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2020 Annual Report
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Cover stories
Differentiated primary packaging
that brings value to consumers.
Resilient business that serves
consumer staple end markets.
Increased exposure to high-value segments
such as Healthcare and Protein.
Amcor people’s care and focus contributed
to the supply of essential products.
Innovative, more sustainable products that
our customers want, and consumers expect.
We enable our customers to provide solutions
for global trends including e-commerce.
Our cover stories
Annual Report 2020
Annual Report 2020
Contents
Message from the Chairman of the Board and the CEO
Amcor at a glance
Our strategy
Sustainability and innovation
Amcor fiscal 2020 operating review
Form 10-K
Other information
Reconciliation of non-GAAP measures
Contents
3
4
6
8
10
13
1-124
17
21
Amcor plc
Head Office / UK Establishment Address: 83 Tower Road North, Warmley, Bristol, England, BS30 8XP, United Kingdom
UK Overseas Company Number: BR020803
Registered Office: 3rd Floor, 44 Esplanade, St Helier, JE4 9WG, Jersey
Jersey Registered Company Number: 126984, Australian Registered Body Number (ARBN): 630 385 278
www.amcor.com
Annual Report 2020 4
Welcome message
Message from the Chairman
of the Board and the CEO
Dear Shareholder,
Strong financial performance
Fiscal year 2020 (FY20) was a milestone year for
Amcor and a year with many firsts: the first year listed
on the New York Stock Exchange, the first after the
transformational acquisition of Bemis and, of course, the
first time operating through a pandemic that significantly
impacted economies around the world. Faced with
unprecedented circumstances, we delivered strong
performance and advanced our strategic agenda.
Safe, healthy and resilient
The business posted strong financial performance in fiscal
year 2020. Adjusted EBIT was 7% higher and adjusted
earnings per share increased by 13%, both compared to
last year and on a constant currency basis. One of the most
important highlights has been our ability to execute and
outperform against the things we can control. On one of
those controllable aspects, working capital, we achieved
exceptional performance, which – along with higher earnings
– contributed to the delivery of $1.2 billion of free cash flow
– a 26% improvement on the prior year.
At Amcor, safety is our most important value. We take
care of ourselves and each other so that everyone can
Both our Rigid Packaging and Flexible Packaging segments
finished the year well through a combination of organic
return home safely every day. Over the years we have built
growth and disciplined cost control. The Flexible Packaging
a track record of consistently improving safety indicators
segment, which represents close to 80% of our global sales,
in the businesses we acquire. As we integrated the largest
delivered double-digit EBIT growth for the year.
acquisition in our history, we experienced 10% fewer
injuries than the prior year and 52% of our sites worldwide
operated injury-free for the whole year.
The integration of the Bemis acquisition is ahead of initial
expectations. In fact, in capturing synergy benefits of $80
million during the year, we surpassed our initial estimates by
Such an improvement in safety was even more remarkable
30% and are well on the way to achieve our target of $180
considering Covid-19. Although we are not immune, our
million in fiscal year 2021.
business has demonstrated great resilience. Early on we
identified three guiding principles: keeping our people safe
and healthy; keeping our business running; and supporting
the communities where we operate.
Our teams then demonstrated exceptional focus,
commitment and care to minimize the effects of the
coronavirus. We implemented extensive protocols to
prevent and contain infection, sharing across regions
The benefits of the acquisition are becoming increasingly
visible beyond cost synergies. Bemis was a high-quality, well-
invested business that is already enhancing Amcor’s results
and our value proposition for customers. We have increased
our exposure to high-value segments like Healthcare and
Protein, where our differentiated products make us the
partner of choice for customers large and small.
experiences and lessons learned. Our people took great
Unique proposition
pride knowing that their efforts contributed directly to the
supply of essential food, beverage and healthcare products
for consumers. Our teams rose to the occasion and we
cannot thank them enough.
Amcor offers a combination of scale, geographic
reach and capabilities unique in the packaging industry.
Our global footprint is well balanced across developed
markets (primarily North America and Western Europe)
and emerging markets (including China, India and the rest
of Asia, as well as Eastern Europe and Latin America).
We have built best-in-class innovation capabilities to
satisfy the growing needs of consumers.
Annual Report 2020
Welcome message
5
The pandemic has made more evident the value
packaging brings to consumers’ everyday life – from
hygiene and sterilization to extended shelf life and portion
control – and reinforced our belief that there will always
be a role for packaging. Consumers’ increasing demand
for more sustainable packaged products will continue to
shape the industry and reward those companies who lead
the way forward. The answer is responsible packaging that
offers differentiated functionality while minimizing waste
in the environment.
A responsible packaging system will require innovative
packaging design, improvements to waste management
infrastructure and increased consumer participation. In
fiscal year 2020 we maintained our focus on sustainability
despite the challenging operating environment and took
Looking ahead
We are well positioned to deliver strong value for
shareholders over the long term. This past year underlined
the resilient nature of our business, which serves customers
in defensive, consumer staple healthcare, food and
beverage end markets. Through relentless preparation,
rigor and focus on areas under our control, we were able
to continue delivering earnings growth under volatile
macro-economic conditions.
Our positive momentum sets us up very well for the
future. We will continue to rely on our care for each
other’s health and safety, our talented teams, our partnership
with customers, our unique innovation capabilities and
our expertise on sustainability.
meaningful actions on each of those three dimensions.
Ultimately, our aspiration remains to be the leading global
We also made clear progress against our pledge for all
our packaging to be recyclable or reusable by 2025, to
significantly increase our use of recycled materials and to
help drive greater recycling of packaging around the world.
Sustainability remains Amcor’s most exciting long-term
organic growth opportunity.
Creating value
Our business generates strong, consistent cash flow
and we create value for shareholders in three ways:
- Organic earnings growth supported by disciplined
capital expenditure
- An attractive, growing dividend paid quarterly
- Acquisitions and share buy-backs, as reflected in the
synergy benefits from the Bemis acquisition and a $500
million share buy-back completed in fiscal year 2020.
Through those three factors, including accretion delivered
from that $500 million share buy-back, Amcor provided
shareholders a total return of 17% in fiscal year 2020,
exceeding our long-term average of 12% per year.
packaging company for our shareholders, our employees,
our customers and the environment. As always, we thank
you for your continued support as we accelerate forward.
Graeme Liebelt
Chairman
Ron Delia
CEO
Annual Report 2020 6
Amcor at a glance
Amcor at a glance
Global sales USD
Employees
12.5 billion
78%
Flexibles
22%
Rigid
packaging
~47,000
40+
Countries
~230
Sites
Global sales by region
Flexibles
47%
North
America
26%
Emerging
markets
24%
Western
Europe
3%
Australia &
New Zealand
Amcor’s Flexibles business has a global
presence and is one of the world’s largest
developers and suppliers of flexible
packaging and specialty folding cartons.
Overview 2020
Sales USD9.8 billion • Number of plants ~180
Countries 39 • Employees ~40,000
End markets
The business develops and produces flexible
packaging for food, beverage, pharmaceutical,
medical, home- and personal-care, and other products.
Rigid Packaging
Amcor’s Rigid Packaging business is
one of the world’s largest suppliers
of plastic containers and closures.
Overview 2020
Sales USD2.7 billion • Number of plants ~50
Countries 11 • Employees ~6,000
End markets
The business develops and produces rigid
containers and closures for food, beverage, spirits,
home- and personal-care, and healthcare products.
Annual Report 2020 Amcor at a glance
7
Amcor winning strategy
Winning Aspiration
To be THE leading global packaging company
Focused Portfolio
Flexible
Packaging
Rigid
Packaging
Specialty
Cartons
Closures
The Amcor Way
Differentiated capabilities that enable us to win:
Talent
Commercial
Excellence
Operational
Leadership
Innovation
Cash and
Capital Discipline
We generate strong cash flow and redeploy it to consistently create superior shareholder value:
Shareholder Value Creation
Strong,
defensive
cash flow
Dividend
(~ USD 750m)
~4%
Historical yield
Reinvestment
(~ USD 500m)
Acquisitions
and/or buy-backs
(~ USD 300-400m)
~3-4%
Organic EPS
growth
~2-7%
EPS growth
Total shareholder value
of 10-15% per annum
with low volatility
Annual Report 2020 8
Our strategy
Our
strategy
Annual Report 2020 Our strategy
9
Amcor is a global
leader in developing
and producing
responsible packaging
for food, beverage,
pharmaceutical,
medical, home- and
personal-care, and
other products.
Focused portfolio
Summary
Our portfolio of businesses share
Amcor has maintained a consistent
some important characteristics:
strategy and business model. We
-
a focus on primary packaging for
fast-moving consumer goods,
-
-
-
good industry structure,
attractive relative growth, and
multiple paths for us to win from
our leadership position, scale and
other competitive advantages.
have a unique combination of talented
people, differentiated capabilities,
scale and global reach. These are
powerful competitive advantages
that enable us to better serve our
customers and to develop and deliver
packaging that best protects the
environment. By remaining focused
on our strategy and our unique
Amcor works with leading companies
focused portfolio of strong businesses
the company expects to continue
around the world to protect their
we have today across: flexibles and
to grow and drive strong returns for
products and the people who rely
rigid packaging, specialty cartons
shareholders and other stakeholders.
These criteria have led us to the
value proposition for customers,
on them, differentiate brands, and
and closures.
improve supply chains through a
range of flexible and rigid packaging,
Differentiated capabilities
specialty cartons, closures, and
services. The company is focused on
making packaging that is increasingly
light-weighted, recyclable and
reusable, and made using an increasing
amount of recycled content. Around
47,000 Amcor people generate USD
12.5 billion in sales from operations
that span about 230 locations in
40-plus countries.
Strategy
Our strategy consists of three
components: a focused portfolio,
differentiated capabilities, and our
aspiration to be THE leading global
packaging company. To fulfil our
aspiration, we are determined to
win for our customers, employees,
shareholders and the environment.
‘The Amcor Way’ describes the
capabilities deployed consistently
across Amcor that enable us to get
leverage across our portfolio: Talent,
Commercial Excellence, Operational
Leadership, Innovation, and Cash
and Capital Discipline.
Shareholder value creation
Through our portfolio of focused
businesses and differentiated
capabilities we generate strong cash
flow and redeploy cash to consistently
create superior customer value. The
defensive nature of our end markets
mean that year-to-year volatility
should be relatively low, measured on
a constant currency basis. Through
paying dividends and growing the
focused base business organically
in a defensive set of end markets,
pursuing targeted acquisitions or
returning cash to shareholders,
over time value creation has
been strong and consistent.
Annual Report 2020 10
Sustainability and innovation
Sustainability
and innovation
Annual Report 2020 Sustainability and innovation
11
Sustainability is
Amcor’s most exciting
growth opportunity.
We are leveraging our
unique scale, reach
and expertise to
lead the way for the
packaging industry and
meet our customers’
growing sustainability
expectations.
This year has highlighted just how
important shelf-life and hygiene are
to consumers and brand owners.
We already know about the huge
contribution packaging makes to
tackling food waste and, as a result,
to fighting climate change. We
believe there will always be a role for
packaging and those organizations
Innovation
that best meet consumer needs,
Amcor is leading the way in defining and
including recognition for packaging
including caring for the environment,
making the innovative, more sustainable
that requires less resources or is ready
will be rewarded with growth.
products that our customers want and
for recycling. In fiscal year 2020, we
The defining sustainability objective
in our industry is to minimize the
presence of used products in
the environment.
The answer to this challenge is
responsible packaging which will
require three things – innovation for
product design, collaboration for
better infrastructure and education
for greater consumer participation.
consumers expect. Our capabilities
increased our use of post-consumer
are best-in-class, with around $100M
recycled resin (PCR) by more than
annual investment in R&D and
40% - up to almost 200 million pounds.
hundreds of professionals working in
For example, we worked with Unilever
every part of the world to create new
on their iconic Hellmann’s mayonnaise
packaging solutions. This is where we
brand, bringing to the U.S. market the
have the highest degree of control.
first ever 100% PCR-packaged and fully
We are proud of the progress we have
recyclable solution in this category.
made, and we will continue to do more.
Our brand-new e-commerce testing
Amcor was the first packaging company
laboratories help customers choose
to commit to all its packaging being
custom-made products for that channel,
recyclable or reusable by 2025 and,
greatly reducing product damage
since then, we have gone further. Amcor
during shipment, and therefore
is the partner of choice for customers
environmental impact.
who want to protect their brands with
packaging that is more functional,
more attractive, more intelligent and
better for the environment. In the
last four years, Amcor products have
won almost 40 awards for innovation,
Innovation in these areas keeps Amcor
on course to reduce the virgin plastic
used in our supply chain by 200,000
tons and to meet our commitment that
all Amcor packaging will be recyclable
or reusable by 2025.
Annual Report 2020 12
Sustainability and innovation
Collaboration
Education
Like any other product, packaging
On their own, product design and
requires sorting, collecting and
infrastructure are necessary but not
recycling infrastructure. In many
sufficient. Ultimately, we also need
countries, forward-thinking policies
to ensure that consumers have the
have led to steady investment in such
understanding and the resources to
infrastructure. Other regions, however,
recycle. This year Amcor has worked
do not yet offer consumers easy
with companies and NGOs across the
and effective means to participate in
value chain to build our understanding
protecting the environment through
of how to create a plastics system that
effective recycling programs. Those
works. In July we published our own
are typically the regions from where
research on consumer preferences
most of the pollution entering our
when it comes to more sustainable,
environment originates.
responsible packaging and - through
As governments and other
organizations work on this front,
Amcor is proactively contributing its
our partnerships - we continue to
support efforts to understand and
impact consumer behavior.
expertise and global perspective. In
Today, sustainability informs every
fiscal year 2020, we became members
aspect of Amcor’s activities and
of WWF ReSource Plastic initiative;
standards – from employment practices
a global consortium of companies
to sourcing and manufacturing. For
and organizations collaborating to
instance, through our EnviroAction
keep plastic pollution out of the
program, we are continuously reducing
environment. We also joined the
our carbon footprint, cutting down on
Healthcare Plastics Recycling Council,
waste and minimizing water usage. By
a coalition of industry peers across
2030, Amcor will reduce its greenhouse
healthcare, recycling and waste
gas emissions intensity by 60%
management, seeking to improve
compared to the 2006 baseline.
recyclability of plastic products within
healthcare. These augment our existing
and long-standing partnerships –
with the Ellen MacArthur Foundation,
Ocean Conservancy, and
The Recycling Partnership.
We are pleased that, this year, Amcor
was recognized for our sustainability
leadership by FTSE4Good, Ethibel
Excellence Investment Register, the
Institutional Shareholder Services ESG
program, Ecovadis and the MSCI.
Amcor is proud of the sustainability
progress we have driven in fiscal year
2020. We will continue to invest in our
pipeline of products and innovations
to ensure that, working with our
customers and our NGO partners, we
create value for all stakeholders by
delivering more sustainable packaging.
Every year, Amcor’s Sustainability Report contains case studies, data and proof points on Amcor’s sustainability performance over the previous year.
This will be available from www.amcor.com in November 2020.
Annual Report 2020 Amcor fiscal 2020
operating review
13
Amcor fiscal 2020 operating review
Highlights
-
GAAP net income of $612 million
-
Bemis integration well ahead
-
$500 million share buy-back
and earnings per share (EPS) of
of original expectations.
completed. Shares on issue reduced
38.2 cents per share;
-
Adjusted EBIT of $1,497 million,
Pre-tax synergy benefits
of $80 million delivered;
up 7% in constant currency terms;
-
Adjusted free cash flow
-
Adjusted EPS of 64.2 cents
of $1.2 billion, up 26%;
per share, up 13% in constant
-
Annual dividend increased
currency terms;
to 46.0 cents per share;
by 3.5% during the year; and
-
Fiscal 2021 outlook: constant
currency adjusted EPS growth of
5-10%. Adjusted free cash flow
of $1.0-$1.1 billion.
Key Financials1
GAAP results
Net sales
Net income
EPS (diluted US cents)
Twelve Months Ended June 30
2019 $ million
2020 $ million
9,458
430
36.3
12,468
612
38.2
Twelve Months Ended June 30
Adjusted
non-GAAP results
Adjusted Pro Forma
2019 $ million
Net sales
EBITDA
EBIT
Net income
EPS (diluted US cents)
Free cash flow (before dividends)
12,972
1,879
1,433
947
58.2
970
2020
$ million
12,468
1,913
1,497
1,028
64.2
1,220
Reported ∆%
Constant
Currency ∆%
(3.9)
1.8
4.5
8.5
10.3
25.8
(1.8)
4.0
6.7
11.0
12.9
(1) GAAP results for the twelve months ended June 30, 2019, reflects a full twelve months of the legacy Amcor business, plus the Bemis business results from June 11 to June 30, 2019.
Adjusted non-GAAP results exclude items which management considers as not representative of ongoing operations. Non-GAAP adjusted pro forma results for the prior period are
presented as if the Company’s acquisition of Bemis had been consummated as of July 1, 2018 and also exclude items which management considers not representative of ongoing operations.
See “Presentation of Prior Year Financial Information” for more information. In addition, reconciliations of these non-GAAP measures to their most comparable GAAP measures, including pro
forma measures prepared in accordance with SEC Regulation S-X Article 11, are included in the “Reconciliation of Non-GAAP Measures” section of this document.
Note: All amounts referenced throughout this document are in US dollars unless otherwise indicated and numbers may not add up precisely to the totals provided due to rounding.
COVID-19 update
Amcor’s operations have
Amcor established three
been recognized as ‘essential’ by
guiding principles:
governments and authorities around
the world given the role the Company
plays in the supply chains for critical
food and healthcare products.
In dealing with the exceptional
challenges posed by COVID-19,
-
Keeping our employees healthy -
The health and safety of our co-
workers is one of our values and
always Amcor’s first priority.
Around the world, local teams
have implemented a range of
practices including more frequent
cleaning and disinfection,
increased physical distancing
in work and break out spaces,
restricted visitor access,
temperature screening,
Annual Report 2020
Amcor fiscal 2020
operating review
14
supply of personal protective
resilient in the developed world than in
prepared in accordance with SEC
equipment and flexible working
emerging markets and more resilient
Regulation S-X Article 11, are included
from home arrangements.
in at-home consumption channels
in the “Reconciliation of Non-GAAP
-
Keeping our operations running -
To support our business partners,
every Amcor plant and office has
business continuity plans in place
which address infection prevention
than convenience and away-from-
Measures” section of this document.
home channels.
Presentation of Prior Year
Financial Information
Bemis Acquisition Update
The Bemis business was acquired
through an all-stock transaction in
measures, incident response,
On June 11, 2019, the all-stock
June 2019. Integration has proceeded
return to work protocols and
acquisition of Bemis Company,
exceptionally well with all plans
supply chain risks.
Inc. was completed. Amcor was
essentially completed within the first
-
Contributing to relief efforts in our
communities - Amcor launched a
global program to help mitigate the
impact of COVID-19 by donating
food and healthcare packaging
products and by funding local
community initiatives to improve
access to healthcare, education or
determined to be the acquirer for
12 months, ahead of expectations.
accounting purposes and, as a result,
financial information prepared under
U.S. generally accepted accounting
principles (“U.S. GAAP”) for periods
prior to the completion date reflects
the historical financial information for
the legacy Amcor business only.
The Company delivered approximately
$80 million (pre-tax) of cost
synergies during the year, in line with
guidance provided in May 2020 and
substantially ahead (approximately
30% in local currency terms) of the
$65 million expected at the start
food and other essential products.
Financial information included in this
of the fiscal year. Cost synergies
From the start of the COVID-19
outbreak, the Company has operated
its plants around the world with
minimal disruption and has not
experienced significant business
continuity issues. Through fiscal
2020, operating costs were not
materially impacted.
Notwithstanding month to month
volatility, for the six months ended
30 June 2020 volumes were 1%
higher than the prior year within both
the Flexibles and Rigid Packaging
segments which reflects Amcor’s
broad geographic and end market
diversification. The extent to which the
global pandemic has influenced overall
demand for Amcor’s products in each
region has been mixed as certain
end markets in each geographic
area appear to have benefited at
varying times while others have
been constrained. The Company has
seen good demand for healthcare
packaging globally through this
period. Most food and beverage end
markets have generally remained more
document and described as “Adjusted
were primarily driven from overhead
Pro Forma” is being presented to allow
and procurement initiatives, and
shareholders to more easily compare
approximately $57 million was
the current year results with the
recognized in the Flexibles segment
prior year results. The Adjusted Pro
and approximately $23 million in
Forma results represent non-GAAP
Corporate expenses. The Company
measures that provide stakeholders
continues to expect total cost
with an additional perspective on the
synergies of $180 million (pre-tax) by
Company’s financial and operational
the end of fiscal 2022, with further
performance and trends. The Adjusted
benefits expected largely from
Pro Forma results are presented as if
procurement and footprint initiatives
the Company’s acquisition of Bemis
across the 2021 and 2022 fiscal years.
Cash restructuring and integration
costs of approximately $80 million
were incurred during the year.
had been consummated as of July 1,
2018 and exclude the impact of non-
recurring acquisition and integration
related costs, acquisition related
amortization expenses, and other
items management considers as not
representative of ongoing operations.
The presentation of non-GAAP
Adjusted Pro Forma measures is not
meant to be considered in isolation
or as a substitute for results prepared
and presented in accordance with U.S.
GAAP. Reconciliations of non-GAAP
Adjusted Pro Forma measures to their
most comparable GAAP measures,
including Pro Forma measures,
Annual Report 2020 Amcor fiscal 2020
operating review
15
Capital Returns to Shareholders
Share repurchases
The Company completed a $500 million share buy-back program in May 2020. Shares repurchased during fiscal 2020
resulted in a 3.5% reduction in the total number of shares issued and outstanding.
2020 financial results
Segment information
Adjusted Pro Forma
Twelve Months Ended June 30, 2019
Twelve Months Ended June 30, 2020
Adjusted non-
GAAP results1
Net sales
$ million
EBIT
$ million
EBIT /
Sales %
Flexibles
10,081
1,239
Rigid Packaging
Other
2,893
(1)
308
(114)
12.3
10.7
EBIT /
Average
funds
employed
%2
13.1
17.5
Net sales
$ million
EBIT
$ million
EBIT /
Sales %
EBIT /
Average
funds
employed
%2
9,755
1,335
2,716
(4)
290
(128)
13.7
10.7
15.1
16.3
Total Amcor
12,972
1,433
11.0
12.9
12,468
1,497
12.0
14.0
(1) Adjusted non-GAAP measures exclude items which management considers as not representative of ongoing operations. Adjusted non-GAAP results for the prior period are based on
unaudited Adjusted Pro Forma financial information. Further details related to non-GAAP measures and reconciliations to GAAP measures can be found under “Presentation of non-GAAP
financial information” and in the tables included in this document. All amounts referenced throughout this document are in US dollars unless otherwise indicated.
(2) Average funds employed includes shareholders equity and net debt, calculated using a four quarter average and LTM adjusted EBIT.
Full year net sales for the Amcor Group of $12,468 million
lower than last year. Overall volumes were 0.2% higher than
were 1.8% lower than the prior year in constant currency
the prior twelve month period and this was offset by a 0.4%
terms. Excluding a 1.6% unfavorable impact from the pass
unfavorable price/mix.
through of lower raw material costs, sales were 0.2%
Flexibles
Twelve Months Ended June 30
Adjusted Pro Forma
2019 $ million
2020
$ million
Reported △%
Constant
Currency △%
Net sales
Adjusted EBIT
Adjusted EBIT / Sales %
Adjusted EBIT /
Average funds employed %
10,081
1,239
12.3
13.1
9,755
1,335
13.7
15.1
(3.2)
7.8
(0.9)
9.8
Full year net sales for the Flexibles segment were 0.9%
by 0.1% unfavorable price/mix. Volumes were higher in the
lower than the prior twelve month period in constant
Flexibles North America, Europe and Asia Pacific businesses
currency terms. Excluding a 0.9% unfavorable impact
and volume performance in Flexibles Latin America and for
from the pass through of lower raw material costs, sales
specialty carton products continued to improve sequentially
were in line with last year. Overall segment volumes were
through the second half of the 2020 fiscal year but remained
0.1% higher than the prior fiscal year and this was offset
lower than the prior twelve month period.
Annual Report 2020 Amcor fiscal 2020
operating review
16
In North America, full year volumes grew in the low single
Annual volumes were higher across the Asian emerging
digit range, mainly driven by strength in the high value
markets, with particularly strong growth in China and India
healthcare, pet care, protein, ready meal, liquid beverage
towards the end of the fourth quarter. In Latin America
and home and personal care end markets as well as
volumes improved sequentially in each of the third and
specialty folding carton products. This was partly offset
fourth quarters but annual volumes remained lower than the
by lower volumes in confectionary and condiments.
prior twelve month period, primarily reflecting challenging
In Europe, low single digit volume growth for fiscal 2020
was driven by strength in protein, dairy, pet care, coffee,
medical and ready meal products offset by lower
economic conditions across the region and the impact of
volumes lost within the legacy Bemis business prior to the
acquisition close in June 2019.
volumes in certain personal care products.
Adjusted EBIT for fiscal 2020 of $1,335 million was 9.8%
Sales of specialty folding carton products in Europe
improved sequentially in each of the third and fourth
quarters but annual volumes remained lower than the
prior twelve month period, primarily driven by weaker
volumes in the first half of fiscal 2020.
higher than the prior year in constant currency terms. This
includes organic growth of $65 million, or 5.2%, primarily
reflecting favorable product mix as well as strong cost and
operating performance across the business. The remaining
growth of $57 million, or 4.6%, reflects synergy benefits
related to the Bemis acquisition.
Adjusted EBIT margin of 13.7% compares with 12.3% for the
prior year and segment returns of 15.1% expanded by 2%.
Rigid Packaging
Twelve Months Ended June 30
Net sales
Adjusted EBIT
Adjusted EBIT / Sales %
Adjusted EBIT /
Average funds employed %
Adjusted Pro Forma
2019 $ million
2,893
308
10.7
17.5
2020
$ million
2,716
290
10.7
16.3
Reported △%
Constant
Currency △%
(6.1)
(5.9)
(4.8)
(4.2)
Full year net sales for the Rigid Packaging segment were
In Latin America, annual volumes were 0.4% higher
4.8% lower than the prior twelve month period in constant
compared with the prior period.
currency terms, or 0.7% lower after excluding a 4.1%
unfavorable impact from the pass through of lower raw
material costs. The 0.7% decline was driven by volume
growth of 0.5%, offset by unfavorable price/mix of 1.2%.
Through the second half of the fiscal year, the beverage
businesses in North and Latin America experienced an
elevated level of month to month variability between
March 2020 and June 2020 in particular, as customers
In North America, full year beverage volumes were 0.2%
responded to changes in demand through at-home and
lower than the prior year, and hot fill container volumes
away-from-home channels and adjusted inventories.
were up 1%. Specialty Container volumes were higher than
the prior year with strengthening growth in certain spirits,
healthcare, personal care and home cleaning categories
in the second half of the year.
Adjusted EBIT for fiscal 2020 of $290 million was 4.2%
lower than the prior year in constant currency terms when
the business benefited from a particularly strong second
quarter. In line with expectations, adjusted EBIT grew 3% in
the second half of fiscal 2020 compared with the second
half of fiscal 2019, reflecting strong cost performance.
Annual Report 2020
Form 10-K
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 001-36786
AMCOR PLC
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Jersey
98-1455367
83 Tower Road North
Warmley, Bristol
United Kingdom
(Address of principal executive offices)
BS30 8XP
(Zip Code)
Registrant’s telephone number, including area code: +44 117 9753200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Ordinary Shares, par value $0.01 per share
1.125% Guaranteed Senior Notes Due 2027
AMCR
AUKF/27
Name of each exchange
on which registered
The New York Stock Exchange
The New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Annual Report 2020
2
Form 10-K
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
☒
☐
☐
Smaller Reporting Company
Emerging Growth Company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No ☒
The aggregate market value of the ordinary shares held by non-affiliates of the registrant, computed by reference to the
closing price of such shares as of the last business day of the registrant’s most recently completed second quarter, was
$17.4 billion
As of August 25, 2020, the Registrant had 1,568,481,519 shares issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required for Part III of this Annual Report on Form 10-K is incorporated by reference to the
Amcor plc definitive Proxy Statement for its 2020 Annual Shareholder Meeting, which will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, within 120 days of
Amcor plc’s fiscal year end.
Annual Report 2020
Form 10-K
3
Amcor plc
Annual Report on Form 10-K
Table of Contents
Part I
Part I
Item 1.
Item 1A.
Item 1B.
Item 1.
Item 2.
Item 1A. Risk Factors
Item 3.
Item 1B. Unresolved Staff Comments
Item 4.
Item 2.
Business.......................................................................................................................................................
Risk Factors.................................................................................................................................................
Unresolved Staff Comments........................................................................................................................
Business
Properties.....................................................................................................................................................
Legal Proceedings........................................................................................................................................
Mine Safety Disclosures..............................................................................................................................
Properties
Item 3.
Legal Proceedings
Part II
Part II
Item 4.
Item 5.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 6.
Item 5.
Item 7.
Item 7A.
Item 6.
Item 8.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Mine Safety Disclosures
Market For Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities......................................................................................................................................................
Selected Financial Data...............................................................................................................................
Market For Registrant’s Common Equity, Related Shareholder Matters
Management’s Discussion and Analysis of Financial Condition and Results of Operations......................
and Issuer Purchases of Equity Securities
Quantitative and Qualitative Disclosures About Market Risk.....................................................................
Selected Financial Data
Financial Statements and Supplementary Data...........................................................................................
Reports of Independent Registered Public Accounting Firms.....................................................................
Consolidated Statement of Income..............................................................................................................
Financial Statements and Supplementary Data
Consolidated Statement of Comprehensive Income....................................................................................
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheet.........................................................................................................................
Consolidated Statement of Income
Consolidated Statement of Cash Flows.......................................................................................................
Consolidated Statement of Equity...............................................................................................................
Consolidated Statement of Comprehensive Income
Notes to Consolidated Financial Statements...............................................................................................
Consolidated Balance Sheet
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure....................
Consolidated Statement of Cash Flows
Controls and Procedures..............................................................................................................................
Consolidated Statement of Equity
Other Information........................................................................................................................................
Item 9.
Item 9A.
Item 9B.
Notes to Consolidated Financial Statements
Item 8.
Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
113
Item 9A. Controls and Procedures
Item 10.
Item 9B. Other Information
Item 11.
Item 12.
Item 13.
Item 10. Directors, Executive Officers and Corporate Governance
Item 14.
Item 11.
Directors, Executive Officers and Corporate Governance..........................................................................
Executive Compensation.............................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters...
Certain Relationships and Related Transactions, and Director Independence............................................
Principal Accountant Fees and Services......................................................................................................
Executive Compensation
114
115
115
115
115
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
115
Part III
Part III
Part IV
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 15.
Item 14.
Exhibits and Financial Statement Schedules...............................................................................................
116
Principal Accountant Fees and Services
Exhibit Index................................................................................................................................................ 116
Form 10-K Summary (optional)..................................................................................................................
120
Signatures..................................................................................................................................................... 121
Exhibits and Financial Statement Schedules
Part IV
Item 16.
Item 15.
Exhibit Index
Item 16.
Form 10-K Summary (optional)
Signatures
116
120
121
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Annual Report 2020
4
Form 10-K
Forward-Looking Statements
Unless otherwise indicated, references to "Amcor," the "Company," "we," "our," and "us" in this Annual Report on
Form 10-K refer to Amcor plc and its consolidated subsidiaries.
This Annual Report on Form 10-K contains certain statements that are "forward-looking statements" within the
meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements
are generally identified with words like "believe," "expect," "target", "project", "may," "could," "would," "approximately,"
"possible," "will," "should," "expect," "intend," "plan," "anticipate," "estimate," "potential," "outlook" or "continue," the
negative of these words, other terms of similar meaning or the use of future dates. Such statements are based on the current
expectations of the management of Amcor and are qualified by the inherent risks and uncertainties surrounding future
expectations generally. Actual results could differ materially from those currently anticipated due to a number of risks and
uncertainties. None of Amcor or any of its respective directors, executive officers or advisors, provide any representation,
assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually
occur. Risks and uncertainties that could cause actual results to differ from expectations include, but are not limited to:
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The continued financial and operational impacts of the 2019 Novel Coronavirus ("COVID-19") pandemic on Amcor
and its customers, suppliers, employees and the geographic markets in which it and its customers operate (see Part II,
"Item 1A. - Risk Factors" for more information about the risks to the Company due to COVID-19);
changes in consumer demand patterns and customer requirements in numerous industries;
the loss of key customers, a reduction in their production requirements or consolidation among key customers;
significant competition in the industries and regions in which we operate;
the failure to successfully integrate acquisitions in the expected time frame;
the inability to expand our current business effectively through either organic growth, including by product innovation,
or acquisitions;
challenges to or the loss of our intellectual property rights;
challenging current and future global economic conditions;
impact of operating internationally;
price fluctuations or shortages in the availability of raw materials, energy and other inputs, which could adversely
affect our business;
production, supply and other commercial risks, including counterparty credit risks, which may be exacerbated in times
of economic downturn;
a failure in our information technology systems;
an inability to attract and retain key personnel;
costs and liabilities related to current and future environmental and health and safety laws and regulations;
labor disputes;
the possibility that the phase out of the London Interbank Offered Rate ("LIBOR") causes our interest expense to
increase;
foreign exchange rate risk;
an increase in interest rates;
a downgrade in our credit rating that could increase our borrowing costs and negatively affect our financial condition
and results of operations;
a failure to hedge effectively against adverse fluctuations in interest rates and foreign exchange rates;
a significant write-down of goodwill and/or other intangible assets;
our need to maintain an effective system of internal control over financial reporting in the future;
an inability of our insurance policies, including our use of a captive insurance company, to provide adequate protection
against all of the risks we face;
litigation or regulatory developments;
changing government regulations in environmental, health, and safety matters; and
our ability to develop and successfully introduce new products and to develop, acquire and retain intellectual property
rights.
Additional factors that could cause actual results to differ from those expected are discussed in this Annual Report on
Form 10-K, including in the sections entitled "Item 1A - Risk Factors" and "Item 7 - Management’s Discussion and Analysis of
Financial Condition and Results of Operations," and in Amcor’s subsequent filings with the Securities and Exchange
Commission.
Forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which
the statements are made. Amcor assumes no obligation, and disclaims any obligation, to update the information contained in
4
Annual Report 2020
Forward-Looking Statements
Unless otherwise indicated, references to "Amcor," the "Company," "we," "our," and "us" in this Annual Report on
Form 10-K refer to Amcor plc and its consolidated subsidiaries.
this report. All forward-looking statements in this Annual Report on Form 10-K are qualified in their entirety by this cautionary
statement.
Form 10-K
5
This Annual Report on Form 10-K contains certain statements that are "forward-looking statements" within the
meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements
are generally identified with words like "believe," "expect," "target", "project", "may," "could," "would," "approximately,"
"possible," "will," "should," "expect," "intend," "plan," "anticipate," "estimate," "potential," "outlook" or "continue," the
negative of these words, other terms of similar meaning or the use of future dates. Such statements are based on the current
expectations of the management of Amcor and are qualified by the inherent risks and uncertainties surrounding future
expectations generally. Actual results could differ materially from those currently anticipated due to a number of risks and
uncertainties. None of Amcor or any of its respective directors, executive officers or advisors, provide any representation,
assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually
occur. Risks and uncertainties that could cause actual results to differ from expectations include, but are not limited to:
The continued financial and operational impacts of the 2019 Novel Coronavirus ("COVID-19") pandemic on Amcor
and its customers, suppliers, employees and the geographic markets in which it and its customers operate (see Part II,
"Item 1A. - Risk Factors" for more information about the risks to the Company due to COVID-19);
changes in consumer demand patterns and customer requirements in numerous industries;
the loss of key customers, a reduction in their production requirements or consolidation among key customers;
significant competition in the industries and regions in which we operate;
the failure to successfully integrate acquisitions in the expected time frame;
the inability to expand our current business effectively through either organic growth, including by product innovation,
or acquisitions;
challenges to or the loss of our intellectual property rights;
challenging current and future global economic conditions;
impact of operating internationally;
affect our business;
of economic downturn;
a failure in our information technology systems;
an inability to attract and retain key personnel;
price fluctuations or shortages in the availability of raw materials, energy and other inputs, which could adversely
production, supply and other commercial risks, including counterparty credit risks, which may be exacerbated in times
costs and liabilities related to current and future environmental and health and safety laws and regulations;
the possibility that the phase out of the London Interbank Offered Rate ("LIBOR") causes our interest expense to
a downgrade in our credit rating that could increase our borrowing costs and negatively affect our financial condition
a failure to hedge effectively against adverse fluctuations in interest rates and foreign exchange rates;
a significant write-down of goodwill and/or other intangible assets;
our need to maintain an effective system of internal control over financial reporting in the future;
an inability of our insurance policies, including our use of a captive insurance company, to provide adequate protection
against all of the risks we face;
litigation or regulatory developments;
changing government regulations in environmental, health, and safety matters; and
our ability to develop and successfully introduce new products and to develop, acquire and retain intellectual property
rights.
Commission.
Additional factors that could cause actual results to differ from those expected are discussed in this Annual Report on
Form 10-K, including in the sections entitled "Item 1A - Risk Factors" and "Item 7 - Management’s Discussion and Analysis of
Financial Condition and Results of Operations," and in Amcor’s subsequent filings with the Securities and Exchange
Forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which
the statements are made. Amcor assumes no obligation, and disclaims any obligation, to update the information contained in
labor disputes;
increase;
foreign exchange rate risk;
an increase in interest rates;
and results of operations;
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Annual Report 2020
6
Form 10-K
PART I
Item 1. - Business
The Company
Amcor plc (ARBN 630 385 278) is a holding company originally incorporated under the name Arctic Jersey Limited
as a limited company under the Laws of the Bailiwick of Jersey in July 2018, in order to effect the Company's combination with
Bemis Company, Inc. On October 10, 2018, Arctic Jersey Limited was renamed "Amcor plc" and became a public limited
company incorporated under the Laws of the Bailiwick of Jersey.
Bemis Company, Inc. Merger
On June 11, 2019, we completed the acquisition of Bemis Company, Inc. ("Bemis"), a global manufacturer of flexible
packaging products, pursuant to the definitive merger agreement (the "Agreement") between Amcor Limited and Bemis dated
August 6, 2018. Under the terms of the Agreement, Bemis shareholders received 5.1 Amcor shares for each share of Bemis
stock and Amcor shareholders received one Amcor CHESS Depositary Instrument ("CDI") for each share of Amcor Limited
stock issued and outstanding. Upon completion of the transaction, the Amcor shares were registered with the Securities and
Exchange Commission ("SEC") and traded on the New York Stock Exchange ("NYSE") under the symbol "AMCR" and the
CDI's representing our shares on the Australian Securities Exchange ("ASX") are traded under the symbol "AMC." In addition,
Amcor Limited shares were delisted from the ASX and Bemis shares were delisted from the NYSE.
Business Strategy
Strategy
Our strategy consists of three components: a focused portfolio, differentiated capabilities, and our aspiration to be THE
leading global packaging company. To fulfill our aspiration, we are determined to win for our customers, employees,
shareholders and the environment.
Focused portfolio
Our portfolio of businesses share some important characteristics:
A focus on primary packaging for fast-moving consumer goods,
good industry structure,
attractive relative growth, and
•
•
•
• multiple paths for us to win from our leadership position, scale and other competitive advantages.
These criteria have led us to the focused portfolio of strong businesses we have today across: flexible and rigid
packaging, specialty cartons, and closures.
Differentiated capabilities
"The Amcor Way" describes the capabilities deployed consistently across Amcor that enable us to get leverage across
our portfolio: Talent, Commercial Excellence, Operational Leadership, Innovation, and Cash and Capital Discipline.
Shareholder value creation
Through our portfolio of focused business and differentiated capabilities we generate strong cash flow and redeploy
cash to consistently create superior customer value. The defensive nature of our end markets mean that year-to-year volatility
should be relatively low, measured on a constant currency basis. Over time value creation has been strong and consistent
through paying dividends and growing the base business organically in a defensive set of end markets and pursuing targeted
acquisitions or by returning cash to shareholders via share buybacks.
6
Annual Report 2020
Form 10-K
7
Segment Information
Accounting Standards Codification ("ASC") 280, "Segment Reporting," establishes the standards for reporting
information about segments in financial statements. In applying the criteria set forth in ASC 280, the Company has determined
it has two reporting segments, Flexibles and Rigid Packaging. The reporting segments produce flexible packaging, rigid
packaging, specialty cartons, and closure products, which are sold to customers participating in a range of attractive end use
areas throughout Europe, North America, Latin America, Africa and the Asia Pacific regions. Refer to Note 20, "Segments," of
the notes to consolidated financial statements for financial information about reporting segments.
Flexibles Segment
The Flexibles Segment develops and supplies flexible packaging globally. With approximately 40,000 employees at
181 principal manufacturing facilities in 39 countries as of June 30, 2020, the Flexibles Segment is one of the world's largest
suppliers of plastic, aluminum and fiber based flexible packaging. In fiscal year 2020, Flexibles accounted for approximately
78% of the Company’s consolidated net sales.
Rigid Packaging Segment
The Rigid Packaging Segment manufacturers rigid packaging containers and related products in the Americas. As of
June 30, 2020, the Rigid Packaging Segment employed approximately 6,000 employees at 50 principal manufacturing facilities
in 11 countries. In fiscal year 2020, Rigid Packaging accounted for approximately 22% of the Company’s consolidated net
sales.
Marketing, Distribution, and Competition
Our sales are made through a variety of distribution channels, but primarily through our direct sales force. Sales offices
and plants are located throughout Europe, North America, Latin America, Africa and Asia-Pacific regions to provide prompt
and economical service to thousands of customers. Our technically trained sales force is supported by product development
engineers, design technicians, field service technicians, and a customer service organization.
We did not have sales to a single customer that exceeded 10% of consolidated net sales for fiscal year 2020. Sales to
PepsiCo, and its subsidiaries, accounted for approximately 11.1% and 11.0% of our sales in fiscal years 2019 and 2018,
respectively. Business arrangements with PepsiCo are aggregated across a number of separate contracts in disparate locations
and any change in these business arrangements would typically occur over a period of time.
The major markets in which we sell our products historically have been, and continue to be, highly competitive. Areas
of competition include service, innovation, quality, and price. Competitors include AptarGroup, Inc., Ball Corporation, Berry
Global Group, Inc, CCL Industries Inc., Crown Holdings, Inc., Graphic Packaging Holding Company, Huhtamaki Oyj,
International Paper Company, Mayr-Melnhof Karton AG, O-I Glass, Inc., Sealed Air Corporation, Silgan Holdings Inc.,
Sonoco Products Company and WestRock Company, and a variety of privately held companies.
We consider ourselves to be a significant participant in the markets in which we serve; however, due to the diversity of
our business, our precise competitive position in these markets is not reasonably determinable.
Backlog
Working capital fluctuates throughout the year in relation to business volume and other marketplace conditions. We
maintain inventory levels that provide a reasonable balance between obtaining raw materials at favorable prices and
maintaining adequate inventory levels to enable us to fulfill our commitment to promptly fill customer orders. Manufacturing
backlogs are not a significant factor in the industries in which we operate.
Raw Materials
Polymer resins and films, paper, inks, adhesives, aluminum, and chemicals constitute the major raw materials we use.
These are purchased from a variety of global industry sources, and we are not significantly dependent on any one supplier for
our raw materials. While temporary industry-wide shortages of raw materials may occur, we expect to continue to successfully
manage raw material supplies without significant supply interruptions. Currently, raw materials are readily available but pricing
may fluctuate.
7
Annual Report 2020
8
Form 10-K
Intellectual Property
We are the owner or licensee of a number of United States and other country patents and patent applications that relate
to our products, manufacturing processes, and equipment. We have a number of trademarks and trademark registrations in the
United States and in other countries. We also keep certain technology and processes as trade secrets. Our patents, licenses, and
trademarks collectively provide a competitive advantage. However, the loss of any single patent or license alone would not
have a material adverse effect on our results of operations as a whole or those of our reporting segments. Patents, patent
applications and license agreements will expire or terminate over time by operation of law, in accordance with their terms or
otherwise.
Sustainability, Innovation and Environmental Laws and Regulations
We believe there will always be a role for the primary packages made by Amcor. Packaging protects and preserves
food and healthcare products, and reduces the carbon footprint and waste of products. It extends shelf life and reduces food
and other product loss across a range of distribution channels. Consumers want cost effective, convenient and easy to use
packaging which also has an end of life solution to reduce waste. We believe responsible packaging is the answer to achieve
less waste through innovative packaging design, waste management infrastructure and consumer participation.
Amcor is committed to responsible packaging and we see this as being integral to our success. In January 2018, we
became the first global packaging company pledging to develop all of our packaging to be recyclable or reusable by 2025, to
significantly increase our use of recycled materials and to work with others to drive greater recycling of packaging around the
world.
We are highly regarded for our innovation capabilities and we have thousands of active patents. We collaborate with
customers, suppliers, and innovators to create industry-leading solutions, and with stakeholders to increase available
infrastructure for waste collection, sorting and recycling and to inform consumers about the environmental implications of their
packaging. We are uniquely positioned to lead the way in the development of more sustainable or environmentally friendly
packaging. Addressing the need for and increasing the supply of responsible packaging is one of the most important growth
opportunities for Amcor.
Our operations and the real property we own or lease are subject to broad environmental laws and regulations by
multiple jurisdictions. These laws and regulations pertain to the discharge of certain materials into the environment, handling
and disposition of waste, and cleanup of contaminated soil and ground water as well as various other protections of the
environment. We believe that we are in substantial compliance with applicable environmental laws and regulations based on
implementation of our Environmental, Health, and Safety Management System and regular audits of those processes and
systems. However, we cannot predict with certainty that we will not in the future, incur liability, with respect to noncompliance
with environmental laws and regulations due to contamination of sites formerly or currently owned or operated by us (including
contamination caused by prior owners and operators of such sites) or the off-site disposal of regulated materials, which could be
material. In addition, these laws and regulations are constantly changing, and we cannot always anticipate these changes. Refer
to Note 19, "Contingencies and Legal Proceedings," of the notes to the consolidated financial statements for information about
legal proceedings. For a more detailed description of the various laws and regulations that affect our business, see Item 1A.
"Risk Factors".
Employees
As of June 30, 2020, we employed approximately 47,000 people worldwide, with approximately 42% of those
employees being covered by collective bargaining agreements. Our relations with employees under collective bargaining
agreements remain satisfactory and there have been no significant work stoppages or other labor disputes during the past three
years. For more on collective bargaining and labor disputes, see "Item 1A - Risk Factors."
Seasonal Factors
The business of each of the reporting segments is not seasonal to any material extent.
Research and Development
Refer to Note 2, "Significant Accounting Policies," of the notes to consolidated financial statements for information
about our research and development expenditures and policies.
8
Annual Report 2020
Information about our Executive Officers
The following sets forth the name, age and business experience for at least the last five years of our principal executive
officers. Unless otherwise indicated, positions shown are with Amcor.
Form 10-K
9
Positions Held
Period the Position was Held
Name (Age)
Ronald Delia (49)
Managing Director and Chief Executive Officer
Executive VP, Finance and Chief Financial Officer
VP and General Manager, Amcor Rigid Packaging Latin
America
Michael Casamento (49)
Executive VP, Finance and Chief Financial Officer
VP, Corporate Finance
Peter Konieczny (55)
President, Amcor Flexibles Europe, Middle East and Africa
President, Amcor Specialty Cartons
Eric Roegner (50)
Fred Stephan (55)
President, Amcor Rigid Packaging
Executive Leadership Roles, Arconic, Inc. (f/k/a Alcoa Inc.)
President, Amcor Flexibles North America
President, Bemis North America
Senior VP and General Manager of the Insulation Systems -
Johns Manville
Ian Wilson (62)
Executive VP, Strategy and Development
Available Information
2015 to present
2011 to 2015
2008 to 2011
2015 to present
2014 to 2015
2015 to present
2009 to 2015
2018 to present
2006 to 2018
2019 to present
2017 to 2019
2011 to 2017
2000 to present
We are a large accelerated filer (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
Rule 12b-2) and are also an electronic filer. Electronically filed reports (Forms 4, 8-K, 10-K, 10-Q, S-3, S-8, etc.) can be
accessed at the SEC's website (http://www.sec.gov). We make available free of charge (other than an investor’s own Internet
access charges) through the Investor Relations section of the Company's website (http://www.amcor.com/investors), under
"SEC Filings," our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if
applicable, amendments to those reports filed of furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file such material with, or furnish it to, the SEC. You may also obtain these
reports by writing to the Company, Attention: Investor Relations, Amcor plc, Level 11, 60 City Road, Southbank, VIC, 3006,
Australia. We are not including the information contained on our website as part of, or incorporating it by reference into, this
Annual Report on Form 10-K.
9
Annual Report 2020
10
Form 10-K
Item 1A. - Risk Factors
The following factors, as well as factors described elsewhere in this Annual Report on Form 10-K, or in other filings
by the Company with the Securities and Exchange Commission, could adversely affect the Company's consolidated financial
position, results of operations or cash flows. Other factors not presently known to us or, that we presently believe are not
material, could also affect our business operations and financial results.
Strategic Risks
Changes in Consumer Demand — We are exposed to changes in consumer demand patterns and customer requirements in
numerous industries.
Sales of our products and services depend heavily on the volume of sales made by our customers to consumers.
Consequently, changes in consumer preferences for products in the industries that we serve or the packaging formats in which
such products are delivered, whether as a result of changes in cost, convenience or health, environmental and social concerns
and perceptions, may result in a decline in the demand for certain of our products or the obsolescence of some of our existing
products. Although we have adopted certain strategies designed to mitigate the impact of declining sales, there is no guarantee
that such strategies will be successful or will offset a decline in demand. Furthermore, any new products that we produce may
not meet sales or margin expectations due to many factors, including our inability to accurately predict customer demand, end
user preferences or movements in industry standards or to develop products that meet consumer demand in a timely and cost-
effective manner.
Changing preferences for products and packaging formats may result in increased demand for other products we
produce. However, to the extent changing preferences are not offset by demand for new or alternative products, changes to
consumer preferences could have an adverse effect on our business, cash flow, financial condition and results of operations.
Key Customers and Customer Consolidation — The loss of key customers, a reduction in their production requirements or
consolidation among key customers could have a significant adverse impact on our sales revenue and profitability.
Relationships with our customers are fundamental to our success, particularly given the nature of the packaging
industry and the other supply choices available to customers. From time to time, a single customer, depending on the current
status and volumes of a number of separate contracts in disparate locations, may account for 10% or more of our revenue. Sales
to our largest customer accounted for approximately 11% of our total net sales for fiscal years 2019 and 2018. We did not have
sales to a single customer that exceeded 10% of our net sales in 2020 or sales to any other customer that accounted for more
than 10% of net sales in these fiscal periods.
Customer concentration can be even more pronounced within certain business units. Consequently, the loss of any of
our key customers or any significant reduction in their production requirements, or an adverse change in the terms of our supply
agreements with them, could reduce our sales revenue and net profit.
There can be no guarantee that our key customers will not in the future seek to source some or all of their products or
services from competitors, change to alternative forms of packaging, begin manufacturing their packaging products in-house or
seek to renew their business with us on terms less favorable than before.
Any loss, change or other adverse event related to our key customer relationships could have an adverse effect on our
business, cash flow, financial condition and results of operations, which effect may be material.
In addition, over recent years certain of our customers have acquired companies with similar or complementary
product lines. This consolidation has increased the concentration of our business with these customers. Such consolidation may
be accompanied by pressure from customers for lower prices, reflecting the increase in the total volume of products purchased
or the elimination of a price differential between the acquiring customer and the company acquired. While we have generally
been successful at managing customer consolidations, increased pricing pressures from our customers could have a material
adverse effect on our results of operations.
Competition — We face significant competition in the industries and regions in which we operate, which could adversely
affect our business.
We operate in highly competitive geographies and end use areas, each with varying barriers to entry, industry
structures and competitive behavior. We regularly bid for new and continuing business in the industries and regions in which
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we operate and we continue to change in response to consumer demand. We cannot predict with certainty the changes that may
affect our competitiveness.
The loss of business from our larger customers, or the renewal of business on less favorable terms, may have a
significant impact on our operating results. In addition, our competitors may develop a disruptive technology or other
technological innovations that could increase their ability to compete for our current or potential customers. No assurance can
be given that the actions of established or potential competitors will not have an adverse effect on our ability to implement our
plans and on our business, cash flow, financial condition and results of operations.
Expanding Our Current Business — We may be unable to expand our current business effectively through either organic
growth, including product innovation, or acquisitions.
Our business strategy includes both organic expansion of our existing operations, particularly through efforts to
strengthen and expand relationships with customers in emerging markets, product innovation, and expansion through
acquisitions. However, we may not be able to execute our strategy effectively for reasons within and outside our control. Our
ability to grow organically may be limited by, among other things, extensive saturation in the locations in which we operate or a
change or reduction in our customers’ growth plans due to changing economic conditions, strategic priorities or otherwise. For
many of our businesses, organic growth depends on product innovation, new product development and timely responses to
changing consumer demands and preferences. Consequently, failure to develop new or improved products in response to
changing consumer preferences in a timely manner may hinder our growth potential, affect our competitive position and
adversely affect our business and results of operations.
Additionally, over the past decade, we have pursued growth through acquisitions, including our acquisition of Bemis
in 2019. There can be no assurance that we will be able to identify suitable acquisition targets in the right geographic regions
and with the right participation strategy in the future, or to complete such acquisitions on acceptable terms or at all. Other
companies in the industries and regions in which we operate have similar investment and acquisition strategies to us, resulting
in competition for a limited pool of potential acquisition targets. Due in part to that competition, as well as the recent low
interest rate environment, which has made debt funding more appealing and accessible, price multiples for potential targets are
currently higher than their historical averages. If, as a result of these and other factors, we are unable to identify acquisition
targets that meet our investment criteria and close such transactions on acceptable terms, our potential for growth by way of
acquisition may be restricted, which could have an adverse effect on achievement of our strategy and the resulting
expected financial benefits.
Integration — We may face challenges with integrating acquisitions and achieving the financial and other results
anticipated at the time of acquisition.
We may face challenges in integrating our acquisitions with our existing operations. These challenges could include
difficulty in integrating or consolidating business processes and systems and challenges with integrating the business cultures.
In addition, the process of integrating operations could result in an interruption of normal business operations.
We generally expect that we will realize synergy cost savings and other financial and operating benefits from our
acquisitions. For example, we expect the Bemis acquisition in 2019 will generate estimated pre-tax annual net cost synergies by
the end of the third year of approximately $180 million from procurement, manufacturing and general and administrative
efficiencies. While we are currently on track to achieve the targeted Bemis synergies, we cannot predict with certainty that the
full savings will be realized or current savings will be sustained. If we are not able to successfully integrate our acquisitions and
achieve the expected synergy cost savings, the anticipated benefits of the transaction may not be realized fully, or at all, or may
take longer to realize than expected or involve more costs to do so.
Intellectual Property — Challenges to or the loss of our intellectual property rights could have an adverse impact on our
ability to compete effectively.
Our ability to compete effectively depends, in part, on our ability to protect and maintain the proprietary nature of our
owned and licensed intellectual property. We own a number of patents on our products, aspects of our products, methods of use
and/or methods of manufacturing, and we own, or have licenses to use, the material trademark and trade name rights used in
connection with the packaging, marketing and distribution of our major products. We also rely on trade secrets, know-how and
other unpatented proprietary technology. We attempt to protect and restrict access to our intellectual property and proprietary
information by relying on the patent, trademark, copyright and trade secret laws of the countries in which we operate, as well as
non-disclosure agreements. However, it may be possible for a third party to obtain our information without our authorization,
independently develop similar technologies, or breach a non-disclosure agreement entered into with us. Furthermore, many of
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the countries in which we operate, particularly the emerging markets, do not have intellectual property laws that protect
proprietary rights as fully as the laws of the more developed jurisdictions in which we operate, such as the United States and the
European Union. The use of our intellectual property by someone else without our authorization could reduce certain of our
competitive advantages, cause us to lose sales or otherwise harm our business. The costs associated with protecting our
intellectual property rights could also adversely impact our business. Similarly, while we have not received any significant
claims from third parties suggesting that we may be infringing on their intellectual property rights, there can be no assurance
that we will not receive such claims in the future. If we were held liable for a claim of infringement, we could be required to
pay damages, obtain licenses or cease making or selling certain products. Intellectual property litigation, which could result in
substantial cost to us and divert the attention of management, may be necessary to protect our trade secrets or proprietary
technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of
others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain
any necessary licenses on reasonable terms or at all. Failure to protect our patents, trademarks and other intellectual property
rights could have an adverse effect on our business, cash flow, financial condition and results of operations.
Operational Risks
Global Health Outbreaks — Our business and operations may be adversely affected by the recent 2019 Novel Coronavirus
("COVID-19") outbreak or other similar outbreaks.
Our business and financial results may be negatively impacted by outbreaks of contagious diseases, including the
recent outbreak of the coronavirus that was first detected in Wuhan, China in December 2019. As a result of the COVID-19
outbreak, governmental authorities have implemented and are continuing to implement numerous and constantly evolving
measures to try to contain the virus, such as travel bans and restrictions, limitations on gatherings, quarantines, shelter-in-place
orders and business shutdowns. Measures providing for business shutdowns generally exclude essential services and the critical
infrastructure supporting the essential services. We have experienced minimal disruptions to our operations to date as we have
largely been deemed as providing essential services. However, we have experienced volatility in customer order patterns in the
second half of our fiscal year 2020 and could continue to experience significant volatility in the demand for our products in the
future. We have also impaired an equity method investment by $25.6 million in the fourth quarter, in part, partially due to
general market declines associated with the pandemic. See Note 7, "Equity Method Investments" of the notes to consolidated
financial statements for further information regarding the impairment.
The outbreak has in the past, and could in the future result in the temporary closure of our facilities, the facilities of our
suppliers, or other vendors in our supply chain. In limited cases to date, certain customers have shut down their operations
temporarily to deal with the outbreak within their facilities, which has impacted their demand, and we may continue to
experience the volatility in demand from temporary customer shutdowns. In addition, the coronavirus has significantly
impacted and may further impact the economies and financial markets of affected countries, including negatively impacting
economic growth, the proper functioning of capital markets, foreign currency exchange rates and interest rates. The coronavirus
may result in a prolonged economic downturn, such as increased unemployment, decreases in capital spending, business
shutdowns, or economic recessions, which could negatively affect demand for our customers’ products. Despite our efforts to
manage these impacts, the extent to which the coronavirus or other outbreaks impact our business and operations, including our
ability to secure financing at attractive rates, is unknown and the effect could be material.
Global Operations — Challenging current and future global economic conditions have had, and may continue to have, a
negative impact on our business operations and financial results.
Demand for our products and services is dependent on consumer demand for our packaging products, including
packaged food, beverage, healthcare, personal care, agribusiness, industrial, and other consumer goods. As a result, general
economic downturns in our key geographic regions and globally can adversely affect our business operations and financial
results. The current global economic challenges, including relatively high levels of unemployment in certain areas in which we
operate, low economic growth and difficulties associated with managing rising debt levels and related economic volatility in
certain economies, are likely to continue to put pressure on the global economy and our business. The COVID-19 pandemic has
increased volatility in world economies.
When challenging economic conditions exist, our customers may delay, decrease or cancel purchases from us, and
may also delay payment or fail to pay us altogether. Suppliers may have difficulty filling our orders and distributors may have
difficulty getting our products to customers, which may affect our ability to meet customer demands, and result in a loss of
business. Weakened global economic conditions may also result in unfavorable changes in our product prices and product mix
and lower profit margins. All of these factors could have an adverse effect on our business, cash flow, financial condition and
results of operations, which effect may be material.
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Political uncertainty may also contribute to the general economic conditions in one or more markets in which we
operate. For example, the United Kingdom's exit from the European Union has resulted in uncertainty regarding the long-term
nature of the United Kingdom’s relationship with the European Union, causing significant volatility in global financial markets
and altering the conduct of market participants. Political developments such as this could potentially disrupt the markets we
serve and the tax jurisdictions in which we operate, and may cause us to lose customers, suppliers and employees, and
adversely impact profitability.
International Operations — Our international operations subject us to various risks that could adversely affect our business
operations and financial results.
We have operations throughout the world, including facilities located in emerging markets. In fiscal year 2020,
approximately 74% of our sales revenue came from developed markets and 26% came from emerging markets. We expect to
continue to expand our operations in the future, particularly in the emerging markets.
Management of global operations is extremely complex, particularly given the often substantial differences in the
cultural, political and regulatory environments of the countries in which we operate. In addition, many of the countries in which
we operate, including Argentina, Brazil, China and India and other emerging markets, have underdeveloped or developing
legal, regulatory or political systems, which are subject to dynamic change and civil unrest.
The profitability of our operations may be adversely impacted by, among other things:
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changes in applicable fiscal or regulatory regimes;
changes in, or difficulties in interpreting and complying with, local laws and regulations, including tax, labor,
foreign investment and foreign exchange control laws;
nullification, modification or renegotiation of, or difficulties or delays in enforcing, contracts with clients or
joint venture partners that are subject to local law;
reversal of current political, judicial or administrative policies encouraging foreign investment or foreign
trade, or relating to the use of local agents, representatives or partners in the relevant jurisdictions;
pandemics, such as COVID-19, impacting various regions of the world unequally; or
changes in exchange rates and inflation, including hyperinflation, which may be further exacerbated by the
COVID-19 pandemic.
Further, sustained periods of legal, regulatory or political instability in the emerging markets in which we operate
could have an adverse effect on our business, cash flow, financial condition and results of operations, which effect may be
material.
The international scope of our operations, which includes limited sales of our products to entities located in countries
subject to certain economic sanctions administered by the U.S. Office of Foreign Assets Control, the U.S. Department of State,
the Australian Department of Foreign Affairs and Trade and other applicable national and supranational organizations
(collectively, ‘‘Sanctions’’), and operations in certain countries that are from time to time subject to Sanctions, also requires us
to maintain internal processes and control procedures. Failure to do so could result in breach by our employees of various laws
and regulations, including those relating to money laundering, corruption, export control, fraud, bribery, insider trading,
antitrust, competition and economic sanctions, whether due to a lack of integrity or awareness or otherwise. Any such breach
could have an adverse effect on our financial condition and result in reputational damage to our business, which effect may be
material.
Raw Materials — Price fluctuations or shortages in the availability of raw materials, energy and other inputs could
adversely affect our business.
As a manufacturer of packaging products, our sales and profitability are dependent on the availability and cost of raw
materials and labor and other inputs, including energy. All of the raw materials we use are purchased from third parties and our
primary inputs include polymer resins and films, inks and solvents, aluminum and fiber-based carton board. Prices for these raw
materials are subject to substantial fluctuations that are beyond our control due to factors such as changing economic
conditions, pandemics (such as the COVID-19 pandemic), currency and commodity price fluctuations, resource availability,
transportation costs, weather conditions and natural disasters, political unrest and instability, and other factors impacting supply
and demand pressures. Increases in costs can have an adverse effect on our business and financial results. Although we seek to
mitigate these risks through various strategies, including by entering into contracts with certain customers which permit certain
price adjustments to reflect increased raw material costs or by otherwise seeking to increase our prices to offset increases in raw
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material costs, there is no guarantee that we will be able to anticipate or mitigate commodity and input price movements, there
may be delays in adjusting prices to correspond with underlying raw material costs and any failure to anticipate or mitigate
against such movements could have an adverse effect on our business, cash flow, financial condition and results of operations,
which effect may be material.
Commercial Risks — We are subject to production, supply and other commercial risks, including counterparty credit risks,
which may be exacerbated in times of economic downturn.
We face a number of commercial risks, including (i) operational disruption, such as mechanical or technology failures
or forced closures due to pandemics (such as the COVID-19 pandemic), each of which could, in turn, lead to production loss
and/or increased costs, (ii) shortages in manufacturing inputs due to the loss of key suppliers or their inability to supply inputs
and (iii) risks associated with development projects (such as cost overruns and delays). In addition, many of the geographic
areas where our production is located and where we conduct business may be affected by natural disasters, including
earthquakes, snowstorms, hurricanes, forest fires and flooding. Any unplanned plant downtime at any of our facilities would
likely result in unabsorbed fixed costs that could negatively impact our results of operations for the period in which it
experienced the downtime.
Supply shortages or disruptions in our supply chain, including as a result of sourcing materials from a single supplier
or those that may occur related to the COVID-19 pandemic or other natural disasters, could affect our ability to obtain timely
delivery of raw materials, equipment and other supplies, and in turn, adversely impact our ability to supply products to our
customers. Such disruptions could have an adverse effect on our business and financial results. In response to the COVID-19
pandemic, we have implemented employee safety measures across all our supply chain facilities, including proper hygiene,
social distancing and temporary screening which at a minimum are in compliance with local government regulations. These
measures may not be sufficient to prevent the spread of COVID-19 among our employees. Illness, travel restrictions,
absenteeism, or other workforce disruptions could negatively impact our supply chain, manufacturing, distribution or other
business activities.
Additionally, the insolvency of, or contractual default by, any of our customers, suppliers and financial institutions,
such as banks and insurance providers, may have a significant adverse effect on our operations and financial condition. Such
risks are exacerbated in times of economic volatility (such as economic volatility caused by the COVID-19 pandemic), either
globally or in the geographies and industries in which our customers operate. If a counterparty defaults on a payment obligation
to us, we may be unable to collect the amounts owed and some or all of these outstanding amounts may need to be written off.
If a counterparty becomes insolvent or is otherwise unable to meet its obligations in connection with a particular project, we
may need to find a replacement to fulfill that party’s obligations or, alternatively, fulfill those obligations ourself, which is
likely to be more expensive. The occurrence of any of these risks, including any default by our counterparties, could have an
adverse effect on our business, cash flow, financial condition and results of operations, which effect may be material and result
in a competitive disadvantage.
Information technology — A failure or disruption in our information technology systems could disrupt our operations,
compromise customer, employee, vendor and other data and could negatively affect our business.
We rely on the successful and uninterrupted functioning of our information technology and control systems to securely
manage operations and various business functions, and on various technologies to process, store and report information about
our business, and to interact with customers, vendors and employees around the world. In addition, our information systems
increasingly rely on cloud solutions which require different security measures. These measures cover technical changes to our
network security, organization and governance changes as well as alignment of third party vendors on market standards. As
with all large systems, our information technology systems may be susceptible to damage, disruption, information loss or
shutdown due to power outages, failures during the process of upgrading or replacing software, hardware failures, computer
viruses, cyber-attacks, catastrophic events, telecommunications failures, user errors, unauthorized access and malicious or
accidental destruction or theft of information or functionality.
We also maintain and have access to sensitive, confidential or personal data or information that is subject to privacy
and security laws, regulations and customer controls. Despite our efforts to protect such information, our facilities and systems
and those of our customers and third-party service providers may be vulnerable to security breaches, misplaced or lost data and
programming and/or user errors that could lead to the compromising of sensitive, confidential or personal data or information.
Information system damages, disruptions, shutdowns or compromises could result in production downtimes and operational
disruptions, transaction errors, loss of customers and business opportunities, violation of privacy laws and legal liability,
regulatory fines, penalties or intervention, negative publicity resulting in reputational damage, reimbursement or compensatory
payments and other costs, any of which could have an adverse effect on our business, cash flow, financial condition and results
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of operations, which affect may be material and result in a competitive disadvantage. Although we attempt to mitigate these
risks by employing a number of measures, our systems, networks, products, and services remain potentially vulnerable to
advanced and persistent threats.
Attracting and retaining key personnel — If we are unable to attract and retain key personnel, we may be adversely affected.
Our continued success depends, in large part, on our ability to identify, attract, motivate, train and retain qualified
personnel in key functions and geographic areas. Losing the services of key employees in any of our operations could make it
difficult to meet our objectives. There can be no assurance we will be able to recruit, train, assimilate, motivate and retain
employees in the future who actively promote and meet the standards of our culture.
Operational hazards — We are subject to costs and liabilities related to current and future environmental and health and
safety laws and regulations that could adversely affect our business.
We are required to comply with environmental and health and safety laws, rules and regulations in each of the
countries in which we do business. Many of our products come into contact with the food and beverages they package and
therefore we are also subject to certain local and international standards related to such products. Compliance with these laws
and regulations can require significant expenditure of financial and employee resources.
In addition, changes to such laws, regulations and standards are made or proposed regularly, and some of the
proposals, if adopted, might, directly or indirectly, result in a material reduction in the operating results of one or more of our
operating units. For instance, an increase in legislation with respect to litter related to plastic packaging or related recycling
programs may cause legislators in some countries and regions in which our products are sold to consider banning or limiting
certain packaging formats or materials. Additionally, increased regulation of emissions linked to climate change, including
greenhouse gas (carbon) emissions and other climate-related regulations, could potentially increase the cost of our operations
due to increased costs of compliance (which may not be recoverable through adjustment of prices), increased cost of fossil fuel
inputs and increased cost of energy intensive raw material inputs. However, any such changes are uncertain, and we cannot
predict the amount of additional capital expenses or operating expenses that would be necessary for compliance.
Federal, state, provincial, foreign and local environmental requirements relating to air, soil and water quality, handling,
discharge, storage and disposal of a variety of substances and climate change are also significant factors in our business and
changes to such requirements generally result in an increase to our costs of operations. We may be found to have environmental
liability for the costs of remediating soil or water that is, or was, contaminated by us or a third party at various facilities we
own, used or operate (including facilities that may be acquired by us in the future). Legal proceedings may result in the
imposition of fines or penalties, as well as mandated remediation programs, that require substantial, and in some instances,
unplanned capital expenditure.
The effects of climate change and greenhouse gas effects may adversely affect our business. A number of
governmental bodies have introduced, or are contemplating introducing, regulatory change to address the impacts of climate
change, which, where implemented, may have adverse impacts on our operations or financial results.
We have incurred in the past, and may incur in the future, fines, penalties and legal costs relating to environmental
matters, and costs relating to the damage of natural resources, lost property values and toxic tort claims. Provisions are raised
when it is considered probable that we have some liability. However, because the extent of potential environmental damage,
and the extent of our liability for such damage, is usually difficult to assess and may only be ascertained over a long period of
time, our actual liability in such cases may end up being substantially higher than the currently provisioned amount.
Accordingly, additional charges could be incurred that would have an adverse effect on our operating results and financial
position, which may be material.
Labor disputes — We are subject to the risk of labor disputes, which could adversely affect our business.
Although we have not experienced any significant labor disputes in recent years, there can be no assurance that we will
not experience labor disputes in the future, including protests and strikes, which could disrupt our business operations and have
an adverse effect on our business and results of operation. Although we consider our relations with our employees to be good,
there can be no assurance that we will be able to maintain a satisfactory working relationship with our employees in the future.
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Financial Risks
LIBOR Indexed Borrowings — The expected phase out of LIBOR could impact the interest rates paid on our variable rate
indebtedness and cause our interest expense to increase.
A substantial portion of our borrowing capacity bears interest at a variable rate based on the London Interbank Offered
Rate ("LIBOR"). In July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR,
announced that it intends to phase out LIBOR by the end of 2021. The U.S. Federal Reserve, in conjunction with the
Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering
replacing LIBOR with the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase
agreements, backed by Treasury securities.
Certain of our financing agreements include language to determine a replacement rate for LIBOR, if necessary.
However, if LIBOR ceases to exist, we may need to renegotiate some financing agreements extending beyond 2021 that utilize
LIBOR as a factor in determining the interest rate. We are evaluating the potential impact of the eventual replacement of the
LIBOR benchmark interest rate, however, we are not able to predict whether LIBOR will cease to be available after 2021,
whether SOFR will become a widely accepted benchmark in place of LIBOR, or what the impact of such a possible transition
to SOFR may be on our business, financial condition, and results of operations.
Exchange Rates — We are exposed to foreign exchange rate risk.
We are subject to foreign exchange rate risk, both transactional and translational, which may negatively affect our
financial performance. Transactional foreign exchange exposures result from exchange rate fluctuations, including in respect of
the U.S. dollar, the Euro, and other currencies, including in Latin America, in which our costs are denominated, which may
affect our business input costs and proceeds from product sales. Translational foreign exchange exposures result from exchange
rate fluctuations in the conversion of entity functional currencies to U.S. dollars, consistent with our reporting currency, and
may affect the reported value of our assets and liabilities and our income and expenses. In particular, our translational exposure
may be impacted by movements in the exchange rate between the Euro and the Brazilian Real against the U.S. dollar. The
exchange rate has varied in recent years and is subject to further movement.
Exchange rates between transactional currencies may change rapidly. For instance, the Mexican peso and the Brazilian
Real have experienced significant pressures as growth and other concerns, including those related to the COVID-19 pandemic,
have weighed on the Mexican and Brazilian economies, respectively. In addition, we have recognized foreign exchange losses
related to the currency devaluation in Argentina and its designation as a highly inflationary economy under U.S. GAAP. See
Note 2, "Significant Accounting Policies" of the notes to consolidated financial statements for further information regarding
highly inflationary accounting.
To the extent currency devaluation continues across our business, we are likely to experience a lag in the timing to
pass through U.S. dollar-denominated input costs across our business, which would adversely impact our margins and
profitability. As such, we may be exposed to future exchange rate fluctuations, and such fluctuations could have an adverse
effect on our reported cash flow, financial condition and results of operations, which effect may be material.
Interest rates — An increase in interest rates could reduce our reported results of operations.
Fluctuations in interest rates can increase borrowing costs and have an adverse impact on results of operations.
Accordingly, increases in short-term interest rates will directly impact the amount of interest we pay. Refer to Note 13, "Debt,"
of the notes to consolidated financial statements for information about our variable rate borrowings and interest rates.
Credit rating — A downgrade in our credit rating could increase our borrowing costs and negatively affect our financial
condition and results of operations.
In addition to using cash provided by operations, we regularly issue commercial paper, drawdown bank loans and
issue long-term bonds to meet our funding needs. Credit rating agencies rate our debt securities on many factors, including our
financial results, their view of the general outlook for our industry, and their view of the general outlook for the global
economy. Actions taken by the rating agencies include maintaining, upgrading or downgrading the current rating or placing us
on a watch list for a possible future downgrade. If rating agencies downgrade our credit rating, or place us on a watch list, the
impacts could include reduced access to the commercial paper market, an increase in the cost of our borrowings or the fees
associated with our bank credit facility or an increase in the credit spread incurred when issuing debt in the capital markets.
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Refer to "Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations," "Liquidity and
Capital Resources," for more information on our credit rating profile.
Hedging — Failure to hedge effectively against adverse fluctuations in interest rates and foreign exchange rates could
negatively impact our results of operations.
We are subject to the risk of rising interest rates associated with borrowing on a floating-rate basis as well as
unfavorable fluctuations in foreign exchange rates. Our board of directors has approved a hedging policy to manage the risk of
rising interest rates. The level of hedging activity undertaken may change from time to time and we may elect to change our
hedging policy at any time. If our hedges are not effective in mitigating our interest rate risk and foreign exchange rate risks, if
we are under-hedged or if a hedge provider defaults on their obligations under hedging arrangements, it could have an adverse
effect on our business, cash flow, financial condition and results of operations.
Goodwill and other intangible assets — A significant write-down of goodwill and/or other intangible assets would have a
material adverse effect on our reported results of operations and net worth.
As of June 30, 2020, we had $7.3 billion of goodwill and other intangible assets. We review our goodwill balance for
impairment at least once a year and whenever events or a change in circumstances indicate that impairment may have occurred
using the business valuation methods allowed in accordance with current accounting standards. These methods include the use
of a discount rate to calculate the present value of the expected future cash flows of our reporting units. Future changes in the
cost of capital, expected cash flows, or other factors may cause our goodwill and/or other intangible assets to be impaired,
resulting in a non-cash charge against results of operations to write down these assets for the amount of the impairment. In
addition, if we make changes in our business strategy or if external conditions, such as the COVID-19 pandemic, adversely
affect our business operations we may be required to record an impairment charge for goodwill or intangibles, which would
lead to decreased assets and reduced net operating results. If a significant write down is required, the charge would have a
material adverse effect on our reported results of operations and net worth. We have identified the valuation of intangible assets
and goodwill as a critical accounting estimate. See "Item 7. - Management’s Discussion and Analysis of Financial Condition
and Results of Operations," "Critical Accounting Estimates and Judgments," of this Annual Report on Form 10-K.
Internal Controls — If we fail to maintain an effective system of internal control over financial reporting in the future, we
may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect
investor confidence in us and, as a result, the value of our common stock.
As a newly listed NYSE public company in 2019, we elected the transition period for compliance with Section 404 of
the Sarbanes-Oxley Act. Section 404 requires us to furnish a report by management on, among other things, the effectiveness of
our internal control over financial reporting. This assessment needs to include disclosure of any material weaknesses identified
by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of
deficiencies, in internal control that results in more than a reasonable possibility that a material misstatement of annual or
interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also
generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal
control over financial reporting. However, during our transition period, we were exempt from Section 404 compliance until we
filed our second Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (which is this Annual Report on Form
10-K).
Amcor Limited was required to comply with reporting obligations in Australia including the preparation of its
financial statements under Australian Accounting Standards ("AAS") as adopted by the Australian Accounting Standards
Board and other relevant companies law. Amcor Limited was not required to comply with U.S. GAAP. Following the
consummation of the Bemis acquisition, we now prepare financial statements in accordance with U.S. GAAP. We identified
two material weaknesses in our internal control over financial reporting during the conversion of our historical AAS financial
statements to U.S. GAAP. The first material weakness was related to our lack of accounting staff and supervisory personnel
with the appropriate level of experience in technical accounting in U.S. GAAP and disclosure and filing requirements of a U.S.
domestic registrant. We have fully remediated this material weakness as of the end of fiscal year 2020, see "Item 9A, Controls
and Procedures," for further information.
We also identified a second material weakness arising from deficiencies in the design and operating effectiveness of
internal controls over the period end financial reporting process. Specifically, we did not design and maintain effective controls
to verify that conflicting duties were appropriately segregated within key IT systems used in the preparation and reporting of
financial information.
17
Annual Report 2020
18
Form 10-K
We are currently in the process of remediating the second material weakness through a process to (i) develop and
implement additional controls and procedures to reduce the number of segregation of duties conflicts within key IT systems,
which includes the implementation of new security roles and the automation of segregation of duties monitoring where
practical, (ii) design and implement additional compensating controls where necessary and (iii) develop training on segregation
of duties. Given that we operate many ERP systems globally, this effort has targeted the largest locations with standardized
systems in fiscal 2020 and will be expanded to other locations in fiscal 2021. We believe that these enhanced resources and
processes, including the implementation of new mitigating controls, will effectively remediate the second material weakness,
but the material weakness will not be considered remediated until the revised controls operate for a sufficient period of time and
we have concluded, through testing, that these controls are designed and operating effectively.
Failure to remediate the material weakness described above at all or within our expected timeframe, or any newly
identified material weaknesses could limit our ability to prevent or detect a misstatement of our financial results, lead to a loss
of investor confidence and have a negative impact on the trading price of our common stock.
Insurance — Our insurance policies, including our use of a captive insurance company, may not provide adequate
protection against all of the risks we face.
We seek protection from a number of our key operational risk exposures through the purchase of insurance. A
significant portion of our insurance is placed in the insurance market with third-party re-insurers. Our policies with such third-
party re-insurers cover property damage and business interruption, public and products liability and directors' and officers'
liability. Although we believe the coverage provided by such policies is consistent with industry practice, they may not
adequately cover certain risks and there is no guarantee that any claims made under such policies will ultimately be paid.
Additionally, we retain a portion of our insurable risk through a captive insurance company, Amcor Insurances Pte
Ltd, which is located in Singapore. Our captive insurance company collects annual premiums from our business groups, and
assumes specific risks relating to property damage, business interruption and liability claims. The captive insurance company
may be required to make payment for insurance claims which exceed the captive's reserves, which could have an adverse effect
on our business, cash flow, financial condition and results of operations.
Legal and Compliance Risks
Litigation — Litigation or regulatory developments could adversely affect our business operations and financial
performance.
We are, and in the future will likely become, involved in lawsuits, regulatory inquiries, and governmental and other
legal proceedings arising out of the ordinary course of our business. Given our global footprint, we are exposed to more
uncertainty regarding the regulatory environment. The timing of the final resolutions to lawsuits, regulatory inquiries, and
governmental and other legal proceedings is typically uncertain. Additionally, the possible outcomes of, or resolutions to, these
proceedings could include adverse judgments or settlements, either of which could require substantial payments. In addition,
actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic,
may result in legal claims or litigation against us. Refer to "Item 3. - Legal Proceedings" of this Annual Report on Form 10-K.
Environmental, health, and safety regulations — Changing government regulations in environmental, health, and safety
matters may adversely affect our company.
Numerous legislative and regulatory initiatives have been passed and anticipated in response to concerns about
Greenhouse Gas emissions and climate change. We are a manufacturing entity that utilizes petrochemical-based raw materials
to produce many of our products. Increased environmental legislation or regulation could result in higher costs for us in the
form of higher raw material cost, as well as energy and freight costs. It is possible that certain materials might cease to be
permitted to be used in our processes. We could also incur additional compliance costs for monitoring and reporting emissions
and for maintaining permits. Additionally, a sizable portion of our business comes from healthcare packaging and food and
beverage packaging, both highly regulated markets. If we fail to comply with these regulatory requirements, our results of
operations could be adversely impacted.
Patents and proprietary technology — Our success is dependent on our ability to develop and successfully introduce new
products and to develop, acquire and retain intellectual property rights.
Our success depends in large part on our proprietary technology. We rely on intellectual property rights, including
patents, trademarks and trade secrets, as well as confidentiality provisions and licensing arrangements, to establish our
18
Annual Report 2020
Form 10-K
19
proprietary rights. If we are unable to enforce our intellectual property rights, our competitive position may suffer. Our pending
patent applications, and our pending trademark registration applications, may not be allowed or competitors may challenge the
validity or scope of our patents or trademarks. In addition, our patents, trademarks and other intellectual property rights may not
provide us a significant competitive advantage. We may need to spend significant resources monitoring our intellectual property
rights. Our competitive position may be harmed if we cannot detect infringement and enforce our intellectual property rights
quickly or at all. Competitors might avoid infringement by designing around our intellectual property rights or by developing
non-infringing competing technologies. Intellectual property rights and our ability to enforce them may be unavailable or
limited in some countries which could make it easier for competitors to capture market share and could result in lost revenues.
Risks Relating to Being a Jersey, Channel Islands Company Listing Ordinary Shares
Our ordinary shares are issued under the laws of Jersey, Channel Islands, which may not provide the level of legal certainty
and transparency afforded by incorporation in a U.S. jurisdiction and which differ in some respects to the laws applicable to
other U.S. corporations.
We are organized under the laws of Jersey, Channel Islands, a British crown dependency that is an island located off
the coast of Normandy, France. Jersey is not a member of the European Union. Jersey, Channel Islands legislation regarding
companies is largely based on English corporate law principles. The rights of holders of our ordinary shares are governed by
Jersey law, including the Companies (Jersey) Law 1991, as amended, and by the Amcor Articles of Association, as may be
amended from time to time. These rights differ in some respects from the rights of other shareholders in corporations
incorporated in the United States. Further, there can be no assurance that the laws of Jersey, Channel Islands, will not change in
the future or that they will serve to protect investors in a similar fashion afforded under corporate law principles in the U.S.,
which could adversely affect the rights of investors.
U.S. shareholders may not be able to enforce civil liabilities against us.
A significant portion of our assets are located outside of the United States and several of our directors and officers are
citizens or residents of jurisdictions outside of the United States. As a result, it may be difficult for investors to successfully
serve a claim within the United States upon those non-U.S. directors and officers, or to enforce judgments realized in the United
States.
Judgments of U.S. courts may not be directly enforceable outside of the U.S. and the enforcement of judgments of
U.S. courts outside of the U.S., including those in Australia and Jersey, may be subject to limitations. Investors may also have
difficulties pursuing an original action brought in a court in a jurisdiction outside the U.S., including Australia and Jersey, for
liabilities under the securities laws of the U.S. Additionally, our Articles of Association provide that while the Royal Court of
Jersey will have non-exclusive jurisdiction over actions brought against us, the Royal Court of Jersey will be the sole and
exclusive forum for derivative shareholder actions, actions for breach of fiduciary duty by our directors and officers, actions
arising out of Companies (Jersey) Law 1991, as amended, or actions asserting a claim against our directors or officers governed
by the internal affairs doctrine. The exclusive forum provision would not prevent derivative shareholder actions based on claims
arising under U.S. federal securities laws from being raised in a U.S. court and would not prevent a U.S. court from asserting
jurisdiction over such claims. However, there is uncertainty whether a U.S. or Jersey court would enforce the exclusive forum
provision for actions claiming breach of fiduciary duty and other claims.
19
Annual Report 2020
20
Form 10-K
Item 1B. - Unresolved Staff Comments
None.
Item 2. - Properties
We consider our plants and other physical properties, whether owned or leased, to be suitable, adequate, and of
sufficient productive capacity to meet the requirements of our business. The manufacturing plants operate at varying levels of
utilization depending on the type of operation and market conditions. The breakdown of our principal manufacturing plants at
June 30, 2020 were as follows:
Flexibles Segment
This segment has 181 principal manufacturing plants located in 39 countries, of which 130 are owned directly by us or
our subsidiaries and 51 are leased from outside parties. Initial building lease terms typically provide for minimum terms in a
range of two to 36 years and have one or more renewal options.
Rigid Packaging Segment
This segment has 50 principal manufacturing plants located in 11 countries, of which 12 are owned directly by us or
our subsidiaries and 38 are leased from outside parties. Initial building lease terms typically provide for minimum terms in a
range of two to 20 years and have one or more renewal options.
Corporate and General
Our principal executive offices are located in Zurich, Switzerland.
Item 3. - Legal Proceedings
Refer to Note 19, "Contingencies and Legal Proceedings," of the notes to consolidated financial statements for
information about legal proceedings.
Item 4. - Mine Safety Disclosures
Not applicable.
20
Annual Report 2020
Form 10-K
21
PART II
Item 5. - Market for Registrant's Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our ordinary shares are traded on the New York Stock Exchange (the "NYSE") under the symbol AMCR and our
CHESS Depositary Instruments ("CDIs") are traded on the Australian Securities Exchange (the "ASX") under the symbol
AMC. On June 30, 2020, there were 100,310 registered holders of record of our ordinary shares and CDIs.
Share Repurchases
Share repurchase activity during the three months ended June 30, 2020 were as follows (in millions, except number of
shares, which are reflected in thousands, and per share amounts):
Total Number of
Shares Purchased (2)
Average Price Paid
Per Share (2)(3)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar
Value of Shares That
May Yet Be
Purchased Under the
Programs (1)
— $
2,393
9,163
11,556 $
—
9.47
9.97
9.87
— $
2,393
—
2,393
22.7
—
—
Period
April 1 - 30, 2020
May 1 - 31, 2020
June 1 - 30, 2020
Total
(1) On August 20, 2019, our Board of Directors approved an on-market buy-back program of $500 million of ordinary shares and
CDIs. The Board authorization did not provide for an expiration date; however, the on-market buyback program was completed
during the fourth quarter of fiscal year 2020.
Includes shares purchased on the open market to satisfy the vesting and exercises of share-based compensation awards and shares
purchased for shareholder settlement.
Includes shares purchased on the open market to satisfy the vesting and exercises of share-based compensation awards. Average
price paid per share excludes costs associated with the repurchase.
(2)
(3)
21
Annual Report 2020
22
Form 10-K
Shareholder Return Performance
The information under this caption "Shareholder Return Performance" in this Item 5 of this Annual Report on Form
10-K is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C under the
Exchange Act, or to the liabilities of Section 18 of the Exchange Act and will not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically
incorporate it by reference into such a filing.
The line graph below compares the annual percentage change in Amcor plc's cumulative total shareholder return on its
ordinary shares with the cumulative total return of its international packaging peer group, the S&P 500 Index and the ASX 200
Index for the period beginning June 11, 2019. The graph assumes $100 was invested on June 11, 2019, and that all dividends
were reinvested.
Amcor plc
S&P 500
S&P/ASX 200
International packaging peer group
June 11,
2019
June 30,
2019
September
30, 2019
December
31, 2019
March 31,
2020
June 30,
2020
$
$
$
$
100.00 $
102.77 $
88.25 $
99.23 $
75.22 $
95.68
100.00 $
107.05 $
108.87 $
118.74 $
95.47 $
115.08
100.00 $
101.55 $
97.80 $
102.68 $
80.47 $
100.00 $
102.08 $
101.00 $
106.06 $
71.13 $
91.32
93.59
The international packaging peer group consists of AptarGroup, Inc., Ball Corporation, Berry Global Group, Inc, CCL
Industries Inc., Crown Holdings, Inc., Graphic Packaging Holding Company, Huhtamaki Oyj, International Paper Company,
Mayr-Melnhof Karton AG, O-I Glass, Inc., Sealed Air Corporation, Silgan Holdings Inc., Sonoco Products Company and
WestRock Company.
22
Annual Report 2020
Item 6. - Selected Financial Data
Five-Year Consolidated Review of Selected Financial Data (1)
(In millions, except per share amounts)
Selected Consolidated Income Statement Data
Net sales
Operating income
Income from continuing operations
Net income attributable to Amcor plc
Selected Consolidated Balance Sheet Data
Cash and cash equivalents
Total assets
Total debt
Total shareholders' equity
Form 10-K
23
2016
2020
Years ended June 30,
2018
2017
2019
$ 12,467.5 $ 9,458.2 $ 9,319.1 $ 9,101.0 $ 9,421.3
589.1
305.0
309.3
993.9
586.6
575.2
916.1
581.0
564.0
791.7
436.7
430.2
994.0
624.3
612.2
742.6
16,442.1
6,234.7
4,687.1
601.6
17,165.0
6,103.2
5,674.7
620.8
9,057.5
4,848.3
695.4
561.5
9,087.0
4,885.2
587.6
515.7
8,531.8
4,499.5
528.5
Selected Per Share Data
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
Dividends per share (2)
0.387
0.387
0.465
0.363
0.362
0.575
0.497
0.494
0.445
0.487
0.483
0.415
0.266
0.263
0.400
Other Operating Data
Capital expenditures
Depreciation and amortization
399.5
607.2
332.2
349.7
365.0
352.7
379.3
351.8
346.7
351.0
(1) Fiscal year 2020 and 2019 reflects the results of Amcor plc, including Bemis results since the acquisition date of June 11, 2019. The
historical periods solely reflect the results of Amcor Limited.
(2) Fiscal year 2019 dividends per share include dividends of $0.240 and $0.215 per share declared in August 2018 and February 2019,
respectively, along with a pro-rata dividend of $0.120 per share declared in April 2019. The April 2019 dividend was declared to
align the period over which dividends had been paid to Amcor and Bemis shareholders prior to completion of the acquisition.
23
Annual Report 2020
24
Form 10-K
Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and related
Notes included in Item 8 of this Annual Report on Form 10-K.
Two Year Review of Results
(In millions, except per share amounts)
Net sales
Cost of sales
Gross profit
Operating expenses:
Selling, general, and administrative expenses
Research and development expenses
Restructuring and related expenses
Other income, net
Operating income
Interest income
Interest expense
Other non-operating income (loss), net
2020
2019
$ 12,467.5
100.0 % $
9,458.2
100.0 %
(9,932.0)
(79.7)
(7,659.1)
(81.0)
2,535.5
20.3
1,799.1
19.0
(1,384.8)
(11.1)
(97.3)
(115.1)
55.7
(0.8)
(0.9)
0.4
(999.0)
(64.0)
(130.8)
186.4
(10.6)
(0.7)
(1.4)
2.0
994.0
8.0
791.7
8.4
22.2
(206.9)
15.9
0.2
(1.7)
0.1
16.8
(207.9)
3.5
0.2
(2.2)
—
Income from continuing operations before income taxes and equity in income
(loss) of affiliated companies
825.2
6.6
604.1
6.4
Income tax expense
Equity in income (loss) of affiliated companies
(186.9)
(14.0)
(1.5)
(0.1)
(171.5)
4.1
(1.8)
—
Income from continuing operations
624.3
5.0
436.7
4.6
Income (loss) from discontinued operations, net of tax
(7.7)
(0.1)
0.7
—
Net income
$
616.6
4.9 % $
437.4
4.6 %
Net (income) loss attributable to non-controlling interests
(4.4)
—
(7.2)
(0.1)
Net income attributable to Amcor plc
$
612.2
4.9 % $
430.2
4.5 %
24
Annual Report 2020
Form 10-K
25
Overview
Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical,
medical, home and personal-care, and other products. Amcor works with leading companies around the world to protect their
products and the people who rely on them, differentiate brands, and improve supply chains through a range of flexible and rigid
packaging, specialty cartons, closures, and services. The company is focused on making packaging that is increasingly light-
weighted, recyclable and reusable, and made using an increasing amount of recycled content. During fiscal year 2020,
approximately 47,000 Amcor employees generated $12.5 billion in sales from operations that spanned approximately 231
locations in over 40 countries.
Significant Items Affecting the Periods Presented
Impact of COVID-19
The 2019 Novel Coronavirus ("COVID-19") has introduced a period of unprecedented uncertainty and challenge.
Amcor’s operations have been largely recognized as 'essential' by governments and authorities around the world given the role
we play in the supply chains for critical food and healthcare products. Our scale and global footprint has enabled us to
collaborate with customers and suppliers to meet volatile changes in demand and continue to service our customers. In dealing
with the exceptional challenges posed by COVID-19, we have established three guiding principles focusing on the health and
safety of our employees, keeping our operations running and contributing to relief efforts in our communities.
Health and Safety
Our commitment to the health and safety of its employees remains our first priority. Our rigorous precautionary
measures include the formation of global and regional response teams that maintain contact with authorities and experts to
actively manage the situation, restrictions on company travel, quarantine protocols for employees who may have had exposure
or have symptoms, frequent disinfecting of Amcor locations and other measures designed to help protect employees, customers
and suppliers. We expect to continue these measures until the COVID-19 pandemic is adequately contained for our business.
Operations and Supply Chain
To support our business partners, we have instituted business continuity plans in each of our operations and offices
globally which address infection prevention measures, incident response, return to work protocols and supply chain risks. We
have experienced minimal disruptions to our operations to date as we have largely been deemed as providing essential services.
However, we have experienced volatility in customer order patterns in the second half of fiscal year 2020 and could continue to
experience significant volatility in the demand for our products in the future. For instance, in April, our Rigid Packaging
Segment sales volumes in North America and Latin America were adversely impacted as a result of a decrease in foot traffic in
the convenience and on-the-go channels. Our facilities have largely been exempt from government mandated closure orders and
while governmental measures may be modified, we expect that our operations will remain operational given the essential
products we supply. However, despite our best efforts to contain the impact in our facilities, it remains possible that significant
disruptions could occur as a result of the pandemic, including temporary closures of our facilities.
We have not experienced any significant disruptions in our supply chain to date and continue to monitor the risk of
customer, raw material and other supply chain disruptions.
Contributions to Our Communities
To support our local communities, we launched a global program to help mitigate the impact of COVID-19 by
donating food and healthcare packaging products and by funding local community initiatives to improve access to healthcare,
education or food and other essential products.
Looking Ahead
We believe we are well-positioned to meet the challenges of the COVID-19 pandemic. However, we cannot
reasonably estimate the duration and severity of this pandemic or its ultimate impact on the global economy and our operations
and financial results. The ultimate near-term impact of the pandemic on our business will depend on the extent and nature of
any future disruptions across the supply chain, the duration of social distancing measures and other government imposed
restrictions and the nature and pace of macroeconomic recovery in key global economies.
25
Annual Report 2020
26
Form 10-K
The Acquisition of Bemis Company, Inc.
On June 11, 2019, we completed the acquisition of 100% of the outstanding shares of Bemis Company, Inc. ("Bemis"),
a global manufacturer of flexible packaging products based in the United States, for the purchase price of $5.2 billion in an all-
stock transaction. In connection with the Bemis transaction, we assumed $1.4 billion of debt.
2019 Bemis Integration Plan
In connection with the acquisition of Bemis, we initiated restructuring activities in the fourth quarter of 2019 aimed at
integrating and optimizing the combined organization. As previously announced, we continue to target realizing approximately
$180 million of pre-tax synergies driven by procurement, supply chain, and general and administrative savings by the end of
fiscal year 2022.
Our total 2019 Bemis Integration Plan pre-tax integration costs are expected to be approximately $200 million. The
total 2019 Bemis Integration Plan costs include $165 million of restructuring and related expenses and $35 million of general
integration expenses. The restructuring and related expenses are comprised of approximately $90 million in employee related
expenses, $25 million in fixed asset related expenses, $20 million in other restructuring and $30 million in restructuring related
expenses. We estimate that approximately $150 million of the $200 million total integration costs will result in cash
expenditures, of which $115 million relate to restructuring and related expenditures. Cash payments for the fiscal year 2020
were $80.2 million, of which $54.1 million were payments related to restructuring and related expenditures. The 2019 Bemis
Integration Plan relates to the Flexibles segment and Corporate and is expected to be completed by the end of fiscal year 2022.
Restructuring related costs are directly attributable to restructuring activities; however, they do not qualify for special
accounting treatment as exit or disposal activities. General integration costs are not linked to restructuring. We believe the
disclosure of restructuring related costs provides more information on the total cost of our 2019 Bemis Integration Plan. The
restructuring related costs relate primarily to the closure of facilities and include costs to replace graphics, train new employees
on relocated equipment and anticipated loss on sale of closed facilities.
Other Restructuring Plans
On August 21, 2018, we announced a restructuring plan in Amcor Rigid Packaging ("2018 Rigid Packaging
Restructuring Plan") aimed at reducing structural costs and optimizing the footprint. The Plan includes the closures of
manufacturing facilities and headcount reductions to achieve manufacturing footprint optimization and productivity
improvements as well as overhead cost reductions.
Our total 2018 Rigid Packaging Restructuring Plan pre-tax restructuring costs are expected to be approximately $110
million with the main component being the cost to exit manufacturing facilities and employee related costs. The total plan cost
has been increased by approximately $15 million in the fourth quarter of fiscal year 2020 due primarily to additional non-cash
impairments. We estimate that approximately $70 million of the $110 million total costs will result in cash expenditures. Cash
payments for the fiscal year 2020 were $23.6 million. The 2018 Rigid Packaging Restructuring Plan is expected to be
completed during fiscal year 2021.
On June 9, 2016, we announced a major initiative ("2016 Flexibles Restructuring Plan") to optimize the cost base and
drive earnings growth in the Flexibles segment. This initiative was designed to accelerate the pace of adapting the organization
within developed markets through footprint optimization to better align capacity with demand, increase utilization and improve
the cost base and streamlining the organization and reducing complexity, particularly in Europe, to enable greater customer
focus and speed to market.
As part of the 2016 Flexibles Restructuring Plan, we had closed eight manufacturing facilities and reduced headcount
at certain facilities. Our total pre-tax restructuring costs were $230.8 million, with $166.7 million in employee termination
costs, $31.4 million in fixed asset impairment costs and $32.7 million in other costs, which primarily represent the cost to
dismantle equipment and terminate existing lease contracts. Approximately $166 million of the $230.8 million in total program
costs resulted in cash expenditures. Cash payments for fiscal year 2019 were $14.4 million. The Plan was substantially
completed by the end of fiscal year 2019.
26
Annual Report 2020
Form 10-K
27
Impairment in Equity Method Investment
Due to impairment indicators present for the years ended June 30, 2020, 2019 and 2018, we performed impairment
tests by comparing the carrying value of its investment in AMVIG Holdings Limited ("AMVIG") at the end of each period,
including interim periods, to the fair value of the investment, which was determined based on AMVIG's quoted share price. We
recorded impairment charges in fiscal years 2020, 2019 and 2018 of $25.6 million, $14.0 million and $36.5 million,
respectively, as the fair value of the investment was below its carrying value. Refer to Note 7, "Equity Method Investments" for
more information about our equity method investments.
Highly Inflationary Accounting
We have subsidiaries in Argentina that historically had a functional currency of the Argentine Peso. As of June 30,
2018, the Argentine economy was designated as highly inflationary for accounting purposes. Accordingly, beginning July 1,
2018, we began reporting the financial results of our Argentinean subsidiaries with a functional currency of the Argentine Peso
at the functional currency of the parent, which is the U.S. dollar. The transition to highly inflationary accounting resulted in a
negative impact of $27.7 million and $30.2 million that was reflected on the consolidated statement of income for the year
ended June 30, 2020 and 2019, respectively.
27
Annual Report 2020
28
Form 10-K
Results of Operations
The following is a discussion and analysis of changes in the financial condition and results of operations for fiscal year 2020
compared to fiscal year 2019. A discussion and analysis regarding our results of operations for fiscal year 2019 compared to
fiscal year 2018 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7 of our Annual Report
on Form 10-K for the fiscal year ended June 30, 2019, filed with the SEC on September 3, 2019.
Consolidated Results of Operations
(in millions)
Net sales
Operating income
Operating profit as a percentage of net sales
Net income attributable to Amcor plc
Diluted Earnings Per Share
2020
$ 12,467.5
994.0
8.0 %
$
$
612.2
0.382
2019
9,458.2
791.7
8.4 %
430.2
0.363
$
$
$
Net sales increased $3,009.3 million, or 31.8%, to $12,467.5 million for the fiscal year 2020, from $9,458.2 million for
the fiscal year 2019. Excluding negative currency impacts of $274.0 million, or (2.9%), and pass-through of lower raw material
costs of $205.6 million, or (2.2%), the increase in net sales, including intersegment sales, for the fiscal year 2020 was $3,488.9
million or 36.9%, driven by favorable volumes of 0.2% and unfavorable price/mix of (0.4%), with acquisition related impacts
contributing 37.1%.
Net income attributable to Amcor plc increased by $182.0 million, or 42.3%, to $612.2 million for the fiscal year
2020, from $430.2 million for the fiscal year 2019 mainly as a result of the Bemis acquisition and related transaction and
integration cost impacts.
Diluted earnings per shares ("Diluted EPS") increased to $0.382, or 5.2%, for the fiscal year 2020, from $0.363 for the
fiscal year 2019, with net income attributable to ordinary shareholders increasing 42.3% and the diluted weighted average
number of shares outstanding increased 35.3%. The increase in the diluted weighted average number of shares outstanding was
due to the acquisition of Bemis.
Segment Results of Operations
Flexibles Segment
Our Flexibles reporting segment develops and supplies flexible packaging globally.
(in millions)
Net sales including intersegment sales
Adjusted EBIT from continuing operations
Adjusted EBIT from continuing operations as a percentage of net sales
2020
2019
$
9,754.7
$
6,566.7
1,335.1
13.7 %
817.2
12.4 %
Net sales including intersegment sales increased $3,188.0 million, or 48.5%, to $9,754.7 million for fiscal year 2020,
from $6,566.7 million for fiscal year 2019. Excluding negative currency impacts of $235.2 million, or (3.6%), and pass-through
of lower raw material costs of $87.9 million, or (1.4%), the increase in net sales including intersegment sales for the fiscal year
2020 was $3,511.1 million, or 53.5%, driven by favorable volumes of 0.1% and unfavorable price/mix of (0.1%) with
acquisition related impacts contributing 53.5%.
Adjusted earnings before interest and tax from continuing operations ("Adjusted EBIT") for the fiscal year 2020
increased $517.9 million, or 63.4% to $1,335.1 million from $817.2 million for the fiscal year 2019. Excluding negative
currency impacts of $25.4 million, or (3.0%), the increase in Adjusted EBIT for the fiscal year 2020 was $543.3 million, or
66.4%, driven by plant cost improvements of 8.7%, selling, general and administrative ("SG&A") and other cost improvements
of 2.5%, favorable volumes of 0.1%, partially offset by unfavorable price/mix of (1.5%) with acquisition related impacts
contributing 56.6%.
Rigid Packaging Segment
28
Annual Report 2020
Form 10-K
29
Our Rigid Packaging reporting segment manufactures rigid packaging containers and related products.
(in millions)
Net sales including intersegment sales
Adjusted EBIT from continuing operations
Adjusted EBIT from continuing operations as a percentage of net sales
$
2020
2,716.3
290.1
10.7 %
$
2019
2,892.7
308.2
10.7 %
Net sales decreased $176.4 million, or 6.1%, to $2,716.3 million for fiscal year 2020, from $2,892.7 million for fiscal
year 2019. Excluding negative currency impacts of $39.0 million, or (1.3%) and pass-through of lower raw material costs of
$117.7 million, or (4.1%), the decrease in net sales for the fiscal year 2020 was $19.7 million, or 0.7%, driven by favorable
volumes of 0.5% and unfavorable price/mix of (1.2)%.
Adjusted EBIT for the fiscal year 2020 decreased $18.1 million or 5.9% to $290.1 million for the fiscal year 2020
from $308.2 million for the fiscal year 2019. Excluding negative currency impacts of $5.1 million, or (1.7%), the decrease in
Adjusted EBIT for the fiscal year 2020 was $13.0 million, or 4.2%, driven by favorable plant costs of 2.2%, favorable SG&A
and other costs at 0.9%, favorable volumes of 0.4%, and unfavorable price/mix of 7.7%.
Consolidated Gross Profit
(in millions)
Gross profit
Gross profit as a percentage of net sales
2020
2,535.5
2019
1,799.1
$
$
20.3 %
19.0 %
Gross profit increased by $736.4 million, or 40.9%, to $2,535.5 million for fiscal year 2020, from $1,799.1 million for
fiscal year 2019. The increase was primarily in the Flexibles reporting segment driven by the Bemis acquisition.
Consolidated Selling, General and Administrative ("SG&A") Expense
(in millions)
SG&A expenses
SG&A expenses as a percentage of net sales
2020
2019
$
(1,384.8)
$
(999.0)
(11.1) %
(10.6) %
SG&A increased by $385.8 million, or 38.6%, to $1,384.8 million for fiscal year 2020, from $999.0 million for fiscal
year 2019. The increase was primarily in the Flexibles reporting segment and Other driven by the Bemis acquisition, including
related transaction and integration cost impacts.
Consolidated Research and Development ("R&D") Expense
(in millions)
R&D expenses
R&D expenses as a percentage of net sales
2020
2019
$
(97.3)
$
(64.0)
(0.8) %
(0.7) %
Research and development costs increased by $33.3 million, or 52.0%, to $97.3 million for fiscal year 2020, from
$64.0 million for fiscal year 2019. The increase was primarily driven by the addition of the Bemis cost base and timing of
project costs.
Consolidated Restructuring and Related Expense
(in millions)
Restructuring and related expenses
Restructuring and related expenses as a percentage of net sales
2020
2019
$
(115.1)
$
(130.8)
(0.9) %
(1.4) %
Restructuring and related costs decreased by $15.7 million to $115.1 million for fiscal year 2020, from $130.8 million
for fiscal year 2019. The decrease was primarily driven by a reduction in restructuring activities in connection with the 2018
Rigid Packaging Restructuring Plan.
29
Annual Report 2020
30
Form 10-K
Consolidated Other Income, Net
(in millions)
Other income, net
Other income, net, as a percentage of net sales
2020
2019
$
55.7
$
186.4
0.4 %
2.0 %
Other income, net decreased by $130.7 million to $55.7 million for fiscal year 2020, from $186.4 million for fiscal
year 2019. The decrease was mainly driven by nonrecurrence of remedy disposal related gains in the fiscal year 2019.
Consolidated Interest Income
(in millions)
Interest income
Interest income as a percentage of net sales
2020
2019
$
22.2
$
0.2 %
16.8
0.2 %
Interest income increased by $5.4 million, or 32.1%, to $22.2 million for fiscal year 2020, from $16.8 million for fiscal
year 2019, mainly driven by higher cash balances during the period and negative interest rates on a portion of Euro
denominated borrowings.
Consolidated Interest Expense
(in millions)
Interest expense
Interest expense as a percentage of net sales
2020
2019
$
(206.9)
$
(207.9)
(1.7) %
(2.2) %
Interest expense remained relatively stable at $206.9 million for fiscal year 2020 compared to $207.9 million for fiscal
year 2019.
Consolidated Other Non-Operating Income (Loss), Net
(in millions)
Other non-operating income (loss), net
Other non-operating income (loss), net, as a percentage of net sales
2020
2019
$
15.9 $
0.1
3.5
— %
Other non-operating income, net increased by $12.4 million to $15.9 million for fiscal year 2020, from an other non-
operating income, net of $3.5 million for fiscal year 2019, mainly driven by impacts relating to the acquired Bemis pension
plans.
Consolidated Income Tax Expense
(in millions)
Income tax expense
Effective tax rate
2020
2019
$
(186.9)
$
(171.5)
22.6 %
28.4 %
Income tax expense increased by $15.4 million, or 9.0%, to $186.9 million for fiscal year 2020, from $171.5 million
for fiscal year 2019. The increase was primarily driven by the higher overall profit of the total Company with a full year of
Bemis’ results having been included compared to three weeks in fiscal year 2019.
The effective tax rate for the fiscal year 2020 reduced relative to 2019 mainly due to the decrease in non-deductible
transaction costs related to the acquisition of Bemis. The current year effective tax rate is reflective of a greater proportion of
the business in the U.S. as a result of the Bemis acquisition.
30
Annual Report 2020
Form 10-K
31
Presentation of Non-GAAP Information
This Annual Report on Form 10-K refers to financial measures that have not been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S. GAAP"): adjusted earnings before interest and
taxes ("Adjusted EBIT") from continuing operations, adjusted net income from continuing operations, and net debt. These non-
GAAP financial measures adjust for factors that are unusual or unpredictable. These measures exclude the impact of significant
tax reform, certain amounts related to the effect of changes in currency exchange rates, acquisitions, and restructuring,
including employee-related costs, equipment relocation costs, accelerated depreciation and the write-down of equipment. These
measures also exclude gains or losses on sales of significant property and divestitures, certain litigation matters, pension
settlements and certain acquisition-related expenses, including transaction expenses, due diligence expenses, professional and
legal fees, purchase accounting adjustments for inventory, order backlog, intangible amortization, and changes in the fair value
of deferred acquisition payments.
This adjusted information should not be construed as an alternative to results determined under U.S. GAAP.
Management of the Company uses the non-GAAP measures to evaluate operating performance and believes that these non-
GAAP measures are useful to enable investors and other external parties to perform comparisons of current and historical
performance of the Company.
A reconciliation of reported net income attributable to Amcor plc to Adjusted EBIT from continuing operations and
adjusted net income for fiscal years 2020, 2019 and 2018 is as follows:
(in millions)
For the years ended June 30,
2018
2019
2020
Net income attributable to Amcor plc, as reported
$
612.2 $
430.2 $
575.2
Add: Net income (loss) attributable to non-controlling interests
Less: (Income) loss from discontinued operations, net of tax
Income from continuing operations
Add: Income tax expense
Add: Interest expense
Less: Interest income
EBIT from continuing operations
Add: Material restructuring programs (1)
Add: Impairments in equity method investments (2)
Add: Material acquisition costs and other (3)
Add: Amortization of acquired intangible assets from business combinations (4)
Add/(Less): Economic net investment hedging activities not qualifying for hedge
accounting (5)
Add: Impact of hyperinflation (6)
Less: Net legal settlements (7)
Add: Pension settlements (8)
Adjusted EBIT from continuing operations
Less: Income tax expense
Add: Adjustments to income tax expense (9)
Less: Interest expense
Add: Interest income
Less: Material restructuring programs attributable to non-controlling interest
Less: Net (income) loss attributable to non-controlling interests
11.4
—
586.6
118.8
210.0
(13.1)
902.3
14.4
36.5
—
19.3
4.4
7.7
624.3
186.9
206.9
7.2
(0.7)
436.7
171.5
207.9
(22.2)
(16.8)
799.3
64.1
14.0
143.1
31.1
995.9
105.7
25.6
145.6
191.1
—
27.7
—
5.5
(1.4)
83.9
30.2
(5.0)
—
—
—
—
1,497.1
1,075.4
1,056.4
(186.9)
(171.5)
(118.8)
(88.9)
23.2
(32.0)
(206.9)
(207.9)
(210.0)
22.2
(4.3)
(4.4)
16.8
—
13.1
—
(7.2)
(11.4)
Adjusted net income from continuing operations
$ 1,027.9 $
728.8 $
697.3
(1) Material restructuring programs includes the 2018 Rigid Packaging Restructuring Plan and the 2019 Bemis Integration Plan for
fiscal year 2020, the 2018 Rigid Packaging Restructuring Plan for the fiscal year 2019, and the 2016 Flexibles Restructuring Plan
for fiscal year 2018. Refer to Note 6, "Restructuring Plans," for more information about the Company's restructuring plans.
31
Annual Report 2020
32
Form 10-K
(2)
Impairments in equity method investments includes the impairment charges related to other-than-temporary impairments related to
the investment in AMVIG. Refer to Note 7, "Equity Method Investments" for more information about the Company's equity method
investments.
(3) During fiscal year 2020, material acquisition costs and other includes $57.8 million amortization of Bemis acquisition related
inventory fair value step-up and $87.8 million of Bemis transaction related costs and integration costs not qualifying as exit costs,
including certain advisory, legal, audit and audit related fees. During fiscal year 2019, material acquisition costs and other includes
$47.9 million of costs related to the 2019 Bemis Integration Plan, $15.6 million of Bemis acquisition related inventory fair value
step-up, $42.5 million of long-lived asset impairments, $133.7 million of Bemis transaction-related costs, partially offset by
$96.5 million of gain related to the U.S. Remedy sale net of related and other costs.
(4) Amortization of acquired intangible assets from business combinations includes amortization expenses related to all acquired
intangible assets from acquisitions impacting the periods presented, including $26.4 million and $4.5 million of sales backlog
amortization for the fiscal year 2020 and 2019, respectively, from the Bemis acquisition.
(5) Economic net investment hedging activities not qualifying for hedge accounting includes the exchange rate movements on external
loans not deemed to be effective net investment hedging instruments resulting from the Company's conversion to U.S. GAAP from
Australian Accounting Standards ("AAS") recognized in other non-operating income (loss), net.
Impact of hyperinflation includes the adverse impact of highly inflationary accounting for subsidiaries in Argentina where the
functional currency was the Argentine Peso.
(6)
(7) Net legal settlements includes the impact of significant legal settlements after associated costs.
(8)
Impact of pensions settlements includes the amount of actuarial losses recognized in the consolidated income statement related to
the settlement of certain defined benefit plans, not including related tax effects.
(9) Net tax impact on items (1) through (8) above.
Reconciliation of Net Debt
A reconciliation of total debt to net debt at June 30, 2020 and 2019 is as follows:
(in millions)
Current portion of long-term debt
Short-term borrowings
Long-term debt, less current portion
Total debt
Less cash and cash equivalents
Net debt
June 30, 2020
June 30, 2019
$
$
11.1 $
195.2
6,028.4
6,234.7
742.6
5,492.1 $
5.4
788.8
5,309.0
6,103.2
601.6
5,501.6
32
Annual Report 2020
Form 10-K
33
Supplemental Guarantor Information
Amcor plc, along with certain wholly owned subsidiary guarantors, guarantee the following senior notes issued by the
wholly owned subsidiaries, Amcor Finance (USA), Inc., Bemis Company, Inc. and Amcor UK Finance plc.
•
•
•
•
•
•
4.500% Guaranteed Senior Notes due 2021 of Bemis Company, Inc.
3.100% Guaranteed Senior Notes due 2026 of Bemis Company, Inc.
2.630% Guaranteed Senior Notes due 2030 of Bemis Company, Inc.
3.625% Guaranteed Senior Notes due 2026 of Amcor Finance (USA), Inc.
4.500% Guaranteed Senior Notes due 2028 of Amcor Finance (USA), Inc.
1.125% Guaranteed Senior Notes due 2027 of Amcor UK Finance plc
The three notes issued by Bemis Company, Inc. are guaranteed by its parent entity Amcor plc and the subsidiary
guarantors Amcor Pty Ltd (formerly known as Amcor Limited), Amcor Finance (USA), Inc. and Amcor UK Finance plc. The
two notes issued by Amcor Finance (USA), Inc. are guaranteed by its parent entity Amcor plc and the subsidiary guarantors
Amcor Pty Ltd, Bemis Company, Inc. and Amcor UK Finance plc. The note issued by Amcor UK Finance plc is guaranteed by
its parent entity, Amcor plc, and the subsidiary guarantors Amcor Pty Ltd, Bemis Company, Inc. and Amcor Finance (USA),
Inc.
All guarantors fully, unconditionally and irrevocably guarantee, on a joint and several basis, to each holder of the notes
the due and punctual payment of the principal of, and any premium and interest on, such note and all other amounts payable,
when and as the same shall become due and payable, whether at stated maturity, by declaration of acceleration, call for
redemption or otherwise, in accordance with the terms of the notes and related indenture. The obligations of the applicable
guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors
(including those that relate to fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose or
similar laws) under applicable law. The guarantees will be unsecured and unsubordinated obligations of the guarantors and will
rank equally with all existing and future unsecured and unsubordinated debt of each guarantor. None of our other subsidiaries
guarantee such notes. The issuers and guarantors conduct large parts of their operations through other subsidiaries of Amcor
plc.
Bemis is incorporated in Missouri in the United States, Amcor Finance (USA) Inc. is incorporated in Delaware in the
United States, Amcor UK Finance plc is incorporated in England and Wales, United Kingdom and the guarantors are
incorporated under the laws of Jersey, Australia, the United States, and England and Wales and, therefore, insolvency
proceedings with respect to the issuers and guarantors could proceed under, and be governed by, among others, Jersey,
Australian, United States or English insolvency law, as the case may be, if either issuer or any guarantor defaults on its
obligations under the applicable Notes or Guarantees, respectively.
Set forth below is the summarized financial information of the combined obligor group made up of Amcor plc (as
parent guarantor), Bemis Company, Inc., Amcor Finance (USA), Inc. and Amcor UK Finance plc (as subsidiary issuers of the
notes and guarantors of each other’s notes) and Amcor Pty Ltd (as the remaining subsidiary guarantor).
33
Annual Report 2020
34
Form 10-K
Basis of Preparation
Amcor has voluntarily adopted amendments to the financial disclosure requirements for guarantors and issuers of
guaranteed securities registered or being registered as issued by the SEC [Release No. 33-10762; 34-88307; File No. S7-19-18]
in March 2020. The following summarized financial information is presented for the parent, issuer, and guarantor subsidiaries
("Obligor Group") on a combined basis after elimination of intercompany transactions between entities in the combined group
and amounts related to investments in any subsidiary that is a non-guarantor.
This information is not intended to present the financial position or results of operations of the combined group of
companies in accordance with U.S. GAAP.
Statement of Income for Obligor Group
(in millions)
For the year ended June 30,
Net sales - external
Net sales - to subsidiaries outside the Obligor Group
Total net sales
Gross profit
Income from continuing operations (1)
Income (loss) from discontinued operations, net of tax
Net income
Net (income) loss attributable to non-controlling interests
Net income attributable to Obligor Group
$
$
$
2020
915.0
4.9
919.9
174.4
9,201.1
9.6
9,210.7
—
9,210.7
(1)
Includes $9,516.3 net income from subsidiaries outside the Obligor Group mainly made up of intercompany dividend and interest
income, partially offset by expenses related to a legal entity reorganization executed during the period and other expenses related to
transactions with subsidiaries outside the Obligor Group.
Balance Sheet for Obligor Group
(in millions)
As of June 30,
Current assets - external
Assets
Current assets - due from subsidiaries outside the Obligor Group
Total current assets
Non-current assets - external
Non-current assets - due from subsidiaries outside the Obligor Group
Total non-current assets
Total assets
Current liabilities - external
Liabilities
Current liabilities - due from subsidiaries outside the Obligor Group
Total current liabilities
Non-current liabilities - external
Non-current liabilities - due from subsidiaries outside the Obligor Group
Total non-current liabilities
Total liabilities
34
2020
899.3
136.1
1,035.4
1,002.4
12,405.0
13,407.4
14,442.8
1,647.3
35.6
1,682.9
6,073.6
11,200.8
17,274.4
18,957.3
$
$
$
$
Annual Report 2020
Form 10-K
35
Liquidity and Capital Resources
We finance our business primarily through cash flows provided by operating activities, commercial paper, borrowings
from banks and proceeds from issuances of debt and equity. We periodically review our capital structure and liquidity position
in light of market conditions, including the recent COVID-19 pandemic, expected future cash flows, potential funding
requirements for debt refinancing, capital expenditures and acquisitions, the cost of capital, sensitivity analyses reflecting
downside scenarios, the impact on our financial metrics and credit ratings, and our ease of access to funding sources.
Based on our current and expected cash flow from operating activities and available cash, we believe our cash flows
provided by operating activities, together with borrowings available under our credit facilities, will continue to provide
sufficient liquidity to fund our operations, capital expenditures and other commitments, including dividends, into the
foreseeable future.
Overview
(in millions)
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash Flow Overview
Cash Flow from Operating Activities
Year Ended June 30,
2020
2019
Change 2020 vs.
2019
$
1,384.2 $
37.9
(1,236.4)
776.1
10.2
(764.9)
608.1
27.7
(471.5)
Net cash inflows provided by operating activities increased by $608.1 million, or 78.4%, to $1,384.2 million for fiscal
year 2020, from $776.1 million for fiscal year 2019. This increase was primarily due to impacts from the Bemis acquisition.
Cash Flow from Investing Activities
Net cash inflows provided by investing activities increased by $27.7 million, or 271.6%, to $37.9 million for fiscal
year 2020, from a $10.2 million inflow for fiscal year 2019. This increase was primarily due to higher disposal proceeds from
the EC Remedy related to the Bemis acquisition as compared to the U.S. Remedy in the fiscal year 2019, partially offset by
higher capital expenditures as a result of the Bemis acquisition.
Capital expenditures were $399.5 million for fiscal year 2020, an increase of $67.3 million compared to $332.2 million
for fiscal year 2019. The increase in capital expenditures was primarily due to the increased capital spending following the
Bemis acquisition.
Cash Flow from Financing Activities
Net cash flows used in financing activities increased by $471.5 million, or 61.6%, to $1,236.4 million for fiscal year
2020, from a $764.9 million outflow for fiscal year 2019. This increase was primarily due to the $500 million on-market share
buy-back program, partially offset by net inflows from long and short-term debt sources.
Net Debt
We borrow money from financial institutions and debt investors in the form of bank overdrafts, bank loans, corporate
bonds, unsecured notes and commercial paper. We have a mixture of fixed and floating interest rates and use interest rate swaps
to provide further flexibility in managing the interest cost of borrowings.
Short-term debt consists of bank debt with a duration of less than 12 months and bank overdrafts which are classified
as current due to the short-term nature of the borrowings, except where we have the ability and intent to refinance and as such
extend the debt beyond 12 months. The current portion of the long-term debt consists of debt amounts repayable within a year
after the balance sheet date.
35
Annual Report 2020
36
Form 10-K
Our primary bank debt facilities and notes are unsecured and subject to negative pledge arrangements limiting the
amount of secured indebtedness we can incur to a range between 7.5% to 15.0% of our total tangible assets, subject to some
exceptions and variations by facility. In addition, the bank debt facilities and U.S. private placement debt require us to comply
with certain financial covenants, including leverage and interest coverage ratios. The negative pledge arrangements and the
financial covenants are defined in the related debt agreements. As of June 30, 2020, we are in compliance with all applicable
covenants under our bank debt facilities and U.S. private placement debt.
Our net debt as of both June 30, 2020 and June 30, 2019 was $5.5 billion.
Available Financing
As of June 30, 2020, we had undrawn credit facilities available in the amount of $1.8 billion. Our senior facilities are
available to fund working capital, growth capital expenditures and refinancing obligations and are provided to us by five
separate bank syndicates. On September 25, 2019 and December 15, 2019, we canceled $250.0 million and $100.0 million,
respectively, of the $750.0 million term loan facility.
During the quarter ended March 31, 2020, the Company extended the maturity of a 364-day syndicated facility by an
additional six months to October 2020 and reduced the facility size from $1,050.0 million to $840 million. This facility was
canceled on June 29, 2020 following the issuance of a $500.0 million 10 year senior unsecured note on June 19, 2020 and a
€500.0 million 7 year senior unsecured note on June 23, 2020.
As of June 30, 2020, the revolving senior bank debt facilities had an aggregate limit of $4.2 billion, of which
$2.4 billion had been drawn (inclusive of amounts drawn under commercial paper programs reducing the overall balance of
available senior facilities). Our senior facilities mature between fiscal years 2022 and 2024, with an option to extend.
Dividend Payments
In fiscal years 2020, 2019 and 2018, we paid $761.1 million, $679.7 million and $526.8 million, respectively, in
dividends.
Credit Rating
Our capital structure and financial practices have earned us investment grade credit ratings from two internationally
recognized credit rating agencies. These credit ratings are important to our ability to issue debt at favorable rates of interest, for
various tenors and from a diverse range of markets that are highly liquid, including European and U.S. debt capital markets and
from global financial institutions.
Share Repurchases
On August 21, 2019, our Board of Directors approved an on-market buy-back of $500 million of ordinary shares and
Chess Depositary Instruments ("CDIs"). During the twelve months ended June 30, 2020, the Company repurchased
approximately $500.0 million, excluding transaction costs, or 53.9 million shares. The shares repurchased as part of the
program were canceled upon repurchase.
We had cash outflows of $67.0 million, $20.2 million and $35.7 million for the purchase of our shares in the open
market during fiscal years 2020, 2019 and 2018, respectively, as treasury shares to satisfy the vesting and exercises of share-
based compensation awards and shares purchased for shareholder settlement in the fourth quarter of fiscal year 2020. As of
June 30, 2020, 2019 and 2018, we held treasury shares at cost of $67.0 million, $16.1 million and $10.7 million, representing
6.7 million, 1.4 million and 0.9 million shares, respectively.
36
Annual Report 2020
Form 10-K
37
Contractual Obligations
The following table provides a summary of contractual obligations including our debt payment obligations, operating
lease obligations and certain other commitments as of June 30, 2020. These amounts do not reflect all planned spending under
the various categories but rather that portion of spending to which we are contractually committed.
(in millions)
Short-term debt obligations (1)
Long-term debt obligations (1)
Interest expense on short- and long-term debt, fixed
and floating rate (2)
Operating leases (3)
Finance leases
Purchase obligations (4)
Employee benefit plan obligations
Total
Less than 1
year
Within 1 to 3
years
Within 3 to 5
years
More than 5
years
$
$
195.2 $
409.6
131.1
99.7
2.9
1,043.5
90.7
1,972.7 $
— $
— $
1,814.6
1,292.1
185.9
166.3
5.4
970.5
178.4
3,321.1 $
150.6
116.1
4.8
16.0
183.4
1,763.0 $
—
2,485.7
206.6
280.1
32.6
11.3
477.0
3,493.3
(1) All debt obligations are based on their contractual face value, excluding interest rate swap fair value adjustments and unamortized
discounts.
(2) Variable interest rate commitments are based on the current contractual maturity date of the underlying facility, calculated on the
existing drawdown at June 30, 2020, after allowing for increases/(decreases) in projected bank reference rates.
(3) We lease certain manufacturing sites, office space, warehouses, land, vehicles and equipment under operating leases. The leases
have varying terms, escalation clauses and renewal rights. Not included in the above commitments are contingent rental payments
which may arise as part of the rental increase indexed to the consumer price index or in the event that units produced by certain
leased assets exceed a predetermined production capacity.
(4) Purchase obligations represent contracts or commitments for the purchase of raw materials, utilities, capital equipment and various
other goods and services.
Off-Balance Sheet Arrangements
Other than as described under "Contractual Obligations" as of June 30, 2020, we had no significant off-balance sheet
contractual obligations or other commitments.
Liquidity Risk and Outlook
In 2020, the Company continued to have access to liquidity through the commercial paper market. However, our
access was temporarily restricted in March both in the U.S. and Europe due to the impact from COVID-19 on financial markets.
We refinanced these maturities with drawings under our committed bank facilities. As a precautionary measure to maximize
liquidity, in March 2020, we also extended our 364-day syndicated facility by an additional six months to October 2020 while
reducing the facility size from $1,050.0 million to $840.0 million. This facility was canceled on June 29, 2020 following the
issuance of a $500.0 million 10-year senior unsecured note on June 19, 2020 and a €500.0 million 7-year senior unsecured note
on June 23, 2020. The Company also filed a Form S-3 shelf registration statement on June 10, 2020, which enabled the
Company to issue the two notes in June 2020 and will enable the Company to issue debt securities in the future when market
conditions are favorable and on a timely basis.
Liquidity risk arises from the possibility that we might encounter difficulty in settling our debts or otherwise meeting
our obligations related to financial liabilities. We manage our liquidity risk centrally and such management involves
maintaining available funding and ensuring that we have access to an adequate amount of committed credit facilities. Due to the
dynamic nature of our business, we aim to maintain flexibility within our funding structure through the use of bank overdrafts,
bank loans, corporate bonds, unsecured notes, commercial paper and factoring. The following guidelines are used to manage
our liquidity risk:
• maintaining minimum undrawn committed liquidity of at least $200 million that can be drawn at short notice;
•
regularly performing a comprehensive analysis of all cash inflows and outflows in relation to operational, investing
and financing activities;
generally using tradable instruments only in highly liquid markets;
•
• maintaining a senior credit investment grade rating with a reputable independent rating agency;
• managing credit risk related to financial assets;
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• monitoring the duration of long-term debt;
•
•
only investing surplus cash with major financial institutions; and
to the extent practicable, spreading the maturity dates of long-term debt facilities.
As of June 30, 2020 and 2019, an aggregate principal amount of $1,976.5 million and $221.2 million, respectively,
was drawn under our commercial paper programs. However, such programs are backstopped by committed bank syndicated
loan facilities with maturities in April 2022 ($750.0 million), April 2023 ($1.5 billion) and April 2024 ($1.5 billion), with an
option to extend, under which we had $1.8 billion in unused capacity remaining as of June 30, 2020.
We expect long-term future funding needs to primarily relate to refinancing and servicing our outstanding financial
liabilities maturing as outlined above and to finance our growth capital expenditure and payments for acquisitions that may be
completed. We expect to continue to fund our long-term business needs on the same basis as in the past, i.e., partially through
the cash flow provided by operating activities available to the business and management of the capital of the business, in
particular through issuance of commercial paper and debt securities on a regular basis. We decide on discretionary growth
capital expenditures and acquisitions individually based on, among other factors, the return on investment after related
financing costs and the payback period of required upfront cash investments in light of our mid-term liquidity planning
covering a period of four years post the current financial year. Our long-term access to liquidity depends on both our results of
operations and on the availability of funding in financial markets.
Critical Accounting Estimates and Judgments
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us
to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On
an ongoing basis, we evaluate our estimates and judgments, including those related to retirement benefits, intangible assets,
goodwill, equity method investments and expected future performance of operations. Our estimates and judgments are based on
historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions.
We believe the following are critical accounting estimates used in the preparation of our consolidated financial
statements.
•
•
•
•
•
the calculation of annual pension costs and related assets and liabilities;
valuation of intangible assets and goodwill;
calculation of deferred taxes and uncertain tax positions;
calculation of equity method investments; and
calculation of acquisition fair values.
Considerations Related to the COVID-19 Pandemic
The impact that the recent COVID-19 pandemic will have on our consolidated operations is uncertain. While the
overall impact on our operations to date has not been material, we have experienced volatility in customer order patterns. We
have considered the potential impacts of the COVID-19 pandemic in our critical accounting estimates and judgements as of
June 30, 2020 and will continue to evaluate the nature and extent of the impact on our business and consolidated results of
operations.
Pension Costs
Approximately 50% of our defined benefits plans are closed to new entrants and future accruals. The accounting for
our pension plans requires us to recognize the overfunded or underfunded status of the pension plans on our balance sheet. A
substantial portion of our pension amounts relate to our defined benefit plans in the United States, Germany, Switzerland and
the United Kingdom. Net periodic pension cost recorded in fiscal year 2020 was $9.9 million, compared to pension cost of
$12.5 million in fiscal year 2019 and $7.7 million in fiscal year 2018. We expect pension expense before the effect of income
taxes for fiscal year 2021 to be approximately $12.7 million.
For our sponsored plans, the relevant accounting guidance requires that management make certain assumptions
relating to the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations
and expenses, salary inflation rates, mortality rates and other assumptions. We believe that the accounting estimates related to
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39
our pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on
the performance of plan assets, actuarial valuations, market conditions and contracted benefit changes. The selection of
assumptions is based on historical trends and known economic and market conditions at the time of valuation, as well as
independent studies of trends performed by our actuaries. However, actual results may differ substantially from the estimates
that were based on the critical assumptions.
The amount by which the fair value of plan assets differs from the projected benefit obligation of a pension plan must
be recorded on the consolidated balance sheet as an asset, in the case of an overfunded plan, or as a liability, in the case of an
underfunded plan. The gains or losses and prior service costs or credits that arise but are not recognized as components of
pension cost are recorded as a component of other comprehensive income. Pension plan liabilities are revalued annually, or
when an event occurs that requires remeasurement, based on updated assumptions and information about the individuals
covered by the plan. Accumulated actuarial gains and losses in excess of a 10 percent corridor and the prior service cost are
amortized on a straight-line basis from the date recognized over the average remaining service period of active participants or
over the average life expectancy for plans with significant inactive participants. The service costs related to defined benefits are
included in operating income. The other components of net benefit cost are presented in the consolidated statement of income
separately from the service cost component and outside operating income.
We review annually the discount rate used to calculate the present value of pension plan liabilities. The discount rate
used at each measurement date is set based on a high-quality corporate bond yield curve, derived based on bond universe
information sourced from reputable third-party indexes, data providers, and rating agencies. In countries where there is no deep
market in corporate bonds, we have used a government bond approach to set the discount rate. For Mexico, Poland and Turkey,
a corporate bond credit spread has been added to the government bond yields. Additionally, the expected long-term rate of
return on plan assets is derived for each benefit plan by considering the expected future long-term return assumption for each
individual asset class. A single long-term return assumption is then derived for each plan based upon the plan's target asset
allocation.
Pension Assumptions Sensitivity Analysis
The following chart depicts the sensitivity of estimated fiscal year 2021 pension expense to incremental changes in the
discount rate and the expected long-term rate of return on assets.
Total Increase
(Decrease) to
Pension Expense
from Current
Assumption
Total Increase
(Decrease) to
Pension Expense
from Current
Assumption
Discount Rate
+25 basis points
(in millions)
Rate of Return on Plan Assets
(in millions)
0.1 +25 basis points
1.96 percent (current assumption)
— 3.52 percent (current assumption)
-25 basis points
(0.2) -25 basis points
(4.2)
—
4.2
Intangible Assets and Goodwill
Goodwill represents the excess of the aggregate purchase price over the fair value of net assets acquired, including
intangible assets. Goodwill is not amortized but is instead tested annually or when events and circumstances indicate an
impairment may have occurred. Our reporting units each contain goodwill that is assessed for potential impairment. All
goodwill is assigned to a reporting unit, which is defined as an operating segment, at the time of each acquisition based on the
relative fair value of the reporting unit. We have six reporting units, of which five are included in our Flexibles Segment. The
other reporting unit that is also a reporting segment is Rigid Packaging.
Goodwill for our reporting units is reviewed for impairment annually in the fourth quarter of each year or whenever
events and circumstances indicate an impairment may have occurred during the year. When the carrying value of a reporting
unit exceeds its fair value, we recognize an impairment loss equal to the difference between the carrying value and estimated
fair value of the reporting unit, adjusted for any tax benefits, limited to the amount of the carrying value of goodwill.
In performing our impairment analysis, we may elect to first assess qualitative factors to determine whether a
quantitative test is necessary. If we determine that a quantitative test is necessary, or elect to perform a quantitative test instead
of the qualitative test, we derive an estimate of fair values for each of our reporting units using income approaches. The most
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significant assumptions used in the determination of the estimated fair value of the reporting units are the estimated net sales
and earnings before interest, tax, depreciation and amortization, discount rate and terminal values.
Our estimates associated with the goodwill impairment tests are considered critical due to the amount of goodwill
recorded on our consolidated balance sheet and the judgment required in determining fair value amounts, including
undiscounted projected future cash flows. Judgment is used in assessing whether goodwill should be tested more frequently for
impairment than annually. Factors such as a significant decrease in expected net earnings, adverse equity market conditions,
and other external events, such as the COVID-19 pandemic, may result in the need for more frequent assessments.
Intangible assets consist primarily of purchased customer relationships, technology, trademarks and software and are
amortized using the straight-line method over their estimated useful lives, which range from one to 20 years. We review these
intangible assets for impairment as changes in circumstances or the occurrence of events suggest that the remaining value is not
recoverable. The test for impairment requires us to make estimates about fair value, most of which are based on projected future
cash flows and discount rates. These estimates and projections require judgments as to future events, conditions, and amounts
of future cash flows.
Deferred Taxes and Uncertain Tax Positions
We deal with uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions.
The determination of uncertain tax positions is based on an evaluation of whether the weight of available evidence indicates that
it is more likely than not that the position taken or expected to be taken in the tax return will be sustained on tax audit, including
resolution of related appeals or litigation processes, if any. The recognized tax benefits are measured as the largest benefit of
having a more likely than not likelihood of being sustained upon settlement. Significant estimates are required in determining
such uncertain tax positions and related income tax expense and benefit. Additionally, we are also required to assess the
likelihood of recovering deferred tax assets against future sources of taxable income which might result in the need for a
valuation allowance of deferred tax assets, including operating loss, capital loss and tax credit carryforwards if we do not reach
the more likely than not threshold based on all available evidence. Significant judgments and estimates, including expected
future performance of operations and taxable earnings and the feasibility of tax planning strategies, are required in determining
the need for and amount of valuation allowances for deferred tax assets. If actual results differ from these estimates or there are
future changes to tax laws or statutory tax rates, we may need to adjust valuation allowances or tax liabilities, which could have
a material impact on our consolidated financial position and results of operations.
Equity Accounted Investments
Investments in ordinary shares of companies, in which we believe we exercise significant influence over operating and
financial policies, are accounted for using the equity method of accounting. Under this method, the investment is carried at cost
and is adjusted to recognize our share of earnings or losses of the investee after the date of acquisition and cash dividends paid.
The assessment of whether a decline in fair value below the cost basis is other-than-temporary and the amount of such other-
than-temporary decline requires significant estimates.
We review our investment in affiliated companies for impairment whenever events or changes in circumstances
indicate the carrying amount may not be recoverable. For example, we tested our investment in AMVIG Holdings Limited
("AMVIG") for impairment at March 31, 2020 given that the quoted share price had experienced a significant decline in the
month of March associated with general market declines due to the COVID-19 pandemic. At the end of March, we concluded
that the decline was temporary, and the investment was not impaired given our intention to hold the investment. However, the
quoted share price did not recover in our fiscal fourth quarter and we determined that the investment was impaired as of June
30, 2020 and recorded an impairment charge of $25.6 million. We also recorded impairment charges of our AMVIG investment
of $14.0 million in fiscal year 2019 and $36.5 million in fiscal year 2018.
Acquisitions
We record acquisitions resulting in the consolidation of an enterprise using the purchase method of accounting. We
recognize the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in an acquired business at
their fair values as of the date of acquisition. Goodwill is measured as the excess of the consideration transferred, also measured
at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The
acquisition method of accounting requires us to make significant estimates and assumptions, especially with respect to
intangible assets.
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41
We use all available information to estimate fair values and typically engage outside appraisal firms to assist in the fair
value determination for significant acquisitions. The fair value measurements are based on available historical information and
on expectations and assumptions about the future, considering the perspective of marketplace participants. Critical estimates in
valuing intangible assets include, but are not limited to, expected cash flows from customer relationships, acquired developed
technology, corporate trade name and brand names; the period of time we expect to use the acquired intangible asset; and
discount rates.
In estimating the future cash flows, we consider demand, competition, other economic factors and actuarial
assumptions for defined benefit plans. We utilize common valuation techniques such as discounted cash flows and market
approaches, including the relief-from-royalty method to value acquired developed technology, trade names and brand names.
Customer relationships are valued using the cost approach or an income approach such as the excess earnings method. We
believe our estimates to be based on assumptions that are reasonable, but which are inherently uncertain and unpredictable and,
as a result, actual results may differ from estimates, which could result in impairment charges in the future.
In connection with a given business acquisition, we may identify pre-acquisition contingencies as of the acquisition
date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in
order to obtain sufficient information to assess whether we include these contingencies as part of the fair value estimates
acquired and liabilities assumed and, if so, to determine the estimated amounts.
In addition, uncertain tax positions and tax related valuation allowances assumed in a business combination are
initially estimated as of the acquisition date. We reevaluate these items quarterly based on facts and circumstances that existed
as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the
measurement period.
We account for costs to exit or restructure certain activities of an acquired company separately from the business
acquisition. A liability for costs associated with an exit or disposal activity is recognized and measured at fair value in the
consolidated statement of income in the period in which the liability is incurred. We reflect acquired operations that we intend
to dispose of as discontinued operations in our consolidated statement of income and as assets held for sale in our consolidated
balance sheet.
New Accounting Pronouncements
Refer to Note 3, "New Accounting Guidance" of the notes to consolidated financial statements for information about
new accounting pronouncements.
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Item 7A. - Quantitative and Qualitative Disclosures About Market Risk
Overview
Our activities expose us to a variety of market risks and financial risks. Our overall risk management program seeks to
minimize potential adverse effects of these risks on Amcor's financial performance. From time to time, we enter into various
derivative financial instruments such as foreign exchange contracts, commodity fixed price swaps (on behalf of customers) and
interest rate swaps to manage these risks. Our hedging activities are conducted on a centralized basis through standard operating
procedures and delegated authorities, which provide guidelines for control, counterparty risk and ongoing reporting. These
derivative instruments are designed to reduce the economic risk associated with movements in foreign exchange rates, raw
material prices and to fixed and variable interest rates, but may not have been designated or qualify for hedge accounting under
U.S. GAAP and hence may increase income statement volatility. However, we do not trade in derivative financial instruments
for speculative purposes. In addition, we may enter into loan agreements in currencies other than the respective legal entity's
functional currency to economically hedge foreign exchange risk in net investments in our non U.S. subsidiaries, which do not
qualify for hedge accounting under U.S. GAAP and hence may increase income statement volatility.
There have been no material changes in the risks described below, other than increased volatility in connection with
the COVID-19 pandemic, for the fiscal years 2020 and 2019 related to interest rate risk, foreign exchange risk, raw material and
commodity price risk and credit risk.
Interest Rate Risk
Our policy is to manage exposure to interest rate risk by maintaining a mixture of fixed-rate and variable-rate debt,
monitoring global interest rates and, where appropriate, hedging floating interest rate exposure or debt at fixed interest rates
through the use of interest rate swaps.
A hypothetical but reasonably possible increase of 1% in the floating rate on the relevant interest rate yield curve
applicable to both, derivative and non-derivative instruments denominated in U.S. dollars, the currency with the largest interest
rate sensitivity, outstanding as of June 30, 2020, would have resulted in an adverse impact on income before income taxes and
equity in income (loss) of affiliated companies of $17.1 million for the year ended June 30, 2020.
Foreign Exchange Risk
We operate in over 40 countries across the world.
For the year ended June 30, 2020, a hypothetical but reasonably possible adverse change of 1% in the underlying
average foreign currency exchange rate for the Euro would have resulted in an adverse impact on our net sales of $22.3 million.
During fiscal years 2020 and 2019, 49% and 36% of our net sales, respectively, were effectively generated in U.S.
dollar functional currency entities. During fiscal years 2020 and 2019, 18% and 24% of net sales, respectively, were generated
in Euro functional currency entities with the remaining 33% and 40% of net sales, respectively, being generated in entities with
functional currencies other than U.S. dollars and Euros. The impact of translating Euro and other non-U.S. dollar net sales and
operating expenses into U.S. dollar for reporting purposes will vary depending on the movement of those currencies from
period to period.
Raw Material and Commodity Price Risk
The primary raw materials for our products are resins, film, aluminum, and liquids. We have market risk primarily in
connection with the pricing of our products and are exposed to commodity price risk from a number of commodities and certain
other raw materials and energy price risk.
Changes in prices of our key raw materials and commodities, including resins, film, aluminum, inks, solvents,
adhesives and liquids and other raw materials, may result in a temporary or permanent reduction in income before income taxes
and equity in income (loss) of affiliated companies depending on the level of recovery by material type. The level of recovery
depends both on the type of material and the market in which we operate. Across our business, we have a number of contractual
provisions that allow for passing on of raw material price fluctuations to customers within predefined periods.
A hypothetical but reasonably possible 1% increase on average prices for resins, film, aluminum and liquids, not
passed on to the customer by way of a price adjustment, would have resulted in an increase in cost of sales and hence an
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43
adverse impact on income before income taxes and equity in income (loss) of affiliated companies for fiscal years 2020 and
2019 of $56.9 million and $41.4 million, respectively.
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss.
We are exposed to credit risk arising from financing activities including deposits with banks and financial institutions, foreign
exchange transactions and other financial instruments, as well as from over-the-counter raw material and commodity related
derivative instruments.
We manage our credit risk from balances with financial institutions through our counterparty risk policy, which
provide guidelines on setting limits to minimize the concentration of risks and therefore mitigating financial loss through
potential counterparty failure and on dealing and settlement procedures. The investment of surplus funds is made only with
approved counterparties and within credit limits assigned to each specific counterparty. Financial derivative instruments can
only be entered into with high credit quality approved financial institutions. As of June 30, 2020 and 2019, we did not have a
significant concentration of credit risk in relation to derivatives entered into in accordance with our hedging and risk
management activities.
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Form 10-K
Item 8. - Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Amcor plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of Amcor plc and its subsidiaries (the “Company”) as of June
30, 2020 and 2019, and the related consolidated statements of income, comprehensive income, equity and cash flows for each
of the two years in the period ended June 30, 2020, including the related notes and schedule of valuation and qualifying
accounts and reserves for the years ended June 30, 2020 and June 30, 2019 listed in the index appearing under Item 15(a)(2)
(collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over
financial reporting as of June 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of June 30, 2020 and 2019, and the results of its operations and its cash flows for each of the two
years in the period ended June 30, 2020 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial
reporting as of June 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
COSO because a material weakness in internal control over financial reporting existed as of that date related to the design and
operating effectiveness of internal controls over the period end reporting process. Specifically, management did not design and
maintain effective controls to verify that conflicting duties were appropriately segregated within key IT systems used in the
preparation and reporting of financial information.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented
or detected on a timely basis. The material weakness referred to above is described in Management's Report on Internal Control
over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing,
and extent of audit tests applied in our audit of the June 30, 2020 consolidated financial statements, and our opinion regarding
the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated
financial statements.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for
leases in 2020.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included
in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial
statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
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45
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Assessment - Flexibles North America and Flexibles Latin America Reporting Units within the Flexibles
Segment
As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was
$5,339.3 million at June 30, 2020, and the goodwill associated with the Flexibles Segment was $4,369.1 million, which
includes goodwill associated with the Flexibles North America and Flexibles Latin America reporting units. Management
conducts an impairment analysis in the fourth quarter of each year, or whenever events and circumstances indicate an
impairment may have occurred during the year. Management performed a quantitative assessment for goodwill impairment,
utilizing present value (discounted cash flow) methods to determine the fair value of the reporting units. If the carrying value of
a reporting unit exceeds its fair value, management would recognize an impairment loss equal to the difference between the
carrying value and estimated fair value of the reporting unit, adjusted for any tax benefits, limited to the amount of the carrying
value of goodwill. Management’s projected future cash flows for the Flexibles North America and Flexibles Latin America
reporting units included significant judgments and assumptions relating to revenue growth, projected operating income growth,
terminal values, and discount rates.
The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment
of the Flexibles North America and Flexibles Latin America reporting units within the Flexibles Segment is a critical audit
matter are that there was significant judgment by management when developing the fair value measurement of the reporting
units. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate
management’s projected future cash flows and significant assumptions, including revenue growth, projected operating income
growth, terminal values, and discount rates. In addition, the audit effort involved the use of professionals with specialized skill
and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the financial statements. These procedures included testing the effectiveness of controls relating to management’s
goodwill impairment analysis, including controls over the valuation of the Flexibles North America and Flexibles Latin
America reporting units. These procedures also included, among others, testing management’s process for developing the fair
value estimate; evaluating the appropriateness of the discounted cash flow models; testing the completeness, accuracy, and
relevance of underlying data used in the models; and evaluating the significant assumptions used by management, including
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Annual Report 2020 46
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revenue growth, projected operating income growth, terminal values, and discount rates. Evaluating management’s assumptions
related to revenue growth, projected operating income growth, and terminal values involved evaluating whether the
assumptions used by management were reasonable considering (i) the current and past performance of the reporting units, (ii)
the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence
obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of
the Company’s discounted cash flow models and certain significant assumptions, including the terminal values and discount
rates.
/s/ PricewaterhouseCoopers AG
Zürich, Switzerland
August 27, 2020
We have served as the Company's auditor since 2019.
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47
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Amcor plc
Opinion on the Financial Statements
We have audited the consolidated statement of income, consolidated statement of comprehensive income, consolidated
statement of equity and consolidated statement of cash flows of Amcor Plc (formerly known as Amcor Limited) and its
subsidiaries (the “Company”) for the year ended June 30, 2018, including the related notes and schedule of valuation and
qualifying accounts and reserves for the year ended June 30, 2018 listed in the index appearing under Item 15(a)(2)
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended June 30, 2018
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on
a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers
Melbourne, Australia
December 14, 2018
We served as the Company's auditor from 2008 to 2018.
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Amcor plc and Subsidiaries
Consolidated Statement of Income
(in millions, except per share data)
For the years ended June 30,
Net sales
Cost of sales
$
2020
12,467.5 $
(9,932.0)
2019
2018
9,458.2 $
(7,659.1)
9,319.1
(7,462.3)
Gross profit
2,535.5
1,799.1
1,856.8
Operating expenses:
Selling, general, and administrative expenses
Research and development expenses
Restructuring and related expenses
Other income, net
Operating income
Interest income
Interest expense
Other non-operating income (loss), net
(1,384.8)
(97.3)
(115.1)
55.7
(999.0)
(64.0)
(130.8)
186.4
(793.2)
(72.7)
(40.2)
43.2
994.0
791.7
993.9
22.2
16.8
(206.9)
(207.9)
15.9
3.5
13.1
(210.0)
(74.1)
Income from continuing operations before income taxes and equity in
income (loss) of affiliated companies
825.2
604.1
722.9
Income tax expense
Equity in income (loss) of affiliated companies, net of tax
(186.9)
(14.0)
(171.5)
4.1
(118.8)
(17.5)
Income from continuing operations
624.3
436.7
586.6
Income (loss) from discontinued operations, net of tax
(7.7)
0.7
—
Net income
$
616.6 $
437.4 $
586.6
Net (income) loss attributable to non-controlling interests
(4.4)
(7.2)
(11.4)
Net income attributable to Amcor plc
Basic earnings per share:
Income from continuing operations
Income (loss) from discontinued operations
Net income
Diluted earnings per share:
Income from continuing operations
Income (loss) from discontinued operations
Net income
See accompanying notes to consolidated financial statements.
48
$
$
$
$
$
$
$
612.2 $
430.2 $
575.2
0.387 $
(0.005) $
0.382 $
0.363 $
0.001 $
0.364 $
0.387 $
(0.005) $
0.382 $
0.362 $
0.001 $
0.363 $
0.497
—
0.497
0.494
—
0.494
Annual Report 2020
Form 10-K
49
Amcor plc and Subsidiaries
Consolidated Statement of Comprehensive Income
(in millions)
For the years ended June 30,
Net income
Other comprehensive income (loss):
Net gains (losses) on cash flow hedges, net of tax (a)
Foreign currency translation adjustments, net of tax (b)
Net investment hedge of foreign operations, net of tax (c)
Pension, net of tax (d)
Other comprehensive income (loss)
Total comprehensive income
Comprehensive (income) loss attributable to non-controlling interest
Comprehensive income attributable to Amcor plc
(a) Tax (expense) benefit related to cash flow hedges
(b) Tax (expense) benefit related to foreign currency translation
adjustments
(c) Tax (expense) benefit related to net investment hedge of foreign
operations
(d) Tax (expense) benefit related to pension adjustments
See accompanying notes to consolidated financial statements.
2020
2019
2018
$
616.6 $
437.4 $
586.6
(21.7)
(286.5)
(2.3)
(16.4)
(326.9)
289.7
(4.4)
285.3 $
(3.6)
60.5
(11.2)
(59.0)
(13.3)
424.1
(7.8)
416.3 $
(2.0)
43.2
—
27.6
68.8
655.4
(10.6)
644.8
0.2 $
1.8 $
0.6
(1.7) $
(2.8) $
(15.3)
0.8 $
11.8 $
5.4 $
13.3 $
—
(6.9)
$
$
$
$
$
49
Annual Report 2020
50
Form 10-K
As of June 30,
Current assets:
Cash and cash equivalents
Trade receivables, net
Inventories, net
Prepaid expenses and other current assets
Assets held for sale
Total current assets
Non-current assets:
Investments in affiliated companies
Property, plant and equipment, net
Operating lease assets
Deferred tax assets
Other intangible assets, net
Goodwill
Employee benefit assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Current portion of long-term debt
Short-term debt
Trade payables
Accrued employee costs
Other current liabilities
Liabilities held for sale
Total current liabilities
Non-current liabilities:
Long-term debt, less current portion
Operating lease liabilities
Deferred tax liabilities
Employee benefit obligations
Other non-current liabilities
Total non-current liabilities
Total liabilities
Amcor plc and Subsidiaries
Consolidated Balance Sheet
(in millions)
Assets
2020
2019
$
742.6 $
1,615.9
1,831.9
344.3
—
4,534.7
77.7
3,614.8
525.3
135.4
1,994.3
5,339.3
43.4
177.2
601.6
1,864.3
1,953.8
374.3
416.1
5,210.1
98.9
3,975.0
—
190.9
2,306.8
5,156.0
40.2
187.1
11,907.4
16,442.1 $
11,954.9
17,165.0
Liabilities
$
$
11.1 $
195.2
2,170.8
476.5
1,120.0
—
3,973.6
6,028.4
465.7
672.4
391.7
223.2
7,781.4
11,755.0
5.4
788.8
2,303.4
378.4
1,044.9
20.9
4,541.8
5,309.0
—
1,011.7
386.8
241.0
6,948.5
11,490.3
16.3
6,007.5
323.7
(722.4)
(16.1)
5,609.0
65.7
5,674.7
17,165.0
Commitments and contingencies (See Note 19)
Shareholders' Equity
Amcor plc shareholders’ equity:
Ordinary shares ($0.01 par value):
Authorized (9,000.0 shares)
Issued (1,568.5 and 1,625.9 shares, respectively)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury shares (6.7 and 1.4 shares, respectively)
Total Amcor plc shareholders' equity
Non-controlling interest
Total shareholders' equity
Total liabilities and shareholders' equity
See accompanying notes to consolidated financial statements.
50
15.7
5,480.0
246.5
(1,049.3)
(67.0)
4,625.9
61.2
4,687.1
16,442.1 $
$
Annual Report 2020
Form 10-K
51
Amcor plc and Subsidiaries
Consolidated Statement of Cash Flows
(in millions)
For the years ended June 30,
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
2020
2019
2018
$
616.6 $
437.4 $
586.6
Depreciation, amortization and impairment
Net periodic benefit cost
Amortization of debt discount and deferred financing costs
Amortization of deferred gain on sale and leasebacks
Net gain on disposal of property, plant and equipment
Gain on disposal of U.S. plants
Equity in (income) loss of affiliated companies
Net foreign exchange (gain) loss
Share-based compensation
Other, net
Loss from hyperinflationary accounting for Argentine subsidiaries
Deferred income taxes, net
Dividends received from affiliated companies
Changes in operating assets and liabilities, excluding effect of acquisitions, divestitures,
and currency:
Trade receivables
Inventories
Prepaid expenses and other current assets
Trade payables
Other current liabilities
Accrued employee costs
Employee benefit obligations
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
(Issuance)/repayment of loans to/from affiliated companies
Investments in affiliated companies
Business acquisitions, net of cash acquired
Purchase of property, plant and equipment and other intangible assets
Proceeds from divesture
Proceeds from sales of property, plant and equipment and other intangible assets
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from issuance of shares
Settlement of forward contracts
Purchase of treasury shares
Proceeds from (purchase of) non-controlling interest
Proceeds from issuance of long-term debt
Repayment of long-term debt
Net borrowing/(repayment) of commercial paper
Net borrowing/(repayment) of short-term debt
Repayment of lease liabilities
Share buyback/cancellations
Dividends paid
Net cash used in financing activities
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents classified as held for sale assets
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents balance at beginning of year
651.6
9.1
8.1
—
(3.6)
—
14.0
(16.2)
34.0
(0.2)
37.9
(113.7)
7.0
133.3
25.6
(23.2)
(48.1)
8.4
81.3
(32.5)
(5.2)
1,384.2
(0.2)
—
—
(399.5)
424.9
12.7
37.9
1.0
—
(67.0)
4.3
3,193.4
(4,225.1)
1,742.2
(585.9)
(1.6)
(536.6)
(761.1)
(1,236.4)
(44.7)
—
141.0
601.6
453.0
12.5
5.8
(7.0)
(16.0)
(159.1)
(4.1)
(5.1)
18.6
(77.9)
30.2
72.8
8.3
(83.7)
3.2
(52.0)
120.5
97.6
(32.4)
(25.1)
(21.4)
776.1
(0.5)
—
41.9
(332.2)
216.3
84.7
10.2
19.3
(28.2)
(20.2)
3.6
3,228.7
(3,108.1)
(557.6)
379.2
(1.9)
—
(679.7)
(764.9)
1.0
(41.6)
(19.2)
620.8
Cash and cash equivalents balance at end of year
$
742.6 $
601.6 $
357.1
7.7
5.1
(4.4)
(18.2)
—
17.5
85.9
21.0
0.4
—
(73.5)
8.7
0.7
(95.0)
(10.0)
137.0
(68.2)
(53.9)
(36.4)
3.3
871.4
(0.7)
(13.2)
—
(365.0)
—
137.0
(241.9)
28.1
(39.0)
(35.7)
(0.1)
607.1
(744.5)
16.3
155.4
(3.5)
—
(526.8)
(542.7)
(27.5)
—
59.3
561.5
620.8
See accompanying notes to consolidated financial statements, including Note 22, "Supplemental Cash Flow Information."
51
Annual Report 2020
52
Form 10-K
Amcor plc and Subsidiaries
Consolidated Statement of Equity
(in millions)
Balance as of June 30, 2017
$
— $
802.4 $
501.8 $
(778.1) $
(8.1) $
69.6 $
587.6
Ordinary
Shares
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Shares
Non-
controlling
Interest
Total
Net income (loss)
Other comprehensive income (loss)
Dividends declared ($0.445 per share)
Options exercised and shares vested
Forward contracts entered to purchase own equity to
meet share base incentive plans, net of tax
Settlement of forward contracts to purchase own
equity to meet share-based incentive plans, net of tax
Purchase of treasury shares
Share-based compensation expense
Change in non-controlling interest
Balance as of June 30, 2018
Net income (loss)
Other comprehensive income (loss)
Dividends declared ($0.575 per share)
Options exercised and shares vested
Net shares issued
Forward contracts entered to purchase own equity to
meet share base incentive plans, net of tax
Settlement of forward contracts to purchase own
equity to meet share-based incentive plans, net of tax
Purchase of treasury shares
Acquisition of Bemis Company, Inc.
Share-based compensation expense
Change in non-controlling interest
Balance as of June 30, 2019
Net income (loss)
Other comprehensive income (loss)
Share buyback/cancellations
Dividends declared ($0.465 per share)
Options exercised and shares vested
Forward contracts entered to purchase own equity to
meet share base incentive plans, net of tax
Purchase of treasury shares
Share-based compensation expense
Change in non-controlling interest
Cumulative adjustment related to the adoption of
ASC 842 (1)
575.2
(515.6)
69.6
75.5
(39.0)
(39.1)
(48.9)
(26.5)
39.0
18.4
—
784.4
561.4
(708.5)
(10.7)
430.2
(666.1)
(13.9)
11.6
(19.7)
(11.6)
(11.0)
25.1
4.7
5,224.9
15.4
16.3
6,007.5
(0.6)
(536.0)
(15.0)
(10.5)
34.0
(1.8)
323.7
612.2
(747.6)
58.2
41.5
(25.1)
(21.8)
(722.4)
(16.1)
(326.9)
16.1
(67.0)
11.4
(0.8)
(11.3)
(0.1)
68.8
7.2
0.6
586.6
68.8
(526.9)
26.6
(26.5)
—
(39.1)
18.4
(0.1)
695.4
437.4
(13.3)
(13.6)
(679.7)
21.8
—
(11.0)
—
(21.8)
5,229.6
15.4
0.9
5,674.7
616.6
(326.9)
(536.6)
(761.1)
1.1
(10.5)
(67.0)
34.0
4.6
58.2
2.7
65.7
4.4
(13.5)
4.6
Balance as of June 30, 2020
$
15.7 $
5,480.0 $
246.5 $
(1,049.3) $
(67.0) $
61.2 $ 4,687.1
(1) Refer to Note 3, "New Accounting Guidance" for more information.
See accompanying notes to consolidated financial statements.
52
Annual Report 2020
Form 10-K
53
Note 1 - Business Description
Notes to Consolidated Financial Statements
Amcor plc ("Amcor" or the "Company") is a holding company originally incorporated under the name Arctic Jersey
Limited as a limited company incorporated under the Laws of the Bailiwick of Jersey in July 2018, in order to effect the
Company's combination with Bemis Company, Inc. On October 10, 2018, Arctic Jersey Limited was renamed "Amcor plc" and
became a public limited company incorporated under the Laws of the Bailiwick of Jersey. On June 11, 2019, the Company
completed its acquisition of Bemis Company, Inc ("Bemis"). The combination of Amcor and Bemis has created a global
packaging leader. See Note 4, "Acquisitions and Divestitures," for more information on the Bemis acquisition.
The Company develops and produces a broad range of packaging products including flexible packaging, rigid
packaging containers, specialty cartons, and closures. The Company employs approximately 47,000 individuals and has 231
principal manufacturing facilities in more than 40 countries.
The Company's business activities are organized around two reporting segments, Flexibles and Rigid Packaging. The
Company has a globally diverse operating footprint, selling to customers in Europe, North America, Latin America, Africa and
the Asia Pacific regions. The Company's sales are widely diversified, with the majority of sales made to the defensive food,
beverage, pharmaceutical, medical device, home and personal care, and other consumer goods end markets. All markets are
considered to be highly competitive as to price, innovation, quality and service.
53
Annual Report 2020
54
Form 10-K
Note 2 - Significant Accounting Policies
Basis of Presentation and Principles of Consolidation: The consolidated financial statements include the accounts of the
Company and its majority owned subsidiaries. All intercompany transactions and balances have been eliminated. The
consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States
of America ("U.S. GAAP").
Business Combinations: The Company uses the acquisition method of accounting, which requires separate recognition of
assets acquired and liabilities assumed from goodwill, at the acquisition date fair values. Goodwill as of the acquisition date is
measured as the excess of consideration transferred and the fair value of any non-controlling interests in the acquiree over the
net of the acquisition date fair values of the assets acquired and liabilities assumed. During the measurement period, which may
be up to one year from the acquisition date, the Company has the ability to record adjustments to the assets acquired and
liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final
determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are
recorded in the consolidated statement of income.
Discontinued Operations Presentation: The consolidated financial statements and related notes reflect the three plants in
Europe acquired as part of the Bemis acquisition as a discontinued operation in fiscal 2019 as the Company agreed to divest of
these plants as a condition of approval from the European Commission. See Note 5, "Discontinued Operations," for more
information on discontinued operations. The plants were divested in the first quarter of fiscal 2020.
Estimates and Assumptions Required: The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
These estimates are based on historical experience and various assumptions believed to be reasonable under the
circumstances. Management evaluates these estimates on an ongoing basis and adjusts or revises the estimates as circumstances
change. As future events and their impacts cannot be determined with precision, actual results may differ from these estimates.
In the opinion of management, the consolidated financial statements reflect all adjustments necessary to fairly present the
results of the periods presented.
The impact that the 2019 Novel Coronavirus ("COVID-19") pandemic will have on the Company's consolidated
operations is uncertain. The Company has considered the potential impacts of the COVID-19 pandemic when developing the
Company's estimates and judgements as of June 30, 2020, and will continue to evaluate the extent of the impact on the
Company's business and consolidated financial statements. The Company's accounting estimates and assumptions may change
over time in response to COVID-19 and the change could be material in future periods.
Translation of Foreign Currencies: The reporting currency of the Company is the U.S. dollar. The functional currency of the
Company’s subsidiaries is generally the local currency of such entity. Transactions in currencies other than the functional
currency of the entity are recorded at the rates of exchange prevailing at the date of the transaction. Monetary assets and
liabilities in currencies other than the entity’s functional currency are remeasured at the exchange rate as of the balance sheet
date to the entity’s functional currency. Foreign currency transaction gains and losses related to short-term and long-term debt
are recorded in other non-operating income (loss), net, in the consolidated statement of income. The Company recorded such
foreign currency transaction net loss of $0.4 million, net gain of $1.1 million and net loss of $82.7 million during the fiscal
years ended June 30, 2020, 2019 and 2018, respectively. All other foreign currency transaction gains and losses are recorded in
other income, net in the consolidated statement of income. These foreign currency transaction net gains amounted to $21.4
million, $8.9 million and $1.0 million during the fiscal years ended June 30, 2020, 2019 and 2018, respectively.
Upon consolidation, the results of operations of subsidiaries whose functional currency is other than the reporting
currency of the Company are translated using average exchange rates in effect during each year. Assets and liabilities of
operations with a functional currency other than the U.S. dollar are translated at the exchange rate as of the balance sheet date,
while equity balances are translated at historical rates. Translation gains and losses are reported in accumulated other
comprehensive income (loss) as a component of shareholders’ equity.
Highly Inflationary Accounting: A highly inflationary economy is defined as an economy with a cumulative inflation rate of
approximately 100 percent or more over a three-year period. If a country's economy is classified as highly inflationary, the
financial statements of the foreign entity operating in that country must be remeasured to the functional currency of the parent.
As of July 1, 2018, the Argentine economy was designated as highly inflationary for accounting purposes. Accordingly, the
U.S. dollar replaced the Argentine peso as the functional currency for the Company's subsidiaries in Argentina. The impact of
54
Annual Report 2020
Form 10-K
55
highly inflationary accounting was $27.7 million and $30.2 million for the fiscal years ended June 30, 2020 and 2019,
respectively, in the consolidated statement of income.
Revenue Recognition: The Company generates revenue by providing its customers with flexible and rigid packaging serving a
variety of markets including food, consumer products and healthcare end markets. The Company enters into a variety of
agreements with customers, including quality agreements, pricing agreements and master supply agreements which outline the
terms under which the Company does business with a specific customer. The Company also sells to some customers solely
based on purchase orders. The Company has concluded for the vast majority of its revenues, that its contracts with customers
are either a purchase order or the combination of a purchase order with a master supply agreement. All revenue recognized in
the consolidated statement of income is considered to be revenue from contracts with customers.
The Company typically satisfies the obligation to provide packaging to customers at a point in time upon shipment
when control is transferred to customers. Revenue is recognized net of allowances for returns and customer claims and any
taxes collected from customers, which are subsequently remitted to governmental authorities. The Company does not have any
material contract assets or contract liabilities. The Company disaggregates revenue based on geography. Disaggregation of
revenue is presented in Note 20, "Segments".
Significant Judgments
Determining whether products and services are considered distinct performance obligations that should be accounted
for separately versus together may require significant judgment. The Company identified potential performance obligations in
its customer master supply agreements and determined that none of them are capable of being distinct as the customer can only
benefit from the supplied packaging. Therefore, the Company has concluded that it has one performance obligation to supply
packaging to customers.
The Company may provide variable consideration in several forms which are determined through its agreements with
customers. The Company can offer prompt payment discounts, sales rebates or other incentive payments to customers. Sales
rebates and other incentive payments are typically awarded upon achievement of certain performance metrics, including
volume. The Company accounts for variable consideration using the most likely amount method. The Company utilizes
forecasted sales data and rebate percentages specific to each customer agreement and updates its judgment of the amounts to
which the customer is entitled each period.
The Company enters into long term agreements with certain customers, under which it is obligated to make various up-
front payments for which it expects to receive a benefit in excess of the cost over the term of the contract. These up-front
payments are deferred and reflected in prepaid expenses and other current assets or other non-current assets on its consolidated
balance sheet. Contract incentives are typically recognized as a reduction to revenue over the term of the customer agreement.
Practical Expedients
The Company sells primarily through its direct sales force. Any external sales commissions are expensed when
incurred because the amortization period would be one year or less. External sales commission expense is included in selling,
general and administrative expense in the consolidated statement of income.
The Company accounts for shipping and handling activities as fulfillment costs. Accordingly, shipping and handling
costs are classified as a component of cost of products sold while amounts billed to customers are classified as a component of
net sales.
The Company excluded from the measurement of the transaction price all taxes assessed by a government authority
that are both imposed on and concurrent with a specific revenue producing transaction and collected from the customer,
including sales taxes, value added taxes, excise taxes and use taxes. Accordingly, the tax amounts are not included in net sales.
The Company does not adjust the promised consideration for the time value of money for contracts where the
difference between the time of payment and performance is one year or less.
Research and Development: Research and development expenditures are expensed as incurred.
Restructuring Costs: Restructuring costs are recognized when the liability is incurred. The Company calculates severance
obligations based on its standard customary practices. Accordingly, the Company records provisions for severance when
probable and estimable and the Company has committed to the restructuring plan. In the absence of a standard customary
55
Annual Report 2020
56
Form 10-K
practice or established local practice, liabilities for severance are recognized when incurred. If fixed assets are to be disposed of
as a result of the Company’s restructuring efforts, the assets are written off when the Company commits to dispose of them and
they are no longer in use. Depreciation is accelerated on fixed assets for the period of time the asset continues to be used until
the asset ceases to be used. Other restructuring costs, including costs to relocate equipment, are generally recorded as the cost is
incurred or the service is provided. See Note 6, "Restructuring Plans," for more information on the Company’s restructuring
plans.
Cash and Cash Equivalents: The Company considers all highly liquid temporary investments with a maturity of three months
or less when purchased to be cash equivalents. Cash equivalents include certificates of deposit that can be readily liquidated
without penalty at the Company’s option. Cash equivalents are carried at cost which approximates fair market value.
Trade Receivables, Net: Trade accounts receivable, net, are stated at the amount the Company expects to collect, which is net
of an allowance for sales returns and the estimated losses resulting from the inability of its customers to make required
payments. When determining the collectability of specific customer accounts, a number of factors are evaluated, including:
customer creditworthiness, past transaction history with the customer and changes in customer payment terms or practices. In
addition, overall historical collection experience, current economic industry trends and a review of the current status of trade
accounts receivable are considered when determining the required allowance for doubtful accounts. The Company has an
allowance for doubtful accounts of $35.3 million and $34.4 million recorded at June 30, 2020 and 2019, respectively, in trade
receivables, net, on the consolidated balance sheet. The current year expense to adjust the allowance for doubtful accounts is
recorded within selling, general and administrative expenses in the consolidated statement of income.
The Company enters into factoring arrangements from time to time to sell trade receivables to third-party financial
institutions. Sales of receivables are accounted for in accordance with Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 860, Transfers and Servicing ("ASC 860"). Agreements which result in true
sales of the transferred receivables, as defined in ASC 860, which occur when receivables are transferred without recourse to
the Company, are reflected as a reduction of trade receivables, net on the consolidated balance sheets and the proceeds are
included in the cash flows from operating activities in the consolidated statements of cash flows. Agreements that allow the
Company to maintain effective control over the transferred receivables and which do not qualify as a true sale, as defined in
ASC 860, are accounted for as secured borrowings and recorded in the consolidated balance sheets within trade receivables, net
and short-term debt. The expenses associated with receivables factoring are recorded in the consolidated statement of income
primarily as a reduction of net sales. Factored receivables not qualifying as a true sale were accounted for as secured
borrowings. As of June 30, 2020 and 2019, amounts factored recorded under trade receivables, net and short-term debt, were
zero and $152.7 million, respectively.
Inventories: Inventories are valued primarily at the lower of cost, as determined by the first-in, first-out ("FIFO") method, or
net realizable value. Inventory values using the FIFO method of accounting approximate replacement cost.
Inventories are summarized at June 30, 2020 and 2019 as follows:
(in millions)
Raw materials and supplies
Work in process and finished goods
Less: inventory reserves
Inventory, net
2020
2019
$
$
808.6 $
864.6
1,127.6
(104.3)
1,831.9 $
1,180.9
(91.7)
1,953.8
Property, Plant and Equipment, Net: Property, plant and equipment ("PP&E"), net is carried at cost less accumulated
depreciation and impairment and includes expenditures for new facilities and equipment and those costs which substantially
increase the useful lives or capacity of existing PP&E. Cost of constructed assets includes capitalized interest incurred during
the construction period. Maintenance and repairs that do not improve efficiency or extend economic life are expensed as
incurred.
PP&E, including assets held under finance leases, is depreciated using the straight-line method over the estimated
useful lives of assets or, in the case of leasehold improvements and leased assets, over the period of the lease or useful life of
the asset, whichever is shorter, as described below. The Company periodically reviews these estimated useful lives and, when
appropriate, changes are made prospectively.
56
Annual Report 2020
Leasehold land
Land improvements
Buildings
Plant and equipment
Finance leases
Form 10-K
57
Over lease term
Up to 30 years
Up to 45 years
Up to 25 years
Shorter of lease term or 5 - 25 years
For tax purposes, the Company generally uses accelerated methods of depreciation. The tax effect of the difference
between book and tax depreciation has been provided for as deferred income taxes.
Impairment of Long-lived Assets: The Company reviews long-lived assets, primarily PP&E and certain identifiable intangible
assets with finite lives, for impairment when facts or circumstances indicate the carrying amount of an asset or asset group may
not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the
carrying value of the assets, the carrying values are reduced to the estimated fair value. Fair values are determined based on
quoted market values, discounted cash flows or external appraisals, as applicable.
Impairment losses recognized in the consolidated statement of income were as follows:
(in millions)
Selling, general and administrative ("SG&A") expenses
Restructuring and related expenses
Total impairment losses recognized in the consolidated statement of
income
$
$
Years ended June 30,
2019
2020
2018
0.7 $
20.8
47.7 $
27.4
21.5 $
75.1 $
0.4
4.0
4.4
Leasing: The Company has operating leases for certain manufacturing sites, office space, warehouses, land, vehicles and
equipment. Right-of-use lease assets and lease liabilities are recognized at the commencement date based on the present value
of the remaining lease payments over the lease term, which includes renewal periods the Company is reasonably certain to
exercise. The Company reevaluates its leases on a regular basis to consider the economic and strategic incentives of exercising
lease renewal options. Short term leases with a term of twelve months or less, including reasonably certain holding periods, are
not recorded on the consolidated balance sheet. As the Company's leases generally do not provide an implicit rate, the Company
uses its incremental borrowing rate as of the commencement date to determine the present value of lease payments. The
Company recognizes expense for operating leases on a straight-line basis over the lease term in the consolidated statement of
income. Certain leasing arrangements require variable payments that are dependent on usage or output or may vary for other
reasons. Variable lease payments that do not depend on an index or rate are excluded from lease payments in the measurement
of the right-of-use asset and lease liability and recognized as expense in the period in which the obligation for the payments
occur.
Goodwill: Goodwill represents the excess of cost over the fair value of net assets acquired in a business combination. Goodwill
is not amortized, but instead tested annually or whenever events and circumstances indicate an impairment may have occurred
during the year. Among the factors that could trigger an impairment review are a reporting unit’s operating results significantly
declining relative to its operating plan or historical performance, and competitive pressures and changes in the general markets
in which it operates. In light of the COVID-19 pandemic and related global impacts, the Company considered the potential for
goodwill impairment of its reporting units in the third fiscal quarter of 2020. The review did not indicate an impairment
triggering event as of March 31, 2020.
All goodwill is assigned to a reporting unit, which is defined as the operating segment. In conjunction with the
acquisition of Bemis, the Company reassessed its segment reporting structure in the first fiscal quarter of 2020 and elected to
disaggregate the Flexibles Americas operating segment into Flexibles North America and Flexibles Latin America. With this
change, the Company has six reporting units with goodwill that are assessed for potential impairment.
In performing the required impairment tests, the Company has the option to first assess qualitative factors to determine
if it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment concludes that it is
more-likely-than-not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed.
The Company's quantitative assessment utilizes present value (discounted cash flow) methods to determine the fair value of the
reporting units with goodwill. Determining fair value using discounted cash flows requires considerable judgment and is
sensitive to changes in underlying assumptions and market factors. Key assumptions relate to revenue growth, projected
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Annual Report 2020
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Form 10-K
operating income growth, terminal values, and discount rates. If current expectations of future growth rates and margins are not
met, or if market factors outside of Amcor’s control, such as factors impacting the applicable discount rate, or economic or
political conditions in key markets, change significantly, then goodwill allocated to one or more reporting units may be
impaired.
The Company performs its annual impairment analysis in the fourth quarter of each year.
A quantitative impairment analysis was performed in the fourth fiscal quarter for all reporting units for the fiscal years
ended 2020 and 2018, while a qualitative analysis was performed for the fiscal year ended 2019. The Company’s annual
impairment analysis for all three fiscal years concluded that goodwill was not impaired. The Company’s quantitative goodwill
analysis in fiscal years 2020 and 2018 concluded that the fair values substantially exceeded the carrying amounts for each
reporting unit.
Although no reporting units failed the assessments noted above in the annual impairment analysis for 2020, during the
time subsequent to the annual evaluation, and at June 30, 2020, the Company considered whether any events and/or changes in
circumstances, including the impact of the COVID-19 pandemic, had resulted in the likelihood that the goodwill of any of its
reporting units may have been impaired. It is management's opinion that no such events have occurred.
Other Intangible Assets, Net: Contractual or separable intangible assets that have finite useful lives are amortized against
income using the straight-line method over their estimated useful lives, with original periods ranging from one to 20 years. The
straight-line method of amortization reflects an appropriate allocation of the costs of the intangible assets to earnings in
proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company tests finite-
lived intangible assets for impairment when facts and circumstances indicate carrying value may not be recoverable from their
undiscounted cash flows. If impaired, the assets are written down to fair value based on either discounted cash flows or
appraised values.
Costs incurred to develop software programs to be used solely to meet the Company's internal needs have been
capitalized as computer software within other intangible assets.
Fair Value Measurements: The fair values of the Company's financial assets and financial liabilities reflect the amounts that
would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the
measurement date (exit price). The Company determines fair value based on a three-tiered fair value hierarchy. The hierarchy
consists of:
•
•
•
Level 1: fair value measurements represent exchange-traded securities which are valued at quoted prices
(unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of
the reporting date;
Level 2: fair value measurements are determined using input prices that are directly observable for the asset
or liability or indirectly observable through corroboration with observable market data; and
Level 3: fair value measurements are determined using unobservable inputs, such as internally developed
pricing models for the asset or liability due to little or no market activity for the asset or liability.
Financial Instruments: The Company recognizes all derivative instruments on the consolidated balance sheet at fair value.
The impact on earnings from recognizing the fair values of these instruments depends on their intended use, their hedge
designation and their effectiveness in offsetting changes in the fair values of the exposures they are hedging. Derivatives not
designated as hedging instruments are adjusted to fair value through income. Depending on the nature of derivatives designated
as hedging instruments, changes in the fair value are either offset against the change in fair value of the hedged assets, liabilities
or firm commitments through earnings or recognized in shareholders’ equity through other comprehensive income until the
hedged item is recognized. Gains or losses, if any, related to the ineffective portion of any hedge are recognized through
earnings over the life of the hedging relationship.
See Note 11, "Derivative Instruments," for more information regarding specific derivative instruments included on the
Company’s consolidated balance sheet, such as forward foreign currency exchange contracts, currency swap contracts, and
interest rate swap arrangements, among other derivative instruments.
Employee Benefit Plans: The Company sponsors various defined contribution plans to which it makes contributions on behalf
of employees. The expense under such plans was $63.5 million, $39.9 million and $39.8 million for the fiscal years ended June
30, 2020, 2019 and 2018, respectively.
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Annual Report 2020
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59
The Company sponsors a number of defined benefit plans that provide benefits to current and former employees. For
the company-sponsored plans, the relevant accounting guidance requires that management make certain assumptions relating to
the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations and expenses,
salary inflation rates, mortality rates and other assumptions. The Company believes that the accounting estimates related to its
pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on the
performance of plan assets, actuarial valuations, market conditions and contracted benefit changes. The selection of
assumptions is based on historical trends and known economic and market conditions at the time of valuation, as well as
independent studies of trends performed by the Company’s actuaries. However, actual results may differ substantially from the
estimates that were based on the critical assumptions.
The Company recognizes the funded status of each defined benefit pension plan in the consolidated balance sheet.
Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. Pension plan liabilities
are revalued annually, or when an event occurs that requires remeasurement, based on updated assumptions and information
about the individuals covered by the plan. Accumulated actuarial gains and losses in excess of a 10 percent corridor and the
prior service cost are amortized on a straight-line basis from the date recognized over the average remaining service period of
active participants or over the average life expectancy for plans with significant inactive participants. The service costs related
to defined benefits are included in operating income. The other components of net benefit cost other than service cost are
recorded within other non-operating income (loss), net in the consolidated statement of income
Equity Method Investments: Investments in ordinary shares of companies, in which the Company believes it exercises
significant influence over operating and financial policies, are accounted for using the equity method of accounting. Under this
method, the investment is carried at cost and is adjusted to recognize the investor’s share of earnings or losses of the investee
after the date of acquisition and is adjusted for impairment whenever it is determined that a decline in the fair value below the
cost basis is other than temporary. The fair value of the investment then becomes the new cost basis of the investment and it is
not adjusted for subsequent recoveries in fair value. Impairment losses have been recognized for the Company's equity
investment in AMVIG Holdings Limited ("AMVIG") in the last three fiscal years. See Note 7, "Equity Method Investments,"
for more information regarding the Company's equity method investments.
Share-based Compensation: Amcor has a variety of equity incentive plans. For employee awards with a service or market
condition, compensation expense is recognized over the vesting period on a straight-line basis using the grant date fair value of
the award and the estimated number of awards that are expected to vest. For awards with a performance condition, the
Company must reassess the probability of vesting at each reporting period and adjust compensation cost based on its probability
assessment. The Company also has cash-settled share-based compensation plans which are accounted for as liabilities. Such
share-based awards are remeasured to fair value at each reporting period. The Company estimates forfeitures based on
employee level, economic conditions, time remaining to vest and historical forfeiture experience.
Income Taxes: The Company uses the asset and liability method to account for income taxes. Deferred income taxes reflect the
future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts at
each balance sheet date, based upon enacted income tax laws and tax rates. Income tax expense or benefit is provided based on
earnings reported in the consolidated financial statements. The provision for income tax expense or benefit differs from the
amounts of income taxes currently payable because certain items of income and expense included in the consolidated financial
statements are recognized in different time periods by taxing authorities.
Deferred tax assets, including operating loss, capital loss and tax credit carryforwards, are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that any portion of these tax attributes will not be
realized. In addition, from time to time, management must assess the need to accrue or disclose uncertain tax positions for
proposed adjustments from various tax authorities who regularly audit the Company in the normal course of business. In
making these assessments, management must often analyze complex tax laws of multiple jurisdictions. Accounting guidance
prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. The Company records the related interest expense and penalties, if any, as
tax expense in the tax provision. See Note 16, "Income Taxes," for more information on the Company's income taxes.
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Annual Report 2020
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Form 10-K
Note 3 - New Accounting Guidance
Recently Adopted Accounting Standards
In March 2020, the SEC issued Final Rule Release No. 33-10762, "Financial Disclosures About Guarantors and
Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities" that simplifies the
disclosure requirements related to registered securities under Rule 3-10 of Regulation S-X. The rule replaces the requirement to
provide condensed consolidating financial information with a requirement to present summarized financial information of the
issuers and guarantors in either a note to the financial statements or in management's discussion and analysis. The effective date
of the amendment is January 4, 2021 with earlier voluntary compliance permitted. The Company elected to adopt the amended
rules effective with our third fiscal quarter of 2020 and has included the required disclosures as a component of "Part II, Item 7.
- Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-
K.
In February 2018, the Financial Accounting Standards Board ("FASB") issued guidance that requires the Company to
disclose a description of the Company’s accounting policy for releasing income tax effects from accumulated other
comprehensive income and whether the Company elects to reclassify the stranded income tax effects from the Tax Cuts and
Jobs Act ("The Act"), along with information about other income tax effects that are reclassified. For all entities, the guidance
was effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Entities can
choose whether to apply the amendments retrospectively to each period in which the effect of the Act is recognized or to apply
the amendments in the period of adoption. This guidance was effective for the Company on July 1, 2019. The Company
adopted the new guidance effective July 1, 2019 and did not elect the optional reclassification as the impact was not material.
In August 2017, the FASB issued guidance which simplifies existing guidance in order to allow companies to more
accurately present the economic effects of risk management activities in the financial statements. For public business entities,
the amendments in Accounting Standards Update ("ASU") 2017-12 were effective for financial statements issued for fiscal
years beginning after December 15, 2018 and interim periods within those fiscal years. This guidance was effective for the
Company on July 1, 2019 using the modified retrospective approach, with the exception of presentation and disclosure
guidance which is adopted prospectively. Implementation of the standard did not have a material impact on the Company's
condensed consolidated financial statements.
In February 2016, the FASB issued guidance that required lessees to put most leases on their balance sheets but
recognize expenses on their income statements in a manner similar to past accounting guidance. The guidance also eliminates
the previous real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and
lease executory costs for all entities. Lease classification will determine how to recognize lease-related revenue and expense.
The Company adopted the new lease standard at July 1, 2019 using a simplified transition option that allows for a cumulative-
effect adjustment in the period of adoption and therefore did not restate prior periods. The Company also elected to adopt the
package of practical expedients which allows for existing operating leases to continue to be classified as operating leases under
the new guidance without reassessing whether the contracts contain a lease under the new guidance or whether classification of
the operating lease would be different under the new standard. The Company did not elect the use-of-hindsight practical
expedient but did adopt the practical expedient pertaining to land easements which provides the option not to reassess whether
land easements not previously accounted for as leases under prior leasing guidance would be leases under the new guidance.
Adoption of the new leasing standard resulted in the following impacts to the Company's condensed consolidated
financial statements as of the adoption date: the establishment of a lease liability of $590.5 million, including current portion, a
corresponding right-of-use asset of $569.8 million, and the reclassification of approximately $58.2 million (net of tax) of
deferred gains on sale leaseback transactions.
The complete impact of the changes made to the Company's condensed consolidated balance sheet due to the adoption
of the new leasing guidance were as follows:
60
Annual Report 2020
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61
($ in millions)
Operating lease assets
Other current liabilities
Operating lease liabilities
Deferred tax liabilities
Other non-current liabilities
Retained earnings
June 30, 2019
Adjustments due to
Adoption
At July 1, 2019
—
1,044.9
—
1,011.7
241.0
323.7
569.8
54.3
506.8
18.7
(68.2)
58.2
569.8
1,099.2
506.8
1,030.4
172.8
381.9
Due to the adoption of the guidance using the simplified transition option, there are no changes to the Company's
previously reported results prior to July 1, 2019. Lease expense is not expected to change materially as a result of adoption of
the new guidance. The Company changed its disclosures related to leasing beginning in fiscal year 2020. Refer to Note 14,
"Leases".
Accounting Standards Not Yet Adopted
In June 2016, the FASB issued guidance which requires financial assets, or a group of financial assets measured at
amortized cost basis to be presented at the net amount expected to be collected when finalized. The allowance for credit losses
is a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value
at the amount expected to be collected on the financial asset. This guidance affects loans, debt securities, trade receivables, net
investments in leases, off-balance-sheet credit exposures, reinsurance receivables and any other financial assets not excluded
from the scope that have the contractual right to receive cash. For public business entities, the amendments in this update are
effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance
will be effective for the Company on July 1, 2020 and will be adopted using the modified retrospective approach. The Company
does not expect the standard to have a material impact on its consolidated financial statements.
In December 2019, the FASB issued updated guidance to simplify the accounting for income taxes by removing
certain exceptions and improving the consistent application of U.S. GAAP in other tax accounting areas. This guidance is
effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2020
with early adoption permitted. Accordingly, the guidance will be effective for the Company on July 1, 2021. The Company is
currently evaluating the impact that this guidance will have on its financial statements and related disclosures.
In March 2020, the FASB issued optional expedients and exceptions to ease the potential burden in accounting for
reference rate reform related to contract modifications, hedging relationships, and other transactions that reference the London
Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued, subject to meeting certain criteria.
The Company is currently evaluating whether to elect the adoption of this optional guidance.
The Company considers the applicability and impact of all ASUs issued by the FASB and SEC. The Company
determined that all other ASUs not yet adopted to be either not applicable or are expected to have minimal impact on the
Company's consolidated financial statements at this time.
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Form 10-K
Note 4 - Acquisitions and Divestitures
Year ended June 30, 2019
Bemis Company, Inc.
On June 11, 2019, the Company completed the acquisition of 100% of the outstanding shares of Bemis Company, Inc
("Bemis"), a global manufacturer of flexible packaging products based in the United States. Pursuant to the Transaction
Agreement, dated as of August 6, 2018, each outstanding share of Bemis common stock that was issued and outstanding upon
completion of the transaction was converted into the right to receive 5.1 ordinary shares of the Company traded on the New
York Stock Exchange ("NYSE").
The following table summarizes the fair value of consideration exchanged:
Bemis shares outstanding at June 11, 2019 (in millions)
Share Exchange Ratio
Price per Share (Based on Amcor’s closing share price on June 11, 2019)
Total Equity Consideration
91.7
5.1
11.18
5,229.6
$
$
The acquisition of Bemis positioned the Company as a global leader in consumer packaging with a comprehensive
global footprint in flexible packaging and greater scale in key regions of North America, Latin America, Asia Pacific and
Europe, along with industry-leading research and development capabilities.
The acquisition of Bemis was accounted for as a business combination in accordance with ASC 805, "Business
Combinations," which required allocation of the purchase price to the estimated fair values of assets acquired and liabilities
assumed in the transaction. The fair value of the assets acquired and liabilities assumed as of the acquisition date were finalized
upon completion of the measurement period in the fourth fiscal quarter of 2020. The allocation was subject to change within the
measurement period, up to one year from the acquisition date, as additional information concerning final asset and liability
valuations was obtained. The measurement period adjustments resulted in a $229.9 million increase to goodwill, which includes
a $210.6 million decrease to property, plant and equipment, a $99.0 million decrease to finite lived intangible assets, a
$184.1 million decrease to deferred tax liabilities, a $97.9 million increase in other non-current liabilities, along with other
adjustments to assets held for sale and working capital.
62
Annual Report 2020
The following table summarizes the final allocation of the total purchase consideration to the fair values of the assets
acquired and liabilities assumed at the acquisition date.
Form 10-K
63
(in millions)
Cash and cash equivalents
Trade receivables
Inventories
Prepaid expenses and other current assets
Assets held for sale
Property, plant and equipment
Deferred tax assets
Other intangible assets
Other non-current assets
Total identifiable assets acquired
Current portion of long-term debt
Short-term debt
Trade payables
Accrued employee costs
Other current liabilities
Liabilities held for sale
Long-term debt, less current portion
Deferred tax liabilities
Employee benefit obligation
Other non-current liabilities
Total liabilities assumed
Net identifiable assets acquired
Goodwill
Net assets acquired
$
$
3.3
425.6
665.4
80.5
464.2
1,180.1
42.8
1,931.2
52.8
4,845.9
1.7
8.6
286.2
188.1
314.1
21.9
1,365.3
598.5
62.7
136.8
2,983.9
1,862.0
3,367.6
5,229.6
The following table details the identifiable intangible assets acquired from Bemis, their fair values and estimated
useful lives:
Customer relationships
Technology
Other
Total other intangible assets
Weighted-
average
Estimated
Useful Life
(Years)
15
7
7
Fair Value
(in millions)
$
$
1,650.0
110.0
171.2
1,931.2
The allocation of the purchase price resulted in $3,367.6 million of goodwill for the Flexibles Segment, which is not
tax deductible. The goodwill on acquisition represents the future economic benefit expected to arise from other intangible assets
acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well
as expected future synergies.
The fair value measurement of tangible and intangible assets and liabilities was based on significant inputs not
observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 fair
market values were determined using a variety of information, including estimated future cash flows, appraisals and market
comparables.
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Form 10-K
Divestitures
Closing of the Bemis acquisition was conditional upon the receipt of regulatory approvals, approval by both Amcor
and Bemis shareholders, and satisfaction of other customary conditions. In order to satisfy certain regulatory approvals, the
Company was required to divest three of Bemis' medical packaging facilities located in the United Kingdom and Ireland ("EC
Remedy") and three Amcor medical packaging facilities in the United States ("U.S. Remedy"). The U.S. Remedy was
completed during the fourth quarter of fiscal 2019 and the Company received $214.2 million resulting in a gain of $159.1
million. The EC Remedy was completed during the first quarter of fiscal 2020 and the Company received $397.1 million and
recorded a loss on the sale of $8.8 million which is the result of the reclassification of accumulated foreign currency translation
amounts from accumulated other comprehensive income to earnings from discontinued operations upon sale of the EC Remedy.
In addition, the Company sold an equity method investment acquired through the Bemis acquisition in the third quarter
of fiscal 2020 for proceeds of $27.7 million. There was no gain on sale as the investment was recorded at fair value upon
acquisition.
Unaudited Pro Forma Information
The following unaudited pro forma information has been prepared as if the acquisition of Bemis and the sale of the EC
Remedy and U.S. Remedy had occurred as of July 1, 2017. The unaudited pro forma information combines the historical results
of Amcor and Bemis.
(in millions)
Net sales
Income from continuing operations
Pro forma adjustments to net sales are as follows:
•
excludes net sales of the EC Remedy and U.S. Remedy.
Years ended June 30,
2019
2018
$
$
12,972.4 $
13,146.3
565.5 $
535.0
Pro forma adjustments to income from continuing operations attributable to Amcor plc are as follows:
•
•
•
•
excludes income from the EC Remedy which has been accounted for as a discontinued operation and the U.S. Remedy
which has been reported in U.S. GAAP income from continuing operations;
excludes acquisition related charges;
includes acquisition accounting adjustments, including amortization and depreciation adjustments as a result of the fair
value adjustment to property, plant and equipment; and
excludes the impact on net income attributable to purchase accounting related inventory effects and sales backlog
amortization given these charges do not have a continuing impact on the consolidated results.
The unaudited pro forma results are not necessarily indicative of the actual results that would have occurred had the
acquisition been in effect for the periods presented, nor is it intended to be a projection of future results. For example, the
unaudited pro forma results do not include the expected synergies from the transactions, nor the related costs to achieve.
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65
Note 5 - Discontinued Operations
On February 11, 2019, the Company received approval from the European Commission ("EC") for the acquisition of
Bemis. A condition of the approval was an agreement to divest three Bemis medical packaging facilities located in the United
Kingdom and Ireland ("EC Remedy"). Upon completion of the Bemis acquisition on June 11, 2019, the Company determined
that the EC Remedy met the criteria to be classified as a discontinued operation, in accordance with ASC 205-20,
"Discontinued Operations." The sale of the EC Remedy closed on August 8, 2019. The Company recorded a loss on the sale of
$8.8 million, which is the result of the reclassification of accumulated foreign currency translation amounts from accumulated
other comprehensive income to earnings from discontinued operations upon sale of the EC Remedy.
The assets and liabilities of the EC Remedy, which is within the Company's Flexibles Segment, are reflected as held
for sale in the consolidated balance sheet at June 30, 2019. Assets and liabilities classified as held for sale are required to be
recorded at the lower of carrying value or fair value less costs to sell.
The following table summarizes the results of the EC Remedy, classified as discontinued operations, from June 11,
2019 until the sale of the EC Remedy on August 8, 2019:
(in millions)
Net sales
Income (loss) from discontinued operations
Tax expense on discontinued operations
Income (loss) from discontinued operations, net of tax
Years ended June 30,
2019
2020
$
15.8 $
9.6
(7.1)
(0.6)
(7.7) $
0.9
(0.2)
0.7
$
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Annual Report 2020
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Form 10-K
Note 6 - Restructuring Plans
2019 Bemis Integration Plan
In connection with the acquisition of Bemis, the Company initiated restructuring activities in the fourth quarter of 2019
aimed at integrating and optimizing the combined organization. As previously announced, the Company continues to target
realizing approximately $180 million of pre-tax synergies driven by procurement, supply chain, and general and administrative
savings by the end of fiscal year 2022.
The Company's total 2019 Bemis Integration Plan pre-tax integration costs are expected to be approximately $200
million. The total 2019 Bemis Integration Plan costs include $165 million of restructuring and related expenses and $35 million
of general integration expenses. The restructuring and related expenses are comprised of approximately $90 million in
employee related expenses, $25 million in fixed asset related expenses, $20 million in other restructuring and $30 million in
restructuring related expenses. The Company estimates that approximately $150 million of the $200 million total integration
costs will result in cash expenditures, of which $115 million relate to restructuring and related expenditures. Cash payments for
the fiscal year 2020 were $80.2 million, of which $54.1 million were payments related to restructuring and related expenditures.
The 2019 Bemis Integration Plan relates to the Flexibles segment and Corporate and is expected to be completed by the end of
fiscal year 2022.
Restructuring related costs are directly attributable to restructuring activities; however, they do not qualify for special
accounting treatment as exit or disposal activities. General integration costs are not linked to restructuring. The Company
believes the disclosure of restructuring related costs provides more information on the total cost of our 2019 Bemis Integration
Plan. The restructuring related costs relate primarily to the closure of facilities and include costs to replace graphics and train
new employees on relocated equipment.
2018 Rigid Packaging Restructuring Plan
On August 21, 2018, the Company announced a restructuring plan in Amcor Rigid Packaging ("2018 Rigid Packaging
Restructuring Plan") aimed at reducing structural costs and optimizing the footprint. The Plan includes the closures of
manufacturing facilities and headcount reductions to achieve manufacturing footprint optimization and productivity
improvements as well as overhead cost reductions.
The Company's total 2018 Rigid Packaging Restructuring Plan pre-tax restructuring costs are expected to be
approximately $110 million with the main component being the cost to exit manufacturing facilities and employee related costs.
The total plan cost has been increased by approximately $15 million in the fourth quarter of fiscal year 2020 due primarily to
additional non-cash impairments. The Company estimates that approximately $65 to $70 million of the $110 million total costs
will result in cash expenditures. Cash payments for the fiscal year 2020 were $23.6 million. The 2018 Rigid Packaging
Restructuring Plan is expected to be completed during fiscal year 2021.
2016 Flexibles Restructuring Plan
On June 9, 2016, the Company announced a major initiative ("2016 Flexibles Restructuring Plan") to optimize the cost
base and drive earnings growth in the Flexibles segment. This initiative was designed to accelerate the pace of adapting the
organization within developed markets through footprint optimization to better align capacity with demand, increase utilization
and improve the cost base and streamlining the organization and reducing complexity, particularly in Europe, to enable greater
customer focus and speed to market.
As part of the 2016 Flexibles Restructuring Plan, the Company has closed eight manufacturing facilities and reduced
headcount at certain facilities. The Company's total pre-tax restructuring costs were $230.8 million, with $166.7 million in
employee termination costs, $31.4 million in fixed asset impairment costs and $32.7 million in other costs, which primarily
represent the cost to dismantle equipment and terminate existing lease contracts. Approximately $166 million of the $230.8
million total costs resulted in cash expenditures. Cash payments for fiscal year 2019 were $14.4 million. The Plan was
substantially completed by the end of fiscal year 2019.
Other Restructuring Plans
The Company entered into other individually immaterial restructuring plans ("Other Restructuring Plans"). The
Company's restructuring charge related to these Plans was approximately $17.9 million, $18.8 million and $25.8 million for the
years ended June 30, 2020, 2019 and 2018, respectively.
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67
Consolidated Amcor Restructuring Plans
The total costs incurred from the beginning of the Company's material restructuring plans are as follows:
(in millions)
2016 Flexibles
Restructuring
Plan
2018 Rigid
Packaging
Restructuring
Plan
2019 Bemis
Integration
Plan (1)
Other
Restructuring
Plans
Total
Restructuring
and Related
Expenses (1)
Prior years
Fiscal year 2018 net charges to earnings
Fiscal year 2019 net charges to earnings
Fiscal year 2020 net charges to earnings
Expense incurred to date
$
216.4
14.4
—
—
230.8 $
—
—
64.1
37.5
101.6 $
—
—
47.9
59.7
107.6 $
19.8
25.8
18.8
17.9
82.3 $
236.2
40.2
130.8
115.1
522.3
(1) Total restructuring and related expenses includes restructuring related costs from the 2019 Bemis Integration Plan of $14.8 million
and $1.8 million for the fiscal years 2020 and 2019, respectively.
An analysis of the Company's restructuring plan liability, not including restructuring-related liabilities, is as follows:
(in millions)
Employee
Costs
Fixed Asset
Related Costs Other Costs
Total
Restructuring
Costs
Liability balance at June 30, 2017
$
85.9 $
— $
1.6 $
Net charges to earnings
Cash paid
Non-cash and other
Foreign currency translation
Liability balance at June 30, 2018
Net charges to earnings
Additions through business acquisition
Cash paid
Non-cash and other
Foreign currency translation
Liability balance at June 30, 2019
Net charges to earnings
Cash paid
Non-cash and other
Foreign currency translation
Liability balance at June 30, 2020
$
20.5
(74.1)
—
2.8
35.1
83.9
4.7
(48.5)
(2.0)
(0.7)
72.5
45.4
(47.9)
—
(0.5)
69.5 $
4.0
—
(4.0)
—
—
34.1
—
—
(27.4)
—
6.7
23.7
(5.2)
(22.1)
(0.1)
3.0 $
15.7
(17.3)
—
—
—
12.8
—
(4.4)
—
—
8.4
28.5
(24.8)
—
(0.1)
12.0
87.5
40.2
(91.4)
(4.0)
2.8
35.1
130.8
4.7
(52.9)
(29.4)
(0.7)
87.6
97.6
(77.9)
(22.1)
(0.7)
84.5
The costs related to restructuring activities, including restructuring-related activities, have been presented on the
consolidated statement of income as restructuring and related expenses. The accruals related to restructuring activities have
been recorded on the consolidated balance sheet under other current liabilities.
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Annual Report 2020
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Form 10-K
Note 7 - Equity Method Investments
Investments accounted for under the equity method generally include all entities in which the Company or its
subsidiaries have significant influence, with usually not more than 50% voting interest, and are recorded in the consolidated
balance sheet in investments in affiliated companies. Investments in affiliated companies as of June 30, 2020 and 2019 include
an interest in AMVIG Holdings Limited ("AMVIG") of 47.6% and other individually immaterial investments.
AMVIG is listed on the Hong Kong Stock Exchange. Its quoted share price as of June 30, 2020 and 2019 was $0.18
(HKD 1.40) and $0.24 (HKD 1.85), respectively. The value of Amcor's investment in AMVIG based on its quoted share price
as of June 30, 2020 and 2019 was $77.7 million and $104.8 million, respectively.
During the years ended June 30, 2020, 2019 and 2018 the Company received dividends of $9.8 million, $8.2 million
and $8.4 million, respectively, from AMVIG.
The Company reviews its investment in affiliated companies for impairment whenever events or changes in
circumstances indicate the carrying amount may not be recoverable. Due to impairment indicators present in each of the years
presented, the Company performed an impairment test by comparing the carrying value of its investment in AMVIG to its fair
value, which was determined based on AMVIG's quoted share price. The fair value of the investment dropped below its
carrying value during fiscal years 2020, 2019 and 2018, and therefore the Company recorded an other-than-temporary
impairment of $25.6 million, $14.0 million and $36.5 million, respectively, to bring the value of its investment to fair value.
The impairment charge was included in equity in income (loss) of affiliated companies, net of tax, in the consolidated statement
of income.
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Annual Report 2020
Form 10-K
69
Note 8 - Property, Plant and Equipment, Net
The components of property, plant and equipment, net, were as follows:
(in millions)
Land and land improvements
Buildings and improvements
Plant and equipment
Total property
Accumulated depreciation
Accumulated impairment
June 30, 2020
June 30, 2019
$
197.4 $
1,253.4
5,434.8
6,885.6
(3,223.8)
(47.0)
184.3
1,305.0
5,614.9
7,104.2
(3,100.3)
(28.9)
Total property, plant and equipment, net
$
3,614.8 $
3,975.0
At June 30, 2019, property, plant and equipment, net, excluded amounts classified as held for sale.
Depreciation expense amounted to $402.8 million, $305.7 million and $320.8 million for the fiscal year 2020, 2019
and 2018, respectively. Amortization of assets under finance lease obligations is included in depreciation expense.
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Annual Report 2020
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Form 10-K
Note 9 - Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill attributable to each reportable segment were as follows:
(in millions)
Balance as of June 30, 2018
Acquisition and acquisition adjustments
Disposals
Currency translation
Balance as of June 30, 2019
Acquisition and acquisition adjustments
Currency translation
Balance as of June 30, 2020
Flexibles
Segment
Rigid
Packaging
Segment
Total
$
$
1,082.0 $
3,137.7
(24.2)
(14.7)
4,180.8
229.9
(41.6)
4,369.1 $
974.6 $
—
—
0.6
975.2
—
(5.0)
970.2 $
2,056.6
3,137.7
(24.2)
(14.1)
5,156.0
229.9
(46.6)
5,339.3
The table above does not include goodwill attributable to the Company's discontinued operations of $282.0 million at
June 30, 2019. There was no discontinued operations at June 30, 2020. There is a $4.0 million goodwill accumulated
impairment loss in the Rigid Packaging reporting segment which occurred in fiscal year 2006.
Other Intangible Assets
Other intangible assets comprised:
(in millions)
Customer relationships
Computer software
Other (1)
Reported balance
(in millions)
Customer relationships
Computer software
Other (1)
Reported balance
Gross Carrying
Amount
June 30, 2020
Accumulated
Amortization and
Impairment
Net Carrying
Amount
$
$
$
$
1,957.3 $
218.4
320.7
2,496.4 $
(264.3) $
(130.8)
(107.0)
(502.1) $
1,693.0
87.6
213.7
1,994.3
Gross Carrying
Amount
June 30, 2019
Accumulated
Amortization and
Impairment
Net Carrying
Amount
2,053.7 $
221.3
350.6
2,625.6 $
(144.0) $
(127.0)
(47.8)
(318.8) $
1,909.7
94.3
302.8
2,306.8
(1) Other includes $15.5 million and $14.2 million for June 30, 2020 and 2019, respectively, of acquired intellectual property assets not
yet being amortized as the related R&D projects have not yet been completed.
Amortization expense for intangible assets during the fiscal years 2020, 2019, and 2018 was $204.4 million, $44.0
million, and $31.9 million, respectively. In conjunction with a business review and the Company's annual review of intangibles,
the Company performed a quantitative impairment test for a technology intangible and recognized non-cash impairment charges
of $31.1 million for the fiscal year 2019 in the Company's other segment to reduce the carrying value of the asset to its fair
value. The impairment charge was included in selling, general and administrative expenses in the consolidated statement of
income. During fiscal years 2020 and 2018, there were no technology intangible impairment charges recorded.
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Annual Report 2020
Estimated future amortization expense for intangible assets follows:
(in millions)
2021
2022
2023
2024
2025
Form 10-K
71
$
Amortization
180.2
175.7
171.9
167.6
147.7
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Annual Report 2020
72
Form 10-K
Note 10 - Fair Value Measurements
The fair values of the Company's financial assets and financial liabilities listed below reflect the amounts that would be
received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the
measurement date (exit price).
The Company's non-derivative financial instruments primarily include cash and cash equivalents, trade receivables,
trade payables, short-term debt and long-term debt. At June 30, 2020 and 2019, the carrying value of these financial
instruments, excluding long-term debt, approximates fair value because of the short-term nature of these instruments.
Fair value disclosures are classified based on the fair value hierarchy. See Note 2, "Significant Accounting Policies,"
for information about the Company's fair value hierarchy.
The fair value of long-term debt with variable interest rates approximates its carrying value. The fair value of the
Company's long-term debt with fixed interest rates is based on market prices, if available, or expected future cash flows
discounted at the current interest rate for financial liabilities with similar risk profiles.
The carrying values and estimated fair values of long-term debt with fixed interest rates (excluding finance leases)
were as follows:
(in millions)
Total long-term debt with fixed interest rates (excluding
commercial paper and finance leases)
June 30, 2020
June 30, 2019
Carrying
Value
Fair Value
(Level 2)
Carrying
Value
Fair Value
(Level 2)
$
3,599.3 $
3,793.1 $
2,955.6 $
3,041.3
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Additionally, the Company measures and records certain assets and liabilities, including derivative instruments and
contingent purchase consideration liabilities, at fair value.
The following table summarizes the fair value of these instruments, which are measured at fair value on a recurring
basis, by level, within the fair value hierarchy:
(in millions)
Assets
Commodity contracts
Forward exchange contracts
Interest rate swaps
Total assets measured at fair value
Liabilities
Contingent purchase consideration liabilities
Commodity contracts
Forward exchange contracts
Interest rate swaps
Cross currency interest rate swaps
$
$
$
Level 1
Level 2
Level 3
Total
June 30, 2020
— $
0.4 $
— $
—
—
7.4
32.0
—
—
— $
39.8 $
— $
— $
— $
14.8 $
—
—
—
—
6.7
16.8
—
0.2
—
—
—
—
Total liabilities measured at fair value
$
— $
23.7 $
14.8 $
0.4
7.4
32.0
39.8
14.8
6.7
16.8
—
0.2
38.5
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Annual Report 2020
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73
(in millions)
Assets
Commodity contracts
Forward exchange contracts
Interest rate swaps
Total assets measured at fair value
Liabilities
Contingent purchase consideration liabilities
Commodity contracts
Forward exchange contracts
Interest rate swaps
Total liabilities measured at fair value
$
$
$
$
Level 1
Level 2
Level 3
Total
June 30, 2019
— $
—
—
— $
— $
—
—
—
— $
— $
5.5
32.8
38.3 $
— $
4.6
9.3
—
13.9 $
— $
—
—
— $
13.6 $
—
—
—
13.6 $
—
5.5
32.8
38.3
13.6
4.6
9.3
—
27.5
The fair value of the commodity contracts was determined using a discounted cash flow analysis based on the terms of
the contracts and observed market forward prices discounted at a currency-specific rate. Forward exchange contract fair values
were determined based on quoted prices for similar assets and liabilities in active markets using inputs such as currency rates
and forward points. The fair value of the interest rate swaps was determined using a discounted cash flow method based on
market-based swap yield curves, considering current interest rates.
The fair value of the contingent purchase consideration liabilities was determined for each arrangement individually.
The fair value was determined using the income approach with significant inputs that are not observable in the market. Key
assumptions include the discount rates consistent with the level of risk of achievement and probability adjusted financial
projections. The expected outcomes are recorded at net present value, which requires adjustment over the life for changes in
risks and probabilities.
The following table sets forth a summary of changes in the value of the Company's Level 3 financial liabilities:
(in millions)
Fair value at the beginning of the year
Additions due to acquisitions
Changes in fair value of Level 3 liabilities
Payments
Foreign currency translation
Fair value at the end of the year
2020
June 30,
2019
2018
$
13.6 $
14.6 $
—
1.1
—
0.1
$
14.8 $
—
—
(1.0)
—
13.6 $
27.6
—
0.8
(13.0)
(0.8)
14.6
The fair value of contingent purchase consideration liabilities is included in other current liabilities and other non-
current liabilities in the consolidated balance sheet. The change in fair value of the contingent purchase consideration liabilities,
which was included in other income, net is due to the passage of time and changes in the probability of achievement used to
develop the estimate.
Assets and Liabilities Measured and Recorded at Fair Value on a Nonrecurring Basis
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and
liabilities at fair value on a nonrecurring basis as required by U.S. GAAP. The Company measures certain assets, including the
Company’s equity method investments, technology intangible assets, other intangible assets and goodwill at fair value on a
nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined,
when applicable, based on valuation techniques using the best information available, and may include quoted market prices,
market comparables and discounted cash flow projections.
The Company tests for impairment of its equity method investments when impairment indicators are present.
Impairment tests were performed by comparing the carrying value of the Company’s investment in AMVIG at the end of each
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Annual Report 2020
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Form 10-K
period, including interim periods, to the fair value of the investment, which was determined based on AMVIG's quoted share
price which is classified in Level 1 of the fair value hierarchy.
Based on the Company’s evaluation of AMVIG’s current financial condition and the Company’s intent and ability to
hold its investment in AMVIG to recover the carrying value, the Company concluded that the decline in fair value was
temporary at March 31, 2020, and therefore no impairment was recorded. However, the quoted share price did not recover in
the fiscal fourth quarter and the Company determined that the investment was impaired as of June 30, 2020 and recorded an
impairment charge of $25.6 million. The Company also recorded impairment charges of our AMVIG investment of
$14.0 million in fiscal year 2019 and $36.5 million in fiscal year 2018.
The Company tests indefinite-lived intangibles for impairment when facts and circumstances indicate the carrying
value may not be recoverable from their undiscounted cash flows. The Company recognized non-cash impairment charges of
$31.1 million in the fiscal year 2019 to reduce the carrying value of an indefinite-lived technology intangible asset to its fair
value. During fiscal year 2020 and 2018, there were no indefinite-lived intangible impairment charges recorded.
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Annual Report 2020
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75
Note 11 - Derivative Instruments
The Company periodically uses derivatives and other financial instruments to hedge exposures to interest rates,
commodity and currency risks. The Company does not hold or issue financial instruments for speculative or trading purposes.
For hedges that meet the hedge accounting criteria, the Company, at inception, formally designates and documents the
instrument as a fair value hedge or a cash flow hedge of a specific underlying exposure. On an ongoing basis, the Company
assesses and documents that its hedges have been and are expected to continue to be highly effective.
Interest Rate Risk
The Company's policy is to manage exposure to interest rate risk by maintaining a mixture of fixed-rate and variable-
rate debt, monitoring global interest rates and, where appropriate, hedging floating interest rate exposure or debt at fixed interest
rates through various interest rate derivative instruments including, but not limited to, interest rate swaps, cross-currency
interest rate swaps, and interest rate locks.
For interest rate swaps that are accounted for as fair value hedges, changes in the fair value of both the hedging
instruments and the underlying debt obligations are immediately recognized in interest expense. Changes in the fair value of
interest rate swaps that have not been designated as hedging instruments are reported in the accompanying consolidated
statement of income under other non-operating income (loss), net.
As of June 30, 2020 and 2019, the total notional amount of the Company's receive-fixed/pay-variable interest rate
swaps was $837.1 million and $841.1 million, respectively.
At June 30, 2020, the Company had a notional amount of $100 million (equivalent to €89.0 million) cross-currency
interest rate swaps outstanding. The Company did not designate the swaps as a hedging instrument and thus changes in fair
value were immediately recognized in earnings.
During the third quarter of fiscal year 2020, the Company entered into six Treasury lock agreements to protect against
unfavorable interest rate changes relating to the highly probable issuance of long-term debt. The total notional amount of the
Treasury lock of $250.0 million was designated as a cash flow hedge of an anticipated transaction and deemed these agreements
to be highly effective.
The associated unsecured senior note was issued on June 19, 2020, and the Company has settled these Treasury lock
agreements with a $19.8 million cash payment to the counterparties. The loss associated with the settlement was recorded in
accumulated other comprehensive loss and will be amortized to interest expense over the life of the unsecured senior notes,
which is 10 years.
Foreign Currency Risk
The Company manufactures and sells its products and finances operations in a number of countries throughout the
world and, as a result, is exposed to movements in foreign currency exchange rates. The purpose of the Company's foreign
currency hedging program is to manage the volatility associated with the changes in exchange rates.
To manage this exchange rate risk, the Company utilizes forward contracts. Contracts that qualify for hedge
accounting are designated as cash flow hedges of certain forecasted transactions denominated in foreign currencies. The
effective portion of the changes in fair value of these instruments is reported in accumulated other comprehensive income (loss)
("AOCI") and reclassified into earnings in the same financial statement line item and in the same period or periods during
which the related hedged transactions affect earnings. The ineffective portion is recognized in earnings over the life of the
hedging relationship in the same consolidated statement of income line item as the underlying hedged item. Changes in the fair
value of forward contracts that have not been designated as hedging instruments are reported in the accompanying consolidated
statement of income.
As of June 30, 2020 and 2019, the notional amount of the outstanding forward contracts was $1.6 billion and $1.0
billion, respectively.
The Company manages its currency exposure related to the net assets of its foreign operations primarily through
borrowings denominated in the relevant currency. Foreign currency gains and losses from the remeasurement of external
borrowings designated as net investment hedges of a foreign operation are recognized in AOCI, to the extent that the hedge is
effective. The ineffective portion is immediately recognized in other non-operating income (loss), net in the consolidated
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Annual Report 2020
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Form 10-K
statement of income. When a hedged net investment is disposed of, a percentage of the cumulative amount recognized in AOCI
in relation to the hedged net investment is recognized in the condensed consolidated statement of income as part of the profit or
loss on disposal.
At the beginning of fiscal year 2020, the carrying value of commercial paper issued which is designated as a net
investment hedge was $67.0 million. During the three months ended December 31, 2019, the Company settled $67.0 million of
U.S. commercial paper issued by a non-U.S. entity, which was previously designated as a net investment hedge in its U.S.
subsidiaries. The net investment hedges recorded through the point of settlement are included in AOCI and will be reclassified
into earnings only upon the sale or liquidation of the related subsidiaries. The Company did not have any net investment hedges
in place as of June 30, 2020.
Commodity Risk
Certain raw materials used in the Company's production processes are subject to price volatility caused by weather,
supply conditions, political and economic variables and other unpredictable factors. The Company's policy is to minimize
exposure to price volatility by passing through the commodity price risk to customers, including the use of fixed price swaps.
The Company purchases on behalf of customers fixed price commodity swaps to offset the exposure of price volatility on the
underlying sales contracts, these instruments are cash closed out on maturity and the related cost or benefit is passed through to
customers. Information about commodity price exposure is derived from supply forecasts submitted by customers and these
exposures are hedged by a central treasury unit. Changes in the fair value of commodity hedges are recognized in AOCI. The
cumulative amount of the hedge is recognized in the consolidated statement of income when the forecast transaction is realized.
At June 30, 2020 and 2019, the Company had the following outstanding commodity contracts that were entered into to
hedge forecasted purchases:
Commodity
Aluminum
PET resin
June 30, 2020
Volume
June 30, 2019
Volume
44,944 tons
29,342 tons
26,006,000 lbs.
N/A
76
Annual Report 2020
The following tables provide the location of derivative instruments in the consolidated balance sheet:
Form 10-K
77
(in millions)
Assets
Derivatives in cash flow hedging relationships:
Commodity contracts
Forward exchange contracts
Derivatives not designated as hedging instruments:
Forward exchange contracts
Total current derivative contracts
Derivatives in fair value hedging relationships:
Interest rate swaps
Derivatives not designated as hedging instruments:
Forward exchange contracts
Total non-current derivative contracts
Total derivative asset contracts
Liabilities
Derivatives in cash flow hedging relationships:
Commodity contracts
Forward exchange contracts
Derivatives not designated as hedging instruments:
Forward exchange contracts
Cross currency interest rate swaps
Total current derivative contracts
Derivatives in cash flow hedging relationships:
Balance Sheet Location
2020
2019
June 30,
Other current assets
Other current assets
$
0.4 $
2.2
Other current assets
Other non-current assets
Other non-current assets
5.2
7.8
32.0
—
32.0
39.8 $
$
Other current liabilities
$
Other current liabilities
6.7 $
3.0
Other current liabilities
Other current liabilities
13.6
0.2
23.5
0.2
—
0.2
$
23.7 $
—
2.4
2.7
5.1
32.8
0.4
33.2
38.3
4.6
1.5
7.1
—
13.2
0.3
0.4
0.7
13.9
Forward exchange contracts
Other non-current liabilities
Derivatives not designated as hedging instruments:
Forward exchange contracts
Other non-current liabilities
Total non-current derivative contracts
Total derivative liability contracts
In addition to the fair value associated with derivative instruments noted in the table above, the Company had a
carrying value of $67.0 million associated with non-derivative instruments designated as foreign currency net investment
hedges as of June 30, 2019. The designated foreign currency-denominated debt was included in long-term debt in the
consolidated balance sheet. There are no currency net investment hedges as of June 30, 2020.
Certain derivative financial instruments are subject to netting arrangements and are eligible for offset. The Company
has made an accounting policy election not to offset the fair values of these instruments within the consolidated balance sheets.
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Annual Report 2020
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Form 10-K
The following tables provide the effects of derivative instruments on AOCI and in the consolidated statement of
income:
(in millions)
Derivatives in cash flow hedging relationships
Commodity contracts
Forward exchange contracts
Forward exchange contracts
Treasury locks
Total
(in millions)
Derivatives not designated as hedging instruments
Forward exchange contracts
Cross currency interest rate swaps
Total
(in millions)
Derivatives in fair value hedging relationships
Interest rate swaps
Total
Location of Gain
(Loss) Reclassified
from AOCI into
Income (Effective
Portion)
Gain (Loss) Reclassified from AOCI
into Income (Effective Portion)
Years ended June 30,
2019
2020
2018
Cost of sales
Net sales
Cost of sales
Interest expense
$
$
(5.5) $
(1.1)
(0.1)
(0.2)
(6.9) $
(1.6) $
(0.2)
(0.1)
—
(1.9) $
3.2
0.1
0.1
—
3.4
Location of Gain
(Loss) Recognized
in the Consolidated
Income Statements
Gain (Loss) Recognized in Income for
Derivatives not Designated as Hedging
Instruments
Years ended June 30,
2019
2020
2018
Other income, net
Other income, net
$
$
5.8 $
(0.2)
5.6 $
0.8 $
—
0.8 $
1.7
—
1.7
Location of Gain
(Loss) Recognized
in the Consolidated
Income Statements
Gain (Loss) Recognized in Income for
Derivatives in Fair Value Hedging
Relationships
Years ended June 30,
2019
2020
2018
Interest expense
$
$
(0.8) $
(0.8) $
7.4 $
7.4 $
(5.8)
(5.8)
The changes in AOCI for effective derivatives were as follows:
(in millions)
Amounts reclassified into earnings
Commodity contracts
Forward exchange contracts
Treasury locks
Change in fair value
Commodity contracts
Forward exchange contracts
Treasury locks
Tax effect
Total
Years ended June 30,
2019
2018
2020
$
5.5 $
1.6 $
1.2
0.2
(7.1)
(2.1)
(19.6)
0.2
0.3
—
(7.3)
—
—
1.8
(3.2)
(0.2)
—
0.7
0.1
—
0.6
$
(21.7) $
(3.6) $
(2.0)
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79
Note 12 - Pension and Other Post-Retirement Plans
The Company sponsors both funded and unfunded defined benefit pension plans that include statutory and mandated
benefit provision in some countries as well as voluntary plans (generally closed to new joiners). During fiscal year 2020, the
Company maintained 21 statutory and mandated defined benefit arrangements and 57 voluntary defined benefit plans.
The principal defined benefit plans are structured as follows:
Country
United Kingdom
Switzerland
France (1)
Germany (1)
Canada
United States of America
Number of
Funded
Plans
Number of
Unfunded
Plans
Comment
2
1
3
1
6
3
— Closed to new entrants
— Open to new entrants
Three plans are closed to new entrants, two plans are open to
new entrants; two plans are partially indemnified by Rio Tinto
Limited
13 plans are closed to new entrants, one is open to new
entrants; six plans are partially indemnified by Rio Tinto
Limited
2
13
1 Closed to new entrants
2 Closed to new entrants
(1) Rio Tinto Limited assumes responsibility for its former employees' retirement entitlements as of February 1, 2010 when Amcor
acquired Alcan Packaging from Rio Tinto Limited.
Net periodic benefit cost for benefit plans include the following components:
(in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss
Amortization of prior service credit
Curtailment credit
Settlement costs
Other
Net periodic benefit cost
Years ended June 30,
2019
2018
2020
$
23.4 $
14.9 $
48.5
26.4
16.3
27.5
(72.2)
(32.7)
(38.4)
5.4
(1.6)
0.3
5.3
0.8
3.4
(1.7)
(0.1)
2.3
—
$
9.9 $
12.5 $
5.2
(2.2)
(2.7)
2.0
—
7.7
Amounts recognized in the consolidated income statements comprise the following:
(in millions)
Cost of sales
Selling, general and administrative expenses
Other non-operating (income) loss, net
Net periodic benefit cost
Years ended June 30,
2019
2018
2020
$
16.1 $
10.3 $
7.3
(13.5)
$
9.9 $
4.6
(2.4)
12.5 $
11.3
5.0
(8.6)
7.7
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Form 10-K
Changes in benefit obligations and plan assets were as follows:
(in millions)
Change in benefit obligation:
Benefit obligation at the beginning of the year
Service cost
Interest cost
Participant contributions
Actuarial loss (gain)
Plan curtailments
Settlements
Benefits paid
Administrative expenses
Plan amendments
Acquisitions
Other
Foreign currency translation
Benefit obligation at the end of the year
Accumulated benefit obligation at the end of the year
(in millions)
Change in plan assets:
June 30,
2020
2019
$
1,985.0 $
23.4
48.5
6.1
127.4
(0.1)
(42.6)
(76.8)
(5.0)
(0.2)
0.1
2.8
(17.7)
1,179.9
14.9
26.4
6.1
101.5
(0.1)
(26.9)
(37.6)
(1.8)
11.0
723.8
—
(12.2)
$
$
2,050.9 $
1,985.0
1,978.7 $
1,917.0
June 30,
2020
2019
Fair value of plan assets at the beginning of the year
$
1,631.0 $
939.3
Actual return on plan assets
Employer contributions
Participant contributions
Benefits paid
Settlements
Administrative expenses
Acquisitions
Foreign currency translation
158.8
34.3
6.1
(76.8)
(42.6)
(5.0)
—
(14.7)
65.8
35.7
6.1
(37.6)
(27.1)
(1.8)
662.2
(11.6)
Fair value of plan assets at the end of the year
$
1,691.1 $
1,631.0
The following table provides information for defined benefit plans with a projected benefit obligation in excess of plan
assets:
(in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan asset
June 30,
2020
2019
$
1,694.9 $
1,658.5
1,625.9
1,291.7
1,590.0
1,265.0
Amounts recognized in the consolidated balance sheets consist of the following:
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Annual Report 2020
(in millions)
Employee benefit asset
Employee benefit obligation
Unfunded status
Form 10-K
81
June 30,
2020
1,691.1 $
(2,050.9)
(359.8) $
2019
1,631.0
(1,985.0)
(354.0)
$
$
The following table provides information as to how the funded / unfunded status is recognized in the consolidated
balance sheets:
(in millions)
Non-current assets - Employee benefit assets
Current liabilities - Other current liabilities
Non-current liabilities - Employee benefit obligations
Unfunded status
June 30,
2020
2019
$
$
43.4 $
(11.5)
(391.7)
(359.8) $
40.2
(7.4)
(386.8)
(354.0)
The components of other comprehensive (income) loss are as follows:
(in millions)
Changes in plan assets and benefit obligations recognized in other
comprehensive (income) loss:
Net actuarial loss (gain) occurring during the year
Net prior service loss (gain) occurring during the year
Amortization of actuarial loss
Loss (gain) recognized due to settlement/curtailment
Amortization of prior service credit
Foreign currency translation
Tax effect
Years ended June 30,
2019
2018
2020
$
40.7 $
68.4 $
(33.1)
(0.2)
(5.4)
(5.6)
1.6
(2.9)
(11.8)
11.1
(3.4)
(2.2)
1.7
(3.3)
(13.3)
—
(5.2)
0.7
2.2
0.9
6.9
Total recognized in other comprehensive (income) loss
$
16.4 $
59.0 $
(27.6)
(in millions)
Net prior service credit
Net actuarial loss
Accumulated other comprehensive (income) loss at the end of the year
2020
June 30,
2019
2018
$
$
(5.8) $
(7.0) $
(19.8)
236.9
209.9
231.1 $
202.9 $
150.3
130.5
The estimated net actuarial loss and net prior service credit for the defined benefit pension plans that will be amortized
from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are a loss of $8.0
million and a credit of $1.7 million, respectively.
Weighted-average assumptions used to determine benefit obligations at year end were:
Discount rate
Rate of compensation increase
2020
2.0 %
1.9 %
June 30,
2019
2.5 %
2.1 %
2018
2.3 %
1.9 %
Weighted-average assumptions used to determine net periodic benefit cost at year end were:
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Annual Report 2020
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Form 10-K
Discount rate
Rate of compensation increase
Expected long-term rate of return on plan assets
2020
2.5 %
2.1 %
4.5 %
June 30,
2019
2.3 %
1.9 %
3.6 %
2018
2.1 %
1.8 %
4.1 %
Where funded, the Company and, in some countries, the employees make cash contributions into the pension fund. In
the case of unfunded plans, the Company is responsible for benefit payments as they fall due. Plan funding requirements are
generally determined by local regulation and/or best practice and differ between countries. The local statutory funding positions
are not necessarily consistent with the funded status disclosed on the consolidated balance sheet. For any funded plans in deficit
(as measured under local country guidelines), the Company agrees with the trustees and plan fiduciaries to undertake suitable
funding programs to provide additional contributions over time in accordance with local country requirements. Contributions to
the Company's defined benefit pension plans, not including unfunded plans, are expected to be $24.2 million over the next
fiscal year.
The following benefit payments for the succeeding five fiscal years and thereafter, which reflect expected future
service, as appropriate, are expected to be paid:
(in millions)
2021
2022
2023
2024
2025
2026-2030
$
90.7
88.7
89.7
92.0
91.4
477.0
The ERISA Benefit Plan Committee in the United States, the Pension Plan Committee in Switzerland and the Trustees
of the pension plans in Canada, Ireland and UK establish investment policies and strategies for the Company's pension plan
assets and are required to consult with the Company on changes to their investment policy. In developing the expected long-
term rate of return on plan assets at each measurement date, the Company considers the plan assets' historical returns, asset
allocations, and the anticipated future economic environment and long-term performance of the asset classes. While appropriate
consideration is given to recent and historical investment performance, the assumption represents management's best estimate
of the long-term prospective return.
The pension plan assets measured at fair value were as follows:
(in millions)
Equity securities
Government debt securities
Corporate debt securities
Real estate
Cash and cash equivalents
Other
Total
Level 1
Level 2
Level 3
Total
June 30, 2020
$
114.3 $
182.8 $
— $
65.9
59.9
60.4
41.8
18.1
516.4
162.0
—
6.8
6.6
—
—
2.4
—
453.7
$
360.4 $
874.6 $
456.1 $
297.1
582.3
221.9
62.8
48.6
478.4
1,691.1
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Annual Report 2020
Form 10-K
83
(in millions)
Equity securities
Government debt securities
Corporate debt securities
Real estate
Cash and cash equivalents
Other
Total
Level 1
Level 2
Level 3
Total
June 30, 2019
$
$
150.1 $
128.6
69.6
60.7
12.1
10.7
431.8 $
137.3 $
177.8
410.7
—
31.4
0.1
757.3 $
— $
—
—
2.3
—
439.6
441.9 $
287.4
306.4
480.3
63.0
43.5
450.4
1,631.0
Equity securities: Valued at the closing prices reported in the active market in which the individual securities are traded.
Government debt securities: Valued using the pricing of similar agency issues, live trading feeds from several vendors and
benchmark yield.
Corporate debt securities: Valued using market inputs including benchmark yields, reported trades, broker/dealer quotes,
issuer spreads, benchmark securities, bids, offers and reference data including market research publications. Inputs may be
prioritized differently at certain times based on market conditions.
Real estate: Valued at the closing prices reported in the active market in which the listed real estate funds are traded.
Cash and cash equivalents: Consist of cash on deposit with brokers and short-term money market funds and are shown net of
receivables and payables for securities traded at period end but not yet settled. All cash and cash equivalents are stated at cost,
which approximates fair value.
Other:
Level 1: Mutual funds. A daily asset value is available for these assets.
Level 2: Assets held in diversified growth funds, pooled funds, financing funds and derivatives, where the value of the
assets are determined by the investment managers or an external valuer based on the probable value of the underlying
assets.
Level 3: Indemnified plan assets and a buy-in policy, insurance contacts and pooled funds (equity, credit, macro-
orientated, multi-strategy, cash and other). The value of indemnified plan assets and the buy-in policy are determined
based on the value of the liabilities that the assets cover. The value of insurance contracts is determined by the insurer
based on the value of the insurance policies. The value of the pooled funds is calculated by the investment managers
based on the values of the underlying portfolios.
The following table sets forth a summary of changes in the value of the Company's Level 3 assets:
(in millions)
Balance as of June 30, 2019
Actual return on plan assets
Purchases, sales and settlements
Transfer out of Level 3
Foreign currency translation
Balance as of June 30, 2020
$
441.9
15.8
10.4
(0.4)
(11.6)
$
456.1
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Annual Report 2020
84
Form 10-K
Note 13 - Debt
Long-Term Debt
The following table summarizes the carrying value of long-term debt at June 30, 2020 and 2019, respectively:
(in millions)
Bank loans
Commercial paper (1)
U.S. dollar notes due 2019, 2021, 2026, 2028 and 2030 (1)
U.S. private placement notes due 2021 (1)
Euro bonds due 2023 and 2027
Euro private placement notes due 2020 (1)
Other loans
Finance lease obligations
Interest rate swap adjustment
Unamortized discounts and debt issuance costs
Total debt
Less: current portion
Total long-term debt
June 30,
2020
2019
$
416.7 $
1,976.5
2,299.9
275.0
899.4
112.4
22.1
33.2
31.3
(27.0)
6,039.5
(11.1)
2,116.4
221.2
2,199.9
275.0
341.5
113.7
33.1
4.3
34.9
(25.6)
5,314.4
(5.4)
$
6,028.4 $
5,309.0
(1)
Indicates debt which has been classified as long-term liabilities in accordance with the Company’s ability and intent to refinance
such obligations on a long-term basis.
At June 30, 2020 and 2019, land, plant and buildings with a carrying value of $30.5 million and $34.0 million,
respectively, have been pledged as security for bank and other loans.
The following table summarizes the contractual maturities of the Company's long-term debt, including current
maturities (excluding payments for finance leases) at June 30, 2020 for the succeeding five fiscal years and thereafter:
(in millions)
2021
2022 (1)
2023 (1)
2024 (2)
2025
Thereafter
$
409.6
1,424.7
389.9
1,292.1
—
2,485.7
(1) Commercial paper denominated in U.S. dollars is classified as maturing in 2022 and 2023, supported by the 3 year and 4 year
syndicated facilities.
(2) Commercial paper denominated in Euros is classified as maturing in 2024, supported by the 5 year syndicated facility.
84
Annual Report 2020
Bank loans
The Group has entered into syndicated and bilateral multi-currency credit facilities with financial institutions. The
Form 10-K
85
facilities' limits, maturities and interest rates are as follows:
(in millions)
Original
Facility
Limit
Current
Facility
Limit
2019
364 day syndicated facility (1)
$ 1,050.0 $
—
April 5, 2020
2020
—
Maturity
Interest Rate
2019
LIBOR +
1.125%
LIBOR +
1.125%
LIBOR +
1.250%
LIBOR +
1.250%
LIBOR +
1.250%
2020
—
LIBOR +
1.125%
LIBOR +
1.250%
LIBOR +
1.250%
LIBOR +
1.250%
3 year term syndicated facility
750.0
400.0 April 30, 2022
April 30, 2022
3 year syndicated facility
750.0
750.0 April 30, 2022
April 30, 2022
4 year syndicated facility
1,500.0
1,500.0 April 30, 2023
April 30, 2023
5 year syndicated facility
1,500.0
1,500.0 April 30, 2024
April 30, 2024
(1) The 364 day syndicated facility was canceled on June 29, 2020.
(in millions)
3 year term syndicated facility
3 year syndicated facility (1) (2)
4 year syndicated facility (1) (2)
5 year syndicated facility (1) (2)
Secured bank loans
Total
(in millions)
364 day syndicated facility
3 year term syndicated facility
3 year syndicated facility (1) (2)
4 year syndicated facility (1)
5 year syndicated facility (1)
Secured bank loans
Total
June 30, 2020
Facility Usage
Undrawn
Commitments
400.0
750.0
46.8
1,179.8
11.0
—
—
1,453.2
320.2
—
$
2,387.6 $
1,773.4
June 30, 2019
Facility Usage
Undrawn
Commitments
$
511.6 $
750.0
200.0
1,155.2
—
2.4
538.4
—
328.7
344.8
1,500.0
14.3
$
2,619.2 $
2,726.2
(1) The 3, 4 and 5 year syndicated facilities support the Company's commercial paper borrowings.
(2)
June 30, 2020 and 2019 commercial paper included in this syndicated facility.
Facility fees of approximately 0.10% to 0.15% are payable on the undrawn commitments.
The Company has access to a single, multi-tranche syndicated facility with a group of counterparty banks. The funding
arrangements provide for $4.2 billion of facilities consisting of a 3 year term loan tranche expiring in 2022, as well as 3, 4 and 5
year revolver tranches expiring between 2022 and 2024, which may be used to support our commercial paper borrowings. The
agreements include customary terms and conditions for a syndicated facility of this nature and the revolving tranches have two
12 month options available to management to extend the maturity date.
On September 25, 2019 and December 15, 2019, the Company canceled $250.0 million and $100.0 million,
respectively, of the $750.0 million term loan facility.
In April 2020, the Company extended the maturity of a 364 day syndicated facility by an additional six months to
October 2020 and reduced the facility size from $1,050.0 million to $840.0 million. This facility was canceled on June 29, 2020
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Annual Report 2020
86
Form 10-K
following the issuance of $500.0 million 10 year senior unsecured notes on June 19, 2020 and €500.0 million 7 year senior
unsecured notes on June 23, 2020.
U.S. Dollar Notes due 2030
On June 19, 2020, the Company completed an offering of $500.0 million aggregate principal amount of its Senior
Unsecured Notes due 2030 (the "Notes due 2030") in a registered offering. The Notes due 2030 mature on June 19, 2030. The
Company pays interest at 2.63% per annum, semi-annually in arrears on June 19 and December 19, commencing on December
19, 2020. The Company may redeem some or all the notes at any time at a redemption price equal to the greater of the principal
amount and a make-whole amount plus accrued and unpaid interest to the redemption date. On or after March 19, 2030 (three
months prior to the maturity date), the Company may redeem any note at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest to the redemption date.
U.S. Dollar Notes due 2028
On May 7, 2018, the Company completed an offering of $500.0 million aggregate principal amount of its Senior
Unsecured Notes due 2028 (the "Notes due 2028") in a private offering. The Notes due 2028 mature on May 15, 2028. The
Company pays interest at 4.5% per annum, semi-annually in arrears on May 15 and November 15, commencing on November
15, 2018. The Company may redeem some or all the notes at any time at a redemption price equal to the greater of the principal
amount and a make-whole amount plus accrued and unpaid interest to the redemption date. On or after February 15, 2028 (three
months prior to the maturity date), the Company may redeem any note at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest to the redemption date.
U.S. Dollar Notes due 2026
On April 19, 2016, the Company completed an offering of $600.0 million aggregate principal amount of its Senior
Unsecured Notes due 2026 (the "Notes due 2026") in a private offering. The Notes due 2026 mature on April 28, 2026. The
Company pays interest at 3.625% per annum, semi-annually in arrears on April 28 and October 28, commencing on October 28,
2016. The Company may redeem some or all the notes at any time at a redemption price equal to the greater of 100% of the
principal amount and the sum of present value of the principal amount of the notes to be redeemed and the present value of the
remaining scheduled payments of interest as determined by a quotation agent. On or after January 28, 2026 (three months prior
to the maturity date), the redemption price will equal 100% of the principal amount plus accrued and unpaid interest to the
redemption date.
U.S. Dollar Notes due 2019, 2021 and 2026
On June 11, 2019, the Company completed its acquisition of Bemis and assumed its Senior Unsecured Notes (the
"Bemis Notes"). The Bemis Notes were issued on July 27, 2009, October 4, 2011 and September 15, 2016 and have an
aggregate principal amount of $400.0 million, $399.9 million and $300.0 million and mature on August 1, 2019, October 15,
2021 and September 15, 2026. The Company pays interest at 6.80%, 4.50% and 3.10% per annum, semi-annually in arrears, on
the Bemis Notes maturing in 2019, 2021 and 2026, respectively. The Company retired upon maturity the note due on August 1,
2019.
U.S. Private Placement Notes due 2016, 2018 and 2021
On December 15, 2009, the Company completed an offering of $850.0 million aggregate principal amount of its
Senior Unsecured Notes with bullet maturities of December 15, 2016 ($275.0 million), December 15, 2018 ($300.0 million)
and December 15, 2021 ($275.0 million). The Company pays interest at 5.38%, 5.69% and 5.95% per annum respectively,
semi-annually in arrears on June 15 and December 15, commencing on June 15, 2010. In December 2016 and December 2018,
$275.0 million and $300.0 million, respectively, of aggregate principal amount was fully repaid. The Company may, at its
option, redeem all, or from time to time any part of, the notes, in an amount not less than 5.0% of the aggregate principal
amount of the notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus the
applicable make-whole amounts determined for the prepayment date with respect to such principal amount.
Euro Bonds due 2027
On June 23, 2020, the Company issued €500.0 million of unsecured Eurobond market borrowings with maturity June
23, 2027. The Company will pay interest at 1.125% per annum, annually in arrears, commencing on June 23, 2021. The
Company may redeem some or all the notes at any time at a redemption price equal to the greater of the principal amount and a
86
Annual Report 2020
Form 10-K
87
make-whole amount plus accrued and unpaid interest to the redemption date. On or after April 23, 2027 (two months prior to
the maturity date), the Company may redeem any note at a redemption price equal to 100% of the principal amount plus
accrued and unpaid interest to the redemption date.
Euro Bonds due 2023
On March 22, 2013, the Company issued €300.0 million of unsecured Eurobond market borrowings with maturity
March 22, 2023. The Company pays interest at 2.75% per annum, annually in arrears, commencing on March 22, 2014. A
noteholder has the option to require the Company to redeem or, at the Company's option, purchase any notes held by it on the
change of control put date (as defined in the agreement and conditional upon a credit rating downgrade to sub-investment
grade) at the optional redemption amount together with interest accrued to (but excluding) the change of control put date.
Euro Private Placement Notes due 2020
On September 1, 2010, the Company completed an offering of €150.0 million (of which €100.0 million were
outstanding as of June 30, 2019) aggregate principal amount of its Senior Unsecured Notes due 2020 (the "Notes due 2020") in
a private offering. The Notes due 2020 mature on September 1, 2020. The Company pays interest on the Notes due 2020 at
5.0% per annum, semi-annually in arrears on March 1 and September 1, commencing on March 1, 2011. The Company may, at
its option, redeem all, or from time to time any part of, the notes, in an amount not less than 5.0% of the aggregate principal
amount of the notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus the
applicable make-whole amounts determined for the prepayment date with respect to such principal amount.
Exchange of Notes Related to Bemis Acquisition
On June 13, 2019, pursuant to terms and conditions of the offering memorandum and consent solicitation statement,
dated as of May 8, 2019, Amcor Finance (USA), Inc. and Bemis Company, Inc. settled the exchange of various Senior and
Guaranteed Senior Notes for new Guaranteed Senior Notes issued by the Issuers.
Consent was received from Note holders who tendered approximately 91.7% of Notes across five notes (U.S. dollar
notes due 2026 and 2028, and the Bemis Notes due 2019, 2021 and 2026). In return for the debt exchange, certain indenture
terms and conditions were amended and/or removed relating to Bemis Company, Inc.
Subsequently on April 23, 2020, 99.9% of these Notes were tendered by Note holders and exchanged under a Form
S-1 Statement filed March 9, 2020. These Notes have been registered under the Securities Act, as described in an Exchange
Offer Prospectus of the Company dated March 23, 2020.
Guarantees and Financial Covenants
All the notes are general unsecured senior obligations of the Company and are fully and unconditionally guaranteed on
a joint and several basis by certain existing subsidiaries that guarantee its other indebtedness.
The Company is required to satisfy certain financial covenants pursuant to its bank loans and notes, which are tested as
of the last day of each quarterly and annual financial period, including: a) a leverage ratio, which is calculated as total net debt
divided by Adjusted EBITDA and b) an interest coverage ratio, which is calculated as Adjusted EBITDA divided by net interest
expense, as defined in the related debt agreements. As of June 30, 2020 and 2019, the Company was in compliance with all debt
covenants.
Short-Term Debt
Short-term debt, which primarily consists of bank loans and bank overdrafts, is generally used to fund working capital
requirements. The Company has classified commercial paper as long-term at June 30, 2020 in accordance with the Company’s
ability and intent to refinance such obligations on a long-term basis.
The following table summarizes the carrying value of short-term debt at June 30, 2020 and 2019, respectively.
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Annual Report 2020
88
Form 10-K
(in millions)
Bank loans
Secured borrowings
Bank overdrafts
Total short-term debt
June 30,
2020
2019
184.2
—
11.0
195.2 $
533.6
152.7
102.5
788.8
$
As of June 30, 2020, the Company paid a weighted-average interest rate of 2.97% per annum, payable at maturity. As
of June 30, 2019, the Company paid a weighted-average interest rate of 1.61% per annum, payable at maturity.
The Company enters into factoring arrangements from time to time to sell trade receivables to third-party financial
institutions. Agreements that do not qualify as true sales, as defined in ASC 860, are accounted for as secured borrowings and
recorded in the consolidated balance sheet within short-term debt. The secured borrowings at June 30, 2019 reflect agreements
that do not qualify as true sales.
88
Annual Report 2020
Note 14 - Leases
The components of lease expense are as follows:
(in millions)
Operating leases
Cost of sales
Selling, general and administrative expenses
Statement of Income Location
Finance leases
Cost of sales (amortization of right-of-use assets)
Interest expense (interest on lease liabilities)
Total lease cost (1)
(1)
Includes short-term leases and variable lease costs, which are immaterial.
Form 10-K
89
Year Ended June 30,
2020
$
$
89.7
22.4
1.8
0.8
114.7
The Company's leases do not contain any material residual value guarantees or material restrictive covenants. At June
30, 2020, the Company does not have material lease commitments that have not commenced.
Supplemental balance sheet information related to leases was as follows:
Balance Sheet Location
June 30, 2020
(in millions)
Assets
Operating lease right-of-use assets, net
Finance lease assets (1)
Total lease assets
Liabilities
Operating leases:
Current operating lease liabilities
Non-current operating lease liabilities
Finance leases:
Current finance lease liabilities
Non-current finance lease liabilities
Total lease liabilities
Operating lease assets
Property, plant and equipment, net
Other current liabilities
Operating lease liabilities
Current portion of long-term debt
Long-term debt, less current portion
(1) Finance lease assets are recorded net of accumulated amortization of $5.8 million at June 30, 2020.
Supplemental cash flow information related to leases was as follows:
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Lease assets obtained in exchange for new lease obligations:
Operating leases
Finance leases
89
$
$
$
$
$
$
$
$
$
525.3
31.2
556.5
84.0
465.7
1.6
31.6
582.9
June 30, 2020
107.9
0.7
1.6
63.2
31.3
Annual Report 2020
90
Form 10-K
Maturities of lease liabilities are as follows:
(in millions)
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter
Total lease payments
Less: imputed interest
Present value of lease liabilities
Operating Leases
Finance Leases
99.7
89.0
77.3
66.7
49.4
280.1
662.2
112.5
549.7 $
2.9
2.8
2.6
2.6
2.2
32.6
45.7
12.5
33.2
$
The Company’s future minimum lease commitments as of June 30, 2019, under Accounting Standard Codification
Topic 840, the predecessor to Topic 842, are as follows:
(in millions)
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Thereafter
Total minimum obligations
The weighted average remaining lease term and discount rate are as follows:
Weighted average remaining lease term (in years):
Operating leases
Finance leases
Weighted average discount rate:
Operating Leases
Finance leases
Operating Leases
$
$
97.6
90.4
77.7
67.3
55.9
301.8
690.7
June 30, 2020
9.6
18.2
3.8 %
3.9 %
90
Annual Report 2020
Form 10-K
91
Note 15 - Shareholders' Equity
The changes in ordinary and treasury shares during fiscal years 2020, 2019 and 2018 were as follows:
(shares and dollars in millions)
Balance as of June 30, 2017
Options exercised and shares vested
Settlement of forward contracts to purchase own equity to
meet share base incentive plans, net of tax
Purchase of treasury shares
Balance as of June 30, 2018
Net shares issued
Options exercised and shares vested
Settlement of forward contracts to purchase own equity to
meet share base incentive plans, net of tax
Purchase of treasury shares
Acquisition of Bemis
Balance as of June 30, 2019
Share buy-back/cancellations
Options exercised and shares vested
Purchase of treasury shares
Balance as of June 30, 2020
Ordinary Shares
Treasury Shares
Number of
Shares
Amount
Number of
Shares
Amount
1,158.1
—
—
—
1,158.1
—
—
—
—
467.8
1,625.9
—
—
—
—
—
11.6
—
—
—
4.7
16.3
(57.4)
(0.6)
—
—
1,568.5
—
—
15.7
0.7
(6.0)
3.0
3.2
0.9
—
(4.0)
2.5
2.0
—
1.4
—
(1.4)
6.7
6.7
(8.1)
75.5
(39.0)
(39.1)
(10.7)
—
41.5
(25.1)
(21.8)
—
(16.1)
—
16.1
(67.0)
(67.0)
91
Annual Report 2020
92
Form 10-K
The changes in the components of accumulated other comprehensive income (loss) during the years ended June 30,
2020, 2019 and 2018 were as follows:
(in millions)
Balance as of June 30, 2017
Other comprehensive income (loss)
before reclassifications
Amounts reclassified from
accumulated other comprehensive
income (loss)
Net current period other
comprehensive income (loss)
Balance as of June 30, 2018
Other comprehensive income (loss)
before reclassifications
Amounts reclassified from
accumulated other comprehensive
income (loss)
Net current period other
comprehensive income (loss)
Balance as of June 30, 2019
Other comprehensive income (loss)
before reclassifications
Amounts reclassified from
accumulated other comprehensive
income (loss)
Net current period other
comprehensive income (loss)
Balance as of June 30, 2020
Foreign
Currency
Translation
(Net of Tax)
$
Net
Investment
Hedge
(Net of Tax)
Pension
(Net of Tax)
Effective
Derivatives
(Net of Tax)
Total Accumulated
Other
Comprehensive
Income (Loss)
(713.3) $
— $
(58.2) $
(6.6) $
(778.1)
25.8
1.4
71.2
44.0
—
44.0
(669.3)
—
—
—
—
1.8
27.6
(30.6)
(3.4)
(2.0)
(8.6)
59.9
(11.2)
(62.0)
(5.4)
—
—
3.0
1.8
59.9
(609.4)
(11.2)
(11.2)
(59.0)
(89.6)
(3.6)
(12.2)
(297.6)
(2.3)
(24.9)
(27.6)
(1.6)
69.6
(708.5)
(18.7)
4.8
(13.9)
(722.4)
(352.4)
11.1
—
8.5
5.9
25.5
(286.5)
(895.9) $
$
(2.3)
(13.5) $
(16.4)
(106.0) $
(21.7)
(33.9) $
(326.9)
(1,049.3)
92
Annual Report 2020
The following tables provide details of amounts reclassified from Accumulated other comprehensive income (loss):
Form 10-K
93
(in millions)
Amortization of pension:
Amortization of prior service credit
Amortization of actuarial loss
Effect of pension settlement/curtailment
Total before tax effect
Tax benefit on amounts reclassified into earnings
Total net of tax
(Gains) losses on cash flow hedges:
Commodity contracts
Forward exchange contracts
Treasury locks
Total before tax effect
Tax benefit on amounts reclassified into earnings
Total net of tax
(Gains) losses on foreign currency translation:
Foreign currency translation adjustment (1)
Total before tax effect
Tax benefit on amounts reclassified into earnings
Total net of tax
For the years ended June 30,
2019
2018
2020
$
$
$
$
$
$
(1.6) $
5.4
5.6
9.4
(0.9)
8.5 $
5.5 $
1.2
0.2
6.9
(1.0)
5.9 $
(1.7) $
3.4
2.2
3.9
(0.9)
3.0 $
1.6 $
0.2
—
1.8
—
1.8 $
11.1 $
— $
11.1
—
—
—
11.1 $
— $
(2.2)
5.2
(0.7)
2.3
(0.5)
1.8
(3.2)
(0.2)
—
(3.4)
—
(3.4)
—
—
—
—
(1)
Includes the loss on sale of the EC Remedy of $8.8 million, which is the result of the reclassification of accumulated foreign
currency translation amounts from accumulated other comprehensive income to earnings. Refer to Note 5, "Discontinued
Operations" for more information.
Forward contracts to purchase own shares
The Company's employee share plans require the delivery of shares to employees in the future when rights vest or
vested options are exercised. The Company currently acquires shares on the open market to deliver shares to employees to
satisfy vesting or exercising commitments. This exposes the Company to market price risk.
To manage the market price risk, the Company has entered into forward contracts for the purchase of its ordinary
shares. As of June 30, 2020, the Company has entered into forward contracts that mature in June 2021 to purchase 2.0 million
shares at an average price of $10.68. As of June 30, 2019, the Company had outstanding forward contracts for 1.0 million
shares at a price of $11.00 that matured in June 2020.
The forward contracts to purchase the Company's own shares are classified as a current liability. Equity is reduced by
an amount equal to the fair value of the shares at inception. The carrying value of the forward contracts at each reporting period
was determined based on the present value of the cost required to settle the contract.
93
Annual Report 2020
94
Form 10-K
Note 16 - Income Taxes
Amcor plc is a tax resident of the United Kingdom of Great Britain and Northern Ireland ("UK"). Prior to the
acquisition of Bemis, the ultimate parent of the Company at June 30, 2018 was Amcor Limited, which was a tax resident of
Australia.
The components of income before income taxes and equity in income (loss) of affiliated companies were as follows:
(in millions)
Domestic
Foreign
Total income before income taxes and equity in income (loss) of affiliated
companies
Years ended June 30,
2019
2018
2020
(35.6) $
860.8
31.7 $
572.4
(206.6)
929.5
$
825.2 $
604.1 $
722.9
Income tax expense consisted of the following:
(in millions)
Current tax
Domestic
Foreign
Total current tax
Deferred tax
Domestic
Foreign
Total deferred tax
Income tax expense
Years ended June 30,
2019
2018
2020
0.5 $
300.1
300.6
7.2 $
91.5
98.7
1.0
(3.2)
(114.7)
(113.7)
76.0
72.8
0.2
192.1
192.3
(21.3)
(52.2)
(73.5)
$
186.9 $
171.5 $
118.8
The following is a reconciliation of income tax computed at the UK statutory tax rate of 18.5%, 19% and 30%
(Australian) for fiscal years 2020, 2019 and 2018, respectively, to income tax expense.
(in millions)
Income tax expense at statutory rate
Foreign tax rate differential
Tax-exempt income
Non-deductible expenses
Tax law changes
Change in valuation allowance
Other
Income tax expense
Years ended June 30,
2019
2018
2020
$
152.7 $
114.8 $
70.2
—
13.2
(30.5)
(16.5)
(2.2)
59.5
—
5.6
(2.3)
(5.9)
(0.2)
216.9
(40.8)
5.7
(7.7)
(52.9)
5.3
(7.7)
$
186.9 $
171.5 $
118.8
Amcor operates in over forty different jurisdictions with a wide range of statutory tax rates. The tax expense from
operating in non-UK jurisdictions in excess of the UK statutory tax rate is included in the line "Foreign tax rate differential" in
the above tax rate reconciliation table. For fiscal year 2020, the Company's effective tax rate was 22.6% as compared to the
effective tax rates of 28.4% and 16.4% for fiscal years 2019 and 2018, respectively. The fiscal year 2020 foreign tax rate
differential reflects a benefit related to Swiss tax law changes, which was mostly offset by current period tax charges related to
true-up adjustments. Refer to the section "Swiss Tax Reform" in this footnote for a discussion of the benefit realized for Swiss
tax law changes which the Company recognized in fiscal year 2020.
For fiscal year 2020, the Company's effective tax rate for the year was higher than its UK statutory tax rate primarily
due to pretax income being earned in jurisdictions outside of the UK where the applicable tax rates are higher than the UK
statutory tax rate.
94
Annual Report 2020
Significant components of deferred tax assets and liabilities are as follows:
(in millions)
Deferred tax assets
Inventories
Accrued employee benefits
Provisions
Net operating loss carryforwards
Tax credit carryforwards
Accruals and other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities
Property, plant and equipment
Other intangible assets, including impacts from Swiss tax reform
Trade receivables
Derivatives
Undistributed foreign earnings
Total deferred tax liabilities
Net deferred tax liability
Deferred tax assets
Deferred tax liabilities
Net deferred tax liability
Form 10-K
95
June 30,
2020
2019
23.3
126.3
5.1
252.8
49.0
65.9
522.4
(363.8)
158.6
(306.6)
(349.5)
(7.2)
(5.4)
(26.9)
6.3
103.1
14.1
275.0
49.9
122.7
571.1
(290.9)
280.2
(329.2)
(638.5)
(6.7)
(20.4)
(106.2)
(695.6)
(1,101.0)
(537.0)
(820.8)
135.4
190.9
(672.4)
(1,011.7)
$
(537.0) $
(820.8)
Deferred tax liabilities relating to other intangible assets is shown net of a deferred tax asset arising from Swiss tax
reform which was recorded in the fourth quarter of fiscal year 2020 and reflected in the balance as at June 30, 2020. A valuation
allowance is recorded against the deferred tax asset to bring the net amount recorded to the amount more likely than not to be
realized. Refer to the section titled "Swiss Tax Reform" for more information.
The Company maintains a valuation allowance on net operating losses and other deferred tax assets in jurisdictions for
which it does not believe it is more likely than not to realize those deferred tax assets based upon all available positive and
negative evidence, including historical operating performance, carry-back periods, reversal of taxable temporary differences,
tax planning strategies and earnings expectations. The Company's valuation allowance increased by $72.9 million, increased by
$20.4 million and increased by $5.3 million for fiscal year 2020, 2019 and 2018, respectively. The increase of the Company’s
valuation allowance for the fiscal year ended June 30, 2020 is primarily attributed to the valuation allowance on the deferred tax
asset arising from Swiss tax reform.
The decrease in deferred tax liability related to undistributed foreign earnings in fiscal year 2020 includes the tax
impact of the EC Remedy sale of $82.5 million.
As of June 30, 2020, the Company has UK net operating losses (tax effected) and tax credits of approximately $2.9
million that do not expire. The Company has non-UK net operating losses (tax effected) and other tax attribute carryforwards of
$50.9 million, the majority of which do not expire. The Company recorded valuation allowances against deferred tax assets
associated with these net operating losses and tax credits. The benefits of these carryforwards are dependent upon the
generation of taxable income in the jurisdictions in which they arose.
The Company considers the following factors, among others, in evaluating its plans for indefinite reinvestment of its
subsidiaries' earnings: (i) the forecasts, budgets and financial requirements of the Company and its subsidiaries, both for the
long term and for the short term; and (ii) the tax consequences of any decision to reinvest earnings of any subsidiary. The
Company has not provided deferred taxes on approximately $968.2 million of earnings in certain foreign subsidiaries because
such earnings are indefinitely reinvested in its international operations. Upon distribution of such earnings in the form of
dividends or otherwise, the Company may be subject to incremental foreign tax. It is not practicable to estimate the amount of
95
Annual Report 2020
96
Form 10-K
foreign tax that might be payable. A cumulative deferred tax liability of $26.9 million has been recorded attributable to
undistributed earnings that the Company has deemed are no longer indefinitely reinvested. The remaining undistributed
earnings of the Company's subsidiaries are not deemed to be indefinitely reinvested and can be repatriated at no tax cost.
Accordingly, there is no provision for income or withholding taxes on these earnings.
The Company accounts for its uncertain tax positions in accordance with ASC 740, "Income Taxes." At June 30, 2020
and 2019, unrecognized tax benefits totaled $101.1 million and $102.6 million, respectively, all of which would favorably
impact the effective tax rate if recognized.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.
During the fiscal years ended June 30, 2020, 2019 and 2018, the Company's accrual for interest and penalties for these
uncertain tax positions was $7.1 million, $13.8 million, and $2.9 million, respectively. The Company does not currently
anticipate that the total amount of unrecognized tax benefits will result in material changes to its financial position within the
next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years presented is as follows:
(in millions)
Balance at the beginning of the year
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions from prior years
Reductions for settlements
Reductions due to lapse of statute of limitations
Additions related to acquisitions
Balance at the end of the year
2020
June 30,
2019
2018
$
102.6 $
18.7
2.3
(13.2)
(7.0)
(2.3)
—
74.5 $
12.5
8.2
(3.7)
(5.8)
(12.8)
29.7
$
101.1 $
102.6 $
65.1
6.6
8.9
(5.3)
—
(0.8)
—
74.5
The Company conducts business in a number of tax jurisdictions and, as such, is required to file income tax returns in
multiple jurisdictions globally. The years 2016 through 2019 remain open for examination by the United States Internal
Revenue Service ("IRS"), the year 2019 remains open for examination by Her Majesty’s Revenue & Customs ("HMRC") and
the years 2011 through 2019 are currently subject to audit or remain open for examination in various U.S. states and non-U.S.
tax jurisdictions.
The Company believes that its income tax reserves are adequately maintained taking into consideration both the
technical merits of its tax return positions and ongoing developments in its income tax audits. However, the final determination
of the Company's tax return positions, if audited, is uncertain and therefore there is a possibility that final resolution of these
matters could have a material impact on the Company's results of operations or cash flows.
Swiss Tax Reform
During the fiscal year ended June 30, 2020, Swiss tax laws were changed in order to remove certain tax regimes and
replace these with new measures that are hereafter referred to as "Swiss Tax Reform." In the fourth quarter of fiscal year 2020,
the Company obtained confirmation from local authorities as to the methodology to calculate the future benefits and recorded
the impact. The net impact was a benefit of $21.7 million, which consisted of a reduction in deferred tax expense from an
allowed step-up of intangible assets for tax purposes.
96
Annual Report 2020
Form 10-K
97
Note 17 - Share-based Compensation
The Company's equity incentive plans include grants of share options, restricted shares/units, performance shares,
performance rights and share rights to directors, officers and employees. In certain countries and in selected cases, cash
equivalent awards are provided in the event that the issuance of equity awards is not compliant with local legislation and tax
laws.
Cash-Settled Awards
Cash-settled awards may be granted to directors, officers and employees of the Company in lieu of, or in addition to,
participation in other programs.
Such awards are accounted for as liabilities and are remeasured to fair value at each balance sheet date.
Liabilities for cash-settled share-based compensation are as follows:
(in millions)
Total carrying amount of liabilities for cash settled arrangements
June 30,
2020
2019
$
1.1 $
2.7
During fiscal years 2020, 2019 and 2018, the Company paid $1.6 million, $2.3 million and $1.6 million in cash,
respectively, to settle these plans.
Equity-Settled Awards
Share Options
In fiscal year 2020, share options were granted to officers and employees. The exercise price for shares options was set
at the time of grant. There were no share options granted in fiscal year 2019 as they were deferred due to the transaction with
Bemis.
The requisite service period for outstanding share options in fiscal year 2020 ranges from two to four years. The
awards are also subject to performance and market conditions. At vesting, share options can be exercised and converted to
ordinary shares on a one-for-one basis, subject to payment of the exercise price. The maximum contractual term of the share
options in fiscal year 2020 ranges from five to seven years from the grant date.
The fair value of the share options granted in fiscal year 2020 was estimated using the Black-Scholes option pricing
model that uses the assumptions noted in the following table to produce a Monte Carlo simulation. The fair value of share
options granted was estimated using the following assumptions:
Expected dividend yield (%) (1)
Expected share price volatility (%) (2)
Risk-free interest rate (%) (3)
Expected life of options (in years) (4)
June 30,
2020
2019
4.6 %
18.0 %
1.8 %
5.7
N/A
N/A
N/A
N/A
(1) Determined assuming no change in dividend payout during the expected term of the option.
(2) Determined based on the observed historical volatility for the Company's ordinary share price.
(3) Determined based on the yields on U.S. Treasury Bonds in effect at the time of grant with maturities approximately equal to the
share options' expected term.
(4) Determined considering the options' contractual terms, historical exercise and post-vesting termination patterns.
The Company reassesses the probability of vesting at each reporting period and adjusts compensation expense based
on its probability assessment.
97
Annual Report 2020
98
Form 10-K
Changes in outstanding share options for the year were as follows:
Share options outstanding at June 30, 2019
Granted
Exercised
Forfeited
Share options outstanding at June 30, 2020
Vested and exercisable at June 30, 2020
Share Options
(in millions)
Weighted-
average
Exercise Price
Weighted-
average
Contractual
Life
(in years)
10.8 $
49.6
(0.2)
(4.2)
56.0 $
2.5 $
10.32
10.33
6.08
10.63
10.32
8.78
3.6
5.7
6.9
6.0
5.3
1.6
The aggregate intrinsic value (difference in exercise price and closing price at that date) for all share options
outstanding at June 30, 2020 was zero. The aggregate intrinsic value for share options vested and exercisable at June 30, 2020
was $3.6 million. The Company received $1.1 million, $19.3 million and $28.1 million and realized a tax benefit of $0.2
million, $5.5 million and $12.3 million on the exercise of stock options during the fiscal years ended June 30, 2020, 2019 and
2018, respectively. During the fiscal years ended June 30, 2020, 2019 and 2018, the intrinsic value associated with the exercise
of share options was $0.7 million, $8.3 million and $20.6 million, respectively.
The weighted-average grant date fair value of share options granted and the fair value of share options vested was as
follows:
Weighted average grant date fair value of share options granted
Fair value of share options vested (in millions)
Restricted Shares/Units
Years ended June 30,
2019
2018
2020
$
$
0.7
0.3 $
N/A $
3.8 $
1.1
5.3
Restricted shares/units may be granted to directors, officers and employees of the Company and vest on terms as
described in the award. The restrictions prevent the participant from disposing of the restricted shares/units during the vesting
period.
The fair value of restricted shares/units is determined based on the closing price of the Company's shares on the grant
date. Changes in the restricted shares/units for the year were as follows:
Non-vested restricted shares/units at June 30, 2019
Granted
Exercised
Forfeited
Non-vested restricted shares/units at June 30, 2020
Restricted
Shares/Units
(in millions)
Weighted-
average Grant
Date Fair
Value
0.5 $
0.4
(0.2)
—
0.7 $
11.4
10.1
12.1
—
10.4
The weighted-average grant date fair value of restricted shares granted and the fair value of restricted shares/units
vested was as follows:
Weighted-average grant date fair value of restricted shares granted
Fair value of restricted shares/units vested (in millions)
$
$
10.1
2.1 $
N/A $
0.2 $
11.5
1.8
Years ended June 30,
2019
2018
2020
98
Annual Report 2020
Form 10-K
99
Performance Rights and Performance Shares
In fiscal year 2020, performance rights or performance shares (awarded to U.S. participants in place of performance
rights) were granted to officers and employees. There were no performance rights or performance shares granted in fiscal year
2019 as they were deferred due to the transaction with Bemis.
The requisite service period for outstanding performance rights or performance shares in fiscal year 2020 ranges from
two to four years. The awards are also subject to performance and market conditions. At vesting, performance rights can be
exercised and converted to ordinary shares on a one-for-one basis. Performance shares vest automatically and convert to
ordinary shares on a one-for-one basis. There is no amount payable by the participant.
The fair value of the performance rights and performance shares granted in fiscal year 2020 was estimated using the
Black-Scholes option pricing model that uses the assumptions noted in the following table to produce a Monte Carlo
simulation. The fair value of the performance rights and performance shares was estimated using the following assumptions:
Expected dividend yield (%) (1)
Expected share price volatility (%) (2)
Risk-free interest rate (%) (3)
June 30,
2020
2019
4.6 %
18.0 %
1.8 %
N/A
N/A
N/A
(1) Determined assuming no change in dividend payout during the expected term of the performance rights/performance shares.
(2) Determined based on the observed historical volatility for the Company's ordinary share price.
(3) Determined based on the yields on U.S. Treasury Bonds in effect at the time of grant with maturities approximately equal to the
performance rights/performance shares expected term.
Non-vested performance rights/performance shares at June 30, 2019
Granted
Exercised
Forfeited
Non-vested performance rights/performance shares at June 30, 2020
Performance
Rights/
Performance
Shares
(in millions)
Weighted-
Average Grant
Date Fair
Value
1.7 $
5.7
(0.2)
(0.7)
6.5 $
6.3
6.7
7.1
7.0
6.5
The weighted average grant date fair value of performance rights and performance shares granted and the fair value of
performance rights/performance shares’ vested was as follows:
Weighted-average grant date fair value of performance rights/performance
shares granted
Fair value of performance rights/performance shares vested (in millions)
$
$
6.7
1.5 $
N/A $
0.1 $
6.3
0.8
Years ended June 30,
2019
2018
2020
99
Annual Report 2020
100
Form 10-K
Share Rights
Share rights may be granted to directors, officers and employees of the Company and vest on terms as described in the
award. The restrictions prevent the participant from disposing of the share rights during the vesting period.
The fair value of share rights is determined based on the closing price of the Company's shares on the grant date,
adjusted for dividend yield. Changes in the share rights for the year were as follows:
Non-vested share rights at June 30, 2019
Granted
Exercised
Forfeited
Non-vested share rights at June 30, 2020
Share Rights
(in millions)
Weighted-
Average Grant
Date Fair
Value
1.5 $
1.0
(0.9)
(0.1)
1.5 $
10.0
8.8
11.3
10.0
8.4
The weighted-average grant date fair value of share rights granted and the fair value of shares vested was as follows:
Weighted-average grant date fair value of share rights granted
Fair value of share rights vested (in millions)
Compensation Expense
Years ended June 30,
2019
2018
2020
$
$
8.8 $
10.7 $
9.2 $
13.9 $
11.0
12.9
Share-based compensation expense of $34.0 million, $18.6 million and $21.0 million was primarily recorded in
general and administrative expenses for fiscal years 2020, 2019 and 2018, respectively.
Compensation expense for share-based awards recognized in the consolidated income statements, net of estimated
forfeitures, was as follows:
(in millions)
Share options
Restricted shares/units
Performance rights/performance shares
Share rights
Cash-settled awards
Years ended June 30,
2019
2018
2020
$
11.4 $
2.8 $
2.6
11.8
8.2
—
1.6
3.0
8.5
2.7
3.0
2.8
2.9
9.7
2.6
Total share-based compensation expense
$
34.0 $
18.6 $
21.0
As of June 30, 2020, there was $73.4 million of total unrecognized compensation cost related to all unvested share
options, restricted shares/units, performance shares/performance rights and share rights. That cost is expected to be recognized
over a weighted average period of 2.1 years.
100
Annual Report 2020
Form 10-K
101
Note 18 - Earnings Per Share Computations
The Company applies the two-class method when computing its earnings per share ("EPS"), which requires that net
income per share for each class of share be calculated assuming all of the Company's net income is distributed as dividends to
each class of share based on their contractual rights.
Basic EPS is computed by dividing net income available to ordinary shareholders by the weighted-average number of
ordinary shares outstanding after excluding the ordinary shares to be repurchased using forward contracts. Diluted EPS includes
the effects of share options, restricted shares, performance rights, performance shares and share rights, if dilutive.
(in millions, except per share amounts)
Numerator
Net income attributable to Amcor plc
Distributed and undistributed earnings attributable to shares to be
repurchased
Net income available to ordinary shareholders of Amcor plc—basic and
diluted
Net income available to ordinary shareholders of Amcor plc from
continuing operations—basic and diluted
Net income available to ordinary shareholders of Amcor plc from
discontinued operations—basic and diluted
Denominator
Weighted-average ordinary shares outstanding
Weighted-average ordinary shares to be repurchased by Amcor plc
Weighted-average ordinary shares outstanding for EPS—basic
Effect of dilutive shares
Weighted-average ordinary shares outstanding for EPS—diluted
Per ordinary share income
Income from continuing operations
Income from discontinued operations
Basic earnings per ordinary share
Income from continuing operations
Income from discontinued operations
Diluted earnings per ordinary share
Years ended June 30,
2019
2020
2018
$
612.2 $
430.2 $
575.2
(0.4)
(0.8)
(1.3)
611.8 $
429.4 $
573.9
619.5 $
428.7 $
573.9
(7.7) $
0.7 $
—
1,601.0
1,182.6
(1.0)
(2.3)
1,600.0
1.6
1,601.6
1,180.3
3.5
1,183.8
1,157.1
(2.7)
1,154.4
7.3
1,161.7
0.387 $
(0.005) $
0.382 $
0.387 $
(0.005) $
0.382 $
0.363 $
0.001 $
0.364 $
0.362 $
0.001 $
0.363 $
0.497
—
0.497
0.494
—
0.494
$
$
$
$
$
$
$
$
$
Certain stock awards outstanding were not included in the computation of diluted earnings per share above because
they would not have had a dilutive effect. The excluded stock awards represented an aggregate of 36.9 million, 5.6 million and
10.3 million shares at June 30, 2020, 2019 and 2018, respectively.
101
Annual Report 2020
102
Form 10-K
Note 19 - Contingencies and Legal Proceedings
Contingencies - Brazil
The Company's operations in Brazil are involved in various governmental assessments and litigation, principally
related to claims for excise and income taxes. The Company will vigorously defend its positions and believes it will prevail on
most, if not all, of these matters. The Company does not believe that the ultimate resolution of these matters will materially
impact the Company's consolidated results of operations, financial position or cash flows. Under customary local regulations,
the Company's Brazilian subsidiaries may need to post cash or other collateral if a challenge to any administrative assessment
proceeds to the Brazilian court system; however, the level of cash or collateral already pledged or potentially required to be
pledged would not significantly impact the liquidity of Amcor. At June 30, 2020 and 2019, the Company has recorded an
accrual of $11.9 million and $16.4 million, respectively, included in other non-current liabilities in the consolidated balance
sheet and has estimated a reasonably possible loss exposure in excess of the accrual of $18.4 million and $23.7 million,
respectively. The litigation process is subject to many uncertainties and the outcome of individual matters cannot be accurately
predicted. The Company routinely assesses these matters as to probability of ultimately incurring a liability and records the best
estimate of the ultimate loss in situations where the likelihood of an ultimate loss is probable. The Company's assessments are
based on its knowledge and experience, but the ultimate outcome of any of these matters may differ from the Company's
estimates.
As of June 30, 2020, the Company provided letters of credit of $34.0 million, judicial insurance of $0.9 million and
deposited cash of $10.1 million with the courts to continue to defend the cases referenced above.
Contingencies - Environmental Matters
The Company, along with others, has been identified as a potentially responsible party ("PRP") at several waste
disposal sites under U.S. federal and related state environmental statutes and regulations and may face potentially material
environmental remediation obligations. While the Company benefits from various forms of insurance policies, actual coverage
may not, or only partially, cover the total potential exposures. The Company has recorded $17.1 million aggregate accruals for
its share of estimated future remediation costs as these sites.
In addition to the matters described above, the Company has also recorded aggregate accruals of $46.6 million for
potential liabilities for remediation obligations at various worldwide locations that are owned or operated by the Company, or
were formerly owned or operated.
While the Company believes that its accruals are adequate to cover its future obligations, there can be no assurance
that the ultimate payments will not exceed the accrued amounts. Nevertheless, based on the available information, the Company
does not believe that its potential environmental obligations will have a material adverse effect upon its liquidity, results of
operations or financial condition.
Legal Proceedings
On April 18, 2019, prior to the closure of the Amcor and Bemis transaction, litigation funding firm, Burford Capital,
notified Bemis on behalf of two shareholder funds (BCIM Strategic Value Master Fund LP and BCIM SV SMA I LLC) that the
funds would not accept the fixed exchange ratio for Amcor shares and instead intended to file a case asking a Missouri state
court to appraise the value of their Bemis shares and compensate them accordingly. On June 24, 2019, the Burford funds sent a
formal written demand for payment of the fair value of the funds’ shares. On September 6, 2019, the Burford funds filed a
Petition for Appraisal of Stock in the Missouri court. On November 4, 2019, Bemis filed an Answer to the Petition for
Appraisal of Stock. On June 24, 2020, the parties entered into a Confidential Settlement Agreement and Release of all claims
and two days later the case was dismissed with prejudice.
Two lawsuits brought by purported holders of Bemis stock against Bemis and Bemis directors and officers are pending
in federal court in the U.S. District Court for the Southern District of New York, in which plaintiffs are seeking damages for
alleged violations of the Securities Exchange Act of 1934, as amended, and U.S. Securities and Exchange Commission rules
and regulations. Plaintiffs allege a failure to disclose adequately information in the proxy statement issued in connection with
the Amcor-Bemis merger. The cases are: Dixon, et al. v. Bemis Company, Inc. et al. and Stein v. Bemis Company, Inc. et al.,
which were instituted on April 15, 2019 and April 17, 2019, respectively. On March 10, 2020 the federal court in the U.S.
District Court for the Southern District of New York consolidated the two pending cases into a single class action.
102
Annual Report 2020
Form 10-K
103
In addition, a purported holder of Bemis stock filed a putative derivative suit in the Cole County Circuit Court,
Nineteenth Judicial District of Missouri, against Bemis directors and Amcor, alleging that the directors breached fiduciary
duties in connection with the Amcor-Bemis merger and that Amcor aided and abetted breaches of fiduciary duty. The case is
Scarantino, et al. v. Amcor Limited, et al., which was instituted on April 19, 2019.
The Company intends to defend the claims made in the pending actions. It is too early for the Company to provide any
reliable assessment of the likely quantum of any damages that may become payable if its defense is unsuccessful in whole or in
part. Although it is not possible at present to establish a reliable assessment of damages, there can be no assurance that any
damages that may be awarded will not be material to the results of operations or financial condition of the Company.
103
Annual Report 2020
104
Form 10-K
Note 20 - Segments
The Company's business is organized and presented in the two reportable segments outlined below:
Flexibles: Consists of operations that manufacture flexible and film packaging in the food and beverage, medical and
pharmaceutical, fresh produce, snack food, personal care, and other industries.
Rigid Packaging: Consists of operations that manufacture rigid plastic containers for a broad range of predominantly beverage
and food products, including carbonated soft drinks, water, juices, sports drinks, milk-based beverages, spirits and beer, sauces,
dressings, spreads and personal care items and plastic caps for a wide variety of applications.
Other consists of the Company's equity method investments, including AMVIG, undistributed corporate expenses,
intercompany eliminations and other business activities.
Operating segments are organized along the Company's product lines and geographical areas. In conjunction with the
acquisition of Bemis, the Company reassessed its segment reporting structure in the first fiscal quarter of 2020 and elected to
disaggregate the Flexibles Americas operating segment into Flexibles North America and Flexibles Latin America. The five
Flexibles operating segments (Flexibles Europe, Middle East and Africa; Flexibles North America, Flexibles Latin America;
Flexibles Asia Pacific and Specialty Cartons) have been aggregated in the Flexibles reporting segment as they exhibit similarity
in economic characteristics and future prospects, similarity in the products they offer, their production technologies, the
customers they serve, the nature of their service delivery models, and their regulatory environments.
In the fourth quarter of fiscal year 2019, in connection with the acquisition of Bemis, the Company changed its
measure of segment performance from adjusted operating income to adjusted earnings before interest and tax ("Adjusted
EBIT") from continuing operations. The Company's chief operating decision maker, the Global Management Team ("GMT"),
evaluates performance and allocates resources based on Adjusted EBIT from continuing operations. The Company defines
Adjusted EBIT as operating income adjusted to eliminate the impact of certain items that the Company does not consider
indicative of its ongoing operating performance and to include equity in income (loss) of affiliated companies. The GMT
consists of the Managing Director and Chief Executive Officer and his direct reports and provides strategic direction and
management oversight of the day to day activities of the Company.
The accounting policies of the reportable segments are the same as those in the consolidated financial statements and
are discussed in Note 2, "Significant Accounting Policies." The Company also has investments in operations in AMVIG that are
accounted for under the equity method of accounting and, accordingly, those results are not included in segment net sales.
104
Annual Report 2020
Form 10-K
105
The following table presents information about reportable segments:
(in millions)
Sales including intersegment sales
Flexibles
Rigid Packaging
Other
Total sales including intersegment sales
Intersegment sales
Flexibles
Rigid Packaging
Other
Total intersegment sales
Net sales
Adjusted EBIT from continuing operations
Flexibles
Rigid Packaging
Other
Adjusted EBIT from continuing operations
Less: Material restructuring programs (1)
Less: Impairments in equity method investments (2)
Less: Material acquisition costs and other (3)
Less: Amortization of acquired intangible assets from business
combinations (4)
Add/(Less): Economic net investment hedging activities not qualifying for
hedge accounting (5)
Less: Impact of hyperinflation (6)
Add: Net legal settlements (7)
Less: Pension settlements (8)
EBIT from continuing operations
Interest income
Interest expense
Equity in income (loss) of affiliated companies, net of tax
Income from continuing operations before income taxes and equity in
income (loss) of affiliated companies
Years ended June 30,
2019
2020
2018
$
9,754.7 $
2,716.3
—
12,471.0
6,566.7 $
2,892.7
—
9,459.4
6,534.6
2,787.5
—
9,322.1
3.5
—
—
3.5
1.2
—
—
1.2
3.0
—
—
3.0
$
12,467.5 $
9,458.2 $
9,319.1
1,335.1
290.1
817.2
308.2
(128.1)
(50.0)
801.3
298.3
(43.2)
1,497.1
1,075.4
1,056.4
(105.7)
(25.6)
(64.1)
(14.0)
(145.6)
(143.1)
(14.4)
(36.5)
—
(191.1)
(31.1)
(19.3)
—
1.4
(83.9)
(27.7)
(30.2)
—
(5.5)
995.9
22.2
5.0
—
799.3
16.8
—
—
—
902.3
13.1
(206.9)
(207.9)
(210.0)
14.0
(4.1)
17.5
$
825.2 $
604.1 $
722.9
(1) Material restructuring programs includes the 2018 Rigid Packaging Restructuring Plan and the 2019 Bemis Integration Plan for
(2)
fiscal year 2020, the 2018 Rigid Packaging Restructuring Plan for the fiscal year 2019, and the 2016 Flexibles Restructuring Plan
for fiscal year 2018. Refer to Note 6, "Restructuring Plans," for more information about the Company's restructuring plans.
Impairments in equity method investments includes the impairment charges related to other-than-temporary impairments related to
the investment in AMVIG. Refer to Note 7, "Equity Method Investments" for more information about the Company's equity method
investments.
(3) During fiscal year 2020, material acquisition costs and other includes $57.8 million amortization of Bemis acquisition related
inventory fair value step-up and $87.8 million of Bemis transaction related costs and integration costs not qualifying as exit costs,
including certain advisory, legal, audit and audit related fees. During fiscal year 2019, material acquisition costs and other includes
$47.9 million of costs related to the 2019 Bemis Integration Plan, $15.6 million of Bemis acquisition related inventory fair value
step-up, $42.5 million of long-lived asset impairments, $133.7 million of Bemis transaction-related costs, partially offset by
$96.5 million of gain related to the U.S. Remedy sale net of related and other costs.
(4) Amortization of acquired intangible assets from business combinations includes amortization expenses related to all acquired
intangible assets from acquisitions impacting the periods presented, including $26.4 million and $4.5 million of sales backlog
amortization for the fiscal year 2020 and 2019, respectively, from the Bemis acquisition.
105
Annual Report 2020
106
Form 10-K
(5) Economic net investment hedging activities not qualifying for hedge accounting includes the exchange rate movements on external
loans not deemed to be effective net investment hedging instruments resulting from the Company's conversion to U.S. GAAP from
Australian Accounting Standards ("AAS") recognized in other non-operating income (loss), net.
Impact of hyperinflation includes the adverse impact of highly inflationary accounting for subsidiaries in Argentina where the
functional currency was the Argentine Peso.
(6)
(7) Net legal settlements includes the impact of significant legal settlements after associated costs.
(8)
Impact of pensions settlements includes the amount of actuarial losses recognized in the consolidated income statement related to
the settlement of certain defined benefit plans, not including related tax effects.
The tables below present additional financial information by reportable segments:
(in millions)
Flexibles
Rigid Packaging
Other
Total capital expenditures for the acquisition of long-lived assets
(in millions)
Flexibles
Rigid Packaging
Other
Total depreciation and amortization
Years ended June 30,
2019
2020
2018
270.6
125.2
3.7
399.5
$
$
202.0 $
125.5
4.7
332.2 $
217.1
138.9
9.0
365.0
Years ended June 30,
2019
2020
2018
$
477.4
111.4
18.4
233.6 $
112.7
3.4
607.2
$
349.7 $
227.4
122.6
2.7
352.7
$
$
$
$
Total assets by segment is not disclosed as the GMT does not use total assets by segment to evaluate segment
performance or allocate resources and capital.
The Company did not have sales to a single customer that exceeded 10% of consolidated net sales for year ended June
30, 2020. Sales to PepsiCo., and its subsidiaries, accounted for approximately 11.1% and 11.0% of net sales under multiple
separate contractual agreements for the years ended June 30, 2019 and 2018, respectively. The Company sells to this customer
in both the Rigid Packaging and the Flexibles segments. The Company had no other customers that accounted for more than
10% of net sales in each of those years.
Sales by major product were:
(in millions)
Films and other flexible products
Specialty flexible folding cartons
Containers, preforms and closures
Net sales
Segment
Flexibles
Flexibles
Rigid Packaging
Years ended June 30,
2019
2020
2018
$
8,636.8 $
5,347.5 $
5,286.6
1,114.4
2,716.3
$
12,467.5 $
1,218.0
2,892.7
9,458.2 $
1,245.0
2,787.5
9,319.1
The following table provides long-lived asset information for the major countries in which the Company operates.
Long-lived assets include property, plant and equipment, net of accumulated depreciation and impairments.
(in millions)
Long-lived assets by country:
United States of America
Other countries (1)
Long-lived assets
June 30,
2020
2019
$
$
1,559.7 $
1,702.0
2,055.1
2,273.0
3,614.8 $
3,975.0
(1)
Includes our country of domicile, Jersey. The Company had no long-lived assets in Jersey in any period shown. No individual
country represented more than 10% of the respective totals.
106
Annual Report 2020
The following tables disaggregate net sales information by geography in which the Company operates based on
manufacturing or selling operation:
Form 10-K
107
(in millions)
North America
Latin America
Europe (1)
Asia Pacific
Net sales
Year Ended June 30, 2020
Rigid
Packaging
Total
Flexibles
$
$
3,636.5 $
957.1
3,664.8
1,492.8
9,751.2 $
2,219.2
497.1
—
—
2,716.3 $
5,855.7
1,454.2
3,664.8
1,492.8
12,467.5
(1)
Includes our country of domicile, Jersey. The Company had no sales in Jersey in any period shown.
(in millions)
North America
Latin America
Europe (1)
Asia Pacific
Net sales
Year Ended June 30, 2019
Rigid
Packaging
Total
Flexibles
$
951.2 $
541.7
3,713.4
1,359.2
2,331.3
561.4
—
—
3,282.5
1,103.1
3,713.4
1,359.2
$
6,565.5 $
2,892.7 $
9,458.2
(1)
Includes our country of domicile, Jersey. The Company had no sales in Jersey in any period shown.
(in millions)
North America
Latin America
Europe (1)
Asia Pacific
Net sales
Year Ended June 30, 2018
Rigid
Packaging
Total
Flexibles
$
791.2 $
2,254.5
529.4
3,828.0
1,383.0
533.0
—
—
3,045.7
1,062.4
3,828.0
1,383.0
$
6,531.6 $
2,787.5 $
9,319.1
(1)
Includes our country of domicile, Jersey. The Company had no sales in Jersey in any period shown.
107
Annual Report 2020
108
Form 10-K
Note 21 - Deed of Cross Guarantee
The parent entity, Amcor plc, and its wholly owned subsidiaries listed below are subject to a Deed of Cross Guarantee
dated June 24, 2019 (the "Deed") under which each company guarantees the debts of the others:
Amcor Pty Ltd
Amcor Services Pty Ltd
Amcor Investments Pty Ltd
Amcor Finance Australia Pty Ltd
Packsys Pty Ltd
Amcor Flexibles (Dandenong) Pty Ltd
Amcor European Holdings Pty Ltd
Amcor Holdings (Australia) Pty Ltd
Techni-Chem Australia Pty Ltd
Amcor Flexibles Group Pty Ltd
Amcor Flexibles (Australia) Pty Ltd
Packsys Holdings (Aus) Pty Ltd
Amcor Flexibles (Port Melbourne) Pty Ltd
Amcor Packaging (Asia) Pty Ltd
ARP North America Holdco Ltd ARP LATAM Holdco Ltd
The entities above were the only parties to the Deed at June 30, 2020 and comprise the closed group for the purposes
of the Deed (and also the extended closed group). ARP North America Holdco Ltd and ARP LATAM Holdco Ltd are newly
incorporated entities and were added to the deed on September 25, 2019. No other parties have been added, removed or the
subject to a notice of disposal since June 24, 2019.
By entering into the Deed, the wholly owned subsidiaries have been relieved from the requirement to prepare a
financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The following financial statements are additional disclosure items specifically required by ASIC and represent the
consolidated results of the entities subject to the Deed only.
108
Annual Report 2020
Deed of Cross Guarantee
Statement of Income
(in millions)
For the year ended June 30,
Net sales
Cost of sales
Gross profit
Operating expenses
Other income, net
Operating income
Interest income
Interest expense
Other non-operating income (loss), net
Form 10-K
109
2020
2019
$
323.6 $
(274.1)
352.8
(301.2)
49.5
51.6
(24.5)
4,167.0
(164.4)
1,138.5
4,192.0
1,025.7
24.8
(29.9)
(0.5)
34.7
(80.0)
6.9
Income from continuing operations before income taxes
4,186.4
987.3
Income tax credit
Net income
(22.6)
8.0
$
4,163.8 $
995.3
109
Annual Report 2020
110
Form 10-K
Deed of Cross Guarantee
Summarized Statement of Comprehensive Income
(in millions)
For the year ended June 30,
Net income
Other comprehensive income (loss) (1) :
Net gains (losses) on cash flow hedges, net of tax
Foreign currency translation adjustments, net of tax
Net investment hedge of foreign operations, net of tax
Other comprehensive income (loss)
Comprehensive (income) loss attributable to non-controlling interest
Total comprehensive income
2020
2019
$
4,163.8 $
995.3
(0.1)
34.2
(1.9)
32.2
—
4,196.0 $
(1.0)
78.0
(11.6)
65.4
—
1,060.7
$
(1) All of the items in other comprehensive income (loss) may be reclassified subsequently to profit or loss.
Deed of Cross Guarantee
Summarized Statement of Income and Accumulated Losses
(in millions)
For the year ended June 30,
Retained earnings, beginning balance
Net income
2020
2019
$
2,519.0 $
4,163.8
2,189.6
995.3
Accumulated profits before distribution
6,682.8
3,184.9
Dividends recognized during the financial period
(747.6)
(665.9)
Accumulated gains at the end of the financial period
$
5,935.2 $
2,519.0
110
Annual Report 2020
Form 10-K
111
Deed of Cross Guarantee
Balance Sheet
(in millions)
As of June 30,
2020
2019
Assets
Current assets:
Cash and cash equivalents
Trade receivables, net
Inventories
Prepaid expenses and other current assets
Total current assets
Non-current assets:
Property, plant and equipment, net
Deferred tax assets
Other intangible assets, net
Goodwill
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities:
Short-term debt
Trade payables
Accrued employee costs
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term debt, less current portion
Other non-current liabilities
Total liabilities
Shareholders' Equity
Issued
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total shareholders' equity
Total liabilities and shareholders' equity
Note 22 - Supplemental Cash Flow Information
Supplemental cash flow information is as follows:
For the years ended June 30,
Interest paid, net of amounts capitalized
Income taxes paid
$
$
$
37.2 $
787.2
57.5
13.7
895.6
76.8
23.3
10.4
91.2
12,454.6
12,656.3
13,551.9 $
507.3
143.3
17.8
40.7
709.1
355.8
2.9
1,067.8
15.7
5,500.9
5,935.2
1,032.3
12,484.1
13,551.9 $
52.3
801.5
65.5
14.3
933.6
82.0
53.0
9.6
93.1
10,417.7
10,655.4
11,589.0
155.3
190.8
19.0
66.7
431.8
1,587.7
3.3
2,022.8
16.3
6,030.8
2,519.0
1,000.1
9,566.2
11,589.0
2020
2019
2018
$
212.3 $
219.8 $
304.4
147.7
209.4
149.7
Non-cash investing activities includes the purchase of property and equipment for which payment has not been made.
For the fiscal years ended 2020, 2019 and 2018, purchase of property and equipment, accrued but unpaid, was $78.0 million,
$75.0 million and $68.4 million, respectively.
Non-cash financing activities includes ordinary shares issued for acquisitions. For the fiscal year 2019, the Company
issued $5,229.6 million as total equity consideration related to the Bemis acquisition.
111
Annual Report 2020
112
Form 10-K
Note 23 - Quarterly Financial Information (Unaudited)
(in millions, except per share data)
Fiscal Year 2020
Net sales
Gross profit
Net income attributable to Amcor plc
Basic earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
Fiscal Year 2019 (1)
Net sales
Gross profit
Net income attributable to Amcor plc
Basic earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
September 30 December 31
March 31
June 30
Total
Quarter Ended
3,140.7
546.7
66.0
3,043.1
617.3
185.6
3,141.0
652.0
181.5
3,142.7
719.5
179.1
12,467.5
2,535.5
612.2
0.045
(0.005)
0.041
0.045
(0.005)
0.041
0.115
—
0.115
0.115
—
0.115
0.114
—
0.114
0.114
—
0.114
0.113
—
0.113
0.113
—
0.113
0.387
(0.005)
0.382
0.387
(0.005)
0.382
2,262.4
393.8
98.4
2,285.4
453.0
138.6
2,309.9
419.8
112.6
2,600.5
532.5
80.6
9,458.2
1,799.1
430.2
0.085
—
0.085
0.085
—
0.085
0.120
—
0.120
0.120
—
0.120
0.097
—
0.097
0.097
—
0.097
0.061
0.001
0.062
0.060
0.001
0.061
0.363
0.001
0.364
0.362
0.001
0.363
(1) The fourth quarter of fiscal 2019 reflects the results of Amcor plc, including Bemis results since the acquisition date of June 11,
2019. The earlier quarters solely reflect the results of Amcor Limited.
(2) Per share amounts are computed independently for each of the quarters presented. The sum of the quarters may not equal the total
year amount due to the impact of changes in average quarterly shares outstanding.
Note 24 - Subsequent Events
On August 18, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.115 per share to be
paid on September 23, 2020 to shareholders of record as of September 3, 2020. Amcor has received a waiver from the
Australian Securities Exchange ("ASX") settlement operating rules, which will allow Amcor to defer processing conversions
between its ordinary share and CHESS Depositary Instrument ("CDI") registers from September 2, 2020 to September 3, 2020,
inclusive.
112
Annual Report 2020
Note 23 - Quarterly Financial Information (Unaudited)
Item 9. - Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Form 10-K
113
(in millions, except per share data)
September 30 December 31
March 31
June 30
Total
Quarter Ended
Fiscal Year 2020
Net sales
Gross profit
Net income attributable to Amcor plc
Basic earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
Fiscal Year 2019 (1)
Net sales
Gross profit
Net income attributable to Amcor plc
Basic earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share: (2)
Income from continuing operations
Income from discontinued operations
Net income
3,140.7
546.7
66.0
3,043.1
617.3
185.6
3,141.0
652.0
181.5
3,142.7
719.5
179.1
12,467.5
2,535.5
612.2
2,262.4
393.8
98.4
2,285.4
453.0
138.6
2,309.9
419.8
112.6
2,600.5
532.5
80.6
9,458.2
1,799.1
430.2
0.045
(0.005)
0.041
0.045
(0.005)
0.041
0.085
—
0.085
0.085
—
0.085
0.115
—
0.115
0.115
—
0.115
0.120
—
0.120
0.120
—
0.120
0.114
—
0.114
0.114
—
0.114
0.097
—
0.097
0.097
—
0.097
0.113
—
0.113
0.113
—
0.113
0.061
0.001
0.062
0.060
0.001
0.061
0.387
(0.005)
0.382
0.387
(0.005)
0.382
0.363
0.001
0.364
0.362
0.001
0.363
(1) The fourth quarter of fiscal 2019 reflects the results of Amcor plc, including Bemis results since the acquisition date of June 11,
2019. The earlier quarters solely reflect the results of Amcor Limited.
(2) Per share amounts are computed independently for each of the quarters presented. The sum of the quarters may not equal the total
year amount due to the impact of changes in average quarterly shares outstanding.
Note 24 - Subsequent Events
On August 18, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.115 per share to be
paid on September 23, 2020 to shareholders of record as of September 3, 2020. Amcor has received a waiver from the
Australian Securities Exchange ("ASX") settlement operating rules, which will allow Amcor to defer processing conversions
between its ordinary share and CHESS Depositary Instrument ("CDI") registers from September 2, 2020 to September 3, 2020,
inclusive.
None.
Item 9A. - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures as of June 30, 2020. The term "disclosure controls and procedures," as
defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a
company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to our management, including its principal executive and financial
officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and
procedures, no matter how well designed, and operated, can provide only reasonable assurance of achieving their objectives and
management necessarily applies its judgement in evaluating the cost-benefit relationship of possible controls and procedures.
Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures were not effective as of June 30, 2020 due to a material weakness in internal control over
financial reporting that was identified in our prospectus filed with the SEC on March 25, 2019 and is still being remediated, as
described below.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our
management evaluated the design and operating effectiveness of the Company's internal control over financial reporting based
on the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the "COSO framework" (2013)).
Our internal control over financial reporting includes policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in
accordance with management and directors of the Company's authorization; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company's assets that could have a material effect on the financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be
prevented or detected on a timely basis. All internal control systems, no matter how well designed, have inherent limitations.
Accordingly, even effective internal controls and procedures can provide only reasonable assurance with respect to financial
statement preparation and presentation.
As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended June 30,
2019, we identified a material weakness arising from deficiencies in the design and operating effectiveness of internal controls
over the period end reporting process. Specifically, we did not design and maintain effective controls to verify that conflicting
duties were appropriately segregated within key IT systems used in the preparation and reporting of financial information. This
control deficiency did not result in a misstatement of our consolidated financial statements. However, the control deficiency
could have resulted in misstatements of our interim or annual consolidated financial statements and disclosures that may have
not been prevented or detected on a timely basis.
112
113
Annual Report 2020
114
Form 10-K
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30,
2020. Based on this evaluation, our management concluded that we did not maintain effective internal control over financial
reporting as of June 30, 2020 given a previously identified material weakness had not been remediated as of fiscal 2020 year
end.
The effectiveness of our internal control over financial reporting as of June 30, 2020, has been audited by
PricewaterhouseCoopers AG, an independent registered public accounting firm, as stated in their report, which appears on
"Item 8. - Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Plan for Remediation of Material Weakness
We are currently in the process of remediating the material weakness related to deficiencies in the design and
operating effectiveness of internal controls over period end reporting through a process to (i) develop and implement additional
controls and procedures to reduce the number of segregation of duties conflicts within key IT systems, which includes the
implementation of new security roles and the automation of segregation of duties monitoring where practical, (ii) design and
implement additional compensating controls where necessary and (iii) develop training on segregation of duties. Given we
operate many ERP systems globally, this effort has targeted the largest locations with standardized systems in fiscal 2020 and
will be expanded to other locations in fiscal 2021. These enhanced processes, including the implementation of new mitigating
controls, will effectively remediate the material weakness, but the material weakness will not be considered remediated until the
revised controls operate for a sufficient period of time and we have concluded, through testing, they are designed and operating
effectively. We currently expect that the remediation of this material weakness will be completed by the end of fiscal 2021.
However, there is no assurance that the material weakness will be fully remediated by the end of fiscal 2021 as the severity and
length of the 2019 Novel Coronavirus ("COVID-19") pandemic is unknown and the remediation timeline could be negatively
impacted because of inefficiencies caused by COVID-19 limitations on travel, meetings and on-site work.
Completed Remediation of Previously Reported Material Weakness
As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended June 30,
2019, we identified a material weakness related to a lack of experience in technical accounting in U.S. GAAP and U.S.
domestic registrant filing requirements. Since the material weakness has been identified, we have taken numerous steps to
address the underlying causes and to remediate the material weakness. We have hired additional financial reporting personnel
with U.S. GAAP technical accounting and financial reporting experience, as well as U.S. domestic registrant filing experience,
aligned our accounting policies and procedures with U.S. GAAP, enhanced our internal review procedures during the financial
close process with U.S. GAAP experienced staff, and have conducted technical training for accounting and finance personnel.
During our fourth fiscal quarter of 2020, we completed our testing of the operating effectiveness of the implemented steps and
found them to be effective. As a result, we have concluded the material weakness has been remediated as of June 30, 2020.
Changes in Internal Control Over Financial Reporting
Except as described above, there were no changes in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth fiscal quarter of 2020 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. - Other Information
None.
PART III
Item 10. - Directors, Executive Officers and Corporate Governance
The information required to be submitted in response to this item is omitted because a definitive proxy statement
containing such information will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120
days after June 30, 2020, and such information is expressly incorporated herein by reference. Information with respect to our
executive officers appears in Part I of this Annual Report on Form 10-K.
Our Board Committee Charters, Corporate Governance Guidelines, and our Code of Conduct & Ethics Policy can be
electronically accessed at our website (http://www.amcor.com/investors) under "Corporate Governance" or, free of charge, by
114
Annual Report 2020
Form 10-K
115
writing directly to the Company, Attention: Corporate Secretary. Our Board of Directors has adopted a Code of Conduct that
applies to our principal executive officer, principal financial officer, principal accounting officer, and other persons performing
similar functions. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to or
waivers from our Code of Conduct by posting such information on the Investor Relations section of our website promptly
following the date of such amendment or waiver.
We are not including the information contained on our website as part of, or incorporating it by reference into, this
report.
Item 11. - Executive Compensation
Information required to be submitted in response to this item is omitted because a definitive proxy statement
containing such information will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120
days after June 30, 2020, and such information is expressly incorporated herein by reference.
Item 12. - Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Equity compensation plans as of June 30, 2020 were as follows:
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
64,624,420 (1) $
10.32 (2)
69,848,225 (3)
—
64,624,420 (1) $
—
10.32 (2)
—
69,848,225 (3)
Plan Category
Equity compensation
plans approved by
security holders
Equity compensation
plans not approved by
security holders
Total
(1)
Includes outstanding options awards of 55,994,907, which have a weighted average exercise price of $10.32, 6,539,330 awards of
ordinary shares issuable upon vesting of performance shares/rights, 1,442,874 awards of ordinary shares issuable upon vesting of
share rights and 647,309 restricted shares issued under the share retention plan.
(2) Performance shares/rights, share rights, restricted share awards and non-executive director share plans are excluded when
determining the weighted-average exercise price of outstanding options.
(3) May be issued as options, performance shares/rights, share rights or restricted shares.
The additional information required to be submitted in response to this item is omitted because a definitive proxy
statement containing such information will be filed with the Securities and Exchange Commission pursuant to Regulation 14A
within 120 days after June 30, 2020, and such information is expressly incorporated herein by reference.
Item 13. - Certain Relationships and Related Transactions, and Director Independence
The information required to be submitted in response to this item is omitted because a definitive proxy statement
containing such information will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120
days after June 30, 2020, and such information is expressly incorporated herein by reference.
Item 14. - Principal Accountant Fees and Services
The information required to be submitted in response to this item is omitted because a definitive proxy statement
containing such information will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120
days after June 30, 2020, and such information is expressly incorporated herein by reference.
115
Annual Report 2020
116
Form 10-K
PART IV
Item 15. - Exhibits and Financial Statement Schedules
(a) Financial Statements, Financial Statement Schedule, and Exhibits
(1) Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Equity
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts and Reserves
All other schedules are omitted because they are not applicable or the required information is shown
in the financial statements or notes thereto.
44
48
49
50
51
52
53
122
Exhibit
Description
Form of Filing
Incorporated by
Reference
2 .1
3 .1
3 .2
4 .1
4 .2
4 .3
4 .4
4 .5
Transaction Agreement, dated as of August 6, 2018, by and among the Amcor plc, Amcor
Limited, Arctic Corp. and Bemis Company, Inc. (“Bemis”) (incorporated by reference to Annex
A to Amcor plc's Registration Statement on Form S-4 filed on March 12, 2019).
Articles of Association of Amcor plc (incorporated by reference to Exhibit 3.1 to Amcor plc’s
Current Report on Form 8-K filed on June 13, 2019).
Incorporated by
Reference
Memorandum of Association of Amcor plc (incorporated by reference to Exhibit 3.2 to Amcor
plc’s Registration Statement on Form S-4 filed on March 12, 2019).
Incorporated by
Reference
Note and Guarantee Agreement, dated as of December 15, 2009, as amended by Amendment
No. 1 dated as of June 28, 2013 and Amendment No. 2, dated as of June 6, 2019, among Amcor
Finance (USA), Inc. (“AFUI”), Amcor Limited and the other parties thereto (the “2009 Note
Agreement”), relating to the 5.95% Series C Guaranteed Senior Notes due 2021 (the “2009
Series C Notes”) (incorporated by reference to Exhibit 10.1 to Amcor plc’s Current Report on
Form 8-K filed on June 27, 2019).
Note and Guarantee Agreement, dated as of September 1, 2010, as amended by Amendment No.
1, dated as of June 28, 2013 and Amendment No. 2, dated as of June 6, 2019, among Amcor
Limited, AFUI and the other parties thereto (the “2010 Note Agreement”), relating to the 5.00%
Series B Guaranteed Senior Notes due 2020 (the “2010 Series B Notes”) (incorporated by
reference to Exhibit 10.2 to Amcor plc’s Current Report on Form 8-K, filed on June 27, 2019).
Trust Deed, dated as of February 28, 2011, among Amcor Limited, AFUI, Amcor UK Finance
Limited and DB Trustees (Hong Kong) Limited (the “Principal Trust Deed”) (incorporated by
reference to Exhibit 4.3 to Amcor plc’s Registration Statement on Form S-4 filed on March 12,
2019).
Final Terms, dated as of March 11, 2011, among Amcor Limited, AFUI and Amcor UK Finance
Limited, relating to the 4.625% Notes due 2019 (incorporated by reference to Exhibit 4.4 to
Amcor plc’s Registration Statement on Form S-4 filed on March 12, 2019).
First Supplemental Trust Deed, dated as of October 26, 2012, among Amcor Limited, AFUI,
Amcor UK Finance Limited and DB Trustees (Hong Kong) Limited (incorporated by reference
to Exhibit 4.5 to Amcor plc’s Registration Statement on Form S-4 filed on March 12, 2019).
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Annual Report 2020 Form 10-K
117
Form of Filing
Incorporated by
Reference
Exhibit
Description
4 .6
4 .7
4 .8
4 .9
4 .10
4 .11
4 .12
4 .13
4 .14
4 .15
4 .16
4 .17
4 .18
4 .19
4 .20
4 .21
4 .22
4 .23
Second Supplemental Trust Deed dated as of July 22, 2019 to the Principal Trust Deed, among
Amcor Limited, AFUI, Amcor plc, Bemis and the guarantors party thereto (incorporated by
reference to Exhibit 10.1 to Amcor plc’s Current Report on Form 8-K filed on July 26, 2019).
Final Terms, dated as of March 20, 2013, among Amcor Limited, Amcor Finance (USA), Inc. and
Amcor UK Finance Limited, relating to the 2.750% Notes due 2023 (incorporated by reference to
Exhibit 4.6 to Amcor plc’s Registration Statement on Form S-4 filed on March 12, 2019).
Incorporated by
Reference
Indenture, dated as of April 28, 2016, among Amcor Finance (USA), Inc., Amcor Limited, Amcor
UK Finance PLC and Deutsche Bank Trust Company Americas (incorporated by reference to
Exhibit 4.7 to Amcor plc’s Registration Statement on Form S-4 filed on March 12, 2019).
Form of 3.625% Notes due 2026 (incorporated by reference to Exhibit 4.8 to Amcor plc’s
Registration Statement on Form S-4 filed on March 12, 2019).
Form of 4.500% Notes due 2028 (incorporated by reference to Exhibit 4.9 to Amcor plc’s
Registration Statement on Form S-4 filed on March 12, 2019).
Form of 6.80% Notes due 2019 (incorporated by reference to Exhibit 4.11 to Amcor plc’s
Registration Statement on Form S-4 filed on March 12, 2019).
Form of 4.500% Notes due 2021 (incorporated by reference to Exhibit 4.12 to Amcor plc’s
Registration Statement on Form S-4 filed on March 12, 2019). I
Form of 3.100% Notes due 2026 (incorporated by reference to Exhibit 4.13 to Amcor plc’s
Registration Statement on Form S-4 filed on March 12, 2019).
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Form of 2.630% Guaranteed Senior Note Due 2030 (incorporated by reference to Exhibit 4.2 on
Amcor plc’s Current Report on Form 8-K filed on June 19, 2020).
Incorporated by
Reference
Form of 1.125% Guaranteed Senior Note Due 2027 (incorporated by reference to Exhibit 4.2 on
Amcor plc’s Current Report on Form 8-K filed on June 23, 2020).
Incorporated by
Reference
Supplemental Indenture, dated as of June 13, 2019, by and between Bemis and U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 10.1 on Amcor plc’s
Current Report on Form 8-K filed on June 17, 2019).
Supplemental Indenture, dated as of June 13, 2019, by and among AFUI, Amcor Limited, Amcor
UK Finance plc and Deutsche Bank Trust Company Americas, as trustee (incorporated by
reference to Exhibit 10.2 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Indenture, dated as of June 13, 2019, by and among Bemis, as issuer, Amcor plc, Amcor
Limited, AFUI, Amcor UK Finance plc and Deutsche Bank Trust Company Americas, as trustee
(incorporated by reference to Exhibit 10.3 on Amcor plc’s Current Report on Form 8-K filed on
June 17, 2019).
Indenture, dated as of June 13, 2019, by and among AFUI, as issuer, Amcor plc, Amcor Limited,
Bemis, Amcor UK Finance plc and Deutsche Bank Trust Company Americas, as trustee
(incorporated by reference to Exhibit 10.4 on Amcor plc’s Current Report on Form 8-K filed on
June 17, 2019).
Indenture, dated as of June 19, 2020, by and among Bemis, as issuer, Amcor plc, Amcor Finance
(USA), Inc., Amcor UK Finance plc, Amcor Pty Ltd and Deutsche Bank Trust Company
Americas, the trustee (incorporated by reference to Exhibit 4.1 on Amcor plc’s Current Report
on Form 8-K filed on June 19, 2020).
Indenture, dated as of June 23, 2020, by and among Amcor UK Finance plc, as issuer, Amcor
plc, Amcor Finance (USA), Inc., Amcor Pty Ltd, Bemis Company, Inc. and Deutsche Bank Trust
Company Americas, the trustee (incorporated by reference to Exhibit 4.1 on Amcor plc’s Current
Report on Form 8-K filed on June 23, 2020).
Registration Rights Agreement, dated as of June 13, 2019, by and among Bemis, Amcor plc,
Amcor Limited, AFUI, Amcor UK Finance plc and Citigroup Global Markets Inc. and J.P.
Morgan Securities LLC, the dealer managers for the offers (the “Dealer Managers”), relating to
the New Bemis 4.500% 2021 Notes (incorporated by reference to Exhibit 10.5 on Amcor plc’s
Current Report on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Registration Rights Agreement, dated as of June 13, 2019, by and among Bemis, Amcor plc,
Amcor Limited, AFUI, Amcor UK Finance plc and the Dealer Managers, relating to the Bemis’
3.100% 2026 Notes (incorporated by reference to Exhibit 10.6 on Amcor plc’s Current Report on
Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Annual Report 2020 118
Form 10-K
Exhibit
4 .24
4 .25
Description
Registration Rights Agreement, dated as of June 13, 2019, by and among AFUI, Amcor plc,
Amcor Limited, Bemis, Amcor UK Finance plc and the Dealer Managers, relating to the
Amcor’s 3.625% 2026 Notes (incorporated by reference to Exhibit 10.7 on Amcor plc’s Current
Report on Form 8-K filed on June 17, 2019).
Registration Rights Agreement, dated as of June 13, 2019, by and among AFUI, Amcor plc,
Amcor Limited, Bemis, Amcor UK Finance plc and the Dealer Managers, relating to the
Amcor’s 4.500% 2028 Notes (incorporated by reference to Exhibit 10.8 on Amcor plc’s Current
Report on Form 8-K filed on June 17, 2019).
4 .26
Description of Securities of the Registrant.
Fourth Deed of Amendment and Restatement of Syndicated Facility Agreement, dated as of
March 2, 2018, by and among Amcor Limited, the subsidiaries of Amcor Limited listed therein
as Borrowers and as Guarantors, Commonwealth Bank of Australia, J.P. Morgan Australia
Limited, National Australia Bank Limited and Westpac Banking Corporation and the entities
listed therein as Lenders and Affiliates of Lenders (incorporated by reference to Exhibit 10.1 to
Amcor plc’s Registration Statement on Form S-4 filed on March 12, 2019).
Form of Filing
Incorporated by
Reference
Incorporated by
Reference
Filed Herewith
Incorporated by
Reference
10 .1
10 .2
10 .3
10 .4
10 .5
10 .6
10 .7
10 .8
10 .9
10 .10
10 .11
10 .12
10 .13
Amcor plc 2019 Omnibus Incentive Share Plan (incorporated by reference to Exhibit 99.1 to
Amcor plc’s Registration Statement on Form S-8 filed on July 22, 2019).*
Incorporated by
Reference
Amcor Limited 2014/15 Long Term Incentive Plan (incorporated by reference to Exhibit 99.2 to
Amcor plc’s Registration Statement on Form S-8 filed on July 22, 2019).*
Incorporated by
Reference
Amcor Limited 2016/17 Long Term Incentive Plan (incorporated by reference to Exhibit 99.3 to
Amcor plc’s Registration Statement on Form S-8 filed on July 22, 2019).*
Incorporated by
Reference
Amcor Limited 2017/18 Long Term Incentive Plan (incorporated by reference to Exhibit 99.4 to
Amcor plc’s Registration Statement on Form S-8 filed on July 22, 2019).*
Incorporated by
Reference
Amcor Limited 2012/13 Long Term Incentive Plan (incorporated by reference to Exhibit 99.5 to
Amcor plc’s Registration Statement on Form S-8 filed on July 22, 2019).*
Incorporated by
Reference
Amcor Limited 2013/14 Long Term Incentive Plan (incorporated by reference to Exhibit 99.6 to
Amcor plc’s Registration Statement on Form S-8 filed on July 22, 2019).*
Incorporated by
Reference
Amcor Rigid Plastics Deferred Compensation Plan, as amended by that certain First
Amendment, dated December 11, 2014, that certain Second Amendment, dated December 10,
2018 and that certain Third Amendment, dated December 16, 2019.*
Employment Agreement between Amcor Limited and Ronald Delia, dated as of January 21,
2015 (incorporated by reference to Exhibit 10.3 to Amcor plc’s Registration Statement on Form
S-4 filed on March 12, 2019).*
Employment Agreement between Amcor Limited and Michael Casamento, dated as of
September 23, 2015 (incorporated by reference to Exhibit 10.4 to Amcor plc’s Registration
Statement on Form S-4 filed on March 12, 2019).*
Employment Agreement between Amcor Limited and Ian Wilson, dated as of May 22, 2014
(incorporated by reference to Exhibit 10.5 to Amcor plc’s Registration Statement on Form S-4
filed on March 12, 2019).*
Employment Agreement between Amcor Limited and Peter Konieczny, dated as of September
17, 2009 (incorporated by reference to Exhibit 10.6 to Amcor plc’s Registration Statement on
Form S-4 filed on March 12, 2019).*
Employment Agreement between Amcor Limited and Eric Roegner, dated as of August 28, 2018
(incorporated by reference to Exhibit 10.7 to Amcor plc’s Registration Statement on Form S-4
filed on March 12, 2019).*
10 .14
Form of Deed of Appointment (incorporated by reference to Exhibit 10.8 to
Amcor plc’s Registration Statement on Form S-4 filed on March 12, 2019).*
Filed Herewith
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Annual Report 2020 Form 10-K
119
Exhibit
Description
Form of Filing
10 .15
10 .16
10 .17
10 .18
10 .19
10 .20
10 .21
10 .22
Original Three-Year Credit Agreement, dated as of April 30, 2019, among AFUI, AUKF,
and Amcor Limited (together with AFUI and AUKF, the “Initial Borrowers”) as borrowers
thereunder, a syndicate of banks (collectively, the “Three-Year Facility Lenders”) and JPMorgan,
as administrative agent and foreign administrative agent for the Three-Year Facility Lenders and
others (incorporated by reference to Exhibit 10.9 on Amcor plc’s Current Report on Form 8-K
filed on June 17, 2019).
Amendment No. 1 to Original Three-Year Credit Agreement, dated as of May 30, 2019
(incorporated by reference to Exhibit 10.10 on Amcor plc’s Current Report on Form 8-K filed on
June 17, 2019).
Original Four-Year Credit Agreement, dated as of April 30, 2019, among the Initial Borrowers as
borrowers thereunder, a syndicate of banks (collectively, the “Four-Year Facility Lenders”), and
JPMorgan, as administrative agent and foreign administrative agent for the Four-Year Facility
Lenders and others (incorporated by reference to Exhibit 10.11 on Amcor plc’s Current Report
on Form 8-K filed on June 17, 2019).
Amendment No. 1 to Original Four-Year Credit Agreement, dated as of May 30, 2019
(incorporated by reference to Exhibit 10.12 on Amcor plc’s Current Report on Form 8-K filed on
June 17, 2019).
Original Five-Year Credit Agreement, dated as of April 30, 2019, among the Initial Borrowers as
borrowers thereunder, a syndicate of banks (collectively, the “Five-Year Facility Lenders”), and
JPMorgan, as administrative agent and foreign administrative agent for the Five-Year Facility
Lenders and others (incorporated by reference to Exhibit 10.13 on Amcor plc’s Current Report
on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Amendment No. 1 to Original Five-Year Credit Agreement, dated as of May 30, 2019
(incorporated by reference to Exhibit 10.14 on Amcor plc’s Current Report on Form 8-K filed on
June 17, 2019).
Incorporated by
Reference
364-Day Credit Agreement, dated as of April 5, 2019 , among the Initial Borrowers as borrowers
thereunder, a syndicate of banks (collectively, the “364-Day Facility Lenders”), and JPMorgan,
as administrative agent and foreign administrative agent for the 364-Day Facility Lenders and
others (incorporated by reference to Exhibit 10.15 on Amcor plc’s Current Report on Form 8-K
filed on June 17, 2019).
Original Term Loan Agreement, dated as of April 30, 2019, among AFUI, as borrower
thereunder, a syndicate of banks (collectively, the “Term Loan Lenders”), and JPMorgan, as
administrative agent for the Term Loan Lenders and others (incorporated by reference to Exhibit
10.16 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Incorporated by
Reference
10 .23
Amendment No. 1 to Original Term Loan Agreement, dated as of May 30, 2019 (incorporated by
reference to Exhibit 10.17 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
10 .24
10 .25
10 .26
10 .27
10 .28
Joinder to Three-Year Credit Agreement, dated as of June 11, 2019, with Bemis, AFUI,
Amcor UK Finance plc, Amcor Limited and JPMorgan, as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.18 on Amcor plc’s Current Report
on Form 8-K filed on June 17, 2019).
Joinder to Four-Year Credit Agreement, dated as of June 11, 2019, with Bemis, AFUI,
Amcor UK Finance plc, Amcor Limited and JPMorgan, as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.19 on Amcor plc’s Current Report
on Form 8-K filed on June 17, 2019).
Joinder to Five-Year Credit Agreement, dated as of June 11, 2019, with Bemis, AFUI,
Amcor UK Finance plc, Amcor Limited and JPMorgan as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.20 on Amcor plc’s Current Report
on Form 8-K filed on June 17, 2019).
Joinder to 364-Day Credit Agreement, dated as of June 11, 2019, with Bemis, AFUI, Amcor UK
Finance plc, Amcor Limited and JPMorgan, as administrative agent and foreign administrative
agent (incorporated by reference to Exhibit 10.21 on Amcor plc’s Current Report on Form 8-K
filed on June 17, 2019).
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by
Reference
Joinder to Term Loan Agreement, dated as of June 11, 2019, with among AFUI, Amcor Limited
and JPMorgan, as administrative agent and foreign administrative agent (incorporated by
reference to Exhibit 10.22 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Annual Report 2020 120
Form 10-K
Exhibit
10 .29
Description
Form of Filing
Supplement No. 1 to the Three-Year Credit Agreement Guaranty, dated as of June 11, 2019, with
Bemis and JPMorgan, as administrative agent and foreign administrative agent (incorporated by
reference to Exhibit 10.23 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Exhibit
10 .30
Supplement No. 1 to the Four-Year Credit Agreement Guaranty, dated as of June 11, 2019, with
Bemis and JPMorgan, as administrative agent and foreign administrative agent (incorporated by
reference to Exhibit 10.24 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Description
10 .29
10 .31
10 .32
10 .30
10 .31
10 .33
10 .32
10 .33
Supplement No. 1 to the 364-Day Credit Agreement Guaranty, dated as of June 11, 2019, with
Bemis and JPMorgan, as administrative agent and foreign administrative agent (incorporated by
reference to Exhibit 10.26 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Supplement No. 1 to the Five-Year Credit Agreement Guaranty, dated as of June 11, 2019, with
Bemis and JPMorgan, as administrative agent and foreign administrative agent (incorporated by
reference to Exhibit 10.25 on Amcor plc’s Current Report on Form 8-K filed on June 17, 2019).
Supplement No. 1 to the Three-Year Credit Agreement Guaranty, dated as of
June 11, 2019, with Bemis and JPMorgan, as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.23 on Amcor plc’s
Current Report on Form 8-K filed on June 17, 2019).
Supplement No. 1 to the Four-Year Credit Agreement Guaranty, dated as of
June 11, 2019, with Bemis and JPMorgan, as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.24 on Amcor plc’s
Current Report on Form 8-K filed on June 17, 2019).
Supplement No. 1 to the Five-Year Credit Agreement Guaranty, dated as of
June 11, 2019, with Bemis and JPMorgan, as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.25 on Amcor plc’s
Current Report on Form 8-K filed on June 17, 2019).
Supplement No. 1 to the 364-Day Credit Agreement Guaranty, dated as of
June 11, 2019, with Bemis and JPMorgan, as administrative agent and foreign
administrative agent (incorporated by reference to Exhibit 10.26 on Amcor plc’s
Current Report on Form 8-K filed on June 17, 2019).
Supplement No. 1 to the Term Loan Agreement Guaranty, dated as of June 11,
2019, with Bemis and JPMorgan, as administrative agent (incorporated by
reference to Exhibit 10.27 on Amcor plc’s Current Report on Form 8-K filed on
June 17, 2019).
22
Subsidiary Guarantors and Issuers of Guaranteed Securities.
21 .1
Subsidiaries of Amcor plc. *
Supplement No. 1 to the Term Loan Agreement Guaranty, dated as of June 11, 2019, with Bemis
and JPMorgan, as administrative agent (incorporated by reference to Exhibit 10.27 on Amcor
plc’s Current Report on Form 8-K filed on June 17, 2019).
Incorporated by
Reference
Form of Filing
Incorporated by
Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by
Reference
Incorporated by
Reference
Incorporated by Reference
Incorporated by Reference
Filed Herewith
Incorporated by Reference
Filed Herewith
23 .1
Consent of PricewaterhouseCoopers as auditors for the financial statements of Amcor Limited.
Filed Herewith
21 .1
Subsidiaries of Amcor plc.
Filed Herewith
23 .2
22
23 .1
31 .1
23 .2
31 .2
31 .1
31 .2
32
32
101
101
104
Consent of PricewaterhouseCoopers AG as auditors for the financial statements of Amcor plc.
Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities
Exchange Act of 1934, as amended.
Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under the Securities
Exchange Act of 1934, as amended.
Subsidiary Guarantors and Issuers of Guaranteed Securities.
Consent of PricewaterhouseCoopers as auditors for the financial statements of
Amcor Limited.
Consent of PricewaterhouseCoopers AG as auditors for the financial statements of
Amcor plc.
Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under
the Securities Exchange Act of 1934, as amended.
Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under
the Securities Exchange Act of 1934, as amended.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of
Inline XBRL Interactive data files – The XBRL Instance Document does not appear in the
2002.
Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002.
Inline XBRL Interactive data files – The XBRL Instance Document does not
appear in the Interactive Data File because its XBRL tags are embedded within the
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Inline XBRL document.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101).
* This exhibit is a management contract or compensatory plan or arrangement.
104
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Furnished
Herewith
Furnished Herewith
Filed
Electronically
Filed Electronically
Filed
Electronically
Filed Electronically
* This exhibit is a management contract or compensatory plan or arrangement.
Item 16. - Form 10-K Summary
None.
120
Annual Report 2020
Form 10-K
121
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMCOR PLC
By /s/ Michael Casamento
By /s/ Julie Sorrells
Michael Casamento, Executive Vice President and
Chief Financial Officer (Principal Financial Officer)
August 27, 2020
Julie Sorrells, Vice President & Corporate Controller
(Principal Accounting Officer)
August 27, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Michael Casamento
Michael Casamento, Executive Vice President and
Chief Financial Officer (Principal Financial Officer)
August 27, 2020
/s/ Ronald Delia
Ronald Delia, Managing Director and Chief
Executive Officer
August 27, 2020
/s/ Graeme Liebelt
Graeme Liebelt, Director and Chairman
August 27, 2020
/s/ Nicholas (Tom) Long
Nicholas (Tom) Long, Director
August 27, 2020
/s/ Arun Nayar
Arun Nayar, Director
August 27, 2020
/s/ Philip Weaver
Philip Weaver, Director
August 27, 2020
/s/ Julie Sorrells
Julie Sorrells, Vice President & Corporate Controller
(Principal Accounting Officer)
August 27, 2020
/s/ Armin Meyer
Armin Meyer, Director and Deputy Chairman
August 27, 2020
/s/ Andrea Bertone
Andrea Bertone, Director
August 27, 2020
/s/ Karen Guerra
Karen Guerra, Director
August 27, 2020
/s/ Jeremy Sutcliffe
Jeremy Sutcliffe, Director
August 27, 2020
/s/ David Szczupak
David Szczupak, Director
August 27, 2020
121
Annual Report 2020
122
Form 10-K
Schedule II - Valuation and Qualifying Accounts and Reserves
(in millions)
Reserves for Doubtful Accounts, Sales Returns, Discounts and Allowances:
Year ended June 30,
Balance at
Beginning of the
Year
Additions
Charged to
Profit and Loss
Write-offs
Foreign
Currency
Impact and
Other (1)
Balance at End
of the Year
2020
2019
2018
$
$
$
34.4 $
17.0 $
20.9 $
5.0 $
3.2 $
0.3 $
(0.8) $
— $
(3.0) $
(3.3) $
14.2 $
(1.2) $
35.3
34.4
17.0
(1) Foreign Currency Impact and Other includes reserve accruals related to acquisitions.
122
Annual Report 2020 Form 10-K
123
Annual Report 2020 124
Form 10-K
Annual Report 2020 Other
information
Other information
17
Annual Report 2020
18
Other information
Cautionary Statement Regarding Forward-Looking Statements
This document contains certain
the cost synergies related thereto;
statements that are “forward-looking
failure to successfully integrate
statements” within the meaning of
Bemis’ business and operations
the safe harbor provisions of the
in the expected time frame or at
U.S. Private Securities Litigation
all; integration costs related to the
Reform Act of 1995. Forward-looking
acquisition of Bemis; failure by Amcor
statements are generally identified
to expand its business; the potential
with words like “believe,” “expect,”,
loss of intellectual property rights;
“target”, “project”, “may,” “could,”
various risks that could affect our
“would,” “approximately,” “possible,”
business operations and financial
“will,” “should,” “expect,” “intend,”
results due to the international
“plan,” “anticipate,” “estimate,”
operations; price fluctuations or
“potential,” “outlook” or “continue,”
shortages in the availability of raw
the negative of these words, other
materials, energy and other inputs;
terms of similar meaning or the use
disruptions to production, supply
of future dates. Such statements are
and commercial risks, including
based on the current expectations
counterparty credit risks, which may
of the management of Amcor and
be exacerbated in times of economic
are qualified by the inherent risks
downturn; the possibility of labor
and uncertainties surrounding future
disputes; fluctuations in our credit
expectations generally. Actual results
ratings; disruptions to the financial or
could differ materially from those
capital markets; and other risks and
currently anticipated due to a number
uncertainties identified from time to
of risks and uncertainties. None
time in Amcor’s filings with the U.S.
of Amcor or any of its respective
Securities and Exchange Commission
directors, executive officers or
(the “SEC”), including without
advisors, provide any representation,
limitation, those described under
assurance or guarantee that the
Item 1A. “Risk Factors” of Amcor’s
occurrence of the events expressed
annual report on Form 10-K for the
or implied in any forward-looking
fiscal year ended June 30, 2020.
statements will actually occur.
You can obtain copies of Amcor’s
Risks and uncertainties that could
filings with the SEC for free at
cause actual results to differ from
the SEC’s website (www.sec.gov).
expectations include, but are not
Forward-looking statements included
limited to: the continued financial
herein are made only as of the date
and operational impacts of the
hereof and Amcor does not undertake
COVID-19 pandemic on Amcor and its
any obligation to update any forward-
customers, suppliers, employees and
looking statements, or any other
the geographic markets in which it and
information in this communication,
its customers operate; fluctuations
as a result of new information, future
in consumer demand patterns; the
developments or otherwise, or to
loss of key customers or a reduction
correct any inaccuracies or omissions
in production requirements of key
in them which become apparent,
customers; significant competition in
except as expressly required by law.
the industries and regions in which
All forward-looking statements in this
Amcor operates; failure to realize the
communication are qualified in their
anticipated benefits of the acquisition
entirety by this cautionary statement.
of Bemis Company, Inc. (“Bemis”), and
Annual Report 2020
Other information
19
Basis of Preparation of
Supplemental Unaudited Adjusted
Pro Forma Financial Information
The fiscal 2019 unaudited adjusted
pro forma financial information
presented in the document gives
effect to Amcor’s acquisition of
Bemis as if the combination had been
consummated on July 1, 2018. The
Supplemental Unaudited Adjusted Pro
Forma Financial Information includes
adjustments for (1) accounting policy
alignment, (2) elimination of the effect
of events that are directly attributable
to the combination (e.g., one-time
transaction costs), (3) elimination
of the effect of consummated and
identifiable divestitures agreed to
with certain regulatory agencies
as a condition of approval for the
transaction, and (4) items which
management considers are not
representative of ongoing operations.
The Supplemental Unaudited Adjusted
Pro Forma Financial Information does
include the purchase accounting
impact and does not reflect any cost
or growth synergies that Amcor
may achieve as a result of the
transaction, future costs to combine
the operations of Amcor and Bemis
or the costs necessary to achieve
any cost or growth synergies. The
Supplemental Unaudited Adjusted Pro
Forma Financial Information has been
Business Combinations (“ASC Topic
presented for informational purposes
805”), with Amcor treated as the
only and is not necessarily indicative
legal and accounting acquirer. The
of what Amcor’s results of operations
Supplemental Unaudited Adjusted
actually would have been had the
Pro Forma Financial Information has
combination been completed as of
not been adjusted to give effect to
July 1, 2018, nor is it indicative of the
pro forma events that are (1) directly
future operating results of Amcor. The
attributable to the combination, (2)
Supplemental Unaudited Adjusted Pro
factually supportable, or (3) expected
Forma Financial Information should be
to have a continuing impact on the
read in conjunction with the separate
combined results of Amcor and
historical financial statements and
Bemis. More specifically, other than
accompanying notes contained in
excluding Amcor’s divested plants
each of the Amcor and Bemis periodic
and one-time transaction costs, the
reports, as available. For avoidance of
Supplemental Unaudited Adjusted
doubt, the Supplemental Unaudited
Pro Forma Financial Information does
Adjusted Pro Forma Financial
not reflect the types of pro forma
Information is not intended to be,
adjustments set forth in S-4 Pro
and was not, prepared on a basis
Forma Statements. Consequently, the
consistent with the unaudited pro
Supplemental Unaudited Adjusted
forma condensed combined financial
Pro Forma Financial Information is
information in Amcor’s Registration
intentionally different from, but does
Statement on Form S-4 filed March
not supersede, the pro forma financial
25, 2019 with the SEC (the “S-4 Pro
information set forth in S-4 Pro
Forma Statements”), which provides
Forma Statements.
the pro forma financial information
required by Article 11 of Regulation
S-X. For instance, the Supplemental
Unaudited Adjusted Pro Forma
Financial Information does not give
effect to the combination under the
acquisition method of accounting in
accordance with Financial Accounting
Standards Board (“FASB”) Accounting
Standard Codification Topic 805,
Reconciliations of non-GAAP adjusted
pro forma measures to their most
comparable GAAP measures and
reconciliations of pro forma net
income in accordance with Article
11 of Regulation S-X to adjusted pro
forma net income are included in
the “Reconciliation of Non-GAAP
Measures” section of this document.
Annual Report 2020
20
Other information
Presentation of non-GAAP
financial information
Included in this document are
measures of financial performance
-
earnings from discontinued
Amcor also evaluates performance
operations and any associated
on a constant currency basis, which
profit on sale of businesses or
measures financial results assuming
subsidiaries;
-
material acquisition compensation
divide, as appropriate, those amounts
that are not calculated in accordance
-
consummated and identifiable
with U.S. GAAP. These measures
include adjusted EBIT (calculated
as earnings before interest and
divestitures agreed to with certain
regulatory agencies as a condition
of approval for Amcor’s acquisition
tax), adjusted net income, adjusted
of Bemis;
earnings per share, adjusted free cash
flow before dividends, adjusted cash
flow after dividends, net debt and the
Supplemental Unaudited Adjusted Pro
Forma Financial Information including
adjusted earnings before interest,
tax, amortization and depreciation,
adjusted earnings before interest and
tax, and adjusted earnings per share
and any ratios related thereto. In
-
impairments in goodwill and
equity method investments;
and transaction costs such as
due diligence expenses,
professional and legal fees
and integration costs;
-
material purchase accounting
adjustments for inventory;
arriving at these non-GAAP measures,
-
amortization of acquired
we exclude items that either have a
non-recurring impact on the income
statement or which, in the judgment of
our management, are items that, either
as a result of their nature or size, could,
were they not singled out, potentially
cause investors to extrapolate future
performance from an improper base.
intangible assets from business
combinations;
-
impact of economic net
investment hedging activities not
qualifying for hedge accounting;
-
payments or settlements related
to legal claims; and
While not all inclusive, examples of
-
impacts from hyperinflation
these items include:
accounting.
-
material restructuring programs,
Management has used and uses
including associated costs such
these measures internally for
as employee severance, pension
planning, forecasting and evaluating
and related benefits, impairment of
the performance of the company’s
property and equipment and other
reporting segments and certain of the
assets, accelerated depreciation,
measures are used as a component
termination payments for
of Amcor’s board of directors’
contracts and leases, contractual
measurement of Amcor’s performance
obligations and any other
qualifying costs related to
the restructuring plan;
for incentive compensation purposes.
constant foreign currency exchange
rates used for translation based on
the rates in effect for the comparable
prior-year period. In order to compute
constant currency results, we
multiply or divide, as appropriate,
current-year U.S. dollar results by
the current-year average foreign
exchange rates and then multiply or
by the prior-year average foreign
exchange rates. Amcor believes
that these non-GAAP measures are
useful to enable investors to perform
comparisons of current and historical
performance of the company. For
each of these non-GAAP financial
measures, a reconciliation to the
most directly comparable U.S. GAAP
financial measure has been provided
herein. These non-GAAP financial
measures should not be construed as
an alternative to results determined
in accordance with U.S. GAAP. The
company provides guidance on a
non-GAAP basis as we are unable
to predict with reasonable certainty
the ultimate outcome and timing
of certain significant items without
unreasonable effort. These items
include but are not limited to the
impact of foreign exchange translation,
restructuring program costs, asset
impairments and possible gains and
losses on the sale of assets. These
items are uncertain, depend on various
factors and could have a material
impact on U.S. GAAP earnings
and cash flow measures for the
guidance period.
Annual Report 2020
Reconciliation of
Non-GAAP Measures
21
Reconciliation of Non-GAAP Measures
Supplemental Unaudited Pro Forma Condensed Statement of Income
On June 11, 2019, Amcor plc (“Amcor”,
Amcor and Bemis have different
The Unaudited Pro Forma Condensed
“Amcor Limited”, “Company”)
fiscal years. The Unaudited Pro Forma
Statement of Income has been
completed the acquisition of 100%
Condensed Statement of Income
prepared to reflect adjustments
of the outstanding shares of Bemis
is developed from (a) the audited
to Amcor’s historical consolidated
Company, Inc (“Bemis”), a global
consolidated financial statements
financial information that are (i)
manufacturer of flexible packaging
of Amcor contained in our Annual
directly attributable to the acquisition
products based in the United States
Report on Form 10-K for the annual
of Bemis, (ii) factually supportable
(“the Transaction”). Pursuant to the
fiscal period ended June 30, 2019
and (iii) expected to have a continuing
Transaction Agreement, dated as of
and (b) deriving the condensed
impact on our results.
August 6, 2018, each outstanding
consolidated income statement of
share of Bemis common stock that
Bemis for the period July 1, 2018
was issued and outstanding upon
through June 10, 2019 by subtracting
completion of the transaction was
the historical unaudited condensed
converted into the right to receive
consolidated statement of income
5.1 ordinary shares of the Company
for the six months ended June 30,
traded on the New York Stock
2018 appearing in Bemis Quarterly
Exchange (“NYSE”).
The Unaudited Pro Forma Condensed
Statement of Income has been
prepared using the purchase method
of accounting, Accounting Standards
Codification (“ASC”) Topic 805,
“Business Combinations,” with Amcor
treated as the acquirer, and Article 11
of Regulation S-X, as defined by the
Securities and Exchange Commission
(the “SEC”), as if the transaction had
been completed on July 1, 2018.
Report on Form 10-Q for the period
ended June 30, 2018 filed with the
SEC on July 27, 2018 from the audited
consolidated statement of income
for the fiscal year ended December
31, 2018 appearing in Bemis’ Annual
Report on Form 10-K filed with the
SEC on February 15, 2019 and adding
the Bemis unaudited consolidated
financial information from their
accounting records for the period from
January 1, 2019 through June 10, 2019.
The Unaudited Pro Forma Condensed
Statement of Income has been
prepared for illustrative purposes only
and does not purport to represent
what the actual consolidated results
of operations of Amcor would have
been had the Bemis acquisition
occurred on the date assumed. In
addition, the financial information
is not indicative of future results or
current financial conditions and does
not reflect any anticipated synergies,
operating efficiencies, cost savings
or integration costs that may result
from the transaction. The financial
information should be read in
conjunction with historical financial
statements and accompanying notes
filed with the SEC.
Annual Report 2020 22
Reconciliation of
Non-GAAP Measures
Unaudited Pro Forma Condensed Statement of Income
Twelve Months Ended June 30, 2019
Amcor
Historical
Bemis
Historical
EC and U.S.
Remedies1
Pro Forma
Adjustments
New Amcor
Pro Forma
—
12,972
33
2a
(10,589)
($ million)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Restructuring and related expenses
Other income, net
Operating income
Interest income
Interest expense
Other non-operating income (loss), net
Income from continuing operations before
income taxes and equity in income (loss)
of affiliated companies
Income tax (expense) benefit
Equity in income (loss) of affiliated companies,
net of tax
Income (loss) from continuing operations
Net (income) loss attributable to
non-controlling interests
Net income attributable to Amcor plc
9,458
(7,659)
1,799
(999)
(64)
(131)
186
792
17
(208)
4
604
(172)
4
437
(7)
430
3,798
(3,182)
616
(179)
(36)
(156)
38
282
2
(71)
3
216
(64)
—
151
—
151
Note: the sum of the columns may not equal the total New Amcor Pro Forma amount due to rounding.
1. Remedy Adjustments
2.
Pro Forma Adjustments
EC and U.S. Remedies: Closing of the
a.
Cost of sales has been adjusted
Transaction was conditional upon
to reflect a reduction in the
the receipt of regulatory approvals,
depreciation expense following the
approval by both Amcor and Bemis
adjustment of historical property,
shareholders, and satisfaction of other
plant and equipment to a lower
customary conditions. To satisfy certain
preliminary fair value and to reverse
regulatory approvals, the Company
the one-time amortization impact
was required to divest three of Bemis’
of the inventory fair value uplift.
medical packaging facilities located in
the United Kingdom and Ireland (“EC
Remedy”) and three Amcor medical
packaging facilities in the United
States (“U.S. Remedy”). The Unaudited
Pro Forma Condensed Statement of
Income has been adjusted to exclude
the EC Remedy and U.S. Remedy
businesses.
b.
Selling, general and administrative
expenses has been adjusted to
reflect the reversal of the non-
recurring transaction costs partially
offset by the net increase in the
amortization expense following the
recognition of additional intangible
assets mainly for customer
(284)
220
(65)
14
3
—
1
33
(54) 2b
—
43
2b
(124) 2b
(46)
(102)
—
—
—
—
—
—
(46)
(102)
2,383
(1,218)
(97)
(244)
101
926
19
(279)
6
672
8
—
(38)
—
(38)
71
2c
(157)
—
(31)
—
(31)
4
519
(7)
512
relationships, technology and other
intangibles. Restructuring and other
costs have been adjusted to reverse
the nonrecurring transaction costs
included in the Bemis historical
financials while other income, net
has excluded the gain on sale of the
U.S. Remedy assets, partially offset
by transaction costs.
c.
Income tax expense has been
adjusted to reflect the tax impact
on the various adjustments from
items (a) and (b) above.
Annual Report 2020 Reconciliation of
Non-GAAP Measures
23
Reconciliation of Pro Forma Net income under Article 11 to Adjusted Pro Forma Net Income
($ million)
Pro forma net income under Article 11
Restructuring costs
Impairment of equity method investments
Transaction related and other costs
Amortization of acquired intangibles
Reversal of purchase accounting adjustments for backlog and property, plant and equipment valuation
Legacy Bemis adjustments
Impact of hyperinflationary accounting and other
Tax effect of above items
Adjusted Pro Forma Net Income
Twelve Months Ended June 30, 2019
512
113
14
225
164
(22)
(23)
24
(61)
947
Reconciliation of adjusted Earnings before interest, tax, depreciation and amortization (EBITDA),
Earnings before interest and tax (EBIT), Net income and Earnings per share (EPS)
($ million)
EBITDA
EBIT
Net
Income
EPS
(Diluted
US cents)
EBITDA
EBIT
Net
Income
EPS
(Diluted
US cents)
Twelve Months Ended June 30, 2019
Twelve Months Ended June 30, 2020
Net income attributable to Amcor
430
430
430
36.3
612
612
612
38.2
Net income attributable to
non-controlling interests
(Income) loss from discontinued operations
Tax expense
Interest expense, net
Depreciation and amortization
EBITDA, EBIT, Net income and EPS
Material restructuring and related costs
Impairment in equity method investments
Net investment hedge not
qualifying for hedge accounting
Material transaction and other costs1
Material impact of hyperinflation
Net legal settlements
Pension settlements
Amortization of acquired intangibles2
Tax effect of above items
7
(1)
172
191
350
1,149
64
14
(1)
143
30
(5)
—
64
14
(1)
143
30
(5)
—
31
Adjusted EBITDA, EBIT, Net income and EPS
1,394
1,075
Pro Forma Adjustments3
485
357
8
0.5
(1)
—
7
(1)
172
191
4
8
187
185
607
799
430
36.3
1,603
64
14
5.4
1.2
106
26
4
8
187
185
996
106
26
620
102
26
(1)
(0.1)
—
—
—
143
30
(5)
—
31
23
729
218
12.1
2.6
(0.4)
—
2.6
2.0
61.6
(3.4)
146
28
—
5
146
28
—
5
146
28
—
5
191
191
(89)
(5.6)
1,913
1,497
1,028
64.2
—
—
—
—
38.7
6.3
1.6
—
9.1
1.7
— —
0.3
11.9
Adjusted Pro Forma EBITDA, EBIT,
Net income and EPS
1,879
1,433
947
58.2
1,913
1,497
1,028
64.2
(1) Includes costs associated with the Bemis acquisition. The twelve months ended June 30, 2020 and 2019 includes $58 million and $16 million respectively of acquisition related inventory
fair value step-up costs.
(2) The twelve months ended June 30, 2020 and 2019 includes $26 million and $5 million respectively of sales backlog amortization related to the Bemis acquisition.
(3) Includes Bemis and remedy adjustments. EPS also adjusts for new shares issued to complete the Bemis combination.
Annual Report 2020 24
Reconciliation of
Non-GAAP Measures
Reconciliation of adjusted EBIT by reporting segment
Twelve Months Ended June 30, 2019
Twelve Months Ended June 30, 2020
Flexibles
Rigid
Packaging
Other1
Total
Flexibles
Rigid
Packaging
Other1
Total
($ million)
Net income attributable to Amcor
Net income attributable to
non-controlling interests
(Income) loss from discontinued operations
Tax expense
Interest expense, net
EBIT
Material restructuring and related costs
Impairment in equity method investments
Net investment hedge not qualifying for
hedge accounting
Material transaction and other costs2
Material impact of hyperinflation
Net legal settlement
Pension settlement
Amortization of acquired intangibles3
Adjusted EBIT
Pro Forma Adjustments4
Adjusted Pro Forma EBIT
Adjusted Pro Forma EBIT / sales %
430
7
(1)
172
191
816
209
(226)
799
1,008
63
—
—
78
—
—
—
186
—
14
(1)
64
14
(1)
153
143
31
(5)
—
31
—
(5)
—
—
(66)
(49)
—
—
—
(13)
4
—
—
26
833
406
1,239
12.3
64
—
—
3
27
—
—
5
308
—
308
10.7
1,076
1,335
290
(128)
1,497
357
—
(114)
1,433
1,335
11.0
13.7
—
290
10.7
Average funds employed5
9,439
1,766
8,860
1,782
Adjusted Pro Forma EBIT /
average funds employed %
13.1
17.5
12.9
15.1
16.3
(1) Other includes equity in income (loss) of affiliated companies, net of tax and general corporate expenses.
(2) Includes costs associated with the Bemis acquisition. The twelve months ended June 30, 2020 and 2019 includes $58 million and $16 million respectively of acquisition related inventory
fair value step-up costs.
(3) The twelve months ended June 30, 2020 and 2019 includes $26 million and $5 million respectively of sales backlog amortization related to the Bemis acquisition.
(4) Includes Bemis and remedy adjustments.
(5) Average funds employed includes shareholders equity and net debt, calculated using a four quarter average and LTM adjusted EBIT.
612
4
8
187
185
996
106
26
—
146
28
—
5
191
217
38
—
—
3
28
—
—
5
(229)
5
26
—
66
—
—
5
—
—
—
(128)
1,497
12.0
14.0
Annual Report 2020 Reconciliation of
Non-GAAP Measures
25
Reconciliation of adjusted free cash flow and cash flow after dividends
Twelve Months Ended June 30,
($ million)
Net cash provided from operating activities
Purchase of property, plant and equipment and other intangible assets
Proceeds from sale of property, plant and equipment and other intangible assets
Operating cash flow related to divested operations
Material transaction and integration related costs1
Adjusted free cash flow (before dividends)2
Pro Forma adjustments3 (before dividends)
Adjusted Pro Forma free cash flow (before dividends)
Dividends4
Adjusted Pro Forma cash flow after dividends
2019
776
(332)
85
—
204
733
237
970
(767)
203
2020
1,384
(400)
13
60
163
1,220
—
1,220
(761)
459
(1) The twelve months ended June 30, 2020 includes cash integration costs of $80 million.
(2) Adjusted free cash flow excludes material transaction related costs because these cash flows are not considered to be directly related to the underlying business.
(3) Includes Bemis and remedy adjustments.
(4) The twelve months ended June 30, 2019 includes dividends paid to former Bemis shareholders of $87 million.
Twelve Months Ended June 30,
($ million)
Adjusted EBITDA
Interest paid, net
Income tax paid
Purchase of property, plant and equipment and other intangible assets
Proceeds from sale of property, plant and equipment and other intangible assets
Movement in working capital
Other
Adjusted free cash flow (before dividends)1
Pro Forma adjustments2 (before dividends)
Adjusted Pro Forma free cash flow (before dividends)
2019
1,394
(220)
(148)
(332)
85
53
(99)
733
237
970
2020
1,913
(187)
(209)
(400)
13
213
(123)
1,220
—
1,220
(1) Adjusted free cash flow excludes material transaction related costs because these cash flows are not considered to be directly related to the underlying business.
(2) Includes Bemis and remedy adjustments.
Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical,
home- and personal-care, and other products. Amcor works with leading companies around the world to protect their
products and the people who rely on them, differentiate brands, and improve supply chains through a range of flexible
and rigid packaging, specialty cartons, closures, and services.
The company is focused on making packaging that is increasingly light-weighted, recyclable and reusable, and made
using an increasing amount of recycled content. Around 47,000 Amcor people generate $12.5 billion in sales from
operations that span about 230 locations in 40-plus countries. NYSE: AMCR; ASX: AMC
Annual Report 2020 Annual Report 2020
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