FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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[X] |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 2009
OR
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[ ] |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11846
AptarGroup, Inc.
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DELAWARE
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36-3853103 |
(State of Incorporation)
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(I.R.S. Employer Identification No.) |
475 WEST TERRA COTTA AVENUE, SUITE E, CRYSTAL LAKE, ILLINOIS 60014
815-477-0424
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o
Indicate by check
mark whether the
registrant is a
large accelerated filer, an accelerated filer, a non-accelerated
filer, or a
smaller reporting company.
See the definitions of large accelerated
filer, accelerated
filer
and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
þ
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Accelerated filer
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Non-accelerated filer o
(Do not check if a smaller reporting company) |
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
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Class
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Outstanding at April 30, 2009 |
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Common Stock, $.01 par value per share
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67,737,407 shares |
AptarGroup, Inc.
Form 10-Q
Three Months Ended March 31, 2009
INDEX
i
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AptarGroup, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In thousands, except per share amounts
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Three Months Ended March 31, |
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2009 |
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2008 |
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Net Sales |
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$ |
431,816 |
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$ |
532,258 |
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Operating Expenses: |
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Cost of sales (exclusive of depreciation shown below) |
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289,721 |
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362,780 |
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Selling, research & development and administrative |
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72,688 |
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81,824 |
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Depreciation and amortization |
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30,101 |
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32,955 |
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392,510 |
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477,559 |
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Operating Income |
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39,306 |
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54,699 |
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Other Income (Expense): |
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Interest expense |
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(3,447 |
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(4,607 |
) |
Interest income |
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1,275 |
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3,449 |
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Equity in results of affiliates |
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97 |
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Miscellaneous, net |
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(119 |
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(944 |
) |
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(2,291 |
) |
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(2,005 |
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Income Before Income Taxes |
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37,015 |
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52,694 |
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Provision for Income Taxes |
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10,421 |
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15,815 |
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Net Income |
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26,594 |
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36,879 |
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Add: Net Loss Attributable to Noncontrolling Interests |
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71 |
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22 |
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Net Income Attributable to AptarGroup, Inc. |
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$ |
26,665 |
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$ |
36,901 |
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Net Income Attributable to AptarGroup, Inc. Per Common Share: |
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Basic |
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$ |
.39 |
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$ |
.54 |
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Diluted |
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$ |
.38 |
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$ |
.52 |
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Average Number of Shares Outstanding: |
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Basic |
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67,677 |
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68,168 |
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Diluted |
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69,519 |
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71,072 |
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Dividends Per Common Share |
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$ |
.15 |
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$ |
.13 |
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See accompanying notes to condensed consolidated financial statements.
1
AptarGroup, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except per share amounts
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March 31, |
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December 31, |
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2009 |
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2008 |
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Assets |
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Current Assets: |
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Cash and equivalents |
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$ |
203,882 |
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$ |
192,072 |
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Accounts and notes receivable, less allowance for doubtful
accounts of $11,809 in 2009 and $11,900 in 2008 |
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308,222 |
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343,937 |
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Inventories, net |
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221,254 |
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244,775 |
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Prepayments and other |
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73,356 |
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78,965 |
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806,714 |
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859,749 |
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Property, Plant and Equipment: |
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Buildings and improvements |
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288,344 |
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297,093 |
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Machinery and equipment |
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1,457,408 |
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1,484,353 |
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1,745,752 |
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1,781,446 |
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Less: Accumulated depreciation |
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(1,065,958 |
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(1,078,063 |
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679,794 |
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703,383 |
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Land |
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17,071 |
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17,499 |
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696,865 |
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720,882 |
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Other Assets: |
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Investments in affiliates |
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673 |
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712 |
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Goodwill |
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221,141 |
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227,041 |
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Intangible assets, net |
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12,350 |
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14,061 |
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Miscellaneous |
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10,171 |
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9,377 |
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244,335 |
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251,191 |
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Total Assets |
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$ |
1,747,914 |
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$ |
1,831,822 |
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See accompanying notes to condensed consolidated financial statements.
2
AptarGroup, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except per share amounts
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March 31, |
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December 31, |
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2009 |
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2008 |
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Liabilities and Stockholders Equity |
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Current Liabilities: |
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Notes payable |
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$ |
50,552 |
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$ |
39,919 |
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Current maturities of long-term obligations |
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24,408 |
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24,700 |
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Accounts payable and accrued liabilities |
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259,314 |
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310,408 |
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334,274 |
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375,027 |
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Long-Term Obligations |
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229,714 |
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226,888 |
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Deferred Liabilities and Other: |
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Deferred income taxes |
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22,732 |
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24,561 |
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Retirement and deferred compensation plans |
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53,695 |
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62,476 |
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Deferred and other non-current liabilities |
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10,902 |
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11,072 |
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Commitments and contingencies |
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87,329 |
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98,109 |
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Stockholders Equity: |
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AptarGroup, Inc. stockholders equity |
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Preferred stock, $.01 par value, 1 million shares
authorized, none outstanding |
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Common stock, $.01 par value |
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802 |
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801 |
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Capital in excess of par value |
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262,719 |
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254,216 |
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Retained earnings |
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1,082,520 |
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1,065,998 |
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Accumulated other comprehensive income |
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83,317 |
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139,300 |
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Less treasury stock at cost, 12.6 and 12.5 million shares as of March 31, 2009
and December 31, 2008, respectively |
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(333,459 |
) |
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(329,285 |
) |
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Total AptarGroup, Inc. Stockholders Equity |
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1,095,899 |
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1,131,030 |
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Noncontrolling interests in subsidiaries |
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698 |
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768 |
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Total Equity |
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1,096,597 |
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1,131,798 |
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Total Liabilities and Equity |
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$ |
1,747,914 |
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$ |
1,831,822 |
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See accompanying notes to condensed consolidated financial statements.
3
AptarGroup, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In thousands, brackets denote cash outflows
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Three Months Ended March 31, |
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2009 |
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2008 |
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Cash Flows From Operating Activities: |
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Net income attributable to AptarGroup, Inc. |
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$ |
26,665 |
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$ |
36,901 |
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Adjustments to reconcile net income to net cash provided by operations: |
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Depreciation |
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29,076 |
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31,727 |
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Amortization |
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1,026 |
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1,228 |
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Stock option based compensation |
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5,049 |
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7,167 |
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Provision for bad debts |
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676 |
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186 |
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Noncontrolling interests |
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(71 |
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(22 |
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Deferred income taxes |
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(3,225 |
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(3,115 |
) |
Retirement and deferred compensation plans |
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(8,455 |
) |
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(2,674 |
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Equity in results of affiliates in excess of cash distributions received |
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100 |
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Changes in balance sheet items, excluding
effects from foreign currency adjustments: |
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Accounts receivable |
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18,706 |
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(29,988 |
) |
Inventories |
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14,531 |
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(4,604 |
) |
Prepaid and other current assets |
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(1,938 |
) |
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(3,195 |
) |
Accounts payable and accrued liabilities |
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(42,697 |
) |
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1,881 |
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Income taxes payable |
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2,408 |
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5,521 |
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Other changes, net |
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7,026 |
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(2,135 |
) |
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Net Cash Provided by Operations |
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48,777 |
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38,978 |
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Cash Flows From Investing Activities: |
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Capital expenditures |
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(31,937 |
) |
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(41,940 |
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Disposition of property and equipment |
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162 |
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278 |
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Intangible assets acquired |
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(216 |
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(410 |
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Acquisition of business net of cash acquired |
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(4,086 |
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Collection of notes receivable, net |
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47 |
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151 |
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Net Cash Used by Investing Activities |
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(31,944 |
) |
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(46,007 |
) |
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Cash Flows From Financing Activities: |
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Proceeds from notes payable |
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11,001 |
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28,055 |
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Proceeds from long-term obligations |
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3,546 |
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Repayments of long-term obligations |
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(364 |
) |
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(721 |
) |
Dividends paid |
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(10,143 |
) |
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(8,864 |
) |
Proceeds from stock options exercises |
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3,487 |
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2,888 |
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Purchase of treasury stock |
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(4,820 |
) |
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(16,583 |
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Excess tax benefit from exercise of stock options |
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493 |
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|
992 |
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Net Cash Provided by Financing Activities |
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3,200 |
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5,767 |
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Effect of Exchange Rate Changes on Cash |
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(8,223 |
) |
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22,739 |
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Net Increase in Cash and Equivalents |
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11,810 |
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|
21,477 |
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Cash and Equivalents at Beginning of Period |
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|
192,072 |
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|
313,739 |
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Cash and Equivalents at End of Period |
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$ |
203,882 |
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$ |
335,216 |
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See accompanying notes to condensed consolidated financial statements.
4
AptarGroup, Inc.
Notes to Condensed Consolidated Financial Statements
(Amounts in Thousands, Except per Share Amounts, or Otherwise Indicated)
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include the accounts of
AptarGroup, Inc. and its subsidiaries. The terms AptarGroup or Company as used herein refer to
AptarGroup, Inc. and its subsidiaries.
The Company has adopted the provisions of FASB Statement (SFAS) No. 160, Noncontrolling
Interests in Consolidated Financial Statements an Amendment of ARB No. 51, effective January 1,
2009. SFAS No. 160 establishes accounting and reporting standards for noncontrolling interests
(i.e., minority interests) in a subsidiary, including changes in a parents ownership interest in a
subsidiary, and requires, among other things, that noncontrolling interests in subsidiaries be
classified as shareholders equity. Prior period information presented in this Form 10-Q has been
reclassified, where required.
The Company has also adopted the provisions of FASB Statement No. 161, Disclosures about
Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133. SFAS
No. 161 requires expanded qualitative and quantitative disclosures about derivatives and hedging
activities in each interim and annual period. SFAS No. 161 was effective for our Company on
January 1, 2009, and will be applied prospectively. The adoption of SFAS No. 161 did not have a
significant impact on our consolidated financial statements.
In the opinion of management, the unaudited condensed consolidated financial statements
include all adjustments, consisting of only normal recurring adjustments, necessary for a fair
statement of consolidated financial position, results of operations, and cash flows for the interim
periods presented. The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States of
America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures made are adequate to make the information presented not
misleading. Accordingly, these unaudited condensed consolidated financial statements and related
notes should be read in conjunction with the consolidated financial statements and notes thereto
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008. The
results of operations of any interim period are not necessarily indicative of the results that may
be expected for the year. Certain previously reported amounts have been reclassified to conform to
the current period presentation.
NOTE 2 INVENTORIES
At March 31, 2009 and December 31, 2008, approximately 21% and 23%, respectively, of the total
inventories are accounted for by using the LIFO method. Inventories, by component, consisted of:
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March 31, |
|
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December 31, |
|
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|
2009 |
|
|
2008 |
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|
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Raw materials |
|
$ |
81,376 |
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$ |
93,081 |
|
Work-in-process |
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|
53,873 |
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|
55,228 |
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Finished goods |
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89,299 |
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|
99,310 |
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Total |
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224,548 |
|
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|
247,619 |
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Less LIFO Reserve |
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(3,294 |
) |
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(2,844 |
) |
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Total |
|
$ |
221,254 |
|
|
$ |
244,775 |
|
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5
NOTE 3 GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill since the year ended December 31, 2008 are as
follows by reporting segment:
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Pharma |
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Beauty & Home |
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Closures |
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Total |
|
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Balance as of December 31, 2008 |
|
$ |
28,133 |
|
|
$ |
158,823 |
|
|
$ |
40,085 |
|
|
$ |
227,041 |
|
Foreign currency exchange effects |
|
|
(1,103 |
) |
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(3,464 |
) |
|
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(1,333 |
) |
|
|
(5,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2009 |
|
$ |
27,030 |
|
|
$ |
155,359 |
|
|
$ |
38,752 |
|
|
$ |
221,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below shows a summary of intangible assets as of March 31, 2009 and December 31,
2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009 |
|
December 31, 2008 |
|
|
|
Weighted Average |
|
|
Gross |
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
|
|
|
Amortization |
|
|
Carrying |
|
|
Accumulated |
|
|
Net |
|
|
Carrying |
|
|
Accumulated |
|
|
Net |
|
|
|
Period (Years) |
|
|
Amount |
|
|
Amortization |
|
|
Value |
|
|
Amount |
|
|
Amortization |
|
|
Value |
|
Amortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents |
|
|
14 |
|
|
$ |
18,050 |
|
|
$ |
(13,127 |
) |
|
$ |
4,923 |
|
|
$ |
18,854 |
|
|
$ |
(13,357 |
) |
|
$ |
5,497 |
|
License agreements and other |
|
|
6 |
|
|
|
24,580 |
|
|
|
(17,153 |
) |
|
|
7,427 |
|
|
|
25,641 |
|
|
|
(17,077 |
) |
|
|
8,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets |
|
|
9 |
|
|
$ |
42,630 |
|
|
$ |
(30,280 |
) |
|
$ |
12,350 |
|
|
$ |
44,495 |
|
|
$ |
(30,434 |
) |
|
$ |
14,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate amortization expense for the intangible assets above for the quarters ended March
31, 2009 and 2008 was $1,026 and $1,228, respectively.
Future estimated amortization expense for the years ending December 31 is as follows:
|
|
|
|
|
2009 |
|
$ |
4,100 |
|
2010 |
|
|
3,535 |
|
2011 |
|
|
2,142 |
|
2012 |
|
|
1,253 |
|
2013 |
|
|
1,005 |
|
Future amortization expense may fluctuate depending on changes in foreign currency rates. The
estimates for amortization expense noted above are based upon foreign exchange rates as of March
31, 2009.
NOTE 4 RECONCILIATION OF TOTAL EQUITY
Total equity was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, 2009 |
|
|
March 31, 2008 |
|
|
|
Aptargroup, Inc. |
|
|
Non- |
|
|
|
|
|
|
Aptargroup, Inc. |
|
|
Non- |
|
|
|
|
|
|
Stockholders |
|
|
Controlling |
|
|
Total |
|
|
Stockholders |
|
|
Controlling |
|
|
Total |
|
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
Equity, Beginning of Period |
|
$ |
1,131,030 |
|
|
$ |
768 |
|
|
$ |
1,131,798 |
|
|
$ |
1,119,018 |
|
|
$ |
553 |
|
|
$ |
1,119,571 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
26,665 |
|
|
|
(71 |
) |
|
|
26,594 |
|
|
|
36,901 |
|
|
|
(22 |
) |
|
|
36,879 |
|
Foreign currency translation
Adjustments |
|
|
(56,218 |
) |
|
|
1 |
|
|
|
(56,217 |
) |
|
|
92,551 |
|
|
|
13 |
|
|
|
92,564 |
|
Net gain on derivative (net of tax) |
|
|
41 |
|
|
|
|
|
|
|
41 |
|
|
|
116 |
|
|
|
|
|
|
|
116 |
|
Pension liability (net of tax) |
|
|
194 |
|
|
|
|
|
|
|
194 |
|
|
|
149 |
|
|
|
|
|
|
|
149 |
|
|
|
|
|
|
|
|
Total Comprehensive income (loss) |
|
|
(29,318 |
) |
|
|
(70 |
) |
|
|
(29,388 |
) |
|
|
129,717 |
|
|
|
(9 |
) |
|
|
129,708 |
|
Stock option exercises & restricted
Stock vestings |
|
|
9,150 |
|
|
|
|
|
|
|
9,150 |
|
|
|
11,403 |
|
|
|
|
|
|
|
11,403 |
|
Cash dividends declared |
|
|
(10,143 |
) |
|
|
|
|
|
|
(10,143 |
) |
|
|
(8,864 |
) |
|
|
|
|
|
|
(8,864 |
) |
Noncontrolling interest in entity acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192 |
|
|
|
192 |
|
Treasury stock purchased |
|
|
(4,820 |
) |
|
|
|
|
|
|
(4,820 |
) |
|
|
(16,583 |
) |
|
|
|
|
|
|
(16,583 |
) |
|
|
|
|
|
|
|
Equity, End of Period |
|
$ |
1,095,899 |
|
|
$ |
698 |
|
|
$ |
1,096,597 |
|
|
$ |
1,234,691 |
|
|
$ |
736 |
|
|
$ |
1,235,427 |
|
|
|
|
|
|
|
|
6
NOTE 5 RETIREMENT AND DEFERRED COMPENSATION PLANS
Components of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
Three months ended March 31, |
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
Service cost |
|
$ |
1,091 |
|
|
$ |
968 |
|
|
$ |
408 |
|
|
$ |
419 |
|
Interest cost |
|
|
955 |
|
|
|
864 |
|
|
|
585 |
|
|
|
555 |
|
Expected return on plan assets |
|
|
(932 |
) |
|
|
(777 |
) |
|
|
(229 |
) |
|
|
(212 |
) |
Amortization of net loss |
|
|
60 |
|
|
|
6 |
|
|
|
146 |
|
|
|
191 |
|
Amortization of prior service cost |
|
|
1 |
|
|
|
1 |
|
|
|
89 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
1,175 |
|
|
$ |
1,062 |
|
|
$ |
999 |
|
|
$ |
973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMPLOYER CONTRIBUTIONS
In order to meet or exceed minimum funding levels required by U.S. law, the Company expects to
contribute approximately $10 million to its domestic defined benefit plans in 2009 and has
contributed $8.9 million as of March 31, 2009. At its discretion, the Company anticipates that it
will make contributions over the next several years to certain of its German pension plans that
have not been funded in the past. Accordingly, the Company expects to contribute approximately $10
million to its foreign defined benefit plans in 2009 and as of March 31, 2009, has contributed
approximately $0.2 million.
NOTE 6 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company maintains a foreign exchange risk management policy designed to establish a framework
to protect the value of the Companys non-functional denominated transactions from adverse changes
in exchange rates. Sales of the Companys products can be denominated in a currency different from
the currency in which the related costs to produce the product are denominated. Changes in
exchange rates on such inter-country sales or intercompany loans impact the Companys results of
operations. The Companys policy is not to engage in speculative foreign currency hedging
activities, but to minimize its net foreign currency transaction exposure defined as firm
commitments and transactions recorded and denominated in currencies other than the functional
currency. The Company may use foreign currency forward exchange contracts, options and cross
currency swaps to economically hedge these risks although these instruments are not specifically
designated as hedges.
The Company maintains an interest rate risk management strategy to minimize significant,
unanticipated earnings fluctuations that may arise from volatility in interest rates.
For derivative instruments designated as hedges, the Company formally documents the nature and
relationships between the hedging instruments and the hedged items, as well as the risk management
objectives, strategies for undertaking the various hedge transactions, and the method of assessing
hedge effectiveness. Additionally, in order to designate any derivative instrument as a hedge of
an anticipated transaction, the significant characteristics and expected terms of any anticipated
transaction must be specifically identified, and it must be probable that the anticipated
transaction will occur.
FAIR VALUE HEDGES
The Company has an interest rate swap to convert a portion of its fixed-rate debt into
variable-rate debt. Under the interest rate swap contract, the Company exchanges, at specified
intervals, the difference between fixed-rate and floating-rate amounts, which are calculated based
on an agreed upon notional amount.
As of March 31, 2009, the Company has recorded the fair value of derivative instruments of
$1.1 million in miscellaneous other assets with a corresponding increase to debt related to a
fixed-to-variable interest rate swap agreement with a notional
principal value of $15 million. No gain or loss was recorded in the income statement in 2009 or
2008 as any hedge ineffectiveness for the periods was immaterial.
7
CASH FLOW HEDGES
As of March 31, 2009, the Company had one foreign currency cash flow hedge. A French entity of
AptarGroup, AptarGroup Holding SAS, has hedged the risk of variability in Euro equivalent
associated with the cash flows of an intercompany loan extended in Brazilian Real. The forward
contracts utilized were designated as a hedge of the changes in the cash flows relating to the
changes in foreign currency rates relating to the loan and related forecasted interest. The
notional amount of the foreign currency forward contracts utilized to hedge cash flow exposure was
4.2 million Brazilian Real ($1.8 million) as of March 31, 2009. The notional amount of the foreign
currency forward contracts utilized to hedge cash flow exposure was 5.5 million Brazilian Real
($3.1 million) as of March 31, 2008.
During the three months ended March 31, 2009, the Company did not recognize any net gain
(loss) as any hedge ineffectiveness for the period was immaterial, and the Company did not
recognize any net gain (loss) related to the portion of the hedging instrument excluded from the
assessment of hedge effectiveness. The Companys foreign currency forward contracts hedge
forecasted transactions for approximately three years (March 2012).
HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS
A significant number of the Companys operations are located outside of the United States. Because
of this, movements in exchange rates may have a significant impact on the translation of the
financial condition and results of operations of the Companys foreign entities. A strengthening
U.S. dollar relative to foreign currencies has a dilutive translation effect on the Companys
financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive
effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset
exposure. The Company does not otherwise use derivative financial instruments to manage this risk.
In the event the Company plans on a full or partial liquidation of any of its foreign subsidiaries
where the Companys net investment is likely to be monetized, the Company will consider hedging the
currency exposure associated with such a transaction.
OTHER
As of March 31, 2009, the Company has recorded the fair value of foreign currency forward exchange
contracts of $3.9 million in prepaids and others, $0.8 million in accounts payable and accrued
liabilities, and $0.9 million in deferred and other non-current liabilities in the balance sheet.
All forward exchange contracts outstanding as of March 31, 2009 had an aggregate contract amount of
$202 million.
Fair Value of Derivative Instruments in the Statement of Financial Position as of March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
Derivative |
|
|
|
|
|
Derivative |
|
Derivative Contracts Designated as |
|
|
|
|
|
Assets |
|
|
|
|
|
Liabilities |
|
Hedging Instruments under SFAS No. |
|
Balance Sheet |
|
|
March 31, |
|
|
|
|
|
March 31, |
|
133 |
|
Location |
|
|
2009 |
|
|
Balance Sheet Location |
|
|
2009 |
|
Interest Rate Contracts |
|
Other Assets Miscellaneous |
|
$ |
1,097 |
|
|
|
|
|
|
$ |
|
|
Foreign Exchange Contracts |
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Liabilities |
|
|
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts |
|
|
|
|
|
|
|
|
|
Deferred and other non-current liabilities |
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,097 |
|
|
|
|
|
|
|
193 |
|
|
Derivative Contracts Not Designated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as Hedging Instruments under SFAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts |
|
Prepayments & Other |
|
|
3,931 |
|
|
Accounts Payable and Accrued Liabilities |
|
|
752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts |
|
|
|
|
|
|
|
|
|
Deferred and other non-current liabilities |
|
|
808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,931 |
|
|
|
|
|
|
$ |
1,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivative Contracts |
|
|
|
|
|
$ |
5,028 |
|
|
|
|
|
|
$ |
1,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Derivative Instruments on the Statements of Financial Performance
for the Quarter Ended March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss) |
|
Derivatives in Statement 133 Fair |
|
Location of Gain or (Loss) Recognized in |
|
|
Recognized in Income on Derivative |
|
Value Hedging Relationships |
|
Income on Derivative |
|
|
2009 |
|
Interest Rate Contracts |
|
|
(a) |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Interest rate swap uses the short-cut method which adjusts short term debt.
Therefore, there is no net impact on income. |
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of |
|
|
Location of |
|
|
Amount of |
|
|
Location of Gain |
|
|
Amount of Gain or |
|
Derivatives in Statement 133 |
|
Gain or |
|
|
Gain or |
|
|
Gain or |
|
|
or (Loss) |
|
|
(Loss) Recognized |
|
Cash Flow Hedging |
|
(Loss) |
|
|
(Loss) |
|
|
(Loss) From |
|
|
Recognized in |
|
|
in Income of |
|
Relationships |
|
Recognized |
|
|
Reclassified |
|
|
Accumulated |
|
|
Income on |
|
|
Derivative |
|
|
|
in OCI on |
|
|
From |
|
|
OCI Into |
|
|
Derivative |
|
|
(Ineffective Portion |
|
|
|
Derivative |
|
|
Accumulated |
|
|
Income |
|
|
(Ineffective |
|
|
and Amount |
|
|
|
(Effective |
|
|
OCI Into |
|
|
(Effective |
|
|
Portion and |
|
|
Excluded from |
|
|
|
Portion) |
|
|
Income |
|
|
Portion) |
|
|
Amount Excluded |
|
|
Effectiveness |
|
|
|
|
|
|
|
(Effective |
|
|
|
|
|
|
From Effectiveness |
|
|
Testing) |
|
|
|
2009 |
|
|
Portion) |
|
|
2009 |
|
|
Testing) |
|
|
2009 |
|
Foreign Exchange Contracts |
|
$ |
26 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
26 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as |
|
|
|
Amount of Gain or (Loss) Recognized in |
Hedging Instruments Under |
|
Location of Gain or (Loss) Recognized in |
|
Income on Derivative |
Statement 133 |
|
Income on Derivative |
|
2009 |
Foreign Exchange Contracts |
|
Other Income (Expense), Miscellaneous, net |
|
$ (1,933) |
NOTE
7 COMMITMENTS AND CONTINGENCIES
The Company, in the normal course of business, is subject to a number of lawsuits and claims both
actual and potential in nature. Management believes the resolution of these claims and lawsuits
will not have a material adverse or positive effect on the Companys financial position, results of
operations or cash flow.
Under its Certificate of Incorporation, the Company has agreed to indemnify its officers and
directors for certain events or occurrences while the officer or director is, or was serving, at
its request in such capacity. The maximum potential amount of future payments the Company could be
required to make under these indemnification agreements is unlimited; however, the Company has a
directors and officers liability insurance policy that covers a portion of its exposure. As a
result of its insurance policy coverage, the Company believes the estimated fair value of these
indemnification agreements is minimal. The Company has no liabilities recorded for these
agreements as of March 31, 2009.
NOTE
8 STOCK REPURCHASE PROGRAM
During the quarter ended March 31, 2009, the Company repurchased 177 thousand shares for an
aggregate amount of $4.8 million. As of March 31, 2009, the Company has a remaining authorization
to repurchase 4.4 million additional shares. The timing of and total amount expended for the share
repurchase depends upon market conditions. There is no time limit on the repurchase authorization.
NOTE
9 EARNINGS PER SHARE
AptarGroups authorized common stock consisted of 199 million shares, having a par value of $.01
each. Information related to the calculation of earnings per share is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, 2009 |
|
|
March 31, 2008 |
|
|
|
Diluted |
|
|
Basic |
|
|
Diluted |
|
|
Basic |
|
|
Consolidated operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common shareholders |
|
$ |
26,665 |
|
|
$ |
26,665 |
|
|
$ |
36,901 |
|
|
$ |
36,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equivalent shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of common stock |
|
|
67,677 |
|
|
|
67,677 |
|
|
|
68,168 |
|
|
|
68,168 |
|
Effect of dilutive stock based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
1,838 |
|
|
|
|
|
|
|
2,897 |
|
|
|
|
|
Restricted stock |
|
|
4 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average equivalent shares |
|
|
69,519 |
|
|
|
67,677 |
|
|
|
71,072 |
|
|
|
68,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
.38 |
|
|
$ |
.39 |
|
|
$ |
.52 |
|
|
$ |
.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
10 SEGMENT INFORMATION
The Company operates in the packaging industry, which includes the development, manufacture and
sale of consumer product dispensing systems. The Company is organized into three reporting
segments. Operations that sell spray and lotion dispensing systems primarily to the personal care,
fragrance/cosmetic and household markets form the Beauty & Home segment. Operations that sell dispensing
systems to the pharmaceutical market form the Pharma segment.
Operations that sell closures to each market served by AptarGroup form the Closures segment.
9
The accounting policies of the segments are the same as those described in Note 1, Summary of
Significant Accounting Policies in the Companys Annual Report on Form 10-K for the year ended
December 31, 2008. The Company evaluates performance of its business segments and allocates
resources based upon earnings before interest expense in excess of interest income, stock option
and certain corporate expenses, income taxes and unusual items (collectively referred to as
Segment Income). Financial information regarding the Companys reportable segments is shown
below:
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
2009 |
|
|
2008 |
|
|
Total Revenue: |
|
|
|
|
|
|
|
|
Beauty & Home |
|
$ |
214,496 |
|
|
$ |
288,177 |
|
Closures |
|
|
117,277 |
|
|
|
134,570 |
|
Pharma |
|
|
103,031 |
|
|
|
114,395 |
|
Other |
|
|
78 |
|
|
|
81 |
|
|
|
|
|
|
Total Revenue |
|
$ |
434,882 |
|
|
$ |
537,223 |
|
|
|
|
|
|
|
|
|
|
Less: Intersegment Sales: |
|
|
|
|
|
|
|
|
Beauty & Home |
|
$ |
2,824 |
|
|
$ |
4,414 |
|
Closures |
|
|
101 |
|
|
|
294 |
|
Pharma |
|
|
106 |
|
|
|
180 |
|
Other |
|
|
35 |
|
|
|
77 |
|
|
|
|
|
|
Total Intersegment Sales |
|
$ |
3,066 |
|
|
$ |
4,965 |
|
|
|
|
|
|
|
|
|
|
Net Sales: |
|
|
|
|
|
|
|
|
Beauty & Home |
|
$ |
211,672 |
|
|
$ |
283,763 |
|
Closures |
|
|
117,176 |
|
|
|
134,276 |
|
Pharma |
|
|
102,925 |
|
|
|
114,215 |
|
Other |
|
|
43 |
|
|
|
4 |
|
|
|
|
|
|
Net Sales |
|
$ |
431,816 |
|
|
$ |
532,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income (1): |
|
|
|
|
|
|
|
|
Beauty & Home |
|
$ |
10,336 |
|
|
$ |
28,400 |
|
Closures |
|
|
11,617 |
|
|
|
10,804 |
|
Pharma |
|
|
28,429 |
|
|
|
29,562 |
|
Corporate & Other |
|
|
(11,124 |
) |
|
|
(14,892 |
) |
|
|
|
|
|
Income before interest and taxes |
|
$ |
39,258 |
|
|
$ |
53,874 |
|
Interest expense, net |
|
|
(2,172 |
) |
|
|
(1,158 |
) |
|
|
|
|
|
Income before income taxes |
|
$ |
37,086 |
|
|
$ |
52,716 |
|
|
|
|
|
|
|
|
(1): The Company evaluates performance of its business units and allocates resources based upon
segment income. Segment income is defined as earnings before interest expense in excess of
interest income, stock option and certain corporate expenses, income taxes and unusual items.
Prior year amounts have been revised to reflect the current method used to allocate certain
corporate costs.
NOTE
11 STOCK-BASED COMPENSATION
SFAS 123(R) upon adoption requires the application of the non-substantive vesting approach which
means that an award is fully vested when the employees retention of the award is no longer
contingent on providing subsequent service. Under this approach, compensation costs are recognized
over the requisite service period of the award instead of ratably over the vesting period stated in
the grant. As such, costs would be recognized immediately, if the employee is retirement eligible
on the date of grant or over the period from the date of grant until retirement eligibility if
retirement eligibility is reached before the end of the vesting period stated in the grant. For
awards granted prior to adoption, the Company will continue to recognize compensation costs ratably
over the vesting period with accelerated recognition of the unvested portion upon actual
retirement.
The Company issues stock options and restricted stock units to employees under Stock Awards
Plans approved by shareholders. Stock options are issued to non-employee directors for their
services as directors under Director Stock Option Plans approved by shareholders. Options are
awarded with the exercise price equal to the market price on the date of grant and generally become
exercisable over three years and expire 10 years after grant. Restricted stock generally vests
over three years.
Compensation expense recorded attributable to stock options for the first quarter of 2009 was
approximately $5.1 million ($3.8 million after tax), or $0.06 per share basic and $0.05 per share
diluted. The income tax benefit related to this compensation expense was approximately $1.3
million. Approximately $4.7 million of the compensation expense was recorded in selling, research
& development and administrative expenses and the balance was recorded in cost of sales.
Compensation expense recorded attributable to stock options for the first quarter of 2008 was
approximately $7.2 million ($5.2 million after tax), or $0.08 per share basic and $0.07 per share
diluted. The income tax benefit related to this compensation expense was
approximately $2.0 million. Approximately $6.8 million of the compensation expense was recorded in
selling, research & development and administrative expenses and the balance was recorded in cost of
sales.
The Company uses historical data to estimate expected life and volatility. The
weighted-average fair value of stock options granted under the Stock Awards Plans was $7.33 and
$10.02 per share in 2009 and 2008, respectively. These values were
10
estimated on the respective dates of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
Stock Awards Plans: |
|
|
|
|
|
|
Three months ended March 31, |
|
2009 |
|
|
2008 |
|
|
Dividend Yield |
|
|
1.6 |
% |
|
|
1.4 |
% |
Expected Stock Price Volatility |
|
|
24.2 |
% |
|
|
22.4 |
% |
Risk-free Interest Rate |
|
|
2.2 |
% |
|
|
3.7 |
% |
Expected Life of Option (years) |
|
|
6.9 |
|
|
|
6.9 |
|
There were no grants under the Director Stock Option Plan during the first quarters of 2009
and 2008.
A summary of option activity under the Companys stock option plans as of March 31, 2009, and
changes during the period then ended is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards Plans |
|
|
Director Stock Option Plans |
|
|
|
|
|
|
|
Weighted Average |
|
|
|
|
|
|
Weighted Average |
|
|
|
Shares |
|
|
Exercise Price |
|
|
Shares |
|
|
Exercise Price |
|
|
Outstanding, January 1, 2009 |
|
|
7,743,827 |
|
|
$ |
24.51 |
|
|
|
157,000 |
|
|
$ |
23.25 |
|
Granted |
|
|
1,252,270 |
|
|
|
30.56 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(273,914 |
) |
|
|
13.83 |
|
|
|
|
|
|
|
|
|
Forfeited or expired |
|
|
(2,867 |
) |
|
|
33.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2009 |
|
|
8,719,316 |
|
|
$ |
25.71 |
|
|
|
157,000 |
|
|
$ |
23.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2009 |
|
|
6,245,617 |
|
|
$ |
22.89 |
|
|
|
157,000 |
|
|
$ |
23.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Remaining Contractual Term (Years): |
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2009 |
|
|
6.5 |
|
|
|
|
|
|
|
4.9 |
|
|
|
|
|
Exercisable at March 31, 2009 |
|
|
5.4 |
|
|
|
|
|
|
|
4.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Intrinsic Value ($000): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2009 |
|
$ |
55,161 |
|
|
|
|
|
|
$ |
1,291 |
|
|
|
|
|
Exercisable at March 31, 2009 |
|
$ |
54,155 |
|
|
|
|
|
|
$ |
1,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic Value of Options Exercised ($000) During the Three Months Ended: |
|
|
|
|
|
|
|
|
|
March 31, 2009 |
|
$ |
4,436 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
March 31, 2008 |
|
$ |
5,360 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
The fair value of shares vested during the three months ended March 31, 2009 and 2008 was
$11.0 million and $10.0 million, respectively. Cash received from option exercises was
approximately $3.5 million and the actual tax benefit realized for the tax deduction from option
exercises was approximately $4.8 million in the three months ended March 31, 2009. As of March 31,
2009, the remaining valuation of stock option awards to be expensed in future periods was $10.1
million and the related weighted-average period over which it is expected to be recognized is 1.5
years.
The fair value of restricted stock grants is the market price of the underlying shares on the
grant date. A summary of restricted stock unit activity as of March 31, 2009, and changes during
the period then ended is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average |
|
|
|
Shares |
|
|
Grant-Date Fair Value |
|
|
Nonvested at January 1, 2009 |
|
|
21,739 |
|
|
$ |
32.03 |
|
Granted |
|
|
3,792 |
|
|
|
29.72 |
|
Vested |
|
|
(10,353 |
) |
|
|
31.16 |
|
|
|
|
|
|
Nonvested at March 31, 2009 |
|
|
15,178 |
|
|
$ |
32.04 |
|
|
|
|
|
|
|
|
Compensation expense recorded attributable to restricted stock unit grants for the first
quarter of 2009 and 2008 was approximately $0.1 million and $0.4 million, respectively. The fair
value of units vested during the three months ended March 31, 2009 and 2008 was $323 and $262,
respectively. The intrinsic value of units vested during the three months ended March 31, 2009 and
2008 was $319 and $324, respectively. As of March 31, 2009 there was $28 thousand of total
unrecognized compensation cost relating to restricted stock unit awards which is expected to be
recognized over a weighted average period of 1.1 years.
11
NOTE
12 INCOME TAX UNCERTAINTIES
The Company had approximately $9.9 and $9.7 million recorded for income tax uncertainties as of
March 31, 2009 and December 31, 2008, respectively. The amount, if recognized, that would impact
the effective tax rate is $9.2 and $8.9 million, respectively. The Company does not anticipate any
significant changes to the amount recorded for income tax uncertainties over the next 12 months.
NOTE
13 FAIR VALUE
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards SFAS No. 157, Fair Value Measurements, which defines fair value, establishes
a framework for measuring fair value, and expands disclosures about fair value measurements. The
provisions of SFAS No. 157 were effective as of the beginning of our 2008 fiscal year. However,
the FASB deferred the effective date of SFAS No. 157, until the beginning of our 2009 fiscal year,
as it relates to fair value measurement requirements for nonfinancial assets and liabilities that
are not remeasured at fair value on a recurring basis. These nonfinancial assets and liabilities
include goodwill, other nonamortizable intangible assets and unallocated purchase price for recent
acquisitions which are included within other assets. We adopted SFAS No. 157 as it relates to
financial assets and liabilities at the beginning of our 2008 fiscal year and as it relates to
non-financial assets and liabilities at the beginning of our 2009 fiscal year. Our adoption did
not have a material impact on our financial statements.
The fair value framework requires the categorization of assets and liabilities into three
levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1
provides the most reliable measure of fair value, whereas Level 3 generally requires significant
management judgment. The three levels are defined as follows:
|
|
|
Level 1: Unadjusted quoted prices in active markets for identical assets and
liabilities. |
|
|
|
Level 2: Observable inputs other than those included in Level 1. For example, quoted
prices for similar assets or liabilities in active markets or quoted prices for identical
assets or liabilities in inactive markets. |
|
|
|
Level 3: Unobservable inputs reflecting managements own assumptions about the inputs
used in pricing the asset or liability. |
As of March 31, 2009, the fair values of our financial assets and liabilities are categorized
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap (a) |
|
$ |
1,097 |
|
|
$ |
|
|
|
$ |
1,097 |
|
|
$ |
|
|
Forward exchange contracts (b) |
|
|
3,931 |
|
|
|
|
|
|
|
3,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value |
|
$ |
5,028 |
|
|
$ |
|
|
|
$ |
5,028 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts (b) |
|
$ |
1,753 |
|
|
$ |
|
|
|
$ |
1,753 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value |
|
$ |
1,753 |
|
|
$ |
|
|
|
$ |
1,753 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2008, the fair values of our financial assets and liabilities were categorized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap (a) |
|
$ |
1,068 |
|
|
$ |
|
|
|
$ |
1,068 |
|
|
$ |
|
|
Forward exchange contracts (b) |
|
|
10,865 |
|
|
|
|
|
|
|
10,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value |
|
$ |
11,933 |
|
|
$ |
|
|
|
$ |
11,933 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts (b) |
|
$ |
1,195 |
|
|
$ |
|
|
|
$ |
1,195 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value |
|
$ |
1,195 |
|
|
$ |
|
|
|
$ |
1,195 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Based on third party quotation from
financial institution |
(b) |
|
Based on observable market transactions
of spot and forward rates |
NOTE
14 SUBSEQUENT EVENT
In April 2009, the Company announced a plan to consolidate two French dispensing closure
manufacturing facilities and several sales offices in North America and Europe. The locations
affected primarily relate to AptarGroups Closures and Beauty & Home segments. The total costs associated
with the facility consolidation plan are estimated to be approximately $6 million. The charges
will be recorded in the quarter in which they are recognizable for accounting purposes with the
majority expected in 2009. Annual savings are estimated to be approximately $3 million primarily
beginning in 2010.
12
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, OR OTHERWISE INDICATED)
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, |
|
2009 |
|
|
2008 |
|
|
Net Sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales (exclusive of depreciation and amortization shown below) |
|
|
67.1 |
|
|
|
68.1 |
|
Selling, research & development and administration |
|
|
16.8 |
|
|
|
15.4 |
|
Depreciation and amortization |
|
|
7.0 |
|
|
|
6.2 |
|
|
|
|
|
|
Operating Income |
|
|
9.1 |
|
|
|
10.3 |
|
Other income (expense) |
|
|
(.5 |
) |
|
|
(.4 |
) |
|
|
|
|
|
Income before income taxes |
|
|
8.6 |
|
|
|
9.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
6.2 |
% |
|
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
Tax Rate |
|
|
28.1 |
% |
|
|
30.0 |
% |
|
|
|
|
|
|
|
NET SALES
We reported net sales of $431.8 million for the quarter ended March 31, 2009, or 19% below first
quarter 2008 net sales of $532.3 million. The average U.S. dollar exchange rate strengthened
compared to the Euro (our primary foreign currency exposure) in the first quarter of 2009 compared
to the first quarter of 2008, and as a result, changes in exchange rates negatively impacted sales
and accounted for approximately 10% of the 19% sales decrease. Product and custom tooling sales
declined 10% while acquisitions contributed 1% to sales.
For further discussion on net sales by reporting segment, please refer to the segment analysis
of net sales and operating income on the following pages.
The following table sets forth, for the periods indicated, net sales by geographic location:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, |
|
2009 |
|
|
% of Total |
|
|
2008 |
|
|
% of Total |
|
|
Domestic |
|
$ |
118,530 |
|
|
|
27 |
% |
|
$ |
131,259 |
|
|
|
25 |
% |
Europe |
|
|
256,869 |
|
|
|
60 |
% |
|
|
341,566 |
|
|
|
64 |
% |
Other Foreign |
|
|
56,417 |
|
|
|
13 |
% |
|
|
59,433 |
|
|
|
11 |
% |
COST OF SALES (EXCLUSIVE OF DEPRECIATION SHOWN BELOW)
Our cost of sales as a percent of net sales decreased to 67.1% in the first quarter of 2009
compared to 68.1% in the same period a year ago.
The following factors positively impacted our cost of sales percentage in the first quarter of
2009:
Segment Mix. Compared to the prior year, our Pharma segment sales represented a larger percentage
of our overall sales. This positively impacts our cost of sales percentage as margins on our
pharmaceutical products typically are higher than the overall company average.
Declining Raw Material Costs. Raw material costs, in particular plastic resin in the U.S.,
decreased in the first quarter of 2009 over 2008. While the majority of these cost decreases are
passed along to our customers in our selling prices, we experienced the usual lag in the timing of
passing on these cost decreases.
Strengthening of the U.S. Dollar. We are a net importer from Europe into the U.S. of products
produced in Europe with costs denominated in Euros. As a result, when the U.S. dollar or other
currencies strengthen against the Euro, products produced in Europe (with costs denominated in
Euros) and sold in currencies that are stronger compared to the Euro, have a positive impact on
cost of sales as a percentage of net sales.
13
The following factor negatively impacted our cost of sales percentage in the first quarter of 2009:
Underutilized Overhead Costs in Certain Operations. Several of our business operations, especially
in the Beauty & Home business segment, saw a decrease in unit volumes produced and sold. As a
result of these lower production levels, overhead costs were underutilized, thus negatively
impacting cost of goods sold as a percentage of net sales.
SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE
Our Selling, Research & Development and Administrative expenses (SG&A) decreased by approximately
$9.1 million in the first quarter of 2009 to $72.7 million compared to $81.8 million in the same
period a year ago. Changes in currency rates accounted for $7.2 million of the decrease in SG&A in
the quarter. The remainder of the decrease is primarily the result of lower stock option expense.
However, SG&A as a percentage of net sales still increased to 16.8% compared to 15.4% of net sales
in the same period of the prior year.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased approximately $2.9 million in the first quarter of 2009 to
$30.1 million compared to $33.0 million in the first quarter of 2008. Changes in foreign currency
rates accounted for a $3.3 million decrease for a net increase of $0.4 million on a constant
currency basis. Depreciation and amortization as a percentage of net sales increased to 7.0%
compared to 6.2% of net sales in the same period of the prior year.
OPERATING INCOME
Operating income decreased approximately $15.4 million in the first quarter of 2009 to $39.3
million compared to $54.7 million in the same period in the prior year. The decrease is primarily
due to the strengthening of the U.S. dollar compared to the Euro which is having a negative impact
on the translation of our results in U.S. dollars and the decrease in sales of our products,
particularly in the Beauty & Home segment as mentioned above. Operating income as a percentage of
net sales was 9.1% in the first quarter 2009 compared to 10.3% for the same period in the prior
year. This decrease is attributed to the Companys inability to reduce fixed overhead costs at the
same rate as sales decline.
NET OTHER EXPENSE
Net other expenses in the first quarter of 2009 increased to $2.2 million in the first quarter
compared to $2.0 million in the first quarter of the prior year. Interest income decreased by $2.2
million due primarily to lower average cash balances but was offset partially by lower interest
expense and net foreign currency losses.
EFFECTIVE TAX RATE
The reported effective tax rate decreased to 28.1% for the three months ended March 31, 2009
compared to 30.0% in the first quarter of 2008 due primarily to mix of where the income is earned.
NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.
We reported net income of $26.7 million in the first quarter of 2009 compared to $36.9 million in
the first quarter of 2008.
BEAUTY & HOME SEGMENT
Operations that sell spray and lotion dispensing systems primarily to the personal care,
fragrance/cosmetic and household markets form the Beauty & Home segment.
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2009 |
|
|
2008 |
|
|
Net Sales |
|
$ |
211,672 |
|
|
$ |
283,763 |
|
Segment Income (1) |
|
|
10,336 |
|
|
|
28,400 |
|
Segment Income as a percentage of Net Sales |
|
|
4.9 |
% |
|
|
10.0 |
% |
(1) The Company evaluates performance of its business units and allocates resources based upon
segment income. Segment income is defined as earnings before interest expense in excess of
interest income, stock option and certain corporate expenses, income taxes and unusual items.
Prior year amounts have been revised to reflect the current method used to allocate certain
corporate costs. For a reconciliation of segment income to income before income taxes, see Note 10
Segment information to the Consolidated Financial Statements
in Item 1.
14
Net sales for the quarter ended March 31, 2009 decreased 25% to $211.7 million compared to
$283.8 million in the first quarter of the prior year. The strengthening U.S. dollar compared to
the Euro negatively impacted the change in sales and represented 9% of the 25% decrease. Sales,
excluding foreign currency changes, decreased approximately 17% in the first quarter of 2009
compared to the same period in the prior year as demand decreased in all regions with the exception
of Asia. Acquisitions accounted for a 1% increase in sales. Sales of our products, excluding
foreign currency changes, to the personal care market decreased 9% in the first quarter of 2009
compared to the first quarter of the prior year. The general market weakness was offset slightly
by the increased sales of our Bag-on-Valves and locking actuators. Sales, excluding foreign
currency changes, to the fragrance & cosmetic and household markets decreased 20% and 19%,
respectively, in the first quarter of 2009 compared to the first quarter of the prior year
primarily due to the general economic condition.
Segment income in the first quarter of 2009 decreased approximately 64% to $10.3 million
compared to $28.4 million reported in the prior year. The lower segment income in the first
quarter is due primarily to the reductions in volumes. Segment income was lower at all locations
except Asia which benefited from increased sales volumes and Latin America which benefited from
increased efficiencies and cost savings activities. Under absorbed fixed costs continue to
negatively impact segment income and contingency plans are in effect at all locations in an effort
to offset some of the impact of the volume reductions.
CLOSURES SEGMENT
The Closures segment designs and manufactures primarily dispensing closures. These products are
generally sold to the personal care, household and food/beverage markets.
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2009 |
|
|
2008 |
|
|
Net Sales |
|
$ |
117,176 |
|
|
$ |
134,276 |
|
Segment Income |
|
|
11,617 |
|
|
|
10,804 |
|
Segment Income as a percentage of Net Sales |
|
|
9.9 |
% |
|
|
8.0 |
% |
Net sales for the quarter ended March 31, 2009 decreased 13% to $117.2 million compared to
$134.3 million in the first quarter of the prior year. The strengthening U.S. dollar compared to
the Euro negatively impacted the change in sales and represented 10% of the 13% decrease. Core
product sales decreased 6% due mainly to resin pass-through contracts with our customers.
Acquisitions accounted a 3% increase in sales. Product sales, excluding foreign currency changes,
to the personal care and household markets decreased approximately 5% and 27%, respectively, in the
first quarter of 2009 compared to the same period in the prior year. This is primarily due to
weaker demand across all regions attributed to our customers experiencing soft demand. Partially
offsetting these decreases was a 7% increase in sales of our products to the food/beverage market
related mainly to new products.
Despite decreased overall sales, segment income in the first quarter of 2009 increased
approximately 8% to $11.6 million compared to $10.8 million reported in the prior year. The
increase in segment income is primarily due to cost savings and the normal delay in the
pass-through of lower resin costs to our customers.
PHARMA SEGMENT
Operations that sell dispensing systems to the pharmaceutical market form the Pharma segment.
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2009 |
|
|
2008 |
|
|
Net Sales |
|
$ |
102,925 |
|
|
$ |
114,215 |
|
Segment Income |
|
|
28,429 |
|
|
|
29,562 |
|
Segment Income as a percentage of Net Sales |
|
|
27.6 |
% |
|
|
25.9 |
% |
Net sales for the Pharma segment declined by 10% in the first quarter of 2009 to $102.9
million compared to $114.2 million in the first quarter of 2008. The strengthening U.S. dollar
compared to the Euro negatively impacted the change in sales and represented almost all of the 10%
decrease. Acquisitions accounted for a 1% increase in sales. While our other segments have seen
decreases in constant currency sales during the first quarter, the Pharma segment continues to see
stable demand as sales of our metered dose inhaler valves (MDIs), which is used to dispense
asthma medications, improved.
Segment income in the first quarter of 2009 decreased approximately 4% to $28.4 million
compared to $29.6 million reported in the prior year. As with net sales, this decrease is
attributed to an unfavorable currency comparison to 2008. Segment income as a percentage of net
sales improved from 25.9% in 2008 to 27.6% in 2009 mainly due to solid sales results and good
control of operating expenses.
FOREIGN CURRENCY
A significant number of our operations are located outside of the United States. Because of this,
movements in exchange rates may have a significant impact on the translation of the financial
statements of our foreign entities. Our primary foreign exchange exposure is to the Euro, but we
have foreign exchange exposure to the British Pound, South American and Asian currencies,
15
among others. We manage our exposures to foreign exchange principally with forward exchange
contracts to hedge certain transactions and firm purchase and sales commitments denominated in
foreign currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive
translation effect on our financial statements. Conversely, a weakening U.S. dollar has an
additive effect. In some cases, we sell products denominated in a currency different from the
currency in which the related costs are incurred. Changes in exchange rates on such inter-country
sales could materially impact our results of operations.
QUARTERLY TRENDS
Our results of operations in the second half of the year typically are negatively impacted by
customer plant shutdowns in the summer months in Europe and plant shutdowns in December. In the
future, our results of operations in a quarterly period could be impacted by factors such as
changes in product mix, changes in material costs, changes in growth rates in the industries to
which our products are sold, recognition of equity based compensation expense for retirement
eligible employees in the period of grant and changes in general economic conditions in any of the
countries in which we do business.
Our estimated stock option expense on a pre-tax basis (in $ millions) for the year 2009
compared to the prior year is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
2008 |
|
First Quarter |
|
|
5.0 |
|
|
|
7.2 |
|
Second Quarter |
|
|
1.6 |
|
|
|
1.4 |
|
Third Quarter |
|
|
1.6 |
|
|
|
1.3 |
|
Fourth Quarter |
|
|
1.4 |
|
|
|
1.3 |
|
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash flow from operations and our revolving credit facility.
Cash and equivalents increased to $203.9 million at the end of March 2009 from $192.1 million at
December 31, 2008. Total short and long-term interest bearing debt increased in the first quarter
of 2009 to $304.7 million from $291.5 million at December 31, 2008. The ratio of our Net Debt
(interest bearing debt less cash and cash equivalents) to Net Capital (stockholders equity plus
Net Debt) of 8% remained unchanged at the end of the quarter compared to the prior year end.
In the first quarter of 2009, our operations provided approximately $48.8 million in cash flow
compared to $39.0 million for the same period a year ago. The increase in cash flow is primarily
attributable to an improvement in working capital across all segments. During the first quarter of
2009, we utilized the majority of the operating cash flows to finance capital expenditures.
We used $31.9 million in cash for investing activities during the first quarter of 2009,
compared to $46.0 million during the same period a year ago. The decrease in cash used for
investing activities is due primarily to $10.0 million less spent on capital expenditures in the
first quarter of 2009 compared to the first quarter of 2008. In 2008, we also used $4.1 million of
cash for the acquisition of a business. Cash outlays for capital expenditures for 2009 are
estimated to be approximately $130 million but this amount could vary due to changes in currency
rates.
We received approximately $3.2 million in cash provided by financing activities in the first
quarter of 2009 compared to $5.8 million in the first quarter of the prior year. The decrease in
cash from financing activities is due primarily to a reduction in the purchase of treasury stock
which in turn lead to a reduction in proceeds from notes payable.
Our revolving credit facility and certain long-term obligations require us to satisfy certain
financial and other covenants including:
|
|
|
|
|
|
|
Requirement |
|
Level at March 31, 2009 |
Debt to total capital ratio |
|
Maximum of 55% |
|
22% |
Based upon the above debt to total capital ratio covenant we would have the ability to borrow
approximately an additional $1.0 billion before the 55% requirement was exceeded.
Our foreign operations have historically met cash requirements with the use of internally
generated cash or borrowings. These foreign subsidiaries have financing arrangements with several
foreign banks to fund operations located outside the U.S., but all these lines are uncommitted.
Cash generated by foreign operations has generally been reinvested locally. The majority of our
$203.9 million in cash and equivalents is located outside of the U.S.
We believe we are in a strong financial position and have the financial resources to meet
business requirements in the foreseeable future. We have historically used cash flow from
operations as our primary source of liquidity. In the event that customer demand would decrease
significantly for a prolonged period of time and negatively impact cash flow from operations, we
would have the ability to restrict and significantly reduce capital expenditure levels, which
historically have been the most significant use of cash for us. A prolonged and significant
reduction in capital expenditure levels could increase future repairs and maintenance costs as well
as have a negative impact on operating margins if we were unable to invest in new innovative
products.
On April 15, 2009, the Board of Directors declared a quarterly dividend of $0.15 per share
payable on May 20, 2009 to stockholders of record as of April 29, 2009.
OFF-BALANCE SHEET ARRANGEMENTS
We lease certain warehouse, plant and office facilities as well as certain equipment under
noncancelable operating leases expiring at various dates through the year 2018. Most of the
operating leases contain renewal options and certain equipment
16
leases include options to purchase during or at the end of the lease term. Other than operating
lease obligations, we do not have any off-balance sheet arrangements.
OUTLOOK
While there continues to be uncertainty about the near term performance of the global economy, we
expect that the conditions in the first quarter will continue into the second quarter. Difficult
economic conditions have historically presented opportunities as well as challenges. The present
situation, severe as it may be, is no different. While future sales visibility remains low,
presently we expect that demand, particularly in our Beauty & Home and Closures segments, will
increase in the second half of the year. While we have been reducing costs, we have not reduced
our research and development efforts. We believe that our strong balance sheet, experienced
management team and dedicated employees will enable us to weather the current economic situation
and that when conditions improve, our innovative new products will drive market share growth.
Excluding any effects of the facility consolidation plan that was announced in April, 2009, we
anticipate that diluted earnings per share for the second quarter of 2009 will be in the range of
$0.37 to $0.42 per share compared to $0.64 per share in the prior year.
17
FORWARD-LOOKING STATEMENTS
This Managements Discussion and Analysis and certain other sections of this Form 10-Q contain
forward-looking statements that involve a number of risks and uncertainties. Words such as
expects, anticipates, believes, estimates, and other similar expressions or future or
conditional verbs such as will, should, would and could are intended to identify such
forward-looking statements. Forward-looking statements are made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934 and are based on our beliefs as well as assumptions made by and information currently
available to us. Accordingly, our actual results may differ materially from those expressed or
implied in such forward-looking statements due to known or unknown risks and uncertainties that
exist in our operations and business environment, including but not limited to:
|
|
economic, environmental and political conditions worldwide; |
|
|
changes in customer and/or consumer spending levels; |
|
|
the availability of raw materials and components (particularly from sole sourced suppliers)
as well as the financial viability of these suppliers; |
|
|
the cost of materials and other input costs (particularly resin, metal, anodization costs
and transportation and energy costs); |
|
|
significant fluctuations in foreign currency exchange rates; |
|
|
our ability to increase prices; |
|
|
our ability to contain costs and improve productivity; |
|
|
changes in capital availability or cost, including interest rate fluctuations |
|
|
our ability to meet future cash flow estimates to support our goodwill impairment testing; |
|
|
competition, including technological advances; |
|
|
our ability to protect and defend our intellectual property rights; |
|
|
the timing and magnitude of capital expenditures; |
|
|
our ability to identify potential new acquisitions and to successfully acquire and
integrate such operations or products; |
|
|
work stoppages due to labor disputes; |
|
|
the demand for existing and new products; |
|
|
fiscal and monetary policy, including changes in worldwide tax rates; |
|
|
our ability to manage worldwide customer launches of complex technical products, in
particular in developing markets; |
|
|
the success of our customers products, particularly in the pharmaceutical industry; |
|
|
difficulties in product development and uncertainties related to the timing or outcome of
product development; |
|
|
significant product liability claims and the costs associated with defending such claims; |
|
|
direct or indirect consequences of acts of war or terrorism; |
|
|
difficulties in complying with government regulation; |
|
|
the timing and successful completion of our facility consolidation plan; |
|
|
our successful implementation of a new worldwide ERP system starting in 2009 without
disruption to our operations and |
|
|
other risks associated with our operations. |
Although we believe that our forward-looking statements are based on reasonable assumptions,
there can be no assurance that actual results, performance or achievements will not differ
materially from any future results, performance or achievements expressed or implied by such
forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking
statements. We undertake no obligation to update publicly any forward-looking statements, whether
as a result of new information, future events or otherwise. Please refer to Item 1A (Risk
Factors) of Part 1 included in the Companys Annual Report on Form 10-K for additional risk
factors affecting the Company.
18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A significant number of our operations are located outside of the United States. Because of this,
movements in exchange rates may have a significant impact on the translation of the financial
condition and results of operations of our entities. Our primary foreign exchange exposure is to
the Euro, but we also have foreign exchange exposure to the British Pound, South American and Asian
currencies, among others. A weakening U.S. dollar relative to foreign currencies has an additive
translation effect on our financial condition and results of operations. Conversely, a
strengthening U.S. dollar has a dilutive effect.
Additionally, in some cases, we sell products denominated in a currency different from the
currency in which the related costs are incurred. Any changes in exchange rates on such
inter-country sales may impact our results of operations.
We manage our exposures to foreign exchange principally with forward exchange contracts to
hedge certain firm purchase and sales commitments and intercompany cash transactions denominated in
foreign currencies.
The table below provides information as of March 31, 2009 about our forward currency exchange
contracts. The majority of the contracts expire before the end of the second quarter of 2009 with
the exception of a few contracts on intercompany loans that expire in the third quarter of 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Min / Max |
|
|
|
Contract Amount |
|
|
Average Contractual |
|
|
Notional |
|
Buy/Sell |
|
(in thousands) |
|
|
Exchange Rate |
|
|
Volumes |
|
|
Euro/U.S. Dollar |
|
$ |
121,477 |
|
|
|
1.3023 |
|
|
|
121,477127,391 |
|
Swiss Franc/Euro |
|
|
39,462 |
|
|
|
0.6600 |
|
|
|
37,66639,462 |
|
U.S. Dollar/Euro |
|
|
11,146 |
|
|
|
0.7680 |
|
|
|
7,68311,146 |
|
U.S. Dollar/Chinese Yuan |
|
|
6,000 |
|
|
|
6.8511 |
|
|
|
6,0006,000 |
|
Euro/Brazilan Real |
|
|
5,663 |
|
|
|
4.6821 |
|
|
|
5,6636,132 |
|
Euro/ Russian Ruble |
|
|
5,566 |
|
|
|
37.4988 |
|
|
|
5,5665,566 |
|
Czech Koruna / Euro |
|
|
3,255 |
|
|
|
0.0375 |
|
|
|
2,5243,255 |
|
Canadian Dollar/U.S.
Dollar |
|
|
2,600 |
|
|
|
0.7965 |
|
|
|
2,000-2,600 |
|
Euro/Chinese Yuan |
|
|
1,700 |
|
|
|
8.7265 |
|
|
|
1,7001,700 |
|
Chinese Yuan/Japanese
Yen |
|
|
1,155 |
|
|
|
13.9321 |
|
|
|
4471,155 |
|
Other |
|
|
3,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
201,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009, we have recorded the fair value of foreign currency forward exchange
contracts of $3.9 million in prepaids and others, $0.8 million in accounts payable and accrued
liabilities, and $0.9 million in deferred and other non-current liabilities in the balance sheet.
At March 31, 2009, we had a fixed-to-variable interest rate swap agreement with a notional
principal value of $15 million which requires us to pay an average variable interest rate (which
was 2.5% at March 31, 2009) and receive a fixed rate of 6.6%. The variable rate is adjusted
semiannually based on London Interbank Offered Rates (LIBOR). Variations in market interest
rates would produce changes in our net income. If interest rates increase by 100 basis points, net
income related to the interest rate swap agreement would decrease by less than $0.1 million
assuming a tax rate of 30%. As of March 31, 2009, we recorded the fair value of the
fixed-to-variable interest rate swap agreement of $1.1 million in miscellaneous other assets with
an offsetting adjustment to debt. No gain or loss was recorded in the income statement in 2009 as
any hedge ineffectiveness for the period is immaterial.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Companys management has evaluated, with the participation of the chief executive officer and
chief financial officer of the Company, the effectiveness of the Companys disclosure controls and
procedures (as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as
of March 31, 2009. Based on that evaluation, the chief executive officer and chief financial
officer have concluded that these controls and procedures were effective as of such date.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No change in the Companys internal control over financial reporting (as such term is defined in
Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the Companys fiscal
quarter ended March 31, 2009 that materially affected, or is reasonably like to materially affect,
the Companys internal control over financial reporting.
19
PART II
OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
During the quarter ended March 31, 2009, the FCP Aptar Savings Plan (the Plan) sold 885 shares of
our Common Stock on behalf of the participants at an average price of $31.08 per share, for an
aggregate amount of $27.5 thousand. No shares were purchased during the quarter. At March 31,
2009, the Plan owns 16,283 shares of our Common Stock. The employees of AptarGroup S.A.S. and
Valois S.A.S., our subsidiaries, are eligible to participate in the Plan. All eligible
participants are located outside of the United States. An independent agent purchases shares of
Common Stock available under the Plan for cash on the open market and we do not issue shares. We
do not receive any proceeds from the purchase of Common Stock under the Plan. The agent under the
Plan is Banque Nationale de Paris Paribas Asset Management. No underwriters are used under the
Plan. All shares are sold in reliance upon the exemption from registration under the Securities
Act of 1933 provided by Regulation S promulgated under that Act.
ISSUER PURCHASES OF EQUITY SECURITIES
The following table summarizes the Companys purchases of its securities for the quarter ended
March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number Of Shares |
|
|
Maximum Number Of |
|
|
|
Total Number |
|
|
|
|
|
|
Purchased As Part Of |
|
|
Shares That May Yet Be |
|
|
|
Of Shares |
|
|
Average Price |
|
|
Publicly Announced |
|
|
Purchased Under The |
|
Period |
|
Purchased |
|
|
Paid Per Share |
|
|
Plans Or Programs |
|
|
Plans Or Programs |
|
|
1/1 1/31/09 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
4,548,557 |
|
2/1 2/28/09 |
|
|
121,678 |
|
|
|
27.87 |
|
|
|
121,678 |
|
|
|
4,426,879 |
|
3/1 3/31/09 |
|
|
55,000 |
|
|
|
25.99 |
|
|
|
55,000 |
|
|
|
4,371,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
176,678 |
|
|
$ |
27.28 |
|
|
|
176,678 |
|
|
|
4,371,879 |
|
The Company announced the existing repurchase program on July 19, 2006. On July 17, 2008, the
Company announced that its Board of Directors authorized the Company to repurchase an additional
four million shares of its outstanding common stock. There is no expiration date for these
repurchase programs.
ITEM 6. EXHIBITS
|
|
|
Exhibit 31.1
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
Exhibit 31.2
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
Exhibit 32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. |
|
|
|
Exhibit 32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. |
20
SIGNATURE
Pursuant to the requirements 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.
|
|
|
|
|
|
|
AptarGroup, Inc. |
|
|
|
|
(Registrant) |
|
|
|
|
|
|
|
|
|
By /s/ Robert W. Kuhn
Robert W. Kuhn
|
|
|
|
|
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer) |
|
|
|
|
|
|
|
|
|
Date: May 5, 2009 |
|
|
21
INDEX OF EXHIBITS
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
31.1
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
22