Edgar Filing: APTARGROUP INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549-1004

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013

[ ] 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.

DELAWARE		36-3853103
(State of Incorporation)		(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 þ 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.

Large accelerated filer þ		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company ¨
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date

Class		Outstanding at July 30, 2013
Common Stock, $.01 par value per share		66,283,277 shares

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AptarGroup, Inc.

Form 10-Q

Quarter Ended June 30, 2013

INDEX

Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2013 and 2012	1

	Condensed Consolidated Statements of Comprehensive Income/ (Loss) – Three and Six Months Ended June 30, 2013 and 2012	2

	Condensed Consolidated Balance Sheets – June 30, 2013 and December 31, 2012	3

	Condensed Consolidated Statements of Changes in Equity – Six Months Ended June 30, 2013 and 2012	5

	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2013 and 2012	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25

Item 4.	Controls and Procedures	25

Part II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 6.	Exhibits	26

	Signature	27

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

In thousands, except per share amounts

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012

Net Sales	$	641,441		$	577,503		$	1,259,074		$	1,170,001
Operating Expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	431,351			390,225			849,837			791,295
Selling, research & development and administrative	88,111			87,840			182,418			176,339
Depreciation and amortization	38,614			32,597			74,785			65,151
Restructuring initiatives	2,511			(215		)	6,578			(215		)
	560,587			510,447			1,113,618			1,032,570
Operating Income	80,854			67,056			145,456			137,431

Other Income (Expense):
Interest expense	(5,442		)	(3,904		)	(10,523		)	(9,146		)
Interest income	846			794			1,695			1,822
Equity in results of affiliates	(61		)	(158		)	(323		)	(289		)
Miscellaneous, net	73			(1,247		)	(633		)	(1,000		)
	(4,584		)	(4,515		)	(9,784		)	(8,613		)

Income before Income Taxes	76,270			62,541			135,672			128,818

Provision for Income Taxes	26,390			20,889			45,814			43,353

Net Income	$	49,880		$	41,652		$	89,858		$	85,465

Net (Gain) Loss Attributable to Noncontrolling Interests	$	(78	)	$	34		$	(27	)	$	30

Net Income Attributable to AptarGroup, Inc.	$	49,802		$	41,686		$	89,831		$	85,495

Net Income Attributable to AptarGroup, Inc. per Common Share:
Basic	$	0.75		$	0.63		$	1.36		$	1.29
Diluted	$	0.73		$	0.61		$	1.31		$	1.24

Average Number of Shares Outstanding:
Basic	66,420			66,580			66,288			66,388
Diluted	68,106			68,758			68,339			68,940

Dividends per Common Share	$	0.25		$	0.22		$	0.50		$	0.44

See accompanying unaudited notes to condensed consolidated financial statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/ (LOSS)

(Unaudited)

In thousands, except per share amounts

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012

Net Income	$	49,880		$	41,652		$	89,858		$	85,465
Other Comprehensive Income/ (Loss):
Foreign currency translation adjustments	6,551			(70,504		)	(29,062		)	(28,822		)
Changes in treasury locks, net of tax	15			165			30			180
Net (loss) on derivatives, net of tax	--			--			--			(7		)
Defined benefit pension plan, net of tax
Amortization of prior service cost included in net income, net of tax	61			60			122			121
Amortization of net loss included in net income, net of tax	954			684			2,072			1,371
Total defined benefit pension plan, net of tax	1,015			744			2,194			1,492
Total other comprehensive income/ (loss)	7,581			(69,595		)	(26,838		)	(27,157		)

Comprehensive (Loss)/Income	57,461			(27,943		)	63,020			58,308

Comprehensive (Income)/ Loss Attributable to Noncontrolling Interests	(82		)	38			(32		)	35

Comprehensive Income/ (Loss) Attributable to AptarGroup, Inc.	$	57,379		$	(27,905	)	$	62,988		$	58,343

See accompanying unaudited notes to condensed consolidated financial statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

In thousands, except per share amounts

	June 30,			December 31,
	2013			2012
Assets

Current Assets:
Cash and equivalents	$	189,990		$	229,755
Accounts and notes receivable, less allowance for doubtful accounts of $4,623 in 2013 and $6,751 in 2012	455,935			396,788
Inventories	337,625			321,885
Prepaid and other	101,070			90,505
	1,084,620			1,038,933

Property, Plant and Equipment:
Buildings and improvements	366,618			364,704
Machinery and equipment	1,873,898			1,857,347
	2,240,516			2,222,051
Less: Accumulated depreciation	(1,427,059		)	(1,397,575		)
	813,457			824,476
Land	23,251			23,757
	836,708			848,233

Other Assets:
Investments in affiliates	3,361			3,693
Goodwill	346,730			351,552
Intangible assets, net	49,244			51,960
Miscellaneous	18,718			30,041
	418,053			437,246
Total Assets	$	2,339,381		$	2,324,412

See accompanying unaudited notes to condensed consolidated financial statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

In thousands, except per share amounts

	June 30,			December 31,
	2013			2012
Liabilities and Stockholders’ Equity

Current Liabilities:
Notes payable	$	7,928		$	45,166
Current maturities of long-term obligations	27,349			29,488
Accounts payable and accrued liabilities	404,001			380,669
	439,278			455,323

Long-Term Obligations	352,636			352,860

Deferred Liabilities and Other:
Deferred income taxes	29,097			33,451
Retirement and deferred compensation plans	100,926			95,872
Deferred and other non-current liabilities	6,782			6,408
Commitments and contingencies	--			--
	136,805			135,731

Stockholders’ Equity:
AptarGroup, Inc. stockholders’ equity
Preferred stock, $.01 par value, 1 million shares authorized, none outstanding	--			--
Common stock, $.01 par value, 199 million shares authorized; 85.0 and 84.1 million shares issued as of June 30, 2013 and December 31, 2012, respectively	850			840
Capital in excess of par value	475,034			430,210
Retained earnings	1,570,286			1,513,558
Accumulated other comprehensive income	33,840			60,683
Less treasury stock at cost, 18.8 and 18.2 million shares as of June 30, 2013 and December 31, 2012, respectively	(669,988		)	(625,401		)
Total AptarGroup, Inc. Stockholders’ Equity	1,410,022			1,379,890
Noncontrolling interests in subsidiaries	640			608

Total Stockholders’ Equity	1,410,662			1,380,498
Total Liabilities and Stockholders’ Equity	$	2,339,381		$	2,324,412

See accompanying unaudited notes to condensed consolidated financial statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

In thousands, except per share amounts

	AptarGroup, Inc. Stockholders’ Equity
				Accumulated
				Other			Common					Capital in		Non-
	Retained			Comprehensive			Stock		Treasury			Excess of		Controlling			Total
	Earnings			Income/(Loss)			Par Value		Stock			Par Value		Interest			Equity

Balance – December 31, 2011:	$	1,409,388		$	60,318		$	827	$	(545,612	)	$	364,855	$	796		$	1,290,572

Net income (loss)	85,495													(30		)	85,465
Foreign currency translation adjustments				(28,817		)								(5		)	(28,822		)
Changes in unrecognized pension gains/losses and related amortization, net of tax				1,492													1,492
Changes in treasury locks, net of tax				180													180
Net loss on derivatives, net of tax				(7		)											(7		)
Stock option exercises & restricted stock vestings							18		3			38,280					38,301
Cash dividends declared on common stock	(29,175		)														(29,175		)
Treasury stock purchased									(10,096		)						(10,096		)
Balance – June 30, 2012:	$	1,465,708		$	33,166		$	845	$	(555,705	)	$	403,135	$	761		$	1,347,910

Balance – December 31, 2012:	$	1,513,558		$	60,683		$	840	$	(625,401	)	$	430,210	$	608		$	1,380,498

Net income	89,831													27			89,858
Foreign currency translation adjustments				(29,067		)								5			(29,062		)
Changes in unrecognized pension gains/losses and related amortization, net of tax				2,194													2,194
Changes in treasury locks, net of tax				30													30
Net loss on derivatives, net of tax				--													--
Stock option exercises & restricted stock vestings							10		1			44,824					44,835
Cash dividends declared on common stock	(33,103		)														(33,103		)
Treasury stock purchased									(44,588		)						(44,588		)
Balance – June 30, 2013:	$	1,570,286		$	33,840		$	850	$	(669,988	)	$	475,034	$	640		$	1,410,662

See accompanying unaudited notes to condensed consolidated financial statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

In thousands, brackets denote cash outflows

Six Months Ended June 30,	2013			2012

Cash Flows from Operating Activities:
Net income	$	89,858		$	85,465
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	72,303			64,485
Amortization	2,482			666
Stock option based compensation	9,324			8,689
Recovery of doubtful accounts	(723		)	(605		)
Deferred income taxes	(6,756		)	(478		)
Defined benefit plan expense	9,668			7,154
Equity in results of affiliates in excess of cash distributions received	323			289
Changes in balance sheet items, excluding effects from foreign currency adjustments:
Accounts receivable	(67,815		)	(40,455		)
Inventories	(22,591		)	(20,793		)
Prepaid and other current assets	(9,670		)	5,163
Accounts payable and accrued liabilities	19,745			10,447
Income taxes payable	9,258			796
Retirement and deferred compensation plans	(7,752		)	(20,978		)
Other changes, net	11,954			(15,680		)
Net Cash Provided by Operations	109,608			84,165

Cash Flows from Investing Activities:
Capital expenditures	(71,741		)	(95,351		)
Disposition of property and equipment	2,946			1,229
Investment in unconsolidated affiliate	(13		)	(279		)
Notes receivable, net	(159		)	95
Net Cash Used by Investing Activities	(68,967		)	(94,306		)

Cash Flows from Financing Activities:
Repayments of notes payable	(37,407		)	(53,792		)
Proceeds from long-term obligations	--			539
Repayments of long-term obligations	(1,537		)	--
Dividends paid	(33,103		)	(29,175		)
Credit facility costs	(498		)	(1,121		)
Proceeds from stock option exercises	31,100			25,003
Purchase of treasury stock	(44,588		)	(10,096		)
Excess tax benefit from exercise of stock options	3,912			4,380
Net Cash Used by Financing Activities	(82,121		)	(64,262		)

Effect of Exchange Rate Changes on Cash	1,715			(2,340		)

Net Decrease in Cash and Equivalents	(39,765		)	(76,743		)
Cash and Equivalents at Beginning of Period	229,755			377,616
Cash and Equivalents at End of Period	$	189,990		$	300,873

See accompanying unaudited notes to condensed consolidated financial statements.

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AptarGroup, Inc.

Notes to Condensed Consolidated Financial Statements

(Amounts in Thousands, Except per Share Amounts, or Otherwise Indicated)

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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. All significant intercompany accounts and transactions have been eliminated. Certain previously reported amounts have been reclassified to conform to the current period presentation.

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, comprehensive income, changes in equity 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 (“SEC”). 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. Also, certain financial position data included herein was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 but does not include all disclosures required by accounting principles generally accepted in the United States of America. 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates to the FASB’s Accounting Standards Codification.

In February 2013, The FASB issued authoritative guidance that amends the presentation of accumulated other comprehensive income and clarifies how to report the effect of significant reclassifications out of accumulated other comprehensive income. The guidance requires footnote disclosures regarding the changes in accumulated other comprehensive income by component and the line items affected in the statements of earnings. The adoption of this standard had no impact on the Condensed Consolidated Financial Statements other than disclosure. Additional information can be found in Note 5 of the Notes to the Condensed Consolidated Financial Statements.

In January 2013, The FASB issued authoritative guidance requiring new asset and liability offsetting disclosures for derivatives, repurchase agreements and security lending transactions to the extent that they are offset in the financial statements or are subject to an enforceable master netting arrangement or similar agreement. We do not have any repurchase agreements and do not participate in securities lending transactions. Our derivative instruments are not offset in the financial statements. Accordingly, the adoption of this standard had no impact on the Condensed Consolidated Financial Statements other than disclosure. Additional information can be found in Note 6 of the Notes to the Condensed Consolidated Financial Statements.

INCOME TAXES

The Company computes taxes on income in accordance with the tax rules and regulations of the many taxing authorities where the income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pretax income for financial accounting purposes. To the extent that these differences create differences between the tax basis of an asset or liability and its reported amount in the financial statements, an appropriate provision for deferred income taxes is made.

In its determination of which foreign earnings are permanently reinvested in foreign operations, the Company considers numerous factors, including the financial requirements of the U.S. parent company and those of its foreign subsidiaries, the U.S. funding needs for dividend payments and stock repurchases, and the tax consequences of remitting earnings to the U.S. From this analysis, current year repatriation decisions are made in an attempt to provide a proper mix of debt and shareholder capital both within the U.S. and for non-U.S. operations. The Company’s policy is to permanently reinvest its accumulated foreign earnings and only will make a distribution out of current year earnings to meet the cash needs at the parent company. As such, the Company does not provide taxes on earnings that are deemed to be permanently reinvested. The effective tax rate for 2013 includes the tax cost of repatriating $77 million of current year earnings, all of which was repatriated in the first half of 2013.

The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. This liability is provided whenever the Company determines that a tax benefit will not meet a more-likely-than-not threshold for recognition. See Note 13 of the Notes to the Condensed Consolidated Financial Statements for more information.

NOTE 2 - INVENTORIES

At June 30, 2013 and December 31, 2012, approximately 18% and 19%, respectively, of the total inventories are accounted for by using the LIFO method. Inventories, by component, consisted of:

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	June 30,			December 31,
	2013			2012

Raw materials	$	119,754		$	125,889
Work in process	94,506			75,261
Finished goods	130,844			127,393
Total	345,104			328,543
Less LIFO Reserve	(7,479		)	(6,658		)
Total	$	337,625		$	321,885

NOTE 3 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill since the year ended December 31, 2012 are as follows by reporting segment:

	Beauty +						Food +			Corporate
	Home			Pharma			Beverage			& Other			Total

Goodwill	$	179,890		$	153,978		$	17,684		$	1,615		$	353,167
Accumulated impairment losses	--			--			--			(1,615		)	(1,615		)
Balance as of December 31, 2012	$	179,890		$	153,978		$	17,684		$	--		$	351,552
Acquisition	--			--			--			--			--
Foreign currency exchange effects	(2,389		)	(2,316		)	(117		)	--			(4,822		)
Goodwill	$	177,502		$	151,661		$	17,567		$	1,615		$	348,345
Accumulated impairment losses	--			--			--			(1,615		)	(1,615		)
Balance as of June 30, 2013	$	177,502		$	151,661		$	17,567		$	--		$	346,730

The table below shows a summary of intangible assets as of June 30, 2013 and December 31, 2012.

		June 30, 2013							December 31, 2012

Weighted Average		Gross							Gross
Amortization		Carrying		Accumulated			Net		Carrying		Accumulated			Net
Period (Years)		Amount		Amortization			Value		Amount		Amortization			Value

Amortized intangible assets:
Patents	7	$	19,314	$	(18,762	)	$	552	$	19,570	$	(18,894	)	$	676
Acquired technology	15	38,399		(2,560		)	35,839		38,928		(1,298		)	37,630
License agreements and other	5	35,189		(22,336		)	12,853		35,780		(22,126		)	13,654
Total intangible assets	10	$	92,902	$	(43,658	)	$	49,244	$	94,278	$	(42,318	)	$	51,960

Aggregate amortization expense for the intangible assets above for the quarters ended June 30, 2013 and 2012 was $1,245 and $317, respectively. Aggregate amortization expense for the intangible assets above for the six months ended June 30, 2013 and 2012 was $2,482 and $666, respectively.

Future estimated amortization expense for the years ending December 31 is as follows:

2013	$	2,459	(remaining estimated amortization for 2013)
2014	4,901
2015	4,728
2016	4,096
2017	3,409
2018 and thereafter	29,651

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 June 30, 2013.

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NOTE 4 – RETIREMENT AND DEFERRED COMPENSATION PLANS

Components of Net Periodic Benefit Cost:

	Domestic Plans						Foreign Plans
Three months ended June 30,	2013			2012			2013			2012

Service cost	$	2,045		$	1,808		$	959		$	509
Interest cost	1,246			1,231			658			630
Expected return on plan assets	(1,474		)	(1,404		)	(447		)	(379		)
Amortization of net loss	1,117			965			348			118
Amortization of prior service cost	1			1			92			90
Net periodic benefit cost	$	2,935		$	2,601		$	1,610		$	968

	Domestic Plans						Foreign Plans
Six months ended June 30,	2013			2012			2013			2012

Service cost	$	4,270		$	3,612		$	1,928		$	1,028
Interest cost	2,496			2,459			1,323			1,275
Expected return on plan assets	(2,888		)	(2,805		)	(899		)	(767		)
Amortization of net loss	2,551			1,929			700			239
Amortization of prior service cost	2			2			185			182
Net periodic benefit cost	$	6,431		$	5,197		$	3,237		$	1,957

EMPLOYER CONTRIBUTIONS

In order to meet or exceed minimum funding levels required by U.S. law, the Company expects to contribute $10 million in the second half of 2013 and did not make any contribution during the first half of 2013. The Company also expects to contribute approximately $4.3 million to its foreign defined benefit plans in 2013 and has contributed approximately $1.2 million during the first half of 2013.

NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Changes in Accumulated Other Comprehensive Income by Component:

	Foreign Currency			Defined Benefit Pension Plans			Other			Total
Balance – December 31, 2011	$	100,593		$	(39,907	)	$	(368	)	$	60,318
Other comprehensive loss before reclassifications	(28,817		)	--			--			(28,817		)
Amounts reclassified from accumulated other comprehensive income	--			1,492			173			1,665
Net current-period other comprehensive (loss)/income	(28,817		)	1,492			173			(27,152		)
Balance - June 30, 2012	$	71,776		$	(38,415	)	$	(195	)	$	33,166

Balance – December 31, 2012	$	120,097		$	(59,248	)	$	(166	)	$	60,683
Other comprehensive loss before reclassifications	(29,067		)	--			--			(29,067		)
Amounts reclassified from accumulated other comprehensive income	--			2,194			30			2,224
Net current-period other comprehensive (loss)/income	(29,067		)	2,194			30			(26,843		)
Balance - June 30, 2013	$	91,030		$	(57,054	)	$	(136	)	$	33,840

Reclassifications Out of Accumulated Other Comprehensive Income:

Details about Accumulated Other	Amount Reclassified from Accumulated						Affected Line in the Statement
Comprehensive Income Components	Other Comprehensive Income						Where Net Income is Presented
Three months ended June 30,	2013			2012

Defined Benefit Pension Plans
Amortization of net loss	$	1,465		$	1,083		(a)
Amortization of prior service cost	93			91			(a)
	1,558			1,174			Total before tax
	(543		)	(430		)	Tax benefit
	$	1,015		$	744		Net of tax


Other
Changes in treasury locks	23			22			Interest Expense
Net loss on derivatives	--			--
	23			22			Total before tax
	(8		)	143			Tax benefit
	$	15		$	165		Net of tax

Total reclassifications for the period	$	1,030		$	909

(a)	These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 4 – Retirement and Deferred Compensation Plans for additional details).

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Details about Accumulated Other	Amount Reclassified from Accumulated						Affected Line in the Statement
Comprehensive Income Components	Other Comprehensive Income						Where Net Income is Presented
Six months ended June 30,	2013			2012

Defined Benefit Pension Plans
Amortization of net loss	$	3,251		$	2,168		(b)
Amortization of prior service cost	187			184			(b)
	3,438			2,352			Total before tax
	(1,244		)	(860		)	Tax benefit
	$	2,194		$	1,492		Net of tax

Other
Changes in treasury locks	46			45			Interest Expense
Net loss on derivatives	--			(10		)	Interest Income
	46			35			Total before tax
	(16		)	138			Tax benefit
	$	30		$	173		Net of tax

Total reclassifications for the period	$	2,224		$	1,665

(b)	These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 4 – Retirement and Deferred Compensation Plans for additional details).

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 Company’s non-functional denominated transactions from adverse changes in exchange rates. Sales of the Company’s 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 can impact the Company’s results of operations. The Company’s 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.

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.

HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS

A significant number of the Company’s 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 Company’s foreign entities. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on the Company’s 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 actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of its foreign subsidiaries where the Company’s net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction.

OTHER

As of June 30, 2013, the Company has recorded the fair value of foreign currency forward exchange contracts of $2.1 million in prepaid and other, $0.4 million in miscellaneous other assets, $1.9 million in accounts payable and accrued liabilities, and $0.3 million in deferred and other non-current liabilities in the balance sheet. All forward exchange contracts outstanding as of June 30, 2013 had an aggregate contract amount of $119.7 million.

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Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of June 30, 2013

and December 31, 2012

Derivative Contracts Not Designated as Hedging Instruments	Balance Sheet Location	June 30, 2013		December 31, 2012

Derivative Assets
Foreign Exchange Contracts	Prepaid and other	$	2,112	$	332
Foreign Exchange Contracts	Miscellaneous Other Assets	390		982
		$	2,502	$	1,314
Derivative Liabilities
Foreign Exchange Contracts	Accounts payable and accrued liabilities	$	1,910	$	2,097
Foreign Exchange Contracts	Deferred and other non-current liabilities	279		164
		$	2,189	$	2,261

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Income

for the Quarters Ended June 30, 2013 and June 30, 2012

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		2013		2012
Foreign Exchange Contracts	Other Income (Expense) Miscellaneous, net	$	2,555	$	(8,351	)
		$	2,555	$	(8,351	)

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Income

for the Six Months Ended June 30, 2013 and June 30, 2012

Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized in Income on Derivative	Amount of Loss Recognized in Income on Derivative
		2013			2012
Foreign Exchange Contracts	Other Income (Expense) Miscellaneous, net	$	(43	)	$	(1,235	)
		$	(43	)	$	(1,235	)

				Net Amounts		Gross Amounts not Offset in the
			Gross Amounts	Presented in		Statement of Financial Position
	Gross		Offset in the	the Statement of		Financial	Cash Collateral	Net
	Amount		Financial Position	Financial Position		Instruments	Received	Amount
Description
2013
Derivative Assets	$	2,502	--	$	2,502	--	--	$	2,502
Total Assets	$	2,502	--	$	2,502	--	--	$	2,502

Derivative Liabilities	$	2,189	--	$	2,189	--	--	$	2,189
Total Liabilities	$	2,189	--	$	2,189	--	--	$	2,189

2012
Derivative Assets	$	1,314	--	$	1,314	--	--	$	1,314
Total Assets	$	1,314	--	$	1,314	--	--	$	1,314

Derivative Liabilities	$	2,261	--	$	2,261	--	--	$	2,261
Total Liabilities	$	2,261	--	$	2,261	--	--	$	2,261

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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 including the proceeding noted below. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on the Company’s financial position or results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur that could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial position, results of operations and cash flows.

In 2010, a competitor filed a lawsuit against certain AptarGroup, Inc. subsidiaries alleging that certain processes performed by a supplier of a specific type of diptube utilized by the AptarGroup, Inc. subsidiaries in the manufacture of a specific type of pump infringes patents owned by the counterparty. This lawsuit sought an injunction barring the manufacture, use, sale and importation of this specific pump for use in fragrance containers. In April 2012, the Company’s United States subsidiary was found to have infringed on patents owned by the counterparty within the United States. The ruling does not apply to the manufacture or sales of pumps in countries outside the United States and no damages were assessed. The Company has appealed this ruling and the appeal is pending with oral argument scheduled to take place in August 2013.

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 June 30, 2013.

NOTE 8 – STOCK REPURCHASE PROGRAM

During the three and six months ended June 30, 2013, the Company repurchased approximately 600 thousand and 801 thousand shares for aggregate amounts of $33.8 million and $44.6 million, respectively. The timing of and total amount expended for share repurchases depends upon market conditions. The Company announced the existing repurchase program on July 19, 2011 and, as of June 30, 2013, the Company had remaining authorization to repurchase 1.2 million additional shares. On July 18, 2013, the Company’s 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.

NOTE 9 – EARNINGS PER SHARE

AptarGroup’s authorized common stock consists 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
	June 30, 2013				June 30, 2012
	Diluted		Basic		Diluted		Basic

Consolidated operations
Income available to common shareholders	$	49,802	$	49,802	$	41,686	$	41,686

Average equivalent shares
Shares of common stock	66,420		66,420		66,580		66,580
Effect of dilutive stock based compensation
Stock options	1,682		--		2,174		--
Restricted stock	4		--		4		--
Total average equivalent shares	68,106		66,420		68,758		66,580
Net income per share	$	0.73	$	0.75	$	0.61	$	0.63

	Six months ended
	June 30, 2013				June 30, 2012
	Diluted		Basic		Diluted		Basic

Consolidated operations
Income available to common stockholders	$	89,831	$	89,831	$	85,495	$	85,495

Average equivalent shares
Shares of common stock	66,288		66,288		66,388		66,388
Effect of dilutive stock based compensation
Stock options	2,043		--		2,543		--
Restricted stock	8		--		9		--
Total average equivalent shares	68,339		66,288		68,940		66,388
Net income per share	$	1.31	$	1.36	$	1.24	$	1.29

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NOTE 10 – SEGMENT INFORMATION

The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing systems. The Company is organized into three reporting segments. Operations that sell dispensing systems primarily to the personal care, fragrance/cosmetic and home care markets form the Beauty + Home segment. Operations that sell dispensing systems primarily to the prescription drug and consumer health care markets form the Pharma segment. Operations that sell dispensing systems primarily to the food and beverage markets form the Food + Beverage segment.

The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Segment income is defined as earnings before net interest expense, certain corporate expenses, restructuring initiatives and related depreciation and income taxes.

Financial information regarding the Company’s reportable segments is shown below:



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012

Total Revenue:
Beauty + Home	$	378,828		$	372,853		$	746,011		$	753,689
Pharma	182,995			133,033			351,888			273,234
Food + Beverage	83,570			75,684			168,903			151,506
Total Revenue	645,393			581,570			1,266,802			1,178,429

Less: Intersegment Sales:
Beauty + Home	$	3,844		$	3,569		$	7,555		$	7,254
Pharma	64			54			88			212
Food + Beverage	44			444			85			962
Total Intersegment Sales	$	3,952		$	4,067		$	7,728		$	8,428

Net Sales:
Beauty + Home	$	374,984		$	369,284		$	738,456		$	746,435
Pharma	182,931			132,979			351,800			273,022
Food + Beverage	83,526			75,240			168,818			150,544
Net Sales	$	641,441		$	577,503		$	1,259,074		$	1,170,001

Segment Income (1):
Beauty + Home	$	30,339		$	33,546		$	54,754		$	66,518
Pharma	50,437			31,110			96,417			70,482
Food + Beverage	11,864			7,744			20,414			14,532
Restructuring Initiatives and Related Depreciation	(3,067		)	215			(7,593		)	215
Corporate & Other	(8,707		)	(6,964		)	(19,492		)	(15,605		)
Income before interest and taxes	$	80,866		$	65,651