Edgar Filing: APTARGROUP INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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, 2015

[ ] 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 ¨

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. (Check one):

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 27, 2015
Common Stock, $.01 par value per share		62,795,667 shares

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AptarGroup, Inc.

Form 10-Q

Quarter Ended June 30, 2015

INDEX

Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2015 and 2014	1

	Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2015 and 2014	2

	Condensed Consolidated Balance Sheets – June 30, 2015 and December 31, 2014	3

	Condensed Consolidated Statements of Changes in Equity – Six Months Ended June 30, 2015 and 2014	5

	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2015 and 2014	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

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,
	2015			2014			2015			2014

Net Sales	$	594,275		$	670,631		$	1,184,086		$	1,346,682
Operating Expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	375,278			451,051			761,257			904,462
Selling, research & development and administrative	89,312			96,486			185,499			203,160
Depreciation and amortization	34,165			38,466			68,225			75,713
	498,755			586,003			1,014,981			1,183,335
Operating Income	95,520			84,628			169,105			163,347

Other (Expense) Income:
Interest expense	(9,195		)	(5,246		)	(16,498		)	(10,127		)
Interest income	1,105			1,047			2,836			2,063
Equity results of affiliates	(407		)	(198		)	(526		)	(1,744		)
Miscellaneous, net	(1,268		)	(525		)	(1,467		)	(153		)
	(9,765		)	(4,922		)	(15,655		)	(9,961		)
Income before Income Taxes	85,755			79,706			153,450			153,386

Provision for Income Taxes	28,214			26,622			50,810			51,894

Net Income	$	57,541		$	53,084		$	102,640		$	101,492

Net (Income) Loss Attributable to Noncontrolling Interests	$	(2	)	$	(8	)	$	70		$	(27	)

Net Income Attributable to AptarGroup, Inc.	$	57,539		$	53,076		$	102,710		$	101,465

Net Income Attributable to AptarGroup, Inc. per Common Share:
Basic	$	0.92		$	0.81		$	1.64		$	1.55
Diluted	$	0.90		$	0.79		$	1.59		$	1.49

Average Number of Shares Outstanding:
Basic	62,697			65,328			62,496			65,397
Diluted	64,276			67,438			64,603			68,042

Dividends per Common Share	$	0.28		$	0.28		$	0.56		$	0.53

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

In thousands

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014

Net Income	$	57,541		$	53,084		$	102,640		$	101,492
Other Comprehensive Income (Loss):
Foreign currency translation adjustments	45,099			(5,164		)	(94,147		)	(4,601		)
Changes in treasury locks, net of tax	7			6			13			12
Defined benefit pension plan, net of tax
Amortization of prior service cost included in net income, net of tax	42			53			85			106
Amortization of net loss included in net income, net of tax	1,131			664			2,257			1,329
Total defined benefit pension plan, net of tax	1,173			717			2,342			1,435
Total other comprehensive income (loss)	46,279			(4,441		)	(91,792		)	(3,154		)

Comprehensive Income	103,820			48,643			10,848			98,338

Comprehensive (Income) Loss Attributable to Noncontrolling Interests	(2		)	(9		)	70			(18		)

Comprehensive Income Attributable to AptarGroup, Inc.	$	103,818		$	48,634		$	10,918		$	98,320

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

In thousands

	June 30,			December 31,
	2015			2014
Assets

Current Assets:
Cash and equivalents	$	391,810		$	399,762
Short-term investments	66,897			--
	458,707			399,762
Accounts and notes receivable, less allowance for doubtful accounts of $4,192 in 2015 and $4,251 in 2014	435,448			406,976
Inventories	315,178			311,072
Prepaid and other	102,258			96,128
	1,311,591			1,213,938

Property, Plant and Equipment:
Buildings and improvements	342,879			353,683
Machinery and equipment	1,874,243			1,919,507
	2,217,122			2,273,190
Less: Accumulated depreciation	(1,462,264		)	(1,484,546		)
	754,858			788,644
Land	21,778			23,011
	776,636			811,655

Other Assets:
Investments in affiliates	4,965			5,760
Goodwill	316,480			329,741
Intangible assets, net	36,090			40,045
Miscellaneous	32,044			36,051
	389,579			411,597
Total Assets	$	2,477,806		$	2,437,190

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,
	2015			2014
Liabilities and Stockholders’ Equity

Current Liabilities:
Notes payable	$	5,766		$	233,284
Current maturities of long-term obligations	18,122			18,692
Accounts payable and accrued liabilities	377,569			352,762
	401,457			604,738

Long-Term Obligations	813,007			588,892

Deferred Liabilities and Other:
Deferred income taxes	21,297			25,521
Retirement and deferred compensation plans	110,631			109,517
Deferred and other non-current liabilities	3,724			4,606
Commitments and contingencies (Note 10)	--			--
	135,652			139,644

Stockholders’ Equity:
AptarGroup, Inc. stockholders’ equity
Common stock, $.01 par value, 199 million shares authorized; 87.0 and 86.3 million shares issued as of June 30, 2015 and December 31, 2014, respectively	869			862
Capital in excess of par value	555,307			507,313
Retained earnings	1,807,786			1,740,005
Accumulated other comprehensive (loss)	(201,837		)	(110,045		)
Less treasury stock at cost, 24.2 and 24.3 million shares as of June 30, 2015 and December 31, 2014, respectively	(1,034,726		)	(1,034,728		)
Total AptarGroup, Inc. Stockholders’ Equity	1,127,399			1,103,407
Noncontrolling interests in subsidiaries	291			509

Total Stockholders’ Equity	1,127,690			1,103,916
Total Liabilities and Stockholders’ Equity	$	2,477,806		$	2,437,190

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

	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, 2013:	$	1,619,419		$	109,751		$	853	$	(744,213	)	$	493,947		$	551		$	1,480,308

Net income	101,465														27			101,492
Foreign currency translation adjustments				(4,592		)									(9		)	(4,601		)
Changes in unrecognized pension losses and related amortization, net of tax				1,435														1,435
Changes in treasury locks, net of tax				12														12
Stock option exercises & restricted stock vestings							5		1			35,737						35,743
Cash dividends declared on common stock	(34,693		)															(34,693		)
Treasury stock purchased									(52,884		)							(52,884		)
Balance – June 30, 2014:	$	1,686,191		$	106,606		$	858	$	(797,096	)	$	529,684		$	569		$	1,526,812

Balance – December 31, 2014:	$	1,740,005		$	(110,045	)	$	862	$	(1,034,728	)	$	507,313		$	509		$	1,103,916

Net income	102,710														(70		)	102,640
Foreign currency translation adjustments				(94,147		)												(94,147		)
Changes in unrecognized pension losses and related amortization, net of tax				2,342														2,342
Changes in treasury locks, net of tax				13														13
Stock option exercises & restricted stock vestings							7		2			48,470						48,479
Cash dividends declared on common stock	(34,929		)															(34,929		)
Non Controlling Interest Repurchased												(476		)	(148		)	(624		)
Balance – June 30, 2015:	$	1,807,786		$	(201,837	)	$	869	$	(1,034,726	)	$	555,307		$	291		$	1,127,690

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,	2015			2014

Cash Flows from Operating Activities:
Net income	$	102,640		$	101,492
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	66,059			72,946
Amortization	2,166			2,767
Stock based compensation	13,983			13,130
Provision for (recovery of) doubtful accounts	362			(69		)
Deferred income taxes	(2,465		)	(3,808		)
Defined benefit plan expense	10,294			8,452
Equity in results of affiliates in excess of cash distributions received	526			1,744
Changes in balance sheet items, excluding effects from foreign currency adjustments:
Accounts receivable	(50,289		)	(71,208		)
Inventories	(23,058		)	(19,565		)
Prepaid and other current assets	(16,381		)	(5,868		)
Accounts payable and accrued liabilities	38,885			17,898
Income taxes payable	(3,222		)	(21,572		)
Retirement and deferred compensation plans	(3,832		)	(6,559		)
Other changes, net	4,509			20,920
Net Cash Provided by Operations	140,177			110,700

Cash Flows from Investing Activities:
Capital expenditures	(60,306		)	(87,068		)
Proceeds from sale of property and equipment	83			2,287
Insurance proceeds	1,900			--
Purchase of short-term investments	(66,897		)	--
Notes receivable, net	(701		)	(163		)
Net Cash Used by Investing Activities	(125,921		)	(84,944		)

Cash Flows from Financing Activities:
(Repayments of) Proceeds from notes payable	(227,512		)	77,019
Proceeds from long-term obligations	225,887			--
Repayments of long-term obligations	(1,539		)	(308		)
Dividends paid	(34,929		)	(34,693		)
Credit facility costs	(1,216		)	(299		)
Proceeds from stock option exercises	28,810			18,319
Purchase of treasury stock	--			(52,884		)
Excess tax benefit from exercise of stock options	4,575			3,802
Net Cash (Used) Provided by Financing Activities	(5,924		)	10,956

Effect of Exchange Rate Changes on Cash	(16,284		)	(5,285		)

Net (Decrease) Increase in Cash and Equivalents	(7,952		)	31,427
Cash and Equivalents at Beginning of Period	399,762			309,861
Cash and Equivalents at End of Period	$	391,810		$	341,288

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 as 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 our subsidiaries. The terms “AptarGroup” or “Company” as used herein refer to AptarGroup, Inc. and our 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 disclosures 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, 2014 but does not include all disclosures required by GAAP. Accordingly, these Unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

CHANGE IN ACCOUNTING PRINCIPLE

During the quarter, the Company changed its inventory valuation method for certain operating entities in its North American business to the first-in first-out (FIFO) method from the last-in first-out (LIFO) method. Prior to the change, the Company utilized two methods of inventory costing: LIFO for inventories in these operating entities and FIFO for inventories in other operating entities. The Company believes that the FIFO method is preferable as it better reflects the current value of inventory on the Company’s Condensed Consolidated Balance Sheet, provides better matching of revenues and expenses, results in uniformity across the Company’s global operations with respect to the method of inventory accounting and improves comparability with the Company’s peers. The cumulative pre-tax effect of this change is $7.4 million. We have determined that this change is not material to the Company’s previously issued financial statements and that the cumulative effect of the change is not material to current operations or to the trend of reported results of operations. Therefore, we conclude it was appropriate to recognize the cumulative effect of the change as an operating item in the current period’s Condensed Consolidated Statement of Income and not to adopt the change by retrospective application.

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. During the first six months of 2015, there have been no developments to the recently adopted accounting pronouncements from those disclosed in the Company’s 2014 Annual Report on Form 10-K that are considered to have a material impact on our Unaudited Condensed Consolidated Financial Statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies but are not yet effective are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SHORT TERM INVESTMENTS

Short term investments reflect funds invested in a time deposit instrument with a two-year maturity. However, during the life of the investment the funds can be redeemed at any time with a 35-90 day notice. There are no penalties for early redemption. We do not consider this investment a marketable security as there is no active market for this type of product.

INCOME TAXES

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

In our 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 our 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 our accumulated foreign earnings and the Company will only make a distribution out of current year earnings to meet the cash needs at the parent company. As such, the Company does not provide for taxes on earnings that are deemed to be permanently reinvested. Since no distribution to the U.S. of foreign earnings is expected in 2015, the effective tax rate for 2015 includes no tax cost of repatriation.

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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 4 of the Unaudited Notes to the Condensed Consolidated Financial Statements for more information.

NOTE 2 - INVENTORIES

At December 31, 2014, approximately 19% of the total inventories were accounted for by the LIFO method. Inventories, by component, consisted of:

	June 30,		December 31,
	2015		2014

Raw materials	$	100,872	$	108,618
Work in process	97,426		94,414
Finished goods	116,880		115,809
Total	315,178		318,841
Less LIFO reserve	--		(7,769		)
Total	$	315,178	$	311,072

As discussed in Note 1 above, the Company changed its inventory valuation method for certain operating entities in its North American business to the first-in first-out (FIFO) method from the last-in first-out (LIFO) method during the current quarter. Had this change not been implemented, the Company would have reported a LIFO reserve for the current quarter ended June 30, 2015 of $6,879 as compared to $7,427 for the quarter ended March 31, 2015 and $7,769 for the fiscal year ended December 31, 2014.

NOTE 3 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill since December 31, 2014 are as follows by reporting segment:

		Beauty +						Food +			Corporate
		Home			Pharma			Beverage			& Other			Total

Balance as of December 31, 2014
	Goodwill	$	171,149		$	141,592		$	17,000		$	1,615		$	331,356
	Accumulated impairment losses	--			--			--			(1,615		)	(1,615		)
		$	171,149		$	141,592		$	17,000		$	--		$	329,741

Foreign currency exchange effects		(3,947		)	(8,799		)	(515		)	--			(13,261		)

Balance as of June 30, 2015
	Goodwill	$	167,202		$	132,793		$	16,485		$	1,615		$	318,095
	Accumulated impairment losses	--			--			--			(1,615		)	(1,615		)
		$	167,202		$	132,793		$	16,485		$	--		$	316,480

The table below shows a summary of intangible assets as of June 30, 2015 and December 31, 2014.


		June 30, 2015							December 31, 2014

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

Amortized intangible assets:
Patents	7	$	15,743	$	(15,711	)	$	32	$	17,001	$	(16,852	)	$		149
Acquired Technology	15	32,891		(7,675		)	25,216		35,701		(5,950		)	29,751
License agreements and other	5	31,056		(20,214		)	10,842		32,804		(22,659		)	10,145
Total intangible assets	9	$	79,690	$	(43,600	)	$	36,090	$	85,506	$	(45,461	)	$	40,045

Aggregate amortization expense for the intangible assets above for the quarters ended June 30, 2015 and 2014 was $1,085 and $1,369, respectively. Aggregate amortization expense for the intangible assets above for the six months ended June 30, 2015 and 2014 was $2,166 and $2,767, respectively.

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

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2015	$	2,055	(remaining estimated amortization for 2015)
2016	3,743
2017	3,317
2018	3,317
2019 and thereafter	23,658

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, 2015.

NOTE 4 – INCOME TAX UNCERTAINTIES

The Company had approximately $5.7 and $6.4 million recorded for income tax uncertainties as of June 30, 2015 and December 31, 2014, respectively. The $0.7 million decrease in income tax uncertainties was primarily due to the settlement of a tax audit in Italy as well as changes in foreign currency rates. The amount, if recognized, that would impact the effective tax rate is $5.5 and $6.3 million, respectively. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease by no more than $5.1 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions.

NOTE 5 – LONG –TERM OBLIGATIONS

In December 2014, we executed a $475 million private placement to take advantage of low long-term interest rates. At that time, we closed on $250 million of the private placement to fund our ASR program (see Note 11). This closing consisted of two maturity tranches, with $125 million of 9 year notes at an interest rate of 3.49% and $125 million of 11 year notes at an interest rate of 3.61%. We closed on the remaining $225 million of the private placement in February, 2015, consisting of $100 million of 9 year notes at an interest rate of 3.49% and $125 million of 11 year notes at an interest rate of 3.61%. The proceeds from this closing were used to pay down the existing revolving line of credit.

The Company’s long-term obligations consisted of the following:

	June 30,			December 31,
	2015			2014

Notes payable 0.61% - 27.26%, due in monthly and annual installments
through 2027	$	4,244		$	5,160
Senior unsecured notes 2.3%, due in 2015	16,000			16,000
Senior unsecured notes 6.0%, due in 2016	50,000			50,000
Senior unsecured notes 6.0%, due in 2018	75,000			75,000
Senior unsecured notes 3.8%, due in 2020	84,000			84,000
Senior unsecured notes 3.2%, due in 2022	75,000			75,000
Senior unsecured notes 3.5%, due in 2023	125,000			125,000
Senior unsecured notes 3.4%, due in 2024	50,000			50,000
Senior unsecured notes 3.5%, due in 2024	100,000			--
Senior unsecured notes 3.6%, due in 2025	125,000			125,000
Senior unsecured notes 3.6%, due in 2026	125,000			--
Capital lease obligations	1,885			2,424
	831,129			607,584
Current maturities of long-term obligations	(18,122		)	(18,692		)
Total long-term obligations	$	813,007		$	588,892

Aggregate long-term maturities, excluding capital lease obligations, due annually for the five years beginning in 2015 are $17,769, $50,391, $392, $75,342, $189 and $685,161 thereafter.

NOTE 6 – RETIREMENT AND DEFERRED COMPENSATION PLANS

Components of Net Periodic Benefit Cost:

	Domestic Plans						Foreign Plans
Three months ended June 30,	2015			2014			2015			2014

Service cost	$	2,504		$	2,010		$	1,139		$	1,081
Interest cost	1,589			1,482			412			699
Expected return on plan assets	(1,897		)	(1,646		)	(447		)	(510		)
Amortization of net loss	1,351			717			418			313
Amortization of prior service cost	--			--			64			80
Net periodic benefit cost	$	3,547		$	2,563		$	1,586		$	1,663

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	Domestic Plans						Foreign Plans
Six months ended June 30,	2015			2014			2015			2014

Service cost	$	5,008		$	4,021		$	2,299		$	2,160
Interest cost	3,178			2,964			832			1,398
Expected return on plan assets	(3,795		)	(3,292		)	(902		)	(1,020		)
Amortization of net loss	2,702			1,434			843			626
Amortization of prior service cost	--			--			129			161
Net periodic benefit cost	$	7,093		$	5,127		$	3,201		$	3,325

EMPLOYER CONTRIBUTIONS

Although the Company has no minimum funding requirement, we plan to contribute approximately $10 million to our domestic defined benefit plans in 2015. No 2015 contributions were made as of June 30, 2015. The Company also expects to contribute approximately $12.6 million to our foreign defined benefit plans in 2015, and as of June 30, 2015, we have contributed approximately $1.0 million.

NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in Accumulated Other Comprehensive Income by Component:

	Foreign Currency			Defined Benefit Pension Plans			Other			Total

Balance – December 31, 2013	$	149,965		$	(40,093	)	$	(121	)	$	109,751
Other comprehensive loss before reclassifications	(4,252		)	--			--			(4,252		)
Amounts reclassified from accumulated other comprehensive income	(340		)	1,435			12			1,107
Net current-period other comprehensive (loss) income	(4,592		)	1,435			12			(3,145		)
Balance - June 30, 2014	$	145,373		$	(38,658	)	$	(109	)	$	106,606

Balance – December 31, 2014	$	(42,851	)	$	(67,097	)	$	(97	)	$	(110,045	)
Other comprehensive loss before reclassifications	(94,147		)	--			--			(94,147		)
Amounts reclassified from accumulated other comprehensive income	--			2,342			13			2,355
Net current-period other comprehensive (loss) income	(94,147		)	2,342			13			(91,792		)
Balance - June 30, 2015	$	(136,998	)	$	(64,755	)	$	(84	)	$	(201,837	)

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,	2015			2014

Defined Benefit Pension Plans
Amortization of net loss	$	1,769		$	1,030		(a)
Amortization of prior service cost	64			80			(a)
	1,833			1,110			Total before tax
	(660		)	(393		)	Tax benefit
	$	1,173		$	717		Net of tax

Other
Changes in treasury locks	9			10			Interest Expense
	9			10			Total before tax
	(2		)	(4		)	Tax benefit
	$	7		$	6		Net of tax

Total reclassifications for the period	$	1,180		$	723

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(a) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 6 – Retirement and Deferred Compensation Plans for additional details).

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,	2015			2014

Defined Benefit Pension Plans
Amortization of net loss	$	3,545		$	2,060		(b)
Amortization of prior service cost	129			161			(b)
	3,674			2,221			Total before tax
	(1,332		)	(786		)	Tax benefit
	$	2,342		$	1,435		Net of tax

Foreign Currency
Foreign Currency Gain	--			(340		)	Miscellaneous, net
	--			(340		)	Total before tax
	--			--			Tax benefit
	$	--		$	(340	)	Net of tax

Other
Changes in treasury locks	19			19			Interest Expense
	19			19			Total before tax
	(6		)	(7		)	Tax benefit
	$	13		$	12		Net of tax

Total reclassifications for the period	$	2,355		$	1,107

(b) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 6 – Retirement and Deferred Compensation Plans for additional details).

NOTE 8 – 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 our 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 subsidiaries. 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 our 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, 2015, the Company has recorded the fair value of foreign currency forward exchange contracts of $1.4 million in prepaid and other, $1.7 million in accounts payable and accrued liabilities, and $0.1 million in deferred and other non-current liabilities in the balance sheet. All forward exchange contracts outstanding as of June 30, 2015 had an aggregate contract amount of $138.1 million.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of June 30, 2015

and December 31, 2014

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Derivative Contracts Not Designated as Hedging Instruments	Balance Sheet Location	June 30, 2015		December 31, 2014

Derivative Assets
Foreign Exchange Contracts	Prepaid and other	$	1,379	$	1,037
Foreign Exchange Contracts	Miscellaneous Other Assets	--		7
		$	1,379	$	1,044

Derivative Liabilities
Foreign Exchange Contracts	Accounts payable and accrued liabilities	$	1,736	$	2,378
Foreign Exchange Contracts	Deferred and other non-current liabilities	90		115
		$	1,826	$	2,493

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

for the Quarters Ended June 30, 2015 and June 30, 2014

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
		2015			2014

Foreign Exchange Contracts	Other Income (Expense) Miscellaneous, net	$	(3,301	)	$	(1,335	)
		$	(3,301	)	$	(1,335	)

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

for the Six Months Ended June 30, 2015 and June 30, 2014

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
		2015			2014

Foreign Exchange Contracts	Other Income (Expense) Miscellaneous, net	$	(48	)	$	(1,494	)
		$	(48	)	$	(1,494	)

				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
June 30, 2015
Derivative Assets	$	1,379	--	$	1,379	--	--	$	1,379
Total Assets	$	1,379	--	$	1,379	--	--	$	1,379

Derivative Liabilities	$	1,826	--	$	1,826	--	--	$	1,826
Total Liabilities	$	1,826	--	$	1,826	--	--	$	1,826

December 31, 2014
Derivative Assets	$	1,044	--	$	1,044	--	--	$	1,044
Total Assets	$	1,044	--	$	1,044	--	--	$	1,044

Derivative Liabilities	$	2,493	--	$	2,493	--	--	$	2,493
Total Liabilities	$	2,493	--	$	2,493	--	--	$	2,493

NOTE 9 – FAIR VALUE

Authoritative guidelines require 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.

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· Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

As of June 30, 2015, the fair values of our financial assets and liabilities were categorized as follows:

	Total		Level 1		Level 2		Level 3
*Assets*
Forward exchange contracts (a)	$	1,379	$	--	$	1,379	$	--
Total assets at fair value	$	1,379	$	--	$	1,379	$	--

*Liabilities*
Forward exchange contracts (a)	$	1,826	$	--	$	1,826	$	--
Total liabilities at fair value	$	1,826	$	--	$	1,826	$	--

As of December 31, 2014, the fair values of our financial assets and liabilities were categorized as follows:

	Total		Level 1		Level 2		Level 3
*Assets*
Forward exchange contracts (a)	$	1,044	$	--	$	1,044	$	--
Total assets at fair value	$	1,044	$	--	$	1,044	$	--

*Liabilities*
Forward exchange contracts (a)	$	2,493	$	--	$	2,493	$	--
Total liabilities at fair value	$	2,493	$	--	$	2,493	$	--

(a) Market approach valuation technique based on observable market transactions of spot and forward rates.

The carrying amounts of the Company’s other current financial instruments such as cash and equivalents, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instrument. The Company considers our long-term obligations a Level 2 liability and utilizes the market approach valuation technique based on interest rates that are currently available to the Company for issuance of debt with similar terms and maturities. The estimated fair value of the Company’s long-term obligations was $827 million as of June 30, 2015 and $606 million as of December 31, 2014.

NOTE 10 – 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. 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.

Under our Certificate of Incorporation, the Company has agreed to indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our 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 our exposure. As a result of our 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, 2015.

NOTE 11 – STOCK REPURCHASE PROGRAM

On October 30, 2014, the Company announced a new share repurchase authorization of up to $350 million of common stock. This new authorization replaces previous authorizations and has no expiration date. AptarGroup may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.

On December 16, 2014, the Company entered into an agreement to repurchase approximately $250 million of its common stock under an accelerated share repurchase program (the “ASR program”). The ASR program is part of the Company’s $350 million share repurchase authorization. On December 17, 2014, the Company paid $250 million to Wells Fargo Bank N.A. (“Wells Fargo”) in exchange for approximately 3.1 million shares, estimated to represent approximately 80% of the total number of shares expected to be purchased in the ASR program based on then current market prices. The ultimate number of shares to be repurchased under the ASR program will be based on the volume-weighted average price of the Company’s common stock during the term of the ASR program, less a discount. Final settlement of the ASR program is expected to be completed by the end of September 2015, although the settlement may be accelerated at Wells Fargo’s option.

During the three and six months ended June 30, 2015, the Company did not repurchase any shares. During the three and six months ended June 30, 2014, the Company repurchased approximately 600 thousand and 800 thousand shares for approximately $39.9 million and $52.9 million, respectively. Shares repurchased were returned to Treasury Stock.

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NOTE 12 – STOCK-BASED COMPENSATION

The Company issues stock options and restricted stock units to employees under Stock Awards Plans approved by shareholders. Stock options and restricted stock units are issued to non-employee directors under Director Stock Option Plans and the Director Restricted Stock Unit Plan 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 units generally vest over three years.

Compensation expense recorded attributable to stock options for the first six months of 2015 was approximately $12.0 million ($7.8 million after tax). The income tax benefit related to this compensation expense was approximately $4.2 million. Approximately $10.7 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 six months of 2014 was approximately $12.0 million ($7.8 million after tax). The income tax benefit related to this compensation expense was approximately $4.2 million. Approximately $10.8 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 $12.83 and $14.84 per share in 2015 and 2014, respectively. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Stock Awards Plans:
Six months ended June 30,	2015		2014

Dividend Yield	1.7	%	1.7	%
Expected Stock Price Volatility	21.9	%	22.2	%
Risk-free Interest Rate	1.6	%	2.3	%
Expected Life of Option (years)	6.9		6.9

There were no grants under the Director Stock Option Plan during the second quarter of 2015 as this plan was cancelled and replaced by the Director Restricted Stock Unit Plan. The fair value of stock options granted under the Director Stock Option Plan during the second quarter of 2014 was $14.07. These values were estimated on the respective date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Director Stock Option Plans:
Six months ended June 30,	2014

Dividend Yield	1.8	%
Expected Stock Price Volatility	22.2	%
Risk-free Interest Rate	2.2	%
Expected Life of Option (years)	6.9

A summary of option activity under the Company’s stock plans during the first half of 2015 is presented below:

Stock Awards Plans

Director Stock Option Plans

Weighted Average

Shares

Exercise Price

Shares

Exercise Price

Outstanding, January 1, 2015

8,107,806

46.74

368,668

53.52

Granted

1,391,355

64.60

Exercised

(788,268

)

34.60

(62,001

)

40.67

Forfeited or expired

(20,653

)

60.34

Outstanding at June 30, 2015

8,690,240

50.67

306,667

56.11

Exercisable at June 30, 2015

5,925,974

44.64

224,325

53.41

Weighted-Average Remaining Contractual Term (Years):