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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 1-11846
AptarGroup, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-3853103
(State of Incorporation) (I.R.S. Employer Identification No.)
475 West Terra Cotta Avenue, Suite E, Crystal Lake, Illinois 60014
(Address of Principal Executive Offices) (Zip Code)
815-477-0424
(Registrant's Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------------------- -----------------------------------------
Common Stock $.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities Registered Pursuant to Section 12 (g) of the Act : None
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 X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates,
based on the closing sales price for the Common Stock on the New York Stock
Exchange on March 12, 2001, was approximately $1,044,964,587. The number of
shares outstanding of Common Stock, as of March 12, 2001 was 35,688,710 shares
held by approximately 800 shareholders of record.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2000 Annual Report to Stockholders are
incorporated by reference into Parts I and II of this report.
Portions of the Registrant's Proxy Statement for the annual meeting of
stockholders to be held on May 9, 2001 are incorporated by reference into Part
III of this report.
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AptarGroup, Inc.
INDEX TO
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2000
PART I
Page
----
Item 1 Business.................................................... 3
Item 2 Properties.................................................. 10
Item 3 Legal Proceedings........................................... 11
Item 4 Submission of Matters to a Vote of Security-Holders......... 11
PART II
Market for Registrant's Common Equity and Related
Item 5 Stockholder Matters......................................... 11
Item 6 Selected Financial Data..................................... 11
Management's Discussion and Analysis of Consolidated Results
Item 7 of Operations and Financial Condition....................... 11
Item 7A Quantitative and Qualitative Disclosures about Market Risk.. 12
Item 8 Financial Statements and Supplementary Data................. 12
Changes in and Disagreements with Accountants on Accounting
Item 9 and Financial Disclosure.................................... 12
PART III
Item 10 Directors and Executive Officers of the Registrant.......... 12
Item 11 Executive Compensation...................................... 13
Security Ownership of Certain Beneficial Owners and
Item 12 Management.................................................. 13
Item 13 Certain Relationships and Related Transactions.............. 13
PART IV
Exhibits, Financial Statement Schedules and Reports on Form
Item 14 8-K......................................................... 13
Signatures ............................................................ 14
2
PART I
Item 1. Business
(a) General Development of Business
The Company's business began as a one-product, one-country operation that
has become a multinational supplier of a broad line of dispensing packaging
systems. The Company's business was started in the late 1940's through its
subsidiary SeaquistPerfect Dispensing L.L.C., which manufactured and sold
aerosol valves in the United States. The Company's business has grown
primarily through the acquisition of relatively small companies and internal
expansion.
Date Business Country Start-up/Acquisition Initial Product Line
---- ------------------ ----------- ---------------------- --------------------------
1968 SeaquistPerfect Germany Acquisition Aerosol valves
Dispensing GmbH
(formerly Perfect-
Valois Ventil
GmbH)
1970 Valois S.A. France Acquisition Aerosol valves
1976 Seaquist Closures U.S. Start-up Dispensing closures
L.L.C.
1976 35% of certain Germany Acquisition Pumps
Pfeiffer Group
companies
1981 AR Valve product U.S. Acquisition Aerosol valves
line
1981 RDW Industries, U.S. Acquisition Dispensing closures
Inc.
1983 STEP S.A. France Acquisition Pumps
1989 SAR S.p.A. Italy Acquisition Pumps
1993 Remainder of the Germany Acquisition Pumps
Pfeiffer Group
1994 Seaquist de Mexico Start-up Dispensing closures
Mexico, S.A. de
C.V.
1995 Liquid Molding U.S. Acquisition Silicone molded products
Systems, Inc.
1995 35% of Loffler Germany Acquisition Dispensing Closures
Kunststoffwerk
GmbH & Co. KG
1995 General Plastics, France Acquisition Dispensing closures
S.A.
1997 50% of U.S. Start-up joint venture Aerosol spray caps and
CosterSeaquist accessories
L.L.C.
1997 Aptar Suzhou China Start-up Aerosol valves, pumps,
Dispensing closures
Systems, Co., Ltd
1998 65% of Loffler Germany Acquisition Dispensing closures
KunststoffwerkGmbH
& Co. KG
1998 Inairic S.A. Argentina Acquisition Pumps
1999 Emson Research, U.S. Acquisition Pumps
Inc.
1999 Seaquist-Valois do Brazil Start-up Dispensing closures and
Brasil Ltda. pumps
1999 Somova S.r.l. Italy Acquisition Pumps, aerosol spray caps
and accessories
1999 80% of Microflow Switzerland Acquisition Research and development
Engineering S.A. Company
2000 50% of U.S. Acquisition Aerosol spray caps and
CosterSeaquist. accessories
L.L.C.
2000 50% of France Start-up joint venture Airless dispensing systems
Airlessystems
S.A.S.
2000 35% of H. Argentina Acquisition Dispensing Closures
Engelmann S.A.
3
(b) Financial Information about Industry Segments
The Company operates in the packaging components industry. Financial
information relating to operations by geographic area for each of the three
years in the period ended December 31, 2000 is set forth in Note 16 ("Segment
Information") to the Consolidated Financial Statements contained in the 2000
Annual Report to Stockholders, pages 48 and 50, which is incorporated herein
by reference.
(c) Narrative Description of Business
General
The Company is a leading global supplier of a broad range of innovative
dispensing systems for the personal care, fragrance/cosmetic, pharmaceutical,
household and food/beverage markets. The Company focuses on providing value
added dispensing systems (pumps, dispensing closures and aerosol valves) to
global consumer product marketers to allow them to differentiate their
products and meet the consumer's need for convenience. The Company has
manufacturing facilities located throughout the world including facilities in
North America, Europe, Asia and South America. The Company has over 2,500
customers with no single customer accounting for greater than 6% of the
Company's 2000 net sales.
For 2000, the percentage of net sales represented by sales to the personal
care, fragrance/cosmetic, pharmaceutical, household and food/beverage markets
were 32%, 32%, 21%, 8% and 7%, respectively. Pumps, dispensing closures and
aerosol valves represented approximately 62%, 22% and 14%, respectively, of
AptarGroup's 2000 net sales. The Company expects the mix of sales by product
and by market to remain approximately the same in 2001.
Sales of a majority of the Company's dispensing systems have traditionally
grown at a faster rate than the overall packaging industry as consumer's
preference for convenience has increased, and product differentiation through
packaging design has become more important to the Company's customers.
Consumer product marketers have converted many of their products to packages
with dispensers that offer the benefit of enhanced shelf appeal, convenience,
cleanliness or accuracy of dosage. The Company expects this trend to continue.
Growth Strategy
The company intends to enhance its position as a leading global supplier of
innovative dispensing systems by (i) expanding geographically, (ii)
discovering new applications for the Company's existing products, and (iii)
developing new dispensing technologies.
The Company is committed to expanding geographically to serve multinational
customers in existing and emerging areas. Targeted areas include Latin
America, Eastern Europe, India and Asia. Recently, the Company acquired a
minority interest in a leading manufacturer of dispensing closures in
Argentina, and is in the process of increasing its manufacturing capabilities
in India, China and Eastern Europe.
The Company continues to develop applications for SimpliSqueeze(R), a no-
leak, invertible closure with one-hand dispensing convenience. SimpliSqueeze
features a silicone valve that enables the product to be dispensed with a
slight squeeze of the bottle, and upon release, closes firmly and does not
leak. Consumer awareness of the innovative SimpliSqueeze closure has grown as
a result of its original use in the personal care market. The success of the
SimpliSqueeze technology in the personal care market led to the successful
launch of a non-carbonated sports drink package utilizing this technology.
This new application in the food/beverage market has attracted new customers
to the Company. Most recently, the Company has been awarded several contracts
to supply SimpliSqueeze dispensing closures to bottled water customers.
Another example of a product for which the Company continues to find new
applications is the metered dose aerosol valve. Metered dose aerosol valves
are used to dispense precise amounts of product in very fine particles from
pressurized containers. Traditionally metered dose valves were used to deliver
medication via the pulmonary route. Recently, the Company has begun
4
to work with a bio-technology company who is developing proprietary technology
to orally administer large molecule drugs to be absorbed through the inner
linings of the mouth.
The Company continues to invest in new dispensing technologies. In 1999,
the Company acquired 80% of Microflow Engineering S.A. ("Microflow"), a
research and development company whose objective is to develop an electronic
dispensing system based on silicone etching technology primarily for the
pharmaceutical market as an alternative to the traditional mechanical pump. In
addition, the Company has internally developed a patented technology for
dispensing fragrance in a lightweight sample blister package as an alternative
to standard vials.
Pumps (62% of 2000 net sales)
AptarGroup believes it is the leading supplier of pharmaceutical,
fragrance/cosmetic and personal care fine mist pumps worldwide and the second
largest supplier of personal care lotion pumps worldwide. Pumps are finger-
actuated dispensing systems that dispense a spray or lotion from non-
pressurized containers. Pumps are sold to all five of the Company's markets.
Traditional applications for pumps include perfumes, lotions, oral and nasal
sprays, hair sprays and window cleaners. Applications for pumps have recently
expanded to include more viscous products such as spray gels and specialized
skin treatments, as well as an increasing number of food products such as
butter substitutes and candy sprays. The style of pump used depends largely on
the nature of the product being dispensed, from small, fine mist pumps used
with perfume and pharmaceutical products to lotion pumps for more viscous
formulas. In 2000, 1999 and 1998, pump sales accounted for approximately 62%,
61% and 60% respectively, of AptarGroup's net sales.
Fragrance/Cosmetic
The fragrance/cosmetic market requires a broad range of pump dispensing
systems to meet functional as well as aesthetic requirements. A considerable
amount of research, time and coordination with the customers' development
staff is required to qualify a pump for use with their products. Within the
market, the Company expects the use of pumps to continue to increase,
particularly in the cosmetic sector. For example, packaging for certain
products such as skin moisturizers and anti-aging lotions is undergoing a
conversion to pump systems, which may provide growth opportunities for the
Company.
Pharmaceutical
Pumps sold to the pharmaceutical market deliver medications orally, nasally
or topically. The pharmaceutical market is unique and different from the other
markets the Company serves. Characteristics of this market include (i)
governmental regulatory requirements, (ii) contaminant-controlled
manufacturing environments, and (iii) a significant amount of time and
research from initially working with pharmaceutical companies at the molecule
development stage of a medication through the eventual distribution to the
market. AptarGroup has clean room manufacturing facilities in France, Germany,
Switzerland, China and the United States. The Company believes that the
conversion from traditional medication forms such as pills and syringes to the
use of pumps for the dispensing of medication will continue to increase.
Potential opportunities for conversion from pills and syringes to pump
dispensing systems include vaccines, cold and flu treatments and hormone
replacement therapies.
Personal Care
Personal care pumps include both fine mist spray as well as lotion pumps.
Sales of fine mist pumps, for use in hair care, sun care and deodorant
products, have increased significantly over the last several years. The
Company also supplies lotion pumps to the personal care market for products
such as skin moisturizers and soap.
5
Food/Beverage
Historically, sales of the Company's pumps to this market have not been
significant. However, the Company has recently increased its sales to this
market with applications such as butter substitute sprays, candy sprays and
condiments. The Company believes there will be additional applications for
pumps in this market in the future.
Closures (22% of 2000 net sales)
The Company believes that it is the largest supplier of dispensing closures
in the United States, and the second largest supplier in Europe. The Company
manufactures primarily dispensing closures and to a small degree, some plastic
non-dispensing closures. Dispensing closures are plastic caps, primarily for
plastic containers, which allow a product to be dispensed without removing the
cap. Closure sales accounted for approximately 22% of AptarGroup's net sales
in 2000, 1999 and 1998.
Sales of dispensing closures have grown as consumers worldwide have
demonstrated a preference for a package utilizing the convenience of a
dispensing closure. At the same time, consumer marketers are trying to
differentiate their products by incorporating performance enhancing features
such as no-drip dispensing, inverted packaging and directional flow to make
them simpler to use, cleaner and more appealing to consumers.
Personal Care
Historically, the majority of the dispensing closure sales have been to the
personal care market. Products with dispensing closures include shampoos,
shower gels, conditioners and toothpaste. While many personal care products
have already converted from non-dispensing to dispensing closures, the Company
expects to benefit from its SimpliSqueeze technology as companies utilize more
inverted packaging.
Household
While the Company has had success worldwide in selling dispensing closures
to this market, it has not represented a significant amount of total
dispensing closure sales. Products utilizing dispensing closures include
dishwashing detergents, laundry care products and household cleaners. The
Company believes this market offers an opportunity for expansion as a result
of conversion from non-dispensing to dispensing closures.
Food/Beverage
Similar to the household market, sales of dispensing closures to the
food/beverage market has not represented a significant amount of total
dispensing closure sales. However, the Company has recently experienced an
increase in the amount of interest from food marketers who are considering
utilizing dispensing closures for their products. Examples of food/beverage
products currently utilizing dispensing closures include salad dressings,
syrups, condiments, honey, non-carbonated sports drinks and edible oils. The
Company has secured orders to sell SimpliSqueeze closures on single-serve
bottled water applications for delivery in 2001. The Company believes there
are tremendous growth opportunities in the food/beverage market due to the
size of the non-carbonated single-serve beverage market worldwide and
additional conversion from traditional non-dispensing food packages to
dispensing closure systems.
Aerosol Valves (14% of 2000 net sales)
AptarGroup believes it is the largest aerosol valve supplier in North
America. Aerosol valves dispense product from pressurized containers. The
majority of the aerosol valves sold by the Company are continuous spray valves
with the balance being metered dose valves. Demand for aerosol valves is
dependent upon the consumers' preference for application, consumer perception
of environmental impact, and changes in demand for the products in this
market. Aerosol valve sales accounted for approximately 14%, 15% and 16% of
AptarGroup's net sales in 2000, 1999 and 1998, respectively.
6
In addition to aerosol valves, the Company has invested in manufacturing
capabilities to produce accessories that are complementary to the valve, such
as customized spray through overcaps. These overcaps provide a higher degree
of differentiation and convenience since the cap does not need to be removed
prior to usage.
Personal Care
The primary applications in the personal care market are continuous spray
valves for hair care products, deodorants and shaving creams. In addition, the
metered dose valve is used in this market for breath sprays.
Household
The primary applications for continuous spray valves in the household
market include disinfectants, spray paints, insecticides and automotive
products. Metered dose aerosol valves are used for air fresheners.
Pharmaceutical
Metered dose aerosol valves are used for dispensing precise amounts of
medication. Aerosol technology allows medication to be broken up into very
fine particles, which enables the drug to be delivered via the pulmonary
system. The Company works with pharmaceutical companies as they work to phase
out the use of aerosol chlorofluorocarbon ("CFC") propellants. The Company
expects to increase its market share of metered dose valves to this market as
pharmaceutical companies replace CFC products with alternative propellants.
Research and Development
The Company is committed to developing innovative products and adapting
existing products for new markets and customer requirements. Expenditures for
research and development activities were $26.9 million, $25.6 million
(excluding a $3.3 million write-off of purchased in-process research and
development associated with the Microflow acquisition), and $23.6 million in
2000, 1999 and 1998, respectively. These costs were associated with a number
of products in varying stages of development.
Patents and Trademarks
AptarGroup will continue to sell its products under the names used by its
operating units and is not currently offering any products under the
AptarGroup name. The names used by its operating units have been trademarked.
AptarGroup customarily seeks patent and trademark protection for its
products and currently owns and has numerous applications pending for United
States and foreign patents and trademarks. In addition, certain of
AptarGroup's products are produced under patent licenses granted by third
parties. The majority of AptarGroup's net sales are generated by products
which have patent protection on either the product or a component of the
product. Management believes that it possesses certain technical capabilities
in making its products that would also make it difficult for a competitor to
duplicate them.
Technology
Pumps and aerosol valves require the assembly of up to 15 different
plastic, metal and rubber components using high-speed equipment. When molding
dispensing closures, or plastic components to be used in pump or aerosol valve
products, the Company uses advanced plastic injection molding technology,
including large cavitation plastic injection molds. These molds are required
to maintain tolerances as small as one thousandth of an inch and manufacture
products in a high-speed, cost-effective manner. The Company has experience in
liquid silicone rubber molding that the Company utilizes in its dispensing
closure operations. The Company also uses bi-injection molding technology in
its various product lines to develop new innovative products for the packaging
industry. The Microflow acquisition provides electronic capabilities that the
Company did not previously possess.
7
Manufacturing and Sourcing
The principal raw materials used in AptarGroup's production are plastic
resins and certain metal products. AptarGroup believes an adequate supply of
such raw materials is readily available from existing and alternative sources.
The Company attempts to offset cost increases through improving productivity
and increasing selling prices over time, as allowed by market conditions.
AptarGroup also purchases plastic and metal components that are used in the
final assembly of its products from suppliers near its production facilities.
Certain suppliers of these components have unique technical abilities that
make AptarGroup dependent on them, particularly for aerosol valve and pump
production in North America. In addition, the Company's pharmaceutical
products often use specific approved plastic resin for its customers.
Significant delays in receiving components from these suppliers or
discontinuance of an approved plastic resin would require AptarGroup to seek
alternative sources, which could result in higher costs as well as impact the
ability of the Company to supply products in the short term. The Company has
not experienced such delays.
Sales and Distribution
Sales of products are primarily through AptarGroup's own sales force. To a
limited extent, AptarGroup also uses the services of independent
representatives and distributors who sell AptarGroup's products as independent
contractors to certain smaller customers and export markets. Backlogs are not
a significant factor. Most orders placed with the Company are ready for
delivery within 120 days. Some customers place blanket orders, which extend
beyond this delivery period. However, deliveries against these orders are
subject to change.
Customers
The demand for AptarGroup's products is influenced by the demand for the
products of AptarGroup's customers. Demand for the products of AptarGroup's
customers may be affected by general economic conditions, government
regulations, tariffs and other trade barriers. AptarGroup's customers include
many of the largest personal care, fragrance/cosmetic, pharmaceutical,
household products and food/beverage marketers in the world. The Company has
over 2,500 customers with no single customer accounting for greater than 6% of
2000 net sales. Over the past few years, a consolidation of the Company's
customer base has occurred. This trend is expected to continue. A
concentration of customers may result in pricing pressures or a loss of
volume. This situation also presents opportunities for increasing sales due to
the breadth of the Company's product line, its international presence, and
long-term relationships with certain customers.
International Business
A significant number of AptarGroup's operations are located outside the
United States. Sales in Europe for the years ended December 31, 2000, 1999 and
1998 were approximately 53%, 54% and 57%, respectively, of net sales. The
majority of units sold in Europe are manufactured at facilities in England,
France, Germany, Ireland, Italy, Spain and Switzerland. Other geographic areas
serviced by AptarGroup include Argentina, Australia, Brazil, Canada, Czech
Republic, China, India, Indonesia, Japan and Mexico, though the combined sales
from these areas is not significant to AptarGroup's consolidated sales. Export
sales from the United States were $44.3 million, $57.9 million and $21.4
million in 2000, 1999 and 1998, respectively.
Foreign Currency
A significant number of AptarGroup'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 financial conditions and results of
operations of AptarGroup's foreign entities. The Company's primary foreign
exchange exposure is to the Euro, but the Company has foreign exchange
exposure to South American and Asian currencies as well as the British Pound.
The Company manages its 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. A
strengthening U.S. dollar relative to foreign currencies has a dilutive
translation effect
8
on the Company's financial condition and results of operations. Conversely, a
weakening U.S. dollar has an additive effect.
In some cases, the Company sells 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 the
Company's results of operations.
Working Capital Practices
Collection and payment periods tend to be longer for the Company's
operations located outside the United States due to local business practices.
Historically, the Company has not needed to keep significant amounts of
finished goods inventory to meet customer requirements.
Employee and Labor Relations
AptarGroup has approximately 6,400 full-time employees. Of the full-time
employees, approximately 1,700 are located in North America, 4,200 are located
in Europe and the remaining 500 are located in Asia and South America.
Approximately 200 of the North American employees are covered by a collective
bargaining agreement, while the majority of the Company's international
employees are covered by collective bargaining arrangements made at either the
local or national government level in their respective countries. Termination
of employees at certain AptarGroup European operations could be costly due to
local regulations regarding severance benefits. Management of AptarGroup
considers its employee relations to be good.
Competition
All of the markets in which AptarGroup operates are highly competitive and
the Company continues to experience price competition in all product lines and
markets. Competitors include privately and publicly held entities.
AptarGroup's competitors range from regional to international companies.
AptarGroup expects the market for its products to remain competitive.
AptarGroup believes its competitive advantages are consistent high levels
of innovation, quality, service and geographic diversity and breadth of
products. The Company's manufacturing strength lies in the ability to mold
complex plastic components in a cost-effective manner and to assemble products
at high speeds.
Environment
AptarGroup's manufacturing operations primarily involve plastic injection
molding and automated assembly processes, and to a limited degree metal
annodization. Historically, the environmental impact of these processes has
been minimal, and management believes it meets current environmental standards
in all material respects.
Government Regulation
To date, the manufacturing operations of AptarGroup have not been
significantly affected by environmental laws and regulations relating to the
environment.
Certain AptarGroup products are affected by government regulation. Growth
of packaging using aerosol valves has been restrained by concerns relating to
the release of certain chemicals into the atmosphere. Both aerosol and pump
packaging are affected by government regulations regarding the release of
VOC's (volatile organic compounds) into the atmosphere. Certain states within
the United States have regulations that required the reduction in the amount
of VOC's that can be released into the atmosphere and the potential exists for
this type of regulation to expand to a worldwide basis. These regulations
required the Company's customers to reformulate certain aerosol and pump
products, which may have affected the demand for such products. The Company
owns patents and has developed systems to function with alternative propellant
and product formulations.
9
Aerosol packaging of paints has also been adversely impacted by local
regulations adopted in many large cities in the United States designed to
address the problem of spray painted graffiti. Aerosol packaging may also be
adversely impacted by insurance cost considerations relating to the storage of
aerosol products.
Government regulation in the dispensing closure product line primarily
relates to waste reduction. The Company's dispensing closures are plastic and
mainly consist of polypropylene, a recyclable plastic. The Company also uses
recycled plastic in its manufacturing process.
Future government regulations could include medical cost containment
policies. For example, reviews by various governments to determine the number
of drugs or prices thereof that will be paid by their insurance systems could
affect future sales to the pharmaceutical industry. Such regulation could
adversely affect prices of and demand for the Company's pharmaceutical
products. The Company believes that the focus on the cost effectiveness of the
use of medications as compared to surgery and hospitalization provides an
opportunity for the Company to expand sales to the pharmaceutical market.
Regulatory requirements impact the Company's customers and could affect the
Company's investment in and manufacturing of products for the pharmaceutical
market.
Item 2. Properties
The principal offices and manufacturing facilities of AptarGroup are either
owned or leased by the Company or its subsidiaries. None of the owned
principal properties is subject to a lien or other encumbrance material to the
operations of the Company. The Company believes that existing operating leases
will be renegotiated as they expire or that suitable alternative properties
can be leased on acceptable terms. The Company considers the condition and
extent of utilization of its manufacturing facilities and other properties to
be generally good, and the capacity of its plants to be adequate for the needs
of its business.
The locations of the Company's principal manufacturing facilities, by
country, are set forth below:
FRANCE GERMANY CHINA
Caen Bohringen Suzhou
Le Neubourg Dortmund
Le Vaudreuil Eigeltingen
Poincy Freyung
Verneuil Sur Avre Menden
ITALY NORTH AMERICA UNITED KINGDOM
San Giovanni Teatino Cary, Illinois, USA Leeds, England
(Chieti) McHenry, Illinois,
Manoppello USA
Milan Midland, Michigan,
USA
Mukwonago, Wisconsin,
USA
Norwalk, Connecticut,
USA
Queretaro, Mexico
Stratford,
Connecticut, USA
SWITZERLAND IRELAND BRAZIL
Messovico Tourmakeady, County Sao Paulo
Mayo
Ballinasloe, County
Gallway
ARGENTINA CHECH REPUBLIC
Buenos Aires Ckyne
10
In addition to the above countries, the Company has sales offices or other
manufacturing facilities in Australia, Canada, India, Indonesia, Japan and
Spain. The Company's corporate office is located in Crystal Lake, Illinois.
Item 3. Legal Proceedings
Legal proceedings involving the Company generally relate to product
liability and patent infringement issues. In the opinion of AptarGroup's
management, the outcome of pending claims and litigation is not likely to have
a material adverse effect on the Company's financial position or the results
of its operations.
Historically, product liability claims for all products of the Company have
been minimal. However, the increase in pump and aerosol valve applications for
pharmaceutical products may increase the risk associated with product
liability claims. Quality control systems are specifically designed to prevent
defects in the Company's products. Additionally, the Company maintains product
liability insurance in excess of its historical claims experience.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information set forth in Note 18 "Quarterly Data (Unaudited)" to the
Consolidated Financial Statements contained in the Company's 2000 Annual
Report to Stockholders, page 51, is incorporated herein by reference. The
Common Stock of AptarGroup is traded on the New York Stock Exchange (symbol:
ATR). As of March 12, 2001, stockholders of record totaled approximately 800.
During the quarter ended December 31, 2000, the FCP Aptar Savings Plan (the
"Plan") purchased 450 shares of Common Stock of the Company on behalf of the
participants at an average price of $26.68 per share for an aggregate amount
of $12 thousand. During the same quarter, the Plan sold 10 shares of Common
Stock of the Company at the average price of $27.81 per share for an aggregate
amount of $278. At December 31, 2000, the Plan owns 3,935 shares of Common
Stock of the Company. Employees of AptarGroup S.A., a subsidiary of the
Company, are eligible to participate in the Plan. All eligible participants
are located outside of the United States. An agent independent of the Company
purchases shares of Common Stock available under the Plan for cash on the open
market and the Company issues no shares. The Company does not receive any
proceeds from the purchase of Common Stock under the Plan. The agent under the
Plan is Banque Nationale de Paris. 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.
Item 6. Selected Financial Data
The information set forth under the heading "Five Year Summary of Selected
Financial Data" appearing on page 54 of the Company's 2000 Annual Report to
Stockholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Consolidated Results of
Operations and Financial Condition
The information set forth under the heading "Management's Discussion and
Analysis of Consolidated Results of Operations and Financial Condition"
appearing on pages 55-63 of the Company's 2000 Annual Report to Stockholders
is incorporated herein by reference.
11
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The information set forth under the heading "Management's Discussion and
Analysis of Consolidated Results of Operations and Financial Condition"
appearing on pages 55-63 of the Company's 2000 Annual Report to Stockholders
is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The information set forth under the headings "Consolidated Balance Sheets,"
"Consolidated Statements of Income," "Consolidated Statements of Cash Flows,"
"Consolidated Statements of Changes in Equity," "Notes to Consolidated
Financial Statements" and "Report of Independent Accountants" appearing on
pages 26-52 of the Company's 2000 Annual Report to Stockholders is
incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Certain information required to be furnished in this part of the Form 10-K
has been omitted because the Registrant will file with the Securities and
Exchange Commission a definitive proxy statement pursuant to Regulation 14A
under the Securities Exchange Act of 1934 not later than April 29, 2001.
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the heading "Election of Directors" in the
Registrant's Proxy Statement for the annual meeting of stockholders to be held
on May 9, 2001 is incorporated herein by reference.
In addition to Messrs. Carl A. Siebel and Peter Pfeiffer, each of whom is a
director and executive officer of the Company and information with respect to
whom is incorporated by reference in this Item 10, executive officers of the
Registrant are as follows:
Jacques Blanie, age 54, has been Executive Vice President of
SeaquistPerfect Dispensing L.L.C. since 1996 and Geschaftsfuhrer of
SeaquistPerfect Dispensing GmbH since 1986. In 1996, Perfect-Valois Ventil
GmbH changed its name to SeaquistPerfect Dispensing GmbH.
Francois Boutan, age 58, has served in the capacity of Vice President
Finance-Europe since 1998. Mr. Boutan was Financial Director and Controller of
the European operations of AptarGroup from 1988 to 1998.
Olivier De Pous, age 56, has been Directeur General of Valois S.A. since
January 2000. Mr. De Pous was Directeur de Division Parfumerie Cosmetique of
Valois S.A. from 1997 to 1999 and Directeur Technique, Division Parfumerie
Cosmetique of Valois S.A. from 1992 to 1997.
Patrick Doherty, age 45, has served as President of SeaquistPerfect
Dispensing L.L.C. since October 2000. Mr. Doherty was Executive Vice
President, General Manager of SeaquistPerfect Dispensing L.L.C. since April
1999, and was Vice President of Operations of SeaquistPerfect Dispensing
L.L.C. since April 1993.
Olivier Fourment, age 43, has been Directeur General of Valois S.A. since
January 2000. Mr. Fourment was Directeur de Division Pharmacie of Valois S.A.
from 1997 to 1999 and Directeur Commercial, Division Pharmacie of Valois S.A.
from 1990 to 1997.
Stephen J. Hagge, age 49, has been Executive Vice President, Chief
Financial Officer and Secretary of AptarGroup since 1993.
Lawrence Lowrimore, age 56, has been Vice President-Human Resources of
AptarGroup since 1993.
12
Francesco Mascitelli, age 50, has been Direttore Generale of Emsar S.p.A.,
an Italian subsidiary, since 1991. In 1999, Sar S.p.A. changed its name to
Emsar S.p.A.
Emil Meshberg, age 53, has been Vice President of AptarGroup since February
1999, and has served as Chief Executive Officer and President of Emson
Research, Inc. for more than the past five years.
Eric S. Ruskoski, age 53, has been President of Seaquist Closures L.L.C.
since 1987.
Hans-Josef Schutz, age 56, has been Geschaftsfuhrer of the Pfeiffer Group
since 1993.
Item 11. Executive Compensation
The information set forth under the headings "Board Compensation" and
"Executive Compensation" (other than "Compensation Committee Report on
Executive Compensation" and "Performance Graph") in the Registrant's Proxy
Statement for the annual meeting of stockholders to be held on May 9, 2001 is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Registrant's Proxy Statement for the
annual meeting of stockholders to be held on May 9, 2001, is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The information set forth under the heading "Certain Transactions" in the
Registrant's Proxy Statement for the annual meeting of stockholders to be held
on May 9, 2001 is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of this report:
Location
--------
1) Financial Statements required by Item 8 of this
Form
Consolidated Balance Sheets....................... Annual Report, page 26
Consolidated Statements of Income................. Annual Report, page 28
Consolidated Statements of Cash Flows............. Annual Report, page 29
Consolidated Statements of Changes in Equity...... Annual Report, page 30
Notes to Consolidated Financial Statements........ Annual Report, page 32
Report of Independent Accountants................. Annual Report, page 52
2) Schedule required by Article 12 of Regulation S-X
Report of Independent Accountants on Financial page 16
Statement Schedule................................
II--Valuation and Qualifying Accounts............. page 17
All other schedules have been omitted because they are not applicable or
not required.
3) Exhibits required by Item 601 of Regulation S-K are incorporated by
reference to the Exhibit Index on pages 18-20 of this report.
(b)Reports on Form 8-K during the quarter ended December 31, 2000:
No reports on Form 8-K were filed during the quarter ended December 31,
2000.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized in the City of
Crystal Lake, State of Illinois on this 22nd day of March 2001.
AptarGroup, Inc.
(Registrant)
/s/ Stephen J. Hagge
By___________________________________
Stephen J. Hagge
Executive Vice President, Chief
Financial Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ King Harris Chairman of the Board and Director March 22, 2001
_________________________________
King Harris
/s/ Carl Siebel President and Chief Executive Officer and March 22, 2001
_________________________________ Director (Principal Executive Officer)
Carl Siebel
/s/ Peter Pfeiffer Vice Chairman of the Board and Director March 22, 2001
_________________________________
Peter Pfeiffer
/s/ Stephen J. Hagge Executive Vice President, Chief March 22, 2001
_________________________________ Financial Officer and Secretary
Stephen J. Hagge (Principal Accounting and Financial Officer)
/s/ Prof. Dr. Robert W. Hacker Director March 22, 2001
_________________________________
Prof. Dr. Robert W. Hacker
/s/ Robert Barrows Director March 22, 2001
_________________________________
Robert Barrows
/s/ Ralph Gruska Director March 22, 2001
_________________________________
Ralph Gruska
/s/ Leo A. Guthart Director March 22, 2001
_________________________________
Leo A. Guthart
/s/ Dr. Joanne C. Smith Director March 22, 2001
_________________________________
Dr. Joanne C. Smith
/s/ Alfred Pilz Director March 22, 2001
_________________________________
Alfred Pilz
14
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders
of AptarGroup, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 15, 2001, appearing in the 2000 Annual Report to
Stockholders of AptarGroup, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
February 15, 2001
15
AptarGroup, Inc.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(Dollars in Thousands)
Deductions
Balance at Charged to from Balance
beginning costs and reserve at end
of period expenses Acquisition (a) of period
---------- ---------- ----------- ---------- ---------
2000
Allowance for doubtful
accounts............... $6,865 $1,849 $ -- $1,787 $6,927
Inventory obsolescence
reserve................ 7,881 2,956 -- 1,997 8,840
1999
Allowance for doubtful
accounts............... $5,132 $ 679 $2,013 $ 959 $6,865
Inventory obsolescence
reserve................ 6,815 2,548 512 1,994 7,881
1998
Allowance for doubtful
accounts............... $3,812 1,912 $ 147 $ 739 $5,132
Inventory obsolescence
reserve................ 5,439 1,682 74 380 6,815
--------
(a) Write-off of accounts considered uncollectible, net of recoveries and
foreign currency translation adjustments.
16
INDEX TO EXHIBITS
Number and Description of Exhibit
---------------------------------
3(i) Amended and Restated Certificate of Incorporation of the Company, filed
as Exhibit 3 (i) to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 2000 (File No. 1-11846), is hereby incorporated
by reference.
3(ii) Amended and Restated By-Laws of the Company, filed as Exhibit 3(ii) to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995 (File No. 1-11846) is hereby incorporated by reference.
4.1 Rights Agreement dated as of April 6, 1993 between the Company and
Chemical Bank, as rights agent, filed as Exhibit 4.1 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1993 (the
"1993 10-K")(File No. 1-11846), is hereby incorporated by reference.
4.2 Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, of the Company, filed as
Exhibit 6.4 of the Company's Registration Statement on Form 8-A filed
under the Exchange Act on April 5, 1993 (File No. 1-11846), is hereby
incorporated by reference.
The Registrant hereby agrees to provide the Commission, upon request,
copies of instruments defining the rights of holders of long-term debt
of the Registrant and its subsidiaries as are specified by item
601(b)(4)(iii)(A) of Regulation S-K.
4.3 Note Purchase Agreement dated as of May 15, 1999 relating to $107
million senior unsecured notes, series 1999-A, filed as Exhibit 4.1 to
the Company's quarterly report on Form 10-Q for the quarter ended June
30, 1999 (File No. 1-11846), is hereby incorporated by reference.
4.4 Multicurrency Credit Agreement dated as of June 30, 1999 among the
Company, the lenders party thereto, Bank of America National Trust and
Savings Association, as Agent, and Bank of America Securities LLC, as
Arranger, filed as Exhibit 4.2 to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 1999 (File No. 1-11846), is
hereby incorporated by reference.
4.5* First Amendment Agreement dated as of December 14, 2000 relating to the
Multicurrency Credit Agreement dated as of June 30, 1999 among the
Company, the lender party thereto, Deutsche Bank AG New York Brance
and/or Cayman Islands and Bank of America, National Association as
Agent for the Lenders (File No. 1-11846), is hereby incorporated by
reference.
10.1 AptarGroup, Inc. 1992 Stock Awards Plan, filed as Exhibit 10.1
(included as Appendix B to the Prospectus) to the Company's
Registration Statement on Form S-1, Registration Number 33-58132, filed
on February 10, 1993 (the "Form S-1"), is hereby incorporated by
reference.**
10.2 AptarGroup, Inc. 1992 Director Stock Option Plan, filed as Exhibit 10.2
(included as Appendix C to the Prospectus) to the Form S-1, is hereby
incorporated by reference.**
10.3 Agreement of Employment dated as of March 28, 1990 of Ervin J. LeCoque,
filed as Exhibit 10.3 to the Form S-1 is hereby incorporated by
reference.**
10.4 Managing Director Employment Agreement dated January 2, 1981 of Mr.
Peter Pfeiffer, filed as Exhibit 10.4 to the Form S-1, is hereby
incorporated by reference.**
10.5 Service Agreement dated April 30, 1981, of Carl A. Siebel, and related
pension plan, filed as Exhibit 10.5 to the Form S-1, is hereby
incorporated by reference.**
10.6 Service agreement dated April 22, 1993, between AptarGroup, Inc. and
Peter Pfeiffer, and related pension plan, filed as Exhibit 10.6 to the
1993 10-K, is hereby incorporated by reference.**
10.7 First supplement dated 1989 pertaining to the pension plan between
Perfect-Valois Ventil GmbH and Carl A. Siebel, filed as Exhibit 10.7 to
the 1993 10-K, is hereby incorporated by reference.**
10.8 Pittway Guarantee dated February 2, 1990, pertaining to the pension
plan between Perfect-Valois Ventil GmbH and Carl A. Siebel, filed as
Exhibit 10.8 to the 1993 10-K, is hereby incorporated by reference.**
10.9 Assignment, Assumption and Release as of April 22, 1993, among Pittway
Corporation, AptarGroup, Inc., and Ervin J. LeCoque, filed as Exhibit
10.9 to the 1993 10-K, is hereby incorporated by reference.**
17
Number and Description of Exhibit
---------------------------------
10.10 Assignment, Assumption and Release as of April 22, 1993, among Pittway
Corporation, AptarGroup, Inc., and Carl A. Siebel, filed as Exhibit
10.10 to the 1993 10-K, is hereby incorporated by reference.**
10.11 Second supplement dated December 19, 1994 pertaining to the pension plan
between Perfect-Valois Ventil GmbH and Carl A. Siebel, filed as Exhibit
10.11 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-11846), is hereby incorporated by
reference.**
10.12 Amendment to Agreement of Employment dated November 20, 1995 of Ervin J.
LeCoque, filed as Exhibit 10.13 of the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (File No. 1-11846), is hereby
incorporated by reference.**
10.13 Employment Agreement dated February 1, 1996 of Stephen J. Hagge, filed
as Exhibit 10.14 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 (File No. 1-11846), is hereby incorporated
by reference.**
10.14 AptarGroup, Inc. 1996 Stock Awards Plan, filed as Appendix A to the
Company's Proxy Statement, dated April 10, 1996 (File No. 1-11846), is
hereby incorporated by reference.**
10.15 AptarGroup, Inc. 1996 Director Stock Option Plan, filed as Appendix B to
the Company's Proxy Statement, dated April 10, 1996 (File No. 1-11846),
is hereby incorporated by reference.**
10.16 Stock Purchase Agreement dated as of February 16, 1999 between
AptarGroup, Inc. and The Meshberg Family Trust, filed as Exhibit 2.1 to
the Company's Report on Form 8-K filed on February 26, 1999 (File No. 1-
11846), is hereby incorporated by reference.
10.17 Stock Purchase Agreement dated as of February 16, 1999 among AptarGroup,
Inc., Emil Meshberg and Samuel Meshberg, filed as Exhibit 2.2 to the
Company's Report on Form 8-K filed on February 26, 1999 (File No. 1-
11846), is hereby incorporated by reference.
10.18 Agreement of Merger dated as of February 16, 1999 among AptarGroup,
Inc., R Merger Corporation, R.P.M. manufacturing Company, Emil Meshberg
and Ronald Meshberg, filed as Exhibit 2.3 to the Company's Report on
Form 8-K filed on February 26, 1999 (File No. 1-11846), is hereby
incorporated by reference.
10.19 Employment Agreement dated October 19, 1995, of James R. Reed, filed as
Exhibit 10.19 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1999 (File No. 1-11846), is hereby incorporated by
reference.**
10.20 Employment Agreement dated February 17, 1999, of Emil Meshberg, filed as
Exhibit 10.20 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1999 (File No. 1-11846), is hereby incorporated by
reference.**
10.21 Amendment No.1 to Service Agreement dated January 1, 2000 of Carl A.
Siebel, filed as Exhibit 10.21 of the Company's Annual Report on Form
10-K for the year ended December 31, 1999 (File No. 1-11846), is hereby
incorporated by reference.**
10.22 AptarGroup, Inc. 2000 Stock Awards Plan, filed as Appendix A to the
Company's Proxy Statement, dated April 6, 2000 (File No. 1-11846), is
hereby incorporated by reference.**
10.23 AptarGroup, Inc. 2000 Director Stock Option Plan, filed as Appendix B to
the Company's Proxy Statement, dated April 6, 2000 (File No. 1-11846),
is hereby incorporated by reference.**
10.24 Employment Agreement dated March 6, 1996 of Eric S. Ruskoski, filed as
Exhibit 10.17 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 (File No. 1-11846), is hereby incorporated by
reference.**
13* 2000 Annual Report to Stockholders (such report, except to the extent
specifically incorporated herein by reference, is being furnished for
the information of the Securities and Exchange Commission only and is
not to be deemed filed as a part of this Form 10-K).
21* List of Subsidiaries.
23* Consent of Independent Accountants.
--------
* Filed herewith.
** Management contract or compensatory plan or arrangement.
18