-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hor5z4zDjZ8+daO8cT0V7Yz99rq+fD94AlpPzDEE9FZZkcQi0Cz5ZICkvGEetkRs m5bNZLVWfw5l8fNWPgipxA== 0000896622-96-000004.txt : 19960703 0000896622-96-000004.hdr.sgml : 19960703 ACCESSION NUMBER: 0000896622-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APTARGROUP INC CENTRAL INDEX KEY: 0000896622 STANDARD INDUSTRIAL CLASSIFICATION: 3050 IRS NUMBER: 363853103 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11846 FILM NUMBER: 96559174 BUSINESS ADDRESS: STREET 1: 475 W TERRA COTTA AVE STREET 2: STE E CITY: CRYSTAL LAKE STATE: IL ZIP: 60014 BUSINESS PHONE: 8154770424 MAIL ADDRESS: STREET 1: 475 W. TERRA COTTA AVE. SUITE E CITY: CRYSTAL LAKE STATE: IL ZIP: 60014 10-Q 1 FIRST QUARTER FORM 10Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 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) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (May 9, 1996) COMMON STOCK 17,937,760 2 APTARGROUP, INC. FORM 10-Q QUARTER ENDED MARCH 31, 1996 INDEX PART I. FINANCIAL INFORMATION PAGE ---- ITEM 1. Financial statements (Unaudited) Consolidated Statements of Income - Three Months Ended March 31, 1996 and 1995 3 Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1996 and 1995 6 Notes to Consolidated Financial Statements 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 13 SIGNATURE 14 3 AptarGroup, Inc. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended March 31, 1996 and 1995 (Dollars in Thousands, Except Per Share Data) (UNAUDITED) Three Months Ended March 31, --------------------------- 1996 1995 ---- ---- NET SALES $152,954 $135,629 ------- ------- OPERATING EXPENSES: Cost of sales ................... 98,714 86,616 Selling, general and administrative ................ 25,012 22,807 Depreciation and amortization ... 11,489 10,442 ------- ------- 135,215 119,865 ------- ------- OPERATING INCOME.................... 17,739 15,764 ------- ------- OTHER INCOME (EXPENSE): Interest expense................. (1,774) (1,615) Interest income.................. 261 230 Equity in income of affiliates... 350 815 Minority interests............... (55) (37) Miscellaneous, net............... 638 268 ------- ------- (580) (339) ------- ------- INCOME BEFORE INCOME TAXES.......... 17,159 15,425 PROVISION FOR INCOME TAXES.......... 6,486 5,800 ------- ------- NET INCOME.......................... $ 10,673 $ 9,625 ======= ======= PER COMMON SHARE: Net Income....................... $ .60 $ .54 ======= ======= Average number of shares outstanding (in thousands)...... 17,930 17,915 See accompanying notes to consolidated financial statements. 4 AptarGroup, Inc. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (UNAUDITED) March 31, December 31, ASSETS 1996 1995 -------- ----------- CURRENT ASSETS: Cash and equivalents........... $ 17,409 $ 17,332 Accounts and notes receivable, less allowance for doubtful accounts of $3,104 in 1996 and $3,296 in 1995............ 124,160 119,011 Inventories.................... 74,431 73,339 Prepayments and other.......... 16,102 14,188 ------- ------- 232,102 223,870 ------- ------- PROPERTY, PLANT AND EQUIPMENT: Buildings and improvements..... 74,242 75,696 Machinery and equipment........ 403,411 397,169 ------- ------- 477,653 472,865 Less: Accumulated depreciation. (238,780) (231,152) ------- ------- 238,873 241,713 Land........................... 4,209 4,268 ------- ------- 243,082 245,981 ------- ------- OTHER ASSETS: Investments in affiliates...... 15,067 14,951 Goodwill, less accumulated amortization of $4,689 in 1996 and $4,409 in 1995....... 47,690 48,387 Miscellaneous.................. 25,709 26,027 ------- ------- 88,466 89,365 ------- ------- TOTAL ASSETS $563,650 $559,216 ======= ======= See accompanying notes to consolidated financial statements. 5 AptarGroup, Inc. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (UNAUDITED) LIABILITIES AND March 31, December 31, STOCKHOLDERS' EQUITY 1996 1995 -------- ------------ CURRENT LIABILITIES: Notes payable............... $ 5,502 $ 8,322 Current maturities of long-term obligations...... 7,946 8,737 Accounts payable and accrued liabilities........ 107,399 106,147 ------- ------- 120,847 123,206 ------- ------- LONG-TERM OBLIGATIONS........... 80,878 80,712 ------- ------- DEFERRED LIABILITIES AND OTHER: Deferred income taxes........ 23,442 21,992 Retirement and deferred compensation plans.......... 12,533 12,487 Minority interests........... 1,349 1,033 Deferred and other non- current liabilities......... 7,042 7,500 ------- ------- 44,366 43,012 ------- ------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value . 179 179 Capital in excess of par value.................... 103,183 102,954 Retained earnings............. 210,279 200,860 Cumulative foreign currency translation adjustment...... 3,918 8,293 ------- ------- 317,559 312,286 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $563,650 $559,216 ======= ======= See accompanying notes to consolidated financial statements. 6 AptarGroup, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Dollars in Thousands) (UNAUDITED) Three Months Ended March 31, ----------------------- 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: -------- -------- Net income............................... $ 10,673 $ 9,625 Adjustments to reconcile net income to net cash provided by operations: Depreciation ........................... 10,792 10,008 Amortization ........................... 697 434 Provision for bad debts................. 93 140 Minority interests...................... 55 37 Deferred income taxes................... 2,203 1,026 Retirement and deferred compensation plans..................... 686 614 Equity in income of affiliates in excess of cash distributions received.. (350) (815) Changes in balance sheet items, excluding effects from foreign currency adjustments: Increase in accounts receivable........ (7,282) (11,891) Increase in inventories................ (2,310) (7,627) Increase in prepaid and other current assets........................ (3,295) (124) Increase(decrease)in accounts payable and accrued liabilities....... 321 (1,508) Increase in income taxes payable....... 1,965 2,785 Other changes, net..................... (1,096) 139 ------ ------ NET CASH PROVIDED BY OPERATIONS.......... 13,152 2,843 ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures..................... (10,832) (11,255) Disposition of property and equipment.... 85 62 Collections of notes receivable, net..... 562 43 Investments in affiliates................ (12) (57) ------ ------ NET CASH USED BY INVESTING ACTIVITIES.... (10,197) (11,207) ------ ------ 7 AptarGroup, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (cont'd) For the Three Months Ended March 31, 1996 and 1995 (Dollars in Thousands) (UNAUDITED) Three Months Ended March 31, --------------------- 1996 1995 ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: (Decrease)increase in notes payable...... $ (1,722) $ 2,948 Proceeds from long-term obligations..... 1,635 1,494 Repayments of long-term obligations..... (1,497) (963) Dividends paid.......................... (1,254) (1,075) Proceeds from stock options exercised... 229 13 ------ ------ NET CASH (USED)PROVIDED BY FINANCING ACTIVITIES.............................. (2,609) 2,417 ------ ------ EFFECT OF EXCHANGE RATE CHANGES ON CASH... (269) 274 ------ ------ NET INCREASE(DECREASE) IN CASH AND EQUIVALENTS............................. 77 (5,673) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD.................................. 17,332 20,125 ------ ------ CASH AND EQUIVALENTS AT END OF PERIOD..... $ 17,409 $ 14,452 ====== ====== See accompanying notes to consolidated financial statements. 8 APTARGROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands, except per share data) (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements included the accounts of AptarGroup, Inc. and its subsidiaries. The terms "AptarGroup" or "Company" as used herein refer to AptarGroup, Inc. and its subsidiaries. In the opinion of management, the unaudited consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position and results of operations for the interim periods presented. The accompanying unaudited consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Accordingly, these financial statements and related notes should be read in conjunction with the financial statements and notes therto included in the Company's Annual Report to Shareholders incorporated by reference into the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a fiscal year. 9 NOTE 2 - INVENTORIES At March 31, 1996 and December 31, 1995, inventories, by component, consisted of: March 31, December 31, 1996 1995 -------- ----------- Raw Materials $ 24,469 $ 25,152 Work in progress 22,258 21,927 Finished goods 29,522 28,013 ------- ------- Total 76,249 75,092 Less LIFO reserve (1,818) (1,753) ------- ------- Total $ 74,431 $ 73,339 ======= ======= 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the three months ended March 31, 1996 totaled $153.0 million, an increase of 13% when compared to the three months ended March 31, 1995. The increase is primarily attributed to sales volume increases of pumps to the pharmaceutical market and closures to the personal care market, acquisitions made during the fourth quarter 1995 and the mix of products sold. These increases were partially offset by continued price competition, decreased demand from customers in the high-end fragrance/cosmetics market, decreased orders from customers in the lower to mid-class fragrance/cosmetics market and lower aerosol valve sales as compared to the prior year. Overall, the Company continues to experience sales growth in all areas of the world. Sales to unaffiliated customers from European operations represented approximately 59% of net sales for the quarter ended March 31, 1996, compared to 62% for the same period a year ago. Including sales between geographic areas, sales from European operations represented approximately 68% of total net sales for the quarters ended March 31, 1996 and 1995. The translation of AptarGroup's foreign sales was favorably affected by the weaker U.S. dollar relative to certain European currencies when compared to the same three month period in 1995. The weaker U.S. dollar contributed approximately 1% to the Company's sales growth in the quarter. If exchange rates had been constant and the effect of acquisitions ($5.1 million) were excluded from 1996 results, sales for the three months ended March 31, 1996, would have increased 8%. Cost of sales as a percent of net sales increased to 64.5% in the first quarter compared to 63.9% in the same period a year ago. Generally, the increase is attributed to continued price competition, the mix of products sold and a negative impact of exchange rate changes, particularly the Italian Lira in relation to other European currencies. Selling, general and administrative expenses (SG&A) were $25.0 million in the first quarter of 1996 compared to $22.8 million in the prior year quarter. As a percent of total net sales, SG&A decreased to 16.4% from 16.8% a year ago. 11 Operating income increased to $17.7 million in the first quarter of 1996 compared to $15.8 million a year ago. Europe and U.S operations represented 70% and 38% of total operating income in the first quarter of 1996, respectively, with the reconciling difference due to income from other foreign operations and corporate expenses. In the first quarter of 1995, Europe and the U.S. represented 82% and 36% of total operating income, respectively. European operating income was negatively affected by changes in European currencies in relation to one another (particularly the Italian Lira), softness in the demand for fragrance/cosmetics pumps, increased price competition and the mix of products sold. These factors are expected to continue to affect the Company in the near term. The increase in U.S. operating income is due primarily to increased sales of closures to the personal care market. The effective tax rate for the three months ended March 31, 1996 was 37.8% compared to 37.6% for the same period a year ago. The rate differential is due to the mix of income earned by country. Net income for the first quarter increased 11% to $10.7 million compared to $9.6 million in the first quarter of 1995. The increase in net income is due primarily to higher sales volume and cost containment efforts. Foreign Currency A significant portion of AptarGroup's operations are located outside 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 AptarGroup's foreign entities. The Company, at times, uses forward exchange contracts, primarily with banks, to hedge the currency risk associated with future cash receipts or payments. In general, since the majority of the Company's operations are based in Europe, primarily France, Germany and Italy, a weakening U.S. dollar relative to the major European currencies has an additive translation effect on the Company's financial condition and results of operations. Conversely, a strengthening U.S. dollar would have a dilutive effect. 12 Quarterly Trends AptarGroup's results of operations in the second half of the year typically are negatively impacted by European summer holidays and customer plant shutdowns in December. In the future, AptarGroup's results of operations in a quarterly period could be impacted by factors such as changes in product mix, changes in material costs, changes in growth rates in the industries to which AptarGroup's products are sold or changes in general economic conditions in any of the countries in which AptarGroup does business. Liquidity and Capital Resources Historically, AptarGroup has generated positive cash flow from operations and has utilized the majority of such cash flows to invest in capital projects. Net cash provided by operations in the first three months of 1996 was $13.2 million compared to $2.8 million in the same period a year ago. The increase is primarily attributed to changes in working capital, principally smaller increases in accounts receivables and inventories, as compared to the same period a year ago. Total net working capital at March 31, 1996 was $111.3 million compared to $100.7 million at December 31, 1995. Net cash used by investing activities decreased to $10.2 million from $11.2 million a year ago. Management anticipates that capital expenditures for all of 1996 will total between $65 and $70 million. Net cash used by financing activities was $2.6 million in 1996 compared to net cash provided by financing activities of $2.4 million in 1995. The change is due primarily to a reduction in notes payable. The ratio of interest-bearing debt to total capitalization was 23% at March 31, 1996 compared to 24% at December 31, 1995. The majority of the Company's debt has been and continues to be, denominated in foreign currency. AptarGroup has historically borrowed locally to hedge potential currency fluctuations for assets that were purchased outside of the U.S. It is expected that this practice will continue. The Company has a multi-year, unsecured revolving credit agreement allowing borrowings of up to $25 million. Under this credit agreement, interest on borrowings is payable at a rate equal to the London Interbank Offered Rate 13 (LIBOR) plus an amount based on the financial condition of the Company. At March 31, 1996, the amount unused and available under this agreement was $25 million. The Company is required to pay a fee for the unused portion of the commitment. The agreement expires on April 29, 2001. The credit available under the revolving credit agreement provides management with the ability to refinance certain short-term obligations on a long-term basis. As it is management's intent to do so, short-term obligations of $25 million have been reclassified as long-term obligations as of March 31, 1996 and December 31, 1995. On October 10, 1995, the Company issued a private placement of $25 million principal amount of 7.08% senior unsecured notes due in 2005. The revolving credit agreement and the private placement agreement contain covenants that include certain financial tests, including minimum interest coverage, net worth and maximum borrowings. On April 24, 1996, the Board of Directors declared a quarterly dividend of $.07 per share payable on May 29, 1996 to shareholders of record as of May 8, 1996. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No exhibits are included with this report. (b) No reports on Form 8-K were filed for the quarter ending March 31, 1996. 14 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned therunto duly authorized. AptarGroup, Inc. (Registrant) By /s/ Stephen J. Hagge ----------------------- Stephen J. Hagge Executive Vice President and Chief Financial Officer, Secretary and Treasurer (Duly Authorized Officer and Principal Financial Officer) Date: May 9, 1996 15 EXHIBIT INDEX EXHIBIT NO DESCRIPTION - - ------- ----------- 27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed. EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME 1,000 3-MOS DEC-31-1996 MAR-31-1996 17,409 0 124,160 (3,104) 74,431 232,102 481,862 (238,780) 563,650 120,847 80,878 0 0 179 317,380 563,650 152,954 152,954 98,714 135,215 36,501 0 (1,774) 17,159 6,486 10,673 0 0 0 10,673 .60 .60
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