-----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, IinABzxovKnPRD5lp6z5/YeZBYjxKrov9mI/hOVmJt/r5aOityLGc3VQ9W5MZH57 iWzKmV08it524zDnKFq30Q== 0000896622-97-000005.txt : 19970508 0000896622-97-000005.hdr.sgml : 19970508 ACCESSION NUMBER: 0000896622-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970507 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APTARGROUP INC CENTRAL INDEX KEY: 0000896622 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] 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: 97597125 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 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, 1997 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 2, 1997) Common Stock 17,959,863 ---------- Page 2 APTARGROUP, INC. FORM 10-Q QUARTER ENDED MARCH 31, 1997 INDEX Part I. FINANCIAL INFORMATION Page Item 1. Financial Statements (Unaudited) Consolidated Statements of Income - Three Months Ended March 31, 1997 and 1996 3 Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURE 12 Page 3 APTARGROUP, INC. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended March 31, 1997 and 1996 (Dollars in Thousands, Except Per Share Data) (UNAUDITED) Three Months Ended March 31, 1997 1996 ---- ---- NET SALES ............................................ $ 158,290 $ 152,954 --------- --------- OPERATING EXPENSES: Cost of sales ...................................... 100,851 98,714 Selling, research & development and administrative . 25,552 25,012 Depreciation and amortization ...................... 12,519 11,489 --------- --------- 138,922 135,215 --------- --------- OPERATING INCOME ..................................... 19,368 17,739 --------- --------- OTHER INCOME (EXPENSE): Interest expense ................................... (1,464) (1,774) Interest income .................................... 202 261 Equity in income of affiliates ..................... 182 350 Minority interests ................................. (80) (55) Miscellaneous, net ................................. 275 638 --------- --------- (885) (580) --------- --------- INCOME BEFORE INCOME TAXES ........................... 18,483 17,159 PROVISION FOR INCOME TAXES ........................... 7,070 6,486 --------- --------- NET INCOME ........................................... $ 11,413 $ 10,673 ========= ========= Net Income Per Common Share........................... $ .64 $ .60 ========= ========= Average number of shares outstanding (in thousands).. 17,954 17,930 See accompanying notes to consolidated financial statements. Page 4 APTARGROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (UNAUDITED) March 31, December 31, 1997 1996 ---- ---- ASSETS CURRENT ASSETS: Cash and equivalents ............................... $ 19,272 $ 16,386 Accounts and notes receivable, less allowance for doubtful accounts of $3,479 in 1997 and $3,623 in 1996 .............................................. 137,104 130,885 Inventories ........................................ 75,615 75,930 Prepayments and other .............................. 14,745 14,030 --------- --------- 246,736 237,231 --------- --------- PROPERTY, PLANT AND EQUIPMENT: Buildings and improvements ......................... 72,906 75,971 Machinery and equipment ............................ 431,207 440,743 --------- --------- 504,113 516,714 Less: Accumulated depreciation ..................... (264,460) (265,780) --------- --------- 239,653 250,934 Land ............................................... 4,112 4,395 --------- --------- 243,765 255,329 --------- --------- OTHER ASSETS: Investments in affiliates .......................... 14,654 14,970 Goodwill, less accumulated amortization of $5,333 in 1997 and $5,505 in 1996 ....................... 43,633 47,261 Miscellaneous ...................................... 20,098 21,345 --------- --------- 78,385 83,576 --------- --------- TOTAL ASSETS ................................. $ 568,886 $ 576,136 ========= ========= See accompanying notes to consolidated financial statements. Page 5 APTARGROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (UNAUDITED) March 31, December 31, 1997 1996 ---- ---- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable ...................................... $ 12,291 $ 4,145 Current maturities of long-term obligations ........ 8,391 9,540 Accounts payable and accrued liabilities ........... 102,764 102,574 --------- --------- 123,446 116,259 --------- --------- LONG-TERM OBLIGATIONS ................................ 73,904 76,569 --------- --------- DEFERRED LIABILITIES AND OTHER: Deferred income taxes .............................. 22,326 22,884 Retirement and deferred compensation plans ......... 12,424 12,952 Minority interests ................................. 4,402 4,381 Deferred and other non-current liabilities ......... 7,025 7,392 --------- --------- 46,177 47,609 --------- --------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value ....................... 180 179 Capital in excess of par value ..................... 103,731 103,572 Retained earnings .................................. 243,542 233,385 Cumulative foreign currency translation adjustment . (22,094) (1,437) --------- --------- 325,359 335,699 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $ 568,886 $ 576,136 ========= ========= See accompanying notes to consolidated financial statements. Page 6 APTARGROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands, brackets denote cash outflows) (UNAUDITED) Three Months Ended March 31, ---------------------------- 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ......................................... $ 11,413 $ 10,673 Adjustments to reconcile net income to net cash provided by operations: Depreciation ..................................... 11,839 10,792 Amortization ..................................... 680 697 Provision for bad debts .......................... 125 93 Minority interests ............................... 80 55 Deferred income taxes ............................ (62) 2,203 Retirement and deferred compensation plans ....... 952 686 Equity in income of affiliates in excess of cash distributions received .......................... (182) (350) Changes in balance sheet items, excluding effects from foreign currency adjustments: Accounts receivable ............................ (14,689) (7,282) Inventories .................................... (4,417) (2,310) Prepaid and other current assets ............... (1,054) (3,295) Accounts payable and accrued liabilities ....... 6,783 2,286 Other changes, net ............................. (510) (1,096) -------- -------- NET CASH PROVIDED BY OPERATIONS ...................... 10,958 13,152 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ............................... (15,139) (10,832) Disposition of property and equipment .............. 164 85 (Issuance)/collection of notes receivable, net ..... (68) 562 Investments in affiliates .......................... -- (12) -------- -------- NET CASH USED BY INVESTING ACTIVITIES ................ (15,043) (10,197) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Change in notes payable ............................ 10,436 (1,722) Proceeds from long-term obligations ................ 42 1,635 Repayments of long-term obligations ................ (1,073) (1,497) Dividends paid ..................................... (1,257) (1,254) Proceeds from stock options exercised .............. 159 229 -------- -------- NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES ..... 8,307 (2,609) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH .............. (1,336) (269) -------- -------- NET INCREASE IN CASH AND EQUIVALENTS ................ 2,886 77 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD .......... 16,386 17,332 -------- -------- CASH AND EQUIVALENTS AT END OF PERIOD ................ $ 19,272 $ 17,409 ======== ======== See accompanying notes to consolidated financial statements. Page 7 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 include 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 thereto 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, 1996. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a fiscal year. NOTE 2 - INVENTORIES At March 31, 1997 and December 31, 1996, inventories, by component, consisted of: March 31, December 31, 1997 1996 -------- ----------- Raw materials ....................... $ 24,444 $ 25,150 Work in progress .................... 22,763 23,533 Finished goods ...................... 30,519 29,283 -------- -------- Total ............................. 77,726 77,966 Less LIFO reserve ................... (2,111) (2,036) -------- -------- Total ............................. $ 75,615 $ 75,930 ======== ======== Page 8 NOTE 3 - SUBSEQUENT EVENT After the end of the first quarter of 1997, the Company received a favorable judgment as plaintiff in a patent infringement lawsuit relating to an aerosol valve component. The amount of the award is $7.8 million plus interest in an amount to be determined. The decision could be subject to appeal and the Company cannot predict the ultimate outcome or timing of such appeal. This award is not included in the first quarter results. 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, 1997 totaled $158.3 million, an increase of 3% when compared to the three months ended March 31, 1996. The translation of AptarGroup's foreign sales was negatively affected by the stronger U.S. dollar relative to the same three month period in 1996. If the dollar exchange rate had been constant, sales for the three months ended March 31, 1997 would have increased approximately 10%. Sales increased to each of the Company's primary markets - fragrance/cosmetics, personal care and pharmaceutical. The increase in sales was primarily attributed to volume increases. The Company continues to experience price competition in all of its markets. Sales to customers by European operations represented approximately 58% of net sales for the quarter ended March 31, 1997, compared to 59% for the same period a year ago. Sales to customers by U.S. operations represented 39% of net sales for the quarter ended March 31, 1997 compared to 38% in the prior year. Cost of sales as a percent of net sales decreased to 63.7% in the first quarter compared to 64.5% in the same period a year ago. Generally, the decrease is attributed to the mix of products sold, cost savings and a net gain from changes in exchange rates between the comparable quarters on inter-country transactions. Selling, research & development, and administrative expenses (SG&A) were $25.6 million in the first quarter of 1997 compared to $25.0 million in the prior year quarter. As a percent of total net sales, SG&A decreased to 16.1% from 16.4% a year ago. Operating income increased to $19.4 million in the first quarter of 1997 compared to $17.7 million a year ago. As a percentage of sales, operating income increased to 12.2% in 1997 from 11.6% in 1996. European operations represented 72% of operating income in the first quarter of 1997, compared to 70% for the same period a year ago. U.S. operations represented 39% of operating income in the first quarter of 1997, compared to 38% in the first quarter of 1996. The difference between Europe and U.S. operations to total operating income is due to operating income from other foreign operations and corporate expenses. Page 9 European operating income for the quarter increased due to increased sales of pumps to the fragrance/cosmetics market, increased sales of pumps and metered dose aerosol valves to the pharmaceutical market and a net gain from differences in exchange rates between the periods on inter-country transactions. The increase in U.S. operating income is due primarily to increased sales of closures and pumps to the personal care market. The effective tax rate for the three months ended March 31, 1997 was 38.3% compared to 37.8% for the same period a year ago. The increased effective rate is due to a change in the mix of countries where income was earned. Net income for the first quarter increased 7% to $11.4 million compared to $10.7 million in the first quarter of 1997. The increase in net income is due primarily to higher sales volume. The adverse effect of the stronger dollar on the translation of foreign denominated results was offset by a net gain from differences in exchange rates between the comparable periods on various inter-country transactions. 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. In general, since the majority of the Company's operations are based in Europe, primarily France, Germany and Italy, a strengthening U.S. dollar relative to the major European currencies has a dilutive translation effect on the Company's financial condition and results of operations. Conversely, a weakening U.S. dollar would have an additive effect. Additionally, in some cases, the Company sells products denominated in a currency different from the currency in which the respective costs are incurred. Changes in exchange rates on such inter-country sales impacts the Company's results of operations. 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 1997 was $11.0 million compared to $13.2 million in the same period a year ago. The decrease is primarily attributed to changes in working capital, principally an increase in accounts receivable as compared to the same period a year ago. Total net working capital at March 31, 1997 was $123.3 million compared to $121.0 million at December 31, 1996. Page 10 Net cash used by investing activities increased to $15.0 million from $10.2 million a year ago. Management anticipates that capital expenditures for all of 1997 will total between $65 and $70 million. Net cash provided by financing activities was $8.3 million in 1997 compared to net cash used by financing activities of $2.6 million in 1996. The change is due primarily to an increase in notes payable. The ratio of interest-bearing debt to total capitalization was 23% at March 31, 1997 compared to 21% at December 31, 1996. 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 (LIBOR) plus an amount based on the financial condition of the Company. At March 31, 1997, 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, 1997 and December 31, 1996. On April 24, 1997, the Board of Directors declared a quarterly dividend of $.07 per share payable on May 28, 1997 to shareholders of record as of May 7, 1997. ADOPTION OF NEW ACCOUNTING STANDARDS Effective for periods ending after December 15, 1997, the Company is required to adopt SFAS 128 (Statement of Financial Accounting Standards No. 128, "Earnings Per Share"). SFAS 128 requires companies to calculate basic and diluted earnings per share based upon standards designed to provide consistency and compatibility with calculations of other countries and with that of the International Accounting Standards Committee. The Company does not expect earnings per share as reported to be materially different than basic or diluted earnings per share to be reported upon adoption of the new accounting standard. Page 11 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 is included with this report. (b) No reports on Form 8-K were filed for the quarter ended March 31, 1997. Page 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AptarGroup, Inc (Registrant) By /s/ 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 7, 1997 EX-27 2 FDS --
5 0000896622 AptarGroup, Inc. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 19,272 0 137,104 (3,479) 75,615 246,736 508,225 (264,460) 568,886 123,446 73,904 0 0 180 103,731 568,886 158,290 158,290 100,851 138,922 38,071 0 (1,464) 18,483 7,070 11,413 0 0 0 11,413 .64 .64
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