-----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, RiktUbxkAP7XqF7dwaz+/IRYqgsvvj55ce4iNuqFQWsp1aCS1bcID5t0XhlVP4VK UXAflT+feM5PupQFiK/yEQ== 0000950131-01-001583.txt : 20010323 0000950131-01-001583.hdr.sgml : 20010323 ACCESSION NUMBER: 0000950131-01-001583 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010322 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-K405 SEC ACT: SEC FILE NUMBER: 001-11846 FILM NUMBER: 1576480 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-K405 1 0001.txt FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 EX-4.5 2 0002.txt FIRST AMENDMENT AGREEMENT DATED DEC. 14, 2000 Exhibit 4.5 FIRST AMENDMENT AGREEMENT ------------------------- THIS FIRST AMENDMENT AGREEMENT (this "Amendment"), dated as of December 14, 2000, is among AptarGroup, Inc. (the "Borrower"), the financial institutions listed on the signature pages hereto as Lenders (the "Lenders"), Deutsche Bank AG New York Branch and/or Cayman Islands Branch (the "Accession Lender") and Bank of America, National Association (f/k/a Bank of America National Trust and Savings Association) as Agent for the Lenders; W I T N E S E T H: - - - - - - - - - WHEREAS, the Borrower, the Lenders and the Agent are parties to that certain Multi-Currency Credit Agreement dated as of June 30, 1999 (the "Credit Agreement"); WHEREAS, the parties hereto wish to amend the Credit Agreement as hereinafter set forth; WHEREAS, the Accession Lender wishes to become a Lender under the Credit Agreement; NOW, THEREFORE, the parties hereto, in consideration of the premises and the mutual agreements herein contained, hereby agree as follows: Section 1. Credit Agreement Definitions Capitalized terms used herein that ---------------------------- are defined in the Credit Agreement shall have the same meaning when used herein unless otherwise defined herein. Section 2. Amendments To Credit Agreement. Effective on (and subject to ------------------------------ the occurrence of) the First Amendment Effective Date (as defined below), the Credit Agreement shall be amended as follows: 2.1 Events of Default. Section 7.1(e) of the Credit Agreement is hereby ----------------- amended to state in its entirety as follows: "(e) (x) default by the Borrower or any Subsidiary occurs in the payment when due of Indebtedness in an aggregate principal amount of $5,000,000 or (y) a default by the Borrower or any Subsidiary or other circumstance occurs under any Contractual Obligation under which any Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount of $5,000,000 is issued or created and such default or other circumstance continues for a period of time sufficient to permit the holder or beneficiary of such Indebtedness, or a trustee therefor, to cause the acceleration of the maturity of any such Indebtedness or any mandatory unscheduled prepayment, purchase, or other early funding thereof;" 2.2 Schedule 2.1. Schedule 2.1 to the Credit Agreement is deleted in its ------------ entirety and Schedule 2.1 to this Amendment is substituted therefore. Section 3. Addition of Lender. ------------------ (a) By execution hereof, Accession Lender, as of the First Amendment Effective Date, shall become a Lender under the Credit Agreement, as amended through the First Amendment Effective Date, with a Commitment as set forth on Schedule 2.1 attached to this Amendment and from and after the First Amendment Effective Date shall have all the rights and obligations of a Lender thereunder. (b) Accession Lender hereby confirms it has received a copy of the Credit Agreement and Exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the effectiveness thereof. Accession Lender acknowledges and agrees that it (i) has made and will continue to make such inquiries and has taken and will take such care on its own behalf as would have been the case had it been a Lender under the Credit Agreement as of the Effective Date and (ii) has made and will continue to make, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Credit Agreement. Accession Lender further acknowledges and agrees that neither the Agent nor any Lender makes any representations or warranties about the creditworthiness of the Borrower or any other party to the Credit Agreement or any other Loan Document or with respect to the legality, validity, sufficiency or enforceability of the Credit Agreement or any other Loan Document or the value of any security therefor. Section 4. Representation And Warranties. In order to induce the Lenders, ----------------------------- the Accession Lender and the Agent to execute and deliver this Amendment, the Borrower hereby represents and warrants to each Lender, the Accession Lender and the Agent that: (a) No Event of Default or Default has occurred and is continuing or will result from the execution and delivery or effectiveness of this Amendment; and (b) the warranties of the Borrowers contained in Section 5 of the Credit Agreement are true and correct as of the date hereof, with the same effect as though made on such date; provided that with respect to Section 5.10 the reference to December 31, 1998 therein shall instead be a reference to December 31, 1999 and the reference to March 31, 1999 therein shall instead be a reference to September 30, 2000. -2- Section 5. Conditions to Effectiveness. --------------------------- (a) The Amendment set forth in Section 2 hereof shall become effective on the date (the "First Amendment Effective Date") when the Agent shall have received all of the following, each in form and substance satisfactory to the Agent: (i) eight counterparts of this Amendment executed by the Borrower, the Agent and the Required Lenders (for purposes of such calculation, the Accession Lender shall not be included as a Lender); (ii) certified copies of resolutions of the Board of Directors of the Borrower authorizing the execution and delivery by the Borrower of its obligations under the Credit Agreement as amended by this Amendment; (iii) an opinion of Sidley & Austin in substantially the form delivered in connection with the initial closing of the Credit Agreement; (iv) such other documents as the Agent or any Lender may reasonably request. (b) The provisions of Section 3 of this Amendment shall become effective as of the First Amendment Effective Date upon receipt by the Agent of eight counterparts of this Amendment executed by the Accession Lender and satisfaction of the conditions set forth in Section 5(a). Section 6. Repayments and Reborrowings. Upon satisfaction of the --------------------------- conditions set forth in Section 5(b), the outstanding Loans shall be reallocated among the Lenders (including the Accession Lender) to reflect the Commitments after giving effect to this Amendment on such date as the Agent shall determine with the intent being to minimize amounts due under Section 2.11. Section 7. Reaffirmation of Loan Documents. From and after the date ------------------------------- hereof, each reference that appears in any other Loan Document to the Credit Agreement shall be deemed to be a reference to the Credit Agreement as amended hereby. As amended hereby, the Credit Agreement is hereby reaffirmed, approved and confirmed in every respect and shall remain in full force and effect. Section 8. Counterparts; Effectiveness. This Amendment may be executed by --------------------------- the parties hereto in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. -3- Section 9. Governing Law; Entire Agreement. This Amendment shall be ------------------------------- deemed a contract made under and governed by the laws of the State of Illinois, without giving effect to conflicts of laws principles. This agreement constitutes the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes any prior agreements with respect thereto. Section 10. Loan Document. This Amendment is a Loan Document. ------------- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. APTARGROUP, INC. By: /s/ Stephen Hagge Title: Executive Vice President, Chief Financial Officer and Secretary -4- BANK OF AMERICA, NATIONAL ASSOCIATION (f/k/a Bank of America National Trust and Savings Association), as Agent and Lender By: /s/ M.H. Claggett Title: Principal -5- SOCIETE GENERALE - NEW YORK BRANCH, as Lender By: /s/ Jerry Parisi Title: Managing Director -6- ABN AMRO BANK N.V., as Lender By:________________________________ Title:_____________________________ By:________________________________ Title:_____________________________ -7- FLEET NATIONAL BANK, as Lender By: /s/ W. Lincoln Schoff Jr. Title: Senior Vice President -8- DEUTSCHE BANK AG NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH, as Accession Lender By: /s/ Robert W. Casey, Jr. Title: Managing Director By: /s/ K. Kunz Title: Vice President -9- SCHEDULE 2.1 COMMITMENTS Bank Commitment Percentage ---- ---------- ---------- BANK OF AMERICA, N.A. $ 28,700,000 28.7% ABN AMRO BANK N.V. $ 10,000,000 10.0% FLEET NATIONAL BANK $ 28,000,000 28.0% SOCIETE GENERALE - NEW YORK BRANCH $ 18,300,000 18.3% DEUTSCHE BANK-NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH $ 15,000,000 15.0% TOTAL $100,000,000 100.00% EX-13 3 0003.txt 2000 ANNUAL REPORT consolidated balance sheets (Amounts in thousands, except per share)
December 31, 2000 1999 - ------------------------------------------------------------------------------------------ ASSETS CURRENT ASSETS: Cash and equivalents $ 55,559 $ 32,416 Accounts and notes receivable, less allowance for doubtful accounts of $6,927 in 2000 and $6,865 in 1999 210,794 188,507 Inventories 121,522 109,151 Prepayments and other 19,674 21,160 -------------------- 407,549 351,234 -------------------- PROPERTY, PLANT AND EQUIPMENT: Buildings and improvements 108,905 96,427 Machinery and equipment 665,991 615,665 -------------------- 774,896 712,092 Less: Accumulated depreciation (402,412) (357,733) -------------------- 372,484 354,359 Land 4,949 4,199 -------------------- 377,433 358,558 -------------------- OTHER ASSETS: Investments in affiliates 11,127 3,969 Goodwill, less accumulated amortization of $13,093 in 2000 and $9,943 in 1999 127,754 127,214 Miscellaneous 28,376 22,323 -------------------- 167,257 153,506 -------------------- TOTAL ASSETS $952,239 $ 863,298 ====================
See accompanying notes to consolidated financial statements. 26 AptarGroup consolidated balance sheets (Amounts in thousands, except per share)
December 31, 2000 1999 - ---------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 29,248 $ 25,499 Current maturities of long-term obligations 10,326 9,648 Accounts payable and accrued liabilities 163,528 124,758 -------------------- 203,102 159,905 -------------------- LONG-TERM OBLIGATIONS 252,752 235,649 -------------------- DEFERRED LIABILITIES AND OTHER: Deferred income taxes 35,873 25,529 Retirement and deferred compensation plans 12,597 14,658 Minority interests 5,050 4,118 Deferred and other non-current liabilities 2,325 3,170 -------------------- 55,845 47,475 -------------------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 1 million shares authorized, none outstanding - - Common stock, $.01 par value, 99 million shares authorized, 36.6 and 36.5 million outstanding in 2000 and 1999, respectively 366 365 Capital in excess of par value 115,034 112,921 Retained earnings 439,258 381,762 Accumulated other comprehensive income (89,163) (68,567) Less: Treasury stock at cost, 1.0 and 0.2 million shares in 2000 and 1999, respectively (24,955) (6,212) -------------------- 440,540 420,269 -------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $952,239 $863,298 ====================
See accompanying notes to consolidated financial statements. AptarGroup 27 consolidated statements of income (Amounts in thousands, except per share)
Years Ended December 31, 2000 1999 1998 - ------------------------------------------------------------------------------------------------ Net Sales $ 883,481 $834,317 $ 713,506 -------------------------------- Operating Expenses: Cost of sales 553,642 519,704 444,615 Selling, research & development, and administrative 145,000 137,507 119,287 Depreciation and amortization 70,949 68,670 54,446 -------------------------------- 769,591 725,881 618,348 -------------------------------- Operating Income 113,890 108,436 95,158 -------------------------------- Other Income (Expense): Interest expense (19,002) (14,246) (6,451) Interest income 1,764 1,170 1,146 Equity in results of affliates 506 (918) 219 Minority interests (756) (160) (389) Miscellaneous, net 1,520 796 (375) Lawsuit settlements - - 9,881 In-process research and development write-off - (3,300) - -------------------------------- (15,968) (16,658) 4,031 -------------------------------- Income Before Income Taxes 97,922 91,778 99,189 Provision For Income Taxes 33,256 33,066 38,368 -------------------------------- Net Income $ 64,666 $ 58,712 $ 60,821 ================================ Net Income Per Common Share Basic $ 1.80 $ 1.62 $ 1.69 ================================ Diluted $ 1.78 $ 1.59 $ 1.65 ================================
See accompanying notes to consolidated financial statements. 28 AptarGroup consolidated statements of cash flows (Amounts in thousands, brackets denote cash outflows)
Years Ended December 31, 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net income $ 64,666 $ 58,712 $ 60,821 Adjustments to reconcile net income to net cash provided by operations: Depreciation 65,987 64,405 51,808 Amortization 4,962 4,265 2,638 Provision for bad debts 1,849 679 1,912 Minority interests 756 160 389 Deferred income taxes 3,870 5,615 5,031 Retirement and deferred compensation plans (828) 1,030 2,607 Equity in results of affliates in excess of cash distributions received (389) 918 (219) In-process research & development write-off -- 3,300 -- Changes in balance sheet items, excluding effects from acquisitions and foreign currency adjustments: Accounts and notes receivable (34,388) (8,422) (8,637) Inventories (19,625) (6,684) (8,727) Prepaid and other current assets (535) (4,841) 1,465 Accounts payable and accrued liabilities 27,920 (3,291) (7,473) Income taxes payable 18,517 (7,551) (11,814) Other changes, net (4,964) 10,137 (4,822) --------------------------------------------- Net cash provided by operations 127,798 118,432 84,979 --------------------------------------------- Cash Flows from Investing Activities: Capital expenditures (93,933) (88,594) (79,811) Disposition of property and equipment 2,906 2,154 1,911 Acquisition of businesses (2,271) (144,189) (20,027) Investments in af?liates (3,788) (2,000) (1,300) (Issuance) collection of notes receivable, net (657) (59) 330 --------------------------------------------- Net cash used by investing activities (97,743) (232,688) (98,897) --------------------------------------------- Cash Flows from Financing Activities: Proceeds from notes payable 29,828 - 28,698 Repayments of notes payable - (4,089) - Proceeds from long-term obligations 3,116 156,639 7,621 Repayments of long-term obligations (14,876) (18,965) (11,374) Dividends paid (7,170) (6,532) (5,763) Proceeds from stock options exercised 2,114 3,228 1,196 Purchase of treasury stock (18,743) (6,212) - --------------------------------------------- Net cash (used) provided by financing activities (5,731) 124,069 20,378 --------------------------------------------- Effect of Exchange Rate Changes on Cash (1,181) (2,556) 982 --------------------------------------------- Net Increase in Cash and Equivalents 23,143 7,257 7,442 Cash and Equivalents at Beginning of Period 32,416 25,159 17,717 --------------------------------------------- Cash and Equivalents at End of Period $ 55,559 $ 32,416 $ 25,159 ============================================= Supplemental Cash Flow Disclosure: Interest paid $ 19,616 $ 12,178 $ 6,347 Income taxes paid $ 25,275 $ 35,445 $ 36,400 Supplemental Non-cash Investing Activities: Net assets contributed to joint venture $ 5,000 - -
See accompanying notes to consolidated financial statements. AptarGroup 29 consolidated statements of changes in equity Years Ended December 31, 2000, 1999 and 1998 (Amounts in thousands, except per share)
Accumulated Other Common Capital in Comprehensive Total Retained Comprehensive Stock Treasury Excess of Income Equity Earnings Income Par Value Stock Par Value - ----------------------------------------------------------------------------------------------------------------------------------- BALANCE - DECEMBER 31, 1997 $ 342,055 $ 274,524 $ (37,348) $ 180 $ 104,699 Net income $ 60,821 60,821 60,821 Foreign currency translation adjustments 17,199 17,199 17,199 ----------- Comprehensive income $ 78,020 =========== Stock awards 1,196 1,196 Adjustment for stock split 181 (181) Cash dividends declared on common stock (5,763) (5,763) ----------------------------------------------------------------------------- BALANCE - DECEMBER 31, 1998 415,508 329,582 (20,149) 361 105,714 Net income $ 58,712 58,712 58,712 Foreign currency translation adjustments (48,418) (48,418) (48,418) ----------- Comprehensive income $ 10,294 =========== Stock awards 3,228 2 3,226 Stock issues for acquisitions 3,983 2 3,981 Cash dividends declared on common stock (6,532) (6,532) Treasury stock purchased (6,212) (6,212) ----------------------------------------------------------------------------- BALANCE - DECEMBER 31, 1999 420,269 381,762 (68,567) 365 (6,212) 112,921 Net income $ 64,666 64,666 64,666 Foreign currency translation adjustments (20,596) (20,596) (20,596) ----------- Comprehensive income $ 44,070 =========== Stock awards 2,114 1 2,113 Cash dividends declared on common stock (7,170) (7,170) Treasury stock purchased (18,743) (18,743) ----------------------------------------------------------------------------- BALANCE - DECEMBER 31, 2000 $ 440,540 $ 439,258 $ (89,163) $ 366 $ (24,955) $ 115,034 =============================================================================
See accompanying notes to consolidated financial statements. 30 AptarGroup "This Page Intentionally Left Blank" AptarGroup 31 notes to consolidated financial statements (Amounts in thousands, except per share, or otherwise indicated) - 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business AptarGroup, Inc. is an international company that designs, manufactures and sells consumer product dispensing systems. The Company focuses on providing value-added components to a variety of global consumer product marketers in the personal care, fragrance/cosmetic, pharmaceutical, household and food/beverage industries. The Company has manufacturing facilities located throughout the world including facilities in North America, Europe, Asia and South America. Basis of Presentation The accompanying consolidated financial statements include the accounts of AptarGroup, Inc. and its subsidiaries. The terms "AptarGroup" or "Company" as used herein refer to AptarGroup, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain previously reported amounts have been reclassified to conform to the current period presentation. Accounting Estimates The financial statements are prepared in conformity with generally accepted accounting principles ("GAAP"). This process requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 32 AptarGroup Cash Management The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Inventories Inventories are stated at cost, which is lower than market. Costs included in inventories are raw materials, direct labor and manufacturing overhead. The costs of certain domestic and foreign inventories are determined by using the last-in, first-out ("LIFO") method, while the remaining inventories are valued using the first-in, first-out (FIFO) method. Investments in Affiliated Companies The Company accounts for its investments in 20% to 50% owned affiliated companies, which it does not control, using the equity method. These investments are in companies that manufacture and distribute products similar to the Company's products or supply components to the Company. Dividends of $117 were received from affiliated companies in 2000, and no dividends were received from affiliated companies in 1999, or 1998. Property and Depreciation Properties are stated at cost. Depreciation is determined on a straight-line basis over the estimated useful lives for financial reporting purposes and accelerated methods for income tax reporting. Generally, the estimated useful lives are 25 to 40 years for buildings and improvements and 3 to 10 years for computers, computer software, machinery and equipment. Intangible Assets Management believes goodwill acquired in purchase transactions has continuing value. It is the Company's policy to amortize such costs over lives ranging from 10 to 40 years using the straight-line method. Other intangibles, consisting of patents, non-compete agreements and license agreements, acquired in purchase transactions or developed, are capitalized and amortized over their useful lives. Management assesses the excess purchase price over the fair value of the net assets acquired ("Goodwill") and other intangibles using projected undiscounted cash flows to determine if impairment has occurred when underlying conditions warrant. It is management's opinion that no such impairment exists. Derivatives Gains and losses on hedges of existing assets or liabilities are included in the carrying amount of those assets or liabilities and are ultimately recognized in income as part of those carrying amounts. Gains and losses related to qualifying hedges of firm commitments also are deferred and are recognized in income or as adjustments of carrying amounts when the hedged transaction occurs. Research & Development Expenses Research and development costs are expensed as incurred. These costs amounted to $26,887, $25,611, and $23,567 in 2000, 1999 and 1998, respectively. The 1999 amount excludes the $3,300 write-off of purchased in-process research and development ("IPR&D") costs described in Note 3. AptarGroup 33 Income Taxes A provision has not been made for U.S. or additional foreign taxes on $298,379 of undistributed earnings of foreign subsidiaries. These earnings will continue to be reinvested and could become subject to additional tax if they were remitted as dividends, or lent to a U.S. affiliate, or if the Company should sell its stock in the subsidiaries. It is not practicable to estimate the amount of additional tax that might be payable on these undistributed foreign earnings. Translation of Foreign Currencies The functional currencies of all the Company's foreign operations are the local currencies. Assets and liabilities are translated into U.S. dollars at the rates of exchange on the balance sheet date. Sales and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are accumulated in a separate section of stockholders' equity. Realized and unrealized foreign currency gains and losses are reflected in income, as a component of miscellaneous income and expense, and are not significant to the consolidated results of operations for the years presented. Stock-Based Compensation The Company follows APB Opinion No. 25 "Accounting for Stock Issued to Employees" and the related Interpretations in accounting for its stock option plans. Since the Company's stock awards have met certain criteria of APB Opinion No. 25, no compensation cost has been recognized. The required disclosure for SFAS 123 "Accounting for Stock-Based Compensation" can be found in Note 14. Revenue Recognition The Company's policy is to recognize revenue from product sales when earned, as defined by GAAP, and in accordance with SEC Staff Accounting Bulletin No. 101. Revenue for product sales is recognized when the title and the risk of loss have transferred to the customer and the Company has no remaining obligations regarding the transaction. - 2 - ACQUISITIONS In the first quarter of 2000, the Company acquired the remaining 50 percent of a joint venture in the United States for approximately $2.3 million in cash, assumed the remaining $3.75 million in debt and entered into a license agreement with the former joint venture partner. The acquired business produces spray caps and specialty actuators for aerosol valves and pumps for the North American market. The acquisition of the remaining 50 percent was accounted for as a purchase business combination. Goodwill in this acquisition was approximately $2 million and is being amortized on a straight-line basis over 20 years. During the first quarter of 1999, the Company acquired Emson Research, Inc. and related companies ("Emsar", formerly referred to as Emson) for approximately $123 million in cash and 148,371 shares of the Company's common stock (valued at approximately $4 million). Approximately $23 million of debt was assumed in the transaction. Emsar is a leading supplier of perfume pumps in the North American market and also maintains a significant position in the North American personal care and food pump markets. The Goodwill in this acquisition was approximately $86 million and is being amortized on a straight-line basis over 40 years. 34 AptarGroup During the third quarter of 1999, the Company acquired controlling interests in two companies and acquired a line of business from a third company for approximately $21 million in cash and approximately $4 million in assumed debt. The Goodwill in these acquisitions was approximately $4 million and is being amortized on a straight-line basis over lives ranging from 10 to 40 years. Two of the three acquisitions involved companies that manufacture and distribute products similar to the Company's products. The third acquisition, involving a company called Microflow Engineering S.A. ("Microflow"), is a research and development company whose primary project is to develop an electronic dispensing system primarily for the pharmaceutical market. Based upon an independent appraisal, a one-time charge against pretax and net income of $3.3 million for purchased IPR&D costs was recorded in conjunction with the purchase of 80% of this company. See Note 3 below for further disclosure on purchased IPR&D. 2000 1999 - ------------------------------------------------------------------ Net Sales $883,481 $ 845,479 Net Income $ 64,459 $ 59,999 Net Earnings per common share: Basic $ 1.80 $ 1.65 Diluted $ 1.77 $ 1.62 Weighted average shares outstanding: Basic 35,863 36,373 Diluted 36,369 36,933 These unaudited pro forma results have been prepared for comparative purposes only and may not be indicative of the results of operations which would have actually resulted had the combinations been in effect on January 1, 1999, or of future periods. - 3 - PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT In connection with the acquisition of Microflow, the Company allocated $3.3 million of the purchase price to acquired IPR&D which was expensed as of the acquisition date. Microflow is a development company engaged primarily in the development of an electronic delivery device. This development effort is expected to be used by the Company primarily in drug delivery systems and may have applications in other markets as well. Microflow's electronic delivery device is not commercially viable at this time and has no known alternative future uses apart from use in a dispensing system. The Company acquired Microflow to expand its mechanical pump product line to include an electronic dispensing system. The Company used an independent professional appraisal consultant to assess and allocate value to the IPR&D. The valuation was determined using the income approach and the Company believes that the assumptions used in the forecast are reasonable. No assurance can be given, however that the underlying assumptions used to estimate expected sales, development costs or profitability, or the events associated with the project will transpire as estimated. For these reasons, actual results may vary from the projected results. AptarGroup 35 Estimated net cash inflows from the acquired in-process technology related to the electronic delivery device were originally projected to commence in the year 2002, peak in 2006 and steadily decline at a rate of 20% through 2011. Subsequent to the acquisition, the Company has broadened the project to include potential applications in other markets in addition to the originally intended drug delivery system. This has delayed the original cash inflow projections from 2002 to 2004. However, offsetting this delay is the expectation of additional sales volumes coming from the expanded markets to which the Company intends to sell. Overall, the Company does not believe that these changes in estimates will have a material impact on the expected return on its investment. The operating income as a percentage of sales assumption that was used is consistent with the Company's current margins of similar products. The in-process technology was essentially completed in 2000, however, there will continue to be additional development costs incurred in 2001 to adapt the technology for specific applications. These additional costs are not expected to be material. An adjustment to the appraised value of the acquired IPR&D was made to reflect the percentage of completion, which was estimated at 65%. The cash flows related to the project were discounted using a 25% discount rate. Management expects to continue supporting the development of the electronic delivery device and believes the Company has a reasonable chance of successfully completing the project. The failure of the project would not, however, materially impact the Company's financial position or results of operations. - 4 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Company has limited involvement with derivative financial instruments and does not trade them. In accordance with the Company's policy, derivatives may be used to manage certain interest rate and foreign exchange exposures. The Company has a cross-currency interest rate swap to hedge an intercompany lending transaction. This swap requires the Company to pay principal of 26.5 million French Francs plus interest at 8% and receive principal of $5.4 million plus interest at 7.08% over ten years. If the Company canceled the swap at December 31, 2000, the Company would have received approximately $1.4 million based on the fair value of the swap on that date. At December 31, 2000, the Company has fixed to variable interest rate swap agreements with a notional principal value of $50 million which require the Company to pay an average variable interest rate of 6.61% and receive a fixed rate of 6.62%. The variable rates are adjusted semiannually based on London Interbank Offered Rates ("LIBOR"). Variations in market interest rates would produce changes in the Company's net income. If interest rates increase by 10%, net income related to the interest rate swap agreements would decrease by approximately $0.2 million assuming a tax rate of 34%. If the Company canceled the swaps at December 31, 2000, the Company would have received approximately $1.9 million based on the fair value of the swaps on that date. 36 AptarGroup The Company principally uses forward exchange contracts, with terms of less than one year, to hedge certain firm purchase and sale commitments and intercompany cash transactions denominated in foreign currencies. The notional value of the Company's forward exchange contracts was $23.4 million and $31.0 million at December 31, 2000 and 1999, respectively. Deferred gains and losses are recognized in earnings as part of the underlying transaction when the transaction is settled. Such gains and losses were not significant to the Company's financial results. If the Company cancelled the forward exchange contracts at December 31, 2000, the Company would have received approximately $1.1 million based on the fair value of the contracts on that date. The Company is exposed to credit-related losses in the event of nonperformance by counter parties to financial instruments, but it does not expect any counter parties to fail to meet their obligations. The credit exposure of forward foreign exchange contracts is represented by the difference between the forward contract rate and the spot rate at the time of settlement. - 5 - INVENTORIES At December 31, 2000 and 1999, approximately 25% of the total inventories are accounted for by the LIFO method. Inventories, by component consisted of: 2000 1999 - --------------------------------------------------------------------------- Raw materials $ 55,429 $ 42,648 Work-in-process 20,975 28,370 Finished goods 46,805 38,923 -------------------- Total $123,209 $ 109,941 Less LIFO reserve (1,687) (790) -------------------- Total $121,522 $ 109,151 ==================== - 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES At December 31, 2000 and 1999, accounts payable and accrued liabilities consisted of the following: 2000 1999 - ------------------------------------------------------------------------------ Accounts payable, principally trade $ 84,085 $ 65,915 Accrued employee compensation costs 32,841 32,089 Other accrued liabilities 46,602 26,754 -------------------- Total $163,528 $ 124,758 ==================== AptarGroup 37 -7- INCOME TAXES Income before income taxes consists of:
2000 1999 1998 - --------------------------------------------------------------------------------- Domestic $ 11,017 $ 27,350 $ 34,185 Foreign 86,905 64,428 65,004 -------------------------------- Total $ 97,922 $ 91,778 $ 99,189 ================================
The provision for income taxes is comprised of:
2000 1999 1998 - --------------------------------------------------------------------------------- CURRENT: Federal $ 3,449 $ 8,462 $ 11,898 State/local 52 997 1,625 Foreign 25,885 17,992 19,814 -------------------------------- 29,386 27,451 33,337 -------------------------------- DEFERRED: Federal/State 969 934 254 Foreign 2,901 4,681 4,777 -------------------------------- 3,870 5,615 5,031 -------------------------------- Total $ 33,256 $ 33,066 $ 38,368 ================================
The difference between the actual income tax provision and the tax provision computed by applying the statutory federal income tax rate of 35.0% in 2000, 1999 and 1998 to income before income taxes is as follows:
2000 1999 1998 - --------------------------------------------------------------------------------- Income tax at statutory rate $ 34,273 $ 32,122 $ 34,716 State income taxes, net of federal benefit 34 746 1,105 Deferred tax impact due to foreign rate changes (1,126) - - Rate differential on earnings of foreign operations (506) 348 2,434 Other items, net 581 (150) 113 -------------------------------- Actual income tax provision $ 33,256 $ 33,066 $ 38,368 ================================ Effective income tax rate 34.0% 36.0% 38.7%
38 AptarGroup Significant deferred tax assets and liabilities as of December 31, 2000 and 1999 are comprised of the following temporary differences:
2000 1999 - ---------------------------------------------------------------- DEFERRED TAX ASSETS: Net operating loss carryforwards $ 1,507 $ 1,972 Asset bases differentials 1,757 2,920 Pensions 1,136 2,580 Bad debt reserve 1,746 1,590 Other 8,577 8,963 -------------------- Total deferred tax assets 14,723 18,025 -------------------- DEFERRED TAX LIABILITIES: Depreciation 32,997 26,770 Leases 3,317 3,566 Other 5,768 6,549 -------------------- Total deferred tax liabilities 42,082 36,885 -------------------- Net deferred tax liabilities $ 27,359 $ 18,860 ====================
On December 31, 2000, the Company had foreign tax net operating loss carryforwards of approximately $2,207 which have an indefinite carryforward period and approximately $1,324, which expire beginning in 2003 through 2005. The Company has not provided for taxes on certain tax-deferred income of a foreign operation. The income arose predominately from government grants. Taxes of approximately $2,198 would become payable at the time the income is distributed. -8- DEBT The average annual interest rate on short-term notes payable under unsecured lines of credit was approximately 7.1% and 6.3% for 2000 and 1999, respectively. There are no compensating balance requirements associated with short-term borrowings. In December 2000, the Company amended its multi-year, multi-currency unsecured revolving credit agreement to increase maximum borrowings allowed from $75 million to $100 million. Under this credit agreement, interest on borrowings is payable at a rate equal to LIBOR plus an amount based on the financial condition of the Company. The Company is required to pay a fee for the unused portion of the commitment. Such payments in 2000, 1999 and 1998 were not significant. The agreement expires on June 30, 2004. The amount used under this agreement was $85 million and $70 million at December 31, 2000 and 1999, respectively. 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 $85 million have been recorded as long-term obligations and an additional $15 million of short-term obligations representing the unused and available amount under the new credit agreement have been reclassified as long-term obligations as of December 31, 2000. Short-term obligations of $70 million have been recorded as long-term obligations and an additional $5 million of short-term obligations representing the unused and available amount have been reclassified as long-term obligations as of December 31, 1999 under the prior revolving credit agreement. AptarGroup 39 The revolving credit and the senior unsecured debt agreements contain covenants that include certain financial tests, including minimum interest coverage, net worth and maximum borrowings. At December 31, the Company's long-term obligations consisted of the following:
2000 1999 - ------------------------------------------------------------------------------------------- Borrowing under revolving credit agreement 7.5% and 6.85% at December 31, 2000 and 1999 $ 85,000 $ 70,000 Notes payable 1.2% - 8.0%, due in monthly and annual installments through 2009 17,137 17,024 Senior unsecured debt 7.08%, due in installments through 2005 17,857 21,429 Senior unsecured notes 6.62%, due in equal annual installments through 2011 107,000 107,000 Mortgages payable 2.1% - 6.0%, due in monthly and annual installments through 2008 8,970 10,427 Industrial revenue bond, interest at 79% of prime, (which was 7.4% and 8.5% at December 31, 2000 and 1999), due in quarterly installments through 2001 333 666 Capital lease obligations 11,781 13,751 -------------------- 248,078 240,297 Less current portion (10,326) (9,648) Reclass of short-term obligations 15,000 5,000 -------------------- Total long-term obligations $252,752 $ 235,649 ====================
Substantially all of the mortgages are payable by foreign subsidiaries to foreign banks. Interest rates on such borrowings vary due to differing market conditions in the countries in which such debt has been incurred. Mortgages payable are secured by the properties or assets for which the debt was obtained. Based on the borrowing rates currently available to the Company for long-term obligations with similar terms and average maturities, the fair value of the Company's long-term obligations approximates its book value. Aggregate long-term maturities, excluding capital lease obligations, due annually for the five years beginning in 2001 are $8,793, $7,155, $13,828, $90,581 and $115,940 thereafter. 40 AptarGroup -9- LEASE COMMITMENTS The Company leases certain warehouse, plant, and office facilities as well as certain equipment under noncancelable operating and capital leases expiring at various dates through the year 2019. Most of the operating leases contain renewal options and certain equipment leases include options to purchase during or at the end of the lease term. Amortization expense related to capital leases is included in depreciation expense. Rent expense under operating leases (including taxes, insurance and maintenance when included in the rent) amounted to $12,228, $10,170 and $5,949 in 2000, 1999 and 1998, respectively. Assets recorded under capital leases consist of: 2000 1999 - ----------------------------------------------------------------------- Buildings $ 14,296 $ 15,046 Machinery and equipment 9,007 9,854 -------------------- 23,303 24,900 Accumulated depreciation (11,506) (10,357) -------------------- $ 11,797 $ 14,543 ==================== Future minimum payments, by year and in the aggregate, under the capital leases and noncancelable operating leases with initial or remaining terms of one year or more consisted of the following at December 31, 2000: Capital Operating Leases Leases - ----------------------------------------------------------------------- 2001 $ 2,252 $ 5,541 2002 1,882 4,130 2003 2,225 3,026 2004 1,574 2,530 2005 1,723 2,004 Subsequent to 2005 5,186 2,495 -------------------- Total minimum lease payments 14,842 $ 19,726 ========== Amounts representing interest (3,061) -------- Present value of future minimum lease payments 11,781 Less amount due in one year (1,533) -------- Total $ 10,248 ======== AptarGroup 41 -10- RETIREMENT AND DEFERRED COMPENSATION PLANS The Company has various noncontributory retirement plans covering certain of its domestic and foreign employees. Benefits under the Company's retirement plans are based on participants' years of service and annual compensation as defined by each plan. Annual cash contributions to fund pension costs accrued under the Company's domestic plans are generally equal to the minimum funding amounts required by ERISA while pension commitments under its foreign plans are partially offset by the cash surrender value of insurance contracts purchased by the Company. Changes in the benefit obligation and plan assets of the Company's domestic and foreign plans are as follows:
2000 1999 - --------------------------------------------------------------------------------- CHANGE IN BENEFIT OBLIGATION: Benefit obligation at beginning of year $ 27,476 $ 28,328 Service cost 1,650 1,844 Interest cost 1,759 1,961 Actuarial loss/(gain) 1,262 (1,375) Benefits paid (2,278) (1,891) Foreign currency translation adjustment (581) (1,391) --------------------- Benefit obligation at end of year $ 29,288 $ 27,476 ===================== CHANGE IN PLAN ASSETS: Fair value of plan assets at beginning of year $ 21,280 $ 17,890 Actual return on plan assets 3,061 4,254 Employer contribution 1,208 1,229 Benefits paid (2,278) (1,891) Foreign currency translation adjustment (103) (202) --------------------- Fair value of plan assets at end of year $ 23,168 $ 21,280 ===================== Funded status $ (6,120) $ (6,196) Unrecognized net actuarial gain (2,476) (1,658) Unrecognized prior service cost 514 338 Unamortized net transition asset 72 (94) --------------------- Accrued benefit cost included in the balance sheet $ (8,010) $ (7,610) =====================
2000 1999 1998 - --------------------------------------------------------------------------------- COMPONENTS OF NET PERIODIC BENEFIT COST: Service cost $ 1,650 $ 1,844 $ 2,319 Interest cost 1,759 1,961 1,506 Expected return on plan assets (1,524) (1,503) (1,435) Net amortized and deferred gains and losses (50) 47 (103) -------------------------------- Net periodic benefit cost $ 1,835 $ 2,349 $ 2,287 ================================
42 AptarGroup Plan assets primarily consist of U.S. government obligations, investment grade corporate bonds and common and preferred stocks for the domestic plans and insurance contracts for the foreign plans. The projected benefit obligation for domestic plans was determined using assumed discount rates of 7.0% and 7.3% in 2000 and 1999, respectively. For the foreign plans, the projected benefit obligation was determined using an assumed discount rate of 6.2% and 5.5% in 2000 and 1999, respectively. The assumed rates of increase in compensation were 4.8% for the domestic plans and 3.0% for the foreign plans in 2000 and 1999. The expected long-term rate of return on plan assets was 8.3% for the domestic plans and 7.3% for the foreign plans in 2000 and 1999. The Company has a non-qualified supplemental pension plan which provides for pension amounts that would have been payable from the Company's principal pension plan if it were not for limitations imposed by income tax regulations. The liability for this plan was $520 and $545 at December 31, 2000 and 1999, respectively. This amount is included in the liability for domestic plans shown above. The Company also has unfunded retirement compensation arrangements with certain former employees. The cost of these retirement agreements was provided ratably over the employees' active employment. The Company has no additional postretirement or postemployment benefit plans. -11- CONTINGENCIES The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. Management believes the resolution of these claims and lawsuits will not have a material adverse effect on the Company's financial position or results of operations. -12- LAWSUIT SETTLEMENTS During 1998, the Company recorded approximately $9.9 million in settlements of patent infringement lawsuits. The most significant settlement is attributed to a favorable judgement in a lawsuit relating to an aerosol valve component that was recorded in the fourth quarter of 1998. Diluted earnings per share was positively impacted in 1998 by $.16 per share related to these lawsuit settlements. AptarGroup 43 -13- PREFERRED STOCK PURCHASE RIGHTS The Company has a preferred stock purchase rights plan (the "Rights Plan") and each share of common stock has one preferred share purchase right (a "Right"). Under the terms of the Rights Plan, if a person or group other than certain exempt persons acquires 15% or more of the outstanding common stock, each Right will entitle its holder (other than such person or members of such group) to purchase, at the Right's then current exercise price, a number of shares of the Company's common stock having a market value of twice such price. Persons or groups can lose their exempt status under certain conditions. In addition, under certain circumstances if the Company is acquired in a merger or other business combination transaction, each Right will entitle its holder to purchase, at the Right's then current exercise price, a number of the acquiring company's common shares having a market value of twice such price. Each Right entitles the holder under certain circumstances to buy one two-thousandths of a share of Series A junior participating preferred stock, par value $.01 per share, at an exercise price of $35. Each share of Series A junior participating preferred stock will entitle its holder to 2,000 votes and will have a minimum preferential quarterly dividend payment equal to the greater of $10 per share or 2,000 times the amount paid to holders of common stock. Currently 49,500 shares of Series A junior participating preferred stock have been reserved. The Rights will expire on April 6, 2003 unless previously exercised or redeemed at the option of the Board of Directors for $ .005 per Right. 44 AptarGroup -14- STOCK BASED COMPENSATION At December 31, 2000, the Company has fixed stock-based compensation plans that are discussed below. Had compensation cost for the Comapny's stock awards plans been recorded based on the fair value at the grant dates, consistent with the method of SFAS 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below.
2000 1999 1998 - --------------------------------------------------------------------------------- Net Income As Reported $ 64,666 $ 58,712 $ 60,821 Pro Forma $ 61,315 $ 56,102 $ 58,987 Basic Earnings per Share As Reported $ 1.80 $ 1.62 $ 1.69 Pro Forma $ 1.71 $ 1.54 $ 1.64 Diluted Earnings per Share As Reported $ 1.78 $ 1.59 $ 1.65 Pro Forma $ 1.69 $ 1.52 $ 1.60
The fair value of stock options granted under the Stock Awards Plans was $10.47 and $11.37 per share in 2000 and 1999, respectively. These values were estimated on the respective dates of grant using the Black-Scholes option- pricing model with the following weighted-average assumptions for 2000 and 1999, respectively: dividend yield of .6% for both years, expected volatility of 32.8% for 2000 and 31.2% for 1999, risk-free interest rate of 6.6% and 4.8% and an expected life of 7 years for 2000 and 7.5 years for 1999. The fair value of stock options granted under the Director Stock Option Plans in 2000 and 1999 was $12.03 and $13.48 per share, respectively. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 2000 and 1999, respectively: dividend yield of .7% and .6%, expected volatility of 30.5% and 33.1%, risk-free interest rate of 6.7% and 5.7% and an expected life of 7 years and 7.5 years. Under the Stock Awards Plans, the Company may grant stock options, stock appreciation rights, restricted stock and other stock awards to employees. The combined maximum number of shares which may be issued under these plans is 6 million. Options granted under these plans become exercisable annually over a three year period and expire ten years after the grant date. Director Stock Option Plans provide for the award of stock options to non-employee Directors who have not previously been awarded options. The combined maximum number of shares subject to options under these plans is 240 thousand. Options granted under these plans become exercisable over a three year period and expire ten years after the grant date. AptarGroup 45 A summary of the status of the Company's stock option plans as of December 31, 2000, 1999 and 1998, and changes during the years ending on those dates is presented below.
Director Stock Stock Awards Plans Option Plans ---------------------------- ----------------------------- Option Price Option Price Option Shares Shares Per Share Shares Per Share - -------------------------------------------------------------------------------------------- Outstanding, January 1, 1998 1,841,132 $9.19 - $28.00 88,000 $9.19 - $20.88 Granted 533,500 $24.91 6,000 $32.38 Exercised (64,950) $9.19 - $18.00 (6,000) $9.19 Canceled (19,794) $9.19 - $18.00 (4,000) $20.88 --------- --------- Outstanding, December 31, 1998 2,289,888 $9.19 - $28.00 84,000 $9.19 - $32.38 Granted 550,700 $24.94 - $28.25 4,000 $29.50 Exercised (263,304) $9.19 - $24.91 (2,000) $20.88 Canceled (23,135) $16.81 - $24.91 - --------- --------- Outstanding, December 31, 1999 2,554,149 $9.19 - $28.25 86,000 $9.19 - $32.38 Granted 535,800 $22.75 - $27.13 2,000 $27.38 Exercised (90,161) $9.19 - $27.19 (6,000) $20.88 Canceled (24,428) $16.81 - $27.19 - --------- --------- Outstanding December, 31 2000 2,975,360 $ 9.19 - $28.25 82,000 $9.19 - $32.38 ========= ========= OPTIONS EXERCISABLE 12/31/98 1,426,752 55,500 12/31/99 1,557,631 72,000 12/31/00 1,929,524 82,000 AVAILABLE FOR FUTURE GRANTS 12/31/98 1,497,378 22,000 12/31/99 970,113 20,000 12/31/00 2,437,610 80,000
46 AptarGroup The following table summarizes information about stock options outstanding at December 31, 2000:
Options Outstanding Options Exercisable -------------------------------------------- ----------------------------- Weighted- Shares Average Weighted- Shares Weighted- Year Outstanding Remaining Average Exercisable Average Granted at Year-end Life Exercise Price at Year-end Exercise Price - --------------------------------------------------------------------------------------------------- STOCK AWARDS PLANS 1993 292,424 2.5 $ 9.19 292,424 $ 9.19 1994 193,926 3.1 10.31 193,926 10.31 1995 314,864 4.1 13.64 314,864 13.64 1996 281,836 5.1 18.00 281,836 18.00 1997 332,204 6.1 16.84 332,204 16.84 1998 501,434 7.1 24.91 336,135 24.91 1999 527,472 8.1 27.13 178,135 27.13 2000 531,200 9.1 22.76 - - ---------- ---------- 2,975,360 6.3 $ 19.68 1,929,524 $ 17.03 ========== ========== DIRECTOR STOCK OPTION PLANS 1993 26,000 2.4 $ 9.19 26,000 $ 9.19 1997 44,000 6.4 20.88 44,000 20.88 1998 6,000 7.4 32.38 6,000 32.38 1999 4,000 8.4 29.50 4,000 29.50 2000 2,000 9.4 27.38 2,000 27.38 ---------- ---------- 82,000 5.4 $ 18.59 82,000 $ 18.59 ========== ==========
Restricted stock totaling 21,331 shares in 2000 and 8,100 shares in 1998 were issued under the Stock Awards Plans and a restricted stock grant for 200 shares was cancelled in 2000. These shares vest equally over three years and do not have voting or dividend rights prior to vesting. Amounts available for future stock option grants under the Stock Awards Plans have been reduced by restricted stock awards. AptarGroup 47 -15- EARNINGS PER SHARE The reconciliations of basic and diluted earnings for the years ending December 31, 2000, 1999 and 1998 are as follows:
Income Shares Per Share (Numerator) (Denominator) Amount - ------------------------------------------------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 2000 Basic EPS Income available to common stockholders $ 64,666 35,863 $ 1.80 EFFECT OF DILUTIVE SECURITIES Stock options - 506 ----------------------------------------- DILUTED EPS Income available to common stockholders $ 64,666 36,369 $ 1.78 ========================================= FOR THE YEAR ENDED DECEMBER 31, 1999 BASIC EPS Income available to common stockholders $ 58,712 36,353 $ 1.62 EFFECT OF DILUTIVE SECURITIES Stock options - 560 ----------------------------------------- DILUTED EPS Income available to common stockholders $ 58,712 36,913 $ 1.59 ========================================= FOR THE YEAR ENDED DECEMBER 31, 1998 BASIC EPS Income available to common stockholders $ 60,821 36,051 $ 1.69 EFFECT OF DILUTIVE SECURITIES Stock options - 748 ----------------------------------------- DILUTED EPS Income available to common stockholders $ 60,821 36,799 $ 1.65 =========================================
-16- SEGMENT INFORMATION The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing systems. The Company is organized primarily based upon individual business units, which resulted from historic acquisitions or internally created business units. All of the business units sell primarily dispensing systems. These business units all involve similar production processes, sell to similar classes of customers and markets, use the same methods to distribute their products and operate in similar regulatory environments. Management believes it operates in one reportable segment. 48 AptarGroup The following are sales and long-lived asset information by geographic area and product information for the years ended December 31, 2000, 1999 and 1998: GEOGRAPHIC INFORMATION
Sales to Unaffiliated Long-Lived Customers(a) Assets - --------------------------------------------------------------------------------- 2000 United States $ 343,825 $ 238,525 Europe: France 173,910 113,402 Germany 119,091 91,771 Italy 77,307 56,313 Other Europe 97,101 20,529 --------- --------- Total Europe 467,409 282,015 Other Foreign Countries 72,247 24,132 --------- --------- Total $ 883,481 $ 544,672 ========= ========= 1999 United States $ 332,986 $ 216,894 Europe: France 180,808 106,534 Germany 111,829 97,141 Italy 55,139 55,555 Other Europe 102,048 19,784 --------- --------- Total Europe 449,824 279,014 Other Foreign Countries 51,507 19,121 --------- --------- Total $ 834,317 $ 515,029 ========= ========= 1998 United States $ 271,960 $ 97,325 Europe: France 172,739 105,225 Germany 89,004 104,197 Italy 63,109 55,700 Other Europe 79,440 24,289 --------- --------- Total Europe 404,292 289,411 Other Foreign Countries 37,254 10,253 --------- --------- Total $ 713,506 $ 396,989 ========= =========
(a) Sales are attributed to countries based upon where sales to unaffiliated customers are invoiced. AptarGroup 49 PRODUCT SALES INFORMATION
2000 1999 1998 - --------------------------------------------------------------------------------- Pumps $ 546,148 $510,202 $ 430,827 Closures 197,992 184,010 155,243 Valves 122,516 124,386 113,908 Other 16,825 15,719 13,528 -------------------------------- Total $ 883,481 $834,317 $ 713,506 ================================
-17- STOCK REPURCHASE PROGRAM In 1999, the Board of Directors authorized the repurchase of a maximum of one million shares of the Company's outstanding shares. At December 31, 2000 all one million shares had been repurchased for an aggregate amount of $25.0 million including 764,500 shares that were purchased for an aggregate amount of $18.7 million in 2000. In the fourth quarter of 2000, the Board of Directors authorized an additional repurchase of a maximum of two million shares of the Company's outstanding shares. The timing of and total amount expended for share repurchases depends upon market conditions. No shares were repurchased from this additional two million-share authorization at December 31, 2000. 50 AptarGroup -18- QUARTERLY DATA (UNAUDITED) Quarterly results of operations and per share information for the years ended December 31, 2000 and 1999 are as follows:
First Second Third Fourth Total Quarter Quarter Quarter Quarter For Year - --------------------------------------------------------------------------------------- Year Ended December 31, 2000 Net sales $217,646 $ 227,667 $ 224,691 $213,477 $ 883,481 Gross profit/(1)/ $ 66,259 $ 69,310 $ 65,251 $ 63,032 $ 263,852 Net income $ 16,276 $ 17,792 $ 16,240 $ 14,358 $ 64,666 Per Common Share - 2000 Net income Basic $ .45 $ .49 $ .45 $ .40 $ 1.80 Diluted $ .45 $ .49 $ .45 $ .40 $ 1.78 Dividends paid $ .05 $ .05 $ .05 $ .05 $ .20 Stock price high $ 28.63 $ 29.31 $ 29.94 $ 30.13 $ 30.13 Stock price low $ 20.13 $ 23.38 $ 21.88 $ 19.38 $ 19.38 Average number of shares outstanding Basic 36,136 35,949 35,774 35,600 35,863 Diluted 36,466 36,564 36,294 36,057 36,369 Year Ended December 31, 1999 Net sales $198,227 $ 208,860 $ 210,479 $216,751 $ 834,317 Gross profit/(1)/ $ 58,028 $ 62,794 $ 63,451 $ 65,936 $ 250,209 Net income/(2)/ $ 14,269 $ 16,180 $ 12,894 $ 15,369 $ 58,712 Per Common Share - 1999 Net income Basic/(2)/ $ .39 $ .45 $ .35 $ .42 $ 1.62 Diluted/(2)/ $ .39 $ .44 $ .35 $ .42 $ 1.59 Dividends paid $ .04 $ .04 $ .05 $ .05 $ .18 Stock price high $ 29.63 $ 31.50 $ 30.88 $ 29.25 $ 31.50 Stock price low $ 23.13 $ 23.88 $ 22.50 $ 23.88 $ 22.50 Average number of shares outstanding Basic 36,189 36,344 36,440 36,435 36,353 Diluted 36,845 37,026 37,039 36,943 36,913
(1) Gross profit is defined as net sales less cost of sales less depreciation (2) The third quarter includes a $3.3 million write-off of IPR&D. AptarGroup 51 report of independent accountants TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF APTARGROUP, INC. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in equity present fairly, in all material respects, the financial position of AptarGroup, Inc. and its subsidiaries at December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of AptarGroup, Inc.'s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 15, 2001 52 AptarGroup management's responsibility for financial statements The financial statements of AptarGroup, Inc. and its consolidated subsidiaries, and all other information presented in this Annual Report, are the responsibility of the management of the Company. These statements have been prepared in accordance with generally accepted accounting principles consistently applied and reflect in all material respects the substance of events and transactions that should be included. Management is responsible for the accuracy and objectivity of the financial statements, including estimates and judgments refected therein, and fulfills this responsibility primarily by establishing and maintaining accounting systems and practices adequately supported by internal accounting controls. Management believes that the internal accounting controls in use are satisfactory to provide reasonable assurance that the Company's assets are safeguarded, that transactions are executed in accordance with management's authorizations, and that the financial records are reliable for the purpose of preparing financial statements. Independent accountants were selected by the Board of Directors, upon the recommendation of the Audit Committee, to audit the financial statements in accordance with generally accepted auditing standards. Their audits include a review of internal accounting control policies and procedures and selected tests of transactions. The Audit Committee of the Board of Directors, which consists of three directors who are not officers or employees of the Company, meets regularly with management and the independent accountants to review matters relating to financial reporting, internal accounting controls, and auditing. The independent accountants have unrestricted access to the Audit Committee. /s/ Carl A. Siebel Carl A. Siebel President and Chief Executive Officer /s/ Stephen J. Hagge Stephen J. Hagge Executive Vice President & Chief Financial Officer AptarGroup 53 five year summary of selected financial data (In millions of dollars, except per share data)
Year Ended December 31, 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------ Statement of Income Data: Net Sales $ 883.5 $ 834.3 $ 713.5 $ 655.4 $ 615.8 Cost of Sales 553.6 519.7 444.6 418.1 399.7 % Of Net Sales 62.7% 62.3% 62.3% 63.8% 64.9% Selling, Research & Development, and Administrative 145.0 137.5 119.3 108.4 104.3 % of Net Sales 16.4% 16.5% 16.7% 16.5% 16.9% Depreciation and Amortization 70.9 68.7 54.4 49.9 47.9 % of Net Sales 8.0% 8.2% 7.6% 7.6% 7.8% Operating Income 113.9 108.4 95.2 79.0 64.0 % of Net Sales 12.9% 13.0% 13.3% 12.1% 10.4% Net Income 64.7 58.7 60.8 46.5 37.5 % of Net Sales 7.3% 7.0% 8.5% 7.1% 6.1% Net Income - Adjusted/(1)/ 64.7 62.0 54.7 46.5 37.5 % of Net Sales 7.3% 7.4% 7.7% 7.1% 6.1% Per Common Share: Net Income Basic $ 1.80 $ 1.62 $ 1.69 $ 1.29 $ 1.05 Diluted 1.78 1.59 1.65 1.27 1.03 Diluted - Adjusted (1) 1.78 1.68 1.49 1.27 1.03 Cash Dividends Declared 0.20 0.18 0.16 0.15 0.14 Balance Sheet and Other Data: Capital Expenditures $ 93.9 $ 88.6 $ 79.8 $ 71.2 $ 62.8 Total Assets 952.2 863.3 714.7 585.4 576.1 Long-Term Obligations 252.8 235.6 80.9 70.7 76.6 Net Debt 236.8 238.4 92.9 55.9 73.9 Stockholders' Equity 440.5 420.3 415.5 342.1 335.7 Capital Expenditures % of Net Sales 10.6% 10.6% 11.2% 10.8% 10.2% Interest Bearing Debt to Total Capitalization 39.9% 39.2% 22.1% 17.7% 21.1% Net Debt to Total Net Capitalization/(2)/ 35.0% 36.2% 18.3% 14.0% 18.0%
(1) Adjusted reflects the exclusion of an IPR&D write-off in 1999 and favorable lawsuit settlements in 1998. (2) Net Debt is interest bearing debt less cash and cash equivalents. Net Capitalization is Stockholder's Equity plus Net Debt. 54 AptarGroup management's discussion & analysis of consolidated results of operations & financial condition Results of Operations The following table sets forth, for the periods indicated, the percentage relationship of certain items to net sales.
Year Ended December 31, 2000 1999 1998 - ----------------------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% Cost of sales 62.7 62.3 62.3 Selling, research & development, and administrative 16.4 16.5 16.7 Depreciation and amortization 8.0 8.2 7.7 ------------------------------ Operating income 12.9 13.0 13.3 Other income (expenses): IPR&D write-off - (0.4) - Lawsuit settlements - - 1.4 Net other expense (1.8) (1.6) (0.8) ------------------------------ Income before income taxes 11.1 11.0 13.9 Provision for income taxes 3.8 4.0 5.4 ------------------------------ Net income 7.3% 7.0% 8.5% ==============================
AptarGroup 55 2000 COMPARED TO 1999 Net sales in 2000 totaled $883.5 million, an increase of 5.9% when compared to net sales of $834.3 million in 1999. Approximately 1% of the net sales growth was related to increases in selling prices primarily related to the pass through to customers of material cost increases. Net sales were negatively affected by the translation of AptarGroup's foreign sales into U.S. dollars due to the stronger U.S. dollar relative to 1999. Net sales, excluding changes in foreign currency exchange rates and acquisitions ("Core Sales"), grew 12% compared to the prior year. Core Sales of pumps to the worldwide fragrance/cosmetic market were strong throughout 2000. Core Sales of the Company's aerosol valves, pumps and dispensing closures to the European personal care market also increased significantly over the prior year. Core Sales to the pharmaceutical market grew moderately over the prior year. These strengths were offset somewhat by weak sales of the Company's products to the U.S. personal care market. The following table sets forth (in thousands of dollars), for the periods indicated, net sales by geographic location. 2000 % of Total 1999 % of Total - ------------------------------------------------------------------------------ Domestic $ 343,825 39% $332,986 40% Europe 467,409 53% 449,824 54% Other Foreign 72,247 8% 51,507 6% Cost of sales as a percent of net sales increased slightly in 2000 to 62.7% compared to 62.3% in 1999. The effect of LIFO inventory valuation increased cost of sales nearly $900 thousand in 2000 and $1 million in 1999. The cost of sales percentage was negatively impacted by the following factors: . Increases in raw material prices, particularly plastic resin and metal in 2000 that were passed on to customers by increased selling prices, thus having a slight negative impact on operating margins. . Implementation of the reduced 35 hour work week in France. . Under utilized fixed costs in the U.S. due to the weak sales in 2000 to the U.S. personal care market. Offsetting these negative factors, were the following positive impacts: . Better utilization of fixed costs in Europe due to the strong sales to the fragrance/ cosmetic market. . The effect of the Company manufacturing products in Europe and incurring costs in Euros and selling these products in countries outside of Europe in currencies that were stronger than the Euro relative to the prior year. 56 AptarGroup Selling, research & development, and administrative expenses ("SG&A") increased by approximately $7.5 million in 2000 but decreased slightly as a percent of sales in 2000 to 16.4% from 16.5% in 1999 mainly due to cost containment efforts. Depreciation and amortization increased nearly $2.3 million to $70.9 million in 2000 from $68.7 million recorded in 1999. The primary reason for the increase was due to higher amortization expense attributed to a full year of goodwill amortization on acquisitions completed in 1999 as well as higher depreciation charges related to expenditures for geographic expansion in 1999 and 2000. Operating income increased to $113.9 million compared to $108.4 million in 1999, primarily due to the reasons mentioned above. This includes the negative effect of translating the Company's foreign denominated results into a stronger U.S. dollar relative to the same period in 1999. The net of this negative translation impact with the positive impact of incurring manufacturing costs in Euros and selling in currencies that gained strength against the Euro in 2000 was a negative impact of approximately $2 million. Net other expenses increased to $16.0 million in 2000 from $13.4 million in 1999 excluding the write-off of purchased in-process research and development ("IPR&D"). The change was due primarily to an increase in interest expense in excess of interest income ("Net Interest Expense") of approximately $4.2 million related to a full year of interest expense associated with acquisitions completed in 1999, additional borrowings related to the Company's stock repurchase plan, and increased average interest rates. The effective income tax rate decreased to 34% in 2000 from 36% in 1999. This decrease is due primarily to the positive effect of reductions in European corporate tax rates on the Company's deferred income taxes in 2000. The Company expects the effective tax rate for 2001 to be approximately 33%. Net income increased 4.3% to $64.7 million compared to $62.0 million excluding the write-off of IPR&D recorded in 1999. Net income as reported increased 7.3% to $64.7 million in 2000 compared to $58.7 million in 1999. 1999 COMPARED TO 1998 Net sales in 1999 totaled $834.3 million, an increase of 16.9% when compared to net sales of $713.5 million in 1998. Net sales were negatively affected by the translation of AptarGroup's foreign sales due to the stronger U.S. dollar relative to 1998. If the U.S. dollar exchange rates had not changed from year to year, net sales for 1999 would have increased approximately 20%. Acquisitions completed in 1999 and 1998 accounted for approximately $103 million of the $120.8 million increase in sales. Core Sales growth for the year was approximately 6%. Core Sales of pumps to the fragrance/cosmetic market were slow in the first half of 1999 and began to rebound during the second half. In addition, U.S. sales of dispensing closures across all markets were negatively affected by the implementation of an enterprise wide information system in the second quarter of 1999. Offsetting these negative effects was the increase of pump and metered valve sales to the pharmaceutical industry. AptarGroup 57 The following table sets forth (in thousands of dollars), for the periods indicated, net sales by geographic location. 1999 % of Total 1998 % of Total - ------------------------------------------------------------------------------- Domestic $ 332,986 40% $271,960 38% Europe 449,824 54% 404,292 57% Other Foreign 51,507 6% 37,254 5% Cost of sales as a percent of net sales remained constant in 1999 at 62.3%. The negative effects of increases in raw material costs in 1999 on the LIFO inventory valuation in the U.S., particularly plastic resin, was primarily offset by productivity increases, selected price increases, and the mix of products sold. SG&A decreased slightly as a percent of net sales in 1999 to 16.5% from 16.7% in 1998. The decrease was primarily due to the acquisitions in 1999, which had lower SG&A as a percentage of sales. Depreciation and amortization increased $14.1 million to $68.7 million in 1999 from $54.4 million recorded in 1998. The primary reasons for the increase in depreciation and amortization are an increase in goodwill amortization and depreciation expense related to the acquisitions made in 1999 and the increased depreciation due to plant and geographic expansions in 1999 and 1998. Operating income increased to $108.4 million compared to $95.2 million in 1998, primarily due to the acquisitions made in 1999 as well as the increased sales to the pharmaceutical market. The net impact on operating income due to the stronger U.S. dollar in 1999 was insignificant. In 1999, the results included a $3.3 million write-off of IPR&D related to the acquisition of Microflow in the third quarter. The 1998 results include approximately $9.9 million in favorable lawsuit settlements received. Net other expenses, excluding the write-off of IPR&D, increased to $13.4 million in 1999 from $5.9 million in 1998 excluding the lawsuit settlement. The change was due primarily to the increased Net Interest Expense of approximately $7.8 million related to the acquisitions made in 1999 and late 1998. The effective income tax rate decreased to 36.0% in 1999 from 38.7% in 1998. The ongoing rationalization of tax rates combined with the mix of income earned, and a decrease in effective corporate tax rates in both France and Germany, helped contribute to the decrease in the effective tax rate. Offsetting the positive impacts on the effective tax rate is the non-deductible write-off of IPR&D and goodwill amortization associated with the acquisitions in 1999. Excluding the effects of the IPR&D write-off in 1999 and the lawsuit settlements in 1998 mentioned above, net income increased 13% to $62.0 million compared to $54.7 million recorded in 1998. Net income as reported decreased 3.5% to $58.7 million in 1999 compared to $60.8 million in 1998. 58 AptarGroup FOREIGN CURRENCY A significant number of the Company's operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial conditions and results of operations of AptarGroup's foreign entities. The Company's primary foreign exchange exposure is to the Euro, but the Company also has foreign exchange exposure to South American and Asian currencies as well as the British Pound. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on the Company's financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. Additionally, 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 impact the Company's results of operations. 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. The table below provides information as of December 31, 2000 about the Company's forward currency exchange contracts. All the contracts expire before the end of the third quarter of 2001. Average Contractual Buy/Sell Contract Amount Exchange Rate - --------------------------------------------------------------------------- EURO/USD $ 15,254 .8702 GBP/EURO 4,215 .6037 EURO/GBP 1,475 1.6662 EURO/YEN 1,393 .0106 Other 1,101 - -------- Total $ 23,438 ======== The other contracts in the above table represent contracts to buy or sell various other currencies (principally Swiss and Australian). If the Company cancelled the forward exchange contracts at December 31, 2000, the Company would have received approximately $1.1 million based on the fair value of the contracts on that date. All forward exchange contracts outstanding as of December 31, 1999 had an aggregate contract amount of $31.0 million. The Company has a cross-currency interest rate swap to hedge an intercompany lending transaction. This swap requires the Company to pay principal of 26.5 million French Francs plus interest at 8% and receive principal of $5.4 million plus interest at 7.08% through 2005. If the Company canceled the swap at December 31, 2000, the Company would have received approximately $1.4 million based on the fair value of the swap on that date. AptarGroup 59 At December 31, 2000, the Company has fixed-to-variable interest rate swap agreements with a notional principal value of $50 million which require the Company to pay an average variable interest rate of 6.61% and receive a fixed rate of 6.62%. The variable rates are adjusted semiannually based on London Interbank Offered Rates ("LIBOR"). Variations in market interest rates would produce changes in the Company's net income. If interest rates increase by 10%, net income related to the interest rate swap agreements would decrease by approximately $0.2 million assuming a tax rate of 34%. If the Company canceled the swaps at December 31, 2000, the Company would have received approximately $1.9 million based on the fair value of the swaps on that date. LIQUIDITY AND CAPITAL RESOURCES Net cash generated from operating activities rose to $127.8 million in 2000 compared to $118.4 million and $85.0 million in 1999 and 1998, respectively. In each of these years, cash flow from operations was primarily derived from earnings before depreciation and amortization. During 2000, the Company utilized the majority of such cash flows to finance capital expenditures, repurchase Company stock, fund acquisitions and invest in affiliates. Cash and equivalents were $55.6 million at December 31, 2000 versus $32.4 million at December 31, 1999 and $25.2 million at December 31, 1998. Working capital increased $13.1 million to $204.4 million at December 31, 2000 compared to $191.3 million and $149.2 million at December 31, 1999 and 1998, respectively. The majority of the increase in working capital was due to higher accounts receivable and inventory balances partially offset by higher accounts payable, accrued liabilities, and taxes payable in 2000. The Company used $97.7 million in cash for investing activities during 2000 compared to $232.7 million and $98.9 million during 1999 and 1998, respectively. The significant decrease in cash used for investing activities was due to fewer acquisitions made in 2000 versus 1999 and 1998. Capital expenditures totaled $93.9 million in 2000 as the Company continued to invest in property, plant and equipment primarily for product line enhancements, new products and capacity increases, compared to $88.6 million and $79.8 million in 1999 and 1998, respectively. Cash outlays for capital expenditures for 2001 are estimated to be approximately $90 million. During the third quarter, the Company contributed assets worth approximately $7.4 million and liabilities worth approximately $2.4 million into a joint venture to produce airless pump dispensing systems. Prior to creating the joint venture, the Company had annual sales of approximately $15 million of airless dispensing systems that are now sold as part of the joint venture and are therefore no longer included in net sales. The impact on profitability in 2000 was not significant. Profits derived from the joint venture are now shown in the income statement in equity in results of affiliates. 60 AptarGroup Net cash (used) provided by financing activities was ($5.7) million in 2000, compared to $124.1 million and $20.4 million provided in 1999 and 1998, respectively. The net cash used by financing activities in 2000 was primarily due to the Company's stock repurchase program and the repayment of long-term debt. The Board of Directors authorized in 1999 the repurchase of a maximum of one million shares of the Company's outstanding shares. As of December 31, 2000, all one million shares have been repurchased for an aggregate amount of $25.0 million. In the fourth quarter of 2000, the Board of Directors authorized the repurchase of an additional two million shares of the Company's outstanding shares. As of December 31, 2000, no shares were repurchased from this additional two million share authorization. The ratio of the Company's total interest bearing debt net of cash to total capitalization net of cash was 35.0% and 36.2% as of December 31, 2000 and 1999, respectively. In May 1999, the Company entered into a $107 million, twelve-year private debt placement agreement. The private placement is comprised of $107 million of 6.62% senior unsecured notes. The notes will be repaid in equal annual installments of $21.4 million beginning on May 30, 2007 and ending on May 30, 2011. During the third quarter of 1999, the Company entered into interest rate swap agreements with two different banks for a notional amount of $25 million each or a total of $50 million. The agreements swapped the 6.62% fixed interest rate on the private placement described above for variable floating rates equal to the six month LIBOR less a spread ranging from 8.25 to 10.5 basis points. The amortization schedule for the swap agreements was designed to match the amortization of the underlying private placement. The Company amended its multi-year, multi-currency unsecured revolving credit agreement in December of 2000 to increase maximum borrowings allowed from $75 million to $100 million. Under this credit agreement, interest on borrowings is payable at a rate equal to LIBOR plus an amount based on the financial condition of the Company. At December 31, 2000, the amount unused and available under this agreement was $15 million. The Company is required to pay a fee for the unused portion of the commitment. The agreement expires on June 30, 2004. 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, an additional $15 million of short-term obligations representing the unused and available amount under the credit agreement have been reclassified as long-term obligations as of December 31, 2000. The Company's foreign operations have historically met cash requirements with the use of internally generated cash and borrowings. Foreign subsidiaries have financing arrangements with several foreign banks to fund operations located outside of the U.S., but all of these lines are uncommitted. Cash generated by foreign operations has generally been reinvested locally. While management currently intends to reinvest such cash from foreign operations, the timing of the decision to transfer such cash to the U.S. in the future may be impacted to the extent management believes the transaction costs and taxes associated with such transfers are less than the expected benefits. The Company believes that it has the financial resources needed to meet business requirements in the foreseeable future, including capital expenditures, working capital requirements, future dividends and potential acquisitions. AptarGroup 61 ADOPTION OF ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" (the effective date of which was amended in September 1999 by SFAS No. 137). This Statement was further amended in June 2000 by SFAS No. 138. SFAS No. 133 and the amendments found in SFAS No. 138 require that entities recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Periodic changes in fair value of these instruments must be recognized in results of operations unless they qualify for hedge accounting treatment. The Company has assessed the impact it will have on the financial position and results of operations, and determined that it will not have a material impact on the financial statements. The Company will implement SFAS No. 133 and the amendments found in SFAS No. 138 on January 1, 2001. OUTLOOK The demand for the Company's fragrance/cosmetic pump products continues to remain strong worldwide heading into 2001. While many of the Company's customers in this market are optimistic about sales growth in 2001, it is still too early to project whether this strength will continue throughout all of 2001. Sales of the Company's products to the U.S. personal care market appears to be improving as incoming orders for the first quarter are increasing. Sales of the Company's products to the personal care market in Europe also continues to remain strong. Sales growth rates of the Company's pharmaceutical products are expected to exceed prior year levels. The sales of the Company's products to other markets are showing signs of growth in 2001. The Company saw an increase in the cost of its raw materials in 2000, in particular plastic resins and metal components. To help offset this increase in costs, the Company announced selected selling price increases in 2000, but the net effect had a slightly negative impact on operating margins. The Company has also announced additional price increases in the first quarter of 2001. The impact that these price increases will have on the 2001 results is still not known at this time. The Company expects to increase annual earnings in the range of 10 percent to 15 percent in 2001 based upon the following factors: . The sales growth mentioned above, . Anticipated cost savings of nearly $5 million targeted for the U.S. personal care market, . An expected reduction of the effective income tax rate of 1% and . Expected interest rate reductions. Many economists are predicting a slowdown in the U.S. economy in 2001. Currently the Company has not seen any significant impact on its incoming order patterns in the U.S. If the economic slowdown accelerates or is sharper than anticipated, this may have a negative impact on the Company's results. 62 AptarGroup The Company is expecting to continue to expand geographically in 2001, particularly into Asia and South America. Investments may be made in countries that may not be as politically stable as the U.S. or the western European countries. The Company intends to monitor its exposure in these other countries to minimize risk. The European Community introduced a common European monetary unit called the Euro effective January 1, 1999. Several of the Company's major European subsidiaries have converted their accounting systems to Euro and have not experienced any material effect on the results of operations. The Company's remaining European subsidiaries are expected to convert their systems in 2001. As more customers and suppliers convert to a single currency in the future, the Company may experience selling price or cost impacts. The Company believes that any negative impact coming from price adjustments will be more than offset by the increase in consumer demand that a stronger European Community will bring in the future. The Company in some cases sells products denominated in a currency different than 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. FORWARD-LOOKING STATEMENTS This Management's Discussion and Analysis and certain other sections of this annual report contain forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on management's beliefs as well as assumptions made by and information currently available to management. Accordingly, the Company's actual results may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in the Company's operations and business environment, including, among other factors, government regulation including tax rate policies, competition and technological change, intellectual property rights, the failure by the Company to produce anticipated cost savings or improve productivity, the timing and magnitude of capital expenditures and acquisitions, currency exchange rates, interest rates, economic and market conditions in the United States, Europe and the rest of the world, changes in customer spending levels, the demand for existing and new products, the cost and availability of raw materials, the successful integration of the Company's acquisitions, and other risks associated with the Company's operations. Although the Company believes that its forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. AptarGroup 63 EX-21 4 0004.txt LIST OF SUBSIDIARIES APTARGROUP, INC. LIST OF SUBSIDIARIES
State or Other Jurisdiction of Percentage Incorporation Owned ------------- ----- AptarGroup International L.L.C. Delaware 100% AptarGroup Foreign Sales Corporation Barbados 100% AptarGroup International Holding B.V. Netherlands 100% AptarGroup Holding S.A.S. France 100% Aptar GmbH Germany 100% Erich Pfeiffer GmbH Germany 100% Pfeiffer Vaporisateurs France S.a.r.L. France 100% P & S Japan Ltd. Japan 100% Pfeiffer (U.K.) Limited United Kingdom 100% P&P Promotion of German Manufacturing Technologies GmbH Germany 100% Vallis Leasobjekt Gesellschaft GmbH Germany 100% Seaplast S.A. Spain 50% Seaquist-Loffler Kunststoffwerke GmbH Germany 100% Loffler Kunststoffwerk spol. s.r.o. Czech Republic 100% SeaquistPerfect Dispensing GmbH Germany 100% Valois Deutschland GmbH Germany 100% SeaquistPerfect Plastic GmbH Germany 100% AptarGroup S.A. France 100% Aptar South Europe SARL France 100% Novares S.p.A. Italy 100% EMSAR S.p.A. Italy 100% EMSAR France SCA France 100% AptarGroup SAR Finance Unlimited Ireland 100% EMSAR GmbH Germany 100% SAR (U.K.) Limited United Kingdom 100% Tes S.p.A. Italy 6% Somova S.r.l. Italy 100% Spruhventile GmbH Germany 100% Caideil M.P. Teoranta Ireland 100% General Plastics S.A. France 100% Graphocolor France 60% Moulage Plastique de Normandie S.A. France 100% Perfect-Valois U.K. Limited United Kingdom 100% Seaquist-Loeffler Limited United Kingdom 100% Valois S.A. France 100% Valois Dispray S.A. Switzerland 100% Valois Espana S.A. Spain 100% Valois Italiana S.r.l. Italy 100% Ensyma S.A. Switzerland 100% Microflow Engineering S.A. Switzerland 80% Airlessystems S.A.S. France 50% Aptar India Private Limited India 100%
EMSAR Dispensing Systems Ltd. Hong Kong 100% EMSAR Brasil Ltda. Brazil 100% Inairic S.A. Argentina 100% Seaquist Canada Ltd. Canada 100% Seaquist Finance Unlimited Ireland 100% Seaquist-Valois Australia Pty. Ltd. Australia 100% Seaquist-Valois do Brasil Ltda. Brazil 100% Seaquist-Valois Japan, Inc. Japan 100% SeaquistPerfect Dispensing de Mexico S.A. de C.V. Mexico 100% H. Engelmann S.A. Argentina 35% Aptar Suzhou Dispensing Ltd. P.R. China 100% SeaquistPefect Molding L.L.C. Illinois 100% Emson Research, Inc. Connecticut 100% EMSAR UK Ltd. United Kingdom 100% Emson Foreign Sales Corporation U.S. Virgin Islands 100% EMSAR, Inc. Connecticut 100% EMSAR Ventures, Inc. Connecticut 100% P.T. Emson Ongko Indonesia Indonesia 100% Emson Spraytech India Private Ltd. India 51% Global Precision, Inc. Florida 100% Liquid Molding Systems, Inc. Delaware 100% Philson, Inc. Connecticut 100% Pfeiffer of America, Inc. Delaware 100% P Merger Corporation Connecticut 100% Seaquist Closures L.L.C. Delaware 100% Seaquist Closures Foreign, Inc. Delaware 100% Seaquist de Mexico, S.A. de C.V. Mexico 75% SeaquistPerfect Dispensing L.L.C. Delaware 100% SeaquistPerfect Dispensing Foreign, Inc. Delaware 100% Valois of America, Inc. Connecticut 100%
EX-23 5 0005.txt CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-64320 and 33-80408) of AptarGroup, Inc. of our report dated February 15, 2001 relating to the financial statements, which appears in the Annual Report to Stockholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 15, 2001 relating to the financial statement schedule, which appears in this Form 10-K. /s/ PRICEWATERHOUSECOOPERS LLP - ------------------------------ PricewaterhouseCoopers LLP Chicago, Illinois March 22, 2001 -----END PRIVACY-ENHANCED MESSAGE-----