<PAGE>
<PAGE> 1 SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ----to----
COMMISSION FILE NUMBER 1-11846
APTARGROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-3853103
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
475 WEST TERRA COTTA AVENUE, SUITE E
CRYSTAL LAKE, ILLINOIS 60014
- - ------------------------------------ -----
Address of Principal Executive Offices) (Zip Code)
815-477-0424
------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (May 9, 1996)
COMMON STOCK 17,937,760 <PAGE>
<PAGE> 2
APTARGROUP, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
ITEM 1. Financial statements (Unaudited)
Consolidated Statements of Income -
Three Months Ended March 31, 1996 and 1995 3
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 8
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
<PAGE>
<PAGE> 3
AptarGroup, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 and 1995
(Dollars in Thousands, Except Per Share Data)
(UNAUDITED)
Three Months Ended March 31,
---------------------------
1996 1995
---- ----
NET SALES $152,954 $135,629
------- -------
OPERATING EXPENSES:
Cost of sales ................... 98,714 86,616
Selling, general and
administrative ................ 25,012 22,807
Depreciation and amortization ... 11,489 10,442
------- -------
135,215 119,865
------- -------
OPERATING INCOME.................... 17,739 15,764
------- -------
OTHER INCOME (EXPENSE):
Interest expense................. (1,774) (1,615)
Interest income.................. 261 230
Equity in income of affiliates... 350 815
Minority interests............... (55) (37)
Miscellaneous, net............... 638 268
------- -------
(580) (339)
------- -------
INCOME BEFORE INCOME TAXES.......... 17,159 15,425
PROVISION FOR INCOME TAXES.......... 6,486 5,800
------- -------
NET INCOME.......................... $ 10,673 $ 9,625
======= =======
PER COMMON SHARE:
Net Income....................... $ .60 $ .54
======= =======
Average number of shares
outstanding (in thousands)...... 17,930 17,915
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE> 4
AptarGroup, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
March 31, December 31,
ASSETS 1996 1995
-------- -----------
CURRENT ASSETS:
Cash and equivalents........... $ 17,409 $ 17,332
Accounts and notes receivable,
less allowance for doubtful
accounts of $3,104 in 1996
and $3,296 in 1995............ 124,160 119,011
Inventories.................... 74,431 73,339
Prepayments and other.......... 16,102 14,188
------- -------
232,102 223,870
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Buildings and improvements..... 74,242 75,696
Machinery and equipment........ 403,411 397,169
------- -------
477,653 472,865
Less: Accumulated depreciation. (238,780) (231,152)
------- -------
238,873 241,713
Land........................... 4,209 4,268
------- -------
243,082 245,981
------- -------
OTHER ASSETS:
Investments in affiliates...... 15,067 14,951
Goodwill, less accumulated
amortization of $4,689 in
1996 and $4,409 in 1995....... 47,690 48,387
Miscellaneous.................. 25,709 26,027
------- -------
88,466 89,365
------- -------
TOTAL ASSETS $563,650 $559,216
======= =======
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE> 5 AptarGroup, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
LIABILITIES AND March 31, December 31,
STOCKHOLDERS' EQUITY 1996 1995
-------- ------------
CURRENT LIABILITIES:
Notes payable............... $ 5,502 $ 8,322
Current maturities of
long-term obligations...... 7,946 8,737
Accounts payable and
accrued liabilities........ 107,399 106,147
------- -------
120,847 123,206
------- -------
LONG-TERM OBLIGATIONS........... 80,878 80,712
------- -------
DEFERRED LIABILITIES AND OTHER:
Deferred income taxes........ 23,442 21,992
Retirement and deferred
compensation plans.......... 12,533 12,487
Minority interests........... 1,349 1,033
Deferred and other non-
current liabilities......... 7,042 7,500
------- -------
44,366 43,012
------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value . 179 179
Capital in excess of
par value.................... 103,183 102,954
Retained earnings............. 210,279 200,860
Cumulative foreign currency
translation adjustment...... 3,918 8,293
------- -------
317,559 312,286
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $563,650 $559,216
======= =======
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE> 6 AptarGroup, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Dollars in Thousands)
(UNAUDITED)
Three Months Ended
March 31,
-----------------------
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: -------- --------
Net income............................... $ 10,673 $ 9,625
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation ........................... 10,792 10,008
Amortization ........................... 697 434
Provision for bad debts................. 93 140
Minority interests...................... 55 37
Deferred income taxes................... 2,203 1,026
Retirement and deferred
compensation plans..................... 686 614
Equity in income of affiliates in
excess of cash distributions received.. (350) (815)
Changes in balance sheet items,
excluding effects from foreign
currency adjustments:
Increase in accounts receivable........ (7,282) (11,891)
Increase in inventories................ (2,310) (7,627)
Increase in prepaid and other
current assets........................ (3,295) (124)
Increase(decrease)in accounts
payable and accrued liabilities....... 321 (1,508)
Increase in income taxes payable....... 1,965 2,785
Other changes, net..................... (1,096) 139
------ ------
NET CASH PROVIDED BY OPERATIONS.......... 13,152 2,843
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................... (10,832) (11,255)
Disposition of property and equipment.... 85 62
Collections of notes receivable, net..... 562 43
Investments in affiliates................ (12) (57)
------ ------
NET CASH USED BY INVESTING ACTIVITIES.... (10,197) (11,207)
------ ------<PAGE>
<PAGE> 7 AptarGroup, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (cont'd)
For the Three Months Ended March 31, 1996 and 1995
(Dollars in Thousands)
(UNAUDITED)
Three Months Ended
March 31,
---------------------
1996 1995
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease)increase in notes payable...... $ (1,722) $ 2,948
Proceeds from long-term obligations..... 1,635 1,494
Repayments of long-term obligations..... (1,497) (963)
Dividends paid.......................... (1,254) (1,075)
Proceeds from stock options exercised... 229 13
------ ------
NET CASH (USED)PROVIDED BY FINANCING
ACTIVITIES.............................. (2,609) 2,417
------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH... (269) 274
------ ------
NET INCREASE(DECREASE) IN CASH AND
EQUIVALENTS............................. 77 (5,673)
CASH AND EQUIVALENTS AT BEGINNING OF
PERIOD.................................. 17,332 20,125
------ ------
CASH AND EQUIVALENTS AT END OF PERIOD..... $ 17,409 $ 14,452
====== ======
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE> 8
APTARGROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, except per share data)
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements included the
accounts of AptarGroup, Inc. and its subsidiaries. The terms "AptarGroup"
or "Company" as used herein refer to AptarGroup, Inc. and its subsidiaries.
In the opinion of management, the unaudited consolidated financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation of financial position and
results of operations for the interim periods presented. The accompanying
unaudited consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosure normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company
believes that the disclosures made are adequate to make the information
presented not misleading. Accordingly, these financial statements and
related notes should be read in conjunction with the financial statements
and notes therto included in the Company's Annual Report to Shareholders
incorporated by reference into the Company's Annual Report on Form 10-K for
the year ended December 31, 1995. The results of operations of any interim
period are not necessarily indicative of the results that may be expected
for a fiscal year.
<PAGE>
<PAGE> 9
NOTE 2 - INVENTORIES
At March 31, 1996 and December 31, 1995, inventories, by component,
consisted of:
March 31, December 31,
1996 1995
-------- -----------
Raw Materials $ 24,469 $ 25,152
Work in progress 22,258 21,927
Finished goods 29,522 28,013
------- -------
Total 76,249 75,092
Less LIFO reserve (1,818) (1,753)
------- -------
Total $ 74,431 $ 73,339
======= =======
<PAGE>
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the three months ended March 31, 1996 totaled $153.0 million,
an increase of 13% when compared to the three months ended March 31, 1995.
The increase is primarily attributed to sales volume increases of pumps to
the pharmaceutical market and closures to the personal care market,
acquisitions made during the fourth quarter 1995 and the mix of products
sold. These increases were partially offset by continued price competition,
decreased demand from customers in the high-end fragrance/cosmetics market,
decreased orders from customers in the lower to mid-class
fragrance/cosmetics market and lower aerosol valve sales as compared to the
prior year.
Overall, the Company continues to experience sales growth in all areas of
the world. Sales to unaffiliated customers from European operations
represented approximately 59% of net sales for the quarter ended March 31,
1996, compared to 62% for the same period a year ago. Including sales
between geographic areas, sales from European operations represented
approximately 68% of total net sales for the quarters ended March 31, 1996
and 1995.
The translation of AptarGroup's foreign sales was favorably affected by the
weaker U.S. dollar relative to certain European currencies when compared to
the same three month period in 1995. The weaker U.S. dollar contributed
approximately 1% to the Company's sales growth in the quarter. If exchange
rates had been constant and the effect of acquisitions ($5.1 million) were
excluded from 1996 results, sales for the three months ended March 31,
1996, would have increased 8%.
Cost of sales as a percent of net sales increased to 64.5% in the first
quarter compared to 63.9% in the same period a year ago. Generally, the
increase is attributed to continued price competition, the mix of products
sold and a negative impact of exchange rate changes, particularly the
Italian Lira in relation to other European currencies.
Selling, general and administrative expenses (SG&A) were $25.0 million in
the first quarter of 1996 compared to $22.8 million in the prior year
quarter. As a percent of total net sales, SG&A decreased to 16.4% from
16.8% a year ago.<PAGE>
<PAGE> 11
Operating income increased to $17.7 million in the first quarter of 1996
compared to $15.8 million a year ago. Europe and U.S operations
represented 70% and 38% of total operating income in the first quarter of
1996, respectively, with the reconciling difference due to income from
other foreign operations and corporate expenses. In the first quarter of
1995, Europe and the U.S. represented 82% and 36% of total operating
income, respectively.
European operating income was negatively affected by changes in European
currencies in relation to one another (particularly the Italian Lira),
softness in the demand for fragrance/cosmetics pumps, increased price
competition and the mix of products sold. These factors are expected to
continue to affect the Company in the near term. The increase in U.S.
operating income is due primarily to increased sales of closures to the
personal care market.
The effective tax rate for the three months ended March 31, 1996 was 37.8%
compared to 37.6% for the same period a year ago. The rate differential is
due to the mix of income earned by country.
Net income for the first quarter increased 11% to $10.7 million compared to
$9.6 million in the first quarter of 1995. The increase in net income is
due primarily to higher sales volume and cost containment efforts.
Foreign Currency
A significant portion of AptarGroup's operations are located outside the
United States. Because of this, movements in exchange rates may have a
significant impact on the translation of the financial condition and
results of operations of AptarGroup's foreign entities. The Company, at
times, uses forward exchange contracts, primarily with banks, to hedge the
currency risk associated with future cash receipts or payments. In
general, since the majority of the Company's operations are based in
Europe, primarily France, Germany and Italy, a weakening U.S. dollar
relative to the major European currencies has an additive translation
effect on the Company's financial condition and results of operations.
Conversely, a strengthening U.S. dollar would have a dilutive effect.
<PAGE>
<PAGE> 12
Quarterly Trends
AptarGroup's results of operations in the second half of the year typically
are negatively impacted by European summer holidays and customer plant
shutdowns in December. In the future, AptarGroup's results of operations
in a quarterly period could be impacted by factors such as changes in
product mix, changes in material costs, changes in growth rates in the
industries to which AptarGroup's products are sold or changes in general
economic conditions in any of the countries in which AptarGroup does
business.
Liquidity and Capital Resources
Historically, AptarGroup has generated positive cash flow from operations
and has utilized the majority of such cash flows to invest in capital
projects. Net cash provided by operations in the first three months of
1996 was $13.2 million compared to $2.8 million in the same period a year
ago. The increase is primarily attributed to changes in working capital,
principally smaller increases in accounts receivables and inventories, as
compared to the same period a year ago. Total net working capital at March
31, 1996 was $111.3 million compared to $100.7 million at December 31,
1995.
Net cash used by investing activities decreased to $10.2 million from $11.2
million a year ago. Management anticipates that capital expenditures for
all of 1996 will total between $65 and $70 million.
Net cash used by financing activities was $2.6 million in 1996 compared to
net cash provided by financing activities of $2.4 million in 1995. The
change is due primarily to a reduction in notes payable. The ratio of
interest-bearing debt to total capitalization was 23% at March 31, 1996
compared to 24% at December 31, 1995.
The majority of the Company's debt has been and continues to be,
denominated in foreign currency. AptarGroup has historically borrowed
locally to hedge potential currency fluctuations for assets that were
purchased outside of the U.S. It is expected that this practice will
continue.
The Company has a multi-year, unsecured revolving credit agreement allowing
borrowings of up to $25 million. Under this credit agreement, interest on
borrowings is payable at a rate equal to the London Interbank Offered Rate <PAGE>
<PAGE> 13
(LIBOR) plus an amount based on the financial condition of the Company. At
March 31, 1996, the amount unused and available under this agreement was
$25 million. The Company is required to pay a fee for the unused portion
of the commitment. The agreement expires on April 29, 2001. The credit
available under the revolving credit agreement provides management with the
ability to refinance certain short-term obligations on a long-term basis.
As it is management's intent to do so, short-term obligations of $25
million have been reclassified as long-term obligations as of March 31,
1996 and December 31, 1995.
On October 10, 1995, the Company issued a private placement of $25 million
principal amount of 7.08% senior unsecured notes due in 2005.
The revolving credit agreement and the private placement agreement contain
covenants that include certain financial tests, including minimum interest
coverage, net worth and maximum borrowings.
On April 24, 1996, the Board of Directors declared a quarterly dividend of
$.07 per share payable on May 29, 1996 to shareholders of record as of May
8, 1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are included with this report.
(b) No reports on Form 8-K were filed for the quarter ending
March 31, 1996.<PAGE>
<PAGE> 14 SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned therunto duly authorized.
AptarGroup, Inc.
(Registrant)
By /s/ Stephen J. Hagge
-----------------------
Stephen J. Hagge
Executive Vice President and Chief
Financial Officer, Secretary and
Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
Date: May 9, 1996<PAGE>
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NO DESCRIPTION
- - ------- -----------
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 17,409
<SECURITIES> 0
<RECEIVABLES> 124,160
<ALLOWANCES> (3,104)
<INVENTORY> 74,431
<CURRENT-ASSETS> 232,102
<PP&E> 481,862
<DEPRECIATION> (238,780)
<TOTAL-ASSETS> 563,650
<CURRENT-LIABILITIES> 120,847
<BONDS> 80,878
0
0
<COMMON> 179
<OTHER-SE> 317,380
<TOTAL-LIABILITY-AND-EQUITY> 563,650
<SALES> 152,954
<TOTAL-REVENUES> 152,954
<CGS> 98,714
<TOTAL-COSTS> 135,215
<OTHER-EXPENSES> 36,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,774)
<INCOME-PRETAX> 17,159
<INCOME-TAX> 6,486
<INCOME-CONTINUING> 10,673
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,673
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
