UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~MARCH 31,~~JUNE 30, 2022

☐ 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.


Delaware						36-3853103
(State of Incorporation)						(I.R.S. Employer Identification No.)

265 EXCHANGE DRIVE, SUITE 100, CRYSTAL LAKE, IL 60014

815-477-0424

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	ATR	New York Stock Exchange

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 þ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated
filer

☐

Smaller reporting
company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares outstanding of common stock, as of ~~April~~July 22, 2022, was ~~65,573,074~~65,337,000 shares.

Table of Contents

AptarGroup, Inc.

Form 10-Q

Quarter Ended ~~March 31,~~June 30, 2022

INDEX


Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income – Three and Six Months Ended ~~March~~June 3 10 , ~~202~~2 2022 and ~~202~~12021	1

	Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended ~~March~~June 3 10 , ~~202~~2 2022 and ~~202~~12021	2

	Condensed Consolidated Balance Sheets – ~~March 31~~June 3 0 , ~~202~~2 2022 and December 31, ~~202~~12021	3

	Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended ~~March~~June 3 10 , ~~202~~2 2022 and ~~202~~12021	5

	Condensed Consolidated Statements of Cash Flows - ~~Three~~Six Months Ended ~~March~~June 3 10 , ~~202~~2 2022 and ~~202~~12021	67

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2731

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3948

Item 4.	Controls and Procedures	3948

Part II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4049

Item 6.	Exhibits	4150

	Signature	4251

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


In thousands, except per share amounts	In thousands, except per share amounts	In thousands, except per share amounts

			Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,				2022		2021
									2022		2021		2022		2021

Net Sales	Net Sales			$	844,932	$	776,754	Net Sales	$	844,543	$	811,032	$	1,689,475	$	1,587,786
Operating Expenses:	Operating Expenses:							Operating Expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	Cost of sales (exclusive of depreciation and amortization shown below)			542,728		488,705		Cost of sales (exclusive of depreciation and amortization shown below)	549,010		523,050		1,091,738		1,011,755
Selling, research & development and administrative	Selling, research & development and administrative			145,541		134,348		Selling, research & development and administrative	135,382		140,913		280,923		275,261
Depreciation and amortization	Depreciation and amortization			58,665		57,438		Depreciation and amortization	58,552		57,790		117,217		115,228
Restructuring initiatives	Restructuring initiatives			291		3,672		Restructuring initiatives	428		4,876		719		8,548
Total Operating Expenses	Total Operating Expenses			747,225		684,163		Total Operating Expenses	743,372		726,629		1,490,597		1,410,792
Operating Income	Operating Income			97,707		92,591		Operating Income	101,171		84,403		198,878		176,994

Other (Expense) Income:	Other (Expense) Income:							Other (Expense) Income:
Interest expense	Interest expense			(8,930)		(7,415)		Interest expense	(11,982)		(7,175)		(20,912)		(14,590)
Interest income	Interest income			288		381		Interest income	989		624		1,277		1,005
Net investment (loss) gain	Net investment (loss) gain			(1,250)		16,809		Net investment (loss) gain	(483)		(1,611)		(1,733)		15,198
Equity in results of affiliates	Equity in results of affiliates			(86)		(515)		Equity in results of affiliates	(276)		81		(362)		(434)
Miscellaneous, net	Miscellaneous, net			(1,103)		(963)		Miscellaneous, net	52		(2,028)		(1,051)		(2,991)
Total Other (Expense) Income	Total Other (Expense) Income			(11,081)		8,297		Total Other (Expense) Income	(11,700)		(10,109)		(22,781)		(1,812)

Income before Income Taxes	Income before Income Taxes			86,626		100,888		Income before Income Taxes	89,471		74,294		176,097		175,182

Provision for Income Taxes	Provision for Income Taxes			24,255		16,949		Provision for Income Taxes	25,858		19,020		50,113		35,969

Net Income	Net Income			$	62,371	$	83,939	Net Income	$	63,613	$	55,274	$	125,984	$	139,213

Net Loss Attributable to Noncontrolling Interests				$	52	$	13
Net Income Attributable to Noncontrolling Interests								Net Income Attributable to Noncontrolling Interests	$	12	$	2	$	64	$	15

Net Income Attributable to AptarGroup, Inc.	Net Income Attributable to AptarGroup, Inc.			$	62,423	$	83,952	Net Income Attributable to AptarGroup, Inc.	$	63,625	$	55,276	$	126,048	$	139,228

Net Income Attributable to AptarGroup, Inc. per Common Share:	Net Income Attributable to AptarGroup, Inc. per Common Share:							Net Income Attributable to AptarGroup, Inc. per Common Share:
Basic	Basic			$	0.95	$	1.29	Basic	$	0.97	$	0.84	$	1.92	$	2.12
Diluted	Diluted			$	0.93	$	1.24	Diluted	$	0.95	$	0.81	$	1.88	$	2.05

Average Number of Shares Outstanding:	Average Number of Shares Outstanding:							Average Number of Shares Outstanding:
Basic	Basic			65,543		65,229		Basic	65,475		65,818		65,509		65,525
Diluted	Diluted			67,146		67,648		Diluted	66,900		68,086		66,969		67,869

Dividends per Common Share	Dividends per Common Share			$	0.38	$	0.36	Dividends per Common Share	$	0.38	$	0.38	$	0.76	$	0.74

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

Table of Contents

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


In thousands	In thousands						In thousands

		Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,			2022		2021
								2022		2021		2022		2021

Net Income	Net Income		$	62,371	$	83,939	Net Income	$	63,613	$	55,274	$	125,984	$	139,213
Other Comprehensive Income (Loss):	Other Comprehensive Income (Loss):						Other Comprehensive Income (Loss):
Foreign currency translation adjustments	Foreign currency translation adjustments		(23,042)		(48,482)		Foreign currency translation adjustments	(68,845)		21,109		(91,887)		(27,373)
Changes in derivative (losses) gains, net of tax			(412)		520
Changes in derivative gains, net of tax							Changes in derivative gains, net of tax	533		289		121		809
Defined benefit pension plan, net of tax	Defined benefit pension plan, net of tax						Defined benefit pension plan, net of tax
Actuarial (loss) gain, net of tax			(783)		319

Actuarial gain (loss), net of tax							Actuarial gain (loss), net of tax	33		123		(750)		442
Prior service cost, net of tax							Prior service cost, net of tax	—		—		—		—
Amortization of prior service cost included in net income, net of tax	Amortization of prior service cost included in net income, net of tax		28		33		Amortization of prior service cost included in net income, net of tax	25		32		53		65
Amortization of net loss included in net income, net of tax	Amortization of net loss included in net income, net of tax		1,580		2,354		Amortization of net loss included in net income, net of tax	1,572		2,354		3,152		4,708
Total defined benefit pension plan, net of tax	Total defined benefit pension plan, net of tax		825		2,706		Total defined benefit pension plan, net of tax	1,630		2,509		2,455		5,215
Total other comprehensive loss			(22,629)		(45,256)
Comprehensive Income			39,742		38,683
Comprehensive Loss Attributable to Noncontrolling Interests			14		13
Comprehensive Income Attributable to AptarGroup, Inc.			$	39,756	$	38,696
Total other comprehensive (loss) income							Total other comprehensive (loss) income	(66,682)		23,907		(89,311)		(21,349)
Comprehensive (Loss) Income							Comprehensive (Loss) Income	(3,069)		79,181		36,673		117,864
Comprehensive Income Attributable to Noncontrolling Interests							Comprehensive Income Attributable to Noncontrolling Interests	826		2		840		15
Comprehensive (Loss) Income Attributable to AptarGroup, Inc.							Comprehensive (Loss) Income Attributable to AptarGroup, Inc.	$	(2,243)	$	79,183	$	37,513	$	117,879

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

Table of Contents

AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In thousands	In thousands					In thousands

		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Assets	Assets					Assets
Cash and equivalents	Cash and equivalents	$	355,629	$	122,925	Cash and equivalents	$	240,474	$	122,925
Short-term investments	Short-term investments	717		740		Short-term investments	—		740
Total Cash and equivalents and Short-term investments	Total Cash and equivalents and Short-term investments	356,346		123,665		Total Cash and equivalents and Short-term investments	240,474		123,665
Accounts and notes receivable, less current expected credit loss ("CECL") of $8,754 in 2022 and $7,374 in 2021		694,373		671,350
Accounts and notes receivable, less current expected credit loss ("CECL") of $9,414 in 2022 and $7,374 in 2021						Accounts and notes receivable, less current expected credit loss ("CECL") of $9,414 in 2022 and $7,374 in 2021	703,000		671,350
Inventories	Inventories	459,613		441,464		Inventories	470,600		441,464
Prepaid and other	Prepaid and other	131,754		121,729		Prepaid and other	144,567		121,729
Total Current Assets	Total Current Assets	1,642,086		1,358,208		Total Current Assets	1,558,641		1,358,208
Land	Land	30,850		31,436		Land	29,632		31,436
Buildings and improvements	Buildings and improvements	638,988		631,897		Buildings and improvements	638,497		631,897
Machinery and equipment	Machinery and equipment	2,861,827		2,862,142		Machinery and equipment	2,788,792		2,862,142
Property, Plant and Equipment, Gross	Property, Plant and Equipment, Gross	3,531,665		3,525,475		Property, Plant and Equipment, Gross	3,456,921		3,525,475
Less: Accumulated depreciation	Less: Accumulated depreciation	(2,255,047)		(2,249,598)		Less: Accumulated depreciation	(2,199,929)		(2,249,598)
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net	1,276,618		1,275,877		Property, Plant and Equipment, Net	1,256,992		1,275,877
Investments in equity securities	Investments in equity securities	57,137		59,485		Investments in equity securities	53,838		59,485
Goodwill	Goodwill	961,757		974,157		Goodwill	936,107		974,157
Intangible assets, net	Intangible assets, net	348,165		362,343		Intangible assets, net	329,285		362,343
Operating lease right-of-use assets	Operating lease right-of-use assets	64,244		62,454		Operating lease right-of-use assets	62,626		62,454
Miscellaneous	Miscellaneous	57,445		48,840		Miscellaneous	60,621		48,840
Total Other Assets	Total Other Assets	1,488,748		1,507,279		Total Other Assets	1,442,477		1,507,279
Total Assets	Total Assets	$	4,407,452	$	4,141,364	Total Assets	$	4,258,110	$	4,141,364

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

Table of Contents

AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In thousands, except share and per share amounts	In thousands, except share and per share amounts					In thousands, except share and per share amounts

		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Notes payable, revolving credit facility and overdrafts	Notes payable, revolving credit facility and overdrafts	$	841	$	147,276	Notes payable, revolving credit facility and overdrafts	$	2,300	$	147,276
Current maturities of long-term obligations, net of unamortized debt issuance costs	Current maturities of long-term obligations, net of unamortized debt issuance costs	142,178		142,351		Current maturities of long-term obligations, net of unamortized debt issuance costs	67,986		142,351
Accounts payable, accrued and other liabilities	Accounts payable, accrued and other liabilities	718,474		692,865		Accounts payable, accrued and other liabilities	751,746		692,865
Total Current Liabilities	Total Current Liabilities	861,493		982,492		Total Current Liabilities	822,032		982,492
Long-Term Obligations, net of unamortized debt issuance costs	Long-Term Obligations, net of unamortized debt issuance costs	1,294,850		907,024		Long-Term Obligations, net of unamortized debt issuance costs	1,271,752		907,024
Deferred income taxes	Deferred income taxes	24,548		27,547		Deferred income taxes	22,096		27,547
Retirement and deferred compensation plans	Retirement and deferred compensation plans	104,344		116,809		Retirement and deferred compensation plans	105,335		116,809
Operating lease liabilities	Operating lease liabilities	47,862		48,010		Operating lease liabilities	46,973		48,010
Deferred and other non-current liabilities	Deferred and other non-current liabilities	75,904		74,882		Deferred and other non-current liabilities	41,458		74,882
Commitments and contingencies	Commitments and contingencies	—		—		Commitments and contingencies	—		—
Total Deferred Liabilities and Other	Total Deferred Liabilities and Other	252,658		267,248		Total Deferred Liabilities and Other	215,862		267,248
AptarGroup, Inc. stockholders’ equity	AptarGroup, Inc. stockholders’ equity					AptarGroup, Inc. stockholders’ equity
Common stock, $.01 par value, 199 million shares authorized, 70.5 and 70.4 million shares issued as of March 31, 2022 and December 31, 2021, respectively		705		704
Common stock, $.01 par value, 199 million shares authorized, 70.6 million and 70.4 million shares issued as of June 30, 2022 and December 31, 2021, respectively						Common stock, $.01 par value, 199 million shares authorized, 70.6 million and 70.4 million shares issued as of June 30, 2022 and December 31, 2021, respectively	706		704
Capital in excess of par value	Capital in excess of par value	929,218		916,534		Capital in excess of par value	939,897		916,534
Retained earnings	Retained earnings	1,826,924		1,789,413		Retained earnings	1,865,634		1,789,413
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(338,708)		(316,041)		Accumulated other comprehensive loss	(404,576)		(316,041)
Less: Treasury stock at cost, 5.0 and 4.9 million shares as of March 31, 2022 and December 31, 2021, respectively		(434,867)		(421,203)
Less: Treasury stock at cost, 5.2 million and 4.9 million shares as of June 30, 2022 and December 31, 2021, respectively						Less: Treasury stock at cost, 5.2 million and 4.9 million shares as of June 30, 2022 and December 31, 2021, respectively	(467,550)		(421,203)
Total AptarGroup, Inc. Stockholders’ Equity	Total AptarGroup, Inc. Stockholders’ Equity	1,983,272		1,969,407		Total AptarGroup, Inc. Stockholders’ Equity	1,934,111		1,969,407
Noncontrolling interests in subsidiaries	Noncontrolling interests in subsidiaries	15,179		15,193		Noncontrolling interests in subsidiaries	14,353		15,193
Total Stockholders’ Equity	Total Stockholders’ Equity	1,998,451		1,984,600		Total Stockholders’ Equity	1,948,464		1,984,600
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	4,407,452	$	4,141,364	Total Liabilities and Stockholders’ Equity	$	4,258,110	$	4,141,364

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

Table of Contents

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


In thousands	In thousands																								In thousands

Three Months Ended	Three Months Ended	AptarGroup, Inc. Stockholders’ Equity																							Three Months Ended	AptarGroup, Inc. Stockholders’ Equity
March 31, 2022 and 2021		Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock Par Value			Treasury Stock				Capital in Excess of Par Value				Non- Controlling Interest			Total Equity
June 30, 2022 and 2021													June 30, 2022 and 2021	Retained Earnings							Accumulated Other Comprehensive (Loss) Income						Common Stock Par Value				Treasury Stock			Capital in Excess of Par Value						Non- Controlling Interest						Total Equity
				Retained Earnings						Accumulated Other Comprehensive (Loss) Income			Common Stock Par Value					Treasury Stock				Capital in Excess of Par Value							Non- Controlling Interest								Total Equity
Balance - December 31, 2020
Balance - March 31, 2021																									Balance - March 31, 2021	$	1,704,336				$	(326,965)		$	700							$	(352,282)					$	874,623					$	383					$	1,900,795
Net income (loss)	Net income (loss)	83,952					—				—						—								—					(13)			83,939			Net income (loss)		55,276						—						—						—						—	(2)	55,274

Foreign currency translation adjustments	Foreign currency translation adjustments	—			(48,482)			—			—				—				—					(48,482)		Foreign currency translation adjustments		—				21,109			—						—						—						—						21,109
Changes in unrecognized pension gains (losses) and related amortization, net of tax		—			2,706			—			—				—				—			2,706
Changes in derivative gains (losses), net of tax		—			520			—			—				—				—			520
Changes in unrecognized pension gains and related amortization, net of tax																									Changes in unrecognized pension gains and related amortization, net of tax	—				2,509			—						—						—						—						2,509
Changes in derivative gains, net of tax																									Changes in derivative gains, net of tax	—				289			—						—						—						—						289
Stock awards and option exercises	Stock awards and option exercises	—			—			5			9,301				25,462				—			34,768			Stock awards and option exercises	—				—			2						7,900						23,759						—						31,661
Cash dividends declared on common stock	Cash dividends declared on common stock	(23,441)			—			—			—				—				—			(23,441)			Cash dividends declared on common stock	(24,974)				—			—						—						—						—						(24,974)

Balance - March 31, 2021		$	1,704,336		$	(326,965)		$	700		$	(352,282)			$	874,623			$	383		$	1,900,795
Balance - June 30, 2021																									Balance - June 30, 2021	$	1,734,638			$	(303,058)		$	702					$	(344,382)					$	898,382					$	381					$	1,986,663

Balance - December 31, 2021		$	1,789,413		$	(316,041)		$	704		$	(421,203)			$	916,534			$	15,193		$	1,984,600
Balance - March 31, 2022																									Balance - March 31, 2022	$	1,826,924			$	(338,708)		$	705					$	(434,867)					$	929,218					$	15,179					$	1,998,451
Net income (loss)	Net income (loss)	62,423			—			—			—				—				(52)			62,371			Net income (loss)	63,625				—			—						—						—						(12)						63,613

Foreign currency translation adjustments	Foreign currency translation adjustments	—			(23,080)			—			—				—				38			(23,042)			Foreign currency translation adjustments	—				(68,031)			—						—						—						(814)						(68,845)
Changes in unrecognized pension gains (losses) and related amortization, net of tax		—			825			—			—				—				—			825
Changes in derivative gains (losses), net of tax		—			(412)			—			—				—				—			(412)
Changes in unrecognized pension gains and related amortization, net of tax																									Changes in unrecognized pension gains and related amortization, net of tax	—				1,630			—						—						—						—						1,630
Changes in derivative gains, net of tax																									Changes in derivative gains, net of tax	—				533			—						—						—						—						533
Stock awards and option exercises	Stock awards and option exercises	—			—			1			2,319				12,684				—			15,004			Stock awards and option exercises	—				—			1						4,422						10,679						—						15,102
Cash dividends declared on common stock	Cash dividends declared on common stock	(24,912)			—			—			—				—				—			(24,912)			Cash dividends declared on common stock	(24,915)				—			—						—						—						—						(24,915)
Treasury stock purchased	Treasury stock purchased	—			—			—			(15,983)				—				—			(15,983)			Treasury stock purchased	—				—			—						(37,105)						—						—						(37,105)
Balance - March 31, 2022		$	1,826,924		$	(338,708)		$	705		$	(434,867)			$	929,218			$	15,179		$	1,998,451
Balance - June 30, 2022																									Balance - June 30, 2022	$	1,865,634			$	(404,576)		$	706					$	(467,550)					$	939,897					$	14,353					$	1,948,464

Table of Contents


In thousands

Six Months Ended	AptarGroup, Inc. Stockholders’ Equity
June 30, 2022 and 2021	Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Common Stock Par Value		Treasury Stock		Capital in Excess of Par Value		Non- Controlling Interest		Total Equity

Balance - December 31, 2020	$	1,643,825	$	(281,709)	$	695	$	(361,583)	$	849,161	$	396	$	1,850,785
Net income (loss)	139,228		—		—		—		—		(15)		139,213


Foreign currency translation adjustments	—		(27,373)		—		—		—		—		(27,373)
Changes in unrecognized pension gains and related amortization, net of tax	—		5,215		—		—		—		—		5,215
Changes in derivative gains, net of tax	—		809		—		—		—		—		809
Stock awards and option exercises	—		—		7		17,201		49,221		—		66,429
Cash dividends declared on common stock	(48,415)		—		—		—		—		—		(48,415)

Balance - June 30, 2021	$	1,734,638	$	(303,058)	$	702	$	(344,382)	$	898,382	$	381	$	1,986,663

Balance - December 31, 2021	$	1,789,413	$	(316,041)	$	704	$	(421,203)	$	916,534	$	15,193	$	1,984,600
Net income (loss)	126,048		—		—		—		—		(64)		125,984

Foreign currency translation adjustments	—		(91,111)		—		—		—		(776)		(91,887)
Changes in unrecognized pension gains and related amortization, net of tax	—		2,455		—		—		—		—		2,455
Changes in derivative gains, net of tax	—		121		—		—		—		—		121
Stock awards and option exercises	—		—		2		6,741		23,363		—		30,106
Cash dividends declared on common stock	(49,827)		—		—		—		—		—		(49,827)
Treasury stock purchased	—		—		—		(53,088)		—		—		(53,088)
Balance - June 30, 2022	$	1,865,634	$	(404,576)	$	706	$	(467,550)	$	939,897	$	14,353	$	1,948,464

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


In thousands, brackets denote cash outflows	In thousands, brackets denote cash outflows					In thousands, brackets denote cash outflows

Three Months Ended March 31,		2022		2021
Six Months Ended June 30,						Six Months Ended June 30,	2022		2021

Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	62,371	$	83,939	Net income	$	125,984	$	139,213
Adjustments to reconcile net income to net cash provided by operations:	Adjustments to reconcile net income to net cash provided by operations:					Adjustments to reconcile net income to net cash provided by operations:
Depreciation	Depreciation	47,638		47,627		Depreciation	95,123		95,606
Amortization	Amortization	11,027		9,811		Amortization	22,094		19,622
Stock-based compensation	Stock-based compensation	13,362		11,489		Stock-based compensation	22,136		21,805
Provision for CECL	Provision for CECL	1,393		342		Provision for CECL	2,338		(240)
(Gain) loss on disposition of fixed assets	(Gain) loss on disposition of fixed assets	(182)		91		(Gain) loss on disposition of fixed assets	(179)		5
Net loss (gain) on remeasurement of equity securities	Net loss (gain) on remeasurement of equity securities	1,250		(16,809)		Net loss (gain) on remeasurement of equity securities	1,733		(15,198)
Deferred income taxes	Deferred income taxes	(2,859)		(3,580)		Deferred income taxes	(5,484)		(6,865)
Defined benefit plan expense	Defined benefit plan expense	6,225		7,475		Defined benefit plan expense	12,347		14,650
Equity in results of affiliates	Equity in results of affiliates	86		515		Equity in results of affiliates	362		434
Change in fair value of contingent consideration	Change in fair value of contingent consideration	(1,050)		975		Change in fair value of contingent consideration	(2,265)		1,950
Changes in balance sheet items, excluding effects from foreign currency adjustments:	Changes in balance sheet items, excluding effects from foreign currency adjustments:					Changes in balance sheet items, excluding effects from foreign currency adjustments:
Accounts and other receivables	Accounts and other receivables	(28,977)		(70,194)		Accounts and other receivables	(60,045)		(76,735)
Inventories	Inventories	(21,758)		(26,428)		Inventories	(49,242)		(55,873)
Prepaid and other current assets	Prepaid and other current assets	(10,629)		(16,995)		Prepaid and other current assets	(24,091)		(19,793)
Accounts payable, accrued and other liabilities	Accounts payable, accrued and other liabilities	32,012		49,764		Accounts payable, accrued and other liabilities	62,973		69,139
Income taxes payable	Income taxes payable	1,697		(3,121)		Income taxes payable	822		(5,261)
Retirement and deferred compensation plan liabilities	Retirement and deferred compensation plan liabilities	(19,913)		(5,156)		Retirement and deferred compensation plan liabilities	(19,727)		(9,657)
Other changes, net	Other changes, net	384		2,440		Other changes, net	(8,225)		2,779
Net Cash Provided by Operations	Net Cash Provided by Operations	92,077		72,185		Net Cash Provided by Operations	176,654		175,581
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(73,058)		(63,884)		Capital expenditures	(147,262)		(137,039)
Proceeds from government grants	Proceeds from government grants	7,955		—		Proceeds from government grants	12,794		—
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	446		318		Proceeds from sale of property, plant and equipment	507		4,571
Maturity of short-term investment	Maturity of short-term investment	24		243		Maturity of short-term investment	740		243

Acquisition of business, net of cash acquired and release of escrow						Acquisition of business, net of cash acquired and release of escrow	—		(4,834)

Proceeds from sale of investment in equity securities	Proceeds from sale of investment in equity securities	1,088		—		Proceeds from sale of investment in equity securities	1,088		—
Notes receivable, net	Notes receivable, net	(4,876)		(593)		Notes receivable, net	(6,992)		(29)
Net Cash Used by Investing Activities	Net Cash Used by Investing Activities	(68,421)		(63,916)		Net Cash Used by Investing Activities	(139,125)		(137,088)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Proceeds from notes payable and overdrafts	Proceeds from notes payable and overdrafts	9,172		4,019		Proceeds from notes payable and overdrafts	20,457		7,410
Repayments of notes payable and overdrafts	Repayments of notes payable and overdrafts	(11,293)		(3,180)		Repayments of notes payable and overdrafts	(21,010)		(4,615)
Repayments and proceeds of short term revolving credit facility, net	Repayments and proceeds of short term revolving credit facility, net	(144,345)		(52,000)		Repayments and proceeds of short term revolving credit facility, net	(144,345)		(52,000)
Proceeds from long-term obligations	Proceeds from long-term obligations	402,153		2,053		Proceeds from long-term obligations	402,244		7,888
Repayments of long-term obligations	Repayments of long-term obligations	(2,795)		(4,337)		Repayments of long-term obligations	(80,453)		(7,001)
Debt issuance costs	Debt issuance costs	(3,766)		—		Debt issuance costs	(4,009)		(1,718)

Dividends paid	Dividends paid	(24,912)		(23,441)		Dividends paid	(49,827)		(48,415)
Proceeds from stock option exercises	Proceeds from stock option exercises	3,688		31,871		Proceeds from stock option exercises	11,416		53,038
Purchase of treasury stock	Purchase of treasury stock	(15,983)		—		Purchase of treasury stock	(53,088)		—
Net Cash Provided (Used) by Financing Activities	Net Cash Provided (Used) by Financing Activities	211,919		(45,015)		Net Cash Provided (Used) by Financing Activities	81,385		(45,413)
Effect of Exchange Rate Changes on Cash	Effect of Exchange Rate Changes on Cash	(2,871)		(8,539)		Effect of Exchange Rate Changes on Cash	(1,365)		(6,555)
Net Increase (Decrease) in Cash and Equivalents and Restricted Cash		232,704		(45,285)
Cash and Equivalents and Restricted Cash at Beginning of Period		122,925		304,970
Cash and Equivalents and Restricted Cash at End of Period		$	355,629	$	259,685
Net Increase (Decrease) in Cash and Equivalents						Net Increase (Decrease) in Cash and Equivalents	117,549		(13,475)
Cash and Equivalents at Beginning of Period						Cash and Equivalents at Beginning of Period	122,925		304,970
Cash and Equivalents at End of Period						Cash and Equivalents at End of Period	$	240,474	$	291,495

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Restricted cash included in the line item prepaid and other on the Condensed Consolidated Balance Sheets as shown below represents amounts held in escrow related to the Fusion Acquisition and the Noble Acquisition.

Three Months Ended March 31, 2022 2021
Cash and equivalents $ 355,629 $ 254,852
Restricted cash included in prepaid and other — 4,833
Total Cash and Equivalents and Restricted Cash shown in the Statement of Cash Flows $ 355,629 $ 259,685

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands, Except per Share Amounts, or as Otherwise Indicated)

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of AptarGroup, Inc. and our subsidiaries. The terms “AptarGroup”, “Aptar”, “Company”, “we”, “us” or “our” as used herein refer to AptarGroup, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated.

In the opinion of management, the unaudited Condensed Consolidated Financial Statements (the “Condensed Consolidated Financial Statements”) include all normal recurring adjustments necessary for a fair statement of consolidated financial position, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. The accompanying Condensed Consolidated Financial Statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. Also, certain financial position data included herein was derived from the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 but does not include all disclosures required by U.S. GAAP. Accordingly, these Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

The extent to which the COVID-19 pandemic impacts our financial results and operations for all 3 of our business segments will depend on future developments which are highly uncertain and cannot be predicted, including the emergence of new variants, the availability, adoption and efficacy of vaccines and boosters, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extended in response to any further resurgence of the virus and numerous other uncertainties. No impairments were recorded as of ~~March 31,~~June 30, 2022 related to the COVID-19 pandemic. However, due to the general uncertainty surrounding the situation, including areas such as cost inflation, supply chain disruptions and labor shortages, future results could be materially impacted.

~~The~~As of June 30, 2022, the war in Ukraine ~~and the recent COVID-19 outbreak in China have~~has not ~~as of March 31, 2022~~ had a significant direct impact on our business, ~~in these regions,~~ though the near-term visibility for ~~both of these situations~~this situation is expected to remain fluid and uncertain for the next several quarters. However, we have ~~started to experience~~experienced some indirect impacts on our business, including higher ~~energy~~input costs and certain supply chain ~~interruptions.~~disruptions.

ADOPTION OF RECENT ACCOUNTING STANDARDS

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy including the nature of the transaction, the financial statement line items affected by the transaction and any significant terms and conditions associated with the transactions. We adopted this guidance in the fourth quarter of 2021 using the prospective approach.

In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments to this update apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 was further amended in January 2021 by ASU 2021-01 which clarified the applicability of certain provisions. Both standards are effective upon issuance and can be adopted any time prior to December 31, 2022. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. During 2021, we amended the revolving credit facility to provide mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. We are evaluating any further impact this standard may have on our Condensed Consolidated Financial Statements and anticipate no further significant impacts.

Other accounting standards that have been issued by the FASB or other standards-setting bodies did not have a material impact on our Condensed Consolidated Financial Statements.

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INCOME TAXES

We compute taxes on income in accordance with the tax rules and regulations of the many taxing authorities where income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pre-tax income for financial accounting purposes. To the extent that these differences create timing differences between the tax basis of an asset or liability and our reported amount in the financial statements, an appropriate provision for deferred income taxes is made.

We maintain our assertion that the cash and distributable reserves at our non-U.S. affiliates are indefinitely reinvested. As of ~~March 31,~~June 30, 2022, under currently enacted laws, we do not have a balance of foreign earnings that will be subject to U.S. taxation upon repatriation. We will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and our global cash management goals.

We provide a liability for the amount of unrecognized tax benefits from uncertain tax positions. This liability is provided whenever we determine that a tax benefit will not meet a more-likely-than-not threshold for recognition.

We are subject to the examination of our returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies. We believe that we have adequately provided a tax reserve for any adjustments that may result from tax examinations or uncertain tax positions. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner inconsistent with our expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. The resolution of each of these audits is not expected to be material to our Condensed Consolidated Financial Statements.

NOTE 2 – REVENUE

Revenue by segment and geography for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 is as follows:


	For the Three Months Ended June 30, 2022
Segment	Europe		Domestic		Latin America		Asia		Total
Pharma	$	209,118	$	108,414	$	6,339	$	16,360	$	340,231
Beauty + Home	202,276		102,354		40,504		26,212		371,346
Food + Beverage	33,571		78,034		12,299		9,062		132,966
Total	$	444,965	$	288,802	$	59,142	$	51,634	$	844,543


	For the Three Months Ended June 30, 2021
Segment	Europe		Domestic		Latin America		Asia		Total
Pharma	$	212,220	$	93,527	$	5,294	$	14,302	$	325,343
Beauty + Home	192,371		103,679		38,882		25,314		360,246
Food + Beverage	32,402		71,974		11,885		9,182		125,443
Total	$	436,993	$	269,180	$	56,061	$	48,798	$	811,032


	For the Six Months Ended June 30, 2022
Segment	Europe		Domestic		Latin America		Asia		Total
Pharma	$	420,125	$	214,755	$	14,194	$	33,619	$	682,693
Beauty + Home	411,359		198,170		77,702		52,314		739,545
Food + Beverage	68,612		155,882		24,990		17,753		267,237
Total	$	900,096	$	568,807	$	116,886	$	103,686	$	1,689,475

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	For the Six Months Ended June 30, 2021
Segment	Europe		Domestic		Latin America		Asia		Total
Pharma	$	420,167	$	182,822	$	10,664	$	25,522	$	639,175
Beauty + Home	381,611		202,486		73,224		49,871		707,192
Food + Beverage	60,904		139,037		21,138		20,340		241,419
Total	$	862,682	$	524,345	$	105,026	$	95,733	$	1,587,786

For the Three Months Ended March 31, 2022
Segment Europe Domestic Latin
America Asia Total
Pharma $ 211,007 $ 106,341 $ 7,855 $ 17,259 $ 342,462
Beauty + Home 209,083 95,816 37,198 26,102 368,199
Food + Beverage 35,041 77,848 12,691 8,691 134,271
Total $ 455,131 $ 280,005 $ 57,744 $ 52,052 $ 844,932

For the Three Months Ended March 31, 2021
Segment Europe Domestic Latin
America Asia Total
Pharma $ 207,947 $ 89,295 $ 5,370 $ 11,220 $ 313,832
Beauty + Home 189,240 98,807 34,342 24,557 346,946
Food + Beverage 28,502 67,063 9,253 11,158 115,976
Total $ 425,689 $ 255,165 $ 48,965 $ 46,935 $ 776,754

We perform our obligations under a contract with a customer by transferring goods and/or services in exchange for consideration from the customer. The timing of performance will sometimes differ from the timing of the receipt of the associated consideration from the customer, thus resulting in the recognition of a contract asset or a contract liability. We recognize a contract asset when we transfer control of goods or services to a customer prior to invoicing for the related performance obligation. The contract asset is transferred to accounts receivable when the product is shipped and invoiced to the customer. We recognize a contract liability if the customer's payment of consideration precedes the entity's performance.

The opening and closing balances of our contract asset and contract liabilities are as follows:

Balance as of December 31, 2021 Balance as of March 31, 2022 Increase/
(Decrease)
Contract asset (current) $ 16,878 $ 15,236 $ (1,642)
Contract liability (current) 86,340 91,711 5,371
Contract liability (long-term) 21,905 21,133 (772)


	Balance as of December 31, 2021		Balance as of June 30, 2022		Increase/ (Decrease)
Contract asset (current)	$	16,878	$	14,787	$	(2,091)

Contract liability (current)	86,340		94,667		8,327
Contract liability (long-term)	21,905		20,254		(1,651)

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The differences in the opening and closing balances of our contract asset and contract liabilities are primarily the result of timing differences between our performance and the customer’s payment. The total amount of revenue recognized during the current year against contract liabilities is ~~$25.4~~$51.6 million, including ~~$21.4~~$33.2 million relating to contract liabilities at the beginning of the year. Current contract assets and long-term contract assets are included within the Prepaid and Other and Miscellaneous assets, respectively, while current contract liabilities and long-term contract liabilities are included within Accounts ~~Payable, Accrued~~payable, accrued and ~~Other Liabilities~~other liabilities and ~~Deferred~~deferred and ~~Other Non-current Liabilities,~~other non-current liabilities, respectively, within our Condensed Consolidated Balance Sheets.

Determining the Transaction Price

In most cases, the transaction price for each performance obligation is stated in the contract. In determining the variable amounts of consideration within the transaction price (such as volume-based customer rebates), we include an estimate of the expected amount of consideration as revenue. We apply the expected value method based on all of the information (historical, current, and forecast) that is reasonably available and identify reasonable estimates based on this information. We apply the method consistently throughout the contract when estimating the effect of an uncertainty on the amount of variable consideration to which we will be entitled.

Product Sales

We primarily manufacture and sell drug delivery, consumer product dispensing and active material science solutions. The amount of consideration is typically fixed for customers. At the time of delivery, the customer is invoiced at the agreed-upon price. Revenue from product sales is typically recognized upon manufacture or shipment, when control of the goods transfers to the customer.

To determine when the control transfers, we typically assess, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. For a majority of product sales, control of the goods transfers to the customer at the time of shipment of the goods. Once the goods are shipped, we are precluded from redirecting the shipment to another customer. Therefore, our performance obligation is satisfied at the time of shipment. For sales in which control transfers upon delivery, shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs and revenue is recorded upon final delivery to the customer location. We have elected to account for shipping and handling costs that occur after the customer has obtained control of a good as fulfillment costs rather than as a promised service. We do not have any material significant payment terms as payment is typically received shortly after the point of sale.

There also exist instances where we manufacture highly customized products that have no alternative use to us and for which we have an enforceable right to payment for performance completed to date. For these products, we transfer control and recognize revenue over time by measuring progress towards completion using the ~~Output Method~~output method based on the number of products produced. As we normally make our products to a customer’s order, the time between production and shipment of our products is typically within a few weeks. We believe this measurement provides a faithful depiction of the transfer of goods as the costs incurred reflect the value of the products produced.

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As a part of our customary business practice, we offer a standard warranty that the products will materially comply with the technical specifications and will be free from material defects. Because such warranties are not sold separately, do not provide for any service beyond a guarantee of a product’s initial specifications, and are not required by law, there is no revenue deferral for these types of warranties.

Tooling Sales

We also build or contract for molds and other tools (collectively defined as “tooling”) necessary to produce our products. As with product sales, we recognize revenue when control of the tool transfers to the customer. If the tooling is highly customized with no alternative use to us and we have an enforceable right to payment for performance completed to date, we transfer control and recognize revenue over time by measuring progress towards completion using the ~~Input Method~~input method based on costs incurred relative to total estimated costs to completion. Otherwise, revenue for the tooling is recognized at the point in time when the customer approves the tool. We do not have any material significant payment terms as payment is typically either received during the mold-build process or shortly after completion.

In certain instances, we offer extended warranties on our tools above and beyond the normal standard warranties. We normally receive payment at the inception of the contract and recognize revenue over the term of the contract. We do not have any material extended warranties as of ~~March 31,~~June 30, 2022 or December 31, 2021.

Service Sales

We also provide services to our pharmaceutical customers. As with product sales, we recognize revenue based on completion of each performance obligation of the service contract.

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Contract Costs

We do not incur significant costs to obtain or fulfill revenue contracts.

Credit Risk

We are exposed to credit losses primarily through our product sales, tooling sales and services to our customers. We assess each customer’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the customer’s established credit rating or our assessment of the customer’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risks, and business strategy in our evaluation. A credit limit is established for each customer based on the outcome of this review.

We monitor our ongoing credit exposure through active review of customer balances against contract terms and due dates. Our activities include timely account reconciliation, dispute resolution and payment confirmation. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

Current uncertainty in credit and market conditions due to the COVID-19 pandemic and the war in Ukraine may slow our collection efforts if customers experience significant difficulty accessing credit and paying their obligations or due to imposed sanctions delaying payment which may lead to higher than normal accounts receivable and increased CECL charges.

NOTE 3 - INVENTORIES

Inventories, by component net of reserves, consisted of:


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Raw materials	Raw materials	$	145,249	$	140,818	Raw materials	$	153,353	$	140,818
Work in process	Work in process	143,591		137,654		Work in process	145,806		137,654
Finished goods	Finished goods	170,773		162,992		Finished goods	171,441		162,992
Total	Total	$	459,613	$	441,464	Total	$	470,600	$	441,464

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NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill by reporting segment since December 31, 2021 are as follows:



	Pharma		Beauty + Home		Food + Beverage		Total
Balance as of December 31, 2021	$	520,197	$	325,719	$	128,241	$	974,157

Foreign currency exchange effects	(29,275)		(8,295)		(480)		(38,050)
Balance as of June 30, 2022	$	490,922	$	317,424	$	127,761	$	936,107

Pharma Beauty +
Home Food +
Beverage Total
Balance as of December 31, 2021 $ 520,197 $ 325,719 $ 128,241 $ 974,157
Foreign currency exchange effects (9,386) (2,845) (169) (12,400)
Balance as of March 31, 2022 $ 510,811 $ 322,874 $ 128,072 $ 961,757

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The table below shows a summary of intangible assets as of ~~March 31,~~June 30, 2022 and December 31, 2021.



		June 30, 2022						December 31, 2021
Weighted Average Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization		Net Value		Gross Carrying Amount		Accumulated Amortization		Net Value
Amortized intangible assets:
Patents	14.1	$	2,799	$	(1,650)	$	1,149	$	2,767	$	(1,528)	$	1,239
Acquired technology	11.4	133,695		(49,689)		84,006		140,936		(45,613)		95,323
Customer relationships	13.4	303,681		(86,613)		217,068		311,964		(77,512)		234,452
Trademarks and trade names	7.0	43,371		(24,973)		18,398		44,893		(22,886)		22,007
License agreements and other	39.1	15,310		(6,646)		8,664		16,179		(6,857)		9,322
Total intangible assets	13.2	$	498,856	$	(169,571)	$	329,285	$	516,739	$	(154,396)	$	362,343

March 31, 2022 December 31, 2021
Weighted Average Amortization Period (Years) Gross
Carrying
Amount Accumulated
Amortization Net
Value Gross
Carrying
Amount Accumulated
Amortization Net
Value
Amortized intangible assets:
Patents 13.9 $ 2,870 $ (1,664) $ 1,206 $ 2,767 $ (1,528) $ 1,239
Acquired technology 11.5 138,488 (47,989) 90,499 140,936 (45,613) 95,323
Customer relationships 13.3 309,610 (82,634) 226,976 311,964 (77,512) 234,452
Trademarks and trade names 7.0 44,364 (24,084) 20,280 44,893 (22,886) 22,007
License agreements and other 39.2 16,045 (6,841) 9,204 16,179 (6,857) 9,322
Total intangible assets 13.2 $ 511,377 $ (163,212) $ 348,165 $ 516,739 $ (154,396) $ 362,343

Aggregate amortization expense for the intangible assets above for the ~~three months~~quarters ended ~~March 31,~~June 30, 2022 and 2021 was ~~$11,027~~$11,067 and $9,811, respectively. Aggregate amortization expense for the intangible assets above for the six months ended June 30, 2022 and 2021 was $22,094 and $19,622, respectively.

Future estimated amortization expense for the years ending December 31 is as follows:


2022	2022	$	33,180	(remaining estimated amortization for 2022)	2022	$	21,459	(remaining estimated amortization for 2022)
2023	2023	43,721			2023	42,669
2024	2024	40,541			2024	39,455
2025	2025	39,088			2025	38,039
2026	2026	36,874			2026	35,919
Thereafter	Thereafter	154,761			Thereafter	151,744

Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of ~~March 31,~~June 30, 2022.

NOTE 5 – INCOME TAXES

The effective tax rate for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, was ~~28.0%~~28.9% and ~~16.8%~~25.6%. The effective tax rate for the six months ended June 30, 2022 and 2021, respectively, was 28.5% and 20.5%. The lower effective tax rate for the three and six months ended ~~March 31,~~June 30, 2021 reflects ~~incremental~~additional tax benefits from employee stock-based ~~compensation~~compensation.

Table of ~~$8.0 million and a $2.9 million benefit from changes in U.S. state tax laws for the three months ended March 31, 2021.~~Contents

NOTE 6 – DEBT

Notes Payable, Revolving Credit Facility and Overdrafts

At ~~March 31,~~June 30, 2022 and December 31, 2021, our notes payable, revolving credit facility and overdrafts consisted of the following:


		March 31, 2022		December 31, 2021
							June 30, 2022		December 31, 2021
Revolving credit facility	Revolving credit facility	$	—	$	144,383	Revolving credit facility	$	—	$	144,383
Overdrafts 6.25% to 13.40%		841		2,893
Overdrafts 0.35% to 14.90%						Overdrafts 0.35% to 14.90%	2,300		2,893
		$	841	$	147,276		$	2,300	$	147,276

~~Table of Contents~~

On June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") with a syndicate of banks to replace the then existing facility maturing July 2022 (the "prior credit facility") ~~maturing July 2022~~ and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term facility"). The revolving credit facility matures in June 2026, subject to a maximum of 2 one-year extensions in certain circumstances, and provides for unsecured financing of up to $600 million available in the U.S. and to our wholly-owned UK subsidiary. The amended term facility matures in July 2022. The revolving credit facility can be drawn in various currencies including USD, EUR, GBP, and CHF to the equivalent of $600 million, which may be increased by up to $300 million subject to the satisfaction of certain conditions. As of ~~March 31,~~June 30, 2022, no balance was utilized under the revolving credit facility in the U.S. or by our wholly-owned UK subsidiary and $56 million remained outstanding under the amended term facility. As of December 31, 2021, $133 million was utilized under the revolving credit facility in the U.S., €10 million (approximately $11.4 ~~million)~~million given the exchange rates at the end of 2021) was utilized by our wholly-owned UK subsidiary and $56 million remained outstanding under the amended term facility.

There are no compensating balance requirements associated with our revolving credit facility. Each borrowing under the revolving credit facility will bear interest at rates based on LIBOR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. The revolving credit facility provides mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio.

In October 2020, we entered into an unsecured money market borrowing arrangement to provide short term financing of up to $30 million that is available in the U.S. No borrowing on this facility is permitted over a quarter end date. As such, no balance was utilized under this arrangement as of ~~March 31,~~June 30, 2022 or December 31, 2021.

Long-Term Obligations

On March 7, 2022, we issued $400 million aggregate principal amount of 3.600% Senior Notes due March 2032 in an underwritten public offering. The form and terms of the notes were established pursuant to an Indenture, dated as of March 7, 2022, as amended and supplemented by a First Supplemental Indenture, dated as of March 7, 2022, each between the Company and U.S. Bank Trust Company, National Association, as trustee. Interest is payable semi-annually in arrears. The notes are unsecured obligations and rank equally in right of payment with all of our other existing and future senior, unsecured indebtedness. We redeemed all $75.0 million of our 3.25% senior unsecured notes during the second quarter at a price equal to the principal amount plus accrued interest and $0.4 million make-whole payment.

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At ~~March 31,~~June 30, 2022 and December 31, 2021, our long-term obligations consisted of the following:

March 31, 2022 December 31, 2021
Notes payable 0.00% – 14.42%, due in monthly and annual installments through 2028 $ 26,087 $ 22,785
Senior unsecured notes 3.2%, due in 2022 75,000 75,000
Senior unsecured debts 1.38% USD floating swapped to 1.36% EUR fixed, due in 2022 56,000 56,000
Senior unsecured notes 3.5%, due in 2023 125,000 125,000
Senior unsecured notes 1.0%, due in 2023 110,640 113,830
Senior unsecured notes 3.4%, due in 2024 50,000 50,000
Senior unsecured notes 3.5%, due in 2024 100,000 100,000
Senior unsecured notes 1.2%, due in 2024 221,280 227,660
Senior unsecured notes 3.6%, due in 2025 125,000 125,000
Senior unsecured notes 3.6%, due in 2026 125,000 125,000
Senior unsecured notes 3.6%, due in 2032, net of discount of $1,027 398,973 —
Finance Lease Liabilities 29,284 30,185
Unamortized debt issuance costs (5,236) (1,085)
$ 1,437,028 $ 1,049,375
Current maturities of long-term obligations (142,178) (142,351)
Total long-term obligations $ 1,294,850 $ 907,024

~~Table of Contents~~


	June 30, 2022		December 31, 2021
Notes payable 0.00% – 14.42%, due in monthly and annual installments through 2028	$	22,478	$	22,785
Senior unsecured notes 3.2%, due in 2022	—		75,000
Senior unsecured debts 2.19% USD floating swapped to 1.36% EUR fixed, due in 2022	56,000		56,000
Senior unsecured notes 3.5%, due in 2023	125,000		125,000
Senior unsecured notes 1.0%, due in 2023	104,790		113,830
Senior unsecured notes 3.4%, due in 2024	50,000		50,000
Senior unsecured notes 3.5%, due in 2024	100,000		100,000
Senior unsecured notes 1.2%, due in 2024	209,580		227,660
Senior unsecured notes 3.6%, due in 2025	125,000		125,000
Senior unsecured notes 3.6%, due in 2026	125,000		125,000
Senior unsecured notes 3.6%, due in 2032, net of discount of $1,001	398,999		—
Finance Lease Liabilities	27,938		30,185
Unamortized debt issuance costs	(5,047)		(1,085)
	$	1,339,738	$	1,049,375
Current maturities of long-term obligations	(67,986)		(142,351)
Total long-term obligations	$	1,271,752	$	907,024

The aggregate long-term maturities, excluding finance lease liabilities, which are disclosed in Note 7, due annually from the current balance sheet date for the next five years are:


Year One	$	~~138,729~~64,685
Year Two	~~343,403~~334,416
Year Three	~~276,394~~263,811
Year Four	~~254,268~~254,223
Year Five	~~1,103~~632
Thereafter	~~399,083~~399,080

Covenants

Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:

Requirement

Level at ~~March 31,~~June 30, 2022

Consolidated Leverage Ratio (1)

Maximum of 3.50 to 1.00

~~1.83~~1.84 to 1.00

Consolidated Interest Coverage Ratio (1)

Minimum of 3.00 to 1.00

~~18.90~~16.58 to 1.00

(1)Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.

NOTE 7 – LEASES

We lease certain warehouse, plant and office facilities as well as certain equipment under non-cancelable operating and finance leases expiring at various dates through the year 2034. Most of the operating leases contain renewal options and certain leases include options to purchase the related asset during or at the end of the lease term.

Amortization expense related to finance leases is included in depreciation expense, while rent expense related to operating leases is included within cost of sales and selling, research & development and administrative expenses (“SG&A”).

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The components of lease expense for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 were as follows:


		Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,			2022		2021
								2022		2021		2022		2021
Operating lease cost	Operating lease cost		$	5,281	$	5,789	Operating lease cost	$	4,921	$	6,044	$	10,202	$	11,833

Finance lease cost:	Finance lease cost:						Finance lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets		$	1,129	$	976	Amortization of right-of-use assets	$	949	$	1,099	$	2,078	$	2,075
Interest on lease liabilities	Interest on lease liabilities		325		312		Interest on lease liabilities	314		375		639		687
Total finance lease cost	Total finance lease cost		$	1,454	$	1,288	Total finance lease cost	$	1,263	$	1,474	$	2,717	$	2,762

Short-term lease and variable lease costs	Short-term lease and variable lease costs		$	3,982	$	3,128	Short-term lease and variable lease costs	$	2,746	$	2,444	$	6,728	$	5,572

Supplemental cash flow information related to leases was as follows:


Three Months Ended March 31,		2022		2021
Six Months Ended June 30,						Six Months Ended June 30,	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	5,500	$	5,755	Operating cash flows from operating leases	$	10,337	$	11,771
Operating cash flows from finance leases	Operating cash flows from finance leases	335		349		Operating cash flows from finance leases	645		716
Financing cash flows from finance leases	Financing cash flows from finance leases	1,179		1,198		Financing cash flows from finance leases	1,989		2,337

Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:					Right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	6,406	$	1,496	Operating leases	$	11,903	$	4,739
Finance leases	Finance leases	599		47		Finance leases	731		4,792

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NOTE 8 – RETIREMENT AND DEFERRED COMPENSATION PLANS

Effective January 1, 2021, our domestic noncontributory retirement plans were closed to new employees and employees who were rehired after December 31, 2020. These employees are instead eligible for additional contribution to their defined contribution 401(k) employee savings plan. All domestic employees with hire/rehire dates prior to January 1, 2021 are still eligible for the domestic pension plans and continue to accrue plan benefits after this date.

Components of Net Periodic Benefit Cost:


		Domestic Plans				Foreign Plans					Domestic Plans				Foreign Plans
Three Months Ended March 31,		2022		2021		2022		2021
Three Months Ended June 30,										Three Months Ended June 30,	2022		2021		2022		2021
Service cost	Service cost	$	3,945	$	4,227	$	1,970	$	2,078	Service cost	$	3,945	$	3,941	$	1,876	$	2,071
Interest cost	Interest cost	1,742		1,611		373		218		Interest cost	1,743		1,604		342		208
Expected return on plan assets	Expected return on plan assets	(3,227)		(3,073)		(727)		(723)		Expected return on plan assets	(3,229)		(3,064)		(689)		(721)
Amortization of net loss	Amortization of net loss	1,667		2,503		444		589		Amortization of net loss	1,668		2,501		433		591
Amortization of prior service cost	Amortization of prior service cost	—		—		38		45		Amortization of prior service cost	—		—		33		44
Net periodic benefit cost	Net periodic benefit cost	$	4,127	$	5,268	$	2,098	$	2,207	Net periodic benefit cost	$	4,127	$	4,982	$	1,995	$	2,193


	Domestic Plans				Foreign Plans
Six Months Ended June 30,	2022		2021		2022		2021
Service cost	$	7,890	$	8,168	$	3,846	$	4,149
Interest cost	3,485		3,215		715		426
Expected return on plan assets	(6,456)		(6,137)		(1,416)		(1,444)
Amortization of net loss	3,335		5,004		877		1,180
Amortization of prior service cost	—		—		71		89
Net periodic benefit cost	$	8,254	$	10,250	$	4,093	$	4,400

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The components of net periodic benefit cost, other than the service cost component, are included in the line Miscellaneous, net in the Condensed Consolidated Statements of Income.

Employer Contributions

We currently have no minimum funding requirements for our domestic and foreign plans. We contributed ~~$15.2~~$15.3 million to our domestic defined benefit plans during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and we do not expect additional significant payments during 2022. We have contributed ~~approximately $0.5~~$1.0 million to our foreign defined benefit plans during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and do not expect additional significant contributions during 2022.

NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in Accumulated Other Comprehensive (Loss) Income by Component:


		Foreign Currency		Defined Benefit Pension Plans		Derivatives		Total			Foreign Currency		Defined Benefit Pension Plans		Derivatives		Total
Balance - December 31, 2020	Balance - December 31, 2020	$	(178,025)	$	(102,322)	$	(1,362)	$	(281,709)	Balance - December 31, 2020	$	(178,025)	$	(102,322)	$	(1,362)	$	(281,709)
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	(48,482)		319		5,061		(43,102)		Other comprehensive (loss) income before reclassifications	(27,373)		442		4,066		(22,865)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		2,387		(4,541)		(2,154)		Amounts reclassified from accumulated other comprehensive income (loss)	—		4,773		(3,257)		1,516
Net current-period other comprehensive (loss) income	Net current-period other comprehensive (loss) income	(48,482)		2,706		520		(45,256)		Net current-period other comprehensive (loss) income	(27,373)		5,215		809		(21,349)
Balance - March 31, 2021		$	(226,507)	$	(99,616)	$	(842)	$	(326,965)
Balance - June 30, 2021										Balance - June 30, 2021	$	(205,398)	$	(97,107)	$	(553)	$	(303,058)

Balance - December 31, 2021	Balance - December 31, 2021	$	(249,500)	$	(66,486)	$	(55)	$	(316,041)	Balance - December 31, 2021	$	(249,500)	$	(66,486)	$	(55)	$	(316,041)
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	(23,080)		(783)		1,192		(22,671)		Other comprehensive (loss) income before reclassifications	(91,111)		(750)		4,885		(86,976)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		1,608		(1,604)		4		Amounts reclassified from accumulated other comprehensive income (loss)	—		3,205		(4,764)		(1,559)
Net current-period other comprehensive (loss) income	Net current-period other comprehensive (loss) income	(23,080)		825		(412)		(22,667)		Net current-period other comprehensive (loss) income	(91,111)		2,455		121		(88,535)
Balance - March 31, 2022		$	(272,580)	$	(65,661)	$	(467)	$	(338,708)
Balance - June 30, 2022										Balance - June 30, 2022	$	(340,611)	$	(64,031)	$	66	$	(404,576)

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Reclassifications Out of Accumulated Other Comprehensive (Loss) Income:


Details about Accumulated Other Comprehensive Income Components	Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line in the Statement Where Net Income is Presented	Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line in the Statement Where Net Income is Presented
Three Months Ended March 31,		2022		2021
Three Months Ended June 30,							Three Months Ended June 30,	2022		2021

Defined Benefit Pension Plans	Defined Benefit Pension Plans						Defined Benefit Pension Plans
Amortization of net loss	Amortization of net loss	$	2,111	$	3,092	(1)	Amortization of net loss	$	2,101	$	3,092	(1)
Amortization of prior service cost	Amortization of prior service cost	38		45		(1)	Amortization of prior service cost	33		44		(1)
		2,149		3,137		Total before tax		2,134		3,136		Total before tax
		(541)		(750)		Tax impact		(537)		(750)		Tax impact
		$	1,608	$	2,387	Net of tax		$	1,597	$	2,386	Net of tax
Derivatives	Derivatives						Derivatives
Changes in cross currency swap: interest component	Changes in cross currency swap: interest component	$	(20)	$	(12)	Interest Expense	Changes in cross currency swap: interest component	$	(118)	$	(6)	Interest Expense
Changes in cross currency swap: foreign exchange component	Changes in cross currency swap: foreign exchange component	(1,584)		(4,529)		Miscellaneous, net	Changes in cross currency swap: foreign exchange component	(3,042)		1,290		Miscellaneous, net
		$	(1,604)	$	(4,541)	Net of tax		$	(3,160)	$	1,284	Net of tax
Total reclassifications for the period	Total reclassifications for the period	$	4	$	(2,154)		Total reclassifications for the period	$	(1,563)	$	3,670

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Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line in the Statement Where Net Income is Presented
Six Months Ended June 30,	2022		2021

Defined Benefit Pension Plans
Amortization of net loss	$	4,212	$	6,184	(1)
Amortization of prior service cost	71		89		(1)
	4,283		6,273		Total before tax
	(1,078)		(1,500)		Tax impact
	$	3,205	$	4,773	Net of tax
Derivatives
Changes in cross currency swap: interest component	$	(138)	$	(18)	Interest Expense
Changes in cross currency swap: foreign exchange component	(4,626)		(3,239)		Miscellaneous, net
	$	(4,764)	$	(3,257)	Net of tax
Total reclassifications for the period	$	(1,559)	$	1,516

(1)These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax. See Note 8 – Retirement and Deferred Compensation Plans for additional details.

NOTE 10 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We maintain a foreign exchange risk management policy designed to establish a framework to protect the value of our non-functional currency denominated transactions from adverse changes in exchange rates. Sales of our products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales or intercompany loans can impact our results of operations. Our policy is not to engage in speculative foreign currency hedging activities, but to minimize our net foreign currency transaction exposure, defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. We may use foreign currency forward exchange contracts, options and cross currency swaps to economically hedge these risks.

For derivative instruments designated as hedges, we formally document the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness at inception. Quarterly thereafter, we formally assess whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur. All derivative financial instruments used as hedges are recorded at fair value in the Condensed Consolidated Balance Sheets (See Note 11 - Fair Value).

Cash Flow Hedge

For derivative instruments that are designated and qualify as cash flow hedges, the changes in fair values are recorded in accumulated other comprehensive loss and included in changes in derivative gain/loss. The changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings. Cash flows from the settlement of derivative contracts designated as cash flow hedges offset cash flows from the underlying hedged items and are included in operating activities in the Condensed Consolidated Statements of Cash Flows.

~~Table of Contents~~

In 2017 our wholly-owned UK subsidiary borrowed $280 million in term loan borrowings under our prior credit facility. In order to mitigate the currency risk of U.S. dollar debt on a euro functional currency entity and to mitigate the risk of variability in interest rates, we entered into a EUR/USD floating-to-fixed cross currency swap on July 20, 2017 in the notional amount of $280 million to effectively hedge the foreign exchange and interest rate exposure on the $280 million term loan. This EUR/USD swap agreement fixed our U.S. dollar floating-rate debt to 1.36% euro fixed-rate debt. Related to this hedge, approximately ~~$0.5 million~~$66 thousand of ~~loss~~income is included in accumulated other comprehensive loss at ~~March 31,~~June 30, 2022. The amount expected to be recognized into earnings during the ~~next 4 months~~third quarter of 2022 related to the interest component of our cross currency swap based on prevailing foreign exchange and interest rates at ~~March 31,~~June 30, 2022 is a gain of ~~$131~~$34 thousand. The amount expected to be recognized into earnings during the ~~next 4 months~~third quarter of 2022 related to the foreign exchange component of our cross currency swap is dependent on fluctuations in currency exchange rates. As of ~~March 31,~~June 30, 2022, the fair value of the cross currency swap was a ~~$1.7~~$5.0 million asset. The swap contract ~~expires~~expired on July 20, 2022.

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Hedge of Net Investments in Foreign Operations

A significant number of our 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 condition and results of operations of our foreign subsidiaries. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. In some cases, we maintain debt in these subsidiaries to offset the net asset exposure. We do not otherwise actively manage this risk using derivative financial instruments. In the event we plan on a full or partial liquidation of any of our foreign subsidiaries where our net investment is likely to be monetized, we will consider hedging the currency exposure associated with such a transaction.

Other

As of ~~March 31,~~June 30, 2022, we have recorded the fair value of foreign currency forward exchange contracts of ~~$0.4~~$0.3 million in ~~prepaid~~Prepaid and other and ~~$2.3~~$0.3 million in ~~accounts~~Accounts payable, accrued and other liabilities on the ~~balance sheet.~~Condensed Consolidated Balance Sheets. All forward exchange contracts outstanding as of ~~March 31,~~June 30, 2022 had an aggregate notional contract amount of ~~$58.9~~$61.4 million.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2022 and December 31, 2021


			March 31, 2022				December 31, 2021						June 30, 2022				December 31, 2021
		Balance Sheet Location	Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments			Balance Sheet Location	Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments
Derivative Assets	Derivative Assets										Derivative Assets
Foreign Exchange Contracts	Foreign Exchange Contracts	Prepaid and other	$	—	$	358	$	—	$	331	Foreign Exchange Contracts	Prepaid and other	$	—	$	333	$	—	$	331
Cross Currency Swap Contract (1)	Cross Currency Swap Contract (1)	Prepaid and other	1,657		—		511		—		Cross Currency Swap Contract (1)	Prepaid and other	5,049		—		511		—
			$	1,657	$	358	$	511	$	331			$	5,049	$	333	$	511	$	331

Derivative Liabilities	Derivative Liabilities										Derivative Liabilities
Foreign Exchange Contracts	Foreign Exchange Contracts	Accounts payable, accrued and other liabilities	$	—	$	2,329	$	—	$	221	Foreign Exchange Contracts	Accounts payable, accrued and other liabilities	$	—	$	250	$	—	$	221

			$	—	$	2,329	$	—	$	221			$	—	$	250	$	—	$	221

__________________________

(1)This cross currency swap contract is composed of both an interest component and a foreign exchange component.

~~Table of Contents~~

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Three Months Ended ~~March 31,~~June 30, 2022 and 2021


Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative				Location of (Loss) Gain Recognized in Income on Derivatives	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income on Derivative				Total Amount of Affected Income Statement Line Item		Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative				Location of (Loss) Gain Recognized in Income on Derivatives	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income on Derivative				Total Amount of Affected Income Statement Line Item
		2022		2021			2022		2021					2022		2021			2022		2021
Cross currency swap contract:	Cross currency swap contract:												Cross currency swap contract:
Interest component	Interest component	$	(392)	$	532	Interest expense	$	20	$	12	$	(8,930)	Interest component	$	651	$	295	Interest expense	$	118	$	6	$	(11,982)
Foreign exchange component	Foreign exchange component	1,584		4,529		Miscellaneous, net	1,584		4,529		(1,103)		Foreign exchange component	3,042		(1,290)		Miscellaneous, net	3,042		(1,290)		52
		$	1,192	$	5,061		$	1,604	$	4,541				$	3,693	$	(995)		$	3,160	$	(1,284)

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The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Six Months Ended June 30, 2022 and 2021


Derivatives in Cash Flow Hedging Relationships	Amount of Gain Recognized in Other Comprehensive Income on Derivative				Location of Gain Recognized in Income on Derivatives	Amount of Gain Reclassified from Accumulated Other Comprehensive Income on Derivative				Total Amount of Affected Income Statement Line Item
	2022		2021			2022		2021
Cross currency swap contract:
Interest component	$	259	$	827	Interest expense	$	138	$	18	$	(20,912)
Foreign exchange component	4,626		3,239		Miscellaneous, net	4,626		3,239		(1,051)
	$	4,885	$	4,066		$	4,764	$	3,257

The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Three Months Ended ~~March 31,~~June 30, 2022 and 2021


Derivatives Not Designated as Hedging Instruments	Location of (Loss) Gain Recognized in Income on Derivatives	Amount of (Loss) Gain Recognized in Income on Derivatives
		2022		2021
Foreign Exchange Contracts	Other (Expense) Income: Miscellaneous, net	$	1,991	$	(1,176)
		$	1,991	$	(1,176)

The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2022 and 2021

Derivatives Not Designated
as Hedging Instruments Location of (Loss) Gain Recognized
in Income on Derivatives Amount of (Loss) Gain
Recognized in Income
on Derivatives
2022 2021
Foreign Exchange Contracts Other (Expense) Income:
Miscellaneous, net $ (2,100) $ (513)
$ (2,100) $ (513)

Gross Amounts Offset in the Statement of Financial Position Net Amounts Presented in the Statement of Financial Position Gross Amounts not Offset in the Statement of Financial Position
Gross Amount Financial Instruments Cash Collateral Received Net Amount
March 31, 2022
Derivative Assets $ 2,015 — $ 2,015 — — $ 2,015
Total Assets $ 2,015 — $ 2,015 — — $ 2,015
Derivative Liabilities $ 2,329 — $ 2,329 — — $ 2,329
Total Liabilities $ 2,329 — $ 2,329 — — $ 2,329
December 31, 2021
Derivative Assets $ 842 — $ 842 — — $ 842
Total Assets $ 842 — $ 842 — — $ 842
Derivative Liabilities $ 221 — $ 221 — — $ 221
Total Liabilities $ 221 — $ 221 — — $ 221


Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized in Income on Derivatives	Amount of Loss Recognized in Income on Derivatives
		2022		2021
Foreign Exchange Contracts	Other (Expense) Income: Miscellaneous, net	$	(109)	$	(1,689)
		$	(109)	$	(1,689)

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			Gross Amounts Offset in the Statement of Financial Position	Net Amounts Presented in the Statement of Financial Position		Gross Amounts not Offset in the Statement of Financial Position
	Gross Amount					Financial Instruments	Cash Collateral Received	Net Amount

June 30, 2022
Derivative Assets	$	5,382	—	$	5,382	—	—	$	5,382
Total Assets	$	5,382	—	$	5,382	—	—	$	5,382

Derivative Liabilities	$	250	—	$	250	—	—	$	250
Total Liabilities	$	250	—	$	250	—	—	$	250

December 31, 2021
Derivative Assets	$	842	—	$	842	—	—	$	842
Total Assets	$	842	—	$	842	—	—	$	842

Derivative Liabilities	$	221	—	$	221	—	—	$	221
Total Liabilities	$	221	—	$	221	—	—	$	221

NOTE 11 – FAIR VALUE

Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

•Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

•Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

As of ~~March 31,~~June 30, 2022, the fair values of our financial assets and liabilities were categorized as follows:


		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Assets	Assets									Assets
Investment in equity securities (1)	Investment in equity securities (1)	$	6,668	$	6,668	$	—	$	—	Investment in equity securities (1)	$	6,185	$	6,185	$	—	$	—
Foreign exchange contracts (2)	Foreign exchange contracts (2)	358		—		358		—		Foreign exchange contracts (2)	333		—		333		—
Cross currency swap contract (2)	Cross currency swap contract (2)	1,657		—		1,657		—		Cross currency swap contract (2)	5,049		—		5,049		—
Convertible note	Convertible note	5,000		—		—		5,000		Convertible note	5,000		—		—		5,000
Total assets at fair value	Total assets at fair value	$	13,683	$	6,668	$	2,015	$	5,000	Total assets at fair value	$	16,567	$	6,185	$	5,382	$	5,000
Liabilities	Liabilities									Liabilities
Foreign exchange contracts (2)	Foreign exchange contracts (2)	$	2,329	$	—	$	2,329	$	—	Foreign exchange contracts (2)	$	250	$	—	$	250	$	—

Contingent consideration obligation	Contingent consideration obligation	32,858		—		—		32,858		Contingent consideration obligation	31,643		—		—		31,643
Total liabilities at fair value	Total liabilities at fair value	$	35,187	$	—	$	2,329	$	32,858	Total liabilities at fair value	$	31,893	$	—	$	250	$	31,643

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As of December 31, 2021, the fair values of our financial assets and liabilities were categorized as follows:


	Total		Level 1		Level 2		Level 3
Assets
Investment in equity securities (1)	$	9,006	$	9,006	$	—	$	—
Foreign exchange contracts (2)	331		—		331		—
Cross currency swap contract (2)	511		—		511		—

Total assets at fair value	$	9,848	$	9,006	$	842	$	—
Liabilities
Foreign exchange contracts (2)	$	221	$	—	$	221	$	—

Contingent consideration obligation	33,908		—		—		33,908
Total liabilities at fair value	$	34,129	$	—	$	221	$	33,908

(1)Investment in PureCycle Technologies ("PCT" or "PureCycle" ).). See Note 1718 - Investment in Equity Securities for discussion of this investment.

(2)Market approach valuation technique based on observable market transactions of spot and forward rates.

The carrying amounts of our other current financial instruments such as cash and equivalents, accounts and notes receivable, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instruments. We consider our long-term obligations a Level 2 liability and utilize the market approach valuation technique based on interest rates that are currently available to us for issuance of debt with similar terms and maturities. The estimated fair value of our long-term obligations was $1.2 billion as of ~~March 31,~~June 30, 2022 and $0.9 billion as of December 31, 2021.

During the first quarter of 2022, we invested $5.0 million in a convertible note in Enable Injections, Inc. This investment is recorded at fair value and is a Level 3 fair value measurement.

~~Table of Contents~~

As discussed in Note ~~12-~~12 - Fair Value of our Annual Report on Form 10-K for the year ended December 31, 2021, we have a contingent consideration obligation to the selling equity holders of:

–Fusion Packaging, Inc. ("Fusion") in connection with the acquisition of 100% of the equity interests of Fusion (the "Fusion Acquisition") based on 2022 cumulative performance targets, and

–Noble International Holdings, Inc., Genia Medical, Inc. and JBCB Holdings, LLC (collectively referred to as "Noble") in connection with the acquisition of 100% of the equity interests of Noble (the "Noble Acquisition") based on 2024 cumulative performance targets.

We consider these obligations Level 3 liabilities and have estimated the aggregate fair value for these contingent consideration arrangements as follows:


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Fusion Acquisition	Fusion Acquisition	$	26,116	$	27,166	Fusion Acquisition	$	26,681	$	27,166
Noble Acquisition	Noble Acquisition	6,742		6,742		Noble Acquisition	4,962		6,742

		$	32,858	$	33,908		$	31,643	$	33,908

Changes in the fair value of these obligations are recorded within selling, research & development and administrative expenses in our Condensed Consolidated Statements of Income. Significant changes to the inputs, as noted above, can result in a significantly higher or lower fair value measurement. The following table provides a summary of changes in our Level 3 fair value measurements:


Balance, December 31, 2021	$	33,908

Decrease in fair value recorded in earnings	~~(1,050)~~(2,265)

Balance, ~~March 31,~~June 30, 2022	$	~~32,858~~31,643

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NOTE 12 - COMMITMENTS AND CONTINGENCIES

In the normal course of business, we are subject to a number of lawsuits and claims both actual and potential in nature. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on our financial position, our results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur and could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial position, results of operations and cash flows.

Under our Certificate of Incorporation, we have agreed to indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have a directors and officers liability insurance policy that covers a portion of our exposure. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal. We have no liabilities recorded for these agreements as of ~~March 31,~~June 30, 2022 and December 31, 2021.

A fire caused damage to our facility in Annecy, France in June 2016. We were insured for the damages caused by the fire, including business interruption insurance. During the second quarter of 2022, we filed a lawsuit against the insurance company to recover part of our claim. NaN gain contingencies have been recognized as our ability to realize those gains remains uncertain.

In March 2017, the Supreme Court of Brazil issued a decision that a certain state value added tax should not be included in the calculation of federal gross receipts taxes. The decision reduces our gross receipts tax in Brazil prospectively and retrospectively. In May 2021, the Supreme Court of Brazil issued a judgment establishing rules for the refund of amounts paid in excess based on the calculation methodology to be applied. In June 2021, we received a favorable court decision of $1.6 million for the retrospective right to recover part of our claim. This amount was recorded in cost of sales. On September 30, 2021, we received a formal decision statement from the Federal Regional Court of Brazil that the favorable court decisions are final. We do not expect to receive any further amounts in future periods.

In December 2019, tax authorities in Brazil notified us of a tax assessment of approximately $6.1 million, including interest and penalties of $2.3 million and $0.8 million, respectively, relating to differences in tax classification codes used for import duties for the period from January 2015 to August 2018. We are vigorously contesting the assessment, including interest and penalties, and ~~have~~ filed an administrative defense appeal in December 2019. In June 2020, an unfavorable decision was issued on the first administrative defense appeal. We filed a second administrative defense appeal in August 2020. We still believe we have a strong defense. Due to uncertainty in the amount of assessment and the timing of our appeal, no liability is recorded as of ~~March 31,~~June 30, 2022.

Subsequent to quarter end, in July 2022, tax authorities in India notified us of a tax assessment of approximately $6.8 million plus interest and penalties relating to differences in tax classification codes used for import duties for the period from 2017 to current. We are currently drafting our response and will be vigorously contesting the assessment. Due to uncertainty of the timing and amounts of assessment, no liability is recorded as of June 30, 2022.

NOTE 13 – STOCK REPURCHASE PROGRAM

On April 18, 2019, we announced a share repurchase authorization of up to $350 million of common stock. This authorization replaces previous authorizations and has no expiration date. We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.

During the three and six months ended ~~March 31,~~June 30, 2022, we repurchased approximately ~~140~~348 thousand shares for ~~approximately $16.0 million.~~$37.1 million and 488 thousand shares for $53.1 million, respectively. During the three and six months ended ~~March 31,~~June 30, 2021, we did not repurchase any shares. As of ~~March 31,~~June 30, 2022, there was ~~$184.4~~$147.3 million of authorized share repurchases remaining under the existing authorization.

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NOTE 14 – STOCK-BASED COMPENSATION

We issue restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Restricted Stock Unit Award Agreement for Directors pursuant to the Company’s 2018 Equity Incentive Plan. RSUs granted to employees vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over three years. Performance-based RSUs vest at the end of the specified performance period, generally three years, assuming required performance or market vesting conditions are met. Performance-based RSUs have one of two vesting conditions: (1) based on our internal financial performance metrics and (2) based on our total shareholder return (“TSR”) relative to total shareholder returns of an industrial peer group. At the time of vesting, the vested shares of common stock are issued in the employee’s name. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). RSUs granted to directors are only time-based and generally vest over one year.

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The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. Inputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement.


Six Months Ended June 30,	2022			2021
Fair value per stock award	$	141.95		$	171.63
Grant date stock price	$	114.52		$	141.59
Assumptions:
Aptar's stock price expected volatility	20.20		%	21.40		%
Expected average volatility of peer companies	41.70		%	50.00		%
Correlation assumption	41.20		%	58.10		%
Risk-free interest rate	2.04		%	0.32		%
Dividend yield assumption	1.33		%	1.02		%

Three Months Ended March 31, 2022 2021
Fair value per stock award $ 141.95 $ 171.63
Grant date stock price $ 114.52 $ 141.59
Assumptions:
Aptar's stock price expected volatility 20.20 % 21.40 %
Expected average volatility of peer companies 41.70 % 50.00 %
Correlation assumption 41.20 % 58.10 %
Risk-free interest rate 2.04 % 0.32 %
Dividend yield assumption 1.33 % 1.02 %

A summary of RSU activity as of ~~March 31,~~June 30, 2022 and changes during the ~~three~~six month period then ended is presented below:


		Time-Based RSUs			Performance-Based RSUs				Time-Based RSUs			Performance-Based RSUs
		Units	Weighted Average Grant-Date Fair Value		Units	Weighted Average Grant-Date Fair Value			Units	Weighted Average Grant-Date Fair Value		Units	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2022	Nonvested at January 1, 2022	485,479	$	108.73	650,553	$	111.04	Nonvested at January 1, 2022	485,479	$	108.73	650,553	$	111.04
Granted	Granted	176,096	112.64		204,377	127.95		Granted	187,429	112.76		225,303	126.72
Vested	Vested	(130,763)	102.60		—	—		Vested	(140,914)	106.15		(43,388)	134.97
Forfeited	Forfeited	(5,206)	110.59		(8,088)	119.16		Forfeited	(5,468)	111.16		(74,224)	112.07
Nonvested at March 31, 2022		525,606	$	111.43	846,842	$	115.05
Nonvested at June 30, 2022								Nonvested at June 30, 2022	526,526	$	110.74	758,244	$	114.23

Included in the time-based RSUs activity for the six months ended June 30, 2022 are 10,589 units granted to non-employee directors and 10,007 units vested related to non-employee directors.


Three Months Ended March 31,		2022		2021
Six Months Ended June 30,						Six Months Ended June 30,	2022		2021
Compensation expense	Compensation expense	$	13,362	$	11,262	Compensation expense	$	22,136	$	21,579
Fair value of units vested	Fair value of units vested	12,361		19,116		Fair value of units vested	19,724		20,778
Intrinsic value of units vested	Intrinsic value of units vested	15,291		25,699		Intrinsic value of units vested	21,481		28,259

The actual tax benefit realized for the tax deduction from RSUs was approximately ~~$2.4~~$4.2 million in the ~~three~~six months ended ~~March 31,~~June 30, 2022. As of ~~March 31,~~June 30, 2022, there was ~~$71.0~~$63.6 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted-average period of ~~2.3~~2.2 years.

Historically we issued stock options to our employees and non-employee directors. Beginning in 2019, we no longer issue stock options. Stock options were awarded with the exercise price equal to the market price on the date of grant and generally vest over three years and expire 10 years after grant. For stock option grants, we used historical data to estimate expected life and volatility.

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A summary of option activity under our stock plans during the ~~three~~six months ended ~~March 31,~~June 30, 2022 is presented below:

Stock Awards Plans Director Stock Option Plans
Options Weighted Average
Exercise Price Options Weighted Average
Exercise Price
Outstanding, January 1, 2022 3,072,503 $ 71.99 51,700 $ 63.91
Exercised (61,775) 59.68 — —
Forfeited or expired (400) 51.80 — —
Outstanding at March 31, 2022 3,010,328 $ 72.24 51,700 $ 63.91
Exercisable at March 31, 2022 3,010,328 $ 72.24 51,700 $ 63.91
Weighted-Average Remaining Contractual Term (Years):
Outstanding at March 31, 2022 3.9 1.8
Exercisable at March 31, 2022 3.9 1.8
Aggregate Intrinsic Value:
Outstanding at March 31, 2022 $ 136,239 $ 2,770
Exercisable at March 31, 2022 $ 136,239 $ 2,770
Intrinsic Value of Options Exercised During the Three Months Ended:
March 31, 2022 $ 3,780 $ —
March 31, 2021 $ 37,454 $ 2,474



	Stock Awards Plans				Director Stock Option Plans
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding, January 1, 2022	3,072,503		$	71.99	51,700		$	63.91

Exercised	(168,846)		67.60		—		—
Forfeited or expired	(400)		51.80		—		—
Outstanding at June 30, 2022	2,903,257		$	72.25	51,700		$	63.91
Exercisable at June 30, 2022	2,903,257		$	72.25	51,700		$	63.91
Weighted-Average Remaining Contractual Term (Years):
Outstanding at June 30, 2022	3.6				1.6
Exercisable at June 30, 2022	3.6				1.6
Aggregate Intrinsic Value:
Outstanding at June 30, 2022	$	90,420			$	2,041
Exercisable at June 30, 2022	$	90,420			$	2,041
Intrinsic Value of Options Exercised During the Six Months Ended:
June 30, 2022	$	8,046			$	—
June 30, 2021	$	63,407			$	4,248


~~Three~~Six Months Ended ~~March 31,~~June 30,	2021
Compensation expense (included in SG&A)	$	185
Compensation expense (included in Cost of sales)	42
Compensation expense, Total	$	227
Compensation expense, net of tax	174
Grant date fair value of options vested	2,421

The reduction in stock option expense is due to our move to RSUs as discussed above. Cash received from option exercises was approximately ~~$3.7~~$11.4 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022. The actual tax benefit realized for the tax deduction from option exercises was approximately ~~$0.3~~$1.4 million and ~~$9.1~~$15.0 million in the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively. As of ~~March 31,~~June 30, 2022, there is no remaining valuation of stock option awards to be expensed in future periods.

NOTE 15 – EARNINGS PER SHARE

Basic net income per share is calculated by dividing net income attributable to Aptar by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing the net income attributable to Aptar by the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to stock-based compensation awards. Stock-based compensation awards for which total employee proceeds exceed the average market price over the applicable period would have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share. The reconciliation of basic and diluted earnings per share for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 is as follows:

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	Three Months Ended
	June 30, 2022				June 30, 2021
	Diluted		Basic		Diluted		Basic
Consolidated operations
Income available to common stockholders	$	63,625	$	63,625	$	55,276	$	55,276

Average equivalent shares
Shares of common stock	65,475		65,475		65,818		65,818
Effect of dilutive stock-based compensation
Stock options	1,021		—		1,727		—
Restricted stock	404		—		541		—
Total average equivalent shares	66,900		65,475		68,086		65,818
Net income per share	$	0.95	$	0.97	$	0.81	$	0.84

~~Table of Contents~~


		Three Months Ended									Six Months Ended
		March 31, 2022				March 31, 2021					June 30, 2022				June 30, 2021
		Diluted		Basic		Diluted		Basic			Diluted		Basic		Diluted		Basic
Consolidated operations	Consolidated operations									Consolidated operations
Income available to common stockholders	Income available to common stockholders	$	62,423	$	62,423	$	83,952	$	83,952	Income available to common stockholders	$	126,048	$	126,048	$	139,228	$	139,228

Average equivalent shares	Average equivalent shares									Average equivalent shares
Shares of common stock	Shares of common stock	65,543		65,543		65,229		65,229		Shares of common stock	65,509		65,509		65,525		65,525
Effect of dilutive stock-based compensation	Effect of dilutive stock-based compensation									Effect of dilutive stock-based compensation
Stock options	Stock options	1,193		—		1,869		—		Stock options	1,109		—		1,804		—
Restricted stock	Restricted stock	410		—		550		—		Restricted stock	351		—		540		—
Total average equivalent shares	Total average equivalent shares	67,146		65,543		67,648		65,229		Total average equivalent shares	66,969		65,509		67,869		65,525
Net income per share	Net income per share	$	0.93	$	0.95	$	1.24	$	1.29	Net income per share	$	1.88	$	1.92	$	2.05	$	2.12

NOTE 16 – SEGMENT INFORMATION

We are organized into 3 reporting segments. Operations that sell dispensing systems, drug delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health markets form the Pharma segment. Operations that sell dispensing systems and sealing solutions primarily to the beauty, personal care and home care markets form the Beauty + Home segment. Operations that sell dispensing systems, sealing solutions and food service trays to the food and beverage markets form the Food + Beverage segment.

The accounting policies of the segments are the same as those described in Part II, Item 8, Note 1 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2021. We evaluate performance of our reporting segments and allocate resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.

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Financial information regarding our reporting segments is shown below:


		Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,			2022		2021
								2022		2021		2022		2021
Total Sales:	Total Sales:						Total Sales:
Pharma	Pharma		$	346,672	$	315,811	Pharma	$	345,369	$	328,549	$	692,041	$	644,360
Beauty + Home	Beauty + Home		374,475		353,377		Beauty + Home	377,490		366,641		751,965		720,018
Food + Beverage	Food + Beverage		134,767		116,703		Food + Beverage	133,122		125,918		267,889		242,621
Total Sales	Total Sales		$	855,914	$	785,891	Total Sales	$	855,981	$	821,108	$	1,711,895	$	1,606,999
Less: Intersegment Sales:	Less: Intersegment Sales:						Less: Intersegment Sales:
Pharma	Pharma		$	4,210	$	1,979	Pharma	$	5,138	$	3,206	$	9,348	$	5,185
Beauty + Home	Beauty + Home		6,276		6,431		Beauty + Home	6,144		6,395		12,420		12,826
Food + Beverage	Food + Beverage		496		727		Food + Beverage	156		475		652		1,202
Total Intersegment Sales	Total Intersegment Sales		$	10,982	$	9,137	Total Intersegment Sales	$	11,438	$	10,076	$	22,420	$	19,213
Net Sales:	Net Sales:						Net Sales:
Pharma	Pharma		$	342,462	$	313,832	Pharma	$	340,231	$	325,343	$	682,693	$	639,175
Beauty + Home	Beauty + Home		368,199		346,946		Beauty + Home	371,346		360,246		739,545		707,192
Food + Beverage	Food + Beverage		134,271		115,976		Food + Beverage	132,966		125,443		267,237		241,419
Net Sales	Net Sales		$	844,932	$	776,754	Net Sales	$	844,543	$	811,032	$	1,689,475	$	1,587,786
Adjusted EBITDA (1):	Adjusted EBITDA (1):						Adjusted EBITDA (1):
Pharma	Pharma		$	115,552	$	108,484	Pharma	$	111,006	$	105,979	$	226,558	$	214,463
Beauty + Home	Beauty + Home		39,498		35,356		Beauty + Home	44,879		37,910		84,377		73,266
Food + Beverage	Food + Beverage		19,235		19,990		Food + Beverage	17,705		19,626		36,940		39,616
Corporate & Other, unallocated	Corporate & Other, unallocated		(17,970)		(11,607)		Corporate & Other, unallocated	(13,663)		(15,959)		(31,633)		(27,566)

Acquisition-related costs (2)							Acquisition-related costs (2)	—		(2,434)		—		(2,434)
Restructuring Initiatives ~~(2)~~(3)	Restructuring Initiatives ~~(2)~~(3)		(291)		(3,672)		Restructuring Initiatives ~~(2)~~(3)	(428)		(4,876)		(719)		(8,548)
Net unrealized investment (loss) gain ~~(3)~~(4)	Net unrealized investment (loss) gain ~~(3)~~(4)		(2,091)		16,809		Net unrealized investment (loss) gain ~~(3)~~(4)	(483)		(1,611)		(2,574)		15,198
Depreciation and amortization	Depreciation and amortization		(58,665)		(57,438)		Depreciation and amortization	(58,552)		(57,790)		(117,217)		(115,228)
Interest Expense	Interest Expense		(8,930)		(7,415)		Interest Expense	(11,982)		(7,175)		(20,912)		(14,590)
Interest Income	Interest Income		288		381		Interest Income	989		624		1,277		1,005
Income before Income Taxes	Income before Income Taxes		$	86,626	$	100,888	Income before Income Taxes	$	89,471	$	74,294	$	176,097	$	175,182

(1)We evaluate performance of our reporting segments and allocate resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.

(2)Acquisition-related costs include transaction costs related to acquisitions (see Note 17 – Acquisitions for further details).

(3)Restructuring Initiatives includes expense items for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 as follows (see Note 1819 – Restructuring Initiatives for further details):


		Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,			2022		2021
								2022		2021		2022		2021
Restructuring Initiatives by Segment	Restructuring Initiatives by Segment						Restructuring Initiatives by Segment
Pharma	Pharma		$	—	$	35	Pharma	$	—	$	38	$	—	$	73
Beauty + Home	Beauty + Home		258		1,096		Beauty + Home	420		1,457		678		2,553
Food + Beverage	Food + Beverage		33		(79)		Food + Beverage	8		117		41		38
Corporate & Other	Corporate & Other		—		2,620		Corporate & Other	—		3,264		—		5,884
Total Restructuring Initiatives	Total Restructuring Initiatives		$	291	$	3,672	Total Restructuring Initiatives	$	428	$	4,876	$	719	$	8,548

~~(3)~~(4)Net unrealized investment (loss) gain represents the change in fair value of our investment in PCT (see Note 1718 – Investment in Equity Securities for further details).

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NOTE 17 – ACQUISITIONS

Business Combinations

On September 2, 2021, following the signature of a share purchase agreement on July 22, 2021 and the approval of the French Ministry of Economy under the foreign investment clearance regulations, we completed the acquisition of 64.3% of the share capital of Voluntis S.A. (“Voluntis”). Voluntis, based in Paris, France and Boston, MA, is a pioneer in digital therapeutics. We acquired from certain members of the management and certain shareholders the entirety of their shares representing approximately 64.3% of the share capital of Voluntis (on a non-diluted basis) at a price of €8.70 per share for €50.8 million (approximately $60.4 million) funded with available cash on hand. This values the full company equity (on a fully diluted basis) at €79.1 million (approximately $93.9 million). Aptar launched a mandatory cash simplified tender offer to acquire Voluntis's remaining shares for the same price of €8.70 per share. During September 2021, Aptar acquired €8.4 million (approximately $9.9 million) of additional shares from the tender offer, bringing the total investment as of September 30, 2021 to €59.2 million (approximately $70.3 million) representing 74.9% of the total share capital, which implied a non-controlling interest valued at €19.9 million (approximately $23.6 million). Following completion of the tender offer, Aptar implemented a mandatory squeeze-out on the remaining outstanding shares of Voluntis on the same financial terms as those of the tender offer. During the fourth quarter of 2021, the tender offer and squeeze-out were completed and funded with available cash on hand and we acquired the remaining 25.1% of the share capital for €19.5 million (approximately $22.6 million), resulting in Aptar owning 100.0% of the share capital of Voluntis.

The fair value of the assets acquired include a technology intangible asset of $27.9 million and other intangible assets of $8.4 million. The technology intangible asset was valued using the Multi-Period Excess Earnings Method ("MPEEM") valuation approach. Judgment was applied with respect to determining the fair value of the acquired technology, which involved the use of significant estimates and assumptions with respect to the revenue growth rate, technology obsolescence rate and discount rate.

On August 17, 2021, we completed the acquisition of 80% of the equity interests of Weihai Hengyu Medical Products Co., Ltd. ("Hengyu"). Hengyu, a leading Chinese manufacturer of elastomeric and plastic components used in injectable drug delivery, is based in Weihai, China. Under the terms of the agreement, 90% of the estimated purchase price for 80% ownership, RMB 347.7 million (approximately $53.6 million), was paid to the sellers in August 2021 with available cash on hand. A final purchase price adjustment of RMB 1.5 million (approximately $0.2 million) was recorded to Accounts payable, accrued and other liabilities and was paid in the fourth quarter of 2021. The remaining 10% of the acquisition price for 80% ownership, RMB 38.7 million (approximately $6.0 million), is payable to the sellers eighteen months after closing plus simple interest of 4% and is expected to be funded with available cash on hand. This values the full company equity (on a fully diluted basis) at RMB 484.9 million (approximately $74.8 million) and implies a non-controlling interest valued at RMB 97.0 million (approximately $15.0 million) as of the acquisition date. Pursuant to the agreement, we have the option to acquire the remaining 20% of the equity of Hengyu upon the fifth anniversary of the closing date.

The fair value of the assets acquired include a customer relationship intangible asset of $24.1 million and other intangible assets of $5.6 million. The customer relationship intangible asset was valued using the MPEEM valuation approach. Judgment was applied with respect to determining the fair value of the customer relationships, which involved the use of significant estimates and assumptions with respect to the revenue growth rates, customer attrition rates, Adjusted EBIT margins and discount rate.

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The following table summarizes the assets acquired and liabilities assumed as of the acquisition dates at estimated fair value.



	2021
Assets
Cash and equivalents	$	3,852
Accounts receivable	5,208
Inventories	606
Other Receivable	286
Prepaid and other	1,863
Property, plant and equipment	14,081
Goodwill	104,433
Intangible assets	65,981
Operating lease right-of-use assets	2,309
Other miscellaneous assets	78
Liabilities
Current maturities of long-term obligations, net of unamortized debt issuance costs	1,410
Accounts payable, accrued and other liabilities	9,663
Deferred income taxes	16,792
Operating lease liabilities	2,306
Deferred and other non-current liabilities	5,770
Net assets acquired	$	162,756

The following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition dates:



	2021
		Weighted-Average Useful Life (in Years)	Estimated Fair Value of Assets
Acquired technology		10	$	34,322
Customer relationships		11.6	30,258

License agreements and other		0.25	1,401
Total			$	65,981

Goodwill in the amount of $104.4 million was recorded related to the Voluntis and Hengyu acquisitions, which is included in the Pharma segment. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill acquired in the Voluntis and Hengyu acquisitions largely consists of expansion into the digital health solutions market, by adding digital therapeutic solutions and broadening our digital health services provided to customers; as well as strengthening our capabilities in high-growth economies by enhancing the ability to respond to changing local market needs in the injectables market. Goodwill will not be amortized, but will be tested for impairment at least annually. For the Voluntis and Hengyu acquisitions, no goodwill will be deductible for tax purposes.

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NOTE 1718 – INVESTMENT IN EQUITY SECURITIES

Our investment in equity securities consisted of the following:


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Equity Method Investments:	Equity Method Investments:					Equity Method Investments:
BTY	BTY	$	33,398	$	33,199	BTY	$	31,445	$	33,199
Sonmol	Sonmol	5,745		5,904		Sonmol	5,325		5,904

Desotec GmbH	Desotec GmbH	893		919		Desotec GmbH	846		919

Other Investments:	Other Investments:					Other Investments:
PureCycle	PureCycle	6,668		9,006		PureCycle	6,185		9,006
YAT	YAT	5,994		5,978		YAT	5,672		5,978
Loop	Loop	2,894		2,894		Loop	2,894		2,894
Others	Others	1,545		1,585		Others	1,471		1,585
		$	57,137	$	59,485		$	53,838	$	59,485

Equity method investments

BTY

On January 1, 2020, we acquired 49% of the equity interests in 3 related companies: Suzhou Hsing Kwang, Suqian Hsing Kwang and Suzhou BTY (collectively referred to as “BTY”) for an approximate purchase price of ~~$32~~$32.0 million. We have a call option to acquire an additional 26% to 31% of BTY’s equity interests following the initial lock-up period of 5 years based on a predetermined formula. Subsequent to the second lock-up period, which ends 3 years after the initial lock-up period, we have a call option to acquire the remaining equity interests of BTY based on a predetermined formula. Additionally, the selling shareholders of BTY have a put option for the remaining equity interest to be acquired by Aptar based on a predetermined formula. The BTY entities are leading Chinese manufacturers of high quality, decorative metal components, metal-plastic sub-assemblies, and complete color cosmetics packaging solutions for the beauty industry.

Sonmol

On April 1, 2020, we invested $5$5.0 million to acquire 30% of the equity interests in Healthcare, Inc., Shanghai Sonmol Internet Technology Co., Ltd. and its subsidiary, Shanghai Sonmol Medical Equipment Co., Ltd. (collectively referred to as “Sonmol”), a pharmaceutical and leading Chinese company that provides consumer electric devices and connected devices for asthma control.

Kali Care

During 2017, we invested $5$5.0 million to acquire 20% of the equity interests in Kali Care, a technology company that provides digital monitoring systems for medical devices. Since our investment, we have recognized approximately $1.6 million of our cumulative pro-rata share of operating losses. During 2021 and 2020, we recognized an other than temporary impairment of $0.4 million ($0.3 million after-tax) and $3.0 million ($2.3 million after-tax), respectively, on our underlying assets in this investment as a result of a reassessment of the future value of the business and continued reduction in operating cash flows. In addition to our investment, we also hold a note receivable from Kali Care for $1.5 million which is included in accounts and notes receivable in the Condensed Consolidated Balance Sheets. ~~During~~In March 2022, we recorded an expected credit loss reserve against the outstanding note receivable from Kali Care for $1.5 million as a result of a proposed sale of the business. During the second quarter, we recovered $0.1 million on this note and expect to receive similar amounts in annual payments over the next three years.

Desotec GmbH

During 2009, we invested €574 thousand to acquire 23% of the equity interests in Desotec GmbH, a leading manufacturer of special assembly machines for bulk processing for the pharmaceutical, beauty and home and food and beverages markets.

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Other investments

During August 2019, we invested an aggregate amount of $3.5 million in 2 preferred equity investments in sustainability companies Loop and PureCycle that were accounted for at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. During 2020, we invested an additional $1.4 million in these 2 equity investments and also received $333 thousand of equity in PureCycle in exchange for our resource dedication for technological partnership and support. In November 2020, we increased the value of the PureCycle investment by $3.1 million based on observable price changes.

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In March 2021, PureCycle was purchased by a special purpose acquisition company and was subsequently listed on Nasdaq under the ticker PCT. At that time, our investment in PureCycle was converted into shares of PCT resulting in less than a 1% ownership interest. This investment is now recorded at fair value based on observable market prices for identical assets and the change in fair value is recorded as a net investment gain or loss in the Condensed Consolidated Statements of Income. In September 2021, we received $333 thousand of shares of PCT in exchange for our resource dedication for technological partnership and support and exercised an option to purchase $1.0 million of additional shares in connection with an FDA milestone. During October 2021, we sold 191,349 shares for $2.4 million in net proceeds, resulting in a realized gain of $2.0 million. During March 2022, we sold 107,600 shares for $1.1 million in net proceeds, resulting in a realized gain of $841 thousand. For the three months ended ~~March 31,~~June 30, 2022 and 2021, we recorded a net ~~unrealized~~ loss on our investment in PureCycle of ~~$1.2~~$0.5 million and $1.6 million, respectively. For the six months ended June 30, 2022 and 2021, we recorded a net loss on our investment in PureCycle of $1.7 million and a net gain on our investment of $15.2 million, respectively. As of June 30, 2022, our total net unrealized gain ~~of $16.8 million, respectively.~~is approximately $3.9 million.

On July 7, 2021, we invested approximately $5.9 million to acquire 10% of the equity interests in YAT, a multi-functional, science-driven online skincare solutions company.

Other than the expected credit loss reserve against the outstanding Kali Care note receivable, as noted above, there were no indications of impairment noted in the ~~three~~six months ended ~~March 31,~~June 30, 2022 related to these investments.

NOTE 1819 – RESTRUCTURING INITIATIVES

In late 2017, we began a business transformation to drive profitable sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan was the Beauty + Home segment; however, certain global general and administrative functions were also addressed. ~~For the three months ended March 31, 2022 and 2021, we recognized $0.3 million and $3.7 million of restructuring expenses related to this plan, respectively.~~ As of the end of 2021, we had successfully completed the vast majority of our planned initiatives related to our transformation plan and do not expect significant additional restructuring expenses related to this plan going forward. For the three and six months ended June 30, 2022, we recognized $0.4 million and $0.7 million of restructuring costs related to this plan, respectively. For the three and six months ended June 30, 2021, we recognized $4.9 million and $8.5 million of restructuring costs related to this plan, respectively. The cumulative expense incurred as of ~~March 31,~~June 30, 2022 was ~~$136.5~~$137.0 million.

As of ~~March 31,~~June 30, 2022 we have recorded the following activity associated with the business transformation:


		Beginning Reserve at 12/31/2021		Net Charges for the Three Months Ended 3/31/2022		Cash Paid		Interest and FX Impact		Ending Reserve at 3/31/2022			Beginning Reserve at 12/31/2021		Net Charges for the Six Months Ended 6/30/2022		Cash Paid		Interest and FX Impact		Ending Reserve at 6/30/2022
Employee severance	Employee severance	$	3,535	$	218	$	(1,574)	$	84	$	2,263	Employee severance	$	3,535	$	644	$	(2,184)	$	(76)	$	1,919
Professional fees and other costs	Professional fees and other costs	260		73		(291)		(2)		40		Professional fees and other costs	260		75		(320)		(3)		12
Totals	Totals	$	3,795	$	291	$	(1,865)	$	82	$	2,303	Totals	$	3,795	$	719	$	(2,504)	$	(79)	$	1,931

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, OR AS OTHERWISE INDICATED)

RESULTS OF OPERATIONS


		Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,			2022		2021
								2022		2021		2022		2021
Net sales	Net sales		100.0	%	100.0	%	Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales (exclusive of depreciation and amortization shown below)	Cost of sales (exclusive of depreciation and amortization shown below)		64.2		62.9		Cost of sales (exclusive of depreciation and amortization shown below)	65.0		64.5		64.6		63.7
Selling, research & development and administrative	Selling, research & development and administrative		17.2		17.3		Selling, research & development and administrative	16.0		17.4		16.6		17.3
Depreciation and amortization	Depreciation and amortization		7.0		7.4		Depreciation and amortization	6.9		7.1		7.0		7.3
Restructuring initiatives	Restructuring initiatives		—		0.5		Restructuring initiatives	0.1		0.6		—		0.6
Operating income	Operating income		11.6		11.9		Operating income	12.0		10.4		11.8		11.1
Other income (expense)	Other income (expense)		(1.3)		1.1		Other income (expense)	(1.4)		(1.2)		(1.4)		(0.1)
Income before income taxes	Income before income taxes		10.3		13.0		Income before income taxes	10.6		9.2		10.4		11.0
Net Income	Net Income		7.4		10.8		Net Income	7.5		6.8		7.5		8.8
Effective tax rate	Effective tax rate		28.0	%	16.8	%	Effective tax rate	28.9	%	25.6	%	28.5	%	20.5	%
Adjusted EBITDA margin (1)	Adjusted EBITDA margin (1)		18.5	%	19.6	%	Adjusted EBITDA margin (1)	18.9	%	18.2	%	18.7	%	18.9	%

(1)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".

SIGNIFICANT DEVELOPMENTS

As each of our segments produce dispensing systems that have been determined to be essential products by various government agencies around the world, our facilities have remained operational during the COVID-19 pandemic. We have taken a variety of measures to ensure the availability and functioning of our critical infrastructure, to promote the safety and security of our employees and to support the communities in which we operate. We continue to follow public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing and the adoption of work-from-home arrangements, and all of these policies and initiatives have impacted our operations.

As the rates of transmission have slowed in many regions during 2022, we have seen several of our impacted applications return to more normal volume levels. We have seen improvement in sales of our products to our prescription, beauty, hair care, sun care and bottled water customers as people return to more active lifestyles. However, we have also seen more normal volumes in some of the applications which benefited from the pandemic, such as our personal cleansing and surface cleaner products along with our active material science solutions and injectables components.

The extent to which the COVID-19 pandemic impacts our financial results and operations ~~for fiscal year 2022 and beyond~~ for all three of our business segments will depend on future developments which are highly uncertain and cannot be predicted, including the emergence of new variants, the availability, adoption and efficacy of vaccines and boosters, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extended in response to any further resurgence of the virus and numerous other uncertainties. No impairments were recorded as of ~~March 31,~~June 30, 2022 related to the COVID-19 pandemic. However, due to the general uncertainty surrounding the situation, including areas such as cost inflation, supply chain disruptions and labor shortages, future results could be materially impacted.

~~The~~As of June 30, 2022, the war in Ukraine ~~and the recent COVID-19 outbreak in China have~~has not ~~as of March 31, 2022~~ had a significant direct impact on our business ~~in these regions~~ though the near-term visibility for ~~both of these situations~~this situation is expected to remain fluid and uncertain for the next several quarters. However, we have ~~started to experience~~experienced some indirect impacts on our business, including higher ~~energy~~input costs and certain supply chain ~~interruptions.~~disruptions.

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NET SALES

We reported net sales of $844.5 million for the quarter ended June 30, 2022, which represents a 4% increase compared to $811.0 million reported during the second quarter of 2021. The U.S. dollar strengthened compared to the euro and other major currencies in which we operate, resulting in a negative currency translation impact of 6%. There was no significant impact from our acquisitions of Voluntis S.A. ("Voluntis") and Weihai Hengyu Medical Products Co., Ltd. ("Hengyu") on our consolidated net sales during the second quarter of 2022. Therefore, core sales, which excludes acquisitions and changes in foreign currency rates, increased by 10% in the second quarter of 2022 compared to the same period in 2021. Of our 10% core sales increase, approximately 5% is related to improved volumes and product mix with all three segments showing year over year gains. Price adjustments related to the passing through of higher resin and other input costs accounted for the remaining 5% of the core sales increase.


Second Quarter 2022 Net Sales Change over Prior Year	Pharma		Beauty + Home		Food + Beverage		Total
Core Sales Growth	12	%	10	%	8	%	10	%
Acquisitions	1	%	—	%	—	%	—	%
Currency Effects (1)	(8)	%	(7)	%	(2)	%	(6)	%
Total Reported Net Sales Growth	5	%	3	%	6	%	4	%

Reported net sales for the first ~~three~~six months of 2022 increased 9%6% to ~~$844.9 million~~$1.69 billion compared to ~~$776.8 million~~$1.59 billion for the first ~~three~~six months of 2021. The average U.S. dollar exchange rate strengthened compared to the euro and other major currencies in which we operate, resulting in a negative currency translation impact of 4%5%. There was no significant impact from our acquisitions of Voluntis ~~S.A. ("Voluntis")~~ and ~~Weihai~~ Hengyu ~~Medical Products Co., Ltd. ("Hengyu")~~ on our consolidated results during the first ~~quarter~~six months of 2022. Therefore, core sales, which ~~exclude~~excludes acquisitions and changes in foreign currency rates, increased by ~~13%~~11% in the first ~~three~~six months of 2022 compared to the same period in 2021. Price increases to ~~our customers due~~recover inflationary cost increases continue to ~~rising inflationary costs had~~have a ~~positive~~strong impact on our core ~~sales during the first quarter of 2022.~~sales. Of our ~~13%~~11% core sales increase, approximately 5% is due to price adjustments related to the passing through of higher resin and other input costs. ~~Excluding these inflationary pass-throughs, all three segments still reported strong core sales growth during the first quarter of 2022 as discussed below.~~

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Three Months Ended March 31, 2022 Net Sales Change over Prior Year		Pharma		Beauty + Home		Food + Beverage		Total
Six Months Ended June 30, 2022 Net Sales Change over Prior Year										Six Months Ended June 30, 2022 Net Sales Change over Prior Year	Pharma		Beauty + Home		Food + Beverage		Total
Core Sales Growth	Core Sales Growth	13	%	10	%	18	%	13	%	Core Sales Growth	13	%	10	%	13	%	11	%
Acquisitions	Acquisitions	1	%	—	%	—	%	—	%	Acquisitions	1	%	—	%	—	%	—	%
Currency Effects (1)	Currency Effects (1)	(5)	%	(4)	%	(2)	%	(4)	%	Currency Effects (1)	(7)	%	(5)	%	(2)	%	(5)	%
Total Reported Net Sales Growth	Total Reported Net Sales Growth	9	%	6	%	16	%	9	%	Total Reported Net Sales Growth	7	%	5	%	11	%	6	%

(1)Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

The following table sets forth, for the periods indicated, net sales sourced by geographic location:


		Three Months Ended June 30,					Six Months Ended June 30,
Three Months Ended March 31,			2022		% of Total			2021		% of Total
													2022		% of Total		2021		% of Total		2022		% of Total		2021		% of Total

Domestic	Domestic		$	280,005	33	%		$	255,165	33	%	Domestic	$	288,802	34	%	$	269,180	33	%	$	568,807	34	%	$	524,345	33	%
Europe	Europe		455,131		54	%		425,689		55	%	Europe	444,965		53	%	436,993		54	%	900,096		53	%	862,682		54	%
Latin America	Latin America		57,744		7	%		48,965		6	%	Latin America	59,142		7	%	56,061		7	%	116,886		7	%	105,026		7	%
Asia	Asia		52,052		6	%		46,935		6	%	Asia	51,634		6	%	48,798		6	%	103,686		6	%	95,733		6	%

For further discussion on net sales by reporting segment, please refer to the analysis of segment net sales and segment Adjusted EBITDA on the following pages.

COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW)

Cost of sales ~~("COS"~~(“COS”) as a percent of net sales increased to ~~64.2%~~65.0% in the ~~first three months~~second quarter of 2022 compared to ~~62.9%~~64.5% in the second quarter of 2021. While our COS percentage was positively impacted by an improved mix of our higher-margin Pharma product sales compared to the same period ~~a year ago. As discussed above, we~~in 2021, this positive impact was more than offset by inflationary cost increases. We experienced ~~significant inflationary~~ increases in several input costs ~~during the current quarter~~ including resin, metals, freight, labor and utilities. While we maintain our normal pass-through of resin ~~prices~~cost increases and have implemented general price increases to offset other cost increases, there is no margin on ~~these pass-throughs~~resin pass-through costs, which increases our COS as a percentage of sales.

For the first six months of 2022, COS as a percent of net sales increased to 64.6% compared to 63.7% in the same period in 2021 due to the same inflationary cost increases discussed above.

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SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE

Selling, research & development and administrative expenses (“SG&A”) ~~increased~~decreased by ~~$11.2~~approximately $5.5 million to ~~$145.5~~$135.4 million in the ~~first three months~~second quarter of 2022 compared to ~~$134.3~~$140.9 million during the same period ~~a year ago.~~in 2021. Excluding changes in foreign currency rates, SG&A increased by approximately ~~$15.6~~$2.0 million in the quarter. The increase is mainly related to an increase in information systems costs due to an upgrade of our enterprise reporting system, along with higher travel costs compared to 2021. SG&A as a percentage of net sales decreased to 16.0% in the second quarter of 2022 compared to 17.4% in the same period in 2021.

SG&A increased by $5.7 million to $280.9 million in the first ~~three~~six months of 2022 compared to $275.3 million during the same period in 2021. Excluding changes in foreign currency rates, SG&A increased by approximately $17.6 million in the first six months of 2022 compared to the first ~~three~~six months of 2021. Of this increase, ~~$3.1~~$2.4 million relates to ~~three~~six months of incremental SG&A costs in 2022 as our acquisitions of Hengyu and Voluntis were completed ~~subsequent to March 31,~~during the third quarter of 2021. The remaining increase is partially related to higher compensation costs, including accruals related to our current short-term incentive compensation programs and the timing of certain equity compensation arrangement expense recognition. We also experienced an increase in information systems costs due to an upgrade of our enterprise reporting system along with higher professional fees for internal projects and higher travel costs compared to 2021. Finally, we recorded a ~~$1.5~~$1.4 million expected net credit loss reserve against the outstanding note receivable from one of our venture investments (Kali Care) as discussed in Note 1718 - Investment in Equity Securities of the Condensed Consolidated Financial Statements. SG&A as a percentage of net sales decreased to ~~17.2%~~16.6% in the first ~~quarter~~six months of 2022 compared to 17.3% during the same period in ~~the prior year.~~2021.

DEPRECIATION AND AMORTIZATION

Reported depreciation and amortization expenses increased by approximately ~~$1.2~~$0.8 million to ~~$58.7~~$58.6 million in the second quarter of 2022 compared to $57.8 million during the same period in 2021. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $4.4 million in the second quarter compared to the second quarter of 2021. Approximately $1.8 million of this increase is due to incremental depreciation and amortization associated with our acquisitions of Voluntis and Hengyu, which finalized during the third quarter of 2021. We have also increased our capital spending during the current and prior year to support our growth strategy. Depreciation and amortization as a percentage of net sales decreased to 6.9% in the second quarter of 2022 compared to 7.1% in the same period of the prior year.

Reported depreciation and amortization expenses increased by approximately $2.0 million to $117.2 million in the first ~~three~~six months of 2022 compared to ~~$57.4~~$115.2 million during the same period a year ago. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately ~~$3.2~~$7.6 million in the first ~~three~~six months of 2022 compared to the same period a year ago. As mentioned above, approximately ~~$1.2~~$3.0 million of this increase is due to our acquisitions of Voluntis and Hengyu subsequent to ~~March 31,~~June 30, 2021 and the remaining increase relates to higher capital spending during the current and prior year to support our growth strategy. Depreciation and amortization as a percentage of net sales decreased to 7.0% in the first ~~three~~six months of 2022 compared to ~~7.4%~~7.3% in the same period of the prior year.

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RESTRUCTURING INITIATIVES

In late 2017, we began a business transformation plan to drive profitable sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan was the Beauty + Home segment; however, certain global general and administrative functions were also addressed. As of the end of 2021, we have successfully completed the vast majority of our planned initiatives related to our transformation plan, including implementing new commercial strategies, reducing costs and adding capabilities in Asia and in fast growing application fields that we believe will position the segment for future growth and profitability. However, the COVID-19 global pandemic resulted in a significant decline in our beauty business. While our Beauty + Home segment continues to be profitable, the disruption caused by the pandemic, including higher operating costs, have more than offset any expected growth in earnings from our transformation. Although we believe the beauty market remains a long-term attractive growth market and we remain committed to completing our transformation initiatives, we expect the return to growth to be gradual and non-linear as this market is highly correlated to the return to post-pandemic normal consumer behavior, including travel, which has proven to be sporadic and uncertain. The cumulative expense incurred for this transformation plan as of ~~March 31,~~June 30, 2022 was ~~$136.5~~$137.0 million.

Restructuring costs related to the above plan for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 are as follows:


		Three Months Ended June 30,						Six Months Ended June 30,
Three Months Ended March 31,			2022		2021
								2022		2021		2022		2021
Restructuring Initiatives by Segment	Restructuring Initiatives by Segment						Restructuring Initiatives by Segment
Pharma	Pharma		$	—	$	35	Pharma	$	—	$	38	$	—	$	73
Beauty + Home	Beauty + Home		258		1,096		Beauty + Home	420		1,457		678		2,553
Food + Beverage	Food + Beverage		33		(79)		Food + Beverage	8		117		41		38
Corporate & Other	Corporate & Other		—		2,620		Corporate & Other	—		3,264		—		5,884
Total Restructuring Initiatives	Total Restructuring Initiatives		$	291	$	3,672	Total Restructuring Initiatives	$	428	$	4,876	$	719	$	8,548

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OPERATING INCOME

Operating income increased approximately $16.8 million to $101.2 million in the second quarter of 2022 compared to $84.4 million in the same period a year ago. Excluding changes in foreign currency rates, operating income increased by approximately $24.3 million in the quarter compared to the same period a year ago. Strong sales growth, along with lower restructuring costs, during the current quarter drove this improvement. Operating income as a percentage of net sales increased to 12.0% in the second quarter of 2022 compared to 10.4% in the prior year period.

For the first ~~three~~six months of 2022, operating income increased approximately ~~$5.1~~$21.9 million to ~~$97.7~~$198.9 million compared to ~~$92.6~~$177.0 million in the same period of the prior year. Excluding changes in foreign currency rates, operating income increased by approximately ~~$9.8~~$34.2 million in the first ~~three~~six months of 2022 compared to the same period a year ago. ~~The~~As mentioned above, the combination of strong sales ~~growth discussed above, along with~~and lower restructuring costs ~~during the current quarter drove~~led to this improvement. Operating income as a percentage of net sales ~~decreased~~increased to ~~11.6%~~11.8% in the first ~~three~~six months of 2022 compared to ~~11.9%~~11.1% for the same period in the prior year.

~~NET~~TOTAL OTHER INCOME (EXPENSE)

Net other ~~income (expense) decreased $19.4~~expense in the second quarter of 2022 increased $1.6 million to ~~$11.1~~$11.7 million ~~of expense for the three months ended March 31, 2022~~ from ~~$8.3~~$10.1 million ~~of income~~ in the same period of the prior year. ~~$18.1~~Interest expense increased by $4.8 million in the second quarter of 2022, primarily as a result of our $400 million 3.600% Senior Notes due March 2032, which were issued on March 7, 2022 and a $0.4 million make-whole payment for the redemption of all $75.0 million of our 3.25% senior unsecured notes. See Note 6 - Debt of the Condensed Consolidated Financial Statements for further details. The loss recognized in the second quarter of 2022 for our investment in PureCycle Technologies ("PCT" or "PureCycle") was lower than the loss recognized compared to the prior year period by $1.1 million. We also benefited from a $1.0 million land sale gain and $0.9 million of lower pension costs related to the change in discount rate assumptions.

Net other expense increased $21.0 million to $22.8 million of expense for the six months ended June 30, 2022 from $1.8 million of expense in the same period of the prior year. Of this ~~reduction~~increase, $16.9 million is the change in fair value of our investment in ~~PureCycle Technologies ("PCT" or "PureCycle").~~PureCycle. As discussed in Note 1718 - Investment in Equity Securities of the Condensed Consolidated Financial Statements, our investment in PureCycle was converted into shares of PCT, a publicly traded entity, during the first quarter of 2021. This investment is recorded at fair value based on observable market prices for identical assets with the change in fair value being recorded as a net investment gain or loss in the Condensed Consolidated Statements of Income. Interest expense increased by ~~$1.5~~$6.3 million in the first ~~quarter~~half of 2022 as a result of approximately ~~one month~~four months of interest expense on our $400 million 3.600% Senior Notes ~~due March 2032, which~~as discussed above. These increases were ~~issued on March 7, 2022. See Note 6 - Debt~~slightly offset by a $1.0 million land sale gain and $1.7 million of lower pension costs related to the ~~Condensed Consolidated Financial Statements for further details.~~change in discount rate assumptions.

PROVISION FOR INCOME TAXES

The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings and related estimated full year-taxes, adjusted for the impact of discrete quarterly items. The effective tax rate for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, was ~~28.0%~~28.9% and ~~16.8%~~25.6%. The effective tax rate for the six months ended June 30, 2022 and 2021, respectively, was 28.5% and 20.5%. The lower effective tax rate for the three and six months ended ~~March 31,~~June 30, 2021 reflects ~~incremental~~additional tax benefits from employee stock-based ~~compensation of $8.0 million and a $2.9 million benefit from changes in U.S. state tax laws for the three months ended March 31, 2021.~~compensation.

NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.

We reported net income attributable to AptarGroup of ~~$62.4~~$63.6 million and ~~$84.0~~$126.0 million in the three and six months ended ~~March 31,~~June 30, 2022, respectively, compared to $55.3 million and ~~2021, respectively.~~

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$139.2 million for the same periods in the prior year.

PHARMA SEGMENT

Operations that sell dispensing systems, drug delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health markets form our Pharma segment.


		Three Months Ended June 30,								Six Months Ended June 30,
Three Months Ended March 31,			2022			2021
										2022			2021			2022			2021

Net Sales	Net Sales		$	342,462		$	313,832		Net Sales	$	340,231		$	325,343		$	682,693		$	639,175
Adjusted EBITDA (1)	Adjusted EBITDA (1)		115,552			108,484			Adjusted EBITDA (1)	111,006			105,979			226,558			214,463
Adjusted EBITDA margin (1)	Adjusted EBITDA margin (1)		33.7		%	34.6		%	Adjusted EBITDA margin (1)	32.6		%	32.6		%	33.2		%	33.6		%

(1)Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".

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Net sales for the Pharma segment increased 5% in the second quarter of 2022 to $340.2 million compared to $325.3 million in the second quarter of 2021. Changes in currencies negatively affected net sales by 8%, while the acquisitions of Voluntis and Hengyu had a positive impact of 1% during the second quarter of 2022. Therefore, core sales increased by 12% in the second quarter of 2022 compared to the second quarter of 2021. The majority of the sale growth is due to higher volumes and product mix. Core sales of our products to the prescription drug market increased 15% on strong demand for our allergic rhinitis and asthma devices as many regions continue to experience post-pandemic re-openings. We also realized strong sales of our products on emergency medical applications for existing and new solutions in the prescription drug market. The 13% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant, saline rinse and cough and cold solutions. Core sales of our elastomeric components to the injectables market increased 9% due to continued strong demand for our vaccine and biologic components, even as demand for COVID-19 vaccines began to normalize. Sales of our active material science solutions increased 5% on higher demand for our oral dose and diabetes products.


Second Quarter 2022 Net Sales Change over Prior Year	Prescription Drug		Consumer Health Care		Injectables		Active Material Science Solutions		Digital Health		Total
Core Sales Growth	15	%	13	%	9	%	5	%	—	%	12	%
Acquisitions	—	%	—	%	3	%	—	%	100	%	1	%
Currency Effects (1)	(9)	%	(9)	%	(9)	%	(3)	%	—	%	(8)	%
Total Reported Net Sales Growth	6	%	4	%	3	%	2	%	100	%	5	%

Net sales for the first ~~three~~six months of 2022 increased by 9%7% to ~~$342.5~~$682.7 million compared to ~~$313.8~~$639.2 million in the first ~~three~~six months of 2021. Changes in currency rates negatively impacted net sales by 5%7%, while the acquisitions of Voluntis and Hengyu had a positive impact of 1% during the first ~~quarter~~six months of 2022. Therefore, core sales increased by 13% in the first ~~three~~six months of 2022 compared to the same period in the prior year. All markets showed core sales growth during the first ~~quarter~~six months of ~~2022 with almost all of~~2022. The 13% core sales growth in the ~~increase~~consumer health care market was driven by higher demand for our nasal decongestant, saline rinses and cough and cold solutions, while sales to the prescription drug market increased 9% on solid demand for our allergic rhinitis, asthma and emergency medical devices due to ~~volume versus price pass-throughs.~~post-pandemic re-openings and product launches as discussed above. Core sales of our active material science solutions increased ~~58%~~30% mainly on strong demand for our Activ-Film products used with at-home COVID-19 test kits. Similarly, sales of our elastomeric components for COVID-19 and other vaccines drove the 7%8% core sales growth in our injectables market. The 13% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant, saline rinses and dermal solutions. Sales to the prescription drug market increased 3% on solid demand for our allergic rhinitis and asthma devices as many regions began to experience post-pandemic re-openings.


Three Months Ended March 31, 2022 Net Sales Change over Prior Year		Prescription Drug		Consumer Health Care		Injectables		Active Material Science Solutions		Digital Health		Total
Six Months Ended June 30, 2022 Net Sales Change over Prior Year														Six Months Ended June 30, 2022 Net Sales Change over Prior Year	Prescription Drug		Consumer Health Care		Injectables		Active Material Science Solutions		Digital Health		Total
Core Sales Growth	Core Sales Growth	3	%	13	%	7	%	58	%	—	%	13	%	Core Sales Growth	9	%	13	%	8	%	30	%	—	%	13	%
Acquisitions	Acquisitions	—	%	—	%	3	%	—	%	100	%	1	%	Acquisitions	—	%	—	%	3	%	—	%	100	%	1	%
Currency Effects (1)	Currency Effects (1)	(4)	%	(5)	%	(6)	%	(4)	%	—	%	(5)	%	Currency Effects (1)	(7)	%	(7)	%	(8)	%	(4)	%	—	%	(7)	%
Total Reported Net Sales Growth	Total Reported Net Sales Growth	(1)	%	8	%	4	%	54	%	100	%	9	%	Total Reported Net Sales Growth	2	%	6	%	3	%	26	%	100	%	7	%

(1)Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the second quarter of 2022 increased 5% to $111.0 million compared to $106.0 million in the same period of the prior year. Strong product sales growth along with improved sales mix of our higher margin products for the prescription drug market drove the current quarter growth. Our Adjusted EBITDA margin remaining consistent at 32.6% as the stronger mix of prescription business was offset by the lack of margin on the pass-through of higher input costs.

Adjusted EBITDA in the first ~~three~~six months of 2022 increased 3%6% to ~~$115.6~~$226.6 million compared to ~~$108.5~~$214.5 million ~~reported~~ in the same period of the prior year. This increase is mainly driven by our strong core sales growth discussed above. However, the lack of margin on the pass-through of higher ~~SG&A~~input costs and incremental startup costs for our digital health investments and elastomeric component capacity expansion led to a lower Adjusted EBITDA margin.

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BEAUTY + HOME SEGMENT

Operations that sell dispensing systems and sealing solutions to the beauty, personal care and home care markets form our Beauty + Home segment.


		Three Months Ended June 30,								Six Months Ended June 30,
Three Months Ended March 31,			2022			2021
										2022			2021			2022			2021

Net Sales	Net Sales		$	368,199		$	346,946		Net Sales	$	371,346		$	360,246		$	739,545		$	707,192
Adjusted EBITDA (1)	Adjusted EBITDA (1)		39,498			35,356			Adjusted EBITDA (1)	44,879			37,910			84,377			73,266
Adjusted EBITDA margin (1)	Adjusted EBITDA margin (1)		10.7		%	10.2		%	Adjusted EBITDA margin (1)	12.1		%	10.5		%	11.4		%	10.4		%

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~~For the first three months of 2022,~~Reported net sales for the quarter ended June 30, 2022 increased 6%3% to ~~$368.2~~$371.3 million compared to ~~$346.9~~$360.2 million in the ~~first three months~~second quarter of the prior year. Changes in currency rates negatively impacted net sales by ~~approximately 4%.~~7% in the second quarter of 2022. Therefore, core sales increased by 10% in the ~~first three months~~second quarter of 2022 compared to the same ~~period in~~quarter of the prior year. Approximately 6%3% of ~~the 10%~~this growth came from ~~pass-through of higher input cost while the remaining amount is due to~~ increased volumes and improved product mix as sales for many of our applications began to normalize after the COVID-19 impacts seen during 2021. The remaining core sales increase is mainly due to the pass-through of higher input costs. Core sales of our products to the beauty market increased ~~16%~~19% as consumer demand for products across all of our markets continued to improve over prior year levels. Personal care core sales increased 6% due to higher sales to the hair care, deodorant and sun care markets. This was partially offset by declines in personal cleansing, as hand sanitizer demand continues to normalize. Core sales to the home care markets decreased 17% on strong prior year comparisons for dish care and household cleaner products.


Second Quarter 2022 Net Sales Change over Prior Year	Personal Care		Beauty		Home Care		Total
Core Sales Growth	6	%	19	%	(17)	%	10	%

Currency Effects (1)	(6)	%	(9)	%	(3)	%	(7)	%
Total Reported Net Sales Growth	—	%	10	%	(20)	%	3	%

For the first six months of 2022, net sales increased 5% to $739.5 million compared to $707.2 million in the first six months of the prior year. Changes in currency rates negatively impacted net sales by approximately 5%. Therefore, core sales increased by 10% in the first six months of 2022 compared to the same period in the prior year. Approximately 4% of this growth came from increased product volumes and mix, while the remaining amount is mainly due to the pass-through of higher input costs. Core sales of our products to the beauty market increased 18% during the first ~~three~~six months of 2022 as we experienced ~~an increase in demand for both fragrance and color cosmetic products.~~growth across all of our applications. Personal care core sales increased 8%7% as higher sales of our hair care and sun care applications more than offset the lower demand for our hand sanitizer dispensing solutions. ~~Our~~As mentioned above, core sales of our home care market ~~realized increased~~products declined 13% mainly due to lower tooling sales toand normalizing demand for our dish care, ~~customers. However, it was not enough to offset lower sales to our automotive~~industrial and ~~industrial customers, which saw a return to a more normal demand after the higher~~household cleaner applications as rates of COVID-19 ~~related volumes we realized~~transmission have slowed in ~~the first quarter of 2021.~~certain regions.


Three Months Ended March 31, 2022 Net Sales Change over Prior Year		Personal Care		Beauty		Home Care		Total
Six Months Ended June 30, 2022 Net Sales Change over Prior Year										Six Months Ended June 30, 2022 Net Sales Change over Prior Year	Personal Care		Beauty		Home Care		Total
Core Sales Growth	Core Sales Growth	8	%	16	%	(9)	%	10	%	Core Sales Growth	7	%	18	%	(13)	%	10	%

Currency Effects (1)	Currency Effects (1)	(4)	%	(5)	%	(3)	%	(4)	%	Currency Effects (1)	(5)	%	(7)	%	(3)	%	(5)	%
Total Reported Net Sales Growth	Total Reported Net Sales Growth	4	%	11	%	(12)	%	6	%	Total Reported Net Sales Growth	2	%	11	%	(16)	%	5	%

(1)Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the second quarter of 2022 increased 18% to $44.9 million compared to $37.9 million in the same period in the prior year. As discussed above, increases in product sales volumes drove our Adjusted EBITDA growth in the second quarter of 2022. Inflationary increases negatively impacted our current period results as price pass throughs were not enough to offset the full effect of rising material and labor costs. However, we were able to compensate for this impact with improved operational performance and a $1.0 million land sale gain.

Adjusted EBITDA in the first ~~three~~six months of 2022 increased ~~12%~~15% to ~~$39.5~~$84.4 million compared to ~~$35.4~~$73.3 million reported in the same period in the prior year. ~~Strong~~As discussed above, strong product sales growth also drove ~~the majority of~~ the Adjusted EBITDA improvement in the first ~~three~~six months of 2022, while operational improvements were able to offset the net negative impact of inflation and some supply chain ~~challenges~~disruptions in certain regions.

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FOOD + BEVERAGE SEGMENT

Operations that sell dispensing systems, sealing solutions and food service trays to the food and beverage markets form our Food + Beverage segment.


		Three Months Ended June 30,								Six Months Ended June 30,
Three Months Ended March 31,			2022			2021
										2022			2021			2022			2021

Net Sales	Net Sales		$	134,271		$	115,976		Net Sales	$	132,966		$	125,443		$	267,237		$	241,419
Adjusted EBITDA (1)	Adjusted EBITDA (1)		19,235			19,990			Adjusted EBITDA (1)	17,705			19,626			36,940			39,616
Adjusted EBITDA margin (1)	Adjusted EBITDA margin (1)		14.3		%	17.2		%	Adjusted EBITDA margin (1)	13.3		%	15.6		%	13.8		%	16.4		%

Reported sales for the quarter ended June 30, 2022 increased approximately 6% to $133.0 million compared to $125.4 million in the second quarter of the prior year. Changes in currency rates negatively impacted net sales by 2%. Therefore, core sales for the second quarter of 2022 increased 8% compared to the same quarter of the prior year. Approximately 6% of the 8% core sales increase is due to passing through higher resin and other input costs as we continued to experience high inflationary cost increases during the second quarter of 2022. However, even without these price increases, we reported growth in both our food and beverage markets. Our food market volumes increased on higher demand for our products on granular and powder applications, along with strong growth in our food service packaging applications. The beverage market also reported strong growth as sales of our premium bottled water products continued to recover from the COVID-19 pandemic levels last year.


Second Quarter 2022 Net Sales Change over Prior Year	Food		Beverage		Total
Core Sales Growth	8	%	11	%	8	%

Currency Effects (1)	(2)	%	(3)	%	(2)	%
Total Reported Net Sales Growth	6	%	8	%	6	%

Net sales for the first ~~three~~six months of 2022 increased by ~~16%~~11% to ~~$134.3~~$267.2 million compared to ~~$116.0~~$241.4 million in the first ~~three~~six months of 2021. Changes in currency rates negatively impacted net sales by 2%. Therefore, core sales increased by ~~18%~~13% in the first ~~three~~six months of 2022 compared to the same period in the prior year. ~~As discussed above, increased~~Increased product and tooling sales, along with the pass-through of higher material costs, positively impacted the first ~~three~~six months of 2022. Approximately ~~12%~~9% of the ~~18%~~13% core sales increase is due to passing through higher resin and other input costs. Core sales to the food market increased ~~18%~~13%, while core sales to the beverage market increased ~~16%~~14% in the first ~~three~~six months of 2022 compared to the same period of the prior year. For the food market, we realized strong growth in sauces and condiments and our food service packaging products. ~~The~~As mentioned above, the beverage market also reported growth as sales of our premium bottled water products ~~continued to~~ recover from the lower COVID-19 pandemic levels last year.


Three Months Ended March 31, 2022 Net Sales Change over Prior Year		Food		Beverage		Total
Six Months Ended June 30, 2022 Net Sales Change over Prior Year								Six Months Ended June 30, 2022 Net Sales Change over Prior Year	Food		Beverage		Total
Core Sales Growth	Core Sales Growth	18	%	16	%	18	%	Core Sales Growth	13	%	14	%	13	%

Currency Effects (1)	Currency Effects (1)	(2)	%	(1)	%	(2)	%	Currency Effects (1)	(2)	%	(3)	%	(2)	%
Total Reported Net Sales Growth	Total Reported Net Sales Growth	16	%	15	%	16	%	Total Reported Net Sales Growth	11	%	11	%	11	%

(1)Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the second quarter of 2022 decreased 10% to $17.7 million compared to $19.6 million reported in the same period of the prior year. The higher product and tooling sales discussed above were offset by unfavorable product mix and some operational inefficiencies, specifically in North America, due to labor and supply chain disruptions.

Adjusted EBITDA in the first ~~three~~six months of 2022 decreased 4%7% to ~~$19.2~~$36.9 million compared to ~~$20.0~~$39.6 million reported in the same period of the prior year. As discussed above, we experienced increased product and tooling sales growth during the first ~~quarter~~half of 2022. However, our profitability was negatively impacted by unfavorable product mix and some operational inefficiencies ~~specifically in North America,~~ due to labor and supply chain ~~issues.~~disruptions mentioned above. These issues, along with the lack of margin on the pass-through of higher input costs, had a negative impact on our Adjusted EBITDA margin during the ~~current quarter.~~first six months of 2022.

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CORPORATE & OTHER

In addition to our three reporting segments, we assign certain costs to “Corporate & Other,” which is presented separately in Note 16 – Segment Information of the Notes to the Condensed Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items) primarily includes certain professional fees, compensation and information system costs which are not allocated directly to our reporting segments. For the quarter ended June 30, 2022, Corporate & Other ~~expenses~~Adjusted EBITDA decreased to $13.7 million from $16.0 million in the second quarter of 2021. The majority of this decrease is due to the timing of expense recognition for certain items such as equity compensation for retirement eligible employees.

Corporate & Other Adjusted EBITDA in the first ~~three~~six months of 2022 increased to ~~$18.0~~$31.6 million compared to ~~$11.6~~$27.6 million reported in the same period of the prior year. This increase is partially related to higher compensation costs, including accruals related to our current short-term incentive compensation programs and the timing of equity compensation expense recognition including substantive vesting conditions for retirement eligible employees. We also reported higher professional fees and travel costs compared to ~~2021.~~2021 as travel restrictions begin to ease.

NON-U.S. GAAP MEASURES

In addition to the information presented herein that conforms to accounting principles generally accepted in the United States of America ("U.S. GAAP"), we also present financial information that does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S. GAAP financial measures because they allow for a better period over period comparison of operating results by removing the impact of items that, in management’s view, do not reflect our core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the unaudited Condensed Consolidated Statements of Income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measure to arrive at these non-U.S. GAAP financial measures.

In our Management’s Discussion and Analysis, we exclude the impact of foreign currency translation when presenting net sales and other information, which we define as “constant currency.” Changes in net sales excluding the impact of foreign currency translation is a non-U.S. GAAP financial measure. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our prior period results at current period foreign currency exchange rates. As a result, our management believes that these presentations are useful internally and may be useful to investors. We also exclude the impact of material acquisitions when comparing results to prior periods. Changes in operating results excluding the impact of acquisitions are non-U.S. GAAP financial measures. We believe it is important to exclude the impact of acquisitions on period over period results in order to evaluate performance on a more comparable basis.

We present earnings before net interest and taxes (“EBIT”) and earnings before net interest, taxes, depreciation and amortization (“EBITDA”). We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude the business transformation charges (restructuring initiatives), acquisition-related costs, purchase accounting adjustments related to acquisitions and investments and net unrealized investment gains and losses related to observable market price changes on equity securities. Our Outlook is also provided on a non-U.S. GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as exchange rates and changes in the fair value of equity investments, or reliably predicted because they are not part of our routine activities, such as restructuring and acquisition costs.

We provide a reconciliation of Net Debt to Net Capital as a non-U.S. GAAP measure. “Net Debt” is calculated as interest bearing debt less cash and equivalents and short-term investments while “Net Capital” is calculated as stockholders’ equity plus Net Debt. Net Debt to Net Capital measures a company’s financial leverage, which gives users an idea of a company's financial structure, or how it is financing its operations, along with insight into its financial strength. We believe that it is meaningful to take into consideration the balance of our cash, cash equivalents and short-term investments when evaluating our leverage. If needed, such assets could be used to reduce our gross debt position.

Finally, we provide a reconciliation of free cash flow as a non-U.S. GAAP measure. Free cash flow is calculated as cash provided by operating activities less capital expenditures plus proceeds from government grants related to capital expenditures. We use free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. We believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives.

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		Three Months Ended																	Three Months Ended
		March 31, 2022																	June 30, 2022

		Consolidated			Pharma			Beauty + Home			Food + Beverage			Corporate & Other		Net Interest			Consolidated			Pharma			Beauty + Home			Food + Beverage			Corporate & Other		Net Interest
Net Sales	Net Sales	$	844,932		$	342,462		$	368,199		$	134,271		$	—	$	—	Net Sales	$	844,543		$	340,231		$	371,346		$	132,966		$	—	$	—

Reported net income	Reported net income	$	62,371															Reported net income	$	63,613
Reported income taxes	Reported income taxes	24,255																Reported income taxes	25,858
Reported income before income taxes	Reported income before income taxes	86,626			92,206			15,681			8,973			(21,592)		(8,642)		Reported income before income taxes	89,471			87,445			21,053			7,594			(15,628)		(10,993)
Adjustments:	Adjustments:																	Adjustments:
Restructuring initiatives	Restructuring initiatives	291			—			258			33			—				Restructuring initiatives	428			—			420			8			—
Net unrealized investment loss	Net unrealized investment loss	2,091												2,091				Net unrealized investment loss	483												483

Adjusted earnings before income taxes	Adjusted earnings before income taxes	89,008			92,206			15,939			9,006			(19,501)		(8,642)		Adjusted earnings before income taxes	90,382			87,445			21,473			7,602			(15,145)		(10,993)
Interest expense	Interest expense	8,930														8,930		Interest expense	11,982														11,982
Interest income	Interest income	(288)														(288)		Interest income	(989)														(989)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	Adjusted earnings before net interest and taxes (Adjusted EBIT)	97,650			92,206			15,939			9,006			(19,501)		—		Adjusted earnings before net interest and taxes (Adjusted EBIT)	101,375			87,445			21,473			7,602			(15,145)		—
Depreciation and amortization	Depreciation and amortization	58,665			23,346			23,559			10,229			1,531				Depreciation and amortization	58,552			23,561			23,406			10,103			1,482

Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	156,315		$	115,552		$	39,498		$	19,235		$	(17,970)	$	—	Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	159,927		$	111,006		$	44,879		$	17,705		$	(13,663)	$	—

Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	18.5		%	33.7		%	10.7		%	14.3		%					Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	18.9		%	32.6		%	12.1		%	13.3		%

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Three Months Ended
March 31, 2021
Consolidated Pharma Beauty + Home Food + Beverage Corporate & Other Net Interest
Net Sales $ 776,754 $ 313,832 $ 346,946 $ 115,976 $ — $ —
Reported net income $ 83,939
Reported income taxes 16,949
Reported income before income taxes 100,888 87,670 9,688 10,010 554 (7,034)
Adjustments:
Restructuring initiatives 3,672 35 1,096 (79) 2,620
Net unrealized investment gain (16,809) (16,809)
Adjusted earnings before income taxes 87,751 87,705 10,784 9,931 (13,635) (7,034)
Interest expense 7,415 7,415
Interest income (381) (381)
Adjusted earnings before net interest and taxes (Adjusted EBIT) 94,785 87,705 10,784 9,931 (13,635) —
Depreciation and amortization 57,438 20,779 24,572 10,059 2,028
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 152,223 $ 108,484 $ 35,356 $ 19,990 $ (11,607) $ —
Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) 19.6 % 34.6 % 10.2 % 17.2 %

Net Debt to Net Capital Reconciliation March 31, December 31,
2022 2021
Notes payable, revolving credit facility and overdrafts $ 841 $ 147,276
Current maturities of long-term obligations, net of unamortized debt issuance costs 142,178 142,351
Long-Term Obligations, net of unamortized debt issuance costs 1,294,850 907,024
Total Debt 1,437,869 1,196,651
Less:
Cash and equivalents 355,629 122,925
Short-term investments 717 740
Net Debt $ 1,081,523 $ 1,072,986
Total Stockholders' Equity $ 1,998,451 $ 1,984,600
Net Debt 1,081,523 1,072,986
Net Capital $ 3,079,974 $ 3,057,586
Net Debt to Net Capital 35.1 % 35.1 %


	Three Months Ended
	June 30, 2021

	Consolidated			Pharma			Beauty + Home			Food + Beverage			Corporate & Other		Net Interest
Net Sales	$	811,032		$	325,343		$	360,246		$	125,443		$	—	$	—

Reported net income	$	55,274
Reported income taxes	19,020
Reported income before income taxes	74,294			81,806			12,122			9,691			(22,774)		(6,551)
Adjustments:
Restructuring initiatives	4,876			38			1,457			117			3,264
Net unrealized investment loss	1,611												1,611
Transaction costs related to acquisitions	2,434			2,434			—			—			—

Adjusted earnings before income taxes	83,215			84,278			13,579			9,808			(17,899)		(6,551)
Interest expense	7,175														7,175
Interest income	(624)														(624)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	89,766			84,278			13,579			9,808			(17,899)		—
Depreciation and amortization	57,790			21,701			24,331			9,818			1,940

Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	147,556		$	105,979		$	37,910		$	19,626		$	(15,959)	$	—

Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	18.2		%	32.6		%	10.5		%	15.6		%

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Free Cash Flow Reconciliation March 31, March 31,
2022 2021
Net Cash Provided by Operations $ 92,077 $ 72,185
Capital Expenditures (73,058) (63,884)
Proceeds from Government Grants 7,955 —
Free Cash Flow $ 26,974 $ 8,301


	Six Months Ended
	June 30, 2022

	Consolidated			Pharma			Beauty + Home			Food + Beverage			Corporate & Other		Net Interest
Net Sales	$	1,689,475		$	682,693		$	739,545		$	267,237		$	—	$	—

Reported net income	$	125,984
Reported income taxes	50,113
Reported income before income taxes	176,097			179,651			36,734			16,567			(37,220)		(19,635)
Adjustments:
Restructuring initiatives	719			—			678			41			—
Net unrealized investment loss	2,574												2,574


Adjusted earnings before income taxes	179,390			179,651			37,412			16,608			(34,646)		(19,635)
Interest expense	20,912														20,912
Interest income	(1,277)														(1,277)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	199,025			179,651			37,412			16,608			(34,646)		—
Depreciation and amortization	117,217			46,907			46,965			20,332			3,013

Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	316,242		$	226,558		$	84,377		$	36,940		$	(31,633)	$	—

Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	18.7		%	33.2		%	11.4		%	13.8		%

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	Six Months Ended
	June 30, 2021

	Consolidated			Pharma			Beauty + Home			Food + Beverage			Corporate & Other		Net Interest
Net Sales	$	1,587,786		$	639,175		$	707,192		$	241,419		$	—	$	—

Reported net income	$	139,213
Reported income taxes	35,969
Reported income before income taxes	175,182			169,476			21,810			19,701			(22,220)		(13,585)
Adjustments:
Restructuring initiatives	8,548			73			2,553			38			5,884
Net unrealized investment gain	(15,198)												(15,198)
Transaction costs related to acquisitions	2,434			2,434			—			—			—

Adjusted earnings before income taxes	170,966			171,983			24,363			19,739			(31,534)		(13,585)
Interest expense	14,590														14,590
Interest income	(1,005)														(1,005)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	184,551			171,983			24,363			19,739			(31,534)		—
Depreciation and amortization	115,228			42,480			48,903			19,877			3,968

Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	299,779		$	214,463		$	73,266		$	39,616		$	(27,566)	$	—

Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	18.9		%	33.6		%	10.4		%	16.4		%


Net Debt to Net Capital Reconciliation	June 30,			December 31,
	2022			2021

Notes payable, revolving credit facility and overdrafts	$	2,300		$	147,276
Current maturities of long-term obligations, net of unamortized debt issuance costs	67,986			142,351
Long-Term Obligations, net of unamortized debt issuance costs	1,271,752			907,024
Total Debt	1,342,038			1,196,651
Less:
Cash and equivalents	240,474			122,925
Short-term investments	—			740
Net Debt	$	1,101,564		$	1,072,986

Total Stockholders' Equity	$	1,948,464		$	1,984,600
Net Debt	1,101,564			1,072,986
Net Capital	$	3,050,028		$	3,057,586

Net Debt to Net Capital	36.1		%	35.1		%

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Free Cash Flow Reconciliation	June 30,		June 30,
	2022		2021

Net Cash Provided by Operations	$	176,654	$	175,581
Capital Expenditures	(147,262)		(137,039)
Proceeds from Government Grants	12,794		—
Free Cash Flow	$	42,186	$	38,542

FOREIGN CURRENCY

Because of our international presence, movements in exchange rates may have a significant impact on the translation of the financial statements of our foreign subsidiaries. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and South American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales could materially impact our results of operations. During the second quarter and for the first ~~quarter~~six months of 2022, the U.S. dollar strengthened compared to the major European currencies and Latin America currencies. This resulted in a dilutive impact on our translated results during the ~~first~~second quarter of 2022 when compared to the ~~first~~second quarter of 2021.

QUARTERLY TRENDS

Our results of operations in the last quarter of the year typically are negatively impacted by customer plant shutdowns in December. Several of the markets we serve are impacted by the seasonality of underlying consumer products. This, in turn, may have an impact on our net sales and results of operations for those markets. We believe the diversification of our product portfolio minimizes fluctuations in our overall quarterly financial statements and results in an immaterial seasonality impact on our Condensed Consolidated Financial Statements when viewed quarter over quarter. However, uncertainties related to the economic recovery from the COVID-19 pandemic may impact noted historical trends.

LIQUIDITY AND CAPITAL RESOURCES

Given our current low level of leverage relative to others in our industry and our ability to generate strong levels of cash flow from operations, we believe we are in a strong financial position and have the financial resources to meet our business requirements in the foreseeable future. We have historically used cash flow from operations, our revolving credit facilities, proceeds from stock options and debt, as needed, as our primary sources of liquidity. Our primary uses of liquidity are to invest in equipment and facilities that are necessary to support our growth, pay quarterly dividends to stockholders, repurchase shares of our common stock and to make acquisitions that will contribute to the achievement of our strategic objectives. Due to ~~uncertainty~~uncertainties amid the war in Ukraine, potential new COVID-19 variants across the ~~recent COVID-19 outbreak in China~~globe and the inflationary environment, in the event that customer demand decreases significantly for a prolonged period of time and adversely impacts our cash flows from operations, we would have the ability to restrict and significantly reduce capital expenditure levels as well as evaluate our acquisition strategy. A prolonged and significant reduction in capital expenditure levels could increase future repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.

Cash and equivalents and restricted cash increased to ~~$355.6~~$240.5 million at ~~March 31,~~June 30, 2022 from $122.9 million at December 31, 2021 primarily due to proceeds from our $400 million inaugural public bond offering, as described below. Total short and long-term interest bearing debt of ~~$1.4~~$1.3 billion at ~~March 31,~~June 30, 2022 was slightly higher than the $1.2 billion at December 31, 2021. The ratio of our Net Debt (interest bearing debt less cash and equivalents) to Net Capital (stockholders’ equity plus Net Debt) ~~remained consistent~~increased to 36.1% at June 30, 2022 compared to 35.1% at ~~March 31, 2022 and~~ December 31, 2021. See the reconciliation under "Non-U.S. GAAP Measures".

In the first ~~three~~six months of 2022, our operations provided approximately ~~$92.1~~$176.7 million in net cash flow compared to ~~$72.2~~$175.6 million for the same period a year ago. In both periods, cash flow from operations was primarily derived from earnings before depreciation and amortization. The increase in cash provided by ~~operations~~operating activities during the first ~~three~~six months of 2022 is primarily attributable to ~~better~~improved working capital management and lower restructuring costs. Partially offsetting ~~the increase~~other increases in cash provided by operations was a ~~$15.2~~$16.3 million contribution to our domestic and foreign benefit plans during the first ~~quarter~~half of 2022.

We used ~~$68.4~~$139.1 million in cash for investing activities during the first ~~three~~six months of 2022 compared to ~~$63.9~~$137.1 million during the same period a year ago. Our investment in capital projects increased ~~$9.2~~$10.2 million during the first ~~three~~six months of 2022 compared to the first ~~three~~six months of 2021, which is primarily related to additional investments in capacity for our injectables and active material science solutions divisions, partially offset by ~~$8.0~~$12.8 million received by government grant proceeds. Our 2022 estimated cash outlays for capital expenditures net of government grant proceeds are expected to be in the range of approximately ~~$300~~$290 million to ~~$330 million but could vary due to changes in exchange rates as well as the timing of capital projects.~~$320 million.

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Financing activities provided ~~$211.9~~$81.4 million in cash during the first ~~three~~six months of 2022 compared to ~~$45.0~~$45.4 million in cash used by financing activities during the same period a year ago. During the first ~~three~~six months of 2022, we received proceeds from long-term obligations of $402.2 million primarily from the issuance of $400 million of our 3.600% Senior Notes due March 2032 during the first quarter of 2022. As part of our bond offering, we paid ~~$3.8~~$4.0 million in debt issuance costs. Additionally, we repaid $144.3 million related to our revolving credit facility, paid ~~$24.9~~$49.8 million of dividends and purchased ~~$16.0~~$53.1 million of treasury stock. We ~~anticipate redeeming~~redeemed all $75.0 million of our 3.25% ~~private placement~~senior unsecured notes ~~due in September 2022~~ during the second quarter of 2022 at a price equal to the principal amount plus aaccrued interest and $0.4 million make-whole premium.

On June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") to replace the then existing facility maturing July 2022 (the "prior credit facility") ~~maturing July 2022~~ and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term facility"). The revolving credit facility matures in June 2026, subject to a maximum of two one-year extensions in certain circumstances, and provides for unsecured financing of up to $600 million available in the U.S. and to our wholly-owned UK subsidiary. The amended term facility matures in July 2022. The revolving credit facility can be drawn in various currencies including USD, EUR, GBP and CHF to the equivalent of $600 million, which may be increased by up to $300 million subject to the satisfaction of certain conditions. Each borrowing under the revolving credit facility will bear interest at rates based on LIBOR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. The revolving credit facility provides mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. As of ~~March 31,~~June 30, 2022, no balance was utilized under the revolving credit facility in the U.S. or by our wholly-owned UK subsidiary and $56 million remained outstanding under the amended term facility which matures in July 2022. As of December 31, 2021, $133 million was utilized under the revolving credit facility in the U.S., €10 million (approximately $11.4 million) was utilized by our wholly-owned UK subsidiary and $56 million remained outstanding under the amended term facility. Credit facility balances are included in notes payable, revolving credit facility and overdrafts on the Condensed Consolidated Balance Sheets.

Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:


	Requirement	Level at ~~March 31,~~June 30, 2022
Consolidated Leverage Ratio (1)	Maximum of 3.50 to 1.00	~~1.83~~1.84 to 1.00
Consolidated Interest Coverage Ratio (1)	Minimum of 3.00 to 1.00	~~18.90~~16.58 to 1.00

(1)Definitions of ratios are included as part of the revolving credit facility ~~agreement.~~and note purchase agreements.

Based upon the above consolidated leverage ratio covenant, we have the ability to borrow approximately an additional $1.0 billion before the 3.50 to 1.00 maximum ratio requirement is exceeded.

Our foreign operations have historically met cash requirements with the use of internally generated cash or uncommitted short-term borrowings. We also have committed financing arrangements in both the U.S. and the UK as detailed above. We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.

We facilitate a supply chain finance program ("SCF") across Europe and the U.S. that is administered by a third-party platform. Eligible suppliers can elect to receive early payment of invoices, less an interest deduction, and negotiate their receivable sales arrangements through the third-party platform on behalf of the respective SCF bank. We are not a party to those agreements, and the terms of our payment obligations are not impacted by a supplier's participation in the SCF. Accordingly, we have concluded that this program continues to be a trade payable program and is not indicative of a borrowing arrangement.

All outstanding amounts related to suppliers participating in the SCF are recorded within Accounts payable, accrued and other liabilities in our Condensed Consolidated Balance Sheets, and associated payments are included in operating activities within our Condensed Consolidated Statements of Cash Flows. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the amounts ~~due~~payable related to ~~suppliers participating in~~ the SCF program were approximately $33 million and $30 ~~million.~~

million, respectively.

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Collection and payment periods tend to be longer for our operations located outside the United States due to local business practices. We have also seen an increasing trend in pressure from certain customers to lengthen their payment terms. As the majority of our products are made to order, we have not needed to keep significant amounts of finished goods inventory to meet customer requirements. However, some of our contracts specify an amount of finished goods safety stock we are required to maintain.

To the extent our financial position allows and there is a clear financial benefit, we from time-to-time benefit from early payment discounts with some suppliers. We are also lengthening the payment terms with our suppliers to be in line with customer trends. While we have offered third party alternatives for our suppliers to receive payments sooner, we generally do not utilize these offerings from our customers as the economic conditions currently are not beneficial for us.

On July 6, 2022, we entered into an arrangement to swap approximately $200 million of our fixed USD debt to fixed EUR debt which should generate interest savings of approximately $0.5 million per quarter based upon current exchange rates.

On ~~April 14,~~July 13, 2022, the Board of Directors declared a quarterly cash dividend of $0.38 per share payable on ~~May 18,~~August 17, 2022 to stockholders of record as of ~~April~~July 27, 2022.

CONTINGENCIES

The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. Please refer to Note 12 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements for a discussion of contingencies affecting our business.

RECENTLY ISSUED ACCOUNTING STANDARDS

We have reviewed the recently issued accounting standards updates to the FASB’s Accounting Standards Codification that have future effective dates. Standards that have been adopted during 2022 are discussed in Note 1 – Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments to this update apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 was further amended in January 2021 by ASU 2021-01 which clarified the applicability of certain provisions. Both standards are effective upon issuance and can be adopted any time prior to December 31, 2022. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. ~~As of December 31,~~During 2021, we ~~have~~ amended the revolving credit facility to provide mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. We are evaluating any further impact this standard may have on our Condensed Consolidated Financial Statements and anticipate no further significant impacts.

Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our Condensed Consolidated Financial Statements upon adoption.

OUTLOOK

We ~~expect~~are recovering nicely in the ~~broad based momentum from~~critical markets that had previously been impacted by the ~~first quarter~~pandemic, including our Pharma segment’s prescription drug and consumer health care markets which are expected to continue ~~with growth~~strong momentum in ~~each segment, including strong growth of our prescription drug device business~~the coming quarter. At the same time, we are operating in an uncertain environment, which ~~will help~~continues to ~~compensate for lower demand for at-home COVID-19 tests. The~~be affected by rising inflation, the ongoing war in Ukraine, supply chain disruptions, and a very tight U.S. labor market. In addition, the ~~COVID-19 outbreak in China are~~stronger dollar is expected to continue to have ~~some~~an impact on our ~~business in~~results. We believe we are well positioned to navigate a potential economic downturn due to the ~~respective regions though visibility remains highly uncertain. We will continue~~strength of our balance sheet, our disciplined approach to ~~manage~~capital management and our ~~operations efficiently while we mitigate rising costs through pricing initiatives and cost containment.~~broad portfolio of innovative solutions that serve multiple essential markets.

We expect earnings per share for the ~~second~~third quarter of 2022, excluding any restructuring expenses, ~~acquisition-related costs and~~ changes in the fair value of equity investments and acquisition costs, to be in the range of ~~$0.92~~$0.90 to ~~$1.02~~$1.00 and this guidance is based on an effective tax rate range of ~~27%~~28% to ~~29%~~30%.

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FORWARD-LOOKING STATEMENTS

Certain statements in Management’s Discussion and Analysis and other sections of this Form 10-Q are forward-looking and involve a number of risks and uncertainties, including certain statements set forth in the Significant Developments, Restructuring Initiatives, Quarterly Trends, Liquidity and Capital Resources, Contingencies and Outlook sections of this Form 10-Q. Words such as “expects,” “anticipates,” “believes,” “estimates,” “future,” “potential”, "are optimistic" and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. 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 our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results or other events may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in our operations and business environment including, but not limited to:

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•geopolitical conflicts worldwide including the invasion of Ukraine by the Russian military and the resulting indirect impact on demand from our customers selling their products into these countries, as well as rising ~~energy costs;~~input costs and certain supply chain disruptions;

•lower demand and asset utilization due to recessionary period;

•the impact of COVID-19 and its variants on our global supply chain and our global customers, employees and operations, which has elevated and will continue to elevate many of the risks and uncertainties discussed below;

•economic conditions worldwide, including inflationary conditions and potential deflationary or inflationary conditions in other regions we rely on for growth;

•the availability of direct labor workers and the increase in direct labor costs, especially in North America;

•our ability to preserve organizational culture and maintain employee productivity in the work-from-home environment caused by the current pandemic;

•the availability of raw materials and components (particularly from sole sourced suppliers) as well as the financial viability of these suppliers;

•fluctuations in the cost of materials, components, transportation cost as a result of supply chain disruptions and labor shortages, and other input costs (particularly resin, metal, anodization costs and energy costs);

•significant fluctuations in foreign currency exchange rates or our effective tax rate;

•the impact of tax reform legislation, changes in tax rates and other tax-related events or transactions that could impact our effective tax rate;

•financial conditions of customers and suppliers;

•consolidations within our customer or supplier bases;

•changes in customer and/or consumer spending levels;

•loss of one or more key accounts;

•our ability to successfully implement facility expansions and new facility projects;

•our ability to offset inflationary impacts with cost containment, productivity initiatives or price increases;

•changes in capital availability or cost, including rising interest ~~rate fluctuations;~~rates;

•volatility of global credit markets;

•our ability to identify potential new acquisitions and to successfully acquire and integrate such operations, including the successful integration of the businesses we have acquired, including contingent consideration valuation;

•our ability to build out acquired businesses and integrate the product/service offerings of the acquired entities into our existing product/service portfolio;

•direct or indirect consequences of acts of war, terrorism or social unrest;

•cybersecurity threats that could impact our networks and reporting systems;

•the impact of natural disasters and other weather-related occurrences;

•fiscal and monetary policies and other regulations;

•changes or difficulties in complying with government regulation;

•changing regulations or market conditions regarding environmental sustainability;

•work stoppages due to labor disputes;

•competition, including technological advances;

•our ability to protect and defend our intellectual property rights, as well as litigation involving intellectual property rights;

•the outcome of any legal proceeding that has been or may be instituted against us and others;

•our ability to meet future cash flow estimates to support our goodwill impairment testing;

•the demand for existing and new products;

•the success of our customers’ products, particularly in the pharmaceutical industry;

•our ability to manage worldwide customer launches of complex technical products, particularly in developing markets;

•difficulties in product development and uncertainties related to the timing or outcome of product development;

•significant product liability claims; and

•other risks associated with our operations.

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Although we believe that our 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. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please refer to Item 1A (Risk Factors) of Part I included in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional risks and uncertainties that may cause our actual results or other events to differ materially from those expressed or implied in such forward-looking statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A significant number of our 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 condition and results of operations of our subsidiaries. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and South American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations. Conversely, a weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.

The table below provides information as of ~~March 31,~~June 30, 2022 about our forward currency exchange contracts. The majority of the contracts expire before the end of the ~~second~~third quarter of 2022.


Buy/Sell	Buy/Sell	Contract Amount (in thousands)		Average Contractual Exchange Rate	Min / Max Notional Volumes	Buy/Sell	Contract Amount (in thousands)		Average Contractual Exchange Rate	Min / Max Notional Volumes

EUR / USD	EUR / USD	$	18,832	1.1221	14,836 - 18,832	EUR / USD	$	20,201	1.0637	17,814 - 20,968
EUR / BRL	EUR / BRL	10,966		6.3613	9,735 - 10,966	EUR / BRL	10,252		5.4742	10,252 - 11,196
EUR / CNY						EUR / CNY	9,042		7.0281	5,213 - 9,042
CZK / EUR	CZK / EUR	5,570		0.0403	5,540 - 6,534	CZK / EUR	6,663		0.0401	2,123 - 6,663
EUR / THB	EUR / THB	5,098		37.2138	3,288 - 5,232	EUR / THB	4,823		37.0419	4,823 - 4,988
EUR / MXN		5,018		23.9103	4,346 - 5,018
CHF / EUR						CHF / EUR	2,205		0.9641	2,205 - 2,277
MXN / USD	MXN / USD	4,000		0.0474	3,700 - 4,000	MXN / USD	2,000		0.0478	2,000 - 3,000
USD / CNY	USD / CNY	3,000		6.4313	3,000 - 3,000	USD / CNY	1,900		6.5798	1,900 - 3,000
CHF / EUR		2,356		0.9626	2,354 - 2,379
EUR / MXN						EUR / MXN	1,671		22.7120	1,671 - 3,153
EUR / CHF						EUR / CHF	1,076		1.0371	113 - 1,076
GBP / EUR						GBP / EUR	572		1.1804	572 - 975
EUR / GBP						EUR / GBP	512		0.8471	481 - 965
USD / EUR	USD / EUR	1,945		0.8804	1,112 - 1,945	USD / EUR	381		0.9411	381 - 2,379
GBP / EUR		788		1.1935	335 - 788
CHF / USD	CHF / USD	459		1.0839	188 - 459	CHF / USD	158		1.0492	104 - 205
CZK / USD		378		0.0445	0 - 378
EUR / CHF		295		1.0368	30 - 746
USD / CZK		113		22.0284	0 - 113
EUR / GBP		67		0.8374	67 - 149
USD / GBP						USD / GBP	40		0.8040	40 - 154
Total	Total	$	58,885			Total	$	61,496

As of ~~March 31,~~June 30, 2022, we have recorded the fair value of foreign currency forward exchange contracts of ~~$0.4~~$0.3 million in prepaid and other and ~~$2.3~~$0.3 million in accounts payable, accrued and other liabilities on the Condensed Consolidated Balance Sheets. We also entered into a EUR/USD floating-to-fixed cross currency interest rate swap on July 20, 2017 to effectively hedge the foreign exchange and interest rate exposure on the $280 million bank term loan drawn by our wholly-owned UK ~~subsidiary.~~subsidiary, which matures in July 2022. The fair value of this cash flow hedge is ~~$1.7~~$5.0 million reported in prepaid and other assets on the Condensed Consolidated Balance Sheets.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of our disclosure controls and procedures (as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of ~~March 31,~~June 30, 2022. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures were effective as of such date.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our fiscal quarter ended ~~March 31,~~June 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES

Certain French employees are eligible to participate in the FCP Aptar Savings Plan (the “Plan”). An independent agent purchases shares of common stock available under the Plan for cash on the open market and we do not issue shares. We do not receive any proceeds from the purchase of common stock under the Plan. The agent under the Plan is BNP Paribas Fund Services. 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. During the quarter ended ~~March 31,~~June 30, 2022, the Plan purchased ~~2,247~~15,367 shares of our common stock on behalf of the participants at an average price of ~~$117.50,~~$112.22, for an aggregate amount of ~~$264 thousand,~~$1.7 million, and sold ~~1,123~~no shares of our common stock on behalf of the ~~participants at an average price of $115.95, for an aggregate amount of $130 thousand.~~participants. At ~~March 31,~~June 30, 2022, the Plan owned ~~110,008~~125,375 shares of our common stock.

ISSUER PURCHASES OF EQUITY SECURITIES

On April 18, 2019, we announced a share purchase authorization of up to $350 million of common stock. This authorization replaced previous authorizations and has no expiration date. We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.

During the three and six months ended ~~March 31,~~June 30, 2022, we repurchased approximately ~~140~~348 thousand shares for ~~approximately $16.0 million.~~$37.1 million and 488 thousand shares for $53.1 million, respectively. As of ~~March 31,~~June 30, 2022, there was ~~$184.4~~$147.3 million of authorized share repurchases remaining under the existing authorization.

The following table summarizes our purchases of our securities for the quarter ended ~~March 31,~~June 30, 2022:

Period Total Number Of Shares Purchased Average Price Paid Per Share Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs
(in millions)
1/1 - 1/31/22 — $ — — $ 200.4
2/1 - 2/28/22 — — — 200.4
3/1 - 3/31/22 140,000 114.16 140,000 184.4
Total 140,000 $ 114.16 140,000 $ 184.4



Period	Total Number Of Shares Purchased	Average Price Paid Per Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs	Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs (in millions)

4/1 - 4/30/22	—	$	—	—	$	184.4
5/1 - 5/31/22	232,000	106.87		232,000	159.6
6/1 - 6/30/22	116,000	106.13		116,000	147.3
Total	348,000	$	106.62	348,000	$	147.3

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ITEM 6. EXHIBITS


~~Exhibit 4.1~~						Indenture, dated as of March 7, 2022, between AptarGroup, Inc. and U.S. Bank Trust Company, National Association, as trustee, filed as Exhibit 4.1 to AptarGroup, Inc.'s current report on Form 8-K filed on March 7, 2022, is hereby incorporated by reference.

~~Exhibit 4.2~~						First Supplemental Indenture, dated as of March 7, 2022, between AptarGroup, Inc. and U.S. Bank Trust Company, National Association, as trustee, filed as Exhibit 4.2 to AptarGroup, Inc.'s current report on Form 8-K filed on March 7, 2022, is hereby incorporated by reference.

~~Exhibit 4.3~~						~~Form of 3.600% Senior Notes due 2032 (included as a part of Exhibit 4.2).~~

~~Exhibit 4.4~~						Assignment, Assumption and Amendment Agreement, dated as of March 1, 2022, among AptarGroup, Inc., AptarGroup UK Holdings Limited, and the holders of the 0.98% Series D Senior Notes Due July 19, 2023 and 1.17% Series E Senior Notes Due July 19, 2024.

~~Exhibit 10.1~~						~~Expatriate Letter Agreement,~~ ~~dated~~ as of January 25, 2022, among AptarGroup, Inc., Aptar Europe Holding SAS and Gael Touya, including the Employment Contract Amendment Suspending the French Contract, filed as Exhibit 10.1 to AptarGroup, Inc.'s current report on Form 8-K filed on January 25, 2022, is hereby incorporated by reference.

Exhibit 31.1						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101						The following information from our Quarterly Report on Form 10-Q for the ~~first~~second quarter of fiscal 2022, filed with the SEC on ~~April~~July 29, 2022, formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Cover Page, (ii) the Condensed Consolidated Statements of Income – Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021, (iii) the Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021, (iv) the Condensed Consolidated Balance Sheets – ~~March 31,~~June 30, 2022 and December 31, 2021, (v) the Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021, (vi) the Condensed Consolidated Statements of Cash Flows - ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021 and (vii) the Notes to Condensed Consolidated Financial Statements.
Exhibit 104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						AptarGroup, Inc.
						(Registrant)

			By			/s/ ROBERT W. KUHN
						Robert W. Kuhn
						Executive Vice President and Chief Financial Officer
						(Duly Authorized Officer and
						Principal Accounting and Financial Officer)


						Date: ~~April~~July 29, 2022


	Balance as of December 31, 2021		Balance as of March 31, 2022		Increase/ (Decrease)
Contract asset (current)	$	16,878	$	15,236	$	(1,642)

Contract liability (current)	86,340		91,711		5,371
Contract liability (long-term)	21,905		21,133		(772)


Net Debt to Net Capital Reconciliation	March 31,			December 31,
	2022			2021

Notes payable, revolving credit facility and overdrafts	$	841		$	147,276
Current maturities of long-term obligations, net of unamortized debt issuance costs	142,178			142,351
Long-Term Obligations, net of unamortized debt issuance costs	1,294,850			907,024
Total Debt	1,437,869			1,196,651
Less:
Cash and equivalents	355,629			122,925
Short-term investments	717			740
Net Debt	$	1,081,523		$	1,072,986

Total Stockholders' Equity	$	1,998,451		$	1,984,600
Net Debt	1,081,523			1,072,986
Net Capital	$	3,079,974		$	3,057,586

Net Debt to Net Capital	35.1		%	35.1		%