AptarGroup - 10-Q quarterly report FY

AptarGroup - 10-Q quarterly report FY

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004

FORM 10-Q


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

For The Quarterly Period Ended September 30, 2004

OR


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

475 West Terra Cotta Avenue, Suite E, Crystal Lake, Illinois 60014

815-477-0424

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date (October 19, 2004).

Common Stock 35,753,576

AptarGroup, Inc.

Form 10-Q

Quarter Ended September 30, 2004

INDEX


Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Income — Three and Nine Months Ended September 30, 2004 and 2003	1

	Consolidated Balance Sheets — September 30, 2004 and December 31, 2003	2

	Consolidated Condensed Statements of Cash Flows — Nine Months Ended September 30, 2004 and 2003	4

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18

Part II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 6.	Exhibits and Reports on Form 8-K	20

	Signature	21
Exhibit 10.1 Stock Option Agreement for Employees
Exhibit 10.2 Stock Option Agreement for Non-Employees Directors
Exhibit 10.3 Stock Option Agreement for Employees
Exhibit 10.4 Restricted Stock Award Agreement
Exhibit 31.1 Certification
Exhibit 31.2 Certification
Exhibit 32.1 Section 1350 Certification
Exhibit 32.2 Section 1350 Certification

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

AptarGroup, Inc.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

In thousands, except per share amounts


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Net Sales	$	325,893		$	281,310		$	953,340		$	834,546

Operating Expenses:
Cost of sales
(exclusive of depreciation shown below)		218,417			185,774			636,200			546,647
Selling, research & development and administrative		46,963			42,374			142,025			128,672
Depreciation and amortization		23,196			21,474			70,679			63,786
Acquired research and development charge		—			1,250			—			1,250

		288,576			250,872			848,904			740,355

Operating Income		37,317			30,438			104,436			94,191

Other Income (Expense):
Interest expense		(2,794	)		(2,410	)		(7,518	)		(7,246	)
Interest income		1,022			665			2,912			1,977
Equity in results of affiliates		224			189			917			527
Minority interests		1			(138	)		(271	)		(255	)
Miscellaneous, net		1,102			(310	)		1,127			80

		(445	)		(2,004	)		(2,833	)		(4,917	)

Income Before Income Taxes		36,872			28,434			101,603			89,274
Provision for Income Taxes		11,615			9,327			32,329			29,612


Net Income	$	25,257		$	19,107		$	69,274		$	59,662


Net Income Per Common Share:
Basic	$	.70		$	.53		$	1.91		$	1.65

Diluted	$	.68		$	.51		$	1.86		$	1.62


Average number of shares outstanding:
Basic		36,107			36,207			36,344			36,059
Diluted		37,179			37,159			37,298			36,806

See accompanying notes to consolidated financial statements.

1

AptarGroup, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

In thousands, except per share amounts


	September 30,			December 31,
	2004			2003
Assets
Current Assets:
Cash and equivalents	$	153,010		$	164,982
Accounts and notes receivable, less allowance for doubtful accounts of $9,390 in 2004 and $9,533 in 2003		256,352			231,976
Inventories		179,547			165,207
Prepayments and other		30,863			40,289

		619,772			602,454

Property, Plant and Equipment:
Buildings and improvements		168,495			167,684
Machinery and equipment		995,189			960,193

		1,163,684			1,127,877
Less: Accumulated depreciation		(690,369	)		(651,080	)

		473,315			476,797
Land		7,791			6,634

		481,106			483,431

Other Assets:
Investments in affiliates		13,840			13,018
Goodwill		136,059			136,660
Intangible assets		14,607			14,692
Miscellaneous		14,109			14,088

		178,615			178,458

Total Assets	$	1,279,493		$	1,264,343

See accompanying notes to consolidated financial statements.

2

AptarGroup, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

In thousands, except per share amounts


	September 30,			December 31,
	2004			2003
Liabilities and Stockholders’ Equity
Current Liabilities:
Notes payable	$	44,180		$	88,871
Current maturities of long-term obligations		5,975			7,839
Accounts payable and accrued liabilities		207,319			186,510

		257,474			283,220

Long-Term Obligations		144,325			125,196

Deferred Liabilities and Other:
Deferred income taxes		42,633			39,757
Retirement and deferred compensation plans		23,865			22,577
Deferred and other non-current liabilities		2,437			4,085
Minority interests		6,674			6,457

		75,609			72,876

Stockholders’ Equity:
Common stock, $.01 par value		381			377
Capital in excess of par value		144,888			136,710
Retained earnings		677,252			618,547
Accumulated other comprehensive income		58,351			65,708
Less treasury stock at cost, 2.4 and 1.4 million shares in 2004 and 2003, respectively.		(78,787	)		(38,291	)

		802,085			783,051

Total Liabilities and Stockholders’ Equity	$	1,279,493		$	1,264,343

See accompanying notes to consolidated financial statements.

3

AptarGroup, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

In thousands, brackets denote cash outflows


Nine Months Ended September 30,	2004			2003

Cash Flows From Operating Activities:
Net income	$	69,274		$	59,662
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		68,980			62,277
Amortization		1,699			1,508
Provision for bad debts		494			946
Minority interests		271			255
Deferred income taxes		(697	)		(838	)
Retirement and deferred compensation plans		1,011			139
Equity in results of affiliates in excess of cash distributions received		(917	)		(527	)
Changes in balance sheet items, excluding effects from foreign currency adjustments:
Accounts receivable		(18,908	)		(14,246	)
Inventories		(15,478	)		(15,865	)
Prepaid and other current assets		8,437			(1,517	)
Accounts payable and accrued liabilities		13,440			5,954
Income taxes payable		3,827			12,922
Other changes, net		1,928			594

Net Cash Provided by Operations		133,361			111,264

Cash Flows From Investing Activities:
Capital expenditures		(76,187	)		(56,529	)
Disposition of property and equipment		5,610			1,017
Intangible assets		(1,625	)		(399	)
(Collection)/issuance of notes receivable, net		(627	)		925

Net Cash Used by Investing Activities		(72,829	)		(54,986	)

Cash Flows From Financing Activities:
(Repayments)/proceeds from notes payable		(44,729	)		3,564
Proceeds from long-term obligations		25,000			50
Repayments of long-term obligations		(7,810	)		(11,259	)
Dividends paid		(10,569	)		(6,848	)
Proceeds from stock options exercises		9,355			7,297
Purchase of treasury stock		(42,062	)		(1,349	)

Net Cash Used by Financing Activities		(70,815	)		(8,545	)

Effect of Exchange Rate Changes on Cash		(1,689	)		10,937

Net (Decrease)/increase in Cash and Equivalents		(11,972	)		58,670
Cash and Equivalents at Beginning of Period		164,982			90,205

Cash and Equivalents at End of Period	$	153,010		$	148,875

See accompanying notes to consolidated financial statements.

4

AptarGroup, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of AptarGroup, Inc. and its subsidiaries. The terms “AptarGroup” or “Company” as used herein refer to AptarGroup, Inc. and its subsidiaries.

In the opinion of management, the unaudited consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of consolidated financial position, results of operations, and cash flows for the interim periods presented. The accompanying unaudited consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Accordingly, these unaudited consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

At September 30, 2004 and September 30, 2003, the Company had stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation.


		Three Months Ended September 30,				Nine Months Ended September 30,
		2004		2003		2004		2003
Net income, as reported		$	25,257	$	19,107	$	69,274	$	59,662
Deduct:	Total stock-based employee
	compensation expense determined
	under fair value based method for all
	awards, net of related tax effects		1,187		2,159		2,902		3,240

Pro forma net income		$	24,070	$	16,948	$	66,372	$	56,422

Earnings per share:
Basic — as reported		$	.70	$	.53	$	1.91	$	1.65
Basic — pro forma		$	.67	$	.47	$	1.83	$	1.56
Diluted — as reported		$	.68	$	.51	$	1.86	$	1.62
Diluted — pro forma		$	.65	$	.46	$	1.78	$	1.53

5

NOTE 2 — INVENTORIES

At September 30, 2004 and December 31, 2003, approximately 21% and 23%, respectively, of the total inventories are accounted for by using the last-in, first-out (LIFO) method, while the remaining inventories are valued using the first-in, first-out (FIFO) method. Inventories, by component, consisted of:


	September 30,			December 31,
	2004			2003
Raw materials	$	62,095		$	54,602
Work in progress		45,213			39,165
Finished goods		74,968			72,969

		182,276			166,736
Less LIFO Reserve		(2,729	)		(1,529	)

Total	$	179,547		$	165,207

Inventories are stated at cost, which is lower than market. Costs included in inventories are raw materials, direct labor and manufacturing overhead.

NOTE 3 — GOODWILL AND OTHER INTANGIBLE ASSETS

The table below shows a summary of intangible assets as of September 30, 2004 and December 31, 2003.


			2004							2003
	Weighted-
	Average		Gross							Gross
	Amortization		Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Period		Amount		Amortization			Value		Amount		Amortization			Value
Amortized intangible assets:
Patents		15	$	16,449	$	(6,809	)	$	9,640	$	16,625	$	(5,908	)	$	10,717
License agreements, organization costs and other		6		9,086		(4,645	)		4,441		7,485		(4,043	)		3,442

		12		25,535		(11,454	)		14,081		24,110		(9,951	)		14,159

Unamortized intangible assets:
Trademarks				464		—			464		470		—			470
Minimum pension liability				62		—			62		63		—			63

				526		—			526		533		—			533

Total intangible assets			$	26,061	$	(11,454	)	$	14,607	$	24,643	$	(9,951	)	$	14,692

Aggregate amortization expense for the intangible assets above for the quarters ended September 30, 2004 and September 30, 2003 was $561 and $537, respectively. Aggregate amortization expense for the intangible assets above for the nine months ended September 30, 2004 and September 30, 2003 was $1,699 and $1,508, respectively.

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


	2004 2005 2006 2007 2008		$2,180 1,695 1,721 1,718 1,719

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 September 30, 2004.

6

The changes in the carrying amount of goodwill since the year ended December 31, 2003 are as follows by reporting segment:


	Dispensing Systems			SeaquistPerfect
	Segment			Segment			Total
Balance as of January 1, 2004	$	134,800		$	1,860	$		136,660
Foreign currency exchange effects		(601	)		—			(601	)

Balance as of September 30, 2004	$	134,199		$	1,860	$		136,059

NOTE 4 — COMPREHENSIVE INCOME/(LOSS)

AptarGroup’s total comprehensive income was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2004		2003		2004			2003
Net income	$	25,257	$	19,107	$	69,274		$	59,662
Add: foreign currency translation adjustment		13,894		7,752		(7,357	)		60,331

Total comprehensive income	$	39,151	$	26,859	$	61,917		$	119,993

NOTE 5 — RETIREMENT AND DEFERRED COMPENSATION PLANS

Components of Net Periodic Benefit Cost:


Three months ended September 30,
		Domestic Plans						Foreign Plans
	2004			2003			2004			2003
Service cost	$	853		$	702		$	223		$	196
Interest cost		548			457			314			258
Expected return on plan assets		(603	)		(416	)		(92	)		(66	)
Amortization of prior service cost		6			5			24			27
Amortization of net gain		73			15			57			70

Net periodic benefit cost	$	877		$	763		$	526		$	485

Nine months ended September 30,


		Domestic Plans						Foreign Plans
	2004			2003			2004			2003
Service cost	$	2,559		$	2,106		$	669		$	582
Interest cost		1,644			1,371			945			764
Expected return on plan assets		(1,809	)		(1,248	)		(277	)		(196	)
Amortization of prior service cost		18			15			73			79
Amortization of net gain		219			45			171			207

Net periodic benefit cost	$	2,631		$	2,289		$	1,581		$	1,436

Employer Contributions:

The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expected to contribute approximately $1.6 million to its foreign defined benefit plans and that the Company did not expect to contribute to its domestic defined benefit plans in 2004. As of September 30, 2004, the Company contributed approximately $0.5 million to its foreign plans and did not contribute to its domestic plans. The Company presently anticipates contributing an additional $1.1 million to fund its foreign plans and does not anticipate contributing to its domestic plans in 2004.

7

NOTE 6 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company maintains a foreign exchange risk management policy designed to establish a framework to protect the value of the Company’s non-functional currency denominated transactions from adverse changes in exchange rates. Sales of the Company’s 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 impact the Company’s results of operations. The Company’s policy is not to engage in speculative foreign currency hedging activities, but to minimize its net foreign currency transaction exposure defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. The Company may use foreign currency forward exchange contracts and collars, currency swaps, options and cross currency swaps to hedge these risks.

The Company maintains an interest rate risk management strategy to minimize significant, unanticipated earnings fluctuations that may arise from volatility in interest rates.

For derivative instruments designated as hedges, the Company formally documents 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. 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.

FAIR VALUE HEDGES

The Company has an interest rate swap to convert a portion of its fixed-rate debt into variable-rate debt. Under the interest rate swap contract, the Company exchanges, at specified intervals, the difference between fixed-rate and floating-rate amounts, which is calculated based on an agreed upon notional amount.

As of September 30, 2004, the Company recorded the fair value of derivative instrument assets of $3.5 million in miscellaneous other assets with an offsetting adjustment to debt related to the fixed-to-variable interest rate swap agreement with a notional principal value of $25 million. No gain or loss was recorded in the income statement for the three or nine months ended September 30, 2004 or September 30, 2003 since there was no hedge ineffectiveness.

CASH FLOW HEDGES

The Company did not use any cash flow hedges in the three or nine months ended September 30, 2004 or September 30, 2003.

HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS

A significant number of the Company’s operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of the Company’s foreign entities. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on the Company’s financial condition. Conversely, a strengthening U.S. dollar has a dilutive effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset exposure. The Company does not otherwise actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of its foreign subsidiaries where the Company’s net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction.

OTHER

As of September 30, 2004, the Company recorded the fair value of foreign currency forward exchange contracts of $787 in prepayments and other in the balance sheet. All forward exchange contracts outstanding as of September 30, 2004 had an aggregate contract amount of $63.1 million.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. Management believes the resolution of these claims and lawsuits will not have a material adverse or positive effect on the Company’s financial position, results of operations or cash flow.

Under its Certificate of Incorporation, the Company has agreed to indemnify its officers and directors for certain events or occurrences while the officer or director is, or was serving, at its request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a directors and officers liability insurance policy that covers a portion of its exposure. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of September 30, 2004.

8

NOTE 8 — STOCK REPURCHASE PROGRAM

In July 2004, the Board of Directors authorized the repurchase of an additional two million shares of the Company’s outstanding common stock, bringing the maximum number of shares authorized to be repurchased to five million. The timing of and total amount expended for the share repurchase depends upon market conditions. During the quarter ended September 30, 2004, the Company repurchased 883 thousand shares for an aggregate amount of $38.2 million. The cumulative total number of shares repurchased through September 30, 2004 was approximately 2.4 million shares for an aggregate amount of $80.4 million.

NOTE 9 — EARNINGS PER SHARE

AptarGroup’s authorized common stock consists of 99 million shares, having a par value of $0.01 each. Information related to the calculation of earnings per share is as follows:


	Three months ended
		September 30, 2004				September 30, 2003
	Diluted		Basic		Diluted		Basic
Consolidated operations
Income available to common stockholders	$	25,257	$	25,257	$	19,107	$	19,107

Average equivalent shares
Shares of common stock		36,107		36,107		36,207		36,207
Dilutive effect of:
Stock options		1,056		—		920		—
Restricted stock		16		—		32		—

Total average equivalent shares		37,179		36,107		37,159		36,207

Net income per share	$	.68	$	.70	$	.51	$	.53


	Nine months ended
		September 30, 2004				September 30, 2003
	Diluted		Basic		Diluted		Basic
Consolidated operations
Income available to common stockholders	$	69,274	$	69,274	$	59,662	$	59,662

Average equivalent shares
Shares of common stock		36,344		36,344		36,059		36,059
Dilutive effect of:
Stock options		940		—		714		—
Restricted stock		14		—		33		—

Total average equivalent shares		37,298		36,344		36,806		36,059

Net income per share	$	1.86	$	1.91	$	1.62	$	1.65

NOTE 10 — SEGMENT INFORMATION

The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing systems. The Company is organized primarily based upon individual business units, which resulted from historic acquisitions or internally created business units. All of the business units sell primarily dispensing systems. These business units all require similar production processes, sell to similar classes of customers and markets, use the same methods to distribute products and operate in similar regulatory environments. Based on the current economic characteristics of the Company’s business units, the Company has identified two reportable segments: Dispensing Systems and SeaquistPerfect.

The Dispensing Systems segment is an aggregate of four of the Company’s five business units. The Dispensing Systems segment sells primarily non-aerosol spray and lotion pumps, plastic dispensing and non-dispensing closures, and metered dose aerosol valves. These three products are sold to all of the markets served by the Company including the fragrance/cosmetic, pharmaceutical, personal care, household, and food/beverage markets.

SeaquistPerfect represents the Company’s fifth business unit and sells primarily aerosol valves and accessories and certain non-aerosol spray and lotion pumps. These products are sold primarily to the personal care, household, and food/beverage markets.

9

The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. The Company evaluates performance of its business units and allocates resources based upon earnings before interest expense in excess of interest income, corporate expenses and income taxes (collectively referred to as “EBIT”) excluding unusual items. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties.

Financial information regarding the Company’s reportable segments is shown below:


Quarter ended September 30,
					Corporate
	Dispensing Systems		SeaquistPerfect		and Other			Totals
Total Revenue
2004	$	276,275	$	52,024				$	328,299
2003		234,841		48,444					283,285
Less: Intersegment Sales
2004	$	661	$	1,745				$	2,406
2003		515		1,460					1,975
Net Sales
2004	$	275,614	$	50,279				$	325,893
2003		234,326		46,984					281,310
EBIT
2004	$	37,699	$	4,318	$	(3,373	)	$	38,644
2003		31,133		4,666		(4,370	)		31,429

Nine Months ended September 30,


					Corporate
	Dispensing Systems		SeaquistPerfect		and Other			Totals
Total Revenue
2004	$	800,389	$	159,839				$	960,228
2003		697,173		143,095					840,268
Less: Intersegment Sales
2004	$	2,333	$	4,555				$	6,888
2003		1,988		3,734					5,722
Net Sales
2004	$	798,056	$	155,284				$	953,340
2003		695,185		139,361					834,546
EBIT
2004	$	103,966	$	14,368	$	(12,125	)	$	106,209
2003		94,926		13,465		(12,598	)		95,793

Reconciliation of segment EBIT to consolidated income before income taxes is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Income before income taxes
Total EBIT for reportable segments	$	38,644		$	31,429		$	106,209		$	95,793
Acquired research and development charge (1)		—			(1,250	)		—			(1,250	)
Interest expense, net		(1,772	)		(1,745	)		(4,606	)		(5,269	)

Income before income taxes	$	36,872		$	28,434		$	101,603		$	89,274

(1) Acquired research and development charge is associated with the Dispensing Systems segment. Management evaluates the segment profitability excluding this charge and therefore this charge is shown as a reconciling item to the consolidated totals.

10

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

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

RESULTS OF OPERATIONS


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Net Sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales (exclusive of depreciation shown below)		67.0			66.0			66.7			65.5
Selling, research & development and administration		14.4			15.1			14.9			15.4
Depreciation and amortization		7.1			7.7			7.4			7.6
Acquired research and development charge		—			0.4			—			0.2

Operating Income		11.5			10.8			11.0			11.3
Other income (expense)		(0.2	)		(0.7	)		(0.3	)		(0.6	)

Income before income taxes		11.3			10.1			10.7			10.7

Net income		7.8	%		6.8	%		7.3	%		7.1	%

Effective Tax Rate		31.5	%		32.8	%		31.8	%		33.2	%

NET SALES

Net sales for the quarter and nine months ended September 30, 2004 of $325.9 million and $953.3 million increased $44.6 million or 16% and $118.8 million or 14%, respectively, over the same periods a year ago. Changes in currency rates from 2003 to 2004 accounted for approximately $15 million and $54 million of the increase in sales for the quarter and nine month periods, respectively. Sales of tooling to customers also increased $5.9 million and $18.6 million for the quarter and nine months ended September 30, 2004, respectively. Excluding changes in foreign currency rates, the changes in sales by market were as follows:

•		Our sales to the personal care market increased approximately 12% and 9% for the quarter and nine months ended September 30, 2004, respectively, reflecting unit sales growth of both dispensing closures and spray pumps in the quarter, and unit sales growth as well as certain raw material related price increases for the quarter and nine months ended September 30, 2004. In addition, sales of tooling to customers increased approximately $5 million and $7 million for the three and nine month periods ended September 30, 2004, respectively. Price competition for our dispensing closure product line continues to affect this market pressuring selling prices.
•		Our sales to the fragrance/cosmetic market increased 9% and 4% for the quarter and nine months ended September 30, 2004, respectively, reflecting strength in the high end sector of this market. Price competition continues to impact the low-end sector of this market.
•		Our sales to the pharmaceutical market increased 2% and 4% for the quarter and nine months ended September 30, 2004, respectively. In the third quarter of the prior year, approximately $6 million of revenue was recorded related to a custom tooling project. Excluding tooling sales, pharmaceutical product sales increased nearly 12% in the quarter ended September 30, 2004 reflecting increased unit sales of spray pumps as well as metered dose aerosol valves. For the first nine months, product mix had a negative impact on sales growth as sales of metered dose aerosol valves increased. Typically, pharmaceutical spray pumps have a higher unit selling price than metered dose aerosol valves. Sales of pharmaceutical spray pumps during the first half of the year were adversely affected by one customer that, beginning in the second half of 2003, dramatically reduced its purchases to reduce its inventory levels. That customer began to reorder in the third quarter of 2004, contributing to the increase in sales of spray pumps in the quarter.
•		Our sales to the food/beverage markets increased approximately 29% and 24% for the quarter and nine months ended September 30, 2004, respectively, reflecting the continued acceptance of our dispensing closure product range in this market. Sales of tooling to customers increased $4.1 million and $6.9 million for the quarter and nine months ended September 30, 2004, respectively.
•		Our sales to the household market increased approximately 11% and 13% for the quarter and nine months ended September 30, 2004, respectively, reflecting sales growth in both dispensing closures and spray pumps in the quarter and aerosol valves, dispensing closures and spray pumps for the first nine months. Sales of tooling to customers increased $2.1 million and $2.6 million for the quarter and nine months ended September 30, 2004, respectively.

11

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


	Three Months Ended September 30,										Nine Months Ended September 30,
	2004		% of Total			2003		% of Total			2004		% of Total			2003		% of Total
Domestic	$	105,708		32	%	$	87,933		31	%	$	290,590		31	%	$	264,183		32	%
Europe		187,878		58	%		167,702		60	%		575,988		60	%		498,403		60	%
Other Foreign		32,307		10	%		25,675		9	%		86,762		9	%		71,960		8	%

COST OF SALES (EXCLUSIVE OF DEPRECIATION SHOWN BELOW)

Our cost of sales as a percent of net sales increased to 67.0% in the third quarter compared to 66.0% in the third quarter of 2003. The following factors influenced our cost of sales percentage in the quarter ended September 30, 2004:

Higher Quality Related Costs. We incurred higher quality related costs in the quarter. The most significant issue related to a problem encountered with resin used to make pumps for one of our pharmaceutical customers. Our resin supplier had erroneously mixed and shipped a non-approved resin with an approved resin that was not detected in our statistical in-coming quality control process. This problem cost approximately $2.2 million in the quarter. We do not expect any additional costs related to this problem in the fourth quarter.

Rising Raw Material Costs. Raw material costs, in particular plastic resin and metal, increased in the third quarter and first nine months of 2004. Only a portion of these raw material price increases have been passed on to customers with the net effect bringing a reduction in margin.

Continued Price Pressure. Pricing pressure continues in all the markets we serve, particularly in the low-end of the fragrance/cosmetic market and dispensing closure product range. We saw an increase in both direct and indirect competition from Asian suppliers. Directly, Asian suppliers continue to export more spray pumps in particular to the U.S. market. Indirectly, some fragrance marketers in the U.S. have started sourcing their entire product in Asia and importing the finished product back into the U.S. Price reductions, particularly in the areas previously mentioned, greater than cost savings achieved through productivity gains had a negative impact on cost of sales.

Strengthening of the Euro. We are a net exporter from Europe of products produced in Europe with costs denominated in Euros. As a result, when the Euro strengthens against the U.S. dollar or other currencies, products produced in and exported from Europe and sold in currencies which have weakened against the Euro increase our costs, thus having a negative impact on cost of sales as a percentage of net sales.

Increased Sales of Custom Tooling. We had a $5.9 million increase in sales of custom tooling in the third quarter of 2004. Traditionally, sales of custom tooling generate lower margins than our regular product sales and thus, any increased sales of custom tooling negatively impacts cost of sales as a percentage of sales.

Our cost of sales as a percent of net sales increased to 66.7% for the nine months ended September 30, 2004 compared to 65.5% for the same period a year ago. In addition to the items already mentioned above relating to the third quarter, the following factors influenced our cost of sales percentage in the first nine months of 2004:

Operating Losses and Shut Down Expenses for a Mold Manufacturing Facility in the U.S. We decided in the first quarter of 2004 to close a mold manufacturing facility in the U.S. Due to a reduction in the volume of business in the first nine months of 2004, this facility lost approximately $1.4 million. In addition, approximately $1.0 million of shut down and related severance charges relating to approximately 40 people were recorded. This facility was completely vacated early in the third quarter of 2004. The majority of these expenses are shown in cost of goods sold.

Increased Sales of Custom Tooling. We had an $18.6 million increase in sales of custom tooling in the first nine months of 2004. Traditionally, sales of custom tooling generate lower margins than our regular product sales and thus, any increased sales of custom tooling negatively impacts cost of sales as a percentage of sales.

Sale of Building. In the first quarter of 2004, we sold a production facility and realized a gain on the sale of the building of approximately $1 million. The gain is included in cost of goods sold.

12

SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE

Our Selling, Research & Development and Administrative expenses (“SG&A”) increased by approximately $4.6 million in the third quarter of 2004 compared to the same period a year ago. Approximately 60% of our business is based in Europe and has costs denominated in Euros. Approximately $2.2 million of the increase in SG&A is related to the strengthened Euro versus the U.S. dollar compared to the prior year. The remainder of the increase is primarily due to normal inflationary costs, wage increases and approximately $400 thousand related to costs incurred to comply with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). SG&A as a percentage of net sales for the quarter ended September 30, 2004 decreased to 14.4% from 15.1% in 2003.

Our SG&A costs increased approximately $13.4 million for the nine months ended September 30, 2004 compared to the same period a year ago. Changes in foreign currency rates accounted for approximately $8.3 million of the increase in SG&A costs. The remainder of the increase is due to normal inflationary costs, wage increases and Sarbanes-Oxley related costs of approximately $1 million. SG&A as a percentage of net sales for the nine months ended September 30, 2004 decreased to 14.9% from 15.4% in 2003.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased approximately $1.7 million in the third quarter of 2004 to $23.2 million compared to $21.5 million in the third quarter of 2003. Approximately $1.2 million of the increase is due to changes in foreign currency rates. The remaining increase primarily relates to increased capital expenditures in prior years.

Depreciation and amortization increased approximately $6.9 million for the first nine months of 2004 to $70.7 million compared to $63.8 million for the first nine months of 2003. Approximately $4.1 million of the increase is due to changes in foreign currency rates. The remaining increase primarily relates to an acceleration of depreciation on equipment related to a pharmaceutical project that was canceled by a customer in the first quarter, as well as increased capital expenditures in prior years.

NET OTHER EXPENSE

Net other expenses in the third quarter of 2004 decreased to $445 thousand from $2.0 million in the prior year primarily reflecting net foreign currency gains of approximately $900 thousand compared to foreign currency losses of approximately $100 thousand in 2003. The majority of the foreign currency gain relates to a foreign currency contract put in place for the repatriation of approximately $50 million from Europe to the U.S. in the third quarter of 2004.

Net other expenses for the nine months ended September 30, 2004 decreased to $2.8 million from $4.9 million in the prior year primarily due to increased interest income of $1.0 million related to the increase in cash levels over the prior year as well as net foreign currency gains mentioned above.

EFFECTIVE TAX RATE

The reported effective tax rate for the three and nine months ended September 30, 2004 was 31.5% and 31.8%, respectively, compared to 32.8% and 33.2%, for the same periods a year ago. The decrease in the effective tax rate is primarily attributed to the mix of where the income was earned.

NET INCOME

We reported net income for the third quarter of 2004 of $25.3 million compared to $19.1 million reported in the third quarter of 2003. Net income for the nine months ended September 30, 2004 was $69.3 million compared to $59.7 million for the first nine months of the prior year.

DISPENSING SYSTEMS SEGMENT

The Dispensing Systems segment is an aggregate of four of our five business units. The Dispensing Systems segment sells primarily non-aerosol spray and lotion pumps, plastic dispensing closures, and metered dose aerosol valves. These three products are sold to all the markets we serve.

13




	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Net Sales	$	275,614		$	234,326		$	798,056		$	695,185
Earnings Before Interest and Taxes (“EBIT”)		37,699			31,133			103,966			94,926
EBIT as a percentage of Net Sales		13.7	%		13.3	%		13.0	%		13.7	%

Our net sales for the Dispensing Systems segment grew by approximately 18% or $41.3 million in the third quarter of 2004 over the third quarter of 2003. Approximately $5.2 million of the increase related to an increase in sales of tooling to customers, while approximately $13 million of the increase related to the strengthening Euro. The remainder of the increase reflects strong sales of our dispensing closure product range to the food/beverage and personal care markets as well as increased sales of our pumps to the personal care and fragrance/cosmetic market.

Net sales for the Dispensing Systems segment grew approximately 15% or $102.9 million in the first nine months of 2004 compared to the first nine months of 2003. Sales of tooling to customers accounted for $18.9 million of the increase, while approximately $46.5 million of the increase related to the strengthening Euro. The remainder of the increase reflects strong sales of our dispensing closure product range to the food/beverage and personal care markets as well as increased sales of our pumps to the personal care and fragrance/cosmetic market.

Segment EBIT in the third quarter of 2004 increased 21% or $6.6 million to $37.7 million compared to $31.1 million reported in the prior year. The increase in EBIT from the prior year is primarily related to the increase in sales volume partially offset by higher quality related costs, higher material prices and continued price competition Segment EBIT in the first nine months of 2004 increased approximately 9.5% or $9.1 million to $104.0 million compared to $94.9 million reported in the first nine months of the prior year. The increase in EBIT from the prior year is mainly due to the same reasons noted above for the third quarter.

SEAQUISTPERFECT SEGMENT

SeaquistPerfect represents our fifth business unit and sells primarily aerosol valves and accessories and certain non-aerosol spray and lotion pumps. These products are sold primarily to the personal care, household, and food/beverage markets.




	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Net Sales	$	50,279		$	46,984		$	155,284		$	139,361
Earnings Before Interest and Taxes (“EBIT”)		4,318			4,666			14,368			13,465
EBIT as a percentage of Net Sales		8.6	%		9.9	%		9.3	%		9.7	%

Net sales for the quarter ended September 30, 2004 increased 7% or approximately $3.3 million to $50.3 million from $47.0 million reported in the third quarter of the prior year. Approximately $2.0 million of the increase in sales is due to the strengthening Euro. Net sales of our products to the personal care market decreased in the quarter, while sales of our products to the household market increased in the quarter. Sales of tooling to customers were not significant in the quarter.

Net sales for the SeaquistPerfect segment for the first nine months of 2004 increased approximately 11%, or $15.9 million to $155.3 million compared to $139.4 million in the first nine months of the prior year. Approximately $7.2 million of the increase is due to the strengthening Euro. Net sales of our products increased to both the personal care and household markets in the first nine months of 2004 compared to the same period in the prior year. Sales of tooling to customers were not significant in the quarter.

Segment EBIT in the third quarter of 2004 decreased approximately 7% to $4.3 million compared to $4.7 million reported in the prior year. EBIT decreased over the prior year primarily due to an unfavorable customer mix in the third quarter.

Segment EBIT in the first nine months of 2004 increased approximately 7% to $14.4 million compared to $13.5 million reported in the first nine months of the prior year reflecting the increased sales volumes combined with productivity improvements.

See Note 10 to the Notes to Consolidated Financial Statements for a reconciliation of the EBIT amounts to the Company’s income before income taxes.

14

FOREIGN CURRENCY

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 entities. Our primary foreign exchange exposure is to the Euro, but we also have foreign exchange exposure to South American and Asian currencies, among others. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Conversely, a strengthening U.S. dollar has a dilutive effect.

Additionally, we are a net importer of products produced in European countries with Euro based costs, into the U.S. and sold in U.S. dollars. A weaker dollar compared to the Euro makes imported European produced products more expensive thus reducing operating income margins.

QUARTERLY TRENDS

Our results of operations in the fourth quarter typically are negatively impacted by customer plant shutdowns and holidays in December. In the future, our results of operations in a quarterly period could be impacted by factors such as changes in product mix, changes in material costs, changes in growth rates in the industries to which our products are sold, and changes in general economic conditions in any of the countries in which we do business.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash flow from operations and our revolving credit facility. Our financial condition continues to be strong. Cash and equivalents decreased to $153.0 million from $165.0 million at December 31, 2003. Total short and long-term interest bearing debt decreased in the quarter to $194.5 million from $221.9 million at December 31, 2003. The ratio of Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (stockholder’s equity plus Net Debt) decreased to approximately 5% compared to 7% as of December 31, 2003.

In the first nine months of 2004, our operations provided approximately $133.4 million in cash flow compared to $111.3 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 from the prior year is primarily attributed to an increase in profitability before depreciation expense. During the first nine months of 2004, we utilized the operating cash flows to finance capital expenditures, repurchase the Company’s common stock, pay dividends and pay down interest bearing debt.

We used $72.8 million in cash for investing activities during the first nine months of 2004, compared to $55.0 million during the same period a year ago. The increase in cash used for investing activities is due to higher cash outlays for capital expenditures. The increase in capital expenditures in the first nine months of 2004 is primarily due to the purchase of a manufacturing facility in the second quarter that was previously being leased and the continued investment in new product introductions. Cash outlays for capital expenditures for 2004 are estimated to be approximately $110 million.

Cash used by financing activities was $70.8 million in the first nine months of 2004 compared to cash used by financing activities of $8.5 million in the same period a year ago. We repatriated approximately $50 million in cash from our European operations back to the U.S. in the third quarter. This cash was used primarily to pay down the existing revolving credit facility. We repurchased approximately 983 thousand of the Company’s common stock for approximately $42.1 million, the majority of which was repurchased in the third quarter of 2004. An increase in the dividends paid to shareholders accounted for an additional $3.7 million of cash used by financing activities in the first nine months. Cash proceeds of $9.4 million from stock option exercises in the first nine months of 2004 were offset by the reduction of interest bearing debt of $27.4 million.

The Board of Directors declared a quarterly dividend of $.15 per share payable on November 18, 2004 to stockholders of record as of October 28, 2004.

In February of 2004, we entered into a five year $150 million revolving credit facility (the “New Credit Facility”) and terminated the previous $100 million revolving credit facility that was scheduled to expire on June 30, 2004. The New Credit Facility contains substantially similar terms as the expiring facility. Under this credit agreement, interest on borrowings is payable at a rate equal to LIBOR plus an amount based on our financial condition. At September 30, 2004, the amount unused and available under this agreement was $117 million. We are required to pay a fee of .15% for this commitment. The agreement expires on February 27, 2009.

In May of 2004, we entered into a $25 million seven year debt agreement. This debt agreement is comprised of $25 million of 5.09% senior unsecured notes due May 28, 2011. The proceeds from this debt were used to pay down borrowings under the revolving credit facility.

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

15

Our foreign operations have historically met cash requirements with the use of internally generated cash or borrowings. Foreign subsidiaries have financing arrangements with several foreign banks to fund operations located outside the U.S., but all these lines are uncommitted. Cash generated by foreign operations has generally been reinvested locally. The majority of our $153 million in cash and equivalents is located outside of the U.S.

We believe we are in a strong financial position and have the financial resources to meet business requirements in the foreseeable future. We have historically used cash flow from operations as our primary source of liquidity. In the event that customer demand would decrease significantly for a prolonged period of time and negatively impact cash flow from operations, we would have the ability to restrict and significantly reduce capital expenditure levels, which historically have been the most significant use of cash for us. 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.

OFF-BALANCE SHEET ARRANGEMENTS

We lease certain warehouse, plant, and office facilities as well as certain equipment under noncancelable operating leases expiring at various dates through the year 2018. Most of the operating leases contain renewal options and certain equipment leases include options to purchase during or at the end of the lease term. We have an option on one building lease to purchase the building during or at the end of the term of the lease at approximately the amount expended by the lessor for the purchase of the building and improvements. If we do not exercise the purchase option at the end of the lease, we would be required to pay an amount not to exceed $9.5 million. Other than operating lease obligations, we do not have any off-balance sheet arrangements.

ADOPTION OF ACCOUNTING STANDARDS

In December 2003, the Financial Accounting Standards Board, (“FASB”) issued Interpretation No. (“FIN”) 46R, “Consolidation of Variable Interest Entities.” The objective of FIN 46R is to improve financial reporting by companies involved with variable interest entities. Prior to FIN 46R, companies have generally included another entity in its consolidated financial statements only if it controlled the entity through voting interest. FIN 46R changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk or loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. Consolidation by a primary beneficiary of the assets, liabilities and results of activities of variable interest entities will provide more complete information about the resources, obligations, risks and opportunities of the consolidated company. We do not have any investments in variable interest entities.

In December 2003, the FASB issued FASB Staff Position (“FSP”) 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” In December 2003, the President signed into law the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the “Act”). The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. This FSP defers any accounting for the effects of the Act and requires additional disclosures pending further consideration of the underlying accounting issues. We do not provide any postretirement healthcare benefits and therefore there will be no effect on our results of operations.

OUTLOOK

The positive momentum we experienced in the first nine months of the year is expected to continue into the fourth quarter. Sales of our products to each of the markets we serve are expected to increase over the prior year. Sales of our products to the pharmaceutical market are expected to increase; particularly in light of the fact that a pharmaceutical customer who had significantly reduced orders for pumps late in 2003 began placing orders again in the third quarter. Our sales to the food/beverage and personal care markets are expected to increase as customers continue to launch new products into these markets. Sales of our fragrance/cosmetic and household products are also expected to increase over prior year fourth quarter volumes.

We have filed for tax refunds totaling approximately $1.5 million in the U.S. relating to research and development expenditures incurred from 2000 through 2002. These refunds will be recognized as a reduction of our tax provision when they are received. We anticipate that we will receive these refunds in 2005. If the tax refunds are received, we will have to pay contingent consulting fees which will be recorded in SG&A.

Material costs are expected to continue to increase in the fourth quarter. We will continue to attempt to pass these costs along to our customers.

We anticipate diluted earnings per share for the fourth quarter of 2004 to be in the range of $.57 to $.62 per share compared to $.54 per share in the fourth quarter of 2003.

16

FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis and certain other sections of this Form 10-Q contain forward-looking statements that involve a number of risks and uncertainties. Words such as “expects,” “anticipates,” “believes,” “estimates,” 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 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:

     •       difficulties in product development and uncertainties related to the timing or outcome of product development;
     •       direct or indirect consequences of acts of war or terrorism;
     •       difficulties in complying with government regulation including tax rate policies;
     •       competition (particularly from Asia) and technological change;
     •       our ability to defend our intellectual property rights;
     •       the failure by us to produce anticipated cost savings or improve productivity;
     •       the timing and magnitude of capital expenditures;
     •       our ability to identify potential acquisitions and to successfully acquire and integrate such operations or products;
     •       significant fluctuations in currency exchange rates;
     •       significant fluctuations in interest rates;
     •       economic and market conditions in the United States, Europe and the rest of the world;
     •       changes in customer spending levels;
     •       the demand for existing and new products;
     •       work stoppages due to labor disputes;
     •       the cost and availability of raw materials; and
     •       other risks associated with our operations.

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.

17

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 entities. Our primary foreign exchange exposure is to the Euro, but we also have foreign exchange exposure to South American and Asian currencies, among others. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Conversely, a strengthening U.S. dollar has a dilutive effect.

Additionally, we are a net importer of products produced in European countries with Euro based costs, into the U.S. and sold in U.S. dollars. A weaker dollar compared to the Euro makes imported European produced products more expensive, thus reducing operating income margins.

We manage our exposures to foreign exchange principally with forward exchange contracts to hedge certain firm purchase and sale commitments and intercompany cash transactions denominated in foreign currencies.

The table below provides information as of September 30, 2004 about our forward currency exchange contracts.

All the contracts expire before the end of the third quarter of 2005.


			Average Contractual
Buy/Sell	Contract Amount		Exchange Rate
	($ in Thousands)
Euro/U.S. Dollar	$	33,855		1.2174
Swiss Francs/Euro		7,213		.6529
Euro/British Pounds		5,535		.6783
Euro/Russian Ruble		3,980		36.3625
Canadian Dollar/Euro		2,815		.6299
Euro/Swiss Francs		1,216		1.5335
U.S. Dollar/Mexican Peso		1,050		11.4793
Euro/Japanese Yen		1,043		130.0906
Other		6,442

Total	$	63,149

The other contracts in the above table represent contracts to buy or sell various other currencies (principally European, South American and Australian). As of September 30, 2004, we have recorded the fair value of foreign currency forward exchange contracts of $787 thousand in prepayments and other in the balance sheet. All forward exchange contracts outstanding as of September 30, 2003 had an aggregate contract amount of $30.9 million.

At September 30, 2004, we had a fixed-to-variable interest rate swap agreement with a notional principal value of $25 million which requires us to pay an average variable interest rate (which was 1.5% at September 30, 2004) and receive a fixed rate of 6.6%. The variable rate is adjusted semiannually based on London Interbank Offered Rates (“LIBOR”). Variations in market interest rates would produce changes in our net income. If interest rates increase by 100 basis points, net income related to the interest rate swap agreement would decrease by less than $200 thousand assuming a tax rate of 31.5%. As of September 30, 2004, we recorded the fair value of the fixed-to-variable interest rate swap agreement of $3.5 million in miscellaneous other assets with an offsetting adjustment to debt. No gain or loss was recorded in the income statement in 2004 related to the interest rate swap agreement since there was no hedge ineffectiveness.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2004. 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.

INTERNAL CONTROL OVER FINANCIAL REPORTING

There has been no change in the Company’s internal control over financial reporting identified in connection with the above evaluation that occurred during the Company’s fiscal quarter ended September 30, 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

18

PART II — OTHER INFORMATION

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

PURCHASE OF EQUITY SECURITIES

The following table summarizes the Company’s purchases of its securities for quarter ended September 30, 2004:



					Total Number of		Maximum Number
					Shares Purchased		of Shares that May
	Total Number of				as Part of Publicly		Yet Be Purchased
	Shares		Average Price		Announced Plans		Under the Plans or
Period	Purchased		Paid per Share		or Programs		Programs
7/1 - 7/31/04		286,500	$	42.98		286,500		3,183,500
8/1 - 8/31/04		550,300		43.18		550,300		2,633,200
9/1 - 9/30/04		45,800		45.71		45,800		2,587,400
Total		982,600	$	42.81		982,600

The Company announced on October 21, 1999 that it was authorized to repurchase one million shares of its outstanding common stock. On October 19, 2000, the Company announced that it was authorized to repurchase an additional two million shares of its outstanding common stock. On July 15, 2004, the Company announced that it was authorized to repurchase an additional two million shares of its outstanding common stock bringing the cumulative total repurchase authorization to five million shares of the Company’s common stock. This additional authorization of two million shares is included in the last column of the table above beginning in the month of July. There is no expiration date for these repurchase programs. These repurchase programs have been approved by the Board of Directors.

RECENT SALES OF UNREGISTERED SECURITIES

During the quarter ended September 30, 2004, the FCP Aptar Savings Plan (the “Plan”) sold 411 shares of our common stock on behalf of the participants at an average price of $44.69 for an aggregate amount of $18,366. At September 30, 2004, the Plan owned 4,546 shares of our common stock. The employees of AptarGroup S.A.S. and Valois S.A.S., our subsidiaries, are eligible to participate in the Plan. All eligible participants are located outside of the United States. An independent agent purchases shares of common stock available under the Plan for cash on the open market and the Company issues no shares. The Company does not receive any proceeds from the purchase of common stock under the Plan. The agent under the Plan is Banque Nationale de Paris (BNP) Paribas Asset Management. No underwriters are used under the Plan. All shares are sold in reliance upon the exemption from registration under the Securities Act of 1933, as amended, provided by Regulation S promulgated under that Act.

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ITEM 6. EXHIBITS

(a)		Exhibit 10.1 AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2004 Stock Awards Plan.

		Exhibit 10.2 AptarGroup, Inc. Stock Option Agreement for Non-Employee Directors pursuant to the AptarGroup, Inc. 2004 Director Option Plan.

		Exhibit 10.3 AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2000 Stock Awards Plan.

		Exhibit 10.4 AptarGroup, Inc. Restricted Stock Award Agreement pursuant to the AptarGroup, Inc. 2000 Stock Awards Plan.

		Exhibit 31.1 Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

		Exhibit 31.2 Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

		Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350.

		Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350.

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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/ Stephen J. Hagge
	STEPHEN J. HAGGE
	Executive Vice President, Chief Financial Officer and Secretary (Duly Authorized Officer and Principal Financial Officer) Date: October 29, 2004

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INDEX OF EXHIBITS


Exhibit Number		Description

10.1		AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2004 Stock Awards Plan

10.2		AptarGroup, Inc. Stock Option Agreement for Non-Employee Directors pursuant to the AptarGroup, Inc. 2004 Director Option Plan

10.3		AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2000 Stock Awards Plan

10.4		AptarGroup, Inc. Restricted Stock Award Agreement pursuant to the AptarGroup, Inc. 2000 Stock Awards Plan

31.1		Certification Pursuant to 13a-14(a) under the Securities Exchange Act of 1934.

31.2		Certification Pursuant to 13a-14(a) under the Securities Exchange Act of 1934.

32.1		Certification Pursuant to 18 U.S.C. Section 1350.

32.2		Certification Pursuant to 18 U.S.C. Section 1350.

Requirement

Level at September 30, 2004

Interest coverage ratio

At least 3.5 to 1

Debt to total capital ratio

No more than 55%