10-Q

Table of Contents UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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

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FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

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OR

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**☐**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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FOR THE TRANSITION PERIOD FROM **** TO

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COMMISSION FILE NUMBER 1-11846

AptarGroup, Inc.

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

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

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815 - 477-0424

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

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

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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 ◻

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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 ◻

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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.

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Large accelerated filer þ	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

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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. ◻

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

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The number of shares outstanding of common stock, as of July 24, 2020, was 64,473,805 shares.

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Table of Contents ​

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AptarGroup, Inc.

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Form 10-Q

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Quarter Ended June 30, 2020

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INDEX

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		​
Part I.	FINANCIAL INFORMATION	​
​	​	​
Item 1.	Financial Statements (Unaudited)	​
​	​	​
​	Condensed Consolidated Statements of Income – Three and Six Months Ended June 30, 2020 and 2019	1
​	​	​
​	Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2020 and 2019	2
​	​	​
​	Condensed Consolidated Balance Sheets – June 30, 2020 and December 31, 2019	3
​	​	​
​	Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended June 30, 2020 and 2019	5
​	​	​
​	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2020 and 2019	6
​	​	​
​	Notes to Condensed Consolidated Financial Statements	7
​	​	​
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
​	​	​
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
​	​	​
Item 4.	Controls and Procedures	43
​	​	​
Part II.	OTHER INFORMATION	​
​	​	​
Item 1A.	Risk Factors	44
​	​	​
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
​	​	​
Item 5.	Other Information	45
​	​	​
Item 6.	Exhibits	45
​	​	​
​	Signature	46

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​ i

Table of Contents PART I – FINANCIAL INFORMATION

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ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
In thousands, except per share amounts													​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		​	2019		​	2020		​	2019		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	****	$	699,305		$	742,661		$	1,420,858		$	1,487,121
Operating Expenses:	​	​	​	​	​	​	​	​	​	​	​	​	​
Cost of sales (exclusive of depreciation and amortization shown below)	​	****	441,702	​		469,441	​	****	892,958	​		938,573	​
Selling, research & development and administrative	​	****	123,365	​		113,752	​	****	249,557	​		234,967	​
Depreciation and amortization	​	****	56,429	​		47,867	​	****	107,235	​		95,356	​
Restructuring initiatives	​	​	7,331	​	​	1,737	​	​	12,170	​	​	11,267	​
​	​	****	628,827	​		632,797	​	****	1,261,920	​		1,280,163	​
Operating Income	​	****	70,478	​		109,864	​	****	158,938	​		206,958	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other (Expense) Income:	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	****	(8,734)	​		(8,756)	​	****	(17,122)	​		(17,970)	​
Interest income	​	****	175	​		1,033	​	****	350	​		2,781	​
Equity in results of affiliates	​	****	(328)	​		9	​	****	(1,127)	​		(86)	​
Miscellaneous, net	​	****	(923)	​		(49)	​	****	(2,335)	​		417	​
​	​	****	(9,810)	​		(7,763)	​	****	(20,234)	​		(14,858)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income before Income Taxes	​	****	60,668	​		102,101	​	****	138,704	​		192,100	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Provision for Income Taxes	​	****	18,808	​		28,180	​	****	41,594	​		55,180	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income	​	$	41,860	​	$	73,921	​	$	97,110	​	$	136,920	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income Attributable to Noncontrolling Interests	​	$	(21)	​	$	(6)	​	$	(18)	​	$	(1)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income Attributable to AptarGroup, Inc.	​	$	41,839	​	$	73,915	​	$	97,092	​	$	136,919	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income Attributable to AptarGroup, Inc. per Common Share:	​	​	​	​	​	​	​	​	​	​	​	​	​
Basic	​	$	0.65	​	$	1.16	​	$	1.51	​	$	2.17	​
Diluted	​	$	0.63	​	$	1.12	​	$	1.47	​	$	2.08	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average Number of Shares Outstanding:	​	​	​	​	​	​	​	​	​	​	​	​	​
Basic	​	​	64,262	​	​	63,471	​	​	64,135	​	​	63,219	​
Diluted	​	​	66,384	​	​	66,232	​	​	66,246	​	​	65,842	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Dividends per Common Share	​	$	0.36	​	$	0.36	​	$	0.72	​	$	0.70	​

​

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

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​ 1

Table of Contents AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
In thousands	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	2020		​	2019		​	2020		****	2019		****
​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income	$	41,860	​	$	73,921	****	$	97,110	​	$	136,920	​
Other Comprehensive Income (Loss):	​	​	​	​	​	​	​	​	​	​	​	​
Foreign currency translation adjustments	****	19,096	​		9,414	​	****	(23,133)	​		(197)	​
Changes in derivative (losses) gains, net of tax	​	(733)	​	​	(479)	​	​	750	​	​	(872)	​
Defined benefit pension plan, net of tax	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of prior service cost included in net income, net of tax	****	72	​		83	​	****	143	​		167	​
Amortization of net loss included in net income, net of tax	****	1,368	​		633	​	****	2,933	​		1,270	​
Total defined benefit pension plan, net of tax	****	1,440	​		716	​	****	3,076	​		1,437	​
Total other comprehensive income (loss)	****	19,803	​		9,651	​	****	(19,307)	​		368	​
Comprehensive Income	****	61,663	​		83,572	​	****	77,803	​		137,288	​
Comprehensive (Income) Loss Attributable to Noncontrolling Interests	****	(22)	​		2	​	****	(19)	​		(1)	​
Comprehensive Income Attributable to AptarGroup, Inc.	$	61,641	​	$	83,574	​	$	77,784	​	$	137,287	​

​

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

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Table of Contents AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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​	​	​	​	​	​	​	​
In thousands	​	​	​	​	​	​	****
​	​	​	​	​	​	​	​
​	**** ​	​	June 30,	**** ​	​	December 31,	****
​	​	​	2020	​	​	2019	​
Assets	​	​	​	​	​	​	​
Current Assets:	​	​	​	​	​	​	​
Cash and equivalents	​	$	247,656	​	$	241,970	​
Accounts and notes receivable, less current expected credit loss ("CECL") of $6,080 in 2020 and $3,626 in 2019	​	****	575,655	​	​	558,428	​
Inventories	​	****	381,939	​	​	375,795	​
Prepaid and other	​	****	138,321	​	​	115,048	​
​	​	****	1,343,571	​	​	1,291,241	​
Property, Plant and Equipment:	​	​	​	​	​	​	​
Buildings and improvements	​	****	521,312	​	​	504,328	​
Machinery and equipment	​	****	2,578,354	​	​	2,521,737	​
​	​	****	3,099,666	​	​	3,026,065	​
Less: Accumulated depreciation	​	****	(2,028,101)	​	​	(1,963,520)	​
​	​	****	1,071,565	​	​	1,062,545	​
Land	​	****	26,355	​	​	25,133	​
​	​	****	1,097,920	​	​	1,087,678	​
Other Assets:	​	​	​	​	​	​	​
Investments in equity securities	​	****	44,193	​	​	8,396	​
Goodwill	​	****	861,928	​	​	763,461	​
Intangible assets, net	​	****	352,740	​	​	291,084	​
Operating lease right-of-use assets	​	​	68,665	​	​	72,377	​
Miscellaneous	​	****	44,999	​	​	47,882	​
​	​	****	1,372,525	​	​	1,183,200	​
Total Assets	​	$	3,814,016	​	$	3,562,119	​

​

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

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​ 3

Table of Contents AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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​	​	​	​	​	​	​	​
In thousands, except share and per share amounts	​	​	​	​	​	​	****
​	​	​	​	​	​	​	​
​	**** ​	​	June 30,	**** ​	​	December 31,	****
​	​	​	2020	​	​	2019	​
Liabilities and Stockholders’ Equity	​	​	​	​	​	​	​
Current Liabilities:	​	​	​	​	​	​	​
Notes payable, revolving credit facility and overdrafts	​	$	150,831	​	$	44,259	​
Current maturities of long-term obligations, net of unamortized debt issuance costs	​	****	66,248	​		65,988	​
Accounts payable, accrued and other liabilities	​	****	612,688	​		573,028	​
​	​	****	829,767	​		683,275	​
Long-Term Obligations, net of unamortized debt issuance costs	​	****	1,082,742	​		1,085,453	​
Deferred Liabilities and Other:	​	​	​	​	​	​	​
Deferred income taxes	​	****	39,414	​		41,388	​
Retirement and deferred compensation plans	​	****	108,896	​		101,225	​
Operating lease liabilities	​	​	52,036	​	​	55,276	​
Deferred and other non-current liabilities	​	****	55,175	​		23,250	​
Commitments and contingencies	​	****	—	​		—	​
​	​	****	255,521	​		221,139	​
Stockholders’ Equity:	​	​	​	​	​	​	​
AptarGroup, Inc. stockholders’ equity	​	​	​	​	​	​	​
Common stock, $.01 par value, 199 million shares authorized, 69.0 and 68.6 million shares issued as of June 30, 2020 and December 31, 2019, respectively	​	****	690	​		686	​
Capital in excess of par value	​	****	803,511	​		770,596	​
Retained earnings	​	****	1,573,392	​		1,523,820	​
Accumulated other comprehensive loss	​	****	(361,256)	​		(341,948)	​
Less: Treasury stock at cost, 4.7 and 4.8 million shares as of June 30, 2020 and December 31, 2019, respectively	​	****	(370,706)	​		(381,238)	​
Total AptarGroup, Inc. Stockholders’ Equity	​	****	1,645,631	​		1,571,916	​
Noncontrolling interests in subsidiaries	​	****	355	​		336	​
Total Stockholders’ Equity	​	****	1,645,986	​		1,572,252	​
Total Liabilities and Stockholders’ Equity	​	$	3,814,016	​	$	3,562,119	​

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See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

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Table of Contents AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
In thousands	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended	​	AptarGroup, Inc. Stockholders’ Equity														​	​	​	​	​	​	​
June 30, 2020 and 2019	****	​		****	Accumulated		****	​		****	​		****	​		****	​		****	​		​
​	​	​		​	Other		​	Common		​	​		​	Capital in		​	Non-		​	​		​
​	​	Retained		​	Comprehensive		​	Stock		​	Treasury		​	Excess of		​	Controlling		​	Total		​
​	​	Earnings		​	(Loss) Income		​	Par Value		​	Stock		​	Par Value		​	Interest		​	Equity		****
Balance - March 31, 2019	​	$	1,413,453	​	$	(319,795)	​	$	676	​	$	(327,871)	​	$	700,933	​	$	318	​	$	1,467,714	​
Net income	​		73,915	​	​	—	​	​	—	​	​	—	​	​	—	​	​	6	​	​	73,921	​
Foreign currency translation adjustments	​	​	—	​	​	9,422	​	​	—	​	​	—	​	​	—	​	​	(8)	​	​	9,414	​
Changes in unrecognized pension gains (losses) and related amortization, net of tax	​	​	—	​	​	716	​	​	—	​	​	—	​	​	—	​	​	—	​	​	716	​
Changes in derivative gains (losses), net of tax	​	​	—	​	​	(479)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(479)	​
Stock awards and option exercises	​	​	—	​	​	—	​	​	7	​	​	14,587	​	​	42,399	​	​	—	​	​	56,993	​
Cash dividends declared on common stock	​		(22,761)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(22,761)	​
Treasury stock purchased	​	​	—	​	​	—	​	​	—	​	​	(4,096)	​	​	—	​	​	—	​	​	(4,096)	​
Balance - June 30, 2019	​	$	1,464,607	​	$	(310,136)	​	$	683	​	$	(317,380)	​	$	743,332	​	$	316	​	$	1,581,422	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance - March 31, 2020	​	$	1,554,665	​	$	(381,058)	​	$	689	​	$	(372,573)	​	$	785,567	​	$	333	​	$	1,587,623	​
Net income	​		41,839	​	​	—	​	​	—	​	​	—	​	​	—	​	​	21	​	​	41,860	​
Foreign currency translation adjustments	​	​	—	​	​	19,095	​	​	—	​	​	—	​	​	—	​	​	1	​	​	19,096	​
Changes in unrecognized pension gains (losses) and related amortization, net of tax	​	​	—	​	​	1,440	​	​	—	​	​	—	​	​	—	​	​	—	​	​	1,440	​
Changes in derivative gains (losses), net of tax	​	​	—	​	​	(733)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(733)	​
Stock awards and option exercises	​	​	—	​	​	—	​	​	1	​	​	1,867	​	​	17,944	​	​	—	​	​	19,812	​
Cash dividends declared on common stock	​		(23,112)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(23,112)	​
Balance - June 30, 2020	​	$	1,573,392	​	$	(361,256)	​	$	690	​	$	(370,706)	​	$	803,511	​	$	355	​	$	1,645,986	​

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​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
In thousands	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended	​	AptarGroup, Inc. Stockholders’ Equity														​	​	​	​	​	​	​
June 30, 2020 and 2019	****	​		****	Accumulated		****	​		****	​		****	​		****	​		****	​		​
​	​	​		​	Other		​	Common		​	​		​	Capital in		​	Non-		​	​		​
​	​	Retained		​	Comprehensive		​	Stock		​	Treasury		​	Excess of		​	Controlling		​	Total		​
​	​	Earnings		​	(Loss) Income		​	Par Value		​	Stock		​	Par Value		​	Interest		​	Equity		****
Balance - December 31, 2018	​	$	1,371,826	​	$	(310,504)	​	$	673	​	$	(318,208)	​	$	678,769	​	$	315	​	$	1,422,871	​
Net income	​		136,919	​	​	—	​	​	—	​	​	—	​	​	—	​	​	1	​	​	136,920	​
Foreign currency translation adjustments	​	​	—	​		(197)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(197)	​
Changes in unrecognized pension gains (losses) and related amortization, net of tax	​	​	—	​		1,437	​	​	—	​	​	—	​	​	—	​	​	—	​	​	1,437	​
Changes in derivative gains (losses), net of tax	​	​	—	​		(872)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(872)	​
Stock awards and option exercises	​	​	—	​	​	—	​		10	​		19,924	​	​	64,563	​	​	—	​	​	84,497	​
Cash dividends declared on common stock	​		(44,138)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(44,138)	​
Treasury stock purchased	​	​	—	​	​	—	​	​	—	​	​	(19,096)	​	​	—	​	​	—	​	​	(19,096)	​
Balance - June 30, 2019	​	$	1,464,607	​	$	(310,136)	​	$	683	​	$	(317,380)	​	$	743,332	​	$	316	​	$	1,581,422	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance - December 31, 2019	​	$	1,523,820	​	$	(341,948)	​	$	686	​	$	(381,238)	​	$	770,596	​	$	336	​	$	1,572,252	​
Net income	​		97,092	​	​	—	​	​	—	​	​	—	​	​	—	​	​	18	​	​	97,110	​
Adoption of CECL standard	​	​	(1,377)	​		—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(1,377)	​
Foreign currency translation adjustments	​	​	—	​		(23,134)	​	​	—	​	​	—	​	​	—	​	​	1	​	​	(23,133)	​
Changes in unrecognized pension gains (losses) and related amortization, net of tax	​	​	—	​		3,076	​	​	—	​	​	—	​	​	—	​	​	—	​	​	3,076	​
Changes in derivative gains (losses), net of tax	​	​	—	​		750	​	​	—	​	​	—	​	​	—	​	​	—	​	​	750	​
Stock awards and option exercises	​	​	—	​	​	—	​		4	​		10,532	​	​	32,915	​	​	—	​	​	43,451	​
Cash dividends declared on common stock	​		(46,143)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(46,143)	​
Balance - June 30, 2020	​	$	1,573,392	​	$	(361,256)	​	$	690	​	$	(370,706)	​	$	803,511	​	$	355	​	$	1,645,986	​

​

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

​

​ 5

Table of Contents AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

​

​	​	​	​	​	​	​	​
In thousands, brackets denote cash outflows	​	​	​	​	​	​	****
​	​	​	​	​	​	​	​
Six Months Ended June 30,	****	​	2020	****	​	2019	****
​	​	​	​	​	​	​	​
Cash Flows from Operating Activities:	​	​	​	​	​	​	​
Net income	​	$	97,110	​	$	136,920	​
Adjustments to reconcile net income to net cash provided by operations:	​	​	​	​	​	​	​
Depreciation	​	****	86,901	​		82,968	​
Amortization	​	****	20,334	​		12,388	​
Stock-based compensation	​	****	17,603	​		12,978	​
Provision for CECL	​	****	1,089	​		312	​
(Gain) loss on disposition of fixed assets	​	****	(46)	​		368	​
Deferred income taxes	​	****	9	​		679	​
Defined benefit plan expense	​	****	11,550	​		7,699	​
Equity in results of affiliates	​	****	1,127	​		86	​
Changes in balance sheet items, excluding effects from foreign currency adjustments:	​	​	​	​	​	​	​
Accounts and other receivables	​	****	(25,625)	​		(28,772)	​
Inventories	​	****	(13,241)	​		(18,503)	​
Prepaid and other current assets	​	****	(16,936)	​		546	​
Accounts payable, accrued and other liabilities	​	****	63,256	​		14,590	​
Income taxes payable	​	****	(8,446)	​		1,840	​
Retirement and deferred compensation plan liabilities	​	****	(5,916)	​		(4,652)	​
Other changes, net	​	****	(1,083)	​		1,693	​
Net Cash Provided by Operations	​	****	227,686	​		221,140	​
Cash Flows from Investing Activities:	​	​	​	​	​	​	​
Capital expenditures	​	****	(122,986)	​		(124,774)	​
Proceeds from sale of property, plant and equipment	​	****	4,130	​		1,082	​
Acquisition of business, net of cash acquired and release of escrow	​	​	(159,570)	​	​	(49,131)	​
Acquisition of intangible assets, net	​	****	(3,612)	​		(602)	​
Investment in equity securities	​	****	(34,044)	​		—	​
Proceeds from sale of investment in equity securities	​	​	—	​	​	16,487	​
Notes receivable, net	​	****	(1,045)	​		(220)	​
Net Cash Used by Investing Activities	​	****	(317,127)	​		(157,158)	​
Cash Flows from Financing Activities:	​	​	​	​	​	​	​
Proceeds from notes payable and overdrafts	​	****	14,464	​	​	31,022	​
Repayments of notes payable and overdrafts	​	****	(27,788)	​	​	(35,490)	​
Proceeds and repayments of short term revolving credit facility, net	​	​	125,000	​	​	(38,685)	​
Proceeds from long-term obligations	​	****	1,316	​		10,446	​
Repayments of long-term obligations	​	****	(4,067)	​		(6,546)	​
Payment of contingent consideration obligation	​	​	(1,500)	​	​	—	​
Dividends paid	​	****	(46,143)	​		(44,138)	​
Proceeds from stock option exercises	​	****	30,058	​		70,712	​
Purchase of treasury stock	​	****	—	​		(19,096)	​
Net Cash Provided (Used) by Financing Activities	​	****	91,340	​		(31,775)	​
Effect of Exchange Rate Changes on Cash	​	****	8,522	​		3,920	​
Net Increase in Cash and Equivalents and Restricted Cash	​	****	10,421	​		36,127	​
Cash and Equivalents and Restricted Cash at Beginning of Period	​	****	246,973	​		266,823	​
Cash and Equivalents and Restricted Cash at End of Period	​	$	257,394	​	$	302,950	​

​

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 Noble and Fusion Acquisitions (as defined herein).

​	​	​	​	​	​	​	​
Six Months Ended June 30,	****	​	2020	****	​	2019	****
​	​	​	​	​	​	​	​
Cash and equivalents	​	$	247,656	​	$	302,950	​
Restricted cash included in prepaid and other	​	​	9,738	​	​	—	​
Total Cash and Equivalents and Restricted Cash shown in the Statement of Cash Flows	​	$	257,394	​	$	302,950	​

​

​

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.

​

​ 6

Table of Contents 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. Certain previously reported amounts have been reclassified to conform to the current period presentation.

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, 2019 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, 2019. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

Beginning July 1, 2018, we have applied highly inflationary accounting for our Argentinian subsidiaries pursuant to U.S. GAAP. We have changed the functional currency from the Argentinian peso to the U.S. dollar. We remeasure our peso denominated assets and liabilities using the official rate. In September 2019, the President of Argentina reinstituted exchange controls restricting foreign currency purchases in an attempt to stabilize Argentina’s financial markets. As a result of these currency controls, a legal mechanism known as the Blue Chip Swap emerged in Argentina for reporting entities to transfer U.S. dollars. The Blue Chip Swap rate has diverged significantly from Argentina’s “official rate” due to the economic environment. During the second quarter of 2020, we transferred U.S. dollars into Argentina through the Blue Chip Swap method and we recognized a gain of $1.0 million. This gain helped to offset foreign currency losses due to our Argentinian peso exposure and devaluation against the U.S. dollar. For the six months ended June 30, 2020, our Argentinian operations contributed less than 2.0% of consolidated net assets and revenues.

There are many uncertainties regarding the current COVID-19 pandemic, including the scope of scientific and health issues, the anticipated duration of the pandemic and the extent of local and worldwide social, political and economic disruption it may cause. The pandemic has impacted our business, operations and financial results during the six months ended June 30, 2020 including an overall reduction to net sales. No impairments were recorded as of June 30, 2020. While the disruption is currently expected to be temporary, there is uncertainty around the duration. Due to significant uncertainty surrounding the situation, our judgment regarding future results could change and therefore our results could be materially impacted.

​

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.

Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, issued by the FASB in June 2016, as well as the clarifying amendments subsequently issued. We applied the guidance using a modified retrospective approach and accordingly recognized an amount of $1.4 million as the cumulative adjustment to opening retained earnings in the first quarter of 2020. This is based on management's best estimates of specific losses on individual exposures particularly on current trade receivables, as well as the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. On an ongoing basis, we will contemplate forward-looking economic conditions in recording lifetime expected credit losses for our financial assets measured at cost, such as our trade receivables and certain other assets. 7

Table of Contents In January 2017, the FASB issued ASU 2017-04, which provides guidance to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As a result, impairment charges are required for the amount by which a reporting unit’s carrying amount exceeds its fair value up to the amount of its allocated goodwill. We adopted the standard on January 1, 2020 and did not record any impairment charges.

In August 2018, the FASB issued ASU 2018-15 to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. We adopted the standard on January 1, 2020 and no material impacts were noted.

In August 2018, the FASB issued ASU 2018-13, which amends disclosure requirements for fair value measurements. The new standard modifies disclosure requirements including removing requirements to disclose the valuation process for Level 3 measurements and adding requirements to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 measurements. We adopted the standard on January 1, 2020 and no material impacts were noted.

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.

INCOME TAXES

​

We compute taxes on income in accordance with the tax rules and regulations of the many taxing authorities where the 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.  Under current U.S. tax laws, all of our non-U.S. earnings are subject to U.S. taxation. 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 the global cash management goals of the Company.

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.

The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and many state and foreign jurisdictions. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its 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

At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all the goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. For a contract that has more than one performance obligation, we allocate the total contract consideration to each distinct performance obligation on a relative standalone selling price basis. Revenue is recognized when (or as) the performance obligations are satisfied (i.e., when the customer obtains control of the good or service). The majority of our revenues are derived from product and tooling sales; however, we also receive revenues from service, license, exclusivity and royalty arrangements, which collectively are not material to the quarterly and year-to-date results. Revenue by segment and geography for the three and six months ended June 30, 2020 and 2019 is as follows:

​ 8

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	For the Three Months Ended June 30, 2020														****
​	​	​	​	​	​		​	Latin		​	​	​	​	​	​	​
Segment	​	Europe		​	Domestic		​	America		​	Asia		​	Total		****
Beauty + Home	​	$	152,412	​	$	94,349	​	$	29,893	​	$	23,132	​	$	299,786	​
Pharma	​	​	201,813	​	​	81,098	​	​	6,987	​	​	11,361	​	​	301,259	​
Food + Beverage	​	​	27,841	​	​	54,478	​	​	6,489	​	​	9,452	​	​	98,260	​
Total	​	$	382,066	​	$	229,925	​	$	43,369	​	$	43,945	​	$	699,305	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	For the Three Months Ended June 30, 2019														​
​	​	​	​	​	​		​	Latin		​	​	​	​	​	​	​
Segment	​	Europe		​	Domestic		​	America		​	Asia		​	Total		​
Beauty + Home	​	$	202,541	​	$	73,973	​	$	41,449	​	$	24,117	​	$	342,080	​
Pharma	​	​	190,654	​	​	76,042	​	​	7,078	​	​	8,165	​	​	281,939	​
Food + Beverage	​	​	32,336	​	​	65,160	​	​	9,211	​	​	11,935	​	​	118,642	​
Total	​	$	425,531	​	$	215,175	​	$	57,738	​	$	44,217	​	$	742,661	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	**** ​	For the Six Months Ended June 30, 2020														****
​	​	​	​	​	​		​	Latin		​	​	​	​	​	​	​
Segment	​	Europe		​	Domestic		​	America		​	Asia		​	Total		****
Beauty + Home	​	$	339,362	​	$	176,194	​	$	66,074	​	$	42,716	​	$	624,346	​
Pharma	​	​	391,943	​	​	172,063	​	​	13,566	​	​	20,883	​	​	598,455	​
Food + Beverage	​	​	56,610	​	​	112,068	​	​	14,523	​	​	14,856	​	​	198,057	​
Total	​	$	787,915	​	$	460,325	​	$	94,163	​	$	78,455	​	$	1,420,858	​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	**** ​	For the Six Months Ended June 30, 2019														​
​	​	​	​	​	​		​	Latin		​	​	​	​	​	​	​
Segment	​	Europe		​	Domestic		​	America		​	Asia		​	Total		​
Beauty + Home	​	$	418,774	​	$	160,952	​	$	84,091	​	$	45,922	​	$	709,739	​
Pharma	​	​	374,828	​	​	147,814	​	​	14,734	​	​	17,264	​	​	554,640	​
Food + Beverage	​	​	63,297	​	​	120,280	​	​	17,095	​	​	22,070	​	​	222,742	​
Total	​	$	856,899	​	$	429,046	​	$	115,920	​	$	85,256	​	$	1,487,121	​

​

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		****	Balance as of		​	Increase/		****
​	****	December 31, 2019		****	June 30, 2020		****	(Decrease)		****
Contract asset (current)	​	$	16,245	​	$	15,113	​	$	(1,132)	​
Contract asset (long-term)	​	$	—	​	$	—	​	$	—	​
Contract liability (current)	​	$	79,305	​	$	70,708	​	$	(8,597)	​
Contract liability (long-term)	​	$	9,779	​	$	20,662	​	$	10,883	​

​

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 $27.3 million, including $21.6 million relating to contract liabilities at the beginning of the year.

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. 9

Table of Contents Product Sales

We primarily manufacture and sell dispensing, sealing and active packaging solutions. The amount of consideration is typically fixed for such customers. At the time of delivery, the customer is invoiced 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. A majority of product sales are sold free on board (“FOB”) shipping point. For FOB shipping point shipments, control of the goods transfers to the customer at the time of shipment of the goods. Therefore, our performance obligation is satisfied at the time of shipment. 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 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.

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 to build 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 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 tools sold to our customers 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. At December 31, 2019, $515 thousand of unearned revenue associated with outstanding contracts was reported in Accounts Payable, Accrued and Other Liabilities. At June 30, 2020, the unearned amount was $410 thousand. We expect to recognize approximately $111 thousand of the unearned amount during the remainder of 2020, $125 thousand in 2021, and $174 thousand thereafter.

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.

At June 30, 2020, we reported $576 million of accounts receivable, net of CECL of $6.1 million. Changes in the allowance were not material for the six months ended June 30, 2020. Current uncertainty in credit and market conditions due to the COVID-19 pandemic may slow our collection efforts if customers experience significant difficulty accessing credit and paying their obligations, which may lead to higher than normal accounts receivable and increased CECL charges. 10

Table of Contents

NOTE 3 - INVENTORIES

Inventories, by component, consisted of:

​

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​	**** ​	2020		**** ​	2019		****
Raw materials	​	$	112,287	​	$	111,653	​
Work in process	​	****	123,710	​		123,750	​
Finished goods	​	****	145,942	​	****	140,392	​
Total	​	$	381,939	​	$	375,795	​

​

​

​

​

​

​

​

​

NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill by reporting segment since December 31, 2019 are as follows:

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	**** ​	Beauty +		****	​	​	****	Food +		****	Corporate		****	​	​	****
​	​	Home		​	Pharma		​	Beverage		​	& Other		​	Total		****
Goodwill	​	$	221,658	​	$	413,650	​	$	128,153	​	$	1,615	​	$	765,076	​
Accumulated impairment losses	​	​	—	​		—	​		—	​		(1,615)	​		(1,615)	​
Balance as of December 31, 2019	​	$	221,658	​	$	413,650	​	$	128,153	​	$	—	​	$	763,461	​
Acquisition	​	​	99,644	​	​	463	​	​	—	​	​	—	​	​	100,107	​
Foreign currency exchange effects	​		(473)	​		(1,175)	​		8	​		—	​		(1,640)	​
Goodwill	​	$	320,829	​	$	412,938	​	$	128,161	​	$	1,615	​	$	863,543	​
Accumulated impairment losses	​		—	​		—	​		—	​		(1,615)	​		(1,615)	​
Balance as of June 30, 2020	​	$	320,829	​	$	412,938	​	$	128,161	​	$	—	​	$	861,928	​

​

The table below shows a summary of intangible assets as of June 30, 2020 and December 31, 2019.

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	June 30, 2020								​	​	December 31, 2019							​
Weighted Average			​	Gross		​	​	​	​	​	​	​	Gross		​	​	​	​	​	​	****
Amortization Period			​	Carrying		​	Accumulated		​	Net		​	Carrying		​	Accumulated		​	Net		****
​	****	(Years)	****	Amount		****	Amortization		****	Value		****	Amount		****	Amortization		****	Value		****
Amortized intangible assets:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Patents		7.1	​	$	2,703	​	​	(1,334)	​	$	1,369	​	$	2,804	​	$	(1,318)	​	$	1,486	​
Acquired technology		12.6	​	****	105,020	​	​	(29,907)	​	****	75,113	​		100,511	​		(25,430)	​		75,081	​
Customer relationships	​	13.5	​	​	279,709	​	​	(43,561)	​	​	236,148	​	​	217,934	​	​	(33,924)	​	​	184,010	​
Trademarks and trade names	​	6.0	​	​	44,508	​	​	(13,568)	​	​	30,940	​	​	35,015	​	​	(11,003)	​	​	24,012	​
License agreements and other		15.5	​	****	22,480	​	​	(13,310)	​	****	9,170	​		16,153	​		(9,658)	​		6,495	​
Total intangible assets		12.6	​	$	454,420	​	$	(101,680)	​	$	352,740	​	$	372,417	​	$	(81,333)	​	$	291,084	​

​

Aggregate amortization expense for the intangible assets above for the quarters ended June 30, 2020 and 2019 was $12,320 and $6,386, respectively. Aggregate amortization expense for the intangible assets above for the six months ended June 30, 2020 and 2019 was $20,334 and $12,388, respectively.

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

​	​	​	​	​	​
2020	​	$	19,192	​	(remaining estimated amortization for 2020)
2021	​		37,723	​	​
2022	​		37,443	​	​
2023	​		37,362	​	​
2024 and thereafter	​		221,020	​	​

​ 11

Table of Contents 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 June 30, 2020.

​

NOTE 5 – 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 June 30, 2020 and 2019, respectively, was 31.0% and 27.6%. The effective tax rate for the three months ended June 30, 2019 was favorably impacted by net tax benefits of $2.9 million from discrete events. This consisted of a $9.1 million benefit from the excess tax benefits from employee share-based compensation offset by, among other items, a $6.3 million charge to record a valuation allowance to properly reflect the realization of recorded deferred tax assets.

The effective tax rate for the six months ended June 30, 2020 and 2019, respectively, was 30.0% and 28.7%. The effective tax rate for the six months ended June 30, 2020 reflects a favorable impact of net tax benefits of $4.6 million, primarily from the excess tax benefits from employee share-based compensation.  This is offset by the unfavorable impact from the mix of earnings, particularly losses in jurisdictions where we cannot record the tax benefit. The effective tax rate for the six months ended June 30, 2019 was favorably impacted by net tax benefits of $4.1 million from discrete events.  This consisted of a favorable impact of $11.6 million from the excess tax benefits from employee share-based compensation, offset by, among other items, a $7.0 million charge recognized to record a valuation allowance to properly reflect the realization of recorded deferred tax assets.

​

NOTE 6 – DEBT

Notes Payable, Revolving Credit Facility and Overdrafts

At June 30, 2020 and December 31, 2019, our notes payable, revolving credit facility and overdrafts, consisted of the following:

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​		2020		****	2019		****
Notes payable 8.00%	​	$	831	​	$	1,436	​
Revolving credit facility 1.28%	​	​	150,000	​	​	25,000	​
Overdrafts 5.68% - 7.82%	​	​	—	​	​	17,823	​
​	​	$	150,831	​	$	44,259	​

​

We maintain a multi-currency revolving credit facility with two tranches that matures in July 2022 which provides for unsecured financing of up to $300 million that is available in the U.S. and up to €150 million that is available to our wholly-owned UK subsidiary. $150.0 million was utilized under our U.S. facility and no balance was utilized under our euro-based revolving credit facility as of June 30, 2020. $25.0 million was utilized under our U.S. facility and no balance was utilized on our euro-based revolving credit facility as of December 31, 2019.

There are no compensating balance requirements associated with our revolving credit facility. Each borrowing under the credit facility will bear interest at rates based on LIBOR, prime rates or other similar rates, in each case plus an applicable margin. A facility fee on the total amount of the facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. 12

Table of Contents Long-Term Obligations

At June 30, 2020, our long-term obligations consisted of the following:

​

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​		​	Unamortized		​	​		​
​		​			Debt Issuance			​
​	****	Principal		****	Costs		****	Net		****
Notes payable 0.00% – 10.90%, due in monthly and annual installments through 2028	​	$	15,358	​	$	—	​	$	15,358	​
Senior unsecured notes 3.2%, due in 2022	​	****	75,000	​	****	52	​	****	74,948	​
Senior unsecured debts 2.4% USD floating swapped to 1.36% EUR fixed, equal annual installments through 2022	​	****	168,000	​	****	315	​	****	167,685	​
Senior unsecured notes 3.5%, due in 2023	​	​	125,000	​	​	126	​	​	124,874	​
Senior unsecured notes 1.0%, due in 2023	​	​	112,340	​	​	326	​	​	112,014	​
Senior unsecured notes 3.4%, due in 2024	​	****	50,000	​	****	56	​	****	49,944	​
Senior unsecured notes 3.5%, due in 2024	​	​	100,000	​	​	126	​	​	99,874	​
Senior unsecured notes 1.2%, due in 2024	​	​	224,680	​	​	661	​	​	224,019	​
Senior unsecured notes 3.6%, due in 2025	​	​	125,000	​	​	145	​	​	124,855	​
Senior unsecured notes 3.6%, due in 2026	​	​	125,000	​	​	145	​	​	124,855	​
Finance Lease Liabilities	​	****	30,564	​	****	—	​	****	30,564	​
​	​	$	1,150,942	​	$	1,952	​	$	1,148,990	​
Current maturities of long-term obligations	​	****	(66,248)	​	****	—	​	****	(66,248)	​
Total long-term obligations	​	$	1,084,694	​	$	1,952	​	$	1,082,742	​

​

At December 31, 2019, our long-term obligations consisted of the following:

​

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​		​	Unamortized		​	​		​
​		​			Debt Issuance			​		​
​	****	Principal		****	Costs		****	Net		****
Notes payable 0.00% – 10.90%, due in monthly and annual installments through 2028	​	$	19,220	​	$	—	​	$	19,220	​
Senior unsecured notes 3.2%, due in 2022	​		75,000	​		64	​		74,936	​
Senior unsecured debts 3.2% USD floating swapped to 1.36% EUR fixed, equal annual installments through 2022	​		168,000	​		390	​		167,610	​
Senior unsecured notes 3.5%, due in 2023	​	​	125,000	​	​	144	​	​	124,856	​
Senior unsecured notes 1.0%, due in 2023	​	​	112,170	​	​	356	​	​	111,814	​
Senior unsecured notes 3.4%, due in 2024	​		50,000	​		63	​		49,937	​
Senior unsecured notes 3.5%, due in 2024	​	​	100,000	​	​	144	​	​	99,856	​
Senior unsecured notes 1.2%, due in 2024	​	​	224,340	​	​	742	​	​	223,598	​
Senior unsecured notes 3.6%, due in 2025	​	​	125,000	​	​	169	​	​	124,831	​
Senior unsecured notes 3.6%, due in 2026	​	​	125,000	​	​	169	​	​	124,831	​
Finance Lease Liabilities	​		29,952	​		—	​		29,952	​
​	​	$	1,153,682	​	$	2,241	​	$	1,151,441	​
Current maturities of long-term obligations	​		(65,988)	​	​	—	​	​	(65,988)	​
Total long-term obligations	​	$	1,087,694	​	$	2,241	​	$	1,085,453	​

​

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 $62,259, $59,990, $133,859, $338,967, $274,900 and $250,404 thereafter.

Covenants

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

​

​

​	​	​	​	​
​	****	Requirement	****	Level at June 30, 2020
Consolidated Leverage Ratio (1)		Maximum of 3.50 to 1.00		1.98 to 1.00
Consolidated Interest Coverage Ratio (1)		Minimum of 3.00 to 1.00		15.50 to 1.00
(1)	Definitions of ratios are included as part of the revolving credit facility agreement and the note purchase agreements.
---	---

13

Table of Contents ​

​

NOTE 7 – LEASES

We lease certain warehouse, plant and office facilities as well as certain equipment under noncancelable 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”).

The components of lease expense for the three and six months ended June 30, 2020 and 2019 were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020			2019			2020			2019
Operating lease cost	​	$	5,841	​	$	5,437	​	$	11,095	​	$	11,441	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Finance lease cost:	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of right-of-use assets	​	$	906	​	$	1,004	​	$	2,105	​	$	1,876	​
Interest on lease liabilities	​	​	369	​	​	325	​	​	717	​	​	640	​
Total finance lease cost	​	$	1,275	​	$	1,329	​	$	2,822	​	$	2,516	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Short-term lease and variable lease costs	​	$	2,430	​	$	2,328	​	$	4,878	​	$	4,270	​

​

Supplemental cash flow information related to leases was as follows:

​

​	​	​	​	​	​	​	​
Six Months Ended June 30,		2020		​	2019		​
Cash paid for amounts included in the measurement of lease liabilities:	​	​	​	​	​	​	​
Operating cash flows from operating leases	​	$	11,662	​	$	10,249	​
Operating cash flows from finance leases	​	​	704	​	​	534	​
Financing cash flows from finance leases	​	​	2,545	​	​	2,294	​
​	​	​	​	​	​	​	​
Right-of-use assets obtained in exchange for lease obligations:	​	​	​	​	​	​	​
Operating leases	​	$	11,371	​	$	9,512	​
Finance leases	​	​	3,127	​	​	11,622	​

​

​

NOTE 8 – RETIREMENT AND DEFERRED COMPENSATION PLANS

Components of Net Periodic Benefit Cost:

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Domestic Plans					​	Foreign Plans					****
Three Months Ended June 30,	****	2020			2019			2020			2019
Service cost	​	$	3,562	​	$	2,775	​	$	1,767	​	$	1,445	​
Interest cost	​	****	1,536	​		1,846	​	****	340	​		495	​
Expected return on plan assets	​	****	(2,702)	​		(3,095)	​	****	(631)	​		(586)	​
Amortization of net loss	​	****	1,294	​		489	​	****	514	​		359	​
Amortization of prior service cost	​	****	—	​		—	​	****	95	​		113	​
Net periodic benefit cost	​	$	3,690	​	$	2,015	​	$	2,085	​	$	1,826	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Domestic Plans					​	Foreign Plans					​
Six Months Ended June 30,	​	2020		​	2019		​	2020		​	2019		****
Service cost	​	$	7,139	​	$	5,548	​	$	3,535	​	$	2,905	​
Interest cost	​	****	3,523	​		3,691	​	****	680	​		996	​
Expected return on plan assets	​	****	(6,124)	​		(6,189)	​	****	(1,265)	​		(1,178)	​
Amortization of net loss	​	****	2,842	​		978	​	****	1,028	​		722	​
Amortization of prior service cost	​	****	—	​		—	​	****	192	​		226	​
Net periodic benefit cost	​	$	7,380	​	$	4,028	​	$	4,170	​	$	3,671	​

​

The components of net periodic benefit cost, other than the service cost component, are included in the line “Miscellaneous, net” in the income statement.

​ 14

Table of Contents EMPLOYER CONTRIBUTIONS

Although we currently have no minimum funding requirements for our domestic and foreign plans, we contributed $204 thousand to our ongoing domestic supplemental employee retirement plan (“SERP”) annuity contracts during the six months ended June 30, 2020. We plan to contribute approximately an additional $200 thousand to pay our ongoing SERP annuity contracts during 2020. We have contributed approximately $1.1 million to our foreign defined benefit plans during the six months ended June 30, 2020 and do not expect additional significant contributions during 2020.

​

NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE INCOME

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Foreign		****	Defined Benefit		****	​	​	****	​	​	****
​	​	Currency		​	Pension Plans		​	Derivatives		​	Total		****
Balance - December 31, 2018	​	$	(248,401)	​	$	(60,463)	​	$	(1,640)	​	$	(310,504)	​
Other comprehensive (loss) income before reclassifications	​		(197)	​		—	​		3,727	​		3,530	​
Amounts reclassified from accumulated other comprehensive income (loss)	​		—	​		1,437	​		(4,599)	​		(3,162)	​
Net current-period other comprehensive (loss) income	​		(197)	​		1,437	​		(872)	​		368	​
Balance - June 30, 2019	​	$	(248,598)	​	$	(59,026)	​	$	(2,512)	​	$	(310,136)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance - December 31, 2019	​	$	(257,124)	​	$	(83,147)	​	$	(1,677)	​	$	(341,948)	​
Other comprehensive (loss) income before reclassifications	​		(23,134)	​		—	​		1,758	​		(21,376)	​
Amounts reclassified from accumulated other comprehensive income (loss)	​		—	​		3,076	​		(1,008)	​		2,068	​
Net current-period other comprehensive (loss) income	​		(23,134)	​		3,076	​		750	​		(19,308)	​
Balance - June 30, 2020	​	$	(280,258)	​	$	(80,071)	​	$	(927)	​	$	(361,256)	​

​

Reclassifications Out of Accumulated Other Comprehensive (Loss) Income:

​	​	​	​	​	​	​	​	​	​
​	​	Amount Reclassified from					​	​	​
Details about Accumulated Other	​	Accumulated Other					​	Affected Line in the Statement	​
Comprehensive Income Components	​	Comprehensive Income					​	Where Net Income is Presented	​
Three Months Ended June 30,	****	2020		****	2019		****	****
​	​	​	​	​	​	​	​	​	​
Defined Benefit Pension Plans	​	​	​	​	​	​	​	​	​
Amortization of net loss	​	$	1,808	​	$	848		(1)	​
Amortization of prior service cost	​	****	95	​		113		(1)	​
​	​	****	1,903	​		961		Total before tax	​
​	​	****	(463)	​		(245)		Tax benefit	​
​	​	$	1,440	​	$	716		Net of tax	​
Derivatives	​	​	​	​	​	​	​	​	​
Changes in cross currency swap: interest component	​	$	(525)	​	$	(1,552)	​	Interest Expense	​
Changes in cross currency swap: foreign exchange component	​	​	3,060	​	​	3,084	​	Miscellaneous, net	​
​	​	$	2,535	​	$	1,532		Net of tax	​
Total reclassifications for the period	​	$	3,975	​	$	2,248	​	​	​

​ 15

Table of Contents

​	​	​	​	​	​	​	​	​	​
​	​	Amount Reclassified from					​	​	****
Details about Accumulated Other	​	Accumulated Other					​	Affected Line in the Statement	****
Comprehensive Income Components	​	Comprehensive Income					​	Where Net Income is Presented	****
Six Months Ended June 30,	****	2020		****	2019		****	****	****
​	​	​	​	​	​	​	​	​	​
Defined Benefit Pension Plans	​	​	​	​	​	​	​	​	​
Amortization of net loss	​	$	3,870	​	$	1,700		(1)	​
Amortization of prior service cost	​	****	192	​		226		(1)	​
​	​	****	4,062	​		1,926		Total before tax	​
​	​	****	(986)	​		(489)		Tax benefit	​
​	​	$	3,076	​	$	1,437		Net of tax	​
Derivatives	​	​	​	​	​	​	​	​	​
Changes in cross currency swap: interest component	​	$	(1,288)	​	$	(3,006)	​	Interest Expense	​
Changes in cross currency swap: foreign exchange component	​	****	280	​		(1,593)		Miscellaneous, net	​
​	​	$	(1,008)	​	$	(4,599)		Net of tax	​
Total reclassifications for the period	​	$	2,068	​	$	(3,162)	​	​	​
(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 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 for additional details.

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.

During 2017, our wholly-owned UK subsidiary borrowed $280 million in term loan borrowings under a new 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 cross currency swap 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 $0.9 million of loss is included in accumulated other comprehensive loss at June 30, 2020. The amount expected to be recognized into earnings during the next 12 months related to the interest component of our cross currency swap based on prevailing foreign exchange and interest rates at June 30, 2020 is $0.3 million. The amount expected to be recognized into earnings during the next 12 months related to the foreign exchange component of our cross currency swap is dependent on fluctuations in currency exchange rates. As of June 30, 2020, the fair values of the cross currency swap were a $3.1 million asset. The swap contract expires on July 20, 2022. 16

Table of Contents 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 June 30, 2020, we have recorded the fair value of foreign currency forward exchange contracts of $0.7 million in prepaid and other and $0.1 million in accounts payable and accrued liabilities on the balance sheet. All forward exchange contracts outstanding as of June 30, 2020 had an aggregate notional contract amount of $49.4 million.

​

​

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	****	June 30, 2020					****	December 31, 2019					****
​	​	​	​	​		​	Derivatives		​	​		​	Derivatives		​
​	​	​	​	Derivatives		​	not		​	Derivatives		​	not		​
​	​	​	​	Designated		​	Designated		​	Designated		​	Designated		​
​	​	Balance **** Sheet	​	as Hedging		​	as Hedging		​	as Hedging		​	as Hedging		​
​	​	Location	​	Instruments		​	Instruments		​	Instruments		​	Instruments		****
Derivative Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Foreign Exchange Contracts		Prepaid and other	​	$	—	​	$	747	​	$	—	​	$	206	​
Cross Currency Swap Contract (1)		Prepaid and other	​	****	3,052	​	****	—	​		2,552	​		—	​
​	​	​	​	$	3,052	​	$	747	​	$	2,552	​	$	206	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Foreign Exchange Contracts		Accounts payable, accrued and other liabilities	​	$	—	​	$	137	​	$	—	​	$	401	​
​	​	​	​	$	—	​	$	137	​	$	—	​	$	401	​
(1)	This cross currency swap contract is composed of both an interest component and a foreign exchange component.
---	---

​

​

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Three Months Ended June 30, 2020 and 2019

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​					​	​	​	Amount of Gain (Loss)					​	Total Amount		​
​	​	Amount of Gain (Loss)					​	Location of (Loss)	​	Reclassified from					​	of Affected		​
Derivatives in Cash	​	Recognized in					​	Gain Recognized	​	Accumulated					​	Income		​
Flow Hedging	​	Other Comprehensive					​	in Income on	​	Other Comprehensive					​	Statement		​
Relationships	​	Income on Derivative					​	Derivatives	​	Income on Derivative					​	Line Item		​
​	****	2020		****	2019		****	​	****	2020		****	2019		****	​		****
Cross currency swap contract:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest component		$	(208)	​	$	1,080	​	Interest expense	​	$	525	​	$	1,552	​	$	(8,734)	​
Foreign exchange component		​	(3,060)	​	​	(3,084)	​	Miscellaneous, net	​	​	(3,060)	​	​	(3,084)	​	​	(923)	​
​	​	$	(3,268)	​	$	(2,004)	​	​	​	$	(2,535)	​	$	(1,532)	​	​	​	​

17

Table of Contents ​

​

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Six Months Ended June 30, 2020 and 2019

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​					​	​	​	Amount of Gain (Loss)					​	Total Amount		​
​	​	Amount of Gain (Loss)					​	Location of (Loss)	​	Reclassified from					​	of Affected		​
Derivatives in Cash	​	Recognized in					​	Gain Recognized	​	Accumulated					​	Income		​
Flow Hedging	​	Other Comprehensive					​	in Income on	​	Other Comprehensive					​	Statement		​
Relationships	​	Income on Derivative					​	Derivatives	​	Income on Derivative					​	Line Item		​
​	****	2020		****	2019		****	​	****	2020		****	2019		****	​		****
Cross currency swap contract:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest component		$	2,038	​	$	2,472	​	Interest expense	​	$	1,288	​	$	3,006	​	$	(17,122)	​
Foreign exchange component		​	(280)	​	​	1,593	​	Miscellaneous, net	​	​	(280)	​	​	1,593	​	​	(2,335)	​
​	​	$	1,758	​	$	4,065	​	​	​	$	1,008	​	$	4,599	​	​	​	​

​

​

The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Three Months Ended June 30, 2020 and 2019

​	​	​	​	​	​	​	​	​	​
​	​	​	​	Amount of (Loss) Gain					​
Derivatives Not Designated	​	Location of (Loss) Gain Recognized	​	Recognized in Income					​
as Hedging Instruments	​	in Income on Derivatives	​	on Derivatives					​
​	****	​	****	2020		****	2019		****
Foreign Exchange Contracts		Other (Expense) Income:<br>Miscellaneous, net	​	$	(940)	​	$	(251)	​
​	​	​	​	$	(940)	​	$	(251)	​

​

​

The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2020 and 2019

​

​	​	​	​	​	​	​	​	​	​
​	​	​	​	Amount of (Loss) Gain					​
Derivatives Not Designated	​	Location of (Loss) Gain Recognized	​	Recognized in Income					​
as Hedging Instruments	​	in Income on Derivatives	​	on Derivatives					​
​	**** ​	​	**** ​	2020		**** ​	2019		****
Foreign Exchange Contracts		Other (Expense) Income:<br>Miscellaneous, net	​	$	807	​	$	(514)	​
​	​	​	​	$	807	​	$	(514)	​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	Gross Amounts not Offset			​	​	​	****
​	​	​	​	​	Gross Amounts	​	Net Amounts		​	in the Statement of			​	​	​	****
​	​	​	​	​	Offset in the	​	Presented in		​	Financial Position			​	​	​	****
​	****	Gross		**** ​	Statement of	​	the Statement of		**** ​	Financial	**** ​	Cash Collateral	**** ​	Net		****
​	​	Amount		​	Financial Position	​	Financial Position		​	Instruments	​	Received	​	Amount		****
Description	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
June 30, 2020																​
Derivative Assets	​	$	3,799	****	—	​	$	3,799	****	—	****	—	​	$	3,799	​
Total Assets	​	$	3,799	****	—	​	$	3,799	****	—	****	—	​	$	3,799	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative Liabilities	​	$	137	****	—	​	$	137	****	—	****	—	​	$	137	​
Total Liabilities	​	$	137	****	—	​	$	137	****	—	****	—	​	$	137	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2019																​
Derivative Assets	​	$	2,758		—	​	$	2,758		—		—	​	$	2,758	​
Total Assets	​	$	2,758		—	​	$	2,758		—		—	​	$	2,758	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative Liabilities	​	$	401		—	​	$	401		—		—	​	$	401	​
Total Liabilities	​	$	401		—	​	$	401		—		—	​	$	401	​

​

​

​

​

​

​

​ 18

Table of Contents

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 June 30, 2020, the fair values of our financial assets and liabilities were categorized as follows:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Total		****	Level 1		****	Level 2		****	Level 3		****
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts **** ^(1)^	​	$	747	​	$	—	​	$	747	​	$	—	​
Cross currency swap contract ^(1)^	​	​	3,052	​	​	—	​	​	3,052	​	​	—	​
Total assets at fair value	​	$	3,799	​	$	—	​	$	3,799	​	$	—	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts **** ^(1)^	​	$	137	​	$	—	​	$	137	​	$	—	​
Contingent consideration obligation	​	​	24,710	​	​	—	​	​	—	​	​	24,710	​
Total liabilities at fair value	​	$	24,847	​	$	—	​	$	137	​	$	24,710	​

​

As of December 31, 2019, the fair values of our financial assets and liabilities were categorized as follows:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Total		****	Level 1		****	Level 2		****	Level 3		****
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts ^(1)^	​	$	206	​	$	—	​	$	206	​	$	—	​
Cross currency swap contract ^(1)^	​	​	2,552	​	​	—	​	​	2,552	​	​	—	​
Total assets at fair value	​	$	2,758	​	$	—	​	$	2,758	​	$	—	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts ^(1)^	​	$	401	​	$	—	​	$	401	​	$	—	​
Contingent consideration obligation	​	​	5,930	​	​	—	​	​	—	​	​	5,930	​
Total liabilities at fair value	​	$	6,331	​	$	—	​	$	401	​	$	5,930	​
(1)	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 $1.1 billion as of June 30, 2020 and $1.1 billion as of December 31, 2019.

As discussed in Note 17 - Acquisitions, we have a contingent consideration obligation to the selling equity holders of Fusion in connection with the Fusion Acquisition (as defined herein) based on 2022 cumulative performance targets, a contingent consideration obligation to the selling equity holders of Noble in connection with the Noble Acquisition (as defined herein) based on 2024 cumulative performance targets and a contingent consideration obligation to the selling equity holder of Gateway in connection with the Gateway Acquisition (as defined herein) based on 2020 and 2022 performance targets. We consider these obligations Level 3 liabilities and have estimated the aggregate fair value for these contingent consideration arrangements to be $20.3 million, $2.9 million and $1.5 million, respectively, as of June 30, 2020. During the quarter ended June 30, 2020, $1.5 million of the Gateway contingent consideration accrual was paid as a result of the business meeting their first performance target. As of December 31, 2019 the aggregate fair value for these contingent consideration arrangements was $2.9 million and $3.0 million for the Noble Acquisition and the Gateway Acquisition, respectively.

​

NOTE 12 - 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. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on our financial position, 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. 19

Table of Contents 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 June 30, 2020 and December 31, 2019.

A fire caused damage to our facility in Annecy, France in June 2016. We are insured for the damages caused by the fire, including business interruption insurance.  For the six months ended June 30, 2020, we did not receive any insurance proceeds, and have no insurance receivable as of June 30, 2020. During the six months ended June 30, 2020 and 2019, profitability was not impacted. The final settlement continues to be negotiated. In many cases, our insurance coverage exceeds the amount of our recognized losses. However, no gain contingencies were recognized during the six months ended June 30, 2020 as our ability to realize those gains remains uncertain.

An environmental investigation, undertaken to assess areas of possible contamination, was completed at our facility in Jundiaí, São Paulo, Brazil. The facility is primarily an internal supplier of anodized aluminum components for certain of our dispensing systems. The testing indicated that soil and groundwater in certain areas of the facility were impacted above acceptable levels established by local regulations. In March 2017, we reported the findings to the relevant environmental authority, the Environmental Company of the State of São Paulo – CETESB. Based upon our best estimate, we recorded a reserve of $1.5 million (operating expense) in the first quarter of 2017 related to this contingency. During 2019, we paid approximately $0.6 million. For the six months ended June 30, 2020, we paid approximately $0.1 million and made adjustments to the accrual based on our future anticipated expenditures.  As of June 30, 2020, our outstanding reserve is $0.4 million. The ultimate loss associated with this environmental contingency is subject to the investigation and ongoing review of the CETESB. We will continue to evaluate the range of likely costs as the investigation proceeds and we have further clarity on the nature and extent of remediation that will be required. We note that the contamination, or any failure to complete any required remediation in a timely manner, could potentially result in fines or penalties.

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, potentially, retrospectively. During the first quarter of 2019, we received a favorable court decision of $2.7 million for the retrospective right to recover part of our claim. This amount is recorded in cost of sales as a favorable impact of $1.7 million and $1.0 million was recognized as interest income. In June 2020, we received a favorable court decision of $0.7 million for the retrospective right to recover part of our claim. This amount is recorded in cost of sales as a favorable impact of $0.7 million. If the Judicial Court grants full retrospective recovery, we estimate remaining potential recoveries of approximately $1.5 million to $7.5 million, including interest, depending on the future decisions of the Supreme Court of Brazil. Due to uncertainties around our remaining court recovery claims, we have not recorded any further amounts relating to the retrospective nature of this matter.

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. On June 4, 2020, an unfavorable decision was issued on the first administrative defense appeal. We are awaiting the formal notification in order to review its content and file our second appeal. 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 June 30, 2020.

​

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 June 30, 2020, we did not repurchase any shares. During the three and six months ended June 30, 2019, we repurchased approximately 34 thousand shares and 193 thousand shares for approximately $4.1 million and $19.1 million, respectively. As of June 30, 2020, there was $278.5 million of authorized share repurchases available to us.

​ 20

Table of Contents

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.

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,	​	​	2020	​	​	​	2019	​	****
Fair value per stock award	​	$	94.98	​	​	$	134.97	​	​
Grant date stock price	​	$	83.93	​	​	$	104.51	​	​
Assumptions:	​	​	​	​	​	​	​	​	​
Aptar's stock price expected volatility	​	​	23.80	%	​	​	16.50	%	​
Expected average volatility of peer companies	​	​	48.50	%	​	​	31.90	%	​
Correlation assumption	​	​	63.50	%	​	​	37.40	%	​
Risk-free interest rate	​	​	0.31	%	​	​	2.19	%	​
Dividend yield assumption	​	​	1.72	%	​	​	1.30	%	​

​

A summary of RSU activity as of June 30, 2020 and changes during the six month period then ended is presented below:

​

​

​	​	​	​	​	​	​	​	​	​	​	​
​	****	Time-Based RSUs				​	Performance-Based RSUs
​	****			Weighted Average			​		Weighted Average		​
​	​	Units	​	Grant-Date Fair Value		​	Units	​	Grant-Date Fair Value		​
Nonvested at January 1, 2020	​	480,729	​	$	95.45	​	181,680	​	$	117.26	​
Granted	​	229,033	​	****	85.57	​	417,313	​	****	93.08	​
Vested	​	(125,020)	​	​	85.55	​	—	​	​	—	​
Forfeited	​	(5,692)	​	****	99.08	​	(6,714)	​	****	108.10	​
Nonvested at June 30, 2020	​	579,050	​	$	92.14	​	592,279	​	$	100.29	​

​

Included in the June 30, 2020 time-based RSUs are 12,379 units granted to non-employee directors and 11,490 units vested related to non-employee directors.

Compensation expense recorded attributable to RSUs for the first six months of 2020 and 2019 was approximately $16.3 million and $9.8 million, respectively. The actual tax benefit realized for the tax deduction from RSUs was approximately $3.0 million in the six months ended June 30, 2020. The fair value of units vested during the six months ended June 30, 2020 and 2019 was $10.7 million and $4.1 million, respectively. The intrinsic value of units vested during the six months ended June 30, 2020 and 2019 was $12.8 million and $4.8 million, respectively. As of June 30, 2020, there was $58.8 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted-average period of 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. Compensation expense attributable to employee stock options for the first six months of 2020 was approximately $1.3 million ($1.0 million after tax). Approximately $1.1 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense attributable to stock options for the first six months of 2019 was approximately $3.2 million ($2.7 million after tax). Approximately $2.7 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. The reduction in stock option expense is due to our move to RSUs as discussed above. For stock option grants, we used historical data to estimate expected life and volatility. 21

Table of Contents A summary of option activity under our stock plans during the six months ended June 30, 2020 is presented below:

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Stock Awards Plans					​	Director Stock Option Plans				****
​	****	​	​	****	Weighted Average		****	​	****	Weighted Average		****
​	​	​	Options	​	Exercise Price		​	Options	​	Exercise Price		****
Outstanding, January 1, 2020	****	​	5,044,180	​	$	68.32	****	135,251	​	$	58.45	​
Granted	****	​	—	​	****	—	****	—	​	****	—	​
Exercised	****	​	(460,243)	​	****	58.21	****	(30,751)	​	****	51.22	​
Forfeited or expired	****	​	(14,200)	​	****	76.07	****	—	​	****	—	​
Outstanding at June 30, 2020	****	​	4,569,737	​	$	69.38	****	104,500	​	$	60.58	​
Exercisable at June 30, 2020	****	​	4,416,415	​	$	68.62	****	104,500	​	$	60.58	​
Weighted-Average Remaining Contractual Term (Years):	​	​	​	​	​	​	​	​	​	​	​	​
Outstanding at June 30, 2020	****	​	5.0	​	​	​	​	3.1	​	****	​	​
Exercisable at June 30, 2020	****	​	4.9	​	​	​	​	3.1	​	****	​	​
Aggregate Intrinsic Value:	​	​	​	​	​	​	​	​	​	​	​	​
Outstanding at June 30, 2020	​	$	194,684	​	​	​	$	4,902	​	​	​	​
Exercisable at June 30, 2020	​	$	190,936	​	​	​	$	4,902	​	​	​	​
Intrinsic Value of Options Exercised During the Six Months Ended:	​	​	​	​	​	​	​	​	​	​	​	​
June 30, 2020	​	$	26,027	​	​	​	$	1,973	​	​	​	​
June 30, 2019	​	$	65,944	​	​	​	$	722	​	​	​	​

​

The grant date fair value of options vested during the six months ended June 30, 2020 and 2019 was $7.6 million and $12.2 million, respectively. Cash received from option exercises was approximately $30.1 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $6.4 million in the six months ended June 30, 2020. As of June 30, 2020, the remaining valuation of stock option awards to be expensed in future periods was $1.0 million and the related weighted-average period over which it is expected to be recognized is 0.7 years.

​

​

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 June 30, 2020 and 2019 is as follows:

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended											​
​	****	June 30, 2020					​	June 30, 2019
​	​	Diluted		****	Basic		****	Diluted			Basic		​
Consolidated operations	​	​	​	​	​	​	​	​	​	​	​	​	​
Income available to common stockholders	​	$	41,839	​	$	41,839	​	$	73,915	​	$	73,915	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average equivalent shares	​	​	​	​	​	​	​	​	​	​	​	​	​
Shares of common stock	​	****	64,262	​	****	64,262	​		63,471	​		63,471	​
Effect of dilutive stock-based compensation	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options	​	****	1,661	​	****	—	​		2,533	​		—	​
Restricted stock	​	****	461	​	****	—	​		228	​		—	​
Total average equivalent shares	​	****	66,384	​	​	64,262	​	​	66,232	​	​	63,471	​
Net income per share	​	$	0.63	​	$	0.65	​	$	1.12	​	$	1.16	​

22

Table of Contents ​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended											​
​	​	June 30, 2020					​	June 30, 2019					​
​	**** ​	Diluted		**** ​	Basic		**** ​	Diluted		**** ​	Basic		****
Consolidated operations	​	​	​	​	​	​	​	​	​	​	​	​	​
Income available to common stockholders	​	$	97,092	​	$	97,092	​	$	136,919	​	$	136,919	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average equivalent shares	​	​	​	​	​	​	​	​	​	​	​	​	​
Shares of common stock	​	****	64,135	​	****	64,135	​		63,219	​		63,219	​
Effect of dilutive stock-based compensation	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options	​	****	1,734	​	****	—	​		2,411	​		—	​
Restricted stock	​	****	377	​	****	—	​		212	​		—	​
Total average equivalent shares	​	****	66,246	​	​	64,135	​	​	65,842	​	​	63,219	​
Net income per share	​	$	1.47	​	$	1.51	​	$	2.08	​	$	2.17	​

​

​

​

NOTE 16 – SEGMENT INFORMATION

We are organized into three reporting segments. Our Beauty + Home segment sells to the personal care, beauty and home care markets. Our Pharma segment serves customers in the prescription drug, consumer health care, injectables and active packaging markets. Our Food + Beverage segment sells to the food and beverage markets.

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, 2019. We evaluate performance of our business units and allocate resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs. All internal segment reporting and discussions of results with our Chief Operating Decision Maker (CODM) are based on segment Adjusted EBITDA.

Financial information regarding our reporting segments is shown below:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		​	2019			2020		​	2019		​
Total Sales:	​	​	​	​	​	​	​	​	​	​	​	​	​
Beauty + Home	​	$	306,469	​	$	349,253	​	$	636,935	​	$	722,756	​
Pharma	​	****	303,885	​		284,577	​	****	603,475	​		559,071	​
Food + Beverage	​	****	99,023	​		119,095	​	****	199,324	​		223,822	​
Total Sales	​	​	709,377	​	​	752,925	​	$	1,439,734	​	$	1,505,649	​
Less: Intersegment Sales:	​	​	​	​	​	​	​	​	​	​	​	​	​
Beauty + Home	​	$	6,683	​	$	7,173	​	$	12,589	​	$	13,017	​
Pharma	​	****	2,626	​		2,638	​	****	5,020	​		4,431	​
Food + Beverage	​	****	763	​		453	​	****	1,267	​		1,080	​
Total Intersegment Sales	​	$	10,072	​	$	10,264	​	$	18,876	​	$	18,528	​
Net Sales:	​	​	​	​	​	​	​	​	​	​	​	​	​
Beauty + Home	​	$	299,786	​	$	342,080	​	$	624,346	​	$	709,739	​
Pharma	​	****	301,259	​		281,939	​	****	598,455	​		554,640	​
Food + Beverage	​	****	98,260	​		118,642	​	****	198,057	​		222,742	​
Net Sales	​	$	699,305	​	$	742,661	​	$	1,420,858	​	$	1,487,121	​
Adjusted EBITDA (1):	​	​	​	​	​	​	​	​	​	​	​	​	​
Beauty + Home	​	$	23,974	​	$	48,745	​	$	58,221	​	$	101,936	​
Pharma	​	****	104,099	​		101,428	​	****	212,441	​		198,785	​
Food + Beverage	​	****	17,785	​		20,944	​	****	33,192	​		37,635	​
Corporate & Other, unallocated	​	****	(9,279)	​		(10,630)	​	****	(23,107)	​		(23,385)	​
Acquisition-related costs (2)	​	​	(3,592)	​	​	(1,059)	​	​	(5,866)	​	​	(1,059)	​
Restructuring Initiatives (3)	​	​	(7,331)	​	​	(1,737)	​	​	(12,170)	​	​	(11,267)	​
Depreciation and amortization	​	​	(56,429)	​	​	(47,867)	​	​	(107,235)	​	​	(95,356)	​
Interest Expense	​	​	(8,734)	​	​	(8,756)	​	​	(17,122)	​	​	(17,970)	​
Interest Income	​	****	175	​		1,033	​	****	350	​		2,781	​
Income before Income Taxes	​	$	60,668	​	$	102,101	​	$	138,704	​	$	192,100	​
(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 and acquisition-related costs.
---	---

23

Table of Contents

(2)	Acquisition-related costs include transaction costs and purchase accounting adjustments related to acquisitions and investments (see Note 17 – Acquisitions and Note 18 – Investment in Equity Securities for further details).
(3)	Restructuring Initiatives includes expense items for the three and six months ended June 30, 2020 and 2019 as follows (see Note 19 – Restructuring Initiatives for further details):
---	---

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		****	2019		****	2020		****	2019		​
Restructuring Initiatives by Segment	​	​	​	​	​	​	​	​	​	​	​	​	​
Beauty + Home	​	$	7,324	​	$	1,259	​	$	12,231	​	$	9,528	​
Pharma	​	****	(111)	​		(113)	​	****	(142)	​		213	​
Food + Beverage	​	****	75	​		112	​	****	178	​		622	​
Corporate & Other	​	​	43	​	​	479	​	​	(97)	​	​	904	​
Total Restructuring Initiatives	​	$	7,331	​	$	1,737	​	$	12,170	​	$	11,267	​

​

​

​

​

NOTE 17 – ACQUISITIONS

Business Combinations

On April 1, 2020, we completed our acquisition (the “Fusion Acquisition”) of 100% of the equity interests of Fusion Packaging, Inc. (“Fusion”) for a purchase price of approximately $163.8 million (net of $1.0 million of cash acquired), which was funded by a draw on our revolving credit facility and cash on hand. Fusion, based in Dallas, TX, is a global leader in the design, engineering and distribution of luxury packaging for the beauty industry. As part of the Fusion Acquisition, we are also obligated to pay to the selling equity holders of Fusion certain contingent consideration based on 2022 cumulative financial performance metrics as defined in the purchase agreement. Based on a projection as of the acquisition date, we estimated the aggregate fair value for this contingent consideration arrangement to be $19.1 million utilizing a Black-Scholes valuation model. As of June 30, 2020, $5.7 million was held in restricted cash pending the finalization of a working capital adjustment and indemnity escrow. Subsequent to the end of the quarter, $2.0 million of working capital escrow was released from restriction. Fusion contributed net sales of $13.8 million and pretax loss of $3.3 million for the quarter ended June 30, 2020 which have been included in the Condensed Consolidated Financial Statements within our Beauty + Home segment. Included in pretax loss is $2.7 million of fair value adjustment amortization for inventory sold during 2020. We are in the process of finalizing our purchase accounting.

On October 31, 2019, we completed our acquisition (the “Noble Acquisition”) of 100% of the equity interests of Noble International Holdings, Inc., Genia Medical, Inc. and JBCB Holdings, LLC (collectively referred to as “Noble”). Noble, based in Orlando, FL, is a leading provider in developing patient-centric advanced drug delivery system training devices including autoinjector, prefilled syringe, onbody and respiratory devices for the world’s leading biopharmaceutical companies and original equipment manufacturers. The purchase price was approximately $62.3 million (net of $1.6 million of cash acquired) and was funded by cash on hand. As part of the Noble Acquisition, we are also obligated to pay to the selling equity holders of Noble certain contingent consideration based on 2024 cumulative financial performance metrics defined in the purchase agreement. Based on projection as of the acquisition date, we estimated the aggregate fair value for this contingent consideration arrangement to be $2.9 million utilizing the Black-Scholes valuation model. As of December 31, 2019, $5 million was held in restricted cash pending the finalization of a working capital adjustment and indemnity escrow. During the first quarter of 2020, $1.0 million related to the working capital escrow was released from restriction, resulting in an additional $463 thousand payment due to the seller and a corresponding increase to our purchase price and associated goodwill balance. The results of Noble’s operations have been included in the Condensed Consolidated Financial Statements within our Pharma segment since the date of acquisition.

On June 5, 2019, we completed our acquisition (the “Nanopharm Acquisition”) of all of the outstanding capital stock of Nanopharm Ltd. (“Nanopharm”). Nanopharm, located in Newport, UK, is a science-driven, leading provider of orally inhaled and nasal drug product design and development services. The purchase price was approximately $38.1 million (net of $1.8 million of cash acquired) and was funded by cash on hand. The results of Nanopharm’s operations have been included in the Condensed Consolidated Financial Statements within our Pharma segment since the date of acquisition.

On May 31, 2019, we completed our acquisition (the “Gateway Acquisition”) of all of the outstanding equity interests of Gateway Analytical LLC (“Gateway”). Gateway, located in Gibsonia, PA, provides industry-leading particulate detection and predictive analytical services to customers developing injectable medicines. The purchase price was approximately $7.0 million and was funded by cash on hand. As part of the Gateway Acquisition, we are also obligated to pay to the selling equity holder of Gateway certain contingent consideration based on 2020 and 2022 performance targets defined in the purchase agreement. Based on projections as of the acquisition date, we estimated the aggregate fair value for this contingent consideration arrangement to be $3.0 million. During the quarter ended June 30, 2020, $1.5 million of the contingent consideration accrual was paid as a result of the business meeting their first performance target. Additionally, the remaining $1.5 million accrual was reclassified from long-term to short-term liabilities as the payment is expected to be made within a year. The results of Gateway’s operations have been included in the Condensed Consolidated Financial Statements within our Pharma segment since the date of acquisition. 24

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

​

​	​	​	​	​	​	​	​
​	****	2020		****	2019		****
Assets	​	​	​	​	​	​	​
Cash and equivalents	​	$	1,010	​	$	3,427	​
Accounts receivable	​		4,380	​		3,504	​
Inventories	​		386	​		—	​
Prepaid and other	​		1,090	​		2,478	​
Property, plant and equipment	​		2,885	​		4,267	​
Goodwill	​		99,644	​		59,143	​
Intangible assets	​		79,900	​		52,980	​
Operating lease right-of-use assets	​	​	4,744	​	​	—	​
Other miscellaneous assets	​		65	​		430	​
Liabilities	​	​	​	​	​	​	​
Accounts payable, accrued and other liabilities	​		5,641	​		5,388	​
Deferred income taxes	​		—	​		2,592	​
Operating lease liabilities	​	​	4,207	​	​	—	​
Deferred and other non-current liabilities	​		322	​		1,598	​
Net assets acquired	​	$	183,934	​	$	116,651	​

​

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 date:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	2020				​	2019				​
​	****	Weighted-Average	****	Estimated		****	Weighted-Average	****	Estimated		****
​	​	Useful Life	​	Fair Value		​	Useful Life	​	Fair Value		****
​	​	(in years)	​	of Asset		​	(in years)	​	of Asset		****
Acquired technology		4	​	$	4,600		8	​	$	9,160	​
Customer relationships		13	​		62,300		11	​		39,379	​
Trademarks and trade names	​	4	​	​	10,300	​	4	​	​	2,457	​
License agreements and other		0.25	​		2,700		1	​		1,984	​
Total	​	​	​	$	79,900	​	​	​	$	52,980	​

​

Goodwill in the amount of $99.6 million was recorded related to the Fusion Acquisition which is included in the Beauty + Home segment and $59.1 million was recorded related to the 2019 acquisitions, all of which are 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 largely consists of unique relationships, brand equity and proprietary technology that has been established creating niches such as turnkey solutions for the beauty market related to the Fusion Acquisition, analytical services for drug developers related to the Nanopharm Acquisition and Gateway Acquisition and patient onboarding related to the Noble Acquisition, as well as the abilities of the acquired companies to maintain their competitive advantage from a technical viewpoint. Goodwill will not be amortized, but will be tested for impairment at least annually. For the Fusion Acquisition, goodwill of $82.3 million will be deductible for tax purposes. For the 2019 acquisitions, goodwill of $31.1 million will be deductible for tax purposes.

The unaudited pro forma results presented below include the effects of the Fusion Acquisition as if it had occurred as of January 1, 2019. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as intangible asset amortization, fair value adjustments for inventory and financing costs related to the change in our debt structure. The pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the date indicated.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		​	2019			2020		​	2019		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	$	699,305	​	$	762,148	​	$	1,428,821	​	$	1,525,826	​
Net Income Attributable to AptarGroup Inc.	​		45,989	​		75,811	​	****	96,350	​		139,003	​
Net Income per common share — basic	​		0.72	​		1.19	​	****	1.50	​		2.20	​
Net Income per common share — diluted	​		0.69	​		1.14	​	****	1.45	​		2.11	​

​ 25

Table of Contents Asset Acquisition

On August 2, 2019, we completed our asset acquisition (the “Bapco Acquisition”) of the remaining 80% ownership interest in the capital stock of Bapco Closures Holdings Limited (“Bapco”), for $3.8 million (net of $2.9 million of cash acquired). The 20% ownership investment previously held in Bapco is now included within the intangible assets acquired. Bapco, located in Leeds, UK, provides innovative closures sealing technology that provides package integrity and tamper evidence. The results of Bapco’s operations have been included in the Condensed Consolidated Financial Statements within our Food + Beverage segment since the date of acquisition.

NOTE 18 –INVESTMENT IN EQUITY SECURITIES

Our investment in equity securities consisted of the following:

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​	****	2020		****	2019		****
Equity Method Investments:	​	​	​	​	​	​	​
BTY	​	$	30,894	​	$	119	​
Sonmol	​	​	4,969	​	​	—	​
Kali Care	​	​	3,691	​	​	3,881	​
Desotec GmbH	​	​	845	​	​	858	​
​	​	​	​	​	​	​	​
Other Investments	​	​	3,794	​	​	3,538	​
​	​	$	44,193	​	$	8,396	​

​

Equity method investments

Sonmol

On April 1, 2020, we invested $5 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 company that provides connected devices for asthma control.

BTY

On October 1, 2019, we entered into a strategic definitive agreement to acquire 49% of the equity interests in 3 related companies: Suzhou Hsing Kwang, Suqian Hsing Kwang and Suzhou BTY (collectively referred to as “BTY”), contingent on the settlement date of the transaction. 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 subsequent to 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. On January 1, 2020, the transaction closed for an approximate purchase price of $32 million for our 49% share. As of June 30, 2020, we paid approximately $28.8 million, with the remaining amount of $3.2 million included in Accounts payable, accrued and other liabilities. The amount is payable after certain conditions under the definitive agreement are fulfilled and is expected to be paid during the third quarter of 2020.

Kali Care

During 2017, we invested $5 million to acquire 20% of the equity interests in Kali Care, a technology company that provides digital monitoring systems for medical devices.

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.

Other investments

During August 2019, we invested an aggregate amount of $3.5 million in two preferred equity investments in sustainability companies Loop and Purecycle Technologies (“Purecycle”) that are 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. 26

Table of Contents There were no indications of impairment nor were there any changes from observable price changes noted in the six months ended June 30, 2020 related to these investments.

​

NOTE 19 – 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 is the Beauty + Home segment; however, certain global general and administrative functions are also being addressed. For the three and six months ended June 30, 2020, we recognized $7.3 million and $12.2 million of restructuring costs related to this plan, respectively. For the three and six months ended June 30, 2019, we recognized $1.7 million and $11.3 million of restructuring costs related to this plan, respectively. Using current exchange rates, we estimate total implementation costs of approximately $125 million for these initiatives, including costs that have been recognized to date. The cumulative expense incurred as of June 30, 2020 was $98.7 million. We also anticipate making capital investments related to the transformation plan of approximately $50 million, of which $43 million has been incurred to date.

As of June 30, 2020 we have recorded the following activity associated with the business transformation:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	**** ​	Beginning		**** ​	Net Charges for		**** ​	​	​	**** ​	​	​	**** ​	Ending		****
​	​	Reserve at		​	the Six Months		​	​	​	​	Interest and		​	Reserve at		****
​	​	12/31/2019		​	Ended 6/30/2020		​	Cash Paid		​	FX Impact		​	6/30/2020		****
Employee severance	​	$	7,090	​	$	8,190	​	$	(2,324)	​	$	192	​	$	13,148	​
Professional fees and other costs	​		3,609	​		3,980	​		(4,595)	​		(17)	​		2,977	​
Totals	​	$	10,699	​	$	12,170	​	$	(6,919)	​	$	175	​	$	16,125	​

​

​

​

​

​

​

​ 27

Table of Contents

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,				​	​
​	​	2020		​	2019		​	​	2020	****	​	2019	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales		​	100.0	%	​	100.0	%	​	100.0	%	​	100.0	%	​
Cost of sales (exclusive of depreciation and amortization shown below)	​	​	63.2	​	​	63.2	​	​	62.8	​	​	63.1	​	​
Selling, research & development and administrative	​	​	17.6	​	​	15.3	​	​	17.6	​	​	15.8	​	​
Depreciation and amortization	​	​	8.1	​	​	6.5	​	​	7.5	​	​	6.4	​	​
Restructuring initiatives	​	​	1.0	​	​	0.2	​	​	0.9	​	​	0.8	​	​
Operating income	​	​	10.1	​	​	14.8	​	​	11.2	​	​	13.9	​	​
Other expense	​	​	(1.4)	​	​	(1.1)	​	​	(1.4)	​	​	(1.0)	​	​
Income before income taxes	​	​	8.7	​	​	13.7	​	​	9.8	​	​	12.9	​	​
Net Income	​	​	6.0	​	​	10.0	​	​	6.8	​	​	9.2	​	​
Effective tax rate	​	​	31.0	%	​	27.6	%	​	30.0	%	​	28.7	%	​
Adjusted EBITDA margin (1)	​	​	19.5	%	​	21.6	%	​	19.8	%	​	21.2	%	​
(1)	Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation of non-U.S. GAAP measures starting on page 35.
---	---

​

SIGNIFICANT DEVELOPMENTS

During the second quarter of 2020, financial results and operations continued to be adversely impacted by the novel coronavirus (“COVID-19”) pandemic. The significance of the impacts to our segments during the second quarter and first six months of 2020 are discussed herein and include, but are not limited to, the adverse impact on sales of our beauty products sold via duty free travel and retail stores and a reduction of our products used for on-the-go beverage applications. The extent to which the COVID-19 pandemic impacts our financial results and operations for fiscal year 2020 and going forward for all three of our business segments will depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the outbreak and the international actions being taken to contain and treat it. No impairments were recorded as of June 30, 2020. While the disruption is currently expected to be temporary, there is uncertainty around the duration. Due to significant uncertainty surrounding the situation, our judgment regarding future results could change and therefore our results could be materially impacted.

As each of our segments produce dispensing systems that have been determined to be essential products by various government agencies around the world, the majority of our facilities remained operational during the second quarter of 2020. 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. These measures include requiring remote working arrangements for employees where practicable. We are following 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. Due to the speed with which the situation continues to evolve, we are not able at this time to estimate the impact of COVID-19 on our future financial results and operations, but the impact could be material for the remainder of fiscal year 2020 and could be material during any future periods affected either directly or indirectly by this pandemic. See Part II, Item 1A, “Risk Factors,” included in this report for information on material risks associated with COVID-19. 28

Table of Contents NET SALES

We reported net sales of $699.3 million for the quarter ended June 30, 2020, which represents a 6% decrease compared to $742.7 million reported during the second quarter of 2019. Sales were negatively impacted by changes in currency exchange rates, passing through lower resin costs to customers and COVID-19 related effects on certain markets we serve. The average U.S. dollar exchange rate strengthened compared to most major currencies we operate in, resulting in a negative currency translation impact of 3%. The acquisitions of Gateway, Nanopharm, Noble and Fusion positively impacted sales by 3%. Therefore, core sales, which exclude acquisitions and changes in foreign currency rates, decreased by 6% in the second quarter of 2020 compared to the same period in 2019. During the second quarter of 2020, our consolidated core sales were negatively impacted by the COVID-19 pandemic, especially within our Beauty + Home and Food + Beverage segments. For Beauty + Home, beauty sales were significantly impacted by the loss of travel and retail sales during the second quarter of 2020. Our Food + Beverage segment also realized lower core sales due to the negative impact of COVID-19, especially on our single-serving beverage product sales. Food + Beverage sales were also impacted by lower tooling sales the effects of passing through lower resin costs to our customers during the quarter. Conversely, our Pharma segment was less impacted by the COVID-19 pandemic and realized strong core sales growth during the second quarter of 2020 with three of the four divisions reporting increased sales compared to the same prior year period.

​	​	​	​	​	​	​	​	​	​
Second Quarter 2020	​	Beauty	​	​	​	Food +	​	​	​
Net Sales Change over Prior Year	****	+ Home	****	Pharma	****	Beverage	****	Total	​
​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	(13)	%	6	%	(15)	%	(6)	%
Acquisitions	​	4	%	2	%	—	%	3	%
Currency Effects (1)	​	(3)	%	(1)	%	(2)	%	(3)	%
Total Reported Net Sales Growth	​	(12)	%	7	%	(17)	%	(6)	%

​

For the first six months of 2020, we reported net sales of $1.42 billion, 4% below the first six months of 2019 reported net sales of $1.49 billion. Sales were negatively impacted by changes in currency exchange rates, passing-through lower resin costs to customers and COVID-19 related effects on certain markets we serve. The average U.S. dollar exchange rate strengthened compared to most major currencies we operate in, resulting in a negative currency translation impact of 2%. The acquisitions of Gateway, Nanopharm, Noble and Fusion positively impacted sales by 2%.  Therefore, core sales, which exclude acquisitions and changes in foreign currency rates, decreased by 4% in the first six months of 2020 compared to the same period in 2019.  As discussed above, the Beauty + Home and Food + Beverage segments have both been significantly impacted by the COVID-19 pandemic, and passing through lower resin costs.

​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2020	​	Beauty	​	​	​	Food +	​	​	​
Net Sales Change over Prior Year	****	+ Home	****	Pharma	****	Beverage	****	Total
​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	(11)	%	6	%	(9)	%	(4)	%
Acquisitions	​	2	%	3	%	—	%	2	%
Currency Effects (1)	​	(3)	%	(1)	%	(2)	%	(2)	%
Total Reported Net Sales Growth	​	(12)	%	8	%	(11)	%	(4)	%
(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 by geographic location:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,									​	Six Months Ended June 30,									​
​	​	2020		​	% of Total	​	2019		​	% of Total	​	2020		​	% of Total	​	2019		​	% of Total	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Domestic	​	$	229,925	​	33%	​	$	215,175	​	29%	​	$	460,325	​	32%	​	$	429,046	​	29%	****
Europe	​	​	382,066	​	55%	​	​	425,531	​	57%	​	​	787,915	​	55%	​	​	856,899	​	57%	​
Latin America	​	​	43,369	​	6%	​	​	57,738	​	8%	​	​	94,163	​	7%	​	​	115,920	​	8%	​
Asia	​	​	43,945	​	6%	​	​	44,217	​	6%	​	​	78,455	​	6%	​	​	85,256	​	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. 29

Table of Contents COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW)

Cost of sales (“COS”) as a percent of net sales remained consistent at 63.2% in the second quarter of 2020 compared to the second quarter of 2019. Our COS percentage was positively impacted by our cost containment efforts and the mix of business as we reported sales growth in our higher margin Pharma segment compared to sales declines in the Beauty + Home and Food + Beverage segments. However, we did experience some additional costs, under-absorbed overhead and temporary disruptions to our manufacturing capacities during the second quarter of 2020 related to the COVID-19 pandemic. For example, we declared a special bonus payment to certain employees who worked to maintain supply to our customers and keep our facilities running, which increased our COS percentage during the second quarter of 2020.

Cost of sales as a percent of net sales decreased slightly to 62.8% in the first six months of 2020 compared to 63.1% in the same period a year ago. As mentioned above, our COS was favorably impacted by the increased mix in our higher margin Pharma business. We also realized approximately $5.4 million in lower resin costs during the first half of 2020 as prices have declined compared to the prior year. However, we also reported additional costs and temporary inefficiencies in our manufacturing process related to the COVID-19 pandemic as discussed above.

SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE

Selling, research & development and administrative expenses (“SG&A”) increased by approximately $9.6 million to $123.4 million in the second quarter of 2020 compared to $113.8 million during the same period in 2019. Excluding changes in foreign currency rates, SG&A increased by approximately $12.6 million in the quarter. The increase is partly due to $8.0 million of new operational and transaction costs for our acquisitions completed subsequent to June 30, 2019. We also recognized higher personnel costs, including $2.2 million in stock-based compensation, in accordance with our growth strategy. SG&A as a percentage of net sales increased to 17.6% compared to 15.3% in the same period of the prior year due to the cost increases mentioned above.

SG&A increased by $14.6 million to $249.6 million in the first six months of 2020 compared to $235.0 million during the same period a year ago. Excluding changes in foreign currency rates, SG&A increased by approximately $20.2 million in the first six months of 2020 compared to the first six months of 2019. As discussed above, the increase is related to $12.3 million of new SG&A costs from our acquisitions completed subsequent to June 30, 2019, along with higher personnel costs. SG&A as a percentage of net sales increased to 17.6% compared to 15.8% in the same period of the prior year.

DEPRECIATION AND AMORTIZATION

Reported depreciation and amortization expenses increased by approximately $8.5 million to $56.4 million in the second quarter of 2020 compared to $47.9 million during the same period a year ago. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $9.8 million in the quarter compared to the same period in 2019. The majority of this increase is due to $6.8 million of incremental depreciation and amortization costs related to our acquired companies. Depreciation and amortization as a percentage of net sales increased to 8.1% in the second quarter of 2020 compared to 6.5% in the same period of the prior year primarily due to a combination of lower sales in the current year and the increase in expenses noted above.

Reported depreciation and amortization expenses increased by approximately $11.9 million to $107.2 million in the first six months of 2020 compared to $95.3 million during the same period a year ago. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $14.2 million in the first six months of 2020 compared to the same period a year ago. As discussed above, this increase is mainly due to incremental depreciation and amortization costs associated with our acquisitions Depreciation and amortization as a percentage of net sales increased to 7.5% in the first six months of 2020 compared to 6.4% in the same period of the prior year due to lower sales in the current year and an increase in expenses.

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 is the Beauty + Home segment; however, certain global general and administrative functions are also being addressed. Restructuring costs related to this plan for the three and six months ended June 30, 2020 and 2019 are as follows:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		****	2019		****	2020		****	2019		​
Restructuring Initiatives by Segment	​	​	​	​	​	​	​	​	​	​	​	​	​
Beauty + Home	​	$	7,324	​	$	1,259	​	$	12,231	​	$	9,528	​
Pharma	​	****	(111)	​		(113)	​	****	(142)	​		213	​
Food + Beverage	​	****	75	​		112	​	****	178	​		622	​
Corporate & Other	​	​	43	​	​	479	​	​	(97)	​	​	904	​
Total Restructuring Initiatives	​	$	7,331	​	$	1,737	​	$	12,170	​	$	11,267	​

30

Table of Contents ​

We estimate total implementation costs of approximately $125 million, including costs that have been recognized to date. We also anticipate making capital investments related to the business transformation of approximately $50 million, of which $43 million has been incurred to date. Based on our ongoing restructuring initiatives, we are progressing towards our initial target of $80 million annualized incremental EBITDA by the end of 2020, principally within the Beauty + Home segment. However, in addition to the impacts of COVID-19, ongoing changes in customer and vendor negotiations, material indices, macro-economic trends and other factors represent continuing headwinds to the Beauty + Home segment, and have offset the consolidated net benefits from these initiatives.

OPERATING INCOME

Operating income decreased approximately $39.4 million to $70.5 million the second quarter of 2020 compared to $109.9 million in the same period a year ago. Excluding changes in foreign currency rates, operating income decreased by approximately $37.5 million in the quarter compared to the same period a year ago. Operating income as a percentage of net sales declined to 10.1% in the second quarter of 2020 compared to 14.8% in the prior year period mainly due to some short-term under-absorption of fixed costs resulting from lower sales related to the COVID-19 pandemic.

For the first six months of 2020, operating income decreased approximately $48.0 million to $158.9 million compared to $207.0 million in the same period of the prior year. Excluding changes in foreign currency rates, operating income decreased by approximately $43.8 million in the first six months of 2020 compared to the same period a year ago. As discussed above, the majority of this decrease occurred during the second quarter of 2020 due to the short-term impact of lower sales related to the COVID-19 pandemic. Operating income as a percentage of net sales decreased to 11.2% in the first six months of 2020 compared to 13.9% for the same period in the prior year.

NET OTHER EXPENSE

Net other expense in the second quarter of 2020 increased $2.0 million to $9.8 million from $7.8 million in the same period of the prior year. Interest income decreased by approximately $0.9 million due to less cash on hand after our acquisition of Fusion at the beginning of the second quarter 2020.  Miscellaneous expenses increased by approximately $0.9 million as a result of higher pension costs due to the decline in discount rates in 2020 compared to 2019.

Net other expense for the six months ended June 30, 2020 increased $5.3 million to $20.2 million from $14.9 million in the same period of the prior year. As discussed above, this increase is mainly due to $2.4 million of lower interest income in 2020 as a result of the Fusion acquisition. Miscellaneous expenses increased by approximately $2.8 million in part due to the high costs to hedge certain Latin American and Asian currencies and the higher pension costs mentioned above.

EFFECTIVE TAX RATE

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 June 30, 2020 and 2019, respectively, was 31.0% and 27.6%.  The effective tax rate for the three months ended June 30, 2019 was favorably impacted by net tax benefits of $2.9 million from discrete events. This consisted of a $9.1 million benefit from the excess tax benefits from employee share-based compensation offset by, among other items, a $6.3 million charge to record a valuation allowance to properly reflect the realization of recorded deferred tax assets.

The effective tax rate for the six months ended June 30, 2020 and 2019, respectively, was 30.0% and 28.7%. The effective tax rate for the six months ended June 30, 2020 reflects a favorable impact of net tax benefits of $4.6 million, primarily from the excess tax benefits from employee share-based compensation.  This is offset by the unfavorable impact from the mix of earnings, particularly losses in jurisdictions where we cannot record the tax benefit.  The effective tax rate for the six months ended June 30, 2019 was favorably impacted by net tax benefits of $4.1 million from discrete events.  This consisted of a favorable impact of $11.6 million from the excess tax benefits from employee share-based compensation, offset by, among other items, a $7.0 million charge recognized to record a valuation allowance to properly reflect the realization of recorded deferred tax assets.

​

NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.

We reported net income attributable to AptarGroup of $41.8 million and $97.1 million in the three and six months ended June 30, 2020, compared to $73.9 million and $136.9 million for the same periods in the prior year. 31

Table of Contents BEAUTY + HOME SEGMENT

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		​	2019		****	2020		​	2019		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	$	299,786	​	$	342,080	​	$	624,346	​	$	709,739	****
Adjusted EBITDA (1)	​	​	23,974	​	​	48,745	​	​	58,221	​	​	101,936	​
Adjusted EBITDA margin (1)	​	​	8.0%	​	​	14.2%	​	​	9.3%	​	​	14.4%	​
(1)	Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation of non-U.S. GAAP measures starting on page 35.
---	---

Reported net sales for the quarter ended June 30, 2020 decreased 12% to $299.8 million compared to $342.1 million in the second quarter of the prior year. Changes in currency rates negatively impacted net sales by 3% while our acquisition of Fusion positively impacted sales by 4% in the second quarter of 2020. Therefore, core sales decreased 13% in the second quarter of 2020 compared to the same quarter of the prior year. The COVID-19 pandemic negatively impacted overall core sales during the second quarter of 2020. Core sales of our products to the beauty market decreased 33% as we experienced a significant reduction in orders from customers providing both prestige and masstige beauty products, mainly in the travel retail and standard retail settings. Many beauty stores remained closed throughout much of the quarter in response to government shelter in place regulations and international travel is down significantly leading to a reduction in duty free sales. Personal care core sales improved 11% on increased sales of our products to our personal cleansing customers, mainly for hand sanitizers and liquid soaps which more than offset continued softness in our deodorant, hair care and sun care applications as consumers continued to shelter in place. Core sales to the home care markets decreased 5% as higher demand for our household cleaner products was not enough to offset declines in sales of our products used on laundry care and automotive products.

​	​	​	​	​	​	​	​	​	​
Second Quarter 2020	​	Personal	​	​	​	Home	​	​	​
Net Sales Change over Prior Year	****	Care	****	Beauty	****	Care	****	Total	​
​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	11	%	(33)	%	(5)	%	(13)	%
Acquisitions	​	—	%	8	%	—	%	4	%
Currency Effects (1)	​	(4)	%	(3)	%	(2)	%	(3)	%
Total Reported Net Sales Growth	​	7	%	(28)	%	(7)	%	(12)	%

​

For the first six months of 2020, net sales decreased 12% to $624.3 million compared to $709.7 million in the first six months of the prior year. Core sales decreased by 11% in the first six months of 2020 compared to the same period in the prior year. The COVID-19 pandemic discussed above also impacted the first six months of 2020 as we began to see the effects in our first quarter results. Core sales of our products to the beauty market decreased 23% across all applications, but mainly on lower sales of prestige fragrance products to our customers.  Personal care core sales increased 3%, driven by increases in hand sanitation product sales, while home care core sales decreased 5% mainly on lower sales to our laundry care customers.

​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2020	​	Personal	​	​	​	Home	​	​	​
Net Sales Change over Prior Year	****	Care	****	Beauty	****	Care	****	Total
​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	3	%	(23)	%	(5)	%	(11)	%
Acquisitions	​	—	%	4	%	—	%	2	%
Currency Effects (1)	​	(4)	%	(3)	%	(2)	%	(3)	%
Total Reported Net Sales Growth	​	(1)	%	(22)	%	(7)	%	(12)	%
(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 2020 decreased 51% to $24.0 million compared to $48.7 million in the same period in the prior year. As discussed above, the COVID-19 pandemic affected our profitability due to lower sales volumes. Our profitability was further impacted by special bonus payments to certain employees who worked to maintain supply to our customers and keep our facilities running as well as lower overhead absorption due to fluctuations in demand primarily in our facilities that manufacture beauty products. 32

Table of Contents Adjusted EBITDA in the first six months of 2020 decreased 43% to $58.2 million compared to $101.9 million reported in the same period in the prior year. As discussed above, our profitability during the first half of 2020 was significantly impacted by the COVID-19 pandemic, mainly in our beauty applications.  Our profitability was further impacted by special employee bonus payments and lower overhead absorption as we continue to manage demand fluctuations in our facilities.

PHARMA SEGMENT

Operations that sell drug delivery, sealing and active packaging solutions primarily to the prescription drug, consumer health care, injectables and active packaging markets form the Pharma segment.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		​	2019		****	2020		​	2019		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	$	301,259	​	$	281,939	​	$	598,455	​	$	554,640	​
Adjusted EBITDA (1)	​	​	104,099	​	​	101,428	​	​	212,441	​	​	198,785	​
Adjusted EBITDA margin (1)	​	​	34.6%	​	​	36.0%	​	​	35.5%	​	​	35.8%	​
(1)	Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation of non-U.S. GAAP measures starting on page 35.
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Net sales for the Pharma segment increased 7% in the second quarter of 2020 to $301.3 million compared to $281.9 million in the second quarter of 2019. Changes in currencies negatively affected net sales by 1% while our acquisitions of Gateway, Nanopharm and Noble positively impacted sales by 2% in the second quarter of 2020. Therefore, core sales increased by 6% in the second quarter of 2020 compared to the second quarter of 2019. Core sales increased in three of our four markets with only the prescription drug market reporting a decline due to difficult prior year comparisons on tooling and central nervous system application sales. Core sales to the consumer health care market increased 10% on strong demand for our products used on nasal decongestant and cough/cold treatments. Injectables core sales grew 26% on increased demand across all components while active packaging core sales improved 21% due to strong growth in our probiotics, diabetes, and ActivFilm products.

​	​	​	​	​	​	​	​	​	​	​	​
Second Quarter 2020	​	Prescription	​	Consumer	​	​	​	Active	​	​	​
Net Sales Change over Prior Year	****	Drug	****	Health Care	****	Injectables	****	Packaging	​	Total	​
​	​	​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	(6)	%	10	%	26	%	21	%	6	%
Acquisitions	​	—	%	—	%	15	%	—	%	2	%
Currency Effects (1)	​	(1)	%	(1)	%	(2)	%	(1)	%	(1)	%
Total Reported Net Sales Growth	​	(7)	%	9	%	39	%	20	%	7	%

​

Net sales for the first six months of 2020 increased by 8% to $598.5 million compared to $554.6 million in the first six months of 2019. Changes in currencies negatively affected net sales by 1% while our acquisitions of Noble, Nanopharm and Gateway positively impacted sales by 3% in the first six months of 2020. Therefore, core sales increased by 6% in the first six months of 2020 compared to the same period in the prior year. As discussed above, the prescription drug market core sales decrease of 2% was driven by difficult prior year comparisons on tooling and central nervous system application sales. During 2019, we also benefitted from the realization of $1.8 million of revenue for achieving a development milestone related to a customer project. Core sales to the consumer health care market increased 6% as increased demand for our products used on nasal decongestant and dermal drug delivery treatments more than compensated for some softness in demand for our nasal saline products. Core sales of our products to the injectables and active packaging markets increased 24% and 23% respectively due to strong sales across all applications as discussed above.

​

​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2020	​	Prescription	​	Consumer	​	​	​	Active	​	​	​
Net Sales Change over Prior Year	****	Drug	****	Health Care	****	Injectables	****	Packaging	​	Total
​	​	​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	(2)	%	6	%	24	%	23	%	6	%
Acquisitions	​	1	%	—	%	17	%	—	%	3	%
Currency Effects (1)	​	(2)	%	(1)	%	(3)	%	(1)	%	(1)	%
Total Reported Net Sales Growth	​	(3)	%	5	%	38	%	22	%	8	%
(1)	Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
---	---

33

Table of Contents Adjusted EBITDA in the second quarter of 2020 increased 3% to $104.1 million compared to $101.4 million reported in the same period of the prior year. The strong product sales growth discussed above along with incremental profit related to our acquisitions led to the increase in reported results for the second quarter of 2020 compared to the second quarter of 2019. While the Pharma segment did not experience a significant sales impact from COVID-19, our margins were negatively impacted by lower sales of our high-margin prescription applications compared to our other product offerings.  We also recognized the special bonus payments discussed above which negatively impacted our Adjusted EBITDA during the second quarter of 2020.

Adjusted EBITDA in the first six months of 2020 increased 7% to $212.4 million compared to $198.8 million reported in the same period of the prior year. The increase in sales along with incremental profit related to our acquisitions was able to compensate for lower prescription sales and special bonus payments made as discussed above.

​

FOOD + BEVERAGE SEGMENT

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,					​
​	​	2020		​	2019		****	2020		​	2019		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	$	98,260	​	$	118,642	​	$	198,057	​	$	222,742	​
Adjusted EBITDA (1)	​	​	17,785	​	​	20,944	​	​	33,192	​	​	37,635	​
Adjusted EBITDA margin (1)	​	​	18.1%	​	​	17.7%	​	​	16.8%	​	​	16.9%	​
(1)	Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation of non-U.S. GAAP measures starting on page 35.
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Net sales for the quarter ended June 30, 2020 decreased approximately 17% to $98.3 million compared to $118.6 million in the second quarter of the prior year. Changes in foreign currency rates had an unfavorable impact of 2% on total segment sales. Therefore, core sales decreased by 15% in the second quarter of 2020 compared to the second quarter of 2019. This decrease is due to the passing on of lower resin costs to our customers, lower tooling costs and lower beverage closure sales related to the COVID-19 crisis. For the food market, we realized increased sales of our products used on cooking oils and spreads applications. However, this increase was more than offset by lower tooling sales as we recognized several large tooling projects during the second quarter of 2019.  Core sales to the beverage market decreased 37% as sales of our single-serve bottled water and on-the-go functional drink products were significantly affected by the COVID-19 pandemic.

​	​	​	​	​	​	​	​	​	​
Second Quarter 2020	​	​	​	​	​	​	​	​	​
Net Sales Change over Prior Year	****	​	​	Food	****	Beverage	****	Total	​
​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	​	​	(3)	%	(37)	%	(15)	%
Acquisitions	​	​	​	—	%	—	%	—	%
Currency Effects (1)	​	​	​	(2)	%	(3)	%	(2)	%
Total Reported Net Sales Growth	​	​	​	(5)	%	(40)	%	(17)	%

​

Net sales for the first six months of 2020 decreased by 11% to $198.1 million compared to $222.7 million in the first six months of 2019. Core sales decreased by 9% in the first six months of 2020 compared to the same period in the prior year. The pass-through of lower resin costs and lower tooling sales negatively impacted the first six months of 2020 by $8.6 million and $6.8 million, respectively. Core sales to the food market were flat while core sales to the beverage market decreased 26% in the first six months of 2020 compared to the same period of the prior year. Sales to the food market increased due to strong sales of our products to our spreads and granular/powder non-beverage dairy customers. These increases were offset by lower tooling sales due to strong activity in the prior year period. As discussed above, core sales to the beverage market decreased as sales of our single-serve bottled water and on-the-go functional drink products and tooling sales were significantly affected by the COVID-19 pandemic. 34

Table of Contents

​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2020	​	​	​	​	​	​	​	​	​
Net Sales Change over Prior Year	****	​	​	Food	****	Beverage	****	Total
​	​	​	​	​	​	​	​	​	​
Core Sales Growth	​	​	​	—	%	(26)	%	(9)	%
Acquisitions	​	​	​	—	%	—	%	—	%
Currency Effects (1)	​	​	​	(2)	%	(3)	%	(2)	%
Total Reported Net Sales Growth	​	​	​	(2)	%	(29)	%	(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 2020 decreased 15% to $17.8 million compared to $20.9 million reported in the same period of the prior year. Lower tooling sales and the COVID-19 impacts on product sales discussed above, along with special bonus payments to certain employees who worked to maintain supply to our customers and keep our facilities running, more than offset the benefits we received from cost containment activities and other operational improvements realized during the second quarter of 2020.

Adjusted EBITDA in the first six months of 2020 decreased 12% to $33.2 million compared to $37.6 million reported in the same period of the prior year. The COVID-19 impact on product sales discussed above, along with lower tooling and special bonus payments, more than offset the benefits we received from lower resin input costs and other operational improvements realized during the first half of 2020.

​

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 to the Notes to the Condensed Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring and acquisition-related costs) 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, 2020, Corporate & Other expenses decreased to $9.3 million from $10.6 million in the second quarter of 2019. This decrease is mainly due to lower variable compensation costs which are tied to company performance, lower travel and entertainment costs due to travel restrictions in place, and lower medical costs as we have experienced lower medical claims during the second quarter of 2020 compared to the prior year second quarter.

Corporate & Other expenses in the first six months of 2020 decreased to $23.1 million compared to $23.4 million reported in the same period of the prior year. As discussed above, this decrease is mainly due to lower variable compensation, travel and entertainment and medical costs which more than offset increased costs in professional fees and other personnel costs as we continue to implement our growth strategy.

NON-U.S. GAAP MEASURE S

In addition to the information presented herein that conforms to 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 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. 35

Table of Contents We present adjusted earnings before net interest and taxes (“Adjusted EBIT”) and consolidated adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude the business transformation charges (restructuring initiatives), acquisition-related costs and purchase accounting adjustments related to acquisitions and investments. Our “Outlook” discussion below 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, or reliably predicted because they are not part of our routine activities, such as restructuring and acquisition-related 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 and 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 operations less 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.

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	June 30, 2020
​	​	​	​
​		Consolidated		****	Beauty + Home		****	Pharma		****	Food + Beverage		****	Corporate & Other		****	Net Interest
Net Sales	​	$	699,305	​	$	299,786	​	$	301,259	​	$	98,260	​	$	-	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported net income	​	$	41,860	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income taxes	​	​	18,808	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income before income taxes	​	​	60,668	​	​	(12,755)	​	​	85,467	​	​	8,519	​	​	(12,004)	​	​	(8,559)
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring initiatives	​	​	7,331	​	​	7,324	​	​	(111)	​	​	75	​	​	43	​	​	​
Transaction costs related to acquisitions	​	​	3,207	​	​	3,207	​	​	​	​	​	​	​	​	​	​	​	​
Purchase accounting adjustments related to acquisitions and investments	​	​	3,252	​	​	2,959	​	​	293	​	​	​	​	​	​	​	​	​
Adjusted earnings before income taxes	​	​	74,458	​	​	735	​	​	85,649	​	​	8,594	​	​	(11,961)	​	​	(8,559)
Interest expense	​	​	8,734	​	​	​	​	​	​	​	​	​	​	​	​	​	​	8,734
Interest income	​	​	(175)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(175)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	​	​	83,017	​	​	735	​	​	85,649	​	​	8,594	​	​	(11,961)	​	​	-
Depreciation and amortization	​	​	56,429	​	​	25,939	​	​	18,617	​	​	9,191	​	​	2,682	​	​	-
Purchase accounting adjustments included in Depreciation and amortization above	​	​	(2,867)	​	​	(2,700)	​	​	(167)	​	​	​	​	​	​	​	​	​
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	​	$	136,579	​	$	23,974	​	$	104,099	​	$	17,785	​	$	(9,279)	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	​	​	19.5%	​	​	8.0%	​	​	34.6%	​	​	18.1%	​	​	​	​	​	​

​ 36

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	June 30, 2019
​	​	​	​
​		Consolidated		****	Beauty + Home		****	Pharma		****	Food + Beverage		****	Corporate & Other		****	Net Interest
Net Sales	​	$	742,661	​	$	342,080	​	$	281,939	​	$	118,642	​	$	-	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported net income	​	$	73,921	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income taxes	​	​	28,180	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income before income taxes	​	​	102,101	​	​	26,813	​	​	84,425	​	​	12,195	​	​	(13,609)	​	​	(7,723)
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring initiatives	​	​	1,737	​	​	1,259	​	​	(113)	​	​	112	​	​	479	​	​	​
Transaction costs related to acquisitions	​	​	1,059	​	​	​	​	​	1,059	​	​	​	​	​	​	​	​	​
Purchase accounting adjustments related to acquisitions and investments	​	​	222	​	​	​	​	​	222	​	​	​	​	​	​	​	​	​
Adjusted earnings before income taxes	​	​	105,119	​	​	28,072	​	​	85,593	​	​	12,307	​	​	(13,130)	​	​	(7,723)
Interest expense	​	​	8,756	​	​	​	​	​	​	​	​	​	​	​	​	​	​	8,756
Interest income	​	​	(1,033)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(1,033)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	​	​	112,842	​	​	28,072	​	​	85,593	​	​	12,307	​	​	(13,130)	​	​	-
Depreciation and amortization	​	​	47,867	​	​	20,673	​	​	16,057	​	​	8,637	​	​	2,500	​	​	​
Purchase accounting adjustments included in Depreciation and amortization above	​	​	(222)	​	​	​	​	​	(222)	​	​	​	​	​	​	​	​	-
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	​	$	160,487	​	$	48,745	​	$	101,428	​	$	20,944	​	$	(10,630)	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	​	​	21.6%	​	​	14.2%	​	​	36.0%	​	​	17.7%	​	​	​	​	​	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 30, 2020
​	​	​	​
​		Consolidated		****	Beauty + Home		****	Pharma		****	Food + Beverage		****	Corporate & Other		****	Net Interest
Net Sales	​	$	1,420,858	​	$	624,346	​	$	598,455	​	$	198,057	​	$	-	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported net income	​	$	97,110	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income taxes	​	​	41,594	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income before income taxes	​	​	138,704	​	​	(5,647)	​	​	175,321	​	​	14,481	​	​	(28,679)	​	​	(16,772)
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring initiatives	​	​	12,170	​	​	12,231	​	​	(142)	​	​	178	​	​	(97)	​	​	​
Transaction costs related to acquisitions	​	​	4,591	​	​	4,591	​	​	​	​	​	​	​	​	​	​	​	​
Purchase accounting adjustments related to acquisitions and investments	​	​	4,642	​	​	3,221	​	​	1,421	​	​	​	​	​	​	​	​	​
Adjusted earnings before income taxes	​	​	160,107	​	​	14,396	​	​	176,600	​	​	14,659	​	​	(28,776)	​	​	(16,772)
Interest expense	​	​	17,122	​	​	​	​	​	​	​	​	​	​	​	​	​	​	17,122
Interest income	​	​	(350)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(350)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	​	​	176,879	​	​	14,396	​	​	176,600	​	​	14,659	​	​	(28,776)	​	​	-
Depreciation and amortization	​	​	107,235	​	​	46,525	​	​	36,508	​	​	18,533	​	​	5,669	​	​	-
Purchase accounting adjustments included in Depreciation and amortization above	​	​	(3,367)	​	​	(2,700)	​	​	(667)	​	​	​	​	​	​	​	​	​
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	​	$	280,747	​	$	58,221	​	$	212,441	​	$	33,192	​	$	(23,107)	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	​	​	19.8%	​	​	9.3%	​	​	35.5%	​	​	16.8%	​	​	​	​	​	​

​ 37

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 30, 2019
​	​	​	​
​		Consolidated		****	Beauty + Home		****	Pharma		****	Food + Beverage		****	Corporate & Other		****	Net Interest
Net Sales	​	$	1,487,121	​	$	709,739	​	$	554,640	​	$	222,742	​	$	-	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported net income	​	$	136,920	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income taxes	​	​	55,180	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reported income before income taxes	​	​	192,100	​	​	50,994	​	​	165,683	​	​	19,911	​	​	(29,299)	​	​	(15,189)
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring initiatives	​	​	11,267	​	​	9,528	​	​	213	​	​	622	​	​	904	​	​	​
Transaction costs related to acquisitions	​	​	1,059	​	​	​	​	​	1,059	​	​	​	​	​	​	​	​	​
Purchase accounting adjustments related to acquisitions and investments	​	​	222	​	​	​	​	​	222	​	​	​	​	​	​	​	​	​
Adjusted earnings before income taxes	​	​	204,648	​	​	60,522	​	​	167,177	​	​	20,533	​	​	(28,395)	​	​	(15,189)
Interest expense	​	​	17,970	​	​	​	​	​	​	​	​	​	​	​	​	​	​	17,970
Interest income	​	​	(2,781)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(2,781)
Adjusted earnings before net interest and taxes (Adjusted EBIT)	​	​	219,837	​	​	60,522	​	​	167,177	​	​	20,533	​	​	(28,395)	​	​	-
Depreciation and amortization	​	​	95,356	​	​	41,414	​	​	31,830	​	​	17,102	​	​	5,010	​	​	​
Purchase accounting adjustments included in Depreciation and amortization above	​	​	(222)	​	​	​	​	​	(222)	​	​	​	​	​	​	​	​	-
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	​	$	314,971	​	$	101,936	​	$	198,785	​	$	37,635	​	$	(23,385)	​	$	-
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)	​	​	21.2%	​	​	14.4%	​	​	35.8%	​	​	16.9%	​	​	​	​	​	​

​

​	​	​	​	​	​	​	​
Net Debt to Net Capital Reconciliation	**** ​	​	June 30,	**** ​	​	December 31,	****
​	​	​	2020	​	​	2019	​
​	​	​	​	​	​	​	​
Notes payable, revolving credit facility and overdrafts	​	$	150,831		$	44,259
Current maturities of long-term obligations, net of unamortized debt issuance costs	​	​	66,248	​	​	65,988	​
Long-Term Obligations, net of unamortized debt issuance costs	​	​	1,082,742	​	​	1,085,453	​
Total Debt	​	​	1,299,821	​	​	1,195,700	​
Less:	​	​	​	​	​	​	​
Cash and equivalents	​	​	247,656	​	​	241,970	​
Net Debt	​	$	1,052,165	​	$	953,730	​
​	​	​	​	​	​	​	​
Total Stockholders' Equity	​	$	1,645,986	​	$	1,572,252	​
Net Debt	​	​	1,052,165	​	​	953,730	​
Net Capital	​	$	2,698,151	​	$	2,525,982	​
​	​	​	​	​	​	​	​
Net Debt to Net Capital	​	​	39.0%	​	​	37.8%	​

​

​	​	​	​	​	​	​	​
Free Cash Flow Reconciliation	****	​	June 30,	****	​	June 30,	​
​	​	​	2020	​	​	2019	​
​	​	​	​	​	​	​	​
Net Cash Provided by Operations		$	227,686		$	221,140	​
​	​	​	​	​	​	​	​
Less:	​	​	​	​	​	​	​
Capital Expenditures	​	​	122,986	​	​	124,774	​
Free Cash Flow	​	$	104,700	​	$	96,366	​

​ 38

Table of Contents 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. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies. Changes in exchange rates on such inter-country sales could materially impact our results of operations. During the second quarter of 2020 the U.S. dollar strengthened compared to the euro and other currencies in Latin America and Asia. This resulted in a dilutive impact on our translated results during the second quarter of 2020 when compared to the second quarter of 2019.

Beginning July 1, 2018, we have applied highly inflationary accounting for our Argentinian subsidiaries pursuant to U.S. GAAP. We have changed the functional currency from the Argentinian peso to the U.S. dollar. We remeasure our peso denominated assets and liabilities using the official rate. In September 2019, the President of Argentina reinstituted exchange controls restricting foreign currency purchases in an attempt to stabilize Argentina’s financial markets. As a result of these currency controls, a legal mechanism known as the Blue Chip Swap emerged in Argentina for reporting entities to transfer U.S. dollars. The Blue Chip Swap rate has diverged significantly from Argentina’s “official rate” due to the economic environment. During the second quarter of 2020, we transferred U.S. dollars into Argentina through the Blue Chip Swap method and we recognized a gain of $1.0 million. This gain helped to offset foreign currency losses due to our Argentinian peso exposure and devaluation against the U.S. dollar. For the six months ended June 30, 2020, our Argentinian operations contributed less than 2.0% of consolidated net assets and revenues. ****

QUARTERLY TRENDS

Our results of operations in the last quarter of the year typically are negatively impacted by customer plant shutdowns in December. In addition to the significant impact of COVID-19 on our business, our results of operations in a quarterly period could be impacted by factors such as the seasonality of certain products within our segments, changes in foreign currency rates, changes in product mix, changes in material costs, changes in growth rates in the markets 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

Given the diversification of our segments, we believe we are in a strong financial position and have the financial resources to meet our business requirements in the foreseeable future. Our Pharma segment provided strong operating cash flows to balance out the temporary softness in some of our Beauty + Home and Food + Beverage markets during the first half of 2020. Our primary uses of liquidity are to invest in equipment and facilities that are necessary to support our growth, cost efficiencies and to make acquisitions that will contribute to the achievement of our strategic objectives. Amid the COVID-19 pandemic, we are focused on preserving our liquidity and therefore we have temporarily suspended repurchasing shares of our common stock and discretionary contributions to our defined benefit plans. However, we intend to continue to pay quarterly dividends to our stockholders, invest in our business and make acquisitions as we consider necessary to achieve our strategic objectives. In the event that customer demand decreases significantly for a prolonged period of time due to the COVID-19 pandemic 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 $257.4 million at June 30, 2020 from $247.0 million at December 31, 2019. Total short and long-term interest bearing debt of $1.3 billion at June 30, 2020 increased from $1.2 billion at December 31, 2019 resulting from an increase of $125.0 million in net proceeds from our group credit facility during the first half of 2020 the majority of which was utilized to fund the second quarter Fusion acquisition. The ratio of our Net Debt (interest bearing debt less cash and equivalents) to Net Capital (stockholders’ equity plus Net Debt) increased to 39.0% at June 30, 2020 compared to 37.8% at December 31, 2019. See the reconciliation of non-U.S. GAAP measures starting on page 35.

In the first six months of 2020, our operations provided approximately $227.7 million in net cash flow compared to $221.1 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 during the first six months of 2020 is primarily attributable to better working capital management which offset lower net income. 39

Table of Contents We used $317.1 million in cash for investing activities during the first six months of 2020 compared to $157.2 million during the same period a year ago. During the first six months of 2020, $158.1 million of cash was utilized to fund the Fusion Acquisition. We invested $28.8 million in our 49% equity interest of BTY and $5.0 million in our 30% equity interest of Sonmol, which are accounted for as equity method investments. Additionally, we released $1.0 million relating to the working capital escrow settlement and paid an additional $463 thousand as a working capital payment related to our acquisition of Noble. Our investment in capital projects decreased $1.8 million during the first six months of 2020 compared to the first six months of 2019, as we have reduced our expenditures amid the COVID-19 pandemic. Our 2020 estimated cash outlays for capital expenditures are expected to be in the range of approximately $230 to $250 million but could vary due to changes in exchange rates as well as the timing of capital projects.

Financing activities provided $91.3 million in cash during the first six months of 2020 compared to $31.8 million in cash used by financing activities during the same period a year ago. During the first six months of 2020, we received net proceeds from our U.S. group credit facility of $125.0 million and stock option exercises of $30.1 million. We used cash on hand to pay $46.1 million of dividends and net repayments of $13.3 million related to our notes payable and overdrafts and $2.8 million related to our outstanding long-term debt obligations.

We hold U.S. dollar and euro-denominated debt to align our capital structure with our earnings base. We also maintain a multi-currency revolving credit facility with two tranches, providing for unsecured financing of up to $300 million that is available in the U.S. and up to €150 million that is available to our wholly-owned UK subsidiary. Each borrowing under the credit facility will bear interest at rates based on LIBOR, prime rates or other similar rates, in each case plus an applicable margin. A facility fee on the total amount of the facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. $150.0 million was utilized under our U.S. facility and no balance was utilized under our euro-based revolving credit facility as of June 30, 2020. The $25.0 million balance at December 31, 2019 under our U.S. credit facility was repaid during the first quarter of 2020. Credit facility balances are included in notes payable, including revolving credit facilities 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 June 30, 2020
Consolidated Leverage Ratio (1)		Maximum of 3.50 to 1.00		1.98 to 1.00
Consolidated Interest Coverage Ratio (1)		Minimum of 3.00 to 1.00		15.50 to 1.00
(1)	Definitions of ratios are included as part of the revolving credit facility agreement and the note purchase agreements.
---	---

​

Based upon the above consolidated leverage ratio covenant, we have the ability to borrow approximately an additional $825.8 million 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 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.

On July 16, 2020, the Board of Directors declared a quarterly cash dividend of $0.36 per share payable on August 19, 2020 to stockholders of record as of July 29, 2020.

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.

OFF-BALANCE SHEET ARRANGEMENTS

We lease certain warehouse, plant and office facilities as well as certain equipment under noncancelable operating leases. 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. As a result of the adoption of ASU 2016-02 and subsequent amendments, which requires organizations to recognize leases on the balance sheet, we do not have significant off-balance sheet arrangements. Please refer to Note 7 – Leases of the Notes to Condensed Consolidated Financial Statements. 40

Table of Contents

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 are effective for 2020 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. The new standard is effective upon issuance and can be adopted any time prior to December 31, 2022. We do not anticipate that this new guidance will have a significant impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, which amends disclosure requirements for defined benefit pension and other postretirement plans. The amendments in this update remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The new standard is effective for fiscal years ending after December 15, 2020. As this update adds disclosure requirements, we do not expect that this guidance will have a significant impact on our consolidated financial statements.

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 consolidated financial statements upon adoption.

OUTLOOK

Factors that could impact our third quarter results include among other things, economic uncertainty in some of our markets, driven in part by the recent spike in COVID-19 cases in many regions of the world. We expect to see gradual improvement in the second half of the year although this will be heavily dependent on the pace and breadth of the resumption of travel activity, the reopening of retail stores and general consumer spending confidence.

We expect earnings per share for the third quarter of 2020, excluding any restructuring expenses and acquisition-related costs, to be in the range of $0.80 to $0.88 and this guidance is based on an effective tax rate range of 28% to 30%.

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” 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 (the “Exchange Act”) 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:

●	outbreaks of pandemics, including the impact of COVID-19 on our global supply chain and our global customers and operations, which has elevated and may or will continue to elevate many of the risks and uncertainties discussed below;
●	economic conditions worldwide, including potential deflationary or inflationary conditions in regions we rely on for growth;
---	---
●	political conditions worldwide, including the impact of the UK leaving the European Union (Brexit) on our UK operations;
---	---
●	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;
---	---
●	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 and other input costs (particularly resin, metal, anodization costs and transportation and energy costs);
---	---

41

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●	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 interest rate fluctuations;
---	---
●	volatility of global credit markets;
---	---
●	our ability to identify potential new acquisitions and to successfully acquire and integrate such operations and products, including the successful integration of the businesses we have acquired, including contingent consideration valuation;
---	---
●	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;
---	---
●	the execution of our business transformation plan; 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, 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, 2019 and to Item 1A (Risk Factors) of Part II of this report for additional risk factors affecting the Company.

​

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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 entities. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso and Swiss franc, among other Asian, European, and South American currencies. 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 relative to foreign currencies has a dilutive 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.

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

The table below provides information as of June 30, 2020 about our forward currency exchange contracts. The majority of the contracts expire before the end of the third quarter of 2020.

​	​	​	​	​	​	​	​	​
​	​	​	​	​	Average	****	Min / Max	​
​	****	​	Contract Amount	****	Contractual	​	Notional	​
Buy/Sell	​	​	(in thousands)	****	Exchange Rate	****	Volumes	​
​	​	​	​	​	​	​	​	​
EUR / USD	​	$	15,273		1.1043		13,329-17,460	​
EUR / BRL	​	​	9,672		5.5705		9,072-9,744	​
CHF / EUR	​	​	7,368	​	0.9455	​	205-7,368	​
EUR / INR	​	​	3,774		83.5400		3,767-3,777	​
CZK / EUR	​	​	3,631	​	0.0373	​	2,245-3,631	​
MXN / USD	​	​	2,669	​	0.0426	​	2,669-3,059	​
EUR / MXN	​	​	2,259	​	25.5878		2,259-2,863	​
USD / EUR	​	​	2,182		0.9092		1,488-2,593	​
EUR/THB	​	​	1,295		35.3761		1,235-1,295	​
GBP / EUR	​	​	759		1.1334		759-2,824	​
EUR/GBP	​	​	337	​	0.8901	​	122-337	​
CHF / USD	​	​	179	​	1.0317	​	175-354	​
CAD/EUR	​	​	22	​	0.6532	​	20-43	​
Total		$	49,420	​	​	​	​	​

​

As of June 30, 2020, we have recorded the fair value of foreign currency forward exchange contracts of $0.7 million in prepaid and other and $0.1 million in accounts payable and accrued liabilities on the balance sheet. We also entered into a EUR/USD floating-to-fixed cross currency 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. The fair value of this cash flow hedge is $3.1 million reported in prepaid and other on the balance sheet.

​

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 Exchange Act) as of June 30, 2020. 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

During the fiscal quarter ended June 30, 2020, we implemented enterprise resource planning (“ERP”) systems at two operating facilities. Consequently, the control environments have been modified at these locations to incorporate the controls contained within the new ERP systems. Except for the foregoing, no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) occurred during our fiscal quarter ended June 30, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Amid the COVID-19 pandemic, we have implemented remote work arrangements and restricted non-essential business travel. These arrangements have not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting and disclosure controls and procedures.

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PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

The following risk factor is in addition to the risks described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 under Item 1A, “Risk Factors” filed with the SEC pursuant to the Exchange Act. The effects of the events and circumstances described in the following risk factors have elevated and may or will continue to elevate many of the risks contained in the Company’s Form 10-K, including the risks relating to a deterioration in economic conditions in a particular region or market, our fixed costs structure, reliance on single sourced materials and manufacturing sites and potential asset impairments.

The COVID-19 pandemic is currently adversely affecting our business. Additional factors could exacerbate such negative consequences and/or cause other materially adverse effects. The COVID-19 pandemic adversely affected our sales of products to our travel and retail beauty business and on-the-go beverage customers in the six months ended June 30, 2020 and that adverse impact may continue into the third quarter. Beginning in the first quarter of 2020, economic and health conditions in the United States and across most of the globe have changed rapidly. Customer demand across all segments, particularly our Beauty + Home and Food + Beverage segments, may decrease further from historical levels depending on the duration and severity of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties. Such events may result in business and manufacturing disruption, inventory shortages due to disruptions to our supply chain and distribution channels, delivery delays, increased risk associated with customer payments and reduced sales and operations, any of which could materially affect our stock price, business prospects, financial condition, results of operations and liquidity.

The ability of our employees to work may be significantly impacted by COVID-19. **** The majority of our office and management personnel are working remotely and the majority of our facilities remained operational during the first half of 2020 as each of our segments produce dispensing systems that have been determined to be essential products by various government agencies around the world. The health and safety of our workforce is of primary concern and we may need to enact further precautionary measures to help minimize the risk of our employees being exposed to the virus. Further, our management team is focused on mitigating the adverse effects of the COVID-19 pandemic, which has required and will continue to require a large investment of time and resources across the entire company, thereby diverting their attention from other priorities that existed prior to the outbreak of the pandemic. If these conditions worsen, or last for an extended period of time, our ability to manage our business may be impaired, and operational risks, cybersecurity risks and other risks facing us even prior to the pandemic may be elevated.

​

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 Banque Nationale de Paris 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 June 30, 2020, the Plan purchased 19,876 shares of our common stock on behalf of the participants at an average price of $104.89, for an aggregate amount of $2.1 million. The Plan sold 11,571 shares of our common stock on behalf of the participants at an average price of $105.62, for an aggregate amount of $1.2 million during the same period. At June 30, 2020, the Plan owned 96,783 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 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 June 30, 2020, we did not repurchase any shares. As of June 30, 2020, there was $278.5 million of authorized share repurchases available to us. Amid the COVID-19 pandemic, we are focused on preserving our liquidity and therefore we have temporarily suspended repurchasing shares of our common stock.

​

​

​

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ITEM 5. OTHER INFORMATION

On July 30, 2020, the Company’s Board of Directors (the “Board”) amended and restated the Company's by-laws to clarify certain corporate procedures and make certain other enhancements and technical changes. The changes effected by the amendment and restatement of the Company’s by-laws (the “Amended and Restated By-Laws”) include, without limitation, the following:

●	updating the advance notice provisions for director nominations and stockholder proposals at stockholder meetings;
●	designating the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of litigation;
---	---
●	clarifying that the Board may postpone, reschedule or cancel a stockholder meeting;
---	---
●	clarifying when the plurality voting carve-out to the majority vote standard for the election of directors applies;
---	---
●	clarifying the powers of the chairman of a stockholder meeting to regulate conduct at such meeting;
---	---
●	allowing emergency special Board meetings to be held with less than 24 hours’ notice; and
---	---
●	outlining the process for Board action in the event of an emergency.
---	---

The Amended and Restated By-Laws are effective July 30, 2020. The preceding summary does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated By-Laws, which are filed as Exhibit 3.1 to this Form 10-Q and incorporated herein by reference.

​

ITEM 6. EXHIBITS

​

​	​	​
​	​	​
​	​	​
Exhibit 3.1	​	Amended and Restated By-Laws of AptarGroup, Inc.
​	​	​
Exhibit 10.1	​	AptarGroup, Inc. 2018 Equity Incentive Plan (as amended and restated effective May 6, 2020), filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed May 7, 2020, is incorporated herein 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 second quarter of fiscal 2020, filed with the SEC on July 31, 2020, formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Cover Page, (ii) the Condensed Consolidated Statements of Income – Three and Six Months Ended June 30, 2020 and 2019, (iii) the Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2020 and 2019, (iv) the Condensed Consolidated Balance Sheets – June 30, 2020 and December 31, 2019, (v) the Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended June 30, 2020 and 2019, (vi) the Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2020 and 2019 and (vii) the Notes to Condensed Consolidated Financial Statements.<br><br>​
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,
​	​	Chief Financial Officer and Secretary
​	​	(Duly Authorized Officer and
​	​	Principal Accounting and Financial Officer)
​	​	​
​	​	​
​	​	Date: July 31, 2020

​

​

​

​ 46

Exhibit 3.1

​

​

​

​

APTARGROUP, INC.

a Delaware Corporation

________________________________________

AMENDED AND RESTATED

BY-LAWS

​

Effective July 30, 2020

________________________________________

ARTICLE I​ MEETINGS OF STOCKHOLDERS

Section 1.1 Place of Meeting. All meetings of the stockholders shall be held at such place, within or without the State of Delaware, as is fixed in the notice of the meeting. The Board of Directors may postpone, reschedule or cancel any meeting of the stockholders for any reason.

Section 1.2 Annual Meeting. An annual meeting of the stockholders of the Corporation for the election of directors and the transaction of such other business as may properly come before the meeting shall be held on a date specified by the Board of Directors and at the time and place specified by the Board of Directors. If for any reason any annual meeting shall not be held during any year, the business thereof may be transacted at any special meeting of the stockholders.

Section 1.3 Special Meetings. Special meetings of stockholders may be called only in the manner provided in the Certificate of Incorporation.

Section 1.4 Notice of Meetings; Remote Meetings. Notice of the date, time and place of each annual and each special meeting of the stockholders shall be given to each of the stockholders entitled to vote at such meeting by mailing the same in a postage prepaid wrapper addressed to each such stockholder at his address as it appears on the books of the Corporation, or by delivering the same personally to any such stockholder, in lieu of such mailing, at least ten (10) days prior to, and not more than sixty (60) days before, such meeting, and meetings may be held without notice if all of the stockholders entitled to vote thereat are present in person or by proxy, or if notice thereof is waived by all such stockholders not present in person or by proxy, before or after the meeting. The notice of each special meeting of the stockholders shall set forth the purposes thereof and the business transacted at all special meetings of stockholders shall be confined to the purposes stated in the notice thereof.

​

​

​ The Board of Directors, acting in its sole discretion, may determine that any meeting of the stockholders will not be held at any place but will be held solely by means of remote communication, and may establish guidelines and procedures in accordance with applicable provisions of the Delaware General Corporation Law (the “DGCL”) and any other applicable law or regulation for participation in a stockholder meeting by means of remote communication. Subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a stockholder meeting held by means of remote communication may be deemed present in person, may participate in the meeting and may vote, whether such meeting is to be held at a designated place or solely by means of remote communication; provided, however, that (i) the Corporation shall implement measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement measures to provide such stockholders and proxyholders an opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation or a delegate thereof.

Section 1.5 Setting of Record Date. The Board of Directors shall have the power to fix a record date which (i) in the case of any meeting of stockholders, shall be not more than sixty (60) nor less than ten (10) days before the date of such meeting, (ii) in the case of the payment of any dividend, the allotment of rights, the exercise of any rights in respect of any change or conversion or exchange of capital stock, shall be not more than sixty (60) days before such action or (iii) (in the event the Certificate of Incorporation is amended to permit action to be taken by stockholders by consent) in the case of obtaining the consent of stockholders for any purpose, shall be not more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. The record date shall be used by the Corporation for the determination of the stockholders entitled (a) to notice of and to vote at any meeting of stockholders, (b) to receive payment of any dividend or allotment of rights, (c) to exercise the right in respect of any change, conversion or exchange of capital stock or (d) to give any consent of stockholders, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of and to vote at such meeting or to receive payment of such dividend or to receive such allotment of rights or to exercise such rights or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.

Section 1.6 Organization. At each meeting of the stockholders, the Chief Executive Officer, or in the case of vacancy in office or absence of the Chief Executive Officer, the Chairman of the Board, or in the case of vacancy in office or absence of the Chairman of the Board, one of the following officers present in the order stated: the Vice-Chairman of the Board, the President, the Chief Operating Officer, the Vice-Presidents in their order of rank and seniority or a chairman chosen by the stockholders entitled to cast a majority of the votes which all stockholders present in person or by proxy are entitled to cast on such matter, shall act as chairman, and the Secretary, or, in the absence of the Secretary, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, a person appointed by the chairman, shall act as secretary.

Section 1.7 Voting at Stockholders’ Meetings. At each meeting of the stockholders, every stockholder having the right to vote thereat shall be entitled to vote in person, or by proxy. Stockholders shall have the voting rights specified in the Certificate of Incorporation. The vote for directors, and, upon the demand of any stockholder, the vote upon any question before the meeting, shall be by written ballot.

2

​

​ Section 1.8 Quorum and Adjournment. Except as otherwise provided by law or by the Certificate of Incorporation, at any meeting of the stockholders the presence, in person or by proxy, of the holders of shares of stock of the Corporation entitled to cast at least a majority of the votes which the outstanding stock entitled to vote thereat is entitled to cast on a particular matter shall be requisite and shall constitute a quorum entitled to take action with respect to that vote on that matter. If at any meeting of stockholders there shall be less than a quorum so present, the stockholders present in person or by proxy and entitled to vote thereat on such matter may without further notice, except as required by law, adjourn the meeting from time to time until a quorum shall be present, but no business shall be transacted at any such adjourned meeting except such as might have been lawfully transacted had the meeting not been adjourned. Regardless of whether a quorum is present, the chairman of a meeting of the stockholders or the Board of Directors may adjourn the meeting for any reason. At an adjourned meeting of the stockholders at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days or if after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.

Section 1.9 List of Stockholders. The Secretary shall prepare, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder, and such list shall be open to examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, at the principal place of business of the Corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

3

​

​ Section 1.10 Advance Notice of Stockholder Nominations. Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the stockholders may be made at an annual or special meeting of the stockholders only (x) pursuant to the Corporation’s notice with respect to such meeting, (y) by or at the direction of the Board of Directors or (z) by any stockholder of the Corporation who was a stockholder of record on the record date set with respect to such meeting as provided for in Section 1.5, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 1.10. For nominations or other business to be properly brought before an annual or special meeting by a stockholder pursuant to clause (z) above, the stockholder must give timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper matter for stockholder action under the DGCL and a proper matter for consideration at such meeting under the Certificate of Incorporation and these By-Laws. To be timely, (1) in the case of special meetings of the stockholders, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the ninetieth (90th) day prior to such meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made and (2) in the case of all annual meetings of stockholders, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days prior to or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. The number of individuals a stockholder may nominate for election at a meeting of the stockholders (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such meeting. Persons nominated by stockholders to serve as directors of the Corporation who have not been nominated in accordance with this Section 1.10 shall not be eligible to serve as directors. Only such business shall be conducted at an annual or special meeting of stockholders as shall have been brought before the meeting in accordance with this Section 1.10. The chairman of the meeting shall determine whether a nomination or any business proposed to be transacted by the stockholders has been properly brought before the meeting and, if any proposed nomination or business has not been properly brought before the meeting, the chairman shall declare that such proposed business or nomination shall not be presented for stockholder action at the meeting. Nothing in this Section 1.10 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(i)A stockholder’s notice shall set forth:

(a)as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), if any:

(1)the name, age, business address and residence address of such Proposed Nominee;

(2)the principal occupation and employment of such Proposed Nominee;

4

​

​ (3)a written questionnaire with respect to the background and qualification of such Proposed Nominee completed by the Proposed Nominee in the form required by the Corporation (which form the stockholder shall request in writing from the Secretary and which the Secretary shall provide to such stockholder within ten (10) days of receiving such request);

(4)such Proposed Nominee’s executed written consent to being named in the proxy statement for the meeting of the stockholders as a nominee;

(5)such Proposed Nominee’s written representation and agreement, in the form required by the Corporation (which form the stockholder shall request in writing from the Secretary and which the Secretary shall provide to such stockholder within ten (10) days of receiving such request), that such Proposed Nominee: (I) is not and will not become party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law; (II) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation; (III) would, if elected as a director, comply with applicable law of the exchanges upon which the Corporation’s shares of common stock trade, all of the Corporation’s corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and guidelines applicable generally to the Corporation’s directors and applicable fiduciary duties under state law and, if elected as a director of the Corporation, currently would be in compliance with any such policies and guidelines that have been publicly disclosed; (IV) intends to serve a full term if elected as a director of the Corporation; and (V) will provide facts, statements and other information in all communications with the Corporation and its stockholders that are or will be true and correct in all material respects, and that do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

(6)all information relating to such Proposed Nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for a director election where the number of nominees for election exceeds the number of directors to be elected, or may otherwise be required, pursuant to Section 14 of the Exchange Act (or pursuant to any law or statute replacing such section) and the rules and regulations promulgated thereunder; and

(7)a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the Proposed Nominee, on the one hand, and the stockholder giving notice and any Stockholder Associated Person (as defined below), on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K if the stockholder giving notice and any Stockholder Associated Person were the “registrant” for purposes of such rule and the person being nominated were a director or executive officer of such registrant;

5

​

​ (b)as to any other business that the stockholder proposes to bring before the meeting of the stockholders:

(1)a brief description of the business desired to be brought before the meeting;

(2)the reasons for conducting such business at the meeting;

(3)the text of the proposal (including the complete text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these By-Laws, the language of the proposed amendment); and

(4)a complete and accurate description of any material interest in such business of the stockholder giving notice and any Stockholder Associated Person, individually or in the aggregate, including any anticipated benefit to the stockholder and any Stockholder Associated Person therefrom, and all other information related to such proposed business that would be required to be disclosed in a proxy statement or other filing required to be made by the stockholder or any Stockholder Associated Person in connection with the solicitation of proxies or consents in support of such proposed business by such stockholder or any Stockholder Associated Person pursuant to Regulation 14A under the Exchange Act;

(c)as to the stockholder giving notice, any Proposed Nominee and any Stockholder Associated Person:

(1)the name and address of such stockholder, as they appear on the Corporation’s books and records, and the name and address of any Stockholder Associated Person;

(2)the number of shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially and/or of record by such stockholder, Proposed Nominee and Stockholder Associated Person, and the date or dates such shares were acquired and the investment intent of such acquisition;

(3)the nominee holder for, and number of, any Corporation securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person;

(4)short interest of such stockholder, Proposed Nominee or Stockholder Associated Person in any security of the Corporation (for purposes of these By-Laws, a person shall be deemed to have a short interest in a security if such person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security);

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​ (5)a complete and accurate description of all agreements, arrangements or understandings (whether written or oral) (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights with an exercise or conversion privilege or a settlement payment or mechanism at a price related to the capital stock of the Corporation or with a value derived in whole or in part from the value of the capital stock of the Corporation, hedging transactions, and borrowed or loaned shares) (each, a “Derivative Instrument”), that have been entered into as of the date of the stockholder’s notice or any supplement thereto by, or on behalf of, such stockholder, Proposed Nominee or Stockholder Associated Person, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Corporation;

(6)any rights to dividends on the shares of the Corporation owned beneficially by such stockholder, Proposed Nominee or Stockholder Associated Person;

(7)any proportionate interest in shares of capital stock of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or similar entity in which such stockholder, Proposed Nominee or Stockholder Associated Person (I) is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, or (II) is the manager, managing member or, directly or indirectly, beneficially owns an interest in the manager or managing member of a limited liability company or similar entity;

(8)any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate (as defined below) thereof, other than an interest arising from the ownership of the Corporation’s securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders;

(9)a complete and accurate description of all agreements, arrangements or understandings, written or oral, and formal or informal, (I) between or among the stockholder giving notice and any Stockholder Associated Person or (II) between or among the stockholder giving notice or any Stockholder Associated Person and any other person or entity (naming each such person or entity) in connection with or related to the foregoing or any Proposed Nominee, including, without limitation, (x) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or Stockholder Associated Person has the right to vote any shares of any security of the Corporation, (y) any understanding, formal or informal, written or oral, that such stockholder or any Stockholder Associated Person may have reached with any stockholder of the Corporation (including their names) with respect to how such stockholder will vote its shares in the Corporation at any meeting of the Corporation’s stockholders or take other action in support of any Proposed Nominee, or other action to be taken, by the proposing stockholder or any Stockholder Associated Person and (z) any other agreements that would be required to be disclosed by such stockholder or any Stockholder Associated Person or any other person or entity pursuant to Item 5 or Item 6 of a Schedule 13D that would be filed pursuant to the Exchange Act and the rules and regulations promulgated thereunder (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder giving notice, or any Proposed Nominee or any Stockholder Associated Person or other person or entity);

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​ (10)a complete and accurate description of any performance-related fees (other than an asset-based fee) to which any such stockholder, Proposed Nominee or Stockholder Associated Person may be entitled as a result of any increase or decrease in the value of shares of the Corporation or any Derivative Instruments; and

(11)a complete and accurate description of any pending or threatened legal proceeding in which such stockholder, Proposed Nominee or Stockholder Associated Person is a party or participant involving the Corporation or any officer, affiliate or associate (as defined below) of the Corporation;

(d)as to the stockholder giving notice and any Stockholder Associated Person:

(1)whether such stockholder or Stockholder Associated Person intends or is part of a group which intends (I) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the Proposed Nominee(s) and/or approve or adopt the proposal(s) and/or (II) otherwise to solicit proxies in support of such Proposed Nominee(s) or proposal(s);

(2)whether and the extent to which any agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of such stockholder or Stockholder Associated Person with respect to any shares of the capital stock of the Corporation, without regard to whether such transaction is required to be reported on a Schedule 13D in accordance with the Exchange Act; and

(3)the investment strategy or objective, if any, of such stockholder and Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder or Stockholder Associated Person;

(e)a representation from the stockholder giving notice that (1) such stockholder (I) is a holder of record of stock of the Corporation entitled to vote at the meeting, (II) intends to vote such stock at the meeting and (III) intends to appear in person or by proxy at the meeting to nominate any Proposed Nominees or bring such business before the meeting; and (2) if such stockholder does not appear to present such Proposed Nominee or business at the meeting, the Corporation need not present such Proposed Nominee or business for a vote at such meeting, notwithstanding that proxies in respect of such vote may have been received by the Corporation; and

(f)such other information regarding each matter of business to be proposed by the stockholder giving notice, regarding the stockholder in his or her capacity as a proponent of a stockholder proposal or regarding any Stockholder Associated Person, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitations of proxies for such business or the election of any Proposed Nominee, or is otherwise required, pursuant to Section 14 of the Exchange Act (or pursuant to any law or statute amending, restating or replacing such section) and the rules and regulations promulgated thereunder.

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​ (ii)In addition to the information required in Section 1.10(i) above, the Corporation may require any Proposed Nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such Proposed Nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such Proposed Nominee, under the listing standards of each principal securities exchange upon which the shares of the Corporation are listed, any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s directors, including those applicable to a director’s service on any of the committees of the Board of Directors.

(iii)Notwithstanding the foregoing provisions of this Section 1.10, if the stockholder (or a qualified representative of the stockholder) proposing a nominee for director or business to be conducted at a meeting of stockholders does not appear at the meeting to present such nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

(iv)A stockholder providing notice under this Section 1.10 shall update such notice, if necessary, so that the information provided or required to be provided in such notice shall continue to be true and correct (a) as of the record date for the meeting and (b) as of the date that is ten (10) business days prior to the meeting (or any postponement, adjournment or recess thereof), and such update shall be delivered to, or mailed and received by, the Secretary at the principal executive office of the Corporation not later than five (5) business days after the record date for the meeting (in the case of an update required to be made as of the record date) and not later than seven (7) business days prior to the date for the meeting, if practicable or, if not practicable, on the first practicable date prior to the meeting or any adjournment, recess or postponement thereof (in the case of an update required to be made as of ten (10) business days prior to the meeting or any adjournment, recess or postponement thereof).

(v)If any information submitted pursuant to this Section 1.10 by any stockholder proposing business for consideration or individuals to nominate for election or reelection as a director at a meeting of stockholders shall be inaccurate in any respect, such information may be deemed not to have been provided in accordance with these By-Laws. Any such stockholder shall notify the Corporation of any inaccuracy or change in any such information within two (2) business days of becoming aware of such inaccuracy or change. Upon written request by the Secretary of the Corporation, the Board of Directors or any committee thereof, any such stockholder shall provide, within seven (7) business days of delivery of such request (or such other period as may be specified in such request), (a) written verification, reasonably satisfactory to the Board of Directors, any committee thereof or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 1.10, and (b) a written update of any information (including written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 1.10 as of an earlier date. If a stockholder fails to provide such written verification within such period, the information as to which written verification was requested may be deemed not to have been provided in accordance with this Section 1.10.

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​ (vi)Notwithstanding the foregoing provisions of this Section 1.10, a stockholder shall also comply with all applicable requirements of state law and all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth herein, provided, however, that any references in these By-Laws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to stockholder proposals to be considered pursuant to this Section 1.10. Nothing in this Section 1.10 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act. Subject to Rule 14a-8 under the Exchange Act, nothing in these By-Laws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of a director or directors or any other business proposal.

(vii)As used in these By-Laws, (a) an “affiliate” and “associate” each have the respective meanings set forth in Rule 12b-2 under the Exchange Act; (b) “Stockholder Associated Person” shall mean (1) any person who is a member of a “group” (as such term is used in Rule 13d‑5 of the Exchange Act) with or otherwise acting in concert with such stockholder, (2) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary), (3) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person and beneficially owns, directly or indirectly, shares of stock of the Corporation, (4) any person that directly, or indirectly through one or more intermediaries, controls such stockholder or any Stockholder Associated Person and (5) any participant (as defined in paragraphs (a)(ii)(vi) of Instruction 3 to Item 4 of Schedule 14A, or any successor instructions) with such stockholder or other Stockholder Associated Person in respect of any proposals or nominations, as applicable; and (c) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service, in a document filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act or in a notice pursuant to the applicable rules of an exchange on which the securities of the Corporation are listed.

Section 1.11 Required Vote for Directors. Except as otherwise required by law or by the Certificate of Incorporation, each director shall be elected by the vote of the majority of the votes cast in person or represented by proxy and entitled to vote on the election of directors with respect to the director at any meeting for the election of directors at which a quorum is present; provided, however, that each director shall be elected by a plurality of the votes cast in person or represented by proxy at the meeting and entitled to vote on the election of directors for any meeting for the election of directors for which (i) the Secretary receives a notice that a stockholder has nominated one or more candidates for election to the Board of Directors in compliance with the requirements set forth in these By-Laws and (ii) such nomination has not yet been withdrawn by such stockholder on or prior to the tenth (10th) day preceding the date that the Corporation first mails its notice of meeting for such election. For purposes of this Section 1.11, “majority of the votes cast” means that the number of shares voted “for” a director exceeds the number of shares voted “against” that director (with “abstentions” and “broker nonvotes” not counted as a vote cast either “for” or “against” that director’s election).

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​ Section 1.12 Conduct of Meetings. The Board of Directors may adopt rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations, the chairman of any meeting of the stockholders shall have the right and authority to prescribe rules, regulations and procedures and to take all acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include or address, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) maintenance of order at the meeting and the safety of those present; (iv) compliance with state and local laws and regulations concerning safety and security; (v) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (vi) restrictions on entry to the meeting after the time fixed for the commencement thereof; (vii) limitations on the time allotted to questions or comments by participants; (viii) removal of any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines; (ix) conclusion, recess or adjournment of the meeting, whether or not a quorum is present, to a later date and time and at a place announced at the meeting; and (x) restrictions on the use of audio and video recording devices and cell phones. Unless and to the extent determined by the Board of Directors or the chairman of the stockholder meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

ARTICLE II​ DIRECTORS

Section 2.1 Number of Directors. Subject to any rights of the holders of the Preferred Stock or any series thereof to elect additional directors under specified circumstances, the number of directors which shall constitute the whole Board of Directors of the Corporation shall be such number as shall from time to time be fixed by resolution adopted by directors constituting not less than seventy percent (70%) of the whole Board of Directors.

Section 2.2 Chairman of the Board. At each regular annual meeting of the Board of Directors, a majority of the members of the Board of Directors shall select one of its members as Chairman of the Board. The Chairman of the Board shall hold such position until the first regular annual meeting of the Board of Directors following such selection or until the Chairman’s successor is selected and qualifies, provided that the Chairman may be removed at any time as Chairman of the Board, with or without cause, by the affirmative vote therefor of a majority of the whole Board of Directors.

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​ Section 2.3 Vacancies and Newly Created Directorships. Subject to any rights of the holders of the Preferred Stock or any series thereof to fill such newly created directorships or vacancies, any newly created directorships resulting from any increase in the authorized number of directors and any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall, unless otherwise provided by law or by resolution of directors constituting not less than seventy percent (70%) of the whole Board of Directors, be filled only by a resolution of directors constituting not less than seventy percent (70%) of the whole Board of Directors, and any director so chosen shall hold office until the next election of the class for which such director shall have been chosen, and until his successor shall have been duly elected and qualified, unless he shall resign, die, become disqualified or be removed. Notwithstanding the foregoing, in the event that at the time of the existence of an unfilled newly created directorship or any such vacancy there are unfilled newly created directorships and/or vacancies constituting more than thirty percent (30%) of the whole Board of Directors, a majority of the directors then serving on the Board of Directors shall have the authority to fill enough of such unfilled newly created directorships and/or vacancies so that, after giving effect thereto, there will be the minimum number of directors serving on the Board of Directors necessary to constitute seventy percent (70%) of the whole Board of Directors.

Section 2.4 Powers, Qualifications and Removal. The business of the Corporation shall be managed by or under the direction of the Board of Directors. Any director may tender his resignation at any time. Subject to any rights of the holders of the Preferred Stock or any series thereof, any director or the entire Board of Directors may be removed at any time, but only for cause.

Section 2.5 Regular and Special Meetings of the Board. The Board of Directors may hold its meetings, whether organizational, regular or special, either within or without the State of Delaware. Regular meetings of the Board may be held with or without notice at such time and place as shall from time to time be determined by resolution of the Board. Whenever the time or place of regular meetings of the Board shall have been determined by resolution of the Board, no regular meetings shall be held pursuant to any resolution of the Board altering or modifying its previous resolution relating to the time or place of the holding of regular meetings, without first giving three (3) days’ notice to each director, either personally or by facsimile telecommunication, or five (5) days’ written notice to each director by mail, of the substance and effect of such new resolution relating to the time and place at which regular meetings of the Board may thereafter be held without notice. Special meetings of the Board shall be held whenever called in writing by the Chairman of the Board, Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer or any three (3) directors. Notice of each special meeting of the Board shall be delivered personally to each director or sent by telegraph to his residence or usual place of business at least three (3) days before the meeting, or mailed to him to his residence or usual place of business at least five (5) days before the meeting; provided, however, that less than twenty-four (24) hours’ notice may be provided if the person or persons calling such special meeting deem it necessary or appropriate under the circumstances. Meetings of the Board, whether regular or special, may be held at any time and place, and for any purpose, without notice, when all the directors are present or when all directors not present shall, in writing, waive notice of and consent to the holding of such meeting, which waiver and consent may be given after the holding of such meeting.

Section 2.6 Organization. At every meeting of the Board, the Chairman of the Board or, in the case of vacancy in such position or absence of the Chairman of the Board, one of the following officers present in the order stated: the Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer, the Vice Presidents in their order of rank and seniority, or a chairman chosen by a majority of the directors present, shall preside, and the Secretary, or, in the absence of the Secretary, an Assistant Secretary, or in the absence of the Secretary and the Assistant Secretaries, any person appointed by the chairman of the meeting, shall act as secretary.

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​ Section 2.7 Quorum and Adjournment. At all meetings of the Board a majority of the whole Board of Directors shall be necessary and sufficient to constitute a quorum for the transaction of business except as may otherwise be specifically provided in the Certificate of Incorporation or in these By-Laws; provided, that if a quorum of directors shall not be present at any duly called or regular meeting thereof, the directors present may adjourn said meeting from time to time for a period of not exceeding two (2) weeks in the aggregate and notice of any such adjourned meeting shall not be necessary unless an adjournment was taken sine die.

Section 2.8 Executive Committee. There shall be a committee of the Board of Directors designated as the Executive Committee, to consist of three (3) or more of the directors, as shall from time to time be appointed by resolution of directors constituting not less than seventy percent (70%) of the whole Board of Directors. Except as otherwise limited by resolution of directors constituting not less than seventy percent (70%) of the whole Board of Directors or by law, the Certificate of Incorporation or these By-Laws, the Executive Committee shall have and may exercise, when the Board is not in session, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but the Executive Committee shall not, except to the extent both permitted by law and expressly so authorized in a resolution of directors constituting not less than seventy percent (70%) of the whole Board of Directors, have power (i) to fill vacancies in the Board, (ii) to change the membership of or to fill vacancies in the Executive Committee, (iii) to remove or replace the chairman of the Executive Committee, (iv) to authorize the Corporation to sell, lease or otherwise dispose of assets of the Corporation, (v) to authorize the Corporation to liquidate, dissolve or effect a recapitalization or reorganization in any form of transaction, (vi) to authorize the Corporation to acquire any interest in any business (whether by a purchase of assets, purchase of stock, merger or otherwise) or enter into any joint venture, (vii) to adopt a bonus or other compensation plan in which directors or officers of the Corporation are eligible to participate, (viii) to authorize the Corporation to create, incur, assume or suffer to exist any indebtedness or (ix) to amend these By-Laws. An affirmative vote of directors constituting at least seventy percent (70%) of the whole Board of Directors shall be required to change the size, membership or powers of the Executive Committee, to fill vacancies in it, or to dissolve it. The Executive Committee may make rules for the conduct of its business and may appoint such assistants as it shall from time to time deem necessary. A majority of the members of the Executive Committee shall constitute a quorum. A member of the Executive Committee shall be appointed chairman of the Executive Committee by resolution of directors constituting at least seventy percent (70%) of the whole Board of Directors and shall preside at all meetings of the Executive Committee; provided that in the case of vacancy in such position or absence of the chairman of the Executive Committee at the time of any such meeting, a member of the Executive Committee selected by a majority of the members of the Executive Committee shall preside at such meeting.

Section 2.9 Audit Committee. There shall be a committee of the Board of Directors designated as the Audit Committee, to consist of not fewer than three members of the Board as shall from time to time be appointed by resolution of the Board. No member of the Board who is an officer or an employee of the Corporation or any subsidiary of the Corporation shall be eligible to serve on the Audit Committee. The Audit Committee shall review and, as it shall deem appropriate, approve internal accounting and financial controls for the Corporation and accounting principles and auditing practices and procedures to be employed in the preparation and review of financial statements of the Corporation. The Audit Committee shall engage independent public accountants to audit the annual financial statements of the Corporation and its subsidiaries and shall arrange with such accountants the scope of the audit to be undertaken by such accountants. The Board shall have the power at any time to change the membership of the Audit Committee, to fill vacancies in it, or to dissolve it. The Audit Committee may make rules for the conduct of its business and may appoint such assistants as it shall from time to time deem necessary. A majority of the members of the Audit Committee shall constitute a quorum.

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​ Section 2.10 Compensation Committee. There shall be a committee of the Board of Directors designated as the Compensation Committee, to consist of not fewer than two members of the Board as shall from time to time be appointed by resolution of directors constituting at least seventy percent (70%) of the whole Board of Directors. No member of the Board who is an officer or an employee of the Corporation or any subsidiary of the Corporation shall be eligible to serve on the Compensation Committee. The Compensation Committee shall make such determinations and perform such other duties as are expressly delegated to it from time to time pursuant to the terms of any stock option, equity bonus or other employee benefit plan of the Corporation, and make such recommendations to the Board regarding other compensation of officers and employees of the Corporation as it deems appropriate. The Board shall have the power at any time to change the size, membership or powers of the Compensation Committee, to fill vacancies in it, or to dissolve it; provided, however, that an affirmative vote of directors constituting at least seventy percent (70%) of the whole Board of Directors shall be required to take any such action. The Compensation Committee may make rules for the conduct of its business and may appoint such assistants as it shall from time to time deem necessary. A majority of the members of the Compensation Committee shall constitute a quorum.

Section 2.11 Corporate Governance Committee. There shall be a committee of the Board of Directors designated as the Corporate Governance Committee, to consist of not fewer than two members of the Board as shall from time to time be appointed by resolution of directors constituting at least seventy percent (70%) of the whole Board of Directors. The Corporate Governance Committee shall (i) identify, evaluate and recommend individuals qualified to be directors of the Corporation to the Board for either appointment to the Board or to stand for election at a meeting of the stockholders, (ii) review and recommend to the Board appropriate compensation for the Corporation’s directors and (iii) develop and recommend to the Board corporate governance principles for the Corporation. The Board shall have the power at any time to change the membership or powers of the Corporate Governance Committee, to fill vacancies in it, or to dissolve it; provided, however, that an affirmative vote of directors constituting at least seventy percent (70%) of the whole Board of Directors shall be required to take any such action. The Corporate Governance Committee may make rules for the conduct of its business (including, without limitation, rules as to whether and on what basis, if any, it will consider suggestions regarding candidates for election submitted by stockholders) and may appoint such assistants as it shall from time to time deem necessary. A majority of the members of the Corporate Governance Committee shall constitute a quorum.

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​ Section 2.12 Other Committees; Designation of Replacement Members of Committees. The Board of Directors may also, by resolution or resolutions passed by the affirmative vote therefor of directors constituting at least seventy percent (70%) of the whole Board of Directors, designate one or more other committees, which, to the extent provided in said resolution or resolutions, shall have and may exercise, when the Board is not in session, the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. A majority of the members of any such committee may determine its action and fix the time and place of its meetings unless directors constituting at least seventy percent (70%) of the whole Board of Directors shall otherwise provide. The Board of Directors shall have power, through the affirmative vote of directors constituting at least seventy percent (70%) of the whole Board of Directors, at any time to fill vacancies in, to change the size membership or powers of, or to dissolve any such committee. The Board of Directors may designate in advance a person to replace a specified director as a member of any committee of the Board of Directors in the event that such director shall for any reason cease to be a member of such committee. The vote of the Board of Directors required to designate in advance a person for such purpose shall be the same as that which is required under these By-Laws to appoint a member of such committee. In the event that any member of any committee of the Board of Directors shall for any reason cease to be a member of such committee, the person designated in advance to replace such member, if any, shall, without any further action on the part of the Board of Directors and so long as such person is at that time a member of the Board of Directors, become a member of such committee. Such person shall also assume the chairmanship of such committee if held by the member such person is replacing immediately prior to such member ceasing to be a member of such committee.

Section 2.13 Compensation of Directors. By resolution of the Board of Directors, the directors shall be paid their reasonable expenses, if any, for attendance at each regular or special meeting of the Board or of any committee designated in these By-Laws or by the Board pursuant to these By-Laws and, by resolution of directors constituting at least seventy percent (70%) of the whole Board of Directors, may be paid a fixed sum for attendance at such meeting, or a stated salary as director, or both, or may be paid other compensation (in cash, stock or other form) for acting as directors. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor; provided however that directors who are also salaried officers of the Corporation or any subsidiary of the Corporation shall not receive fees or salaries as directors.

Section 2.14 Communications Equipment. Members of the Board of Directors or any committee thereof may participate in and act at any meeting of the Board or such committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant to this Section 2.14 shall constitute presence in person at the meeting.

Section 2.15 Waiver of Notice and Presumption of Assent. Any member of the Board of Directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.

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​ Section 2.16 Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee.

ARTICLE III​ OFFICERS

Section 3.1 Designation, Term, Vacancies. The officers of the Corporation shall be a Chief Executive Officer, a Vice-Chairman of the Board, a President, a Chief Operating Officer, one or more Vice-Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers and such other officers as the Board of Directors may from time to time deem necessary. Such officers may have and perform the powers and duties usually pertaining to their respective offices, the powers and duties respectively prescribed by law and by these By-Laws, and such additional powers and duties as may from time to time be prescribed by the Board. The same person may hold any two (2) or more offices.

At each regular annual meeting of the Board of Directors, the Board shall, at its discretion, elect the Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer, the Secretary, the Treasurer and, at their discretion, such Vice-Presidents as the Board shall determine, all of whom shall hold office until the first regular annual meeting of the Board of Directors following their appointment or until their successors are appointed and qualify, provided that they, or any of them, may be removed at any time, with or without cause, by the affirmative vote therefor of a majority of the whole Board of Directors. All other agents and employees of the Corporation shall hold office during the pleasure of the Board of Directors. Vacancies occurring among the officers of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors.

Section 3.2 Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation and shall exercise such other powers as may from time to time be delegated to the Chief Executive Officer by these By-Laws or by resolution of the Board of Directors. Subject to the Board of Directors, the Chief Executive Officer shall have general charge of the entire business of the Corporation. The Chief Executive Officer may sign certificates of stock and may sign and seal bonds, debentures, contracts or other obligations authorized by the Board, and may, without previous authority of the Board, make such contracts as the ordinary conduct of the Corporation’s business requires. The Chief Executive Officer shall have the usual powers and duties vested in a chief executive officer of a corporation. He shall have power to select and appoint all necessary officers and employees of the Corporation, except those selected by the Board of Directors, and to remove all such officers and employees, except those selected by the Board of Directors, and make new appointments to fill vacancies. The Chief Executive Officer may delegate any of his or her powers to the Vice-Chairman of the Board, the President, the Chief Operating Officer or a Vice-President of the Corporation. The Chief Executive Officer shall at all times be subject to the direction of the Board of Directors.

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​ Section 3.3 Vice-Chairman of the Board. The Vice-Chairman of the Board shall have such of the Chief Executive Officer’s powers and duties as the Chief Executive Officer may from time to time delegate to him and shall exercise such other powers as may from time to time be delegated to the Vice-Chairman of the Board by these By-Laws or by resolution of the Board of Directors. The Vice-Chairman of the Board may sign certificates of stock and may sign and seal bonds, debentures, contracts or other obligations authorized by the Board, and may, without previous specific authority of the Board, make such contracts as the ordinary conduct of the Corporation’s business requires.

Section 3.4 President. The President shall have such powers as may from time to time be delegated to the President by these By-Laws or by resolution of the Board of Directors. The President may sign certificates of stock and may sign and seal bonds, debentures, contracts or other obligations authorized by the Board, and may, without previous specific authority of the Board, make such contracts as the ordinary conduct of the Corporation’s business requires.

Section 3.5 Chief Operating Officer. The Chief Operating Officer shall have such powers as may from time to time be delegated to the Chief Operating Officer by these By-Laws or by resolutions of the Board of Directors. The Chief Operating Officer may sign certificates of stock and may sign and seal bonds, debentures, contracts or other obligations authorized by the Board, and may, without previous specific authority of the Board, make such contracts as the ordinary conduct of the Corporation’s business requires.

Section 3.6 Vice-Presidents. Each Vice-President shall have such of the Chief Executive Officer’s, the Vice-Chairman of the Board’s, the President’s and the Chief Operating Officer’s powers and duties as the Chief Operating Officer, the Vice Chairman of the Board, the President and the Chief Operating Officer, respectively, may from time to time delegate to such Vice-President and each Vice-President shall have such other powers and perform such other duties as may be assigned to such Vice-President by these By-Laws or by resolution of the Board of Directors.

Section 3.7 Treasurer. The Treasurer shall have custody of such funds and securities of the Corporation as may come to the Treasurer’s hands or be committed to the Treasurer’s care by the Board of Directors. Whenever necessary or proper, the Treasurer shall endorse on behalf of the Corporation, for collection, checks, notes, or other obligations, and shall deposit the same to the credit of the Corporation in such bank or banks or depositories, approved by the Board of Directors, as the Board of Directors, Chief Executive Officer, Vice-Chairman of the Board, President or Chief Operating Officer may designate. The Treasurer may sign receipts or vouchers for payments made to the Corporation, and the Board of Directors may require that such receipts or vouchers shall also be signed by some other officer to be designated by them. Whenever required by the Board of Directors, the Treasurer shall render a statement of the Corporation’s cash accounts and such other statements respecting the affairs of the Corporation as may be required. The Treasurer shall keep proper and accurate books of account. The Treasurer shall perform all acts incident to the office of Treasurer, subject to the direction of the Board of Directors.

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​ Section 3.8 Secretary. The Secretary shall have custody of the seal of the Corporation and when required by the Board of Directors, or when any instrument signed by another officer of the Corporation duly authorized to sign the same so requires, or when necessary to attest any proceedings of the stockholders or directors, shall affix it to any instrument requiring the same and shall attest the same with his or her signature, provided that the seal may be affixed by the Chief Executive Officer, the Vice Chairman of the Board, the President, the Chief Operating Officer or a Vice-President or other officer of the Corporation to any document executed by any of them respectively on behalf of the Corporation which does not require the attestation of the Secretary. The Secretary shall attend to the giving and serving of notices of meetings. The Secretary shall have charge of such books and papers as properly belong to such office or as may be committed to his or her care by the Board of Directors. The Secretary shall perform such other duties as appertain to such office or as may be required by the Board of Directors.

Section 3.9 Assistant Secretary. Each Assistant Secretary shall be vested with such powers and duties as may be delegated to him or her by the President, the Chief Operating Officer or the Secretary and any act may be done or duty performed by an Assistant Secretary with like effect as though done or performed by the Secretary; and shall have such other powers and perform such other duties as may be assigned to him or her by the Board of Directors.

Section 3.10 Assistant Treasurer. Each Assistant Treasurer shall be vested with such powers and duties as may be delegated to him or her by the Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer or the Treasurer, and any act may be performed by an Assistant Treasurer with like effect as though done or performed by the Treasurer; and shall have such other powers and perform such other duties as may be assigned to him or her by the Board of Directors.

Section 3.11 Delegation. In case of the absence of any officer of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board may delegate, for the time being, the powers or duties, or any of them, of such officer to any other officer or to any director.

Section 3.12 Compensation. The compensation of any officer of the Corporation for serving in such capacity, other than compensation under any plan which has received stockholder approval, shall require the approval of directors constituting at least a majority of the directors serving on the Board of Directors who are not salaried officers of the Corporation or any subsidiary of the Corporation.

ARTICLE IV​ STOCK

Section 4.1 Certificates of Stock. All certificates of shares of the capital stock of the Corporation shall be in such form not inconsistent with the Certificate of Incorporation, these By-Laws and the laws of the State of Delaware, as shall be approved by the Board of Directors, and shall be signed by the Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer or a Vice-President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and shall bear the seal of the Corporation and shall not be valid unless so signed and sealed. Certificates countersigned by a duly appointed transfer agent and/or registered by a duly appointed registrar shall be deemed to be so signed and sealed whether the signatures be manual or facsimile signatures and whether the seal be a facsimile seal or any other form of seal. All certificates for each class of stock shall be consecutively numbered and the name of the person owning the shares represented thereby, his address, with the number of such shares and the date of issue, shall be entered on the Corporation’s books. All certificates surrendered shall be canceled and no new certificates shall be issued until the former certificates for the same number of shares shall have been surrendered and canceled, except in cases provided for herein.

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​ In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been affixed to, any such certificate or certificates shall cease to be such officer or officers of the Corporation before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation, and may be issued and delivered as though the person or persons who signed such certificates, or whose facsimile signature or signatures shall have been affixed thereto, had not ceased to be such officer or officers of the Corporation.

Section 4.2 Uncertificated Shares; Transfers of Shares. The Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of, the Corporation as provided for in these By-Laws and the laws of the State of Delaware. Transfers of certificated shares of stock shall be made upon the books of the Corporation by the holder in person or by attorney, upon the surrender and cancellation of the certificate or certificates for such shares. But the Board of Directors may appoint one or more suitable banks and/or trust companies as transfer agents and/or registrars of transfers, for facilitating transfers of any class or series of stock of the Corporation by the holders thereof under such regulations as the Board of Directors may from time to time prescribe. Upon such appointment being made all certificates of such class or series thereafter issued shall be countersigned by one of such transfer agents and/or one of such registrars or transfers, and shall not be valid unless so countersigned. Uncertificated shares of the stock of the Corporation shall be transferred on the books of the Corporation only by the person then registered in the stock records of the Corporation as the owner of such shares or by such person’s representative as determined in accordance with generally accepted securities industry practices.

Section 4.3 Stolen, Lost, Mutilated and Destroyed Certificates. The Board of Directors may in its sole discretion direct that a new certificate or certificates of stock may be issued in place of any certificate or certificates of stock theretofore issued by the Corporation, alleged to have been stolen, lost, mutilated or destroyed, and the Board of Directors when authorizing the issuance of such new certificate or certificates may, in its discretion, and as a condition precedent thereto, require the owner of such mutilated certificate to surrender the same and the owner of such stolen, lost, mutilated or destroyed certificate or certificates or his legal representatives to give to the Corporation, and to such registrar or registrars and/or transfer agent or transfer agents as may be authorized or required to countersign such new certificate or certificates, a bond in such sum as the Corporation may direct not exceeding double the value of the stock represented by the certificate alleged to have been stolen, lost, mutilated or destroyed, as indemnity against any claim that may be made against them or any of them for or in respect of the shares of stock represented by the certificate alleged to have been stolen, lost, mutilated or destroyed.

Section 4.4 Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the owner in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware.

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​ ARTICLE V​ CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS

Section 5.1 Contracts. Subject to the provisions of the Certificate of Incorporation, the Board of Directors or the Executive Committee (subject to Section 2.8) may authorize any officer or officers, fiscal agent or other agent or employee of the Corporation to enter into any contract or execute or deliver any instrument in the name of or on behalf of the Corporation and such authority may be general or confined to specific instances; and unless so authorized by the Board of Directors or by these By-Laws, no officer, fiscal or other agent or employee of the Corporation shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose.

Section 5.2 Loans. The Chairman of the Board or any officer or agent of the Corporation when authorized by the Board of Directors or the Executive Committee may negotiate loans and advances for the Corporation from any bank, trust company or other institution or from any firm, corporation or individual, and for such loans and advances, when authorized by the Board of Directors or the Executive Committee (subject to Section 2.8), may make, execute and deliver promissory notes or other evidences of indebtedness of the Corporation, and pledge, hypothecate or transfer as security for the payment thereof securities or other property at any time held by the Corporation. No loans shall be contracted on behalf of the Corporation and no notes or other evidences of indebtedness shall be issued in its behalf unless and except as authorized by the Board of Directors or the Executive Committee (if authorized pursuant to Section 2.8).

Section 5.3 Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks or trust companies or with such bankers or other depositories in the United States or elsewhere as the Board of Directors, the Executive Committee, the Chief Executive Officer, the Vice-Chairman of the Board, the President or the Chief Operating Officer may approve.

Section 5.4 Checks, Drafts, Etc. All notes, drafts, acceptances, checks, endorsements or other evidences of indebtedness shall be signed by the Chairman of the Board, Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer or a Vice-president and shall be countersigned by the Treasurer or an Assistant Treasurer of the Corporation, or by such officers as may, from time to time, be designated by resolution of the Board of Directors or the Executive Committee for that purpose. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories may be made by the Treasurer or an Assistant Treasurer or by any other officer or agent who may be designated by resolution of the Board of Directors or the Executive Committee.

Section 5.5 Safe Deposit Vaults. To the extent permitted by law, securities of the Corporation may be deposited in such safe deposit vaults in the United States or elsewhere as the Board of Directors or the Executive Committee may approve, and access to such vaults shall be only by such officer together with such additional officer or officers and/or responsible employee or employees as may from time to time be designated for the purpose by resolution of the Board of Directors.

Section 5.6 Deposit of Securities for Safekeeping. From time to time, to the extent permitted by law, the Board of Directors or the Executive Committee may deposit for safekeeping with one or more banks, trust companies or other financial institutions to be selected by them in the United States or elsewhere, any securities owned by the Corporation and not otherwise deposited or pledged as security. Any and all securities so deposited may be withdrawn from time to time only by such officer of the Corporation together with such additional officer or officers and/or responsible employee or employees as may from time to time, to the extent permitted by law, be designated for the purpose by resolution of the Board of Directors or the Executive Committee.

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​ ARTICLE VI​ GENERAL

Section 6.1 Seal. The corporate seal shall have inscribed thereon the name of the Corporation, and shall be in such form as may be approved from time to time by the Board of Directors. One or more duplicate dies for impressing such seal may be kept and used.

Section 6.2 Books and Records. Subject to the provisions of the statute under which the Corporation is organized, the Corporation may keep its books outside the State of Delaware.

The Board of Directors shall have power, from time to time, to determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation (except such as may by statute be specifically open to inspection), or any of them shall be open to the inspection of the stockholders and no stockholder shall have any right to inspect any account or book or document of the Corporation except as conferred by statute or authorized by the Board of Directors.

Section 6.3 Fiscal Year. The fiscal year shall begin the first day of January in each year.

Section 6.4 Notices. Whenever under the provisions of these By-Laws notice is required to be given to any director, officer or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, by depositing the same in the post office or letter-box, in a post-paid sealed wrapper, addressed to such stockholder, officer or director at such address as appears on the books of the Corporation, or, in default of other address, to such director, officer or stockholder at his last known post office address and such notice shall be deemed to be given at the time when the same shall be thus mailed.

Any stockholder, director or officer may waive any notice required to be given under these By-Laws by instrument in writing signed (either before or after the holding of any meeting in respect of which the notice is required) by such stockholder, director or officer and filed with the Corporation.

Section 6.5 Stock of Other Corporations. The Chairman of the Board, Chief Executive Officer, the Vice-Chairman of the Board, the President, the Chief Operating Officer and each Vice-President are each individually authorized on behalf of the Corporation, in person or by proxy, to attend, act and vote at meetings of the stockholders of any corporation in which the Corporation shall hold stock, and to exercise thereat any and all rights and powers incident to the ownership of such stock, and to execute waivers of notice of such meetings and calls therefor, and to take or participate in the taking of action by the stockholders of such corporation by consent in lieu of a meeting. The Board of Directors or the Executive Committee may also authorize any other director, officer or other person on behalf of the Corporation to take any and all of such actions, and authority may be given to exercise such authority either on one or more designated occasions, or generally on all occasions until revoked by the Board of Directors or the Executive Committee.

Section 6.6 Registration of Securities. Any stocks or securities owned by the Corporation may, if so determined by the Board of Directors or the Executive Committee, be registered either in the name of the Corporation or in the name of any nominee or nominees appointed for that purpose by the Board of Directors or the Executive Committee.

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​ Section 6.7 Amendments. These By-Laws may be altered or amended by the holders of shares of stock of the Corporation entitled to vote with respect thereto, present in person or by proxy at any regular or special meeting of the stockholders, if notice of the proposed alteration or amendment be contained in the notice of the meeting, or by the affirmative vote therefor of directors constituting at least seventy percent (70%) of the whole Board of Directors, provided, however, that these By-Laws may not be altered or amended either by action of the stockholders or by action of the Board of Directors to make provisions contrary to or in conflict with or in any way modifying any provision of the Certificate of Incorporation and provided, further, that the vote of stockholders necessary to alter or amend these By-Laws shall be as provided for in the Certificate of Incorporation. For purposes of these By-Laws, “whole Board of Directors” means the total number of directors which the Corporation would have on the Board of Directors if there were no vacancies.

ARTICLE VII​ FORUM FOR ADJUDICATION OF DISPUTES

Section 7.1 Forum for Adjudication of Disputes. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or these By-Laws and (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 7.1.

ARTICLE VIII​****EMERGENCY BY-LAWS

Section 8.1 Emergency By-Laws. Notwithstanding anything to the contrary in the Certificate of Incorporation or these By-Laws, in the event there is any emergency, disaster or catastrophe, as referred to in Section 110 of the DGCL, or other similar emergency condition (each, an “emergency”) and irrespective of whether a quorum of the Board of Directors or a standing committee thereof can readily be convened for action, this ARTICLE VIII shall apply.

(i)Any director or senior executive officer of the Corporation may call a meeting of the Board of Directors or any committee thereof by any feasible means and with such advance notice as circumstances permit in the judgment of the person calling the meeting. Neither the business to be transacted nor the purpose of any such meeting need be specified in the notice thereof.

(ii)At any meeting called in accordance with Section 8.1(i), the director or directors in attendance shall constitute a quorum. In the event that no directors are able to attend the meeting, the Designated Officers in attendance shall be deemed directors for such meeting. For purposes of this Section 8.1(ii), a “Designated Officer” means an officer who is included on a list of officers of the Corporation who shall be deemed to be directors of the Corporation for purposes of obtaining a quorum during an emergency if a quorum of directors cannot otherwise be obtained, which officers have been designated by the Board of Directors prior to such time as an emergency may have occurred.

(iii)Directors may take action to appoint one or more of the directors to membership on any standing or temporary committees of the Board of Directors as they deem advisable. Directors may also take action to designate one or more of the officers of the Corporation to serve as directors of the Corporation while this ARTICLE VIII applies.

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​ (iv)To the extent that it considers it practical to do so, the Board of Directors shall manage the business of the Corporation during an emergency in a manner that is consistent with the Certificate of Incorporation and these By-Laws. It is recognized, however, that in an emergency, it may not always be practical to act in this manner and this ARTICLE VIII is intended to, and does hereby, empower the Board of Directors with the maximum authority possible under the DGCL and all other applicable law to conduct the interim management of the affairs of the Corporation in an emergency in what it considers to be in the best interests of the Corporation, including, without limitation, taking any action that it determines to be practical and necessary to address the circumstances of the emergency.

(v)No director, officer or employee acting in accordance with this ARTICLE VIII or otherwise pursuant to Section 110 of the DGCL (or any successor section) shall be liable except for willful misconduct.

(vi)This ARTICLE VIII shall continue to apply until such time following the emergency when it is feasible for at least a majority of the Board of Directors immediately prior to the emergency to resume management of the business of the Corporation.

(vii)At any meeting called in accordance with Section 8.1(i), the Board of Directors may modify, amend or add to the provisions of this ARTICLE VIII in order to make any provision that may be practical or necessary given the circumstances of the emergency.

(viii)The provisions of this ARTICLE VIII shall be subject to repeal or change by further action of the Board of Directors or by action of the stockholders, but no such repeal or change shall modify the provisions of Section 8.1(v) with regard to action taken prior to the time of such repeal or change.

(ix)Nothing contained in this ARTICLE VIII shall be deemed exclusive of any other provisions for emergency powers consistent with other sections of the DGCL that have been or may be adopted by corporations created under the DGCL.

ARTICLE IX​ MISCELLANEOUS

Section 9.1 Section Headings. Section headings in these By-Laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 9.2 Inconsistent Provisions. In the event that any provision of these By-Laws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL or any other applicable law, the provision of these By-Laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

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Exhibit 31.1

​

CERTIFICATION

​

I, Stephan B. Tanda, certify that:

​

1.	I have reviewed this quarterly report on Form 10-Q of AptarGroup, Inc.;

​

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

​

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

​

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a--15(e) and 15d--15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a--15(f) and 15d--15(f)) for the registrant and have:
a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
---	---

​

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---

​

​	Date:	July 31, 2020
​	​	​
​	​	​
​	By:	/s/ STEPHAN B. TANDA
​	​	Stephan B. Tanda
​	​	President and Chief Executive Officer

​

Exhibit 31.2

​

CERTIFICATION

​

I, Robert W. Kuhn, certify that:

​

1.	I have reviewed this quarterly report on Form 10-Q of AptarGroup, Inc.;

​

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

​

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

​

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a--15(e) and 15d--15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a--15(f) and 15d--15(f)) for the registrant and have:
a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
---	---

​

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---

​

​	​	​
​	Date:	July 31, 2020
​	​	​
​	​	​
​	By:	/s/ ROBERT W. KUHN
​	​	Robert W. Kuhn
​	​	Executive Vice President,
​	​	Chief Financial Officer and Secretary

​

Exhibit 32.1

​

Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

​

I, Stephan B. Tanda, president and chief executive officer of AptarGroup, Inc., certify that (i) the Quarterly Report on Form 10-Q of AptarGroup, Inc. for the quarter ended June 30, 2020 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of AptarGroup, Inc.

​

​

​	By:	/s/ STEPHAN B. TANDA
​	​	Stephan B. Tanda
​	​	President and Chief Executive Officer
​	​	​
​	​	July 31, 2020

​

Exhibit 32.2

​

Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

​

I, Robert W. Kuhn, executive vice president and chief financial officer and secretary of AptarGroup, Inc., certify that (i) the Quarterly Report on Form 10-Q of AptarGroup, Inc. for the quarter ended June 30, 2020 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of AptarGroup, Inc.

​

​

​	By:	/s/ ROBERT W. KUHN
​	​	Robert W. Kuhn
​	​	Executive Vice President,
​	​	Chief Financial Officer and Secretary
​	​	​
​	​	July 31, 2020

​