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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM     TO      
COMMISSION FILE NUMBER 1-11846
atr-20200630x10q002.jpg
AptarGroup, Inc.
Delaware36-3853103
(State of Incorporation)(I.R.S. Employer Identification No.)
265 EXCHANGE DRIVE, SUITE 301, CRYSTAL LAKE, IL 60014
815-477-0424
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueATRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Accelerated filer

☐Non-accelerated
filer 		☐Smaller reporting
company 		☐Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
The number of shares outstanding of common stock, as of October 20, 2023, was 65,781,269 shares.

AptarGroup, Inc.
Form 10-Q
Quarter Ended September 30, 2023
INDEX
i
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AptarGroup, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In thousands, except per share amounts
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net Sales$892,997 $836,860 $2,648,970 $2,526,335 
Operating Expenses:
Cost of sales (exclusive of depreciation and amortization shown below)566,691 546,376 1,697,824 1,638,114 
Selling, research & development and administrative138,137 135,428 427,488 416,351 
Depreciation and amortization62,686 57,601 184,212 174,818 
Restructuring initiatives6,161 2,270 19,628 2,989 
Total Operating Expenses773,675 741,675 2,329,152 2,232,272 
Operating Income119,322 95,185 319,818 294,063 
Other (Expense) Income:
Interest expense(9,984)(9,756)(29,900)(30,668)
Interest income946 752 2,266 2,029 
Net investment (loss) gain(1,240)649 1,839 (1,084)
Equity in results of affiliates1,002 178 1,514 (184)
Miscellaneous income (expense), net
3 (2,093)(1,341)(3,144)
Total Other Expense(9,273)(10,270)(25,622)(33,051)
Income before Income Taxes110,049 84,915 294,196 261,012 
Provision for Income Taxes25,751 30,738 72,265 80,851 
Net Income$84,298 $54,177 $221,931 $180,161 
Net (Gain) Loss Attributable to Noncontrolling Interests$(2)$67 $201 $131 
Net Income Attributable to AptarGroup, Inc.$84,296 $54,244 $222,132 $180,292 
Net Income Attributable to AptarGroup, Inc. per Common Share:
Basic$1.28 $0.83 $3.39 $2.75 
Diluted$1.26 $0.81 $3.32 $2.70 
Average Number of Shares Outstanding:
Basic65,707 65,322 65,550 65,446 
Diluted67,035 66,581 66,865 66,825 
Dividends per Common Share$0.41 $0.38 $1.17 $1.14 

See accompanying unaudited Notes to Condensed Consolidated Financial Statements.
1
AptarGroup, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
In thousands
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net Income$84,298 $54,177 $221,931 $180,161 
Other Comprehensive Income (Loss):
Foreign currency translation adjustments(52,514)(92,164)(28,639)(184,051)
Changes in derivative gains (losses), net of tax2,707 3,542 (2,424)3,663 
Defined benefit pension plan, net of tax
Actuarial (loss) gain, net of tax(5)31 63 (719)
Amortization of prior service cost included in net income, net of tax33 25 98 78 
Amortization of net loss included in net income, net of tax161 1,551 483 4,703 
Total defined benefit pension plan, net of tax189 1,607 644 4,062 
Total other comprehensive loss(49,618)(87,015)(30,419)(176,326)
Comprehensive Income (Loss)34,680 (32,838)191,512 3,835 
Comprehensive Loss Attributable to Noncontrolling Interests88 910 319 1,750 
Comprehensive Income (Loss) Attributable to AptarGroup, Inc.$34,768 $(31,928)$191,831 $5,585 
See accompanying unaudited Notes to Condensed Consolidated Financial Statements.
2
AptarGroup, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands
September 30, 2023December 31, 2022
Assets
Cash and equivalents$151,573 $141,732 
Accounts and notes receivable, less current expected credit loss ("CECL") of $12,209 in 2023 and $9,519 in 2022
717,484 676,987 
Inventories490,872 486,806 
Prepaid and other142,829 124,766 
Total Current Assets1,502,758 1,430,291 
Land29,421 30,197 
Buildings and improvements718,242 693,542 
Machinery and equipment3,022,026 2,925,517 
Property, Plant and Equipment, Gross3,769,689 3,649,256 
Less: Accumulated depreciation(2,381,041)(2,305,592)
Property, Plant and Equipment, Net1,388,648 1,343,664 
Investments in equity securities48,022 52,308 
Goodwill943,037 945,632 
Intangible assets, net287,231 315,744 
Operating lease right-of-use assets53,510 58,675 
Miscellaneous75,018 57,144 
Total Other Assets1,406,818 1,429,503 
Total Assets$4,298,224 $4,203,458 
See accompanying unaudited Notes to Condensed Consolidated Financial Statements.
3
AptarGroup, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except share and per share amounts
September 30, 2023December 31, 2022
Liabilities and Stockholders’ Equity
Current Liabilities:
Notes payable, revolving credit facility and overdrafts$124,503 $3,810 
Current maturities of long-term obligations, net of unamortized debt issuance costs366,378 118,981 
Accounts payable, accrued and other liabilities740,759 794,385 
Total Current Liabilities1,231,640 917,176 
Long-Term Obligations, net of unamortized debt issuance costs680,065 1,052,597 
Deferred income taxes17,448 20,563 
Retirement and deferred compensation plans57,433 48,977 
Operating lease liabilities39,697 42,948 
Deferred and other non-current liabilities58,252 52,993 
Commitments and contingencies— — 
Total Deferred Liabilities and Other172,830 165,481 
AptarGroup, Inc. stockholders’ equity
Common stock, $.01 par value, 199 million shares authorized, 71.5 million and 70.9 million shares issued as of September 30, 2023 and December 31, 2022, respectively
715 709 
Capital in excess of par value1,028,663 968,618 
Retained earnings2,074,434 1,929,240 
Accumulated other comprehensive loss(371,440)(341,366)
Less: Treasury stock at cost, 5.7 million and 5.6 million shares as of September 30, 2023 and December 31, 2022, respectively
(532,633)(503,266)
Total AptarGroup, Inc. Stockholders’ Equity2,199,739 2,053,935 
Noncontrolling interests in subsidiaries13,950 14,269 
Total Stockholders’ Equity2,213,689 2,068,204 
Total Liabilities and Stockholders’ Equity$4,298,224 $4,203,458 
See accompanying unaudited Notes to Condensed Consolidated Financial Statements.
4
AptarGroup, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
In thousands
Three Months EndedAptarGroup, Inc. Stockholders’ Equity
September 30, 2023 and 2022Retained EarningsAccumulated
Other
Comprehensive (Loss) Income		Common
Stock
Par Value		Treasury
Stock		Capital in
Excess of
Par Value		Non-
Controlling
Interest		Total
Equity
Balance - June 30, 2022$1,865,634 $(404,576)$706 $(467,550)$939,897 $14,353 $1,948,464 
Net income (loss)54,244 — — — — (67)54,177 
Foreign currency translation adjustments— (91,321)— — — (843)(92,164)
Changes in unrecognized pension gains and related amortization, net of tax— 1,607 — — — — 1,607 
Changes in derivative gains, net of tax— 3,542 — — — — 3,542 
Stock awards and option exercises— — 1 1,988 14,580 — 16,569 
Cash dividends declared on common stock(24,829)— — — — — (24,829)
Treasury stock purchased— — — (19,241)— — (19,241)
Balance - September 30, 2022$1,895,049 $(490,748)$707 $(484,803)$954,477 $13,443 $1,888,125 
Balance - June 30, 2023$2,017,065 $(321,913)$713 $(526,484)$1,005,007 $14,038 $2,188,426 
Net income (loss)84,296 — — — — 2 84,298 
Foreign currency translation adjustments(1)(52,423)— — — (90)(52,514)
Changes in unrecognized pension gains and related amortization, net of tax— 189 — — — — 189 
Changes in derivative gains, net of tax— 2,707 — — — — 2,707 
Stock awards and option exercises— — 2 2,114 23,656 — 25,772 
Cash dividends declared on common stock(26,926)— — — — — (26,926)
Treasury stock purchased— — — (8,263)— — (8,263)
Balance - September 30, 2023$2,074,434 $(371,440)$715 $(532,633)$1,028,663 $13,950 $2,213,689 
5
In thousands
Nine Months EndedAptarGroup, Inc. Stockholders’ Equity
September 30, 2023 and 2022Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Common
Stock
Par Value		Treasury
Stock		Capital in
Excess of
Par Value		Non-
Controlling
Interest		Total
Equity
Balance - December 31, 2021
$1,789,413 $(316,041)$704 $(421,203)$916,534 $15,193 $1,984,600 
Net income (loss)180,292 — — — — (131)180,161 
Foreign currency translation adjustments— (182,432)— — — (1,619)(184,051)
Changes in unrecognized pension gains (losses) and related amortization, net of tax— 4,062 — — — — 4,062 
Changes in derivative gains (losses), net of tax— 3,663 — — — — 3,663 
Stock awards and option exercises— — 3 8,729 37,943 — 46,675 
Cash dividends declared on common stock(74,656)— — — — — (74,656)
Treasury stock purchased— — — (72,329)— — (72,329)
Balance - September 30, 2022$1,895,049 $(490,748)$707 $(484,803)$954,477 $13,443 $1,888,125 
Balance - December 31, 2022
$1,929,240 $(341,366)$709 $(503,266)$968,618 $14,269 $2,068,204 
Net income (loss)222,132 — — — — (201)221,931 
Foreign currency translation adjustments(227)(28,294)— — — (118)(28,639)
Changes in unrecognized pension gains (losses) and related amortization, net of tax— 644 — — — — 644 
Changes in derivative gains (losses), net of tax— (2,424)— — — — (2,424)
Stock awards and option exercises— — 6 7,935 60,045 — 67,986 
Cash dividends declared on common stock(76,711)— — — — — (76,711)
Treasury stock purchased— — — (37,302)— — (37,302)
Balance - September 30, 2023$2,074,434 $(371,440)$715 $(532,633)$1,028,663 $13,950 $2,213,689 
See accompanying unaudited Notes to Condensed Consolidated Financial Statements.
6
AptarGroup, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In thousands, brackets denote cash outflows
Nine Months Ended September 30,20232022
Cash Flows from Operating Activities:
Net income$221,931 $180,161 
Adjustments to reconcile net income to net cash provided by operations:
Depreciation150,718 142,046 
Amortization33,494 32,772 
Stock-based compensation36,084 31,941 
Provision for CECL3,449 3,344 
(Gain) loss on disposition of fixed assets(3,753)315 
Net (gain) loss on remeasurement of equity securities(1,839)1,084 
Deferred income taxes(16,978)(9,506)
Defined benefit plan expense10,659 18,367 
Equity in results of affiliates(1,514)184 
Change in fair value of contingent consideration— (2,265)
Changes in balance sheet items, excluding effects from foreign currency adjustments:
Accounts and other receivables(43,061)(76,921)
Inventories(5,188)(62,139)
Prepaid and other current assets(19,236)(9,903)
Accounts payable, accrued and other liabilities3,860 62,053 
Income taxes payable(8,732)15,470 
Retirement and deferred compensation plan liabilities1,323 (15,432)
Other changes, net(5,615)(5,222)
Net Cash Provided by Operations355,602 306,349 
Cash Flows from Investing Activities:
Capital expenditures(231,199)(226,131)
Proceeds from government grants— 17,058 
Proceeds from sale of property, plant and equipment6,037 778 
Maturity of short-term investment— 740 
Acquisition of businesses, net of cash acquired and release of escrow(16,570)(4,100)
Acquisition of intangible assets, net(3,648)(5,189)
Proceeds from sale of investment in equity securities5,604 1,599 
Notes receivable, net439 (7,155)
Net Cash Used by Investing Activities(239,337)(222,400)
Cash Flows from Financing Activities:
Proceeds from notes payable and overdrafts24,392 35,058 
Repayments of notes payable and overdrafts(27,863)(33,417)
Proceeds and (repayments) of short term revolving credit facility, net123,514 (93,468)
Proceeds from long-term obligations257 406,550 
Repayments of long-term obligations(117,289)(262,245)
Debt issuance costs— (4,009)
Payment of contingent consideration obligation(22,750)— 
Dividends paid(76,711)(74,656)
Proceeds from stock option exercises39,742 18,411 
Purchase of treasury stock(37,302)(72,329)
Net Cash Used by Financing Activities(94,010)(80,105)
Effect of Exchange Rate Changes on Cash(12,914)(957)
Net Increase in Cash and Equivalents and Restricted Cash9,341 2,887 
Cash and Equivalents and Restricted Cash at Beginning of Period142,732 122,925 
Cash and Equivalents and Restricted Cash at End of Period$152,073 $125,812 
7
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 Metaphase acquisition.
Nine Months Ended September 30,20232022
Cash and equivalents$151,573 $124,812 
Restricted cash included in prepaid and other500 1,000 
Total Cash and Equivalents and Restricted Cash shown in the Statement of Cash Flows$152,073 $125,812 
See accompanying unaudited Notes to Condensed Consolidated Financial Statements.
8
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, 2022 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, 2022. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.
ADOPTION OF RECENT ACCOUNTING STANDARDS
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification.
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405), which enhances the transparency of supplier finance programs and requires certain disclosures for a buyer in a supplier finance program. The requirements are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 13, 2023. Early adoption is permitted. We adopted this guidance in the fourth quarter of 2022.
In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments to this update apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 was further amended in January 2021 by ASU 2021-01 which clarified the applicability of certain provisions. Both standards are effective upon issuance and could be adopted any time prior to December 31, 2022. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. We adopted this guidance in the second quarter of 2023 and have transitioned away from LIBOR to SOFR in our revolving credit facility.
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 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 with the following exceptions: all earnings in Germany, the pre-2023 earnings in Suzhou, China and the pre-2020 earnings in Italy, Switzerland and Colombia. The change in the Suzhou, China assertion was made in the current quarter. Under current U.S. tax laws, all of our non-U.S. earnings are subject to U.S. taxation on a current or deferred basis. We will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and our global cash management goals.
9
We provide a liability for the amount of unrecognized tax benefits from uncertain tax positions. This liability is provided whenever we determine that a tax benefit will not meet a more-likely-than-not threshold for recognition.
We are subject to the examination of our returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and government bodies. We believe that we have adequately provided a tax reserve for any adjustments that may result from tax examinations or uncertain tax positions. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner inconsistent with our expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. The resolution of each of these audits is not expected to be material to our Condensed Consolidated Financial Statements.
ASSETS HELD FOR SALE
Assets to be disposed of by sale are reported at the lower of their carrying amount or fair value less costs to sell, and are not depreciated while they are held for sale. During the second quarter of 2023, we recorded $0.7 million as assets held for sale within prepaid and other on our Condensed Consolidated Balance Sheets related to three buildings located in France. During the third quarter of 2023, two of the three buildings were sold and we recognized a $0.8 million gain on sale.
SUPPLY CHAIN FINANCE PROGRAM
We facilitate a supply chain finance program ("SCF") across Europe and the U.S. that is administered by a third-party platform. Eligible suppliers can elect to receive early payment of invoices, less an interest deduction, and negotiate their receivable sales arrangements through the third-party platform on behalf of the respective SCF bank. We are not a party to those agreements, and the terms of our payment obligations are not impacted by a supplier's participation in the SCF. Accordingly, we have concluded that this program continues to be a trade payable program and is not indicative of a borrowing arrangement. Under these agreements, the average payment terms range from 60 to 120 days and are based on industry standards and best practices within each of our regions.
All outstanding amounts related to suppliers participating in the SCF are recorded within accounts payable, accrued and other liabilities in our Condensed Consolidated Balance Sheets, and associated payments are included in operating activities within our Condensed Consolidated Statements of Cash Flows. As of September 30, 2023, the amounts due to suppliers participating in the SCF and included in accounts payable, accrued and other liabilities were approximately $37.3 million.
We have lengthened the payment terms with our suppliers to be in line with customer trends. While we have offered a third party alternative for our suppliers to receive payments sooner, we generally do not utilize these offerings from our customers as the economic conditions currently are not beneficial for us.
 
NOTE 2 – REVENUE
Segment financial information for the prior periods has been recast to conform to the current presentation. Refer to Note 16 - Segment Information. Revenue by segment and geography based on shipped from locations for the three and nine months ended September 30, 2023 and 2022 was as follows:
For the Three Months Ended September 30, 2023
SegmentEuropeDomesticLatin
America		AsiaTotal
Aptar Pharma$252,174 $106,804 $11,118 $19,092 $389,188 
Aptar Beauty203,599 58,181 39,963 22,237 323,980 
Aptar Closures53,431 89,795 21,956 14,647 179,829 
Total$509,204 $254,780 $73,037 $55,976 $892,997 
For the Three Months Ended September 30, 2022
SegmentEuropeDomesticLatin
America		AsiaTotal
Aptar Pharma$212,751 $105,542 $6,309 $18,795 $343,397 
Aptar Beauty169,936 75,070 35,195 22,845 303,046 
Aptar Closures54,146 99,198 21,777 15,296 190,417 
Total$436,833 $279,810 $63,281 $56,936 $836,860 
10
For the Nine Months Ended September 30, 2023
SegmentEuropeDomesticLatin
America		AsiaTotal
Aptar Pharma$733,749 $309,946 $30,699 $61,540 $1,135,934 
Aptar Beauty629,168 175,942 113,282 61,564 979,956 
Aptar Closures167,836 261,903 63,128 40,213 533,080 
Total$1,530,753 $747,791 $207,109 $163,317 $2,648,970 
For the Nine Months Ended September 30, 2022
SegmentEuropeDomesticLatin
America		AsiaTotal
Aptar Pharma$632,876 $320,297 $20,503 $52,414 $1,026,090 
Aptar Beauty540,629 224,269 97,337 67,558 929,793 
Aptar Closures163,424 304,051 62,327 40,650 570,452 
Total$1,336,929 $848,617 $180,167 $160,622 $2,526,335 
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 invoicing for 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 were as follows:
Balance as of December 31, 2022Balance as of September 30, 2023Increase/
(Decrease)
Contract asset (current)$16,736 $19,768 $3,032 
Contract liability (current)80,241 73,282 (6,959)
Contract liability (long-term)25,361 32,818 7,457 
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 invoicing. The total amount of revenue recognized during the current year against contract liabilities is $106.0 million, including $59.4 million relating to contract liabilities at the beginning of the year. Current contract assets are included within the prepaid and Other and Miscellaneous assets, respectively, while current contract liabilities and long-term contract liabilities are included within accounts payable, accrued and other liabilities and deferred and other non-current liabilities, respectively, within our Condensed Consolidated Balance Sheets.
Determining the Transaction Price
In most cases, the transaction price for each performance obligation is stated in the contract. In determining the variable amounts of consideration within the transaction price (such as volume-based customer rebates), we include an estimate of the expected amount of consideration as revenue. We apply the expected value method based on all of the information (historical, current, and forecast) that is reasonably available and identify reasonable estimates based on this information. We apply the method consistently throughout the contract when estimating the effect of an uncertainty on the amount of variable consideration to which we will be entitled.
Product Sales
We primarily manufacture and sell drug and consumer product dosing, dispensing and protection technologies. The amount of consideration is typically fixed for customers. At the time of delivery, the customer is invoiced at the agreed-upon price. Revenue from product sales is typically recognized upon manufacture or shipment, when control of the goods transfers to the customer.
11
To determine when the control transfers, we typically assess, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. For a majority of product sales, control of the goods transfers to the customer at the time of shipment of the goods. Once the goods are shipped, we are precluded from redirecting the shipment to another customer. Therefore, our performance obligation is satisfied at the time of shipment. For sales in which control transfers upon delivery, shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs and revenue is recorded upon final delivery to the customer location. We have elected to account for shipping and handling costs that occur after the customer has obtained control of a good as fulfillment costs rather than as a promised service. We do not have any material significant payment terms as payment is typically received shortly after the point of sale.
There also exist instances where we manufacture highly customized products that have no alternative use to us and for which we have an enforceable right to payment for performance completed to date. For these products, we transfer control and recognize revenue over time by measuring progress towards completion using the output method based on the number of products produced. As we normally make our products to a customer’s order, the time between production and shipment of our products is typically within a few weeks. We believe this measurement provides a faithful depiction of the transfer of goods as the costs incurred reflect the value of the products produced.
As a part of our customary business practice, we offer a standard warranty that the products will materially comply with the technical specifications and will be free from material defects. Because such warranties are not sold separately, do not provide for any service beyond a guarantee of a product’s initial specifications, and are not required by law, there is no revenue deferral for these types of warranties.
Tooling Sales
We also build or contract for molds and other tools (collectively defined as “tooling”) necessary to produce our products. As with product sales, we recognize revenue when control of the tool transfers to the customer. If the tooling is highly customized with no alternative use to us and we have an enforceable right to payment for performance completed to date, we transfer control and recognize revenue over time by measuring progress towards completion using the input method 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 significant payment terms as payment is typically either received during the mold-build process or shortly after completion.
In certain instances, we offer extended warranties on our tools above and beyond the normal standard warranties. We normally receive payment at the inception of the contract and recognize revenue over the term of the contract. We do not have any material extended warranties as of September 30, 2023 or December 31, 2022.
Service Sales
We also provide services to our customers. As with product sales, we recognize revenue based on completion of each performance obligation of the service contract. Milestone deliverables and upfront payments are tied to specific performance obligations and recognized upon satisfaction of the individual performance obligation.
Contract Costs
We do not incur significant costs to obtain or fulfill revenue contracts.
Credit Risk
We are exposed to credit losses primarily through our product sales, tooling sales and services to our customers. We assess each customer’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the customer’s established credit rating or our assessment of the customer’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risks, and business strategy in our evaluation. A credit limit is established for each customer based on the outcome of this review.
We monitor our ongoing credit exposure through active review of customer balances against contract terms and due dates. Our activities include timely account reconciliation, dispute resolution and payment confirmation. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.
12
NOTE 3 - INVENTORIES
Inventories, by component net of reserves, consisted of:
September 30,
2023		December 31,
2022
Raw materials$145,742 $159,041 
Work in process173,453 153,592 
Finished goods171,677 174,173 
Total$490,872 $486,806 

NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 by reporting segment were as follows:
Aptar
Pharma		Aptar
Beauty		Aptar ClosuresTotal
Balance as of December 31, 2022$498,742 $319,011 $127,879 $945,632 
Reclassification due to segment change— (39,472)39,472 — 
Acquisitions— 3,655 114 3,769 
Foreign currency exchange effects(5,191)(1,025)(148)(6,364)
Balance as of September 30, 2023$493,551 $282,169 $167,317 $943,037 
The table below shows a summary of intangible assets as of September 30, 2023 and December 31, 2022.
September 30, 2023December 31, 2022
Weighted Average Amortization Period (Years)Gross
Carrying
Amount		Accumulated
Amortization		Net
Value		Gross
Carrying
Amount		Accumulated
Amortization		Net
Value
Amortized intangible assets:
Patents9.8$7,181 $(1,617)$5,564 $8,044 $(1,968)$6,076 
Acquired technology11.4136,860 (65,378)71,482 135,191 (56,628)78,563 
Customer relationships13.5304,726 (116,570)188,156 305,994 (99,130)206,864 
Trademarks and trade names7.544,140 (32,555)11,585 43,998 (28,190)15,808 
License agreements and other31.416,910 (6,466)10,444 15,425 (6,992)8,433 
Total intangible assets13.3$509,817 $(222,586)$287,231 $508,652 $(192,908)$315,744 
Aggregate amortization expense for the intangible assets above for the quarters ended September 30, 2023 and 2022 was $11,400 and $10,678, respectively. Aggregate amortization expense for the intangible assets above for the nine months ended September 30, 2023 and 2022 was $33,494 and $32,772, respectively.
As of September 30, 2023, future estimated amortization expense for the years ending December 31 is as follows:
2023$11,473 
(remaining estimated amortization for 2023)
202441,267 
202539,565 
202637,287 
202726,026 
Thereafter131,613 
13
Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of September 30, 2023.
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 September 30, 2023 and 2022, respectively, was 23.4% and 36.2%. The effective tax rate for the nine months ended September 30, 2023 and 2022, respectively, was 24.6% and 31.0%. The effective tax rate for the three months ended September 30, 2023 reflects additional tax benefits from employee stock-based compensation and a benefit related to a change in the U.S. tax regulations issued during the quarter related to foreign tax credits. The effective tax rate for the three months ended September 30, 2022 reflects an out-of-period charge of $7.2 million for taxes related to a legal entity reorganization to enhance our dividend and cash management capabilities. The tax charge had an 8.5% impact on the effective tax rate for the three months ended September 30, 2022. The lower reported effective tax rate for the nine months ended September 30, 2023 reflects additional tax benefits from employee stock-based compensation, the refining of certain U.S. tax filing positions and a change in the U.S. tax regulations pertaining to foreign tax credits. As mentioned above, the tax rate for the nine months ended September 30, 2022, reflects an out-of-period charge for $7.2 million and had a 2.8% impact on the effective tax rate.
NOTE 6 – DEBT
Notes Payable, Revolving Credit Facility and Overdrafts
At September 30, 2023 and December 31, 2022, our notes payable, revolving credit facility and overdrafts consisted of the following:
September 30,
2023		December 31,
2022
Revolving credit facility 4.73% to 6.18%
$123,790 $— 
Overdrafts 4.64% to 4.71%
713 3,810 
$124,503 $3,810 
On June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") with a syndicate of banks to replace the then-existing facility maturing July 2022 (the "prior credit facility") and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term facility"). The revolving credit facility matures in June 2026, subject to a maximum of two one-year extensions in certain circumstances, and provides for unsecured financing of up to $600 million available in the U.S. and to our wholly-owned UK subsidiary. The amended term facility matured in July 2022 and was repaid in full. The revolving credit facility can be drawn in various currencies including USD, EUR, GBP, and CHF to the equivalent of $600 million, which may be increased by up to $300 million subject to the satisfaction of certain conditions. As of September 30, 2023, $44.5 million and €75.0 million ($79.3 million) was utilized under the revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary. As of December 31, 2022, no balance was utilized under the revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary.
There are no compensating balance requirements associated with our revolving credit facility. Each borrowing under the revolving credit facility will bear interest at rates based on SOFR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. In May 2023 the revolving credit facility was amended to make SOFR the default borrowing rate for USD. The revolving credit facility also provides mechanics relating to a transition away from designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio.
In October 2020, we entered into an unsecured money market borrowing arrangement to provide short term financing of up to $30 million that is available in the U.S. No borrowing on this facility is permitted over a quarter end date. As such, no balance was utilized under this arrangement as of September 30, 2023 or December 31, 2022.
Long-Term Obligations
On July 19, 2023, we repaid in full the €100 million 0.98% Senior Notes that were due July 2023.
14
On March 7, 2022, we issued $400 million aggregate principal amount of 3.60% Senior Notes due March 2032 in an underwritten public offering. The form and terms of the notes were established pursuant to an Indenture, dated as of March 7, 2022, as amended and supplemented by a First Supplemental Indenture, dated as of March 7, 2022, each between the Company and U.S. Bank Trust Company, National Association, as trustee. Interest is payable semi-annually in arrears. The notes are unsecured obligations and rank equally in right of payment with all of our other existing and future senior, unsecured indebtedness.
At September 30, 2023 and December 31, 2022, our long-term obligations consisted of the following:
September 30, 2023December 31, 2022
Notes payable 0.00% – 2.25%, due in monthly and annual installments through 2031
$15,005 $29,167 
Senior unsecured notes 1.0%, due in 2023
— 106,995 
Senior unsecured notes 3.4%, due in 2024
50,000 50,000 
Senior unsecured notes 3.5%, due in 2024
100,000 100,000 
Senior unsecured notes 1.2%, due in 2024
211,440 213,990 
Senior unsecured notes 3.6%, due in 2025
125,000 125,000 
Senior unsecured notes 3.6%, due in 2026
125,000 125,000 
Senior unsecured notes 3.6%, due in 2032, net of discount of $0.9 million
399,128 399,050 
Finance Lease Liabilities24,867 26,934 
Unamortized debt issuance costs(3,997)(4,558)
$1,046,443 $1,171,578 
Current maturities of long-term obligations(366,378)(118,981)
Total long-term obligations$680,065 $1,052,597 
The aggregate long-term maturities, excluding finance lease liabilities and unamortized debt issuance costs, which are discussed in Note 7, due annually from the current balance sheet date for the next five years and thereafter are:
Year One$363,408 
Year Two6,368 
Year Three256,200 
Year Four315 
Year Five72 
Thereafter399,210 
Covenants
Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:
RequirementLevel at September 30, 2023
Consolidated Leverage Ratio (1) 
Maximum of 3.50 to 1.00
 
1.61 to 1.00
Consolidated Interest Coverage Ratio (1) 
Minimum of 3.00 to 1.00
 
16.19 to 1.00
________________________________________
(1)Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.
NOTE 7 – LEASES
We lease certain warehouse, plant and office facilities, as well as certain equipment, under non-cancelable operating and finance leases expiring at various dates through the year 2037. 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.
15
The components of lease expense for the three and nine months ended September 30, 2023 and 2022 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Operating lease cost$5,150 $4,870 $15,841 $15,605 
Finance lease cost:
Amortization of right-of-use assets$908 $1,050 $2,686 $3,307 
Interest on lease liabilities289 307 883 947 
Total finance lease cost$1,197 $1,357 $3,569 $4,254 
Short-term lease and variable lease costs$5,774 $4,226 $15,883 $11,437 
Supplemental cash flow information related to leases was as follows:
Nine Months Ended September 30,20232022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$15,993 $15,001 
Operating cash flows from finance leases883 941 
Financing cash flows from finance leases2,377 2,749 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$7,764 $13,146 
Finance leases401 919 
NOTE 8 – RETIREMENT AND DEFERRED COMPENSATION PLANS
Effective January 1, 2021, our domestic noncontributory retirement plans were closed to new employees and employees who were rehired after December 31, 2020. These employees are instead eligible for additional contribution to their defined contribution 401(k) employee savings plan. All domestic employees with hire/rehire dates prior to January 1, 2021 are still eligible for the domestic pension plans and continue to accrue plan benefits after this date.
Components of Net Periodic Benefit Cost:
Domestic PlansForeign Plans
Three Months Ended September 30,2023202220232022
Service cost$2,409 $3,948 $1,487 $1,775 
Interest cost2,158 1,742 915 330 
Expected return on plan assets(3,094)(3,228)(589)(653)
Amortization of net loss— 1,668 230 403 
Amortization of prior service cost— — 45 35 
Net periodic benefit cost$1,473 $4,130 $2,088 $1,890 
Domestic PlansForeign Plans
Nine Months Ended September 30,2023202220232022
Service cost$7,228 $