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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________
FORM 10-Q
______________________________ 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2014
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
001-36587
(Commission File Number)
 _____________________________
Catalent, Inc.
(Exact name of registrant as specified in its charter)
_____________________________ 
Delaware
 
20-8737688
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
14 Schoolhouse Road, Somerset, NJ
 
08873
(Address of principal executive offices)
 
(Zip code)
(732) 537-6200
Registrant's telephone number, including area code
______________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  x   Yes     ¨   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
 
 
Accelerated filer ¨
 
Non-accelerated filer x
 
(Do not check if a smaller reporting company)
Smaller reporting company ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

On November 3, 2014 there were 123,813,614 shares of the Registrant's common stock, par value $0.01 per share, issued and outstanding.

 

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CATALENT, INC.

INDEX TO FORM 10-Q
For the Three Months Ended September 30, 2014
 
Item
 
Page
 
 
 
Part I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Part II.
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 

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Special Note Regarding Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.
These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statement is subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.
Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include, but are not limited to, those described under the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q of Catalent, Inc. (“Catalent” or the “Company”) for the quarter ended September 30, 2014 and the following:

•
We participate in a highly competitive market and increased competition may adversely affect our business.

•
The demand for our offerings depends in part on our customers’ research and development and the clinical and market success of their products. Our business, financial condition and results of operations may be harmed if our customers spend less on or are less successful in these activities.

•
We are subject to product and other liability risks that could adversely affect our results of operations, financial condition, liquidity and cash flows.

•
Failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition.

•
Failure to provide quality offerings to our customers could have an adverse effect on our business and subject us to regulatory actions and costly litigation.

•
The services and offerings we provide are highly exacting and complex, and if we encounter problems providing the services or support required, our business could suffer.

•
Our global operations are subject to a number of economic, political and regulatory risks.

•
If we do not enhance our existing or introduce new technology or service offerings in a timely manner, our offerings may become obsolete over time, customers may not buy our offerings and our revenue and profitability may decline.

•
We and our customers depend on patents, copyrights, trademarks and other forms of intellectual property protections, but these protections may not be adequate.

•
Our future results of operations are subject to fluctuations in the costs, availability, and suitability of the components of the products we manufacture, including active pharmaceutical ingredients, excipients, purchased components, and raw materials.

•
Changes in market access or healthcare reimbursement in the United States or internationally could adversely affect our results of operations and financial condition.

•
Fluctuations in the exchange rate of the U.S. dollar and other foreign currencies could have a material adverse effect on our financial performance and results of operations.

•
Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.


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•
We are dependent on key personnel.

•
Risks generally associated with our information systems could adversely affect our results of operations.

•
We may in the future engage in acquisitions and other transactions that may complement or expand our business or divest of non-strategic businesses or assets. We may not be able to complete such transactions, and such transactions, if executed, pose significant risks and could have a negative effect on our operations.

•
Our offerings and our customers’ products may infringe on the intellectual property rights of third parties.

•
We are subject to environmental, health and safety laws and regulations, which could increase our costs and restrict our operations in the future.

•
We are subject to labor and employment laws and regulations, which could increase our costs and restrict our operations in the future.

•
Certain of our pension plans are underfunded, and additional cash contributions we may be required to make will reduce the cash available for our business, such as the payment of our interest expense.

•
Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or in our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our indebtedness.

•
Affiliates of The Blackstone Group L.P. ("Blackstone") control us and their interests may conflict with ours or yours in the future.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as the date they were made and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Social Media
We use our website (www.catalent.com), our corporate Facebook page (https://www.facebook.com/CatalentPharmaSolutions) and our corporate Twitter account (@catalentpharma) as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, Securities and Exchange Commission ("SEC") filings and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this report.


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PART I.    FINANCIAL INFORMATION

Item 1.
FINANCIAL STATEMENTS

Catalent, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited; Dollars in millions, except per share data)

 
Three Months Ended  
 September 30,
 
2014
 
2013
Net revenue
$
418.3

 
$
414.3

Cost of sales
293.0

 
295.1

Gross margin
125.3

 
119.2

Selling, general and administrative expenses
81.4

 
81.1

Restructuring and other
1.4

 
3.0

Operating earnings/(loss)
42.5

 
35.1

Interest expense, net
35.5

 
40.9

Other (income)/expense, net
41.3

 
(1.0
)
Earnings/(loss) from continuing operations before income taxes
(34.3
)
 
(4.8
)
Income tax expense/(benefit)
(14.0
)
 
(6.6
)
Earnings/(loss) from continuing operations
(20.3
)
 
1.8

Net earnings/(loss) from discontinued operations, net of tax
0.4

 
(0.4
)
Net earnings/(loss)
(19.9
)
 
1.4

Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax
(0.4
)
 
(0.1
)
Net earnings/(loss) attributable to Catalent
$
(19.5
)
 
$
1.5

 
 
 
 
Amounts attributable to Catalent:
 
 
 
Earnings/(loss) from continuing operations less net income (loss) attributable to noncontrolling interest
(19.9
)
 
1.9

Net earnings/(loss) attributable to Catalent
(19.5
)
 
1.5

 
 
 
 
Earnings per share attributable to Catalent:
 
 
 
Basic
 
 
 
Earnings/(loss) from continuing operations
(0.19
)
 
0.03

Net earnings/(loss)
(0.18
)
 
0.02

Diluted
 
 
 
Earnings/(loss) from continuing operations
(0.19
)
 
0.02

Net earnings/(loss)
(0.18
)
 
0.02

The accompanying notes are an integral part of these unaudited consolidated financial statements.


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Catalent, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income/(Loss)
(Unaudited; Dollars in millions)

 
Three Months Ended  
 September 30,
 
2014
 
2013
Net earnings/(loss)
$
(19.9
)
 
$
1.4

Other comprehensive income/(loss), net of tax
 
 
 
Foreign currency translation adjustments
(53.8
)
 
20.4

Pension and Other Post-Retirement adjustments
0.4

 
0.2

Deferred compensation
(0.2
)
 
0.5

Other comprehensive income/(loss), net of tax
(53.6
)
 
21.1

Comprehensive income/(loss)
(73.5
)
 
22.5

Comprehensive income/(loss) attributable to noncontrolling interest
(0.2
)
 
(0.1
)
Comprehensive income/(loss) attributable to Catalent
$
(73.3
)
 
$
22.6

The accompanying notes are an integral part of these unaudited consolidated financial statements.


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Catalent, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited; Dollars in millions, except per share data)
 
 
September 30,
2014
 
June 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
63.2

 
$
74.4

Trade receivables, net
332.2

 
403.7

Inventories
142.4

 
134.8

Prepaid expenses and other
81.3

 
74.6

Total current assets
619.1

 
687.5

Property, plant, and equipment, net
853.3

 
873.0

Other assets:
 
 
 
Goodwill
1,057.9

 
1,097.1

Other intangibles, net
360.9

 
357.6

Deferred income taxes
24.4

 
26.3

Other
35.7

 
48.7

Total assets
$
2,951.3

 
$
3,090.2

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND SHAREHOLDERS' EQUITY/(DEFICIT)
 
 
 
Current liabilities:
 
 
 
Current portion of long-term obligations and other short-term borrowings
$
36.4

 
$
25.2

Accounts payable
116.7

 
148.1

Other accrued liabilities
224.5

 
279.7

Total current liabilities
377.6

 
453.0

Long-term obligations, less current portion
1,780.3

 
2,685.4

Pension liability
148.1

 
154.7

Deferred income taxes
97.6

 
103.2

Other liabilities
40.4

 
61.2

Commitment and contingencies (see Note 15)
 
 


 
 
 
 
Redeemable noncontrolling interest
4.3

 
4.5

 
 
 
 
Shareholders' equity/(deficit):
 
 
 
Common stock $0.01 par value; 1.0 billion and 84 million shares authorized in September 30, 2014 and June 30, 2014, 123,741,468 and 74,821,348 issued and outstanding in September 30, 2014 and June 30, 2014, respectively. Preferred stock $0.01 par value; 100 million and 0 authorized in September 30, 2014 and June 30, 2104, respectively.
1.2

 
0.7

Additional paid in capital
1,979.0

 
1,031.4

Accumulated deficit
(1,398.6
)
 
(1,379.1
)
Accumulated other comprehensive income/(loss)
(77.8
)
 
(24.2
)
Total Catalent Shareholders' equity/(deficit)
503.8

 
(371.2
)
Noncontrolling interest
(0.8
)
 
(0.6
)
Total Shareholders' equity/(deficit)
503.0

 
(371.8
)
Total liabilities, redeemable noncontrolling interest and Shareholders' equity/(deficit)
$
2,951.3

 
$
3,090.2

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Catalent, Inc. and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity/(Deficit)
(Unaudited; Dollars in millions, except share data in thousands)
 
 
Shares of Common Stock
 
Common
Stock
 
Additional
Paid in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income/(Loss)
 
Noncontrolling Interest
 
Total
Shareholders'
Deficit
Balance at June 30, 2014
74,821.3

 
$
0.7

 
$
1,031.4

 
$
(1,379.1
)
 
$
(24.2
)
 
$
(0.6
)
 
$
(371.8
)
Equity contribution
48,920.2

 
0.5

 
946.1

 
 
 
 
 
 
 
946.6

Equity compensation
 
 
 
 
1.5

 
 
 
 
 
 
 
1.5

Net earnings/(loss)
 
 
 
 
 
 
(19.5
)
 
 
 
(0.2
)
 
(19.7
)
Other comprehensive income/(loss), net of tax
 
 
 
 
 
 
 
 
(53.6
)
 
 
 
(53.6
)
Balance at September 30, 2014
123,741.5

 
$
1.2

 
$
1,979.0

 
$
(1,398.6
)
 
$
(77.8
)
 
$
(0.8
)
 
$
503.0

The accompanying notes are an integral part of these unaudited consolidated financial statements.


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Catalent, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited; Dollars in millions)
 
Three Months Ended 
 September 30,
 
2014
 
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net earnings/(loss)
$
(19.9
)
 
$
1.4

Net earnings/(loss) from discontinued operations
0.4

 
(0.4
)
Earnings/(loss) from continuing operations
(20.3
)
 
1.8

Adjustments to reconcile (loss)/earnings from continued operations to net cash from operations:
 
 
 
Depreciation and amortization
35.0

 
36.5

Non-cash foreign currency transaction (gain)/loss, net
(11.2
)
 
(4.0
)
Amortization and write off of debt financing costs
12.4

 
3.1

Non-cash gain on acquisition
(7.0
)
 
—

Reclassification of call premium payments and financing fees paid
9.8

 
—

Equity compensation
1.5

 
1.2

Provision/(benefit) for deferred income taxes
(7.7
)
 
(5.3
)
Provision for bad debts and inventory
1.7

 
1.9

Change in operating assets and liabilities:
 
 
 
Decrease/(increase) in trade receivables
62.0

 
67.8

Decrease/(increase) in inventories
(14.1
)
 
(4.0
)
Increase/(decrease) in accounts payable
(26.3
)
 
(30.1
)
Other accrued liabilities and operating items, net
(76.0
)
 
(43.2
)
Net cash provided by/(used in) operating activities from continuing operations
(40.2
)
 
25.7

Net cash provided by/(used in) operating activities from discontinued operations
0.4

 
(0.5
)
Net cash provided by/(used in) operating activities
(39.8
)
 
25.2

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisition of property and equipment and other productive assets
(31.2
)
 
(18.8
)
Proceeds from sale of property and equipment
—

 
0.6

Payment for acquisitions, net
(13.5
)
 
(8.0
)
Net cash provided by/(used in) investing activities from continuing operations
(44.7
)
 
(26.2
)
Net cash provided by/(used in) investing activities from discontinued operations
—

 
—

Net cash provided by/(used in) investing activities
(44.7
)
 
(26.2
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net change in short-term borrowings
11.7

 
(5.8
)
Proceeds from borrowing, net
—

 
—

Payments related to long-term obligations
(863.8
)
 
(6.7
)
Reclassification of call premium payments and financing fees paid
(9.8
)
 
—

Equity contribution/(redemption)
948.8

 
—

Net cash (used in)/provided by financing activities from continuing operations
86.9

 
(12.5
)
Net cash (used in)/provided by financing activities from discontinued operations
—

 
—

Net cash (used in)/provided by financing activities
86.9

 
(12.5
)
Effect of foreign currency on cash
(13.6
)
 
2.9

NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS
(11.2
)
 
(10.6
)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
74.4

 
106.4

CASH AND EQUIVALENTS AT END OF PERIOD
$
63.2

 
$
95.8

SUPPLEMENTARY CASH FLOW INFORMATION:
 
 
 
Interest paid
$
44.3

 
$
23.8

Income taxes paid, net
$
9.9

 
$
15.8


The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Catalent, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(Unaudited; Dollars in millions except per share amounts)
 
1 .    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Catalent, Inc. (“Catalent” or the “Company”) directly and wholly owns PTS Intermediate Holdings LLC (“Intermediate Holdings”). Intermediate Holdings directly and wholly owns Catalent Pharma Solutions, Inc. (“Operating Company”). The financial results of Catalent are solely comprised of the financial results of Operating Company and its subsidiaries on a consolidated basis.
In July 2014, the Company’s board of directors and holders of the requisite number of outstanding shares of its capital stock approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 70 -for-1 stock split of its outstanding common stock (the “stock split”). The stock split became effective on July 17, 2014 upon the filing of the Company’s Certificate of Amendment of the Amended and Restated Certificate of Incorporation with the Delaware Secretary of State. On the effective date of the stock split, (i) each outstanding share of common stock was increased to seventy shares of common stock, (ii) the number of shares of common stock issuable under each outstanding option to purchase common stock was proportionately increased on a one-to-seventy basis, (iii) the exercise price of each outstanding option to purchase common stock was proportionately decreased on a one-to-seventy basis, and (iv) the number of shares underlying each restricted stock unit was proportionately increased on a one-to-seventy basis. All of the share and per share information referenced throughout the financial statements and notes to the financial statements have been retroactively adjusted to reflect this stock split.
On August 5, 2014 , the Company completed an initial public offering (the "IPO") of 42.5 million shares of its common stock for an initial price of $20.50 per share for total proceeds, before underwriting discounts and commissions and other offering expenses of approximately $871.3 million and proceeds net of underwriters discount and commissions of approximately $828 million . The shares offered and sold in the IPO were registered under the Securities Act pursuant to the Company's Registration Statement on Form S-1 (File No. 333-193542), which was declared effective by the SEC on July 30, 2014. The proceeds raised were used to pay an advisory agreement termination fee of $29.8 million to Blackstone and certain other existing owners recorded within other (income)/expense, net on the Consolidated Statements of Operations, redeem the outstanding Senior Subordinated Notes, and redeem the outstanding Senior Notes. The remaining proceeds were used to repay portions of the unsecured term loan. The Company's common stock began trading on the New York Stock Exchange under the symbol "CTLT" as of July 31, 2014. On September 9, 2014, Morgan Stanley and J.P. Morgan, as representatives of the underwriters of Catalent’s IPO, purchased an additional 6.4 million shares of Catalent’s common stock from Catalent at the initial public offering price of $20.50 per share less the underwriting discount pursuant to an option granted to the underwriters at the time of the IPO. The net proceeds received by the Company were $124.2 million and were subsequently used for debt reduction and general corporate purposes. Refer to Note 4 for further discussion regarding debt repayments.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending June 30, 2015 . The consolidated balance sheet at June 30, 2014 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2014 filed with the Securities and Exchange Commission.

10


Noncontrolling interest is included within the equity section in the consolidated balance sheets. Redeemable noncontrolling interest has been classified as temporary equity and is therefore reported outside of permanent equity on the consolidated balance sheets at the greater of the initial carrying amount adjusted for the noncontrolling interest's share of net earnings/(loss) or its redemption value. The Company presents the amount of consolidated net earnings/(loss) that is attributable to Catalent and the noncontrolling interest in the consolidated statements of operations. Furthermore, the Company discloses the amount of comprehensive income that is attributable to Catalent and the noncontrolling interest in the consolidated statements of comprehensive income/(loss).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, inventory and long-lived asset valuation, goodwill and other intangible asset valuation and impairment, equity-based compensation, income taxes, derivative financial instruments and pension plan asset and liability valuation. Actual amounts may differ from these estimated amounts.
Foreign Currency Translation

The financial statements of the Company’s operations outside the U.S. are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of these foreign operations into U.S. dollars are accumulated as a component of other comprehensive income/(loss) utilizing period-end exchange rates. The currency fluctuations related to certain long-term inter-company loans deemed to not be repayable in the foreseeable future have been recorded within the cumulative translation adjustment, a component of other comprehensive income/(loss). In addition, the currency fluctuation associated with the portion of the Company’s euro-denominated debt designated as a net investment hedge is included as a component of other comprehensive income/(loss). Foreign currency transaction gains and losses calculated by utilizing weighted average exchange rates for the period are included in the consolidated statements of operations in the other (income) expense, net line item. Foreign currency translation gains and losses generated from inter-company loans that are long-term in nature, but may be repayable in the foreseeable future, are also recorded within the other (income) expense, net line item on the consolidated statements of operations.
Revenue Recognition
In accordance with Codification Standard ASC 605 Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. In cases where the Company has multiple contracts with the same customer, the Company evaluates those contracts to assess if the contracts are linked or are separate arrangements. Factors the Company considers include the timing of negotiation, interdependency with other contracts or elements and payment terms. The Company and its customers generally view each contract discussion as a separate arrangement.
Manufacturing and packaging service revenue is recognized upon delivery of the product in accordance with the terms of the contract, which specify when transfer of title and risk of loss occurs. Some of the Company’s manufacturing contracts with its customers have annual minimum purchase requirements. At the end of the contract year, revenue is recognized for the unfilled purchase obligation in accordance with the contract terms. Development service contracts generally take the form of a fee-for-service arrangement. After the Company has evidence of an arrangement, the price is determinable and there is a reasonable expectation regarding payment, the Company recognizes revenue at the point in time the service obligation is completed and accepted by the customer. Examples of output measures include a formulation report, analytical and stability testing, clinical batch production or packaging and the storage and distribution of a customer’s clinical trial material. Development service revenue is primarily driven by the Company’s Development and Clinical Services segment.
Arrangements containing multiple elements, including service arrangements, are accounted for in accordance with the provisions of ASC 605-25 Revenue Recognition: Multiple-Element Arrangements . The Company determines the separate units of account in accordance with ASC 605-25. If the deliverable meets the criteria of a separate unit of accounting, the arrangement consideration is allocated to each element based upon its relative selling price. In determining the best evidence of selling price of a unit of account the Company utilizes vendor-specific objective evidence (“VSOE”), which is the price the Company charges when the deliverable is sold separately. When VSOE is not available, management uses relevant third-party evidence (“TPE”) of selling price, if available. When neither VSOE nor TPE of selling price exists, management uses its best estimate of selling price.

11


Goodwill
The Company accounts for purchased goodwill and intangible assets with indefinite lives in accordance with ASC 350 Goodwill, Intangible and Other Assets . Under ASC 350, goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment at least annually. The Company's annual goodwill impairment test was conducted as of April 1, 2014 . The Company assesses goodwill for possible impairment by comparing the carrying value of its reporting units to their fair values. The Company determines the fair value of its reporting units utilizing estimated future discounted cash flows and incorporates assumptions that it believes marketplace participants would utilize. In addition, the Company uses comparative market information and other factors to corroborate the discounted cash flow results.
Property and Equipment and Other Definite Lived Intangible Assets
Property and equipment are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, including capital lease assets that are amortized over the shorter of their useful lives or the terms of the respective leases. The Company generally uses the following ranges of useful lives for its property and equipment categories: buildings and improvements - 5 to 50 years; machinery and equipment - 3 to 10 years; and furniture and fixtures - 3 to 7 years. Depreciation expense was $23.7 million for the three months ended September 30, 2014 and  $26.2 million for the three months ended September 30, 2013 . Depreciation expense includes amortization of assets related to capital leases. The Company charges repairs and maintenance costs to expense as incurred. The amount of capitalized interest was immaterial for all periods presented.
Intangible assets with finite lives, primarily including customer relationships and patents and trademarks continue to be amortized over their useful lives. The Company evaluates the recoverability of its other long-lived assets, including amortizing intangible assets, if circumstances indicate impairment may have occurred pursuant to ASC 360 Property, Plant and Equipment . This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an un-discounted basis, to be generated from such assets. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the consolidated statements of operations. Fair value is determined based on assumptions the Company believes marketplace participants would utilize and comparable marketplace information in similar arms length transactions. The Company did not record any impairment charge for the three months ended September 30, 2014 or three months ended September 30, 2013 .
Research and Development Costs
The Company expenses research and development costs as incurred. Costs incurred in connection with the development of new offerings and manufacturing process improvements are recorded within selling, general and administrative expenses. Such research and development costs included in selling, general and administrative expenses amounted to $2.8 million for the three months ended September 30, 2014 and $3.4 million for the three months ended September 30, 2013 . Costs incurred in connection with research and development services the Company provides to customers and services performed in support of the commercial manufacturing process for customers are recorded within cost of sales. Such research and development costs included in cost of sales amounted to $8.8 million for the three months ended September 30, 2014 and $7.4 million for the three months ended September 30, 2013 .
Earnings / (Loss) Per Share
The Company reports net earnings (loss) per share pursuant to ASC 260 Earnings per Share . Under ASC 260, basic earnings per share, which excludes dilution, is computed by dividing net earnings or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net earnings or loss available to common stockholders by the weighted average of common shares outstanding plus the dilutive potential common shares. Diluted earnings per share includes in-the-money stock options, restricted stock units, and restricted stock using the treasury stock method. During a loss period, the assumed exercise of in-the-money stock options has an anti-dilutive effect and therefore, these instruments are excluded from the computation of dilutive earnings per share.

12


Equity-Based Compensation
The Company accounts for its equity-based compensation awards pursuant to ASC 718 Compensation-Stock Compensation . ASC 718 requires companies to recognize compensation expense using a fair value based method for costs related to share-based payments including stock options and restricted stock units. The expense is measured based on the grant date fair value of the awards that are expected to vest, and the expense is recorded over the applicable requisite service period. In the absence of an observable market price for a share-based award, the fair value is based upon a valuation methodology that takes into consideration various factors, including the exercise price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the underlying share price based on peer companies, the expected dividends on the underlying shares and the risk-free interest rate.
Recent Financial Accounting Standards

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which explicitly requires management to assess an entity’s ability to continue as a going concern at each annual and interim reporting period, and to provide related footnote disclosures in certain circumstances. The standard indicates that substantial doubt exists when it is probable that an entity will not meet its obligations one year from the date the financial statements are issued. The likelihood threshold of probable is similar to its current use in US GAAP for loss contingencies. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier application is permitted. Catalent does not expect this standard to have a material impact on the Company's disclosures.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, " Revenue from Contracts with Customers " ("ASU 2014-09").  The new standard will supersede nearly all existing revenue recognition guidance.  The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, the standard creates a five-step model that requires a company to exercise judgment when considering the terms of the contracts and all relevant facts and circumstances.  The five steps require a company to identify customer contracts, identify the separate performance obligations, determine the transaction price, allocate the transaction price to the separate performance obligations and recognize revenue when each performance obligation is satisfied. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016.  The standard allows for either full retrospective adoption, where the standard is applied to all periods presented, or modified retrospective adoption where the standard is applied only to the most current period presented in the financial statements.  Early adoption is not permitted.  Catalent is currently evaluating the impact of this standard on the Company's consolidated results of operations and financial positio n.
2 .    GOODWILL
The following table summarizes the changes between June 30, 2014 and September 30, 2014 in the carrying amount of goodwill in total and by reporting segment:
 
(Dollars in millions)
Oral
Technologies
 
Medication
Delivery
Solutions
 
Development
& Clinical
Services
 
Total
Balance at June 30, 2014 (1)
$
891.8

 
$
—

 
$
205.3

 
$
1,097.1

Additions/(impairments)
—

 
—

 
—

 
—

Foreign currency translation adjustments
(32.0
)
 
—

 
(7.2
)
 
(39.2
)
Balance at September 30, 2014
$
859.8

 
$
—

 
$
198.1

 
$
1,057.9


(1)
The opening balance is reflective of historical impairment charges related to the Medication Delivery Solutions segment of approximately $158.0 million .
No goodwill impairment charges were required during the current or comparable prior year period. When required, impairment charges are recorded within the consolidated statements of operations as impairment charges and (gain)/loss on sale of assets.

13


3 .
DEFINITE LIVED LONG-LIVED ASSETS
The Company’s definite lived long-lived assets include property, plant and equipment as well as other intangible assets with definite lives. Refer to Note 17 Supplemental Balance Sheet Information for details related to property, plant and equipment.
The details of other intangible assets subject to amortization as of September 30, 2014 and June 30, 2014 , are as follows:
(Dollars in millions)
Weighted Average Life
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
September 30, 2014
 
 
 
 
 
 
 
Amortized intangibles:
 
 
 
 
 
 
 
Core technology
19 years
 
$
169.5

 
$
(53.5
)
 
$
116.0

Customer relationships
14 years
 
229.0

 
(70.4
)
 
158.6

Product relationships
12 years
 
230.0

 
(143.7
)
 
86.3

Total intangible assets
 
 
$
628.5

 
$
(267.6
)
 
$
360.9

 
(Dollars in millions)
Weighted Average Life
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
June 30, 2014
 
 
 
 
 
 
 
Amortized intangibles:
 
 
 
 
 
 
 
Core technology
20 years
 
$
150.2

 
$
(53.3
)
 
$
96.9

Customer relationships
14 years
 
234.6

 
(68.0
)
 
166.6

Product relationships
12 years
 
237.6

 
(143.5
)
 
94.1

Total intangible assets
 
 
$
622.4

 
$
(264.8
)
 
$
357.6

Amortization expense was $11.3 million and $10.3 million for the three months ended September 30, 2014 and September 30, 2013 , respectively. Future amortization expense is estimated to be:
(Dollars in millions)
Remainder 
 Fiscal 2015
 
2016
 
2017
 
2018
 
2019
 
2020
Amortization expense
$
33.7

 
$
44.9

 
$
44.3

 
$
44.2

 
$
38.6

 
$
23.3

There were no impairments of intangible assets recorded in the current or prior period.

14


4 .
LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS
Long-term obligations and other short-term borrowings consist of the following at September 30, 2014 and June 30, 2014 :
(Dollars in millions)
Maturity
 
September 30, 
 2014
 
June 30, 
 2014
Senior Secured Credit Facilities
 
 
 
 
 
Term loan facility dollar-denominated
May 2021
 
1,381.0

 
1,383.9

       Term loan facility euro-denominated
May 2021
 
315.6

 
338.6

9 3/4 % Senior Subordinated euro-denominated Notes
April 2017
 
—

 
293.9

7 7/8 % Senior Notes
October 2018
 
—

 
348.7

Senior Unsecured Term Loan Facility
December 2017
 
40.4

 
274.3

$200.0 million Revolving Credit Facility
May 2019
 
—

 
—

Capital lease obligations
2015 to 2032
 
61.2

 
64.0

Other obligations
2015 to 2018
 
18.5

 
7.2

Total
 
 
1,816.7

 
2,710.6

Less: Current portion of long-term obligations and other short-term borrowings
 
 
36.4

 
25.2

Long-term obligations, less current portion
 
 
$
1,780.3

 
$
2,685.4


Redemption of Notes and Unsecured Term Loan Prepayment
On July 29, 2014, Operating Company provided notice of its election to redeem all of the $350.0 million aggregate principal amount outstanding of the Senior Notes. The Senior Notes were redeemed on August 28, 2014 at a redemption price of 101.5% of their principal amount plus accrued and unpaid interest. The redemption was funded with proceeds from the IPO. In connection with the redemption the Company recorded $5.3 million in expense related to the call premium and expensed $5.9 million of unamortized debt discount and deferred financing costs, both in other (income) / expense, net in the consolidated statements of operations.
On August 5, 2014, Operating Company provided notice of its election to redeem all of the €225.0 million aggregate principal amount outstanding of the Senior Subordinated Notes. The Senior Subordinated Notes were redeemed on September 4, 2014 at a redemption price of 101.625% of their principal amount plus accrued and unpaid interest. The redemption was funded with proceeds from the IPO. In connection with the redemption the Company recorded $4.5 million in expense related to the call premium and expensed $4.0 million of unamortized debt discount and deferred financing costs, both in other (income) / expense, net in the consolidated statements of operations.
On August 6, 2014, the Company paid $114.5 million of the outstanding borrowings under the unsecured term loans with proceeds from the IPO. On September 12, 2014, the Company repaid $120.0 million of the outstanding borrowings under the unsecured term loans with proceeds from the additional shares purchased by the representatives of the underwriters in connection with the IPO. In connection with the debt payments, the Company expensed $0.9 million of unamortized debt discount and deferred financing costs in other (income) / expense, net in the consolidated statements of operations.
Debt Covenants
The Credit Agreement and the senior unsecured term loan facility contain a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s (and the Company’s restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans or advances; make certain acquisitions; and in the case of the Company’s Credit Agreement, enter into sale and leaseback transactions, amend material agreements governing the Company’s subordinated indebtedness and change the Company’s lines of business.
The Credit Agreement and the senior unsecured term loan facility also contain change of control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a Net Leverage covenant when there is a 30% or more draw outstanding at a period end. As of September 30, 2014 , the Company was in material compliance with all covenants related to its long-term obligations.

15


5 .
EARNINGS PER SHARE
The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three months ended September 30, 2014 and 2013 are as follows (in millions, except per share data):
 
 
Three months ended September 30,
(Dollars in millions)
2014
 
2013
 
Earnings / (loss) from continuing operations less net income / (loss) attributable to noncontrolling interest
$
(19.9
)
 
$
1.9

 
Earnings / (loss) from discontinued operations
0.4

 
(0.4
)
 
Net earnings / (loss) attributable to Catalent
$
(19.5
)
 
$
1.5

 
 
 
 
 
 
Weighted average shares outstanding
105,535,385

 
75,015,223

 
Dilutive securities issuable-stock plans
—

 
1,034,605

 
Total weighted average diluted shares outstanding
105,535,385

 
76,049,828

 
 
 
 
 
 
Basic earnings per share of common stock:
 
 
 

 
Earnings / (loss) from continuing operations
$
(0.19
)
 
$
0.03

 
Earnings / (loss) from discontinued operations
0.01

 
(0.01
)
 
Net earnings / (loss) attributable to Catalent
$
(0.18
)
 
$
0.02

 
 
 
 
 
 
Diluted earnings per share of common stock-assuming dilution:
 
 
 
 
Earnings / (loss) from continuing operations
$
(0.19
)
 
$
0.02

 
Earnings / (loss) from discontinued operations
0.01

 
—

 
Net earnings / (loss) attributable to Catalent
$
(0.18
)
 
$
0.02

 
The computation of diluted earnings per share for the three months ended September 30, 2014 excludes the maximum effect of the potential common shares issuable under the employee stock option plan of approximately 6.8 million shares, and excludes restricted share awards of 1.4 million shares, because the Company had a net loss for the period and the effect would therefore be anti-dilutive. The computation of diluted earnings per share for September 30, 2013 excludes the effect of potential shares issuable under the employee stock option plan of 2.4 million shares, because the vesting provisions of those awards specify performance or market-based conditions that had not been met as of the period end.
6 .
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Risk Management Objective of Using Derivatives
The Company is exposed to fluctuations in the applicable exchange rate on its investments in foreign operations. While the Company does not actively hedge against changes in foreign currency, the Company has mitigated the exposure of its investments in its European operations by denominating a portion of its debt in euros. At September 30, 2014 , the Company had euro-denominated debt outstanding of $315.6 million that qualifies as a hedge of a net investment in foreign operations. For non-derivatives designated and qualifying as net investment hedges, the effective portion of the translation gains or losses are reported in accumulated other comprehensive income/(loss) as part of the cumulative translation adjustment. For the three months ended September 30, 2014 , the Company recorded an unrealized foreign exchange gain of $10.8 million within cumulative translation adjustment. For the three months ended September 30, 2013 , the Company recorded an unrealized foreign exchange loss of $11.4 million within cumulative translation adjustment. The net accumulated gain of this net investment as of September 30, 2014 included within other comprehensive income/(loss) was approximately $60.2 million .
For the three months ended September 30, 2014 , the Company recognized an unrealized foreign exchange gain of $21.3 million in the consolidated statement of operations related to a portion of its euro-denominated debt not designated as a net investment hedge. For the three months ended September 30, 2013 , the Company recorded an unrealized foreign exchange loss of $7.6 million .
Amounts are reclassified out of accumulated other comprehensive income/(loss) into earnings when the entity to which the gains and losses reside is either sold or substantially liquidated.

16


7 .
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
ASC 820 Fair Value Measurements and Disclosures , which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation.
Fair value under ASC 820 is principally applied to financial assets and liabilities, which, for Catalent, primarily include investments in money market funds and contingent consideration. The Company is not required to apply all the provisions of ASC 820 to the nonfinancial assets and nonfinancial liabilities. There was no change from the previously reported classification of financial assets and liabilities included in its financial statements.
The following table provides a summary of financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2014 , aggregated by the level in the fair value hierarchy within which those measurements fall:
 
 
 
Fair Value Measurements using:
(Dollars in millions)
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Cash equivalents - money market funds
$
4.1

 
$
4.1

 
$
—

 
$
—

The following table provides a summary of financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2014 , aggregated by the level in the fair value hierarchy in which those measurements fall:
 
 
 
Fair Value Measurements using:
(Dollars in millions)
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Cash equivalents - money market funds
$
1.4

 
$
1.4

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Contingent consideration
$
0.9

 
$
—

 
$
—

 
$
0.9

Cash Equivalents
The fair value of cash equivalents is estimated on the quoted market price of the investments. The carrying amounts of the Company’s cash equivalents approximate their fair value due to the short-term maturity of these instruments.
Contingent Consideration
The fair value of the contingent consideration, which is considered a Level 3 liability, is based on a discounted cash flow model to estimate the potential payout related to the arrangement.



17


Long-Term Obligations
The estimated fair value of long-term debt, which is considered a Level 2 liability, is based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities and considers collateral, if any.
The carrying amounts and the estimated fair values of financial instruments as of September 30, 2014 and June 30, 2014 , are as follows:
 
September 30, 2014
 
June 30, 2014
(Dollars in millions)
Carrying
Value
 
Estimated Fair
Value
 
Carrying
Value
 
Estimated Fair
Value
Long-term debt and other
$
1,816.7

 
$
1,839.3

 
$
2,710.6

 
$
2,680.2

8 .
INCOME TAXES
The Company accounts for income taxes in accordance with the provision of ASC 740 Income Taxes . Generally, fluctuations in the effective tax rate are primarily due to changes in U.S. and non-U.S. pretax income resulting from the Company’s business mix and changes in the tax impact of special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Such discrete items include, but are not limited to, changes in foreign statutory tax rates, the amortization of certain assets and the tax impact of changes in its ASC 740 unrecognized tax benefit reserves. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as the United States, Germany, France, and the United Kingdom. The Company is no longer subject to non-U.S. income tax examinations for years prior to 2005. Under the terms of the purchase agreement related to the 2007 acquisition, the Company is indemnified by its former owner for tax liabilities that may arise in the future that relate to tax periods prior to April 10, 2007. The indemnification agreement includes, among other taxes, any and all federal, state and international income-based taxes as well as related interest and penalties. As of September 30, 2014 and June 30, 2014 , approximately $2.3 million and $2.4 million , respectively, of unrecognized tax benefit is subject to indemnification by the Company's former owner.
ASC 740 includes guidance on the accounting for uncertainty in income taxes recognized in the financial statements. This standard also provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeal or litigation process, based on the technical merits. As of September 30, 2014 , the Company had a total of $56.4 million of unrecognized tax benefits. A reconciliation of its reserves for uncertain tax positions, excluding accrued interest and penalties, for September 30, 2014 is as follows:
(Dollars in millions)
 
Balance at June 30, 2014
$
60.6

Reductions based on tax positions related to the current year
(1.8
)
Reductions for tax positions of prior years
(2.4
)
Balance at September 30, 2014
$
56.4

As of September 30, 2014 and June 30, 2014 , the Company had a total of $61.7 million and $65.7 million , respectively, of uncertain tax positions (including accrued interest and penalties). As of these dates, $41.0 million and $41.4 million , respectively, represent the amount of unrecognized tax benefits, which, if recognized, would favorably affect the effective income tax rate. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2014 and June 30, 2014 , the Company has approximately $5.4 million and $5.1 million , respectively, of accrued interest and penalties related to uncertain tax positions. As of these dates, the portion of such interest and penalties subject to indemnification by its former owner is $2.0 million and $2.0 million , respectively.

18

9 .
EMPLOYEE RETIREMENT BENEFIT PLANS
Components of the Company’s net periodic benefit costs are as follows:
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Components of net periodic benefit cost:
 
 
 
Service cost
$
0.7

 
$
0.7

Interest cost
3.1

 
3.0

Expected return on plan assets
(2.8
)
 
(2.5
)
Amortization (1)
0.5

 
0.3

Net amount recognized
$
1.5

 
$
1.5

(1)
Amount represents the amortization of unrecognized actuarial gains/(losses).
The Company has recorded $39.6 million in obligations related to its withdrawal from a multi-employer pension plan related to a former commercial packaging site, a clinical services site and a former printed components operation. The estimated discounted value of the projected contributions related to these plans is $39.6 million as of September 30, 2014 and $39.6 million as of June 30, 2014 . The annual cash impact associated with the Company's long-term obligation approximates $1.7 million per year. Refer to Note 15 to the Consolidated Financial Statements for further discussion.
10 .
RELATED PARTY TRANSACTIONS
Advisor Transaction and Management Fees
The Company entered into a transaction and advisory fee agreement with affiliates of Blackstone and certain other investors in BHP PTS Holdings L.L.C. (the “Investors”), the investment entity controlled by affiliates of Blackstone that was formed in connection with the Investors' investment in Catalent. The Company historically paid an annual sponsor advisory fee to Blackstone and the Investors for certain monitoring, advisory and consulting services to the Company prior to the IPO. For the three months ended September 30, 2014 and September 30, 2013 , this management fee was approximately $0 and $3.2 million , respectively. This fee was recorded as expense within selling, general and administrative expenses in the Consolidated Statements of Operations. In connection with the IPO, the Company paid the Investors an advisory agreement termination fee of $29.8 million in August 2014 recorded within other (income)/expense, net line item in the consolidated statements of operations.
11 .
EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
Description of Capital Stock and Initial Public Offering
The Company is authorized to issue 1,000,000,000 shares of common stock, with a par value of $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. In accordance with the Company's amended and restated certificate of incorporation, each share of common stock shall have one vote, and the common stock shall vote together as a single class. In July 2014, the Company’s board of directors and holders of the requisite number of outstanding shares of its capital stock have approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 70 -for-1 stock split. The stock split became effective on July 17, 2014 upon the filing with the Delaware Secretary of State of an amendment to the Company's amended and restated certificate of incorporation. Refer to Note 1 to the Consolidated Financial Statements for further discussion.

On August 5, 2014 , the Company completed an IPO of 42.5 million shares of its common stock for an initial price of $20.50 per share for total proceeds, before underwriting discounts and commissions and other offering expenses of approximately $871.3 million and proceeds net of underwriters discount and commissions of approximately $828.0 million . The shares offered and sold in the IPO were registered under the Securities Act pursuant to the Company's Registration Statement on Form S-1 (File No. 333-193542), which was declared effective by the SEC on July 30, 2014. The Company's common stock began trading on the New York Stock Exchange under the symbol "CTLT" as of July 31, 2014. On September 9, 2014, Morgan Stanley and J.P. Morgan, as representatives of the underwriters of Catalent’s IPO of its common stock, purchased an additional 6.4 million shares of Catalent’s common stock from Catalent at the IPO price of $20.50 per share less the underwriting discount for net proceeds of approximately $124.2 million pursuant to an option granted to the underwriters at the time of the IPO.

19


Accumulated other comprehensive income/(loss)
The components of the changes in the cumulative translation adjustment and minimum pension liability for the three months ended September 30, 2014 and September 30, 2013 are presented below.
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Foreign currency translation adjustments:
 
 
 
Net investment hedge
$
10.8

 
$
(11.4
)
Long term intercompany loans
(9.6
)
 
12.2

Translation adjustments
(55.4
)
 
19.6

Total foreign currency translation adjustment, pre tax
(54.2
)
 
20.4

Tax expense/(benefit)
(0.4
)
 
—

Total foreign currency translation adjustment, net of tax
$
(53.8
)
 
$
20.4

 
 
 
 
Net change in minimum pension liability
 
 
 
Net gain/(loss) recognized during the period
0.5

 
0.3

Total pension, pretax
0.5

 
0.3

Tax expense/(benefit)
(0.1
)
 
(0.1
)
Net change in minimum pension liability, net of tax
$
0.4

 
$
0.2

Changes in Accumulated Other Comprehensive Income/(Loss) by Component
For the three months ended September 30, 2014 the changes in accumulated other comprehensive income net of tax by component are as follows:
(Dollars in millions)
Foreign Exchange Translation Adjustments
 
Pension and Other Post-Retirement Adjustments
 
Deferred Compensation
 
Total
Balance at June 30, 2014
$
14.0

 
$
(41.4
)
 
$
3.2

 
$
(24.2
)
Other comprehensive income/(loss) before reclassifications
(53.8
)
 
—

 
(0.2
)
 
(54.0
)
Amounts reclassified from accumulated other comprehensive income
—

 
0.4

 
—

 
0.4

Net current period other comprehensive income (loss)
(53.8
)
 
0.4

 
(0.2
)
 
(53.6
)
Balance at September 30, 2014
$
(39.8
)
 
$
(41.0
)
 
$
3.0

 
$
(77.8
)

For the three months ended September 30, 2014 , the Company reclassified $0.4 million of actuarial losses (net of tax benefit of $0.1 million ) related to its defined benefit pension and other post-retirement benefit plans from accumulated other comprehensive income into selling, general and administrative expenses.
12 .
EQUITY-BASED COMPENSATION
2007 Stock Incentive Plan
The Company’s stock-based compensation is comprised of stock options and restricted stock units. Awards issued under the 2007 PTS Holdings Corp. Stock Incentive Plan, as amended (the “2007 Plan”) were generally issued for the purpose of retaining key employees and directors. The Company has adopted two forms of non-qualified stock option agreements (the “Form Option Agreement”) for awards granted under the 2007 Plan. Under the Company's Form Option Agreement adopted in 2009, a portion of the stock option awards vest in equal annual installments over a five -year period contingent solely upon the participant’s continued employment with the Company, or one of its subsidiaries, another portion of the stock option awards will vest over a specified performance period upon achievement of pre-determined operating performance targets over time and the remaining portion of the stock option awards will vest upon realization of certain internal rates of return or multiple of investment goals. Under the Company's other Form Option Agreement, adopted in 2013, a portion of the stock option awards will vest over a specified performance period upon achievement of pre-determined operating performance targets over time while the other portion of the stock option awards will vest upon realization of a specified multiple of investment goal. The

20


Form Option Agreements include certain forfeiture provisions upon a participant’s separation from service with the Company. Following the IPO, the Company decided not to grant any further award under the 2007 Plan; however, all outstanding awards granted prior to the IPO remained outstanding in accordance with the terms of the 2007 Plan.
2014 Omnibus Incentive Plan
In connection with the IPO, the Company's Board of Directors adopted the 2014 Omnibus Incentive Plan effective July 30, 2014. The 2014 Plan provides certain members of management, employees and directors of the Company and its subsidiaries with various incentives, including grants of stock options and restricted stock units. A maximum of 6,700,000 shares of common stock may be issued under this plan.
Restricted stock units under the 2014 Plan may be granted to members of management and directors. At the IPO, the Company granted to members of management restricted stock units that had certain performance-related vesting requirements ("performance stock units"). These performance stock units had a grant date fair value of $14.7 million , which represents approximately 692,000 shares of common stock. Under the 2014 Plan, the performance share units will vest based on achieving Company financial performance metrics established at the outset of each three-year performance period. The metrics are a mix of cumulative revenue growth and cumulative EBITDA growth targets. The performance share units vest following the end of the three-year performance period based on achievement of the targets. The restricted stock awards will vest on the third anniversary of the date of grant subject to the participant's continued employment with the Company.
Stock options were also granted as part of the IPO under the 2014 Plan for selected executives of the Company with an aggregate intrinsic value of $2.3 million , which represents approximately 509,000 shares of common stock. Each stock option vests in equal annual installments over a four -year period from the date of grant, contingent solely upon the participant's continued employment with the Company.
The Company recognized equity-based compensation expense of $1.5 million and $1.2 million for the three months ended September 30, 2014 and September 30, 2013 , respectively.
13.
OTHER (INCOME) / EXPENSE, NET
The components of Other (Income) / Expense for the three months ended September 30, 2014 and 2013 are as follows:
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Other (Income) / Expense
 
 
 
Debt extinguishment costs
$
20.6

 
$
0.1

Gain on acquisition (1)
(7.0
)
 
—

Sponsor advisory agreement termination fee (2)
29.8

 
—

Foreign currency (gains) and losses
(3.1
)
 
(1.0
)
     Other
1.0

 
$
(0.1
)
Total Other (Income) / Expense
$
41.3

 
$
(1.0
)
(1)
The Company completed a product acquisition in July 2014 that was accounted for as a business combination and resulted in a non-cash bargain purchase gain of $7.0 million .
(2)
The Company paid a sponsor advisory agreement termination fee of $29.8 million in connection with our IPO.
14 .
REDEEMABLE NONCONTROLLING INTEREST
In July 2013, the Company acquired a 67% controlling interest in a softgel manufacturing facility located in Haining, China. The noncontrolling interest shareholders have the right to jointly sell the remaining 33% interest to Catalent during the 30-day period following the third anniversary of closing for a price based on the greater of (1) an amount that would provide the noncontrolling interest shareholders a return on their investment of a predetermined amount per annum on their pro rata share of the initial valuation or (2) a multiple of the sum of the target's earnings before interest, taxes, depreciation and amortization and amortization less net debt for the four quarters immediately preceding such sale. Noncontrolling interest with redemption features, such as the arrangement described above, that are not solely within the Company's control are considered redeemable noncontrolling interests, which is considered temporary equity and is therefore reported outside of permanent equity on the Company's consolidated balance sheet at the greater of the initial carrying amount adjusted for the noncontrolling interest's share of net income/(loss) or its redemption value. As of September 30, 2014 , the redemption value of the redeemable noncontrolling interest approximated the carrying value.

21

15 .
COMMITMENTS AND CONTINGENCIES
As previously disclosed with regard to the Company’s participation in a multi-employer pension plan, the Company notified the plan trustees of its withdrawal from such plan in fiscal 2012. The withdrawal from the plan resulted in the recognition of liabilities associated with the Company’s long-term obligations in both the prior and current year periods, which were primarily recorded as an expense within discontinued operations. The actuarial review process, which is administered by the plan trustees, is ongoing and the Company awaits final determination as to the Company’s ultimate liability. The annual cash impact associated with the Company's long-term obligation approximates $1.7 million per year. Refer to Note 9 to the Consolidated Financial Statements for further discussion.

Beginning in November 2006, the Company, along with several pharmaceutical companies, has been named in approximately 380 civil lawsuits filed by individuals allegedly injured by their use of the prescription acne medication Amnesteem®, a branded generic form of isotretinoin, and in some instances of isotretinoin products made and/or sold by other firms as well. All of these lawsuits have been dismissed or settled.
From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of which could be significant. The Company intends to vigorously defend itself against such other litigation and does not currently believe that the outcome of any such other litigation will have a material adverse effect on the Company’s financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.
From time to time, the Company receives subpoenas or requests for information from various government agencies, including from state attorneys general and the U.S. Department of Justice relating to the business practices of customers or suppliers. The Company generally responds to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred. The Company expects to incur costs in future periods in connection with existing and future requests.
16 .
SEGMENT INFORMATION
The Company conducts its business within the following operating segments: Softgel Technologies, Modified Release Technologies, Medication Delivery Solutions and Development & Clinical Services. The Softgel Technologies and Modified Release Technologies segments are aggregated into one reportable operating segment – Oral Technologies. The Company evaluates the performance of its segments based on segment earnings before noncontrolling interest, other (income) expense, impairments, restructuring costs, interest expense, income tax (benefit)/expense, and depreciation and amortization (“Segment EBITDA”). EBITDA from continuing operations is consolidated earnings from continuing operations before interest expense, income tax (benefit)/expense, depreciation and amortization and is adjusted for the income or loss attributable to noncontrolling interest. The Company’s presentation of Segment EBITDA and EBITDA from continuing operations may not be comparable to similarly-titled measures used by other companies.

22


The following tables include net revenue and Segment EBITDA during the three months ended September 30, 2014 and September 30, 2013 :
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Oral Technologies
 
 
 
Net revenue
$
261.1

 
$
258.9

Segment EBITDA
57.7

 
60.4

Medication Delivery Solutions
 
 
 
Net revenue
56.9

 
56.5

Segment EBITDA
9.9

 
8.2

Development and Clinical Services
 
 
 
Net revenue
103.1

 
101.0

Segment EBITDA
21.4

 
15.7

   Inter-segment revenue elimination
(2.8
)
 
(2.1
)
   Unallocated Costs (1)
(52.4
)
 
(11.6
)
Combined Totals:
 
 
 
Net revenue
$
418.3

 
$
414.3

 
 
 
 
EBITDA from continuing operations
$
36.6

 
$
72.7


(1)
Unallocated costs include restructuring and special items, equity-based compensation, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Equity compensation
$
(1.5
)
 
$
(1.2
)
Restructuring and other special items (2)
(4.5
)
 
(6.7
)
Sponsor advisory fee
—

 
(3.2
)
Noncontrolling interest
0.4

 
0.1

Other income/(expense), net (3)
(41.3
)
 
1.0

Non-allocated corporate costs, net
(5.5
)
 
(1.6
)
Total unallocated costs
$
(52.4
)
 
$
(11.6
)


23


(2)
Segment results do not include restructuring and certain acquisition-related costs.
(3)
Amounts primarily relate to the expense associated with the termination of the sponsor advisory services agreement of $29.8 million in connection with the IPO, expenses related to financing transactions of $20.6 million , and acquisition-related gain of $7.0 million , all during the current year; and foreign currency translation gains and losses during all periods presented.
Provided below is a reconciliation of earnings/(loss) from continuing operations to EBITDA from continuing operations:
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Earnings/(loss) from continuing operations
$
(20.3
)
 
$
1.8

Depreciation and amortization
35.0

 
36.5

Interest expense, net
35.5

 
40.9

Income tax (benefit)/expense
(14.0
)
 
(6.6
)
Noncontrolling interest
0.4

 
0.1

EBITDA from continuing operations
$
36.6

 
$
72.7

The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the Consolidated Financial Statements:  
(Dollars in millions)
September 30, 
 2014
 
June 30, 
 2014
Assets
 
 
 
Oral Technologies
$
2,505.3

 
$
2,585.6

Medication Delivery Solutions
291.4

 
292.8

Development and Clinical Services
642.2

 
672.1

Corporate and eliminations
(487.6
)
 
(460.3
)
Total assets
$
2,951.3

 
$
3,090.2

17 .
SUPPLEMENTAL BALANCE SHEET INFORMATION
Supplementary balance sheet information at September 30, 2014 and June 30, 2014 is detailed in the following tables.
Inventories
Work-in-process and finished goods inventories include raw materials, labor, and overhead. Total inventories consist of the following:
(Dollars in millions)
September 30, 
 2014
 
June 30, 
 2014
Raw materials and supplies
$
86.8

 
$
84.1

Work-in-process
25.6

 
23.8

Finished goods
41.9

 
39.8

Total inventories, gross
154.3

 
147.7

Inventory reserve
(11.9
)
 
(12.9
)
Inventories
$
142.4

 
$
134.8


24


Prepaid expenses and other
Prepaid expenses and other current assets consist of the following:
(Dollars in millions)
September 30, 
 2014
 
June 30, 
 2014
Prepaid expenses
$
25.2

 
$
16.6

Spare parts supplies
12.1

 
12.5

Deferred taxes
11.8

 
12.7

Other current assets
32.2

 
32.8

Prepaid expenses and other
$
81.3

 
$
74.6

Property, plant, and equipment, net
Property, plant, and equipment, net consist of the following:
(Dollars in millions)
September 30, 
 2014
 
June 30, 
 2014
Land, buildings, and improvements
$
603.3

 
$
619.0

Machinery, equipment, and capitalized software
674.0

 
683.6

Furniture and fixtures
8.8

 
8.1

Construction in progress
121.0

 
110.9

Property, plant, and equipment, at cost
1,407.1

 
1,421.6

Accumulated depreciation
(553.8
)
 
(548.6
)
Property, plant, and equipment, net
$
853.3

 
$
873.0

Other assets
Other assets consist of the following:
(Dollars in millions)
September 30, 
 2014
 
June 30, 
 2014
Deferred long term debt financing costs
$
9.9

 
$
19.7

Other
25.8

 
29.0

Total other assets
$
35.7

 
$
48.7

Other accrued liabilities
Other accrued liabilities consist of the following:
(Dollars in millions)
September 30, 
 2014
 
June 30, 
 2014
Accrued employee-related expenses
$
79.2

 
$
86.7

Restructuring accrual
6.4

 
10.3

Deferred income tax
0.9

 
1.0

Accrued interest
0.5

 
12.2

Deferred revenue and fees
40.1

 
47.1

Accrued income tax
42.5

 
61.5

Other accrued liabilities and expenses
54.9

 
60.9

Other accrued liabilities
$
224.5

 
$
279.7


25

18 .    SUBSEQUENT EVENTS

In November 2014, the Company acquired 100% of the shares of a company specializing in particle size reduction (micronization), milling and analytical contract services on a global basis. The acquired business is based in the U.S. and the U.K. The acquired business will be included in the Development and Clinical Services segment.
In October 2014, the Company acquired the remaining shares of Redwood Bioscience Inc., and the SMARTagAntibody-Drug Conjugate (ADC) technology platform. The acquired business is based in the U.S. and will be included in the Oral Technologies segment.
The purchase price and financial results of the aforementioned acquired businesses are not material to the Company’s consolidated financial statements individually or in the aggregate.
In the preparation of its consolidated financial statements, the Company completed an evaluation of the impact of subsequent events and determined there was no other subsequent event requiring disclosure in or adjustment to these financial statements.

26


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

The Company
    
We are the leading global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products. Our oral, injectable, and respiratory delivery technologies address the full diversity of the pharmaceutical industry, including small molecules, large molecule biologics and consumer health products. Through our extensive capabilities and deep expertise in product development, we help our customers take products to market faster, including nearly half of new drug products approved by the U.S. Food and Drug Administration in the last decade. Our advanced delivery technology platforms, broad and deep intellectual property, and proven formulation, manufacturing and regulatory expertise enable our customers to develop more products and better treatments. Across both development and delivery, our commitment to reliably supply our customers’ needs is the foundation for the value we provide; annually, we produce more than 70 billion doses for nearly 7,000 customer products. We believe that through our investments in growth-enabling capacity and capabilities, our ongoing focus on operational and quality excellence, the sales of existing customer products, the introduction of new customer products, our patents and innovation activities, and our entry into new markets, we will continue to benefit from attractive and differentiated margins, and realize the growth potential from these areas.
For financial reporting purposes, we present three distinct financial reporting segments based on criteria established by generally accepted accounting principles in the United States ("GAAP"): Oral Technologies, Medication Delivery Solutions and Development & Clinical Services. The Oral Technologies segment includes the Softgel Technologies and Modified Release Technologies businesses.
Critical Accounting Policies and Estimates
We prepare our financial statements in accordance with GAAP. These standards require management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, inventory and long-lived asset valuation, goodwill and other intangible asset impairment, income taxes, derivative financial instruments, self-insurance accruals, loss contingencies and restructuring charge reserves. Actual amounts may differ from these estimated amounts.
There was no material change to our critical accounting policies or in the underlying accounting assumptions and estimates from those described in our fiscal year 2014 Annual Report on Form 10-K, other than recently adopted accounting principles, none of which had a material impact.
Key Performance Metrics
Use of EBITDA from continuing operations and Adjusted EBITDA
Management measures operating performance based on consolidated earnings from continuing operations before interest expense, expense/(benefit) for income taxes and depreciation and amortization and is adjusted for the income or loss attributable to noncontrolling interest (“EBITDA from continuing operations”). EBITDA from continuing operations is not defined under GAAP and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP and is subject to important limitations.
We believe that the presentation of EBITDA from continuing operations enhances an investor’s understanding of our financial performance. We believe this measure is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business and use this measure for business planning purposes. In addition, given the significant investments that we have made in the past in property, plant and equipment, depreciation and amortization expenses represent a meaningful portion of our cost structure. We believe that EBITDA from continuing operations will provide investors with a useful tool for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures because it eliminates depreciation and amortization expense. We present EBITDA from continuing operations in order to provide supplemental information that we consider relevant for the readers of our consolidated financial statements, and such information is not meant to replace or supersede GAAP measures. Our definition of EBITDA from continuing operations may not be the same as similarly titled measures used by other companies.
In addition, we evaluate the performance of our segments based on segment earnings before noncontrolling interest, other (income)/expense, impairments, restructuring costs, interest expense, income tax expense/(benefit), and depreciation and amortization (“Segment EBITDA”).

27
Table of Contents


Under the senior credit agreement (the "Secured Credit Agreement") and the credit agreement governing the senior unsecured term loan facility, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “EBITDA” in the indentures and the credit agreement governing the senior unsecured term loan facility). Adjusted EBITDA is based on the definitions in our indentures and the credit agreement governing the senior unsecured term loan facility, is not defined under GAAP, and is subject to important limitations. We have included the calculations of Adjusted EBITDA for the periods presented. Adjusted EBITDA is the covenant compliance measure used in certain covenants under the indentures governing our notes and the credit agreement governing the senior unsecured term loan facility, particularly those governing debt incurrence and restricted payments. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
The most directly comparable GAAP measure to EBITDA from continuing operations and Adjusted EBITDA is earnings/(loss) from continuing operations. Included in this report is a reconciliation of earnings/(loss) from continuing operations to EBITDA from continuing operations and to Adjusted EBITDA.
Use of Constant Currency
As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of results on a constant currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We use results on a constant currency basis as one measure to evaluate our performance. In this Quarterly Report on Form 10-Q, we compute constant currency by calculating current-year results using prior-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant currency basis as excluding the impact of foreign exchange. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Non-GAAP Measures
Organic revenue is a useful measure calculated by the company to explain the underlying results and trends in the business. Organic revenue is a measure used to show current year sales from existing operations and includes joint ventures and revenue from product participation related activities entered into within the year.  Organic revenue excludes the impact of foreign currency, acquisitions of operating or legal entities and divestitures.

28
Table of Contents


Results of Operations
Three Months Ended September 30, 2014 compared to the Three Months Ended September 30, 2013

 
Three Months Ended  
 September 30,
 
FX impact (unfavorable) / favorable
 
Constant Currency Increase/(Decrease)
(Dollars in millions)
2014
 
2013
 

 
Change $
 
Change %
Net revenue
$
418.3

 
$
414.3

 
$
(0.9
)
 
$
4.9

 
1
 %
Cost of products sold
293.0

 
295.1

 
0.4

 
(2.5
)
 
(1
)%
Gross margin
125.3

 
119.2

 
(1.3
)
 
7.4

 
6
 %
Selling, general and administrative expenses
81.4

 
81.1

 
0.1

 
0.2

 
*

Restructuring and other
1.4

 
3.0

 
0.1

 
(1.7
)
 
(57
)%
Operating earnings/(loss)
42.5

 
35.1

 
(1.5
)
 
8.9

 
25
 %
Interest expense, net
35.5

 
40.9

 
0.3

 
(5.7
)
 
(14
)%
Other (income)/expense, net
41.3

 
(1.0
)
 
(0.6
)
 
42.9

 
*

Earnings/(loss) from continuing operations before income taxes
(34.3
)
 
(4.8
)
 
(1.2
)
 
(28.3
)
 
*

Income tax expense/(benefit)
(14.0
)
 
(6.6
)
 
(0.6
)
 
(6.8
)
 
*

Earnings/(loss) from continuing operations
(20.3
)
 
1.8

 
(0.6
)
 
(21.5
)
 
*

Net earnings/(loss) from discontinued operations, net of tax
0.4

 
(0.4
)
 
—

 
0.8

 
*

Net earnings/(loss)
(19.9
)
 
1.4

 
(0.6
)
 
(20.7
)
 
*

Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax
(0.4
)
 
(0.1
)
 
—

 
(0.3
)
 
*

Net earnings/(loss) attributable to Catalent
$
(19.5
)
 
$
1.5

 
$
(0.6
)
 
$
(20.4
)
 
*

 *Percentage not meaningful
Net Revenue
Net revenue increased by $4.9 million , or 1%, as compared to the three months ended September 30, 2013 , excluding the impact of foreign exchange. The increase in net revenue was primarily due to increased sales within our modified release technologies business included in our Oral Technologies segment and increased demand for analytical services operations within our Development and Clinical Services segment. These revenue increases were partially offset by lower end market demand for certain products using our softgel offering within Oral Technologies and lower revenue from clinical services within Development and Clinical Services.
Gross Margin
Gross margin increased by $7.4 million , or 6% , as compared to the three months ended September 30, 2013 , excluding the impact of foreign exchange. The increase in gross margin was primarily due to increased sales within our modified release technologies business included in our Oral Technologies segment and a favorable shift in revenue mix within our Development and Clinical Services segment, partially offset by decreased demand for our softgel offering within Oral Technologies segment.
Selling, General and Administrative Expense
Selling, general and administrative expenses were comparable to the three months ended September 30, 2013 , excluding the impact of foreign exchange. The impact of increased employee compensation costs, which were a result of inflationary increases, was offset by a reduction in expense due to the elimination of the recurring sponsor advisory fee agreement as a result of our IPO during the period.

29
Table of Contents


Restructuring and Other
Restructuring and other charges of $1.4 million for the three months ended September 30, 2014 decreased by $1.6 million , or 53% , compared to the three months ended September 30, 2013 . The prior period charges included restructuring initiatives across several of our operations which were enacted to improve cost efficiency, including the consolidation of our Allendale clinical services operation into our Philadelphia clinical services center of excellence and employee-related severance expenses during the three months ended September 30, 2013 . The three months ended September 30, 2014 included restructuring activities enacted to improve cost efficiency primarily related to employee severance expenses.
Interest Expense, net
Interest expense, net of $35.5 million for the three months ended September 30, 2014 decreased by $5.4 million , or 13%, compared to the three months ended September 30, 2013 , primarily driven by lower levels of outstanding debt as compared the comparable period in the prior year. During the quarter the Company redeemed $350 million of Senior Notes and $275 million of Senior Subordinated Notes on August 28, 2014 and September 4, 2014, respectively. In addition, the Company reduced an aggregate of $234.5 million of outstanding borrowings under the unsecured term loan during the quarter. The funds utilized to reduce our debt level were generated by proceeds from our IPO which was completed during the quarter.
Other (Income)/Expense, net
Other expense of $41.3 million for the three months ended September 30, 2014 increased from other income of $1.0 million in the three months ended September 30, 2013 . The increase was primarily driven by a sponsor advisory agreement termination fee of $29.8 million which was agreed to in connection with our IPO. In addition, we incurred $20.6 million of expense associated with the early redemption of our Senior Notes and pre-payment of the unsecured term loan, of which $9.8 million was a cash expense. Offsetting these other expense items was the impact of a gain on acquisition of $7.0 million , related to a business combination completed in the period and a net $3.1 million of gains associated with foreign exchange.
Provision/(Benefit) for Income Taxes
Our Provision / (Benefit) for income taxes for the three months ended September 30, 2014 was $14.0 million relative to losses before income taxes of $34.3 million . Our benefit for income taxes for the three months ended September 30, 2013 was $6.6 million relative to losses before income taxes of $4.8 million . The income tax benefit for the current period is not comparable to the same period of the prior year due to changes in pretax income over many jurisdictions and the impact of discrete items. Generally, fluctuations in the effective tax rate are primarily due to changes in our geographic pretax income resulting from our business mix and changes in the tax impact of permanent differences, restructuring, other special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Our effective tax rate at September 30, 2014 reflects benefits derived from operations outside the United States, which are generally taxed at lower rates than the U.S. statutory rate of 35%.

30
Table of Contents


Segment Review
The Company’s results on a segment basis for the three months ended September 30, 2014 compared to the three months ended September 30, 2013 were as follows:
 
Three Months Ended  
 September 30,
 
FX impact (unfavorable) / favorable
 
Constant Currency Increase/(Decrease)
(Dollars in millions)
2014
 
2013
 

 
Change $
 
Change %
Oral Technologies
 
 
 
 
 
 
 
 
 
Net revenue
$
261.1

 
$
258.9

 
$
(3.7
)
 
$
5.9

 
2
 %
Segment EBITDA
57.7

 
60.4

 
(1.8
)
 
(0.9
)
 
(1
)%
Medication Delivery Solutions
 
 
 
 
 
 
 
 
 
Net revenue
56.9

 
56.5

 
—

 
0.4

 
1
 %
Segment EBITDA
9.9

 
8.2

 
(0.1
)
 
1.8

 
22
 %
Development and Clinical Services
 
 
 
 
 
 
 
 
 
Net revenue
103.1

 
101.0

 
2.8

 
(0.7
)
 
(1
)%
Segment EBITDA
21.4

 
15.7

 
0.7

 
5.0

 
32
 %
Inter-segment revenue elimination
(2.8
)
 
(2.1
)
 
—

 
(0.7
)
 
33
 %
Unallocated Costs (1)
(52.4
)
 
(11.6
)
 
0.6

 
(41.4
)
 
*

Combined Total
 
 
 
 
 
 
 
 
 
Net revenue
$
418.3

 
$
414.3

 
$
(0.9
)
 
$
4.9

 
1
 %
 
 
 
 
 
 
 
 
 
 
EBITDA from continuing operations
$
36.6

 
$
72.7

 
$
(0.6
)
 
$
(35.5
)
 
(49
)%
 *    Percentage not meaningful
(1)
Unallocated costs includes equity-based compensation, certain acquisition related costs, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:
 
Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Impairment charges and gain/(loss) on sale of assets
$
—

 
$
—

Equity compensation
(1.5
)
 
(1.2
)
Restructuring and other special items (2)
(4.5
)
 
(6.7
)
Sponsor advisory fee
—

 
(3.2
)
Noncontrolling interest
0.4

 
0.1

       Other income/(expense), net (3)
(41.3
)
 
1.0

Non-allocated corporate costs, net
(5.5
)
 
(1.6
)
Total unallocated costs
$
(52.4
)
 
$
(11.6
)
 
(2)
Segment results do not include restructuring and certain acquisition related costs.
(3)
Amounts primarily relate to the expense associated with the termination of the sponsor advisory services agreement of $29.8 million resulting from the initial public offering, expenses related to financing transactions of $20.6 million, acquisition related gain of $7.0 million, net, during the current year, and foreign currency translation gains and losses during all periods presented.
Provided below is a reconciliation of earnings/(loss) from continuing operations to EBITDA from continuing operations:

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Three Months Ended  
 September 30,
(Dollars in millions)
2014
 
2013
Earnings/(loss) from continuing operations
$
(20.3
)
 
$
1.8

Depreciation and amortization
35.0

 
36.5

Interest expense, net
35.5

 
40.9

Income tax (benefit)/expense
(14.0
)
 
(6.6
)
Noncontrolling interest
0.4

 
0.1

EBITDA from continuing operations
$
36.6

 
$
72.7

Oral Technologies segment
 
2014 vs. 2013
 Factors Contributing to Year-Over-Year Change
Three Months Ended  
 September 30,
 
Net Revenue
 
Segment EBITDA
Organic revenue / Segment EBITDA
1
 %
 
(2
)%
Impact of acquisitions
2
 %
 
1
 %
Impact of divestitures / business restructuring
(1
)%
 
—
 %
Constant currency change
2
 %
 
(1
)%
Foreign exchange fluctuation
(1
)%
 
(3
)%
Total % Change
1
 %
 
(4
)%
Oral Technologies’ net revenue increased $5.9 million , or 2% , excluding the impact of foreign exchange. The increase is primarily due to increased sales in our modified release technologies business of approximately $5 million, or 2%, as compared to the three months ended September 30, 2013 . Additionally, revenue increased as a result of higher profit from product participation related activities of approximately $4 million, or 2% compared to the prior year across the Oral Technologies businesses, partially offset by lower end market demand for certain customer products using our softgel offering.
Oral Technologies' segment EBITDA decreased by $0.9 million , or 1%, as compared to the three months ended September 30, 2013 , excluding the impact of foreign exchange. The decrease was primarily driven by decreased demand and unfavorable product mix in our softgel offering partially offset by increased revenues during the quarter within our modified release technologies platform.
Medication Delivery Solutions segment
 
2014 vs. 2013
 Factors Contributing to Year-Over-Year Change
Three Months Ended  
 September 30,
 
Net Revenue
 
Segment EBITDA
Organic revenue / Segment EBITDA
1
%
 
22
 %
Impact of acquisitions
—
%
 
—
 %
Impact of divestitures / business restructuring
—
%
 
—
 %
Constant currency change
1
%
 
22
 %
Foreign exchange fluctuation
—
%
 
(1
)%
Total % Change
1
%
 
21
 %
Net revenue in our Medication Delivery Solutions segment increased by $0.4 million , or 1%, as compared to the three months ended September 30, 2013 , excluding the impact of foreign exchange, primarily due to increased revenue generated from our biologics offerings driven by the timing of completed project milestones and increased demand for products utilizing our blow-fill-seal technology platform by approximately 7% as compared to the prior year period, partially offset by decreased demand for our injectable products at our European pre-filled syringe operations of approximately 6%.

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Medication Delivery Solutions' segment EBITDA increased by $1.8 million , or 22% , as compared to the three months ended September 30, 2013 , excluding the impact of foreign exchange. The increase was primarily attributable to favorable product mix shift to revenue from our biologics offerings and our blow-fill-seal technology platform.
Development and Clinical Services segment
 
2014 vs. 2013
 Factors Contributing to Year-Over-Year Change
Three Months Ended  
 September 30,
 
Net Revenue
 
Segment EBITDA
Organic revenue / Segment EBITDA
(1
)%
 
32
%
Impact of acquisitions
—
 %
 
—
%
Impact of divestitures / business restructuring
—
 %
 
—
%
Constant currency change
(1
)%
 
32
%
Foreign exchange fluctuation
3
 %
 
4
%
Total % Change
2
 %
 
36
%
Development and Clinical Services' net revenue decreased by $0.7 million , or 1%, as compared to the three months ended September 30, 2013 , excluding the impact of foreign exchange, primarily driven by lower revenue from our clinical services offerings of approximately $5 million, or 5%, partially offset by growth in analytical services due to higher project volumes in the U.S. and growth of our integrated oral solids development and manufacturing capabilities of approximately $4 million, or 4%.
Development and Clinical Services' segment EBITDA increased by $5 million , or 32%, excluding the impact of foreign exchange, as compared to the three months ended September 30, 2013 , primarily due to increased demand for analytical services and favorable revenue mix across the segment.
Liquidity and Capital Resources
Sources and Uses of Cash
Our principal source of liquidity has been cash flows generated from operations. The principal uses of cash are to fund planned operating and capital expenditures, interest payments on debt and any mandatory or discretionary principal payments on debt issuances. As of September 30, 2014 , our financing needs were supported by $200 million of available funds under our revolving credit facility. As of September 30, 2014 , the revolving credit facility is only reduced by $13.3 million of outstanding letters of credit. The revolving credit facility matures in May 2019.
Cash Flows
The following table summarizes our consolidated statement of cash flows from continuing operations:
 
Three Months Ended  
September 30,
 
 
(Dollars in millions)
2014
 
2013
 
Change $
Net cash provided by/(used in):
 
 
 
 
 
Operating activities
$
(40.2
)
 
$
25.7

 
$
(65.9
)
Investing activities
$
(44.7
)
 
$
(26.2
)
 
$
(18.5
)
Financing activities
$
86.9

 
$
(12.5
)
 
$
99.4

Operating Activities
For the three months ended September 30, 2014 , cash used in operating activities was $40.2 million compared to cash provided by $25.7 million for the comparable prior year period. Cash used in operating activities decreased primarily due to lower net earnings in the current quarter primarily driven by the sponsor advisory agreement termination fee of $29.8 million paid in connection with the IPO and the acceleration of $20 million interest paid during the quarter due to the early repayment of debt. Working capital balances were also unfavorable as compared to the three months ended September 30, 2014 .

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Investing Activities
For the three months ended September 30, 2014 , cash used in investing activities was $44.7 million compared to $26.2 million for the comparable prior year period. Acquisitions of property, plant and equipment totaled $31.2 million for the three months ended September 30, 2014 as compared to $18.8 million in the comparable prior year period. In addition, during the three months ended September 30, 2014 , we expended $13.5 million for acquisition activities as compared to $8.0 million in the comparable period.
Financing Activities
For the three months ended September 30, 2014 , cash provided by financing activities was $86.9 million compared to cash used in financing activities of $12.5 million for the comparable prior year period. The net proceeds raised in connection with our IPO were primarily used to fund debt payments of $863.8 million . The current period also includes $9.8 million of call premiums paid in connection with the early termination of certain debt instruments in the period. For the three months ended September 30, 2013, we decreased our net short-term borrowings by $5.8 million and repaid $6.7 million of our long-term borrowings.
Guarantees and Security
All obligations under our Secured Credit Agreement are unconditionally guaranteed by each of our existing U.S. wholly owned subsidiaries, other than our Puerto Rico subsidiaries, subject to certain exceptions.
All obligations under the Secured Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the following assets of each guarantor, subject to certain exceptions:
•
a pledge of 100% of our capital stock and 100% of the equity interests directly held by us and each guarantor in any wholly-owned material subsidiary of the Company or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of a first tier non-U.S. subsidiary); and
•
a security interest in, and mortgages on, substantially all tangible and intangible assets of us and of each guarantor, subject to certain limited exceptions.
Debt Covenants
The Credit Agreement and the senior unsecured term loan facility, among other things, restrict, subject to certain exceptions, the Company’s (and the Company’s restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans or advances; make certain acquisitions; and in the case of the Company’s Credit Agreement, enter into sale and leaseback transactions and change the Company’s lines of business.
The Credit Agreement and the senior unsecured term loan facility also contain change of control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a Net Leverage covenant when there is a 30% or more draw outstanding at a period end. As of September 30, 2014, the Company was in compliance with all covenants related to its long-term obligations.
Subject to certain exceptions, the Credit Agreement and the senior unsecured term loan facility will permit the Company and its restricted subsidiaries to incur certain additional indebtedness, including secured indebtedness. None of the Company’s non-U.S. subsidiaries or Puerto Rico subsidiaries is a guarantor of the loans.

As of September 30, 2014 and June 30, 2014 , the amounts of cash and cash equivalents held by foreign subsidiaries were $63.2 million and $53.5 million, respectively, out of the total consolidated cash and cash equivalents of $63.2 million and $74.4 million . We believe that the amount of funds held by foreign subsidiaries as of such dates not readily convertible into other foreign currencies, including U.S. dollars, was $4.0 million and $3.5 million, respectively. Based on our domestic cash flows from operations and our other sources of liquidity, we believe we have sufficient access to funds for our expected future domestic liquidity needs. Our intent is to continue to reinvest undistributed earnings of our foreign local entities and we do not currently plan to repatriate them to fund our operations in the United States. In the event we need to repatriate funds from outside of the United States, such repatriation would likely be subject to restrictions by local laws and/or tax consequences, including foreign withholding taxes or U.S. income taxes. It is not feasible to estimate the amount of U.S. tax that might be payable on the remittance of such earnings.

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Historical and Adjusted EBITDA
The Company's Adjusted EBITDA for the last twelve months ended September 30, 2014 based on the definitions in the Company's indentures and the credit agreement governing the senior unsecured term loan facility is calculated as follows:
(Dollars in millions)
Twelve Months Ended 
 September 30, 2014
Earnings/(loss) from continuing operations
$
(4.2
)
Interest expense, net
157.7

Income tax (benefit)/provision
42.1

Depreciation and amortization
141.4

Noncontrolling interest
1.3

EBITDA from continuing operations
338.3

 
 
Equity compensation (1)
4.8

Impairment charges and (gain)/loss on sale of assets (2)
3.2

Financing-related expenses (3)
31.5

GAAP Restructuring (4)
18.1

Acquisition, integration and other special items (5)
9.3

Foreign exchange loss (gain) (included in other, net) (6)
(5.5
)
Other adjustments (7)
24.1

Sponsor advisory fee (8)
9.7

Adjusted EBITDA
$
433.5


(1)
Reflects non-cash stock-based compensation expense under the provisions of ASC 718 Compensation – Stock Compensation.
(2)
Reflects non-cash asset impairment charges or gains and losses from the sale of assets not included in GAAP Restructuring and other special items discussed below.
(3)
Reflects the expenses associated with refinancing activities undertaken by us during the period.
(4)
Reflects GAAP restructuring charges, which were primarily attributable to activities which focus on various aspects of operations, including consolidating certain operations, rationalizing headcount and aligning operations in a more strategic and cost-efficient structure to optimize our business.
(5)
Primarily reflects acquisition and ongoing integration-related costs.
(6)
Foreign exchange gain of $5.5 million for the twelve months ended September 30, 2014 included $24.3 million of unrealized foreign currency exchange rate gains primarily driven by gains of $4.9 million related to inter-company loans denominated in a currency different from the functional currency of either the borrower or the lender and foreign currency exchange gains of $19.4 million driven by the ineffective portion of the net investment hedge related to the euro denominated debt. The foreign exchange adjustment was also affected by the exclusion of realized foreign currency exchange rate losses from the non-cash and cash settlement of inter-company loans of $18.8 million . Inter-company loans are between Catalent entities and do not reflect the ongoing results of the companies' trade operations.
(7)
Reflects certain other adjustments made pursuant to the definition of "EBITDA" under our indentures and credit agreements, including the sponsor advisory agreement termination fee of $29.8 million offset by a gain on acquisition of $7.0 million .
(8)
Represents amount of sponsor advisory fee. The sponsor advisory fee agreement was terminated in connection with the IPO. Refer to Note 10 to the Consolidated Financial Statements for further discussion.

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Adjusted Net Income
Management also measures operating performance based on Adjusted Net Income/(loss). Adjusted Net Income/(loss) is not defined under GAAP and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP and is subject to important limitations. For example, Adjusted Net Income excludes our non-cash tax expense and does not reflect the impact on earnings resulting from certain other items.
We believe that the presentation of Adjusted Net Income/(loss) enhances an investor’s understanding of our financial performance. We believe this measure is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business and we use this measure for business planning purposes. We define Adjusted Net Income/(loss) as net earnings/(loss) adjusted for (1) earnings or loss of discontinued operations, net of tax, (2) non-cash tax expense or income, (3) amortization attributable to purchase accounting and (4) income or loss from non-controlling interest in our majority-owned operations. We also make adjustments for other cash and non-cash items included in the table below, partially offset by our estimate of the cash taxes saved as a result of such cash and non-cash items. We believe that Adjusted Net Income/(loss) will provide investors with a useful tool for assessing the comparability between periods of our ability to generate cash from operations available to our stockholders.
We present Adjusted Net Income/(loss) in order to provide supplemental information that we consider relevant for the readers of our Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q, and such information is not meant to replace or supersede GAAP measures. Our definition of Adjusted Net Income/(loss) may not be the same as similarly titled measures used by other companies.

A reconciliation of net income, the most directly comparable GAAP measure, to Adjusted Net Income is as follows:
 
Twelve Months Ended 
 September 30, 2014
(Dollars in millions)
Net earnings/(loss)
$
(6.1
)
Net earnings/(loss) from discontinued operations, net of tax
1.9

Earnings/(loss) from continuing operations
(4.2
)
Amortization (1)
43.6

Non-cash Income tax expense/(benefit)  (2)
42.1

Cash taxes (paid) / refunded
(15.2
)
Net (earnings)/loss attributable to noncontrolling interest, net of tax
1.3

Equity compensation (3)
4.8

Impairment charges and (gain)/loss on sale of assets  (4)
3.2

Financing-related expenses (5)
31.5

GAAP restructuring (6)
18.1

Acquisition, integration and other special items (7)
9.3

Foreign exchange loss (gain) (included in other (income) / expense, net) (8)
(5.5
)
Other adjustments  (9)
24.1

Sponsor advisory fee (10)
9.7

Estimated cash tax (savings) / expense attributable to reconciling items (11)
(5.5
)
Adjusted net income / (loss)
$
157.3

(1)
Represents the amortization attributable to purchase accounting for previously completed business combinations.
(2)
Represents the amount of income tax-related (benefit)/expense recorded within our net earnings/(loss) that may not result in cash payment or receipt.
(3)
Reflects non-cash stock-based compensation expense under the provisions of ASC 718 Compensation – Stock Compensation.
(4)
Reflects non-cash asset impairment charges or gains and losses from the sale of assets not included in GAAP Restructuring and other special items discussed below.
(5)
Reflects the expense associated with refinancing activities undertaken by the Company during the period.

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(6)
Reflects GAAP restructuring charges which were primarily attributable to activities which focus on various aspects of operations, including consolidating certain operations, rationalizing headcount and aligning operations in a more strategic and cost-efficient structure to optimize our business.
(7)
Primarily reflects acquisition and integration related costs.
(8)
Foreign exchange gain of $5.5 million for the twelve months ended September 30, 2014 included $24.3 million of unrealized foreign currency exchange rate gains primarily driven by gains of $4.9 million related to inter-company loans denominated in a currency different from the functional currency of either the borrower or the lender, partially offset by foreign currency exchange gains of $19.4 million driven by the ineffective portion of the net investment hedge related to the euro denominated debt. The foreign exchange adjustment was also impacted by the exclusion of realized foreign currency exchange rate losses from the non-cash and cash settlement of inter-company loans of $18.8 million . Inter-company loans are between Catalent entities and do not reflect the ongoing results of the Company's trade operations.
(9)
Reflects certain other adjustments made pursuant to the definition of "EBITDA" under our indentures and credit agreements including the sponsor advisory agreement termination fee of $29.8 million offset by the gain on acquisition of $7.0 million .
(10)
Represents amount of sponsor advisory fee. The sponsor advisory fee agreement was terminated in connection with the IPO. Refer to Note 10 to the Consolidated Financial Statements for further discussion.
(11)
Represents the estimated cash tax impact of certain items recorded in each period that are added back in the calculation of Adjusted Net Income/(loss). The estimate is determined by applying the statutory tax rate in tax-paying jurisdictions to income or expense items that affect cash taxes paid. Generally, amortization attributable to purchase accounting, unrealized gains/losses due to foreign currency translation and non-cash equity compensation do not affect cash taxes.

Backlog

While we generally have long-term supply agreements that provide for a revenue stream over a period of years, our backlog represents, as of a point in time, future service revenues from work not yet completed. For our Oral Technologies segment and Medication Delivery Solutions segment, backlog represents firm orders for manufacturing services and includes minimum volumes, where applicable. For our Development and Clinical Services segment, backlog represents estimated future service revenues from work not yet completed under signed contracts. Using these methods of reporting backlog, as of September 30, 2014 , backlog was approximately $807.3 million, as compared to approximately $782.1 million as of June 30, 
 2014 , including approximately $389.6 million and $373.8 million, respectively, related to our Development and Clinical Services segment. We expect to recognize approximately 81% of revenue from the backlog in existence as of September 30, 2014 by June 30, 2015.
To the extent projects are delayed, the timing of our revenue could be affected. If a customer cancels an order, we may be reimbursed for the costs we have incurred. For orders that are placed inside a contractual firm period, we generally have a contractual right to payment in the event of cancellation. Fluctuations in our reported backlog levels also result from the timing and order pattern of our customers who often seek to manage their level of inventory on hand. Because of customer ordering patterns, our backlog reported for certain periods may fluctuate and may not be indicative of future results.
Interest Rate Risk Management
A portion of the debt used to finance the Company’s operations is exposed to interest rate fluctuations. We may use various hedging strategies and derivative financial instruments to create an appropriate mix of fixed and floating rate assets and liabilities. The primary interest rate exposure as of September 30, 2014 is to interest rate fluctuations in the United States and Europe, especially USD LIBOR and EURIBOR interest rates.
Currency Risk Management
Risk Management Objective of Using Derivatives
The Company is exposed to fluctuations in the EUR-USD exchange rate on its investments in foreign operations in Europe. While the Company does not actively hedge against changes in foreign currency, the Company has mitigated the exposure of its investments in its European operations by denominating a portion of its debt in euros. At September 30, 2014 , the Company had euro denominated debt outstanding of $315.6 million that qualifies as a hedge of a net investment in foreign operations. For non-derivatives designated and qualifying as net investment hedges, the effective portion of the translation gains or losses are reported in accumulated other comprehensive income/(loss) as part of the cumulative translation adjustment. For the three months ended September 30, 2014 , the Company recorded an unrealized foreign exchange gain of $10.8 million within cumulative translation adjustment. For the three months ended September 30, 2013 , the Company recorded an

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unrealized foreign exchange loss of $11.4 million within cumulative translation adjustment. The net accumulated gain of this net investment as of September 30, 2014 included within other comprehensive income/(loss) was approximately $60.2 million .
For the three months ended September 30, 2014 , the Company recognized an unrealized foreign exchange gain of $21.3 million in the consolidated statement of operations related to a portion of its euro-denominated debt not designated as a net investment hedge. For the three months ended September 30, 2013 , the Company recorded an unrealized foreign exchange loss of $7.6 million .
Amounts are reclassified out of accumulated other comprehensive income/(loss) into earnings when the hedged net investment is either sold or substantially liquidated.
Periodically, we may utilize forward currency exchange contracts to manage the Company’s exposures to the variability of cash flows primarily related to the foreign exchange rate changes of future foreign currency transaction costs. In addition, we may utilize foreign currency forward contracts to protect the value of existing foreign currency assets and liabilities. Currently, we do not utilize foreign currency exchange contracts. We expect to continue to evaluate hedging opportunities for foreign currency in the future.
Contractual Obligations
There has been no other material change outside the ordinary course of business since June 30, 2014 with respect to the contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 .
Off-Balance Sheet Arrangements
Other than operating leases and outstanding letters of credit, we do not have any material off-balance sheet arrangement as of September 30, 2014 .

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Table of Contents


Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to cash flow and earnings fluctuations as a result of certain market risks. These market risks primarily relate to changes in interest rates associated with our long-term debt obligations and foreign exchange rate changes. We sometimes utilize derivative financial instruments, such as interest rate swaps, in order to mitigate risk associated with some of our variable rate debt.
Interest Rate Risk
We have historically used interest rate swaps to manage the economic effect of variable rate interest obligations associated with our floating rate term loans so that the interest payable on the term loans effectively becomes fixed at a certain rate, thereby reducing the impact of future interest rate changes on our future interest expense. As of September 30, 2014 , we did not have any interest rate swap agreements in place that would either have the economic effect of modifying the variable interest obligations associated with our floating rate term loans or would be considered effective cash flow hedges for financial reporting purposes.
Foreign Currency Exchange Risk
The nature of our global operations exposes us to cash flow and earnings fluctuations resulting from foreign exchange rate variation. These exposures are transactional and translational in nature. Since we manufacture and sell our products throughout the world, our foreign currency risk is diversified. Principal drivers of this diversified foreign exchange exposure include the European euro, British pound, Argentinean peso, Brazilian real and Australian dollar. Our transactional exposure arises from the purchase and sale of goods and services in currencies other than the functional currency of our operational units. We also have exposure related to the translation of financial statements of our foreign divisions into U.S. dollars, the functional currency of Catalent. The financial statements of our operations outside the United States are measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of these foreign operations in U.S. dollars are accumulated as a component of other comprehensive income/(loss) utilizing period-end exchange rates. Foreign currency transaction gains and losses calculated by utilizing weighted average exchange rates for the period are included in our consolidated statements of operations in “other (income)/expense, net”. Such foreign currency transaction gains and losses include inter-company loans denominated in non-U.S. dollar currencies.

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Item 4.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer, and our Executive Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any control and procedure, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our President and Chief Executive Officer, and our Executive Vice President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that, as of September 30, 2014 , our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II.    OTHER INFORMATION
Item 1.
LEGAL PROCEEDINGS
Beginning in November 2006, the Company, along with several pharmaceutical companies, has been named in approximately 380 civil lawsuits filed by individuals allegedly injured by their use of the prescription acne medication Amnesteem®, a branded generic form of isotretinoin, and in some instances of isotretinoin products made and/or sold by other firms as well. All of these lawsuits have been dismissed or settled.
From time to time, we may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of which could be significant. We intend to vigorously defend ourselves against such other litigation and do not currently believe that the outcome of any such other litigation will have a material adverse effect on our financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.
From time to time, we receive subpoenas or requests for information from various government agencies, including from state attorneys general and the U.S. Department of Justice relating to the business practices of customers or suppliers. We generally respond to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred by us. We expect to incur additional costs in the future in connection with existing and future requests.
Item 1A.
RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 , which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There has been no material change to the risk factors disclosed in the Company’s Annual Report on Form 10-K.
Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.

Use of Proceeds from Registered Securities
On August 5, 2014, we completed the IPO, in which we sold 42,500,000 shares of common stock at an IPO price of $20.50 per share. The shares offered and sold in the IPO were registered under the Securities Act pursuant to our Registration Statement on Form S-1 (File No. 333-193542), which was declared effective by the SEC on July 30, 2014. The total proceeds, before underwriting discount and commission and other offering expenses, for the shares sold in the IPO was approximately $871.3 million. The underwriters of the offering were led by Morgan Stanley, J.P. Morgan, BofA Merrill Lynch, Goldman, Sachs & Co., Jefferies and Deutsche Bank Securities. Blackstone Capital Markets, Piper Jaffray, Raymond James, Wells Fargo Securities, William Blair and Evercore acted as co-managers for the IPO.
The IPO generated net proceeds of approximately $822.7 million to us after net underwriting discounts and commissions and other offering expenses. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates), persons owning 10 percent or more of our common stock or any other affiliate. We used a portion of the net proceeds received in the offering to redeem the €225.0 million in aggregate principal amount of our Senior Subordinated Notes, to redeem the $350.0 million in aggregate principal amount of our Senior Notes and to repay approximately $114.5 million of the $275.0 million aggregate principal amount outstanding under our senior unsecured term loan facility.
Prior to the IPO, we were a party to a Transaction and Advisory Fee Agreement, dated as of April 10, 2007, among us, Blackstone Management Partners V L.L.C. (“BMP”), Genstar Capital LLC and Aisling Capital, LLC (the “Advisory Agreement”). On August 5, 2014, and in connection with the IPO, the Advisory Agreement was terminated. In connection with such termination, we paid a termination fee equal to approximately $29.8 million to the other parties to the Advisory Agreement, including approximately $26.2 million to BMP, using a portion of the net proceeds of the IPO.

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On September 9, 2014, Morgan Stanley and J.P. Morgan, as representatives of the underwriters of Catalent’s IPO, purchased an additional 6.4 million shares of Catalent’s common stock from Catalent at the IPO price of $20.50 per share less the underwriting discount pursuant to an option granted to the underwriters at the time of the IPO. The net proceeds received by the Company was $124.2 million and was subsequently used to repay approximately $120.0 million of the $160.5 million aggregate principal amount outstanding under our senior unsecured term loan facility.

Purchase of Equity Securities
None.
Item 3.
DEFAULTS UPON SENIOR SECURITIES
None.
Item 4.
MINE SAFETY DISCLOSURES
Not applicable.
Item 5.
OTHER INFORMATION
Iran Threat Reduction and Syria Human Rights Act of 2012
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRSHRA”), which added Section 13(r) of the Exchange Act, the Company hereby incorporates by reference herein Exhibit 99.1 of this report, which includes disclosures publicly filed and/or provided to Blackstone by Travelport Worldwide Limited, which may be considered our affiliate.
Item 6.
EXHIBITS
Exhibits:
10.1
 
Form of Performance Share Unit for U.S. Employees*
 
 
 
10.2
 
Form of Performance Share Unit Agreement for Non-U.S. Employees*
 
 
 
31.1
  
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
 
 
31.2
  
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
 
 
32.1
  
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
 
 
32.2
  
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
 
 
 
99.1
 
Section 13(r) Disclosure*
 
 
101.1
  
The following financial information from Catalent, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 formatted in XBRL: (i) Consolidated Statements of Operations for the Three Months Ended September 30, 2014 and 2013; (ii) Consolidated Statements of Comprehensive Income/(Loss) for the Three Months Ended September 30, 2014 and 2013 (iii) Consolidated Balance Sheets as of September 30, 2014 and June 30, 2014; (iv) Consolidated Statement of Changes in Shareholders’ Equity/(Deficit) as of September 30, 2014; (v) Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2014 and 2013; and (vi) Notes to Unaudited Consolidated Financial Statements.
*
Filed herewith
**
Furnished herewith.

42
Table of Contents


SIGNATURES
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.
 
 
 
CATALENT, INC.
(Registrant)
 
 
 
 
Date:
November 13, 2014
By:
 
/s/ John R. Chiminski
 
 
 
 
John R. Chiminski
 
 
 
 
President & Chief Executive Officer
 
 
 
 
Date:
November 13, 2014
By:
 
/S/ Matthew M. Walsh
 
 
 
 
Matthew M. Walsh
 
 
 
 
Executive Vice President & Chief Financial Officer

43


Exhibit 10.1

PERFORMANCE SHARE UNIT GRANT NOTICE
UNDER THE
CATALENT, INC.
2014 OMNIBUS INCENTIVE PLAN

Catalent, Inc. (the “ Company ”), pursuant to its 2014 Omnibus Incentive Plan, as it may be amended from time to time (the “ Plan ”), hereby grants to the Participant set forth below the target number of Performance Share Units (which are performance-based Restricted Stock Units for purposes of the Plan) as set forth below. The Performance Share Units are subject to all of the terms and conditions as set forth herein and in the Performance Share Unit Agreement (attached hereto or previously provided to the Participant in connection with a prior grant) and the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein (including Exhibit A attached hereto) shall have the meaning set forth in the Plan or the Performance Share Unit Agreement.
Participant :
[ Insert Participant Name ]
Date of Grant :
[ Insert Date of Grant ]
Performance Period :
The period commencing on and ending on .
Target Number of
Performance Share Units :
[ Insert Target Number of PSUs ], subject to adjustment as set forth in the Plan.     


* * *






THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS PERFORMANCE SHARE UNIT GRANT NOTICE, THE PERFORMANCE SHARE UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF PERFORMANCE SHARE UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS PERFORMANCE SHARE UNIT GRANT NOTICE, THE PERFORMANCE SHARE UNIT AGREEMENT AND THE PLAN. THE PARTICIPANT’S RIGHTS UNDER THE PERFORMANCE SHARE UNIT GRANT NOTICE AND THE PERFORMANCE SHARE UNIT AGREEMENT WILL LAPSE SIXTY (60) DAYS FROM THE DATE OF GRANT AND THE PERFORMANCE SHARE UNITS WILL BE FORFEITED ON SUCH DATE IF THE PARTICIPANT SHALL NOT HAVE ACCEPTED THIS PERFORMANCE SHARE UNIT GRANT NOTICE AND THE PERFORMANCE SHARE UNIT AGREEMENT BY SUCH DATE.
This Performance Share Unit Grant Notice may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

CATALENT, INC.    PARTICIPANT

________________________________      ________________________________
By:
Title:













_________________________
1
To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.




PERFORMANCE SHARE UNIT AGREEMENT
UNDER THE
CATALENT, INC.
2014 OMNIBUS INCENTIVE PLAN

Pursuant to the Performance Share Unit Grant Notice (the “ Grant Notice ”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Performance Share Unit Agreement (this “ Performance Share Unit Agreement ”) and the Catalent, Inc. 2014 Omnibus Incentive Plan, as it may be amended from time to time (the “ Plan ”), Catalent, Inc. (the “ Company ”) and the Participant agree as follows.
1. Definitions . Whenever the following terms are used in this Performance Share Unit Agreement, they shall have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan or the Grant Notice, as applicable.

(a) Employment . The term “Employment” means the Participant’s employment as an employee of the Company or any of its Affiliates or Subsidiaries.

(b)      Restrictive Covenant Violation . The term “Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants set forth in Section 10 or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s or any of its Affiliates’ or Subsidiaries’ vendors, suppliers, customers or employees or any similar provision applicable to or agreed to by the Participant.
(c)      Retirement . The term “Retirement” shall mean a Termination by the Participant that occurs on or after the date on which the Participant attains the age of sixty-five (65) and has completed at least ten (10) years of Employment (other than a Termination when grounds existed for a Termination for Cause at the time thereof).
(d)      Termination Date . The term “Termination Date” shall mean the date upon which the Participant incurs a Termination for any reason.
2. Grant of Performance Share Units . Subject to the terms and conditions set forth herein, in the Grant Notice and in the Plan, for good and valuable consideration, the Company hereby grants to the Participant the Target Number of Performance Share Units (which are performance-based Restricted Stock Units for purposes of the Plan) provided in the Grant Notice (with each Performance Share Unit representing an unfunded, unsecured right to receive one share of Common Stock). The Company may make one or more additional grants of Performance Share Units to the Participant under this Performance Share Unit Agreement by providing the Participant with a new Grant Notice and new Exhibit A, to the extent applicable, which may also include any terms and conditions differing from this Performance Share Unit Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Performance Share Units hereunder and makes no implied promise to grant additional Performance Share Units.

3.      Vesting . Subject to the conditions contained herein and in the Plan, the Performance Share Units shall vest as provided on Exhibit A or in Section 6 below. With respect to any Performance Share Unit, the period of time that such Performance Share Unit remains subject to vesting shall be its Restricted Period.
4.      Dividend Equivalents . The Performance Share Units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on shares of Common Stock. Such dividend equivalents will be provided in shares of Common Stock having a Fair Market Value equal to the amount of such applicable dividends, and shall be shall be payable at the same time as the Performance Share Units are settled in accordance with Section 5 below. In the event that any Performance Share Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Performance Share Units.




5.     Settlement of Performance Share Units . Upon expiration of the Restricted Period with respect to any outstanding Performance Share Units that have not previously been forfeited in accordance with Exhibit A or Section 6 below, the Company shall issue to the Participant as soon as practicable (but no later than March 15 of the year following the year in which the Restricted Period expires) one share of Common Stock for each Performance Share Unit and such Performance Share Unit shall be cancelled; provided , however , that the Committee may, in its sole discretion, elect to defer the issuance of such shares beyond the expiration of the Restricted Period if such extension would not cause adverse tax consequences under Section 409A of the Code.

6.     Treatment on Termination .

(a)      Subject to clauses (b) - (d) below, in the event of a Termination prior to the Regular Vesting Date, the CIC Vesting Date or the Time Vesting Date (each as defined on Exhibit A), as applicable, (i) all vesting with respect to the Participant’s Performance Share Units shall cease and (ii) unvested Performance Share Units shall be forfeited to the Company by the Participant for no consideration as of the Termination Date.
(b)      Death . If the Participant incurs a Termination due to death, the Target Number of Performance Share Units or the number of Converted PSUs (as defined on Exhibit A) to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, become fully vested, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration.
(c)      Disability/Retirement . If the Participant incurs a Termination due to Disability or Retirement, in each case, the number of Performance Share Units as determined in accordance with Exhibit A, to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, continue to vest as provided on Exhibit A as if the Participant had continued Employment through the Regular Vesting Date, the CIC Vesting Date or the Time Vesting Date, as applicable, subject to the Participant’s compliance with the restrictive covenants set forth in Section 10 and the Participant’s execution, delivery and non-revocation of a waiver and release of claims in favor of the Company and its Affiliates and Subsidiaries in a form prescribed by the Company on or prior to the 60 th day following the Termination Date; provided, however, in the case of a Termination due to Retirement, the number of Performance Share Units, if any, that shall vest, as determined in accordance with Exhibit A shall be multiplied by a fraction, the numerator of which is equal to the number of days between and including the first day of the Performance Period and the date the Participant incurs a Termination due to Retirement and the denominator of which is 1095. Upon the Regular Vesting Date, the CIC Vesting Date or the Time Vesting Date, as applicable, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration.
(d)      Change in Control . In the event of a Change in Control, to the extent the acquiring or successor entity assumes, continues or substitutes for the Performance Share Units as provided for and described on Exhibit A hereto, if the Participant incurs a Termination by the Service Recipient without Cause (other than due to death or Disability) during the period commencing on the date of the consummation of a Change in Control and ending on the date that is eighteen (18) months following the consummation of such Change in Control, the number of Converted PSUs shall, to the extent not then vested or previously forfeited or cancelled, become fully vested, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration.

7.      Non - Transferability . The Performance Share Units are not transferable by the Participant except to Permitted Transferees in accordance with Section 14(b) of the Plan. Whenever the word “Participant” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to executors, the administrators or the person or persons to whom the Performance Share Units may be transferred by will or by the laws of descent and distribution in accordance with Section 14 of the Plan, the word “Participant” shall be deemed to include such person or persons. Except as otherwise provided herein, no assignment or transfer of the Performance Share Units, or of the rights represented thereby, whether voluntary or involuntary, by operation




of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Performance Share Units shall terminate and become of no further effect.
8.      Rights as Stockholder . Except as otherwise expressly provided for herein, the Participant or a Permitted Transferee of the Performance Share Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Performance Share Unit unless and until the Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof.
9.      Repayment of Proceeds; Clawback Policy . If a Restrictive Covenant Violation occurs or the Company discovers after a Termination that grounds existed for Cause at the time thereof, then the Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the Performance Share Units and any shares issued in respect thereof. Any reference in this Performance Share Unit Agreement to grounds existing for a Termination for Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or termination with, Cause. The Performance Share Units and all proceeds thereof shall be subject to the Company’s Clawback Policy, as in effect from time to time, to the extent the Participant is a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act.
10.      Restrictive Covenants .
(a)    To the extent that the Participant is a party to an employment or similar agreement with the Company or one of its Affiliates or Subsidiaries containing non-competition, non-solicitation, non-interference or confidentiality restrictions (or two or more such restrictions), those restrictions and related enforcement provisions under such agreement shall govern and the following provisions of this Section 10 shall not apply.
(b)    Competitive Activity
(i) The Participant shall be deemed to have engaged in “Competitive Activity” if, during the period commencing on the Date of Grant and ending on the date that is 12 months after the Termination Date (the “Restricted Activity Period”), the Participant, whether on the Participant’s own behalf or on behalf of or in conjunction with any other Person (as defined below), directly or indirectly, violates any of the following prohibitions:
(I)    During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any person, firm, part-nership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly, solicit or assist in soliciting in competition with the Company or any of its Subsidiaries, the business of any client or prospective client:
(1) with whom the Participant had personal contact or dealings on behalf of the Company or any of its Subsidiaries during the one year period preceding the Termination Date;
(2) with whom employees reporting to the Participant have had personal contact or dealings on behalf of the Company or any of its Subsidiaries during the one year immediately preceding the Termination Date; or





(3) for whom the Participant had direct or indirect responsibility during the one year immediately preceding the Termination Date.
(II)    During the Restricted Activity Period, the Participant will not directly or indirectly:
(1) engage in any business that competes with the business of the Company or any of its Subsidiaries, including, but not limited to, providing formulation/dose form technologies and/or contract services to pharmaceutical, biotechnology, over-the-counter and vitamin/mineral supplements companies related to pre-clinical and clinical development, formulation, analysis, manufacturing and/or packaging and any other technology, product  or service of the type developed, manufactured or sold by the Company or any of its Subsidiaries (including, without limitation, any other business which the Company or any of its Subsidiaries have plans to engage in as of the Termination Date) in any geographical area where the Company or any of its Subsidiaries conduct business (a “Competitive Business”);
(2) enter the employ of, or render any services to, any Person (or any division or controlled or controlling Affiliate of any Person) who or which engages in a Competitive Business;
(3) acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(4) interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the Date of Grant) between the Company or any of its Subsidiaries and customers, clients, suppliers, or investors of the Company or any of its Subsidiaries.

Notwithstanding anything to the contrary in this Performance Share Unit Agreement, the Participant may, directly or indirectly own, solely as an investment, securities of any entity engaged in the business of the Company or any of its Subsidiaries which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Participant (i) is not a controlling person of, or a member of a group which controls, such Person and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such Person.
(III)    During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(1) solicit or encourage any employee of the Company or any of its Subsidiaries to leave the employment of the Company or any of its Subsidiaries; or
(2) hire any such employee who was employed by the Company or any of its Subsidiaries as of the Termination Date or who left the employment of the Company or any of its Subsidiaries coincident with, or within six (6) months prior to or after, the Termination Date; provided, however, that this restriction shall cease to apply to any employee who has not been employed by the Company or any of its Subsidiaries for at least six (6) months.





(IV)    During the Restricted Activity Period, the Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company or any of its Subsidiaries any consultant then under contract with the Company or any of its Subsidiaries.
(ii)    It is expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 10(b) to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Performance Share Unit Agreement is an unenforceable restriction against the Participant, the provisions of this Performance Share Unit Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Performance Share Unit Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

(c)    Confidentiality
(i)    The Participant will not at any time (whether during or after the Participant’s Employment) (x) retain or use for the benefit, purposes or account of the Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any person outside the Company and its Affiliates and Subsidiaries (other than its professional advisers who are bound by confidentiality obligations), any non-public, proprietary or confidential information --including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals -- concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)    “Confidential Information” shall not include any information that is (x) generally known to the industry or the public other than as a result of the Participant’s breach of this covenant or any breach of other confidentiality obligations by third parties, (y) made legitimately available to the Participant by a third party without breach of any known confidentiality obligation, or (z) required by law to be disclosed or in any judicial or administrative process; provided that the Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate, at the Company’s cost, with any attempts by the Company to obtain a protective order or similar treatment.
(iii)    Except as required by law, the Participant will not disclose to anyone, other than the Participant’s immediate family and legal or financial or tax advisors or lender, each of whom the Participant agrees to instruct not to disclose, the existence or contents of this Performance Share Unit Agreement (unless this Performance Share Unit Agreement shall be publicly available as a result of a regulatory filing made by the Company or one of its Affiliates or Subsidiaries); provided, that the Participant may disclose to any prospective future employer the provisions of Section 10 of this Performance Share Unit Agreement provided they agree to maintain the confidentiality of such terms.
(iv)    Upon Termination, the Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in the Participant’s possession or control (including any of the foregoing stored or located in the Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company or one of its Affiliates or Subsidiaries, except that




the Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which the Participant is or becomes aware.
(d)    Equitable Relief.

Notwithstanding the remedies set forth in Section 9 above and notwithstanding any other remedy which would otherwise be available to the Company at law or in equity, the Company and the Participant agree and acknowledge that if an actual or threatened Restrictive Covenant Violation occurs, the Company will be entitled to an injunction and/or other equitable relief restraining the Participant from the Restrictive Covenant Violation without the necessity of posting a bond or proving actual damages.
11.      Tax Withholding . The provisions of Section 14(d) of the Plan are incorporated herein by reference and made a part hereof.
12.      Notice . Every notice or other communication relating to this Performance Share Unit Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.
13.      No Right to Continued Employment . Neither the Plan nor this Performance Share Unit Agreement nor the granting of the Performance Share Units evidenced hereby shall be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any of its Affiliates or Subsidiaries. Further, the Company, or, if different, the Service Recipient, may at any time dismiss the Participant or discontinue any consulting relationship, free from any liability or any claim under the Plan or this Performance Share Unit Agreement, except as otherwise expressly provided herein.
14.      Data Privacy . The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Performance Share Unit Agreement and any other Performance Share Unit grant materials by and among, as applicable, the Service Recipient, the Company and its other Affiliates or Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
The Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Performance Share Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
The Participant understands that Data will be transferred to Morgan Stanley Smith Barney LLC, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential




recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company, Morgan Stanley Smith Barney LLC and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s Employment and career with the Service Recipient will not be adversely affected; the only adverse consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Performance Share Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
15.      Binding Effect . This Performance Share Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.
16.     Waiver and Amendments . Subject to Section 13(b) of the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, this Performance Share Unit Agreement, prospectively or retroactively (including after the Participant’s Termination); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Participant hereunder shall not to that extent be effective without the consent of the Participant. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

17.     Governing Law; Venue . This Performance Share Unit Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. For purposes of litigating any dispute that arises under this grant or this Performance Share Unit Agreement, the parties hereby submit to and consent to the jurisdiction of the State of New Jersey, agree that such litigation shall be conducted in the courts of Somerset County, or the federal courts for the United States for the District of New Jersey, where this grant is made and/or to be performed.

18.     Plan . The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Performance Share Unit Agreement, the Plan shall govern and control.

19.     Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

20.     Imposition of Other Requirements . The Company reserves the right to impose any other requirements on the Participant’s participation in the Plan, on the Performance Share Units and on any shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.





21.     Section 409A of the Code . The Performance Share Units are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “ Section 409A ”). However, notwithstanding any other provision of the Plan, the Grant Notice or this Performance Share Unit Agreement, if at any time the Committee determines that the Performance Share Units (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify the Participant or any other person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Performance Share Unit Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for the Performance Share Units to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.

22.     Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges that, depending on his or her country, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell shares of Common Stock or rights to shares of Common Stock (e.g., Performance Share Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.

23.     Entire Agreement . This Performance Share Unit Agreement, the Grant Notice and the Plan constitute the entire understanding between the Participant and the Company regarding the Performance Share Units. This Performance Share Unit Agreement, the Grant Notice and the Plan supersede any prior agreements, commitments or negotiations concerning the Performance Share Units.





Exhibit A

1.      Vesting/Change in Control . Except as otherwise expressly provided in Section 6 of the Performance Share Unit Agreement, provided the Participant has not incurred a Termination on or prior to the Regular Vesting Date (as defined below), the Performance Share Units granted hereunder shall vest upon the date on which the Committee determines the cumulative Revenue (as defined below) growth during the Performance Period and the cumulative EBITDA (as defined below) growth during the Performance Period, in each case, as of the last day of the Performance Period, which determination shall be made no later than the seventy-fifth (75 th ) day following the end of the Performance Period (the “ Regular Vesting Date ”) and in an amount, if any, equal to the product of (1) the Target Number of Performance Share Units and (2) the Cumulative Performance Percentage (as defined and described below). Upon the Regular Vesting Date, the Restricted Period shall expire and any vested Performance Share Units shall be settled in accordance with Section 5 of the Performance Share Unit Agreement. Any Performance Share Units that do not become vested in accordance with this Exhibit A (to the extent not previously forfeited pursuant to Section 6 of the Performance Share Unit Agreement) shall, effective as of the Regular Vesting Date, be forfeited by the Participant without consideration.
Notwithstanding the foregoing:
(i)      in the event of a Change in Control on or prior to July 1, 2015, to the extent the acquiring or successor entity does not assume, continue or substitute for the Performance Share Units, the Target Number of Performance Share Units, to the extent not then vested or previously forfeited or cancelled, shall become fully vested and on such date the Restricted Period shall expire (the date of such vesting and expiration, the “ CIC Vesting Date ”);
(ii)      in the event of a Change in Control after July 1, 2015 but prior to the end of the Performance Period, to the extent the acquiring or successor entity does not assume, continue or substitute for the Performance Share Units, a number of Performance Share Units equal to the number that would have vested based on the Cumulative Performance Percentage measured as of the last day of the fiscal year immediately preceding the date of the Change in Control (such day, the “ End Date ”) based on actual growth between July 1, 2014 through and including the End Date, measuring cumulative growth as of the End Date, to the extent not then vested or previously forfeited or cancelled, shall become fully vested and the Restricted Period with respect to such Performance Share Units shall expire on the CIC Vesting Date;
(iii)      in the event of a Change in Control on or prior to July 1, 2015, to the extent the acquiring or successor entity assumes, continues or substitutes for the Performance Share Units, in lieu of the vesting schedule in the first paragraph above, the Target Number of Performance Share Units will be subject to the following vesting schedule: provided the Participant has not incurred a Termination prior to the Time Vesting Date (as defined below), such Performance Share Units shall vest on June 30, 2017 (the “ Time Vesting Date ”) and, on the Time Vesting Date, the Restricted Period with respect to such Converted PSUs (as defined below) shall expire; and
(iv)      in the event of a Change in Control after July 1, 2015, to the extent the acquiring or successor entity assumes, continues or substitutes for the Performance Share Units, in lieu of the vesting schedule in the first paragraph above, a number of Performance Share Units equal to the number that would have vested based on the Cumulative Performance Percentage measured as of the End Date based on actual growth between [ ] through and including the End Date, measuring cumulative growth as of the End Date, will be subject to the following vesting schedule: provided the Participant has not incurred a Termination prior to the Time Vesting Date, such Performance Share Units shall vest on the Time Vesting Date and, on the Time Vesting Date, the Restricted Period with respect to such Converted PSUs shall expire.
Any Performance Share Units that do not vest or become Converted PSUs, as applicable, shall immediately be forfeited without any further action by the Company or the Participant and without any payment of consideration therefor.
For purposes of this Exhibit A and the Performance Share Unit Agreement, the term “Converted PSUs” shall mean those Performance Share Units that result from conversion pursuant to clause (iii) or clause (iv) above.




2.      Cumulative Performance Percentage . A number of Performance Share Units granted hereunder shall vest, if at all, based on the Cumulative Performance Percentage which is based on the cumulative Revenue (as defined below) growth during the Performance Period and the cumulative EBITDA (as defined below) growth during the Performance Period, determined as of the last day of the Performance Period in accordance with this Section 2.

For purposes of this Exhibit A:

“ Revenue ” shall mean net revenue as presented in the Company’s annual Securities and Exchange Commission filings but will be adjusted to [ ] fiscal year average foreign exchange rates. Future performance will be translated at constant foreign exchange rates in order to gauge performance against revenue goals in consideration of foreign currency fluctuations, which may occur. Revenue targets may also be adjusted during the Performance Period for any unusual items as defined and interpreted by the Committee including, but not limited to acquisitions and divestitures.

“ EBITDA ” shall mean the Company’s internally adjusted EBITDA which is generally calculated in the same manner as Adjusted EBITDA is calculated for purposes of the Company’s indentures governing its notes and its credit agreement governing its senior unsecured term loan facility, except for the impact of foreign exchange and other non-operational matters. EBITDA is based on [ ] fiscal year average foreign exchange rates and future performance will be translated at constant foreign exchange rates in order to gauge performance against EBITDA goals in consideration of foreign currency fluctuations, which may occur. EBITDA targets may also be adjusted during the Performance Period for any unusual items as defined and interpreted by the Committee including, but not limited to acquisitions and divestitures.

The Cumulative Performance Percentage shall be equal to the sum of twenty-five percent (25%) of the Revenue Performance Percentage and seventy-five percent (75%) of the EBITDA Performance Percentage as outlined and determined below.

Cumulative Revenue Growth

(during the Performance Period expressed as a percentage assuming the starting point for Revenue growth is $ million)
Revenue Performance Percentage
 %- %
%
%
%
%
%
%
%
%
%
%
%
 %+
%





Cumulative EBITDA Growth

(during the Performance Period expressed as a percentage assuming the starting point for EBITDA growth is $ million)
EBITDA Performance Percentage
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%+
%

Cumulative Performance Percentage

(the Revenue and EBITDA dollar amounts reflected below assume the full Performance Period runs and such amounts reflect Revenue and EBITDA for the 20[ ], 20[ ] and 20[ ] fiscal years, in the aggregate)

 
Cumulative EBITDA
(75%)
(in millions)
$
$
$
$
$
Cumulative
Revenue  (25%)
(in millions)
$
 %
 %
 %
 %
 %
$
 %
 %
 %
 %
 %
$
 %
 %
 %
 %
 %
$
 %
 %
 %
 %
 %
$
 %
 %
 %
 %
 %

The Revenue Performance Percentage, EBITDA Performance Percentage and Cumulative Performance Percentage shall each be a linear interpolation for any achievement that falls between the above targets, provided that there shall be no linear interpolation if the cumulative Revenue growth increases on average by less than [ ]% as of the last day of the Performance Period and/or the cumulative EBITDA growth increases on average by less than [ ]% as of the last day of the Performance Period. The maximum possible payout is [ ]percent ([ ]%) of the Target Number of Performance Share Units if cumulative Revenue growth increases on average by at least [ ] percent ([ ]%) as of the last day of the Performance Period and cumulative EBITDA growth increases on average by at least [ ] percent ([ ]%) as of the last day of the Performance Period.






Exhibit 10.2

PERFORMANCE SHARE UNIT GRANT NOTICE FOR NON-U.S. PARTICIPANTS
UNDER THE
CATALENT, INC.
2014 OMNIBUS INCENTIVE PLAN

Catalent, Inc. (the “ Company ”), pursuant to its 2014 Omnibus Incentive Plan, as it may be amended from time to time (the “ Plan ”), hereby grants to the Participant set forth below the target number of Performance Share Units (which are performance-based Restricted Stock Units for purposes of the Plan) as set forth below. The Performance Share Units are subject to all of the terms and conditions as set forth herein and in the Performance Share Unit Agreement for Non-U.S. Participants, including any special terms and conditions for the Participant’s country set forth in Appendix A (both attached hereto), and the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein (including Exhibit A attached hereto) shall have the meaning set forth in the Plan or the Performance Share Unit Agreement.
Participant :
[ Insert Participant Name ]
Date of Grant :
[ Insert Date of Grant ]
Performance Period :
The period commencing on and ending on .
Target Number of
Performance Share Units :
[ Insert Target Number of PSUs ], subject to adjustment as set forth in the Plan.     


* * *





THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS PERFORMANCE SHARE UNIT GRANT NOTICE, THE PERFORMANCE SHARE UNIT AGREEMENT (INCLUDING APPENDIX A) AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF PERFORMANCE SHARE UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS PERFORMANCE SHARE UNIT GRANT NOTICE, THE PERFORMANCE SHARE UNIT AGREEMENT (INCLUDING APPENDIX A) AND THE PLAN. THE PARTICIPANT’S RIGHTS UNDER THE PERFORMANCE SHARE UNIT GRANT NOTICE AND THE PERFORMANCE SHARE UNIT AGREEMENT (INCLUDING APPENDIX A) WILL LAPSE SIXTY (60) DAYS FROM THE DATE OF GRANT AND THE PERFORMANCE SHARE UNITS WILL BE FORFEITED ON SUCH DATE IF THE PARTICIPANT SHALL NOT HAVE ACCEPTED THIS PERFORMANCE SHARE UNIT GRANT NOTICE AND THE PERFORMANCE SHARE UNIT AGREEMENT BY SUCH DATE.
This Performance Share Unit Grant Notice may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

CATALENT, Inc.      Participant     

________________________________      ________________________________
By:
Title:

























_____________________________
1
To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.




PERFORMANCE SHARE UNIT AGREEMENT FOR NON-U.S. PARTICIPANTS
UNDER THE
CATALENT, INC.
2014 OMNIBUS INCENTIVE PLAN

Pursuant to the Performance Share Unit Grant Notice for Non-U.S. Participants (the “ Grant Notice ”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Performance Share Unit Agreement for Non-U.S. Participants (the “ Performance Share Unit Agreement ”), including any special terms and conditions for the Participant’s country set forth in Appendix A attached hereto (collectively, along with Exhibit A, this “ Agreement ”), and the Catalent, Inc. 2014 Omnibus Incentive Plan, as it may be amended from time to time (the “ Plan ”), Catalent, Inc. (the “ Company ”) and the Participant agree as follows.
1. Definitions . Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan or the Grant Notice, as applicable.

(a) Employment . The term “Employment” means the Participant’s employment as an employee of the Company or any of its Affiliates or Subsidiaries.

(b)      Restrictive Covenant Violation . The term “Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants set forth in Section 10 or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s or any of its Affiliates’ or Subsidiaries’ vendors, suppliers, customers or employees or any similar provision applicable to or agreed to by the Participant.
(c)      Retirement . The term “Retirement” shall mean a Termination by the Participant that occurs on or after the date on which the Participant attains the age of sixty-five (65) and has completed at least ten (10) years of Employment (other than a Termination when grounds existed for a Termination for Cause at the time thereof).
(d)      Termination Date . The term “Termination Date” shall mean the date upon which the Participant incurs a Termination for any reason.
2.     Grant of Performance Share Units . Subject to the terms and conditions set forth herein, in the Grant Notice and in the Plan, for good and valuable consideration, the Company hereby grants to the Participant the Target Number of Performance Share Units (which are performance-based Restricted Stock Units for purposes of the Plan) provided in the Grant Notice (with each Performance Share Unit representing an unfunded, unsecured right to receive one share of Common Stock). The Company may make one or more additional grants of Performance Share Units to the Participant under this Agreement by providing the Participant with a new Grant Notice and new Exhibit A, to the extent applicable, which may also include any terms and conditions differing from this Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Performance Share Units hereunder and makes no implied promise to grant additional Performance Share Units.

3.      Vesting . Subject to the conditions contained herein and in the Plan, the Performance Share Units shall vest as provided on Exhibit A or in Section 6 below. With respect to any Performance Share Unit, the period of time that such Performance Share Unit remains subject to vesting shall be its Restricted Period.
4.      Dividend Equivalents . The Performance Share Units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on shares of Common Stock. Such dividend equivalents will be provided in shares of Common Stock having a Fair Market Value equal to the amount of such applicable dividends, and shall be shall be payable at the same time as the Performance Share Units are settled in accordance with Section 5 below. In the event that any Performance Share Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Performance Share Units.




5.     Settlement of Performance Share Units . Upon expiration of the Restricted Period with respect to any outstanding Performance Share Units that have not previously been forfeited in accordance with Exhibit A or Section 6 below, the Company shall issue to the Participant as soon as practicable (but no later than March 15 of the year following the year in which the Restricted Period expires) one share of Common Stock for each Performance Share Unit and such Performance Share Unit shall be cancelled; provided , however , that the Committee may, in its sole discretion, elect to defer the issuance of such shares beyond the expiration of the Restricted Period if such extension would not cause adverse tax consequences under Section 409A of the Code.

6.     Treatment on Termination .

(a)      Subject to clauses (b) - (d) below, in the event of a Termination prior to the Regular Vesting Date, the CIC Vesting Date or the Time Vesting Date (each as defined on Exhibit A), as applicable, (i) all vesting with respect to the Participant’s Performance Share Units shall cease and (ii) unvested Performance Share Units shall be forfeited to the Company by the Participant for no consideration as of the Termination Date.
(b)      Death . If the Participant incurs a Termination due to death, the Target Number of Performance Share Units or the number of Converted PSUs (as defined on Exhibit A) to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, become fully vested, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration.
(c)      Disability/Retirement . If the Participant incurs a Termination due to Disability or Retirement, in each case, the number of Performance Share Units as determined in accordance with Exhibit A, to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, continue to vest as provided on Exhibit A as if the Participant had continued Employment through the Regular Vesting Date, the CIC Vesting Date or the Time Vesting Date, as applicable, subject to the Participant’s compliance with the restrictive covenants set forth in Section 10 and the Participant’s execution, delivery and non-revocation of a waiver and release of claims in favor of the Company and its Affiliates and Subsidiaries in a form prescribed by the Company on or prior to the 60 th day following the Termination Date; provided, however, in the case of a Termination due to Retirement, the number of Performance Share Units, if any, that shall vest, as determined in accordance with Exhibit A shall be multiplied by a fraction, the numerator of which is equal to the number of days between and including the first day of the Performance Period and the date the Participant incurs a Termination due to Retirement and the denominator of which is 1095. Upon the Regular Vesting Date, the CIC Vesting Date or the Time Vesting Date, as applicable, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration.
Notwithstanding the above, if the Company receives an opinion of counsel that there has been a legal judgment and/or legal development in the Participant's jurisdiction that would cause the continued vesting of the Performance Share Units after Termination due to Retirement being deemed unlawful and/or discriminatory, the unvested Performance Share Units shall be treated as set forth in the remaining provisions of this Section 6.
(d)      Change in Control . In the event of a Change in Control, to the extent the acquiring or successor entity assumes, continues or substitutes for the Performance Share Units as provided for and described on Exhibit A hereto, if the Participant incurs a Termination by the Service Recipient without Cause (other than due to death or Disability) during the period commencing on the date of the consummation of a Change in Control and ending on the date that is eighteen (18) months following the consummation of such Change in Control, the number of Converted PSUs shall, to the extent not then vested or previously forfeited or cancelled, become fully vested, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration.

7.      Non - Transferability . The Performance Share Units are not transferable by the Participant except to Permitted Transferees in accordance with Section 14(b) of the Plan. Whenever the word “Participant” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to executors, the administrators or the person or persons to whom the Performance Share Units may be transferred by




will or by the laws of descent and distribution in accordance with Section 14 of the Plan, the word “Participant” shall be deemed to include such person or persons. Except as otherwise provided herein, no assignment or transfer of the Performance Share Units, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Performance Share Units shall terminate and become of no further effect.
8.      Rights as Stockholder . Except as otherwise expressly provided for herein, the Participant or a Permitted Transferee of the Performance Share Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Performance Share Unit unless and until the Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof.
9.      Repayment of Proceeds; Clawback Policy . If a Restrictive Covenant Violation occurs or the Company discovers after a Termination that grounds existed for Cause at the time thereof, then the Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the Performance Share Units and any shares issued in respect thereof. Any reference in this Agreement to grounds existing for a Termination for Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or termination with, Cause. The Performance Share Units and all proceeds thereof shall be subject to the Company’s Clawback Policy, as in effect from time to time, to the extent the Participant is a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act.
10.      Restrictive Covenants .
(a)    To the extent that the Participant is a party to an employment or similar agreement with the Company or one of its Affiliates or Subsidiaries containing non-competition, non-solicitation, non-interference or confidentiality restrictions (or two or more such restrictions), those restrictions and related enforcement provisions under such agreement shall govern and the following provisions of this Section 10 shall not apply.

(b)      Competitive Activity
(i) The Participant shall be deemed to have engaged in “ Competitive Activity ” if, during the period commencing on the Date of Grant and ending on the date that is 12 months after the Termination Date (the “ Restricted Activity Period ”), the Participant, whether on the Participant’s own behalf or on behalf of or in conjunction with any other Person (as defined below), directly or indirectly, violates any of the following prohibitions:

(I)      During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any person, firm, part-nership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“ Person ”), directly or indirectly, solicit or assist in soliciting in competition with the Company or any of its Subsidiaries, the business of any client or prospective client:
(1)
with whom the Participant had personal contact or dealings on behalf of the Company or any of its Subsidiaries during the one year period preceding the Termination Date;





(2)
with whom employees reporting to the Participant have had personal contact or dealings on behalf of the Company or any of its Subsidiaries during the one year immediately preceding the Termination Date; or

(3)
for whom the Participant had direct or indirect responsibility during the one year immediately preceding the Termination Date.

(II)      During the Restricted Activity Period, the Participant will not directly or indirectly:
(1)
engage in any business that competes with the business of the Company or any of its Subsidiaries, including, but not limited to, providing formulation/dose form technologies and/or contract services to pharmaceutical, biotechnology, over-the-counter and vitamin/mineral supplements companies related to pre-clinical and clinical development, formulation, analysis, manufacturing and/or packaging and any other technology, product  or service of the type developed, manufactured or sold by the Company or any of its Subsidiaries (including, without limitation, any other business which the Company or any of its Subsidiaries have plans to engage in as of the Termination Date) in any geographical area where the Company or any of its Subsidiaries conduct business (a “ Competitive Business ”);

(2)
enter the employ of, or render any services to, any Person (or any division or controlled or controlling Affiliate of any Person) who or which engages in a Competitive Business;

(3)
acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or

(4)
interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the Date of Grant) between the Company or any of its Subsidiaries and customers, clients, suppliers, or investors of the Company or any of its Subsidiaries.

Notwithstanding anything to the contrary in this Agreement, the Participant may, directly or indirectly own, solely as an investment, securities of any entity engaged in the business of the Company or any of its Subsidiaries which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Participant (i) is not a controlling person of, or a member of a group which controls, such Person and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such Person.
(III)      During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(1)
solicit or encourage any employee of the Company or any of its Subsidiaries to leave the employment of the Company or any of its Subsidiaries; or

(2)
hire any such employee who was employed by the Company or any of its Subsidiaries as of the Termination Date or who left the employment of the Company or any of its Subsidiaries coincident with, or within six (6) months prior to or after, the Termination Date; provided, however, that this restriction shall cease to apply to any employee who has not been employed by the Company or any of its Subsidiaries for at least six (6) months.





(IV)      During the Restricted Activity Period, the Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company or any of its Subsidiaries any consultant then under contract with the Company or any of its Subsidiaries.
(ii)    It is expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 10(b) to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against the Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

(c)      Confidentiality
(i)      The Participant will not at any time (whether during or after the Participant’s Employment) (x) retain or use for the benefit, purposes or account of the Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any person outside the Company and its Affiliates and Subsidiaries (other than its professional advisers who are bound by confidentiality obligations), any non-public, proprietary or confidential information --including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals -- concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“ Confidential Information ”) without the prior written authorization of the Board.
(ii)      “ Confidential Information ” shall not include any information that is (x) generally known to the industry or the public other than as a result of the Participant’s breach of this covenant or any breach of other confidentiality obligations by third parties; (y) made legitimately available to the Participant by a third party without breach of any known confidentiality obligation; or (z) required by law to be disclosed or in any judicial or administrative process; provided that the Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate, at the Company’s cost, with any attempts by the Company to obtain a protective order or similar treatment.
(iii)      Except as required by law, the Participant will not disclose to anyone, other than the Participant’s immediate family and legal or financial or tax advisors or lender, each of whom the Participant agrees to instruct not to disclose, the existence or contents of this Agreement (unless this Agreement shall be publicly available as a result of a regulatory filing made by the Company or one of its Affiliates or Subsidiaries); provided , that the Participant may disclose to any prospective future employer the provisions of Section 10 of this Agreement provided they agree to maintain the confidentiality of such terms.
(iv)      Upon Termination, the Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in the Participant’s possession or control (including any of the foregoing stored or located in the Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company or one of its Affiliates or Subsidiaries, except that the Participant may retain only those portions of any personal notes,




notebooks and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which the Participant is or becomes aware.
(d)     Equitable Relief.

Notwithstanding the remedies set forth in Section 9 above and notwithstanding any other remedy which would otherwise be available to the Company at law or in equity, the Company and the Participant agree and acknowledge that if an actual or threatened Restrictive Covenant Violation occurs, the Company will be entitled to an injunction and/or other equitable relief restraining the Participant from the Restrictive Covenant Violation without the necessity of posting a bond or proving actual damages.
11.      Tax Withholding .
(a)      Responsibility for Taxes . The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“ Tax-Related Items ”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Share Units, including, but not limited to, the grant, vesting or settlement of the Performance Share Units, the subsequent sale of shares of Common Stock acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Performance Share Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former Service Recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)      Satisfaction of Withholding Obligations . Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Service Recipient to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Service Recipient, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by any of the means described in Section 14(d) of the Plan or by such other means or method as the Committee in its sole discretion and without notice to the Participant deems appropriate.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in shares of Common Stock, for tax purposes, the Participant is deemed to have been issued the full number of shares of Common Stock subject to the vested Performance Share Units, notwithstanding that a number of the shares of Common Stock is held back solely for the purpose of paying the Tax-Related Items.
Finally, the Participant agrees to pay to the Company or the Service Recipient any amount of Tax-Related Items that the Company or the Service Recipient may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares or the proceeds of the sale of shares of Common Stock, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
12.      Notice . Every notice or other communication relating to this Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the




Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.
13.      No Right to Continued Employment . Neither the Plan nor this Agreement nor the granting of the Performance Share Units evidenced hereby shall be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any of its Affiliates or Subsidiaries. Further, the Company, or, if different, the Service Recipient, may at any time dismiss the Participant or discontinue any consulting relationship, free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided herein.
14.      Nature of Grant . In accepting the grant of the Performance Share Units, the Participant acknowledges, understands and agrees that:
(a)      the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
(b)      the grant of the Performance Share Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Share Units, or benefits in lieu of Performance Share Units, even if Performance Share Units have been granted in the past;
(c)      all decisions with respect to future Performance Share Units or other grants, if any, will be at the sole discretion of the Company;
(d)      the Performance Share Unit grant and the Participant’s participation in the Plan shall not be interpreted as forming an employment or service contract with the Company, or any Affiliate or Subsidiary;
(e)      the Participant is voluntarily participating in the Plan;
(f)      the Performance Share Units and the shares of Common Stock subject to the Performance Share Units, and the income and value of same, are not intended to replace any pension rights or compensation;
(g)      the Performance Share Units and the shares of Common Stock subject to the Performance Share Units, and the income and value of same, are not part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;
(h)      the future value of the underlying shares of Common Stock is unknown, indeterminable and cannot be predicted with certainty;
(i)      no claim or entitlement to compensation or damages shall arise from forfeiture of the Performance Share Units resulting from a Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and in consideration of the grant of the Performance Share Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company, any of its Affiliates or Subsidiaries, waives the Participant’s ability, if any, to bring any such claim, and releases the Company, its Affiliates and Subsidiaries from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be




deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;
(j)      unless otherwise provided in the Plan or by the Company in its discretion, the Performance Share Units and the benefits evidenced by this Agreement do not create any entitlement to have the Performance Share Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock of the Company; and
(m)      the Participant acknowledges and agrees that neither the Company, nor any Affiliate or Subsidiary shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Performance Share Units or of any amounts due to the Participant pursuant to the settlement of the Performance Share Units or the subsequent sale of any shares of Common Stock acquired upon settlement.
15.      No Advice Regarding Grant . The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying shares of Common Stock. The Participant is hereby advised to consult with the Participant’s own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan.
16.      Data Privacy . The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Performance Share Unit grant materials by and among, as applicable, the Service Recipient, the Company and its other Affiliates or Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
The Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Performance Share Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
The Participant understands that Data will be transferred to Morgan Stanley Smith Barney LLC, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company, Morgan Stanley Smith Barney LLC and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s Employment and career with the Service Recipient will not be adversely affected; the only adverse consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Performance Share Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the




Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
17.      Binding Effect . This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.
18.     Waiver and Amendments . Subject to Section 13(b) of the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Participant hereunder shall not to that extent be effective without the consent of the Participant. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

19.     Governing Law; Venue . This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of New Jersey, agree that such litigation shall be conducted in the courts of Somerset County, or the federal courts for the United States for the District of New Jersey, where this grant is made and/or to be performed.

20.     Plan . The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Agreement, the Plan shall govern and control.

21.     Language . If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

22.     Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

23.     Imposition of Other Requirements . The Company reserves the right to impose any other requirements on the Participant’s participation in the Plan, on the Performance Share Units and on any shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

24.     Section 409A of the Code . The Performance Share Units are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “ Section 409A ”). However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Committee determines that the Performance Share Units (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify the Participant or any other person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for




the Performance Share Units to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.

25.     Appendix . Notwithstanding any provisions in this Agreement, the Performance Share Unit grant shall be subject to any special terms and conditions set forth in Appendix A to this Performance Share Unit Agreement for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in Appendix A, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A constitutes part of this Performance Share Unit Agreement.

26.     Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges that, depending on his or her country, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell shares of Common Stock or rights to shares of Common Stock (e.g., Performance Share Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.

27.     Entire Agreement . This Agreement, the Grant Notice and the Plan constitute the entire understanding between the Participant and the Company regarding the Performance Share Units. This Agreement, the Grant Notice and the Plan supersede any prior agreements, commitments or negotiations concerning the Performance Share Units.





Exhibit A

1.      Vesting/Change in Control . Except as otherwise expressly provided in Section 6 of the Performance Share Unit Agreement, provided the Participant has not incurred a Termination on or prior to the Regular Vesting Date (as defined below), the Performance Share Units granted hereunder shall vest upon the date on which the Committee determines the cumulative Revenue (as defined below) growth during the Performance Period and the cumulative EBITDA (as defined below) growth during the Performance Period, in each case, as of the last day of the Performance Period, which determination shall be made no later than the seventy-fifth (75 th ) day following the end of the Performance Period (the “ Regular Vesting Date ”) and in an amount, if any, equal to the product of (1) the Target Number of Performance Share Units and (2) the Cumulative Performance Percentage (as defined and described below). Upon the Regular Vesting Date, the Restricted Period shall expire and any vested Performance Share Units shall be settled in accordance with Section 5 of the Performance Share Unit Agreement. Any Performance Share Units that do not become vested in accordance with this Exhibit A (to the extent not previously forfeited pursuant to Section 6 of the Performance Share Unit Agreement) shall, effective as of the Regular Vesting Date, be forfeited by the Participant without consideration.
Notwithstanding the foregoing:
(i)      in the event of a Change in Control on or prior to July 1, 2015, to the extent the acquiring or successor entity does not assume, continue or substitute for the Performance Share Units, the Target Number of Performance Share Units, to the extent not then vested or previously forfeited or cancelled, shall become fully vested and on such date the Restricted Period shall expire (the date of such vesting and expiration, the “ CIC Vesting Date ”);
(ii)      in the event of a Change in Control after July 1, 2015 but prior to the end of the Performance Period, to the extent the acquiring or successor entity does not assume, continue or substitute for the Performance Share Units, a number of Performance Share Units equal to the number that would have vested based on the Cumulative Performance Percentage measured as of the last day of the fiscal year immediately preceding the date of the Change in Control (such day, the “ End Date ”) based on actual growth between July 1, 2014 through and including the End Date, measuring cumulative growth as of the End Date, to the extent not then vested or previously forfeited or cancelled, shall become fully vested and the Restricted Period with respect to such Performance Share Units shall expire on the CIC Vesting Date;
(iii)      in the event of a Change in Control on or prior to July 1, 2015, to the extent the acquiring or successor entity assumes, continues or substitutes for the Performance Share Units, in lieu of the vesting schedule in the first paragraph above, the Target Number of Performance Share Units will be subject to the following vesting schedule: provided the Participant has not incurred a Termination prior to the Time Vesting Date (as defined below), such Performance Share Units shall vest on June 30, 2017 (the “ Time Vesting Date ”) and, on the Time Vesting Date, the Restricted Period with respect to such Converted PSUs (as defined below) shall expire; and
(iv)      in the event of a Change in Control after July 1, 2015, to the extent the acquiring or successor entity assumes, continues or substitutes for the Performance Share Units, in lieu of the vesting schedule in the first paragraph above, a number of Performance Share Units equal to the number that would have vested based on the Cumulative Performance Percentage measured as of the End Date based on actual growth between [ ] through and including the End Date, measuring cumulative growth as of the End Date, will be subject to the following vesting schedule: provided the Participant has not incurred a Termination prior to the Time Vesting Date, such Performance Share Units shall vest on the Time Vesting Date and, on the Time Vesting Date, the Restricted Period with respect to such Converted PSUs shall expire.
Any Performance Share Units that do not vest or become Converted PSUs, as applicable, shall immediately be forfeited without any further action by the Company or the Participant and without any payment of consideration therefor.
For purposes of this Exhibit A and the Performance Share Unit Agreement, the term “Converted PSUs” shall mean those Performance Share Units that result from conversion pursuant to clause (iii) or clause (iv) above.




2.      Cumulative Performance Percentage . A number of Performance Share Units granted hereunder shall vest, if at all, based on the Cumulative Performance Percentage which is based on the cumulative Revenue (as defined below) growth during the Performance Period and the cumulative EBITDA (as defined below) growth during the Performance Period, determined as of the last day of the Performance Period in accordance with this Section 2.

For purposes of this Exhibit A:

“ Revenue ” shall mean net revenue as presented in the Company’s annual Securities and Exchange Commission filings but will be adjusted to [ ] fiscal year average foreign exchange rates. Future performance will be translated at constant foreign exchange rates in order to gauge performance against revenue goals in consideration of foreign currency fluctuations, which may occur. Revenue targets may also be adjusted during the Performance Period for any unusual items as defined and interpreted by the Committee including, but not limited to acquisitions and divestitures.

“ EBITDA ” shall mean the Company’s internally adjusted EBITDA which is generally calculated in the same manner as Adjusted EBITDA is calculated for purposes of the Company’s indentures governing its notes and its credit agreement governing its senior unsecured term loan facility, except for the impact of foreign exchange and other non-operational matters. EBITDA is based on [ ] fiscal year average foreign exchange rates and future performance will be translated at constant foreign exchange rates in order to gauge performance against EBITDA goals in consideration of foreign currency fluctuations, which may occur. EBITDA targets may also be adjusted during the Performance Period for any unusual items as defined and interpreted by the Committee including, but not limited to acquisitions and divestitures.

The Cumulative Performance Percentage shall be equal to the sum of twenty-five percent (25%) of the Revenue Performance Percentage and seventy-five percent (75%) of the EBITDA Performance Percentage as outlined and determined below.

Cumulative Revenue Growth

(during the Performance Period expressed as a percentage assuming the starting point for Revenue growth is $ million)
Revenue Performance Percentage
 %- %
%
%
%
%
%
%
%
%
%
%
%
%+
%





Cumulative EBITDA Growth

(during the Performance Period expressed as a percentage assuming the starting point for EBITDA growth is $ million)
EBITDA Performance Percentage
 %- %
%
%
%
%
%
%
%
%
%
%
%
%
%
%+
%

Cumulative Performance Percentage

(the Revenue and EBITDA dollar amounts reflected below assume the full Performance Period runs and such amounts reflect Revenue and EBITDA for the 20[ ], 20[ ] and 20[ ] fiscal years, in the aggregate)

 
Cumulative EBITDA
(75%)
(in millions)
$
$
$
$
$
Cumulative
Revenue  (25%)
(in millions)
$
%
%
%
%
%
$
%
%
%
%
%
$
%
%
%
%
%
$
%
%
%
%
%
$
%
%
%
%
%

The Revenue Performance Percentage, EBITDA Performance Percentage and Cumulative Performance Percentage shall each be a linear interpolation for any achievement that falls between the above targets, provided that there shall be no linear interpolation if the cumulative Revenue growth increases on average by less than [ ]% as of the last day of the Performance Period and/or the cumulative EBITDA growth increases on average by less than [ ]% as of the last day of the Performance Period. The maximum possible payout is [ ] percent ([ ]%) of the Target Number of Performance Share Units if cumulative Revenue growth increases on average by at least [ ] percent ([ ]%) as of the last day of the Performance Period and cumulative EBITDA growth increases on average by at least [ ] percent ([ ]%) as of the last day of the Performance Period.






APPENDIX A

PERFORMANCE SHARE UNIT AGREEMENT FOR NON-U.S. PARTICIPANTS
UNDER THE
CATALENT, INC.
2014 OMNIBUS INCENTIVE PLAN


COUNTRY-SPECIFIC TERMS AND CONDITIONS


All capitalized terms used in this Appendix A that are not defined herein have the meanings defined in the Plan or the Performance Share Unit Agreement for Non-U.S. Participants (the “ Performance Share Unit Agreement ”).  This Appendix A constitutes part of the Performance Share Unit Agreement.
Terms and Conditions
This Appendix A includes additional or different terms and conditions that govern the Performance Share Units if the Participant works or resides in one of the countries listed below.  The Participant understands that if the Participant is a citizen or resident of a country other than the one in which he or she is currently working, transfers Employment and/or residency after the Date of Grant or is considered a resident of another country for local law purposes, the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply to the Participant.
Notifications
This Appendix A also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to participation in the Plan.  The information is based on the securities, exchange control and other laws in effect in the respective countries as of May 2014.  Such laws are often complex and change frequently.  As a result, the Participant should not rely on the information in this Appendix A as the only source of information relating to the consequences of participation in the Plan because the information may be out of date at the time the Performance Share Units vest or at the time the Participant sells the shares of Common Stock.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result.  Accordingly, the Participant should seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to his or her situation. 
Finally, if the Participant is a citizen or resident of a country other than the one in which he or she is currently working, transfers Employment and/or residency after the Date of Grant or is considered a resident of another country for local law purposes, the information contained herein may not apply to the Participant.




ARGENTINA


Notifications

Securities Law Information. Neither the Performance Share Units nor the underlying shares of Common Stock are publicly offered or listed on any stock exchange in Argentina. The offer is private and not subject to the supervision of any Argentine governmental authority.

Exchange Control Information. If the Participant transfers proceeds from the sale of shares of Common Stock or the receipt of any dividends paid on such shares into Argentina within 10 days of sale/receipt ( i.e. , if the proceeds have not been held in a U.S. bank or brokerage account for at least 10 days prior to transfer), the Participant must deposit 30% of the proceeds into a non-interest bearing account in Argentina for 365 days. If the Participant has satisfied the 10 day holding obligation, the Argentine bank handling the transaction may still request certain documentation in connection with the Participant’s request to transfer proceeds into Argentina, including evidence of the sale and proof of the source of funds used to purchase the shares of Common Stock. If the bank determines that the 10-day rule or any other rule or regulation promulgated by the Argentine Central Bank has not been satisfied, it will require that 30% of the transfer amount be placed in a non-interest bearing dollar denominated mandatory deposit account for a holding period of 365 days.
  
The Participant must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with the vesting of the Performance Share Units and the subsequent sale of any shares of Common Stock acquired at vesting and the receipt of any dividends.

Please note that exchange control regulations in Argentina are subject to frequent change. The Participant should consult with his or her personal legal advisor regarding any exchange control obligations the Participant may have in connection with the Participant’s participation in the Plan.

Foreign Asset/Account Reporting Information. The Participant must report any shares of Common Stock acquired under the Plan and held by the Participant on December 31st of each year on the Participant’s annual tax return for that year. The Participant is strongly advised to consult the Participant’s personal tax advisor to ensure compliance with this tax reporting obligation.


AUSTRALIA

Terms and Conditions

Vesting. The following provisions supplement the Performance Share Unit Grant Notice and Sections 3 and 6 and Exhibit A of the Performance Share Unit Agreement:
Notwithstanding Section 6(c) of the Performance Share Unit Agreement, if the Participant incurs a Termination due to Disability or Retirement, the Target Number of Performance Share Units shall, to the extent not then vested or previously forfeited or cancelled, become fully vested and the Restricted Period shall expire.
Data Privacy. The following provisions supplement Section 16 of the Performance Share Unit Agreement:
The Company can be contacted at 14 Schoolhouse Rd, Somerset, NJ 08873. The Service Recipient can be contacted at Catalent Australia Pty. Ltd., 217-221 Governor Road, Braeside, Victoria, Australia 3195.
The Participant’s personal information will be held in accordance with the Service Recipient’s privacy policy, a copy of which can be obtained by contacting the Service Recipient at the address indicated above. The Service Recipient’s privacy policy contains, among other things, details of how the Participant can access and seek correction of personal




information held in connection with this Performance Share Units, how the Participant can complain about a breach of the Australian Privacy Principles and how the Service Recipient will deal with such a complaint.
The Participant understands and agrees that Data may be transferred to recipients located outside of Australia, including the United States and any other country where the Company has operations.

Notifications

Securities Law Information. If the Participant acquires shares of Common Stock pursuant to the Performance Share Units and offers the shares of Common Stock for sale to a person or entity resident in Australia, such offer may be subject to disclosure requirements under Australian law. The Participant should obtain legal advice as to his or her disclosure obligations prior to making any such offer.

Exchange Control Information. The Participant is responsible for reporting cash transactions inbound ( e.g. , the remittance of cash proceeds received upon sale of shares of Common Stock) exceeding A$10,000 and for inbound international fund transfers of any value, which do not involve an Australian bank.


BELGIUM

Notifications

Foreign Asset/Account Reporting Information. The Participant is required to report any security or bank account (including a brokerage account) opened and maintained outside Belgium on his or her annual tax return.

BRAZIL

Terms and Conditions

Compliance with Law. By accepting the Performance Share Units, the Participant acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the Performance Share Units, the receipt of any dividends, and the sale of shares of Common Stock acquired under the Plan.
Notifications

Exchange Control Information. If the Participant is resident or domiciled in Brazil, the Participant will be required to submit annually a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include shares of Common Stock acquired under the Plan.


CHINA

Terms and Conditions

The following terms and conditions will be applicable to the Participant to the extent that the Company, in its discretion, determines that the Participant’s participation in the Plan will be subject to exchange control restrictions in the People’s Republic of China (“PRC”), as implemented by the PRC State Administration of Foreign Exchange (“SAFE”).
Vesting. The following provisions supplement the Performance Share Unit Grant Notice and Sections 3 and 6 and Exhibit A of the Performance Share Unit Agreement:




Notwithstanding anything to the contrary in the Performance Share Unit Agreement, the Performance Share Units shall not vest and no shares of Common Stock will be issued to the Participant unless and until all necessary exchange control or other approvals with respect to the Performance Share Units under the Plan have been obtained from SAFE or its local counterpart (“SAFE Approval”). In the event that SAFE Approval has not been obtained prior to any date(s) on which the Performance Share Units are scheduled to vest in accordance with the Vesting Schedule set forth on Exhibit A, the Performance Share Units will not vest until the seventh day of the month following the month in which SAFE Approval is obtained (the “Actual Vesting Date”). If the Participant incurs a Termination prior to the Actual Vesting Date, the Participant shall not be entitled to vest in any portion of the Performance Share Units and the Performance Share Units shall be forfeited without any liability to the Company or its Affiliates.
Notwithstanding Section 6(c) of the Performance Share Unit Agreement, if the Participant incurs a Termination due to Disability or Retirement on or after the Actual Vesting Date, the Target Number of Performance Share Units shall, to the extent not then vested or previously forfeited or cancelled, become fully vested and the Restricted Period shall expire.
Settlement of Performance Share Units and Sale of Shares. Notwithstanding anything to the contrary in the Plan or the Performance Share Unit Agreement, due to PRC exchange control restrictions the Participant agrees that any shares of Common Stock acquired at settlement of the Performance Share Units may be immediately sold at settlement or, at the Company’s discretion, at a later time (including when the Participant terminates Employment for any reason). If, however, the sale of the shares of Common Stock is not permissible under the Company’s insider trading policy, the Company retains the discretion to postpone the issuance of the shares of Common Stock subject to the vested Performance Share Units until such time that the sale is again permissible and to then immediately sell the shares of Common Stock subject to the Performance Share Units. The Participant further agrees that the Company is authorized to instruct its designated broker to assist with the mandatory sale of the shares of Common Stock (on the Participant’s behalf pursuant to this authorization), and the Participant expressly authorizes such broker to complete the sale of such shares of Common Stock. The Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of shares of Common Stock at any particular price. Upon the sale of the shares of Common Stock, the Company agrees to pay the cash proceeds from the sale, less any brokerage fees or commissions, to the Participant in accordance with applicable exchange control laws and regulations and provided any liability for Tax-Related Items has been satisfied. Due to fluctuations in the share price and/or the United States Dollar exchange rate between the settlement date and (if later) the date on which the shares of Common Stock are sold, the sale proceeds may be more or less than the market value of the shares of Common Stock on the settlement date (which is the amount relevant to determining the Participant’s tax liability). The Participant understands and agrees that the Company is not responsible for the amount of any loss the Participant may incur and that the Company assumes no liability for any fluctuation in the share price and/or United States Dollar exchange rate.
Exchange Control Restrictions. The Participant understands and agrees that he or she will be required to immediately repatriate to China the proceeds from the sale of any shares of Common Stock acquired under the Plan or from any cash dividends paid or such shares. The Participant further understands that such repatriation of the proceeds may need to be effected through a special exchange control account established by the Company or any Affiliate or Subsidiary, and the Participant hereby consents and agrees that the proceeds may be transferred to such account by the Company (or its designated broker) on the Participant’s behalf prior to being delivered to the Participant. The Participant also agrees to sign any agreements, forms and/or consents that may be reasonably requested by the Company (or the Company’s designated broker) to effectuate such transfers.




The proceeds may be paid to the Participant in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid to the Participant in U.S. dollars, the Participant understands that he or she will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are paid to the Participant in local currency, (i) the Participant acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the proceeds to local currency due to exchange control restrictions, and (ii) the Participant agrees to bear any currency fluctuation risk between the time the shares of Common Stock are sold or dividends are paid and the time the proceeds are converted to local currency and distributed to the Participant. The Participant agrees to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.

Notifications

Foreign Asset/Account Reporting Information. Effective from January 1, 2014, PRC residents are required to report to SAFE details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-PRC residents, either directly or through financial institutions. Under these rules, the Participant may be subject to reporting obligations for the Performance Share Units and/or the shares of Common Stock acquired under the Plan and any Plan-related transactions. The Participant should consult his or her personal legal advisor regarding the details of this reporting obligation.


FRANCE

Terms and Conditions

Type of Performance Share Units. The Performance Share Units are not granted as “French-qualified” awards and are not intended to qualify for the special tax and social security treatment applicable to shares granted for no consideration under Sections L. 225-197 to L. 225-197-6 of the French Commercial Code, as amended.

Consent to Receive Information in English. By accepting the Performance Share Units, the Participant confirms having read and understood the documents related to the Performance Share Units (the Plan and the Agreement) which were provided in the English language. The Participant accepts the terms of these documents accordingly.

Consentement Relatif à l'Utilisation de la Langue Anglaise. En acceptant l’Attribution, le Participant confirme avoir lu et compris les documents relatifs à cette Attribution (le Plan et le Contrat d'Attribution) qui ont été remis en langue anglaise. Le Participant accepte les termes de ces documents en conséquence.

Notifications

Foreign Asset/Account Reporting Information. The Participant is required to report all foreign accounts (whether open, current or closed) to the French tax authorities when filing his or her annual tax return.


GERMANY

Notifications

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported electronically to the German Federal Bank ( Bundesbank ). In the case of payments made or received in connection with securities (including proceeds realized upon the sale of shares of Common Stock), the report must be made by the 5th day of the month following the month in which the payment was made or received. The form of the report (“ Allgemeine Meldeportal Statistik ”) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. The Participant understands that if the Participant makes or receives a payment in excess of this amount, the Participant is responsible for complying with applicable reporting requirements.






ITALY

Terms and Conditions

Data Privacy. This provision replaces Section 16 of the Performance Share Unit Agreement:

The Participant understands that the Service Recipient, the Company and any other Affiliate and Subsidiary may hold certain personal information about the Participant, including, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, details of the Performance Share Units or any other entitlement to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Personal Data”) and will process such data for the exclusive purpose of implementing, managing and administering the Plan.

The Participant also understands that providing the Company with Personal Data is mandatory for compliance with local law and necessary for the performance of the Plan and that the Participant’s refusal to provide such Personal Data would make it impossible for the Company to perform its contractual obligations and may affect the Participant’s ability to participate in the Plan. The Controllers of personal data processing are Catalent, Inc., 14 Schoolhouse Road, Somerset, NJ 08873, and Catalent Italy, SpA, Via Nettunense KM 20, 100 04011 Aprilia (LT), Italy, which is also the Company’s representative in Italy for privacy purposes pursuant to Legislative Decree no 196/2003.

The Participant understands that Personal Data will not be publicized, but it may be accessible by the Service Recipient and its internal and external personnel in charge of processing of such Personal Data and by the Personal Data Processor (the “Processor”), if any. An updated list of Processors and other transferees of Personal Data is available upon request from the Service Recipient. Furthermore, Personal Data may be transferred to Morgan Stanley Smith Barney LLC, Service Recipient and any banks, other financial institutions or brokers involved in the management and administration of the Plan. The Participant understands that the Company and/or its Affiliates and Subsidiaries will transfer Personal Data amongst themselves as necessary for the purpose of implementation, administration and management of the Participant’s participation in the Plan, and that the Company and/or its Affiliates and Subsidiaries may each further transfer Personal Data to third parties assisting the Company in the implementation, administration and management of the Plan, including any requisite transfer to Morgan Stanley Smith Barney LLC or another third party with whom the Participant may elect to deposit any shares of Common Stock acquired under the Plan. Such recipients may receive, possess, use, retain and transfer the Personal Data in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that these recipients may be located in or outside the European Economic Area in such countries as in the United States that may not provide the same level of protection as intended under Italian data privacy laws. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete the Participant’s Personal Data as soon as it has accomplished all the necessary legal obligations connected with the management and administration of the Plan.

The Participant understands that Personal Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Personal Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

The processing activity, including communication, the transfer of the Participant’s Personal Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require the Participant’s consent thereto as the processing is necessary to performance of contractual obligations related to implementation, administration and management of the Plan. The Participant understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, the Participant has the right to, including but not limited to,




access, delete, update, ask for rectification of the Participant’s Personal Data and estop, for legitimate reason, the Personal Data processing.

Furthermore, the Participant is aware that the Participant’s Personal Data will not be used for direct marketing purposes. In addition, the Personal Data provided can be reviewed and questions or complaints can be addressed by contacting the Participant’s human resources department.

Plan Document Acknowledgement. By accepting the Performance Share Units, the Participant acknowledges that (a) the Participant has received the Plan and the Agreement; (b) the Participant has reviewed those documents in their entirety and fully understands the contents thereof; and (c) the Participant accepts all provisions of the Plan and the Agreement. The Participant further acknowledges that the Participant has read and specifically and expressly approves, without limitation, the following sections of the Performance Share Unit Agreement: “Treatment on Termination”; “Non-Transferability”; “Repayment of Proceeds; Clawback Policy”; “Restrictive Covenants”; “Tax Withholding”; “No Right to Continued Employment”; “Nature of Grant”; “No Advice Regarding Grant”; “Data Privacy” as replaced by the above provision; “Waiver and Amendments”; “Governing Law; Venue”; “Electronic Delivery and Acceptance”; “Imposition of Other Requirements”; and “Appendix.”

Notifications

Foreign Asset/Account Reporting Information. If, at any time during the fiscal year, the Participant holds foreign financial assets (including cash and/or shares of Common Stock) which may generate income taxable in Italy, the Participant is required to report these assets on his or her annual tax return (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to the Participant if the Participant is the beneficial owner of foreign financial assets under Italian money laundering provisions.

Foreign Asset Tax Information . The value of the financial assets held outside of Italy by Italian residents is subject to a foreign asset tax. Beginning in 2014, such tax is levied at an annual rate of 2 per thousand (0.2%). The taxable amount will be the fair market value of the financial assets ( e.g. , shares of Common Stock) assessed at the end of the calendar year. The Participant is responsible for complying with any reporting and/or payment obligations that may arise in connection with this tax.


JAPAN

Notifications

Foreign Asset/Account Reporting Information. If the Participant holds assets ( e.g. , shares of Common Stock acquired under the Plan, proceeds from the sale of shares of Common Stock and, possibly, Performance Share Units) outside of Japan with a value exceeding ¥50 million as of December 31 of any calendar year, the Participant is required to report such to the Japanese tax authorities by March 15th of the following year. The Participant should consult with his or her personal tax advisor regarding the details of this reporting obligation.


SINGAPORE

Notifications

Securities Law Information. The Performance Share Units are granted pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that the Performance Share Units are subject to section 257 of the SFA and the Participant will not be able to make (i) any subsequent sale of the shares of Common Stock in Singapore or (ii) any offer of such subsequent sale of the shares of Common Stock in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1




Subdivision (4) (other than section 280) of the SFA.

Director Notification Requirement. Directors, associate directors and shadow directors 2 of a Singaporean Affiliate or Subsidiary are subject to certain notification requirements under the Singapore Companies Act and must notify the Singaporean Affiliate or Subsidiary in writing of an interest ( e.g. , Performance Share Units, shares of Common Stock, etc.) in the Company or any related companies within two business days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest ( e.g. , when the shares of Common Stock are sold), or (iii) becoming a director (if such an interest exists at the time).

SWITZERLAND

Notifications

Securities Law Information. The offer of the Performance Share Units is considered a private offering in Switzerland and is therefore not subject to securities registration in Switzerland.

UNITED KINGDOM

Terms and Conditions

Form of Settlement. Notwithstanding any discretion contained in the Plan or anything to the contrary in the Performance Share Unit Agreement, the Performance Share Units are payable in shares of Common Stock only.

Tax Withholding. The following provisions supplement Section 11 of the Performance Share Unit Agreement:

If payment or withholding of the income tax due in connection with the Performance Share Units is not made within ninety (90) days of the end of the tax year in which the taxable event occurs or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Participant to the Service Recipient, effective on the Due Date. The Participant agrees that the loan will bear interest at the official rate of Her Majesty’s Revenue and Customs (“HMRC”) and will be immediately due and repayable by the Participant, and the Company and/or the Service Recipient may recover it at any time thereafter by any of the means referred to in Section 11 of the Performance Share Unit Agreement.

Notwithstanding the foregoing, if the Participant is an executive officer or director of the Company (within the meaning of Section 13(k) of the Exchange Act), the Participant shall not be eligible for a loan to cover the income tax due as described above. Instead, the amount of any uncollected income tax may constitute a benefit to the Participant on which additional income tax and National Insurance contributions may be payable. The Participant acknowledges that the Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying the Company or the Service Recipient (as applicable) for the value of any employee National Insurance contributions due on this additional benefit. The Participant further acknowledges that the Company or the Service Recipient may recover such amounts from the Participant by any of the means referred to in Section 11 of the Performance Share Unit Agreement.







_____________________________
2    A shadow director is an individual who is not on the board of directors of a company but who has sufficient control so that the board of directors acts in accordance with the “directions or instructions” of the individual.




Joint Election. As a condition of the Participant’s participation in the Plan, the Participant agrees to accept any liability for secondary Class 1 National Insurance contributions which may be payable by the Company and/or the Service Recipient in connection with the Performance Share Units and any event giving rise to Tax-Related Items (the “Service Recipient’s Liability”). Without limitation to the foregoing, the Participant agrees to execute the following joint election with the Company (the “Joint Election”), the form of such Joint Election being formally approved by HMRC, and to execute any other consents or elections required to accomplish the transfer of the Service Recipient’s Liability to the Participant. The Participant further agrees to execute such other joint elections as may be required between the Participant and any successor to the Company and/or the Service Recipient. The Participant further agrees that the Company and/or the Service Recipient may collect the Service Recipient’s Liability from him or her by any of the means set forth in Section 11 of the Performance Share Unit Agreement.

If the Participant does not enter into the Joint Election prior to the vesting of the Performance Share Units or any other event giving rise to Tax-Related Items, he or she will not be entitled to vest in the Performance Share Units or receive any benefit in connection with the Performance Share Units unless and until he or she enters into the Joint Election and no shares of Common Stock or other benefit pursuant to the Performance Share Units will be issued to the Participant under the Plan, without any liability to the Company and/or the Service Recipient.


URUGUAY

There are no country-specific provisions.




ATTACHMENT TO APPENDIX FOR THE UNITED KINGDOM

Important Note on the Joint Election to Transfer
Service Recipient National Insurance Contributions

As a condition of participation in the Catalent, Inc. 2014 Omnibus Incentive Plan (the “Plan”) and the Performance Share Units that have been granted to you (the “Participant”) by Catalent, Inc. (the “Company”), the Participant is required to enter into a joint election to transfer to the Participant any liability for employer National Insurance contributions (the “Service Recipient’s Liability”) that may arise in connection with the Performance Share Units or in connection with any future Performance Share Units that may be granted by the Company to the Participant under the Plan (the “Joint Election”).
If the Participant does not agree to enter into the Joint Election, the Performance Share Units will be worthless as the Participant will not be able to vest in the Performance Share Units or receive any benefit in connection with the Performance Share Units.
By entering into the Joint Election:
1.
the Participant agrees that any Service Recipient’s Liability that may arise in connection with or pursuant to the vesting of the Performance Share Units (or any performance share units granted to the Participant under the Plan) or the acquisition of shares of the Company’s common stock or other taxable events in connection with the Performance Share Units (or any other performance share units granted under the Plan) will be transferred to the Participant;

2.
the Participant authorises the Company and/or the Participant’s employer to recover an amount sufficient to cover the Service Recipient’s Liability by any method set forth in the Performance Share Unit Agreement and/or the Joint Election; and

3.
the Participant acknowledges that even if he or she has accepted the Joint Election via the Company's online procedure, the Company or the Participant’s employer may still require the Participant to sign a paper copy of the Joint Election (or a substantially similar form) if the Company determines such is necessary to give effect to the Joint Election.

By accepting the Performance Share Units through the Company’s online acceptance procedure (or by signing the Performance Share Unit Agreement), the Participant is agreeing to be bound by the terms of the Joint Election.
Please read the terms of the Joint Election carefully before
accepting the Performance Share Unit Agreement
and the Joint Election.
Please print and keep a copy of the Joint Election
for your records.




CATALENT, INC.
2014 OMNIBUS Incentive Plan

(UK Employees)
Election To Transfer the Service Recipient’s National Insurance Liability to the Employee
1.      Parties

This Election is between:
(A)
You, the individual who has gained access to this Election (the “Employee”), who is employed by one of the U.K. companies listed in the Schedule below (the “Service Recipient”) and who is eligible to receive Performance Share Units (“Performance Share Units”) granted by Catalent, Inc. pursuant to the terms and conditions of the 2014 Omnibus Incentive Plan (the “Plan”), and
(B)
Catalent, Inc. of 14 Schoolhouse Road, Somerset, NJ 08873, United States of America (the “Company”), which may grant Performance Share Units under the Plan and is entering into this Form of Election on behalf of the Service Recipient .
2.      Purpose of Election
2.1
This Election relates to Performance Share Units granted by the Company under the Plan on or after September __, 2014.
2.2      In this Election the following words and phrases have the following meanings:
“ Taxable Event ” means, in relation to the Performance Share Units:
(i)
the acquisition of securities pursuant to the Performance Share Units (within section 477(3)(a) of ITEPA); and/or
(ii)
the assignment or release of the Performance Share Units in return for consideration (within section 477(3)(b) of ITEPA); and/or
(iii)
the receipt of a benefit in connection with the Performance Share Units, other than a benefit within (i) or (ii) above (within section 477(3)(c) of ITEPA); and/or
(iv)
post-acquisition charges relating to the Performance Share Units and/or shares acquired pursuant to the Performance Share Units (within section 427 of ITEPA); and/or
(v)
post-acquisition charges relating to the Performance Share Units and/or shares acquired pursuant to the Performance Share Units (within section 439 of ITEPA).

“ ITEPA ” means the Income Tax (Earnings and Pensions) Act 2003.
“ SSCBA ” means the Social Security Contributions and Benefits Act 1992.
2.3
This Election relates to the Service Recipient’s secondary Class 1 National Insurance Contributions (the “ Service Recipient’s Liability ”) which may arise on the occurrence of a Taxable Event in respect of the Performance Share Units pursuant to section 4(4)(a) and/or paragraph 3B(1A) of Schedule 1 of the SSCBA.





2.4
This Election does not apply in relation to any liability, or any part of any liability, arising as a result of regulations being given retrospective effect by virtue of section 4B(2) of either the SSCBA or the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
2.5
This Election does not apply to the extent that it relates to relevant employment income which is employment income of the earner by virtue of Chapter 3A of Part VII of ITEPA (employment income: securities with artificially depressed market value).
3.      Election
The Employee and the Company jointly elect that the entire liability of the Service Recipient to pay the Service Recipient’s Liability on the Taxable Event is hereby transferred to the Employee. The Employee understands that by signing the Performance Share Unit Agreement to accept the grant of the Performance Share Units he or she will become personally liable for the Service Recipient’s Liability covered by this Election. This Election is made in accordance with paragraph 3B(1) of Schedule 1 to SSCBA.
4.      Payment of the Service Recipient’s Liability

4.1
The Employee hereby authorises the Company and/or the Service Recipient to collect the Service Recipient’s Liability from the Employee at any time after the Taxable Event:

(i)
by deduction from salary or any other payment payable to the Employee at any time on or after the date of the Taxable Event; and/or
(ii)
directly from the Employee by payment in cash or cleared funds; and/or
(iii)
by arranging, on behalf of the Employee, for the sale of some of the securities which the Employee is entitled to receive in respect of the Performance Share Units; and/or
(iv)
by any other means specified in the Performance Share Unit Agreement.
4.2
The Company hereby reserves for itself and the Service Recipient the right to withhold the transfer of any securities in respect of the Performance Share Units to the Employee until full payment of the Service Recipient’s Liability is received.
4.3
The Company agrees to procure the remittance by the Service Recipient of the Service Recipient’s Liability to HM Revenue and Customs on behalf of the Employee within 14 days after the end of the UK tax month during which the Taxable Event occurs (or within 17 days after the end of the UK tax month during which the Taxable Event occurs, if payments are made electronically).
5.      Duration of Election

5.1
The Employee and the Company agree to be bound by the terms of this Election regardless of whether the Employee is transferred abroad or is not employed by the Service Recipient on the date on which the Service Recipient’s Liability becomes due.

5.2
Any reference in this Election to the Company and/or the Service Recipient shall include that entity's successors in title and assigns as permitted in accordance with the terms of the relevant Plan and relevant Agreement. This Election will continue in effect in respect of any awards which replace the Performance Share Units in circumstances where section 483 of ITEPA applies.




This Election will continue in effect until the earliest of the following:
(i)
the Employee and the Company agree in writing that it should cease to have effect;
(ii)
the date the Company serves written notice on the Employee terminating its effect;

(iii)
the date HM Revenue and Customs withdraws approval of this Election; or
(iv)
after due payment of the Service Recipient’s Liability in respect of the entirety of the Performance Share Units to which this Election relates or could relate, such that the Election ceases to have effect in accordance with its terms.
Acceptance by the Employee
The Employee acknowledges that by signing the Performance Share Unit Agreement to accept the grant of the Performance Share Units, the Employee agrees to be bound by the terms of this Election.
Acceptance by the Company
The Company acknowledges that, by arranging for the scanned signature of an authorised representative to appear on this Election, the Company agrees to be bound by the terms of this Election.
Signed for and on behalf of the Company     



__________________
By:
Title:





SCHEDULE OF EMPLOYER COMPANIES

The Employers to which this Form of Election relates are:     

Catalent UK Packaging Limited
Lancaster Way, Wingates Industrial Park,
Registered Number: 00714877
Corporation Tax District: [insert]
Westhoughton, Bolton,
Lancashire UK, BL5 3XX
PAYE Reference: [insert]

Catalent UK Swindon Zydis Limited
Frankland Road,
Registered Number: SCO70691
Corporation Tax District: [insert]
Blagrove, Swindon,
Wiltshire, UK SN5 8YG
PAYE Reference: [insert]



Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, John R. Chiminski, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q for the three months ended September 30, 2014 of Catalent, 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)) 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.
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

c.
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: November 13, 2014

/s/ John R. Chiminski
John R. Chiminski
President and Chief Executive Officer
(Principal Executive Officer)


Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew Walsh, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q for the three months ended September 30, 2014 of Catalent, 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)) 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.
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

c.
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: November 13, 2014

/s/ Matthew M. Walsh
Matthew M. Walsh
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)

Exhibit 32.1
Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Catalent, Inc. (the “Company”) on Form 10-Q for the three months ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John R. Chiminski, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 13, 2014
/s/ John R. Chiminski
John R. Chiminski
President and
Chief Executive Officer




Exhibit 32.2
Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Catalent, Inc. (the “Company”) on Form 10-Q for the three months ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew M. Walsh, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 13, 2014
/s/ Matthew M. Walsh
Matthew M. Walsh
Executive Vice President and
Chief Financial Officer


        

Exhibit 99.1
Section 13(r) Disclosure

Travelport Worldwide Limited, which may be considered our affiliate, included the disclosure reproduced below in its Form 10-Q for the fiscal quarter ended September 30, 2014. We have not independently verified or participated in the preparation of this disclosure.

“As part of our global business in the travel industry, we provide certain passenger travel-related Travel Commerce Platform and Technology Services to Iran Air. We also provide certain Technology Services to Iran Air Tours. All of these services are either exempt from applicable sanctions prohibitions pursuant to a statutory exemption permitting transactions ordinarily incident to travel or, to the extent not otherwise exempt, specifically licensed by the U.S. Office of Foreign Assets Control. Subject to any changes in the exempt/licensed status of such activities, we intend to continue these business activities, which are directly related to and promote the arrangement of travel for individuals.

The gross revenue and net profit attributable to these activities in the quarter ended September 30, 2014 were approximately $171,000 and $124,000, respectively.”