|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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)
|
Large accelerated filer
x
|
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
|
|
|
Emerging growth company
¨
|
|
|
Item
|
|
Page
|
|
|
|
Part I.
|
|
|
|
|
|
Item 1.
|
Financial Statements
(unaudited)
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Part II.
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
•
|
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 or result in claims from customers.
|
•
|
Failure to provide quality offerings to our customers could have an adverse effect on our business and subject us to regulatory actions or 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 economic, political, and regulatory risks, including the risks of changing regulatory standards or changing interpretations of existing standards, that could affect the profitability of our operations or require costly changes to our procedures.
|
•
|
The referendum in the United Kingdom (the "U.K.") and resulting decision of the U.K. government to consider exiting from the European Union could have future adverse effects on our revenues and costs, and therefore our profitability.
|
•
|
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, trade secrets, 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 for our customers’ products in the United States or internationally, including the possible repeal or replacement of the Affordable Care Act in the United States, could adversely affect our results of operations and financial condition by affecting demand for our offerings.
|
•
|
As a global enterprise, fluctuations in the exchange rate of the U.S. dollar against foreign currencies could have a material adverse effect on our financial performance and results of operations.
|
•
|
Tax legislative or regulatory initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.
|
•
|
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
|
•
|
Changes to the estimated future profitability of the business may require that we establish an additional valuation allowance against all or some portion of our net U.S. deferred tax assets.
|
•
|
We are dependent on key personnel.
|
•
|
We use advanced information and communication systems to run our operations, compile and analyze financial and operational data, and communicate among our employees, customers, and counter-parties, so the risks generally associated with information and communications systems could adversely affect our results of operations.
|
•
|
We engage, from time to time, 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, including risks relating to our ability to successfully and efficiently integrate acquisitions and realize anticipated benefits therefrom. The failure to execute or realize the full benefits from any such transaction could have a negative effect on our operations.
|
•
|
Our offerings or 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 make to increase the funding level 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.
|
Item 1.
|
FINANCIAL STATEMENTS
|
|
Three Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Net revenue
|
$
|
543.9
|
|
|
$
|
442.2
|
|
Cost of sales
|
403.8
|
|
|
318.1
|
|
||
Gross margin
|
140.1
|
|
|
124.1
|
|
||
Selling, general and administrative expenses
|
107.0
|
|
|
98.2
|
|
||
Impairment charges and (gain)/loss on sale of assets
|
—
|
|
|
—
|
|
||
Restructuring and other
|
1.2
|
|
|
1.1
|
|
||
Operating earnings
|
31.9
|
|
|
24.8
|
|
||
Interest expense, net
|
24.3
|
|
|
22.1
|
|
||
Other expense/(income), net
|
5.7
|
|
|
(2.1
|
)
|
||
Earnings from continuing operations, before income taxes
|
1.9
|
|
|
4.8
|
|
||
Income tax expense/(benefit)
|
(1.9
|
)
|
|
0.2
|
|
||
Net earnings
|
3.8
|
|
|
4.6
|
|
||
|
|
|
|
||||
|
|
|
|
||||
Earnings per share:
|
|
|
|
||||
Basic
|
|
|
|
||||
Net earnings
|
0.03
|
|
|
0.04
|
|
||
Diluted
|
|
|
|
|
|||
Net earnings
|
0.03
|
|
|
0.04
|
|
|
Three Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Net earnings
|
$
|
3.8
|
|
|
$
|
4.6
|
|
Other comprehensive income/(loss), net of tax
|
|
|
|
||||
Foreign currency translation adjustments
|
38.1
|
|
|
0.6
|
|
||
Pension and other post-retirement adjustments
|
0.4
|
|
|
0.8
|
|
||
Available for sale investments
|
(3.4
|
)
|
|
—
|
|
||
Other comprehensive income/(loss), net of tax
|
35.1
|
|
|
1.4
|
|
||
Comprehensive income
|
38.9
|
|
|
6.0
|
|
|
September 30,
2017 |
|
June 30,
2017 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
601.4
|
|
|
$
|
288.3
|
|
Trade receivables, net
|
410.5
|
|
|
488.8
|
|
||
Inventories
|
194.0
|
|
|
184.9
|
|
||
Prepaid expenses and other
|
124.2
|
|
|
97.8
|
|
||
Total current assets
|
1,330.1
|
|
|
1,059.8
|
|
||
Property, plant, and equipment, net
|
1,025.0
|
|
|
995.9
|
|
||
Other assets:
|
|
|
|
||||
Goodwill
|
1,069.6
|
|
|
1,044.1
|
|
||
Other intangibles, net
|
269.2
|
|
|
273.1
|
|
||
Deferred income taxes
|
62.6
|
|
|
53.9
|
|
||
Other
|
28.3
|
|
|
27.5
|
|
||
Total assets
|
$
|
3,784.8
|
|
|
$
|
3,454.3
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term obligations and other short-term borrowings
|
$
|
23.9
|
|
|
$
|
24.6
|
|
Accounts payable
|
166.8
|
|
|
163.2
|
|
||
Other accrued liabilities
|
266.4
|
|
|
281.2
|
|
||
Total current liabilities
|
457.1
|
|
|
469.0
|
|
||
Long-term obligations, less current portion
|
2,082.9
|
|
|
2,055.1
|
|
||
Pension liability
|
129.3
|
|
|
129.5
|
|
||
Deferred income taxes
|
30.3
|
|
|
31.7
|
|
||
Other liabilities
|
46.4
|
|
|
45.5
|
|
||
Commitment and contingencies (see Note 13)
|
|
|
|
||||
|
|
|
|
||||
Shareholders' equity/(deficit):
|
|
|
|
||||
Common stock $0.01 par value; 1.0 billion shares authorized on September 30, 2017 and June 30, 2017, 132,841,121 and 125,049,867 issued and outstanding on September 30, 2017 and June 30, 2017, respectively.
|
1.3
|
|
|
1.3
|
|
||
Preferred stock $0.01 par value; 100 million authorized on September 30, 2017 and June 30, 2017, 0 issued and outstanding on September 30, 2017 and June 30, 2017.
|
—
|
|
|
—
|
|
||
Additional paid in capital
|
2,268.4
|
|
|
1,992.0
|
|
||
Accumulated deficit
|
(951.9
|
)
|
|
(955.7
|
)
|
||
Accumulated other comprehensive income/(loss)
|
(279.0
|
)
|
|
(314.1
|
)
|
||
Total shareholders' equity
|
1,038.8
|
|
|
723.5
|
|
||
Total liabilities and shareholders' equity
|
$
|
3,784.8
|
|
|
$
|
3,454.3
|
|
|
Shares of Common Stock
|
|
Common
Stock
|
|
Additional
Paid in Capital |
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
|
Total
Shareholders'
Equity/ (Deficit)
|
|||||||||||
Balance at June 30, 2017
|
125,049.9
|
|
|
$
|
1.3
|
|
|
$
|
1,992.0
|
|
|
$
|
(955.7
|
)
|
|
$
|
(314.1
|
)
|
|
$
|
723.5
|
|
Equity offering, sale of common stock
|
7,354.2
|
|
|
—
|
|
|
277.8
|
|
|
|
|
|
|
277.8
|
|
|||||||
Share issuances related to equity-based
compensation
|
437.0
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Equity compensation
|
|
|
|
|
7.0
|
|
|
|
|
|
|
7.0
|
|
|||||||||
Cash paid, in lieu of equity, for tax
withholding
|
|
|
|
|
(8.4
|
)
|
|
|
|
|
|
(8.4
|
)
|
|||||||||
Net earnings/(loss)
|
|
|
|
|
|
|
3.8
|
|
|
|
|
3.8
|
|
|||||||||
Other comprehensive income/(loss), net
tax
|
|
|
|
|
|
|
|
|
35.1
|
|
|
35.1
|
|
|||||||||
Balance at September 30, 2017
|
132,841.1
|
|
|
$
|
1.3
|
|
|
$
|
2,268.4
|
|
|
$
|
(951.9
|
)
|
|
$
|
(279.0
|
)
|
|
$
|
1,038.8
|
|
|
Three Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net earnings
|
$
|
3.8
|
|
|
$
|
4.6
|
|
Adjustments to reconcile earnings from continued operations to net cash from operations:
|
|
|
|
||||
Depreciation and amortization
|
39.0
|
|
|
35.8
|
|
||
Non-cash foreign currency transaction (gain)/loss, net
|
8.3
|
|
|
(0.7
|
)
|
||
Amortization and write off of debt financing costs
|
1.3
|
|
|
1.1
|
|
||
Equity compensation
|
7.0
|
|
|
6.9
|
|
||
Provision/(benefit) for deferred income taxes
|
(1.8
|
)
|
|
(4.1
|
)
|
||
Provision for bad debts and inventory
|
4.9
|
|
|
2.0
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Decrease/(increase) in trade receivables
|
87.0
|
|
|
43.9
|
|
||
Decrease/(increase) in inventories
|
(7.3
|
)
|
|
(16.4
|
)
|
||
Increase/(decrease) in accounts payable
|
2.0
|
|
|
(1.2
|
)
|
||
Other assets/accrued liabilities, net - current and non-current
|
(60.5
|
)
|
|
(23.6
|
)
|
||
Net cash provided by operating activities
|
83.7
|
|
|
48.3
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Acquisition of property and equipment and other productive assets
|
(42.7
|
)
|
|
(27.7
|
)
|
||
Payment for acquisitions, net of cash acquired
|
—
|
|
|
(86.9
|
)
|
||
Net cash (used in) investing activities
|
(42.7
|
)
|
|
(114.6
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net change in other borrowings
|
(1.7
|
)
|
|
(4.3
|
)
|
||
Proceeds from borrowing, net
|
—
|
|
|
75.0
|
|
||
Payments related to long-term obligations
|
(4.7
|
)
|
|
(4.7
|
)
|
||
Equity offering, sale of common stock
|
277.8
|
|
|
—
|
|
||
Cash paid, in lieu of equity, for tax withholding obligations
|
(8.4
|
)
|
|
(0.1
|
)
|
||
Net cash provided by financing activities
|
263.0
|
|
|
65.9
|
|
||
Effect of foreign currency on cash
|
9.1
|
|
|
0.9
|
|
||
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS
|
313.1
|
|
|
0.5
|
|
||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
|
288.3
|
|
|
131.6
|
|
||
CASH AND EQUIVALENTS AT END OF PERIOD
|
$
|
601.4
|
|
|
$
|
132.1
|
|
SUPPLEMENTARY CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
$
|
16.7
|
|
|
$
|
20.2
|
|
Income taxes paid, net
|
$
|
7.9
|
|
|
$
|
10.9
|
|
1
.
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
BUSINESS COMBINATION AND RELATED FINANCING TRANSACTIONS
|
3
.
|
GOODWILL
|
(Dollars in millions)
|
Softgel Technologies
|
|
Drug Delivery Solutions
|
|
Clinical Supply Services
|
|
Total
|
||||||||
Balance at June 30, 2017
|
$
|
415.2
|
|
|
$
|
477.2
|
|
|
$
|
151.7
|
|
|
$
|
1,044.1
|
|
Additions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation adjustments
|
10.0
|
|
|
9.1
|
|
|
6.4
|
|
|
25.5
|
|
||||
Balance at September 30, 2017
|
$
|
425.2
|
|
|
$
|
486.3
|
|
|
$
|
158.1
|
|
|
$
|
1,069.6
|
|
4
.
|
DEFINITE LIVED LONG-LIVED ASSETS
|
(Dollars in millions)
|
Weighted Average Life
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||
September 30, 2017
|
|
|
|
|
|
|
|
||||||
Amortized intangibles:
|
|
|
|
|
|
|
|
||||||
Core technology
|
18 years
|
|
$
|
173.9
|
|
|
$
|
(79.2
|
)
|
|
$
|
94.7
|
|
Customer relationships
|
14 years
|
|
260.1
|
|
|
(112.6
|
)
|
|
147.5
|
|
|||
Product relationships
|
12 years
|
|
212.1
|
|
|
(185.1
|
)
|
|
27.0
|
|
|||
Total intangible assets
|
|
|
$
|
646.1
|
|
|
$
|
(376.9
|
)
|
|
$
|
269.2
|
|
(Dollars in millions)
|
Weighted Average Life
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||
June 30, 2017
|
|
|
|
|
|
|
|
||||||
Amortized intangibles:
|
|
|
|
|
|
|
|
||||||
Core technology
|
18 years
|
|
$
|
170.3
|
|
|
$
|
(74.8
|
)
|
|
$
|
95.5
|
|
Customer relationships
|
14 years
|
|
253.0
|
|
|
(106.1
|
)
|
|
146.9
|
|
|||
Product relationships
|
12 years
|
|
206.9
|
|
|
(176.2
|
)
|
|
30.7
|
|
|||
Total intangible assets
|
|
|
$
|
630.2
|
|
|
$
|
(357.1
|
)
|
|
$
|
273.1
|
|
(Dollars in millions)
|
Remainder
Fiscal 2018 |
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||||
Amortization expense
|
$
|
34.5
|
|
|
$
|
40.3
|
|
|
$
|
26.2
|
|
|
$
|
26.2
|
|
|
$
|
26.2
|
|
|
$
|
26.2
|
|
5
.
|
LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS
|
(Dollars in millions)
|
Maturity as of September 30, 2017
|
|
September 30,
2017 |
|
June 30, 2017
|
||||
Senior Secured Credit Facilities
|
|
|
|
|
|
||||
Term loan facility dollar-denominated
|
May 2021
|
|
$
|
1,241.1
|
|
|
$
|
1,244.2
|
|
Term loan facility euro-denominated
|
May 2021
|
|
365.2
|
|
|
352.0
|
|
||
Euro-denominated 4.75% Senior Notes due 2024
|
December 2024
|
|
441.6
|
|
|
424.3
|
|
||
Capital lease obligations
|
2020 to 2032
|
|
53.9
|
|
|
53.3
|
|
||
Other obligations
|
2017 to 2018
|
|
5.0
|
|
|
5.9
|
|
||
Total
|
|
|
2,106.8
|
|
|
2,079.7
|
|
||
Less: Current portion of long-term obligations and other short-term
borrowings |
|
|
23.9
|
|
|
24.6
|
|
||
Long-term obligations, less current portion
|
|
|
$
|
2,082.9
|
|
|
$
|
2,055.1
|
|
|
|
September 30, 2017
|
|
June 30, 2017
|
||||||||||||
(Dollars in millions)
|
Fair Value Measurement
|
Carrying
Value
|
|
Estimated Fair
Value
|
|
Carrying
Value
|
|
Estimated Fair
Value
|
||||||||
Euro-denominated 4.75% Senior Notes
|
Level 1
|
$
|
441.6
|
|
|
$
|
474.6
|
|
|
$
|
424.3
|
|
|
$
|
454.0
|
|
Senior Secured Credit Facilities & Other
|
Level 2
|
1,665.2
|
|
|
1,664.8
|
|
|
1,655.4
|
|
|
1,653.1
|
|
||||
Total
|
|
$
|
2,106.8
|
|
|
$
|
2,139.4
|
|
|
$
|
2,079.7
|
|
|
$
|
2,107.1
|
|
6
.
|
EARNINGS PER SHARE
|
|
Three Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Net earnings
|
$
|
3.8
|
|
|
$
|
4.6
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
125,713,246
|
|
|
124,819,466
|
|
||
Dilutive securities issuable-stock plans
|
2,071,275
|
|
|
1,440,255
|
|
||
Total weighted average diluted shares outstanding
|
127,784,521
|
|
|
126,259,721
|
|
||
|
|
|
|
||||
Basic earnings per share of common stock:
|
|
|
|
|
|||
Net earnings
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
|
|
|
||||
Diluted earnings per share of common stock :
|
|
|
|
||||
Net earnings
|
$
|
0.03
|
|
|
$
|
0.04
|
|
7
.
|
OTHER (INCOME) / EXPENSE, NET
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Other (income)/expense, net
|
|
|
|
||||
Foreign currency (gains) and losses
|
5.6
|
|
|
(2.3
|
)
|
||
Other
|
0.1
|
|
|
0.2
|
|
||
Total Other (Income)/Expense, net
|
$
|
5.7
|
|
|
$
|
(2.1
|
)
|
8
.
|
RESTRUCTURING AND OTHER COSTS
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Restructuring costs:
|
|
|
|
||||
Employee-related reorganization
|
$
|
1.7
|
|
|
$
|
0.8
|
|
Facility exit and other costs
|
0.6
|
|
|
0.3
|
|
||
Total restructuring costs
|
$
|
2.3
|
|
|
$
|
1.1
|
|
Other - insurance recoveries against customer claims
|
(1.1
|
)
|
|
—
|
|
||
Total restructuring and other costs
|
$
|
1.2
|
|
|
$
|
1.1
|
|
9
.
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Unrealized foreign exchange gain/(loss) within other
comprehensive income
|
$
|
(17.6
|
)
|
|
$
|
(3.5
|
)
|
Unrealized foreign exchange gain/(loss) within statement
of operations
|
$
|
(13.4
|
)
|
|
$
|
(2.5
|
)
|
10
.
|
INCOME TAXES
|
11
.
|
EMPLOYEE RETIREMENT BENEFIT PLANS
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Components of net periodic benefit cost:
|
|
|
|
||||
Service cost
|
$
|
0.9
|
|
|
$
|
0.8
|
|
Interest cost
|
1.8
|
|
|
1.7
|
|
||
Expected return on plan assets
|
(2.9
|
)
|
|
(2.8
|
)
|
||
Amortization
(1)
|
0.6
|
|
|
1.1
|
|
||
Net amount recognized
|
$
|
0.4
|
|
|
$
|
0.8
|
|
(1)
|
Amount represents the amortization of unrecognized actuarial gains/(losses).
|
12
.
|
EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Foreign currency translation adjustments:
|
|
|
|
||||
Net investment hedge
|
$
|
(17.6
|
)
|
|
$
|
(3.5
|
)
|
Long-term intercompany loans
|
13.5
|
|
|
(7.7
|
)
|
||
Translation adjustments
|
36.1
|
|
|
10.6
|
|
||
Total foreign currency translation adjustment, pretax
|
32.0
|
|
|
(0.6
|
)
|
||
Tax expense/(benefit)
|
(6.1
|
)
|
|
(1.2
|
)
|
||
Total foreign currency translation adjustment, net of tax
|
$
|
38.1
|
|
|
$
|
0.6
|
|
|
|
|
|
||||
Net change in minimum pension liability
|
|
|
|
||||
Net gain/(loss) recognized during the period
|
0.6
|
|
|
1.1
|
|
||
Total pension, pretax
|
0.6
|
|
|
1.1
|
|
||
Tax expense/(benefit)
|
0.2
|
|
|
0.3
|
|
||
Net change in minimum pension liability, net of tax
|
$
|
0.4
|
|
|
$
|
0.8
|
|
|
|
|
|
||||
Net change in available for sale investment:
|
|
|
|
||||
Net gain/(loss) recognized during the period
|
(5.2
|
)
|
|
—
|
|
||
Total available for sale investment, pretax
|
(5.2
|
)
|
|
—
|
|
||
Tax expense/(benefit)
|
(1.8
|
)
|
|
—
|
|
||
Net change in available for sale investment, net of tax
|
$
|
(3.4
|
)
|
|
$
|
—
|
|
|
|
|
|
(Dollars in millions)
|
Foreign Exchange Translation Adjustments
|
|
Pension and Liability Adjustments
|
|
Available for Sale investment Adjustments
|
|
Total
|
||||||||
Balance at June 30, 2017
|
$
|
(280.7
|
)
|
|
$
|
(43.9
|
)
|
|
$
|
10.5
|
|
|
$
|
(314.1
|
)
|
Other comprehensive income/(loss) before reclassifications
|
38.1
|
|
|
—
|
|
|
(3.4
|
)
|
|
34.7
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
||||
Net current period other comprehensive income (loss)
|
38.1
|
|
|
0.4
|
|
|
(3.4
|
)
|
|
35.1
|
|
||||
Balance at September 30, 2017
|
$
|
(242.6
|
)
|
|
$
|
(43.5
|
)
|
|
$
|
7.1
|
|
|
$
|
(279.0
|
)
|
13
.
|
COMMITMENTS AND CONTINGENCIES
|
14
.
|
SEGMENT INFORMATION
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Softgel Technologies
|
|
|
|
||||
Net revenue
|
$
|
219.7
|
|
|
$
|
186.4
|
|
Segment EBITDA
|
35.1
|
|
|
30.5
|
|
||
Drug Delivery Solutions
|
|
|
|
||||
Net revenue
|
225.8
|
|
|
191.3
|
|
||
Segment EBITDA
|
47.4
|
|
|
42.0
|
|
||
Clinical Supply Services
|
|
|
|
||||
Net revenue
|
109.7
|
|
|
75.0
|
|
||
Segment EBITDA
|
16.7
|
|
|
10.5
|
|
||
Inter-segment revenue elimination
|
(11.3
|
)
|
|
(10.5
|
)
|
||
Unallocated Costs
(1)
|
(34.0
|
)
|
|
(20.3
|
)
|
||
Combined Totals:
|
|
|
|
||||
Net revenue
|
$
|
543.9
|
|
|
$
|
442.2
|
|
|
|
|
|
||||
EBITDA from continuing operations
|
$
|
65.2
|
|
|
$
|
62.7
|
|
(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)
|
2017
|
|
2016
|
||||
Equity compensation
|
(7.0
|
)
|
|
(6.9
|
)
|
||
Restructuring and other special items
(2)
|
(12.3
|
)
|
|
(5.9
|
)
|
||
Other income/(expense), net
(3)
|
(5.7
|
)
|
|
2.1
|
|
||
Non-allocated corporate costs, net
|
(9.0
|
)
|
|
(9.6
|
)
|
||
Total unallocated costs
|
$
|
(34.0
|
)
|
|
$
|
(20.3
|
)
|
(2)
|
Segment results do not include restructuring and certain acquisition-related costs.
|
(3)
|
Amounts primarily relate to foreign currency translation gains and losses during all periods presented. Refer to Note
7
for details.
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Earnings from continuing operations
|
$
|
3.8
|
|
|
$
|
4.6
|
|
Depreciation and amortization
|
39.0
|
|
|
35.8
|
|
||
Interest expense, net
|
24.3
|
|
|
22.1
|
|
||
Income tax expense/(benefit)
|
(1.9
|
)
|
|
0.2
|
|
||
EBITDA from continuing operations
|
$
|
65.2
|
|
|
$
|
62.7
|
|
(Dollars in millions)
|
September 30,
2017 |
|
June 30,
2017 |
||||
Assets
|
|
|
|
||||
Softgel Technologies
|
$
|
1,534.7
|
|
|
$
|
1,631.8
|
|
Drug Delivery Solutions
|
1,632.1
|
|
|
1,639.0
|
|
||
Clinical Supply Services
|
635.5
|
|
|
596.2
|
|
||
Corporate and eliminations
|
(17.5
|
)
|
|
(412.7
|
)
|
||
Total assets
|
$
|
3,784.8
|
|
|
$
|
3,454.3
|
|
15
.
|
SUPPLEMENTAL BALANCE SHEET INFORMATION
|
(Dollars in millions)
|
September 30,
2017 |
|
June 30,
2017 |
||||
Raw materials and supplies
|
$
|
118.1
|
|
|
$
|
107.5
|
|
Work-in-process
|
40.0
|
|
|
42.8
|
|
||
Finished goods
|
61.5
|
|
|
56.7
|
|
||
Total inventories, gross
|
219.6
|
|
|
207.0
|
|
||
Inventory cost adjustment
|
(25.6
|
)
|
|
(22.1
|
)
|
||
Inventories
|
$
|
194.0
|
|
|
$
|
184.9
|
|
(Dollars in millions)
|
September 30,
2017 |
|
June 30,
2017 |
||||
Prepaid expenses
|
$
|
23.7
|
|
|
$
|
12.3
|
|
Spare parts supplies
|
11.9
|
|
|
11.8
|
|
||
Prepaid income tax
|
12.1
|
|
|
11.5
|
|
||
Short term deferred financing costs
|
6.1
|
|
|
—
|
|
||
Non-US value added tax
|
23.4
|
|
|
16.0
|
|
||
Available for sale investment
|
13.4
|
|
|
18.6
|
|
||
Other current assets
|
33.6
|
|
|
27.6
|
|
||
Prepaid expenses and other
|
$
|
124.2
|
|
|
$
|
97.8
|
|
(Dollars in millions)
|
September 30,
2017 |
|
June 30,
2017 |
||||
Land, buildings, and improvements
|
$
|
752.5
|
|
|
$
|
735.2
|
|
Machinery, equipment, and capitalized software
|
847.0
|
|
|
825.0
|
|
||
Furniture and fixtures
|
10.4
|
|
|
10.1
|
|
||
Construction in progress
|
165.0
|
|
|
137.4
|
|
||
Property, plant, and equipment, at cost
|
1,774.9
|
|
|
1,707.7
|
|
||
Accumulated depreciation
|
(749.9
|
)
|
|
(711.8
|
)
|
||
Property, plant, and equipment, net
|
$
|
1,025.0
|
|
|
$
|
995.9
|
|
(Dollars in millions)
|
September 30,
2017 |
|
June 30,
2017 |
||||
Accrued employee-related expenses
|
$
|
82.8
|
|
|
$
|
96.4
|
|
Restructuring accrual
|
4.7
|
|
|
5.9
|
|
||
Accrued interest
|
6.4
|
|
|
0.9
|
|
||
Deferred revenue and fees
|
77.0
|
|
|
84.9
|
|
||
Accrued income tax
|
17.8
|
|
|
24.7
|
|
||
Other accrued liabilities and expenses
|
77.7
|
|
|
68.4
|
|
||
Other accrued liabilities
|
$
|
266.4
|
|
|
$
|
281.2
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
September 30, |
|
FX impact
|
|
Constant Currency Increase/(Decrease)
|
|||||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
|
|
Change $
|
|
Change %
|
|||||||||
Net revenue
|
$
|
543.9
|
|
|
$
|
442.2
|
|
|
$
|
6.5
|
|
|
$
|
95.2
|
|
|
22
|
%
|
Cost of sales
|
403.8
|
|
|
318.1
|
|
|
6.1
|
|
|
79.6
|
|
|
25
|
%
|
||||
Gross margin
|
140.1
|
|
|
124.1
|
|
|
0.4
|
|
|
15.6
|
|
|
13
|
%
|
||||
Selling, general and administrative expenses
|
107.0
|
|
|
98.2
|
|
|
0.3
|
|
|
8.5
|
|
|
9
|
%
|
||||
Restructuring and other
|
1.2
|
|
|
1.1
|
|
|
—
|
|
|
0.1
|
|
|
9
|
%
|
||||
Operating earnings
|
31.9
|
|
|
24.8
|
|
|
0.1
|
|
|
7.0
|
|
|
28
|
%
|
||||
Interest expense, net
|
24.3
|
|
|
22.1
|
|
|
—
|
|
|
2.2
|
|
|
10
|
%
|
||||
Other (income)/expense, net
|
5.7
|
|
|
(2.1
|
)
|
|
0.8
|
|
|
7.0
|
|
|
*
|
|
||||
Earnings from continuing operations, before income taxes
|
1.9
|
|
|
4.8
|
|
|
(0.7
|
)
|
|
(2.2
|
)
|
|
(46
|
)%
|
||||
Income tax expense/(benefit)
|
(1.9
|
)
|
|
0.2
|
|
|
(0.3
|
)
|
|
(1.8
|
)
|
|
*
|
|
||||
Net earnings
|
3.8
|
|
|
4.6
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(9
|
)%
|
||||
Less: Net earnings/(loss) attributable to noncontrolling
interest, net of tax |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
||||
Net earnings attributable to Catalent
|
$
|
3.8
|
|
|
$
|
4.6
|
|
|
$
|
(0.4
|
)
|
|
$
|
(0.4
|
)
|
|
(9
|
)%
|
|
Three Months Ended
September 30, |
|
FX impact
|
|
Constant Currency Increase/(Decrease)
|
|||||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
|
|
Change $
|
|
Change %
|
|||||||||
Softgel Technologies
|
|
|
|
|
|
|
|
|
|
|||||||||
Net revenue
|
$
|
219.7
|
|
|
$
|
186.4
|
|
|
$
|
4.0
|
|
|
$
|
29.3
|
|
|
16
|
%
|
Segment EBITDA
|
35.1
|
|
|
30.5
|
|
|
—
|
|
|
4.6
|
|
|
15
|
%
|
||||
Drug Delivery Solutions
|
|
|
|
|
|
|
|
|
|
|||||||||
Net revenue
|
225.8
|
|
|
191.3
|
|
|
2.5
|
|
|
32.0
|
|
|
17
|
%
|
||||
Segment EBITDA
|
47.4
|
|
|
42.0
|
|
|
0.3
|
|
|
5.1
|
|
|
12
|
%
|
||||
Clinical Supply Services
|
|
|
|
|
|
|
|
|
|
|||||||||
Net revenue
|
109.7
|
|
|
75.0
|
|
|
0.4
|
|
|
34.3
|
|
|
46
|
%
|
||||
Segment EBITDA
|
16.7
|
|
|
10.5
|
|
|
0.1
|
|
|
6.1
|
|
|
58
|
%
|
||||
Inter-segment revenue elimination
|
(11.3
|
)
|
|
(10.5
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|
4
|
%
|
||||
Unallocated Costs
(1)
|
(34.0
|
)
|
|
(20.3
|
)
|
|
(0.9
|
)
|
|
(12.8
|
)
|
|
63
|
%
|
||||
Combined Total
|
|
|
|
|
|
|
|
|
|
|||||||||
Net revenue
|
$
|
543.9
|
|
|
$
|
442.2
|
|
|
$
|
6.5
|
|
|
$
|
95.2
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBITDA from continuing operations
|
$
|
65.2
|
|
|
$
|
62.7
|
|
|
$
|
(0.5
|
)
|
|
$
|
3.0
|
|
|
5
|
%
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Equity compensation
|
(7.0
|
)
|
|
(6.9
|
)
|
||
Restructuring and other special items
(2)
|
(12.3
|
)
|
|
(5.9
|
)
|
||
Other income/(expense), net
(3)
|
(5.7
|
)
|
|
2.1
|
|
||
Non-allocated corporate costs, net
|
(9.0
|
)
|
|
(9.6
|
)
|
||
Total unallocated costs
|
$
|
(34.0
|
)
|
|
$
|
(20.3
|
)
|
|
Three Months Ended
September 30, |
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Earnings from continuing operations
|
$
|
3.8
|
|
|
$
|
4.6
|
|
Depreciation and amortization
|
39.0
|
|
|
35.8
|
|
||
Interest expense, net
|
24.3
|
|
|
22.1
|
|
||
Income tax expense/(benefit)
|
(1.9
|
)
|
|
0.2
|
|
||
EBITDA from continuing operations
|
$
|
65.2
|
|
|
$
|
62.7
|
|
|
2017 vs. 2016
|
||||
Factors Contributing to Year-Over-Year Change
|
Three Months Ended
September 30, |
||||
|
Net Revenue
|
|
Segment EBITDA
|
||
Revenue/Segment EBITDA without acquisitions
|
2
|
%
|
|
(3
|
)%
|
Impact of acquisitions
|
14
|
%
|
|
18
|
%
|
Constant currency change
|
16
|
%
|
|
15
|
%
|
Foreign currency translation impact on reporting
|
2
|
%
|
|
—
|
%
|
Total % change
|
18
|
%
|
|
15
|
%
|
|
2017 vs. 2016
|
||||
Factors Contributing to Year-Over-Year Change
|
Three Months Ended
September 30, |
||||
|
Net Revenue
|
|
Segment EBITDA
|
||
Revenue/Segment EBITDA without acquisitions
|
13
|
%
|
|
10
|
%
|
Impact of acquisitions
|
4
|
%
|
|
2
|
%
|
Constant currency change
|
17
|
%
|
|
12
|
%
|
Foreign currency translation impact on reporting
|
1
|
%
|
|
1
|
%
|
Total % Change
|
18
|
%
|
|
13
|
%
|
|
2017 vs. 2016
|
||||
Factors Contributing to Year-Over-Year Change
|
Three Months Ended
September 30, |
||||
|
Net Revenue
|
|
Segment EBITDA
|
||
Revenue/Segment EBITDA without acquisitions
|
46
|
%
|
|
58
|
%
|
Impact of acquisitions
|
—
|
%
|
|
—
|
%
|
Constant currency change
|
46
|
%
|
|
58
|
%
|
Foreign currency translation impact on reporting
|
—
|
%
|
|
1
|
%
|
Total % Change
|
46
|
%
|
|
59
|
%
|
|
Three Months Ended
September 30, |
|
|
||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
Difference
|
||||||
Net cash provided by/(used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
83.7
|
|
|
$
|
48.3
|
|
|
$
|
35.4
|
|
Investing activities
|
$
|
(42.7
|
)
|
|
$
|
(114.6
|
)
|
|
$
|
71.9
|
|
Financing activities
|
$
|
263.0
|
|
|
$
|
65.9
|
|
|
$
|
197.1
|
|
•
|
a pledge of 100% of the capital stock of Operating Company and 100% of the equity interests directly held by Operating Company and each guarantor in any wholly owned material subsidiary of Operating 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 such non-U.S. subsidiary); and
|
•
|
a security interest in, and mortgages on, substantially all tangible and intangible assets of Operating Company and of each guarantor, subject to certain limited exceptions.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Item 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Item 5.
|
OTHER INFORMATION
|
Item 6.
|
EXHIBITS
|
|
|
|
|
Interest Purchase Agreement, dated September 18, 2017, by and among Catalent Pharma Solutions, Inc., Cook Pharmica LLC, Cook Group Incorporated. Disclosure schedules and exhibits have been omitted. The Interest Purchase Agreement as filed identifies such schedules and exhibits, including the general nature of their contents. Catalent, Inc. agrees to furnish a copy of any omitted attachment to the Securities and Exchange Commission on a confidential basis upon request (incorporated by reference to exhibit 2.1 to the Company's Current Report on Form 8-K filed on September 19, 2017, File No. 001-36587).
|
|
|
|
|
|
Second Amended and Restated Certificate of Incorporation of Catalent, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 6, 2017, File No. 001-36587).
|
|
|
|
|
|
Bylaws of Catalent, Inc., adopted November 2, 2017 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on November 6, 2017, File No. 001-36587).
|
|
|
|
|
|
Indenture, dated October 18, 2017, by and among Catalent Pharma Solutions, Inc., the subsidiary guarantors named therein and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 18, 2017, File No. 001-36587).
|
|
|
|
|
|
Form of 4.875% Senior Notes due 2026 (included as part of Exhibit 4.1 above).
|
|
|
|
|
|
Catalent Pharma Solutions, Inc. Deferred Compensation Plan as amended and restated effective January 1, 2016†*
|
|
|
|
|
|
Amendment to the Catalent Pharma Solutions, Inc. Deferred Compensation Plan dated October 16, 2017 † *
|
|
|
|
|
|
Amendment No. 3 to Amended and Restated Credit Agreement, dated as of October 18, 2017, by and among Catalent Pharma Solutions, Inc., PTS Intermediate Holdings LLC, Morgan Stanley Senior Funding, Inc., as administrative agent, collateral agent and swing line lender and the lenders party thereto, which amends that certain Amended and Restated Credit Agreement, dated as of May 20, 2014 (as amended), by and among Catalent Pharma Solutions, Inc., PTS Intermediate Holdings LLC, Morgan Stanley Senior Funding, Inc. and JPMorgan Chase Bank, N.A., as L/C Issuers, the other lenders party thereto and the other agents party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 18, 2017, File No. 001-36587)
|
|
|
|
|
|
Form of the Performance Share Unit Agreement for U.S. Employees for the performance period July 1, 2017 through June 30, 2020 †*
|
|
|
|
|
|
Form of the Performance Share Unit Agreement for Non-U.S. Employees for the performance period July 1, 2017 through June 30, 2020 †*
|
|
|
|
|
|
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*
|
|
|
|
|
|
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*
|
|
|
|
|
|
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**
|
|
|
|
|
|
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**
|
|
|
|
|
101.1
|
|
The following financial information from Catalent, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in XBRL: (i) Consolidated Statements of Operations for the Three Months Ended September 30, 2017 and 2016; (ii) Consolidated Statements of Comprehensive Income/(Loss) for the Three Months Ended September 30, 2017 and 2016 (iii) Consolidated Balance Sheets as of September 30, 2017 and June 30, 2017; (iv) Consolidated Statement of Changes in Shareholders’ Equity/(Deficit) as of September 30, 2017; (v) Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2017 and 2016; and (vi) Notes to Unaudited Consolidated Financial Statements.
|
|
|
CATALENT, INC.
(Registrant)
|
||
|
|
|
|
|
Date:
|
November 6, 2017
|
By:
|
|
/s/ John R. Chiminski
|
|
|
|
|
John R. Chiminski
|
|
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
Date:
|
November 6, 2017
|
By:
|
|
/s/ Matthew M. Walsh
|
|
|
|
|
Matthew M. Walsh
|
|
|
|
|
Executive Vice President & Chief Financial Officer
|
2.1
|
Account.
Account means a bookkeeping account maintained by the Committee to record the payment obligation of a Participating Employer to a Participant as determined under the terms of the Plan. The Committee may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms. Reference to an Account means any such Account established by the Committee, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
|
2.2
|
Account Balance.
Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation Date.
|
2.3
|
Adopting Employer.
Adopting Employer means an Affiliate who, with the consent of the Company, has adopted the Plan for the benefit of its eligible employees. As a condition of adopting the Plan, the Adopting Employer agrees that it will be deemed to have appointed the Company as its agent to exercise on its behalf all of the powers and authority conferred upon the Company by the terms of the Plan including, but not limited to, the power to amend and terminate the Plan.
|
2.4
|
Affiliate.
Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).
|
2.5
|
Beneficiary.
Beneficiary means a natural person, estate, or trust designated by a Participant to receive payments to which a Beneficiary is entitled in accordance with provisions of the Plan. The Participant’s estate shall be the Beneficiary if: (i) the Participant has failed to properly designate a Beneficiary, or (ii) all designated Beneficiaries have predeceased the Participant.
|
2.6
|
Business Day
. Business Day means each day on which the New York Stock Exchange is open for business.
|
2.7
|
Change of Control
. Change of Control means (i) the sale or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any “person” or “group” (as such terms are defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act or (ii) any “person” or “group” becomes the “beneficial owner” (as defined in Rules 13d-2 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the voting stock of the Company, including by way of merger, consolidation or otherwise.
|
2.8
|
Claimant.
Claimant means a Participant or Beneficiary filing a claim under Article XII of this Plan.
|
2.9
|
Code.
Code means the Internal Revenue Code of 1986, as amended from time to time.
|
2.10
|
Code Section 409A.
Code Section 409A means section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue Service thereunder.
|
2.11
|
Committee.
Committee means, as applicable: (i) the Compensation Committee of the Board of Directors of the Company, or, if none exists, the Compensation Committee of the Board of Directors of a public parent company of the Company; (ii) such other committee to which the Board of Directors of the Company or of a public parent company of the Company, as applicable, has delegated power to oversee the administration of the Plan; or (iii) if no such committee has been created, the Board of Directors of the Company.
|
2.12
|
Company.
Company means Catalent Pharma Solutions, Inc.
|
2.13
|
Company Contribution.
Company Contribution means a credit by a Participating Employer to a Participant’s Account(s) in accordance with the provisions of Section 5.1. Unless the context clearly indicates otherwise, a reference to Company Contribution shall include Earnings attributable to such contribution.
|
2.14
|
Company Stock.
Company Stock means phantom shares of common stock issued by a public parent company of the Company, as applicable.
|
2.15
|
Compensation.
Compensation means a Participant’s base salary, bonus, commissions, Director fees (including fees paid for service as a member of the Board of Directors of a Participating Employer, and fees for attendance at any such Board or committee meetings), restricted stock units and/or performance share units designated as eligible for deferral by the Committee, and such other cash or equity-based compensation (if any) approved by the Committee as Compensation that may be deferred under this Plan. Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A. Notwithstanding the foregoing, the following amounts are excluded from Compensation: (i) other cash or non-cash compensation that has not been approved by the Committee as Compensation that may be deferred, expense reimbursements, other benefits or contributions by the Company, its Affiliate, or any public parent company of the Company, as applicable, to any other employee benefit plan, other than pre-tax salary deferrals into the Qualified Plan or any Code Section 125 plan sponsored by the Company, its Affiliates, or any public parent company of the Company, as applicable, and (ii) amounts realized (A) from the exercise of a stock option, (B) when restricted stock (or property) held by a Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture, or (C) from the sale, exchange or other disposition of stock acquired under a qualified stock option.
|
2.16
|
Compensation Deferral Agreement.
Compensation Deferral Agreement means an agreement between a Participant and a Participating Employer that specifies: (i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more Accounts. The Committee may permit different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component. Unless otherwise specified by the Committee in the Compensation Deferral Agreement, Employees may defer up to 100% of restricted stock units and performance share units and up to 80% of base salary and
|
2.17
|
Deferral.
Deferral means a credit to a Participant’s Account(s) that records that portion of the Participant’s Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals.
|
2.18
|
Director.
Director means a member of the Board of Directors of a Participating Employer.
|
2.19
|
Disabled.
Disabled means that a Participant is, by reason of any medically-determinable physical or mental impairment, which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months: (i) unable to engage in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer. The Committee shall determine whether a Participant is Disabled in accordance with Code Section 409A
|
2.20
|
Earnings.
Earnings means a positive or negative adjustment to the value of an Account in accordance with Article VIII.
|
2.21
|
Effective Date.
Effective Date of this amended and restated Plan means January 1, 2016.
|
2.22
|
Eligible Employee.
Eligible Employee means a member of a “select group of management or highly compensated employees” of a Participating Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in its sole discretion.
|
2.23
|
Employee.
Employee means a common-law employee of an Employer.
|
2.24
|
Employer.
Employer means, with respect to Employees it employs, the Company, each Affiliate, and any public parent company of the Company, as applicable.
|
2.25
|
ERISA.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
2.27
|
Participant.
Participant means an Eligible Employee or a Director who has received notification of his or her eligibility to defer Compensation under the Plan under Section 3.1 and any other person with an Account Balance greater than zero, regardless of whether such individual continues to be an Eligible Employee or a Director. A Participant’s continued participation in the Plan shall be governed by Section 3.2 of the Plan.
|
2.28
|
Participating Employer.
Participating Employer means the Company, each Adopting Employer, and any public parent company of the Company.
|
2.29
|
Payment Schedule.
Payment Schedule means the date as of which payment of an Account under the Plan will commence and the form in which payment of such Account will be made.
|
2.30
|
Performance-Based Compensation.
Performance-Based Compensation means Compensation where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.
|
2.31
|
PSU Account.
PSU Account means the Account established by the Committee to record a Participant’s Deferrals of performance share units (if any) for a Plan Year and the Payment Schedule applicable to such Deferrals.
|
2.32
|
Plan.
Generally, the term Plan means the “Catalent Pharma Solutions, Inc. Deferred Compensation Plan” as documented herein and as may be amended from time to time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section.
|
2.33
|
Plan Year.
Plan Year means January 1 through December 31.
|
2.34
|
Post-2015 Account
. Post-2015 Account means all amounts credited to the Plan on behalf of a Participant that were deferred under Compensation Deferral Agreements that first took effect on or after January 1, 2016 or that were attributable to periods that began on or after January 1, 2016.
|
2.35
|
Pre-2016 Account.
Pre-2016 Account means all amounts credited to the Plan on behalf of a Participant that were deferred under Compensation Deferral Agreements that first took effect prior to January 1, 2016 or that were attributable to periods that began prior to January 1, 2016, including Prior Plan Credits.
|
2.36
|
Prior Plan.
Prior Plan means the Cardinal Health Deferred Compensation Plan, as amended and restated effective January 1, 2005.
|
2.37
|
Prior Plan Credits.
Prior Plan Credits means credits made by the Company to a Participant’s Account(s) of amounts accrued by the Participant, if any, under the Prior Plan. A schedule of the Prior Plan Credits of Participants shall be maintained by the Committee. A Participant is 100% vested in any Prior Plan Credits credited to his or her Account.
|
2.38
|
Qualified Plan.
Qualified Plan means the Catalent Pharma Solutions, LLC 401(k) Plan, as amended from time to time.
|
2.39
|
Retirement.
In connection with a Participant’s Post-2015 Account, Retirement means (i) with respect to a Participant who is an Employee, Separation from Service after age 65 or age 55 with 10 years of service and (ii) with respect to a Participant who is a Director, Separation from Service. In connection with a Participant’s Pre-2016 Account, Retirement means (i) with respect to a Participant who is an Employee, Separation from Service after attainment of age 65 and (ii) with respect to a Participant who is a Director, Separation from Service.
|
2.40
|
Retirement/Termination Account.
Retirement/Termination Account means an Account established by the Committee to record amounts payable to a Participant upon Separation from Service, other than amounts allocated to a PSU Account or RSU Account. The Committee shall establish a Primary Retirement/Termination Account for each Participant effective January 1, 2016 or, if later, effective with his or her initial participation in the Plan. A Participant may establish one additional Retirement/Termination Account. All Deferrals and other amounts credited to the Plan on behalf of a Participant shall be allocated to the Participant’s Primary Retirement/ Termination Account unless allocated to a different Account by the Participant.
|
2.41
|
RSU Account.
RSU Account means the Account established by the Committee to record a Participant’s Deferrals of restricted stock units (if any) for a Plan Year and the Payment Schedule applicable to such Deferrals.
|
2.42
|
Separation from Service.
Separation from Service means an Employee’s termination of employment with the Employer. A Director incurs a Separation from Service upon the date he or she ceases to serve on the Board of Directors of a Participating Employer. Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A.
|
2.43
|
Specified Date Account.
Specified Date Account means an Account established by the Committee to record the amounts payable at a future date as specified in the Participant’s Compensation Deferral Agreement, other than amounts allocated to a PSU Account or RSU Account. Unless otherwise determined by the Committee, a Participant may maintain no more than five Specified Date Accounts. A Specified Date Account may be identified in enrollment materials as an “In-Service Account” or such other name as established by the Committee without affecting the meaning thereof. Director Deferrals may not be allocated to a Specified Date Account.
|
2.44
|
Substantial Risk of Forfeiture.
Substantial Risk of Forfeiture means the description specified in Treas. Reg. Section 1.409A-1(d).
|
2.45
|
Unforeseeable Emergency.
Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s dependent (as defined in Code section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The types of events which may qualify as an Unforeseeable Emergency may be limited by the Committee.
|
2.46
|
Valuation Date.
Valuation Date means each Business Day.
|
2.47
|
Year of Service
. Year of Service means a period of twelve (12) consecutive calendar months during which a Participant is employed by the Company, an Affiliate, or a public parent company of the Company, as applicable; and, prior to April 10, 2007, by Cardinal Health, Inc. or one of its affiliates.
|
3.1
|
Eligibility and Participation.
An Eligible Employee or a Director becomes a Participant upon the earlier to occur of: (i) a credit of Company Contributions under Article V, or (ii) receipt of notification of eligibility to participate.
|
3.2
|
Duration.
A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions, subject to the terms of the Plan, for as long as such Participant remains an Eligible Employee or a Director. A Participant who is no longer an Eligible Employee or a Director but has not Separated from Service may not defer Compensation under the Plan beyond the Plan Year in which he or she became ineligible but may otherwise exercise all of the rights of a Participant under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero (0), and during such time may continue to make allocation elections as provided in Section 8.4. An individual shall cease being a Participant in the Plan when all benefits under the Plan to which he or she is entitled have been paid.
|
4.1
|
Deferral Elections, Generally.
|
(a)
|
A Participant may elect to defer Compensation by submitting a Compensation Deferral Agreement during the enrollment periods established by the Committee and in the manner specified by the Committee, but in any event, in accordance with Section 4.2. A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation shall be considered void and shall have no effect with respect to such service period or Compensation. The Committee may modify any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2.
|
(b)
|
The Participant shall specify on his or her Compensation Deferral Agreement the amount of Deferrals and whether to allocate Deferrals (excluding Deferrals of performance share units or restricted stock units) to a Retirement/Termination Account or to a Specified Date Account. If no designation is made, Deferrals shall be allocated to the Primary Retirement/Termination Account. Deferrals of performance share units and restricted stock units shall be allocated to a PSU Account or RSU Account, as applicable. A Participant may also specify in his or her Compensation Deferral Agreement the Payment Schedule applicable to his or her Plan Accounts. If the Payment Schedule is not specified in a Compensation Deferral Agreement, the Payment Schedule shall be the Payment Schedule specified in Article VI.
|
(a)
|
First Year of Eligibility.
In the case of the first year in which an Eligible Employee or a Director becomes eligible to participate in the Plan, he or she has up to 30 days following notification of his or her initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned during such year. The Compensation Deferral Agreement described in this paragraph becomes irrevocable upon the end of such 30-day period, and shall become effective on the first day of the calendar quarter coincident with or next following the end of such 30-day period. The determination of whether an Eligible Employee or a Director may file a Compensation Deferral Agreement under this paragraph shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-2(a)(7).
|
(b)
|
Prior Year Election.
Except as otherwise provided in this Section 4.2, Participants may defer Compensation by filing a Compensation Deferral Agreement no later than December 31 of the year prior to the year in which the Compensation to be
|
(c)
|
Performance-Based Compensation.
Participants may file a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six months before the end of the performance period, provided that:
|
(i)
|
the Participant performs services continuously from the later of the beginning of the performance period or the date the criteria are established through the date the Compensation Deferral Agreement is submitted; and
|
(ii)
|
the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed.
|
(d)
|
Sales Commissions.
Sales commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12)(i)) are considered to be earned by the Participant in the taxable year of the Participant in which they are earned for income tax purposes. The Compensation Deferral Agreement must be filed before the last day of the year preceding the year in which the sales commissions are earned, and becomes irrevocable after that date.
|
(e)
|
Short-Term Deferrals.
Compensation that meets the definition of a “short-term deferral” described in Treas. Reg. Section 1.409A-1(b)(4) may be deferred in accordance with the rules of Article VII, applied as if the date the Substantial Risk of Forfeiture lapses is the date payments were originally scheduled to commence, provided, however, that the provisions of Section 7.3 shall not apply to payments attributable to a change in control event (as defined in Treas. Reg. Section 1.409A-3(i)(5)).
|
(f)
|
Certain Forfeitable Rights.
With respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, an election to defer such Compensation may be made on or before the 30
th
day after the Participant obtains the legally binding right to the Compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse. The Compensation Deferral Agreement described in this paragraph
|
(g)
|
Company Awards.
Participating Employers may unilaterally provide for deferrals of Company awards prior to the date of such awards. Deferrals of Company awards (such as sign-on, retention, or severance pay) may be negotiated with a Participant prior to the date the Participant has a legally binding right to such Compensation.
|
(h)
|
“Evergreen” Deferral Elections.
The Committee, in its discretion, may provide in the Compensation Deferral Agreement that such Compensation Deferral Agreement will continue in effect for each subsequent year or performance period. Such “evergreen” Compensation Deferral Agreements will become effective with respect to an item of Compensation on the date such election becomes irrevocable under this Section 4.2. An evergreen Compensation Deferral Agreement may be terminated or modified prospectively with respect to Compensation for which such election remains revocable under this Section 4.2. A Participant whose Compensation Deferral Agreement is cancelled in accordance with Section 4.6 will be required to file a new Compensation Deferral Agreement under this Article IV in order to recommence Deferrals under the Plan.
|
4.3
|
Allocation of Deferrals.
A Compensation Deferral Agreement may allocate Deferrals (other than Deferrals of performance share units or restricted stock units) to one or more Specified Date Accounts and/or to up to two Retirement/Termination Accounts. The Committee may, in its discretion, establish a minimum deferral period for the establishment of a Specified Date Account (for example, the third Plan Year following the year Compensation is allocated to such accounts or, for restricted stock units, the third Plan Year following the year of deferral). Deferrals of performance share units or restricted stock units shall be allocated to a PSU Account or RSU Account, as applicable.
|
4.4
|
Deductions from Pay.
The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant’s Compensation.
|
4.5
|
Vesting.
Participant Deferrals of cash Compensation shall be 100% vested at all times. Deferrals of equity-based Compensation shall be vested in accordance with the underlying equity award.
|
4.6
|
Cancellation of Deferrals.
The Committee may cancel a Participant’s Deferrals: (i) for the balance of the Plan Year in which an Unforeseeable Emergency occurs, (ii) if the Participant receives a hardship distribution under the Employer’s qualified 401(k) plan, through the end of the Plan Year in which the six month anniversary of the hardship distribution falls, and (iii) during periods in which the Participant is unable to perform the
|
5.1
|
Discretionary Company Contributions.
The Committee, in its discretion for any year, shall credit Company Contributions with respect to the Deferrals made by Participants who are Employees. Such Company Contributions shall be equal to fifty percent of the amount of Deferrals for the year on Compensation up to six percent of the Participant’s Compensation.
|
5.2
|
Vesting.
Company Contributions described in Section 5.1 above, and the Earnings thereon, shall vest in accordance with the following schedule:
|
Years of Service
|
Vested Percentage
|
Less than 1
|
0%
|
At least 1 but less than 2
|
25%
|
At least 2 but less than 3
|
50%
|
At least 3 but less than 4
|
75%
|
4 or more
|
100%
|
6.1
|
Distributions of Post-2015 Accounts.
A Participant shall be entitled to payments from the Plan upon the first to occur of the following events, at the time and in the manner specified below:
|
(a)
|
Retirement.
Upon the Participant’s Separation from Service due to Retirement, he or she shall receive a distribution from each Retirement/Termination Account, based on the value of that Account(s) as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine. In addition, the Participant shall receive a distribution of the balance of any PSU Account or RSU Account that the Participant did not elect to have distributed upon a specified date or that is distributable upon Separation from Service under paragraph (c) below because payments from the Account had not commenced as of the date of Separation from Service. Payment will be made or begin on the 15
th
day of the month following the month in which the six-month anniversary of the Participant’s Separation from Service due to Retirement occurs, in a single lump sum payment, unless the Participant elects to have the Account distributed in substantially equal annual installments over a period of up to fifteen years.
|
(b)
|
Termination.
Upon the Participant’s Separation from Service for reasons other than death or Retirement, he or she shall receive a distribution of the vested portion of each Retirement/Termination Account, based on the value of that Account(s) as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine. In addition, the Participant shall receive a distribution of the balance of any PSU Account or RSU Account that the Participant did not elect to have distributed upon a specified date or that is distributable upon Separation from Service under paragraph (c) below because payments from the Account had not commenced as of the date of Separation from Service. Payment will be made or begin on the 15
th
day of the month following the month in which the six-month anniversary of the Participant’s Separation from Service occurs, in a single lump sum payment, unless the Participant elects to have the Account distributed in substantially equal annual installments over a period of up to five years.
|
(c)
|
Specified Date.
Upon the occurrence of a specified date designated by a Participant who is not a Director, he or she shall receive a distribution of the vested portion of the applicable Specified Date Account, based on the value of that Account as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine. In addition, the Participant shall receive a distribution of the balance of any PSU Account or RSU Account that the Participant elected to have distributed upon a specified date. Payment will be made or begin on the 15
th
day of the month following the month in which the specified date occurs, in a single lump sum payment, unless the Participant elects to have the Account distributed in substantially equal annual installments over a period of up to five years. Notwithstanding any election as to the form of payment made by the Participant, Specified Date Accounts (as well as PSU Accounts and RSU Accounts that a Participant elected to have distributed at a specified date) that have not yet been distributed (or commenced distribution in the case of installment payments) upon the Participant’s Separation from Service
|
6.2
|
Distribution of Pre-2016 Accounts
. The balance of a Participant’s Pre-2016 Account shall be distributed upon the first to occur of the following events, at the time and in the manner specified in this Section 6.2. Participants shall continue to have the right to modify distribution elections applicable to a Pre-2016 Account in accordance with terms of the Plan in effect prior to January 1, 2016.
|
(a)
|
Separation from Service.
Upon the Participant’s Separation from Service due to Retirement or Termination, he or she shall receive a distribution of his entire Pre-2016 Account, based on the value of that Account as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine. Payment will be made or begin on the 15
th
day of the month following the month in which the six-month anniversary of the Participant’s Separation from Service due to Retirement or Termination occurs, in a single lump sum payment or, if elected by the Participant during his or her initial enrollment in the Plan, during the period ending on December 31, 2015 pursuant to the terms of Plan then in effect, or in accordance with Article VII, in substantially equal annual installments over a period of five or ten years, as elected by the Participant.
|
(b)
|
Death After the Commencement of Benefits.
Upon the Participant’s death after the commencement of the distribution of the Participant’s Pre-2016 Account, his or her designated Beneficiary(ies) shall receive the remaining distributions of the Pre-2016 Account due under the Plan in accordance with the distribution method in effect at the time of the Participant’s death.
|
(c)
|
Death Prior to the Commencement of Benefits.
Upon the Participant’s death prior to the commencement of the distribution of the Participant’s Pre-2016 Account, his or her designated Beneficiary(ies) shall receive a distribution of all of his or her Pre-2016 Account, based on the value of such Account as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine, in a single lump sum. Notwithstanding the forgoing, the Participant’s designated Beneficiaries shall receive distributions of the Participant’s Pre-2016 Account in annual installments as elected by the Participant during his or her initial enrollment in the Plan or not later than twelve months prior to the Participant’s death. Payment of the Pre-2016 Account in a lump sum or annual installments will be made or begin no later than the later of (i) December 31 of the year in which the Participant’s death occurs, or (ii) ninety (90) days following the date of the Participant’s death.
|
6.3
|
Distribution Rules Applicable to Both Pre-2016 Accounts and Post-2015 Accounts
. Notwithstanding anything to the contrary in this Article, distribution of a Participant’s Pre-2016 Account and Post-2015 Account shall be distributed in accordance with the following:
|
(a)
|
Disability.
Upon the Participant’s becoming Disabled the Participant shall receive a distribution of all of his or her Accounts, based on the value of such Accounts as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine, in a single lump sum. Payment will be made or begin no later than the later of (i) December 31 of the year in which the Participant is determined to be Disabled, or (ii) ninety (90) days following the date of the Participant’s disability.
|
(b)
|
Unforeseeable Emergency.
Upon the occurrence of an Unforeseeable Emergency, a Participant may submit a written request to the Committee to receive payment of all or any portion of his or her vested Accounts. Whether a Participant or Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed through insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Deferrals under this Plan. If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted first from the Participant’s Pre-2016 Account until depleted, and then from the Participant’s Post-2015 Account on a pro rata basis from the vested portion of each of the Participant's Retirement/Termination Accounts until depleted and then pro rata from the vested portion of each of the Participant’s Specified Date Accounts. Emergency payments shall be paid in a single lump sum as soon as administratively practicable following the date the payment is approved by the Committee.
|
(c)
|
Change of Control.
Notwithstanding anything to the contrary in this Section 6.1, the remaining balance of all of a Participant’s Accounts will be distributed in a single lump sum payment if the Participant Separates from Service within 24 months following a Change of Control. Payment of Post-2015 Accounts will be made on the 15
th
day of the month following the month in which the six-month anniversary of the Participant’s Separation from Service occurs, based on the value of that Account(s) as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine. Payment of Pre-2016 Accounts will be on the first regular payment processing date after the termination of the Participant’s employment or service, as applicable, unless a longer delay is required by applicable law, in which event the lump sum shall be paid as soon as is permitted by applicable law, with the amount based on the value of that Account as of the end of the month preceding the month of payment or such later date as the Committee, in its sole discretion, shall determine.
|
(d)
|
Small Account Balances.
Notwithstanding anything to the contrary in this Article VI, the Committee shall pay the value of the Participant’s Accounts upon a Separation from Service in a single lump sum if the balance of such Accounts is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), provided the payment represents the complete liquidation of the Participant’s interest in the Plan. Further, the Committee may, in its discretion, direct a single lump sum payment of all of a Participant’s Account at any time, if the balance of such Accounts is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), provided the payment represents the complete liquidation of the Participant’s interest in the Plan and all plans and arrangements which are required to be aggregated with the Plan under Treas. Reg. § 1.409A-1(c)(2).
|
(e)
|
Rules Applicable to Installment Payments.
If a Payment Schedule specifies installment payments, annual payments will be made beginning as of the payment commencement date for such installments and shall continue on each anniversary thereof until the number of installment payments specified in the Payment Schedule has been paid. Earnings shall continue to be credited to a Participant’s Accounts during the installment period. The amount of each installment payment shall be determined by dividing (a) by (b), where (a) equals the Account Balance as of the Valuation Date disregarding any portion thereof consisting of units of Company Stock and (b) equals the remaining number of installment payments. For purposes of Article VII, each installment payment will be treated as a separate payment.
|
(f)
|
Acceleration of or Delay in Payments.
The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant’s Accounts be paid to an “alternate payee,” any amounts to be paid to the alternate payee(s) shall be paid in a single lump sum.
|
7.1
|
Participant’s Right to Modify.
A Participant may modify any or all of the alternative Payment Schedules with respect to an Account, consistent with the permissible Payment Schedules available under the Plan for the applicable Account, provided such modification complies with the requirements of this Article VII. For purposes of clarity, the Payment Schedule applicable to a Pre-2016 Account may be modified only to elect a different Payment Schedule available for a Pre-2016 Account. The permissible Payment
|
7.2
|
Time of Election.
The date on which a modification election is submitted to the Committee must be at least 12 months prior to the date on which payment is scheduled to commence under the Payment Schedule in effect prior to the modification.
|
7.3
|
Date of Payment under Modified Payment Schedule.
Except with respect to modifications that relate to the payment of a Death Benefit, the date payments are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the original Payment Schedule. Under no circumstances may a modification election result in an acceleration of payments in violation of Code Section 409A.
|
7.4
|
Effective Date.
A modification election submitted in accordance with this Article VII is irrevocable upon receipt by the Committee and becomes effective 12 months after such date.
|
7.5
|
Effect on Accounts.
An election to modify a Payment Schedule is specific to the Account or payment event to which it applies, and shall not be construed to affect the Payment Schedules of any other Accounts.
|
8.1
|
Valuation.
Deferrals shall be credited to appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement. Company Contributions shall be credited to the Primary Retirement/Termination Account at the times determined by the Committee. Valuation of Accounts shall be performed under procedures approved by the Committee.
|
8.2
|
Earnings Credit.
Each Account will be credited with Earnings on each Business Day, based upon the Participant’s investment allocation among a menu of investment options selected in advance by the Committee, in accordance with the provisions of this Article VIII (“investment allocation”).
|
8.3
|
Investment Options
. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change.
|
8.4
|
Investment Allocations.
A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Participating Employer or any trustee
|
8.5
|
Unallocated Deferrals and Accounts.
If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an investment option, the primary objective of which is the preservation of capital, as determined by the Committee.
|
8.6
|
Company Stock.
The Committee may include Company Stock as one of the investment options described in Section 8.3. The Committee may, in its sole discretion, limit the investment allocation of Company Contributions to Company Stock. The Committee may also require Deferrals consisting of equity-based Compensation, such as deferrals of restricted stock units or performance share units, to be allocated to Company Stock.
|
8.7
|
Diversification.
A Participant may not re-allocate an investment in Company Stock into another investment option. The portion of an Account that is invested in Company Stock will be paid under Article VI in the form of whole shares of Company Stock.
|
8.8
|
Effect on Installment Payments.
If an Account is to be paid in installments, the portion of the Account that is invested in Company Stock will be paid under Article VI in a single lump sum payment at the time the initial installment is distributed, and only the cash value of the Account shall be considered in determining the amount of each installment payment.
|
8.9
|
Dividend Equivalents.
Dividend equivalents with respect to company stock, if any, will be credited to Participant Accounts, in the discretion of the Committee, and distributed to Participants in accordance with Section 6 of this Plan.
|
9.1
|
Plan Administration
. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and
|
9.2
|
Administration Upon Change of Control.
Upon a Change of Control, the Committee, as constituted immediately prior to such Change of Control, shall continue to act as the Committee. The individual who was the Chief Executive Officer of the Company (or if such person is unable or unwilling to act, the next highest ranking officer) prior to the Change of Control shall have the authority (but shall not be obligated) to appoint an independent third party to act as the Committee.
|
9.3
|
Withholding.
Any payments due under the Plan or any amounts credited to the Plan shall be subject to withholding of any taxes required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan.
|
9.4
|
Indemnification.
All Participating Employers shall indemnify and hold harmless each employee, officer, director, or agent, to whom or to which are delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee and its agents (but excluding any third-party administrator, record-keeper, or trustee except as provided under a separate agreement with such party), against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which arise as a result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased by any Participating Employer. Notwithstanding the foregoing, no Participating Employer shall indemnify any person if his or its actions or
|
9.5
|
Delegation of Authority.
In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who shall be legal counsel to the Company or public parent company of the Company, as applicable.
|
9.6
|
Binding Decisions or Actions.
The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
|
10.1
|
Amendment and Termination.
The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Article X. Each Participating Employer may also terminate its participation in the Plan.
|
10.2
|
Amendments.
The Company may amend the Plan at any time and for any reason, provided that any such amendment shall not adversely affect the rights to which a Participant is entitled as of the date of any such amendment or restatement.
|
10.3
|
Termination.
The Company may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix). If a Participating Employer terminates its participation in the Plan, the benefits of affected Employees shall be paid at the time provided in Article VI.
|
10.4
|
Accounts Taxable Under Code Section 409A.
The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Code Section 409A. Notwithstanding anything in the Plan to the contrary, no distribution on account a separation from service will be made to a specified employee within the meaning of Code Section 409 earlier than six months following the employee’s separation from service.
|
11.1
|
General Assets.
Obligations established under the terms of the Plan may be satisfied from the general funds of the Participating Employers or a trust described in this Article XI. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets
|
11.2
|
Rabbi Trust.
The Company or a public parent company of the Company, as applicable, may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan. Payments under the Plan may be paid from the general assets of the Participating Employer or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.
|
12.1
|
Filing a Claim.
Any controversy or claim arising out of or relating to the Plan shall be filed in writing with the Committee, which shall make all determinations concerning such claim. Any claim filed with the Committee and any decision by the Committee denying such claim shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim (the “Claimant”).
|
(a)
|
In General.
Notice of a denial of benefits will be provided within 90 days of the Committee’s receipt of the Claimant's claim for benefits. If the Committee determines that it needs additional time to review the claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial 90-day period. The extension will not be more than 90 days from the end of the initial 90-day period and the notice of extension will explain the special circumstances that require the extension and the date by which the Committee expects to make a decision.
|
(b)
|
Disability Benefits.
Notice of denial of disability benefits will be provided within forty-five (45) days of the Committee’s receipt of the Claimant’s claim for Disability benefits. If the Committee determines that it needs additional time to review the Disability claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial 45-day period. If the Committee determines that a decision cannot be made within the first extension period due to matters beyond the control of the Committee, the time period for making a determination may be further extended for an additional 30 days. If such an additional extension is necessary, the Committee shall notify the Claimant prior to the expiration of the initial 30-day extension. Any notice of extension shall indicate the circumstances necessitating the extension of time, the date by which the Committee expects to furnish a notice of decision, the specific standards on which such entitlement to a benefit is based, the unresolved issues
|
(c)
|
Contents of Notice.
If a claim for benefits is completely or partially denied, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language. The notice shall: (i) cite the pertinent provisions of the Plan document, and (ii) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or information necessary to complete the claim and why such material or information is necessary. The claim denial also shall include an explanation of the claims review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse decision on review. In the case of a complete or partial denial of a disability benefit claim, the notice shall provide a statement that the Committee will provide to the Claimant, upon request and free of charge, a copy of any internal rule, guideline, protocol, or other similar criterion that was relied upon in making the decision.
|
12.2
|
Appeal of Denied Claims.
A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by filing a written appeal with a committee designated to hear such appeals (the “Appeals Committee”). A Claimant who timely requests a review of the denied claim (or his or her authorized representative) may review, upon request and free of charge, copies of all documents, records and other information relevant to the denial and may submit written comments, documents, records and other information relevant to the claim to the Appeals Committee. All written comments, documents, records, and other information shall be considered “relevant” if the information: (i) was relied upon in making a benefits determination, (ii) was submitted, considered or generated in the course of making a benefits decision regardless of whether it was relied upon to make the decision, or (iii) demonstrates compliance with administrative processes and safeguards established for making benefit decisions. The Appeals Committee may, in its sole discretion and if it deems appropriate or necessary, decide to hold a hearing with respect to the claim appeal.
|
(a)
|
In General.
Appeal of a denied benefits claim (other than a disability benefits claim) must be filed in writing with the Appeals Committee no later than 60 days after receipt of the written notification of such claim denial. The Appeals Committee shall make its decision regarding the merits of the denied claim within 60 days following receipt of the appeal (or within 120 days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be
|
(b)
|
Disability Benefits.
Appeal of a denied disability benefits claim must be filed in writing with the Appeals Committee no later than 180 days after receipt of the written notification of such claim denial. The review shall be conducted by the Appeals Committee (exclusive of the person who made the initial adverse decision or such person’s subordinate). In reviewing the appeal, the Appeals Committee shall: (i) not afford deference to the initial denial of the claim, (ii) consult a medical professional who has appropriate training and experience in the field of medicine relating to the Claimant’s disability and who was neither consulted as part of the initial denial nor is the subordinate of such individual, and (iii) identify the medical or vocational experts whose advice was obtained with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decision. The Appeals Committee shall make its decision regarding the merits of the denied claim within 45 days following receipt of the appeal (or within 90 days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. Following its review of any additional information submitted by the Claimant, the Appeals Committee shall render a decision on its review of the denied claim.
|
(c)
|
Contents of Notice.
If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language.
|
(d)
|
For the denial of a disability benefit, the notice will also include a statement that the Appeals Committee will provide, upon request and free of charge: (i) any internal rule, guideline, protocol or other similar criterion relied upon in making
|
12.3
|
Claims Appeals Upon Change of Control.
Upon a Change of Control, the Appeals Committee, as constituted immediately prior to such Change of Control, shall continue to act as the Appeals Committee. Upon such Change of Control, the Company may not remove any member of the Appeals Committee, but may replace resigning members if 2/3rds of the members of the Board of Directors of the Company and a majority of Participants and Beneficiaries with Account Balances consent to the replacement.
|
12.4
|
Legal Action.
A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures.
|
12.5
|
Discretion of Appeals Committee.
All interpretations, determinations and decisions of the Appeals Committee with respect to any claim shall be made in its sole discretion, and shall be final and conclusive.
|
13.1
|
Assignment.
No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)).
|
13.2
|
No Legal or Equitable Rights or Interest.
No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Company, an Affiliate, or any public parent company of the Company. The right and power of the Company, its Affiliates, or any public parent company of the Company to dismiss or discharge an Employee is expressly reserved. The Company, its Affiliates, and any public parent company of the Company make no representations or warranties as to the tax consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan.
|
13.3
|
No Employment Contract.
Nothing contained herein shall be construed to constitute a contract of employment between an Employee and the Company, an Affiliate, or any public parent company of the Company.
|
13.4
|
Notice.
Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means as is established by the Committee. Notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by certified mail to:
|
13.5
|
Headings.
The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.
|
13.6
|
Invalid or Unenforceable Provisions.
If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.
|
13.7
|
Lost Participants or Beneficiaries.
Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current mailing address. If benefit payments are returned to the Plan or are not presented for
|
13.8
|
Facility of Payment to a Minor.
If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Committee may, in its discretion, make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Committee, the Company, any Affiliate, any public parent company of the Company, and the Plan from further liability on account thereof.
|
13.9
|
Governing Law.
To the extent not preempted by ERISA, the laws of the State of Delaware shall govern the construction and administration of the Plan.
|
“2.16
|
Compensation Deferral Agreement
. Compensation Deferral Agreement means an agreement between a Participant and a Participating Employer that specifies: (i) the amount of each component of Compensation that the Participant has elected to defer under the Plan in accordance with the provisions of Article IV and (ii) the Payment Schedule applicable to one or more Accounts. The Committee may permit a Participant to specify in the Compensation Deferral Agreement different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component. A Compensation Deferral Agreement may also specify the investment allocation described in Section 8.4.”
|
“2.29
|
Payment Schedule.
Payment Schedule means the triggering date or event for commencing payment of an Account under the Plan and the form in which payment of such Account will be made (
e.g.
, lump sum or installments).”
|
“2.43
|
Retirement/Termination Account.
Retirement/Termination Account means an Account established by the Committee to record amounts payable to a Participant upon Separation from Service, other than amounts allocated to a PSU Account or RSU Account.”
|
“2.46
|
Specified Date Account.
Specified Date Account means an Account established by the Committee to record the amounts payable with respect to a future date specified in the Participant’s Compensation Deferral Agreement, other than amounts allocated to a PSU Account or RSU Account. A Specified Date Account may be identified in enrollment materials as an “In-Service Account” or such other name as established by the Committee without affecting the meaning thereof.”
|
(a)
|
A Participant may elect to defer Compensation by submitting a Compensation Deferral Agreement during an enrollment period established by the Committee and in the manner specified by the Committee, but, in any event, in accordance with this Article IV. Unless an earlier date is provided in the Compensation Deferral Agreement, an election with respect to a component of Compensation (
e.g.
, salary, bonus, or other component of Compensation) becomes irrevocable on the latest date on which a Compensation Deferral Agreement with respect to such component of Compensation may be submitted by the applicable Participant in accordance with Section 4.2.
|
(b)
|
A Compensation Deferral Agreement that is not timely submitted with respect to a service period or component of Compensation, or that is submitted by a Participant who Separates from Service prior to the latest date such agreement would become irrevocable under Section 409A, shall be considered null and void and shall not take effect with respect to such period, component, or separating Participant. The Committee may modify or revoke any Compensation Deferral Agreement prior to the date the election becomes irrevocable under this Section 4.1, and a Participant may modify or revoke any Compensation Deferral Agreement prior to the date the election becomes irrevocable under this Section 4.1, to the extent the Participant may have submitted a Compensation Deferral Agreement with respect to the components of Compensation covered by such Agreement on the date of such modification or revocation.
|
(c)
|
With a Participant’s first Compensation Deferral Agreement or from time to time thereafter in subsequent Compensation Deferral Agreements, the Participant may ask that the Committee establish one or more Specified Date Accounts, one or more Retirement/Termination Accounts, one RSU Account, one PSU Account, or any combination of the foregoing;
provided, however
, that (i) a non-employee Director may not have a Specified Date Account; (ii) no Participant may have more than 5 Specified Date Accounts; (iii) no Participant may have more than 2 Retirement/Termination Date Accounts; and (iv) the Committee may, in its discretion, establish a minimum deferral period applicable to Specified Date Accounts, RSU Accounts, or PSU Accounts (for example, the third Plan Year following the year Compensation is allocated to such account or, for restricted stock units, the third Plan Year following the year of the Deferral).
|
(d)
|
A Participant electing to defer Compensation shall specify in the Participant’s Compensation Deferral Agreement the amount of Deferrals and the allocation of such Deferrals in accordance with Section 4.3. A Participant may also specify in any Compensation Deferral Agreement that establishes an Account the Payment Schedule applicable to such Account. If the Payment Schedule for an Account is not specified in the Compensation Deferral Agreement establishing that Account, the Payment Schedule shall be deemed to include the following elements:
|
(i)
|
the payment shall be made in a lump sum, and
|
(ii)
|
the payment shall occur on the earliest date on which payment is permitted under Article VI, except that, to the extent that the provisions of Article VI permit payment at one or more times when payment would result in an early payment tax under Code § 409A or otherwise as well as one or more times when payment would not result in such tax, then payment shall occur on the earliest date that would not result in incurring any such tax.
|
(e)
|
Unless otherwise specified by the Committee in the Compensation Deferral Agreement and subject to the rules promulgated under Code § 409A, including the rules set forth in Treas. Reg. § 1.409A-2:
|
(i)
|
A Participant, other than a non-employee Director, may elect to defer up to 80% of base salary for services rendered in the next following Plan Year.
|
(ii)
|
A Participant, other than a non-employee Director, may elect to defer up to 80% of any annual bonus, whether paid pursuant to the Company’s Management Incentive Plan or otherwise, for services rendered in the fiscal year commencing on July 1 of the current Plan Year and ending on June 30 of the next following Plan Year.
|
(iii)
|
A Participant, other than a non-employee Director, may elect to defer up to 80% of quarterly sales commissions for sales occurring in the next following Plan Year.
|
(iv)
|
A Participant, other than a non-employee Director, may elect to defer either 0% or 100% of any award of restricted stock units (“RSUs”) to the Participant in the twelve-month period following such election;
provided
that only RSUs granted under the Catalent, Inc. 2014 Omnibus Incentive Plan (the “Omnibus Plan”) and subject to a three-year vesting schedule are eligible for deferral under the Plan.
|
(v)
|
A Participant, other than a non-employee Director, may elect to defer either 0% or 100% of any award of performance share units (“PSUs”) to the Participant in the twelve-month period following such election or at any time prior to such election;
provided
that (A) only PSUs granted under the Omnibus Plan and subject to a three-year performance period are eligible for deferral under the Plan, (B) there must be at least twelve months remaining in the performance period of the PSUs, and (C) a Participant’s election to defer PSUs under this Section 4.1(e)(v) shall have no impact on the number of shares of common stock that may issue to the Participant as a result of the PSU grant, which is governed by the Omnibus Plan, any long-term incentive plan established under the Omnibus Plan, and any award notice or agreement that may be issued to the Participant in connection with such grant, as each may be in effect from time to time.
|
(vi)
|
A Participant who is a non-employee Director may elect to defer up to 100% of meeting and retainer fees for services rendered in the next following Plan Year.
|
(vii)
|
A Participant who is a non-employee Director may elect to defer either 0% or 100% of RSUs that may be awarded to the Participant with respect to services rendered in the next following Plan Year;
provided
that only RSUs granted under the Omnibus Plan and subject to a one-year vesting schedule are eligible for deferral under the Plan.
|
(a)
|
Initial Eligibility.
The Committee may permit an Eligible Employee or non-employee Director to defer Compensation earned in the first year of eligibility. The Compensation Deferral Agreement with respect to such Deferral must be submitted not later than 30 days after the Eligible Employee or non-employee Director first becomes eligible.
|
(b)
|
Prior Year Election.
Except as otherwise provided in this Section 4.2, the Committee may permit an Eligible Employee or Director to defer Compensation by submitting a Compensation Deferral Agreement no later than December 31 of a calendar year, to be effective with respect to Compensation earned on or after January 1 of the next following year.
|
(c)
|
Performance-Based Compensation.
The Committee may permit Eligible Employees to defer Compensation qualifying as Performance-Based Compensation by submitting a Compensation Deferral Agreement no later than the date that is six months before the end of the applicable performance period;
provided
that:
|
(i)
|
the Eligible Employee performs services continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date the Compensation Deferral Agreement is submitted; and
|
(ii)
|
the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is submitted.
|
(d)
|
Short-Term Deferrals.
The Committee may permit Compensation that may be deemed a “short-term deferral” within the meaning of Treas. Reg. § 1.409A-1(b)(4) to be deferred in accordance with the rules of Article VII, applied as if the date the Substantial Risk of Forfeiture lapses is the date payments were originally scheduled to commence;
provided, however
, that the provisions of Article VII shall not apply to payments attributable to a Change of Control.
|
(e)
|
Certain Forfeitable Rights.
With respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the continued services of the Eligible Employee or non-employee Director for a period of at least 12 months from the date the legally binding right is obtained, the Committee may permit such Eligible Employee or non-employee Director to defer such Compensation by submitting a Compensation Deferral Agreement on or before the 30
th
day after the legally binding right to the Compensation accrues;
provided
that the Compensation Deferral Agreement is submitted at least 12 months in advance of the earliest date on which the forfeiture condition could lapse.
|
(f)
|
Company Awards.
Participating Employers may unilaterally provide for deferrals of Company awards prior to the date of such awards. Deferrals of Company awards (such as sign-on, retention, or severance pay) may be negotiated with a Participant prior to the date the Participant has a legally binding right to such Compensation.
|
(g)
|
“Evergreen” Deferral Elections.
The Committee, in its discretion, may provide that a Compensation Deferral Agreement will continue in effect for one or more subsequent years or performance periods by communicating that intention to the Participant in writing prior to the date the Compensation Deferral Agreement becomes irrevocable under Section 4.1. An evergreen Compensation Deferral Agreement may be revoked or modified prospectively by the Participant or the Committee with respect to Compensation for which such election remains revocable under Section 4.1. A Participant whose evergreen Compensation Deferral Agreement is cancelled in accordance with Section 4.6 will be required to submit a new Compensation Deferral Agreement under this Article IV in order to recommence Deferrals under the Plan.
|
4.3
|
Allocation of Deferrals.
A Compensation Deferral Agreement may allocate Deferrals (other than Deferrals of performance share units or restricted stock units) among the Specified Date Accounts and Retirement/Termination Accounts that the Participant is permitted to establish. If a Participant has established two Retirement/Termination Accounts and fails to specify which such Account shall receive an elected Deferral, then the Deferral shall be allocated to the first such Account to be established, which shall be the Participant’s “Primary Retirement/Termination Account.” A Deferral of performance share units or restricted stock units shall be allocated to a PSU Account or RSU Account, as applicable.”
|
6.
|
Except as expressly modified above, the terms of the Plan shall remain in full force and effect.
|
(1)
|
with whom the Participant had personal contact or dealings on behalf of the Company or any of its Subsidiaries or Affiliates 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 or Affiliates during the one-year period preceding the Termination Date; or
|
(3)
|
for whom the Participant had direct or indirect responsibility during the one-year period preceding the Termination Date.
|
(1)
|
engage in any business that competes with the business of the Company or any of its Subsidiaries or Affiliates, including, but not limited to, providing formulation/dose form technologies and/or contract services to pharmaceutical, biotechnology, over-the-counter and vitamins/minerals/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 or Affiliates (including, without limitation, any other business that the Company or any of its Subsidiaries or Affiliates have plans to engage in as of the Termination Date) in any geographical area where the Company or any of its Subsidiaries or Affiliates conducts 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, any business relationship (whether formed before, on or after the Date of Grant) between the Company or any of its Subsidiaries or Affiliates and any customer, client, supplier, or investor of the Company or any of its Subsidiaries or Affiliates.
|
(1)
|
solicit or encourage any employee of the Company or any of its Subsidiaries or Affiliates to leave such Employment; or
|
(2)
|
hire any such employee who was employed by the Company or any of its Subsidiaries or Affiliates as of the Termination Date or who left such Employment 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 or Affiliates for at least six (6) months.
|
Performance Level
|
Cumulative
EPS
|
Percent of
Target Goal
|
EPS Performance
Percentage
|
Below Threshold
|
Below $3.43
|
Below 75%
|
0%
|
Threshold
|
$3.43
|
75%
|
50%
|
|
Between $3.43
and $4.57
|
|
Linearly interpolate between 50% and 100%
|
Target
|
$4.57
|
100%
|
100%
|
|
Between $4.57and $5.71
|
|
Linearly interpolate between 100% and 200%
|
Maximum
|
$5.71 (or higher)
|
125%
|
200%
|
Relative Total Shareholder Return
|
=
|
(Ending Stock Price -
Beginning Stock Price +
Assumed Dividend Reinvestment)
Beginning Stock Price
|
RTSR Percentile Rank
Relative to RTSR of Peer Group
|
Performance Level
|
RTSR Performance Percentage
|
Below 25th Percentile
|
Below Threshold
|
0%
|
25th Percentile
|
Threshold
|
50%
|
Between 25
th
Percentile
and Median
|
|
Linearly Interpolate Between
50% and 100%
|
Median
|
Target
|
100%
|
Between Median
and 75
th
Percentile
|
|
Linearly Interpolate Between 100% and 150%
|
75th Percentile and Above
|
Maximum
|
150%
|
(1)
|
with whom the Participant had personal contact or dealings on behalf of the Company or any of its Subsidiaries or Affiliates 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 or Affiliates during the one-year period preceding the Termination Date; or
|
(3)
|
for whom the Participant had direct or indirect responsibility during the one-year period preceding the Termination Date.
|
(1)
|
engage in any business that competes with the business of the Company or any of its Subsidiaries or Affiliates, including, but not limited to, providing formulation/dose form technologies and/or contract services to pharmaceutical, biotechnology, over-the-counter and vitamins/minerals/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 or Affiliates (including, without limitation, any other business that the Company or any of its Subsidiaries or Affiliates have plans to engage in as of the Termination Date) in any geographical area where the Company or any of its Subsidiaries or Affiliates conducts 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, any business relationship (whether formed before, on or after the Date of Grant) between the Company or any of its Subsidiaries or Affiliates and any customer, client, supplier, or investor of the Company or any of its Subsidiaries or Affiliates.
|
(1)
|
solicit or encourage any employee of the Company or any of its Subsidiaries or Affiliates to leave such Employment; or
|
(2)
|
hire any such employee who was employed by the Company or any of its Subsidiaries or Affiliates as of the Termination Date or who left such Employment 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 or Affiliates for at least six (6) months.
|
Performance Level
|
Cumulative
EPS
|
Percent of
Target Goal
|
EPS Performance
Percentage
|
Below Threshold
|
Below $3.43
|
Below 75%
|
0%
|
Threshold
|
$3.43
|
75%
|
50%
|
|
Between $3.43 and $4.57
|
|
Linearly interpolate between 50% and 100%
|
Target
|
$4.57
|
100%
|
100%
|
|
Between $4.57 and $5.71
|
|
Linearly interpolate between 100% and 200%
|
Maximum
|
$5.71 (or higher)
|
125%
|
200%
|
Relative Total Shareholder Return
|
=
|
(Ending Stock Price -
Beginning Stock Price +
Assumed Dividend Reinvestment)
Beginning Stock Price
|
RTSR Percentile Rank
Relative to RTSR of Peer Group
|
Performance Level
|
RTSR Performance Percentage
|
Below 25th Percentile
|
Below Threshold
|
0%
|
25th Percentile
|
Threshold
|
50%
|
Between 25th Percentile and Median
|
|
Linearly Interpolate between 50% and 100%
|
Median
|
Target
|
100%
|
Between Median and 75th Percentile
|
|
Linearly Interpolate between 100% and 150%
|
75th Percentile and Above
|
Maximum
|
150%
|
1.
|
I have reviewed this Annual Report on Form 10-Q for the period ended
September 30, 2017
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JOHN R. CHIMINSKI
|
John R. Chiminski
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-Q for the period ended
September 30, 2017
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ MATTHEW M. WALSH
|
Matthew M. Walsh
|
Executive Vice President and
|
Chief Financial Officer
|
(Principal Financial Officer)
|
/s/ JOHN R. CHIMINSKI
|
John R. Chiminski
|
President and
|
Chief Executive Officer
|
/s/ MATTHEW M. WALSH
|
Matthew M. Walsh
|
Executive Vice President and
|
Chief Financial Officer
|