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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________
FORM 10-Q
______________________________ 
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
001-36587
(Commission File Number)
 _____________________________
Catalent, Inc.
(Exact name of registrant as specified in its charter)
_____________________________ 
Delaware   20-8737688
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
14 Schoolhouse Road, Somerset, NJ   08873
(Address of principal executive offices)   (Zip code)
(732) 537-6200
Registrant's telephone number, including area code
______________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   ☒ Yes ¨  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).       ☒ Yes ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨ Yes    ☒ No 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbols(s) Name of each exchange on which registered
Common Stock CTLT New York Stock Exchange

On November 1, 2019, there were 146,308,834 shares of the Registrant's common stock, par value $0.01 per share, issued and outstanding.


Table of Contents
CATALENT, INC. and Subsidiaries

INDEX TO FORM 10-Q
For the Three Ended September 30, 2019
 
Item Page
Part I.
Item 1.
Financial Statements (unaudited)
6
6
7
8
9
10
11
Item 2.
31
Item 3.
42
Item 4.
43
Part II.
44
Item 1.
44
Item 1A.
44
Item 2.
44
Item 3.
44
Item 4.
44
Item 5.
44
Item 6.
45
46

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Special Note Regarding Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.
These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statement is subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.
Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include, but are not limited to, those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 (the “Fiscal 2019 10-K”) and the following:
•We participate in a highly competitive market, and increased competition may adversely affect our business.
•The demand for our offerings depends in part on our customers’ research and development and the clinical and market success of their products. Our business, financial condition, and results of operations may be harmed if our customers spend less on, or are less successful in, these activities.
•We are subject to product and other liability risks that could exceed our anticipated costs or 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 exit of the United Kingdom (the “U.K.”) from the European Union could have future adverse effects on our operations, 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, know-how, trade secrets, and other forms of intellectual property protections, but these protections may not be adequate.
•Our offerings or our customers’ products may infringe on the intellectual property rights of third parties.
•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 (“U.S.”) or internationally, including possible changes to the U.S. Affordable Care Act, could adversely affect our results of operations and financial condition by affecting demand for our offerings or the financial health of our customers.
•As a global enterprise, fluctuations in the exchange rate of the U.S. dollar, our reporting currency, against other currencies could have a material adverse effect on our financial performance and results of operations.
•Tax legislative or regulatory initiatives, new interpretations or developments concerning existing tax laws, or challenges to our tax positions could adversely affect our results of operations and financial condition.
3
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•Our ability to use our net operating loss carryforwards, ex-U.S. tax credit 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 whose continued employment and engagement at current levels cannot be assured.
•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, and the risks generally associated with information and communications systems could adversely affect our results of operations. We are continuously working to install new, and upgrade existing, systems and provide employee awareness training around phishing, malware, and other cyber-security risks to enhance the protections available to us, but such protections may be inadequate to address malicious attacks or inadvertent compromises of data security.
•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 or execute on dispositions 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.
•Gene therapy is a relatively new and still-developing mode of treatment, dependent on cutting-edge technologies, and our customers’ gene therapies may be perceived as unsafe or may result in unforeseen adverse events. Negative public opinion, continuing research, or increased regulatory scrutiny of gene therapy and its financial cost may damage public perception of the safety, utility, or efficacy of gene therapies and harm our customers’ ability to conduct their business or obtain regulatory approvals for their gene therapy products, and thereby have an indirect, adverse effect on our gene therapy offerings.
•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.
•Despite our high indebtedness level, we and our subsidiaries will still be able to incur significant additional debt, which could further exacerbate the risks associated with our substantial indebtedness.
•Our debt agreements contain restrictions that limit our flexibility in operating our business.
•Despite the limitations in our debt agreements, we retain the ability to take certain actions that may interfere with our ability timely to pay our substantial indebtedness.
•We may use derivative financial instruments to reduce our exposure to market risks from changes in interest rates on our variable-rate indebtedness or changes in currency exchange rates, and any such instrument may expose us to risks related to counterparty credit worthiness or non-performance of these instruments.
We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties, and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.
4
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Social Media
We use our website (www.catalent.com), our corporate Facebook page (https://www.facebook.com/CatalentPharmaSolutions), and our corporate Twitter account (@catalentpharma) as channels for the distribution of information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, Securities and Exchange Commission (“SEC”) filings, and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this report.
5
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PART I. FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

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

Three Months Ended  
September 30,
2019 2018
Net revenue $ 664.7    $ 551.8   
Cost of sales 487.0    403.3   
Gross margin 177.7    148.5   
Selling, general, and administrative expenses 142.8    115.5   
Impairment charges and (gain)/loss on sale of assets (0.2)   2.9   
Restructuring and other 0.7    9.7   
Operating earnings 34.4    20.4   
Interest expense, net 36.3    28.1   
Other (income)/expense, net 4.9    5.7   
Earnings/(loss) from operations before income taxes (6.8)   (13.4)  
Income tax expense/(benefit) (6.9)   1.0   
Net earnings/(loss) 0.1    (14.4)  
Less: Series A Preferred Stock dividend (8.1)   —   
Net earnings/(loss) attributable to common shareholders $ (8.0)   $ (14.4)  
Earnings/(loss) per share:
Basic
Net earnings/(loss) $ (0.05)   $ (0.10)  
Diluted
Net earnings/(loss) $ (0.05)   $ (0.10)  
The accompanying notes are an integral part of these unaudited consolidated financial statements.


6
Catalent, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income/(Loss)
(Unaudited; dollars in millions)

Three Months Ended  
September 30,
2019 2018
Net earnings/(loss) $ 0.1    $ (14.4)  
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments (21.8)   (8.8)  
Pension and other post-retirement adjustments (0.3)   0.4   
Other comprehensive income/(loss), net of tax (22.1)   (8.4)  
Comprehensive income/(loss) $ (22.0)   $ (22.8)  
The accompanying notes are an integral part of these unaudited consolidated financial statements.

7
Catalent, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited; dollars in millions, except share and per share data)
 
September 30,
2019 		June 30,
2019
ASSETS
Current assets:
Cash and cash equivalents $ 243.4    $ 345.4   
Trade receivables, net 647.9    693.1   
Inventories 250.7    257.2   
Prepaid expenses and other 124.8    100.1   
Total current assets 1,266.8    1,395.8   
Property, plant, and equipment, net 1,561.1    1,536.7   
Other assets:
Goodwill 2,195.9    2,220.9   
Other intangibles, net 902.9    930.8   
Deferred income taxes 34.1    38.6   
Other 158.7    61.2   
Total assets $ 6,119.5    $ 6,184.0   
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations and other short-term borrowings $ 74.3    $ 76.5   
Accounts payable 214.0    255.8   
Other accrued liabilities 327.5    338.4   
Total current liabilities 615.8    670.7   
Long-term obligations, less current portion 2,858.7    2,882.8   
Pension liability 139.6    143.6   
Deferred income taxes 70.5    74.4   
Other liabilities 179.0    124.3   
Commitment and contingencies (see Note 16) —    —   
Total liabilities 3,863.6    3,895.8   
Redeemable preferred stock, $0.01 par value; 1.0 million shares authorized on September 30 and June 30, 2019; 650,000 shares issued and outstanding on September 30 and June 30, 2019
606.6    606.6   
Shareholders' equity:
Common stock, $0.01 par value; 1.0 billion shares authorized on September 30 and June 30, 2019; 146.2 million and 145.7 million issued and outstanding on September 30 and June 30, 2019, respectively. 1.5    1.5   
Preferred stock, $0.01 par value; 99 million authorized on September 30 and June 30, 2019; 0 issued and outstanding on September 30 and June 30, 2019. —    —   
Additional paid in capital 2,755.2    2,757.4   
Accumulated deficit (731.4)   (723.4)  
Accumulated other comprehensive income/(loss) (376.0)   (353.9)  
Total shareholders' equity 1,649.3    1,681.6   
Total liabilities, redeemable preferred stock, and shareholders' equity $ 6,119.5    $ 6,184.0   
The accompanying notes are an integral part of these unaudited consolidated financial statements.
8
Catalent, Inc. and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity/(Deficit)
(Unaudited; dollars in millions, except share data in thousands)
 
Three Months Ended September 30, 2019
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, 2019 145,738.3    $ 1.5    $ 2,757.4    $ (723.4)   $ (353.9)   $ 1,681.6   
Share issuances related to stock-based
     compensation
497.4    —   
Stock-based compensation 16.6    16.6   
Cash paid, in lieu of equity, for tax
     withholding
(18.1)   (18.1)  
Non-qualified stock (0.7)   (0.7)  
Preferred dividend (8.1)   (8.1)  
Net earnings 0.1    0.1   
Other comprehensive income/(loss), net of
tax 		(22.1)   (22.1)  
Balance at September 30, 2019 146,235.7    $ 1.5    $ 2,755.2    $ (731.4)   $ (376.0)   $ 1,649.3   


Three Months Ended September 30, 2018
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, 2018 133,423.6    $ 1.3    $ 2,283.3    $ (872.1)   $ (325.8)   $ 1,086.7   
Cumulative effect of change in accounting
     for ASC 606, net of tax
15.1    15.1   
Equity offering, sale of common stock 11,431.4    0.1    445.4    445.5   
Share issuances related to stock-based
     compensation
366.0    —    —   
Stock-based compensation 10.0    10.0   
Cash paid, in lieu of equity, for tax
withholding 		(5.1)   (5.1)  
Net earnings/(loss) (14.4)   (14.4)  
Other comprehensive income/(loss), net of
tax 		(8.4)   (8.4)  
Balance at September 30, 2018 145,221.0    $ 1.4    $ 2,733.6    $ (871.4)   $ (334.2)   $ 1,529.4   
The accompanying notes are an integral part of these unaudited consolidated financial statements.

9
Catalent, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited; dollars in millions)

Three Months Ended 
September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings/(loss) $ 0.1    $ (14.4)  
Adjustments to reconcile earnings from operations to net cash from operations:
Depreciation and amortization 60.6    52.9   
Non-cash foreign currency transaction (gain)/loss, net (0.1)   2.0   
Amortization and write-off of debt financing costs
1.5    5.2   
Asset impairments charges and (gain)/loss on sale of assets
(0.2)   2.9   
(Gain)/loss on derivative instrument 8.9    —   
Equity compensation
16.6    10.0   
Provision/(benefit) for deferred income taxes (0.6)   1.2   
Provision for bad debts and inventory 4.1    2.8   
Change in operating assets and liabilities:
Decrease/(increase) in trade receivables 34.1    73.7   
Decrease/(increase) in inventories 0.2    (21.0)  
Increase/(decrease) in accounts payable (47.3)   (18.3)  
Other assets/accrued liabilities, net—current and non-current
(52.7)   (55.8)  
Net cash provided by operating activities 25.2    41.2   
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, equipment, and other productive assets (73.5)   (38.3)  
Payment for acquisitions, net of cash acquired (10.7)   (127.5)  
Payment made for investments (0.7)   —   
Net cash (used in) investing activities (84.9)   (165.8)  
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in other borrowings (2.5)   (4.5)  
Payments related to long-term obligations (3.3)   (454.7)  
Dividends paid (11.9)   —   
Proceeds from sale of common stock, net —    445.5   
Cash paid, in lieu of equity, for tax-withholding obligations (18.1)   (5.1)  
Net cash (used in)/provided by financing activities (35.8)   (18.8)  
Effect of foreign currency exchange on cash (6.5)   (0.7)  
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS (102.0)   (144.1)  
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 345.4    410.2   
CASH AND EQUIVALENTS AT END OF PERIOD $ 243.4    $ 266.1   
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid $ 24.8    $ 29.5   
Income taxes paid, net $ 12.7    $ 14.8   
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Catalent, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Catalent, Inc. (“Catalent” or the “Company”) directly and wholly owns PTS Intermediate Holdings LLC (“Intermediate Holdings”). Intermediate Holdings directly and wholly owns Catalent Pharma Solutions, Inc. (“Operating Company”). The financial results of Catalent are comprised of the financial results of Operating Company and its subsidiaries on a consolidated basis.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending June 30, 2020. The consolidated balance sheet at June 30, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information on the Company's accounting policies and footnotes, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019 filed with the Securities and Exchange Commission (the “SEC”).
In fiscal 2020, the Company engaged in a business reorganization to better align its internal business unit structure with its “Follow the Molecule” strategy and the increased focus on its biologics-related offerings. Under the revised structure, the Company changed the components of three of its four operating segments:
•Softgel and Oral Technologies, which includes formulation, development, and clinical and commercial manufacturing of soft capsules, or “softgels”, as well as large-scale manufacturing of oral solid dose forms, for pharmaceutical and consumer health markets, and supporting ancillary services; and
•Biologics, which encompasses biologic cell-line and viral vector gene therapy development and manufacturing; formulation, development, and manufacturing for parenteral dose forms, including prefilled syringes, vials, and cartridges; and analytical development and testing services for large molecules; and
•Oral and Specialty Delivery, which includes formulation, development, and small-to-medium scale manufacturing for most types of oral solid dose forms, including Zydis orally dissolving tablets; formulation, development, and manufacture of blow-fill-seal unit doses, metered dose inhalers, and nasal products; and analytical development and testing capabilities for small molecules.
Each of these three segments, along with the Company's fourth segment, Clinical Supply Services, which remains unchanged, reports through a separate management team and ultimately reports to the Company's Chief Executive Officer, who is designated as the Chief Operating Decision Maker (“CODM”) for segment reporting purposes. The Company's operating segments are the same as its reporting segments. All prior-period comparative segment information has been restated to reflect the current reportable segments in accordance with Accounting Standards Codification ("ASC") 280, Segment Reporting, promulgated by the Financial Accounting Standards Board (the “FASB”).
Reclassification
Certain prior-period amounts were reclassified to conform to the current period presentation. As discussed below in “—Recent Financial Accounting Standards—Recently Adopted Accounting Standards” and in Note 15, Leases, contract assets previously presented in trade receivables, net are now presented in prepaid expenses and other.
Foreign Currency Translation
The financial statements of the Company’s operations are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of operations outside the U.S. into U.S. dollars are accumulated as a component of other comprehensive income/(loss) utilizing period-end exchange rates. Since July 1, 2018, the Company has accounted for its Argentine operations as highly inflationary.
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Research and Development Costs
The Company expenses research and development costs as incurred. Costs incurred in connection with the development of new offerings and manufacturing process improvements are recorded within selling, general, and administrative expenses. Such research and development costs included in selling, general, and administrative expenses amounted to $0.5 million and $0.5 million for the three months ended September 30, 2019 and 2018, respectively. Costs incurred in connection with research and development services the Company provides to customers and services performed in support of the commercial manufacturing process for customers are recorded within cost of sales. Such research and development costs included in cost of sales amounted to $13.8 million and $11.3 million for the three months ended September 30, 2019 and 2018, respectively.
Recent Financial Accounting Standards
Recently Adopted Accounting Standards
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. The new guidance requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases and became effective for public reporting entities in annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. The guidance requires adoption of the new standard using the modified retrospective approach. The Company adopted the guidance on July 1, 2019 and elected the transition method that allows for the application of the standard at the adoption date rather than at the beginning of the earliest comparative period presented in the financial statements. The Company also elected the package of practical expedients; as a result, it did not reassess: (i) whether any expired or existing contract is or contains a lease, (ii) whether any expired or existing lease requires capitalization under the new guidance, and (iii) the initial direct cost for any existing lease. The Company also elected (x) not to reassess lease terms using hindsight and (y) to combine lease and non-lease components within a single lease agreement. Upon adoption, the Company recognized $46 million of lease liabilities and a corresponding amount for right-of-use assets on its consolidated balance sheet. The adoption of the guidance did not have any effect on the Company’s consolidated statements of operations or cash flows. Refer to Note 15, Leases for further discussion of the Company's lease accounting policy.
New Accounting Standards Not Adopted as of September 30, 2019
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The ASU will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years and allows for either retrospective or prospective application. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirement for Fair Value Measurement, which changes the disclosure requirements on fair value measurements in Topic 820. The guidance eliminates certain disclosure requirements that are no longer considered cost beneficial and adds new disclosure requirement for Level 3 fair value measurements. The ASU will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a new accounting model known as Credit Expected Credit Losses (“CECL”). CECL requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables. The ASU will be effective for fiscal years beginning after December 15, 2019. The Company does not expect the adoption of the guidance to have a material impact to its consolidated financial statements.
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2. REVENUE RECOGNITION
The Company recognizes revenue in accordance with ASC 606. The Company generally earns its revenue by supplying goods or providing services under contracts with its customers in three primary revenue streams: manufacturing and commercial product supply, development services, and clinical supply services. The Company measures the revenue from customers based on the consideration specified in its contracts, excluding any sales incentive or amount collected on behalf of a third party.
The company generally expenses sales commissions as incurred because either the amortization period is one year or less, or the balance with an amortization period greater than one year is not material.
The following tables allocate revenue, for the three months ended September 30, 2019 and September 30, 2018, by type of activity and reporting segment (in millions):
Three months ended September 30, 2019 Softgel & Oral Technologies Biologics Oral & Specialty Delivery Clinical Supply Services Total
Manufacturing & commercial product supply $ 242.0    $ 64.4    $ 76.0    $ —    $ 382.4   
Development services 21.7    124.2    56.6    —    202.5   
Clinical supply services —    —    —    84.6    84.6   
Total $ 263.7    $ 188.6    $ 132.6    $ 84.6    $ 669.5   
Inter-segment revenue elimination    (4.8)  
Combined net revenue $ 664.7   

Three months ended September 30, 2018 Softgel & Oral Technologies Biologics Oral & Specialty Delivery Clinical Supply Services Total
Manufacturing & commercial product supply $ 218.2    $ 52.0    $ 62.2    $ —    $ 332.4   
Development services 21.9    73.7    48.6    —    144.2   
Clinical supply services —    —    —    77.7    77.7   
Total $ 240.1    $ 125.7    $ 110.8    $ 77.7    $ 554.3   
Inter-segment revenue elimination    (2.5)  
Combined net revenue $ 551.8   

The following table allocates revenue by the location where the goods were made or the service performed:
(Dollars in millions) Three Months Ended September 30, 2019 Three Months Ended September 30, 2018
United States $ 362.3    $ 264.4   
Europe 210.1    196.4   
International Other 110.9    107.6   
Elimination of revenue attributable to multiple locations (18.6)   (16.6)  
Total $ 664.7    $ 551.8   
Development Services Revenue
Development services contracts generally take the form of short-term, fee-for-service arrangements. Performance obligations vary, but frequently include biologic cell-line development, performing formulation, analytical stability, or other services related to product development, and providing manufacturing services for products that are under development or otherwise not intended for commercial sale. The transaction prices for these arrangements are fixed and include amounts stated in the contracts for each promised service, and each service is generally considered to be a separate performance obligation. The Company recognizes revenue over time because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date.
The Company measures progress toward the completion of its performance obligations satisfied over time based on the nature of the services to be performed. For certain types of arrangements related to biologic cell-line development, revenue is
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recognized over time and measured using an output method based on the completion of tasks and activities that are performed to satisfy a performance obligation. For all other types of arrangements, revenue is recognized over time and measured using an input method based on effort expended. Each of these methods provides an appropriate depiction of the Company’s progress toward fulfilling its performance obligations for its respective arrangement. In certain development services arrangements that require a portion of the contract consideration to be received in advance at the commencement of the contract, such advance payment is initially recorded as a contract liability.
The Company allocates consideration to each performance obligation using the “relative standalone selling price” as defined under ASC 606. Generally, the Company utilizes observable standalone selling prices in its allocations of consideration. If observable standalone selling prices are not available, the Company estimates the applicable standalone selling price using an adjusted market assessment approach, representing the amount that the Company believes the market is willing to pay for the applicable service. Payment is typically due 30 to 90 days following the completion of services provided to the customer, based on the payment terms set forth in the applicable customer agreement.
Manufacturing & Commercial Product Supply Revenue
Manufacturing and commercial product supply revenue consists of revenue earned by manufacturing products supplied to customers under long-term commercial supply arrangements. In these arrangements, the customer typically owns and supplies the active pharmaceutical ingredient, or API, that is used in the manufacturing process. The contract generally includes the terms of the manufacturing services and related product quality assurance procedures to comply with regulatory requirements. Due to the regulated nature of the Company’s business, these contract terms are highly interdependent and, therefore, are considered to be a single combined performance obligation. The transaction price is generally stated in the agreement as a fixed price per unit, with no contractual provision for a refund or price concession. Control is transferred to the customer over time, creating a corresponding right to recognize the related revenue, because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date. Progress is measured based on the units of product that have successfully completed the contractually required product quality assurance process, as the conclusion of that process generally defines the time when the applicable contract and the related regulatory requirements permit the customer to exercise control over the product’s disposition. The customer is typically responsible for arranging the shipping and handling of product following quality assurance.
Payment is typically due 30 to 90 days after the goods are shipped as requested by the customer, based on the payment terms set forth in the applicable customer agreement.
Clinical Supply Services Revenue
Clinical supply services contracts generally take the form of fee-for-service arrangements. Performance obligations for clinical supply services revenue typically include a combination of the following services: the manufacturing, packaging, storage, distribution, destruction, and inventory management of customer clinical trials materials. Performance obligations can also include the sourcing of comparator drug products on behalf of customers to be used in clinical trials to compare performance with the drug under clinical investigation. In certain arrangements, the Company recognizes revenue over time when the Company satisfies performance obligations. Satisfaction of the performance obligations is measured using an input method measure of progress based on effort expended by the Company. In other arrangements, revenue is recognized at the point in time when control transfers, which occurs upon either the delivery of the related output of the service to the customer or the completion of quality testing with respect to the product, and the Company has an enforceable right to payment based on the terms of the arrangement. Payment is typically due 30 to 90 days following the completion of services provided to the customer based on the payment terms set forth in the applicable customer agreement.
The Company records revenue for comparator sourcing arrangements on a net basis because it is acting as an agent that does not control the product or service before it is transferred to the customer. Payment for comparator sourcing activity is typically received in advance at the commencement of the contract and is initially recorded as a contract liability.
Licensing Revenue
The Company occasionally enters into arrangements with its customers that include licenses of functional intellectual property, including patents, or other intangible property (“out-licensing”). Revenue from such arrangements are within the scope of ASC 606. The Company does not have any material license arrangement that contains more than one performance obligation. The terms of such out-licensing arrangements include the license of functional intellectual or intangible property (primarily drug formulae) and typically provide for payment by the licensee of one or more of the following: non-refundable, up-front license fees or royalties on net sales of licensed products. The Company recognizes revenue from nonrefundable, up-front license fees when the licensed intellectual property is made available for the customer’s use and benefit, which is
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generally at the inception of the arrangement. Royalty payments from such arrangements are recognized when subsequent sale or usage of an item subject to the royalty occurs and the performance obligation to which royalty relates is satisfied.
Contract Liabilities
Contract liabilities relate to cash consideration that the Company receives in advance of satisfying the related performance obligations. Changes in the contract liabilities balance during the three months ended September 30, 2019 are as follows:
(Dollars in millions)
Contract liability
Balance at June 30, 2019 $ 177.4   
Balance at September 30, 2019 $ 182.5   
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period $ 42.8   

3. BUSINESS COMBINATIONS
Novavax Transaction Overview
On July 31, 2019, Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc., “Paragon”), which contains the Company's gene therapy development and manufacturing related businesses, acquired from Novavax Inc. (“Novavax”) certain property, plant and equipment, rights to two facilities under leases in southern Maryland, certain raw material inventory, and the right to assume the employment of more than 100 Novavax employees located at those facilities in the areas of operations, quality, and product development, among other things. Paragon made a cash payment of $18.3 million in connection with the acquisition. The Company considers the transaction to be a business combination under ASC 805, Business Combinations and accounted for it using the acquisition method of accounting. The Company estimated fair values at the acquisition date for the allocation of consideration to the acquired items.
The aggregate purchase consideration was funded with cash on hand. As a result of the preliminary fair value allocations, the Company recognized property, plant, and equipment of $15.6 million and $0.3 million for inventory. The remainder of the fair value, $2.4 million, was allocated to goodwill, primarily the value of the existing organized and trained work force.
The Novavax transaction expanded Paragon’s early-development capabilities and supplemented Paragon’s pool of experienced biologics operatives to support its growth.
Paragon Bioservices, Inc. Acquisition
On May 17, 2019, the Company acquired 100% of the equity interest in Paragon for an aggregate nominal purchase price of $1,192.1 million, which was subject to adjustment (as further discussed below), in order to enhance the Company’s end-to-end integrated biopharmaceutical solutions. Paragon is a leading contract development and manufacturing organization (“CDMO”) focused on the development and manufacturing of cutting-edge biopharmaceuticals, including viral vectors used in gene therapies.
The Company estimated fair values at the acquisition date for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed. During the measurement period ending no later than one year after the acquisition date, the Company will continue to obtain information to assist in finalizing the fair values of the net assets acquired, which may differ materially from these preliminary estimates. Amounts subject to finalization include working capital adjustments and income taxes. If any measurement period adjustment is material, the Company will record such adjustment, including any related impact on net income, in the reporting period in which the adjustment is determined. During the first quarter the Company received an escrow refund of $7.6 million related to as assessment of various asset and liability balances and expenses as of the acquisition date. The adjustment is reflected in both goodwill and cash (part of other net assets). This adjustment had no impact on the consolidated statement of operations. There was no other change in these balances related to the acquisition noted during this period.
The Company accounted for the transaction using the acquisition method of accounting for business combinations, in accordance with ASC 805.
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Pending Acquisition as of September 30, 2019
On June 15, 2019, Operating Company and Bristol-Myers Squibb S.r.l. (“BMS”), entered into a Sale and Purchase Agreement for the acquisition of BMS’s oral solid, biologics, and sterile product manufacturing and packaging facility in Anagni, Italy (“Anagni”) for consideration of €45.0 million, subject to adjustment, plus the value of initiating certain services to aid the transition from BMS to Company ownership. At the closing of this acquisition, BMS will enter into a five-year agreement with respect to the continuing supply by the Company of certain products currently produced at the Anagni facility.
Adding Anagni to the Company’s global network will expand its biologics drug product offering in Europe, which the Company expects will enable it to both capture a larger segment of the biologics market in that region and complement its existing European sterile fill/finish capabilities. The acquisition will also add oral solid manufacturing and packaging capacity to augment the Company's current capabilities in Europe.
The Anagni acquisition is expected to close during the second quarter of fiscal 2020.
4. GOODWILL
The following table summarizes the changes between June 30, 2019 and September 30, 2019 in the carrying amount of goodwill in total and by reporting segment:
(Dollars in millions) Softgel & Oral Technologies Biologics Oral & Specialty Delivery Clinical Supply Services Total
Balance at June 30, 2019 $ 409.2    $ 1,320.0    $ 340.3    $ 151.4    $ 2,220.9   
Additions —    2.4    —    —    2.4   
Reallocation 108.1    (124.3)   16.2    —    —   
Other (1.6)   (7.4)   1.1    —    (7.9)  
Foreign currency translation adjustments (10.2)   (1.6)   (3.8)   (3.9)   (19.5)  
Balance at September 30, 2019 $ 505.5    $ 1,189.1    $ 353.8    $ 147.5    $ 2,195.9   
The addition to goodwill in the Biologics reporting segment relates to the Novavax transaction. See Note 3, Business Combinations. The reallocation of goodwill relates to the adjustments to the Company’s reporting segments, as a result of which certain assets moved from the Biologics reporting segment to the Oral and Specialty Delivery reporting segment, and other assets moved from the Oral and Specialty Delivery reporting segment to the Softgel and Oral Technologies reporting segment. The Company recorded no impairment charge to goodwill in the current period.
5. DEFINITE-LIVED LONG-LIVED ASSETS
The Company’s definite-lived long-lived assets include property, plant, and equipment as well as intangible assets with definite lives. Refer to Note 16, Supplemental Balance Sheet Information for details related to property, plant, and equipment.
The details of other intangibles, net as of September 30, 2019 and June 30, 2019 are as follows:
(Dollars in millions) Weighted Average Life
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
September 30, 2019
Amortized intangibles:
Core technology 18 years $ 133.9    $ (77.2)   $ 56.7   
Customer relationships 14 years 974.4    (195.2)   779.2   
Product relationships 11 years 269.4    (210.0)   59.4   
Other 4 years 9.4    (1.8)   7.6   
Total intangible assets $ 1,387.1    $ (484.2)   $ 902.9   
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(Dollars in millions) Weighted Average Life
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
June 30, 2019
Amortized intangibles:
Core technology 18 years $ 168.2    $ (105.6)   $ 62.6   
Customer relationships 14 years 981.1    (182.5)   798.6   
Product relationships 11 years 275.5    (213.9)   61.6   
Other 4 years 9.3    (1.3)   8.0   
Total intangible assets $ 1,434.1    $ (503.3)   $ 930.8   
The decreases in the gross carrying value of core technology, customer relationships, and product relationships as of September 30, 2019 compared to the prior-year period are associated with the sale of an intangible property licensing right and the reclassification of intangible assets to other assets related to the sale of the Company’s facility in Braeside, Australia.
Amortization expense was $21.5 million and $18.2 million for the three months ended September 30, 2019 and 2018, respectively. Future amortization expense for the next five fiscal years is estimated to be:
(Dollars in millions) Remainder 
Fiscal 2020 		2021 2022 2023 2024 2025
Amortization expense $ 62.9    $ 85.9    $ 85.2    $ 84.7    $ 84.5    $ 83.9   

6. LONG-TERM OBLIGATIONS AND SHORT-TERM BORROWINGS
Long-term obligations and short-term borrowings consisted of the following at September 30, 2019 and June 30, 2019:
(Dollars in millions) Maturity as of September 30, 2019 September 30, 2019 June 30, 2019
Senior secured credit facilities
Term loan facility U.S. dollar-denominated May 2026 $ 934.4    $ 936.2   
       Term loan facility euro-denominated May 2024 332.7    346.8   
Revolving credit facility May 2024 —    —   
Euro-denominated 4.75% Senior Notes due 2024 December 2024 411.9    428.3   
U.S. dollar-denominated 4.875% Senior Notes due 2026 January 2026 444.8    444.6   
U.S. dollar-denominated 5.00% Senior Notes due 2027 July 2027 492.4    492.1   
Deferred purchase consideration October 2021 145.1    143.9   
Capital lease obligations 2020 to 2044 166.8    167.3   
Other obligations 2019 to 2024 4.9    0.1   
Total 2,933.0    2,959.3   
Less: Current portion of long-term obligations and other short-term
borrowings 		74.3    76.5   
Long-term obligations, less current portion $ 2,858.7    $ 2,882.8   
Senior Secured Credit Facilities and Fourth Amendment
In May 2019, Operating Company completed a fourth amendment (the “Fourth Amendment”) to its Amended and Restated Credit Agreement, dated as of May 20, 2014 (as amended through the Fourth Amendment, the “Credit Agreement”). As part of the Fourth Amendment, Operating Company borrowed $950 million aggregate principal amount of incremental term B loans (the “Incremental Dollar Term B-2 Loans”) and replaced the existing revolving credit commitments of $200 million with new revolving credit commitments of $550 million (the “Incremental Revolving Credit Commitments”). The Incremental Dollar Term B-2 Loans will mature at the earlier of (1) May 17, 2026 and (2) the 91st day prior to the maturity of Operating Company’s 4.75% senior unsecured notes due 2024 (the “Euro Notes”) or a permitted refinancing thereof, if on such 91st day any of the Euro Notes remains outstanding. There is a prepayment premium of 1.00% to any principal amount of the Incremental Dollar Term B-2 Loans that is subject to a repricing event during the first six-month period after the Fourth Amendment effective date. The Incremental Revolving Credit Commitments constitute revolving credit commitments under the Credit Agreement. The maturity date for the revolving loans is now the earlier of (1) May 17, 2024 and (2) the 91st day prior to
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the maturity of any dollar term loans or euro term loans under the Credit Agreement, or any permitted refinancing thereof, if on such 91st day any of such dollar term loans or euro term loans remains outstanding. Under the Credit Agreement, the applicable rate for U.S. dollar-denominated term loans, including the Incremental Dollar Term B-2 Loans, is LIBOR (subject to a floor of 1.00%) plus 2.25%, and the applicable rate for euro-denominated term loans is Euribor (the Euro Interbank Offered Rate published by the European Money Markets Institute, subject to a floor of 1.00%) plus 1.75%. The applicable rate for the revolving loans is initially LIBOR plus 2.25%, and such rate can additionally be reduced to LIBOR plus 2.00% in future periods based on a measure of Operating Company's total leverage ratio. The euro-denominated term loans will mature in May 2024.
Euro-denominated 4.75% Senior Notes due 2024
In December 2016, Operating Company completed a private offering of €380.0 million aggregate principal amount of the Euro Notes. The Euro Notes are fully and unconditionally guaranteed, jointly and severally, by all of the wholly owned U.S. subsidiaries of Operating Company that guarantee its senior secured credit facilities. The Euro Notes were offered in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the U.S. only to non-U.S. investors pursuant to Regulation S under the Securities Act. The Euro Notes will mature on December 15, 2024, bear interest at the rate of 4.75% per annum and are payable semi-annually in arrears on June 15 and December 15 of each year.
U.S. Dollar-denominated 4.875% Senior Notes due 2026
In October 2017, Operating Company completed a private offering of $450.0 million aggregate principal amount of 4.875% Senior Notes due 2026 (the “USD 2026 Notes”). The USD 2026 Notes are fully and unconditionally guaranteed, jointly and severally, by all of the wholly owned U.S. subsidiaries of Operating Company that guarantee its senior secured credit facilities. The USD 2026 Notes were offered in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the U.S. only to non-U.S. investors pursuant to Regulation S under the Securities Act. The USD 2026 Notes will mature on January 15, 2026, bear interest at the rate of 4.875% per annum, and are payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2018.
U.S. dollar-denominated 5.00% Senior Notes due 2027
In June 2019, Operating Company completed a private offering of $500.0 million aggregate principal amount of 5.00% Senior Notes due 2027 (the “USD 2027 Notes” and, together with the USD 2026 Notes, the “USD Notes”; and the USD Notes and Euro Notes together, the “Senior Notes”). The USD 2027 Notes are fully and unconditionally guaranteed, jointly and severally, by all of the wholly owned U.S. subsidiaries of Operating Company that guarantee its senior secured credit facilities. The USD 2027 Notes were offered in the U.S to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the U.S only to non-U.S. investors pursuant to Regulation S under the Securities Act. The USD 2027 Notes will mature on July 15, 2027, bear interest at the rate of 5.00% per annum, and are payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020.
Deferred Purchase Consideration
In connection with the acquisition of Catalent Indiana LLC in October 2017, $200.0 million of the $950.0 million aggregate nominal purchase price is payable in $50.0 million installments, on each of the first four anniversaries of the closing date. The Company paid the first installment in October 2018. The balance of the deferred purchase consideration was recorded at fair value as of the acquisition date, with the difference between the remaining nominal amount and the fair value treated as imputed interest.
Debt Covenants
Senior Secured Credit Facilities
The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, Operating Company’s (and Operating Company’s restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans, or advances; make certain acquisitions; enter into sale and leaseback transactions; amend material agreements governing Operating Company’s subordinated indebtedness; and change Operating Company’s lines of business.
The Credit Agreement also contains change-of-control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a net leverage covenant when there is a 30% or more draw
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outstanding at a period end. As of September 30, 2019, Operating Company was in compliance with all material covenants under the Credit Agreement.
Subject to certain exceptions, the Credit Agreement permits Operating Company and its restricted subsidiaries to incur certain additional indebtedness, including secured indebtedness. None of Operating Company’s non-U.S. subsidiaries or Puerto Rico subsidiaries is a guarantor of the loans.
 
Under the Credit Agreement, Operating Company’s ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “Consolidated EBITDA” in the Credit Agreement). Adjusted EBITDA is based on the definitions in the Credit Agreement, is not defined under GAAP, and is subject to important limitations.
The Senior Notes
The various indentures governing the Senior Notes (collectively, the “Indentures”) contain covenants that, among other things, limit the ability of Operating Company and its restricted subsidiaries to incur or guarantee more debt or issue certain preferred shares; pay dividends on, repurchase, or make distributions in respect of their capital stock or make other restricted payments; make certain investments; sell certain assets; create liens; consolidate, merge, sell; or otherwise dispose of all or substantially all of their assets; enter into certain transactions with their affiliates, and designate their subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the Indentures. The Indentures also contain customary events of default, including, but not limited to, nonpayment, breach of covenants, and payment or acceleration defaults in certain other indebtedness of Operating Company or certain of its subsidiaries. Upon an event of default, either the holders of at least 30% in principal amount of each of the then-outstanding Senior Notes or the applicable Trustee under the Indentures may declare the applicable notes immediately due and payable; or in certain circumstances, the applicable notes will become automatically immediately due and payable. As of September 30, 2019, Operating Company was in compliance with all material covenants under the Indentures.
Fair Value of Debt Instruments
The estimated fair values of the senior secured credit facilities and Senior Notes are classified as Level 2 in the fair value hierarchy and are calculated by using discounted cash flow models with the market interest rate as a significant input. The carrying amounts and the estimated fair values of financial instruments as of September 30, 2019 and June 30, 2019 are as follows:
September 30, 2019 June 30, 2019
(Dollars in millions) Fair Value Measurement
Carrying
Value
Estimated Fair
Value
Carrying
Value
Estimated Fair
Value
Euro-denominated 4.75% senior notes due
2024 		Level 2 $ 411.9    $ 425.9    $ 428.3    $ 454.2   
U.S. dollar-denominated 4.875% senior notes
due 2026 		Level 2 444.8    460.9    444.6    457.0   
U.S. dollar-denominated 5.00% senior notes
due 2027 		Level 2 492.4    523.4    492.1    509.0   
Senior secured credit facilities & other Level 2 1,583.9    1,550.1    1,594.3    1,526.0   
Total $ 2,933.0    $ 2,960.3    $ 2,959.3    $ 2,946.2   

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7. EARNINGS PER SHARE
The Company computes earnings per share (“EPS”) of the Company's common stock, par value $0.01 (the "Common Stock") using the two-class method required due to the participating nature of the Series A Preferred Stock (as defined and discussed in Note 14, Redeemable Preferred Stock—Series A Preferred). Diluted net income per share is computed using the weighted average number of shares of Common Stock outstanding plus the weighted average number of shares of Common Stock that would be issued assuming exercise or conversion of all potentially dilutive instruments. Dilutive securities having an anti-dilutive effect on diluted net income per share are excluded from the calculation. The dilutive effect of the securities that are issuable under the Company’s equity incentive plans are reflected in diluted earnings per share by application of the treasury stock method. The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three months ended September 30, 2019 and 2018, respectively, are as follows (in millions, except share and per share data):
Three Months Ended  
September 30,
(Dollars in millions, except per share data) 2019 2018
Net earnings/(loss) $ 0.1    $ (14.4)  
Less: Series A Preferred Stock dividend (8.1)   —   
Net earnings/(loss) attributable to common shareholders $ (8.0)   $ (14.4)  
Weighted average shares outstanding 145,663,115    142,149,315   
Total weighted average diluted shares outstanding 145,663,115    142,149,315   
Earnings per share:  
Basic $ (0.05)   $ (0.10)  
Diluted $ (0.05)   $ (0.10)  
For the periods of net loss, basic and diluted EPS are the same as the assumed exercise of stock options and conversion of convertible preferred stock are anti-dilutive.
8. OTHER (INCOME)/EXPENSE, NET
The components of other (income)/expense, net for the three months ended September 30, 2019 and 2018 are as follows:
Three Months Ended  
September 30,
(Dollars in millions) 2019 2018
Other (income)/expense, net
Debt refinancing costs (1)
$ 0.1    $ 4.2   
Foreign currency (gains) and losses (2)
(3.1)   1.7   
     Other (3)
7.9    (0.2)  
Total other (income)/expense, net $ 4.9    $ 5.7   
(1) The expense in the three months ended September 30, 2018 includes a write-off of $4.2 million of previously capitalized financing charges related to the Company's U.S. dollar term loan under its senior secured credit facility.
(2) Foreign currency remeasurement (gains) and losses include both cash and non-cash transactions.
(3) Included within Other for the three months ended September 30, 2019 are unrealized losses of $8.9 million related to the fair value of the derivative liability associated with the Series A Preferred Stock.
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9.  RESTRUCTURING AND OTHER COSTS
From time to time, the Company has implemented plans to restructure certain operations, both domestically and internationally. The restructuring plans focused on various aspects of operations, including closing and consolidating certain manufacturing operations, rationalizing headcount and aligning operations in a strategic and more cost-efficient structure. In addition, the Company may incur restructuring charges in the future in cases where a material change in the scope of operation with its business occurs. Employee-related costs consist primarily of severance costs and also include outplacement services provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. Facility exit and other costs consist of accelerated depreciation, equipment relocation costs and costs associated with planned facility expansions and closures to streamline Company operations. The restructuring costs for the three months ended September 30, 2019 and 2018 were $0.7 million and $9.7 million, respectively.
10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to fluctuations in the applicable exchange rate on its investments in operations outside the U.S. While the Company does not actively hedge against changes in foreign currency, the Company has mitigated its exposure from its investments in its European operations by denominating a portion of its debt in euros. At September 30, 2019, the Company had euro-denominated debt outstanding of $744.6 million that is designated and qualifies as a hedge of a net investment in foreign operations. For non-derivatives designated and qualifying as net investment hedges, the translation gains or losses are reported in accumulated other comprehensive income/(loss) as part of the cumulative translation adjustment. The non-hedge portions of the euro-denominated debt translation gains or losses are reported in the consolidated statement of operations. The following table includes net investment hedge activity during the three months ended September 30, 2019 and 2018.
Three Months Ended  
September 30,
(Dollars in millions) 2019 2018
Unrealized foreign exchange gain/(loss) within other
     comprehensive income
$ 20.3    $ (4.2)  
Unrealized foreign exchange gain/(loss) within statement
     of operations
$ 9.7    $ (2.5)  
The net accumulated gain of the instrument designated as a hedge as of September 30, 2019 within other comprehensive income/(loss) was approximately $80.1 million. Amounts are reclassified out of accumulated other comprehensive income/(loss) into earnings when the entity to which the gains and losses relate is either sold or substantially liquidated.
2019 Derivative Liability
As discussed in Note 14, Redeemable Preferred Stock—Series A Preferred, in May 2019, the Company issued shares of Series A Preferred Stock in exchange for net proceeds of $646.3 million after taking into account the $3.7 million issuance cost.
The dividend rate used to determine the amount of the quarterly dividend payable on shares of the Series A Preferred Stock is subject to adjustment so as to provide holders of shares of Series A Preferred Stock with certain protections against a decline in the trading price of shares of Common Stock. The Company determined that this feature should be accounted for as a derivative liability, since the feature fluctuates inversely to changes in the trading price and is also linked to the performance of the S&P 500 stock index. Accordingly, the Company bifurcated the adjustable dividend feature from the remainder of the Series A Preferred Stock and accounted for this feature as a derivative liability at fair value. The Company will recognize changes in the fair value of the derivative liability in the consolidated statements of operations for each reporting period. The fair value was determined using an option pricing methodology, specifically both a Monte Carlo simulation and a binomial lattice model. The methodology incorporates the terms and conditions of the preferred stock arrangement, historical stock price volatility, the risk-free interest rate, a credit spread based on the yield indexes of high-yield bonds, and the trading price of shares of the Common Stock. The calculation of the estimated fair value of the derivative liability is highly sensitive to changes in unobservable inputs, such as the expected volatility and the Company's specific credit spread.
The Company recorded a loss of $8.9 million on the change in the estimated fair value of the derivative liability from July 1, 2019 through September 30, 2019, which is reflected as a non-operating expense in the consolidated statements of operations. The fair value of the derivative liability as of September 30, 2019 was $35.7 million.
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The fair value is classified as Level 3 in the fair value hierarchy due to the significant management judgment required for the assumptions underlying the calculation of value. The following table sets forth a summary of changes in the estimated fair value of the derivative liability:
(Dollars in millions)
Fair Value Measurements of
Series A Preferred Stock
Derivative Liability
Using Significant
Unobservable Inputs (Level 3)
Balance at July 1, 2019 $ 26.8   
Change in estimated fair value of Series A Preferred Stock derivative liability 8.9   
Balance at September 30, 2019 $ 35.7   

11. INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Generally, fluctuations in the effective tax rate are primarily due to changes in U.S. and non-U.S. pretax income resulting from the Company’s business mix and changes in the tax impact of special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Such discrete items include, but are not limited to, changes in foreign statutory tax rates, the amortization of certain assets, the tax impact of changes in the Company's unrecognized tax benefit reserves and the tax impact of certain equity compensation.
In the normal course of business, the Company is subject to examination by taxing authorities around the world, including such major jurisdictions as the United States, Germany, France, and the United Kingdom. The Company is no longer subject to examinations by the relevant tax authorities for years prior to fiscal year 2009. Under the terms of the 2007 purchase agreement by which the stockholders at that time acquired their interest in the Company, the Company is indemnified by its former owner for tax liabilities that may arise after the 2007 purchase that relate to tax periods prior to April 10, 2007. The indemnification agreement applies to, among other taxes, any and all federal, state, and international income-based taxes as well as related interest and penalties. As of both September 30, 2019 and June 30, 2019, $0.6 million of unrecognized tax benefit is subject to indemnification by the Company's former owner.
ASC 740 includes guidance on the accounting for uncertainty in income taxes recognized in the financial statements. This standard provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeal or litigation process, based on the technical merits. As of September 30, 2019 and June 30, 2019, the Company had a total of $5.3 million and $5.2 million, respectively, of uncertain tax positions (including accrued interest and penalties). As of both of these dates, $3.8 million represent the amount of unrecognized tax benefits, which, if recognized, would favorably affect the effective income tax rate. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense. As of September 30, 2019 and June 30, 2019, the Company has approximately $1.5 million and $1.4 million, respectively, of accrued interest and penalties related to uncertain tax positions. As of these dates, the portion of such interest and penalties subject to indemnification by its former owner is $1.4 million and $1.3 million, respectively.
The Company recorded a benefit for income taxes for the three months ended September 30, 2019 of $6.9 million relative to losses from operations before income taxes of $6.8 million. The amount of this benefit is primarily driven by U.S. income tax deductions, also referred to as a windfall benefit, related to the Company’s equity compensation expense. The Company recorded a provision for income taxes for the three months ended September 30, 2018 of $1.0 million relative to losses from operations before income taxes of $13.4 million. The income tax provision for the current period is not comparable to the same period of the prior year due to changes in pretax income over many jurisdictions and the impact of discrete items. Generally, fluctuations in the effective tax rate are primarily due to changes in our geographic pretax income resulting from our business mix and changes in the tax impact of permanent differences, special items, certain equity related compensation and other discrete tax items, which may have unique tax implications depending on the nature of the item.
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12. EMPLOYEE RETIREMENT BENEFIT PLANS
Components of the Company’s net periodic benefit costs are as follows:
Three Months Ended  
September 30,
(Dollars in millions) 2019 2018
Components of net periodic benefit cost:
Selling, general, and administrative expenses:
Service cost $ 0.6    $ 0.9   
Other (income)/expense, net:
Interest cost 1.7    1.9   
Expected return on plan assets (2.7)   (2.6)  
Amortization (1)
0.8    0.6   
Net amount recognized $ 0.4    $ 0.8   
(1)   Amount represents the amortization of unrecognized actuarial gains/(losses).
As previously disclosed, the Company notified the trustees of a multi-employer pension plan of its withdrawal from participation in such plan in fiscal 2012. The actuarial review process administered by the plan trustees ended in fiscal 2015. The liability reported reflects the present value of the Company's expected future long-term obligations. The estimated discounted value of the projected contributions related to such plans was $38.8 million and $38.8 million as of September 30, 2019 and June 30, 2019, respectively, and is included within pension liability on the consolidated balance sheets. The annual cash impact associated with the Company's obligations in such plan is approximately $1.7 million per year.
13. EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
Description of Capital Stock
The Company is authorized to issue 1,000,000,000 shares of Common Stock, and 100,000,000 shares of preferred stock, par value $0.01 per share. Under the Company's certificate of incorporation, each share of Common Stock has one vote, and the Common Stock votes together as a single class.
Public Stock Offering
On July 27, 2018, the Company completed a public offering of its Common Stock (the “2018 Equity Offering”), in which the Company sold 11.4 million shares, including the underwriters' over-allotment option, of Common Stock at a price of $40.24 per share, before underwriting discounts and commissions. Net of these discounts and commissions and other offering expenses, the Company obtained total net proceeds from the 2018 Equity Offering, including the over-allotment exercise, of $445.5 million. The net proceeds of the 2018 Equity Offering were used to repay a corresponding portion of the outstanding borrowings under Operating Company's U.S. dollar-denominated term loans.
Outstanding Stock
Shares of Common Stock outstanding include shares of unvested restricted stock. Unvested restricted stock included in reportable shares outstanding was 0.5 million shares as of September 30, 2019. Shares of unvested restricted stock are excluded from the calculation of basic weighted average shares outstanding, but their dilutive impact is added back in the calculation of diluted weighted average shares outstanding, except when the effect would be anti-dilutive.
The Company has 650,000 shares of its preferred stock outstanding. See Note 14, Redeemable Preferred Stock—Series A Preferred.
Stock Repurchase Program
On October 29, 2015, the Company’s Board of Directors authorized a share repurchase program to use up to $100.0 million to repurchase shares of outstanding Common Stock. Under the program, the Company is authorized to repurchase shares through open market purchases, privately negotiated transactions, or otherwise as permitted by applicable federal securities laws. There has been no purchase pursuant to this program as of September 30, 2019.
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Accumulated Other Comprehensive Income/(loss)
The components of the changes in the cumulative translation adjustment, minimum pension liability, and available for sale investment for the three months ended September 30, 2019 and 2018 are presented below.
Three Months Ended  
September 30,
(Dollars in millions) 2019 2018
Foreign currency translation adjustments:
Net investment hedge $ 20.3    $ (4.2)  
Long-term intercompany loans (6.5)   (3.3)  
Translation adjustments (32.3)   (2.8)  
Total foreign currency translation adjustment, pretax (18.5)   (10.3)  
Tax expense/(benefit) 3.3    (1.5)  
Total foreign currency translation adjustment, net of tax $ (21.8)   $ (8.8)  
Net change in minimum pension liability
Net (gain)/loss recognized during the period $ (0.6)   $ 0.6   
Total pension liability, pretax (0.6)   0.6   
Tax expense/(benefit) (0.3)   0.2   
Net change in minimum pension liability, net of tax $ (0.3)   $ 0.4   
For the three months ended September 30, 2019, the changes in accumulated other comprehensive income/(loss), net of tax by component are as follows:
(Dollars in millions) Foreign Exchange Translation Adjustments    Pension and Liability Adjustments    Other    Total   
Balance at June 30, 2019 $ (303.7)   $ (49.1)   $ (1.1)   $ (353.9)  
Other comprehensive income/(loss) before
reclassifications 		(21.8)   —    —    (21.8)  
Amounts reclassified from accumulated other
comprehensive income/(loss) 		—    (0.3)   —    (0.3)  
Net current period other comprehensive income/(loss) (21.8)   (0.3)   —    (22.1)  
Balance at September 30, 2019 $ (325.5)   $ (49.4)   $ (1.1)   $ (376.0)  

14.  REDEEMABLE PREFERRED STOCK — SERIES A PREFERRED
During May 2019, the Company designated 1,000,000 shares of its preferred stock, par value $0.01, as its “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”), pursuant to a certificate of designation of preferences, rights, and limitations (as amended, the “Certificate of Designation”) filed with the Delaware Secretary of State, and issued and sold 650,000 shares of the Series A Preferred Stock for an aggregate purchase price of $650.0 million, to affiliates of Leonard Green & Partners, L.P. (the “Series A Investors”), each share having an initial stated value of $1,000 (as such value may be adjusted in accordance with the terms of the Certificate of Designation, the “Stated Value”). The Series A Preferred Stock ranks senior to the Company’s Common Stock with respect to dividend rights and rights upon the voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Company.
The holders of Series A Preferred Stock are entitled to vote with the holders of the Common Stock as a single class on an “as-converted” basis and, for so long as the Series A Investors or their successors have the right to designate a nominee for election to the board pursuant to their stockholders’ agreement with the Company, have the right to elect one board member voting as a separate class. They also have veto rights over certain amendments to the Company’s organizational documents that would have an adverse effect on the rights of the Series A Preferred Stock; issuance of senior or pari passu securities; or the incurrence of indebtedness above certain leverage ratios, as set forth in the Certificate of Designation.
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Holders of Series A Preferred Stock have the right under the Certificate of Designation to receive a liquidation preference entitling them to be paid out of assets available for distribution to stockholders before any payment may be made to holders of any other class or series of capital stock, the value of which preference is equal to the greater of (a) the Stated Value plus all accrued and unpaid dividends or (b) the amount that such holders would have been entitled to receive upon the Company’s liquidation, dissolution, and winding up if all outstanding shares of Series A Preferred Stock had been converted into shares of Common Stock immediately prior to such liquidation, dissolution, or winding up.
Holders of Series A Preferred Stock are also entitled (a) to receive a cumulative annual dividend equal to 5.0% of the Stated Value, payable quarterly in arrears in cash, by increasing the Stated Value, or in a combination thereof at Catalent’s election, with such rate subject to an increase to 6.5% or 8.0% depending on the price of the Common Stock at the fourth (or in certain cases fifth) anniversary of the initial issuance, as set forth in the Certificate of Designation, and (b) to participate in the distribution of any ordinary dividend on the Common Stock calculated on an as-converted basis.
The Series A Preferred Stock is subject to conversion or redemption under various circumstances, including the right of holders to convert some or all of their shares into shares of Common Stock after twelve months at a fixed price of $49.54 (the “Conversion Price”) and the Company’s right to (x) convert all outstanding shares of Series A Preferred Stock at any time after the third anniversary of the initial issuance if the price of the Common Stock exceeds 150.0% of the Conversion Price or (y) redeem all outstanding shares of Series A Preferred Stock at any time after the fifth anniversary of the initial issuance at a price per share equal to the Stated Value, plus accrued and unpaid dividends, for cash, shares of Common Stock, or a combination of these. The Conversion Price is subject to customary anti-dilution and other adjustments. In addition, holders of shares of Series A Preferred Stock are eligible to demand redemption of their shares in the event of a change of control. Due to these various rights, privileges, and preferences, the Company has classified the Series A Preferred Stock as temporary (mezzanine) equity on its consolidated balance sheets.
Proceeds from the offering of the Series A Preferred Stock, net of stock issuance costs, were $646.3 million, which were used to fund a portion of the consideration for the Paragon acquisition due at its closing. Of the net proceeds, $39.7 million was allocated to the dividend adjustment feature at its issuance and separately accounted for as a derivative liability, as disclosed in Note 10, Derivative Instruments and Hedging Activities; thus, the proceeds of the issuance were allocated as follows:
(Dollars in millions)
Issuance of Series A Preferred Stock $ 650.0   
Stock issuance costs (3.7)  
Net of stock issuance costs 646.3   
Derivative liability (Portion of preferred stock allocated to dividend adjustment at inception - see
Note 10) 		(39.7)  
Net proceeds from Series A Preferred Stock issuance $ 606.6   
Any change in the fair value of derivative liability is recorded as non-operating expenses in the consolidated statement of operations. See Note 10, Derivative Instruments and Hedging Activities for detail concerning the change in fair value during the three months ended September 30, 2019.
15. LEASES
The Company leases certain manufacturing and office facilities, land, vehicles, and equipment. The terms of these leases vary widely, although most have terms between 3 and 10 years.
In accordance with ASC 842, Leases, the Company recognizes a “right-of-use” asset and related lease liability at the commencement date of each lease based on the present value of the fixed lease payments over the expected lease term. The lease term for this purpose will include any renewal period where the Company determines that it is reasonably certain that it will exercise the option to renew. While certain leases also permit Catalent to terminate the lease in advance of the nominal term upon payment of an associated penalty, the Company generally does not take into account potential early termination dates in its determination of the lease term as it is reasonably certain not to exercise an early-termination option as of the lease commencement date.
The Company uses its incremental borrowing rate, which represents the interest rate the Company would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms, in order to calculate the present value of a lease, since the implicit discount rate for its leases is not readily determinable.
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Fixed lease payments are recognized on straight-line basis over the lease term, while variable payments are recognized in the period incurred. As permitted by ASC 842, the Company has elected not to separate those components of a lease agreement not related to the leasing of an asset from those components that are related.
The Company does not record leases with an initial lease term of 12 months or less on its consolidated balance sheets. The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term.
Supplemental information concerning the leases recorded in the Company's unaudited consolidated balance sheet as of September 30, 2019 is detailed in the following table:
(Dollars in millions) Line item in the consolidated balance sheet Balance at September 30, 2019
Right-of-use assets:
Finance leases Property, plant, and equipment, net $ 122.9   
Operating leases Other assets 65.7   
Current lease liabilities:
Finance leases Current portion of long-term obligations and other short-term borrowings 9.5   
Operating leases Other accrued liabilities 10.6   
Non-current lease liabilities:
Finance leases Long-term obligations, less current portion 157.3   
Operating leases Other liabilities 56.6   
The components of the net lease costs for the three months ended September 30, 2019 reflected in the Company's unaudited consolidated statement of operations were as follows:
(Dollars in millions) Three months ended September 30, 2019
Finance lease costs:
Amortization of right-of-use assets $ 1.9   
Interest on lease liabilities 3.1   
Total 5.0   
Operating lease costs 4.2   
Variable lease costs 1.7   
Total lease costs $ 10.9   
The weighted average remaining lease term and weighted average discount rate related to the Company's right-of-use assets and lease liabilities as of September 30, 2019 are as follows:
Weighted average remaining lease term (years):
Finance leases 16.1
Operating leases 9.2
Weighted average discount rate:
Finance leases 6.7  %
Operating leases 4.4  %
Supplemental information concerning the cash-flow impact arising from the Company's leases for the three months ended September 30, 2019 recorded in the Company's unaudited consolidated statement of cash flows is detailed in the following table (in millions):
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Cash paid for amounts included in lease liabilities:
Financing cash flows from finance leases $ 2.2   
Operating cash flows from finance leases 3.1   
Operating cash flows from operating leases 2.4   
Non-cash transactions:
Right-of-use assets obtained in exchange for new finance lease liabilities 4.1   
Right-of-use assets obtained in exchange for new operating lease liabilities 23.7   
As of September 30, 2019, the Company expects that its future minimum lease payments will become due and payable as follows:
(Dollars in millions) Finance Leases Operating Leases Total
Remainder of 2020 $ 15.8    $ 10.0    $ 25.8   
2021 20.0    12.4    32.4   
2022 17.9    11.7    29.6   
2023 17.4    11.3    28.7   
2024 16.8    8.0    24.8   
Thereafter 181.2    30.6    211.8   
Total minimum lease payments 269.1    84.0    353.1   
Less: interest 102.3    16.8    119.1   
Total lease liabilities $ 166.8    $ 67.2    $ 234.0   

16. COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects, and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of any of which could be significant. The Company intends to vigorously defend itself against any such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company’s consolidated financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.
From time to time, the Company receives subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. The Company generally responds to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred. The Company expects to incur costs in future periods in connection with future requests.
17. SEGMENT INFORMATION
As disclosed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, the Company now conducts its business within the following operating segments: Softgel and Oral Technologies, Biologics, Oral and Specialty Delivery, and Clinical Supply Services. The Company evaluates the performance of its segments based on segment earnings before other (expense)/income, impairments, restructuring costs, interest expense, income tax expense/(benefit), and depreciation and amortization (“Segment EBITDA”). “EBITDA from operations” is consolidated earnings from operations before interest expense, income tax expense/(benefit), and depreciation and amortization. Segment EBITDA and EBITDA from operations are not defined in GAAP and may not be comparable to similarly titled measures used by other companies.
The following tables include net revenue and Segment EBITDA for each of the Company's current reporting segments during the three months ended September 30, 2019 and 2018:
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(Dollars in millions) Three Months Ended  
September 30,
2019 2018
Net revenue:
Softgel and Oral Technologies $ 263.7    $ 240.1   
Biologics 188.6    125.7   
Oral and Specialty Delivery 132.6    110.8   
Clinical Supply Services 84.6    77.7   
Inter-segment revenue elimination (4.8)   (2.5)  
Net revenue $ 664.7    $ 551.8   
(Dollars in millions) Three Months Ended  
September 30,
2019 2018
Segment EBITDA reconciled to net earnings/(loss):
Softgel and Oral Technologies $ 46.4    $ 41.3   
Biologics 35.8    27.0   
Oral and Specialty Delivery 27.7    18.9   
Clinical Supply Services 21.6    20.2   
Sub-Total $ 131.5    $ 107.4   
Reconciling items to net earnings/(loss)
Unallocated costs (1)
(41.4)   (39.8)  
Depreciation and amortization (60.6)   (52.9)  
Interest expense, net (36.3)   (28.1)  
Income tax expense/(benefit) $ 6.9    (1.0)  
Net earnings/(loss) $ 0.1    $ (14.4)  
(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) 2019 2018
Impairment charges and gain/(loss) on sale of assets $ 0.2    $ (2.9)  
Stock-based compensation (16.6)   (10.0)  
Restructuring and other special items (a)
(11.8)   (13.2)  
Other income/(expense), net (b)
(4.9)   (5.7)  
Unallocated corporate costs, net (8.3)   (8.0)  
Total unallocated costs $ (41.4)   $ (39.8)  
(a) Restructuring and other special items during the three months ended September 30, 2019 include transaction and integration costs associated with the Company’s gene therapy acquisitions, the disposal of one of our sites in Australia (which closed in October 2019), and other restructuring initiatives across the Company's network of sites. Restructuring and other special items during the three months ended September 30, 2018 include transaction and integration costs associated with the acquisitions of Catalent Indiana and Juniper.
(b) Refer to Note 8, Other (income)/expense, net, for details of financing charges and foreign currency translation adjustments recorded within other income/(expense), net.
The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the consolidated financial statements.
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(Dollars in millions) September 30,
2019 		June 30,
2019
Assets
Softgel and Oral Technologies $ 1,478.7    $ 1,586.5   
Biologics 2,849.3    2,825.7   
Oral and Specialty Delivery 1,190.9    1,098.7   
Clinical Supply Services 464.9    463.2   
Corporate and eliminations 135.7    209.9   
Total assets $ 6,119.5    $ 6,184.0   

18. SUPPLEMENTAL BALANCE SHEET INFORMATION
Supplemental balance sheet information at September 30, and June 30, 2019 is detailed in the following tables.
Inventories
Work-in-process and finished goods inventories include raw materials, labor, and overhead. Total inventories consist of the following:
(Dollars in millions) September 30,
2019 		June 30,
2019
Raw materials and supplies $ 169.5    $ 161.6   
Work-in-process & finished goods 101.6    115.0   
Total inventories, gross 271.1    276.6   
Inventory cost adjustment (20.4)   (19.4)  
Inventories $ 250.7    $ 257.2   
Prepaid expenses and other
Prepaid expenses and other consist of the following:
(Dollars in millions) September 30,
2019 		June 30,
2019
Prepaid expenses $ 41.1    $ 18.7   
Contract assets 16.1    23.3   
Current assets held for sale (1)
11.7    —   
Spare parts supplies 8.4    8.1   
Prepaid income tax 9.9    10.0   
Non-U.S. value-added tax 12.3    16.4   
Other current assets 25.3    23.6   
Prepaid expenses and other $ 124.8    $ 100.1   
(1) In fiscal 2018, the Company agreed to sell its facility in Braeside, Australia, which is part of the Softgel and Oral Technologies segment. As of September 30, 2019, the facility's assets met the criteria to be classified as held for sale; as a result, these assets and liabilities have been reclassified within the other assets and liabilities line on the consolidated balance sheets. Non-current assets held for sale and current liabilities held for sale of $29.1 million and $12.2 million, respectively, are presented in Other assets and Other accrued liabilities, respectively on the consolidated balance sheet as of September 30, 2019. The sale transaction closed in the second quarter of fiscal 2020.
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Property, plant, and equipment, net
Property, plant, and equipment, net consist of the following:
(Dollars in millions) September 30,
2019 		June 30,
2019
Land, buildings, and improvements $ 1,046.3    $ 1,049.4   
Machinery, equipment, and capitalized software 1,102.0    1,104.9   
Furniture and fixtures 17.1    16.9   
Construction in progress 315.1    278.9   
Property, plant, and equipment, at cost 2,480.5    2,450.1   
Accumulated depreciation (919.4)   (913.4)  
Property, plant, and equipment, net $ 1,561.1    $ 1,536.7   
Depreciation expense was $39.1 million for the three months ended September 30, 2019 and $34.7 million for the three months ended September 30, 2018. Depreciation expense includes amortization of assets related to capital leases. The Company charges repairs and maintenance costs to expense as incurred. The amount of capitalized interest was immaterial for all periods presented.
Other accrued liabilities
Other accrued liabilities consist of the following:
(Dollars in millions) September 30,
2019 		June 30,
2019
Accrued employee-related expenses $ 83.4    $ 103.9   
Restructuring accrual 5.7    8.2   
Accrued interest 17.4    11.7   
Contract liability 159.6    155.2   
Accrued income tax —    8.5   
Current liabilities held for sale (1)
12.2    —   
Other accrued liabilities and expenses 49.2    50.9   
Other accrued liabilities $ 327.5    $ 338.4   
(1) See footnote (1) in the Prepaid expenses and other table earlier in this Note.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
We are the leading global provider of advanced delivery technologies and development solutions for drugs, biologics, and consumer health products. Our oral, injectable, gene therapy, and respiratory delivery technologies address the full diversity of the pharmaceutical industry, including small molecules, protein and gene therapy biologics, and consumer health products. Through our extensive capabilities and deep expertise in product development, we help our customers take products to market faster, including nearly half of new drug products approved by the U.S. Food and Drug Administration in the last decade. Our advanced delivery technology platforms, which include those in our Softgel and Oral Technologies, Biologics, and Oral and Specialty Delivery segments, our proven formulation, manufacturing, and regulatory expertise, and our broad and deep intellectual property enable our customers to develop more products and better treatments for patients and consumers. Across both development and delivery, our commitment to reliably supply our customers’ and their patients' needs is the foundation for the value we provide; annually, we produce approximately 73 billion doses for nearly 7,000 customer products or approximately 1 in every 20 doses of such product taken each year by patients and consumers around the world. We believe that, through our investments in growth-enabling capacity and capabilities, our ongoing focus on operational and quality excellence, the sales of existing customer products, the introduction of new customer products, our innovation activities and patents, and our entry into new markets, we will continue to benefit from attractive and differentiated margins and realize the growth potential from these areas.
Critical Accounting Policies and Estimates
We prepare our financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Management made certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP. These estimates and assumptions affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities in the consolidated financial statements. These estimates also affect the reported amount of net earnings during the reporting periods. Actual results could differ from those estimates. Because of the size of the financial statement elements to which they relate, some of our accounting policies and estimates have a more significant impact on the consolidated financial statements than others.
There was no material change to our critical accounting policies or in the underlying accounting assumptions and estimates from those described in our Fiscal 2019 10-K, other than recently adopted accounting principles disclosed in Note 1 to the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, which adoptions had no material impact on net earnings.
Non-GAAP Performance Metrics
Use of EBITDA from operations
Management measures operating performance based on consolidated earnings from operations before interest expense, expense/(benefit) for income taxes, and depreciation and amortization (“EBITDA from operations”). EBITDA from operations is not defined under GAAP, is not a measure of operating income, operating performance, or liquidity presented in accordance with GAAP, and is subject to important limitations.
We believe that the presentation of EBITDA from operations enhances an investor’s understanding of our financial performance. We believe this measure is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business and use this measure for business planning purposes. In addition, given the significant investments that we have made in the past in property, plant, and equipment, depreciation and amortization expenses represent a meaningful portion of our cost structure. We believe that EBITDA from operations will provide investors with a useful tool for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt, and to undertake capital expenditures because it eliminates depreciation and amortization expense. We present EBITDA from operations in order to provide supplemental information that we consider relevant for the readers of our consolidated financial statements, and such information is not meant to replace or supersede GAAP measures. Our definition of EBITDA from operations may not be the same as similarly titled measures used by other companies. The most directly comparable GAAP measure to EBITDA from operations is net earnings. Included in this report is a reconciliation of net earnings to EBITDA from operations.
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In addition, we evaluate the performance of our segments based on segment earnings before other (income)/expense, impairments, restructuring costs, interest expense, income tax expense/(benefit), and depreciation and amortization (“Segment EBITDA”).
Use of Constant Currency
As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of results on a constant currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We use results on a constant currency basis as one measure to evaluate our performance. In this Quarterly Report on Form 10-Q, we compute constant currency by calculating current-year results using prior-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant currency basis as excluding the impact of foreign exchange. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Other Non-GAAP Measures
Organic revenue growth and Segment EBITDA growth are useful measures calculated by the Company to explain the underlying results and trends in the business. Organic revenue growth and Segment EBITDA growth are measures used to show current year sales and earnings from existing operations and include joint ventures and revenue from product-participation-related activities entered into within the year. Organic revenue growth and Segment EBITDA growth exclude the impact of foreign currency, acquisitions of operating or legal entities, and divestitures within the year. These measures should be considered in addition to, not as a substitute for, performance measures reported in accordance with GAAP. These measures, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018
The below tables summarize several financial metrics we use to measure performance for the three months ended September 30, 2019 and three months ended September 30, 2018. Refer to the discussions below regarding performance and use of key financial metrics.
CTLT-20190930_G1.JPG
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Results for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 were as follows:
  Three Months Ended  
September 30, 		FX Impact Constant Currency Increase/(Decrease)
(Dollars in Millions) 2019 2018 Change $ Change %
Net revenue $ 664.7    $ 551.8    $ (11.0)   $ 123.9    22  %
Cost of sales 487.0    403.3    (8.1)   91.8    23  %
Gross margin 177.7    148.5    (2.9)   32.1    22  %
Selling, general and administrative expenses 142.8    115.5    (1.0)   28.3    25  %
Impairment charges and (gain)/loss on sale of assets (0.2)   2.9    —    (3.1)   (107) %
Restructuring and other 0.7    9.7    —    (9.0)   (93) %
Operating earnings 34.4    20.4    (1.9)   15.9    78  %
Interest expense, net 36.3    28.1    (0.1)   8.3    30  %
Other (income)/expense, net 4.9    5.7    (1.8)   1.0    18  %
Earnings/(loss) from operations before income taxes (6.8)   (13.4)   —    6.6    (49) %
Income tax expense/(benefit) (6.9)   1.0    (0.1)   (7.8)   (780) %
Net earnings/(loss) $ 0.1    $ (14.4)   $ 0.1    $ 14.4    (100) %
Net Revenue
2019 vs. 2018
 Factors Contributing to Year-Over-Year Change Three Months Ended September 30,
Net Revenue
Revenue without acquisitions/divestitures 11  %
Impact of acquisitions 11  %
Constant currency change 22  %
Foreign currency translation impact on reporting (2) %
Total % change 20  %
Net revenue increased $123.9 million, or 22%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange. Net revenue increased 11% as a result of acquisitions. We acquired Juniper Pharmaceuticals, Inc. (“Juniper”) in August 2018 and Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc., “Paragon”) in May 2019. Net revenue increased 11% without the impact of acquisitions on a constant-currency basis, primarily related to volume increases in our Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services segments.
Gross Margin
Gross margin increased $32.1 million, or 22%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange, primarily as a result of our acquisitions and increased volumes as discussed above. On a constant-currency basis, gross margin, as a percentage of revenue, decreased 20 basis points to 26.7% in the three months ended September 30, 2019, compared to 26.9% in the prior-year period.
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Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased by $28.3 million, or 25%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange, primarily relating to additional selling, general and administrative expenses from acquired companies of $22.4 million, including $8.7 million of incremental depreciation and amortization expense and $2.2 million of employee-related costs. Selling, general, and administrative expenses further increased approximately $5.0 million for non-cash equity-based compensation, driven by the achievement of certain performance-based metrics during the first quarter of fiscal 2020.
Restructuring and Other    
Restructuring and other costs of $0.7 million for the three months ended September 30, 2019 decreased $9.0 million, or 93%, compared to the three months ended September 30, 2018. Restructuring expense varies period-to-period based on the timing of site consolidation efforts and other efforts to further streamline the business.
Interest Expense, net
Interest expense, net of $36.3 million for the three months ended September 30, 2019 increased by $8.2 million compared to the three months ended September 30, 2018, primarily driven by increased debt associated with the financing of the Paragon acquisition in May 2019 and Operating Company's June 2019 offering of 5.00% Senior Notes due 2027 (the "USD 2027 Notes").
For additional information concerning our debt and financing arrangements, including the changing mix of debt and equity in our capital structure, see “—Liquidity and Capital Resources—Debt and Financing Arrangements” and Note 6 to the consolidated financial statements.
A component of the purchase price for the acquisition of Catalent Indiana LLC ("Catalent Indiana") in fiscal 2018 consisted of $200.0 million in deferred purchase consideration payable in four annual $50.0 million installments on the first four anniversary dates of the acquisition. We made the first such payment in October 2018, and the present value of the balance is accounted for as debt, with the difference between the nominal value and the present value considered imputed interest expense.
Other (Income)/Expense, net
Other expense, net of $4.9 million for the three months ended September 30, 2019 was primarily driven by a loss of $8.9 million related to the change in the fair value of the derivative liability arising from the dividend adjustment mechanism of the series A convertible preferred stock, par value $0.01 (the "Series A Preferred Stock"). The loss was partially offset by non-cash foreign currency translation gains. See Notes 10 and 14 to the consolidated financial statements for more details on the Series A Preferred Stock dividend adjustment mechanism. Other expense, net of $5.7 million for the three months ended September 30, 2018 was primarily driven by non-cash foreign currency translation losses.
Income Tax Expense
Our benefit for income taxes for the three months ended September 30, 2019 was $6.9 million relative to loss from operations before income taxes of $6.8 million. The amount of this benefit is primarily driven by U.S. income tax deductions, also referred to as a windfall benefit, related to the Company’s equity compensation expense. Our provision for income taxes for the three months ended September 30, 2018 was $1.0 million relative to losses from operations before income taxes of $13.4 million. The income tax provision for the current period is not comparable to the same period of the prior year due to changes in pretax income over many jurisdictions and the impact of discrete items. Generally, fluctuations in the effective tax rate are primarily due to changes in our geographic pretax income resulting from our business mix and changes in the tax impact of permanent differences, special items, certain equity-related compensation, and other discrete tax items, which may have unique tax implications depending on the nature of the item.
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Segment Review
The following charts depict the percentages of revenue for each of the Company's four segments for the three months ended September 30, 2019 compared to the three months ended September 30, 2018. Refer below for discussions regarding the segments' revenue and EBITDA performance.
CTLT-20190930_G2.JPG
Our results on a segment basis for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 were as follows:
  Three Months Ended  
September 30, 		FX Impact Constant Currency Increase/(Decrease)
(Dollars in Millions) 2019 2018 Change $ Change %
Softgel and Oral Technologies
Net revenue $ 263.7    $ 240.1    $ (6.0)   $ 29.6    12  %
Segment EBITDA $ 46.4    $ 41.3    $ (1.0)   $ 6.1    15  %
Biologics
Net revenue 188.6    125.7    (1.5)   64.4    51  %
Segment EBITDA 35.8    27.0    (0.2)   9.0    33  %
Oral and Specialty Delivery
Net revenue 132.6    110.8    (1.9)   23.7    21  %
Segment EBITDA 27.7    18.9    (0.8)   9.6    51  %
Clinical Supply Services
Net revenue 84.6    77.7    (1.7)   8.6    11  %
Segment EBITDA 21.6    20.2    (0.8)   2.2    11  %
Inter-segment revenue elimination (4.8)   (2.5)   0.1    (2.4)   (96) %
Unallocated Costs (1)
(41.4)   (39.8)   2.0    (3.6)   9  %
Combined totals
Net revenue $ 664.7    $ 551.8    $ (11.0)   $ 123.9    22  %
EBITDA from operations $ 90.1    $ 67.6    $ (0.8)   $ 23.3    34  %
(1) Unallocated costs include restructuring and special items, stock-based compensation, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:
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  Three Months Ended  
September 30,
(Dollars in millions) 2019 2018
Impairment charges and gain/(loss) on sale of assets $ 0.2    $ (2.9)  
Stock-based compensation (16.6)   (10.0)  
Restructuring and other special items (a)
(11.8)   (13.2)  
       Other (expense), net
(4.9)   (5.7)  
Unallocated corporate costs, net (8.3)   (8.0)  
Total unallocated costs $ (41.4)   $ (39.8)  
(a) Restructuring and other special items during the three months ended September 30, 2019 include transaction and integration costs associated with the Company’s gene therapy acquisitions, the disposal of one of our sites in Australia (which closed in October 2019), and other restructuring initiatives across the Company's network of sites. Restructuring and other special items during the three months ended September 30, 2018 include transaction and integration costs associated with the acquisitions of Catalent Indiana and Juniper.
Provided below is a reconciliation of net earnings to EBITDA from operations:
  Three Months Ended  
September 30,
(Dollars in millions) 2019 2018
Net earnings $ 0.1    $ (14.4)  
Depreciation and amortization 60.6    52.9   
Interest expense, net 36.3    28.1   
Income tax expense (6.9)   1.0   
EBITDA from operations $ 90.1    $ 67.6   
Softgel and Oral Technologies segment
2019 vs. 2018
Factors Contributing to Year-Over-Year Change Three Months Ended  
September 30,
Net Revenue Segment EBITDA
Revenue/Segment EBITDA without divestitures 12  % 15  %
Impact of divestitures —  % —  %
Constant currency change 12  % 15  %
Foreign currency translation impact on reporting (2) % (3) %
Total % change 10  % 12  %
Softgel and Oral Technologies net revenue increased by $29.6 million, or 12%, excluding the impact of foreign exchange, compared to the three months ended September 30, 2018. The increase relates to volume increases across our consumer health portfolio within Europe as well as increased demand in our prescription product business in North America, which is partially attributable to recently launched products.
Softgel and Oral Technologies segment EBITDA increased $6.1 million, or 15%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange. The increase relates to volume increases across our consumer health portfolio within Europe, as well as increased demand in our higher-margin prescription product business in North America, the latter of which is partially attributable to recently launched products.
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Biologics segment
2019 vs. 2018
Factors Contributing to Year-Over-Year Change Three Months Ended  
September 30,
Net Revenue Segment EBITDA
Revenue/Segment EBITDA without acquisitions 6  % (18) %
Impact of acquisitions 45  % 51  %
Constant currency change 51  % 33  %
Foreign exchange fluctuation (1) % (1) %
Total % change 50  % 32  %
Net revenue in our Biologics segment increased by $64.4 million, or 51%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange. The net revenue increase was driven primarily by acquisitions. Excluding the effect of acquisitions, the net revenue increase was driven primarily by increased end-market demand for our U.S. drug product offerings, due to improved capacity utilization, offset slightly by decreased volume demand related to our U.S. drug substance product offering, principally due to the fiscal 2019 completion of a limited duration customer contract for non-cell line clinical manufacturing services.
Biologics segment EBITDA increased by $9 million, or 33%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange. Segment EBITDA without acquisitions decreased from the prior-year period, primarily due to decreased volume demand related to our U.S. drug substance product offering, mostly due to the fiscal 2019 completion of a limited duration customer contract for non-cell line clinical manufacturing services, partially offset by increased demand for our U.S. drug product offering.
On May 17, 2019, we acquired Paragon, which increased net revenue and Segment EBITDA on an inorganic basis in our Biologics segment by 45% and 51%, respectively, in the three months ended September 30, 2019 compared to the corresponding prior-year period.
Oral and Specialty Delivery segment
2019 vs. 2018
Factors Contributing to Year-Over-Year Change Three Months Ended  
September 30,
Net Revenue Segment EBITDA
Revenue/Segment EBITDA without acquisitions/divestitures 18  % 46  %
Impact of acquisitions 3  % 5  %
Constant currency change 21  % 51  %
Foreign currency translation impact on reporting (1) % (4) %
Total % Change 20  % 47  %
Net revenue in our Oral and Specialty Delivery segment increased by $23.7 million, or 21%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange. The increase is principally attributable to strong end-market demand for oral commercial products across the U.S. and Europe as well as an increase related to the intake of new molecules within our development and analytical services platform.
Oral and Specialty Delivery segment EBITDA increased by $9.6 million, or 51%, compared to the three months ended September 30, 2018, excluding the impact of foreign exchange. Segment EBITDA without acquisitions increased 46%, primarily due to a strong end-market demand for higher-margin oral commercial products across the U.S. and Europe, as well as an increase in the intake of new molecules within our development and analytical services platform.
On August 14, 2018, we acquired Juniper, which increased net revenue and Segment EBITDA in our Oral and Specialty Delivery segment for the three months ended September 30, 2019 by 3% and 5%, respectively, compared to the prior-year period.
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Clinical Supply Services segment
2019 vs. 2018
Factors Contributing to Year-Over-Year Change Three Months Ended  
September 30,
Net Revenue Segment EBITDA
Revenue/Segment EBITDA 11  % 11  %
Comparator revenue recognition adoption impact —  % —  %
Constant currency change 11  % 11  %
Foreign currency translation impact on reporting (2) % (4) %
Total % Change 9  % 7  %
Clinical Supply Services net revenue increased by $8.6 million, or 11%, excluding the impact of foreign exchange, compared to the three months ended September 30, 2018. The increase was driven by strong demand in our storage and distribution and manufacturing and packaging businesses.
Clinical Supply Services segment EBITDA increased by $2.2 million, or 11%, excluding the impact of foreign exchange, compared to the three months ended September 30, 2018, primarily due to strong demand in our storage and distribution and manufacturing and packaging businesses.
Liquidity and Capital Resources
Sources and Uses of Cash
Our principal sources of liquidity have been cash flows generated from operations and certain financing activities for acquisitions. The principal uses of cash are to fund operating and capital expenditures, business or asset acquisitions, interest payments on debt, the payment of deferred purchase consideration from the Catalent Indiana acquisition, the payment of the quarterly dividend on the Series A Preferred Stock, and any mandatory or discretionary principal payment on our debt. At the current stated value of the Series A Preferred Stock outstanding as of September 30, 2019, the aggregate amount of each regular quarterly dividend, if paid in cash, is $8.1 million. As of September 30, 2019, Operating Company had available a $550 million revolving credit facility that matures in May 2024 (following the execution in May 2019 of the fourth amendment (the "Fourth Amendment") to Operating Company's amended and restated credit agreement dated May 2014 (as amended, the "Credit Agreement"), the capacity of which was reduced by $6.7 million in letters of credit outstanding as of September 30, 2019. The revolving credit facility includes borrowing capacity available for letters of credit and for short-term borrowings, referred to as swing-line borrowings. As of September 30, 2019, we had no outstanding borrowings under our revolving credit facility.
We believe that our cash on hand, cash from operations, and available borrowings under our revolving credit facility will be adequate to meet our future liquidity needs for at least the next twelve months, including with respect to payment of the next $50.0 million installment on the Catalent Indiana deferred purchase consideration, due in October 2019, and our quarterly regular dividend on the Series A Preferred Stock, if paid in cash, as well as the amounts expected to become due with respect to our pending capital projects. We have no significant maturity under any of our bank or note debt until the euro-denominated term loans in our senior secured credit facility mature in May 2024. After payment of the October 2019 deferred purchase consideration installment, we will have only two remaining annual payments of $50.0 million each.
On October 29, 2015, our Board of Directors authorized a share repurchase program to use up to $100.0 million to repurchase shares of our outstanding common stock, par value $0.01 (“Common Stock”). Under the program, we are authorized to repurchase shares through open market purchases, privately negotiated transactions, or otherwise as permitted by applicable federal securities laws. There has been no purchase pursuant to this program as of September 30, 2019.
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Cash Flows
The following table summarizes our consolidated statements of cash flows:
  Three Months Ended  
September 30, 		 
(Dollars in millions) 2019 2018 $ Change
Net cash provided by/(used in):
Operating activities $ 25.2    $ 41.2    $ (16.0)  
Investing activities $ (84.9)   $ (165.8)   $ 80.9   
Financing activities $ (35.8)   $ (18.8)   $ (17.0)  
Operating Activities
For the three months ended September 30, 2019, cash provided by operating activities was $25.2 million, compared to $41.2 million for the corresponding prior-year period. Cash flow from operating activities for the three months ended September 30, 2019 decreased primarily due to a decreased in accounts receivable cash collections during the current-year three-month period compared to the corresponding prior-year period. The decrease in rate of accounts receivable cash collections is attributable to higher revenue and higher days sales outstanding in the current-year three month period compared to the prior-year period.
Investing Activities
For the three months ended September 30, 2019, cash used in investing activities was $84.9 million, compared to $165.8 million for the three months ended September 30, 2018. The decrease was primarily driven by $127.5 million of cash paid, net of cash acquired, for the acquisition of Juniper in August 2018, partially offset by increased in cash used in acquisitions of property, plant, and equipment, which totaled $73.5 million for the three months ended September 30, 2019 compared to $38.3 million in the three months ended September 30, 2018, including the July 2019 acquisition of assets from Novavax, Inc. for our gene therapy product offering.
Financing Activities
For the three months ended September 30, 2019, cash used in financing activities was $35.8 million, compared to cash used in financing activities of $18.8 million for the three months ended September 30, 2018. The cash used in financing activities during the current-year period consists of $11.9 million of dividends paid on the Series A Preferred Stock with respect to both the period from issuance through June 30, 2019 and the first quarter of fiscal 2020, $18.1 million of cash paid in lieu of equity for tax withholding obligations on equity compensation and $5.8 million paid on outstanding borrowings. The cash used in financing activities during the prior-year period consists of $450.0 million used in a partial paydown in July 2018 of the then-outstanding U.S. dollar-denominated term loan, offset in substantial part by net proceeds of $445.3 million from the Company's July 2018 public offering of shares of its Common Stock.
Guarantees and Security
Senior Secured Credit Facilities
All obligations under the Credit Agreement and the guarantees of those obligations are secured by substantially all of the following assets of Operating Company and each guarantor (Operating Company's parent entity and each of Operating Company's material domestic subsidiaries), subject to certain exceptions:
•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.
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The Senior Notes
All obligations under Operating Company's 4.75% senior unsecured notes due 2024 (the "Euro Notes"), Operating Company's 4.875% Senior Notes due 2026 (the "USD 2026 Notes"), and the USD 2027 Notes (together with the Euro Notes and the USD 2026 Notes, the "Senior Notes") are general, unsecured, and subordinated to all existing and future secured indebtedness of the guarantors to the extent of the value of the assets securing such indebtedness. Each of the Senior Notes is separately guaranteed by all of Operating Company's wholly owned U.S. subsidiaries that guarantee the senior secured credit facilities. None of the Senior Notes is guaranteed by either PTS Intermediate Holdings LLC or Catalent, Inc.
Debt Covenants
Senior Secured Credit Facilities
The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, Operating Company’s (and Operating Company’s restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans, or advances; make certain acquisitions; enter into sale and leaseback transactions; amend material agreements governing Operating Company’s subordinated indebtedness; and change Operating Company’s lines of business.
The Credit Agreement also contains change-of-control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a net leverage covenant when there is a 30% or more draw outstanding at a period end. As of September 30, 2019, Operating Company was in compliance with all material covenants under the Credit Agreement.
Subject to certain exceptions, the Credit Agreement permits Operating Company and its restricted subsidiaries to incur certain additional indebtedness, including secured indebtedness. None of Operating Company's non-U.S. subsidiaries or its Puerto Rico subsidiary is a guarantor of the loans.
Under the Credit Agreement, Operating Company's ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “Consolidated EBITDA” in the Credit Agreement). Adjusted EBITDA is based on the definitions in the Credit Agreement, is not defined under GAAP, and is subject to important limitations.
As market conditions warrant, we and our affiliates may from time to time seek to purchase our outstanding debt in privately negotiated or open-market transactions, by tender offer or otherwise. Subject to any applicable limitation contained in the Credit Agreement, any purchase made by us may be funded by the use of cash on our balance sheet or the incurrence of new secured or unsecured debt. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchase may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series. In addition, any such purchases made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which amounts may be material, and in related adverse tax consequences to us.
The Senior Notes
The several indentures governing each of the Senior Notes (collectively, the “Indentures”) contain certain covenants that, among other things, limit the ability of Operating Company and its restricted subsidiaries to incur or guarantee more debt or issue certain preferred shares; pay dividends on, repurchase, or make distributions in respect of their capital stock or make other restricted payments; make certain investments; sell certain assets; create liens; consolidate, merge, sell; or otherwise dispose of all or substantially all of their assets; enter into certain transactions with their affiliates, and designate their subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the Indentures. The Indentures also contain customary events of default including, but not limited to, nonpayment, breach of covenants, and payment or acceleration defaults in certain other indebtedness of Operating Company or certain of its subsidiaries. Upon an event of default, either the holders of at least 30% in principal amount of each of the then-outstanding Senior Notes, or the applicable Trustee under the Indentures, may declare the applicable Senior Notes immediately due and payable; or in certain circumstances, the applicable Senior Notes will become automatically immediately due and payable. As of September 30, 2019, Operating Company was in compliance with all material covenants under the Indentures.
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Geographic Allocation of Cash
As of September 30, 2019 and June 30, 2019, the amounts of cash and cash equivalents held by subsidiaries were $184.9 million and $203.9 million, respectively, out of the total consolidated cash and cash equivalents of $243.4 million and $345.4 million, respectively. These balances are dispersed across many locations around the world.

Interest Rate Risk Management
A portion of the debt used to finance our operations is exposed to interest-rate fluctuations. We may use various hedging strategies and derivative financial instruments to create an appropriate mix of fixed- and floating-rate assets and liabilities. Historically, we have used interest-rate swaps to manage the economic effect of variable-rate interest obligations associated with our floating-rate term loans so that the interest payable on the term loans effectively becomes fixed at a certain rate, thereby reducing the impact of future interest-rate changes on our future interest expense. As of September 30, 2019, we did not have any interest-rate swap agreement in place that would have the economic effect of modifying the variable-rate interest obligations associated with our floating-rate term loans.
Currency Risk Management
We are exposed to fluctuations in the euro-U.S. dollar exchange rate on our investments in our foreign operations in Europe. While we do not actively hedge against changes in foreign currency, we have mitigated the exposure of our investments in our European operations by denominating a portion of our debt in euros. At September 30, 2019, we had $744.6 million of euro-denominated debt outstanding that qualifies as a hedge of a net investment in foreign operations. Refer to Note 10 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion of net investment hedge activity in the period.
From time to time, we may use forward foreign currency exchange contracts to manage our exposure to the variability of cash flows primarily related to the foreign exchange rate changes of future foreign currency transaction costs. In addition, we may use such contracts to protect the value of existing foreign currency assets and liabilities. Currently, we do not use any forward foreign currency exchange contracts. We expect to continue to evaluate hedging opportunities for foreign currency in the future.
Contractual Obligations
There has been no significant change to our contractual obligations since our Fiscal 2019 10-K. Refer to Note 6 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion regarding our long-term obligations.
Off-Balance Sheet Arrangements
Other than operating leases and outstanding letters of credit as discussed above, we do not have any material off-balance sheet arrangements as of September 30, 2019.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to cash flow and earnings fluctuations as a result of certain market risks. These market risks primarily relate to changes in interest rates associated with our long-term debt obligations and foreign exchange rate changes.
Interest Rate Risk
The Company has historically used interest-rate swaps to manage the economic effect of variable-rate interest obligations associated with our floating-rate term loans so that the interest payable on the term loans effectively becomes fixed at a certain rate, thereby reducing the impact of future interest-rate changes on our future interest expense. As of September 30, 2019, we did not have any interest-rate swap agreement in place that would either have the economic effect of modifying the variable-rate interest obligations associated with our floating-rate term loans or would be considered an effective cash flow hedge for financial reporting purposes.
Foreign Currency Exchange Risk
By the nature of our global operations, we are exposed to cash flow and earnings fluctuations resulting from foreign exchange rate variation. These exposures are transactional and translational in nature. Since we manufacture and sell our products throughout the world, our foreign-currency risk is diversified. Principal drivers of this diversified foreign-exchange exposure include the European euro, British pound, Argentinean peso, Brazilian real, and Australian dollar. Our transactional exposure arises from the purchase and sale of goods and services in currencies other than the functional currency of our operational units. We also have exposure related to the translation of financial statements of our foreign subsidiaries into U.S. dollars, the functional currency of Operating Company. The financial statements of our operations outside the U.S. are measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of these foreign operations in U.S. dollars are accumulated as a component of accumulated other comprehensive income/(loss) utilizing period-end exchange rates. Foreign-currency transaction gains and losses calculated by utilizing weighted average exchange rates for the period are included in the statements of operations in other (income)/expense, net. Such foreign-currency transaction gains and losses include inter-company loans denominated in non-U.S. dollar currencies.
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Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any control or procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our President and Chief Executive Officer, and our Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that, as of September 30, 2019, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the first quarter,we implemented controls related to the adoption of Accounting Standards Codification 842, Leases and the related financial statement reporting. There was no other change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
In May 2019, we acquired Paragon. During the three months ended September 30, 2019, we continued to integrate Paragon into our financial reporting processes and procedures and internal control over financial reporting. As part of this process, we have undertaken efforts to significantly enhance the internal controls of Paragon, which were not subject to the internal control requirements applicable to U.S. public companies prior to our acquisition, to bring them in line with our internal controls over financial reporting, and those efforts are ongoing.


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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, we may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects, and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of any of which could be significant. We intend to vigorously defend ourselves against any such litigation and do not currently believe that the outcome of any such litigation will have a material adverse effect on our consolidated financial statements. In addition, the healthcare industry is highly regulated, and government agencies continue to scrutinize certain practices affecting government programs and otherwise.
From time to time, we receive subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. We generally respond to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred. We expect to incur costs in future periods in connection with future requests.
Item 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our Fiscal 2019 10-K, which could materially affect our business, financial condition, or future results. The risks described in such report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or operating results. Other than what was disclosed in the Special Note Regarding Forward-Looking Statements, there has been no material change to the risk factors disclosed in our Fiscal 2019 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.

Purchase of Equity Securities
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION

Not applicable.

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Item 6. EXHIBITS
Exhibits:
3.1
Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, Par Value $0.01 Per Share, of Catalent, Inc. (incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 13, 2019).
Form of 2018 OIP Performance Share Unit Agreement for U.S. Employees. † *
Form of 2018 OIP Performance Share Unit Agreement for Non-U.S. Employees. † *
Form of Management Incentive Plan for the fiscal year ending 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, 2019 formatted in inline XBRL: (i) Consolidated Statements of Operations for the Three and Months Ended September 30, 2019 and 2018; (ii) Consolidated Statements of Comprehensive Income/(Loss) for the Three Months Ended September 30, 2019 and 2018 (iii) Consolidated Balance Sheets as of September 30, 2019 and June 30, 2018; (iv) Consolidated Statement of Changes in Shareholders’ Equity/(Deficit) as of September 30, 2019; (v) Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2019 and 2018; and (vi) Notes to Unaudited Consolidated Financial Statements.
* Filed herewith
** Furnished herewith
† Represents a management contract, compensatory plan or arrangement in which directors and/or executive officers are eligible to participate.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
CATALENT, INC.
(Registrant)
Date: November 5, 2019 By:   /s/ John R. Chiminski
  John R. Chiminski
  Chief Executive Officer
Date: November 5, 2019 By:   /s/ Wetteny Joseph
  Wetteny Joseph
  Senior Vice President & Chief Financial Officer

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Exhibit 10.1
PERFORMANCE SHARE UNIT AGREEMENT
UNDER THE
CATALENT, INC.
2018 OMNIBUS INCENTIVE PLAN

(Performance Period commencing on _________ and ending on _________)

Pursuant to the Performance Share Unit Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Performance Share Unit Agreement (this “Agreement”), and the Plan, Catalent, Inc. (the “Company”) and the Participant agree as follows.
1.Definitions. Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. Capitalized terms not defined in this Agreement shall have the meaning set forth in the Plan or the Grant Notice, as applicable.
(a) Delivered RTSR Value. The term “Delivered RTSR Value” means the product of (i) the number of Delivered Shares attributable to the RTSR Performance Percentage times (ii) the Ending Stock Price (as defined in Exhibit A).
(b) Delivered RTSR Value Cap. The term “Delivered RTSR Value Cap” means three times the Target RTSR Value.
(c) Delivered Shares. The term “Delivered Shares” has the meaning set forth in Section 5 of this Agreement.
(d) Employment. The term “Employment” means the Participant’s employment as an employee of the Company or any of its Affiliates or Subsidiaries.
(e) Performance Period. The term “Performance Period” means the period commencing on _________ and ending on _________.
(f) Period of Service. The term “Period of Service” means the continuous period of the Participant’s Employment up to the Termination Date, and also includes any prior period of Employment separated by: (i) any break in Employment as a result of a leave of absence authorized by the Company or by law; and (ii) any break in Employment not authorized by the Company or by law lasting twelve (12) months or less.
(g) Plan. The term “Plan” means the 2018 Omnibus Incentive Plan, as in effect from time to time.
(h) Restrictive Covenant Violation. The term “Restrictive Covenant Violation” means the Participant’s breach of any of the Restrictive Covenants set forth in Section 10 of this Agreement or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s or any of its Affiliates’ or Subsidiaries’ vendors, suppliers, customers or employees or any similar provision applicable to or agreed to by the Participant, all to the extent permitted by law.
(i) Retirement. The term “Retirement” means a Termination (other than a Termination when grounds existed for a Termination for Cause at the time thereof) initiated by the Participant that occurs on or after the date on which the sum of the Participant’s age and Period of Service (calculated in months)


equals sixty-five (65) years, so long as the Participant is at least fifty-five (55) years old and provides at least six (6) months’ notice of his or her intention to retire.
(j) Target RTSR Value. The term “Target RTSR Value” means the product of (i) the RTSR Target Number of Performance Share Units provided in the Grant Notice times (ii) the closing price per share of Common Stock on the Date of Grant set forth in the Grant Notice.
(k) Termination Date. The term “Termination Date” means the date upon which the Participant incurs a Termination for any reason
2.Grant of Performance Share Units. Subject to the terms and conditions set forth in this Agreement, the Grant Notice and the Plan, for good and valuable consideration, the Company hereby grants to the Participant the EPS and RTSR Target Number of Performance Share Units provided in the Grant Notice.
3.Vesting. Subject to the terms and conditions contained in this Agreement, the Grant Notice and the Plan, the Performance Share Units shall vest as provided in Exhibit A, except as otherwise set forth in Section 6 of this Agreement. With respect to any Performance Share Unit, the period during which such Performance Share Unit remains subject to vesting requirements shall be its Restricted Period.
4.Dividend Equivalents. The Company will credit Performance Share Units with dividend equivalent payments following the payment by the Company of dividends on shares of Common Stock. The Company will provide such dividend equivalents in shares of Common Stock having a Fair Market Value per Performance Share Unit, as of the date of such dividend payment, equal to the per-share amount of such applicable dividend, and shall be payable at the same time as (and only if) the Performance Share Units are settled in accordance with Section 5 below. In the event that any Performance Share Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Performance Share Units.
5.Settlement of Performance Share Units. Following expiration of the Restricted Period with respect to any outstanding Performance Share Unit not previously forfeited in accordance with Exhibit A or Section 6 below, or, as applicable with respect to any Converted RSUs (as defined in Exhibit A), the Company shall issue to the Participant by no later than the ninetieth (90th) day following the end of the Performance Period one share of Common Stock for such Performance Share Unit or Converted RSU (each, a “Delivered Share” and, collectively, the “Delivered Shares”). Notwithstanding the foregoing, (a) the Performance Share Units, or, as applicable, the Converted Units may be settled at a different time in the circumstances set forth in Section 6(b) and Section 6(d) below, as well as in Section 2(b) of Exhibit A, and (b) in the event that the Delivered RTSR Value exceeds the Delivered RTSR Value Cap, the number of Delivered Shares attributable to the RTSR Performance Percentage shall be reduced to the level at which the Delivered RTSR Value is as close as possible to, but does not exceed, the Delivered RTSR Value Cap and the Participant shall have no right to receive any shares of Common Stock that relate to such required reduction in the Delivered Shares.
6.Treatment on Termination.
(a) Subject to clauses (b) – (d) below, if the Participant incurs a Termination prior to the Regular Vesting Date (as defined on Exhibit A), (i) the Participant’s Performance Share Units shall cease


vesting and (ii) the Participant shall forfeit all unvested Performance Share Units to the Company for no consideration as of the Termination Date.
(b) Death. If the Participant incurs a Termination due to death, the EPS Target Number of Performance Share Units and the RTSR Target Number of Performance Share Units or the number of Converted RSUs to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, become fully vested, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration. Settlement of such vested Performance Share Units (or Converted RSUs) shall be made within ninety (90) days of the date of the Participant’s death, or at such later time as permitted under Section 409A.
(c) Disability/Retirement. If the Participant incurs a Termination due to Disability or Retirement, the number of Performance Share Units as determined in accordance with Exhibit A, or the number of Converted RSUs to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, continue to vest as provided in Exhibit A as if the Participant had continued Employment through the Regular Vesting Date, subject to the Participant’s compliance with the restrictive covenants set forth in Section 10 of this Agreement and the Participant’s execution, delivery, and non-revocation of a waiver and release of claims in favor of the Company and its Affiliates and Subsidiaries in a form prescribed by the Company on or prior to the 60th day following the Termination Date; provided, however, in the case of a Termination due to Retirement, the number of Performance Share Units, if any, that shall vest shall be the number determined in accordance with Exhibit A and then multiplied by a fraction, the numerator of which is equal to the number of days between and including the first day of the Performance Period and the date the Participant incurs a Termination due to Retirement and the denominator of which is 1095 (the “Retirement Fraction”). Upon the Regular Vesting Date, the Restricted Period shall expire with respect to the Retirement Fraction of the Performance Share Units (or the Converted Units), and the Participant will immediately forfeit the remaining fraction of the unvested Performance Share Units (or the Converted Units) to the Company for no consideration.
(d) Change in Control. In the event of a Change in Control, if the Participant incurs a Termination by the Service Recipient without Cause prior to the Regular Vesting Date, the number of Converted RSUs shall, to the extent not then vested or previously forfeited or cancelled, become fully vested and the Restricted Period shall expire. Subject to Section 14(t)(i) and (ii) of the Plan, settlement of such Converted RSUs shall be made within ninety (90) days of the date of the Participant’s Termination.
7.Non-Transferability. The Performance Share Units are not transferable by the Participant except to Permitted Transferees in accordance with Section 14(b) of the Plan. Whenever the word “Participant” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to executors, the administrators or the person or persons to whom the Performance Share Units may be transferred by will or by the laws of descent and distribution in accordance with Section 14(b) of the Plan, the word “Participant” shall be deemed to include such person or persons. Except as otherwise provided in this Agreement or the Plan, no assignment or transfer of the Performance Share Units, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right in this Agreement or the Plan whatsoever, but immediately upon such assignment or transfer the Performance Share Units shall be forfeited and become of no further effect.


8.Rights as Stockholder. The Participant or a Permitted Transferee of the Performance Share Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Performance Share Unit unless and until the Participant becomes the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant becomes the holder of record or the beneficial owner thereof.
9.Repayment of Proceeds; Clawback Policy. If a Restrictive Covenant Violation occurs or the Company discovers after a Termination that grounds existed for Cause at the time thereof, then the Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the Performance Share Units and any shares of Common Stock issued in respect thereof. Any reference in this Agreement to grounds existing for a Termination for Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or termination with, Cause. The Performance Share Units and all proceeds thereof shall be subject to the Company’s Clawback Policy (to comply with applicable laws or with the Company’s Corporate Governance Guidelines or other similar requirements), as in effect from time to time, to the extent the Participant is a director or “officer” as defined in Rule 16a‑1(f) promulgated under the Exchange Act.
10.Restrictive Covenants.
(a) To the extent that the Participant is a party to an employment or similar agreement with the Company or one of its Affiliates or Subsidiaries containing non-competition, non-solicitation, non-interference or confidentiality restrictions (or two or more such restrictions), those restrictions and related enforcement provisions under such agreement shall govern and the following provisions of this Section 10 shall not apply.
(b) Competitive Activity. To the extent a Participant (i) lives in a jurisdiction where restrictive covenants are void as against public policy or (ii) has a business title below the level of “director” and receives base compensation of less than $100,000 (or its local currency equivalent) per year, Section 10(b) of this Agreement shall be considered deleted from and therefore not part of this Agreement.
i. The Participant shall be deemed to have engaged in “Competitive Activity” if, during the period commencing on the Date of Grant and ending on the date that is 12 months after the Termination Date (the “Restricted Activity Period”), the Participant, whether on the Participant’s own behalf or on behalf of or in conjunction with any other Person (as defined below), directly or indirectly, violates any of the following prohibitions:
(I) During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any individual, person, firm, part­nership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly, solicit or assist in soliciting in competition with the Company or any of its Subsidiaries or Affiliates, the business of any client or prospective client:
1.with whom the Participant had personal contact or dealings on behalf of the Company or any of its Subsidiaries 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.
(II) During the Restricted Activity Period, the Participant will not directly or indirectly:
1.engage in any business that competes with the business of the Company or any of its Subsidiaries 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.
Notwithstanding anything to the contrary in this Agreement, the Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in any Competitive Business that are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Participant (i) is not a controlling person of, or a member of a group that controls, such Person and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such Person. Any such qualifying ownership shall not be deemed to be


engaging in Competitive Activity or a Restrictive Covenant Violation for purposes of this Agreement.
(III) During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
1.solicit or encourage any employee of the Company or any of its Subsidiaries 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.
(IV) During the Restricted Activity Period, the Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company or any of its Subsidiaries or Affiliates any consultant then under contract with the Company or any of its Subsidiaries or Affiliates.
ii.It is expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 10(b) to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against the Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained in this Section 10(b).
(c) Confidentiality.
(i) The Participant will not at any time (whether during or after the Participant’s Employment) (x) retain or use for the benefit, purposes or account of the Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company and its Affiliates and Subsidiaries (other than its professional advisors who are bound by confidentiality obligations), any non-public, proprietary or confidential information (including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, and government and regulatory activities and approvals) concerning the past, current, or future business, activities, and operations of the Company, its Subsidiaries or Affiliates, and/or any third party that has disclosed or


provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii) Notwithstanding anything to the contrary in Section 10(c)(i), “Confidential Information” shall not include any information that (w) is or becomes generally available to the public other than as a result of a breach of this Section 10(c); (x) is already known by the recipient of the disclosed information at the time of disclosure as evidenced by the recipient’s written records, (y) becomes available to the recipient of the disclosed information on a non-confidential basis from a source that is entitled to disclose it on a non-confidential basis, or (z) was or is independently developed by or for the recipient of the information without reference to Confidential Information, as evidenced by the recipient’s written records.
(iii) Except as required by law, the Participant will not disclose to anyone, other than the Participant’s immediate family and legal or financial or tax advisors or lender, each of whom the Participant agrees to instruct not to disclose, the existence or contents of this Agreement (unless this Agreement shall be publicly available as a result of a regulatory filing made by the Company or one of its Affiliates or Subsidiaries); provided, that the Participant may disclose to any prospective future employer the provisions of Section 10 of this Agreement provided such prospective future employer agrees to maintain the confidentiality of such terms.
(iv) Upon Termination, the Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including, without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name, or other source indicator) owned or used by the Company, its Subsidiaries, or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters, and other data) in the Participant’s possession or control (including any of the foregoing stored or located in the Participant’s office, home, laptop, or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company or one of its Affiliates or Subsidiaries, except that the Participant may retain only those portions of any personal notes, notebooks, and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which the Participant is or becomes aware.
(v) Notwithstanding the foregoing, pursuant to 18 U.S.C. § 1833(b), the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties to this Agreement also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. 18 U.S.C. § 1833(b) states: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets where such disclosure is expressly allowed by 18 U.S.C. § 1833(b).
d. Equitable Relief. Notwithstanding the remedies set forth in Section 9 above and notwithstanding any other remedy that would otherwise be available to the Company at law or in equity,


the Company and the Participant agree and acknowledge that if an actual or threatened Restrictive Covenant Violation occurs, the Company will be entitled to an injunction and/or other equitable relief restraining the Participant from the Restrictive Covenant Violation without the necessity of posting a bond or proving actual damages.
11.Tax Withholding.
a.Responsibility for Taxes. The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that neither the Company nor the Service Recipient (1) makes any representation or undertaking regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Share Units, including, but not limited to, the grant, vesting or settlement of the Performance Share Units, the subsequent sale of shares of Common Stock acquired pursuant to such settlement and the receipt of any dividend or any dividend equivalent; and (2) commits to or is under any obligation to structure the terms of the grant or any aspect of the Performance Share Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company or the Service Recipient (or former Service Recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
b.Satisfaction of Withholding Obligations. Prior to any relevant taxable or tax withholding event, as applicable, the Participant shall make adequate arrangements satisfactory to the Company or the Service Recipient, as appropriate, to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and the Service Recipient, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by any of the means described in the Plan or by such other means or method as the Committee in its sole discretion and without notice to the Participant deems appropriate; provided, however, that, if the Participant is subject to Section 16 of the Exchange Act, then the Participant may elect, in advance of any tax withholding event, to satisfy the amount of all required Tax-Related Items in respect of the Performance Share Units in cash, and, in the absence of Participant’s timely election, the Company will withhold shares of Common Stock to satisfy any withholding obligations upon the relevant tax withholding event.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. If the maximum or another rate that is higher than the Participant's actual rate is used, the Company or the Service Recipient may refund any over-withheld amount to the Participant in cash (with no entitlement to the Common Stock equivalent), or, if not refunded, the Participant may seek a refund from the local tax authorities. If the obligation for Tax-Related Items is satisfied by withholding shares of Common Stock, the Participant shall be deemed for tax purposes to have been issued the full number of shares of Common Stock


subject to the vested Performance Share Units, notwithstanding that a portion of the shares of Common Stock is held back solely for the purpose of paying the Tax-Related Items.
Finally, the Participant shall pay to the Company or the Service Recipient any amount of Tax-Related Items that the Company or the Service Recipient may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares of Common Stock or the proceeds of the sale of shares of Common Stock, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
12.Notice. Every notice or other communication relating to this Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as provided in this Agreement; provided, that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted, or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.
13.No Right to Continued Employment. Neither the Plan nor this Agreement nor the granting of the Performance Share Units that are the subject of this Agreement shall be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any of its Affiliates or Subsidiaries. Further, the Company, or, if different, the Service Recipient, may at any time dismiss the Participant or discontinue any consulting relationship free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided in this Agreement.
14.Nature of Grant. In accepting the grant of the Performance Share Units, the Participant acknowledges, understands and agrees that:
a.the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;
b.the grant of the Performance Share Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Share Units, or benefits in lieu of Performance Share Units, even if Performance Share Units have been granted in the past;
c.all decisions with respect to future Performance Share Units or other grants, if any, will be at the sole discretion of the Company;


d.neither the Performance Share Unit grant nor the Participant’s participation in the Plan shall create any right to employment or be interpreted as forming an employment or service contract with the Company, the Service Recipient or any Affiliate or Subsidiary of the Company or interfere with the ability of the Company, the Service Recipient or any Affiliate or Subsidiary of the Company, as applicable, to terminate the Participant’s employment or service contract (if any), to the extent otherwise permitted by law or any applicable agreement other than this Agreement;
e.unless otherwise agreed with the Company, none of the Performance Share Units, the shares of Common Stock subject to the Performance Share Units, and the income and value of same is granted as consideration for, or in connection with, the service the Participant may provide as a director of the Company, the Service Recipient, or any Affiliate or Subsidiary of the Company;
f.the Participant is voluntarily participating in the Plan;
g.none of the Performance Share Units, the shares of Common Stock subject to the Performance Share Units, and the income and value of same is intended to replace any pension right or other form of compensation;
h.none of the Performance Share Units, the shares of Common Stock subject to the Performance Share Units, and the income and value of same is part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, or end-of-service payments, any bonus, holiday pay, long-service award, pension, or retirement or welfare benefit, or any similar payment;
i.the future value of the underlying shares of Common Stock is unknown, indeterminable and cannot be predicted with certainty;
j.no claim or entitlement to compensation or damages shall arise from any forfeiture of the Performance Share Units resulting from a Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of any employment-related law in any jurisdiction applicable to the Participant’s employment or the terms of the Participant’s employment agreement, if any);
k.unless otherwise provided in the Plan or by the Company in its discretion, neither the Performance Share Units nor any benefit evidenced by this Agreement creates any entitlement either (i) to have the Performance Share Units or any such benefit transferred to or assumed by another company or (ii) to be exchanged, cashed out, or substituted for, in connection with any corporate transaction affecting the Common Stock; and
l.the Participant acknowledges and agrees that none of the Company, the Service Recipient, and any Affiliate or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency, if any, and the United States Dollar that may affect the value of the Performance Share Units or of any amount due to the Participant pursuant to the settlement of the Performance Share Units or the subsequent sale of any share of Common Stock acquired upon settlement.
15.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendation regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying shares of Common Stock. The Participant is hereby advised to consult with the Participant’s own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan.


16.Data Privacy. The Participant hereby explicitly and without reservation consents to the collection, use, and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Performance Share Unit grant material by and among, as applicable, the Service Recipient, the Company, and its other Affiliates or Subsidiaries for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the Plan.
The Participant understands that the Service Recipient, the Company, and its other Affiliates or Subsidiaries may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any share of Common Stock or directorships held in the Company, or details of all Performance Share Units or any other entitlement to shares of Common Stock awarded, canceled, exercised, vested, unvested, or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering, and managing the Plan.
The Participant understands that Data will be transferred to Morgan Stanley Smith Barney LLC, or such other third-party administrator or stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration, and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipient of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company, Morgan Stanley Smith Barney LLC, and any other possible recipient that may assist the Company (presently or in the future) with implementing, administering, and managing the Plan to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer, and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendment to Data or refuse or withdraw the consents in this Section 16, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing on a purely voluntary basis the consents described in this Agreement. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s Employment or service with the Service Recipient will not be adversely affected; the only adverse consequence of refusing or withdrawing the Participant’s consent is that the Company may be unable to grant Performance Share Units or other awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
The Participant understands that the Company may rely on a different legal basis for the collection, processing, and/or transfer of Data either now or in the future and/or request the Participant to provide another data privacy consent. If applicable and upon request of the Company or the Service Recipient, the Participant agrees to provide an executed acknowledgment or data privacy consent (or any other acknowledgments, agreements, or consents) to the Company and/or the Service Recipient that the Company and/or the Service Recipient may deem necessary to obtain under the data


privacy laws in the Participant’s country, either now or in the future. The Participant understands that the Participant may be unable to participate in the Plan if the Participant fails to execute any such acknowledgment, agreement, or consent requested by the Company and/or the Service Recipient.
17.Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators, successors, and, to the extent permitted, assigns or other Permitted Transferees of the parties to this Agreement.
18.Waiver and Amendments. Subject to Section 13(b) of the Plan, the Committee may waive any condition or right under, amend any term of, or alter, suspend, discontinue, cancel, or terminate, this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation, or termination that would materially and adversely affect the rights of the Participant under this Agreement shall not to that extent be effective without the consent of the Participant. No waiver by either of the parties hereto of their rights under this Agreement shall be deemed to constitute a waiver with respect to any subsequent occurrence or transaction under this Agreement unless such waiver specifically states that it is to be construed as a continuing waiver.
19.Governing Law; Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of law. For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the federal and state courts located in the State of New Jersey, and hereby waive any objection to proceeding in such jurisdiction, including any objection regarding an inconvenient forum.
20. Plan. The terms and conditions of the Plan are incorporated in this Agreement by reference. In the event of a conflict or inconsistency between the terms and conditions of the Plan and the terms and conditions of this Agreement, the Plan shall govern and control.
21.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
22.Imposition of Other Requirements. The Company reserves the right to impose any other requirements on the Participant’s participation in the Plan, on the Performance Share Units and on any share of Common Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreement or undertaking that may be necessary to accomplish the foregoing


23.Section 409A of the Code. It is intended that the Performance Share Units be exempt from or compliant with Section 409A of the Code (together with any Department of Treasury regulation and other interpretive guidance issued thereunder, including without limitation any such regulation or other guidance that may be issued after the date hereof, “Section 409A”) and this Agreement shall be interpreted, construed, and operated to reflect such intent. However, notwithstanding any other provision of the Plan, the Grant Notice, or this Agreement, if at any time the Committee determines that the Performance Share Units (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify the Participant or any other person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other action, as the Committee determines is necessary or appropriate either for the Performance Share Units to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
24.Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to the insider trading restrictions and/or market abuse laws of one or more countries that may affect the Participant’s ability to accept, acquire, sell, or otherwise dispose of shares of Common Stock, rights to shares of Common Stock (e.g., Performance Share Units), or rights linked to the value of shares of Common Stock under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Participant placed before the Participant possessed inside information. Further, the Participant could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees, and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restriction that may be imposed under any applicable Company securities trading policy. The Participant acknowledges that Participant is responsible for complying with any applicable restrictions and is encouraged to speak to Participant’s own personal legal advisor for further details regarding any insider trading and/or market abuse laws applicable to the Participant.
25.Entire Agreement; Miscellaneous. This Agreement, the Grant Notice, and the Plan constitute the entire understanding between the Participant and the Company regarding the Performance Share Units. This Agreement, the Grant Notice, and the Plan supersede any prior agreements, commitments, or negotiations concerning the Performance Share Units. The headings used in this Agreement, including without limitation Exhibit A, are for convenience only and shall not affect its interpretation.
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Exhibit A to Performance Share Unit Agreement
1. Vesting. Except as otherwise expressly provided in Section 6 of the Agreement, provided the Participant has not incurred a Termination on or prior to the Regular Vesting Date, the Performance Share Units granted under the Grant Notice to which this Agreement relates shall vest upon the date on which the Committee determines and certifies, as applicable, the attainment level of both the EPS Performance Percentage (as defined below) and the RTSR Performance Percentage (as defined below)(the “Regular Vesting Date”) with respect to the period commencing on _________ and ending on _________ (the “Performance Period”), in each case as of the last day of the Performance Period, which determination shall be made no later than the seventy-fifth (75th) day following the end of the Performance Period. As determined by the Committee, the number of Performance Share Units, if any, in which the Participant vests shall be equal to the sum of (a) the product of (i) the EPS Target Number of Performance Share Units (as set forth in the Grant Notice) and (ii) the EPS Performance Percentage, plus (b) the product of (i) the RTSR Target Number of Performance Share Units (as set forth in the Grant Notice) and (ii) the RTSR Performance Percentage. Upon the Regular Vesting Date, the Restricted Period shall expire and any vested Performance Share Units shall be settled in accordance with Section 5 of the Agreement. Any Performance Share Units that do not vest in accordance with this Exhibit A (to the extent not previously forfeited pursuant to Section 6 of the Agreement) shall, effective as of the Regular Vesting Date, be forfeited by the Participant without consideration.
2. Change in Control. Notwithstanding Section 1 of this Exhibit A, the following shall apply in connection with a Change in Control:
(a) In the event of a Change in Control prior to the last day of the Performance Period, to the extent the stock of the acquiring or successor entity is publicly traded and the Performance Shares Units are assumed, continued, or substituted, the Performance Share Units shall be converted, immediately prior to the Change in Control, to a number of time-based Restricted Stock Units equal to the sum of (A) the EPS Target Number of Performance Share Units, and (B) either of the following (1) if the Change in Control occurs in the first year of the Performance Period, the RTSR Target Number of Performance Share Units, or (2) if the Change in Control occurs after the first year of the Performance Period, a number of Performance Share Units that would become eligible to vest based on the attainment level of the Relative Total Shareholder Return Performance Goal calculated as of a shortened Performance Period that ends on the date immediately preceding the date of the Change in Control (the “Converted RSUs”). The Converted RSUs shall be eligible to vest based on the Participant’s continued Employment through the Regular Vesting Date (which, for purposes of the Converted RSUs, shall be the last day of the Performance Period), except as otherwise provided in Section 6(b) – (d) of the Agreement. Provided that the Participant has not incurred a Termination prior to the Regular Vesting Date (subject to Section 6(b) – (d) of the Agreement), the Restricted Period with respect to the Converted RSUs shall expire upon the Regular Vesting Date and any vested Converted RSUs shall be settled in accordance with Section 5 of the Agreement.
(b) In the event of a Change in Control prior to the last day of the Performance Period, to the extent the acquiring or successor entity does not assume, continue, or substitute the Performance Share Units, or the stock of the acquiring or successor entity is not publicly traded, the Performance Share Units shall be replaced with a right to receive, within thirty (30) days following the date of the Change in Control, a cash payment equal to the sum of (i) the product of (A) the Per Share Cash Amount (as defined below), multiplied by (B) the EPS Target Number of Performance Share Units, and (ii) the product of (A) the Per Share Cash Amount, multiplied by (B) either (1) if the Change in Control occurs in the first year of the Performance Period, the RTSR Target Number of Performance Share Units, or (2) if the Change in


Control occurs after the first year of the Performance Period, a number of Performance Share Units that would become eligible to vest based on the attainment of the Relative Total Shareholder Return Performance Goal calculated as of a shortened Performance Period that ends on the date immediately preceding the date of the Change in Control. The “Per Share Cash Amount” for purposes of this Section 2(b) means an amount equal to the sum of (I) the average of the closing price of the Common Stock for the 20 trading days immediately preceding the date of the Change in Control and (II) any cash dividend payable on a share of Common Stock during the 20 trading-day period described in the foregoing. If settlement of the Performance Share Units may not be made within the period specified in this Section 2(b) due to the limitation in Section 14(t)(iii)(A) of the Plan, such settlement shall be made in accordance with Section 5 of the Agreement.
(c) In the event of a Change in Control on or after the last day of the Performance Period but prior to the settlement of such Performance Share Units in shares of Common Stock in accordance with this Agreement, the Participant shall receive whatever a stockholder of shares of Common Stock equal in number to the settlement amount (determined in accordance with Section 1 of this Exhibit A) would have been eligible to receive due to such Change in Control, with such settlement occurring in accordance with Section 5 of the Agreement.
(d) Any Performance Share Unit that does not vest or become Converted RSUs, as applicable, shall immediately be forfeited without any further action by the Company or the Participant and without any payment of consideration therefor.
3. Earnings Per Share Performance Goal
For purposes of this Agreement:
“Cumulative EPS” means the sum of the EPS (as defined below) for each fiscal year of the Company or portion thereof in the Performance Period;
“Earnings Per Share” or “EPS” for any period means the Company’s “adjusted net income” for such period, as publicly reported by the Company, divided by the average number of fully diluted shares of Common Stock outstanding in such period, as publicly reported by the Company; and
“EPS Performance Percentage” means the percentage as set forth in the below table, representing the performance level of attainment of the Earnings Per Share performance goal set forth in the below table.
Performance Level Cumulative EP Percent of Target Goal EPS Performance Percentage
Below Threshold Below $X.XX Below 75% 0%
Threshold $ X.XX 75% 50%
Between $X.XX and $X.XX Linearly interpolate between 50% and 100%
Target $X.XX 100% 100%
Between $X.XX and $X.XX Linearly interpolate between 100% and 200%
Maximum $X.XX (or higher) 125% 200%



4. Relative Total Shareholder Return Performance Goal
For purpose of this Agreement:
“Beginning Stock Price” means the average of the closing prices of the Common Stock or the shares of the Peer Group (as defined below), as applicable, for the 20 trading days ending on the trading date immediately preceding the first day of the Performance Period;
“Ending Stock Price” means the average of the closing prices of the Common Stock or the shares of the Peer Group, as applicable, for the 20 trading days up to and including (if a trading day) the last day of the Performance Period;
“Peer Group” means the companies that comprise the S&P Composite 1500 Health Care Index. Companies that are members of the index at the beginning of the Performance Period that subsequently cease to be listed in the index as a result of acquisitions, mergers, or combinations involving such companies shall be excluded from the Peer Group. Companies that are members of the index at the beginning of the Performance Period that subsequently file for bankruptcy during the Performance Period shall be treated as worst performers for purposes of the Relative Total Shareholder Return Performance Goal calculation;
“Relative Total Shareholder Return” or “RTSR” means the quotient equal to (i) the Ending Stock Price minus the Beginning Stock Price plus assumed reinvestment as of the ex-dividend date of ordinary and extraordinary cash dividends, if any, paid by the applicable issuer during the Performance Period, divided by (ii) the Beginning Stock Price. Relative Total Shareholder Return expressed as a formula shall be as follows:
Relative Total Shareholder Return = (Ending Stock Price –
Beginning Stock Price +
Beginning Stock Price
The stock prices and cash dividend payments reflected in the calculation of Total Shareholder Return shall be adjusted to reflect stock splits during the Performance Period, and dividends shall be assumed to be reinvested in the relevant issuer’s shares for purposes of the calculation of Total Shareholder Return; and
“RTSR Performance Percentage” means the percentage as set forth in the below table, representing the performance level of attainment of the Relative Total Shareholder Return Performance Goal set forth in the below table.
RTSR Percentile Rank Relative to RTSR of Peer Group Performance Level RTSR Performance Percentage
Below 25th Percenti
Below Threshold 0%
25th Percentil
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 Ab
Maximum 150%



Exhibit 10.2
PERFORMANCE SHARE UNIT AGREEMENT FOR NON-U.S. PARTICIPANTS
UNDER THE
CATALENT, INC.
2018 OMNIBUS INCENTIVE PLAN
(Performance Period commencing on _________ and ending on _________)
Pursuant to the Performance Share Unit Grant Notice for Non-U.S. Participants (the “Grant Notice”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Performance Share Unit Agreement for Non-U.S. Participants, including any special terms and conditions for the Participant’s country set forth in Appendix 1 attached hereto (collectively, along with Exhibit A, this “Agreement”), and the Plan, Catalent, Inc. (the “Company”) and the Participant agree as follows.
1.Definitions. Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. Capitalized terms not defined in this Agreement shall have the meaning set forth in the Plan or the Grant Notice, as applicable.
a.Delivered RTSR Value. The term “Delivered RTSR Value” means the product of (i) the number of Delivered Shares attributable to the RTSR Performance Percentage times (ii) the Ending Stock Price (as defined in Exhibit A).
b.Delivered RTSR Value Cap. The term “Delivered RTSR Value Cap” means three times the Target RTSR Value.
c.Delivered Shares. The term “Delivered Shares” has the meaning set forth in Section 5 of this Agreement.
d.Employment. The term “Employment” means the Participant’s employment as an employee of the Company or any of its Affiliates or Subsidiaries.
e.Performance Period. The term “Performance Period” means the period commencing on _________ and ending on _________.
f.Period of Service. The term “Period of Service” means the continuous period of the Participant’s Employment up to the Termination Date, and also includes any prior period of Employment separated by: (i) any break in Employment as a result of a leave of absence authorized by the Company or by law; and (ii) any break in Employment not authorized by the Company or by law lasting twelve (12) months or less.
g.Plan. The term “Plan” means the 2018 Omnibus Incentive Plan, as in effect from time to time.
h.Restrictive Covenant Violation. The term “Restrictive Covenant Violation” means the Participant’s breach of any of the Restrictive Covenants set forth in Section 10 of this Agreement or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s or any of its Affiliates’ or Subsidiaries’ vendors, suppliers, customers or employees or any similar provision applicable to or agreed to by the Participant, all to the extent permitted by law.


i.Retirement. The term “Retirement” means a Termination (other than a Termination when grounds existed for a Termination for Cause at the time thereof) initiated by the Participant that occurs on or after the date on which the sum of the Participant’s age and Period of Service (calculated in months) equals sixty-five (65) years, so long as the Participant is at least fifty-five (55) years old and provides at least six (6) months’ notice of Participant’s intention to retire.
j.Target RTSR Value. The term “Target RTSR Value” means the product of (i) the RTSR Target Number of Performance Share Units provided in the Grant Notice times (ii) the closing price per share of Common Stock on the Date of Grant set forth in the Grant Notice.
k.Termination Date. The term “Termination Date” means the date upon which the Participant incurs a Termination for any reason.
2.Grant of Performance Share Units. Subject to the terms and conditions set forth in this Agreement, the Grant Notice and the Plan, for good and valuable consideration, the Company hereby grants to the Participant the EPS and RTSR Target Number of Performance Share Units provided in the Grant Notice.
3.Vesting. Subject to the terms and conditions contained in this Agreement, the Grant Notice and the Plan, the Performance Share Units shall vest as provided in Exhibit A, except as otherwise set forth in Section 6 of this Agreement. With respect to any Performance Share Unit, the period during which such Performance Share Unit remains subject to vesting requirements shall be its Restricted Period.
4.Dividend Equivalents. The Company will credit Performance Share Units with dividend equivalent payments following the payment by the Company of dividends on shares of Common Stock. The Company will provide such dividend equivalents in shares of Common Stock having a Fair Market Value per Performance Share Unit, as of the date of such dividend payment, equal to the per-share amount of such applicable dividend, and shall be payable at the same time as (and only if) the Performance Share Units are settled in accordance with Section 5 below. In the event that any Performance Share Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Performance Share Units.
5.Settlement of Performance Share Units. Following expiration of the Restricted Period with respect to any outstanding Performance Share Unit not previously forfeited in accordance with Exhibit A or Section 6 below, or, as applicable with respect to any Converted RSUs (as defined in Exhibit A), the Company shall issue to the Participant by no later than the ninetieth (90th) day following the end of the Performance Period one share of Common Stock for such Performance Share Unit or Converted RSU (each, a “Delivered Share” and, collectively, the “Delivered Shares”). Notwithstanding the foregoing, (a) the Performance Share Units, or, as applicable, the Converted Units may be settled at a different time in the circumstances set forth in Section 6(b) and Section 6(d) below, as well as in Section 2(b) of Exhibit A, and (b) in the event that the Delivered RTSR Value exceeds the Delivered RTSR Value Cap, the number of Delivered Shares attributable to the RTSR Performance Percentage shall be reduced to the level at which the Delivered RTSR Value is as close as possible to, but does not exceed, the Delivered RTSR Value Cap and the Participant shall have no right to receive any shares of Common Stock that relate to such required reduction in the Delivered Shares.


6.Treatment on Termination.
a.Subject to clauses (b) – (d) below, if the Participant incurs a Termination prior to the Regular Vesting Date (as defined on Exhibit A), (i) the Participant’s Performance Share Units shall cease vesting and (ii) the Participant shall forfeit all unvested Performance Share Units to the Company for no consideration as of the Termination Date.
b.Death. If the Participant incurs a Termination due to death, the EPS Target Number of Performance Share Units and the RTSR Target Number of Performance Share Units or the number of Converted RSUs to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, become fully vested, the Restricted Period shall expire and any unvested Performance Share Units will immediately be forfeited to the Company by the Participant for no consideration. Settlement of such vested Performance Share Units (or Converted RSUs) shall be made within ninety (90) days of the date of the Participant’s death, or at such later time as permitted under Section 409A.
c.Disability/Retirement. If the Participant incurs a Termination due to Disability or Retirement, the number of Performance Share Units as determined in accordance with Exhibit A, or the number of Converted RSUs, to the extent applicable, shall, to the extent not then vested or previously forfeited or cancelled, continue to vest as provided in Exhibit A, as if the Participant had continued Employment through the Regular Vesting Date, subject to the Participant’s compliance with the restrictive covenants set forth in Section 10 of this Agreement and the Participant’s execution, delivery and non-revocation of a waiver and release of claims in favor of the Company and its Affiliates and Subsidiaries in a form prescribed by the Company on or prior to the 60th day following the Termination Date; provided, however, in the case of a Termination due to Retirement, the number of Performance Share Units, if any, that shall vest shall be the number determined in accordance with Exhibit A and then multiplied by a fraction, the numerator of which is equal to the number of days between and including the first day of the Performance Period and the date the Participant incurs a Termination due to Retirement and the denominator of which is 1095 (the “Retirement Fraction”). Upon the Regular Vesting Date, the Restricted Period shall expire with respect to the Retirement Fraction of the Performance Share Units (or the Converted Units), and the Participant will immediately forfeit the remaining fraction of the unvested Performance Share Units (or the Converted Units) to the Company for no consideration.
d.Change in Control. In the event of a Change in Control, if the Participant incurs a Termination by the Service Recipient without Cause prior to the Regular Vesting Date, the number of Converted RSUs shall, to the extent not then vested or previously forfeited or cancelled, become fully vested and the Restricted Period shall expire. Subject to Section 14(t)(i) and (ii) of the Plan, settlement of such Converted RSUs shall be made within ninety (90) days of the date of the Participant’s Termination.


7.Non-Transferability. The Performance Share Units are not transferable by the Participant except to Permitted Transferees in accordance with Section 14(b) of the Plan. Whenever the word “Participant” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to executors, the administrators or the person or persons to whom the Performance Share Units may be transferred by will or by the laws of descent and distribution in accordance with Section 14(b) of the Plan, the word “Participant” shall be deemed to include such person or persons. Except as otherwise provided in this Agreement or the Plan, no assignment or transfer of the Performance Share Units, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right in this Agreement or the Plan whatsoever, but immediately upon such assignment or transfer the Performance Share Units shall be forfeited and become of no further effect.
8. Rights as Stockholder. The Participant or a Permitted Transferee of the Performance Share Units shall have no rights as a stockholder with respect to any share of Common Stock underlying a Performance Share Unit unless and until the Participant becomes the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant becomes the holder of record or the beneficial owner thereof.
9.Repayment of Proceeds; Clawback Policy. If a Restrictive Covenant Violation occurs or the Company discovers after a Termination that grounds existed for Cause at the time thereof, then the Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the Performance Share Units and any shares of Common Stock issued in respect thereof. Any reference in this Agreement to grounds existing for a Termination for Cause shall be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or termination with, Cause. The Performance Share Units and all proceeds thereof shall be subject to the Company’s Clawback Policy (to comply with applicable laws or with the Company’s Corporate Governance Guidelines or other similar requirements), as in effect from time to time, to the extent the Participant is a director or “officer” as defined in Rule 16a-1(f) promulgated under the Exchange Act.
10.Restrictive Covenants.
a.To the extent that the Participant is a party to an employment or similar agreement with the Company or one of its Affiliates or Subsidiaries containing non-competition, non-solicitation, non- interference or confidentiality restrictions (or two or more such restrictions), those restrictions and related enforcement provisions under such agreement shall govern and the following provisions of this Section 10 shall not apply.
b.Competitive Activity. To the extent a Participant (i) lives in a jurisdiction where restrictive covenants are void as against public policy or (ii) has a business title below the level of “director” and receives base compensation of less than $100,000 (or its local currency equivalent) per year, Section 10(b) of this Agreement shall be considered deleted from and therefore not part of this Agreement.


i.The Participant shall be deemed to have engaged in “Competitive Activity” if, during the period commencing on the Date of Grant and ending on the date that is 12 months after the Termination Date (the “Restricted Activity Period”), the Participant, whether on the Participant’s own behalf or on behalf of or in conjunction with any other Person (as defined below), directly or indirectly, violates any of the following prohibitions:
(I) During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any individual, person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly, solicit or assist in soliciting in competition with the Company or any of its Subsidiaries or Affiliates, the business of any client or prospective client:
1.with whom the Participant had personal contact or dealings on behalf of the Company or any of its Subsidiaries 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.
(II) During the Restricted Activity Period, the Participant will not directly or indirectly:
1.engage in any business that competes with the business of the Company or any of its Subsidiaries 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 service 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.
Notwithstanding anything to the contrary in this Agreement, the Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in any Competitive Business that are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Participant (i) is not a controlling person of, or a member of a group that controls, such Person and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such Person. Any such qualifying ownership shall not be deemed to be engaging in Competitive Activity or a Restrictive Covenant Violation for purposes of this Agreement.
(III) During the Restricted Activity Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
1.solicit or encourage any employee of the Company or any of its Subsidiaries 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.
(IV) During the Restricted Activity Period, the Participant will not, directly or indirectly, solicit or encourage to cease to work with the Company or any of its Subsidiaries or Affiliates any consultant then under contract with the Company or any of its Subsidiaries or Affiliates.
ii.It is expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 10(b) to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against the Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained in this Section 10(b).


c.Confidentiality.
i.The Participant will not at any time (whether during or after the Participant’s Employment) (x) retain or use for the benefit, purposes or account of the Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company and its Affiliates and Subsidiaries (other than its professional advisors who are bound by confidentiality obligations), any non-public, proprietary or confidential information (including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, and government and regulatory activities and approvals) concerning the past, current, or future business, activities, and operations of the Company, its Subsidiaries or Affiliates, and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
ii.Notwithstanding anything to the contrary in Section 10(c)(i), “Confidential Information” shall not include any information that (w) is or becomes generally available to the public other than as a result of a breach of this Section 10(c); (x) is already known by the recipient of the disclosed information at the time of disclosure as evidenced by the recipient’s written records, (y) becomes available to the recipient of the disclosed information on a non- confidential basis from a source that is entitled to disclose it on a non-confidential basis, or (z) was or is independently developed by or for the recipient of the information without reference to Confidential Information, as evidenced by the recipient’s written records.
iii.Except as required by law, the Participant will not disclose to anyone, other than the Participant’s immediate family and legal or financial or tax advisors or lender, each of whom the Participant agrees to instruct not to disclose, the existence or contents of this Agreement (unless this Agreement shall be publicly available as a result of a regulatory filing made by the Company or one of its Affiliates or Subsidiaries); provided, that the Participant may disclose to any prospective future employer the provisions of Section 10 of this Agreement provided such prospective future employer agrees to maintain the confidentiality of such terms.


iv.Upon Termination, the Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including, without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name, or other source indicator) owned or used by the Company, its Subsidiaries, or Affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters, and other data) in the Participant’s possession or control (including any of the foregoing stored or located in the Participant’s office, home, laptop, or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company or one of its Affiliates or Subsidiaries, except that the Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which the Participant is or becomes aware.
v.Notwithstanding the foregoing, pursuant to 18 U.S.C. § 1833(b) the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties to this Agreement also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. 18 U.S.C. § 1833(b) states: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets where such disclosure is expressly allowed by 18 U.S.C. § 1833(b).
d.Equitable Relief. Notwithstanding the remedies set forth in Section 9 above and notwithstanding any other remedy that would otherwise be available to the Company at law or in equity, the Company and the Participant agree and acknowledge that if an actual or threatened Restrictive Covenant Violation occurs, the Company will be entitled to an injunction and/or other equitable relief restraining the Participant from the Restrictive Covenant Violation without the necessity of posting a bond or proving actual damages.
11.Tax Withholding.


a.Responsibility for Taxes. The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that neither the Company nor the Service Recipient (1) makes any representation or undertaking regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Share Units, including, but not limited to, the grant, vesting or settlement of the Performance Share Units, the subsequent sale of shares of Common Stock acquired pursuant to such settlement and the receipt of any dividend or any dividend equivalent; and (2) commits to or is under any obligation to structure the terms of the grant or any aspect of the Performance Share Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company or the Service Recipient (or former Service Recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

b.Satisfaction of Withholding Obligations. Prior to any relevant taxable or tax withholding event, as applicable, the Participant shall make adequate arrangements satisfactory to the Company or the Service Recipient, as appropriate, to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and the Service Recipient, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by any of the means described in the Plan or by such other means or method as the Committee in its sole discretion and without notice to the Participant deems appropriate; provided, however, that, if the Participant is subject to Section 16 of the Exchange Act, then the Participant may elect, in advance of any tax withholding event, to satisfy the amount of all required Tax-Related Items in respect of the Performance Share Units in cash, and, in the absence of Participant’s timely election, the Company will withhold shares of Common Stock to satisfy any withholding obligations upon the relevant tax withholding event.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. If the maximum or another rate that is higher than the Participant's actual rate is used, the Company or the Service Recipient may refund any over-withheld amount to the Participant in cash (with no entitlement to the Common Stock equivalent), or, if not refunded, the Participant may seek a refund from the local tax authorities. If the obligation for Tax-Related Items is satisfied by withholding shares of Common Stock, the Participant shall be deemed for tax purposes to have been issued the full number of shares of Common Stock subject to the vested Performance Share Units, notwithstanding that a portion of the shares of Common Stock is held back solely for the purpose of paying the Tax-Related Items.
Finally, the Participant shall pay to the Company or the Service Recipient any amount of Tax-Related Items that the Company or the Service Recipient may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares of Common Stock or the proceeds of the sale of shares of Common Stock, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.


12.Notice. Every notice or other communication relating to this Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as provided in this Agreement; provided, that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted, or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.
13.No Right to Continued Employment. Neither the Plan nor this Agreement nor the granting of the Performance Share Units that are the subject of this Agreement shall be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any of its Affiliates or Subsidiaries. Further, the Company, or, if different, the Service Recipient, may at any time dismiss the Participant or discontinue any consulting relationship, free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided in this Agreement.
14.Nature of Grant. In accepting the grant of the Performance Share Units, the Participant acknowledges, understands and agrees that:
a.the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;
b.the grant of the Performance Share Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Share Units, or benefits in lieu of Performance Share Units, even if Performance Share Units have been granted in the past;
c.all decisions with respect to future Performance Share Units or other grants, if any, will be at the sole discretion of the Company;
d.neither the Performance Share Unit grant nor the Participant’s participation in the Plan shall create any right to employment or be interpreted as forming an employment or service contract with the Company, the Service Recipient or any Affiliate or Subsidiary of the Company or interfere with the ability of the Company, the Service Recipient or any Affiliate or Subsidiary of the Company, as applicable, to terminate the Participant’s employment or service contract (if any), to the extent otherwise permitted by law or any applicable agreement other than this Agreement;
e.unless otherwise agreed with the Company, none of the Performance Share Units, the shares of Common Stock subject to the Performance Share Units, and the income and value of same is granted as consideration for, or in connection with, the service the Participant may provide as a director of the Company, the Service Recipient, or any Affiliate or Subsidiary of the Company;
f.the Participant is voluntarily participating in the Plan;
g.none of the Performance Share Units, the shares of Common Stock subject to the Performance Share Units, and the income and value of same is intended to replace any pension right or other form of compensation;


h.none of the Performance Share Units, the shares of Common Stock subject to the Performance Share Units, and the income and value of same is part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, or end-of-service payments, any bonus, holiday pay, long-service award, pension, or retirement or welfare benefit, or any similar payment;
i.the future value of the underlying shares of Common Stock is unknown, indeterminable and cannot be predicted with certainty;
j.no claim or entitlement to compensation or damages shall arise from any forfeiture of the Performance Share Units resulting from a Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of any employment-related law in any jurisdiction applicable to the Participant’s employment or the terms of the Participant’s employment agreement, if any);
k.unless otherwise provided in the Plan or by the Company in its discretion, neither the Performance Share Units nor any benefit evidenced by this Agreement creates any entitlement either (i) to have the Performance Share Units or any such benefit transferred to or assumed by another company or (ii) to be exchanged, cashed out, or substituted for, in connection with any corporate transaction affecting the Common Stock; and
l.the Participant acknowledges and agrees that none of the Company, the Service Recipient, and any Affiliate or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency, if any, and the United States Dollar that may affect the value of the Performance Share Units or of any amount due to the Participant pursuant to the settlement of the Performance Share Units or the subsequent sale of any share of Common Stock acquired upon settlement.

15.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendation regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying shares of Common Stock. The Participant is hereby advised to consult with the Participant’s own personal tax, legal, and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan.
16.Data Privacy. The Participant hereby explicitly and without reservation consents to the collection, use, and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Performance Share Unit grant material by and among, as applicable, the Service Recipient, the Company, and its other Affiliates or Subsidiaries for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the Plan.
The Participant understands that the Service Recipient, the Company, and its other Affiliates or Subsidiaries may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any share of Common Stock or directorships held in the Company, or details of all Performance Share Units or any other entitlement to shares of Common Stock


awarded, canceled, exercised, vested, unvested, or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering, and managing the Plan.
The Participant understands that Data will be transferred to Morgan Stanley Smith Barney LLC, or such other third-party administrator or stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipient of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company, Morgan Stanley Smith Barney LLC, and any other possible recipient that may assist the Company (presently or in the future) with implementing, administering, and managing the Plan to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer, and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendment to Data or refuse or withdraw the consents in this Section 16, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing on a purely voluntary basis the consents described in this Agreement. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s Employment or service with the Service Recipient will not be adversely affected; the only adverse consequence of refusing or withdrawing the Participant’s consent is that the Company may be unable to grant Performance Share Units or other awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
The Participant understands that the Company may rely on a different legal basis for the collection, processing, and/or transfer of Data either now or in the future and/or request the Participant to provide another data privacy consent. If applicable and upon request of the Company or the Service Recipient, the Participant agrees to provide an executed acknowledgment or data privacy consent (or any other acknowledgments, agreements, or consents) to the Company and/or the Service Recipient that the Company and/or the Service Recipient may deem necessary to obtain under the data privacy laws in the Participant’s country, either now or in the future. The Participant understands that the Participant may be unable to participate in the Plan if the Participant fails to execute any such acknowledgment, agreement, or consent requested by the Company and/or the Service Recipient.
17.Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators, successors, and, to the extent permitted, assigns or other Permitted Transferees of the parties to this Agreement.


18.Waiver and Amendments. Subject to Section 13(b) of the Plan, the Committee may waive any condition or right under, amend any term of, or alter, suspend, discontinue, cancel, or terminate, this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation, or termination that would materially and adversely affect the rights of the Participant under this Agreement shall not to that extent be effective without the consent of the Participant. No waiver by either of the parties hereto of their rights under this Agreement shall be deemed to constitute a waiver with respect to any subsequent occurrence or transaction under this Agreement unless such waiver specifically states that it is to be construed as a continuing waiver.
19.Governing Law; Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of law. For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the federal and state courts located in the State of New Jersey, and hereby waive any objection to proceeding in such jurisdiction, including any objection regarding an inconvenient forum.
20. Plan. The terms and conditions of the Plan are incorporated in this Agreement by reference. In the event of a conflict or inconsistency between the terms and conditions of the Plan and the terms and conditions of this Agreement, the Plan shall govern and control.
21.Language. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of this Agreement. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
22.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
23.Imposition of Other Requirements. The Company reserves the right to impose any other requirement on the Participant’s participation in the Plan, on the Performance Share Units, and on any share of Common Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreement or undertaking that may be necessary to accomplish the foregoing.


24.Section 409A of the Code. It is intended that the Performance Share Units be exempt from or compliant with Section 409A of the Code (together with any Department of Treasury regulation and other interpretive guidance issued thereunder, including without limitation any such regulation or other guidance that may be issued after the date hereof, “Section 409A”) and this Agreement shall be interpreted, construed, and operated to reflect such intent. However, notwithstanding any other provision of the Plan, the Grant Notice, or this Agreement, if at any time the Committee determines that the Performance Share Units (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify the Participant or any other person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other action, as the Committee determines is necessary or appropriate either for the Performance Share Units to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
25.Appendix. Notwithstanding any term or condition in this Agreement, the Performance Share Unit grant shall be subject to any special term or condition set forth in Appendix 1 to this Agreement for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in Appendix 1, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix 1 constitutes part of this Agreement.
26.Foreign Asset/Account, Exchange Control and Tax Reporting. The Participant’s country may have certain foreign asset/account, exchange control, and/or tax reporting requirements, which may affect the Participant’s ability to acquire or hold shares of Common Stock under the Plan or cash received from participating in the Plan (including any dividend received or sale proceeds arising from the sale of shares of Common Stock) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets, or transactions to the tax or other authorities in Participant’s country. The Participant may also be required to repatriate the sale proceeds or other funds received as a result of the Participant’s participation in the Plan to Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is the Participant’s responsibility to be compliant with such regulations and the Participant should consult Participant’s personal legal advisor for further details.
27.Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to the insider trading restrictions and/or market abuse laws of one or more countries that may affect the Participant’s ability to accept, acquire, sell, or otherwise dispose of shares of Common Stock, rights to shares of Common Stock (e.g., Performance Share Units), or rights linked to the value of shares of Common Stock under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Participant placed before the Participant possessed inside information. Further, the Participant could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees, and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restriction that may be imposed under any applicable Company securities trading policy. The Participant acknowledges that Participant is responsible for complying with any applicable restrictions and is encouraged to speak to Participant’s own personal legal advisor for further details regarding any insider trading and/or market abuse laws applicable to the Participant.


28.Entire Agreement; Miscellaneous. This Agreement, the Grant Notice, and the Plan constitute the entire understanding between the Participant and the Company regarding the Performance Share Units. This Agreement, the Grant Notice, and the Plan supersede any prior agreement, commitment, or negotiation concerning the Performance Share Units. The headings used in this Agreement, including without limitation Exhibit A and Appendix 1, are for convenience only and shall not affect its interpretation.
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Exhibit A to Performance Share Unit Agreement
1. Vesting. Except as otherwise expressly provided in Section 6 of the Agreement, provided the Participant has not incurred a Termination on or prior to the Regular Vesting Date, the Performance Share Units granted under the Grant Notice to which this Agreement relates shall vest upon the date on which the Committee determines and certifies, as applicable, the attainment level of both the EPS Performance Percentage (as defined below) and the RTSR Performance Percentage (as defined below)(the “Regular Vesting Date”) with respect to the period commencing on _________ and ending on _________ (the “Performance Period”), in each case as of the last day of the Performance Period, which determination shall be made no later than the seventy-fifth (75th) day following the end of the Performance Period. As determined by the Committee, the number of Performance Share Units, if any, in which the Participant vests shall be equal to the sum of (a) the product of (i) the EPS Target Number of Performance Share Units (as set forth in the Grant Notice) and (ii) the EPS Performance Percentage, plus (b) the product of (i) the RTSR Target Number of Performance Share Units (as set forth in the Grant Notice) and (ii) the RTSR Performance Percentage. Upon the Regular Vesting Date, the Restricted Period shall expire and any vested Performance Share Units shall be settled in accordance with Section 5 of the Agreement. Any Performance Share Units that do not vest in accordance with this Exhibit A (to the extent not previously forfeited pursuant to Section 6 of the Agreement) shall, effective as of the Regular Vesting Date, be forfeited by the Participant without consideration.
2. Change in Control. Notwithstanding Section 1 of this Exhibit A, the following shall apply in connection with a Change in Control:
(a) In the event of a Change in Control prior to the last day of the Performance Period, to the extent the stock of the acquiring or successor entity is publicly traded and the Performance Shares Units are assumed, continued, or substituted, the Performance Share Units shall be converted, immediately prior to the Change in Control, to a number of time-based Restricted Stock Units equal to the sum of (A) the EPS Target Number of Performance Share Units, and (B) either of the following (1) if the Change in Control occurs in the first year of the Performance Period, the RTSR Target Number of Performance Share Units, or (2) if the Change in Control occurs after the first year of the Performance Period, a number of Performance Share Units that would become eligible to vest based on the attainment level of the Relative Total Shareholder Return Performance Goal calculated as of a shortened Performance Period that ends on the date immediately preceding the date of the Change in Control (the “Converted RSUs”). The Converted RSUs shall be eligible to vest based on the Participant’s continued Employment through the Regular Vesting Date (which, for purposes of the Converted RSUs, shall be the last day of the Performance Period), except as otherwise provided in Section 6(b) – (d) of the Agreement. Provided that the Participant has not incurred a Termination prior to the Regular Vesting Date (subject to Section 6(b) – (d) of the Agreement), the Restricted Period with respect to the Converted RSUs shall expire upon the Regular Vesting Date and any vested Converted RSUs shall be settled in accordance with Section 5 of the Agreement.
(b) In the event of a Change in Control prior to the last day of the Performance Period, to the extent the acquiring or successor entity does not assume, continue, or substitute the Performance Share Units, or the stock of the acquiring or successor entity is not publicly traded, the Performance Share Units shall be replaced with a right to receive, within thirty (30) days


following the date of the Change in Control, a cash payment equal to the sum of (i) the product of (A) the Per Share Cash Amount (as defined below), multiplied by (B) the EPS Target Number of Performance Share Units, and (ii) the product of (A) the Per Share Cash Amount, multiplied by (B) either (1) if the Change in Control occurs in the first year of the Performance Period, the RTSR Target Number of Performance Share Units, or (2) if the Change in Control occurs after the first year of the Performance Period, a number of Performance Share Units that would become eligible to vest based on the attainment of the Relative Total Shareholder Return Performance Goal calculated as of a shortened Performance Period that ends on the date immediately preceding the date of the Change in Control. The “Per Share Cash Amount” for purposes of this Section 2(b) means an amount equal to the sum of (I) the average of the closing price of the Common Stock for the 20 trading days immediately preceding the date of the Change in Control and (II) any cash dividend payable on a share of Common Stock during the 20 trading-day period described in the foregoing. If settlement of the Performance Share Units may not be made within the period specified in this Section 2(b) due to the limitation in Section 14(t)(iii)(A) of the Plan, such settlement shall be made in accordance with Section 5 of the Agreement.
(c) In the event of a Change in Control on or after the last day of the Performance Period but prior to the settlement of such Performance Share Units in shares of Common Stock in accordance with this Agreement, the Participant shall receive whatever a stockholder of shares of Common Stock equal in number to the settlement amount (determined in accordance with Section 1 of this Exhibit A) would have been eligible to receive due to such Change in Control, with such settlement occurring in accordance with Section 5 of the Agreement.
(d) Any Performance Share Unit that does not vest or become Converted RSUs, as applicable, shall immediately be forfeited without any further action by the Company or the Participant and without any payment of consideration therefor.
3. Earnings Per Share Performance Goal
For purposes of this Agreement:
“Cumulative EPS” means the sum of the EPS (as defined below) for each fiscal year of the Company or portion thereof in the Performance Period;
“Earnings Per Share” or “EPS” for any period means the Company’s “adjusted net income” for such period, as publicly reported by the Company, divided by the average number of fully diluted shares of Common Stock outstanding in such period, as publicly reported by the Company; and


“EPS Performance Percentage” means the percentage as set forth in the below table, representing the performance level of attainment of the Earnings Per Share performance goal set forth in the below table.
Performance Level Cumulative EP Percent of Target Goal EPS Performance Percentage
Below Threshold
Below $X.XX Below 75% 0%
Threshold
$ X.XX 75% 50%
Between $X.XX and $X.XX Linearly interpolate between 50% and 100%
Target
$X.XX 100% 100%
Between $X.XX and $X.XX Linearly interpolate between 100% and 200%
Maximum
$X.XX (or higher) 125% 200%
4. Relative Total Shareholder Return Performance Goal
For purpose of this Agreement:
“Beginning Stock Price” means the average of the closing prices of the Common Stock or the shares of the Peer Group (as defined below), as applicable, for the 20 trading days ending on the trading date immediately preceding the first day of the Performance Period;
“Ending Stock Price” means the average of the closing prices of the Common Stock or the shares of the Peer Group, as applicable, for the 20 trading days up to and including (if a trading day) the last day of the Performance Period;
“Peer Group” means the companies that comprise the S&P Composite 1500 Health Care Index. Companies that are members of the index at the beginning of the Performance Period that subsequently cease to be listed in the index as a result of acquisitions, mergers, or combinations involving such companies shall be excluded from the Peer Group. Companies that are members of the index at the beginning of the Performance Period that subsequently file for bankruptcy during the Performance Period shall be treated as worst performers for purposes of the Relative Total Shareholder Return Performance Goal calculation;
“Relative Total Shareholder Return” or “RTSR” means the quotient equal to (i) the Ending Stock Price minus the Beginning Stock Price plus assumed reinvestment as of the ex-dividend date of ordinary and extraordinary cash dividends, if any, paid by the applicable issuer during the Performance Period, divided by (ii) the Beginning Stock Price. Relative Total Shareholder Return expressed as a formula shall be as follows:
Relative Total Shareholder Return
=
(Ending Stock Price –
Beginning Stock Price +
Beginning Stock Price
The stock prices and cash dividend payments reflected in the calculation of Total Shareholder Return shall be adjusted to reflect stock splits during the Performance Period, and dividends shall


be assumed to be reinvested in the relevant issuer’s shares for purposes of the calculation of Total Shareholder Return; and
“RTSR Performance Percentage” means the percentage as set forth in the below table, representing the performance level of attainment of the Relative Total Shareholder Return Performance Goal set forth in the below table.
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%




















APPENDIX 1
PERFORMANCE SHARE UNIT AGREEMENT FOR NON-U.S. PARTICIPANTS UNDER THE
CATALENT, INC.
2018 OMNIBUS INCENTIVE PLAN
(Performance Period commencing on _________ and ending on _________)
COUNTRY-SPECIFIC TERMS AND CONDITIONS
All capitalized terms used in this Appendix 1 that are not defined in this Appendix 1 have the meanings defined in the Plan or the Agreement.
Terms and Conditions
This Appendix 1 includes additional or different terms and conditions that govern the Performance Share Units if the Participant works or resides in one of the countries listed below. The Participant understands that if the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working, transfers Employment and/or residency after the Date of Grant, or is considered a resident of another country for local law purposes, the Company shall, in its discretion, determine to what extent the terms and conditions contained in this Appendix 1 shall apply to the Participant.
Notifications
This Appendix 1 also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of August 2019. Such laws are often complex and change frequently. As a result, the Participant should not rely on the information in this Appendix 1 as the only source of information relating to the consequences of participation in the Plan because the information may be out of date at the time the Performance Share Units vest or at the time the Participant sells the shares of Common Stock.
In addition, the information contained in this Appendix 1 is general in nature and may not apply to the Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant should seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working, transfers Employment and/or residency after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained in this Appendix 1 may not apply to the Participant.





EUROPEAN UNION / EUROPEAN ECONOMIC AREA / SWITZERLAND / UNITED KINGDOM
Terms and Conditions
Data Privacy. If the Participant is employed in the European Union (“EU”), the European Economic Area, Switzerland or, if and when the United Kingdom leaves the European Union, the United Kingdom (collectively, EEA+), the following provision replaces Section 16 of the Agreement:
The Company is located at 14 Schoolhouse Road, Somerset, New Jersey 08873, USA and grants employees of the Company and its Subsidiaries or Affiliates the opportunity to participate in the Plan, at the Company’s sole discretion. If the Participant would like to participate in the Plan, the Participant understands that the Participant should review the following information about the Company’s data processing practices. The Company’s representative in the EU is:
Catalent Pharma Solutions GmbH
Riedstrasse 1
Cham, Switzerland CH-6330
+41 41 747 4250
Privacy@Catalent.com
(a) Data Collection and Usage. Pursuant to applicable data protection laws, the Participant is hereby notified that the Company collects, processes, uses, and transfers certain personally identifiable information about the Participant for the exclusive legitimate purpose of implementing, administering, and managing the Plan and generally administering employee equity awards, specifically, the Participant’s name, home address and telephone number, e-mail address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any equity or directorships held in the Company and any Affiliate or Subsidiary, and details of all Performance Share Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested, or outstanding in the Participant’s favor, which the Company receives from the Participant or the Service Recipient (“Personal Data”). In order to facilitate Participant’s participation in the Plan, the Company will collect, process, use, and transfer the Participant’s Personal Data for purposes of allocating shares of Common Stock and implementing, administering, and managing the Plan. The Company’s collection, processing, use, and transfer of the Participant’s Personal Data is necessary for the performance of the Plan and pursuant to the Company’s legitimate business interests of managing the Plan and generally administering employee equity awards. The Participant’s refusal to provide Personal Data would make it impossible for the Company to perform its contractual obligations and may affect Participant’s ability to participate in the Plan. As such, by participating in the Plan, Participant voluntarily acknowledges the collection, use, processing, and transfer of Participant’s Personal Data as described herein.
(b) Stock Plan Administration Service Providers. The Company transfers participant data to Morgan Stanley Smith Barney LLC, an independent service provider based in the United States, which assists the Company with the implementation, administration, and management of the Plan. In the future, the Company may select a different service provider and share the Participant’s data with another company that serves in a similar manner. The


Company’s service provider will open an account for the Participant to receive and trade shares of Common Stock. The Participant’s Personal Data will only be accessible by those individuals requiring access to it for purposes of implementing, administering, and operating the Plan.
(c) International Data Transfers. The Company and its service providers operate, relevant to the Company, in the United States, which means that it will be necessary for Personal Data to be transferred to, and processed in, the United States. By participating in the Plan, the Participant understands that the service providers will receive, possess, use, retain, and transfer the Participant’s Personal Data for the purposes of implementing, administering, and managing the Participant’s participation in the Plan. When transferring the Participant’s Personal Data to these service providers, the Company provides appropriate safeguards in accordance with the EU Standard Contractual Clauses. The Participant may request a copy of the safeguards used to protect the Participant’s Personal Data by contacting Privacy@Catalent.com.
(d) Data Subject Rights. To the extent provided by law, the Participant has the right to request access to Personal Data, rectification of Personal Data, erasure of Personal Data, restriction of processing of Personal Data, and portability of Personal Data. The Participant may also have the right to object, on grounds related to a particular situation, to the processing of Personal Data, as well as opt-out of the Plan herein, in any case without cost, by contacting in writing Privacy@Catalent.com. The Participant’s provision of Personal Data is a contractual requirement. The Participant understands, however, that the only consequence of refusing to provide Personal Data is that the Company may not be able to allow the Participant to participate in the Plan or grant other equity awards to the Participant or administer or maintain such awards. For more information on the consequences of the refusal to provide Personal Data, the Participant may contact Privacy@Catalent.com. The Participant may also have the right to lodge a complaint with the relevant data protection supervisory authority.
(e) Data Retention. The Company will use the Participant’s Personal Data only as long as is necessary to implement, administer, and manage the Participant’s participation in the Plan or as required to comply with legal or regulatory obligations, including under tax and security laws. When the Company no longer needs the Participant’s Personal Data, which will generally be seven (7) years after the Participant participates in the Plan, the Company will remove it from it from its systems. If the Company keeps data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis would be relevant laws or regulations.
ARGENTINA
Notifications
Securities Law Information. Neither the Performance Share Units nor the underlying shares of Common Stock are publicly offered or listed on any stock exchange in Argentina.
Personal Assets Tax Information. The Participant may be subject to a personal assets tax depending on the value of Participant’s computable assets per year (including any shares of Common Stock acquired under the Plan). The rules for determining the Participant’s personal


assets tax liability, if any, are complex, and the Participant is advised to speak with Participant’s personal tax advisor to determine the Participant’s obligations with respect to the personal assets tax.
Bank Tax Information. The Tax on Checking Accounts (“Bank Tax”) is imposed on funds transferred to or from bank accounts in Argentina. It is possible that the Bank Tax may apply to payments made to the Participant’s bank account in relation to the sale of any shares of Common Stock acquired upon vesting of the Performance Share Units and/or the receipt of any cash dividends paid with respect to shares of Common Stock, although there are some limited exemptions from the Bank Tax. The Participant should speak with Participant’s personal tax advisor to determine Participant’s obligations with respect to the Bank Tax and whether the Participant may be eligible for an exemption from the Bank Tax.
Exchange Control Information. Certain restrictions and requirements may apply if and when the Participant transfers proceeds from the sale of shares of Common Stock or any cash dividends paid with respect to such shares of Common Stock into Argentina.
Please note that exchange control regulations in Argentina are subject to change. The Participant should speak with Participant’s personal legal advisor regarding any exchange control obligations that the Participant may have prior to vesting in the Performance Share Units or remitting funds into Argentina, as the Participant is responsible for complying with applicable exchange control laws.
Foreign Asset/Account Reporting Information. The Participant must report any share of Common Stock acquired under the Plan and held by the Participant on December 31st of each year on the Participant’s annual tax return for that year. The Participant is strongly advised to consult the Participant’s personal tax advisor to ensure compliance with this tax reporting obligation.
BELGIUM
Notifications
Foreign Asset/Account Reporting Information. The Participant is required to report any security or bank account (including a brokerage account) opened and maintained outside Belgium on Participant’s annual tax return. In a separate report, the Participant must provide the National Bank of Belgium with certain details regarding such foreign accounts (including the account number, bank name and country in which such account was opened). This report, as well as additional information on how to complete it, can be found on the website of the National Bank of Belgium at www.nbe.be, under the Kredietcentrales / Centrales des crédits caption.
Stock Exchange Tax Information. A stock exchange tax will apply on the sale of shares of Common Stock acquired from vesting of the Performance Share Units. The Participant is responsible for paying and reporting the stock exchange tax due on the sales transaction. The Participant should consult with the Participant’s tax advisor for details on the applicability of this tax.
Brokerage Account Tax Information. A brokerage account tax may apply if the average annual value of the securities the Participant holds (including shares of Common Stock acquired under the Plan) in a brokerage or other securities account exceeds certain thresholds. The


Participant should consult with Participant’s tax advisor for details regarding Participant’s obligations with respect to the brokerage account tax.
BRAZIL
Terms and Conditions
Nature of Grant. The following provisions supplement Section 14 of the Agreement:
In accepting the Performance Share Units, the Participant agrees that (i) Participant is making an investment decision, (i) the shares of Common Stock will be issued to the Participant only if the vesting conditions are met, and any necessary service is rendered by the Participant over the Restricted Period, and (iii) the value of the underlying shares of Common Stock is not fixed and may increase or decrease in value over the Restricted Period without compensation to the Participant.
Compliance with Law. By accepting the Performance Share Units, the Participant acknowledges Participant’s agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the Performance Share Units, the receipt of any dividend, and the sale of shares of Common Stock acquired under the Plan.
Notifications
Exchange Control Information. If the Participant is resident or domiciled in Brazil, the Participant will be required to submit a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil annually, if the aggregate value of such assets and rights is equal to or greater than US$100,000. If the aggregate value of such assets and rights exceeds US$100,000,000, the Participant will be required to make such declarations on a quarterly basis. Assets and rights that must be reported include shares of Common Stock acquired under the Plan. Foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil.
Tax on Financial Transactions. If the Participant repatriates the proceeds from the sale of shares of Common Stock or receipt of any cash dividend and converts the funds into local currency, the Participant may be subject to the Tax on Financial Transactions.
CANADA
Terms and Conditions. The following terms and conditions apply if the Participant resides in Quebec:
The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir expressément exigé la rédaction en anglais du présent Contrat, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relatifs au, ou suite au, présent Contrat.
Data Privacy. The following provision supplements Section 16 of the Agreement:


The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Company and its Affiliates and Subsidiaries, and any designated broker that may be selected by the Company, to assist with the Plan to disclose and discuss the Plan with their respective advisors. The Participant further authorizes the Company and its Subsidiaries to record such information and to keep such information in Participant’s employee file.
Notifications
Securities Law Information. The Participant is permitted to sell shares of Common Stock acquired under the Plan through the Company’s designated broker, provided the resale of such shares of Common Stock takes place outside of Canada through the facilities of a stock exchange on which the shares of Common Stock are listed. The shares of Common Stock are currently listed on the New York Stock Exchange.
Foreign Asset/Account Reporting Information. Foreign property, including Performance Share Units, shares of Common Stock acquired under the Plan, and other rights to receive shares of Common Stock of a non-Canadian company held by a Canadian resident must generally be reported annually on a Form T1135 (Foreign Income Verification Statement) if the total cost of the foreign property exceeds C$100,000 at any time during the year. Thus, unvested Performance Share Units must be reported – generally at a nil cost – if the C$100,000 cost threshold is exceeded because the Participant holds other foreign property. When shares of Common Stock are acquired, their cost generally is the adjusted cost base (“ACB”) of the shares of Common Stock. The ACB would ordinarily equal the fair market value of the shares of Common Stock at the time of acquisition, but if the Participant owns other shares of Common Stock of the same company, this ACB may need to be averaged with the ACB of the other shares of Common Stock. The Participant should consult Participant’s personal legal advisor to ensure compliance with applicable reporting obligations.
CHINA
Terms and Conditions
The following terms and conditions will be applicable to the Participant to the extent that the Company, in its discretion, determines that the Participant’s participation in the Plan will be subject to exchange control restrictions in the People’s Republic of China (“PRC”), as implemented by the PRC State Administration of Foreign Exchange (“SAFE”).
Settlement of Vested Performance Share Units. This provision replaces Section 5 of the Agreement:
Notwithstanding anything to the contrary in the Plan or the Agreement, the Performance Share Units do not provide the Participant with any right to receive shares of Common Stock. Upon vesting, the Performance Share Units shall be settled and paid only in cash through local payroll in an amount equal to the fair market value of the shares of Common Stock at vesting less any Tax-Related Items. The Participant agrees to bear any currency fluctuation risk between the time the Performance Share Units vest and the time the cash payment is distributed to the Participant.


Notwithstanding the foregoing, the Company reserves the right to settle the Performance Share Units in shares of Common Stock, in its discretion.
FRANCE
Terms and Conditions
Type of Performance Share Units. The Performance Share Units are not granted as “French-qualified” awards and are not intended to qualify for the special tax and social security treatment applicable to shares granted for no consideration under Sections L. 225-197 to L. 225-197-6 of the French Commercial Code, as amended.
Consent to Receive Information in English. By accepting the Performance Share Units, the Participant confirms having read and understood the documents related to the Performance Share Units (the Plan and the Agreement) which were provided in the English language. The Participant accepts the terms of these documents accordingly.
Consentement Relatif à l'Utilisation de la Langue Anglaise. En acceptant l’Attribution, le Participant confirme avoir lu et compris les documents relatifs à cette Attribution (le Plan et le Contrat d'Attribution) qui ont été remis en langue anglaise. Le Participant accepte les termes de ces documents en conséquence.
Notifications
Exchange Control Information. The Participant must declare to the customs and excise authorities any cash or securities the Participant imports or exports without the use of a financial institution when the value of the cash or securities is equal to or exceeds €10,000 for 2019. The declaration must be filed with the local customs service of the frontier where the cash or securities are imported or exported. The filing must be executed by the person who completes the transaction. It is the Participant’s obligation to comply with the exchange controls applicable to the Participant, not the Company’s or the Service Recipient’s.
Foreign Asset/Account Reporting Information. The Participant is required to report all foreign accounts (whether open, current, or closed) to the French tax authorities when filing Participant’s annual tax return. Additional monthly reporting obligations may apply if the Participant's foreign account balances exceed €1,000,000. Failure to complete these reports trigger penalties for the French resident Participant. The Participant should consult Participant’s personal legal advisor regarding the details of this reporting obligation.
GERMANY
Notifications
Exchange Control Information. Cross-border payments in excess of €12,500 must be reported electronically to the German Federal Bank (Bundesbank). In the case of payments made or received in connection with securities (including proceeds realized upon the sale of shares of Common Stock), the report must be made by the 5th day of the month following the month in which the payment was made or received. The form of the report (“Allgemeine Meldeportal Statistik”) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. The Participant understands that if the Participant makes or receives


a payment in excess of this amount, the Participant is responsible for complying with applicable reporting requirements.
Foreign Asset/Account Reporting Information. If the acquisition of shares of Common Stock under the Plan leads to a “qualified participation” at any point during the calendar year, the Participant will need to report the acquisition of shares of Common Stock when the Participant files his or her tax return for the relevant year. A qualified participation is attained if (i) the value of the shares of Common Stock acquired exceeds €150,000 or (ii) the shares of Common Stock exceed 10% of the Company’s total shares of Common Stock. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
ITALY
Terms and Conditions
Plan Document Acknowledgement. By accepting the Performance Share Units, the Participant acknowledges that (a) the Participant has received the Plan and the Agreement; (b) the Participant has reviewed those documents in their entirety and fully understands the contents thereof; and (c) the Participant accepts all provisions of the Plan and the Agreement. The Participant further acknowledges that the Participant has read and specifically and expressly approves, without limitation, the following sections of the Agreement: “Treatment on Termination”; “Non-Transferability”; “Repayment of Proceeds; Clawback Policy”; “Restrictive Covenants”; “Tax Withholding”; “No Right to Continued Employment”; “Nature of Grant”; “No Advice Regarding Grant”; “Data Privacy” as replaced by the above provision; “Waiver and Amendments”; “Governing Law; Venue”; “Electronic Delivery and Acceptance”; “Imposition of Other Requirements”; “Language”; and “Appendix.”
Notifications
Foreign Asset/Account Reporting Information. If, at any time during the fiscal year, the Participant holds foreign financial assets (including cash and/or shares of Common Stock) which may generate income taxable in Italy, the Participant is required to report these assets on Participant’s annual tax return (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to the Participant if the Participant is the beneficial owner of foreign financial assets under Italian money laundering provisions.
Foreign Asset Tax Information. The value of any shares of Common Stock (and certain other foreign assets) the Participant holds outside of Italy will be subject to a foreign financial assets tax. The taxable amount is equal to the fair market value of the shares of Common Stock on December 31 or on the last day the shares of Common Stock were held (in such case, or when the shares of Common Stock are acquired during the course of the year, the tax is levied in proportion to the number of days the shares of Common Stock were held over the calendar year). No payment obligation arises, if the amount of the foreign financial assets tax calculated on all financial assets held abroad does not exceed a minimum threshold. If the Participant is subject to this foreign financial assets tax, the Participant will need to report the value of his or her financial assets held abroad in Form RM of his or her annual tax return. This foreign financial assets tax will not apply to the Restricted Stock Unit since it is non-transferable. The Participant


should contact his or her personal tax advisor for additional information about the foreign financial assets tax.
JAPAN
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (e.g., shares of Common Stock acquired under the Plan, proceeds from the sale of shares of Common Stock, and, possibly, Performance Share Units) outside of Japan with a value exceeding ¥50,000,000 as of December 31 of any calendar year, the Participant is required to report such to the Japanese tax authorities by March 15th of the following year. The Participant should consult with Participant’s personal tax advisor regarding the details of this reporting obligation.
SINGAPORE
Notifications
Securities Law Information. The Performance Share Units are granted pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that the Performance Share Units are subject to section 257 of the SFA and the Participant will not be able to make (i) any subsequent sale of the shares of Common Stock in Singapore or (ii) any offer of such subsequent sale of the shares of Common Stock in Singapore, unless such sale or offer is made (i) after six months from the Date of Grant, or (ii) pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.) or pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.
Chief Executive Officer and Director Notification Requirement. If the Participant is the Chief Executive Officer (“CEO”), or a director, associate director, or shadow director[1] of a Singaporean Affiliate or Subsidiary (a “Singaporean Entity”), the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singaporean Entity in writing when the Participant receives or disposes of an interest (e.g., Performance Share Units, shares of Common Stock) in the Company or any related company. These notifications must be made within two business days of (i) its acquisition or disposal of any interest in the Company or any related company, (ii) any change in a previously disclosed interest (e.g., when the shares of Common Stock are sold), or (iii) becoming the CEO or a director, associate director, or shadow director (if such an interest exists at the time).


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


Exit Tax Information. If the Participant is (i) neither a Singapore citizen nor a Singapore permanent resident, and the Participant (a) intends to leave Singapore for any period exceeding three months, (b) will be posted overseas on a secondment, or (c) is about to cease employment with the Singaporean Entity with which the Participant was employed at the time of grant, regardless of whether the Participant intends to remain in Singapore, or (ii) a Singapore permanent resident, and the Participant (a) intends to leave Singapore for any period exceeding three months, (b) will be posted overseas on a secondment or (c) is about to cease employment with the Singaporean Entity with which the Participant was employed at the time of grant and intends to leave Singapore on a permanent basis, the Participant may be subject to an exit tax upon Participant’s departure from Singapore or cessation of employment, as applicable. In such case, the Participant will be taxed on the Participant’s Performance Share Units on a “deemed vesting” basis, i.e., the Participant will be deemed to have vested in Participant’s Restricted Stock Units on the later of (i) one month before the date Participant departs Singapore or ceases employment, or (ii) the date on which the Participant’s Restricted Stock Units were granted. If the Participant is subject to the exit tax, the Participant acknowledges and agrees that the Service Recipient will report details of Participant’s departure from Singapore or cessation of employment to the Inland Revenue Authority of Singapore and will withhold any income payable to the Participant for a period of up to 30 days. The Participant is hereby advised to consult with a personal tax advisor in the event the Participant may be subject to these exit tax rules.
SWITZERLAND
Notifications
Securities Law Information. The offer of the Performance Share Units is not intended to be publicly offered in or from Switzerland. Because the offer of the Performance Share Units is considered a private offering, it is not subject to registration in Switzerland. Neither this document nor any other material relating to the Performance Share Units (1) constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations; (2) may be publicly distributed or otherwise made publicly available in Switzerland; or (3) have been or will be filed with, approved, or supervised by any Swiss regulatory authority (in particular, the Swiss Financial Market Supervisory Authority (FINMA)).
UNITED KINGDOM
Terms and Conditions
Form of Settlement. Notwithstanding any discretion contained in the Plan or anything to the contrary in the Agreement, the Performance Share Units are payable in shares of Common Stock only.
Tax Withholding. The following provisions supplement Section 11 of the Agreement:
Without limitation to Section 11 of the Agreement, the Participant agrees that the Participant is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items as and when requested by the Service Recipient or the Company or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). The Participant also agrees to indemnify and keep indemnified the Service Recipient and the Company against


any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Participant’s behalf.
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply. In the event that the Participant is a director or executive officer of the Company and the income tax is not collected from or paid by the Participant within ninety (90) days of the end of the U.K. tax year in which an event giving rise to the indemnification described above occurs, the amount of any uncollected income tax may constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) may be payable. The Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company and/or the Service Recipient (as appropriate) the amount of any employee NICs due on this additional benefit.

URUGUAY
There are no country-specific provisions.




Exhibit 10.3
CATALENTLOGO1.JPG
Management Incentive Plan
FY2020 Summary
Introduction
The Management Incentive Plan (MIP) is a variable annual cash incentive program under the Catalent, Inc. 2018 Omnibus Incentive Plan (the Plan) that rewards performance against annual individual and business-based goals. Individual performance goals designed to support the broader business goals are established each year between eligible participants and their respective managers. The Compensation and Leadership Committee (the Committee) of the Board of Directors (the Board) of Catalent, Inc. (Catalent or the Company) selects the business-based goals for the MIP from among the corporate financial and strategic growth objectives approved each year by the Board.
Eligibility for the MIP is based on several criteria, including position in the organization and past performance. MIP participants are expected to play an important role in achieving the Company’s strategic goals and contributing to the growth of the Company and its people. Key features of the MIP, including funding and the determination and payment of individual awards, are described below.
Market-Based Program
Catalent believes that providing competitive market-based compensation is critical to attracting, engaging and retaining key talent and the critical skill sets and expertise necessary to make Catalent successful. With this in mind, Catalent’s incentive programs, including the MIP, are reviewed on an annual basis taking into account market compensation trends, annual financial goals, and changes in business strategies. Where appropriate, a review is performed and changes are generally agreed prior to the start of the fiscal year, although the Company reserves the right to make changes at any time.
MIP Alignment with Financial Goals
Catalent believes that the MIP acts best as an incentive when there is meaningful alignment between the business performance factors used to measure a participant’s achievement and the participant’s ability to enhance the performance of the overall organization through the participant’s position within the organization. Depending on a participant’s role, the business performance factors can be weighted among one, two, or three organizational levels (i.e., overall Catalent, the principal business unit (BU) to which the participant’s efforts are directed (if any), and the principal site and/or region to which the participant’s efforts are directed (if any)). In some cases, the business performance factors may also be weighted differently for participants who support multiple BUs and/or sites. The chart below provides several examples of weightings for the business performance factors.


MIPIMAGE11.JPG
(1) As noted above, there may be cases in which other weightings are used for individual participants.
(2) Includes positions that support business unit-wide initiatives (e.g., VPs of operations, quality, or finance for a BU).
(3) This weighting may take into account site/regional results, which may include the results of multiple BUs and sites.
Business Performance Factors Combine for a Business Achievement Factor (BF)
As noted, the business performance factors measure achievement against a set of goals fixed each year by the Board and the Committee. For fiscal 2020, there are three business goals, (1) EBITDA (earnings before interest, taxes, depreciation, and amortization), which accounts for 65% of the overall business goal, (2) Revenue at 20%, and (3) Annual Capital Deployed at 15%. Because the MIP measures achievement against budget, adjustments to EBITDA, Revenue, and Annual Capital Deployed that are used in determining the budget will also apply when measuring performance, and results in foreign currencies will be converted to U.S. dollars at the currency exchange rates used to determine the budget.
EBITDA and Revenue directly measure Catalent’s overall financial performance. The goal of improving Annual Capital Deployed is to improve Catalent’s working capital ratio, which in turn should result in an increase in cash flow. This improvement can come from, for example, improvements in collections and the management of payables. The target for fiscal 2020 is to improve this ratio by one percentage point. Annual Capital Deployed is calculated as the 12-month average of the Working Capital ratio using actual results at budget rates, where the ratio is (Working Capital) / (annualized computation of last-90-days revenue).
Achievement against each goal—EBITDA, Revenue, and Annual Capital Deployed—is measured separately, and an achievement factor is assigned based on the attainment against each goal. These achievement factors are then weighted—65% for EBITDA, 20% for Revenue, and 15% for Annual Capital Deployed—to determine an overall business achievement factor (BF).
For fiscal 2020, the Committee has established the payout scales set forth below, which are used to convert the achievement against a goal to the achievement factor used to calculate the MIP.









EBITDA and Revenue Payout Scale

% of Target Achievement
Factor
Assigned 		Comment % of Target Achievement
Factor
Assigned 		Comment
>125% 200.00% 100% 100.00% Target
125% 200.00% Maximum 99% 97.50%
124% 195.00% 98% 95.00%
123% 190.00% 97% 92.50%
122% 185.00% 96% 90.00%
121% 180.00% 95% 87.50%
120% 175.00% 94% 85.00%
119% 170.00% 93% 82.50%
118% 165.00% 92% 80.00%
117% 160.00% 91% 77.50%
116% 155.00% 90% 75.00%
115% 150.00% 89% 72.50%
114% 145.00% 88% 70.00%
113% 140.00% 87% 67.50%
112% 135.00% 86% 65.00%
111% 130.00% 85% 62.50%
110% 125.00% 84% 60.00%
109% 122.50% 83% 57.50%
108% 120.00% 82% 55.00%
107% 117.50% 81% 52.50%
106% 115.00% 80% 50.00% Threshold
105% 112.50% < 80% Zero Committee Discretion
104% 110.00%
103% 107.50%
102% 105.00%
101% 102.50%
100% 100.00% Target
100% performance results in a 100% achievement factor. Performance above and below target increases or decreases the achievement factor as indicated in the chart above. The minimum achievement factor is 80%–below that, the assigned achievement factor is 0% (though the Committee remains free, in its sole discretion, to still make a MIP award in respect of this Business Performance Factor). Similarly, the maximum achievement factor is 125%–above that, the assigned achievement factor remains the same.




Corporate Annual Capital Deployed Payout Scale
MIPIMAGE21.JPG
Reducing our Annual Capital Deployed by one percentage point results in a 100% achievement factor, with the achievement factor increasing and deceasing based on performance against the target. The minimum achievement factor is -0.25%–below that, the assigned achievement factor is 0% (though the Committee remains free, in its sole discretion, to still make a MIP award in respect of this Business Performance Factor). Similarly, the maximum achievement factor is ‑2.00%–above that, the assigned achievement factor remains the same. The Annual Capital Deployed Scale may differ within one or more of Catalent’s Business Units.
Set forth below is a chart showing, at multiple example levels of achievement, how the three separate business performance factors–EBITDA, Revenue, and Annual Capital Deployed–can come together to give participants a singled combined BF.
MIPIMAGE31.JPG
Note: For fiscal 2020, the Committee has set the EBITDA and revenue performance thresholds at 80% of target and the Corporate Annual Capital Deployed at ‑0.25%. Funding for the MIP is dependent on achievement of at least one of the threshold levels. If no hurdles are met, MIP awards can only occur at the sole discretion of the Committee.


Individual Performance Factor (IPF)
Each year, MIP participants, in collaboration with their managers, establish appropriate individual performance goals based on their roles. These goals should be aligned with the business performance goals established for Catalent overall. At fiscal year-end, managers determine each participant’s individual performance factor (IPF) based on the participant’s overall performance for the year, including achievement of the participant’s individual performance goals. In general, the IPF ranges from 0 to 150%.
For fiscal 2020, MIP participants who receive a performance rating of “Did Not Meet Expectations” will receive a zero IPF and will not be eligible for payout under the MIP regardless of the BF achievement.
The Business and Individual Performance Factors Are Combined to Determine the MIP Award
At the beginning of each fiscal year, a target MIP payout is set for each participant, usually expressed as a percentage of base salary. The amount actually paid to the participant following the end of the fiscal year is dependent on both the participant’s combined business achievement percentage (a non-discretionary fixed amount) and the individual performance factor assigned to the participant (based on manager’s discretion). For fiscal 2020, the combined BF is weighted 70%, and the IPF is weighted 30%, in order to obtain an overall combined performance factor, which is expressed as a percentage and then applied against the target. Because each BF can range from 0% to 200%, and the IPF can range from 0% to 150%, the total MIP payout can range from 0% to 185% of the target payout amount.
MIP Calculation Summary for Fiscal 2020
Set forth below is a graphical summary of the MIP calculation process. For participants with multiple business factors (overall, BU, and site/region), the business factor calculation is performed separately for each segment, then combined as a weighted average, in order to determine an overall combined BF.


MIPIMAGE41.JPG
Sample MIP calculation for illustrative purposes:
In this example, we assume that all relevant business metrics perform at target. We also assume that the participant has a base salary of $100,000 and a MIP target of 15%, and that the participant ends the fiscal year with an individual performance factor of 100%.


MIPIMAGE51.JPG

Performance Updates During the Fiscal Year
The MIP design is open and transparent, reflecting Catalent’s confidence that Company leaders can deliver on its challenging but achievable goals.
Throughout the fiscal year, participants should review their progress against their personal goals with their managers. The senior management team will also provide updates on Catalent’s progress against its business goals. These individual and team updates will help participants to track their and the Company’s progress toward annual MIP funding and payout.
Effect of Employment Status Changes on Eligibility (Subject to Local Laws)
Your eligibility to receive a MIP award is affected by your employment status at payout. Listed below are payout provisions pertaining to different termination scenarios:


Event
Occurring prior to April 1, 2020
Occurring between April 1, 2020 and MIP payment (scheduled for Sept. 2020)
Voluntary termination (including resignation and job abandonment) Not eligible for payout
Involuntary termination for cause* or for other than reduction-in-force/restructure/divestiture
Not eligible for payout
Involuntary termination due to reduction-in-force/restructure/divestiture Not eligible for payout Employees with continuous MIP-eligible service through the date of termination, where at least 90 days of that service occurred in fiscal 2020, will be eligible for payout at the normal payout date based on actual company/BU/site results (pro-rated for the portion of the year in service) and IPF as determined by the employees’ manager (similarly pro-rated)
Death or Disability**
Employees with continuous MIP-eligible service through the date of death or Disability, where at least 90 days of that service occurred in fiscal 2020, will be eligible for payout at the normal payout date based on actual company/BU/site results (pro-rated for the portion of the year in service) and IPF as determined by the employees’ manager (similarly pro-rated)
Retirement***
Not eligible for payout Employees with at least 90 days of MIP-eligible service in fiscal 2020 will be eligible for payout at the normal payout date based on actual company/BU/site results (pro-rated for the portion of the year in service) and IPF as determined by the employees’ manager (similarly pro-rated)
Certain leaves of absence (LOA) may affect eligibility. Applicable LOA policies should be consulted on a regional basis.
* Management reserves the right to determine in its sole discretion whether an individual termination of a participant is for cause.
** The definition of Disability shall be as set forth in the Plan.
*** A termination (other than a termination when grounds existed for a termination for cause at the time thereof) initiated by a participant that occurs on or after the date on which the sum of the participant’s age and period of service (calculated in months) equals sixty-five (65) years, so long as the participant is at least fifty-five (55) years old.




Eligibility Guidelines for New Hires and Newly Eligible Employees
If an employee’s start date or entry into a MIP-eligible position during the fiscal year is between July 1 and March 31 of a fiscal year, then the MIP target amount for that employee will be prorated to reflect the portion of that fiscal year during which the employee was eligible. Any employee with a start date or entry into a MIP-eligible position during the final quarter of a fiscal year (April 1 through June 30) will not be eligible for participation in the MIP for that fiscal year.
Timetable for Bonus Determination and Payment
After the close of the fiscal year, BF determinations are made and overall MIP funding is calculated.
At the appropriate time during the Catalent annual performance management cycle, year-end performance reviews are completed and managers determine and assign MIP-eligible participants an applicable IPF value based on assessments of individual performance against goals.
Individual MIP awards are typically communicated within 90 days of the end of the fiscal year (generally in September).
Clawback/Forfeiture
A participant’s participation in the MIP may be cancelled by the Committee in its sole discretion, or the Committee in its sole discretion may require that a MIP award paid to a participant be forfeited and repaid to the Company, if the participant has engaged in or engages in any Detrimental Activity, as defined in the Plan and summarized below. In addition, if a participant receives any amount in excess of what the participant should have received under the terms of the MIP for any reason (including by reason of a financial restatement, mistake in calculation, or other administrative error), then the Participant shall be required to repay any such excess amount to the Company. Without limiting the foregoing, all MIP awards are subject to reduction, cancellation, forfeiture, or recoupment to the extent necessary to comply with applicable law.
“Detrimental Activity” means any of the following: (i) unauthorized disclosure of any confidential or proprietary information of the Company or its affiliates; (ii) any activity that would be grounds to terminate a participant’s employment for Cause; (iii) whether in writing or orally, maligning, denigrating or disparaging the Company, its affiliates or their respective predecessors and successors, or any of the current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, with respect to any of their respective past or present activities, or otherwise publishing (whether electronically, in writing or orally) statements that tend to portray any of the aforementioned persons or entities in an unfavorable light; (iv) the breach of any non-competition, non-solicitation or other agreement containing restrictive covenants, with the Company or its affiliates; or (v) fraud or conduct contributing to any financial restatement or irregularity, as determined by the Committee in its sole discretion. Notwithstanding the foregoing, this definition is not intended to, and shall not be interpreted in a manner that limits or restricts a participant (or any other person or entity) from (1) initiating communications directly with,


cooperating with, providing relevant information to, or otherwise assisting in an investigation by (A) the U.S. Securities and Exchange Commission (the SEC) or any other governmental, regulatory, or legislative body regarding a possible violation of any federal law relating to fraud or any SEC rule or regulation; or (B) the U.S. Equal Employment Opportunity Commission or any other governmental authority with responsibility for the administration of fair employment practices laws regarding a possible violation of such laws; (2) responding to any inquiry from any such governmental, regulatory, or legislative body or official or governmental authority; or (3) participating, otherwise assisting in any governmental action, investigation, or proceeding relating to a possible violation of any such law, rule or regulation.
Important Information Regarding the Summary
Participation in the MIP in any year is not a guarantee of participation in any future year. The application of the MIP to any given individual may vary depending on various circumstances, including the terms of any applicable employment contract, applicable regional laws governing employment, benefits, or payments under benefit plans applicable to only a subset of employees, and the terms of any applicable collective bargaining or employment agreement. Furthermore, the Company reserves the right to modify or cancel the MIP at any time, with or without notice to employees, to the fullest extent permitted by applicable law. In addition, separation from Catalent employment may affect a participant’s ability to participate in the MIP or the amount of the participant’s benefits in ways that are not fully described in this summary plan description. Employees with questions concerning eligibility for the MIP or the terms and conditions of the plan may contact their Catalent Human Resources representatives.



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

I, John R. Chiminski, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2019 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.



Date: November 5, 2019
/s/ JOHN R. CHIMINSKI
John R. Chiminski
Chief Executive Officer
(Principal Executive Officer)



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

I, Wetteny Joseph, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2019 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.

Date: November 5, 2019

/s/ WETTENY JOSEPH
Wetteny Joseph
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)



Exhibit 32.1
Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Catalent, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John R. Chiminski, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 5, 2019
/s/ JOHN R. CHIMINSKI
John R. Chiminski
Chief Executive Officer





Exhibit 32.2
Certification of the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Catalent, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wetteny Joseph, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 5, 2019
/s/ WETTENY JOSEPH
Wetteny Joseph
Senior Vice President and
Chief Financial Officer