The objective of the following Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition ("MD&A") is to help the reader understand the financial performance of AptarGroup, Inc. MD&A is presented in eight sections: Overview, Results of Operations, Off-Balance Sheet Arrangements, Overview of Contractual Obligations, Adoption of Accounting Standards, Critical Accounting Policies and Estimates, Operations Outlook and Forward-Looking Statements. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and accompanying Notes to Consolidated Financial Statements contained elsewhere in this Report on Form 10-K.
In MD&A, "we," "our," "us," "AptarGroup," "AptarGroup, Inc." and "the Company" refer to AptarGroup, Inc. and its subsidiaries.

                             RESULTS OF OPERATIONS

The following table sets forth the consolidated statements of income and the
related percentages of net sales for the periods indicated:



Years Ended December 31,                         2008                              2007                              2006
                                        Amount in            % of         Amount in            % of         Amount in            % of
                                      $ Thousands       Net Sales       $ Thousands       Net Sales       $ Thousands       Net Sales
Net sales                            $  2,071,685           100.0 %    $  1,892,167           100.0 %    $  1,601,385           100.0 %
Cost of sales (exclusive of
depreciation shown below)               1,411,275            68.1         1,283,773            67.9         1,086,269            67.8
Selling, research & development
and administrative                        300,846            14.5           274,196            14.5           238,907            14.9
Depreciation and amortization             131,145             6.3           123,466             6.5           114,606             7.2


Operating income                          228,419            11.0           210,732            11.1           161,603            10.1
Other expense                              (7,451 )          (0.3 )         (10,737 )          (0.5 )         (13,297 )          (0.8 )


Income from continuing
operations before income taxes            220,968            10.7 %         199,995            10.6 %         148,306             9.3 %


Income from continuing
operations                                153,495             7.4 %         139,507             7.4 %         102,896             6.4 %


Effective tax rate                                           30.5 %                            30.2 %                            30.6 %

Income from discontinued
operations net of tax                           -               -             2,232             0.1 %               -               -

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Years Ended December 31,           2008       % of Total             2007       % of Total           2006       % of Total

Domestic                   $    531,054              26%     $    498,231              26%     $  470,405              29%
Europe                        1,288,667              62%        1,180,443              63%        974,967              61%
Other Foreign                   251,964              12%          213,493              11%        156,013              10%

COST OF SALES (EXCLUSIVE OF DEPRECIATION SHOWN BELOW) Our cost of sales as a percentage of net sales increased slightly in 2008 to 68.1% compared to 67.9% in 2007.

The following factors negatively impacted our cost of sales percentage in 2008:

Rising Input Costs. Input costs, in particular resin, tinplate, utilities and transportation costs, continued to increase through the third quarter of 2008 over 2007, primarily in the U.S. and Europe, but also in the rest of the world. While we attempt to pass these rising input costs along in our selling prices we experience a lag in the timing of passing on these cost increases. We experienced decreases in certain material costs towards the end of the fourth quarter. However, the effects of these decreases do not offset the increases taken during the first nine months of the year.

Weakening of the U.S. Dollar. We are a net importer from Europe into the U.S. and other countries of products produced in Europe with costs denominated in Euros. As a result, when the U.S. dollar or other currencies weaken against the Euro, products produced in Europe (with costs denominated in Euros) and sold in currencies that are weaker compared to the Euro, have a negative impact on cost of sales as a percentage of net sales.

Underutilized Overhead Costs in Certain Operations. Certain of our business operations in the Beauty & Home and Closures business segments saw a decrease in unit volumes sold and as a result of the lower production levels, overhead costs were underutilized, thus negatively impacting cost of goods sold as a percentage of net sales.

The following factor positively impacted our cost of sales percentage in 2008:

Favorable Product Mix. Increased sales of our products to the pharmaceutical market which traditionally generate higher margins helped positively impact our cost of sales percentage in 2008.

Last in First Out ("LIFO") Inventory Valuation. Some of our U.S. operations use LIFO as their inventory valuation method. As some material costs, namely resins, dramatically decreased at the end of the fourth quarter, the decrease to the LIFO reserve in 2008 was approximately $2.3 million, thus positively impacting our cost of sales percentage in 2008.

In 2007, our cost of sales as a percentage of net sales increased to 67.9% compared to 67.8% in 2006.

The following factors negatively impacted our cost of sales percentage in 2007:

Rising Raw Material Costs. Raw material costs, in particular plastic resin costs in the U.S. and metal (including nickel) prices worldwide, increased in 2007 compared to 2006. While the majority of the plastic resin raw material price increase has been passed on to customers through price increases, the net effect is a reduction in the margin percentage.

Last in First Out ("LIFO") Inventory Valuation. Some of our U.S. operations use LIFO as their inventory valuation method. Due to the rising raw material costs, the increase to the LIFO reserve in 2007 was approximately $2.3 million, thus negatively impacting our cost of sales percentage in 2007.

Weakening of the U.S. Dollar. We are a net importer from Europe into the U.S. and other countries of products produced in Europe with costs denominated in Euros. As a result, when the U.S. dollar or other currencies weaken against the Euro,

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products produced in Europe (with costs denominated in Euros) and sold in currencies that are weaker compared to the Euro, have a negative impact on cost of sales as a percentage of net sales.

The following factors positively impacted our cost of sales percentage in 2007:

Leveraging of Fixed Manufacturing Costs. The increase in sales volumes across all three business segments allowed us to better leverage our fixed overhead manufacturing expenses as a percentage of sales.

Favorable Product Mix. Increased sales of our products to the pharmaceutical market which traditionally generate higher margins helped positively impact our cost of sales percentage in 2007.

Lower Compliance Costs For The Pharma Industry. In 2006, we incurred additional costs in our Pharma segment due to more stringent quality standards on certain of our products. These costs included, among others, higher personnel related costs to assure the level of quality demanded by this market and higher scrap associated with the destruction of non-usable components. Although the higher quality standards remained, a majority of these costs did not reoccur in 2007 and as a result had a positive impact on our cost of sales percentage in 2007.

SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE Our Selling, Research & Development and Administrative expenses ("SG&A") increased approximately 10% or $26.7 million in 2008. Changes in currency rates accounted for approximately $13.2 million of the increase or 5% of the 10% increase. The remaining increase is primarily due to inflationary cost increases, higher bad debt expense and higher professional fees related to several corporate initiatives. SG&A expenses as a percentage of sales remained consistent with the prior year at 14.5%.
In 2007, our SG&A increased approximately 15% or $35.3 million. Changes in currency rates accounted for approximately $13.8 million of the increase or 6% of the 15% increase. Acquisitions completed during 2006 accounted for $2.3 million or 1% of the 15% increase. The remainder of the increase is primarily due to inflationary cost increases as well as increased research and development costs associated with our innovative products currently under development. Nevertheless, SG&A as a percentage of sales decreased to 14.5% in 2007 compared to 14.9% in 2006.

EFFECTIVE TAX RATE ON INCOME FROM CONTINUING OPERATIONS The reported effective tax rate on income from continuing operations for 2008 increased slightly to 30.5% compared to 30.2% in 2007. The increase in the tax provision for 2008 reflects primarily a change in the mix of income earned by country. This increase was partially offset by the benefits from tax changes that became effective in the current year related to an expanded R&D credit in France and lower tax rates in Germany and Italy.
In 2007, the reported effective tax rate for 2007 decreased to 30.2% compared to 30.6% in 2006, primarily due to a tax law change in Germany in 2007 reducing the statutory rate from 38% to 30% effective in 2008. This tax law change required us to reduce certain previously recorded net deferred tax liabilities by approximately $2.3 million in 2007.

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INCOME FROM DISCONTINUED OPERATIONS In the fourth quarter of 2007, we sold our Australian operation for approximately $6.7 million in cash and generated a gain on the sale of approximately $3.9 million before tax or $2.2 million after tax. Due to the immateriality of the results of the Australian operation, only the net gain of $2.2 million is reported in the Consolidated Statements of Income in the line Income From Discontinued Operations Net of Tax.

                                   NET INCOME
We reported net income of $153.5 million in 2008 compared to $141.7 million
reported in 2007 and $102.9 million reported in 2006.

                             BEAUTY & HOME SEGMENT



                                                                                                                % Change             % Change
Years Ended December 31,                                2008                  2007           2006          2008 vs. 2007        2007 vs. 2006

Net Sales                                       $  1,072,478          $  1,005,218     $  837,093                6 .7%               20 .1%
Segment Income (1)                                    91,516                99,553         72,396               (8 .1)               37 .5
Segment Income as a percentage of Net Sales             8.5%                  9.9%           8.6%

(1) Segment income is defined as earnings before net interest, corporate expenses and income taxes. The Company evaluates performance of its business units and allocates resources based upon segment income. For a reconciliation of segment income to income before income taxes, see Note 17 to the Consolidated Financial Statements in Item 8.

Net sales increased approximately 7% in 2008 to $1.1 billion compared to $1.0 billion in 2007. The weakening U.S. dollar compared to the Euro positively impacted the sales increase and represented approximately 5% of the increase while acquisitions were immaterial. The remaining 2% of the increase in sales was led by increased demand for our products from the fragrance/cosmetic market. Sales excluding changes in exchange rates of our products to the fragrance/cosmetic market increased approximately 4% in 2008 reflecting a continued growth in developing markets such as Latin America and Southeast Asia. Sales to Eastern Europe, the US, and parts of Western Europe were down in the second half of the year due to general economic conditions. Sales excluding changes in exchange rates of our products to the personal care and household markets were flat and down 4% respectively in 2008. We do not see any erosion in our customer base, but again attribute this softness to the general economic conditions.
In 2007, net sales increased 20% in 2007 to $1.0 billion compared to $837.1 million in 2006. The weakening U.S. dollar compared to the Euro positively impacted the sales increase and represented approximately 7% of the increase while acquisitions accounted for approximately 1% of the 20% increase in sales. The remaining 12% of the increase in sales was led by strong demand for our products from the fragrance/cosmetic and personal care markets. Sales excluding changes in exchange rates of our products to the fragrance/cosmetic market increased approximately 15% in 2007 reflecting a combination of strong general market demand both in the high and low end of the market especially in developing markets such as Latin America and Southeast Asia. Sales to Eastern Europe and Russia also increased significantly. The continued success of our innovative fragrance sampling products also contributed to strong sales growth. Sales excluding changes in exchange rates of our products to the personal care market increased 10% in 2007, reflecting increased demand for our aerosol valve products in Europe as well as our new and innovative bag-on-valve and accessory products in North America. Sales excluding changes in exchange rates to the household market increased approximately 6% due primarily to an increase in insecticide sprays.
Segment income decreased approximately 8% to $91.5 million in 2008 compared to $99.6 million reported in 2007. The decrease in segment income of $8.1 million is due primarily to the significant increase in input costs for the first nine months of the year and our inability to pass on these costs fast enough to our customers. In addition, soft general economic conditions in the fourth quarter lead to underutilized capacity at some of our operations.
In 2007, segment income increased approximately 38% to $99.6 million in 2007 compared to $72.4 million reported in 2006. Acquisitions accounted for approximately $2.4 million or 3% of the 38% increase in segment income. The remainder of the increase in segment income of $24.7 million is due primarily to the increase in sales volumes mentioned above and the leveraging of fixed overhead costs worldwide. In addition, an increase in sales of our higher margin value added products helped contribute to the increase in profitability in 2007.

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                                CLOSURES SEGMENT



                                                                                                     % Change             % Change
Years Ended December 31,                            2008           2007           2006          2008 vs. 2007        2007 vs. 2006

Net Sales                                     $  541,745     $  493,000     $  441,203                9 .9%               11 .7%
Segment Income                                    45,327         50,036         44,031               (9 .4)               13 .6
Segment Income as a percentage of Net Sales         8.4%          10.1%          10.0%

Net sales to the Closures segment increased nearly 10% in 2008 to $541.7 million compared to $493.0 million in 2007. The weakening U.S. dollar compared to the Euro positively impacted the sales increase and represented approximately 4% of the increase. Of the remaining 6% growth, increased selling prices due to the rising cost of resin accounted for approximately 4% of the increase while sales of custom tooling contributed 1%. 2008 also represented two dramatically different halves of business for the Closures segment. The first half of the year was positively impacted by favorable exchange rates (mainly Euro), a higher resin pass through, and higher tooling sales. Conversely, the second half of 2008 saw an unfavorable exchange rate impact (Euro, Mexican Peso, and Brazilian Real) and lower tooling sales, primarily in Europe. For the full year, sales excluding changes in exchange rates of our products to the food market increased 19% in 2008 mainly due to new ketchup and salad dressing launches in the U.S. This increase was offset by a 15% decrease in the household market during 2008 reflecting the loss of a detergent cap customer as well as a general slowdown in the closure personal care market.
In 2007, net sales to the Closures segment increased nearly 12% in 2007 to $493.0 million compared to $441.2 million in 2006. The weakening U.S. dollar compared to the Euro positively impacted the sales increase and represented approximately 5% of the increase while acquisitions accounted for approximately 2% of the 12% increase in sales. Sales excluding changes in exchange rates of our products to the personal care market increased 7% in 2007 while acquisitions accounted for nearly half of the growth. Sales excluding changes in exchange rates of our products to the household and food/beverage markets increased 8% and 10%, respectively, in 2007. Sales to the North American market decreased approximately 3% in 2007 reflecting a general slowdown in the closure personal care market. This decrease was more than offset by strong growth in both the European and Latin American markets.
Segment income decreased 9% to $45.3 million in 2008 compared to $50.0 million in 2007. As was the case with the Beauty and Home segment, rising input costs during the first nine months of the year and our inability to pass these increased costs on to customers fast enough coupled with underutilized fixed overhead costs particularly in Europe were the primary reasons for the decrease in profitability.
In 2007, segment income increased 14% to $50.0 million in 2007 compared to $44.0 million in 2006. Segment income from acquisitions was immaterial in 2007. A decrease in segment income in North America was primarily due to the lower sales volumes mentioned above as well as the normal delay of passing on the rising cost of resin to our customers. This decrease was more than offset by increases in segment income in both Europe and Latin America due to the increase in sales in those regions.

                                 PHARMA SEGMENT



                                                                                              % Change               % Change
Years Ended December 31,                     2008           2007           2006          2008 vs. 2007          2007 vs. 2006

Net Sales                              $  457,456     $  393,868     $  322,603               16 .1%                 22 .1%
Segment Income                            127,089        106,161         80,841               19 .7                  31 .3
Segment Income as a percentage of
Net Sales                                   27.8%          27.0%          25.1%

Net sales to the Pharma segment increased more than 16% in 2008 to $457.5 million compared to $393.9 million in 2007. Changes in foreign currency rates positively affected the sales growth and accounted for 6% of the total growth. The remaining increase is primarily related to increased demand for our metered dose inhaler valve ("MDI's") used to dispense asthma medications and nasal spray pumps used to dispense allergy medications.
In 2007, net sales to the Pharma segment increased more than 22% in 2007 to $393.9 million compared to $322.6 million in 2006. The weakening U.S. dollar compared to the Euro positively impacted the sales increase and represented approximately 8% of the 22% increase in sales. The remainder of the increase was due to increased sales of our nasal spray pumps and increased sales of our MDI valves relating primarily to new customer launches.
Segment income increased 19.7% to $127.1 million in 2008 compared to $106.2 million reported in 2007. The increase in segment income is primarily due to the higher sales volumes detailed above.
In 2007, segment income increased 31% to $106.2 million in 2007 compared to $80.8 million reported in 2006. The increase in segment income is primarily due to the higher sales volumes mentioned above as well as a reduction in quality-related and compliance costs compared to the prior year.

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