Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM 10-K~~ ______________________________

~~ANNUAL~~FORM ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF~~ 10-K

~~THE SECURITIES EXCHANGE ACT OF 1934~~ ______________________________

~~For~~ANNUAL ~~the~~REPORT ~~fiscal~~PURSUANT ~~year~~TO ~~ended~~SECTION ~~June~~13 ~~30,~~OR ~~2012~~15(d) ~~Commission~~OF ~~file number 333-147871~~

~~CATALENT~~THE ~~PHARMA~~SECURITIES ~~SOLUTIONS,~~EXCHANGE ~~INC.~~ACT OF 1934

~~(Exact~~For ~~name~~the offiscal ~~registrant~~year asended ~~specified~~June in30, ~~its~~2013 ~~charter)~~Commission file number 333-147871

Delaware		13-3523163
(State of incorporation)		(I.R.S. Employer Identification No.)

______________________________

14 Schoolhouse Road Somerset, New Jersey		08873
(Address of principal executive offices)		(Zip Code)

CATALENT PHARMA SOLUTIONS, INC.

~~Registrant’s~~(Exact ~~telephone~~name ~~number,~~of ~~including~~registrant ~~area~~as ~~code:~~specified ~~(732~~in its charter) ~~537-6200~~

~~Securities Registered Pursuant to Section~~______________________________ ~~12(b) of the Act: None~~

Securities Registered Pursuant to Section 12(g) of the Act: None



Delaware	13-3523163
(State of incorporation)	(I.R.S. Employer Identification No.)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x



14 Schoolhouse Road Somerset, New Jersey	08873
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (732) 537-6200

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section~~______________________________ ~~13 or Section 15(d) of the Exchange Act. Yes x No ¨~~

~~Indicate~~Securities byRegistered ~~check~~Pursuant ~~mark whether the registrant (1) has filed all reports required~~ to ~~be filed by~~ Section ~~13 or 15~~12(db) of the ~~Exchange~~ Act: ~~during~~None 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 x

~~(Note:~~Securities AsRegistered aPursuant ~~voluntary filer not subject~~ to ~~the filing requirements of~~ Section ~~13 or 15~~12(dg) of the ~~Exchange~~ Act,: ~~the~~None ~~registrant has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it were subject to such filing requirements.)~~

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No ______________________________

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent~~is ~~filers~~a ~~pursuant to Item 405 of Regulation S~~well-Kknown (§seasoned ~~229.405 of this chapter) is not contained herein~~issuer, ~~and~~as ~~will~~defined ~~not be contained, to the best of registrant’s knowledge,~~ in ~~definitive~~Rule ~~proxy~~405 ~~or information statements incorporated by reference in Part III~~ of ~~this~~the ~~Form 10-K~~Securities ~~or any amendment to this Form 10-K~~Act. ¨Yes o No x

Indicate by check mark ~~whether~~if the registrant is anot ~~large~~required ~~accelerated~~to ~~filer,~~file anreports ~~accelerated~~pursuant ~~filer,~~to aSection 13 ~~non-accelerated filer,~~ or aSection 15(d) ~~smaller reporting company. See the definitions~~ of ~~“large accelerated filer”, “accelerated filer”, “non-accelerated filer” and “smaller reporting company in Rule 12b of~~ the ~~Exchange~~ Act. Yes x No o

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ¨mark ~~Accelerated~~whether ~~filer~~the ¨registrant ~~Non-accelerated~~(1) has ~~filer~~filed xall ~~Smaller~~reports ~~reporting~~required ~~company~~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 o No x

~~Indicate~~(Note: byAs ~~check~~a ~~mark~~voluntary ~~whether~~filer not subject to the ~~registrant~~filing isrequirements aof ~~shell~~Section 13 ~~company~~or 15(asd) ~~defined~~of inthe ~~Rule~~Exchange ~~12b-2~~Act, the registrant has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act) during the preceding 12 months as if it were subject to such filing requirements. ~~Yes ¨ No x~~)

OnIndicate ~~September 4~~by check mark whether the registrant has submitted electronically and posted on its corporate Web site, ~~2012~~if ~~there~~any, ~~were~~every ~~100~~Interactive ~~shares~~Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the ~~Registrant’s~~preceding ~~Common~~12 ~~Stock,~~months ~~par~~(or ~~value~~for ~~$0.01~~such ~~per~~shorter ~~share,~~period ~~issued~~that the registrant was required to submit and ~~outstanding~~post such files). x Yes o No

~~Table~~Indicate by check mark if disclosure of ~~Contents~~delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company" in Rule 12b-2 of the Exchange Act.

~~TABLE~~Large OFaccelerated ~~CONTENTS~~filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o

ITEM		PAGE
PART I
	Special Note Regarding Forward - Looking Statements
Item 1.	Business		3
Item 1A.	Risk Factors		11
Item 1B.	Unresolved Staff Comments		21
Item 2.	Properties		21
Item 3.	Legal Proceedings		22
Item 4.	Mine Safety Disclosures		24
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		24
Item 6.	Selected Financial Data		24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		48
Item 8.	Financial Statements and Supplementary Data		49
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		107
Item 9A.	Controls and Procedures		107
	Management’s Report on Internal Control over Financial Reporting		107
Item 9B.	Other Information		108
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		109
Item 11.	Executive Compensation		114
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		137
Item 13.	Certain Relationships and Related Transactions, and Director Independence		139
Item 14.	Principal Accountant Fees and Services		141
PART IV
Item 15.	Exhibits and Financial Statement Schedules		142
SIGNATURES			148

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

2On September 3, 2013 there were 100 shares of the Registrant's Common Stock, par value $0.01 per share, issued and outstanding.

~~Table of Contents~~1

~~PART~~Table Iof Contents

~~Special~~CATALENT ~~Note~~PHARMA ~~Regarding~~SOLUTIONS, ~~Forward-Looking Statements~~ INC.

~~Certain~~INDEX ~~information~~TO ~~included~~FORM ~~in this Annual Report on Form~~ 10-K may be deemed to be “forward-looking statements.” All statements, other than statements of historical facts, included in this Form 10-K are forward-looking statements. In particular, statements that we make regarding future market trends are forward-looking statements. When used in this document, the words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions are intended to identify forward-looking statements.

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 statements are not guarantees of our future performance and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements. We disclaim any duty to update any forward-looking statements.



Item		Page
	Part I

	Special Note Regarding Forward - Looking Statements	3

Item 1.	Business	3

Item 1A.	Risk Factors	12

Item 1B.	Unresolved Staff Comments	21

Item 2.	Properties	22

Item 3.	Legal Proceedings	22

Item 4.	Mine Safety Disclosures	23

	Part II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25

Item 6.	Selected Financial Data	25

Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	49

Item 8.	Financial Statements and Supplementary Data	50

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	101

Item 9A.	Controls and Procedures	101

	Management's Report on Internal Control over Financial Reporting	101

Item 9B.	Other Information	102

	Part III

Item 10.	Directors, Executive Officers and Corporate Governance	102

Item 11.	Executive Compensation	107

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	132

Item 13.	Certain Relationships and Related Transactions, and Director Independence	135

Item 14.	Principal Accountant Fees and Services	137

	Part IV

Item 15.	Exhibits and Financial Statement Schedules	139

SIGNATURES		144

We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on our results of operations and financial condition. 2

~~ITEM~~Table 1.of ~~BUSINESS~~Contents

~~General~~ PART I

~~Catalent~~Special ~~Pharma~~Note ~~Solutions,~~Regarding Inc. (“we”, “us”, “our” or the “Company”), a Delaware corporation, is the leading global provider of development solutions and advanced delivery technologies for drugs, biologics and consumer health products. Through our extensive capabilities and deep expertise in product development, we help our customers bring more products to market, faster. Our advanced delivery technology platforms, the broadest and most diverse combination of intellectual property and proven formulation, manufacturing and regulatory expertise available to the industry, enable our customers to bring more products and better treatments to the market. Across both development and delivery, our commitment to reliably supply our customers’ needs serves as the foundation for the value we provide. We operate through four businesses: Development & Clinical Services, Softgel Technologies, Modified Release Technologies, and Medication Delivery Solutions. We believe that through our prior and ongoing investments in growthForward-~~enabling~~Looking capacity and capabilities, our entry into new markets, our ongoing focus on operational and quality excellence, our innovation activities, the sales of existing customer products, and the introduction of new customer products, we will continue to benefit from attractive margins in and realize the growth potential from these areas. Statements

WeCertain ~~have~~information ~~extensive~~included ~~relationships~~in ~~with industry-leading~~this ~~customers.~~Annual InReport ~~Fiscal~~on ~~2012,~~Form we10-K ~~did~~may ~~business~~be ~~with~~deemed 83to ofbe ~~the~~“forward-looking ~~top~~statements.” ~~100~~All ~~global pharmaceutical marketers~~statements, ~~and~~other 41than statements of ~~the~~historical ~~top~~facts, 50included ~~biotechnology~~in ~~marketers.~~this ~~Selected~~Form ~~key~~10-K ~~customers~~are ~~include~~forward-looking ~~Pfizer,~~statements. ~~Johnson &~~In ~~Johnson~~particular, ~~GlaxoSmithKline,~~statements ~~Eli Lilly,~~that ~~Merck,~~we ~~Novartis~~make ~~and~~regarding ~~Roche.~~future Wemarket ~~have~~trends ~~many~~are ~~long~~forward-~~standing~~looking ~~relationships~~statements. ~~with~~When ~~our~~used ~~customers, particularly~~ in ~~advanced~~this ~~delivery technologies~~document, ~~where~~the awords ~~prescription~~“believe,” ~~pharmaceutical~~“expect,” ~~product~~“anticipate,” ~~relationship~~“estimate,” ~~will~~“project,” ~~often~~“plan,” ~~last~~“should,” ~~for~~“intend,” ~~nearly two decades~~“may,” ~~extending from mid-clinical development through the end of the product’s life cycle. We serve customers who require innovative product development~~“will,” ~~superior quality~~“would,” ~~advanced~~“potential” ~~manufacturing~~ and ~~skilled~~similar ~~technical~~expressions ~~services~~are intended to ~~support~~identify ~~their~~forward-looking ~~development and marketed product needs~~statements.

WeThese ~~believe~~statements ~~our~~are ~~customers~~based ~~value~~on usassumptions ~~because~~and ~~our~~assessments ~~depth~~made ofby ~~development~~our ~~solutions~~management ~~and~~in ~~advanced~~light ~~delivery technologies,~~of ~~consistent~~their ~~and~~experience ~~reliable supply, geographic reach,~~ and ~~substantial~~their ~~expertise~~perception ~~enable~~of ushistorical totrends, ~~create~~current aconditions, ~~broad~~expected ~~range~~future ofdevelopments ~~business~~ and ~~product~~other ~~solutions~~factors ~~that~~they ~~can~~believe ~~be customized~~ to ~~fit~~be ~~their individual needs~~appropriate. ~~The~~Any ~~aim~~forward-looking ofstatements ~~our~~are ~~offerings~~not isguarantees toof ~~allow~~ our ~~customers~~future toperformance ~~bring~~and ~~more~~are ~~products~~subject to ~~market~~risks ~~faster,~~ and ~~develop~~uncertainties ~~and market differentiated new products~~ that ~~improve~~could ~~patient~~cause ~~outcomes.~~actual ~~We believe our leading market position~~results, ~~significant~~developments ~~global scale,~~ and ~~diversity~~business ofdecisions ~~customers,~~to ~~offerings, regulatory~~differ ~~categories,~~materially ~~products,~~from ~~and~~those ~~geographies~~contemplated ~~reduce~~by ~~our~~such ~~exposure~~forward-looking tostatements. ~~potential~~We ~~strategic~~disclaim ~~and~~any ~~product~~duty ~~shifts~~to ~~within~~update ~~the~~any ~~industry~~forward-looking statements.

~~Our history of innovation in the advanced delivery of pharmaceutical products formed the foundation of our market-leading business.~~ We ~~have~~can agive ~~track~~no ~~record~~assurances ofthat ~~nearly~~any ~~eight decades~~ of ~~oral dose form innovation, since we first transformed~~ the ~~softgel~~events ~~manufacturing~~anticipated ~~process in the 1930s. We launched the oral dissolving tablet category~~ by ~~commercializing our Zydis® technology in~~ the ~~1980s and, in 2001, introduced an advanced softgel capsule shell, VegiCaps® Soft capsules. Our GPEx® cell line technology for biologics can help bring innovator, bio~~forward-~~similar~~looking ~~and~~statements ~~bio-better~~will ~~products~~occur ~~to the market more rapidly. Today we employ more than 1~~or,~~000~~ ~~scientists~~if ~~and~~any ~~technicians~~of ~~and~~them ~~hold approximately 1~~does,~~400~~ ~~patents~~what ~~and~~impact ~~patent~~they ~~applications~~will ~~in advanced~~have ~~delivery,~~on ~~drug~~our ~~and~~results ~~biologics~~of ~~formulation~~operations and ~~manufacturing.~~financial ~~We apply this portfolio to actively support current and future revenue generation, and we may receive license and exclusivity fees and/or royalties for certain technologies~~condition.

InSocial recent years we have continued to expand our advanced delivery technology portfolio. In Fiscal 2011, we acquired a novel molecular optimization platform, OptiForm™ from GlaxoSmithKline, providing drug developers a new way to identify the best form of a molecule to take forward into development. In 2011, we also in-licensed a development stage oral Media

3We use our website (www.catalent.com), our corporate Facebook page (https://www.facebook.com/pages/Catalent-Pharma-Solutions-LLC/205471596139733) and our corporate Twitter account (@catalentpharma) as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, 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.

~~Table~~ ITEM 1. BUSINESS ~~of Contents~~

~~dissolving~~General tablet alternative, LyoPan™, which we are progressing towards commercialization. In Fiscal 2012, we licensed the novel OptiDose™ controlled release technology from Sanwa Kagaku Kenkyusho Co., Ltd., a commercially successful platform which enables novel modified release options for oral solid dose forms. We also launched OptiMelt™ hot melt technology capabilities, based on growth investments in capabilities and capital assets, and in April 2012 entered into a broad collaboration with BASF in this area. We also have formed active partnerships to extend our technology reach, including collaborations with Bend Research for multiparticulate oral controlled-release products and with Toyobo Biologics Inc. related to GPExR and biologics manufacturing, and have active collaborations with research universities around the world. We believe our own internal innovation activities, supplemented by current and future external partnerships and collaborations, will continue to strengthen and extend our leadership position in the industry for delivery of drugs, biologics and consumer health products.

WeCatalent ~~created~~Pharma Solutions, Inc. (“we”, “us”, “our” ~~Development &~~or ~~Clinical~~the ~~Services~~“Company”), ~~business~~a inDelaware ~~Fiscal~~corporation, ~~2010~~is ~~which~~the ~~unified~~leading ~~all~~global provider of ~~our~~development ~~existing~~solutions ~~development~~and ~~activities~~advanced delivery technologies for drugs, tobiologics ~~address~~and ~~the~~consumer ~~needs~~health ofproducts. Through our ~~pharmaceutical~~extensive capabilities and ~~biotechnology~~ deep expertise in product development, we help our customers ~~for~~bring ~~solutions~~more products to ~~increasingly~~market, ~~complex~~faster, ~~product~~including ~~development~~nearly ~~challenges~~half of new drug products approved by the FDA in the last decade. WeOur ~~have~~advanced ~~continued~~delivery technology platforms, the broadest and most diverse combination of intellectual property and proven formulation, manufacturing and regulatory expertise available to ~~invest~~the industry, enable our customers to ~~expend~~bring more products and better treatments to the ~~capabilities~~market. Across both development and ~~capacity~~delivery, ofour commitment to reliably supply our ~~development~~customers' ~~solutions~~needs is the foundation for the value we provide; annually, ~~including~~we ~~substantial~~produce ~~expansions~~more ofthan ~~cold-chain~~70 ~~capabilities~~billion doses for ~~clinical~~ ~~supplies~~nearly 7,000 customer products. InWe ~~Fiscal~~believe ~~2012~~that through our prior and ongoing investments in growth-enabling capacity and capabilities, weour ~~substantially~~ongoing ~~expanded~~focus on operational and quality excellence, the ~~scale~~sales of ~~this~~existing ~~business~~customer ~~with~~products, the ~~acquisition~~introduction of ~~the~~new ~~Clinical~~customer ~~Trial~~products, ~~Supplies~~our ~~(“CTS”)~~patents ~~business~~and ofinnovation ~~Aptuit~~activities, ~~CTS~~and ~~(See~~our ~~Note~~entry 2into new markets, we will continue to benefit from attractive and differentiated margins, and realize the ~~Consolidated~~growth ~~Financial~~potential ~~Statements)~~from these areas.

~~History~~We have extensive, long-term relationships with a broad and diverse range of industry-leading customers. In fiscal 2013, we did business with 85 of the top 100 branded drug marketers, 20 of the top 25 generics marketers, 41 of the top 50 biologics marketers, and 19 of the top 20 consumer health marketers globally. Selected key customers include Pfizer, Johnson & Johnson, GlaxoSmithKline, Eli Lilly, Merck, Novartis and Roche. We have many long-standing relationships with our customers, particularly in advanced delivery technologies, where we tend to follow a prescription molecule through all phases of its lifecycle, from innovator, development and launch to generics or over-the-counter switch. A prescription pharmaceutical product relationship with an innovator will often last for nearly two decades, extending from mid-clinical development through the end of the product's life cycle. We serve customers who require innovative product development, superior quality, advanced manufacturing and skilled technical services to support their development and marketed product needs.

~~Catalent~~We ~~was~~believe ~~formed~~our incustomers ~~April~~value ~~2007,~~us ~~when~~because weour ~~were~~depth ~~acquired by affiliates~~ of ~~The~~development ~~Blackstone~~solutions ~~Group~~and ~~(“Blackstone”).~~advanced ~~Prior~~delivery ~~to that~~technologies, weintellectual ~~formed~~property, ~~the~~consistent ~~core of the Pharmaceutical Technologies~~ and ~~Services (“PTS”)~~reliable ~~segment~~supply, ofgeographic ~~Cardinal Health~~reach, ~~Inc.~~and ~~(“Cardinal”).~~substantial ~~PTS~~expertise ~~was~~enable inus ~~turn~~to ~~created~~create ~~by Cardinal through~~ a ~~series~~broad ofrange ~~acquisitions, with the intent~~ of ~~creating~~business ~~the~~and ~~world’s~~product ~~leading~~solutions ~~outsourcing~~that ~~provider~~can ofbe ~~specialized,~~customized ~~market-leading solutions~~ to ~~the~~fit ~~global~~their ~~pharmaceutical~~individual ~~and biotechnology industry~~needs. InThe ~~1998,~~aim ~~R.P.~~of ~~Scherer~~our ~~Corporation,~~offerings ~~the~~is ~~market~~to ~~leader~~allow inour ~~advanced~~customers ~~oral~~to ~~drug~~bring ~~delivery~~more ~~technologies,~~products ~~was~~to ~~acquired~~market ~~by Cardinal. In 1999~~faster, ~~Cardinal~~and ~~acquired~~develop ~~Automated~~and ~~Liquid Packaging, Inc., the~~ market ~~leader~~differentiated innew ~~blow-fill-seal~~products ~~technology~~that ~~for~~improve ~~respiratory~~patient ~~treatments, ophthalmics, and other areas~~outcomes. InWe ~~2001,~~believe ~~Cardinal~~our ~~purchased~~leading ~~International~~market ~~Processing Corporation~~position, asignificant ~~provider~~global ~~of oral solid dose forms. In 2002~~scale, ~~PTS~~and ~~entered~~diversity ~~the fee-for-service development solutions market with the acquisition~~ of ~~Magellan Labs~~customers, ~~a leader in the provision of analytical sciences services to the U.S. pharmaceuticals industry. Finally~~offerings, inregulatory ~~2003~~categories, ~~Cardinal acquired Intercare Group PLC~~products, ~~through which~~and wegeographies ~~expanded~~reduce our ~~European~~exposure ~~injectable~~to ~~manufacturing~~potential ~~network.~~strategic ~~During the period from 1996 through 2006 we also made other selective acquisitions of businesses, facilities~~ and ~~technologies~~product inshifts ~~all~~within ~~segments,~~the ~~including our legacy pharmaceutical packaging segment~~industry.

Subsequent to our 2007 acquisition, we have regularly reviewed our portfolio of offerings and operations in the context of our strategic growth plan. As a result of those ongoing assessments, since 2007 we have sold five businesses, including two injectable vial facilities in the U.S., a French oral dose facility, a printed components business (with four facilities), and in Fiscal 2012 our North American commercial packaging business. Concurrent with the sale of the North American commercial packaging business, the Packaging Services segement ceased to be a reportable segment within continuing operations. In addition, the Sterile Technologies segment has been renamed Medication Delivery Solutions. We have also consolidated operations at two other facilities integrating them into the remaining facility network since our acquisition by Blackstone. 3

AsTable ~~further described above and in Note 2 to the Consolidated Financial Statements filed herewith, in Fiscal 2012 we acquired the Clinical Trials Supplies business~~ of ~~Aptuit LLC, combining it into our existing Development & Clinical segment. We also purchased the 49% minority share ownership of our Softgel Technologies business’ German subsidiary.~~ Contents

Our ~~Competitive~~legacy ~~Strengths~~of innovation in the advanced delivery of pharmaceutical products formed the foundation of our market-leading business, with nearly eight decades of oral dose form innovation since we first transformed the softgel manufacturing process in the 1930s. We launched the oral dissolving tablet category by commercializing our Zydis® technology in the 1980s and, in 2001, introduced an advanced softgel capsule shell, VegiCaps® Soft capsules, followed by its introduction to prescription pharmaceuticals as OptiShell™ in 2012. Our GPEx® cell line technology for biologics can help bring innovator, biosimilar and biobetter products to the market more rapidly. Today we employ more than 1,000 scientists and technicians and hold approximately 1,300 patents and patent applications in advanced delivery, drug and biologics formulation and manufacturing. We apply this portfolio to actively support current and future revenue generation, and we may receive license and exclusivity fees and/or royalties for certain technologies.

•In ~~Leading~~recent ~~Provider~~years ofwe ~~Development~~have ~~Solutions~~continued ~~and~~to ~~Advanced~~expand ~~Delivery~~our ~~Technologies~~advanced delivery technology portfolio. In Wefiscal ~~are~~2011, ~~the~~we ~~leading~~acquired ~~provider~~a ofnovel ~~development~~molecular ~~solutions~~optimization platform, OptiForm™ from GlaxoSmithKline, and ~~advanced~~in-licensed ~~delivery~~an ~~technologies~~oral ~~for~~dissolving ~~drugs~~tablet alternative, ~~biologics~~LyoPan™, ~~and~~which ~~consumer~~we ~~health~~are ~~products~~progressing towards commercialization. In ~~the~~fiscal ~~last~~2012, ~~seven~~we ~~years~~licensed OptiDose™ tab-in-tab technology from Sanwa Kagaku Kenkyusho Co., Ltd. Also in 2012, we ~~have~~launched ~~supported~~OptiMelt™ ~~the~~hot ~~development~~melt extrusion capabilities and ~~launch~~capacity, ofand ~~nearly~~entered ~~half~~into ofa ~~FDA~~broad ~~new~~collaboration with BASF in this area. In fiscal 2013, we acquired an exclusive license to market the SMARTag™ precision protein-chemical ~~entity~~engineering ~~product~~technology ~~approvals~~from Redwood Bioscience for advanced antibody-drug conjugates; licensed an innovative taste-masking technology from the New Jersey Institute of Technology; and reached an agreement to acquire a majority share in a Chinese softgel producer, Zhejiang Jiang Yuan Tang Biotechnology Co., ~~With~~Ltd, ~~over~~our 1tenth global softgel facility. We also have formed active partnerships to extend our technology reach,~~000~~ ~~scientists~~including ~~and~~collaborations ~~technicians~~with ~~worldwide~~CTC ~~and~~Bio ~~approximately~~(South 1Korea),~~400~~ ~~patents~~CEVEC (Germany), Bend Research (United States) and ~~patent~~Toyobo ~~applications~~Biologics (Japan), weand ~~possess~~have ~~substantial~~active ~~expertise~~collaborations inwith ~~drug~~research ~~development~~universities around the world. We believe our own internal innovation activities, supplemented by current and ~~advanced~~future ~~delivery~~external ~~technologies~~partnerships and collaborations, will continue to strengthen and ~~help~~extend our ~~customers~~leadership ~~bring~~position ~~more~~in ~~products~~the ~~and~~industry ~~better~~for ~~treatments~~delivery toof ~~market~~drugs, ~~faster~~biologics and consumer health products.

•We ~~Longstanding,~~created ~~Extensive~~our ~~Relationships~~Development ~~with~~& ~~Blue~~Clinical ~~Chip~~Services ~~Customers.~~business Wein ~~have~~fiscal ~~longstanding,~~2010 ~~extensive~~to ~~relationships~~address ~~with~~the ~~leading~~needs of our pharmaceutical and biotechnology customers. for solutions to increasingly complex product development challenges. In ~~Fiscal~~fiscal 2012, we ~~did~~substantially expanded the scale of this business with 83the acquisition of the ~~top~~Clinical ~~100~~Trial ~~global~~Supplies ~~pharmaceutical~~business ~~marketers~~of ~~and~~Aptuit 41LLC of(“Aptuit CTS”) (See Note 2 to the ~~top~~Consolidated 50Financial ~~biotechnology~~Statements). ~~marketers,~~We ashave ~~well~~continued asto ~~approximately~~invest ato ~~thousand~~expand ~~other~~the ~~customers.~~capabilities ~~Regardless~~and capacity of ~~size~~our development solutions, ~~our~~including ~~customers~~substantial ~~all~~expansions ~~seek~~of ~~innovative~~cold-chain ~~product~~clinical ~~development~~supply capabilities and, ~~superior~~in ~~quality~~fiscal 2013, ~~advanced~~expanded ~~manufacturing~~capabilities for oral drugs, and ~~skilled~~both ~~technical~~metered-dose ~~services~~and dry-powder inhalers. Also in fiscal 2013, we formed a China-based clinical supplies joint venture with ShangPharma Corporation, to ~~support~~create ~~their~~the ~~development~~first provider in China of end-to-end clinical supply solutions, and ~~marketed~~announced ~~product~~a ~~needs.~~global Weclinical ~~believe~~research ~~our~~organization ~~customers~~alliance ~~value~~to usfurther ~~because~~streamline ~~our~~the ~~depth~~clinical ofsupply ~~development~~process.

4History

~~Table~~Catalent was formed in April 2007, when we were acquired by affiliates of ~~Contents~~The Blackstone Group L.P. (“Blackstone”). Prior to that, we formed the core of the Pharmaceutical Technologies and Services (“PTS”) segment of Cardinal Health, Inc. (“Cardinal”). PTS was in turn created by Cardinal through a series of acquisitions, with the intent of creating the world's leading outsourcing provider of specialized, market-leading solutions to the global pharmaceutical and biotechnology industry. In 1998, R.P. Scherer Corporation, the market leader in advanced oral drug delivery technologies, was acquired by Cardinal. In 1999, Cardinal acquired Automatic Liquid Packaging, Inc., the market leader in blow-fill-seal technology for respiratory treatments, ophthalmics, and other areas. In 2001, Cardinal purchased International Processing Corporation, a provider of oral solid dose forms. In 2002, PTS entered the fee-for-service development solutions market with the acquisition of Magellan Labs, a leader in analytical sciences services for the U.S. pharmaceuticals industry. Finally, in 2003, Cardinal acquired Intercare Group PLC, through which we expanded our European injectable manufacturing network. During the period from 1996 through 2006 we also made other selective acquisitions of businesses, facilities and technologies in all segments, including our legacy pharmaceutical packaging segment.

~~services~~Subsequent ~~and~~to ~~advanced~~our ~~delivery~~2007 ~~technologies~~acquisition, ~~consistent~~we have regularly reviewed our portfolio of offerings and ~~reliable~~operations ~~supply~~in the context of our strategic growth plan. As a result of those ongoing assessments, ~~geographic~~since ~~reach~~2007 ~~and~~we ~~substantial~~have ~~expertise~~sold ~~enable~~five usbusinesses, toincluding ~~create~~two injectable vial facilities in the U.S., a ~~broad~~French ~~range~~oral ofdose ~~tailored~~facility, ~~solutions~~a printed components business (with four facilities), ~~many~~and ofin ~~which~~fiscal ~~are~~2012 ~~unavailable~~our ~~from~~North American commercial packaging business. We have also consolidated operations at four other ~~individual~~facilities, ~~providers~~integrating them into the remaining facility network since our acquisition by Blackstone.

•As ~~Diversified~~further ~~Operating~~described ~~Platform.~~above Weand ~~are~~in ~~diversified~~Note by2 ~~virtue~~to ofthe ~~our~~Consolidated ~~geographic~~Financial ~~scope,~~Statements ~~our~~filed ~~large customer base~~herewith, ~~the~~in ~~extensive~~fiscal ~~range~~2012 ~~of products~~ we ~~produce,~~acquired ~~our~~the ~~service~~Clinical ~~offerings,~~Trials ~~and~~Supplies ~~our~~business ~~ability to provide solutions at nearly every stage~~ of ~~product~~Aptuit ~~lifecycles. We produce nearly 7~~LLC,~~000~~ ~~distinct~~combining ~~items~~it ~~across~~into ~~multiple~~our ~~categories,~~existing ~~including~~Development ~~brand~~& ~~and~~Clinical ~~generic~~segment. We ~~prescription~~also ~~drugs~~purchased ~~and biologics, over-~~the~~-counter,~~ ~~consumer~~49% ~~health,~~minority ~~veterinary,~~share ~~and~~ownership ~~medical~~of ~~device and diagnostics. In Fiscal 2012,~~ our ~~top~~Softgel 20Technologies ~~products~~business' ~~represented~~German ~~less than approximately one quarter of total revenue~~subsidiary. Further, ~~with~~in nocalendar ~~individual~~2013 ~~product~~we ~~greater~~entered ~~than~~into ~~3%.~~two Wejoint ~~serve~~ventures ~~approximately 1,000 customers~~ in ~~approximately 80 countries~~China, ~~with~~which aprovided majority control of ~~our~~both ~~Fiscal~~a ~~2012~~softgel ~~revenues~~manufacturer ~~coming from outside the United States. This diversity, combined with long product lifecycles~~ and ~~close~~a ~~customer~~newly ~~relationships,~~established ~~has~~clinical ~~contributed~~supply ~~to the stability of our~~ business. ~~It has also allowed us to reduce our exposure to potential strategic, customer and product shifts.~~

• Deep, Broad and Growing Technology Foundation. We have a long track record of innovation across our offerings, which substantially differentiate us from other industry participants. Our culture of creativity and innovation is grounded in our advanced delivery technologies, our scientists and engineers, and our patents and proprietary manufacturing processes throughout our global network. Our global Innovation & Growth function, created in fiscal 2011, drives focused application of resources to highest priority opportunities for both new customer product introductions and platform technology development. As of June 30, 2012, we have more than 450 product development programs in active development across our businesses.4

•Table ~~Significant Investment in Global Manufacturing Network. We have made significant past investments to establish a global manufacturing network, and today hold 4.7 million square feet~~ of manufacturing and laboratory space across five continents. Recent growth-related investments in facilities, capacity and capabilities across our businesses have positioned us for future growth in areas aligned with anticipated future demand. Through our focus on operational, quality and regulatory excellence, we drive ongoing and continuous improvements in safety, productivity and reliable supply to customer expectations, which we believe further differentiate us. Our manufacturing network and capabilities allow us the flexibility to reliably supply the changing needs of our customers while consistently meeting their quality, delivery and regulatory compliance expectations.Contents

•Our ~~High~~Competitive ~~Standards~~Strengths of Regulatory Compliance and Operational and Quality Excellence. We operate our plants in accordance with current good manufacturing practices (“cGMP”), following our own high standards which are consistent with those of many of our large global pharmaceutical and biotechnology customers. We have approximately 1,000 employees around the globe focused on quality and regulatory compliance. More than half of our facilities are registered with the U.S. Food and Drug Administration (“FDA”), with the remaining facilities registered with other applicable regulatory agencies, such as the European Medicines Agency (“EMA”). In some cases, facilities are registered with multiple regulatory agencies. In Fiscal 2012, we underwent more than 60 regulatory audits, as well as hundreds of customer audits.

• ~~Strong~~Leading Provider of Development Solutions and ~~Experienced~~Advanced ~~Management~~Delivery ~~Team~~Technologies. ~~Our~~We ~~executive~~are ~~leadership~~the ~~team~~leading ~~has~~provider ~~been~~of ~~transformed~~development ~~since~~solutions ~~2009~~and advanced delivery technologies for drugs, biologics and ~~today~~consumer ~~has~~health ~~more~~products. ~~than~~In ~~200~~the ~~years~~last ofdecade, ~~combined~~we have supported the development and ~~diverse~~launch ~~experience~~of ~~within~~nearly half of the ~~pharmaceutical~~U.S. Food and ~~healthcare~~Drug ~~industries~~Administration ("FDA") new chemical entity product approvals. With anover ~~average~~1,000 ofscientists ~~more~~and ~~than~~technicians 20worldwide ~~years~~and ofapproximately ~~functional~~1,300 ~~experience~~patents and patent applications, ~~this~~we ~~team~~possess ~~possesses~~substantial ~~deep~~expertise ~~knowledge~~in drug development and aadvanced ~~wide~~delivery ~~network~~technologies, ofand ~~industry~~help ~~relationships~~our customers bring more products and better treatments to market faster.

• ~~Principal~~Longstanding, ~~Shareholder~~Extensive Relationships with ~~Proven~~Blue ~~Healthcare~~Chip ~~Sector Expertise~~Customers. ~~Our~~We ~~principal~~have ~~shareholder~~longstanding, isextensive anrelationships ~~entity~~with ~~controlled~~leading bypharmaceutical ~~affiliates~~and ofbiotechnology ~~The~~customers. ~~Blackstone~~In ~~Group~~fiscal 2013, awe ~~leading~~did ~~global~~business ~~alternative~~with ~~asset~~85 ~~manager~~of ~~and~~the ~~financial~~top ~~advisory~~100 ~~firm.~~branded ~~Current~~drug ~~and~~marketers, ~~prior~~20 ~~healthcare~~of ~~investments~~the bytop ~~The~~25 ~~Blackstone~~generics ~~Group~~marketers, in41 ~~addition~~of to the ~~Company~~top 50 biologics marketers, ~~include:~~and ~~Biomet~~19 of the top 20 consumer health marketers globally, ~~Emcure~~as well as with more than a thousand other customers. Regardless of size, ~~Apria~~our ~~Healthcare~~customers seek innovative product development, ~~Nycomed~~superior quality, ~~DJO~~advanced ~~Inc~~manufacturing and skilled technical services to support their development and marketed product needs., ~~Independent~~We ~~Clinical~~believe ~~Services,~~our ~~Southern~~customers ~~Cross~~value ~~Healthcare~~us because our depth of development services and advanced delivery technologies, ~~Stiefel~~consistent ~~Labs~~and reliable supply, ~~TeamHealth~~geographic reach and ~~Vanguard~~substantial ~~Health~~expertise ~~Systems~~enable us to create a broad range of tailored solutions, many of which are unavailable from other individual providers.

~~Our~~• ~~Strategy~~Diversified Operating Platform. We are diversified by virtue of our geographic scope, our large customer base, the extensive range of products we produce, our service offerings, and our ability to provide solutions at nearly every stage of product lifecycles. We produce nearly 7,000 distinct items across multiple categories, including brand and generic prescription drugs and biologics, over-the-counter, consumer health, veterinary, and medical device and diagnostics. In fiscal 2013, our top 20 products represented approximately half of total revenue, with no individual product greater than 3%. We serve approximately 1,000 customers in approximately 70 countries, with a majority of our fiscal 2013 revenues coming from outside the United States. This diversity, combined with long product lifecycles and close customer relationships, has contributed to the stability of our business. It has also allowed us to reduce our exposure to potential strategic, customer and product shifts.

We• ~~believe~~Deep, ~~that~~Broad weand ~~are~~Growing ~~well~~Technology ~~situated~~Foundation. toWe ~~leverage~~have ~~our market-leading~~a ~~development~~long ~~solutions~~track record of innovation across our offerings, ~~innovative~~which substantially differentiate us from other industry participants. Our culture of creativity and innovation is grounded in our advanced delivery technologies, ~~strong~~our ~~customer~~scientists ~~relationships~~and engineers, and ~~past~~our patents and ~~current~~proprietary ~~growth~~manufacturing ~~investments~~processes throughout our global network. Our global Research & Development team drives focused application of resources to ~~accelerate~~highest ~~future~~priority ~~growth~~opportunities ~~and~~for ~~earn~~both ~~attractive~~new ~~returns~~customer onproduct ~~capital~~introductions and platform technology development. WeAs ~~are~~of ~~pursuing~~June ~~three~~30, ~~key strategic~~2013, ~~growth~~we ~~accelerators:~~have more than 450 product development programs in active development across our businesses.

• ~~Enhancing~~Significant ~~the~~Investment ~~value~~in Global Manufacturing Network. We have made significant past investments to establish a global manufacturing network, and today hold 4.6 million square feet of ~~our~~manufacturing ~~current~~and ~~businesses~~laboratory ~~through~~space ~~expanded~~across five continents. We have invested approximately $439.1 million in the last five years in capital expenditures. Recent and ongoing growth-related investments in facilities, capacity and capabilities across our businesses have positioned us for future growth in areas aligned with anticipated future demand. Through our focus on operational, quality and ~~intellectual~~regulatory ~~property~~excellence, ~~extended~~we ~~capacity~~drive ongoing and continuous improvements in safety, productivity and ~~targeted~~reliable ~~market~~supply ~~strategies~~to ~~addressing~~customer ~~under-served~~expectations, which we believe further differentiate us. Our manufacturing network and capabilities allow us the flexibility to reliably supply the changing needs of our customers~~/geographies~~ while consistently meeting their quality, delivery and ~~adjacent~~regulatory ~~markets~~compliance expectations.

• ~~Proactive~~High ~~market~~Standards ~~entry~~of ~~into~~Regulatory ~~emerging/~~Compliance and Operational and Quality Excellence. We operate our plants in accordance with current good manufacturing practices (“cGMP”), following our own high~~-growth~~ ~~geographies~~standards which are consistent with those of many of our large global pharmaceutical and ~~other~~biotechnology ~~markets~~customers. ~~where~~We wehave approximately 1,000 employees around the globe focused on quality and regulatory compliance. More than half of our facilities are ~~currently~~registered ~~only~~with ~~narrowly~~the ~~represented~~FDA, ~~including~~with ~~but~~the ~~not~~remaining ~~limited~~facilities toregistered ~~China~~with other applicable regulatory agencies, ~~Brazil~~such as the European Medicines Agency (“EMA”). In some cases, ~~and~~facilities ~~Japan~~are registered with multiple regulatory agencies. In fiscal 2013, we underwent more than 38 regulatory audits, as well as hundreds of customer audits.

5• Strong and Experienced Management Team. Our executive leadership team has been transformed since 2009, and today has more than 200 years of combined and diverse experience within the pharmaceutical and healthcare industries. With an average of more than 20 years of functional experience, this team possesses deep knowledge and a wide network of industry relationships.

~~Table of Contents~~5

•Table ~~Expanding our proactive development~~ of ~~novel, improved products which leverage our advanced delivery technology portfolio, from idea through initial proof of concept, to enable us to retain a greater share of the value of such products.~~Contents

To• ~~realize~~Principal ~~these, we~~Shareholder ~~will~~with ~~continue~~Proven toHealthcare ~~focus~~Sector onExpertise. ~~our~~Our ~~core~~principal ~~competencies:~~shareholder ~~quality~~is ~~and~~an ~~compliance;~~entity ~~operational,~~controlled ~~commercial~~by ~~and~~affiliates ~~new~~of ~~product~~Blackstone, ~~introduction~~a ~~excellence;~~leading ~~market-driven~~global alternative asset manager and ~~patient-centric~~financial ~~innovation;~~advisory firm. Current and ~~talent~~prior ~~acquisition~~healthcare investments by Blackstone, ~~development~~in ~~and~~addition ~~retention~~to the Company, include: Biomet, Inc., WeEmcure ~~also expect~~Pharmaceuticals toLtd., ~~pursue~~Apria ~~selected~~Healthcare ~~acquisitions~~Group ofInc., ~~other~~Nycomed ~~businesses~~Holding ~~that~~A/S, ~~are~~DJO ~~aligned~~Global ~~with~~LLC, ~~our~~Independent ~~growth~~Clinical ~~strategies~~Services Ltd, Southern Cross Healthcare Group PLC, Stiefel Laboratories, Inc, Team Health Holdings, Inc., and Vanguard Health Systems, Inc.

Our ~~Segments~~ Strategy

~~Our~~We believe that we are well situated to leverage our market-leading development solutions offerings, innovative delivery technologies, strong customer relationships, and ~~services~~prior ~~are~~and ~~summarized~~ongoing ~~below~~growth byinvestments ~~reporting~~to ~~segment~~accelerate future growth and earn attractive returns on capital. We are pursuing three key strategic growth accelerators:

Segment	Offerings and Services	Fiscal 2012Revenue*
		(in millions)
Development & Clinical Services	• Manufacturing, packaging, storage, distribution and inventory management for global clinical trials of drugs and biologics; analytical and bioanalytical development and testing; scientific and regulatory consulting services; development services and clinical manufacturing for conventional oral dose forms; and development and manufacturing of products.	$	268.3
Oral Technologies	• Formulation, development and manufacturing of prescription and consumer health products using our proprietary softgel, LiquiGel®, Vegicaps® and Zydis® technologies; our recently licensed development stage OptiDose™ and Lyopan™ technologies; as well as other proprietary and conventional oral drug delivery technologies.	$	1,220.2
Medication Delivery Solutions	• Formulation, development, and manufacturing for prefilled syringes and other injectable formats; blow-fill-seal unit dose development and manufacturing; and biologic cell line development and manufacturing, including our GPEx® protein expression technology.	$	223.9


•	Enhancing the value of our current businesses through expanded capabilities and intellectual property, extended capacity, and targeted market strategies addressing under-served customers/geographies and adjacent markets.

*• ~~Segment~~Proactive ~~Revenue~~market ~~includes~~entry ~~inter~~into emerging/high-~~segment~~growth ~~revenue~~geographies ofand ~~$17.6~~other ~~million~~markets where we are currently only narrowly represented, including, but not limited to, China, Brazil, and Japan.

~~This~~• ~~table~~Expanding ~~should~~our beproactive ~~read~~development inof ~~conjunction~~novel, ~~with~~improved ~~Note~~products 15which leverage our advanced delivery technology portfolio, from idea through initial proof of concept, to enable us to retain a greater share of the ~~Consolidated~~value ~~Financial~~of ~~Statements.~~such products.

~~Development~~To realize these, we will continue to focus on our core competencies: quality and ~~Clinical~~compliance; ~~Services~~operational, commercial and new product introduction excellence; market-driven and patient-centric innovation; and talent acquisition, development and retention. We also expect to pursue selected acquisitions of other businesses that are aligned with our growth strategies.

Our ~~Development &~~Segments Clinical Services segment provides manufacturing, packaging, storage and inventory management for drugs and biologics in clinical trials. We offer customers flexible solutions for clinical supplies production, and provide distribution and inventory management support for both simple and complex clinical trials. This includes dose form manufacturing or over-encapsulation where needed; supplying placebos, comparator drug procurement and clinical packages and kits for physicians and patients; inventory management; investigator kit ordering and fulfillment; and return supply reconciliation and reporting. We support trials in all regions of the world through our facilities and distribution network. In Fiscal 2012 we substantially expanded this business via the Aptuit CTS acquisition in February 2012 (see Note 2 to the Consolidated Financial Statements for further discussion.)

We also offer analytical chemical and cell-based testing and scientific services, respiratory products formulation and manufacturing, regulatory consulting, and bioanalytical testing for biologic products. Our ~~respiratory product capabilities include development services for inhaled products for delivery via metered dose inhalers, dry powder inhalers and nasal sprays. Demand for our~~ offerings ~~is driven by the need for scientific expertise~~ and ~~depth and breadth of~~ services ~~offered,~~are assummarized ~~well~~below as by ~~the~~reporting ~~reliable supply thereof, including quality, execution and performance~~segment. ~~We provide global regulatory and clinical support services for our customers’ regulatory and clinical strategies during all stages of development.~~

Oral Technologies



Segment	Offerings and Services	Fiscal 2013 Revenue*
(Dollars in millions)
Development & Clinical Services	Manufacturing, packaging, storage, distribution and inventory management for global clinical trials of drugs and biologics; analytical and bioanalytical development and testing; scientific and regulatory consulting services; development services and manufacturing for conventional oral dose forms; and development and manufacturing of products.	$	404.8
Oral Technologies	Formulation, development and manufacturing of prescription and consumer health products using our proprietary softgel, Liqui-Gel^®, Vegicaps^®, OptiShell™, OptiDose™, OptiMelt™, and Zydis^® technologies; our development stage OptiDose™ technology; as well as other proprietary and conventional oral drug delivery technologies.	$	1,186.3
Medication Delivery Solutions	Formulation, development, and manufacturing for prefilled syringes and other injectable formats; blow-fill-seal unit dose development and manufacturing; and biologic cell line development and manufacturing, including our GPEx® and SMARTag™ technologies.	$	219.3

~~Our~~*Segment ~~Oral~~Revenue ~~Technologies~~includes inter-segment ~~provides~~revenue ~~advanced oral delivery technologies, including formulation, development and manufacturing~~ of ~~oral dose forms for prescription and consumer health products~~$10.1 ~~These oral dose forms include softgel, modified release and immediate release solid oral technology products~~million. ~~At certain facilities we also provide integrated primary packaging services for the products we manufacture.~~

6This table should be read in conjunction with Note 14 to the Consolidated Financial Statements.

~~Table~~Development ofand ~~Contents~~Clinical Services

~~Through~~Our ~~our~~Development & ~~Softgel~~Clinical ~~Technologies~~Services ~~business,~~segment weprovides ~~provide~~manufacturing, ~~formulation~~packaging, ~~development~~storage and ~~manufacturing~~ ~~services~~inventory management for ~~soft~~drugs ~~gelatin~~and ~~capsules,~~biologics ~~or “softgels”, which we first commercialized~~ in ~~the~~clinical ~~1930s~~trials. We ~~are~~offer ~~the~~customers ~~market~~flexible ~~leader~~solutions infor ~~overall~~clinical ~~softgel~~supplies ~~manufacturing~~production, and ~~hold~~provide ~~the~~distribution ~~leading market position in the prescription arena. Our principal softgel technologies include traditional softgel capsules (in which the shell is made from animal-derived materials)~~ and ~~VegiCaps~~inventory ~~capsules~~management ~~(in~~support ~~which~~for ~~the~~both ~~shell~~simple ~~is made from vegetable-derived materials), which are used in a broad range of customer products including prescription drugs, over-the-counter medications,~~ and ~~vitamins~~complex ~~and~~clinical ~~supplements~~trials. ~~Softgel~~This ~~capsules~~includes ~~encapsulate~~dose ~~liquid,~~form ~~paste~~manufacturing or ~~oil~~over-~~based~~encapsulation ~~active~~where ~~compounds~~needed; insupplying ~~solution~~placebos, orcomparator ~~suspension~~drug ~~into~~procurement anand ~~outer~~clinical ~~shell,~~packages ~~filling~~ and ~~sealing the~~kits ~~capsule simultaneously. Softgels have historically been used to solve formulation challenges or technical issues~~ for aphysicians ~~specific~~and ~~drug,~~patients; toinventory ~~help~~management; ~~improve~~investigator ~~the~~kit ~~clinical~~ordering ~~performance~~and offulfillment; ~~compounds, to provide important market differentiation, particularly for over-the-counter compounds,~~ and toreturn ~~provide~~supply ~~safe~~reconciliation ~~handling of hormonal, potent~~ and ~~cytotoxic drugs~~reporting. We ~~also~~support ~~participate~~trials in ~~the~~all ~~softgel vitamin, mineral and supplement business in selected~~ regions ~~around~~of the world. ~~With~~through ~~the 2001 introduction of~~ our ~~vegetable-derived~~facilities ~~softgel shell, VegiCaps capsules, drug~~ and ~~consumer~~distribution health manufacturers have been able to extend the softgel dose form to a broader range of active ingredients and serve patient/consumer populations that were previously inaccessible due to religious, dietary or cultural preferencesnetwork. ~~Our~~In ~~VegiCaps~~fiscal ~~capsules~~2012 ~~are patent protected in most major global markets. Physician and patient studies~~ we ~~have~~substantially ~~conducted~~expanded ~~have~~this ~~demonstrated~~business avia ~~preference~~the ~~for~~Aptuit ~~softgels~~CTS ~~versus traditional~~acquisition ~~tablet and hard capsule dose forms~~ in ~~terms~~February of2012 ~~ease~~(see ofNote ~~swallowing,~~2 ~~real or perceived speed of delivery, ability~~ to ~~remove~~the ~~or eliminate unpleasant odor or taste and, for physicians, perceived improved patient adherence with dosing regimens.~~

Through our Modified Release Technologies business we provide formulation, development and manufacturing services for fast-dissolve tablets and both proprietary and conventional controlled release products. We launched our orally dissolving tablet business in 1986 with the introduction of Zydis tablets, a unique oral dosage form that is freeze-dried in its package, can be swallowed without water, and typically dissolves in the mouth in less than three seconds. Most often used for indications, drugs and patient groups that can benefit from rapid oral disintegration, the Zydis technology is utilized in a wide range of products and indications, including treatments for a variety of central nervous system-related conditions such as migraines, Parkinsons’ Disease, schizophrenia, and pain-relief. Zydis tablets continue to be used in new ways by our customers as we extend the application of the technology to new categories, such as for immunotherapies, vaccines and biologics delivery. We have recently added two new technology platforms to the Modified Release business portfolio, including the highly flexible OptiDose technology, already commercially proven in Japan, and the development stage LyoPan oral dissolving tablet technology. We plan to continue to expand the development pipeline of customer products for all of our Modified Release technologies. Representative Modified Release Technology business customers include Pfizer, Novartis, Merck, GlaxoSmithKline, Eli Lilly and Johnson & Johnson. 6

~~Medication~~Table ~~Delivery~~of ~~Solutions~~ Contents

~~Our~~Consolidated ~~Medication~~Financial ~~Delivery~~Statements ~~Solutions segment provides formulation, development and manufacturing services~~ for ~~delivery~~further ~~of drugs and biologics~~discussion), ~~administered via injection, inhalation~~ and ophthalmic routes, using both traditional and advanced technologies. Our range of injectable manufacturing offerings includes filling drugs or biologics into pre-filled syringes and bags, with flexibility to accommodate other formats within our existing network, focused increasingly on complex and difficult products. With our range of technologies we are able to meet a wide range of specifications, timelines and budgets. The complexity of the manufacturing process, the importance of experience and know-how, regulatory compliance, and high start-up capital requirements create significant barriers to entry and, as a result, limit the number of competitors in ~~the~~fiscal ~~market.~~2013 ~~For~~formed ~~example, blow-fill-seal is an advanced aseptic processing technology which uses~~ a ~~continuous~~joint ~~process~~venture ~~to form, fill~~ with ~~drug,~~ShangPharma ~~and~~Corporation seal a plastic container in a sterile environment. Blow-fill-seal units are currently used for a variety of pharmaceuticals in liquid form, such as respiratory, ophthalmic and optic products. We are a leader in the outsourced blow-fill-seal market, and operate one of the largest capacity commercial manufacturing blow-fill-seal facilities in the world. Our sterile blow-fill-seal business provides flexible and scalable solutions for unit-dose delivery of complex formulations such as suspensions and emulsions, as well as innovative design and engineering container design and manufacturing solutions. Our regulatory expertise can lead to ~~decreased~~expand ~~time to commercialization, and~~ our ~~dedicated development production lines support feasibility, stability and~~ clinical ~~runs.~~ Wesupply ~~plan~~services tonetwork ~~continue~~into ~~to expand our product line in existing and new markets, and in higher margin specialty products with additional respiratory, ophthalmic, and injectable applications~~China. ~~Representative customers include Pfizer, Sanofi-Aventis, Novartis and Roche.~~

~~Our~~We ~~biologics~~also ~~offerings~~offer ~~include~~analytical ~~our~~chemical ~~formulation development~~ and cell-~~line manufacturing~~ based ontesting ~~our~~and ~~advanced~~scientific ~~and~~services, ~~patented~~respiratory ~~Gene~~products ~~Product~~formulation ~~Expression~~and ~~(“GPEx”)~~manufacturing, ~~technology~~regulatory consulting, ~~which~~and isbioanalytical ~~used~~testing tofor ~~develop~~biologic ~~stable,~~products. ~~high-yielding~~Our ~~mammalian~~respiratory ~~cell~~product ~~lines~~capabilities include development and manufacturing services for ~~both~~inhaled ~~innovator~~products ~~and~~for ~~bio-similar~~delivery ~~biologic~~via ~~compounds.~~metered ~~Our~~dose ~~GPEx®~~inhalers, ~~technology~~dry ~~can~~powder ~~provide~~inhalers ~~rapid~~and ~~cell~~nasal ~~line~~sprays. We also provide formulation development, ~~high~~and ~~biologics~~clinical ~~production~~and ~~yields,~~commercial ~~flexibility~~manufacturing for conventional and ~~versatility~~specialty oral dose forms. We ~~are~~provide ~~investing~~global inregulatory ~~expanded~~and ~~capability~~clinical ~~and~~support ~~capacity~~services tofor ~~produce~~our customers' regulatory and clinical ~~scale~~strategies ~~biologic~~during ~~supplies;~~all ~~once~~stages ~~complete,~~of ~~combined~~development. ~~with~~Demand ~~offerings~~for ~~from~~our ~~other~~offerings ~~parts~~is ofdriven ~~Catalent~~by ~~and~~the ~~external~~need ~~partners,~~for wescientific ~~can~~expertise ~~enable~~and adepth ~~developer~~and breadth of ~~new~~services ~~biologic entities~~offered, ~~biosimilars~~ oras ~~biobetters~~well toas ~~bring~~by athe ~~product~~reliable ~~from~~supply ~~gene~~thereof, toincluding ~~market commercialization~~quality, ~~faster.~~execution and performance.

7Oral Technologies

~~Table~~Our Oral Technologies segment provides advanced oral delivery technologies, including formulation, development and manufacturing of ~~Contents~~oral dose forms for prescription and consumer health products across all phases of a molecule's lifecycle. These oral dose forms include softgel, modified release and immediate release solid oral technology products. At certain facilities we also provide integrated primary packaging services for the products we manufacture.

~~Development~~Through our Softgel Technologies business, we provide formulation, development and ~~Product~~manufacturing ~~Supply~~services ~~Chain~~for ~~Solutions~~soft gelatin capsules, or “softgels”, which we first commercialized in the 1930s as the original innovator of softgel technology. We are the market leader in overall softgel manufacturing, and hold the leading market position in the prescription arena. Our principal softgel technologies include traditional softgel capsules (in which the shell is made from animal-derived materials) and VegiCaps and OptiShell capsules (in which the shell is made from vegetable-derived materials), which are used in a broad range of customer products including prescription drugs, over-the-counter medications, and vitamins and supplements. Softgel capsules encapsulate liquid, paste or oil-based active compounds in solution or suspension into an outer shell, filling and sealing the capsule simultaneously. Softgels have historically been used to solve formulation challenges or technical issues for a specific drug, to help improve the clinical performance of compounds, to provide important market differentiation, particularly for over-the-counter compounds, and to provide safe handling of hormonal, potent and cytotoxic drugs. We also participate in the softgel over-the-counter and vitamin, mineral and supplement business in selected regions around the world. With the 2001 introduction of our vegetable-derived softgel shell, VegiCaps capsules, drug and consumer health manufacturers have been able to extend the softgel dose form to a broader range of active ingredients and serve patient/consumer populations that were previously inaccessible due to religious, dietary or cultural preferences. In recent years this platform has been extended to pharmaceutical active ingredients via the OptiShell platform. Our VegiCaps and OptiShell capsules are patent protected in most major global markets. Physician and patient studies we have conducted have demonstrated a preference for softgels versus traditional tablet and hard capsule dose forms in terms of ease of swallowing, real or perceived speed of delivery, ability to remove or eliminate unpleasant odor or taste and, for physicians, perceived improved patient adherence with dosing regimens.

InThrough ~~addition~~our toModified ~~our~~Release ~~proprietary~~Technologies ~~offerings,~~business we ~~are~~provide ~~also~~formulation, ~~differentiated~~development inand ~~the~~manufacturing ~~market~~services byfor fast-dissolve tablets and both proprietary and conventional controlled release products. We launched our ~~ability~~orally todissolving ~~offer~~tablet abusiness ~~broad~~in ~~range~~1986 with the introduction of ~~innovative development~~Zydis ~~and~~tablets, ~~product~~a ~~supply~~unique ~~solutions~~oral ~~which~~dosage form that is freeze-dried in its package, can be ~~combined~~swallowed orwithout ~~tailored~~water, and typically dissolves in ~~many~~the ~~ways~~mouth toin ~~enable~~less ~~our~~than ~~customers~~three ~~take~~seconds. ~~their~~Most ~~drugs~~often used for indications, ~~biologics~~drugs and ~~consumer~~patient ~~health~~groups ~~products~~that can benefit from ~~laboratory~~rapid tooral ~~market.~~disintegration, ~~Once~~the aZydis ~~product~~technology is onutilized ~~the~~in ~~market,~~a wewide ~~can~~range ~~provide comprehensive~~of ~~integrated~~products ~~product~~and ~~supply~~indications, ~~from~~including ~~the~~treatments ~~sourcing~~for a variety of ~~the~~central ~~bulk~~nervous ~~drug~~system-related toconditions ~~comprehensive~~such ~~manufacturing~~as migraines, Parkinsons' Disease, schizophrenia, and ~~packaging~~pain relief. Zydis tablets continue to be used in new ways by our customers as we extend the ~~testing~~application ~~required~~of ~~for~~the ~~release~~technology to ~~distribution~~new categories, such as for immunotherapies, vaccines and biologics delivery. ~~Customer~~More ~~solutions~~recently we ~~develop~~have ~~are~~added ~~flexible~~three new technology platforms to the Modified Release business portfolio, ~~scalable~~including ~~and~~the ~~creative~~highly flexible OptiDose tab-in-tab technology, soalready ~~that they~~commercially ~~meet~~proven in Japan; the ~~unique~~OptiMelt ~~needs~~hot ofmelt ~~both~~extrusion ~~large~~technology; and ~~emerging~~the ~~companies,~~development ~~and~~stage ~~for~~LyoPan ~~products~~oral ofdissolving ~~all~~tablet ~~sizes~~technology. We ~~believe~~plan ~~that~~to ~~our~~continue ~~development~~to ~~and~~expand ~~product~~the ~~supply~~development ~~solutions~~pipeline ~~will~~of ~~continue~~customer toproducts ~~contribute~~for toall of our ~~future~~Modified ~~growth~~Release technologies.

~~Sales~~Representative Oral Technologies business customers include Pfizer, Novartis, Merck, GlaxoSmithKline, Eli Lilly and ~~Marketing~~Johnson & Johnson.

~~Our~~Medication ~~target~~Delivery customers include large pharmaceutical and biotechnology companies, mid-size, emerging and specialty pharmaceutical and biotechnology companies, and consumer health companies, along with companies in other selected healthcare market segments. We have longstanding, extensive relationships with leading pharmaceutical and biotechnology customers. In Fiscal 2012, we did business with 83 of the top 100 global pharmaceutical marketers, 41 of the top 50 biotechnology marketers, and approximately 1,000 other customers. Faced with access, pricing and reimbursement pressures as well as other market challenges, large pharmaceutical and biotechnology companies have increasingly sought partners to enhance the clinical competitiveness of their drugs and biologics and improve their R&D productivity, while reducing their fixed cost base. Many mid-size, emerging and specialty pharmaceutical and biotechnology companies, while facing the same pricing and market pressures, have chosen not to build a full infrastructure, but rather to partner with other companies—through licensing agreements, collaborations or outsourcing—to access the critical skills, technologies and services required to bring their products to market. Consumer health companies require rapidly-developed, innovative dose forms and formulations to keep up in the fast-paced over-the-counter medication and vitamins markets. These market segments are all critically important to our growth, but require distinct solutions, marketing and sales approaches, and market strategy. Solutions

WeOur ~~follow~~Medication aDelivery ~~hybrid~~Solutions ~~demand~~segment ~~generation~~provides ~~organization model~~formulation, ~~with~~development ~~global~~ and ~~growth~~manufacturing ~~account~~services ~~teams~~for ~~offering~~delivery ~~the full breadth~~ of ~~Catalent’s~~drugs ~~solutions~~and ~~to selected accounts~~biologics, ~~and~~administered ~~technical~~via ~~specialist~~injection, ~~teams providing~~inhalation ~~the in-depth technical knowledge~~ and ~~practical~~ophthalmic ~~experience essential for each individual offering. All business development and field sales representatives ultimately report to a single sales head~~routes, ~~and~~using ~~significant~~both ~~investments~~traditional ~~have been made in enhancing their skills~~ and ~~capabilities~~advanced technologies. Our ~~sales~~range ~~organization currently consists~~ of ~~more~~injectable ~~than~~manufacturing ~~160~~offerings ~~full-time,~~includes ~~experienced~~filling ~~sales~~drugs ~~professionals,~~or ~~supported~~biologics byinto ~~inside~~pre-filled ~~sales and sales operations. We also have completed building a dedicated strategic marketing team~~syringes, ~~providing~~with ~~strategic~~flexibility ~~market~~to ~~and~~accommodate ~~product~~other ~~planning~~formats ~~and~~within ~~management for~~ our ~~offerings.~~existing ~~Supporting these marketing plans~~network, wefocused ~~participate~~increasingly ~~in major trade shows relevant to the offerings globally and ensure adequate visibility to our offerings and solutions through a comprehensive print and~~ on~~-line~~ ~~advertising,~~complex ~~professional~~pharmaceuticals ~~training~~ and ~~publicity program.~~

~~Global Accounts~~ 7

WeTable ~~manage selected accounts globally due to their materiality and growth potential by establishing strategic plans, goals and targets. We recorded approximately 47%~~ of our total revenue in Fiscal 2012 from these global accounts. These accounts are assigned a dedicated business development professional with substantial industry experience. These account leaders, along with members of the executive leadership team, are responsible for managing and extending the overall account relationship. Growing sales, profitability, and increasing account penetration are key goals and are directly linked to compensation. Account leaders also work closely with the rest of the sales organization to ensure alignment around critical priorities for the accounts. Contents

~~Emerging~~biologics. With our range of technologies we are able to meet a wide range of specifications, ~~Specialty~~timelines and ~~Virtual~~budgets. ~~Accounts~~The complexity of the manufacturing process, the importance of experience and know-how, regulatory compliance, and high start-up capital requirements create significant barriers to entry and, as a result, limit the number of competitors in the market. For example, blow-fill-seal is an advanced aseptic processing technology which uses a continuous process to form, fill with drug, and seal a plastic container in a sterile environment. Blow-fill-seal units are currently used for a variety of pharmaceuticals in liquid form, such as respiratory, ophthalmic and optic products. We are a leader in the outsourced blow-fill-seal market, and operate one of the largest capacity commercial manufacturing blow-fill-seal facilities in the world. Our sterile blow-fill-seal business provides flexible and scalable solutions for unit-dose delivery of complex formulations such as suspensions and emulsions, as well as innovative design and engineering container design and manufacturing solutions. Our regulatory expertise can lead to decreased time to commercialization, and our dedicated development production lines support feasibility, stability and clinical runs. We plan to continue to expand our product line in existing and new markets, and in higher margin specialty products with additional respiratory, ophthalmic, and injectable applications. Representative customers include Pfizer, Sanofi-Aventis, Novartis and Roche.

~~Emerging,~~Our ~~specialty~~biologics ~~and~~offerings ~~virtual~~include ~~pharmaceutical~~our formulation development and ~~biotechnology~~cell-line ~~companies~~manufacturing ~~are~~based ~~expected~~on toour beadvanced aand ~~critical~~patented ~~driver~~Gene ofProduct ~~industry~~Expression ~~growth globally.~~(“GPEx”) ~~Historically~~technology, ~~many~~which ofis ~~these~~used ~~companies have chosen not~~ to ~~build~~develop ~~a full infrastructure~~stable, ~~but~~high-yielding ~~rather~~mammalian ~~partner~~cell ~~with~~lines ~~other~~for ~~companies~~both toinnovator ~~produce~~and ~~their~~bio-similar ~~products~~biologic compounds. WeOur ~~expect~~GPEx® ~~them~~technology tocan ~~continue~~provide torapid docell soline ~~in the future~~development, ~~providing~~high abiologics ~~critical~~production ~~source~~yields, ~~for future~~flexibility ~~integrated~~and ~~solution demand~~versatility. In Wefiscal ~~expect~~2013, towe ~~continue~~launched ~~to increase~~ our ~~penetration~~recently ofcompleted ~~geographic~~biologics ~~clusters~~facility ~~of emerging companies~~ in ~~North America~~Madison, ~~Europe~~Wisconsin, ~~South~~with ~~America~~expanded capability and ~~Asia.~~capacity Weto ~~regularly~~produce ~~use~~clinical ~~active~~scale ~~pipeline~~biologic ~~screening~~supplies; ~~and~~combined ~~customer~~with ~~targeting~~offerings ~~to identify~~from ~~the~~other ~~optimal~~businesses ~~candidates~~of ~~for~~Catalent ~~partnering~~and ~~based~~external onpartners, ~~product~~we ~~profiles,~~now ~~funding~~provide ~~status,~~the ~~and~~broadest ~~relationships,~~range toof ~~ensure~~technologies ~~that~~and ~~our~~services ~~technical~~supporting ~~sales~~the ~~specialists~~development and ~~field~~launch ~~sales~~of ~~representatives~~new ~~develop~~biologic ~~custom~~entities, ~~solutions~~biosimilars ~~designed~~or biobetters to ~~address~~bring ~~the~~a ~~specific needs~~product offrom ~~customers~~gene into ~~the~~ market. commercialization, faster.

~~Contractual~~Development ~~Arrangements~~and Product Supply Chain Solutions

WeIn ~~generally~~addition ~~enter~~to ~~into~~our aproprietary ~~broad~~offerings, ~~range~~we ofare ~~contractual~~also ~~arrangements~~differentiated ~~with~~in the market by our ~~customers,~~ability ~~including~~to ~~agreements~~bring ~~with~~together ~~respect~~our development solutions and advanced delivery technologies to ~~feasibility,~~ offer innovative development, and product supply, ~~licenses~~solutions which can be combined or tailored in many ways to enable our customers to take their drugs, biologics and ~~quality.~~consumer ~~The~~health ~~terms~~products offrom ~~these~~laboratory ~~contracts~~to ~~vary~~market. ~~significantly~~Once ~~depending~~a product is on the ~~offering~~market, ~~and~~we ~~customer~~can ~~requirements.~~provide ~~Some~~comprehensive integrated product supply, from the sourcing of ~~our~~the ~~agreements~~bulk ~~may~~drug ~~include~~to acomprehensive ~~variety~~manufacturing ofand ~~revenue~~packaging ~~arrangements~~to ~~such~~the astesting ~~fee-~~required for~~-service~~ release to distribution. Customer solutions we develop are flexible, ~~royalties~~scalable and creative, ~~profit-sharing~~ so that they meet the unique needs of both large and ~~fixed~~emerging ~~fees~~companies, and for products of all sizes. We ~~generally~~believe ~~secure~~that ~~pricing~~our development and ~~contract~~product ~~mechanisms~~supply insolutions will continue to contribute to our ~~supply~~future growth.

8Sales and Marketing

~~Table~~Our target customers include large pharmaceutical and biotechnology companies, mid-size, emerging and specialty pharmaceutical and biotechnology companies, and consumer health companies, along with companies in other selected healthcare market segments such as animal health and medical devices. We have longstanding, extensive relationships with leading pharmaceutical and biotechnology customers. In fiscal 2013, we did business with 85 of ~~Contents~~the top 100 branded drug marketers, 20 of the top 25 generics marketers, 41 of the top 50 biologics marketers, and 19 of the top 20 consumer health marketers globally, as well as with more than a thousand other customers. Faced with access, pricing and reimbursement pressures as well as other market challenges, large pharmaceutical and biotechnology companies have increasingly sought partners to enhance the clinical competitiveness of their drugs and biologics and improve their R&D productivity, while reducing their fixed cost base. Many mid-size, emerging and specialty pharmaceutical and biotechnology companies, while facing the same pricing and market pressures, have chosen not to build a full infrastructure, but rather to partner with other companies-through licensing agreements, collaborations or outsourcing to access the critical skills, technologies and services required to bring their products to market. Consumer health companies require rapidly-developed, innovative dose forms and formulations to keep up in the fast-paced over-the-counter medication and vitamins markets. These market segments are all critically important to our growth, but require distinct solutions, marketing and sales approaches, and market strategy.

~~agreements~~We ~~that~~follow ~~allow~~a ~~for~~hybrid ~~periodic~~demand ~~resetting~~generation oforganization ~~pricing~~model, ~~terms~~with global and, ingrowth ~~some~~account ~~cases,~~teams ~~these~~offering ~~agreements~~the ~~provide~~full ~~for~~breadth ~~our~~of ~~ability~~Catalent's solutions to ~~renegotiate~~selected ~~pricing~~accounts, inand ~~the~~technical ~~event~~specialist ofteams ~~certain~~providing ~~price~~the ~~increases~~in-depth ~~for~~technical ~~the raw~~knowledge ~~materials~~and ~~utilized~~practical inexperience ~~the~~essential ~~products~~for weeach ~~make~~individual offering. ~~Our~~All ~~typical~~business ~~supply~~development ~~agreements~~and ~~include~~field ~~indemnification~~sales ~~from~~representatives ~~our~~ultimately ~~customers~~report ~~for~~to ~~product~~a ~~liability~~single ~~and~~sales ~~intellectual~~head, ~~property matters~~ and ~~caps~~significant onongoing ~~Catalent’s~~investments ~~contractual~~are ~~liabilities,~~made ~~subject~~to inenhance ~~each case~~their toskills ~~negotiated~~and ~~exclusions~~capabilities. InOur ~~addition,~~sales ~~our~~organization ~~typical~~currently ~~manufacturing~~consists ~~supply~~of ~~agreement~~more ~~terms~~than ~~range~~150 ~~from~~full-time, ~~two~~experienced tosales ~~five~~professionals, ~~years~~supported ~~with~~by ~~regular~~inside ~~renewals~~sales ofand ~~one~~sales tooperations. ~~three~~We ~~years,~~also ~~although~~have ~~some~~built ofa ~~our~~dedicated ~~agreements~~strategic ~~are~~marketing ~~terminable~~team, ~~upon~~providing ~~much~~strategic ~~shorter~~market ~~notice~~and ~~periods, such~~product asplanning 30and ormanagement 90for ~~days. For~~ our ~~development~~offerings. Supporting ~~solutions~~these ~~offerings~~marketing plans, we ~~may~~participate ~~enter~~in ~~into~~major ~~master~~trade ~~service~~shows ~~agreements,~~relevant ~~which~~to ~~provide~~the ~~for~~offerings ~~standardized~~globally ~~terms~~ and ~~conditions,~~ensure ~~which~~adequate ~~make~~visibility itto ~~easier~~our offerings and ~~quicker~~solutions ~~for~~through ~~customers~~a ~~with~~comprehensive ~~multiple~~print ~~development~~and ~~needs~~on-line ~~to access~~advertising ~~Catalent’s~~and ~~offerings~~publicity program.

~~Manufacturing Capabilities~~ 8

WeTable ~~operate manufacturing facilities, development centers and sales offices throughout the world. We have twenty-seven facilities on five continents with 4.7 million square feet~~ of manufacturing, lab and related space. Our manufacturing capabilities include the full suite of competencies relevant to support each site’s activities, including regulatory, quality assurance and in-house validation at all of the production sites. Contents

WeGlobal ~~operate~~Accounts our plants in accordance with cGMP. More than half of our facilities are registered with the U.S. FDA, with the remaining facilities being registered with other applicable regulatory agencies, such as the EMA. In some cases certain facilities are registered with multiple regulatory agencies.

We ~~have~~manage ~~invested~~selected ~~approximately~~accounts ~~$367~~globally ~~million~~due into ~~our~~their ~~manufacturing~~materiality ~~facilities~~and ~~since~~growth ~~Fiscal~~potential ~~2008~~by ~~through~~establishing ~~improvements~~strategic ~~and~~plans, ~~expansions~~goals inand ~~our facilities~~targets. ~~including~~We recorded approximately ~~$104~~37% ~~million~~of onour ~~capital~~total ~~expenditures~~revenue in ~~Fiscal~~fiscal ~~2012~~2013 from these global accounts. WeThese ~~believe~~accounts ~~that~~are ~~our~~assigned ~~facilities~~a ~~and~~dedicated ~~equipment~~business development professional with substantial industry experience. These account leaders, along with members of the executive leadership team, are inresponsible ~~good~~for ~~condition~~managing and extending the overall account relationship. Growing sales, profitability, and increasing account penetration are ~~well~~key ~~maintained~~goals and are ~~able~~directly linked to ~~operate~~compensation. atAccount orleaders ~~above~~also ~~present~~work ~~levels~~closely ~~for~~with the ~~foreseeable future,~~rest inof ~~all~~the ~~material~~sales ~~respects~~organization to ensure alignment around critical priorities for the accounts.

~~Our manufacturing operations are focused on employee health and safety~~Emerging, ~~regulatory compliance,~~Specialty ~~operational excellence, continuous improvement,~~ and ~~process~~Virtual ~~standardization~~Accounts across the organization. Our manufacturing operations are structured around an enterprise management philosophy and methodology that utilizes principles and tools common to a number of quality management programs including Six Sigma and Lean Manufacturing.

~~Raw~~Emerging, ~~Materials~~ specialty and virtual pharmaceutical and biotechnology companies are expected to be a critical driver of industry growth globally. Historically, many of these companies have chosen not to build a full infrastructure, but rather partner with other companies to produce their products. We expect them to continue to do so in the future, providing a critical source for future integrated solution demand. We expect to continue to increase our penetration of geographic clusters of emerging companies in North America, Europe, South America and Asia. We regularly use active pipeline and product screening and customer targeting to identify the optimal candidates for partnering based on product profiles, funding status, and relationships, to ensure that our technical sales specialists and field sales representatives develop custom solutions designed to address the specific needs of customers in the market.

WeContractual ~~use~~Arrangements a broad and diverse range of raw materials in the design, development and manufacture of products. This includes, but is not limited to key materials such as gelatin, starch, and iota carrageenan for the Oral Technologies segment; packaging films for our and Development & Clinical Services segments, and resin for our blow-fill-seal business in our Medication Delivery Solutions segment. The raw materials that we use are sourced externally on a global basis. Globally, our supplier relationships could be interrupted due to natural disasters and international supply disruptions, including those caused by pandemics, geopolitical and other issues. For example, the supply of gelatin is obtained from a limited number of sources. In addition, much of the gelatin we use is bovine-derived. Past concerns of contamination from Bovine Spongiform Encephalopathy (“BSE”) have narrowed the number of possible sources of particular types of gelatin. If there were a future disruption in the supply of gelatin from any one or more key suppliers, there can be no assurance that we could obtain an alternative supply from our other suppliers. If future restrictions were to emerge on the use of bovine-derived gelatin from certain geographic sources due to concerns of contamination from BSE, any such restriction could hinder our ability to timely supply our customers with products and the use of alternative non-bovine-derived gelatin for specific customer products could be subject to lengthy formulation, testing and regulatory approval.

We ~~work~~generally ~~very~~enter ~~closely~~into a broad range of contractual arrangements with our ~~suppliers~~customers, toincluding ~~assure~~agreements ~~continuity~~with ofrespect ~~supply~~to ~~while~~feasibility, ~~maintaining~~development, ~~excellence~~supply, inlicenses, ~~material~~and quality. ~~and~~The ~~reliability, and~~terms weof ~~have~~these ancontracts ~~active~~vary ~~and~~significantly ~~effective~~depending ~~supplier~~on ~~audit~~the ~~program~~offering and customer requirements. WeSome ~~continually~~of ~~evaluate~~our ~~alternate~~agreements ~~sources~~may ofinclude ~~supply,~~a ~~although~~variety weof dorevenue ~~not~~arrangements ~~frequently~~such ~~pursue~~as ~~regulatory~~fee-for-service, ~~qualification~~royalties, ofprofit-sharing ~~alternative~~and ~~sources~~fixed ~~for~~fees. ~~key~~We ~~raw~~generally ~~materials~~secure ~~due~~pricing toand ~~the~~contract ~~strength~~mechanisms ofin our ~~existing~~ ~~supplier~~supply ~~relationships,~~agreements ~~the~~that ~~reliability~~allow offor ~~our~~periodic ~~current~~resetting ~~supplier~~of ~~base~~pricing terms and, ~~the~~in ~~time~~some ~~and~~cases, ~~expense~~these ~~associated~~agreements ~~with~~provide ~~the~~for ~~regulatory~~our ~~process.~~ability ~~Although~~to arenegotiate ~~change~~pricing in ~~suppliers~~the ~~could~~event ~~require~~of ~~significant~~certain ~~effort~~price orincreases ~~investment~~for bythe usraw inmaterials ~~circumstances~~utilized ~~where~~ in the ~~items~~products ~~supplied~~we ~~are~~make. ~~integral~~Our totypical ~~the~~supply ~~performance~~agreements ofinclude indemnification from our ~~products~~customers orfor ~~incorporate~~product ~~specialized~~liability ~~material~~and ~~such~~intellectual asproperty ~~gelatin~~matters and caps on Catalent's contractual liabilities, wesubject doin ~~not~~each ~~believe~~case ~~that~~to ~~the~~negotiated ~~loss~~exclusions. ofIn ~~any~~addition, ~~existing~~our typical manufacturing supply ~~arrangement~~agreement ~~would~~terms ~~have~~range afrom ~~material~~two ~~adverse~~to ~~effect~~five onyears ~~our~~with ~~business.~~regular ~~See “Risk~~renewals ~~Factor”—Our~~of ~~future~~one ~~results~~to three years, although some of ~~operations~~our agreements are ~~subject~~terminable toupon ~~fluctuations~~much inshorter ~~the~~notice ~~costs~~periods, ~~availability,~~such ~~and~~as ~~suitability~~30 ofor ~~the~~90 ~~components~~days. For ofour ~~the~~development ~~products~~solutions offerings, we ~~manufacture,~~may ~~including~~enter ~~active~~into ~~pharmaceutical~~master ~~ingredients,~~service ~~excipients~~agreements, ~~purchased~~ ~~components~~which provide for standardized terms and conditions, which make it easier and ~~raw~~faster ~~materials.”~~for customers with multiple development needs to access Catalent's offerings.

~~Competition~~Manufacturing Capabilities

We ~~compete~~operate onmanufacturing ~~several~~facilities, ~~fronts~~development ~~both~~centers ~~domestically~~ and ~~internationally,~~sales ~~including~~offices ~~competing~~throughout ~~with~~the ~~other~~world. ~~companies~~We ~~that~~have ~~offer~~twenty-six ~~advanced~~facilities ~~delivery technologies~~on orfive ~~development~~continents ~~services~~with to4.6 ~~pharmaceutical,~~million ~~biotechnology~~square ~~and~~feet ~~consumer~~of ~~health companies based in North America~~manufacturing, ~~South~~lab ~~America, Europe~~ and ~~the~~related ~~Asia-Pacific region~~space. WeOur ~~also~~manufacturing ~~may~~capabilities ~~compete~~include ~~with~~ the ~~internal~~full ~~operations~~suite of ~~those~~competencies ~~pharmaceutical, biotechnology~~relevant ~~and~~to ~~consumer~~support ~~health~~each ~~manufacturers~~site's ~~that~~activities, ~~choose~~including toregulatory, ~~source~~quality ~~these~~assurance ~~services~~and ~~internally,~~in-house ~~where possible~~validation.

9We operate our plants in accordance with cGMP. More than half of our facilities are registered with the FDA, with the remaining facilities being registered with other applicable regulatory agencies, such as the EMA. In some cases certain facilities are registered with multiple regulatory agencies.

~~Table~~We have invested approximately $292.7 million of ~~Contents~~cash outflows in our manufacturing facilities since fiscal 2011 through improvements and expansions in our facilities including approximately $122.5 million on capital expenditures in fiscal 2013. We believe that our facilities and equipment are in good condition, are well maintained and are able to operate at or above present levels for the foreseeable future, in all material respects.

~~Competition~~Our ismanufacturing ~~driven~~operations byare ~~proprietary~~focused ~~technologies~~on ~~and~~employee ~~know-how~~health ~~(where~~and ~~relevant)~~safety, ~~consistency of~~regulatory compliance, operational ~~performance~~excellence, ~~quality,~~continuous ~~price~~improvement, ~~value~~ and ~~speed~~process standardization across the organization. ~~While~~Our wemanufacturing dooperations ~~have~~are ~~competitors~~structured ~~who~~around ~~compete~~an ~~with~~enterprise usmanagement inphilosophy ~~our~~and ~~individual~~methodology ~~technology~~that ~~platforms,~~utilizes weprinciples doand ~~not~~tools ~~believe~~common weto ~~have~~a ~~competition~~number ~~from~~of ~~any~~quality ~~directly~~management ~~comparable~~programs ~~companies.~~including Six Sigma and Lean Manufacturing.

~~Employees~~Raw Materials

We ~~have~~use ~~approximately~~a ~~8,700~~broad ~~employees~~and indiverse ~~twenty-seven~~range ~~facilities~~of onraw ~~five~~materials ~~continents: ten facilities are~~ in the ~~United States~~design, ~~with~~development ~~certain~~and ~~employees~~manufacture atof ~~one~~products. ofThis ~~which~~includes, ~~being~~but ~~represented~~is bynot alimited ~~labor organization~~to ~~with~~key ~~their~~materials ~~terms~~such ~~and~~as ~~conditions~~gelatin, ofstarch, ~~employment~~and ~~being~~iota ~~subject~~carrageenan tofor athe ~~collective~~Oral ~~bargaining~~Technologies ~~agreement.~~segment; ~~National~~packaging ~~work~~films ~~councils~~for our and~~/or~~ ~~labor~~Development & ~~organizations~~Clinical ~~are~~Services ~~active~~segment, atand ~~all~~resin ~~twelve~~for of our ~~European~~blow-fill-seal ~~facilities~~business ~~consistent~~in ~~with~~our ~~labor environments/laws~~Medication inDelivery ~~European~~Solutions ~~countries~~segment. ~~Similar~~The ~~relationships~~raw ~~with~~materials ~~labor~~that ~~organizations~~we oruse ~~national~~are ~~work~~sourced ~~councils~~externally ~~exist~~on ina ~~our~~global ~~plants~~basis. ~~in Argentina~~Globally, ~~Brazil and Australia. Our management believes that~~ our ~~employee relations are satisfactory.~~

		North America				Europe				South America				Asia Pacific				Total
Approximate Number of Employees			3,300				4,100				700				600				8,700

~~Intellectual~~Table ~~Property~~of Contents

Wesupplier ~~rely~~relationships oncould abe ~~combination~~interrupted ofdue ~~know~~to ~~how,~~natural ~~trade~~disasters ~~secrets,~~and ~~patents,~~international ~~copyrights~~supply ~~and~~disruptions, ~~trademarks~~including ~~and~~those ~~other~~caused ~~intellectual~~by ~~property laws~~pandemics, ~~nondisclosure~~ geopolitical and other ~~contractual~~issues. ~~provisions~~For ~~and~~example, ~~technical~~the ~~measures~~supply toof ~~protect~~gelatin is obtained from a limited number of ~~our~~sources. ~~offerings~~In addition, ~~services~~much ~~and~~of ~~intangible~~the ~~assets~~gelatin we use is bovine-derived. ~~These~~Past ~~proprietary~~concerns ~~rights~~of ~~are~~contamination ~~important~~from toBovine ~~our~~Spongiform ~~ongoing~~Encephalopathy ~~operations.~~(“BSE”) Wehave ~~operate~~narrowed ~~under~~the ~~licenses~~number ~~from~~of ~~third parties~~possible ~~for~~sources ~~certain~~of ~~patents,~~particular ~~software~~types ~~and~~of ~~information~~gelatin. ~~technology~~If ~~systems~~there ~~and~~were ~~proprietary~~a ~~technologies~~future ~~and~~disruption in ~~certain~~the ~~instances~~supply of gelatin from any one or more key suppliers, there can be no assurance that we ~~license~~could ~~our~~obtain ~~technology~~an toalternative ~~third~~supply ~~parties~~from our other suppliers. WeIf ~~also~~future ~~have~~restrictions awere ~~long~~to ~~track~~emerge ~~record~~on the use of ~~innovation~~bovine-derived ~~across~~gelatin ~~our~~from ~~lines~~certain ofgeographic ~~business and,~~sources due to ~~further~~concerns ~~encourage~~of ~~active~~contamination ~~innovation~~from BSE, weany ~~have~~such ~~developed~~restriction ~~incentive~~could ~~compensation~~hinder ~~systems~~our ~~linked~~ability to ~~patent~~timely ~~filings~~supply ~~and~~our ~~other~~customers ~~recognition~~with products and ~~reward~~the ~~programs~~use of alternative non-bovine-derived gelatin for ~~scientists~~specific customer products could be subject to lengthy formulation, testing and ~~non-scientists~~regulatory ~~alike~~approval.

We ~~have~~work ~~applied~~very closely with our suppliers to assure continuity of supply while maintaining excellence in ~~the~~material ~~United~~quality ~~States~~and reliability, and ~~certain~~we ~~foreign~~have ~~countries~~an ~~for~~active ~~registration~~and ofeffective asupplier ~~number~~audit program. We continually evaluate alternate sources of ~~trademarks~~supply, ~~service~~although ~~marks~~we ~~and~~do ~~patents~~not frequently pursue regulatory qualification of alternative sources for key raw materials due to the strength of our existing supplier relationships, ~~some~~ the reliability of ~~which~~our ~~have~~current ~~been~~supplier ~~registered~~base and ~~issued,~~the time and ~~also~~expense ~~hold~~associated ~~common~~with ~~law~~the ~~rights~~regulatory process. Although a change in ~~various~~suppliers ~~trademarks~~could ~~and~~require ~~service~~significant ~~marks.~~effort Weor ~~hold~~investment ~~approximately~~by 1us in circumstances where the items supplied are integral to the performance of our products or incorporate specialized material such as gelatin,~~400~~ ~~patents~~we ~~and~~do ~~patent~~not ~~applications~~believe ~~worldwide~~that the loss of any existing supply arrangement would have a material adverse effect on our business. See “Risk Factor” - "Our future results of operations are subject to fluctuations in ~~advanced~~the ~~drug~~costs, ~~delivery~~availability, and ~~biologics~~suitability ~~formulations~~of ~~and technologies~~the components of the products we manufacture, ~~and~~including ~~manufacturing~~active pharmaceutical ingredients, excipients, purchased components, and ~~other~~raw ~~areas~~materials. ”

WeCompetition hold patents and license rights relating to certain aspects of our formulations, nutritional and pharmaceutical dosage forms, mammalian cell engineering, and sterile manufacturing services. We also hold patents relating to certain processes and products. We have a number of pending patent applications in the United States and certain foreign countries, and intend to pursue additional patents as appropriate. We have enforced and will continue to enforce our intellectual property rights in the United States and worldwide.

We docompete ~~not~~on ~~consider~~several ~~any~~fronts ~~particular~~both ~~patent,~~domestically ~~trademark,~~and ~~license~~internationally, ~~franchise~~including competing with other companies that offer advanced delivery technologies or ~~concession~~development services to bepharmaceutical, ~~material~~biotechnology and consumer health companies based in North America, South America, Europe and the Asia-Pacific region. We also may compete with the internal operations of those pharmaceutical, biotechnology and consumer health manufacturers that choose to ~~our~~source ~~overall~~these ~~business~~services internally, where possible.

~~Regulatory~~Competition ~~Matters~~is driven by proprietary technologies and know-how (where relevant), consistency of operational performance, quality, price, value and speed. While we do have competitors who compete with us in our individual offerings, we do not believe we have competition from any directly comparable companies.

~~The~~Employees manufacture, distribution and marketing of the products of our customers in this industry are subject to extensive ongoing regulation by the FDA, other government authorities and foreign regulatory authorities. Certain of our subsidiaries may be required to register for permits and/or licenses with, and will be required to comply with operating and security standards of, the Drug Enforcement Agency (“DEA”), the FDA, the Department of Health and Human Services (“DHHS”), the European Union (“EU”) member states and various state boards of pharmacy, state health departments and/or comparable state agencies as well as foreign agencies, and certain accrediting bodies depending upon the type of operations and location of product distribution, manufacturing and sale.

We have approximately 8,300 employees in twenty-six facilities on five continents: nine facilities are in the United States, with certain employees at one of which being represented by a labor organization with their terms and conditions of employment being subject to a collective bargaining agreement. National works councils and/or labor organizations are active at all eleven of our European facilities consistent with labor environments/laws in European countries. Similar relationships with labor organizations or national works councils exist in our plants in Argentina, Brazil, and Australia. Our management believes that our employee relations are satisfactory.

In addition, certain of our subsidiaries may be subject to the Federal Food, Drug, and Cosmetic Act, The Public Health Service Act, the Controlled Substances Act and comparable state and foreign regulations, and the Needlestick Safety and Prevention Act.



	North America	Europe	South America	Asia Pacific	Total
Approximate Number of Employees	3,300	3,800	700	500	8,300

~~Laws~~Intellectual ~~regulating~~Property the manufacture and distribution of products also exist in most other countries where our subsidiaries conduct business. In addition, the international manufacturing operations are subject to local certification requirements, including compliance with domestic and/or foreign good manufacturing practices and quality system regulations established by the FDA and/or applicable foreign regulatory authorities.

We ~~are~~rely ~~also~~on ~~subject~~a tocombination ~~various~~of ~~federal~~knowhow, ~~state~~trade secrets, ~~local~~patents, ~~foreign~~copyrights and ~~transnational~~ ~~laws,~~trademarks ~~regulations~~ and ~~recommendations,~~other ~~both~~intellectual inproperty ~~the~~laws, ~~United~~nondisclosure ~~States~~ and ~~abroad,~~other ~~relating~~contractual toprovisions ~~safe~~and ~~working~~technical ~~conditions,~~measures ~~laboratory~~to ~~and~~protect ~~manufacturing~~a ~~practices~~number ~~and~~of ~~the~~our ~~use~~offerings, ~~transportation~~services and ~~disposal~~intangible ~~of hazardous or potentially hazardous substances~~assets. InThese ~~addition,~~proprietary ~~U.S.~~rights ~~and~~are ~~international~~important ~~import~~to ~~and~~our ~~export~~ongoing ~~laws~~operations. ~~and~~We ~~regulations~~operate ~~require~~under uslicenses tofrom ~~abide~~third byparties for certain ~~standards~~patents, ~~relating~~software toand ~~the~~information ~~importation~~technology systems and ~~exportation~~proprietary oftechnologies ~~finished~~and ~~goods,~~in ~~raw~~certain ~~materials~~instances ~~and~~we ~~supplies~~license ~~and~~our ~~the~~technology ~~handling~~to ~~of information~~third parties. We ~~are~~ also ~~subject~~have toa ~~certain~~long ~~laws~~track ~~and~~record ~~regulations~~of ~~concerning~~innovation ~~the~~across ~~conduct~~our lines of ~~our~~business ~~foreign operations~~and, ~~including~~to ~~the~~further ~~U.S.~~encourage ~~Foreign~~active ~~Corrupt~~innovation, ~~Practices~~we ~~Act,~~have ~~the~~developed ~~U.K.~~incentive ~~Anti-Bribery~~compensation ~~Act~~systems ~~and~~linked ~~other~~to ~~anti-bribery~~patent ~~laws~~filings and ~~laws~~other ~~pertaining~~recognition toand ~~the accuracy~~reward ofprograms ~~our~~for ~~internal~~scientists ~~books~~ and ~~records~~non-scientists alike.

10We have applied in the United States and certain foreign countries for registration of a number of trademarks, service marks and patents, some of which have been registered and issued, and also hold common law rights in various trademarks and service marks. We hold approximately 1,300 patents and patent applications worldwide in advanced drug delivery and biologics formulations and technologies, and manufacturing and other areas.

~~Table of Contents~~10

~~The~~Table costs associated with complying with the various applicable federal regulations, as well as state, local, foreign and transnational regulations, could be significant and the failure to comply with such legal requirements could have an adverse effect on our results of ~~operations and financial condition. Reference is made to Item 1A Risk Factors for additional discussion of the costs of associated with complying with the various regulations.~~ Contents

~~Quality Assurance~~We hold patents and license rights relating to certain aspects of our formulations, nutritional and pharmaceutical dosage forms, mammalian cell engineering, and sterile manufacturing services. We also hold patents relating to certain processes and products. We have a number of pending patent applications in the United States and certain foreign countries, and intend to pursue additional patents as appropriate. We have enforced and will continue to enforce our intellectual property rights in the United States and worldwide.

We ~~are~~do ~~committed~~not toconsider ~~creating~~any ~~and~~particular ~~maintaining the highest standard of regulatory compliance while providing high quality products to our customers. To meet these commitments~~patent, we have developed and implemented a Catalent wide quality management system throughout the organization that we believe is appropriate. Our senior management team is actively involved in setting quality policiestrademark, standards and internal position papers as well as managing internal and external quality performance. Our quality assurance department provides quality leadership and supervises our quality systems programs. An internal audit program monitors compliance with applicable regulationslicense, ~~standards~~franchise and internal policies. In addition, our facilities are subject to periodic inspection by the FDA and other equivalent local, state and foreign regulatory authorities and customers. All FDA, DEA and other regulatory inspectional observations have been resolved or ~~are~~concession ~~on track~~ to be ~~completed~~material ~~at the prescribed timeframe provided in response~~ to ~~the agency. We believe that~~ our ~~operations~~overall ~~are in compliance in all material respects with the regulations under which our facilities are governed~~business. ~~We have more than 1,000 employees around the globe focusing on quality and regulatory compliance.~~

~~Environmental~~Regulatory Matters

~~Our~~The ~~operations are subject to a variety of environmental~~manufacture, ~~health~~distribution and ~~safety~~marketing ~~laws~~of ~~and~~the ~~regulations,~~products ~~including those~~ of ~~the~~our ~~Environmental~~customers ~~Protection~~in ~~Agency~~this ~~(“EPA”)~~industry ~~and~~are ~~equivalent~~subject ~~state,~~to ~~local~~extensive ~~and foreign~~ongoing ~~regulatory~~regulation ~~agencies~~by inthe ~~each~~FDA, ofother ~~the~~government ~~jurisdictions~~authorities inand ~~which~~foreign weregulatory ~~operate~~authorities. ~~These~~Certain ~~laws~~of ~~and~~our ~~regulations~~subsidiaries ~~govern,~~may ~~among~~be ~~other~~required ~~things,~~to ~~air~~register ~~emissions,~~for ~~wastewater~~permits ~~discharges,~~and/or ~~the~~licenses ~~use~~with, ~~handling~~ and ~~disposal~~will ofbe ~~hazardous~~required ~~substances~~to ~~and~~comply ~~wastes,~~with ~~soil~~operating and ~~groundwater~~ ~~contamination~~security ~~and~~standards ~~employee~~of, ~~health~~the ~~and~~Drug ~~safety.~~Enforcement ~~Our~~Agency ~~manufacturing facilities use~~(“DEA”), inthe ~~varying degrees~~FDA, ~~hazardous~~the ~~substances~~Department inof ~~their~~Health ~~processes.~~and ~~These~~Human ~~substances~~Services ~~include~~(“DHHS”), ~~among others, chlorinated solvents, and in~~ the ~~past~~European ~~chlorinated solvents~~Union ~~were~~(“EU”) ~~used~~member atstates ~~one~~and orvarious ~~more~~state boards of ~~our facilities~~pharmacy, ~~including~~state ahealth ~~number~~departments weand/or nocomparable ~~longer~~state ~~own~~agencies oras ~~operate.~~well Asas atforeign ~~our current facilities~~agencies, ~~contamination~~and atcertain ~~such~~accrediting ~~formerly~~bodies ~~owned~~depending orupon ~~operated~~the ~~properties~~type ~~can~~of ~~result~~operations and ~~has~~location ~~resulted~~of inproduct ~~liability to us~~distribution, ~~for~~manufacturing ~~which we~~and ~~have recorded appropriate reserves as needed~~sale.

~~ITEM~~In ~~1A.~~addition, ~~RISK~~certain ~~FACTORS~~of our subsidiaries may be subject to the United States Federal Food, Drug, and Cosmetic Act, The Public Health Service Act, the Controlled Substances Act and comparable state and foreign regulations, and the Needlestick Safety and Prevention Act.

IfLaws ~~any of~~regulating the ~~following~~manufacture ~~risks~~and ~~actually~~distribution ~~occur,~~of products also exist in most other countries where our subsidiaries conduct business,. ~~financial~~In ~~condition~~addition, ~~operating~~the ~~results~~international ormanufacturing ~~cash~~operations ~~flow~~are ~~could~~subject beto ~~materially~~local ~~and~~certification ~~adversely~~requirements, ~~affected.~~including ~~Additional~~compliance ~~risks~~with domestic and/or ~~uncertainties~~foreign ~~not~~good ~~presently~~manufacturing ~~known~~practices toand ~~us,~~quality orsystem ~~that~~regulations weestablished ~~currently~~by ~~believe~~the ~~are immaterial,~~FDA ~~may~~and/or ~~also~~applicable ~~impair~~foreign ~~our~~regulatory ~~business operations~~authorities.

~~Risks~~We ~~Related~~are also subject to ~~Our~~various ~~Indebtedness~~federal, state, local, foreign and transnational laws, regulations and recommendations, both in the United States and abroad, relating to safe working conditions, laboratory and manufacturing practices and the use, transportation and disposal of hazardous or potentially hazardous substances. In addition, U.S. and international import and export laws and regulations require us to abide by certain standards relating to the importation and exportation of finished goods, raw materials and supplies and the handling of information. We are also subject to certain laws and regulations concerning the conduct of our foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Anti-Bribery Act and other anti-bribery laws and laws pertaining to the accuracy of our internal books and records.

~~Our~~The ~~substantial~~costs ~~leverage~~associated ~~could~~with ~~adversely~~complying ~~affect~~with ~~our~~the ~~ability~~various toapplicable ~~raise~~federal ~~additional~~regulations, ~~capital~~as towell ~~fund~~as ~~our~~state, ~~operations~~local, ~~limit~~foreign ~~our~~and ~~ability~~transnational ~~to react~~regulations, tocould ~~changes~~be insignificant and the ~~economy~~failure orto incomply ~~our~~with ~~industry,~~such ~~expose~~legal usrequirements tocould ~~interest~~have ~~rate~~an ~~risk~~adverse toeffect ~~the~~on ~~extent~~our results of ~~our~~operations ~~variable~~and ~~rate~~financial ~~debt~~condition. ~~and~~Reference ~~prevent~~is usmade ~~from~~to ~~meeting~~"Item ~~our~~1A. ~~obligations~~Risk ~~under~~Factors" for additional discussion of the ~~notes~~costs associated with complying with the various regulations.

WeQuality ~~are~~Assurance ~~highly leveraged. The following chart shows our level of indebtedness as of June 30, 2012.~~

11We are committed to ensuring and maintaining the highest standard of regulatory compliance while providing high quality products to our customers. To meet these commitments, we have developed and implemented a Catalent wide quality management system throughout the organization that is appropriate. We have more than 1,000 employees around the globe focusing on quality and regulatory compliance. Our senior management team is actively involved in setting quality policies, standards and internal position papers as well as managing internal and external quality performance. Our quality assurance department provides quality leadership and supervises our quality systems programs. An internal audit program monitors compliance with applicable regulations, standards and internal policies. In addition, our facilities are subject to periodic inspection by the FDA and other equivalent local, state and foreign regulatory authorities and customers. All FDA, DEA and other regulatory inspectional observations have been resolved or are on track to be completed at the prescribed timeframe provided in response to the agency. We believe that our operations are in compliance in all material respects with the regulations under which our facilities are governed.

~~Table~~Environmental ofMatters ~~Contents~~

		June 30, 2012
	Maturity	(in millions)
Senior Secured Credit Facilities
Term loan facility Dollar-denominated (1)	September 2016		798.9
Term loan facility Dollar-denominated (1)	September 2017		591.2
Term loan facility Euro-denominated (1)	April 2014		56.3
Term loan facility Euro-denominated (1)	September 2016		257.7
9 1/2 % Senior Toggle Notes	April 2015		619.1
9 3/4 % Senior Subordinated Euro-denominated Notes (2)	April 2017		268.7
Revolving Credit Agreement	April 2016		—
Other Obligations	2012 to 2032		91.6
Total debt			2,683.5

Our operations are subject to a variety of environmental, health and safety laws and regulations, including those of the Environmental Protection Agency (“EPA”) and equivalent state, local and foreign regulatory agencies in each of the jurisdictions in which we operate. These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous substances and wastes, soil and groundwater contamination and employee health and safety. Our manufacturing facilities use, in varying degrees, hazardous substances in their processes.

(1) We have approximately $1,704.1 million (U.S. dollar equivalent) aggregate principal amount of senior secured term loan facilities, consisting of a $1,390.1 million U.S. dollar-denominated tranche and a €251.7 million Euro-denominated tranche (equal to $314.0 million based on an exchange rate of €1 = $1.2469).11

~~(2)~~Table ~~Represents the U.S. dollar-equivalent~~ of ~~the €215.5 million aggregate principal amount of senior subordinated notes based on an exchange rate of €1 = $1.2469.~~Contents

~~Our~~These ~~high~~substances ~~degree~~include, among others, chlorinated solvents, and in the past chlorinated solvents were used at one or more of ~~leverage~~our ~~could~~facilities, ~~have~~including ~~important~~a ~~consequences~~number ~~for~~we no longer own or operate. As at our current facilities, contamination at such formerly owned or operated properties can result and has resulted in liability to us, ~~including:~~for which we have recorded appropriate reserves as needed.

•ITEM ~~increasing~~1A. ~~our~~RISK ~~vulnerability to adverse economic, industry or competitive developments;~~FACTORS

•If ~~exposing~~any usof to the ~~risk~~following ofrisks ~~increased~~actually ~~interest~~occur, ~~rates~~our ~~because~~business, ~~certain~~financial ofcondition, ~~our~~operating ~~borrowings,~~results ~~including~~or ~~borrowings~~cash ~~under~~flow ~~our~~could ~~senior~~be ~~secured~~materially ~~credit~~and ~~facilities~~adversely affected. Additional risks or uncertainties not presently known to us, or that we currently believe are atimmaterial, ~~variable~~may ~~rates~~also ofimpair ~~interest;~~our business operations.

•Risks ~~exposing~~Related us to ~~the~~Our ~~risk~~Indebtedness ~~of fluctuations in exchange rates because certain of our borrowings, including our senior secured term loan facilities and the senior subordinated notes, are denominated in euros;~~

•Our ~~making~~substantial itleverage ~~more~~could ~~difficult~~adversely ~~for~~affect usour ability to ~~satisfy~~raise ~~our~~additional ~~obligations~~capital ~~with respect~~ to fund our ~~indebtedness~~operations, ~~including~~limit ~~the~~our ~~notes,~~ability ~~and~~to ~~any~~react ~~failure~~ to ~~comply~~changes ~~with~~in the ~~obligations~~economy ofor ~~any~~in of our ~~debt instruments~~industry, ~~including~~expose ~~restrictive~~us ~~covenants~~to ~~and~~interest ~~borrowing~~rate ~~conditions,~~risk ~~could~~to ~~result~~the inextent ~~an event~~ of ~~default~~our ~~under~~variable ~~the~~rate ~~indentures~~debt ~~governing~~and ~~the~~prevent ~~notes~~us ~~and~~from ~~the~~meeting ~~agreements~~our ~~governing~~obligations ~~such~~under ~~other~~the ~~indebtedness;~~notes.

•We ~~restricting~~are ushighly ~~from~~leveraged. As ~~making~~of ~~strategic~~June 30, ~~acquisitions~~2013, orwe ~~causing~~had us(1) to$1,704.2 ~~make~~million ~~non-strategic~~(dollar ~~divestitures~~equivalent) of senior indebtedness; (2) $281.9 million (dollar equivalent) of senior subordinated indebtedness, (3) 348.2 million of senior notes, and (4) 274.1 million of senior unsecured term loan. In addition, we had an additional $188.5 million of unutilized capacity and $11.8 million of outstanding letters of credit under our revolving credit facility.

•Our ~~limiting~~high ~~our~~degree ~~ability~~of toleverage ~~obtain~~could ~~additional~~have ~~financing~~important consequences for ~~working capital~~us, ~~capital~~including: ~~expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and~~

• ~~limiting~~increasing our ~~flexibility~~vulnerability into ~~planning~~adverse ~~for~~economic, orindustry ~~reacting to, changes in our business~~ or ~~market conditions and placing us at a~~ competitive ~~disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.~~developments;

~~Our~~• ~~total~~exposing ~~interest~~us ~~expense~~to ~~was~~the ~~$183.2~~risk ~~million,~~of ~~$165.5~~increased ~~million~~interest ~~and~~rates ~~$161.0~~because ~~million~~certain ~~for~~of ~~fiscal~~our ~~years 2012~~borrowings, ~~2011~~including ~~and~~borrowings ~~2010,~~under ~~respectively. After taking into consideration~~ our ~~ratio~~senior ofsecured ~~fixed-to-floating~~credit ~~rate debt~~facilities, aare ~~100~~at ~~basis~~variable ~~point increase in such~~ rates ~~would~~of ~~increase our annual~~ interest ~~expense by approximately $0.5 million.~~ ;

~~Current~~• ~~global~~exposing ~~economic~~us ~~conditions~~to ~~could~~the ~~negatively~~risk ~~affect~~of fluctuations in exchange rates because certain of our ~~operating~~borrowings, ~~results.~~including certain of our senior secured term loan facilities and the Senior Subordinated Notes, are denominated in euros;

~~The~~• ~~economies~~making ofit ~~the~~more ~~United~~difficult ~~States~~for ~~and~~us ~~the other countries in which the Company produces its products continue~~ to besatisfy ~~affected~~our byobligations ~~the economic conditions that began~~ with ~~the~~respect ~~financial and credit crisis in late 2008. Although economic conditions have stabilized since then, there continues~~ to ~~be significant uncertainty as to whether global economic improvement is achievable and sustainable. These conditions may result in a further slowdown to the global economy that could affect~~ our ~~business~~indebtedness, byincluding ~~reducing~~ the ~~prices that consumers~~notes, ~~patients,~~ and ~~payors~~any ~~are~~failure ~~willing~~ to ~~pay~~comply ~~for~~with ~~our~~the ~~customers’~~obligations ~~products,~~of orany ~~by reducing the demand~~ of our ~~offerings~~debt instruments, ~~which~~including ~~could~~restrictive incovenants ~~turn negatively impact our sales~~ and ~~revenue~~borrowing ~~generation~~conditions, ~~and~~could result in aan ~~material~~event ~~adverse~~of ~~effect~~default onunder ~~our~~the ~~business,~~indenture ~~cash~~governing ~~flow,~~the ~~results~~notes ofand ~~operations,~~the ~~financial~~agreements ~~position~~governing ~~and~~such ~~prospects.~~other indebtedness;

12• restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

~~Table~~• oflimiting ~~Contents~~our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and

~~Despite~~• limiting our ~~high~~flexibility ~~indebtedness~~in ~~level~~planning for, weor ~~and~~reacting to, changes in our ~~subsidiaries~~business ~~will~~or ~~still~~market beconditions ~~able~~and placing us at a competitive disadvantage compared to ~~incur significant~~our ~~additional~~competitors ~~amounts~~who ofare ~~debt~~less highly leveraged and who, ~~which~~therefore, ~~could~~may ~~further~~be ~~exacerbate~~able ~~the~~to ~~risks~~take ~~associated~~advantage ~~with~~of opportunities that our ~~substantial~~leverage ~~indebtedness.~~prevents us from exploiting.

WeOur ~~and~~total ~~our~~interest ~~subsidiaries~~expense, ~~may~~net bewas ~~able~~$203.2 tomillion, ~~incur~~$183.2 ~~substantial~~million ~~additional~~and ~~indebtedness in the future~~$165.5 ~~Although~~million ~~the~~for ~~indentures~~fiscal ~~governing~~years ~~the~~2013, ~~notes~~2012 and ~~the~~2011, ~~senior~~respectively. ~~secured~~After ~~credit~~taking ~~facilities~~into ~~contain~~consideration ~~restrictions~~our ~~on the~~ratio ~~incurrence~~ of ~~additional~~fixed-to-floating ~~indebtedness~~rate debt, ~~these~~including ~~restrictions~~our ~~are~~senior ~~subject~~unsecured toterm aloan ~~number~~entered ofinto ~~significant~~on ~~qualifications~~April ~~and exceptions and~~29, ~~under certain circumstances~~2013, ~~the~~a ~~amount~~100 ofbasis ~~indebtedness~~point ~~that~~increase ~~could be incurred~~ in ~~compliance~~such ~~with~~rates ~~these restrictions~~would ~~could~~increase beour ~~substantial.~~annual Weinterest ~~have~~expense by approximately $~~180 million available to us for borrowing, subject to certain conditions, from our $200~~11.39 million ~~revolving credit facility~~. ~~If new debt is added to our subsidiaries’ existing debt levels, the risks associated with debt we currently face would increase.~~

~~Our debt agreements contain restrictions that limit our flexibility in operating our business.~~ 12

~~Our~~Table ~~senior secured credit facilities and the indentures governing the notes contain various covenants that limit our ability to engage in specified types~~ of ~~transactions. These covenants limit our ability and the ability of our restricted subsidiaries to, among other things:~~ Contents

•Despite ~~incur~~our ~~additional~~high indebtedness level, we and ~~issue~~our ~~certain~~subsidiaries ~~preferred~~will ~~stock;~~still be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness

•We ~~pay~~and ~~certain~~our ~~dividends~~subsidiaries may be able to incur substantial additional indebtedness in the future. Although the indenture that governs the notes, the indentures governing our other notes and the senior secured credit facilities contain restrictions on the incurrence of additional indebtedness, ~~repurchase~~these orrestrictions ~~make~~are ~~distributions~~subject into ~~respect~~a number of ~~capital~~significant ~~stock~~qualifications orand ~~make~~exceptions ~~other~~and, ~~restricted~~under ~~payments;~~certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. We have approximately $188.5 million available to us for borrowing, subject to certain conditions, from our $200.3 million revolving credit facility. If new debt is added to our subsidiaries' existing debt levels, the risks associated with debt we currently face would increase.

•Our ~~place~~debt ~~limitations~~agreements oncontain ~~distributions~~restrictions ~~from~~that ~~restricted~~limit ~~subsidiaries;~~our flexibility in operating our business.

•The ~~issue~~indenture orthat ~~sell~~governs ~~capital~~the ~~stock~~notes, our credit facilities and the indentures governing our other notes contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability and the ability of our restricted subsidiaries; to, among other things:

• ~~guarantee~~incur ~~certain~~additional indebtedness and issue certain preferred stock;

• ~~make~~pay certain ~~investments~~dividends on, repurchase or make distributions in respect of capital stock or make other restricted payments;

• ~~sell~~place orlimitations ~~exchange~~on ~~assets~~distributions from restricted subsidiaries;

• ~~enter~~issue ~~into~~or ~~transactions~~sell ~~with~~capital ~~affiliates~~stock of restricted subsidiaries;

• ~~create~~guarantee certain ~~liens~~indebtedness; ~~and~~

• ~~consolidate,~~make ~~merge~~certain ~~or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis.~~investments;

A• ~~breach~~sell ~~of any of these covenants could result in a default under one~~ or ~~more~~exchange of these agreements, including as a result of cross default provisions, and, in the case of the revolving credit facility, permit the lenders to cease making loans to us. Upon the occurrence of an event of default under the senior secured credit facilities, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and to terminate all commitments to extend further credit. Such actions by those lenders could cause cross defaults under our other indebtedness. If we were unable to repay those amounts, the lenders under the senior secured credit facilities could proceed against the collateral granted to them to secure that indebtedness. We pledged a significant portion of our assets as collateral under the senior secured credit facilities. If the lenders under the senior secured credit facilities accelerate the repayment of borrowings, we may not have sufficient assets to repay the senior secured credit facilities as well as our unsecured indebtedness, including the notes. In addition, our senior secured credit facilities include other and more restrictive covenants and restrict our ability to prepay our other indebtedness, including the notes. Our ability to comply with these covenants may be affected by events beyond our control. ;

We• ~~utilize~~enter ~~derivative~~into ~~financial~~transactions ~~instruments~~with to reduce our exposure to market risks from changes in interest rates on our variable rate indebtedness and we are exposed to risks related to counterparty credit worthiness or non-performance of these instruments. affiliates;

We• ~~enter~~create ~~into~~certain ~~pay-fixed~~liens; interest rate swaps to limit our exposure to changes in variable interest rates. Such instruments may result in economic losses should exchange rates decline to a point lower than our fixed rate commitments. We are exposed to credit-related losses which could impact the results of operations in the event of fluctuations in the fair value of the interest rate swaps due to a change in the credit worthiness or non-performance by the counterparties to the interest rate swaps. and

~~Risks~~• ~~Related~~consolidate, tomerge or transfer all or substantially all of our ~~Business~~assets and the assets of our subsidiaries on a consolidated basis.

WeA ~~participate~~breach of any of these covenants could result in a ~~highly~~default ~~competitive~~under ~~market~~one or more of these agreements, including as a result of cross default provisions, and, ~~increased~~in ~~competition~~the case of the revolving credit facility, permit the lenders to cease making loans to us. Upon the occurrence of an event of default under the senior secured credit facilities, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and to terminate all commitments to extend further credit. Such actions by those lenders could cause cross defaults under our other indebtedness. If we were unable to repay those amounts, the lenders under the senior secured credit facilities could proceed against the collateral granted to them to secure that indebtedness. We pledged a significant portion of our assets as collateral under the senior secured credit facilities. If the lenders under the senior secured credit facilities accelerate the repayment of borrowings, we may ~~adversely~~not ~~affect~~have sufficient assets to repay the senior secured credit facilities as well as our ~~business~~unsecured indebtedness, including the notes. In addition, our senior secured credit facilities include other and more restrictive covenants and restrict our ability to prepay our other indebtedness, including the notes. Our ability to comply with these covenants may be affected by events beyond our control.

We ~~operate~~may inutilize aderivative ~~market~~financial ~~that~~instruments isto ~~highly~~reduce ~~competitive.~~our Weexposure ~~compete~~to onmarket ~~several~~risks ~~fronts,~~from ~~both~~changes ~~domestically~~in ~~and~~interest ~~internationally,~~rates ~~including~~on ~~competing~~our ~~with~~variable ~~other~~rate ~~companies~~indebtedness ~~that~~and ~~provide~~we ~~similar~~are ~~offerings~~exposed to ~~pharmaceutical,~~ ~~biotechnology~~risks ~~and~~related ~~consumer~~to ~~health~~counterparty ~~companies~~credit ~~based~~worthiness inor ~~North~~non-performance ~~America,~~of ~~Latin~~these ~~America, Europe and the Asia-Pacific region~~instruments. ~~We also may compete with~~

13We may enter into pay-fixed interest rate swaps to limit our exposure to changes in variable interest rates. Such instruments may result in economic losses should exchange rates decline to a point lower than our fixed rate commitments. We are exposed to credit-related losses which could impact the results of operations in the event of fluctuations in the fair value of the interest rate swaps due to a change in the credit worthiness or non-performance by the counterparties to the interest rate swaps.

~~Table~~Risks ofRelated ~~Contents~~to Our Business

~~the~~We ~~internal~~participate ~~operations~~in ofa ~~those~~highly ~~pharmaceutical,~~competitive ~~biotechnology~~market and ~~consumer~~increased ~~health~~competition ~~manufacturers~~may ~~that~~adversely ~~choose~~affect toour ~~source these offerings internally, where possible~~business.

We ~~face~~operate ~~material competition~~ in ~~each~~a ofmarket ~~our~~that ~~markets. Competition~~ is ~~driven~~highly bycompetitive. ~~proprietary~~We ~~technologies~~compete ~~and~~on ~~know-how,~~several ~~capabilities~~fronts, ~~consistency~~ ofboth ~~operational~~domestically ~~performance, quality, price, value~~ and ~~speed. Some competitors may have greater financial~~internationally, ~~research~~including ~~and~~competing ~~development, operational and marketing resources than we do. Competition may also increase as additional companies enter our markets or use their existing resources to compete directly~~ with ~~ours.~~other ~~Expanded competition from~~ companies inthat ~~low-cost~~provide ~~jurisdictions,~~similar ~~such~~offerings ~~as India and China, may in the future impact our results of operations or limit our growth. Greater financial, research and development, operational and marketing resources may allow our competitors~~ to ~~respond more quickly with new~~pharmaceutical, ~~alternative~~biotechnology ~~or emerging technologies. Changes in the nature or extent of our customer requirements may render our offerings obsolete or non-competitive~~ and ~~could~~consumer ~~adversely~~health ~~affect our results of operations and financial condition.~~

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. 13

~~Our~~Table ~~customers are engaged in research, development, production and marketing~~ of pharmaceutical, biotechnology and consumer health products. The amount of customer spending on research, development, production and marketing, as well as the outcomes of such research, development, and marketing activities, have a large impact on our sales and profitability, particularly the amount our customers choose to spend on our offerings. Our customers determine the amounts that they will spend based upon, among other things, available resources and their need to develop new products, which, in turn, is dependent upon a number of factors, including their competitors’ research, development and production initiatives, and the anticipated market uptake, clinical and reimbursement scenarios for specific products and therapeutic areas. In addition, consolidation in the industries in which our customers operate may have an impact on such spending as customers integrate acquired operations, including research and development departments and their budgets. Our customers finance their research and development spending from private and public sources. A reduction in spending by our customers could have a material adverse effect on our business, financial condition and results of operations. If our customers are not successful in attaining or retaining product sales due to market conditions, reimbursement issues or other factors, our results of operations may be materially impacted. Contents

Wecompanies ~~are~~based ~~subject~~in toNorth ~~product~~America, Latin America, Europe and ~~other~~the ~~liability~~Asia-Pacific ~~risks~~region. ~~that~~We ~~could~~also ~~adversely~~may ~~affect~~compete ~~our~~with ~~results~~the ofinternal operations, ~~financial~~of ~~condition~~those pharmaceutical, ~~liquidity~~ biotechnology and ~~cash~~consumer ~~flows~~health manufacturers that choose to source these offerings internally, where possible.

We ~~are~~face ~~subject~~material tocompetition ~~significant~~in ~~product~~each ~~liability~~of our markets. Competition is driven by proprietary technologies and ~~other~~know-how, ~~liability~~capabilities, ~~risks~~consistency ~~that~~of ~~are~~operational ~~inherent~~performance, ~~in the~~quality, ~~design~~price, value and speed. Some competitors may have greater financial, research and development, ~~manufacture~~operational and marketing ofresources ~~our~~than ~~offerings~~we do. WeCompetition may bealso ~~named~~increase as aadditional ~~defendant~~companies inenter ~~product~~our ~~liability~~markets ~~lawsuits,~~or ~~which~~use ~~may~~their ~~allege~~existing ~~that~~resources ~~our~~to ~~offerings~~compete ~~have~~directly ~~resulted~~with orours. ~~could~~Expanded ~~result~~competition from companies in anlow-cost ~~unsafe~~jurisdictions, ~~condition~~such as India and China, may in the future impact our results of operations or ~~injury~~limit toour ~~consumers~~growth. ~~Such lawsuits~~Greater ~~could~~financial, beresearch ~~costly~~and todevelopment, ~~defend~~operational and ~~could~~marketing ~~result~~resources inmay ~~reduced~~allow ~~sales,~~our ~~significant~~competitors ~~liabilities~~to ~~and~~respond ~~diversion~~more ofquickly ~~management’s~~with ~~time~~new, ~~attention~~alternative ~~and~~or ~~resources~~emerging technologies. ~~Even~~Changes ~~claims~~in ~~without~~the ~~merit~~nature ~~could~~or ~~subject~~extent usof toour ~~adverse~~customer ~~publicity~~requirements may render our offerings obsolete or non-competitive and ~~require~~could usadversely toaffect ~~incur significant~~our ~~legal~~results ~~fees~~of operations and financial condition.

~~Furthermore,~~The ~~product~~demand ~~liability~~for ~~claims and lawsuits, regardless of their ultimate outcome, could have a material adverse effect on~~ our ~~business~~offerings ~~operations,~~depends ~~financial~~in ~~condition~~part ~~and reputation and~~ on our ~~ability to attract and retain~~ customers.' Weresearch ~~have historically sought to manage this risk through the combination of product liability insurance~~ and ~~contractual~~ ~~indemnities~~development and ~~liability~~the ~~limitations~~clinical ~~in our agreements with customers~~ and ~~vendors.~~market ~~The~~success ~~availability~~ of ~~product~~their ~~liability insurance for companies in the pharmaceutical industry is generally more limited than insurance available to companies in other industries~~products. ~~Insurance~~Our ~~carriers~~business, ~~providing~~financial ~~product~~condition ~~liability insurance to those in the pharmaceutical~~ and ~~biotechnology~~results ~~industries generally limit the amount~~ of ~~available~~operations ~~policy~~may ~~limits, require larger self-insured retentions and exclude coverage for certain products and claims. There can~~ be noharmed ~~assurance~~if ~~that a successful product liability claim or other liability claim would be adequately covered by~~ our ~~applicable~~customers ~~insurance~~spend ~~policies~~less oron ~~by any applicable contractual indemnity~~ or ~~liability~~are ~~limitations.~~less Insuccessful ~~addition, as we seek to expand our participation~~ in ~~marketed~~these ~~products through royalty and profit sharing arrangements, our ability to contractually limit our liability may be restricted~~activities.

~~Failure~~Our tocustomers ~~comply~~are ~~with~~engaged ~~existing~~in research, development, production and ~~future~~marketing ~~regulatory~~of ~~requirements~~pharmaceutical, ~~could~~biotechnology ~~adversely~~and ~~affect~~consumer health products. The amount of customer spending on research, development, production and marketing, as well as the outcomes of such research, development, and marketing activities, have a large impact on our ~~results~~sales and profitability, particularly the amount our customers choose to spend on our offerings. Our customers determine the amounts that they will spend based upon, among other things, available resources and their need to develop new products, which, in turn, is dependent upon a number of factors, including their competitors' research, development and production initiatives, and the anticipated market uptake, clinical and reimbursement scenarios for specific products and therapeutic areas. In addition, consolidation in the industries in which our customers operate may have an impact on such spending as customers integrate acquired operations, including research and development departments and their budgets. Our customers finance their research and development spending from private and public sources. A reduction in spending by our customers could have a material adverse effect on our business, financial condition and results of operations. If our customers are not successful in attaining or retaining product sales due to market conditions, reimbursement issues or other factors, our results of operations may be materially impacted.

~~The healthcare industry is highly regulated.~~ We are subject to ~~various~~product ~~local, state, federal, foreign~~ and ~~transnational~~ ~~laws and regulations, which include the operating and security standards of DEA, FDA, various state boards of pharmacy, state health departments, the United States DHHS, the EU member states and~~ other ~~comparable~~liability ~~agencies~~risks ~~and,~~that ~~in the future, any changes to such laws and regulations~~ could adversely affect ~~us.~~our Inresults particular, we are subject to laws and regulations concerning good manufacturing practices and drug safety. Our subsidiaries may be required to register for permits and/or licenses with, and may be required to comply with the laws and regulations of ~~the DEA~~operations, ~~the~~financial ~~FDA~~condition, ~~DHHS,~~liquidity ~~foreign agencies including the EMA,~~ and ~~other~~cash ~~various~~flows. ~~state boards of pharmacy, state health departments and/or comparable state agencies as~~

14We are subject to significant product liability and other liability risks that are inherent in the design, development, manufacture and marketing of our offerings. We may be named as a defendant in product liability lawsuits, which may allege that our offerings have resulted or could result in an unsafe condition or injury to consumers. Such lawsuits could be costly to defend and could result in reduced sales, significant liabilities and diversion of management's time, attention and resources. Even claims without merit could subject us to adverse publicity and require us to incur significant legal fees.

~~Table~~Furthermore, product liability claims and lawsuits, regardless of ~~Contents~~their ultimate outcome, could have a material adverse effect on our business operations, financial condition and reputation and on our ability to attract and retain customers. We have historically sought to manage this risk through the combination of product liability insurance and contractual indemnities and liability limitations in our agreements with customers and vendors. The availability of product liability insurance for companies in the pharmaceutical industry is generally more limited than insurance available to companies in other industries. Insurance carriers providing product liability insurance to those in the pharmaceutical and biotechnology industries generally limit the amount of available policy limits, require larger self-insured retentions and exclude coverage for certain products and claims. There can be no assurance that a successful product liability claim or other liability claim would be adequately covered by our applicable insurance policies or by any applicable contractual indemnity or liability limitations. In addition, as we seek to expand our participation in marketed products through royalty and profit sharing arrangements, our ability to contractually limit our liability may be restricted.

~~well~~Failure asto ~~certain~~comply ~~accrediting~~with ~~bodies~~existing ~~depending~~and ~~upon~~future ~~the~~regulatory ~~type~~requirements ofcould ~~operations~~adversely ~~and~~affect ~~location~~our results of ~~product~~operations ~~distribution, manufacturing~~ and ~~sale.~~financial condition.

The ~~manufacture,~~healthcare ~~distribution~~industry ~~and~~is ~~marketing~~highly ofregulated. ~~our~~We ~~offerings for use in our customers’ products~~ are subject to ~~extensive~~various ~~ongoing regulation by the FDA, the DEA, the EMA, and other equivalent~~ local, state, federal, ~~and~~ foreign ~~regulatory~~and ~~authorities.~~transnational ~~Failure~~laws byand usregulations, orwhich byinclude ~~our~~the ~~customers~~operating toand ~~comply~~security ~~with~~standards of the ~~requirements~~DEA, ofthe ~~these~~FDA, ~~regulatory~~various ~~authorities~~state ~~could~~boards ~~result~~of ~~in warning letters~~pharmacy, ~~product~~state ~~recalls~~health ~~or seizures~~departments, ~~monetary~~the ~~sanctions~~DHHS, ~~injunctions~~the toEU ~~halt~~member ~~manufacture~~states and ~~distribution,~~other ~~restrictions~~comparable onagencies ~~our operations~~and, ~~civil~~in orthe ~~criminal sanctions~~future, orany ~~withdrawal~~changes ofto ~~existing~~such orlaws ~~denial~~and ofregulations ~~pending~~could ~~approvals,~~adversely ~~including~~affect ~~those relating to products or facilities~~us. In ~~addition~~particular, ~~such~~we aare ~~failure~~subject ~~could expose us~~ to ~~contractual~~laws orand ~~product~~regulations ~~liability~~concerning ~~claims~~good asmanufacturing ~~well~~practices asand ~~contractual~~drug ~~claims~~safety. ~~from~~Our ~~our~~subsidiaries ~~customers,~~may ~~including~~be ~~claims~~required ~~for~~to ~~reimbursement~~register for ~~lost~~permits and/or ~~damaged~~licenses ~~active pharmaceutical ingredients~~with, ~~the~~and ~~cost~~may ~~of which could be significant.~~

In addition, any new offerings or products must undergo lengthy and rigorous clinical testing and other extensive, costly and time-consuming procedures mandated by the FDA, the EMA and other equivalent local, state, federal and foreign regulatory authorities. We or our customers may elect to delay or cancel anticipated regulatory submissions for current or proposed new products for any number of reasons. 14

~~Although~~Table we believe that we are in compliance in all material respects with applicable laws and regulations, there can be no assurance that a regulatory agency or tribunal would not reach a different conclusion concerning the compliance of our operations with applicable laws and regulations. In addition, there can be no assurance that we will be able to maintain or renew existing permits, licenses or any other regulatory approvals or obtain, without significant delay, future permits, licenses or other approvals needed for the operation of our businesses. Any noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary permits and licenses could have an adverse effect on our results of operations and financial condition. Contents

~~Failure~~be required to ~~provide~~comply ~~quality~~with ~~offerings~~the tolaws ~~our~~and ~~customers~~regulations ~~could~~of ~~have~~the anDEA, ~~adverse~~the ~~effect~~FDA, onDHHS, ~~our~~foreign ~~business~~ agencies including the EMA, and ~~subject~~other usvarious tostate ~~regulatory~~boards ~~actions~~of pharmacy, state health departments and/or ~~costly~~comparable ~~litigation~~state agencies as well as certain accrediting bodies depending upon the type of operations and location of product distribution, manufacturing and sale.

~~Our~~The ~~results~~manufacture, ~~depend~~distribution ~~on our ability to execute~~ and ~~improve~~marketing ~~when necessary~~of our ~~quality~~offerings ~~management~~for ~~strategy~~use ~~and~~in ~~systems, and effectively train and maintain~~ our ~~employee~~customers' ~~base~~products ~~with~~are ~~respect~~subject to ~~quality~~extensive ~~management.~~ongoing ~~Quality~~regulation ~~management~~by ~~plays~~the anFDA, ~~essential~~the ~~role in determining and meeting customer requirements~~DEA, ~~preventing defects and improving our offerings. While we have a network of quality systems throughout our business units and facilities which relate to~~ the ~~design~~EMA, ~~formulation,~~and ~~development,~~other ~~manufacturing,~~equivalent ~~packaging~~local, ~~sterilization~~state, ~~handling,~~federal ~~distribution~~ and ~~labeling~~ offoreign ~~our~~regulatory ~~customers’~~authorities. ~~products~~Failure ~~which~~by ~~use~~us ~~our~~or ~~offerings,~~by ~~quality~~our ~~and~~customers ~~safety~~to ~~issues~~comply ~~may occur~~ with ~~respect~~the torequirements ~~any~~ of ~~our~~these ~~offerings.~~regulatory Aauthorities ~~quality or safety issue~~ could ~~have~~result anin ~~adverse~~warning ~~effect on our business~~letters, ~~financial condition and results of operations and may subject us to regulatory actions, including~~ product recalls, ~~product~~or seizures, monetary sanctions, injunctions to halt manufacture and distribution, restrictions on our operations, civil or ~~civil~~criminal sanctions, or withdrawal of existing or denial of pending approvals, including ~~monetary~~those ~~sanctions~~relating ~~and~~to ~~criminal actions~~products or facilities. In addition, such ana ~~issue~~failure could ~~subject~~expose us to ~~costly~~contractual ~~litigation,~~or ~~including~~product liability claims as well as contractual claims from our customers, including claims for reimbursement for ~~the cost of~~ lost or damaged active pharmaceutical ingredients, the cost of which could be significant.

~~The~~In ~~services~~addition, ~~and~~any new offerings weor ~~provide~~products ~~are~~must ~~highly~~undergo ~~exacting~~lengthy and ~~complex~~rigorous clinical testing and other extensive, costly and iftime-consuming weprocedures ~~encounter~~mandated ~~problems~~by ~~providing~~the FDA, the ~~services~~EMA orand ~~support required~~other equivalent local, state, federal and foreign regulatory authorities. We or our ~~business~~customers ~~could~~may ~~suffer~~elect to delay or cancel anticipated regulatory submissions for current or proposed new products for any number of reasons.

~~The~~Although ~~offerings~~ we ~~provide~~believe ~~are~~that ~~highly~~we ~~exacting~~are ~~and complex, particularly~~ in ~~our Medication~~compliance ~~Delivery Solutions segment, due~~ in ~~part~~all tomaterial ~~strict~~respects ~~regulatory~~with ~~requirements.~~applicable ~~From~~laws ~~time~~and ~~to time~~regulations, ~~problems~~there ~~may~~can ~~arise~~be inno ~~connection~~assurance ~~with~~that ~~facility~~a ~~operations~~regulatory oragency ~~during preparation~~ or ~~provision~~tribunal ofwould annot ~~offering,~~reach ina ~~both~~different ~~cases~~conclusion ~~for~~concerning athe ~~variety~~compliance of ~~reasons~~ ~~including,~~our ~~but~~operations ~~not~~with ~~limited~~applicable ~~to,~~laws ~~equipment malfunction, sterility variances or failures, failure to follow specific protocols~~ and ~~procedures,~~regulations. ~~problems~~In ~~with raw materials~~addition, ~~environmental~~there ~~factors~~can ~~and~~be ~~damage~~no ~~to,~~assurance orthat ~~loss~~we ~~of,~~will ~~manufacturing operations~~be ~~due~~able to ~~fire,~~maintain ~~flood~~ or ~~similar~~renew ~~causes.~~existing ~~Such problems could affect production of a particular batch or series of batches~~permits, ~~requiring~~licenses ~~the destruction of product,~~ or ~~could~~any ~~halt facility production altogether. This could, among~~ other ~~things, lead~~regulatory toapprovals ~~increased~~or ~~costs~~obtain, ~~lost~~without ~~revenue,~~significant ~~damage to customer relations~~delay, ~~reimbursement~~future ~~to customers for lost active pharmaceutical ingredients~~permits, ~~time~~licenses ~~and~~or ~~expense spent investigating the cause and, depending on the cause, similar losses with respect to~~ other ~~batches~~approvals orneeded ~~products.~~for ~~Production problems in our drug and biologic manufacturing operations could be particularly significant because~~ the ~~cost~~operation of ~~raw materials is often higher than in~~ our ~~other~~ businesses. IfAny ~~problems~~noncompliance ~~are~~by ~~not~~us ~~discovered~~with ~~before the~~applicable ~~product~~laws isand ~~released~~regulations toor the ~~market,~~failure ~~recall~~to ~~and~~maintain, ~~product~~renew ~~liability~~or ~~costs~~obtain ~~may~~necessary ~~also~~permits beand ~~incurred.~~licenses Incould ~~addition,~~have ~~such~~an ~~risks~~adverse ~~may~~effect beon ~~greater~~our atresults ~~facilities~~of ~~that~~operations ~~are~~and ~~new~~financial ~~or going through significant expansion~~condition.

~~Our~~Failure ~~global~~to ~~operations~~provide ~~are~~quality ~~subject~~offerings to aour ~~number~~customers ofcould ~~economic,~~have ~~political~~an adverse effect on our business and subject us to regulatory ~~risks~~actions and costly litigation.

WeOur ~~conduct~~results depend on our ~~operations~~ability to execute and improve when necessary our quality management strategy and systems, and effectively train and maintain our employee base with respect to quality management. Quality management plays an essential role in ~~various~~determining ~~regions~~and meeting customer requirements, preventing defects and improving our offerings. While we have a network of quality systems throughout our business units and facilities which relate to the ~~world~~design, ~~including~~formulation, ~~North~~development, ~~America~~manufacturing, ~~South~~packaging, ~~America~~sterilization, ~~Europe~~handling, distribution and ~~the~~labeling ~~Asia-Pacific~~of ~~region. Global~~our ~~economic~~customers' products which use our offerings, quality and ~~regulatory~~safety ~~developments~~issues ~~affect~~may ~~businesses~~occur ~~such~~with asrespect ~~ours~~to inany ~~many~~of ~~ways~~our offerings. ~~Our~~A quality or safety issue could have an adverse effect on our business, financial condition and results of operations ~~are~~and may subject us to ~~the~~regulatory ~~effects~~actions, ofincluding ~~global~~product ~~competition~~recalls, product seizures, injunctions to halt manufacture and distribution, restrictions on our operations, or civil sanctions, including ~~potential~~monetary ~~competition~~sanctions and criminal actions. In addition, such an issue could subject us to costly litigation, including claims from ~~manufacturers~~our incustomers ~~low-~~for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of which could be significant.

15The 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.

~~Table~~The offerings we provide are highly exacting and complex, particularly in our Medication Delivery Solutions segment, due in part to strict regulatory requirements. From time to time, problems may arise in connection with facility operations or during preparation or provision of ~~Contents~~an offering, in both cases for a variety of reasons including, but not limited to, equipment malfunction, sterility variances or failures, failure to follow specific protocols and procedures, problems with raw materials, environmental factors and damage to, or loss of, manufacturing operations due to fire, flood or similar causes. Such problems could affect production of a particular batch or series of batches, requiring the destruction of product, or could halt facility production altogether. This could, among other things, lead to increased costs, lost revenue, damage to customer relations, reimbursement to customers for lost active pharmaceutical ingredients, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. Production problems in our drug and biologic manufacturing operations could be particularly significant because the cost of raw materials is often higher than in our other businesses. If problems are not discovered before the product is released to the market, recall and product liability costs may also be incurred. In addition, such risks may be greater at facilities that are new or going through significant expansion or renovation.

jurisdictions such as China. Local jurisdiction risks include regulatory risks arising from local laws. Our global operations are also affected by local economic environments, including inflation and recession. Political changes, some of which may be disruptive, can interfere with our supply chain and customers and some or all of our activities in a particular location. While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to mitigate these risks are costly and not always successful. Also, fluctuations in foreign currency exchange rates can impact our consolidated financial results. 15

IfTable weof 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. Contents

~~The~~Our ~~healthcare industry~~global isoperations characterized by rapid technological change. Demand for our offerings may change in ways we may not anticipate because of such evolving industry standards as well as a result of evolving customer needs that are increasingly sophisticated and varied and the introduction by others of new offerings and technologies that provide alternatives to our offerings. Several of our higher margin offerings are based on proprietary technologies. The patents for these technologies will ultimately expire, and these offerings may become subject to ~~competition.~~a ~~Without~~number ~~the timely introduction~~ of ~~enhanced or new offerings~~economic, ~~our~~political ~~offerings may become obsolete over time, in which case our revenue~~ and ~~operating~~regulatory ~~results would suffer~~risks. For example, if we are unable to respond to changes in the nature or extent of the technological or other needs of our pharmaceutical customers through enhancing our offerings, our competition may develop offering portfolios that are more competitive than ours and we could find it more difficult to renew or expand existing agreements or obtain new agreements. Innovations directed at continuing to offer enhanced or new offerings generally will require a substantial investment before we can determine their commercial viability, and we may not have the financial resources necessary to fund these innovations.

~~The~~ We ~~success~~conduct our operations in various regions of ~~enhanced~~ orthe ~~new~~world, ~~offerings~~including ~~will~~North ~~depend~~America, onSouth ~~several~~America, ~~factors~~Europe and the Asia-Pacific region. Global economic and regulatory developments affect businesses such as ours in many ways. Our operations are subject to the effects of global competition, including potential competition from manufacturers in low-cost jurisdictions such as India and China. Local jurisdiction risks include regulatory risks arising from local laws. Our global operations are also affected by local economic environments, including inflation and recession. Political changes, some of which may be disruptive, can interfere with our ~~ability~~supply chain and customers and some or all of our activities in a particular location. While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to: mitigate these risks are costly and not always successful. Also, fluctuations in foreign currency exchange rates can impact our consolidated financial results.

•If ~~properly~~we ~~anticipate~~do ~~and~~not ~~satisfy~~enhance ~~customer~~our ~~needs~~existing or introduce new technology or service offerings in a timely manner, ~~including~~our ~~increasing~~offerings ~~demand~~may ~~for~~become ~~lower~~obsolete ~~cost~~over ~~products;~~time, customers may not buy our offerings and our revenue and profitability may decline.

•The ~~enhance~~healthcare industry is characterized by rapid technological change. Demand for our offerings may change in ways we may not anticipate because of such evolving industry standards as well as a result of evolving customer needs that are increasingly sophisticated and varied and the introduction by others of new offerings and technologies that provide alternatives to our offerings. Several of our higher margin offerings are based on proprietary technologies. The patents for these technologies will ultimately expire, ~~innovate~~and these offerings may become subject to competition. Without the timely introduction of enhanced or new offerings, our offerings may become obsolete over time, in which case our revenue and operating results would suffer. For example, if we are unable to respond to changes in the nature or extent of the technological or other needs of our pharmaceutical customers through enhancing our offerings, our competition may develop offering portfolios that are more competitive than ours and ~~manufacture~~we could find it more difficult to renew or expand existing agreements or obtain new agreements. Innovations directed at continuing to offer enhanced or new offerings ingenerally anwill ~~economical~~require a substantial investment before we can determine their commercial viability, and ~~timely~~we ~~manner;~~may not have the financial resources necessary to fund these innovations.

•The ~~differentiate~~success ~~our~~of ~~offerings~~enhanced ~~from~~or ~~competitors’~~new offerings; will depend on several factors, including our ability to:

• ~~achieve~~properly ~~positive~~anticipate ~~clinical~~and ~~outcomes~~satisfy ~~for~~customer ~~our~~needs, ~~customers’~~including ~~new~~increasing demand for lower cost products;

• ~~meet~~enhance, ~~safety~~innovate, ~~requirements~~develop and ~~other~~manufacture ~~regulatory~~new ~~requirements~~offerings ofin ~~government~~an ~~agencies~~economical and timely manner;

• ~~obtain~~differentiate ~~valid~~our ~~and~~offerings ~~enforceable~~from ~~intellectual~~competitors’ ~~property rights~~offerings; ~~and~~

• ~~avoid~~achieve ~~infringing~~positive ~~the~~clinical ~~proprietary~~outcomes ~~rights~~for ofour ~~third~~customers’ ~~parties.~~new products;

~~Even~~• ifmeet wesafety ~~succeed~~requirements ~~in creating enhanced or new offerings from these innovations, they may still fail to result in commercially successful offerings or may not produce revenue in excess of the costs of development,~~ and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of offerings embodying new technologies or features. Finally, innovations may not be accepted quickly in the marketplace because of, among other ~~things,~~regulatory ~~entrenched~~requirements ~~patterns~~ of ~~clinical~~government ~~practice, the need for regulatory clearance and uncertainty over third-party reimbursement.~~ agencies;

We• ~~and~~obtain ~~our~~valid ~~customers depend on patents, copyrights, trademarks~~ and ~~other~~enforceable ~~forms of~~ intellectual property ~~protections,~~rights; ~~however, these protections may not be adequate.~~ and

We• ~~rely~~avoid oninfringing athe combination of know-how trade secrets, patents, copyrights and trademarks and other intellectual property laws, nondisclosure and other contractual provisions and technical measures to protect a number of our offerings and intangible assets. These proprietary rights are important to our ongoing operations. There can be no assurance that these protections will prove meaningful against competitive offerings or otherwise be commercially valuable or that we will be successful in obtaining additional intellectual property or enforcing our intellectual property rights against unauthorized users. Our exclusive rights under certain of our offerings are protected by patents, some of which are subject to expire in the near term. When patents covering an offering expire, loss of exclusivity may occur and this may force us to compete with third parties~~, thereby affecting our revenue and profitability~~. ~~We do not currently expect any material loss of revenue to occur as a result of the expiration of any patent.~~

~~Our~~Even ~~proprietary~~if ~~rights~~we ~~may~~succeed bein ~~invalidated,~~creating ~~circumvented~~enhanced or ~~challenged.~~new Weofferings ~~have~~from inthese ~~the~~innovations, ~~past~~they ~~been~~may ~~subject~~still fail to ~~patent~~result ~~oppositions~~in ~~before~~commercially ~~the~~successful ~~European~~offerings ~~Patent~~or ~~Office~~may ~~and~~not weproduce ~~may~~revenue in ~~the~~excess ~~future~~of bethe ~~subject~~costs ~~to patent~~of ~~oppositions~~development, inand ~~Europe~~they ormay ~~other~~be ~~jurisdictions~~quickly inrendered ~~which~~obsolete weby ~~hold~~changing ~~patent~~customer ~~rights.~~preferences Inor ~~addition,~~the inintroduction ~~the~~by ~~future,~~our wecompetitors ~~may~~of ~~need~~offerings toembodying ~~take~~new ~~legal~~technologies ~~actions~~or tofeatures. ~~enforce~~Finally, ~~our~~innovations ~~intellectual~~may ~~property~~not ~~rights,~~be toaccepted ~~protect~~quickly ~~our~~in ~~trade~~the ~~secrets~~marketplace orbecause toof, ~~determine~~among ~~the~~other ~~validity and~~things, ~~scope~~entrenched patterns of ~~the~~clinical ~~proprietary~~practice, ~~rights~~the ofneed ~~others.~~for ~~The~~regulatory ~~outcome~~clearance ofand ~~any~~uncertainty ~~such~~over ~~legal~~market ~~action~~access ~~may~~or begovernment ~~unfavorable~~or tothird-party usreimbursement.

16We and our customers depend on patents, copyrights, trademarks and other forms of intellectual property protections, however, these protections may not be adequate.

~~Table~~We rely on a combination of ~~Contents~~know-how, trade secrets, patents, copyrights and trademarks and other intellectual property laws, nondisclosure and other contractual provisions and technical measures to protect a number of our offerings and intangible assets. These proprietary rights are important to our ongoing operations. There can be no assurance that these protections will prove meaningful against competitive offerings or otherwise be commercially valuable or that we will be successful in obtaining additional intellectual property or enforcing our intellectual property rights against unauthorized users. Our exclusive rights under certain of our offerings are protected by patents, some of which are subject to expire in the near term. When patents covering an offering expire, loss of exclusivity may occur and this may force us to compete with third parties, thereby affecting our revenue and profitability. We do not currently expect any material loss of revenue to occur as a result of the expiration of any patent.

~~These~~Our ~~legal actions regardless of outcome might result in substantial costs and diversion of resources and management attention. Although we use reasonable efforts to protect our~~ proprietary ~~and~~rights ~~confidential~~may ~~information, there can~~ be ~~no assurance that our confidentiality and non-disclosure agreements will not be breached~~invalidated, ~~our~~circumvented ~~trade secrets will not otherwise become known by competitors~~ or ~~that~~challenged. weWe ~~will~~ have ~~adequate remedies~~ in the ~~event~~past ofbeen ~~unauthorized~~subject ~~use~~to orpatent ~~disclosure~~oppositions ofbefore ~~proprietary~~the ~~information.~~European ~~Even~~Patent ifOffice ~~the validity~~ and ~~enforceability~~we ~~of our intellectual property is upheld, a court might construe our intellectual property not to cover the alleged infringement. In addition, intellectual property enforcement~~ may ~~be unavailable~~ in ~~some~~the ~~foreign~~future ~~countries. There can~~ be nosubject ~~assurance that our competitors will not independently develop technologies that are substantially equivalent or superior~~ to ~~our technology or that third parties will not design around our~~ patent ~~claims~~oppositions toin ~~produce~~Europe ~~competitive offerings. The use of our technology~~ or ~~similar~~other ~~technology by others could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business.~~

We have applied in the United States and certain foreign countries for registration of a number of trademarks, service marks and patents, some of which have been registered or issued, and also claim common law rights in various trademarks and service marks. In the past, third parties have opposed our applications to register intellectual property and there can be no assurance that they will not do so in the future. It is possible that in some cases we may be unable to obtain the registrations for trademarks, service marks and patents for which we have applied and a failure to obtain trademark and patent registrations in the United States or other countries could limit our ability to protect our trademarks and proprietary technologies and impede our marketing efforts in those jurisdictions. 16

~~Our~~Table ~~use~~ of certain intellectual property rights is also subject to license agreements with third parties for certain patents, software and information technology systems and proprietary technologies. If these license agreements were terminated for any reason, it could result in the loss of our rights to this intellectual property, our operations may be materially adversely affected and we may be unable to commercialize certain offerings. Contents

Injurisdictions ~~addition,~~in ~~many~~which ofwe ~~our~~hold ~~branded~~patent ~~pharmaceutical customers rely on patents to protect their products from generic competition~~rights. ~~Because~~In ~~incentives~~addition, ~~exist~~ in ~~some countries, including~~ the ~~United States~~future, ~~for generic~~we ~~pharmaceutical~~may ~~companies~~need to ~~challenge~~take ~~these~~legal ~~patents,~~actions ~~pharmaceutical~~to ~~and~~enforce ~~biotechnology~~our ~~companies~~intellectual ~~are~~property ~~under~~rights, ~~the ongoing threat of a challenge~~ to ~~their~~protect ~~patents. If~~ our ~~customers’~~trade ~~patents~~secrets ~~were~~or ~~successfully challenged and as a result subjected~~ to ~~generic~~determine ~~competition,~~ the ~~market~~validity ~~for~~and ~~our~~scope ~~customers’~~of ~~products~~the ~~could~~proprietary berights ~~significantly~~of ~~impacted,~~others. ~~which~~The ~~could~~outcome ~~have~~of anany ~~adverse~~such ~~effect~~legal onaction ~~our~~may ~~results~~be ofunfavorable ~~operations~~to ~~and financial condition~~us.

~~Our~~These ~~future~~legal ~~results~~actions regardless of ~~operations~~outcome ~~are~~might ~~subject~~result in substantial costs and diversion of resources and management attention. Although we use reasonable efforts to ~~fluctuations~~protect inour ~~the~~proprietary ~~costs,~~and ~~availability~~confidential information, there can be no assurance that our confidentiality and ~~suitability~~non-disclosure ofagreements will not be breached, our trade secrets will not otherwise become known by competitors or that we will have adequate remedies in the ~~components~~event of unauthorized use or disclosure of proprietary information. Even if the ~~products~~ wevalidity ~~manufacture,~~and ~~including~~enforceability ~~active~~of ~~pharmaceutical~~our ~~ingredients~~intellectual property is upheld, ~~excipients~~a court might construe our intellectual property not to cover the alleged infringement. In addition, ~~purchased~~intellectual ~~components~~property enforcement may be unavailable in some foreign countries. There can be no assurance that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology or that third parties will not design around our patent claims to produce competitive offerings. The use of our technology or similar technology by others could reduce or eliminate any competitive advantage we have developed, ~~and~~cause ~~raw~~us ~~materials~~to lose sales or otherwise harm our business.

We ~~depend~~have onapplied ~~various~~in ~~active~~the ~~pharmaceutical~~United ~~ingredients,~~States ~~components,~~and ~~compounds,~~certain ~~raw~~foreign ~~materials,~~countries ~~and~~for ~~energy~~registration ~~supplied~~of ~~primarily~~a bynumber ~~others~~of ~~for our~~trademarks, ~~offerings.~~service ~~This~~marks ~~includes~~and patents, ~~but~~some isof ~~not~~which ~~limited~~have ~~to,~~been ~~gelatin,~~registered ~~starch~~or issued, ~~iota~~and ~~carrageenan,~~also ~~petroleum-based~~claim ~~products~~common law rights in various trademarks and ~~resin~~service marks. ~~Also~~In the past, ~~frequently~~third parties have opposed our ~~customers~~applications ~~provide~~to ~~their~~register ~~active~~intellectual ~~pharmaceutical~~property orand ~~biologic~~there ~~ingredient~~can ~~for~~be ~~formulation~~no orassurance ~~incorporation~~that they will not do so in the ~~finished product~~future. It is possible that ~~any~~in ofsome ~~our~~cases orwe ~~our~~may ~~customer~~be ~~supplier~~unable ~~relationships~~to ~~could~~obtain bethe ~~interrupted~~registrations ~~due~~for totrademarks, ~~natural~~service ~~disasters,~~marks ~~international~~and ~~supply~~patents ~~disruptions~~for ~~caused~~which bywe ~~pandemics,~~have ~~geopolitical~~applied ~~issues~~and ora ~~other~~failure ~~events~~to obtain trademark and patent registrations in the United States or other countries could ~~be terminated~~limit our ability to protect our trademarks and proprietary technologies and impede our marketing efforts in ~~the~~those ~~future~~jurisdictions.

~~For~~Our ~~example,~~use ~~gelatin is a key component in our Oral Technologies segment. The supply~~ of ~~gelatin~~certain ~~is obtained~~intellectual ~~from~~property arights ~~limited number of sources. In addition, much of the gelatin we use~~ is ~~bovine-derived.~~also ~~Past~~subject ~~concerns~~to oflicense ~~contamination~~agreements ~~from~~with ~~Bovine~~third ~~Spongiform~~parties ~~Encephalopathy~~for ~~(“BSE”)~~certain ~~have~~patents, ~~narrowed~~software ~~the~~and ~~number~~information oftechnology ~~possible~~systems ~~sources~~and ofproprietary ~~particular types of gelatin~~technologies. If ~~there~~these ~~were~~license aagreements ~~future~~were ~~disruption~~terminated infor ~~the supply of gelatin from~~ any ~~one or more key suppliers~~reason, weit ~~may~~could ~~not~~result bein ~~able to obtain an alternative supply from our other suppliers. If future restrictions were to emerge on~~ the ~~use~~loss of ~~bovine-derived~~ ~~gelatin~~our ~~due~~rights to ~~concerns~~this ofintellectual ~~contamination from BSE~~property, ~~any such restriction could hinder~~ our ~~ability~~operations tomay ~~timely~~be ~~supply~~materially ~~our~~adversely ~~customers~~affected ~~with products~~ and ~~the~~we ~~use~~may ~~of alternative non-bovine-derived gelatin could~~ be ~~subject~~unable to ~~lengthy formulation,~~commercialize ~~testing~~certain ~~and regulatory approval~~offerings.

~~Any~~In ~~sustained~~addition, ~~interruption~~many inof our ~~receipt~~branded ofpharmaceutical ~~adequate~~customers ~~supplies~~rely ~~could~~on ~~have~~patents ~~an adverse~~to ~~effect~~protect ontheir usproducts from generic competition. InBecause ~~addition~~incentives exist in some countries, ~~while~~including wethe ~~have~~United ~~processes~~States, ~~intended~~for generic pharmaceutical companies to ~~reduce~~challenge ~~volatility~~these inpatents, ~~component~~pharmaceutical and ~~material~~biotechnology ~~pricing,~~companies weare ~~may~~under ~~not~~the beongoing ~~able~~threat of a challenge to ~~successfully~~their ~~manage~~patents. ~~price~~If ~~fluctuations~~our customers' patents were successfully challenged and ~~future~~as ~~price~~a ~~fluctuations~~result orsubjected ~~shortages~~to ~~may~~generic competition, the market for our customers' products could be significantly impacted, which could have an adverse effect on our results of operations and financial condition.

~~Changes~~Our infuture ~~healthcare~~results ~~reimbursement~~of operations are subject to fluctuations in the ~~United~~costs, ~~States~~availability, orand ~~internationally~~suitability ~~could adversely~~of ~~affect~~the ~~our~~components ~~results~~ of ~~operations~~the products we manufacture, including active pharmaceutical ingredients, excipients, purchased components, and ~~financial~~raw ~~condition~~materials.

~~The~~We ~~healthcare~~depend ~~industry~~on ~~has~~various ~~changed~~active ~~significantly~~pharmaceutical ~~over time~~ingredients, components, compounds, raw materials, and weenergy ~~expect~~supplied ~~the~~primarily ~~industry~~by toothers ~~continue~~for toour ~~evolve~~offerings. ~~Some~~This ofincludes, ~~these~~but ~~changes,~~is ~~such~~not aslimited ~~ongoing~~to, ~~healthcare~~gelatin, ~~reform~~starch, ~~adverse~~iota ~~changes~~carrageenan, inpetroleum-based ~~government~~products orand ~~private~~resin. ~~funding~~Also, offrequently ~~healthcare~~our ~~products~~customers ~~and~~provide ~~services,~~their ~~legislation~~active pharmaceutical or ~~regulations~~biologic ~~governing~~ingredient for formulation or incorporation in the ~~patient access~~finished toproduct. ~~care~~It ~~and~~is ~~privacy,~~possible orthat ~~the~~any ~~delivery~~of our or ~~pricing~~our ofcustomer ~~pharmaceuticals~~supplier ~~and~~relationships ~~healthcare~~could ~~services~~be orinterrupted ~~mandated~~due ~~benefits~~to natural disasters, ~~may~~international ~~cause~~supply ~~healthcare~~disruptions ~~industry~~caused ~~participants~~by topandemics, ~~change~~geopolitical issues, other events or could be terminated in the future.

17For example, gelatin is a key component in our Oral Technologies segment. The supply of gelatin is obtained from a limited number of sources. In addition, much of the gelatin we use is bovine-derived. Past concerns of contamination from Bovine Spongiform Encephalopathy (“BSE”) have narrowed the number of possible sources of particular types of gelatin. If there were a future disruption in the supply of gelatin from any one or more key suppliers, we may not be able to obtain an alternative supply from our other suppliers. If future restrictions were to emerge on the use of bovine-derived gelatin due to concerns of contamination from BSE, any such restriction could hinder our ability to timely supply our customers with products and the use of alternative non-bovine-derived gelatin could be subject to lengthy formulation, testing and regulatory approval.

~~Table~~Any sustained interruption in our receipt of ~~Contents~~adequate supplies could have an adverse effect on us. In addition, while we have processes intended to reduce volatility in component and material pricing, we may not be able to successfully manage price fluctuations and future price fluctuations or shortages may have an adverse effect on our results of operations.

amount of our offerings they purchase or the price they are willing to pay for our offerings. Changes in the healthcare industry’s pricing, selling, inventory, distribution or supply policies or practices could also significantly reduce our revenue and results of operations. Particularly, volatility in individual product demand may result from changes in public or private payer reimbursement or coverage. 17

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

AsChanges a company with many international entities, certain revenues, costs, assets and liabilities, including a portion of our senior secured credit facilities and the senior subordinated notes, are denominated in ~~currencies~~market ~~other~~access ~~than~~or ~~the~~healthcare ~~U.S.~~reimbursement ~~dollar. As a result, changes~~ in the ~~exchange~~United ~~rates~~States ~~of these currencies~~ or ~~any other~~internationally ~~applicable~~could ~~currencies~~adversely ~~to the U.S. dollar will~~ affect our ~~revenues,~~results ~~earnings~~of ~~and~~operations ~~cash flows~~ and ~~could~~financial ~~result in unrealized and realized exchange losses despite any efforts we may undertake to manage or mitigate our exposure to foreign currency fluctuations~~condition.

~~Tax~~The healthcare industry has changed significantly over time, and we expect the industry to continue to evolve. Some of these changes, such as ongoing healthcare reform, adverse changes in government or private funding of healthcare products and services, legislation ~~initiatives~~or regulations governing the patient access to care and privacy, or ~~challenges~~the delivery, pricing or reimbursement approval of pharmaceuticals and healthcare services or mandated benefits, may cause healthcare industry participants to change the amount of our ~~tax~~offerings ~~positions~~they purchase or the price they are willing to pay for our offerings. Changes in the healthcare industry's pricing, selling, inventory, distribution or supply policies or practices could ~~adversely~~also ~~affect~~significantly reduce our revenue and results of operations. ~~and~~Particularly, ~~financial~~volatility ~~condition~~in individual product demand may result from changes in public or private payer reimbursement or coverage.

WeFluctuations ~~are a large multinational corporation with operations~~ in the ~~United~~exchange ~~States~~rate ~~and international~~of ~~jurisdictions, including North America, South America, Europe and~~ the ~~Asia-Pacific region~~U.S. Asdollar ~~such, we are subject to the tax laws~~ and ~~regulations~~other offoreign ~~the~~currencies ~~United States federal, state and local governments and of many international jurisdictions. From time to time, various legislative initiatives may be proposed that~~ could ~~adversely~~have ~~affect~~a ~~our~~material ~~tax~~adverse ~~positions.~~effect ~~There~~on ~~can be no assurance that~~ our ~~effective~~financial ~~tax~~performance ~~rate or tax payments will not be adversely affected by these initiatives. In addition, United States federal, state~~ and ~~local,~~results asof ~~well as international tax laws and regulations are extremely complex and subject to varying interpretations~~operations. ~~There can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge.~~

WeAs a company with many international entities, certain revenues, costs, assets and liabilities, including a portion of our senior secured credit facilities and the senior subordinated notes, are ~~dependent~~denominated onin ~~key~~currencies ~~personnel~~other than the U. S. dollar. As a result, changes in the exchange rates of these currencies or any other applicable currencies to the U.S. dollar will affect our revenues, earnings and cash flows and could result in unrealized and realized exchange losses despite any efforts we may undertake to manage or mitigate our exposure to foreign currency fluctuations.

WeTax ~~depend~~legislation oninitiatives ~~senior~~or ~~executive~~challenges ~~officers and other key personnel, including our technical personnel,~~ to ~~operate and grow~~ our ~~business~~ ~~and~~tax topositions ~~develop new enhancements, offerings and technologies. The loss of any of these officers or other key personnel combined with a failure to attract and retain suitably skilled technical personnel~~ could adversely affect our ~~operations. Although~~results anof ~~equity-based~~operations ~~compensation plan is in place, we do not have the ability to compensate employees with publicly traded equity, which may have a negative impact on our ability to recruit~~ and ~~retain professionals, and could have a material adverse effect on our business,~~ financial condition ~~and results of operations~~.

~~Risks~~We ~~generally~~are ~~associated~~a large multinational corporation with ~~our information~~operations ~~systems~~in the United States and international jurisdictions, including North America, South America, Europe and the Asia-Pacific region. As such, we are subject to the tax laws and regulations of the United States federal, state and local governments and of many international jurisdictions. From time to time, various legislative initiatives may be proposed that could adversely affect our ~~results~~tax ofpositions. ~~operations~~There can be no assurance that our effective tax rate or tax payments will not be adversely affected by these initiatives. In addition, United States federal, state and local, as well as international tax laws and regulations are extremely complex and subject to varying interpretations. There can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge.

We ~~rely~~are dependent on ~~information~~key ~~systems~~personnel. ~~in our business to obtain, rapidly process, analyze and manage data to:~~

•We ~~facilitate~~depend ~~the~~on ~~manufacture~~senior executive officers and ~~distribution~~other key personnel, including our technical personnel, to operate and grow our business and to develop new enhancements, offerings and technologies. The loss of ~~thousands~~any of ~~inventory~~these ~~items~~officers or other key personnel combined with a failure to attract and ~~from~~retain suitably skilled technical personnel could adversely affect our ~~facilities;~~operations. Although an equity-based compensation plan is in place, we do not have the ability to compensate employees with publicly traded equity, which may have a negative impact on our ability to recruit and retain professionals, and could have a material adverse effect on our business, financial condition and results of operations.

•Risks ~~receive,~~generally ~~process~~associated ~~and~~with ~~ship~~our ~~orders~~information onsystems acould ~~timely~~adversely ~~basis;~~affect our results of operations.

•We ~~manage~~rely ~~the~~on ~~accurate~~information ~~billing~~systems ~~and~~in ~~collections~~our ~~for~~business ~~thousands~~to ofobtain, ~~customers;~~rapidly process, analyze and manage data to:

• ~~manage~~facilitate the ~~accurate~~manufacture ~~accounting~~ and ~~payment~~distribution ~~for~~of thousands of ~~vendors;~~inventory items to and from our facilities;

• ~~schedule~~receive, process and ~~operate~~ship ~~our~~orders ~~global~~on ~~network~~a oftimely ~~development, manufacturing and packaging facilities.~~basis;

~~Our~~• ~~results~~manage ofthe ~~operations~~accurate ~~could~~billing beand ~~adversely~~collections ~~affected if these systems are interrupted, damaged by unforeseen events or fail~~ for ~~any extended~~thousands ~~period~~ of ~~time, including due to the actions of third parties.~~ customers;

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

~~Our~~• ~~future~~schedule ~~success may be dependent on opportunities to buy other businesses or technologies~~ and ~~possibly~~ ~~enter~~operate ~~into joint ventures that could complement, enhance or expand~~ our ~~current~~global ~~business~~network or offerings and services or that might otherwise offer us growth opportunities. We may face competition from other companies in pursuing acquisitions in the pharmaceutical and biotechnology industry. Our ability to acquire targets may also be limited by applicable antitrust laws and other regulations in the United States and other foreign jurisdictions in which we do business. To the extent that we are successful in making acquisitions, we may have to expend substantial amounts of ~~cash~~development, ~~incur~~manufacturing ~~debt~~ and ~~assume~~packaging ~~loss-making divisions~~facilities. We may not be able to complete such transactions, for reasons including, but not limited to, a failure to secure financing. Any transactions that we are able to identify and complete may involve a number of risks, including the diversion of management’s attention to integrate the acquired businesses or joint ventures, the possible adverse effects on our operating results during the integration process, the potential loss of customers or employees in connection with the acquisition, delays

18Our results of operations could be adversely affected if these systems are interrupted, damaged by unforeseen events or fail for any extended period of time, including due to the actions of third parties.

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

orOur ~~reduction~~future insuccess ~~realizing~~may ~~expected~~be ~~synergies~~dependent ~~and~~on ~~our~~opportunities ~~potential~~to ~~inability~~buy toother ~~achieve~~businesses ~~our~~or ~~intended~~technologies ~~objectives~~and ~~for~~possibly ~~the~~enter ~~transaction.~~into Injoint ~~addition,~~ventures wethat ~~may~~could becomplement, ~~unable~~enhance toor ~~maintain~~expand ~~uniform~~our ~~standards, controls,~~current ~~procedures~~business ~~and~~or ~~policies,~~offerings and ~~this~~services ~~may~~or ~~lead~~that tomight ~~operational~~otherwise ~~inefficiencies.~~

To the extent that we are not successful in completing divestitures, as such may be determined by future strategic plans and business performance, we may have to expend substantial amounts of cash, incur debt and continue to absorb loss-making or under-performing divisions. Any divestitures that we are unable to complete may involve a number of risks, including diversion of management’s attention, a negative impact on our customer relationships, costs associated with retaining the targeted divestiture, closing and disposing of the impacted business or transferring business to other facilities. 18

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

~~From~~offer ~~time~~us togrowth ~~time,~~opportunities. ~~third~~We ~~parties~~may ~~have~~face ~~asserted intellectual~~competition ~~property~~from ~~infringement~~other ~~claims~~companies ~~against~~in uspursuing ~~and~~acquisitions ~~our~~in ~~customers~~the pharmaceutical and ~~there~~biotechnology ~~can~~industry. Our ability to acquire targets may also be nolimited ~~assurance~~by ~~that~~applicable ~~third~~antitrust ~~parties~~laws ~~will~~and ~~not~~other ~~assert~~regulations ~~infringement~~in ~~claims~~the ~~against~~United ~~either~~States usand orother ~~our~~foreign ~~customers~~jurisdictions in ~~the~~which ~~future~~we do business. ~~While~~To wethe ~~believe~~extent that ~~our~~we ~~offerings~~are dosuccessful ~~not infringe~~ in ~~any~~making ~~material~~acquisitions, ~~respect~~we ~~upon~~may ~~proprietary~~have ~~rights~~to expend substantial amounts of ~~other~~cash, ~~parties~~incur debt and~~/or~~ ~~that~~assume ~~meritorious~~loss-making ~~defenses~~divisions. ~~would~~We ~~exist~~may ~~with~~not ~~respect~~be able to ~~any~~complete ~~assertions~~such totransactions, ~~the~~for ~~contrary~~reasons including, ~~there~~but ~~can~~not belimited noto, ~~assurance~~a ~~that~~failure weto ~~would~~secure ~~not~~financing. beAny ~~found~~transactions tothat ~~infringe~~we onare ~~the proprietary~~able ~~rights~~to ofidentify ~~others.~~and ~~Patent~~complete ~~applications~~may ininvolve ~~the~~a ~~United~~number ~~States~~of ~~and~~risks, ~~some~~including ~~foreign~~the ~~countries~~diversion ~~are~~of ~~generally~~management's ~~not~~attention ~~publicly~~to ~~disclosed~~integrate ~~until~~ the ~~patent~~acquired isbusinesses ~~issued~~ or ~~published~~joint ventures, ~~and~~the wepossible ~~may~~adverse ~~not~~effects beon ~~aware~~our ofoperating ~~currently~~results ~~filed~~during ~~patent~~the ~~applications~~integration ~~that relate~~process, tothe ~~our~~potential ~~offerings~~loss orof ~~processes.~~customers Ifor ~~patents~~employees ~~later~~in ~~issue~~connection onwith ~~these~~the ~~applications~~acquisition, wedelays ~~may~~or bereduction ~~found~~in ~~liable~~realizing ~~for~~expected ~~subsequent~~synergies ~~infringement.~~and ~~There~~our ~~has~~potential ~~been~~inability ~~substantial~~to ~~litigation~~achieve inour intended objectives for the ~~pharmaceutical~~transaction. ~~and~~In ~~biotechnology~~addition, ~~industries~~we ~~with~~may ~~respect~~be unable to ~~the manufacture,~~maintain ~~use~~uniform ~~and~~standards, ~~sale~~controls, ofprocedures ~~products~~and ~~that~~policies, ~~are~~and ~~the~~this ~~subject~~may oflead ~~conflicting~~to ~~patent~~operational ~~rights~~inefficiencies.

~~Any~~To ~~claims~~the extent that ~~our~~we ~~offerings~~are ~~or processes~~not ~~infringe~~successful ~~these~~in ~~rights~~completing ~~(including~~divestitures, ~~claims~~as ~~arising~~such ~~through~~may ~~our~~be ~~contractual~~determined ~~indemnification~~by offuture ~~our~~strategic ~~customers),~~plans ~~regardless~~and ofbusiness ~~their~~performance, ~~merit~~we ormay ~~resolution,~~have ~~could~~to beexpend ~~costly~~substantial ~~and~~amounts ~~may~~of ~~divert~~cash, ~~the~~incur ~~efforts~~debt and ~~attention~~continue ofto ~~our~~absorb ~~management~~loss-making ~~and~~or ~~technical personnel~~under-performing divisions. WeAny ~~may~~divestitures ~~not~~that ~~prevail~~we inare ~~such~~unable ~~proceedings~~to ~~given~~complete ~~the~~may ~~complex~~involve ~~technical~~a ~~issues~~number ~~and~~of ~~inherent~~risks, ~~uncertainties~~including indiversion ~~intellectual~~of ~~property~~management's ~~litigation.~~attention, Ifa ~~such~~negative ~~proceedings~~impact ~~result~~on inour ancustomer ~~adverse outcome~~relationships, wecosts ~~could,~~associated ~~among~~with ~~other~~retaining ~~things~~the targeted divestiture, beclosing ~~required~~and disposing of the impacted business or transferring business to: other facilities.

•Our ~~pay~~offerings ~~substantial~~and ~~damages~~our ~~(potentially~~customers' ~~treble~~products ~~damages~~may ininfringe on the ~~United~~intellectual ~~States);~~property rights of third parties

•From ~~cease~~time ~~the~~to ~~manufacture~~time, ~~use~~third parties have asserted intellectual property infringement claims against us and our customers and there can be no assurance that third parties will not assert infringement claims against either us or ~~sale~~our customers in the future. While we believe that our offerings do not infringe in any material respect upon proprietary rights of other parties and/or that meritorious defenses would exist with respect to any assertions to the ~~infringing~~contrary, there can be no assurance that we would not be found to infringe on the proprietary rights of others. Patent applications in the United States and some foreign countries are generally not publicly disclosed until the patent is issued or published, and we may not be aware of currently filed patent applications that relate to our offerings or processes;. If patents later issue on these applications, we may be found liable for subsequent infringement. There has been substantial litigation in the pharmaceutical and biotechnology industries with respect to the manufacture, use and sale of products that are the subject of conflicting patent rights.

•Any ~~discontinue~~claims that our offerings or processes infringe these rights (including claims arising through our contractual indemnification of our customers), regardless of their merit or resolution, could be costly and may divert the ~~use~~efforts and attention of our management and technical personnel. We may not prevail in such proceedings given the ~~infringing~~complex ~~technology;~~technical issues and inherent uncertainties in intellectual property litigation. If such proceedings result in an adverse outcome, we could, among other things, be required to:

• ~~expend~~pay ~~significant~~substantial ~~resources~~damages to(potentially ~~develop~~treble ~~non-infringing~~damages ~~technology~~in the United States);

• ~~license~~cease ~~technology from~~ the ~~third party claiming infringement~~manufacture, ~~which~~use ~~license~~or ~~may~~sale ~~not~~of bethe ~~available~~infringing onofferings ~~commercially reasonable terms,~~ or ~~may not be available at all~~processes; ~~and~~

• ~~lose~~discontinue the ~~opportunity~~use ~~to license our technology to others or to collect royalty payments based upon successful protection and assertion~~ of ~~our~~the ~~intellectual~~infringing ~~property against others.~~technology;

In• ~~addition,~~expend ~~our~~significant ~~customers’~~resources ~~products may be subject~~ to ~~claims~~develop ~~of intellectual property infringement and such claims could materially affect our business if their products cease to be manufactured and they have to discontinue the use of the~~ non-infringing technology ~~which we may provide.~~ ;

~~Any~~• oflicense ~~the~~technology ~~foregoing~~from ~~could~~the ~~affect~~third ~~our~~party ~~ability~~claiming toinfringement, ~~compete~~which orlicense ~~have~~may anot ~~material~~be ~~adverse~~available ~~effect~~ on ~~our~~commercially ~~business~~reasonable terms, ~~financial~~or ~~condition~~may ~~and results~~not ofbe ~~operations.~~available at all; and

We• ~~are~~lose ~~subject~~the opportunity to ~~environmental,~~license ~~health~~our ~~and~~technology ~~safety~~to ~~laws~~others ~~and~~or ~~regulations,~~to ~~which~~collect ~~could~~royalty ~~increase~~payments ~~our costs~~based upon successful protection and ~~restrict~~assertion of our ~~operations~~intellectual inproperty ~~the~~against ~~future~~others.

~~Our~~In ~~operations are subject to a variety of environmental~~addition, ~~health~~our ~~and safety~~customers' ~~laws~~products ~~and~~may ~~regulations,~~be including those of EPA and equivalent local, state, and foreign regulatory agencies in each of the jurisdictions in which we operate. These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous substances and wastes, soil and groundwater contamination and employee health and safety. Any failure by us to comply with environmental, health and safety requirements could result in the limitation or suspension of production or subject us to ~~monetary~~claims ~~fines or civil or criminal sanctions, or other future liabilities in excess~~ of ~~our~~intellectual ~~reserves.~~property Weinfringement ~~are also subject to laws~~ and ~~regulations~~such ~~governing~~claims ~~the~~could ~~destruction~~materially ~~and~~affect ~~disposal of raw materials and non-compliant products, the handling of regulated material that are included in~~ our ~~offerings,~~business ~~and~~if ~~the disposal of our offerings at the end of~~ their ~~useful~~products ~~life.~~cease Into ~~addition,~~be ~~compliance~~manufactured ~~with environmental, health~~ and ~~safety requirements~~they ~~could~~have ~~restrict our ability~~ to ~~expand~~discontinue ~~our~~the ~~facilities or require us to acquire costly pollution control equipment, incur other significant expenses or modify our manufacturing processes. Our manufacturing facilities may~~ use, inof ~~varying degrees, hazardous substances in their processes. These substances include, among others, chlorinated solvents, and in~~ the ~~past~~infringing ~~chlorinated~~technology ~~solvents~~which ~~were used at one or more of our facilities, including a number~~ we nomay ~~longer own or operate~~provide. ~~As at our current facilities, contamination at such formerly~~

19Any of the foregoing could affect our ability to compete or have a material adverse effect on our business, financial condition and results of operations.

~~Table~~We ofare ~~Contents~~subject to environmental, health and safety laws and regulations, which could increase our costs and restrict our operations in the future.

~~owned~~Our oroperations ~~operated~~are ~~properties~~subject ~~can result and has resulted in liability~~ to ~~us.~~a Invariety ~~the event~~ of ~~the~~environmental, ~~discovery~~health ofand ~~new~~safety orlaws ~~previously~~and ~~unknown contamination either at our facilities or at third-party locations~~regulations, including ~~facilities~~those weof ~~formerly~~EPA ~~owned~~and orequivalent ~~operated~~local, ~~the~~state, ~~issuance~~and offoreign ~~additional~~regulatory ~~requirements~~agencies ~~with~~in ~~respect~~each toof ~~existing contamination, or~~ the ~~imposition~~jurisdictions ofin ~~other~~which ~~cleanup~~we ~~obligations~~operate. ~~for~~These ~~which~~laws weand ~~are~~regulations ~~responsible~~govern, weamong ~~may~~other bethings, ~~required~~air ~~to take additional~~emissions, ~~unplanned~~wastewater ~~remedial~~discharges, ~~measures~~the ~~for~~use, ~~which~~handling noand ~~reserves~~disposal ~~have~~of ~~been~~hazardous ~~recorded.~~substances Weand ~~are~~wastes, ~~conducting~~soil ~~monitoring~~ and ~~cleanup~~groundwater of contamination atand ~~certain~~employee ~~facilities~~health ~~currently~~and orsafety. ~~formerly~~Any ~~owned~~failure ~~or operated~~ by us. Weto ~~have~~comply ~~established~~with ~~accounting~~environmental, ~~reserves for~~health ~~certain~~and ~~contamination~~safety ~~liabilities~~requirements ~~but~~could ~~cannot~~result ~~assure~~in ~~you~~the ~~that~~limitation ~~such~~or ~~liabilities~~suspension ~~will~~of ~~not~~production ~~exceed~~or ~~our~~subject ~~reserves.~~us to

~~We are subject to labor and employment laws and regulations, which could increase our costs and restrict our operations in the future.~~ 19

WeTable employ approximately 8,700 employees worldwide, including approximately 3,300 employees in North America, 4,100 in Europe, 700 in South America and 600 in the Asia/Pacific region. Certain employees at one of our North American facilities are represented by a labor organization, and national work councils and/or labor organizations are active at all twelve of our European facilities consistent with labor environments/laws in European countries. Similar relationships with labor organizations or national work councils exist in our plants in Argentina, Brazil and Australia. Our management believes that our employee relations are satisfactory. However, further organizing activities or collective bargaining may increase our employment-related costs and we may be subject to work stoppages and other labor disruptions. Moreover, as employers are subject to various employment-related claims, such as individual and class actions relating to alleged employment discrimination, wage-hour and labor standards issues, such actions, if brought against us and successful in whole or in part, may affect our ability to compete or have a material adverse effect on our business, financial condition and results of operations. Contents

~~Certain~~monetary fines or civil or criminal sanctions, or other future liabilities in excess of our ~~pension~~reserves. ~~plans~~We are ~~underfunded~~also subject to laws and regulations governing the destruction and disposal of raw materials and non-compliant products, the handling of regulated material that are included in our offerings, and ~~additional~~the ~~cash contributions~~disposal weof ~~may~~our beofferings ~~required~~at the end of their useful life. In addition, compliance with environmental, health and safety requirements could restrict our ability to ~~make~~expand ~~will~~our ~~reduce~~facilities or require us to acquire costly pollution control equipment, incur other significant expenses or modify our manufacturing processes. Our manufacturing facilities may use, in varying degrees, hazardous substances in their processes. These substances include, among others, chlorinated solvents, and in the ~~cash~~past ~~available~~chlorinated ~~for~~solvents were used at one or more of our ~~business~~facilities, including a number we no longer own or operate. As at our current facilities, contamination at such asformerly owned or operated properties can result and has resulted in liability to us. In the ~~payment~~event of the discovery of new or previously unknown contamination either at our ~~interest~~facilities ~~expense~~or at third-party locations, including facilities we formerly owned or operated, the issuance of additional requirements with respect to existing contamination, or the imposition of other cleanup obligations for which we are responsible, we may be required to take additional, unplanned remedial measures for which no reserves have been recorded. We are conducting monitoring and cleanup of contamination at certain facilities currently or formerly owned or operated by us. We have established accounting reserves for certain contamination liabilities but cannot assure you that such liabilities will not exceed our reserves.

~~Certain~~We ofare ~~our~~subject ~~employees~~to inlabor ~~the~~and ~~United~~employment ~~States,~~laws ~~United~~and ~~Kingdom~~regulations, ~~Germany, France, Japan and Australia are participants in defined benefit pension plans~~ which wecould ~~sponsor.~~increase ~~As of June 30, 2012, the underfunded amount of~~ our ~~pension~~costs ~~plans on a worldwide basis was approximately $135.0 million, primarily related to our plans in the United Kingdom~~ and ~~Germany.~~restrict ~~Included within this obligation is an estimate of approximately $36.0 million related to~~ our ~~Fiscal~~operations ~~2012 withdrawal from a multiemployer pension plan which we participated~~ in. ~~In general,~~ the ~~amount of~~ future ~~contributions to the underfunded plans will depend upon asset returns and a number of other factors and, as a result, the amount we may be required to contribute to such plan in the future may vary~~. ~~Such cash contributions to the plans will reduce the cash available for our business to pursue strategic growth initiatives or the payment of interest expense on the notes or our other indebtedness.~~

~~Blackstone~~We ~~controls~~employ usapproximately 8,300 employees worldwide, including approximately 3,300 employees in North America, 3,800 in Europe, 700 in South America and 500 in the Asia/Pacific region. Certain employees at one of our ~~Investors~~North ~~may~~American ~~have~~facilities ~~conflicts~~are represented by a labor organization, and national works councils and/or labor organizations are active at all twelve of ~~interest~~our European facilities consistent with uslabor environments/laws in European countries. Similar relationships with labor organizations or national works councils exist in our ~~note~~plants ~~holders~~in Argentina, Brazil and Australia. Our management believes that our employee relations are satisfactory. However, further organizing activities or collective bargaining may increase our employment-related costs and we may be subject to work stoppages and other labor disruptions. Moreover, as employers are subject to various employment-related claims, such as individual and class actions relating to alleged employment discrimination, wage-hour and labor standards issues, such actions, if brought against us and successful in ~~the~~ ~~future~~whole or in part, may affect our ability to compete or have a material adverse effect on our business, financial condition and results of operations.

~~Blackstone~~Certain ~~controls approximately 86%~~ of BHP PTS Holdings L.L.C., with the other Investors (as defined in Note 11 to the Consolidated Financial Statements) controlling the remainder. By virtue of this controlling interest and BHP PTS Holdings L.L.C.’s ownership of all the outstanding membership interests of our ~~indirect~~pension ~~parent~~plans ~~company,~~are ~~Phoenix Charter LLC~~underfunded, ~~we are controlled by Blackstone. Blackstone controls us~~ and ~~all~~additional ofcash ~~our~~contributions ~~subsidiaries~~we ~~and~~may isbe ~~entitled~~required to ~~elect~~make ~~all~~will ofreduce ~~our directors, to appoint new management and to approve actions requiring~~ the ~~approval~~cash ofavailable for our ~~stockholder~~business, ~~including~~such ~~approving or~~as ~~rejecting~~the ~~proposed~~payment ~~mergers or sales~~ of ~~all or substantially all of~~ our ~~assets,~~interest ~~regardless of whether note holders believe that any such transactions are in their own best interests~~expense.

~~The~~Certain ~~interests~~ of our employees in the ~~Investors~~United ~~may~~States, ~~differ~~United ~~from~~Kingdom, ~~holders~~Germany, ofFrance, ~~our~~Japan ~~notes~~and Australia are participants in ~~material~~defined ~~respects.~~benefit ~~For~~pension ~~example,~~plans ifwhich we ~~encounter~~sponsor. ~~financial difficulties~~As orof ~~are~~June 30, ~~unable~~2013, tothe ~~pay~~underfunded amount of our ~~debts~~pension asplans ~~they~~on ~~mature,~~a ~~the~~worldwide ~~interests~~basis ofwas ~~the~~approximately ~~Investors~~$90.7 asmillion, ~~equity~~primarily ~~holders~~related ~~might~~to ~~conflict~~our ~~with~~fiscal ~~the~~2012 ~~interests~~plans ofin ~~our~~the ~~note~~United ~~holders.~~Kingdom ~~The~~and ~~Investors~~Germany. ~~also~~In ~~may~~addition, we have an ~~interest~~estimated inobligation ~~pursuing~~of ~~acquisitions,~~approximately ~~divestitures~~$39.7 million, ~~financings~~ ~~(including~~as ~~financings~~of ~~that~~June 30, ~~are~~2013, ~~secured~~related ~~and/or~~to ~~senior~~our towithdrawal ~~the~~from ~~senior~~a ~~subordinated~~multiemployer ~~notes)~~pension orplans ~~other~~in ~~transactions~~which ~~that~~we participated, resulting in ~~their~~a ~~judgment,~~total ~~could~~underfunded ~~enhance~~amount ~~their~~related ~~equity~~to ~~investments,~~our ~~even~~pension ~~though~~plans ~~such~~of ~~transactions~~$130.4 ~~might~~million ~~involve~~as ~~risks~~of toJune ~~our~~30, ~~note holders~~2013. ~~Additionally~~In general, the ~~indentures~~amount ~~governing~~of future contributions to the ~~notes~~underfunded ~~permit~~plans uswill todepend ~~pay~~upon ~~advisory~~asset ~~fees,~~returns ~~dividends~~and ora ~~make~~number of other ~~restricted~~factors ~~payments~~and, ~~under~~as ~~certain~~a ~~circumstances~~result, ~~and~~ the ~~Investors~~amount orwe ~~their~~may ~~affiliates~~be ~~and/or~~required ~~advisors~~to ~~may~~contribute ~~have~~to ansuch ~~interest~~plans in ~~our doing~~the ~~so.~~future ~~See~~may ~~Item 13~~vary. ~~“Certain~~Such ~~Relationships~~cash ~~and~~contributions ~~Related~~to ~~Party~~the ~~Transactions—Transaction~~plans ~~and~~will ~~Advisory~~reduce ~~Fee~~the ~~Agreement”~~cash available for aour ~~discussion~~business ofto ~~certain~~pursue ~~payments~~strategic ~~affiliates~~growth ofinitiatives ~~Blackstone~~or inthe ~~connection~~payment ~~with~~of ~~the~~interest ~~2007~~expense ~~acquisition~~on ~~from Cardinal~~the ~~and~~notes ~~related~~or ~~financings~~our other indebtedness.

~~Members~~Blackstone ofcontrols ~~the~~us ~~Investors~~and orour ~~their~~Investors ~~affiliates~~may orhave ~~advisors~~conflicts ~~are in the business~~ of ~~making~~interest ~~or advising on investments in companies and may, from time to time in the future, acquire interests in businesses or provide advice that directly or indirectly compete~~ with ~~certain~~us ~~portions of our business~~ or ~~are suppliers or customers of ours. They may also pursue acquisition opportunities that may be complementary to~~ our ~~business~~noteholders ~~and,~~in ~~as a result, those acquisition opportunities may not be available to us. You should consider that~~ the ~~interests of these holders may differ from yours in material respects~~future. ~~See Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and Item 13 “Certain Relationships and Related Party Transactions”.~~

20Blackstone controls approximately 87% of BHP PTS Holdings L.L.C., with the other Investors controlling the remainder. By virtue of this controlling interest and BHP PTS Holdings L.L.C.'s ownership of all the outstanding membership interests of our indirect parent company, Phoenix Charter LLC, we are controlled by Blackstone. Blackstone controls us and all of our subsidiaries and is entitled to elect all of our directors, to appoint new management and to approve actions requiring the approval of our stockholder, including approving or rejecting proposed mergers or sales of all or substantially all of our assets, regardless of whether noteholders believe that any such transactions are in their own best interests.

~~Table~~The interests of ~~Contents~~the Investors may differ from holders of our notes in material respects. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of the Investors as equity holders might conflict with the interests of our noteholders. The Investors also may have an interest in pursuing acquisitions, divestitures, financings (including financings that are secured and/or senior to the senior subordinated notes) or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to our noteholders. Additionally, the indenture governing the notes permits us to pay advisory fees, dividends or make other restricted payments under certain circumstances, and the Investors or their affiliates and/or advisors may have an interest in our doing so. See Item

~~ITEM 1B. UNRESOLVED STAFF COMMENTS~~20

~~None.~~ Table of Contents

~~ITEM~~13 2“Certain Relationships and Related Transactions, and Director Independence-Transaction and Advisory Fee Agreement” for a discussion of certain payments we make to affiliates of Blackstone in connection with Blackstone's acquisition of us and related financings. ~~PROPERTIES~~

~~Our~~Members ~~principal executive~~of ~~offices~~the ~~are~~Investors ~~located~~or attheir 14affiliates ~~Schoolhouse~~or ~~Road,~~advisors ~~Somerset,~~are ~~New~~in ~~Jersey.~~the Webusiness ~~also~~of ~~operate~~making ~~manufacturing~~or ~~operations,~~advising ~~development~~on ~~centers~~investments in companies and ~~sales~~may, ~~offices~~from ~~throughout~~time to time in the ~~world.~~future, Weacquire ~~have~~interests ~~twenty-seven~~in ~~facilities~~businesses onor ~~five~~provide ~~continents~~advice ~~with~~that ~~approximately 4.7 million~~directly ~~square~~or ~~feet~~indirectly compete with certain portions of ~~manufacturing,~~our ~~lab~~business ~~and~~or ~~related~~are ~~space~~suppliers or customers of ours. ~~Our~~They ~~manufacturing~~may ~~capabilities~~also ~~encompass~~pursue acquisition opportunities that may be complementary to our business and, as a ~~full~~result, ~~suite~~those acquisition opportunities may not be available to us. You should consider that the interests of ~~competencies~~these ~~including~~holders ~~regulatory,~~may ~~quality~~differ ~~assurance~~from ~~and~~yours in~~-house~~ ~~validation~~material atrespects. ~~all~~See Item 12 “Security Ownership of ~~the~~Certain ~~production~~Beneficial ~~sites.~~Owners ~~The~~and ~~following table~~Management ~~sets~~and ~~forth~~Related ~~our~~Stockholder ~~manufacturing~~Matters” and ~~laboratory~~Item ~~facilities~~13 by“Certain ~~area~~Relationships and ~~region:~~Related Transactions, and Director Independence”.

Facility Sites

Country

Region

Segment

Total SquareFootage

Owned/Leased

Kakegawa

Japan

Asia Pacific

Oral Technologies

107,300

Owned

Braeside

Australia

Asia Pacific

Oral Technologies

163,100

Owned

Beinheim

France

Europe

Oral Technologies

78,100

Owned

Eberbach

Germany

Europe

Oral Technologies

370,580

Leased

Aprilia

Italy

Europe

Oral Technologies

72,000

Owned

Swindon

United Kingdom

Europe

Oral Technologies

164,687

Owned

Swindon

United Kingdom

Europe

Oral Technologies

253,314

Owned

Somerset, NJ

USA

North America

Oral Technologies

265,000

Owned

Winchester, KY

USA

North America

Oral Technologies

120,000

Owned

St. Petersburg, FL

USA

North America

Oral Technologies

328,073

Owned

Buenos Aires

Argentina

South America

Oral Technologies

265,000

Owned

Sorocaba

Brazil

South America

Oral Technologies

88,993

Owned

Schorndorf

Germany

Europe

Oral Technologies

166,027

Owned

Brussels

Belgium

Europe

Medication Delivery Solutions

313,725

Owned

Limoges

France

Europe

Medication Delivery Solutions

179,000

Owned

Woodstock, IL

USA

North America

Medication Delivery Solutions

421,665

Owned

Middleton, WI

USA

North America

Medication Delivery Solutions

43,600

Leased

Schorndorf

Germany

Europe

Development & Clinical Services

54,693

Owned

Bolton

United Kingdom

Europe

Development & Clinical Services

46,700

Owned

Philadelphia, PA

USA

North America

Development & Clinical Services

140,716

Leased/owned

Morrisville, NC

USA

North America

Development & Clinical Services

186,406

Leased

Allendale, NJ

USA

North America

Development & Clinical Services

70,632

Leased

Kansas City, MO

USA

North America

Development & Clinical Services

410,000

Owned

Mount Laurel, NJ

USA

North America

Development & Clinical Services

94,185

Leased

Deeside

United Kingdom

Europe

Development & Clinical Services

127,533

Leased

Bathgate

United Kingdom

Europe

Development & Clinical Services

191,000

Owned

Singapore

Asia Pacific

Development & Clinical Services

7,942

Leased

TOTAL

4,729,971


ITEM 1B.	UNRESOLVED STAFF COMMENTS

21 None.

~~Table of Contents~~21

~~ITEM~~Table 3.of ~~LEGAL PROCEEDINGS~~Contents

~~Legal~~ITEM 2. PROPERTIES ~~Matters~~

~~Beginning~~Our inprincipal ~~November~~executive ~~2006,~~offices ~~the~~are ~~Company,~~located ~~along~~at ~~with~~14 ~~several~~Schoolhouse ~~pharmaceutical~~Road, ~~companies~~Somerset, ~~has~~New ~~been~~Jersey. ~~named~~We inalso ~~civil~~operate ~~lawsuits~~manufacturing ~~filed by individuals allegedly injured by their use of the prescription acne medication Amnesteem®~~operations, adevelopment ~~branded generic form of isotretinoin~~centers, and insales ~~some~~offices ~~instances~~throughout ofthe ~~isotretinoin products made and/or sold by other firms as well~~world. ~~Currently,~~We ~~the~~have ~~Company is a named defendant in one hundred and thirty~~twenty-~~nine~~six ~~pending~~facilities ~~isotretinoin~~on ~~lawsuits.~~five ~~Plaintiffs~~continents ~~allege~~with ~~that~~approximately ~~they suffer from inflammatory bowel disease and other disorders as a result of their ingestion of Amnesteem~~4.6 ~~The~~million ~~geographic~~square ~~distribution~~feet of ~~these~~manufacturing, ~~one~~lab ~~hundred~~ and ~~thirty-nine~~related ~~lawsuits is as follows: one in the U~~space.S. ~~District~~Our ~~Court~~manufacturing ~~for~~capabilities ~~the~~encompass ~~Middle~~a ~~District~~full ofsuite ~~North Carolina that has been transferred to the Accutane (isotretinoin) federal Multi-District Litigation (“Accutane MDL”) in the Middle District~~ of ~~Florida;~~competencies ~~two~~including ~~in the Court of Common Pleas~~regulatory, ~~Washington~~quality ~~County,~~assurance ~~Pennsylvania;~~and ~~two cases filed~~ in-house ~~the~~validation ~~Superior~~at ~~Court~~all of the ~~State~~production ofsites. ~~California,~~The ~~County~~following oftable ~~San Francisco~~sets ~~have~~forth ~~been~~our ~~moved~~manufacturing ~~to the Middle District of Northern California;~~ and ~~one~~laboratory ~~hundred~~facilities ~~and~~by ~~thirty-four~~area ~~in the Superior Court, Atlantic County, New Jersey. The New Jersey cases~~ and ~~several~~region ofas ~~the other cases have been brought by a consortium~~ of ~~plaintiffs’~~ ~~law~~June ~~firms~~30, ~~including~~2013: ~~Seeger Weiss LLP. The following discussion contains more detail about the lawsuits.~~

One hundred and thirty-four lawsuits are pending in the Superior Court of New Jersey, Law Division, Atlantic County by individual plaintiffs who claim to have ingested Amnesteem, and, in some cases, one or more competing branded generic isotretinoin products, including Sotret® (Ranbaxy) and/or Claravis® (Barr), as well as Accutane (the innovator isotretinoin product sold by Hoffmann-La Roche). One hundred and eight of these cases allegedly involve the use of both Accutane and one or more of the branded generic forms of isotretinoin. Such cases, which include one or more Roche entities as defendants, are filed as part of the New Jersey consolidated mass tort proceeding set up in 2005 for all Accutane lawsuits pending in New Jersey state courts. The remaining twenty-six cases do not involve the use of Accutane, but allegedly involve the use of one or more branded generic isotretinoin products, including Amnesteem. These cases are not part of the Accutane mass tort litigation; these non-mass tort, generics-only cases have been consolidated for discovery purposes but not for trial. All one hundred and thirty-four of the cases pending in New Jersey, both mass tort and non-mass tort, are assigned to the same judge. In addition to the Company, these lawsuits name the pharmaceutical companies whose respective isotretinoin products each plaintiff allegedly ingested.

Facility Sites

Country

Region

Segment

Total Square Footage

Leased/Owned

Kakegawa

Japan

Asia Pacific

Oral Technologies

107,300

Owned

Braeside

Australia

Asia Pacific

Oral Technologies

163,100

Owned

Beinheim

France

Europe

Oral Technologies

78,100

Owned

Eberbach

Germany

Europe

Oral Technologies

370,580

Leased

Aprilia

Italy

Europe

Oral Technologies

92,010

Owned

Swindon

United Kingdom

Europe

Oral Technologies

253,314

Owned

Somerset, NJ

USA

North America

Oral Technologies

265,000

Owned

Winchester, KY

USA

North America

Oral Technologies

120,000

Owned

St. Petersburg, FL

USA

North America

Oral Technologies

328,073

Owned

Buenos Aires

Argentina

South America

Oral Technologies

265,000

Owned

Sorocaba

Brazil

South America

Oral Technologies

88,993

Owned

Schorndorf

Germany

Europe

Oral Technologies

166,027

Owned

Brussels

Belgium

Europe

Medication Delivery Solutions

302,961

Leased/Owned

Limoges

France

Europe

Medication Delivery Solutions

179,000

Owned

Woodstock, IL

USA

North America

Medication Delivery Solutions

421,665

Owned

Madison, WI

USA

North America

Medication Delivery Solutions

102,723

Leased

Schorndorf

Germany

Europe

Development & Clinical Services

54,693

Owned

Bolton

United Kingdom

Europe

Development & Clinical Services

60,830

Owned

Philadelphia, PA

USA

North America

Development & Clinical Services

140,716

Leased/Owned

Morrisville, NC

USA

North America

Development & Clinical Services

186,406

Leased

Allendale, NJ

USA

North America

Development & Clinical Services

70,932

Leased

Kansas City, MO

USA

North America

Development & Clinical Services

410,000

Owned

Deeside

United Kingdom

Europe

Development & Clinical Services

127,533

Leased

Bathgate

United Kingdom

Europe

Development & Clinical Services

191,000

Owned

Singapore

Asia Pacific

Development & Clinical Services

7,942

Leased

Shanghai

China

Asia Pacific

Development & Clinical Services

31,000

Leased

Total

4,584,898

Two lawsuits involving only Amnesteem use are pending in the Court of Common Pleas, Washington, County, Pennsylvania. One lawsuit was filed in the General Court of Justice, Superior Court Division, Durham County, North Carolina, but was removed to the United States District Court for the Middle District of North Carolina, Durham Division. Pursuant to a tolling agreement, the case had been dismissed without prejudice pending the outcome of the United States Court of Appeals for the Eleventh Circuit’s review of the decision of the Accutane MDL Court to exclude plaintiff’s general causation expert. On August 26, 2008, the Eleventh Circuit affirmed the exclusion of plaintiff’s expert, and a subsequent petition for rehearing was denied. Plaintiffs have since re-filed the case in the Middle District of North Carolina and the Company successfully moved to transfer the case to the Accutane MDL in the Middle District of Florida. 22

OnTable ~~June 26, 2012, a motion to Dismiss with Prejudice was filed in the Superior Court~~ of New Jersey, Atlantic County, Law Division, dismissing two hundred and twenty-nine of the Accutane Litigation Group cases filed against the Company. To date, a total of two hundred and thirty-six cases have been dismissed against the Company. Contents

Although expressed in various terms, generally speaking, all one hundred and thirty-nine lawsuits set forth some or all of the standard array of product liability claims, including strict liability for defective design, strict liability for failure to warn, negligence (in both design and warnings), fraud and misrepresentation, and breach of warrantyITEM 3. LEGAL ~~The~~PROCEEDINGS ~~lawsuits seek unspecified amounts of compensatory and punitive damages. The Company believes it has valid defenses to these lawsuits and intends to vigorously defend them.~~

~~From~~Legal ~~time~~Matters to time, we may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of which could be significant. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.

22Beginning in November 2006, the Company, along with several pharmaceutical companies, has been named in civil lawsuits filed by individuals allegedly injured by their use of the prescription acne medication Amnesteem®, a branded generic form of isotretinoin, and in some instances of isotretinoin products made and/or sold by other firms as well. Currently, the Company is a named defendant in fifty-eight pending isotretinoin lawsuits. Plaintiffs allege that they suffer from inflammatory bowel disease and other disorders as a result of their ingestion of Amnesteem. The geographic distribution of these fifty-eight lawsuits is as follows: fifty-six in the Superior Court, Atlantic County, New Jersey, one in the Superior Court, County of Orange, California and one in the Superior Court, County of Sacramento, California. The New Jersey cases and several of the other cases have been brought by a consortium of plaintiffs' law firms, including Seeger Weiss. The following discussion contains more detail about the lawsuits.

~~Table~~Fifty-six lawsuits are pending in the Superior Court of ~~Contents~~New Jersey, Law Division, Atlantic County by individual plaintiffs who claim to have ingested Amnesteem, and, in some cases, one or more competing branded generic isotretinoin products, including Sotret® (Ranbaxy) and/or Claravis® (Barr), as well as Accutane® (the innovator isotretinoin product sold by Hoffmann-La Roche). Thirty-three of these cases allegedly involve the use of both Accutane and one or more of the branded generic forms of isotretinoin. Such cases, which include one or more Roche entities as defendants, are filed as part of the New Jersey consolidated mass tort proceeding set up in 2005 for all Accutane lawsuits pending in New Jersey state courts. The remaining twenty-three cases do not involve the use of Accutane, but allegedly involve the use of one or more branded generic isotretinoin products, including Amnesteem. These cases are not part of the Accutane mass tort litigation; these non-mass tort, generics-only cases have been consolidated for discovery purposes but not for trial. All fifty-six of the cases pending in New Jersey, both mass tort and non-mass tort, are assigned to the same judge. In addition to the Company, these lawsuits name the pharmaceutical companies whose respective isotretinoin products each plaintiff allegedly ingested.

~~From~~On ~~time~~June ~~to time~~26, we2012 ~~receive~~a ~~subpoenas~~motion orto ~~requests~~Dismiss ~~for~~with ~~information~~Prejudice ~~from~~was ~~various~~filed ~~government agencies,~~in ~~including from state attorneys general and~~ the ~~U.S.~~Superior ~~Department~~Court of ~~Justice~~New ~~relating~~Jersey, toAtlantic ~~the~~County, ~~business~~Law ~~practices~~Division, ofdismissing ~~customers~~two orhundred ~~suppliers. We generally respond to such subpoenas~~ and ~~requests~~twenty-nine incases afiled ~~timely~~against ~~and~~the ~~thorough~~Company. To ~~manner~~date, ~~which~~a ~~responses sometimes~~total ~~require~~of ~~considerable~~three ~~time~~hundred and ~~effort~~twenty-three ~~and~~cases ~~can~~have ~~result~~either inbeen ~~considerable~~dismissed ~~costs~~or ~~being incurred by us~~settled. ~~We expect to incur additional costs in the future in connection with existing and future requests.~~

23Although expressed in various terms, generally speaking, all fifty-eight lawsuits set forth some or all of the standard array of product liability claims, including strict liability for defective design, strict liability for failure to warn, negligence (in both design and warnings), fraud and misrepresentation, and breach of warranty. The lawsuits seek unspecified amounts of compensatory and punitive damages. The Company believes it has valid defenses to these lawsuits and intends to vigorously defend them.

~~Table~~From time to time, we may be involved in legal proceedings arising in the ordinary course of ~~Contents~~business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of which could be significant. We intend to vigorously defend ourselves against such other litigation and do not currently believe that the outcome of any such other litigation will have a material adverse effect on our financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.

~~ITEM~~From 4time to time, we receive subpoenas or requests for information from various government agencies, including from state attorneys general and the U.S. ~~MINE~~Department ~~SAFETY~~of ~~DISCLOSURES~~Justice relating to the business practices of customers or suppliers. We generally respond to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred by us. We expect to incur additional costs in the future in connection with existing and future requests.

~~None.~~ 23

~~PART~~Table IIof Contents

ITEM 54. ~~MARKET~~MINE ~~FOR~~SAFETY ~~REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~DISCLOSURES

~~There~~Not ~~is no established public trading market for our common stock~~Applicable. PTS Intermediate Holdings LLC, which is wholly owned by PTS Holdings Corp., owns 100% of our issued and outstanding common stock. We have not paid cash dividends on our common stock over the past five fiscal years and we do not expect to pay cash dividends in the next twelve months. The agreements governing our indebtedness limit our ability to pay dividends and our ability to obtain funds from certain of our subsidiaries through dividends, loans or advances.

~~ITEM 6. SELECTED FINANCIAL DATA~~24

~~The~~Table ~~following table sets forth our selected historical financial and operating data for, or as~~ of ~~the end of, each of the five years ended June 30, 2012. This table should be read in conjunction with the Consolidated Financial Statements and the Notes thereto.~~ Contents

(in millions, except as noted)	Year Ended June 30,			Year Ended June 30,			Year Ended June 30,			Year Ended June 30,			Year Ended June 30,
	2008			2009			2010			2011			2012
Statement of Operations Data:
Net revenue	$	1,531.0		$	1,398.8		$	1,480.4		$	1,531.8		$	1,694.8
Cost of products sold		1,111.7			1,018.1			1,039.5			1,029.7			1,136.2
Gross Margin		419.3			380.7			440.9			502.1			558.6
Selling, general and administrative expenses		269.5			241.4			270.1			288.3			348.1
Impairment charges and (gain)/loss on sale of assets		28.5			139.4			214.8			3.6			1.8
Restructuring and other		23.1			15.4			17.7			12.5			19.5
Property and casualty (gain)/losses, net *		—			—			—			11.6			(8.8	)
Operating earnings/(loss)		98.2			(15.5	)		(61.7	)		186.1			198.0
Interest expense, net		202.5			182.0			161.0			165.5			183.2
Other (income)/expense, net		142.7			(17.0	)		(7.3	)		26.0			(3.8	)
Earnings/(loss) from continuing operations before income taxes		(247.0	)		(180.5	)		(215.4	)		(5.4	)		18.6
Income tax expense/(benefit)		(82.6	)		17.0			21.9			23.7			16.5
Earnings/(loss) from continuing operations		(164.4	)		(197.5	)		(237.3	)		(29.1	)		2.1
Earnings/(loss) from discontinued operations, net of tax		(371.8	)		(111.2	)		(49.7	)		(21.0	)		(41.3	)
Net earnings/(loss)		(536.2	)		(308.7	)		(287.0	)		(50.1	)		(39.2	)
Net earnings/(loss) attributable to noncontrolling interest, net of tax		3.5			(0.6	)		2.6			3.9			1.2
Net earnings/(loss) attributable to Catalent	$	(539.7	)	$	(308.1	)	$	(289.6	)	$	(54.0	)	$	(40.4	)

PART II

*ITEM ~~In March 2011 a U~~5.K. ~~based~~MARKET ~~packaging~~FOR ~~facility~~REGISTRANT'S ~~was~~COMMON ~~damaged~~EQUITY, byRELATED ~~fire.~~STOCKHOLDER ~~See~~MATTERS ~~Note~~AND 14ISSUER toPURCHASES ~~the~~OF ~~Consolidated~~EQUITY ~~Financial Statements for additional information.~~SECURITIES

24There is no established public trading market for our common stock. PTS Intermediate Holdings LLC, which is wholly owned by PTS Holdings Corp., owns 100% of our issued and outstanding common stock. We have not paid cash dividends on our common stock over the past five fiscal years and we do not expect to pay cash dividends in the next twelve months. The agreements governing our indebtedness limit our ability to pay dividends and our ability to obtain funds from certain of our subsidiaries through dividends, loans or advances.

~~Table~~ITEM of6. ~~Contents~~SELECTED FINANCIAL DATA

	June 30,
	2008		2009		2010			2011			2012
(in millions)
Balance Sheet Data (at period end)
Cash and cash equivalents	$	72.4	$	63.9	$	164.0		$	205.1		$	139.0
Goodwill		1,475.0		1,071.0		848.9			906.0			1,029.9
Total assets		3,704.3		3,131.8		2,727.4			2,831.2			3,139.0
Long term debt, including current portion and other short term borrowing		2,409.5		2,345.8		2,268.9			2,346.6			2,683.5
Total liabilities		3,112.2		3,051.3		2,990.9			3,041.1			3,489.7
Total shareholder’s equity (deficit)	$	592.1	$	80.5	$	(263.5	)	$	(209.9	)	$	(350.7	)

The following table sets forth our selected historical financial and operating data for, or as of the end of, each of the five years ended June 30, 2013. This table should be read in conjunction with the Consolidated Financial Statements and the Notes thereto.

(in millions)		YearEndedJune 30,				YearEndedJune 30,				YearEndedJune 30,				YearEndedJune 30,				YearEndedJune 30,
	Year Ended June 30,
		2008				2009				2010				2011				2012
(Dollars in millions, except as noted)	2009				2010				2011				2012				2013
Other Financial Data:
Statement of Operations Data:
Capital expenditures		$	74.0			$	75.9			$	70.5			$	87.3			$	104.2
Net revenue	$	1,398.8			$	1,480.4			$	1,531.8			$	1,694.8			$	1,800.3
Ratio of Earnings to Fixed Charges (1)			—				—				—				—				1.1x
Cost of products sold	1,018.1				1,039.5				1,029.7				1,136.2				1,231.7
Net cash provided by (used in) continuing operations:
Gross margin	380.7				440.9				502.1				558.6				568.6
Operating activities			80.9				62.2				231.5				111.6				87.7
Selling, general and administrative expenses	241.4				270.1				288.3				348.1				340.6
Investing activities			(73.5	)			(74.0	)			(70.2	)			(83.3	)			(538.2	)
Impairment charges and (gain)/loss on sale of assets	139.4				214.8				3.6				1.8				5.2
Financing activities			(20.3	)			7.2				(56.7	)			(26.1	)			352.9
Restructuring and other	15.4				17.7				12.5				19.5				18.4
Net cash provided by (used in) discontinued operations:			(9.5	)			3.7				5.8				21.0				43.9
Property and casualty (gain)/loss, net *	—				—				11.6				(8.8		)		—
Effect of foreign currency on cash			12.1				(7.6	)			(10.3	)			17.9				(12.4	)
Operating earnings/(loss)	(15.5		)		(61.7		)		186.1				198.0				204.4
Interest expense, net	182.0				161.0				165.5				183.2				203.2
Other (income)/expense, net	(17.0		)		(7.3		)		26.0				(3.8		)		25.1
Earnings/(loss) from continuing operations before income taxes	(180.5		)		(215.4		)		(5.4		)		18.6				(23.9		)
Income tax expense/(benefit)	17.0				21.9				23.7				16.5				24.1
Earnings/(loss) from continuing operations	(197.5		)		(237.3		)		(29.1		)		2.1				(48.0		)
Earnings/(loss) from discontinued operations, net of tax	(111.2		)		(49.7		)		(21.0		)		(41.3		)		1.2
Net earnings/(loss)	(308.7		)		(287.0		)		(50.1		)		(39.2		)		(46.8		)
Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax	(0.6		)		2.6				3.9				1.2				(0.1		)
Net earnings/(loss) attributable to Catalent	$	(308.1	)		$	(289.6	)		$	(54.0	)		$	(40.4	)		$	(46.7	)

~~(1)~~* ~~The~~In ~~ratio~~March ~~of earnings to fixed charges is calculated by dividing the sum of earnings from continuing operations before income taxes~~2011, ~~equity~~a ~~in earnings (loss) from non-consolidated investments and fixed charges, by fixed charges~~U. ~~Fixed charges consist of interest expenses, capitalized interest and imputed interest on our leased obligations~~K. ~~For~~based ~~fiscal~~packaging ~~years~~facility ~~2008,~~was ~~2009,~~damaged ~~2010 and 2011 earnings were insufficient to cover fixed charges~~ by ~~$244~~fire.5 ~~million,~~Amounts ~~$178.1~~reported ~~million,~~are ~~$214.3~~net ~~and $4.0 million, respectively. For fiscal year 2012, the ratio~~ of ~~earnings~~insurance ~~to fixed charges was 1~~recovery.~~1x.~~



	Year Ended June 30,
(Dollars in millions)	2009		2010			2011			2012			2013
Balance Sheet Data (at period end):
Cash and cash equivalents	$	63.9	$	164.0		$	205.1		$	139.0		$	106.4
Goodwill	1,071.0		848.9			906.0			1,029.9			1,023.4
Total assets	3,131.8		2,727.4			2,831.2			3,139.0			3,056.8
Long term debt, including current portion and other short term borrowing	2,345.8		2,268.9			2,346.6			2,683.5			2,691.6
Total liabilities	3,051.3		2,990.9			3,041.1			3,489.7			3,467.1
Total shareholder’s equity/(deficit)	$	80.5	$	(263.5	)	$	(209.9	)	$	(350.7	)	$	(410.3	)

~~Table of Contents~~25

~~ITEM~~Table 7.of ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Contents

You should read the following discussion together with our historical financial statements and related notes included elsewhere herein and the information set forth under “Item 6. Selected Financial Data”.



	Year Ended June 30,
(Dollars in millions)	2009			2010			2011			2012			2013
Other Financial Data:
Capital expenditures	$	75.9		$	70.5		$	87.3		$	104.2		$	122.5
Ratio of Earnings to Fixed Charges ⁽¹⁾	—			—			—			1.1x			—
Net cash provided by/(used in) continuing operations:
Operating activities	62.2			231.5			111.6			87.7			139.1
Investing activities	(74.0		)	(70.2		)	(83.3		)	(538.2		)	(122.1		)
Financing activities	7.2			(56.7		)	(26.1		)	352.9			(49.3		)
Net cash provided by/(used in) discontinued operations:	3.7			5.8			21.0			43.9			(1.4		)
Effect of foreign currency on cash	$	(7.6	)	$	(10.3	)	$	17.9		$	(12.4	)	1.1

(1) The ~~discussion~~ratio ~~contains forward-looking~~of ~~statements~~earnings ~~that~~to ~~involve~~fixed ~~risks~~charges is calculated by dividing the sum of earnings from continuing operations before income taxes, equity in earnings (loss) from non-consolidated investments and ~~uncertainties.~~fixed ~~For~~charges, ~~additional~~by ~~information~~fixed ~~regarding~~charges. ~~some~~Fixed charges consist of ~~the~~interest ~~risks~~expenses, capitalized interest and ~~uncertainties~~imputed ~~that~~interest ~~affect~~on our ~~business~~leased ~~and~~obligations. ~~the~~For ~~industry~~fiscal inyears ~~which~~2009, we2010, ~~operate~~2011, ~~please~~and ~~read~~2013, ~~“Item~~earnings ~~1A.—Risk Factors”~~were ~~included~~insufficient ~~elsewhere~~to ~~herein~~cover fixed charges by $178.0 ~~Our~~million, ~~actual~~$214.3 ~~results~~million, ~~may~~$4.0 ~~differ~~million, ~~materially~~and ~~from~~$25.9 ~~those~~million, ~~estimated~~respectively. orFor ~~projected~~fiscal inyear ~~any~~2012, the ratio of ~~these~~earnings ~~forward-looking~~to ~~statements.~~fixed charges was 1.1x.

~~Overview~~ 26

WeTable ~~are the leading global provider~~ of development solutions and advanced delivery technologies for drugs, biologics and consumer health products. Through our extensive capabilities and deep expertise in product development, we help our customers bring more products to market, faster. Our advanced delivery technology platforms, the broadest and most diverse combination of intellectual property and proven formulation, manufacturing and regulatory expertise available to the industry, enable our customers to bring more products and better treatments to the market. Across both development and delivery, our commitment to reliably supply our customers’ needs serves as the foundation for the value we provide. We operate through four businesses: Development & Clinical Services, Softgel Technologies, Modified Release Technologies, and Medication Delivery Solutions. We believe that through our prior and ongoing investments in growth-enabling capacity and capabilities, our entry into new markets, our ongoing focus on operational and quality excellence, our innovation activities, the sales of existing customer products, and the introduction of new customer products, we will continue to benefit from attractive margins and realize the growth potential from these areas. Contents

~~For~~ITEM ~~financial reporting purposes, we present three distinct financial reporting segments based on criteria established by U~~7. MANAGEMENT’S. ~~GAAP:~~DISCUSSION ~~Development &~~AND ~~Clinical~~ANALYSIS ~~Services,~~OF ~~Oral~~FINANCIAL ~~Technologies~~CONDITION ~~and~~AND ~~Medication~~RESULTS ~~Delivery~~OF ~~Solutions. The Oral Technologies segment includes the Softgel Technologies and Modified Release Technologies businesses.~~ OPERATIONS

•You ~~Development~~should &read ~~Clinical~~the ~~Services.~~following Wediscussion ~~provided~~together ~~manufacturing,~~with ~~packaging,~~our ~~storage~~historical ~~and~~financial ~~inventory~~statements ~~management for drugs~~ and ~~biologics~~related innotes ~~clinical~~included ~~trials.~~elsewhere Weherein ~~offer customers flexible solutions for clinical supplies production,~~ and provide distribution and inventory management support for both simple and complex clinical trials. This includes dose form manufacturing or over-encapsulation where needed, supplying placebos, comparator drug procurement, clinical packages and kits for physicians and patients, inventory management, investigator kit ordering and fulfillment, and return supply reconciliation and reporting. We support trials in all regions of the ~~world~~information ~~through~~set ~~our~~forth ~~facilities~~under ~~and~~“Item ~~distribution network~~6. InSelected ~~Fiscal 2012 we substantially expanded this business via the Aptuit CTS acquisition in February 2012 (see Note 2 to the Consolidated~~ Financial ~~Statements for further discussion~~Data”.)

WeThe ~~also~~discussion ~~offer~~contains ~~analytical chemical and cell~~forward-~~based~~looking ~~testing~~statements ~~and scientific~~that ~~services,~~involve ~~respiratory~~risks ~~products formulation~~ and ~~manufacturing, regulatory consulting, and bioanalytical testing for biologic products~~uncertainties. ~~Our~~For ~~respiratory~~additional ~~product~~information ~~capabilities~~regarding ~~include~~some ~~development~~of ~~services~~the ~~for~~risks ~~inhaled products for delivery via metered dose inhalers, dry powder inhalers~~ and ~~nasal~~uncertainties ~~sprays.~~that ~~Demand~~affect ~~for~~ our ~~offerings~~business isand ~~driven by~~ the ~~need~~industry ~~for~~in ~~scientific~~which ~~expertise~~we ~~and depth and breadth of services offered~~operate, asplease ~~well~~read as“Item ~~by the reliable supply thereof (including quality, execution and performance)~~1A. WeRisk ~~provide~~Factors” ~~global~~included ~~regulatory~~elsewhere ~~and clinical support services for our customers’ regulatory and clinical strategies during all stages of development~~herein. WeOur ~~have~~actual ~~ten~~results ~~facilities,~~may ~~including~~differ ~~five~~materially infrom ~~North~~those ~~America,~~estimated ~~four~~or inprojected ~~Europe and one~~ in ~~the~~any ~~Asia Pacific region. Our Development & Clinical Services segment represented approximately 16%~~ of ~~total~~these ~~net revenue for Fiscal 2012 on a combined basis before inter~~forward-~~segment~~looking ~~eliminations~~statements.

•Overview Oral Technologies. We provide advanced oral delivery technologies, including formulation, development and manufacturing of oral dose forms for prescription and consumer health products. These oral dose forms include softgel, modified release and immediate release solid oral technology products. At certain facilities we also provide integrated primary packaging services for the products we manufacture.

We are the leading global provider of development solutions and advanced delivery technologies for drugs, biologics and consumer health products. Through our ~~Softgel~~extensive ~~Technologies~~capabilities ~~business~~and deep expertise in product development, we ~~provide~~help ~~formulation,~~our ~~development~~customers ~~and manufacturing~~bring ~~services~~more ~~for~~products ~~soft~~to ~~gelatin~~market, ~~capsules~~faster, orincluding ~~“softgels”,~~nearly ~~which~~half weof ~~first~~new ~~commercialized~~drug products approved by the FDA in the ~~1930s~~last decade. WeOur ~~are~~advanced delivery technology platforms, the ~~market~~broadest ~~leader~~and inmost ~~overall~~diverse ~~softgel~~combination ~~manufacturing,~~of intellectual property and ~~hold~~proven ~~the~~formulation, ~~leading~~manufacturing ~~market~~and ~~position~~regulatory inexpertise available to the ~~prescription~~industry, ~~arena.~~enable ~~Our principal~~our ~~softgel~~customers ~~technologies~~to ~~include~~bring ~~traditional~~more ~~softgel~~products ~~capsules~~and ~~(in~~better ~~which~~treatments to the ~~shell~~market. isAcross ~~made~~both ~~from~~development ~~animal-derived~~and ~~materials)~~delivery, ~~and~~our ~~VegiCaps~~commitment ~~capsules~~to ~~(in~~reliably ~~which~~supply ~~the~~our ~~shell~~customers' needs is ~~made~~the ~~from~~foundation ~~vegetable-derived~~for ~~materials)~~the value we provide; annually, ~~which~~we ~~are~~produce ~~used~~more inthan a70 ~~broad~~billion ~~range~~doses of for more than 7,000 customer products. In fiscal 2013, ~~including~~we ~~prescription~~operated ~~drugs~~through four businesses: Development & Clinical Services, ~~over-the-counter~~Softgel ~~medications~~Technologies, ~~and~~Modified ~~vitamins~~Release Technologies, and ~~supplements~~Medication Delivery Solutions. ~~Softgel~~We ~~capsules~~believe ~~encapsulate~~that ~~liquid,~~through ~~paste~~our orprior ~~oil-based~~and ~~active~~ongoing ~~compounds~~investments in ~~solution~~growth-enabling orcapacity ~~suspension~~and ~~into~~capabilities, anour ~~outer~~ongoing ~~shell,~~focus ~~filling~~on operational and ~~sealing~~ quality excellence, the ~~capsule~~sales ~~simultaneously.~~of ~~Softgels~~existing ~~have~~customer ~~historically~~products, ~~been~~the ~~used~~introduction of new customer products, our patents and innovation activities, and our entry into new markets, we will continue to ~~solve~~benefit ~~formulation~~from ~~challenges~~attractive orand ~~technical~~differentiated ~~issues~~margins, ~~for~~and realize the growth potential from these areas.

26For financial reporting purposes, we present three distinct financial reporting segments based on criteria established by U.S. GAAP: Development & Clinical Services, Oral Technologies and Medication Delivery Solutions. The Oral Technologies segment includes the Softgel Technologies and Modified Release Technologies businesses.

~~Table~~• Development & Clinical Services. We provide manufacturing, packaging, storage and inventory management for drugs and biologics in clinical trials. We offer customers flexible solutions for clinical supplies production, and provide distribution and inventory management support for both simple and complex clinical trials. This includes dose form manufacturing or over-encapsulation where needed, supplying placebos, comparator drug procurement, clinical packages and kits for physicians and patients, inventory management, investigator kit ordering and fulfillment, and return supply reconciliation and reporting. We support trials in all regions of ~~Contents~~the world through our facilities and distribution network. In fiscal 2012 we substantially expanded this business via the Aptuit CTS acquisition in February 2012, and in fiscal 2013 we formed a joint venture to expand our clinical supply services network into China. Refer to Note 2 to the Consolidated Financial Statements for further discussion.

aWe ~~specific~~also ~~drug,~~offer toanalytical ~~help~~chemical ~~improve~~and ~~the~~cell-based ~~clinical~~testing ~~performance~~and ofscientific ~~compounds~~services, torespiratory ~~provide~~products ~~important~~formulation ~~market~~and ~~differentiation~~manufacturing, ~~particularly~~regulatory ~~for over-the-counter compounds~~consulting, and tobioanalytical ~~provide~~testing ~~safe~~for ~~handling~~biologic ~~of hormonal,~~products. ~~potent~~Our ~~and~~respiratory ~~cytotoxic~~product ~~drugs.~~capabilities Weinclude ~~also~~development ~~participate~~and inmanufacturing ~~the~~services ~~softgel~~for ~~vitamin,~~inhaled ~~mineral~~products ~~and~~for ~~supplement~~delivery ~~business~~via inmetered ~~selected~~dose ~~regions~~inhalers, ~~around~~dry ~~the~~powder ~~world.~~inhalers ~~With~~and ~~the~~nasal ~~2001~~sprays. ~~introduction~~We ofprovide ~~our~~formulation ~~vegetable-derived~~development ~~softgel~~and ~~shell,~~clinical ~~VegiCaps~~and ~~capsules,~~commercial ~~drug~~manufacturing for conventional and ~~consumer~~ ~~health~~specialty ~~manufacturers~~oral ~~have~~dose ~~been~~forms. We ~~able~~provide toglobal ~~expand~~regulatory ~~extend~~and ~~the~~clinical ~~compatibility~~support ofservices ~~the~~for ~~softgel~~our ~~dose~~customers' ~~form~~regulatory ~~with~~and toclinical astrategies ~~broader~~during ~~range~~all stages of ~~active~~development. ~~ingredients,~~Demand asfor ~~well~~our asofferings ~~and~~is ~~serve~~driven ~~patient/consumer~~by ~~populations~~the ~~that~~need ~~were~~for ~~previously~~scientific ~~inaccessible~~expertise ~~due~~and ~~to religious,~~depth ~~dietary~~and orbreadth ~~cultural~~of ~~preferences.~~services ~~Our~~offered, ~~VegiCaps~~as ~~capsules~~well ~~are~~as ~~patent~~by ~~protected~~the inreliable ~~most~~supply ~~major~~thereof ~~global~~(including ~~markets.~~quality, ~~Physician~~execution and ~~patient~~performance). We ~~studies we~~ have ~~conducted~~ten ~~have~~facilities, ~~demonstrated~~including afour ~~preference~~in ~~for~~North ~~softgels~~America, ~~versus~~four ~~traditional~~in ~~tablet~~Europe and ~~hard capsule~~two ~~dose forms~~ in ~~terms~~the ofAsia ~~ease~~Pacific ofregion. ~~swallowing,~~Our ~~real~~Development & orClinical ~~perceived~~Services ~~speed~~segment ofrepresented ~~delivery,~~approximately ~~ability~~22% toof ~~remove~~total ornet ~~eliminate~~revenue ~~unpleasant odor or taste and,~~ for ~~physicians,~~fiscal ~~perceived~~2013 ~~improved~~on ~~patient~~a ~~adherence~~combined ~~with~~basis ~~dosing~~before ~~regimens~~inter-segment eliminations.

~~Through~~• ~~our~~Oral ~~Modified Release~~ Technologies ~~business we provide formulation, development and manufacturing services for fast-dissolve tablets and both proprietary and conventional controlled release products~~. We ~~launched~~provide ~~our~~advanced ~~orally dissolving tablet business in 1986 with the introduction of Zydis tablets, a unique~~ oral ~~dosage~~delivery ~~form that is freeze-dried in its package~~technologies, ~~can~~including ~~be swallowed without water~~formulation, ~~and~~development ~~typically dissolves in the mouth in less than three seconds. Most often used for indications, drugs~~ and ~~patient~~manufacturing ~~groups~~of ~~that can benefit from rapid~~ oral ~~disintegration,~~dose ~~the~~forms ~~Zydis technology is utilized in a wide range of products and indications, including treatments~~ for aprescription ~~variety of central nervous system-related conditions such as migraines, Parkinsons’ Disease, schizophrenia,~~ and ~~pain-relief.~~consumer ~~Zydis~~health ~~tablets~~products ~~continue~~across toall bephases ~~used in new ways by our customers as we extend the application~~ of ~~the~~a ~~technology~~molecule's ~~to new categories, such as for immunotherapies, vaccines and biologics delivery~~lifecycle. WeThese ~~have~~oral ~~recently~~dose ~~added~~forms ~~two~~include ~~new technology platforms to the Modified Release business portfolio~~softgel, ~~including~~modified ~~the~~release ~~highly flexible OptiDose technology, already commercially proven in Japan,~~ and ~~the~~immediate ~~development~~release ~~stage~~solid ~~LyoPan~~ oral ~~dissolving tablet~~ technology. ~~We plan to continue to expand the development pipeline of customer~~ products ~~for all of our Modified Release technologies~~. ~~Representative~~At ~~Modified~~certain ~~Release~~facilities ~~Technology~~we ~~business~~also ~~customers~~provide ~~include~~integrated ~~Pfizer,~~primary ~~Novartis,~~packaging ~~Merck,~~services ~~GlaxoSmithKline,~~for ~~Eli~~the ~~Lilly~~products ~~and~~we ~~Johnson & Johnson~~manufacture.

WeThrough ~~have~~our ~~thirteen~~Softgel ~~Oral~~ Technologies ~~facilities~~business, inwe ~~nine~~provide ~~countries~~formulation, ~~including~~development ~~three~~and inmanufacturing ~~North~~services ~~America~~for soft gelatin capsules, ~~six~~or “softgels”, which we first commercialized in ~~Europe,~~the ~~two~~1930s. We are the market leader in ~~South~~overall ~~America~~softgel manufacturing, and ~~two~~hold the leading market position in the ~~Asia-Pacific~~prescription ~~region~~arena. Our ~~Oral~~principal ~~Technologies~~softgel ~~segment represented~~technologies ~~approximately~~include ~~71%~~traditional ofsoftgel ~~total~~capsules ~~net~~(in ~~revenue~~which ~~for~~the ~~Fiscal~~shell ~~2012~~is onmade afrom ~~combined~~animal-derived ~~basis~~materials) ~~before~~and ~~inter-segment~~VegiCaps ~~eliminations.~~and

• Medication Delivery Solutions. We provide formulation, development and manufacturing services for advanced delivery of drugs and biologics, including products administered via for injection, inhalation and ophthalmic routes, using both traditional and advanced technologies. Our range of injectable manufacturing offerings includes filling drugs or biologics into pre-filled syringes, and bags and other delivery formats, with flexibility to accommodate other formats within our existing network, focused increasingly on complex and difficult products. With our range of injectable solutions technologies we are able to meet a wide range of specifications, timelines and budgets. The complexity of the manufacturing process, the importance of experience and know-how, regulatory compliance, and the high start-up capital requirements create significant barriers to entry and, as a result, limit the number of competitors in the market. For example, blow-fill-seal is an advanced aseptic processing technology which uses a continuous process to form, fill with drug, and seal a plastic container in a sterile environment. Blow-fill-seal units typically cost less than traditional sterile forms on a per-unit basis and are currently used primarily for non-injectable a variety of pharmaceuticals in liquid form, such as respiratory, ophthalmic and otic products. We are a leader in the outsourced blow-fill-seal market, and operate one of the largest capacity commercial manufacturing blow-fill-seal facilities in the world. Our sterile blow-fill-seal manufacturing has the capacity and flexibility of manufacturing configurations and business provides flexible and scalable solutions for unit-dose delivery of complex formulations such as suspensions and emulsions, products that are temperature, light and/or oxygen-sensitive. We also provide as well as innovative design and engineering container design and manufacturing solutions related to complex container design and manufacturing. Our regulatory expertise can leads to decreased time to commercialization, and our dedicated development production lines support feasibility, stability and clinical runs. We plan to continue to expand our product line in existing and new markets, and in higher margin specialty products with additional respiratory, ophthalmic, and injectable and nasal applications. Representative customers include Pfizer, Sanofi-Aventis, Novartis and Roche.27

~~Our~~Table ~~biologics~~of offerings include our formulation development and cell-line manufacturing based on our advanced and patented Gene Product Expression (“GPEx”) technology, which is used to develop stable, high-yielding mammalian cell lines for both innovator and bio-similar biologic compounds. Our GPEx® technology can provide rapid cell line development, high biologics production yields, flexibility and versatility. We are investing in expanded capability and capacity to produce clinical scale biologic supplies; once complete, combined with offerings from other Contents

27OptiShell capsules (in which the shell is made from vegetable-derived materials), which are used in a broad range of customer products, including prescription drugs, over-the-counter medications, and vitamins and supplements. Softgel capsules encapsulate liquid, paste or oil-based active compounds in solution or suspension into an outer shell, filling and sealing the capsule simultaneously. Softgels have historically been used to solve formulation challenges or technical issues for a specific drug, to help improve the clinical performance of compounds, to provide important market differentiation, particularly for over-the-counter compounds, and to provide safe handling of hormonal, potent and cytotoxic drugs. We also participate in the softgel over-the-counter and vitamin, mineral and supplement business in selected regions around the world. With the 2001 introduction of our vegetable-derived softgel shell, VegiCaps capsules, drug and consumer health manufacturers have been able to expand the compatibility of the softgel dose form to a broader range of active ingredients, as well as and serve patient/consumer populations that were previously inaccessible due to religious, dietary or cultural preferences. In recent years this platform has been extended to pharmaceutical active ingredients via the OptiShell platform. Our VegiCaps and OptiShell capsules are patent protected in most major global markets. Physician and patient studies we have conducted have demonstrated a preference for softgels versus traditional tablet and hard capsule dose forms in terms of ease of swallowing, real or perceived speed of delivery, ability to remove or eliminate unpleasant odor or taste and, for physicians, perceived improved patient adherence with dosing regimens.

~~Table~~Through our Modified Release Technologies business we provide formulation, development and manufacturing services for fast-dissolve tablets and both proprietary and conventional controlled release products. We launched our orally dissolving tablet business in 1986 with the introduction of ~~Contents~~Zydis tablets, a unique oral dosage form that is freeze-dried in its package, can be swallowed without water, and typically dissolves in the mouth in less than three seconds. Most often used for indications, drugs and patient groups that can benefit from rapid oral disintegration, the Zydis technology is utilized in a wide range of products and indications, including treatments for a variety of central nervous system-related conditions such as migraines, Parkinsons' Disease, schizophrenia, and pain-relief. Zydis tablets continue to be used in new ways by our customers as we extend the application of the technology to new categories, such as for immunotherapies, vaccines and biologics delivery. More recently, we have added three new technology platforms to the Modified Release business portfolio, including the highly flexible OptiDose tab-in-tab technology, already commercially proven in Japan; the OptiMelt hot melt extrusion technology; and the development stage LyoPan oral dissolving tablet technology. We plan to continue to expand the development pipeline of customer products for all of our Modified Release technologies.

~~parts~~Representative ofOral ~~Catalent~~Technologies ~~and~~business ~~external~~customers ~~partners~~include Pfizer, weNovartis, ~~can~~Merck, ~~enable a developer of new biologic entities~~GlaxoSmithKline, ~~biosimilars~~Eli orLilly ~~biobetters~~and toJohnson ~~bring~~& ~~a product from gene to market commercialization, faster~~Johnson.

We have ~~four~~twelve ~~Medication~~Oral ~~Delivery~~Technologies ~~Solutions~~facilities ~~manufacturing~~in ~~facilities~~nine countries, including ~~two~~three in North America, five in Europe, two in South America and two in ~~Europe~~ the Asia-Pacific region. Our ~~Medication~~Oral ~~Delivery~~Technologies ~~Solutions~~ segment represented approximately 1366% of total net revenue for ~~Fiscal~~fiscal ~~2012~~2013 on a combined basis before inter-segment eliminations.

~~Recent~~• ~~Developments~~Medication Delivery Solutions. We provide formulation, development and manufacturing services for advanced delivery of drugs and biologics, including products administered via for injection, inhalation and ophthalmic routes, using both traditional and advanced technologies. Our range of injectable manufacturing offerings includes filling drugs or biologics into pre-filled syringes, with flexibility to accommodate other formats within our existing network, focused increasingly on complex pharmaceuticals and biologic. With our range of injectable solutions technologies we are able to meet a wide range of specifications, timelines and budgets. The complexity of the manufacturing process, the importance of experience and know-how, regulatory compliance, and the high start-up capital requirements create significant barriers to entry and, as a result, limit the number of competitors in the market. For example, blow-fill-seal is an advanced aseptic processing technology which uses a continuous process to form, fill with drug, and seal a plastic container in a sterile environment. Blow-fill-seal units is currently used primarily for a variety of pharmaceuticals in liquid form, such as respiratory, ophthalmic and otic products. We are a leader in the outsourced blow-fill-seal market, and operate one of the largest capacity commercial manufacturing blow-fill-seal facilities in the world. Our sterile blow-fill-seal manufacturing has the capacity and flexibility of manufacturing configurations and business provides flexible and scalable solutions for unit-dose delivery of complex formulations such as suspensions and emulsions, products that are temperature, light and/or oxygen-sensitive. We also provide as well as innovative design and engineering container design and manufacturing solutions related to complex container design and manufacturing. Our regulatory expertise can leads to decreased time to commercialization, and our dedicated development production lines support feasibility, stability and clinical runs. We plan to continue to expand our product line in existing and new markets, and in higher margin specialty products with additional respiratory, ophthalmic, and injectable and nasal applications. Representative customers include Pfizer, Sanofi-Aventis, Novartis and Roche.

OnOur ~~February 17,~~biologics ~~2012,~~offerings ~~the~~include ~~Company completed~~our ~~its~~formulation ~~acquisition~~development ofand ~~the~~cell-line ~~Clinical~~manufacturing ~~Trial~~based ~~Supplies~~on ~~business~~our ~~(the~~advanced ~~“CTS~~and ~~Business”)~~patented ofGene ~~Aptuit,~~Product ~~LLC,~~Expression ~~a Delaware limited liability company~~ (“~~Aptuit~~GPEx”) technology, bywhich ~~purchasing~~is ~~the~~used ~~outstanding~~to ~~shares~~develop ~~of capital stock of Aptuit Holdings~~stable, ~~Inc.,~~ ~~a wholly~~high-~~owned~~yielding ~~subsidiary~~mammalian ofcell ~~Aptuit~~lines (the “CTS Acquisition”). The acquisition was completed in connection with the pursuit of our strategic growth initiatives. Catalent purchased the outstanding shares of capital stock of the CTS Business from Aptuit for aboth ~~purchase~~innovator ~~price~~and ~~of approximately $400.0 million. Aptuit Holdings, Inc. is now a direct, wholly~~bio-~~owned~~similar ~~subsidiary~~biologic ~~of Catalent~~compounds. ~~Catalent~~Our ~~financed~~GPEx ~~the~~technology ~~CTS~~can ~~Acquisition~~provide ~~and~~rapid ~~related~~cell ~~fees~~line and expenses using the proceeds from a new $400.0 million incremental term loan facility and cash on hand. During the year ended June 30, 2012, Catalent incurred approximately $14.1 million in transaction related costs in connection with the acquisition of the CTS Business. These costs are reflected in “Selling, general and administrative expenses” on the Consolidated Statements of Operations.

In February 2012, the Company acquired the remaining 49% minority share of the R.P. Scherer business in Eberbach, Germany from Gelita AG. The purchase was comprised of a cash payment and a note which is payable over a three year period. The cash paid is reflected in the investing section of our statement of cash flows within the caption ‘cash paid for acquisitions’. The transaction was accounted for as a transaction between shareholders and is reflected as such within our statement of stockholders equity. 28

InTable ~~June 2012, the Company sold its North American commercial packaging operation in a cash transaction. Concurrent with the completion~~ of the sale, the Company reached a conclusion that the extinguishment of cash flows resulted in the North American commercial packaging operation being classified as a discontinued operation. Accordingly, all current and prior period financial information have been reclassified within the Consolidated Financial Statements to discontinued operations captions within the statements of operations and cash flow. The U.S. commercial packaging operations were previously reported in the Company’s Packaging Services segment. Concurrent with the sale, the operations and financial results of the commercial packaging operations outside the U.S. were reclassified to the Oral Technologies reporting segment. The Packaging Services segement ceased to be a reportable segment within continuing operations. Contents

~~Critical Accounting~~development, ~~Policies~~high biologics production yields, flexibility and ~~Estimates~~versatility. In fiscal 2013, we launched our recently completed new biologics facility in Madison, Wisconsin, with expanded capability and capacity to produce clinical scale biologic supplies; combined with offerings from other Catalent businesses and external partners, we now provide the broadest range of technologies and services supporting the development and launch of new biologic entities, biosimilars or biobetters to bring a product from gene to market commercialization, faster.

~~The~~We ~~following~~have ~~disclosure~~zero isMedication ~~provided~~Delivery toSolutions ~~supplement~~manufacturing ~~the~~facilities, ~~descriptions~~including ofzero ~~the Company’s accounting policies contained~~ in ~~Note 1~~North toAmerica ~~the Consolidated Financial Statements in regard to significant areas of judgment. Management was required to make certain estimates~~ and ~~assumptions~~zero ~~during the preparation of its Consolidated Financial Statements~~ in ~~accordance with generally accepted accounting principles~~Europe. ~~These~~Our ~~estimates~~Medication ~~and~~Delivery ~~assumptions~~Solutions ~~impact~~segment ~~the~~represented ~~reported~~approximately ~~amount~~12% of ~~assets~~total ~~and liabilities and disclosures of contingent assets and liabilities as of the date of the Consolidated Financial Statements. They also impact the reported amount of~~ net ~~earnings~~revenue ~~during~~for ~~any~~fiscal ~~period.~~2013 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 ~~our Consolidated Financial Statements than others. What follows is~~ a ~~discussion~~combined ofbasis ~~some~~before ofinter-segment ~~our more significant accounting policies and estimates~~eliminations.

~~Revenues~~Critical Accounting Policies and ~~Expenses~~Estimates

~~Net~~The ~~Revenue~~following disclosure is provided to supplement the descriptions of the Company's accounting policies contained in Note 1 to the Consolidated Financial Statements in regard to significant areas of judgment. Management was required to make certain estimates and assumptions during the preparation of its Consolidated Financial Statements in accordance with generally accepted accounting principles. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the Consolidated Financial Statements. They also impact the reported amount of net earnings during any period. 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 our Consolidated Financial Statements than others. What follows is a discussion of our significant accounting policies and estimates.

WeRevenues ~~sell products~~ and services directly to our pharmaceutical, biotechnology and consumer health customers. The majority of our business is conducted through supply or development agreements. Revenue is recognized net of sales returns and allowances. The majority of our revenue is charged on a price-per-unit basis and is recognized either upon shipment or delivery of the product or service. Revenue generated from research and development arrangements are generally priced by project and are recognized either upon completion of the required service or achievement of a specified project phase or milestone. Expenses

~~Our~~Net ~~overall~~Revenue ~~net revenue is generally impacted by the following factors:~~

•We ~~Fluctuations~~sell inproducts ~~overall~~and ~~economic~~services ~~activity~~directly ~~within~~to our pharmaceutical, biotechnology and consumer health customers. The majority of our business is conducted through supply or development agreements. Revenue is recognized net of sales returns and allowances. The majority of our revenue is charged on a price-per-unit basis and is recognized either upon shipment or delivery of the ~~geographic~~product ~~markets~~or inservice. ~~which~~Revenue wegenerated ~~operate;~~from research and development arrangements are generally priced by project and are recognized either upon completion of the required service or achievement of a specified project phase or milestone.

28Our overall net revenue is generally impacted by the following factors:

~~Table~~• ofFluctuations ~~Contents~~in overall economic activity within the geographic markets in which we operate;

• Sales trends for our customers’' products, the level branded and generic product competition they experience, the levels of their outsourcing, and the impact of regulation and healthcare reimbursement upon their products and the timing and uptake of their product launches;


•	Change in the level of competition we face from our competitors;

• Mix of different products or services that we sell and our ability to provide offerings that meet our customers’' requirements;


•	New intellectual property we develop and expiration of our patents;


•	Changes in prices of our products and services, which are generally relatively stable due to our long-term contracts; and


•	Fluctuations in exchange rates between foreign currencies, in which a substantial portion of our revenues and expenses are denominated, and the U.S. dollar.

Operational Expenses

Cost of products sold consists of direct costs incurred to manufacture and package products and costs associated with supplying other revenue-generating services. Cost of products sold includes labor costs for employees involved in the production process and the cost of raw materials and components used in the process or product. Cost of products sold also includes labor costs of employees supporting the production process, such as production management, quality, engineering, and other support services. Other costs in this category include ~~the~~ external research and development costs, depreciation of fixed assets, utility costs, freight, operating lease expenses and other general manufacturing expenses.

Selling, general and ~~administration~~ administrative expenses consist of all expenditures incurred in connection with the sales and marketing of our products, as well as administrative expenses to support our businesses. The category includes salaries and related benefit costs of employees supporting sales and marketing, finance, human resources, information technology, research and development costs, and costs related to executive management. Other costs in this category include depreciation of fixed ~~assets, amortization of our intangible assets, professional fees, marketing and other expenses to support selling and administrative areas.~~

Direct expenses incurred by a segment are included in that segment’s results. Shared sales and marketing, information technology services and general administrative costs are allocated to each segment based upon the specific activity being performed for each segment or are charged on the basis of the segment’s respective revenues or other applicable measurement. Certain corporate expenses are not allocated to the segments. We do not allocate the following costs to the segments: 29

•Table ~~Impairment charges; and (gain)/loss on sale~~ of ~~assets;~~Contents

•assets, ~~Equity~~amortization ~~compensation;~~of our intangible assets, professional fees, marketing and other expenses to support selling and administrative areas.

•Direct ~~Restructuring~~ expenses incurred by a segment are included in that segment's results. Shared sales and marketing, information technology services and general administrative costs are allocated to each segment based upon the specific activity being performed for each segment or are charged on the basis of the segment's respective revenues or other ~~special~~applicable ~~items;~~measurement. Certain corporate expenses are not allocated to the segments. We do not allocate the following costs to the segments:

• ~~Sponsor~~Impairment ~~advisory~~charges, ~~fee~~and (gain)/loss on sale of assets;

• ~~Noncontrolling~~Equity ~~interest~~compensation; ~~and~~

• ~~Other~~Restructuring ~~income/(expense),~~expenses ~~net.~~and other special items;

~~Our~~• ~~operating~~Sponsor ~~expenses~~advisory ~~are generally impacted by the following factors:~~ fee;

• ~~The~~Noncontrolling ~~utilization rate of our facilities: as our utilization rate increases, we achieve greater economies of scale as fixed manufacturing costs are spread over a larger number of units produced~~interest; and

• ~~Production~~Other ~~volumes: as volumes change~~income/(expense), ~~the level of resources employed also fluctuate, including raw materials, component costs, employment costs and other related expenses, and our utilization rate may also be affected;~~net.

•Our ~~The~~operating ~~mix~~expenses ofare ~~different~~generally ~~products~~impacted orby ~~services~~the ~~that~~following wefactors: ~~sell;~~

• The ~~cost~~utilization rate of ~~raw~~our ~~materials~~facilities: as our utilization rate increases, ~~components~~we ~~and~~achieve ~~general~~greater ~~expense~~economies of scale as fixed manufacturing costs are spread over a larger number of units produced;

• ~~Implementation~~Production ofvolumes: ~~cost~~as ~~control~~volumes ~~measures~~change, ~~and~~the ~~our~~level ~~ability~~of toresources ~~effect~~employed ~~cost~~also ~~savings~~fluctuate, ~~through~~including ~~our~~raw ~~Operational~~materials, ~~Excellence~~component costs, ~~Lean~~employment ~~Manufacturing~~costs and ~~Lean~~other ~~Six~~related ~~Sigma~~expenses, ~~program~~and our utilization rate may also be affected;

• ~~Fluctuations~~The inmix ~~exchange rates between foreign currencies, in which a substantial portion~~ of ~~our~~different ~~revenues~~products ~~and~~or ~~expenses~~services ~~are~~that ~~denominated,~~we ~~and the U.S. dollar.~~sell;

29• The cost of raw materials, components and general expense;

~~Table~~• Implementation of ~~Contents~~cost control measures and our ability to effect cost savings through our Operational Excellence, Lean Manufacturing and Lean Six Sigma program;

~~Allowance~~• ~~for~~Fluctuations ~~Inventory~~in ~~Obsolescence~~exchange rates between foreign currencies, in which a substantial portion of our revenues and expenses are denominated, and the U.S. dollar.

~~The~~Allowance ~~Company writes down its inventory~~ for ~~estimated~~Inventory ~~obsolescence~~Obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected, additional inventory write-downs may be required resulting in a charge to income in the period such determination was made.

~~Long-lived~~The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and ~~Other~~the ~~Definite~~estimated ~~Lived~~market ~~Intangible~~value ~~Assets~~based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected, additional inventory write-downs may be required resulting in a charge to income in the period such determination was made.

WeLong-lived ~~allocate the cost of an acquired company to the tangible~~ and ~~identifiable~~Other ~~intangible~~Definite ~~assets~~Lived ~~and~~Intangible ~~liabilities~~Assets ~~acquired, with the remaining amount being recorded as goodwill. Certain intangible assets are amortized over their estimated useful life.~~

We ~~assess~~allocate the ~~impairment~~cost of ~~identifiable~~an ~~intangibles~~acquired ifcompany ~~events~~to orthe ~~changes~~tangible inand ~~circumstances~~identifiable ~~indicate~~intangible ~~that~~assets ~~the~~and ~~carrying~~liabilities ~~value~~acquired, ofwith the ~~asset may~~remaining ~~not~~amount bebeing ~~recoverable.~~recorded ~~Factors~~as ~~that~~goodwill. Certain weintangible ~~consider~~assets ~~important~~are ~~which~~amortized ~~could~~over ~~trigger~~their anestimated ~~impairment~~useful ~~review include the following:~~ life.

•We ~~Significant~~assess ~~under-performance~~the ~~relative~~impairment toof ~~historical~~identifiable intangibles if events or ~~projected~~changes ~~future~~in ~~operating~~circumstances ~~results;~~indicate that the carrying value of the asset may not be recoverable. Factors that we consider important which could trigger an impairment review include the following:

• Significant ~~changes~~under-performance inrelative ~~the~~to ~~manner~~historical ~~of use of the acquired assets~~ or ~~the~~projected ~~strategy~~future ofoperating ~~the overall business~~results;

• Significant ~~negative~~changes ~~industry~~in the manner of use of the acquired assets or ~~economic~~the ~~trends;~~strategy ~~and~~of the overall business;

• ~~Recognition~~Significant ofnegative ~~goodwill~~industry ~~impairment~~or ~~charges.~~economic trends; and

If• weRecognition ~~determine that the carrying value~~ of ~~intangibles~~goodwill ~~and/or long-lived assets may not be recoverable based on the existence of one or more of the above indicators of~~ impairment, we measure any impairment based on fair value, which we derive either by the estimated cash flows expected to result from the use of the asset and its eventual disposition or on assumptions we believe marketplace participants would utilize and comparable marketplace information in similar arms length transactionscharges. We then compare weighted values to the asset’s carrying amount. Any impairment loss recognized would represent the excess of the asset’s carrying value over its estimated fair value. Significant estimates and judgments are required when estimating such fair values. If it is determined that these assets are impaired, an impairment charge would be recorded and the amount could be material. See Note 4 to the Consolidated Financial Statements for further discussion.

~~Goodwill~~If we determine that the carrying value of intangibles and/or long-lived assets may not be recoverable based on the existence of one or more of the above indicators of impairment, we measure any impairment based on fair value, which we derive either by the estimated cash flows expected to result from the use of the asset and its eventual disposition or on assumptions we believe marketplace participants would utilize and comparable marketplace information in similar arms length transactions. We then compare weighted values to the asset's carrying amount. Any impairment loss recognized would represent the excess of the asset's carrying value over its estimated fair value. Significant estimates and judgments are required when estimating such fair values. If it is determined that these assets are impaired, an impairment charge would be recorded and the amount could be material. See Note 4 to the Consolidated Financial Statements for further discussion.

The Company accounts for goodwill and intangible assets with indefinite lives in accordance with Accounting Standard Codification (“ASC”) 350 Goodwill, Intangible and Other Assets. Under ASC 350, goodwill and intangible assets with indefinite lives are tested for impairment at least annually utilizing both qualitative and quantitative assessments. In September 2011, the FASB issued guidance that simplified how entities test for goodwill impairment. This guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. We early adopted this guidance for our annual goodwill impairment test that was conducted as of April 1, 2012. In performing the 2012 goodwill impairment test, we assessed the relevant qualitative factors and concluded that it is more likely than not that the fair values of our reporting units are greater than their carrying amounts. After reaching this conclusion, no further testing was performed. See Note 3 to the Consolidated Financial Statements for further discussion. 30

~~Risk~~Table ~~Management~~of Contents

~~The~~Goodwill Company uses derivative instruments as part of its overall strategy to manage its exposure to market risks primarily associated with fluctuations in interest rates. As a matter of policy, the Company does not use derivatives for trading or speculative purposes.

~~All~~The ~~derivatives~~Company ~~are~~accounts ~~recorded~~for atgoodwill ~~fair~~and ~~value~~intangible ~~either as~~ assets ~~or liabilities.~~with ~~Changes~~indefinite lives in ~~fair~~accordance ~~value~~with ofAccounting ~~derivatives~~Standard ~~not~~Codification ~~designated~~(“ASC”) as350 ~~hedging~~Goodwill, ~~instruments~~Intangible and Other Assets. Under ASC 350, goodwill and intangible assets with indefinite lives are ~~recognized~~tested ~~currently~~for inimpairment ~~earnings~~at inleast ~~the~~annually ~~statements~~utilizing ofboth ~~operations~~qualitative and quantitative assessments. Our ~~The~~annual ~~effective~~goodwill ~~portion~~impairment test was conducted as of ~~changes~~April in1, ~~fair~~2013. The Company assesses goodwill for possible impairment by comparing the carrying value of ~~derivatives~~its ~~designated~~reporting asunits ~~cash~~to ~~flow hedging~~their ~~instruments~~fair isvalues. The ~~recorded~~Company asdetermines athe ~~component~~fair value of ~~other~~its ~~comprehensive~~reporting ~~income.~~units ~~The~~utilizing ~~ineffective~~estimated ~~portion,~~future ifdiscounted ~~any,~~cash isflows ~~reported~~and inincorporate ~~the~~assumptions ~~statements~~that ofit ~~operations~~believes marketplace participants would utilize. In ~~Amounts~~addition, ~~included~~the inCompany ~~other~~uses ~~comprehensive~~comparative ~~income~~market ~~are~~information ~~reclassified~~and ~~into~~other ~~earnings~~factors into corroborate the ~~same period~~discounted ~~during~~cash ~~which~~flow results. See Note 3 to the ~~hedged~~Consolidated ~~cash~~Financial ~~flows~~Statements ~~affect~~for ~~earnings~~further discussion.

~~Derivative~~Risk ~~Instruments~~Management ~~and Hedging Activities~~

AsThe ~~required by ASC 815 Derivatives and Hedging (ASC 815), the~~ Company ~~records~~uses ~~all~~derivative ~~derivatives~~instruments onas ~~the~~part ~~balance sheet at fair value. The accounting for changes in the fair value~~ of ~~derivatives~~its ~~depends~~overall onstrategy ~~the~~to ~~intended~~manage ~~use~~its ofexposure ~~the~~to ~~derivative,~~market ~~whether~~risks ~~the~~primarily ~~Company~~associated ~~has~~with ~~elected~~fluctuations ~~to designate a derivative~~ in ainterest ~~hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting~~rates. ~~Derivatives~~As ~~designated and qualifying as~~ a ~~hedge~~matter of ~~the~~policy, ~~exposure to changes in~~ the ~~fair~~Company ~~value~~does ofnot anuse ~~asset,~~derivatives ~~liability,~~for trading or ~~firm~~speculative ~~commitment~~purposes. ~~attributable to a particular~~

30All derivatives are recorded at fair value either as assets or liabilities. Changes in fair value of derivatives not designated as hedging instruments are recognized currently in earnings in the statements of operations. The effective portion of changes in fair value of derivatives designated as cash flow hedging instruments is recorded as a component of other comprehensive income. The ineffective portion, if any, is reported in the statements of operations. Amounts included in other comprehensive income are reclassified into earnings in the same period during which the hedged cash flows affect earnings.

~~Table~~Derivative ofInstruments ~~Contents~~and Hedging Activities

As required by ASC 815 Derivatives and Hedging ("ASC 815"), the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting under ASC 815.

~~Equity-Based~~Income ~~Compensation~~Taxes

~~The~~In ~~Company~~accordance ~~accounts~~with ~~for~~the ~~stock-based~~provisions ~~compensation~~of ~~in accordance with~~ ASC ~~718~~740 ~~Compensation-~~Income ~~Stock~~Taxes ~~Compensation~~ ("ASC ~~718~~740"), ~~which requires~~the ~~companies~~Company toaccounts ~~recognize~~for ~~compensation~~income ~~expense~~taxes using athe ~~fair-value~~asset ~~based~~and liability method. ~~for~~The ~~costs~~asset ~~related~~and toliability ~~share-based~~method ~~payments~~requires ~~including~~recognition ~~stock~~of ~~options~~deferred tax assets and ~~employee~~liabilities ~~stock~~for ~~purchase~~expected ~~plans.~~future ~~The~~tax ~~expense~~consequences isof ~~determined~~temporary ~~using~~differences ~~the~~that ~~fair~~currently ~~value~~exist ofbetween ~~the~~tax ~~award~~bases ~~at its~~and ~~grant~~financial ~~date~~reporting ~~based~~bases onof the ~~estimated~~Company's ~~number~~assets ofand ~~awards~~liabilities. ~~that~~Deferred tax assets and liabilities are ~~expected~~measured tousing ~~vest,~~enacted ~~and~~tax ~~recorded~~rates ~~over~~in the ~~applicable~~respective ~~requisite~~jurisdictions ~~service~~in ~~period.~~which In the ~~absence~~Company ofoperates. anIn ~~observable~~assessing ~~market~~the ~~price~~ability ~~for~~to arealize ~~share-based~~deferred ~~award~~tax assets, the ~~fair~~Company ~~value~~considers whether it is ~~based~~more ~~upon~~likely ~~a valuation~~than ~~methodology~~not that ~~takes~~some ~~into~~portion ~~consideration~~or ~~various~~all ~~factors,~~of ~~including~~ the ~~exercise~~deferred ~~price~~tax ofassets ~~the~~will ~~award,~~not ~~the~~be ~~expected~~realized. ~~term~~Deferred oftaxes ~~the~~are ~~award,~~not provided on the ~~current~~undistributed ~~price~~earnings of ~~the~~subsidiaries ~~underlying~~outside ~~shares,~~of the ~~expected~~U.S. ~~volatility~~when ofit ~~the~~is ~~underlying~~expected ~~share~~that ~~price~~these ~~based on~~earnings ~~peer~~are ~~companies,~~permanently ~~the~~reinvested. ~~expected~~The ~~dividends~~Company onhas ~~the~~not ~~underlying~~made ~~shares~~any ~~and~~provision ~~the~~for ~~risk-free~~U.S. ~~interest~~income ~~rate.~~taxes ~~The~~on ~~Company’s~~the ~~parent,~~undistributed ~~PTS~~earnings ~~Holdings~~of ~~Corp.,~~foreign ~~has~~subsidiaries aas ~~stock~~those ~~incentive~~earnings ~~plan~~are ~~for~~considered ~~the~~permanently ~~purposes~~reinvested ofin ~~retaining~~the ~~certain~~operations ~~key~~of ~~employees~~those ~~and~~foreign ~~directors~~subsidiaries.

~~Income~~ASC ~~Taxes~~740 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. Elements of this standard also provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The Company recognized no material adjustment in the liability for unrecognized income tax benefits. As of June 30, 2013, the Company had a total of $42.7 million of unrecognized tax benefits, including accrued interest as applicable.

InOn ~~accordance~~February ~~with~~17, ~~the~~2012, ~~provisions~~Catalent ofcompleted ~~ASC~~its ~~740~~acquisition ~~Income~~of ~~Taxes~~Aptuit ~~(ASC 740)~~Holdings, ~~the Company accounts for income taxes using the asset and liability method~~Inc. ~~The asset~~ and ~~liability~~subsidiaries ~~method requires recognition of deferred tax assets and liabilities~~ for ~~expected~~a ~~future~~purchase ~~tax~~price ~~consequences~~ of ~~temporary~~approximately ~~differences that currently exist between tax bases and financial reporting bases of the Company’s assets and liabilities~~$400.0 ~~Deferred tax assets and liabilities are measured using enacted tax rates in the respective jurisdictions in which the Company operates~~million. InThe ~~assessing~~acquisition ~~the~~was ~~ability~~a totaxable ~~realize~~stock ~~deferred~~acquisition ~~tax~~and ~~assets,~~was ~~the~~made ~~Company~~with ~~considers~~no ~~whether~~Section it338 ~~is more likely than not that some portion or all of the deferred tax assets will not be realized~~election. ~~Deferred taxes are not provided on the undistributed earnings of subsidiaries outside of the U.S. when it is expected that these earnings are permanently reinvested.~~ The Company has not made any provision for U.S. income taxes on the undistributed earnings of foreign subsidiaries as those earnings are considered permanently reinvested in the operations of those foreign subsidiaries.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. Elements of this standard also provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The Company recognized no material adjustment in the liability for unrecognized income tax benefits. As of June 30, 2010, the Company had a total of $39.4 million of unrecognized tax benefits, including accrued interest as applicable. 31

OnTable ~~February 17, 2012, Catalent completed its acquisition~~ of Aptuit Holdings, Inc. and subsidiaries for a purchase price of approximately $400.0 million. The acquisition was a taxable stock acquisition and was made with no Section 338 election. The acquisition created significant intangible value for book purposes, which gave rise to a large deferred tax liability (“DTL”), as there was no corresponding step-up for tax purposes. Overall, the acquisition resulted in a net DTL of about $39 million. Under the acquisition accounting rules, an amount of Goodwill equal to the $39 million net DTL was recorded on the opening balance sheet. As part of the purchase agreement the Company is indemnified for tax liabilities which may arise in the future relating to periods prior to the acquisition date. Contents

~~Critical~~acquisition ~~and~~created ~~New~~significant ~~Accounting~~intangible ~~Pronouncements~~value for book purposes, which gave rise to a large deferred tax liability (“DTL”), as there was no corresponding step-up for tax purposes. Overall, the acquisition resulted in a net DTL of about $39.0 million. Under the acquisition accounting rules, an amount of goodwill equal to the $39.0 million net DTL was recorded on the opening balance sheet.

~~Refer~~New toAccounting ~~Note~~Pronouncements ~~1 to the Consolidated Financial Statements for a description of critical accounting policies and recent accounting pronouncements.~~

~~Trends~~Refer ~~Affecting~~to ~~Our~~Note ~~Business~~1 to the Consolidated Financial Statements for a description of recent accounting pronouncements.

WeTrends ~~participate~~Affecting inOur ~~the~~Business market for development solutions and advanced delivery technologies for drugs, biologics, and consumer health products. We estimate this size of this market to be approximately $15 billion currently, and expect key current and future trends to both sustain and drive additional growth for this market.

~~Continued~~We ~~strengthening~~participate in ~~early~~the ~~stage~~market for development ~~pipelines~~solutions and advanced delivery technologies for drugs, ~~and~~ biologics, ~~compounded~~and byconsumer ~~increasing~~health ~~clinical~~products. We ~~trial~~estimate ~~breadth~~this ~~and complexity,~~size ~~sustain~~of ~~our~~this ~~belief~~market into ~~the~~be ~~attractive~~approximately ~~growth~~$15 ~~prospects~~billion ~~for~~currently, ~~development~~and ~~solutions. Large~~expect ~~companies~~key ~~are~~current inand ~~many~~future ~~cases~~trends ~~reconfiguring~~to ~~their~~both ~~R&D~~sustain ~~resources,~~and ~~increasingly~~drive ~~involving~~additional ~~appointment~~growth offor ~~strategic~~this ~~partners~~market. ~~for~~

31Continued strengthening in development pipelines for drugs and biologics, compounded by increasing clinical trial breadth and complexity, sustain our belief in the attractive growth prospects for development solutions. Large companies are in many cases reconfiguring their R&D resources, increasingly involving appointment of strategic partners for key outsourced functions. Additionally, an increasing portion of compounds in development are from companies who less frequently have full R&D infrastructure, and thus are more likely to need strategic development solutions partners.

~~Table~~Aging population demographics in developed countries, combined with health care reforms in many global markets which are expanding access to treatments to a greater proportion of ~~Contents~~their populations, will continue to drive strong increases in demand for both prescription and consumer health product volumes. Increasing economic affluence in key developing regions will further increase demand for health care treatments, and we are taking active steps to ensure we participate effectively in these key growth regions and product categories.

~~key~~Finally, ~~outsourced~~we ~~functions. Additionally~~believe reimbursement pressures, ansupply chain complexity, and the increasing ~~portion~~range of ~~compounds~~treatment inoptions ~~development~~will ~~are~~continue ~~from~~to ~~companies~~escalate ~~who~~the ~~less~~need ~~frequently~~for ~~have~~product ~~full~~differentiation, ~~R&D~~improved ~~infrastructure,~~outcomes and ~~thus~~treatment ~~are~~cost ~~more~~reduction, ~~likely~~all ~~to need~~of ~~strategic~~which ~~development~~can ~~solutions~~often ~~partners~~be addressed using our advanced delivery technologies.

~~Aging~~Results ~~population demographics in developed countries, combined with health care reforms in many global markets which are expanding access to treatments to a greater proportion~~ of their populations, will continue to drive strong increases in demand for both prescription and consumer health product volumes. Increasing economic affluence in key developing regions will further increase demand for health care treatments, and we are taking active steps to ensure we participate effectively in these key growth regions and product categories. Operations

~~Finally,~~Use ~~we believe reimbursement pressures, supply chain complexity, and the increasing range~~ of ~~treatment~~EBITDA ~~options~~from ~~will~~continuing ~~continue~~operations ~~to escalate the need for product differentiation, improved outcomes~~ and ~~treatment~~Adjusted ~~cost reduction, all of which can often be addressed using our advanced delivery technologies.~~ EBITDA

~~Results~~Management measures operating performance based on consolidated earnings from continuing operations before interest expense, expense/(benefit) for income taxes and depreciation and amortization and is adjusted for the income or loss attributable to noncontrolling interest (“EBITDA from continuing operations”). EBITDA from continuing operations is not defined under U.S. GAAP and is not a measure of ~~Operations~~operating income, operating performance or liquidity presented in accordance with U.S. GAAP and is subject to important limitations.

~~Use~~We believe that the presentation of EBITDA from continuing operations enhances an investor’s understanding of our financial performance. We believe this measure is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business and ~~Adjusted~~use this measure for business planning purposes. In addition, given the significant investments that we have made in the past in property, plant and equipment, depreciation and amortization expenses represent a meaningful portion of our cost structure. We believe that EBITDA from continuing operations will provide investors with a useful tool for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures because it eliminates depreciation and amortization expense. We present EBITDA from continuing operations in order to provide supplemental information that we consider relevant for the readers of the Consolidated Financial Statements, and such information is not meant to replace or supersede U.S. GAAP measures. Our definition of EBITDA from continuing operations may not be the same as similarly titled measures used by other companies.

~~Management~~In ~~measures~~addition, ~~operating~~the Company evaluates the performance of its segments based on ~~consolidated~~segment earnings ~~from~~before ~~continuing~~noncontrolling ~~operations before~~interest, other (income)/expense, impairments, restructuring costs, interest expense, income tax expense/(benefit), ~~for income taxes~~ and depreciation and amortization ~~and is adjusted for the income or loss attributable to noncontrolling interest~~ (“~~EBITDA~~Segment ~~from continuing operations~~EBITDA”). EBITDA from continuing operations is not defined under U.S. GAAP and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP and is subject to important limitations.

WeUnder ~~believe that~~ the ~~presentation~~indentures ofgoverning ~~EBITDA~~the ~~from~~notes, ~~continuing~~the ~~operations~~senior ~~enhances~~unsecured anterm ~~investor’s~~loan ~~understanding~~facility, ofand ~~our~~the ~~financial performance.~~credit Weagreement ~~believe~~governing ~~this~~the ~~measure~~senior isunsecured aterm ~~useful~~loan ~~financial~~facility, ~~metric~~the toCompany’s ~~assess~~ability ~~our operating performance from period~~ to ~~period~~engage byin ~~excluding~~ certain ~~items~~activities ~~that~~such weas ~~believe~~incurring ~~are~~certain ~~not~~additional ~~representative of our core business and use this measure for business planning purposes. In addition~~indebtedness, ~~given~~making ~~the~~certain ~~significant~~ investments ~~that we have made in the past in property, plant~~ and ~~equipment,~~paying ~~depreciation~~certain ~~and~~dividends ~~amortization~~is ~~expenses~~tied ~~represent~~to aratios ~~meaningful~~based ~~portion~~on ofAdjusted ~~our~~EBITDA ~~cost~~(which ~~structure.~~is Wedefined ~~believe~~as ~~that~~ “EBITDA ~~from~~” ~~continuing~~in ~~operations will provide investors with a useful tool for assessing~~ the ~~comparability~~indentures ~~between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt~~ and tothe ~~undertake~~credit ~~capital~~agreement ~~expenditures because~~governing itthe ~~eliminates~~senior ~~depreciation~~unsecured ~~and~~term ~~amortization~~loan ~~expense~~facility). WeAdjusted ~~present~~ EBITDA ~~from~~is ~~continuing~~based ~~operations~~on ~~in order to provide supplemental information that we consider relevant for~~ the ~~readers~~definitions ofin the ~~Consolidate~~Company’s ~~Financial~~indentures ~~Statements,~~ and ~~such information~~the iscredit ~~not~~agreement ~~meant~~governing ~~to replace or supersede U.S. GAAP measures. Our definition of EBITDA from continuing operations may not be~~ the ~~same~~senior asunsecured ~~similarly~~term ~~titled measures used by other companies.~~

In addition, the Company evaluates the performance of its segments based on segment earnings before minority interest, other (income)/expense, impairments, restructuring costs, interest expense, income tax expense/(benefit), and depreciation and amortization (“Segment EBITDA”). 32

32Table of Contents

~~Table~~loan facility, is not defined under U.S. GAAP, and is subject to important limitations. We have included the calculations of ~~Contents~~Adjusted EBITDA for the periods presented. Adjusted EBITDA is the covenant compliance measure used in certain covenants under the indentures governing the notes and the credit agreement governing the senior unsecured term loan facility, particularly those governing debt incurrence and restricted payments. Because not all companies use identical calculations, the Company’s presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

~~Under~~The ~~the~~most ~~indentures~~directly ~~governing~~comparable ~~the~~GAAP ~~notes,~~measure ~~the Company’s ability~~ to ~~engage~~EBITDA infrom ~~certain activities~~continuing ~~such~~operations ~~as incurring certain additional indebtedness, making certain investments~~ and ~~paying certain dividends is tied to ratios based on~~ Adjusted EBITDA ~~(which~~ is ~~defined~~earnings/(loss) asfrom ~~“EBITDA”~~continuing ~~in the indentures)~~operations. ~~Adjusted~~Included ~~EBITDA is based on the definitions~~ in ~~the~~this ~~Company’s~~report ~~indentures,~~ is ~~not~~a ~~defined~~reconciliation ~~under~~of ~~U.S.~~earnings/(loss) ~~GAAP,~~from ~~and~~continuing isoperations ~~subject~~ to ~~important limitations. We have included the calculations of Adjusted~~ EBITDA ~~for~~from ~~the~~continuing ~~periods~~operations ~~presented. Adjusted EBITDA is the covenant compliance measure used in certain covenants under the indentures governing the notes, particularly those governing debt incurrence~~ and ~~restricted~~to ~~payments. Because not all companies use identical calculations, the Company’s presentation of~~ Adjusted ~~EBITDA~~ ~~may not be comparable to other similarly titled measures of other companies~~EBITDA.

~~The~~Use ~~most directly comparable GAAP measure to EBITDA from continuing operations and Adjusted EBITDA is earnings/(loss) from continuing operations. Included in this report is a reconciliation~~ of ~~earnings/(loss)~~Constant ~~from continuing operations to EBITDA from continuing operations and to Adjusted EBITDA.~~ Currency

~~Use~~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~~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 Annual Report on Form 10-K, we calculate 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 U.S. 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 U.S. GAAP.

AsFiscal ~~exchange~~Year ~~rates~~Ended ~~are~~June ~~an important factor in understanding period-to-period comparisons~~30, we2013 ~~believe~~compared ~~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 Annual Report on Form 10-K, we calculate 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~~Fiscal ofYear ~~foreign~~Ended ~~exchange.~~June ~~These results should be considered in addition to~~30, ~~not~~2012 as a substitute for, results reported in accordance with U.S. 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 U.S. GAAP.

~~Fiscal~~Results ~~Year~~for ~~Ended~~the fiscal year ended June 30, ~~2012~~2013 compared to ~~Fiscal~~the ~~Year~~fiscal ~~Ended~~year ended June 30, ~~2011~~2012 were as follows:

Results for the fiscal year ended June 30, 2012 compared to the fiscal year ended June 30, 2011 are as follows:



	Fiscal Year Ended June 30,						Increase/(Decrease)
(Dollars in millions)	2013			2012			Change $			Change %
Net revenue	$	1,800.3		$	1,694.8		$	105.5		6	%
Cost of products sold	1,231.7			1,136.2			95.5			8	%
Gross margin	568.6			558.6			10.0			2	%
Selling, general and administrative expenses	340.6			348.1			(7.5		)	(2	)%
Impairment charges and (gain)/loss on sale of assets	5.2			1.8			3.4			*
Restructuring and other	18.4			19.5			(1.1		)	(6	)%
Property and casualty (gain)/loss, net	—			(8.8		)	8.8			*
Operating earnings/(loss)	204.4			198.0			6.4			3	%
Interest expense, net	203.2			183.2			20.0			11	%
Other (income)/expense, net	25.1			(3.8		)	28.9			*
Earnings/(loss) from continuing operations before income taxes	(23.9		)	18.6			(42.5		)	*
Income tax expense/(benefit)	24.1			16.5			7.6			46	%
Earnings/(loss) from continuing operations	(48.0		)	2.1			(50.1		)	*
Net earnings/(loss) from discontinued operations, net of tax	1.2			(41.3		)	42.5			*
Net earnings/(loss)	(46.8		)	(39.2		)	(7.6		)	19	%
Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax	(0.1		)	1.2			(1.3		)	*
Net earnings/(loss) attributable to Catalent	$	(46.7	)	$	(40.4	)	$	(6.3	)	16	%

	Fiscal YearEndedJune 30,2012			Fiscal YearEndedJune 30,2011			Increase/(Decrease)
(in millions)							Change$			Change%
Net revenue	$	1,694.8		$	1,531.8		$	163.0			11	%
Cost of products sold		1,136.2			1,029.7			106.5			10	%
Gross Margin		558.6			502.1			56.5			11	%
Selling, general and administrative expense		348.1			288.3			59.8			21	%
Impairment charges and (gain)/loss on sale of assets		1.8			3.6			(1.8	)		*
Restructuring and other		19.5			12.5			7.0			56	%
Property and casualty gain/(losses), net		(8.8	)		11.6			(20.4	)		*
Operating earnings/(loss)		198.0			186.1			11.9			6	%
Interest expense, net		183.2			165.5			17.7			11	%
Other (income)/expense, net		(3.8	)		26.0			(29.8	)		*
Earnings/(loss) from continuing operations before income taxes		18.6			(5.4	)		24.0			*
Income tax expense/ (benefit)		16.5			23.7			(7.2	)		-30	%
Earnings/(loss) from continuing operations		2.1			(29.1	)		31.2			-107	%
Earnings /(loss) from discontinued operations		(41.3	)		(21.0	)		(20.3	)		97	%
Net earnings/(loss)		(39.2	)		(50.1	)		10.9			-22	%
Net earnings/(loss) attributable to noncontrolling interest		1.2			3.9			(2.7	)		-69	%
Net earnings/(loss) attributable to Catalent	$	(40.4	)	$	(54.0	)	$	13.6			-25	%

* Percentage not meaningful

*Net ~~Percentage not meaningful~~Revenue

Net ~~Revenue~~revenue increased $105.5 million, or 6%, in fiscal year 2013 compared to the same period a year ago. Excluding the unfavorable impact from foreign exchange fluctuation of $35.5 million, or 2%, net revenue increased by $141.0 million, or

Net revenue increased $163.0 million, or 11%, compared to the same period a year ago. The stronger U.S. dollar unfavorably impacted revenue by 1%, or $17.2 million. Excluding the impact of foreign exchange, net revenue increased by $180.2 million, or 12%, as compared to fiscal year 2011. The increase was primarily due to increased demand within the Development & Clinical Services and the Oral Technologies segments, partially offset by decreases within Medication 33

33Table of Contents

~~Table~~8%, as compared to the same period a year ago. The increase was primarily due to the inclusion of ~~Contents~~a full year of revenue from the acquired Aptuit CTS business within our Development and Clinical Services segment, partially offset by volume declines within our Zydis technology platform and the impact of certain concessions granted to secure long term arrangements with regard to certain products and customers within our softgel business in our Oral Technologies segment.

~~Delivery~~Gross Solutions. The Oral Technologies increase was a result of stronger demand for prescription and consumer health softgels within multiple geographies, as well as an increase for controlled release products within North America and Europe. Increased market demand for customer products using the Zydis® technology also contributed to the segment’s favorability. The Development & Clinical Services volume increase was primarily related to strong demand for clinical and analytical services within North America and Europe, as well as due to the acquisition of Aptuit’s CTS business which closed in mid-February of the current fiscal year and contributed approximately $67.9 million to the revenue increase. Within the Medication Delivery Solutions segment, revenue was lower compared to the prior fiscal year due to decreased demand within our European injectable facilities, partially offset by increased demand for products within our blow-fill-seal offering. Margin

Gross ~~Margin~~margin increased $10.0 million, or 2%, in fiscal year 2013 compared to fiscal year 2012. Excluding the unfavorable impact from foreign exchange fluctuation of $10.6 million, or 2%, gross margin increased by $20.6 million, or approximately 4%, as compared to the same period a year ago. This increase in gross margin was due to the revenue generated by acquired Aptuit CTS businesses within Development and Clinical Services and research and development profit participation revenue recorded within the Oral Technologies segment. These gross margin increases were partially offset by unfavorable product mix and volume declines in the Zydis technology platform in our Oral Technologies segment and within the Medication Delivery Solutions segments.

~~Gross margin increased $56.5 million~~Selling, orGeneral 11%, compared to the prior fiscal year. The stronger U.S. dollar unfavorably impacted gross margin by approximately 2%, or $7.7 million. Excluding the impact of foreign exchange, gross margin increased by $64.2 million, or 13%, primarily due to favorable product mix related to the revenue increases within the Oral Technologies segment and ~~the~~Administrative increased demand for analytical and clinical services within the Development and Clinical Services segment. The aforementioned acquisition of Aptuit’s CTS business contributed approximately $18 million to the increase in gross margin. Expense

Selling, ~~General~~general and ~~Administrative~~administrative ~~Expense~~expense decreased $7.5 million, or 2%, in fiscal year 2013 compared to the prior period. Excluding the increase resulting from from foreign exchange fluctuation of $3.4 million, or 1%, selling, general and administrative expense decreased by $4.1 million as compared to the same period a year ago. The decrease was primarily due to the absence of $15.0 million of transaction related costs associated with the Aptuit CTS acquisition which was incurred in the prior year period partially offset by increased depreciation and amortization and integration costs associated with the Aptuit CTS acquisition.

~~Selling,~~Restructuring ~~general~~ and ~~administrative~~ expense increased by $59.8 million, or 21%, compared to prior fiscal year. The increase from the prior fiscal year is primarily related to transaction related expenses incurred in connection with the acquisition of the CTS business, the recognition of a multi-employer pension plan obligation related to an ongoing operation, incentive-based variable employee related costs and continued investments in our sales and marketing function across the global network. In addition, the acquisition of the Aptuit CTS business resulted in $15.0 million additional selling, general and administrative expenses. Other

~~Impairment~~Restructuring and other charges decreased $1.1 million, or 6%, in fiscal year 2013 compared to the prior period. The current period charges related to restructuring initiatives across several of our operations,which were enacted to improve cost efficiency, including both site consolidation and ~~(gain)/loss~~employee onrelated ~~sale~~severance charges undertaken to achieve acquisition related synergies. The prior period charges primarily related to consolidating and streamlining our manufacturing footprint and employee related charges resulting from organizational changes and workforce reductions to adjust the capacity of ~~assets~~our workforce within our business units.

InInterest ~~fiscal year 2012~~Expense, ~~in conjunction with the Company’s routine review of its long-lived asset portfolio we recorded an impairment charge related to property, plant and equipment of approximately $1.8 million,~~ net ~~of any gains on sale of equipment. During fiscal years 2012 and 2011, no goodwill or intangible asset impairment charges were recorded.~~

~~Restructuring~~Interest ~~and~~expense, ~~Other~~net of $203.2 million increased by $20.0 million, or 11%, in fiscal year 2013 compared to the period ended June 30, 2012. The increase was primarily the result of the full twelve month fiscal year 2013 effect of the incremental term loan borrowing of $400.0 million used to finance the Aptuit CTS acquisition, which closed during the third quarter of fiscal year 2012, during which four months of interest expense was recognized. In addition, Catalent recorded capital leases in the third quarter of fiscal 2012, for which a full year of interest expense has been incurred in the current year compared to only four months in the prior fiscal year.

~~Restructuring~~Other ~~and other charges of $19.5 million for the fiscal year ended June 30~~(Income)/Expense, 2012 increased $7.0 million compared to the prior fiscal year. The charges for the fiscal year ended June 30, 2012 primarily include costs to consolidate and streamline our manufacturing footprint and employee related charges resulting from organizational changes and workforce reductions to adjust the capacity of our workforce within our business units. During fiscal year 2011, restructuring and special charges of $12.5 million were primarily related to asset impairments of facilities expected to be consolidated and additional costs associated with real estate exited in a prior period. net

~~Interest~~Other ~~Expense~~expense of $25.1 million increased by $28.9 million in fiscal year 2013 compared to the period ended June 30, ~~net~~2012. The increased expense was primarily driven by both cash and non-cash charges associated with financing related fees occurring during fiscal year 2013 and by increased unrealized losses related to foreign currency translation on intercompany loans as compared to the prior period.

~~Interest~~Provision/(Benefit) ~~expense, net of $183.2 million~~ for ~~the~~Income fiscal year ended June 30, 2012 increased $17.7 million, primarily driven by the incremental term loan borrowing of $400 million entered into in the third fiscal quarter and the increased interest associated with the extension of approximately 80% of our original U.S. dollar and Euro denominated term loans. Taxes

~~Other~~Our ~~(Income)/Expense~~provision for income taxes was $24.1 million in fiscal year 2013 relative to our loss from continuing operations before income taxes of $23.9 million resulting in an income tax provision rate in excess of 100% due to the mix of profits and losses in various jurisdictions. Our provision for income taxes for the fiscal year ended June 30, ~~net~~2012 was $16.5 million relative to earnings from continuing operations before income taxes of $18.6 million resulting in an income tax provision rate of 88.8%. Generally, fluctuations in the effective tax rate are primarily due to changes in our geographic pretax income resulting from our business mix and changes in the tax impact of permanent differences, restructuring, other special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Key drivers in permanent differences year over year include the reversal of intercompany dividend income which is not included for tax purposes, disallowed interest expense as well as a non-deductible asset impairment.

~~Other~~Segment income, net increased to $3.8 million of income in the current year as compared to a loss of $26.0 million in the prior fiscal year. This fluctuation primarily resulted from the non-cash unrealized foreign currency transaction losses recognized in the prior year while no such losses were recognized in the current fiscal year. Review

~~Income Tax Provision/(Benefit)~~ 34

~~The~~Table ~~income tax provision/(benefit) rate relative to earnings/(loss) before income taxes, minority interest and discontinued operations was 88.8% in fiscal 2012 and an amount in excess~~ of 100 % in fiscal 2011, respectively. Generally, fluctuations in the effective tax rate are primarily due to changes in our geographic pretax income resulting from our business mix and changes in the tax impact of permanent differences, restructuring, other special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Key drivers in permanent differences year over year include the reversal of intercompany dividend income which is not includible for tax purposes, disallowed interest expense as well as a non-deductible asset impairment. Contents

34The Company’s results on a segment basis for the fiscal year ended June 30, 2013 compared to the fiscal year ended June 30, 2012 were as follows:



	Fiscal Year Ended June 30,						Increase/(Decrease)
(Dollars in millions)	2013			2012			Change $			Change %
Oral Technologies
Net revenue	$	1,186.3		$	1,220.2		$	(33.9	)	(3	)%
Segment EBITDA	315.7			334.6			(18.9		)	(6	)%
Medication Delivery Solutions
Net revenue	219.3			223.9			(4.6		)	(2	)%
Segment EBITDA	31.5			27.5			4.0			15	%
Development and Clinical Services
Net revenue	404.8			268.3			136.5			51	%
Segment EBITDA	75.0			53.0			22.0			42	%
Inter-segment revenue elimination	(10.1		)	(17.6		)	7.5			43	%
Unallocated Costs ⁽¹⁾	(90.6		)	(84.8		)	5.8			7	%
Combined Total
Net revenue	1,800.3			1,694.8			105.5			6	%
EBITDA from continuing operations	$	331.6		$	330.3		$	1.3		*

~~Our~~ * Percentage ~~Fiscal~~not 2012 provision for income taxes was $16.5 million, relative to income before income taxes of $18.6 million, and resulted in an effective tax rate of 88.8%. Our fiscal 2011 provision for income taxes was $23.7 million and relative to losses before income taxes of ($5.4) million resulted in an effective tax rate of in excess of 100% due to the mix of profits and losses in various jurisdictions. meaningful

~~Segment~~(1) ~~Review~~Unallocated costs includes equity-based compensation, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:

The Company’s results on a segment basis for the fiscal year ended June 30, 2012 compared to the fiscal year ended June 30, 2011 are as follows:



	Fiscal Year Ended June 30,
(Dollars in millions)	2013			2012
Impairment charges and gain/(loss) on sale of assets	$	(5.2	)	$	(1.8	)
Equity compensation	(2.8		)	(3.7		)
Restructuring and other special items ⁽²⁾	(29.0		)	(45.8		)
Property and casualty losses	—			8.8
Sponsor advisory fee	(12.4		)	(11.8		)
Noncontrolling interest	0.1			(1.2		)
Other income/(expense), net⁽³⁾	(25.1		)	3.8
Non-allocated corporate costs, net	(16.2		)	(33.1		)
Total unallocated costs	$	(90.6	)	$	(84.8	)

	Fiscal Year EndedJune 30,						Increase/(Decrease)
(in millions)	2012			2011			Change $			Change %
Oral Technologies
Net revenue	$	1,220.2		$	1,159.0		$	61.2			5	%
Segment EBITDA		334.6			308.4			26.2			8	%
Medication Delivery Solutions
Net revenue		223.9			238.6			(14.7	)		-6	%
Segment EBITDA		27.5			33.5			(6.0	)		-18	%
Development and Clinical Services
Net revenue		268.3			157.0			111.3			71	%
Segment EBITDA		53.0			30.1			22.9			76	%
Inter-segment revenue elimination		(17.6	)		(22.8	)		5.2			-23	%
Unallocated Costs (1)		(84.8	)		(100.3	)		15.5			-15	%
Combined Total
Net revenue		1,694.8			1,531.8			163.0			11	%
EBITDA from continuing operations	$	330.3		$	271.7		$	58.6			22	%


(2)	Segment results do not include restructuring and certain acquisition related costs

(13) ~~Unallocated~~Primarily ~~costs~~relates ~~includes~~to ~~U.S.~~realized ~~GAAP restructuring~~ and ~~other,~~unrealized ~~equity-based~~gains/(losses) ~~compensation,~~related ~~impairment~~to ~~charges,~~foreign ~~certain~~currency ~~other~~translation ~~corporate directed costs,~~ and ~~other~~expenses ~~costs~~related ~~that~~to ~~are~~financing ~~not~~transactions ~~allocated~~during to the ~~segments as follows:~~period.

	Fiscal Year EndedJune 30,
(in millions)	2012			2011
Impairment charges and gain/(loss) on sale of assets	$	(1.8	)	$	(3.6	)
Equity compensation		(3.7	)		(3.9	)
Restructuring and other items		(45.8	)		(24.9	)
Property and casualty losses		8.8			(11.6	)
Sponsor advisory fee		(11.8	)		(10.6	)
Noncontrolling interest		(1.2	)		(3.9	)
Other income/(expense), net		3.8			(26.0	)
Non-allocated corporate costs, net		(33.1	)		(15.8	)
Total unallocated costs	$	(84.8	)	$	(100.3	)

Provided below is a reconciliation of earnings/(loss) from continuing operations to EBITDA from continuing operations:

~~Provided below is a reconciliation of earnings/ (loss) from continuing operations to EBITDA:~~ 35

	Fiscal Year EndedJune 30,
(in millions)	2012			2011
Earnings/(loss) from continuing operations	$	2.1		$	(29.1	)
Depreciation and amortization		129.7			115.5
Interest expense, net		183.2			165.5
Income tax (benefit)/expense		16.5			23.7
Noncontrolling interest		(1.2	)		(3.9	)
EBITDA from continuing operations	$	330.3		$	271.7

Table of Contents



	Fiscal Year Ended June 30,
(Dollars in millions)	2013			2012
Earnings/(loss) from continuing operations	$	(48.0	)	$	2.1
Depreciation and amortization	152.2			129.7
Interest expense, net	203.2			183.2
Income tax (benefit)/expense	24.1			16.5
Noncontrolling interest	0.1			(1.2		)
EBITDA from continuing operations	$	331.6		$	330.3

~~Table~~Oral ofTechnologies ~~Contents~~segment

Net revenue decreased by $33.9 million, or 3%, in fiscal year 2013 as compared to the prior year. Excluding the unfavorable impact from foreign exchange fluctuation of $31.9 million, or 3%, Oral Technologies’ ~~segment~~net revenue was relatively flat as compared to the same period a year ago primarily related to decreased demand for certain customer products utilizing our Zydis technology platform, and the impact of certain concessions granted to secure long term arrangements with regard to certain products and customers within our softgel business, partially offset by research and development product participation revenue recognized in the first half of the current year.

~~Net~~Oral ~~revenues~~Technologies' ~~increased~~segment byEBITDA ~~5%,~~decreased orby $6118.29 million, ~~compared~~or to6%, ~~the~~in ~~same~~fiscal ~~period~~year a2013 ~~year~~as ~~ago.~~compared ~~The~~to ~~stronger~~fiscal Uyear 2012.S. ~~dollar~~Excluding ~~unfavorably~~the unfavorable ~~impacted~~impact ~~the segment’s~~from ~~revenue~~foreign byexchange ~~1%,~~fluctuation orof $139.3 million., ~~Excluding~~or 3%, the ~~impact~~segment ofEBITDA decreased ~~foreign~~by ~~exchange~~$9.6 ~~rates~~million, ~~net~~or ~~revenue~~3%, ~~increased~~as bycompared ~~6%,~~to orthe ~~$74.5~~same ~~million.~~period ~~This~~a ~~increase~~year ~~was~~ago primarily ~~driven~~related byto ~~increase~~decreased product demand ~~for~~within ~~controlled~~our ~~release,~~Zydis ~~prescription~~technology platform as noted above and ~~consumer health~~unfavorable ~~softgel~~product ~~offerings~~pricing mix within the segment, partially offset by the research and ~~increased~~development ~~demand~~product ofparticipation ~~our~~income ~~customers’~~recorded ~~products~~in ~~which~~the ~~utilize~~first ~~our~~half ~~Zydis~~of ~~technology~~the ~~platform.~~current fiscal year.

~~Segment~~Medication ~~EBITDA~~Delivery ~~increased~~Solutions by 8%, or $26.2 million. Oral Technologies’ EBITDA was unfavorably impacted by foreign exchange rate movements by 2%, or $6.2 million. Excluding the impact of foreign exchange rates, the increase was 10%, or $32.4 million, which was primarily related to the previously mentioned sales volume increases as well as favorable product mix and improved productivity and fixed manufacturing cost management within the segment.

Net revenue decreased by $4.6 million, or 2%, in fiscal year 2013 as compared to fiscal year 2012. Excluding the unfavorable impact from foreign exchange fluctuation of $2.6 million, or 1%, Medication Delivery Solutions' ~~segment~~ net revenue was relatively flat as compared to the same period a year ago primarily due to reduced demand for sterile injectable products at our European pre-filled syringe facilities, partially offset by increased demand for biologics services.

~~Net~~Medication ~~revenues~~Delivery ~~decreased~~Solutions' bySegment ~~6%,~~EBITDA orincreased by $144.70 million, ~~compared~~or to15%, ~~the~~in ~~prior~~ fiscal year. ~~The~~2013 ~~stronger~~primarily ~~U.S.~~due ~~dollar~~to cost ~~negatively impacted~~saving ~~the~~initiatives ~~segment’s~~enacted ~~revenue~~within ~~by approximately 1%, or $2.0 million. Excluding~~ the ~~impact~~segment ofand ~~foreign~~increased ~~exchange~~demand ~~rates,~~for ~~net~~biologics ~~revenues decreased 5%~~services, orpartially ~~$12.7~~offset ~~million, which was primarily driven~~ by decreased demand for ~~both~~sterile ~~flu~~injectable ~~and non-flu pre-filled syringe~~ products ~~within our European injectable facilities~~ as ~~well~~noted ~~as lower year over year revenue from our biologics offering~~above. ~~These~~The ~~revenue~~impact ~~declines~~of ~~were~~foreign ~~partially~~exchange ~~offset~~fluctuations bydid ~~increased~~not ~~demand~~materially ~~for~~impact ~~products~~Segment ~~utilizing our blow-fill-seal platform~~EBITDA.

~~Segment~~Development EBITDA decreased by 18%, or $6.0 million. The stronger U.S. dollar negatively impacted Medication Delivery Solutions’ EBITDA by approximately 2%, or $0.5 million. Excluding the impact of foreign exchange rates, the $5.5 million, or 17%, decrease was primarily due to the decreased demand for both flu and ~~non-flu~~Clinical ~~pre-filled~~Services syringe products within our European injectable facilities, as discussed above, and were partially offset by favorable product mix and manufacturing efficiency improvements within our blow-fill-seal operation. segment

~~Development~~Net ~~and~~revenues ~~Clinical~~increased ~~Services~~by $136.5 million, or 51%, in fiscal year 2013 as compared to fiscal year 2012 primarily due to the full year inclusion of the acquired Aptuit CTS business, which closed in the third quarter of the previous fiscal year. Foreign exchange fluctuations did not materially impact segment net revenues.

~~Net~~Development ~~revenues~~and ~~increased~~Clinical byServices' ~~71%,~~Segment orEBITDA increased by $~~111~~22.30 million., ~~The~~or ~~stronger~~42%, ~~U.S.~~in ~~dollar~~fiscal ~~negatively~~year ~~impacted~~2013 ~~the~~as ~~segment’s~~compared ~~revenue~~to byfiscal ~~1%,~~year ~~or $2~~2012.~~0 million.~~ Excluding the unfavorable impact offrom foreign exchange ~~rates,~~fluctuation ~~net revenues~~of ~~increased~~$0.8 bymillion, 72or 2%, orthe ~~$113.3~~Development ~~million.~~and ~~The~~Clinical ~~CTS~~Services' ~~Acquisition~~Segment ~~which~~EBITDA increased ~~closed~~by in$22.8 ~~the~~million, ~~third~~or ~~quarter~~43%, ofas compared to the ~~current~~same ~~fiscal~~period a year ~~contributed~~ago ~~approximately~~primarily ~~$67.9~~due ~~million~~to the acquisition of the ~~revenue~~Aptuit ~~increase.~~CTS ~~The~~business ~~remaining~~and ~~increase~~synergy ~~was~~realization ~~primarily~~across ~~related~~the tosegment, ~~strong demand~~partially ~~for~~offset ~~analytical~~by ~~and~~a ~~clinical~~mix ~~services~~shift ~~within~~to ~~North~~lower ~~America~~margin ~~and Europe~~services.

Segment EBITDA increased by $22.9 million, primarily due to the previously mentioned stronger demand within the Company’s clinical services and analytical offerings, as well as due to the acquisition of Aptuit’s CTS business which contributed approximately $13.5 million of the EBITDA increase. The segment’s EBITDA was immaterially impacted by foreign exchange rates. 36

36Table of Contents

~~Table~~Fiscal ofYear ~~Contents~~Ended June 30, 2012 compared to Fiscal Year Ended June 30, 2011

~~Fiscal~~Results ~~Year~~for ~~Ended~~the fiscal year ended June 30, ~~2011~~2012 compared to ~~Fiscal~~the ~~Year~~fiscal ~~Ended~~year ended June 30, ~~2010~~ 2011 are as follows:

Results for the fiscal year ended June 30, 2011 compared to the fiscal year ended June 30, 2010 are as follows:



	Fiscal Year Ended June 30,						Increase/(Decrease)
(Dollars in millions)	2012			2011			Change $			Change %
Net revenue	$	1,694.8		$	1,531.8		$	163.0		11	%
Cost of products sold	1,136.2			1,029.7			106.5			10	%
Gross margin	558.6			502.1			56.5			11	%
Selling, general and administrative expenses	348.1			288.3			59.8			21	%
Impairment charges and (gain)/loss on sale of assets	1.8			3.6			(1.8		)	*
Restructuring and other	19.5			12.5			7.0			56	%
Property and casualty (gain)/loss, net	(8.8		)	11.6			(20.4		)	*
Operating earnings/(loss)	198.0			186.1			11.9			6	%
Interest expense, net	183.2			165.5			17.7			11	%
Other (income)/expense, net	(3.8		)	26.0			(29.8		)	*
Earnings/(loss) from continuing operations before income taxes	18.6			(5.4		)	24.0			*
Income tax expense/(benefit)	16.5			23.7			(7.2		)	(30	)%
Earnings/(loss) from continuing operations	2.1			(29.1		)	31.2			(107	)%
Net earnings /(loss) from discontinued operations, net of tax	(41.3		)	(21.0		)	(20.3		)	97	%
Net earnings/(loss)	(39.2		)	(50.1		)	10.9			(22	)%
Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax	1.2			3.9			(2.7		)	(69	)%
Net earnings/(loss) attributable to Catalent	$	(40.4	)	$	(54.0	)	$	13.6		(25	)%

	Fiscal YearEndedJune 30,2011			Fiscal YearEndedJune 30,2010			Increase/(Decrease)
(in millions)							Change$			Change%
Net revenue	$	1,531.8		$	1,480.4		$	51.4			3	%
Cost of products sold		1,029.7			1,039.5			(9.8	)		-1	%
Gross Margin		502.1			440.9			61.2			14	%
Selling, general and administrative expense		288.3			270.1			18.2			7	%
Impairment charges and (gain)/loss on sale of assets		3.6			214.8			(211.2	)		-98	%
Restructuring and other		12.5			17.7			(5.2	)		-29	%
Property and casualty gain/(losses), net		11.6			—			11.6			*
Operating earnings/(loss)		186.1			(61.7	)		247.8			*
Interest expense, net		165.5			161.0			4.5			3	%
Other (income)/expense, net		26.0			(7.3	)		33.3			*
Earnings/(loss) from continuing operations before income taxes		(5.4	)		(215.4	)		210.0			-97	%
Income tax expense/ (benefit)		23.7			21.9			1.8			8	%
Earnings/(loss) from continuing operations		(29.1	)		(237.3	)		208.2			-88	%
Earnings /(loss) from discontinued operations		(21.0	)		(49.7	)		28.7			-58	%
Net earnings/(loss)		(50.1	)		(287.0	)		236.9			-83	%
Net earnings/(loss) attributable to noncontrolling interest		3.9			2.6			1.3			50	%
Net earnings/(loss) attributable to Catalent	$	(54.0	)	$	(289.6	)	$	235.6			-81	%

* Percentage not meaningful

*Net ~~Percentage~~Revenue ~~not meaningful~~

Net ~~Revenue~~revenue increased $163.0 million, or 11%, compared to the same period a year ago. The stronger U.S. dollar unfavorably impacted revenue by 1%, or $17.2 million. Excluding the impact of foreign exchange, net revenue increased by $180.2 million, or 12%, as compared to fiscal year 2011. The increase was primarily due to increased demand within the Development & Clinical Services and the Oral Technologies segments, partially offset by decreases within Medication Delivery Solutions. The Oral Technologies increase was a result of stronger demand for prescription and consumer health softgels within multiple geographies, as well as an increase for controlled release products within North America and Europe. Increased market demand for customer products using the Zydis® technology also contributed to the segment's favorability. The Development & Clinical Services volume increase was primarily related to strong demand for clinical and analytical services within North America and Europe, as well as due to the acquisition of Aptuit's CTS business which closed in mid-February of the current fiscal year and contributed approximately $67.9 million to the revenue increase. Within the Medication Delivery Solutions segment, revenue was lower compared to the prior fiscal year due to decreased demand within our European injectable facilities, partially offset by increased demand for products within our blow-fill-seal offering.

~~Net~~Gross ~~revenue~~Margin increased $51.4 million, or 3%, compared to the same period a year ago. The weaker U.S. dollar favorably impacted revenue by less than 1%, or $6.0 million. Excluding the impact of foreign exchange, net revenue increased by $45.4 million, or 3%, during the fiscal year 2011. The increase was primarily due to increased demand within the Oral Technologies and Development & Clinical Services segments. The Oral Technologies increase was a result of stronger demand for prescription and consumer health softgels within multiple geographies, as well as an increase for controlled release products within North America and Europe, partially offset by decreased market demand for customer products using the Zydis® technology realized in the first half of the year. The Development & Clinical Services volume increase was primarily related to strong demand for clinical services within North America and Europe. The Medication Delivery Solutions segment was modestly ahead of the prior fiscal year due to strong demand within one of our European injectable facilities.

Gross ~~Margin~~margin increased $56.5 million, or 11%, compared to the prior fiscal year. The stronger U.S. dollar unfavorably impacted gross margin by approximately 2%, or $7.7 million. Excluding the impact of foreign exchange, gross margin increased by $64.2 million, or 13%, primarily due to favorable product mix related to the revenue increases within the Oral Technologies segment and the increased demand for analytical and clinical services within the Development and Clinical Services segment. The aforementioned acquisition of Aptuit's CTS business contributed approximately $18 million to the increase in gross margin.

~~Gross margin increased $61.2 million~~Selling, orGeneral 14%, compared to the same period a year ago. The weaker U.S. dollar favorably impacted gross margin by less than 1%, or $1.6 million. Excluding the impact of foreign exchange, gross margin increased by $59.6 million, or 14%, primarily due to favorable product mix related to the revenue increases within the Oral Technologies segment, as well as the increased demand for clinical services within the Development and ~~Clinical~~Administrative ~~Services~~Expense ~~segment. Improved productivity and fixed manufacturing cost management within our segments also contributed to the margin expansion.~~

Selling, ~~General~~general and ~~Administrative~~administrative ~~Expense~~expense increased by $59.8 million, or 21%, compared to prior fiscal year. The increase from the prior fiscal year is primarily related to transaction related expenses incurred in connection with the acquisition of the Aptuit CTS business, the recognition of a multi-employer pension plan obligation related to an ongoing

Selling, general and administrative expense increased by $18.2 million, or 7%, compared to Fiscal 2010. The increase from the prior fiscal year is primarily related to an increase in research and development spending within our segments and investments in expanding our sales and marketing function across our global network. 37

37Table of Contents

~~Table~~operation, incentive-based variable employee related costs and continued investments in our sales and marketing function across our global network. In addition, the acquisition of ~~Contents~~the Aptuit CTS business resulted in $15.0 million additional selling, general and administrative expenses.

~~Impairment~~Restructuring ~~charges~~ and ~~(gain)/loss~~Other ~~on sale of assets~~

InRestructuring and other charges of $19.5 million for the fiscal year ~~2011~~ended weJune ~~recorded~~30, an2012 ~~impairment~~increased ~~charge~~$7.0 ~~related~~million compared to ~~property~~the prior fiscal year. The charges for the fiscal year ended June 30, ~~plant~~2012 primarily include costs to consolidate and ~~equipment~~streamline ofour ~~approximately~~manufacturing ~~$3.6~~footprint ~~million,~~and ~~net~~employee ofrelated ~~any gains~~charges onresulting ~~sale~~from oforganizational ~~equipment,~~changes inand ~~conjunction~~workforce ~~with~~reductions ~~the~~to ~~Company’s~~adjust ~~routine~~the ~~review~~capacity of ~~its~~our ~~long-lived~~workforce ~~asset~~within ~~portfolio~~our business units. During fiscal year 2011, norestructuring ~~goodwill~~and orspecial ~~intangible~~charges ~~asset~~of ~~impairment~~$12.5 ~~charges~~million were ~~recorded~~primarily related to asset impairments of facilities expected to be consolidated and additional costs associated with real estate exited in a prior period.

~~During~~Interest ~~fiscal year 2010~~Expense, ~~the~~net Company concluded that goodwill impairment indicators existed in the Medication Delivery Solutions segment and recorded a non-cash goodwill impairment charge of $158.3 million, charges related to the impairment of other definite-lived intangible assets under ASC 350 of $15.8 million and $3.1 million of impairment charges related to property, plant and equipment.

~~Impairment~~Interest ~~charges~~expense, ~~are~~net ~~recorded~~of ~~within~~$183.2 million for the ~~Consolidated~~fiscal ~~Statements~~year ended June 30, 2012 increased $17.7 million, primarily driven by the incremental term loan borrowing of ~~Operations~~$400 asmillion ~~impairment~~entered ~~charges~~into in the third fiscal quarter and ~~gain/(loss)~~ onthe ~~sale~~increased interest associated with the extension of ~~assets~~approximately 80% of our original U.S. dollar and Euro denominated term loans.

~~Restructuring~~Other ~~and~~(Income)/Expense, ~~Other~~net

~~Restructuring~~Other ~~and~~income, ~~other~~net ~~charges~~increased ofto $123.58 million ~~for~~of ~~Fiscal~~income ~~2011~~in ~~decreased~~the ~~$5.2~~current ~~million~~year as compared to ~~the~~a ~~prior~~loss ~~fiscal~~of ~~year~~$26.0 ~~The~~million ~~charges for Fiscal 2011 included asset impairment and real estate charges related to facility consolidations announced~~ in the prior ~~periods,~~fiscal ~~employee~~year. ~~related~~This ~~charges~~fluctuation ~~resulting~~primarily resulted from ~~organizational changes and workforce reductions to adjust~~ the ~~capacity~~non-cash ofunrealized ~~our workforce~~foreign ~~within~~currency ~~our~~transaction ~~business~~losses ~~units.~~recognized ~~During~~in ~~Fiscal~~the ~~2010,~~prior ~~restructuring~~year ~~and~~while ~~special~~no ~~charges~~such oflosses ~~$17.7 million~~ were ~~primarily~~recognized ~~related to asset impairments of facilities expected to be consolidated and additional costs associated with real estate exited~~ in athe ~~prior~~current ~~period~~fiscal year.

~~Interest~~Provision/(Benefit) ~~Expense,~~for ~~net~~Income Tax

~~Interest~~The ~~expense~~income tax provision/(benefit) rate relative to earnings/(loss) before income taxes, ~~net~~minority ofinterest ~~$165~~and discontinued operations was 88.58% ~~million~~in ~~for~~fiscal ~~the~~2012 ~~Fiscal~~and ~~2011~~an ~~increased~~amount ~~$4.5~~in ~~million~~excess of 100 % in fiscal 2011, ~~primarily~~respectively. ~~driven~~Generally, byfluctuations in the ~~higher~~effective ~~average~~tax ~~foreign exchange~~rate ~~rates~~are ~~compared~~primarily due to changes in our geographic pretax income resulting from our business mix and changes in the ~~Fiscal~~tax ~~2010~~impact of permanent differences, restructuring, other special items and other discrete tax items, which may have unique tax implications depending on the ~~full~~nature of the item. Key drivers in permanent differences year ~~impact~~over year include the reversal of intercompany dividend income which is not includible for tax purposes, disallowed interest expense ~~associated~~as ~~with~~well ~~our~~as ~~senior~~a ~~toggle~~non-deductible ~~notes~~asset asimpairment. ~~compared~~Our effective tax rate reflects benefits derived from operations outside the United States, which are generally taxed at lower rates than the U.S. statutory rate of 35%. Our fiscal 2012 provision for income taxes was $16.5 million, relative to aincome ~~partial~~before ~~year~~income ~~impact~~taxes of $18.6 million, and resulted in ~~the~~an ~~prior~~effective ~~year~~tax rate of 88.8%. Our fiscal 2011 provision for income taxes was $23.7 million and relative to losses before income taxes of ($5.4) million resulted in an effective tax rate of in excess of 100% due to the mix of profits and losses in various jurisdictions

~~Other~~Segment ~~(Income)/Expense,~~Review ~~net~~

~~Other~~The ~~expense,~~Company's ~~net~~results ~~increased~~on bya ~~$33.3~~segment ~~million~~basis for the fiscal year ended June 30, ~~2011~~2012 compared to the ~~same period of the prior~~ fiscal year. This fluctuation primarily resulted from recording non-cash unrealized foreign currency transaction losses of $13.2 million during the fiscal year 2011 compared with $28.4 million of non-cash unrealized foreign currency transaction gains in the comparable prior year period. In addition, Euro hedge losses recorded in the prior year period totaled $3.3 million as compared to $0.2 million gain during the fiscal period ended June 30, 2011 ~~due~~are toas ~~the~~follows: designation of the financial instrument for hedge accounting purposes effective October 1, 2010. These amounts were offset by a decrease in realized foreign currency losses of approximately $5.5 million associated with inter-company loan activity.

~~Income Tax Provision/(Benefit)~~ 38

~~The~~Table ~~income tax provision/(benefit) rate relative to earnings/(loss) before income taxes, minority interest and discontinued operations was in excess~~ of 100% in fiscal 2011 and 10.2% in fiscal 2010. Generally, fluctuations in the effective tax rate are primarily due to changes in our geographic pretax income resulting from our business mix and changes in the tax impact of permanent differences, restructuring, other special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Our fiscal 2011 provision for income taxes was $23.7 million, relative to losses before income taxes of ($5.4) million, and resulted in an effective tax rate in excess of 100% due to the mix of profits and losses in various jurisdictions. Our fiscal 2010 provision for income taxes was $21.9 million and relative to losses before income taxes of ($215.4) million resulted in an effective tax rate of 10.2%. Contents

Segment Review



	Fiscal Year Ended June 30,						Increase/(Decrease)
(Dollars in millions)	2012			2011			Change $			Change %
Oral Technologies
Net revenue	$	1,220.2		$	1,159.0		$	61.2		5	%
Segment EBITDA	334.6			308.4			26.2			8	%
Medication Delivery Solutions
Net revenue	223.9			238.6			(14.7		)	(6	)%
Segment EBITDA	27.5			33.5			(6.0		)	(18	)%
Development and Clinical Services
Net revenue	268.3			157.0			111.3			71	%
Segment EBITDA	53.0			30.1			22.9			76	%
Inter-segment revenue elimination	(17.6		)	(22.8		)	5.2			23	%
Unallocated Costs(1)	(84.8		)	(100.3		)	15.5			15	%
Combined Total
Net revenue	1,694.8			1531.8			163.0			11	%
EBITDA from continuing operations	$	330.3		$	271.7		$	58.6		22	%

~~Our~~(1) ~~results~~Unallocated oncosts aincludes ~~segment~~U.S. ~~basis~~GAAP ~~for~~restructuring ~~the~~and ~~fiscal~~other, ~~year ended~~equity-based ~~June 30~~compensation, ~~2011~~impairment ~~compared~~charges, tocertain ~~the~~other ~~fiscal~~corporate ~~year~~directed ~~ended June 30~~costs, ~~2010.~~and other costs that are not allocated to the segments as follows:



	Fiscal Year Ended June 30,
(Dollars in millions)	2012			2011
Impairment charges and gain/(loss) on sale of assets	$	(1.8	)	$	(3.6	)
Equity compensation	(3.7		)	(3.9		)
Restructuring and other items⁽²⁾	(45.8		)	(24.9		)
Property and casualty losses	8.8			(11.6		)
Sponsor advisory fee	(11.8		)	(10.6		)
Noncontrolling interest	(1.2		)	(3.9		)
Other income/(expense), net ⁽³⁾	3.8			(26.0		)
Non-allocated corporate costs, net	(33.1		)	(15.8		)
Total unallocated costs	$	(84.8	)	$	(100.3	)

~~Table~~(2) ofSegment ~~Contents~~results do not include restructuring and certain acquisition related costs

	Fiscal Year EndedJune 30,						Increase/(Decrease)
(in millions)	2011			2010			Change $			Change %
Oral Technologies
Net revenue	$	1,159.0		$	1,120.3		$	38.7			3	%
Segment EBITDA		308.4			274.3			34.1			12	%
Medication Delivery Solutions
Net revenue		238.6			234.7			3.9			2	%
Segment EBITDA		33.5			30.0			3.5			12	%
Development and Clinical Services
Net revenue		157.0			144.9			12.1			8	%
Segment EBITDA		30.1			23.5			6.6			28	%
Inter-segment revenue elimination		(22.8	)		(19.5	)		(3.3	)		17	%
Unallocated Costs(1)		(100.3	)		(267.1	)		166.8			-62	%
Combined Total
Net revenue		1,531.8			1,480.4			51.4			3	%
EBITDA from continuing operations	$	271.7		$	60.7		$	211.0			*


(3)	Primarily relates to realized and unrealized gains/(losses) related to foreign currency translation and expenses related to financing transactions during the period.

*Provided ~~Percentage~~below ~~not~~is ~~meaningful~~a reconciliation of earnings/ (loss) from continuing operations to EBITDA:

(1) Unallocated costs includes U.S. GAAP restructuring and other, equity-based compensation, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:



	Fiscal Year Ended June 30,
(Dollars in millions)	2012			2011
Earnings/(loss) from continuing operations	$	2.1		$	(29.1	)
Depreciation and amortization	129.7			115.5
Interest expense, net	183.2			165.5
Income tax (benefit)/expense	16.5			23.7
Noncontrolling interest	(1.2		)	(3.9		)
EBITDA from continuing operations	$	330.3		$	271.7

	Fiscal Year EndedJune 30,
(in millions)	2011			2010
Impairment charges and gain/(loss) on sale of assets	$	(3.6	)	$	(214.8	)
Equity compensation		(3.9	)		(2.6	)
Restructuring and other items		(24.9	)		(29.4	)
Property and casualty losses		(11.6	)		—
Sponsor advisory fee		(10.6	)		(10.0	)
Noncontrolling interest		(3.9	)		(2.6	)
Other income/(expense), net		(26.0	)		7.3
Non-allocated corporate costs, net		(15.8	)		(15.0	)
Total unallocated costs	$	(100.3	)	$	(267.1	)

Oral Technologies segment

39Net revenues increased by 5%, or $61.2 million, compared to the same period a year ago. The stronger U.S. dollar unfavorably impacted the segment's revenue by 1%, or $13.3 million. Excluding the impact of foreign exchange rates, net

~~Table of Contents~~39

~~Provided~~Table ~~below is a reconciliation~~ of ~~earnings/(loss) from continuing operations to EBITDA:~~ Contents

	Fiscal Year EndedJune 30,
(in millions)	2011			2010
Earnings/(loss) from continuing operations	$	(29.1	)	$	(237.3	)
Depreciation and amortization		115.5			117.7
Interest expense, net		165.5			161.0
Income tax (benefit)/expense		23.7			21.9
Noncontrolling interest		(3.9	)		(2.6	)
EBITDA from continuing operations	$	271.7		$	60.7

revenue increased by 6%, or $74.5 million. This increase was primarily driven by increase demand for controlled release, prescription and consumer health softgel offerings, and increased demand of our customers' products which utilize our Zydis technology platform.

Oral Technologies' Segment EBITDA increased by 8%, or $26.2 million. Oral Technologies' Segment EBITDA was unfavorably impacted by foreign exchange rate movements by 2%, or $6.2 million. Excluding the impact of foreign exchange rates, the increase was 10%, or $32.4 million, which was primarily related to the previously mentioned sales volume increases as well as favorable product mix and improved productivity and fixed manufacturing cost management within the segment.

~~Net~~Medication ~~revenues~~Delivery ~~increased~~Solutions ~~by 3%, or $38.7 million, compared to the same period a year ago. The weaker U.S. dollar positively impacted the~~ segment’s revenue by 1%, or $9.5 million. Excluding the impact of foreign exchange rates, revenues increased by 3%, or $29.2 million. This increase was primarily driven by sales increases within the segment’s controlled release, prescription and consumer health softgel offerings, partially offset by declines for demand of our customers’ products which utilize our Zydis technology platform.

~~Segment~~Net ~~EBITDA~~revenues ~~increased~~decreased by 126%, or $3414.17 million., ~~Oral~~compared ~~Technologies’~~to ~~EBITDA~~the ~~was~~prior ~~favorably~~fiscal ~~impacted~~year. The bystronger ~~foreign~~U.S. ~~exchange~~dollar ~~rate~~negatively ~~movements~~impacted the segment's revenue by approximately 1%, or $2.70 million. Excluding the impact of foreign exchange rates, ~~the~~net ~~increase~~revenues ~~was~~decreased 5%, or $3112.47 million, ~~or 11%,~~ which was primarily ~~related~~driven toby ~~the~~decreased ~~previously~~demand ~~mentioned~~for ~~sales~~both ~~volume~~flu ~~increases~~and non-flu pre-filled syringe products within our European injectable facilities as well as ~~favorable~~lower ~~product~~year ~~mix~~over ~~and~~year ~~improved~~revenue ~~productivity~~from ~~and~~our ~~fixed~~biologics ~~manufacturing~~offering. These ~~cost~~revenue ~~management~~declines were partially offset by increased demand for products utilizing our blow-fill-seal platform.

Medication Delivery Solutions' ~~segment~~Segment EBITDA decreased by 18%, or $6.0 million. The stronger U.S. dollar negatively impacted Medication Delivery Solutions' EBITDA by approximately 2%, or $0.5 million. Excluding the impact of foreign exchange rates, the $5.5 million, or 17%, decrease was primarily due to the decreased demand for both flu and non-flu pre-filled syringe products within our European injectable facilities, as discussed above, and were partially offset by favorable product mix and manufacturing efficiency improvements within our blow-fill-seal operation.

~~Net~~Development ~~revenues~~and ~~increased~~Clinical byServices 2%segment or $3.9 million. The stronger U.S. dollar negatively impacted Medication Delivery Solutions’ revenue by approximately 1%, or $2.8 million. Excluding the impact of foreign exchange rates, net revenues increased 3%, or $6.7 million, which was primarily driven by an increased demand for non-flu pre-filled syringes products within one of our European injectable facilities.

~~Segment~~Net ~~EBITDA~~revenues increased by 1271%, or $3111.53 million. The stronger U.S. dollar negatively impacted ~~Medication~~the ~~Delivery~~segment's ~~Solutions’~~revenue ~~EBITDA growth~~ by ~~approximately 2~~1%, or $02.60 million. Excluding the impact of foreign exchange rates, ~~the~~net ~~increase~~revenues ~~was~~increased 14by 72%, or $4113.13 million,. The ~~primarily~~Aptuit ~~due~~CTS toAcquisition ~~increased~~which ~~demand~~closed ~~for~~in ~~non-flu~~the ~~pre-filled~~third ~~syringe~~quarter ~~products~~of ~~within~~the ~~one~~current fiscal year contributed approximately $67.9 million of the ~~Company’s~~revenue ~~European injectable~~increase. The ~~facilities,~~remaining asincrease ~~discussed~~was ~~above,~~primarily asrelated ~~well~~to asstrong ~~favorable~~demand ~~product~~for ~~mix~~analytical and ~~manufacturing~~clinical ~~efficiency~~services ~~improvements~~ within ~~the~~North ~~Company’s~~America ~~blow-fill-seal~~and ~~operation~~Europe.

Development and Clinical Services' Segment EBITDA increased by $22.9 million, primarily due to the previously mentioned stronger demand within the Company's clinical services and analytical offerings, as well as due to the acquisition of Aptuit's CTS business which contributed approximately $13.5 million of the EBITDA increase. The segment's EBITDA was immaterially impacted by foreign exchange rates.

~~Net~~Liquidity revenues increased by 8%, or $12.1 million. Foreign exchange rates had an immaterial impact on the segment’s results. The increase was primarily related to strong demand for clinical services within North America and ~~Europe.~~Capital ~~The company’s analytical science services business was modestly ahead of the prior fiscal year.~~ Resources

~~Segment~~Sources ~~EBITDA~~and ~~increased~~Uses ~~by 28%, or $6.6 million, primarily due to the previously mentioned stronger demand within the company’s clinical services offering, as well as the implementation~~ of ~~fixed manufacturing cost saving efficiencies across many of the segment’s facilities. The segment’s EBITDA was immaterially impacted by foreign exchange rates.~~ Cash

~~Liquidity~~The Company’s principal source of liquidity has been cash flow generated from operations. The principal uses of cash are to fund planned operating and ~~Capital~~capital ~~Resources~~expenditures, interest payments on debt and any mandatory or discretionary principal payments on debt issuances. As of June 30, 2013, the Company’s financing needs were supported by a $200.3 million revolving credit facility, which was reduced by $11.8 million of outstanding letters of credit. The revolving credit facility matures April 10, 2016. The April 10, 2016 maturity date is subject to certain conditions regarding the refinancing or repayment of the Company’s term loans, the $350 million of 7.875% Senior Notes due October 2018 (the "7.875% Notes"), the €225.0 million 9.75% Euro-denominated Senior Subordinated Notes due April 2017 (the "Senior Subordinated Notes") and certain other unsecured debt. As of June 30, 2013, we had no outstanding borrowings under the Company’s revolving credit facility.

~~Sources~~In September 2012, the Company announced the commencement of a tender offer to purchase for cash up to $350.0 million aggregate principal amount of its outstanding $565.0 million 9.5%/10.25% senior PIK election notes due April 2015 (the "Senior Toggle Notes"). On September 18, 2012, the Company purchased $45.9 million aggregate principal amount of Senior Toggle Notes at a price of $47.1 million plus accrued and ~~Use~~unpaid interest pursuant to the tender offer. On November 1, 2012, the Company redeemed $304.1 million aggregate principal amount of ~~Cash~~Senior Toggle Notes for an aggregate price of $311.4 million plus accrued and unpaid interest.

~~The~~On ~~Company’s~~September ~~principal source of liquidity has been cash flow generated from operations. The principal uses of cash are to fund planned operating and capital expenditures~~18, ~~interest payments on debt and any mandatory or discretionary principal payments on debt issuances. In February~~2012, the Company ~~used~~issued ~~the proceeds from a~~ $~~400~~350.0 million ~~incremental~~aggregate ~~senior~~principal ~~secured~~amount ~~term~~of ~~loan~~7.875% ~~facility~~Senior ~~due~~Notes ~~2017, along with cash on hand, to finance~~ (the ~~acquisition~~“7.875% ~~of the~~Notes”). ~~Aptuit~~The ~~CTS Business~~7.875% AsNotes ofwill ~~June 30,~~mature ~~2012,~~on ~~the~~October ~~Company’s~~15, ~~financing~~2018 ~~needs~~and ~~were~~interest ~~supported~~is bypayable anon ~~approximately~~the ~~$200~~7.3875% ~~million~~Notes ~~revolving~~on ~~credit~~April ~~agreement,~~15 ~~which~~and isOctober ~~reduced~~15 byof ~~$20.8~~each ~~million~~year, ofcommencing ~~outstanding~~April ~~letters~~15, ~~of credit~~2013. The ~~revolving credit~~7.875% ~~agreement~~Notes ~~matures~~were ~~April 10,~~offered ~~2016.~~in ~~The~~a ~~April 10,~~private ~~2016~~offering ~~maturity~~to ~~date~~qualified isinstitutional ~~subject~~buyers pursuant to ~~certain~~Rule ~~conditions~~144A ~~regarding~~under the ~~refinancing~~Securities orAct ~~repayment~~ of ~~the~~1933, ~~Company’s~~as ~~term~~amended ~~loans,~~ (the ~~senior~~“Securities ~~toggle notes~~Act”), ~~the senior subordinated notes~~ and ~~certain~~ ~~other~~to ~~unsecured debt~~non-U.S. Aspersons ofin ~~June 30,~~offshore ~~2012,~~transactions wein ~~had~~accordance nowith ~~outstanding~~Regulation ~~borrowings~~S under the ~~Company’s~~Securities ~~revolving~~Act. ~~credit~~The ~~agreement~~7.875% Notes were issued at a

Table of Contents

Weprice ~~continue~~of to100.0% ~~believe~~of ~~that~~their ~~the~~principal amount. The Company’s ~~cash~~used a portion of the net proceeds from ~~operations~~the offering of the 7.875% Notes to finance a portion of its tender offer for the Senior Toggle Notes and ~~available~~partial ~~borrowings under~~redemption of the ~~revolving~~Senior ~~credit~~Toggle ~~facility~~Notes ~~will~~as bedescribed ~~adequate~~above. toWe ~~meet~~may redeem these notes at par plus specified declining premiums set forth in the ~~Company’s~~senior ~~future~~subordinated ~~liquidity~~indenture ~~needs~~plus ~~for~~any ataccrued ~~least~~and unpaid interest to the ~~next~~date ~~twelve~~of ~~months~~redemption.

~~Cash~~On ~~Flows~~April 29, 2013, the Company entered into a senior unsecured term loan facility, in order to borrow an aggregate principal amount of $275.0 million of unsecured term loans (the "Unsecured Loans") due December 31, 2017. The proceeds from the Unsecured Loans were used to redeem all $269.1 million remaining principal outstanding of the Company's Senior Toggle Notes at par plus accrued and unpaid interest as of May 29, 2013, the date of redemption. The Unsecured Loans bear interest, at the Company’s option, at a rate equal to the Eurocurrency Rate plus 5.25%, subject to a floor of 1.25%, or the "Base Rate" plus 4.25%, subject to a floor of 2.25%. The Base Rate is equal to the higher of either the Federal Funds Rate plus 0.5% or the rate of interest per annum published by the Wall Street Journal from time to time, as the “prime lending rate.” The "Eurocurrency Rate" is determined by reference to the British Bankers Association Interest Settlement rate for deposits in dollars for the interest period relevant to such borrowing adjusted for certain additional costs. The Company is not required to repay installments on the Unsecured Loans and is only required to repay the Unsecured Loans on the date of maturity.

~~Fiscal~~We ~~Year~~continue ~~Ended~~to ~~June 30,~~believe ~~2012~~that ~~Compared~~the Company’s cash from operations and available borrowings under the revolving credit facility will be adequate to meet the ~~Fiscal~~ ~~Year~~Company’s ~~Ended~~future ~~June 30,~~liquidity ~~2011~~needs for at least the next twelve months.

~~The~~Cash ~~following table summarizes our statement of cash flows from continuing operations for the fiscal year ended June 30, 2012 compared with the fiscal year ended June 30, 2011.~~ Flows

	Fiscal Year EndedJune 30,
(in millions)	2012			2011			$ Change
Net cash provided by/(used in):
Operating activities	$	87.7		$	111.6		$	(23.9	)
Investing activities		(538.2	)		(83.3	)		(454.9	)
Financing activities	$	352.9		$	(26.1	)	$	379.0

Fiscal Year Ended June 30, 2013 Compared to the Fiscal Year Ended June 30, 2012

~~Operating~~The ~~activities~~following table summarizes the Company’s Consolidated Statement of Cash Flows from continuing operations for the fiscal year ended June 30, 2013 compared with the fiscal year ended June 30, 2012:

For the fiscal year ended June 30, 2012, cash provided by operating activities was $87.7 million compared to cash provided by operating activities of $111.6 million for the fiscal year ended June 30, 2011. The decrease was primarily driven by changes in working capital accounts and the cash payments made in connection with costs associated the sale of North American Commerical Packaging operations and the CTS Acquisition. In addition, cash flow computations are impacted by changes in our interest rate swaps, foreign exchange rates impacting our liability accounts and the impact of our income tax provision on our accrued income tax payable balance.



	Fiscal Year Ended June 30,
(in millions)	2013	2012	$ Change
Net cash provided by/(used in):

Filing Compare · Catalent Pharma Solutions, Inc.