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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
----------------
Commission File Number 1-8036
---------
THE WEST COMPANY, INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1210010
------------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
101 Gordon Drive, PO Box 645, Lionville, PA 19341-0645
--------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-594-2900
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
-----------------------------------------------------------------
Common Stock, par value New York Stock Exchange
$.25 per share
Securities registered pursuant to Section 12(g) of the Act:
None
----
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K 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._____
As of March 18, 1996, the Registrant had 16,640,880 shares of its
Common Stock outstanding. The market value of Common Stock held
by non-affiliates of the Registrant as of that date was
$393,140,790.
Exhibit Index appears on pages F-1, F-2, F-3, and F-4.
DOCUMENTS INCORPORATED BY REFERENCE
------------------------------------
Documents incorporated by reference: 1) portions of the
Registrant's Annual Report to Shareholders for the Company's 1995
fiscal year (the "1995 Annual Report to Shareholders") are
incorporated by reference in Parts I and II; and (2) portions of
the Registrant's definitive Proxy Statement (the "Proxy
Statement") are incorporated by reference in Part III.
2
PART I
Item l. Business
--------
The Company
-----------
The West Company, Incorporated is engaged in one industry segment
- the design, development, manufacture and marketing of stoppers,
closures, containers, medical device components and assemblies
made from elastomers, metal and plastic that meet the unique
filling, sealing, dispensing and delivery needs of the health
care and consumer products markets. The Company also provides
contract packaging and contract manufacturing services to these
markets in the United States and Puerto Rico. In addition, the
Company manufactures related packaging machinery. The Company's
products include pharmaceutical packaging components (stoppers,
seals, caps, containers and dropper bulbs), components for
medical devices (parts for syringes and components for blood
sampling and analysis devices and for intravenous administration
sets) and packaging components for consumer products.
The Company was incorporated in 1923. The executive offices of
the Company are located at 101 Gordon Drive, PO Box 645,
Lionville, Pennsylvania 19341-0645, approximately 35 miles from
Philadelphia. The telephone number at the Company's executive
offices is 610-594-2900. As used herein, the term "Company"
includes The West Company, Incorporated and its consolidated
subsidiaries, unless the context otherwise indicates.
Principal Products -Pharmaceutical Packaging Components
--------------------------------------------------------
The Company manufactures a broad line of pharmaceutical stoppers
from natural rubber and a variety of synthetic elastomers.
Several hundred proprietary formulations of these substances are
molded into a range of stopper sizes used in packaging serums,
vaccines, antibiotics, anesthetics, intravenous solutions and
other drugs. Most formulae are specially designed to be
compatible with drugs so that the drugs will remain effective and
unchanged during storage. The Company's rubber laboratories not
only develop formulations, but also conduct preliminary
compatibility tests on customers' new drugs, and in the United
States file formulation information with the Food and Drug
Administration to assist its customers' new drug applications.
A broad line of aluminum seals which securely hold the stoppers
on glass or plastic containers is manufactured by the Company.
The Company also makes a wide variety of seals lined with its
specially formulated rubber discs or other materials. Aluminum
seals include closures with tamper-evident tabs or plastic
FlipOff^R buttons which must be removed before the drug can be
withdrawn. The Company also designs, manufactures and sells
capping machines for use with Company-designed metal caps and
seals and other packaging equipment.
3
The majority of pharmaceutical-packaging components currently
manufactured by the Company are used in packaging injectable
drugs. Included in this category of products are syringe parts
used by pharmaceutical manufacturers to package their drugs in
pre-filled unit-dose disposable syringes.
Products used in the packaging of non-injectable drugs include
rubber dropper bulbs, plastic contraceptive drug packages and
child-resistant and tamper-evident plastic closures. The Company
also manufactures and markets a range of Counter Cap^R products.
These devices are plastic child resistant caps that advance, or
count, every time a bottle of oral medication is opened or
closed, thereby promoting compliance with medication
instructions. In addition, the Company manufactures injection
blow-molded plastic bottles and containers for the pharmaceutical
industry.
In January 1992, the Company entered into a partnership with
Schott Corporation to continue the glass vial, ampoule and
cartridge manufacturing operations formerly carried on by the
Company at its Cleona, Pennsylvania site. In September 1995 the
Company sold its 40% partnership interest to Schott Corporation.
In January 1994, the Company acquired Senetics, Inc., a Boulder
Colorado company specializing in the development of innovative
closure and delivery systems for the oral and inhalation drug
delivery markets. The purchase price of the acquisition was
$3 million. Additional amounts are due based on license fees or
royalty income and/or direct sales of the product until January
5, 1999.
The Company's German holding company, The West Company GmbH,
acquired Schubert Seals A/S, a Danish manufacturer of rubber
components and metal seals servicing the European pharmaceutical
industry. A 51% ownership interest was acquired in May 1994 and
the remainder in December 1995. The purchase price totaled DK 71
million ($12 million at exchange rates at the dates of the
acquisitions).
Principal Products - Components for Medical Devices
----------------------------------------------------
The Company manufactures rubber and plastic components for empty
disposable syringes. Typical components include plungers, hubs
and needle covers which are assembled into finished empty
disposable syringes by the Company's customers.
Blood-sampling system components manufactured by the Company
include vacuum tube stoppers and needle valves. The Company also
makes a number of specialized rubber and plastic components for
blood analyzing systems.
4
Also included in this category are Company-manufactured and
Company-purchased components assembled into drug-transfer
devices.
The Company also manufactures and sells disposable infant nursers
and individual nurser components to infant formula manufacturers.
Principal Products
Packaging Components for the Consumer Products Industries
-----------------------------------------------------------------
The Company manufactures a wide range of plastic threaded
closures for the personal-care industry, mainly for such products
as cosmetics and toiletries. The Company offers many different
standard threaded closure designs in a wide range of sizes and
colors, in addition to closures designed for specific customers
and specialty packaging. The Company also manufactures custom
and stock plastic containers for personal-care products.
The Company manufactures a variety of custom-designed and/or
proprietary plastic closures, some of which are tamper evident,
for food and beverage processors.
Principal Services
Contract Packaging and Contract Manufacturing
--------------------------------------------------
In April 1995, the Company purchased Paco Pharmaceutical
Services, Inc. ("Paco") for $52.4 million. Paco with facilities
in Lakewood, New Jersey and Canovanas, Puerto Rico provides
contract manufacturing and contract packaging services to
pharmaceutical and personal-care consumer companies.
Paco's contract manufacturing services capability covers liquids,
creams, ointments, powders and semi-solids. These manufacturing
capabilities are offered to pharmaceutical, personal health care
and consumer products companies which supply the product formula
and specifications and the majority of the necessary raw
materials. Typical products manufactured by Paco are headache
and cold medications, hair care products, lotions, oral hygiene
products and deodorants. These manufactured products are
packaged by Paco in bottles, pouches or tubes depending on the
nature of the product and the customers' requirements.
Paco also manufactures sterile ophthalmic products consisting
primarily of contact lens solutions for major ophthalmic
companies and manufactures and sells metaprotirenol, a hospital
unit-dose product used for inhalation therapy.
Paco's contract-packaging services include the design, assembly
and filling of a broad variety of packages, including blister
packages (a plastic bubble with a foil backing), bottles, tubes,
laminated and other flexible pouches or strip packages, aluminum
5
and plastic liquid cup containers, paperboard specialty packages
and innovative tamper evident and child-resistant packages. The
type of package depends on the requirements of the customer.
Blister packaging or bottles typically are used for tablets and
capsules while aluminum or plastic cups, pouches, bottles and
tubes are used for liquids, creams, ointments and powder. The
products to be inserted in the package are supplied by the
customer in bulk. They are inserted in the package of choice,
labeled, boxed and shipped back to the customer.
Order Backlog
--------------
Product orders on hand at December 31, 1995 were approximately
$108 million, compared with approximately $99 million at the end
of 1994. Orders on hand include those placed by customers for
manufacture over a period of time according to a customer's
schedule or upon confirmation by the customer. Orders are
generally considered firm when goods are manufactured or orders
are confirmed. The Company also has contractual arrangements
with a number of its customers, and products covered by these
contracts are included in the Company's backlog only as orders
are received from those customers.
Paco's twelve-month backlog of unfilled customer orders was
approximately $20 million at December 31, 1995. Backlog is
defined at Paco as orders written and included in production
schedules during the next 12 months. Such orders generally may
be cancelled by the customer without penalty.
Raw Materials
--------------
The Company uses three basic raw materials in the manufacture of
its products: rubber, aluminum and plastic. Approximately 25% of
the total rubber used by the Company is natural rubber,
substantially all of which is imported from Sri Lanka and
Malaysia. Plastic resins and aluminum are purchased as needed
from several sources. The Company has been receiving adequate
supplies of raw materials to meet its production needs, and it
foresees no significant availability problems in the near future.
However, the political stability and seasonal weather conditions
of countries which supply natural rubber are significant
factors in the continuing supply of this commodity. Synthetic
elastomers and plastics currently purchased by the Company are
made from petroleum derivatives, the cost and availability of
which are dependent on the supply of petroleum feedstocks. Also,
the Company is dependent on sole sources of supply with respect
to certain other raw material ingredients in older product
formulations. In the event the supplier discontinues production,
the Company may be required to stockpile these materials until
new formulations are qualified with customers.
The Company is pursuing a supply chain management strategy of
aligning with vertically integrated suppliers that control their
own feedstocks. This will result in reducing the number of raw
6
materials suppliers. In some cases, the Company will purchase
raw materials from a single source. This strategy is expected to
assure quality, secure supply and reduce costs. However, it
could result in risks to the Company's supply lines in the event
of a supplier production problem. These risks will be managed by
selecting suppliers with backup plans and fail-safe mechanisms as
part of their operating standards.
Paco's customers supply the bulk of raw materials as part of
their contractual agreements. Items that Paco purchases for the
accounts of customers include preformed plastic tubes and bottles
and other packaging materials. Paco uses a variety of vendors
and is not dependent on any single source of supply.
Laboratory, Research and Engineering
-------------------------------------
Pharmaceutical packaging components must meet the rigid
specifications set by the pharmaceutical industry relating to the
function of the package, material compatibility, and freedom from
chemical and physical contamination. Rubber formulations that
involve contact with injectable pharmaceutical products are
required to pass shelf-life tests extending from six months to
three years. New rubber compounds must be tested to show that
they do not cause precipitation in the customer's product or
affect its potency, sterility, effectiveness, color or clarity.
In addition, in the United States the Food and Drug Admin-
istration may review and inspect certain of the Company's
facilities for adequacy of methods and procedures and
qualifications of technical personnel.
The Company maintains its own laboratories for testing raw
materials and finished goods to assure adherence to customer
specifications and to safeguard the quality of its products. The
Company also uses its laboratory facilities for research and
development of new rubber and thermoplastic compounds and for
testing and evaluating new products and materials.
The Company maintains engineering staffs responsible for product
and tooling design and testing and for the design and
construction of processing equipment. In addition, a corporate
product research department develops new packaging and device
concepts for identified market needs.
Research, development and engineering expenditures for the
creation and application of new and improved products and
processes were approximately $12 million in 1995, $12 million in
1994 and $11.4 million in 1993. Approximately 140
professional employees were engaged full time in such activity in
1995.
Employees
----------
7
As of December 31, 1995, the Company and its subsidiaries had
5,210 full-time equivalent employees.
Patents and Licenses
---------------------
The patents owned by the Company and its subsidiaries have been
valuable in establishing the Company's market share and in the
growth of the Company's business and may continue to be of value
in the future, especially in view of the Company's continuing
development of its own proprietary products. Nevertheless, the
Company does not consider its business or its earnings to be
materially dependent upon any single patent or patent right.
Major Customers
-----------------
The Company serves major pharmaceutical and hospital
supply/medical device companies, many of which have several
divisions with separate purchasing responsibilities. The Company
also sells to many of the leading manufacturers of personal-care
products. The Company distributes its products primarily through
its own sales force but also uses regional distributors in the
United States and Asia/Pacific.
Becton Dickinson and Company ("B-D") accounted for approximately
11% of the Company's consolidated net sales during the Company's
last fiscal year. The principal products sold to B-D are
components made of rubber, metal and plastic used in B-D's
disposable syringes and blood sampling and analysis devices. B-D
has manufactured a portion of its own rubber components for a
number of years. The Company expects to continue as a major B-D
supplier.
Excluding B-D, the next ten largest customers accounted for
approximately 29% of the Company's consolidated net sales in
1995, and no one of these customers accounted for more than 6% of
1995 consolidated net sales.
Competition
------------
The Company competes with several companies, some of which are
larger than the Company, across its major pharmaceutical
packaging component and medical device component product lines.
In addition, many companies worldwide compete with the Company
for business related to specific product lines. However,
although there are no industry statistics available, the Company
believes that it supplies a major portion of the domestic
industry requirements for pharmaceutical rubber and metal
packaging components, and has a significant share of the European
market for these components. Because of the special nature of
these products, competition is based primarily on product design
and performance, although total cost is becoming more important
as healthcare markets worldwide face increasing government
controls and pressure to control overall costs.
8
The Company is one of the leading domestic producers of threaded
plastic closures, although there are numerous competitors in the
field of plastics.
In addition, some of the Company's customers also manufacture a
portion of their own plastic and rubber components.
The contract packaging and manufacturing service industry is
highly competitive. The Company believes that its contract
packaging services subsidiary, Paco, competes with three
significant companies, only one of which is larger than Paco.
For contract manufacturing services, Paco competes with four
major competitors and several smaller regional companies; several
of these competitors are larger than Paco. In addition most
domestic pharmaceutical companies maintain in-house manufacturing
and packaging capabilities and at times will offer their excess
capacity to manufacture or package on a contract basis other
manufacturers' products. However, most large pharmaceutical and
personal health care companies have traditionally made extensive
use of contract packagers and manufacturers during times of peak
demand, during the introduction of a new product and for
production of samples and special product promotions.
Government Regulations and Environmental Matters
---------------------------------------------------
The Company does not believe that it will have any material
expenditures relating to environmental matters other than those
discussed in the Note "Commitments and Contingencies" of Notes to
Consolidated Financial Statements of the 1995 Annual Report to
Shareholders, incorporated by reference herein.
Paco's contract packaging and manufacturing processes and
services are subject to the Good Manufacturing Practice standards
applicable to the pharmaceutical industry. The Company's
packaging and manufacturing services are subject to the Federal,
Food, Drug and Cosmetic Act, the Comprehensive Drug Abuse
Prevention and Control Act of 1970 and various rules and
regulations of the Bureau of Alcohol, Tobacco and Firearms of the
United States Department of Treasury, the Bureau of Narcotics of
the United States Department of Justice, the Drug Enforcement
Agency and state narcotic regulatory agencies. Paco is regularly
subjected to testing and inspection of its products and
facilities by representatives of various Federal agencies.
In addition, the Company comes under the regulation of various
state and municipal health agencies in jurisdictions where the
Company has facilities.
International
---------------
The Note "Affiliated Companies" and the Note "Industry Segment
and Operations by Geographic Area" of Notes to Consolidated
Financial Statements of the 1995 Annual Report to Shareholders
are incorporated herein by reference.
9
The Company believes that its international business does not
involve a substantially greater business risk than its domestic
business. However, economic and competitive factors vary in the
countries in which the Company's international subsidiaries and
affiliates do business. The future growth and performance of the
Company's international subsidiaries and affiliates are dependent
on these factors and the political stability of the countries
where they do business.
The Company's financial condition and results are impacted by
fluctuations in exchange rate markets (See Notes "Summary of
Significant Accounting Policies - "Foreign Currency" and "Other
Income (Expense)" of Notes to Consolidated Financial Statements
of the 1995 Annual Report to Shareholders, incorporated herein by
reference). Hedging by the Company of these exposures is
discussed in the Note "Debt" and in the Note "Fair Value of
Financial Instruments" of Notes to Consolidated Financial
Statements of the 1995 Annual Report to Shareholders,
incorporated herein by reference.
Item 2. Properties
-----------
The Company maintains thirteen manufacturing plants and two mold
and die production facilities in the United States, two
manufacturing plants in Puerto Rico, and a total of ten
manufacturing plants and one mold and die production facility in
Germany, England, France, Denmark, Argentina, Brazil and
Singapore.
The Company's executive offices, U.S. research and development
center and pilot plant are located in a leased facility at
Lionville, Pennsylvania, about 35 miles from Philadelphia. All
other Company facilities are used for manufacturing and
distribution, and facilities in Eschweiler, Germany and Boulder,
Colorado are also used for research and development activities.
The manufacturing facilities of the Company are well-maintained,
are operating generally on a two or three-shift basis and are
adequate for the Company's present needs.
The principal facilities in the United States and Puerto Rico,
are as follows:
- Approximately 1,036,000 square feet of owned and 996,000
square feet of leased space in Pennsylvania, New Jersey,
Florida, Colorado, Nebraska, North Carolina and Puerto Rico.
The principal international facilities are as follows:
- Approximately 300,000 square feet of owned space and 145,000
square feet of leased space in Germany, England, Denmark and
France.
10
- Approximately 99,000 square feet of owned space in Argentina
and Brazil.
- Approximately 92,000 square feet of owned space in Singapore.
Of the aforementioned currently owned facilities, approximately
464,000 square feet are subject to mortgages to secure the
Company's real estate mortgage notes. See the Note "Debt" of
Notes to Consolidated Financial Statements of the 1995 Annual
Report to Shareholders, which information is incorporated herein
by reference.
Sales office facilities in separate locations are leased
under short-term arrangements.
The Company also holds for sale 106,100 square feet of former
manufacturing facility space in the United States.
11
Item 3. Legal Proceedings.
-----------------
A. Wayne, New Jersey
------------------
The Company is a party to an Administrative Consent Order with
the New Jersey Department of Environmental Protection (the "DEP")
under which the Company is required to submit and perform a
cleanup plan for property formerly owned by the Company in Wayne,
New Jersey. The present owner of the property, who is currently
in bankruptcy, has agreed pursuant to a litigation settlement
between him and the Company to provide a Declaration of
Environmental Restriction required by the DEP to complete the
cleanup pursuant to the Administrative Consent Order. The
settlement agreement also provides that the Company will complete
the ongoing monitoring requirements of the cleanup plan and will
complete the closure of a plastic waste disposal area on the
property subject to the DEP's requirements for closure under a
revised closure plan. The settlement agreement is pending before
the Bankruptcy Court, which must approve it before it becomes
effective.
B. OCAP Litigation
---------------
On March 30, 1992, OCAP Acquisition Corp. ("OCAP") commenced an
action in the Supreme Court of the State of New York, County of
New York, against Paco, certain of its subsidiaries and R. P.
Scherer Corporation ("Scherer"), Paco's former parent company,
(collectively, the "defendants"), arising out of the termination
of an Asset Purchase Agreement dated February 21, 1992 (the
"Purchase Agreement") between OCAP and the defendants providing
for the purchase of substantially all the assets of Paco. On May
15, 1992, OCAP served an amended verified complaint (the "Amended
Complaint"), asserting causes of action for breach of contract
and breach of the implied covenant of good faith and fair
dealing, arising out of defendants' March 25, 1992 termination of
the Purchase Agreement, as well as two additional causes of
action that were subsequently dismissed by order of the court.
The Amended Complaint seeks $75 million in actual damages, $100
million in punitive damages, as well as OCAP's attorney fees and
other litigation expenses, costs and disbursements incurred in
bringing this action. Scherer has asserted a counterclaim
against OCAP for breach of contract and breach of the covenant of
good faith and fair dealing arising out of the termination of the
Purchase Agreement. Discovery with respect to the action has
been completed and a trial date of March 21, 1996 has been set.
Based upon the investigation conducted by the Company to date,
the Company believes that this action lacks merit and intends to
defend against it vigorously. In the opinion of management, the
ultimate outcome of this litigation will not have a material
adverse effect on the Company's business or financial condition.
Scherer has agreed to indemnify Paco against any liabilities
(including fees and expenses incurred after March 31, 1992) it
may have as a result of this litigation matter.
12
See the Note "Commitments and Contingencies" of Notes to
Consolidated Financial Statements of the 1995 Annual Report to
Shareholders, which information is incorporated herein by
reference.
13
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 4 (a) Executive Officers of the Registrant
-----------------------------------
The executive officers of the Company at March 29, 1996 were as
follows:
Name Age Business Experience During Past Five
Years
---- --- ---------------------------------------
George R. Bennyhoff1 52 Senior Vice President, Human Resources
and Public Affairs since March 1986.
Wendy Dixon1 40 Group Vice President, Strategic
Planning since November 1995, and Group
Vice President, The Americas, from
March 1995 to November 1995 for the
Company; and prior to joining the
Company Executive Vice President and
General Manager of Biomaterials for
Osteotech, Inc., a medical device
company, from May 1993 to
February 1995; and prior thereto held
the following positions with Centocor,
Inc., a biotechnology pharmaceutical
company: Vice President, Business
Development from August 1992 to April
1993, Vice President, European
Marketing & Sales from October 1990 to
August 1992.
Jerry E. Dorsey1 51 Executive Vice President and Chief
Operating Officer since June 1994;
previously Group President from August
1993 to June 1994; President, Health
Care Division from May 1992 to July
1993 for the Company; and prior to
joining the Company President and Chief
Executive Officer of Foster Medical, a
medical supply company, from 1990 to
May 1992.
Steven A. Ellers 45 Vice President, Global Sales since March
1996, previously Vice President,
Operations from June 1994 to March 1996;
and prior thereto Vice President
Asia/Pacific and Managing Director,
Singapore for the Company from May 1990
to May 1994.
1 Holds position as corporate officer elected by the Board of
Directors for one year term.
14
Name Age Business Experience During Past Five
Years
---- --- ---------------------------------------
John R. Gailey III1 41 Vice President since December 1995,
General Counsel since May 1994 and
Secretary since December 1991
previously Corporate Counsel for the
Company from December 1991 to May 1994
and prior to joining the Company, an
Associate with the law firm of Dechert
Price & Rhoads.
Stephen M. Heumann1 54 Vice President since May 1994; and
Treasurer since December 1990;
previously Assistant Treasurer from May
1990 through November 1990 for the
Company.
Raymond J. Land1 51 Senior Vice President, Finance and
Administration for the Company since
October 1991; prior to joining the
Company General Manager - Premium Meals
for Campbell Soup Company.
William G. Little1 53 Chairman of the Board since May 1995
and Director, President and Chief
Executive Officer since May 1991 for
the Company; and prior to joining the
Company, Division President, Kendall,
Inc., a medical device company, from
1990 to May 1991.
Donald E. Morel, Jr. 38 Corporate Vice President, Scientific
Services since May 1995; previously
Vice President, Research & Development
from August 1993 to May 1995 and prior
thereto Director Research &
Development, Health Care Products
Division from May 1993 to August 1993
for the Company; and prior to joining
the Company Director Research &
Development for Applied Research
International, a provider of contract
research in materials science, from
1988.
1 Holds position as corporate officer elected by the Board of
Directors for one year term.
15
Name Age Business Experience During Past Five
Years
---- --- ---------------------------------------
Anna Mae Papso1 52 Vice President since March 1991 and
Corporate Controller since May 1989.
Victor E. Ziegler1 65 Executive Vice President since January
1992; previously Division President
from July 1991 to January 1992 and
Group President for the Company.
1 Holds position as corporate officer elected by the Board of
Directors for one year term.
16
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
--------------------------------------------------
The Company's common stock is listed on the New York Stock
Exchange and the high and low prices for the stock for each
calendar quarter in 1995 and 1994 were as follows:
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
High Low High Low High Low High Low High Low
1995 27 1/2 24 3/4 29 25 1/2 30 5/8 28 28 22 5/8 30 5/8 22 5/8
1994 25 3/4 23 3/4 24 3/4 21 1/4 25 3/4 21 5/8 29 1/8 25 1/2 29 1/8 21 1/4
As of December 31, 1995, the Company had 1,287 shareholders of
record. There were also 2,200 holders of shares registered in
nominee names. The Company's Common Stock paid a quarterly
dividend of $.11 per share in each of the first three quarters of
1994; $.12 per share in the fourth quarter of 1994 and each of
the first three quarters of 1995; and $.13 per share in the
fourth quarter of 1995.
Item 6. Selected Financial Data.
-----------------------
Information with respect to the Company's net sales, income
(loss) from consolidated operations, income (loss) before change
in accounting method, income (loss) before change in accounting
method per share and dividends paid per share is incorporated by
reference to the line items corresponding to those categories
under the heading "Ten-Year Summary - Summary of Operations" of
the 1995 Annual Report to Shareholders. Information with respect
to total assets and total debt is incorporated by reference to
the line items corresponding to those categories under the
heading "Ten-Year Summary - Year End Financial Position" of the
1995 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis Financial Condition
and Results of Operations.
---------------------------------------------------------
The information called for by this Item is incorporated by
reference to the text appearing in the "Financial Review" section
of the 1995 Annual Report to Shareholders.
Subsequent Event
----------------
On March 28, 1996, the Company approved a plan to restructure its
global manufacturing operations. The plan provides for the closing
or substantial downsizing of six manufacturing facilities and an
approximate 5% reduction of its workforce. As part of the plan
the Company will withdraw from its machinery systems business,
which accounted for less than 1% of 1995 net sales. Implementation
of the restructuring plan will begin immediately and be
substantially complete by the end of the first quarter of 1997.
The total estimated net charge related to these planned actions
is $15 million, net of $6.5 million of income tax benefits.
Approximately one-third of the net charge relates to reduction
in personnel and covers severance pay and other benefits to be
provided to terminated employees. The remaining accrued net
charge relates to facility close down costs and to the reduction
to net realizable value of related equipment and facilities.
As a result of this net charge, the Company will report a net
loss for the quarter ending March 31, 1996.
These actions are intended to position the Company to better
meet the demands of the rapidly changing healthcare market.
Specifically the plan will create focused, more efficient
factories and will enable the Company to shift production to
lower-cost locations. These moves are made possible by the
increasing willingness of our customers to accept the Company's
products from alternate and multiple locations.
These actions are components of an overall strategy that includes
offering customers enhanced technical capabilities and product
offerings to enable the Company to preserve its leadership
position in its core business.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The information called for by this Item is incorporated by
reference to "Consolidated Financial Statements", "Notes to the
Consolidated Financial Statements", and "Quarterly Operating and
Per Share Data (Unaudited)" of the 1995 Annual Report to
Shareholders.
17
Subsequent Event
----------------
On March 28, 1996, the Company approved a major restructuring plan
which includes the closing or substantial downsizing of six
manufacturing facilities, disposition of related excess equipment
and properties and an approximate 5% reduction of the workforce.
The total estimated charge related to these planned actions is
$15 million, net of $6.5 million of income tax benefits, and will
be accrued in the first quarter of 1996. Approximately one-third
of the net charge relates to reduction in personnel, including
manufacturing and staff positions, and covers severance pay and
other benefits to be provided to terminated employees. The
remaining accrued net charge relates to facility close down costs
and to the reduction to estimated net realizable value of the
carrying value of equipment and facilities made excess by the
restructuring plan. The restructuring activities will be
substantially complete by the end of the first quarter of 1997.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
--------------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
Information called for by this Item is incorporated by reference
to "ELECTION OF DIRECTORS" and "ELECTION OF DIRECTORS - Section
16(a) Reporting" in the Proxy Statement.
Information about executive officers of the Company is set forth
in Item 4 (a) of this report.
Item 11. Executive Compensation.
-----------------------
Information called for by this Item is incorporated by reference
to "ELECTION OF DIRECTORS - Compensation of Directors; Board
Compensation Committee Report on Executive Compensation;
Compensation of Named Executive Officers" contained in the Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
---------------------------------------------------
Information called for by this Item is incorporated by reference
to "STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "ELECTION
OF DIRECTORS, Stock Ownership of Directors and Executive
Officers" contained in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Information called for by this Item is incorporated by reference
to "ELECTIONS OF DIRECTORS - Compensation of Directors" and
"ELECTION OF DIRECTORS - Certain Transactions" in the Proxy
Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
-------------------------------------------------------
(a) 1. The following report and consolidated financial
statements, included in the 1995 Annual Report to
Shareholders, have been incorporated herein by
reference:
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993
18
Consolidated Balance Sheets at December 31, 1995 and
1994
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Accountants
(a) 2. Supplementary Financial Information
Schedules are omitted because they are either not
applicable, not required or because the information
required is contained in the consolidated financial
statements or notes thereto.
(a) 3. See Index to Exhibits on pages F-1, F-2, F-3 and
F-4 of this Report.
(b) There were no reports on Form 8-K filed by the
Company in the fourth quarter of 1995.
(c) The exhibits are listed in the Index to Exhibits on
pages F-1, F-2, F-3 and F-4 of this Report.
(d) Financial Statements of affiliates are omitted
because they do not meet the tests of a significant
subsidiary at the 20% level.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, The West Company, Incorporated
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE WEST COMPANY, INCORPORATED
(Registrant)
By /s/ Raymond J. Land
--------------------------------
Raymond J. Land
Senior Vice President, Finance
and Administration
(Principal Financial Officer)
March 29, 1996
--------------------------------
Date
20
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
and on the dates indicated.
Signature Title Date
--------- ------ -------
William G. Little Chairman, Director, March 29, 1996
--------------------------------- President,and Chief
William G. Little Executive Officer
(Principal Executive Officer)
Tenley E. Albright Director March 29, 1996
-----------------------------------
Tenley E. Albright *
George W. Ebright Director March 29, 1996
------------------------------------
George W. Ebright*
George J. Hauptfuhrer Director March 29, 1996
------------------------------------
George J. Hauptfuhrer*
Director March 29, 1996
-------------------------------------
L. Robert Johnson
Raymond J. Land Senior Vice President, March 29, 1996
-------------------------------------- Finance and Administration
Raymond J. Land
(Principal Financial Officer)
William H. Longfield
--------------------------------------
William H. Longfield* Director March 29, 1996
21
Signature Title Date
------------ ------ ------
John P. Neafsey Director March 29, 1996
--------------------------------------
John P. Neafsey*
Anna Mae Papso Vice President and March 29, 1996
-------------------------------------- Corporate Controller
Anna Mae Papso
(Principal Accounting Officer)
Monroe E. Trout Director March 29, 1996
---------------------------------------
Monroe E. Trout*
William S. West Director, Chairman March 29, 1996
----------------------------------
William S. West*
J. Roffe Wike, II Director March 29, 1996
---------------------------------------
J. Roffe Wike, II*
Hans Wimmer Director March 29, 1996
---------------------------------------
Hans Wimmer*
22
Signature Title Date
---------- ----- ------
Geoffrey F. Worden Director March 29, 1996
----------------------------------------
Geoffrey F. Worden*
Victor E. Ziegler Director March 29, 1996
----------------------------------------
Victor E. Ziegler*
* By Raymond J. Land pursuant to a power of attorney.
23
INDEX TO EXHIBITS
Exhibit Page
Number Number
(3) (a) Restated Articles of Incorporation of the Company,
incorporated by reference to Exhibit (4) to the Company's
Registration Statement on Form S-8 (Registration No.
33-37825).
(3) (b) Bylaws of the Company, as amended and restated December 13,
1994, incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994
(File No. 1-8036).
(4) (a) Form of stock certificate for common stock incorporated by
reference to Exhibit (3) (b) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1989 (File No.
1-8036).
(4) (b) Flip-In Rights Agreement between the Company and American
Stock Transfer & Trust Company, as Rights Agent, dated as
of January 16, 1990, incorporated by reference to Exhibit 1
to the Company's Form 8-A Registration Statement (File No.
1-8036).
(4) (c) Flip-Over Rights Agreement between the Company and American
Stock Transfer & Trust Company, as Rights Agent, dated as
of January 16, 1990, incorporated by reference to Exhibit 2
to the Company's Form 8-A Registration Statement (File No.
1-8036).
(5) None.
(9) None.
(10) (a) Amended and Restated Put and Call Agreement dated as of
March 23, 1993 between Hans Wimmer, Wimmer Holding GbR and
the Company, incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1992 (File No. 1-8036).
(10) (b) Registration Rights Agreement dated March 23, 1993 between
the Company and Hans Wimmer, incorporated by reference to
The Company's Annual Report on Form 10-K for the year ended
December 31, 1992 (File No. 1-8036).
(10) (c) Lease dated as of December 31, 1992 between Lion
Associates, L.P. and the Company, relating to the lease of
the Company's headquarters in Lionville, Pa., incorporated
by reference to The Company's Annual Report on Form 10-K
for the year ended December 31, 1992 (File No. 1-8036).
F- 1
24
Exhibit Page
Number Number
(10) (d) First Addendum to Lease dated as of May 22, 1995 between
Lion Associates, L.P. and the Company.
(10) (e) Long-Term Incentive Plan, as amended March 2, 1993,
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No. 1-
8036), incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993
(File No. 1-8036).
(10) (f) 1996 Annual Incentive Bonus Plan, incorporated by reference
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1993 (File No. 1-8036).
(10) (g) Non-Qualified Stock Option Plan for Non-Employee Directors,
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No. 1-
8036).
(10) (h) Pension agreement dated February 17, 1994 between Pharma-
Gummi Wimmer West GmbH and Ulf Tychsen, incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 (File No. 1-8036).
(10) (i) Form of agreement between the Company and eight of its
executive officers, incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No.1-8036).
(10) (j) Schedule of agreements with executive officers,
incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1995 (File
No. 1-8036).
(10) (k) Supplemental Employees' Retirement Plan, incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-8036).
(10) (l) Amendment No. 1 to Employees' Supplemental Retirement Plan.
(10) (m) Amendment No. 2 to Supplemental Employee's Retirement Plan,
incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1995 (File
No. 1-8036).
(10) (n) Retirement Plan for Non-Employee Directors of the Company,
as amended November 5, 1991, incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 1-8036).
(10) (o) Employment Agreement dated May 20, 1991 between the Company
and William G. Little, incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 1-8036).
(10) (p) Management Contract dated as of March 7, 1986, between Hans
Wimmer and Pharma-Gummi Wimmer West GmbH, as amended,
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No. 1-
8036).
F- 2
25
Exhibit Page
Number Number
(10) (q) Contract of Employment dated April 2, 1992 between Ulf C.
Tychsen and Pharma-Gummi Wimmer West GmbH, and related
letter agreement of even date and Addendum No. 1 dated
September 26, 1994, incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-8036).
(10) (r) Non-qualified Deferred Compensation Plan for Designated
Executive Officers, incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1994 (File No. 1-8036).
(10) (s) Amendment No. 1 to Non-Qualified Deferred Compensation Plan
for Designated Executive Officers, incorporated by
reference to the Company's Annual Report on form 10-K for
the years ended December 31, 1994 (File No. 1-8036).
(10) (t) Non-qualified Deferred Compensation Plan for Outside
Directors, incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1989 (File No. 1-8036).
(10) (u) Agreement and Plan of Merger dated March 24, 1995 among the
Company, Stoudt Acquisition Corp. and Paco Pharmaceutical
Services, Inc. incorporated by reference to the Company's
Schedule 14 D-1, filed with the Commission on March 30,
1995.
(10) (v) Non-qualified Stock Option Agreement dated September 8,
1995 between the Company and William G. Little,
incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1995
(File No. 1-8036).
(10) (w) Non-Compete Agreement dated January 30, 1995 between the
Company and Wendy L. Dixon.
(10) (x) Lease Agreement, dated August 31, 1978, between Paco Packaging,
Inc. and Nineteenth Lakewood Corp., as amended by Amendment
of Lease, dated November 30, 1978, Second Amendment of Lease,
dated August 6, 1979, Third Amendment of Lease, dated July 24,
1980 and Fourth Amendment of Lease, dated August 14, 1980,
incorporated by reference to the Exhibits to Paco Pharmaceutical
Services, Inc.'s Registration Statement on Form S-1,
Registration No. 33-48754, filed with the Commission.
(10) (y) Fifth Amendment of Lease, dated May 13, 1994, to the Lease
Agreement, dated August 31, 1978, between Paco Packaging, Inc.
and Nineteenth Lakewood Corp., incorporated by reference to
the Exhibits to Paco Pharmaceutical Services, Inc.'s Annual
Report on Form 10-K for the year ended March 31, 1994,
Commission file number 0-20324.
(10) (z) Lease Agreement, dated December 9, 1977, between Paco Packaging,
Inc. and New Oak Street Corp., as amended to Lease Agreement,
dated August 31, 1978, Second Amendment of Lease, dated April 8,
1979 and Third Amendment of Lease, dated November 16, 1983,
incorporated by reference to the Exhibits to Paco Pharmacuetical
Services, Inc.'s Registration Statement on Form S-1, Registration
No. 33-48754, filed with the Commission.
(10) (aa) Lease Agreement, dated April 7, 1986, between Northlake Realty Co.
Inc. and Paco Packaging, Inc., as amended by Amendment to Lease,
dated July 1, 1986, Second Amendment of Lease, dated June 15,
1987 between Paco Packaging and C.P. Lakewood, L.P., Agreement,
dated December 29, 1987, and Lease Modification Agreement, dated
December 13, 1989, incorporated by reference to the Exhibits to
Paco Pharmaceutical Services, Inc.'s Registration Statement on
Form S-1, Registration No. 33-48754, filed with the Commission.
(10) (bb) Collective Bargaining Agreement, dated November 30, 1994, by and
between Paco Pharmaceutical Services, Inc. and Teamsters Local 35
(affiliated with the International Brotherhood of Teamsters),
incorporated by reference to the Exhibit to Paco Pharmaceutical
Services, Inc.'s Quarterly Report on Form 10-Q for the period
ended December 31, 1994, Commission file number 0-20324.
(10) (cc) Indemnification Agreement, dated June 18, 1992, between Paco
Pharmaceutical Services, Inc. and R. P. Scherer Corporation
and R. P. Scherer International Corporation, incorporated
by reference to the Exhibits to Paco Pharmaceutical Services,
Inc.'s Registration Statement on Form S-1, Registration
No. 33-48754, filed with the Commission.
(11) Not Applicable
(12) Not Applicable
(13) 1995 Annual Report to Shareholders.
(16) Not applicable.
(18) None.
(21) Subsidiaries of the Company.
(22) None.
F- 3
26
Exhibit Page
Number Number
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27) Financial Data Schedules.
(28) Not applicable.
(99) None.
27
F - 4