Back to GetFilings.com
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, 1998
----------------
Commission File Number 1-8036
---------
WEST PHARMACEUTICAL SERVICES, INC.
--------------------------------------
(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 17, 1999, the Registrant had 15,099,072 shares of its
Common Stock outstanding. The market value of Common Stock held
by non-affiliates of the Registrant as of that date was
$514,312,140.
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 1998
fiscal year (the "1998 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
-----------
West Pharmaceutical Services, Inc. (formerly The West Company,
Incorporated) applies value-added services to the process of
bringing new drug therapies and healthcare products to global
markets. West's technologies include the design and manufacture
of packaging components for pharmaceutical, healthcare and
consumer products; the research and development of drug delivery
systems, and contract laboratory services and other services that
support the manufacturing, filling and packaging of
pharmaceutical, healthcare and consumer products. The Company's
activities are organized in three operating segments: 1) the
Device Product Development segment (consisting of four regional
business units serving global markets) designs, manufactures, and
sells stoppers, closures, medical device components and
assemblies made from elastomers, metal and plastics; 2) the
Contract Services segment (consisting of two business units
serving the United States and Puerto Rico markets) provides
contract manufacturing and contract packaging services to the
pharmaceutical and personal care industries and contract
laboratory services for testing injectable drug packaging; and
3) the Drug Delivery Research and Development segment (consisting
of two business units) identifies and develops drug delivery
systems for biopharmaceutical and other drugs to improve their
therapeutic performance and/or their method of administration.
As of December 31, 1998, the Company and its subsidiaries had
4,800 employees.
The Company, a Pennsylvania business corporation, was founded 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 in
this Item, the term "Company" includes West Pharmaceutical
Services, Inc. and its consolidated subsidiaries, unless the
context otherwise indicates.
Device Product Development
Principal Products
--------------------------------------------------------
Pharmaceutical Stoppers
-----------------------
The Company is the world's largest independent manufacturer of
stoppers for sealing drug vials and other pharmaceutical
containers. Several hundred proprietary formulations are molded
from natural rubber and synthetic elastomers into a variety of
3
stopper sizes, shapes and colors. The stoppers are used in
packaging serums, vaccines, antibiotics, anesthetics, intravenous
solutions and other drugs.
Most stopper formulations are specially designed to be compatible
with drugs so that the drugs will remain effective and unchanged
during storage. New rubber compounds must be tested to show that
they do not leach into the customer's product or affect its
potency, sterility, effectiveness, color or clarity. The
Company's laboratories conduct tests to determine the
compatibility of its stoppers with customers' drugs and, in the
United States, file formulation information with the Food and
Drug Administration in support of customers' new drug
applications.
Stoppers usually are washed, sterilized and subject to other pre-
use processes by the customer or a third-party before they are
fitted on the container. However, the Company has recently
introduced a value-added line of stoppers that are pre-washed and
ready to be sterilized, eliminating several steps in customers'
incoming processes. The Company is also marketing a line of pre-
sterilized stoppers that can be introduced directly into
customers' sterile drug-filling operations.
Metal Seals
-----------
The Company also offers a broad line of aluminum seals in various
sizes, shapes and colors. The seals are crimped onto glass or
plastic pharmaceutical containers to hold the stoppers securely
in place. The top of aluminum seals often contains tamper-evident
tabs or plastic covers, which must be removed before the drug can
be withdrawn.
Some aluminum seals are sold with specially formulated rubber or
elastomeric discs pre-fitted inside the seal. These "lined"
seals may be placed directly onto the pharmaceutical container,
thus eliminating the need for a separate stopper.
Other Products
---------------
Other products for the pharmaceutical industry include:
Products used in the packaging of non-injectable drugs
such as rubber dropper bulbs, plastic contraceptive drug
packages and child-resistant and tamper-evident plastic
closures
Plastic bottles and containers for the pharmaceutical
industry
Rubber and plastic components for empty and pre-filled
disposable syringes such as plungers, hubs and needle
covers
4
Blood-sampling system components, including vacuum tube
stoppers and needle valves, and a number of specialized
rubber and plastic components for blood-analyzing systems
and other medical devices
Disposable infant nursers and individual nurser components
The Company also manufactures a wide range of standard and
custom-designed plastic threaded caps and containers for the
personal-care industry. The caps, produced mainly for cosmetics
and toiletries, come in many different sizes and colors. The
Company also makes closures for food and beverage processors.
The Company focuses its efforts on multiple-piece closures that
require high-speed assembly.
Product Development
------------------------
The Company maintains its own laboratories for testing raw
materials and finished goods to assure conformity to customer
specifications and to safeguard product quality. Laboratory
facilities are also used for development of new products.
Engineering staffs are responsible for product and tooling design
and testing and for the design and construction of processing
equipment. In addition, a corporate product development
department develops new packaging and device concepts.
Approximately 120 professional employees were engaged full time
in these activities in 1998. Development and engineering
expenditures for the creation and application of new and improved
device products and manufacturing processes were approximately
$9.2 million in 1998, $8.8 million in 1997 and $8.9 million in
1996, net of cost reimbursements by customers.
Recent Developments
-------------------
The Company has taken steps to expand its product offerings and
improve competitiveness of its Device Product Development
operating segment.
The Company increased its capacity in the components area with
the acquisition of 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 remaining 49% in December 1995. The
company's name was recently changed to "West Pharmaceutical
Services Danmark A/S."
In 1996 and 1997, the Company implemented a major restructuring
plan announced in 1996. The plan included the closing or
downsizing of six manufacturing facilities, withdrawal from the
machinery business and an approximate 5% reduction in the
workforce. The restructuring was designed to reduce the costs
associated with multiple plant sites and shift certain production
capacity to lower-cost locations. In 1998, a further 1%
5
reduction in the workforce, made possible by manufacturing and
other operating efficiencies, was announced. (Additional
information pertaining to these activities is incorporated by
reference to the Note "Restructuring Charges" of Notes to
Consolidated Financial Statements of the 1998 Annual Report to
Shareholders.)
In 1998, the Company acquired Betraine Limited, a company located
in the U.K., which manufactures precision injection molded
plastic components for the healthcare and consumer industries.
The acquisition expanded global capabilities in the non-
injectable market.
Contract Services
Principal Services
--------------------------------
Contract Packaging and Contract Manufacturing
---------------------------------------------
The Company entered into the pharmaceutical services market in
1995 with its acquisition of Paco Pharmaceutical Services, Inc.
("Paco"). Paco's name was recently changed to West
Pharmaceutical Services Lakewood, Inc. (West Lakewood).
West Lakewood provides contract manufacturing and packaging of
products for pharmaceutical and consumer-products companies.
With its flexible manufacturing environment and workforce, West
Lakewood has the capability to quickly undertake to make and
package products according to customers' specifications, usually
employing customer-supplied raw materials. Once the operation is
complete, West Lakewood delivers the finished product to the
customer for final sale and distribution to the end user.
Customers typically use West Lakewood services on a temporary
basis to supplement their own manufacturing or packaging
capability during a new-product introduction or special
promotion. However, West Lakewood does retain long-term
business in both the manufacturing and packaging areas. West
Lakewood operates facilities in Lakewood, New Jersey and
Canovanas, Puerto Rico.
West Lakewood contract packaging and manufacturing processes and
services are subject to the Good Manufacturing Practice standards
applicable to the pharmaceutical industry as well as to numerous
other federal and state laws and regulations governing the
manufacture, handling and packaging of drugs and other regulated
substances.
West Lakewood manufactures liquids and creams, solids,
suspensions, and powders. These products produced include:
headache and cold medications
skin lotions
6
deodorants
toothpaste and mouthwash
metaproterenol and albuterol, products used for inhalation
therapy.
West Lakewood contract-packaging services include the design,
assembly and filling of a broad variety of packages, including
"blister" packages (i.e., a plastic film with a foil
backing)
bottles and tubes
laminated and other flexible pouches or strip packages
aluminum and plastic liquid cup containers
paperboard specialty packages
innovative tamper-evident and child-resistant packages
Although 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
powders.
Contract Laboratory Services
-----------------------------
In 1998, the Company established the contract laboratory services
business, which provides testing services to analyze customers'
injectable product packaging. Regulatory agencies require drug
companies to demonstrate that packaging components will not
contaminate the drug. The test data is generated in a format
acceptable for U.S. Food and Drug Administration (FDA)
submissions. The services offered include product/closure
interaction testing, extractables testing, moisture analysis of
closures, particle quantification/analysis, quantification of
closure surface silicone, and other custom services. The
Company's laboratory complies with applicable Good Manufacturing
Practice standards and its laboratory will be FDA registered.
Research and Development
Drug Delivery Systems
---------------------------------------------------------
In 1993, the Company began developing drug-delivery systems for
bio-pharmaceuticals and other drugs that are difficult to
administer effectively through traditional injectable or oral
routes. Improving the therapeutic performance of these drugs in
an economical fashion calls for sophisticated delivery solutions.
7
To advance the Company's efforts in this area, in 1994 the
Company began acquiring interests in DanBioSyst UK Ltd. (DBS) in
10% annual increments; and in March 1998, acquired the remaining
70% ownership interest, making DBS a wholly-owned subsidiary.
DBS is a research company located in Nottingham, England, which
specializes in identifying and developing systems for delivery of
complex drug molecules, or to assist in delivering drugs to a
specific site in the body. DBS engages in research to develop
these unique systems and then patents this technology. DBS has
patents or patent applications covering a range of delivery
platforms including nasal, oral, parenteral, pulmonary and
rectal/vaginal. DBS enters into agreements with
biopharmaceutical and other drug companies, to apply its delivery
system technology to the customers' drug molecule to achieve the
desired result.
The Company's Lionville-based resources are dedicated to
development of drug delivery systems. This group's work, until
recently, was focused on the Ocufit SR system, a silicone rod
small enough to fit behind the eyelid. The Ocufit SR can be
designed to release a number of different drugs in predefined
quantities over time periods ranging from two weeks to several
months without physical intervention. The Ocufit SR is being
jointly developed with Escalon Medical Corporation, which owns
the basic technology. An Investigative New Drug Application was
filed with the FDA late in 1998, and Escalon is now conducting
Phase I clinical trials. The Lionville group is also developing
products based on DBS patented technology. The current projects
relate to nasal delivery of leuprolide and morphine and further
development of the Targit delivery system, a coated starch
capsule, designed to deliver medication to a specific site in the
body.
The Company had 58 employees directly engaged in these activities
as of December 31, 1998 and total expenses were $5.3 million, net
of revenues received, in 1998.
Order Backlog
--------------
Device product orders on hand at December 31, 1998 were
approximately $90 million, compared with approximately $80
million at the end of 1997. 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.
West Lakewood's twelve-month backlog of unfilled customer orders
was approximately $18 million at December 31, 1998 and December
31, 1997. Backlog is defined by West Lakewood as orders written
8
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 device products: rubber; aluminum; and plastic. 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.
The Company is pursuing a supply chain management strategy, which
involves purchasing from integrated suppliers that control their
own sources of supply. This strategy has reduced the number of
raw-materials suppliers used by the Company. In some cases, the
Company will purchase raw materials from a single source to
assure quality and reduce costs. This strategy increases the
risks that the Company's supply lines may be interrupted in the
event of a supplier production problem. These risks are managed
by selecting suppliers with multiple manufacturing sites, rigid-
quality control systems, surplus inventory levels and other
methods of maintaining supply in case of interruption in
production.
Patents and Licenses
---------------------
The Company's device products patents and trademarks have been
useful in establishing the Company's market share and in the
growth of the Company's manufactured device product 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
current manufactured device product business or its earnings to
be materially dependent upon any single patent or trademark.
Although not material at this time, the Company believes its drug
delivery development capabilities will play an increasingly
important role in the future. DBS has a growing portfolio of
patented technology, which is critical to our success because a
significant amount of future income is expected to be derived
from licensing this technology to customers.
Major Customers
-----------------
The Company provides manufactured device components and/or
contract services to major pharmaceutical and hospital
supply/medical device companies, many of which have several
divisions with separate purchasing responsibilities. The Company
also provides contract-packaging and contract-manufacturing
services for many of the leading manufacturers of personal-care
products. The Company distributes its products and services
9
primarily through its own sales force but also uses regional
distributors in the United States and Asia/Pacific. The business
units have separate sales forces but the Company is increasing
the sales effort of each group to sell all of the Company's
capabilities.
Becton Dickinson and Company ("B-D") accounted for approximately
12% of the Company's 1998 consolidated net sales. The principal
products sold to B-D are synthetic rubber, natural rubber, metal
and plastic components used in B-D's disposable syringes and
blood sampling and analysis devices. The Company expects to
continue as a major B-D supplier.
Excluding B-D, the next ten largest customers accounted for
approximately 30% of the Company's consolidated net sales in
1998, but no one of these customers accounted for more than 5% of
1998 consolidated net sales.
Competition
------------
The Company competes with several companies, some of which are
larger than the Company, across its major Device Product
Development product lines. In addition, many companies worldwide
compete with the Company for business related to specific product
lines. However, the Company believes that it supplies a major
portion of the U.S. market requirements for pharmaceutical
elastomer 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 increasingly more important as pharmaceutical
companies initiate aggressive cost-control measures across their
entire operations. Competitors often compete on the basis of
price. The Company differentiates itself from its competition as
a "full-service" supplier, which is able to provide pre-sale
compatibility studies and other services and sophisticated post-
sale technical support on a global basis.
The Company competes against numerous competitors in the field of
plastic closures for consumer products, many of which are larger
than the Company and command dominant market shares. The Company
attempts to differentiate itself through its expertise in high-
speed assembly of multiple-piece closures.
The U.S. contract-packaging and manufacturing service industry is
highly competitive. For packaging services, West Lakewood
competes with three significant companies, only two of which are
larger than it. For contract-manufacturing services, West
Lakewood competes with four major competitors and several smaller
regional companies; several of these competitors are larger than
it. 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 other
10
companies' products on a contract basis. However, most large
pharmaceutical and personal healthcare 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.
Many companies provide proprietary drug delivery technologies to
the pharmaceutical and biotech markets. However, unlike West,
the majority of these companies are focused on a single route of
drug administration, and very few have capabilities necessary to
take drug products through all stages of the development process
and commercial manufacture. The three largest companies, the
market leaders, have multiple-delivery technologies, but their
strong franchises are in oral, controlled-release delivery
systems. West's drug delivery technologies, none of which is
currently in commercial production, are in less competitive
segments that do not compete with the market leaders.
Environmental Regulations
---------------------------------------------------
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 1998 Annual Report to
Shareholders, incorporated by reference herein.
International
---------------
The Note "Affiliated Companies" and the Note "Segment
Information" of Notes to Consolidated Financial Statements of the
1998 Annual Report to Shareholders are incorporated herein by
reference.
The Company believes that its international business does not
involve a substantially greater business risk than its domestic
business. Financial crises in the Asia/Pacific region and more
recently in our major markets in South America have resulted in a
decline in demand for the Company's products in these regions;
however, direct sales to customers in these markets have
historically not been significant, representing less than 10% of
consolidated sales.
The Company's financial condition and results are impacted by
fluctuations in exchange-rate markets (See Notes "Summary of
Significant Accounting Policies - Foreign Currency Translation"
and "Other Income (Expense)" of Notes to Consolidated Financial
Statements of the 1998 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
"Financial Instruments" of Notes to Consolidated Financial
11
Statements of the 1998 Annual Report to Shareholders,
incorporated herein by reference.
Item 2. Properties
-----------
In the Device Product Development operating segment, the Company
maintains nine manufacturing plants and two mold and die
production facilities in the United States, one manufacturing
plant in Puerto Rico, and a total of eight manufacturing plants
and two mold and die production facilities in Germany, England,
France, Denmark, Brazil and Singapore.
In the Contract Services operating segment, the Company maintains
one facility in the United States and one facility in Puerto Rico
to provide contract manufacturing and packaging services.
Contract Laboratory services are provided from the Company's
Lionville, Pennsylvania facility.
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. The
Company conducts drug delivery research and development in a
leased facility located in Nottingham, England. All other
company facilities are used for manufacturing and distribution,
and facilities in Eschweiler, Germany are also used for device
product development activities.
The production 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 839,000 square feet of owned and 997,000 square
feet of leased space in Pennsylvania, New Jersey, Florida,
Nebraska, North Carolina and Puerto Rico.
The principal international facilities are as follows:
- Approximately 530,000 square feet of owned space and 67,700
square feet of leased space in Germany, England, Denmark and
France.
- Approximately 69,000 square feet of owned space in Brazil.
- Approximately 92,000 square feet of owned space in Singapore.
Of the aforementioned currently owned facilities, approximately
354,000 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 1998 Annual
12
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 former manufacturing facility
space in Puerto Rico - totaling 42,000 square feet.
Item 3. Legal Proceedings.
-----------------
None
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 31, 1999 were as
follows:
Name Age Business Experience During Past Five
Years
---- --- ---------------------------------------
George R. Bennyhoff1 55 Senior Vice President, Human Resources
and Public Affairs.
Jerry E. Dorsey1 54 President and Chief Operating Officer
since September 1998, previously
Executive Vice President and Chief
Operating Officer from June 1994 to
August 1998; Group President from
August 1993 to June 1994; President,
Health Care Division from May 1992 to
July 1993 for the Company.
Steven A. Ellers1 48 Senior Vice President and Chief
Financial Officer since March 1998;
previously Group President from August
1997 to February 1998; Corporate Vice
President, Sales from April 1996 to
July 1997; Vice President, Operations
from June 1994 to March 1996; Vice
President Asia/Pacific and Managing
Director, Singapore from May 1990 to
May 1994 for the Company.
John R. Gailey III1 44 Vice President since December 1995,
General Counsel since May 1994 and
Secretary.
Stephen M. Heumann1 57 Vice President since May 1994 and
Treasurer.
Lawrence P. Higgins1 59 Vice President, Operations since May
1996 and prior to joining the Company
an international business consultant
from 1994 to 1996 and Senior Vice
President International Operations for
Revlon, Inc., a cosmetics company,
from 1992 to 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
---- --- ---------------------------------------
William G. Little1 56 Chairman of the Board since May 1995,
Director and Chief Executive Officer
for the Company and President of the
Company until September 1998.
Donald E. Morel, Jr.1 41 Group President since March 1998;
previously, Corporate Vice President,
Scientific Services from May 1995 to
February 1998; 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.
Anna Mae Papso1 55 Vice President and Corporate Controller
Anthony A. Sinkula 61 Vice President and Chief Scientific
Officer since July 1998 and prior to
joining the Company a consultant to
several major pharmaceutical companies
and the National Cancer Institute.
1 Holds position as corporate officer elected by the Board of
Directors for one year term.
15
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 1998 and 1997 were as follows:
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
High Low High Low High Low High Low High Low
1998 321/4 2815/16 33 28 30 25 3511/16 27 3511/16 25
1997 291/4 27 30 27 343/16 281/2 351/16 28 351/16 27
As of December 31, 1998, the Company had 1,903 shareholders of
record. There were also 2,900 holders of shares registered in
nominee names. The Company's common stock paid a quarterly
dividend of $.14 per share in each of the first three quarters of
1997; $.15 per share in the fourth quarter of 1997 and each of
the first three quarters of 1998; and $.16 per share in the
fourth quarter of 1998.
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 (basic and assuming dilution) 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 1998 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 1998 Annual Report to
Shareholders.
Item 7. Management's Discussion and Analysis of 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 1998 Annual Report to Shareholders.
Item 7A. Quantitative and Qualitative Disclosure about Market
Risk
--------------------------------------------------------
The information called for by this Item is incorporated by
reference to the Notes "Financial Instruments", "Summary of
Significant Accounting Policies" of Notes to Consolidated
Financial Statements of the 1998 Annual Report to Shareholders.
16
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The information called for by this Item is incorporated by
reference to "Consolidated Financial Statements", "Notes to
Consolidated Financial Statements", and "Quarterly Operating and
Per Share Data (Unaudited)" of the 1998 Annual Report to
Shareholders.
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 "PROPOSAL #1: ELECTION OF DIRECTORS" and "OWNERSHIP OF COMPANY
STOCK" 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 "INFORMATION ABOUT THE BOARD AND BOARD COMMITTEES -
Compensation of Directors"; "BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION"; and "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 "OWNERSHIP OF COMPANY STOCK" contained in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
None
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 1998 Annual Report to
Shareholders, have been incorporated herein by
reference:
17
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Comprehensive
Income for the years ended December 31, 1998,
1997 and 1996
Consolidated Balance Sheets at December 31, 1998 and
1997
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996
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 1998.
(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.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, West Pharmaceutical Services,
Inc. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WEST PHARMACEUTICAL SERVICES, INC.
(Registrant)
By /s/ Steven A. Ellers
--------------------------------
Steven A. Ellers
Senior Vice President
and Chief Financial Officer
March 31, 1999
--------------------------------
Date
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 31, 1999
--------------------------------- and Chief Executive
William G. Little Officer
(Principal Executive Officer)
Tenley E. Albright Director March 31, 1999
-----------------------------------
Tenley E. Albright *
John W. Conway Director March 31, 1999
___________________________________
John W. Conway*
George W. Ebright Director March 31, 1999
------------------------------------
George W. Ebright*
Steven A. Ellers Senior Vice President March 31, 1999
------------------------------------ and Chief Financial
Steven A. Ellers Officer
L. Robert Johnson Director March 31, 1999
------------------------------------
L. Robert Johnson*
William H. Longfield Director March 31, 1999
--------------------------------------
William H. Longfield*
20
Signature Title Date
--------- ------ -------
John P. Neafsey Director March 31, 1999
--------------------------------------
John P. Neafsey*
Anna Mae Papso Vice President March 31, 1999
-------------------------------------- and Corporate Controller
Anna Mae Papso
(Principal Accounting Officer)
Director March 31, 1999
---------------------------------------
Monroe E. Trout
Anthony Welters Director March 31, 1999
---------------------------------------
Anthony Welters*
J. Roffe Wike, II Director March 31, 1999
---------------------------------------
J. Roffe Wike, II*
Geoffrey F. Worden Director March 31, 1999
----------------------------------------
Geoffrey F. Worden*
* By William G. Little pursuant to a power of attorney.
21
INDEX TO EXHIBITS
Exhibit
Number
(3) (a) Amended and Restated Articles of Incorporation of the
Company through January 4, 1999.
(3) (b) Bylaws of the Company, as amended through October 27, 1998,
incorporated by reference to Exhibit (3)(b) to the
Company's Form 10-Q for the quarter ended September 30,
1998 (File No. 1-8036).
(4) (a) Form of stock certificate for common stock.
(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).
(9) None.
(10) (a) 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).
(10) (b) First Addendum to Lease dated as of May 22, 1995 between
Lion Associates, L.P. and the Company, incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (File No. 1-8036).
(10) (c) 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).
(10) (d) Amendments to the Long Term Incentive Plan, dated April 30,
1996, incorporated herein by reference to the Company's
Form 10Q for the quarter ended June 30, 1996 (File No. 1-
8036).
(10) (e) Executive Incentive Bonus Plan 1999.
22
F - 1
Exhibit
Number
(10) (f) Non-Qualified Stock Option Plan for Non-Employee Directors,
reflecting amendments effective April 30, 1996 and April
28, 1998 incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 (File No. 1-8036).
(10) (g) Form of amended and restated agreement between the Company
and certain of its executive officers, incorporated by
reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998 (File No.1-8036).
(10) (h) Schedule of agreements with executive officers,
incorporated herein by reference to the Company's Quarterly
Report on Form 10Q for the quarter ended March 31, 1998
(File No.1-8036).
(10) (i) 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) (j) Amendment No. 1 to Supplemental Employees' Retirement Plan,
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 (File No. 1-
8036).
(10) (k) Amendment No. 2 to Supplemental Employees' 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) (l) Retirement Plan for Non-Employee Directors of the Company,
as amended April 28, 1998, incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 (File No. 1-8036).
(10) (m) 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) (n) Non-Qualified Deferred Compensation Plan for Designated
Executive Officers and Amendments Nos. 1 and 2 thereto.
(10) (o) Non-qualified Deferred Compensation Plan for Outside
Directors and Amendment No. 1 thereto.
23
F - 2
Exhibit
Number
(10) (p) 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) (q) 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 (File number 0-20324).
(10) (r) Lease Agreement, dated December 9, 1977, between Paco
Packaging, Inc. and New Oak Street Corp., as amended by the
Amendment 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 Pharmaceutical Services,
Inc.'s Registration Statement on Form S-1, Registration No.
33-48754, filed with the Commission.
(10) (s) 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) (t) Collective Bargaining Agreement, dated December 1, 1997, by
and between Paco Pharmaceutical Services, Inc. and Teamster
Local 35 (affiliated with the International Brotherhood of
Teamsters), incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1997 (File No.1-8036).
(10) (u) 1998 Key Employee Incentive Compensation Plan, dated
March 10, 1998, incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1997 (File No.1-8036).
(10) (v) Asset Purchase Agreement Among Collaborative Clinical
Research, Inc., GFI Pharmaceutical Services, Inc., and WCE
clinical Evaluations and West Pharmaceuticals, Inc. dated
December 28, 1998.
24
F - 3
Exhibit
Number
(11) Not Applicable.
(12) Not Applicable.
(13) Portions of 1998 Annual Report to Shareholders.
(16) Not applicable.
(18) None.
(21) Subsidiaries of the Company.
(22) None.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27) Financial Data Schedules
(99) None.
F - 4