- Reports $0.50 per Diluted Share, $0.45 per Diluted Share
Excluding Unusual Items - - Revises 2009 Adjusted Diluted EPS(1)
Estimate to between $2.08 and $2.13 - - Announces Fourth Quarter
Restructuring Plans for Business Units - - Conference Call
Scheduled for 9 a.m. Today - LIONVILLE, Pa., Nov. 3
/PRNewswire-FirstCall/ -- West Pharmaceutical Services, Inc.
(NYSE:WST) today announced its results for the third quarter of
2009. Summary comparative results were as follows: ($millions,
except per-share data) Three Months Ended September 30 2009 2008
Net Sales $258.9 $256.2 Gross Profit 71.7 66.0 Reported Operating
Profit 25.9 17.9 Adjusted Operating Profit (1) 22.0 19.7 Reported
Diluted EPS $0.50 $0.40 Adjusted Diluted EPS(1) $0.45 $0.37 (1) See
"Restructuring and Other Items" section of the release and
"Supplemental Information and Notes to Non-GAAP Financial Measures"
in the tables following the text of this release. Consolidated
sales were 1.0% higher in the quarter when compared to the prior
year period including $8.2 million, or 3.3 percentage points, of
adverse effects of foreign currency translation. Excluding currency
translation effects, consolidated sales were 4.3% higher than in
the prior year quarter, with component sales for H1N1 flu
vaccinations contributing substantially. The resulting growth in
the Pharmaceutical Systems segment more than compensated for lower
sales in the Tech Group segment. Consolidated gross profit margin
was 27.7% in the quarter, compared to 25.7% in the third quarter of
2008. The two margin point increase includes the combined effect of
overall higher selling prices and lower raw material costs, net of
higher depreciation charges. As a result of improved margins, gross
profit increased $5.7 million, to $71.7 million in the current
quarter, net of $1.8 million of adverse foreign currency
translation. Adjusted Operating Profit grew by 11.7% compared to
the prior year period. The effect of the consolidated gross margin
improvement was muted by $2.8 million in higher U.S. pension
expense and $0.7 million of unfavorable foreign currency
translation, net of $0.6 million in lower stock-based compensation
expense. The Company announced plans to restructure certain
business operations, which will result in the elimination of
approximately 100 jobs, and to re-evaluate certain business
initiatives and assets. These will result in total charges in the
range of $8.0 million to $10.0 million. Approximately $7.0 million
of charges are expected to be included in the Company's reported
results for the fourth quarter of 2009. The restructuring is
expected to result in annual savings of approximately $6.0 million
in 2010 and approximately $8.0 million annually thereafter.
Executive Commentary "The growth that we are seeing in sales of
packaging components and systems, excluding currency translation,
is the best indicator we have that inventories in the supply chain
are at or near the low point for this cycle," said Donald E. Morel
Jr., Ph.D., the Company's Chairman and Chief Executive Officer.
"Demand for flu vaccine added to that growth and should continue to
contribute through the next two quarters, during which we expect
overall demand to firm. In the Tech Group, sales under existing
manufacturing contracts remain sluggish. The restructuring plan we
announced today will improve operating efficiencies in both
business segments, enhancing our strategic focus on maintaining and
building our proprietary injectable drug delivery product
portfolio. The Tech Group will continue to provide critical
engineering and manufacturing support to those development efforts,
which we believe will accelerate West's growth in the longer term."
"In revenue terms, this third quarter was relatively strong
compared to the first half of the year. We expect the unusual
seasonality of 2009 to continue and that fourth-quarter sales will
be the strongest of the year, despite some continued weakness in
the Tech Group. Our revised guidance is for 2009 Adjusted Diluted
EPS of between $2.08 and $2.13. We expect the overall improvements
we've seen during the last four months to continue through the
fourth quarter and into 2010, and are forecasting revenue growth of
between 3% and 5% for next year, excluding the effects of currency
translation." Pharmaceutical Systems Segment Pharmaceutical Systems
segment sales for the third quarter of 2009 were $198.1 million,
$7.6 million higher than those reported in the third quarter of
2008. Unfavorable foreign currency translation reduced comparable
quarterly sales by $7.2 million, or 3.8%. Excluding the effects of
currency translation, sales grew by $14.8 million, or 7.8%. H1N1
flu vaccination-related sales of $9.7 million, primarily for serum
stoppers, were augmented by growth in components used in the
processing and packaging of freeze-dried pharmaceutical products,
and components for prefillable syringes and cartridges. In each of
those categories, Westar® processing and West's component coating
technologies contributed to the sales value of the incremental
units. Geographically, and excluding the effects of currency
translation, revenue growth was strongest in North America and
Asia. Gross profit in the quarter was $63.4 million, compared to
$56.2 million in the 2008 quarter, and gross margin was 32.0%, 2.5
percentage points higher than in the prior-year period. Currency
translation reduced gross profit by $1.6 million. The increase in
gross profit compared to the prior-year period was primarily due to
the $9.8 million combined effects of higher overall selling prices
and a more profitable sales mix, as well as to $1.9 million in
lower raw material costs. This is the first quarterly improvement
in material costs in 2009 because the benefit of lower market
prices for petroleum products through the first half of the year
was delayed until the current quarter under the terms of West's
purchase agreements for certain materials. Those improvements were
partially offset by $2.5 million of higher depreciation costs and
$1.2 million of increased labor costs. Pharmaceutical Systems
SG&A costs were substantially unchanged in the third quarter
compared to the 2008 period, and as a result were lower as a
percentage of the higher sales. Currency translation reduced
reported costs of foreign operations by $1.0 million, with those
lower reported costs offset by increases in compensation and
depreciation expenses. Research spending was $0.4 million higher
than in the prior-year quarter. Adjusted operating profit increased
29.4% to $29.9 million, an increase of $6.8 million, net of $0.5
million of adverse currency translation effects. Tech Group Segment
Tech Group segment sales were $62.9 million in the third quarter,
down from $68.3 million in the prior-year period. Foreign currency
translation reduced reported revenue by $1.0 million and
contractually mandated price reductions, associated with lower
plastic resin costs, accounted for $1.6 million in lower revenue.
Excluding those items, revenues were $2.8 million lower, on mixed,
but generally lower, demand from customers for their
custom-manufactured products. Launch-quantity orders from customers
introducing new products contributed substantial revenue in the
quarter but were more than offset by the lower demand for more
mature products and by product withdrawals that have occurred since
the 2008 period. Tooling and development revenues were $1.5 million
lower than in the prior year. Acquisitions and dispositions affect
comparisons to the prior-year quarter. Third quarter results
include for the first time the operations acquired from Plastef
Investissements SA in July 2009, which contributed $4.0 million in
sales of proprietary safety needle products. 2009 results do not
include revenues from the Tech Group's former Mexico facility,
which was sold in the fourth quarter of 2008. That facility
generated $2.7 million of primarily industrial contract
manufacturing revenue in the third quarter of 2008 that was not
transferred to other West locations following the sale of the
facility. Gross profit was $8.3 million in the quarter, $1.5
million lower than the $9.8 million reported in third quarter of
2008, and gross profit margin was 13.2% compared to 14.4% in the
prior year period. Acquisitions and dispositions had no material
effect on gross profit. The decline was primarily the result of the
negative marginal effect of reduced sales revenue and production
throughput, which outpaced the net positive effects of lower raw
material and energy costs. SG&A costs increased $0.7 million on
higher information technology and compensation costs. Operating
profit for the third quarter of 2009 was $2.6 million, compared to
$5.1 million in the prior year quarter, reflecting the
inefficiencies associated with the lower revenue and utilization.
Corporate and Other U.S. pension expense was $4.3 million in the
current quarter, a $2.8 million increase over the third quarter of
2008, primarily as a result of substantial investment losses
incurred by the U.S. pension plan assets during 2008. Similar
effects are being reported in each 2009 quarter. Stock-based
compensation expense decreased by $0.6 million compared to the
prior year quarter, due primarily to a change in the estimated cost
of the Company's long-term incentive plan. Other corporate general
and administrative costs were substantially unchanged compared to
the prior year quarter as increases in depreciation and short-term
incentive plan costs were offset by reduced utilization of external
service providers. Net interest expense was $0.4 million lower
compared to the prior-year period. The Company's reported tax
expense reflects an expected 2009 annual effective tax rate of
23.8% on operating earnings, as well as the tax effects of
"Restructuring and Other Items." The comparable expected annual tax
rate in the 2008 period was 26.1%. The primary reason for the rate
reduction is the expected distribution of international earnings
for 2009. Restructuring and Other Items West today announced
operational restructuring plans in both the Tech Group and
Pharmaceutical Systems segments, a substantial part of which will
be reflected in the fourth-quarter 2009 reported results. The Tech
Group plan will consolidate manufacturing operations and support
functions to better align capacity to contract manufacturing
activity. Approximately 65 positions will be eliminated by the
plan, which is expected to cost between $2.0 million and $3.0
million. Approximately $1.0 million is expected to be included in
the results of operations in the fourth quarter of 2009 and the
balance will be expended in 2010. The Company expects that it will
experience revenue losses of approximately $1.0 million per year of
lower margin business, but expects to generate overall annual
operating cost savings of approximately $2.0 million in 2010 and
$4.0 million once the restructuring is complete. The Pharmaceutical
Systems plan includes: exiting certain specialized laboratory
service offerings; retiring information technology applications and
associated support; and abandoning plans to expand its U.S. metals
facility. Approximately 35 positions are being eliminated. The
costs of the plan are expected to be between $6.0 million and $7.0
million, of which approximately $6.0 million is expected to be
included in the results of operations in the fourth quarter of
2009. The balance will be expended in 2010. The plan is expected to
generate cost savings in the range of $4.0 million annually. During
the third quarter of 2009, the Company recognized $3.9 million in
pre-tax ($1.7 million after-tax) benefits as a result of relief
from penalties, administrative charges and interest associated with
certain tax deficiencies in Brazil that were recorded in 2007. The
relief is pursuant to an amnesty program initiated by the Brazilian
government. In addition, the Company recognized a $0.4 million
reduction to tax expense in the quarter from the resolution of
prior-year tax contingencies. During the third quarter of 2008, the
Company reduced certain prior-year tax contingency reserves,
recognizing income of $2.2 million in that quarter. 2008 third
quarter results included $1.8 million of pre-tax charges for costs
that were reimbursed under a contract settlement agreement with
Nektar Therapeutics for converting the former Exubera® device
production facility. The settlement had no impact on results in the
current quarter. Financial Guidance The Company revised its 2009
guidance and previewed revenue expectations for 2010. The changes
are intended to reflect management's current expectations and
include revisions to revenue, gross profit and Adjusted Diluted
EPS(1) estimates. Revised full-year 2009 financial guidance, at
assumed exchange rates(3), is summarized as follows: 2009 Guidance
------------- Consolidated Sales(3) $1.03 to $1.05 billion
Pharmaceutical Systems Revenue(3) $790 to $800 million
Pharmaceutical Systems Gross Profit as a Percent of Sales 33.4%
Tech Group Revenue (includes $12 million of inter-company sales)(3)
Tech Group Gross Profit as a Percent of Sales $250 to $255 million
14.6% Consolidated Gross Profit Margin 29.2% Full Year Adjusted
Diluted EPS(1)(2)(3) $2.08 to $2.13 (2) (3) See corresponding notes
under "Supplemental Information and Notes to Non-GAAP Financial
Measures" in the tables following the text of this release. The
principal currency assumption in these estimates is for the
translation of the Euro at $1.48 to euro 1.00 for the remainder of
2009. The Company's earlier guidance reflected the Euro at $1.40
for the remainder of 2009. During the fourth quarter of 2009, the
Company expects to recognize charges described under "Restructuring
and Other Items" of approximately $7.0 million pre-tax, or $0.12
per diluted share. These charges are excluded from the guidance for
2009 Adjusted Diluted EPS. The revised guidance reflects, among
other factors, the following expectations: no unusual slowness of
customer orders for delivery in the current quarter; demand
associated with government-sponsored vaccinations against the
H1N1(A) virus strain will sustain through the quarter; anticipated
pricing changes under existing contracts will be realized and lower
raw material costs will continue. The Company continues to expect
that 2009 capital spending will be between $110 million and $120
million. The Company expects consolidated 2010 sales revenue to
grow 3% to 5% from the expected 2009 revenue at constant exchange
rates. The expectation is based upon a recovery in volume demand
associated with expected improvements in overall economic
conditions globally, but does not include significant overall
changes in pricing. The Company will provide further 2010 guidance
when it announces results for the fourth quarter and full year
2009, in February 2010. Third-Quarter Conference Call The Company
will host a conference call to discuss the results and business
expectations at 9:00 a.m. Eastern Standard Time today. To
participate on the call, please dial 210-839-8398 or 888-790-3758.
The passcode is WST. A live broadcast of the conference call will
be available through the Company's web site,
http://www.westpharma.com/, in the "Investor" section. Please allow
extra time prior to the call to visit the site and download the
streaming media software required to listen to the Internet
broadcast. An online archive of the broadcast will be available at
the site two hours after the live call and will be available
through Tuesday, November 17, 2009, by dialing 866-346-1326 or
203-369-0000 and entering conference ID# 4311. Exubera® is a
registered trademark of Pfizer, Inc. WEST PHARMACEUTICAL SERVICES,
INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in millions,
except per share data) Three Months Ended Nine Months Ended
September 30, September 30, ------------- ------------- 2009 2008
2009 2008 ---- ---- ---- ---- Net sales $258.9 100% $256.2 100%
$762.3 100% $806.3 100% Cost of goods and services sold 187.2 72
190.2 74 542.6 71 573.3 71 ----- -- ----- -- ----- -- ----- --
Gross profit 71.7 28 66.0 26 219.7 29 233.0 29 Research and
development 5.1 2 4.6 2 14.1 2 14.8 2 Selling, general and
administrative expenses 44.3 17 41.5 16 132.3 17 122.5 15
Restructuring and other items (3.9) -1 1.8 1 (2.8) - (3.6) - Other
expense, net 0.3 - 0.2 - 0.3 - 0.8 - --- -- --- -- --- -- --- --
Operating profit 25.9 10 17.9 7 75.8 10 98.5 12 Interest expense,
net 3.5 1 3.9 2 10.5 1 10.5 1 --- -- --- -- ---- -- ---- -- Income
before income taxes 22.4 9 14.0 5 65.3 9 88.0 11 Income tax expense
6.0 2 0.8 - 14.6 2 20.0 3 Equity in net income of affiliated
companies 0.8 - 0.3 - 1.6 - 0.8 - --- -- --- -- --- -- --- -- Net
Income 17.2 7% 13.5 5% 52.3 7% 68.8 8% Less: net income
attributable to noncontrolling interests - 0.2 - 0.5 -- --- -- ---
Net income attributable to common shareholders $17.2 $13.3 $52.3
$68.3 ===== ===== ===== ===== Net income per share attributable to
common shareholders: Basic $0.52 $0.41 $1.60 $2.11 Assuming
Dilution $0.50 $0.40 $1.53 $1.98 ----- ----- ----- ----- Average
common shares outstanding 32.9 32.5 32.8 32.4 Average shares
assuming dilution 36.4 36.2 36.3 36.1 WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT INFORMATION (UNAUDITED) (in millions) Three
Months Ended Nine Months Ended September 30, September 30,
------------- ------------- Net Sales: 2009 2008 2009 2008 ----
---- ---- ---- Pharmaceutical Systems $198.1 $190.5 $579.2 $610.6
Tech Group 62.9 68.3 192.0 204.3 Eliminations (2.1) (2.6) (8.9)
(8.6) ---- ---- ---- ---- Consolidated Total $258.9 $256.2 $762.3
$806.3 ====== ====== ====== ====== Operating Profit (Loss):
Pharmaceutical Systems $29.9 $23.1 $91.5 $107.0 Tech Group 2.6 5.1
13.4 13.5 General corporate costs (3.7) (3.9) (13.1) (14.0)
Stock-based compensation expense (2.5) (3.1) (6.3) (7.1) U.S.
pension expense (4.3) (1.5) (12.5) (4.5) Restructuring and other
items 3.9 (1.8) 2.8 3.6 --- ---- --- --- Consolidated Total $25.9
$17.9 $75.8 $98.5 ===== ===== ===== ===== WEST PHARMACEUTICAL
SERVICES NON-GAAP MEASURES (UNAUDITED) THREE MONTHS ENDED SEPTEMBER
30, 2009 (in millions, except per share data) As Reported Non-GAAP
September 30, Brazil Tax September 30, 2009 Tax Benefits Amnesty
2009 ---- ------------ ------- ---- Operating profit $25.9 $-
$(3.9) $22.0 Interest expense, net 3.5 - - 3.5 --- -- -- --- Income
before income taxes 22.4 - (3.9) 18.5 Income tax expense 6.0 0.4
(2.2) 4.2 Equity in net income of affiliated companies 0.8 - - 0.8
--- -- -- --- Net income 17.2 (0.4) (1.7) 15.1 Less: net income
attributable to noncontrolling interests - - - - -- -- -- -- Net
income attributable to common shareholders $17.2 $(0.4) $(1.7)
$15.1 ----- ----- ----- ----- Net income per diluted share
attributable to common shareholders $0.50 $(0.01) $(0.04) $0.45
----- ------ ------ ----- WEST PHARMACEUTICAL SERVICES NON-GAAP
MEASURES (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, 2008 (in
millions, except per share data) As Reported Contract Non-GAAP
September 30, settlement September 30, 2008 costs(income) Tax
Benefits 2008 ---- ------------ ------------ ---- Operating profit
$17.9 $1.8 $- $19.7 Interest expense, net 3.9 - - 3.9 --- -- -- ---
Income before income taxes 14.0 1.8 - 15.8 Income tax expense 0.8
0.7 2.2 3.7 Equity in net income of affiliated companies 0.3 - -
0.3 --- -- -- --- Net income 13.5 1.1 (2.2) 12.4 Less: net income
attributable to noncontrolling interests 0.2 - - 0.2 --- -- -- ---
Net income attributable to common shareholders $13.3 $1.1 $(2.2)
$12.2 ----- ---- ----- ----- Net income per diluted share
attributable to common shareholders $0.40 $0.03 $(0.06) $0.37 -----
----- ------ ----- Please refer to the "Notes to Non-GAAP financial
measures" for more information. Non-GAAP measures are intended to
explain or aid in the use of, not as a substitute for, the related
GAAP financial measure. WEST PHARMACEUTICAL SERVICES NON-GAAP
MEASURES (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 2009 (in
millions, except per share data) As Reported Non-GAAP September 30,
Brazil Tax Tax September 30, 2009 Restructuring Amnesty benefits
2009 ---- ------------- ------- -------- ---- Operating profit
$75.8 $1.1 $(3.9) $- $73.0 Interest expense, net 10.5 - - - 10.5
---- -- -- -- ---- Income before income taxes 65.3 1.1 (3.9) - 62.5
Income tax expense 14.6 0.4 (2.2) 2.1 14.9 Equity in net income of
affiliated companies 1.6 - - - 1.6 --- -- -- -- --- Net income 52.3
0.7 (1.7) (2.1) 49.2 Less: net income attributable to
noncontrolling interests - - - - - -- -- -- -- -- Net income
attributable to common shareholders $52.3 $0.7 $(1.7) $(2.1) $49.2
----- ---- ----- ----- ----- Net income per diluted share
attributable to common shareholders $1.53 $0.02 $(0.04) $(0.06)
$1.45 ----- ----- ------ ------ ----- WEST PHARMACEUTICAL SERVICES
NON-GAAP MEASURES (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 2008
(in millions, except per share data) Contract As Reported
settlement Non-GAAP September 30, cost Tax September 30, 2008
Restructuring (income) benefits 2008 ---- ------------- --------
-------- ---- Operating profit $98.5 $2.5 $(6.1) $- $94.9 Interest
expense, net 10.5 - - - 10.5 ---- -- -- -- ---- Income before
income taxes 88.0 2.5 (6.1) - 84.4 Income tax expense 20.0 0.9
(2.1) 3.3 22.1 Equity in net income of affiliated companies 0.8 - -
- 0.8 --- -- -- -- --- Net income 68.8 1.6 (4.0) (3.3) 63.1 Less:
net income attributable to noncontrolling interests 0.5 - - - 0.5
--- -- -- -- --- Net income attributable to common shareholders
$68.3 $1.6 $(4.0) $(3.3) $62.6 ----- ---- ----- ----- ----- Net
income per diluted share attributable to common shareholders $1.98
$0.05 $(0.11) $(0.09) $1.83 ----- ----- ------ ------ ----- Please
refer to the "Notes to Non-GAAP financial measures" for more
information. Non-GAAP measures are intended to explain or aid in
the use of, not as a substitute for, the related GAAP financial
measure. West Pharmaceutical Services, Inc. SUPPLEMENTAL
INFORMATION AND NOTES TO NON-GAAP FINANCIAL MEASURES For additional
details, please see the attached financial schedules and Safe
Harbor Statement. (1) "Adjusted operating profit" and its
components and "adjusted diluted earnings per share (EPS)" are
defined as reported operating profit and reported diluted EPS
excluding the impact of restructuring costs, discrete tax items and
certain other significant items, as described below. Management
uses adjusted operating profit and adjusted diluted EPS to measure
the business and compare operating results to prior periods.
Adjusted operating profit and adjusted EPS also are used, together
with other measures, to set performance goals for determining
payouts under annual and long-term incentive programs. We believe
that investors' understanding of our performance is enhanced by
disclosing these measures. The items excluded from adjusted
operating profit and adjusted diluted EPS are: Brazil Tax Amnesty
Benefit: During September 2009, we enrolled in a Brazil amnesty
program which entitled us to a reduction in certain tax-related
penalties, interest and other costs in exchange for our irrevocable
declaration of all specified obligations. As these tax-related
obligations were previously accrued, the impact was a pre-tax gain
of $3.9 million, or $1.7 million after-tax. Restructuring Charges:
During both 2009 and 2008, we incurred restructuring and other
related charges as part of our December 2007 plan to align the
plant capacity and workforce of our Tech Group with its revised
business outlook and as part of a longer-term strategy of focusing
the business on proprietary products. The majority of these charges
related to severance and other employee benefits and a smaller
portion resulted from asset write-offs and other related costs. The
restructuring program was substantially completed during the second
quarter of 2009. 2008 Contract Settlement Costs (Income): Under a
February 2008 agreement reached with our former customer, Nektar
Therapeutics, we received full reimbursement for, among other
things, severance-related employee costs, inventory on hand, leases
and other facility costs associated with the shutdown of operations
at the former Exubera® device manufacturing facility. During the
first and second quarters of 2008, we received contract settlement
payments from Nektar which more than offset related raw material,
severance and facility costs, resulting in a net gain for the
year-to-date period ended September 30, 2009. Tax Benefits: During
the first nine months of both 2009 and 2008, we recognized discrete
tax provision benefits as follows: -- In 2009, we recognized a $2.1
million net income tax provision benefit principally resulting from
the completion of a tax audit and the expiration of open tax
periods in various tax jurisdictions. -- In 2008, an agreement
reached with the Republic of Singapore reduced our income tax rate
in that country for a period of 10 years, on a retroactive basis
back to July 2007, resulting in a $1.0 million tax benefit. -- Also
in 2008, we recognized a $2.3 million net tax provision benefit
resulting from the expiration of open tax audit years in certain
foreign tax jurisdictions. (2) Reconciliation of 2009 Adjusted
Guidance to 2009 Reported Guidance is as follows: Full Year 2009
Guidance (3) Diluted Earnings Per Share --------------------------
Adjusted guidance $2.08 to $2.13 Restructuring, net of tax (0.14)
Brazil tax amnesty, net of tax 0.04 Discrete tax benefits 0.06
Reported guidance $2.04 to $2.09 (3) Reflects relative currency
valuations, most significantly the Euro, which is reflected in our
estimates for the remainder of the year at $1.48 per Euro. WEST
PHARMACEUTICAL SERVICES CASH FLOW ITEMS (UNAUDITED) (in millions)
Nine Months Ended September 30, -------------------------------
2009 2008 ---- ---- Depreciation and amortization $49.8 $45.4
Operating cash flow $85.1 $91.0 Capital expenditures $(76.4)
$(88.2) ------ ------ WEST PHARMACEUTICAL SERVICES FINANCIAL
CONDITION (UNAUDITED) (in millions) As of As of September 30, 2009
December 31, 2008 ------------------ ----------------- Cash and
Cash Equivalents $79.5 $87.2 Debt $397.0 $386.0 Equity $565.7
$487.1 Net Debt to Total Invested Capital* 35.9% 38.0% Working
Capital $236.3 $207.1 ------ ------ * Net Debt and Total Invested
Capital are Non-GAAP measures. Net Debt is determined by reducing
total debt by the amount of cash and cash equivalents. Total
Invested Capital is the sum of Net Debt and Equity. Forward Looking
Statements This press release contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that are based on management's beliefs and assumptions,
current expectations, estimates and forecasts. Statements that are
not historical facts, including statements that are preceded by,
followed by, or that include, words such as "estimate," "expect,"
"intend," "believe," "plan," "anticipate" and other words and terms
of similar meaning are forward-looking statements. West's estimated
or anticipated future results, product performance or other
non-historical facts are forward-looking and reflect our current
perspective on existing trends and information. Many of the factors
that will determine the Company's future results are beyond the
ability of the Company to control or predict. These statements are
subject to known or unknown risks or uncertainties, and therefore,
actual results could differ materially from past results and those
expressed or implied in any forward-looking statement. You should
bear this in mind as you consider forward-looking statements. We
undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events
or otherwise. Important factors that may affect future results
include, but are not limited to, the following: Revenue and
profitability: -- sales demand and our ability to meet that demand;
-- competition from other providers in the Company's businesses,
including customers' in-house operations, and from lower-cost
producers in emerging markets, which can impact unit volume, price
and profitability; -- customers' changing inventory requirements
and manufacturing plans that alter existing orders or ordering
patterns for the products we supply to them; -- the timing,
regulatory approval and commercial success of customer products
that incorporate our products, including the availability and scope
of relevant public and private health insurance reimbursement for
prescription products, medical devices and components and medical
procedures in which our customers' products are employed or
consumed; -- average profitability, or mix, of products sold in any
reporting period; -- maintaining or improving production
efficiencies and overhead absorption; -- the timeliness and
effectiveness of capital investments, particularly capacity
expansions, including the effects of delays and cost increases
associated with construction, availability and cost of capital
goods, and necessary internal, governmental and customer approvals
of planned and completed projects, and the demand for goods to be
produced in new facilities; -- dependence on third-party suppliers
and partners, some of which are single-source suppliers of critical
materials and products, including our Japanese partner and
affiliate Daikyo Seiko, Ltd.; -- the availability and cost of
skilled employees required to meet increased production,
managerial, research and other needs of the Company, including
professional employees and persons employed under collective
bargaining agreements; -- interruptions or weaknesses in our supply
chain, which could cause delivery delays or restrict the
availability of raw materials and key bought-in components and
finished products; -- raw-material price escalation, particularly
petroleum-based raw materials, and our ability to pass raw-material
cost increases on to customers through price increases; --
deflation of selling prices under contract requiring periodic price
adjustments based on published cost-of-living or similar indices;
and -- claims associated with product quality, including product
liability, and the related costs of defending and obtaining
insurance indemnifying us for the cost of such claims. Other Risks:
-- the cost and progress of development, regulatory approval and
marketing of new products as a result of the Company's research and
development efforts; -- the defense of self-developed or
in-licensed intellectual property, including patents, trade and
service marks and trade secrets; -- dependence of normal business
operations on information and communication systems and
technologies provided, installed or operated by third parties,
including costs and risks associated with planned upgrades to
existing business systems; -- the effects of a prolonged U.S. and
global economic downturn or recession; -- the relative strength of
the U.S. dollar in relation to other currencies, particularly the
Euro, British Pound, Danish Krone, Singapore Dollar, and Japanese
Yen; -- changes in tax law or loss of beneficial tax incentives; --
the conclusion of unresolved tax positions inconsistent with
currently expected outcomes; -- continued significant losses on
investments of pension plan assets, relative to expected returns on
those assets, could further increase our pension expense and
funding obligations in future periods; -- the potential delay,
suspension or elimination of customers' research and development
efforts and overall spending resulting from continued uncertainty
regarding federal healthcare reform efforts; and other risks and
uncertainties detailed in West's filings with the Securities and
Exchange Commission, including our annual report on Form 10-K and
our periodic reports on Form 10-Q and Form 8-K. You should evaluate
any statement in light of these important factors. Contacts:
Investors and Financial Media: West FD Michael A. Anderson Evan
Smith / Matt Duch Vice President and Treasurer (212) 850-5600 (610)
594-3345 DATASOURCE: West Pharmaceutical Services, Inc. CONTACT:
Michael A. Anderson, Vice President and Treasurer, West,
+1-610-594-3345, Investors and Financial Media: Evan Smith, or Matt
Duch, both of FD, +1-212-850-5600, Web Site:
http://www.westpharma.com/
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