SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 2002
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Commission File Number 1-8036
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WEST PHARMACEUTICAL SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1210010
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number
101 Gordon Drive, PO Box 645,
Lionville, PA 19341-0645
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code 610-594-2900
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N/A
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Former name, former address and former fiscal year, if changed
since last report.
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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
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March 31, 2002 -- 14,422,573
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Page 2
Index
Form 10-Q for the
Quarter Ended March 31, 2002
Page
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Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Income for the
Three Months ended March 31, 2002 and
March 31, 2001 3
Condensed Consolidated Balance Sheets at
March 31, 2002 and December 31, 2001 4
Consolidated Statement of Shareholders' Equity
at March 31, 2002 and December 31, 2001 5
Condensed Consolidated Statements of Cash Flows
for the Three Months ended March 31, 2002
and March 31, 2001 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosure
about Market Risk 15
Part II - Other Information
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
Index to Exhibits F-1
Page 3
Part I. Financial Information
Item 1. Financial Statements
West Pharmaceutical Services, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
Quarter Ended
March 31, 2002 March 31, 2001
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Net sales ........................................ $103,700 100% $ 99,300 100%
Cost of goods and services sold .................. 72,300 70 69,800 70
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Gross profit .................................. 31,400 30 29,500 30
Selling, general and administrative expenses ..... 20,500 20 18,200 18
Other (income) expense, net ...................... (1,800) (2) 100 1
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Operating profit .............................. 12,700 12 11,200 11
Interest expense, net............................. 2,400 2 3,300 3
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Income before income taxes
and minority interests ....................... 10,300 10 7,900 8
Provision for income taxes ....................... 4,000 4 2,800 3
Minority interests ............................... -- - 100 -
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Income from consolidated operations............ 6,300 6% 5,000 5%
--- ---
Equity in net income of affiliated companies ..... 200 300
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Income from continuing operations.............. 6,500 5,300
Earnings (loss) from discontinued operations,
net of tax..................................... -- 100
Loss on disposal of discontinued operations,
net of tax..................................... (400) --
-------- --------
Net income .................................... $ 6,100 $ 5,400
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Net income per share:
Basic
Continuing operations....................... $ 0.45 $ 0.37
Discontinued operations..................... $ (0.03) $ 0.01
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$ 0.42 $ 0.38
Assuming Dilution
Continuing operations....................... $ 0.45 $ 0.37
Discontinued operations..................... $ (0.03) $ 0.01
-------- --------
$ 0.42 $ 0.38
Average common shares outstanding................. 14,366 14,320
Average shares assuming dilution.................. 14,397 14,323
See accompanying notes to consolidated financial statements.
Page 4
West Pharmaceutical Services, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands)
Unaudited
March 31, Dec. 31,
2002 2001
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ASSETS
Current assets:
Cash, including equivalents ................... $ 28,900 $ 42,100
Accounts receivable ........................... 70,900 61,800
Inventories ................................... 36,500 34,300
Income tax refundable.......................... 3,700 5,700
Deferred income tax benefits .................. 2,300 2,400
Other current assets .......................... 10,100 12,200
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Total current assets .............................. 152,400 158,500
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Property, plant and equipment ..................... 465,800 459,500
Less accumulated depreciation and amortization..... 254,200 249,200
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211,600 210,300
Investments in affiliated companies ............... 19,500 20,800
Goodwill .......................................... 32,100 32,600
Prepaid pension asset.............................. 49,400 48,300
Deferred income tax benefits ...................... 22,100 21,400
Other assets....................................... 19,600 19,400
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Total Assets ...................................... $506,700 $511,300
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ............. $ 11,300 $ 4,300
Notes payable ................................. 3,700 4,400
Accounts payable .............................. 22,000 22,600
Accrued expenses:
Salaries, wages, benefits ................... 12,900 16,000
Income taxes payable ........................ 11,000 5,400
Restructuring costs.......................... 2,000 2,200
Deferred income taxes........................ 1,500 1,600
Other ....................................... 19,300 18,800
-------- --------
Total current liabilities ......................... 83,700 75,300
-------- --------
Long-term debt, excluding current portion.......... 171,400 184,300
Deferred income taxes ............................. 46,800 46,800
Other long-term liabilities ....................... 28,200 28,100
Shareholders' equity............................... 176,600 176,800
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Total Liabilities and Shareholders' Equity......... $506,700 $511,300
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See accompanying notes to consolidated financial statements
Page 5
West Pharmaceutical Services, Inc. and Subsidiaries
Consolidated Statement of Shareholders' Equity (unaudited)
(in thousands)
Capital in Other
Common excess of Retained comprehensive Treasury
Stock par value Earnings income (loss) stock Total
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Balance, December 31, 2001 $ 4,300 $ 31,600 $254,000 $ (27,400) $ (85,700) $ 176,800
Net income 6,100 6,100
Shares issued under stock plans (400) 2,400 2,000
Cash dividends declared (2,800) (2,800)
Foreign currency translation adjustment (5,700) (5,700)
Minimum pension liability adjustment 100 100
Fair value of financial instruments adjustment 100 100
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Balance, March 31, 2002 $ 4,300 $ 31,200 $257,300 $ (32,900) $ (83,300) $ 176,600
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See accompanying notes to consolidated financial statements.
Page 6
West Pharmaceutical Services, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Three Months Ended
March 31, March 31,
2002 2001
-------- --------
Cash flows provided by operating activities:
Income from continuing operations............ $ 6,500 $ 5,300
Depreciation and amortization................ 7,900 8,000
Other non-cash items, net.................... (1,100) (2,200)
Changes in assets and liabilities ........... (6,300) (9,500)
-------- --------
Net cash provided by operating activities ...... 7,000 1,600
-------- --------
Cash flows used in investing activities:
Property, plant and equipment acquired ........ (10,600) (11,800)
Customer advances, net of repayments .......... (1,100) (200)
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Net cash used in investing activities ............. (11,700) (12,000)
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Cash flows(used in)provided by financing activities:
Net borrowings under revolving
credit agreements ............................ (1,800) --
Other long-term debt,net........................ (4,500) (100)
Other notes payable, net......... .............. (100) 11,800
Dividend payments .............................. (2,800) (2,600)
Sale of common stock, net ...................... 2,100 500
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Net cash (used in) provided by financing activities. (7,100) 9,600
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Net cash used in discontinued operations............ -- (1,900)
-------- --------
Effect of exchange rates on cash .................. (1,400) (2,200)
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Net(decrease)in cash, including equivalents........ $ (13,200) $ (4,900)
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See accompanying notes to consolidated financial statements
Page 7
West Pharmaceutical Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data)
The interim consolidated financial statements for the three-month period ended
March 31, 2002 should be read in conjunction with the consolidated financial
statements and notes thereto of West Pharmaceutical Services, Inc.(The Company),
appearing in the Company's 2001 Annual Report on Form 10-K. The year-end
condensed consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. Interim results are based on the Company's accounts
without audit.
1. Interim Period Accounting Policy
---------------------------------
In the opinion of management, the unaudited Condensed Consolidated Balance
Sheet and Consolidated Statement of Shareholders Equity as of March 31,
2002 and the related unaudited Consolidated Statements of Income and the
unaudited Condensed Consolidated Statement of Cash Flows for the three
month period then ended and for the comparative period in 2001 contain all
adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position as of March 31, 2002 and the results
of operations and cash flows for the respective periods. The results of
operations for any interim period are not necessarily indicative of results
for the full year.
Reclassification
----------------
Certain items have been reclassified to conform to current classifications.
In particular, interest expense is recorded net of interest income.
Interest income was previously recorded in other (income) expense. The
impact of the reclassification decreased previously reported first quarter
2001 other (income) expense and decreased interest expense by $400.
Operating Expenses
------------------
To better relate costs to benefits received or activity in an interim
period, certain operating expenses have been annualized for interim
reporting purposes. Such expenses include certain employee benefit costs
and annual quantity discounts.
Income Taxes
-------------
The tax rate used for interim periods is the estimated annual effective
consolidated tax rate, based on the current estimate of full year results,
except that taxes applicable to prior year adjustments, if any, are
recorded as identified.
In the first quarter of 2002, the Company recorded a pre-tax foreign
exchange gain of $1,700. Excluding, this non-recurring item, the effective
tax rate for the first quarter 2002 was 35%.
Page 8
West Pharmaceutical Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(continued)
2. Inventories at March 31, 2002 and December 31, 2001 are
summarized as follows:
3/31/02 12/31/01
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Finished goods $16,900 $15,700
Work in process 7,500 6,300
Raw materials 12,100 12,300
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$36,500 $34,300
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------- -------
3. Comprehensive income (loss) for the three months ended March 31,
2002 and March 31, 2001 was as follows:
Three Months Ended
3/31/02 3/31/01
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Net income ......................... $ 6,100 $ 5,400
Foreign currency
translation adjustments............ (5,700) (9,900)
Minimum pension liability
adjustments........................ 100 -
Fair value adjustment on
derivative financial instruments... 100 (400)
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Comprehensive income(loss).......... $ 600 $(4,900)
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Page 9
West Pharmaceutical Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
4. Net sales to external customers and operating profit (loss) by
operating segment for the three months ended March 31, 2002 and March
31, 2001 are as follows:
Three Months Ended
March 31
Net Sales: 2002 2001
---------- -------- --------
Pharmaceutical Systems.......... $ 99,100 $ 95,700
Drug Delivery Systems........... 4,600 3,600
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Consolidated Total ............. $103,700 $ 99,300
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-------- --------
Three Months Ended
March 31
Operating Profit (Loss): 2002 2001
----------------------- -------- --------
Pharmaceutical Systems.......... $ 20,600 $ 18,300
Drug Delivery Systems........... (2,200) (2,300)
Corporate and unallocated....... (5,700) (4,800)
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Consolidated Total ............. $ 12,700 $ 11,200
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-------- --------
Corporate and unallocated items include a non-recurring foreign
exchange gain of $1,700.
Compared with March 31, 2001, there were no material changes in the
amount of assets as of March 31, 2002 for any operating segment.
5. Common stock issued at March 31, 2002 was 17,165,141 shares, of which
2,742,568 shares were held in treasury. Dividends of $.19 per common
share were paid in the first quarter of 2002 and a dividend of $.19
per share payable May 1, 2002 to holders of record on April 17, 2002
was declared on March 11, 2002.
6. The Company has accrued the estimated cost of environmental compliance
expenses related to soil or ground water contamination at current and
former manufacturing facilities. The ultimate cost to be incurred by
the Company and the timing of such payments cannot be fully
determined. However, based on consultants' estimates of the costs of
remediation in accordance with applicable regulatory requirements, the
Company believes the accrued liability of $1,400 at March 31, 2002 is
sufficient to cover the future costs of these remedial actions, which
will be carried out over the next several years. The Company has not
anticipated any possible recovery from insurance or other sources.
Page 10
West Pharmaceutical Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
7. The following table details the activity related to the Company's
restructuring reserve which consists of accrued severance and benefit
costs:
Balance, December 31,2001 2,200
Payments (200)
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Balance, March 31, 2002 2,000
Reductions to the reserve balance represent severance and benefits
payments. The Company expects to complete all payments within the next
two years.
8. In November 2001, the Company sold its contract manufacturing and
packaging business located in Lakewood, NJ. The results of this
business have been reflected as discontinued operations in the
accompanying consolidated financial statements.
At December 31, 2001 the Company was required to hold $4.3 million of
the sales proceeds in trust for the repayment of certain debentures,
issued by the contract manufacturing and packaging business, that
became due and payable upon the sale. These debentures were repaid in
the first quarter of 2002 resulting in a $400, net of tax, charge
which was included in the loss on disposal of discontinued operations.
9. Effective January 1, 2002, the Company adopted Financial Accounting
Standards Statement No. 142, "Goodwill and Other Intangible Assets."
SFAS 142 eliminated the previous requirement to amortize goodwill and
indefinite-lived intangible assets. Instead, goodwill and intangible
assets with indefinite lives are tested for impairment on at least an
annual basis or sooner if an event occurs which indicates that there
could be impairment. The SFAS 142 impairment test begins with an
estimate of the fair value of the reporting unit or intangible asset.
The Company has determined its reporting units to be each of the four
geographic regions in the Pharmaceutical Systems Segment, the drug
delivery business unit, and the clinical services business unit. If
the fair value of the reporting unit is less than the carrying value,
the goodwill or intangible asset is considered impaired. Once
impairment is determined, an impairment loss is recognized for the
amount that the carrying amount exceeds the fair value. The Company
performed an impairment test of its goodwill and determined that no
impairment of the recorded goodwill existed. As required by the
statement, the Company did not record amortization expense for
goodwill in the first quarter of 2002 as compared to the $300, net of
tax, recorded in the prior year quarter. The goodwill balance as of
March 31, 2002 was $32,100 as compared to $32,600 as of December 31,
2001. The decrease of $500 is solely the result of foreign currency
translation adjustments.
Page 11
West Pharmaceutical Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
The cost and respective accumulated amortization for the Company's
intangible assets, mainly patents, was $11,000 and $3,500,
respectively, as of March 31, 2002, and $11,200 and $3,300,
respectively, as of December 31, 2001. The cost basis of intangibles
includes the effects of foreign currency translation adjustments.
Intangible amortization expense for the quarter ended March 31, 2002
was $200 and is estimated to be $700 for the full year. Estimated
amortization for each of the subsequent five fiscal years will be
approximately $700 per year.
The following reconciles the reported net income and earnings per
share to that which would have resulted had SFAS No. 142 been applied
to the three-month period ended March 31, 2001.
As reported
Income from continuing operations $5,300
Discontinued operations 100
------
Net income $5,400
Goodwill amortization, net of tax 300
------
As adjusted $5,700
As reported basic earning per share
Continuing operations $ 0.37
Discontinued operations $ 0.01
------
$ 0.38
As adjusted $ 0.40
As reported diluted earnings per share
Continuing operations $ 0.37
Discontinued operations $ 0.01
------
$ 0.38
As adjusted $ 0.40
10. During the first quarter of 2002, the Company's Argentina subsidiary
recorded a foreign currency translation gain of $1,700 on net assets
denominated in non-peso currencies due to the devaluation of the
Argentine peso and associated with a repatriation of funds to the
United States. The foreign currency gain was subject to both Argentine
federal income taxes and US dividend withholding taxes. The
devaluation of assets denominated in the Argentine peso totaled $2,700
as of March 31, 2002 and is recorded as a cumulative translation
adjustment to shareholder's equity.
Page 12
Item 2.
Management's Discussion and Analysis of Financial Condition and
- ----------------------------------------------------------------
Results of Operations for the Three Months ended March 31, 2002
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versus March 31, 2001
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Net Sales
- ---------
Net sales for the first quarter of 2002 were $103.7 million, a 4% increase over
the $99.3 million reported in the first quarter of 2001. At constant exchange
rates, sales for the first quarter 2002 increased 7% from the prior year
quarter.
First quarter 2002 sales for the Pharmaceutical Systems segment were $99.1
million, a $3.4 million or 4% increase from prior year reported sales of $95.7
million. At constant exchange rates, sales increased by 6%. International
markets continued to grow significantly resulting in 8% sales growth at constant
exchange rates. Sales in domestic markets increased 4% from the prior year
quarter. The increase in both the international and domestic markets is
primarily led by demand for pharmaceutical packaging products, including serum
and lyo stoppers. This increase is offset slightly by a decline in sales of
disposable medical devices in domestic markets.
The Drug Delivery Systems segment had revenues of $4.6 million, a $1.0 million
or 28% increase from the prior year quarter. Higher sales of services in the
consumer healthcare research unit of the clinical services business unit
resulted in an increase in sales of $1.3 million from the prior year. After a
difficult year in 2001, the recovery of this business unit is due to increased
revenues from consumer response marketing studies. Drug delivery business unit
sales are $0.3 million below those in the first quarter of 2001. This decrease
is primarily the result of lower revenues from contract research services.
Gross Profit
- ------------
The consolidated gross margin in the quarter was 30.3%, compared with 29.7% in
2001. The increase in margins is primarily the result of improvements in the
Pharmaceutical Systems division. Results in the North America region improved
due to positive sales mix, favorable manufacturing variances, and lower raw
material costs. The favorable results in North America were offset by decreased
margins in Europe, primarily in the U.K., where the Company's plastic device
facility is experiencing production delays and lower than anticipated demand for
one of its principle products. Drug Delivery Systems segment gross profit was
essentially equal to prior year levels, although margins declined slightly due
to a lower volume of higher margin contract research services in the drug
delivery business unit.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses increased $2.3 million (13%) as
compared with the first quarter of 2001. The major contributors to the increase
include $1.3 million lower pension income, $1 million increase in information
systems costs associated with the Company's e-West business systems initiative
and increased incentive compensation costs of $0.9 million.
Other (Income) Expense
- ----------------------
Other (income) expense consists principally of foreign exchange transaction
items and miscellaneous equipment sales. First quarter 2002 includes a $1.7
million non-recurring foreign exchange gain on the repatriation of funds from
operations in Argentina.
Page 13
Management's Discussion and Analysis of Financial Condition and
- ----------------------------------------------------------------
Results of Operations for the Three Months ended March 31, 2002
- ----------------------------------------------------------------------
versus March 31, 2001, continued
- --------------------------------
Interest Expense, net
- ----------------------
Net interest costs declined by $0.9 million (27%). The decrease is due to lower
interest rates as well as lower debt levels in the current year. Debt levels
decreased as the Company formed an international financing structure in order to
utilize existing cash balances to reduce debt.
Provision for Income Taxes
- --------------------------
Including the effects of the $1.7 million foreign exchange gain the effective
tax rate for the first quarter of 2002 was 38.4%. Excluding this non-recurring
item, the estimated annual tax rate for 2002 is 35% compared with a 36%
estimated rate used in the first quarter of 2001. The full year 2001 effective
tax rate, excluding unusual items was 33%. The change in the estimated tax rate
was made in response to the Company's current projected geographic mix of
earnings.
Equity in Net Income of Affiliated Companies
- --------------------------------------------
Earnings in net income of affiliates decreased slightly from the prior year
quarter. Earnings from Daikyo Seiko, Ltd., a Japanese company in which the
Company has a 25% ownership interest, declined from the prior year due to sales
decreases resulting from a loss of business from its European customers as well
as increased depreciation and other costs connected with the plant upgrade
completed in 2001. Results from the Company's Mexican affiliates were consistent
with those reported in the first quarter of 2001.
Discontinued Operations
- -----------------------
In November 2001, the Company sold its contract manufacturing and packaging
business located in Lakewood, NJ. The results of this business have been
reflected as discontinued operations in the accompanying consolidated financial
statements.
At December 31, 2001 the Company was required to hold $4.3 million of the sales
proceeds in trust for the repayment of certain debentures, issued by the
contract manufacturing and packaging business, that became due and payable upon
the sale. These debentures were repaid in the first quarter of 2002 resulting in
a $0.4 million, net of tax, charge which was included in loss on disposal of
discontinued operations.
Net Income
- -----------
Net income for the first quarter of 2002 was $6.1 million, or $.42 per share,
compared to $5.4 million, or $.38 per share in the first quarter 2001. Net
income for the first quarter of 2002 included a $1.7 million non-recurring
foreign exchange gain ($0.8 million net of tax or $0.05 per share) on the
repatriation of funds from operations in Argentina. Also included was a loss on
disposal of discontinued operations of $0.4 million, net of tax, or $0.03 per
share. First quarter 2001 earnings included income from discontinued operations
of $0.1, net of tax. Excluding these non-recurring items, first quarter earnings
were $0.40 per share, in the 2002 quarter, compared to $.37 per share in the
prior year quarter. Average common shares outstanding were 14.4 million in the
first quarter compared to 14.3 million in the first quarter of 2000. The
increase in shares outstanding is the result of employee stock option exercises.
Page 14
Management's Discussion and Analysis of Financial Condition and
- ----------------------------------------------------------------
Results of Operations for the Three Months ended March 31, 2002
- ----------------------------------------------------------------------
versus March 31, 2001, continued
- --------------------------------
FINANCIAL CONDITION
- -------------------
Working capital at March 31, 2002 was $68.7 million compared with $83.2 million
at December 31, 2001. The working capital ratio at March 31, 2002 was 1.8 to 1.
Accounts receivable increased significantly, reflecting the increase in March
2002 sales levels versus December 2001. Days sales outstanding remained
consistent with the fourth quarter of 2001. Cash flows from operations increased
from the prior year first quarter due to improved earnings as well as the
receipt of tax refunds related to 2001.
Capital spending was $10.6 million, primarily for facility expansions at two
European plants, new equipment purchases and equipment upgrades used in the
production of new products, and costs associated with an enterprise resource
planning initiative. Full year 2002 capital spending is projected to be
approximately $41 million. The Company paid cash dividends totaling $2.8 million
($0.19 per share) during the first quarter of 2002.
Debt as a percentage of total invested capital at March 31, 2002 was 51.3%
compared with 52.2% at December 31, 2001. Debt levels decreased by $6.6 million
as the Company formed an international financing structure in order to utilize
existing cash balances to reduce debt. Total shareholder's equity was $176.6
million at March 31, 2002 compared to $176.8 million at December 31, 2001.
The Company believes its financial condition and current capitalization provide
sufficient flexibility to meet future cash flow requirements.
Accounting Changes
- ------------------
Effective January 1, 2002, the Company adopted Financial Accounting Standards
Statement No. 142, "Goodwill and Other Intangible Assets." SFAS 142 eliminated
the previous requirement to amortize goodwill and indefinite-lived intangible
assets. Instead, goodwill and intangible assets with indefinite lives are tested
for impairment on at least an annual basis or sooner if an event occurs which
indicates that there could be impairment. The SFAS 142 impairment test begins
with an estimate of the fair value of the reporting unit or intangible asset.
The Company has determined its reporting units to be each of the four geographic
regions in the Pharmaceutical Systems Segment, the drug delivery business unit,
and the clinical services business unit. If the fair value of the reporting unit
is less than the carrying value, the goodwill or intangible asset is considered
impaired. Once impairment is determined, an impairment loss is recognized for
the amount that the carrying amount exceeds the fair value. The Company
performed an impairment test of its goodwill and determined that no impairment
of the recorded goodwill existed. As required by the statement, the Company did
not record amortization expense for goodwill in the first quarter of 2002 as
compared to the $300 recorded in the prior year quarter.
Market Risk
- -----------
The Company is exposed to various market risk factors such as fluctuating
interest rates and foreign currency rate fluctuations. These risk factors can
impact results of operations, cash flows and financial position. These risks are
managed periodically with the use of derivative financial instruments such as
interest rate swaps and forward exchange contracts. In accordance with Company
policy, derivative financial instruments are not used for speculation or trading
purposes.
Page 15
Management's Discussion and Analysis of Financial Condition and
- ----------------------------------------------------------------
Results of Operations for the Three Months ended March 31, 2002
- ----------------------------------------------------------------------
versus March 31, 2001, continued
- --------------------------------
Forward-Looking Information
- ---------------------------
Certain statements in this report, including management's discussion and
analysis, that are not historical are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The words
"estimate", "expect", "intend", "believe" and similar expressions are intended
to identify forward-looking statements. These forward-looking statements involve
known and unknown risks and uncertainties. Many factors could cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements that may be expressed or
implied by such forward-looking statements, including but not limited to
(1)sales demand, (2) the timing and success of customers' projects, (3)
competitive pressures, (4) the strength or weakness of the U.S. dollar, (5)
inflation, (6) the cost of raw materials, (7) continued cost-improvement
programs, (8) statutory tax rates and (9) significant asset dispositions. The
Company does not intend to update these forward-looking statements.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
- -------------------------------------------------------------------
The information called for by this item is incorporated by reference to the text
appearing in Item 2 "Management's Discussion and Analysis of Financial Condition
and Results of Operations-Market Risk".
Page 16
Part II - Other Information
Item 1. Legal Proceedings
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) See Index to Exhibits on pages F-1 of this Report.
(b) No reports on Form 8-K have been filed for the quarter
ended March 31, 2002.
Page 17
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEST PHARMACEUTICAL SERVICES,INC.
-----------------------------------
(Registrant)
May 8, 2002 Linda R. Altemus
- ---------------- /s/ -------------------------------------
Date Vice President and Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
Number
(2) None.
(3) (a) Amended and Restated Articles of Incorporation of the Company through
January 4, 1999 (the "Articles of Incorporation"), incorporated by
reference to Exhibit (3)(a)to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 1-8036).
(3) (b) ByLaws of the Company, as amended through October 27, 1998 (the
"ByLaws"), 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) Articles 5, 6, 8(c) and 9 of the Articles of Incorporation,
incorporated by reference to Exhibit (3) (a) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 (File No.
1-8036).
(4) (b) Articles I and V of the ByLaws, incorporated by reference to Exhibit 3
(b) to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 (File No. 1-8036).
(4) (c) Form of stock certificate for common stock, incorporated by reference
to Exhibit (4) (a) the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (File No. 1-8036).
(10) 2002 Management Incentive Bonus Plan.
(11) Not Applicable.
(15) None.
(18) None.
(19) None.
(22) None.
(23) Not Applicable.
(24) None.
(27) None.
(99) None.
F - 1