West Pharmaceutical Services, Inc. Announces Fourth Quarter And Full Year 1999 Results
LIONVILLE, Pa., Feb. 15 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST) today announced results for the fourth quarter and year-ended December 31, 1999.
Sales for the fourth quarter were $115.4 million, compared with $114.8 million reported in the fourth quarter of 1998. At constant exchange rates, sales increased by 4.9% over last year's comparable quarter. Net income was $10.2 million, or $0.69 per share. Results for the quarter include the following items of note: A net tax benefit of $1.6 million due mainly to a refund of foreign taxes triggered by a dividend from a foreign subsidiary; a $4.2 million charge associated with the write-off of a plastic product line that has not gained market acceptance; and the reversal of $3.5 million of the 1996 restructuring charge related to the company's operation in Puerto Rico, due to a change in the business plan for that operation. Excluding these three items, net income for the quarter would have been $8.5 million, or $0.58 per share. This compares with net income of $10 million, or $0.66 per share, reported for the fourth quarter of 1998. Sales for 1999 grew to $469.1 million compared with $449.7 million for 1998. At constant exchange rates, sales increased 6.5% year over year. Net income for 1999 was $38.7 million, or $2.59 per share, compared with net income of $6.7 million, or $0.41 per share, in 1998. In addition to the fourth quarter items noted above, results in 1999 include a tax benefit of $0.7 million relating to the favorable settlement of prior years' tax appeal. Results for 1998 included an acquisition related in-process research and development charge of $28.2 million and a restructuring charge related to staff reductions totaling $2.5 million net of tax. Excluding the items noted in both years, net income for 1999 was $36.3 million, or $2.44 per share, compared to net income of $37.4 million, or $2.28 per share, in 1998.
For the full year 1999, the company's device product development segment, which represents more than 80% of the company's revenues, achieved solid growth, improved operating efficiencies and higher operating earnings for the year. The company's drug delivery segment also continued to make progress. As previously announced, Phase I clinical trials will be initiated shortly using the company's proprietary nasal delivery technology for the delivery of morphine and leuprolide. However within the company's contract services segment, sales and operating earnings of the contract packaging and contract manufacturing businesses were lower, due primarily to customer product launch postponements and cancellations and a large reduction in demand for certain customers' products.
William G. Little, Chairman and Chief Executive Officer stated, "Our device product development business continues to lead the market in innovation, service and quality. We are market leaders in providing sophisticated packaging components to global pharmaceutical and medical device companies. Results in this segment in 1999 were very gratifying and I was very pleased with its revenue growth and profitability throughout the year. We also continue to be encouraged by the system development progress and the industry interest regarding our drug delivery technology. As we start Phase I clinical trials for nasally administered morphine and leuprolide, we will be evaluating prospective licensees for this advanced proprietary technology. However, our contract services segment performed well below our expectations in the second half of 1999. We have completed a thorough review of our contract packaging and contract manufacturing operations and markets, while implementing changes in management at our Lakewood, N.J. facility. Our newly acquired clinical services business also experienced lower than expected revenues. While we anticipate that the contract services segment will experience a difficult first half of 2000, we anticipate much better performance in the second half of the year."
Mr. Little concluded, "As a result of the slow return to growth in contract services, we expect a decline in earnings for the company in the first half of 2000, with a significant decline in first quarter earnings, versus the same periods in 1999. However, we believe that this trend will be reversed in the second half of the year because the fundamentals of our business remain strong. At this time, we see earnings per share for 2000 exceeding 1999's solid performance."
West Pharmaceutical Services applies value-added technologies 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; research and development of drug delivery systems; contract laboratory services; clinical services; and other services that support the manufacturing, filling and packaging of pharmaceutical and healthcare products. For more information, visit the West Pharmaceutical Services website at http://www.westpharma.com.
Statements concerning forecasted results, financial or otherwise, which are contained in the above material constitute "forward looking statements" as the term is used under the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ materially from those expressed in any forward-looking statement and are dependent on a number of factors including but not limited to, sales demand, timing of customers' projects, competitive pressures, the strength or weakness of the U.S. dollar, inflation, the cost of raw materials and successful continuance of cost-improvement programs.
West Announces Fourth Quarter and Full Year 1999 Results Consolidated Statements of Income (in thousands, except per share data) Quarter Ended Twelve Months Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 1999 1998 1999 1998 Net sales $115,400 100% $114,800 100% $469,100 100% $449,700 100% Cost of goods sold 79,600 69 79,100 69 324,800 69 314,500 70 Gross profit 35,800 31 35,700 31 144,300 31 135,200 30 Selling, general and administrative expenses 22,000 19 18,000 16 77,900 17 70,500 16 Restructuring charge(1) 700 1 -- -- 700 -- 4,000 1 Acquired research and development -- -- -- -- -- -- 28,200 6 Other (income), net (1,200) (1) (800) (1) (1,200) -- (2,500) (1) Operating profit 14,300 12 18,500 16 66,900 14 35,000 8 Interest expense 2,700 2 2,300 2 10,400 2 7,200 2 Income before income taxes and minority interests 11,600 10 16,200 14 56,500 12 27,800 6 Provision for income taxes 1,900 2 5,900 5 18,400 4 21,200 5 Minority interests 100 -- -- -- 200 -- 100 -- Income from consolidated operations 9,600 8% 10,300 9% 37,900 8% 6,500 1% Equity in net income (loss) of affiliated companies 600 (300) 800 200 Net income $10,200 $10,000 $38,700 $6,700 Net income per share: Basic $0.69 $0.66 $2.59 $0.41 Assuming dilution $ 0.68 $0.66 $2.57 $0.40 Average common shares outstanding 14,743 15,162 14,914 16,435 Average shares assuming dilution 14,852 15,250 15,048 16,504
(1) The 1999 fourth quarter reflects a $3.5M adjustment of a 1996 restructuring charge due to changes in the business plan and the write off of assets related to a plastic product line that has not gained market acceptance.
SOURCE West Pharmaceutical Services
CONTACT: Stephen M. Heumann, Vice President and Treasurer of West Pharmaceutical Services, Inc., 610-594-3346; Investors - Ephraim Bernstein, Jill Zames, Dory Lombardo, or Media - Stacey Nield of Morgen-Walke Associates, 212-850-5600, for West Pharmaceutical Services, Inc.