Press Release

  View printer-friendly version

« Back

West Pharmaceutical Services, Inc. Announces Second Quarter And Six Month Results

LIONVILLE, Pa., July 20 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST) today announced results for the second quarter and six months ended June 30, 2000.

Net sales for the second quarter were $112.7 million compared to the $124.4 million reported in the second quarter of 1999. At constant exchange rates, sales for the second quarter 2000 were 5.9% lower. Sales in the Company's Device Product Development segment, which represent approximately 85% of total sales, declined 1.9%, at constant exchange rates, compared with the same period last year. This decline reflects the impact of inventory reductions of the Company's products by certain of its customers, compared with a broad-based increase in demand in the second quarter of 1999. The Company's Contract Services segment experienced lower sales volume due to continued soft business conditions in its Contract Manufacturing and Packaging unit.

Net income for the second quarter was $5.0 million, or $0.35 per share, including pretax severance costs of $1.5 million, as compared with net income of $10.4 million, or $0.70 per share, in the second quarter of 1999. The reduced results reflect lower domestic demand for higher value pharmaceutical and medical device packaging components, lower utilization of the Company's plastics facility in the United Kingdom, and continued low volume in the Contract Services segment. In addition, the adverse impact of the strong U.S. dollar reduced reported results from international operations and increased the cost of their dollar-based raw materials. This was offset somewhat by reduced selling, general and administrative expenses due to higher pension income, lower incentive compensation and the effects of the strong U.S. dollar.

In the second quarter, the Company had an average of 14.5 million common shares outstanding compared to an average of 14.9 million in the same period last year. The Company repurchased 162,000 shares during the second quarter 2000 under its share repurchase program. Since the inception of its one million share repurchase program in March 1999, the Company has acquired 889,500 shares at a cost of approximately $28.0 million.

For the six-month period ending June 30, 2000, net sales were $220.4 million compared with the $238.6 million reported in the same period last year. At constant exchange rates, first half 2000 sales were 4.1% lower. Net income for the six-month period was $10.1 million, or $0.70 per share, compared to $19.9 million, or $1.33 per share, reported in the same period of 1999.

William G. Little, Chairman and Chief Executive Officer, commented, "Our results are consistent with the announcement we made on June 21. While we are disappointed with this performance, we continue to take the steps we believe necessary to mitigate current conditions and to return us to normal growth rates. At the same time, we are making significant capital investments to meet our customers' needs and to expand our services. In addition, we remain encouraged by our drug delivery capabilities in multiple product areas that should contribute to an eventual shift in our revenue mix. In that light and as previously announced, we expect to complete a drug delivery licensing agreement with a substantial organization during the third quarter. We look forward to reporting on the continued progress of these and other development projects.

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" that involve risks and uncertainties. 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, successful continuance of cost-improvement programs and statutory tax rates.

                      West Pharmaceutical Services, Inc.
                      Consolidated Statements of Income
                    (In thousands, except per share data)

                         Quarter Ended               Six Months Ended
                  June 30,2000   June 30,1999  June 30, 2000   June 30,1999

    NET SALES    $112,700  100% $124,400 100% $220,400   100% $238,600 100%

    Cost of        84,500    75   84,600   68  164,000     74  164,400   69
    goods and
    services
    sold

      GROSS        28,200    25   39,800   32   56,400     26   74,200   31
      PROFIT

    Selling,       17,000    15   19,700   16   34,400     16   36,700   15
    general and
    administrative
    expenses

    Other               -     -      300    -      400      -      300    -
     expense, net

    Operating      11,200    10   19,800   16   21,600     10   37,200   16
     Profit

    Interest        3,400     3    2,800    2    6,400      3    4,800    2
     expense

    Income          7,800     7   17,000   14   15,200      7   32,400   14
     before
     income taxes
     and minority
     interests

    Provision       3,000     3    6,600    5    5,700      3   12,500    5
     for income
     taxes

    Minority          100     -        -    -      200      -      100    -
     interests

    Income          4,700    4%   10,400   8%    9,300     4%   19,800   8%
     from
     consolidated
     operations

    Equity in         300              -            800             100
     net income
     of affiliated
     companies

    Net Income     $5,000        $10,400        $10,100         $19,900

    Net income
     per share:
      Basic         $0.35          $0.70         $0.70           $1.33
      Assuming      $0.35          $0.69         $0.70           $1.32
       dilution

    Average common 14,463         14,945        14,487          15,017
    shares
    outstanding

    Average         14,465        15,043        14,495         15,113

shares

outstanding

assuming

dilution SOURCE West Pharmaceutical Services, Inc.

CONTACT: Stephen M. Heumann, Vice President and Treasurer of West Pharmaceutical Services, Inc., 610-594-3346; Investor Relations - Robert P. Jones, Dory Lombardo, or Press - Stacey Nield of Morgen-Walke Associates, 212-850-5600, for West Pharmaceutical Services, Inc./