Press Release

  View printer-friendly version

« Back

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

LIONVILLE, Pa., Jul 19, 2001 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST) today announced results for the second quarter and six months ended June 30, 2001.

Net sales for the second quarter increased 3% to $117.2 million compared to the $113.6 million reported in the second quarter of 2000. At constant exchange rates, sales for the second quarter 2001 grew 6%. Sales in the Company's Device Product Development segment, which represent approximately 80% of total revenue, remained essentially flat, but increased 3% at constant exchange rates. Revenue in the Contract Services segment increased 12%, driven primarily by new customers in the contract manufacturing and packaging operations. Drug Delivery segment revenue was a record $2.4 million, including $1.4 million of previously deferred license fees, compared to $0.3 million in the same quarter last year.

Net income for the second quarter increased 20% to $6.0 million, or $0.42 per share, compared to net income of $5.0 million, or $0.35 per share, reported in the second quarter of 2000. The comparative results exclude a second quarter 2001 restructuring charge of $2.9 million after tax, or $0.20 per share, primarily for severance costs associated with the previously announced reduction of salaried workforce, resulting in reported net income for the second quarter of $3.1 million, or $0.22 per share. The improvement was a result of a combination of the increased revenue and lower production costs in the Contract Services segment, which returned to profitability, and record revenue in the Drug Delivery systems segment, narrowing its loss. Partially offsetting these positive factors were proportionately higher sales of lower margin products and higher production costs in the Device Product Development segment, as well as lower recognized pension income.

For the six-month period ending June 30, 2001, net sales increased 5% to $233.4 million compared with the $222.3 million in the same period last year. First-half 2001 sales were 8% higher at constant exchange rates. Excluding the restructuring charge, net income for the first half of 2001 increased 13% to $11.4 million, or $0.80 per share, compared to $10.1 million, or $0.70 per share, in 2000.

William G. Little, Chairman and Chief Executive Officer, commented: "The Company is focusing its resources on developing products and technologies that enhance the effectiveness of pharmaceuticals and on realizing the potential of the Company's strong new product portfolio. It is particularly pleasing to announce two new business opportunities. We recently announced an agreement with Solvay Pharmaceuticals, to develop a nasal flu vaccine employing West's proprietary ChiSys(TM) technology. Additionally, Debiopharm, S.A., has licensed to West the exclusive rights to produce and market its single-use reconstitution system, which provides a faster and easier method to reconstitute dry powder or lyophilized drugs for injection. It has been approved by the FDA for use in conjunction with an advanced-stage prostate cancer drug." Mr. Little continued, "We have completed the organization plans we announced following our strategic review with the elections of Donald Morel as Chief Operating Officer and Linda Altemus as Vice President, Finance and Administration."

Mr. Little added, "Operating results for the quarter continue to show improvement, with our drug delivery systems and contract services business segments reporting significantly improved results, and we expect to report improved year-over-year results in the coming quarter."

West Pharmaceutical Services supports global pharmaceutical and healthcare markets with products and services that enhance the effectiveness of drug delivery and product dispensing. West Pharmaceutical Services' technologies include drug formulation research and development, clinical research and laboratory services and the design, development and manufacture of components and systems for dispensing and delivering pharmaceutical, healthcare and consumer products. For more information, visit West Pharmaceutical Services at http://www.westdrugdelivery.com and 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.

For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission.

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

                                             Quarter Ended
                                June 30, 2001              June 30, 2000

    Net sales             $117,200          100%     $113,600          100%
    Cost of goods and
     services sold          85,600            73       85,400            75
    Gross profit            31,600            27       28,200            25
    Selling, general and
     administrative
     expenses               19,000            16       17,000            15
    Restructuring charge     4,500             4           --            --
    Other (income)
     expense, net               --            --           --            --
    Operating profit         8,100             7       11,200            10
    Interest expense         3,400             3        3,400             3
    Income before income
     taxes and
     minority interests      4,700             4        7,800             7
    Provision for
     income taxes            1,700             1        3,000             3
    Minority interests         100            --          100            --
    Income from
     consolidated operations 2,900            3%        4,700            4%
    Equity in net income
     of affiliated companies   200            --          300            --
    Net income              $3,100            --       $5,000            --
    Net income per share:
    Basic                    $0.22            --        $0.35            --
    Assuming dilution        $0.22            --        $0.35            --
    Average common
     shares outstanding     14,336            --       14,463            --
    Average shares
     assuming dilution      14,356            --       14,465            --


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

                                             Six Months Ended
                                June 30, 2001               June 30, 2000

    Net sales             $233,400          100%     $222,300          100%
    Cost of goods
     and services sold     171,100            73      165,900            75
    Gross profit            62,300            27       56,400            25
    Selling, general
     and administrative
     expenses               38,300            17       34,400            15
    Restructuring charge     4,500             2           --             -
    Other (income)
     expense, net            (300)            --           --           400
                                 -
    Operating profit        19,800             8       21,600            10
    Interest expense         7,100             3        6,400             3
    Income before income
     taxes and minority
     interests              12,700             5       15,200             7
    Provision for
     income taxes            4,600             2        5,700             3
    Minority interests         100            --          200            --
    Income from
     consolidated operations 8,000            3%        9,300            4%
    Equity in net income
     of affiliated companies   500            --          800            --
    Net income              $8,500            --      $10,100            --
    Net income per share:
    Basic                    $0.59            --        $0.70            --
    Assuming dilution        $0.59            --        $0.70            --
    Average common
     shares outstanding     14,328            --       14,487            --
    Average shares
     assuming dilution      14,342            --       14,495            --


                      West Pharmaceutical Services, Inc.
                        Operating Segment Information
                                (in thousands)

                              Three Months Ended           Six Months Ended
                                    June 30,                   June 30,
    Net Sales:                2001          2000         2001          2000
    Device product
     development           $94,500       $95,400     $189,800      $188,500
    Contract services       20,300        18,100       40,400        33,400
    Drug delivery research
     and development         2,400           300        3,200           700
    Corporate and
     unallocated items          --         (200)           --         (300)
    Consolidated Total    $117,200      $113,600     $233,400      $222,300


                               Three Months Ended          Six Months Ended
                                    June 30,                   June 30,
    Operating Profit (Loss):  2001          2000         2001          2000
    Device product
     development           $17,800       $20,400      $36,500       $40,200
    Contract services          700       (3,800)          300       (7,400)
    Drug delivery research
     and development         (800)       (2,400)      (2,600)       (4,700)
    Corporate and
     unallocated items*    (9,600)       (3,000)     (14,400)       (6,500)
    Consolidated Total      $8,100       $11,200      $19,800       $21,600

    * Corporate and unallocated items include a second quarter 2001
      restructuring charge of $4.5 million.
SOURCE West Pharmaceutical Services, Inc.

CONTACT:          Michael A. Anderson Vice President and Treasurer West
                  Pharmaceutical Services, Inc., 610-594-3345; Investors - Theresa Vogt or Sarah
                  Torres, both of Morgen-Walke Associates, 212-850-5600; Media - Jim Weinrebe of
                  Schwartz Communications, 781-684-0770, westpharma@shwartz-pr.com, all for West
                  Pharmaceutical Services, Inc.