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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: August 29, 2002
WEST PHARMACEUTICAL SERVICES, INC.
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(Exact name of registrant as specified in charter)
Pennsylvania 1-8036 23-1210010
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(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
101 Gordon Drive, P.O. Box 645, Lionville, Pennsylvania 19341-0645
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(Address of Principal Executive Offices) (Zip Code)
(610) 594-2900
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events and Regulation FD Disclosure.
West Pharmaceutical Services, Inc. hereby files this Current Report on Form
8-K in order to incorporate by reference the selected financial information
attached hereto as Exhibit 99.1 into our registration on Form S-3 to be
subsequently filed by us on the date hereof in order to provide the disclosures
required by paragraph 61 of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" as a result of our filing of our
registration statement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits:
Exhibit No. Description
99.1 Five-Year Summary for West Pharmaceutical
Services, Inc.
SIGNATURE
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.
Date: August 29, 2002 By: /s/ Linda R. Altemus
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Linda R. Altemus
Vice President and
Chief Financial Officer
Exhibit 99.1
Five-Year Summary
West Pharmaceutical Services, Inc. and Subsidiaries
(in thousands of dollars, except per share data)
2001 2000 1999 1998 1997
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SUMMARY OF OPERATIONS
Net sales ................................................. $ 396,900 378,600 395,800 359,900 371,900
Operating profit .......................................... $ 41,300 31,000 61,800 25,300 59,200
Income from continuing operations ......................... $ 19,600 12,700 35,900 1,400 41,900
(Loss) income from discontinued operations................. $ (24,800) (11,100) 2,800 5,300 2,500
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Net (loss) income ......................................... $ (5,200) 1,600 38,700 6,700 44,400
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SFAS 142 reconciliation (a):
Reported net (loss) income................................. $ (5,200) 1,600 38,700
Goodwill amortization, net of tax ......................... $ 1,300 1,600 1,600
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Adjusted net (loss) income................................. $ (3,900) 3,200 40,300
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Net (loss) income per share:
Basic (b)
Continuing operations ................................. $ 1.37 0.88 2.41 0.09 2.54
Discontinued operations ............................... $ (1.73) (0.77) 0.18 0.32 0.15
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$ (0.36) 0.11 2.59 0.41 2.69
SFAS 142 Reconciliation (a):
Reported net (loss) income per share .................. $ (0.36) 0.11 2.59
Goodwill amortization, net of tax...................... $ 0.09 0.11 0.11
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Adjusted net (loss) income per share................... $ (0.27) 0.22 2.70
Assuming dilution (c)
Continuing operations ................................. $ 1.37 0.88 2.39 0.08 2.53
Discontinued operations ............................... $ (1.73) (0.77) 0.18 0.32 0.15
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$ (0.36) 0.11 2.57 0.40 2.68
SFAS 142 Reconciliation (a):
Reported net (loss) income per share .................. $ (0.36) 0.11 2.57
Goodwill amortization, net of tax ..................... $ 0.09 0.11 0.11
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Adjusted net (loss) income per share .................. $ (0.27) 0.22 2.68
Average common shares outstanding ......................... 14,336 14,407 14,914 16,435 16,475
Average shares assuming dilution .......................... 14,348 14,409 15,048 16,504 16,572
Dividends paid per common share ........................... $ .73 .69 .65 .61 .57
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Research, development and engineering
expenses ................................................. $ 17,800 17,100 14,200 12,200 11,700
Capital expenditures ...................................... $ 44,100 47,700 39,300 35,100 30,100
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2001 2000 1999 1998 1997
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YEAR-END FINANCIAL POSITION
Working capital ........................................... $ 83,200 87,800 68,100 37,000 105,500
Total assets .............................................. $ 511,300 549,100 542,900 500,000 467,600
Total invested capital:
Total debt ............................................... $ 193,000 199,400 171,100 141,100 89,000
Minority interests ....................................... $ -- 1,000 800 600 400
Shareholders' equity ..................................... $ 176,800 204,800 231,200 230,100 277,700
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Total invested capital .................................... $ 369,800 405,200 403,100 371,800 367,100
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PERFORMANCE MEASUREMENTS
Gross margin (d) .......................................... % 29.3 28.8 34.0 33.5 33.2
Operating profitability (e) ............................... % 10.4 8.2 15.6 7.0 15.9
Tax rate .................................................. % 30.7 34.6 31.3 93.0 22.3
Asset turnover ratio (f) .................................. .75 .69 .76 .74 .80
Return on average shareholders' equity .................... % (2.7) .7 16.8 2.6 16.7
Total debt as a percentage of total
invested capital ......................................... % 52.2 49.2 42.5 37.9 24.2
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Stock price range ......................................... $28.35-22.75 31.88-19.63 40.44-30.88 35.69-25.75 35.06-27.00
Performance measurements represent performance indicators commonly used in the
financial community. They are not measures of financial performance under
generally accepted accounting principles.
(a) 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 as of
January 1, 2002 and determined that no impairment of the recorded goodwill
existed.
The changes in the carrying amount of goodwill for the years ended December 31,
2001 and 2000 are as follows:
Pharmaceutical Drug Delivery
Systems Systems Total
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Balance January 1, 2000 $ 34,200 $ 14,100 $ 48,300
Write-down of site management
organization -- (9,200) (9,200)
Goodwill amortization (1,200) (700) (1,900)
Foreign currency translation adjustments (2,300) -- (2,300)
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Balance December 31, 2000 30,700 4,200 34,900
Goodwill acquired 500 -- 500
Goodwill amortization (1,100) (300) (1,400)
Foreign currency translation adjustments (1,400) -- (1,400)
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Balance December 31, 2001 $ 28,700 $ 3,900 $ 32,600
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Balance as of January 1, 2000 and December 31, 2000 excludes $18,200 and
$17,500, respectively, of goodwill related to the contract manufacturing and
packaging business. This business was sold in November 2001, therefore goodwill
was included in net assets of discontinued operations. Upon the sale of the
business, $16,900 of goodwill was included in the loss on disposal.
The cost and respective accumulated amortization for the Company's intangible
assets, mainly patents, was $11,200 and $3,300 respectively, as of December 31,
2001, and $11,500 and $2,700, respectively, as of December 31, 2000. The cost
basis of intangibles includes the effects of foreign currency translation
adjustments. The weighted average life of intangibles purchased or acquired for
the years ended 2001, 2000 and 1999 was 17 years, 15 years and 17 years,
respectively. Amortization expense for the years ended December 31, 2001, 2000
and 1999 was $600, $700 and $1,000, respectively. Estimated amortization for the
next five years will be approximately $700 per year.
(b) Based on average common shares outstanding.
(c) Based on average shares, assuming dilution.
(d) Net sales minus cost of goods sold, including applicable depreciation and
amortization, divided by net sales.
(e) Operating profit (loss) divided by net sales.
(f) Net sales divided by average total assets.
2001 includes a net restructuring charge that reduced operating results by $.09
per share.
2000 includes tax benefits totaling $.11 per share realized upon the favorable
resolution of tax issues connected to the 1997 reorganization of the Company's
German subsidiaries, and 2000 includes a net restructuring charge that reduced
operating results by $.78 per share.
1999 includes net tax benefits totaling $.16 per share related to a favorable
determination of a prior years' tax appeal and the refund of taxes paid
previously as a result of a dividend, and 1999 includes for the first time
results of the clinical service business acquired on April 20, 1999.
1998 includes a charge for acquired research and development and a restructuring
charge that reduced operating results by $1.72 per share and $.15 per share,
respectively, and 1998 includes for the first time the results of two companies
acquired in 1998.
1997 includes the net tax benefit mainly from a German tax reorganization which
increased net income per share by $.48.