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 June 30, 1999 --------------- Commission File Number 1-8036 ------ WEST PHARMACEUTICAL SERVICES, INC. ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 23-1210010 ------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 101 Gordon Drive, PO Box 645, Lionville, PA 19341-0645 ------------------------------------- ---------------------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code 610-594-2900 -------------- N/A ----------------------------------------------------------------- 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 . --- --- June 30, 1999 -- 14,872,419 ----------------------------------------------------------------- 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 June 30, 1999 Page ----- Part I - Financial Information Item 1. Financial Statements Consolidated Statements of Operations for the Three and Six Months ended June 30, 1999 and June 30, 1998 3 Condensed Consolidated Balance Sheets at June 30, 1999 and December 31, 1998 4 Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 1999 and June 30, 1998 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosure about Market Risk 16 Part II - Other Information Item 1. Legal Proceedings 18 Item 2. Changes in Securities and Use of Proceeds 18 Item 3. Defaults Upon Senior Securities 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 6. Exhibits and Reports on Form 8-K 18 SIGNATURES 19 Index to Exhibits F-1 Page 3 Part I. Financial Information Item 1. Financial Statements West Pharmaceutical Services, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) <TABLE> Quarter Ended Six Months Ended <CAPTION> June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998 ---------------- ------------- --------------- -------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Net sales $124,400 100% $115,800 100% $238,600 100% $221,000 100% Cost of goods sold 84,600 68 81,000 70 164,400 69 154,900 70 ---------------------------------------------------------------------------------------------------- Gross profit 39,800 32 34,800 30 74,200 31 66,100 30 Selling, general and administrative expenses 19,700 16 18,400 16 36,700 15 35,200 16 Acquired research and development - - - - - - 28,200 13 Other expense (income), net 300 - (800) (1) 300 - (1,400) (1) ---------------------------------------------------------------------------------------------------- Operating profit 19,800 16 17,200 15 37,200 16 4,100 2 Interest expense 2,800 2 1,900 2 4,800 2 3,100 1 ---------------------------------------------------------------------------------------------------- Income before income taxes and minority interests 17,000 14 15,300 13 32,400 14 1,000 1 Provision for income taxes 6,600 6 5,800 5 12,500 6 11,200 5 Minority interests - - 100 - 100 - 100 - ---------------------------------------------------------------------------------------------------- Income (loss) from consolidated operations 10,400 8% 9,400 8% 19,800 8% (10,300) (4)% --- --- --- ---- Equity in net income of affiliated companies - 500 100 500 ---------------------------------------------------------------------------------------------------- Net income (loss) $ 10,400 $9,900 $ 19,900 $ (9,800) ---------------------------------------------------------------------------------------------------- Net income (loss) per share: Basic $ 0.70 $ .58 $ 1.33 $ (0.59) Assuming dilution $ 0.69 $ .58 $ 1.32 $ (0.59) ---------------------------------------------------------------------------------------------------- Average common shares outstanding 14,945 16,991 15,017 16,798 Average shares assuming dilution 15,043 17,071 15,113 16,798 Page 4 See accompanying notes to consolidated financial statements. </TABLE> Page 5 West Pharmaceutical Services, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands) <TABLE> <CAPTION> Unaudited June 30, 1999 Dec. 31, 1998 ASSETS -------------- ------------- <S> <C> <C> Current assets: Cash, including equivalents $ 39,600 $ 31,300 Accounts receivable 75,200 64,400 Inventories 40,500 43,500 Current deferred income tax benefits 9,600 9,700 Other current assets 11,500 10,800 --------------------------------------------------------------------------- Total current assets 176,400 159,700 --------------------------------------------------------------------------- Net property, plant and equipment 214,500 220,300 Investments in affiliated companies 15,500 15,700 Goodwill 71,300 61,200 Deferred charges and other assets 52,300 48,700 --------------------------------------------------------------------------- Total Assets $530,000 $ 505,600 --------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 2,700 $ 800 Notes payable 2,400 35,300 Accounts payable 19,900 20,800 Accrued expenses: Salaries, wages, benefits 14,800 17,100 Income taxes payable 9,900 8,500 Other 28,500 21,700 --------------------------------------------------------------------------- Total current liabilities 78,200 104,200 --------------------------------------------------------------------------- Long-term debt, excluding current portion 160,300 105,000 Deferred income taxes 39,300 39,100 Other long-term liabilities 26,700 26,600 Minority interests 600 600 --------------------------------------------------------------------------- Shareholders' equity 224,900 230,100 --------------------------------------------------------------------------- Page 6 Total Liabilities and Shareholders' Equity $530,000 $505,600 --------------------------------------------------------------------------- </TABLE> See accompanying notes to consolidated financial statements. Page 7 West Pharmaceutical Services, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) <TABLE> <CAPTION> Six Months Ended June 30, 1999 June 30, 1998 ---------------- ------------------- <S> <C> <C> Cash flows from operating activities: Net income, plus net non-cash items $ 35,000 $ 31,500 Changes in assets and liabilities (4,700) (15,200) ----------------------------------------------------------------------------------------- Net cash provided by operating activities 30,300 16,300 ----------------------------------------------------------------------------------------- Cash flows from investing activities: Property, plant and equipment acquired (19,500) (18,700) Proceeds from sale of assets 100 800 Payment for acquisitions, net of cash acquired (15,900) (6,900) Customer advances, net of repayments (1,400) 1,000 ----------------------------------------------------------------------------------------- Net cash used in investing activities (36,700) (23,800) ----------------------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from long-term debt 100,000 - Net (repayments) borrowings under revolving credit agreements (71,600) 9,700 Repayment of other long-term debt (900) (1,900) Notes payable, net 1,600 (500) Dividend payments (4,800) (5,000) Sale of common stock, net 1,600 1,800 Purchase of treasury stock (9,000) - ----------------------------------------------------------------------------------------- Net cash provided by financing activities 16,900 4,100 ----------------------------------------------------------------------------------------- Effect of exchange rates on cash (2,200) (300) ----------------------------------------------------------------------------------------- Net increase (decrease) in cash, including equivalents $ 8,300 $ (3,700) ----------------------------------------------------------------------------------------- </TABLE> See accompanying notes to consolidated financial statements. Page 8 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 six-month period ended June 30, 1999 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc., appearing in the Company's 1998 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 as of June 30, 1999 and the related unaudited Consolidated Statements of Operations for the three and six-month periods then ended, and the unaudited Condensed Consolidated Statement of Cash Flows for the six- month period then ended and for the comparative period in 1998 contain all adjustments, consisting only of normal recurring accruals, necessary to present fairly the financial position as of June 30, 1999 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. 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, annual quantity discounts and advertising. 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 (excluding the charge for acquired research and development in 1998), except that taxes applicable to operating results in Brazil and prior year adjustments, if any, are recorded as identified. Net Loss Per Share --------------------- For the six months ended June 30, 1998, because of the reported net loss, the incremental shares from potential issuance of common stock under the Company's stock option and award plans are not included in average shares assuming dilution. Page 9 West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) (continued) 2. Inventories at June 30, 1999 and December 31, 1998 are summarized as follows: <TABLE> <CAPTION> <S> <C> <C> 1999 1998 -------- -------- Finished goods $ 13,800 $ 15,700 Work in process 13,700 13,700 Raw materials 13,000 14,100 -------- -------- $ 40,500 $ 43,500 -------- -------- -------- -------- </TABLE> 3. The carrying value of property, plant and equipment at June 30, 1999 and December 31, 1998 is determined as follows: <TABLE> <CAPTION> <S> <C> <C> 1999 1998 -------- -------- Property, plant and equipment $471,700 $472,200 Less accumulated depreciation and amortization 257,200 251,900 -------- -------- Net property, plant and equipment $214,500 $220,300 -------- -------- -------- -------- </TABLE> 4. For the three and six months ended June 30, 1999 and 1998, the Company's comprehensive income (loss) is as follows: <TABLE> <CAPTION> Three Months Ended Six Months Ended 6/30/99 6/30/98 6/30/99 6/30/98 -------- ------- ------- ------- <S> <C> <C> <C> <C> Net income (loss) $10,400 $ 9,900 $19,900 $(9,800) Foreign currency translation adjustments (4,600) (100) (13,200) (2,700) ------- ------- ------- ------- Comprehensive income (loss) $5,800 $9,800 $ 6,700 $(12,500) ------- ------- ------- ------- ------- ------- ------- ------- Page 10 </TABLE> West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) (Continued) 5. Net sales to external customers and operating profit (loss) by operating segment for the three and six months ended June 30, 1999 and June 30, 1998 are as follows: <TABLE> <CAPTION> Three Months Ended Six Months Ended <S> <C> <C> <C> <C> Net Sales: 1999 1998 1999 1998 ---------- ---- ---- ---- ---- Device product development $100,800 $93,400 $194,200 $179,500 Contract services 23,400 21,800 44,000 40,900 Drug delivery research and development 200 600 400 600 ------- ------- -------- -------- Consolidated Total $124,400 $115,800 $238,600 $221,000 ------- ------- -------- -------- ------- ------- -------- -------- Three Months Ended Six Months Ended Operating Profit (Loss): 1999 1998 1999 1998 ------------------------ ---- ---- ---- ---- Device product development $26,000 $21,700 $47,500 $41,600 Contract services 1,800 2,000 4,000 2,900 Drug delivery research and development (1,600) (1,300) (3,000) (2,100) Corporate and unallocated items (6,400) (5,200) (11,300) (38,300) ------- ------- ------- ------- Consolidated Total $19,800 $17,200 $37,200 $4,100 ------- ------- ------- ------- ------- ------- ------- ------- </TABLE> Compared with December 31, 1998, the only material change in operating segment assets as of June 30, 1999 was the acquisition of the Clinical Services Division of Collaborative Clinical Research, Inc. on April 20, 1999 (see Note 9). This business unit is included in the Contract Services segment. 6. Common stock issued at June 30, 1999 was 17,165,141 shares, of which 2,292,722 shares were held in treasury. Dividends of $.16 per common share were paid in the first quarter of 1999 and a dividend of $.16 per share payable to holders of record on July 21, 1999 was declared on April 27, 1999. 7. 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 Page 11 West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) (Continued) accordance with applicable regulatory requirements, the Company believes the accrued liability of $1,000 at June 30, 1999 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. 8. On September 8, 1998, the Company recorded a pre-tax charge of $4,000. The charge is related to employee reductions associated with identified manufacturing and other efficiencies. The charge covers severance and benefits for 92 employees and other related charges. Through June 30, 1999, the total payout of severance and benefits associated with this charge was $3,000. 9. On April 20, 1999, the Company acquired the assets of the Clinical Services Division (CSD) of Collaborative Clinical Research, Inc.. The cash purchase price was $15,900, which was financed with available cash, and the Company assumed $2,300 of current liabilities of CSD. The acquisition was accounted for as a purchase and CSD was consolidated on May 1, 1999. The preliminary allocation of the purchase price is as follows: Current assets $ 2,900 Equipment and leasehold improvements 800 Goodwill 14,500 ------- $18,200 ------- ------- Pro forma results assuming acquisition of CSD as of January 1, 1999 would not have had any material effect on consolidated results. 10. On April 8, 1999, the Company entered into an agreement with five insurance companies to borrow a total of $100,000 for ten years at a coupon rate of 6.81%; the effective interest rate is 6.91%. Interest is payable quarterly. The proceeds were used to repay debt under existing lines of credit, for the acquisition of CSD, and for general corporate purposes. Page 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. ----------------------------------------------------------------- Results of Operations for the Three and Six Months ended June 30, 1999 Versus Comparable 1998 Periods ----------------------------------------------------------------- Net Sales --------- Net sales for the second quarter of 1999 were $124.4 million; a 7.5% increase compared with 1998's second quarter sales of $115.8 million. At constant exchange rates, consolidated net sales increased 9.5% in the second quarter. Device product development segment sales increased $7.4 million, or 7.9%, to $100.8 million; at constant exchange rates the increase was 10.5%. For this segment, sales showed strong increases in all regions with the exception of the South America region where sales were essentially flat at constant exchange rates. The primary growth driver for this segment was demand for packaging components for parenteral pharmaceuticals. Management believes three factors were the major reasons for this strong demand. First, customer demand for components for insulin and vaccines, typically high-value components, increased. Second, certain customers switched to higher value components to improve their production efficiency. Third, customers increased certain product inventories. The inventory adjustments relate in part to an earlier summer shutdown schedule in Europe compared with 1998, an event which normally prompts some customers to place additional orders ahead of shutdown to secure supply. Medical device component sales grew modestly, excluding the impact of the acquisition of Betraine Limited in July 1998. Personal care and food dispensing components declined, mainly due to lower Spout-Pak sales compared with last year. Contract services segment sales increased 7.6% to $23.4 million, with the growth attributable to the clinical services business unit acquired in April 1999. The contract manufacturing and packaging unit's sales were $1.1 million lower due to the switch by two customers to in-house production, as expected, and due to disappointing sales of several customers' new products resulting in customer reductions or stoppages of production. Revenues in the start-up contract labs business and in the drug delivery research and development segment were not significant, as expected. Net sales for the first half of 1999 were $238.6 million, 8% higher than sales in the same period of 1998 and 9.1% higher at constant exchange rates. Device product development sales were 8.2% higher and the contract services segment sales were 7.6% higher than first half 1998 sales. The major drivers for these increases are noted above. Page 13 Results of Operations for the Three and Six Months ended June 30, 1999 Versus Comparable 1998 Periods ----------------------------------------------------------------- Gross Profit ------------ The 32% consolidated gross margin in the second quarter of 1999 was unusually high and resulted in gross profit of $39.8 million; a 14.3% increase compared with the same period of 1998. The margins in both the device product development segment and the contract services segment showed significant improvement. The high-margin product mix and another quarter of successful cost saving programs more than offset the impact of price competition in the device product development segment. In the contract services segment, the gross margin improvement reflects the combination of the addition of the higher-margin clinical services business unit and the successful operating efficiency initiatives and elimination of loss/low-margin business at the contract manufacturing and packaging business unit. The consolidated gross profit margin for the six-month period was 31.1% compared with 29.9% in the same period of 1998. The favorable product mix in second quarter sales of the device product development segment and the May 1999 addition of the higher margin clinical services business unit combined with continued operating efficiency improvements in both segments were the primary factors in the margin increase. Selling, General and Administrative Expenses -------------------------------------------- Selling, general and administrative (SG&A) expenses totaled $19.7 million, or 15.8% of net sales, in the second quarter of 1999 compared with $18.4 million, or 15.9% of net sales, in the comparable 1998 quarter. The increase of $1.3 million in total expenses includes $1.4 million of expenses related to acquired businesses; namely, Betraine Limited in July 1998 and the clinical services business unit in April 1999. In addition, the quarter includes expenses related to the completion of upgrades in our desktop computers for Year 2000 issues and related systems upgrades. Offsetting these increases, in part, were higher income from pension plan assets and a favorable exchange rate impact. These same factors were evident in the SG&A expense comparison for the first half of 1999 and 1998. Of the total 1999 SG&A expense increase of $1.5 million, acquired companies added $2.6 million. Higher income from pension plan assets and the impact of a stronger U.S. dollar offset the majority of the increased expenses. SG&A spending is being tightly controlled as the Company invests in drug delivery system research and development and the core manufacturing operations. Other (Income) Expense ---------------------- Net losses on foreign currency transactions and the decline in interest income due to lower cash investments were largely responsible for the other expense in the quarter and first half of 1999 compared with income in the same periods of 1998. Page 14 Results of Operations for the Three and Six Months ended June 30, 1999 Versus Comparable 1998 Periods ----------------------------------------------------------------- Interest Expense ---------------- Interest expense increased $.9 million and $1.7 million in comparisons of second quarter and first half 1999 results with comparable 1998 periods. Average borrowings have increased as a result of stock buybacks of two million shares in October 1998 at an average cost of $30.20 per share and 265,800 shares in 1999 at an average cost of $33.79 per share, and due to acquisitions of three business units since March 31, 1998. Equity in Affiliates -------------------- Equity in net income of affiliates located in Japan and Mexico declined in both the quarter and the six months compared with 1998 due to poor market demand in those countries due largely to government spending and reimbursement policies. Income Taxes ------------ The effective tax rate for the quarter and first half of 1999 was 38.5%, slightly higher than the tax rate in second quarter of 1998 but flat with the first-half 1998 tax rate, excluding the charge for the acquired research and development. The effective tax rate for the full year 1998, excluding the impact of the charge for acquired research and development, was 37.8%. The estimated increase in the 1999 tax rate reflects the geographic mix of earnings forecasted. Net Income (Loss) ----------------- The net income for the second quarter of 1999 was $10.4 million, or $.70 per share, compared with $9.9 million, or $.58 per share, in 1998. Average common shares outstanding in the 1999 quarter were 14.9 million compared with 17.0 million in second quarter 1998. For the six-month period 1999 net income was $19.9 million, or $1.33 per share, compared to a loss of $9.8 million, or $.59 per share, in the same period of 1998. The net loss for the first six months includes a $28.2 million charge for acquired research and development related to the acquisition of DanBioSyst U.K. Ltd.; excluding the charge, net income for the first half of 1998 was $18.4 million, or $1.10 per share. Average shares outstanding for the first six months of 1999 were 15.0 million compared with 16.8 million in the like period of 1998. The reduction in average common shares outstanding reflects the Company's buyback of common shares as noted above. Financial Position ------------------ Working capital at June 30, 1999 was $98.2 million compared with $55.5 million at December 31, 1998. The working capital ratio at June 30, 1999 was 2.3 to 1. The primary reason for the increase in working capital is the Company's ability to finance $37.6 million Page 15 Results of Operations for the Three and Six Months ended June 30, 1999 Versus Comparable 1998 Periods ----------------------------------------------------------------- of short-term notes payable on a long-term basis using proceeds from a $100 million, 10-year private debt placement closed on April 9, 1999. This private debt placement has a coupon rate of 6.81%, and an effective interest rate of 6.91%. Total debt outstanding at June 30, 1999 was $165.4 million, an increase of $24.3 million compared with year end 1998. Debt as a percentage of total invested capital at June 30, 1999 was 42.3% compared with 37.9% at December 31, 1998. In 1999, funds generated from operations covered capital spending of $19.5 million, cash dividends of $.32 per share, and repurchase of 265,800 shares of common stock at an average price of $33.79 per share. The stock repurchases were made pursuant to a plan authorized by the Company's Board of Directors and announced on March 10, 1999. The plan provides for purchase of up to one million shares of the Company's common stock in open market or privately negotiated transactions. The Company believes its financial condition and current capitalization indicate an ability to finance substantial future growth. 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. At June 30, 1999 and December 31, 1998 the Company had three interest rate swap agreements in effect, with an estimated fair value less than $0.1 million. There were no forward exchange contracts in effect at June 30, 1999. Year 2000 --------- The Company continues to execute a comprehensive plan to address the Year 2000 issue. Using internal and external resources the Company identified and prioritized critical business processes and plant locations, and completed an inventory of all computer hardware and software and computer-controlled equipment. As a result of this work, which started in April 1997, decisions were made to remediate or replace mission-critical items. Page 16 Results of Operations for the Three and Six Months ended June 30, 1999 Versus Comparable 1998 Periods ----------------------------------------------------------------- At June 30, 1999, the Company had completed remediation or replacement of all critical information systems that support business functions. This includes all manufacturing, financial- reporting and payroll systems, desktop computer hardware and software and software-dependent systems and equipment used in research and development, manufacturing processes and facility management. The Company also has received Year-2000 readiness certifications from its major supplier base. As a follow-up measure to the certification program, the Company completed on-site assessments of the 20 key suppliers to its device product development segment. On-site assessments of 15 additional suppliers are planned through the end of the year. The Company believes it has completed all modifications required to address critical information systems. Nonetheless, the Company is actively developing contingency plans and conducting related training to cover an unexpected interruption of critical systems and operations due to the Year 2000 problem. In addition, efforts to address any modifications to non- critical systems will continue through the end of the year and possibly into 2000, but the failure of such systems is not considered to have any significant impact on the Company's business or financial position or results. Total pretax costs incurred through June 30 are approximately $5.5 million, of which $4.9 million has been capitalized. The Company expects to spend approximately $2.0 million in the remainder of 1999 on the project. The cost of the Year 2000 project and the date on which the Company believes it will substantially complete all modifications are based on management's best estimates. The estimates are based on numerous assumptions of future events, including the continued availability of certain resources and other factors. Because none of these estimates can be guaranteed, actual time and cost to complete the project plan could differ materially from those anticipated. Specific factors that might cause such differences include, but are not limited to, the reliability and timely receipt of vendor certifications, the appropriateness and effectiveness of testing and validation methods, the availability and cost of trained personnel and the timely availability of replacement computer hardware, software and equipment and similar uncertainties. Page 17 Item 3. Quantitive 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 18 Part II - Other Information Item 1. Legal Proceedings ----------------- None. Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- None. Item 3. Defaults Upon Senior Securities ------------------------------- None. Item. 4. Submission of Matters to a Vote of Security Holders -------------------------------------------------- (a) The Company held its annual meeting of shareholders on April 27, 1999. (c) Class II directors (with a term expiring in 2002) were elected by a vote of : For Against --- ------- Tenley E. Albright 9,100,521 168,652 John Conway 9,100,521 168,652 J. Roffe Wike, II 9,100,346 168,737 George W. Ebright, L. Robert Johnson, William G. Little, William H. Longfield, John P. Neafsey, Monroe E. Trout, Anthony Welters and Geoffrey F. Worden continued their term of office after the meeting. The appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for the year ending December 31, 1999 was approved by a vote of 9,260,257 for the appointment and 4,840 against, with 4,076 abstentions. The 1999 Non-Qualified Stock Option Plan for Non-Employee Directors was approved by a vote of 8,243,031 for the Plan and 939,978 against, with 86,161 abstentions. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) See Index to Exhibits on pages F-1 and F-2 of this Report. Page 19 (b) No reports on Form 8-K have been filed for the quarter ended June 30, 1999. 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) August 16, 1999 /s/ Steven A. Ellers ------------- --------------------------------- Date (Signature) Steven A. Ellers Senior Vice President and Chief Financial Officer Page 20 INDEX TO EXHIBITS Exhibit Number (3) (a) Amended and Restated Articles of Incorporation of the Company through January 4, 1999, incorporated by reference 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, 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) Form of stock certificate for common stock, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8036). (4) (b) Flip-In Rights Agreement between the Company and American Stock Transfer & Trust Company, as Rights Agent, dated as of January 16, 1990, incorporated by reference to Exhibit 1 to the Company's Form 8-A Registration Statement (File No. 1-8036). (4) (c) Flip-Over Rights Agreement between the Company and American Stock Transfer & Trust Company, as Rights Agent, dated as of January 16, 1990, incorporated by reference to Exhibit 2 to the Company's Form 8-A Registration Statement (File No. 1-8036). (9) None. (10) (a) Retirement Plan for Non-Employee Directors reflecting amendments effective on November 5, 1991, April 28, 1998 and May 27, 1999. (10) (b) Deferred Compensation Plan for Outside Directors, as amended and restated effective May 27, 1999. (10) (c) 1999 Non-Qualified Stock Option Plan for Non-Employee Directors, effective as of April 27, 1999. (10) (d) Form of Director Stock Option Agreement (11) Not Applicable. (12) Not Applicable. (15) None. F - 1 Page 21 Exhibit Number (16) Not applicable. (18) None. (19) None. (22) None. (23) None. (24) None. (27) Financial Data Schedule (99) None. F - 2