- Reported Diluted EPS of $0.82 Includes Settlement Gain and Restructuring
Costs -
- Adjusted Diluted EPS(1) of $0.73 -
- Maintains Full-Year 2008 Earnings Estimate -
- Conference Call Scheduled for 9 a.m. E.D.T. Today -
LIONVILLE, Pa., Aug. 5 /PRNewswire-FirstCall/ -- West Pharmaceutical
Services, Inc. (NYSE: WST) today announced results for the second quarter
of 2008. Reported diluted earnings per share of $0.82 included net
after-tax income of $3.3 million, or $0.09 per diluted share, for the
combined effects of a contract settlement gain and restructuring charges.
Summary quarterly results are as follows:
Three Months Ended June 30
($ millions, except per-share data ) 2008 2007
Net Sales $279.3 $263.7
Gross Profit 83.6 76.7
Reported Operating Profit 42.6 34.9
Adjusted Operating Profit (1) 37.4 34.9
Reported Diluted EPS from continuing operations $0.82 $0.74
Adjusted Diluted EPS(1) from continuing operations $0.73 $0.68
(1) See corresponding note under "Supplemental Information and Notes to
Non-GAAP Financial Measures" in the tables following the text of this
release.
Quarterly consolidated revenue increased by 5.9% when compared to the
second quarter of 2007, with favorable currency effects and other sales
gains outpacing anticipated sales declines for certain products. Currency
translation contributed 6.8% of sales growth as over half of the Company's
sales are made in foreign currencies, which have strengthened compared to
the US dollar. Excluding currency gains, Pharmaceutical Systems segment
sales grew at 3.9%, in spite of anticipated lower sales of components for
packaging certain anemia drugs ("ESA" drugs), as a result of regulatory and
reimbursement changes that have reduced utilization of those drugs, and of
certain diagnostic components that the Company no longer produces. The Tech
Group segment sales declined by 12.9% excluding currency effects, primarily
due to the anticipated loss of Exubera(R) inhalable insulin device sales,
because the product is no longer being produced or marketed. The
consolidated sales effect of these forecasted sales declines was $20.2
million, or 8.2 percentage points, and, excluding the impact of these,
revenue grew by 14.7%, or 7.3% excluding currency.
The consolidated gross profit margin was 29.9% in the quarter, or 0.8
percentage points higher than in the prior-year quarter. The overall
improvement was a result of operating improvements in the Tech Group and
currency translation, which more than compensated for higher raw material
costs and some production inefficiencies in Pharmaceutical Systems.
Reported quarterly operating profit of $42.6 million included a net benefit
of $5.2 million from a contract settlement relating to the manufacture of
devices for the discontinued Exubera product, net of $1.4 million of
restructuring costs. Excluding those items, adjusted operating profit was
$37.4 million, compared to $34.9 million in the second quarter of 2007, an
increase of 7.2%.
Executive Commentary
"West delivered solid quarterly results under difficult market
conditions," said Donald E. Morel Jr. Ph.D., the Company's Chairman and
Chief Executive Officer. "We have responded to increases in raw material
and energy costs by working with our customers and vendors to maintain the
stability of supply, by taking appropriate and fair pricing actions and by
looking within our own operations for ways to manage other costs. The Tech
Group improved on operating efficiencies resulting from restructuring and
by making steady progress ramping up utilization at the Michigan facility."
"Our customers continue to carefully manage their inventory levels in
response to broad cost increases, and West is, in turn, sensitive to the
effects of customer order patterns and higher costs on our own results,"
said Dr. Morel. "We are focused on managing through this difficult period
and remain confident that our 2008 results will be in line with our
previous earnings guidance."
"The ESA situation aside, we have not seen anything that fundamentally
changes our long-term, positive outlook for the markets we serve or our
growth expectations. While costs and inventory management policies can
impact our near-term results and require our attention, it is the success
of our customers' products and our ability to support them that have the
greatest impact on our performance. We are implementing our strategic
plans, including optimizing our production efficiency, and advancing our IT
platform upgrade, product development, and capacity expansion initiatives.
West will continue to distinguish itself in the market based upon the
significant value of our products, customer service and standard-setting
innovation, with products like the Daikyo Crystal Zenith(R) resin-based
silicone-free prefillable syringe that we introduced during the quarter."
Pharmaceutical Systems Segment
Pharmaceutical Systems segment sales in the second quarter of 2008 were
$212.6 million, compared to $189.3 million in the prior year quarter, a
12.3% increase. Favorable foreign currency translation contributed 8.4%.
Over 60% of segment sales are reported in currencies other than the US
dollar and benefited from the relatively weak US dollar. Quarterly sales of
components used for packaging ESA drugs decreased $6.1 million, and sales
of a diagnostic component that the Company stopped producing at the end of
2007 were $3.9 million lower than the prior year quarter. Together these
two products accounted for a 5.8% decline in sales when compared to the
second quarter of 2007. These declines were more than offset by a combined
$14.7 million increase in sales of standard pharmaceutical packaging
components, Flip-Off(R) seals and safety and administration systems, and a
$2.6 million increase in tooling, development, and laboratory services
revenue.
Gross profit in the business segment was $73.2 million in the quarter,
an increase of 9.3%, compared to $67.0 million generated in the prior year
quarter, while gross margin declined by one percentage point, to 34.4%.
Sales increases and currency accounted for the increased gross profit, with
selling price increases and volume-driven efficiencies offsetting the
incremental costs of raw materials and labor. The lower gross margin was
due to increased staffing in North American production facilities in
support of manufacturing initiatives, and higher utility costs.
Higher research and development ("R&D") and selling, general and
administrative ("SG&A") costs limited growth in Pharmaceutical Systems
operating profit, which was $40.3 million, or $0.5 million higher than the
second quarter of 2007. R&D spending increased by $1.2 million over the
prior year quarter, as the Company continues to develop a number of new
products, including an auto-injector device, and a line of Daikyo Crystal
Zenith products, one of which - a luer lock, silicone-free, prefillable
syringe - was commercially introduced during the quarter. SG&A costs, at
$28.8 million, were $4.7 million higher than the prior year quarter and
were 13.5% of segment sales, compared to 12.7% in the same period in 2007.
The increase included $1.9 million of currency translation effects, $1.6
million for compensation costs, including annual pay increases and
increased staffing in information systems and sales positions, and $0.5
million for information technology project costs.
Tech Group Segment
The Tech Group segment generated sales of $69.6 million in the second
quarter, $8.1 million below the prior-year period. Lower sales were due to
the absence of Exubera inhalable insulin device sales and of packaging for
a customer's over-the-counter diet product, which accounted for $10.2
million and $4.2 million of sales, respectively, in the second quarter of
2007. Positive contributions came from $1.9 million of favorable currency
translation, and $3.8 million of growth in contract manufacturing revenue
for intravenous and blood filter products, primarily at the Tech Group's
Michigan and Puerto Rico facilities, as well as higher sales of juice and
dairy carton closures, insulin pens and components and an intra-nasal
delivery device.
Gross profit of $10.4 million in the second quarter compared favorably
to the $9.7 million realized by the Tech Group in the prior year quarter,
and gross margin improved to 14.9% from 12.5%. Lower overhead costs and
production efficiencies resulting from the restructuring plan and from
improved utilization of the new Michigan facility accounted for the gross
margin improvement. Substantially all higher raw material costs were
recovered through pricing. SG&A spending was $1.0 million lower than in the
second quarter of 2007 due to the benefits of restructuring and to lower
intangible asset amortization. The improved gross margins and lower SG&A
costs contributed to an operating profit of $4.7 million in the quarter,
compared to $3.5 million in the prior-year period, excluding the effects of
restructuring and other items.
Restructuring and Other Items
West announced a restructuring plan for the operations in the Tech
Group segment during the fourth quarter of 2007. Pre-tax charges of $1.4
million were incurred pursuant to that plan in the second quarter of 2008,
and charges of $2.4 million were incurred through the first half of 2008.
The Company now estimates that it will incur between $4.0 million and $5.0
million of plan costs in 2008, or between $1 million and $2 million less
than previously estimated.
A first quarter 2008 settlement agreement with Nektar Therapeutics
provided for the reimbursement of the Company's costs of maintaining and
closing the Exubera device production facility and of related tangible
investments. The Company received the final payment under that contract in
the second quarter, recognizing a pre-tax gain of $6.6 million. The payment
included reimbursement for facility conversion costs, some of which have
not yet been recorded or incurred, including an estimated $3.5 million to
be incurred in the second half of 2008.
Corporate and Other Items
Unallocated corporate general and administrative costs declined by $0.4
million, stock-based compensation costs declined $0.3 million and US
pension costs declined slightly, when compared to the second quarter of
2007. Lower stock-based compensation plan costs reflect a decline in the
Company's share price during the 2008 quarter, compared to an increase in
share price and related plan costs during the same period last year.
Net interest expense was $1.8 million higher than in the prior-year
quarter, primarily as a result of lower cash investment balances and lower
market yields on invested cash. The Company's adjusted, or non-GAAP,
effective tax rate was 26.3% in the quarter, based on a revised expected
annual effective tax rate of 26.8% for 2008. These are non-GAAP rates
because each is determined by excluding the separately measured tax effects
of restructuring costs, the contract settlement gain and discrete tax
benefits recognized in the first quarter of 2008. The comparable quarterly
and expected annual non-GAAP effective rates in the prior year quarter were
28.4% and 29.3%, respectively, which exclude discrete tax benefits
recognized in that quarter. The 2.5 percentage point decline in the
expected annual effective rate is primarily due to lower statutory and
concessionary tax rates on income of certain of the Company's international
operations.
2008 Guidance
For the full-year 2008, West's financial guidance, at assumed exchange
rates(2), is summarized as follows:
2008 Guidance(2)
Estimated Consolidated Sales $1,080 million
Pharmaceutical Systems Revenue Estimate $825 to $ 835 million
Tech Group Revenue Estimate (includes
$13 million of inter-company sales) $260 to $ 270 million
Consolidated Gross Profit Margin Estimate 29.1%
Adjusted Diluted EPS(1)(3) Estimate $2.40 to $ 2.50
(1)(2)(3) See corresponding notes under "Supplemental Information and
Notes to Non-GAAP Financial Measures" in the tables following the text of
this release.
Second-Quarter Conference Call
The Company will host a conference call to discuss the results and
business expectations at 9:00 a.m. Eastern Daylight Time today. To
participate on the call please dial (888)790-3758 or (210) 839-8398. The
passcode is WST.
A live broadcast of the conference call will be available at the
Company's web site, http://www.westpharma.com, in the "Investor" section. Please
allow extra time prior to the call to visit the site and download the
streaming media software required to listen to the Internet broadcast. An
online archive of the broadcast will be available at the site two hours
after the live call and will be available through Tuesday, August 19, 2008,
by dialing (800) 944-0939 or (203)369-3413 and entering conference ID#
2885611.
Daikyo Crystal Zenith(R) is a registered trademark of Daikyo Seiko, Ltd
Exubera(R) is a registered trademark of Pfizer, Inc.
Contacts:
West Pharmaceutical Services, Inc.
Michael A. Anderson
Vice President and Treasurer
(610) 594-3345
Investors and Financial
FD
Evan Smith / Theresa Kelleher
(212) 850-5600
wst@fd.com
WEST PHARMACEUTICAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net sales $279.3 100% $263.7 100% $550.0 100% $521.3 100%
Cost of goods sold 195.7 70 187.0 71 382.9 70 364.2 70
Gross profit 83.6 30 76.7 29 167.1 30 157.1 30
Research and
development 4.9 2 3.8 1 10.3 2 7.4 1
Selling, general and
administrative
expenses 40.9 15 38.2 15 81.0 15 75.2 15
Restructuring and
other items (5.2) (2) - - (5.5) (1) - -
Other expense, net 0.4 - (0.2) - 0.6 - 0.1 -
Operating profit 42.6 15 34.9 13 80.7 14 74.4 14
Interest expense, net 3.5 1 1.7 - 6.6 1 3.9 1
Income before
income taxes
and minority
interests 39.1 14 33.2 13 74.1 13 70.5 13
Provision for income
taxes 10.8 4 7.0 3 19.2 3 18.2 3
Minority interests 0.2 - 0.1 - 0.4 - 0.2 -
Income from
consolidated
operations 28.1 10% 26.1 10% 54.5 10% 52.1 10%
Equity in net income
of affiliated
companies 0.6 0.4 0.5 0.9
Income from
continuing
operations 28.7 26.5 55.0 53.0
Discontinued
operations, net
of tax - (0.5) - (0.5)
Net income $28.7 $26.0 $55.0 $52.5
Net income per share:
Basic:
Continuing
operations $0.89 $0.80 $1.70 $1.61
Discontinued
operations - (0.01) - (0.01)
$0.89 $0.79 $1.70 $1.60
Assuming dilution:
Continuing
operations $0.82 $0.74 $1.58 $1.51
Discontinued
operations - (0.01) - (0.01)
$0.82 $0.73 $1.58 $1.50
Average common
shares outstanding 32.4 32.9 32.3 32.8
Average shares
assuming dilution 36.3 37.1 36.2 35.8
WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT INFORMATION
(UNAUDITED)
(in millions)
Three Months Ended Six Months Ended
June 30, June 30,
Net Sales: 2008 2007 2008 2007
Pharmaceutical Systems $212.6 $189.3 $420.1 $380.7
Tech Group 69.6 77.7 136.0 146.7
Eliminations (2.9) (3.3) (6.1) (6.1)
Consolidated Total $279.3 $263.7 $550.0 $521.3
Operating Profit (Loss):
Pharmaceutical Systems $40.3 $39.8 $83.9 $84.5
Tech Group 4.7 3.5 8.4 6.3
U.S. pension expense (1.5) (1.6) (3.0) (3.2)
Stock-based compensation expense (1.6) (1.9) (4.0) (2.3)
General corporate costs (4.5) (4.9) (10.1) (10.9)
Restructuring and other items 5.2 - 5.5 -
Consolidated Total $42.6 $34.9 $80.7 $74.4
WEST PHARMACEUTICAL SERVICES
NON-GAAP MEASURES (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2008
(in millions, except per share data)
As Contract
Reported settle- Non-GAAP
June 30, Restruc- ment, Tax June 30,
2008 turing net benefits 2008
Operating profit $42.6 $1.4 $(6.6) $- $37.4
Interest expense, net 3.5 - - - 3.5
Income before income taxes
and minority interests 39.1 1.4 (6.6) - 33.9
Income tax expense (benefit) 10.8 0.5 (2.4) - 8.9
Minority interests 0.2 - - - 0.2
Income from consolidated
operations 28.1 0.9 (4.2) - 24.8
Equity in net income of
affiliated companies 0.6 - - - 0.6
Income from continuing
operations $28.7 $0.9 $(4.2) $- $25.4
Net income per diluted share:
Continuing operations $0.82 $0.02 $(0.11) $- $0.73
WEST PHARMACEUTICAL SERVICES
NON-GAAP MEASURES (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2008
(in millions, except per share data)
As Contract
Reported settle- Non-GAAP
June 30, Restruc- ment, Tax June 30,
2008 turing net benefits 2008
Operating profit $80.7 $2.4 $(7.9) $- $75.2
Interest expense, net 6.6 - - - 6.6
Income before income taxes
and minority interests 74.1 2.4 (7.9) - 68.6
Income tax expense (benefit) 19.2 0.9 (2.9) 1.1 18.3
Minority interests 0.4 - - - 0.4
Income from consolidated
operations 54.5 1.5 (5.0) (1.1) 49.9
Equity in net income of
affiliated companies 0.5 - - - 0.5
Income from continuing
operations $55.0 $1.5 $(5.0) $(1.1) $50.4
Net income per diluted share:
Continuing operations $1.58 $0.04 $(0.14) $(0.03) $1.45
Please refer to the "Notes to Non-GAAP financial measures" for more
information.
Non-GAAP measures are intended to explain or aid in the use of, not as a
substitute for, the related GAAP financial measure.
WEST PHARMACEUTICAL SERVICES
NON-GAAP MEASURES (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2007
(in millions, except per share data)
As Reported Non-GAAP
June 30, R&D Tax Foreign Tax June 30,
2007 Credits Credits 2007
Operating profit $34.9 $- $- $34.9
Interest expense, net 1.7 - - 1.7
Income before income taxes
and minority interests 33.2 - - 33.2
Income tax expense (benefit) 7.0 1.6 0.8 9.4
Minority interests 0.1 - - 0.1
Income from consolidated
operations 26.1 (1.6) (0.8) 23.7
Equity in net income of
affiliated companies 0.4 - - 0.4
Income from continuing
operations $26.5 ($1.6) ($0.8) $24.1
Net income per diluted share:
Continuing operations $0.74 ($0.04) ($0.02) $0.68
WEST PHARMACEUTICAL SERVICES
NON-GAAP MEASURES (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2007
(in millions, except per share data)
As Reported Non-GAAP
June 30, R&D Tax Foreign Tax June 30,
2007 Credits Credits 2007
Operating profit $74.4 $- $- $74.4
Interest expense, net 3.9 - - 3.9
Income before income taxes
and minority interests 70.5 - - 70.5
Income tax expense (benefit) 18.2 1.6 0.8 20.6
Minority interests 0.2 - - 0.2
Income from consolidated
operations 52.1 (1.6) (0.8) 49.7
Equity in net income of
affiliated companies 0.9 - - 0.9
Income from continuing
operations $53.0 ($1.6) ($0.8) $50.6
Net income per diluted share:
Continuing operations $1.51 ($0.04) ($0.02) $1.45
Please refer to the "Notes to Non-GAAP financial measures" for more
information.
Non-GAAP measures are intended to explain or aid in the use of, not as a
substitute for, the related GAAP financial measure.
West Pharmaceutical Services, INC.
SUPPLEMENTAL INFORMATION AND NOTES TO NON-GAAP FINANCIAL MEASURES
For additional details, please see the attached financial schedules and
Safe Harbor Statement.
For the purpose of aiding the comparison of our year-to-year results,
reference is made in this release and may be made in management commentary
on the release, to results excluding certain items in an effort to improve
the analysis of underlying trends in the financial statements, and for
consistency with performance metrics used for incentive compensation
programs. These re- measured period results are not in conformity with
United States generally accepted accounting principles ("GAAP") and are
"non-GAAP financial measures." The non-GAAP financial measures are intended
to explain or aid in the use of, not as a substitute for, the related GAAP
financial measures.
(1) "Adjusted operating profit" and its components and "adjusted
diluted earnings per share (EPS)," both of which are non-GAAP financial
measures, are defined as reported operating profit and reported diluted EPS
excluding the impact of the 2008 Restructuring Charges, the 2008 Contract
Settlement gain, and the 2008 and 2007 Income Tax Adjustments, as described
below. Reconciliations of the non-GAAP financial measures to the most
comparable financial results prepared in conformity to GAAP are provided in
the materials accompanying this earnings release.
2008 Restructuring Charges:
For the three- and six-month periods ended June 30, 2008, we have
incurred $1.4 million and $2.4 million, respectively, of restructuring
charges as part of a plan to align the plant capacity and workforce of our
Tech Group segment with the current business outlook for the segment and as
part of a longer-term strategy of focusing the business on proprietary
products. We now expect to incur between $4 million and $5 million in
related severance and other costs during 2008 as we consolidate our tooling
operations into one facility and reduce other production, engineering and
administrative operations.
2008 Contract Settlement:
In February of 2008, we entered into a termination and continuation
agreement with our customer Nektar Therapeutics, which provided for the
full reimbursement of our investment in materials, facilities, equipment,
personnel and other costs associated with the shutdown of manufacturing
operations for the Exubera(R) inhalation device. The agreement required us
to maintain the production facility for up to one year, while Nektar
determined how to proceed with the product. During the first quarter of
2008, we received payments from Nektar, which more than offset the related
raw materials, severance and facility costs incurred, resulting in a net
first quarter gain of $1.3 million. In April of 2008, Nektar notified us
that it no longer required us to maintain the production facility. As part
of the termination agreement, we received additional payments in the second
quarter of 2008, offset by compensation and overhead costs incurred at our
production facility, resulting in a net second quarter gain of $6.6
million. For the six month period ending June 30, 2008, our gain on the
contract settlement totaled $7.9 million. We plan to convert the existing
assets of the production facility to other operations in our Tech Group
segment and expect to incur transition and carrying costs of approximately
$3.5 million during the remainder of 2008 before this site is ready to
commence new production operations, resulting in an estimated final net
gain on the contract settlement of approximately $4.4 million.
2008 Income Tax Adjustments:
During the first quarter of 2008, we completed an agreement with the
republic of Singapore which reduces our income tax rate in Singapore for a
period of 10 years, provided we comply with certain capital spending and
employment targets included in our expansion plans for our production
facility in that country. The effective date of the agreement was
retroactively applied to income earned after June 1, 2007. As a result of
the agreement, we recorded a $1.0 million tax benefit in the first quarter
of 2008 resulting from the remeasurement of our current and deferred income
tax liabilities at the new tax rate. In addition, we recorded an unrelated
$0.1 million tax benefit resulting from the expiration of tax audit years
in certain foreign jurisdictions.
2007 Income Tax Adjustments:
In the second quarter of 2007, the Company revised its tax planning
strategies resulting in the recognition of a $0.8 million foreign tax
credit and completed a project supporting $1.6 million in research and
development credits related to prior year tax returns in Ireland and the
United States. As these items do not relate to ordinary income in the
current year, they were accounted for discretely in the period in which
they occurred and excluded from the prior year effective tax rate
calculation.
(2) Reflects relative currency valuations that are at or near current
levels, most significantly the Euro, which is reflected in the Company's
estimates for the remainder of the year at $1.50 per Euro.
(3) Reconciliation of 2008 Adjusted Guidance to 2008 Reported Guidance
Full Year 2008 Guidance
Net Income Diluted Earnings Per
(in millions) Share
Adjusted guidance $83.0 - $86.7 $2.40 - $2.50
Restructuring, net of tax (3.3) - (2.6) (.09) - (.07)
Contract settlement gain,
net of tax 2.9 .08
Discrete tax benefits 1.1 .03
Reported guidance $83.7 - $88.1 $2.42 - $2.54
WEST PHARMACEUTICAL SERVICES
FINANCIAL CONDITION
(UNAUDITED)
(in millions)
As of As of
June 30, 2008 December 31, 2007
Cash $102.3 $108.4
Working capital $264.9 $229.4
Debt $398.2 $395.1
WEST PHARMACEUTICAL SERVICES
CASH FLOW ITEMS
(UNAUDITED)
(in millions)
Six Months Ended June 30
2008 2007
Depreciation and amortization $29.9 $28.3
Operating cash flow $48.9 $45.7
Capital expenditures $53.2 $45.1
Forward Looking Statements
This press release contains forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are
based on management's beliefs and assumptions, current expectations,
estimates and forecasts. Statements that are not historical facts,
including statements that are preceded by, followed by, or that include,
words such as "estimate," "expect," "intend," "believe," "plan,"
"anticipate" and other words and terms of similar meaning are
forward-looking statements. West's estimated or anticipated future results,
product performance or other non-historical facts are forward-looking and
reflect our current perspective on existing trends and information.
Many of the factors that will determine the Company's future results
are beyond the ability of the Company to control or predict. These
statements are subject to known or unknown risks or uncertainties, and
therefore, actual results could differ materially from past results and
those expressed or implied in any forward-looking statement. You should
bear this in mind as you consider forward-looking statements. We undertake
no obligation to publicly update forward-looking statements, whether as a
result of new information, future events or otherwise.
Important factors that may affect future results include, but are not
limited to, the following:
Revenue and profitability:
-- sales demand and our ability to meet that demand;
-- competition from other providers in the Company's businesses,
including customers' in-house operations, and from lower-cost producers in
emerging markets, which can impact unit volume, price and profitability;
-- customers' changing inventory requirements and manufacturing plans
that alter existing orders or ordering patterns for the products we supply
to them;
-- the timing, regulatory approval and commercial success of customer
products that incorporate our products, including the availability and
scope of relevant public and private health insurance reimbursement for
prescription products, medical devices and components and medical
procedures in which our customers' products are employed or consumed;
-- average profitability, or mix, of products sold in any reporting
period;
-- maintaining or improving production efficiencies and overhead
absorption;
-- the timeliness and effectiveness of capital investments,
particularly capacity expansions, including the effects of delays and cost
increases associated with construction, availability and cost of capital
goods, and necessary internal, governmental and customer approvals of
planned and completed projects, and the demand for goods to be produced in
new facilities;
-- dependence on third-party suppliers and partners, some of which are
single-source suppliers of critical materials and products, including our
Japanese partner and affiliate Daikyo Seiko, Ltd.;
-- the availability and cost of skilled employees required to meet
increased production, managerial, research and other needs of the Company,
including professional employees and persons employed under collective
bargaining agreements;
-- interruptions or weaknesses in our supply chain, which could cause
delivery delays or restrict the availability of raw materials and key
bought- in components and finished products;
-- raw-material price escalation, particularly petroleum-based raw
materials, and our ability to pass raw-material cost increases on to
customers through price increases;
-- claims associated with product quality, including product liability,
and the related costs of defending and obtaining insurance indemnifying the
Company for the cost of such claims;
Other Risks:
-- the cost and progress of development, regulatory approval and
marketing of new products as a result of the Company's research and
development efforts;
-- the defense of self-developed or in-licensed intellectual property,
including patents, trade and service marks and trade secrets;
-- dependence of normal business operations on information and
communication systems and technologies provided, installed or operated by
third parties, including costs and risks associated with planned upgrades
to existing business systems;
-- the relative strength of the U.S. dollar in relation to other
currencies, particularly the Euro, British Pound, and Japanese Yen;
-- changes in tax law or loss of beneficial tax incentives;
-- the conclusion of unresolved tax positions inconsistent with
currently expected outcomes;
-- the timely execution and realization of savings anticipated by the
restructuring plan for certain operations and functions of The Tech Group,
announced in December 2007;
and other risks and uncertainties detailed in West's filings with the
Securities and Exchange Commission, including our annual report on Form
10-K for the year 2007 and our periodic reports on Form 10-Q and Form 8-K.
You should evaluate any statement in light of these important factors.
SOURCE West Pharmaceutical Services, Inc.
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Related links:
http://www.westpharma.com/
CONTACT:
Michael A. Anderson, Vice President and
Treasurer of West Pharmaceutical Services, Inc., +1-610-594-3345;
or Investors and Financial, Evan Smith or Theresa Kelleher, both
of FD for West Pharmaceutical Services, Inc., +1-212-850-5600,
wst@fd.com
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