UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-K
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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WEST PHARMACEUTICAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
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Pennsylvania
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23-1210010
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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530 Herman O. West Drive, Exton, PA
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19341-0645
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $.25 per share
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Document
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Parts Into Which Incorporated
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Proxy Statement for the Annual Meeting of Shareholders to be held May 6, 2014
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Part III
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Page
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BUSINESS
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RISK FACTORS
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UNRESOLVED STAFF COMMENTS
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PROPERTIES
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LEGAL PROCEEDINGS
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MINE SAFETY DISCLOSURES
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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SELECTED FINANCIAL DATA
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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CONTROLS AND PROCEDURES
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OTHER INFORMATION
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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EXECUTIVE COMPENSATION
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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Packaging Systems
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Contract Analytical Laboratory:
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||||||
Manufacturing:
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North American Operations
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North American Operations
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United States
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United States
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Exton, PA
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Clearwater, FL
(1)
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Jersey Shore, PA
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Mold-and-Die Tool Shops:
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Kearney, NE
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North American Operations
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Kinston, NC
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United States
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Lititz, PA
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Upper Darby, PA
(2)
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St. Petersburg, FL
(1)
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European Operations
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South American Operations
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England
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Brazil
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Bodmin
(2)
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Sao Paulo
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Delivery Systems
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European Operations
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Manufacturing:
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Denmark
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North American Operations
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Horsens
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United States
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Frankfort, IN
(2)
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England
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Grand Rapids, MI
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St. Austell
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Phoenix, AZ
(2)
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Scottsdale, AZ
(2)(3)
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France
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Tempe, AZ
(2)
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Le Nouvion
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Williamsport, PA
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Germany
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Puerto Rico
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Eschweiler
(1)
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Cayey
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Stolberg
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European Operations
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Serbia
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France
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Kovin
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Le Vaudreuil
(2)
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Asia Pacific Operations
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Ireland
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China
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Dublin
(2)
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Qingpu
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Mold-and-Die Tool Shop:
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India
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European Operations
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Chennai
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Denmark
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Roskilde
(2)
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Singapore
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Jurong
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(1)
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This manufacturing facility is also used for research and development activities.
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(2)
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This facility is leased in whole or in part.
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(3)
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This manufacturing facility is also used for mold and die production.
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Name
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Age
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Position
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Michael A. Anderson
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58
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Vice President and Treasurer since June 2001. He was Finance Director, Drug Delivery Systems Division from October 1999 to June 2001, Vice President, Business Development from April 1997 to October 1999 and Director of Taxes from July 1992 to April 1997.
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Warwick Bedwell
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54
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President, Pharmaceutical Packaging Systems Asia Pacific Region since January 3, 2011. Previously, he served as Vice President and Commercial Director-Bone and Rheumatology for Roche Products (UK) Limited, a biotech company, from October 2008 to August 2010. From January 2007 to October 2008, he served as Vice President and Global Head of Business Development for Hoffman LaRoche Inc. (U.S.) and from June 2003 to December 2006, he served as President and General Manager of Roche Inc. in the Philippines. Prior thereto, he held numerous positions in commercial operations for Roche Products Pty Ltd. in Australia.
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Rachael M. Bushey
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36
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Vice President, Deputy General Counsel and Corporate Secretary since October 2013. Previously, she served as Assistant General Counsel and Assistant Secretary from May 2012 until October 2013, and Associate Counsel, Securities and Corporate Governance Matters, from December 2010 until May 2012. Prior to joining West, she was a corporate attorney at the law firm of Pepper Hamilton LLP.
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William J. Federici
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54
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Senior Vice President, and Chief Financial Officer since joining the Company in August 2003. He was National Industry Director for Pharmaceuticals of KPMG LLP (accounting firm) from June 2002 until August 2003 and, prior thereto, an audit partner with Arthur Andersen, LLP.
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Karen A. Flynn
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51
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President, Pharmaceutical Packaging Systems Americas Region since June 2012. She was Vice President, Sales from May 2008 to June 2012. From 2000 to 2008, she worked in Sales Management, most recently as Vice President, Global Accounts, for Catalent (formerly known as Cardinal Health). Prior thereto, she held various positions at West, including Quality, Research and Development, and Sales.
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John R. Gailey III
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59
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Senior Vice President, General Counsel since May 1994, and Chief Compliance Officer. He served as Corporate Counsel from 1991 until his appointment as General Counsel.
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Jeffrey C. Hunt
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55
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President, Pharmaceutical Packaging Systems since January 3, 2011. Previously, he served as Vice President, Strategic Planning and Business Development from July 2010 to January 2011. From August 2006 to July 2009, he served as President of the Patient Care and Safety Products Global Business Unit for Covidien. From August 2004 to August 2006, he was Vice President and General Manager of the SharpSafety Division of Tyco Healthcare/Kendall, Vice President of Marketing from June 2003 to August 2004 and Marketing Director from March 1998 to June 2003.
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Heino Lennartz
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48
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President, Pharmaceutical Packaging Systems Europe Region since February 2010 and, prior thereto, President, Europe, Pharmaceutical Systems since July 2009. He was Vice President Finance, MIS & Purchasing for Europe & Asia Pacific from December 2006 until July 2009. Mr. Lennartz was Vice President Corporate Finance of AIXTRON AG, a leading semiconductor equipment company, from 2003 to 2006 and, prior thereto, held various positions, including Director Business Systems Europe, at GDX Automotive, a rubber and plastic car body sealing system supplier.
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Richard D. Luzzi
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62
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Senior Vice President, Human Resources since June 2002. He served as Vice President, Human Resources of GS Industries, a steel manufacturer, from 1998 to 2002, Vice President, Human Resources of Lukens Steel from 1993 to 1998, and Vice President, Human Resources of Rockwell International, from 1990 to 1993.
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Daniel Malone
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52
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Vice President and Corporate Controller since August 2011. He was Vice President of Finance, Pharmaceutical Packaging Systems Americas Region from September 2008 to August 2011 and Director of Financial and Management Reporting from October 1999 to September 2008.
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Donald E. Morel, Jr., Ph.D.
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56
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Chairman of the Board of the Company since March 2003 and our Chief Executive Officer since April 2002. He was our President from April 2002 to June 2006 and Chief Operating Officer from May 2001 to April 2002. He was Division President, Drug Delivery Systems from October 1999 to May 2001, and prior thereto, Group President.
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John E. Paproski
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57
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President, Pharmaceutical Delivery Systems since December 2009. He was Vice President of Innovation, from January 2005 to December 2009 and Vice President, Global Product Development from August 1996 to January 2005. He has held numerous other operations and engineering positions within the Company, including Vice President of Rubber Operations from August 1993 to January 2005 and Director of Manufacturing Engineering from 1991 to 1993.
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First Quarter
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Second Quarter
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Third Quarter
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Fourth Quarter
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Year
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High
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Low
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High
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Low
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High
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Low
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High
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Low
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High
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Low
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2013
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32.74
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27.31
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35.45
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30.85
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41.54
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35.25
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50.60
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39.62
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50.60
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27.31
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2012
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21.51
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18.68
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25.25
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19.65
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26.74
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23.44
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28.01
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25.25
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28.01
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18.68
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Period
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Total number of shares purchased
(1)(2)
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Average price paid per share
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Total number of shares purchased as
part of publicly
announced plans or
programs
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Maximum number
of shares that may
yet be purchased
under the plans or
programs
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|||||
October 1 – 31, 2013
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—
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$
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—
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—
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—
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November 1 – 30, 2013
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3,979
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47.01
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—
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—
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December 1 – 31, 2013
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110
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48.77
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—
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—
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Total
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4,089
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$
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47.06
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—
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—
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(1)
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Includes 530 shares purchased on behalf of employees enrolled in the Non-Qualified Deferred Compensation Plan for Designated Employees (Amended and Restated Effective January 1, 2008). Under the plan, Company match contributions are delivered to the plan’s investment administrator, who then purchases shares in the open market and credits the shares to individual plan accounts.
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(2)
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Includes 3,559 shares of common stock acquired from employees who tendered already-owned shares to satisfy the exercise price on option exercises, as part of the 2011 Omnibus Incentive Compensation Plan (the "2011 Plan").
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(in millions, except per share data)
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2013
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2012
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2011
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2010
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2009
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|||||
SUMMARY OF OPERATIONS
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||||||||||
Net sales
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$
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1,368.4
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$
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1,266.4
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$
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1,192.3
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$
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1,104.7
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$
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1,055.7
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Operating profit
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162.4
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135.1
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109.6
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90.7
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97.5
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|||||
Net income
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$
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112.3
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$
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80.7
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$
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75.5
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$
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65.3
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$
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72.6
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Net income per share:
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||||||||||
Basic (1)
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$
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1.61
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$
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1.19
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$
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1.12
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$
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0.98
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$
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1.11
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Diluted (2)
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1.57
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1.15
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1.08
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0.95
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1.06
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|||||
Weighted average common shares outstanding
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69.6
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68.1
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67.3
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66.7
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65.7
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|||||
Weighted average shares assuming dilution
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71.4
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71.8
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74.0
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73.5
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72.6
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Dividends declared per common share
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$
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0.39
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$
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0.37
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$
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0.35
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$
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0.33
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$
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0.31
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YEAR-END FINANCIAL POSITION
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||||||||||
Cash and cash equivalents
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$
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230.0
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$
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161.9
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$
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91.8
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$
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110.2
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$
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83.1
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Working capital
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413.8
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295.5
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228.8
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266.9
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226.1
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|||||
Total assets
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1,671.6
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1,564.0
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1,399.1
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1,294.3
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1,271.0
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|||||
Total invested capital:
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||||||||||
Total debt
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373.5
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411.5
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349.4
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358.4
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379.6
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|||||
Total equity
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906.4
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728.9
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654.9
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625.7
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579.1
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|||||
Total invested capital
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$
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1,279.9
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$
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1,140.4
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$
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1,004.3
|
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$
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984.1
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$
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958.7
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PERFORMANCE MEASUREMENTS (3)
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||||||||||
Gross margin (a)
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31.8
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%
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30.6
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%
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28.5
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%
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28.8
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%
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28.8
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%
|
|||||
Operating profitability (b)
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11.9
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%
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10.7
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%
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9.2
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%
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8.2
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%
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9.2
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%
|
|||||
Effective tax rate
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27.4
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%
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30.2
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%
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25.3
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%
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18.3
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%
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16.2
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%
|
|||||
Return on invested capital (c)
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9.8
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%
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8.8
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%
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8.2
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%
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7.6
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%
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8.9
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%
|
|||||
Net debt-to-total invested capital (d)
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13.7
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%
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25.5
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%
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28.2
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%
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28.4
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%
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33.9
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%
|
|||||
Research and development expenses
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$
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37.9
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$
|
33.2
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$
|
29.1
|
|
$
|
23.9
|
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$
|
19.9
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|
Operating cash flow
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220.5
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|
187.4
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130.7
|
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138.3
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|
137.7
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|||||
Stock price range
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$50.60-27.31
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$28.01-18.68
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$23.98-17.75
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$22.42-16.37
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$20.89-13.93
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▪
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Net income in 2013 included the impact of a loss on extinguishment of debt of $0.2 million and net discrete tax charges of $3.6 million.
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▪
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Net income in 2012 included the impact of restructuring and related charges of $1.4 million (net of $0.7 million in tax), an impairment charge of $2.1 million (net of $1.3 million in tax), an increase in acquisition-related contingencies of $1.0 million (net of $0.2 million in tax), a loss on extinguishment of debt of $9.8 million (net of $1.8 million in tax) and discrete tax charges of $2.1 million.
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▪
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Net income in 2011 included the impact of restructuring and related charges of $3.5 million (net of $1.8 million in tax), income from the reduction of acquisition-related contingencies of $0.2 million, special separation benefits related to the retirement of our former President and Chief Operating Officer of $1.8 million (net of $1.1 million in tax) and net discrete tax charges of $1.4 million.
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▪
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Net income in 2010 included the impact of restructuring charges and asset impairments of $10.2 million (net of $5.7 million in tax), income from the reduction of acquisition-related contingencies of $1.6 million (net of $0.2 million in tax) and the recognition of income tax benefits totaling $1.1 million, the majority of which resulted from the reversal of liabilities for unrecognized tax benefits.
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▪
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Net income in 2009 included the impact of restructuring charges and asset impairments of $6.3 million (net of $3.2 million in tax) and income tax benefits totaling $6.1 million primarily relating to reversals of liabilities for unrecognized tax benefits and the identification of additional qualified R&D activities related to prior years.
|
•
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Net sales were $1,368.4 million, an increase of 8.0% from 2012. Excluding foreign currency effects, net sales increased by $90.6 million, or 7.2%.
|
•
|
Gross profit was $434.7 million, an increase of 12.1% from 2012, and our gross margin percentage increased by 1.2 margin points to 31.8%.
|
•
|
Operating profit for 2013 was $162.4 million, an increase of 20.2% from 2012, and our operating profit margin increased by 1.2 margin points to 11.9%.
|
•
|
Net income for 2013 was $112.3 million, or $1.57 per diluted share, compared to $80.7 million, or $1.15 per diluted share, in 2012.
|
•
|
Our financial position remains strong, with net cash provided by operating activities totaling $220.5 million in 2013.
|
•
|
Our Board of Directors approved an increase in the quarterly cash dividend, which began with the fourth quarter 2013 dividend of $0.10 per share.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013/2012
|
|
2012/2011
|
||||||||
Packaging Systems
|
$
|
996.0
|
|
|
$
|
915.1
|
|
|
$
|
857.4
|
|
|
8.8
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%
|
|
6.7
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%
|
Delivery Systems
|
374.1
|
|
|
352.1
|
|
|
336.7
|
|
|
6.2
|
%
|
|
4.6
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%
|
|||
Intersegment sales elimination
|
(1.7
|
)
|
|
(0.8
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|||
Consolidated net sales
|
$
|
1,368.4
|
|
|
$
|
1,266.4
|
|
|
$
|
1,192.3
|
|
|
8.0
|
%
|
|
6.2
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013/2012
|
|
2012/2011
|
||||||||
Packaging Systems:
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
$
|
361.4
|
|
|
$
|
318.4
|
|
|
$
|
276.5
|
|
|
13.5
|
%
|
|
15.2
|
%
|
Gross Margin
|
36.3
|
%
|
|
34.8
|
%
|
|
32.2
|
%
|
|
|
|
|
|||||
Delivery Systems:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gross Profit
|
$
|
73.3
|
|
|
$
|
69.3
|
|
|
$
|
62.8
|
|
|
5.8
|
%
|
|
10.4
|
%
|
Gross Margin
|
19.6
|
%
|
|
19.7
|
%
|
|
18.6
|
%
|
|
|
|
|
|||||
Consolidated Gross Profit
|
$
|
434.7
|
|
|
$
|
387.7
|
|
|
$
|
339.3
|
|
|
12.1
|
%
|
|
14.3
|
%
|
Consolidated Gross Margin
|
31.8
|
%
|
|
30.6
|
%
|
|
28.5
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013/2012
|
|
2012/2011
|
||||||||
Packaging Systems
|
$
|
15.1
|
|
|
$
|
12.7
|
|
|
$
|
11.6
|
|
|
18.9
|
%
|
|
9.5
|
%
|
Delivery Systems
|
22.8
|
|
|
20.5
|
|
|
17.5
|
|
|
11.2
|
%
|
|
17.1
|
%
|
|||
Consolidated R&D costs
|
$
|
37.9
|
|
|
$
|
33.2
|
|
|
$
|
29.1
|
|
|
14.2
|
%
|
|
14.1
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013/2012
|
|
2012/2011
|
||||||||
Packaging Systems
|
$
|
128.4
|
|
|
$
|
116.7
|
|
|
$
|
110.6
|
|
|
10.0
|
%
|
|
5.5
|
%
|
Delivery Systems
|
42.6
|
|
|
37.0
|
|
|
35.6
|
|
|
15.1
|
%
|
|
3.9
|
%
|
|||
Corporate
|
63.9
|
|
|
64.4
|
|
|
44.9
|
|
|
(0.8
|
)%
|
|
43.4
|
%
|
|||
Consolidated SG&A costs
|
$
|
234.9
|
|
|
$
|
218.1
|
|
|
$
|
191.1
|
|
|
7.7
|
%
|
|
14.1
|
%
|
SG&A as a % of net sales
|
17.2
|
%
|
|
17.2
|
%
|
|
16.0
|
%
|
|
|
|
|
Expense (income)
|
Year Ended December 31,
|
||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Packaging Systems
|
$
|
0.9
|
|
|
$
|
1.5
|
|
|
$
|
1.7
|
|
Delivery Systems
|
(1.5
|
)
|
|
(6.6
|
)
|
|
(0.1
|
)
|
|||
Corporate and other unallocated items:
|
|
|
|
|
|
||||||
Corporate
|
0.1
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|||
Restructuring and related charges
|
—
|
|
|
2.1
|
|
|
5.3
|
|
|||
Impairment charge
|
—
|
|
|
3.4
|
|
|
—
|
|
|||
Special separation benefits
|
—
|
|
|
—
|
|
|
2.9
|
|
|||
Acquisition-related contingencies
|
—
|
|
|
1.2
|
|
|
(0.2
|
)
|
|||
Consolidated restructuring and other items
|
$
|
(0.5
|
)
|
|
$
|
1.3
|
|
|
$
|
9.5
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013/2012
|
|
2012/2011
|
||||||||
Segments:
|
|
|
|
|
|
|
|
|
|
||||||||
Packaging Systems
|
$
|
217.0
|
|
|
$
|
187.5
|
|
|
$
|
152.6
|
|
|
15.7
|
%
|
|
22.9
|
%
|
Delivery Systems
|
9.4
|
|
|
18.4
|
|
|
9.8
|
|
|
(48.9
|
)%
|
|
87.8
|
%
|
|||
Corporate and other unallocated items:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate
|
(64.0
|
)
|
|
(64.1
|
)
|
|
(44.8
|
)
|
|
(0.2
|
)%
|
|
43.1
|
%
|
|||
Other unallocated expense
|
—
|
|
|
(6.7
|
)
|
|
(8.0
|
)
|
|
|
|
|
|||||
Consolidated operating profit
|
$
|
162.4
|
|
|
$
|
135.1
|
|
|
$
|
109.6
|
|
|
20.2
|
%
|
|
23.3
|
%
|
Consolidated operating profit margin
|
11.9
|
%
|
|
10.7
|
%
|
|
9.2
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013/2012
|
|
2012/2011
|
||||||||
Interest expense
|
$
|
18.6
|
|
|
$
|
18.6
|
|
|
$
|
19.3
|
|
|
—
|
%
|
|
(3.6
|
)%
|
Capitalized interest
|
(1.6
|
)
|
|
(1.9
|
)
|
|
(1.1
|
)
|
|
(15.8
|
)%
|
|
72.7
|
%
|
|||
Interest income
|
(1.9
|
)
|
|
(1.8
|
)
|
|
(1.3
|
)
|
|
5.6
|
%
|
|
38.5
|
%
|
|||
Interest expense, net
|
$
|
15.1
|
|
|
$
|
14.9
|
|
|
$
|
16.9
|
|
|
1.3
|
%
|
|
(11.8
|
)%
|
($ in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Net cash provided by operating activities
|
$
|
220.5
|
|
|
$
|
187.4
|
|
|
$
|
130.7
|
|
Net cash used in investing activities
|
(149.9
|
)
|
|
(116.0
|
)
|
|
(120.5
|
)
|
|||
Net cash used in financing activities
|
(5.1
|
)
|
|
(3.4
|
)
|
|
(24.7
|
)
|
($ in millions)
|
December 31, 2013
|
|
December 31, 2012
|
||||
Cash and cash equivalents
|
$
|
230.0
|
|
|
$
|
161.9
|
|
Short-term investments
|
$
|
7.5
|
|
|
$
|
12.4
|
|
Working capital
|
$
|
413.8
|
|
|
$
|
295.5
|
|
Total debt
|
$
|
373.5
|
|
|
$
|
411.5
|
|
Total equity
|
$
|
906.4
|
|
|
$
|
728.9
|
|
Net debt-to-total invested capital
|
13.7
|
%
|
|
25.5
|
%
|
|
|
Payments Due By Period
|
|||||||||||||
($ in millions)
|
Total
|
Less than 1 year
|
1 - 3 years
|
3 - 5 years
|
More than 5 years
|
||||||||||
Purchase obligations
(1)
|
$
|
31.9
|
|
$
|
17.9
|
|
$
|
14.0
|
|
$
|
—
|
|
$
|
—
|
|
Long-term debt
|
373.1
|
|
2.2
|
|
113.6
|
|
88.6
|
|
168.7
|
|
|||||
Interest on long-term debt and interest rate swaps
(2)
|
97.3
|
|
14.8
|
|
24.2
|
|
15.6
|
|
42.7
|
|
|||||
Capital lease obligations
|
0.4
|
|
—
|
|
0.4
|
|
—
|
|
—
|
|
|||||
Operating lease obligations
|
53.5
|
|
10.5
|
|
16.4
|
|
9.2
|
|
17.4
|
|
|||||
Other long-term liabilities
(3)
|
13.7
|
|
0.1
|
|
1.2
|
|
2.9
|
|
9.5
|
|
|||||
Total contractual obligations
(4)
|
$
|
569.9
|
|
$
|
45.5
|
|
$
|
169.8
|
|
$
|
116.3
|
|
$
|
238.3
|
|
(1)
|
Our business creates a need to enter into various commitments with suppliers. In accordance with U.S. GAAP, these purchase obligations are not reflected in the accompanying consolidated balance sheets. These purchase commitments do not exceed our projected requirements and are in the normal course of business.
|
(2)
|
For fixed-rate long-term debt, interest was based on principal amounts and fixed coupon rates at year end. Future interest payments on variable-rate debt were calculated using principal amounts and the applicable ending interest rate at year end. Interest on fixed-rate derivative instruments was based on notional amounts and fixed interest rates contractually obligated at year end.
|
(3)
|
Represents acquisition-related contingencies. In connection with certain business acquisitions, we agreed to make payments to the sellers when and if certain operating milestones are achieved, such as sales and operating income targets.
|
(4)
|
This table does not include obligations pertaining to pension and postretirement benefits because the actual amount and timing of future contributions may vary significantly depending upon plan asset performance, benefit payments, and other factors. The minimum required contributions to our plans are expected to be $13.1 million in 2014. See Note 13,
Benefit Plans
, for estimated benefit payments over the next ten years.
|
($ in millions)
|
2014
|
2015
|
2016
|
2017
|
2018
|
Thereafter
|
Carrying Value
|
Fair Value
|
|||||||||||
Current Debt:
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. dollar denominated
|
$
|
0.1
|
|
|
|
|
|
|
$
|
0.1
|
|
$
|
0.1
|
|
|||||
Average interest rate - fixed
|
8.4
|
%
|
|
|
|
|
|
|
|
||||||||||
U.S. dollar denominated
|
2.0
|
|
|
|
|
|
|
2.0
|
|
2.0
|
|
||||||||
Average interest rate - variable
|
5.4
|
%
|
|
|
|
|
|
|
|
||||||||||
Long-Term Debt and Capital Leases:
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. dollar denominated
(1)
|
|
27.1
|
|
2.2
|
|
22.4
|
|
32.5
|
|
|
84.2
|
|
84.0
|
|
|||||
Average interest rate - variable
|
|
1.2
|
%
|
1.7
|
%
|
1.7
|
%
|
1.7
|
%
|
|
|
|
|||||||
U.S. dollar denominated
|
|
|
|
|
|
168.6
|
|
168.6
|
|
158.1
|
|
||||||||
Average interest rate - fixed
|
|
|
|
|
|
3.9
|
%
|
|
|
||||||||||
Euro denominated
|
|
|
84.6
|
|
|
|
|
84.6
|
|
89.8
|
|
||||||||
Average interest rate - fixed
|
|
|
4.4
|
%
|
|
|
|
|
|
||||||||||
Euro denominated
|
|
|
|
28.9
|
|
|
|
28.9
|
|
28.9
|
|
||||||||
Average interest rate - variable
|
|
|
|
1.7
|
%
|
|
|
|
|
||||||||||
Yen denominated
|
|
|
|
4.8
|
|
|
|
4.8
|
|
4.8
|
|
||||||||
Average interest rate - variable
|
|
|
|
1.6
|
%
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
|
$
|
1,368.4
|
|
|
$
|
1,266.4
|
|
|
$
|
1,192.3
|
|
Cost of goods and services sold
|
|
933.7
|
|
|
878.7
|
|
|
853.0
|
|
|||
Gross profit
|
|
434.7
|
|
|
387.7
|
|
|
339.3
|
|
|||
Research and development
|
|
37.9
|
|
|
33.2
|
|
|
29.1
|
|
|||
Selling, general and administrative expenses
|
|
234.9
|
|
|
218.1
|
|
|
191.1
|
|
|||
Restructuring and other items (Note 2)
|
|
(0.5
|
)
|
|
1.3
|
|
|
9.5
|
|
|||
Operating profit
|
|
162.4
|
|
|
135.1
|
|
|
109.6
|
|
|||
Loss on debt extinguishment
|
|
0.2
|
|
|
11.6
|
|
|
—
|
|
|||
Interest expense
|
|
17.0
|
|
|
16.7
|
|
|
18.2
|
|
|||
Interest income
|
|
1.9
|
|
|
1.8
|
|
|
1.3
|
|
|||
Income before income taxes
|
|
147.1
|
|
|
108.6
|
|
|
92.7
|
|
|||
Income tax expense
|
|
40.2
|
|
|
32.7
|
|
|
23.5
|
|
|||
Equity in net income of affiliated companies
|
|
5.4
|
|
|
4.8
|
|
|
6.3
|
|
|||
Net income
|
|
$
|
112.3
|
|
|
$
|
80.7
|
|
|
$
|
75.5
|
|
|
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
1.61
|
|
|
$
|
1.19
|
|
|
$
|
1.12
|
|
Diluted
|
|
$
|
1.57
|
|
|
$
|
1.15
|
|
|
$
|
1.08
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
69.6
|
|
|
68.1
|
|
|
67.3
|
|
|||
Diluted
|
|
71.4
|
|
|
71.8
|
|
|
74.0
|
|
|||
|
|
|
|
|
|
|
||||||
Dividends declared per share
|
|
$
|
0.39
|
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net income
|
$
|
112.3
|
|
|
$
|
80.7
|
|
|
$
|
75.5
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments
|
(0.9
|
)
|
|
7.0
|
|
|
(11.8
|
)
|
|||
Defined benefit pension and other postretirement plans:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) arising during period, net of tax of $20.3, $(6.2) and $(17.9)
|
33.7
|
|
|
(13.2
|
)
|
|
(30.1
|
)
|
|||
Curtailment arising during period, net of tax of $(0.2)
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|||
Settlement effects arising during period, net of tax of $0.3
|
—
|
|
|
—
|
|
|
0.5
|
|
|||
Less: amortization of actuarial loss, net of tax of $3.6, $2.8 and $2.2
|
4.9
|
|
|
5.7
|
|
|
3.8
|
|
|||
Less: amortization of prior service credit, net of tax of $(0.5), $(0.5) and $(0.5)
|
(0.8
|
)
|
|
(0.8
|
)
|
|
(0.9
|
)
|
|||
Less: amortization of transition obligation
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||
Net gains on investment securities, net of tax of $2.1, $0.2 and $0.2
|
3.5
|
|
|
0.4
|
|
|
0.3
|
|
|||
Net gains (losses) on derivatives, net of tax of $1.8, (2.1) and $(1.1)
|
3.0
|
|
|
(3.6
|
)
|
|
(1.7
|
)
|
|||
Other comprehensive income (loss), net of tax
|
43.5
|
|
|
(4.4
|
)
|
|
(40.2
|
)
|
|||
Comprehensive income
|
$
|
155.8
|
|
|
$
|
76.3
|
|
|
$
|
35.3
|
|
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash, including cash equivalents
|
$
|
230.0
|
|
|
$
|
161.9
|
|
Short-term investments
|
7.5
|
|
|
12.4
|
|
||
Accounts receivable, net
|
185.7
|
|
|
175.0
|
|
||
Inventories
|
176.9
|
|
|
162.2
|
|
||
Deferred income taxes
|
15.9
|
|
|
7.7
|
|
||
Other current assets
|
34.7
|
|
|
38.1
|
|
||
Total current assets
|
650.7
|
|
|
557.3
|
|
||
Property, plant and equipment
|
1,369.0
|
|
|
1,274.8
|
|
||
Less accumulated depreciation and amortization
|
657.3
|
|
|
605.8
|
|
||
Property, plant and equipment, net
|
711.7
|
|
|
669.0
|
|
||
Investments in affiliated companies
|
60.9
|
|
|
59.8
|
|
||
Goodwill
|
114.2
|
|
|
112.5
|
|
||
Deferred income taxes
|
61.8
|
|
|
90.3
|
|
||
Intangible assets, net
|
48.3
|
|
|
50.6
|
|
||
Other noncurrent assets
|
24.0
|
|
|
24.5
|
|
||
Total Assets
|
$
|
1,671.6
|
|
|
$
|
1,564.0
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Notes payable and other current debt
|
$
|
2.2
|
|
|
$
|
32.7
|
|
Accounts payable
|
108.0
|
|
|
102.9
|
|
||
Pension and other postretirement benefits
|
2.2
|
|
|
2.8
|
|
||
Accrued salaries, wages and benefits
|
59.1
|
|
|
56.5
|
|
||
Income taxes payable
|
14.3
|
|
|
15.6
|
|
||
Taxes other than income
|
7.8
|
|
|
7.8
|
|
||
Other current liabilities
|
43.3
|
|
|
43.5
|
|
||
Total current liabilities
|
236.9
|
|
|
261.8
|
|
||
Long-term debt
|
371.3
|
|
|
378.8
|
|
||
Deferred income taxes
|
18.9
|
|
|
20.8
|
|
||
Pension and other postretirement benefits
|
83.1
|
|
|
135.4
|
|
||
Other long-term liabilities
|
55.0
|
|
|
38.3
|
|
||
Total Liabilities
|
765.2
|
|
|
835.1
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
||
|
|
|
|
||||
Equity:
|
|
|
|
||||
Preferred stock, 3.0 million shares authorized; 0 shares issued and 0 shares outstanding in 2013 and 2012
|
—
|
|
|
—
|
|
||
Common stock, par value $.25 per share; 100.0 million shares authorized; shares issued: 70.4 million and 68.8 million; shares outstanding: 70.2 million and 68.6 million
|
17.6
|
|
|
17.2
|
|
||
Capital in excess of par value
|
120.0
|
|
|
70.7
|
|
||
Retained earnings
|
805.0
|
|
|
719.9
|
|
||
Accumulated other comprehensive loss
|
(32.4
|
)
|
|
(75.9
|
)
|
||
Treasury stock, at cost (0.2 million shares in 2013 and 2012)
|
(3.8
|
)
|
|
(3.0
|
)
|
||
Total Equity
|
906.4
|
|
|
728.9
|
|
||
Total Liabilities and Equity
|
$
|
1,671.6
|
|
|
$
|
1,564.0
|
|
|
Common Shares Issued
|
|
Common Stock
|
|
Capital in Excess of Par Value
|
|
Number of Treasury Shares
|
|
Treasury Stock
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Total
|
||||||||||||||
Balance, December 31, 2010
|
68.6
|
|
|
$
|
17.2
|
|
|
$
|
68.7
|
|
|
2.0
|
|
|
$
|
(41.5
|
)
|
|
$
|
612.6
|
|
|
$
|
(31.3
|
)
|
|
$
|
625.7
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
75.5
|
|
|
|
|
75.5
|
|
||||||||||||
Stock-based compensation
|
|
|
|
|
8.6
|
|
|
|
|
|
|
|
|
|
|
8.6
|
|
||||||||||||
Shares issued under stock plans
|
|
|
|
|
(13.1
|
)
|
|
(1.0
|
)
|
|
22.0
|
|
|
|
|
|
|
8.9
|
|
||||||||||
Shares repurchased for employee tax withholdings
|
|
|
|
|
|
|
0.2
|
|
|
(3.5
|
)
|
|
|
|
|
|
(3.5
|
)
|
|||||||||||
Excess tax benefit from employee stock plans
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
3.5
|
|
||||||||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(23.6
|
)
|
|
|
|
(23.6
|
)
|
||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
(40.2
|
)
|
|
(40.2
|
)
|
||||||||||||
Balance, December 31, 2011
|
68.6
|
|
|
17.2
|
|
|
67.7
|
|
|
1.2
|
|
|
(23.0
|
)
|
|
664.5
|
|
|
(71.5
|
)
|
|
654.9
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
80.7
|
|
|
|
|
80.7
|
|
||||||||||||
Stock-based compensation
|
|
|
|
|
10.9
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
||||||||||||
Shares issued under stock plans
|
0.2
|
|
|
|
|
(12.5
|
)
|
|
(1.2
|
)
|
|
24.4
|
|
|
|
|
|
|
11.9
|
|
|||||||||
Shares repurchased for employee tax withholdings
|
|
|
|
|
(0.3
|
)
|
|
0.2
|
|
|
(4.4
|
)
|
|
|
|
|
|
(4.7
|
)
|
||||||||||
Excess tax benefit from employee stock plans
|
|
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
||||||||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(25.3
|
)
|
|
|
|
(25.3
|
)
|
||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.4
|
)
|
|
(4.4
|
)
|
||||||||||||
Balance, December 31, 2012
|
68.8
|
|
|
17.2
|
|
|
70.7
|
|
|
0.2
|
|
|
(3.0
|
)
|
|
719.9
|
|
|
(75.9
|
)
|
|
728.9
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112.3
|
|
|
|
|
|
112.3
|
|
||||||
Stock-based compensation
|
|
|
|
|
|
|
15.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.3
|
|
||||||
Shares issued under stock plans
|
1.8
|
|
|
0.4
|
|
|
30.9
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
30.5
|
|
|||||||
Shares repurchased for employee tax withholdings
|
(0.2
|
)
|
|
|
|
|
(5.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(5.2
|
)
|
||||||||
Excess tax benefit from employee stock plans
|
|
|
|
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.3
|
|
||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27.2
|
)
|
|
|
|
|
(27.2
|
)
|
||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43.5
|
|
|
43.5
|
|
||||||
Balance, December 31, 2013
|
70.4
|
|
|
$
|
17.6
|
|
|
$
|
120.0
|
|
|
0.2
|
|
|
$
|
(3.8
|
)
|
|
$
|
805.0
|
|
|
$
|
(32.4
|
)
|
|
$
|
906.4
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
112.3
|
|
|
$
|
80.7
|
|
|
$
|
75.5
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
81.0
|
|
|
72.8
|
|
|
71.1
|
|
|||
Amortization
|
4.2
|
|
|
4.1
|
|
|
4.6
|
|
|||
Loss on debt extinguishment
|
0.2
|
|
|
11.6
|
|
|
—
|
|
|||
Stock-based compensation
|
21.2
|
|
|
15.5
|
|
|
8.4
|
|
|||
Loss (gain) on sales of equipment
|
0.4
|
|
|
1.7
|
|
|
(0.2
|
)
|
|||
Asset impairments
|
—
|
|
|
6.2
|
|
|
—
|
|
|||
Deferred income taxes
|
1.7
|
|
|
5.3
|
|
|
2.9
|
|
|||
Pension and other retirement plans, net
|
8.0
|
|
|
(2.7
|
)
|
|
(4.5
|
)
|
|||
Equity in undistributed earnings of affiliates, net of dividends
|
(4.8
|
)
|
|
(4.5
|
)
|
|
(6.0
|
)
|
|||
Changes in assets/liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Increase in accounts receivable
|
(9.1
|
)
|
|
(25.7
|
)
|
|
(25.5
|
)
|
|||
Increase in inventories
|
(13.9
|
)
|
|
(8.9
|
)
|
|
(9.3
|
)
|
|||
(Increase) decrease in other current assets
|
(0.6
|
)
|
|
5.8
|
|
|
(3.1
|
)
|
|||
Increase in accounts payable
|
4.6
|
|
|
5.8
|
|
|
24.6
|
|
|||
Changes in other assets and liabilities
|
15.3
|
|
|
19.7
|
|
|
(7.8
|
)
|
|||
Net cash provided by operating activities
|
220.5
|
|
|
187.4
|
|
|
130.7
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||
Capital expenditures
|
(151.9
|
)
|
|
(131.3
|
)
|
|
(95.4
|
)
|
|||
Acquisition of patents and other long-term assets
|
(3.9
|
)
|
|
(0.7
|
)
|
|
(1.4
|
)
|
|||
Sales and maturities of short-term investments
|
19.1
|
|
|
45.6
|
|
|
15.6
|
|
|||
Purchases of short-term investments
|
(14.2
|
)
|
|
(31.2
|
)
|
|
(41.2
|
)
|
|||
Other, net
|
1.0
|
|
|
1.6
|
|
|
1.9
|
|
|||
Net cash used in investing activities
|
(149.9
|
)
|
|
(116.0
|
)
|
|
(120.5
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||
Borrowings under revolving credit agreements
|
292.7
|
|
|
568.3
|
|
|
193.4
|
|
|||
Repayments under revolving credit agreements
|
(311.0
|
)
|
|
(502.6
|
)
|
|
(199.9
|
)
|
|||
Debt issuance costs
|
—
|
|
|
(7.5
|
)
|
|
(0.3
|
)
|
|||
Repayments of long-term debt
|
(30.5
|
)
|
|
(215.9
|
)
|
|
(0.7
|
)
|
|||
Issuance of long-term debt
|
43.2
|
|
|
168.1
|
|
|
0.2
|
|
|||
Dividend payments
|
(26.8
|
)
|
|
(24.9
|
)
|
|
(23.2
|
)
|
|||
Proceeds from exercise of stock options and stock appreciation rights
|
21.7
|
|
|
8.7
|
|
|
3.9
|
|
|||
Employee stock purchase plan contributions
|
2.5
|
|
|
2.2
|
|
|
1.9
|
|
|||
Excess tax benefit from employee stock plans
|
8.3
|
|
|
4.9
|
|
|
3.5
|
|
|||
Shares repurchased for employee tax withholdings
|
(5.2
|
)
|
|
(4.7
|
)
|
|
(3.5
|
)
|
|||
Net cash used in financing activities
|
(5.1
|
)
|
|
(3.4
|
)
|
|
(24.7
|
)
|
|||
Effect of exchange rates on cash
|
2.6
|
|
|
2.1
|
|
|
(3.9
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
68.1
|
|
|
70.1
|
|
|
(18.4
|
)
|
|||
Cash, including cash equivalents at beginning of period
|
161.9
|
|
|
91.8
|
|
|
110.2
|
|
|||
Cash, including cash equivalents at end of period
|
$
|
230.0
|
|
|
$
|
161.9
|
|
|
$
|
91.8
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Interest paid, net of amounts capitalized
|
$
|
16.9
|
|
|
$
|
15.3
|
|
|
$
|
18.2
|
|
Income taxes paid, net
|
$
|
34.4
|
|
|
$
|
16.1
|
|
|
$
|
20.4
|
|
Accrued capital expenditures
|
$
|
17.1
|
|
|
$
|
54.3
|
|
|
$
|
33.8
|
|
Dividends declared, not paid
|
$
|
7.0
|
|
|
$
|
6.5
|
|
|
$
|
6.1
|
|
($ in millions)
|
2013
|
|
2012
|
|
||
Finished goods
|
$
|
80.0
|
|
$
|
70.9
|
|
Work in process
|
24.8
|
|
23.6
|
|
||
Raw materials
|
72.1
|
|
67.7
|
|
||
|
$
|
176.9
|
|
$
|
162.2
|
|
($ in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Restructuring and related charges (reversals):
|
|
|
|
|
|
||||||
Severance and post-employment benefits
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
2.3
|
|
Impairments and asset write-offs
|
—
|
|
|
2.4
|
|
|
—
|
|
|||
Other restructuring charges
|
—
|
|
|
0.9
|
|
|
3.0
|
|
|||
Total restructuring and related charges
|
—
|
|
|
2.1
|
|
|
5.3
|
|
|||
Impairment charge
|
—
|
|
|
3.4
|
|
|
—
|
|
|||
Development income
|
(2.0
|
)
|
|
(6.5
|
)
|
|
—
|
|
|||
Acquisition-related contingencies
|
1.0
|
|
|
1.2
|
|
|
(0.2
|
)
|
|||
Special separation benefits
|
—
|
|
|
—
|
|
|
2.9
|
|
|||
Foreign exchange and other
|
0.5
|
|
|
1.1
|
|
|
1.5
|
|
|||
Total restructuring and other items
|
$
|
(0.5
|
)
|
|
$
|
1.3
|
|
|
$
|
9.5
|
|
($ in millions)
|
Severance
and benefits
|
|
Other
Costs
|
|
Total
|
||||||
Balance, December 31, 2011
|
$
|
6.2
|
|
|
$
|
0.6
|
|
|
$
|
6.8
|
|
Charges (reversals), net
|
(1.2
|
)
|
|
3.3
|
|
|
2.1
|
|
|||
Cash payments
|
(2.6
|
)
|
|
(1.4
|
)
|
|
(4.0
|
)
|
|||
Non-cash adjustments
|
0.4
|
|
|
(2.5
|
)
|
|
(2.1
|
)
|
|||
Balance, December 31, 2012
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
Cash payments
|
(2.8
|
)
|
|
—
|
|
|
(2.8
|
)
|
|||
Balance, December 31, 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
($ in millions)
|
2013
|
|
2012
|
|
||
Balance at January 1
|
$
|
6.8
|
|
$
|
6.3
|
|
Additions for tax positions taken in the current year
|
1.7
|
|
0.7
|
|
||
Reduction for expiration of statute of limitations/audits
|
(1.4
|
)
|
(0.2
|
)
|
||
Balance at December 31
|
$
|
7.1
|
|
$
|
6.8
|
|
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
|||
U.S. operations
|
$
|
28.9
|
|
$
|
8.9
|
|
$
|
15.8
|
|
International operations
|
118.2
|
|
99.7
|
|
76.9
|
|
|||
Total income before income taxes
|
$
|
147.1
|
|
$
|
108.6
|
|
$
|
92.7
|
|
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
|||
Current:
|
|
|
|
||||||
Federal
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
State
|
0.3
|
|
0.2
|
|
—
|
|
|||
International
|
38.2
|
|
27.2
|
|
20.6
|
|
|||
Current income tax provision
|
38.5
|
|
27.4
|
|
20.6
|
|
|||
Deferred:
|
|
|
|
||||||
Federal and state
|
9.2
|
|
3.3
|
|
2.7
|
|
|||
International
|
(7.5
|
)
|
2.0
|
|
0.2
|
|
|||
Deferred income tax provision
|
1.7
|
|
5.3
|
|
2.9
|
|
|||
Income tax expense
|
$
|
40.2
|
|
$
|
32.7
|
|
$
|
23.5
|
|
($ in millions)
|
2013
|
|
2012
|
|
||
Deferred tax assets
|
|
|
||||
Net operating loss carryforwards
|
$
|
20.7
|
|
$
|
21.1
|
|
Tax credit carryforwards
|
36.1
|
|
37.0
|
|
||
Restructuring and impairment charges
|
0.1
|
|
0.3
|
|
||
Pension and deferred compensation
|
51.2
|
|
69.8
|
|
||
Other
|
19.8
|
|
15.1
|
|
||
Valuation allowance
|
(23.5
|
)
|
(20.4
|
)
|
||
Total deferred tax assets
|
104.4
|
|
122.9
|
|
||
Deferred tax liabilities:
|
|
|
||||
Accelerated depreciation
|
40.5
|
|
42.8
|
|
||
Other
|
5.4
|
|
3.9
|
|
||
Total deferred tax liabilities
|
45.9
|
|
46.7
|
|
||
Net deferred tax asset
|
$
|
58.5
|
|
$
|
76.2
|
|
|
2013
|
|
2012
|
|
2011
|
|
U.S. federal corporate tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
Tax on international operations less than U.S. tax rate
|
(5.3
|
)
|
(5.9
|
)
|
(8.2
|
)
|
Non-benefited losses
|
—
|
|
0.6
|
|
—
|
|
Reversal of prior valuation allowance
|
(1.0
|
)
|
—
|
|
(0.1
|
)
|
Reversal of reserves for unrecognized tax benefits
|
(0.8
|
)
|
(0.2
|
)
|
(0.8
|
)
|
U.S. tax on international earnings, net of foreign tax credits
|
0.1
|
|
(1.2
|
)
|
(1.5
|
)
|
State income taxes, net of federal tax effect
|
0.1
|
|
(1.0
|
)
|
0.7
|
|
U.S. research and development credits
|
(1.8
|
)
|
—
|
|
(1.1
|
)
|
Other business credits and Section 199 Deduction
|
(0.5
|
)
|
(1.0
|
)
|
(1.3
|
)
|
Non-deductible debt premium
|
—
|
|
2.0
|
|
—
|
|
Other
|
1.6
|
|
1.9
|
|
2.6
|
|
Effective tax rate
|
27.4
|
%
|
30.2
|
%
|
25.3
|
%
|
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
|||
Packaging Systems
|
$
|
996.0
|
|
$
|
915.1
|
|
$
|
857.4
|
|
Proprietary products
|
92.7
|
|
77.0
|
|
67.4
|
|
|||
Contract manufacturing
|
281.4
|
|
275.1
|
|
269.3
|
|
|||
Delivery Systems
|
374.1
|
|
352.1
|
|
336.7
|
|
|||
Intersegment sales elimination
|
(1.7
|
)
|
(0.8
|
)
|
(1.8
|
)
|
|||
Net sales
|
$
|
1,368.4
|
|
$
|
1,266.4
|
|
$
|
1,192.3
|
|
|
Sales
|
|
Property, Plant and Equipment, Net
|
||||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
|
2013
|
|
2012
|
|
2011
|
|
||||||
United States
|
$
|
614.5
|
|
$
|
592.8
|
|
$
|
543.6
|
|
|
$
|
336.0
|
|
$
|
322.0
|
|
$
|
272.6
|
|
Germany
|
219.6
|
|
184.4
|
|
184.1
|
|
|
124.4
|
|
117.2
|
|
118.1
|
|
||||||
France
|
112.6
|
|
102.6
|
|
94.2
|
|
|
43.4
|
|
42.1
|
|
41.3
|
|
||||||
Other European countries
|
279.4
|
|
251.4
|
|
242.7
|
|
|
83.2
|
|
72.3
|
|
69.9
|
|
||||||
Other
|
142.3
|
|
135.2
|
|
127.7
|
|
|
124.7
|
|
115.4
|
|
91.7
|
|
||||||
|
$
|
1,368.4
|
|
$
|
1,266.4
|
|
$
|
1,192.3
|
|
|
$
|
711.7
|
|
$
|
669.0
|
|
$
|
593.6
|
|
($ in millions)
|
Packaging Systems
|
Delivery Systems
|
Corporate and Eliminations
|
Consolidated
|
||||||||
2013
|
|
|
|
|
||||||||
Net sales
|
$
|
996.0
|
|
$
|
374.1
|
|
$
|
(1.7
|
)
|
$
|
1,368.4
|
|
Operating profit
|
$
|
217.0
|
|
$
|
9.4
|
|
$
|
(64.0
|
)
|
$
|
162.4
|
|
Loss on debt extinguishment
|
—
|
|
—
|
|
(0.2
|
)
|
(0.2
|
)
|
||||
Interest expense, net
|
—
|
|
—
|
|
(15.1
|
)
|
(15.1
|
)
|
||||
Income before income taxes
|
$
|
217.0
|
|
$
|
9.4
|
|
$
|
(79.3
|
)
|
$
|
147.1
|
|
Segment assets
|
$
|
1,048.9
|
|
$
|
429.3
|
|
$
|
193.4
|
|
$
|
1,671.6
|
|
Capital expenditures
|
81.3
|
|
28.5
|
|
42.1
|
|
151.9
|
|
||||
Depreciation and amortization expense
|
55.5
|
|
20.9
|
|
8.8
|
|
85.2
|
|
||||
|
|
|
|
|
||||||||
2012
|
|
|
|
|
||||||||
Net sales
|
$
|
915.1
|
|
$
|
352.1
|
|
$
|
(0.8
|
)
|
$
|
1,266.4
|
|
Operating profit
|
$
|
187.5
|
|
$
|
18.4
|
|
$
|
(70.8
|
)
|
$
|
135.1
|
|
Loss on debt extinguishment
|
—
|
|
—
|
|
(11.6
|
)
|
(11.6
|
)
|
||||
Interest expense, net
|
—
|
|
—
|
|
(14.9
|
)
|
(14.9
|
)
|
||||
Income before income taxes
|
$
|
187.5
|
|
$
|
18.4
|
|
$
|
(97.3
|
)
|
$
|
108.6
|
|
Segment assets
|
$
|
942.7
|
|
$
|
389.3
|
|
$
|
232.0
|
|
$
|
1,564.0
|
|
Capital expenditures
|
74.3
|
|
24.5
|
|
32.5
|
|
131.3
|
|
||||
Depreciation and amortization expense
|
52.7
|
|
18.4
|
|
5.8
|
|
76.9
|
|
||||
|
|
|
|
|
||||||||
2011
|
|
|
|
|
||||||||
Net sales
|
$
|
857.4
|
|
$
|
336.7
|
|
$
|
(1.8
|
)
|
$
|
1,192.3
|
|
Operating profit
|
$
|
152.6
|
|
$
|
9.8
|
|
$
|
(52.8
|
)
|
$
|
109.6
|
|
Interest expense, net
|
—
|
|
—
|
|
(16.9
|
)
|
(16.9
|
)
|
||||
Income before income taxes
|
$
|
152.6
|
|
$
|
9.8
|
|
$
|
(69.7
|
)
|
$
|
92.7
|
|
Segment assets
|
$
|
843.5
|
|
$
|
365.6
|
|
$
|
190.0
|
|
$
|
1,399.1
|
|
Capital expenditures
|
66.2
|
|
26.1
|
|
3.1
|
|
95.4
|
|
||||
Depreciation and amortization expense
|
53.6
|
|
18.5
|
|
3.6
|
|
75.7
|
|
($ and shares in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Net income, as reported, for basic net income per share
|
$
|
112.3
|
|
|
$
|
80.7
|
|
|
$
|
75.5
|
|
Plus: interest expense on convertible debt, net of tax
|
—
|
|
|
2.0
|
|
|
4.3
|
|
|||
Net income for diluted net income per share
|
$
|
112.3
|
|
|
$
|
82.7
|
|
|
$
|
79.8
|
|
Weighted average common shares outstanding
|
69.6
|
|
|
68.1
|
|
|
67.3
|
|
|||
Dilutive effect of stock options, stock appreciation rights and performance share awards, based on the treasury stock method
|
1.7
|
|
|
1.1
|
|
|
0.9
|
|
|||
Assumed conversion of convertible debt, based on the if-converted method
|
0.1
|
|
|
2.6
|
|
|
5.8
|
|
|||
Weighted average shares assuming dilution
|
71.4
|
|
|
71.8
|
|
|
74.0
|
|
($ in millions)
|
Losses on
cash flow
hedges
|
Unrealized gains
on investment
securities
|
Defined benefit
pension and other
postretirement plans
|
Foreign
currency
translation
|
Total
|
||||||||||
Balance, December 31, 2012
|
$
|
(9.0
|
)
|
$
|
0.8
|
|
$
|
(84.9
|
)
|
$
|
17.2
|
|
$
|
(75.9
|
)
|
Other comprehensive (loss) income before reclassifications
|
(1.8
|
)
|
3.5
|
|
33.7
|
|
(0.9
|
)
|
34.5
|
|
|||||
Amounts reclassified out
|
4.8
|
|
—
|
|
4.2
|
|
—
|
|
9.0
|
|
|||||
Other comprehensive income (loss), net of tax
|
3.0
|
|
3.5
|
|
37.9
|
|
(0.9
|
)
|
43.5
|
|
|||||
Balance, December 31, 2013
|
$
|
(6.0
|
)
|
$
|
4.3
|
|
$
|
(47.0
|
)
|
$
|
16.3
|
|
$
|
(32.4
|
)
|
Detail of components
|
2013
|
Location on Statement of Income
|
||
Losses on cash flow hedges:
|
|
|
||
Foreign currency contracts
|
$
|
(5.1
|
)
|
Cost of goods and services sold
|
Interest rate swap contracts
|
(2.6
|
)
|
Interest expense
|
|
Forward treasury locks
|
(0.3
|
)
|
Interest expense
|
|
Total before tax
|
(8.0
|
)
|
|
|
Tax expense
|
3.2
|
|
|
|
Net of tax
|
$
|
(4.8
|
)
|
|
Amortization of defined benefit pension and other postretirement plans:
|
|
|
||
Transition obligation
|
$
|
(0.1
|
)
|
(a)
|
Prior service cost
|
1.3
|
|
(a)
|
|
Actuarial losses
|
(8.5
|
)
|
(a)
|
|
Total before tax
|
(7.3
|
)
|
|
|
Tax expense
|
3.1
|
|
|
|
Net of tax
|
$
|
(4.2
|
)
|
|
Total reclassifications for the period, net of tax
|
$
|
(9.0
|
)
|
|
($ in millions)
|
Packaging Systems
|
Delivery Systems
|
Total
|
||||||
Balance, December 31, 2011
|
$
|
35.9
|
|
$
|
75.6
|
|
$
|
111.5
|
|
Foreign currency translation
|
0.8
|
|
0.2
|
|
1.0
|
|
|||
Balance, December 31, 2012
|
36.7
|
|
75.8
|
|
112.5
|
|
|||
Foreign currency translation
|
1.3
|
|
0.4
|
|
1.7
|
|
|||
Balance, December 31, 2013
|
$
|
38.0
|
|
$
|
76.2
|
|
$
|
114.2
|
|
|
2013
|
2012
|
||||||||||||||||
($ in millions)
|
Cost
|
Accumulated Amortization
|
Net
|
Cost
|
Accumulated Amortization
|
Net
|
||||||||||||
Patents and licensing
|
$
|
20.7
|
|
$
|
(9.4
|
)
|
$
|
11.3
|
|
$
|
19.2
|
|
$
|
(7.8
|
)
|
$
|
11.4
|
|
In-process R&D/technology
|
3.5
|
|
(0.1
|
)
|
3.4
|
|
3.5
|
|
(0.1
|
)
|
3.4
|
|
||||||
Trademarks
|
12.1
|
|
(1.1
|
)
|
11.0
|
|
12.1
|
|
(1.0
|
)
|
11.1
|
|
||||||
Customer relationships
|
29.7
|
|
(14.6
|
)
|
15.1
|
|
29.7
|
|
(12.9
|
)
|
16.8
|
|
||||||
Customer contracts
|
11.7
|
|
(4.2
|
)
|
7.5
|
|
11.6
|
|
(3.7
|
)
|
7.9
|
|
||||||
|
$
|
77.7
|
|
$
|
(29.4
|
)
|
$
|
48.3
|
|
$
|
76.1
|
|
$
|
(25.5
|
)
|
$
|
50.6
|
|
($ in millions)
|
Expected useful lives (years)
|
2013
|
|
2012
|
|
||
Land
|
|
$
|
15.7
|
|
$
|
9.0
|
|
Buildings and improvements
|
5-50
|
397.5
|
|
310.9
|
|
||
Machinery and equipment
|
10-15
|
655.2
|
|
607.1
|
|
||
Molds and dies
|
4-7
|
95.7
|
|
90.1
|
|
||
Computer hardware and software
|
3-10
|
107.1
|
|
102.5
|
|
||
Construction in progress
|
|
97.8
|
|
155.2
|
|
||
|
|
$
|
1,369.0
|
|
$
|
1,274.8
|
|
|
Location
|
Ownership interest
|
The West Company Mexico, S.A. de C.V.
|
Mexico
|
49%
|
Aluplast S.A. de C.V.
|
Mexico
|
49%
|
Pharma Tap S.A. de C.V.
|
Mexico
|
49%
|
Pharma Rubber S.A. de C.V.
|
Mexico
|
49%
|
Daikyo
|
Japan
|
25%
|
($ in millions)
|
December 31,
2013 |
|
December 31,
2012 |
||||
Euro note A, due 2013 (4.22%)
|
$
|
—
|
|
|
$
|
26.9
|
|
Term loan, due 2014 (8.40%)
|
0.1
|
|
|
0.2
|
|
||
Series B floating rate notes, due 2015 (1.14%)
|
25.0
|
|
|
25.0
|
|
||
Euro note B, due 2016 (4.38%)
|
84.1
|
|
|
80.8
|
|
||
Capital leases, due through 2016 (6.0%)
|
0.4
|
|
|
0.7
|
|
||
Revolving credit facility, due 2017 (1.68%)
|
53.7
|
|
|
71.5
|
|
||
Term loan, due 2018 (1.67%)
|
41.3
|
|
|
35.3
|
|
||
Note payable, due 2019
|
0.3
|
|
|
—
|
|
||
Series A notes, due 2022 (3.67%)
|
42.0
|
|
|
42.0
|
|
||
Series B notes, due 2024 (3.82%)
|
53.0
|
|
|
53.0
|
|
||
Series C notes, due 2027 (4.02%)
|
73.0
|
|
|
73.0
|
|
||
Convertible debt, due 2047 (4.0%)
|
0.6
|
|
|
3.1
|
|
||
Total debt
|
373.5
|
|
|
411.5
|
|
||
Less: current portion of long-term debt
|
2.2
|
|
|
32.7
|
|
||
Long-term debt
|
$
|
371.3
|
|
|
$
|
378.8
|
|
|
Amount of Gain (Loss) Recognized in OCI
|
|
Amount of (Gain) Loss Reclassified from Accumulated OCI into Income
|
|
Location of Gain (Loss) Reclassified from Accumulated OCI into
Income
|
||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
||||||||
Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency hedge contracts
|
$
|
0.4
|
|
|
$
|
(0.2
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
Net sales
|
Foreign currency hedge contracts
|
(2.5
|
)
|
|
(0.8
|
)
|
|
3.3
|
|
|
—
|
|
|
Cost of goods and services sold
|
||||
Interest rate swap contracts
|
0.2
|
|
|
(1.9
|
)
|
|
1.6
|
|
|
2.0
|
|
|
Interest expense
|
||||
Forward treasury locks
|
—
|
|
|
(2.9
|
)
|
|
0.2
|
|
|
0.2
|
|
|
Interest expense
|
||||
Total
|
$
|
(1.9
|
)
|
|
$
|
(5.8
|
)
|
|
$
|
4.9
|
|
|
$
|
2.2
|
|
|
|
Net Investment Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency-denominated debt
|
$
|
(2.1
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Foreign exchange and other
|
Total
|
$
|
(2.1
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
•
|
Level 1
: Unadjusted quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2
: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
•
|
Level 3
: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
|
Balance at
|
|
Basis of Fair Value Measurements
|
||||||||||||
($ in millions)
|
December 31,
2013 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
$
|
7.5
|
|
|
$
|
7.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred compensation assets
|
5.7
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
13.2
|
|
|
$
|
13.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
Deferred compensation liabilities
|
12.1
|
|
|
12.1
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swap contracts
|
5.6
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
||||
|
$
|
22.0
|
|
|
$
|
12.1
|
|
|
$
|
5.6
|
|
|
$
|
4.3
|
|
|
Balance at
|
|
Basis of Fair Value Measurements
|
||||||||||||
($ in millions)
|
December 31,
2012 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
$
|
12.4
|
|
|
$
|
12.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred compensation assets
|
4.0
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
16.4
|
|
|
$
|
16.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
3.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
Deferred compensation liabilities
|
7.6
|
|
|
7.6
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swap contracts
|
8.6
|
|
|
—
|
|
|
8.6
|
|
|
—
|
|
||||
Foreign currency contracts
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
||||
|
$
|
20.9
|
|
|
$
|
7.6
|
|
|
$
|
10.0
|
|
|
$
|
3.3
|
|
|
($ in millions)
|
||
Balance, December 31, 2011
|
$
|
2.1
|
|
Increase in fair value recorded in earnings
|
1.2
|
|
|
Balance, December 31, 2012
|
3.3
|
|
|
Increase in fair value recorded in earnings
|
1.0
|
|
|
Balance, December 31, 2013
|
$
|
4.3
|
|
|
Pension benefits
|
|
Other retirement benefits
|
||||||||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
|
2013
|
|
2012
|
|
2011
|
|
||||||
Net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
9.7
|
|
$
|
8.5
|
|
$
|
8.9
|
|
|
$
|
1.1
|
|
$
|
1.3
|
|
$
|
1.2
|
|
Interest cost
|
14.8
|
|
15.5
|
|
16.0
|
|
|
0.6
|
|
1.0
|
|
1.0
|
|
||||||
Expected return on assets
|
(17.3
|
)
|
(16.4
|
)
|
(16.0
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of prior service (credit) cost
|
(1.3
|
)
|
(1.4
|
)
|
(1.5
|
)
|
|
—
|
|
0.1
|
|
0.1
|
|
||||||
Amortization of transition obligation
|
0.1
|
|
0.1
|
|
0.1
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of actuarial loss (gain)
|
9.2
|
|
8.5
|
|
6.0
|
|
|
(0.7
|
)
|
—
|
|
—
|
|
||||||
Curtailment
|
—
|
|
—
|
|
(0.2
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Settlement effects
|
—
|
|
—
|
|
0.8
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
15.2
|
|
$
|
14.8
|
|
$
|
14.1
|
|
|
$
|
1.0
|
|
$
|
2.4
|
|
$
|
2.3
|
|
Other changes in plan assets and benefit obligations recognized in other comprehensive income, pre-tax:
|
|
|
|
|
|
|
|
||||||||||||
Net (gain) loss arising during period
|
$
|
(35.5
|
)
|
$
|
17.3
|
|
$
|
46.7
|
|
|
$
|
(18.5
|
)
|
$
|
2.1
|
|
$
|
1.3
|
|
Amortization of prior service credit (cost)
|
1.3
|
|
1.4
|
|
1.5
|
|
|
—
|
|
(0.1
|
)
|
(0.1
|
)
|
||||||
Amortization of transition obligation
|
(0.1
|
)
|
(0.1
|
)
|
(0.1
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of actuarial (loss) gain
|
(9.2
|
)
|
(8.5
|
)
|
(6.0
|
)
|
|
0.7
|
|
—
|
|
—
|
|
||||||
Curtailment
|
—
|
|
—
|
|
0.2
|
|
|
—
|
|
—
|
|
0.4
|
|
||||||
Settlement effects
|
—
|
|
—
|
|
(0.8
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Total recognized in other comprehensive income
|
$
|
(43.5
|
)
|
$
|
10.1
|
|
$
|
41.5
|
|
|
$
|
(17.8
|
)
|
$
|
2.0
|
|
$
|
1.6
|
|
Total recognized in net periodic benefit cost and other comprehensive income
|
$
|
(28.3
|
)
|
$
|
24.9
|
|
$
|
55.6
|
|
|
$
|
(16.8
|
)
|
$
|
4.4
|
|
$
|
3.9
|
|
|
Pension benefits
|
|
Other retirement benefits
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
|
2013
|
|
2012
|
|
2011
|
|
||||||
U.S. plans
|
$
|
11.9
|
|
$
|
12.0
|
|
$
|
11.4
|
|
|
$
|
1.0
|
|
$
|
2.4
|
|
$
|
2.3
|
|
International plans
|
3.3
|
|
2.8
|
|
2.7
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
15.2
|
|
$
|
14.8
|
|
$
|
14.1
|
|
|
$
|
1.0
|
|
$
|
2.4
|
|
$
|
2.3
|
|
|
Pension benefits
|
|
Other retirement benefits
|
||||||||||
($ in millions)
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||
Change in benefit obligation:
|
|
|
|
|
|
||||||||
Benefit obligation, January 1
|
$
|
(363.2
|
)
|
$
|
(319.9
|
)
|
|
$
|
(26.0
|
)
|
$
|
(21.7
|
)
|
Service cost
|
(9.7
|
)
|
(8.5
|
)
|
|
(1.1
|
)
|
(1.3
|
)
|
||||
Interest cost
|
(14.8
|
)
|
(15.5
|
)
|
|
(0.6
|
)
|
(1.0
|
)
|
||||
Participants' contributions
|
(0.6
|
)
|
—
|
|
|
(0.5
|
)
|
(0.5
|
)
|
||||
Actuarial gain (loss)
|
12.9
|
|
(32.4
|
)
|
|
18.5
|
|
(2.1
|
)
|
||||
Amendments/transfers in
|
—
|
|
(0.3
|
)
|
|
—
|
|
—
|
|
||||
Benefits/expenses paid
|
16.4
|
|
15.3
|
|
|
0.5
|
|
0.6
|
|
||||
Foreign currency translation
|
(1.8
|
)
|
(1.9
|
)
|
|
—
|
|
—
|
|
||||
Benefit obligation, December 31
|
$
|
(360.8
|
)
|
$
|
(363.2
|
)
|
|
$
|
(9.2
|
)
|
$
|
(26.0
|
)
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
|
||||||||
Fair value of assets, January 1
|
$
|
251.0
|
|
$
|
213.3
|
|
|
$
|
—
|
|
$
|
—
|
|
Actual return on assets
|
40.5
|
|
32.3
|
|
|
—
|
|
—
|
|
||||
Employer contribution
|
8.2
|
|
19.8
|
|
|
—
|
|
0.1
|
|
||||
Participants' contribution
|
0.6
|
|
—
|
|
|
0.5
|
|
0.5
|
|
||||
Benefits/expenses paid
|
(16.4
|
)
|
(15.3
|
)
|
|
(0.5
|
)
|
(0.6
|
)
|
||||
Foreign currency translation
|
0.8
|
|
0.9
|
|
|
—
|
|
—
|
|
||||
Fair value of assets, December 31
|
$
|
284.7
|
|
$
|
251.0
|
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||||
Funded status at end of year
|
$
|
(76.1
|
)
|
$
|
(112.2
|
)
|
|
$
|
(9.2
|
)
|
$
|
(26.0
|
)
|
|
Pension benefits
|
Other retirement benefits
|
||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||
Current liabilities
|
$
|
(1.5
|
)
|
$
|
(1.6
|
)
|
$
|
(0.7
|
)
|
$
|
(1.2
|
)
|
Noncurrent liabilities
|
(74.6
|
)
|
(110.6
|
)
|
(8.5
|
)
|
(24.8
|
)
|
||||
|
$
|
(76.1
|
)
|
$
|
(112.2
|
)
|
$
|
(9.2
|
)
|
$
|
(26.0
|
)
|
|
Pension benefits
|
Other retirement benefits
|
||||||||||
($ in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||
Net actuarial loss (gain)
|
$
|
95.2
|
|
$
|
140.0
|
|
$
|
(15.5
|
)
|
$
|
2.3
|
|
Transition obligation
|
0.3
|
|
0.4
|
|
—
|
|
—
|
|
||||
Prior service (credit) cost
|
(7.4
|
)
|
(8.8
|
)
|
—
|
|
—
|
|
||||
Total
|
$
|
88.1
|
|
$
|
131.6
|
|
$
|
(15.5
|
)
|
$
|
2.3
|
|
($ in millions)
|
Domestic Plans
|
International Plans
|
Total
|
||||||
2014
|
$
|
31.4
|
|
$
|
1.6
|
|
$
|
33.0
|
|
2015
|
20.5
|
|
1.5
|
|
22.0
|
|
|||
2016
|
22.3
|
|
1.6
|
|
23.9
|
|
|||
2017
|
24.4
|
|
2.0
|
|
26.4
|
|
|||
2018
|
24.3
|
|
2.3
|
|
26.6
|
|
|||
2019 to 2023
|
133.8
|
|
15.8
|
|
149.6
|
|
|||
|
$
|
256.7
|
|
$
|
24.8
|
|
$
|
281.5
|
|
|
Pension benefits
|
|
Other retirement benefits
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
|
|
2013
|
|
2012
|
|
2011
|
|
Discount rate
|
3.99
|
%
|
4.78
|
%
|
5.55
|
%
|
|
3.50
|
%
|
4.50
|
%
|
5.25
|
%
|
Rate of compensation increase
|
4.24
|
%
|
4.29
|
%
|
4.33
|
%
|
|
—
|
|
—
|
|
—
|
|
Long-term rate of return on assets
|
7.12
|
%
|
7.37
|
%
|
7.59
|
%
|
|
—
|
|
—
|
|
—
|
|
|
Pension benefits
|
|
Other retirement benefits
|
||||||
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
Discount rate
|
4.82
|
%
|
4.07
|
%
|
|
4.55
|
%
|
3.50
|
%
|
Rate of compensation increase
|
4.37
|
%
|
4.39
|
%
|
|
—
|
|
—
|
|
|
2013
|
|
2012
|
|
Equity securities
|
66
|
%
|
65
|
%
|
Debt securities
|
32
|
%
|
34
|
%
|
Other
|
2
|
%
|
1
|
%
|
|
100
|
%
|
100
|
%
|
|
Balance at
|
|
||||||||||
|
December 31,
|
Basis of Fair Value Measurements
|
||||||||||
($ in millions)
|
2013
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Cash
|
$
|
1.0
|
|
$
|
1.0
|
|
$
|
—
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
||||||||
Indexed mutual funds
|
132.6
|
|
132.6
|
|
—
|
|
—
|
|
||||
International mutual funds
|
55.4
|
|
55.4
|
|
—
|
|
—
|
|
||||
Fixed income securities:
|
|
|
|
|
||||||||
Mutual funds
|
87.4
|
|
87.4
|
|
—
|
|
—
|
|
||||
Insurance contract
|
1.2
|
|
—
|
|
1.2
|
|
—
|
|
||||
Balanced mutual fund
|
7.1
|
|
7.1
|
|
—
|
|
—
|
|
||||
|
$
|
284.7
|
|
$
|
283.5
|
|
$
|
1.2
|
|
$
|
—
|
|
|
Balance at
|
|
||||||||||
|
December 31,
|
Basis of Fair Value Measurements
|
||||||||||
($ in millions)
|
2012
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Equity securities:
|
|
|
|
|
||||||||
Indexed mutual funds
|
$
|
111.4
|
|
$
|
111.4
|
|
$
|
—
|
|
$
|
—
|
|
International mutual funds
|
49.6
|
|
49.6
|
|
—
|
|
—
|
|
||||
Fixed income securities:
|
|
|
|
|
||||||||
Mutual funds
|
83.8
|
|
83.8
|
|
—
|
|
—
|
|
||||
Insurance contract
|
1.3
|
|
—
|
|
1.3
|
|
—
|
|
||||
Balanced mutual fund
|
4.9
|
|
4.9
|
|
—
|
|
—
|
|
||||
|
$
|
251.0
|
|
$
|
249.7
|
|
$
|
1.3
|
|
$
|
—
|
|
($ in millions)
|
2013
|
|
2012
|
|
2011
|
|
|||
Stock option and appreciation rights
|
$
|
7.7
|
|
$
|
5.3
|
|
$
|
4.4
|
|
Performance-vesting shares
|
6.5
|
|
6.0
|
|
3.0
|
|
|||
Performance-vesting units
|
2.4
|
|
0.9
|
|
0.2
|
|
|||
Performance-vesting shares/units dividend equivalents
|
0.4
|
|
0.1
|
|
0.1
|
|
|||
Employee stock purchase plan
|
0.4
|
|
0.4
|
|
0.3
|
|
|||
Deferred compensation plans
|
3.8
|
|
2.8
|
|
0.4
|
|
|||
Total stock-based compensation expense
|
$
|
21.2
|
|
$
|
15.5
|
|
$
|
8.4
|
|
(in millions, except per share data)
|
2013
|
|
2012
|
|
2011
|
|
Options outstanding, January 1
|
5.6
|
|
5.8
|
|
5.7
|
|
Granted
|
0.9
|
|
1.2
|
|
1.0
|
|
Exercised
|
(1.6
|
)
|
(1.4
|
)
|
(0.8
|
)
|
Forfeited
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
Options outstanding, December 31
|
4.8
|
|
5.6
|
|
5.8
|
|
Options exercisable, December 31
|
2.3
|
|
3.0
|
|
3.5
|
|
Weighted Average Exercise Price
|
2013
|
|
2012
|
|
2011
|
|
|||
Options outstanding, January 1
|
$
|
19.83
|
|
$
|
17.88
|
|
$
|
16.16
|
|
Granted
|
29.71
|
|
21.47
|
|
20.43
|
|
|||
Exercised
|
18.97
|
|
13.12
|
|
8.84
|
|
|||
Forfeited
|
23.10
|
|
20.66
|
|
19.84
|
|
|||
Options outstanding, December 31
|
$
|
21.99
|
|
$
|
19.83
|
|
$
|
17.88
|
|
Options exercisable, December 31
|
$
|
19.51
|
|
$
|
19.01
|
|
$
|
16.46
|
|
|
2013
|
|
2012
|
|
2011
|
|
SARs outstanding, January 1
|
389,686
|
|
320,336
|
|
222,096
|
|
Granted
|
132,566
|
|
145,018
|
|
126,048
|
|
Exercised
|
(147,148
|
)
|
(75,668
|
)
|
(15,370
|
)
|
Forfeited
|
—
|
|
—
|
|
(12,438
|
)
|
SARs outstanding, December 31
|
375,104
|
|
389,686
|
|
320,336
|
|
SARs exercisable, December 31
|
56,938
|
|
110,292
|
|
117,800
|
|
|
|
|
|
||||||
Weighted Average Exercise Price
|
2013
|
|
2012
|
|
2011
|
|
|||
SARs outstanding, January 1
|
$
|
20.81
|
|
$
|
20.17
|
|
$
|
19.87
|
|
Granted
|
29.56
|
|
21.22
|
|
20.57
|
|
|||
Exercised
|
20.47
|
|
18.91
|
|
19.58
|
|
|||
Forfeited
|
—
|
|
—
|
|
19.59
|
|
|||
SARs outstanding, December 31
|
24.03
|
|
20.81
|
|
20.17
|
|
|||
SARs exercisable, December 31
|
$
|
20.95
|
|
$
|
20.70
|
|
$
|
19.86
|
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Non-vested PVS awards, January 1
|
652,662
|
|
657,038
|
|
695,100
|
|
|||
Granted at target level
|
175,498
|
|
209,680
|
|
202,198
|
|
|||
Adjustments above/(below) target
|
38,330
|
|
(120,155
|
)
|
(116,355
|
)
|
|||
Vested and converted
|
(273,044
|
)
|
(83,859
|
)
|
(103,507
|
)
|
|||
Forfeited
|
(15,088
|
)
|
(10,042
|
)
|
(20,398
|
)
|
|||
Non-vested PVS awards, December 31
|
578,358
|
|
652,662
|
|
657,038
|
|
|||
|
|
|
|
||||||
Weighted Average Grant Date Fair Value
|
2013
|
|
2012
|
|
2011
|
|
|||
Non-vested PVS awards, January 1
|
$
|
21.42
|
|
$
|
19.39
|
|
$
|
19.61
|
|
Granted at target level
|
29.67
|
|
21.33
|
|
20.43
|
|
|||
Adjustments above/(below) target
|
23.83
|
|
13.86
|
|
20.97
|
|
|||
Vested and converted
|
29.56
|
|
21.22
|
|
20.43
|
|
|||
Forfeited
|
23.29
|
|
20.98
|
|
19.23
|
|
|||
Non-vested PVS awards, December 31
|
$
|
23.79
|
|
$
|
21.42
|
|
$
|
19.39
|
|
|
2013
|
|
2012
|
|
2011
|
|
Non-vested PVU awards, January 1
|
69,240
|
|
54,572
|
|
46,840
|
|
Granted at target level
|
25,538
|
|
27,100
|
|
26,884
|
|
Adjustments above/(below) target
|
3,000
|
|
(7,156
|
)
|
(8,330
|
)
|
Vested and converted
|
(18,322
|
)
|
(5,276
|
)
|
(7,386
|
)
|
Forfeited
|
—
|
|
—
|
|
(3,436
|
)
|
Non-vested PVU awards, December 31
|
79,456
|
|
69,240
|
|
54,572
|
|
Weighted Average Grant Date Fair Value
|
2013
|
|
2012
|
|
2011
|
|
|||
Non-vested PVU awards, January 1
|
$
|
20.98
|
|
$
|
19.65
|
|
$
|
19.47
|
|
Granted at target level
|
29.56
|
|
21.22
|
|
20.56
|
|
|||
Adjustments above/(below) target
|
25.30
|
|
15.22
|
|
20.53
|
|
|||
Vested and converted
|
29.56
|
|
21.22
|
|
20.43
|
|
|||
Forfeited
|
—
|
|
—
|
|
18.77
|
|
|||
Non-vested PVU awards, December 31
|
$
|
23.86
|
|
$
|
20.98
|
|
$
|
19.65
|
|
Year
|
($ in millions)
|
|
|
2014
|
$
|
10.5
|
|
2015
|
9.0
|
|
|
2016
|
7.4
|
|
|
2017
|
5.1
|
|
|
2018
|
4.1
|
|
|
Thereafter
|
17.4
|
|
|
Total
|
$
|
53.5
|
|
($ in millions, except per share data)
|
First
Quarter (1)
|
Second
Quarter (2)
|
Third
Quarter (3)
|
Fourth
Quarter (4)
|
Full Year
|
||||||||||
2013
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
339.4
|
|
$
|
344.5
|
|
$
|
341.8
|
|
$
|
342.7
|
|
$
|
1,368.4
|
|
Gross profit
|
111.7
|
|
110.9
|
|
105.5
|
|
106.6
|
|
434.7
|
|
|||||
Net income
|
$
|
31.7
|
|
$
|
30.2
|
|
$
|
26.8
|
|
$
|
23.6
|
|
$
|
112.3
|
|
Net income per share:
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.46
|
|
$
|
0.44
|
|
$
|
0.38
|
|
$
|
0.33
|
|
$
|
1.61
|
|
Diluted
|
$
|
0.45
|
|
$
|
0.43
|
|
$
|
0.37
|
|
$
|
0.33
|
|
$
|
1.57
|
|
|
|
|
|
|
|
||||||||||
2012
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
316.3
|
|
$
|
324.8
|
|
$
|
303.8
|
|
$
|
321.5
|
|
$
|
1,266.4
|
|
Gross profit
|
101.1
|
|
98.7
|
|
90.4
|
|
97.5
|
|
387.7
|
|
|||||
Net income
|
$
|
29.2
|
|
$
|
15.6
|
|
$
|
14.8
|
|
$
|
21.1
|
|
$
|
80.7
|
|
Net income per share:
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.43
|
|
$
|
0.23
|
|
$
|
0.22
|
|
$
|
0.31
|
|
$
|
1.19
|
|
Diluted
|
$
|
0.41
|
|
$
|
0.23
|
|
$
|
0.22
|
|
$
|
0.30
|
|
$
|
1.15
|
|
(1)
|
First quarter 2013 net income included a loss on debt extinguishment of $0.2 million and $1.3 million ($0.02 per diluted share) of discrete tax items. Net income for the first quarter 2012 included restructuring and related charges of $0.3 million, $0.3 million of discrete tax items and $0.1 million related to an increase in acquisition-related contingencies.
|
(2)
|
Net income for the second quarter of 2012 included a loss on debt extinguishment of $9.8 million ($0.13 per diluted share), restructuring and related charges of $2.3 million ($0.03 per diluted share) and $0.2 million related to an increase in acquisition-related contingencies.
|
(3)
|
Third quarter 2013 net income included $1.3 million ($0.02 per diluted share) of discrete tax items. Net income for the third quarter of 2012 included restructuring and related charges of $1.0 million ($0.01 per diluted share), $1.9 million ($0.03 per diluted share) of discrete tax items and $0.4 million ($0.01 per diluted share) related to an increase in acquisition-related contingencies.
|
(4)
|
Net income for the fourth quarter of 2013 included $3.5 million ($0.05 per diluted share) of discrete tax items. Fourth quarter 2012 net income included $0.3 million related to an increase in acquisition-related contingencies and $0.1 million of restructuring and related charges.
|
Plan Category
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights (a)
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights (b)
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding Securities
Reflected in Column (a)) (c)
|
|
||||
Equity compensation plans approved by security holders
|
5,970,780
|
|
(1)
|
$
|
21.99
|
|
(2)
|
9,479,205
|
|
(3)
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
5,970,780
|
|
|
$
|
21.99
|
|
|
9,479,205
|
|
|
(1)
|
Includes 1,970,140 outstanding stock options, 270,314 outstanding stock-settled stock appreciation rights, 385,216 unvested restricted performance share units and 260,154 deferred stock-equivalents units granted to directors under the 2011 Plan. Includes 2,265,446 outstanding stock options, 193,142 unvested restricted performance share units and 109,000 deferred stock-equivalents units granted to directors under the Non-Qualified Deferred Compensation Plan for Non-Employee Directors under the 2007 Omnibus Incentive Compensation Plan (which was terminated in 2011). Includes 517,368 outstanding stock options under the 2004 Stock-Based Compensation Plan (which was terminated in 2007). The average term of remaining options granted is 6.8 years. No future grants or awards may be made under the terminated plans. The total includes restricted performance share units at 100% of grant. The restricted performance share unit payouts were at 113.4%, 39.2%, 43.3% in 2013, 2012 and 2011, respectively. The total does not include stock-equivalent units granted or credited to directors under the Non-Qualified Deferred Compensation Plan for Non-Employee Directors to be settled only in cash.
|
(2)
|
Restricted performance share and deferred stock-equivalent units are excluded when determining the weighted-average exercise price of outstanding options.
|
(3)
|
Represents 4,192,337 shares reserved under the Company's Employee Stock Purchase Plan and 5,286,868 shares remaining available for issuance under the 2011 Plan. The estimated number of shares that could be issued for the current period from the Employee Stock Purchase Plan is 827,370. This number of shares is calculated by multiplying the 634 share per offering period per participant limit by 1,305, the number of current participants in the plan.
|
($ in millions)
|
Balance at
beginning of
period
|
Charged
to costs
and expenses
|
Deductions (1)
|
Balance at
end of
period
|
||||||||
For the year ended December 31, 2013
|
|
|
|
|
||||||||
Allowances deducted from assets:
|
|
|
|
|
||||||||
Deferred tax asset valuation allowance
|
$
|
20.4
|
|
$
|
2.8
|
|
$
|
0.3
|
|
$
|
23.5
|
|
Allowance for doubtful accounts
|
0.5
|
|
—
|
|
0.3
|
|
0.8
|
|
||||
Total allowances deducted from assets
|
$
|
20.9
|
|
$
|
2.8
|
|
$
|
0.6
|
|
$
|
24.3
|
|
|
|
|
|
|
||||||||
For the year ended December 31, 2012
|
|
|
|
|
||||||||
Allowances deducted from assets:
|
|
|
|
|
||||||||
Deferred tax asset valuation allowance
|
$
|
19.3
|
|
$
|
0.6
|
|
$
|
0.5
|
|
$
|
20.4
|
|
Allowance for doubtful accounts
|
0.3
|
|
0.3
|
|
(0.1
|
)
|
0.5
|
|
||||
Total allowances deducted from assets
|
$
|
19.6
|
|
$
|
0.9
|
|
$
|
0.4
|
|
$
|
20.9
|
|
|
|
|
|
|
||||||||
For the year ended December 31, 2011
|
|
|
|
|
||||||||
Allowances deducted from assets:
|
|
|
|
|
||||||||
Deferred tax asset valuation allowance
|
$
|
24.9
|
|
$
|
(0.2
|
)
|
$
|
(5.4
|
)
|
$
|
19.3
|
|
Allowance for doubtful accounts
|
0.5
|
|
(0.1
|
)
|
(0.1
|
)
|
0.3
|
|
||||
Total allowances deducted from assets
|
$
|
25.4
|
|
$
|
(0.3
|
)
|
$
|
(5.5
|
)
|
$
|
19.6
|
|
|
|
|
|
|
(1)
|
Includes accounts receivable written off, the write-off or write-down of valuation allowances, and translation adjustments.
|
(a) 3.
|
Exhibits - An index of the exhibits included in this Form 10-K is contained on pages F-1 through F-4 and is incorporated herein by reference.
|
(b)
|
See subsection (a) 3. above.
|
(c)
|
Financial Statements of affiliates are omitted because they do not meet the tests of a significant subsidiary at the 20% level.
|
Signature
|
Title
|
Date
|
/s/ Donald E. Morel, Jr., Ph.D
|
Director, Chief Executive Officer and Chairman
|
February 27, 2014
|
Donald E. Morel, Jr., Ph.D
|
of the Board (Principal Executive Officer)
|
|
|
|
|
/s/ Daniel Malone
|
Vice President and Controller
|
February 27, 2014
|
Daniel Malone
|
(Principal Accounting Officer)
|
|
|
|
|
/s/ William J. Federici
|
Senior Vice President and Chief Financial Officer
|
February 27, 2014
|
William J. Federici
|
(Principal Financial Officer)
|
|
|
|
|
/s/ Mark A. Buthman
|
Director
|
February 18, 2014
|
Mark A. Buthman*
|
|
|
|
|
|
/s/ William F. Feehery
|
Director
|
February 18, 2014
|
William F. Feehery*
|
|
|
|
|
|
/s/ Thomas W. Hofmann
|
Director
|
February 18, 2014
|
Thomas W. Hofmann*
|
|
|
|
|
|
/s/ L. Robert Johnson
|
Director
|
February 18, 2014
|
L. Robert Johnson*
|
|
|
|
|
|
/s/ Paula A. Johnson
|
Director
|
February 18, 2014
|
Paula A. Johnson*
|
|
|
|
|
|
/s/ Myla Lai-Goldman, M.D.
|
Director
|
February 18, 2014
|
Myla Lai-Goldman, M.D.*
|
|
|
|
|
|
/s/ Douglas A. Michels
|
Director
|
February 18, 2014
|
Douglas A. Michels*
|
|
|
|
|
|
/s/ John H. Weiland
|
Director
|
February 18, 2014
|
John H. Weiland*
|
|
|
|
|
|
/s/ Anthony Welters
|
Director
|
February 18, 2014
|
Anthony Welters*
|
|
|
|
|
|
/s/ Patrick J. Zenner
|
Director
|
February 18, 2014
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Patrick J. Zenner*
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Exhibit Number
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Description
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3.1
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Our Amended and Restated Articles of Incorporation effective December 17, 2007 are incorporated by reference from our Form 8-K dated December 17, 2007.
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3.2
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Certificate of Amendment of our Amended and Restated Articles of Incorporation, is incorporated by reference from our Form 8-K filed on August 26, 2013.
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3.3
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Our Bylaws, as amended through October 14, 2008 are incorporated by reference from our Form 8-K dated October 20, 2008.
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4.1
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Form of stock certificate for common stock is incorporated by reference from our annual report on Form 10-K dated May 6, 1999.
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4.2
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Article 5, 6, 8(c) and 9 of our Amended and Restated Articles of Incorporation are incorporated by reference from our Form 8-K dated December 17, 2007.
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4.3
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Article I and V of our Bylaws, as amended through October 14, 2008 are incorporated by reference from our Form 8-K dated October 20, 2008.
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4.4
(1)
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Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries have been omitted.
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10.1
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First Amendment to Credit Agreement, dated February 1, 2013, among West Pharmaceutical Services, Inc., certain of its subsidiaries, the several banks and other financial institutions party thereto, and PNC Bank, National Association, as administrative agent for the Lenders incorporated by reference from our Form 8-K filed on February 6, 2013.
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10.2
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Note Purchase Agreement, dated July 5, 2012, among the Company and the Purchasers named therein is incorporated by reference from our Form 8-K filed on July 10, 2012.
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10.3
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Credit Agreement, dated April 27, 2012, by and among West Pharmaceutical Services, Inc., our direct and indirect subsidiaries from time to time parties thereto, the several banks and other financial institutions from time to time parties thereto and PNC Bank, National Association, as administrative agent for the Lenders incorporated by reference from our Form 8-K filed on May 3, 2012.
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10.4
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Lease Agreement dated December 17, 2010, by and between us and 530 Regency Drive Associates, L.P., a Pennsylvania limited partnership, is incorporated by reference from our 8-K dated December 22, 2010.
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10.5
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Letter to 530 Regency Drive Associates, L.P. exercising purchase option.
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10.6
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Lease dated as of December 31, 1992 between Lion Associates, L.P. and us relating to the lease of our headquarters in Lionville, Pa. is incorporated by reference from our 1992 10-K report.
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10.7
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First Addendum to Lease dated as of May 22, 1995 between Lion Associates, L.P. and us is incorporated by reference from our 1995 10-K report.
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10.8
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Lease dated as of December 14, 1999 between White Deer Warehousing & Distribution Center, Inc. and us relating to the lease of our site in Montgomery, Pa. is incorporated by reference from our 2002 10-K report.
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10.9
(2)
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1999 Non-Qualified Stock Option Plan for Non-Employee Directors, effective as of April 27, 1999 (now terminated), is incorporated by reference from our 10-Q report for the quarter ended June 30, 1999.
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10.10
(2)
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Amendment No. 1 to 1999 Non-Qualified Stock Option Plan for Non-Employee Directors, effective October 30, 2001, is incorporated by reference from our 2001 10-K report.
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10.11
(2)
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Form of Second Amended and Restated Change-in-Control Agreement between us and certain of our executive officers dated as of March 25, 2000 is incorporated by reference from our 10-Q report for the quarter ended March 31, 2000.
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10.12
(2)
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Form of Amendment No. 1 to Second Amended and Restated Change-in-Control Agreement dated as of May 1, 2001 between us and certain of our executive officers is incorporated by reference from our 2001 10-K report.
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Exhibit Number
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Description
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10.13
(2)
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Form of Amendment No. 2 to Second Amended and Restated Change-in-Control Agreement between us and certain of our executive officers, dated as of various dates in December 2008, is incorporated by reference from our 2008 10-K report.
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10.14
(2)
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Schedule of agreements with executive officers is incorporated by reference from our 2008 10-K report.
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10.15
(2)
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Change-in-Control Agreement, dated as of January 21, 2011, between us and Jeffrey C. Hunt, is incorporated by reference from our 2011 10-K report.
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10.16
(2)
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Change-in-Control Agreement, dated as of May 3, 2012, between us and John Paproski.
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10.17
(2)
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Change-in-Control Agreement, dated as of August 16, 2012, between us and Daniel Malone.
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10.18
(2)
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Change-in-Control Agreement, dated as of August 15, 2012, between us and Karen Flynn.
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10.19
(2)
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Non-Competition Agreement, dated as of October 5, 1994, between us and Steven A. Ellers, is incorporated by reference from our 2007 10-K report.
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10.20
(2)
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Employment Agreement, dated as of April 30, 2002, between us and Donald E. Morel, Jr. is incorporated by reference from our 10-Q report for the quarter ended September 30, 2002.
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10.21
(2)
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Amendment #1 to the Employment Agreement between us and Donald E. Morel, Jr., dated as of December 19, 2008, is incorporated by reference from our 2008 10-K report.
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10.22
(2)
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Non-Qualified Stock Option Agreement, dated as of April 30, 2002 between us and Donald E. Morel, Jr. is incorporated by reference from our 10-Q report for the quarter ended September 30, 2002.
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10.23
(2)
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Indemnification Agreement, dated as of January 5, 2009 between us and Donald E. Morel, Jr. is incorporated by reference from our Form 8-K dated January 6, 2009.
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10.24
(2)
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Supplemental Employees' Retirement Plan, as amended and restated effective January 1, 2008, is incorporated by reference from our 2008 10-K report.
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10.25
(2)
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Non-Qualified Deferred Compensation Plan for Designated Employees, as amended and restated effective January 1, 2008, is incorporated by reference from our 2008 10-K report.
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10.26
(2)
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Deferred Compensation Plan for Outside Directors, as amended and restated effective June 30, 2013.
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10.27
(2)
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1998 Key Employee Incentive Compensation Plan, dated March 10, 1998 (now terminated) is incorporated by reference from our 1997 10-K report.
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10.28
(2)
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Amendment No. 1 to 1998 Key Employees Incentive Compensation Plan, effective October 30, 2001 is incorporated by reference from our 2001 10-K report.
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10.29
(2)
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West Pharmaceutical Services, Inc. 2011 Omnibus Incentive Compensation Plan is incorporated by reference from our Form 8-K filed on May 6, 2011.
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10.30
(2)
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2007 Omnibus Incentive Compensation Plan effective as of May 1, 2007, is incorporated by reference to Exhibit 99.1 of the Company's Form 8-K dated May 4, 2007.
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10.31
(2)
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2004 Stock-Based Compensation Plan (now terminated) is incorporated by reference from our Proxy Statement for the 2004 Annual Meeting of Shareholders.
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10.32
(2)
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Form of Director 2004 Non-Qualified Stock Option Award Agreement, issued pursuant to the 2004 Stock-Based Compensation Plan is incorporated by reference from our 10-Q report for the quarter ended September 30, 2004.
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10.33
(2)
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Form of Director 2004 Stock Unit Award Agreement, issued pursuant to the 2004 Stock-Based Compensation Plan is incorporated by reference from our 10-Q report for the quarter ended September 30, 2004.
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10.34
(2)
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Form of Director 2004 Non-Qualified Stock Option Agreement, issued pursuant to the 2004 Stock-Based Compensation Plan is incorporated by reference from our 10-Q report for the quarter ended September 30, 2004.
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10.35
(2)
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Form of Executive 2005 Non-Qualified Stock Option Award Notice is incorporated by reference from our 10-Q report for the quarter ended September 30, 2005.
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Exhibit Number
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Description
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10.36
(2)
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Form of Director 2005 Non-Qualified Stock Option Award Notice is incorporated by reference from our 10-Q report for the quarter ended September 30, 2005.
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10.37
(2)
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Form of Director 2005 Stock Unit Share Award Notice is incorporated by reference from our 10-Q report for the quarter ended September 30, 2005.
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10.38
(2)
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Form of Executive 2006 Bonus and Incentive Share Award is incorporated by reference from our 10-Q report for the quarter ended March 31, 2006.
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10.39
(2)
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Form of Executive 2006 Non-Qualified Stock Option Award is incorporated by reference from our 10-Q report for the quarter ended March 31, 2006.
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10.40
(2)
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Form of 2006 Performance-Vesting Restricted (“PVR”) Share Award is incorporated by reference from our 10-Q report for the quarter ended March 31, 2006.
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10.41
(2)
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Form of Director 2006 Non-Qualified Stock Option Award Notice is incorporated by reference from our 10-Q report for the quarter ended June 30, 2006.
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10.42
(2)
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Form of Director 2006 Stock Unit Award Notice is incorporated by reference from our 10-Q report for the quarter ended June 30, 2006.
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10.43
(2)
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Form of 2007 Bonus and Incentive Share Award, issued pursuant to the 2004 Stock-Based Compensation Plan, is incorporated by reference from our 10-Q report for the quarter ended March 31, 2007.
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10.44
(2)
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Form of 2007 Non-Qualified Stock Option and Performance-Vesting Share Unit Award, issued pursuant to the 2004 Stock-Based Compensation Plan, is incorporated by reference from our 10-Q report for the quarter ended March 31, 2007.
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10.45
(2)
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Form of Director 2007 Deferred Stock Award, issued pursuant to the 2007 Omnibus Incentive Compensation Plan, is incorporated by reference from our 10-Q report for the quarter ended June 30, 2007.
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10.46
(2)
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Form of 2008 Bonus and Incentive Share Award, issued pursuant to the 2007 Omnibus Incentive Compensation Plan, is incorporated by reference from our 10-Q report for the quarter ended March 31, 2008.
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10.47
(2)
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Form of 2008 Non-Qualified Stock Option and Performance-Vesting Share Unit Award, issued pursuant to the 2007 Omnibus Incentive Compensation Plan, is incorporated by reference from our 10-Q report for the quarter ended March 31, 2008.
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10.48
(2)
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Form of Director 2008 Deferred Stock Award, issued pursuant to the 2007 Omnibus Incentive Compensation Plan, is incorporated by reference from our 2008 10-K report.
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10.49
(2)
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Form of 2009 Supplemental Long-Term Incentive Award, is incorporated by reference from our 10-Q report for the quarter ended September 30, 2009.
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10.5
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Credit Agreement, dated June 3, 2011, by and among us, certain of our subsidiaries, several banks and other financial institutions from time to time parties thereto (the "Lenders") and PNC Bank, National Association, as administrative agent for the Lenders.
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10.51
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Security Agreement, dated June 3, 2011, by and among us, the subsidiaries of the Company listed on the signature pages thereto and PNC Bank, National Association, as administrative agent, for the holders of the Obligations.
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10.52
(3)
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Agreement, effective as of January 1, 2005, between us and The Goodyear Tire & Rubber Company is incorporated by reference from our 10-Q report for the quarter ended June 30, 2005.
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10.53
(3)
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First Agreement to Amend to Agreement, effective as of July 1, 2008, between us and The Goodyear Tire & Rubber Company is incorporated by reference from our 10-Q report for the quarter ended March 31, 2009.
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10.54
(3)
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Supply Agreement, dated as of October 1, 2007, between us and Becton, Dickinson and Company is incorporated by reference from our 2007 10-K report.
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10.55
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Distributorship Agreement, dated January 25, 2007, between Daikyo Seiko, Ltd. and us is incorporated by reference from our 2006 10-K report.
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10.56
(3)
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Amended and Restated Technology Exchange and Cross License Agreement, dated January 25, 2007, between us and Daikyo Seiko, Ltd. is incorporated by reference from our 2006 10-K report.
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Exhibit Number
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Description
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10.57
(3)
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Global Supply Agreement by and between ExxonMobil Chemical Company and us, entered into on July 28, 2011, and effective from January 1, 2011 through December 31, 2013 is incorporated by reference from our Form 8-K report filed on July 1, 2011.
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10.58
(2)
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Amendment to Letter Agreement, dated as of May 1, 2003, between us and Robert S. Hargesheimer is incorporated by reference from our 2003 10-K report.
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10.59
(2)
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Amendment #2 to Letter Agreement, dated as of December 19, 2008, between us and Robert S. Hargesheimer, is incorporated by reference from our 2008 10-K report.
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10.60
(2)
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Letter Agreement dated as of March 30, 2006 between us and Donald E. Morel, Jr. is incorporated by reference from our 10-Q report for the quarter ended June 30, 2006.
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10.61
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Note Purchase Agreement, dated as of July 28, 2005, among us and each of the purchasers listed on Schedule A thereto, is incorporated by reference from our 8-K report dated August 3, 2005.
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10.62
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Indemnification agreements between us and each of our directors in the form of Exhibit 10.1 to our Form 8-K report dated January 6, 2009, which is incorporated by reference.
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12.1
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Computation of Ratio of Earnings to Fixed Charges.
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21.
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Subsidiaries of the Company.
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23.
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Consent of Independent Registered Public Accounting Firm.
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24.
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Powers of Attorney.
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31.1
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Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1*
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Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2*
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Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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(1)
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We agree to furnish to the SEC, upon request, a copy of each instrument with respect to issuances of long-term debt of the Company and its subsidiaries.
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(2)
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Management compensatory plan.
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(3)
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Certain portions of this exhibit have been omitted pursuant to a confidential treatment request submitted to the SEC.
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*
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Furnished, not filed.
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1.
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Definitions
. As used in this Agreement, the following terms will have the meanings set forth below:
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(a)
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An “
Affiliate
” of any Person means any Person directly or indirectly controlling, controlled by or under common control with such Person.
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(b)
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“
Change in Control
” means a change in control of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K as in effect on the date of this Agreement pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (the “
Act
”), provided, that, without limitation, a Change in Control shall be deemed to have occurred if:
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(i)
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Any Person, other than:
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(1)
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the Company,
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(2)
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any Person who on the date hereof is a director or officer of the Company, or
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(3)
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a trustee or fiduciary holding securities under an employee benefit plan of the Company,
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(ii)
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During any period of two consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period; or
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(iii)
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The shareholders of the Company approve: (A) a plan of complete liquidation of the Company; or (B) an agreement for the sale or disposition of all or substantially all of the Company’s assets; or (C) a merger, consolidation, or reorganization of the Company with or involving any other corporation,
other
than a merger, consolidation, or reorganization (collectively, a “
Non-Control Transaction
”), that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least 50% of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of the Non-Control Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) outstanding immediately after the Non-Control Transaction.
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(c)
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“
Code
” means the Internal Revenue Code of 1986, as amended.
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(d)
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“
Constructive Termination
” means the occurrence of any of the following events:
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(i)
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The Company requires the Executive to assume any duties inconsistent with, or the Company makes a significant diminution or reduction in the nature or scope of the Executive’s authority or duties from, those assigned to or held by the Executive on the Effective Date;
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(ii)
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A material reduction in the Executive’s annual salary or incentive compensation opportunities;
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(iii)
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A relocation of the Executive’s site of employment to a location more than 50 miles from the Executive’s site of employment on the Effective Date;
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(iv)
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The Company fails to provide the Executive with substantially the same fringe benefits that were provided to the Executive as of the Effective Date, or with a package of fringe benefits that, although one or more of such benefits may vary from those in effect as of the Effective Date, is substantially at least as beneficial to the Executive in all material respects as such fringe benefits taken as a whole; or
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(v)
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A successor of the Company does not assume the Company’s obligations under this Agreement, expressly or as a matter of law.
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(1)
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the Executive will have consented in writing or given a written waiver to the occurrence of any of the events enumerated in clauses (i) through (v) above;
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(2)
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the Executive will have failed to give the Company written notice stating the Executive’s intention to claim Constructive Termination and the basis
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(3)
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The event constituting a Constructive Termination has been cured by the Company prior to the effective date of the Executive’s resignation.
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(f)
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“
Payment
” means
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(i)
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any amount due or paid to the Executive under this Agreement,
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(ii)
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any amount that is due or paid to the Executive under any plan, program or arrangement of the Company and any of its Subsidiaries, and
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(iii)
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any amount or benefit that is due or payable to the Executive under this Agreement or under any plan, program or arrangement of the Company and any of its Subsidiaries not otherwise covered under clause (i) or (ii) hereof which must reasonably be taken into account under section 280G of the Code and the Regulations in determining the amount of the “parachute payments” received by the Executive, including, without limitation, any amounts which must be taken into account under the Code and Regulations as a result of (1) the acceleration of the vesting of any option, restricted stock or other equity award granted under any equity plan of the Company or otherwise, (2) the acceleration of the time at which any payment or benefit is receivable by the Executive or (3) any contingent severance or other amounts that are payable to the Executive.
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(g)
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“
Person
” means an individual, a corporation, a partnership, an association, a trust or other entity or organization.
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(h)
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“
Regulations
” means the proposed, temporary and final regulations under sections 4999, 280G or 409A of Code or any successor provisions thereto, as applicable.
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(i)
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“
Retirement Plan
” means the West Pharmaceutical Services, Inc. Employees’ Retirement Plan and any successor plan thereto.
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(j)
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“
Savings/Deferred Comp Plan
” means the Company’s 401(k) Plan, the Company’s Non-Qualified Deferred Compensation Plan for Designated Employees and any successor plans or other similar plans established from time to time that may allow executive officers to defer taxation of compensation.
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(k)
|
“
Separation from Service
” is the date on which the Executive ceases to be employed by the Company or any of its Subsidiaries or Affiliates for any reason and, to the extent that section 409A of the Code applies to the Payments under this agreement, shall be the date that the Executive incurs a “separation from service” as defined in that Code section and the Regulations.
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(l)
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“
Subsidiary
” has the meaning ascribed to the term by section 425(f) of the Code.
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2.
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Termination Following a Change in Control
.
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(a)
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Subject to Section 2(b), the Executive will be entitled to the benefits specified in Section 3 if,
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(i)
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at any time within two years after a Change in Control has occurred, a Separation from Service occurs due to: (A) an involuntary termination of employment by the Company other than by reason of continuous willful misconduct to the detriment of the Company, or (B) as a result of the Executive’s resignation at any time following the Executive’s Constructive Termination, or
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(ii)
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The Company signs an agreement, the consummation of which would result in the occurrence of a Change in Control, and then, a Separation from Service occurs due to (A) an involuntary termination of employment by the Company other than by reason of continuous willful misconduct to the detriment of the Company, or (B) the Executive’s resignation at any time following the Executive’s Constructive Termination occurring after the date of such agreement (and, if such agreement expires or is terminated prior to consummation, prior to the expiration or termination of such agreement).
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(b)
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The Executive will not be entitled to the benefits specified in Section 3 if:
|
(i)
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the Executive’s employment terminates for any other reason, including, death, disability, voluntary resignation without a Constructive Termination or retirement under the Retirement Plan, or
|
(ii)
|
the Executive is in breach of any of the Executive’s obligations under this Agreement before or following a Separation from Service.
|
3.
|
Benefits Payable Upon Termination of Employment
. Following a Separation from Service due to a termination of employment described in Section 2(a), the Executive will be entitled to the following benefits:
|
(a)
|
Severance Compensation
. the Executive will be entitled to severance compensation in an amount equal to three times the sum of
|
(i)
|
the Executive’s highest annual base salary rate in effect during the year of the termination of the Executive’s employment, plus
|
(ii)
|
the aggregate amount of the annual bonuses paid or payable to the Executive for the three fiscal years immediately preceding a Change in Control divided by the number of fiscal years as to which such bonuses were paid or payable;
|
(b)
|
Equivalent of Vested Savings/Deferred Comp Plan Benefit
.
The Company will pay to the Executive the difference, if any, between
|
(i)
|
the benefit the Executive would be entitled to receive under the Savings/Deferred Comp Plan if the Company’s contributions to the Savings/Deferred Comp Plan were fully vested upon the Separation from Service, and
|
(ii)
|
the benefit the Executive is entitled to receive under the terms of the Savings/Deferred Comp Plan upon the Separation from Service.
|
(c)
|
Unvested Equity Awards
. All stock options, other equity-based awards and shares of the Company’s stock granted or awarded to the Executive pursuant to any Company compensation or benefit plan or arrangement, but which are unvested, will vest immediately upon the Separation from Service. The provisions of this Section 3(c) will supersede the terms of any such grant or award made to the Executive under any such plan or arrangement to the extent there is an inconsistency between the two.
|
(d)
|
Employee and Executive Benefits
.
The Executive will be entitled to a continuation of all hospital, medical, dental, and similar insurance benefits not otherwise addressed in this Agreement in the same manner and amount to which the Executive was entitled on the date of a Change in Control or on the date of Constructive Termination of the Executive’s employment (whichever benefits are more favorable to the Executive) until the earlier of:
|
(i)
|
a period of 36 months after the Separation from Service,
|
(ii)
|
the Executive’s retirement under the Retirement Plan, or
|
(iii)
|
the Executive’s eligibility for similar benefits with a new employer.
|
(e)
|
No Duplication of Payments
. If Executive is entitled to receive any Payment under this Agreement, he shall not also be entitled to receive severance payments under any other plan, program or agreement with the Company, including the severance letter agreement between the Company and Executive dated August 25, 1993 (the “Severance Letter Agreement”).
|
4.
|
Excise Tax Limitation.
|
(a)
|
Limitation
. Notwithstanding any other provisions of this Agreement to the contrary, in the event that any Payments received or to be received by the Executive in connection with the Executive’s employment with the Company (or termination thereof) under this Agreement or otherwise would subject the Executive to the excise tax (plus any related interest and penalties) imposed under section 4999 of the Internal Revenue Code of 1986, as amended (the “
Excise Tax
”), and if the net-after tax amount (taking into account all applicable taxes payable by the Executive, including any Excise Tax) that the Executive would receive with respect to such payments or benefits does not exceed the net-after tax amount the Executive would
|
(b)
|
Determination of Application of the Limitation
. Subject to the provisions of Section 4(c), all determinations required under this Section 4 shall be made by the accounting firm that was the Company’s independent auditors immediately prior to the Change in Control (or, in default thereof, an accounting firm mutually agreed upon by the Company and the Executive) (the “
Accounting Firm
”), which shall provide detailed supporting calculations both to the Executive and the Company within fifteen days of the Change in Control, the Separation from Service or any other date reasonably requested by the Executive or the Company on which a determination under this Section 4 is necessary or advisable. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Company shall cause the Accounting Firm to provide the Executive with an opinion that the Accounting Firm has substantial authority under the Code and Regulations not to report an Excise Tax on the Executive’s federal income tax return. Any determination by the Accounting Firm shall be binding upon the Executive and the Company.
|
(c)
|
Procedures
. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would result in Payments that would be less on an after-tax basis than had those payments been limited under Section 4(a). Such notice shall be given as soon as practicable after the Executive knows of such claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. the Executive agrees not to pay the claim until the expiration of the thirty-day period following the date on which the Executive notifies the Company, or such shorter period ending on the date the Taxes with respect to such claim are due (the “
Notice Period
”). If the Company notifies the Executive in writing prior to the expiration of the Notice Period that it desires to contest the claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to the claim; (ii) take such action in connection with the claim as the Company may reasonably request, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably acceptable to the Executive; (iii) cooperate with the Company in good faith in contesting the claim; and (iv) permit the Company to participate in any proceedings relating to the claim. The Executive shall permit the Company to control all proceedings related to the claim and, at its option, permit the Company to pursue or forgo any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of such claim. If requested by the Company, the Executive agrees either to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts as the Company shall determine;
provided
,
however
, that, if the Company directs the Executive to pay such claim and pursue a refund, the Company shall advance the amount of such payment to the Executive on an after-tax and interest-free basis (the “
Advance
”). The Company’s control of the contest related to the claim shall be limited to the issues related to the Payments and the Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or other taxing authority. The Advance or other payments and the reimbursement of any related costs, expenses or taxes payable under this Section 4(c) and/or Section 4(e) shall be made on or before the end of the Executive’s taxable year following the taxable year in which any additional taxes are payable by the Executive or if no additional taxes are payable the Executive’s taxable year following the taxable year in which the audit or litigation is closed.
|
(d)
|
Repayments
. If, after receipt by the Executive of an Advance, the Executive becomes entitled to a refund with respect to the claim to which such Advance relates, the Executive shall pay the Company the amount of the refund (together with any interest paid or credited thereon after Taxes applicable thereto). If, after receipt by the Executive of an Advance, a determination is made that the Executive shall not be entitled to any refund with respect to the claim and the Company does not promptly notify the Executive of its intent to contest the denial of refund, then the amount of the Advance shall not be required to be repaid by the Executive.
|
(e)
|
Further Assurances
. The Company shall indemnify the Executive and hold the Executive harmless, on an after-tax basis, from any costs, expenses, penalties, fines, interest or other liabilities (“
Losses
”) incurred by the Executive with respect to the exercise by the Company of any of its rights under this Section 4, including, without limitation, any Losses related to the Company’s decision to contest a claim or any imputed income to the Executive resulting from any Advance or action taken on the Executive’s behalf by the Company hereunder. Subject to the last sentence of Section 4(c), the Company shall pay all legal fees and expenses incurred under this Section 4 and shall promptly reimburse the Executive for the reasonable expenses incurred by the Executive in connection with any actions taken by the Company or required to be taken by the Executive hereunder. The Company shall also pay all of the fees and expenses of the Accounting Firm, including, without limitation, the fees and expenses related to the opinion referred to in Section 4(b).
|
5.
|
Payment of Severance Compensation
. The severance compensation set forth in Section 3(a) will be payable in 36 equal monthly installments commencing on the first day of the month following the month in which the Separation from Service occurs. Notwithstanding the above, in the event that the Executive is a “specified employee” within the meaning of Code section 409A, the first six monthly installments shall be paid in a lump sum on the first day of the month following or coincident with the date that is six months following the Separation from Service and all remaining monthly installments shall be paid monthly.
|
6.
|
Legal Fees
. The Company will pay all legal fees and expenses which the Executive may incur as a result of the Company’s contesting the validity or enforceability of this Agreement.
|
7.
|
Payments Final
. In the event of a termination of the Executive’s employment under the circumstances described in this Agreement, the arrangements provided for by this Agreement, and any other agreement between the Company and the Executive in effect at that time and by any other applicable plan of the Company in which the Executive then participates, will constitute the entire obligation of the Company to the Executive, and performance of that obligation will constitute full settlement of any claim that the Executive might otherwise assert against the Company on account of such termination. The Company’s obligation to pay the Executive under this Agreement will be absolute and unconditional and will not be affected by any circumstance, including without limitation, any set-off, counterclaim, defense or other rights the Company may have against the Executive or anyone else as long as the Executive is not in beach of the Executive’s obligations under this Agreement.
|
8.
|
Non-Competition
.
|
(a)
|
During the one-year period following the Executive’s termination of employment covered by this Agreement, the Executive will not, and will not permit any of the Executive's Affiliates, or any other Person, directly or indirectly, to:
|
(i)
|
engage in competition with, or acquire a direct or indirect interest or an option to acquire such an interest in any Person engaged in competition with, the Company's Business in the United States (other than an interest of not more than 5 percent of the outstanding stock of any publicly traded company);
|
(ii)
|
serve as a director, officer, employee or consultant of, or furnish information to, or otherwise facilitate the efforts of, any Person engaged in competition with the Company's Business in the United States;
|
(b)
|
solicit, employ, interfere with or attempt to entice away from the Company any employee who has been employed by the Company or a Subsidiary in an executive or supervisory capacity in connection with the conduct of the Company's Business within one year prior to such solicitation, employment, interference or enticement; or
|
(c)
|
approach, solicit or deal with in competition with the Company or any Subsidiary any Person which at any time during the 12 months immediately preceding the Termination Date:
|
(i)
|
was a customer, client, supplier, agent or distributor of the Company or any Subsidiary;
|
(ii)
|
was a customer, client, supplier, agent or distributor of the Company or any Subsidiary with whom employees reporting to or under the direct control of the Executive had personal contact on behalf of the Company or any Subsidiary; or
|
(iii)
|
was a Person with whom the Executive had regular, substantial or a series of business dealings on behalf of the Company or any Subsidiary (whether or not a customer, client, supplier, agent or distributor of the Company or any Subsidiary).
|
(d)
|
The "Company's Business" means: (i) the manufacture and sale of stoppers, closures, containers, medical-device components and assemblies made from elastomers, metal and plastic for the health-care and consumer-products industries, and (ii) any other business conducted by the Company or any of its Subsidiaries or Affiliates during the term of this Agreement and in which the Executive has have been actively involved.
|
9.
|
Confidentiality and Enforcement
. Executive’s obligations under any Confidentiality and Non-Disclosure Agreements with the Company and the non-compete agreement described in Section 8 (collectively, the “
Material Ancillary Agreements
”) are hereby affirmed. A breach of any Material Ancillary Agreement is a breach of this Agreement and all Payments and obligations of the Company under this Agreement shall cease in the event of the breach of those Material Ancillary Agreements. The Executive acknowledges that a breach of the covenants contained in the Material Ancillary Agreements and incorporated by reference into this Agreement will cause the Company immediate and irreparable harm for which the Company’s remedies at law (such as money damages) will be inadequate. The Company shall have the right, in addition to any other rights it may have, to obtain an injunction to restrain any breach or threatened breach of such agreements. The Company may contact any Person with or for whom the Executive works after the Executive’s employment by the Company ends and may send that Person a copy of those agreements and/or this Agreement. In consideration of the benefit of having the protection afforded by this Agreement, the Executive agrees that the provisions of the Material Ancillary Agreements apply to the Executive, and the Executive will be bound by them, whether or not a Change in Control occurs or the Executive actually receives the benefits specified in Section 3.
|
10.
|
Duration of Agreement
. This Agreement commences on the Effective Date and will continue until terminated as provided in this Section. This Agreement may be terminated only under the following circumstances:
|
(i)
|
At any time by the mutual written consent of the Executive and the Company; and
|
(ii)
|
By the Company at the end of each successive two-year period commencing on the Effective Date by giving the Executive written notice at least one year in advance of such termination, except that such termination and written notice will not be effective unless the Executive will be employed by the Company on the Separation from Service.
|
10.
|
Notices
. Each party giving or making notice, request, demand or other communication (each, a “
Notice
”) under this Agreement shall give the Notice in writing and use one of the following methods of delivery: personal delivery, registered or certified mail with return receipt requested, nationally recognized overnight courier, fax or e-mail. Such Notice shall be addressed to the last address provided by the party receiving Notice. Notices are not effective unless compliant with this Section and provided within the timeframes required in this Agreement.
|
11.
|
Integration and Replacement of Other Agreements.
This Agreement together with the Material Ancillary Agreements constitutes the entire agreement and understanding between the Company and the Executive with respect to the subject matter hereof and merges and supersedes all prior discussions, agreements (written and verbal) and understandings between the Company and the Executive with respect to such matters. For avoidance of doubt, this Agreement supersedes, replaces and nullifies the Retention and Bonus Agreement between the Company and Executive dated October 31, 2000, but does supersede, nullify or replace the Severance Letter Agreement (subject to non-duplication clause contained in Section 3(e) of this Agreement).
|
12.
|
Miscellaneous
.
|
(a)
|
This Agreement will be binding upon and inure to the benefit of the Executive, the Executive’s personal representatives and heirs and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.
|
(b)
|
Should any provision of this Agreement be adjudged to any extent invalid by any competent tribunal, that provision will be deemed modified to the extent necessary to make it enforceable. The invalidity or unenforceability of any provision of this Agreement (or the Material Ancillary Agreements) shall in no way affect the validity or enforceability of any other provision hereof.
|
(c)
|
This Agreement will be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania.
|
(d)
|
This Agreement may be executed in one or more counterparts, which together shall constitute a single agreement.
|
/s/ JOHN PAPROSKI
|
|
By:
|
/s/ Richard D. Luzzi
|
JOHN PAPROSKI
|
|
|
Richard D. Luzzi
|
|
|
|
Vice President, Human Resources
|
1.
|
Definitions
. As used in this Agreement, the following terms will have the meanings set forth below:
|
(a)
|
An “
Affiliate
” of any Person means any Person directly or indirectly controlling, controlled by or under common control with such Person.
|
(b)
|
“
Change in Control
” means a change in control of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K as in effect on the date of this Agreement pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (the “
Act
”), provided, that, without limitation, a Change in Control shall be deemed to have occurred if:
|
(i)
|
Any Person, other than:
|
(1)
|
the Company,
|
(2)
|
any Person who on the date hereof is a director or officer of the Company, or
|
(3)
|
a trustee or fiduciary holding securities under an employee benefit plan of the Company,
|
(ii)
|
During any period of two consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has
|
(iii)
|
The shareholders of the Company approve: (A) a plan of complete liquidation of the Company; or (B) an agreement for the sale or disposition of all or substantially all of the Company’s assets; or (C) a merger, consolidation, or reorganization of the Company with or involving any other corporation,
other
than a merger, consolidation, or reorganization (collectively, a “
Non-Control Transaction
”), that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least 50% of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of the Non-Control Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) outstanding immediately after the Non-Control Transaction.
|
(c)
|
“
Code
” means the Internal Revenue Code of 1986, as amended.
|
(d)
|
“
Constructive Termination
” means the occurrence of any of the following events:
|
(i)
|
The Company requires the Executive to assume any duties inconsistent with, or the Company makes a significant diminution or reduction in the nature or scope of the Executive’s authority or duties from, those assigned to or held by the Executive on the Effective Date;
|
(ii)
|
A material reduction in the Executive’s annual salary or incentive compensation opportunities;
|
(iii)
|
A relocation of the Executive’s site of employment to a location more than 50 miles from the Executive’s site of employment on the Effective Date;
|
(iv)
|
A material reduction in the package of fringe benefits offered to the Executive as of the Effective Date, unless such reduction is applicable on a broad basis to similarly-situated employees of the Company; or
|
(v)
|
A successor of the Company does not assume the Company’s obligations under this Agreement, expressly or as a matter of law.
|
(1)
|
the Executive will have consented in writing or given a written waiver to the occurrence of any of the events enumerated in clauses (i) through (v) above;
|
(2)
|
the Executive will have failed to give the Company written notice stating the Executive’s intention to claim Constructive Termination and the basis for that claim at least 10 days in advance of the effective date of the Executive’s resignation; or
|
(3)
|
The event constituting a Constructive Termination has been cured by the Company prior to the effective date of the Executive’s resignation.
|
(f)
|
“
Payment
” means
|
(i)
|
any amount due or paid to the Executive under this Agreement,
|
(ii)
|
any amount that is due or paid to the Executive under any plan, program or arrangement of the Company and any of its Subsidiaries, and
|
(iii)
|
any amount or benefit that is due or payable to the Executive under this Agreement or under any plan, program or arrangement of the Company and any of its Subsidiaries not otherwise covered under clause (i) or (ii) hereof which must reasonably be taken into account under section 280G of the Code and the Regulations in determining the amount of the “parachute payments” received by the Executive, including, without limitation, any amounts which must be taken into account under the Code and Regulations as a result of (1) the acceleration of the vesting of any option, restricted stock or other equity award granted under any equity plan of the Company or otherwise, (2) the acceleration of the time at which any payment or benefit is receivable by the Executive or (3) any contingent severance or other amounts that are payable to the Executive.
|
(g)
|
“
Person
” means an individual, a corporation, a partnership, an association, a trust or other entity or organization.
|
(h)
|
“
Regulations
” means the proposed, temporary and final regulations under sections 4999, 280G or 409A of Code or any successor provisions thereto, as applicable.
|
(i)
|
“
Retirement Plan
” means the West Pharmaceutical Services, Inc. Employees’ Retirement Plan and any successor plan thereto.
|
(j)
|
“
Savings/Deferred Comp Plan
” means the Company’s 401(k) Plan, the Company’s Non-Qualified Deferred Compensation Plan for Designated Employees and any successor plans or other similar plans established from time to time that may allow executive officers to defer taxation of compensation.
|
(k)
|
“
Separation from Service
” is the date on which the Executive ceases to be employed by the Company or any of its Subsidiaries or Affiliates for any reason and, to the extent that section 409A of the Code applies to the Payments under this agreement, shall be the date that the Executive incurs a “separation from service” as defined in that Code section and the Regulations.
|
(l)
|
“
Subsidiary
” has the meaning ascribed to the term by section 425(f) of the Code.
|
2.
|
Termination Following a Change in Control
.
|
(a)
|
Subject to Section 2(b), the Executive will be entitled to the benefits specified in Section 3 if,
|
(i)
|
at any time within two years after a Change in Control has occurred, a Separation from Service occurs due to: (A) an involuntary termination of employment by the Company other than by reason of continuous willful misconduct to the detriment of the Company, or (B) as a result of the Executive’s resignation at any time following the Executive’s Constructive Termination, or
|
(ii)
|
The Company signs an agreement, the consummation of which would result in the occurrence of a Change in Control, and then, a Separation from Service occurs due to (A) an involuntary termination of employment by the Company other than by reason of continuous willful misconduct to the detriment of the Company, or (B) the Executive’s resignation at any time following the Executive’s Constructive Termination occurring after the date of such agreement (and, if such agreement expires or is terminated prior to consummation, prior to the expiration or termination of such agreement).
|
(b)
|
The Executive will not be entitled to the benefits specified in Section 3 if:
|
(i)
|
the Executive’s employment terminates for any other reason, including, death, disability, voluntary resignation without a Constructive Termination or retirement under the Retirement Plan, or
|
(ii)
|
the Executive is in breach of any of the Executive’s obligations under this Agreement before or following a Separation from Service.
|
3.
|
Benefits Payable Upon Termination of Employment
. Following a Separation from Service due to a termination of employment described in Section 2(a), the Executive will be entitled to the following benefits:
|
(a)
|
Severance Compensation
. the Executive will be entitled to severance compensation in an amount equal to two times the sum of
|
(i)
|
the Executive’s highest annual base salary rate in effect during the year of the termination of the Executive’s employment, plus
|
(ii)
|
the aggregate amount of the annual bonuses paid or payable to the Executive for the three fiscal years immediately preceding a Change in Control divided by the number of fiscal years as to which such bonuses were paid or payable;
|
(b)
|
Equivalent of Vested Savings/Deferred Comp Plan Benefit
.
The Company will pay to the Executive the difference, if any, between
|
(i)
|
the benefit the Executive would be entitled to receive under the Savings/Deferred Comp Plan if the Company’s contributions to the Savings/Deferred Comp Plan were fully vested upon the Separation from Service, and
|
(ii)
|
the benefit the Executive is entitled to receive under the terms of the Savings/Deferred Comp Plan upon the Separation from Service.
|
(c)
|
Unvested Equity Awards
. All stock options, other equity-based awards and shares of the Company’s stock granted or awarded to the Executive pursuant to any Company compensation or benefit plan or arrangement, but which are unvested, will vest in full immediately upon the Separation from Service. If such unvested awards are dependent upon achievement of performance goals, those goals will be deemed to be satisfied at the target level. The provisions of this Section 3(c) will supersede the terms of any such grant or award made to the Executive under any such plan or arrangement to the extent there is an inconsistency between the two.
|
(d)
|
Employee and Executive Benefits
.
The Executive will be entitled to a continuation of all hospital, medical, dental, and similar insurance benefits not otherwise addressed in this Agreement in the same manner and amount to which the Executive was entitled on the date of a Change in Control or on the date of Constructive Termination of the Executive’s employment (whichever benefits are more favorable to the Executive) until the earlier of:
|
(i)
|
a period of 24 months after the Separation from Service,
|
(ii)
|
the Executive’s retirement under the Retirement Plan, or
|
(iii)
|
the Executive’s eligibility for similar benefits with a new employer.
|
(e)
|
No Duplication of Payments
. If Executive is entitled to receive any Payment under this Agreement, he shall not also be entitled to receive severance payments under any other plan, program or agreement with the Company.
|
1.
|
Excise Tax Limitation.
|
(a)
|
Limitation
. Notwithstanding any other provisions of this Agreement to the contrary, in the event that any Payments received or to be received by the Executive in connection with the Executive’s employment with the Company (or termination thereof) under this Agreement or otherwise would subject the Executive to the excise tax (plus any related interest and penalties) imposed under section 4999 of the Internal Revenue Code of 1986, as amended (the “
Excise Tax
”), and if the net-after tax amount (taking into account all applicable taxes payable by the Executive, including any Excise Tax) that the Executive would receive with respect to such payments or benefits does not exceed the net-after tax amount the Executive would receive if the amount of such payment and benefits were reduced to the maximum amount which could otherwise be payable to the Executive without the imposition of the Excise Tax, then, to the extent necessary to eliminate the imposition of the Excise Tax, (i) such cash Payments shall first be reduced (if necessary, to zero), then (ii) all non-cash Payments (other than those relating to equity and incentive plans) shall next be reduced (if necessary, to zero,
|
(b)
|
Determination of Application of the Limitation
. Subject to the provisions of Section 4(c), all determinations required under this Section 4 shall be made by the accounting firm that was the Company’s independent auditors immediately prior to the Change in Control (or, in default thereof, an accounting firm mutually agreed upon by the Company and the Executive) (the “
Accounting Firm
”), which shall provide detailed supporting calculations both to the Executive and the Company within fifteen days of the Change in Control, the Separation from Service or any other date reasonably requested by the Executive or the Company on which a determination under this Section 4 is necessary or advisable. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Company shall cause the Accounting Firm to provide the Executive with an opinion that the Accounting Firm has substantial authority under the Code and Regulations not to report an Excise Tax on the Executive’s federal income tax return. Any determination by the Accounting Firm shall be binding upon the Executive and the Company.
|
(c)
|
Procedures
. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would result in Payments that would be less on an after-tax basis than had those payments been limited under Section 4(a). Such notice shall be given as soon as practicable after the Executive knows of such claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. the Executive agrees not to pay the claim until the expiration of the thirty-day period following the date on which the Executive notifies the Company, or such shorter period ending on the date the Taxes with respect to such claim are due (the “
Notice Period
”). If the Company notifies the Executive in writing prior to the expiration of the Notice Period that it desires to contest the claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to the claim; (ii) take such action in connection with the claim as the Company may reasonably request, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably acceptable to the Executive; (iii) cooperate with the Company in good faith in contesting the claim; and (iv) permit the Company to participate in any proceedings relating to the claim. The Executive shall permit the Company to control all proceedings related to the claim and, at its option, permit the Company to pursue or forgo any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of such claim. If requested by the Company, the Executive agrees either to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts as the Company shall determine;
provided
,
however
, that, if the Company directs the Executive to pay such claim and pursue a refund, the Company shall advance the amount of such payment to the Executive on an after-tax and interest-free basis (the “
Advance
”). The Company’s control of the contest related to the claim shall be limited to the issues related to the Payments and the Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or other taxing authority. The Advance or other payments and the reimbursement of any related costs, expenses or taxes payable under this Section 4(c) and/or Section 4(e) shall be made on or before the end of the Executive’s taxable year following the taxable year in which any additional taxes are payable by the Executive or if no additional taxes are payable the Executive’s taxable year following the taxable year in which the audit or litigation is closed. Notwithstanding the above, to the extent required to avoid the penalty taxes and interest payable under section 409A of the Code, if the Executive is a “specified person” within the meaning of that Code section, the Advance shall be delayed until the date that is six months following the Separation from Service.
|
(d)
|
Repayments
. If, after receipt by the Executive of an Advance, the Executive becomes entitled to a refund with respect to the claim to which such Advance relates, the Executive shall pay the Company the amount of the refund (together with any interest paid or credited thereon after Taxes applicable thereto). If, after receipt by the Executive of an Advance, a determination is made that the Executive shall not be entitled to any refund with respect to the claim and the Company does not promptly notify the Executive of its intent to contest the denial of refund, then the amount of the Advance shall not be required to be repaid by the Executive.
|
(e)
|
Further Assurances
. The Company shall indemnify the Executive and hold the Executive harmless, on an after-tax basis, from any costs, expenses, penalties, fines, interest or other liabilities (“
Losses
”) incurred by the Executive with respect to the exercise by the Company of any of its rights under this Section 4, including, without limitation, any Losses related to the Company’s decision to contest a claim or any imputed income to the Executive resulting from any Advance or action taken on the Executive’s behalf by the Company hereunder. Subject to the last sentence of Section 4(c), the Company shall pay all reasonable and document legal fees and expenses incurred under this Section 4 and shall promptly reimburse the Executive for the reasonable expenses incurred by the Executive in connection with any actions taken by the Company or required to be taken by the Executive hereunder. The Company shall also pay all of the fees and expenses of the Accounting Firm, including, without limitation, the fees and expenses related to the opinion referred to in Section 4(b).
|
5.
|
Payment of Severance Compensation
. The severance compensation set forth in Section 3(a) will be payable in 24 equal monthly installments commencing on the first day of the month following the month in which the Separation from Service occurs. Notwithstanding the above, in the event that the Executive is a “specified employee” within the meaning of Code section 409A, the first six monthly installments shall be paid in a lump sum on the first day of the month following or coincident with the date that is six months following the Separation from Service and all remaining monthly installments shall be paid monthly.
|
6.
|
Legal Fees
. The Company will pay all reasonable and documented legal fees and expenses which the Executive may incur as a result of the Company’s contesting the validity or enforceability of this Agreement.
|
7.
|
Payments Final
. In the event of a termination of the Executive’s employment under the circumstances described in this Agreement, the arrangements provided for by this Agreement, and any other agreement between the Company and the Executive in effect at that time and by any other applicable plan of the Company in which the Executive then participates, will constitute the entire obligation of the Company to the Executive, and performance of that obligation will constitute full settlement of any claim that the Executive might otherwise assert against the Company on account of such termination. The Company’s obligation to pay the Executive under this Agreement will be absolute and unconditional and will not be affected by any circumstance, including without limitation, any set-off, counterclaim, defense or other rights the Company may have against the Executive or anyone else as long as the Executive is not in beach of the Executive’s obligations under this Agreement.
|
8.
|
Non-Competition
.
|
(a)
|
During the one-year period following the Executive’s termination of employment covered by this Agreement, the Executive will not, and will not permit any of the Executive's Affiliates (as defined below), or any other Person, directly or indirectly, to:
|
(i)
|
engage in competition with, or acquire a direct or indirect interest or an option to acquire such an interest in any Person engaged in competition with, the Company's Business (as defined below) in the United States (other than an interest of not more than 5 percent of the outstanding stock of any publicly traded company);
|
(ii)
|
serve as a director, officer, employee or consultant of, or furnish information to, or otherwise facilitate the efforts of, any Person engaged in competition with the Company's Business in the United States;
|
(b)
|
solicit, employ, interfere with or attempt to entice away from the Company any employee who has been employed by the Company or a Subsidiary in an executive or supervisory capacity within one year prior to such solicitation, employment, interference or enticement; or
|
(c)
|
approach, solicit or compete directly or indirectly with the Company or any Subsidiary or any Person which at any time during the 12 months immediately preceding the Termination Date:
|
(i)
|
was a customer, client, supplier, agent or distributor of the Company or any Subsidiary;
|
(ii)
|
was a customer, client, supplier, agent or distributor of the Company or any Subsidiary with whom employees reporting to or under the direct control of the Executive had personal contact on behalf of the Company or any Subsidiary; or
|
(iii)
|
was a Person with whom the Executive had regular, substantial or a series of business dealings on behalf of the Company or any Subsidiary (whether or not a customer, client, supplier, agent or distributor of the Company or any Subsidiary).
|
(d)
|
The "Company's Business" means: (i) the manufacture and sale of stoppers, closures, containers, medical-device components and assemblies made from elastomers, metal and plastic for the health-care and consumer-products industries, and (ii) any other business conducted by the Company or any of its Subsidiaries or Affiliates during the term of this Agreement and in which the Executive has have been actively involved.
|
9.
|
Confidentiality and Enforcement
. Executive’s obligations under any Confidentiality and Non-Disclosure Agreements with the Company and the non-compete agreement described in Section 8 (collectively, the “
Material Ancillary Agreements
”) are hereby affirmed. A breach of any Material Ancillary Agreements is a breach of this Agreement and all Payments and obligations of the Company under this Agreement shall cease in the event of the breach of those Material Ancillary Agreements. The Executive acknowledges that a breach of the covenants contained in the Material Ancillary Agreements and incorporated by reference into this Agreement will cause the Company immediate and irreparable harm for which the Company’s remedies at law (such as money damages) will be inadequate. The Company shall have the right, in addition to any other rights it may have, to obtain an injunction to restrain any breach or threatened breach of such agreements. The Company may contact any Person with or for whom the Executive works after the Executive’s employment by the Company ends and may send that Person a copy of those agreements and/or this Agreement. In consideration of the benefit of having the protection afforded by this Agreement, the Executive agrees that the provisions of the Material Ancillary Agreements apply to the Executive, and the Executive will be bound by them, whether or not a Change in Control occurs or the Executive actually receives the benefits specified in Section 3.
|
10.
|
Duration of Agreement
. This Agreement commences on the Effective Date and will continue until terminated as provided in this Section. This Agreement may be terminated only under the following circumstances:
|
(i)
|
At any time by the mutual written consent of the Executive and the Company; and
|
(ii)
|
By the Company at the end of each successive two-year period commencing on the Effective Date by giving the Executive written notice at least one year in advance of such termination, except that such termination and written notice will not be effective unless the Executive will be employed by the Company on the Separation from Service.
|
10.
|
Notices
. Each party giving or making notice, request, demand or other communication (each, a “
Notice
”) under this Agreement shall give the Notice in writing and use one of the following methods of delivery: personal delivery, registered or certified mail with return receipt requested, nationally recognized overnight courier, fax or e-mail. Such Notice shall be addressed to the last address provided by the party receiving Notice. Notices are not effective unless compliant with this Section and provided within the timeframes required in this Agreement.
|
11.
|
Miscellaneous
.
|
(a)
|
This Agreement will be binding upon and inure to the benefit of the Executive, the Executive’s personal representatives and heirs and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.
|
(b)
|
Should any provision of this Agreement be adjudged to any extent invalid by any competent tribunal, that provision will be deemed modified to the extent necessary to make it enforceable. The invalidity or unenforceability of any provision of this Agreement (or the Material Ancillary Agreements) shall in no way affect the validity or enforceability of any other provision hereof.
|
(c)
|
This Agreement will be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania.
|
(d)
|
This Agreement together with the Material Ancillary Agreements constitutes the entire agreement and understanding between the Company and the Executive with respect to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings between the Company and the Executive with respect to such matters.
|
(e)
|
This Agreement may be executed in one or more counterparts, which together shall constitute a single agreement.
|
/s/ DANIEL MALONE
|
|
By:
|
/s/ Richard D. Luzzi
|
DANIEL MALONE
|
|
|
Richard D. Luzzi
|
|
|
|
Vice President, Human Resources
|
1.
|
Definitions. As used in this Agreement, the following terms will have the meanings set forth below:
|
(a)
|
An “
Affiliate
” of any Person means any Person directly or indirectly controlling, controlled by or under common control with such Person.
|
(b)
|
“
Change in Control
” means a change in control of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K as in effect on the date of this Agreement pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (the “
Act
”), provided, that, without limitation, a Change in Control shall be deemed to have occurred if:
|
(i)
|
Any Person, other than:
|
(1)
|
the Company,
|
(2)
|
any Person who on the date hereof is a director or officer of the Company, or
|
(3)
|
a trustee or fiduciary holding securities under an employee benefit plan of the Company,
|
(ii)
|
During any period of two consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period; or
|
(iii)
|
The shareholders of the Company approve: (A) a plan of complete liquidation of the Company; or (B) an agreement for the sale or disposition of all or substantially all of the Company’s assets; or (C) a merger, consolidation, or reorganization of the Company with or involving any other corporation,
other
than a merger, consolidation, or reorganization (collectively, a “
Non-Control Transaction
”), that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least 50% of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of the Non-Control Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) outstanding immediately after the Non-Control Transaction.
|
(c)
|
“
Code
” means the Internal Revenue Code of 1986, as amended.
|
(d)
|
“
Constructive Termination
” means the occurrence of any of the following events:
|
(i)
|
The Company requires the Executive to assume any duties inconsistent with, or the Company makes a significant diminution or reduction in the nature or scope of the Executive’s authority or duties from, those assigned to or held by the Executive on the Effective Date;
|
(ii)
|
A material reduction in the Executive’s annual salary or incentive compensation opportunities;
|
(iii)
|
A relocation of the Executive’s site of employment to a location more than 50 miles from the Executive’s site of employment on the Effective Date;
|
(iv)
|
A material reduction in the package of fringe benefits offered to the Executive as of the Effective Date, unless such reduction is applicable on a broad basis to similarly-situated employees of the Company; or
|
(v)
|
A successor of the Company does not assume the Company’s obligations under this Agreement, expressly or as a matter of law.
|
(1)
|
the Executive will have consented in writing or given a written waiver to the occurrence of any of the events enumerated in clauses (i) through (v) above;
|
(2)
|
the Executive will have failed to give the Company written notice stating the Executive’s intention to claim Constructive Termination and the basis for that claim at least 10 days in advance of the effective date of the Executive’s resignation; or
|
(3)
|
The event constituting a Constructive Termination has been cured by the Company prior to the effective date of the Executive’s resignation.
|
(f)
|
“
Payment
” means
|
(i)
|
any amount due or paid to the Executive under this Agreement,
|
(ii)
|
any amount that is due or paid to the Executive under any plan, program or arrangement of the Company and any of its Subsidiaries, and
|
(iii)
|
any amount or benefit that is due or payable to the Executive under this Agreement or under any plan, program or arrangement of the Company and any of its Subsidiaries not otherwise covered under clause (i) or (ii) hereof which must reasonably be taken into account under section 280G of the Code and the Regulations in determining the amount of the “parachute payments” received by the Executive, including, without limitation, any amounts which must be taken into account under the Code and Regulations as a result of (1) the acceleration of the vesting of any option, restricted stock or other equity award granted under any equity plan of the Company or otherwise, (2) the acceleration of the time at which any payment or benefit is receivable by the Executive or (3) any contingent severance or other amounts that are payable to the Executive.
|
(g)
|
“
Person
” means an individual, a corporation, a partnership, an association, a trust or other entity or organization.
|
(h)
|
“
Regulations
” means the proposed, temporary and final regulations under sections 4999, 280G or 409A of Code or any successor provisions thereto, as applicable.
|
(i)
|
“
Retirement Plan
” means the West Pharmaceutical Services, Inc. Employees’ Retirement Plan and any successor plan thereto.
|
(j)
|
“
Savings/Deferred Comp Plan
” means the Company’s 401(k) Plan, the Company’s Non-Qualified Deferred Compensation Plan for Designated Employees and any successor plans or other similar plans established from time to time that may allow executive officers to defer taxation of compensation.
|
(k)
|
“
Separation from Service
” is the date on which the Executive ceases to be employed by the Company or any of its Subsidiaries or Affiliates for any reason and, to the extent that section 409A of the Code applies to the Payments under this agreement, shall be the date that the Executive incurs a “separation from service” as defined in that Code section and the Regulations.
|
(l)
|
“
Subsidiary
” has the meaning ascribed to the term by section 425(f) of the Code.
|
2.
|
Termination Following a Change in Control.
|
(a)
|
Subject to Section 2(b), the Executive will be entitled to the benefits specified in Section 3 if,
|
(i)
|
at any time within two years after a Change in Control has occurred, a Separation from Service occurs due to: (A) an involuntary termination of employment by the Company other than by reason of continuous willful misconduct to the detriment of the Company, or (B) as a result of the Executive’s resignation at any time following the Executive’s Constructive Termination, or
|
(ii)
|
The Company signs an agreement, the consummation of which would result in the occurrence of a Change in Control, and then, a Separation from Service occurs due to (A) an involuntary termination of employment by the Company other than by reason of continuous willful misconduct to the detriment of the Company, or (B) the Executive’s resignation at any time following the Executive’s Constructive Termination occurring after the date of such agreement (and, if such agreement expires or is terminated prior to consummation, prior to the expiration or termination of such agreement).
|
(b)
|
The Executive will not be entitled to the benefits specified in Section 3 if:
|
(i)
|
the Executive’s employment terminates for any other reason, including, death, disability, voluntary resignation without a Constructive Termination or retirement under the Retirement Plan, or
|
(ii)
|
the Executive is in breach of any of the Executive’s obligations under this Agreement before or following a Separation from Service.
|
3.
|
Benefits Payable Upon Termination of Employment. Following a Separation from Service due to a termination of employment described in Section 2(a), the Executive will be entitled to the following benefits:
|
(a)
|
Severance Compensation
. the Executive will be entitled to severance compensation in an amount equal to two times the sum of
|
(i)
|
the Executive’s highest annual base salary rate in effect during the year of the termination of the Executive’s employment, plus
|
(ii)
|
the aggregate amount of the annual bonuses paid or payable to the Executive for the three fiscal years immediately preceding a Change in Control divided by the number of fiscal years as to which such bonuses were paid or payable;
|
(b)
|
Equivalent of Vested Savings/Deferred Comp Plan Benefit
.
The Company will pay to the Executive the difference, if any, between
|
(i)
|
the benefit the Executive would be entitled to receive under the Savings/Deferred Comp Plan if the Company’s contributions to the Savings/Deferred Comp Plan were fully vested upon the Separation from Service, and
|
(ii)
|
the benefit the Executive is entitled to receive under the terms of the Savings/Deferred Comp Plan upon the Separation from Service.
|
(c)
|
Unvested Equity Awards
. All stock options, other equity-based awards and shares of the Company’s stock granted or awarded to the Executive pursuant to any Company compensation or benefit plan or arrangement, but which are unvested, will vest in full immediately upon the Separation from Service. If such unvested awards are dependent upon achievement of performance goals, those goals will be deemed to be satisfied at the target level. The provisions of this Section 3(c) will supersede the terms of any such grant or award made to the Executive under any such plan or arrangement to the extent there is an inconsistency between the two.
|
(d)
|
Employee and Executive Benefits
.
The Executive will be entitled to a continuation of all hospital, medical, dental, and similar insurance benefits not otherwise addressed in this Agreement in the same manner and amount to which the Executive was entitled on the date of a Change in Control or on the date of Constructive Termination of the Executive’s employment (whichever benefits are more favorable to the Executive) until the earlier of:
|
(i)
|
a period of 24 months after the Separation from Service,
|
(ii)
|
the Executive’s retirement under the Retirement Plan, or
|
(iii)
|
the Executive’s eligibility for similar benefits with a new employer.
|
(e)
|
No Duplication of Payments
. If Executive is entitled to receive any Payment under this Agreement, he shall not also be entitled to receive severance payments under any other plan, program or agreement with the Company.
|
4.
|
Excise Tax Limitation.
|
(a)
|
Limitation
. Notwithstanding any other provisions of this Agreement to the contrary, in the event that any Payments received or to be received by the Executive in connection with the Executive’s employment with the Company (or termination thereof) under this Agreement or otherwise would subject the Executive to the excise tax (plus any related interest and penalties) imposed under section 4999 of the Internal Revenue Code of 1986, as amended (the “
Excise Tax
”), and if the net-after tax amount (taking into account all applicable taxes payable by the Executive, including any Excise Tax) that the Executive would receive with respect to such payments or benefits does not exceed the net-after tax amount the Executive would receive if the amount of such payment and benefits were reduced to the maximum amount which could otherwise be payable to the Executive without the imposition of the Excise Tax, then, to the extent necessary to eliminate the imposition of the Excise Tax, (i) such cash Payments shall first be reduced (if necessary, to zero), then (ii) all non-cash Payments (other than those relating to equity and incentive plans) shall next be reduced (if necessary, to zero, and finally (iii) all other non-cash Payments relating to equity and incentive plans shall be reduced.
|
(b)
|
Determination of Application of the Limitation
. Subject to the provisions of Section 4(c), all determinations required under this Section 4 shall be made by the accounting firm that was the Company’s independent auditors immediately prior to the Change in Control (or, in default thereof, an accounting firm mutually agreed upon by the Company and the Executive) (the “
Accounting Firm
”), which shall provide detailed supporting calculations both to the Executive and the Company within fifteen days of the Change in Control, the Separation from Service or any other date reasonably requested by the Executive or the Company on which a determination under this Section 4 is necessary or advisable. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Company shall cause the Accounting Firm to provide the Executive with an opinion that the Accounting Firm has substantial authority under the Code and Regulations not to report an Excise Tax on the Executive’s federal income tax return. Any determination by the Accounting Firm shall be binding upon the Executive and the Company.
|
(c)
|
Procedures
. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would result in Payments that would be less on an after-tax basis than had those payments been limited under Section 4(a). Such notice shall be given as soon as practicable after the Executive knows of such claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. the Executive agrees not to pay the claim until the expiration of the thirty-day period following the date on which the Executive notifies the Company, or such shorter period ending on the date the Taxes with respect to such claim are due (the “
Notice Period
”). If the Company notifies the Executive in writing prior to the expiration of the Notice Period that it desires to contest the claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to the claim; (ii) take such action in connection with the claim as the Company may reasonably request, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably acceptable to the Executive; (iii) cooperate with the Company in good faith in contesting the claim; and (iv) permit the Company to participate in any proceedings relating to the claim. The Executive shall permit the Company to control all proceedings related to the claim and, at its option, permit the Company to pursue or forgo any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of such claim. If requested by the Company, the Executive agrees either to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and to prosecute such contest
|
(d)
|
Repayments
. If, after receipt by the Executive of an Advance, the Executive becomes entitled to a refund with respect to the claim to which such Advance relates, the Executive shall pay the Company the amount of the refund (together with any interest paid or credited thereon after Taxes applicable thereto). If, after receipt by the Executive of an Advance, a determination is made that the Executive shall not be entitled to any refund with respect to the claim and the Company does not promptly notify the Executive of its intent to contest the denial of refund, then the amount of the Advance shall not be required to be repaid by the Executive.
|
(e)
|
Further Assurances
. The Company shall indemnify the Executive and hold the Executive harmless, on an after-tax basis, from any costs, expenses, penalties, fines, interest or other liabilities (“
Losses
”) incurred by the Executive with respect to the exercise by the Company of any of its rights under this Section 4, including, without limitation, any Losses related to the Company’s decision to contest a claim or any imputed income to the Executive resulting from any Advance or action taken on the Executive’s behalf by the Company hereunder. Subject to the last sentence of Section 4(c), the Company shall pay all reasonable and document legal fees and expenses incurred under this Section 4 and shall promptly reimburse the Executive for the reasonable expenses incurred by the Executive in connection with any actions taken by the Company or required to be taken by the Executive hereunder. The Company shall also pay all of the fees and expenses of the Accounting Firm, including, without limitation, the fees and expenses related to the opinion referred to in Section 4(b).
|
5.
|
Payment of Severance Compensation. The severance compensation set forth in Section 3(a) will be payable in 24 equal monthly installments commencing on the first day of the month following the month in which the Separation from Service occurs. Notwithstanding the above, in the event that the Executive is a “specified employee” within the meaning of Code section 409A, the first six monthly installments shall be paid in a lump sum on the first day of the month following or coincident with the date that is six months following the Separation from Service and all remaining monthly installments shall be paid monthly.
|
6.
|
Legal Fees. The Company will pay all reasonable and documented legal fees and expenses which the Executive may incur as a result of the Company’s contesting the validity or enforceability of this Agreement.
|
7.
|
Payments Final. In the event of a termination of the Executive’s employment under the circumstances described in this Agreement, the arrangements provided for by this Agreement, and any other agreement between the Company and the Executive in effect at that time and by any other applicable plan of the Company in which the Executive then participates, will constitute the entire obligation of the Company to the Executive, and performance of that obligation will constitute full settlement of any claim that the Executive might otherwise assert against the Company on account of such termination. The Company’s obligation to pay the Executive under this Agreement will be absolute and unconditional and will not be affected by any circumstance, including without limitation, any set-off, counterclaim, defense or other rights the Company may have against the Executive or anyone else as long as the Executive is not in beach of the Executive’s obligations under this Agreement.
|
8.
|
Non-Competition.
|
(a)
|
During the one-year period following the Executive’s termination of employment covered by this Agreement, the Executive will not, and will not permit any of the Executive's Affiliates (as defined below), or any other Person, directly or indirectly, to:
|
(i)
|
engage in competition with, or acquire a direct or indirect interest or an option to acquire such an interest in any Person engaged in competition with, the Company's Business (as defined below) in the United States (other than an interest of not more than 5 percent of the outstanding stock of any publicly traded company);
|
(ii)
|
serve as a director, officer, employee or consultant of, or furnish information to, or otherwise facilitate the efforts of, any Person engaged in competition with the Company's Business in the United States;
|
(b)
|
solicit, employ, interfere with or attempt to entice away from the Company any employee who has been employed by the Company or a Subsidiary in an executive or supervisory capacity within one year prior to such solicitation, employment, interference or enticement; or
|
(c)
|
approach, solicit or compete directly or indirectly with the Company or any Subsidiary or any Person which at any time during the 12 months immediately preceding the Termination Date:
|
(i)
|
was a customer, client, supplier, agent or distributor of the Company or any Subsidiary;
|
(ii)
|
was a customer, client, supplier, agent or distributor of the Company or any Subsidiary with whom employees reporting to or under the direct control of the Executive had personal contact on behalf of the Company or any Subsidiary; or
|
(iii)
|
was a Person with whom the Executive had regular, substantial or a series of business dealings on behalf of the Company or any Subsidiary (whether or not a customer, client, supplier, agent or distributor of the Company or any Subsidiary).
|
(d)
|
The "Company's Business" means: (i) the manufacture and sale of stoppers, closures, containers, medical-device components and assemblies made from elastomers, metal and plastic for the health-care and consumer-products industries, and (ii) any other business conducted by the Company or any of its Subsidiaries or Affiliates during the term of this Agreement and in which the Executive has have been actively involved.
|
9.
|
Confidentiality and Enforcement. Executive’s obligations under any Confidentiality and Non-Disclosure Agreements with the Company and the non-compete agreement described in Section 8 (collectively, the “
Material Ancillary Agreements
”) are hereby affirmed. A breach of any Material Ancillary Agreements is a breach of this Agreement and all Payments and obligations of the Company under this Agreement shall cease in the event of the breach of those Material Ancillary Agreements. The Executive acknowledges that a breach of the covenants contained in the Material Ancillary Agreements and incorporated by reference into this Agreement will cause the Company immediate and irreparable harm for which the Company’s remedies at law (such as money damages) will be inadequate. The Company shall have the right, in addition to any other rights it may have, to obtain an injunction to restrain any breach or threatened breach of such agreements. The Company may contact any Person with or for whom the Executive works after the Executive’s employment by the Company ends and may send that Person a copy of those agreements and/or this Agreement. In consideration of the benefit of having the protection afforded by this Agreement, the Executive agrees that the provisions of the Material Ancillary Agreements apply to the Executive, and the Executive will be bound by them, whether or not a Change in Control occurs or the Executive actually receives the benefits specified in Section 3.
|
10.
|
Duration of Agreement. This Agreement commences on the Effective Date and will continue until terminated as provided in this Section. This Agreement may be terminated only under the following circumstances:
|
(i)
|
At any time by the mutual written consent of the Executive and the Company; and
|
(ii)
|
By the Company at the end of each successive two-year period commencing on the Effective Date by giving the Executive written notice at least one year in advance of such termination, except that such termination and written notice will not be effective unless the Executive will be employed by the Company on the Separation from Service.
|
10.
|
Notices. Each party giving or making notice, request, demand or other communication (each, a “
Notice
”) under this Agreement shall give the Notice in writing and use one of the following methods of delivery: personal delivery, registered or certified mail with return receipt requested, nationally recognized overnight courier, fax or e-mail. Such Notice shall be addressed to the last address provided by the party receiving Notice. Notices are not effective unless compliant with this Section and provided within the timeframes required in this Agreement.
|
11.
|
Miscellaneous.
|
(a)
|
This Agreement will be binding upon and inure to the benefit of the Executive, the Executive’s personal representatives and heirs and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.
|
(b)
|
Should any provision of this Agreement be adjudged to any extent invalid by any competent tribunal, that provision will be deemed modified to the extent necessary to make it
|
(c)
|
This Agreement will be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania.
|
(d)
|
This Agreement together with the Material Ancillary Agreements constitutes the entire agreement and understanding between the Company and the Executive with respect to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings between the Company and the Executive with respect to such matters.
|
(e)
|
This Agreement may be executed in one or more counterparts, which together shall constitute a single agreement.
|
/s/ KAREN FLYNN
|
|
By:
|
/s/ Richard D. Luzzi
|
KAREN FLYNN
|
|
|
Richard D. Luzzi
|
|
|
|
Vice President, Human Resources
|
1.
|
Eligible Directors
. Duly elected members of the Board of Directors of the Company (“Directors”) eligible to participate in this Plan shall be those Directors who are not officers or employees of the Company or any of its subsidiaries as defined in section 425(f) of the Internal Revenue Code of 1986, as amended.
|
2.
|
Deferrable Compensation
. An Eligible Director may elect to defer all or any part or none of the compensation payable to such Eligible Director by the Company for services rendered as a Director (“Directors’ Fees”).
|
3.
|
Crediting of Stock Equivalents
. An Eligible Director shall also be credited with any Stock Equivalents awarded or credited to the Director under the Stock-Equivalents Plan and Stock Units credited under an Omnibus Plan, in accordance with the terms and conditions contained therein.
|
4.
|
Crediting of Stock-Settled Awards
. An Eligible Director shall also be credited with any shares of Deferred Stock or stock-settled Stock Units awarded to the Director under the Omnibus Plan (“Stock-Settled Awards”), or any successor plan thereto, in accordance with the terms and conditions contained therein.
|
5.
|
Election to Defer
.
|
a)
|
An Eligible Director who desires to defer payment of his or her Directors’ Fees in any calendar year shall notify the Company’s Secretary in writing on or before December 31 of the prior year, stating how much of his or her Directors’ Fees shall be deferred. Except as provided in Sections 5(b) or 5(c), an election so made shall be irrevocable and shall apply to payments made in each calendar year thereafter until the Director shall, on or before December 31, notify the Company’s Secretary in writing that a different election shall apply to the following calendar years. Any such election shall likewise continue in effect until similarly changed.
|
b)
|
By notifying the Company in writing, an Eligible Director may cancel (but not postpone) his or her deferral election, if either the Eligible Director experiences an “unforeseeable emergency” within the meaning of Section 409A of the Code. Future elections to defer are subject to Section 5(a).
|
c)
|
An Eligible Director may cancel (but not postpone) his or her deferral election, if he or she experiences a Disability, provided that the Eligible Director notifies the Company in writing by the later of the date that is 2½ months following the date such Director incurred a Disability or the end of the calendar year containing the year in which the Director incurred a Disability. For purposes of this Section 5(c), a “Disability” is any medically determinable physical or mental impairment resulting in the service provider’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.
|
6.
|
Non-Deferred Compensation
. Any Directors’ Fees that are not deferred under this Plan shall be paid in line with normal Company policy.
|
7.
|
Deferred Compensation Accounts
.
|
a)
|
Credits
.
|
i)
|
Pre-2014 Amounts
. With respect to deferrals made on or before December 31, 2013, at the time that a Director makes an election to defer under Paragraph 5 above, the Director shall also indicate whether the amount he or she chooses to defer shall be credited to an “A” Account or to a “B” Account, as described below. The Company shall then establish such an Account for that Director. The Company shall also establish a “C” Account for purposes of crediting Stock Equivalents awarded or credited under the Stock-Equivalents Plan and Stock Units awarded under an Omnibus Plan and a “D” Account for purposes of crediting Stock-Settled Awards.
|
ii)
|
Post-2013 Amounts
. All deferrals made on or after January 1, 2014, shall automatically be deemed invested in the “D” Account and distributable solely in shares of Company Stock.
|
iii)
|
Accounts.
|
(A)
|
“A” Account
. If a Director elects an “A” Account, his or her account shall be credited on the last business day of each calendar quarter with the amount of his or her Directors’ Fees earned during that quarter but deferred pursuant to Paragraph 5.
|
(B)
|
“B” Account
. If a Director elects a “B” Account, his or her account shall be credited on the last business day of each calendar quarter with a number of Stock Equivalents equal to that number (including fractions) obtained by dividing the amount of his or her Directors’ Fees earned during that quarter but deferred under Paragraph 5, by the Fair Market Value of the Company’s common stock (the “Common Stock”) on the last business day of such calendar quarter.
|
(C)
|
“C” Account
. A Director’s “C” Account shall be credited, from time to time, with the Stock Equivalents, if any, that are awarded to the Director under the Stock-Equivalents Plan.
|
(D)
|
“D” Account
. A Director’s “D” Account shall be credited, from time to time, with Stock-Settled Awards, if any, that are awarded under an Omnibus Plan.
|
(E)
|
Grandfathering of Pre-2005 Amounts
. Each “A,” “B,” and “C” Account shall be divided into separate book accounts to reflect (I) amounts earned and vested on or before December 31, 2004 and the earnings credited thereon (“Grandfathered Amounts”), and (II) amounts earned and vested on or after January 1, 2005 and the earnings credited thereon (“Grandfathered Amounts”)
|
iv)
|
“
Fair Market Value
” (for all purposes of this Plan) shall mean the reported closing asked price of the Common Stock on the date in question on the principal national securities exchange on which it is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange, then the reported closing asked price of the Common Stock on such date on the principal exchange shall be determinative of “Fair Market Value.”
|
b)
|
Earnings
. In addition, the Company shall credit the indicated Account as follows:
|
i)
|
“A” Account
. As of January 1, April 1, July 1 and October 1 of each year, the Company shall credit, as earnings to each “A” Account established on behalf of a Director, an amount equal to a percentage of the balance in each such “A” Account at the end of the preceding calendar quarter, determined without regard to any additions made to such “A” Account as of the last business day of that calendar quarter. Such percentage shall be equal to one-fourth of the prime rate of interest at the Company’s principal commercial bank in effect on the last day of such quarter.
|
ii)
|
“B” Account
. As of January 1, April 1, July 1 and October 1 of each year, the Company shall credit as earnings to each “B” Account, an additional number of Stock Equivalents. The number of additional Stock Equivalents to be credited shall be determined by dividing the dividends paid during the preceding calendar quarter with respect to the number of shares of Common Stock equal to the Stock Equivalents in the “B” Account on the relevant dividend record dates, by the Fair Market Value of the on the such dividend record date.
|
iii)
|
“C” Account
. As of January 1, April 1, July 1 and October 1 of each year, the Company shall credit as earnings to each “C” Account an additional number of Stock Equivalents. The number of additional Stock Equivalents to be credited shall be determined by dividing the dividends paid during the preceding calendar quarter with respect to the number of shares of Common Stock equal to the Stock Equivalents in the “C” Account on the relevant dividend record dates, by the Fair Market Value of the Common Stock on such dividend record date.
|
iv)
|
“D” Account
. As of January 1, April 1, July 1 and October 1 of each year, the Company shall credit as earnings to each “D” Account an additional number of shares of Stock-Settled Awards. The number of additional shares of Stock-Settled Awards to be credited shall be determined by dividing the dividends paid during the preceding calendar quarter with respect to the number of shares of Common Stock equal to the Stock-Settled Awards in the “D” Account on the relevant dividend record dates, by the Fair Market Value of the Common Stock on such dividend record date.
|
8.
|
Adjustments
. In the event of any change in the Common Stock, the value and attributes of each Stock Equivalent and Stock-Settled Award shall be appropriately adjusted consistent with such change to the same extent as if such Stock Equivalents or Stock-Settled Awards were instead, issued and outstanding shares of Common Stock. A change referred to in this Paragraph includes, without limitation, a stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or rights offering to purchase Common Stock at a price substantially below fair market value, or any similar change affecting the Common Stock
|
9.
|
Payment of Deferred Compensation
. The balance in a Director’s Account shall be determined on the day on which he or she ceases to be a Director of the Company, whether by reason of death, resignation, removal, failure of re-election, or otherwise (“Termination Date”).
|
a)
|
Balances of each Account shall be determined as follows:
|
i)
|
The balance in a Director’s “A” Account shall be the dollar amount credited to such Account as of the Termination Date adjusted for earnings through the distribution date.
|
ii)
|
The balance in a Director’s “B” and “C” Accounts shall be the amount that would be derived if shares of Common Stock equal in number to the Stock Equivalents credited to such Account as of the Termination Date were sold at Fair Market Value on the distribution date.
|
iii)
|
The balance in a Director’s “D” Account shall be the number of Stock-Settled Awards credited to such Account as of the distribution date (inclusive of additional shares credited due to dividends payable under Section 7).
|
b)
|
Subject to a Director’s election to receive his or her distribution in an alternate form and method as permitted pursuant to Section 9(d), a Director shall receive the balance in each of his or her Accounts in ten equal installments.
|
i)
|
For Amounts Deferred and Vested on or before December 31, 2013
, the first installment shall be paid on the January 15 immediately following the Termination Date, and the others shall be paid on January 15 of the second through tenth years following the Termination Date. Amounts shall be adjusted for earnings and losses as described in Section 9(c).
|
ii)
|
For Amounts Deferred and Vested on or after January 1, 2014
, the first installment shall be paid as soon as practicable following the Termination Date but in no event later than the second business day following the Termination Date and in no event shall the payment be made later than December 31 of the year of the Director’s Termination Date. All other installments shall be made on the anniversary of the Director’s Termination Date (or first business day following such anniversary) of the second through tenth years following the Termination Date. Amounts shall be adjusted for earnings and losses as described in Section 9(c).
|
c)
|
Crediting of Earnings and Losses during Installment Period
. Earnings during the period between a Director’s Termination Date and distribution of each installment shall be credited as follows:
|
i)
|
For active Directors as of June 30, 2013, each Director shall elect whether all or a portion of the amounts credited to his or her “B” and “C” Account as of such Director’s Termination Date shall be either (i) deemed invested in the Director’s “D” Account and distributable in Company Stock or (ii) increased by earnings that would have been credited to the remaining balance if it had been held in an “A” Account during the year. Any other shares credited to the Director’s “D” Account upon his Termination shall only be increased to reflect dividends paid on the underlying Stock-Settled Awards under Section 5(b).
|
ii)
|
For Directors who begin service on or after July 1, 2013, each Director shall have all of his amounts deemed invested in the “D” Account and distributable solely in shares of Company Stock.
|
d)
|
Method of Distribution Elections.
A Director may make an election to receive a distribution of his or her Accounts in lump sum or other annual installment form to the extent permitted by this Section 9(d),
|
i)
|
With respect to Grandfathered Amounts, a Director may make an election to receive a single, lump sum payment of the balance in a Director’s Accounts. Such lump sum election is revocable, but must be made no later than December 31 of the year before the year of a Director’s Termination Date.
|
ii)
|
With respect to Non-Grandfathered Amounts, a Director may make an irrevocable election to receive either (I) a single, lump sum payment of the balance in a Director’s Accounts or (II) annual installments for a period between two and nine years, which shall be payable in the same amount and in the same time and manner described in Section 9(b). Such election must be made on or before the later of (a) December 31, 2008, or (b) the date a Director submits his initial deferral and form of payment election for participation in the Plan, which date shall be no later than 30 days following the Director’s initial eligibility to participate in the Plan.
|
iii)
|
For Amounts Deferred and Vested on or before December 31, 2013
, if the Director makes a lump sum election pursuant to this Section 9(d), (I) the balance in a Director’s “A” Account shall be distributed in a cash lump sum, (II) the balance in a Director’s “B” Account and “C” Account shall be paid to him or her in a cash or Company Stock lump sum (as elected by the Director on or before June 30, 2013) payable during the month following the Termination Date (or January 15, 2009, if later), and (III) the
|
iv)
|
For Amounts Deferred and Vested on or after January 1, 2014
, if the Director makes a lump sum election pursuant to this Section 9(d), (I) the balance in a Director’s “A” Account shall be distributed in a cash lump sum, (II) the balance in a Director’s “B” Account, “C” Account and “D” shall be paid to him or her by the issuance of shares of Common Stock plus cash equal to the fair market value of any amounts credited to such Accounts shall be paid as soon as practicable following the Termination Date but in no event no later than the second business day following the Termination Date and in no event shall the payment be made later than December 31 of the year of the Director’s Termination Date.
|
10.
|
Designation of Beneficiary
. If a Director dies before receiving the entire balance of his or her Accounts, any balance remaining in the Accounts shall be paid in a cash or Company Stock lump sum (as elected under Section 9) to the Director’s designated beneficiary during the year of the Director’s death. If the Director has not designated a beneficiary in writing to the Company’s Secretary, then the balance shall be paid to the Director’s estate. Any designation of beneficiary may be revoked or modified at any time by the Director.
|
11.
|
Unsecured Obligation of Company
. The Company’s obligations to establish and maintain Accounts for each electing Eligible Director and to make payments of deferred compensation to such Eligible Director under this Plan shall be the general unsecured obligations of the Company. The Company shall have no obligation to establish any separate fund, purchase any annuity contract or in any other way make special provision or specially earmark any funds for the payment of any amounts called for under this Plan. Neither this Plan nor any actions taken under or pursuant to this Plan shall be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Eligible Director, his or her designated beneficiary, executors or administrators, or any other person or entity. If the Company chooses to establish such a fund or purchase such an annuity contract or make any other arrangement to provide for the payment of any amounts called for under this Plan, such fund, contract or arrangement shall remain part of the general assets of the Company. No person claiming benefits under this Plan shall have any right, title, or interest in or to any such fund, contract or arrangement.
|
12.
|
Withholding of Taxes
. The rights of a Director to payments under this Plan shall be subject to the Company’s obligations, if any, to withhold from such payments all applicable federal, state, local or foreign withholding taxes.
|
13.
|
Non-Assignability
. Except as described in Paragraph 10, no portion of a Director’s Account may be assigned or transferred in any manner, and no Account shall be subject to anticipation or to voluntary or involuntary alienation.
|
14.
|
Amendments and Termination
.
|
a)
|
The Plan may be amended at any time by the entire Board of Directors or by a Committee designated by the Board of Directors. The Board or Committee may amend or terminate the Plan at any time; provided that no amendment may be made without:
|
i)
|
the appropriate approval of the Company’s shareholders if such approval is necessary to comply with any tax or other regulatory requirement, including any shareholder approval required as a condition to the exemptive relief under Section 16(b) of the Securities Exchange Act of 1934, as amended from time to time, and the regulations promulgated thereunder (the “Exchange Act”); or
|
ii)
|
the Director’s consent, if such amendment would adversely impair or affect any rights or obligations of the Director under the Plan.
|
b)
|
Prior Shareholder and Eligible Director Approval
. Anything herein to the contrary notwithstanding, the Board may amend the Plan without the consent of Eligible Directors or shareholders to comply with the requirements of Rule 16b-3 issued under the Exchange Act, or any successor rules promulgated by the Securities and Exchange Commission.
|
15.
|
Restatement Effective Date
. The Plan as amended and restated herein shall be effective with respect to Director’s Fees, Stock Equivalents, Stock Units and Stock-Settled Awards payable on or after June 30, 2013.
|
West Pharmaceutical Services, Inc. and Subsidiaries
|
|||||||||||||||
Computation of Ratio of Earnings to Fixed Charges
|
|||||||||||||||
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
(in millions, except ratio amounts)
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
EARNINGS:
|
|
|
|
|
|
||||||||||
Income before income taxes
|
$
|
147.1
|
|
$
|
108.6
|
|
$
|
92.7
|
|
$
|
74.5
|
|
$
|
83.1
|
|
Add:
|
|
|
|
|
|
||||||||||
Fixed charges
|
22.0
|
|
22.6
|
|
23.1
|
|
21.1
|
|
21.9
|
|
|||||
Less:
|
|
|
|
|
|
||||||||||
Capitalized interest
|
(1.6
|
)
|
(1.9
|
)
|
(1.1
|
)
|
(0.9
|
)
|
(2.4
|
)
|
|||||
Adjusted earnings
|
$
|
167.5
|
|
$
|
129.3
|
|
$
|
114.7
|
|
$
|
94.7
|
|
$
|
102.6
|
|
|
|
|
|
|
|
||||||||||
FIXED CHARGES:
|
|
|
|
|
|
||||||||||
Interest expense
|
18.6
|
|
18.6
|
|
19.3
|
|
$
|
17.7
|
|
$
|
17.6
|
|
|||
One-third of rent expense
|
3.4
|
|
4.0
|
|
3.8
|
|
3.4
|
|
4.3
|
|
|||||
Total fixed charges
|
$
|
22.0
|
|
$
|
22.6
|
|
$
|
23.1
|
|
$
|
21.1
|
|
$
|
21.9
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
7.61
|
|
5.72
|
|
4.97
|
|
4.49
|
|
4.68
|
|
|
State/County of
Incorporation
|
Stock
Ownership
|
|
|
West Pharmaceutical Services, Inc.
|
Pennsylvania
|
Parent Co.
|
|
|
Citation Plastics Co.
|
New Jersey
|
100.0
|
|
%
|
Medimop Medical Projects (North), Ltd.
|
Israel
|
100.0
|
|
|
Medimop Medical Projects Ltd.
|
Israel
|
100.0
|
|
|
Plasmec Public Limited Company
|
England
|
100.0
|
|
|
PM2OL A/S
|
Denmark
|
100.0
|
|
|
Tech Group Europe Limited
|
Ireland
|
100.0
|
|
|
Tech Group Grand Rapids, Inc.
|
Delaware
|
100.0
|
|
|
Tech Group North America, Inc.
|
Arizona
|
100.0
|
|
|
(mfg) Tech Group Puerto Rico, LLC
|
Delaware
|
100.0
|
|
|
TGPR Holdings Limited
|
Ireland
|
100.0
|
|
|
W.P.S. F. Limited
|
England
|
100.0
|
|
|
West Analytical Services, LLC
|
Delaware
|
100.0
|
|
|
West Pharmaceutical Packaging (China) Company Ltd.
|
China
|
100.0
|
|
|
West Pharmaceutical Packaging India Private Limited
|
India
|
100.0
|
|
|
West Pharmaceutical Services Argentina S.A.
|
Argentina
|
100.0
|
|
|
West Pharmaceutical Services Australia Pty. Ltd.
|
Australia
|
100.0
|
|
|
West Pharmaceutical Services Beograd d.o.o
|
Serbia
|
100.0
|
|
|
West Pharmaceutical Services Brasil Ltda.
|
Brasil
|
100.0
|
|
|
West Pharmaceutical Services Canovanas, Inc.
|
Delaware
|
100.0
|
|
|
West Pharmaceutical Services Colombia S.A.S
|
Colombia
|
98.2
|
|
(a)
|
West Pharmaceutical Services Cornwall Limited
|
England
|
100.0
|
|
|
West Pharmaceutical Services Danmark A/S
|
Denmark
|
100.0
|
|
|
West Pharmaceutical Services Delaware Acquisition, Inc.
|
Delaware
|
100.0
|
|
|
West Pharmaceutical Services Deutschland GmbH Co KG
|
Germany
|
100.0
|
|
|
West Pharmaceutical Services France S.A.
|
France
|
99.9
|
|
(b)
|
West Pharmaceutical Services Group Limited
|
England
|
100.0
|
|
|
West Pharmaceutical Services Hispania S.A.
|
Spain
|
100.0
|
|
|
West Pharmaceutical Services Holding Danmark ApS
|
Denmark
|
100.0
|
|
|
West Pharmaceutical Services Holding France SAS
|
France
|
100.0
|
|
|
West Pharmaceutical Services Holding GmbH
|
Germany
|
100.0
|
|
|
West Pharmaceutical Services Holdings Ltd
|
Israel
|
100.0
|
|
|
West Pharmaceutical Services Italia S.r.L.
|
Italy
|
100.0
|
|
|
West Pharmaceutical Services Lakewood, Inc.
|
Delaware
|
100.0
|
|
|
West Pharmaceutical Services Lewes Limited
|
England
|
100.0
|
|
|
West Pharmaceutical Services Normandie SAS
|
France
|
100.0
|
|
|
West Pharmaceutical Services of Delaware, Inc.
|
Delaware
|
100.0
|
|
|
West Pharmaceutical Services of Florida, Inc.
|
Florida
|
100.0
|
|
|
West Pharmaceutical Services Shanghai Medical Rubber Products Co., Ltd.
|
China
|
100.0
|
|
|
West Pharmaceutical Services Singapore (Holding) Pte. Limited
|
Singapore
|
100.0
|
|
|
West Pharmaceutical Services Singapore Pte. Ltd.
|
Singapore
|
100.0
|
|
|
West Pharmaceutical Services Vega Alta, Inc.
|
Delaware
|
100.0
|
|
|
West Pharmaceutical Services Venezuela C.A.
|
Venezuela
|
100.0
|
|
|
West Pharmaceutical Services Verwaltungs GmbH
|
Germany
|
100.0
|
|
|
|
|
|||
(a) 1.55% is held in treasury by West Pharmaceutical Services Colombia S.A.S
|
|
|||
(b) In addition, .01% is owned directly by 8 individual shareholders who are officers of the Company.
|
|
/s/ Mark A. Buthman
|
Mark A. Buthman
|
/s/ William F. Feehery
|
William F. Feehery
|
/s/ Thomas W. Hofmann
|
Thomas W. Hofmann
|
/s/ L. Robert Johnson
|
L. Robert Johnson
|
/s/ Paula A. Johnson
|
Paula A. Johnson
|
/s/ Myla Lai-Goldman, M.D.
|
Myla Lai-Goldman, M.D.
|
/s/ Douglas A. Michels
|
Douglas A. Michels
|
/s/ John H. Weiland
|
John H. Weiland
|
/s/ Anthony Welters
|
Anthony Welters
|
/s/ Patrick J. Zenner
|
Patrick J. Zenner
|
1.
|
I have reviewed this Annual Report on Form 10-K of West Pharmaceutical Services, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this Annual Report on Form 10-K of West Pharmaceutical Services, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|