UNITED STATES
|
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-Q
|
þ
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QUARTERLY 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)
|
Pennsylvania
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23-1210010
|
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number)
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|
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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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Large accelerated filer
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þ
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Accelerated filer
|
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
|
o
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Emerging growth company
|
o
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Page
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FINANCIAL STATEMENTS (UNAUDITED)
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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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CONTROLS AND PROCEDURES
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LEGAL PROCEEDINGS
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RISK FACTORS
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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EXHIBITS
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
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$
|
447.5
|
|
|
$
|
397.6
|
|
|
$
|
863.2
|
|
|
$
|
785.3
|
|
Cost of goods and services sold
|
305.3
|
|
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272.6
|
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586.6
|
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526.1
|
|
||||
Gross profit
|
142.2
|
|
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125.0
|
|
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276.6
|
|
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259.2
|
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||||
Research and development
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10.8
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|
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10.0
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|
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20.4
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20.3
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|
||||
Selling, general and administrative expenses
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70.0
|
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61.3
|
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138.3
|
|
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123.8
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||||
Other expense (Note 13)
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1.1
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11.7
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4.2
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12.6
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||||
Operating profit
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60.3
|
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42.0
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113.7
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102.5
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||||
Interest expense
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2.2
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2.2
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4.1
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4.3
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||||
Interest income
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(0.3
|
)
|
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(0.3
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)
|
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(0.9
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)
|
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(0.6
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)
|
||||
Other nonoperating income
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(1.7
|
)
|
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(0.6
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)
|
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(3.3
|
)
|
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(1.4
|
)
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||||
Income before income taxes
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60.1
|
|
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40.7
|
|
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113.8
|
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100.2
|
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||||
Income tax expense
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6.0
|
|
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2.9
|
|
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18.5
|
|
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5.1
|
|
||||
Equity in net income of affiliated companies
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(2.0
|
)
|
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(1.0
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)
|
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(4.4
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)
|
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(4.6
|
)
|
||||
Net income
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$
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56.1
|
|
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$
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38.8
|
|
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$
|
99.7
|
|
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$
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99.7
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Net income per share:
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Basic
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$
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0.76
|
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$
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0.53
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$
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1.35
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$
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1.35
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Diluted
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$
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0.75
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$
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0.51
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$
|
1.33
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$
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1.32
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||||||||
Weighted average shares outstanding:
|
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Basic
|
73.6
|
|
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73.9
|
|
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73.8
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73.6
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||||
Diluted
|
75.0
|
|
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75.8
|
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75.2
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75.7
|
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||||
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Dividends declared per share
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$
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0.14
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$
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0.13
|
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$
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0.28
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$
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0.26
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2018
|
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2017
|
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2018
|
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2017
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||||||||
Net income
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$
|
56.1
|
|
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$
|
38.8
|
|
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$
|
99.7
|
|
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$
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99.7
|
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Other comprehensive (loss) income, net of tax:
|
|
|
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|
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|||||
Foreign currency translation adjustments
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(49.6
|
)
|
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36.3
|
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(29.6
|
)
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42.2
|
|
||||
Defined benefit pension and other postretirement plan adjustments, net of tax of $0.4, $(0.3), $0.1 and $(0.4), respectively
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1.0
|
|
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(0.8
|
)
|
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0.3
|
|
|
(0.9
|
)
|
||||
Net loss on investment securities, net of tax of $(3.0) and $(2.9), respectively
|
—
|
|
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(5.4
|
)
|
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—
|
|
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(5.1
|
)
|
||||
Net gain (loss) on derivatives, net of tax of $0.3, $(1.1), $1.1 and $(0.3), respectively
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0.7
|
|
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(2.9
|
)
|
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2.9
|
|
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(1.2
|
)
|
||||
Other comprehensive (loss) income, net of tax
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(47.9
|
)
|
|
27.2
|
|
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(26.4
|
)
|
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35.0
|
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Comprehensive income
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$
|
8.2
|
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$
|
66.0
|
|
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$
|
73.3
|
|
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$
|
134.7
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
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Current assets:
|
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||||
Cash and cash equivalents
|
$
|
225.5
|
|
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$
|
235.9
|
|
Accounts receivable, net
|
296.7
|
|
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253.2
|
|
||
Inventories
|
208.2
|
|
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215.2
|
|
||
Other current assets
|
36.5
|
|
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39.2
|
|
||
Total current assets
|
766.9
|
|
|
743.5
|
|
||
Property, plant and equipment
|
1,737.0
|
|
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1,745.8
|
|
||
Less: accumulated depreciation and amortization
|
910.3
|
|
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890.8
|
|
||
Property, plant and equipment, net
|
826.7
|
|
|
855.0
|
|
||
Investments in affiliated companies
|
91.8
|
|
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85.8
|
|
||
Goodwill
|
106.6
|
|
|
107.7
|
|
||
Deferred income taxes
|
38.5
|
|
|
25.7
|
|
||
Intangible assets, net
|
21.7
|
|
|
21.7
|
|
||
Other noncurrent assets
|
21.5
|
|
|
23.4
|
|
||
Total Assets
|
$
|
1,873.7
|
|
|
$
|
1,862.8
|
|
|
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|
||||
LIABILITIES AND EQUITY
|
|
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|
||
Current liabilities:
|
|
|
|
|
|
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Accounts payable
|
$
|
126.2
|
|
|
$
|
138.1
|
|
Pension and other postretirement benefits
|
2.2
|
|
|
2.2
|
|
||
Accrued salaries, wages and benefits
|
55.1
|
|
|
56.2
|
|
||
Income taxes payable
|
17.9
|
|
|
6.0
|
|
||
Other current liabilities
|
86.2
|
|
|
77.0
|
|
||
Total current liabilities
|
287.6
|
|
|
279.5
|
|
||
Long-term debt
|
196.4
|
|
|
197.0
|
|
||
Deferred income taxes
|
11.8
|
|
|
10.4
|
|
||
Pension and other postretirement benefits
|
53.6
|
|
|
53.4
|
|
||
Other long-term liabilities
|
42.4
|
|
|
42.6
|
|
||
Total Liabilities
|
591.8
|
|
|
582.9
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 15)
|
|
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||
|
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|
||||
Equity:
|
|
|
|
||||
Preferred stock, 3.0 million shares authorized; 0 shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.25 per share; 100.0 million shares authorized; shares issued: 75.3 million and 75.2 million; shares outstanding: 73.5 million and 73.9 million
|
18.8
|
|
|
18.8
|
|
||
Capital in excess of par value
|
304.7
|
|
|
309.3
|
|
||
Retained earnings
|
1,258.0
|
|
|
1,178.2
|
|
||
Accumulated other comprehensive loss
|
(143.7
|
)
|
|
(117.3
|
)
|
||
Treasury stock, at cost (1.8 million and 1.3 million shares)
|
(155.9
|
)
|
|
(109.1
|
)
|
||
Total Equity
|
1,281.9
|
|
|
1,279.9
|
|
||
Total Liabilities and Equity
|
$
|
1,873.7
|
|
|
$
|
1,862.8
|
|
|
Common Shares Issued
|
|
Common Stock
|
|
Capital in Excess of Par Value
|
|
Number of Treasury Shares
|
|
Treasury Stock
|
|
Retained earnings
|
|
Accumulated other comprehensive (loss) income
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance, December 31, 2017
|
75.2
|
|
|
$
|
18.8
|
|
|
$
|
309.3
|
|
|
1.3
|
|
|
$
|
(109.1
|
)
|
|
$
|
1,178.2
|
|
|
$
|
(117.3
|
)
|
|
$
|
1,279.9
|
|
Effect of modified retrospective application of a new accounting standard (see Note 3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.4
|
|
|
—
|
|
|
11.4
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
99.7
|
|
|
—
|
|
|
99.7
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
—
|
|
|
11.5
|
|
||||||
Shares issued under stock plans
|
0.1
|
|
|
—
|
|
|
(7.0
|
)
|
|
(0.3
|
)
|
|
19.3
|
|
|
—
|
|
|
—
|
|
|
12.3
|
|
||||||
Shares purchased under share repurchase program
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
(70.8
|
)
|
|
—
|
|
|
—
|
|
|
(70.8
|
)
|
||||||
Shares repurchased for employee tax withholdings
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
(4.6
|
)
|
|
—
|
|
|
—
|
|
|
(4.4
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31.3
|
)
|
|
—
|
|
|
(31.3
|
)
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.4
|
)
|
|
(26.4
|
)
|
||||||
Balance, June 30, 2018
|
75.3
|
|
|
$
|
18.8
|
|
|
$
|
304.7
|
|
|
1.8
|
|
|
$
|
(155.9
|
)
|
|
$
|
1,258.0
|
|
|
$
|
(143.7
|
)
|
|
$
|
1,281.9
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
99.7
|
|
|
$
|
99.7
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
50.6
|
|
|
45.4
|
|
||
Amortization
|
1.3
|
|
|
1.4
|
|
||
Stock-based compensation
|
9.4
|
|
|
9.0
|
|
||
Non-cash restructuring charges
|
0.4
|
|
|
—
|
|
||
Venezuela deconsolidation
|
—
|
|
|
11.1
|
|
||
Contingent consideration payments in excess of acquisition-date liability
|
(0.5
|
)
|
|
—
|
|
||
Other non-cash items, net
|
(3.4
|
)
|
|
(3.6
|
)
|
||
Changes in assets and liabilities
|
(30.5
|
)
|
|
(57.0
|
)
|
||
Net cash provided by operating activities
|
127.0
|
|
|
106.0
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(48.2
|
)
|
|
(67.0
|
)
|
||
Cash related to deconsolidated Venezuelan subsidiary
|
—
|
|
|
(6.0
|
)
|
||
Other, net
|
2.5
|
|
|
2.8
|
|
||
Net cash used in investing activities
|
(45.7
|
)
|
|
(70.2
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Repayments of long-term debt
|
—
|
|
|
(1.2
|
)
|
||
Dividend payments
|
(20.7
|
)
|
|
(19.1
|
)
|
||
Contingent consideration payments up to amount of acquisition-date liability
|
—
|
|
|
(0.2
|
)
|
||
Proceeds from exercise of stock options and stock appreciation rights
|
10.9
|
|
|
29.5
|
|
||
Employee stock purchase plan contributions
|
2.4
|
|
|
2.2
|
|
||
Shares purchased under share repurchase programs
|
(70.8
|
)
|
|
(26.9
|
)
|
||
Shares repurchased for employee tax withholdings
|
(4.4
|
)
|
|
(3.8
|
)
|
||
Net cash used in financing activities
|
(82.6
|
)
|
|
(19.5
|
)
|
||
Effect of exchange rates on cash
|
(9.1
|
)
|
|
7.3
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(10.4
|
)
|
|
23.6
|
|
||
|
|
|
|
||||
Cash, including cash equivalents at beginning of period
|
235.9
|
|
|
203.0
|
|
||
Cash, including cash equivalents at end of period
|
$
|
225.5
|
|
|
$
|
226.6
|
|
($ in millions)
|
Balance at December 31, 2017
|
|
Adjustments Due to ASC 606
|
|
Balance at January 1, 2018
|
||||||
Assets:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
253.2
|
|
|
$
|
25.0
|
|
|
$
|
278.2
|
|
Inventories
|
215.2
|
|
|
(20.8
|
)
|
|
194.4
|
|
|||
Other current assets
|
39.2
|
|
|
(8.4
|
)
|
|
30.8
|
|
|||
|
|
|
|
|
|
||||||
Liabilities and Equity:
|
|
|
|
|
|
||||||
Other current liabilities
|
$
|
77.0
|
|
|
$
|
(13.7
|
)
|
|
$
|
63.3
|
|
Deferred income taxes
|
10.4
|
|
|
3.0
|
|
|
13.4
|
|
|||
Other long-term liabilities
|
42.6
|
|
|
(4.9
|
)
|
|
37.7
|
|
|||
Retained earnings
|
1,178.2
|
|
|
11.4
|
|
|
1,189.6
|
|
($ in millions)
|
As Reported
|
|
Balances without Adoption of ASC 606
|
|
Effects of Change (Lower)/Higher
|
||||||
Net sales
|
$
|
447.5
|
|
|
$
|
452.6
|
|
|
$
|
(5.1
|
)
|
Cost of goods and services sold
|
305.3
|
|
|
305.9
|
|
|
(0.6
|
)
|
|||
Research and development
|
10.8
|
|
|
10.9
|
|
|
(0.1
|
)
|
|||
Other expense
|
1.1
|
|
|
0.9
|
|
|
0.2
|
|
|||
Income tax expense
|
6.0
|
|
|
6.8
|
|
|
(0.8
|
)
|
|||
Net income
|
$
|
56.1
|
|
|
$
|
59.9
|
|
|
$
|
(3.8
|
)
|
($ in millions)
|
As Reported
|
|
Balances without Adoption of ASC 606
|
|
Effects of Change (Lower)/Higher
|
||||||
Net sales
|
$
|
863.2
|
|
|
$
|
870.9
|
|
|
$
|
(7.7
|
)
|
Cost of goods and services sold
|
586.6
|
|
|
588.6
|
|
|
(2.0
|
)
|
|||
Research and development
|
20.4
|
|
|
20.5
|
|
|
(0.1
|
)
|
|||
Other expense
|
4.2
|
|
|
3.9
|
|
|
0.3
|
|
|||
Income tax expense
|
18.5
|
|
|
19.7
|
|
|
(1.2
|
)
|
|||
Net income
|
$
|
99.7
|
|
|
$
|
104.4
|
|
|
$
|
(4.7
|
)
|
($ in millions)
|
As Reported
|
|
Balances without Adoption of ASC 606
|
|
Effects of Change Higher/(Lower)
|
||||||
Assets:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
296.7
|
|
|
$
|
276.8
|
|
|
$
|
19.9
|
|
Inventories
|
208.2
|
|
|
225.0
|
|
|
(16.8
|
)
|
|||
Other current assets
|
36.5
|
|
|
46.1
|
|
|
(9.6
|
)
|
|||
|
|
|
|
|
|
||||||
Liabilities and Equity:
|
|
|
|
|
|
||||||
Other current liabilities
|
$
|
86.2
|
|
|
$
|
96.5
|
|
|
$
|
(10.3
|
)
|
Deferred income taxes
|
11.8
|
|
|
10.0
|
|
|
1.8
|
|
|||
Other long-term liabilities
|
42.4
|
|
|
47.1
|
|
|
(4.7
|
)
|
|||
Retained earnings
|
1,258.0
|
|
|
1,251.3
|
|
|
6.7
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
56.1
|
|
|
$
|
38.8
|
|
|
$
|
99.7
|
|
|
$
|
99.7
|
|
Weighted average common shares outstanding
|
73.6
|
|
|
73.9
|
|
|
73.8
|
|
|
73.6
|
|
||||
Dilutive effect of equity awards, based on the treasury stock method
|
1.4
|
|
|
1.9
|
|
|
1.4
|
|
|
2.1
|
|
||||
Weighted average shares assuming dilution
|
75.0
|
|
|
75.8
|
|
|
75.2
|
|
|
75.7
|
|
($ in millions)
|
June 30,
2018 |
|
December 31,
2017 |
||||
Raw materials
|
$
|
90.2
|
|
|
$
|
88.6
|
|
Work in process
|
39.0
|
|
|
31.8
|
|
||
Finished goods
|
79.0
|
|
|
94.8
|
|
||
|
$
|
208.2
|
|
|
$
|
215.2
|
|
($ in millions)
|
June 30,
2018 |
|
December 31,
2017 |
||||
Note payable, due December 31, 2019
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Credit Facility, due October 15, 2020 (1.00%)
|
28.9
|
|
|
29.6
|
|
||
Series A notes, due July 5, 2022 (3.67%)
|
42.0
|
|
|
42.0
|
|
||
Series B notes, due July 5, 2024 (3.82%)
|
53.0
|
|
|
53.0
|
|
||
Series C notes, due July 5, 2027 (4.02%)
|
73.0
|
|
|
73.0
|
|
||
|
197.0
|
|
|
197.7
|
|
||
Less: unamortized debt issuance costs
|
0.6
|
|
|
0.7
|
|
||
Total debt
|
196.4
|
|
|
197.0
|
|
||
Less: current portion of long-term debt
|
—
|
|
|
—
|
|
||
Long-term debt, net
|
$
|
196.4
|
|
|
$
|
197.0
|
|
(in millions)
|
|
|
Sell
|
||||
Currency
|
Purchase
|
|
U. S. Dollar (
“
USD
”
)
|
Euro
|
|||
USD
|
29.6
|
|
|
—
|
|
24.4
|
|
Yen
|
5,375.7
|
|
|
28.2
|
|
17.9
|
|
SGD
|
33.5
|
|
|
16.3
|
|
7.3
|
|
|
Amount of Gain (Loss) Recognized in OCI for the
|
|
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the
|
|
Location of Loss (Gain) Reclassified from Accumulated OCI into Income
|
||||||||||||
|
Three Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
|||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
||||||||
Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency hedge contracts
|
$
|
0.5
|
|
|
$
|
(1.2
|
)
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
|
Net sales
|
Foreign currency hedge contracts
|
(0.2
|
)
|
|
(2.2
|
)
|
|
0.1
|
|
|
0.1
|
|
|
Cost of goods and services sold
|
||||
Interest rate swap contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
Interest expense
|
||||
Total
|
$
|
0.3
|
|
|
$
|
(3.4
|
)
|
|
$
|
0.4
|
|
|
$
|
0.5
|
|
|
|
Net Investment Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency-denominated debt
|
$
|
1.2
|
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other expense
|
Total
|
$
|
1.2
|
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Amount of Gain (Loss) Recognized in OCI for the
|
|
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the
|
|
Location of Loss (Gain) Reclassified from Accumulated OCI into Income
|
||||||||||||
|
Six Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
|||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
||||||||
Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency hedge contracts
|
$
|
0.1
|
|
|
$
|
(0.9
|
)
|
|
$
|
0.8
|
|
|
$
|
0.3
|
|
|
Net sales
|
Foreign currency hedge contracts
|
1.4
|
|
|
(1.1
|
)
|
|
0.5
|
|
|
0.1
|
|
|
Cost of goods and services sold
|
||||
Interest rate swap contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
Interest expense
|
||||
Forward treasury locks
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
Interest expense
|
||||
Total
|
$
|
1.5
|
|
|
$
|
(2.0
|
)
|
|
$
|
1.4
|
|
|
$
|
0.8
|
|
|
|
Net Investment Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency-denominated debt
|
$
|
0.5
|
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other expense
|
Total
|
$
|
0.5
|
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
•
|
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)
|
June 30,
2018 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation assets
|
$
|
8.8
|
|
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency contracts
|
3.4
|
|
|
—
|
|
|
3.4
|
|
|
—
|
|
||||
|
$
|
12.2
|
|
|
$
|
8.8
|
|
|
$
|
3.4
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
5.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.0
|
|
Deferred compensation liabilities
|
9.9
|
|
|
9.9
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
|
8.0
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
||||
|
$
|
22.9
|
|
|
$
|
9.9
|
|
|
$
|
8.0
|
|
|
$
|
5.0
|
|
|
Balance at
|
|
Basis of Fair Value Measurements
|
||||||||||||
($ in millions)
|
December 31,
2017 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation assets
|
$
|
8.9
|
|
|
$
|
8.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency contracts
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
||||
|
$
|
9.4
|
|
|
$
|
8.9
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
4.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.9
|
|
Deferred compensation liabilities
|
9.9
|
|
|
9.9
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
|
5.1
|
|
|
—
|
|
|
5.1
|
|
|
—
|
|
||||
|
$
|
19.9
|
|
|
$
|
9.9
|
|
|
$
|
5.1
|
|
|
$
|
4.9
|
|
|
($ in millions)
|
||
Balance, December 31, 2016
|
$
|
8.0
|
|
Decrease in fair value recorded in earnings
|
(2.4
|
)
|
|
Payments
|
(0.7
|
)
|
|
Balance, December 31, 2017
|
4.9
|
|
|
Increase in fair value recorded in earnings
|
0.6
|
|
|
Payments
|
(0.5
|
)
|
|
Balance, June 30, 2018
|
$
|
5.0
|
|
|
Pension benefits
|
|
Other retirement benefits
|
|
Total
|
||||||||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
$
|
2.7
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
|
$
|
2.6
|
|
Interest cost
|
2.4
|
|
|
2.4
|
|
|
—
|
|
|
0.1
|
|
|
2.4
|
|
|
2.5
|
|
||||||
Expected return on assets
|
(3.9
|
)
|
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
(3.3
|
)
|
||||||
Amortization of prior service credit
|
(0.5
|
)
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.6
|
)
|
|
(0.6
|
)
|
||||||
Recognized actuarial losses (gains)
|
1.0
|
|
|
1.2
|
|
|
(0.6
|
)
|
|
(0.4
|
)
|
|
0.4
|
|
|
0.8
|
|
||||||
Net periodic benefit cost
|
$
|
1.7
|
|
|
$
|
2.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
1.0
|
|
|
$
|
2.0
|
|
|
Pension benefits
|
|
Other retirement benefits
|
|
Total
|
||||||||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
U.S. plans
|
$
|
1.2
|
|
|
$
|
1.8
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
0.5
|
|
|
$
|
1.3
|
|
International plans
|
0.5
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.7
|
|
||||||
Net periodic benefit cost
|
$
|
1.7
|
|
|
$
|
2.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
1.0
|
|
|
$
|
2.0
|
|
|
Pension benefits
|
|
Other retirement benefits
|
|
Total
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
$
|
5.5
|
|
|
$
|
5.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.5
|
|
|
$
|
5.3
|
|
Interest cost
|
4.7
|
|
|
4.9
|
|
|
0.1
|
|
|
0.2
|
|
|
4.8
|
|
|
5.1
|
|
||||||
Expected return on assets
|
(7.8
|
)
|
|
(6.7
|
)
|
|
—
|
|
|
—
|
|
|
(7.8
|
)
|
|
(6.7
|
)
|
||||||
Amortization of prior service credit
|
(0.8
|
)
|
|
(0.7
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
(1.1
|
)
|
||||||
Recognized actuarial losses (gains)
|
1.9
|
|
|
2.4
|
|
|
(1.1
|
)
|
|
(1.1
|
)
|
|
0.8
|
|
|
1.3
|
|
||||||
Net periodic benefit cost
|
$
|
3.5
|
|
|
$
|
5.2
|
|
|
$
|
(1.3
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
2.2
|
|
|
$
|
3.9
|
|
|
Pension benefits
|
|
Other retirement benefits
|
|
Total
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
U.S. plans
|
$
|
2.5
|
|
|
$
|
3.8
|
|
|
$
|
(1.3
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
1.2
|
|
|
$
|
2.5
|
|
International plans
|
1.0
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
1.4
|
|
||||||
Net periodic benefit cost
|
$
|
3.5
|
|
|
$
|
5.2
|
|
|
$
|
(1.3
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
2.2
|
|
|
$
|
3.9
|
|
($ 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, 2017
|
$
|
(4.2
|
)
|
|
$
|
0.5
|
|
|
$
|
(39.0
|
)
|
|
$
|
(74.6
|
)
|
|
$
|
(117.3
|
)
|
Other comprehensive income (loss) before reclassifications
|
1.5
|
|
|
—
|
|
|
0.5
|
|
|
(29.6
|
)
|
|
(27.6
|
)
|
|||||
Amounts reclassified out
|
1.4
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
1.2
|
|
|||||
Other comprehensive income (loss), net of tax
|
2.9
|
|
|
—
|
|
|
0.3
|
|
|
(29.6
|
)
|
|
(26.4
|
)
|
|||||
Balance, June 30, 2018
|
$
|
(1.3
|
)
|
|
$
|
0.5
|
|
|
$
|
(38.7
|
)
|
|
$
|
(104.2
|
)
|
|
$
|
(143.7
|
)
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Location on Statement of Income
|
||||||||||||
Detail of components
|
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
|
|||||||
Losses on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
|
$
|
(0.3
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
(0.3
|
)
|
|
Net sales
|
Foreign currency contracts
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.7
|
)
|
|
(0.1
|
)
|
|
Cost of goods and services sold
|
||||
Interest rate swap contracts
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
Interest expense
|
||||
Forward treasury locks
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
Interest expense
|
||||
Total before tax
|
|
(0.5
|
)
|
|
(0.7
|
)
|
|
(1.8
|
)
|
|
(1.1
|
)
|
|
|
||||
Tax expense
|
|
0.1
|
|
|
0.2
|
|
|
0.4
|
|
|
0.3
|
|
|
|
||||
Net of tax
|
|
$
|
(0.4
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(0.8
|
)
|
|
|
Amortization of defined benefit pension and other postretirement plans:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service credit
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
(a)
|
Actuarial losses
|
|
(0.4
|
)
|
|
(0.8
|
)
|
|
(0.8
|
)
|
|
(1.3
|
)
|
|
(a)
|
||||
Total before tax
|
|
0.2
|
|
|
(0.2
|
)
|
|
0.3
|
|
|
(0.2
|
)
|
|
|
||||
Tax expense
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
|
||||
Net of tax
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
|
$
|
(0.2
|
)
|
|
|
Total reclassifications for the period, net of tax
|
|
$
|
(0.3
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(1.0
|
)
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Restructuring and related charges:
|
|
|
|
|
|
|
|
||||||||
Severance and post-employment benefits
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
—
|
|
Asset-related charges
|
0.3
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
||||
Other charges
|
0.6
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
||||
Total restructuring and related charges
|
2.2
|
|
|
—
|
|
|
5.5
|
|
|
—
|
|
||||
Venezuela deconsolidation
|
—
|
|
|
11.1
|
|
|
—
|
|
|
11.1
|
|
||||
Development and licensing income
|
(0.2
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(0.8
|
)
|
||||
Contingent consideration
|
0.3
|
|
|
0.4
|
|
|
0.6
|
|
|
0.7
|
|
||||
Other items
|
(1.2
|
)
|
|
0.6
|
|
|
(1.5
|
)
|
|
1.6
|
|
||||
Total other expense
|
$
|
1.1
|
|
|
$
|
11.7
|
|
|
$
|
4.2
|
|
|
$
|
12.6
|
|
($ in millions)
|
Severance
and benefits
|
|
Asset-related charges
|
|
Other charges
|
|
Total
|
||||||||
Balance, December 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges
|
3.3
|
|
|
0.4
|
|
|
1.8
|
|
|
5.5
|
|
||||
Cash payments
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Non-cash asset write-downs
|
—
|
|
|
(0.4
|
)
|
|
(1.8
|
)
|
|
(2.2
|
)
|
||||
Balance, June 30, 2018
|
$
|
3.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Proprietary Products
|
$
|
346.0
|
|
|
$
|
312.8
|
|
|
$
|
672.2
|
|
|
$
|
621.6
|
|
Contract-Manufactured Products
|
101.5
|
|
|
84.9
|
|
|
191.0
|
|
|
164.0
|
|
||||
Intersegment sales elimination
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.3
|
)
|
||||
Consolidated net sales
|
$
|
447.5
|
|
|
$
|
397.6
|
|
|
$
|
863.2
|
|
|
$
|
785.3
|
|
Operating profit (loss):
|
|
|
|
|
|
|
|
||||||||
Proprietary Products
|
$
|
71.7
|
|
|
$
|
56.7
|
|
|
$
|
134.5
|
|
|
$
|
121.8
|
|
Contract-Manufactured Products
|
9.0
|
|
|
10.5
|
|
|
18.5
|
|
|
19.3
|
|
||||
Corporate
|
(18.2
|
)
|
|
(14.1
|
)
|
|
(33.8
|
)
|
|
(27.5
|
)
|
||||
Other unallocated items
|
(2.2
|
)
|
|
(11.1
|
)
|
|
(5.5
|
)
|
|
(11.1
|
)
|
||||
Total operating profit
|
$
|
60.3
|
|
|
$
|
42.0
|
|
|
$
|
113.7
|
|
|
$
|
102.5
|
|
Interest expense
|
2.2
|
|
|
2.2
|
|
|
4.1
|
|
|
4.3
|
|
||||
Interest income
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.9
|
)
|
|
(0.6
|
)
|
||||
Other nonoperating income
|
(1.7
|
)
|
|
(0.6
|
)
|
|
(3.3
|
)
|
|
(1.4
|
)
|
||||
Income before income taxes
|
$
|
60.1
|
|
|
$
|
40.7
|
|
|
$
|
113.8
|
|
|
$
|
100.2
|
|
|
Three Months Ended
June 30, |
|
% Change
|
||||||||||
($ in millions)
|
2018
|
|
2017
|
|
As-Reported
|
|
Ex-Currency
|
||||||
Proprietary Products
|
$
|
346.0
|
|
|
$
|
312.8
|
|
|
10.6
|
%
|
|
6.9
|
%
|
Contract-Manufactured Products
|
101.5
|
|
|
84.9
|
|
|
19.6
|
%
|
|
16.9
|
%
|
||
Intersegment sales elimination
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||
Consolidated net sales
|
$
|
447.5
|
|
|
$
|
397.6
|
|
|
12.6
|
%
|
|
9.0
|
%
|
|
Six Months Ended
June 30, |
|
% Change
|
||||||||||
($ in millions)
|
2018
|
|
2017
|
|
As-Reported
|
|
Ex-Currency
|
||||||
Proprietary Products
|
$
|
672.2
|
|
|
$
|
621.6
|
|
|
8.2
|
%
|
|
2.6
|
%
|
Contract-Manufactured Products
|
191.0
|
|
|
164.0
|
|
|
16.5
|
%
|
|
12.5
|
%
|
||
Intersegment sales elimination
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
||
Consolidated net sales
|
$
|
863.2
|
|
|
$
|
785.3
|
|
|
9.9
|
%
|
|
4.7
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proprietary Products:
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
$
|
128.8
|
|
|
$
|
110.8
|
|
|
$
|
250.0
|
|
|
$
|
232.1
|
|
Gross Profit Margin
|
37.2
|
%
|
|
35.4
|
%
|
|
37.2
|
%
|
|
37.3
|
%
|
||||
Contract-Manufactured Products:
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross Profit
|
$
|
13.4
|
|
|
$
|
14.2
|
|
|
$
|
26.6
|
|
|
$
|
27.1
|
|
Gross Profit Margin
|
13.1
|
%
|
|
16.8
|
%
|
|
13.9
|
%
|
|
16.6
|
%
|
||||
Consolidated Gross Profit
|
$
|
142.2
|
|
|
$
|
125.0
|
|
|
$
|
276.6
|
|
|
$
|
259.2
|
|
Consolidated Gross Profit Margin
|
31.8
|
%
|
|
31.4
|
%
|
|
32.0
|
%
|
|
33.0
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proprietary Products
|
$
|
10.8
|
|
|
$
|
10.0
|
|
|
$
|
20.4
|
|
|
$
|
20.3
|
|
Contract-Manufactured Products
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Consolidated R&D Costs
|
$
|
10.8
|
|
|
$
|
10.0
|
|
|
$
|
20.4
|
|
|
$
|
20.3
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proprietary Products
|
$
|
47.5
|
|
|
$
|
43.4
|
|
|
$
|
95.9
|
|
|
$
|
88.3
|
|
Contract-Manufactured Products
|
4.3
|
|
|
3.8
|
|
|
8.6
|
|
|
7.9
|
|
||||
Corporate
|
18.2
|
|
|
14.1
|
|
|
33.8
|
|
|
27.6
|
|
||||
Consolidated SG&A costs
|
$
|
70.0
|
|
|
$
|
61.3
|
|
|
$
|
138.3
|
|
|
$
|
123.8
|
|
SG&A as a % of net sales
|
15.6
|
%
|
|
15.4
|
%
|
|
16.0
|
%
|
|
15.8
|
%
|
(Income) Expense
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proprietary Products
|
$
|
(1.2
|
)
|
|
$
|
0.7
|
|
|
$
|
(0.8
|
)
|
|
$
|
1.7
|
|
Contract-Manufactured Products
|
0.1
|
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|
(0.1
|
)
|
||||
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Unallocated items
|
2.2
|
|
|
11.1
|
|
|
5.5
|
|
|
11.1
|
|
||||
Consolidated other expense
|
$
|
1.1
|
|
|
$
|
11.7
|
|
|
$
|
4.2
|
|
|
$
|
12.6
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proprietary Products
|
$
|
71.7
|
|
|
$
|
56.7
|
|
|
$
|
134.5
|
|
|
$
|
121.8
|
|
Contract-Manufactured Products
|
9.0
|
|
|
10.5
|
|
|
18.5
|
|
|
19.3
|
|
||||
Corporate
|
(18.2
|
)
|
|
(14.1
|
)
|
|
(33.8
|
)
|
|
(27.5
|
)
|
||||
Adjusted consolidated operating profit
|
$
|
62.5
|
|
|
$
|
53.1
|
|
|
$
|
119.2
|
|
|
$
|
113.6
|
|
Adjusted consolidated operating profit margin
|
14.0
|
%
|
|
13.4
|
%
|
|
13.8
|
%
|
|
14.5
|
%
|
||||
Unallocated items
|
(2.2
|
)
|
|
(11.1
|
)
|
|
(5.5
|
)
|
|
(11.1
|
)
|
||||
Consolidated operating profit
|
$
|
60.3
|
|
|
$
|
42.0
|
|
|
$
|
113.7
|
|
|
$
|
102.5
|
|
Consolidated operating profit margin
|
13.5
|
%
|
|
10.6
|
%
|
|
13.2
|
%
|
|
13.1
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest expense
|
$
|
2.4
|
|
|
$
|
2.7
|
|
|
$
|
4.6
|
|
|
$
|
5.4
|
|
Capitalized interest
|
(0.2
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(1.1
|
)
|
||||
Interest income
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.9
|
)
|
|
(0.6
|
)
|
||||
Interest expense, net
|
$
|
1.9
|
|
|
$
|
1.9
|
|
|
$
|
3.2
|
|
|
$
|
3.7
|
|
($ in millions)
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
127.0
|
|
|
$
|
106.0
|
|
Net cash used in investing activities
|
$
|
(45.7
|
)
|
|
$
|
(70.2
|
)
|
Net cash used in financing activities
|
$
|
(82.6
|
)
|
|
$
|
(19.5
|
)
|
($ in millions)
|
June 30,
2018 |
|
December 31,
2017 |
||||
Cash and cash equivalents
|
$
|
225.5
|
|
|
$
|
235.9
|
|
Working capital
|
$
|
479.3
|
|
|
$
|
464.0
|
|
Total debt
|
$
|
196.4
|
|
|
$
|
197.0
|
|
Total equity
|
$
|
1,281.9
|
|
|
$
|
1,279.9
|
|
Net debt-to-total invested capital
|
N/A
|
|
|
N/A
|
|
•
|
sales demand and our ability to meet that demand;
|
•
|
competition from other providers in our businesses, including customers’ in-house operations, and from lower-cost producers in emerging markets, which can impact unit volume, price and profitability;
|
•
|
customers’ changing inventory requirements and manufacturing plans that alter existing orders or ordering patterns for the products we supply to them;
|
•
|
the timing, regulatory approval and commercial success of customer products that incorporate our products and systems;
|
•
|
whether customers agree to incorporate our products and delivery systems with their new and existing drug products, the ultimate timing and successful commercialization of those products and systems, which involves substantial evaluations of the functional, operational, clinical and economic viability of our products, and the rate, timing and success of regulatory approval for the drug products that incorporate our components and systems;
|
•
|
the timely and adequate availability of filling capacity, which is essential to conducting definitive stability trials and the timing of first commercialization of customers’ products in Daikyo Crystal Zenith
®
prefilled syringes;
|
•
|
average profitability, or mix, of the products sold in any reporting period, including lower-than-expected sales growth of our high-value proprietary product offerings;
|
•
|
maintaining or improving production efficiencies and overhead absorption;
|
•
|
dependence on third-party suppliers and partners, some of which are single-source suppliers of critical materials and products, including our Japanese partner and affiliate, Daikyo;
|
•
|
the loss of key personnel or highly-skilled employees;
|
•
|
the availability and cost of skilled employees required to meet increased production, managerial, research and other needs, including professional employees and persons employed under collective bargaining agreements;
|
•
|
interruptions or weaknesses in our supply chain, including from reasons beyond our control such as extreme weather, longer-term climate changes, natural disasters, pandemic, war, accidental damage, or unauthorized access to our or our customers’ information and systems, which could cause delivery delays or restrict the availability of raw materials, key purchased components and finished products;
|
•
|
the successful and timely implementation of price increases necessary to offset rising production costs, including raw material prices, particularly petroleum-based raw materials;
|
•
|
the cost and progress of development, regulatory approval and marketing of new products;
|
•
|
our ability to obtain and maintain licenses in any jurisdiction in which we do business;
|
•
|
the relative strength of USD in relation to other currencies, particularly the Euro, SGD, the Danish Krone, Yen, Venezuelan Bolivar, Colombian and Argentinian Peso, and Brazilian Real; and
|
•
|
the potential adverse effects of global healthcare legislation on customer demand, product pricing and profitability.
|
Period
|
|
Total number of shares purchased
(1)(2)(3)
|
|
Average price paid per share
(1)(2)(3)
|
|
Total number of shares purchased as part of publicly announced plans or programs
(3)
|
|
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
(3)
|
|||||
April 1 – 30, 2018
|
|
7,716
|
|
|
$
|
92.00
|
|
|
—
|
|
|
260,000
|
|
May 1 – 31, 2018
|
|
260,160
|
|
|
88.02
|
|
|
260,000
|
|
|
—
|
|
|
June 1 – 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
267,876
|
|
|
$
|
88.14
|
|
|
260,000
|
|
|
—
|
|
(1)
|
Includes 160 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.
|
(2)
|
Includes 7,716 shares of common stock acquired from employees who tendered already-owned shares to satisfy the withholding tax obligations on the vesting of restricted stock awards, as part of the 2016. Plan.
|
(3)
|
In February 2018, we announced a share repurchase program for calendar-year 2018 authorizing the repurchase of up to 800,000 shares of our common stock from time to time on the open market or in privately-negotiated transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18. The number of shares to be repurchased and the timing of such transactions will depend on a variety of factors, including market conditions. During the
three months ended
June 30, 2018
, we purchased
260,000
shares of our common stock under the program at a cost of
$22.9 million
, or an average price of
$88.03
per share. During the
six months ended
June 30, 2018
, we purchased
800,000
shares of our common stock under the program at a cost of
$70.8 million
, or an average price of
$88.51
per share.
|
Exhibit #
|
Description
|
3.1
|
|
3.2
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
(1)
|
Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries have been omitted.
|
10.1
|
|
10.2
(2)
|
|
31.1
|
|
31.2
|
|
32.1*
|
|
32.2*
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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 quarterly report on Form 10-Q 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.
|