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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
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Commission File Number 1-8036
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WEST PHARMACEUTICAL SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1210010
- ------------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
101 Gordon Drive, PO Box 645, Lionville, PA 19341-0645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-594-2900
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, par value New York Stock Exchange
$.25 per share
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X.
--- ---
As of March 20, 2003, the Registrant had 14,488,069 shares of its Common Stock
outstanding. The market value of Common Stock held by non-affiliates of the
Registrant as of that date was $304,539,210.
Exhibit Index appears on pages F-1, F-2, F-3, F-4 and F-5.
DOCUMENTS INCORPORATED BY REFERENCE
------------------------------------
Documents incorporated by reference: 1) portions of the Registrant's Annual
Report to Shareholders for the Company's 2002 fiscal year (the "2002 Annual
Report to Shareholders") are incorporated by reference in Parts I and II; and
(2) portions of the Registrant's definitive Proxy Statement (the "Proxy
Statement") are incorporated by reference in Part III.
PART 1
Item 1. Business.
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West Pharmaceutical Services, Inc. (the "Company") applies value-added
technologies to the process of bringing new drug therapies and healthcare
products to global markets. The Company's technologies include drug formulation
research and development, clinical research and laboratory services, and the
design, development, and manufacture of components and systems for dispensing
and delivering pharmaceutical, healthcare, and consumer products.
The Company is organized into two reportable segments:
1) the Pharmaceutical Systems segment consists of two regional operating units,
the Americas and Europe/Asia, serving global markets. The Pharmaceutical Systems
segment designs, manufactures and sells stoppers, closures, medical device
components and assemblies made from elastomers, metals and plastics and provides
contract laboratory services for testing injectable drug packaging.
2) the Drug Delivery Systems segment identifies and develops drug delivery
systems for biopharmaceutical and other drugs to improve their therapeutic
performance and/or their method of administration. This segment also includes a
clinical services organization which conducts Phase I through Phase IV clinical
trials.
As of December 31, 2002, the Company and its subsidiaries had 4,140 employees.
The Company, a Pennsylvania business corporation, was founded in 1923. The
executive offices of the Company are located at 101 Gordon Drive, PO Box 645,
Lionville, Pennsylvania 19341-0645, approximately 35 miles from Philadelphia.
The telephone number at the Company's executive offices is 610-594-2900. As used
in this Item, the term "Company" includes West Pharmaceutical Services, Inc. and
its consolidated subsidiaries, unless the context otherwise indicates.
The Company makes its periodic and current reports available, free of charge on
its website, www.westpharma.com, as soon as reasonably practicable after such
material is electronically filed with the Securities and Exchange Commission.
Pharmaceutical Systems Segment
----------------------------
Pharmaceutical Stoppers
- -----------------------
The Company is one of the world's largest manufacturers of rubber and
elastomeric stoppers for sealing injectable drug vials and other pharmaceutical
containers, a ranking that is supported by primary market research and the
Company's own market resources. The Company offers several hundred proprietary
natural rubber and synthetic elastomer formulations, which are molded into a
variety of stopper sizes, shapes and colors. The stoppers are used in packaging
serums, vaccines, antibiotics, anesthetics, intravenous solutions and other
drugs and solutions. They are designed and manufactured to assure the integrity
of these solutions throughout the drug product's approved shelf life.
Most stopper formulations are specially designed to be compatible with a given
drug formulation so that the drug will remain safe and effective during storage.
New elastomeric components must be tested with each drug solution to show that
ingredients do not leach into the customer's product or adversely affect the
drug's safety and effectiveness. The Company's laboratories conduct tests to
determine the compatibility of its rubber stoppers with customers' drugs and, in
the United States, file formulation and process information with the Food and
Drug Administration ("FDA"), which is used in support of customers' new drug
applications.
Rubber stoppers are usually washed, sterilized and subjected to other pre-use
processes by the customer or a third party before they are fitted on the filled
container. The Company has introduced a value-added line of stoppers that are
pharmaceutically pre-washed and packaged and ready to be sterilized, eliminating
several steps in customers' incoming processes. The Company is also developing a
line of pre-sterilized stoppers that can be introduced directly into customers'
sterile drug-filling operations.
Metal Seals
- -----------
The Company also offers a broad line of aluminum seals in various sizes, shapes,
and colors to secure its rubber stopper onto the vial and help its customers
differentiate and distinguish its drug solutions. The seals are crimped onto
glass or plastic pharmaceutical containers to hold the rubber stoppers securely
in place. The top of the aluminum seals often contains tamper-evident tabs or
plastic covers, which must be removed before the drug can be withdrawn. During
2002, the Company introduced improvements in its metal seals that help the
customer protect against counterfeiting of injectible drug products and maintain
better control and integrity of in-process filled vials prior to final labeling.
Some aluminum seals are sold with specially formulated rubber or elastomeric
discs pre-fitted inside the seal. These "lined" seals may be placed directly
onto the pharmaceutical container, thus eliminating the need for a separate
stopper. In recent years, the Company has expanded capacity and upgraded
production processes for metal seal manufacturing, clearly bringing them to
state-of-the-art capability.
Other Products
- ---------------
Other products for the pharmaceutical industry include:
* Products used in the packaging of non-injectable drugs such as rubber
dropper bulbs, plastic contraceptive drug packages, and
child-resistant and tamper-evident plastic closures;
* Plastic systems used for lyophilized drug reconstitution and delivery,
which are molded and fabricated in a clean room environment;
* Plastic containers, bottles, and closures for the consumer, medical
device and diagnostic markets;
* Elastomeric and plastic components for empty and pre-filled disposable
syringes such as plungers, tip caps and needle covers;
* Blood-collection system components, including vacuum tube stoppers and
needle valves, and a number of specialized elastomeric and plastic
components for blood-analyzing systems and other medical devices;
* Closures and fitments used in intravenous drug delivery systems; and
* Disposable infant nursers and individual nurser components.
The Company also makes closures for food and beverage processors, focusing its
efforts on multiple-piece closures that require high-speed assembly.
Product Development
- --------------------
The Company maintains its own laboratories for testing raw materials and
finished goods to assure conformity to customer specifications and to safeguard
product quality. Laboratory facilities are also used for development of new
products. Engineering staffs are responsible for product and tooling design
testing, and for the design and construction of processing equipment. In
addition, a corporate product development department develops new packaging and
device concepts. Approximately 95 professional employees were engaged in these
activities in 2002. Development and engineering expenditures for the creation
and application of new and improved device products and manufacturing processes
were approximately $10.6 million in 2002, $10.0 million in 2001 and $9.6 million
in 2000.
Drug Delivery Systems Segment
------------------------------
Drug Delivery
- --------------
Since 1993, the Company has been developing proprietary drug delivery systems
for various drug and biological products for which alternative methods and
routes of administration might improve therapeutic performance or the cost
effectiveness of the therapy. In furtherance of that effort, in 1998 the Company
completed the acquisition of DanBioSyst UK Ltd (DBS), a research and development
company located in Nottingham, England. DBS was re-named West Pharmaceutical
Services Drug Delivery & Clinical Research Center, Ltd. (noted as West Drug
Delivery herein) in 1999 and its operations integrated with the Company's
Lionville based drug delivery development operation.
West Drug Delivery engages in both independent and client-funded research to
develop unique delivery technologies, patenting these where possible, and
subject to any rights granted or ceded in connection with client funding,
retains the rights to exploit the patented technology. West Drug Delivery has
patents or patent applications covering a range of delivery technologies for
various routes of administration, including nasal, oral and parenteral. West
Drug Delivery then seeks to license the technologies to pharmaceutical companies
for use in combination with their drug products. Alternatively, West will
develop versions of generic drug products, which incorporate its proprietary
delivery technologies, and then seek development and marketing partners or
licensees for the resulting products. West Drug Delivery also maintains
laboratory capabilities that support client and internal development projects.
Research and development expenditures for the drug delivery business unit were
$10.9 million in 2002, $7.8 million in 2001 and $7.5 million in 2000.
In 2002, West Drug Delivery Systems completed a Phase I trial for nasal
calcitonin and continued the development of proprietary formulations based on
the Company's patented chitosan-based nasal delivery system (ChiSysTM). The
Company also continued development of the TargitTM delivery system, an orally
administered, specially coated, starch capsule designed to bypass normal
digestion and deliver the drug to the colon for local and systemic effect. In
addition, the Company funded studies related to a near term licensing
opportunity for a generic version of a popular nasally delivered allergy
product. The Company anticipates that the development work in 2002, together
with increased focus on its ChiSysTM technology, will lead to additional
licensing opportunities in 2003.
Clinical Services
- -----------------
In April 1999, the Company acquired the Clinical Services division of
Collaborative Clinical Research, Inc. Clinical Services operates as a business
unit within the Drug Delivery Systems segment. The Clinical Services business
unit consists of an 80-bed clinical trials research facility known as the "GFI
Research Center" in Evansville, Indiana. In addition to performing clinical
trials, limited contract research services such as protocol writing, case report
form design and various aspects of early phase project management are at times
provided to clients.
The GFI Research Center performs human clinical trials for pharmaceutical,
medical device and consumer health products, which are conducted on behalf of
applicants seeking marketing approval for their products. In the pharmaceutical
arena, the GFI Research Center conducts Phase I through Phase IV clinical
research trials covering a broad range of therapeutic applications.
In conducting the trials, the GFI Research Center contracts with licensed
physicians who oversee the administration of individual trials. In addition, the
Institutional Review Board ("IRB"), an independent committee that includes
medical and non-medical personnel charged with protecting the safety of study
subjects, provides review of both study protocols and trial administration. The
GFI Research Center employs a staff of approximately 100 people, including
nurses, medical technicians and other support staff.
The Company may be subject to claims arising from the personal injury or death
of persons participating in clinical trials, the professional malpractice of the
physicians with whom the Company has contracted or the actions of its own
employees in conducting the trials. The Company believes that these risks are
mitigated by several factors. First, physicians who perform the studies are
required to carry their own malpractice insurance. Second, review by the IRB
helps to ensure the protection of subjects enrolled in the trial. Third, all
study subjects are required to sign an informed consent prior to their
participation in a particular study. Finally, regulations governing the conduct
of clinical trials and the protection of human subjects place shared
responsibility for proper study conduct and the protection of study subjects
onto the principal investigator, the IRB and the trial site. Extensive training
programs are conducted at the site involving investigators, staff and IRB
members regarding their respective responsibilities in the conduct of clinical
research.
To further reduce its exposure to liability, the Company typically obtains
indemnification from the trial sponsors. However, the indemnification excludes
actions by the Company such as negligence or misconduct, and the terms of each
indemnification provision may vary.
Government Regulation
- ---------------------
The FDA extensively regulates the research, development, testing, manufacture,
labeling, promotion, advertising, distribution and marketing of drugs under the
Food, Drug and Cosmetic Act. The Company's businesses are involved in a number
of activities regulated by the FDA.
The Company's drug packaging components, including stoppers, seals and syringes,
are used to package drug products that are regulated by the FDA. To accommodate
the needs of its customers, which manufacture drug products, the Company must
maintain detailed written procedures for the receipt, identification, storage,
handling, sampling, testing and approval or rejection of its products. Before
shipment, samples from each lot of components must be tested for conformance
with applicable written requirements. Manufacturing facilities must establish
and conform to written procedures for production and process controls and must
create and retain records for a specified period of time.
The Company's contract laboratory, which performs certain services for drug
manufacturers, is subject to the FDA's current good manufacturing practices
("cGMP") regulations. It must also register as a contract laboratory with the
FDA and is subject to periodic inspections by the FDA. The Drug Enforcement
Administration has licensed the contract laboratory to handle and store
controlled substances.
The FDA regulates the work of the GFI Research Center in certain clinical
trials. GFI must comply with the FDA's regulations applicable to activities a
sponsor of certain trials delegates to it, such as recruitment of study
subjects, documentation of the study and conducting and monitoring the trial. In
addition, the FDA regulates the conduct and activities of GFI's IRB.
To be approved for marketing in the United States, drugs must undergo an
extensive development and approval process designed to ensure that only those
products proven to be safe and effective are made available to the public. As
part of that process, applicants seeking approval must conduct, through
hospitals and other clinical research facilities, a series of clinical tests of
the drug on humans. These clinical trials involve the administration or use of a
drug in progressively larger populations of human volunteers, and in some cases,
over long periods of time and in higher doses. Human clinical trials are a
critical component of the drug development process as the FDA's ultimate
approval for marketing of an applicant's drug will depend in large measure on
the data and information obtained during the clinical trial work.
Clinical trials involve the administration of the investigational drug to human
subjects under the supervision of qualified investigators. Clinical trials are
conducted under protocols detailing the objectives of the study, the parameters
to be used in monitoring safety, and the effectiveness criteria to be evaluated.
Each protocol must be submitted to the FDA as part of the investigational new
drug exemption.
Clinical trials typically are conducted in three sequential phases, but the
phases may overlap or be combined. Each trial must be reviewed and approved by
the IRB before it can begin. Phase I usually involves the initial introduction
of the investigational drug into people to evaluate its safety, dosage
tolerance, pharmacodynamics, and, if possible, to gain an early indication of
its effectiveness. Phase II usually involves trials in a limited patient
population to evaluate the appropriate dosage and dosage tolerance; identify
possible adverse effects and safety risks; and preliminarily evaluate the
efficacy of the drug for specific indications.
Phase III trials usually further evaluate clinical efficacy and test further for
safety by using the drug in its final form in an expanded patient population.
The FDA sometimes requires Phase IV studies to be conducted after a drug has
been approved for marketing. These studies are used to monitor the long-term
risks and benefits of a particular drug, to study the effect of alternative
dosage levels, or to evaluate the safety and efficacy of a drug in targeted
patient populations.
Recent Developments
- -------------------
On January 29, 2003, an explosion and fire occurred at the Company's Kinston,
N.C. plant. Six people lost their lives and many others were injured in the
accident, which caused substantial damage to the building, machinery, equipment
and inventories. See Note 21 "Subsequent Event" of the Notes to Consolidated
Financial Statements of the 2002 Annual Report to Shareholders, incorporated
herein by reference.
In December 2002 the Company sold its consumer healthcare research unit for $2.0
million to Concentrics Research, LLC, a company formed by the former employee
management team and Bindley Capital Partners, LLC. During 2002 but prior to the
sale of the business, the Company recorded a goodwill impairment charge of $0.6
million; as a result, there was no gain or loss recorded on the sale of the
business.
In 2001, the Company sold all the operating assets of its contract manufacturing
and packaging business unit to DPT Lakewood, Inc. for a sales price of $29.8
million, consisting of $28.0 million in cash and a $1.8 million note due in
2003. The sale resulted in a loss on disposal of $25.2 million, or $1.76 per
share.
For additional information see Note 2 "Discontinued Operations" of the Notes to
Consolidated Financial Statements of the 2002 Annual Report to Shareholders,
incorporated herein by reference.
Order Backlog
- -------------
At December 31, 2002, the Pharmaceutical Systems segment order backlog was
approximately $119 million, all of which is expected to be filled during fiscal
year 2003, compared with approximately $105 million at the end of 2001. Order
backlog in this segment includes firm orders placed by customers for manufacture
over a period of time according to a customer's schedule or upon confirmation by
the customer. The Company also has contractual arrangements with a number of its
customers, and products covered by these contracts are included in the Company's
backlog only as orders are received from those customers.
Drug Delivery Systems segment backlog, which is primarily related to the
clinical services business unit, consists of signed contracts yet to be
completed. Contracts included in backlog are subject to termination or delay at
any time and therefore the backlog is not necessarily a meaningful predictor of
future results. Delayed contracts remain in the Company's backlog until
cancelled. As of December 31, 2002, the Drug Delivery Systems segment backlog
was $1.3 million, of which $1.1 million is expected to be filled during fiscal
year 2003; at December 31, 2001 the backlog was $2.0 million.
Raw Materials
- -------------
The Company uses three basic raw materials in the manufacture of its
Pharmeutical Systems products: elastomers, aluminum and plastic. The Company has
been receiving adequate supplies of raw materials to meet its production needs,
and it foresees no significant availability problems in the near future.
The Company is pursuing a supply chain management strategy, which involves
purchasing from integrated suppliers that control their own sources of supply.
This strategy has reduced the number of raw material suppliers used by the
Company. In some cases, the Company will purchase raw materials from a single
source to assure quality and reduce costs. This strategy increases the risks
that the Company's supply lines may be interrupted in the event of a supplier
production problem. These risks are managed by selecting suppliers with multiple
manufacturing sites, rigid quality control systems, surplus inventory levels and
other methods of maintaining supply in case of interruption in production.
Patents, Trademarks and Proprietary Rights
- ------------------------------------------
The Company's policy is to apply for patent protection for the technology,
inventions and improvements deemed important to the success of its business. The
Company also relies upon trademarks, trade secrets, know-how, continuing
technological innovations and licensing opportunities to maintain and further
develop its competitive position.
It is also the Company's policy to require that employees and consultants,
outside scientific collaborators, sponsored researchers and other advisors who
receive confidential information, execute confidentiality agreements upon the
commencement of employment or consulting relationships. The agreements provide
that all inventions by an employee shall be the Company's property.
The Company's patents, trademarks and proprietary rights that relate to the
Pharmaceutical Systems Segment have been useful in establishing the Company's
market share and in the growth of the Company's business, and are expected to
continue to be of value in the future, especially in view of the Company's
continuing development of its own proprietary products in this segment. Although
of importance in the aggregate, the Company does not consider its current
Pharmaceutical Systems segment business or its earnings to be materially
dependent on any single patent, trademark or proprietary right.
The Company's Drug Delivery Segment has acquired a significant portfolio of
patents, pending patent applications and related proprietary rights for
inventions relating to drug delivery systems technology developed primarily at
its Nottingham, England research facility. While this portfolio has not
produced significant tangible income to the Company in the past year, it is
expected to be of major value to this segment going forward, particularly in the
areas of attracting and developing strategic alliances with ethical drug
manufacturers seeking proprietary systems for delivery of their products, and
then developing, selling and licensing the Company's proprietary systems for use
with the products of these manufacturers.
Major Customers
- ---------------
The Company provides components and/or contract services to major
pharmaceutical, biotechnology and hospital supply/medical device companies, many
of which have several divisions with separate purchasing responsibilities. The
Company also provides clinical research to full service contract research
organizations. The Company distributes its products and services primarily
through its own sales force but also uses regional distributors in the United
States and in the Asia/Pacific region.
Becton Dickinson and Company ("BD") accounted for approximately 13% of the
Company's 2002 consolidated net sales. The principal products sold to BD are
synthetic rubber, natural rubber, metal and plastic components used in BD's
disposable and pre-filled syringes and blood sampling and analysis devices. The
Company expects to continue as a major BD supplier.
Excluding BD, the next ten largest customers accounted for approximately 31% of
the Company's consolidated net sales in 2002 but no one of these customers
accounted for more than 4% of 2002 consolidated net sales.
Competition
- -----------
The Company competes with several companies, some of which are larger than the
Company, across its major Pharmaceutical Systems product lines. In addition,
many companies worldwide compete with the Company for business related to
specific product lines. However, the Company believes that it supplies a major
portion of the U.S. market requirements for pharmaceutical elastomer and metal
packaging components and also has a significant share of the European market for
these components.
Because of the special nature of these products, competition is based primarily
on product design and performance, although total cost is becoming increasingly
important as pharmaceutical companies continue with aggressive cost control
programs across their entire operations. Competitors often compete on the basis
of price. The Company differentiates itself from its competition as a
"full-service" supplier that is able to provide pre-sale compatibility studies
and other services and sophisticated post-sale technical support on a global
basis.
The Company competes against numerous competitors in the field of plastic
closures for consumer products. Many of these competitors are larger than the
Company and command significant market shares. The Company differentiates itself
through its expertise in high-speed assembly of multiple-piece closure systems.
The clinical research industry is highly fragmented and comprised of several
large full-service Contract Research Organizations (CROs), many small CROs and
limited service providers. The major competitors in the industry include the
research departments of pharmaceutical companies.
Many companies provide proprietary drug delivery technologies to the
pharmaceutical and biotechnology markets. However, unlike West, the majority of
these companies are focused on a single route of drug administration, and very
few have capabilities necessary to take drug products through all stages of the
development process and commercial manufacture. The three largest companies, the
market leaders, have multiple-delivery technologies, but their strong franchises
are in oral, controlled-release delivery systems. West's drug delivery
technologies, none of which is currently in commercial production, are in less
competitive segments that do not compete with the market leaders.
Environmental Regulations
- --------------------------
The Company is subject to applicable federal, state, local and foreign health,
safety and environmental laws, including those governing discharges of
pollutants to air and water, the generation, management and disposal of
hazardous materials and wastes and the remediation of contaminated sites. Some
of the Company's manufacturing facilities have been issued environmental
permits/certificates and have implemented controls to prevent or reduce
discharges to air and water. These permits/certificates are subject to
modification, renewal and revocation by the issuing authorities. The Company
believes that its operations are currently in material compliance with all
environmental laws, regulations and permits. The Company believes that ongoing
environmental operating and capital expenditures will not be material.
Pursuant to applicable state programs, the Company is currently completing
environmental remediation activities at one current and two former manufacturing
facilities. Collectively, the Company has reserved $0.9 million to address the
cost of remediation at these three facilities.
At its former Technical Center facility in Phoenixville, Pennsylvania, the
Company has fully characterized contaminated soils and is about to complete
groundwater characterization activities. Upon completion of the groundwater
characterization in 2003, the Company believes that it will be able to obtain a
release of liability from the Commonwealth of Pennsylvania.
The Company has completed remediation activities at its former plastics
manufacturing facility in Wayne, New Jersey. Remaining work on the site involves
re-grading a small area adjacent to the manufacturing area to comply with state
solid waste management regulations. This work is expected to be completed in
2003, following which final approval is expected.
At its current operating plant in St. Petersburg, Florida, the Company has
commenced remediation activities for contaminated groundwater. The Company
expects that this project will be completed in 2004, subject thereafter to
periodic monitoring.
International
- -------------
The Company conducts business in most of the major markets in the world. Sales
outside of the United States account for approximately 46% of consolidated net
sales. Although the general business process is similar to the domestic
business, international operations are exposed to additional risks including
fluctuating foreign currency exchange rates, multiple tax jurisdictions and,
particularly in Latin and South America, political and social issues that could
destabilize local markets and affect the demand for the Company's products.
For additional information see Note 13 "Affiliated Companies" and Note 7
"Segment Information" of the Notes to Consolidated Financial Statements of the
2002 Annual Report to Shareholders are incorporated herein by reference.
The Company's financial condition and results are impacted by fluctuations in
exchange-rate markets (See Note 1 "Summary of Significant Accounting Policies -
Foreign Currency Translation" and Note 5 "Other Income (Expense)" of the Notes
to Consolidated Financial Statements of the 2002 Annual Report to Shareholders,
incorporated herein by reference). Hedging by the Company of these exposures is
discussed in Note 1 "Summary of Significant Accounting Policies - Financial
Instruments" and in Note 16 "Financial Instruments" of the Notes to Consolidated
Financial Statements of the 2002 Annual Report to Shareholders, incorporated
herein by reference.
Item 2. Properties.
-----------
In the Pharmaceutical Systems segment, the Company maintains eight manufacturing
plants and two mold and die production facilities in the United States, and a
total of eight manufacturing plants and two mold and die production facilities
in Germany, England, France, Denmark, Brazil and Singapore. Contract laboratory
services are provided from the Company's Lionville, Pennsylvania facility.
In the Drug Delivery Systems segment, the Company conducts drug delivery
research and development in leased facilities located in Lionville, Pennsylvania
and Nottingham, England. Clinical research services are provided by the GFI
Research Center from leased space in Evansville, Indiana.
The Company's executive offices, U.S. research and development center and pilot
plant are located in a leased facility at Lionville, Pennsylvania, about 35
miles from Philadelphia. All other company facilities are used for manufacturing
and distribution, and facilities in Eschweiler, Germany, Montgomery,
Pennsylvania and Clearwater, Florida, are also used for development activities
for Pharmaceutical Systems products.
The manufacturing production facilities of the Company are well maintained and
are operating generally on a two or three shift basis. The facilities in Germany
and France are both being expanded to meet increased customer demand.
The principal facilities in the United States are as follows:
- - Approximately 671,000 square feet of owned and 555,000 square feet of
leased space in Pennsylvania, Florida, Nebraska, North Carolina and
Indiana.
The principal international facilities are as follows:
- - Approximately 809,000 square feet of owned space and 90,000 square feet of
leased space in Germany, England, Denmark, France, Spain and Italy.
- - Approximately 250,000 square feet of owned space in Brazil.
- - Approximately 90,000 square feet of owned space in Singapore.
Sales office facilities in separate locations are leased under short-term
arrangements.
Item 3. Legal Proceedings.
-----------------
On February 24, 2003, plaintiffs Terry Ellis, Rosalie Whitley and Gloria
Young, on behalf of themselves and a purported class of residents of Craven
County, North Carolina and the surrounding area, filed a lawsuit naming the
Company and Thomas Clagon, its Kinston, North Carolina plant manager, as
defendants. Plaintiffs allege negligence and strict liability arising out
of the explosion at the Company's Kinston, North Carolina plant and seek
unspecified compensatory and punitive damages. The lawsuit was filed before
the state court in Craven County, North Carolina.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None.
Item 4 (a) Executive Officers of the Registrant.
------------------------------------
The executive officers of the Company at March 26, 2003 were as follows:
Name Age Business Experience During Past Five Years
- ---- --- ---------------------------------------------
Joseph E. Abbott 50 Vice President and Corporate Controller since
April 2002 and Corporate Controller since
December 2000. Previously Director of Internal
Audit.
Linda R. Altemus 51 Vice President and Chief Financial Officer
since March 2002; Vice President, Finance and
Administration from June 2001 to March 2002;
Chief Information Officer from June 2000 to
June 2001; Vice President, Management
Information Systems from March 1999
to June 2000 and Director, Information Systems
from May 1997 to March 1999.
Michael A. Anderson 47 Vice President and Treasurer since June 2001;
Vice President, Finance & Administration for
Drug Delivery Systems from November 1999 to
June 2001; Vice President, Business
Development from April 1997 to October 1999.
Steven A. Ellers 52 President, Pharmaceutical Systems Division
since June 2002; Executive Vice President
from June 2000 to June 2002; Senior Vice
President and Chief Financial Officer from
March 1998 to June 2000; Group President from
April 1997 to March 1998.
John R. Gailey III 48 Vice President, General Counsel and Secretary.
Herbert L. Hugill 55 President of the Americas, Pharmaceutical
Systems Division since January 2002;
President, Global Sales and Marketing from
May 2001 until January 2002; Division
President, Clinical Services from November
1999 until May 2001 and General Manager of
the Clinical Services Group from April 1999
until November 1999. Previously Mr. Hugill
served as Chief Operating Officer of
Collaborative Clinical Research, Inc.
Robert J. Keating 54 President, Europe and Asia Pacific,
Pharmaceutical Systems Division since April
2002; Regional Director Asia Pacific from
June 1998 to April 2002; General Manager from
July 1997 until June 1998.
Name Age Business Experience During Past Five Years
- ---- --- --------------------------------------------
William G. Little 60 Chairman of the Board until March 2003;
Chief Executive Officer until April 30, 2002
and President until September 1998.
Richard Luzzi 51 Vice President, Human Resources from June
2002 to present; Vice President, Human
Resources of GS Industries from July 1998
until May 2002. Previously Mr. Luzzi served
as Vice President of Human Resources of
Lukens, Inc.
Donald E. Morel, Jr., Ph.D. 45 Chairman of the Board since March 2003,
Chief Executive Officer since April 2002 and
President since May 2001; Chief Operating
Officer from May 2001 to April 2002;
Division President, Drug Delivery Systems
from October 1999 to May 2001; Group
President from April 1998 to October 1999.
Previously Vice President, Scientific
Services.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
----------------------------------------------------------------------
The Company's common stock is listed on the New York Stock Exchange. The high
and low prices for the stock for each calendar quarter in 2002 and 2001 and full
year 2002 and 2001 were as follows:
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
High Low High Low High Low High Low High Low
2002 30.53 25.00 32.50 27.90 31.99 21.08 24.80 16.25 32.50 16.25
2001 26.16 22.75 27.60 22.80 28.35 23.12 28.30 23.30 28.35 22.75
As of March 20, 2003, the Company had 1,665 shareholders of record. There were
also 3,046 holders of shares registered in nominee names. The Company's common
stock paid a quarterly dividend of $.18 per share in each of the first three
quarters of 2001; $.19 per share in the fourth quarter of 2001 and each of the
first three quarters of 2002; and $.20 per share in the fourth quarter of 2002.
Item 6. Selected Financial Data.
-----------------------
Information with respect to the Company's net sales, income from continuing
operations, income (loss) from discontinued operations, income per share from
continuing operations (basic and assuming dilution), income (loss) per share
from discontinued operations (basic and assuming dilution) and dividends paid
per share is incorporated by reference to the line items corresponding to those
categories under the heading "Five-Year Summary - Summary of Operations" of the
2002 Annual Report to Shareholders. Information with respect to total assets and
total debt is incorporated by reference to the line items corresponding to those
categories under the heading "Five-Year Summary - Year-End Financial Position"
of the 2002 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
------------------------------------------------------------
The information called for by this Item is incorporated by reference to the text
appearing in the "Financial Review" section of the 2002 Annual Report to
Shareholders.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
---------------------------------------------------------
The Company is exposed to market risk from changes in foreign currency exchange
rates and interest rates. The following describes the nature of these risks. All
debt securities and derivative instruments are considered non-trading.
Foreign Currency Exchange Risk
- -------------------------------
The Company has subsidiaries outside the United States accounting for
approximately 46% of consolidated net sales. Virtually all of these sales and
related operating costs are denominated in the currency of the local country and
translated into U.S. dollars. Although the majority of the assets and
liabilities of these subsidiaries are in the local currency of the subsidiary
and are therefore translated into U.S. dollars, the foreign subsidiaries may
hold assets or liabilities not denominated in their local currency. These items
may give rise to foreign currency transaction gains and losses. As a result of
the above, the Company's results of operations and financial position are
exposed to changing exchange rates. The Company periodically uses forward
contracts to hedge certain transactions, but generally does not hedge foreign
currency exposures. In order to minimize the effect of foreign currency
fluctuations, the Company attempts to pass foreign currency costs on to
customers through price increases.
Interest Rate Risk
- ------------------
As a result of its normal borrowing activities the Company is exposed to
fluctuations in interest rates, which the Company manages primarily through its
financing activities. The Company has short- and long- term debt with both fixed
and variable interest rates. Short-term debt is primarily comprised of notes
payable to banks under lines of credit at variable interest rates. Long-term
debt consists of $100,000 in senior notes at a fixed rate of interest and
revolving credit facilities and other notes at variable rates.
The Company also utilizes interest rate swaps to minimize interest rate
fluctuations on certain debt obligations. As of December 31, 2002, the Company
had one interest rate swap. The swap, with a notional amount of 6,950 British
Pound Sterling ($11,200), converts variable rate debt to a fixed rate of 7.2%.
The swap expires in October 2003.
The following table summarizes the Company's interest rate risk sensitive
instruments:
Expected Maturity Date December 31, 2002
There- Carrying Fair
($ in millions) 2003 2004 2005 2006 2007 after Value Value
---------------------------------------------------------------------------
Notes Payable and Current
Portion of Long-term Debt:
U.S. dollar denominated $ 500 $ - $ - $ - $ - $ - $ 500 $ 500
Average interest rate - fixed 9.1%
BPS denominated 11,200 - - - - - 11,200 11,400
Average interest rate - variable 4.5%
BPS denominated 3,800 - - - - - 3,800 3,800
Average interest rate - variable 5.2%
Euro denominated 200 - - - - - 200 200
Average interest rate - fixed 0.0%
Other denominations 100 - - - - - 100 100
Average interest rate - fixed 2.0%
--------------------------------------------------------------------------
Long-Term Debt:
U.S. dollar denominated - - - - - 100,000 100,000 100,300
Average interest rate - fixed 6.8%
U.S. dollar denominated - - 38,300 - - - 38,300 38,300
Average interest rate - variable 2.4%
BPS denominated - - 20,900 - - - 20,900 20,900
Average interest rate - variable 5.0%
--------------------------------------------------------------------------
Interest Rate Swaps:
Variable to fixed - BPS 200 - - - - - 200 200
Fixed pay rate 7.2%
--------------------------------------------------------------------------
Item 8. Financial Statements and Supplementary Data.
---------------------------------------------
The information called for by this Item is incorporated by reference to
"Consolidated Financial Statements", "Notes to Consolidated Financial
Statements", and "Quarterly Operating and Per Share Data (Unaudited)" of the
2002 Annual Report to Shareholders.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
-------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
Information called for by this Item is incorporated by reference to "PROPOSAL
#1: ELECTION OF DIRECTORS" in the Proxy Statement.
Information about executive officers of the Company is set forth in Item 4 (a)
of this report.
Item 11. Executive Compensation.
-----------------------
Information called for by this Item is incorporated by reference to
"COMPENSATION OF DIRECTORS AND NAMED EXECUTIVE OFFICERS", "BOARD COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION" and "SHAREHOLDER RETURN PERFORMANCE
GRAPH" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
Information called for by this Item is incorporated by reference to "PRINCIPAL
OWNERS OF COMMON STOCK", "INFORMATION ABOUT THE BOARD AND BOARD COMMITTEES -
Stock Ownership of Directors and Executive Officers, Equity Compensation Plan
Information" in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
None
Item 14. Controls and Procedures.
-----------------------
In connection with the preparation and filing of the Company's Quarterly Report
on Form 10-Q for the third quarter of 2002, the Company established disclosure
controls and procedures (as defined under SEC Rules 13a-14 and 15d-14). These
controls and procedures are designed to, among other things, ensure that
information required to be disclosed in the Company's periodic reports is
recorded, processed, summarized and reported on a timely basis and that such
information is made known to the Company's Chief Executive Officer and Chief
Financial Officer (together, the "Certifying Officers") to allow timely
decisions regarding required disclosure. As part of this process, the Company
also established a Disclosure Committee of key management from a variety of
functional areas. The Disclosure Committee monitors the Company"s disclosure
controls and procedures, assists the Certifying Officers in evaluating their
effectiveness and supports the Certifying Officers' certification of the
Company's periodic reports as required by SEC Rule 13a-14 and 15d-14.
The Certifying Officers have evaluated the effectiveness of the Company's
disclosure controls and procedures within 90 days prior to the filing date of
this report and, based on such evaluation, have concluded that such disclosure
controls and procedures are effective.
There were no significant changes in internal controls or in other factors that
could significantly affect the Company's internal controls subsequent to the
date of the evaluation mentioned above. In addition, no corrective actions were
taken or required with regard to significant deficiencies or material
weaknesses.
PART IV
Item 15. Exhibits, Financial Statement Schedule and Reports on
Form 8-K.
------------------------------------------------------
(a)1. The following report and consolidated financial statements, included
in the 2002 Annual Report to Shareholders, have been incorporated
herein by reference:
Consolidated Statements of Income for the years ended December 31,
2002, 2001 and 2000
Consolidated Statements of Comprehensive Income (Loss)for the years
ended December 31, 2002, 2001 and 2000
Consolidated Balance Sheets at December 31, 2002 and 2001
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows for the years ended December 31,
2002, 2001 and 2000
Notes to Consolidated Financial Statements
Report of Independent Accountants
(a)2. Financial Statement Schedule
Report of Independent Accountants on Financial Statement Schedule
To the Board of Directors of West Pharmaceutical Services Inc.:
Our audits of the consolidated financial statements referred to in our
report dated March 3, 2003 appearing in the 2002 Annual Report to
Shareholders of West Pharmaceutical Services Inc. (which report and
consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the
financial statement schedule listed in Item 15(a)(2) of this Form
10-K. In our opinion, the financial statement schedule presents
fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial
statements.
/s/PricewaterhouseCoopers LLP
-----------------------------
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 3, 2003
Schedule II - Valuation and Qualifying Accounts
Balance at Charged to Balance at
beginning of costs and Translation end of
period expenses adjustments period
--------------------------------------------------------
Deferred tax asset valuation allowance:
For the year ended December 31,
2002 $ 10,700 $ 3,100 $ (4,000) $ 9,800
2001 10,200 (500) 1,000 10,700
2000 4,900 1,900 3,400 10,200
All other schedules are omitted because they are either not
applicable, not required or because the information required is
contained in the consolidated financial statements or notes thereto.
(a)3. See Index to Exhibits on pages F-1, F-2, F-3, F-4 and F-5 of this
Report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December
31, 2002.
(c) The exhibits are listed in the Index to Exhibits on pages F-1, F-2,
F-3, F-4 and F-5 of this Report.
(d) Financial Statements of affiliates are omitted because they do not
meet the tests of a significant subsidiary at the 20% level.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, West Pharmaceutical Services, Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
WEST PHARMACEUTICAL SERVICES, INC.
(Registrant)
By: /s/ Linda R. Altemus
- -----------------------------------------------
Linda R. Altemus
Vice President and Chief Financial Officer
March 26, 2003
- --------------------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ------ -------
/s/ Donald E. Morel, Jr., Ph.D. Director, President, March 26, 2003
- -------------------------------- Chief Executive Officer
Donald E. Morel, Jr., Ph.D. and Chairman of the Board
(Principal Executive Officer)
/s/ Joseph E. Abbott Vice President and March 26, 2003
- ------------------------------- Corporate Controller
Joseph E. Abbott (Principal Accounting Officer)
/s/ Tenley E. Albright Director March 26, 2003
- -------------------------------
Tenley E. Albright *
/s/ Linda R. Altemus Vice President and March 26, 2003
- ------------------------------- Chief Financial Officer
Linda R. Altemus (Principal Financial Officer)
/s/ John W. Conway Director March 26, 2003
- -------------------------------
John W. Conway*
/s/ George W. Ebright Director March 26, 2003
- -------------------------------
George W. Ebright*
/s/ L. Robert Johnson Director March 26, 2003
- -------------------------------
L. Robert Johnson*
/s/ William G. Little Director March 26, 2003
- -------------------------------
William G. Little*
Signature Title Date
--------- ------ -------
/s/ William H. Longfield Director March 26, 2003
- --------------------------------
William H. Longfield*
/s/ John P. Neafsey Director March 26, 2003
- --------------------------------
John P. Neafsey*
/s/ Anthony Welters Director March 26, 2003
- --------------------------------
Anthony Welters*
/s/ Geoffrey F. Worden Director March 26, 2003
- --------------------------------
Geoffrey F. Worden*
/s/ Robert C. Young Director March 26, 2003
- --------------------------------
Robert C. Young*
/s/ Patrick J. Zenner Director March 26, 2003
- --------------------------------
Patrick J. Zenner*
* By John R. Gailey III pursuant to a power of attorney.
CERTIFICATION
I, Donald E. Morel, Jr. Ph.D., certify that:
1. I have reviewed this annual report on Form 10-K of West Pharmaceutical
Services, Inc.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures 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 annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 26, 2003
By: /s/ Donald E. Morel, Jr., Ph.D.
- -----------------------------------
Donald E. Morel, Jr., Ph.D.
President and Chief Executive Officer
CERTIFICATION
I, Linda R. Altemus, certify that:
1. I have reviewed this annual report on Form 10-K of West Pharmaceutical
Services, Inc.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures 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 annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 26, 2003
By: /s/ Linda R. Altemus
- -----------------------------------------
Linda R. Altemus
Vice President and Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
Number
(2) None.
(3) (a) Amended and Restated Articles of Incorporation of the
Company through January 4, 1999 incorporated by reference to
Exhibit (3)(a) of the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 1-8036).
(3) (b) Bylaws of the Company, as amended through October 27, 1998,
incorporated by reference to Exhibit (3)(b) to the Company's
Form 10-Q for the quarter ended September 30, 1998 (File No.
1-8036).
(4) Miscellaneous long term debt instruments and credit facility
agreements of the Company, under which the underlying
authorized debt is equal to less than ten percent of the
total assets of the Company and its subsidiaries on a
consolidated basis, may not be filed as exhibits to this
report pursuant to Section (b) (4) (iii) A of Item 601 of
Reg S-K. The Company agrees to furnish to the Commission,
upon request, copies of any such unfiled instruments (File
No. 1-8036).
(4) (a) Form of stock certificate for common stock incorporated by
reference to Exhibit (4) (a) of the Company's Annual Report
on Form 10-K for the year ended December 31, 1998 (File No.
1-8036).
(4) (a) (1) Article 5, 6, 8(c) and 9 of the Amended and Restated
Articles of Incorporation of the Company, incorporated by
reference to Exhibit (3) (a) of the Company's Annual Report
on Form 10-K for the year ended December 31, 1998 (File No.
1-8036).
(4) (a) (2) Article I and V of the Bylaws of the Company, as amended,
incorporated by reference to Exhibit (3) (b) to the
Company's Form 10-Q for the quarter ended September 30, 1998
(File No. 1-8036).
(4) (b) Note Purchase Agreement dated as of April 8, 1999 among the
Company and the insurance companies identified on a schedule
thereto, incorporated by reference to Exhibit (4)(b) of the
Company's Form 10-Q for the quarter ended September 30, 2000
(File No. 1-8036).
(4) (c) Credit Agreement, dated as of July 26, 2000 among the
Company, the banks and other financial institutions
identified on a schedule thereto, and PNC Bank, N.A., as
agent for the banks (the "Credit Agreement"), incorporated
by reference to Exhibit (4) (c) of the Company's Form 10-Q
for the quarter ended September 30, 2000 (File No. 1-8036).
(4) (c) (1) First Amendment dated as of September 14, 2000, to the
Credit Agreement, incorporated by reference to Exhibit (4)
(c) (1) of the Company's Annual Report on Form 10-K for the
year ended December 31, 2001 (File No. 1-8036).
F - 1
Exhibit
Number
(4) (c) (2) Second Amendment dated as of November 17, 2000, to the
Credit Agreement, incorporated by reference to Exhibit (4)
(c) (2) of the Company's Annual Report on Form 10-K for the
year ended December 31, 2001 (File No. 1-8036).
(4) (c) (3) Joinder and Assumption Agreement dated as of February 28,
2001, with respect to the Credit Agreement, incorporated by
reference to Exhibit (4) (c) (3) of the Company's Annual
Report on Form 10-K for the year ended December 31, 2001
(File No. 1-8036).
..
(4) (c) (4) Third Amendment dated as of February 28, 2001 to the Credit
Agreement, incorporated by reference to Exhibit (4) (c) (4)
of the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 (File No. 1-8036).
(4) (c) (5) Fourth Amendment dated as of July 13, 2001 to the Credit
Agreement, incorporated by reference to Exhibit (10) (a) of
the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001 (File No. 1-8036).
(4) (c) (6) Extension Agreement dated as of January 5, 2001 to the
Credit Agreement, incorporated by reference to Exhibit (4)
(c) (6) of the Company's Annual Report on Form 10-K for the
year ended December 31, 2001 (File No. 1-8036).
(4) (c) (7) Fifth Amendment dated as of July 17, 2002 to the Credit
Agreement, incorporated by reference to Exhibit (4) (c) (7)
of the Company's Quarterly Annual Report on Form 10-Q for
the quarter ended June 30, 2002 (File No. 1-8036).
(9) None.
(10) (a) Lease dated as of December 31, 1992 between Lion Associates,
L.P. and the Company, relating to the lease of the Company's
headquarters in Lionville, Pa., incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1992 (File No. 1-8036).
(10) (aa) Discounted Stock Purchase Plan, as Amended and Restated,
dated as of November 5, 1991.
(10) (b) First Addendum to Lease dated as of May 22, 1995 between
Lion Associates, L.P. and the Company, incorporated by
reference to Exhibit (10)(d) of the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 (File No.
1- 8036).
(10) (bb) Amendment No. 1 to Discounted Stock Purchase Plan, effective
as of December 31, 2001.
(10) (c) Lease dated as of December 14, 1999 between White Deer
Warehousing & Distribution Center, Inc. and the Company
relating to the lease of the Company's site in Montgomery,
Pa.
F - 2
Exhibit
Number
(10) (d) Long-Term Incentive Plan, as amended March 2, 1993,
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No. 1-
8036).
(10) (e) Amendments to the Long Term Incentive Plan, dated April 30,
1996, incorporated herein by reference to Exhibit (10)(a) of
the Company's Form 10Q for the quarter ended June 30, 1996
(File No. 1-8036).
(10) (e) (1) Amendment to the Long Term Incentive Plan, Effective October
30, 2001, incorporated by reference to Exhibit 10(d)(1) of
the Company's Annual Report on Form 10-K for the year ended
December 31, 2001 (File No. 1-8036).
(10) (f) 1999 Non-Qualified Stock Option Plan for Non- Employee
Directors, effective as of April 27, 1999, incorporated by
reference Exhibit (10)(c) of to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999
(File No. 1- 8036).
(10) (g) 2002 Management Incentive Bonus Plan, incorporated by
reference to Exhibit 10 of the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2002 (File No.
1-8036).
(10) (h) Amendment No. 1 to 1999 Non-Qualified Stock Option Plan for
Non-Employee Directors, effective October 30, 2001,
incorporated by reference to Exhibit 10(f) of the Company's
Annual Report on Form 10-K for the year ended December 31,
2001 (File No. 1-8036).
(10) (i) Form of Second Amended and Restated Change-in-Control
Agreement between the Company and certain of its executive
officers dated as of March 25, 2000, incorporated by
reference to Exhibit(10)(b) of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000
(File No. 1-8036).
(10) (i) (1) Form of Amendment No.1 to Second Amended and Restated
Change-in-Control Agreement dated as of May 1, 2001 between
the Company and certain of its executive officers,
incorporated by reference to Exhibit 10(g)(1) of the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001 (File No. 1-8036).
(10) (j) Schedule of agreements with executive officers, incorporated
by reference to Exhibit 10(h) of the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 (File No.
1-8036).
(10) (k) Amendment to Amended and Restated Employment Agreement,
dated as of April 30, 2002, between the Company and William
G. Little, incorporated by reference to Exhibit 10 (a) of
the Company's Quarterly Annual Report on Form 10-Q for the
quarter ended September 30, 2002 (File No. 1- 8036).
F - 3
Exhibit
Number
(10) (l) Non-Competition Agreement, dated as of April 30, 2002,
between the Company and William G. Little, incorporated by
reference to Exhibit 10 (b) of the Company's Quarterly
Annual Report on Form 10-Q for the quarter ended September
30, 2002 (File No. 1- 8036).
(10) (m) Employment Agreement, dated as of April 30, 2002, between
the Company and Donald E. Morel, Jr., incorporated by
reference to Exhibit 10 (c) of the Company's Quarterly
Annual Report on Form 10-Q for the quarter ended September
30, 2002 (File No. 1- 8036).
(10) (n) Non-Qualified Stock Option Agreement, dated as of April 30,
2002 between the Company and Donald E. Morel, Jr.,
incorporated by reference to Exhibit 10 (d) of the Company's
Quarterly Annual Report on Form 10-Q for the quarter ended
September 30, 2002 (File No. 1- 8036).
(10) (o) Supplemental Employees' Retirement Plan, incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-8036).
(10) (p) Amendment No. 1 to Supplemental Employees' Retirement Plan,
incorporated by reference to Exhibit (10)(l) of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 1- 8036).
(10) (q) Amendment No. 2 to Supplemental Employees' Retirement Plan,
incorporated by reference to Exhibit (10)(c) of the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1995 (File No. 1-8036).
(10) (r) Amended and Restated Employment Agreement dated as of March
25, 2000 between the Company and William G. Little,
incorporated by reference to Exhibit (10)(a) of the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000 (File No. 1-8036).
(10) (r) (1) Amendment No.1 to Amended and Restated Employment Agreement,
dated as of May 1, 2001, between the Company and William G.
Little, incorporated by reference to Exhibit 10(l)(1) of the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001 (File No. 1-8036).
(10) (s) Non-Qualified Deferred Compensation Plan for Designated
Executive Officers as amended and restated effective April
1, 2000, incorporated by reference to Exhibit (10)(a) of the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 (File No. 1-8036).
(10) (t) Deferred Compensation Plan for Outside Directors, as amended
and restated effective May 27, 1999, incorporated by
reference to Exhibit(10)(a) of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999
(File No. 1-8036).
F - 4
Exhibit
Number
(10) (u) 1999 Stock-Equivalents Compensation Plan for Non-Employee
Directors, incorporated by reference to Exhibit (10)(a) of
the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 (File No. 1-8036).
(10) (v) 1998 Key Employee Incentive Compensation Plan, dated March
10, 1998, incorporated by reference to Exhibit (10)(y) of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (File No.1-8036).
(10) (w) Asset Purchase Agreement, dated as of November 15, 2001, by
and among DFB Pharmaceuticals, Inc., DPT Lakewood, Inc.,
West Pharmaceutical Services, Inc., West Pharmaceutical
Services Lakewood, Inc., Charter Laboratories, Inc. and Paco
Laboratories, Inc., incorporated by reference to Exhibit 2.1
of the Company's Current Report on form 8-K dated November
20, 2001 (File No. 1-8036).
(10) (x) Side letter dated November 30, 2001, incorporated by
reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K dated November 20, 2001 (File No.1-8036).
(10) (y) Amendment No.1 to 1998 Key Employees Incentive Compensation
Plan, effective October 30, 2001, incorporated by reference
to Exhibit 10(s) of the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 (File No. 1-8036).
(10) (z) 2003 Employee Stock Purchase Plan, effective as of June 1,
2003, incorporated by reference to Appendix A of the
Company's 2003 Definitive Proxy Statement on Form 14A (File
No. 1-8036).
(11) Not Applicable.
(12) Not Applicable.
(13) Portions of 2002 Annual Report to Shareholders.
(16) Not applicable.
(18) None.
(21) Subsidiaries of the Company.
(22) None.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(99) (a) Certification by Donald E. Morel, Jr., Ph.D., pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(99) (b) Certification by Linda R. Altemus, 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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