West Pharmaceutical Services (WST) 10-K risk factor changes: FY2015 vs FY2014

The current uncertainty in the global economy, including the continuing effects of recession or slow economic growth in the [removed: U.S. and] [added: U.S.,] Europe, [added: and emerging markets in Asia and South America,] may negatively affect our operating results.

If economic and market conditions in the [removed: U.S.] [added: U.S., Europe,] or [removed: Europe] [added: in emerging markets,] weaken further, we may experience material adverse impacts on our business, financial condition and results of operations.

If our customers fail to continue to sell, develop and deploy [removed: new] injectable products or we are unable to develop new products that assist in the delivery of drugs by alternative methods, our sales and profitability may suffer.

Sales outside of the U.S. accounted for [removed: 54%] [added: 52.0%] of our consolidated net sales in [removed: 2014] [added: 2015] and we anticipate that sales from international operations will continue to represent a significant portion of our total sales in the future.

Virtually all of our international sales, assets and related operating costs and expenses are earned, valued or incurred in the currency of the local country, primarily the Euro, the [removed: Danish Krone,] [added: Singapore Dollar,] and the [removed: Singapore Dollar.][added: Danish Krone.]

Our consolidated financial statements are presented in [removed: U.S. dollars,] [added: USD,] and, therefore, we must translate the reported values of our foreign assets, liabilities, revenues and expenses into [removed: U.S. dollars,] [added: USD,] which can result in significant fluctuations in [added: the amount of those assets, liabilities, revenues or expenses.]

The exchange rates between these foreign currencies and [removed: the U.S. dollar] [added: USD] in recent years have fluctuated significantly and may continue to do so in the future.

Increases or decreases in the value of [removed: the U.S. dollar] [added: USD] compared to these foreign currencies may negatively affect the value of these items in our consolidated financial statements, which could have a material adverse effect on our operating results.

In addition, if relevant and effective patent protection is not [removed: available,] [added: available or has expired,] we may not prevent competitors from independently developing products and services similar or duplicative to ours.

We have manufacturing sites [removed: all over] [added: throughout] the world.

Our international operations and our ability to implement our overall business strategy (including our plan to continue expanding into emerging and/or faster-growing markets outside [added: of] the U.S.) are subject to risks and uncertainties that can vary by country, and include: transportation delays and interruptions; political and economic instability and disruptions; imposition of duties and tariffs; import and export controls; the risks of divergent business expectations or cultural incompatibility inherent in establishing and maintaining operations in foreign countries; difficulties in staffing and managing multi-national operations; labor strikes and/or disputes; and potentially adverse tax consequences.

Our growth partly depends on new-product innovation and the development and commercialization of proprietary multi-component systems for injectable drug administration and other healthcare applications (such as the Daikyo CZ ready-to-use prefilled [removed: syringe system).][added: syringes and the SmartDose systems).]

We are also exposed to currencies in emerging market countries, such as the Chinese Yuan, the Indian Rupee, and various South American currencies, including the Venezuelan Bolivar and the Brazilian Real.

the amount of those assets, liabilities, revenues or expenses.

The PPACA also imposes significant new taxes on medical device makers in the form of an excise tax on all U.S. medical device sales (as defined under the regulations).

The full effects of the PPACA cannot be known until all of the provisions are implemented and the Centers for Medicare & Medicaid Services and other federal and state agencies issue applicable regulations or guidance.

[removed: Non-GAAP] [added: Non-U.S. GAAP] Financial Measures

[removed: These] [added: The] re-measured results excluding effects from currency translation [added: and excluding the effects of unallocated items] are not in conformity with U.S. GAAP and should not be used as a substitute for the comparable U.S. GAAP financial measures.

We are a manufacturer of components and systems for the packaging and delivery of injectable drugs as well as [removed: delivery system] components for the pharmaceutical, healthcare and consumer products industries.

Our customers include the leading global producers of pharmaceuticals, biologics, medical devices and [removed: personal care] [added: consumer] products.

Our business operations are organized into two reportable segments, [removed: which are aligned with the underlying markets] [added: Packaging Systems] and [removed: customers they serve.][added: Delivery Systems.]

As a result of our global manufacturing and distribution presence, more than half of our revenues are generated outside of the U.S. in currencies other than [removed: the U.S. dollar,] [added: USD,] including [removed: 44%] [added: approximately 40%] in Europe and 10% collectively in [removed: Asia, South America,] [added: Asia] and [removed: Israel.][added: South America.]

Generally, our financial results are affected positively by a weaker [removed: U.S. dollar] [added: USD] and negatively by a stronger [removed: U.S. dollar,] [added: USD,] as compared to the foreign currencies in which we conduct our business.

In terms of net sales, the most significant foreign currencies are the Euro, the [removed: Danish Krone, and the] Singapore Dollar, [added: and the Danish Krone,] with Euro-denominated sales representing the majority of sales transacted in foreign currencies.

During [removed: 2014,] [added: 2015,] average exchange rates were unfavorable versus the exchange rates realized in [removed: 2013,] [added: 2014,] resulting in lower reported net [removed: sales and] [added: sales,] operating [removed: profit of $5.5 million] [added: profit, net income,] and [removed: $1.4] [added: net income per diluted share of $123.9] million, [added: $29.3 million, $21.4 million, and $0.29,] respectively, [removed: versus 2013.][added: as compared to 2014.]

[removed: | • | Net sales were $1,421.4 million, an increase of 3.9% from 2013.] Excluding foreign currency effects, [added: consolidated] net sales increased by [removed: $58.5] [added: $102.3] million, or [removed: 4.3%. |][added: 7.2%.]

[removed: | • |] Net income [removed: for 2014] [added: in 2015] was [removed: $127.1] [added: $95.6] million, or [removed: $1.75] [added: $1.30] per diluted share, compared to [removed: $112.3] [added: $127.1] million, or [removed: $1.57] [added: $1.75] per diluted share, in [removed: 2013. |][added: 2014.]

We plan to continue funding capital projects related to new products, expansion activity, advanced quality systems, and investment in emerging [removed: markets for Packaging Systems and new proprietary products within Delivery Systems.][added: markets.]

Percentages in the following tables and throughout [removed: the] [added: this] Results of Operations section may reflect rounding adjustments.

| ($ in millions) | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2014/2013] [added: 2015/2014] | | | [removed: 2013/2012] [added: 2014/2013] | |

| Packaging Systems | $ | [removed: 1,019.7] [added: 1,000.7] | | | $ | [removed: 996.0] [added: 1,019.7] | | | $ | [removed: 915.1] [added: 996.0] | | | [removed: 2.4] [added: (1.9] | [removed: %] [added: )%] | | [removed: 8.8] [added: 2.4] | % |

| Delivery Systems | [removed: 402.5] [added: 400.2] | | | | [removed: 374.1] [added: 402.5] | | | | [removed: 352.1] [added: 374.1] | | | | [removed: 7.6] [added: (0.5] | [removed: %] [added: )%] | | [removed: 6.2] [added: 7.6] | % |

| Intersegment sales elimination | [removed: (0.8] [added: (1.1] | | ) | | [removed: (1.7] [added: (0.8] | | ) | | [removed: (0.8] [added: (1.7] | | ) | | — | | | — | |

| Consolidated net sales | $ | [removed: 1,421.4] [added: 1,399.8] | | | $ | [removed: 1,368.4] [added: 1,421.4] | | | $ | [removed: 1,266.4] [added: 1,368.4] | | | [removed: 3.9] [added: (1.5] | [removed: %] [added: )%] | | [removed: 8.0] [added: 3.9] | % |

Consolidated net sales [removed: increased] [added: decreased] by [removed: $102.0] [added: $21.6] million, or [removed: 8.0%,] [added: 1.5%,] in [removed: 2013,] [added: 2015,] including [removed: a favorable] [added: an unfavorable] foreign currency impact of [removed: $11.3] [added: $123.9] million.

Excluding foreign currency effects, consolidated net sales [added: generated outside of the U.S. in 2015] increased by [removed: $90.6 million, or 7.2%.][added: 8.3%.]

Packaging Systems – Packaging [removed: Systems’] [added: Systems'] net sales [removed: increased] [added: decreased] by [removed: $80.9] [added: $19.0] million, or [removed: 8.8%,] [added: 1.9%,] in [removed: 2013,] [added: 2015,] including [removed: a favorable] [added: an unfavorable] foreign currency impact of [removed: $8.6] [added: $105.2] million.

[removed: Higher sales volumes and an improved] [added: An improvement in] product mix [added: and higher sales volumes] contributed [removed: 5.6] [added: 6.9] percentage points of the increase, and sales price increases contributed [removed: 2.3 percentage points.][added: the remainder of the increase.]

Delivery Systems – Delivery [removed: Systems’] [added: Systems'] net sales [removed: increased] [added: decreased] by [removed: $22.0] [added: $2.3] million, or [removed: 6.2%,] [added: 0.5%,] in [removed: 2013,] [added: 2015,] including [removed: a favorable] [added: an unfavorable] foreign currency impact of [removed: $2.7] [added: $18.7] million.

| Gross Profit | $ | [removed: 369.0] [added: 381.7] | | | $ | [removed: 361.4] [added: 369.0] | | | $ | [removed: 318.4] [added: 361.4] | | | [removed: 2.1] [added: 3.4] | % | | [removed: 13.5] [added: 2.1] | % |

| Gross Margin | [removed: 36.2] [added: 38.1] | | % | | [removed: 36.3] [added: 36.2] | | % | | [removed: 34.8] [added: 36.3] | | % | | | | | | |

| Gross Profit | $ | [removed: 78.8] [added: 74.1] | | | $ | [removed: 73.3] [added: 78.8] | | | $ | [removed: 69.3] [added: 73.3] | | | [removed: 7.5] [added: (6.0] | [removed: %] [added: )%] | | [removed: 5.8] [added: 7.5] | % |

| Gross Margin | [removed: 19.6] [added: 18.5] | | % | | 19.6 | | % | | [removed: 19.7] [added: 19.6] | | % | | | | | | |

| Consolidated Gross Profit | $ | [removed: 447.8] [added: 455.8] | | | $ | [removed: 434.7] [added: 447.8] | | | $ | [removed: 387.7] [added: 434.7] | | | [removed: 3.0] [added: 1.8] | % | | [removed: 12.1] [added: 3.0] | % |

| Consolidated Gross Margin | [removed: 31.5] [added: 32.6] | | % | | [removed: 31.8] [added: 31.5] | | % | | [removed: 30.6] [added: 31.8] | | % | | | | | | |

Consolidated gross profit increased by [removed: $47.0] [added: $8.0] million, or [removed: 12.1%,] [added: 1.8%,] in [removed: 2013, including a favorable] [added: 2015, despite an unfavorable] foreign currency impact of [removed: $3.1] [added: $42.4] million.

Consolidated gross margin increased by [removed: 1.2] [added: 1.1] margin points in [removed: 2013.][added: 2015.]

Packaging Systems – Packaging [removed: Systems’] [added: Systems'] gross profit increased by [removed: $43.0] [added: $12.7] million, or [removed: 13.5%,] [added: 3.4%,] in [removed: 2013, including a favorable] [added: 2015, despite an unfavorable] foreign currency impact of [removed: $2.8] [added: $37.1] million.

Delivery Systems [removed: – Delivery Systems’] [added: –Delivery Systems'] gross profit [removed: increased] [added: decreased] by [removed: $4.0] [added: $4.7] million, or [removed: 5.8%,] [added: 6.0%,] in [removed: 2013,] [added: 2015,] including [removed: a favorable] [added: an unfavorable] foreign currency impact of [removed: $0.3] [added: $5.3] million.

| Packaging Systems | $ | [removed: 16.3] [added: 14.4] | | | $ | [removed: 15.1] [added: 16.3] | | | $ | [removed: 12.7] [added: 15.1] | | | [removed: 7.9] [added: (11.7] | [removed: %] [added: )%] | | [removed: 18.9] [added: 7.9] | % |

| Delivery Systems | [removed: 21.0] [added: 19.7] | | | | [removed: 22.8] [added: 21.0] | | | | [removed: 20.5] [added: 22.8] | | | | [removed: (7.9] [added: (6.2] | )% | | [removed: 11.2] [added: (7.9] | [removed: %] [added: )%] |

| Consolidated R&D costs | $ | [removed: 37.3] [added: 34.1] | | | $ | [removed: 37.9] [added: 37.3] | | | $ | [removed: 33.2] [added: 37.9] | | | [removed: (1.6] [added: (8.6] | )% | | [removed: 14.2] [added: (1.6] | [removed: %] [added: )%] |

| Packaging Systems | $ | [removed: 130.1] [added: 132.7] | | | $ | [removed: 128.4] [added: 130.1] | | | $ | [removed: 116.7] [added: 128.4] | | | [removed: 1.3] [added: 2.0] | % | | [removed: 10.0] [added: 1.3] | % |

| Delivery Systems | [removed: 45.4] [added: 42.5] | | | | [removed: 42.6] [added: 45.4] | | | | [removed: 37.0] [added: 42.6] | | | | [removed: 6.6] [added: (6.4] | [removed: %] [added: )%] | | [removed: 15.1] [added: 6.6] | % |

| Corporate | [removed: 53.2] [added: 57.8] | | | | [removed: 63.9] [added: 53.2] | | | | [removed: 64.4] [added: 63.9] | | | | [removed: (16.7] [added: 8.6] | [removed: )%] [added: %] | | [removed: (0.8] [added: (16.7] | )% |

| Consolidated SG&A costs | $ | [removed: 228.7] [added: 233.0] | | | $ | [removed: 234.9] [added: 228.7] | | | $ | [removed: 218.1] [added: 234.9] | | | [removed: (2.6] [added: 1.9] | [removed: )%] [added: %] | | [removed: 7.7] [added: (2.6] | [removed: %] [added: )%] |

We may also refer to consolidated operating profit and consolidated operating profit margin excluding the effects of unallocated items.

Our 2015 results were affected by the weakening of the Euro and other foreign currencies in relation to USD.

The average Euro to USD exchange rate decreased from $1.33 for 2014 to $1.11 for 2015.

Our 2015 results also include a $50.4 million pension settlement charge, which reduced net income and net income per diluted share by $32.0 million and $0.43, respectively, as compared to 2014, a $10.9 million charge for executive retirement and related costs, which lowered net income and net income per diluted share by $6.9 million and $0.09, respectively, as compared to 2014, and a discrete tax charge of $0.8 million, which reduced net income and net income per diluted share by $0.8 million and $0.01, respectively, compared to 2014.

Excluding foreign currency effects, the pension settlement charge, the executive retirement charge, and the discrete tax charge, our net sales and net income per diluted share increased by 7.2% and 21.1%, respectively, for 2015, as compared to 2014.

At December 31, 2015, our cash and cash equivalents balance totaled $274.6 million and our borrowing capacity under our senior unsecured, multi-currency revolving credit facility agreement (the "New Credit Agreement") was $269.9 million.

The New Credit Agreement expires in October 2020.

2016 Organizational Structure Change and Business Outlook

In 2015, our business operations consisted of two reportable segments, as discussed above.

Beginning in 2016, we are changing our organization and reporting structure for our next phase of growth and development, which will result in a change to Proprietary Products and Contract-Manufactured Products as reportable segments.

See Part I, Item 1, Business, of this Form 10-K for further discussion regarding the change in our organization and reporting structure.

We continue to focus on our customers' increasing demand for higher product quality, including the development of our proprietary packaging and delivery systems product offerings.

We will manage our capabilities and asset base to respond to changing markets and to enable improvements in service and quality.

We expect that contract manufacturing will remain focused on pharmaceutical and medical device customers.

On February 17, 2016, the Venezuelan government announced a devaluation of the Bolivar, from the official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD, and streamlined the previous three-tiered currency exchange mechanism into a dual currency exchange mechanism.

Please refer to Note 18, Subsequent Events, for further discussion.

2015 compared to 2014

Consolidated net sales originating in the U.S. in 2015 were $667.4 million, an increase of 5.8% from 2014.

Consolidated net sales generated outside of the U.S. (mainly in Europe) in 2015 were $732.4 million, a decrease of 7.4% from 2014 due to an unfavorable foreign currency impact.

Excluding foreign currency effects, net sales increased by $86.2 million, or 8.5%, due to growth in our high-value product offerings, particularly FluroTec-coated components, Westar components, and the Envision line of vision-inspected components.

Our high-value product offerings represented 46.0% of Packaging Systems' net sales in 2015, as compared to 43.6% in 2014.

Excluding foreign currency effects, net sales increased by $16.4 million, or 4.1%, due to an increase in contract manufacturing sales, particularly sales of glucose monitoring devices.

Sales volumes contributed the entirety of the increase.

Proprietary net sales represented 24.7% of Delivery Systems' net sales in 2015, as compared to 26.2% in 2014, as net sales for SmartDose were higher in 2014 due to clinical trials that have since concluded.

2015 compared to 2014

Packaging Systems' gross margin increased by 1.9 margin points in 2015, as product mix improvements, sales price increases, and production efficiencies were partially offset by increased labor and overhead costs.

Delivery Systems' gross margin decreased by 1.1 margin points in 2015, as a result of increased overhead and depreciation related to new capabilities supporting both proprietary and contract manufacturing programs.

2015 compared to 2014

Packaging Systems – Packaging Systems' R&D costs decreased by $1.9 million, or 11.7%, in 2015, primarily due to the reallocation of resources to commercial projects in 2015 and the impact of foreign currency, which decreased R&D costs by $0.8 million.

Delivery Systems – Delivery Systems' R&D costs decreased by $1.3 million, or 6.2%, in 2015, due to the reassignment of personnel to clinical trial production activities for SmartDose in 2015, the completion of development work on the SelfDose self-injection system in 2014, and the impact of foreign currency, which decreased R&D costs by $0.2 million.

| ($ in millions) | 2015 | | | | 2014 | | | | 2013 | | | | 2015/2014 | | | 2014/2013 | |

2015 compared to 2014

Consolidated SG&A costs increased by $4.3 million, or 1.9%, in 2015, despite the impact of foreign currency, which decreased SG&A costs by $12.5 million.

Consolidated SG&A cost for 2015 and 2014 were 16.6% and 16.1%, respectively, of consolidated net sales for 2015 and 2014.

Packaging Systems – Packaging Systems' SG&A costs increased by $2.6 million, or 2.0%, in 2015, as increases in compensation costs related to merit increases, incentive compensation costs, and consulting and sales costs were partially offset by the impact of foreign currency, which decreased SG&A costs by $11.3 million.

Delivery Systems – Delivery Systems' SG&A costs decreased by $2.9 million, or 6.4%, in 2015, as decreases in sales costs and the impact of foreign currency, which decreased SG&A costs by $1.2 million, were partially offset by increases in incentive compensation costs, compensation costs, and depreciation expense.

| ($ in millions) | 2015 | | | | 2014 | | | | 2013 | | |

2015 compared to 2014

Packaging Systems – Packaging Systems' other income increased by $0.7 million in 2015, primarily due to an asset write-off recorded in 2014.

Delivery Systems – Delivery Systems' other income decreased by $1.0 million in 2015, due to gains recorded in 2014, including a gain recorded as a result of the sale of a contract services business, and an increase in foreign exchange transaction losses.

Our reportable segments are Packaging Systems and Delivery Systems.

2014 Financial Performance Highlights

| | |

| --- | --- |

| • | Gross profit was $447.8 million, an increase of 3.0% from 2013, and our gross margin percentage decreased by 0.3 margin points to 31.5%. |

| • | Operating profit for 2014 was $182.0 million, an increase of 12.1% from 2013, and our operating profit margin increased by 0.9 margin points to 12.8%. |

| • | Our financial position remains strong, with cash and cash equivalents of $255.3 million and a borrowing capacity available under our multi-currency revolving credit facility of $266.8 million at December 31, 2014, and net cash provided by operating activities totaling $182.9 million in 2014. |

| • | Our Board of Directors approved an increase in the quarterly cash dividend, which began with the fourth quarter 2014 dividend of $0.11 per share. |

| • | The translation of our non-U.S. dollar-denominated sales is expected to adversely affect 2015 sales and net income per share, as compared to 2014. |

We anticipate continued revenue and margin improvement on a long-term basis, driven by customers' increasing demand for higher product quality, which results in higher revenues and margin per unit sold in Packaging Systems and an increasing percentage of total sales from higher margin proprietary products in Delivery Systems.

We continue to believe that actions taken in recent years to increase capacity for certain products, reduce costs through restructuring and lean savings efforts, and expand into emerging markets will lead to improved profitability as global demand increases.

In October 2014, Donald E.

Morel, Jr., Ph.D., our Chairman and Chief Executive Officer, announced his intention to retire at our Annual Meeting in May 2015.

Our Board of Directors has launched a comprehensive search for Dr. Morel’s successor.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

2013 compared to 2012

Excluding foreign currency effects, net sales increased by $72.3 million, or 7.9%, primarily due to continued growth in sales of our higher-value product offerings that reduce particulate contamination and create efficiencies in our customer's manufacturing processes and strong packaging component sales, partially offset by lower sales of disposable device components.

Excluding foreign currency effects, net sales increased by $19.3 million, or 5.5%, primarily due to increases in CZ, administration systems, and safety systems sales, as well as contract manufacturing sales.

Proprietary net sales represented 24.8% of Delivery Systems' net sales for 2013, as compared to 21.9% in 2012.

Sales price increases contributed 1.3 percentage points of the increase.

Packaging Systems' gross margin increased by 1.5 margin points in 2013, primarily as a result of sales price increases and an improved product mix, which increased Packaging Systems' gross margin by 2.3 margin points.

These favorable items were partially offset by the impact of increased compensation and plant overhead costs in excess of efficiency gains, which combined to decrease Packaging Systems' gross margin by 0.8 margin points.

Delivery Systems’ gross margin decreased by 0.1 margin points in 2013, as the impact of increased compensation and raw material costs in excess of efficiency improvements combined to decrease Delivery Systems' gross margin by 1.4 margin points.

These unfavorable items were largely offset by the impact of sales price increases and an improved product mix, which increased Delivery Systems' gross margin by 1.3 margin points.

Consolidated R&D costs increased by $4.7 million, or 14.2%, in 2013.

Packaging Systems – Packaging Systems' R&D costs increased by $2.4 million, or 18.9%, in 2013, as a result of increased investment in next-generation packaging components.

Delivery Systems – Delivery Systems' R&D costs increased by $2.3 million, or 11.2%, in 2013, as a result of development work on SmartDose and the SelfDose and ConfiDose systems.

Consolidated SG&A costs for both 2013 and 2012 were 17.2% of consolidated net sales for 2013 and 2012.

Packaging Systems – Packaging Systems' SG&A costs increased by $11.7 million, or 10.0%, in 2013, as a result of increased compensation costs mainly related to merit and headcount increases, particularly in Asia, incremental consulting costs for supply chain initiatives and information technology projects, incentive compensation cost increases, and foreign currency effects, which increased SG&A costs by $0.4 million.

Delivery Systems – Delivery Systems' SG&A costs increased by $5.6 million, or 15.1%, in 2013, as a result of increased compensation costs, incremental legal, sales and marketing costs, and foreign currency effects, which increased SG&A costs by $0.1 million.

The increase in stock-based compensation expense was due to increased performance-based achievement levels and the impact of higher share prices on our incentive and deferred compensation plan liabilities, which are indexed to our share price.

Unallocated items – During 2014, we recorded a $1.2 million charge for license costs associated with acquired in-process research.

Since February 2013, when the Venezuelan government announced a devaluation of the bolivar, we have used the official exchange rate of 6.3 bolivars to the U.S. dollar to re-measure our Venezuelan subsidiary's financial statements in U.S. dollars.

From December 2013 through February 2015, the Venezuelan government announced a series of changes to the regulations governing its currency exchange market, which included the expanded use of one currency exchange mechanism and the creation of two additional currency exchange mechanisms.

As the majority of our currency purchases are transacted at the official exchange rate of 6.3 bolivars per U.S. dollar, we have continued to re-measure our Venezuelan subsidiary's financial statements using the official exchange rate.

At December 31, 2014, we had $2.0 million in net monetary assets denominated in Venezuelan bolivars, including $1.4 million in cash and cash equivalents.

Use of the official exchange rate has been restricted by the Venezuelan government to companies providing critical supplies, such as food and medicine, and there is no guarantee that we will have access to the official exchange rate in the future.

If we are no longer able to use the official exchange rate in the future, if we determine that we should use one of the other currency exchange mechanisms in Venezuela in the future, or if there is a significant devaluation in the official exchange rate, a pre-tax charge up to the amount of our Venezuelan subsidiary's net monetary assets denominated in bolivars could be required.

We will continue to actively monitor the political and economic developments in Venezuela.

Sales outside of the U.S. accounted for [removed: 54%] [added: 52.0%] of consolidated net sales in [removed: 2014.][added: 2015.]

Virtually all of these sales and related operating costs are denominated in the currency of the local country and translated into [removed: U.S. dollars] [added: USD] for consolidated reporting purposes.

At December 31, [removed: 2014,] [added: 2015,] a net cumulative foreign currency translation gain on these hedges of [removed: $5.4] [added: $5.8] million (net of tax of [removed: $3.3] [added: $3.4] million) was recorded within accumulated other comprehensive loss.

| ($ in millions) | [removed: 2015 | | |] 2016 | | [added: |] 2017 | | 2018 | | 2019 | [added: 2020 | |] Thereafter | | Carrying Value | | | Fair Value | | |

| Current [removed: Debt:] [added: Debt and Capital Leases:] | | | | | | | | | | | | | | | | | | |

| U.S. dollar denominated (1) | $ | [removed: 27.2] [added: 2.5] | | | | | | | | | | | $ | [removed: 27.2] [added: 2.5] | | $ | [removed: 27.2] [added: 2.5] | |

| Average interest rate - variable | [removed: 1.2] [added: 1.7] | | % | | | | | | | | | | | | | | | |

| Long-Term [removed: Debt and Capital Leases:] [added: Debt:] | | | | | | | | | | | | | | | | | | |

| U.S. dollar denominated (1) | | | | [removed: 2.3] [added: 2.2] | | [removed: 2.4] [added: 32.6] | | [removed: 32.6] | | | | | [removed: 37.3] [added: 34.8] | | | [removed: 37.3] [added: 34.8] | | |

| Average interest rate - variable | | | | 1.7 | % | 1.7 | % | [removed: 1.7] | [removed: %] | | | | | | | | | |

| U.S. dollar denominated | | | | | | | | | | | 168.0 | | 168.0 | | | [removed: 166.9] [added: 163.1] | | |

| Euro denominated | | | | [removed: 74.5] | | | | | [added: 22.9] | | | | [removed: 74.5] [added: 22.9] | | | [removed: 77.5] [added: 22.9] | | |

| Average interest rate - [removed: fixed] [added: variable] | [added: 4.4] | | [added: %] | [removed: 4.4] | [removed: %] | | | | | | | | | | | | | |

| Average interest rate - variable | | | | | | [removed: 1.7] | [removed: %] | | [added: 1.7] | [added: %] | | | | | | | | |

| Yen denominated | | | | | | [removed: 4.2] | | | [added: 4.2] | | | | 4.2 | | | 4.2 | | |

| Average interest rate - variable | | | | | | [removed: 1.6] | [removed: %] | | [added: 1.6] | [added: %] | | | | | | | | |

At December 31, [removed: 2014,] [added: 2015,] this agreement had a fair value of [removed: $0.6] [added: $2.0] million, unfavorable to the Company, which was recorded as a [removed: current] [added: noncurrent] liability.

[removed: The second agreement is] [added: (1) As of December 31, 2015, we have] a forward-start interest rate swap [added: outstanding] designed to hedge the variability in cash flows due to changes in the applicable interest rate of our [removed: $39.2] [added: $37.1] million five-year term loan.

Refer to Note 9, Derivative Financial Instruments, for additional information on [removed: these] [added: this] interest rate [removed: hedges.][added: hedge.]

| U.S. dollar denominated | 66.8 | | | | | | | | | | | | 66.8 | | | 66.8 | | |

As of December 31, 2015, there were no options outstanding.

| Euro denominated | | | | | | 25.5 | | | | | | | 25.5 | | | 25.5 | | |

(1) As of December 31, 2014, we have two interest rate swap agreements outstanding.

The first agreement is designed to protect against volatility in variable interest rates payable on our $25.0 million senior floating rate notes maturing July 28, 2015 (“Series B Notes”).

At December 31, 2014, this agreement had a fair value of $3.0 million, unfavorable to the Company, which was recorded as a noncurrent liability.

With these contracts we may benefit from a decline in crude oil prices, as there is no downward exposure other than the $0.1 million premium that we paid to purchase the contracts.

During the year ended December 31, 2014 and 2013, a loss of $0.1 million and $0.1 million, respectively, was recorded in cost of goods and services sold related to call options.

West Pharmaceutical Services, Inc. (which may be referred to as West, the Company, we, us or our) is a manufacturer of components and systems for the packaging and delivery of injectable drugs as well as [removed: delivery system] components for the pharmaceutical, healthcare and consumer products industries.

Our customers include the leading global producers of pharmaceuticals, biologics, medical devices and [removed: personal care] [added: consumer] products.

Daikyo Crystal Zenith® [removed: (“CZ”)] [added: (“CZ®”)] is a registered trademark of Daikyo Seiko, Ltd. ("Daikyo").

Our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available on our website under the Investors - SEC Filings caption as soon as reasonably practical after we electronically file the material with, or furnish it to, the [added: U.S.] Securities and Exchange Commission (“SEC”).

Throughout this Form 10-K, we incorporate by reference certain information from parts of other documents filed with the SEC and from our Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Shareholders [removed: (“2015] [added: (“2016] Proxy Statement”), which will be filed with the SEC within 120 days following the end of our [removed: 2014] [added: 2015] fiscal year.

Our [removed: 2015] [added: 2016] Proxy Statement will be available on our website on or about March 31, [removed: 2015,] [added: 2016,] under the caption Investors - Annual Report & Proxy.

[removed: Our] [added: In 2015, our business operations consisted of two] reportable [removed: segments are] [added: segments,] the Pharmaceutical Packaging Systems segment [removed: (“Packaging Systems”)] [added: ("Packaging Systems")] and the Pharmaceutical Delivery Systems segment (“Delivery Systems”).

Our Packaging Systems segment [removed: develops, manufactures and sells] [added: includes] primary packaging components and systems for injectable drug delivery, including stoppers and seals for vials, closures and other components used in syringe, intravenous and blood collection systems, and prefillable syringe components.

West [removed: FluroTec] [added: FluroTec®] barrier film is applied to reduce the risk of product loss by contamination and protect the shelf life of packaged drugs.

We also apply a [removed: Teflon coating] [added: fluoropolymer laminate] to the surface of stoppers and plungers to improve compatibility between the closure and the drug.

B2-coating is a coating applied to the surface of stoppers and plungers [removed: using a process that] [added: which] eliminates the need for conventional silicone application.

In addition, our Westar® RS and [removed: Westar] [added: Westar®] RU post-manufacturing processes are documented and fully validated procedures for [removed: washing and] [added: washing,] siliconizing [added: and sterilizing] stoppers and syringe [removed: components to remove biological materials and endotoxins.][added: components.]

These processes increase the overall efficiency of injectable drug production by outsourcing component processing, thereby eliminating steps otherwise required in [removed: each of] our customers' manufacturing processes, and help to assure compliance with the latest regulatory requirements for component preparation.

We also offer Envision™ components that are inspected using automated vision inspection systems, ensuring that components (plungers and stoppers) meet enhanced quality specifications for visible and subvisible particulate [removed: and] contamination.

West Analytical Services provides [removed: us and our] customers with in-depth knowledge and analysis of the interaction and compatibility of drug products with elastomer, glass and plastic packaging components.

Our Delivery Systems segment [removed: develops, manufactures and sells] [added: includes] safety and administration systems, multi-component systems for drug [added: containment and] administration and a variety of custom contract-manufacturing solutions targeted to the healthcare and consumer-products industries.

In addition, Delivery Systems is responsible for the continued development and commercialization of our line of proprietary healthcare, administrative and advanced injection systems, including Daikyo [removed: CZ,] [added: CZ®,] SmartDose® and other systems.

Delivery Systems [removed: offers] [added: includes] a variety of products and services, which are described below:

We offer customer contract-manufacturing and assembly solutions, which use such technologies as multi-component molding, in-mold labeling, ultrasonic welding and clean room molding and device assembly used to manufacture customer-owned components and devices used in surgical, diagnostic, ophthalmic, other drug delivery systems, [removed: personal care] and consumer products.

Our administration systems include sterile devices for the [added: preparation and] administration of drug products, including patented products such as the MixJect® transfer device, the Mix2Vial® needleless reconstitution [removed: system] [added: system, the Vial2Bag® system,] and [added: a variety of] vial adapters.

Examples of our safety systems that are designed to prevent needle sticks are [removed: érisTM] [added: éris™] and NovaGuard® SA for prefilled syringes and [removed: NovaGuard] [added: NovaGuard®] LP for luer lock syringes.

The Daikyo CZ 1ml long Insert Needle syringe system is the market's first [added: polymer] syringe system without silicone oil lubrication applied to the barrel or plunger that incorporates an insert-molded needle to avoid the need for adhesive.

This system is designed for controlled, subcutaneous delivery of high volume and high viscosity drugs, using [removed: prefilled] [added: prefillable] Daikyo CZ cartridges.

Sales outside of the U.S. accounted for [removed: 54%] [added: 52.0%] of consolidated net sales in [removed: 2014.][added: 2015.]

These risks include currency fluctuations relative to the U.S. [removed: dollar,] [added: Dollar ("USD"),] multiple tax jurisdictions and, particularly in South America and Israel, political and social issues that could destabilize local markets and affect the demand for our products.

Intellectual Property [removed: Rights]

Our Packaging Systems customers include [removed: practically every] [added: most of the] major branded pharmaceutical, generic and biopharmaceutical [removed: company] [added: companies] in the world.

Our Delivery Systems segment sells to many of the world's largest pharmaceutical, biopharmaceutical and medical device companies and to large customers within the [removed: personal care] [added: consumer] and food-and-beverage industries.

Our ten largest customers accounted for [removed: 40.2%] [added: 42.0%] of our consolidated net sales in [removed: 2014,] [added: 2015,] but none of these customers individually accounted for more than 10% of net sales.

At December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] the order backlog for Packaging [removed: Systems, excluding consigned inventory,] [added: Systems] was [removed: $339.7] [added: $413.2] million and [removed: $315.6] [added: $339.7] million, respectively.

The increase in [removed: the order] backlog [removed: for Packaging Systems] primarily reflects [removed: a return to normal levels,] [added: changes in customer ordering patterns and extended lead-times for certain high-value products,] partially offset by an unfavorable foreign currency impact.

The entire order backlog for Packaging Systems at December 31, [removed: 2014] [added: 2015] is expected to be filled during [removed: 2015.][added: 2016.]

We differentiate ourselves from our competition as [removed: a "full-service, value-added"] [added: an integrated drug packaging and delivery systems] global supplier that can provide pre-sale [removed: formula] [added: primary packaging support] and engineering development, analytical services, [removed: regulatory expertise and post-manufacturing technologies, as well as after-sale technical support.]

Our Delivery Systems business [removed: competes] [added: operates] in very competitive markets for both healthcare and consumer products.

The competition varies from smaller regional companies to large global [removed: molders that command significant market shares.][added: molders.]

[removed: There are] [added: Given the] extreme cost pressures [removed: and] [added: they face,] many of our customers look off-shore to reduce cost.

We continue to seek new innovative opportunities for acquisition, licensing, partnering or development [removed: within] [added: of products, services and technologies that serve the] injectable [removed: packaging] [added: drug containment] and delivery [removed: systems, most of which will be manufactured and marketed by our Delivery Systems segment.][added: market.]

Research and development spending will continue to increase as we pursue innovative strategic platforms in prefillable [removed: syringe,] [added: syringes,] injectable [removed: container,] [added: containers,] advanced injection and safety and administration systems.

We spent [removed: $16.3] [added: $14.4] million in [removed: 2014, $15.1] [added: 2015, $16.3] million in [removed: 2013,] [added: 2014,] and [removed: $12.7] [added: $15.1] million in [removed: 2012] [added: 2013] on research and development for Packaging Systems.

Delivery Systems incurred research and development costs of [removed: $21.0] [added: $19.7] million, [removed: $22.8] [added: $21.0] million, and [removed: $20.5] [added: $22.8] million in the years [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012,] [added: 2013,] respectively.

Beginning in 2016, we are changing our organization and reporting structure for our next phase of growth and development, which will result in a change to Proprietary Products and Contract-Manufactured Products as reportable segments.

The Proprietary Products reportable segment, which will combine the existing Packaging Systems segment with the proprietary products portion of the existing Delivery Systems segment, will develop commercial, operational, and innovation strategies across our global network, with specific emphasis on product offerings to biologic, generic, and pharmaceutical customers.

The Contract-Manufactured Products reportable segment, which will consist of the contract manufacturing portion of the existing Delivery Systems segment, will serve as a fully integrated business focused on the design, manufacture, and automated assembly of complex assemblies for pharmaceutical and medical device customers.

The information and discussion included in this Form 10-K reflects the structure in place as of December 31, 2015.

In 2015, we launched Daikyo RUV components, which are manufactured using clean, high-quality elastomer formulations and then washed, camera-inspected and sterilized to help reduce the customer’s manufacturing footprint, streamline processes, minimize risks around component preparation and eliminate bioburden.

Our newest sterile drug vial seal, the Flip-Off PlusRU seal, provides drug manufacturers around the world with ready-to-use, high-quality seals that consistently achieve reproducible and safe container integrity for drug products while minimizing levels of bioburden and particulates.

The development of our SmartDose electronic wearable injector continues to gain momentum in the marketplace, with multiple active development programs in place.

In 2015, we had orders being placed further in advance by certain customers, some as much as a year, while others focused more on short-term stock-building.

regulatory expertise and after-sale technical support.

There are a small number of competitors supplying medical devices and medical devices components.

We also have specialized knowledge of container and closure components, which is integral to developing delivery systems.

Teflon® is a registered trademark of E.I. du Pont de Nemours and Company.

Our business operations are organized into two reportable segments, which are aligned with the underlying markets and customers they serve.

Our SmartDose electronic patch injector system is under evaluation by several biopharmaceutical companies.

Although important in the aggregate, we do not consider our business to be materially dependent on any individual patent or license.

In 2013, several customers completed strategic stock-building, which resulted in a reduced order backlog at December 31, 2013.

However, we believe that we supply a major portion of the U.S. market for pharmaceutical elastomer and metal packaging components and also have a significant share of the European market for these components.

The markets we serve are also served by many competitors and, therefore, our market shares are generally less than 5% of the total global markets.

Because of the more demanding regulatory requirements in the medical device component area, there are a smaller number of competitors, mostly large-scale companies.

For the fiscal year ended December 31, [removed: 2014][added: 2015]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, [removed: 2014] [added: 2015] was approximately [removed: $2,985,690,126] [added: $4,181,975,535] based on the closing price as reported on the New York Stock Exchange.

As of January 31, [removed: 2015,] [added: 2016,] there were [removed: 71,495,486] [added: 72,333,516] shares of the registrant's common stock outstanding.

| Proxy Statement for the Annual Meeting of Shareholders to be held May [removed: 5, 2015] [added: 3, 2016] | Part III |

| [PART [removed: I](#s998A9F6927EB0959DA6C80A6D3E9CB9D)] [added: I](#s3C372C67DEA87E25F74D5DE39A9F3237)] | | Page |

| [ITEM [removed: 1.](#sC7BEF866FD2AAF87C73780A6D41893AF)] [added: 1.](#sB9D37D5006C4D60520F85DE39ADDA60B)] | BUSINESS | [removed: [3](#sC7BEF866FD2AAF87C73780A6D41893AF)] [added: [3](#sB9D37D5006C4D60520F85DE39ADDA60B)] |

| [ITEM [removed: 1A.](#s5363B6BE6E5D97C1D0DE80A6D437AC34)] [added: 1A.](#s79A0D42BD513945EEBB25DE39AFDE0EC)] | RISK FACTORS | [removed: [8](#s5363B6BE6E5D97C1D0DE80A6D437AC34)] [added: [9](#s79A0D42BD513945EEBB25DE39AFDE0EC)] |

| [ITEM [removed: 1B.](#sA04B4C811B5AE82F146880A6D466F4DA)] [added: 1B.](#s0E077C356E39F55CC6BF5DE39B2B69FD)] | UNRESOLVED STAFF COMMENTS | [removed: [14](#sA04B4C811B5AE82F146880A6D466F4DA)] [added: [16](#s0E077C356E39F55CC6BF5DE39B2B69FD)] |

| [ITEM [removed: 2.](#s77DCA41409DFDEF74B8380A6D4954363)] [added: 2.](#s4C8D73A0B435D4D725365DE38B440BEC)] | PROPERTIES | [removed: [15](#s77DCA41409DFDEF74B8380A6D4954363)] [added: [17](#s4C8D73A0B435D4D725365DE38B440BEC)] |

| [ITEM [removed: 3.](#s4677CB432710F1668ABB80A6D4C3AD5E)] [added: 3.](#sFFDDC16A5573DA5D214B5DE39B8942AE)] | LEGAL PROCEEDINGS | [removed: [16](#s4677CB432710F1668ABB80A6D4C3AD5E)] [added: [18](#sFFDDC16A5573DA5D214B5DE39B8942AE)] |

| [ITEM [removed: 4.](#s72626C706712D18A6ADF80A6D4E34F81)] [added: 4.](#s8BE90783128C5473FF775DE39BA8FD49)] | MINE SAFETY DISCLOSURES | [removed: [16](#s72626C706712D18A6ADF80A6D4E34F81)] [added: [18](#s8BE90783128C5473FF775DE39BA8FD49)] |

| [EXECUTIVE OFFICERS OF THE [removed: COMPANY](#s427A09C2CD58F53A7BE480A6D511145A)] [added: COMPANY](#s6B15CAB256520159FE5C5DE39BD74E7E)] | | [removed: [16](#s427A09C2CD58F53A7BE480A6D511145A)] [added: [18](#s6B15CAB256520159FE5C5DE39BD74E7E)] |

| [ITEM [removed: 5.](#s0EC335D4EA8255CF5C6380A6B0818999)] [added: 5.](#s26FB3F1067277DB929925DE38C2ECD1F)] | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | [removed: [18](#s0EC335D4EA8255CF5C6380A6B0818999)] [added: [20](#s26FB3F1067277DB929925DE38C2ECD1F)] |

| [ITEM [removed: 6.](#s266303F5A4342FB4223F80A6B053D2D6)] [added: 6.](#s3113CE306573BF2A1B575DE38BC0CD7E)] | SELECTED FINANCIAL DATA | [removed: [20](#s266303F5A4342FB4223F80A6B053D2D6)] [added: [22](#s3113CE306573BF2A1B575DE38BC0CD7E)] |

| [ITEM [removed: 7.](#sCF7DF1E810A87616CFCC80A6D5BDF137)] [added: 7.](#s3E7839A4E8602CF51A265DE39C833F1C)] | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | [removed: [22](#sCF7DF1E810A87616CFCC80A6D5BDF137)] [added: [24](#s3E7839A4E8602CF51A265DE39C833F1C)] |

| [ITEM [removed: 7A.](#sA6726D3A920F7E4D1DA380A6B0148F0B)] [added: 7A.](#sDC85073E7005D98A5C915DE38B630230)] | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | [removed: [38](#sA6726D3A920F7E4D1DA380A6B0148F0B)] [added: [39](#sDC85073E7005D98A5C915DE38B630230)] |

| [ITEM [removed: 8.](#sA31C8699B808908D664980A6D6596B13)] [added: 8.](#s1433C0D690E9DE3F25BC5DE39D1F6BC5)] | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | [removed: [40](#sA31C8699B808908D664980A6D6596B13)] [added: [41](#s1433C0D690E9DE3F25BC5DE39D1F6BC5)] |

| [ITEM [removed: 9.](#s9D5E37A7EFF9E8C26B0B80A6DB68A100)] [added: 9.](#s9FD8E5BF1D1807D847A95DE3A26CBCC4)] | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | [removed: [76](#s9D5E37A7EFF9E8C26B0B80A6DB68A100)] [added: [79](#s9FD8E5BF1D1807D847A95DE3A26CBCC4)] |

| [ITEM [removed: 9A.](#sC637D4717C14DAF6F35080A6DB973CED)] [added: 9A.](#s323982E47A2A6454E5A25DE3A2BA3B6A)] | CONTROLS AND PROCEDURES | [removed: [76](#sC637D4717C14DAF6F35080A6DB973CED)] [added: [79](#s323982E47A2A6454E5A25DE3A2BA3B6A)] |

| [ITEM [removed: 9B.](#sB97AB4664EFA3E35E67C80A6DBB65A9D)] [added: 9B.](#sEF92EEEBF38780606C1F5DE3A2C90B5D)] | OTHER INFORMATION | [removed: [77](#sB97AB4664EFA3E35E67C80A6DBB65A9D)] [added: [80](#sEF92EEEBF38780606C1F5DE3A2C90B5D)] |

| [PART [removed: III](#s4876D33CDBF6EB80E96380A6DBE53884)] [added: III](#s934177AF3C58B9744B4E5DE3A2F8CF96)] | | |

| [ITEM [removed: 10.](#s09F8BBDC769F0815F12780A6DC042593)] [added: 10.](#sB354E46C87C0A106EEFD5DE3A317F96D)] | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | [removed: [77](#s09F8BBDC769F0815F12780A6DC042593)] [added: [80](#sB354E46C87C0A106EEFD5DE3A317F96D)] |

| [ITEM [removed: 11.](#s745E249727F1A13782C980A6DC421ED3)] [added: 11.](#sB253698972C6E276ED115DE3A356A77C)] | EXECUTIVE COMPENSATION | [removed: [77](#s745E249727F1A13782C980A6DC421ED3)] [added: [80](#sB253698972C6E276ED115DE3A356A77C)] |

| [ITEM [removed: 12.](#s961B00391744B28C8A5780A6B4A68D0E)] [added: 12.](#sE083CF710506B9F123A55DE38BE05162)] | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | [removed: [77](#s961B00391744B28C8A5780A6B4A68D0E)] [added: [80](#sE083CF710506B9F123A55DE38BE05162)] |

| [ITEM [removed: 13.](#s4FFA27F881891E919CE180A6DC90DDA1)] [added: 13.](#sC96C03837914E209A2DB5DE3A3A4CCB3)] | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | [removed: [78](#s4FFA27F881891E919CE180A6DC90DDA1)] [added: [81](#sC96C03837914E209A2DB5DE3A3A4CCB3)] |

| [ITEM [removed: 14.](#sD523C1040A73DCC240F680A6DCAFC667)] [added: 14.](#s6757B3A1368534EC33D25DE3A3C3990F)] | PRINCIPAL ACCOUNTING FEES AND SERVICES | [removed: [78](#sD523C1040A73DCC240F680A6DCAFC667)] [added: [81](#s6757B3A1368534EC33D25DE3A3C3990F)] |

| [ITEM [removed: 15.](#sDC3A6BCF9D7ABF61712280A6ABC1927B)] [added: 15.](#s10C6D203E113ED3510905DE388D3170D)] | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | [removed: [78](#sDC3A6BCF9D7ABF61712280A6ABC1927B)] [added: [81](#s10C6D203E113ED3510905DE388D3170D)] |

| [EXHIBIT [removed: INDEX](#sE4DB83759988AC8E137080A6DD5B3684)] [added: INDEX](#s3055338BE2D8F34C84885DE3A46F6B68)] | | [removed: [F-1](#sE4DB83759988AC8E137080A6DD5B3684)] [added: [F-1](#s3055338BE2D8F34C84885DE3A46F6B68)] |

10-K 1 wst10k123115.htm 10-K

| [PART II](#s1E6364425DD0C11B1A985DE39BF6E4BF) | | |

| [PART IV](#sFBF654CC95415B0E0EC85DE3A3F21641) | | |

| [SIGNATURES](#s3901CDCEE56D9DBB403C5DE3A44F60F0) | | [83](#s3901CDCEE56D9DBB403C5DE3A44F60F0) |

10-K 1 wst10k123114.htm 10-K

| [PART II](#sFBEAF48C7A429236F76580A6D5310C82) | | |

| [PART IV](#s7540E1A2D4C5F74BCAC780A6DCDE212F) | | |

| [SIGNATURES](#sC17A9F03A77B1C1B78D580A6DD3C7B6D) | | [80](#sC17A9F03A77B1C1B78D580A6DD3C7B6D) |

| Packaging Systems | | | | | [removed: | | |]

| [removed: |] North American Operations | | [added: European Operations] | | North American Operations | [removed: | |]

| [removed: | |] United States | | [added: England] | | United States | [removed: |]

| [removed: | | |] Jersey Shore, PA | | [added: England] | | [added: India] |

| [removed: | | | Kearney, NE |] Mold-and-Die Tool [removed: Shops:] [added: Shop:] | | | | [added: Contract Analytical Laboratory: |]

| [removed: | | | Kinston, NC | |] North American Operations | | [added: European Operations] | [added: | |]

| [removed: | | | Lititz, PA] [added: United States] | | [added: France] | [removed: United States] | |

| [removed: | | |] St. Petersburg, FL (1) | | [added: Germany] | | [removed: Upper Darby, PA] |

| [removed: |] South American Operations | | [removed: | | European Operations] [added: Stolberg] | | |

| [removed: | | |] Sao Paulo | | [added: Kovin] | | [removed: Bodmin (2)] |

| [removed: | | Denmark | |] Delivery Systems | | | | [added: |]

| [removed: | | | Horsens |] Manufacturing: | | | | [added: |]

| [removed: | | | | |] North American Operations | | [added: European Operations] | [added: | Asia Pacific Operations |]

| [removed: | | England |] [added: United States] | | [added: Denmark] | [removed: United States] | [added: China] |

| [removed: | | |] [added: Grand Rapids, MI] | | [added: Ireland] | | [removed: Grand Rapids, MI] |

| [removed: | | | Le Nouvion] [added: Scottsdale, AZ (2)(3)] | | | | [removed: Scottsdale, AZ (2)(3)] |

| [removed: | | |] [added: Tempe, AZ (2)] | | | | [removed: Tempe, AZ (2)] |

| [removed: | | Germany |] [added: Williamsport, PA] | | | | [removed: Williamsport, PA] |

| | | [removed: |] Eschweiler (1) | | | [removed: | |]

| [removed: | | | Stolberg] [added: Puerto Rico] | | | [removed: Puerto Rico] | |

| [removed: | | |] [added: Cayey] | | | | [removed: Cayey] |

| [added: Brazil] | | Serbia | | | [removed: | | |]

| [removed: | | | | |] [added: Phoenix, AZ (2)] | | Dublin (2) | [added: | |]

| [added: Kearney, NE] | | [added: St. Austell] | [added: |] Sri City | [removed: | | | |]

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| Clearwater, FL | | Horsens | | Qingpu |

| Kinston, NC | | France | | Singapore |

| Lititz, PA | | Le Nouvion | | Jurong |

| | | | | |

| Upper Darby, PA | | Bodmin (2) | | Exton, PA |

| | | | | |

| Manufacturing: | | | | |

| Frankford, IN (2) | | Le Vaudreuil (2) | | |

| | | | | |

Construction began in July 2015.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Manufacturing: | | | | Contract Analytical Laboratory: | | | |

| | | | Clearwater, FL | | | | Exton, PA |

| | | Brazil | | | | England | |

| | European Operations | | | | | | |

| | | | St. Austell | | | | Frankfort, IN (2) |

| | | France | | | | | Phoenix, AZ (2) |

| | | | Kovin | | European Operations | | |

| | | | | | | France | |

| | Asia Pacific Operations | | | | | | Le Vaudreuil (2) |

| | | China | | | | | |

| | | | Qingpu | | | Ireland | |

| | | India | | | | | |

| | | Singapore | | | | | |

| | | | Jurong | | | | |

Construction is planned to begin in 2015, subject to the project obtaining requisite planning and zoning approvals.

| Michael A. Anderson | [removed: 59] [added: 60] | Vice President and Treasurer since June 2001. He was Finance Director, Drug Delivery Systems Division from October 1999 to June 2001, Vice President, Business Development from April 1997 to October 1999 and Director of Taxes from July 1992 to April 1997. |

| Warwick Bedwell | [removed: 55] [added: 56] | President, Pharmaceutical Packaging Systems Asia Pacific Region since January 3, 2011. Previously, he served as Vice President and Commercial Director-Bone and Rheumatology for Roche Products (UK) Limited, a biotech company, from October 2008 to August 2010. From January 2007 to October 2008, he served as Vice President and Global Head of Business Development for Hoffman LaRoche Inc. (U.S.) and from June 2003 to December 2006, he served as President and General Manager of Roche Inc. in the Philippines. Prior thereto, he held numerous positions in commercial operations for Roche Products Pty Ltd. in Australia. |

| William J. Federici | [removed: 55] [added: 56] | Senior Vice [removed: President,] [added: President] and Chief Financial Officer since joining the Company in August 2003. He was National Industry Director for Pharmaceuticals of KPMG LLP (accounting firm) from June 2002 until August 2003 and, prior thereto, an audit partner with Arthur Andersen, LLP. |

| Karen A. Flynn | [removed: 52] [added: 53] | President, Pharmaceutical Packaging Systems since October 2014. She was President, Pharmaceutical Packaging Systems Americas Region from June 2012 to October 2014 and served as Vice President, Sales from May 2008 to June 2012. From 2000 to 2008, she worked in Sales Management, most recently as Vice President, Global Accounts, for Catalent (formerly [removed: known as] [added: a business segment of] Cardinal Health). Prior thereto, she held various positions at West, including Quality, Research and Development, and Sales. |

| Heino Lennartz | [removed: 49] [added: 50] | President, Pharmaceutical Packaging Systems Europe Region since February 2010 and, prior thereto, President, Europe, Pharmaceutical Systems since July 2009. He was Vice President Finance, MIS & Purchasing for Europe & Asia Pacific from December 2006 until July 2009. Mr. Lennartz was Vice President Corporate Finance of AIXTRON AG, a leading semiconductor equipment company, from 2003 to 2006 and, prior thereto, held various positions, including Director Business Systems Europe, at GDX Automotive, a rubber and plastic car body sealing system supplier. |

| Daniel Malone | [removed: 53] [added: 54] | Vice President and Corporate Controller since August 2011. He was Vice President of Finance, Pharmaceutical Packaging Systems Americas Region from September 2008 to August 2011 and Director of Financial and Management Reporting from October 1999 to September 2008. |

| John E. Paproski | [removed: 58] [added: 59] | President, Pharmaceutical Delivery Systems since December 2009. He was Vice President of Innovation, from January 2005 to December 2009 and Vice President, Global Product Development from August 1996 to January 2005. He has held numerous other operations and engineering positions within the Company, including Vice President of Rubber Operations from August 1993 to January 2005 and Director of Manufacturing Engineering from 1991 to 1993. |

| Annette F. Favorite | 51 | Senior Vice President and Chief Human Resources Officer since October 2015. Prior to joining West, she spent more than 25 years at IBM Corporation, an information technology services company, in a number of strategic and global human resources roles. Most recently, she served as Vice President, Global Talent Management. |

| Eric M. Green | 46 | Chief Executive Officer since April 2015 and President since December 2015. Prior to joining West, he was Executive Vice President and President of the Research Markets business unit at Sigma-Aldrich Corporation, a leading life science and technology company, from 2013 to 2015. From 2009 to 2013, he served as Vice President and Managing Director, International, where he was responsible for Asia Pacific and Latin America, and prior thereto, held various commercial and operational roles. |

| George L. Miller | 61 | Senior Vice President, General Counsel and Corporate Secretary since joining West in November 2015. Previously, he served as Senior Vice President, General Counsel and Corporate Secretary for Sigma-Aldrich Corporation from 2009 to 2015. Prior to working at Sigma-Aldrich, he held senior legal positions with Novartis AG, a global healthcare company. |

| | | |

| Christopher G. Ryan | 55 | President, Pharmaceutical Packaging Systems Americas Region since February 2015. Previously, he served as Global Business Leader and Strategic Marketer for the Industrial Product Division at W.L. Gore. Prior to serving in this role, he led a Global Consumer Performance Fabric Business Unit at the same company. Prior thereto, he held various senior positions at Cargill, Inc. |

| John R. Gailey III | 60 | Senior Vice President, General Counsel since May 1994, and Chief Compliance Officer. He served as Corporate Counsel from 1991 until his appointment as General Counsel. |

| Richard D. Luzzi | 63 | Senior Vice President, Human Resources since June 2002. He served as Vice President, Human Resources of GS Industries, a steel manufacturer, from 1998 to 2002, Vice President, Human Resources of Lukens Steel from 1993 to 1998, and Vice President, Human Resources of Rockwell International, from 1990 to 1993. |

| Donald E. Morel, Jr., Ph.D. | 57 | Chairman of the Board of the Company since March 2003 and our Chief Executive Officer since April 2002. He was our President from April 2002 to June 2006 and Chief Operating Officer from May 2001 to April 2002. He was Division President, Drug Delivery Systems from October 1999 to May 2001, and prior thereto, Group President. |

As of January 31, [removed: 2015,] [added: 2016,] we had [removed: 891] [added: 861] shareholders of record, which excludes shareholders whose shares were held by brokerage firms, depositaries and other institutional firms in “street names” for their customers.

Our common stock paid a quarterly dividend of [removed: $0.095] [added: $0.10] per share in each of the first three quarters of [removed: 2013; $0.10] [added: 2014; $0.11] per share in the fourth quarter of [removed: 2013] [added: 2014] and each of the first three quarters of [removed: 2014;] [added: 2015;] and [removed: $0.11] [added: $0.12] per share in the fourth quarter of [removed: 2014.][added: 2015.]

The following table shows information with respect to purchases of our common stock made during the three months ended December 31, [removed: 2014] [added: 2015] by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act:

| Period | | Total number of shares purchased (1) | | | Average price paid per share | | | | Total number of shares purchased as part of publicly announced plans or programs (2) | | | Maximum number of shares that may yet be purchased under the plans or programs (2) | [added: |]

| (1) | Includes [removed: 440] [added: 310] 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. |

The following [added: performance] graph compares the cumulative total return to holders of our common stock with the cumulative total return of the [added: following] Standard & Poor's [added: ("S&P") indices, for the five years ended December 31, 2015: MidCap 400 Index, 400 Health Care Equipment & Supplies Industry,] SmallCap 600 Index and [removed: the Standard & Poor's] 600 Health Care Equipment & Supplies [removed: Industry for the five years ended December 31, 2014.][added: Industry.]

The Company's cumulative shareholder return is based on an investment of $100 on December 31, [removed: 2009] [added: 2010] and is compared to the cumulative total return of the [removed: SmallCap 600 Index and the 600 Health Care Equipment & Supplies Industry] [added: S&P indices mentioned above] over the period with a like amount invested.

[removed: ][added: ]

| 2015 | 60.30 | 48.66 | 60.00 | 52.73 | 61.73 | 53.10 | 64.59 | 52.79 | 64.59 | 48.66 |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| October 1 – 31, 2015 | | 20 | | | $ | 53.34 | | | — | | | — | |

| November 1 – 30, 2015 | | 220 | | | 61.55 | | | | — | | | — | |

| December 1 – 31, 2015 | | 70 | | | 61.41 | | | | — | | | — | |

| Total | | 310 | | | $ | 60.99 | | | — | | | — | |

| (2) | In December 2015, we announced a share repurchase program authorizing the repurchase of up to 700,000 shares of the Company’s 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. The program commenced on January 1, 2016 and is expected to be completed by December 31, 2016. The Company's previously-authorized share repurchase program expired on December 31, 2015. |

Due to the appreciation in the Company's share value, the S&P added the Company to its midcap indices in 2015, and removed the Company from their smallcap indices, which were shown in the prior-year Form 10-K.

| 2013 | 32.74 | 27.31 | 35.45 | 30.85 | 41.54 | 35.25 | 50.60 | 39.62 | 50.60 | 27.31 |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 – 31, 2014 | | — | | | $ | — | | | — | | | (2) |

| November 1 – 30, 2014 | | 380 | | | 51.05 | | | | — | | | (2) |

| December 1 – 31, 2014 | | 60 | | | 53.68 | | | | — | | | (2) |

| Total | | 440 | | | $ | 51.41 | | | — | | | (2) |

| (2) | On October 29, 2014, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock from time to time on the open market or in privately negotiated transactions as permitted under the regulations of the Securities and Exchange Commission. The extent to which we repurchase the shares and the timing of any repurchases will be determined by us based on our evaluation of market conditions and other factors. The program is expected to be completed no later than December 31, 2015. As of December 31, 2014, no shares had been repurchased under the program. |

| (in millions, except per share data) | [added: 2015 | | |] 2014 | | | 2013 | | | 2012 | | | 2011 | | | [removed: 2010 | | |]

| Net sales | $ | [removed: 1,421.4] [added: 1,399.8] | | $ | [removed: 1,368.4] [added: 1,421.4] | | $ | [removed: 1,266.4] [added: 1,368.4] | | $ | [removed: 1,192.3] [added: 1,266.4] | | $ | [removed: 1,104.7] [added: 1,192.3] | |

| Operating profit | [added: 128.6 | | |] 182.0 | | | 162.4 | | | 135.1 | | | 109.6 | | | [removed: 90.7 | | |]

| Net income | [removed: $] [added: 95.6] | [added: | |] 127.1 | | [removed: $] | 112.3 | | [removed: $] | 80.7 | | [removed: $] | 75.5 | | [removed: $] | [removed: 65.3 | |]

| Basic (1) | $ | [removed: 1.79] [added: 1.33] | | $ | [removed: 1.61] [added: 1.79] | | $ | [removed: 1.19] [added: 1.61] | | $ | [removed: 1.12] [added: 1.19] | | $ | [removed: 0.98] [added: 1.12] | |

| Diluted (2) | [added: 1.30 | | |] 1.75 | | | 1.57 | | | 1.15 | | | 1.08 | | | [removed: 0.95 | | |]

| Weighted average common shares outstanding | [added: 72.0 | | |] 70.9 | | | 69.6 | | | 68.1 | | | 67.3 | | | [removed: 66.7 | | |]

| Weighted average shares assuming dilution | [added: 73.8 | | |] 72.8 | | | 71.4 | | | 71.8 | | | 74.0 | | | [removed: 73.5 | | |]

| Dividends declared per common share | $ | [removed: 0.41] [added: 0.46] | | $ | [removed: 0.39] [added: 0.41] | | $ | [removed: 0.37] [added: 0.39] | | $ | [removed: 0.35] [added: 0.37] | | $ | [removed: 0.33] [added: 0.35] | |

| Cash and cash equivalents | $ | [removed: 255.3] [added: 274.6] | | $ | [removed: 230.0] [added: 255.3] | | $ | [removed: 161.9] [added: 230.0] | | $ | [removed: 91.8] [added: 161.9] | | $ | [removed: 110.2] [added: 91.8] | |

| Total equity | [added: 1,023.9 | | |] 956.9 | | | 906.4 | | | 728.9 | | | 654.9 | | | [removed: 625.7 | | |]

| Gross margin (a) | [removed: 31.5] [added: 32.6] | | % | [removed: 31.8] [added: 31.5] | | % | [removed: 30.6] [added: 31.8] | | % | [removed: 28.5] [added: 30.6] | | % | [removed: 28.8] [added: 28.5] | | % |

| Operating profitability (b) | [removed: 12.8] [added: 9.2] | | % | [removed: 11.9] [added: 12.8] | | % | [removed: 10.7] [added: 11.9] | | % | [removed: 9.2] [added: 10.7] | | % | [removed: 8.2] [added: 9.2] | | % |

| Effective tax rate | [removed: 28.0] [added: 22.6] | | % | [removed: 27.4] [added: 28.0] | | % | [removed: 30.2] [added: 27.4] | | % | [removed: 25.3] [added: 30.2] | | % | [removed: 18.3] [added: 25.3] | | % |

| Return on invested capital (c) [added: †] | [removed: 10.2] [added: 7.6] | | % | [removed: 9.8] [added: 10.2] | | % | [removed: 8.8] [added: 9.8] | | % | [removed: 8.2] [added: 8.8] | | % | [removed: 7.6] [added: 8.2] | | % |

| Net debt-to-total invested capital (d) [added: †] | [removed: 7.8] [added: 2.3] | | % | [removed: 13.7] [added: 7.7] | | % | [removed: 25.5] [added: 13.6] | | % | [removed: 28.2] [added: 25.4] | | % | [removed: 28.4] [added: 28.2] | | % |

| Research and development expenses | $ | [removed: 37.3] [added: 34.1] | | $ | [removed: 37.9] [added: 37.3] | | $ | [removed: 33.2] [added: 37.9] | | $ | [removed: 29.1] [added: 33.2] | | $ | [removed: 23.9] [added: 29.1] | |

| Operating cash flow | [added: 212.4 | | |] 182.9 | | | 220.5 | | | 187.4 | | | 130.7 | | | [removed: 138.3 | | |]

| Stock price range | [added: $64.59-48.66 | | |] $55.29-39.11 | | | $50.60-27.31 | | | $28.01-18.68 | | | $23.98-17.75 | | | [removed: $22.42-16.37 | | |]

[removed: They] [added: The following performance measures] are not [removed: measures of financial performance under] [added: in conformity with] U.S. generally accepted accounting principles ("U.S. [removed: GAAP").][added: GAAP") and should not be used as a substitute for the comparable U.S. GAAP financial measures.]

(d) Net debt (total debt less cash and cash equivalents) divided by total invested capital [removed: net of] [added: less] cash and cash equivalents.

| | | | | | | | | | | | | | | | |

| Working capital † | 359.4 | | | 406.6 | | | 413.6 | | | 295.4 | | | 228.8 | | |

| Total assets † | 1,695.1 | | | 1,669.7 | | | 1,670.2 | | | 1,562.5 | | | 1,398.7 | | |

| Total debt † | 298.2 | | | 335.5 | | | 372.1 | | | 410.0 | | | 349.0 | | |

| Total invested capital † | $ | 1,322.1 | | $ | 1,292.4 | | $ | 1,278.5 | | $ | 1,138.9 | | $ | 1,003.9 | |

| | | | | | | | | | | | | | | | |

The non-U.S. GAAP financial measures are included as management uses them in evaluating our results of operations, and believes that this information provides users a valuable insight into our overall performance and financial position.

| † | Reflects the Company's adoption of the guidance issued by the Financial Accounting Standards Board ("FASB") in 2015 regarding the classification of debt issuance costs. |

| ▪ | Net income in 2015 included the impact of a pension settlement charge of $32.0 million (net of $18.4 million in tax), a charge for executive retirement and related costs of $6.9 million (net of $4.0 million in tax) and a discrete tax charge of $0.8 million. |

| | |

| --- | --- |

| Working capital | 406.8 | | | 413.8 | | | 295.5 | | | 228.8 | | | 266.9 | | |

| Total assets | 1,670.9 | | | 1,671.6 | | | 1,564.0 | | | 1,399.1 | | | 1,294.3 | | |

| Total debt | 336.7 | | | 373.5 | | | 411.5 | | | 349.4 | | | 358.4 | | |

| Total invested capital | $ | 1,293.6 | | $ | 1,279.9 | | $ | 1,140.4 | | $ | 1,004.3 | | $ | 984.1 | |

| ▪ | Net income in 2010 included the impact of restructuring charges and asset impairments of $10.2 million (net of $5.7 million in tax), income from the reduction of acquisition-related contingencies of $1.6 million (net of $0.2 million in tax) and the recognition of income tax benefits totaling $1.1 million, the majority of which resulted from the reversal of liabilities for unrecognized tax benefits. |

West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

| | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net sales | | $ | [removed: 1,421.4] [added: 1,399.8] | | | $ | [removed: 1,368.4] [added: 1,421.4] | | | $ | [removed: 1,266.4] [added: 1,368.4] | |

| Cost of goods and services sold | | [removed: 973.6] [added: 944.0] | | | | [removed: 933.7] [added: 973.6] | | | | [removed: 878.7] [added: 933.7] | | |

| Gross profit | | [removed: 447.8] [added: 455.8] | | | | [removed: 434.7] [added: 447.8] | | | | [removed: 387.7] [added: 434.7] | | |

| Research and development | | [removed: 37.3] [added: 34.1] | | | | [removed: 37.9] [added: 37.3] | | | | [removed: 33.2] [added: 37.9] | | |

| Selling, general and administrative expenses | | [removed: 228.7] [added: 233.0] | | | | [removed: 234.9] [added: 228.7] | | | | [removed: 218.1] [added: 234.9] | | |

| Other [removed: (income)] expense [added: (income)] (Note 14) | | [removed: (0.2] [added: 60.1] | | [removed: )] | | [removed: (0.5] [added: (0.2] | | ) | | [removed: 1.3] [added: (0.5] | | [added: )] |

| Operating profit | | [removed: 182.0] [added: 128.6] | | | | [removed: 162.4] [added: 182.0] | | | | [removed: 135.1] [added: 162.4] | | |

| Loss on debt extinguishment | | — | | | | [removed: 0.2] [added: —] | | | | [removed: 11.6] [added: 0.2] | | |

| Interest expense | | [removed: 16.5] [added: 14.1] | | | | [removed: 17.0] [added: 16.5] | | | | [removed: 16.7] [added: 17.0] | | |

| Interest income | | [removed: 3.5] [added: 1.6] | | | | [removed: 1.9] [added: 3.5] | | | | [removed: 1.8] [added: 1.9] | | |

| Income before income taxes | | [removed: 169.0] [added: 116.1] | | | | [removed: 147.1] [added: 169.0] | | | | [removed: 108.6] [added: 147.1] | | |

| Income tax expense | | [removed: 47.2] [added: 26.3] | | | | [removed: 40.2] [added: 47.2] | | | | [removed: 32.7] [added: 40.2] | | |

| Equity in net income of affiliated companies | | [removed: 5.3] [added: 5.8] | | | | [removed: 5.4] [added: 5.3] | | | | [removed: 4.8] [added: 5.4] | | |

| Net income | | $ | [removed: 127.1] [added: 95.6] | | | $ | [removed: 112.3] [added: 127.1] | | | $ | [removed: 80.7] [added: 112.3] | |

| Basic | | $ | [removed: 1.79] [added: 1.33] | | | $ | [removed: 1.61] [added: 1.79] | | | $ | [removed: 1.19] [added: 1.61] | |

| Diluted | | $ | [removed: 1.75] [added: 1.30] | | | $ | [removed: 1.57] [added: 1.75] | | | $ | [removed: 1.15] [added: 1.57] | |

| Basic | | [removed: 70.9] [added: 72.0] | | | | [removed: 69.6] [added: 70.9] | | | | [removed: 68.1] [added: 69.6] | | |

| Diluted | | [removed: 72.8] [added: 73.8] | | | | [removed: 71.4] [added: 72.8] | | | | [removed: 71.8] [added: 71.4] | | |

| Dividends declared per share | | $ | [removed: 0.41] [added: 0.46] | | | $ | [removed: 0.39] [added: 0.41] | | | $ | [removed: 0.37] [added: 0.39] | |

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net income | $ | [removed: 127.1] [added: 95.6] | | | $ | [removed: 112.3] [added: 127.1] | | | $ | [removed: 80.7] [added: 112.3] | |

| Foreign currency translation adjustments | [removed: (71.3] [added: (70.3] | | ) | | [removed: (0.9] [added: (71.3] | | ) | | [removed: 7.0] [added: (0.9] | | [added: )] |

| Net actuarial (loss) gain arising during period, net of tax of [removed: $(10.6), $20.3] [added: $(6.0), $(10.6)] and [removed: $(6.2)] [added: $20.3] | [removed: (18.9] [added: (9.3] | | ) | | [removed: 33.7] [added: (18.9] | | [added: )] | | [removed: (13.2] [added: 33.7] | | [removed: )] |

| Less: amortization of actuarial loss, net of tax of [removed: $1.1, $3.6] [added: $1.6, $1.1] and [removed: $2.8] [added: $3.6] | [removed: 2.0] [added: 2.9] | | | | [removed: 4.9] [added: 2.0] | | | | [removed: 5.7] [added: 4.9] | | |

| Net gains on investment securities, net of tax of [removed: $0.2, $2.1 and] [added: $0.4,] $0.2 [added: and $2.1] | [removed: 0.4] [added: 0.7] | | | | [removed: 3.5] [added: 0.4] | | | | [removed: 0.4] [added: 3.5] | | |

| Net gains [removed: (losses)] on derivatives, net of tax of [removed: $0.9, 1.8] [added: $0.8, 0.9] and [removed: $(2.1)] [added: $1.8] | [removed: 1.7] [added: 1.2] | | | | [removed: 3.0] [added: 1.7] | | | | [removed: (3.6] [added: 3.0] | | [removed: )] |

| Other comprehensive (loss) income, net of tax | [removed: (86.8] [added: (43.4] | | ) | | [removed: 43.5] [added: (86.8] | | [added: )] | | [removed: (4.4] [added: 43.5] | | [removed: )] |

| Comprehensive income | $ | [removed: 40.3] [added: 52.2] | | | $ | [removed: 155.8] [added: 40.3] | | | $ | [removed: 76.3] [added: 155.8] | |

West Pharmaceutical Services, Inc. and Subsidiaries at December 31, [removed: 2014] [added: 2015] and [removed: 2013][added: 2014]

| | [added: 2015 | | | |] 2014 | | | | 2013 | | |

| Cash and cash equivalents | $ | [removed: 255.3] [added: 274.6] | | | $ | [removed: 230.0] [added: 255.3] | |

| Accounts receivable, net | [removed: 179.0] [added: 181.4] | | | | [removed: 185.7] [added: 179.0] | | |

| Inventories | [removed: 181.5] [added: 181.1] | | | | [removed: 176.9] [added: 181.5] | | |

| Deferred income taxes | [removed: 7.8] [added: —] | | | | [removed: 15.9] [added: 7.8] | | |

| Other current assets | [removed: 35.7] [added: 36.6] | | | | [removed: 42.2] [added: 35.5] | | |

| Total current assets | [removed: 659.3] [added: 673.7] | | | | [removed: 650.7] [added: 659.1] | | |

| Property, plant and equipment | [removed: 1,390.8] [added: 1,440.3] | | | | [removed: 1,369.0] [added: 1,390.8] | | |

| Less accumulated depreciation [removed: and amortization] | [removed: 685.0] [added: 719.3] | | | | [removed: 657.3] [added: 685.0] | | |

West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, 2015, 2014 and 2013

| Prior service credit arising during period, net of tax of $0.3 | 0.4 | | | | — | | | | — | | |

| Settlement effects arising during the period, net of tax of $18.7 | 31.7 | | | | — | | | | — | | |

| | 2015 | | | | 2014 | | |

| Total Assets | $ | 1,695.1 | | | $ | 1,669.7 | |

| Total Liabilities | 671.2 | | | | 712.8 | | |

West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, 2015, 2014 and 2013

| Stock-based compensation | — | | | 0.1 | | | | 26.4 | | | | — | | | 0.2 | | | | — | | | | — | | | | 26.7 | | |

| Balance, December 31, 2015 | 72.4 | | | $ | 18.1 | | | $ | 207.8 | | | 0.1 | | | $ | (4.0 | ) | | $ | 964.6 | | | $ | (162.6 | ) | | $ | 1,023.9 | |

West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, 2015, 2014 and 2013

| Pension settlement charge | 50.4 | | | | — | | | | — | | |

| | $ | 181.1 | | $ | 181.5 | |

In November 2015, the FASB issued guidance regarding the balance sheet classification of deferred taxes.

This guidance requires that deferred tax assets and liabilities be classified as noncurrent.

The current requirement that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected by these amendments.

Early adoption is permitted and the amendments may be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented.

In April 2015, the FASB issued guidance regarding the classification of debt issuance costs.

This guidance requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt.

Subsequently, in August 2015, the FASB issued additional guidance which addressed the presentation of debt issuance costs associated with lines of credit, whereby these costs may be presented as an asset and amortized ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings.

Early adoption is permitted for financial statements that have not been previously issued, and retrospective application is required for each balance sheet presented.

We adopted this guidance in the fourth quarter of 2015.

Debt issuance costs previously recorded as an asset, in the amount of $1.0 million and $1.2 million as of December 31, 2015 and 2014, respectively, have been reclassified as a reduction to long-term debt within our consolidated balance sheets.

In September 2015, the FASB issued guidance that simplifies the accounting for measurement-period adjustments in business combinations, by eliminating the requirement to account for those adjustments retrospectively.

Instead, the acquirer will be required to recognize measurement-period adjustments in the reporting period in which the amounts are determined.

In July 2015, the FASB issued guidance regarding the subsequent measurement of inventory.

This guidance requires inventory measured using any method other than last-in, first-out or the retail inventory method to be measured at the lower of cost and net realizable value.

Net realizable value represents estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016.

In April 2015, the FASB issued guidance on the accounting for fees paid by a customer in a cloud computing arrangement.

This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015.

This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015.

This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015.

Management believes that the adoption of this guidance will not have a material impact on our financial statements.

Early adoption is permitted as of one year prior to the current effective date.

| Net income | $ | 95.6 | | | $ | 127.1 | | | $ | 112.3 | |

In December 2015, we announced a share repurchase program authorizing the repurchase of up to 700,000shares of the Company’s 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.

The program commenced on January 1, 2016 and is expected to be completed by December 31, 2016.

The Company’s previously-authorized share repurchase program expired on December 31, 2015.

| | | $ | 1,440.3 | | $ | 1,390.8 | |

| | | | | | | | |

| Total Assets | $ | 1,670.9 | | | $ | 1,671.6 | |

| Total Liabilities | 714.0 | | | | 765.2 | | |

| Balance, December 31, 2011 | 68.6 | | | $ | 17.2 | | | $ | 67.7 | | | 1.2 | | | $ | (23.0 | ) | | $ | 664.5 | | | $ | (71.5 | ) | | $ | 654.9 | |

| Asset impairments | — | | | | — | | | | 6.2 | | |

| | $ | 181.5 | | $ | 176.9 | |

In November 2014, the Financial Accounting Standards Board ("FASB") issued guidance related to pushdown accounting.

Companies now have the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity.

The election to apply pushdown accounting can be made either in the reporting period in which the change-in-control event occurred, or in a subsequent reporting period.

This guidance was effective immediately upon issuance.

In July 2013, the FASB issued revised guidance to address the diversity in practice related to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists.

In March 2013, the FASB issued guidance that clarifies the application of U.S. GAAP to the release of cumulative translation adjustments related to changes of ownership in or within foreign entities, including step acquisitions.

| Numerator: | | | | | | | | | | | |

| Net income, as reported, for basic net income per share | $ | 127.1 | | | $ | 112.3 | | | $ | 80.7 | |

| Plus: interest expense on convertible debt, net of tax | — | | | | — | | | | 2.0 | | |

| Denominator: | | | | | | | | | | | |

On October 29, 2014, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock from time to time on the open market or in privately negotiated transactions as permitted under the regulations of the Securities and Exchange Commission.

The extent to which we repurchase the shares and the timing of any repurchases will be determined by us based on our evaluation of market conditions and other factors.

The program is expected to be completed no later than December 31, 2015.

As of December 31, 2014, no shares had been repurchased under the program.

| | | $ | 1,390.8 | | $ | 1,369.0 | |

| Balance, December 31, 2012 | $ | 36.7 | | $ | 75.8 | | $ | 112.5 | |

| | $ | 76.3 | | $ | (34.3 | ) | $ | 42.0 | | $ | 77.7 | | $ | (29.4 | ) | $ | 48.3 | |

| Other | 16.1 | | | 16.3 | | |

| Term loan, due 2014 (8.40%) | $ | — | | | $ | 0.1 | |

| Term loan, due 2018 (1.66%) | 39.2 | | | | 41.3 | | |

| Convertible debt, due 2047 (4.0%) | — | | | | 0.6 | | |

| Total debt | 336.7 | | | | 373.5 | | |

Series B Notes

As of December 31, 2014, there is one tranche remaining from our 2005 private placement, for $25.0 million that matures on July 28, 2015.

The Series B Notes bear interest at LIBOR plus 0.9 percentage points.

Please refer to Note 9, Derivative Financial Instruments, for a discussion of the interest-rate swap agreement associated with the Series B Notes.

In 2012, we entered into a $300.0 million multi-currency revolving credit facility, which expires in April 2017 and contains an accordion feature allowing the maximum to be increased through a term loan to $350.0 million upon approval by the banks.

The total amount outstanding under this facility as of December 31, 2013 of $53.7 million was classified as long-term.

The proceeds from the issuance reduced indebtedness under our prior revolving credit facility that was incurred to finance our 2012 repurchase of our Convertible Debentures discussed below.

Convertible Debt

In 2007, the Company issued $161.5 million of Convertible Debentures.

In 2012, we repurchased $158.4 million in aggregate principal amount of the Convertible Debentures, representing 98.06% of the aggregate outstanding principal amount.

During 2013, we repurchased an additional $2.5 million and in 2014, we repurchased the remaining $0.6 million in aggregate principal amount of our Convertible Debentures.

As a result of these repurchases, we recognized a pre-tax loss on debt extinguishment of less than $0.1 million in 2014, and a pre-tax loss on debt extinguishment of $0.2 million and $11.6 million during 2013 and 2012, respectively.

Disclosure Controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our [removed: Chief Executive Officer (“CEO”)] [added: CEO] and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO have concluded that, as of December 31, [removed: 2014,] [added: 2015,] our disclosure controls and procedures are effective.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2014] [added: 2015] based on the framework established in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management has determined that our internal control over financial reporting was effective as of December 31, [removed: 2014.][added: 2015.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2014] [added: 2015] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

During the fourth quarter ended December 31, [removed: 2014,] [added: 2015,] there have been no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Information about our directors is incorporated by reference from the discussion under the heading Items to be Voted on - Proposal 1 - Election of Ten Directors in our [removed: 2015] [added: 2016] Proxy Statement.

Information about our Code of Business Conduct is incorporated by reference from the discussion under the heading Corporate Governance and Board Matters - Code of Business Conduct in our [removed: 2015] [added: 2016] Proxy Statement.

Information regarding the procedures by which our shareholders may recommend nominees to our Board of Directors is incorporated by reference from the discussion under the heading Other Information - [removed: 2016] [added: 2017] Shareholder Proposals or Nominations included in our [removed: 2015] [added: 2016] Proxy Statement.

Information about our Audit Committee, including the members of the committee, and our Audit Committee financial experts, is incorporated by reference from the discussion under the heading Corporate Governance and Board Matters - Committees - Audit Committee in our [removed: 2015] [added: 2016] Proxy Statement.

Information about director and executive compensation is incorporated by reference from the discussion under the headings Director Compensation and Executive Compensation in our [removed: 2015] [added: 2016] Proxy Statement.

Information required by this Item is incorporated by reference from the discussion under the headings Other Information - Stock Ownership in our [removed: 2015] [added: 2016] Proxy Statement.

The following table sets forth information about the grants of stock options, restricted stock or other rights under all of the Company's equity compensation plans as of the close of business on December 31, [removed: 2014.][added: 2015.]

The table does not include information about tax-qualified plans such as the West 401(k) Plan or the Tech Group Puerto [removed: Rico, Inc.] [added: Rico] Savings and Retirement Plan.

| (1) | Includes [removed: 2,322,234] [added: 3,152,653] outstanding stock options, [removed: 203,540] [added: 131,924] outstanding stock-settled stock appreciation rights, [removed: 470,719] [added: 416,418] restricted performance share [added: units, 41,458 restricted retention share units, 259,417 deferred stock-equivalents] units and [removed: 234,865 deferred] [added: 428 restricted] stock-equivalents units granted to directors under the 2011 Plan. Includes [removed: 1,931,226] [added: 1,745,308] outstanding stock options and [removed: 90,611] [added: 90,988] deferred stock-equivalents units granted to directors under the Non-Qualified Deferred Compensation Plan for Non-Employee Directors under the 2007 Omnibus Incentive Compensation Plan (which was terminated in 2011). Includes [removed: 329,454] [added: 126,146] outstanding stock options under the 2004 Stock-Based Compensation Plan (which was terminated in 2007). The average term of remaining options and stock-settled stock appreciation rights granted is [removed: 6.4] [added: 6.3] years. No future grants or awards may be made under the terminated plans. The total includes restricted performance share units at 100% of grant. The restricted performance share unit payouts were at [added: 167.8%,] 124.4%, [removed: 113.4%,] and [removed: 39.2%] [added: 113.4%] in [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012,] [added: 2013,] respectively. The total does not include stock-equivalent units granted or credited to directors under the Non-Qualified Deferred Compensation Plan for Non-Employee Directors to be settled only in cash. |

| (3) | Represents [removed: 4,115,586] [added: 4,053,829] shares reserved under the Company's Employee Stock Purchase Plan and [removed: 4,056,600] [added: 2,487,881] shares remaining available for issuance under the 2011 Plan. The estimated number of shares that could be issued for [removed: 2014] [added: 2015] from the Employee Stock Purchase Plan is [removed: 730,878.] [added: 679,400.] This number of shares is calculated by multiplying the [removed: 543] [added: 430] share per offering period per participant limit by [removed: 1,346,] [added: 1,580,] the number of current participants in the plan. |

| Equity compensation plans approved by security holders | 5,964,740 | | (1) | $ | 31.62 | | (2) | 6,541,710 | | (3) |

| Total | 5,964,740 | | | $ | 31.62 | | | 6,541,710 | | |

| Equity compensation plans approved by security holders | 5,582,649 | | (1) | $ | 25.46 | | (2) | 8,172,186 | | (3) |

| Total | 5,582,649 | | | $ | 25.46 | | | 8,172,186 | | |

Information called for by this Item is incorporated by reference from the discussion under the heading Related Person Transactions and Procedures in our [removed: 2015] [added: 2016] Proxy Statement.

Information about director independence is incorporated by reference from the discussion under the heading Corporate Governance and Board Matters - Related Person Transactions and Procedures in our [removed: 2015] [added: 2016] Proxy Statement.

Information about the fees for professional services rendered by our independent auditors in [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] is incorporated by reference from the discussion under the heading Independent Auditor and Fees - Fees Paid to PricewaterhouseCoopers LLP in our [removed: 2015] [added: 2016] Proxy Statement.

Our Audit Committee's policy on pre-approval of audit and permissible non-audit services of our independent auditors is incorporated by reference from the section captioned Independent Auditors and Fees - Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services in our [removed: 2015] [added: 2016] Proxy Statement.

Consolidated Statements of Income for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

Consolidated Balance Sheets at December 31, [removed: 2014] [added: 2015] and [removed: 2013][added: 2014]

Consolidated Statement of Equity for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

| For the year ended December 31, [removed: 2012] [added: 2015] | | | | | | | | | | | | |

| Allowance for doubtful accounts | [removed: 0.3] [added: 0.9] | | | [removed: 0.3] [added: 0.1] | | | [removed: (0.1] [added: (0.4] | | ) | [removed: 0.5] [added: 0.6] | | |