West Pharmaceutical Services (WST) 10-K risk factor changes: FY2016 vs FY2015

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

Examples of the effects of these [removed: continuing] global economic challenges include: our suppliers' and our customers' inability to access the credit markets at commercially reasonable rates; reduction in sales due to customers decreasing their inventories in the near-term or long-term or due to liquidity difficulties; reduction in sales due to shortages of materials we purchase from our suppliers; reduction in research and development efforts and expenditures by our customers; our inability to hedge our currency and raw material risks sufficiently or at commercially reasonable prices; insolvency of suppliers or customers; inflationary pressures on our supplies or our products; and increased expenses due to growing [added: global] taxation of corporate profits or revenues.

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

Sales outside of the U.S. accounted for [removed: 52.0%] [added: 51.1%] of our consolidated net sales in [removed: 2015] [added: 2016] and we anticipate that sales from international operations will continue to represent a significant portion of our total sales in the future.

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 [removed: Brazilian Real.][added: Argentinian Peso.]

If we are unable to provide comparative value advantages, timely [removed: fulfillment of] [added: fulfill] customer [removed: orders] [added: orders,] or resist pricing pressure, we will have to reduce our prices, which may reduce our profit margins.

[removed: Competitors] [added: Companies] often compete on the basis of price.

We differentiate ourselves from our competition [removed: as] [added: by being] a [removed: "full-service, value-added"] [added: “full-service, value-added”] global supplier that is able to provide pre-sale compatibility [removed: studies] [added: studies, engineering support,] and other services and sophisticated post-sale technical support on a global basis.

The pharmaceutical and [removed: medical technology] [added: healthcare] industries have experienced a significant amount of consolidation.

[removed: In addition, group] purchasing organizations and integrated health delivery networks have served to concentrate purchasing decisions for some customers, which has placed pricing pressure on suppliers.

An effect of the governmental regulation of our customers' drug products, devices, and manufacturing processes is that compliance with regulations makes it [removed: costly and time-consuming for customers] [added: difficult] to [removed: substitute or replace] [added: change] components and devices produced by one supplier with those from [removed: another.][added: another supplier, due to the large amount of data and information that customers must generate to demonstrate that the components and devices are equivalent and pose no additional risk to the patient.]

If the applicable regulations were to be modified in a way that reduced the [removed: cost] [added: level of data] and [removed: time involved for customers] [added: information needed] to [removed: substitute] [added: prove equivalency for a change from] one supplier's components or devices [removed: for] [added: to] those made by another, it is likely that the competitive pressure would increase and adversely affect our sales and profitability.

If we are not successful in protecting our intellectual property rights, [removed: we may harm] our ability to [removed: compete.][added: compete may be affected.]

[removed: We cannot assure you] [added: There can be no assurance] that the steps we will take to prevent misappropriation, infringement or other violation of our intellectual property or the intellectual property of others will be successful.

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

In [removed: addition, in] some instances, [added: however,] the manufacturing of certain product lines is concentrated in one or [removed: more] [added: only a few] of our plants.

The functioning of our manufacturing and distribution assets and systems could be disrupted for reasons either within or beyond our control, [removed: including:] [added: including, without limitation:] extreme weather or longer-term climatic changes; natural disasters; pandemic; war; accidental damage; disruption to the supply of material or services; product quality and safety issues; systems failure; workforce actions; or environmental contamination.

[removed: These include] [added: We face this competition from a wide range of companies, including] large medical device companies, some of which have greater financial and marketing resources than we do.

The development of new or improved products, processes or technologies by other companies (such as needle-free injection technology) may [added: reduce customer demand for our products or] render some of our products or proposed products obsolete or less competitive.

In addition, [added: any] failure [added: or inability] to meet increased customer quality expectations could cause a reduction in demand.

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 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 [removed: disruptions;] [added: disruptions, including the United Kingdom's referendum on withdrawal from the European Union;] 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.

Any of these events could have an adverse effect on our international operations in the future by reducing the demand for our [removed: products,] [added: products or] decreasing the prices at which we can sell our [removed: products] [added: products,] or otherwise have an adverse effect on our financial condition, results of operations and cash flows.

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 [removed: applications (such as the Daikyo CZ ready-to-use prefilled syringes and the SmartDose systems).][added: applications.]

The ultimate timing and successful commercialization of new products and systems requires substantial evaluations of the functional, operational, clinical and economic viability of [removed: the Company's] [added: our] products.

In addition, the timely and adequate availability of filling capacity is essential to both conducting definitive stability trials and the timing of [removed: first] commercialization of customers' products in CZ prefilled [added: cartridges and] syringes.

Strategic transactions involve risks, including those associated with integrating the operations or maintaining the operations as separate (as applicable), financial reporting, disparate technologies and personnel of acquired companies, joint ventures or related companies; managing geographically dispersed operations or other strategic investments; the diversion of management's attention from other business concerns; the inherent risks in [removed: entering markets or lines of business in which we have either limited or no direct experience; unknown risks; and the potential loss of key employees, customers and strategic partners of acquired companies, joint ventures or companies in which we may make strategic investments.]

The design, manufacture and marketing of [added: pharmaceutical packaging and] medical devices involve certain inherent risks.

[removed: Additionally, suppliers' added expenses could be passed] on to us in the form of higher prices and we may not be able to pass on such expenses to our customers through price increases.

[removed: Federal healthcare] [added: Healthcare] reform may adversely affect our results of operations.

[removed: Our] [added: The Patient Protection and Affordable Care Act (the “PPACA”) was enacted in March 2010 and could result in reduced demand for our products, as our] sales depend, in part, on the extent to which pharmaceutical companies and healthcare providers and facilities are reimbursed by government authorities, private insurers and other third-party payers for the costs of our products.

Legislative or administrative reforms to reimbursement systems in the U.S. [removed: (as part] [added: (including the possible termination] of the [removed: PPACA)] [added: PPACA and potential replacement thereafter with a different system)] or abroad (for example, those under consideration in France, Germany, Italy and the United Kingdom) could significantly reduce reimbursement for our [removed: customers] [added: customers'] products, which could in turn reduce the demand for our products.

Moreover, in the coming years, additional changes could be made to [added: global] governmental healthcare programs that could significantly impact the success of our products.

We will continue to evaluate the PPACA, as amended, the implementation of regulations or guidance related to various provisions of the PPACA by federal agencies, [added: the potential repeal and replacement of the PPACA,] as well as trends and changes that may be encouraged by the legislation and [added: other healthcare legislation globally and] that may potentially impact our business over time.

Our declaration and payment of future dividends is subject to risks and uncertainties, including: deterioration of our financial performance or position; inability to declare a dividend in compliance with applicable laws or debt covenants; an increase in our cash needs or decrease in available cash; and the business judgment of the Board of Directors that a declaration of a dividend is not in [removed: the Company's] [added: our] best [removed: interests.][added: interest.]

Key value-added and proprietary products and processes are licensed from our affiliate, Daikyo, including but not limited [removed: to Daikyo] [added: to,] CZ, FluroTec and B2-coating technologies.

Our rights to these products and processes are licensed pursuant to agreements that expire in [removed: 2017, which we expect to renew prior to their expiration.][added: 2027.]

However, if [removed: we are unsuccessful in renewing these agreements, or if] the agreements are terminated [removed: early because we fail to satisfy our obligations,] [added: early,] our business could be adversely impacted.

In addition, group

In addition,

Significant developments in U.S. policies could have a material adverse effect on our business and/or results of operations.

Changes in U.S. social, political, regulatory, and economic conditions, or in laws and policies governing foreign trade, manufacturing, development, immigration, and investment could have an adverse effect on our financial condition, results of operations and cash flows.

entering markets or lines of business in which we have either limited or no direct experience; unknown risks; and the potential loss of key employees, customers and strategic partners of acquired companies, joint ventures or companies in which we may make strategic investments.

Additionally, suppliers' added expenses could be passed

We face this competition from a wide range of companies.

The Patient Protection and Affordable Care Act (the “PPACA”) was enacted in March 2010.

The PPACA reduces Medicare and Medicaid payments to hospitals, clinical laboratories and pharmaceutical companies, and could otherwise reduce the volume of medical procedures.

These factors, in turn, could result in reduced demand for our products and increased downward pricing pressure.

It is also possible that the PPACA will result in lower reimbursements for our customers' products.

While the PPACA is intended to expand health insurance coverage to uninsured persons in the U.S., the impact of any overall increase in access to healthcare on sales of West's products is uncertain at this time.

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

[removed: We were] [added: The Company was] incorporated under the laws of the Commonwealth of Pennsylvania on July 27, 1923.

[removed: Our] [added: In 2015, our] business operations [removed: are organized into] [added: consisted of] two reportable segments, Packaging Systems and Delivery Systems.

[removed: In addition, we are] exposed to Yen, as we maintain a 25% ownership interest in, and we purchase finished goods and other materials from, Daikyo.

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

At December 31, [removed: 2015,] [added: 2016,] our cash and cash equivalents balance totaled [removed: $274.6] [added: $203.0] million and our borrowing capacity under our [removed: senior unsecured,] [added: $300.0 million] multi-currency revolving credit facility [removed: agreement] (the [removed: "New Credit Agreement")] [added: "Credit Facility")] was [removed: $269.9] [added: $270.6] million.

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

We expect that contract manufacturing will remain focused on [removed: pharmaceutical] [added: pharmaceutical, diagnostic,] and medical device customers.

Also excluded are items that [removed: management considers] [added: we consider] not representative of ongoing operations.

| ($ in millions) | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2015/2014] [added: 2016/2015] | | | [removed: 2014/2013] [added: 2015/2014] | |

| Consolidated net sales | $ | [removed: 1,399.8] [added: 1,509.1] | | | $ | [removed: 1,421.4] [added: 1,399.8] | | | $ | [removed: 1,368.4] [added: 1,421.4] | | | [removed: (1.5] [added: 7.8] | [removed: )%] [added: %] | | [removed: 3.9] [added: (1.5] | [removed: %] [added: )%] |

Consolidated net sales decreased by $21.6 million, or 1.5%, in 2015, including an unfavorable foreign currency [added: translation] impact of $123.9 million.

Excluding foreign currency [added: translation] effects, consolidated net sales increased by $102.3 million, or 7.2%.

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 [added: translation] impact.

Excluding foreign currency [added: translation] effects, consolidated net sales generated outside of the U.S. in 2015 increased by 8.3%.

[removed: Packaging Systems] [added: Proprietary Products] – [removed: Packaging Systems'] [added: Proprietary Products] net sales decreased by [removed: $19.0] [added: $28.0] million, or [removed: 1.9%,] [added: 2.5%,] in 2015, including an unfavorable foreign currency [added: translation] impact of [removed: $105.2] [added: $113.7] million.

Excluding foreign currency [added: translation] effects, net sales increased by [removed: $86.2] [added: $85.7] million, or [removed: 8.5%,] [added: 7.6%,] due to growth in our high-value product offerings, particularly FluroTec-coated components, Westar components, and the Envision line of vision-inspected components.

An improvement in product mix and higher sales volumes contributed [removed: 6.9] [added: 9.1] percentage points of the increase, and sales price increases contributed the remainder of the increase.

[removed: Delivery Systems] [added: Contract-Manufactured Products] – [removed: Delivery Systems'] [added: Contract-Manufactured Products] net sales [removed: decreased] [added: increased] by [removed: $2.3] [added: $6.7] million, or [removed: 0.5%,] [added: 2.3%,] in 2015, including an unfavorable foreign currency [added: translation] impact of [removed: $18.7] [added: $10.2] million.

Excluding foreign currency [added: translation] effects, net sales increased by [removed: $16.4] [added: $16.9] million, or [removed: 4.1%,] [added: 5.7%, particularly] due to an increase in [removed: contract manufacturing sales, particularly sales] [added: the sale] of glucose monitoring devices.

Consolidated net sales increased by [removed: $53.0] [added: $109.3] million, or [removed: 3.9%,] [added: 7.8%,] in [removed: 2014, despite] [added: 2016, including] an unfavorable foreign currency [added: translation] impact of [removed: $5.5] [added: $17.5] million.

Excluding foreign currency [added: translation] effects, consolidated net sales increased by [removed: $58.5] [added: $126.8] million, or [removed: 4.3%.][added: 9.1%.]

Excluding foreign currency [added: translation] effects, [added: consolidated] net sales [added: in 2016] increased by [removed: $29.4] [added: $126.8] million, or [removed: 2.9%.][added: 9.1%.]

| ($ in millions) | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2015/2014] [added: 2016/2015] | | | [removed: 2014/2013] [added: 2015/2014] | |

| Consolidated Gross Profit | $ | [removed: 455.8] [added: 501.1] | | | $ | [removed: 447.8] [added: 455.8] | | | $ | [removed: 434.7] [added: 447.8] | | | [removed: 1.8] [added: 9.9] | % | | [removed: 3.0] [added: 1.8] | % |

| Consolidated Gross [added: Profit] Margin | [removed: 32.6] [added: 33.2] | | % | | [removed: 31.5] [added: 32.6] | | % | | [removed: 31.8] [added: 31.5] | | % | | | | | | |

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

Consolidated gross [added: profit] margin increased by 1.1 margin points in 2015.

[removed: Packaging Systems] [added: Proprietary Products] – [removed: Packaging Systems'] [added: Proprietary Products] gross profit increased by [removed: $12.7] [added: $7.9] million, or [removed: 3.4%,] [added: 2.0%,] in 2015, [removed: despite] [added: including] an unfavorable foreign currency [added: translation] impact of [removed: $37.1] [added: $41.4] million.

[removed: Packaging Systems'] [added: Proprietary Products] gross [added: profit] margin increased by [removed: 1.9] [added: 1.6] margin points in 2015, as product mix improvements, sales price increases, and production efficiencies were partially offset by increased labor and overhead costs.

[removed: Delivery Systems –Delivery Systems' gross] [added: Consolidated operating] profit decreased by [removed: $4.7] [added: $53.4] million, or [removed: 6.0%,] [added: 29.3%,] in 2015, including an unfavorable foreign currency [added: translation] impact of [removed: $5.3] [added: $29.3] million.

[removed: Delivery Systems'] [added: Contract-Manufactured Products] gross [added: profit] margin decreased by [removed: 1.1] [added: 0.3] margin points in [removed: 2015,] [added: 2015] as a result of increased overhead and depreciation related to new capabilities supporting [removed: both proprietary and] contract manufacturing programs.

Consolidated gross profit increased by [removed: $13.1] [added: $45.3] million, or [removed: 3.0%,] [added: 9.9%,] in [removed: 2014, despite] [added: 2016, including] an unfavorable foreign currency [added: translation] impact of [removed: $2.3] [added: $5.6] million.

[removed: Packaging Systems'] [added: Contract-Manufactured Products] gross [added: profit] margin decreased by [removed: 0.1] [added: 0.4] margin points in [removed: 2014,] [added: 2016,] as [removed: lower raw material costs and moderate sales price] [added: increased labor] and [removed: product mix improvements] [added: overhead costs] were [added: partially] offset by [removed: increased employee compensation, laboratory] [added: a favorable mix of product sales] and [removed: engineering] [added: lower raw material] costs.

| ($ in millions) | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2015/2014] [added: 2016/2015] | | | [removed: 2014/2013] [added: 2015/2014] | |

| Consolidated R&D costs | $ | [removed: 34.1] [added: 36.8] | | | $ | [removed: 37.3] [added: 34.1] | | | $ | [removed: 37.9] [added: 37.3] | | | [removed: (8.6] [added: 7.9] | [removed: )%] [added: %] | | [removed: (1.6] [added: (8.6] | )% |

Consolidated [removed: R&D] [added: SG&A] costs [removed: decreased] [added: increased] by [removed: $3.2] [added: $4.3] million, or [removed: 8.6%,] [added: 1.9%,] in 2015, including the impact of foreign [removed: currency,] [added: currency translation,] which decreased [removed: R&D] [added: SG&A] costs by [removed: $1.0] [added: $12.5] million.

[removed: Delivery Systems – Delivery Systems'] [added: Consolidated] R&D costs decreased by [removed: $1.3] [added: $3.2] million, or [removed: 6.2%,] [added: 8.6%,] in 2015, due to the [added: reallocation of resources to commercial projects in 2015, the] reassignment of personnel to clinical trial production activities for [added: the] SmartDose [added: technology platform] in 2015, the completion of development work on the SelfDose self-injection system in 2014, and the impact of foreign [removed: currency,] [added: currency translation,] which decreased R&D costs by [removed: $0.2] [added: $1.0] million.

| ($ in millions) | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2015/2014] [added: 2016/2015] | | | [removed: 2014/2013] [added: 2015/2014] | |

| Corporate | [removed: 57.8] [added: 56.3] | | | | [removed: 53.2] [added: 57.8] | | | | [removed: 63.9] [added: 53.2] | | | | [removed: 8.6] [added: (2.6] | [removed: %] [added: )%] | | [removed: (16.7] [added: 8.6] | [removed: )%] [added: %] |

Our products include vial containment solutions, prefillable systems, self-injection platforms, cartridge systems and components, reconstitution and transfer systems, intradermal delivery solutions, specialty components, and contract manufacturing and analytical services.

Our customers include the leading biologic, generic, pharmaceutical, diagnostic, and medical device companies in the world.

Our Proprietary Products reportable segment, which is a combination of the previous Packaging Systems segment and the proprietary products portion of the previous Delivery Systems segment, develops commercial, operational, and innovation strategies across our global network, with specific emphasis on product offerings to biologic, generic, and pharmaceutical drug customers.

Our Contract-Manufactured Products reportable segment, which consists of the contract manufacturing portion of the previous Delivery Systems segment, serves as a fully integrated business focused on the design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and medical device customers.

In addition, we are

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 Argentinian Peso, both of which were unfavorable to our results in 2016.

During 2016, average exchange rates were unfavorable versus the exchange rates realized in 2015.

Foreign currency translation resulted in lower reported net sales, operating profit, net income, and net income per diluted share of $17.5 million, $4.0 million, $2.9 million, and $0.04, respectively, as compared to 2015.

Segment results presented in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect the impact of this change.

Please refer to Note 17, Segment Information, for additional details.

2016 Financial Performance Summary

Consolidated net sales increased by $109.3 million, or 7.8%, in 2016, due to growth in our high-value product offerings.

Consolidated gross profit increased by $45.3 million, or 9.9%, in 2016, as product mix improvements, production efficiencies, and sales price increases were partially offset by increased labor and overhead costs.

Net income per diluted share was $1.91 in 2016, as compared to $1.30 in 2015.

Results for 2016 included restructuring and related charges, a charge related to the devaluation of the Venezuelan Bolivar, the impact of foreign currency translation, and a discrete tax charge, which reduced net income per diluted share by $0.23, $0.04, $0.04, and $0.01, respectively, as compared to 2015.

Results for 2016 also included a pension curtailment gain, which increased net income per diluted share by $0.01, as compared to 2015.

| Proprietary Products | $ | 1,189.9 | | | $ | 1,098.3 | | | $ | 1,126.3 | | | 8.3 | % | | (2.5 | )% |

| Contract-Manufactured Products | 320.2 | | | | 302.4 | | | | 295.7 | | | | 5.9 | % | | 2.3 | % |

| Intersegment sales elimination | (1.0 | | ) | | (0.9 | | ) | | (0.6 | | ) | | — | | | — | |

2016 compared to 2015

Consolidated net sales originating in the U.S. in 2016 were $738.3 million, an increase of 10.6% from 2015.

Consolidated net sales generated outside of the U.S. (mainly in Europe) in 2016 were $770.8 million, an increase of 5.2% from 2015.

Excluding foreign currency translation effects, consolidated net sales generated outside of the U.S. in 2016 increased by 7.6%.

Proprietary Products – Proprietary Products net sales increased by $91.6 million, or 8.3%, in 2016, including an unfavorable foreign currency translation impact of $17.5 million.

Excluding foreign currency translation effects, net sales increased by $109.1 million, or 9.9%, due to growth in our high-value product offerings, including products sold under our distributorship agreement with Daikyo and our Westar® and FluroTec-coated stoppers and plungers.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $17.8 million, or 5.9%, in 2016, primarily due to higher drug delivery and diagnostic product sales.

| Proprietary Products: | | | | | | | | | | | | | | | | | |

| Gross Profit | $ | 448.0 | | | $ | 404.5 | | | $ | 396.6 | | | 10.8 | % | | 2.0 | % |

| Gross Profit Margin | 37.7 | | % | | 36.8 | | % | | 35.2 | | % | | | | | | |

| Contract-Manufactured Products: | | | | | | | | | | | | | | | | | |

| Gross Profit | $ | 53.1 | | | $ | 51.3 | | | $ | 51.2 | | | 3.5 | % | | 0.2 | % |

| Gross Profit Margin | 16.6 | | % | | 17.0 | | % | | 17.3 | | % | | | | | | |

2016 compared to 2015

Consolidated gross profit margin increased by 0.6 margin points in 2016.

Proprietary Products – Proprietary Products gross profit increased by $43.5 million, or 10.8%, in 2016, including an unfavorable foreign currency translation impact of $5.6 million.

Proprietary Products gross profit margin increased by 0.9 margin points in 2016, as product mix improvements, production efficiencies, and sales price increases were partially offset by increased labor and overhead costs.

Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $1.8 million, or 3.5%, in 2016.

Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $0.1 million, or 0.2%, in 2015, including an unfavorable foreign currency translation impact of $1.0 million.

| Proprietary Products | $ | 36.8 | | | $ | 34.1 | | | $ | 37.3 | | | 7.9 | % | | (8.6 | )% |

| Contract-Manufactured Products | — | | | | — | | | | — | | | | — | | | — | |

Throughout this section, references to “Notes” refer to the footnotes included in Part II, Item 8 of this Form 10-K, unless otherwise indicated.

Our products include stoppers and seals for vials, prefillable syringe components and systems, components for intravenous and blood collection systems, safety and administration systems, advanced injection systems, and contract design and manufacturing services.

Our customers include the leading global producers of pharmaceuticals, biologics, medical devices and consumer products.

Packaging Systems develops, manufactures and sells 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.

Delivery Systems develops, manufactures and sells safety and administration systems, multi-component systems for drug 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, multi-component systems for injectable drug administration and other healthcare applications.

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

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

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

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.

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.

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

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.

| Packaging Systems | $ | 1,000.7 | | | $ | 1,019.7 | | | $ | 996.0 | | | (1.9 | )% | | 2.4 | % |

| Delivery Systems | 400.2 | | | | 402.5 | | | | 374.1 | | | | (0.5 | )% | | 7.6 | % |

| Intersegment sales elimination | (1.1 | | ) | | (0.8 | | ) | | (1.7 | | ) | | — | | | — | |

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

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.

2014 compared to 2013

Packaging Systems – Packaging Systems’ net sales increased by $23.7 million, or 2.4%, in 2014, despite an unfavorable foreign currency impact of $5.7 million.

While overall growth in our high-value product offerings continued, customer inventory management actions due to regulatory issues and formulation changes reduced demand levels for Teflon and FluroTec-coated components, resulting in a reduction in sales of these products in 2014.

Our high-value product offerings represented 43.2% of Packaging Systems' net sales for 2014, as compared to 42.9% in 2013.

Higher sales volumes and a moderate improvement in product mix contributed 2.1 percentage points of the increase, and sales price increases contributed 0.8 percentage points of the increase.

Delivery Systems – Delivery Systems’ net sales increased by $28.4 million, or 7.6%, in 2014, including a favorable foreign currency impact of $0.2 million.

Excluding foreign currency effects, net sales increased by $28.2 million, or 7.5%, primarily due to an increase in contract manufacturing sales, proprietary reconstitution product sales, and customer-funded clinical development sales of our SmartDose component samples.

Proprietary net sales represented 26.2% of Delivery Systems' net sales for 2014, as compared to 24.8% in 2013.

Sales volume and product mix improvements contributed 7.1 percentage points of the increase, and sales price increases contributed the remainder of the increase.

| Packaging Systems: | | | | | | | | | | | | | | | | | |

| Gross Profit | $ | 381.7 | | | $ | 369.0 | | | $ | 361.4 | | | 3.4 | % | | 2.1 | % |

| Gross Margin | 38.1 | | % | | 36.2 | | % | | 36.3 | | % | | | | | | |

| Delivery Systems: | | | | | | | | | | | | | | | | | |

| Gross Profit | $ | 74.1 | | | $ | 78.8 | | | $ | 73.3 | | | (6.0 | )% | | 7.5 | % |

| Gross Margin | 18.5 | | % | | 19.6 | | % | | 19.6 | | % | | | | | | |

2014 compared to 2013

Consolidated gross margin decreased by 0.3 margin points in 2014.

Packaging Systems – Packaging Systems’ gross profit increased by $7.6 million, or 2.1%, in 2014, despite an unfavorable foreign currency impact of $2.3 million.

In accordance with Company policy, derivative financial instruments are not used for [removed: speculation] [added: investment] or trading purposes.

Sales outside of the U.S. accounted for [removed: 52.0%] [added: 51.1%] of consolidated net sales in [removed: 2015.][added: 2016.]

We have designated our [removed: €61.1 million Euro note B and our] €21.0 million Euro-denominated borrowings under our [removed: revolving credit facility] [added: Credit Facility] as a hedge of our net investment in certain European subsidiaries.

We also have ¥500.0 million in Yen-denominated borrowings under our [removed: revolving credit facility] [added: Credit Facility] which has been designated as a hedge of our net investment in Daikyo.

At December 31, [removed: 2015,] [added: 2016,] a [removed: net] cumulative foreign currency translation gain on these hedges of [removed: $5.8] [added: $1.1] million (net of tax of [removed: $3.4] [added: $0.6] million) was recorded within accumulated other comprehensive loss.

| ($ in millions) | [removed: 2016 | | |] 2017 | | [added: |] 2018 | | 2019 | [added: |] 2020 | | [added: 2021 |] Thereafter | | Carrying Value | | | Fair Value | | |

| U.S. dollar denominated (1) | $ | [removed: 2.5] [added: 2.4] | | | | | | | | | | | $ | [removed: 2.5] [added: 2.4] | | $ | [removed: 2.5] [added: 2.4] | |

| Average interest rate - variable | [removed: 1.7] [added: 2.3] | | % | | | | | | | | | | | | | | | |

| U.S. dollar denominated | [removed: 66.8] | | | | | | | | | | [added: 168.0] | | [removed: 66.8] [added: 168.0] | | | [removed: 66.8] [added: 169.2] | | |

| Average interest rate - variable | [removed: 4.4] | | [removed: %] | [added: 2.3] | [added: %] | | | | | | | | | | | | | |

| U.S. dollar denominated (1) | | | | [removed: 2.2] [added: 32.6] | | [removed: 32.6] [added: 0.1] | | | | | | | [removed: 34.8] [added: 32.7] | | | [removed: 34.8] [added: 32.7] | | |

| Average interest rate - variable | | | | [removed: 1.7] | [removed: %] | [removed: 1.7] | [removed: %] | [added: 1.0] | [added: %] | | | | | | | | | |

| Euro denominated | | | | | | | | [added: 22.1] | [removed: 22.9] | | | | [removed: 22.9] [added: 22.1] | | | [removed: 22.9] [added: 22.1] | | |

| Average interest rate - variable | | | | | | | | [removed: | 1.7] [added: 1.0] | % | | | | | | | | | [added: |]

| Yen denominated | | | | | | | | [added: 4.3] | [removed: 4.2] | | | | [removed: 4.2] [added: 4.3] | | | [removed: 4.2] [added: 4.3] | | |

(1) As of December 31, [removed: 2015,] [added: 2016,] we have a forward-start interest rate swap outstanding designed to hedge the variability in cash flows due to changes in the applicable interest rate of our [removed: $37.1] [added: $34.9] million five-year term loan.

At December 31, [removed: 2015,] [added: 2016,] this agreement had a fair value of [removed: $2.0] [added: $1.0] million, unfavorable to [removed: the Company,] [added: us,] which was recorded as a noncurrent liability.

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

Many of our [removed: Packaging Systems] [added: proprietary] products are made from synthetic elastomers, which are derived from the petroleum refining process.

In [removed: November 2014,] [added: February 2016,] we purchased a series of call options for a total of [removed: 134,700] [added: 71,900] barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with [removed: regard] [added: regards] to a portion of our forecasted elastomer purchases through [removed: December 2015.][added: November 2016.]

In recent years, raw material costs have fluctuated due to crude oil price fluctuations.

We expect this volatility to continue.

With these contracts in 2016, we benefited $0.4 million due to increases in crude oil prices, offset by the $0.2 million premium that we paid to purchase the contracts.

In November 2016, we purchased a series of call options for a total of 96,525 barrels of crude oil through November 2017.

During 2016, the gain recorded in cost of goods and services sold related to these options was less than $0.1 million.

| U.S. dollar denominated | | | | | | | | | | | 168.0 | | 168.0 | | | 163.1 | | |

| Average interest rate - variable | | | | | | | | | 1.6 | % | | | | | | | | |

In recent years, increases in raw material costs have had an adverse impact on us.

We expect the volatility in raw material prices to continue.

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

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

All trademarks and registered trademarks used in this report are the property of [removed: West Pharmaceutical Services, Inc.,] [added: West,] either directly or indirectly through its subsidiaries unless noted otherwise.

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

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: 2016] [added: 2017] Annual Meeting of Shareholders [removed: (“2016] [added: (“2017] Proxy Statement”), which will be filed with the SEC within 120 days following the end of our [removed: 2015] [added: 2016] fiscal year.

Our [removed: 2016] [added: 2017] Proxy Statement will be available on our website on or about March 31, [removed: 2016,] [added: 2017,] under the caption Investors - Annual [removed: Report] [added: Reports] & Proxy.

Information about our corporate governance, including our Corporate Governance Principles and Code of Business Conduct, as well as information about our Directors, Board Committees, Committee Charters, and instructions on how to contact the [removed: Board] [added: Board,] is available on our website under the Investors - Corporate Governance [removed: caption.][added: heading.]

We intend to make any required disclosures regarding any amendments of our Code of Business Conduct or waivers granted to any of our directors or executive officers under the [removed: heading] [added: caption] Code of Business Conduct on our website.

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

[removed: The] [added: Our] Proprietary Products reportable segment, which [removed: will combine] [added: is a combination of] the [removed: existing] [added: previous] Packaging Systems segment [removed: with] [added: and] the proprietary products portion of the [removed: existing] [added: previous] Delivery Systems segment, [removed: will develop] [added: develops] commercial, operational, and innovation strategies across our global network, with specific emphasis on product offerings to biologic, generic, and pharmaceutical [added: drug] customers.

[removed: The] [added: Our] Contract-Manufactured Products reportable segment, which [removed: will consist] [added: consists] of the contract manufacturing portion of the [removed: existing] [added: previous] Delivery Systems segment, [removed: will serve] [added: serves] as a fully integrated business focused on the design, manufacture, and automated assembly of complex [removed: assemblies] [added: devices, primarily] for [removed: pharmaceutical] [added: pharmaceutical, diagnostic,] and medical device customers.

The growth strategy for [removed: Packaging Systems] [added: Proprietary Products] includes organic growth through market segmentation, new-product innovation, strategic acquisitions and geographic expansion.

[removed: We have] [added: Proprietary Products has] manufacturing facilities in North and South America, Europe and Asia Pacific, with affiliated companies in Mexico and Japan.

See Note 17, Segment Information, for net sales and asset information for [removed: Packaging Systems.][added: Proprietary Products.]

[removed: Delivery Systems] [added: Contract-Manufactured Products] has expertise in product design and development, including in-house mold [removed: design and construction,] [added: design,] an engineering center for developmental and prototype tooling, process design and validation and high-speed automated assemblies.

[removed: Delivery Systems] [added: Contract-Manufactured Products] has manufacturing operations in North America and Europe.

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

The [removed: system] [added: technology platform] is fully programmable, has a single push-button operation and a hidden needle for safety.

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

See Note 17, Segment Information, for net sales and asset information for [removed: Delivery Systems.][added: Contract-Manufactured Products.]

We have significant operations outside of the United States [removed: ("U.S."),] [added: (“U.S.”),] which are managed through the same business segments as our U.S. operations – [removed: Packaging Systems] [added: Proprietary Products] and [removed: Delivery Systems.][added: Contract-Manufactured Products.]

Sales outside of the U.S. accounted for [removed: 52.0%] [added: 51.1%] of consolidated net sales in [removed: 2015.][added: 2016.]

We employ a [removed: supply-chain] [added: supply chain] management strategy in our business segments, which involves purchasing from integrated suppliers that control their own sources of supply.

We purchase certain [removed: of our] raw materials in the open market.

[removed: In particular,] [added: Some] key value-added and proprietary products and processes are licensed from Daikyo.

Our intellectual property rights have been useful in establishing our market [removed: share] [added: position] and in the growth of our business, and are expected to continue to be of value in the future.

Although our [removed: Packaging Systems] [added: Proprietary Products] business is not inherently seasonal, sales and operating profit in the second half of the year are typically lower than the first half primarily due to scheduled plant shutdowns in conjunction with our customers' production schedules and the year-end impact of holidays on production.

Our [removed: Delivery Systems] [added: Contract-Manufactured Products] business is not inherently seasonal.

For a more detailed discussion of working capital, please [removed: see] [added: refer to] the discussion in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations under the caption Financial Condition, Liquidity and Capital Resources.

Our [removed: Packaging Systems] customers include [removed: most of] the [removed: major branded] [added: leading biologic, generic,] pharmaceutical, [removed: generic] [added: diagnostic,] and [removed: biopharmaceutical] [added: medical device] companies in the world.

[removed: Packaging Systems components and other products are sold to] [added: Our Proprietary Products customers include most of the] major [removed: pharmaceutical, biotechnology] [added: biologic, generic,] and [removed: hospital supply/medical device companies,] [added: pharmaceutical drug companies in the world,] which incorporate [removed: them] [added: our components and other offerings] into their products for distribution to the ultimate end-user.

[removed: Delivery Systems] [added: Contract-Manufactured Products] components generally are incorporated into our customers' manufacturing lines for further processing or assembly.

Our ten largest customers accounted for [removed: 42.0%] [added: 36.8%] of our consolidated net sales in [removed: 2015,] [added: 2016,] but none of these customers individually accounted for more than 10% of net sales.

At December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] the order backlog for [removed: Packaging Systems] [added: Proprietary Products] was [removed: $413.2] [added: $373.3] million and [removed: $339.7] [added: $413.2] million, respectively.

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

The [removed: entire] [added: majority of the] order backlog for [removed: Packaging Systems] [added: Proprietary Products] at December 31, [removed: 2015] [added: 2016] is expected to be filled during [removed: 2016.][added: 2017.]

The majority of [removed: Delivery Systems'] [added: Contract-Manufactured Products] manufacturing activity is governed by contractual volume expectations, with terms between one and three years, subject to periodic revisions based on customer requirements.

We compete with several companies across our [removed: Packaging Systems] [added: Proprietary Products] product lines.

[removed: Because of] [added: Due to] the special nature of our pharmaceutical packaging components and our long-standing participation in the market, competition [added: for these components] is based primarily on product design and performance, although total cost is becoming increasingly important as pharmaceutical companies continue with aggressive cost-control programs across their operations.

We differentiate ourselves from our competition [removed: as] [added: by being] an integrated drug [removed: packaging] [added: containment] and delivery systems global supplier that can provide [removed: pre-sale] [added: pre-approval] primary packaging support and engineering development, analytical services, [added: regulatory expertise and after-sale technical support.]

Customers also appreciate the global scope of [removed: West's] [added: our] manufacturing capability and our ability to produce many products at multiple sites.

Our products include vial containment solutions, prefillable systems, self-injection platforms, cartridge systems and components, reconstitution and transfer systems, intradermal delivery solutions, specialty components, and contract manufacturing and analytical services.

development, which resulted in a change to Proprietary Products and Contract-Manufactured Products as our reportable segments.

Segment results presented in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect the impact of this change.

Please refer to Note 17, Segment Information, for additional details.

Proprietary Products Segment

Proprietary Products offers proprietary packaging, containment and drug delivery products.

The packaging products include stoppers and seals for injectable packaging systems, which are designed to help ensure drug compatibility and stability, while also supporting operational efficiency.

Proprietary Products also offers syringe and cartridge components, including custom solutions for the specific needs of injectable drug applications, as well as administration systems that can enhance the safe delivery of drugs through advanced reconstitution, mixing and transfer technologies.

In 2016, we announced the availability of the 1-3mL NovaPure® plunger, an innovative, high-quality component for pre-filled delivery systems, designed to reduce particulates, ensure consistency of delivery and fit the changing needs of higher-volume injectable drug delivery systems.

This new offering adds to our current portfolio of NovaPure products, which includes the 1mL long NovaPure plunger and 13mm and 20mm NovaPure lyo and serum stoppers.

Our NovaPure plungers are designed and manufactured using scientific, risk-mitigating Quality by Design principles to ensure dimensional control and consistency, sub-visible and visible particulate control, and low parts per million defect attributes.

We also offer drug containment solutions, including CZ vials, syringes and cartridges, which can provide a high-quality solution to glass incompatibility issues and can stand up to cold storage environments, while reducing the risk of breakage that exists with glass.

It is an integrated life-cycle solution that is designed to maintain drug safety, purity and efficacy.

In addition, we offer a variety of self-injection systems, which are innovative, patient-centric technologies that are easy to use and can be combined with connected health technologies that have the potential to increase adherence.

The development of our SmartDose® technology platform continues to gain momentum in the marketplace, as the U.S. Food and Drug Administration (“FDA”) approved the first combination product that incorporates our SmartDose technology for use in the U.S. in July 2016, and several other active development programs are in place.

Analytical Lab Services completes the product offerings in Proprietary Products.

This group provides specialized testing for drug packaging, devices and administration systems.

Contract-Manufactured Products Segment

We manufacture customer-owned components and devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products.

This can vary from year-to-year, depending upon customer inventory management programs and customer product launches.

Our Contract-Manufactured Products customers include many of the world's largest pharmaceutical, diagnostic, and medical device companies.

The decrease in backlog primarily reflects a return to normal levels and an unfavorable foreign currency impact.

several quarters, while others focused more on short-term stock-building.

We spent $36.8 million in 2016, $34.1 million in 2015, and $37.3 million in 2014 on research and development, all of which related to Proprietary Products.

Our products include stoppers and seals for vials, prefillable syringe components and systems, components for intravenous and blood collection systems, safety and administration systems, advanced injection systems, and contract design and manufacturing services.

Our customers include the leading global producers of pharmaceuticals, biologics, medical devices and consumer products.

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

Packaging Systems Segment

Our Packaging Systems segment 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.

Packaging Systems consists of three operating segments - Americas, Europe and Asia Pacific - which are aggregated for reporting purposes.

Packaging Systems' products generally consist of elastomeric components offered in a variety of standard and customer-specific configurations and formulations, which are available with advanced barrier films and coatings to enhance their performance.

West 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 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 which eliminates the need for conventional silicone application.

It helps manufacturers reduce product rejections due to trace levels of silicone molecules found in non-coated packaged drug compounds.

FluroTec and B2-coating technologies are licensed from Daikyo.

In addition, our Westar® RS and Westar® RU post-manufacturing processes are documented and fully validated procedures for washing, siliconizing and sterilizing stoppers and syringe components.

The Westar RS process prepares components for introduction into the customer's sterilizer and the Westar RU process provides sterilized components.

These processes increase the overall efficiency of injectable drug production by outsourcing component processing, thereby eliminating steps otherwise required in 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 contamination.

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 NovaPure® components, which include serum and lyophilization stoppers and syringe plungers, incorporate quality by design principles and are manufactured utilizing advanced process technologies.

The closures provide the highest levels of quality to the market, helping to ensure the safety, efficacy and purity of injectable drug products.

Our tamper-evident Flip-Off® seals are sold in a wide range of sizes and colors to meet customers' needs for product identification and differentiation.

The seals can be provided using proprietary printing for cautionary statements and embossing technology that can serve as a counterfeiting deterrence.

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.

As an adjunct to our Packaging Systems products, we offer contract analytical laboratory services for testing and evaluating primary drug-packaging components and their compatibility with the contained drug formulation.

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

Our analytical laboratories also provide specialized testing for complete drug delivery systems.

Delivery Systems Segment

Our Delivery Systems segment includes safety and administration systems, multi-component systems for drug 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 CZ®, SmartDose® and other systems.

Delivery Systems includes a variety of products and services, which are described below:

The Daikyo CZ 1ml long Insert Needle syringe system is the market's first 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.

The luer lock version of the Daikyo CZ syringe system was introduced previously, along with several sizes of sterile vials.

Additional sizes of vials continue to be introduced.

CZ technology is licensed from Daikyo.

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

The ConfiDose® auto-injector and SelfDoseTM self-injection systems enhance patient compliance and safety.

The needle remains automatically shielded at all times.

These systems eliminate preparation steps and simplify the injection of drugs, providing patients with a sterile, single-use disposable system that can be readily used at home.

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

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

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

For the fiscal year ended December 31, [removed: 2015][added: 2016]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, [removed: 2015] [added: 2016] was approximately [removed: $4,181,975,535] [added: $5,555,781,688] based on the closing price as reported on the New York Stock Exchange.

As of January 31, [removed: 2016,] [added: 2017,] there were [removed: 72,333,516] [added: 73,260,436] shares of the registrant's common stock outstanding.

| Proxy Statement for the Annual Meeting of Shareholders to be held May [removed: 3, 2016] [added: 2, 2017] | Part III |

| [PART [removed: I](#s3C372C67DEA87E25F74D5DE39A9F3237)] [added: I](#sC40A2F1748A1A1FA971699BB311ACF75)] | | Page |

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| [ITEM [removed: 7.](#s3E7839A4E8602CF51A265DE39C833F1C)] [added: 7.](#sD05BDC6B4BAE878644AA99BB32DCB408)] | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | [removed: [24](#s3E7839A4E8602CF51A265DE39C833F1C)] [added: [23](#sD05BDC6B4BAE878644AA99BB32DCB408)] |

| [ITEM [removed: 7A.](#sDC85073E7005D98A5C915DE38B630230)] [added: 7A.](#s6BB297F8305519474C2699BA63CD3725)] | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | [removed: [39](#sDC85073E7005D98A5C915DE38B630230)] [added: [37](#s6BB297F8305519474C2699BA63CD3725)] |

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| [ITEM [removed: 9.](#s9FD8E5BF1D1807D847A95DE3A26CBCC4)] [added: 9.](#s454FBB9B33F1CEE12EC199BB9475F1DB)] | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | [removed: [79](#s9FD8E5BF1D1807D847A95DE3A26CBCC4)] [added: [77](#s454FBB9B33F1CEE12EC199BB9475F1DB)] |

| [ITEM [removed: 9A.](#s323982E47A2A6454E5A25DE3A2BA3B6A)] [added: 9A.](#sD55AF03B0B2A79540F1D99BB9756713E)] | CONTROLS AND PROCEDURES | [removed: [79](#s323982E47A2A6454E5A25DE3A2BA3B6A)] [added: [78](#sD55AF03B0B2A79540F1D99BB9756713E)] |

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| [PART [removed: III](#s934177AF3C58B9744B4E5DE3A2F8CF96)] [added: III](#sFF5977E47C89D6D6187899BB9D3F893C)] | | |

| [ITEM [removed: 10.](#sB354E46C87C0A106EEFD5DE3A317F96D)] [added: 10.](#sD7DEEEE6B37CF1828B2E99BBA019E173)] | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | [removed: [80](#sB354E46C87C0A106EEFD5DE3A317F96D)] [added: [79](#sD7DEEEE6B37CF1828B2E99BBA019E173)] |

| [ITEM [removed: 11.](#sB253698972C6E276ED115DE3A356A77C)] [added: 11.](#s5D0FABDCDCBB154AEC7199BBA31D74C4)] | EXECUTIVE COMPENSATION | [removed: [80](#sB253698972C6E276ED115DE3A356A77C)] [added: [79](#s5D0FABDCDCBB154AEC7199BBA31D74C4)] |

| [ITEM [removed: 12.](#sE083CF710506B9F123A55DE38BE05162)] [added: 12.](#s79EDE88ECC8D6768346F99BA72737A3F)] | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | [removed: [80](#sE083CF710506B9F123A55DE38BE05162)] [added: [80](#s79EDE88ECC8D6768346F99BA72737A3F)] |

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| [ITEM [removed: 15.](#s10C6D203E113ED3510905DE388D3170D)] [added: 15.](#sD370892F6203A1ED7E5999BA5F590EDD)] | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | [removed: [81](#s10C6D203E113ED3510905DE388D3170D)] [added: [81](#sD370892F6203A1ED7E5999BA5F590EDD)] |

| [EXHIBIT [removed: INDEX](#s3055338BE2D8F34C84885DE3A46F6B68)] [added: INDEX](#sE9A086AD5D93F3FEF83999BBB79F27A1)] | | [removed: [F-1](#s3055338BE2D8F34C84885DE3A46F6B68)] [added: [F-1](#sE9A086AD5D93F3FEF83999BBB79F27A1)] |

10-K 1 wst10k123116.htm 10-K

| [PART II](#sF810B5DC39AF5E2382ED99BB32640EDC) | | |

| [PART IV](#s05BB2B37853141A673B999BBAEC9AC29) | | |

| [SIGNATURES](#sEA4209D1479A9523744699BBB4AC223A) | | [83](#sEA4209D1479A9523744699BBB4AC223A) |

10-K 1 wst10k123115.htm 10-K

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

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

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

| United States | | [removed: France] [added: Ireland] | | |

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

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

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

Our [removed: Delivery Systems] [added: Proprietary Products reportable] segment leases facilities located in Israel, New Jersey and Texas for research and development, as well as other activities.

| Proprietary Products | | | | |

| Contract-Manufactured Products | | | | |

| Frankfort, IN (2) | | Dublin (2) | | |

Commercial production is expected to begin in 2018.

| Packaging Systems | | | | |

| Delivery Systems | | | | |

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

| | |

| --- | --- |

| (3) | This manufacturing facility is also used for mold and die production. |

Construction began in July 2015.

[removed: Executive] [added: Generally, executive] officers are elected by the Board of Directors annually at the regular meeting of the Board of Directors following the Annual Meeting of Shareholders.

| Michael A. Anderson | [removed: 60] [added: 61] | 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. [added: He retired from West as of December 31, 2016.] |

| Annette F. Favorite | [removed: 51] [added: 52] | 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. |

| William J. Federici | [removed: 56] [added: 57] | Senior Vice President and Chief Financial Officer since joining [removed: the Company] [added: West] in August 2003. [added: Acting Treasurer since January 2017.] 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: 53] [added: 54] | [added: Senior Vice President and Chief Commercial Officer since January 2016. She was] President, Pharmaceutical Packaging Systems [removed: since] [added: from] October [removed: 2014. She was] [added: 2014 to January 2016,] President, Pharmaceutical Packaging Systems Americas Region from June 2012 to October [removed: 2014] [added: 2014,] and [removed: 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 a business segment of Cardinal Health). Prior thereto, she held various positions at West, including Quality, Research and Development, and Sales. |

| Eric M. Green | [removed: 46] [added: 47] | 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. |

| Daniel Malone | [removed: 54] [added: 55] | 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. |

| George L. Miller | [removed: 61] [added: 62] | 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. |

Additionally, executive officers may be elected upon hire or due to a promotion.

| David A. Montecalvo | 51 | Senior Vice President, Global Operations and Supply Chain since September 2016. Prior to joining West, he served in a number of senior leadership roles at Medtronic plc, including Vice President, Contract Manufacturing Operations, for the company's Restorative Therapies Group, and Vice President, Business Operations Integration, where he was responsible for directing and leading the global operations integration of Covidien plc into Medtronic. Prior thereto, he held senior operations and product development roles at Urologix, Inc. and LecTec Corporation. |

| Eric Resnick | 53 | Vice President and Chief Technology Officer since March 2016. Previously, he served as Vice President and General Manager of Integrated Packaging and Delivery within West's Innovation and Technology Team and President Proprietary Products - Pharmaceutical Delivery Systems from March 2015 until March 2016. He served as Vice President Research and Development and Self-Injection Systems from March 2014 until March 2015, and Vice President and General Manager of West's Contract Manufacturing Delivery Devices division from 2008 until March 2014. Prior thereto, he held various positions of increasing responsibility since joining The Tech Group in 2001. Prior to joining West, he held engineering and operating roles with Eastman Kodak Company and Ortho Clinical Diagnostics. |

| | | |

| | | |

| Warwick Bedwell | 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. |

| Heino Lennartz | 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. |

| John E. Paproski | 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. |

| 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. |

Our common stock is listed on the New York Stock Exchange [added: (“NYSE”)] under the symbol “WST.” The following table shows the high and low prices for our common stock as reported by the NYSE, for the periods indicated.

As of January 31, [removed: 2016,] [added: 2017,] we had [removed: 861] [added: 915] 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: $0.10] [added: $0.11] per share in each of the first three quarters of [removed: 2014; $0.11] [added: 2015; $0.12] per share in the fourth quarter of [removed: 2014] [added: 2015] and each of the first three quarters of [removed: 2015;] [added: 2016;] and [removed: $0.12] [added: $0.13] per share in the fourth quarter of [removed: 2015.][added: 2016.]

The following table shows information with respect to purchases of our common stock made during the three months ended December 31, [removed: 2015] [added: 2016] 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 [removed: (1)] [added: (1)(2)] | | | Average price paid per share [added: (1)(2)] | | | | Total number of shares purchased as part of publicly announced plans or programs [removed: (2)] [added: (2)(3)] | | | Maximum number [added: (or approximate dollar value)] of shares that may yet be purchased under the plans or programs [removed: (2)] [added: (2)(3)] | |

| (1) | Includes [removed: 310] [added: 340] 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. |

| [removed: (2)] [added: (3)] | In December [removed: 2015,] [added: 2016,] we announced a share repurchase program authorizing the repurchase of up to [removed: 700,000] [added: 800,000] shares of [removed: the Company’s] [added: our] common stock from time to time on the open market or in [removed: privately- negotiated] [added: 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. [removed: The] [added: This share repurchase] program commenced on January 1, [removed: 2016] [added: 2017] and is expected to be completed by December 31, [removed: 2016. The Company's previously-authorized share repurchase program expired on December 31, 2015.] [added: 2017.] |

The following performance graph compares the cumulative total return to holders of our common stock with the cumulative total return of the following Standard & Poor's [removed: ("S&P")] [added: (“S&P”)] indices, for the five years ended December 31, [removed: 2015:] [added: 2016:] MidCap 400 [removed: Index, 400 Health Care Equipment & Supplies Industry, SmallCap 600] Index and [removed: 600] [added: 400] Health Care Equipment & Supplies Industry.

The Company's cumulative shareholder return is based on an investment of $100 on December 31, [removed: 2010] [added: 2011] and is compared to the cumulative total return of the S&P indices mentioned above over the period with a like amount invested.

[removed: ][added: ]

| 2016 | 69.59 | 53.88 | 77.71 | 68.42 | 84.33 | 71.23 | 86.50 | 70.17 | 86.50 | 53.88 |

| October 1 – 31, 2016 | | 70 | | | $ | 72.23 | | | — | | | 329,190 | |

| November 1 – 30, 2016 | | 329,390 | | | 77.24 | | | | 329,190 | | | — | |

| December 1 – 31, 2016 | | 70 | | | 82.86 | | | | — | | | — | |

| Total | | 329,530 | | | $ | 77.24 | | | 329,190 | | | — | |

| (2) | In December 2015, we announced a share repurchase program authorizing the repurchase of up to 700,000 shares of our common stock from time to time on the open market or in privately-negotiated transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18. During the fourth quarter of 2016, we purchased 329,190 shares of our common stock under this program at a cost of $25.4 million, or an average price of $77.25 per share. During the year ended December 31, 2016, we purchased 700,000 shares of our common stock under this program at a cost of $52.2 million, or an average price of $74.54 per share. This share repurchase program expired on December 31, 2016. |

| | |

| --- | --- |

| 2014 | 51.12 | 41.41 | 45.73 | 40.93 | 45.43 | 39.11 | 55.29 | 43.49 | 55.29 | 39.11 |

| 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 | | | — | | | — | |

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.

| (in millions, except per share data) | [added: 2016 | | |] 2015 | | | 2014 | | | 2013 | | | 2012 | | | [removed: 2011 | | |]

| Net sales | $ | [removed: 1,399.8] [added: 1,509.1] | | $ | [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] | |

| Operating profit | [added: 196.8 | | |] 128.6 | | | 182.0 | | | 162.4 | | | 135.1 | | | [removed: 109.6 | | |]

| Net income | [added: 143.6 | | |] 95.6 | | | 127.1 | | | 112.3 | | | 80.7 | | | [removed: 75.5 | | |]

| Basic (1) | $ | [removed: 1.33] [added: 1.96] | | $ | [removed: 1.79] [added: 1.33] | | $ | [removed: 1.61] [added: 1.79] | | $ | [removed: 1.19] [added: 1.61] | | $ | [removed: 1.12] [added: 1.19] | |

| Diluted (2) | [added: 1.91 | | |] 1.30 | | | 1.75 | | | 1.57 | | | 1.15 | | | [removed: 1.08 | | |]

| Weighted average common shares outstanding | [added: 73.3 | | |] 72.0 | | | 70.9 | | | 69.6 | | | 68.1 | | | [removed: 67.3 | | |]

| Weighted average shares assuming dilution | [added: 75.0 | | |] 73.8 | | | 72.8 | | | 71.4 | | | 71.8 | | | [removed: 74.0 | | |]

| Dividends declared per common share | $ | [removed: 0.46] [added: 0.50] | | $ | [removed: 0.41] [added: 0.46] | | $ | [removed: 0.39] [added: 0.41] | | $ | [removed: 0.37] [added: 0.39] | | $ | [removed: 0.35] [added: 0.37] | |

| Cash and cash equivalents | $ | [removed: 274.6] [added: 203.0] | | $ | [removed: 255.3] [added: 274.6] | | $ | [removed: 230.0] [added: 255.3] | | $ | [removed: 161.9] [added: 230.0] | | $ | [removed: 91.8] [added: 161.9] | |

| Working capital [removed: †] | [added: 400.9 | | |] 359.4 | | | 406.6 | | | 413.6 | | | 295.4 | | | [removed: 228.8 | | |]

| Total assets [removed: †] | [added: 1,716.7 | | |] 1,695.1 | | | 1,669.7 | | | 1,670.2 | | | 1,562.5 | | | [removed: 1,398.7 | | |]

| Total debt [removed: †] | [added: 228.6 | | |] 298.2 | | | 335.5 | | | 372.1 | | | 410.0 | | | [removed: 349.0 | | |]

| Total equity | [added: 1,117.5 | | |] 1,023.9 | | | 956.9 | | | 906.4 | | | 728.9 | | | [removed: 654.9 | | |]

| Total invested capital [removed: †] | $ | [removed: 1,322.1] [added: 1,346.1] | | $ | [removed: 1,292.4] [added: 1,322.1] | | $ | [removed: 1,278.5] [added: 1,292.4] | | $ | [removed: 1,138.9] [added: 1,278.5] | | $ | [removed: 1,003.9] [added: 1,138.9] | |

| Gross margin (a) | [removed: 32.6] [added: 33.2] | | % | [removed: 31.5] [added: 32.6] | | % | [removed: 31.8] [added: 31.5] | | % | [removed: 30.6] [added: 31.8] | | % | [removed: 28.5] [added: 30.6] | | % |

| Operating profitability (b) | [removed: 9.2] [added: 13.0] | | % | [removed: 12.8] [added: 9.2] | | % | [removed: 11.9] [added: 12.8] | | % | [removed: 10.7] [added: 11.9] | | % | [removed: 9.2] [added: 10.7] | | % |

| Effective tax rate | [removed: 22.6] [added: 28.7] | | % | [removed: 28.0] [added: 22.6] | | % | [removed: 27.4] [added: 28.0] | | % | [removed: 30.2] [added: 27.4] | | % | [removed: 25.3] [added: 30.2] | | % |

| Return on invested capital (c) [removed: †] | [removed: 7.6] [added: 10.5] | | % | [removed: 10.2] [added: 7.6] | | % | [removed: 9.8] [added: 10.2] | | % | [removed: 8.8] [added: 9.8] | | % | [removed: 8.2] [added: 8.8] | | % |

| Net debt-to-total invested capital (d) [removed: †] | [removed: 2.3] [added: 2.2] | | % | [removed: 7.7] [added: 2.3] | | % | [removed: 13.6] [added: 7.7] | | % | [removed: 25.4] [added: 13.6] | | % | [removed: 28.2] [added: 25.4] | | % |

| Research and development expenses | $ | [removed: 34.1] [added: 36.8] | | $ | [removed: 37.3] [added: 34.1] | | $ | [removed: 37.9] [added: 37.3] | | $ | [removed: 33.2] [added: 37.9] | | $ | [removed: 29.1] [added: 33.2] | |

| Operating cash flow | [added: 219.4 | | |] 212.4 | | | 182.9 | | | 220.5 | | | 187.4 | | | [removed: 130.7 | | |]

| Stock price range | [added: $86.50-53.88 | | |] $64.59-48.66 | | | $55.29-39.11 | | | $50.60-27.31 | | | $28.01-18.68 | | | [removed: $23.98-17.75 | | |]

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 [added: with] a valuable insight into our overall performance and financial position.

| ▪ | Net income in 2016 included the impact of restructuring and related charges of $17.4 million (net of $9.0 million in tax), a charge related to the devaluation of the Venezuelan Bolivar of $2.7 million, a pension curtailment gain of $1.3 million (net of $0.8 million in tax), and a discrete tax charge of $1.0 million. |

| | |

| --- | --- |

| † | 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 2011 included the impact of restructuring and related charges of $3.5 million (net of $1.8 million in tax), income from the reduction of acquisition-related contingencies of $0.2 million, special separation benefits related to the retirement of our former President and Chief Operating Officer of $1.8 million (net of $1.1 million in tax) and net discrete tax charges of $1.4 million. |

West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013][added: 2014]

| | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net sales | | $ | [removed: 1,399.8] [added: 1,509.1] | | | $ | [removed: 1,421.4] [added: 1,399.8] | | | $ | [removed: 1,368.4] [added: 1,421.4] | |

| Cost of goods and services sold | | [removed: 944.0] [added: 1,008.0] | | | | [removed: 973.6] [added: 944.0] | | | | [removed: 933.7] [added: 973.6] | | |

| Gross profit | | [removed: 455.8] [added: 501.1] | | | | [removed: 447.8] [added: 455.8] | | | | [removed: 434.7] [added: 447.8] | | |

| Research and development | | [removed: 34.1] [added: 36.8] | | | | [removed: 37.3] [added: 34.1] | | | | [removed: 37.9] [added: 37.3] | | |

| Selling, general and administrative expenses | | [removed: 233.0] [added: 239.8] | | | | [removed: 228.7] [added: 233.0] | | | | [removed: 234.9] [added: 228.7] | | |

| Other expense (income) (Note 14) | | [removed: 60.1] [added: 27.7] | | | | [removed: (0.2] [added: 60.1] | | [removed: )] | | [removed: (0.5] [added: (0.2] | | ) |

| Operating profit | | [removed: 128.6] [added: 196.8] | | | | [removed: 182.0] [added: 128.6] | | | | [removed: 162.4] [added: 182.0] | | |

| Interest expense | | [removed: 14.1] [added: 8.1] | | | | [removed: 16.5] [added: 14.1] | | | | [removed: 17.0] [added: 16.5] | | |

| Interest income | | [removed: 1.6] [added: 1.1] | | | | [removed: 3.5] [added: 1.6] | | | | [removed: 1.9] [added: 3.5] | | |

| Income before income taxes | | [removed: 116.1] [added: 189.8] | | | | [removed: 169.0] [added: 116.1] | | | | [removed: 147.1] [added: 169.0] | | |

| Income tax expense | | [removed: 26.3] [added: 54.4] | | | | [removed: 47.2] [added: 26.3] | | | | [removed: 40.2] [added: 47.2] | | |

| Equity in net income of affiliated companies | | [removed: 5.8] [added: 8.2] | | | | [removed: 5.3] [added: 5.8] | | | | [removed: 5.4] [added: 5.3] | | |

| Net income | | $ | [removed: 95.6] [added: 143.6] | | | $ | [removed: 127.1] [added: 95.6] | | | $ | [removed: 112.3] [added: 127.1] | |

| Basic | | $ | [removed: 1.33] [added: 1.96] | | | $ | [removed: 1.79] [added: 1.33] | | | $ | [removed: 1.61] [added: 1.79] | |

| Diluted | | $ | [removed: 1.30] [added: 1.91] | | | $ | [removed: 1.75] [added: 1.30] | | | $ | [removed: 1.57] [added: 1.75] | |

| Basic | | [removed: 72.0] [added: 73.3] | | | | [removed: 70.9] [added: 72.0] | | | | [removed: 69.6] [added: 70.9] | | |

| Diluted | | [removed: 73.8] [added: 75.0] | | | | [removed: 72.8] [added: 73.8] | | | | [removed: 71.4] [added: 72.8] | | |

| Dividends declared per share | | $ | [removed: 0.46] [added: 0.50] | | | $ | [removed: 0.41] [added: 0.46] | | | $ | [removed: 0.39] [added: 0.41] | |

West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013][added: 2014]

| | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net income | $ | [removed: 95.6] [added: 143.6] | | | $ | [removed: 127.1] [added: 95.6] | | | $ | [removed: 112.3] [added: 127.1] | |

| Foreign currency translation adjustments | [removed: (70.3] [added: (18.1] | | ) | | [removed: (71.3] [added: (70.3] | | ) | | [removed: (0.9] [added: (71.3] | | ) |

| Prior service credit arising during period, net of tax of [added: $1.1 and] $0.3 | [removed: 0.4] [added: 1.9] | | | | [removed: —] [added: 0.4] | | | | — | | |

| Net actuarial [removed: (loss) gain] [added: loss] arising during period, net of tax of [removed: $(6.0), $(10.6)] [added: $(4.8), $(6.0)] and [removed: $20.3] [added: $(10.6)] | [removed: (9.3] [added: (11.1] | | ) | | [removed: (18.9] [added: (9.3] | | ) | | [removed: 33.7] [added: (18.9] | | [added: )] |

| Settlement effects arising during [removed: the] period, net of tax of [added: $1.1 and] $18.7 | [removed: 31.7] [added: 2.0] | | | | [removed: —] [added: 31.7] | | | | — | | |

| Less: amortization of actuarial loss, net of tax of [removed: $1.6, $1.1] [added: $1.2, $1.6] and [removed: $3.6] [added: $1.1] | [removed: 2.9] [added: 2.2] | | | | [removed: 2.0] [added: 2.9] | | | | [removed: 4.9] [added: 2.0] | | |

| Less: amortization of prior service credit, net of tax of $(0.5), $(0.5) and $(0.5) | [removed: (0.8] [added: (0.9] | | ) | | (0.8 | | ) | | (0.8 | | ) |

| Net [added: (losses)] gains on investment securities, net of tax of [removed: $0.4, $0.2] [added: $(0.1), $0.4] and [removed: $2.1] [added: $0.2] | [removed: 0.7] [added: (0.2] | | [added: )] | | [removed: 0.4] [added: 0.7] | | | | [removed: 3.5] [added: 0.4] | | |

| Net [added: (losses)] gains on derivatives, net of tax of [removed: $0.8, 0.9] [added: $0.1, $0.8] and [removed: $1.8] [added: $0.9] | [removed: 1.2] [added: (0.1] | | [added: )] | | [removed: 1.7] [added: 1.2] | | | | [removed: 3.0] [added: 1.7] | | |

| Other comprehensive [removed: (loss) income,] [added: loss,] net of tax | [removed: (43.4] [added: (24.2] | | ) | | [removed: (86.8] [added: (43.4] | | ) | | [removed: 43.5] [added: (86.8] | | [added: )] |

| Comprehensive income | $ | [removed: 52.2] [added: 119.4] | | | $ | [removed: 40.3] [added: 52.2] | | | $ | [removed: 155.8] [added: 40.3] | |

West Pharmaceutical Services, Inc. and Subsidiaries at December 31, [removed: 2015] [added: 2016] and [removed: 2014][added: 2015]

| | [added: 2016 | | | |] 2015 | | | | 2014 | | |

| Cash and cash equivalents | $ | [removed: 274.6] [added: 203.0] | | | $ | [removed: 255.3] [added: 274.6] | |

| Accounts receivable, net | [removed: 181.4] [added: 200.5] | | | | [removed: 179.0] [added: 181.4] | | |

| Inventories | [removed: 181.1] [added: 199.3] | | | | [removed: 181.5] [added: 181.1] | | |

| Deferred income taxes | [removed: —] [added: 66.2] | | | | [removed: 7.8] [added: 70.5] | | |

| Other current assets | [removed: 36.6] [added: 39.1] | | | | [removed: 35.5] [added: 36.6] | | |

| | 2016 | | | | 2015 | | |

| Net income | — | | | — | | | | — | | | | — | | | — | | | | 143.6 | | | | — | | | | 143.6 | | |

| Shares issued under stock plans | 1.4 | | | 0.3 | | | | 21.0 | | | | — | | | 9.9 | | | | — | | | | — | | | | 31.2 | | |

| Shares purchased under share repurchase program | — | | | — | | | | — | | | | 0.5 | | | (52.2 | | ) | | — | | | | — | | | | (52.2 | | ) |

| Balance, December 31, 2016 | 73.7 | | | $ | 18.4 | | | $ | 260.4 | | | 0.6 | | | $ | (46.1 | ) | | $ | 1,071.6 | | | $ | (186.8 | ) | | $ | 1,117.5 | |

| Non-cash restructuring charges | 17.5 | | | | — | | | | — | | |

| Purchase of cost-method investments | (8.4 | | ) | | (1.5 | | ) | | (0.5 | | ) |

| Other, net | 2.8 | | | | 3.6 | | | | 1.1 | | |

| Shares purchased under share repurchase program | (52.2 | | ) | | — | | | | — | | |

| | $ | 199.3 | | $ | 181.1 | |

During 2016, as part of our restructuring plan, we recorded within other expense a $10.0 million non-cash asset write-down associated with the discontinued use of this trademark.

During 2016, as part of our restructuring plan, we recorded within other expense a $2.8 million non-cash asset write-down associated with the discontinued use of a patent.

During 2016, as part of our restructuring plan, we recorded within other expense a $4.5 million non-cash asset write-down associated with the discontinued use of certain equipment.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance regarding the balance sheet classification of deferred taxes.

In May 2015, the FASB issued amended guidance on the disclosure requirements for certain investments whose fair value was measured using the net asset value (“NAV”) per share practical expedient.

In addition, the guidance eliminates the requirement to categorize such investments within the fair value hierarchy table.

Early adoption is permitted, and retroactive application is required for all periods presented.

We adopted this guidance in the fourth quarter of 2016.

We adopted this guidance as of January 1, 2016, on a prospective basis.

The adoption did not have a material impact on our financial statements.

In February 2015, the FASB issued amended guidance that changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities.

We adopted this guidance as of January 1, 2016, on a prospective basis.

The adoption did not have a material impact on our financial statements.

We adopted this guidance as of January 1, 2016.

The adoption did not have a material impact on our financial statements.

We adopted this guidance in the fourth quarter of 2016.

The adoption did not have an impact on our financial statements.

We adopted this guidance as of January 1, 2016.

The adoption did not have a material impact on our financial statements.

In January 2017, the FASB issued guidance which removes the second step of the goodwill impairment test.

A goodwill impairment charge will now be the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

In January 2017, the FASB issued guidance which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

This

guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.

In November 2016, the FASB issued guidance on the classification and presentation of restricted cash in the statement of cash flows.

Early adoption is permitted.

We are currently evaluating the impact that this guidance will have on our financial statements.

In October 2016, the FASB issued guidance which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.

Early adoption is permitted.

We are currently evaluating the impact that this guidance will have on our financial statements.

| Loss on debt extinguishment | | — | | | | — | | | | 0.2 | | |

| Deferred income taxes | 12.4 | | | | 15.7 | | |

| Balance, December 31, 2012 | 68.8 | | | $ | 17.2 | | | $ | 70.7 | | | 0.2 | | | $ | (3.0 | ) | | $ | 719.9 | | | $ | (75.9 | ) | | $ | 728.9 | |

| Shares issued under stock plans | 1.8 | | | 0.4 | | | | 30.9 | | | | — | | | (0.8 | | ) | | — | | | | — | | | | 30.5 | | |

| Loss on debt extinguishment | — | | | | — | | | | 0.2 | | |

| Other, net | 2.1 | | | | 0.6 | | | | 1.0 | | |

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

Similar to the impairment testing for goodwill, there is an option to first assess qualitative factors as a basis for determining whether it is necessary to perform a quantitative impairment test.

We considered this option when performing our impairment testing, but elected to continue utilizing a quantitative test, comparing the fair value and carrying value of the asset.

Any excess carrying value would represent an impairment loss.

Fair values are determined using discounted cash flow analyses.

The if-converted method assumes conversion of the debt at the beginning of the reporting period (or at time of issuance, if later).

In addition, interest charges applicable to the convertible debt, net of tax, are added back to net income for the purpose of this calculation.

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 April 2014, the FASB issued guidance for the reporting of discontinued operations, which also contained new disclosure requirements for both discontinued operations and other disposals that do not meet the definition of a discontinued operation.

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

| Assumed conversion of convertible debt, based on the if-converted method | — | | | | — | | | | 0.1 | | |

During 2013, the number of shares not included in the computation of diluted net income per share was immaterial.

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

In addition, at December 31, 2015 and 2014, we have a cost-basis investment with a carrying amount of $5.0 million and $3.5 million, respectively.

| ($ in millions) | Packaging Systems | | | Delivery Systems | | | Total | | |

| Balance, December 31, 2013 | $ | 38.0 | | $ | 76.2 | | $ | 114.2 | |

| Disposition | — | | | (0.5 | | ) | (0.5 | | ) |

| Foreign currency translation | (3.9 | | ) | (1.2 | | ) | (5.1 | | ) |

| | $ | 75.4 | | $ | (37.8 | ) | $ | 37.6 | | $ | 76.3 | | $ | (34.3 | ) | $ | 42.0 | |

Trademarks with a carrying amount of $10.0 million were determined to have indefinite lives and, therefore, do not require amortization.

| Series B floating rate notes, due July 28, 2015 | $ | — | | | $ | 25.0 | |

| Capital leases, due through 2016 (6%) | — | | | | 0.2 | | |

| Revolving credit facility, due April 26, 2017 | — | | | | 29.7 | | |

| Long-term debt | $ | 228.9 | | | $ | 308.3 | |

This Euro-denominated note, in conjunction with the Euro-denominated revolver borrowings mentioned below, is accounted for as a hedge of our net investment in our European subsidiaries.

During 2012, we entered into two forward treasury lock agreements for a total notional amount of $160.0 million, to protect against changes in the benchmark 10-year Treasury rate during the 30-60 day period leading up to the issuance date of our private placement debt.

We designated these treasury locks as cash flow hedges.

In June 2012, the pricing for our private placement debt (refer to Note 8, Debt) was finalized and accordingly, we terminated both treasury lock agreements, resulting in a $4.6 million settlement payment made by us.

This amount, which was reflected in accumulated other comprehensive loss, will be expensed over the life of the private placement debt.

Changes in the fair value of this derivative are recognized within other expense (income) and are offset by changes in the fair value of the underlying exposure being hedged.

The amount of loss recognized during the fourth quarter of 2015 was $0.2 million.

In addition, during 2015, we entered into several foreign currency hedge contracts that were designated as cash flow hedges of forecasted transactions denominated in foreign currencies, which are described in more detail below.

We entered into a series of foreign currency contracts intended to hedge the currency risk associated with a portion of our forecasted USD-denominated inventory purchases made by certain European subsidiaries, for a total notional amount of €22.1 million ($24.1 million).

We also entered into a series of foreign currency contracts to hedge the currency risk associated with a portion of our forecasted Euro-denominated sales of finished goods by one of our USD functional-currency subsidiaries for a total notional amount of €18.0 million ($19.7 million).

Based on this evaluation, our CEO and CFO have concluded that, as of December 31, [removed: 2015,] [added: 2016,] our disclosure controls and procedures are effective.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2015] [added: 2016] 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: 2015.][added: 2016.]

Also projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with [added: the] policies or procedures may deteriorate.

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2015] [added: 2016] 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: 2015,] [added: 2016,] 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 [removed: be] [added: Be] Voted on - Proposal 1 - Election of [removed: Ten] Directors in our [removed: 2016] [added: 2017] 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: 2016] [added: 2017] 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: 2017 Shareholder] [added: 2018 Shareholders] Proposals or Nominations included in our [removed: 2016] [added: 2017] 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: 2016] [added: 2017] 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: 2016] [added: 2017] Proxy Statement.

Information required by this Item is incorporated by reference from the discussion under the headings Other Information - Stock Ownership in our [removed: 2016] [added: 2017] Proxy Statement.