UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-8036

WEST PHARMACEUTICAL SERVICES, INC.

(Exact name of registrant as specified in its charter)



Pennsylvania	23-1210010
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

530 Herman O. West Drive, Exton, PA	19341-0645
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 610-594-2900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	þ		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
			Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

As of September 30, ~~2017,~~2018, there were ~~74,252,923~~74,079,671 shares of the Registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)
	Condensed Consolidated Statements of Income for the Three and Nine Months ended September 30, ~~2017~~2018 and ~~2016~~2017	3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months ended September 30, ~~2017~~2018 and ~~2016~~2017	4
	Condensed Consolidated Balance Sheets at September 30, ~~2017~~2018 and December 31, ~~2016~~2017	5
	Condensed Consolidated Statement of Equity for the Nine Months ended September 30, ~~2017~~2018	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, ~~2017~~2018 and ~~2016~~2017	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2226
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3439
ITEM 4.	CONTROLS AND PROCEDURES	3439

PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	3440
ITEM 1A.	RISK FACTORS	3540
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
~~ITEM 5.~~	~~OTHER INFORMATION~~	3540
ITEM 6.	EXHIBITS	3640

SIGNATURE		3741

EXHIBIT INDEX		F-1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(Inin millions, except per share data)


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016		2017		2016		2018			2017			2018			2017
Net sales	$	398.2		$	376.7	$	1,183.5	$	1,126.8	$	431.7		$	398.2		$	1,294.9		$	1,183.5
Cost of goods and services sold	273.2			255.6		799.4		749.1		296.1			273.1			882.7			799.2
Gross profit	125.0			121.1		384.1		377.7		135.6			125.1			412.2			384.3
Research and development	9.1			9.0		29.4		27.2		10.1			9.1			30.5			29.4
Selling, general and administrative expenses	61.5			58.3		183.7		178.9		64.9			62.6			203.2			186.4
Other (income) expense (Note 12)	(9.5		)	2.5		3.1		29.1
Other (income) expense (Note 13)										(0.2		)	(9.5		)	4.0			3.1
Operating profit	63.9			51.3		167.9		142.5		60.8			62.9			174.5			165.4
Interest expense	1.3			2.2		5.7		6.7		2.0			1.4			6.1			5.7
Interest income	0.3			0.2		0.9		0.8		(0.5		)	(0.3		)	(1.4		)	(0.9		)
Other nonoperating income										(1.8		)	(1.1		)	(5.1		)	(2.5		)
Income before income taxes	62.9			49.3		163.1		136.6		61.1			62.9			174.9			163.1
Income tax expense	14.0			14.4		19.1		38.3		8.0			14.0			26.5			19.1
Equity in net income of affiliated companies	2.1			2.7		6.7		6.2		(2.1		)	(2.1		)	(6.5		)	(6.7		)
Net income	$	51.0		$	37.6	$	150.7	$	104.5	$	55.2		$	51.0		$	154.9		$	150.7

Net income per share:
Basic	$	0.69		$	0.51	$	2.04	$	1.43	$	0.75		$	0.69		$	2.10		$	2.04
Diluted	$	0.67		$	0.50	$	1.99	$	1.40	$	0.73		$	0.67		$	2.05		$	1.99

Weighted average shares outstanding:
Basic	74.2			73.3		73.8		73.0		73.9			74.2			73.9			73.8
Diluted	75.9			75.0		75.8		74.7		75.7			75.9			75.4			75.8

Dividends declared per share	$	0.14		$	0.13	$	0.40	$	0.37	$	0.15		$	0.14		$	0.43		$	0.40

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(Inin millions)


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016		2017			2016		2018			2017			2018			2017
Net income	$	51.0		$	37.6	$	150.7		$	104.5	$	55.2		$	51.0		$	154.9		$	150.7
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	22.5			5.9		64.7			15.9		(9.5		)	22.5			(39.1		)	64.7
Defined benefit pension and other postretirement plan adjustments, net of tax of $(0.3), $0.3, $(0.7) and $0.9, respectively	(0.7		)	0.6		(1.6		)	2.2
Defined benefit pension and other postretirement plan adjustments, net of tax of $0, $(0.3), $0.1 and $(0.7), respectively											(0.2		)	(0.7		)	0.1			(1.6		)
Net loss on investment securities, net of tax of $(2.9)	—			—		(5.1		)	—		—			—			—			(5.1		)
Net (loss) gain on derivatives, net of tax of $(0.2), $(0.1), $(0.5) and $0.4, respectively	(0.6		)	—		(1.8		)	0.7
Other comprehensive income, net of tax	21.2			6.5		56.2			18.8
Net (loss) gain on derivatives, net of tax of $(0.1), $(0.2), $1.0 and $(0.5), respectively											(0.4		)	(0.6		)	2.5			(1.8		)
Other comprehensive (loss) income, net of tax											(10.1		)	21.2			(36.5		)	56.2
Comprehensive income	$	72.2		$	44.1	$	206.9		$	123.3	$	45.1		$	72.2		$	118.4		$	206.9

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(Inin millions, except per share data)


	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	269.3		$	203.0		$	297.3		$	235.9
Accounts receivable, net	251.8			200.5			302.9			253.2
Inventories	215.8			199.3			206.8			215.2
Other current assets	40.0			39.1			43.1			39.2
Total current assets	776.9			641.9			850.1			743.5
Property, plant and equipment	1,701.2			1,554.7			1,745.8			1,745.8
Less: accumulated depreciation and amortization	865.8			776.4			923.8			890.8
Property, plant and equipment, net	835.4			778.3			822.0			855.0
Investments in affiliated companies	84.6			82.7			90.5			85.8
Goodwill	107.1			103.0			106.3			107.7
Deferred income taxes	87.2			66.2			34.5			25.7
Intangible assets, net	22.5			23.3			21.0			21.7
Other noncurrent assets	16.7			21.3			21.7			23.4
Total Assets	$	1,930.4		$	1,716.7		$	1,946.1		$	1,862.8

LIABILITIES AND EQUITY
Current liabilities:
Notes payable and other current debt	$	33.2		$	2.4
Accounts payable	121.9			122.0			$	125.2		$	138.1
Pension and other postretirement benefits	2.3			2.2			2.2			2.2
Accrued salaries, wages and benefits	62.9			51.6			67.3			56.2
Income taxes payable	7.4			4.5			17.7			6.0
Other current liabilities	72.3			58.3			76.4			77.0
Total current liabilities	300.0			241.0			288.8			279.5
Long-term debt	196.6			226.2			196.2			197.0
Deferred income taxes	8.9			9.2			11.7			10.4
Pension and other postretirement benefits	62.0			75.6			53.8			53.4
Other long-term liabilities	46.0			47.2			43.8			42.6
Total Liabilities	613.5			599.2			594.3			582.9

Commitments and contingencies (Note 14)
Commitments and contingencies (Note 15)

Equity:
Preferred stock, 3.0 million shares authorized; 0 shares issued and outstanding	—			—			—			—
Common stock, $0.25 par value; 100.0 million shares authorized; issued: 75.1 million and 73.7 million; outstanding: 74.3 million and 73.1 million	18.7			18.4
Common stock, par value $0.25 per share; 100.0 million shares authorized; shares issued: 75.3 million and 75.2 million; shares outstanding: 74.1 million and 73.9 million							18.8			18.8
Capital in excess of par value	302.9			260.4			282.8			309.3
Retained earnings	1,188.6			1,071.6			1,312.7			1,178.2
Accumulated other comprehensive loss	(130.6		)	(186.8		)	(153.8		)	(117.3		)
Treasury stock, at cost (0.8 million and 0.6 million shares)	(62.7		)	(46.1		)
Treasury stock, at cost (1.2 million and 1.3 million shares)							(108.7		)	(109.1		)
Total Equity	1,316.9			1,117.5			1,351.8			1,279.9
Total Liabilities and Equity	$	1,930.4		$	1,716.7		$	1,946.1		$	1,862.8

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(Inin millions)


	Common Stock			Capital in Excess of Par Value				Treasury Stock				Retained earnings				Accumulated other comprehensive (loss) income			Total			Common Shares Issued			Common Stock				Capital in Excess of Par Value			Number of Treasury Shares		Treasury Stock			Retained earnings			Accumulated other comprehensive loss			Total
	Shares	Amount						Treasury Stock											Total			Common Shares Issued			Common Stock				Capital in Excess of Par Value			Number of Treasury Shares		Treasury Stock			Retained earnings			Accumulated other comprehensive loss			Total
Balance, December 31, 2016	73.7	$	18.4	Capital in Excess of Par Value			$	260.4			$	Retained earnings			(46.1	Accumulated other comprehensive (loss) income		)	$	1,071.6			$	(186.8	)		$	1,117.5
Effect of modified retrospective application of a new accounting standard (see Note 2)	—	—		—				—				(4.1		)		—			(4.1		)
Balance, December 31, 2017																						75.2			$	18.8			$	309.3		1.3		$	(109.1	)	$	1,178.2		$	(117.3	)	$	1,279.9
Effect of modified retrospective application of a new accounting standard (see Note 3)																						—			—				—			—		—			11.4			—			11.4
Net income	—	—		—				—				150.7				—			150.7			—			—				—			—		—			154.9			—			154.9
Stock-based compensation	—	—		4.3				7.5				—				—			11.8			—			—				6.1			—		9.3			—			—			15.4
Shares issued under stock plans	1.4	0.3		33.9				6.2				—				—			40.4			0.1			—				(32.8		)	(0.9	)	66.5			—			—			33.7
Shares purchased under share repurchase program	—	—		—				(26.9		)		—				—			(26.9		)	—			—				—			0.8		(70.8		)	—			—			(70.8		)
Shares repurchased for employee tax withholdings	—	—		(0.4		)		(3.4		)		—				—			(3.8		)	—			—				0.2			—		(4.6		)	—			—			(4.4		)
Dividends declared	—	—		—				—				(29.6		)		—			(29.6		)	—			—				—			—		—			(31.8		)	—			(31.8		)
Other adjustments to capital in excess of par value	—	—		4.7				—				—				—			4.7
Other comprehensive income, net of tax	—	—		—				—				—				56.2			56.2			—			—				—			—		—			—			(36.5		)	(36.5		)
Balance, 9/30/2017	75.1	$	18.7	$	302.9			$	(62.7	)		$	1,188.6			$	(130.6	)	$	1,316.9
Balance, September 30, 2018																						75.3			$	18.8			$	282.8		1.2		$	(108.7	)	$	1,312.7		$	(153.8	)	$	1,351.8

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(Inin millions)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2018			2017
Cash flows from operating activities:
Net income	$	150.7		$	104.5		$	154.9		$	150.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	69.9			65.9			76.1			69.9
Amortization	1.9			2.0			2.0			1.9
Stock-based compensation	13.6			14.1			14.7			13.6
Non-cash restructuring charges	—			15.9			0.8			—
Venezuela deconsolidation	11.1			—			—			11.1
Contingent consideration payments in excess of acquisition-date liability							(0.5		)	—
Other non-cash items, net	(3.2		)	(3.7		)	(4.0		)	(3.2		)
Changes in assets and liabilities	(62.2		)	(51.1		)	(28.6		)	(62.2		)
Net cash provided by operating activities	181.8			147.6			215.4			181.8

Cash flows from investing activities:
Capital expenditures	(101.3		)	(122.7		)	(74.7		)	(101.3		)
Purchase of cost-method investment	—			(8.4		)
Cash related to deconsolidated Venezuelan subsidiary	(6.0		)	—			—			(6.0		)
Other, net	3.1			2.0			2.5			3.1
Net cash used in investing activities	(104.2		)	(129.1		)	(72.2		)	(104.2		)

Cash flows from financing activities:
Repayments of long-term debt	(1.8		)	(69.2		)	—			(1.8		)
Dividend payments	(28.7		)	(26.2		)	(31.0		)	(28.7		)
Excess tax benefits from employee stock plans	—			13.9
Shares purchased under share repurchase program	(26.9		)	(26.8		)
Shares repurchased for employee tax withholdings	(3.8		)	(3.7		)
Contingent consideration payments up to amount of acquisition-date liability							—			(0.5		)
Proceeds from exercise of stock options and stock appreciation rights	36.0			21.8			30.1			36.0
Employee stock purchase plan contributions	3.2			2.8			3.6			3.2
Contingent consideration payments	(0.5		)	(0.1		)
Shares purchased under share repurchase programs							(70.8		)	(26.9		)
Shares repurchased for employee tax withholdings							(4.4		)	(3.8		)
Net cash used in financing activities	(22.5		)	(87.5		)	(72.5		)	(22.5		)
Effect of exchange rates on cash	11.2			0.3			(9.3		)	11.2
Net increase (decrease) in cash and cash equivalents	66.3			(68.7		)
Net increase in cash and cash equivalents							61.4			66.3

Cash and cash equivalents at beginning of period	203.0			274.6
Cash and cash equivalents at end of period	$	269.3		$	205.9
Cash, including cash equivalents at beginning of period							235.9			203.0
Cash, including cash equivalents at end of period							$	297.3		$	269.3

See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation: The condensed consolidated financial statements included in this report are unaudited and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and U.S. Securities and Exchange Commission (“SEC”) regulations. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, these financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial position, results of operations, cash flows and the change in equity for the periods presented. The condensed consolidated financial statements for the three and nine months ended September 30, ~~2017~~2018 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc. and its majority-owned subsidiaries (which may be referred to as “West”, the “Company”, “we”, “us” or “our”) appearing in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~“2016~~“2017 Annual Report”). The results of operations for any interim period are not necessarily indicative of results for the full year.

As of April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. Please refer to Note ~~12,~~13, Other (Income) Expense, for further discussion.

Note 2: New Accounting Standards

Recently Adopted Standards

In ~~January 2017,~~March 2018, the Financial Accounting Standards Board (“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. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements.

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. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements.

~~In October 2016, the FASB issued guidance which requires companies to recognize~~updates the income tax ~~consequences of an intra-entity transfer of an asset other than inventory~~accounting in U.S. GAAP to reflect the SEC’s interpretive guidance released on December 22, 2017, when the ~~transfer occurs.~~Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law. This guidance iswas effective ~~for fiscal years, and interim periods within those years, beginning after December~~immediately upon issuance. Please refer to Note 15, ~~2017. Early adoption is permitted. We adopted this guidance as of January 1, 2017, on a modified retrospective basis. As a result of~~Income Taxes, to the ~~adoption, a cumulative-effect adjustment of $4.1 million was recorded within retained earnings~~consolidated financial statements in our ~~condensed consolidated balance sheet as of January 1,~~ 2017 Annual Report for ~~unamortized tax expense previously deferred and previously unrecognized deferred tax assets.~~

In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted this guidance as of January 1, 2017, on a prospective basis as it relates to the timing or recognition and classification of share-based compensation award-related income tax effects. For the three and nine months ended September 30, 2017, we recorded a tax benefit of $4.8 million and $30.3 million, respectively, within income tax expense in our condensed consolidated statement of income. These tax benefits were recorded within capital in excess of par value in our condensed consolidated balance sheet in the

prior-year period. Also per the amended guidance, we classified the $30.3 million of excess tax benefits within net cash provided by operating activities in our condensed consolidated statement of cash flows, rather than net cash used in financing activities, which included the excess tax benefits for the nine months ended ~~September 30, 2016~~. The amended guidance allows entities to account for award forfeitures as they occur, however, we have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. We expect to record additional ~~tax benefits throughout 2017.~~information.

In March 2016, the FASB issued guidance that simplifies the transition to the equity method of accounting. This guidance eliminates the requirement to retroactively adopt the equity method of accounting when there is an increase in the level of ownership interest or degree of influence. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements.

In July 2015, the FASB issued guidance regarding the subsequent measurement of inventory. This guidance requires inventory measured using any method other than last-in, first-out or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value represents estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements.

~~Standards Issued Not Yet Adopted~~

In August 2017, the FASB issued guidance which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance will have on our financial statements.

In May 2017, the FASB issued guidance which amends the scope of modification accounting for share-based payment arrangements. The guidance focuses on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would not apply modification accounting if its fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We ~~are currently evaluating the impact that~~adopted this guidance ~~will~~as of January 1, 2018, on a prospective basis. The adoption did not have a material impact on our financial statements.

In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). The guidance requires the bifurcation of net benefit cost. The service cost component will be presented with other employee compensation costs in operating income (or capitalized in assets) and the other components will be reported separately outside of operations, and will not be eligible for capitalization. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. ~~Upon~~We adopted this guidance as of January 1, 2018, on a retrospective basis. As a result of this adoption, we ~~will apply the income statement classification provisions of this guidance retrospectively, and will reclassify~~reclassified net benefit cost components other than service cost from operating income to outside of operations. Net periodic benefit cost for the three months ended September 30, 2018 and 2017 was $0.8 million and $1.4 million, respectively, of which $2.6 million and $2.5 million, respectively, related to service cost and $1.8 million and $1.1 million, respectively, related to net benefit cost components other than service cost. Net periodic benefit cost for the nine months ended September 30, 2018 and 2017 was ~~$1.4~~$3.0 million and $5.3 million, respectively, of which ~~$2.5~~$8.1 million and $7.8 million, respectively, related to service cost and $5.1 million and $2.5 million, respectively, related to net benefit cost components other than service cost. ~~This~~The adoption of this guidance ~~has~~had no impact on net income.

In November 2016, the FASB issued guidance on the classification and presentation of restricted cash in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We adopted this guidance as of January 1, 2018, on a retrospective basis. As of September 30, 2018 and December 31, 2017, we had no restricted cash.

In August 2016, the FASB issued guidance to reduce the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We adopted this guidance as of January 1, 2018, on a retrospective basis. The adoption did not have a material impact on our financial statements.

In January 2016, the FASB issued guidance that addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We adopted this guidance as of January 1, 2018, on a prospective basis. The adoption did not have a material impact on our financial statements.

In May 2014, the FASB issued guidance on the accounting for revenue from contracts with customers, Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), that supersedes most existing revenue recognition guidance, including industry-specific guidance. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, ASC 606 requires enhanced disclosures regarding the nature, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The FASB subsequently issued additional clarifying standards to address issues arising from implementation of ASC 606. We adopted ASC 606 as of January 1, 2018, on a modified retrospective basis. Please refer to Note 3, Revenue, for additional information.

Standards Issued Not Yet Adopted

In August 2018, the FASB issued guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by this update. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. We are currently evaluating our adoption timing and the impact that this guidance may have on our financial statements.

In August 2018, the FASB issued guidance which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. The guidance removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant. This guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance may have on our financial statements.

In August 2018, the FASB issued guidance which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance may have on our financial statements.

In June 2018, the FASB issued guidance which expands the scope of accounting for share-based payment arrangements to include share-based payment transactions for acquiring goods and services from nonemployees. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance may have on our financial statements.

In February 2018, the FASB issued guidance to address a specific consequence of the 2017 Tax Act by allowing a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the 2017 Tax Act’s reduction of the U.S. federal corporate income tax rate. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance may have on our financial statements.

In February 2016, the FASB issued guidance on the accounting for leases. This guidance requires lessees to recognize lease assets and lease liabilities on the balance sheet and to expand disclosures about leasing arrangements, both qualitative and quantitative. In terms of transition, the guidance requires adoption based upon a modified retrospective approach. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently evaluating the impact that this guidance will have on our financial statements. As of September 30, 2018 and December 31, 2017, future minimum rental payments under non-cancelable operating leases were ~~$77.6 million.~~$67.0 million and $79.1 million, respectively.

Note 3: Revenue

Adoption of ASC 606

On January ~~2016,~~1, 2018, we adopted ASC 606, on a modified retrospective basis, applied to those contracts which were not completed as of January 1, 2018. As a result of our adoption, we recorded a cumulative-effect adjustment of $11.4 million within retained earnings in our condensed consolidated balance sheet as of January 1, 2018, to reflect a change in the ~~FASB issued guidance that addresses~~timing of revenue recognition under ASC 606, from point in time to over time, on our Contract-Manufactured Products product sales, certain ~~aspects~~Proprietary Products product sales, development and tooling agreements, as well as an acceleration on a portion of ~~recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective~~the remaining unearned income from a nonrefundable customer payment.

Results for ~~fiscal years, and interim~~reporting periods ~~within those years,~~ beginning after ~~December 15, 2017. We believe that~~January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for those periods.

The cumulative effect of the changes made to our condensed consolidated January 1, 2018 balance sheet for the adoption of ~~this guidance will not have a material~~ASC 606 was as follows:



($ in millions)	Balance at December 31, 2017		Adjustments Due to ASC 606			Balance at January 1, 2018
Assets:
Accounts receivable, net	$	253.2	$	25.0		$	278.2
Inventories	215.2		(20.8		)	194.4
Other current assets	39.2		(8.4		)	30.8

Liabilities and Equity:
Other current liabilities	$	77.0	$	(13.7	)	$	63.3
Deferred income taxes	10.4		3.0			13.4
Other long-term liabilities	42.6		(4.9		)	37.7
Retained earnings	1,178.2		11.4			1,189.6

The impact of the adoption of ASC 606 on our ~~financial statements.~~condensed consolidated income statement for the three months ended September 30, 2018 was as follows:

~~In May 2014,~~



($ in millions)	As Reported			Balances without Adoption of ASC 606			Effects of Change Higher/(Lower)
Net sales	$	431.7		$	423.5		$	8.2
Cost of goods and services sold	296.1			290.3			5.8
Research and development	10.1			10.0			0.1
Other (income) expense	(0.2		)	(0.4		)	0.2
Income tax expense	8.0			7.8			0.2
Net income	$	55.2		$	53.2		$	2.0

The impact of the ~~FASB issued guidance~~adoption of ASC 606 on our condensed consolidated income statement for the ~~accounting for~~nine months ended September 30, 2018 was as follows:



($ in millions)	As Reported		Balances without Adoption of ASC 606		Effects of Change Higher/(Lower)
Net sales	$	1,294.9	$	1,294.4	$	0.5
Cost of goods and services sold	882.7		878.9		3.8
Research and development	30.5		30.5		—
Other expense	4.0		3.5		0.5
Income tax expense	26.5		27.5		(1.0		)
Net income	$	154.9	$	157.6	$	(2.7	)

The impact of the adoption of ASC 606 on our condensed consolidated balance sheet as of September 30, 2018 was as follows:



($ in millions)	As Reported		Balances without Adoption of ASC 606		Effects of Change Higher/(Lower)
Assets:
Accounts receivable, net	$	302.9	$	277.6	$	25.3
Inventories	206.8		228.5		(21.7		)
Other current assets	43.1		54.2		(11.1		)

Liabilities and Equity:
Other current liabilities	$	76.4	$	90.2	$	(13.8	)
Deferred income taxes	11.7		9.7		2.0
Other long-term liabilities	43.8		48.2		(4.4		)
Retained earnings	1,312.7		1,304.0		8.7

Revenue Recognition

Our revenue results from ~~contracts with customers that will supersede most existing revenue recognition guidance, including industry-specific guidance. The core principle requires an entity to recognize revenue to depict~~ the ~~transfer~~sale of goods or services ~~to customers in an amount that~~and reflects the consideration to which ~~the entity expects~~we expect to be entitled to in exchange for those goods or services. ~~In addition,~~We record revenue based on a five-step model, in accordance with ASC 606. Following the ~~guidance requires enhanced disclosures regarding~~identification of a contract with a customer, we identify the nature, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. The FASB subsequently issued additional clarifying standards to address issues arising from implementation ofperformance obligations (goods or services) in the ~~new revenue recognition standard. This guidance is effective for interim and annual reporting periods beginning on or after December 15, 2017. Early adoption is permitted as of one year prior~~contract, determine the transaction price, allocate the transaction price to the ~~current effective date. Entities can choose~~performance

obligations in the contract, and recognize the revenue when (or as) we satisfy the performance obligations by transferring the promised goods or services to ~~apply~~our customers. A good or service is transferred when (or as) the ~~guidance using either a full retrospective approach~~customer obtains control of that good or a modified retrospective approach. Based on the results of the procedures performed through September 30, 2017, which has included a review of a representative sample of our contracts across our reportable segments and revenue streams, we believe that the adoption of this guidance will not have a material impact on our financial statements, particularly asservice.

We recognize the majority of our revenue, primarily relating to Proprietary Products product sales, at a point in time, following the transfer of control of our products to our customers, which typically occurs upon shipment or delivery, depending on the terms of the related agreements.

We recognize revenue relating to our Contract-Manufactured Products product sales and certain Proprietary Products product sales over time, as our performance does not create an asset with an alternative use to us and we have an enforceable right to payment for performance completed to date.

We recognize revenue relating to our development and tooling agreements over time, as our performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

For revenue recognized over time, revenue is recognized by applying a method of measuring progress toward complete satisfaction of the related performance obligation. When selecting the method for measuring progress, we select the method that best depicts the transfer of control of goods or services promised to our customers.

Revenue for our Contract-Manufactured Products product sales, certain Proprietary Products product sales, and our development and tooling agreements is recorded under an input method, which recognizes revenue on the basis of our efforts or inputs to the satisfaction of a performance obligation (for example, resources consumed, labor hours expended, costs incurred, time elapsed, or machine hours used) relative to the total expected inputs to the satisfaction of that performance obligation. The input method that we use is based on costs incurred.

The majority of the performance obligations within our contracts are satisfied within one year or less. Performance obligations satisfied beyond one year include those relating to a nonrefundable customer payment of $20.0 million received in June 2013 in return for the exclusive use of the SmartDose^® technology platform within a specific therapeutic area. As of September 30, 2018, there was $6.7 million of unearned income related to this payment, of which $0.9 million was included in other current liabilities and $5.8 million was included in other long-term liabilities. The unearned income is being recognized as income on a straight-line basis over the remaining term of the agreement. The agreement does not include a future minimum purchase commitment from the customer.

Our revenue can be generated from contracts with multiple performance obligations. When a sales agreement involves multiple performance obligations, each obligation is separately identified and the transaction price is allocated based on the amount of consideration we expect to be entitled to in exchange for transferring the promised good or service to the customer.

Some customers receive pricing rebates upon attaining established sales volumes. We record rebate costs when sales occur based on our assessment of the likelihood that the required volumes will be attained. We also maintain an allowance for product returns, as we believe that we are able to reasonably estimate the amount of returns based on our substantial historical experience.

The following table presents the approximate percentage of our net sales ~~relates~~by market group:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017⁽¹⁾		2018		2017⁽¹⁾
Biologics	21	%	23	%	21	%	23	%
Generics	21	%	22	%	21	%	21	%
Pharma	34	%	33	%	35	%	35	%
Contract-Manufactured Products	24	%	22	%	23	%	21	%
	100	%	100	%	100	%	100	%
(1) As noted above, prior period amounts have not been adjusted under the modified retrospective method.

The following table presents the approximate percentage of our net sales by product category:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017⁽¹⁾		2018		2017⁽¹⁾
High-Value Components	41	%	42	%	42	%	42	%
Standard Packaging	31	%	32	%	32	%	33	%
Delivery Devices	4	%	4	%	3	%	4	%
Contract-Manufactured Products	24	%	22	%	23	%	21	%
	100	%	100	%	100	%	100	%
(1) As noted above, prior period amounts have not been adjusted under the modified retrospective method.

The following table presents the approximate percentage of our net sales by geographic location:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017⁽¹⁾		2018		2017⁽¹⁾
Americas	51	%	50	%	48	%	51	%
Europe, Middle East, Africa	41	%	42	%	44	%	41	%
Asia Pacific	8	%	8	%	8	%	8	%
	100	%	100	%	100	%	100	%
(1) As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Contract Assets and Liabilities

Contract assets or liabilities result from transactions with revenue recorded over time. If the measure of remaining rights exceeds the measure of the remaining performance obligations, we record a contract asset. Contract assets are recorded on the condensed consolidated balance sheet in accounts receivable, net, and other assets (current and noncurrent portions, respectively). Contract assets included in accounts receivable, net, relate to the unbilled amounts of our product sales for which we have recognized revenue over time. Contract assets included in other assets represent the remaining performance obligations of our development and tooling agreements. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, we record a contract liability. Contract liabilities are recorded on the condensed consolidated balance sheet in other liabilities (current and noncurrent portions, respectively) and represent cash payments received in advance of our performance.

The following table summarizes our contract assets and liabilities, excluding contract assets included in accounts receivable, net:



	($ in millions)
Contract assets, December 31, 2017	$	7.5
Contract assets, September 30, 2018	7.6
Change in contract assets - increase (decrease)	$	0.1

Deferred income, December 31, 2017	$	(33.6	)
Deferred income, September 30, 2018	(30.0		)
Change in deferred income - decrease (increase)	$	3.6

The decrease in deferred income during the nine months ended September 30, 2018 was primarily due to the recognition of revenue of $67.0 million, including $34.5 million of revenue that was included in deferred income at the beginning of the year (of which $18.6 million was recognized in the cumulative-effect adjustment as of January

1, 2018), partially offset by additional cash payments of $62.3 million received in advance of satisfying future performance obligations along with $1.1 million in other adjustments.

Practical Expedients and Exemptions

We have elected to disregard the effects of a significant financing component, as we expect, at the inception of our contracts, that the period between when we transfer a promised good or service to the customer and when the customer pays for that good or service will be one year or less.

In addition, we have elected to omit the disclosure of the majority of our remaining performance obligations, which are satisfied within one year or less.

Supply Chain Financing

We have entered into supply chain financing agreements with certain banks, pursuant to which we offer for sale certain accounts receivable to such banks from time to time, subject to the terms of the applicable agreements. These transactions result in a reduction in accounts receivable, as the agreements transfer effective control over, and credit risk related to, the receivables to the banks. These agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold. As of September 30, 2018, we derecognized $2.3 million of accounts receivable under these agreements. Discount fees related to the sale of ~~packaging components. We continue to review the impact that the adoption of this guidance will have~~such accounts receivable on our ~~other revenue streams, our financial statement disclosures, as well as our accounting policies, business processes,~~condensed consolidated income statements for the three and ~~internal controls. We expect to apply the guidance using the modified retrospective approach.~~nine months ended September 30, 2018 were not material.

Note 3:4: Net Income Per Share

The following table reconciles the shares used in the calculation of basic net income per share to those used for diluted net income per share:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2017		2016		2017		2016
(in millions)									2018		2017		2018		2017
Net income	$	51.0	$	37.6	$	150.7	$	104.5	$	55.2	$	51.0	$	154.9	$	150.7

Weighted average common shares outstanding	74.2		73.3		73.8		73.0		73.9		74.2		73.9		73.8
Dilutive effect of equity awards, based on the treasury stock method	1.7		1.7		2.0		1.7		1.8		1.7		1.5		2.0
Weighted average shares assuming dilution	75.9		75.0		75.8		74.7		75.7		75.9		75.4		75.8

During the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, there were ~~0.5~~0.1 million and ~~0.1~~0.5 million shares, respectively, from stock-based compensation plans not included in the computation of diluted net income per share because their impact was antidilutive. There were 0.4 million ~~and 0.1 million~~ antidilutive shares outstanding during both the nine months ended September 30, ~~2017~~2018 and ~~2016, respectively.~~2017.

the Securities Exchange Act of 1934 Rule 10b-18. The number of shares ~~to be~~ repurchased and the timing of such transactions ~~will depend~~depended on a variety of factors, including market conditions. ~~The program commenced on January 1, 2017 and is expected to be completed by December 31, 2017.~~ There were no shares purchased during the three months ended September 30, ~~2017.~~2018. During the nine months ended September 30, ~~2017,~~2018, we purchased ~~325,000~~800,000 shares of our common stock under the program at a cost of ~~$26.9~~$70.8 million, or an average price of ~~$82.84~~$88.51 per share.

Note 4:5: Inventories

Inventories are valued at the lower of cost (on a first-in, first-out basis) and net realizable value. Inventory balances were as follows:


($ in millions)	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
Raw materials	$	89.2	$	78.0	$	93.3	$	88.6
Work in process	33.7		28.9		38.0		31.8
Finished goods	92.9		92.4		75.5		94.8
	$	215.8	$	199.3	$	206.8	$	215.2

Note 5:6: Affiliated Companies

At September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the aggregate carrying amount of investments in equity-method affiliates was ~~$71.2~~$77.1 million and ~~$69.3~~$72.4 million, respectively, and the aggregate carrying amount of cost-method investments, for which fair value was not readily determinable, was $13.4 million at both period-ends. We test our cost-method investments for impairment whenever circumstances indicate that the carrying value of the investments may not be recoverable. Please refer to Note 5, Affiliated Companies, to the consolidated financial statements in our ~~2016~~2017 Annual Report for additional details.

Note 6:7: Debt

The following table summarizes our long-term debt obligations, net of unamortized debt issuance costs and current maturities. The interest rates shown in parentheses are as of September 30, ~~2017.~~2018.


($ in millions)	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
Term loan, due January 1, 2018 (2.74%)	$	33.1	$	34.9
Note payable, due December 31, 2019	0.1		0.2		$	0.1	$	0.1
Credit Facility, due October 15, 2020 (1.00%)	29.3		26.4		28.7		29.6
Series A notes, due July 5, 2022 (3.67%)	42.0		42.0		42.0		42.0
Series B notes, due July 5, 2024 (3.82%)	53.0		53.0		53.0		53.0
Series C notes, due July 5, 2027 (4.02%)	73.0		73.0		73.0		73.0
	230.5		229.5		196.8		197.7
Less: unamortized debt issuance costs	0.7		0.9		0.6		0.7
Total debt	229.8		228.6		196.2		197.0
Less: current portion of long-term debt	33.2		2.4		—		—
Long-term debt, net	$	196.6	$	226.2	$	196.2	$	197.0

Please refer to Note 8, Debt, to the consolidated financial statements in our ~~2016~~2017 Annual Report for additional details regarding our debt agreements.

At September 30, ~~2017~~2018, we had ~~$29.3~~$28.7 million in outstanding long-term borrowings under our $300.0 million multi-currency revolving credit facility (the “Credit Facility”), of which ~~$4.5~~$4.4 million was denominated in Japanese Yen (“Yen”) and ~~$24.8~~$24.3 million was denominated in Euro. These borrowings, together with outstanding letters of credit of ~~$3.0~~$2.5 million, resulted in ~~an available~~a borrowing capacity available under the Credit Facility of ~~$267.7~~$268.8 million at September 30, ~~2017.~~2018. Please refer to Note 7,8, Derivative Financial Instruments, for a discussion of the foreign currency hedges associated with ~~this facility.~~

~~In addition, at September 30, 2017, we had $33.1 million outstanding under our five-year term loan due January 2018, all of which was classified as current. Please refer to Note 7,~~ ~~Derivative Financial Instruments, for a discussion of~~ the ~~interest-rate swap agreement associated with this loan, and please refer to Note 16,~~ ~~Subsequent Event, for additional details regarding this loan.~~Credit Facility.

Note 7:8: Derivative Financial Instruments

Our ongoing business operations expose us to various risks such as fluctuating interest rates, foreign exchange rates and increasing commodity prices. To manage these market risks, we periodically enter into derivative financial instruments such as interest rate swaps, options and foreign exchange contracts for periods consistent with, and for notional amounts equal to or less than, the related underlying exposures. We do not purchase or hold any derivative financial instruments for investment or trading purposes. All derivatives are recorded in our condensed consolidated balance sheet at fair value.

~~Interest Rate Risk~~

At September 30, 2017, we had a $33.1 million forward-start interest rate swap outstanding that hedges the variability in cash flows due to changes in the applicable interest rate of our variable-rate ~~five~~-year term loan. Under this swap, we receive variable interest rate payments based on one-month London Interbank Offered Rate (“LIBOR”) plus a margin in return for making monthly fixed interest payments at 5.41%. We designated this swap as a cash flow hedge. Please refer to Note 16, ~~Subsequent Event, for additional details regarding this forward-start interest rate swap agreement.~~

Foreign Exchange Rate Risk

We have entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany loans. As of September 30, 2018, the total amount of these forward exchange contracts was €10.0 million, Singapore Dollar (“SGD”) 601.5 million and $13.4 million. As of December 31, 2017, the total amount of these forward exchange contracts was ~~€72.5~~€12.0 million, SGD 171.0 million and ~~kr83.4 million. As of December 31, 2016, the total amount of these forward exchange contracts was €57.5~~$13.4 million.

In addition, we have entered into several foreign currency contracts, designated as cash flow hedges, for periods of up to eighteen months, intended to hedge the currency risk associated with a portion of our forecasted transactions denominated in foreign currencies. As of September 30, ~~2017,~~2018, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows:


(in millions)		Sell			Sell
Currency	Purchase	U. S. Dollar (“USD”)	Euro	Purchase	U. S. Dollar (“USD”)	Euro
USD	46.3	—	41.8	19.9	—	16.3
Yen	5,255.3	28.3	16.6	3,601.4	18.9	12.0
Singapore Dollar	29.9	14.6	6.2
SGD				21.5	10.7	4.5

At September 30, ~~2017,~~2018, a portion of our debt consisted of borrowings denominated in currencies other than USD. We have designated our €21.0 million ($~~24.8~~24.3 million) Euro-denominated borrowings under our Credit Facility as a hedge of our net investment in certain European subsidiaries. A cumulative foreign currency translation loss of $~~1.0~~0.5 million pre-tax ($~~0.6~~0.4 million after tax) on this debt was recorded within accumulated other comprehensive loss as of

September 30, ~~2017~~2018. We have also designated our ¥500.0 million ($~~4.5~~4.4 million) Yen-denominated borrowings under our Credit Facility as a hedge of our net investment in Daikyo Seiko, Ltd. (“Daikyo”). At September 30, ~~2017,~~2018, there was a cumulative foreign currency translation loss ~~on this Yen-denominated debt~~ of $~~0.3~~0.2 million pre-tax ($0.2 million after tax), on this Yen-denominated debt, which was also included within accumulated other comprehensive loss.

Commodity Price Risk

Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain clauses that provide for surcharges related to fluctuations in crude oil prices. The following economic hedges did not qualify for hedge accounting treatment since they did not meet the highly effective requirement at inception.

In November ~~2016,~~2017, we purchased a series of call options for a total of ~~96,525~~125,166 barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with regards to a portion of our forecasted elastomer purchases through ~~November 2017. With these contracts,~~May 2019. In April 2018, we ~~may benefit from an increase in~~purchased a series of call options for a total of 30,612 barrels of crude oil ~~prices, as there is no downward exposure other than the $0.2 million premium that we paid to purchase the contracts.~~from December 2018 through August 2019.

During the three months ended September 30, ~~2017,~~2018, the ~~loss~~gain recorded in cost of goods and services sold related to these call options was less than $0.1 million. During the nine months ended September 30, ~~2017,~~2018, the ~~loss~~gain recorded in cost of goods and services sold related to these call options was ~~$0.2~~$0.5 million.

As of September 30, ~~2017,~~2018, we had outstanding contracts to purchase ~~17,550~~72,699 barrels of crude oil from October 2018 to August 2019 at a weighted-average strike price of ~~$60~~$74.21 per barrel.

Effects of Derivative Instruments on Financial Position and Results of Operations

Please refer to Note 8,9, Fair Value Measurements, for the balance sheet location and fair values of our derivative instruments as of September 30, ~~2017~~2018 and December 31, ~~2016.~~2017.

The following table summarizes the effects of derivative instruments designated as hedges on other comprehensive income (“OCI”) and earnings, net of tax:


	Amount of (Loss) Gain Recognized in OCI for the						Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the				Location of Loss (Gain) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Recognized in OCI for the						Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the					Location of Loss (Gain) Reclassified from Accumulated OCI into Income
	Three Months Ended September 30,						Three Months Ended September 30,					Three Months Ended September 30,						Three Months Ended September 30,
($ in millions)	2017			2016			2017		2016			2018			2017			2018			2017
Cash Flow Hedges:
Foreign currency hedge contracts	$	(0.7	)	$	—		$	0.4	$	—	Net sales	$	0.1		$	(0.7	)	$	—		$	0.4	Net sales
Foreign currency hedge contracts	(0.9		)	(0.3		)	0.3		—		Cost of goods and services sold	(0.5		)	(0.9		)	(0.1		)	0.3		Cost of goods and services sold
Interest rate swap contracts	—			—			0.2		0.2		Interest expense	—			—			—			0.2		Interest expense
Forward treasury locks	—			—			0.1		0.1		Interest expense	—			—			0.1			0.1		Interest expense
Total	$	(1.6	)	$	(0.3	)	$	1.0	$	0.3		$	(0.4	)	$	(1.6	)	$	—		$	1.0
Net Investment Hedges:
Foreign currency-denominated debt	$	(0.5	)	$	(0.2	)	$	—	$	—	Other (income) expense	$	0.2		$	(0.5	)	$	—		$	—	Other expense
Total	$	(0.5	)	$	(0.2	)	$	—	$	—		$	0.2		$	(0.5	)	$	—		$	—


	Amount of (Loss) Gain Recognized in OCI for the						Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the				Location of Loss (Gain) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Recognized in OCI for the					Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the				Location of Loss (Gain) Reclassified from Accumulated OCI into Income
	Nine Months Ended September 30,						Nine Months Ended September 30,					Nine Months Ended September 30,					Nine Months Ended September 30,
($ in millions)	2017			2016			2017		2016			2018		2017			2018		2017
Cash Flow Hedges:
Foreign currency hedge contracts	$	(1.6	)	$	(0.3	)	$	0.7	$	0.1	Net sales	$	0.2	$	(1.6	)	$	0.8	$	0.7	Net sales
Foreign currency hedge contracts	(2.0		)	0.3			0.4		—		Cost of goods and services sold	0.9		(2.0		)	0.4		0.4		Cost of goods and services sold
Interest rate swap contracts	—			(0.2		)	0.5		0.6		Interest expense	—		—			—		0.5		Interest expense
Forward treasury locks	—			—			0.2		0.2		Interest expense	—		—			0.2		0.2		Interest expense
Total	$	(3.6	)	$	(0.2	)	$	1.8	$	0.9		$	1.1	$	(3.6	)	$	1.4	$	1.8
Net Investment Hedges:
Foreign currency-denominated debt	$	(1.7	)	$	(1.3	)	$	—	$	—	Other (income) expense	$	0.7	$	(1.7	)	$	—	$	—	Other expense
Total	$	(1.7	)	$	(1.3	)	$	—	$	—		$	0.7	$	(1.7	)	$	—	$	—

For the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017, there was no material ineffectiveness related to our hedges.

Note 8:9: Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables present the assets and liabilities recorded at fair value on a recurring basis:


	Balance at		Basis of Fair Value Measurements						Balance at		Basis of Fair Value Measurements
($ in millions)	September 30, 2017		Level 1		Level 2		Level 3		September 30, 2018		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets	$	8.5	$	8.5	$	—	$	—	$	9.4	$	9.4	$	—	$	—
Foreign currency contracts	1.0		—		1.0		—		2.8		—		2.8		—
	$	9.5	$	8.5	$	1.0	$	—	$	12.2	$	9.4	$	2.8	$	—
Liabilities:
Contingent consideration	$	8.0	$	—	$	—	$	8.0	$	5.2	$	—	$	—	$	5.2
Deferred compensation liabilities	9.5		9.5		—		—		10.5		10.5		—		—
Interest rate swap contract	0.2		—		0.2		—
Foreign currency contracts	4.7		—		4.7		—		5.8		—		5.8		—
	$	22.4	$	9.5	$	4.9	$	8.0	$	21.5	$	10.5	$	5.8	$	5.2


	Balance at		Basis of Fair Value Measurements						Balance at		Basis of Fair Value Measurements
($ in millions)	December 31, 2016		Level 1		Level 2		Level 3		December 31, 2017		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets	$	7.4	$	7.4	$	—	$	—	$	8.9	$	8.9	$	—	$	—
Foreign currency contracts	0.2		—		0.2		—		0.5		—		0.5		—
	$	7.6	$	7.4	$	0.2	$	—	$	9.4	$	8.9	$	0.5	$	—
Liabilities:
Contingent consideration	$	8.0	$	—	$	—	$	8.0	$	4.9	$	—	$	—	$	4.9
Deferred compensation liabilities	8.4		8.4		—		—		9.9		9.9		—		—
Interest rate swap contract	1.0		—		1.0		—
Foreign currency contracts	1.6		—		1.6		—		5.1		—		5.1		—
	$	19.0	$	8.4	$	2.6	$	8.0	$	19.9	$	9.9	$	5.1	$	4.9

Deferred compensation assets are included within other noncurrent assets and are valued using a market approach based on quoted market prices in an active market. The fair value of our foreign currency contracts, included within other current assets and other current liabilities, is valued using an income approach based on quoted forward foreign exchange rates and spot rates at the reporting date. The fair value of our contingent consideration, included within other current and other long-term liabilities, is discussed further in the section related to Level 3 fair value measurements. The fair value of deferred compensation liabilities is based on quoted prices of the underlying employees’ investment selections and is included within other long-term liabilities. Our interest rate swap, included within other current and other long-term liabilities, is valued based on the terms of the contract and observable market inputs (i.e., LIBOR, Eurodollar synthetic forwards and swap spreads). Please refer to Note 7, ~~Derivative Financial Instruments, for further discussion of our derivatives.~~

Level 3 Fair Value Measurements

The fair value of the contingent consideration liability related to the SmartDose^® technology platform (the “SmartDose contingent consideration”) was initially determined using a probability-weighted income approach, and is revalued at each reporting date or more frequently if circumstances dictate. Changes in the fair value of this obligation are recorded as income or expense within other ~~(income)~~ expense in our condensed consolidated

statements of income. The significant unobservable inputs used in the fair value measurement of the SmartDose contingent consideration are the sales projections, the probability of success factors, and the discount rate. Significant increases or decreases in any of those inputs in isolation would result in a significantly lower or higher fair value measurement. As development and commercialization of the SmartDose technology platform progresses, we may need to update the sales projections, the probability of success factors, and the discount rate used. This could result in a material increase or decrease to the SmartDose contingent consideration.

The following table provides a summary of changes in our Level 3 fair value measurements:


	($ in millions)			($ in millions)
Balance, December 31, 2015	$	6.0
Balance, December 31, 2016				$	8.0
Decrease in fair value recorded in earnings				(2.4		)
Payments				(0.7		)
Balance, December 31, 2017				4.9
Increase in fair value recorded in earnings	2.3			0.8
Payments	(0.3		)	(0.5		)
Balance, December 31, 2016	8.0
Increase in fair value recorded in earnings	0.5
Payments	(0.5		)
Balance, September 30, 2017	$	8.0
Balance, September 30, 2018				$	5.2

Other Financial Instruments

We believe that the carrying amounts of our cash and cash equivalents and accounts receivable approximate their fair values due to their near-term maturities.

The estimated fair value of long-term debt is based on quoted market prices for debt issuances with similar terms and maturities and is classified as Level 2 within the fair value hierarchy. At September 30, 2018, the estimated fair value of long-term debt was $192.5 million compared to a carrying amount of $196.2 million. At December 31, 2017, the estimated fair value of long-term debt was ~~$201.0 million compared to a carrying amount of $196.6 million. At December 31, 2016, the estimated fair value of long-term debt was $228.3~~$201.5 million and the carrying amount was ~~$226.2~~$197.0 million.

Note 9:10: Stock-Based Compensation

The West Pharmaceutical Services, Inc. 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) provides for the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to employees and non-employee directors. A committee of the Board of Directors determines the terms and conditions of awards to be granted. Vesting requirements vary by award. At September 30, ~~2017,~~2018, there were ~~4,602,225~~3,734,129 shares remaining in the 2016 Plan for future grants.

During the nine months ended September 30, ~~2017,~~2018, we granted ~~443,936~~485,313 stock options at a weighted average exercise price of ~~$83.88~~$90.05 per share based on the grant-date fair value of our stock to ~~key~~ employees under the 2016 Plan.

The weighted average grant date fair value of options granted was ~~$18.04~~$20.06 per share as determined by the Black-Scholes option valuation model using the following weighted average assumptions: a risk-free interest rate of ~~2.04%~~2.7%; expected life of ~~5.9~~5.6 years based on prior experience; stock volatility of ~~19.9%~~19.7% based on historical data; and a dividend yield of 0.7%. Stock option expense is recognized over the vesting period, net of forfeitures.

During the nine months ended September 30, ~~2017,~~2018, we granted ~~91,803~~99,886 stock-settled performance share unit (“PSU”) awards at a weighted average grant-date fair value of ~~$83.97~~$90.10 per share to ~~key employees under~~eligible employees. These awards are earned based on the ~~2016 Plan. Each PSU award entitles the holder to one share of our common stock if the~~Company’s performance against pre-established targets, including annual growth rate of revenue and return on invested capital, ~~targets are achieved~~ over a ~~three-year~~specified performance period. Depending on the achievement of the targets, recipients of stock-settled PSU awards are entitled to receive a certain number of shares of common stock. Shares earned under PSU awards may vary from 0% to 200% of an employee’s targeted award. The fair value of stock-settled PSU awards is based on the market price of our stock at the grant date and is recognized as expense over the performance period, adjusted for estimated target outcomes and net of forfeitures.

~~Total stock-based compensation expense for both the three months ended September 30, 2017 and 2016 was $4.6 million. For~~During the nine months ended September 30, ~~2017~~2018, we granted 14,745 stock-settled restricted share unit (“RSU”) awards at a weighted average grant-date fair value of $96.12 per share to eligible employees. These awards are earned over a specified performance period. The fair value of stock-settled RSU awards is based on the market price of our stock at the grant date and ~~2016,~~is recognized as expense over the performance period, net of forfeitures.

Total stock-based compensation expense was ~~$13.6~~$5.3 million and ~~$14.1~~$14.7 million for the three and nine months ended September 30, 2018, respectively. For the three and nine months ended September 30, 2017, stock-based compensation expense was $4.6 million and $13.6 million, respectively.

Note ~~10:~~11: Benefit Plans

The components of net periodic benefit cost for the three months ended September 30 were as ~~follows ($ in millions):~~

Pension benefits Other retirement benefits Total
2017 2016 2017 2016 2017 2016
Service cost $ 2.5
$ 2.3
$ —
$ 0.1
$ 2.5
$ 2.4
Interest cost 2.4
2.7
—
0.1
2.4
2.8
Expected return on assets (3.4 ) (3.1 ) —
—
(3.4 ) (3.1 )
Amortization of prior service credit (0.3 ) (0.3 ) (0.1 ) —
(0.4 ) (0.3 )
Recognized actuarial losses (gains) 1.2
1.3
(0.9 ) (0.3 ) 0.3
1.0
Net periodic benefit cost $ 2.4
$ 2.9
$ (1.0 ) $ (0.1 ) $ 1.4
$ 2.8
follows:

Pension benefits Other retirement benefits Total
2017 2016 2017 2016 2017 2016
U.S. plans $ 1.7
$ 2.3
$ (1.0 ) $ (0.1 ) $ 0.7
$ 2.2
International plans 0.7
0.6
—
—
0.7
0.6
Net periodic benefit cost $ 2.4
$ 2.9
$ (1.0 ) $ (0.1 ) $ 1.4
$ 2.8



	Pension benefits						Other retirement benefits						Total
($ in millions)	2018			2017			2018			2017			2018			2017
Service cost	$	2.6		$	2.5		$	—		$	—		$	2.6		$	2.5
Interest cost	2.3			2.4			0.1			—			2.4			2.4
Expected return on assets	(3.9		)	(3.4		)	—			—			(3.9		)	(3.4		)
Amortization of prior service credit	(0.3		)	(0.3		)	(0.2		)	(0.1		)	(0.5		)	(0.4		)
Recognized actuarial losses (gains)	0.9			1.2			(0.7		)	(0.9		)	0.2			0.3
Net periodic benefit cost	$	1.6		$	2.4		$	(0.8	)	$	(1.0	)	$	0.8		$	1.4



	Pension benefits				Other retirement benefits						Total
($ in millions)	2018		2017		2018			2017			2018		2017
U.S. plans	$	1.0	$	1.7	$	(0.8	)	$	(1.0	)	$	0.2	$	0.7
International plans	0.6		0.7		—			—			0.6		0.7
Net periodic benefit cost	$	1.6	$	2.4	$	(0.8	)	$	(1.0	)	$	0.8	$	1.4

The components of net periodic benefit cost for the nine months ended September 30 were as follows ($ in millions):


	Pension benefits						Other retirement benefits						Total						Pension benefits						Other retirement benefits						Total
	2017			2016			2017			2016			2017			2016			2018			2017			2018			2017			2018			2017
Service cost	$	7.8		$	7.6		$	—		$	0.4		$	7.8		$	8.0		$	8.1		$	7.8		$	—		$	—		$	8.1		$	7.8
Interest cost	7.3			7.9			0.2			0.3			7.5			8.2			7.0			7.3			0.2			0.2			7.2			7.5
Expected return on assets	(10.1		)	(9.5		)	—			—			(10.1		)	(9.5		)	(11.7		)	(10.1		)	—			—			(11.7		)	(10.1		)
Amortization of transition obligation	—			0.1			—			—			—			0.1
Amortization of prior service credit	(1.0		)	(1.0		)	(0.5		)	—			(1.5		)	(1.0		)	(1.1		)	(1.0		)	(0.5		)	(0.5		)	(1.6		)	(1.5		)
Recognized actuarial losses (gains)	3.6			3.6			(2.0		)	(1.0		)	1.6			2.6			2.8			3.6			(1.8		)	(2.0		)	1.0			1.6
Net periodic benefit cost	$	7.6		$	8.7		$	(2.3	)	$	(0.3	)	$	5.3		$	8.4		$	5.1		$	7.6		$	(2.1	)	$	(2.3	)	$	3.0		$	5.3


	Pension benefits				Other retirement benefits						Total				Pension benefits				Other retirement benefits						Total
	2017		2016		2017			2016			2017		2016		2018		2017		2018			2017			2018		2017
U.S. plans	$	5.5	$	6.9	$	(2.3	)	$	(0.3	)	$	3.2	$	6.6	$	3.5	$	5.5	$	(2.1	)	$	(2.3	)	$	1.4	$	3.2
International plans	2.1		1.8		—			—			2.1		1.8		1.6		2.1		—			—			1.6		2.1
Net periodic benefit cost	$	7.6	$	8.7	$	(2.3	)	$	(0.3	)	$	5.3	$	8.4	$	5.1	$	7.6	$	(2.1	)	$	(2.3	)	$	3.0	$	5.3

In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). We adopted this guidance as of January 1, 2018, on a retrospective basis. Please refer to Note 2, New Accounting Standards, for additional information.

During the nine months ended September 30, 2017, we contributed $20.0 million to our U.S. qualified pension plan.

Effective January 1, 2019, except for interest crediting, benefit accruals under our U.S. qualified and non-qualified defined benefit pension plans will cease.

Note ~~11:~~12: Accumulated Other Comprehensive Loss

The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, ~~2017~~2018:

($ in millions)
Losses on
cash flow
hedges

Unrealized gains
on investment
securities

Defined benefit
pension and other
postretirement plans

Foreign
currency
translation
Total
Balance, December 31, 2016 $ (3.2 ) $ 5.2
$ (45.4 ) $ (143.4 ) $ (186.8 )
Other comprehensive (loss) income before reclassifications (3.6 ) (5.1 ) (1.8 ) 64.7
54.2
Amounts reclassified out 1.8
—
0.2
—
2.0
Other comprehensive (loss) income, net of tax (1.8 ) (5.1 ) (1.6 ) 64.7
56.2
Balance, September 30, 2017 $ (5.0 ) $ 0.1
$ (47.0 ) $ (78.7 ) $ (130.6 )



($ in millions)	Losses on cash flow hedges			Unrealized gains on investment securities		Defined benefit pension and other postretirement plans			Foreign currency translation			Total
Balance, December 31, 2017	$	(4.2	)	$	0.5	$	(39.0	)	$	(74.6	)	$	(117.3	)
Other comprehensive income (loss) before reclassifications	1.1			—		0.6			(39.1		)	(37.4		)
Amounts reclassified out	1.4			—		(0.5		)	—			0.9
Other comprehensive income (loss), net of tax	2.5			—		0.1			(39.1		)	(36.5		)
Balance, September 30, 2018	$	(1.7	)	$	0.5	$	(38.9	)	$	(113.7	)	$	(153.8	)

A summary of the reclassifications out of accumulated other comprehensive loss is presented in the following ~~table ($ in millions):~~table:


	Three Months Ended September 30,						Nine Months Ended September 30,						Location on Statement of Income
($ in millions)													Location on Statement of Income	Three Months Ended September 30,						Nine Months Ended September 30,						Location on Statement of Income
Detail of components	2017			2016			2017			2016			Location on Statement of Income	2018			2017			2018			2017			Location on Statement of Income
Losses on cash flow hedges:													Location on Statement of Income
Foreign currency contracts	$	(0.5	)	$	—		$	(0.8	)	$	—		Net sales	$	0.1		$	(0.5	)	$	(0.8	)	$	(0.8	)	Net sales
Foreign currency contracts	(0.5		)	(0.1		)	(0.6		)	(0.2		)	Cost of goods and services sold	—			(0.5		)	(0.7		)	(0.6		)	Cost of goods and services sold
Interest rate swap contracts	(0.2		)	(0.3		)	(0.7		)	(1.0		)	Interest expense	—			(0.2		)	—			(0.7		)	Interest expense
Forward treasury locks	(0.1		)	(0.1		)	(0.3		)	(0.2		)	Interest expense	(0.1		)	(0.1		)	(0.3		)	(0.3		)	Interest expense
Total before tax	(1.3		)	(0.5		)	(2.4		)	(1.4		)		—			(1.3		)	(1.8		)	(2.4		)
Tax expense	0.3			0.2			0.6			0.5				—			0.3			0.4			0.6
Net of tax	$	(1.0	)	$	(0.3	)	$	(1.8	)	$	(0.9	)		$	—		$	(1.0	)	$	(1.4	)	$	(1.8	)
Amortization of defined benefit pension and other postretirement plans:
Transition obligation	$	—		$	—		$	—		$	(0.1	)	(a)
Prior service credit	0.4			0.3			1.5			1.0			(a)	$	0.5		$	0.4		$	1.6		$	1.5		(a)
Actuarial losses	(0.3		)	(1.0		)	(1.6		)	(2.6		)	(a)	(0.2		)	(0.3		)	(1.0		)	(1.6		)	(a)
Total before tax	0.1			(0.7		)	(0.1		)	(1.7		)		0.3			0.1			0.6			(0.1		)
Tax expense	(0.1		)	0.2			(0.1		)	0.6				—			(0.1		)	(0.1		)	(0.1		)
Net of tax	$	—		$	(0.5	)	$	(0.2	)	$	(1.1	)		$	0.3		$	—		$	0.5		$	(0.2	)
Total reclassifications for the period, net of tax	$	(1.0	)	$	(0.8	)	$	(2.0	)	$	(2.0	)		$	0.3		$	(1.0	)	$	(0.9	)	$	(2.0	)

(a) These components are included in the computation of net periodic benefit cost. Please refer to Note ~~10,~~11, Benefit Plans, for additional details.

Note ~~12:~~13: Other (Income) Expense

Other (income) expense consists of:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016			2017			2016			2018			2017			2018			2017
Restructuring and related charges:
Severance and post-employment benefits	$	—		$	1.4		$	—		$	7.8		$	0.1		$	—		$	3.4		$	—
Asset-related charges	—			0.9			—			15.9			0.4			—			0.8			—
Other charges													0.7			—			2.5			—
Total restructuring and related charges	—			2.3			—			23.7			1.2			—			6.7			—
Venezuela currency devaluation	—			—			—			2.7
Argentina currency devaluation													1.1			—			1.1			—
Venezuela deconsolidation	—			—			11.1			—			—			—			—			11.1
Development and licensing income	(9.5		)	(0.4		)	(10.3		)	(1.2		)	(0.2		)	(9.5		)	(0.6		)	(10.3		)
Contingent consideration costs	(0.2		)	—			0.5			1.9
Contingent consideration													0.2			(0.2		)	0.8			0.5
Other items	0.2			0.6			1.8			2.0			(2.5		)	0.2			(4.0		)	1.8
Total other (income) expense	$	(9.5	)	$	2.5		$	3.1		$	29.1		$	(0.2	)	$	(9.5	)	$	4.0		$	3.1

Restructuring and Related Charges

In February 2018, our Board of Directors approved a restructuring plan designed to realign our manufacturing capacity with demand. These changes are expected to be implemented over the following twelve to twenty-four

months. The plan will require restructuring and related charges in the range of $8.0 million to $13.0 million and capital expenditures in the range of $9.0 million to $14.0 million. Once fully completed, we expect that the plan will provide us with annualized savings in the range of $17.0 million to $22.0 million.

During the three months ended September 30, 2018, we recorded $1.2 million in restructuring and related charges associated with this plan, consisting of $0.1 million for severance charges, $0.4 million for non-cash asset write-downs associated with the discontinued use of certain equipment, and $0.7 million for other charges. During the nine months ended September 30, 2018, we recorded $6.7 million in restructuring and related charges associated with this plan, consisting of $3.4 million for severance charges, $0.8 million for non-cash asset write-downs associated with the discontinued use of certain equipment, and $2.5 million for other charges.

The following table presents activity related to our restructuring obligations related to the 2018 restructuring plan:



($ in millions)	Severance and benefits			Asset-related charges			Other charges			Total
Balance, December 31, 2017	$	—		$	—		$	—		$	—
Charges	3.4			0.8			2.5			6.7
Cash payments	(0.2		)	—			—			(0.2		)
Non-cash asset write-downs	—			(0.8		)	(2.5		)	(3.3		)
Balance, September 30, 2018	$	3.2		$	—		$	—		$	3.2

On February 15, 2016, our Board of Directors approved a restructuring plan designed to repurpose several of our production facilities in support of growing high-value proprietary products and to realign operational and commercial activities to meet the needs of our new market-focused commercial organization.

~~During~~ Please refer to Note 14, Other Expense, to the ~~three months ended~~consolidated financial statements in our 2017 Annual Report for further discussion of the 2016 Plan. Our remaining restructuring obligations related to the 2016 Plan as of September 30, 2016, we recorded $2.3 million in restructuring and related charges, consisting of $1.4 million for severance charges and $0.9 million for a non-cash asset write-down associated with the discontinued use of certain equipment. During the nine months ended September 30, 2016, we incurred $23.7 million in restructuring and related charges, consisting of $7.8 million for severance charges, $10.0 million for a non-cash asset write-down associated with the discontinued use of a trademark, and $5.9 million for non-cash asset write-downs associated with the discontinued use of a patent and certain equipment.

~~The following table presents activity related to our restructuring obligations:~~

($ in millions)
Severance
and benefits
Asset-related charges Other charges Total
Balance, December 31, 2015 $ —
$ —
$ —
$ —
Charges 8.9
17.3
0.2
26.4
Cash payments (3.0 ) —
—
(3.0 )
Non-cash asset write-downs —
(17.3 ) (0.2 ) (17.5 )
Balance, December 31, 2016 5.9
—
—
5.9
Cash payments (2.9 ) —
—
(2.9 )
Balance, 9/30/2017 $ 3.0
$ —
$ —
$ 3.0

~~The balance of the charges related to this plan will be recognized as incurred in 2017.~~2018 were $1.0 million.

Other Items

~~On February 17, 2016,~~During the ~~Venezuelan government announced a devaluation of the Bolivar, from the previously-prevailing official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD,~~three and ~~streamlined the previous~~

~~three-tiered currency exchange mechanism into a dual currency exchange mechanism. As a result, during the~~ nine months ended September 30, ~~2016,~~2018, we recorded a ~~$2.7~~charge of $1.1 million ~~charge.~~ related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018.

During the nine months ended September 30, 2017, as a result of the continued deterioration of conditions in Venezuela as well as our continued reduced access to USD settlement controlled by the Venezuelan government, we recorded a charge of $11.1 million related to the deconsolidation of our Venezuelan subsidiary, following our determination that we no longer met the U.S. GAAP criteria for control of that subsidiary. This charge included the derecognition of the carrying amounts of our Venezuelan ~~subsidiary's~~subsidiary’s assets and liabilities, as well as the write-off of our investment in our Venezuelan subsidiary, related unrealized translation adjustments and the elimination of intercompany accounts. As of April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. ~~We will continue to actively monitor the political and economic developments in Venezuela.~~

In addition, during the three and nine months ended September 30, ~~2017,~~2018, we ~~recognized~~recorded development ~~and licensing~~ income of ~~$9.5~~$0.2 million and ~~$10.3~~$0.6 million, respectively, related to a nonrefundable customer payment of $20.0 million received in June 2013 in return for the exclusive use of the SmartDose technology platform within ~~Proprietary Products.~~a specific therapeutic area. During the three and nine months ended September 30, 2017, we recorded income of $0.4 million and $1.2 million, respectively, related to this nonrefundable customer payment. Please refer to Note 3, Revenue, for additional information. In addition, during the three and nine months ended September 30, 2017, we recorded income of $9.1

million attributable to the reimbursement of certain costs related to a technology that we subsequently licensed to a third party. The license of technology to the third party may result in additional income in the future, contingent on commercialization of the related product. During both the three and nine months ended September 30, 2017 and 2016, we recorded income of $0.4 million and $1.2 million related to a nonrefundable customer payment of $20.0 million received in June 2013 in return for the exclusive use of the SmartDose technology platform within a specific therapeutic area. As of September 30, 2017, there was ~~$13.2 million~~ ~~of unearned income related to this payment, of which~~ ~~$1.5 million~~ ~~was included in other current liabilities and~~ ~~$11.7 million~~ was included in other long-term liabilities. The unearned income is being recognized as income on a straight-line basis over the remaining term of the agreement. The agreement does not include a future minimum purchase commitment from the customer.

Contingent consideration ~~costs represent~~represents changes in the fair value of the SmartDose contingent consideration. Please refer to Note 8,9, Fair Value Measurements, for additional details.

Other items consist of foreign exchange transaction gains and losses, gains and losses on the sale of fixed assets, and miscellaneous income and charges.

Note ~~13:~~14: Income Taxes

The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings before taxes, adjusted for the impact of discrete quarterly items.

The provision for income taxes was ~~$14.0~~$8.0 million and ~~$14.4~~$14.0 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and the effective tax rate was ~~22.3%~~13.1% and ~~29.3%~~22.3%, respectively. The provision for income taxes was ~~$19.1~~$26.5 million and ~~$38.3~~$19.1 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and the effective tax rate was ~~11.7%~~15.1% and ~~28.1%~~11.7%, respectively.

~~The decrease in the effective tax rate for~~During the three and nine months ended September 30, 2018, we recorded a tax benefit of $7.7 million and $13.2 million, respectively, associated with our adoption in 2017 of guidance issued by the FASB regarding share-based payment transactions, as compared to ~~the same periods in 2016, reflects the impact of~~ a tax benefit of $4.8 million and $30.3 million for the same periods in 2017.

During the three and nine months ended September 30, ~~2017,~~2018, we recorded a net tax charge of $0.4 million and a net tax benefit of $4.1 million, respectively, ~~associated with~~to adjust our ~~adoption~~estimated impact of the ~~guidance issued by~~2017 Tax Act. During the ~~FASB regarding share-based payment transactions. Please refer to Note 2,~~ ~~New Accounting Standards~~,year ended December 31, 2017, we had recorded a provisional charge for ~~further discussion~~the estimated impact of the ~~new accounting guidance. The decrease in~~2017 Tax Act, based upon our then-current understanding of the ~~effective tax rate for~~2017 Tax Act and the guidance available at the time. We will continue to actively monitor the developments relating to the 2017 Tax Act, and will adjust our estimate as necessary during the one-year measurement period.

During the nine months ended September 30, 2017, ~~as compared to the same period in 2016, also reflects the impact of~~we recorded a tax benefit of $3.5 million related to a planned repatriation of ~~approximately $65.0 million of cash held by non-U.S. subsidiaries during 2017. During the three months ended September 30, 2017, we repatriated $55.3 million of~~ cash held by non-U.S. subsidiaries. ~~During~~

In response to the ~~remainder~~2017 Tax Act, we reevaluated our position regarding permanent reinvestment of foreign subsidiary earnings and profits through 2017 (with the exception of China and Mexico) and elected to include in our provision for income taxes for the year ended December 31, 2017 an estimated liability of $9.8 million related to foreign withholding taxes and state income taxes that will be incurred upon the distribution of those foreign subsidiary earnings and profits to the U.S. at a future date. Following additional analysis of the 2017 Tax Act, we ~~intend~~are asserting, as of January 1, 2018, indefinite reinvestment related to ~~repatriate approximately $10.0 million~~our investment in all of ~~additional cash held by non-U.S.~~our controlled foreign subsidiaries.

Note ~~14:~~15: Commitments and Contingencies

From time to time, we are involved in product liability matters and other legal proceedings and claims generally incidental to our normal business activities. We accrue for loss contingencies when it is probable that a liability has

been incurred and the amount of the loss can be reasonably estimated. While the outcome of current proceedings cannot be accurately predicted, we believe their ultimate resolution should not have a material adverse effect on our business, financial condition, results of operations or liquidity.

There have been no significant changes to the commitments and contingencies included in our ~~2016~~2017 Annual Report.

Note ~~15:~~16: Segment Information

Our business operations are organized into two reportable segments, Proprietary Products and Contract-Manufactured Products. Our Proprietary Products reportable segment ~~develops commercial, operational,~~offers proprietary packaging, containment and ~~innovation strategies across our global network,~~drug delivery products, along with ~~specific emphasis on product offerings~~analytical lab services, to ~~biotechnology, generics,~~biologic, generic and pharmaceutical drug customers. Our Contract-Manufactured Products reportable 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.

We evaluate the performance of our segments based upon, among other things, segment net sales and operating profit. Segment operating profit excludes general corporate costs, which include executive and director compensation, stock-based compensation, adjustments to annual incentive plan expense for over- or under-attainment of targets, certain pension and other retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that we consider not representative of ongoing operations. Such items are referred to as other unallocated items and generally include restructuring and related charges, certain asset impairments and other specifically-identified income or expense items.

The following table presents information about our reportable segments, reconciled to consolidated totals:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016			2017			2016			2018			2017			2018			2017
Net sales:
Proprietary Products	$	308.9		$	298.1		$	930.5		$	899.9		$	325.2		$	308.9		$	997.4		$	930.5
Contract-Manufactured Products	89.3			79.0			253.3			227.8			106.7			89.3			297.7			253.3
Intersegment sales elimination	—			(0.4		)	(0.3		)	(0.9		)	(0.2		)	—			(0.2		)	(0.3		)
Consolidated net sales	$	398.2		$	376.7		$	1,183.5		$	1,126.8		$	431.7		$	398.2		$	1,294.9		$	1,183.5
Operating profit (loss):
Proprietary Products	$	67.0		$	57.5		$	188.2		$	185.6		$	68.2		$	67.5		$	202.7		$	189.3
Contract-Manufactured Products	10.8			8.9			30.1			25.6			11.2			10.8			29.7			30.1
Corporate	(13.9		)	(12.8		)	(39.3		)	(42.3		)	(16.3		)	(15.4		)	(50.1		)	(42.9		)
Other unallocated items	—			(2.3		)	(11.1		)	(26.4		)	(2.3		)	—			(7.8		)	(11.1		)
Total operating profit	$	63.9		$	51.3		$	167.9		$	142.5		$	60.8		$	62.9		$	174.5		$	165.4
Interest expense	1.3			2.2			5.7			6.7			2.0			1.4			6.1			5.7
Interest income	0.3			0.2			0.9			0.8			(0.5		)	(0.3		)	(1.4		)	(0.9		)
Other nonoperating income													(1.8		)	(1.1		)	(5.1		)	(2.5		)
Income before income taxes	$	62.9		$	49.3		$	163.1		$	136.6		$	61.1		$	62.9		$	174.9		$	163.1

The intersegment sales elimination, which is required for the presentation of consolidated net sales, represents the elimination of components sold between our segments.

Other unallocated items during the three and nine months ended September 30, 2018, consisted of $1.2 million and $6.7 million, respectively, in restructuring and related charges. In addition, during the three and nine months ended September 30, 2018, other unallocated items included a charge of $1.1 million related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018. Other unallocated items during the nine months ended September 30, 2017 consisted of a charge of $11.1 million related to the deconsolidation of our Venezuelan subsidiary. Other unallocated items, during the three and nine months ended September 30, 2016, consisted of $2.3 million and $23.7 million, respectively, in restructuring and related charges. In addition, during the nine months ended September 30, 2016, other unallocated items included a charge of $2.7 million related to the devaluation of the Venezuelan Bolivar from the previously-prevailing official

~~exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD.~~ Please refer to Note ~~12,~~13, Other (Income) Expense, for further discussion of these items.

~~Note 16: Subsequent Event~~

~~On October 2,~~In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). We adopted this guidance as of January 1, 2018, on a retrospective basis. As a result of this adoption, we ~~paid our $33.1 million five-year term loan due January~~reclassified net benefit cost components other than service cost from operating income to outside of operations. Net periodic benefit cost for the three months ended September 30, 2018 and ~~terminated~~2017 was $0.8 million and $1.4 million, respectively, of which $2.6 million and $2.5 million, respectively, related to service cost and $1.8 million and $1.1 million, respectively, related to net benefit cost components other than service cost. Net periodic benefit cost for the ~~associated interest-rate swap agreement. There~~nine months ended September 30, 2018 and 2017 was ~~no material gain or loss on the extinguishment~~$3.0 million and $5.3 million, respectively, of ~~this loan.~~which $8.1 million and $7.8 million, respectively, related to service cost and $5.1 million and $2.5 million, respectively, related to net benefit cost components other than service cost. Please refer to Note 2, New Accounting Standards, for additional information.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion is intended to further the reader’s understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with our condensed consolidated financial statements and accompanying notes elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes included in our ~~2016~~2017 Annual Report. Our historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks discussed in Part I, Item 1A of our ~~2016~~2017 Annual Report and in Part II, Item 1A of this Form 10-Q.

Throughout this section, references to “Notes” refer to the notes to our condensed consolidated financial statements (unaudited) in Part I, Item 1 of this Form 10-Q, unless otherwise indicated.

Non-U.S. GAAP Financial Measures

For the purpose of aiding the comparison of our year-over-year results, we may refer to net sales and other financial results excluding the effects of changes in foreign currency exchange rates. The constant-currency amounts are calculated by translating the current year’s functional currency results at the prior-year period’s exchange rate. We may also refer to consolidated operating profit and consolidated operating profit margin excluding the effects of unallocated items. The re-measured results excluding effects from currency translation and excluding the effects of unallocated items are not in conformity with U.S. GAAP and should not be used as a substitute for the comparable U.S. GAAP financial measures. The non-U.S. GAAP financial measures are incorporated into our discussion and analysis as management uses them in evaluating our results of operations, and believes that this information provides users a valuable insight into our results.

Our Operations

We are a leading global manufacturer in the design and production of ~~packaging components~~technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. Our products include ~~vial~~a variety of primary packaging, containment solutions, ~~prefillable systems, self-injection platforms, cartridge systems and components,~~ reconstitution and transfer systems, ~~intradermal~~and drug delivery ~~solutions, specialty components, and~~systems, as well as contract manufacturing and analytical lab services. Our customers include the leading ~~biotechnology, generics,~~biologic, generic, pharmaceutical, diagnostic, and medical device companies in the world. Our top priority is delivering quality products that meet the exact product specifications and quality standards customers require and expect. This focus on quality includes excellence in manufacturing, scientific and technical expertise and management, so we can partner with our customers to deliver safe, effective drug products to patients quickly and efficiently. The Company was incorporated under the laws of the Commonwealth of Pennsylvania on July 27, 1923.

~~2017~~2018 Financial Performance Summary

Consolidated net sales increased by ~~$21.5~~$33.5 million, or ~~5.7%~~8.4%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016.~~2017. Excluding foreign currency translation effects, consolidated net sales for the three months ended September 30, ~~2017~~2018 increased by ~~$13.8~~$38.3 million, or ~~3.7%~~9.6%, as compared to the same period in ~~2016.~~2017.

Consolidated net sales increased by ~~$56.7~~$111.4 million, or ~~5.0%~~9.4%, for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016.~~2017. Excluding foreign currency translation effects, consolidated net sales for the nine months ended September 30, ~~2017~~2018 increased by ~~$60.4~~$74.9 million, or ~~5.4%~~6.3%, as compared to the same period in ~~2016.~~2017.

~~Consolidated operating profit increased by $12.6~~As announced earlier this year, our Board of Directors approved a restructuring plan in February 2018 designed to realign our manufacturing capacity with demand. These changes are expected to be implemented over the following twelve to twenty-four months. The plan will require restructuring and related charges in the range of $8.0 million ~~or 24.6%,~~to $13.0 million and ~~$25.4~~capital expenditures in the range of $9.0 million ~~or 17.8%, for~~to $14.0 million. Once fully completed, we expect that the plan will provide the Company with annualized savings in the range of $17.0 million to $22.0 million. During the three months ended September 30, 2018, we recorded $1.2 million in restructuring and related charges associated with this plan, consisting of $0.1 million for severance charges, $0.4 million for non-cash asset write-downs associated with the discontinued use of certain equipment, and $0.7 million for other charges. During the nine months ended September 30, ~~2017, as compared to the same periods in 2016, as~~2018, we recorded ~~income~~$6.7 million in restructuring and related charges associated with this plan, consisting of ~~$9.1~~$3.4 million ~~attributable to~~for severance charges, $0.8 million for non-cash asset write-downs associated with the ~~reimbursement~~discontinued use of certain ~~costs related to a technology that we subsequently licensed to a third party during the three~~equipment, and ~~nine months ended September 30, 2017. Please refer to Note 12,~~ ~~Other (Income) Expense~~,$2.5 million for ~~further discussion of this item.~~other charges.

Net income ~~per diluted share was $0.67~~ for the three months ended September 30, ~~2017,~~2018 was $55.2 million, or $0.73 per diluted share, as compared to ~~$0.50 in~~$51.0 million, or $0.67 per diluted share, for the same period in ~~2016. Results~~2017. Net income for the three months ended September 30, 2018 included the impact of restructuring and related charges of $0.9 million (net of $0.3 million in tax), or $0.01 per diluted share, a net tax charge of $0.4 million for the estimated impact of the 2017 Tax Act, a tax benefit of $7.7 million, or $0.10 per diluted share, associated with our adoption in 2017 of guidance issued by the FASB regarding share-based payment transactions, and a charge of $1.1 million, or $0.02 per diluted share, related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018. Net income for the three months ended September 30, 2017 included the impact of a tax benefit of $4.8 million, or $0.06 per diluted share, associated with our adoption in 2017 of ~~the~~ guidance issued by the FASB regarding share-based payment transactions. Results for the three months ended September 30, 2016 included restructuring and related charges and a discrete tax charge, which reduced net income per diluted share by $0.02 and $0.01, respectively.

Net income ~~per diluted share was $1.99~~ for the nine months ended September 30, ~~2017,~~2018 was $154.9 million, or $2.05 per diluted share, as compared to ~~$1.40 in~~$150.7 million, or $1.99 per diluted share, for the same period in ~~2016. Results~~2017. Net income for the nine months ended September 30, 2018 included the impact of restructuring and related charges of $5.2 million (net of $1.5 million in tax), or $0.07 per diluted share, a net tax benefit of $4.1 million, or $0.06 per diluted share, for the estimated impact of the 2017 Tax Act, a tax benefit of $13.2 million, or $0.17 per diluted share, associated with our adoption in 2017 of guidance issued by the FASB regarding share-based payment transactions, and a charge of $1.1 million, or $0.02 per diluted share, related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018. Net income for the nine months ended September 30, 2017 included the impact of a tax benefit of $30.3 million, or $0.40 per diluted share, associated with our adoption in 2017 of ~~the~~ guidance issued by the FASB regarding share-based payment transactions and a charge of $11.1 million, or $0.15 per diluted share, related to the deconsolidation of our Venezuelan subsidiary, which reduced net income per diluted share by $0.15. Results for the nine months ended September 30, 2016 included the impact of restructuring and related charges, a charge related to the devaluation of the Venezuelan Bolivar, and a discrete tax charge, which reduced net income per diluted share by $0.21, $0.03, and $0.01, respectively.subsidiary.

At September 30, ~~2017,~~2018, our cash and cash equivalents balance totaled ~~$269.3~~$297.3 million and our available borrowing capacity under our Credit Facility was ~~$267.7~~$268.8 million.

RESULTS OF OPERATIONS

Percentages in the following tables and throughout the Results of Operations section may reflect rounding adjustments.

Net Sales

The following table presents net sales, consolidated and by reportable segment, for the three months ended September 30, ~~2017~~2018 and ~~2016:~~2017:


	Three Months Ended September 30,					% Change				Three Months Ended September 30,					% Change
($ in millions)	2017		2016			As-Reported		Ex-Currency		2018			2017		As-Reported		Ex-Currency
Proprietary Products	$	308.9	$	298.1		3.6	%	1.5	%	$	325.2		$	308.9	5.2	%	6.6	%
Contract-Manufactured Products	89.3		79.0			13.1	%	11.5	%	106.7			89.3		19.5	%	20.1	%
Intersegment sales elimination	—		(0.4		)	—		—		(0.2		)	—		—		—
Consolidated net sales	$	398.2	$	376.7		5.7	%	3.7	%	$	431.7		$	398.2	8.4	%	9.6	%

Consolidated net sales increased by ~~$21.5~~$33.5 million, or ~~5.7%~~8.4%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including ~~a favorable~~an unfavorable foreign currency translation impact of ~~$7.7~~$4.8 million. Excluding foreign currency translation effects, consolidated net sales for the three months ended September 30, ~~2017~~2018 increased by ~~$13.8~~$38.3 million, or ~~3.7%~~9.6%, as compared to the same period in ~~2016.~~2017.

Proprietary Products – Proprietary Products net sales increased by ~~$10.8~~$16.3 million, or ~~3.6%~~5.2%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including ~~a favorable~~an unfavorable foreign currency translation impact of ~~$6.4~~$4.3 million. Excluding foreign currency translation effects, net sales for the three months ended September 30, ~~2017~~2018 increased by ~~$4.4~~$20.6 million, or ~~1.5%~~6.6%, as compared to the same period in ~~2016. Proprietary Products sales~~2017, primarily due to growth in ~~2017 has been slower than in 2016,~~our high-value product offerings, including our Westar^®components and our ready-to-use seals, stoppers, and plungers, as customers continue to work down inventory purchased in 2016 mostly to address long production lead-times for high-value products. Additional production capacity and staffing have improved our lead-times, and we are beginning to see positive growth in 2017 for customers in the Generics and Biologics market units.well as sales price increases.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by ~~$10.3~~$17.4 million, or ~~13.1%~~19.5%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including ~~a favorable~~an unfavorable foreign currency translation impact of ~~$1.3~~$0.5 million. Excluding foreign currency translation effects, net sales for the three months ended September 30, ~~2017~~2018 increased by ~~$9.0~~$17.9 million, or ~~11.5%~~20.1%, as compared to the same period in ~~2016, primarily due to~~2017, despite the ~~initial commercial ramp-up~~impact of ~~projects that commenced~~the loss of a consumer-product customer in ~~the latter half of 2016.~~early 2018. Higher sales volume, particularly in Ireland, contributed ~~10.3~~18.0 percentage points of the increase, and sales price increases contributed ~~1.2~~2.1 percentage points of the increase.

The intersegment sales elimination, which is required for the presentation of consolidated net sales, represents the elimination of components sold between our segments.

The following table presents net sales, consolidated and by reportable segment, for the nine months ended September 30, ~~2017~~2018 and ~~2016:~~2017:


	Nine Months Ended September 30,						% Change				Nine Months Ended September 30,						% Change
($ in millions)	2017			2016			As-Reported		Ex-Currency		2018			2017			As-Reported		Ex-Currency
Proprietary Products	$	930.5		$	899.9		3.4	%	3.8	%	$	997.4		$	930.5		7.2	%	3.9	%
Contract-Manufactured Products	253.3			227.8			11.2	%	11.1	%	297.7			253.3			17.6	%	15.2	%
Intersegment sales elimination	(0.3		)	(0.9		)	—		—		(0.2		)	(0.3		)	—		—
Consolidated net sales	$	1,183.5		$	1,126.8		5.0	%	5.4	%	$	1,294.9		$	1,183.5		9.4	%	6.3	%

Consolidated net sales increased by ~~$56.7~~$111.4 million, or ~~5.0%~~9.4%, for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including ~~an unfavorable~~a favorable foreign currency translation impact of ~~$3.7~~$36.5 million. Excluding foreign currency translation effects, consolidated net sales for the nine months ended September 30, ~~2017~~2018 increased by ~~$60.4~~$74.9 million, or ~~5.4%~~6.3%, as compared to the same period in ~~2016.~~2017.

Proprietary Products – Proprietary Products net sales increased by ~~$30.6~~$66.9 million, or ~~3.4%~~7.2%, for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including ~~an unfavorable~~a favorable foreign currency translation impact of ~~$3.9~~$30.5 million. Excluding foreign currency translation effects, net sales for the nine months ended September 30, ~~2017~~2018 increased by ~~$34.5~~$36.4 million, or ~~3.8%~~3.9%, as compared to the same period in ~~2016, for the same reasons included~~2017, as growth in ~~the three months ended September 30, 2017 discussion above. Sales volume contributed 3.2 percentage points of the increase,~~ our high-value product offerings, including our Westarand FluroTec-coated components, our administration systems, and our ready-to-use seals, stoppers, and plungers, as well as sales price increases, ~~contributed 0.6 percentage points~~offset the impact of the ~~increase.~~deconsolidation of our Venezuelan subsidiary as of April 1, 2017.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by ~~$25.5~~$44.4 million, or ~~11.2%~~17.6%, for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including a favorable foreign currency translation impact of ~~$0.2~~$6.0 million. Excluding foreign currency translation effects, net sales for the nine months ended September 30, ~~2017~~2018 increased by ~~$25.3~~$38.4 million, or ~~11.1%~~15.2%, as compared to the same period in ~~2016, primarily due to~~2017, despite the ~~initial commercial ramp-up~~impact of ~~projects that commenced~~the loss of a consumer-product customer in ~~the latter half of 2016.~~early 2018. Higher sales volume, particularly in Ireland, contributed ~~9.7~~13.4 percentage points of the increase, and sales price increases contributed ~~1.4~~1.8 percentage points of the increase.

The intersegment sales elimination, which is required for the presentation of consolidated net sales, represents the elimination of components sold between our segments.

Gross Profit

The following table presents gross profit and related gross profit margins, consolidated and by reportable segment:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016			2017			2016			2018			2017			2018			2017
Proprietary Products:
Gross Profit	$	110.5		$	108.4		$	342.5		$	340.9		$	120.4		$	110.6		$	370.4		$	342.7
Gross Profit Margin	35.8		%	36.4		%	36.8		%	37.9		%	37.0		%	35.8		%	37.1		%	36.8		%
Contract-Manufactured Products:
Gross Profit	$	14.5		$	12.7		$	41.6		$	36.8		$	15.2		$	14.5		$	41.8		$	41.6
Gross Profit Margin	16.3		%	16.0		%	16.5		%	16.1		%	14.3		%	16.3		%	14.0		%	16.5		%
Consolidated Gross Profit	$	125.0		$	121.1		$	384.1		$	377.7		$	135.6		$	125.1		$	412.2		$	384.3
Consolidated Gross Profit Margin	31.4		%	32.1		%	32.5		%	33.5		%	31.4		%	31.4		%	31.8		%	32.5		%

Consolidated gross profit increased by ~~$3.9~~$10.5 million, or ~~3.2%~~8.4%, and $27.9 million, or 7.3%, for the three and nine months ended September 30, ~~2017,~~2018, as compared to the same ~~period~~periods in ~~2016, including a favorable foreign currency translation impact of $2.1 million. Consolidated gross profit margin decreased by 0.7 margin points for the three months ended September 30,~~ 2017, ~~as compared to the same period in 2016.~~

~~Consolidated gross profit increased by $6.4 million, or 1.7%, for the nine months ended September 30, 2017, as compared to the same period in 2016,~~ including an unfavorable foreign currency translation impact of ~~$1.1 million.~~$1.5 million for the three months ended September 30, 2018 and a favorable foreign currency translation impact of $11.4 million for the nine months ended September 30, 2018. Consolidated gross profit margin remained constant at 31.4% for the three months ended September 30, 2018, as compared to the same period in 2017, and decreased by ~~1.0~~0.7 margin points for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016.~~2017.

Proprietary Products – Proprietary Products gross profit increased by ~~$2.1~~$9.8 million, or ~~1.9%~~8.9%, and ~~$1.6~~$27.7 million, or 8.1%, for the three and nine months ended September 30, 2018, respectively, as compared to the same periods in 2017, including an unfavorable foreign currency translation impact of $1.4 million for the three months ended September 30, 2018 and a favorable foreign currency translation impact of $10.4 million for the nine months ended September 30, 2018. Proprietary Products gross profit margin increased by 1.2 margin points for the three months ended September 30, 2018, as compared to the same period in 2017, due to a favorable mix of products sold, production efficiencies, and sales price increases, partially offset by increased labor and depreciation costs, as well as the impact of under-absorbed overhead costs from our new facility in Waterford, Ireland and higher raw material costs. Proprietary Products gross profit margin increased by 0.3 margin points for the nine months ended September 30, 2018, as compared to the same period in 2017, as production efficiencies, sales price increases, and a favorable mix of products sold were partially offset by the impact of under-absorbed overhead costs from our new facility in Waterford, Ireland and the deconsolidation of our Venezuelan subsidiary as of April 1, 2017, as well as increased labor and depreciation costs and higher raw material costs.

Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $0.7 million, or 4.8%, and $0.2 million, or 0.5%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same periods in

~~2016,~~ 2017, including ~~a favorable~~an unfavorable foreign currency translation impact of ~~$2.0~~$0.1 million for the three months ended September 30, ~~2017~~2018 and ~~an unfavorable~~a favorable foreign currency ~~transaction~~translation impact of ~~$1.1~~$1.0 million for the nine months ended September 30, ~~2017. Proprietary~~2018, respectively. Contract-Manufactured Products gross profit margin decreased by ~~0.6~~2.0 margin points for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, due to ~~lower sales growth~~unabsorbed overhead from plant consolidation activities, start-up costs associated with the launch of ~~high-value products~~new programs, and ~~increased labor, overhead and depreciation~~higher raw material costs, partially offset by ~~production efficiencies. Proprietary~~sales price increases. Contract-Manufactured Products gross profit margin decreased by ~~1.1~~2.5 margin points for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016, as increased labor,~~2017, due to unabsorbed overhead from plant consolidation activities, start-up costs associated with the launch of new programs, an unfavorable mix of product sales and ~~depreciation~~lower profitability on development and tooling agreements, and higher raw material costs, ~~were~~ partially offset by ~~production efficiencies and~~ sales price increases.

~~Contract-Manufactured Products –~~ Contract-Manufactured Products gross profit increased by $1.8 million, or 14.2%, and $4.8 million, or 13.0%, for the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016. Contract-Manufactured Products gross profit margin increased by 0.3 margin points for the three months ended September 30, 2017, as compared to the same period in 2016, as a favorable mix of products sold and higher sales volume were partially offset by increased labor, overhead and depreciation costs. Contract-Manufactured Products gross profit margin increased by 0.4 margin points for the nine months ended September 30, 2017, as compared to the same period in 2016, as sales price increases, a favorable mix of products sold, higher sales volume, and production efficiencies were partially offset by increased labor, overhead and depreciation costs.

Research and Development (“R&D”) Costs

The following table presents R&D costs, consolidated and by reportable segment:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2017		2016		2017		2016		2018		2017		2018		2017
Proprietary Products	$	9.1	$	9.0	$	29.4	$	27.2	$	10.1	$	9.1	$	30.5	$	29.4
Contract-Manufactured Products	—		—		—		—		—		—		—		—
Consolidated R&D Costs	$	9.1	$	9.0	$	29.4	$	27.2	$	10.1	$	9.1	$	30.5	$	29.4

Consolidated R&D costs increased by ~~$0.1~~$1.0 million, or ~~1.1%~~11.0%, and ~~$2.2~~$1.1 million, or ~~8.1%~~3.7%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same periods in ~~2016, due to~~2017. Efforts remain focused on the continued investment in self-injection systems development, ~~formulation development~~elastomeric packaging components, and ~~delivery~~formulation development.

All of the R&D costs incurred during the three and nine months ended September 30, ~~2017~~2018 related to Proprietary Products.

Selling, General and Administrative (“SG&A”) Costs

The following table presents SG&A costs, consolidated and by reportable segment and corporate:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016			2017			2016			2018			2017			2018			2017
Proprietary Products	$	43.8		$	41.7		$	132.6		$	125.0		$	44.4		$	43.4		$	140.3		$	131.7
Contract-Manufactured Products	3.8			3.8			11.7			11.6			4.1			3.8			12.7			11.7
Corporate	13.9			12.8			39.4			42.3			16.4			15.4			50.2			43.0
Consolidated SG&A costs	$	61.5		$	58.3		$	183.7		$	178.9		$	64.9		$	62.6		$	203.2		$	186.4
SG&A as a % of net sales	15.4		%	15.5		%	15.5		%	15.9		%	15.0		%	15.7		%	15.7		%	15.7		%

Consolidated SG&A costs increased by ~~$3.2~~$2.3 million, or ~~5.5%~~3.7%, and $16.8 million, or 9.0%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same ~~period~~periods in ~~2016, including the impact of foreign currency translation, which increased SG&A costs by $0.7 million for the three months ended September 30, 2017.~~

~~Consolidated SG&A costs increased by $4.8 million, or 2.7%, for the nine months ended September 30,~~ 2017, ~~as compared to the same period in 2016,~~ including the impact of foreign currency translation, which decreased SG&A costs by ~~$0.2~~$0.4 million for the three months ended September 30, 2018 and increased SG&A costs by $3.2 million for the nine months ended September 30, ~~2017.~~2018.

Proprietary Products – Proprietary Products SG&A costs increased by ~~$2.1~~$1.0 million, or ~~5.0%~~2.3%, and ~~$7.6~~$8.6 million, or ~~6.1%~~6.5%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same periods in ~~2016,~~2017, primarily due to ~~increases in~~higher commercial sales compensation costs ~~primarily related to headcount~~ and ~~merit increases.~~legal costs. Foreign currency translation ~~increased~~decreased Proprietary Products SG&A costs by ~~$0.7~~$0.4 million for the three months ended September 30, ~~2017,~~2018 and ~~decreased~~increased Proprietary Products SG&A costs by ~~$0.2~~$3.1 million for the nine months ended September 30, ~~2017.~~2018.

Contract-Manufactured Products – Contract-Manufactured Products SG&A costs ~~remained constant at $3.8~~increased by $0.3 million, or 7.9%, and $1.0 million, or 8.5%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same ~~period~~periods in ~~2016.~~

~~Contract-Manufactured Products SG&A costs increased by $0.1 million, or 0.9%, for the nine months ended September 30,~~ 2017, ~~as compared to the same period in 2016,~~ due to ~~an increase~~increases in ~~travel~~compensation and ~~maintenance~~miscellaneous costs.

Corporate – Corporate SG&A costs increased by ~~$1.1~~$1.0 million, or ~~8.6%~~6.5%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, primarily due to increases in ~~outside services~~general and ~~incentive~~stock-based compensation ~~costs, partially offset by a decrease in U.S. pension~~ costs.

Corporate SG&A costs ~~decreased~~increased by ~~$2.9~~$7.2 million, or ~~6.9%~~16.7%, for the nine months ended September 30, ~~2017,~~ 2018,

as compared to the same period in ~~2016,~~2017, primarily due to ~~a decrease~~increases in ~~U.S. pension~~general, incentive-based, and stock-based compensation costs. as well as outside services.

Other (Income) Expense

The following table presents other income and expense items, consolidated and by reportable segment and unallocated items:


(Income) Expense	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016		2017			2016			2018			2017			2018			2017
Proprietary Products	$	(9.4	)	$	0.2	$	(7.7	)	$	3.1		$	(2.3	)	$	(9.4	)	$	(3.1	)	$	(7.7	)
Contract-Manufactured Products	(0.1		)	—		(0.2		)	(0.4		)	(0.1		)	(0.1		)	(0.6		)	(0.2		)
Corporate	—			—		(0.1		)	—			(0.1		)	—			(0.1		)	(0.1		)
Unallocated items	—			2.3		11.1			26.4			2.3			—			7.8			11.1
Consolidated other (income) expense	$	(9.5	)	$	2.5	$	3.1		$	29.1		$	(0.2	)	$	(9.5	)	$	4.0		$	3.1

Other income and expense items, consisting of foreign exchange transaction gains and losses, gains and losses on the sale of fixed assets, development and licensing income, contingent consideration, ~~costs,~~ and miscellaneous income and charges, are generally recorded within segment results.

Consolidated other ~~(income) expense changed~~income decreased by ~~$12.0~~$9.3 million for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016.~~ 2017.

Consolidated other expense ~~decreased~~increased by ~~$26.0~~$0.9 million for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016.~~

2017.

Proprietary Products – Proprietary Products other ~~(income) expense changed~~income decreased by ~~$9.6~~$7.1 million and ~~$10.8~~$4.6 million for the three and nine months ended September 30, ~~2017, respectively,~~2018, as compared to the same periods in ~~2016,~~2017, as we recorded income of $9.1 million attributable to the reimbursement of certain costs related to a technology that we subsequently licensed to a third party during the three and nine months ended September 30, ~~2017.~~2017, partially offset by foreign exchange transaction gains in Europe during the three and nine months ended September 30, 2018. Please refer to Note ~~12,~~13, Other (Income) Expense, for further discussion of ~~this item.~~the $9.1 million attributable to the reimbursement of certain costs.

Contract-Manufactured Products – Contract-Manufactured Products other income ~~increased by~~remained constant at $0.1 million for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016, due to foreign exchange transaction gains.~~

2017. Contract-Manufactured Products other income ~~decreased~~increased by ~~$0.2~~$0.4 million for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, due to gains on the sale of fixed ~~assets recorded during the nine months ended September 30, 2016, partially offset by foreign exchange transaction gains recorded during the nine months ended September 30, 2017.~~assets.

Corporate – Corporate other income increased by $0.1 million for the ~~nine~~three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016.~~2017, and remained constant at $0.1 million for the nine months ended September 30, 2018, as compared to the same period in 2017.

Unallocated items – During the three and nine months ended September 30, 2018, we recorded $1.2 million and $6.7 million, respectively, in restructuring and related charges. In addition, during the three and nine months ended September 30, 2018, we recorded a charge of $1.1 million related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018. During the nine months ended September 30, 2017, ~~as a result of the continued deterioration of conditions in Venezuela as well as our continued reduced access to USD settlement controlled by the Venezuelan government,~~ we recorded a charge of $11.1 million related to the deconsolidation of our Venezuelan ~~subsidiary, following our determination that we no longer met the U.S. GAAP criteria for control of that~~ subsidiary. During the three months ended September 30, 2016, we recorded $2.3 million in restructuring and related charges, consisting of $1.4 million for severance charges and $0.9 million for a non-cash asset write-down associated with the discontinued use of certain equipment. During the nine months ended September 30, 2016, we incurred $23.7 million in restructuring and related charges, consisting of $7.8 million for severance charges, $10.0 million for a non-cash asset write-down associated with the discontinued use of a trademark, and $5.9 million for non-cash asset write-downs associated with the discontinued use of a patent and certain equipment. In addition, during the nine months ended September 30, 2016, we recorded a $2.7 million charge related to the devaluation of the Venezuelan Bolivar from the previously-prevailing official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD. Please refer to Note ~~12,~~13, Other (Income) Expense, for further discussion of these items.

Operating Profit

The following table presents adjusted operating profit, consolidated and by reportable segment, corporate and unallocated items:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016			2017			2016			2018			2017			2018			2017
Proprietary Products	$	67.0		$	57.5		$	188.2		$	185.6		$	68.2		$	67.5		$	202.7		$	189.3
Contract-Manufactured Products	10.8			8.9			30.1			25.6			11.2			10.8			29.7			30.1
Corporate	(13.9		)	(12.8		)	(39.3		)	(42.3		)	(16.3		)	(15.4		)	(50.1		)	(42.9		)
Adjusted consolidated operating profit	$	63.9		$	53.6		$	179.0		$	168.9		$	63.1		$	62.9		$	182.3		$	176.5
Adjusted consolidated operating profit margin	16.1		%	14.2		%	15.1		%	15.0		%	14.6		%	15.8		%	14.1		%	14.9		%
Unallocated items	—			(2.3		)	(11.1		)	(26.4		)	(2.3		)	—			(7.8		)	(11.1		)
Consolidated operating profit	$	63.9		$	51.3		$	167.9		$	142.5		$	60.8		$	62.9		$	174.5		$	165.4
Consolidated operating profit margin	16.1		%	13.6		%	14.2		%	12.6		%	14.1		%	15.8		%	13.5		%	14.0		%

Consolidated operating profit ~~increased~~decreased by ~~$12.6~~$2.1 million, or ~~24.6%~~3.3%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, including an unfavorable foreign currency translation impact of $1.1 million for the three months ended September 30, 2018.

Consolidated operating profit increased by $9.1 million, or 5.5%, for the nine months ended September 30, 2018, as compared to the same period in 2017, including a favorable foreign currency translation impact of ~~$1.3 million.~~

~~Consolidated operating profit increased by $25.4~~$8.0 million ~~or 17.8%,~~ for the nine months ended September 30, ~~2017, as compared to the same period in 2016, including an unfavorable foreign currency translation impact of $1.0 million.~~2018.

Proprietary Products – Proprietary Products operating profit increased by ~~$9.5~~$0.7 million, or ~~16.5%~~1.0%, and $13.4 million, or 7.1%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same ~~period~~periods in ~~2016, including a favorable foreign currency translation impact of $1.2 million, due to the factors described above.~~

~~Proprietary Products operating profit increased by $2.6 million, or 1.4%, for the nine months ended September 30,~~ 2017, ~~as compared to the same period in 2016,~~ including an unfavorable foreign currency translation impact of $1.0 million for the three months ended September 30, 2018 and a favorable foreign currency translation impact of $7.1 million for the nine months ended September 30, 2018, due to the factors described above.

Contract-Manufactured Products – Contract-Manufactured Products operating profit increased by ~~$1.9~~$0.4 million, or ~~21.3%, and $4.5 million, or 17.6%~~3.7%, for the three ~~and nine~~ months ended September 30, ~~2017, respectively,~~2018, as compared to the same ~~periods~~period in ~~2016,~~2017, including ~~a favorable~~an unfavorable foreign currency translation impact of $0.1 million for the three months ended September 30, 2018, due to the factors described above. Contract-Manufactured Products operating profit decreased by $0.4 million, or 1.3%, for the nine months ended September 30, 2018, as compared to the same period in 2017, including a favorable foreign currency translation impact of $0.9 million for the nine months ended September 30, 2018, due to the factors described above.

Corporate – Corporate costs increased by ~~$1.1~~$0.9 million, or ~~8.6%~~5.8%, and $7.2 million, or 16.8%, for the three and nine months ended September 30, ~~2017,~~2018, respectively, as compared to the same period in ~~2016,~~2017, due to the factors described above.

~~Corporate costs decreased by $3.0 million, or 7.1%, for the nine months ended September 30, 2017, as compared to the same period in 2016, due to the factors described above.~~

Unallocated items – Please refer to the Other (Income) Expense section for details.

Interest Expense, Net

The following table presents interest expense, net, by significant component:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2017			2016			2017			2016			2018			2017			2018			2017
Interest expense	$	2.7		$	3.0		$	8.2		$	9.0		$	2.3		$	2.8		$	6.9		$	8.2
Capitalized interest	(1.4		)	(0.8		)	(2.5		)	(2.3		)	(0.3		)	(1.4		)	(0.8		)	(2.5		)
Interest income	(0.3		)	(0.2		)	(0.9		)	(0.8		)	(0.5		)	(0.3		)	(1.4		)	(0.9		)
Interest expense, net	$	1.0		$	2.0		$	4.8		$	5.9		$	1.5		$	1.1		$	4.7		$	4.8

Interest expense, net, ~~decreased~~increased by ~~$1.0~~$0.4 million, or ~~50.0%~~36.4%, for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016, due to an increase~~2017, as a decrease in capitalized interest ~~particularly related~~due to the ~~construction~~completion of several major projects in 2017, including certain components of our new facility in Waterford, ~~Ireland.~~Ireland, was partially offset by lower interest expense resulting from less debt outstanding during the three months ended September 30, 2018, as compared to the same period in 2017, and an increase in interest income. The Waterford facility began commercial production during the three months ended September 30, 2018.

Interest expense, net, decreased by ~~$1.1~~$0.1 million, or ~~18.6%~~2.1%, for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, due to lower interest expense resulting from less debt outstanding during the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016~~2017, and an increase in interest income, partially offset by a decrease in capitalized ~~interest.~~interest due to the completion of several major projects in 2017, as described above.

Other Nonoperating Income

Other nonoperating income increased by $0.7 million and $2.6 million for the three and nine months ended September 30, 2018, as compared to the same periods in 2017, due to an increase in the expected return on assets and a decrease in recognized actuarial losses for the three and nine months ended September 30, 2018, as compared to the same periods in 2017. Please refer to Note 2, New Accounting Standards, and Note 11, Benefit Plans, for information on guidance issued by the FASB on the presentation of net periodic pension and postretirement benefit cost (net benefit cost) that we adopted as of January 1, 2018, on a retrospective basis.

Income Taxes

was ~~$19.1~~$26.5 million and ~~$38.3~~$19.1 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and the effective tax rate was ~~11.7%~~15.1% and ~~28.1%~~11.7%, respectively.

Please refer to Note 14, Income Taxes, for further discussion of ~~2017, we intend to repatriate approximately $10.0 million of additional cash held by non-U.S. subsidiaries.~~our income taxes.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated companies represents the contribution to earnings from our 25% ownership interest in Daikyo and our 49% ownership interest in four companies in Mexico. Equity in net income of affiliated companies ~~decreased by $0.6~~remained constant at $2.1 million ~~or 22.2%,~~ for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016, primarily due to foreign exchange transaction losses in Mexico.~~2017. Equity in net income of affiliated companies ~~increased~~decreased by ~~$0.5~~$0.2 million, or ~~8.1%~~3.0%, for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, primarily due to the impact of gains on the sale of investment securities by Daikyo during the nine months ended September 30, 2017, partially offset by foreign exchange transaction ~~losses~~gains in ~~Mexico.~~Mexico during the nine months ended September 30, 2018.

Net Income

Net income for the three months ended September 30, 2018 was $55.2 million, which included the impact of restructuring and related charges of $0.9 million (net of $0.3 million in tax), a net tax charge of $0.4 million for the estimated impact of the 2017 Tax Act, a tax benefit of $7.7 million associated with our adoption in 2017 of guidance issued by the FASB regarding share-based payment transactions, and a charge of $1.1 million related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018. Net income for the three months ended September 30, 2017 was $51.0 million, which included the impact of a tax benefit of $4.8 million associated with our adoption in 2017 of ~~the~~ guidance issued by the FASB regarding share-based payment transactions.

Net income for the ~~three~~nine months ended September 30, ~~2016~~2018 was ~~$37.6~~$154.9 million, which included ~~$1.6 million (net~~the impact of ~~$0.7 million in tax) in~~ restructuring and related charges of $5.2 million (net of $1.5 million in tax), a net tax benefit of $4.1 million for the estimated impact of the 2017 Tax Act, a tax benefit of $13.2 million associated with our adoption in 2017 of guidance issued by the FASB regarding share-based payment transactions, and a ~~discrete tax~~ charge of ~~$0.3 million.~~

$1.1 million related to the classification of Argentina’s economy as highly inflationary under U.S. GAAP as of July 1, 2018. Net income for the nine months ended September 30, 2017 was $150.7 million, which included the impact of a tax benefit of $30.3 million associated with our adoption in 2017 of ~~the~~ guidance issued by the FASB regarding share-based payment transactions and a charge of $11.1 million related to the deconsolidation of our Venezuelan subsidiary. Net income for the nine months ended September 30, 2016 was $104.5 million, which included $15.6 million (net of $8.1 million in tax) in restructuring and related charges, a charge of $2.7 million related to the devaluation of the Venezuelan Bolivar, and a discrete tax charge of $0.3 million.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following table presents cash flow data for the nine months ended September 30:


($ in millions)	2017			2016			2018			2017
Net cash provided by operating activities	$	181.8		$	147.6		$	215.4		$	181.8
Net cash used in investing activities	$	(104.2	)	$	(129.1	)	$	(72.2	)	$	(104.2	)
Net cash used in financing activities	$	(22.5	)	$	(87.5	)	$	(72.5	)	$	(22.5	)

Net Cash Provided by Operating Activities – Net cash provided by operating activities increased by ~~$34.2~~$33.6 million for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, primarily due to ~~improved~~

~~operating results and the impact of a tax benefit associated with our adoption of the guidance issued by FASB regarding share-based payment transactions, partially offset by~~ a $20.0 million ~~pension plan~~ contribution to our U.S. qualified pension plan during the nine months ended September 30, 2017.

Net Cash Used in Investing Activities – Net cash used in investing activities decreased by ~~$24.9~~$32.0 million for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, mostly due to a ~~$21.4~~$26.6 million

decrease in capital spending ~~and~~due to the ~~impact~~completion of ~~the deconsolidation of our Venezuelan subsidiary, partially offset by our receipt of insurance proceeds. The capital spending for the nine months ended September 30,~~several major projects in 2017, ~~consisted of spending for new products, expansion activity, and emerging markets,~~ including ~~the construction~~certain components of our new facility in Waterford, Ireland.

Net Cash Used in Financing Activities – Net cash used in financing activities ~~decreased~~increased by ~~$65.0~~$50.0 million for the nine months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, primarily due to ~~a decrease in net debt repayments, as our Euro note B matured in February 2016, partially offset by~~ an increase in ~~proceeds from employee stock plans.~~purchases under our share repurchase programs.

Liquidity and Capital Resources

The table below presents selected liquidity and capital measures:


($ in millions)	September 30, 2017		December 31, 2016			September 30, 2018		December 31, 2017
Cash and cash equivalents	$	269.3	$	203.0		$	297.3	$	235.9
Working capital	$	476.9	$	400.9		$	561.3	$	464.0
Total debt	$	229.8	$	228.6		$	196.2	$	197.0
Total equity	$	1,316.9	$	1,117.5		$	1,351.8	$	1,279.9
Net debt-to-total invested capital	N/A		2.2		%	N/A		N/A

Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased. Working capital is defined as current assets less current liabilities. Net debt is defined as total debt less cash and cash equivalents, and total invested capital is defined as the sum of net debt and total equity. Net debt and total invested capital are non-U.S. GAAP financial measures that should not be used as a substitute for the comparable U.S. GAAP financial measures. The non-U.S. GAAP financial measures are incorporated into our discussion and analysis as management believes that this information provides users with a valuable insight into our overall performance and financial position.

Cash and cash equivalents – Our cash and cash equivalents balance at September 30, ~~2017~~2018 consisted of cash held in depository accounts with banks around the world and cash invested in high-quality, short-term investments. The cash and cash equivalents balance at September 30, ~~2017~~2018 included ~~$147.4~~$106.6 million of cash held by subsidiaries within the U.S., and ~~$121.9~~$190.7 million of cash held by subsidiaries outside of the U.S. ~~During~~In response to the ~~three months ended September 30,~~ 2017 Tax Act, we ~~repatriated $55.3 million~~reevaluated our position regarding permanent reinvestment of ~~cash held by non-U.S. subsidiaries. During~~foreign subsidiary earnings and profits through 2017 (with the ~~remainder~~exception of ~~2017, we intend~~China and Mexico) and elected to ~~repatriate approximately $10.0 million of additional cash held by non-U.S. subsidiaries. We do not expect any additional tax costs associated with the planned repatriation. Deferred~~include in our provision for income taxes ~~have not been provided~~ for ~~any funds remaining in~~ the ~~subsidiaries outside~~year ended December 31, 2017 an estimated liability of $9.8 million related to foreign withholding taxes and state income taxes that will be incurred upon the distribution of those foreign subsidiary earnings and profits to the U.S. at a future date. Following additional analysis of the ~~U.S.,~~2017 Tax Act, we are asserting, as ~~such earnings are intended~~of January 1, 2018, indefinite reinvestment related to ~~be reinvested indefinitely outside~~our investment in all of ~~the U.S.~~our controlled foreign subsidiaries.

Working capital – Working capital at September 30, ~~2017~~2018 increased by ~~$76.0~~$97.3 million, or ~~19.0%~~21.0%, as compared to December 31, ~~2016,~~2017, including ~~an increase~~a decrease of ~~$23.0~~$18.8 million due to foreign currency ~~translation, due to increases in cash and cash equivalents, accounts receivable, and inventories, partially offset by an increase in total current liabilities.~~translation. Excluding the impact of currency exchange rates, cash and cash equivalents, accounts receivable ~~inventories,~~ and total current liabilities increased by ~~$55.1~~$70.7 million, ~~$39.2 million, $5.6~~$57.7 million and ~~$46.1~~$15.5 million, ~~respectively.~~respectively while inventories decreased by $1.8 million. The increase in accounts receivable was due to increased sales activity, ~~in 2017, particularly in~~

~~international markets with~~ longer customer payment ~~terms. Inventories increased due to timing, as inventories are typically lower at year-end due to plant shutdowns.~~terms, and our adoption of the new revenue recognition guidance. The increase in total current liabilities was primarily due to ~~the reclassification of our term loan from long-term debt to current liabilities between those period ends~~increases in income taxes payable and ~~an increase~~accrued salaries, wages and benefits, partially offset by a decrease in ~~other current liabilities.~~accounts payable.

Debt and credit facilities – The ~~$1.2~~$0.8 million ~~increase~~decrease in total debt at September 30, ~~2017,~~2018, as compared to December 31, ~~2016,~~2017, primarily resulted from foreign currency rate ~~fluctuations of $2.8 million and a reduction of $0.2 million in unamortized debt issuance costs, partially offset by net debt repayments of $1.8 million.~~fluctuations.

Our sources of liquidity include our Credit Facility. At September 30, ~~2017,~~2018, we had ~~$29.3~~$28.7 million in outstanding long-term borrowings under this facility, of which ~~$4.5~~$4.4 million was denominated in Yen and ~~$24.8~~$24.3 million was denominated in Euro. These borrowings, together with outstanding letters of credit of ~~$3.0~~$2.5 million, resulted in ~~an available~~ a

borrowing capacity available under ~~the~~our Credit Facility of ~~$267.7~~$268.8 million at September 30, ~~2017.~~2018. We do not expect any significant limitations on our ability to access this source of funds.

Pursuant to the financial covenants in our debt agreements, we are required to maintain established interest coverage ratios and to not exceed established leverage ratios. In addition, the agreements contain other customary covenants, none of which we consider restrictive to our operations. At September 30, ~~2017,~~2018, we were in compliance with all of our debt covenants.

We believe that cash on hand and cash generated from operations, together with availability under our Credit Facility, will be adequate to address our foreseeable liquidity needs based on our current expectations of our business operations, capital expenditures and scheduled payments of debt obligations.

Commitments and Contractual Obligations

A table summarizing the amounts and estimated timing of future cash payments resulting from commitments and contractual obligations was provided in our ~~2016~~2017 Annual Report. During the three months ended September 30, ~~2017,~~2018, there were no material changes outside of the ordinary course of business to our commitments and contractual obligations.

OFF-BALANCE SHEET ARRANGEMENTS

At September 30, ~~2017,~~2018, we had no off-balance sheet financing arrangements other than operating leases, unconditional purchase obligations incurred in the ordinary course of business, and outstanding letters of credit related to various insurance programs, as noted in our ~~2016~~2017 Annual Report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes to the Critical Accounting Policies and Estimates disclosed in Part II, Item 7 of our ~~2016~~2017 Annual ~~Report.~~Report, except for changes relating to our adoption of ASC 606 on January 1, 2018. Please refer to Note 3, Revenue, for our revenue recognition policy as of January 1, 2018.

NEW ACCOUNTING STANDARDS

For information on new accounting standards that were adopted, and those issued but not yet adopted, during the three months ended September 30, ~~2017,~~2018, and the impact, if any, on our financial position or results of operations, see Note 2, New Accounting Standards.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Form 10-Q contains some forward-looking statements that are based on ~~management's~~management’s beliefs and assumptions, current expectations, estimates and forecasts. We also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Such statements provide our current expectations or forecasts of future events. They do not relate strictly to historical or

current facts. We have attempted, wherever possible, to identify forward-looking statements by using words such as “plan,” “expect,” “believe,” “intend,” “will,” “estimate,” “continue” and other words of similar meaning in conjunction with, among other things, discussions of future operations and financial performance, as well as our strategy for growth, product development, market position and expenditures. All statements that address operating performance or events or developments that we expect or anticipate will occur in the future - including statements relating to sales and earnings per share growth, cash flows or uses, and statements expressing views about future operating results - are forward-looking statements.

Forward-looking statements are based on current expectations of future events. The forward-looking statements are, and will be, based on management’s then-current views and assumptions regarding future events and operating performance, and speak only as of their dates. Investors should realize that, if underlying assumptions prove

inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements.

The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements:

sales demand and our ability to meet that demand;

competition from other providers in our businesses, including customers’ in-house operations, and from lower-cost producers in emerging markets, which can impact unit volume, price and profitability;

customers’ changing inventory requirements and manufacturing plans that alter existing orders or ordering patterns for the products we supply to them;

the timing, regulatory approval and commercial success of customer products that incorporate our products and systems;

whether customers agree to incorporate our products and delivery systems with their new and existing drug products, the ultimate timing and successful commercialization of those products and systems, which involves substantial evaluations of the functional, operational, clinical and economic viability of our products, and the rate, timing and success of regulatory approval for the drug products that incorporate our components and systems;


•	the timely and adequate availability of filling capacity, which is essential to conducting definitive stability trials and the timing of first commercialization of customers’ products in Daikyo Crystal Zenith^® prefilled syringes;

average profitability, or mix, of the products sold in any reporting period, including lower-than-expected sales growth of our high-value proprietary product offerings;

maintaining or improving production efficiencies and overhead absorption;

dependence on third-party suppliers and partners, some of which are single-source suppliers of critical materials and products, including our Japanese partner and affiliate, Daikyo;

the loss of key personnel or highly-skilled employees;

the availability and cost of skilled employees required to meet increased production, managerial, research and other needs, including professional employees and persons employed under collective bargaining agreements;

interruptions or weaknesses in our supply chain, including from reasons beyond our control such as extreme weather, longer-term climate changes, natural disasters, pandemic, war, accidental damage, or unauthorized access to our or our ~~customers'~~customers’ information and systems, which could cause delivery delays or restrict the availability of raw materials, key purchased components and finished products;

the successful and timely implementation of price increases necessary to offset rising production costs, including raw material prices, particularly petroleum-based raw materials;

the cost and progress of development, regulatory approval and marketing of new products;

our ability to obtain and maintain licenses in any jurisdiction in which we do business;

the relative strength of USD in relation to other currencies, particularly the Euro, ~~the Singapore Dollar,~~SGD, the Danish Krone, Yen, ~~Venezuelan Bolivar,~~ Colombian and Argentinian Peso, and Brazilian Real; and

the potential adverse effects of global healthcare legislation on customer demand, product pricing and profitability.

This list sets forth many, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all of the factors and should not consider this list to be a complete statement of all potential risks and uncertainties. For further discussion of these and other factors, see the risk factors disclosed in Part I, Item 1A of our ~~2016~~2017 Annual Report. Except as required by law or regulation, we do not intend to update any forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk or the information provided in Part II, Item 7A of our ~~2016~~2017 Annual Report.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls include some, but not all, components of our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our CEO and CFO have concluded that, as of September 30, ~~2017~~2018, our disclosure controls and procedures are effective.

Changes in Internal Controls

During the quarter ended September 30, ~~2017~~,2018, 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.

On January 1, 2018, we adopted ASC 606. Although our adoption of ASC 606 resulted in no change to our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, we did implement changes to our internal controls relating to revenue. These changes included the development of new policies based on a five-step model provided in ASC 606, enhanced contract review requirements, and other ongoing monitoring activities. These controls were designed to provide assurance at a reasonable level of the fair presentation of our condensed consolidated financial statements and related disclosures.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There are no material changes to the risk factors disclosed in Part I, Item 1A of our ~~2016~~2017 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table shows information with respect to purchases of our common stock made during the three months ended September 30, ~~2017~~2018 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act:

Period
Total number of shares purchased (1)

Average price paid per share (1)

Total number of shares purchased as part of publicly announced plans or programs (2)

Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (2)
July 1 – 31, 2017 90
$ 92.31
—
475,000
August 1 – 31, 2017 170
87.20
—
475,000
September 1 – 30, 2017 —
—
—
475,000
Total 260
$ 88.97
—
475,000



Period	Total number of shares purchased (1)	Average price paid per share (1)		Total number of shares purchased as part of publicly announced plans or programs (2)	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (2)
July 1 – 31, 2018	—	$	—	—	—
August 1 – 31, 2018	30	110.28		—	—
September 1 – 30, 2018	—	—		—	—
Total	30	$	110.28	—	—


(1)	Includes ~~260~~30 shares purchased on behalf of employees enrolled in the Non-Qualified Deferred Compensation Plan for Designated Employees (Amended and Restated Effective January 1, 2008). Under the plan, Company match contributions are delivered to the plan’s investment administrator, who then purchases shares in the open market and credits the shares to individual plan accounts.

(2)

In ~~December 2016,~~February 2018, we announced a share repurchase program for calendar-year 2018 authorizing the repurchase of up to 800,000 shares of our common stock from time to time on the open market or in privately-negotiated transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18. The number of shares ~~to be~~ repurchased and the timing of such transactions ~~will depend~~depended on a variety of factors, including market conditions. ~~The program commenced on January 1, 2017 and is expected to be completed by December 31, 2017.~~ There were no shares purchased during the three months ended September 30, ~~2017.~~2018. During the nine months ended September 30, ~~2017,~~2018, we purchased ~~325,000~~800,000 shares of our common stock under the program at a cost of ~~$26.9~~$70.8 million, or an average price of ~~$82.84~~$88.51 per share.

~~ITEM 5. OTHER INFORMATION~~

Our Board of Directors approved a revised form of Change-in-Control (“CIC”) Agreement (“CIC Agreement”) for the following executive officers of the Company: Annette F. Favorite, Karen A. Flynn, Quintin J. Lai, Daniel Malone, George L. Miller, David A. Montecalvo and Eric Resnick. The new form CIC Agreement is substantially similar to existing CIC Agreements for these officers. These revised agreements amend and replace the existing agreements and became effective on October 25, 2017. Generally, CIC benefits will be provided in the event of a termination without Cause or a Constructive Termination (“CT”) within the two years following a CIC of the Company. The changes to the CIC Agreements are as follows:

~~A new definition of “Cause” which includes acts of dishonesty, repeated failure to fulfill duties, conviction of a felony or a Code of Business Conduct violation that injures the Company.~~

A revised definition of “Constructive Termination” to include reporting to an individual whose scope of responsibilities is less than before the CIC, a reduction in short-term incentive target compensation, and a reduction in fringe benefits unless it is broadly-based. An executive must provide notice of circumstances giving rise to CT within 45 days and then provide 30 days to remedy.

~~Cash severance pay will be equal to two times the highest annual salary rate in effect plus target short-term incentive compensation (instead of based on prior paid short-term incentives).~~

~~Incentive compensation will be paid out at pro-rated target compensation for the year of termination.~~

~~Unvested equity awards will vest and performance will be deemed to be at target levels.~~

~~Benefits will continue for a period of 24 months (instead of 36 months).~~

~~The non-compete covenant associated with the CIC Agreement was extended from one year to two years.~~

~~The other material terms of the CIC Agreements for these executives remain the same as our previously filed forms.~~

~~The description in this Item 5 is qualified in its entirety by the Form of Change-in-Control Agreement, which is included as Exhibit 10.1.~~

ITEM 6. EXHIBITS

The list of exhibits in the Exhibit Index to this report is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, West Pharmaceutical Services, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WEST PHARMACEUTICAL SERVICES, INC.

(Registrant)

By: /s/ ~~William~~Bernard J. ~~Federici~~Birkett

~~William~~Bernard J. ~~Federici~~Birkett

Senior Vice President, ~~and~~ Chief Financial Officer and Treasurer

October ~~31, 2017~~30, 2018

EXHIBIT INDEX



Exhibit #	Description
3.1	Our Amended and Restated Articles of Incorporation are incorporated by reference from our Form 10-Q report for the quarter ended March 31, 2015.
3.2	Our Bylaws, as amended through May 5, 2015, are incorporated by reference from our Form 10-Q report for the quarter ended March 31, 2015.
4.1	Form of stock certificate for common stock is incorporated by reference from our annual report on Form 10-K dated May 6, 1999.
4.2	Article 5, 6, 8(c) and 9 of our Amended and Restated Articles of Incorporation are incorporated by reference from our Form 10-Q report for the quarter ended March 31, 2015.
4.3	Article I and V of our Bylaws, as amended through May 5, 2015, are incorporated by reference from our Form 10-Q report for the quarter ended March 31, 2015.
4.4 ⁽¹⁾	Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries have been omitted.
~~10.1~~	~~Form of Change-in-Control Agreement between us and certain of our executive officers.~~
31.1	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

⁽¹⁾ We agree to furnish to the SEC, upon request, a copy of each instrument with respect to issuances of long-term debt of the Company and its subsidiaries.

* Furnished, not filed.

F-1