WEST PHARMACEUTICAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
| | | | Three Months Ended | | | | | | Twelve Months Ended | | | |
| | | | Dec 31, 2005 | | | | Dec 31, 2004 | | | | Dec 31, 2005 | | | | Dec 31, 2004 | |
Net sales | | $ | 195,600 | | 100 | % | $ | 142,000 | | 100 | % | $ | 699,700 | | 100 | % | $ | 541,600 | | 100 | % |
Cost of goods sold | | | 143,800 | | 74 | | | 103,900 | | 73 | | | 507,100 | | 72 | | | 385,700 | | 71 | |
Gross profit | | | 51,800 | | 27 | | | 38,100 | | 27 | | | 192,600 | | 28 | | | 155,900 | | 29 | |
Selling, general and administrative expenses | | | 32,400 | | 17 | | | 28,000 | | 20 | | | 120,300 | | 17 | | | 105,200 | | 20 | |
Restructuring and impairment charges | | | 200 | | — | | | 900 | | 1 | | | (1,300 | ) | — | | | 1,000 | | — | |
Other expense, net | | | 200 | | — | | | 400 | | — | | | 1,400 | | — | | | 1,500 | | — | |
Operating profit | | | 19,000 | | 10 | | | 8,800 | | 6 | | | 72,200 | | 11 | | | 48,200 | | 9 | |
Interest expense, net | | | 3,500 | | 2 | | | 1,600 | | 1 | | | 12,000 | | 2 | | | 7,000 | | 1 | |
Income before income taxes | | | 15,500 | | 8 | | | 7,200 | | 5 | | | 60,200 | | 9 | | | 41,200 | | 8 | |
Provision for income taxes | | | 3,100 | | 2 | | | 200 | | — | | | 17,300 | | 3 | | | 11,100 | | 2 | |
Minority interests | | | — | | — | | | — | | — | | | 100 | | — | | | — | | — | |
Income from consolidated operations | | | 12,400 | | 6 | % | | 7,000 | | 5 | % | | 42,800 | | 6 | % | | 30,100 | | 6 | % |
Equity in net income of affiliated companies | | | 500 | | | | | 300 | | | | | 2,400 | | | | | 3,400 | | | |
Income from continuing operations | | | 12,900 | | | | | 7,300 | | | | | 45,200 | | | | | 33,500 | | | |
Discontinued operations, net of tax | | | (1,200 | ) | | | | (6,900 | ) | | | | 400 | | | | | (14,100 | ) | | |
Net income | | $ | 11,700 | | | | $ | 400 | | | | $ | 45,600 | | | | $ | 19,400 | | | |
Net income per share: | | | | | | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 0.41 | | | | $ | 0.24 | | | | $ | 1.45 | | | | $ | 1.12 | | | |
Discontinued operations | | | (0.04 | ) | | | | (0.23 | ) | | | | 0.01 | | | | | (0.47 | ) | | |
| | $ | 0.37 | | | | $ | 0.01 | | | | $ | 1.46 | | | | $ | 0.65 | | | |
Assuming dilution: | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 0.39 | | | | $ | 0.23 | | | | $ | 1.39 | | | | $ | 1.09 | | | |
Discontinued operations | | | (0.03 | ) | | | | (0.22 | ) | | | | 0.01 | | | | | (0.46 | ) | | |
| | $ | 0.36 | | | | $ | 0.01 | | | | $ | 1.40 | | | | $ | 0.63 | | | |
Average common shares outstanding | | | 31,433 | | | | | 30,276 | | | | | 31,100 | | | | | 29,955 | | | |
Average shares assuming dilution | | | 32,810 | | | | | 31,384 | | | | | 32,525 | | | | | 30,842 | | | |
WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT INFORMATION
(In thousands)
| | Three Months Ended | | Twelve Months Ended | |
| | December 31 | | December 30 | |
Net Sales: | | 2005 | | 2004 | | 2005 | | 2004 | |
Pharmaceutical Systems | | $ | 136,400 | | $ | 124,600 | | $ | 538,300 | | $ | 481,000 | |
Tech Group | | | 61,400 | | | 19,300 | | | 170,100 | | | 67,900 | |
Eliminations | | | (2,200 | ) | | (1,900 | ) | | (8,700 | ) | | (7,300 | ) |
Consolidated Total | | $ | 195,600 | | $ | 142,000 | | $ | 699,700 | | $ | 541,600 | |
| | | | | | | | | | | | | |
Operating Profit (Loss): | | | | | | | | | | | | | |
Pharmaceutical Systems | | $ | 22,200 | | $ | 19,200 | | $ | 94,000 | | $ | 79,100 | |
Tech Group | | | 3,000 | | | 600 | | | 8,900 | | | 3,300 | |
Corporate costs | | | (3,200 | ) | | (6,900 | ) | | (20,500 | ) | | (23,100 | ) |
Restricted Stock Plan | | | (1,100 | ) | | (1,900 | ) | | (3,700 | ) | | (5,100 | ) |
Stock Options & Employee Stock Plan | | | (400 | ) | | — | | | (2,700 | ) | | — | |
Restructuring and impairment charges | | | (200 | ) | | (900 | ) | | 1,300 | | | (1,000 | ) |
Domestic pension expense | | | (1,300 | ) | | (1,300 | ) | | (5,100 | ) | | (5,000 | ) |
Consolidated Total | | $ | 19,000 | | $ | 8,800 | | $ | 72,200 | | $ | 48,200 | |
On August 2, 2005, the Company acquired a 90% interest in Medimop Medical Projects and its U.S. affiliate (Medimop). On February 11, 2005, the Company acquired Monarch Analytical Laboratories, Inc. (Monarch). The results of the Medimop and Monarch businesses are included within the Pharmaceutical Systems Segment. During the three- and twelve-month periods ended December 31, 2005, these businesses contributed $3,600 and $7,700 to net sales and $700 and $1,700 to operating profit, respectively.
On May 20, 2005, the Company completed the acquisition of The Tech Group, Inc. (“TGI”). TGI net sales and operating profit for the period from May 20, 2005 to December 31, 2005 are included in the results under the Tech Group segment for both the three- and twelve-month period ended December 31, 2005. During the three- and twelve-month periods, TGI contributed $42,500 and $98,900 to net sales and $1,700 and $3,500 to operating profit, respectively.
WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT COMPARISON
(In millions)
| | | | | | | (Including Acquisitions) | | (Excluding Acquisitions) |
| Pharmaceutical Systems | | Tech Group Segment | | Consolidated | | Consolidated |
| Q4 2005 | Q4 2004 | | Q4 2005 | Q4 2004 | | Q4 2005 | Q4 2004 | | Q4 2005 | Q4 2004 |
Net Sales | $136.4 | $124.6 | | $61.4 | $ 19.3 | | $195.6 | $ 142.0 | | $149.5 | $142.0 |
Growth % | 9.5% | | | 218.0% | | | 37.9% | | | 5.4% | |
| | | | | | | | | | | |
Gross Profit | $ 44.0 | $ 36.2 | | $ 7.7 | $ 1.9 | | $ 51.8 | $ 38.1 | | $ 44.9 | $ 38.1 |
Gross Margin % | 32.3% | 29.1% | | 12.6% | 10.0% | | 26.5% | 26.9% | | 30.0% | 26.9% |
| | | | | | | | | | | |
Operating Profit | $ 22.2 | $ 19.2 | | $ 3.0 | $ 0.6 | | $ 19.0 | $ 8.8 | | $ 16.6 | $ 8.8 |
Operating Margin % | 16.3% | 15.4% | | 4.8% | 3.2% | | 9.7% | 6.2% | | 11.1% | 6.2% |
