10-Q

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 March 31, 2014

or

¨ 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, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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

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 April 30, 2014, there were 70,669,576 shares of the Registrant’s common stock outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)
	Condensed Consolidated Statements of Income for the Three Months ended March 31, 2014 and 2013	3
	Condensed Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2014 and 2013	4
	Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013	5
	Condensed Consolidated Statement of Equity for the Three Months ended March 31, 2014	6
	Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2014 and 2013	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
ITEM 4.	CONTROLS AND PROCEDURES	30
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	31
ITEM 1A.	RISK FACTORS	31
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	31
ITEM 5.	OTHER INFORMATION	32
ITEM 6.	EXHIBITS	33
SIGNATURE		34
EXHIBIT INDEX		F-1

2

PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(In millions, except per share data)

	Three Months Ended March 31,
	2014		2013
Net sales	$	346.8	$	339.4
Cost of goods and services sold	240.4		227.7
Gross profit	106.4		111.7
Research and development	10.0		9.1
Selling, general and administrative expenses	56.4		59.1
Other expense (Note 11)	0.7		0.2
Operating profit	39.3		43.3
Loss on debt extinguishment	—		0.2
Interest expense	4.0		4.6
Interest income	0.4		0.6
Income before income taxes	35.7		39.1
Income tax expense	9.8		8.6
Equity in net income of affiliated companies	1.2		1.2
Net income	$	27.1	$	31.7
Net income per share:
Basic	$	0.38	$	0.46
Diluted	$	0.38	$	0.45
Weighted average shares outstanding:
Basic	70.6		69.0
Diluted	72.3		70.3
Dividends declared per share	$	0.10	$	0.10

See accompanying notes to condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(In millions)

	Three Months Ended March 31,
	2014			2013
Net income	$	27.1		$	31.7
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(1.8		)	(18.4		)
Defined benefit pension and other postretirement plan adjustments, net of tax of $0.2 and $1.1, respectively	0.2			2.1
Net gains (losses) on derivatives, net of tax of $0.2 and $(0.4), respectively	0.2			(0.3		)
Other comprehensive loss, net of tax	(1.4		)	(16.6		)
Comprehensive income	$	25.7		$	15.1

See accompanying notes to condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(In millions)

	March 31, 2014			December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	230.0		$	230.0
Accounts receivable, net	208.7			185.7
Inventories	187.5			176.9
Deferred income taxes	16.3			15.9
Other current assets	44.1			42.2
Total current assets	686.6			650.7
Property, plant and equipment	1,385.0			1,369.0
Less accumulated depreciation and amortization	673.0			657.3
Property, plant and equipment, net	712.0			711.7
Investments in affiliated companies	59.4			60.9
Goodwill	114.2			114.2
Deferred income taxes	65.2			61.8
Intangible assets, net	47.1			48.3
Other noncurrent assets	23.7			24.0
Total Assets	$	1,708.2		$	1,671.6
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and other current debt	$	14.2		$	2.2
Accounts payable	98.4			108.0
Pension and other postretirement benefits	2.2			2.2
Accrued salaries, wages and benefits	41.8			59.1
Income taxes payable	12.4			14.3
Other current liabilities	58.6			51.1
Total current liabilities	227.6			236.9
Long-term debt	390.7			371.3
Deferred income taxes	19.7			18.9
Pension and other postretirement benefits	82.8			83.1
Other long-term liabilities	52.8			55.0
Total Liabilities	773.6			765.2
Commitments and contingencies (Note 13)
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: 70.7 million and 70.4 million; outstanding: 70.6 million and 70.2 million	17.7			17.6
Capital in excess of par value	129.9			120.0
Retained earnings	825.0			805.0
Accumulated other comprehensive loss	(33.8		)	(32.4		)
Treasury stock, at cost (0.2 million shares in 2014 and 2013)	(4.2		)	(3.8		)
Total Equity	934.6			906.4
Total Liabilities and Equity	$	1,708.2		$	1,671.6

See accompanying notes to condensed consolidated financial statements.

5

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(In millions)

	Common Stock				Capital in Excess of Par Value			Treasury Stock			Retained earnings			Accumulated other comprehensive loss			Total
	Shares		Amount
Balance, December 31, 2013	70.4		$	17.6	$	120.0		$	(3.8	)	$	805.0		$	(32.4	)	$	906.4
Net income											27.1						27.1
Stock-based compensation					4.3												4.3
Shares issued under stock plans	0.4		0.1		7.0			(0.4		)							6.7
Shares repurchased for employee tax withholdings	(0.1	)			(4.1		)										(4.1		)
Excess tax benefit from employee stock plans					2.7												2.7
Dividends declared											(7.1		)				(7.1		)
Other comprehensive loss, net of tax														(1.4		)	(1.4		)
Balance, March 31, 2014	70.7		$	17.7	$	129.9		$	(4.2	)	$	825.0		$	(33.8	)	$	934.6

See accompanying notes to condensed consolidated financial statements.

6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

West Pharmaceutical Services, Inc. and Subsidiaries

(In millions)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	27.1		$	31.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	20.6			19.4
Amortization	1.2			1.1
Loss on debt extinguishment	—			0.2
Stock-based compensation	4.3			5.4
Other non-cash items, net	(1.2		)	(1.1		)
Changes in assets and liabilities	(43.2		)	(37.8		)
Net cash provided by operating activities	8.8			18.9
Cash flows from investing activities:
Capital expenditures	(31.7		)	(61.7		)
Purchases of short-term investments	(9.2		)	(5.4		)
Sales and maturities of short-term investments	5.0			9.6
Other, net	0.3			(0.2		)
Net cash used in investing activities	(35.6		)	(57.7		)
Cash flows from financing activities:
Borrowings under revolving credit agreements	125.3			119.0
Repayments under revolving credit agreements	(93.3		)	(75.7		)
Issuance of long-term debt	—			43.3
Repayments of long-term debt	(0.6		)	(28.9		)
Dividend payments	(7.1		)	(6.5		)
Excess tax benefit from employee stock plans	2.7			1.1
Shares repurchased for employee tax withholdings	(4.1		)	(2.9		)
Proceeds from stock option exercises	2.4			5.5
Employee stock purchase plan contributions	0.8			0.6
Other	0.1			—
Net cash provided by financing activities	26.2			55.5
Effect of exchange rates on cash	0.6			(3.6		)
Net increase in cash and cash equivalents	—			13.1
Cash, including cash equivalents at beginning of period	230.0			161.9
Cash, including cash equivalents at end of period	$	230.0		$	175.0

See accompanying notes to condensed consolidated financial statements.

7

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 U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and 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 months ended March 31, 2014 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc. (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, 2013 (“2013 Annual Report”). The results of operations for any interim period are not necessarily indicative of results for the full year.

Stock Split: On August 1, 2013, our Board of Directors approved a two-for-one stock split of our outstanding shares of common stock, effected in the form of a stock dividend. The record date for the stock split was September 12, 2013, and the share distribution occurred on September 26, 2013. All share and per share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the impact of this stock split.

Note 2:  New Accounting Standards

Recently Adopted Standards

In July 2013, the FASB issued revised guidance to address the diversity in practice related to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We adopted this guidance as of January 1, 2014, on a prospective basis. The adoption did not have a material impact on our financial statements.

In March 2013, the FASB issued guidance that clarifies the application of U.S. GAAP to the release of cumulative translation adjustments related to changes of ownership in or within foreign entities, including step acquisitions. This guidance, which we adopted as of January 1, 2014, will be applied prospectively if and when changes of ownership related to foreign entities occur.

Standards Issued Not Yet Adopted

In April 2014, the FASB issued guidance for the reporting of discontinued operations, which also contains new disclosure requirements for both discontinued operations and other disposals that do not meet the definition of a discontinued operation. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Management believes that the adoption of this guidance will not have a material impact on our financial statements.

8

Note 3:  Net Income Per Share

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

	Three Months Ended March 31,
(In millions)	2014		2013
Numerator:
Net income	$	27.1	$	31.7
Denominator:
Weighted average common shares outstanding	70.6		69.0
Dilutive effect of stock options, stock appreciation rights and performance share awards, based on the treasury stock method	1.7		1.2
Assumed conversion of convertible debt, based on the if-converted method	—		0.1
Weighted average shares assuming dilution	72.3		70.3

Under the "if-converted" method, the after-tax effect of interest expense related to convertible debt is added back to net income. During both periods presented, the add-back amount was immaterial.

In addition, during the three months ended March 31, 2014 and 2013, there were 0.2 million and 0.4 million shares, respectively, not included in the computation of diluted net income per share, because their impact was antidilutive.

Note 4:  Inventories

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

($ in millions)	March 31, 2014		December 31, 2013
Finished goods	$	82.9	$	80.0
Work in process	29.0		24.8
Raw materials	75.6		72.1
	$	187.5	$	176.9

9

Note 5:  Debt

The following table summarizes our long-term debt obligations, net of current maturities:

($ in millions)	March 31, 2014		December 31, 2013
Term loan, due 2014	$	0.1	$	0.1
Series B floating rate notes, due 2015	25.0		25.0
Euro note B, due 2016	84.0		84.1
Capital leases, due through 2016	0.4		0.4
Revolving credit facility, due 2017	85.7		53.7
Term loan, due 2018	40.8		41.3
Note payable, due 2019	0.3		0.3
Series A notes, due 2022	42.0		42.0
Series B notes, due 2024	53.0		53.0
Series C notes, due 2027	73.0		73.0
Convertible debt, due 2047	0.6		0.6
	404.9		373.5
Less: current portion of long-term debt	14.2		2.2
	$	390.7	$	371.3

Please refer to Note 10, Debt, to the consolidated financial statements in our 2013 Annual Report for additional details regarding our debt agreements.

At March 31, 2014, we had $85.7 million in outstanding borrowings under our multi-currency revolving credit facility, of which $4.9 million was denominated in Yen, $28.9 million in Euro and the remainder in U.S. dollar ("USD"). Of the amount outstanding at March 31, 2014, $12.0 million was classified as current and $73.7 million was classified as long-term. The total amount outstanding as of December 31, 2013 was classified as long-term.

At March 31, 2014, we had $40.8 million outstanding under our five-year term loan due January 2018, of which $2.0 million was classified as current. Please refer to Note 6, Derivative Financial Instruments, for a discussion of the interest-rate swap agreement associated with this loan.

Note 6:  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 speculation or trading purposes. All derivatives are recorded on the balance sheet at fair value.

10

Interest Rate Risk

At March 31, 2014, we had $40.8 million of outstanding borrowings under our variable-rate five-year term loan related to the purchase of our new corporate office and research building. In anticipation of this debt, we entered into a forward-start interest rate swap to hedge the variability in cash flows due to changes in the applicable interest rate over the stated period. Under this swap, we receive variable interest rate payments based on one-month London Interbank Offering Rates (“LIBOR”) plus a margin in return for making monthly fixed interest payments at 5.41%. We designated this swap as a cash flow hedge.

In addition, we have a $25.0 million interest rate swap agreement outstanding as of March 31, 2014, that is designated as a cash flow hedge to protect against volatility in the interest rates on our floating rate notes maturing on July 28, 2015 (“Series B Notes”). Under this swap, we receive variable interest rate payments based on three-month LIBOR in return for making quarterly fixed rate payments. Including the applicable margin, the interest rate swap agreement effectively fixes the interest rate payable on the Series B Notes at 5.51%.

Foreign Exchange Rate Risk

During 2014, we entered into several foreign currency hedge contracts that were designated as cash flow hedges of forecasted transactions denominated in foreign currencies, which are described in more detail below.

We entered into a series of foreign currency contracts intended to hedge the currency risk associated with a portion of our forecasted Yen-denominated purchases of inventory from Daikyo Seiko Ltd. (“Daikyo”) made by West in the United States. As of March 31, 2014, there were nine monthly contracts outstanding at ¥95.0 million ($0.9 million) each, for an aggregate notional amount of ¥855.0 million ($8.2 million).

We also entered into a series of foreign currency contracts to hedge the currency risk associated with a portion of our forecasted USD-denominated inventory purchases made by certain European subsidiaries. As of March 31, 2014, there were nine monthly contracts outstanding at a monthly amount ranging from $1.4 million to $3.0 million, for an aggregate notional amount of $20.9 million.

Lastly, we entered into a series of foreign currency contracts to hedge the currency risk associated with a portion of our forecasted Euro-denominated sales of finished goods by one of our USD functional-currency subsidiaries. As of March 31, 2014, there were nine monthly contracts outstanding at $1.5 million each, for an aggregate notional amount of $13.5 million.

At March 31, 2014, a portion of our debt consists of borrowings denominated in currencies other than the U.S. dollar. We have designated our €61.1 million ($84.0 million) Euro note B and our €21.0 million ($28.9 million) Euro-denominated borrowings under our multi-currency revolving credit facility as a hedge of our net investment in certain European subsidiaries. A cumulative foreign currency translation loss of $5.6 million pre-tax ($3.4 million after tax) on this debt was recorded within accumulated other comprehensive loss as of March 31, 2014. We have also designated our ¥500.0 million ($4.9 million) Yen-denominated borrowings under our multi-currency revolving credit facility as a hedge of our net investment in Daikyo. At March 31, 2014, there was a cumulative foreign currency translation gain on this Yen-denominated debt of $0.5 million pre-tax ($0.3 million after tax) which was also included within accumulated other comprehensive loss.

11

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

	Amount of Gain (Loss) Recognized in OCI for						Amount of Loss Reclassified from Accumulated OCI into Income for				Location of Loss Reclassified from Accumulated OCI into Income
	Three Months Ended March 31,						Three Months Ended March 31,
($ in millions)	2014			2013			2014		2013
Cash Flow Hedges:
Foreign currency hedge contracts	$	(0.1	)	$	0.3		$	—	$	—	Net sales
Foreign currency hedge contracts	(0.1		)	(1.7		)	—		0.6		Cost of goods and services sold
Interest rate swap contracts	(0.1		)	0.1			0.4		0.4		Interest expense
Forward treasury locks	—			—			0.1		—		Interest expense
Total	$	(0.3	)	$	(1.3	)	$	0.5	$	1.0
Net Investment Hedges:
Foreign currency-denominated debt	$	—		$	2.4		$	—	$	—	Other expense
Total	$	—		$	2.4		$	—	$	—

For the three months ended March 31, 2014 and 2013, there was no ineffectiveness related to our hedges.

Note 7:  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.

12

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

	Balance at		Basis of Fair Value Measurements
($ in millions)	March 31, 2014		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	11.7	$	11.7	$	—	$	—
Deferred compensation assets	5.8		5.8		—		—
Foreign currency contracts	0.1		—		0.1		—
	$	17.6	$	17.5	$	0.1	$	—
Liabilities:
Contingent consideration	$	4.7	$	—	$	—	$	4.7
Deferred compensation liabilities	10.3		10.3		—		—
Interest rate swap contracts	5.1		—		5.1		—
Foreign currency contracts	0.3		—		0.3		—
	$	20.4	$	10.3	$	5.4	$	4.7

	Balance at		Basis of Fair Value Measurements
($ in millions)	December 31, 2013		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	7.5	$	7.5	$	—	$	—
Deferred compensation assets	5.7		5.7		—		—
	$	13.2	$	13.2	$	—	$	—
Liabilities:
Contingent consideration	$	4.3	$	—	$	—	$	4.3
Deferred compensation liabilities	12.1		12.1		—		—
Interest rate swap contracts	5.6		—		5.6		—
	$	22.0	$	12.1	$	5.6	$	4.3

Short-term investments, which are comprised of certificates of deposit and mutual funds, are included within other current assets and are valued using a market approach based on quoted market prices in an active market. Deferred compensation assets are included within other noncurrent assets and are also 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 is included within other current liabilities and other long-term liabilities and is discussed further in the section related to Level 3 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. Interest rate swaps, included within other long-term liabilities, are valued based on the terms of the contract and observable market inputs (i.e., LIBOR, Eurodollar synthetic forwards and swap spreads). Refer to Note 6, Derivative Financial Instruments, for further discussion of our derivatives.

13

Level 3 Fair Value Measurements

The fair value of the contingent consideration liability related to our 2010 acquisition of technology used in our SmartDose^TM electronic patch injector system (“SmartDose contingent consideration”) was determined at the acquisition date 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 expense in our condensed consolidated statements of income. The significant unobservable inputs used in the fair value measurement of the 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 SmartDose 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 contingent consideration liability.

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

	Three Months Ended March 31,
	2014		2013
Beginning Balance	$	4.3	$	3.3
Increase in fair value recorded in earnings	0.4		—
Ending Balance	$	4.7	$	3.3

Refer to Note 11, Other Expense, for further discussion of our acquisition-related contingency.

Other Financial Instruments

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

Quoted market prices are used to estimate the fair value of publicly traded long-term debt. The fair value of debt that is not quoted on an exchange is estimated using a discounted cash flow method based on interest rates that are currently available to us for debt issuances with similar terms and maturities. At March 31, 2014, the estimated fair value of long-term debt was $387.8 million compared to a carrying amount of $390.7 million. At December 31, 2013, the estimated fair value of long-term debt was $365.8 million and the carrying amount was $371.3 million.

Note 8:  Accumulated Other Comprehensive Loss

The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the three months endedMarch 31, 2014:

($ 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, 2013	$	(6.0	)	$	4.3	$	(47.0	)	$	16.3		$	(32.4	)
Other comprehensive loss before reclassifications	(0.3		)	—		(0.1		)	(1.8		)	(2.2		)
Amounts reclassified out	0.5			—		0.3			—			0.8
Other comprehensive income (loss), net of tax	0.2			—		0.2			(1.8		)	(1.4		)
Balance, March 31, 2014	$	(5.8	)	$	4.3	$	(46.8	)	$	14.5		$	(33.8	)

14

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

	Three Months Ended March 31,
Detail of components	2014			2013			Location on Statement of Income
Losses on cash flow hedges:
Foreign currency contracts	$	—		$	(1.0	)	Cost of goods and services sold
Interest rate swap contracts	(0.7		)	(0.6		)	Interest expense
Forward treasury locks	(0.1		)	—			Interest expense
Total before tax	(0.8		)	(1.6		)
Tax expense	0.3			0.6
Net of tax	$	(0.5	)	$	(1.0	)
Amortization of defined benefit pension and other postretirement plans:
Prior service cost	$	0.3		$	0.4		(a)
Actuarial losses	(0.8		)	(2.4		)	(a)
Total before tax	(0.5		)	(2.0		)
Tax expense	0.2			0.7
Net of tax	$	(0.3	)	$	(1.3	)
Total reclassifications for the period, net of tax	$	(0.8	)	$	(2.3	)

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

Note 9:  Stock-Based Compensation

The 2011 Omnibus Incentive Compensation Plan (the "2011 Plan") provides for the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to employees and non-employee directors. The terms and conditions of awards to be granted are determined by our Board's nominating and compensation committees. Vesting requirements vary by award. At March 31, 2014, there were 4,004,736 shares remaining in the 2011 Plan for future grants.

During the three months ended March 31, 2014, we granted 588,909 stock options at a weighted average exercise price of $47.33 per share based on the grant-date fair value of our stock to key employees under the 2011 Plan. The weighted average grant date fair value of options granted was $10.37 per share as determined by the Black-Scholes option valuation model using the following weighted average assumptions: a risk-free interest rate of 1.57%; expected life of 6 years based on prior experience; stock volatility of 22.1% based on historical data; and a dividend yield of 0.8%. Stock option expense is recognized over the vesting period, net of forfeitures.

In addition, during the three months ended March 31, 2014, we granted 128,710 performance vesting share (“PVS”) awards at a weighted grant-date fair value of $47.33 per share to key employees under the 2011 Plan. Each PVS award entitles the holder to one share of our common stock if the annual growth rate of revenue and return on invested capital targets are achieved over a three-year performance period. The actual payout may vary from 0% to 200% of an employee’s targeted award. The fair value of PVS 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.

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Total stock-based compensation expense was $4.3 million and $5.4 million for the three months ended March 31, 2014 and 2013, respectively.

Note 10:  Benefit Plans

The components of net periodic benefit cost for the three months ended March 31 were as follows ($ in millions):

	Pension benefits						Other retirement benefits					Total
	2014			2013			2014			2013		2014			2013
Service cost	$	2.5		$	2.5		$	0.1		$	0.4	$	2.6		$	2.9
Interest cost	4.2			3.7			0.1			0.2		4.3			3.9
Expected return on assets	(4.8		)	(4.3		)	—			—		(4.8		)	(4.3		)
Amortization of prior service credit	(0.3		)	(0.4		)	—			—		(0.3		)	(0.4		)
Recognized actuarial losses (gains)	1.2			2.4			(0.4		)	—		0.8			2.4
Net periodic benefit cost	$	2.8		$	3.9		$	(0.2	)	$	0.6	$	2.6		$	4.5

	Pension benefits				Other retirement benefits					Total
	2014		2013		2014			2013		2014		2013
U.S. plans	$	2.1	$	3.1	$	(0.2	)	$	0.6	$	1.9	$	3.7
International plans	0.7		0.8		—			—		0.7		0.8
Net periodic benefit cost	$	2.8	$	3.9	$	(0.2	)	$	0.6	$	2.6	$	4.5

Note 11:  Other Expense

Other expense consists of:

	Three Months Ended March 31,
($ in millions)	2014			2013
Development income	$	(0.4	)	$	(0.3	)
Acquisition-related contingencies	0.4			—
Foreign exchange and other	0.7			0.5
	$	0.7		$	0.2

During the three months endedMarch 31, 2014, we recognized $0.4 million of development income within our Pharmaceutical Delivery Systems segment ("Delivery Systems") related to a nonrefundable customer payment received in 2013 for the exclusive use of SmartDose within a specific therapeutic area. As of March 31, 2014, there was $18.6 million of unearned income related to this payment, of which $1.5 million was included in other current liabilities and $17.1 million was included in other long-term liabilities. The unearned income is being recognized as development 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. During the three months ended March 31, 2013, we recorded development income of $0.3 million within Delivery Systems.

During the three months ended March 31, 2014, the SmartDose contingent consideration increased by $0.4 million, due to the time value of money and adjustments related to changes in sales projections. The change in the SmartDose contingent consideration during the three months ended March 31, 2013 was immaterial.

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Note 12:  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. For the three months ended March 31, 2014, our effective tax rate was 27.6% compared with 22.0% for the same period in 2013. The increase in the effective tax rate primarily reflects the absence of the Research and Development ("R&D") tax credit in 2014, changes in our geographic mix of earnings, and the impact of the discrete tax item discussed below. The R&D tax credit was retroactively reinstated in January 2013 for two years, from January 1, 2012 through December 31, 2013, as a result of the enactment of the American Taxpayer Relief Act of 2012 (the "Taxpayer Relief Act").

During the three months endedMarch 31, 2013, we recorded a discrete tax benefit of $1.3 million related to the R&D tax credit. In accordance with U.S. GAAP, although the Taxpayer Relief Act reinstated the tax credit on a retroactive basis to January 1, 2012, the credit was not taken into account for financial reporting purposes until 2013.

Note 13:  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 2013 Annual Report.

Note 14:  Segment Information

Our business operations are organized into two reportable segments, which are aligned with the underlying markets and customers they serve. Our reportable segments are the Pharmaceutical Packaging Systems segment (“Packaging Systems”) and Delivery Systems. Packaging Systems develops, manufactures and sells primary packaging components and systems for injectable drug delivery, including stoppers and seals for vials, closures and other components used in syringe, intravenous and blood collection systems, and prefillable syringe components. Delivery Systems develops, manufactures and sells safety and administration systems, multi-component systems for drug administration, and a variety of custom contract-manufacturing solutions targeted to the healthcare and consumer-products industries. In addition, Delivery Systems is responsible for the continued development and commercialization of our line of proprietary, multi-component systems for injectable drug administration and other healthcare applications.

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 management considers 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.

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

	Three Months Ended March 31,
($ in millions)	2014			2013
Net sales:
Packaging Systems	$	252.9		$	251.5
Delivery Systems	94.0			88.2
Intersegment sales	(0.1		)	(0.3		)
Total net sales	$	346.8		$	339.4

Operating profit:
Packaging Systems	$	51.4		$	58.6
Delivery Systems	(0.2		)	1.2
Corporate	(11.9		)	(16.5		)
Total operating profit	$	39.3		$	43.3
Loss on debt extinguishment	—			0.2
Interest expense	4.0			4.6
Interest income	0.4			0.6
Income before income taxes	$	35.7		$	39.1

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

During the three months ended March 31, 2013, in connection with the repurchase of our convertible debt, we recognized a pre-tax loss on debt extinguishment of $0.2 million.

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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 Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes included in our 2013 Annual Report. These 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 2013 Annual Report and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

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

Our Operations

Our business operations are organized into two reportable segments, which are aligned with the underlying markets and customers they serve. Our reportable segments are Packaging Systems and Delivery Systems. Packaging Systems develops, manufactures and sells primary packaging components and systems for injectable drug delivery, including stoppers and seals for vials, closures and other components used in syringe, intravenous and blood collection systems, and prefillable syringe components. Delivery Systems develops, manufactures and sells safety and administration systems, multi-component systems for drug administration, and a variety of custom contract-manufacturing solutions targeted to the healthcare and consumer-products industries. In addition, Delivery Systems is responsible for the continued development and commercialization of our line of proprietary, multi-component systems for injectable drug administration and other healthcare applications. We also maintain global partnerships to share technologies and market products with affiliates in Japan and Mexico.

On August 1, 2013, our Board of Directors approved a two-for-one stock split of our outstanding shares of common stock, effected in the form of a stock dividend. The record date for the stock split was September 12, 2013, and the share distribution occurred on September 26, 2013. All share and per share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the impact of the stock split.

First Quarter 2014 Financial Performance Highlights and Business Outlook

• Net sales were $346.8 million, an increase of 2.2% from the same period in 2013. Excluding foreign currency effects, net sales increased by $4.1 million, or 1.2%.

• Gross profit was $106.4 million, a decrease of 4.7% from the same period in 2013, and our gross margin decreased by 2.2 margin points to 30.7%.

• Operating profit was $39.3 million, a decrease of 9.2% from the same period in 2013, and our operating profit margin decreased by 1.5 margin points to 11.3%.

• Net income was $27.1 million, or $0.38 per diluted share, compared to $31.7 million, or $0.45 per diluted share, in the same period in 2013.

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Although we achieved higher net sales during the three months ended March 31, 2014, as compared to the same period in 2013, sales of Packaging Systems' high-value product offerings and Delivery Systems' proprietary products declined during the three months ended March 31, 2014, as compared to the same period in 2013. The decrease in sales of Packaging System’s high-value product offerings was mostly a result of the strong sales for the three months ended March 31, 2013, primarily due to customers' strategic inventory building, customers increasing orders in response to drug shortages, and new product launches. The decrease in sales of Delivery Systems' proprietary products was mainly due to decreases in sales of safety systems and CZ, partially offset by an increase in sales of SmartDose cartridges. The unfavorable mix of products sold, both in Packaging Systems and Delivery Systems, was a primary factor for the decrease in gross profit and net income per share during the three months ended March 31, 2014, as compared to the same period in 2013.

The decline in our results during the three months ended March 31, 2014, as compared to the same period in 2013, was not unexpected, and we expect growth in net sales and operating profit for the full year ending December 31, 2014, as compared to the year ended December 31, 2013. We anticipate continued revenue and margin improvement on a long-term basis, driven by customers' increasing demand for higher product quality, which results in higher revenues and margin per unit sold in Packaging Systems and an increasing percentage of total sales from higher margin proprietary products in Delivery Systems. We continue to believe that actions taken in recent years to increase capacity for certain products, reduce costs through restructuring and lean savings efforts, and expand into emerging markets will lead to improved profitability as global demand increases. We plan to continue funding capital projects related to new products, expansion activity, and investment in emerging markets for Packaging Systems and new proprietary products within Delivery Systems. We believe that our strong operating results and financial position give us a platform for sustained growth, and will enable us to take advantage of opportunities to invest in our business as they arise.

RESULTS OF OPERATIONS

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 management considers 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.

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. These re-measured results excluding effects from currency translation are not in conformity with U.S. GAAP and should not be used as a substitute for the related 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.

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

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Net Sales

The following table presents net sales, consolidated and by reportable segment:

	Three Months Ended March 31,
($ in millions)	2014			2013
Packaging Systems	$	252.9		$	251.5
Delivery Systems	94.0			88.2
Intersegment sales elimination	(0.1		)	(0.3		)
Consolidated net sales	$	346.8		$	339.4

Consolidated net sales increased by $7.4 million, or 2.2%, for the three months ended March 31, 2014, as compared to the same period in 2013, including a favorable foreign currency impact of $3.3 million. Excluding foreign currency effects, net sales for the three months ended March 31, 2014 increased by $4.1 million, or 1.2%, as compared to the same period in 2013.

Consolidated net sales originating in the United States were $150.3 million, a decrease of 0.2% from the same period in 2013. Consolidated net sales generated outside of the United States were $196.5 million, an increase of 4.1% from the same period in 2013.

Packaging Systems – Packaging Systems’ net sales increased by $1.4 million, or 0.5% for the three months ended March 31, 2014, as compared to the same period in 2013, including a favorable foreign currency impact of $2.5 million for the three months ended March 31, 2014. Excluding foreign currency effects, net sales for the three months ended March 31, 2014 decreased by $1.1 million, or 0.4% as compared to the same period in 2013, primarily as a decrease in sales of our high-value product offerings was partially offset by an increase in our standard packaging component sales. The decrease in sales of Packaging Systems' high-value product offerings was mostly a result of the strong sales for the three months ended March 31, 2013, primarily due to customers' strategic inventory building, customers increasing orders in response to drug shortages, and new product launches. Sales price increases contributed 0.4 percentage points of the increase.

Delivery Systems – Delivery Systems’ net sales increased by $5.8 million, or 6.6%, for the three months ended March 31, 2014, as compared to the same period in 2013, including a favorable foreign currency impact of $0.9 million. Excluding foreign currency effects, net sales for the three months ended March 31, 2014 increased by $4.9 million, or 5.6%, as compared to the same period in 2013, primarily due to an increase in contract manufacturing sales, which was partially offset by a decrease in our proprietary net sales. The decrease in sales of Delivery Systems' proprietary products was mainly due to decreases in sales of safety systems and CZ, partially offset by an increase in sales of SmartDose cartridges. Proprietary net sales represented 22.5% of Delivery Systems' net sales for the three months ended March 31, 2014, as compared to 25.3% for the same period in 2013. Sales price increases contributed 1.1 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.

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Gross Profit

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

	Three Months Ended March 31,
($ in millions)	2014			2013
Packaging Systems:
Gross Profit	$	89.4		$	94.8
Gross Margin	35.4		%	37.7		%
Delivery Systems:
Gross Profit	$	17.0		$	16.9
Gross Margin	18.1		%	19.1		%
Consolidated Gross Profit	$	106.4		$	111.7
Consolidated Gross Margin	30.7		%	32.9		%

Consolidated gross profit decreased by $5.3 million, or 4.7%, for the three months ended March 31, 2014, as compared to the same period in 2013, despite a favorable foreign currency impact of $0.8 million for the three months ended March 31, 2014. Consolidated gross margin decreased by 2.2 margin points for the three months ended March 31, 2014, as compared to the same period in 2013.

Packaging Systems – Packaging Systems’ gross profit decreased by $5.4 million, or 5.7% for the three months ended March 31, 2014, respectively, as compared to the same period in 2013, despite a favorable foreign currency impact of $0.7 million for the three months ended March 31, 2014. Packaging Systems’ gross margin decreased by 2.3 margin points for the three months ended March 31, 2014, as compared to the same period in 2013, primarily as a result of the unfavorable mix of products sold, production inefficiencies, and increased wages, benefits and other costs, all of which were partially offset by raw material cost decreases and sales price increases.

Delivery Systems – Delivery Systems’ gross profit increased by $0.1 million, or 0.6%, for the three months ended March 31, 2014, as compared to the same period in 2013, including a favorable foreign currency impact of $0.1 million. Delivery Systems’ gross margin decreased by 1.0 margin point for the three months ended March 31, 2014, as compared to the same period in 2013, primarily as a result of the unfavorable mix of products sold and the impact of wage, benefit and other cost increases, all of which were partially offset by production efficiencies and sales price increases.

R&D Costs

	Three Months Ended March 31,
($ in millions)	2014		2013
Packaging Systems	$	4.3	$	3.5
Delivery Systems	5.7		5.6
Consolidated R&D Costs	$	10.0	$	9.1

Consolidated R&D costs increased by $0.9 million, or 9.9%, for the three months ended March 31, 2014 as compared to the same period in 2013.

Packaging Systems – Packaging Systems' R&D costs increased by $0.8 million, or 22.9%, for the three months ended March 31, 2014 as compared to the same period in 2013, primarily as a result of increased investment in next-generation packaging components.

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Delivery Systems – Delivery Systems' R&D costs increased by $0.1 million, or 1.8%, for the three months ended March 31, 2014, as compared to the same period in 2013, primarily as a result of continued development work on a variety of proprietary products.

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

	Three Months Ended March 31,
($ in millions)	2014			2013
Packaging Systems	$	32.9		$	32.1
Delivery Systems	11.6			10.5
Corporate	11.9			16.5
Consolidated SG&A costs	$	56.4		$	59.1
SG&A as a % of net sales	16.2		%	17.4		%

Consolidated SG&A costs decreased by $2.7 million, or 4.6%, for the three months ended March 31, 2014, as compared to the same period in 2013. Consolidated SG&A costs were 16.2% and 17.4% of consolidated net sales for the three months ended March 31, 2014 and 2013, respectively.

Packaging Systems – Packaging Systems' SG&A costs increased by $0.8 million, or 2.5%, for the three months ended March 31, 2014, as compared to the same period in 2013, primarily as a result of increased compensation costs mostly related to headcount and merit increases and incentive compensation cost increases, both of which were partially offset by a decrease in consulting costs.

Delivery Systems – Delivery Systems' SG&A costs increased by $1.1 million, or 10.5%, for the three months ended March 31, 2014, as compared to the same period in 2013, primarily as a result of increased compensation costs mainly related to headcount and merit increases and incremental depreciation and amortization expense.

Corporate – Corporate’s SG&A costs decreased by $4.6 million, or 27.9%, for the three months ended March 31, 2014, as compared to the same period in 2013, primarily due to a $1.8 million decrease in the U.S. pension expense, a $1.1 million decrease in stock-based compensation expense, a $0.8 million decrease in incentive compensation costs, and a $0.6 million decrease in intellectual property-related costs. The decrease in stock-based compensation expense was primarily due to the impact of lower share prices on our incentive and deferred compensation plan liabilities, which are indexed to our share price.

Other Expense

The following table presents other income and expense items for our segments, and corporate and other unallocated items:

Expense (income)	Three Months Ended March 31,
($ in millions)	2014			2013
Packaging Systems	$	0.8		$	0.6
Delivery Systems	(0.1		)	(0.4		)
Corporate and other unallocated items	—			—
Consolidated other expense	$	0.7		$	0.2

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Other income and expense items, consisting primarily of foreign exchange transaction gains and losses, gains and losses on the sale of fixed assets, and miscellaneous income and charges, are generally recorded within segment or corporate results. Certain restructuring, impairments and other specifically-identified gains and losses considered outside of the control of segment management are not allocated to our segments.

During the three months ended March 31, 2014, we recognized development income of $0.4 million within Delivery Systems related to a nonrefundable payment of $20.0 million received from a customer in June 2013 in return for the exclusive use of SmartDose within a specific therapeutic area. Unearned income related to this payment of $1.5 million and $17.1 million was included within other current liabilities and other long-term liabilities, respectively, at March 31, 2014. The unearned income is being recognized as development 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. During the three months ended March 31, 2013, we recorded development income of $0.3 million within Delivery Systems.

During the three months ended March 31, 2014, we increased the SmartDose contingent consideration by $0.4 million due to the time value of money and adjustments related to changes in sales projections. During the three months ended March 31, 2013, we increased the SmartDose contingent consideration by an immaterial amount due to the same factors described above. These adjustments are included within Delivery Systems' results.

Since February 2013, when the Venezuelan government announced a devaluation of the bolivar, we have used the official exchange rate of 6.3 bolivars to the U.S. dollar to re-measure our Venezuelan subsidiary's financial statements in U.S. dollars. Beginning in December 2013, the Venezuelan government announced a series of changes to the regulations governing its currency exchange market, which included the expanded use of a recently-created currency exchange mechanism and the creation of a third currency exchange mechanism. As the majority of our currency purchases are transacted at the official exchange rate of 6.3 bolivars per U.S. dollar, we have continued to re-measure our Venezuelan subsidiary's financial statements using the official rate. At March 31, 2014, we had $2.7 million in net monetary assets denominated in Venezuelan bolivars, including $1.6 million in cash and cash equivalents. If we determine that we should use one of the other currency exchange mechanisms in Venezuela in the future, or if there is a significant devaluation in the official exchange rate, a pre-tax charge up to the amount of our Venezuelan subsidiary's net monetary assets denominated in bolivars could be required. We will continue to actively monitor the political and economic developments in Venezuela.

Operating Profit

The following table presents operating profit (loss) by reportable segment, corporate and other unallocated costs:

	Three Months Ended March 31,
($ in millions)	2014			2013
Segments:
Packaging Systems	$	51.4		$	58.6
Delivery Systems	(0.2		)	1.2
Corporate and other unallocated items:
Corporate	(11.9		)	(16.5		)
Other unallocated expense	—			—
Consolidated operating profit	$	39.3		$	43.3
Consolidated operating profit margin	11.3		%	12.8		%

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Consolidated operating profit decreased by $4.0 million, or 9.2%, for the three months ended March 31, 2014, as compared to the same period in 2013, despite a favorable foreign currency impact of $0.6 million. Consolidated operating profit margin decreased by 1.5 margin points for the three months ended March 31, 2014, as compared to the same period in 2013.

Packaging Systems – Packaging Systems’ operating profit decreased by $7.2 million, or 12.3%, for the three months ended March 31, 2014, as compared to the same period in 2013, despite a favorable foreign currency impact of $0.5 million, due to the factors described above.

Delivery Systems – Delivery Systems’ operating profit decreased by $1.4 million, or 116.7%, for the three months ended March 31, 2014, as compared to the same period in 2013, despite a favorable foreign currency impact of $0.1 million, due to the factors described above.

Corporate – Corporate costs decreased by $4.6 million, or 27.9%, for the three months ended March 31, 2014, as compared to the same period in 2013, due to the factors described above.

Loss on Debt Extinguishment

During the three months ended March 31, 2013, we repurchased $1.7 million in aggregate principal amount of our convertible debt, resulting in a pre-tax loss on debt extinguishment of $0.2 million, the majority of which consisted of the premium over par value.

Interest Expense, Net

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

	Three Months Ended March 31,
($ in millions)	2014			2013
Interest expense	$	4.5		$	4.8
Capitalized interest	(0.5		)	(0.2		)
Interest income	(0.4		)	(0.6		)
Interest expense, net	$	3.6		$	4.0

Interest expense, net, decreased by $0.4 million, or 10.0%, for the three months ended March 31, 2014, as compared to the same period in 2013, primarily due to a decrease in interest expense resulting from less debt outstanding during the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, and an increase in capitalized interest mainly due to capital projects in the United States and Asia.

Income Taxes

The provision for income taxes was $9.8 million and $8.6 million for the three months ended March 31, 2014 and 2013, respectively, resulting in effective tax rates of 27.6% and 22.0%, respectively. The increase in the effective tax rate for the three months ended March 31, 2014 primarily reflects the absence of the R&D tax credit in 2014, changes in our geographic mix of earnings, and the impact of the discrete tax item discussed below. The R&D tax credit was retroactively reinstated in January 2013 for two years, from January 1, 2012 through December 31, 2013, as a result of the enactment of the Taxpayer Relief Act.

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During the three months ended March 31, 2013, we recorded a discrete tax benefit of $1.3 million related to the R&D tax credit. In accordance with U.S. GAAP, although the Taxpayer Relief Act reinstated the tax credit on a retroactive basis to January 1, 2012, the credit was not taken into account for financial reporting purposes until 2013.

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 remained constant at $1.2 million for the three months ended March 31, 2014, as compared to the same period in 2013, as favorable operating results in Mexico were offset by a decrease in Daikyo mostly related to foreign currency effects.

Net Income

Net income for the three months ended March 31, 2014 was $27.1 million. Net income for the three months ended March 31, 2013 was $31.7 million, which included a loss on extinguishment of debt of $0.2 million and a discrete tax benefit of $1.3 million.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following table presents cash flow data for the three months endedMarch 31:

($ in millions)	2014			2013
Net cash provided by operating activities	$	8.8		$	18.9
Net cash used in investing activities	(35.6		)	(57.7		)
Net cash provided by financing activities	26.2			55.5

Net Cash Provided by Operating Activities – Net cash provided by operating activities for the three months ended March 31, 2014 was $8.8 million, a decrease of $10.1 million from the same period in 2013. Net cash provided by operating activities for the three months ended March 31, 2014 decreased primarily due to the decrease in net income, higher working capital requirements, and increased income tax payments.

Net Cash Used in Investing Activities – Net cash used in investing activities for the three months ended March 31, 2014 was $35.6 million, a decrease of $22.1 million from the same period in 2013. Net cash used in investing activities for the three months ended March 31, 2014 decreased primarily due to a $30.0 million decrease in capital spending, to $31.7 million, mainly as the construction of our new corporate office and research building was settled in February 2013. The majority of the capital spending for the three months ended March 31, 2014 related to new products, expansion activity, and emerging markets, including capital projects in the U.S., India and China. The capital spending decrease was partially offset by the change in our short-term investment activity. During the three months ended March 31, 2014, we purchased $9.2 million, and sold $5.0 million, of short-term investments. During the three months ended March 31, 2013, we purchased $5.4 million, and sold $9.6 million, of short-term investments. The short-term investments represent certificates of deposit, primarily in Israel, with maturities between ninety-one days and one year at the time of purchase.

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Net Cash Provided by Financing Activities – Net cash provided by financing activities for the three months ended March 31, 2014 was $26.2 million, a decrease of $29.3 million from the same period in 2013. Net cash provided by financing activities for the three months ended March 31, 2014 decreased primarily due to a reduction in our net debt activity and a $3.1 million decrease in proceeds from stock option exercises, as compared to the three months ended March 31, 2013. During the three months ended March 31, 2013, upon settlement of our new corporate office and research building, we borrowed $42.8 million under a revolving credit facility, which was immediately converted to a five-year term loan due January 2018. A portion of the loan was used to pay the $35.3 million in outstanding obligations at December 31, 2012 related to the construction and acquisition of the new building. During the three months ended March 31, 2013, we also entered into Euro-denominated debt under our multi-currency revolving credit facility and used a portion of our multi-currency revolving credit facility to repay our Euro note A that matured on February 27, 2013. During the three months ended March 31, 2013, we also repurchased $1.7 million in aggregate principal amount of our convertible debt. We used cash generated from operations and net borrowings to fund the repurchase of our convertible debt, working capital needs, capital expenditures, and to pay dividends.

Liquidity and Capital Resources

The table below presents selected liquidity and capital measures:

($ in millions)	March 31, 2014			December 31, 2013
Cash and cash equivalents	$	230.0		$	230.0
Short-term investments	11.7			7.5
Working capital	459.0			413.8
Total debt	404.9			373.5
Total equity	934.6			906.4
Net debt-to-total invested capital	15.8		%	13.7		%

Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased. Short-term investments include all instruments that have maturities between ninety-one days and one year at the time of purchase. 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.

Cash and cash equivalents – Our cash and cash equivalents balance at March 31, 2014 consisted of cash held in cash depository accounts with banks around the world and cash invested in high quality, short-term investments. The cash and cash equivalents balance at March 31, 2014 included $13.1 million of cash held by subsidiaries within the U.S., and $216.9 million of cash held by subsidiaries outside of the U.S., primarily in Germany, Israel, and Singapore, which is available to fund operations and growth of non-U.S. subsidiaries. Repatriating the cash into the U.S. could trigger U.S. federal, state and local income tax obligations; however, we may temporarily access cash held by our non-U.S. subsidiaries without becoming subject to U.S. income tax by entering into short-term intercompany loans.

Working capital - Working capital at March 31, 2014 increased by $45.2 million, or 10.9%, during the three months ended March 31, 2014, as compared to December 31, 2013, including an increase of $0.6 million due to foreign currency translation. Excluding the impact of currency exchange rates, cash and cash equivalents decreased by $0.6 million, accounts receivable and inventories increased by $23.2 million and $10.6 million, respectively, and total current liabilities decreased by $9.2 million. Accounts receivable and inventories increased primarily due to timing, as accounts receivable and inventories are typically lower at year-end due to plant shutdowns; accounts receivable turnover measurements declined slightly between December 31, 2013 and March 31, 2014, while inventory turnover measurements remained consistent for those period ends. The decrease in current liabilities was primarily due to our payment of annual incentive plan bonuses, partially offset by the reclassification of certain of our debt to current.

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Debt and credit facilities - The $31.4 million increase in total debt at March 31, 2014, as compared to December 31, 2013, resulted from net borrowings and related debt activity, primarily used to fund working capital requirements and capital expenditures, mainly under our multi-currency revolving credit facility in the U.S.

Our sources of liquidity include our multi-currency revolving credit facility, which expires in April 2017 and contains a $300.0 million committed credit facility and an accordion feature allowing the maximum to be increased through a term loan to $350.0 million upon approval by the banks. Borrowings under the multi-currency revolving credit facility bear interest at a rate equal to one-month LIBOR plus a margin ranging from 1.25 to 2.25 percentage points, which is based on the ratio of our senior debt to modified EBITDA. At March 31, 2014, we had $85.7 million in outstanding borrowings under this facility, of which $4.9 million was denominated in Yen, $28.9 million in Euro and the remainder in USD. Of the amount outstanding at March 31, 2014, $12.0 million was classified as current and $73.7 million was classified as long-term. The total amount outstanding at December 31, 2013 was classified as long-term. These borrowings, together with outstanding letters of credit of $3.5 million, resulted in a borrowing capacity available under this facility of $210.8 million at March 31, 2014. 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 March 31, 2014, 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 multi-currency revolving 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 2013 Annual Report. During the three months endedMarch 31, 2014, there were no material changes outside of the ordinary course of business to our commitments and contractual obligations.

OFF-BALANCE SHEET ARRANGEMENTS

At March 31, 2014, 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 2013 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 2013 Annual Report.

NEW ACCOUNTING STANDARDS

For information on new accounting standards that were adopted, and those issued but not yet adopted, during the three months endedMarch 31, 2014, and the impact, if any, on our financial position or results of operations, see Note 2, New Accounting Standards.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We and our representatives may, from time-to-time, make certain forward-looking statements in publicly-released materials, both written and oral, including statements contained in filings with the Securities and Exchange Commission, press releases and our reports to shareholders. Forward-looking statements may be identified by the use of words such as “plan,” “expect,” “believe,” “intend,” “will,” “anticipate,” “estimate” 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. For further discussion of these and other factors, see the risk factors disclosed in Item 1A of our 2013 Annual Report and Part II, Item 1A of this Form 10-Q.

• 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 packaging and delivery products and systems;

• whether customers agree to incorporate West’s 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 the Company’s products, and the rate, timing and success of regulatory approval for the drug products that incorporate the Company’s 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 CZ prefilled syringes;

• average profitability, or mix, of products sold in any reporting period, including lower-than-expected sales growth of our high-value pharmaceutical packaging products, of CZ products, and of other proprietary safety and administration devices;

• 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 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, which could cause delivery delays or restrict the availability of raw materials, key purchased components and finished products;

29

• 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;

• the relative strength of the U.S. dollar in relation to other currencies, particularly the Euro, British Pound, Danish Krone, Singapore Dollar, and Japanese Yen; and

• the potential adverse effects of recently-enacted U.S. 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. 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 2013 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 March 31, 2014, our disclosure controls and procedures are effective.

Changes in Internal Controls

During the quarter ended March 31, 2014, 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.

30

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 2013 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 March 31, 2014 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act. The number of shares purchased and price paid per share shown below have been adjusted to reflect the two-for-one stock split discussed in Note 1, Summary of Significant Accounting Policies.

Period	Total number of shares purchased (1)(2)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
January 1 – 31, 2014	570	$	49.96	—	—
February 1 – 28, 2014	82,333	48.68		—	—
March 1 – 31, 2014	39,233	48.69		—	—
Total	122,136	$	48.69	—	—

(1) Includes 37,043 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) Includes 85,093 shares of common stock acquired from employees who tendered already-owned shares to satisfy the withholding tax obligations on the vesting of restricted stock awards, as part of the 2011 Plan.

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ITEM 5. OTHER INFORMATION

Our 2014 Annual Meeting of Shareholders was held on May 6, 2014 at the Company's corporate headquarters. Our shareholders voted on three proposals at the Annual Meeting. The proposals are described in detail in our definitive proxy statement dated March 25, 2014. As of March 10, 2014, the record date, there were 70,697,740 shares outstanding. Shareholders representing 65,271,791, or 92.32%, of the common shares outstanding were present in person or were represented by proxy at the Annual Meeting. The final results for the votes on each proposal are set forth below.

Proposal 1: Our shareholders elected the following directors to serve on our Board until the 2015 Annual Meeting of Shareholders.

Name	For	Withheld	Broker Non-Votes
Mark A. Buthman	61,758,954	204,102	3,308,735
William F. Feehery	61,758,126	204,930	3,308,735
Thomas W. Hofmann	61,747,144	215,912	3,308,735
Paula A. Johnson	61,758,711	204,345	3,308,735
Myla P. Lai-Goldman	61,923,975	39,081	3,308,735
Douglas A. Michels	61,758,674	204,382	3,308,735
Donald E. Morel, Jr.	60,038,736	1,924,320	3,308,735
John H. Weiland	61,735,239	227,817	3,308,735
Anthony Welters	60,397,670	1,565,386	3,308,735
Patrick J. Zenner	60,495,621	1,467,435	3,308,735

Proposal 2: Our shareholders approved, on an advisory basis, named executive officer compensation:

For	Against	Abstain	Broker Non-Votes
59,447,452	2,316,955	198,649	3,308,735

Proposal 3: Our shareholders ratified the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2014 fiscal year. The votes regarding this proposal were as follows:

For	Against	Abstain	Broker Non-Votes
63,616,286	1,642,404	13,101	Not applicable

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ITEM 6.  EXHIBITS

Exhibit Number	Description
3.1	Our Amended and Restated Articles of Incorporation effective December 17, 2007 are incorporated by reference from our Form 8-K dated December 17, 2007.
3.2	Certificate of Amendment of our Amended and Restated Articles of Incorporation, is incorporated by reference from our Form 8-K filed on August 26, 2013.
3.3	Our Bylaws, as amended through October 14, 2008 are incorporated by reference from our Form 8-K dated October 20, 2008.
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 8-K dated December 17, 2007.
4.3	Article I and V of our Bylaws, as amended through October 14, 2008 are incorporated by reference from our Form 8-K dated October 20, 2008.
4.4	Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries have been omitted. (1)
10.1	Form of 2014 Long-Term Incentive Plan Award.
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.

33

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 J. Federici

William J. Federici

Senior Vice President and Chief Financial Officer

May 8, 2014

34

EXHIBIT INDEX

Exhibit Number	Description
3.1	Our Amended and Restated Articles of Incorporation effective December 17, 2007 are incorporated by reference from our Form 8-K dated December 17, 2007.
3.2	Certificate of Amendment of our Amended and Restated Articles of Incorporation, is incorporated by reference from our Form 8-K filed on August 26, 2013.
3.3	Our Bylaws, as amended through October 14, 2008 are incorporated by reference from our Form 8-K dated October 20, 2008.
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 8-K dated December 17, 2007.
4.3	Article I and V of our Bylaws, as amended through October 14, 2008 are incorporated by reference from our Form 8-K dated October 20, 2008.
4.4	Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries have been omitted. (1)
10.1	Form of 2014 Long-Term Incentive Plan Award.
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

EX-10.1

GLOBAL HEADQUARTERS

530 Herman O. West Drive ∙ Exton, PA 19341

TEL 610-594-3327 ∙ FAX 610-594-3013

rick.luzzi@westpharma.com

RICHARD D. LUZZI                

Corporate Vice President Human Resources

Exhibit 10.1

April 3, 2014

[NAME]

[ADDRESS]

Re:    Your 2014 Long-Term Incentive Plan Award

Dear [NAME]:

Congratulations. On February 24, 2014, the Compensation Committee of our Board of Directors granted you the following stock option and performance-vesting share units.

Stock Option Award:	______
Target PVS Units:	______
Expected Value	$______

The expected value is calculated using the fair market value and Black-Scholes option value on the date of the award. The awards were made under the terms of our 2011 Omnibus Incentive Compensation Plan. We have attached a summary of the terms of your awards. Please read it carefully.

Additionally, for awards made in 2014 and later, the Compensation Committee has approved a special continued vesting provision for officers who meet certain age and service requirements. These requirements are set forth in Exhibit II to this Award Letter. To receive this special post-retirement vesting continuation, during that period, you will be subject to restrictive covenants. Therefore, you must execute the Exhibit II and return it to Amanda Furiato.

I am pleased that you are a participant in this long-term incentive compensation program and trust that your participation will be beneficial to both you and the Company.

Sincerely,

Enclosures

Summary of Your Stock Options

What is a stock option?

A stock option is the right to purchase a fixed number of shares at a set exercise price. The option granted by this award is a non-qualified stock option. The stock option gains value when the price of our common stock exceeds the exercise price.

How many shares may I purchase and what is the price?

The number of shares you may purchase and the exercise price are as follows:

Exercise Price	Total shares that may be purchased upon exercise
$47.34	______

May I purchase the shares immediately?

No. Subject to Exhibit II to this Award Agreement, so long as your employment with us continues, 25% of your option becomes exercisable – or “vests” – each year for the first four years following the grant date. At the end of the four-year period, you may exercise the entire option. The following chart shows when and what portion of your option becomes exercisable.

Date	Portion of the option that becomes exercisable
February 24, 2014 (grant date)	0%
February 24, 2015	25%
February 24, 2016	50%
February 24, 2017	75%
February 24, 2018 and thereafter	100%

However, in no event will your option be exercisable after the Expiration Date set forth below.

When will my option expire?

The option expires on February 24, 2024, which will be referred to as the “Expiration Date.” This means that once it becomes exercisable, the option may be exercised until February 23, 2024. In addition,

• if you die, the option will remain exercisable for one year from your date of death;

• if you terminate employment due to disability or retirement, the option will remain exercisable until the Expiration Date;

• if your employment terminates for any reason other than retirement, disability, death or removal for cause, the option will expire 90 days after the termination date;

• if we terminate your employment for cause, the option will expire on the commencement of business on your date of termination.

-1-

How do I exercise my stock option?

There are four ways to exercise a stock option.

• Cash. You write a check to the Company for the exercise price, plus any applicable withholding taxes.

• Already owned shares. You may deliver or attest vested shares of common stock that you own with a fair market value equal to the exercise price, plus any applicable withholding taxes.

• Combination of shares and cash. You may use a combination of cash and stock.

• Reduction of proceeds. You may elect to have shares you would otherwise receive upon the exercise reduced by an amount equal to the total exercise cost divided by the fair market value of the shares at the time of your exercise. In effect, you would receive the “net” shares otherwise due to you after deducting for the exercise cost, plus applicable withholding taxes.

When do I have to pay for the exercise?

The full exercise price and applicable taxes must be paid within three days of exercise.

Will I receive dividends on my unexercised options?

No. Dividends are only payable to you after you exercise your option as long as you do so before the applicable dividend record date.

Summary of Your Performance-Vesting Share Unit Award

What is a performance-vesting share unit?

A PVS Unit award represents the conditional right to receive a distribution of shares. The number of shares you will receive depends on how well the Company’s actual performance compares to specified performance goals at the end of the performance period.    

What are the performance goals applicable to the PVS Unit award?

The performance levels are based on two equally weighted performance measures. The two measures of Company performance are:

• Average return on invested capital – also called “ROIC” – is measured by dividing the average of the Company’s net operating profit (without regard to taxes) over the performance period by the average outstanding equity plus debt over that period.

• Compounded annual revenue growth – also called “CAGR” – is the compound annual growth rate in net sales for the Company over the same period.

What is the performance period for this PVS Unit award?

The Company’s performance against the goals is measured over a three-year period that begins January 1, 2014 and ends December 31, 2016.

-2-

Your target PVS Units award presented on the first page of this letteris the number of shares of West Common Stock that you would receive if the Company obtains 100% of both of the ROIC and CAGR performance targets. Additional shares of Common Stock will be distributed under this PVS award if actual performance exceeds the target performance level, and fewer shares of Common Stock will be distributable if actual performance falls short of the target performance level. No shares ofCommon Stockwill be paid outif actual performance falls below the minimum acceptable level.

The following table shows the performance targets for CAGR and Average ROIC and the corresponding PVS Units payouts for the 2014-2016 performance period.

Performance Range		CAGR		Average ROIC
		(applies to 50% of PVSUs)		(applies to 50% of PVSUs)
		If CAGR is:	Then the payout as a % of Target is:	If ROIC is:	Then the payout as a % of Target is:
Maximum:	150%	11.85%	200%	16.50%	200%
	125%	9.88%	150%	13.75%	150%
	110%	8.69%	120%	12.10%	120%
Target:	100%	7.90%	100%	11.00%	100%
	85%	6.72%	75%	9.35%	75%
Threshold:	70%	5.53%	50%	7.70%	50%
	< 70%	< 5.53%	-0-	<7.70%	-0-

If actual CAGR or ROIC falls between any of the performance range percentages above, the payout for that portion of your PVS Units will be determined by applying a mathematical formula to estimate the value based on the two nearest percentages.

Can my PVS Unit award be adjusted?

Yes, the Committee can change or revise the targets as it considers appropriate and make adjustments for budgeted exchange rates or an “extraordinary or special item” on a case-by-case basis. Extraordinary or special items include (1) settlement of litigation or actions brought by governmental agencies , (2) changes to the Company’s capital structure, including changes to dividend policy, share repurchase programs, mergers, acquisitions, divestitures, reorganizations and restructurings; and (3) new legislation or governmental regulations enacted or promulgated during the performance period.

When will I know how many shares I am eligible to receive?

The shares will be distributed to you in early 2017 after the ROIC and CAGR for the performance period are calculated. This will be done by the Compensation Committee after review of the Company’s audited financial statements.

Will I receive dividends on my PVS Units?

During the performance period, your account will be credited with additional PVS Units as if the target PVS Units award had been reinvested in dividends paid on Common Stock during the period. At the end of the performance period, you may receive additional shares of Common Stock equal to the amount of PVS Units credited through this dividend-reinvestment feature. If performance falls below the target levels, you will forfeit some or all of these PVS Units based on the applicable payout percentage.

-3-

May I defer receipt of my shares?

Delivery of shares upon payout may be deferred under the Deferred Compensation Plan for eligible participants in certain countries. If you are eligible, you will receive details on this deferral opportunity before the end of each performance period and the distribution provisions of the applicable plan will contain additional restrictions. Any election will similarly defer receipt of additional shares you would otherwise receive due to the deemed dividend reinvestment feature.

What happens if I terminate employment during the performance period?

Subject to Exhibit II to this Award Agreement, you will not be entitled to receive a distribution with respect to any PVS Units granted by this award if your employment terminates for any reason before the end of the performance period.

Additional Information Applicable to Both Your Stock Option and PVS Unit Award

Are there other circumstances that would lead to a forfeiture of my award or the proceeds that I receive from exercising my award?

Yes. All awards are subject to our Incentive Compensation Recovery Policy, which is attached to this award letter as Exhibit I. You are encouraged to carefully read that policy and contact me or the Law Department if you have any questions. The policy generally provides that in addition to forfeitures of all or part of your award due to your termination of employment discussed above, in certain other situations you will forfeit your award and may be required to reimburse us for the amounts you receive as a result of any option that you exercise or share of stock that you sell. Your acceptance of this award is expressly conditioned on your agreement to be subject to the Incentive Compensation Recovery Policy, including the provisions that allow us to deduct any proceeds from other sources of income payable to you. This award would not be made if you did not agree to be subject to that policy.

Does the Securities Trading Policy apply to my award?

Yes. All sales of shares of company stock (including shares earned under the PVS Unit award and shares received upon exercise of an option) and all option exercise transactions are subject to our Securities Trading Policy. Option exercises and stock sales by West’s officers who are subject to Section 16 of the Securities and Exchange Act of 1934 or on the designated persons list under our policy also must meet the review and written pre-approval by our General Counsel requirements of that policy. For information and to access the required pre-clearance form, please go to IntraWest and lookunder theLegal & Compliance tab.

Does my acceptance of this award guarantee me any future awards, continued employment or additional severance pay?

No. This award is granted at the sole discretion of West. Your receipt of this award does not guarantee any future awards, nor does it guarantee your continued employment with the Company. Subject to applicable law, your employment may be terminated for any reason. Additionally, this award is not part of your base pay or compensation for determination of any severance pay or benefits you may be entitled to upon termination of employment unless that is specifically agreed to in writing between you and the Company.

-4-

Where can I find additional information about my award?

This is a summary of the terms of your stock option and PVS Unit award. Your award is subject to the terms of the 2011 Omnibus Incentive Compensation Plan. This award is being delivered with an Information Statement, which gives additional information about your award and the 2011 Omnibus Incentive Compensation Plan under which it was granted. We encourage you to read the Information Statement. Additional terms and conditions may apply to your award under the terms of the Omnibus Plan.

-5-

EXHIBIT I

Incentive Compensation Recovery Policy

The Company may seek to recover incentive compensation awarded to any recipient in accordance with the terms of this policy. Each award of annual or long-term equity-based or performance-based compensation must specify that the award is subject to this policy.

Restatement of Financial Results. The Company will cancel or will seek to recover all or a portion of an award from any executive officer of the Company if the Company is required to significantly or materially restate its financial statements (other than to comply with changes to applicable accounting principles) with respect to any of the three fiscal years before the payment of the award. The Company also will not pay or will seek to recover all or a portion of an award from any award recipient whose fraud or misconduct causes the restatement of the Company’s financial statements with respect to any of the three fiscal years before the payment of the award.

Calculation Errors. Even if no financial results are restated, if an award is paid or distributed, and it is subsequently determined that the award should have been less than the amount calculated due to mathematical errors, fraud, misconduct or gross negligence, the Company may seek repayment of the award from any award recipient during the three-year period following the payment of the award.

Detrimental Conduct. If an award recipient directly or indirectly engages in conduct that competes with the Company, or any conduct that is materially inimical, contrary, harmful to, or not in the best interests of the Company or if the award recipient fails to comply with any of the materialterms and conditions of the award (unless the failure is remedied within ten days after having been notified of such failure), then the Company has the discretion to immediately cancel any and all outstanding awards and require that the award recipient repay all or any portion of an award, including the gain realized on the exercise of a stock option, stock appreciation right or the disposition of any other equity-based award. To be subject to this policy, the detrimental conduct must have occurred while the award recipient was rendering service to the Company, or during the six-month period following the later of (1) the date the recipient ceases rendering service to the Company or, (2) the date the award is paid (or an option or stock appreciation right is exercised).

Exercise of Discretion. With respect to executive officers and members of the board of directors, the compensation committee has the sole and absolute authority (unless the board determines that the whole board should have such authority) to determine whether to exercise its discretion to seek repayment or cancel an award and what portion of an award should be recovered or canceled. With respect to all other award recipients, the officers of the Company have sole and absolute authority. The compensation committee, board or officers, as appropriate, will consider all relevant facts and circumstances in exercising their discretion. These facts and circumstances include: (1) the materiality of any changes to calculations or financial results, (2) the potential windfall received by recipients, (3) the culpability and involvement of the award recipients, (4) the controls in place to limit misconduct or incorrect reporting, (5) the period during which any misconduct occurred, (6) any other negative repercussions experienced by the award recipient, (7) the period that has elapsed since the date of any misconduct and (8) the feasibility and costs of recovering the compensation.

Enforcement. The board intends that this policy will be applied to the fullest extent permitted by applicable law. The Company has the authority to seek recovery through any available means including litigation or the filing of liens, if necessary. The Company also has the authority, to the extent permitted by law, to deduct the amount to be repaid from any amounts otherwise owed to the recipient, including wages or other compensation, fringe benefits, or vacation paid. Whether or not the Company elects to make any deduction, if the Company does not recover the full amount that it has determined should be recovered, the recipient must immediately repay the unpaid balance. By agreeing to accept an award, each award recipient consents to the Company’s right to make these deductions.

EXHIBIT II

Conditional Executive Officer Retirement Vesting

Notwithstanding anything in the Award Agreement to which this Exhibit is attached or the 2011 Omnibus Incentive Compensation Plan (“Plan”) to the contrary, the following vesting rules apply to awards made to elected executive officers of the Company on or after February 18, 2014.

Eligibility. To be subject to the special retirement vesting rules set forth in this Exhibit, the following criteria must be met:

1. You have reached age 57.

2. You have rendered 10 years of service to the Company and its affiliates.

3. Your termination must not be due to “Cause” as defined in the Plan and not due to death or disability.

4. You must be an elected executive officer of the Company at the time of your termination.

5. You agree to be bound by the limitations and covenants contained in this Exhibit.

Eligible Awards. The vesting continuation described in this Exhibit will not apply to awards made in the year of your termination, unless your retirement is effective on or after the commencement of the Company’s fourth quarter (October 1). If you retire before the commencement of the Company’s fourth quarter, your awards will not continue to vest and the normal terms and conditions will apply.

Vesting Continuation. Upon retirement as described in this Exhibit and subject to limitations below, (1) all eligible PVSU awards granted to you will continue to vest based on the approved performance criteria as if you remained actively employed by the Company, and (2) all eligible option awards will also continue to vest on the same schedule as set forth in your agreement and will remain exercisable until the expiration date. PVSUs will be distributed in the same manner and at the same time as they are distributed to active employees.

Vesting Cessation Limitations. Vesting will cease and all outstanding awards will be immediately forfeited if the Committee determines in its sole and absolute discretion that any of the following circumstances have occurred:

1. You compete with the Company as described below during the period of continued vesting;

2. You fail to comply with any confidentiality agreements with the Company before or after your termination of employment; or,

3. The Company determines that it could have terminated you for “Cause” due to facts or circumstances discovered after your termination of employment.

Clawback. The clawback period described in the Company’s Incentive Compensation Recovery policy is extended for the full duration of the period of continued vesting described in this Exhibit. The Compensation Committee may determine in its sole and absolute discretion that if circumstances exist that would permit the recovery of incentive compensation paid to you during this extended period, in addition to recovering this compensation, all vesting will immediately cease and the remainder of your awards will be forfeited immediately.

Non-Competition Covenant. To receive the benefits of continued vesting described in this Exhibit, you agree that during the period of continued vesting (the “Restrictive Period”), you will not, and you will not permit any of your Affiliates, or any other Person, directly or indirectly, to:

1. engage in competition with, or acquire a direct or indirect interest or an option to acquire such an interest in any Person engaged in competition with, the Company’s Business (other than an interest of not more than 5 percent of the outstanding stock of any publicly traded company);

2. serve as a director, officer, employee or consultant of, or furnish information to, or otherwise facilitate the efforts of, any Person engaged in competition with the Company’s Business;

3. solicit, employ, interfere with or attempt to entice away from the Company any employee who has been employed by the Company or a Subsidiary in an executive or supervisory capacity in connection with the conduct of the Company’s Business within one year prior to such solicitation, employment, interference or enticement; or

4. approach, solicit or deal with in competition with the Company or any Subsidiary any Person which at any time during the year immediately preceding the date of your retirement described in this Exhibit:

a. was a customer, client, supplier, agent or distributor of the Company or any Subsidiary;

b. was a customer, client, supplier, agent or distributor of the Company or any Subsidiary with whom employees reporting to or under your direct control had personal contact on behalf of the Company or any Subsidiary; or

c. was a Person with whom you had regular, substantial or a series of business dealings on behalf of the Company or any Subsidiary (whether or not a customer, client, supplier, agent or distributor of the Company or any Subsidiary).

d. As used in this Exhibit, the capitalized terms shall have the meanings set forth below:

i. An “Affiliate” of any Person means any Person directly or indirectly controlling, controlled by or under common control with such Person.

ii. The “Company’s Business” means: (a) the manufacture and sale of stoppers, closures, containers, medical-device components and assemblies made from elastomers, metal and plastic for the health-care and consumer-products industries, and (b) any other business conducted by the Company or any of its Subsidiaries or Affiliates during the term of this Agreement and in which you have been actively involved.

iii. "Person” means an individual, a corporation, a partnership, an association, a trust or other entity or organization.

iv. “Subsidiary” has the meaning ascribed to the term by section 425(f) of the United States Internal Revenue Code of 1986, as amended.

Enforcement. Should any provision of this Exhibit be adjudged to any extent invalid by any competent tribunal, that provision will be deemed modified to the extent necessary to make it enforceable.

ACCEPTED AND AGREED:                    

Signature Date

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Donald E. Morel, Jr., Ph.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of West Pharmaceutical Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Donald E. Morel, Jr., Ph.D.

Donald E. Morel, Jr., Ph.D.

Chairman of the Board and Chief Executive Officer

Date: May 8, 2014

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, William J. Federici, certify that:

1. I have reviewed this quarterly report on Form 10-Q of West Pharmaceutical Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ William J. Federici

William J. Federici

Senior Vice President and Chief Financial Officer

Date: May 8, 2014

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of West Pharmaceutical Services, Inc. (the “Company”) for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald E. Morel, Jr., Ph.D., Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Donald E. Morel, Jr., Ph.D.

Donald E. Morel, Jr., Ph.D.

Chairman of the Board and Chief Executive Officer

Date: May 8, 2014

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of West Pharmaceutical Services, Inc. (the “Company”) for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Federici, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William J. Federici

William J. Federici

Senior Vice President and Chief Financial Officer

Date: May 8, 2014

XML

Fair Value Measurements (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Level 3 Fair Value Measurements [Roll Forward]
Balance, beginning of period	$ 4.3	$ 3.3
Increase in fair value recorded in earnings	0.4	0
Balance, end of period	$ 4.7	$ 3.3

XML

Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Reportable segments	2
Net sales	$ 346.8	$ 339.4
Operating profit	39.3	43.3
Loss on debt extinguishment	0	0.2
Interest expense	4.0	4.6
Interest income	0.4	0.6
Income before income taxes	35.7	39.1
Packaging Systems [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Net sales	252.9	251.5
Operating profit	51.4	58.6
Delivery Systems [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Net sales	94.0	88.2
Operating profit	(0.2)	1.2
Intersegment Sales [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Net sales	(0.1)	(0.3)
Corporate [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating profit	$ (11.9)	$ (16.5)

XML

Other Expense (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Other Income and Expenses [Abstract]
Recognition of income related to nonrefundable payment	$ 0.4
Nonrefundable payment from customer	18.6
Unearned income, current	1.5
Unearned income, noncurrent	$ 17.1

XML

Net Income Per Share (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share [Abstract]
Net income	$ 27.1	$ 31.7
Weighted average common shares outstanding (in shares)	70.6	69.0
Dilutive effect of stock options, stock appreciation rights and performance share awards, based on the treasury stock method (in shares)	1.7	1.2
Assumed conversion of convertible debt, based on the if-converted method (in shares)	0	0.1
Weighted average shares assuming dilution (in shares)	72.3	70.3
Antidilutive options excluded from computation of diluted net income per share (in shares)	0.2	0.4

XML

Inventories (Tables)

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventories

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

($ in millions)	March 31, 2014		December 31, 2013
Finished goods	$	82.9	$	80.0
Work in process	29.0		24.8
Raw materials	75.6		72.1
	$	187.5	$	176.9

XML

Accumulated Other Comprehensive Loss (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Cost of goods and services sold	$ (240.4)		$ (227.7)
Interest expense	(4.0)		(4.6)
Prior service cost	0.3		0.4
Actuarial losses	(0.8)		(2.4)
Income before income taxes	35.7		39.1
Tax expense	(9.8)		(8.6)
Net income	27.1		31.7
Reclassification out of Accumulated Other Comprehensive Loss [Member]
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Net income	(0.8)		(2.3)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Losses on Cash Flow Hedges [Member]
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Income before income taxes	(0.8)		(1.6)
Tax expense	0.3		0.6
Net income	(0.5)		(1.0)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Defined Benefit Pension and Other Postretirement Plans [Member]
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Prior service cost	0.3	[1]	0.4	[1]
Actuarial losses	(0.8)	[1]	(2.4)	[1]
Income before income taxes	(0.5)		(2.0)
Tax expense	0.2		0.7
Net income	(0.3)		(1.3)
Foreign Currency Contract [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Losses on Cash Flow Hedges [Member]
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Cost of goods and services sold	0		(1.0)
Interest Rate Swap Contracts [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Losses on Cash Flow Hedges [Member]
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Interest expense	(0.7)		(0.6)
Forward Treasury Locks [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Losses on Cash Flow Hedges [Member]
Reclassification out of Accumulated Other Comprehensive Loss [Line Items]
Interest expense	$ (0.1)		$ 0

[1] These components are included in the computation of net periodic benefit cost. Refer to Note 10, Benefit Plans, for additional details.

XML

Effects of Derivative Instruments on OCI and Earnings (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	$ (0.3)	$ (1.3)
Amount of Loss Reclassified from Accumulated OCI into Income	0.5	1.0
Net Investment Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	0	2.4
Amount of Loss Reclassified from Accumulated OCI into Income	0	0
Foreign Currency Hedge Contracts [Member] | Net Sales [Member] | Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	(0.1)	0.3
Amount of Loss Reclassified from Accumulated OCI into Income	0	0
Foreign Currency Hedge Contracts [Member] | Cost of Goods and Services Sold [Member] | Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	(0.1)	(1.7)
Amount of Loss Reclassified from Accumulated OCI into Income	0	0.6
Interest Rate Swap Contracts [Member] | Interest Expense [Member] | Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	(0.1)	0.1
Amount of Loss Reclassified from Accumulated OCI into Income	0.4	0.4
Forward Treasury Locks [Member] | Interest Expense [Member] | Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	0	0
Amount of Loss Reclassified from Accumulated OCI into Income	0.1	0
Foreign Currency - Denominated Debt [Member] | Other Expense [Member] | Net Investment Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	0	2.4
Amount of Loss Reclassified from Accumulated OCI into Income	$ 0	$ 0

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Tax Disclosure [Abstract]
Effective tax rate (in hundredths)	27.60%	22.00%
Discrete tax benefit, R&D credit		$ 1.3

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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 U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and 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 months ended March 31, 2014 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc. (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, 2013 (“2013 Annual Report”). The results of operations for any interim period are not necessarily indicative of results for the full year.

Stock Split: On August 1, 2013, our Board of Directors approved a two-for-one stock split of our outstanding shares of common stock, effected in the form of a stock dividend. The record date for the stock split was September 12, 2013, and the share distribution occurred on September 26, 2013. All share and per share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the impact of this stock split.

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares available for issuance under the 2011 Plan (in shares)	4,004,736
Stock options, granted (in shares)	588,909
Stock options, weighted average exercise price (in dollars per share)	$ 47.33
Stock options, weighted average grant date fair value (in dollars per share)	$ 10.37
Assumptions used in Black-Scholes model
Risk-free interest rate (in hundredths)	1.57%
Expected life (in years)	6 years
Stock volatility (in hundredths)	22.10%
Dividend yield (in hundredths)	0.80%
Granted, PVS awards (in shares)	128,710
Grant date fair value, PVS awards (in dollars per share)	$ 47.33
Number of shares of common stock per PVS award (in shares)	1
Performance period	3 years
PVS payout, Minimum (in hundredths)	0.00%
PVS payout, Maximum (in hundredths)	200.00%
Stock-based compensation expense	$ 4.3	$ 5.4

XML

Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Components of Accumulated Other Comprehensive Loss

The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the three months endedMarch 31, 2014:

($ 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, 2013	$	(6.0	)	$	4.3	$	(47.0	)	$	16.3		$	(32.4	)
Other comprehensive loss before reclassifications	(0.3		)	—		(0.1		)	(1.8		)	(2.2		)
Amounts reclassified out	0.5			—		0.3			—			0.8
Other comprehensive income (loss), net of tax	0.2			—		0.2			(1.8		)	(1.4		)
Balance, March 31, 2014	$	(5.8	)	$	4.3	$	(46.8	)	$	14.5		$	(33.8	)

Reclassification out of Accumulated Other Comprehensive Loss

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

	Three Months Ended March 31,
Detail of components	2014			2013			Location on Statement of Income
Losses on cash flow hedges:
Foreign currency contracts	$	—		$	(1.0	)	Cost of goods and services sold
Interest rate swap contracts	(0.7		)	(0.6		)	Interest expense
Forward treasury locks	(0.1		)	—			Interest expense
Total before tax	(0.8		)	(1.6		)
Tax expense	0.3			0.6
Net of tax	$	(0.5	)	$	(1.0	)
Amortization of defined benefit pension and other postretirement plans:
Prior service cost	$	0.3		$	0.4		(a)
Actuarial losses	(0.8		)	(2.4		)	(a)
Total before tax	(0.5		)	(2.0		)
Tax expense	0.2			0.7
Net of tax	$	(0.3	)	$	(1.3	)
Total reclassifications for the period, net of tax	$	(0.8	)	$	(2.3	)

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

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

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

	Balance at		Basis of Fair Value Measurements
($ in millions)	March 31, 2014		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	11.7	$	11.7	$	—	$	—
Deferred compensation assets	5.8		5.8		—		—
Foreign currency contracts	0.1		—		0.1		—
	$	17.6	$	17.5	$	0.1	$	—
Liabilities:
Contingent consideration	$	4.7	$	—	$	—	$	4.7
Deferred compensation liabilities	10.3		10.3		—		—
Interest rate swap contracts	5.1		—		5.1		—
Foreign currency contracts	0.3		—		0.3		—
	$	20.4	$	10.3	$	5.4	$	4.7

	Balance at		Basis of Fair Value Measurements
($ in millions)	December 31, 2013		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	7.5	$	7.5	$	—	$	—
Deferred compensation assets	5.7		5.7		—		—
	$	13.2	$	13.2	$	—	$	—
Liabilities:
Contingent consideration	$	4.3	$	—	$	—	$	4.3
Deferred compensation liabilities	12.1		12.1		—		—
Interest rate swap contracts	5.6		—		5.6		—
	$	22.0	$	12.1	$	5.6	$	4.3

Summary of Changes in Level 3 Fair Value Measurements

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

	Three Months Ended March 31,
	2014		2013
Beginning Balance	$	4.3	$	3.3
Increase in fair value recorded in earnings	0.4		—
Ending Balance	$	4.7	$	3.3

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Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Service cost	$ 2.6	$ 2.9
Interest cost	4.3	3.9
Expected return on assets	(4.8)	(4.3)
Amortization of prior service credit	(0.3)	(0.4)
Recognized actuarial losses (gains)	0.8	2.4
Net periodic benefit cost	2.6	4.5
Pension Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Service cost	2.5	2.5
Interest cost	4.2	3.7
Expected return on assets	(4.8)	(4.3)
Amortization of prior service credit	(0.3)	(0.4)
Recognized actuarial losses (gains)	1.2	2.4
Net periodic benefit cost	2.8	3.9
Other Retirement Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Service cost	0.1	0.4
Interest cost	0.1	0.2
Expected return on assets	0	0
Amortization of prior service credit	0	0
Recognized actuarial losses (gains)	(0.4)	0
Net periodic benefit cost	(0.2)	0.6
U.S. Pension Benefit Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Net periodic benefit cost	2.1	3.1
International Pension Benefit Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Net periodic benefit cost	0.7	0.8
U.S. Other Retirement Benefit Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Net periodic benefit cost	(0.2)	0.6
International Other Retirement Benefit Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Net periodic benefit cost	0	0
U.S. Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Net periodic benefit cost	1.9	3.7
International Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Net periodic benefit cost	$ 0.7	$ 0.8

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Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2014

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Schedule of Components of Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended March 31 were as follows ($ in millions):

	Pension benefits						Other retirement benefits					Total
	2014			2013			2014			2013		2014			2013
Service cost	$	2.5		$	2.5		$	0.1		$	0.4	$	2.6		$	2.9
Interest cost	4.2			3.7			0.1			0.2		4.3			3.9
Expected return on assets	(4.8		)	(4.3		)	—			—		(4.8		)	(4.3		)
Amortization of prior service credit	(0.3		)	(0.4		)	—			—		(0.3		)	(0.4		)
Recognized actuarial losses (gains)	1.2			2.4			(0.4		)	—		0.8			2.4
Net periodic benefit cost	$	2.8		$	3.9		$	(0.2	)	$	0.6	$	2.6		$	4.5

	Pension benefits				Other retirement benefits					Total
	2014		2013		2014			2013		2014		2013
U.S. plans	$	2.1	$	3.1	$	(0.2	)	$	0.6	$	1.9	$	3.7
International plans	0.7		0.8		—			—		0.7		0.8
Net periodic benefit cost	$	2.8	$	3.9	$	(0.2	)	$	0.6	$	2.6	$	4.5

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Other Expense (Tables)

3 Months Ended

Mar. 31, 2014

Other Income and Expenses [Abstract]

Schedule of Other Expense

Other expense consists of:

	Three Months Ended March 31,
($ in millions)	2014			2013
Development income	$	(0.4	)	$	(0.3	)
Acquisition-related contingencies	0.4			—
Foreign exchange and other	0.7			0.5
	$	0.7		$	0.2

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 27.1	$ 31.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	20.6	19.4
Amortization	1.2	1.1
Loss on debt extinguishment	0	0.2
Stock-based compensation	4.3	5.4
Other non-cash items, net	(1.2)	(1.1)
Changes in assets and liabilities	(43.2)	(37.8)
Net cash provided by operating activities	8.8	18.9
Cash flows from investing activities:
Capital expenditures	(31.7)	(61.7)
Purchases of short-term investments	(9.2)	(5.4)
Sales and maturities of short-term investments	5.0	9.6
Other, net	0.3	(0.2)
Net cash used in investing activities	(35.6)	(57.7)
Cash flows from financing activities:
Borrowings under revolving credit agreements	125.3	119.0
Repayments under revolving credit agreements	(93.3)	(75.7)
Issuance of long-term debt	0	43.3
Repayments of long-term debt	(0.6)	(28.9)
Dividend payments	(7.1)	(6.5)
Excess tax benefit from employee stock plans	2.7	1.1
Shares repurchased for employee tax withholdings	(4.1)	(2.9)
Proceeds from stock option exercises	2.4	5.5
Employee stock purchase plan contributions	0.8	0.6
Other	0.1	0
Net cash provided by financing activities	26.2	55.5
Effect of exchange rates on cash	0.6	(3.6)
Net increase in cash and cash equivalents	0	13.1
Cash, including cash equivalents at beginning of period	230.0	161.9
Cash, including cash equivalents at end of period	$ 230.0	$ 175.0

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

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

	Three Months Ended March 31,
($ in millions)	2014			2013
Net sales:
Packaging Systems	$	252.9		$	251.5
Delivery Systems	94.0			88.2
Intersegment sales	(0.1		)	(0.3		)
Total net sales	$	346.8		$	339.4

Operating profit:
Packaging Systems	$	51.4		$	58.6
Delivery Systems	(0.2		)	1.2
Corporate	(11.9		)	(16.5		)
Total operating profit	$	39.3		$	43.3
Loss on debt extinguishment	—			0.2
Interest expense	4.0			4.6
Interest income	0.4			0.6
Income before income taxes	$	35.7		$	39.1

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Fair Value Measurements (Details 2) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Other Financial Instruments [Abstract]
Long-term debt, fair value	$ 387.8	$ 365.8
Long-term debt	$ 390.7	$ 371.3

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Net sales	$ 346.8	$ 339.4
Cost of goods and services sold	240.4	227.7
Gross profit	106.4	111.7
Research and development	10.0	9.1
Selling, general and administrative expenses	56.4	59.1
Other expense	0.7	0.2
Operating profit	39.3	43.3
Loss on debt extinguishment	0	0.2
Interest expense	4.0	4.6
Interest income	0.4	0.6
Income before income taxes	35.7	39.1
Income tax expense	9.8	8.6
Equity in net income of affiliated companies	1.2	1.2
Net income	$ 27.1	$ 31.7
Net income per share:
Basic (in dollars per share)	$ 0.38	$ 0.46
Diluted (in dollars per share)	$ 0.38	$ 0.45
Weighted average shares outstanding:
Basic (in shares)	70.6	69.0
Diluted (in shares)	72.3	70.3
Dividends declared per share	$ 0.10	$ 0.10

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Other Expense (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Other Income and Expenses [Abstract]
Development income	$ (0.4)	$ (0.3)
Acquisition-related contingencies	0.4	0
Foreign exchange and other	0.7	0.5
Other expense	$ 0.7	$ 0.2

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Balance Sheet Related Disclosures [Abstract]
Preferred Stock, Shares Authorized	3.0	3.0
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0.25	$ 0.25
Common Stock, Shares Authorized	100.0	100.0
Common Stock, Shares, Issued	70.7	70.4
Common Stock, Shares, Outstanding	70.6	70.2
Treasury Stock, Shares	0.2	0.2

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Debt (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Long-term debt	$ 404.9	$ 373.5
Notes payable and other current debt	14.2	2.2
Long-term debt, excluding current portion	390.7	371.3
Term Loan Due 2014 [Member]
Debt Instrument [Line Items]
Long-term debt	0.1	0.1
Series B Floating Rate Notes Due 2015 [Member]
Debt Instrument [Line Items]
Long-term debt	25.0	25.0
EURO Note B Due 2016 [Member]
Debt Instrument [Line Items]
Long-term debt	84.0	84.1
Capital leases, due through 2016 [Member]
Debt Instrument [Line Items]
Capital leases	0.4	0.4
Revolving credit facility, due 2017 [Member]
Debt Instrument [Line Items]
Long-term debt	85.7	53.7
Line of credit facility classified as short-term	12.0
Line of credit facility, classified as long-term	73.7
Line of credit facility outstanding borrowings, Yen	4.9
Line of credit facility outstanding borrowings, Euro	28.9
Term Loan Due 2018 [Member]
Debt Instrument [Line Items]
Long-term debt	40.8	41.3
Current portion of long-term debt	2.0
Debt Instrument Term	5 years 0 months 0 days
Notes Payable due 2019 [Member]
Debt Instrument [Line Items]
Long-term debt	0.3	0.3
Series A Notes, Due 2022 [Member]
Debt Instrument [Line Items]
Long-term debt	42.0	42.0
Series B Notes, Due 2024 [Member]
Debt Instrument [Line Items]
Long-term debt	53.0	53.0
Series C Notes, Due 2027 [Member]
Debt Instrument [Line Items]
Long-term debt	73.0	73.0
Convertible Debt Due 2047 [Member]
Debt Instrument [Line Items]
Long-term debt	$ 0.6	$ 0.6

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Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

Our business operations are organized into two reportable segments, which are aligned with the underlying markets and customers they serve. Our reportable segments are the Pharmaceutical Packaging Systems segment (“Packaging Systems”) and Delivery Systems. Packaging Systems develops, manufactures and sells primary packaging components and systems for injectable drug delivery, including stoppers and seals for vials, closures and other components used in syringe, intravenous and blood collection systems, and prefillable syringe components. Delivery Systems develops, manufactures and sells safety and administration systems, multi-component systems for drug administration, and a variety of custom contract-manufacturing solutions targeted to the healthcare and consumer-products industries. In addition, Delivery Systems is responsible for the continued development and commercialization of our line of proprietary, multi-component systems for injectable drug administration and other healthcare applications.

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 management considers 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 March 31,
($ in millions)	2014			2013
Net sales:
Packaging Systems	$	252.9		$	251.5
Delivery Systems	94.0			88.2
Intersegment sales	(0.1		)	(0.3		)
Total net sales	$	346.8		$	339.4

Operating profit:
Packaging Systems	$	51.4		$	58.6
Delivery Systems	(0.2		)	1.2
Corporate	(11.9		)	(16.5		)
Total operating profit	$	39.3		$	43.3
Loss on debt extinguishment	—			0.2
Interest expense	4.0			4.6
Interest income	0.4			0.6
Income before income taxes	$	35.7		$	39.1

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

During the three months ended March 31, 2013, in connection with the repurchase of our convertible debt, we recognized a pre-tax loss on debt extinguishment of $0.2 million.

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Derivative Financial Instruments (Details) In Millions, unless otherwise specified	3 Months Ended						3 Months Ended
	Mar. 31, 2014 Forward-Start Interest Rate Swap [Member] USD ($)	Mar. 31, 2014 Interest Rate Swap, Series B Note [Member] USD ($)	Mar. 31, 2014 Foreign Currency Hedge, Euro-Denominated Sales [Member] USD ($)	Mar. 31, 2014 Foreign Currency Hedge, U.S. Inventory Purchases, Yen USD ($)	Mar. 31, 2014 Foreign Currency Hedge, U.S. Inventory Purchases, Yen JPY (¥)	Mar. 31, 2014 Foreign Currency Hedge, Europe Inventory Purchases, Dollars USD ($)	Mar. 31, 2014 Euro-Denominated Revolver [Member] USD ($)	Mar. 31, 2014 Euro-Denominated Revolver [Member] EUR (€)	Mar. 31, 2014 Yen-Denominated Revolver [Member] USD ($)	Mar. 31, 2014 Yen-Denominated Revolver [Member] JPY (¥)	Mar. 31, 2014 Euro Note B [Member] USD ($)	Mar. 31, 2014 Euro Note B [Member] EUR (€)	Mar. 31, 2014 Euro-Denominated Debt [Member] USD ($)
Derivative [Line Items]
Notional amount		$ 25.0	$ 1.5	$ 0.9	¥ 95.0
Amount of hedged item	40.8
Maximum term (in years)	5 years
Fixed interest rate	5.41%	5.51%
Maturity date of debt		Jul. 28, 2015
Variable rate basis	one-month London Interbank Offering Rates (“LIBOR”)	three-month LIBOR
Number of monthly contracts remaining			9	9	9	9
Monthly notional amount, minimum						1.4
Monthly notional amount, maximum						3.0
Aggregate notional amount of remaining contracts			13.5	8.2	855.0	20.9
Notional amount, nonderivative instruments							28.9	21.0	4.9	500.0	84.0	61.1
Cumulative foreign currency translation loss (gain)									(0.5)				5.6
Cumulative foreign currency translation loss (gain), net of tax									$ (0.3)				$ 3.4

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Reconciliation of Basic to Diluted Net Income Per Share

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

	Three Months Ended March 31,
(In millions)	2014		2013
Numerator:
Net income	$	27.1	$	31.7
Denominator:
Weighted average common shares outstanding	70.6		69.0
Dilutive effect of stock options, stock appreciation rights and performance share awards, based on the treasury stock method	1.7		1.2
Assumed conversion of convertible debt, based on the if-converted method	—		0.1
Weighted average shares assuming dilution	72.3		70.3

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CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED) (USD $) In Millions, unless otherwise specified	Total	Common Stock [Member]	Capital in Excess of Par Value [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 31, 2013	$ 906.4	$ 17.6	$ 120.0	$ (3.8)	$ 805.0	$ (32.4)
Balance (in shares) at Dec. 31, 2013		70.4
Increase (Decrease) in Equity [Roll Forward]
Net income	27.1				27.1
Stock-based compensation	4.3		4.3
Shares issued under stock plans (shares)		0.4
Shares issued under stock plans	6.7	0.1	7.0	(0.4)
Shares repurchased for employee tax withholdings (shares)		(0.1)
Shares repurchased for employee tax withholdings	(4.1)		(4.1)
Excess tax benefit from employee stock plans	2.7		2.7
Dividends declared	(7.1)				(7.1)
Other comprehensive loss, net of tax	(1.4)					(1.4)
Balance at Mar. 31, 2014	$ 934.6	$ 17.7	$ 129.9	$ (4.2)	$ 825.0	$ (33.8)
Balance (in shares) at Mar. 31, 2014		70.7

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 27.1	$ 31.7
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(1.8)	(18.4)
Defined benefit pension and other postretirement plan adjustments, net of tax of $0.2 and $1.1, respectively	0.2	2.1
Net gains (losses) on derivatives, net of tax of $0.2 and $(0.4), respectively	0.2	(0.3)
Other comprehensive income (loss), net of tax	(1.4)	(16.6)
Comprehensive income	$ 25.7	$ 15.1

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

 Stock-Based Compensation

The 2011 Omnibus Incentive Compensation Plan (the "2011 Plan") provides for the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to employees and non-employee directors. The terms and conditions of awards to be granted are determined by our Board's nominating and compensation committees. Vesting requirements vary by award. At March 31, 2014, there were 4,004,736 shares remaining in the 2011 Plan for future grants.

During the three months ended March 31, 2014, we granted 588,909 stock options at a weighted average exercise price of $47.33 per share based on the grant-date fair value of our stock to key employees under the 2011 Plan. The weighted average grant date fair value of options granted was $10.37 per share as determined by the Black-Scholes option valuation model using the following weighted average assumptions: a risk-free interest rate of 1.57%; expected life of 6 years based on prior experience; stock volatility of 22.1% based on historical data; and a dividend yield of 0.8%. Stock option expense is recognized over the vesting period, net of forfeitures.

In addition, during the three months ended March 31, 2014, we granted 128,710 performance vesting share (“PVS”) awards at a weighted grant-date fair value of $47.33 per share to key employees under the 2011 Plan. Each PVS award entitles the holder to one share of our common stock if the annual growth rate of revenue and return on invested capital targets are achieved over a three-year performance period. The actual payout may vary from 0% to 200% of an employee’s targeted award. The fair value of PVS 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 was $4.3 million and $5.4 million for the three months ended March 31, 2014 and 2013, respectively.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 30, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	WEST PHARMACEUTICAL SERVICES INC
Entity Central Index Key	0000105770
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		70,669,576
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014

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Benefit Plans

3 Months Ended

Mar. 31, 2014

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Benefit Plans

Benefit Plans

The components of net periodic benefit cost for the three months ended March 31 were as follows ($ in millions):

	Pension benefits						Other retirement benefits					Total
	2014			2013			2014			2013		2014			2013
Service cost	$	2.5		$	2.5		$	0.1		$	0.4	$	2.6		$	2.9
Interest cost	4.2			3.7			0.1			0.2		4.3			3.9
Expected return on assets	(4.8		)	(4.3		)	—			—		(4.8		)	(4.3		)
Amortization of prior service credit	(0.3		)	(0.4		)	—			—		(0.3		)	(0.4		)
Recognized actuarial losses (gains)	1.2			2.4			(0.4		)	—		0.8			2.4
Net periodic benefit cost	$	2.8		$	3.9		$	(0.2	)	$	0.6	$	2.6		$	4.5

	Pension benefits				Other retirement benefits					Total
	2014		2013		2014			2013		2014		2013
U.S. plans	$	2.1	$	3.1	$	(0.2	)	$	0.6	$	1.9	$	3.7
International plans	0.7		0.8		—			—		0.7		0.8
Net periodic benefit cost	$	2.8	$	3.9	$	(0.2	)	$	0.6	$	2.6	$	4.5

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Statement of Comprehensive Income [Abstract]
Defined benefit pension and other postretirement plan adjustments, tax	$ 0.2	$ 1.1
Net gains (losses) on derivatives, tax	$ 0.2	$ (0.4)

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Inventories

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories

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

($ in millions)	March 31, 2014		December 31, 2013
Finished goods	$	82.9	$	80.0
Work in process	29.0		24.8
Raw materials	75.6		72.1
	$	187.5	$	176.9

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Net Income Per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

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

	Three Months Ended March 31,
(In millions)	2014		2013
Numerator:
Net income	$	27.1	$	31.7
Denominator:
Weighted average common shares outstanding	70.6		69.0
Dilutive effect of stock options, stock appreciation rights and performance share awards, based on the treasury stock method	1.7		1.2
Assumed conversion of convertible debt, based on the if-converted method	—		0.1
Weighted average shares assuming dilution	72.3		70.3

Under the "if-converted" method, the after-tax effect of interest expense related to convertible debt is added back to net income. During both periods presented, the add-back amount was immaterial.

In addition, during the three months ended March 31, 2014 and 2013, there were 0.2 million and 0.4 million shares, respectively, not included in the computation of diluted net income per share, because their impact was antidilutive.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation: The condensed consolidated financial statements included in this report are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and 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 months ended March 31, 2014 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc. (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, 2013 (“2013 Annual Report”). The results of operations for any interim period are not necessarily indicative of results for the full year.

Stock Split

Stock Split: On August 1, 2013, our Board of Directors approved a two-for-one stock split of our outstanding shares of common stock, effected in the form of a stock dividend. The record date for the stock split was September 12, 2013, and the share distribution occurred on September 26, 2013. All share and per share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the impact of this stock split.

New Accounting Standards

Recently Adopted Standards

In July 2013, the FASB issued revised guidance to address the diversity in practice related to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We adopted this guidance as of January 1, 2014, on a prospective basis. The adoption did not have a material impact on our financial statements.

In March 2013, the FASB issued guidance that clarifies the application of U.S. GAAP to the release of cumulative translation adjustments related to changes of ownership in or within foreign entities, including step acquisitions. This guidance, which we adopted as of January 1, 2014, will be applied prospectively if and when changes of ownership related to foreign entities occur.

Standards Issued Not Yet Adopted

In April 2014, the FASB issued guidance for the reporting of discontinued operations, which also contains new disclosure requirements for both discontinued operations and other disposals that do not meet the definition of a discontinued operation. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Management believes that the adoption of this guidance will not have a material impact on our financial statements.

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Other Expense

3 Months Ended

Mar. 31, 2014

Other Income and Expenses [Abstract]

Other expense

Other expense consists of:

	Three Months Ended March 31,
($ in millions)	2014			2013
Development income	$	(0.4	)	$	(0.3	)
Acquisition-related contingencies	0.4			—
Foreign exchange and other	0.7			0.5
	$	0.7		$	0.2

During the three months endedMarch 31, 2014, we recognized $0.4 million of development income within our Pharmaceutical Delivery Systems segment ("Delivery Systems") related to a nonrefundable customer payment received in 2013 for the exclusive use of SmartDose within a specific therapeutic area. As of March 31, 2014, there was $18.6 million of unearned income related to this payment, of which $1.5 million was included in other current liabilities and $17.1 million was included in other long-term liabilities. The unearned income is being recognized as development 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. During the three months ended March 31, 2013, we recorded development income of $0.3 million within Delivery Systems.

During the three months ended March 31, 2014, the SmartDose contingent consideration increased by $0.4 million, due to the time value of money and adjustments related to changes in sales projections. The change in the SmartDose contingent consideration during the three months ended March 31, 2013 was immaterial.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

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
($ in millions)	March 31, 2014		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	11.7	$	11.7	$	—	$	—
Deferred compensation assets	5.8		5.8		—		—
Foreign currency contracts	0.1		—		0.1		—
	$	17.6	$	17.5	$	0.1	$	—
Liabilities:
Contingent consideration	$	4.7	$	—	$	—	$	4.7
Deferred compensation liabilities	10.3		10.3		—		—
Interest rate swap contracts	5.1		—		5.1		—
Foreign currency contracts	0.3		—		0.3		—
	$	20.4	$	10.3	$	5.4	$	4.7

	Balance at		Basis of Fair Value Measurements
($ in millions)	December 31, 2013		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	7.5	$	7.5	$	—	$	—
Deferred compensation assets	5.7		5.7		—		—
	$	13.2	$	13.2	$	—	$	—
Liabilities:
Contingent consideration	$	4.3	$	—	$	—	$	4.3
Deferred compensation liabilities	12.1		12.1		—		—
Interest rate swap contracts	5.6		—		5.6		—
	$	22.0	$	12.1	$	5.6	$	4.3

Short-term investments, which are comprised of certificates of deposit and mutual funds, are included within other current assets and are valued using a market approach based on quoted market prices in an active market. Deferred compensation assets are included within other noncurrent assets and are also 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 is included within other current liabilities and other long-term liabilities and is discussed further in the section related to Level 3 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. Interest rate swaps, included within other long-term liabilities, are valued based on the terms of the contract and observable market inputs (i.e., LIBOR, Eurodollar synthetic forwards and swap spreads). Refer to Note 6, Derivative Financial Instruments, for further discussion of our derivatives.

Level 3 Fair Value Measurements

The fair value of the contingent consideration liability related to our 2010 acquisition of technology used in our SmartDose^TM electronic patch injector system (“SmartDose contingent consideration”) was determined at the acquisition date 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 expense in our condensed consolidated statements of income. The significant unobservable inputs used in the fair value measurement of the 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 SmartDose 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 contingent consideration liability.

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

	Three Months Ended March 31,
	2014		2013
Beginning Balance	$	4.3	$	3.3
Increase in fair value recorded in earnings	0.4		—
Ending Balance	$	4.7	$	3.3

Refer to Note 11, Other Expense, for further discussion of our acquisition-related contingency.

Other Financial Instruments

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

Quoted market prices are used to estimate the fair value of publicly traded long-term debt. The fair value of debt that is not quoted on an exchange is estimated using a discounted cash flow method based on interest rates that are currently available to us for debt issuances with similar terms and maturities. At March 31, 2014, the estimated fair value of long-term debt was $387.8 million compared to a carrying amount of $390.7 million. At December 31, 2013, the estimated fair value of long-term debt was $365.8 million and the carrying amount was $371.3 million.

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Debt

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Debt

Debt

The following table summarizes our long-term debt obligations, net of current maturities:

($ in millions)	March 31, 2014		December 31, 2013
Term loan, due 2014	$	0.1	$	0.1
Series B floating rate notes, due 2015	25.0		25.0
Euro note B, due 2016	84.0		84.1
Capital leases, due through 2016	0.4		0.4
Revolving credit facility, due 2017	85.7		53.7
Term loan, due 2018	40.8		41.3
Note payable, due 2019	0.3		0.3
Series A notes, due 2022	42.0		42.0
Series B notes, due 2024	53.0		53.0
Series C notes, due 2027	73.0		73.0
Convertible debt, due 2047	0.6		0.6
	404.9		373.5
Less: current portion of long-term debt	14.2		2.2
	$	390.7	$	371.3

Please refer to Note 10, Debt, to the consolidated financial statements in our 2013 Annual Report for additional details regarding our debt agreements.

At March 31, 2014, we had $85.7 million in outstanding borrowings under our multi-currency revolving credit facility, of which $4.9 million was denominated in Yen, $28.9 million in Euro and the remainder in U.S. dollar ("USD"). Of the amount outstanding at March 31, 2014, $12.0 million was classified as current and $73.7 million was classified as long-term. The total amount outstanding as of December 31, 2013 was classified as long-term.

At March 31, 2014, we had $40.8 million outstanding under our five-year term loan due January 2018, of which $2.0 million was classified as current. Please refer to Note 6, Derivative Financial Instruments, for a discussion of the interest-rate swap agreement associated with this loan.

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

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 speculation or trading purposes. All derivatives are recorded on the balance sheet at fair value.

Interest Rate Risk

At March 31, 2014, we had $40.8 million of outstanding borrowings under our variable-rate five-year term loan related to the purchase of our new corporate office and research building. In anticipation of this debt, we entered into a forward-start interest rate swap to hedge the variability in cash flows due to changes in the applicable interest rate over the stated period. Under this swap, we receive variable interest rate payments based on one-month London Interbank Offering Rates (“LIBOR”) plus a margin in return for making monthly fixed interest payments at 5.41%. We designated this swap as a cash flow hedge.

In addition, we have a $25.0 million interest rate swap agreement outstanding as of March 31, 2014, that is designated as a cash flow hedge to protect against volatility in the interest rates on our floating rate notes maturing on July 28, 2015 (“Series B Notes”). Under this swap, we receive variable interest rate payments based on three-month LIBOR in return for making quarterly fixed rate payments. Including the applicable margin, the interest rate swap agreement effectively fixes the interest rate payable on the Series B Notes at 5.51%.

Foreign Exchange Rate Risk

During 2014, we entered into several foreign currency hedge contracts that were designated as cash flow hedges of forecasted transactions denominated in foreign currencies, which are described in more detail below.

We entered into a series of foreign currency contracts intended to hedge the currency risk associated with a portion of our forecasted Yen-denominated purchases of inventory from Daikyo Seiko Ltd. (“Daikyo”) made by West in the United States. As of March 31, 2014, there were nine monthly contracts outstanding at ¥95.0 million ($0.9 million) each, for an aggregate notional amount of ¥855.0 million ($8.2 million).

We also entered into a series of foreign currency contracts to hedge the currency risk associated with a portion of our forecasted USD-denominated inventory purchases made by certain European subsidiaries. As of March 31, 2014, there were nine monthly contracts outstanding at a monthly amount ranging from $1.4 million to $3.0 million, for an aggregate notional amount of $20.9 million.

Lastly, we entered into a series of foreign currency contracts to hedge the currency risk associated with a portion of our forecasted Euro-denominated sales of finished goods by one of our USD functional-currency subsidiaries. As of March 31, 2014, there were nine monthly contracts outstanding at $1.5 million each, for an aggregate notional amount of $13.5 million.

At March 31, 2014, a portion of our debt consists of borrowings denominated in currencies other than the U.S. dollar. We have designated our €61.1 million ($84.0 million) Euro note B and our €21.0 million ($28.9 million) Euro-denominated borrowings under our multi-currency revolving credit facility as a hedge of our net investment in certain European subsidiaries. A cumulative foreign currency translation loss of $5.6 million pre-tax ($3.4 million after tax) on this debt was recorded within accumulated other comprehensive loss as of March 31, 2014. We have also designated our ¥500.0 million ($4.9 million) Yen-denominated borrowings under our multi-currency revolving credit facility as a hedge of our net investment in Daikyo. At March 31, 2014, there was a cumulative foreign currency translation gain on this Yen-denominated debt of $0.5 million pre-tax ($0.3 million after tax) which was also included within accumulated other comprehensive loss.

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

	Amount of Gain (Loss) Recognized in OCI for						Amount of Loss Reclassified from Accumulated OCI into Income for				Location of Loss Reclassified from Accumulated OCI into Income
	Three Months Ended March 31,						Three Months Ended March 31,
($ in millions)	2014			2013			2014		2013
Cash Flow Hedges:
Foreign currency hedge contracts	$	(0.1	)	$	0.3		$	—	$	—	Net sales
Foreign currency hedge contracts	(0.1		)	(1.7		)	—		0.6		Cost of goods and services sold
Interest rate swap contracts	(0.1		)	0.1			0.4		0.4		Interest expense
Forward treasury locks	—			—			0.1		—		Interest expense
Total	$	(0.3	)	$	(1.3	)	$	0.5	$	1.0
Net Investment Hedges:
Foreign currency-denominated debt	$	—		$	2.4		$	—	$	—	Other expense
Total	$	—		$	2.4		$	—	$	—

For the three months ended March 31, 2014 and 2013, there was no ineffectiveness related to our hedges.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the three months endedMarch 31, 2014:

($ 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, 2013	$	(6.0	)	$	4.3	$	(47.0	)	$	16.3		$	(32.4	)
Other comprehensive loss before reclassifications	(0.3		)	—		(0.1		)	(1.8		)	(2.2		)
Amounts reclassified out	0.5			—		0.3			—			0.8
Other comprehensive income (loss), net of tax	0.2			—		0.2			(1.8		)	(1.4		)
Balance, March 31, 2014	$	(5.8	)	$	4.3	$	(46.8	)	$	14.5		$	(33.8	)

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

	Three Months Ended March 31,
Detail of components	2014			2013			Location on Statement of Income
Losses on cash flow hedges:
Foreign currency contracts	$	—		$	(1.0	)	Cost of goods and services sold
Interest rate swap contracts	(0.7		)	(0.6		)	Interest expense
Forward treasury locks	(0.1		)	—			Interest expense
Total before tax	(0.8		)	(1.6		)
Tax expense	0.3			0.6
Net of tax	$	(0.5	)	$	(1.0	)
Amortization of defined benefit pension and other postretirement plans:
Prior service cost	$	0.3		$	0.4		(a)
Actuarial losses	(0.8		)	(2.4		)	(a)
Total before tax	(0.5		)	(2.0		)
Tax expense	0.2			0.7
Net of tax	$	(0.3	)	$	(1.3	)
Total reclassifications for the period, net of tax	$	(0.8	)	$	(2.3	)

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

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Inventories (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Finished goods	$ 82.9	$ 80.0
Work in process	29.0	24.8
Raw materials	75.6	72.1
Total inventories	$ 187.5	$ 176.9

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 2013 Annual Report.

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Debt (Tables)

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Long-term Debt Obligations, Net of Current Maturities

The following table summarizes our long-term debt obligations, net of current maturities:

($ in millions)	March 31, 2014		December 31, 2013
Term loan, due 2014	$	0.1	$	0.1
Series B floating rate notes, due 2015	25.0		25.0
Euro note B, due 2016	84.0		84.1
Capital leases, due through 2016	0.4		0.4
Revolving credit facility, due 2017	85.7		53.7
Term loan, due 2018	40.8		41.3
Note payable, due 2019	0.3		0.3
Series A notes, due 2022	42.0		42.0
Series B notes, due 2024	53.0		53.0
Series C notes, due 2027	73.0		73.0
Convertible debt, due 2047	0.6		0.6
	404.9		373.5
Less: current portion of long-term debt	14.2		2.2
	$	390.7	$	371.3

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Accumulated Other Comprehensive Loss (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward]
Balance, beginning	$ (32.4)
Other comprehensive loss before reclassifications	(2.2)
Amounts reclassified out	0.8
Other comprehensive income (loss), net of tax	(1.4)	(16.6)
Balance, ending	(33.8)
Losses on Cash Flow Hedges [Member]
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward]
Balance, beginning	(6.0)
Other comprehensive loss before reclassifications	(0.3)
Amounts reclassified out	0.5
Other comprehensive income (loss), net of tax	0.2
Balance, ending	(5.8)
Unrealized Gains on Investment Securities [Member]
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward]
Balance, beginning	4.3
Other comprehensive loss before reclassifications	0
Amounts reclassified out	0
Other comprehensive income (loss), net of tax	0
Balance, ending	4.3
Defined Benefit Pension and Other Postretirement Plans [Member]
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward]
Balance, beginning	(47.0)
Other comprehensive loss before reclassifications	(0.1)
Amounts reclassified out	0.3
Other comprehensive income (loss), net of tax	0.2
Balance, ending	(46.8)
Foreign Currency Translation [Member]
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward]
Balance, beginning	16.3
Other comprehensive loss before reclassifications	(1.8)
Amounts reclassified out	0
Other comprehensive income (loss), net of tax	(1.8)
Balance, ending	$ 14.5

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 230.0	$ 230.0
Accounts receivable, net	208.7	185.7
Inventories	187.5	176.9
Deferred income taxes	16.3	15.9
Other current assets	44.1	42.2
Total current assets	686.6	650.7
Property, plant and equipment	1,385.0	1,369.0
Less accumulated depreciation and amortization	673.0	657.3
Property, plant and equipment, net	712.0	711.7
Investments in affiliated companies	59.4	60.9
Goodwill	114.2	114.2
Deferred income taxes	65.2	61.8
Intangible assets, net	47.1	48.3
Other noncurrent assets	23.7	24.0
Total Assets	1,708.2	1,671.6
Current liabilities:
Notes payable and other current debt	14.2	2.2
Accounts payable	98.4	108.0
Pension and other postretirement benefits	2.2	2.2
Accrued salaries, wages and benefits	41.8	59.1
Income taxes payable	12.4	14.3
Other current liabilities	58.6	51.1
Total current liabilities	227.6	236.9
Long-term debt	390.7	371.3
Deferred income taxes	19.7	18.9
Pension and other postretirement benefits	82.8	83.1
Other long-term liabilities	52.8	55.0
Total Liabilities	773.6	765.2
Commitments and contingencies (Note 13)
Equity:
Preferred stock, 3.0 million shares authorized; 0 shares issued and outstanding	0	0
Common stock, $0.25 par value; 100.0 million shares authorized; issued: 70.7 million and 70.4 million; outstanding: 70.6 million and 70.2 million	17.7	17.6
Capital in excess of par value	129.9	120.0
Retained earnings	825.0	805.0
Accumulated other comprehensive loss	(33.8)	(32.4)
Treasury stock, at cost (0.2 million shares in 2014 and 2013)	(4.2)	(3.8)
Total Equity	934.6	906.4
Total Liabilities and Equity	$ 1,708.2	$ 1,671.6

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New Accounting Standards

3 Months Ended

Mar. 31, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Standards

New Accounting Standards

Recently Adopted Standards

In July 2013, the FASB issued revised guidance to address the diversity in practice related to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We adopted this guidance as of January 1, 2014, on a prospective basis. The adoption did not have a material impact on our financial statements.

In March 2013, the FASB issued guidance that clarifies the application of U.S. GAAP to the release of cumulative translation adjustments related to changes of ownership in or within foreign entities, including step acquisitions. This guidance, which we adopted as of January 1, 2014, will be applied prospectively if and when changes of ownership related to foreign entities occur.

Standards Issued Not Yet Adopted

In April 2014, the FASB issued guidance for the reporting of discontinued operations, which also contains new disclosure requirements for both discontinued operations and other disposals that do not meet the definition of a discontinued operation. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Management believes that the adoption of this guidance will not have a material impact on our financial statements.

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Effects of Derivative Instruments on Other Comprehensive Income ('OCI') and Earnings

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

	Amount of Gain (Loss) Recognized in OCI for						Amount of Loss Reclassified from Accumulated OCI into Income for				Location of Loss Reclassified from Accumulated OCI into Income
	Three Months Ended March 31,						Three Months Ended March 31,
($ in millions)	2014			2013			2014		2013
Cash Flow Hedges:
Foreign currency hedge contracts	$	(0.1	)	$	0.3		$	—	$	—	Net sales
Foreign currency hedge contracts	(0.1		)	(1.7		)	—		0.6		Cost of goods and services sold
Interest rate swap contracts	(0.1		)	0.1			0.4		0.4		Interest expense
Forward treasury locks	—			—			0.1		—		Interest expense
Total	$	(0.3	)	$	(1.3	)	$	0.5	$	1.0
Net Investment Hedges:
Foreign currency-denominated debt	$	—		$	2.4		$	—	$	—	Other expense
Total	$	—		$	2.4		$	—	$	—

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Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Assets:
Short-term investments	$ 11.7	$ 7.5
Deferred compensation assets	5.8	5.7
Foreign currency contracts	0.1
Total assets at fair value	17.6	13.2
Liabilities:
Contingent consideration	4.7	4.3
Deferred compensation liabilities	10.3	12.1
Interest rate swap contracts	5.1	5.6
Foreign currency contracts	0.3
Total liabilities at fair value	20.4	22.0
Level 1 [Member]
Assets:
Short-term investments	11.7	7.5
Deferred compensation assets	5.8	5.7
Total assets at fair value	17.5	13.2
Liabilities:
Deferred compensation liabilities	10.3	12.1
Total liabilities at fair value	10.3	12.1
Level 2 [Member]
Assets:
Foreign currency contracts	0.1
Total assets at fair value	0.1
Liabilities:
Interest rate swap contracts	5.1	5.6
Foreign currency contracts	0.3
Total liabilities at fair value	5.4	5.6
Level 3 [Member]
Liabilities:
Contingent consideration	4.7	4.3
Total liabilities at fair value	$ 4.7	$ 4.3

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

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. For the three months ended March 31, 2014, our effective tax rate was 27.6% compared with 22.0% for the same period in 2013. The increase in the effective tax rate primarily reflects the absence of the Research and Development ("R&D") tax credit in 2014, changes in our geographic mix of earnings, and the impact of the discrete tax item discussed below. The R&D tax credit was retroactively reinstated in January 2013 for two years, from January 1, 2012 through December 31, 2013, as a result of the enactment of the American Taxpayer Relief Act of 2012 (the "Taxpayer Relief Act").

During the three months endedMarch 31, 2013, we recorded a discrete tax benefit of $1.3 million related to the R&D tax credit. In accordance with U.S. GAAP, although the Taxpayer Relief Act reinstated the tax credit on a retroactive basis to January 1, 2012, the credit was not taken into account for financial reporting purposes until 2013.