-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WQ4my5sby3tr7YXz8AAkdOjk8YPZlTev/7SKL97gQy4hN8lV5whfjGyulCYMn+Me uNRGkp9k1Hh8ajDbZqEoZw== 0000105770-96-000024.txt : 19960816 0000105770-96-000024.hdr.sgml : 19960816 ACCESSION NUMBER: 0000105770-96-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEST CO INC CENTRAL INDEX KEY: 0000105770 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 231210010 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08036 FILM NUMBER: 96614891 BUSINESS ADDRESS: STREET 1: 101 GORDON DR STREET 2: P O BOX 645 CITY: LIONVILLE STATE: PA ZIP: 19341-0645 BUSINESS PHONE: 6105942900 MAIL ADDRESS: STREET 1: 101 GORDON DRIVE STREET 2: PO BOX 645 CITY: LIONVILLE STATE: PA ZIP: 19341-0645 10-Q 1 10Q2NDQTR This report contains 20 pages (including cover page) SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended June 30, 1996 --------------- Commission File Number 1-8036 ------ THE WEST COMPANY, INCORPORATED ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 23-1210010 ------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 101 Gordon Drive, PO Box 645, Lionville, PA 19341-0645 ------------------------------------- ---------------------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code 610-594-2900 N/A ----------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ------ ------- June 30, 1996 16,235,296 ----------------------------------------------------------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Page 2 Index Form 10-Q for the Quarter Ended June 30, 1996 Page Part I - Financial Information Item 1. Financial Statements Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 1996 and June 30, 1995 3 Condensed Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 4 Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 1996 and June 30, 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II - Other Information Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 16 Index to Exhibits 17 Page 3 Item 1. Financial Statements The West Company, Incorporated and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Three Months Ended Six Months Ended June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995 ---------------- --------------- -------------- -------------- Net sales $119,000 100 % $109,000 100 % $232,900 100 % $204,200 100 % Cost of goods sold 87,100 73 77,100 71 169,700 73 139,800 68 ---------------------------------------------------------------------------------------------------- Gross profit 31,900 27 31,900 29 63,200 27 64,400 32 Selling, general and administrative expenses 18,100 15 18,100 16 37,200 16 35,300 17 Restructuring charge - - - - 21,500 9 - - Other (income) expense, net (100) - (1,300)(1) (200) - (1,300) - ---------------------------------------------------------------------------------------------------- Operating profit 13,900 12 15,100 14 4,700 2 30,400 15 Interest expense 1,800 2 2,000 2 3,400 2 3,400 2 ---------------------------------------------------------------------------------------------------- Income before income taxes and minority interests 12,100 10 13,100 12 1,300 - 27,000 13 Provision for income taxes 4,600 4 4,700 4 2,200 1 9,800 5 Minority interests 100 - 300 - 100 - 500 - ---------------------------------------------------------------------------------------------------- Income (loss) from consolidated operations 7,400 6 % 8,100 8 % (1,000) (1) % 16,700 8 % --- --- --- ---- Equity in net income of affiliated companies 700 600 900 200 ---------------------------------------------------------------------------------------------------- Net income (loss) $ 8,100 $ 8,700 $ (100) $ 16,900 ---------------------------------------------------------------------------------------------------- Net income per share: $ .50 $ .52 $ .00 $ 1.02 ---------------------------------------------------------------------------------------------------- Average shares outstanding 16,398 16,531 16,514 16,511 See accompanying notes to interim financial statements.
Page 4 The West Company, Incorporated and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
Unaudited Audited ASSETS June 30, 1996 Dec. 31, 1995 -------------- ------------- Current assets: Cash, including equivalents $ 15,000 $ 17,400 Accounts receivable 72,200 67,900 Inventories 49,200 48,300 Other current assets 12,700 14,800 -------------------------------------------------------------------------- Total current assets 149,100 148,400 -------------------------------------------------------------------------- Net property, plant and equipment 211,200 229,300 Investments in affiliated companies 22,400 21,600 Intangibles and other assets 84,700 80,800 -------------------------------------------------------------------------- Total Assets $467,400 $ 480,100 -------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,500 $ 1,500 Notes payable 7,600 8,300 Accounts payable 23,500 22,500 Salaries, wages, benefits 12,700 9,700 Restructuring 6,000 - Income taxes payable 700 3,400 Other current liabilities 15,800 16,400 -------------------------------------------------------------------------- Total current liabilities 67,800 61,800 -------------------------------------------------------------------------- Long-term debt, excluding current portion 106,900 104,500 Deferred income taxes 29,100 34,300 Other long-term liabilities 25,700 25,200 Minority interests 200 200 Shareholders' equity 237,700 254,100 --------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $467,400 $480,100 --------------------------------------------------------------------------- See accompanying notes to interim financial statements.
Page 5 The West Company Incorporated and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Unaudited Quarter Ended June 30, 1996 June 30, 1995 ---------------- ---------------- Cash flows from operating activities: Net income, plus net non-cash items $ 33,800 $ 31,600 Changes in assets and liabilities (11,200) (15,800) -------------------------------------------------------------------------------------------------- Net cash provided by operating activities 22,600 15,800 -------------------------------------------------------------------------------------------------- Cash flows from investing activities: Property, plant and equipment acquired (17,200) (14,800) Proceeds from sale of assets 100 100 Payment for acquisitions, net of cash acquired - (62,300) Customer advance (200) (4,700) -------------------------------------------------------------------------------------------------- Net cash used in investing activities (17,300) (81,700) -------------------------------------------------------------------------------------------------- Cash flows from financing activities: New long-term debt 20,000 38,100 Repayment of long-term debt (13,500) (15,000) Notes payable, net (600) 33,000 Dividend payments (4,300) (3,900) (Purchase) sale of common stock, net (9,100) 900 -------------------------------------------------------------------------------------------------- Net cash (used in) provided by financing activities (7,500) 53,100 -------------------------------------------------------------------------------------------------- Effect of exchange rates on cash (200) 900 -------------------------------------------------------------------------------------------------- Net decrease in cash, including equivalents (2,400) $ (11,900) -------------------------------------------------------------------------------------------------- See accompanying notes to interim financial statements.
Page 6 The West Company, Incorporated and Subsidiaries Notes to Consolidated Financial Statements Interim results are based on the Company's accounts without audit. The interim consolidated financial statements for the period ended June 30, 1996 should be read in conjunction with the consolidated financial statements and notes thereto of The West Company, Incorporated appearing in the Company's 1995 Annual Report on Form 10-K. 1. On January 1, 1996 the Company adopted Statement of Financial Accounting Standards No. 121, Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of. This statement requires that long-lived assets and certain intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of January 1, 1996, no material impact resulted from the adoption of this accounting standard. 2. Interim Period Accounting Policy --------------------------------- In the opinion of management, the unaudited Condensed Consolidated Balance Sheet as of June 30, 1996 and the related unaudited Consolidated Statements of Operations for the three and six months then ended and the unaudited Condensed Consolidated Statement of Cash Flows for the six months then ended and for the comparative periods in 1995 contain all adjustments, consisting only of normal recurring accruals, necessary to present fairly the financial position as of June 30, 1996 and the results of operations and cash flows for the respective periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Operating Expenses ------------------ To better relate costs to benefits received or activity in an interim period, certain operating expenses have been annualized for interim reporting purposes. Such expenses include depreciation due to use of the half year convention, certain employee benefit costs, annual quantity discounts, and advertising. Income Taxes ------------- The tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on current estimates of full year results, except that taxes applicable to operating results in Brazil and the restructuring charge are recorded on a basis discrete to the period, and prior year adjustments, if any, are recorded as identified. Page 7 The West Company, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (Continued) 3. Inventories at June 30, 1996 and December 31, 1995 are summarized as follows: Audited (in thousands) 1996 1995 ------- -------- Finished goods $ 21,300 $ 17,600 Work in process 10,200 10,300 Raw materials and supplies 17,700 20,400 -------- -------- $ 49,200 $ 48,300 -------- -------- -------- -------- 4. The carrying value of property, plant and equipment is determined as follows: Audited (in thousands) 1996 1995 -------- -------- Property, plant and equipment $ 429,800 $ 440,100 Less accumulated depreciation 218,600 210,800 -------- -------- Net property, plant and equipment $ 211,200 $ 229,300 -------- -------- -------- -------- 5. On May 9, 1996 the Company purchased in accordance with an agreement approved by the Board of Directors, 440,000 shares of its common stock owned by a director who retired from the Board of Directors. The aggregate purchase price was $10.0 million. Common stock issued at June 30, 1996 was 16,844,735 shares, of which 609,439 shares were held in treasury. Dividends of $.13 per common share were paid in the second quarter of 1996 and a dividend of $.13 per share payable to holders of record on July 24, 1996 was declared on April 30, 1996. 6. The Company has accrued the estimated cost of environmental compliance expenses related to soil or ground water contamination at current and former manufacturing facilities. The ultimate cost to be incurred by the Company and the timing of such payments cannot be fully determined. However, based on consultants' estimates of the costs of remediation in accordance with applicable regulatory requirements, the Company believes the accrued liability of $1.4 million at June 30, 1996 is sufficient to cover the future costs of these Page 8 The West Company, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (Continued) remedial actions, which will be carried out over the next two to three years. The Company has not anticipated any possible recovery from insurance or other sources. 7. On March 29, 1996, the Company approved a major restructuring plan which includes the closing or substantial downsizing of six manufacturing facilities, disposition of related excess equipment and properties and an approximate 5% reduction of the workforce. The total estimated charge related to these planned actions is $15 million, net of $6.5 million of income tax benefits, and was accrued in the first quarter of 1996. Approximately one-third of the net charge relates to reduction in personnel, including manufacturing and staff positions, and covers severance pay and other benefits to be provided to terminated employees. At June 30, 1996, 30 employees have been terminated and total payout of severance and benefits was $2.4 million. The remaining accrued net charge relates to facility close down costs and to the reduction to estimated net realizable value of the carrying value of equipment and facilities made excess by the restructuring plan. The restructuring activities will be substantially complete by the end of the first quarter of 1997. 8. On March 30, 1992, OCAP Acquisition Corp. ("OCAP") commenced an action in the Supreme Court of the State of New York, County of New York, against Paco Pharmaceutical Services, Inc. ("Paco") certain of its subsidiaries and R. P. Scherer Corporation ("Scherer"), Paco's former parent company, (collectively, the "defendants"), arising out of the termination of an Asset Purchase Agreement dated February 21, 1992 (the "Purchase Agreement") between OCAP and the defendants providing for the purchase of substantially all the assets of Paco. On May 15, 1992, OCAP served an amended verified complaint (the"Amended Complaint"), asserting causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, arising out of defendants' March 25, 1992 termination of the Purchase Agreement, as well as two additional causes of action that were subsequently dismissed by order of the court. The Amended Complaint sought $75 million in actual damages, $100 million in punitive damages, as well as OCAP's attorney fees and other litigation expenses, costs and disbursements incurred in bringing this action. Scherer asserted a counterclaim against OCAP for breach of contract and breach of Page 9 The West Company, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (Continued) the covenant of good faith and fair dealing arising out of the termination of the Purchase Agreement. This matter went to trial in late March, 1996, and on April 10, 1996, at the close of trial, the court dismissed all of the plaintiffs' claims and all of defendants' counterclaims, with each side to bear its own costs. Plantiffs have filed a notice of appeal, and the defendants have filed a notice of cross-appeal. In the opinion of management, the ultimate outcome of this litigation will not have a material adverse effect on the Company's business or financial condition. Scherer has agreed to indemnify Paco against any liabilities (including fees and expenses incurred after March 31, 1992) it may have as a result of this litigation matter. Page 10 Item 2. Management's Discussion and Analysis of Financial Condition and -------------------------------------------------------------- Results of Operations. ---------------------- Results of Operations for the Quarter and Six Months Ended June ---------------------------------------------------------------- 30, 1996 Versus June 30, 1995 ----------------------------- Net Sales --------- Net sales for the second quarter 1996 were $119.0 million, a $10 million, or 9%, increase compared with the same quarter in 1995. The largest component of increase in net sales was an additional month of Paco sales. Paco, acquired in 1995, has been consolidated since May 1995. In addition sales increased due to the higher volume of healthcare product sales in Europe, price increases initiated in the fourth quarter 1995 and higher Spout-Pak closure sale in the U.S. These increases were offset in part by lower demand for other products sold to U.S. consumer products manufacturers and the impact of a stronger U.S. dollar. Net sales for the six months were $232.9 million, a $28.7 million, or 14% increase compared with the same period in 1995. The additional four months of Paco's sales accounted for $21.9 million of the increase. The remaining increase reflects the same factors noted in the discussion on the most recent quarter comparison above. Gross Profit ------------ The gross profit for the quarter was $31.9 million, a margin of 26.8% on net sales, 2.4 percentage points below the 29.2% margin achieved on sales in the second quarter of 1995. An operating loss at Paco, due to poor efficiencies, is the cause of the margin decline. The gross margin on healthcare product sales, increased due to a combination of price and volume increases and efficiencies offset, in part, by product mix. Gross profit for the six months was $63.2 million, a 26.4% margin on sales compared with 31.5% for the same period in 1995. Paco's service operations are lower-margin and due to inefficiencies were well below their normal margin levels. Therefore, Paco had a significant negative impact on consolidated gross margin comparisons. For health care product sales, margins reflect a less favorable product mix, higher material costs and in South America higher labor costs, offset, in part, by price increases. Page 11 Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------------- and Results of Operations, Con't. ---------------------------------- Trends in the core health care business are improving monthly as raw material prices have stabilized and pricing initiatives have held. Future results will reflect the impact of the restructuring plan which will create focused, more efficient factories and will enable the Company to shift certain production to lower-cost facilities. The plan calls for the closing or substantial downsizing of six manufacturing facilities and a reduction of approximately 5% of the Company's workforce. Selling, General and Administrative ----------------------------------- Selling, general and administrative (SG&A) expenses were flat compared with the second quarter 1995. However, SG&A expenses are lower as a percentage of sales compared with the comparable period in 1995. Favorable exchange rate impacts from the stronger U.S. dollar offset the additional month of Paco SG&A expenses. Headcount reductions related to restructuring offset inflation. For the six months, SG&A expenses increased by $1.9 million, or 5% compared with 1995. Excluding Paco expenses for an additional four months, SG&A expenses increased by $0.6 million, or 2%, compared with 1995. Restructuring Charge --------------------- The information contained in Note 7 to the Consolidated Financial Statements, which is incorporated herein by reference to the Interim financial statements describes the restructuring plan approved in the first quarter of 1996 and is incorporated here by reference. The restructuring charge totalled $21.5 million and covers an estimated $8.4 million for severance and $13.1 million of losses on disposition of assets. Other (Income) Expense, net --------------------------- Other income, net, is $1.2 million lower compared with the same quarter in 1995 due to lower interest income and lower gains on dispositions of assets. Compared with the first six months of 1995, other income, net declined by $1.1 million because of reductions in foreign exchange losses, interest income and gains from sales of assets. Interest Expense, Minority Interests, and Equity in Affiliates -------------------------------------------------------------- Lower average debt levels in the second quarter 1996 led to a decline in interest expense of $0.2 million compared with 1995. For the six months interest expense was flat compared with the 1995 period. Page 12 Management's Discussion and Analysis of Financial Condition ------------------------------------------------------------- and Results of Operations, Con't. --------------------------------- Minority interests are lower reflecting the buyout in 1995 of the remaining minority ownership in Schubert Seals A/S. For the quarter and the six months, equity in net income of affiliated companies increased when compared with the same periods in 1995. The Company's affiliate in Japan reported improved operating results and exchange losses related to the Company's affiliate in Mexico were lower. Taxes ----- The effective tax rate for 1996, excluding the restructuring charge and the related tax benefit is 38.5%, unchanged from the first quarter. This is higher than the annual effective rate of 36.5% at the end of the second quarter of 1995. The estimated effective annual tax rate at December 31, 1995 was 32.8%, which reflected a change in the tax accounting method for Puerto Rico and the recorded benefit of tax credits which were assured realization. Excluding the impact of these adjustments, the tax rate in 1995 would have been approximately 36%. The higher 1996 estimated tax rate reflects the higher proportion of earnings being generated in higher tax jurisdiction. Net Income ---------------- Net income for the second quarter 1996 was $8.1 million, or $.50 per share, compared with net income for the second quarter 1995 of $8.7 million, or $.52 per share. The Company reported a net loss of less than $.1 million, or less than $.01 per share for the six months compared with net income of $16.9 million, or $1.02 per share, for the first six months of 1995. The total net charge to income in the first quarter 1996 for the restructuring plan was $15 million, or $.90 per share. Financial Position ------------------ Working capital at June 30, 1996 was $81.3 million compared with $86.6 million at December 31, 1995. Working capital decreased primarily because of the liabilities associated with the restructuring charge. The working capital ratio at June 30, 1996 was 2.2 to 1. Available cash, cash flows from operations and proceeds from new borrowings were adequate to fund capital expenditures, pay dividends of $.26 per share, and fund purchases of stock, including acquisition of 440,000 shares of the Company's common stock (see note 5 to Interim Financial Statements). Total debt as a percentage of total invested capital was 32.8% at June 30, 1996, compared with 31.0% at December 31, 1995. At June Page 13 Management's Discussion and Analysis of Financial Condition ------------------------------------------------------------ and Results of Operations, Con't. --------------------------------- 30, 1996, the Company had available unused lines of credit of $70.4 million. This available borrowing capacity and cash flow from operations is adequate, in the opinion of management, to cover estimated cash requirements, including severance costs related to the restructuring plan and capital expenditures. Page 14 Part II - Other Information Item 1. Legal Proceedings. ------------------ The information contained in Note 8 to Consolidated Financial Statements, is incorporated herein by reference. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- (a) The Company held its annual meeting of shareholders on April 30, 1996. (c) Class III directors (with a term expiring in 1999) were elected by the following vote: For Against --- ------- Tenley E. Albright 13,116,215 230,174 William S. West 13,116,993 229,396 J. Roffe Wike, II 13,116,807 229,581 George J. Hauptfuhrer, Jr., William G. Little, William H. Longfield, Monroe E. Trout, M.D., George W. Ebright, L. Robert Johnson, John P. Neafsey and Geoffrey F. Worden continued their term of office after the meeting. The appointment of Coopers & Lybrand as the Company's independent accountants for the year ending December 31, 1996 was approved by the following vote: FOR AGAINST ABSTENTIONS --- ------- ----------- 13,323,422 16,158 6,813 The amendment to the Non-Qualified Stock Option Plan for Non-Employee Director's Option Plan to (i) authorize the issuance of additional shares and (ii) extend the term of the plan was approved by the following vote: FOR AGAINST ABSTENTIONS --- ------- ----------- 12,978,868 319,089 48,436 The amendment to the Long-Term Incentive Plan authorizing additional shares for issuance was approved by the following vote: FOR AGAINST ABSTENTIONS --- ------- ------------ 11,863,014 1,434,230 49,149 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) See Index to Exhibits on pages F-1 and F-2 of this Report. (b) No reports on Form 8-K have been filed for the quarter ended June 30, 1996. Page 15 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE WEST COMPANY, INCORPORATED ----------------------------------- (Registrant) August 14, 1996 W. G. Little ------------- ----------------------------------- Date (Signature) W. G. Little Chairman of the Board President and Chief Executive Officer August 14, 1996 A. M. Papso --------------- ----------------------------------- Date (Signature) A. M. Papso Vice President and Corporate Controller (Chief Accounting Officer) Page 16 INDEX TO EXHIBITS Exhibit Page Number Number (3) (a) Restated Articles of Incorporation of the Company, incorporated by reference to Exhibit (4) to the Company's Registration Statement on Form S-8 (Registration No. 33-37825). (3) (b) Bylaws of the Company, as amended and restated December 13, 1994, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-8036). (4) (a) Form of stock certificate for common stock incorporated by reference to Exhibit (3) (b) to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (File No. 1-8036). (4) (b) Flip-In Rights Agreement between the Company and American Stock Transfer & Trust Company, as Rights Agent, dated as of January 16, 1990, incorporated by reference to Exhibit 1 to the Company's Form 8-A Registration Statement (File No. 1-8036). (4) (c) Flip-Over Rights Agreement between the Company and American Stock Transfer & Trust Company, as Rights Agent, dated as of January 16, 1990, incorporated by reference to Exhibit 2 to the Company's Form 8-A Registration Statement (File No. 1-8036). (10) (a) Amendments to the Long Term Incentive Plan effective April 30, 1996. (10) (b) Amendments to the Non-Qualified Stock Option Plan for Non-Employee Directors, effective April 30, 1996. (10) (c) Severance and Non-Compete Agreement, dated July 8, 1996, between Lawrence P. Higgins and the Company. F - 1 Exhibit Page Number Number (11) Not Applicable. (15) None. (18) None. (19) None. (22) None. (23) None. (24) None. (27) Financial Data Schedules. (99) Subsidiaries of the Company. F - 2 EX-10 2 EXHIBIT 10C Exhibit (10)(C) July 8, 1996 Mr. Lawrence P. Higgins 820 Lupton s Pointe Mattituck, NY 11952 Dear Larry: In consideration of your employment by The West Company, Incorporated or any of its subsidiaries or affiliates (the "Company"), and the Company s promise to make the payments set forth herein, you and the Company, intending to be legally bound, agree as follows: 1. Termination of Employment. --------------------------- You will be entitled to the benefits specified in Section 2 if your employment by the Company is terminated by the Company, other than by reason of death, disability, continuous willful misconduct to the detriment of the Company, or retirement pursuant to the Company's Salaried Employees' Retirement Plan (or any successor pension plan thereto) (the Retirement Plan ). You will not be entitled to the benefits specified in Section 2 if your employment terminates for any other reasons, including without limitation your voluntary resignation, or if, during the term of your employment or at any time thereafter, you engage in any activity specified in Section 3 hereof. 2. Benefits Payable upon Termination of Employment. ------------------------------------------------- Upon termination of employment as set forth in Section 1, you shall be entitled to the following benefits: a) Severance Compensation. Your regular bi-weekly salary as in effect on the date of termination of your employment will continue for a period of twelve months, with normal deductions. The severance compensation paid hereunder shall not be reduced to the extent of any other compensation for your services which you receive or are entitled to receive from any other employment consistent with the terms of this Agreement. b) Employee Benefits. You shall be entitled to a continuation of all medical, dental and life insurance in the same manner and amount to which you were entitled on the date of termination of your employment until the earlier of (i) a period of 12 months after termination of your employment, or (ii) your eligibility for similar Mr. Lawrence P. Higgins July 8, 1996 Page 2 benefits with a new employer. Upon termination of your employment, Company cars must be returned to the Company. All other benefits not otherwise addressed in this Agreement shall terminate as of the date of termination of your employment. 3. Termination of Benefits in Event of Competitive Activity. --------------------------------------------------------- The Company shall have no obligation to provide or continue any of the benefits under Section 2 (except as required by applicable law) upon the occurrence of any of the following activities: a) You, directly or indirectly, through any Affiliate: i) 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 in the United States (other than an interest of not more than 5 percent of the outstanding stock of any publicly traded company); ii) 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 in the United States; iii) solicit, employ, interfere with or attempt to entice away from the Company any employee who has been employed by the Company 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; iv) engage in conduct in connection with your employment for which criminal or civil penalties against you or the Company may be sought; v) violate the Company's policies, including without limitation the Company's insider-trading policy; or vi) use for yourself or others, or disclosing to others, any confidential or proprietary information of the Company in contravention of any Company policy or agreement. b) As used in this Section: i) The "Company's Business" means (A) the manufacture and sale of stoppers, closures, containers, medical device components and assembliesmade from Mr. Lawrence P. Higgins July 8, 1996 Page 3 elastomers, metal, plastic and glass for the health care and consumer products industries; (B) pharmaceutical and personal health care contract manufacturing and packaging; and (C) any other business conducted by the Company during the term of your employment with the Company in which you have been actively involved while an employee of the Company; ii). "Person" means an individual, a corporation, a partnership, an association, a trust or other entity or organization; and iii). an "Affiliate" of any Person means any Person directly or indirectly controlling, controlled by or under common control with such Person. 4. Payments Final. --------------- In the event of a termination of your employment under the circumstances described in this Agreement, the arrangements provided for by this Agreement, or any other agreement between the Company and you in effect at that time and by any other applicable plan of the Company in which you then participate shall constitute the entire obligation of the Company to you, and performance of that obligation shall constitute full settlement of any claim that you might otherwise assert against the Company on account of such termination. 5. Duration of Agreement. --------------------- This Agreement may not be terminated by either party, except that this Agreement may be terminated at any time by the mutual written consent of you and the Company. 6. Miscellaneous. --------------- a) This Agreement shall be binding upon you and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by you. b) The invalidity or unenforceability in any respect of any provision of this Agreement shall not affect the validity or enforceability of such provision in any other respect or the validity or enforceability of any other provision. c) This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania. Mr. Lawrence P. Higgins July 8, 1996 Page 4 d) This Agreement shall constitute the entire agreement and understanding between the Company and you with respect to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings between the Company and you with respect to such matters. If you are in agreement with the foregoing, please so indicate by signing and returning to the Company the enclosed copy of this letter, whereupon this letter shall constitute a binding agreement between you and the Company and our mutual intention to be legally bound as of the date and year first written above. Very truly yours, THE WEST COMPANY, INCORPORATED By: /s/ William G. Little -------------------- William G. Little Chairman, President and Chief Executive Officer Accepted and agreed to: /s/ Lawrence P. Higgins ------------------------ Lawrence P. Higgins EX-10 3 EXHIBIT 10A Exhibit (10(a) AMENDMENTS TO LONG-TERM INCENTIVE PLAN The first sentence of Paragraph 4 of the Plan is hereby amended and a new final sentence is hereby added to Paragraph 6 of the Plan, to read as follows: "4. Shares Subject to the Plan. The shares that may be issued under the Plan pursuant to paragraph 6 shall not exceed in the aggregate 2,925,000 shares of the Company's common stock." * * * * 6. Awards Under the Plan. . . . Notwithstanding any other provision of this Plan to the contrary, no grant or award under this Plan shall be made in any calendar year, which entitles the recipient to receive in excess of 135,000 shares of the Company's common stock." EX-10 4 EXHIBIT 10B Exhibit (10) (b) AMENDMENT TO 1992 NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS The first sentence of Section 4(a) and Sections 5 and 10 in their entirety shall be amended, to read as follows: "4. Shares Subject to the Plan. (a) Total Number. Subject to adjustment as provided in this Section, the total number of shares as to which Options may be granted under the Plan shall be 200,000 Shares. * * * * 5. Grant of Options. On the first working day following the Annual Meeting of Shareholders, from 1997 through 2001, inclusive, each person who is an Eligible Director on such date shall be granted an Option to acquire 1,500 Shares. * * * * 10. Effective Date and Termination. The Plan became effective on May 7, 1992 and was to terminate immediately following the grant of Options in 1996. Pursuant to resolutions adopted by the Board on March 9, 1996, and subject to approval by the Company's shareholders at the 1996 Annual Meeting of Shareholders, the Plan shall be extended so as to terminate immediately following the grant of Options called for by Section 5 above in 2001. With respect to outstanding Options, the Plan shall terminate on the date on which all outstanding Options have expired or terminated." EX-27 5 EXHIBIT 27
5 6-MOS DEC-31-1996 JUN-30-1996 15,000 0 72,200 0 49,200 12,700 429,800 218,600 467,400 67,800 106,900 4,200 0 0 233,500 467,400 232,900 232,900 169,700 169,700 58,500 0 3,400 1,300 2,200 (100) 0 0 0 (100) .00 .0
EX-99 6 EXHIBIT 99 Exhibit 99 SUBSIDIARIES OF THE COMPANY
State/Jurisdiction Direct Incorporation Stock Ownership The West Company, Incorporated Pennsylvania Parent Co. Paco Pharmaceutical Services, Inc. Delaware 100.0 Paco Packaging, Inc. Delaware 100.0 Paco Technologies, Inc. Delaware 100.0 Paco Laboratories, Inc. Delaware 100.0 Charter Laboratories, Inc. Delaware 100.0 Paco Puerto Rico, Inc. Delaware 100.0 Citation Plastics Co. New Jersey 100.0 The West Company of Puerto Rico, Inc. Delaware 100.0 TWC of Florida, Incorporated Florida 100.0 Senetics, Inc. Colorado 100.0 West International Sales Corporation U.S. Virgin Islands 100.0 The West Company of Delaware, Inc. Delaware 100.0 The West Company de Colombia, S.A. Colombia 52.1 (1) The West Company Holding GmbH Germany 100.0 The West Company Deutschland GmbH Germany 100.0 Pharma-Gummi Beograd Yugoslavia 84.7 (2) The West Company Hispania, S. A. Spain 82.1 The West Company (Custom & Germany 100.0 Specialty Services) GmbH Schubert Seals A/S Denmark 100.0 The West Company Italia S.R.L. Italy 95.0 (3) The West Company France S.A. France 99.99 (4) The West Company (Mauritius) Ltd. Mauritius 100.0 The West Company (India) Private Ltd. India 100.0 The West Company Group Ltd. England 100.0 The West Company (UK) Ltd. England 100.0 The West Company Argentina S.A. Argentina 100.0 The West Company Brasil S.A. Brasil 100.0 The West Company Venezuela C.A. Venezuela 100.0 The West Company Singapore Pty. Ltd. Singapore 100.0 The West Company Australia Pte. Ltd. Australia 100.0 West Company Korea Ltd. Korea 100.0 (1) In addition, 46.16 % is owned directly by The West Company, Incorporated; 1.55% is held in treasury by The West Company De Colombia S.A.. (2) Affilated company accounted for on the cost basis. (3) In addition, 5 % is owned directly by The West Company, Incorporated; (4) In addition, .01% is owned directly by 9 Individual Shareholders.
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