<PAGE>
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> 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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
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.
</TABLE>
Page 4
The West Company, Incorporated and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
Unaudited Audited
ASSETS June 30, 1996 Dec. 31, 1995
-------------- -------------
<S> <C> <C>
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.
</TABLE>
Page 5
<PAGE>
The West Company Incorporated and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Unaudited
Quarter Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
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.
</TABLE>
Page 6
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE> 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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE> 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."
<PAGE>
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."
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 15,000
<SECURITIES> 0
<RECEIVABLES> 72,200
<ALLOWANCES> 0
<INVENTORY> 49,200
<CURRENT-ASSETS> 12,700
<PP&E> 429,800
<DEPRECIATION> 218,600
<TOTAL-ASSETS> 467,400
<CURRENT-LIABILITIES> 67,800
<BONDS> 106,900
<COMMON> 4,200
0
0
<OTHER-SE> 233,500
<TOTAL-LIABILITY-AND-EQUITY> 467,400
<SALES> 232,900
<TOTAL-REVENUES> 232,900
<CGS> 169,700
<TOTAL-COSTS> 169,700
<OTHER-EXPENSES> 58,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,400
<INCOME-PRETAX> 1,300
<INCOME-TAX> 2,200
<INCOME-CONTINUING> (100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (100)
<EPS-PRIMARY> .00
<EPS-DILUTED> .0
</TABLE>
Exhibit 99
<PAGE>
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
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
<PAGE>
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.
</TABLE>
