What drove the increase in 1995 net sales?

The filing attributes the 13% increase to the April 1995 acquisition of Paco Pharmaceutical Services and to stronger European currencies, which increased reported U.S. dollar sales by $10.6 million. Paco's contract services added $38.9 million. Excluding these items, consolidated net sales were slightly lower than in 1994.

Why did gross margin decline in 1995?

The filing cites lower-margin service operations from Paco, higher raw material costs, higher wage costs in South America, and a lower-margin product mix. Labor and overhead at plants supporting new product launches were only partially recovered, and start-up costs rose as production shifted to new sites.

What is the restructuring plan approved in March 1996?

On March 28, 1996, the company approved a plan to close or substantially downsize six manufacturing facilities, reduce its workforce by about 5%, and withdraw from its machinery systems business, which accounted for less than 1% of 1995 net sales. The estimated net charge is $15 million, net of $6.5 million of income tax benefits, and the restructuring is to be substantially complete by the end of the first quarter of 1997.

How did the company's debt and financial position change in 1995?

Outstanding debt was $114.3 million at December 31, 1995, compared with $57.8 million a year earlier. Cash flow from operations was $46.1 million, and working capital was $86.6 million with a current ratio of 2.4 to 1. Debt represented 31% of total invested capital. Management states the company's financial position continues to be strong.

Who is the company's largest customer and how concentrated is its sales?

Becton Dickinson and Company accounted for approximately 11% of 1995 consolidated net sales. The next ten largest customers, excluding B-D, accounted for approximately 29% of 1995 net sales, and no one of them exceeded 6%.

WST 10-K FY1995 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 29, 1996. Cited figures are marked; the original filing is the authoritative source.

The West Company, Incorporated (now West Pharmaceutical Services, Inc.) reported 1995 net sales of $412.9 million^a, up 13% from $365.1 million in 1994, driven by the April 1995 acquisition of Paco Pharmaceutical Services and stronger European currencies, which added $10.6 million.

Excluding those two items, the filing states consolidated net sales were slightly lower than in 1994, as healthcare customers pressed for lower prices and shifted to lower-priced alternative packaging. Net income rose to $28.7 million^b, or $1.73 per share, from $27.3 million, or $1.70 per share, while the gross margin fell to 28.6% from 32.1%. The company's balance sheet grew substantially.

Total debt rose to $114.3 million^c from $57.8 million, and total assets reached $480.1 million. Cash from operations was $46.1 million, and the company spent $32.9 million on fixed asset acquisitions and tooling advances. Management describes the financial position as strong and says it can finance substantial future growth.

Debt to total invested capital was 31%^d, and the working capital ratio was 2.4 to 1. The most significant subsequent event is a restructuring approved on March 28, 1996. It calls for closing or substantially downsizing six manufacturing facilities and cutting about 5% of the workforce, and it will withdraw the company from its machinery systems business.

The estimated net charge is $15 million after $6.5 million of tax benefits, and the company expects to report a net loss for the first quarter of 1996. Implementation is to be substantially complete by the end of the first quarter of 1997.

02—Key points

Key Highlights

1995 net sales were $412.9 million, up 13% from $365.1 million in 1994, with the increase attributed to the Paco acquisition and currency effects.
Net income was $28.7 million, or $1.73 per share, compared with $27.3 million, or $1.70 per share, in 1994.
Gross margin declined to 28.6% in 1995 from 32.1% in 1994, which the company attributes to lower-margin Paco services, higher raw material and wage costs, and product mix.
Total debt increased to $114.3 million at year-end 1995 from $57.8 million, largely reflecting financing for the Paco acquisition and other purchases.
A restructuring plan approved March 28, 1996 includes closing or downsizing six manufacturing facilities and cutting about 5% of the workforce, with a net charge of $15 million.
The company expects a net loss for the first quarter of 1996 because of the restructuring charge.
Becton Dickinson and Company accounted for approximately 11% of 1995 consolidated net sales.

03—Questions

Frequently Asked Questions

What drove the increase in 1995 net sales?
The filing attributes the 13% increase to the April 1995 acquisition of Paco Pharmaceutical Services and to stronger European currencies, which increased reported U.S. dollar sales by $10.6 million. Paco's contract services added $38.9 million. Excluding these items, consolidated net sales were slightly lower than in 1994.
Why did gross margin decline in 1995?
The filing cites lower-margin service operations from Paco, higher raw material costs, higher wage costs in South America, and a lower-margin product mix. Labor and overhead at plants supporting new product launches were only partially recovered, and start-up costs rose as production shifted to new sites.
What is the restructuring plan approved in March 1996?
On March 28, 1996, the company approved a plan to close or substantially downsize six manufacturing facilities, reduce its workforce by about 5%, and withdraw from its machinery systems business, which accounted for less than 1% of 1995 net sales. The estimated net charge is $15 million, net of $6.5 million of income tax benefits, and the restructuring is to be substantially complete by the end of the first quarter of 1997.
How did the company's debt and financial position change in 1995?
Outstanding debt was $114.3 million at December 31, 1995, compared with $57.8 million a year earlier. Cash flow from operations was $46.1 million, and working capital was $86.6 million with a current ratio of 2.4 to 1. Debt represented 31% of total invested capital. Management states the company's financial position continues to be strong.
Who is the company's largest customer and how concentrated is its sales?
Becton Dickinson and Company accounted for approximately 11% of 1995 consolidated net sales. The next ten largest customers, excluding B-D, accounted for approximately 29% of 1995 net sales, and no one of them exceeded 6%.

04—Continue

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