West Pharmaceutical Services Annual Report 2017

FY2017 Annual Report · West Pharmaceutical Services

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2017
ANNUAL REPORT

West Pharmaceutical Services, Inc.
530 Herman O. West Drive
Exton, PA 19341 | USA
610.594.2900
www.westpharma.com

10150 • 0318

Market Insights.
Scientific Knowledge.
Product Innovation.
Global Reach.

As a trusted partner to the
world’s top pharmaceutical,
biotechnology and healthcare
companies, West continues
our 95-year tradition of working
closely by our customers’
side to improve patient health
around the world.

West is a leading global manufacturer
in the design and production of
technologically advanced, high quality,
integrated containment and delivery
systems for injectable medicines. Our
top priority is delivering products of
the highest quality that meet the exact
specifications our customers demand.

Through our in-depth knowledge and
insight, West provides solutions and
scientific know-how to address many of
the industry’s toughest challenges. As a
result of our understanding of materials
and delivery systems and their
compatibility with drug products, we
can assist our customers in designing

drug containment solutions that are in
line with the challenging and evolving
regulatory landscape.

We continue to innovate by developing
the highest quality packaging and
delivery systems for new, sophisticated
injectable medicines that meet
the demands of the ever-changing
healthcare environment. Our scientific
affairs and R&D teams strive to
innovate and evolve our products to
improve the experience for patients
and healthcare providers.

With a focused drive to improve patient
health, our team members rally around
the theme of “Quality – A Patient
First Focus.” With the patient always
top-of-mind, this focus on quality
includes excellence in manufacturing,
scientific and technical expertise and
management. At the manufacturing
level, this means producing clean,
sterile, high-quality components to
minimize disruptions to the supply
chain and bringing safe and effective
drug products to market quickly
and efficiently.

We are passionate not only about what
we do to address patient needs with
the products we make, but also about
who we are – a company comprised
of more than 7,500 team members
committed to the communities in
which we live and work. We strive
to be a good corporate citizen. We
recognize our responsibility to conduct
our business in a sustainable manner,
and we are proud of our charitable
giving and volunteer outreach across
the globe. Together with the Herman
O. West Foundation, the Company
contributes to a wide range of
organizations working to improve
the world.

With our market-led business approach
to the customers we serve, West
is well-positioned to achieve the
development, growth and profitability
goals of our long-term enterprise
business strategy. In April 2018, we
will celebrate 95 years of bringing value
to our customers, patients, employees
and shareholders, and look forward
to many more years to come.

Written Affirmation
On May 25, 2017, Eric M. Green, West’s President & Chief Executive Officer,
submitted to the NYSE the Written Affirmation required by the rules of the
NYSE certifying that he was not aware of any violations by the Company of
NYSE Corporate Governance listing standards.

Section 302 and 906 Certifications
The certifications of Mr. Green and William J. Federici, West’s Chief Financial
Officer, made pursuant to Section 302 and Section 906 of the Sarbanes-
Oxley Act of 2002 regarding the quality of the Company’s public disclosures,
have been filed as exhibits to West’s 2017 Form 10-K.

Dividends
West Pharmaceutical Services has paid 189 consecutive quarterly common
stock cash dividends since becoming a public company in 1970. Dividends
are usually are declared by the Board during the last month of each calendar
quarter and, if approved, are typically paid on the first Wednesday of
February, May, August and November to shareholders of record two weeks
prior to the payment date.

Publications
To receive copies of press releases or quarterly and annual reports filed with
the United States Securities and Exchange Commission, write to Investor
Relations at global headquarters, call 888-594-3222, or send a message
through West’s website, westpharma.com.

Dividend Reinvestment Plan
The West Pharmaceutical Services Dividend Reinvestment Plan for all
registered shareholders is a convenient and economical way for shareholders
to increase their investment in West through the purchase of additional
shares with dividends and voluntary cash payments. All brokerage
commissions and costs of administering the plan are paid by West. For
details of the plan and an enrollment form, please contact the Dividend
Reinvestment Department of Broadridge Corporate Issuer Solutions (see
Transfer Agent and Registrar).

Investor Online
http://investor.westpharma.com

Trademarks
West without Borders is not affiliated with Doctors Without Borders®, which
is a registered service mark of Bureau International de Medecins San
Frontieres.

All other trademarks and registered trademarks used in this report are the
property of West Pharmaceutical Services, Inc. or its subsidiaries, in the
United States and other jurisdictions, unless noted otherwise.

INVESTOR
INFORMATION

Stock Listing
NYSE symbol: WST

Shareholders of Record
As of December 31, 2017: 879

Average Daily Trading Volume 2017
First Quarter:
346,011 shares
Second Quarter: 341,446 shares
Third Quarter: 382,321 shares
Fourth Quarter: 356,032 shares

Global Headquarters
West Pharmaceutical Services, Inc.
530 Herman O. West Drive
Exton, PA 19341 | USA
610-594-2900
www.westpharma.com

Annual Meeting
Tuesday, May 1, 2018, 9:30 a.m. Exton, PA

Code of Business Conduct
Available at http://investor.westpharma.com

Investor Relations Contact
Quintin J. Lai
VP, Corporate Development,
Strategy & Investor Relations
610-594-3318
Quintin.Lai@westpharma.com

Transfer Agent and Registrar
Broadridge Financial Solutions, Inc.
51 Mercedes Way
Edgewood, NY 11717
877-830-4936
shareholder@broadridge.com

| West Annual Report 2017

What We Do

Who We Are

~41 Billion 150 +

Components
Manufactured
Annually

Patents Filed in 2017

7,500 +

Team Members

Countries With
Locations,
28 Manufacturing
Facilities

TOP 75

Pharmaceutical and
Biotech Injectable
Companies use West
as a Supplier

TOP 50

Injectable Biologics
Rely on West and
Daikyo Components

Global Charitable
Campaigns in 2017

2020

Emissions Reduction
Goal Achieved in
2017

West Annual Report 2017 |

2017 NET SALES1
Business at a Glance

$1.6B

NET SALES BY
GEOGRAPHIC
LOCATION

51%

41%

42%

NET SALES BY
PRODUCT
CATEGORY

32%

23%

34%

20%

NET SALES BY
MARKET
GROUP

23%

Pharma

Biologics

Americas

High-Value Components

Europe, Middle East, Africa

Standard Packaging

Asia Pacific

Contract-Manufactured Products2

Delivery Devices

Generics

ANNUAL COMPARISON
Sustained, Consistent Growth

$1.60
BILLION

Constant-Currency
CAGR 6.4%

Adjusted Diluted EPS
CAGR 14.3%3

$2.78

$1.63

$1.37
BILLION

WST-USQ
SPX
MID

400%

300%

200%

100%

2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

2012

2013

2014

2015

2016

2017

Net Sales
NET SALES

Net Sales
ADJUSTED DILUTED EPS3
(NON-GAAP)

Net Sales
5-YEAR TOTAL SHAREHOLDER RETURN

Sources: IR Insight, Company estimates
1Based on full-year 2017 net sales
2Non-proprietary products
3Please refer to our February 15, 2018 and January 10, 2018 current reports on Form 8-K for reconciliation of Non-GAAP financial measures.

| West Annual Report 2017

WEST PHARMACEUTICAL SERVICES, INC. & SUBSIDIARIES
Financial Summary

2017

2016

Net Sales4

$1,599.1

$1,509.1

Net Sales Growth Ex-Currency

5.2%

Diluted Earnings Per Share

As reported (GAAP)

$1.99

$1.91

Tax law changes

Venezuela deconsolidation

Restructuring and related charges

Pension curtailment gain

Venezuela currency devaluation

0.64

0.15

–

As adjusted (Non-GAAP)

$2.78

0.01

–

0.23

(0.01)

0.04

$2.18

Our 2017 as-reported results include the impact of a discrete tax charge

of $48.8 million ($0.64 per diluted share) related to the Tax Cuts and

Jobs Act, and the impact of changes in enacted international tax rates

on previously recorded deferral tax asset and liability balances, as well

as a charge of $11.1 million ($0.15 per diluted share) related to the

deconsolidation of our Venezuelan subsidiary.

Our 2016 as-reported results include the impact of restructuring and

related charges of $17.4 million ($0.23 per diluted share), a pension

curtailment gain of $1.3 million ($0.01 per diluted share), a charge related

to the devaluation of the Venezuelan Bolivar of $2.7 million ($0.04 per

diluted share) and a discrete income tax charge of $1.0 million ($0.01 per

diluted share).

Adjusted results are intended to aid investors in understanding the

Company’s year-over-year results and are considered non-GAAP financial

measures. Non-GAAP financial measures should not be considered in

isolation or as an alternative to such measures determined in accordance

with GAAP. Our executive team uses these financial measures to evaluate

the performance of the Company in terms of profitability and efficiency, as

well as to compare operating results to prior periods.

For a discussion of non-GAAP financial measures, please refer to our

2017 Form 10-K filed on February 26, 2018 and our current Form 8-K

filed on February 15, 2018.

4Dollars in millions, except per share data

West Annual Report 2017 |

A Letter from West’s
President and CEO

I am pleased to report that West had another year
of solid growth in 2017, and we continue to make
significant strides in executing our global enterprise
business strategy. Our market-led approach, initiated
in 2016, has fueled an even greater understanding of
the various markets in which we operate, enabling us to
deliver more focused products and services to address
the specific needs of our diverse customer base.

With a globally-aligned and unified Global Operations Team manufacturing
these tailored customer solutions more efficiently, along with a strong
pipeline of new products in development, we have a bright future ahead.

2017 PERFORMANCE HIGHLIGHTS

Our net sales in 2017 totaled $1.6 billion. At constant currency, organic
sales growth was 5.2%. By segment, organic sales of our Proprietary
Products grew by 3.2%, while our Contract-Manufactured Products sales
grew by 12.0%. Continuing a long-standing trend, West’s average growth
outpaced the underlying injectable pharmaceutical market volume growth.
In addition, we generated strong double-digit growth in cash flow from
operations over the prior year. These results allowed us to maintain our
strong financial position in 2017. In turn, we reduced our net debt and
returned cash to you, our shareholders, with quarterly dividend payments
and share repurchases.

Our Proprietary Products segment offers integrated containment and drug
delivery solutions for our Biologics, Generics and Pharma customers. In the
Biologics space, West, with our partner Daikyo, maintained participation
on 100% of the biologic new molecular entities that were approved by
the FDA in 2017. In addition, we continued to address the needs of our
Generics customers, who require speed and simplicity, with the AccelTRA™
components program, a new and unique offering that combines specially
formulated elastomers with value-added services. With a demanding
regulatory backdrop for the packaging and delivery of injectable medicines,
our Pharma customers are seeking high-value products now more than
ever, which resulted in mid-single digit growth in 2017 in this
market group.

Our Contract-Manufactured Products segment had an impressive year,
generating sustained, double-digit sales growth. Over the last decade,
we have worked to grow and strengthen our ability to service healthcare
and medical device companies, which has resulted in higher growth and
expanded margins for this segment of our business. We have also added
capabilities and capacity to address the growing needs of these healthcare
customers, especially in the areas of diabetes-related diagnostics and drug
delivery. Our plant in Dublin, Ireland is a great example of this alignment
and focus. We nearly doubled the manufacturing footprint of this facility
in December 2016 to meet increasing demand. The expanded site has

| West Annual Report 2017

our more than 50 sites. We have made
significant investments to train and develop
our people, to build their expertise and
ensure their continued engagement. When
I visit our manufacturing sites and R&D
centers, speak with our customer-facing
teams or meet with our back-office support
groups, I am always impressed with the level
of pride they have in working for West. Each
team member understands his or her critical
role in ensuring the more than 112 million
components we make each day are delivered
with the highest level of quality, so that
patients can rest assured that the medicines
they need can be delivered to them safely
and effectively. We play an essential role in
our industry, and we take this responsibility
very seriously.

In conclusion, we have a robust strategy
that we are confident will drive our future
growth. Through the alignment of our global
teams, the continued demand for high-
value products and high-quality contract
manufacturing services, and the execution of
our market-led, global strategy, we expect to
grow our business by 6-8% in organic sales,
annually, for the long-term. We look forward
to another year of strong growth in 2018 and
remain committed to our vision to be the
global leader in the integrated containment
and delivery of injectable medicines.

Thank you to all our shareholders for your
continued commitment to West.

Sincerely,

Eric M. Green
President & CEO

been operational for one year and is
already profitable. The core offering in
Dublin includes manufacturing expertise
in continuous glucose monitoring devices,
and complements the new insulin sheeting
production capabilities at our Waterford,
Ireland plant, which we anticipate will initiate
commercial operations later this year.

Our Global Operations and Supply Chain
Team made good progress in 2017 as
well. The team drove better service to
customers with improved levels of quality,
and significantly reduced lead times by more
than 40%. We also accelerated process
excellence improvements across the global
manufacturing network, enabling us to run
our operations more efficiently and deliver
greater value to our customers.

Creating a safe working environment for our
more than 7,500 team members is one of
the top priorities at West. Over the past two
years, we challenged ourselves to cut our
Recordable Injury Rate (RIR) by half. I am
pleased to report that the team exceeded
that challenge. On top of the improvements
we made in 2016, our RIR dropped to
0.98 in 2017, a 35% improvement over
the previous year, and the lowest rate ever
recorded at West. We have dedicated
more resources to this important aspect
of operating a sustainable business. We
are also working to develop and roll-out
best-in-class health, safety and environment
procedures and processes across our global
network, with a goal of reducing workplace
injuries to industry-leading levels.

FUTURE OPPORTUNITIES

A key pillar of our enterprise strategic plan is
to expand our product and service offerings
to meet future customer and patient needs.
Our Innovation & Technology Team has
identified three core areas of research
and development focus—expanding the
breadth of our core product offerings,
introducing novel self-injection devices, and
launching new products for injectable drug
administration.

In 2017, our core offerings were expanded
with several new product introductions,
including the LyoSeal® cap, West Rigid
Needle Shields™ and the NovaGuard®
SA Pro safety system, along with the
aforementioned AccelTRA™ component
program—all designed to broaden our
product offerings to address unmet customer
needs. With our partners at Daikyo, we
expect to introduce additional high-value

products in 2018 that directly meet and
exceed our customers’ expectations
and demand for high quality, innovative
solutions. We also expanded the SmartDose®
technology portfolio with the introduction of
drug delivery platform wearable devices, and
had success with the SelfDose™ injector,
which we expect will be commercialized in
the coming year. We saw healthy double-digit
growth in our drug administration product
portfolio this year, especially in the United
States. We expect to expand this offering into
more geographic markets, invest in additional
capacity for increased production and
launch new products in the future. Together,
the new products launched over the past five
years in these focus areas contributed more
than 100 basis points of organic sales growth
in 2017, and we expect this trend to continue
in 2018 and the years beyond.

LONG-TERM OUTLOOK

Looking to the future, West’s organic sales
growth and margin expansion will be further
supported by strong underlying market
drivers. Drug companies are experiencing
more regulatory scrutiny, with higher
enforcement of current regulations and new
regulations in the making. They are also
developing more complex drugs, requiring
higher quality packaging and delivery
systems, resulting in increased demand for
our high-value products. West’s reputation
as a scientific and technical leader in the
industry, combined with the breadth and
depth of our product and service portfolio
and unsurpassed global footprint, allows us
to serve as a global partner to customers
across the injectable drug and medical
device landscape.

The West Leadership Team is focused on
maintaining and growing the important
role we play as a leader in the healthcare
industry. We continue to make investments
and strengthen partnerships that reinforce
our ability to produce the highest quality
products our customers need. We have
created a global, market-led team to ensure
our customers have access to experts within
our business who understand their specific
drug containment and delivery needs. At the
same time, we are working to improve our
sustainable business practices by reducing
potential adverse environmental impacts with
more efficient manufacturing processes,
and continuing our tradition of giving back
through charitable and volunteer activities.

Critical to our Company’s success is our
team of dedicated professionals across

West Annual Report 2017 |

Being a Good
Corporate
Citizen – It’s
In Our DNA

At West, acting as a good corporate
citizen is ingrained in our DNA.
Caring for our team members and our
environment while nurturing a culture
of philanthropy have been defining
characteristics of West throughout our
longstanding history. West and our
team members around the world take
this responsibility seriously and, as a
result, give considerable time
and resources to help create a
healthier world.

In 2017, West published our first Corporate
Responsibility Report, which highlighted five
key areas of focus: Compliance and Ethics;
Philanthropy; Diversity; Health and Safety;
and Environmental Sustainability. This report
provided a summary of our commitment in each
of these areas, and outlined goals we have set to
ensure continued advancement in our corporate
responsibility efforts. The following are some
highlights of our efforts, which will be described in
greater detail in our 2017 Corporate Responsibility
Report to be published later this year.

CHAIRMAN’S ADDRESS

For West, 2017 marked a year of continued progress towards
achieving its vision as a global leader in the integrated
containment and delivery of injectable medicines. Across
all aspects of the Company, we are seeing our team reach
important milestones that set the stage for continued
future growth.

The Company is operating with a market-led focus that is
producing results. It is encouraging to see the increased focus
and alignment of our R&D and Commercial teams to deliver
products and services that meet the unique needs of the
distinct customer groups we serve. West is also harmonizing
manufacturing strategies, driving lean initiatives and site
optimization, and delivering better service to our customers,
as well as cost efficiencies. We expect these efforts will further
expand our future operating profits. This unwavering, market-led
focus has produced industry-leading, long-term financial results
enabling us to return substantial value to you, our shareholders,
through quarterly dividends and share buy-backs.

On top of these excellent operational wins, the Company also
made important strides in its commitment to serving as a caring
corporate citizen. With the Company’s first-ever Corporate
Responsibility Report issued last year, West set the stage to
report annually on its success in the areas of environmental
sustainability, diversity, health and safety, compliance and
philanthropy. Some highlights of these efforts are reported in the
following pages.

Our Board of Directors was bolstered by the addition of
Deborah Keller, whose experience leading a multinational drug
development business that partners, just as West does, with the
world’s leading pharmaceutical and biotechnology companies
will be a great asset to the Company. She brings a wealth of
knowledge and unique perspective to the Board, and we look
forward to her future contributions.

Thank you for your continued support of West. It is an honor
to serve as Chairman of the Board as we celebrate our 95th
anniversary in 2018. The Company has a long tradition of
partnering with its healthcare customers to deliver critical
medicines safely and securely, and I am confident this will
continue for years to come.

Sincerely,

Patrick J. Zenner
Chairman

| West Annual Report 2017

HEALTH & SAFETY

At West, compliance with applicable
health and safety laws and regulations
is non-negotiable. We have designed
and operate our facilities in a manner
intended to provide team members
with a healthy and safe workplace. Our
aspiration is to prevent all workplace
injuries and illnesses, and we are
engaging every team member in this
pursuit. In 2017, our Recordable Injury
Rate (RIR) dropped to 0.98, a 35%
improvement over 2016 and the lowest
rate ever recorded since West began
tracking more than a decade ago.

ENVIRONMENTAL SUSTAINABILITY

We believe that long-term, leading
economic performance is directly related
to sustainable practices and the creation
of healthy communities. There are
more than 100 sustainability projects
currently underway across the globe
at West. In 2016, we set goals around
energy, emission and water reduction,
using a 2011 baseline. We are proud to
report that our 2020 goal for emissions
reduction has already been achieved.

A testament to our commitment in this
area is West’s recent achievement of the
Gold Standard from EcoVadis, a leader in
supplier sustainability ratings.

PHILANTHROPY

In philanthropy, West targets support
to charities focused on children,
people with disabilities, healthcare,
and education with a focus on STEM
(Science, Technology, Engineering
& Math). The Company’s giving
encompasses community support from
West Pharmaceutical Services, Inc.;
the Herman O. West Foundation, an
independently managed 501(c)(3) entity;
and West without Borders, our team
member-led giving program.

Across our global network of sites, team
members host West without Borders
campaigns for charities that have
special meaning to them and their local
community, often coming up with creative
ways to raise money. In Exton, our team
raised money for the Juvenile Diabetes
Research Foundation, while holding
educational sessions for team members
around diabetes and its treatment. Our

Dublin, Ireland facility raised funds
for Temple Street Children’s University
Hospital by holding a comprehensive
charity drive. Their events included a
charity cycling event, a women’s mini-
marathon and a bake sale, all of which
benefited the lives of critically ill children
in Ireland.

In addition, this past year we held our
Second Annual Global Food Drive,
with Company sites around the world
collecting food to be donated to their
local food banks and soup kitchens.
Team members collected more than
40,000 pounds of food, resulting in the
equivalent of more than 150,000 meals
for those in need.

These are just a few of the many
examples of how being a good corporate
citizen runs deeply through our culture.
We recognize our responsibility to
conduct our business in a sustainable
manner, and are extremely proud of our
team members’ continued commitment
to supporting local communities and
creating a healthier world.

West Annual Report 2017 |

2017
BOARD OF DIRECTORS

Mark A. Buthman
Retired Executive Vice President & Chief
Financial Officer
Kimberly-Clark Corporation
Director since 2011
Board committees: Audit; Nominating and
Corporate Governance

William F. Feehery, Ph.D.
President
Industrial Biosciences, DowDuPont
Director since 2012
Board committees: Audit; Nominating and
Corporate Governance

Eric M. Green
President & Chief Executive Officer
Director since 2015

Thomas W. Hofmann
Retired Senior Vice President & Chief
Financial Officer
Sunoco, Inc.
Director since 2007
Board committees: Audit; Compensation;
Finance

Paula A. Johnson, M.D., MPH
President
Wellesley College
Director since 2005
Board committee: Innovation and
Technology

Deborah L.V. Keller
Principal
Black Frame Advisors, LLC & Retired CEO,
Covance Drug Development
Director since 2017
Board committees: Finance; Innovation
and Technology

Myla P. Lai-Goldman, M.D.
President & Chief Executive Officer
GeneCentric Therapeutics, Inc.
Director since 2014
Board committees: Finance; Innovation
and Technology

Douglas A. Michels
President & Chief Executive Officer
OraSure Technologies, Inc.
Director since 2011
Board committees: Compensation;
Innovation and Technology

Paolo Pucci
Chief Executive Officer
ArQule, Inc.
Director since 2016
Board committees: Audit; Compensation

John H. Weiland
Retired Vice Chairman, President & Chief
Operating Officer
C. R. Bard, Inc. (which merged with
Becton Dickinson and Company)
Director since 2007
Board committees: Compensation;
Finance

Patrick J. Zenner
Retired President & Chief Executive Officer
Hoffmann-La Roche, Inc.
Director since 2002
Chairman of the Board
Board committee: Nominating and
Corporate Governance

HONORARY DIRECTOR
Morihiro Sudo
President
Daikyo Seiko, Ltd.

BOARD COMMITTEES
Audit Committee
Mark A. Buthman, Chair

Finance Committee
John H. Weiland, Chair

Innovation and Technology Committee
Paula A. Johnson, M.D., MPH, Chair

Nominating and Corporate Governance
Committee
William F. Feehery, Ph.D., Chair

EXECUTIVE OFFICERS
Silji Abraham
Senior Vice President & Chief Digital and
Transformation Officer

Annette F. Favorite
Senior Vice President & Chief Human
Resources Officer

William J. Federici
Senior Vice President, Chief Financial
Officer & Treasurer

Karen A. Flynn
Senior Vice President & Chief Commercial
Officer

Eric M. Green
President & Chief Executive Officer

Quintin J. Lai
Vice President, Corporate Development,
Strategy & Investor Relations

Daniel Malone
Vice President, Controller & Assistant
Treasurer

George L. Miller
Senior Vice President, General Counsel
& Corporate Secretary

David A. Montecalvo
Senior Vice President, Global Operations
& Supply Chain

Compensation Committee
Douglas A. Michels, Chair

Eric Resnick
Vice President & Chief Technology Officer

INDEPENDENT DIRECTORS
The Board of Directors has designated directors who are independent of management as “Independent Directors.” The Independent
Directors’ duties include annual evaluations of the Chief Executive Officer, his leadership succession plans and achievement of long-range
strategic initiatives.

| West Annual Report 2017

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017
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
(State or other jurisdiction of incorporation or organization)

23-1210010
(I.R.S. Employer Identification Number)

530 Herman O. West Drive, Exton, PA

(Address of principal executive offices)

19341-0645

(Zip Code)

Registrant’s telephone number, including area code: 610-594-2900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $.25 per share

Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Non-accelerated filer

(Do not check if a smaller reporting company)

Accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2017 was approximately $6,994,711,952 based on the
closing price as reported on the New York Stock Exchange.

As of January 31, 2018, there were 73,986,496 shares of the registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Document
Proxy Statement for the Annual Meeting of Shareholders to be held May 1, 2018

Parts Into Which Incorporated
Part III

TABLE OF CONTENTS

BUSINESS

PART I
ITEM 1.
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2.
ITEM 3.
ITEM 4. MINE SAFETY DISCLOSURES
EXECUTIVE OFFICERS OF THE COMPANY

PROPERTIES
LEGAL PROCEEDINGS

PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
SELECTED FINANCIAL DATA

ITEM 6.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

ITEM 8.
ITEM 9.

RISK
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND

ITEM 14.

DIRECTOR INDEPENDENCE
PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 16.

FORM 10-K SUMMARY

SIGNATURES

EXHIBIT INDEX

Page
3
7
14
15
16
16
16

18
20

34
36

76
76
77

77
77

79
79

79
80

F-1

PART I

Unless otherwise indicated, or the context otherwise requires, references in this report to “the Company”, “we”,
“us”, “our” and “West” refer to West Pharmaceutical Services, Inc. and its majority-owned subsidiaries.

All trademarks and registered trademarks used in this report are our property, either directly or indirectly through
our subsidiaries unless noted otherwise. Daikyo Crystal Zenith® (“CZ”) is a registered trademark of Daikyo Seiko,
Ltd. (“Daikyo”).

Throughout this report, references to “Notes” refer to the Notes to Consolidated Financial Statements included in
Part II, Item 8 of this Annual Report on Form 10-K (“Form 10-K”), unless otherwise indicated.

Information in this Form 10-K is current as of February 26, 2018, unless otherwise specified.

ITEM 1. BUSINESS

General

We are a leading global manufacturer in the design and production of technologically advanced, high-quality,
integrated containment and delivery systems for injectable drugs and healthcare products. Our products include a
variety of primary packaging, containment solutions, reconstitution and transfer systems, and drug delivery systems,
as well as contract manufacturing and analytical lab services. Our customers include the leading biologic, generic,
pharmaceutical, diagnostic, and medical device companies in the world. Our top priority is delivering quality
products that meet the exact product specifications and quality standards customers require and expect. This focus
on quality includes excellence in manufacturing, scientific and technical expertise and management, so we can
partner with our customers to deliver safe, effective drug products to patients quickly and efficiently.

The Company was incorporated under the laws of the Commonwealth of Pennsylvania on July 27, 1923.

Business Segments

Our business operations are organized into two reportable segments, Proprietary Products and Contract-
Manufactured Products.

Proprietary Products Segment

Our Proprietary Products reportable segment offers proprietary packaging, containment and drug delivery products,
along with analytical lab services, to biologic, generic and pharmaceutical drug customers. Our packaging products
include stoppers and seals for injectable packaging systems, which are designed to help ensure drug compatibility
and stability with active drug products, while also supporting operational efficiency for customers. This product
portfolio also includes syringe and cartridge components, including custom solutions for the specific needs of
injectable drug applications, as well as administration systems that can enhance the safe delivery of drugs through
advanced reconstitution, mixing and transfer technologies. We also provide films, coatings, washing and sterilization
processes and services to enhance the quality of packaging components and mitigate the risk of contamination and
compatibility issues.

This segment's product portfolio also includes drug containment solutions, including CZ, a cyclic olefin polymer, in
the form of vials, syringes and cartridges. These products can provide a high-quality solution to glass
incompatibility issues and can stand up to cold storage environments, while reducing the risk of breakage that exists
with glass. In addition, we offer a variety of self-injection devices, designed to address the need to provide at-home
delivery of injectable therapies. These devices are patient-centric technologies that are easy-to-use and can be
combined with connected health technologies that have the potential to increase adherence.

Analytical lab services completes the product offerings in the Proprietary Products reportable segment. This group
provides specialized testing for drug packaging, devices and administration systems. Offering the combination of
primary packaging components, containment solutions, and drug delivery devices, as well as analytical lab services,
helps to position us as the leader in the integrated containment and delivery of injectable medicines.

This reportable segment has manufacturing facilities in North and South America, Europe, and Asia Pacific, with
affiliated companies in Mexico and Japan. See Item 2, Properties, for additional information on our manufacturing
and other sites.

See Note 17, Segment Information, for net sales, operating profit and asset information for Proprietary Products.

Contract-Manufactured Products Segment

Our Contract-Manufactured Products reportable segment serves as a fully integrated business, focused on the
design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and
medical device customers. These products include a variety of custom contract-manufacturing and assembly
solutions, which use such technologies as multi-component molding, in-mold labeling, ultrasonic welding and clean
room molding and device assembly. We manufacture customer-owned components and devices used in surgical,
diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products.

We have vast expertise in product design and development, including in-house mold design, an engineering center
for developmental and prototype tooling, process design and validation and high-speed automated assemblies.

This reportable segment has manufacturing operations in North America and Europe. See Item 2, Properties, for
additional information on our manufacturing and other sites.

See Note 17, Segment Information, for net sales, operating profit and asset information for Contract-Manufactured
Products.

International

We have significant operations outside of the United States (“U.S.”), which are managed through the same business
segments as our U.S. operations – Proprietary Products and Contract-Manufactured Products. Sales outside of the
U.S. accounted for 54.1% of consolidated net sales in 2017. For a geographic breakdown of sales, see Note 17,
Segment Information. See Item 2, Properties, for additional information on our manufacturing and other sites.

Although the general business processes are similar to the domestic business, international operations are exposed to
additional risks. These risks include currency fluctuations relative to the U.S. Dollar (“USD”), multiple tax
jurisdictions and, particularly in South America and Israel, political and social issues that could destabilize local
markets and affect the demand for our products.

See further discussion of our international operations, the risks associated with our international operations, and our
attempt to minimize some of these risks in Part I, Item 1A, Risk Factors; Part II, Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations under the caption Financial Condition, Liquidity and
Capital Resources; Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk; Note 1 under the
captions Financial Instruments and Foreign Currency Translation; and Note 9, Derivative Financial Instruments.

Raw Materials

We use three basic raw materials in the manufacture of our products: elastomers, aluminum and plastic. Elastomers
include both natural and synthetic materials. We currently have access to adequate supplies of these raw materials to
meet our production needs through agreements with suppliers.

We employ a supply chain management strategy in our business segments, which involves purchasing from
integrated suppliers that control their own sources of supply. Due to regulatory control over our production
processes and the cost and time involved in qualifying suppliers, we rely on single-source suppliers for many critical
raw materials. We purchase certain raw materials in the open market. This strategy increases the risk that our supply
chain may be interrupted in the event of a supplier production or distribution problem. These risks are managed,
where possible, by selecting suppliers with multiple manufacturing sites, rigorous quality control systems, surplus
inventory levels and other methods of maintaining supply in case of an interruption in production or distribution.

Intellectual Property

Intellectual property, including patents, trade secrets and know-how, is important to our business. We own or license
intellectual property rights, including issued patents and pending patent applications in the U.S. and in other
countries, that relate to various aspects of our products. Some key value-added and proprietary products and
processes are licensed from Daikyo. Our intellectual property rights have been useful in establishing our market
position and in the growth of our business, and are expected to continue to be of value in the future.

Seasonality

Although our Proprietary Products business is not inherently seasonal, sales and operating profit in the second half
of the year are typically lower than the first half primarily due to scheduled plant shutdowns in conjunction with our
customers' production schedules and the year-end impact of holidays on production. This can vary from year-to-
year, depending upon customer inventory management programs and customer product launches and other factors.

Our Contract-Manufactured Products business is not inherently seasonal.

Working Capital

We are required to carry significant amounts of inventory to meet customer requirements. In addition, some of our
supply agreements require us to purchase inventory in bulk orders, which increases inventory levels but decreases
the risk of supply interruption. Levels of inventory are also influenced by the seasonal patterns addressed above. For
a more detailed discussion of working capital, please refer to the discussion in Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations under the caption Financial Condition,
Liquidity and Capital Resources.

Marketing

Our Proprietary Products customers include most of the major biologic, generic, and pharmaceutical drug companies
in the world, which incorporate our components and other offerings into their products for distribution to the point
of care and ultimate end-user - the patient.

Our Contract-Manufactured Products customers include many of the world's largest pharmaceutical, diagnostic, and
medical device companies. Contract-Manufactured Products components generally are incorporated into our
customers' manufacturing lines for further processing or assembly.

Our products and services are distributed primarily through our own sales force and distribution network, with
limited use of contract sales agents and regional distributors.

Our ten largest customers accounted for 37.5% of our consolidated net sales in 2017, but none of these customers
individually accounted for more than 10% of net sales. See Note 17, Segment Information, for information on sales
by significant product group.

Order Backlog

Order backlog includes firm orders placed by customers for manufacture over a period of time according to their
schedule or upon confirmation by the customer. We also have contractual arrangements with a number of our
customers. Products covered by these contracts are included in our backlog only as orders are received. Order

backlog may be positively or negatively impacted by several factors, including customer ordering patterns and the
necessary lead-time to deliver customer orders. Order backlog is one of many measures we use to understand future
demand, and should not be considered in isolation to predict future sales growth.

At December 31, 2017 and 2016, the order backlog for Proprietary Products was $377.4 million and $373.3 million,
respectively. The increase in backlog reflects the impact of foreign currency, partially offset by the impact of shorter
lead-time requirements for customer orders. The majority of the order backlog for Proprietary Products at
December 31, 2017 is expected to be filled during 2018.

The majority of Contract-Manufactured Products manufacturing activity is governed by contractual volume
expectations, with terms between one and three years, subject to periodic revisions based on customer requirements.

Competition

We compete with several companies across our Proprietary Products product lines. Due to the special nature of our
pharmaceutical packaging components and our long-standing participation in the market, competition for these
components is based primarily on product design and performance, although total cost is becoming increasingly
important as pharmaceutical companies continue with aggressive cost-control programs across their operations.

In addition, there are a number of competitors supplying medical devices and medical device components. We
compete in this market on the basis of our reputation for quality and reliability in engineering and project
management, as well as our knowledge of, and experience in, compliance with regulatory requirements.

We have specialized knowledge of container closure components, which is integral to developing delivery systems.
With our range of proprietary technologies, we compete with new and established companies in the area of drug
delivery devices, including suppliers of prefillable syringes, auto-injectors, safety needles and other proprietary
systems.

We aim to differentiate ourselves from our competition by being an integrated drug containment and delivery
systems global supplier that can provide pre-approval primary packaging support and engineering development,
analytical services, regulatory expertise and after-sale technical support. Customers also appreciate the global scope
of our manufacturing capability and our ability to produce many products at multiple sites.

Our Contract-Manufactured Products business operates in very competitive markets for its products. The
competition varies from smaller regional companies to large global molders. Given the cost pressures they face,
many of our customers look off-shore to reduce cost. We aim to differentiate ourselves by leveraging our global
capabilities and by employing new technologies such as high-speed automated assembly, insert-molding, multi-shot
molding and expertise with multiple-piece closure systems.

Research and Development Activities

We maintain our own research-scale production facilities and laboratories for developing new products, and offer
contract engineering design and development services to assist customers with new product development. Our
quality control, regulatory and laboratory testing capabilities are used to ensure compliance with applicable
manufacturing and regulatory standards for primary and secondary pharmaceutical packaging components and
delivery systems. We continue to seek new innovative opportunities for acquisition, licensing, partnering or
development of products, services and technologies that serve the injectable drug containment and delivery market.
Research and development spending will continue to increase as we pursue innovative strategic platforms in
prefillable syringes, injectable containers, advanced injection and safety and administration systems.

Commercial development of our new products and services for medical and pharmaceutical applications commonly
requires several years. New products that we develop may require separate approval as medical devices, and
products that are intended to be used in the packaging and delivery of pharmaceutical products are subject to both

customer acceptance of our products and regulatory approval of the customer's products following our development
period.

We spent $39.1 million in 2017, $36.8 million in 2016, and $34.1 million in 2015 on research and development, all
of which related to Proprietary Products.

Environmental Regulations

We are subject to various federal, state and local provisions regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment. Our compliance with these laws and
regulations has not had a material impact on our financial position, results of operations or cash flows. There were
no material capital expenditures for environmental control facilities in 2017 and there are no material expenditures
planned for such purposes in 2018.

Employees

As of December 31, 2017, we employed approximately 7,500 people in our operations throughout the world,
including approximately 7,300 full-time employees.

Available Information

We maintain a website at www.westpharma.com. Our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 are available on our website under the Investors - SEC Filings caption as soon as reasonably
practical after we electronically file the material with, or furnish it to, the U.S. Securities and Exchange Commission
(“SEC”). These filings are also available to the public over the Internet at the SEC's website at www.sec.gov. You
may also read and copy any document we file at the SEC's Public Reference Room at 100 F. Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Room.

Throughout this Form 10-K, we incorporate by reference certain information from parts of other documents filed
with the SEC and from our Proxy Statement for the 2018 Annual Meeting of Shareholders (“2018 Proxy
Statement”), which will be filed with the SEC within 120 days following the end of our 2017 fiscal year. Our 2018
Proxy Statement will be available on our website on or about March 31, 2018, under the caption Investors - Annual
Reports & Proxy.

Information about our corporate governance, including our Corporate Governance Principles and Code of Business
Conduct, as well as information about our Directors, Board Committees, Committee Charters, and instructions on
how to contact the Board, is available on our website under the Investors - Corporate Governance heading. We
intend to make any required disclosures regarding any amendments of our Code of Business Conduct or waivers
granted to any of our directors or executive officers under the caption Code of Business Conduct on our website.
Information relating to the West Pharmaceutical Services Dividend Reinvestment Plan is also available on our
website under the Investors - Transfer Agent/Dividend Reinvestment caption.

We will provide any of the foregoing information without charge upon written request to our Corporate Secretary,
West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341.

ITEM 1A. RISK FACTORS

The statements in this section describe major risks to our business and should be considered carefully. In addition,
these statements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995.

Our disclosure and analysis in this Form 10-K contains some forward-looking statements that are based on
management's beliefs and assumptions, current expectations, estimates and forecasts. We also provide forward-

looking statements in other materials we release to the public as well as oral forward-looking statements. Such
statements give our current expectations or forecasts of future events. They do not relate strictly to historical or
current facts. We have attempted, wherever possible, to identify forward-looking statements by using words such as
“estimate,” “expect,” “intend,” “believe,” “plan,” “anticipate” and other words and terms of similar meaning. In
particular, these include statements relating to future actions, business plans and prospects, new products, future
performance or results of current or anticipated products, sales efforts, expenses, interest rates, foreign-exchange
rates, economic effects, the outcome of contingencies, such as legal proceedings, and financial results.

Many of the factors that will determine our future results are beyond our ability to control or predict. Achievement of
future results is subject to known or unknown risks or uncertainties, including, without limitation, the risks set forth
below. Therefore, actual results could differ materially from past results and those expressed or implied in any
forward-looking statement. You should bear this in mind as you consider forward-looking statements.

Unless required by applicable securities law, we undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise. We also refer you to further
disclosures we make on related subjects in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
to the SEC.

Our operating results may be adversely affected by unfavorable economic and market conditions.

The current uncertainty in the global economy, including the effects of recession or slow economic growth in the
U.S., Europe, and emerging markets in Asia and South America, may negatively affect our operating results.
Examples of the effects of these global economic challenges include: our suppliers' and our customers' inability to
access the credit markets at commercially reasonable rates; reduction in sales due to customers decreasing their
inventories in the near-term or long-term or due to liquidity difficulties; reduction in sales due to shortages of
materials we purchase from our suppliers; reduction in research and development efforts and expenditures by our
customers; our inability to hedge our currency and raw material risks sufficiently or at commercially reasonable
prices; insolvency of suppliers or customers; inflationary pressures on our supplies or our products; and increased
expenses due to growing global taxation of corporate profits or revenues, including the impact of the Tax Cuts and
Jobs Act (the “2017 Tax Act”). Our operating results in one or more geographic regions may also be affected by
uncertain or changing economic conditions within that region. If economic and market conditions in the U.S. or
Europe, or in emerging markets, weaken further, we may experience material adverse impacts on our business,
financial condition and results of operations.

Our sales and profitability are largely dependent on the sale of drug products delivered by injection and the
packaging of drug products. If the products developed by our customers in the future use another delivery
system, our sales and profitability could suffer.

Our business depends to a substantial extent on customers' continued sales and development of products that are
delivered by injection. If our customers fail to continue to sell, develop and deploy injectable products or we are
unable to develop new products that assist in the delivery of drugs by alternative methods, our sales and profitability
may suffer.

Changes in foreign currency exchange rates could have a material adverse effect on our business and/or
results of operations.

Our business is subject to foreign currency exchange rate fluctuations. Sales outside of the U.S. accounted for 54.1%
of our consolidated net sales in 2017 and we anticipate that sales from international operations will continue to
represent a significant portion of our total sales in the future. In addition, many of our manufacturing facilities and
suppliers are located outside of the U.S. Further, we intend to continue our expansion into emerging and/or faster-
growing markets outside of the U.S. in the future. Virtually all of our international sales, assets and related operating
costs and expenses are earned, valued or incurred in the currency of the local country, primarily the Euro, the
Singapore Dollar (“SGD”), and the Danish Krone. In addition, we are exposed to Japanese Yen (“Yen”), as we
maintain a 25% ownership interest in, and we purchase finished goods and other materials from, Daikyo. We are

also exposed to currencies in emerging market countries, such as the Chinese Yuan, the Indian Rupee, and various
South American currencies. Our consolidated financial statements are presented in USD, and, therefore, we must
translate the reported values of our foreign assets, liabilities, revenues and expenses into USD, which can result in
significant fluctuations in the amount of those assets, liabilities, revenues or expenses. The exchange rates between
these foreign currencies and USD in recent years have fluctuated significantly and may continue to do so in the
future. Increases or decreases in the value of USD compared to these foreign currencies may negatively affect the
value of these items in our consolidated financial statements, which could have a material adverse effect on our
operating results.

In addition to translation risks, we incur currency transaction risk when we or one of our subsidiaries enters into a
purchase or sales transaction in a currency other than that entity's local currency. In order to reduce our exposure to
fluctuations in certain exchange rates, we have entered, and expect to continue to enter, into hedging arrangements,
including the use of financial derivatives. There can be no certainty that we will be able to enter into or maintain
hedges of these currency risks, or that our hedges will be effective, which could have a significant effect on our
financial condition and operating results.

If we are unable to provide comparative value advantages, timely fulfill customer orders, or resist pricing
pressure, we will have to reduce our prices, which may reduce our profit margins.

We compete with several companies across our major product lines. Because of the special nature of these products,
competition is based primarily on product design and performance, although total cost is becoming increasingly
important as pharmaceutical companies continue with aggressive cost-control programs across their operations.
Companies often compete on the basis of price. We aim to differentiate ourselves from our competition by being a
“full-service, value-added” global supplier that is able to provide pre-sale compatibility studies, engineering support,
and other services and sophisticated post-sale technical support on a global basis. However, we face continued
pricing pressure from our customers and competitors. If we are unable to resist or to offset the effects of continued
pricing pressure through our value-added services, improved operating efficiencies and reduced expenditures, or if
we have to reduce our prices, our sales and profitability may suffer.

Consolidation in the pharmaceutical and healthcare industries could adversely affect our future revenues and
operating income.

The pharmaceutical and healthcare industries have experienced a significant amount of consolidation. As a result of
this consolidation, competition to provide goods and services to customers has increased. In addition, group
purchasing organizations and integrated health delivery networks have served to concentrate purchasing decisions
for some customers, which has placed pricing pressure on suppliers. Further consolidation within the industries we
serve could exert additional pressure on the prices of our products.

We are subject to regulation by governments around the world, and if these regulations are not complied
with, existing and future operations may be curtailed, and we could be subject to liability.

The design, development, manufacturing, marketing and labeling of certain of our products and our customers'
products that incorporate our products are subject to regulation by governmental authorities in the U.S., Europe and
other countries, including the U.S. Food and Drug Administration (“FDA”) and the European Medicines Agency.
Complying with governmental regulation can be costly and can result in required modification or withdrawal of
existing products and a substantial delay in the introduction of new products. Failure to comply with applicable
regulatory requirements or failure to obtain regulatory approval for a new product could result in expenses and
actions that could adversely affect our business and financial performance.

Products incorporating our technologies are subject to regulations and extensive approval or clearance
processes, which make the timing and success of new-product commercialization difficult to predict.

The process of obtaining FDA and other required regulatory approvals is expensive and time-consuming.
Historically, most medical devices incorporating our technologies have been subject to the FDA's 510(k) marketing

approval process, which typically lasts from six to nine months. Supplemental or full pre-market approval reviews
require a significantly longer period, delaying commercialization. Pharmaceutical products incorporating our
technologies are subject to the FDA's New Drug Application process, which typically takes a number of years to
complete. Additionally, biotechnology products incorporating our technologies are subject to the FDA's Biologics
License Application process, which also typically takes a number of years to complete. Outside of the U.S., sales of
medical devices and pharmaceutical or biotechnology products are subject to international regulatory requirements
that vary from country to country. The time required to obtain approval for sale internationally may be longer or
shorter than that required for FDA approval.

Changes in the regulation of drug products and devices may increase competitive pressure and adversely
affect our business.

An effect of the governmental regulation of our customers' drug products, devices, and manufacturing processes is
that compliance with regulations makes it difficult to change components and devices produced by one supplier with
those from another supplier, due to the large amount of data and information that customers must generate to
demonstrate that the components and devices are equivalent and pose no additional risk to the patient. The
regulation of our customers' products that incorporate our components and devices has increased over time. If the
applicable regulations were to be modified in a way that reduced the level of data and information needed to prove
equivalency for a change from one supplier's components or devices to those made by another, it is likely that the
competitive pressure would increase and adversely affect our sales and profitability.

If we are not successful in protecting our intellectual property rights, our ability to compete may be affected.

Our patents, trademarks and other intellectual property are important to our business. We rely on patent, trademark,
copyright, trade secret, and other intellectual property laws, as well as nondisclosure and confidentiality agreements
and other methods, to protect our proprietary information, technologies and processes. We also have obligations with
respect to the non-use and non-disclosure of third party intellectual property. We may need to engage in litigation or
similar activities to enforce our intellectual property rights, to protect our trade secrets or to determine the validity
and scope of proprietary rights of others. Any such litigation could require us to expend significant resources and
divert the efforts and attention of our management and other personnel from our business operations. There can be
no assurance that the steps we will take to prevent misappropriation, infringement or other violation of our
intellectual property or the intellectual property of others will be successful. In addition, effective patent, copyright,
trademark and trade secret protection may be unavailable or limited for some of our intellectual property in some
countries. Failure to protect our intellectual property could harm our business and results of operations. In addition,
if relevant and effective patent protection is not available or has expired, we may not be able to prevent competitors
from independently developing products and services similar or duplicative to ours.

Disruption in our manufacturing facilities could have a material adverse effect on our ability to make and sell
products and have a negative impact on our reputation, performance or financial condition.

We have manufacturing sites throughout the world. In some instances, however, the manufacturing of certain
product lines is concentrated in one or only a few of our plants. The functioning of our manufacturing and
distribution assets and systems could be disrupted for reasons either within or beyond our control, including, without
limitation: extreme weather or longer-term climatic changes; natural disasters; pandemic; war; accidental damage;
disruption to the supply of material or services; product quality and safety issues; systems failure; workforce actions;
or environmental contamination. There is a risk that incident management systems in place may prove inadequate
and that any disruption may materially adversely affect our ability to make and sell products and, therefore,
materially adversely affect our reputation, performance or financial condition.

The medical technology industry is very competitive and customer demands and/or new products in the
marketplace could cause a reduction in demand.

The medical technology industry is subject to rapid technological changes, and we face significant competition
across our product lines and in each market in which our products are sold. We face this competition from a wide

range of companies, including large medical device companies, some of which have greater financial and marketing
resources than we do. We also face competition from firms that are more specialized than we are with respect to
particular markets. In some instances, competitors, including pharmaceutical companies, also offer, or are
attempting to develop, alternative therapies for diseases that may be delivered via their own, or without, a medical
device. The development of new or improved products, processes or technologies by other companies (such as
needle-free injection technology) may reduce customer demand for our products or render some of our products or
proposed products obsolete or less competitive. In addition, any failure or inability to meet increased customer
quality expectations could cause a reduction in demand.

Significant developments in U.S. policies could have a material adverse effect on our business and/or results
of operations.

Changes in U.S. social, political, regulatory, and economic conditions, including the impact of the 2017 Tax Act, or
in laws and policies governing foreign trade, manufacturing, development, immigration, and investment could have
an adverse effect on our financial condition, results of operations and cash flows.

Our international sales and operations are subject to risks and uncertainties that vary by country and which
could have a material adverse effect on our business and/or results of operations.

We conduct business in most of the major pharmaceutical markets in the world. Our international operations and our
ability to implement our overall business strategy (including our plan to continue expanding into emerging and/or
faster-growing markets outside of the U.S.) are subject to risks and uncertainties that can vary by country, and
include: transportation delays and interruptions; political and economic instability and disruptions, including the
United Kingdom's referendum on withdrawal from the European Union; imposition of duties and tariffs; import and
export controls; the risks of divergent business expectations or cultural incompatibility inherent in establishing and
maintaining operations in foreign countries; difficulties in staffing and managing multi-national operations; labor
strikes and/or disputes; and potentially adverse tax consequences. Limitations on our ability to enforce legal rights
and remedies with third parties or our joint venture partners outside of the U.S. could also create exposure. In
addition, we may not be able to operate in compliance with foreign laws and regulations, or comply with applicable
customs, currency exchange control regulations, transfer pricing regulations or any other laws or regulations to
which we may be subject, in the event that these laws or regulations change. Any of these events could have an
adverse effect on our international operations in the future by reducing the demand for our products or decreasing
the prices at which we can sell our products, or otherwise have an adverse effect on our financial condition, results
of operations and cash flows.

Disruptions in the supply of key raw materials could adversely impact our operations.

We generally purchase our raw materials and supplies required for the production of our products in the open
market. For reasons of quality assurance, sole source availability or cost effectiveness, many components and raw
materials are available and/or purchased only from a single supplier. Due to the stringent regulations and
requirements of the FDA and other regulatory authorities regarding the manufacture of our products, we may not be
able to quickly establish additional or replacement sources for these components or materials or do so without
excessive cost. As a result, a reduction or interruption in supply, or an inability to secure alternative sources of raw
materials or components, could have a material adverse effect on our business and/or results of operations.

Raw material and energy prices have a significant impact on our profitability. If raw material and/or energy
prices increase, and we cannot pass those price increases on to our customers, our profitability and financial
condition may suffer.

We use three basic raw materials in the manufacture of our products: elastomers (which include synthetic and
natural material), aluminum and plastic. In addition, our manufacturing facilities consume a wide variety of energy
products to fuel, heat and cool our operations. Supply and demand factors, which are beyond our control, generally
affect the price of our raw materials and utility costs. If we are unable to pass along increased raw material prices
and energy costs to our customers, our profitability, and thus our financial condition, may be adversely affected. The

prices of many of these raw materials and utilities are cyclical and volatile. For example, the prices of certain
commodities, particularly petroleum-based raw materials, have in the recent past exhibited rapid changes, affecting
the cost of synthetic elastomers and plastic. While we generally attempt to pass along increased costs to our
customers in the form of sales price increases, historically there has been a time delay between raw material and/or
energy price increases and our ability to increase the prices of our products. In some circumstances, we may not be
able to increase the prices of our products due to competitive pressure and other factors.

If we are not timely or successful in new-product innovation or the development and commercialization of
proprietary multi-component systems, our future revenues and operating income could be adversely affected.

Our growth partly depends on new-product innovation and the development and commercialization of proprietary
multi-component systems for injectable drug administration and other healthcare applications. Product development
and commercialization is inherently uncertain and is subject to a number of factors outside of our control, including
any necessary regulatory approvals and commercial acceptance for the products. The ultimate timing and successful
commercialization of new products and systems requires substantial evaluations of the functional, operational,
clinical and economic viability of our products. In addition, the timely and adequate availability of filling capacity is
essential to both conducting definitive stability trials and the timing of commercialization of customers' products in
CZ vials, syringes and cartridges. Delays, interruptions or failures in developing and commercializing new-product
innovations or proprietary multi-component systems could adversely affect future revenues and operating income. In
addition, adverse conditions may also result in future charges to recognize impairment in the carrying value of our
goodwill and other intangible assets, which could have a material adverse effect on our financial results.

We may not succeed in finding and completing acquisition or other strategic transactions, if any, which could
have an adverse effect on our business and results of operations.

We have historically engaged in acquisition activity and we may in the future engage in acquisitions or other
strategic transactions, such as joint ventures or investments in other entities. We may be unable to identify suitable
targets, opportunistic or otherwise, for acquisitions or other strategic transactions in the future. If we identify a
suitable candidate, our ability to successfully implement the strategic transaction would depend on a variety of
factors including our ability to obtain financing on acceptable terms, and to comply with the restrictions contained in
our debt agreements. Strategic transactions involve risks, including those associated with integrating the operations
or maintaining the operations as separate (as applicable), financial reporting, disparate technologies and personnel of
acquired companies, joint ventures or related companies; managing geographically dispersed operations or other
strategic investments; the diversion of management's attention from other business concerns; the inherent risks in
entering markets or lines of business in which we have either limited or no direct experience; unknown risks; and the
potential loss of key employees, customers and strategic partners of acquired companies, joint ventures or
companies in which we may make strategic investments. We may not successfully integrate any businesses or
technologies we may acquire or strategically develop in the future and may not achieve anticipated revenue and cost
benefits relating to any such strategic transactions. Strategic transactions may be expensive, time consuming and
may strain our resources. Strategic transactions may not be accretive to our earnings and may negatively impact our
results of operations as a result of, among other things, the incurrence of debt, one-time write-offs of goodwill and
amortization expenses of other intangible assets. In addition, strategic transactions that we may pursue could result
in dilutive issuances of equity securities.

Product defects could adversely affect the results of our operations.

The design, manufacture and marketing of pharmaceutical packaging and medical devices involve certain inherent
risks. Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating
to the use of our products can lead to injury or other adverse events. These events could lead to recalls or safety
alerts relating to our products (either voluntary or required by the FDA or similar governmental authorities in other
countries), and could result, in certain cases, in the removal of a product from the market. A recall could result in
significant costs, as well as negative publicity and damage to our reputation that could reduce demand for our
products. Personal injuries relating to the use of our products can also result in product liability claims being brought
against us. In some circumstances, such adverse events could also cause delays in new product approvals.

Our operations must comply with environmental statutes and regulations, and any failure to comply could
result in extensive costs which would harm our business.

The manufacture of some of our products involves the use, transportation, storage and disposal of hazardous or toxic
materials and is subject to various environmental protection and occupational health and safety laws and regulations
in the countries in which we operate. This has exposed us in the past, and could expose us in the future, to risks of
accidental contamination and events of non-compliance with environmental laws. Any such occurrences could result
in regulatory enforcement or personal injury and property damage claims or could lead to a shutdown of some of our
operations, which could have an adverse effect on our business and results of operations. We currently incur costs to
comply with environmental laws and regulations and these costs may become more significant.

A loss of key personnel or highly skilled employees could disrupt our operations.

Our executive officers are critical to the management and direction of our businesses. Our future success depends, in
large part, on our ability to retain these officers and other key employees, including people in technical, marketing,
sales and research positions. Competition for experienced employees, particularly for persons with specialized skills,
can be intense. Our ability to recruit such talent will depend on a number of factors, including compensation and
benefits, work location and work environment. If we cannot effectively recruit and retain qualified executives and
employees, our business could be adversely affected. Although we believe that we will be able to attract and retain
talented personnel and replace key personnel should the need arise, our inability to do so on a timely basis could
disrupt the operations of the unit affected or our overall operations. In addition, because of the complex nature of
many of our products and programs, we are generally dependent on an educated and highly skilled engineering staff
and workforce. Our operations could be disrupted by a shortage of available skilled employees.

The uncertain effects of potential climate change legislation could lead to significantly increased costs.

If legislation or regulations are enacted or promulgated in the U.S., Europe or Asia or any other jurisdictions in
which we do business that limit or reduce allowable greenhouse gas emissions and other emissions, such restrictions
could have a significant effect on our operating and financial decisions, including those involving capital
expenditures to reduce emissions, and our results of operations. Our manufacturing operations may not be able to
operate as planned if we are not able to comply with new legal and regulatory legislation around climate change, or
it may become too costly to operate in a profitable manner. Additionally, suppliers' added expenses could be passed
on to us in the form of higher prices and we may not be able to pass on such expenses to our customers through
price increases.

Healthcare reform may adversely affect our results of operations.

Changes in the U.S. or international healthcare systems, including the Patient Protection and Affordable Care Act
(the “PPACA”), could result in reduced demand for our products, as our sales depend, in part, on the extent to which
pharmaceutical companies and healthcare providers and facilities are reimbursed by government authorities, private
insurers and other third-party payers for the costs of our products. The coverage policies and reimbursement levels
of third-party payers, which can vary among public and private sources, may affect which products customers
purchase and the prices they are willing to pay for these products in a particular jurisdiction. Legislative or
administrative reforms to reimbursement systems in the U.S. (including the possible termination of the PPACA and
potential replacement thereafter with a different system) or abroad (for example, those under consideration in
France, Germany, Italy and the United Kingdom) could significantly reduce reimbursement for our customers'
products, which could in turn reduce the demand for our products.

Moreover, in the coming years, additional changes could be made to global governmental healthcare programs that
could significantly impact the success of our products. We will continue to evaluate the PPACA, as amended, the
implementation of regulations or guidance related to various provisions of the PPACA by federal agencies, the
potential repeal and replacement of the PPACA, as well as trends and changes that may be encouraged by the
legislation and other healthcare legislation globally and that may potentially impact our business over time.

No assurance can be given that we will continue to pay or declare dividends.

We have historically paid dividends. However, there can be no assurance that we will pay or declare dividends in the
future. The actual declaration and payment of future dividends, the amount of any such dividends, and the
establishment of record and payment dates, if any, are subject to determination by our Board of Directors each
quarter after its review of our then-current strategy, applicable debt covenants and financial performance and
position, among other things. Our declaration and payment of future dividends is subject to risks and uncertainties,
including: deterioration of our financial performance or position; inability to declare a dividend in compliance with
applicable laws or debt covenants; an increase in our cash needs or decrease in available cash; and the business
judgment of the Board of Directors that a declaration of a dividend is not in our best interest.

Our results of operations and earnings may not meet guidance or expectations.

We provide public guidance on our expected results of operations for future periods. This guidance is comprised of
forward-looking statements subject to risks and uncertainties, including the risks and uncertainties described in this
Form 10-K and in our other public filings and public statements, and is based necessarily on assumptions we make
at the time we provide such guidance. Our guidance may not always be accurate. If, in the future, our results of
operations for a particular period do not meet our guidance or the expectations of investment analysts or if we
reduce our guidance for future periods, the market price of our common stock could decline significantly.

We are exposed to credit risk on accounts receivable and certain prepayments made in the normal course of
business. This risk is heightened during periods when economic conditions worsen.

A substantial majority of our outstanding trade receivables are not covered by collateral or credit insurance. In
addition, we have made prepayments associated with insurance premiums and other advances in the normal course
of business. While we have procedures to monitor and limit exposure to credit risk on trade receivables and other
current assets, there can be no assurance such procedures will effectively limit our credit risk and avoid losses,
which could have a material adverse effect on our financial condition and operating results.

Unauthorized access to our or our customers' information and systems could negatively impact our business.

We may face certain security threats, including threats to the confidentiality, availability and integrity of our data
and systems. We maintain an extensive network of technical security controls, policy enforcement mechanisms and
monitoring systems in order to address these threats. While these measures are designed to prevent, detect and
respond to unauthorized activity in our systems, certain types of attacks could result in financial or information
losses and/or reputational harm. If we cannot prevent the unauthorized access, release and/or corruption of our or
our customers' confidential, classified or personally identifiable information, our reputation could be damaged, and/
or we could face financial losses.

If we fail to comply with our obligations under our distributorship or license agreements with Daikyo, the
agreements are terminated early or we are unable to renew these agreements on the same or substantially
similar terms, we could lose license rights that are important to our business.

Key value-added and proprietary products and processes are licensed from our affiliate, Daikyo, including but not
limited to, CZ, FluroTec® and B2-coating technologies. Our rights to these products and processes are licensed
pursuant to agreements that expire in 2027. However, if the agreements are terminated early, our business could be
adversely impacted.

ITEM IB. UNRESOLVED STAFF COMMENTS

As of the filing of this Form 10-K, there were no unresolved comments from the Staff of the SEC.

ITEM 2. PROPERTIES

Our corporate headquarters are located at 530 Herman O. West Drive, Exton, Pennsylvania. This building also
houses our North American sales and marketing, administrative support and customer service functions, as well as
laboratories.

The following table summarizes production facilities by segment and geographic region. All facilities shown are
owned except where otherwise noted.

Proprietary Products

European Operations

Asia Pacific Operations

China

Qingpu

India

Sri City
Singapore
Jurong

Denmark

Horsens

England

St. Austell

France

Le Nouvion
Le Vaudreuil

Germany

Eschweiler (1) (2)
Stolberg

Serbia

Kovin

European Operations

England

Bodmin (2)

Contract Analytical Laboratory:
North American Operations

United States
Exton, PA

Contract-Manufactured Products

European Operations

Ireland

Dublin (2)

Manufacturing:
North American Operations

United States

Clearwater, FL
Jersey Shore, PA
Kearney, NE
Kinston, NC
Lititz, PA
Scottsdale, AZ (2)
St. Petersburg, FL (1)

South American Operations

Brazil

Sao Paulo

Mold-and-Die Tool Shop:
North American Operations

United States

Upper Darby, PA

Manufacturing:
North American Operations

United States

Frankfort, IN (2)
Grand Rapids, MI
Phoenix, AZ (2)
Tempe, AZ (2)
Williamsport, PA

Puerto Rico
Cayey

(1) This manufacturing facility is also used for research and development activities.
(2) This facility is leased in whole or in part.

Our Proprietary Products reportable segment leases facilities located in Germany, Israel and New Jersey for research
and development, as well as other activities. Sales offices in various locations are leased under short-term
arrangements.

In October 2014, we announced plans to expand our global manufacturing operations to include a new facility in
Waterford, Ireland, which will produce packaging components for insulin injector cartridges and other high-value
packaging components. The Waterford facility will continue to undergo validation procedures during 2018, with
commercial production expected to begin in the second half of 2018.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company are set forth in this table. Generally, executive officers are elected by the
Board of Directors annually at the regular meeting of the Board of Directors following the Annual Meeting of
Shareholders. Additionally, executive officers may be elected upon hire or due to a promotion.

Name
Annette F. Favorite

Age
53

William J. Federici

Karen A. Flynn

Eric M. Green

Quintin J. Lai

Position
Senior Vice President and Chief Human Resources Officer since October
2015. Prior to joining West, she spent more than 25 years at IBM Corporation,
an information technology services company, in a number of strategic and
global human resources roles. Most recently, she served as Vice President,
Global Talent Management.

Senior Vice President and Chief Financial Officer since joining West in August
2003. Acting Treasurer since January 2017. He was National Industry Director
for Pharmaceuticals of KPMG LLP (accounting firm) from June 2002 until
August 2003 and, prior thereto, an audit partner with Arthur Andersen, LLP.

Senior Vice President and Chief Commercial Officer since January 2016. She
was President, Pharmaceutical Packaging Systems from October 2014 to
January 2016, President, Pharmaceutical Packaging Systems Americas Region
from June 2012 to October 2014, and Vice President, Sales from May 2008 to
June 2012. From 2000 to 2008, she worked in Sales Management, most
recently as Vice President, Global Accounts, for Catalent (formerly a business
segment of Cardinal Health). Prior thereto, she held various positions at West,
including Quality, Research and Development, and Sales.

Chief Executive Officer since April 2015 and President since December 2015.
Prior to joining West, he was Executive Vice President and President of the
Research Markets business unit at Sigma-Aldrich Corporation, a leading life
science and technology company, from 2013 to 2015. From 2009 to 2013, he
served as Vice President and Managing Director, International, where he was
responsible for Asia Pacific and Latin America, and prior thereto, held various
commercial and operational roles.

Vice President, Corporate Development, Strategy and Investor Relations since
January 2016. Prior to joining West, he was Vice President of Investor
Relations and Corporate Strategy at Sigma-Aldrich Corporation from 2012 to
2015. From 2002 to 2012, he served as Managing Director and Senior Equity
Research Analyst of the Life Science Tools and Diagnostic sector at Robert W.
Baird & Company.

Daniel Malone

Vice President and Corporate Controller since August 2011. He was Vice
President of Finance, Pharmaceutical Packaging Systems Americas Region
from September 2008 to August 2011 and Director of Financial and
Management Reporting from October 1999 to September 2008.

George L. Miller

David A. Montecalvo

Eric Resnick

Senior Vice President, General Counsel and Corporate Secretary since joining
West in November 2015. Previously, he served as Senior Vice President,
General Counsel and Corporate Secretary for Sigma-Aldrich Corporation from
2009 to 2015. Prior to working at Sigma-Aldrich, he held senior legal
positions with Novartis AG, a global healthcare company.

Senior Vice President, Global Operations and Supply Chain since September
2016. Prior to joining West, he served in a number of senior leadership roles at
Medtronic plc, including Vice President, Contract Manufacturing Operations,
for the company's Restorative Therapies Group, and Vice President, Business
Operations Integration, where he was responsible for directing and leading the
global operations integration of Covidien plc into Medtronic. Prior thereto, he
held senior operations and product development roles at Urologix, Inc. and
LecTec Corporation.

Vice President and Chief Technology Officer since March 2016. Previously, he
served as Vice President and General Manager of Integrated Packaging and
Delivery within West's Innovation and Technology Team and President
Proprietary Products - Pharmaceutical Delivery Systems from March 2015
until March 2016. He served as Vice President Research and Development and
Self-Injection Systems from March 2014 until March 2015, and Vice President
and General Manager of West's Contract Manufacturing Delivery Devices
division from 2008 until March 2014. Prior thereto, he held various positions
of increasing responsibility since joining The Tech Group in 2001. Prior to
joining West, he held engineering and operating roles with Eastman Kodak
Company and Ortho Clinical Diagnostics.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “WST.” The following
table shows the high and low prices for our common stock as reported by the NYSE, for the periods indicated.

First Quarter
Low
High
$79.06
$88.30
$53.88
$69.59

Second Quarter
High
Low
$77.97
$99.91
$68.42
$77.71

Third Quarter
Low
High
$80.02
$96.81
$71.23
$84.33

Fourth Quarter
Low
High
$89.77
$103.36
$70.17
$86.50

Year

High
$103.36
$86.50

Low
$77.97
$53.88

2017
2016

As of January 31, 2018, we had 880 shareholders of record, which excludes shareholders whose shares were held by
brokerage firms, depositaries and other institutional firms in “street names” for their customers.

Dividends

Our common stock paid a quarterly dividend of $0.12 per share in each of the first three quarters of 2016; $0.13 per
share in the fourth quarter of 2016 and each of the first three quarters of 2017; and $0.14 per share in the fourth
quarter of 2017.

Issuer Purchases of Equity Securities

The following table shows information with respect to purchases of our common stock made during the three
months ended December 31, 2017 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under
the Exchange Act:

Period

October 1 – 31, 2017

November 1 – 30, 2017
December 1 – 31, 2017

Total

Total number of
shares purchased
(1)(2)

Average price
paid per share
(1)(2)

— $

319,590
155,530

475,120

—

100.00
99.65

99.88

Total number of shares
purchased as
part of publicly
announced plans or

Maximum number (or
approximate dollar value)
of shares that may
yet be purchased
under the plans or
programs

(2)

(2) (3)

programs

—

319,500
155,500

475,000

155,500
—

—

(1) Includes 120 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) In December 2016, we announced a share repurchase program authorizing the repurchase of up to

800,000 shares of our common stock from time to time on the open market or in privately-negotiated
transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18. During the fourth
quarter of 2017, we purchased 475,000 shares of our common stock under this program at a cost of
$47.5 million, or an average price of $99.88 per share. During the year ended December 31, 2017, we
purchased 800,000 shares of our common stock under this program at a cost of $74.4 million, or an
average price of $92.96 per share. This share repurchase program expired on December 31, 2017.

(3) In February 2018, we announced a share repurchase program for calendar-year 2018 authorizing the
repurchase of up to 800,000 shares of our common stock from time to time on the open market or in
privately-negotiated transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18.
The number of shares to be repurchased and the timing of such transactions will depend on a variety of
factors, including market conditions. This share repurchase program is expected to be completed by
December 31, 2018.

Performance Graph

The following performance graph compares the cumulative total return to holders of our common stock with the
cumulative total return of the following Standard & Poor's (“S&P”) indices, for the five years ended December 31,
2017: 500, MidCap 400 Index and 400 Health Care Equipment & Supplies Industry.

Cumulative total return to shareholders is measured by dividing total dividends (assuming dividend reinvestment)
plus the per-share price change for the period by the share price at the beginning of the period. The Company's
cumulative shareholder return is based on an investment of $100 on December 31, 2012 and is compared to the
cumulative total return of the S&P indices mentioned above over the period with a like amount invested.

ITEM 6. SELECTED FINANCIAL DATA

FIVE-YEAR SUMMARY
West Pharmaceutical Services, Inc. and Subsidiaries

(in millions, except per share data)
SUMMARY OF OPERATIONS
Net sales
Operating profit
Net income

Net income per share:
Basic (1)
Diluted (2)
Weighted average common shares outstanding
Weighted average shares assuming dilution
Dividends declared per common share

YEAR-END FINANCIAL POSITION
Cash and cash equivalents
Working capital
Total assets
Total invested capital:
Total debt
Total equity
Total invested capital

PERFORMANCE MEASUREMENTS (3)
Gross margin (a)
Operating profitability (b)
Effective tax rate (4)
Return on invested capital (c)
Net debt-to-total invested capital (d)
Research and development expenses
Operating cash flow
Stock price range

2017

2016

2015

2014

2013

1,599.1
228.9
150.7

2.04
1.99
73.9
75.8
0.54

235.9
464.0
1,862.8

197.0
1,279.9
1,476.9

1,509.1
196.8
143.6

1.96
1.91
73.3
75.0
0.50

203.0
400.9
1,716.7

228.6
1,117.5
1,346.1

1,399.8
128.6
95.6

1.33
1.30
72.0
73.8
0.46

274.6
359.4
1,695.1

298.2
1,023.9
1,322.1

32.1%
14.3%
36.4%
10.3%
N/A

33.2%
13.0%
28.7%
10.5%
2.2%

32.6%
9.2%
22.6%
7.6%
2.3%

39.1
263.3
$103.36-77.97

36.8
219.4
$86.50-53.88

34.1
212.4
$64.59-48.66

1,421.4
182.0
127.1

1.79
1.75
70.9
72.8
0.41

255.3
406.6
1,669.7

335.5
956.9
1,292.4

1,368.4
162.4
112.3

1.61
1.57
69.6
71.4
0.39

230.0
413.6
1,670.2

372.1
906.4
1,278.5

31.5%
12.8%
28.0%
10.2%
7.7%

37.3
182.9

31.8%
11.9%
27.4%
9.8%
13.6%
37.9
220.5

$55.29-39.11 $50.60-27.31

(1) Based on weighted average common shares outstanding.

(2) Based on weighted average shares, assuming dilution.

(3) Performance measurements represent indicators commonly used in the financial community. The following

performance measures are not in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”)
and should not be used as a substitute for the comparable U.S. GAAP financial measures. The non-U.S. GAAP
financial measures are included as management uses them in evaluating our results of operations, and believes
that this information provides users with a valuable insight into our overall performance and financial position.

(a) Net sales minus cost of goods and services sold, including applicable depreciation and amortization, divided

by net sales.

(b) Operating profit divided by net sales.
(c) Operating profit multiplied by one minus the effective tax rate divided by average total invested capital.
(d) Net debt (total debt less cash and cash equivalents) divided by total invested capital less cash and cash

equivalents.

(4) As a result of the 2017 Tax Act, the federal statutory rate will be reduced from 35.0% to 21.0% effective for tax
years beginning after December 31, 2017. Please refer to Note 15, Income Taxes, for further discussion of the
2017 Tax Act.

Factors affecting the comparability of the information reflected in the selected financial data:

Net income in 2017 included the impact of a discrete tax charge of $48.8 million related to the 2017 Tax Act
and the impact of changes in enacted international tax rates on previously-recorded deferred tax asset and
liability balances, as well as a tax benefit of $33.1 million associated with our adoption of the guidance issued
by the Financial Accounting Standards Board (“FASB”) regarding share-based payment transactions and a
charge of $11.1 million related to the deconsolidation of our Venezuelan subsidiary.

Net income in 2016 included the impact of restructuring and related charges of $17.4 million (net of $9.0
million in tax), a charge related to the devaluation of the Venezuelan Bolivar of $2.7 million, a pension
curtailment gain of $1.3 million (net of $0.8 million in tax), and a discrete tax charge of $1.0 million.

Net income in 2015 included the impact of a pension settlement charge of $32.0 million (net of $18.4 million in
tax), a charge for executive retirement and related costs of $6.9 million (net of $4.0 million in tax) and a discrete
tax charge of $0.8 million.

Net income in 2014 included the impact of a charge for license costs associated with acquired in-process

research of $0.8 million (net of $0.4 million in tax) and discrete tax charges of $1.8 million.

Net income in 2013 included the impact of a loss on extinguishment of debt of $0.2 million and net discrete tax

charges of $3.6 million.

ITEM 7. 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 our consolidated financial statements
and the accompanying footnotes included in Part II, Item 8 of this Form 10-K. 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 this Form
10-K.

Non-U.S. GAAP Financial Measures

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. We
may also refer to consolidated operating profit and consolidated operating profit margin excluding the effects of
unallocated items. The re-measured results excluding effects from currency translation and excluding the effects of
unallocated items are not in conformity with U.S. GAAP and should not be used as a substitute for the comparable
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.

Our Operations

Our business operations are organized into two reportable segments, Proprietary Products and Contract-
Manufactured Products. Our Proprietary Products reportable segment offers proprietary packaging, containment and
drug delivery products, along with analytical lab services, to biologic, generic and pharmaceutical drug customers.
Our Contract-Manufactured Products reportable segment serves as a fully integrated business, focused on the
design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and
medical device customers. We also maintain partnerships to share technologies and market products with affiliates in
Japan and Mexico.

2017 Financial Performance Summary

Consolidated net sales increased by $90.0 million, or 6.0%, in 2017, including a favorable foreign currency
translation impact of $12.2 million. Excluding foreign currency translation effects, consolidated net sales increased
by $77.8 million, or 5.2%.

Consolidated operating profit increased by $32.1 million, or 16.3%, in 2017, including a favorable foreign currency
translation impact of $1.6 million.

Net income in 2017 was $150.7 million, or $1.99 per diluted share, compared to $143.6 million, or $1.91 per diluted
share, in 2016. Our 2017 results included the impact of a discrete tax charge of $48.8 million, or $0.64 per diluted
share, related to the 2017 Tax Act and the impact of changes in enacted international tax rates on previously-
recorded deferred tax asset and liability balances, a tax benefit of $33.1 million, or $0.44 per diluted share,
associated with our adoption of the guidance issued by the FASB regarding share-based payment transactions, and a
charge of $11.1 million, or $0.15 per diluted share, related to the deconsolidation of our Venezuelan subsidiary. Our
2016 results included the impact of restructuring and related charges of $17.4 million, or $0.23 per diluted share, a
charge related to the devaluation of the Venezuelan Bolivar of $2.7 million, or $0.04 per diluted share, and a discrete
tax charge of $1.0 million, or $0.01 per diluted share. Our 2016 results also included a pension curtailment gain of
$1.3 million, or $0.01 per diluted share.

At December 31, 2017, our cash and cash equivalents balance totaled $235.9 million and our available borrowing
capacity under our $300.0 million multi-currency revolving credit facility (the “Credit Facility”) was $267.5 million.

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 we consider 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.

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

Net Sales

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

($ in millions)

Proprietary Products

Year Ended December 31,

% Change

2017

2016

2015

2017/2016

2016/2015

$ 1,236.9

$ 1,189.9

$ 1,098.3

Contract-Manufactured Products

Intersegment sales elimination

362.5

(0.3)

320.2

(1.0)

Consolidated net sales

$ 1,599.1

$ 1,509.1

302.4
(0.9)
$ 1,399.8

3.9%

13.2%

—

6.0%

8.3%

5.9%

—

7.8%

2017 compared to 2016
Consolidated net sales increased by $90.0 million, or 6.0%, in 2017, including a favorable foreign currency
translation impact of $12.2 million. Excluding foreign currency translation effects, consolidated net sales increased
by $77.8 million, or 5.2%.

Proprietary Products – Proprietary Products net sales increased by $47.0 million, or 3.9%, in 2017, including a
favorable foreign currency translation impact of $8.4 million. Excluding foreign currency translation effects, net
sales increased by $38.6 million, or 3.2%. Proprietary Products sales growth in 2017 has been slower than in 2016,
as customers continued to work down inventory purchased in 2016 mostly to address long production lead-times for
high-value products. Additional production capacity and staffing improved our lead-times, and we began to see
positive growth for customers in the Biologics and Generics market units. Higher sales volume contributed 2.2
percentage points of the increase, and sales price increases contributed 1.0 percentage points of the increase.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $42.3 million, or
13.2%, in 2017, including a favorable foreign currency translation impact of $3.8 million. Excluding foreign
currency translation effects, net sales increased by $38.5 million, or 12.0%, primarily due to the initial commercial
ramp-up of projects that commenced in the latter half of 2016. Higher sales volume contributed 10.8 percentage
points of the increase, and sales price increases contributed 1.2 percentage points of the increase.

2016 compared to 2015
Consolidated net sales increased by $109.3 million, or 7.8%, in 2016, including an unfavorable foreign currency
translation impact of $17.5 million. Excluding foreign currency translation effects, consolidated net sales increased
by $126.8 million, or 9.1%. Consolidated net sales originating in the U.S. in 2016 were $738.3 million, an increase
of 10.6% from 2015. Consolidated net sales generated outside of the U.S. (mainly in Europe) in 2016 were $770.8
million, an increase of 5.2% from 2015. Excluding foreign currency translation effects, consolidated net sales
generated outside of the U.S. in 2016 increased by 7.6%.

Proprietary Products – Proprietary Products net sales increased by $91.6 million, or 8.3%, in 2016, including an
unfavorable foreign currency translation impact of $17.5 million. Excluding foreign currency translation effects, net
sales increased by $109.1 million, or 9.9%, due to growth in our high-value product offerings, including products
sold under our distributorship agreement with Daikyo and our Westar® and FluroTec-coated stoppers and plungers.
An improvement in product mix and higher sales volumes contributed 9.1 percentage points of the increase, and
sales price increases contributed the remainder of the increase.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $17.8 million, or
5.9%, in 2016, primarily due to higher drug delivery and diagnostic product sales.

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

Gross Profit

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

($ in millions)

Proprietary Products:

Gross profit

Gross profit margin

Contract-Manufactured Products:

Gross profit

Gross profit margin

Consolidated gross profit

Consolidated gross profit margin

Year Ended December 31,

% Change

2017

2016

2015

2017/2016

2016/2015

449.0

448.0

404.5

0.2%

10.8%

36.3%

37.7%

36.8%

63.6

17.5%

512.6

32.1%

53.1

16.6%

501.1

33.2%

51.3

17.0%

455.8

32.6%

19.8%

3.5%

2.3%

9.9%

2017 compared to 2016
Consolidated gross profit increased by $11.5 million, or 2.3%, in 2017, including a favorable foreign currency
translation impact of $3.3 million. Consolidated gross profit margin decreased by 1.1 margin points in 2017.

Proprietary Products – Proprietary Products gross profit increased by $1.0 million, or 0.2%, in 2017, including a
favorable foreign currency translation impact of $2.6 million. Proprietary Products gross profit margin decreased by
1.4 margin points in 2017, as production efficiencies and modest price increases were more than offset by increased
material labor and overhead costs.

Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $10.5 million, or
19.8%, in 2017, including a favorable foreign currency translation impact of $0.7 million. Contract-Manufactured
Products gross profit margin increased by 0.9 margin points in 2017, as sales price increases, a favorable mix of
products sold, higher sales volume, and production efficiencies were partially offset by increased labor, overhead,
and depreciation costs.

2016 compared to 2015
Consolidated gross profit increased by $45.3 million, or 9.9%, in 2016, including an unfavorable foreign currency
translation impact of $5.6 million. Consolidated gross profit margin increased by 0.6 margin points in 2016.

Proprietary Products – Proprietary Products gross profit increased by $43.5 million, or 10.8%, in 2016, including
an unfavorable foreign currency translation impact of $5.6 million. Proprietary Products gross profit margin
increased by 0.9 margin points in 2016, as product mix improvements, production efficiencies, and sales price
increases were partially offset by increased labor and overhead costs.

Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $1.8 million, or
3.5%, in 2016. Contract-Manufactured Products gross profit margin decreased by 0.4 margin points in 2016, as
increased labor and overhead costs were partially offset by a favorable mix of product sales and lower raw material
costs.

Research and Development (“R&D”) Costs

The following table presents R&D costs, consolidated and by reportable segment:

Year Ended December 31,

% Change

($ in millions)

Proprietary Products

Contract-Manufactured Products

Consolidated R&D costs

2017

2016

2015

2017/2016

2016/2015

39.1

—

39.1

36.8

—

36.8

34.1

—

34.1

6.3%

—

6.3%

7.9%

—

7.9%

2017 compared to 2016
Consolidated R&D costs increased by $2.3 million, or 6.3%, in 2017, due to continued investment in self-injection
systems development and formulation development.

2016 compared to 2015
Consolidated R&D costs increased by $2.7 million, or 7.9%, in 2016, due to continued investment in advanced
delivery and container systems, process technology, and formulation development.

All of the R&D costs incurred during 2017 and 2016 related to Proprietary Products.

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

The following table presents SG&A costs, consolidated and by reportable segment and corporate:

Year Ended December 31,

% Change

2017

2016

2015

2017/2016

2016/2015

($ in millions)

Proprietary Products

Contract-Manufactured Products

Corporate

176.6

168.3

159.4

15.4

50.6

15.2

56.3

15.8

57.8

Consolidated SG&A costs

242.6

239.8

233.0

SG&A as a % of net sales

15.2%

15.9%

16.6%

4.9 %

1.3 %

(10.1)%

1.2 %

5.6 %

(3.8)%

(2.6)%

2.9 %

2017 compared to 2016
Consolidated SG&A costs increased by $2.8 million, or 1.2%, in 2017, including the impact of foreign currency
translation, which increased SG&A costs by $1.2 million.

Proprietary Products – Proprietary Products SG&A costs increased by $8.3 million, or 4.9%, in 2017, due to
increases in compensation costs, primarily related to headcount and merit increases. Foreign currency translation
increased Proprietary Products SG&A costs by $1.2 million.

Contract-Manufactured Products – Contract-Manufactured Products SG&A costs increased by $0.2 million, or
1.3%, in 2017, due to an increase in incentive compensation and travel costs.

Corporate – Corporate’s SG&A costs decreased by $5.7 million, or 10.1%, in 2017, due to decreases in U.S.
pension costs and stock-based compensation expense, partially offset by increases in headcount and outside services.

2016 compared to 2015
Consolidated SG&A costs increased by $6.8 million, or 2.9%, in 2016, including the impact of foreign currency
translation, which decreased SG&A costs by $1.7 million.

Proprietary Products – Proprietary Products SG&A costs increased by $8.9 million, or 5.6%, in 2016, due to
increases in compensation costs primarily related to merit increases and information system maintenance costs.
Foreign currency translation decreased Proprietary Products SG&A costs by $1.7 million.

Contract-Manufactured Products – Contract-Manufactured Products SG&A costs decreased by $0.6 million, or
3.8%, in 2016, due to decreases in compensation and travel costs.

Corporate – Corporate’s SG&A costs decreased by $1.5 million, or 2.6%, in 2016, as a decrease in incentive
compensation costs was partially offset by an increase in U.S. pension costs and stock-based compensation expense.

Other Expense

The following table presents other income and expense items, consolidated and by reportable segment and
unallocated items:

Expense (income)

($ in millions)
Proprietary Products

Contract-Manufactured Products

Corporate

Unallocated items

Year Ended December 31,

2017

2016

2015

(8.9) $

(0.1)

11.1

1.0
(0.3)
—

27.0

27.7

(1.2)
—

—

61.3

60.1

Consolidated other expense

2.0

Other income and expense items, consisting of foreign exchange transaction gains and losses, gains and losses on
the sale of fixed assets, development and licensing income, contingent consideration, and miscellaneous income and
charges, are generally recorded within segment results.

2017 compared to 2016
Consolidated other expense decreased by $25.7 million in 2017.

Proprietary Products – Proprietary Products other (income) expense changed by $9.9 million in 2017, primarily as
we recorded income of $9.1 million attributable to the reimbursement of certain costs related to a technology that we
subsequently licensed to a third party.

Contract-Manufactured Products – Contract-Manufactured Products other income decreased by $0.2 million in
2017, due to gains on the sale of fixed assets recorded in 2016, partially offset by foreign exchange transaction gains
recorded in 2017.

Corporate – Corporate other income increased by $0.1 million in 2017.

Unallocated items – During 2017, as a result of the continued deterioration of conditions in Venezuela as well as
our continued reduced access to USD settlement controlled by the Venezuelan government, we recorded a charge of
$11.1 million related to the deconsolidation of our Venezuelan subsidiary, following our determination that we no
longer met the U.S. GAAP criteria for control of that subsidiary. Please refer to Note 14, Other Expense, for further
discussion of these items.

2016 compared to 2015
Consolidated other expense decreased by $32.4 million in 2016.

Proprietary Products – Proprietary Products other expense increased by $2.2 million in 2016, primarily due to
increased contingent consideration and foreign exchange transaction losses.

Contract-Manufactured Products – Contract-Manufactured Products other income increased by $0.3 million in
2016, due to gains on the sale of fixed assets recorded in 2016.

Unallocated items – During 2016, we recorded $26.4 million in restructuring and related charges, consisting of $8.9
million for severance charges, $10.0 million for a non-cash asset write-down associated with the discontinued use of
a trademark, $7.3 million for non-cash asset write-downs associated with the discontinued use of a patent and certain
equipment, and $0.2 million for other charges. In addition, during 2016, we recorded a pension curtailment gain of
$2.1 million in connection with our decision to freeze both our U.S. qualified and non-qualified defined benefit
pension plans as of January 1, 2019, and recorded a charge of $2.7 million related to the devaluation of the
Venezuelan Bolivar from the previously-prevailing official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to
USD. Please refer to Note 14, Other Expense, for further discussion of these items.

Operating Profit

The following table presents adjusted operating profit, consolidated and by reportable segment, corporate and
unallocated items:

($ in millions)

Proprietary Products

Contract-Manufactured Products

Corporate

Adjusted consolidated operating profit

240.0

Adjusted consolidated operating profit margin

Unallocated items

Consolidated operating profit

Consolidated operating profit margin

15.0%

(11.1)

228.9

14.3%

Year Ended December 31,
2016

2015

2017

242.2

241.9

212.2

48.3

(50.5)

38.2
(56.3)
223.8

14.8%
(27.0)
196.8

13.0%

35.5
(57.8)
189.9

13.6%
(61.3)
128.6

9.2%

% Change

2017/2016

2016/2015

0.1 %

26.4 %

(10.3)%

7.2 %

14.0 %

7.6 %

(2.6)%

17.9 %

16.3 %

53.0 %

2017 compared to 2016
Consolidated operating profit increased by $32.1 million, or 16.3%, in 2017, including a favorable foreign currency
translation impact of $1.6 million.

Proprietary Products – Proprietary Products operating profit increased by $0.3 million, or 0.1%, in 2017, including
a favorable foreign currency translation impact of $0.9 million, due to the factors described above.

Contract-Manufactured Products – Contract-Manufactured Products operating profit increased by $10.1 million,
or 26.4%, in 2017, including a favorable foreign currency translation impact of $0.7 million, due to the factors
described above.

Corporate – Corporate costs decreased by $5.8 million, or 10.3%, in 2017, due to the factors described above.

Unallocated items – Please refer to the Other Expense section for details.

Excluding the unallocated items, our adjusted consolidated operating profit margin increased by 0.2 margin points in
2017.

2016 compared to 2015
Consolidated operating profit increased by $68.2 million, or 53.0%, in 2016, including an unfavorable foreign
currency translation impact of $4.0 million.

Proprietary Products – Proprietary Products operating profit increased by $29.7 million, or 14.0%, in 2016,
including an unfavorable foreign currency translation impact of $4.0 million, due to the factors described above.

Contract-Manufactured Products – Contract-Manufactured Products operating profit increased by $2.7 million, or
7.6%, in 2016, due to the factors described above.

Corporate – Corporate costs decreased by $1.5 million, or 2.6%, in 2016, due to the factors described above.

Unallocated items – Please refer to the Other Expense section for details.

Excluding the unallocated items, our adjusted consolidated operating profit margin increased by 1.2 margin points in
2016.

Interest Expense, Net

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

($ in millions)

Interest expense

Capitalized interest

Interest income

Interest expense, net

Year Ended December 31,
2016

2015

2017

% Change

2017/2016

2016/2015

10.5

11.7

(2.7)

(1.3)

(3.6)

(1.1)

6.5

7.0

15.6
(1.5)
(1.6)
12.5

(10.3)%

(25.0)%

18.2 %

(7.1)%

(25.0)%

140.0 %

(31.3)%

(44.0)%

2017 compared to 2016
Interest expense, net, decreased by $0.5 million, or 7.1%, in 2017, due to lower interest expense resulting from less
debt outstanding during 2017, partially offset by a decrease in capitalized interest.

2016 compared to 2015
Interest expense, net, decreased by $5.5 million, or 44.0%, in 2016, due to lower interest expense resulting from less
debt outstanding during 2016 and increases in capitalized interest resulting from ongoing capital projects, including
the construction of our new facility in Waterford, Ireland.

Income Taxes

The provision for income taxes was $80.9 million, $54.4 million, and $26.3 million for the years 2017, 2016, and
2015, respectively, and the effective tax rate was 36.4%, 28.7%, and 22.6%, respectively.

During 2017, we recorded a discrete tax charge of $48.8 million related to the 2017 Tax Act and the impact of
changes in enacted international tax rates on previously-recorded deferred tax asset and liability balances, as well as
a tax benefit of $33.1 million associated with our adoption of the guidance issued by the FASB regarding share-
based payment transactions. Please refer to Note 15, Income Taxes, for further discussion of the 2017 Tax Act.

During 2016, we recorded a tax benefit of $9.0 million in connection with restructuring and related charges of $26.4
million, a discrete tax charge of $0.8 million related to the pension curtailment gain of $2.1 million, and a discrete
tax charge of $1.0 million resulting from the impact of changes in enacted tax rates on our previously-recorded
deferred tax asset and liability balances.

During 2015, we recorded a tax benefit of $18.4 million in connection with the pension settlement charge of $50.4
million, a tax benefit of $4.0 million in connection with the $10.9 million charge for executive retirement and related
costs of $10.9 million, and a discrete tax charge of $0.8 million resulting from the impact of a change in the enacted
tax rate in the United Kingdom on our previously-recorded deferred tax asset balances.

Please refer to Note 15, Income Taxes, for further discussion of our income taxes.

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 was $9.2 million, $8.2 million, and $5.8 million for the years 2017, 2016, and 2015, respectively. Equity
in net income of affiliated companies increased by $1.0 million, or 12.2%, in 2017, due to the impact of gains on the
sale of investment securities by Daikyo, partially offset by foreign exchange transaction losses in Mexico. Equity in
net income of affiliated companies increased by $2.4 million, or 41.4%, in 2016, due to favorable operating results
at Daikyo. Please refer to Note 5, Affiliated Companies, for further discussion of our affiliated companies.

Net Income

Net income in 2016 was $143.6 million, or $1.91 per diluted share, compared to $95.6 million, or $1.30 per diluted
share, in 2015. Our 2016 results included the impact of restructuring and related charges of $17.4 million (net of
$9.0 million in tax), a charge related to the devaluation of the Venezuelan Bolivar of $2.7 million, a pension
curtailment gain of $1.3 million (net of $0.8 million in tax), and a discrete tax charge of $1.0 million.

Net income in 2015 was $95.6 million, or $1.30 per diluted share, compared to $127.1 million, or $1.75 per diluted
share, in 2014. Our 2015 results included the impact of a pension settlement charge of $32.0 million (net of $18.4
million in tax), a charge for executive retirement and related costs of $6.9 million (net of $4.0 million in tax) and a
discrete tax charge of $0.8 million.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following table presents cash flow data for the years ended December 31:

($ in millions)
Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net Cash Provided by Operating Activities

2017

2016

2015

263.3
$
(133.6) $
(109.0) $

219.4
$
(175.8) $
(113.9) $

212.4
(129.5)
(41.5)

2017 compared to 2016
Net cash provided by operating activities increased by $43.9 million in 2017, due to improved operating results.

2016 compared to 2015
Net cash provided by operating activities increased by $7.0 million in 2016, due to improved operating results and a
decrease in pension plan contributions, partially offset by higher working capital requirements.

Net Cash Used in Investing Activities

2017 compared to 2016
Net cash used in investing activities decreased by $42.2 million in 2017, mostly due to a $39.4 million decrease in
capital spending due to the completion of several major projects, including certain components of our new facility in
Waterford, Ireland. The Waterford facility will continue to undergo validation procedures during 2018, with
commercial production expected to begin in the second half of 2018.

2016 compared to 2015
Net cash used in investing activities increased by $46.3 million in 2016, due to an increase in capital spending, to
$170.2 million, and our $8.4 million cost-method investment in an intradermal drug delivery company. The capital
spending for 2016 consisted of spending for new products, expansion activity, and emerging markets, including the
construction of our new facility in Waterford, Ireland.

Net Cash Used in Financing Activities

2017 compared to 2016
Net cash used in financing activities decreased by $4.9 million in 2017, due to a decrease in net debt repayments,
partially offset by an increase in purchases under our share repurchase programs.

2016 compared to 2015
Net cash used in financing activities increased by $72.4 million in 2016, due to net debt repayments of $69.8
million, which included the maturity of our Euro note B, and $52.2 million in treasury share purchases under the
repurchase program announced in December 2015, partially offset by increases in proceeds and excess tax benefits
from employee stock plans.

We paid cash dividends totaling $39.1 million ($0.53 per share), $35.8 million ($0.49 per share), and $32.4 million
($0.45 per share) during 2017, 2016, and 2015, respectively.

Liquidity and Capital Resources

The table below presents selected liquidity and capital measures as of:

($ in millions)

Cash and cash equivalents

Working capital

Total debt

Total equity

Net debt-to-total invested capital

December 31,
2017

December 31,
2016

235.9

464.0

197.0

1,279.9

N/A

203.0

400.9

228.6

1,117.5

2.2%

Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased.
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. Net debt and total invested
capital are non-U.S. GAAP financial measures that should not be used as a substitute for the comparable U.S. GAAP
financial measures. The non-U.S. GAAP financial measures are incorporated into our discussion and analysis as
management believes that this information provides users with a valuable insight into our overall performance and
financial position.

Cash and cash equivalents – Our cash and cash equivalents balance at December 31, 2017 consisted of cash held
in depository accounts with banks around the world and cash invested in high-quality, short-term investments. The
cash and cash equivalents balance at December 31, 2017 included $100.5 million of cash held by subsidiaries within
the U.S., and $135.4 million of cash held by subsidiaries outside of the U.S. During 2017, we repatriated $63.0

million of cash held by non-U.S. subsidiaries. We do not expect any additional tax costs associated with the
repatriation. In response to the 2017 Tax Act, we reevaluated our position regarding permanent reinvestment of
foreign subsidiary earnings and profits through 2017 (with the exception of China and Mexico, both of which will
remain permanently reinvested) and elected to include in our provision for income taxes for the year ended
December 31, 2017 an estimated liability of $9.8 million related to foreign withholding taxes and state income taxes
that will be incurred upon the distribution of those foreign subsidiary earnings and profits to the U.S. at a future date.
Please refer to Note 15, Income Taxes, for discussion of the undistributed earnings of our China and Mexico entities
at December 31, 2017.

Working capital - Working capital at December 31, 2017 increased by $63.1 million, or 15.7%, as compared to
December 31, 2016, including an increase of $24.7 million due to foreign currency translation. Excluding the impact
of currency exchange rates, cash and cash equivalents, accounts receivable, inventories, and total current liabilities
increased by $20.7 million, $39.7 million, $3.6 million, and $23.8 million, respectively. The increase in accounts
receivable was due to increased sales activity and longer payment terms in 2017. The increase in current liabilities
was due to an increase in accounts payable and other current liabilities, partially offset by the payment of our $33.1
million five-year term loan due January 2018.

Debt and credit facilities - The $31.6 million decrease in total debt at December 31, 2017, as compared to
December 31, 2016, resulted from net debt repayments of $34.9 million, which included the payment of our $33.1
million five-year term loan due January 2018, partially offset by foreign currency rate fluctuations of $3.1 million
and a reduction of $0.2 million in unamortized debt issuance costs.

Our sources of liquidity include our Credit Facility. At December 31, 2017, we had $29.6 million in outstanding
long-term borrowings under this facility, of which $4.4 million was denominated in Yen and $25.2 million was
denominated in Euro. These borrowings, together with outstanding letters of credit of $2.9 million, resulted in a
borrowing capacity available under our Credit Facility of $267.5 million at December 31, 2017. We do not expect
any significant limitations on our ability to access this source of funds. Please refer to Note 8, Debt, for further
discussion of our Credit Facility.

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 December 31, 2017, we were in compliance with all of
our debt covenants, and we expect to continue to be in compliance with the terms of these agreements throughout
2018.

We believe that cash on hand and cash generated from operations, together with availability under our 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

The following table summarizes our commitments and contractual obligations at December 31, 2017. These
obligations are not expected to have a material impact on liquidity.

($ in millions)
Purchase obligations (1)
Debt (including unamortized debt issuance costs)
Interest on debt and interest rate swaps (2)
Operating lease obligations
Other long-term liabilities (3)
Total contractual obligations (4)

Payments Due By Period

Total

Less than 1
year

1 - 3
years

3 - 5
years

More than
5 years

75.6 $
197.7
48.9
79.1
11.5
412.8 $

5.3 $
—
6.8
13.2
0.8
26.1 $

18.3 $
29.7
13.5
19.9
1.9
83.3 $

19.5 $
42.0
12.3
12.9
2.8
89.5 $

32.5
126.0
16.3
33.1
6.0
213.9

(1) Our business creates a need to enter into various commitments with suppliers. In accordance with U.S. GAAP,
these purchase obligations are not reflected in the accompanying consolidated balance sheets. These purchase
commitments do not exceed our projected requirements and are in the normal course of business.

(2) For fixed-rate long-term debt, interest was based on principal amounts and fixed coupon rates at year-end.
Future interest payments on variable-rate debt were calculated using principal amounts and the applicable
ending interest rate at year-end. Interest on fixed-rate derivative instruments was based on notional amounts and
fixed interest rates contractually obligated at year-end.

(3) Represents acquisition-related contingencies. In connection with certain business acquisitions, we agreed to

make payments to the sellers if and when certain operating milestones are achieved, such as sales and operating
income targets.

(4) This table does not include obligations pertaining to pension and postretirement benefits because the actual
amount and timing of future contributions may vary significantly depending upon plan asset performance,
benefit payments, and other factors. Contributions to our plans are expected to be $2.5 million in 2018. See
Note 13, Benefit Plans, for estimated benefit payments over the next ten years.

Reserves for uncertain tax positions - The table above does not include $3.2 million of total gross unrecognized tax
benefits as of December 31, 2017. Due to the high degree of uncertainty regarding the timing of potential cash
flows, we cannot reasonably estimate the settlement periods for amounts which may be paid.

Letters of credit - We have letters of credit totaling $2.9 million supporting the reimbursement of workers'
compensation and other claims paid on our behalf by insurance carriers. Our accrual for insurance obligations was
$3.8 million at December 31, 2017, of which $0.9 million is in excess of our deductible and, therefore, is
reimbursable by the insurance company.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2017, 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's discussion and analysis addresses consolidated financial statements that are prepared in accordance
with U.S. GAAP. The application of these principles requires management to make estimates and assumptions, some
of which are subjective and complex, that affect the amounts reported in the consolidated financial statements. We
believe the following accounting policies and estimates are critical to understanding and evaluating our results of
operations and financial position:

Revenue Recognition: Revenue is recognized when persuasive evidence of a sales arrangement exists, title and risk
of loss have transferred, the selling price is fixed or determinable, and collectability is reasonably assured.
Generally, sales are recognized upon shipment or upon delivery to our customers' site, based upon shipping terms or
legal requirements. Some customers receive pricing rebates upon attaining established sales volumes. We record
rebate costs when sales occur based on our assessment of the likelihood that the required volumes will be attained.
We also maintain an allowance for product returns, as we believe that we are able to reasonably estimate the amount
of returns based on our substantial historical experience.

(income) expense for the difference between the asset's carrying value and its fair value. For assets held and used in
the business, management determines fair value using estimated future cash flows to be derived from the asset,
discounted to a net present value using an appropriate discount rate. For assets held for sale or for investment
purposes, management determines fair value by estimating the proceeds to be received upon sale of the asset, less
disposition costs. During 2016, as part of our restructuring plan, we recorded within other expense a $4.5 million
non-cash asset write-down associated with the discontinued use of certain equipment.

Impairment of Goodwill and Other Intangible Assets: Goodwill and indefinite-lived intangible assets are tested
for impairment at least annually, following the completion of our annual budget and long-range planning process, or
whenever circumstances indicate that the carrying value of these assets may not be recoverable. Goodwill is tested
for impairment at the reporting unit level, which is the same as, or one level below, our operating segments. In
January 2017, the FASB issued guidance which removes the second step of the goodwill impairment test. A
goodwill impairment charge will now be the amount by which a reporting unit's carrying amount exceeds its fair
value, not to exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. We
adopted this guidance as of January 1, 2017, on a prospective basis. Considerable management judgment is
necessary to estimate fair value. Amounts and assumptions used in our goodwill impairment test, such as future
sales, future cash flows and long-term growth rates, are consistent with internal projections and operating plans.
Amounts and assumptions used in our goodwill impairment test are also largely dependent on the continued sale of
drug products delivered by injection and the packaging of drug products, as well as our timeliness and success in
new-product innovation or the development and commercialization of proprietary multi-component systems.
Changes in the estimate of fair value, including the estimate of future cash flows, could have a material impact on
our future results of operations and financial position. Recent accounting guidance also allows entities to first assess
qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors, and
overall financial performance, to determine whether it is necessary to perform the quantitative goodwill impairment
test. As each of our reporting units had a fair value in excess of its carrying value of at least 180% within our 2016
annual impairment test, we elected to follow this guidance for our 2017 annual impairment test. Based upon our
assessment, we determined that it was not more likely than not that the fair value of each of our reporting units was
less than its carrying amount and determined that it was not necessary to perform the quantitative goodwill
impairment test in 2017.

At December 31, 2015, a trademark had been determined to have an indefinite life and, therefore, was not subject to
amortization. During 2016, as part of our restructuring plan, we recorded within other expense a $10.0 million non-
cash asset write-down associated with the discontinued use of this trademark.

Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, and
reviewed for impairment whenever circumstances indicate that the carrying value of these assets may not be
recoverable. During 2016, as part of our restructuring plan, we recorded within other expense a $2.8 million non-
cash asset write-down associated with the discontinued use of a patent.

Employee Benefits: We maintain funded and unfunded defined benefit pension plans in the U.S. and a number of
other countries that cover employees who meet eligibility requirements. In addition, we sponsor postretirement
benefit plans which provide healthcare benefits for eligible employees who retire or become disabled. The
measurement of annual cost and obligations under these defined benefit postretirement plans is subject to a number
of assumptions, which are specific for each of our U.S. and foreign plans. The assumptions, which are reviewed at
least annually, are relevant to both the plan assets (where applicable) and the obligation for benefits that will
ultimately be provided to our employees. Two of the most critical assumptions in determining pension and retiree
medical plan expense are the discount rate and expected long-term rate of return on plan assets. Other assumptions
reflect demographic factors such as retirement age, rates of compensation increases, mortality and turnover and are
evaluated periodically and updated to reflect our actual experience. For our funded plans, we consider the current
and expected asset allocations of our plan assets, as well as historical and expected rates of return in estimating the
long-term rate of return on plan assets. Under U.S. GAAP, differences between actual and expected results are
generally accumulated in other comprehensive income (loss) as actuarial gains or losses and subsequently amortized
into earnings over future periods.

Changes in key assumptions could have a material impact on our future results of operations and financial position.
We estimate that every 25-basis point reduction in our long-term rate of return assumption would increase pension
expense by $0.4 million, and every 25-basis point reduction in our discount rate would increase pension expense by
$0.5 million. A decrease in the discount rate increases the present value of benefit obligations. Our net pension
underfunded balance at December 31, 2017 was $48.5 million, compared to $69.8 million at December 31, 2016.
Our underfunded balance for other postretirement benefits was $7.1 million at December 31, 2017, compared to
$8.0 million at December 31, 2016.

Income Taxes: We estimate income taxes payable based upon current domestic and international tax legislation. In
addition, deferred income tax assets and liabilities are established to recognize differences between the tax basis and
financial statement carrying values of assets and liabilities. We maintain valuation allowances where it is more likely
than not that all or a portion of a deferred tax asset will not be realized. The recoverability of tax assets is subject to
our estimates of future profitability, generally at the respective subsidiary company and country level. Changes in
tax legislation, business plans and other factors may affect the ultimate recoverability of tax assets or final tax
payments, which could result in adjustments to tax expense in the period such change is determined.

When accounting for uncertainty in income taxes recognized in our financial statements, we apply a more-likely-
than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return.

Contingent Consideration

The fair value of the contingent consideration liability related to the SmartDose® technology platform (the
“SmartDose contingent consideration”) was initially determined 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 (income) expense in our 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 the SmartDose technology platform 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 SmartDose contingent consideration.

See Note 1, Summary of Significant Accounting Policies and Note 2, New Accounting Standards, to our consolidated
financial statements for additional information on our significant accounting policies, recently adopted accounting
standards, and accounting standards issued but not yet adopted.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risk factors such as fluctuating interest rates, foreign currency exchange rates and
increasing commodity prices. These risk factors can impact our results of operations, cash flows and financial
position. To manage these risks, we periodically enter into derivative financial instruments such as interest rate
swaps, call options and forward exchange contracts for periods consistent with and for notional amounts equal to or
less than the underlying exposures. In accordance with Company policy, derivative financial instruments are not
used for investment or trading purposes.

Foreign Currency Exchange Risk

Sales outside of the U.S. accounted for 54.1% of consolidated net sales in 2017. Virtually all of these sales and
related operating costs are denominated in the currency of the local country and translated into USD for consolidated
reporting purposes. Although the majority of the assets and liabilities of these subsidiaries are denominated in the
functional currency of the subsidiary, they may also hold assets or liabilities denominated in other currencies. These
items may give rise to foreign currency transaction gains and losses. As a result, our results of operations and

financial position are exposed to changing currency exchange rates. We periodically use forward contracts to hedge
certain transactions or to manage month-end balance sheet exposures on cross-currency intercompany loans.

We have designated our €21.0 million Euro-denominated borrowings under our Credit Facility as a hedge of our net
investment in certain European subsidiaries. We also have ¥500.0 million in Yen-denominated borrowings under our
Credit Facility which has been designated as a hedge of our net investment in Daikyo. At December 31, 2017, a
cumulative foreign currency translation loss on these hedges of $1.4 million (net of tax of $0.2 million) was
recorded within accumulated other comprehensive loss.

Interest Rate Risk

As a result of our normal borrowing activities, we have long-term debt with both fixed and variable interest rates.
Long-term debt consists of senior notes and revolving credit facilities. Our exposures to fluctuations in interest rates
are managed to the extent considered necessary by entering into interest rate swap agreements.

The following table summarizes our interest rate risk-sensitive instruments:

($ in millions)
Long-Term Debt:
U.S. dollar denominated

Average interest rate - variable

U.S. dollar denominated

Average interest rate - fixed

Euro denominated

Average interest rate - variable

Yen denominated

Average interest rate - variable

Commodity Price Risk

2018

2019

2020

2021

2022 Thereafter

Carrying
Value

Fair
Value

0.1 $

0.1

42.0

3.7%

126.0

168.0

171.8

3.9%

25.2

4.4

$ 0.1

25.2

1.0%
4.4
1.0%

Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum
refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain
clauses that provide for surcharges related to fluctuations in crude oil prices. In recent years, raw material costs have
fluctuated due to crude oil price fluctuations. We expect this volatility to continue. We will continue to pursue
pricing and hedging strategies, and ongoing cost control initiatives to offset the effects on gross profit.

In November 2016, we purchased a series of call options for a total of 96,525 barrels of crude oil to mitigate our
exposure to such oil-based surcharges and protect operating cash flows with regards to a portion of our forecasted
elastomer purchases through November 2017. With these contracts in 2016, the gain recorded in cost of goods and
services sold related to these options was less than $0.1 million. During 2017, the loss recorded in cost of goods and
services sold related to these options was $0.2 million.

In November 2017, we purchased a series of call options for a total of 125,166 barrels of crude oil through May
2019. During 2017, the loss recorded in cost of goods and services sold related to these options was less than $0.1
million.

As of December 31, 2017, we had outstanding contracts to purchase 115,701 barrels of crude oil, at a strike price of
$70 per barrel.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENTS OF INCOME
West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, 2017, 2016 and 2015
(in millions, except per share data)

Net sales

Cost of goods and services sold

Gross profit

Research and development

Selling, general and administrative expenses

Other expense (Note 14)

Operating profit

Interest expense

Interest income

Income before income taxes

Income tax expense

Equity in net income of affiliated companies

Net income

Net income per share:

Basic

Diluted

2017

2016

2015

1,599.1

1,509.1

1,399.8

1,086.5

1,008.0

512.6

39.1

242.6

2.0

228.9
7.8

1.3

222.4

80.9

9.2

501.1

36.8

239.8

27.7

196.8
8.1

1.1

189.8

54.4

8.2

150.7

143.6

2.04

1.99

1.96

1.91

944.0

455.8

34.1

233.0

60.1

128.6
14.1

1.6

116.1

26.3

5.8

95.6

1.33

1.30

72.0

73.8

Weighted average shares outstanding:

Basic

Diluted

73.9

75.8

73.3

75.0

Dividends declared per share

0.54

0.50

0.46

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, 2017, 2016 and 2015
(in millions)

Net income

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

Defined benefit pension and other postretirement plans:

Prior service credit arising during period, net of tax of $1.1 and
$0.3

Net actuarial gain (loss) arising during period, net of tax of $1.3,

$(4.8) and $(6.0)

Settlement effects arising during period, net of tax of $1.1 and
$18.7
Less: amortization of actuarial loss, net of tax of $0.5, $1.2 and

$1.6

Less: amortization of prior service credit, net of tax of $(0.5),

$(0.5) and $(0.5)

Less: amortization of transition obligation

Net (loss) gain on investment securities, net of tax of $(2.5), $(0.1)
and $0.4

Net (loss) gain on derivatives, net of tax of $(0.1), $0.1 and $0.8

Other comprehensive income (loss), net of tax

Comprehensive income

2017

2016

2015

150.7

143.6

95.6

68.8

(18.1)

(70.3)

—

6.3

—

3.6

(3.5)
—

(4.7)
(1.0)
69.5

220.2

1.9

(11.1)

2.0

2.2

(0.9)
0.1

(0.2)
(0.1)
(24.2)
119.4

0.4

(9.3)

31.7

2.9

(0.8)
0.1

0.7

1.2
(43.4)
52.2

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED BALANCE SHEETS
West Pharmaceutical Services, Inc. and Subsidiaries at December 31, 2017 and 2016
(in millions, except per share data)

ASSETS
Current assets:

Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets

Total current assets
Property, plant and equipment
Less: accumulated depreciation and amortization
Property, plant and equipment, net
Investments in affiliated companies
Goodwill
Deferred income taxes
Intangible assets, net
Other noncurrent assets
Total Assets

LIABILITIES AND EQUITY
Current liabilities:

Notes payable and other current debt
Accounts payable
Pension and other postretirement benefits
Accrued salaries, wages and benefits
Income taxes payable
Other current liabilities

Total current liabilities
Long-term debt
Deferred income taxes
Pension and other postretirement benefits
Other long-term liabilities
Total Liabilities

Commitments and contingencies (Note 16)

Equity:

Preferred stock, 3.0 million shares authorized; 0 shares issued and outstanding in

2017 and 2016

Common stock, par value $.25 per share; 100.0 million shares authorized;
shares issued: 75.2 million and 73.7 million in 2017 and 2016; shares
outstanding: 73.9 million and 73.1 million in 2017 and 2016
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost (1.3 million and 0.6 million shares in 2017 and 2016)

Total Equity
Total Liabilities and Equity

2017

2016

235.9
253.2
215.2
39.2
743.5
1,745.8
890.8
855.0
85.8
107.7
25.7
21.7
23.4
1,862.8

— $

138.1
2.2
56.2
6.0
77.0
279.5
197.0
10.4
53.4
42.6
582.9

203.0
200.5
199.3
39.1
641.9
1,554.7
776.4
778.3
82.7
103.0
66.2
23.3
21.3
1,716.7

2.4
122.0
2.2
51.6
4.5
58.3
241.0
226.2
9.2
75.6
47.2
599.2

—

18.8
309.3
1,178.2
(117.3)
(109.1)
1,279.9
1,862.8

18.4
260.4
1,071.6
(186.8)
(46.1)
1,117.5
1,716.7

The accompanying notes are an integral part of the consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS
West Pharmaceutical Services, Inc. and Subsidiaries for the years ended December 31, 2017, 2016 and 2015
(in millions)

Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation
Amortization
Stock-based compensation
Non-cash restructuring charges
Pension (curtailment gain) settlement charge
Venezuela deconsolidation
Loss on sales of equipment
Deferred income taxes
Pension and other retirement plans, net
Equity in undistributed earnings of affiliates, net of dividends

Changes in assets/liabilities:

Increase in accounts receivable
Increase in inventories
Decrease (increase) in other current assets
Increase in accounts payable
Changes in other assets and liabilities

Net cash provided by operating activities
Cash flows from investing activities:

Capital expenditures
Purchase of cost-method investments
Cash related to deconsolidated Venezuelan subsidiary
Other, net

Net cash used in investing activities
Cash flows from financing activities:

Borrowings under revolving credit agreements
Repayments under revolving credit agreements
Debt issuance costs
Repayments of long-term debt
Dividend payments
Contingent consideration payments
Proceeds from exercise of stock options and stock appreciation rights
Employee stock purchase plan contributions
Excess tax benefits from employee stock plans
Shares purchased under share repurchase programs
Shares repurchased for employee tax withholdings

Net cash used in financing activities
Effect of exchange rates on cash
Net increase (decrease) in cash and cash equivalents
Cash, including cash equivalents at beginning of period
Cash, including cash equivalents at end of period

Supplemental cash flow information:

2017

2016

2015

150.7

143.6

95.6

94.3
2.4
16.1
0.7
—
11.1
1.6
41.7
(6.9)
(7.0)

(39.7)
(3.6)
0.3
12.6
(11.0)
263.3

(130.8)
—
(6.0)
3.2
(133.6)

—
—
—
(34.9)
(39.1)
(0.7)
39.5
4.4
—
(74.4)
(3.8)
(109.0)
12.2
32.9
203.0
235.9

88.1
2.6
19.5
17.5
(2.1)
—
0.7
21.5
(6.5)
(6.8)

(23.3)
(21.2)
(2.4)
6.1
(17.9)
219.4

(170.2)
(8.4)
—
2.8
(175.8)

—
—
—
(69.8)
(35.8)
(0.3)
25.9
3.8
18.2
(52.2)
(3.7)
(113.9)
(1.3)
(71.6)
274.6
203.0

86.1
3.8
29.6
—
50.4
—
0.4
(8.9)
(28.8)
(5.0)

(14.1)
(11.4)
(2.6)
17.2
0.1
212.4

(131.6)
(1.5)
—
3.6
(129.5)

71.4
(71.4)
(1.0)
(27.4)
(32.4)
(0.1)
12.7
3.2
9.1
—
(5.6)
(41.5)
(22.1)
19.3
255.3
274.6

14.7
33.1
25.0
8.6

$
$
$
$

Interest paid, net of amounts capitalized
Income taxes paid, net
Accrued capital expenditures
Dividends declared, not paid

8.6
48.1
22.7
9.5
The accompanying notes are an integral part of the consolidated financial statements.

8.0
31.0
20.1
10.4

$
$
$
$

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Summary of Significant Accounting Policies

Principles of Consolidation: The consolidated financial statements include the accounts of West after the
elimination of intercompany transactions. We have no participation or other rights in variable interest entities. As of
April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. Please refer to
Note 14, Other Expense, for further discussion.

Use of Estimates: The financial statements are prepared in conformity with U.S. GAAP. These principles require
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingencies in the financial statements. Actual amounts realized may differ from
these estimates.

Cash and Cash Equivalents: Cash equivalents include time deposits, certificates of deposit and all highly liquid
debt instruments with maturities of three months or less at the time of purchase.

Accounts Receivable: Our accounts receivable balance was net of an allowance for doubtful accounts of $0.5
million and $0.4 million at December 31, 2017 and 2016, respectively. We record the allowance based on a specific
identification methodology.

Inventories: Inventories are valued at the lower of cost (on a first-in, first-out basis) and net realizable value. The
following is a summary of inventories at December 31:

($ in millions)
Raw materials
Work in process
Finished goods

2017

2016

88.6
31.8
94.8
215.2

78.0
28.9
92.4
199.3

Property, Plant and Equipment: Property, plant and equipment assets are carried at cost. Maintenance and minor
repairs and renewals are charged to expense as incurred. Costs incurred for computer software developed or
obtained for internal use are capitalized for application development activities and immediately expensed for
preliminary project activities or post-implementation activities. Upon sale or retirement of depreciable assets, costs
and related accumulated depreciation are eliminated, and gains or losses are recognized in other (income) expense.
Depreciation and amortization are computed principally using the straight-line method over the estimated useful
lives of the assets, or the remaining term of the lease, if shorter.

reporting units was less than its carrying amount and determined that it was not necessary to perform the
quantitative goodwill impairment test in 2017.

Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives of 5
to 25 years, and reviewed for impairment whenever circumstances indicate that the carrying value of these assets
may not be recoverable. During 2016, as part of our restructuring plan, we recorded within other expense a $2.8
million non-cash asset write-down associated with the discontinued use of a patent.

Impairment of Long-Lived Assets: Long-lived assets, including property, plant and equipment, are tested for
impairment whenever circumstances indicate that the carrying value of these assets may not be recoverable. An asset
is considered impaired if the carrying value of the asset exceeds the sum of the future expected undiscounted cash
flows to be derived from the asset. Once an asset is considered impaired, an impairment loss is recorded within other
(income) expense for the difference between the asset's carrying value and its fair value. For assets held and used in
the business, management determines fair value using estimated future cash flows to be derived from the asset,
discounted to a net present value using an appropriate discount rate. For assets held for sale or for investment
purposes, management determines fair value by estimating the proceeds to be received upon sale of the asset, less
disposition costs. During 2016, as part of our restructuring plan, we recorded within other expense a $4.5 million
non-cash asset write-down associated with the discontinued use of certain equipment.

Employee Benefits: The measurement of the obligations under our defined benefit pension and postretirement
medical plans are subject to a number of assumptions. These include the rate of return on plan assets (for funded
plans) and the rate at which the future obligations are discounted to present value. U.S. GAAP requires the
recognition of an asset or liability for the funded status of a defined benefit postretirement plan, as measured by the
difference between the fair value of plan assets, if any, and the benefit obligation. For a pension plan, the benefit
obligation is the projected benefit obligation; for any other postretirement plan, such as a retiree health plan, the
benefit obligation is the accumulated postretirement benefit obligation. See Note 13, Benefit Plans, for a more
detailed discussion of our pension and other retirement plans.

Financial Instruments: All derivatives are recognized as either assets or liabilities in the balance sheet and recorded
at their fair value. For a derivative designated as hedging the exposure to variable cash flows of a forecasted
transaction (referred to as a cash flow hedge), the effective portion of the derivative's gain or loss is initially reported
as a component of other comprehensive income (“OCI”), net of tax, and subsequently reclassified into earnings
when the forecasted transaction affects earnings. For a derivative designated as hedging the exposure to changes in
the fair value of a recognized asset or liability or a firm commitment (referred to as a fair value hedge), the
derivative's gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on
the hedged item. For a derivative designated as hedging the foreign currency exposure of a net investment in a
foreign operation, the gain or loss is reported in OCI, net of tax, as part of the cumulative translation adjustment.
The ineffective portion of any derivative used in a hedging transaction is recognized immediately into earnings.
Derivative financial instruments that are not designated as hedges are also recorded at fair value, with the change in
fair value recognized immediately into earnings. We do not purchase or hold any derivative financial instrument for
investment or trading purposes.

Foreign Currency Translation: Foreign currency transaction gains and losses are recognized in the determination
of net income. Foreign currency translation adjustments of subsidiaries and affiliates operating outside of the U.S.
are accumulated in other comprehensive loss, a separate component of equity.

rebate costs when sales occur based on our assessment of the likelihood that the required volumes will be attained.
We also maintain an allowance for product returns, as we believe that we are able to reasonably estimate the amount
of returns based on our substantial historical experience.

Shipping and Handling Costs: Shipping and handling costs are included in cost of goods and services sold.
Shipping and handling costs billed to customers in connection with the sale are included in net sales.

Research and Development: Research and development expenditures are for the creation, engineering and
application of new or improved products and processes. Expenditures include primarily salaries and outside services
for those directly involved in research and development activities and are expensed as incurred.

Environmental Remediation and Compliance Costs: Environmental remediation costs are accrued when such
costs are probable and reasonable estimates are determinable. Cost estimates include investigation, cleanup and
monitoring activities; such estimates are adjusted, if necessary, based on additional findings. Environmental
compliance costs are expensed as incurred as part of normal operations.

Litigation: From time to time, we are involved in legal proceedings, investigations and claims generally incidental
to our normal business activities. In accordance with U.S. GAAP, 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. These estimates
are based on an analysis made by internal and external legal counsel considering information known at the time.
Legal costs in connection with loss contingencies are expensed as incurred.

Income Taxes: Deferred income taxes are recognized by applying enacted statutory tax rates, applicable to future
years, to temporary differences between the tax basis and financial statement carrying values of our assets and
liabilities. Valuation allowances are established when it is more likely than not that all or a portion of a deferred tax
asset will not be realized. In response to the 2017 Tax Act, we reevaluated our position regarding permanent
reinvestment of foreign subsidiary earnings and profits through 2017 (with the exception of China and Mexico, both
of which will remain permanently reinvested) and elected to include in our provision for income taxes for the year
ended December 31, 2017 an estimated liability of $9.8 million related to foreign withholding taxes and state
income taxes that will be incurred upon the distribution of those foreign earnings and profits to the U.S. at a future
date. Please refer to Note 15, Income Taxes, for discussion of the undistributed earnings of our China and Mexico
entities at December 31, 2017. We recognize interest costs related to income taxes in interest expense and penalties
within other (income) expense. The tax law ordering approach is used for purposes of determining whether an
excess tax benefit has been realized during the year.

Stock-Based Compensation: Under the fair value provisions of U.S. GAAP, stock-based compensation cost is
measured at the grant date based on the value of the award and is recognized as expense over the vesting period. In
order to determine the fair value of stock options on the grant date, we use the Black-Scholes valuation model.

Net Income Per Share: Basic net income per share is computed by dividing net income attributable to common
shareholders by the weighted average number of shares of common stock outstanding during each period. Net
income per share assuming dilution considers the dilutive effect of outstanding stock options and other stock awards
based on the treasury stock method. The treasury stock method assumes the use of exercise proceeds to repurchase
common stock at the average fair market value in the period.

Note 2: New Accounting Standards

Recently Adopted Standards

In January 2017, the FASB issued guidance which removes the second step of the goodwill impairment test. A
goodwill impairment charge will now be the amount by which a reporting unit's carrying amount exceeds its fair
value, not to exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. We

adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on
our financial statements.

In January 2017, the FASB issued guidance which clarifies the definition of a business to assist entities with
evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This
guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We
adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on
our financial statements.

In October 2016, the FASB issued guidance which requires companies to recognize the income tax consequences of
an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We
adopted this guidance as of January 1, 2017, on a modified retrospective basis. As a result of the adoption, a
cumulative-effect adjustment of $4.1 million was recorded within retained earnings in our consolidated balance
sheet as of January 1, 2017, for unamortized tax expense previously deferred and previously unrecognized deferred
tax assets.

In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for share-based payment
transactions, including income tax consequences, classification of awards as either equity or liabilities, and
classification on the statement of cash flows. We adopted this guidance as of January 1, 2017, on a prospective basis
as it relates to the timing or recognition and classification of share-based compensation award-related income tax
effects. For the year ended December 31, 2017, we recorded a tax benefit of $33.1 million within income tax
expense in our consolidated statement of income. These tax benefits were recorded within capital in excess of par
value in our consolidated balance sheet in the prior-year period. Also per the amended guidance, we classified the
$33.1 million of excess tax benefits within net cash provided by operating activities in our consolidated statement of
cash flows for the year ended December 31, 2017, rather than net cash used in financing activities, which included
the excess tax benefits for the year ended December 31, 2016. The amended guidance allows entities to account for
award forfeitures as they occur, however, we have elected to continue to estimate forfeitures expected to occur to
determine the amount of compensation cost to be recognized in each period. The adoption of the amended guidance
may result in increased volatility in our effective tax rate.

In March 2016, the FASB issued guidance that simplifies the transition to the equity method of accounting. This
guidance eliminates the requirement to retroactively adopt the equity method of accounting when there is an
increase in the level of ownership interest or degree of influence. We adopted this guidance as of January 1, 2017, on
a prospective basis. The adoption did not have a material impact on our financial statements.

In July 2015, the FASB issued guidance regarding the subsequent measurement of inventory. This guidance requires
inventory measured using any method other than last-in, first-out or the retail inventory method to be measured at
the lower of cost and net realizable value. Net realizable value represents estimated selling prices in the ordinary
course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this
guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial
statements.

Standards Issued Not Yet Adopted

In August 2017, the FASB issued guidance which expands and refines hedge accounting for both nonfinancial and
financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and
the hedged item in the financial statements. This guidance is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating our
adoption timing and the impact that this guidance will have on our financial statements.

In May 2017, the FASB issued guidance which amends the scope of modification accounting for share-based
payment arrangements. The guidance focuses on changes to the terms or conditions of share-based payment awards
that would require the application of modification accounting and specifies that an entity would not apply

modification accounting if its fair value, vesting conditions and classification of the awards are the same
immediately before and after the modification. This guidance is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact
that this guidance will have on our financial statements.

In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit
cost (net benefit cost). The guidance requires the bifurcation of net benefit cost. The service cost component will be
presented with other employee compensation costs in operating income (or capitalized in assets) and the other
components will be reported separately outside of operations, and will not be eligible for capitalization. This
guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.
Early adoption is permitted. Upon adoption, we will apply the income statement classification provisions of this
guidance retrospectively, and will reclassify net benefit cost components other than service cost from operating
income to outside of operations. Net periodic benefit cost for the year ended December 31, 2017 was $7.3 million,
of which $10.4 million related to service cost. This guidance has no impact on net income.

In November 2016, the FASB issued guidance on the classification and presentation of restricted cash in the
statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning
after December 15, 2017. Early adoption is permitted. As of December 31, 2017, we had no restricted cash.

In August 2016, the FASB issued guidance to reduce the diversity in how certain cash receipts and cash payments
are presented and classified in the statement of cash flows. This guidance is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2017. Early adoption is permitted. We believe that the
adoption of this guidance will not have a material impact on our financial statements.

In February 2016, the FASB issued guidance on the accounting for leases. This guidance requires lessees to
recognize lease assets and lease liabilities on the balance sheet and to expand disclosures about leasing
arrangements, both qualitative and quantitative. In terms of transition, the guidance requires adoption based upon a
modified retrospective approach. This guidance is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2018. As of December 31, 2017, future minimum rental payments under non-
cancelable operating leases were $79.1 million.

In January 2016, the FASB issued guidance that addresses certain aspects of recognition, measurement, presentation,
and disclosure of financial instruments. This guidance is effective for fiscal years, and interim periods within those
years, beginning after December 15, 2017. We believe that the adoption of this guidance will not have a material
impact on our financial statements.

In May 2014, the FASB issued guidance on the accounting for revenue from contracts with customers that will
supersede most existing revenue recognition guidance, including industry-specific guidance. The core principle
requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In
addition, the guidance requires enhanced disclosures regarding the nature, timing and uncertainty of revenue and
cash flows arising from an entity's contracts with customers. The FASB subsequently issued additional clarifying
standards to address issues arising from implementation of the new revenue recognition standard. This guidance is
effective for interim and annual reporting periods beginning on or after December 15, 2017. Early adoption is
permitted as of one year prior to the current effective date. Entities can choose to apply the guidance using either a
full retrospective approach or a modified retrospective approach. Based on the results of the procedures performed
through December 31, 2017, which included a review of a representative sample of our contracts across our
reportable segments and revenue streams, we believe that the adoption of this guidance will not have a material
impact on our financial statements, particularly as the majority of our net sales relates to the sale of packaging
components. We expect to record a cumulative-effect adjustment within retained earnings in our consolidated
balance sheet as of January 1, 2018 for the impact of the guidance on the remaining unearned income for the
nonrefundable customer payment received in June 2013 in return for the exclusive use of the SmartDose technology
platform within a specific therapeutic area, as well as our Contract-Manufactured Products product sales, certain
Proprietary Products product sales, and our development and tooling agreements. We continue to review the impact

that the adoption of this guidance will have on our financial statement disclosures, accounting policies, business
processes, and internal controls. We will apply the guidance using the modified retrospective approach.

Note 3: Net Income Per Share

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

(in millions)

Net income

Weighted average common shares outstanding

Dilutive effect of equity awards, based on the treasury stock method

Weighted average shares assuming dilution

2017

2016

2015

150.7

143.6

73.9

1.9

75.8

73.3

1.7

75.0

95.6

72.0

1.8

73.8

During 2017, 2016 and 2015, there were 0.4 million, 0.1 million, and 0.7 million shares, respectively, from stock-
based compensation plans not included in the computation of diluted net income per share because their impact was
antidilutive.

In December 2016, we announced a share repurchase program authorizing the repurchase of up to 800,000 shares of
our common stock from time to time on the open market or in privately-negotiated transactions as permitted under
the Securities Exchange Act of 1934 Rule 10b-18. During 2017, we purchased 800,000 shares of our common stock
under this program at a cost of $74.4 million, or an average price of $92.96 per share. This share repurchase program
expired on December 31, 2017. Please refer to Note 18, Subsequent Events, for discussion of our share repurchase
program for calendar-year 2018.

Note 4: Property, Plant and Equipment

A summary of gross property, plant and equipment at December 31 is presented in the following table:

($ in millions)
Land
Buildings and improvements
Machinery and equipment
Molds and dies
Computer hardware and software
Construction in progress

Expected useful
lives (years)

5-50
10-15
4-7
3-10

2017

2016

21.4
539.2
793.4
114.5
144.6
132.7
1,745.8

18.6
443.3
698.5
98.3
121.9
174.1
1,554.7

Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $94.3 million, $88.1 million and
$86.1 million, respectively.

There were no capitalized leases included in buildings and improvements and machinery and equipment at
December 31, 2017. There were also no capitalized leases included in buildings and improvements at December 31,
2016. Capitalized leases included in machinery and equipment were $1.5 million at December 31, 2016.
Accumulated depreciation on all property, plant and equipment accounted for as capitalized leases was $1.5 million
at December 31, 2016.

We capitalize interest on borrowings during the active construction period of major capital projects. Capitalized
interest is added to the cost of the underlying assets and is amortized over the useful lives of the assets. Capitalized
interest for the years ended December 31, 2017, 2016 and 2015 was $2.7 million, $3.6 million and $1.5 million,
respectively.

During 2016, as part of our restructuring plan, we recorded within other expense a $4.5 million non-cash asset write-
down associated with the discontinued use of certain equipment.

Note 5: Affiliated Companies

At December 31, 2017, the following affiliated companies were accounted for under the equity method:

The West Company Mexico, S.A. de C.V.
Aluplast S.A. de C.V.
Pharma Tap S.A. de C.V.
Pharma Rubber S.A. de C.V.
Daikyo

Location
Mexico
Mexico
Mexico
Mexico
Japan

Ownership interest
49%
49%
49%
49%
25%

Unremitted income of affiliated companies included in consolidated retained earnings amounted to $69.9 million,
$63.0 million and $56.2 million at December 31, 2017, 2016 and 2015, respectively. Dividends received from
affiliated companies were $2.2 million in 2017, $1.4 million in 2016 and $0.8 million in 2015.

Our equity in net unrealized gains of Daikyo's investment securities and derivative instruments, as well as pension
adjustments, included in accumulated other comprehensive loss was $0.5 million, $5.3 million and $5.4 million at
December 31, 2017, 2016 and 2015, respectively.

Our purchases from, and royalty payments made to, affiliates totaled $86.7 million, $94.5 million and $65.8 million,
respectively, in 2017, 2016 and 2015, of which $12.4 million and $9.0 million was due and payable as of
December 31, 2017 and 2016, respectively. The majority of these transactions related to a distributorship agreement
with Daikyo that allows us to purchase and re-sell Daikyo products. Sales to affiliates were $8.1 million, $6.8
million and $5.3 million, respectively, in 2017, 2016 and 2015, of which $1.3 million and $0.9 million was
receivable as of December 31, 2017 and 2016, respectively.

At December 31, 2017 and 2016, the aggregate carrying amount of investments in equity-method affiliates was
$72.4 million and $69.3 million, respectively. In addition, during 2016, we made an $8.4 million cost-method
investment in an intradermal drug delivery company. At December 31, 2017 and 2016, we had cost-method
investments, for which fair value was not readily determinable, with a carrying amount of $13.4 million at both
period-ends. We test our cost-method investments for impairment whenever circumstances indicate that the carrying
value of the investments may not be recoverable.

Note 6: Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment were as follows:

($ in millions)
Balance, December 31, 2015
Foreign currency translation
Balance, December 31, 2016
Foreign currency translation
Balance, December 31, 2017

Proprietary
Products

Contract-
Manufactured
Products

Total

75.1
(1.4)
73.7
3.9
77.6

29.5
(0.2)
29.3
0.8
30.1

104.6
(1.6)
103.0
4.7
107.7

As of December 31, 2017, we had no accumulated goodwill impairment losses.

Intangible assets and accumulated amortization as of December 31 were as follows:

($ in millions)
Patents and licensing
Technology
Trademarks
Customer relationships
Customer contracts

Cost

18.2
3.3
2.0
29.3
11.1
63.9

2017
Accumulated
Amortization
$

2016
Accumulated
Amortization
$

Net

(14.1) $
(1.0)
(1.7)
(19.1)
(6.3)

4.1
2.3
0.3
10.2
4.8
(42.2) $ 21.7

Cost
$ 17.8
3.3
2.0
29.3
10.7
$ 63.1

Net

4.4
2.6
0.4
11.0
4.9
23.3

(13.4) $
(0.7)
(1.6)
(18.3)
(5.8)
(39.8) $

The cost basis of intangible assets includes a foreign currency translation gain of $0.9 million and a foreign currency
translation loss of $0.3 million for the years ended December 31, 2017 and 2016, respectively. Amortization expense
for the years ended December 31, 2017, 2016 and 2015 was $2.4 million, $2.6 million and $3.5 million,
respectively. Estimated annual amortization expense for the next five years is as follows: 2018 - $2.2 million, 2019 -
$2.2 million, 2020 - $2.1 million, 2021 - $2.1 million and 2022 - $2.1 million. During 2016, as part of our
restructuring plan, we recorded within other expense a $2.8 million non-cash asset write-down associated with the
discontinued use of a patent and a $10.0 million non-cash asset write-down associated with the discontinued use of
an indefinite-lived trademark.

Note 7: Other Current Liabilities

Other current liabilities as of December 31 included the following:

($ in millions)

Deferred income

Other accrued expenses

Dividends payable

Restructuring obligations

Other

Total other current liabilities

2017

2016

18.4

27.7

10.4

2.1

18.4

77.0

13.2

20.3

9.5

5.9

9.4

58.3

Other consisted primarily of value-added taxes payable and accrued taxes other than income.

Note 8: Debt

The following table summarizes our long-term debt obligations, net of unamortized debt issuance costs and current
maturities, at December 31. The interest rates shown in parentheses are as of December 31, 2017.

($ in millions)

Term loan, due January 1, 2018 (2.27%)

Note payable, due December 31, 2019

Credit Facility, due October 15, 2020 (1.00%)

Series A notes, due July 5, 2022 (3.67%)

Series B notes, due July 5, 2024 (3.82%)

Series C notes, due July 5, 2027 (4.02%)

Less: unamortized debt issuance costs
Total debt

Less: current portion of long-term debt

Long-term debt

Term Loan

2017

2016

— $

0.1

29.6

42.0

53.0

73.0

197.7

0.7
197.0

—

197.0

34.9

0.2

26.4

42.0

53.0

73.0

229.5

0.9
228.6

2.4

226.2

In 2013, we entered into a $42.8 million five-year term loan due January 2018 related to our corporate office and
research building. Borrowings under the loan bore interest at a variable rate equal to the London Interbank Offered
Rate (“LIBOR”) plus a margin of 1.50 percentage points. Please refer to Note 9, Derivative Financial Instruments,
for a discussion of the interest-rate swap agreement associated with this loan. At December 31, 2016, $34.9 million
was outstanding under this loan, of which $2.4 million was classified as current. As of December 31, 2016, there
was unamortized debt issuance costs remaining of $0.1 million, which was being amortized as additional interest
expense over the term of the loan.

On October 2, 2017, we paid the $33.1 million outstanding to extinguish the term loan and terminated the associated
interest-rate swap agreement. There was no material gain or loss on the extinguishment of the loan.

Credit Facility

In October 2015, we entered into the Credit Facility, that replaced our prior revolving credit facility, which was
scheduled to expire in April 2017. The Credit Facility, which expires in October 2020, contains a $300.0 million
credit facility, which may be increased from time to time by up to $100.0 million in the aggregate, subject to the
satisfaction of certain conditions and upon approval by the banks. Up to $30.0 million of the Credit Facility is
available for swing-line loans and up to $30.0 million is available for the issuance of standby letters of credit.
Borrowings under the Credit Facility bear interest at either the base rate or at the applicable LIBOR rate, plus a
tiered margin based on the ratio of our total debt to modified earnings before interest, taxes, depreciation and
amortization, ranging from 0 to 75 basis points for base rate loans and 100 to 175 basis points for LIBOR rate loans.
Consistent with our previous revolving credit facility, the Credit Facility contains representations and covenants that
require compliance with, among other restrictions, a maximum leverage ratio and a minimum interest coverage
ratio. The Credit Facility also contains usual and customary default provisions, and limitations on liens securing
indebtedness, asset sales, distributions and acquisitions. As of December 31, 2017 and 2016, total unamortized debt
issuance costs of $1.0 million and $1.3 million, respectively, were recorded in other noncurrent assets and are being
amortized as additional interest expense over the term of the Credit Facility. A portion of these costs relate to our
prior credit facility.

At December 31, 2017, we had $29.6 million in outstanding long-term borrowings under the Credit Facility, of
which $4.4 million was denominated in Yen and $25.2 million in Euro. These borrowings, together with outstanding
letters of credit of $2.9 million, resulted in a borrowing capacity available under the Credit Facility of $267.5 million
at December 31, 2017. Please refer to Note 9, Derivative Financial Instruments, for a discussion of the foreign
currency hedges associated with this facility.

Private Placement

In 2012, we concluded a private placement issuance of $168.0 million in senior unsecured notes. The total amount
of the private placement issuance was divided into three tranches - $42.0 million 3.67% Series A Notes due July 5,
2022, $53.0 million 3.82% Series B Notes due July 5, 2024, and $73.0 million 4.02% Series C Notes due July 5,
2027 (the “Notes”). The Notes rank pari passu with our other senior unsecured debt. The weighted average of the
coupon interest rates on the Notes is 3.87%. As of December 31, 2017 and 2016, there were unamortized debt
issuance costs remaining of $0.7 million and $0.8 million, respectively, which are being amortized as additional
interest expense over the term of the Notes.

Covenants

Interest costs incurred during 2017, 2016 and 2015 were $10.5 million, $11.7 million and $15.6 million,
respectively. The aggregate annual maturities of long-term debt were as follows: none in 2018, 2019 - $0.1 million,
2020 - $29.6 million, none in 2021, 2022 - $42.0 million, and thereafter - $126.0 million.

Note 9: 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 investment or trading purposes. All derivatives are recorded on the balance sheet at fair
value.

Interest Rate Risk

At December 31, 2016, we had a $34.9 million forward-start interest rate swap outstanding that hedged the
variability in cash flows due to changes in the applicable interest rate of our variable-rate five-year term loan. Under
this swap, we received variable interest rate payments based on one-month LIBOR plus a margin in return for
making monthly fixed interest payments at 5.41%. We designated this swap as a cash flow hedge.

On October 2, 2017, we paid the $33.1 million outstanding to extinguish the term loan and terminated the interest-
rate swap agreement.

Foreign Exchange Rate Risk

We have entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to
fluctuating foreign exchange rates on cross-currency intercompany loans. As of December 31, 2017, the total
amount of these forward exchange contracts was €12.0 million, SGD 171.0 million and $13.4 million. As of
December 31, 2016, the total amount of these forward exchange contracts was €57.5 million.

In addition, we have entered into several foreign currency contracts, designated as cash flow hedges, for periods of
up to eighteen months, intended to hedge the currency risk associated with a portion of our forecasted transactions
denominated in foreign currencies. As of December 31, 2017, we had outstanding foreign currency contracts to
purchase and sell certain pairs of currencies, as follows:

(in millions)
Currency

USD

Yen

SGD

Sell

Purchase

USD

Euro

39.0

5,157.3

35.2

—

23.5

17.7

34.4

19.8

6.9

At December 31, 2017, a portion of our debt consisted of borrowings denominated in currencies other than USD.
We have designated our €21.0 million ($25.2 million) Euro-denominated borrowings under our Credit Facility as a
hedge of our net investment in certain European subsidiaries. A cumulative foreign currency translation loss of $1.3
million pre-tax ($1.2 million after tax) on this debt was recorded within accumulated other comprehensive loss as of
December 31, 2017. We have also designated our ¥500.0 million ($4.4 million) Yen-denominated borrowings under
our Credit Facility as a hedge of our net investment in Daikyo. At December 31, 2017, there was a cumulative
foreign currency translation loss of $0.3 million pre-tax ($0.2 million after tax) on this Yen-denominated debt, which
was also included within accumulated other comprehensive loss.

Commodity Price Risk

Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum
refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain
clauses that provide for surcharges related to fluctuations in crude oil prices. The following economic hedges did not
qualify for hedge accounting treatment since they did not meet the highly effective requirement at inception.

As of December 31, 2017, we had outstanding contracts to purchase 115,701 barrels of crude oil, at a strike price of
$70 per barrel.

Effects of Derivative Instruments on Financial Position and Results of Operations

Please refer to Note 10, Fair Value Measurements, for the balance sheet location and fair values of our derivative
instruments as of December 31, 2017 and 2016.

The following table summarizes the effects of derivative instruments designated as hedges on OCI and earnings, net
of tax, for the year ended December 31:

Amount of
(Loss) Gain
Recognized in
OCI

Amount of Loss
(Gain) Reclassified
from Accumulated
OCI into Income

2017

2016

2017

2016

Location of Loss (Gain)
Reclassified from
Accumulated OCI into
Income

($ in millions)
Cash Flow Hedges:

Foreign currency hedge contracts

(1.7) $

(0.5) $

Foreign currency hedge contracts

Interest rate swap contracts

Forward treasury locks

Total
Net Investment Hedges:

(2.0)

0.1

—

(0.6)

(0.1)

—

(3.6) $

(1.2) $

1.1

0.8

0.5

0.2

2.6

— Net sales

— Cost of goods and services sold

0.8

0.3

1.1

Interest expense

Foreign currency-denominated debt $

(2.4) $ — $

Total

(2.4) $ — $

— $

— Other expense

—

During 2017 and 2016, there was no material ineffectiveness related to our hedges.

Note 10: 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:

($ in millions)
Assets:

Deferred compensation assets

Foreign currency contracts

Liabilities:

Contingent consideration

Deferred compensation liabilities

Foreign currency contracts

Balance at
December 31,
2017

Basis of Fair Value Measurements

Level 1

Level 2

Level 3

8.9

0.5

9.4

4.9

9.9

5.1

19.9

8.9

—

8.9

— $

0.5

— $

9.9

—

9.9

—

5.1

—

4.9

—

4.9

($ in millions)

Assets:

Deferred compensation assets

Foreign currency contracts

Liabilities:

Contingent consideration

Deferred compensation liabilities

Interest rate swap contracts

Foreign currency contracts

Balance at

December 31,
2016

Basis of Fair Value Measurements

Level 1

Level 2

Level 3

7.4

0.2

7.6

8.0

8.4

1.0

1.6

7.4

—

7.4

— $

0.2

— $

8.4

—

1.0

1.6

2.6

—

8.0

—

8.0

19.0

8.4

Deferred compensation assets are included within other noncurrent assets and are 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, included
within other current and long-term liabilities, is discussed further in the section related to Level 3 fair value
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. Our interest rate swap, included
within other current and other long-term liabilities, was valued based on the terms of the contract and observable
market inputs (i.e., LIBOR, Eurodollar synthetic forwards and swap spreads). We terminated the interest-rate swap
agreement on October 2, 2017. Please refer to Note 9, Derivative Financial Instruments, for further discussion of
our derivatives.

Level 3 Fair Value Measurements

The fair value of the SmartDose contingent consideration was initially determined 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 (income) expense in our consolidated
statements of income. The significant unobservable inputs used in the fair value measurement of the SmartDose
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 the SmartDose technology platform 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 SmartDose contingent consideration.

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

Balance, December 31, 2015

Increase in fair value recorded in earnings

Payments

Balance, December 31, 2016
Decrease in fair value recorded in earnings

Payments

Balance, December 31, 2017

($ in millions)

6.0

2.3
(0.3)
8.0
(2.4)
(0.7)
4.9

Other Financial Instruments

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

The estimated fair value of long-term debt is based on quoted market prices for debt issuances with similar terms
and maturities and is classified as Level 2 within the fair value hierarchy. At December 31, 2017, the estimated fair
value of long-term debt was $201.5 million compared to a carrying amount of $197.0 million. At December 31,
2016, the estimated fair value of long-term debt was $228.3 million and the carrying amount was $226.2 million.

Note 11: Accumulated Other Comprehensive Loss

The following table presents the changes in the components of accumulated other comprehensive loss, net of tax:

($ 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, 2015

(3.1) $

5.4

(39.6) $

(125.3) $ (162.6)

Other comprehensive loss
before reclassifications

Amounts reclassified out
Other comprehensive loss, net
of tax
Balance, December 31, 2016

Other comprehensive (loss)
income before reclassifications

Amounts reclassified out

Other comprehensive (loss)
income, net of tax

(1.2)

1.1

(0.1)

(3.2)

(3.6)

2.6

(1.0)

Balance, December 31, 2017

(4.2) $

(0.2)
—

(0.2)
5.2

(4.7)
—

(9.2)
3.4

(5.8)
(45.4)

6.3

0.1

(18.1)
—

(28.7)
4.5

(18.1)
(143.4)

(24.2)
(186.8)

68.8

—

66.8

2.7

(4.7)
0.5

6.4
(39.0) $

68.8
69.5
(74.6) $ (117.3)

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

Detail of components

2017

2016

Location on Statement of Income

Losses on cash flow hedges:

Foreign currency contracts

Interest rate swap contracts

Forward treasury locks

Total before tax

Tax expense

Net of tax

Amortization of defined benefit pension
and other postretirement plans:

Transition obligation

Prior service credit

Actuarial losses

Curtailment

Total before tax

Tax expense

Net of tax

Total reclassifications for the period, net of
tax

(1.3) $

— Net sales

(1.2)

(0.7)

(0.4)

(3.6)

1.0

(2.6) $

— $

2.1

(2.3)

—

(0.2)

0.1

(0.1) $

— Cost of goods and services sold

Interest expense

(a)

(1.3)
(0.4)
(1.7)
0.6
(1.1)

(0.1)
1.4
(3.4)
(3.1)
(5.2)
1.8
(3.4)

(2.7) $

(4.5)

(a) These components are included in the computation of net periodic benefit cost. Please refer to Note 13, Benefit
Plans, for additional details.

Note 12: Stock-Based Compensation

The West Pharmaceutical Services, Inc. 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) provides for
the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to
employees and non-employee directors. A committee of the Board of Directors determines the terms and conditions
of awards to be granted. Vesting requirements vary by award. At December 31, 2017, there were 4,597,102 shares
remaining in the 2016 Plan for future grants.

Stock options and stock appreciation rights reduce the number of shares available by one share for each award
granted. All other awards under the 2016 Plan will reduce the total number of shares available for grant by an
amount equal to 2.5 times the number of shares awarded. If awards made under previous plans would entitle a plan
participant to an amount of West stock in excess of the target amount, the additional shares (up to a maximum
threshold amount) will be distributed under the 2016 Plan.

The following table summarizes our stock-based compensation expense recorded within selling, general and
administrative expenses for the years ended December 31:

($ in millions)
Stock option and appreciation rights
Performance share units, stock-settled
Performance share units, cash-settled
Performance share units, dividend equivalents
Employee stock purchase plan
Deferred compensation plans
Total stock-based compensation expense

2017

2016

2015

7.8
4.1
0.1
0.1
0.8
3.2
16.1

8.6
6.7
0.1
0.2
0.7
3.2
19.5

9.2
6.0
0.7
0.2
0.6
2.5
19.2

In addition, we recorded a $0.2 million charge during 2016 as part of our restructuring plan, and we recorded a
$10.4 million charge during 2015 related to executive retirements. Both charges were recorded within other expense.
Please refer to Note 14, Other Expense, for further discussion of these charges.

The amount of unrecognized compensation expense for all non-vested awards as of December 31, 2017, was
approximately $17.2 million, which is expected to be recognized over a weighted average period of 1.6 years.

Stock Options

Stock options granted to employees vest in equal increments. All awards expire 10 years from the date of grant.
Upon the exercise of stock options, shares are issued in exchange for the exercise price of the options.

The following table summarizes changes in outstanding options:

(in millions, except per share data)
Options outstanding, January 1
Granted
Exercised
Forfeited
Options outstanding, December 31
Options exercisable, December 31

Weighted Average Exercise Price
Options outstanding, January 1
Granted
Exercised
Forfeited
Options outstanding, December 31
Options exercisable, December 31

2017

2016

2015

4.5
0.5
(1.5)
—
3.5
1.9

5.0
0.7
(1.1)
(0.1)
4.5
2.7

4.6
0.9
(0.5)
—
5.0
2.9

2017

2016

2015

$
$

38.11
84.09
26.15
60.92
48.76
35.44

$
$

31.77
61.98
22.50
45.91
38.11
27.17

$
$

25.49
56.06
21.85
—
31.77
22.75

As of December 31, 2017, the weighted average remaining contractual life of options outstanding and of options
exercisable was 6.4 years and 5.0 years, respectively.

As of December 31, 2017, the aggregate intrinsic value of total options outstanding was $173.0 million, of which
$120.9 million represented vested options.

The fair value of the options was estimated on the date of grant using a Black-Scholes option valuation model that
used the following weighted average assumptions in 2017, 2016 and 2015: a risk-free interest rate of 2.0%, 1.4%,
and 1.7%, respectively; stock volatility of 19.9%, 20.4%, and 21.0%, respectively; and dividend yields of 0.7%,

0.9%, and 0.9%, respectively. Stock volatility is estimated based on historical data and the impact from expected
future trends. Expected lives, which are based on prior experience, averaged 6 years for 2017, 2016 and 2015. The
weighted average grant date fair value of options granted in 2017, 2016 and 2015 was $18.08, $12.12 and $10.57,
respectively. Stock option expense is recognized over the vesting period, net of forfeitures.

For the years ended December 31, 2017, 2016 and 2015, the intrinsic value of options exercised was $91.7 million,
$49.4 million and $17.7 million, respectively. The grant date fair value of options vested during those same periods
was $6.7 million, $5.8 million and $4.8 million, respectively.

Stock Appreciation Rights

Stock appreciation rights (“SARs”) granted to eligible international employees vest in equal annual increments over
4 years of continuous service. All awards expire 10 years from the date of grant. The fair value of each cash-settled
SAR is adjusted at the end of each reporting period, with the resulting change reflected in expense. As of
December 31, 2017, SARs outstanding were 51,368, of which 29,388 were cash-settled and 21,980 were stock-
settled. Upon exercise of a cash-settled SAR, the employee receives cash for the difference between the grant date
price and the fair market value of the Company's stock on the date of exercise. As a result of the cash settlement
feature, cash-settled SARs are recorded within other long-term liabilities. Upon exercise of a stock-settled SAR,
shares are issued in exchange for the exercise price of the stock-settled SAR. As a result of the stock settlement
feature, stock-settled SARs are recorded within equity.

The following table summarizes changes in outstanding SARs:

SARs outstanding, January 1

Granted

Exercised

Forfeited
SARs outstanding, December 31
SARs exercisable, December 31

Weighted Average Exercise Price
SARs outstanding, January 1
Granted
Exercised
Forfeited
SARs outstanding, December 31
SARs exercisable, December 31

Performance Awards

2017

2016

2015

116,087

2,792

(67,511)

—
51,368
39,769

232,930

3,368
(114,976)
(5,235)
116,087
71,701

297,714

12,356
(77,140)
—
232,930
112,295

2017

2016

2015

$
$

31.13
83.47
27.65
—
38.55
30.77

$
$

27.79
68.40
24.95
42.28
31.13
26.65

$
$

25.20
57.25
22.52
—
27.79
24.60

In addition to stock options and SAR awards, we grant performance share unit (“PSU”) awards to eligible
employees. These awards are earned based on the Company's performance against pre-established targets, including
annual growth rate of revenue and return on invested capital, over a specified performance period. Depending on the
achievement of the targets, recipients of stock-settled PSU awards are entitled to receive a certain number of shares
of common stock, whereas recipients of cash-settled PSU awards are entitled to receive a payment in cash per unit
based on the fair market value of a share of our common stock at the end of the performance period.

The following table summarizes changes in our outstanding stock-settled PSU awards:

Non-vested stock-settled PSU awards, January 1
Granted at target level
Adjustments above/(below) target
Vested and converted
Forfeited
Non-vested stock-settled PSU awards, December 31

2017
378,062
92,045
(11,369)
(116,684)
(110)
341,944

2016
422,726
115,035
19,339
(173,364)
(5,674)
378,062

2015
470,719
147,908
132,444
(318,337)
(10,008)
422,726

Weighted Average Grant Date Fair Value
Non-vested stock-settled PSU awards, January 1
Granted at target level
Adjustments above/(below) target
Vested and converted
Forfeited
Non-vested stock-settled PSU awards, December 31 $

2017

2016

2015

54.47
84.01
42.85
50.06
73.64
64.38

45.60
60.47
38.71
59.64
49.86
54.47

30.93
55.49
22.97
51.53
41.84
45.60

Shares earned under PSU awards may vary from 0% to 200% of an employee's targeted award. The fair value of
stock-settled PSU 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. The weighted average
grant date fair value of stock-settled PSU awards granted during the years 2017, 2016 and 2015 was $84.01, $60.47
and $55.49, respectively. Including forfeiture and above-target achievement expectations, we expect that the stock-
settled PSU awards will convert to 166,439 shares to be issued over an average remaining term of one year.

The fair value of cash-settled PSU awards is also based on the market price of our stock at the grant date. These
awards are revalued at the end of each quarter based on changes in our stock price. As a result of the cash settlement
feature, cash-settled PSU awards are recorded within other long-term liabilities.

The following table summarizes changes in our outstanding cash-settled PSU awards:

Non-vested cash-settled PSU awards, January 1
Granted at target level
Adjustments above/(below) target
Vested and converted
Forfeited
Non-vested cash-settled PSU awards, December 31

2017

2016

2015

2,451
598
(107)
(970)
—
1,972

29,196
419
2,858
(29,032)
(990)
2,451

55,509
1,386
19,315
(47,014)
—
29,196

Weighted Average Grant Date Fair Value
Non-vested cash-settled PSU awards, January 1
Granted at target level
Adjustments above/(below) target
Vested and converted
Forfeited
Non-vested cash-settled PSU awards, December 31 $

2017

2016

2015

25.28
83.47
66.61
86.93
—
92.25

32.07
59.64
30.80
59.64
50.55
25.28

26.15
54.14
22.07
51.53
—
32.07

Employee Stock Purchase Plan

We also offer an Employee Stock Purchase Plan (“ESPP”) which provides for the sale of our common stock to
eligible employees at 85% of the current market price on the last trading day of each quarterly offering period.
Payroll deductions are limited to 25% of the employee's base salary, not to exceed $25,000 in any one calendar year.
In addition, employees may not buy more than 2,000 shares during any offering period (8,000 shares per year).
Purchases under the ESPP were 56,218 shares, 60,839 shares and 61,757 shares for the years 2017, 2016 and 2015,
respectively. At December 31, 2017, there were approximately 4.0 million shares available for issuance under the
ESPP.

Deferred Compensation Plans

Our deferred compensation plans include a Non-Qualified Deferred Compensation Plan for Non-Employee
Directors, under which non-employee directors may defer all or part of their annual cash retainers. The deferred fees
may be credited to a stock-equivalent account. Amounts credited to this account are converted into deferred stock
units based on the fair market value of one share of our common stock on the last day of the quarter. For deferred
stock units ultimately paid in cash, a liability is calculated at an amount determined by multiplying the number of
units by the fair market value of our common stock at the end of each reporting period. In addition, deferred stock
awards are granted on the date of our annual meeting, and are distributed in shares of common stock. In 2017, we
granted 17,284 deferred stock awards, with a grant date fair value of $94.68. Similarly, a non-qualified deferred
compensation plan for eligible employees provides for the conversion of compensation into deferred stock units. As
of December 31, 2017, the two deferred compensation plans held a total of 402,155 deferred stock units, including
24,296 units to be paid in cash.

In addition, during 2016, we granted 1,393 restricted share awards at a weighted grant-date fair value of $71.79 per
share to new executive officers under the 2016 Plan. The fair value of the awards is based on the market price of our
stock at the grant date and is recognized as expense over the vesting period.

Annual Incentive Plan

Under our annual incentive plan, participants are paid bonuses on the attainment of certain financial goals, which
they can elect to receive in either cash or shares of our common stock. If the employee elects payment in shares,
they are also given a restricted incentive stock award equal to one share for each four bonus shares issued. The
incentive stock awards vest at the end of four years provided that the participant has not made a disqualifying
disposition of their bonus shares. Incentive stock award grants were 1,800 shares, 2,400 shares and 1,500 shares in
2017, 2016 and 2015, respectively. Incentive stock forfeitures of 800 shares, 800 shares and 200 shares occurred in
2017, 2016 and 2015, respectively. Compensation expense is recognized over the vesting period based on the fair
market value of common stock on the award date: $86.93 per share granted in 2017, $59.64 per share granted in
2016 and $51.53 per share granted in 2015.

Note 13: Benefit Plans

Certain of our U.S. and international subsidiaries sponsor defined benefit pension plans. In addition, we provide
minimal death benefits for certain U.S. retirees and pay a portion of healthcare costs for retired U.S. salaried
employees and their dependents. Benefits for participants are coordinated with Medicare and the plan mandates
Medicare risk (“HMO”) coverage wherever possible and caps the total contribution for non-HMO coverage. We also
sponsor a defined contribution plan for certain salaried and hourly U.S. employees. Our 401(k) plan contributions
were $5.7 million for 2017, $4.9 million for 2016 and $4.8 million for 2015.

Pension and Other Retirement Benefits

The components of net periodic benefit cost and other amounts recognized in OCI were as follows:

($ in millions)
Net periodic benefit cost:
Service cost
Interest cost
Expected return on assets
Amortization of prior service credit
Amortization of transition obligation
Amortization of actuarial loss (gain)
Curtailment
Settlement effects
Net periodic benefit cost
Other changes in plan assets and benefit
obligations recognized in OCI, pre-tax:
Net (gain) loss arising during period
Prior service credit arising during period
Amortization of prior service credit
Amortization of transition obligation
Amortization of actuarial (loss) gain
Curtailment
Settlement effects
Foreign currency translation
Total recognized in OCI
Total recognized in net periodic benefit cost
and OCI

Pension benefits
2016

2017

2015

Other retirement benefits
2015
2016
2017

10.4
9.8
(13.5)
(1.3)
—
4.9
—
—
10.3

$ 10.2
10.5
(12.6)
(1.4)
0.1
4.8
(2.1)
—
$ 9.5

$ 10.6
13.8
(19.5)
(1.3)
0.1
5.9
—
50.4
$ 60.0

$ — $
0.3
—
(0.7)
—
(2.6)
—
—

0.5
0.5
—
—
—
(1.4)
—
—

(3.0) $ (0.4) $

(9.0) $ 19.2
—
1.4
(0.1)
(4.8)
(3.1)

—
1.3
—
(4.9)
—
—
2.6

$ 17.7
(0.7)
1.3
(0.1)
(5.9)
—
— (50.4)
(1.6)
$ (39.7) $

(3.2)
$ (10.0) $ 9.4

(1.1) $ (0.1) $

—
0.7
—
2.6
—
—
—
2.2

(3.0)
—
—
1.4
—
—
—
$ (1.7) $

0.3

$ 18.9

$ 20.3

(0.8) $ (2.1) $

0.1

0.5
0.4
—
—
—
(1.4)
—
—
(0.5)

(0.8)
—
—
—
1.4
—
—
—
0.6

Net periodic benefit cost by geographic location is as follows:

($ in millions)

U.S. plans

International plans

Net periodic benefit cost

Pension benefits

Other retirement benefits

2017

2016

2015

2017

2016

2015

7.3

3.0

10.3

7.1

2.4

9.5

$ 57.4

2.6

$ 60.0

(3.0) $
—
(3.0) $

(0.4) $
—
(0.4) $

(0.5)
—
(0.5)

During 2016, we recorded a pension curtailment gain of $2.1 million in connection with our decision to freeze both
our U.S. qualified and non-qualified defined benefit pension plans as of January 1, 2019.

During 2015, we recorded a $50.4 million pension settlement charge within other expense, of which $47.0 million
related to our purchase of a group annuity contract from MetLife to settle $139.4 million of our $313.6 million
outstanding pension benefit obligation under our U.S. qualified pension plan. MetLife assumed the obligation to pay
future pension benefits and provide administrative services beginning November 1, 2015 for approximately 1,750
retirees and surviving beneficiaries who retired before January 1, 2015 and are currently receiving payments from
this plan. The purchase was funded directly by plan assets. The remaining portion of the pension settlement charge
related to lump-sum payouts made to terminated vested participants of our U.S. qualified pension plan.

The following table presents the changes in the benefit obligation and the fair value of plan assets, as well as the
funded status of the plans:

($ in millions)
Change in benefit obligation:
Benefit obligation, January 1
Service cost
Interest cost
Participants' contributions
Actuarial (loss) gain
Amendments/transfers in
Benefits/expenses paid
Curtailment
Foreign currency translation
Benefit obligation, December 31

Change in plan assets:
Fair value of assets, January 1
Actual return on assets
Employer contribution
Participants' contributions
Benefits/expenses paid
Foreign currency translation
Fair value of assets, December 31

Funded status at end of year

Pension benefits

Other retirement benefits

2017

2016

2017

2016

(262.2) $
(10.4)
(9.8)
(0.7)
(11.8)
—
14.2
—
(7.3)
(288.0) $

192.4
34.4
23.2
0.7
(14.2)
3.0
239.5

(246.3) $
(10.2)
(10.5)
(0.6)
(23.4)
—
16.2
5.2
7.4
(262.2) $

188.9
16.8
6.8
0.6
(16.2)
(4.5)
192.4

(8.0) $
—
(0.3)
(0.5)
1.2
—
0.5
—
—
(7.1) $

— $
—
—
0.5
(0.5)
—
— $

(10.2)
(0.5)
(0.5)
(0.5)
0.1
3.0
0.6
—
—
(8.0)

—
—
0.1
0.5
(0.6)
—
—

(48.5) $

(69.8) $

(7.1) $

(8.0)

International pension plan assets, at fair value, included in the preceding table were $34.7 million and $28.8 million
at December 31, 2017 and 2016, respectively.

Amounts recognized in the balance sheet were as follows:

($ in millions)
Current liabilities
Noncurrent liabilities

Pension benefits

Other retirement benefits

2017

2016

2017

2016

(1.5) $
(47.0)
(48.5) $

(1.5) $
(68.3)
(69.8) $

(0.7) $
(6.4)
(7.1) $

(0.7)
(7.3)
(8.0)

The amounts in accumulated other comprehensive loss, pre-tax, consisted of:

($ in millions)
Net actuarial loss (gain)
Prior service credit
Total

Pension benefits

Other retirement benefits

2017

2016

2017

2016

74.5
(0.8)
73.7

86.0
(2.3)
83.7

(10.4) $
(2.4)
(12.8) $

(11.9)
(3.0)
(14.9)

The net actuarial loss and prior service credit for the defined benefit pension plans that will be amortized from
accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $3.8 million and

$1.4 million, respectively. The net actuarial gain and prior service credit for the other retirement benefits plan that
will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
is $2.1 million and $0.7 million.

The accumulated benefit obligation for all defined benefit pension plans was $283.7 million and $258.4 million at
December 31, 2017 and 2016, respectively, including $67.3 million and $60.6 million, respectively, for international
pension plans.

All of the defined benefit pension plans have projected benefit obligations and accumulated benefit obligations in
excess of plan assets as of December 31, 2017 and 2016.

Benefit payments expected to be paid under our defined benefit pension and other retirement benefit plans in the
next ten years are as follows:

($ in millions)
2018
2019
2020
2021
2022
2023 to 2027

Domestic

International

Total

13.3
14.2
15.2
14.7
15.1
72.3
144.8

2.0
2.1
2.6
2.5
3.0
17.2
29.4

15.3
16.3
17.8
17.2
18.1
89.5
174.2

In 2018, we expect to contribute $1.8 million to pension plans, of which $0.9 million is for international plans.
Included in this amount is a $0.9 million contribution to our non-qualified defined benefit pension plan. In addition,
we expect to contribute $0.7 million for other retirement benefits in 2018. We periodically consider additional,
voluntary contributions depending on the investment returns generated by pension plan assets, changes in benefit
obligation projections and other factors.

Weighted average assumptions used to determine net periodic benefit cost were as follows:

Discount rate
Rate of compensation increase
Long-term rate of return on assets

Pension benefits
2016
3.99%
4.04%
6.95%

2017
3.48%
4.01%
6.47%

Other retirement benefits
2015
2016
2017
3.90%
4.30%
—
—
—
—

2015
4.08% 3.90%
4.07%
6.84%

—
—

Weighted average assumptions used to determine the benefit obligations were as follows:

Discount rate
Rate of compensation increase

Pension benefits
2016
2017

Other retirement benefits

2017

2016

3.14%
3.80%

3.68%
4.04%

3.45%
—

3.90%
—

The discount rate used to determine the benefit obligations for U.S. pension plans was 3.65% and 4.15% as of
December 31, 2017 and 2016, respectively. The weighted average discount rate used to determine the benefit
obligations for all international plans was 1.62% and 2.25% as of December 31, 2017 and 2016, respectively. The
rate of compensation increase for U.S. plans was 4.25% for 2017 and 2016, while the weighted average rate for all
international plans was 2.44% for 2017 and 2.59% for 2016. Other retirement benefits were only available to U.S.
employees. The long-term rate of return for U.S. plans, which accounts for 87% of global plan assets, was 7.00% for
2017 and 7.25% for 2016 and 2015.

The assumed healthcare cost trend rate used to determine benefit obligations was 6.60% for all participants in 2017,
decreasing to 5.00% by 2022. A change in the assumed healthcare cost trend rate by one percentage point would
result in a $0.1 million increase or decrease in the postretirement obligation. The assumed healthcare cost trend rate
used to determine net periodic benefit cost was 6.60% for all participants in 2017, decreasing to 5.00% by 2021. The
effect of a one percentage point increase or decrease in the rate would have an immaterial impact in the aggregate
service and interest cost components.

The weighted average asset allocations by asset category for our pension plans, at December 31, were as follows:

Equity securities
Debt securities
Other

2017

2016

63%
37%
—%
100%

60%
30%
10%
100%

Our U.S. pension plan is managed as a balanced portfolio comprised of two components: equity and fixed income
debt securities. Equity investments are used to maximize the long-term real growth of fund assets, while fixed
income investments are used to generate current income, provide for a more stable periodic return, and provide some
protection against a prolonged decline in the market value of equity investments. Temporary funds may be held as
cash. We maintain a long-term strategic asset allocation policy which provides guidelines for ensuring that the fund's
investments are managed with the short-term and long-term financial goals of the fund, while allowing the flexibility
to react to unexpected changes in capital markets.

The following are the U.S. target asset allocations and acceptable allocation ranges:

Equity securities
Debt securities
Other

Target
allocation
65%
35%
—%

Allocation
range
60% - 70%
30% - 40%
0% - 5%

Diversification across and within asset classes is the primary means by which we mitigate risk. We maintain
guidelines for all asset and sub-asset categories in order to avoid excessive investment concentrations. Fund assets
are monitored on a regular basis. If at any time the fund asset allocation is not within the acceptable allocation range,
funds will be reallocated. We also review the fund on a regular basis to ensure that the investment returns received
are consistent with the short-term and long-term goals of the fund and with comparable market returns. We are
prohibited from pledging fund securities and from investing pension fund assets in our own stock, securities on
margin or derivative securities.

The following tables present the fair value of our pension plan assets, utilizing the fair value hierarchy discussed in
Note 10, Fair Value Measurements. In accordance with U.S. GAAP, certain pension plan assets measured at net
asset value (“NAV”) have not been classified in the fair value hierarchy.

($ in millions)
Cash
Equity securities:

International mutual funds

Fixed income securities:

Mutual funds

Pension plan assets in the fair value hierarchy $
Pension plan assets measured at NAV
Pension plan assets at fair value

Balance at
December 31,
2017

Basis of Fair Value Measurements
Level 3
Level 2
Level 1

1.6

— $

15.5

17.5
34.6

—

—
— $

15.5

17.5
34.6
204.9
239.5

Balance at
December 31,
2016

Basis of Fair Value Measurements
Level 3
Level 2
Level 1

10.0

— $

($ in millions)
Cash
Equity securities:

Indexed mutual funds
International mutual funds

Fixed income securities:

Mutual funds
Insurance contract
Balanced mutual fund
Pension plan assets in the fair value hierarchy $
Pension plan assets measured at NAV
Pension plan assets at fair value

—

—
—

—

—
—

—
—
—
—

8.9
3.0

9.2
—
6.3
37.4

—
—

—
0.5
—
0.5

8.9
3.0

9.2
0.5
6.3
37.9
154.5
192.4

Note 14: Other Expense

Other expense consisted of:

($ in millions)

Restructuring and related charges:

Severance and post-employment benefits

Asset-related charges

Other charges

Total restructuring and related charges

Pension settlement charge

Pension curtailment gain

Executive retirement and related costs

Venezuela currency devaluation

Venezuela deconsolidation
Development and licensing income

Contingent consideration

Other items

Total other expense

Restructuring and Related Charges

2017

2016

2015

— $

8.9

—

17.3

0.2

— $

26.4

—

11.1
(10.6)
(2.4)
3.9

2.0

—
(2.1)
—

2.7

—
(1.5)
2.3
(0.1)
27.7

—

50.4

—

10.9

—

—
(1.5)
1.1
(0.8)
60.1

On February 15, 2016, our Board of Directors approved a restructuring plan designed to repurpose several of our
production facilities in support of growing high-value proprietary products and to realign operational and
commercial activities to meet the needs of our new market-focused commercial organization.

During 2016, we incurred $26.4 million in restructuring and related charges in connection with this plan, consisting
of $8.9 million for severance charges, $10.0 million for a non-cash asset write-down associated with the
discontinued use of a trademark, $7.3 million for non-cash asset write-downs associated with the discontinued use of
a patent and certain equipment, and $0.2 million for other charges.

The following table presents activity related to our restructuring obligations related to the 2016 restructuring plan:

($ in millions)

Balance, December 31, 2015

Charges
Cash payments

Non-cash asset write-downs

Balance, December 31, 2016

Charges

Cash payments

Non-cash asset write-downs
Balance, December 31, 2017

Severance
and benefits

Asset-related
charges

Other
charges

Total

— $

8.9
(3.0)
—

5.9
(0.7)
(3.1)
—
2.1

17.3
—
(17.3)

0.2
—
(0.2)

— $

—

—
— $

0.7

—
(0.7)

— $

—

26.4
(3.0)
(17.5)
5.9

—
(3.1)
(0.7)
2.1

Other Items

During 2015, we recorded a $50.4 million pension settlement charge, of which $47.0 million related to our purchase
of a group annuity contract from MetLife and $3.4 million related to lump-sum payouts made to terminated vested
participants of our U.S. qualified pension plan. Please refer to Note 13, Benefit Plans, for additional details.

In addition, during 2015, we recorded a $10.9 million charge for executive retirement and related costs, including
$2.4 million for a long-term incentive plan award for our previous Chief Executive Officer (“CEO”), $8.0 million
for the revaluation of modified outstanding awards to provide for continued vesting for our previous CEO and
Senior Vice President of Human Resources in conjunction with their retirement, and $0.5 million for other costs,
including relocation and legal fees.

On February 17, 2016, the Venezuelan government announced a devaluation of the Bolivar, from the previously-
prevailing official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD, and streamlined the previous
three-tiered currency exchange mechanism into a dual currency exchange mechanism. As a result, during 2016, we
recorded a $2.7 million charge. In 2017, as a result of the continued deterioration of conditions in Venezuela as well
as our continued reduced access to USD settlement controlled by the Venezuelan government, we recorded a charge
of $11.1 million related to the deconsolidation of our Venezuelan subsidiary, following our determination that we no
longer met the U.S. GAAP criteria for control of that subsidiary. This charge included the derecognition of the
carrying amounts of our Venezuelan subsidiary's assets and liabilities, as well as the write-off of our investment in
our Venezuelan subsidiary, related unrealized translation adjustments and the elimination of intercompany accounts.
As of April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. We will
continue to actively monitor the political and economic developments in Venezuela.

During 2017, we recognized development and licensing income of $10.6 million within Proprietary Products. We
recorded income of $9.1 million attributable to the reimbursement of certain costs related to a technology that we
subsequently licensed to a third party. The license of technology to the third party may result in additional income in
the future, contingent on commercialization of the related product. During 2017, 2016 and 2015, we recorded
income of $1.5 million related to a nonrefundable customer payment of $20.0 million received in June 2013 in
return for the exclusive use of the SmartDose technology platform within a specific therapeutic area. As of
December 31, 2017, there was $12.9 million of unearned income related to this payment, of which $1.5 million was
included in other current liabilities and $11.4 million was included in other long-term liabilities. The unearned
income is being recognized as 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.

Contingent consideration represents changes in the fair value of the SmartDose contingent consideration. Please
refer to Note 10, Fair Value Measurements, for additional details.

Other items consist of foreign exchange transaction gains and losses, gains and losses on the sale of fixed assets, and
miscellaneous income and charges.

Note 15: Income Taxes

As a global organization, we and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various
state and foreign jurisdictions. During 2017, the statute of limitations for the 2013 U.S. federal tax year lapsed,
leaving tax years 2014 through 2017 open to examination. For U.S. state and local jurisdictions, tax years 2013
through 2017 are open to examination. We are also subject to examination in various foreign jurisdictions for tax
years 2010 through 2017.

A reconciliation of the beginning and ending amount of the liability for unrecognized tax benefits is as follows:

($ in millions)
Balance at January 1
Increase due to current year position
Increase due to prior year position
Reduction for expiration of statute of limitations/audits
Settlements
Balance at December 31

2017

2016

6.2
0.4
0.1
(3.5)
—
3.2

5.9
1.0
1.2
(0.9)
(1.0)
6.2

In addition, we had balances in accrued liabilities for interest and penalties of $0.1 million at both December 31,
2017 and 2016. As of December 31, 2017, we had $3.2 million of total gross unrecognized tax benefits, of which
$1.0 million, if recognized, would favorably impact the effective income tax rate. It is reasonably possible that, due
to the expiration of statutes and the closing of tax audits, the amount of gross unrecognized tax benefits may be
reduced by approximately $1.3 million during the next twelve months, which would favorably impact our effective
tax rate.

The components of income before income taxes are:

($ in millions)
U.S. operations
International operations
Total income before income taxes

The related provision for income taxes consists of:

($ in millions)
Current:

Federal
State
International

Current income tax provision
Deferred:

Federal and state
International

Deferred income tax provision
Income tax expense

2017

2016

2015

96.5
125.9
222.4

84.5
105.3
189.8

(4.0)
120.1
116.1

2017

2016

2015

2.1
0.1
37.0
39.2

41.8
(0.1)
41.7
80.9

2.5
1.0
29.4
32.9

21.8
(0.3)
21.5
54.4

1.0
0.9
33.3
35.2

(13.2)
4.3
(8.9)
26.3

Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for
financial reporting and tax purposes.

The significant components of our deferred tax assets and liabilities at December 31 are:

($ in millions)
Deferred tax assets

Net operating loss carryforwards
Tax credit carryforwards
Restructuring and impairment charges
Pension and deferred compensation
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:

Accelerated depreciation
Tax on undistributed earnings of subsidiaries
Other

Total deferred tax liabilities
Net deferred tax asset

2017

2016

19.7
13.7
0.1
28.3
14.3
(20.9)
55.2

26.3
9.8
3.8
39.9
15.3

15.4
27.9
2.9
46.4
19.5
(18.7)
93.4

30.3
—
6.1
36.4
57.0

A reconciliation of the U.S. federal corporate tax rate to our effective consolidated tax rate on income before income
taxes follows:

U.S. federal corporate tax rate
Tax on international operations less than U.S. tax rate
Reversal of prior valuation allowance
Reversal of reserves for unrecognized tax benefits
U.S. tax on international earnings, net of foreign tax credits
State income taxes, net of federal tax effect
U.S. research and development credits
Excess tax benefits on share-based payments
Impact of 2017 Tax Act
Tax on undistributed earnings of subsidiaries
Venezuela deconsolidation
Other business credits and Section 199 Deduction
Other
Effective tax rate

2017

2016

2015

35.0%
(4.5)
(0.5)
(0.2)
0.1
0.2
(0.8)
(14.1)
15.9
4.4
1.7
(0.6)
(0.2)
36.4%

35.0%
(2.9)
(0.3)
(0.6)
(1.3)
0.8
(0.8)
—
—
—
—
(1.1)
(0.1)
28.7%

35.0%
(5.1)
—
(1.6)
(4.6)
0.3
(1.3)
—
—
—
—
(1.3)
1.2
22.6%

The 2017 Tax Act, which was signed into law on December 22, 2017, has resulted in significant changes to the U.S.
corporate income tax system. These changes include, but are not limited to, a federal statutory rate reduction from
35.0% to 21.0% effective for tax years beginning after December 31, 2017. Changes in tax rates and tax laws are
accounted for in the period of enactment. As a result, during the year ended December 31, 2017, we recorded a
discrete charge based upon our current understanding of the 2017 Tax Act and the guidance available as of the date
of this filing. A significant portion of the discrete tax liability is attributable to an one-time mandatory deemed
repatriation tax of post-1986 undistributed foreign subsidiary earnings and profits (the “Transition Toll Tax”) of

$27.9 million. The net Transition Toll Tax is estimated to be $2.0 million after utilization of credit carryforwards and
other tax attributes and is payable over eight years. Furthermore, due to the reduction of the federal statutory rate,
we revalued our deferred assets and liabilities and recorded a provisional $11.4 million federal tax expense, net of
state tax impact, during the year ended December 31, 2017.

In response to the 2017 Tax Act, we also reevaluated our position regarding permanent reinvestment of foreign
subsidiary earnings and profits through 2017 (with the exception of China and Mexico, both of which will remain
permanently reinvested) and elected to include in our provision for income taxes for the year ended December 31,
2017 an estimated liability of $9.8 million related to foreign withholding taxes and state income taxes that will be
incurred upon the distribution of those foreign earnings and profits to the U.S. at a future date.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S.
GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed
(including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017
Tax Act. We have recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation
of deferred tax assets and liabilities and included these amounts in our consolidated financial statements for the year
ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due
to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional
regulatory guidance that may be issued, and actions we may take as a result of the 2017 Tax Act.

During 2015, we recorded a discrete tax benefit of $4.0 million related to executive retirement and related costs. In
addition, we recorded a discrete tax benefit of $18.4 million for a pension settlement charge. In 2015, we also
recorded a discrete tax charge of $0.8 million resulting from the impact of a change in the enacted tax rate in the
United Kingdom on our previously-recorded deferred tax asset balances.

At December 31, 2017, we have fully utilized all of our U.S. federal net operating loss carryforwards. State
operating loss carryforwards of $258.4 million created a deferred tax asset of $17.2 million, while foreign operating
loss carryforwards of $17.5 million created a deferred tax asset of $2.5 million. Management estimates that certain
state and foreign operating loss carryforwards are unlikely to be utilized and the associated deferred tax assets have
been fully reserved. State loss carryforwards expire as follows: $11.4 million in 2018 and $247.0 million thereafter.
Foreign loss carryforwards will begin to expire in 2025, while $14.0 million of the total $17.5 million will not
expire.

As of December 31, 2017, we have utilized all available foreign tax credit carryforwards against the Transition Toll
Tax. We have U.S. federal and state research and development credit carryforwards of $6.9 million and $3.0 million,
respectively. The $6.9 million of U.S. federal research and development credits expire as follows: $1.5 million
expire in 2035, $1.8 million expire in 2036, $1.8 million expire in 2037, and $1.8 million expire in 2038. The $3.0
million of state research and development credits expire as follows: $0.2 million expire in 2021, $0.8 million expire
in 2022, $0.5 million expire in 2023 and $1.5 million expire after 2023. Additionally, we have available other state
tax credits of $0.9 million which expire in 2020.

Undistributed earnings of our China and Mexico entities amounted to an estimated $17.3 million at December 31,
2017, on which deferred income taxes have not been provided because such earnings are intended to be reinvested
indefinitely outside of the U.S.

Note 16: Commitments and Contingencies

At December 31, 2017, we were obligated under various operating lease agreements. Rental expense in 2017, 2016
and 2015 was $13.3 million, $11.7 million and $10.5 million, respectively.

At December 31, 2017, future minimum rental payments under non-cancelable operating leases were:

Year
2018
2019
2020
2021
2022
Thereafter
Total

($ in millions)
13.2
11.4
8.5
6.7
6.2
33.1
79.1

At December 31, 2017, outstanding unconditional contractual commitments for the purchase of raw materials and
finished goods amounted to $75.6 million, of which $5.3 million is due to be paid in 2018.

We have letters of credit totaling $2.9 million supporting the reimbursement of workers' compensation and other
claims paid on our behalf by insurance carriers. Our accrual for insurance obligations was $3.8 million at
December 31, 2017, of which $0.9 million is in excess of our deductible and, therefore, is reimbursable by the
insurance company.

Our SmartDose contingent consideration is payable to the selling shareholders based upon a percentage of product
sales over the life of the underlying product patent, with no cap on total payments. Given the length of the earnout
period and the uncertainty in forecasted product sales, we do not believe it is meaningful to estimate the upper end
of the range over the entire period. However, our estimated probable range which could become payable over the
next five years is between zero and $5.5 million.

Note 17: Segment Information

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

($ in millions)
Net sales:

Proprietary Products
Contract-Manufactured Products

Intersegment sales elimination
Consolidated net sales

2017

2016

2015

1,236.9
362.5
(0.3)
1,599.1

1,189.9
320.2
(1.0)
1,509.1

1,098.3
302.4
(0.9)
1,399.8

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

We do not have any customers accounting for greater than 10% of consolidated net sales.

The following table presents net sales and property, plant and equipment, net, by the country in which the legal
subsidiary is domiciled and assets are located:

Property, Plant and Equipment, Net
2016

2015

2017

323.8
108.8
43.1
244.9
134.4
855.0

329.3
96.8
37.1
192.3
122.8
778.3

332.3
102.9
38.6
117.6
129.6
721.0

($ in millions)
United States
Germany
France
Other European countries
Other

2017

734.6
226.4
125.6
318.5
194.0
$ 1,599.1

Net Sales
2016

738.3
200.6
116.3
268.3
185.6
$ 1,509.1

2015

667.4
194.0
107.6
252.0
178.8
$ 1,399.8

The following tables provide summarized financial information for our segments:

($ in millions)
2017
Net sales
Operating profit
Interest expense, net
Income before income taxes
Segment assets
Capital expenditures
Depreciation and amortization expense

2016
Net sales
Operating profit
Interest expense, net
Income before income taxes
Segment assets
Capital expenditures
Depreciation and amortization expense

2015
Net sales
Operating profit
Interest expense, net
Income before income taxes
Segment assets
Capital expenditures
Depreciation and amortization expense

$
$

Note 18: Subsequent Events

Proprietary
Products

Contract-
Manufactured
Products

Corporate
and
Elimination

Consolidated

$
$

1,236.9
242.2
—
242.2
1,321.3
107.2
77.1

1,189.9
241.9
—
241.9
1,173.9
133.2
71.7

1,098.3
212.2
—
212.2
1,083.7
113.2
69.9

$
$

362.5
48.3
—
48.3
286.4
18.6
16.4

320.2
38.2
—
38.2
261.1
34.0
14.9

302.4
35.5
—
35.5
248.5
22.1
14.2

(0.3) $
(61.6) $
(6.5)
(68.1) $
255.1
$
5.0
3.2

(1.0) $
(83.3) $
(7.0)
(90.3) $
281.7
$
3.0
4.1

(0.9) $
(119.1) $
(12.5)
(131.6) $
362.9
$
(3.7)
5.8

1,599.1
228.9
(6.5)
222.4
1,862.8
130.8
96.7

1,509.1
196.8
(7.0)
189.8
1,716.7
170.2
90.7

1,399.8
128.6
(12.5)
116.1
1,695.1
131.6
89.9

In February 2018, our Board of Directors approved a restructuring plan designed to realign our manufacturing
capacity with demand. These changes are expected to be implemented over the next twelve to twenty-four months.
The plan will require restructuring and related charges in the range of $8.0 million to $13.0 million and capital
expenditures in the range of $9.0 million to $14.0 million. Once fully completed, we expect that the plan will
provide us with annualized savings in the range of $17.0 million to $22.0 million.

In February 2018, we announced a share repurchase program for calendar-year 2018 authorizing the repurchase of
up to 800,000 shares of our common stock from time to time on the open market or in privately-negotiated
transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18. The number of shares to be
repurchased and the timing of such transactions will depend on a variety of factors, including market conditions.
This share repurchase program is expected to be completed by December 31, 2018. Our previously-authorized share
repurchase program expired on December 31, 2017.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of West Pharmaceutical Services, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of West Pharmaceutical Services, Inc., and its
subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive
income, equity and cash flows for each of the three years in the period ended December 31, 2017, including the
related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended
December 31, 2017 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial
statements”). We also have audited the Company's internal control over financial reporting as of December 31,
2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it
accounts for share-based compensation award-related income tax effects in 2017.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 26, 2018

We have served as the Company’s auditor since 1963.

Quarterly Operating and Per Share Data (Unaudited)

($ in millions, except per share data)
2017
Net sales
Gross profit
Net income
Net income per share:
Basic
Diluted

2016
Net sales
Gross profit
Net income
Net income per share:
Basic
Diluted

First
Quarter
(1)

Second
Quarter
(2)

Third
Quarter
(3)

Fourth
Quarter
(4)

Full Year

$
$

387.7
134.1
60.9

0.83
0.81

362.1
123.3
22.1

0.31
0.30

$
$

397.6
125.0
38.8

0.53
0.51

388.0
133.3
44.7

0.61
0.60

$
$

398.2
125.0
51.0

0.69
0.67

376.7
121.1
37.6

0.51
0.50

$
$

415.6
128.5
—

$ 1,599.1
512.6
150.7

— $
— $

2.04
1.99

382.3
123.4
39.1

$ 1,509.1
501.1
143.6

0.53
0.52

$
$

1.96
1.91

The sum of the quarterly amounts may not equal full year due to rounding.

Factors affecting the comparability of the information reflected in the quarterly data:

(1) Net income for the first quarter of 2017 included the impact of a tax benefit of $15.9 million ($0.21 per diluted

share) associated with our adoption of the guidance issued by the FASB regarding share-based payment
transactions. Net income for the first quarter of 2016 included restructuring and related charges of $15.0 million
($0.20 per diluted share) and a charge of $2.5 million ($0.03 per diluted share) related to the devaluation of the
Venezuelan Bolivar.

(2) Second quarter 2017 net income included the impact of a tax benefit of $9.6 million ($0.13 per diluted share)
associated with our adoption of the guidance issued by the FASB regarding share-based payment transactions
and a charge of $11.1 million ($0.15 per diluted share) related to the deconsolidation of our Venezuelan
subsidiary. Second quarter 2016 net income included $1.0 million ($0.01 per diluted share) in reversals of
previously-recorded restructuring and related charges.

(3) Net income for the third quarter of 2017 included the impact of a tax benefit of $4.8 million ($0.06 per diluted
share) associated with our adoption of the guidance issued by the FASB regarding share-based payment
transactions. Net income for the third quarter of 2016 included restructuring and related charges of $1.6 million
($0.02 per diluted share) and a discrete tax charge of $0.3 million ($0.01 per diluted share).

(4) Fourth quarter 2017 net income included the impact of a discrete tax charge of $48.8 million ($0.64 per diluted
share) related to the 2017 Tax Act and the impact of changes in enacted international tax rates on previously-
recorded deferred tax asset and liability balances and a tax benefit of $2.8 million ($0.04 per diluted share)
associated with our adoption of the guidance issued by the FASB regarding share-based payment transactions.
Fourth quarter 2016 net income included restructuring and related charges of $1.8 million ($0.02 per diluted
share), a pension curtailment gain of $1.3 million ($0.01 per diluted share) and a discrete tax charge of $0.7
million ($0.01 per diluted share).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 annual 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 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 Form 10-K. Based on this
evaluation, our CEO and CFO have concluded that, as of December 31, 2017, our disclosure controls and
procedures are effective.

Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting,
as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial
reporting is a process designed under the supervision of our CEO and CFO to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of our financial statements for external reporting
purposes in accordance with U.S. generally accepted accounting principles.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017
based on the framework established in “Internal Control-Integrated Framework (2013)” issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has
determined that our internal control over financial reporting was effective as of December 31, 2017.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within
West have been detected. These inherent limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by management override of the controls. The
design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Also projections of any evaluation of effectiveness to future periods are subject to the risks that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is
included herein.

Changes in Internal Controls
During the fourth quarter ended December 31, 2017, 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.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information about our directors is incorporated by reference from the discussion under the heading Items to Be Voted
on - Proposal 1 - Election of Directors in our 2018 Proxy Statement. Information about our Code of Business
Conduct is incorporated by reference from the discussion under the heading Corporate Governance and Board
Matters - Code of Business Conduct in our 2018 Proxy Statement. Information regarding the procedures by which
our shareholders may recommend nominees to our Board of Directors is incorporated by reference from the
discussion under the heading Other Information - 2019 Shareholder Proposals or Nominations included in our 2018
Proxy Statement. Information about our Audit Committee, including the members of the committee, and our Audit
Committee financial experts, is incorporated by reference from the discussion under the heading Corporate
Governance and Board Matters - Committees - Audit Committee in our 2018 Proxy Statement. The balance of the
information required by this item is contained in the discussion entitled Executive Officers of the Company in Part I
of this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information about director and executive compensation is incorporated by reference from the discussion under the
headings Director Compensation and Executive Compensation in our 2018 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information required by this Item is incorporated by reference from the discussion under the heading Other
Information - Stock Ownership in our 2018 Proxy Statement.

Equity Compensation Plan Information Table

The following table sets forth information about the grants of stock options, restricted stock or other rights under all
of the Company's equity compensation plans as of the close of business on December 31, 2017. The table does not
include information about tax-qualified plans such as the West 401(k) Plan or the Tech Group Puerto Rico Savings
and Retirement Plan.

Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights (a)

Weighted-
Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights (b)

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding Securities
Reflected in Columns (a))
(c)

4,156,305 (1) $

48.61 (2)

8,636,647 (3)

—
4,156,305

—
48.61

—
8,636,647

Plan Category

Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total

(1)

Includes 511,373 outstanding stock options, 95,554 restricted performance share units, 1,393 restricted retention
share units, 44,946 deferred stock-equivalents units and 528 restricted stock-equivalents units granted to
directors under the 2016 Plan. Includes 2,498,076 outstanding stock options, 21,980 outstanding stock-settled
stock appreciation rights, 240,867 restricted performance share units, 41,458 restricted retention share units and
171,422 deferred stock-equivalents units under the 2011 Plan (which was terminated in 2016). Includes 456,185
outstanding stock options and 72,523 deferred stock-equivalents units granted to directors under the Non-
Qualified Deferred Compensation Plan for Non-Employee Directors under the 2007 Omnibus Incentive
Compensation Plan (which was terminated in 2011). The average term of remaining options and stock-settled
stock appreciation rights granted is 6.4 years. No future grants or awards may be made under the terminated
plans. The total includes restricted performance share units at 100% of grant. The restricted performance share
unit payouts were at 89.81%, 110.6%, and 167.8% in 2017, 2016 and 2015, respectively. The total does not
include stock-equivalent units granted or credited to directors under the Non-Qualified Deferred Compensation
Plan for Non-Employee Directors to be settled only in cash.

(2) Restricted performance share and deferred stock-equivalent units are excluded when determining the weighted-

average exercise price of outstanding options.

(3) Represents 4,039,545 shares reserved under the Company's Employee Stock Purchase Plan and 4,597,102
shares remaining available for issuance under the 2016 Plan. The estimated number of shares that could be
issued for 2017 from the Employee Stock Purchase Plan is 340,285. This number of shares is calculated by
multiplying the 269 shares per offering period per participant limit by 1,265, the number of current participants
in the plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

Information called for by this Item is incorporated by reference from the discussion under the heading Corporate
Governance and Board Matters - Related Person Transactions and Procedures in our 2018 Proxy Statement.
Information about director independence is incorporated by reference from the discussion under the heading
Corporate Governance and Board Matters - Director Independence in our 2018 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information about the fees for professional services rendered by our independent auditors in 2017 and 2016 is
incorporated by reference from the discussion under the heading Independent Auditors and Fees - Fees Paid to
PricewaterhouseCoopers LLP in our 2018 Proxy Statement. Our Audit Committee's policy on pre-approval of audit
and permissible non-audit services of our independent auditors is incorporated by reference from the section
captioned Independent Auditors and Fees - Audit Committee Policy on Pre-Approval of Audit and Permissible Non-
Audit Services in our 2018 Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements

The following documents are included in Part II, Item 8:

Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
Consolidated Balance Sheets at December 31, 2017 and 2016
Consolidated Statement of Equity for the years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm

(a) 2. Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts

($ in millions)
For the year ended December 31, 2017
Allowances deducted from assets:

Deferred tax asset valuation allowance
Allowance for doubtful accounts

Total allowances deducted from assets

For the year ended December 31, 2016
Allowances deducted from assets:

Deferred tax asset valuation allowance
Allowance for doubtful accounts

Total allowances deducted from assets

For the year ended December 31, 2015
Allowances deducted from assets:

Deferred tax asset valuation allowance
Allowance for doubtful accounts

Total allowances deducted from assets

Balance at
beginning of
period

Charged
to costs
and
expenses

Deductions
(1)

Balance at
end of
period

18.7 $
0.4
19.1 $

2.5 $
(0.2)
2.3 $

20.1 $
0.6
20.7 $

(1.3) $
—
(1.3) $

22.1 $
0.9
23.0 $

(0.3) $
0.1
(0.2) $

(0.3) $
0.3
— $

(0.1) $
(0.2)
(0.3) $

(1.7) $
(0.4)
(2.1) $

20.9
0.5
21.4

18.7
0.4
19.1

20.1
0.6
20.7

__________________________
(1) Includes accounts receivable written off, the write-off or write-down of valuation allowances, and

translation adjustments.

All other schedules are omitted because they are either not applicable, not required or because the information
required is contained in the consolidated financial statements or notes thereto.

(a) 3. Exhibits - An index of the exhibits included in this Form 10-K is contained on pages F-1 through F-3 and is

(b)
(c)

incorporated herein by reference.
See subsection (a) 3. above.
Financial Statements of affiliates are omitted because they do not meet the tests of a significant subsidiary at
the 20% level.

ITEM 16. FORM 10-K SUMMARY

None.

Pursuant to the requirements of Section 13 or 15(d) 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.

SIGNATURES

WEST PHARMACEUTICAL SERVICES, INC.
(Registrant)

By: /s/ William J. Federici
William J. Federici
Senior Vice President and Chief Financial Officer

February 26, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of West Pharmaceutical Services, Inc. in the capacities and on the dates indicated.

Signature
/s/ Eric M. Green
Eric M. Green

/s/ Daniel Malone
Daniel Malone

/s/ William J. Federici
William J. Federici

/s/ Mark A. Buthman
Mark A. Buthman

/s/ William F. Feehery, Ph.D.
William F. Feehery, Ph.D.

/s/ Thomas W. Hofmann
Thomas W. Hofmann

/s/ Paula A. Johnson, M.D., MPH
Paula A. Johnson, M.D., MPH

/s/ Deborah L.V. Keller
Deborah L.V. Keller

/s/ Myla P. Lai-Goldman, M.D.
Myla P. Lai-Goldman, M.D.

/s/ Douglas A. Michels
Douglas A. Michels

/s/ Paolo Pucci
Paolo Pucci

/s/ John H. Weiland
John H. Weiland

/s/ Patrick J. Zenner
Patrick J. Zenner

Title
Director, President and Chief Executive Officer
(Principal Executive Officer)

Date
February 26, 2018

Vice President and Controller
(Principal Accounting Officer)

February 26, 2018

Senior Vice President and Chief Financial Officer February 26, 2018
(Principal Financial Officer)

Director

February 13, 2018

Director and Chairman of the Board

February 13, 2018

Exhibit
Number
3.1

3.2

4.1

4.2

4.3

4.4 (1)

10.1

10.2

10.3

10.4 (2)

10.5 (2)

10.6 (2)

10.7 (2)

10.8 (2)

10.9 (2)

10.10 (2)

10.11 (2)

10.12 (2)

10.13 (2)

10.14 (2)

10.15 (2)

10.16 (2)

EXHIBIT INDEX

Description
Our Amended and Restated Articles of Incorporation are incorporated by reference from our Form
10-Q report for the quarter ended March 31, 2015.

Our Bylaws, as amended through May 5, 2015, are incorporated by reference from our Form 10-Q
report for the quarter ended March 31, 2015.

Form of stock certificate for common stock is incorporated by reference from our 1998 Form 10-K.

Article 5, 6, 8(c) and 9 of our Amended and Restated Articles of Incorporation are incorporated by
reference from our Form 10-Q report for the quarter ended March 31, 2015.

Article I and V of our Bylaws, as amended through May 5, 2015, are incorporated by reference
from our Form 10-Q report for the quarter ended March 31, 2015.

Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries
have been omitted.

First Amendment to Credit Agreement, dated as of September 4, 2015, by and among West, certain
of its subsidiaries, the several banks and other financial institutions party thereto, and PNC Bank,
National Association, as administrative agent for the Lenders incorporated by reference from our
Form 10-Q report for the quarter ended September 30, 2015.

Credit Agreement, dated as of October 15, 2015, between West, certain of its subsidiaries, the
lenders party thereto from time to time, PNC Bank, National Association, as Administrative Agent
and PNC Capital Markets, LLC, as Sole Lead Arranger and Sole Bookrunner, is incorporated by
reference from our Form 8-K dated October 15, 2015.

Note Purchase Agreement, dated July 5, 2012, among the Company and the Purchasers named
therein is incorporated by reference from our Form 8-K filed on July 10, 2012.
Retirement Separation Agreement, dated as of June 30, 2015, between us and Donald E. Morel, Jr.,
Ph.D., is incorporated by reference from our Form 8-K dated July 1, 2015.

2015 Long-Term Incentive Plan Award, dated as of June 30, 2015, between us and Donald E. Morel,
Jr., is incorporated by reference from our Form 10-Q report for the quarter ended June 30, 2015.

2015 Long-Term Incentive Plan Award, dated as of June 30, 2015, between us and Patrick Zenner,
is incorporated by reference from our Form 10-Q report for the quarter ended June 30, 2015.

Employment Agreement, dated as of April 13, 2015, between us and Eric M. Green, is incorporated
by reference from our Form 8-K dated April 15, 2015.

Indemnification Agreement, dated as of April 24, 2015, between us and Eric M. Green, is
incorporated by reference from our Form 8-K dated April 30, 2015.

Sign-On Retention Award Notice, dated as of April 24, 2015, from us to Eric M. Green, is
incorporated by reference from our Form 8-K dated April 30, 2015.

Schedule of agreements with executive officers is incorporated by reference from our 2008 Form
10-K report.

Employment Agreement, dated as of April 30, 2002, between us and Donald E. Morel, Jr. is
incorporated by reference from our Form 10-Q report for the quarter ended September 30, 2002.
Amendment #1 to the Employment Agreement between us and Donald E. Morel, Jr., dated as of
December 19, 2008, is incorporated by reference from our 2008 Form 10-K report.

Non-Qualified Stock Option Agreement, dated as of April 30, 2002 between us and Donald E.
Morel, Jr. is incorporated by reference from our Form 10-Q report for the quarter ended September
30, 2002.

Indemnification Agreement, dated as of January 5, 2009 between us and Donald E. Morel, Jr. is
incorporated by reference from our Form 8-K dated January 6, 2009.

Supplemental Employees' Retirement Plan, as amended and restated effective January 1, 2008, is
incorporated by reference from our 2008 Form 10-K report.

Non-Qualified Deferred Compensation Plan for Designated Employees, as amended and restated
effective January 1, 2008, is incorporated by reference from our 2008 Form 10-K report.

F-1

Exhibit
Number
10.17 (2)

10.18 (2)

10.19 (2)

10.20 (2)

10.21 (2)

10.22 (2)

10.23 (2)

10.24 (2)

10.25 (2)

10.26 (2)

10.27 (2)

10.28 (2)

10.29 (2)

10.3

10.31

10.32 (3)

10.33 (3)

10.34 (3)

10.35 (4)

10.36

10.37

Description
Deferred Compensation Plan for Outside Directors, as amended and restated effective June 30,
2013, is incorporated by reference from our 2013 Form 10-K report.

West Pharmaceutical Services, Inc. 2011 Omnibus Incentive Compensation Plan is incorporated by
reference from our Form 8-K filed on May 6, 2011.

2007 Omnibus Incentive Compensation Plan effective as of May 1, 2007, is incorporated by
reference to Exhibit 99.1 of the Company's Form 8-K dated May 4, 2007.

2004 Stock-Based Compensation Plan (now terminated) is incorporated by reference from our
Proxy Statement for the 2004 Annual Meeting of Shareholders.

Form of Executive 2006 Non-Qualified Stock Option Award is incorporated by reference from our
Form 10-Q report for the quarter ended March 31, 2006.

Form of Director 2006 Non-Qualified Stock Option Award Notice is incorporated by reference from
our Form 10-Q report for the quarter ended June 30, 2006.

Form of Director 2006 Stock Unit Award Notice is incorporated by reference from our Form 10-Q
report for the quarter ended June 30, 2006.
Form of 2007 Non-Qualified Stock Option and Performance-Vesting Share Unit Award, issued
pursuant to the 2004 Stock-Based Compensation Plan, is incorporated by reference from our Form
10-Q report for the quarter ended March 31, 2007.

Form of Director 2007 Deferred Stock Award, issued pursuant to the 2007 Omnibus Incentive
Compensation Plan, is incorporated by reference from our Form 10-Q report for the quarter ended
June 30, 2007.

Form of 2008 Non-Qualified Stock Option and Performance-Vesting Share Unit Award, issued
pursuant to the 2007 Omnibus Incentive Compensation Plan, is incorporated by reference from our
Form 10-Q report for the quarter ended March 31, 2008.

Form of Director 2008 Deferred Stock Award, issued pursuant to the 2007 Omnibus Incentive
Compensation Plan, is incorporated by reference from our 2008 Form 10-K report.

Form of 2009 Supplemental Long-Term Incentive Award, is incorporated by reference from our
Form 10-Q report for the quarter ended September 30, 2009.

Letter Agreement dated as of March 30, 2006 between us and Donald E. Morel, Jr. is incorporated
by reference from our Form 10-Q report for the quarter ended June 30, 2006.

Credit Agreement, dated June 3, 2011, by and among us, certain of our subsidiaries, several banks
and other financial institutions from time to time parties thereto (the “Lenders”) and PNC Bank,
National Association, as administrative agent for the Lenders, is incorporated by reference from our
Form 8-K dated June 9, 2011.

Security Agreement, dated June 3, 2011, by and among us, the subsidiaries of the Company listed
on the signature pages thereto and PNC Bank, National Association, as administrative agent, for the
holders of the Obligations, is incorporated by reference from our Form 8-K dated June 9, 2011.

Agreement, effective as of January 1, 2005, between us and The Goodyear Tire & Rubber Company
is incorporated by reference from our Form 10-Q report for the quarter ended June 30, 2005.

First Agreement to Amend to Agreement, effective as of July 1, 2008, between us and The
Goodyear Tire & Rubber Company is incorporated by reference from our Form 10-Q report for the
quarter ended March 31, 2009.

Distributorship Agreement, dated and effective January 18, 2017, between Daikyo Seiko, Ltd. and
us is incorporate by reference from our 2016 Form 10-K report.

Amended and Restated Technology Exchange and Cross License Agreement, dated and effective
January 18, 2017, between Daikyo Seiko, Ltd. and us, incorporated by reference from our 2016
Form 10-K report.

Note Purchase Agreement, dated as of July 28, 2005, among us and each of the purchasers listed on
Schedule A thereto, is incorporated by reference from our Form 8-K report dated August 3, 2005.

Indemnification agreements between us and each of our directors in the form of Exhibit 10.1 to our
Form 8-K report dated January 6, 2009, which is incorporated by reference.

F-2

Exhibit
Number
10.38 (3)

10.39 (2)

10.40 (2)

10.41 (3)

10.42 (2)

10.43 (3)

10.44 (2)

21.

23.

31.1

31.2

32.1*

32.2*

101.INS

101.SCH

101.CAL

101.LAB

101.PRE

101.DEF

Description
Global Supply Agreement by and between ExxonMobil Chemical Company and us, entered into on
August 11, 2014, and effective January 1, 2014 through December 31, 2018 is incorporated by
reference from our Form 8-K report filed on August 15, 2014.

Form of 2014 Long-Term Incentive Plan Award is incorporated by reference from our Form 10-Q
report for the quarter ended March 31, 2014.
Form of 2014 Stock-Settled Restricted Stock Unit Award is incorporated by reference from our
Form 10-Q report for the quarter ended June 30, 2014.

Amendment by and between ExxonMobil Chemical Company and us, incorporated by reference
from our Form 10-Q report for the quarter ended June 30, 2016.

Employment Agreement, dated August 28, 2016, between David Montecalvo and us, incorporated
by reference from our Form 10-Q report for the quarter ended September 30, 2016.

Agreement, dated August 16, 2016, to amend Agreement by and between the Goodyear Tire &
Rubber Company and us, incorporated by reference from our Form 10-Q report for the quarter
ended September 30, 2016.
Form of Change-in-Control Agreement between us and certain of our executive officers, is
incorporated by reference from our Form 10-Q report for the quarter ended September 30, 2017.

Subsidiaries of the Company.

Consent of Independent Registered Public Accounting Firm.

Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

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.

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.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

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.

(2) Management compensatory plan.

(3) Certain portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential

treatment order of the SEC.

(4) Certain portions of this exhibit have been omitted pursuant to a confidential treatment request submitted to the

SEC.

* Furnished, not filed.

F-3

Market Insights.
Scientific Knowledge.
Product Innovation.
Global Reach.

drug containment solutions that are in
line with the challenging and evolving
regulatory landscape.

Investor Online
http://investor.westpharma.com

Trademarks
West without Borders is not affiliated with Doctors Without Borders®, which
is a registered service mark of Bureau International de Medecins San
Frontieres.

INVESTOR
INFORMATION

Stock Listing
NYSE symbol: WST

Shareholders of Record
As of December 31, 2017: 879

Average Daily Trading Volume 2017
First Quarter:
346,011 shares
Second Quarter: 341,446 shares
Third Quarter: 382,321 shares
Fourth Quarter: 356,032 shares

Global Headquarters
West Pharmaceutical Services, Inc.
530 Herman O. West Drive
Exton, PA 19341 | USA
610-594-2900
www.westpharma.com

Annual Meeting
Tuesday, May 1, 2018, 9:30 a.m. Exton, PA

Code of Business Conduct
Available at http://investor.westpharma.com

Investor Relations Contact
Quintin J. Lai
VP, Corporate Development,
Strategy & Investor Relations
610-594-3318
Quintin.Lai@westpharma.com

Transfer Agent and Registrar
Broadridge Financial Solutions, Inc.
51 Mercedes Way
Edgewood, NY 11717
877-830-4936
shareholder@broadridge.com

| West Annual Report 2017

2017
ANNUAL REPORT

West Pharmaceutical Services, Inc.
530 Herman O. West Drive
Exton, PA 19341 | USA
610.594.2900
www.westpharma.com

10150 • 0318