11-K 1 wcm_form11-kx20191231.htm 11-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 11-K

(Mark One)

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

For the fiscal year ended December 31, 2019

OR

o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______


Commission file number 1-8036
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:


WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN


B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

WEST PHARMACEUTICAL SERVICES, INC.
530 HERMAN O. WEST DRIVE
EXTON, PA 19341
610-594-2900





REQUIRED INFORMATION
Items
1 to 3.Not required; see Item 4 below.
4.The following are furnished for the Plan:
(a) The West Contract Manufacturing Savings and Retirement Plan is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and is, therefore, filing Plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA.
(b) A written consent of the accountant.


























WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN

FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
For the Years Ended December 31, 2019 and 2018


















WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN


TABLE OF CONTENTS

* Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Participants and the Administrator of
West Contract Manufacturing Savings and Retirement Plan:

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of the West Contract Manufacturing Savings and Retirement Plan (the “Plan”) as of December 31, 2019 and 2018, and the related statements of changes in net assets available for benefits for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements 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 Plan 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.



1
Supplemental Information

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2019, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.


/s/ Fischer Cunnane & Associates Ltd

We have served as the Plan’s auditor since 2009.

West Chester, Pennsylvania
June 19, 2020

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WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2019 AND 2018



20192018
Assets:
Investments:
Investments at fair value (Note D)$5,361,523  $3,982,117  
Plan interest in Master Trust (Note C)298,944  183,604  
Total investments5,660,467  4,165,721  
Receivables:
Employer contributions205,673  108,749  
Notes receivable from participants295,201  203,738  
Total receivables500,874  312,487  
Total assets6,161,341  4,478,208  
Liabilities:
Excess contributions payable
12,084  19,227  
Net assets available for benefits$6,149,257  $4,458,981  





















The accompanying Notes are an integral part of these statements.

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WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018



20192018
Additions:
Investment (loss) income:
Interest and dividend income$191,650  $147,802  
Net appreciation (depreciation) in fair value of investments788,544  (368,372) 
Plan interest in Master Trust net investment income105,868  (4,273) 
Net investment income (loss)1,086,062  (224,843) 
Interest income on notes receivable from participants13,140  10,883  
Contributions:
Employer398,918  266,626  
Participant358,357  290,784  
Rollovers13,709  —  
Total contributions770,984  557,410  
Total additions1,870,186  343,450  
Deductions:
Benefits paid173,653  694,438  
Plan expenses6,257  6,349  
Total deductions179,910  700,787  
Net increase (decrease)1,690,276  (357,337) 
Net assets available for plan benefits:
Beginning of the year4,458,981  4,816,318  
End of the year$6,149,257  $4,458,981  










The accompanying Notes are an integral part of these statements.

4




WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
NOTE A - Description of Plan

The following description of the West Contract Manufacturing Savings and Retirement Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s current provisions.

General
The Plan is a defined contribution plan that was established January 1, 1993, and subsequently amended. Full-time employees of West Contract Manufacturing LLC (the “Employer”) who are at least eighteen years of age are immediately eligible to participate in the Plan. The Plan is subject to the provisions of the ERISA, as amended, and is designed to comply with Section 1081.01(d) of the Puerto Rico Internal Revenue Code of 2011 (the “Code”), as amended. Effective November 30, 2016, the name of the Plan was changed from the “Tech Group Puerto Rico Savings and Retirement Plan” to the “West Contract Manufacturing Savings and Retirement Plan.”

Master Trust
Effective January 3, 2011, West Pharmaceutical Services, Inc. (the “Company” or “Plan Administrator”) entered into an agreement with Vanguard Fiduciary Trust Company (“VFTC”) to form a master trust (“Master Trust”) to hold certain investments of the Plan and the West Pharmaceutical Services, Inc. 401(k) Plan on a commingled basis, for investment purposes only. The sole investment in the Master Trust is common stock of the Company (the “West Stock Fund”). See Note C for more information regarding the Master Trust.

Automatic Enrollment
Employees hired on January 1, 2017 or later are automatically enrolled in the Plan 30 days following their date of hire at a pre-tax contribution rate of 3% of eligible compensation. Employees may choose to decline participation by contacting The Vanguard Group, recordkeeper for the Plan.

Employee Contributions
Eligible employees may contribute up to 50% of pre-tax annual compensation and 10% of after-tax annual compensation, provided such contributions do not exceed the limits of the Code. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans.

Company Matching Contributions
The Company matches 100% of the first 3% of compensation that a participant contributes to the Plan and 50% of the next 2% of compensation contributed to the Plan.

Non-Elective Company Contributions
Effective January 1, 2017, employees were entitled to receive a Non-Elective Company Contribution equal to 1% of their eligible compensation. The Non-Elective Company Contribution was 2% in 2018 and 3% in 2019. Employees must be employed on December 31 or have terminated employment during the year due to death, total and permanent disability, or in connection with an involuntary reduction in force such as a restructuring, reorganization, plant closure, or mass layoff or have reached age 55 with at least 10 years of service to be eligible for the annual Non-Elective Company Contribution.

The Non-Elective Company Contribution is made annually and will be allocated to participant accounts no later than the March 15 that follows the end of the previous calendar year.



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WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
Investments
The Plan offers mutual funds and the West Stock Fund as investment options for participants. The Company’s Investment Committee periodically reviews, and may make changes to, the investment alternatives available.

Participants may change or transfer their investment options at any time. Participants may not allocate future contributions to, or make purchases into, the West Stock Fund if their current balance in the fund exceeds 20% of their total account balance. Company matching contributions and Non-Elective Company Contributions are invested according to the investment allocations made for participant contributions.

Participant Accounts
Individual accounts are maintained for each Plan participant. Each account is self-directed and is credited with the participant’s contribution, the Company’s Matching Contribution and any applicable Non-Elective Company Contributions, and an allocation of Plan earnings (losses). Participant accounts are charged with certain administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting
Participants are immediately vested in their contributions and Company Matching Contributions, plus earnings thereon. Participants become vested in the Non-Elective Company Contributions after completing three years of service with the Company. All contributions are 100% vested when a participant reaches age 65, dies or becomes totally and permanently disabled.

Notes Receivable from Participants
Participants may borrow from their fund accounts a maximum amount equal to the lesser of $50,000 or 50% of the vested portion of their account balances. The loans are secured by the balance in the participant’s account. Loan terms generally range from one to five years, except for loans to purchase a principal residence which may be repaid over fifteen years, and bear interest at the prevailing interest rate determined by the Plan Administrator on the date the loan is made. At December 31, 2019 and 2018, the interest rate on outstanding loans ranged from 4.25% to 6.50% and 4.25% to 6.25%, respectively. Principal and interest are paid ratably through payroll deductions.

Benefits
Benefits are payable upon termination of a participant’s employment, or termination of service due to death, disability or retirement. Participants may make annual in-service withdrawals in accordance with the provisions outlined in the Plan document. Generally, any benefit due shall be paid as soon as administratively feasible.

NOTE B - Summary of Significant Accounting Policies

Basis of Accounting
The accompanying financial statements of the Plan are prepared using the accrual basis of accounting.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying footnotes. Actual results could differ from these estimates.


6




WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
Valuation of Investments and Income Recognition
The Plan’s investments are stated at fair value. See Note D for discussion of fair value measurements, with the exception of the Master Trust, which is discussed in Note C. Purchases and sales of investments are recorded on a trade-date basis. The Plan presents in its statements of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments, which consists of both realized and unrealized gains and losses.

Dividend income is recorded on the ex-dividend date. Capital gain distributions are included in dividend income. Interest income is accrued when earned.

Payment of Benefits
Benefits are recorded when paid. Delinquent notes receivable from participants are treated as distributions based upon the terms of the Plan document.

Plan Expenses
Administrative expenses of the Plan are paid jointly by participants and the Employer.

New Accounting Pronouncements
In February 2017, the Financial Accounting Standards Board (“FASB”) issued guidance to clarify presentation requirements for an employee benefit plan’s interest in a master trust. This guidance also requires more detailed disclosures of an employee benefit plan’s interest in a master trust. Entities should apply these amendments retrospectively to each period for which financial statements are presented. This guidance is effective for fiscal years beginning after December 15, 2018. We adopted this guidance as of January 1, 2019 and have reflected the appropriate disclosures in Note C.

In August 2018, the FASB issued guidance which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. We early adopted the guidance as of January 1, 2019. The adoption did not have a material impact to our financial statements.

NOTE C - Master Trust

As mentioned in Note A, a portion of the Plan’s investments are held in a Master Trust, commingled with assets of another Company-sponsored retirement plan. The sole investment in the Master Trust is the West Stock Fund.

The total fair value of the Master Trust’s investment in the West Stock Fund, as of December 31, 2019 and 2018, was $52,674,914 and $39,382,389, respectively. The West Stock Fund is valued at the year-end unit closing price, which is comprised of the quoted market price of the Company stock plus an uninvested cash portion, which is considered a Level 1 fair value measurement.


7




WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
The changes in net assets for the Master Trust for the years ended December 31 are as follows:
20192018
Dividends
$231,485  $241,539  
Net appreciation (depreciation) in fair value of common stock
19,765,188  (157,629) 
Net investment income 19,996,673  83,910  
Net transfers
(6,704,148) (5,262,171) 
Increase (decrease) in net assets
13,292,525  (5,178,261) 
Net assets:
    Beginning of year39,382,389  44,560,650  
    End of year
$52,674,914  $39,382,389  

The Plan’s share of the Master Trust’s net assets and investment activities is based upon the total of each individual participant’s share of the Master Trust. The Plan’s interest in the net assets of the Master Trust was 0.57% and 0.47% as of December 31, 2019 and 2018, respectively.

The following tables summarize the Plan's investments in the Master Trust for the years ended December 31:

Master Trust BalancePlan's Interest in Master Trust Balance
December 31, 2019December 31, 2019
Common Stock$52,674,914  $298,944  
Total investments at fair value$52,674,914  $298,944  

Master Trust BalancePlan's Interest in Master Trust Balance
December 31, 2018December 31, 2018
Common Stock$39,382,389  $183,604  
Total investments at fair value$39,382,389  $183,604  


NOTE D - 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.


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WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
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 summarize the Plan’s investments, excluding the Master Trust, that are measured at fair value on a recurring basis:
Balance at
Basis of Fair Value MeasurementsDecember 31,
Level 1Level 2Level 32019
Mutual funds$5,361,523  $—  $—  $5,361,523  
Total Investments at fair value$5,361,523  $—  $—  $5,361,523  

Balance at
Basis of Fair Value MeasurementsDecember 31,
Level 1Level 2Level 32018
Mutual funds$3,982,117  $—  $—  $3,982,117  
Total Investments at fair value$3,982,117  $—  $—  $3,982,117  

The valuation methodologies used for assets measured at fair value are as follows:

Mutual funds: Valued at quoted market prices, which represent the net asset value (“NAV”) of shares held by the Plan at year-end.

NOTE E - Risks and Uncertainties

The Plan provides for various investment options. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits.

NOTE F - Related Party Transactions

The Plan invests in shares of mutual funds, which are managed by VFTC, a subsidiary of The Vanguard Group, Inc. VFTC acts as custodian for these investments, as well as the West Stock Fund, as defined by the Plan. Therefore, these transactions qualify as party-in-interest transactions, which are exempt from the prohibited transaction rules. In addition, loans to participants qualify as party-in-interest transactions.


9




WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
NOTE G - Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of termination of the Plan, participants’ accounts will be distributed in accordance with the provisions of the Plan.

NOTE H - Tax Status

The Plan obtained its latest determination letter on September 17, 1993, in which the Puerto Rico Department of Treasury (“Treasury”) stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended and restated since receiving the determination letter. However, the Plan Administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements. On July 15, 2014, the Plan Administrator filed a request for a determination letter from the Treasury on the amended Plan, and is currently awaiting a response.

U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service or Treasury. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that, as of December 31, 2019, there were no uncertain positions taken or expected to be taken that require recognition or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes the Plan is no longer subject to income tax examinations prior to 2015.

NOTE I - Subsequent Events

The Plan has evaluated, for consideration of recognition or disclosure, subsequent events that have occurred through the date of issuance, June 19, 2020, and has determined that, except for the matters noted below, no significant events occurred after December 31, 2019 but prior to the issuance of these financials statements, that would have a material impact on its financial statements.

The 2019 novel coronavirus ("COVID-19") has affected, and may continue to affect, economic activity globally, nationally, and locally. Following the COVID-19 outbreak, the values of investment securities have been subject to significant volatility. Economic and market conditions and other effects of the COVID-19 outbreak may continue to affect the Plan. The extent of the impact of the COVID-19 outbreak on the Plan’s investments and the amounts reported in the 2019 statement of net assets cannot be predicted at this time. The Company has been actively monitoring the COVID-19 situation and its impact globally. Our primary objectives have remained the same throughout the pandemic: to support the safety of our team members and their families and continue to support patients around the world.

The Coronavirus Aid Relief, and Economic Security Act ("CARES Act") was passed by the U.S. Senate on March 26, 2020. Plan Management is in the process of reviewing the CARES Act and any resulting changes to the Plan.

10
WEST CONTRACT MANUFACTURING
SAVINGS AND RETIREMENT PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2019
PLAN EIN: 86-0640193
PLAN NUMBER: 001
(a)(b) Identity of issue, borrower, lessor, or similar party(c) Description of investment including maturity date, rate of interest, collateral, par, or maturity value(d) Cost(e) Current Value
*American Funds EuroPacific Growth Fund Class R-6Mutual Fund**$407,669  
*MFS Global Equity Fund Class R6Mutual Fund**63,399  
*PIMCO Inflation Response Multi-Asset Fund Institutional ClassMutual Fund**1,186  
*Vanguard Diversified Equity FundMutual Fund**1,543,983  
*Vanguard Institutional Target Retirement 2015 FundMutual Fund**27,465  
*Vanguard Institutional Target Retirement 2020 FundMutual Fund**665,837  
*Vanguard Institutional Target Retirement 2025 FundMutual Fund**153,633  
*Vanguard Institutional Target Retirement 2030 FundMutual Fund**85,757  
*Vanguard Institutional Target Retirement 2035 FundMutual Fund**113,760  
*Vanguard Institutional Target Retirement 2040 FundMutual Fund**78,508  
*Vanguard Institutional Target Retirement 2045 FundMutual Fund**128,250  
*Vanguard Institutional Target Retirement 2050 FundMutual Fund**28,362  
*Vanguard Institutional Target Retirement 2055 FundMutual Fund**7,077  
*Vanguard Institutional Target Retirement 2065 FundMutual Fund**4,274  
*Vanguard Institutional Target Retirement Income FundMutual Fund**348,047  
*Vanguard Prime Money Market FundMutual Fund**224,419  
*Vanguard Total Bond Market Index Fund Institutional SharesMutual Fund**419,160  
*Vanguard Total International Stock Index Fund Admiral SharesMutual Fund**7,526  
*Vanguard Total Stock Market Index Fund Institutional SharesMutual Fund**1,038,920  
*Vanguard Total World Stock Index Fund Investor SharesMutual Fund**14,291  
*West Stock FundMaster Trust**298,944  
*Participant Loans4.25% - 6.50%$0295,201  
$5,955,668  
*Party-in-interest
**Cost has been omitted, as investment is participant-directed.


11


SIGNATURE

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.



WEST CONTRACT MANUFACTURING SAVINGS AND RETIREMENT PLAN


By: /s/ Bernard J. Birkett
Bernard J. Birkett
Plan Administrator



Date:  June 19, 2020

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EXHIBIT INDEX


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