form11ktech.htm
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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
FORM
11-K
(Mark
One)
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þ
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31, 2009
OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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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:
THE
TECH GROUP 401(k) 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.
101
GORDON DRIVE
LIONVILLE,
PA 19341
610-594-2900
REQUIRED
INFORMATION
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Items
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1
to 3.
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Not
required; see Item 4 below.
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4.
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The
following are furnished for the Plan:
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(a) The
Tech Group 401(k) Plan is subject to the Employee Retirement Income
Security Act of 1974 (“ERISA”), as amended, and is, therefore, filing Plan
financial statements prepared in accordance with the financial reporting
requirements of ERISA.
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(b) A
written consent of the accountant.
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THE
TECH GROUP 401(k) PLAN
FINANCIAL
STATEMENTS
For
the Years Ended December 31, 2009 and 2008
TABLE
OF CONTENTS
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Page
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1
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FINANCIAL
STATEMENTS:
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2
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3
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4
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10
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11
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the
Participants and Administrators of the
The Tech
Group 401(k) Plan
We have
audited the accompanying statements of net assets available for benefits of The
Tech Group 401(k) Plan as of December 31, 2009 and 2008, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of The Tech Group
401(k) Plan as of December 31, 2009 and 2008, and the changes in its
net assets available for benefits for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
/s/ Fischer Cunnane
& Associates Ltd
Fischer
Cunnane & Associates Ltd
Certified
Public Accountants
West
Chester, Pennsylvania
June 28,
2010
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STATEMENTS
OF NET ASSETS AVAILABLE FOR BENEFITS
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AS
OF DECEMBER 31, 2009 AND 2008
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2009
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2008
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Investments,
at fair value (Note D):
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Mutual
funds
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$ |
- |
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$ |
10,743,636 |
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Collective
trust funds
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- |
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3,732,130 |
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Participant
promissory notes
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- |
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411,064 |
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Total
Investments
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- |
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14,886,830 |
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Employer
contributions receivable
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- |
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4,079 |
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Participant
contributions receivable
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- |
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6,967 |
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Total
Receivables
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- |
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11,046 |
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NET
ASSETS REFLECTING ALL INVESTMENTS AT FAIR VALUE
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- |
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14,897,876 |
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Adjustment
from fair value to contract value for fully benefit-responsive investment
contracts
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- |
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77,625 |
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NET
ASSETS AVAILABLE FOR BENEFITS
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$ |
- |
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$ |
14,975,501 |
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The
accompanying Notes are an integral part of these statements.
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STATEMENTS
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
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2009
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2008
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ADDITIONS
(REDUCTIONS):
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Interest
and dividend income
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$ |
405,168 |
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$ |
706,649 |
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Net
appreciation (depreciation) in fair value of investments (Note
C)
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3,401,186 |
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(6,643,995 |
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Contributions
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Employer
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874,301 |
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747,667 |
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Participant
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1,980,100 |
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1,873,027 |
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Total
Additions (Reductions)
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6,660,755 |
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(3,316,652 |
) |
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DEDUCTIONS:
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Benefits
paid
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(1,474,857 |
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(2,567,673 |
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Plan
expenses
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(5,212 |
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(4,013 |
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Total
Deductions
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(1,480,069 |
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(2,571,686 |
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Transfer
to the West Pharmaceutical Services, Inc. 401(k) Plan (Note
A)
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(20,156,187 |
) |
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- |
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NET
DECREASE
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(14,975,501 |
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(5,888,338 |
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS:
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Beginning
of the year
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14,975,501 |
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20,863,839 |
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End
of the year
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$ |
- |
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$ |
14,975,501 |
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The
accompanying Notes are an integral part of these statements.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE
A - Description of Plan
General
The West
Pharmaceutical Services, Inc. 401(k) Savings and Retirement Plan for Tech Group
Employees was a defined contribution plan, established March 1, 1995, covering
all employees of The Tech Group (the "Employer"), a West Pharmaceutical Services
Company (the “Company”), who had completed three months of service and were at
least eighteen years of age. Effective October 1, 2008, the name of the plan was
changed to The Tech Group 401(k) Plan (the “Plan”) and the Plan was amended and
restated in compliance with final 401(k) regulations, including the provisions
of the Economic Growth and Tax Relief Reconciliation Act of 2001. The Plan was
subject to the provisions of the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
Plan
Merger
On
December 31, 2009 (the “Merger Date”), the Plan was merged into the West
Pharmaceutical Services, Inc. 401(k) Plan (the “West 401(k) Plan”). As a result,
Plan net assets of $20,156,187, which included $479,974 in outstanding
participant loans, were transferred to the West 401(k) Plan at that time.
Participant accounts remained invested according to their investment
instructions on record with the Plan as of the Merger Date.
Contributions
Effective
October 1, 2008, participants were able to contribute up to 50% of pre-tax
annual compensation and 12% of after-tax annual compensation with no combined
limit, subject to Internal Revenue Code limitations. Prior to October 1, 2008,
participants could contribute up to the lesser of 75% of pre-tax compensation or
the amount allowed by the Internal Revenue Service.
The Plan
also allowed participants to make rollover contributions or transfers from other
qualified plans if such rollover or transfer did not jeopardize the tax-exempt
status of the Plan or create adverse tax consequences for the
Employer.
Prior to
the Merger Date, the Employer matched 100% of the first 3% of base compensation
that a participant contributed to the Plan and 50% of the next 2% of
contributions. Effective October 1, 2008, participants were eligible to receive
employer contributions immediately upon beginning participation in the Plan.
Prior to that date, there was a twelve-month waiting period that applied to
employer contributions.
Investing
Options
The Plan
offered twenty-four mutual funds and two collective trust funds as investment
options for participants. Additionally, effective January 1, 2009, participants
could select West Pharmaceutical Services, Inc. common stock (the “West Stock
Fund”) as an investment option. Participants were not permitted to allocate
future contributions to, or make purchases into, the West Stock Fund if their
current balance in the fund exceeded 20% of their total account
balance.
Participant
Accounts
Each
participant's account was self-directed and was credited with the participant's
contributions, allocations of Employer contributions and Plan earnings, offset
by certain administrative expenses and the allocation of Plan losses.
Allocations were based on participant earnings or account balances, as defined.
The benefit to which a participant was entitled was limited to each
participant's vested account balance.
Vesting
Participants
were immediately vested in their contributions and employer contributions plus
actual earnings thereon.
THE TECH
GROUP 401(k) PLAN
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE
A - Description of Plan - continued
Employer
discretionary contributions made prior to October 1, 2008 retained the previous
four-year vesting schedule, as shown below. Upon disability, normal retirement
age, or death, a participant would become fully vested in these
contributions.
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Years
of Service
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Percent
Vested
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Less
than 1
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0%
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1
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25%
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2
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50%
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3
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75%
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4
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100%
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For the
purpose of determining a participant’s vested interest under the Plan, “Year of
Service” meant the completion of at least one thousand hours of service by a
participant in a Plan year. All years of service with the Employer were
counted.
Participant
Promissory Notes
Participants
could 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. Loan terms
generally ranged from one to five years, except for loans to purchase a
principal residence which could be repaid over fifteen years, and bore interest
at the Prime rate plus 1% as published on the first business day of each month
following a change in the rate, as determined on the date the loan was made.
Principal and interest were paid ratably through payroll deductions. All
participant promissory notes outstanding as of the Merger Date were transferred
to the West 401(k) Plan. These loans will remain outstanding under the West
401(k) Plan in accordance with the terms and conditions of such loans. Prior to
the transfer, the loans bore interest at rates ranging between 4.25% and 10%. At
December 31, 2008, interest rates on outstanding loans ranged from 5.00% to
10.00%.
Benefits
Benefits
were payable upon termination of a participant's employment, or termination of
service due to death, disability or retirement. Participants could make annual
in-service withdrawals after attaining age 59 ½ or upon a hardship, in
accordance with the terms of the Plan. Generally, any benefit due would be paid
as soon as administratively feasible.
Plan
Expenses
Certain
expenses of the Plan were paid by the Employer or the Plan.
NOTE
B - Summary of Significant Accounting Policies
Basis
of Accounting
The
accompanying financial statements of the Plan were prepared using the accrual
basis of accounting.
Recently
Adopted Accounting Pronouncements
As of
December 31, 2009, the Plan adopted Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (the “Codification”), which became
the single source of authoritative accounting principles generally accepted in
the United States of America to be applied in the preparation of financial
statements. All other literature is considered non-authoritative. The adoption
of the Codification changed the Plan’s references to various accounting
pronouncements, but did not impact the Plan’s financial
statements.
THE TECH
GROUP 401(k) PLAN
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE
B - Summary of Significant Accounting Policies - continued
In April
2009, the FASB issued additional guidance to assist in determining whether a
market is active or inactive and whether a transaction is distressed. It is
applicable to all assets and liabilities that are measured at fair value and
requires enhanced disclosures. This guidance was effective for the Plan, on a
prospective basis, as of December 31, 2009. The adoption did not have an impact
on the financial statements of the Plan.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to have
made estimates and assumptions that could affect the amounts reported in the
financial statements and accompanying footnotes. Actual results could differ
from those estimates.
Valuation
of Investments and Income Recognition
The
Plan's investments were stated at fair value (see Note D), with the exception of
the collective trust funds, which are discussed separately below.
Purchases
and sales of investments were reflected on a trade-date basis. The Plan
presented in the statements of changes in net assets available for benefits the
net appreciation (depreciation) in fair value of its investments which consisted
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Interest
income was accrued when earned and dividends were recorded on the ex-dividend
date. Capital gain distributions were included in dividend income.
Collective
Trust Funds
The Plan
held an investment in the Vanguard Retirement Savings Trust, a collective trust
fund. This trust fund invested in investment contracts issued by insurance
companies and commercial banks and in investment contracts backed by
high-quality fixed income securities. The fund sought to minimize exposure to
credit risk by diversifying among high credit-quality investments and investment
contracts which were structured to smooth market gains and losses over
time.
The Plan
also held an investment in the Fidelity Advisor Stable Value Fund. This fund
invested in investment contracts issued by insurance companies and other
financial institutions, fixed income securities and money market funds to
provide daily liquidity. The fund sought to preserve the principal investment
while earning interest income.
The
Plan’s investment in these collective trust funds was included in the statement
of net assets available for benefits at fair value, along with a corresponding
adjustment to reflect fully benefit-responsive contracts at contract value.
Contract value represented contributions made to the collective trust funds,
plus earnings, less participant withdrawals and administrative expenses.
Contract value was reported to the Plan by the Vanguard Fiduciary Trust Company.
The statement of changes in net assets available for plan benefits was prepared
on a contract value basis. Participants could direct the withdrawal or transfer
of all or a portion of their investment at contract value.
The
average yield of the Vanguard Retirement Savings Trust was 2.84% and 4.15% for
the years ended December 31, 2009 and 2008, respectively.
The
crediting interest rate and average yield for the Fidelity Advisor Stable Value
Fund for the year ended December 31, 2008 was 2.83% and 3.42%,
respectively.
Payment
of Benefits
Benefits
were recorded when paid.
THE TECH
GROUP 401(k) PLAN
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE
C - Investments
Effective
October 1, 2008, the Plan’s investments were held by Vanguard Fiduciary Trust
Company (“VFTC”), and VFTC served as trustee to the Plan.
Investments
that represented 5% or more of the Plan’s net assets as of December 31, 2008
were as follows:
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2008
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Fidelity
Advisor Stable Value
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$ |
2,064,340 |
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American
Funds EuroPacific Growth Fund
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|
1,131,365 |
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Vanguard
Capital Opportunity Fund Inv
|
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|
1,195,768 |
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Vanguard
Extended Market Index Fund Inv
|
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|
781,056 |
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Vanguard
Growth and Income Fund Inv
|
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|
1,569,202 |
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Vanguard
Morgan Growth Fund Inv
|
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|
1,276,247 |
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Vanguard
Total Bond Market Index Fund Inv
|
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1,453,794 |
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Vanguard
Retirement Savings Trust, at contract value
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1,745,415 |
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During
2009 and 2008, the Plan’s investments, including gains and losses on investments
bought and sold, as well as held during the year, appreciated (depreciated) in
value as follows:
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2009
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2008
|
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|
West
Stock Fund
|
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$ |
2,308 |
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$ |
- |
|
|
Mutual
funds
|
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|
3,398,878 |
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|
(6,643,995 |
) |
|
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$ |
3,401,186 |
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|
$ |
(6,643,995 |
) |
NOTE
D - Fair Value Measurements
On
January 1, 2008, the Plan adopted the new guidance for fair value measurements
of financial assets and liabilities, which defines fair value, establishes a
framework for measuring fair value and expands disclosure requirements. Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability (exit price) in an orderly transaction between market
participants at the measurement date.
The
guidance also establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The three levels of
the hierarchy are described below:
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Level
1:
|
Unadjusted
quoted prices in active markets for identical assets or
liabilities.
|
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|
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 inactive
markets.
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Level
3:
|
Unobservable
inputs that reflect the reporting entity’s own
assumptions.
|
The
asset’s fair value measurement level within the fair value hierarchy is based on
the lowest level of any input that is significant to the fair value measurement.
Valuation techniques used need to maximize the use of observable inputs and
minimize the use of unobservable inputs.
THE TECH
GROUP 401(k) PLAN
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE
D - Fair Value Measurements - continued
As of
December 31, 2008, the Plan’s investments measured at fair value on a recurring
basis were as follows:
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Basis
of Fair Value Measurements
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Total
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Level
1
|
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Level
2
|
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Level
3
|
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Fair
Value
|
|
|
Mutual
funds
|
|
$ |
10,743,636 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
10,743,636 |
|
|
Collective
trust funds
|
|
|
- |
|
|
|
3,732,130 |
|
|
|
- |
|
|
|
3,732,130 |
|
|
Participant
loans
|
|
|
- |
|
|
|
- |
|
|
|
411,064 |
|
|
|
411,064 |
|
|
Total
investments at fair value
|
|
$ |
10,743,636 |
|
|
$ |
3,732,130 |
|
|
$ |
411,064 |
|
|
$ |
14,886,830 |
|
The table
below summarizes the changes in the fair value of the Plan’s Level 3
investments:
|
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|
Participant
Loans
|
|
|
Balance
as of January 1, 2008
|
|
$ |
407,633 |
|
|
Purchases,
sales, issuances and settlements, net
|
|
|
3,431 |
|
|
Balance
as of December 31, 2008
|
|
|
411,064 |
|
|
Purchases,
sales, issuances and settlements, net
|
|
|
68,910 |
|
|
Transfers
to the West 401(k) Plan
|
|
|
(479,974 |
) |
|
Balance
as of December 31, 2009
|
|
$ |
- |
|
Following
is a description of the valuation methodologies used for assets measured at fair
value.
Mutual funds: Valued at
quoted market prices, which represented the net asset value of shares held by
the Plan at year-end.
Collective trust funds:
Valued at net asset value at year-end, based on the fair value of the underlying
investments.
Participant loans: Valued at
cost which approximated fair value.
NOTE
E – Withdrawn Participants
For 2009
and 2008, distributions of benefit payments were $1,474,857 and $2,567,673,
respectively, which included $19,700 and $17,607, respectively, in deemed
distributions.
NOTE
F - Risks and Uncertainties
The Plan
provided for various investment options in any combination of stocks, mutual
funds, and collective trust funds. Investment securities were exposed
to various risks, such as interest rate, market and credit.
NOTE
G – Party-In-Interest Transactions
Through
September 30, 2008, the Plan invested in shares of mutual funds and collective
trust funds managed by an affiliate of Fidelity Management Trust Company, the
Trustee of the Plan at that time. Effective October 1, 2008, the Plan invested
in shares of mutual funds and collective trust funds managed by an affiliate of
VFTC. VFTC acted as Trustee for only those investments as defined by the
Plan. These transactions qualified as party-in-interest transactions,
which were exempt from the prohibited transaction rules. In addition, the West
Pharmaceutical Services, Inc. common stock transactions also qualify as
party-in-interest transactions.
THE TECH
GROUP 401(k) PLAN
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE
H - Plan Termination
Prior to
the plan merger, the Company had the right to terminate the Plan. On December
31, 2009, the Plan was merged into the West 401(k) Plan. All employees of the
Employer became eligible to participate in the West 401(k) Plan effective
January 1, 2010.
NOTE
I – Income Tax Status
The Plan
obtained its latest determination letter on August 25, 2005, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue
Code. The Plan was amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that the Plan
was designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, no provision for income taxes had been
included in the Plan's financial statements.
NOTE
J – Subsequent Events
The
Plan’s management evaluated subsequent events through June 28, 2010, the date on
which the financial statements were issued, and no additional disclosures were
required.
The Plan. Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
THE TECH
GROUP 401(k) PLAN
By: /s/ William J.
Federici
William
J. Federici
Vice
President and Chief Financial Officer
Plan
Administrator
Date: June 28,
2010
|
Exhibit
Number
|
|
Description
|
|
|
|
Consent
of Independent Registered Public Accounting
Firm
|