Good morning and welcome to the West Pharmaceutical Services Fourth Quarter and Full Year 2012 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. If at any time you require operator assistance, please press star followed by zero and we will be happy to assist you. This call is being recorded on behalf of West and is copyrighted material. It cannot be rerecorded or rebroadcasted without the company’s express permission. Your participation in this call implies your consent to our taping. If you have any objection, you may disconnect at this time. And now I’d like to turn today’s meeting over to Mr. John Woolford from Westwicke Partners. Sir, you may begin.

Thank you, Operator. Good morning everyone and welcome to West’s fourth quarter and full year 2012 results conference call. We issued our financial results this morning and the release has been posted in the Investor section on the Company’s website located at www.westpharma.com. If you have not received a copy of this announcement, please call Westwicke Partners at 443-213-0500 and a copy will be sent to you immediately. Posted on the Company’s website a slide presentation that management will refer to in their remarks today. The presentation is in PDF format. Should you require a link to a free download of that software that will enable users to view the presentation, it is also available on the website. I remind you that statements made by management on this call and in the presentation will contain forward-looking statements within the meaning of U.S. federal securities law and that are based on management’s beliefs and assumptions, current expectations, estimates and forecasts. Statements that are not historical facts, including statements that are preceded by, followed by, or that include words such as estimate, expect, intend, believe, plan, anticipate, and other words and terms of similar meaning are forward-looking statements. West’s estimated or anticipated future results, product performance or other non-historical facts are forward-looking and reflect our current perspective on existing trends and information. Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. These statements are subject to known or unknown risks or uncertainties and 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. For a non-exclusive list of factors which could cause actual results to differ from expectations, please refer to today’s press release. Investors are also advised to consult any further disclosures the company makes on related subjects in the company’s 10-K, 10-Q, and 8-K reports. Except as required by applicable securities laws, the company undertakes no obligation to publicly update forward-looking statements whether as a result of new information, future events, or otherwise. In addition, during today’s call management may make reference to non-GAAP financial measures including adjusting operating profit and adjusted diluted EPS. These measures and their component parts have no standardized meaning prescribed by U.S. GAAP and therefore may not be comparable to and should not be viewed as a substitute for U.S. GAAP operating income and diluted EPS. Reconciliations of the non-GAAP financial measures to the most comparable financial results prepared in conformity to GAAP are provided in materials accompanying this morning’s earnings release. At this time, I would like to turn the call over to Don Morel, West’s Chairman and CEO. Don?

Thank you, John, and good morning everyone. Welcome to West’s 2012 year-end conference call. Joining me today are Bill Federici, West’s Chief Financial Officer, and Mike Anderson, our Treasurer and primary investor relations contact. This morning, Bill and I will be giving an overview of our fourth quarter and full-year 2012 performance and our outlook for 2013. Throughout our remarks, we will refer to a PowerPoint slide deck that can be accessed via our website under Investors. If you cannot access the file, the information in the slides is covered in both this morning’s release and our commentary. Financial highlights for our fourth quarter are summarized on Slide No. 3. Continued strong demand in both operating segments resulted in sales of $321.5 million for the quarter, an increase of 10.6% over the prior year, excluding the impact of currency. Both packaging systems and delivery systems posted double-digit sales gains, again excluding the effects of currency. Sales in packaging were lifted by ongoing demand for our high value product lines while delivery systems benefited from growth in both our proprietary products and contract manufacturing operations. For the quarter, our consolidated gross margin improved to 30.3%, an increase of 1.4 percentage points. Adjusted operating profit improved 10.7% when compared with the prior year and adjusted earnings per share were $0.61. Additional segment details are provided on Slide No. 4. Pharmaceutical packaging sales were again driven by volume growth, higher selling prices in key product lines, and the continued positive sales mix bolstered by higher sales of proprietary products such as Westar, FluroTec, Envision, and ready-to-use stoppers and seals. Delivery system sales grew as a result of strong demand for contract manufacturing services with existing healthcare customers, stronger CZ sales in the quarter, and proprietary devices for reconstitution and safety. The quarter was…

Thank you, Don, and good morning everyone. We issued our fourth quarter results this morning, reporting net income of $21.1 million or $0.60 per diluted share versus the $0.54 per diluted share we reported in the fourth quarter of 2011. Excluding the effects of restructuring costs and acquisition-related earn-out adjustments, fourth quarter 2012 earnings were $0.61 per diluted share versus the $0.59 we earned in Q4 2011. A reconciliation of these non-GAAP measures is provided on Slides 15 through 18. Keep in mind as you review our results that foreign currency translation rates, most notably the decline in the euro’s value compared to the U.S. dollar, resulted in a $0.02 per share reduction in Q4 2012 earnings per share in comparison to the same period in 2011. For all of 2012, foreign currency translation is $0.16 per share unfavorable to the prior year. Turning to sales, Slide 8 shows the components of our consolidated sales increase. Consolidated fourth quarter sales were $321.5 million, an increase of 10.6% over fourth quarter 2011 sales, excluding exchange. The increase was driven by a favorable mix in unit volume gains and sales price increases which in the aggregate added sales of $31 million in the current quarter at constant exchange rates. Packaging and system sales increased by $22 million or 10.5% over the same quarter 2011 sales, excluding exchange. A favorable sales mix and volume growth accounted for six percentage points of the increase. Higher selling prices in packaging systems contributed the remainder of the increase. High value product sales increased 17% versus the prior year quarter, excluding exchange. Our Q4 2012 sales comparisons to the prior year period continued to benefit from customer inventory management actions. Excluding the positive effects of the customer inventory builds and our higher than normal sales price increases…

Thank you very much, Bill. This concludes our commentary for this morning, and we now look forward to answering any questions you might have. Operator?

Thank you. [Operator instructions] Your first question comes from the line of Arnie Ursaner with CJS Securities. Please proceed. Arnie Ursaner – CJS Securities: Hi, good morning. A couple questions related to the headquarter relocation. What expenses should we assume in 2013, and how should we think about the timing of those?

The 2013 expenses, obviously we own the building now so we will be having depreciation as opposed to rent that we had in the past with our old building. We actually expect that the net expense – that is, the difference between our cost and the depreciation – will be less than our lease costs. There are some costs associated with moving into the building that will be hit in the first quarter, but those should be relatively minor to the lease cost versus the deprecation. So overall net, we expect a net benefit from the headquarter addition. Arnie Ursaner – CJS Securities: Okay, well again, if you had 2 million of what I would call one-time expenses related to the move, that’s almost $0.03 a share that impacted Q4. Is that the right way to think of it?

That is the right way to think of it. Again, there will be some of those costs, moving costs moving into the first quarter as we exit the existing building and we finish the actual move itself, which we did in January, some of the costs associated with that. But yes. Arnie Ursaner – CJS Securities: Similar-type level, and all incurred in Q1?

Not similar-type level, less than that – much less than that. Less than a million dollars and all would be incurred in quarter one. Arnie Ursaner – CJS Securities: Okay. You led right into my next question – so you obviously are building a number of facilities that are coming online. How should we think about depreciation and amortization on 2013?

Depreciation and amortization in 2013 will go up. If you think about the low to mid-70s that we had in depreciation in 2012, you can add rough numbers about $5 million to that, and that should cover the increased depreciation. Arnie Ursaner – CJS Securities: Okay. And again, I just want to go back to the headquarters. I think you said you accrued all of the expenses, all of capital items in ’12 but they were paid in ’13.

Correct. Arnie Ursaner – CJS Securities: So I’m just trying to make sure I get—so your actual CAPEX--?

Actual CAPEX cash was 131. If you add back the 20 million which was the increase in the accrual primarily related to the headquarters cost, you get to the 151 million that I disclosed to you. Arnie Ursaner – CJS Securities: Okay. And just to clarify – in ’13, do you have any of the headquarters embedded in that number you gave us?

Add in the 125 to 150 number. Arnie Ursaner – CJS Securities: Perfect. CZ total last year did about 9 million. I think you indicated it could jump to 20 to 25 million. Can you go through the factors—

Not in this year.

Not in this year. That’s a total number for proprietary.

The 20 to 25 million increase, Arnie, includes the Airis (ph) safety system, B.safe, and some of the other proprietary products in that space. Arnie Ursaner – CJS Securities: What are you looking for on CZ?

About a $2 million increase in the sales over the 9 million you quoted. Arnie Ursaner – CJS Securities: Got it.

Somewhere in the range of 12 to 14. Arnie Ursaner – CJS Securities: Okay. Before I jump back in queue, if you could broadly speak—I know you have a slide that talks about factors that could impact 2013, but maybe you could just expand a little on in your mind the factors that would impact the high or low end of the guidance range that you’ve provided.

Yeah, I think the high end of the guidance range is going to be impacted by a couple customers bringing new facilities online in China. I think clearly part of the backlog build has been a result of their preordering into their European facilities in preparation for getting the China facilities operational. On the low side, I think what you may see in the latter part of the year – and again, we’ve got pretty good visibility in the first half, not as good into the second half – as we get into Q3 and late Q4, you may see some customers pull back on inventory builds that happened during 2012 to get their inventories back to more normalized levels after ’09, ’10 and ’11. Arnie Ursaner – CJS Securities: I’ll jump back in queue. Thanks.

Your next question comes from the line of Dave Windley with Jefferies. Please proceed. Dave Windley – Jefferies: Thanks for taking the questions. So my question kind of takes off on Arnie’s last, and that is understanding to the extent possible the visibility on clients’ above-normal ordering. I guess if we go back through time, starting to see this trend, I think, a year ago or a little more. To state it briefly, it’s lasted already longer than was originally expected. How much additional work—I think you mentioned in your prepared remarks that you were trying to have more conversations with clients to understand the visibility around that. If you could elaborate on that and just kind of help us to understand what’s driving the clients to rebuild inventory for this long a period of time, and how much longer could it last, I suppose?

Well, there’s a couple parts to the answer, Dave. Number one, clearly some of the inventory builds we’re seeing relate to these new plants coming online in China. A couple of them are fairly substantial, so we’ve seen, we think, a pretty good part of the additional backlog growth be due to those customers getting prepared to launch production in those new plants, and that would be a combination of samples for validation and line runs, as well as commercial production. The second part of this is that we have several customers that are looking at tender business for clients in the Middle East and Africa and in the Far East. For those tenders, they’ve put orders in ahead of the actual awarding of the contracts, but they have to build inventory to be ready to deliver against those. We’ve also had a modest part of the backlog be due to discontinuation of a raw material in part of our process in Germany where customers have had to order some extra samples to be able to run validation runs with the components processed with this new material in advance of getting approval to run full commercial production with it. So you’ve got really three parts to the equation there. How long will it continue? We always see customers change inventory strategies as they get to the latter part of the year. What we are trying to do where we have substantial backlogs built up and lead times that have extended beyond what we consider to be acceptable is simply sit down with the customers, understand their current inventory situation, what they consider to be their desired level of safety stock and ordinary inventory, and then match that against the additional demand and our capacity and availability to deliver. So it’s an exercise where we’re going to stay close to those customers that are experiencing lengthening lead times so that we can plan our production accordingly and meet expected deliver times. Dave Windley – Jefferies: Okay. So that’s helpful, thank you. Last year, a fair amount’s been made about FDA approval pace in 2012 accelerating to levels we haven’t seen for quite a while. I have to admit, I haven’t paid close enough attention to know what the mix of oral administration versus injectable administration is in those product approvals, but is any of this demand being driven by an uptick in new product launches that your clients are doing that require supply?

Not that we can say. When I think back to the approvals for last year, they were up a little bit from the prior year. The balance between injectables and orals hadn’t changed a whole lot. There are a range of new injectables over the next two to three years that we expect to see come to the market that we know are in Phase III trials, but they wouldn’t be building inventory for those right now. The only other thing that might impact that, and I honestly—I’d have to go back and check it, would be expanded approvals for indications above current indications for certain drugs, which often happens. Dave Windley – Jefferies: Okay. And coming back to your first answer, you mentioned some clients putting in tenders for volume ahead of contract award. Does that present backlog risk for you if those contracts don’t go through to those clients?

A backlog is firm, committed orders, so we do not include any sales in that backlog number unless we have a firm PO for it. So it doesn’t represent risk in that sense; however, as a bolus order, it’s one that may not reappear in 2014 if you have a multi-year tender offered. Dave Windley – Jefferies: Okay. And then finally on CZ, I wonder if you could give us a more specific update on that proprietary product in terms of clients’ formal stability, timing of win, when you might expect to see some substantial commercial orders that will cause the inflection in CZ that is so important for the delivery systems business.

Yeah, nothing is changed from our call commentary at the end of the third quarter in terms of timing. Right now, we’re watching closely as best we can when customers will and in fact reveal to us when they have something up on formal stability. Many of them are being very tight-lipped about that, which is understandable. The variable, of course, is that there may be a molecule in the queue that’s on formal stability that has a shelf life of nine or 12 months and doesn’t require the full two years, versus typical drugs that require the two years. Unfortunately because of confidentiality, we can’t talk in depth about those. But nothing has changed in terms of our expectations for what we know now. Assuming a two-year formal stability period, we think the ramp-up occurs toward the fourth quarter of 2015 or early ’16. Dave Windley – Jefferies: Okay, thank you very much.

Thank you.

Your next question comes from the line of Ross Taylor with CL King. Please proceed. Ross Taylor – CL King: Hi. I have a couple of short questions. First looking at your organic revenue guidance for next year of 6 to 8%, if you strip out some of this inventory building action, what do you think kind of the underlying organic growth rate for the company might be?

It’s still in line with—

It’s still in line, yeah. Sorry Bill, go ahead.

No, please, please.

No, it’s still in line with that kind of mid to high single digit range that we’ve talked about. Ross Taylor – CL King: Okay, okay. And on CZ, the $12 million-ish in revenues you expect for 2013, is that basically for the same types of activities that you got the $9 million in revenues for in 2012, and is kind of the profit or margin contribution roughly the same?

Yeah, I mean as we’ve talked about before, it’s going to be lumpy and those samples fundamentally are for line trials, for stability trials, and in many circumstances even for pre-formal stability testing in the laboratories. Ross Taylor – CL King: Okay. And also on CZ, can you comment whether you expect sort of the first commercialized product is likely to be a new drug, or is it likely to replace existing packaging for a drug that’s already on the market?

No idea. Unfortunately we don’t have very good visibility into what’s up on formal stability currently. What we do know in talking with our customers is that the gamut of drugs being tested runs from products that are currently on the market all the way through new drugs that are in early testing that are incompatible with glass. So we will have to wait and see on that question. Ross Taylor – CL King: Okay. And last question, just a modeling question, your interest expense is a little bit lower in the quarter than what I modeled. Is that 3.2 million kind of a good quarterly run rate to use for 2013?

Yeah, between 3.5 and 4 is where you ought to be, Ross. Ross Taylor – CL King: Okay, good. Thank you very much.

Your next question is a follow-up from the line of Arnie Ursaner with CJS Securities. Please proceed. Arnie Ursaner – CJS Securities: Hi, a couple of quick questions. On India, you mentioned you’re doing the more traditional stoppers and closures. Is there some reason you’re not prepared or thinking about doing the more higher end products there?

I think we’re going to watch how the market develops, Arnie. What we’re starting out with, of course, if the metal overseals which are less regulated than the rubber products. But with the capacity that we’ve got in Singapore for the value-add products, we will have the capability to supply out of there as we see how the market evolves in India. My guess is because we’re phasing in the construction of that plant as we begin to put in the rubber equipment, that we will quickly follow on with Westar washing and some of the other technologies to meet market demand there. Arnie Ursaner – CJS Securities: Okay. A couple questions on pharmaceutical delivery. You mentioned CZ might be, I gather, around 11 million of the 20 to 25 million in revenue. How much of the remaining revenue would be SmartDose for early testing?

It’s a small number, Arnie. It’s less than $3 million. Arnie Ursaner – CJS Securities: So what are the big items in there?

As we said, it’s Airis, the safety system, as well as B.safe which is another safety device that we have.

And reconstitution systems on the Medimop side.

The Medimop side, and the increase in those. Arnie Ursaner – CJS Securities: Okay. And again staying on pharmaceutical delivery, you highlighted you had some tooling and development expense in the quarter. In the past, you used to basically not get paid or minimal payment, minimal margin on that. How much was it in the quarter, and can you speak perhaps broadly about where this is going for? Is it a specific customer program, or--?

Yeah, normally when we’re reimbursed for tooling, it is a customer-specific program and it’s a tool unique to their design. I honestly don’t know what that number is, but it’s a small one. It’s probably on the order of $1 million or so. Arnie Ursaner – CJS Securities: But this is for a specific customer?

It would be, yeah. Arnie Ursaner – CJS Securities: Okay. Going back to Slide 10, which is your SG&A costs, obviously in the IT and relocation we have 2 million. So going forward, it sounds like we may have some additional, call it a million of expense for relocation. What should we think about for IT in the upcoming year?

IT, a significant amount was associated with the new building, getting the infrastructure in place IT-wise to accept the new building, which will obviously come down a little bit. But we were also spending money on, for instance, systems and upgrades in the HR area overseas which will continue, so that IT number is not a bad number to use on a go-forward basis. Arnie Ursaner – CJS Securities: Okay. And the outside services of 1.4 million, is that a one-time or an ongoing?

It’s a little bit of both. There were some one-times in there, but there are some—for instance, in association with how we’re looking at our global supply chain, we have some consultants helping us work through that issue, and that was about half a million dollars in the quarter, and that’s not a bad idea to think of that on a quarterly basis going forward. Arnie Ursaner – CJS Securities: Okay. And then going back to an earlier question on the backlog growth and the expansion of time to deliver products, normally the way West has ended this process is by adding capacity. So I guess a couple questions related to that – how much incremental—of the capital spending you’re taking, how much capacity addition might you be able to get to help clients minimize some of this issue? And is some of it impacted by competitor changes? Garmisch has been—you know, pieces of their business, they’ve acquired—I guess they were sold to Aptar. Can you comment on how competitor changes might be impacting capacity within the industry?

Yeah, it was actually Stelmi that was sold to Aptar. As far as we can tell, there hasn’t been a substantive change in terms of share, so we think the competitors are most likely growing a little bit less than we are in terms of dollar value. It’s difficult to say in terms of units. For us, when we look at our capacity demands and we make our capital plans, as you know, Arnie, we typically try to plan two to three years in advance based on not only looking back at how demand has evolved but talking with our customers and making our best projection going forward. It’s likely that when you look at our CAPEX going forward, outside of the maintenance CAPEX which runs probably about 60 to 65 a year, the bulk of the remaining is going into not only new products for delivery but for capacity in Envision, in NovaPure and in Westar. So it will go into the addition of washing and finishing lines, FluroTec molding capacity, and then the vision systems. But that is one of the hardest things we have to deal with, is trying to get that timing right.

I think, Arnie, just one other comment. I absolutely agree with Don, but remember that we’re not talking about large volume growth in terms of expectation. A lot of this, where the growth is going to come from is in this mix shift, so you have a little bit of price this year, a good deal of mix shift towards the high value and proprietary products, and then a little bit of volume. Arnie Ursaner – CJS Securities: Are you reaching a point where on the lower—I mean, within your pharmaceutical area, you have quite different margins in packaging between the high and low end. Are you reaching a point where you’re telling certain customers at the low end that we just don’t have the capacity to meet your need and getting different pricing if they want to continue to get it from you? I mean, you can’t do everything for every customer.

No, but historically the way our plants have been aligned, we cannot easily shift capacity from pharmaceutical to med device, so the med device and the lower margin customers are done in venues where we think we’ve got a favorable cost structure, and we focus only on those products in that venue. When we look at the higher value-added products that are going to pharma, those are concentrated in Singapore and Le Nouvion in France, and Eschweiler, Jersey Shore here in the United States. The one plant where we are changing to accommodate capacity is in Kinston where the changeover from med device to pharmaceutical is taking place; and in fact, a large part of our CAPEX for the next year or two on this side will go into Kinston so that we have a second high value product pharma facility in the U.S. Arnie Ursaner – CJS Securities: Okay, thank you.

And at this time, I am showing we have no further questions. I would now like to turn the call back over to Don Morel for any closing remarks.

Thank you very much for your time today everyone, and we look forward to talking with you in late April when we present our first quarter results. Thank you.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.