FORM 11-K_2013.12.31_TGPR
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
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þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2013
OR
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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:
TECH GROUP PUERTO RICO, INC.
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
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Items | |
1 to 3. | Not required; see Item 4 below. |
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4. | The following are furnished for the Plan: |
| (a) The Tech Group Puerto Rico, Inc. 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. |
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
For the Years Ended December 31, 2013 and 2012
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
TABLE OF CONTENTS
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FINANCIAL STATEMENTS: | |
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SUPPLEMENTAL INFORMATION*: | |
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* 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 Administrators of the
Tech Group Puerto Rico, Inc.
Savings and Retirement Plan
We have audited the accompanying statements of net assets available for benefits of the Tech Group Puerto Rico, Inc. Savings and Retirement Plan as of December 31, 2013 and 2012, 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 Puerto Rico, Inc. Savings and Retirement Plan as of December 31, 2013 and 2012, 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.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the accompanying table of contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure Under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
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/s/ Fischer Cunnane & Associates Ltd |
Fischer Cunnane & Associates Ltd |
Certified Public Accountants |
West Chester, Pennsylvania
June 23, 2014
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TECH GROUP PUERTO RICO, INC. |
SAVINGS AND RETIREMENT PLAN |
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS |
AS OF DECEMBER 31, 2013 AND 2012 |
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| 2013 | 2012 |
ASSETS: | | |
Investments at fair value (Note E): | | |
Mutual funds | $ | 2,822,559 |
| $ | 2,221,211 |
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Plan interest in Master Trust | 33,415 |
| 5,861 |
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Total investments | 2,855,974 |
| 2,227,072 |
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Receivables: | | |
Employer contributions | 5,429 |
| 1,088 |
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Notes receivable from participants | 177,843 |
| 175,199 |
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Total receivables | 183,272 |
| 176,287 |
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Total assets | 3,039,246 |
| 2,403,359 |
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LIABILITIES: | | |
Excess contributions payable | 4,106 |
| 6,958 |
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Net assets available for benefits | $ | 3,035,140 |
| $ | 2,396,401 |
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The accompanying Notes are an integral part of these statements.
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TECH GROUP PUERTO RICO, INC. |
SAVINGS AND RETIREMENT PLAN |
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS |
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 |
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| 2013 | 2012 |
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Additions: | | |
Interest and dividend income | $ | 82,093 |
| $ | 49,162 |
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Net appreciation in fair value of investments (Note C) | 404,184 |
| 181,008 |
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Plan interest in Master Trust net investment income | 10,512 |
| 567 |
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Interest income on notes receivable from participants | 7,126 |
| 8,148 |
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Contributions: | | |
Employer | 121,964 |
| 112,229 |
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Participant | 177,253 |
| 180,320 |
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Total additions | 803,132 |
| 531,434 |
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Deductions: | | |
Benefits paid | 163,133 |
| 203,472 |
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Plan expenses | 1,260 |
| 495 |
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Total deductions | 164,393 |
| 203,967 |
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Net increase | 638,739 |
| 327,467 |
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Net assets available for plan benefits: | | |
Beginning of the year | 2,396,401 |
| 2,068,934 |
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End of the year | $ | 3,035,140 |
| $ | 2,396,401 |
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The accompanying Notes are an integral part of these statements.
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE A - Description of Plan
The following description of the Tech Group Puerto Rico, Inc. 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. The Plan is available to eligible full-time employees of the Tech Group Puerto Rico, Inc. (the "Employer") who have completed three months of service and are at least eighteen years of age. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
Master Trust
Effective January 3, 2011, West Pharmaceutical Services, Inc. (the "Company") 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 D for more information regarding the Master Trust.
Contributions
Participants may contribute up to 50% of pre-tax annual compensation and 10% of after-tax annual compensation with no combined limit, subject to Puerto Rico Internal Revenue Code of 1994 ("PR Code") limitations. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans.
The Employer matches 100% of the first 3% of base compensation that a participant contributes to the Plan and 50% of the next 2% of contributions.
Investments
The Plan offers twenty-four mutual funds and the West Stock Fund as investment options for participants. 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.
Participants may change or transfer their investment options at any time. Employer matching 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 Employer’s contribution and an allocation of Plan earnings (losses), and 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 Employer matching contributions plus earnings thereon.
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE A - Description of Plan - continued
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, 2013 and 2012, interest rates on outstanding loans ranged from 4.25% to 9.25%. 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 of after-tax and rollover contributions, and matching contributions that have been in the Plan for at least two years. Participants may also make in-service withdrawals after attaining age 59 ½ or upon a hardship. 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 those estimates.
Valuation of Investments and Income Recognition
The Plan's investments, including the Master Trust, are stated at fair value (see Note E). Purchases and sales of investments are recorded on a trade-date basis. The Plan presents in the statements of changes in net assets available for benefits the net appreciation 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
Certain expenses of the Plan are paid by the Employer.
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE C - Investments
Investments that represented 5% or more of the Plan's net assets as of December 31 were as follows:
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| 2013 | 2012 |
Templeton Foreign Fund | $ | 267,340 |
| $ | 217,479 |
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Vanguard 500 Index Fund Investor Shares | 301,041 |
| 243,791 |
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Vanguard Capital Opportunity Fund Investor Shares | 216,777 |
| 150,062 |
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Vanguard Extended Market Index Fund Investor Shares | 309,376 |
| 221,456 |
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Vanguard Prime Money Market Fund | 162,148 |
| 129,850 |
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Vanguard Target Retirement 2020 Fund | 368,388 |
| 313,000 |
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Vanguard Total Bond Market Index Fund Investor Shares | 343,114 |
| 360,963 |
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During 2013 and 2012, the Plan's investments outside of the Master Trust, including gains and losses on investments bought and sold, as well as held during the year, appreciated in value as follows:
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| 2013 | 2012 |
Mutual funds | $ | 404,184 |
| $ | 181,008 |
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NOTE D - Master Trust
As mentioned in Note A, effective January 3, 2011, 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 consists of units owned in the West Stock Fund. 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 total fair value of the Master Trust’s investment in the West Stock Fund, as of December 31, 2013 and 2012, was $39,566,073 and $25,224,902, respectively. Refer to Note E for the investment's level in the fair value hierarchy.
The Plan’s interest in the net assets of the Master Trust was 0.08% and 0.02% as of December 31, 2013 and 2012.
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE D - Master Trust - continued
The changes in net assets for the Master Trust for the years ended December 31 are as follows:
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| 2013 | 2012 |
Dividends | $ | 334,365 |
| $ | 366,193 |
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Net appreciation in fair value of common stock | 18,443,160 |
| 8,462,352 |
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Net investment income | 18,777,525 |
| 8,828,545 |
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Net transfers | (4,436,354 | ) | (4,022,169 | ) |
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Increase in net assets | 14,341,171 |
| 4,806,376 |
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Net assets: | | |
Beginning of year | 25,224,902 |
| 20,418,526 |
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End of year | $ | 39,566,073 |
| $ | 25,224,902 |
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NOTE E - 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:
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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 markets that are not active. |
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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.
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE E - Fair Value Measurements - continued
The following tables summarize the Plan’s investments, excluding the Master Trust, that are measured at fair value on a recurring basis:
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| | | | Balance at |
| Basis of Fair Value Measurements | December 31, |
| Level 1 | Level 2 | Level 3 | 2013 |
Mutual funds: | | | | |
Small cap | $ | 152,179 |
| $ | — |
| $ | — |
| $ | 152,179 |
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Mid cap | 526,153 |
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| — |
| 526,153 |
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Large cap | 601,610 |
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| — |
| 601,610 |
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International | 267,340 |
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| — |
| 267,340 |
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Balanced | 770,015 |
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| 770,015 |
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Bond | 343,114 |
| — |
| — |
| 343,114 |
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Money market | 162,148 |
| — |
| — |
| 162,148 |
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Total assets at fair value | $ | 2,822,559 |
| $ | — |
| $ | — |
| $ | 2,822,559 |
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| | | | Balance at |
| Basis of Fair Value Measurements | December 31, |
| Level 1 | Level 2 | Level 3 | 2012 |
Mutual funds: | | | | |
Small cap | $ | 84,267 |
| $ | — |
| $ | — |
| $ | 84,267 |
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Mid cap | 371,518 |
| — |
| — |
| 371,518 |
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Large cap | 460,803 |
| — |
| — |
| 460,803 |
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International | 217,479 |
| — |
| — |
| 217,479 |
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Balanced | 596,331 |
| — |
| — |
| 596,331 |
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Bond | 360,963 |
| — |
| — |
| 360,963 |
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Money market | 129,850 |
| — |
| — |
| 129,850 |
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Total assets at fair value | $ | 2,221,211 |
| $ | — |
| $ | — |
| $ | 2,221,211 |
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TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE E - Fair Value Measurements - continued
The following tables summarize the Master Trust assets that are measured at fair value on a recurring basis:
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| | | | Balance at |
| Basis of Fair Value Measurements | December 31, |
| Level 1 | Level 2 | Level 3 | 2013 |
Master Trust: | | | | |
Common stock | $ | 39,566,073 |
| $ | — |
| $ | — |
| $ | 39,566,073 |
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| | | | Balance at |
| Basis of Fair Value Measurements | December 31, |
| Level 1 | Level 2 | Level 3 | 2012 |
Master Trust: | | | | |
Common stock | $ | 25,224,902 |
| $ | — |
| $ | — |
| $ | 25,224,902 |
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Following is a description of the valuation methodologies used for assets measured at fair value.
Mutual funds: Valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end.
Common stock: 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.
NOTE F - 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 G - Related Party Transactions
The Plan invests in shares of mutual funds managed by The Vanguard Group, an affiliate of VFTC. 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.
TECH GROUP PUERTO RICO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE H - Plan Termination
While the Company has not expressed any intent to terminate the Plan, it is free to do so at any time. In the event of termination of the Plan, participants' accounts will be distributed in accordance with the provisions of the Plan.
NOTE I - 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 PR 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 PR Code. Therefore, no provision for income taxes has been included in the Plan's financial statements.
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, 2013, 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 it is no longer subject to income tax examinations prior to 2010.
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TECH GROUP PUERTO RICO, INC. |
SAVINGS AND RETIREMENT PLAN |
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) |
AS OF DECEMBER 31, 2013 |
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| PLAN EIN: 86-0640193 | | |
| PLAN NUMBER: 001 | | |
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| Identity of Issue | Description | Current Value |
| Templeton Foreign Fund | Mutual Fund | $ | 267,340 |
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* | Vanguard 500 Index Fund Investor Shares | Mutual Fund | 301,041 |
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* | Vanguard Capital Opportunity Fund Investor Shares | Mutual Fund | 216,777 |
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* | Vanguard Explorer Fund Investor Shares | Mutual Fund | 122,726 |
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* | Vanguard Extended Market Index Fund Investor Shares | Mutual Fund | 309,376 |
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* | Vanguard Growth and Income Fund Investor Shares | Mutual Fund | 7,263 |
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* | Vanguard Morgan Growth Fund Investor Shares | Mutual Fund | 147,004 |
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* | Vanguard Prime Money Market Fund | Mutual Fund | 162,148 |
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* | Vanguard Target Retirement 2010 Fund | Mutual Fund | 105,380 |
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* | Vanguard Target Retirement 2015 Fund | Mutual Fund | 2,706 |
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* | Vanguard Target Retirement 2020 Fund | Mutual Fund | 368,388 |
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* | Vanguard Target Retirement 2025 Fund | Mutual Fund | 33,137 |
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* | Vanguard Target Retirement 2030 Fund | Mutual Fund | 48,087 |
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* | Vanguard Target Retirement 2035 Fund | Mutual Fund | 60,644 |
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* | Vanguard Target Retirement 2040 Fund | Mutual Fund | 19,923 |
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* | Vanguard Target Retirement 2045 Fund | Mutual Fund | 9,063 |
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* | Vanguard Target Retirement 2050 Fund | Mutual Fund | 77 |
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* | Vanguard Target Retirement 2055 Fund | Mutual Fund | 288 |
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* | Vanguard Target Retirement 2060 Fund | Mutual Fund | 2,270 |
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* | Vanguard Target Retirement Income | Mutual Fund | 72,633 |
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* | Vanguard Total Bond Market Index Fund Investor Shares | Mutual Fund | 343,114 |
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* | Vanguard Wellington Fund Investor Shares | Mutual Fund | 47,418 |
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* | Vanguard Windsor II Fund Investor Shares | Mutual Fund | 146,303 |
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| William Blair Small Cap Value Fund | Mutual Fund | 29,453 |
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* | West Stock Fund | Master Trust | 33,415 |
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* | Participant Loans | 4.25% - 9.25% | 177,843 |
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| | | $ | 3,033,817 |
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* | Party-in-interest | | |
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| Cost has been omitted, as all investments are participant-directed. | |
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.
TECH GROUP PUERTO RICO, INC. SAVINGS AND RETIREMENT PLAN
By: /s/ William J. Federici
William J. Federici
Senior Vice President and Chief Financial Officer
Plan Administrator
Date: June 24, 2014
EXHIBIT INDEX
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Exhibit Number | | Description |
23.1 | | Consent of Independent Registered Public Accounting Firm |