Welcome to the West Pharmaceutical Services Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) Today's conference is being recorded. If you have any objection, you may disconnect at this time. Now, I will like to turn today's meeting over to John Woolford from Westwicke Partners. Sir, you may begin.

Good morning, everyone and welcome to West's second quarter 2010 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. There is also posted on the company's website, a slide presentation that management will refer to in their remarks today. The presentation is in PDF format and you may need to download appropriate software in order to view the presentation. A link to a free download of that software is provided at the website. Before we begin, I remind you that statements being made by management may contain forward-looking statements within the meaning of US 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 those factors, which could cause actual results to differ from expectations, please refer 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. 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 adjusted operating profits and adjusted diluted EPS. These measures have no standardized meaning prescribed by US GAAP and therefore, they may not be comparable to and should not be viewed as a substitute for US 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. Again, this call is being recorded on behalf of West and is copyrighted material. It cannot be rerecorded or rebroadcast without the company's expressed permission. Your participation in this call implies your consent to our taping. At this time, I would like to turn the call over to Dr. Don Morel, Chairman and CEO.

Thanks you very much, John, and good morning everyone. Welcome to West second quarter conference call. Joining me for the call today are Bill Federici, West's Chief Financial Officer; and Mike Anderson, our Treasurer and primary Investor Relations contact. Please note that we are using a PowerPoint slide deck that could aid in our discussion this morning. We hope this slide to help you follow our commentary and we will call out the slide number we are referring to during the course of our remarks. For those who are unable to view the slides during the call, the information they contain is covered in both the release and our remarks. In keeping with our usual agenda, I will begin with an overview of our second quarter results, give an update on several ongoing development programs and summarize our outlook for the remainder of the year. Bill will then discuss our financials in greater detail. There are three points to capture, where we are at six months end of the year. First, on a positive note, we had a very good first half. Sales growth was a little ahead of our expectations and demand continues to be strong in both operating segments. Second, the steep rise in the dollar versus the euro during the second quarter and non-recurring H1N1 sales in the second half of the year, when they comparison to 2009 difficult, and finally we are beginning to see tangible results from our investments in our key new product development programs notably the CZ 1 mL syringe and Confidose Auto-injector System. I will provide a little more detail on this program in just a moment. Turning to our second quarter results on Slide number three, West reported revenues of $281.8 million for the quarter representing growth of 8% versus the…

We issued our second quarter results this morning reporting net income of $21.7 million or $0.62 per diluted share versus the $0.57 per diluted share we reported in Q2, 2009. As explained in the release, results in both periods included restructuring charges and the results of this year’s quarter also included some discrete tax charges. Excluding the effect of those items in both period second quarter 2010 earnings were $0.64 per diluted share versus $0.58 per diluted share in Q2 2009, a 10% year-over-year increase. The growth rate was achieved despite the current quarter’s results being negatively effective by $0.03 of currency translation. Slide five of our accompanying PowerPoint presentation shows the components of our consolidated sales increase. Consolidated sales grew by almost $21 million to $281.8 million, a 10.2% increase over Q2 2009 sales excluding exchange. Volume and mix contributed $20.2 million, or 7.8 percentage points to the increase, acquisitions we have made since Q2 2009 contributed $4.9 million, or 1.9 percentage points, and price increases contributed $1.3 million, or 50 basis points of the increase. Slide six details the second quarter’s $10.8 million, or 5.7% increase in packaging system sales. On an ex-currency basis, sales increased 8% driven by volume increases, a favorable product mix and modest price increases. Sales increases were strong in all our geographic regions with the European region supplying the majority of the increase, when excluding exchange impact. High value product sales increased almost 25% to $76 million versus Q2 2009 with the most significant increases this quarter in Westar-treated and FluroTec coated components. Standard product sales were about 2% lower than the prior year at $101 million and sales of disposal medical device components increased by about 8% to $28 million. Slide seven shows the factors driving the $9.9 million, or 13.7% increase…

Thanks very much, Bill. This concludes our business review for this morning and we'd now be pleased to answer any questions that you might have. Operator?

(Operator Instructions) The first comes from the line of Dave Windley from Jefferies & Company. Dave Windley - Jefferies & Company: I wanted to start in the CZ product development efforts that you have. Don, is the pricing for your CZ products as you are now rolling out this first large scale order, is it matching your expectations from earlier on?

Yes. Dave Windley - Jefferies & Company: Okay. Well, that's good certainly.

The only color I can add to that Dave is that, remember when you are in the early stages here on the clinical and the engineering evaluations, the price is going to be higher because the units are lower, but certainly the first tranche here out of the gate is right in line with where we thought it'd be. Dave Windley - Jefferies & Company: Okay, and from a logistics standpoint, you commented that you are beginning to produce product in the four-cavity cell. Is that right? So, this large scale order, you would supply out of the four-cavity as opposed to the single cavity?

That is correct. Dave Windley - Jefferies & Company: Okay. On the other end of the spectrum, on the contract manufacturing, you named off a couple of challenges, price pressure, competitive environment, are the volumes in contract manufacturing relatively stable? I am wondering how much visibility you have on that. How much is tied up under longer-term contract?

Yes, we don't have as much, obviously, as we do on the Pharm Systems side of the business. Typically it, depending on the customer, can be anywhere from two to four weeks. Yes, demand has been strong in the areas that we thought they'd be strong in. Disposable components are going to cardiovascular ops for our customers there. On the sampling side and consumables, where you have components that we made going into blood collection, blood analysis, those have been strong. The filters have been in line with expectation and consumer has been pretty strong. You have some ins and outs here, and they are depending on inventories and timings, but demand is certainly more favorable at this point in the year than it was last year. Dave Windley - Jefferies & Company: Okay, and I will ask one more and then drop out, and it is in the ARS contract, that pre exist your acquisition there is no margin. I guess I have wondered if that was contractually provided to that customer cost or is it a function of, say the size of the runs that you are doing, that make that, that cost inefficient or something like that? Should we expect that will be no margin, going forward?

Yes, Dave, on, it's Bill on. On that particular one, it is contractual. We are producing it in the same space that they produced that we acquired the plant as well, and in the absence of other customers, that that business will continue to provide, very limited margin. Dave Windley - Jefferies & Company: Okay.

Moving on to that contract, the only thing I would add to that is we have begun to aggressively market the device in Europe. There is a lot of interest in it for a lot of applications. That pricing will be much different than the pricing for under the existing contract, obviously.

The next question comes from the line of Derek DeBruin from UBS.

You've mentioned, I was actually surprised to see your comments that Europe actually was so strong and I am just wondering, if you could talk a little bit about what you are seeing there, and particularly, I know some of the other companies that reported about full backup spending on European health care, and I am just wondering, could you just talk a little bit about that environment and why you are doing well in that geography?

A lot of it is in the high value part of the business, FluroTec coated stoppers and the Westar processing, we continue to see strong demand there. Overall there is probably some inventory restocking that's going on in the first half of the year after the downturn we saw last year. The third quarter so far for Europe looks fully inline with our expectations. The only issue that Bill and I both highlighted is that because we are seeing shorter order quantities, smaller order quantities and shorter lead times with the new capacity online, we don't have visibility, we'd like to have into the fourth quarter but we've see nothing that would indicate that won't fill in.

Also, there the currency has been the negative drag on Europe, particularly. So when we talk about strength we are excluding currency in that regard.

Okay. obviously there has been some chatter recently about some more M&A particularly in the biologic area, as you watch all of the news items going forward with that how would you see that potentially impacting your business?

It depends on who's acquired and who the acquirer is, obviously, but what we usually see some and we've talked about this before is that you come to a halt in a lot of your development programs. The good news is that the programs that we have underway are with a range of customers both large and small. So although, we may see some delays depending on who is involved? My expectation is that the momentum that has been built to this point is going to continue to carry forward on our major programs.

Okay. Could you talk a little bit about some of what you are increasing R&D spend on? Just the type of project you are undertaking?

Yes, well, it's principally the three. The demand on CZ is making us push that ahead faster than our original plans. So there are both some expenses associated with that and some capital investments that will accelerate. Confidose is getting an awful lot of attention, particularly in the niche I mentioned which is highly viscous drugs where the pressure to deliver the drug is somewhat higher than with an ordinary formulation and you need the properties of the CZ within the auto injector. So that's all positive, and then, I mentioned briefly this new platform that we've acquired, which is basically a patch pump attach pop and for compounds that need to be delivered in the 3 ml to 5 ml range but can't be delivered in bolus. It's a perfect solution to an unmet need where it can deliver over a period of a couple of hours. So, those three areas are principally the ones that will receive the R&D funding.

Great, and I'm sorry, did you talk about the tax rate for the full-year?

No, we didn't mention it specifically but our expectations are, it will be about inline with what we've been talking about which is just about 23.9% for rest of the year.

(Operator Instruction) The next question comes from the line of Arnie Ursaner from CJS Securities.

I like to see how that new name looks in print. A couple of questions. Looking at the quarter, your gross margin, at least relative to my expectations, was pretty disappointing and your SG&A offset it, again most of the SG&A improvement were things out of your control, like your stock price and pension expense. The discretionary parts of SG&A, they all actually increased in the quarter, and yet your guidance, your comments regarding the product mix should have led you dramatically better gross margins. You had much more of your value added products with you here. Maybe you could help us on both of those items and how it would affect operating margin.

Sure. Obviously, we did see an increase in the packaging systems space of 50 basis points over the prior year second quarter. The main components, Arnie, and I know you know all the moving pieces that I have given to you. Price was up about 0.5 percentage point, volume and mix was positive as well, providing about eight-tenths of a point increase. We did have materials cost increase and that impacted the margin and it was all the things you would expect from labor overhead, depreciation and other expenses increasing offsetting those. So from a gross margin perspective, we did get 50 basis points increase, which again is fairly much in for packaging systems, is in line with our longer term growth expectations for that business, about 50-bip increase each year, so we feel pretty good about it. Yes, the increases were in the high value product space and we expect to continue to see those increases, but at the same time, we have increases in our cost pool that are somewhat muting all of that increase. But again, we feel very comfortable with the view that we will see some increases continue in that business over the near-term. Arnie Ursaner – CJS Securities: My second question, obviously you do provide full-year guidance, but there is a lot of discussion points within your prepared remarks about the timing of various things between Q3 and Q4. I think Don clearly indicated, your Q3 backlog and bookings look terrific, you're a little concerned, if you will, about Q4 trends not because of our glaring problem, but just because the lead times were shorter, there's a currency impact, there is an R&D impact. So, I guess my question is, if I were to think about the breakdown that you would like us to think about for Q3 versus Q4, I know you don't normally provide quarterly guidance, but maybe perhaps give us some better sense of how we ought to breakdown back half of the year since you are obviously raising a lot questions about the various components.

Yes. I think the currency impact, and I'll give you some numbers, Arnie to help you run through this. In last year's third quarter, the dollar euro conversion was $1.43 to the €1. In the fourth quarter, it was $1.48 on average to the €1. So, obviously, you can see there that it's a much steeper climb on the fourth quarter than the third quarter given our $1.30 that we are at today, so that's number one. Number two, that we called out is the increase in the R&D expenditures of $0.04. If you are thinking about that, again, I would think that not exactly 50%, but fairly ratably over the third and fourth quarters with slightly more hitting the fourth quarter than the third. In terms of the visibility, Don mentioned and I mentioned that, we've been talking about this for a while. Due to the change in the order patterns by our customers and our decreasing lead times, which allows them not to have to put in so many orders way ahead of time, it's providing a much better view at the third quarter, but a much less predictable view of the fourth quarter. So, we are somewhat cautious about the mix in that fourth quarter and there's no easy way to do this, but if you're trying to do apportionment, you would certainly have much more of the impact probably two-thirds of the impact in the fourth quarter and in the third quarter. Arnie Ursaner – CJS Securities: And, Bill, most of the H1N1 revenues you had were Q3 of the.

They were fairly balanced. And in fact, what we are seeing Arnie is, if you look at it Arnie, there's about probably $10 million of currency impact on sales and roughly about $12 million impact of H1N1 in the fourth quarter. And when we look at the sales in general and you take the currency effect out, we see that the fourth quarter sales are actually going to be lower than the fourth quarter 2009 at the current projections that we've got right now, like 3%.

One thing I would add to that Arnie, is last year we talked about the halves being reversed because of the unusual finish to 2008. So, this year in the first half, we've earned $1.22 versus $1 in 2009, you're going to see a flip-flop, where we'll go back to our traditional seasonality, and the second half of the year will be softer than the first half, which is what we talked about at the outset of the year.

Two more questions if I can. Don, obviously highlighted new Patch product, what would the trailing 12-month revenues of this product and could you describe how you plan to distribute or sell this product?

Yes. This is still in a development phase Arnie, so there's no trailing revenues. What we are doing is adapting the fundamental platform to our customers needs and the acquisition was done to fill an unmeet need in the market and what we perceived to be gap in our portfolio offerings. So, what you are seeing with formulation especially in the biotherapeutic area, there is a desire for a platform that can deliver modest lines not a 1 or 2 mL injection, but in that 3 to 5 mL corridor, but over a long period of time, where you want the drug to works its way and slowly to maximizes its therapeutic effects. So, this acquisition is basically in a prototype phase and the first agreement that we have in place is for prototypes to go to the customer for evaluation. We don't expect substantial revenues off of this until we get to probably at that 2012 kind of timeframe as well. Everything comes together at the end of the 2012 beginning of 2013 in the portfolio. Arnie Ursaner – CJS Securities: Don, to follow-up on that. You obviously are accelerating your R&D spend. Your customers are increasing their R&D funding for you, you told us you're going to accelerate your capital spending. Since you are accelerating all the components of CZ, shouldn't we see commercial revenues at an earlier time that you've been previously?

That is wholly out of our control. It all depends on the evaluation and the stability work done by our customers. Arnie Ursaner – CJS Securities: At this point, and so mid 2012 or beyond before we see what should move the needle for West in terms of commercial opportunities?

That was CZ in particularly, yes.

That's correct.

The next question comes from the line of Dave Windley of Jefferies & Company. Dave Windley - Jefferies & Company: A couple of follow-ups. In the press release, a couple of smaller descriptions on some external consulting costs declining in packaging, but increasing in corporate. I wondered if that was something that that you were scrutinizing in terms of trying to keep those external costs under control just curious if there was anything going on there.

Yes. Of course, and it's a myriad of things. We did have some M&A activity, so labor cost us were a little higher than we expected. We did have some increase in some audit fees and some tax fees relative to some of the activity going on around the world on a tax basis. Those were the primary drivers. And, yes absolutely, we do scrutinize all of those costs especially the discretionary ones and make sure that we are doing the best that we can to keep those under control. Dave Windley - Jefferies & Company: The press release also talks about restructuring, and the second half for the year was described as charges and I wanted to make sure I understood whether those were new charges to be taken to the P&L or just expenses against the reserve?

It's new charges If you remember the way they changed the rules on restructuring that you can't take up all those charge upfront and then have it all come against the reserve. You have to wait till the actual activities are exited before you can take the charge. It's a small number. Dave, we are talking about somewhere between 500,000 and 700,000 for the rest of the year, and it's mostly severance associated with exiting some activities. Dave Windley - Jefferies & Company: Then coming back to CZ. Don, you described the Confidose. If I understood correctly, Confidose, CZ combination for the high pressure inside the Auto-Injector, is that the area, I think you described prior that that was a pleasant surprise to use it that was a market opportunity, I guess. Is that the most exciting area for CZ, or where is the area where you are seeing the most development activity, sampling validation-type activity for CZ?

Yes. It's collectively, David, within the biologic space. So, if you take that as kind of the umbrella, you've got a situation now where there have been some issues in the marketplace with breakage where CZ is a logical alternative that can help solve that issue, but it's also been driven by the older issues of the silicon agglomeration as well as the tungsten. So, I think the emphasis on the breakage issue has brought a lot more attention to CZ as an alternative either in a cartridge or prefilled, but certainly, the original drivers in terms of cleanliness and non-contamination for the biologics is there as well. So, it's really both of those factors, but wholly within the therapeutic protein space. Dave Windley - Jefferies & Company: Getting a little bit at Arnie's question maybe a little bit different way to come at it and at this point, is the number of customers that are enquiring or sampling CZ containing product or CZ containers of once order another, is that interest level at the expectations, that you set forth as you were working up to this point, or ahead or behind, could we look at it that way?

We have a lot of ins and outs. I think my simple answer would be it's in line with expectations, but what we are seeing is that, because of its both utility, there is a market opportunity for what we fundamentally have called life cycle management for the customers, so, if they are producing bulk active at the early clinical stages of product development. They can do that and store it in CZ and they may begin to get data. We have seen demand for example, for larger CZ containers come out up to storing one litre of active. Behind that you would have them potentially go to the market when they are a single dose vial, somewhere in the 2-5 mL range. And after that you've got the opportunity to convert into the syringe, but what you have all the way through and in the eyes of the regulatory bodies is a single primarily container material, and we think that will provide some regulatory advantages. The other thing to think about is that as we progressed, through that chain, we attribute of our rubber products in terms of Westar process in terms of RU also apply to the vials, so they can be done, as well as the syringes, they can be done on format, that is ready to sterilize or they can be done at a format that's ready to use, but as a single package of option, the material really gives them a lot of flexibility, that may provide some advantages from the regulatory perspective. We see new things emerge every time we talked to a customer, but the flexibility in terms of design and the flexibility in terms of primary container format are going to drive it, and in addition to those earlier things I mentioned about cleanliness and breakage. Dave Windley - Jefferies & Company: One last follow-up. I think you talked about or you have talked about other competitive types of materials that would be trying to get out this high durability, maybe low friction value add, are you seeing any competitors developed products a long side in a kind of similar stage of development as you and how is that landscape settling out?

There is no doubt that there will be competitors entering in. There is always new resins coming to the market, but remember the thing that, that really help us in our IP is the timing both around getting these things to market, so even is new option emerge now there are a number of months and years before they're actually going to get to the point where CZ is. We keep reminding people about is CZ has been in development with our Japanese partners since middle 1990s. Now you've got a really robust data set. You've had the emergence of biologics over that time, and we have been working on a compatibility studies and everything over that 10 to 15-year period. So, although, new entrants are going to come in, it's going to be sometime before we get to the stage where CZ is.

The next question comes from the line of Arnie Ursaner from CJS Securities. Arnie Ursaner – CJS Securities: Couple of follow-ups, one you didn't really say anything about international and growth opportunities there, capital spending internationally, in the impression China, India were there opportunities for us?

Yes, China and India are fundamentally right on track. Year-to-year progress and for China, up roughly in that mid-20s percentage range. I think we've seen 25% year-on-year growth, a little bit better. India has been a little bit stronger. We have seen year-on-year growth there north of about 30%. Interestingly and up within the generic segment. We've seen one CZ opportunity come to fruition out of India, which we think is a positive, but right now, so far right on track. Within China the Plastef's facility, we've got four (inaudible) up and running. We are beginning to produce a variant of the TrimTec cap with that plant was dedicated to extensively for export business to South America and other countries. So doing that it's been very strong there. Asian has been right on target. Overall Europe as we talked about earlier solid through the first half, so internationally, pretty much on target. Arnie Ursaner – CJS Securities: Plans for additional capital spending, new facilities in either China or India?

We are in the process of finalizing plans for a smaller rubber facility which would be really developmental in its scope emission in China. We expect to put shovel in the granular. We hope by the end of the year nothing is really change there, and we continue to evaluate the prospects for India. India brings a special set of circumstances because of A, the breadth of the generic industry currently which we serve out of Singapore. But looking downstream in 5 to 10 years, there is no doubt that India will be a hub of innovative development. So, our question is do we invest in a baseline facility initially and then grow into a fully fledged mass Westar facility or do we look at in advance Westar facility from a get-go. Stone evaluation, we'll see how things unfold over the next six months. Arnie Ursaner – CJS Securities: It's very preliminary but if you were to think about CapEx and obviously a lot of people talk about free cash flow over the next, any insights you got to share?

As Bill said, our capital spending from this year is going to be down substantially from our original plan. That's pretty much in response to what we have seen developed in the marketplace. Our expectation going forward is that it will be in that 120 to 140 range as we talked about over the five year plan period. What could change that? I think there has to be some dramatic development in the market place that would make us really accelerate our plans for India in particular. Arnie Ursaner – CJS Securities: Don, you obviously, when we asked about the pricing of CZ you gave a pretty rough answer, how much of a premium is it getting versus in the last right now in the preliminary stage and given the price premium that it is likely to have, is it likely to just be new biotech applications or is there any retrofit opportunity given the cleanliness and the cost premium that it is going to trade at?

The answer to the second part of your question Arnie is that we are seeing broad opportunities both for existing products on the market as well as new products. So, our belief at the current time is that it will not be exclusively reserved for the round of new products coming to margin. With regard to your earlier question, it's difficult to give an answer to that only because sampling prices tend to be dramatically higher than commercial volume prices. So, initially out of the gate here with the order that we have on the books, the price is substantially higher than it would be at commercial levels. Our expectation overall is that it will go to market depending on the drug in the volume at somewhere in that 5X to 8X a glass price. Arnie Ursaner – CJS Securities: You are saying, the safety at other issues were in that kind of premium?

Yes.

We have no further questions at this time.

Thank you very much, operator and thank you for your time today. This concludes our call.

Ladies and gentlemen, you may disconnect at this time. This is the conclusion of the call.