Ball Announces Record First Quarter Earnings
April 28 2005 - 9:30AM
PR Newswire (US)
Ball Announces Record First Quarter Earnings BROOMFIELD, Colo.,
April 28 /PRNewswire-FirstCall/ -- Ball Corporation (NYSE:BLL)
today reported first quarter earnings of $58.6 million, or 51 cents
per diluted share, on sales of $1.32 billion, compared to $46.8
million, or 41 cents per diluted share, on sales of $1.23 billion
in the first quarter of 2004. For the second year in a row, both
sales and earnings were records for a Ball first quarter.
Improvement in sales in all three of the company's business
segments contributed to the record results. R. David Hoover,
chairman, president and chief executive officer, said part of the
improvement in 2005 was due to some of Ball's metal food can
customers buying more product than would be normal in advance of
price increases brought about by the rising cost of steel used to
manufacture the cans. He also noted that lower selling and
administrative costs and the decline of the U.S. dollar against the
euro and Canadian dollar compared to a year ago contributed to the
company's improved first quarter earnings. North American Packaging
Segment Earnings in the company's North American packaging segment
were $78.3 million on sales of $844 million, compared to $66.6
million on sales of $787 million in the first quarter of 2004. "In
addition to the strong demand for steel food cans in the quarter,
we had a full quarter's results from our large metal food can plant
in California this year where in the first quarter of 2004 we had
only two weeks' results after acquiring the facility late in the
quarter," Hoover said. "Sales of PET plastic bottles also were up
over the first quarter of 2004, due in part to increased sales of
Heat-Tek(TM) bottles for hot-filled beverages. Sales of metal
beverage containers were below last year's levels as a result of
poor weather, changes in customer locations we serve and downtime
needed to complete the conversion of a production line to 24-ounce
cans from 12-ounce cans." The conversion of that manufacturing line
in Ball's Golden, Colo., plant is nearly complete and will enable
Ball to more efficiently meet the growing demand for 24-ounce cans
while adding flexibility elsewhere in the company's system to
manufacture other can sizes. Ball is one of the largest suppliers
of custom beverage cans in the world. International Packaging
Segment Earnings in the international packaging segment were $30.3
million on sales of $298 million, compared to $27.6 million on
sales of $284 million in the first quarter of 2004. Currency gains
and lower operating costs in our European operations were somewhat
offset by a small charge in China for the full write-off of an
equity-owned joint venture. "We saw modest sales growth in both
China and Europe in the first quarter of 2005," Hoover said.
"Demand for beverage cans in Germany remains weak but that is being
offset somewhat by stronger demand elsewhere in Europe. We are
encouraged by what appears to be progress towards an acceptable,
workable solution to the German deposit situation, though we do not
expect a meaningful turnaround there in 2005. Meanwhile, we
continue to take steps to adapt to the disruption and better
position ourselves, including the recent conversion of a line at
our plant in the Netherlands from the production of steel cans to
aluminum cans." The start up of Ball's new metal beverage can plant
in Belgrade, Serbia, remains on schedule for the second quarter of
2005. The Belgrade plant will strengthen Ball's ability to meet the
growing demand in Eastern Europe. Aerospace and Technologies
Segment The aerospace and technologies segment had earnings of $8.9
million on sales of $182 million in the quarter, compared to $11.2
million on sales of $160 million in the first quarter of 2004. The
lower earnings compared to a year ago were the result of a $3.8
million write-down of a small aerospace equity investment to net
realizable value. Management intends to complete the sale of this
non-strategic investment before the end of 2005. "We are pleased
with the progress we are making and we are expanding our facilities
and capabilities to keep pace with the growth," Hoover said. "Ball
Aerospace is winning new business and at the same time completing a
few long-lived projects that have been pulling down our margins."
During the first quarter Ball was selected by NASA's Goddard Space
Flight Center to build the Global Precipitation-Microwave Imager as
part of an international effort to complete a constellation of
spacecraft to improve climate and weather predictions. Outlook
"Ball Corporation has enjoyed much success in recent years, and we
are pleased that 2005, the 125th year of our company, began with a
record first quarter," Hoover said. "Still, we realize the
exceptionally strong performance of our food can operations in the
first quarter likely is due to timing and came at the expense of
the rest of the year. "We expect our plastic container operations
to continue to show improvement over last year. As is always the
case, weather and customer promotion activities will help determine
the results in our packaging operations. Our international segment
should benefit from the addition during the second quarter of our
new beverage can plant in Serbia and from good demand in China and
much of Europe except Germany. Our aerospace and technologies
segment should have a full year better than the last two, which
were the best two in its history," Hoover said. Raymond J.
Seabrook, senior vice president and chief financial officer, said,
"As we look to the full year, capital spending could somewhat
exceed $300 million and our share repurchase program may exceed
$175 million rather than the $150 million previously anticipated.
Full year free cash flow still is tracking in the $225 million
range." "Even with all of the positives, we know 2005 will be
challenging with cost pressures throughout our packaging businesses
and accommodating the growth in our aerospace and technologies
segment," Hoover said. "We are excited by our capital investments
in our best performing product lines as we prepare our businesses
for future profitable growth." Ball Corporation is a supplier of
metal and plastic packaging products, primarily for the beverage
and food industries. The company also owns Ball Aerospace &
Technologies Corp., which develops sensors, spacecraft, systems and
components for government and commercial markets. Ball Corporation
employs more than 13,200 people and reported 2004 sales of $5.4
billion. Listen to Ball Management Briefing Ball Corporation
(NYSE:BLL) will host a management briefing and review of the
company's operations at 2 p.m. (Eastern) today at the
Waldorf-Astoria Hotel in New York City. The briefing replaces, for
this quarter, the company's quarterly earnings conference call. The
investing public and others are invited to attend the briefing or
to participate via toll-free telephone access at 800-638-5439
(domestic) or 617-614-3945 (international) using the pass code
"Ball Corporation," or via live Web cast at: http://phx.corporate-/
ir.net/phoenix.zhtml?p=irol-eventDetails&c=115234&eventID=1035473.
A telephone replay of the briefing will be available approximately
two hours after the briefing concludes and will be accessible for
seven days at 888-286-8010 (domestic) or 617-801-6888 using the
pass code 44341276. A Web replay of the briefing will be available
at http://www.ball.com/ in the investor relations section under
"presentations" for at least 30 days after the briefing.
Forward-Looking Statements The information in this news release
contains "forward-looking" statements and other statements
concerning future events and financial performance. Words such as
"expects," "anticipates," "estimates," and variations of same and
similar expressions are intended to identify forward-looking
statements. Forward-looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from those expressed or implied. The company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. Key risks and uncertainties are summarized in the
company's filings with the Securities and Exchange Commission,
especially in Exhibit 99.2 in the most recent Form 10-K. These
filings are available at our Web site and at http://www.sec.gov/.
Factors that might affect our packaging segments include
fluctuation in consumer and customer demand; availability and cost
of raw materials, particularly the recent significant increases in
resin, steel, aluminum and energy costs, and the ability to pass
such increases on to customers; competitive packaging availability,
pricing and substitution; changes in climate and weather; fruit,
vegetable and fishing yields; industry productive capacity and
competitive activity; lack of productivity improvement or
production cost reductions; the German mandatory deposit or other
restrictive packaging laws; changes in major customer or supplier
contracts or loss of a major customer or supplier; international
business risks, including foreign exchange rates, tax rates and
activities of foreign subsidiaries; and the effect of LIFO
accounting on earnings. Factors that might affect aerospace segment
include: funding, authorization and availability of government
contracts and the nature and continuation of those contracts; and
technical uncertainty associated with segment contracts. Factors
that could affect the company as a whole include those listed plus:
acquisitions, joint ventures or divestitures; regulatory action or
laws including environmental and workplace safety; governmental
investigations; goodwill impairment; antitrust and other
litigation; strikes; boycotts; increases in employee benefits and
labor costs; rates of return projected and earned on assets of the
company's defined benefit retirement plans; reduced cash flow;
interest rates affecting our debt; and changes to unaudited results
due to statutory audits or management's evaluation of the company's
internal control over financial reporting. Condensed Financials
(1st quarter 2005) Unaudited Statements of Consolidated Earnings
Three months ended ($ in millions, except per share amounts) April
3, 2005 April 4, 2004 Net sales (Note 1) $1,324.1 $1,231.5 Costs
and expenses Cost of sales (excluding depreciation and
amortization) 1,096.8 1,012.5 Depreciation and amortization 53.4
53.8 Selling, general and administrative 63.0 71.1 1,213.2 1,137.4
Earnings before interest and taxes (Note 1) 110.9 94.1 Interest
expense (25.8) (28.3) Tax provision (29.8) (21.5) Minority
interests (0.2) (0.3) Equity in results of affiliates 3.5 2.8 Net
earnings $58.6 $46.8 Earnings per share (a): Basic $0.52 $0.42
Diluted $0.51 $0.41 Weighted average shares outstanding (000's)
(a): Basic 111,628 111,347 Diluted 114,036 114,060 (a) Per share
and share amounts have been retroactively restated for the
two-for-one stock split on August 23, 2004. Condensed Financials
(1st quarter 2005) Unaudited Statements of Consolidated Cash Flows
Three months ended ($ in millions) April 3, 2005 April 4, 2004 Cash
Flows From Operating Activities: Net earnings $58.6 $46.8
Depreciation and amortization 53.4 53.8 Prepaid common stock
repurchase (108.5) -- Other changes in working capital (148.6)
(190.1) Other (15.9) 20.1 (161.0) (69.4) Cash Flows From Investing
Activities: Additions to property, plant and equipment (80.6)
(34.9) Business acquisitions -- (17.0) Other (7.9) (5.8) (88.5)
(57.7) Cash Flows From Financing Activities: Net change in
borrowings 142.3 155.3 Dividends (11.1) (8.4) Issuance (purchase)
of common stock, net 8.7 (14.6) Other -- (0.4) 139.9 131.9 Effect
of exchange rate changes on cash (2.3) (0.1) Increase (decrease) in
cash and cash equivalents (111.9) 4.7 Cash and cash
equivalents-beginning of period 198.7 36.5 Cash and cash
equivalents-end of period $86.8 $41.2 Condensed Financials (1st
quarter 2005) Unaudited Consolidated Balance Sheets ($ in millions)
April 3, April 4, 2005 2004 Assets Current assets Cash and cash
equivalents $86.8 $41.2 Receivables, net 441.0 372.8 Inventories,
net 714.5 645.5 Prepaid common stock repurchase 108.5 -- Deferred
taxes, prepaids and other current assets 85.1 89.4 Total current
assets 1,435.9 1,148.9 Property, plant and equipment, net 1,534.8
1,466.9 Goodwill 1,361.8 1,300.9 Other assets 285.8 336.4 Total
assets $4,618.3 $4,253.1 Liabilities and Shareholders' Equity
Current liabilities Short-term debt and current portion of
long-term debt $145.0 $208.8 Payables and accrued liabilities 874.3
763.3 Total current liabilities 1,019.3 972.1 Long-term debt
1,631.0 1,632.4 Other liabilities and minority interests 847.2
825.7 Shareholders' equity 1,120.8 822.9 Total liabilities and
shareholders' equity $4,618.3 $4,253.1 Notes to Condensed
Financials (1st quarter 2005) ($ in millions) Three months ended 1.
Business Segment Information April 3, 2005 April 4, 2004 Sales
North American packaging - Metal beverage $544.1 $549.3 Metal food
184.2 145.1 Plastic containers 115.8 93.0 844.1 787.4 International
packaging - Europe metal beverage 255.8 242.0 Asia metal beverage
and plastic containers 42.2 41.8 298.0 283.8 Aerospace and
technologies 182.0 160.3 Consolidated net sales $1,324.1 $1,231.5
Earnings before interest and taxes North American packaging $78.3
$66.6 International packaging 30.3 27.6 Aerospace and technologies
8.9 11.2 Segment earnings before interest and taxes 117.5 105.4
Undistributed corporate costs (6.6) (11.3) Earnings before interest
and taxes $110.9 $94.1 2. Free Cash Flow Management internally uses
a free cash flow measure (1) to evaluate the company's operating
results, (2) for planning purposes, (3) to evaluate strategic
investments and (4) to evaluate the company's ability to incur and
service debt. Free cash flow is not a defined term under U.S.
generally accepted accounting principles (a non-U.S. GAAP measure).
Non-U.S. GAAP measures should not be considered in isolation or as
a substitute for net earnings or cash flow data prepared in
accordance with U.S. GAAP and may not be comparable to similarly
titled measures of other companies. Free cash flow is derived
directly from the company's cash flow statements and is defined as
cash flows from operating activities less additions to property,
plant and equipment. Cash flow from operating activities is the
most comparable GAAP term to free cash flow and it should not be
inferred that the entire free cash flow amount is available for
discretionary expenditures. Based on our current 2005 forecast,
capital spending could somewhat exceed $300 million and full year
2005 free cash flow is tracking in the $225 million range.
DATASOURCE: Ball Corporation CONTACT: Investors, Ann. T. Scott,
+1-303-460-3537, ; or Media, Scott McCarty, +1-303-460-2103, , both
of Ball Corporation Web site: http://www.ball.com/
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