BROOMFIELD, Colo., July 27 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today announced second quarter earnings of
$132.7 million, or $1.26 per diluted share, on sales of $1.84
billion, compared to $79 million, or 71 cents per diluted share, on
sales of $1.55 billion in the second quarter of 2005. For the first
six months of 2006, Ball's earnings were $177.3 million, or $1.69
per diluted share, on sales of $3.21 billion, compared to $137.6
million, or $1.22 per diluted share, on sales of $2.88 billion in
2005. The 2006 second quarter includes a $74.1 million gain ($45.2
million after tax), or 43 cents per diluted share, for insurance
recovery from a fire that occurred April 1 at a beverage can
manufacturing plant in Germany. The 2005 second quarter and first
half results include an after-tax charge of $5.9 million, or five
cents per diluted share, related to the closing of a food can
manufacturing plant in Quebec. "Though the insurance accounting
gain skews our second quarter results, when you put that aside we
still had a solid quarter," said R. David Hoover, chairman,
president and chief executive officer. "Sales and earnings in the
quarter were up in our packaging segments. Integration of the two
businesses acquired at the end of the first quarter is underway.
Beverage can volumes were strong in North America and Europe/Asia.
We are proceeding to replace the production capacity lost to the
fire and we plan to have the replacement capacity operating in the
second quarter of 2007. Overall we are positive about the outlook
as we move into the second half of 2006." Metal Beverage Packaging,
Americas Earnings in the quarter for the metal beverage packaging,
Americas, segment were $67.4 million on sales of $740.6 million. A
year ago second quarter earnings in the segment were $67.4 million
on sales of $664.5 million. For the first six months, earnings were
$121.9 on sales of $1.33 billion, compared to $129.2 million on
sales of $1.21 billion in 2005. "Industry-wide, U.S. beverage can
shipments were up 3.2 percent in the second quarter of 2006 over
the second quarter of 2005," Hoover said. "Favorable weather in
many parts of the U.S. and Canada and heavy promotion of 12-ounce
can packages by beer and soft drink companies helped drive the
strong demand. While the first six months results in this segment
were below last year, we expect full-year earnings in this segment
to exceed those of 2005." Metal Beverage Packaging, Europe/Asia
Second quarter earnings in the metal beverage packaging,
Europe/Asia, segment were $142.5 million including $74.1 million of
earnings due to the insurance accounting gain in 2006 on sales of
$433.8 million, compared to $58.2 million on sales of $394.3
million in 2005. For the first six months segment earnings were
$171.1 million, including the $74.1 insurance accounting gain, on
sales of $734.7 million, compared to $88.5 million on sales of
$692.3 million in the first half of 2005. "We began to see what we
anticipate will be the eventual complete reintroduction of the
beverage can in Germany during the second quarter as a new deposit
redemption system went in place and retailers began stocking canned
beverages again," Hoover said. "That, along with favorable weather
and the excitement generated by the World Cup, no doubt contributed
to the strong growth in the beverage can market in Europe during
the quarter. Results also were positively affected by the cost
recovery initiatives we implemented with our customer base and by
our continued tight cost control efforts. Volume growth was also
strong in China." Metal Food & Household Products Packaging,
Americas Earnings for the second quarter in the metal food and
household products packaging, Americas, segment were $12.8 million
on sales of $314.2 million, compared to a $6 million loss that
includes an $8.8 million business consolidation charge on sales of
$179.1 million in the second quarter of 2005. Through two quarters
segment earnings were $14.6 million on sales of $503.5 million,
compared to $7 million, which includes an $8.8 million business
consolidation charge on sales of $363.3 in the first half of 2005.
"We are beginning to realize some of the synergies we had
identified before acquiring the aerosol and specialty can
operations from U.S. Can at the end of the first quarter," Hoover
said. "The acquired assets are fitting in well with our metal food
can operations. We have begun closing the headquarters facility and
will eliminate approximately 50 staff positions in that process.
Meanwhile we are seeing some improvement in our legacy metal food
can operations as well." Plastic Packaging, Americas Second quarter
earnings in the plastic packaging, Americas, segment were $7.4
million on sales of $178.5 million, compared to $4.7 million on
sales of $133.4 million in the second quarter of 2005. For the
first six months earnings in the segment were $9.2 million on sales
of $300.9 million, compared to $8.2 million on sales of $249.2
million in the first half of 2005. The second quarter and first six
months of 2006 also included increased costs of $1.2 million
related to purchase accounting adjustments to step up the value of
acquired finished goods inventory to fair market value. The
addition of the plastic bottle business acquired from Alcan near
the end of the first quarter was largely responsible for the
increase in plastic packaging, Americas, segment sales in the
second quarter over the second quarter of 2005. The R&D
operation associated with the acquired business will be relocated
from Wisconsin to Ball's R&D operations in Colorado. Aerospace
and Technologies Earnings were $8.3 million on sales of $175.4
million in the aerospace and technologies segment in the second
quarter of 2006, compared to $14.9 million on sales of $180.7
million in the second quarter of 2005. For the first half of 2006,
earnings were $17.8 million on sales of $335.3 million, compared to
$23.8 million on sales of $362.7 million in the first six months of
2005. "The slowdown in awarding and funding of projects began to
manifest itself in the second quarter results of our aerospace and
technologies segment," Hoover said. "Although we continue to bid on
and win new business, sales and earnings were down. Increased
pension costs contributed to the lower earnings in the quarter."
Outlook "We are generally pleased with our second quarter results,"
Hoover said. "We ended the first quarter with a number of
uncertainties arising out of our April 1 fire, the new beverage
container redemption system in Germany, the threat of a possible
disruption at a major aluminum supplier and the integration of two
businesses acquired within days of each other. "In the second
quarter we saw positive developments in all of those areas plus
growth in demand for many of our products and in particular for
beverage cans in both our North American and Europe/Asia metal
beverage packaging segments," Hoover said. "As a result we are more
confident about the outlook for 2006 than we were at the end of the
first quarter and see a stronger second half of the year," Hoover
said. "Still, we realize there is a lot of work to do. We have to
rebuild the lost capacity in Europe; aggressively pursue the
synergies and benefits we anticipate from our acquisitions;
complete the capital spending projects we have underway and begin
to realize the cost savings associated with them; work through the
delays in awarding and funding of projects that are affecting our
aerospace and technologies segment; and continue to push cost
recovery initiatives throughout our reporting segments. "Doing so
will help make 2006 a success and set us up well for 2007," Hoover
said. Ball Corporation is a supplier of high-quality metal and
plastic packaging products and owns Ball Aerospace &
Technologies Corp. Ball reported 2005 sales of $5.8 billion and
employs 15,600 people. Conference Call Details Ball Corporation
(NYSE:BLL) will hold its conference call on the company's second
quarter 2006 results and performance today at 9 a.m. Mountain Time
(11 a.m. Eastern). The North American toll-free number for the call
is 1- 800-779-2954. International callers should dial
+1-212-676-5377. For those unable to listen to the live call, a
taped rebroadcast will be available until 10 p.m. Mountain Time on
Aug. 3, 2006. To access the rebroadcast, dial 800- 633-8284
(domestic callers) or +1-402-977-9140 (international callers) and
enter 21298143 as the reservation number. Please use the following
URL for a Web cast of the live call and for the replay:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
eventDetails&c=115234&eventID=1343616 A written transcript
of the call will be posted within 48 hours of the call's conclusion
to Ball's Web site at http://www.ball.com/ in the investor
relations section under "presentations." Forward-Looking Statements
This news release contains "forward-looking" statements concerning
future events and financial performance. Words such as "expects,"
"anticipates," "estimates" and similar expressions are intended to
identify forward-looking statements. Such 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 filings
with the Securities and Exchange Commission, including in Exhibit
99.2 in our 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 and
preferences; availability and cost of raw materials, including
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;
failure to achieve anticipated productivity improvements or
production cost reductions, including those associated with our
beverage can end project; the German mandatory deposit or other
restrictive packaging laws; changes in major customer or supplier
contracts or loss of a major customer or supplier; changes in
foreign exchange rates, tax rates and activities of foreign
subsidiaries; and the effect of LIFO accounting. Factors that might
affect our aerospace segment include: funding, authorization,
availability and returns of government contracts; and delays,
extensions and technical uncertainties affecting segment contracts.
Factors that might affect the company as a whole include those
listed plus: acquisitions, joint ventures or divestitures;
integration of recently acquired businesses; regulatory action or
laws including tax, environmental and workplace safety;
governmental investigations; technological developments and
innovations; goodwill impairment; antitrust, patent and other
litigation; strikes; labor cost changes; rates of return projected
and earned on assets of the company's defined benefit retirement
plans; changes to the company's pension plans; reduced cash flow;
interest rates affecting our debt; and changes to unaudited results
due to statutory audits or other effects. Condensed Financials (2nd
quarter 2006) Unaudited Statements of Consolidated Earnings Three
months ended Six months ended ($ in millions, except per July 2,
July 3, July 2, July 3, share amounts) 2006 2005 2006 2005 Net
sales (Note 1) $1,842.5 $1,552.0 $3,207.4 $2,876.1 Costs and
expenses Cost of sales (excluding depreciation and amortization)
1,550.0 1,300.2 2,706.3 2,396.9 Business consolidation costs
(gains) (Note 3) (0.4) 8.8 1.7 8.8 Depreciation and amortization
64.9 53.0 119.5 106.4 Selling, general and administrative 73.5 58.5
143.8 121.6 Property insurance gain (Note 3) (74.1) -- (74.1) --
1,613.9 1,420.5 2,897.2 2,633.7 Earnings before interest and taxes
(Note 1) 228.6 131.5 310.2 242.4 Interest expense (37.6) (24.3)
(60.9) (50.1) Tax provision (63.0) (32.9) (79.7) (62.7) Minority
interests (0.2) (0.3) (0.4) (0.5) Equity in results of affiliates
4.9 5.0 8.1 8.5 Net earnings $132.7 $79.0 $177.3 $137.6 Earnings
per share (Note 3): Basic $1.28 $0.72 $1.71 $1.24 Diluted $1.26
$0.71 $1.69 $1.22 Weighted average shares outstanding (000's):
Basic 103,655 109,526 103,449 110,589 Diluted 105,205 111,483
105,133 112,680 Condensed Financials (2nd quarter 2006) Unaudited
Statements of Consolidated Cash Flows Three months ended Six months
ended July 2, July 3, July 2, July 3, ($ in millions) 2006 2005
2006 2005 Cash Flows From Operating Activities: Net earnings $132.7
$79.0 $177.3 $137.6 Depreciation and amortization 64.9 53.0 119.5
106.4 Property insurance gain (Note 3) (74.1) - (74.1) -- Business
consolidation costs (gains) (0.4) 8.8 1.7 8.8 Prepaid common stock
repurchase -- 108.5 -- -- Change in working capital (22.4) (15.8)
(275.6) (164.4) Other 4.9 (2.3) (15.0) (18.2) 105.6 231.2 (66.2)
70.2 Cash Flows From Investing Activities: Additions to property,
plant and equipment (63.1) (67.7) (127.5) (148.3) Acquisitions
(Note 2) (17.5) -- (785.4) -- Property insurance proceeds (Note 3)
32.4 -- 32.4 -- Other 7.1 (1.6) 8.6 (9.5) (41.1) (69.3) (871.9)
(157.8) Cash Flows From Financing Activities: Net change in
borrowings (44.6) 15.7 985.0 158.0 Dividends (10.5) (10.7) (20.7)
(21.8) Purchase of common stock, net (4.7) (176.7) (31.5) (168.0)
Other 0.4 (0.2) (4.0) (0.2) (59.4) (171.9) 928.8 (32.0) Effect of
exchange rate changes on cash 0.5 (1.1) 0.8 (3.4) Change in cash
5.6 (11.1) (8.5) (123.0) Cash-beginning of period 46.9 86.8 61.0
198.7 Cash-end of period $52.5 $75.7 $52.5 $75.7 Condensed
Financials (2nd quarter 2006) Unaudited Consolidated Balance Sheets
July 2, July 3, ($ in millions) 2006 2005 Assets Current assets
Cash and cash equivalents $52.5 $75.7 Receivables, net 770.7 543.0
Inventories, net 830.3 657.6 Deferred taxes, prepaids and other
current assets 139.0 88.5 Total current assets 1,792.5 1,364.8
Property, plant and equipment, net 1,831.4 1,504.5 Goodwill 1,710.0
1,287.9 Other assets 518.9 272.8 Total assets $5,852.8 $4,430.0
Liabilities and Shareholders' Equity Current liabilities Short-term
debt and current portion of long-term debt $133.9 $165.4 Payables
and accrued liabilities 1,206.6 917.2 Total current liabilities
1,340.5 1,082.6 Long-term debt 2,513.0 1,588.0 Other liabilities
and minority interests 949.0 806.7 Shareholders' equity 1,050.3
952.7 Total liabilities and shareholders' equity $5,852.8 $4,430.0
Notes to Condensed Financials (2nd quarter 2006) ($ in millions)
Three months ended Six months ended July 2, July 3, July 2, July 3,
1. Business Segment Information 2006 2005 2006 2005 Sales- Metal
Beverage Packaging, Americas $740.6 $664.5 $1,333.0 $1,208.6 Metal
Beverage Packaging, Europe/Asia 433.8 394.3 734.7 692.3 Metal Food
& Household Packaging, Americas (Note 2) 314.2 179.1 503.5
363.3 Plastic Packaging, Americas (Note 2) 178.5 133.4 300.9 249.2
Aerospace and technologies 175.4 180.7 335.3 362.7 Consolidated net
sales $1,842.5 $1,552.0 $3,207.4 $2,876.1 Earnings before interest
and taxes - Metal Beverage Packaging, Americas $67.4 $67.4 $121.9
$129.2 Metal Beverage Packaging, Europe/Asia 68.4 58.2 97.0 88.5
Property insurance gain (Note 3) 74.1 -- 74.1 -- Total Metal
Beverage Packaging, Europe/Asia 142.5 58.2 171.1 88.5 Metal Food
& Household Packaging, Americas (Note 2) 12.4 2.8 16.3 15.8
Business consolidation gains (costs) (Note 3) 0.4 (8.8) (1.7) (8.8)
Total Metal Food & Household Packaging, Americas 12.8 (6.0)
14.6 7.0 Plastic Packaging, Americas (Note 2) 7.4 4.7 9.2 8.2
Aerospace and technologies 8.3 14.9 17.8 23.8 Segment earnings
before interest and taxes 238.4 139.2 334.6 256.7 Undistributed
corporate costs (9.8) (7.7) (24.4) (14.3) Earnings before interest
and taxes $228.6 $131.5 $310.2 $242.4 2. Acquisitions On March 27,
2006, Ball Corporation acquired all the issued and outstanding
shares of U.S. Can Corporation for consideration of 444,677 Ball
common shares, together with the repayment of $598 million of
existing U.S. Can debt, including $27 million of bond redemption
premiums and fees. The acquisition has been accounted as a
purchase, and, accordingly, its results have been included in our
consolidated financial statements in the Metal Food and Household
Products Packaging, Americas, segment from March 27, 2006. The
acquired business manufactures and sells aerosol cans, paint cans,
plastic containers and custom and specialty containers in 10 plants
in the U.S. and is the largest manufacturer of aerosol cans in
North America. In addition, the company manufactures and sells
aerosol cans in two plants in Argentina. The acquired operations
employ 2,300 people and have annual sales of approximately $600
million. On March 28, 2006, Ball Corporation acquired certain North
American plastic container net assets from Alcan Packaging for a
total cash consideration of $185 million. Ball acquired plastic
container manufacturing plants in Batavia, Illinois; Bellevue,
Ohio; and Brampton, Ontario; as well as certain equipment and other
assets at an Alcan research facility in Neenah, Wisconsin, and at a
plant in Newark, California. The acquisition has been accounted as
a purchase, and, accordingly, its results have been included in our
consolidated financial statements in the Plastic Packaging,
Americas, segment from March 28, 2006. The acquired business
primarily manufactures and sells barrier polypropylene plastic
bottles used in food packaging, and to a lesser extent,
manufactures and sells barrier PET plastic bottles used for
beverages and foods. The acquired operations employ 470 people and
have annual sales of approximately $150 million. 3. Business
Consolidation Activities and Property Insurance Gain 2006 In the
first quarter, a $2.1 million charge ($1.4 million after tax) was
recorded in the Metal Food and Household Products Packaging,
Americas, segment to shut down a food can line in a Canadian plant.
The charge was comprised of employee termination costs and
impairment of plant equipment and related spares and tooling. In
the second quarter, earnings of $0.4 million ($0.2 million after
tax) were recorded to reflect the recovery of amounts previously
expensed in a 2005 business consolidation charge. On April 1, 2006,
there was a fire in the metal beverage can plant in Hassloch,
Germany, which damaged a significant portion of the building and
machinery and equipment. After review and confirmation from the
insurance carrier, a $74.1 million property insurance gain ($45.2
million after tax) was recorded in the second quarter. The
accounting gain is the result of asset replacement costs being
higher than the asset book values at the time of the fire. Property
insurance proceeds of $32.4 million were received in the second
quarter and the damaged plant is expected to be operational in the
second quarter of 2007. 2005 In the second quarter, a charge of
$8.8 million ($5.9 million after tax) was recorded to close a metal
food container plant in Quebec. A summary of the effects of the
above transactions on after-tax earnings follows: Three months
ended Six months ended ($ in millions, except per July 2, July 3,
July 2, July 3, share amounts) 2006 2005 2006 2005 Net earnings as
reported $132.7 $79.0 $177.3 $137.6 Insurance gain, net of tax
(45.2) -- (45.2) -- Business consolidation (gains) costs, net of
tax (0.2) 5.9 1.1 5.9 Net earnings before the above items $87.3
$84.9 $133.2 $143.5 Per diluted share before the above items $0.83
$0.76 $1.27 $1.27 Ball's management segregates the above items
related to closed facilities and insurance gain to evaluate the
company's performance of current operations. The above is presented
on a non-U.S. GAAP basis and should be considered in connection
with the unaudited statement of consolidated earnings. Non-U.S.
GAAP measures should not be considered in isolation. 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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