BROOMFIELD, Colo., April 26 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today reported first quarter 2007 earnings
of $81.2 million, or 78 cents per diluted share, on sales of $1.69
billion, compared to $44.4 million, or 42 cents per diluted share,
on sales of $1.37 billion in the first quarter of 2006. The sharp
increase in earnings came from the corporation's metal beverage
packaging segments and its aerospace and technologies segment. The
first quarter of 2007 included a full quarter's results from
acquisitions made in the plastic packaging and food and household
products packaging segments in March 2006, contributing to the
year-over-year increase in sales. R. David Hoover, chairman,
president and chief executive officer, said the 2007 results were
records for Ball for both first quarter sales and earnings. "We are
pleased with the strong first quarter results, especially
considering they came despite minimal earnings contributions from
two of our five reporting segments," Hoover said. "We continue to
look to maximize results across the board while striving in
particular to improve results in those underperforming segments."
Metal Beverage Packaging, Americas Earnings in the corporation's
metal beverage packaging, Americas, segment were $93.8 million on
sales of $637.5 million, compared to $53.5 million on sales of
$592.4 million in the first quarter of 2006. "We have begun working
off the aluminum sheet inventories we had on hand at the end of
2006," Hoover said, "and we expect to be back to more normal levels
of inventory by the third quarter. That will greatly improve our
free cash flow in this segment over 2006 levels. "We also are
benefiting from lower energy costs compared to a year ago and from
the improvements we are realizing in our project to upgrade and
streamline our beverage can end manufacturing processes," Hoover
said. "We do not expect that capital project to be finished until
2008, but the efficiencies we are seeing are helping improve
results now as we expect to produce approximately 12.5 billion ends
this year using the new processes." Metal Beverage Packaging,
Europe/Asia Earnings in the metal beverage packaging, Europe/Asia,
segment were $44.9 million on sales of $385 million, compared to
$28.1 million on sales of $300.9 million in the first quarter of
2006. "Better pricing, some favorable weather in Europe that fueled
early seasonal demand for beverage cans and a stronger euro versus
the dollar were among factors contributing to the strong
performance of the segment," Hoover said. "We also saw sales volume
gains in China and the easing of the unfavorable margin compression
that dampened results there throughout 2006." Metal Food &
Household Products Packaging, Americas The metal food and household
products packaging, Americas, segment first quarter 2007 results
were a loss of $0.2 million on sales of $278.8 million, compared to
earnings of $1 million, including a $2.1 million restructuring
charge to close a plant in Canada, on sales of $189.3 million a
year ago. "We had some high cost inventory that we needed to work
through the system, and we did that," Hoover said. "We continue to
take actions identified when we acquired U.S. Can last year, and
other steps we have uncovered since, to properly integrate the
acquired assets with what had been our metal food can business."
Plastic Packaging, Americas Earnings in the plastic packaging,
Americas, segment were $2.3 million on sales of $186.6 million,
compared to $1.6 million on sales of $122.4 million in the first
quarter of 2006. "The acquisition we made a year ago in our plastic
packaging segment has been fully integrated and is tracking our
plan, but slow demand for certain PET plastic containers caused us
to idle some production capacity during the quarter, negatively
affecting results in the segment," Hoover said. Aerospace and
Technologies Earnings in the aerospace and technologies segment
were $19.6 million on sales of $206.3 million, compared to $9.5
million on sales of $159.9 million a year ago. "We are seeing a
nice pick up in our aerospace and technologies segment, due in part
to a favorable mix of new projects won in 2006 and improving
program margins," Hoover said. Outlook Raymond J. Seabrook,
executive vice president and chief financial officer, said
expectations for free cash flow for 2007 remain strong. "We expect
adjusted full year free cash flow to be at least $350 million, and
capital spending, net of property insurance recoveries, to be
around $275 million," Seabrook said. "We will use some of the cash
flow to buy back more than $175 million of stock during 2007. "As
part of our overall debt reduction strategy, we anticipate
contributing an incremental $70 million, or $43 million after tax,
to our North American pension plans, probably in the fourth
quarter," Seabrook said. "From an earnings standpoint, we had what
was undoubtedly the best first quarter in the corporation's
history," Hoover said. "Still, we see upside in our underperforming
metal food and household packaging products and plastic packaging
products segments later this year and beyond. There also are
opportunities to improve results in our top performing segments and
we continue to work on those. Margins in our metal beverage
packaging, Americas, segment will ease somewhat as we work off
metal inventories. "Our strong performance in the first quarter
makes us more confident that our full year results will show solid
improvement over 2006, though we do not expect the first quarter
percentage rate of improvement to continue over the remaining three
quarters of the year," Hoover said. "We are working hard to
continue the positive trend we have established." Ball Corporation
is a supplier of high-quality metal and plastic packaging products
and owns Ball Aerospace & Technologies Corp. Ball Corporation
and its subsidiaries employ more than 15,500 people worldwide and
reported 2006 sales of $6.6 billion. Conference Call Details Ball
Corporation will hold its regular quarterly conference call on the
company's results and performance today at 9 a.m. Mountain Time (11
a.m. Eastern). The North American toll-free number for the call is
800-263-9160. International callers should dial 212-676-4900. For
those unable to listen to the live call, a taped rebroadcast will
be available until 11 a.m. Mountain Time on May 3, 2007. To access
the rebroadcast, dial 800-633-8284 (domestic callers) or
+1-402-977-9140 (international callers) and enter 21333853 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=1507344 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 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 Exhibit 99.2 in our
Form 10-K, which 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; crop 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; and changes in foreign exchange rates, tax rates and
activities of foreign subsidiaries. Factors that might affect our
aerospace segment include: funding, authorization, availability and
returns of government and commercial contracts; and delays,
extensions and technical uncertainties affecting segment contracts.
Factors that might affect the company as a whole include those
listed plus: accounting changes; successful or unsuccessful
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;
pension changes; reduced cash flow; interest rates affecting our
debt; and changes to unaudited results due to statutory audits or
other effects. Condensed Financials (March 2007) Unaudited
Statements of Consolidated Earnings Three months ended ($ in
millions, except per share amounts) April 1, 2007 April 2, 2006 Net
sales (Note 2) $1,694.2 $1,364.9 Costs and expenses Cost of sales
(excluding depreciation and amortization) 1,394.3 1,156.7 Business
consolidation costs (Note 4) -- 2.1 Depreciation and amortization
65.0 54.6 Selling, general and administrative 82.2 70.3 1,541.5
1,283.7 Earnings before interest and taxes (Note 2) 152.7 81.2
Interest expense (37.9) (23.3) Tax provision (36.7) (16.5) Minority
interests (0.1) (0.2) Equity in results of affiliates 3.2 3.2 Net
earnings $81.2 $44.4 Earnings per share (Note 4): Basic $0.79 $0.43
Diluted $0.78 $0.42 Weighted average shares outstanding (000s):
Basic 102,110 103,245 Diluted 103,815 105,053 Condensed Financials
(March 2007) Unaudited Statements of Consolidated Cash Flows Three
months ended ($ in millions) April 1, 2007 April 2, 2006 Cash Flows
From Operating Activities: Net earnings $81.2 $44.4 Depreciation
and amortization 65.0 54.6 Income taxes 19.2 (10.3) Pension funding
and expense, net 4.2 5.5 Other changes in working capital (281.3)
(260.2) Other 4.0 (5.8) (107.7) (171.8) Cash Flows From Investing
Activities: Additions to property, plant and equipment (88.1)
(64.4) Acquisitions (Note 3) -- (767.9) Property insurance proceeds
48.6 -- Other 2.4 1.5 (37.1) (830.8) Cash Flows From Financing
Activities: Net change in borrowings 139.2 1,029.6 Dividends (8.0)
(8.5) Purchase of common stock, net (89.7) (28.5) Other 3.0 (4.4)
44.5 988.2 Effect of exchange rate changes on cash -- 0.3 Change in
cash (100.3) (14.1) Cash-beginning of period 151.5 61.0 Cash-end of
period $51.2 $46.9 Condensed Financials (March 2007) Unaudited
Consolidated Balance Sheets April 1, April 2, ($ in millions) 2007
2006 Assets Current assets Cash and cash equivalents $51.2 $46.9
Receivables, net 698.6 586.5 Inventories, net 1,018.7 890.2
Deferred taxes and other current assets 90.7 92.2 Total current
assets 1,859.2 1,615.8 Property, plant and equipment, net 1,889.2
1,821.1 Goodwill 1,770.4 1,738.4 Other assets 399.2 417.1 Total
assets $5,918.0 $5,592.4 Liabilities and Shareholders' Equity
Current liabilities Short-term debt and current portion of
long-term debt $238.2 $119.0 Payables and accrued liabilities
1,095.8 1,064.8 Total current liabilities 1,334.0 1,183.8 Long-term
debt 2,360.7 2,533.7 Other liabilities and minority interests
1,010.8 965.6 Shareholders' equity 1,212.5 909.3 Total liabilities
and shareholders' equity $5,918.0 $5,592.4 Notes to Condensed
Financials (March 2007) 1. Accounting Policy Change In the fourth
quarter of 2006, management changed the method of inventory
accounting for the majority of inventories in the metal beverage
packaging, Americas, and metal food and household products
packaging, Americas, segments from the last-in, first-out (LIFO)
method to the first-in, first-out (FIFO) method. The FIFO method of
inventory accounting better matches revenues and expenses in
accordance with sales contract payment terms. The quarter ended
April 2, 2006, has been retrospectively adjusted on a FIFO basis in
accordance with Statement of Financial Accounting Standards No.
154. 2. Business Segment Information Three months ended ($ in
millions) April 1, 2007 April 2, 2006 Sales- Metal beverage
packaging, Americas $637.5 $592.4 Metal beverage packaging,
Europe/Asia 385.0 300.9 Metal food & household products
packaging, Americas (Note 3) 278.8 189.3 Plastic packaging,
Americas (Note 3) 186.6 122.4 Aerospace and technologies 206.3
159.9 Consolidated net sales $1,694.2 $1,364.9 Earnings before
interest and taxes (A) Metal beverage packaging, Americas $93.8
$53.5 Metal beverage packaging, Europe/Asia 44.9 28.1 Metal food
& household products packaging, Americas (Note 3) (0.2) 3.1
Business consolidation costs (Note 4) -- (2.1) Total metal food
& household products packaging, Americas (0.2) 1.0 Plastic
packaging, Americas (Note 3) 2.3 1.6 Aerospace and technologies
19.6 9.5 Segment earnings before interest and taxes 160.4 93.7
Undistributed corporate costs (7.7) (12.5) Earnings before interest
and taxes $152.7 $81.2 (A) Certain reclassifications were made to
prior year figures to conform to the current year presentation (see
Note 1). Notes to Condensed Financials (March 2007) 3. Acquisitions
On March 27, 2006, Ball Corporation acquired all the issued and
outstanding shares of U.S. Can Corporation and on March 28, 2006,
the company acquired certain plastic container net assets from
Alcan Packaging. The results of the acquisitions were not
significant to Ball's consolidated net sales or net earnings in the
first quarter of 2006. 4. Business Consolidation Activities In the
first quarter of 2006, 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 and to reflect the recovery of business
consolidation costs expensed in 2005. The charge was reduced during
the fourth quarter of 2006 by $0.7 million ($0.5 million after tax)
to reflect the net proceeds on the disposition of the plant's fixed
assets. A summary of the effects of the above transaction on
after-tax earnings follows: Three months ended ($ in millions,
except per share amounts) April 1, 2007 April 2, 2006 Net earnings
as reported $81.2 $44.4 Business consolidation costs, net of tax --
1.4 Net earnings before business consolidation costs $81.2 $45.8
Per diluted share before business consolidation costs $0.78 $0.43
Ball's management segregates the above item related to closed
facilities to evaluate the company's performance of current
operations. The information is presented on a non-U.S. GAAP basis
and should be considered in connection with the unaudited
statements 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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