BROOMFIELD, Colo., July 26 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today announced second quarter earnings of
$105.9 million, or $1.03 per diluted share, on sales of $2.03
billion, compared to $129.8 million, or $1.23 per diluted share, in
2006 when second quarter results included a $45.2 million after-tax
gain, or 43 cents per diluted share, for property insurance
recovery from a fire in a manufacturing facility in Germany. For
the first six months of 2007, Ball's earnings were $187.1 million,
or $1.81 per diluted share, on sales of $3.73 billion. First half
2006 results, which included the property insurance gain, were
earnings of $174.2 million, or $1.66 per diluted share, on sales of
$3.21 billion. During the fourth quarter of 2006, Ball changed its
method of inventory accounting for certain inventories from the
last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. Results for 2006 have been adjusted to reflect the
accounting change. "Operating earnings for both the second quarter
and the first half were up compared to a year ago," said R. David
Hoover, chairman, president and chief executive officer. "Operating
earnings in all business segments except plastic packaging,
Americas, were ahead of last year through the first six months."
Metal Beverage Packaging, Americas Earnings for the quarter in the
metal beverage packaging, Americas, segment were $82.6 million on
sales of $816.7 million. In 2006, second quarter earnings in the
segment were $67 million on sales of $740.6 million. For the first
six months, earnings in 2007 were $176.4 million on sales of $1.45
billion, compared to $120.5 million on sales of $1.33 billion in
the first half of 2006. "Sales volumes in the quarter and for the
first six months were down slightly from 2006 levels, but earnings
were up as we are realizing the benefits of our cost reduction
efforts and the capital project to improve our end-making
capabilities," Hoover said. Metal Beverage Packaging, Europe/Asia
Second quarter earnings in the metal beverage packaging,
Europe/Asia, segment were $92.6 million on sales of $539.3 million,
compared to $141.6 million, including the $74.1 million pre-tax
property insurance gain, on sales of $433.8 million a year ago. For
the first six months, earnings were $137.5 million on sales of
$924.3 million, compared to $169.7 million, including the insurance
gain, on sales of $734.7 million in the first half of 2006. "Sales
volumes in the metal beverage packaging, Europe/Asia, segment were
up more than nine percent over 2006 levels for the quarter and the
first half of 2007," Hoover said. "During the quarter we brought
into full production the replacement capacity we installed
following the April 1, 2006, fire at one of our plants in Germany.
The replacement capacity will help us meet the anticipated strong
demand for beverage cans in Europe in the third quarter of 2007. In
addition, we plan to increase the capacity of our Hermsdorf,
Germany, and Radomsko, Poland, plants by a total of a half billion
cans in 2008, and to further increase capacity as demand warrants."
Metal Food & Household Products Packaging, Americas The metal
food and household products packaging, Americas, segment second
quarter results were earnings of $11.1 million on sales of $284
million, compared to $4.8 million on sales of $295.2 million in
2006. For the first half of 2007, segment earnings were $10.9
million on sales of $562.8 million, compared to $5.8 million on
sales of $484.5 in the first six months of 2006. The second quarter
and first half earnings in 2006 included a $0.4 million gain and
$1.7 million loss, respectively, related to restructuring
activities. "We are seeing progress in the metal food and household
products packaging segment, in part due to the consolidation
activities and the cost cutting measures we have put in place,"
Hoover said. "After operating at a loss in the first quarter of
2007, we were profitable throughout the second quarter and are
performing at an improved level as we enter the seasonally-strong
third quarter." Plastic Packaging, Americas Earnings in the plastic
packaging, Americas, segment for the second quarter of 2007 were
$7.1 million on sales of $198.7 million, compared to $8.8 million
on sales of $197.5 million in 2006. For the first half of 2007,
earnings were $9.4 million on sales of $385.3 million, compared to
$10.4 million on sales of $319.9 million in the first six months of
2006. "We continue to be pleased with the performance of the
business we acquired in March 2006. Results from our PET bottle
business, however, have been disappointing," Hoover said. "Slow
demand for certain higher-margin PET containers that we experienced
in the first quarter continued into the second quarter." Aerospace
& Technologies Earnings in the aerospace and technologies
segment were $15.6 million on sales of $194.1 million during the
second quarter of 2007, compared to $8.3 million on sales of $175.4
million in the same period a year ago. For the first half of 2007,
segment earnings were $35.2 million on sales of $400.4 million,
compared to $17.8 million on sales of $335.3 million in the first
six months of 2006. "The first half of 2007 was a record in terms
of sales and earnings in our aerospace and technologies segment as
the second quarter built on our exceptionally strong first
quarter," Hoover said. "The success of the Orbital Express mission
during the second quarter demonstrated several of our unique
capabilities and our ability to deliver in difficult space
environments. Last week the NASA Goddard Space Flight Center
awarded us the contract to build the Operational Land Imager for
the eighth Landsat Data Continuity Mission. This contract, valued
at more than $120 million, will add to our backlog, which stood at
$753 million at the end of the quarter." Outlook Raymond J.
Seabrook, executive vice president and chief financial officer,
said it now appears the company's planned fourth quarter payment
into its North American pension funds will be smaller than earlier
anticipated. "Because of good pension asset performance, we believe
the amount needed to fund the North American pension plans to the
95 percent level will be in the range of $45 million, or $27
million after-tax, rather than the $70 million we initially
estimated," Seabrook said. "We have been focused on free cash flow,
as can be seen from our results through the first half, and we now
expect adjusted full-year free cash flow to be at least $400
million," Seabrook said. "The higher free cash flow estimate
includes a forecast of $300 million for capital spending, net of
insurance recoveries. The increase in the capital spending estimate
is related in part to 2008 capacity additions for Europe, where we
are essentially sold out this year and next." "The first six months
of 2007 were the best half-year in Ball Corporation's 127-year
history in terms of sales and earnings," Hoover said. "In recent
years our second half performance typically has been better than
our first half, but this year we do not expect that will be the
case, though our overall outlook remains positive. "We will
continue business integration activities to improve our metal food
and household products packaging segment. We expect both the metal
food and household products packaging and the plastic packaging
segments to be much better in the second half," Hoover said. "We
have several beverage can growth opportunities internationally. Our
aerospace and technologies segment has had a stellar first half of
2007, and the long-term outlook for that segment is positive. "We
are working hard on the opportunities and challenges in 2007, and
when the year is over, we believe that it will be viewed as another
excellent year for Ball Corporation," Hoover said. Ball Corporation
is a supplier of high-quality metal and plastic packaging products
for beverage, food and household customers, and of aerospace and
other technologies and services, primarily for the U.S. government.
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 800-205-6714. International
callers should dial 415-908-4703. Please use the following URL for
a Web cast of the live call: http://phx.corporate-/
ir.net/phoenix.zhtml?p=irol-eventDetails&c=115234&eventID=1589905
For those unable to listen to the live call, a taped replay will be
available about an hour after the live call's conclusion until 11
a.m. on August 2, 2007. To access the replay, call 800-633-8284
(North American callers) or 402-977-9140 (international callers)
and use reservation number 21342805. 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 investors 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 (June 2007) Unaudited
Statements of Consolidated Earnings Three months ended Six months
ended ($ in millions, except July 1, July 2, July 1, July 2, per
share amounts 2007 2006 2007 2006 Net sales (Note 2) $2,032.8
$1,842.5 $3,727.0 $3,207.4 Costs and expenses Cost of sales
(excluding depreciation and amortization) 1,682.6 1,554.8 3,076.9
2,711.5 Business consolidation (gains) costs (Note 4) - (0.4) - 1.7
Depreciation and amortization 69.9 64.9 134.9 119.5 Selling,
general and administrative 87.3 73.5 169.5 143.8 Property insurance
gain (Note 4) - (74.1) - (74.1) 1,839.8 1,618.7 3,381.3 2,902.4
Earnings before interest and taxes (Note 2) 193.0 223.8 345.7 305.0
Interest expense (38.1) (37.6) (76.0) (60.9) Tax provision (52.3)
(61.1) (89.0) (77.6) Minority interests (0.1) (0.2) (0.2) (0.4)
Equity in results of affiliates 3.4 4.9 6.6 8.1 Net earnings $105.9
$129.8 $187.1 $174.2 Earnings per share (Note 4): Basic $1.04 $1.25
$1.84 $1.68 Diluted $1.03 $1.23 $1.81 $1.66 Weighted average shares
outstanding (000s): Basic 101,542 103,655 101,826 103,449 Diluted
103,165 105,205 103,374 105,133 Condensed Financials (June 2007)
Unaudited Statements of Consolidated Cash Flows Three months ended
Six months ended ($ in millions) July 1, July 2, July 1, July 2,
2007 2006 2007 2006 Cash Flows From Operating Activities: Net
earnings $105.9 $129.8 $187.1 $174.2 Depreciation and amortization
69.9 64.9 134.9 119.5 Property insurance gain (Note 4) - (74.1) -
(74.1) Business consolidation (gains) costs (Note 4) - (0.4) - 1.7
Income taxes 29.1 17.3 48.3 7.0 Pension funding and expense, net
(6.4) (6.9) (2.4) (1.4) Other changes in working capital 142.2
(29.4) (139.1) (289.6) Other 18.1 4.4 22.3 (3.5) 358.8 105.6 251.1
(66.2) Cash Flows From Investing Activities: Additions to property,
plant and equipment (78.2) (63.1) (166.3) (127.5) Acquisitions
(Note 3) - (17.5) - (785.4) Property insurance proceeds (Note 4) -
32.4 48.6 32.4 Other (1.7) 7.1 0.7 8.6 (79.9) (41.1) (117.0)
(871.9) Cash Flows From Financing Activities: Net change in
borrowings (224.8) (44.6) (85.6) 985.0 Dividends (10.2) (10.5)
(20.4) (20.7) Purchase of common stock, net (7.8) (4.7) (95.3)
(31.5) Other 3.7 0.4 6.7 (4.0) (239.1) (59.4) (194.6) 928.8 Effect
of exchange rate changes on cash 0.9 0.5 0.9 0.8 Change in cash
40.7 5.6 (59.6) (8.5) Cash - beginning of period 51.2 46.9 151.5
61.0 Cash - end of period $91.9 $52.5 $91.9 $52.5 Condensed
Financials (June 2007) Unaudited Consolidated Balance Sheets ($ in
millions) July 1, 2007 July 2, 2006 Assets Current assets Cash and
cash equivalents $91.9 $52.5 Receivables, net 772.4 770.7
Inventories, net 898.8 854.7 Deferred taxes and other current
assets 93.4 129.6 Total current assets 1,856.5 1,807.5 Property,
plant and equipment, net 1,913.8 1,831.4 Goodwill 1,783.8 1,710.0
Other assets 371.0 518.9 Total assets $5,925.1 $5,867.8 Liabilities
and Shareholders' Equity Current liabilities Short-term debt and
current portion of long-term debt $162.1 $133.9 Payables and
accrued liabilities 1,173.4 1,206.6 Total current liabilities
1,335.5 1,340.5 Long-term debt 2,233.0 2,513.0 Other liabilities
and minority interests 1,011.0 949.0 Shareholders' equity 1,345.6
1,065.3 Total liabilities and shareholders' equity $5,925.1
$5,867.8 Notes to Condensed Financials (June 2007) 1. Accounting
Policy Change In the fourth quarter of 2006, management changed the
method of inventory accounting for the majority of inventories in
the metal beverage packaging, Americas, and metal food and
household products packaging, Americas, segments from the last-in,
first-out (LIFO) method to the first-in, first-out (FIFO) method.
The FIFO method of inventory accounting better matches revenues and
expenses in accordance with sales contract payment terms. The six
months ended July 2, 2006, have been retrospectively adjusted on a
FIFO basis in accordance with Statement of Financial Accounting
Standards No. 154. 2. Business Segment Information Three months
ended Six months ended ($ in millions) July 1, July 2, July 1, July
2, 2007 2006 2007 2006 Sales- Metal beverage packaging, Americas
$816.7 $740.6 $1,454.2 $1,333.0 Metal beverage packaging,
Europe/Asia 539.3 433.8 924.3 734.7 Metal food & household
products packaging, Americas (Note 3) 284.0 295.2 562.8 484.5
Plastic packaging, Americas (Note 3) 198.7 197.5 385.3 319.9
Aerospace & technologies 194.1 175.4 400.4 335.3 Consolidated
net sales $2,032.8 $1,842.5 $3,727.0 $3,207.4 Earnings before
interest and taxes (A) - Metal beverage packaging, Americas $82.6
$67.0 $176.4 $120.5 Metal beverage packaging, Europe/Asia 92.6 67.5
137.5 95.6 Property insurance gain (Note 4) - 74.1 - 74.1 Total
metal beverage packaging, Europe/Asia 92.6 141.6 137.5 169.7 Metal
food & household products packaging, Americas (Note 3) 11.1 4.4
10.9 7.5 Business consolidation costs (Note 4) - 0.4 - (1.7) Total
metal food & household products packaging, Americas 11.1 4.8
10.9 5.8 Plastic packaging, Americas (Note 3) 7.1 8.8 9.4 10.4
Aerospace & technologies 15.6 8.3 35.2 17.8 Segment earnings
before interest and taxes 209.0 230.5 369.4 324.2 Undistributed
corporate costs (16.0) (6.7) (23.7) (19.2) Earnings before interest
and taxes $193.0 $223.8 $345.7 $305.0 (A) Amounts in 2006 were
retrospectively adjusted for: (1) a change in inventory accounting
method from LIFO to FIFO (see Note 1), (2) the allocation of
stock-based compensation expense to the packaging segments and (3)
the transfer of a plastic pail product line from the metal food and
household products packaging, Americas, segment to the plastic
packaging, Americas, segment (which occurred as of January 1,
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 and Property Insurance Gain In April 2006 a fire in our
metal beverage can plant in Hassloch, Germany, 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 of 2006. The related 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 $48.6 million and $32.4 million were received in the
first quarter of 2007 and the second quarter of 2006, respectively.
During the second quarter of 2007, we brought into full production
the replacement capacity we installed after the fire. In the second
quarter of 2006, 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. 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 ($0.5 million after tax) to reflect the net
proceeds on the disposition of the plant's fixed assets. A summary
of the effects of the above transactions on after-tax earnings
follows: Three months ended Six months ended ($ in millions, except
per share July 1, July 2, July 1, July 2, amounts) 2007 2006 2007
2006 Net earnings as reported $105.9 $129.8 $187.1 $174.2 Insurance
gain, net of tax - (45.2) - (45.2) Business consolidation (gains)
costs, net of tax - (0.2) - 1.2 Net earnings before the above items
$105.9 $84.4 $187.1 $130.2 Per diluted share before the above items
$1.03 $0.80 $1.81 $1.24 Ball's management segregates the above
items 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 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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