BROOMFIELD, Colo., Jan. 24 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today reported full-year 2007 net earnings
of $281.3 million, or $2.74 per diluted share, on sales of $7.39
billion, compared to $329.6 million, or $3.14 per diluted share, on
sales of $6.62 billion in 2006. Fourth quarter 2007 net earnings
were $33.3 million, or 33 cents per diluted share, on sales of
$1.76 billion, compared to $48.3 million, or 46 cents per diluted
share, on sales of $1.59 billion in the fourth quarter of 2006. In
both 2007 and 2006 results included costs from business
consolidation activities and significant non-operating items.
Fourth quarter 2007 results included net after-tax costs of
approximately $27 million, or 27 cents per diluted share, for
business consolidation primarily in the company's food and
household products packaging, Americas, segment. Full-year 2007
results included the fourth quarter business consolidation costs
and a third quarter after-tax charge of $51.8 million, or 50 cents
per diluted share, related to a customer settlement. Fourth quarter
2006 results included net after-tax costs of $20.2 million, or 19
cents per diluted share, from business consolidation activities,
reduced by a one-time tax gain. Full-year 2006 results included
property insurance proceeds resulting from a fire at a plant in
Germany, offset by business consolidation costs, for a net
after-tax gain of $25.6 million, or 24 cents per diluted share.
Details of the business consolidation activities, customer
settlement and property insurance gain can be found in Note 2 to
the unaudited consolidated financial statements that accompany this
news release. R. David Hoover, chairman, president and chief
executive officer, said 2007 was a record year for Ball in terms of
operating results. "On a comparable basis, our diluted earnings per
share were $3.50 in 2007, up 21 percent from our previous record of
$2.90 in 2006. This came despite a difficult fourth quarter
comparison where, also on a comparable basis, we earned 60 cents
per diluted share in the period in 2007 versus 65 cents in the
fourth quarter of 2006," Hoover said. "While we generally are
pleased with our results from 2007, we have identified and are
executing on numerous initiatives that we believe will lead to
further improvements in 2008 and better position us for the longer
term," Hoover said. "Earlier this week our board of directors
elected John A. Hayes as executive vice president and chief
operating officer of Ball Corporation. John has done a superior job
of leading our operations in Europe in recent years. We look
forward to having him as chief operating officer for all of our
businesses." Metal Beverage Packaging, Americas Metal beverage
packaging, Americas, segment operating earnings were $213.6 million
in 2007 on sales of $2.76 billion, including an $85.6 million
charge for a customer settlement, compared to $269.4 million on
sales of $2.60 billion in 2006. For the fourth quarter, earnings
were $57.8 million on sales of $666.6 million in 2007, compared to
$75.9 million on sales of $611.9 million in 2006. "Continued strong
demand for specialty size cans contributed to overall results in
our metal beverage packaging, Americas, segment in 2007," Hoover
said. "Work is progressing on schedule to install a new 24-ounce
can production line in our Monticello, Ind., beverage can plant.
That capacity will come on stream later this year to help us keep
up with the growing demand for that particular container, primarily
for energy drinks and beer." Ball's board of directors approved
yesterday the corporation's participation in a one-line metal
beverage container plant in southeastern Brazil. The plant will be
part of Latapack-Ball Embalagens, Ltda., Ball's 50-50 joint venture
can company in Brazil. Its capacity will be 900 million cans per
year and can be expanded to 2 billion cans per year as demand
grows. The plant will be financed entirely by cash flows from the
joint venture, and production is expected to begin in mid-2009.
Metal Beverage Packaging, Europe/Asia Metal beverage packaging,
Europe/Asia, segment results in 2007 were operating earnings of
$256.1 million on sales of $1.9 billion, compared to $268.7 million
on sales of $1.51 billion in 2006, which included a pre-tax
property insurance gain of $75.5 million related to a fire in a
German plant. For the fourth quarter, operating earnings in 2007
were $37.6 million on sales of $455.5 million, compared to $33
million on sales of $352.6 million in the fourth quarter of 2006.
Ball announced today plans to build a new beverage can
manufacturing plant in Poland in order to meet the rapidly growing
demand for beverage cans there and elsewhere in Central and Eastern
Europe. The plant will be built in Lublin, near the borders of
Belarus and Ukraine. It will initially have one production line
with an annual capacity of approximately 750 million cans per year
and is expected to begin production in the first half of 2009. "Our
metal beverage packaging, Europe/Asia, segment had a strong 2007,
with improved results throughout Europe and in China, and we have
numerous growth opportunities," Hoover said. "We currently are
speeding up certain production lines in Germany and Poland in
advance of the busy 2008 summer selling season. In addition, during
the fourth quarter of 2007 we announced plans for a beverage can
plant in India that will use existing manufacturing equipment."
Metal Food & Household Products Packaging, Americas Metal food
and household products packaging, Americas, segment results for
2007 were a loss of $8 million on sales of $1.18 billion, including
business consolidation costs of $44.2 million, compared to $2.4
million on sales of $1.14 billion in 2006. For the fourth quarter
of 2007, segment results were a loss of $33.4 million on sales of
$271.1 million, compared to a loss of $23.2 million on sales of
$288.1 million in the same period of 2006. The fourth quarter and
full-year 2007 results included business consolidation costs of
$44.2 million. The fourth quarter and full-year 2006 results
include business consolidation costs of $33.8 million and $35.5
million, respectively. "Work has begun on the further restructuring
announced early in the fourth quarter of our metal food and
household products packaging, Americas, segment," Hoover said. "The
restructuring plan includes closing aerosol can production plants
in California and Georgia and exiting the custom and decorative
tinplate can business. Even though the anticipated annualized cost
savings of $15 million from this restructuring are not expected
until 2009, we believe other improvements we have already made and
continue to make in pricing and operating efficiencies will lead to
much improved performance in this segment in 2008." Plastic
Packaging, Americas Plastic packaging, Americas, segment results
for 2007 were operating earnings of $25.9 million on sales of
$752.4 million, compared to $28.3 million on sales of $693.6
million in 2006. For the fourth quarter, earnings in 2007 were $8.8
million on sales of $172.1 million, compared to $10 million on
sales of $172.6 million for the same period in 2006. "Plastic
packaging, Americas, segment results were down slightly in 2007
from 2006 and are at unacceptable levels," Hoover said. "We will
continue to emphasize our heat set and other higher margin plastic
containers while pursuing price increases for commodity plastic
containers for water and carbonated soft drinks, where returns are
well below our cost of capital and must improve." Aerospace and
Technologies Aerospace and Technologies segment results were
operating earnings of $64.6 million on sales of $787.8 million in
2007, compared to $50 million on sales of $672.3 million in 2006.
For the fourth quarter, earnings were $11.1 million on sales of
$190.9. Fourth quarter 2006 earnings were $16.7 million on sales of
$166.6 million. "Our aerospace and technologies segment enjoyed an
outstanding year in 2007, even though fourth quarter results were
down from a year ago," Hoover said. "We have several large
projects, such as the WorldView 2 satellite for DigitalGlobe, in
progress and are competing for several other large contracts. The
market continues to hold strong demand for the products and
technologies for which we are most recognized." Outlook Raymond J.
Seabrook, executive vice president and chief financial officer,
said adjusted free cash flow for 2007 was $440 million and that
2008 free cash flow will be lower due to higher cash taxes, a
one-time after-tax payment of $42 million for the customer
settlement reached in the third quarter of 2007 and higher 2008
capital expenditures, offset partially by a reduction in working
capital. "In part due to lower than expected capital expenditures
in 2007 which will be spent in 2008, and due to growth projects in
the company's worldwide beverage can business, we expect capital
spending to exceed $300 million in 2008," Seabrook said.
"Approximately 75 percent of our anticipated capital spending will
be in our beverage can segments, with more than $150 million of the
total earmarked for top-line growth projects. Cost reduction and
maintenance capital spending for the total company should be
approximately 60 percent of overall depreciation. "Our credit
profile remains strong with net debt at the end of 2007 at $2.2
billion. This strong credit profile should allow us to repurchase
approximately $300 million of our common stock in 2008, including
the accelerated share buyback program we announced in December,"
Seabrook said. "We are optimistic about 2008," Hoover said. "We are
focused on getting results in our food and household products
packaging and plastic packaging segments to more acceptable levels.
"We have attractive opportunities for growth in our beverage can
operations worldwide, and much of our capital spending will be
directed at these opportunities. Our aerospace and technologies
segment is coming off of a remarkable record year that will be
difficult to duplicate, but results in 2008 should remain strong,"
Hoover said. "For full year 2008 we will work hard to achieve
greater than the $3.50 per diluted share we made in 2007, excluding
restructuring and customer settlement costs," Hoover said. Ball
Corporation is a supplier of high-quality metal and plastic
packaging for beverage, food and household products 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 2007 sales of $7.4
billion. Conference Call Details Ball will hold its regular
quarterly conference call on the company's results and performance
today at 8 a.m. Mountain Time (10 a.m. Eastern). The North American
toll-free number for the call is 800-909-4795. International
callers should dial 212-231-2901. 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=1729222 For those unable to
listen to the live call, a taped replay will be available after its
conclusion until midnight Eastern Time on Jan. 31, 2008. To access
the replay, call 800-633-8284 (North American callers) or
402-977-9140 (international callers) and use reservation number
21363683. 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 product 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; competitive activity; failure to
achieve anticipated productivity improvements or production cost
reductions, including our beverage can end project; 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; changes in senior management;
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
(December 2007) Unaudited Statements of Consolidated Earnings ($ in
millions, Three months ended Year ended except per December 31,
December 31, share amounts) 2007 2006 2007 2006 Sales $1,756.2
$1,591.8 $7,475.3 $6,621.5 Legal settlement (Note 2) - - (85.6) -
Net sales 1,756.2 1,591.8 7,389.7 6,621.5 Costs and expenses Cost
of sales (excluding depreciation and amortization) 1,490.1 1,312.2
6,226.5 5,540.4 Depreciation and amortization 74.3 68.6 281.0 252.6
Selling, general and administrative 69.9 76.9 323.7 287.2 Business
consolidation costs (Note 2) 44.6 33.8 44.6 35.5 Property insurance
gain (Note 2) - 1.4 - (75.5) 1,678.9 1,492.9 6,875.8 6,040.2
Earnings before interest and taxes 77.3 98.9 513.9 581.3 Interest
expense (37.2) (36.3) (149.4) (134.4) Tax provision (9.8) (17.4)
(95.7) (131.6) Minority interests (0.1) 0.1 (0.4) (0.4) Equity in
results of affiliates 3.1 3.0 12.9 14.7 Net earnings $33.3 $48.3
$281.3 $329.6 Earnings per share (Note 2): Basic $0.33 $0.47 $2.78
$3.19 Diluted $0.33 $0.46 $2.74 $3.14 Weighted average shares
outstanding (000s): Basic 99,688 103,160 101,186 103,338 Diluted
101,219 104,814 102,760 104,951 Condensed Financials (December
2007) Unaudited Statements of Consolidated Cash Flows Three months
ended Year ended December 31, December 31, ($ in millions) 2007
2006 2007 2006 Cash Flows From Operating Activities: Net earnings
$33.3 $48.3 $281.3 $329.6 Depreciation and amortization 74.3 68.6
281.0 252.6 Business consolidation and other activities (Note 2)
42.3 33.9 127.9 (41.3) Income taxes (54.2) (27.7) (17.7) (33.9)
Pension funding, net of expense 1.6 (0.2) (19.5) (6.7) Incremental
pension funding, net of taxes (Note 3) (27.3) - (27.3) - Other
changes in working capital 193.2 152.1 12.3 (119.0) Other 4.6 10.3
35.0 20.1 267.8 285.3 673.0 401.4 Cash Flows From Investing
Activities: Additions to property, plant and equipment (85.6)
(92.0) (308.5) (279.6) Acquisitions - (4.7) - (791.1) Property
insurance proceeds (Notes 2 and 3) - 28.9 48.6 61.3 Other (0.5) 6.3
(5.9) 16.0 (86.1) (61.5) (265.8) (993.4) Cash Flows From Financing
Activities: Net change in borrowings (48.4) (122.8) (170.0) 767.4
Dividends (10.2) (10.3) (40.6) (41.0) Purchases of common stock,
net (56.2) (1.0) (211.3) (45.7) Other 1.2 1.6 9.5 (0.5) (113.6)
(132.5) (412.4) 680.2 Effect of exchange rate changes on on cash
4.1 1.1 5.3 2.3 Change in cash 72.2 92.4 0.1 90.5 Cash -- beginning
of period 79.4 59.1 151.5 61.0 Cash -- end of period $151.6 $151.5
$151.6 $151.5 Condensed Financials (December 2007) Unaudited
Consolidated Balance Sheets December 31, December 31, ($ in
millions) 2007 2006 Assets Current Cash and cash equivalents $151.6
$151.5 Receivables, net 582.7 579.5 Inventories, net 998.1 935.4
Deferred taxes and other current assets 110.5 94.9 Total current
assets 1,842.9 1,761.3 Property, plant and equipment, net 1,941.2
1,876.0 Goodwill 1,863.1 1,773.7 Other assets 373.4 429.9 Total
assets $6,020.6 $5,840.9 Liabilities and Shareholders' Equity
Current liabilities Short-term debt and current portion of
long-term debt $176.8 $181.3 Payables and accrued liabilities
1,336.3 1,273.0 Total current liabilities 1,513.1 1,454.3 Long-term
debt 2,181.8 2,270.4 Employee benefit obligations 768.0 847.7
Deferred taxes and other 184.2 103.1 Shareholders' equity 1,373.5
1,165.4 Total liabilities and shareholders' equity $6,020.6
$5,840.9 Notes to Condensed Financials (December 2007) 1. Business
Segment Information Three months ended Year ended December 31,
December 31, ($ in millions) 2007 2006 2007 2006 Net sales (a) -
Metal beverage packaging, Americas $666.6 $611.9 $2,849.5 $2,604.4
Legal settlement (Note 2) - - (85.6) - Total metal beverage
packaging, Americas 666.6 611.9 2,763.9 2,604.4 Metal beverage
packaging, Europe/Asia 455.5 352.6 1,902.2 1,512.5 Metal food &
household packaging, Americas 271.1 288.1 1,183.4 1,138.7 Plastic
packaging, Americas 172.1 172.6 752.4 693.6 Aerospace &
technologies 190.9 166.6 787.8 672.3 Consolidated net sales
$1,756.2 $1,591.8 $7,389.7 $6,621.5 Earnings before interest and
taxes (a) - Metal beverage packaging, Americas $57.8 $75.9 $299.2
$269.4 Legal settlement (Note 2) - - (85.6) - Total metal beverage
packaging, Americas 57.8 75.9 213.6 269.4 Metal beverage packaging,
Europe/Asia 37.6 34.4 256.1 193.2 Property insurance gain (Note 2)
- (1.4) - 75.5 Total metal beverage packaging, Europe/Asia 37.6
33.0 256.1 268.7 Metal food & household packaging, Americas
10.8 10.6 36.2 37.9 Business consolidation costs (Note 2) (44.2)
(33.8) (44.2) (35.5) Total metal food & household packaging,
Americas (33.4) (23.2) (8.0) 2.4 Plastic packaging, Americas 9.2
10.0 26.3 28.3 Business consolidation costs (Note 2) (0.4) - (0.4)
- Total plastic packaging, Americas 8.8 10.0 25.9 28.3 Aerospace
& technologies 11.1 16.7 64.6 50.0 Segment earnings before
interest and taxes 81.9 112.4 552.2 618.8 Undistributed corporate
costs (4.6) (13.5) (38.3) (37.5) Earnings before interest and taxes
$77.3 $98.9 $513.9 $581.3 (a) Amounts in 2006 were retrospectively
adjusted for 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). Notes to Condensed Financials (December 2007) 2.
Business Consolidation Activities and Significant Nonoperating
Items 2007 In the second quarter, Miller Brewing Company (a U.S.
customer) asserted various claims against a wholly owned subsidiary
of the company and on October 4, 2007, the legal dispute was
settled in mediation. Miller will receive $85.6 million ($51.8
million after tax) on settlement of the dispute and Ball will
retain all of Miller's beverage can and end business through 2015.
Miller will receive a one-time payment of $70 million ($42 million
after tax) in January 2008 with the remainder of the settlement
recovered over the life of the supply contract through 2015. In the
fourth quarter, Ball announced plans to close two manufacturing
facilities and to exit the custom and decorative tinplate can
business located in Baltimore, Maryland. Ball will close its food
and household products packaging facilities in Tallapoosa, Georgia,
and Commerce, California, both of which manufacture aerosol and
general line cans. The two plant closures will result in a net
reduction in manufacturing capacity of 10 production lines,
including the relocation of two high-speed aerosol lines into
existing Ball facilities. A charge of $44.6 million ($27 million
after tax), primarily related to these plant closures, was recorded
in the fourth quarter and was comprised of the write-down of fixed
assets to net realizable value, excess inventory and employee
termination costs. The charge also included a $2.3 million pension
annuity expense related to a previously closed plant. Once
completed in early 2009, these actions are expected to yield
annualized pretax cost savings in excess of $15 million. The cash
costs of these actions are expected to be offset by proceeds on
asset dispositions and tax recoveries. 2006 In the fourth quarter,
the company announced the closure of a metal food can manufacturing
facility in Canada, as part of the realignment of the metal food
and household products packaging, Americas, segment following the
acquisition earlier that year of U.S. Can. A charge of $33.8
million ($27.5 million after tax) was recorded in the fourth
quarter related to the closure for equipment disposal, employee
termination, pension and other closure costs. Also in the fourth
quarter, a one-time tax benefit of $8.1 million was recorded due to
a change in the functional currency of a European subsidiary in its
statutory accounts. In the second quarter, a fire in our metal
beverage can plant in Hassloch, Germany, significantly damaged the
plant. A property insurance gain of $75.5 million ($46.1 million
after tax) was recorded in 2006 and initial insurance proceeds of
$61.3 million were received that year. The remaining $48.6 million
of insurance proceeds were received in 2007, and the rebuilt plant
and other replacement production capacity installed after the fire
were restarted during the second quarter of 2007. In the first and
second quarters, a net $1.1 million after-tax charge was recorded
in the metal food and household products packaging, Americas,
segment to shut down a food can line in a Canadian plant and
reflect the recovery of amounts previously expensed in a prior
business consolidation charge. A summary of the effects of the
above transactions on after-tax earnings is as follows: Three
months ended Year ended December 31, December 31, ($ in millions,
except per share amounts) 2007 2006 2007 2006 Net earnings as
reported $33.3 $48.3 $281.3 $329.6 Legal settlement, net of tax - -
51.8 - Business consolidation costs and tax, net 27.0 19.4 27.0
20.5 Insurance gain, net of tax - 0.8 - (46.1) Net earnings before
the above items $60.3 $68.5 $360.1 $304.0 Per diluted share before
the above items $0.60 $0.65 $3.50 $2.90 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. Notes to Condensed Financials
(December 2007) 3. Free Cash Flow Management internally uses a free
cash flow measure (1) to evaluate the company's operating results,
(2) to plan stock buy-back levels, (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 typically
derived directly from the company's cash flow statements and
defined as cash flows from operating activities less additions to
property, plant and equipment; however it may be adjusted for items
that affect comparability between periods. In 2006 and 2007,
property insurance proceeds have been included in the calculation
of free cash flow, as these proceeds are a direct reimbursement of
the company's capital expenditures. Also in 2007, a fourth quarter
$44.5 million ($27.3 million after-tax) incremental North American
pension funding payment has been excluded from the calculation of
free cash flow, as this payment is a direct reduction of pension
debt. The free cash flow calculation is as follows: Year ended
December 31, ($ in millions) 2007 2006 Cash Flows From Operating
Activities $673.0 $401.4 Incremental pension funding, net of tax
27.3 - Additions to property, plant and equipment (308.5) (279.6)
Property insurance proceeds 48.6 61.3 Free Cash Flow $440.4 $183.1
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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