BROOMFIELD, Colo., Oct. 30 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today reported third quarter earnings of
$101.9 million, or $1.05 cents per diluted share, on sales of $2
billion, compared to $60.9 million, or 59 cents per diluted share,
on sales of $1.9 billion in the third quarter of 2007. The third
quarter 2008 results include a $9.1 million ($7.2 million after
tax, or 8 cents per diluted share) charge for closing costs
pertaining to previously announced plant closures in Commerce,
Calif.; Brampton, Ontario; and Kent, Wash. The third quarter 2007
results include an $85.6 million charge ($51.8 million after tax,
or 50 cents per diluted share) for a customer settlement. "Our
overall performance in the quarter was very good, and in a
difficult economic environment all but one of our business segments
reported improved profitability compared to the third quarter of
2007," said R. David Hoover, chairman, president and chief
executive officer. "As we navigate through this broader economic
slowdown, we are confident that the recession resistant qualities
of our packaging products will enable us to move forward with our
strategy to grow our worldwide metal beverage packaging business,
improve our other packaging businesses and leverage our unique
aerospace competencies to generate significant free cash flow to
buy back our stock and pay down debt." For the first nine months of
2008, Ball's results were earnings of $285.7 million, or $2.92 per
diluted share, on sales of $5.83 billion, compared to $248 million,
or $2.40 per diluted share, on sales of $5.63 billion in the same
period in 2007. The nine-month 2008 results include a net pretax
charge of $13.5 million ($10.9 million after tax, or 11 cents per
diluted share) from business consolidation charges net of the gain
on the sale of an Australian aerospace subsidiary. The nine-month
2007 results include the customer settlement. The 2008 results
through three quarters do not include an after-tax charge of
approximately $32 million announced today for the closing of metal
beverage can plants in Kansas City, Mo., and Guayama, Puerto Rico.
Approximately $28 million of the charge is expected to be recorded
in the fourth quarter of 2008, with the remainder recorded in the
first quarter of 2009. Cost reductions associated with these
closings are expected to exceed $30 million in 2009 and be $9
million cash positive on final disposition of the assets. "During
2008, Ball is proactively managing its domestic manufacturing
footprint across our packaging businesses to balance and align our
manufacturing system more closely with current and future customer
demand and to position Ball to improve profitability and returns in
the future," said John A. Hayes, executive vice president and chief
operating officer. "We also continue to benefit from international
metal beverage container growth; however, in light of the current
economic environment we are managing capacity additions to be
consistent with expected demand growth. Efficient execution is
critical as we take a harder look at existing businesses and
in-process activities to improve overall performance." Metal
Beverage Packaging, Americas and Asia Operating earnings in the
quarter, before business consolidation costs, were $77 million on
sales of $767 million, compared to earnings of $71.2 million on
sales of $797 million in the third quarter of 2007 before the
customer settlement. For the first nine months, comparable segment
results were earnings of $228.4 million on sales of $2.3 billion,
compared to $262.2 million on sales of $2.36 billion in the first
three quarters of 2007. Business consolidation costs were $0.6
million and $4 million for 2008 for the third quarter and year to
date, respectively. The customer settlement in 2007 was an $85.6
million charge for both the third quarter and year to date. North
American beverage can volumes decreased approximately 6 percent in
the third quarter compared to the same period in 2007, due to
decreased demand for 12-ounce cans and the company's decision to
walk away from unprofitable business. Ball announced actions today
to further reduce its 12-ounce production capacity in North America
and to consolidate specialty can capacity into fewer facilities
that are better located to serve customers. Volumes in China
increased nearly 20 percent in the third quarter compared to 2007
due largely to our customer mix within overall market growth. Metal
Beverage Packaging, Europe Third quarter earnings in the metal
beverage packaging, Europe, segment were $76.7 million on sales of
$511.3 million, compared to $74.8 million on sales of $454.2
million in the third quarter of 2007. For the first nine months
segment earnings were $201.9 million on sales of $1.5 billion,
compared to $197.7 million on sales of $1.26 billion in the same
period in 2007. Volumes increased 5 percent in the quarter compared
to 2007 and are up nearly 8 percent year-to-date, led by growth in
Western Europe, particularly in the United Kingdom. Metal Food
& Household Products Packaging, Americas Results in the
company's metal food and household products packaging, Americas,
segment continue to improve. Segment earnings for the third quarter
before a $4.5 million charge related to a plant closure were $15.8
million on sales of $365 million, compared to $14.5 million on
sales of $350 million in the third quarter of 2007. For the first
nine months of 2008, earnings were $44.9 million, before the
charge, on sales of $912 million, compared to $25.4 million on
sales of $912 million in 2007. The restructuring plan originally
announced in the third quarter of 2007 is on schedule and on budget
and is still expected to yield annualized cost savings in excess of
$15 million in 2009. Plastic Packaging, Americas Third quarter
results in the plastic packaging, Americas, segment were earnings
of $5.3 million before a $4 million charge for a plant closure, on
sales of $184 million, compared to $7.7 million on sales of $195
million in the third quarter of 2007. For the first three quarters
of 2008, results were earnings of $15.8 million before an $8.3
million charge for a plant closure, on sales of $574 million,
compared to $17.1 million on sales of $580 million in the same
period in 2007. Plastic container volumes decreased 13 percent in
the quarter compared to the prior year as customers continued to
see lower traffic through convenience stores and a decrease in
bottled water sales. Aerospace and Technologies Segment earnings in
the quarter were $18.4 million on sales of $181 million, compared
to $18.3 million on sales of $196 million in the third quarter of
2007. For the first nine months of 2008, earnings were $56 million
before a $7.1 million gain on the sale of an Australian subsidiary,
on sales of $550 million, compared to $53.5 million on sales of
$597 million in the first three quarters of 2007. As a result of
the U.S. Presidential election year, Congress passed a continuing
budget resolution which tends to delay some new program awards. The
company expects this to have an unfavorable impact on the segment
in 2009 when compared to the strong results expected by this
segment in 2008. Outlook Raymond J. Seabrook, executive vice
president and chief financial officer, said full-year free cash
flow is expected to be in the range of $275 to $300 million after
deducting the one-time $70 million customer settlement paid in the
first quarter of 2008, and allowing for reduced fourth quarter
foreign currency cash flow as a result of the stronger U.S. dollar.
A stronger U. S. dollar will also reduce year-end net debt to a
lower amount than previously projected. "Full-year capital spending
is expected to be around $325 million, with more than 50 percent of
that for new, top-line growth projects," Seabrook said. "Through
the first three quarters we have purchased a net $258 million of
the anticipated $300 million stock buyback for 2008 and we continue
to see outstanding value in our stock." "Throughout 2008 Ball has
taken numerous actions across its packaging businesses to set in
place the building blocks to improve our performance in 2009 and
beyond, including redefining our manufacturing footprint,
installing new capacity in growing international markets and
focusing on our overall execution," Hoover said. "We are managing
our manufacturing operations with a focus on cash flow and are
prepared to take downtime as necessary in the fourth quarter to
meet these objectives. Despite this, we continue to believe that
fourth quarter results will be in line with last year's fourth
quarter results from continuing operations. "Ball is a well
financed company that generates significant free cash flow," Hoover
continued. "Careful allocation of that cash flow is fundamental to
our success. The combination of targeted investment for cost
reduction and top-line growth coupled with the return of cash to
our shareholders through stock repurchases and dividends will allow
us to continue to create shareholder value. Combined with the
actions we are taking in our operations, this positions Ball well
for the long term." 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 15,000 people worldwide and
reported 2007 sales of approximately $7.4 billion. For the latest
Ball news and for other company information, please visit
http://www.ball.com/. 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
Time). The North American toll-free number for the call is 800-768-
3232. International callers should dial 212-231-2929. Please use
the following URL for a Web cast of the live call:
phx.corporateir.net/phoenix.zhtml?p=iroleventDetails&c=115234&eventID=1987423
For those unable to listen to the live call, a taped replay will be
available after the call's conclusion until 1 p.m. Eastern Time on
Nov. 6, 2008. To access the replay, call 800-633-8284 (North
American callers) or 402-977-9140 (international callers) and use
reservation number 21395362. 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; the
current global credit squeeze and its effects on liquidity, credit
risk, asset values and the economy; successful or unsuccessful
acquisitions, joint ventures or divestitures; integration of
recently acquired businesses; regulatory action or laws including
tax, environmental, health and workplace safety, including in
respect of chemicals or substances used in raw materials or in the
manufacturing process; 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
(September 2008) Unaudited Statements of Consolidated Earnings
Three months ended Nine months ended September September September
September 28, 30, 28, 30, ($ in millions, except per share 2008
2007 2008 2007 amounts) Sales $2,008.2 $1,992.1 $5,828.7 $5,719.1
Legal settlement (Note 2) - (85.6) - (85.6) Net sales 2,008.2
1,906.5 5,828.7 5,633.5 Costs and expenses Cost of sales (excluding
depreciation and amortization) 1,679.9 1,659.5 4,856.1 4,736.4
Depreciation and amortization 73.9 71.8 224.7 206.7 Selling,
general and administrative 67.5 84.3 227.6 253.8 Business
consolidation and other costs (Note 2) 9.1 - 20.6 - Gain on sale of
subsidiary (Note 2) - - (7.1) - 1,830.4 1,815.6 5,321.9 5,196.9
Earnings before interest and taxes (Note 1) 177.8 90.9 506.8 436.6
Interest expense (33.1) (36.2) (104.0) (112.2) Tax provision (45.8)
3.1 (128.4) (85.9) Minority interests (0.1) (0.1) (0.3) (0.3)
Equity in results of affiliates 3.1 3.2 11.6 9.8 Net earnings
$101.9 $60.9 $285.7 $248.0 Earnings per share (Note 2): Basic $1.07
$0.60 $2.96 $2.44 Diluted $1.05 $0.59 $2.92 $2.40 Weighted average
shares outstanding (000s): Basic 95,368 101,422 96,491 101,691
Diluted 96,604 102,997 97,796 103,372 Condensed Financials
(September 2008) Unaudited Statements of Consolidated Cash Flows
Three months ended Nine months ended September September September
September 28, 30, 28, 30, ($ in millions) 2008 2007 2008 2007 Cash
Flows From Operating Activities: Net earnings $101.9 $60.9 $285.7
$248.0 Depreciation and amortization 73.9 71.8 224.7 206.7 Business
consolidation and other costs 9.1 - 20.6 - Gain on sale of
subsidiary - - (7.1) - Legal settlement - 85.6 (70.3) 85.6 Income
taxes 9.4 (28.6) 15.7 28.8 Pension funding and expense, net (12.1)
(18.7) (11.4) (21.1) Other changes in working capital 16.8 (25.0)
(349.5) (173.2) Other 9.0 8.1 30.0 30.4 208.0 154.1 138.4 405.2
Cash Flows From Investing Activities: Additions to property, plant
and equipment (70.3) (56.6) (230.8) (222.9) Proceeds from sale of
subsidiary - - 8.7 - Property insurance proceeds - - - 48.6 Other
20.0 (6.1) 9.8 (5.4) (50.3) (62.7) (212.3) (179.7) Cash Flows From
Financing Activities: Net change in borrowings (19.2) (36.0) 316.1
(121.6) Dividends (9.3) (10.0) (28.3) (30.4) Purchases of common
stock, net (76.3) (59.8) (257.5) (155.1) Other 1.1 1.6 3.5 8.3
(103.7) (104.2) 33.8 (298.8) Effect of exchange rate changes on
cash (3.5) 0.3 2.4 1.2 Change in cash 50.5 (12.5) (37.7) (72.1)
Cash-beginning of period 63.4 91.9 151.6 151.5 Cash-end of period
$113.9 $79.4 $113.9 $79.4 Condensed Financials (September 2008)
Unaudited Consolidated Balance Sheets September 28, September 30,
($ in millions) 2008 2007 Assets Cash and cash equivalents $113.9
$79.4 Receivables, net 773.8 852.8 Inventories, net 1,000.9 867.6
Deferred taxes and other current assets 128.2 80.1 Total current
assets 2,016.8 1,879.9 Property, plant and equipment, net 1,934.5
1,941.0 Goodwill 1,864.2 1,837.8 Other assets, net 396.2 356.7
Total assets $6,211.7 $6,015.4 Liabilities and Shareholders' Equity
Current liabilities Short-term debt and current portion of
long-term debt $221.5 $169.4 Payables and accrued liabilities
1,143.2 1,255.4 Total current liabilities 1,364.7 1,424.8 Long-term
debt 2,438.0 2,228.9 Other liabilities and minority interests
1,002.4 1,004.4 Shareholders' equity 1,406.6 1,357.3 Total
liabilities and shareholders' equity $6,211.7 $6,015.4 Notes to
Condensed Financials (September 2008) 1. Business Segment
Information Due to first quarter 2008 management reporting changes,
Ball's China operations are included in the metal beverage
packaging, Americas and Asia, segment. The results for the 2007
periods have been retrospectively adjusted to conform to the
current year presentation. Three months ended Nine months ended
September September September September 28, 30, 28, 30, ($ in
millions) 2008 2007 2008 2007 Sales- Metal beverage packaging,
Americas & Asia $767.0 $797.0 $2,304.8 $2,369.9 Legal
settlement (Note 2) - (85.6) - (85.6) Total metal beverage
packaging, Americas & Asia 767.0 711.4 2,304.8 2,284.3 Metal
beverage packaging, Europe 511.3 454.2 1,487.9 1,259.7 Metal food
& household packaging, Americas 365.0 349.5 912.0 912.3 Plastic
packaging, Americas 184.1 195.0 574.0 580.3 Aerospace &
technologies 180.8 196.4 550.0 596.9 Consolidated net sales
$2,008.2 $1,906.5 $5,828.7 $5,633.5 Earnings before interest and
taxes- Metal beverage packaging, Americas & Asia $77.0 $71.2
$228.4 $262.2 Business consolidation costs and other (Note 2) (0.6)
(85.6) (4.0) (85.6) Total metal beverage packaging, Americas &
Asia 76.4 (14.4) 224.4 176.6 Metal beverage packaging, Europe 76.7
74.8 201.9 197.7 Metal food & household packaging, Americas
15.8 14.5 44.9 25.4 Business consolidation costs (Note 2) (4.5) -
(4.5) - Total metal food & household packaging, Americas 11.3
14.5 40.4 25.4 Plastic packaging, Americas 5.3 7.7 15.8 17.1
Business consolidation costs (Note 2) (4.0) - (8.3) - Total plastic
packaging, Americas 1.3 7.7 7.5 17.1 Aerospace & technologies
18.4 18.3 56.0 53.5 Gain on sale of subsidiary (Note 2) - - 7.1 -
Total aerospace & technologies 18.4 18.3 63.1 53.5 Segment
earnings before interest and taxes 184.1 100.9 537.3 470.3
Undistributed corporate costs (6.3) (10.0) (26.7) (33.7) Business
consolidation costs and other (Note 2) - - (3.8) - Total
undistributed corporate costs (6.3) (10.0) (30.5) (33.7) Earnings
before interest and taxes $177.8 $90.9 $506.8 $436.6 Notes to
Condensed Financials (September 2008) 2. Business Consolidation
Activities and Other Significant Operating and Nonoperating Items
2008 In the first quarter, Ball Aerospace & Technologies Corp.
completed the sale of an Australian subsidiary for $10.5 million
that resulted in a pretax gain of $7.1 million ($4.4 million after
tax). In the second quarter, the company announced the closure of
two manufacturing facilities, a metal beverage packaging plant in
Kent, Wash., and a plastic packaging plant in Brampton, Ontario. A
pretax charge of $14.9 million ($10.2 million after tax) was
recorded in the second quarter to reflect these plant closings.
Also in the second quarter, earnings of $3.4 million ($2.1 million
after tax) were recorded to reflect the recovery of costs
previously expensed in prior business consolidation charges. In the
third quarter, $9.1 million ($7.2 after tax) was recorded primarily
for lease cancellation and accelerated depreciation costs
pertaining to announced plant closures in prior periods. In
accordance with generally accepted accounting principles, these
types of costs are recorded until the plant ceases operation. 2007
In the third quarter, the company settled a dispute with a U.S.
customer in mediation for various claims for $85.6 million ($51.8
million after tax). The customer received a one-time payment of
approximately $70 million in January 2008 with the remainder of the
settlement to be recovered over the life of the supply contract
with that customer through 2015. A summary of the effects of the
above transactions on after-tax earnings follows: Three months
ended Nine months ended September September September September 28,
30, 28, 30, ($ in millions, except per share 2008 2007 2008 2007
amounts) Net earnings as reported $101.9 $60.9 $285.7 $248.0
Business consolidation and other costs, net of tax 7.2 - 15.3 -
Gain on sale of subsidiary, net of tax - - (4.4) - Legal
settlement, net of tax - 51.8 - 51.8 Net earnings before above
transactions $109.1 $112.7 $296.6 $299.8 Per diluted share before
above transactions $1.13 $1.09 $3.03 $2.90 Ball's management
segregates the above items to evaluate the performance of the
company's 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. 3. Tax Provision
The 2007 third quarter tax provision was reduced by $17.2 million,
net, due to (1) enacted rate reductions in Germany and the United
Kingdom, offset by reduced tax credits in the U.S.; (2) the
realization of a tax loss pertaining to Canadian operations and (3)
the conclusion of our negotiations with the IRS concerning
disallowed interest deductions under a company-owned life insurance
plan. 4. Subsequent Events On October 30, 2008, the company
announced the closure of two North American metal beverage can
plants. A plant in Kansas City, Missouri, which primarily
manufactures specialty beverage cans, will be closed by the end of
the first quarter 2009 with manufacturing volumes absorbed by other
North American beverage can plants. A plant in Puerto Rico, which
manufactures 12-ounce beverage cans, will be closed by the end of
the year. An after-tax charge of approximately $32 million will be
recorded to reflect these plant closings, of which approximately
$28 million is expected to be recorded in the fourth quarter of
2008 with the remainder recorded in the first quarter of 2009. Cost
reductions associated with these plant closings are expected to
exceed $30 million in 2009 and be $9 million cash positive upon
final disposition of the assets. DATASOURCE: Ball Corporation
CONTACT: Investors, Ann T. Scott, +1-303-460-3537, , or Media,
Scott McCarty, +1-303-460-2103, Web site: http://www.ball.com/
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