BROOMFIELD, Colo., Jan. 29 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today reported full-year 2008 net earnings
of $319.5 million, or $3.29 per diluted share, on sales of $7.56
billion, compared to $281.3 million, or $2.74 per diluted share, on
sales of $7.39 billion in 2007. Fourth quarter 2008 net earnings
were $33.8 million, or 36 cents per diluted share, on sales of
$1.73 billion, compared to $33.3 million, or 33 cents per diluted
share, on sales of $1.76 billion in the fourth quarter of 2007. In
both 2008 and 2007, results included costs from business
consolidation activities and other non-operating items. Fourth
quarter net earnings included net after-tax costs of $19.6 million,
or 20 cents per diluted share, and $27 million, or 27 cents per
diluted share, for 2008 and 2007, respectively. Year-to-date
results included net after-tax costs of $30.5 million, or 32 cents
per diluted share, and $78.8 million, or 76 cents per diluted
share, for 2008 and 2007, respectively. The fourth quarter 2008
charge was primarily for the previously announced closure of metal
beverage packaging plants in Kansas City, Mo., and Guayama, Puerto
Rico. Details of the business consolidation activities and
comparable segment earnings can be found in Notes 1 and 2 to the
unaudited consolidated financial statements that accompany this
news release. "Ball's diluted earnings per share, net sales and net
earnings for the full year all increased during one of the most
challenging global economic environments in decades," said R. David
Hoover, chairman, president and chief executive officer. "Our metal
food and household products packaging and aerospace segments led
our improved performance, but a higher fourth quarter tax rate
caused by the broad stock market decline and its impact on certain
employee benefits plans hurt our results in the quarter by four
cents per diluted share." "The wider economic downturn in 2008
prompted us to accelerate ongoing changes within Ball," said John
A. Hayes, executive vice president and chief operating officer. "As
a result, we are poised to further improve operating performance
due to effectively managing our asset base, aligning with
successful customers and focusing on the execution of our long-term
strategy." Metal Beverage Packaging, Americas & Asia Metal
beverage packaging, Americas and Asia, comparable segment operating
earnings were $284.1 million in 2008 on sales of $2.99 billion,
compared to $326.4 million in 2007 on sales of $3.1 billion. For
the fourth quarter, comparable earnings were $55.7 million on sales
of $684.7 million in 2008, compared to $64.2 million on sales of
$728.1 million in 2007. Fourth quarter results were lower primarily
due to reduced North American sales volumes and curtailed
production for inventory control purposes. Full year results were
lower due to a $52 million inventory holding gain in 2007 that did
not reoccur in 2008. During the year, Ball announced the closure of
three metal beverage packaging plants to further balance the
company's capacity in this segment with market changes. Cost
reductions associated with these plant closings are expected to
exceed $30 million in 2009 and to be over $10 million cash positive
upon final disposition of the assets. In China, strong demand and
an improved customer mix contributed to improved results. Metal
Beverage Packaging, Europe Metal beverage packaging, Europe,
segment results in 2008 were operating earnings of $230.9 million
on sales of $1.87 billion, compared to $228.9 million on sales of
$1.65 billion in 2007. For the fourth quarter, operating earnings
in 2008 were $29.0 million on sales of $380.8 million, compared to
$31.2 million on sales of $393.9 million in the fourth quarter of
2007. The weakening of the euro against the U.S. dollar and the
weakening of the British pound sterling against the euro reduced
fourth quarter results compared to last year. Ball elected to slow
the timing of announced new metal beverage packaging plants in
Poland and India, though the company expects some volume growth in
2009. Cost savings measures continue to be implemented across the
business. Metal Food & Household Products Packaging, Americas
Metal food and household products packaging, Americas, comparable
segment results for 2008 were operating earnings of $68.1 million
on sales of $1.22 billion, compared to $36.2 million in 2007 on
sales of $1.18 billion. For the fourth quarter of 2008, comparable
segment results were operating earnings of $23.2 million on sales
of $309.4 million, compared to $10.8 million on sales of $271.1
million in the same period of 2007. Fourth quarter results were
higher than the same period in 2007 due primarily to a longer and
stronger than expected seasonal pack, better manufacturing
performance and the favorable resolution of a $6.8 million claim.
Plastic Packaging, Americas Plastic packaging, Americas, comparable
segment results for 2008 were operating earnings of $15.8 million
on sales of $735.4 million, compared to $26.3 million on sales of
$752.4 million in 2007. For the fourth quarter, the segment broke
even on sales of $161.4 million, compared to $9.2 million of
comparable earnings on sales of $172.1 million for the same period
in 2007. Fourth quarter results were hurt by reduced sales volumes
and curtailed production for inventory control purposes. The
company will continue to monitor demand trends, given weaker
volumes in 2008, to assess future supply and demand balance.
Aerospace and Technologies Aerospace and technologies comparable
segment results were operating earnings of $76.2 million on sales
of $746.5 million in 2008, compared to $64.6 million on sales of
$787.8 million in 2007. For the fourth quarter, earnings were $20.2
million on sales of $196.5 million. Fourth quarter 2007 earnings
were $11.1 million on sales of $191 million. Backlog at the close
of the year was $597.3 million. Backlog declined in this segment in
part as a result of pressure on the U.S. federal budget, the
broader financial crisis and a slow down in new contract awards
stemming from the effects of the presidential election year. Ball
reduced headcount and realigned resources to support its growing
antenna and video technologies and information services such as
data exploitation, systems engineering and technical support to
defense and intelligence organizations. While this segment is
focused on increasing backlog levels, the company expects 2009
results to decline. Outlook Ball expects improved free cash flow in
2009 in the range of $375 million and significantly lower interest
expense due to lower debt levels and interest rates. Though the
company anticipates stronger free cash flow for the year, it has
elected to suspend its stock buyback program and delay capital
spending for certain plant projects until global economic
conditions and capital markets improve. "Ball has no significant
debt refinancing requirements until October of 2011," said Raymond
J. Seabrook, executive vice president and chief financial officer.
"Our company's expected 2009 strong free cash flow will be used to
increase liquidity, reduce debt, continue dividend payments and
improve financial flexibility." "We remain positive about long-term
growth opportunities in our global beverage can business, and we
have responded prudently to the broader economic downturn by
slowing those projects with the exception of our new joint venture
metal beverage packaging plant in Brazil, where market demand
requires additional capacity," Hoover said. "We reduced the
manufacturing footprint of our North American packaging businesses
to better align supply with market demand and implemented price
increases in all of our packaging operating segments to reflect the
value delivered to our customers. Because of the disciplined
actions we took in 2008 and the defensive nature of our businesses
in this economy, Ball is well positioned to improve diluted
earnings per share performance in 2009." 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 14,500 people
worldwide and reported 2008 sales of more than $7.5 billion.
Conference Call Details Ball Corporation [NYSE: BLL] will hold its
quarterly conference call on the company's fourth quarter and
full-year 2008 results and performance today at 10 a.m. Eastern
Time. The North American toll-free number for the call is
800-732-6870. International callers should dial 212-231-2900.
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&eve
ntID=2055776 For those unable to listen to the live call, a taped
replay will be available after the call's conclusion until noon
Eastern Time on Feb. 5, 2009. To access the replay, call
800-633-8284 (North American callers) or 402-977-9140
(international callers) and use reservation number 21406682. 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; 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
(December 2008) ------------------------------------- Unaudited
Statements of Consolidated Earnings Three months ended Year ended
December 31, December 31, ------------ ------------ ($ in millions,
except per share amounts) 2008 2007 2008 2007
-------------------------- ---- ---- ---- ---- Sales $1,732.8
$1,756.2 $7,561.5 $7,475.3 Legal settlement (Note 2) - - - (85.6)
------- ------- ------- ------- Net sales 1,732.8 1,756.2 7,561.5
7,389.7 ------------ ------- ------- ------- ------- Costs and
expenses Cost of sales (excluding depreciation and amortization)
1,484.3 1,490.1 6,340.4 6,226.5 Depreciation and amortization 72.7
74.3 297.4 281.0 Selling, general and administrative 60.6 69.9
288.2 323.7 Business consolidation and other costs (Note 2) 31.5
44.6 52.1 44.6 Gain on sale of subsidiary (Note 2) - - (7.1) -
----- ----- ----- ----- 1,649.1 1,678.9 6,971.0 6,875.8
--------------------------- ------- ------- ------- -------
Earnings before interest and taxes (Note 1) 83.7 77.3 590.5 513.9
---------------------------- ---- ---- ----- ----- Interest expense
(33.7) (37.2) (137.7) (149.4) Tax provision (19.0) (9.8) (147.4)
(95.7) Minority interests (0.1) (0.1) (0.4) (0.4) Equity in results
of affiliates 2.9 3.1 14.5 12.9 ------------- ----- ----- ------
------ Net earnings $33.8 $33.3 $319.5 $281.3 ------------- -----
----- ------ ------ Earnings per share (Note 2): Basic $0.36 $0.33
$3.33 $2.78 Diluted $0.36 $0.33 $3.29 $2.74 Weighted average shares
outstanding (000s): Basic 94,022 99,688 95,857 101,186 Diluted
95,019 101,219 97,019 102,760 Condensed Financials (December 2008)
------------------------------------ Unaudited Statements of
Consolidated Cash Flows Three months ended Year ended December 31,
December 31, ------------ ------------ ($ in millions) 2008 2007
2008 2007 ---- ---- ---- ---- Cash Flows From Operating Activities:
Net earnings $33.8 $33.3 $319.5 $281.3 Depreciation and
amortization 72.7 74.3 297.4 281.0 Business consolidation and other
costs 31.5 42.3 52.1 42.3 Income taxes 11.4 (13.9) 27.1 14.9 Legal
settlement - - (70.3) 85.6 Incremental pension funding, net of
taxes - (27.3) - (27.3) Other changes in working capital 332.7
172.6 (16.8) (18.4) Other 7.1 (13.5) 18.6 13.6 ----- ----- -----
----- 489.2 267.8 627.6 673.0 ------------------------- ----- -----
----- ----- Cash Flows From Investing Activities: Additions to
property, plant and equipment (76.1) (85.6) (306.9) (308.5) Cash
collateral deposits, net (Note 3) (105.5) - (105.5) - Proceeds from
sale of subsidiary - - 8.7 - Property insurance proceeds - - - 48.6
Other (24.1) (0.5) (14.3) (5.9) ------ ------ ------ ------ (205.7)
(86.1) (418.0) (265.8) ------------------------- ------ ------
------ ------ Cash Flows From Financing Activities: Net change in
borrowings (188.8) (48.4) 127.3 (170.0) Dividends (9.2) (10.2)
(37.5) (40.6) Purchases of common stock, net (42.1) (56.2) (299.6)
(211.3) Other 0.8 1.2 4.3 9.5 ------ ------ ------ ------ (239.3)
(113.6) (205.5) (412.4) ------------------------------- ------
------ ------ ------ Effect of exchange rate changes on cash (30.7)
4.1 (28.3) 5.3 Change in cash 13.5 72.2 (24.2) 0.1 Cash-beginning
of period 113.9 79.4 151.6 151.5 ----- ---- ----- ----- Cash-end of
period $127.4 $151.6 $127.4 $151.6 ------------------ ====== ======
====== ====== Condensed Financials (December 2008)
------------------------------------- Unaudited Consolidated
Balance Sheets December December 31, 31, ($ in millions) 2008 2007
---- ---- Assets Cash and cash equivalents $127.4 $151.6
Receivables, net 507.9 582.7 Inventories, net 974.2 998.1 Cash
collateral - receivable (Note 3) 229.5 - Deferred taxes and other
current assets 326.3 110.5 -------- -------- Total current assets
2,165.3 1,842.9 Property, plant and equipment, net 1,866.9 1,941.2
Goodwill 1,825.5 1,863.1 Other assets, net 511.0 373.4
-------------- -------- -------- Total assets $6,368.7 $6,020.6
-------------- -------- -------- Liabilities and Shareholders'
Equity Current liabilities Short-term debt and current portion of
long-term debt $303.0 $176.8 Cash collateral - liability (Note 3)
124.0 - Payables and other accrued liabilities 1,435.4 1,336.3
-------- -------- Total current liabilities 1,862.4 1,513.1
Long-term debt 2,107.1 2,181.8 Other liabilities and minority
interests 1,313.4 983.2 Shareholders' equity 1,085.8 1,342.5
-------------------------------------------- -------- --------
Total liabilities and shareholders' equity $6,368.7 $6,020.6
-------------------------------------------- -------- --------
Unaudited Notes to Condensed Financials (December 2008)
-------------------------------------------------------- 1.
Business Segment Information Due to first quarter 2008 management
reporting changes, Ball's China operations are included in the
metal beverage packaging, Americas and Asia, segment. The results
for the 2007 periods have been retrospectively adjusted to conform
to the current year presentation. Three months ended Year ended
December 31, December 31, ------------ ------------ ($ in millions)
2008 2007 2008 2007 ---- ---- ---- ---- Sales- Metal beverage
packaging, Americas & Asia $684.7 $728.1 $2,989.5 $3,098.1
Legal settlement (Note 2) - - - (85.6) ----- ----- ----- -----
Total metal beverage packaging, Americas & Asia 684.7 728.1
2,989.5 3,012.5 Metal beverage packaging, Europe 380.8 393.9
1,868.7 1,653.6 Metal food & household packaging, Americas
309.4 271.1 1,221.4 1,183.4 Plastic packaging, Americas 161.4 172.1
735.4 752.4 Aerospace & technologies 196.5 191.0 746.5 787.8
----- ----- ----- ----- Consolidated net sales $1,732.8 $1,756.2
$7,561.5 $7,389.7 ======== ======== ======== ======== Earnings
before interest and taxes- Metal beverage packaging, Americas &
Asia $55.7 $64.2 $284.1 $326.4 Business consolidation and other
costs (Note 2) (36.6) - (40.6) (85.6) ----- ----- ----- ----- Total
metal beverage packaging, Americas & Asia 19.1 64.2 243.5 240.8
----- ----- ----- ----- Metal beverage packaging, Europe 29.0 31.2
230.9 228.9 ----- ----- ----- ----- Metal food & household
packaging, Americas 23.2 10.8 68.1 36.2 Business consolidation
costs (Note 2) 6.1 (44.2) 1.6 (44.2) ----- ----- ----- ----- Total
metal food & household packaging, Americas 29.3 (33.4) 69.7
(8.0) ----- ----- ----- ----- Plastic packaging, Americas - 9.2
15.8 26.3 Business consolidation costs (Note 2) - (0.4) (8.3) (0.4)
----- ----- ----- ----- Total plastic packaging, Americas - 8.8 7.5
25.9 ----- ----- ----- ----- Aerospace & technologies 20.2 11.1
76.2 64.6 Gain on sale of subsidiary (Note 2) - - 7.1 - ----- -----
----- ----- Total aerospace & technologies 20.2 11.1 83.3 64.6
----- ----- ----- ----- Segment earnings before interest and taxes
97.6 81.9 634.9 552.2 Undistributed corporate costs (12.9) (4.6)
(39.6) (38.3) Business consolidation and other costs (Note 2) (1.0)
- (4.8) - ----- ----- ----- ----- Total undistributed corporate
costs (13.9) (4.6) (44.4) (38.3) ----- ----- ----- ----- Earnings
before interest and taxes $83.7 $77.3 $590.5 $513.9 ===== =====
====== ====== Unaudited Notes to Condensed Financials (December
2008) -------------------------------------------------------- 2.
Business Consolidation Activities and Other Significant
Nonoperating Items 2008 On October 30, 2008, the company announced
the closure of two North American metal beverage can plants. A
$41.7 million ($25.8 million after tax) business consolidation
charge was recorded in the fourth quarter, primarily for employee
severance costs, accelerated depreciation and the write down of
assets to net realizable value. A gain of $10.2 million ($6.2
million after tax) was also recorded to reflect the recovery of
business consolidation costs previously expensed. An additional $3
million after-tax charge is expected to be recorded in the first
quarter of 2009 related to these plant closings. Cost reductions
associated with these plant closings could be up to $30 million in
2009 and, inclusive of tax benefits, be $7 million cash positive
upon final disposition of the assets. In prior quarters, $20.6
million ($15.3 million after tax) was recorded for business
consolidation activities primarily for the closure of two
manufacturing facilities, a metal beverage packaging plant in Kent,
Wash., and a plastic packaging plant in Brampton, Ontario. Also
Ball Aerospace completed the sale of a subsidiary for $10.5 million
that resulted in a pretax gain of $7.1 million ($4.4 million after
tax). 2007 A business consolidation charge of $44.6 million ($27
million after tax) was recorded in the fourth quarter, primarily
related to the announced closure of two food and household products
packaging facilities. The closure of the company's facilities in
Tallapoosa, Ga., and Commerce, Calif., resulted in a net reduction
in manufacturing capacity of 10 production lines, including the
relocation of two high-speed aerosol lines into existing Ball
facilities. In a prior 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 $70 million in January 2008 with the remainder of
the settlement to be recovered over the life of the supply contract
with that customer through 2015. A summary of the effects of the
above transactions on after-tax earnings follows: Three months
ended Year ended December 31, December 31, ------------
------------ ($ in millions, except per share amounts) 2008 2007
2008 2007 ---- ---- ---- ---- Net earnings as reported $33.8 $33.3
$319.5 $281.3 Business consolidation and other costs, net of tax
19.6 27.0 34.9 27.0 Gain on sale of subsidiary, net of tax - -
(4.4) - Legal settlement, net of tax - - - 51.8 ---- ---- ---- ----
Net earnings before above transactions $53.4 $60.3 $350.0 $360.1
===== ===== ====== ====== Per diluted share before above
transactions $0.56 $0.60 $3.61 $3.50 ===== ===== ===== ===== 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. Unaudited Notes to
Condensed Financials (December 2008)
-------------------------------------------------------- 3. Cash
Collateral Deposits In the fourth quarter of 2008, $105.5 million
of net interest bearing cash collateral deposits were made on
aluminum derivative hedging contracts. As these derivative hedging
contracts are matched to customer sales contracts, they have little
or no economic impact on our earnings but reduce aluminum price
volatility for our customers. Terms of these derivative contracts
may require Ball to post collateral in certain circumstances when
the negative mark-to-market value of these contracts exceeds
specified levels. Additionally, Ball has similar collateral posting
arrangements with certain customers and financial counterparties on
these hedging contracts. At December 31, 2008, Ball had $229.5
million of cash posted as collateral and had received $124 million
of cash from customers for a net amount of $105.5 million. Assuming
aluminum prices remain unchanged, we would expect to recover all of
these cash deposits in 2009. 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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