Ball Corporation Announces Sharply Higher Second Quarter Earnings
BROOMFIELD, Colo., July 29 /PRNewswire-FirstCall/ -- Ball
Corporation (NYSE:BLL) today announced sharply higher second
quarter earnings of $90.7 million, or $1.60 per diluted share, on
sales of $1.47 billion. The earnings per diluted share were a 23
percent increase over the second quarter of 2003 when the company
reported earnings of $74.3 million, or $1.30 per diluted share, on
sales of $1.35 billion. For the first six months of 2004, Ball's
earnings were $137.5 million, or $2.41 per diluted share, on sales
of $2.7 billion, compared to $105.8 million, or $1.84 per diluted
share, on sales of $2.42 billion in the first half of 2003. The
first half of 2004 had six more accounting days, all in the first
quarter, than did the first half of 2003. "Our operating units are
performing well, despite various challenges," said R. David Hoover,
chairman, president and chief executive officer. "All three of our
reporting segments showed increases in both sales and earnings over
the second quarter of 2003. Additionally, interest expense is down
and our free cash flow generation continues to be very strong. "The
company's performance and outlook were recognized yesterday when
our board of directors declared a two-for-one stock split and
increased our quarterly dividend. This means that since 2002 we
will have split our stock two-for-one on two occasions and
increased the dividend on three," Hoover said. The stock split is
effective Aug. 23 to shareholders of record on Aug. 4, and the
dividend of 10 cents per post-split share, a 33 percent increase
over the previous dividend, will be payable Sept. 15 to
shareholders of record on Sept. 1. Ball's board also authorized the
repurchase of up to 12 million of the company's post-split shares.
North American Packaging Segment North American packaging segment
earnings for the quarter were $91.4 million on sales of $945.4
million, compared to $80.3 million on sales of $905.9 million in
the second quarter of 2003. For the first six months, earnings were
$158.0 million on sales of $1.73 billion, compared to $135.9
million on sales of $1.62 billion in the first half of 2003. "Sales
of metal beverage containers, metal food containers and plastic
containers all increased in the first half of 2004 compared to the
same period in 2003," Hoover said. "In addition to the six extra
shipping days in the first half, improvement came from a number of
factors including increased custom beverage can sales and better
operating results in metal food cans now that most of the line
startup issues of last year are behind us. "Also, demand for metal
beverage containers in general bounced back nicely from the second
quarter and first half of 2003 when cool, wet weather, particularly
in a few key regions of North America, put a damper on outdoor
consumption where can usage is high," Hoover said. "We continue to
work hard at achieving more acceptable results from our plastic
container operations, where poor margins on high-volume commodity
products prevent us from earning our cost of capital," Hoover said.
"We have introduced a number of new containers for new and existing
customers and have increased sales of higher margin heat set
bottles for juices and other products. We expect to continue to
move in that direction and away from dependence on the commodity
containers." International Packaging Segment International
packaging segment earnings for the second quarter were $62.1
million on sales of $351.5 million, compared to $50.4 million on
sales of $321.1 million in the second quarter of 2003. For the
first half of 2004, earnings were $89.7 million on sales of $635.3
million, compared to $64.7 million on sales of $549.7 in the first
six months of 2003. "Results from our European operations remain
favorable despite generally poorer weather conditions than a year
ago and the disruption in Germany due to the wrangling over the
mandatory deposit on beverage containers. The continued strength of
the euro against the dollar also boosted results from our
international packaging segment," Hoover said. "We are encouraged
by the positions being taken by the European Union regarding the
German deposit. While we await a resolution, we are focusing on our
pan-European backfill opportunities and working on additional
creative ways to absorb the volume loss in Germany. Our European
management has streamlined our operating structure by closing a
plant in the United Kingdom and mothballing a production line in
Germany. "Our results in China have improved appreciably
year-over-year, largely as a result of the restructuring of our
operations there," Hoover said. Aerospace and Technologies Segment
Aerospace and technologies segment earnings in the quarter were $12
million on sales of $170.3 million, compared to $11 million on
sales of $126.3 million in the second quarter of 2003. For the
first half of 2004, earnings were $23.2 million on sales of $330.6
million, compared to $27.1 million on sales of $257.8 million in
the first six months of 2003. "We have earned significant new
business in our aerospace and technologies segment in recent
months, adding to our top-line growth in that business. Margins in
the early stages of many of those contracts typically are not what
they are later when we receive various performance and completion
awards," Hoover said. "The highly sophisticated instruments and
spacecraft we built and integrated for the Deep Impact mission to
intercept and study a comet next July are undergoing extensive
testing prior to shipment for launch," Hoover said. "We are excited
to be a part of such a challenging and high-profile mission as Deep
Impact, which demonstrates our capabilities in space exploration."
Outlook "We had a successful second quarter and a good first half
of 2004," Hoover said. "The first half included the six extra
accounting days compared to the first half of 2003. Now in the
second half of this year we will have five fewer accounting days,
all coming out of the fourth quarter, than we did in the second
half of 2003. That will make the comparables more difficult in the
second half. "Still, barring the unforeseen, we currently believe
that it is possible our second half results could exceed our first
half results. Our plants are running very well. Our sales volumes
are strong in nearly all areas. We are bringing new packages to
market. Our aerospace business is growing nicely. Our employees
everywhere, but particularly those in Germany, are working hard to
meet the challenges thrown at them in the course of doing business.
We have successful cost reduction programs in place throughout the
corporation," Hoover said. Raymond J. Seabrook, senior vice
president and chief financial officer, said the company's seasonal
working capital build during the first half of 2004 was lower than
anticipated because of strong first half packaging sales volumes,
leading to an increase in the company's free cash flow through
June. "As a result of our improved operating performance, we now
expect full-year 2004 free cash flow to exceed $325 million,"
Seabrook said. "We still anticipate full-year capital spending to
be in the $175 million to $200 million range, and we expect to
repurchase at least $60 million worth of our stock and to reduce
net debt by at least $200 million." Ball Corporation is a supplier
of high-quality metal and plastic packaging products and innovative
packaging solutions to the beverage and food industries. The
company also owns Ball Aerospace & Technologies Corp., which
develops sensors, spacecraft, systems and components for government
and commercial markets. Ball employs 12,600 people worldwide and
reported 2003 sales of $4.9 billion. Conference Call Information At
9 a.m. Mountain Time today (11 a.m. Eastern), Ball Corporation will
hold its regular quarterly conference call on the company's results
and performance. The North American toll-free number for the call
is 888-489-9496. International callers should dial 1-646-862-1102.
For those unable to listen to the live call, a taped rebroadcast
will be available until midnight Mountain Time on Aug. 5, 2004. To
access the rebroadcast, dial 800-633-8284 (domestic callers) or
1-402-977-9140 (international callers) and enter 21199004 as the
reservation number. To listen to the call via Web cast, please use
the following URL for the live call and for replay:
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=BLL&script=1010&item_id=907563
A written transcript of the call will also 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 The information in this
news release contains "forward-looking" statements and other
statements concerning future events and financial performance.
Words such as "expects," "anticipates," "estimates," and variations
of such words and similar expressions are intended to identify
forward-looking statements. Forward-looking 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 the company's filings with the Securities and
Exchange Commission, especially in Exhibit 99.2 in the most recent
Form 10-K. These filings are available at the company's website and
at http://www.sec.gov/. Factors that might affect the packaging
segments of the company include fluctuation in consumer and
customer demand; competitive packaging material availability,
pricing and substitution; changes in climate and weather; fruit,
vegetable and fishing yields; industry productive capacity and
competitive activity; lack of productivity improvement or
production cost reductions; the German mandatory deposit or other
restrictive packaging laws; availability and cost of raw materials,
such as resin, steel and aluminum, and the ability to pass on to
customers changes in these costs; changes in major customer
contracts or the loss of a major customer; international business
risks, such as foreign exchange rates and tax rates; and the effect
of LIFO accounting on earnings. Factors that might affect the
aerospace segment include: funding, authorization and availability
of government contracts and the nature and continuation of those
contracts; and technical uncertainty associated with segment
contracts. Factors that could affect the company as a whole include
those listed plus: successful and unsuccessful acquisitions, joint
ventures or divestitures and associated integration activities;
regulatory action or laws including environmental and workplace
safety; goodwill impairment; antitrust and other litigation;
strikes; boycotts; increases in various employee benefits and labor
costs; rates of return projected and earned on assets of the
company's defined benefit retirement plans; reduced cash flow; and
interest rates affecting our debt. Condensed Financials (2nd
Quarter 2004) Unaudited Statements of Consolidated Earnings Three
months ended Six months ended ($ in millions, July 4, 2004 June 29,
2003 July 4, 2004 June 29, 2003 except per share amounts) Net sales
(note 1) $1,467.2 $1,353.3 $2,698.7 $2,424.2 Costs and expenses
Cost of sales (excluding depreciation and amortization) 1,193.5
1,103.1 2,206.0 1,989.1 Business consolidation costs -- -- -- 1.4
Depreciation and amortization 52.2 51.5 106.0 101.4 Selling and
administrative 67.7 60.5 138.8 117.2 1,313.4 1,215.1 2,450.8
2,209.1 Earnings before interest and taxes (note 1) 153.8 138.2
247.9 215.1 Interest expense (25.0) (33.4) (53.3) (65.4) Tax
provision (40.8) (33.5) (62.3) (49.2) Minority interests (0.2)
(0.2) (0.5) (0.5) Equity in results of affiliates 2.9 3.2 5.7 5.8
Net earnings $90.7 $74.3 $137.5 $105.8 Earnings per share: Basic
$1.64 $1.33 $2.48 $1.89 Diluted $1.60 $1.30 $2.41 $1.84 Weighted
average shares outstanding (000's): Basic 55,368 56,054 55,524
56,108 Diluted 56,850 57,306 57,009 57,380 Condensed Financials
(2nd Quarter 2004) Unaudited Consolidated Balance Sheets ($ in
millions) July 4, June 29, Assets 2004 2003 Current assets Cash and
cash equivalents $35.9 $39.8 Receivables, net 502.5 472.7
Inventories, net 607.9 589.1 Deferred taxes and prepaid expenses
77.0 60.0 Total current assets 1,223.3 1,161.6 Property, plant and
equipment, net 1,455.9 1,455.8 Goodwill 1,314.4 1,250.6 Other
assets 341.5 361.5 Total assets $4,335.1 $4,229.5 Liabilities and
Shareholders' Equity Current liabilities Short-term debt and
current portion of term debt 157.8 147.3 Payables and accrued
liabilities 863.0 793.8 Total current liabilities 1,020.8 941.1
Long-term debt 1,584.1 1,900.6 Other liabilities and minority
interests 838.3 759.7 Shareholders' equity 891.9 628.1 Total
liabilities and shareholders' equity $4,335.1 $4,229.5 Condensed
Financials (2nd Quarter 2004) Unaudited Statements of Consolidated
Cash Flows Three months ended Six months ended ($ in millions) July
4, June 29, July 4, June 29, 2004 2003 2004 2003 Cash Flows From
Operating Activities: Net earnings $90.7 $74.3 $137.5 $105.8
Depreciation and amortization 52.2 51.5 106.0 101.4 Change in
working capital 20.9 51.2 (163.2) (199.8) Withholding tax payment
related to acquisition (note 2) -- -- -- (138.3) Other 5.6 (1.7)
20.2 1.7 169.4 175.3 100.5 (129.2) Cash Flows From Investing
Activities: Additions to property, plant and equipment (32.5)
(41.6) (67.4) (71.9) Business acquisitions -- -- (30.0) (28.0)
Purchase price adjustment -- 27.8 -- 27.8 Other (0.6) (3.5) (6.4)
(9.1) (33.1) (17.3) (103.8) (81.2) Cash Flows From Financing
Activities: Net change in borrowings (106.4) (142.0) 61.9 20.1
Dividends (8.3) (5.1) (16.7) (10.0) Purchase of common stock, net
(27.0) (30.1) (42.1) (23.9) Other (0.1) 2.3 (0.5) (0.5) (141.8)
(174.9) 2.6 (14.3) Effect of exchange rate changes on cash 0.2 2.6
0.1 5.3 Decrease in cash (5.3) (14.3) (0.6) (219.4) Cash-beginning
of period 41.2 54.1 36.5 259.2 Cash-end of period $35.9 $39.8 $35.9
$39.8 Notes to Condensed Financials (2nd Quarter 2004) ($ in
millions) Three months ended Six months ended 1. Business Segment
July 4, June 29, July 4, June 29, Information 2004 2003 2004 2003
Sales -- North American Packaging -- Metal beverage $663.8 $639.8
$1,213.1 $1,141.8 Metal food 173.9 162.6 319.0 284.4 Plastic
containers 107.7 103.5 200.7 190.5 945.4 905.9 1,732.8 1,616.7
International Packaging -- Europe metal beverage 319.0 296.8 561.0
491.9 Asia metal beverage and plastic containers 32.5 24.3 74.3
57.8 351.5 321.1 635.3 549.7 Aerospace and technologies 170.3 126.3
330.6 257.8 Net sales $1,467.2 $1,353.3 $2,698.7 $2,424.2 Earnings
before interest and taxes -- North American packaging $91.4 $80.3
$158.0 $135.9 International packaging 62.1 50.4 89.7 64.7 Aerospace
and technologies 12.0 11.0 23.2 27.1 Segment earnings before
interest and taxes 165.5 141.7 270.9 227.7 Undistributed corporate
costs (11.7) (3.5) (23.0) (12.6) Earnings before interest and taxes
$153.8 $138.2 $247.9 $215.1 2. Free Cash Flow Management internally
uses a free cash flow measure (1) to evaluate the company's
operating results, (2) for planning purposes, (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). Reconciliations are provided on projected measures where
the GAAP financial measure is available without unreasonable
effort. 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. An example of such
an item excluded in 2003 is the $138.3 million withholding tax
payment liability assumed in the acquisition of Ball Packaging
Europe in December 2002. Because the seller paid the cash into the
company prior to the acquisition to fund this payment, which was
not made until January 2003, we believe this is not a comparable
free cash outflow of the company as this cash outflow was funded by
the seller. Therefore, we exclude it from our 2003 free cash flow
measure. Cash flow from operating activities is the most comparable
GAAP term to free cash flow and it should not be inferred that the
entire free cash flow amount is available for discretionary
expenditures. Based on our current 2004 capital spending forecast
of $175 to $200 million, our projected 2004 free cash flow should
exceed $325 million. DATASOURCE: Ball Corporation CONTACT:
Investors, Ann Scott, +1-303-460-3537, , or Media, Scott McCarty,
+1-303-460-2103, , both of Ball Corporation Web site:
http://www.ball.com/
Copyright
Ball (NYSE:BLL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ball (NYSE:BLL)
Historical Stock Chart
From Jul 2023 to Jul 2024