Ball Corporation Reports Third Quarter Earnings BROOMFIELD, Colo.,
Oct. 28 /PRNewswire-FirstCall/ -- Ball Corporation (NYSE:BLL) today
reported third quarter earnings attributable to common shareholders
of $101.7 million, or 90 cents per diluted share, on sales of $1.48
billion, compared to $68.8 million, or 61 cents per diluted share,
on sales of $1.36 billion in the same period a year ago. Per share
numbers are adjusted to reflect a two-for-one stock split that
occurred in August 2004. The 2004 results include an after-tax gain
of $4.2 million, or four cents per diluted share, related primarily
to proceeds on asset dispositions in China being in excess of
amounts included in a business consolidation charge taken in 2001.
In 2003 the third quarter results included net after-tax costs of
$7.7 million, or six cents per diluted share, comprised of $9.9
million for debt refinancing costs offset in part by a $2.2 million
gain, also related to the consolidation activities in China. For
the first nine months of 2004, Ball's results were earnings of
$239.2 million, or $2.10 per diluted share, on sales of $4.18
billion. A year earlier through three quarters Ball reported
earnings of $174.6 million, or $1.53 per diluted share, on sales of
$3.78 billion. The 2004 results include the third quarter after-tax
gain of $4.2 million, or four cents per diluted share. The 2003
nine-month results included net after-tax costs of $8.6 million, or
seven cents per diluted share, for the debt refinancing costs and
business consolidation gain in the third quarter, as well as a
first quarter 2003 charge related to the closure of a metal food
can plant. R. David Hoover, chairman, president and chief executive
officer, said Ball experienced quarterly earnings improvement in
all three of its business segments, in part due to the continued
positive effects of cost containment and productivity improvement
programs at work throughout the company. "Our North American and
international packaging segment results were up despite a
challenging environment in the packaging industry, upward pressure
on raw material and other costs, the effects of hurricanes in the
U.S. and generally poor summer weather in Europe," Hoover said.
"Aerospace segment results included a modest earnings improvement
on continued strong sales growth in the quarter." North American
Packaging Segment Third quarter results from the North American
packaging segment were earnings of $101.5 million on sales of
$983.1 million, compared to $83.3 million on sales of $907.7
million in the third quarter of 2003. For the first nine months,
North American packaging segment earnings were $259.5 million on
sales of $2.7 billion, compared to $219.2 million on sales of $2.5
billion a year ago. "Our metal food can sales grew by more than 25
percent in the quarter and we continued to recover from performance
issues that plagued us a year ago," Hoover said. "Our metal
beverage can operations were disrupted somewhat in Florida and
Puerto Rico by the spate of hurricanes during the quarter, but our
plants, though closed at times so our employees could be home with
their families, sustained no damage. Sales of plastic containers in
the quarter included continued expansion of our line of bottles for
hot-filled products such as juices." Hoover said demand for
beverage cans in sizes other than traditional 12- and 16-ounce cans
continued to grow. As a result, Ball has announced plans to convert
one of three lines in its Golden, Colo., beverage can plant from
the manufacture of 12-ounce cans to the production of 24-ounce
cans. International Packaging Segment Third quarter earnings in the
international packaging segment were $65.0 million, including a $6
million gain from the China business consolidation activities, on
sales of $334.3 million, compared to the third quarter of 2003 when
earnings were $58.6 million, including a gain of $3.3 million also
related to China business consolidation activities, on sales of
$326.4 million. For the first nine months, international segment
results were earnings of $154.7 million on sales of $969.6 million,
compared to $123.3 million on sales of $876.1 million a year
earlier. Earnings per diluted share were improved by 2 cents in the
third quarter and 7 cents for the first nine months due to a
stronger euro versus a year ago. "A cool, wet summer in much of
Europe after last year's record heat resulted in reduced demand for
beverage cans," Hoover said. "That and the ongoing disruption
caused by the German deposit issue make for a challenging
environment. We continue to adjust and to develop new business
opportunities, such as our beverage can plant under construction in
Belgrade to serve the growing demand in southern and eastern
Europe." Results from Ball's operations in China were up sharply in
the quarter and for the first nine months of 2003. "We have made
real progress in getting our China operations properly sized,"
Hoover said. "We expect the restructuring to be completed in the
fourth quarter, except for some final clearances from Chinese tax
authorities." Aerospace and Technologies Segment The aerospace and
technologies segment had third quarter earnings of $11.6 million on
sales of $161.3 million, compared to $10.6 million on sales of
$125.2 million in 2003. For the first nine months segment earnings
were $34.8 million on sales of $491.9 million, compared to $37.7
million on sales of $383.0 million in the first nine months of
2003. "Our aerospace and technologies segment continues its rapid
growth," Hoover said. "Through the first nine months we have hired
500 employees in this segment as we keep our capabilities on pace
with our business expansion. Demand for our core technologies has
never been greater." During the quarter, NASA selected Ball as part
of a team that will design and potentially build a spacecraft for a
possible robotic mission to service the Hubble Space Telescope. In
the coming months, Ball Aerospace will work closely with the Hubble
Space Telescope Project at NASA's Goddard Space Flight Center to
support a decision on whether such a mission will proceed. Outlook
"At the end of the second quarter we said we believed our second
half results in 2004 could exceed our record first half results,
when we earned $1.21 per diluted share," Hoover said. "Our very
strong third quarter certainly increases that likelihood, even
though our fourth quarter this year will have five fewer accounting
days than did the fourth quarter of 2003. "We are benefiting from
our numerous actions and programs to control costs and keep
operating efficiencies high while providing new package choices for
our customers," Hoover said. "The program we have announced for our
Golden beverage can plant is but the latest of these steps and we
have more in the planning stages." Because of the company's strong
third quarter and year-to-date results, Raymond J. Seabrook, senior
vice president and chief financial officer, said full-year free
cash for 2004 should exceed $350 million. "We see attractive
opportunities over the next couple of years to invest in our
businesses through projects like the new can plant in Belgrade, our
Golden line conversion, and expansion activities to accommodate
growth in aerospace," Seabrook said. "We expect to take advantage
of those opportunities and in 2005 also anticipate repurchasing
$200 million worth of our stock and further reducing our debt
levels by at least $60 million. We have aggressively reduced our
debt following the 2002 acquisition of Ball Packaging Europe to
levels we feel are appropriate for our company." Ball Corporation
is a supplier of high-quality metal and plastic packaging products
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 more than 13,000 people worldwide and
reported 2003 sales of $4.9 billion. Conference Call Information
Ball Corporation (NYSE:BLL) 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 800-207-3341. International callers should
dial 415-908-4737. To listen to the call via Web cast, please use
the following URL for the live call and for replay:
phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115234&eventID=947525
For those unable to listen to the live call, a taped rebroadcast
will be available until 11 p.m. Mountain Time on Nov. 4, 2004. To
access the rebroadcast, dial 800-633-8284 (domestic callers) or
1-402-977-9140 (international callers) and enter 21209459 as the
reservation number. 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; availability and cost of raw materials,
particularly resin, steel, aluminum and energy, and the ability to
pass on to customers changes in these costs; 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; changes in major
customer contracts or the loss of a major customer; international
business risks, such as foreign exchange rates, tax rates and
activities of foreign subsidiaries; 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; governmental investigations; 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 (Third Quarter 2004) Unaudited Statements of
Consolidated Earnings Three months ended Nine months ended October
3, September 28, October 3, September 28, ($ in millions, except
per share amounts) 2004 2003 2004 2003 Net sales (Note 1) $1,478.7
$1,359.3 $4,177.4 $3,783.5 Costs and expenses Cost of sales
(excluding depreciation and amortization) 1,196.4 1,105.0 3,402.4
3,094.1 Busines consolidation gains (Notes 1 and 2) (6.7) (3.5)
(6.7) (2.1) Depreciation and amortization 56.7 49.9 162.7 151.3
Selling and administrative 63.0 64.6 201.8 181.8 1,309.4 1,216.0
3,760.2 3,425.1 Earnings before interest and taxes(Note 1) 169.3
143.3 417.2 358.4 Interest expense before debt refinancing costs
(25.7) (30.9) (79.0) (96.3) Debt refinancing costs (Note 2) --
(15.2) -- (15.2) Total interest expense (25.7) (46.1) (79.0)
(111.5) Tax provision (46.3) (29.1) (108.6) (78.3) Minority
interests (0.3) (0.2) (0.8) (0.7) Equity in results of affiliates
4.7 0.9 10.4 6.7 Net earnings $101.7 $68.8 $239.2 $174.6 Earnings
per share (a): Basic $0.92 $0.62 $2.16 $1.56 Diluted $0.90 $0.61
$2.10 $1.53 Weighted average shares outstanding (000's) (a): Basic
110,620 111,328 110,907 111,917 Diluted 113,537 113,659 113,826
114,480 (a) Per share and share amounts have been retroactively
restated for the two-for-one stock split on August 23, 2004
Condensed Financials (Third Quarter 2004) Unaudited Statements of
Consolidated Cash Flows Three months ended Nine months ended
October 3, September 28, October 3, September 28, ($ in millions)
2004 2003 2004 2003 Cash Flows From Operating Activities: Net
earnings $101.7 $68.8 $239.2 $174.6 Depreciation and amortization
56.7 49.9 162.7 151.3 Change in working capital 53.5 1.2 (109.7)
(198.6) Withholding tax payment related to acquisition (Note 3) --
-- -- (138.3) Other (20.6) 47.5 (0.4) 49.2 191.3 167.4 291.8 38.2
Cash Flows From Investing Activities: Additions to property, plant
and equipment (32.5) (26.6) (99.9) (98.5) Business acquisitions --
-- (30.0) (28.0) Purchase price adjustment -- 3.3 -- 31.1 Other 5.4
2.0 (1.0) (7.1) (27.1) (21.3) (130.9) (102.5) Cash Flows From
Financing Activities: Net change in borrowings (120.3) (108.5)
(58.4) (88.4) Dividends (11.1) (8.4) (27.8) (18.4) Purchase of
common stock, net (1.4) (7.0) (43.5) (30.9) Other 0.1 1.3 (0.4) 0.8
(132.7) (122.6) (130.1) (136.9) Effect of exchange rate changes on
cash 0.4 (4.9) 0.5 0.4 Increase (decrease) in cash 31.9 18.6 31.3
(200.8) Cash-beginning of period 35.9 39.8 36.5 259.2 Cash-end of
period $67.8 $58.4 $67.8 $58.4 Condensed Financials (Third Quarter
2004) Unaudited Consolidated Balance Sheets October 3, September
28, ($ in millions) 2004 2003 Assets Current assets Cash and cash
equivalents $67.8 $58.4 Receivables, net 517.5 554.4 Inventories,
net 577.2 524.9 Deferred taxes and prepaid expenses 66.0 47.8 Total
current assets 1,228.5 1,185.5 Property, plant and equipment, net
1,437.6 1,436.7 Goodwill 1,323.9 1,245.9 Other assets 361.9 353.8
Total assets $4,351.9 $4,221.9 Liabilities and Shareholders' Equity
Current liabilities Short-term debt and current portion of
long-term debt $124.0 $150.6 Payables and accrued liabilities 893.0
794.4 Total current liabilities 1,017.0 945.0 Long-term debt
1,499.4 1,800.5 Other liabilities and minority interests 841.4
789.9 Shareholders' equity 994.1 686.5 Total liabilities and
shareholders' equity $4,351.9 $4,221.9 Notes to Condensed
Financials (Third Quarter 2004) ($ in millions) Three months ended
Nine months ended October 3, September 28, October 3, September 28,
1. Business Segment Information 2004 2003 2004 2003 Sales- North
American packaging- Metal beverage $608.3 $597.3 $1,821.4 $1,739.1
Metal food 267.9 211.7 586.9 496.1 Plastic containers 106.9 98.7
307.6 289.2 983.1 907.7 2,715.9 2,524.4 International packaging-
Europe metal beverage 295.7 291.4 856.7 783.3 Asia metal beverage
and plastic containers 38.6 35.0 112.9 92.8 334.3 326.4 969.6 876.1
Aerospace and technologies 161.3 125.2 491.9 383.0 Consolidated net
sales $1,478.7 $1,359.3 $4,177.4 $3,783.5 Earnings before interest
and taxes (A)- North American packaging $101.5 $83.3 $259.5 $219.2
International packaging 65.0 58.6 154.7 123.3 Aerospace and
technologies 11.6 10.6 34.8 37.7 Segment earnings before interest
and taxes 178.1 152.5 449.0 380.2 Undistributed corporate costs
(8.8) (9.2) (31.8) (21.8) Earnings before interest and taxes $169.3
$143.3 $417.2 $358.4 (A) Includes the following business Three
months ended Nine months ended consolidation gains(costs): October
3, September 28, October 3 September 28, 2004 2003 2004 2003 North
American packaging $0.7 $-- $0.7 $(1.4) International packaging 6.0
3.3 6.0 3.3 Aerospace and technologies -- 0.2 -- 0.2 $6.7 $3.5 $6.7
$2.1 2. Business Consolidation Activities and Debt Refinancing
Costs In the third quarter of 2004, the company recorded $6.7
million of earnings ($4.2 million after tax) related to the
recovery of amounts previously written-down included in a business
consolidation charge taken in a prior period. In China, proceeds of
$6.0 million primarily on asset dispositions were higher than
anticipated, and the relocation of the U.S. plastic packaging
operations from Atlanta to Colorado cost $0.7 million less than
planned. In the third quarter of 2003, the company recorded $3.5
million of earnings ($2.2 million after tax) related to the
completion of China and Aerospace business consolidation activities
commenced in 2001. Also in the third quarter 2003, the company used
the proceeds from a $250 million privately placed addition to its
existing 6.875 percent senior notes due December 2012 to redeem its
8.25 percent senior subordinated notes that were due in 2008. This
debt refinancing resulted in a third quarter after-tax charge of
$9.9 million. Notes to Condensed Financials (Third Quarter 2004) 2.
Business Consolidation Gains and Debt Refinancing Costs (continued)
In the first quarter of 2003, a net business consolidation charge
of $1.4 million ($0.9 million after tax) was recorded primarily for
the closure of a metal food container plant. A summary of the
effects of the above transactions on after-tax earnings follows:
Three months ended Nine months ended ($ in millions, except per
share amounts) Oct. 3, Sept. 28, Oct. 3, Sept. 28 2004 2003 2004
2003 Net earnings as reported $101.7 $68.8 $239.2 $174.6 Business
consolidation gains, net of tax (4.2) (2.2) (4.2) (1.3) Debt
refinancing costs, net of tax -- 9.9 -- 9.9 Net earnings before the
above items $97.5 $76.5 $235.0 $183.2 Per basic share before the
above items (a) $0.88 $0.69 $2.12 $1.64 Per diluted share before
the above items (a) $0.86 $0.67 $2.06 $1.60 (a) Per share amounts
have been retroactively restated for the two-for-one stock split on
August 23, 2004 Ball's management segregates the above items
related to closed facilities and debt refinancing 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 statement of consolidated earnings. Non-U.S.
GAAP measures should not be considered in isolation or as a
substitute for net earnings. 3. 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. We currently do not have any 2004
adjustments. 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 $350 million. DATASOURCE: Ball Corporation
CONTACT: Investors, Ann Scott, +1-303-460-3537, , or Media, Scott
McCarty, +1-303-460-2103, Web site: http://www.ball.com/
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