Operating profits improve moderately during difficult quarter
PERRYSBURG, Ohio, Oct. 25 /PRNewswire-FirstCall/ -- Owens-Illinois,
Inc. (NYSE:OI) today reported its third quarter 2006 financial
results. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO) "Progress
in each of our six core priorities resulted in moderately improved
quarter-over-quarter Segment Operating Profit despite the
challenging cost environment," said Steve McCracken, O-I Chairman
and CEO. "Our $.02 reported earnings per share from continuing
operations did not reflect this progress, principally due to the
charge to close Godfrey, costs of refinancing, and a higher tax
rate. We have gained some momentum, but we have not yet met the
expectations we set when we began this transformation. The changes
in our global glass leadership announced on October 3 will help to
sharpen our focus and accelerate execution of the core priorities."
Third Quarter Highlights: -- Net earnings were $0.02 per share
(diluted) compared with $0.75 per share (diluted) in 2005. --
Earnings from continuing operations, excluding the following items
that management considers not representative of ongoing operations,
were $0.26 per share compared with $0.34 per share in 2005.
Excluded items: (a)mark to market effect of natural gas hedge
contracts; (b)note repurchase finance fees and premiums; and (c)the
charge for the Godfrey plant closure, are explained in Note (1).
3rd Quarter 2006 3rd Quarter 2005 $ Millions EPS $ Millions EPS Net
earnings $8.4 $0.02 $119.6 $0.75 Earnings from continuing
operations 8.4 0.02 56.6 0.34 Earnings from continuing operation
exclusive of items listed in Note (1) 45.0 0.26 56.2 0.34 -- The
Company's financial flexibility was improved by the negotiation of
a new five year euro 300 million European accounts receivable
securitization program which will reduce the Company's cost of
borrowing by over 1% versus the expiring program. -- Management
working capital (accounts receivable plus inventory and repair
parts less accounts payable) at September 30, 2006 was 21.1% of
last 12 months net sales compared with 23.1% at September 30, 2005.
-- SAP is now deployed in approximately half of the European
facilities with the remaining facilities scheduled to 'go-live'
over the next five quarters. -- On September 1, the Company
announced that it will close its Godfrey, Ill., machine parts
manufacturing operation by the end of this year. As part of a broad
initiative to reduce working capital and improve system costs,
machine parts manufacturing will be outsourced to various third
party suppliers. The Company recorded a third quarter charge for
this closure of $29.7 million ($27.7 million after tax, or $0.18
per share). -- Asbestos metrics improved further during the quarter
with cash payments to resolve cases and claims declining from $48.9
million to $46.9 million and deferred amounts payable declining by
$4.0 million. Reconciliation of Third Quarter 2006 Earnings to
Third Quarter 2005 Earnings per share, excluding the items listed
in Note (1) as presented below, were $0.26 per share (diluted) for
the third quarter of 2006 compared with $0.34 per share (diluted)
for the third quarter of 2005. The major factors contributing to
the net $0.08 per share decline were as follows: EPS 2005 EPS
exclusive of items listed in Note (1) $0.34 - Reconciling items: -
Price and product sales mix $0.30 - Productivity, production volume
and cost savings 0.10 - Cost savings from European capacity
rationalization 0.06 - Unit sales volume 0.02 - Raw materials and
other inflation (0.21) - Energy inflation (0.19) - Effective tax
rate (0.08) - European integration operating expenses (0.04) -
Pension expense (0.04) - Minority share owners' interest (0.02) -
Stock option expense (FAS No. 123) (0.01) - All other - net 0.03
------- Total reconciling items $(0.08) ------- 2006 EPS exclusive
of items listed in Note (1) $ 0.26 ======= Consolidated Net Debt
and Free Cash Flow Consolidated net debt at September 30, 2006 was
$5,196.6 million, compared with $4,998.5 million at December 31,
2005 and $5,206.2 million at September 30, 2005. Consolidated net
debt at September 30, 2006 represents a decrease of $9.6 million
from September 30, 2005. $ Millions 09/30/06 12/31/05 09/30/05
Consolidated debt $5,521.5 $5,297.0 $5,201.9 European receivables
securitization 0.0 0.0 226.3(a) Cash and short-term investments (
324.9) ( 298.5) ( 222.0) -------- -------- -------- Net debt
$5,196.6 $4,998.5 $5,206.2 ======== ======== ======== (a) Off
balance sheet prior to December 2005. Summarized cash flows for the
third quarter 2006 and third quarter 2005 are as follows: $
Millions Three months ended 09/30/06 09/30/05 Cash provided by
operating activities $ 137.6 $ 301.9 Additions to property plant
and equip. ( 75.9) (111.1) --------- ------- Free Cash Flow 61.7
190.8 Divestitures/asset sales 6.8 9.3 Debt-related hedging
activity 7.3 (30.0) Convertible preferred dividends ( 5.4) ( 5.4)
Issuance of common stock and other 0.7 ( 1.6) Increase in
short-term investments 11.5 -------- ------- Cash effects on net
debt $ 82.6 $ 163.1 Capitalized lease obligations ( 3.0) Exchange
rate fluctuations/other 9.6 3.9 Decrease (increase) in carrying
value of swapped debt (25.8) 22.1 -------- ------- Non-cash effects
on net debt $(19.2) $ 26.0 -------- ------- Decrease in net debt $
63.4 $ 189.1 ======== ======= Free cash flow for the third quarter
was $61.7 million compared with $190.8 million for the same quarter
last year. This reduction resulted from lower cash provided by
operating activities partially offset by lower capital spending.
The unfavorable comparison in quarterly operating cash flow was
principally due to working capital which provided $56.6 million in
2006 compared to $166.7 million in the prior year quarter.
Capitalization of costs related to the SAP roll-out also had the
effect of reducing cash flow from operating activities during the
quarter. On the favorable side, capital spending was lower in the
third quarter 2006 due to the completion of the new glass container
manufacturing facility in Windsor, Colo., in the fourth quarter of
2005. Business Review Glass Containers Segment - Higher selling
prices, improved productivity and increased unit shipments, drove
improved quarter-over-quarter Segment Operating Profit. Segment
Operating Profit of $207.6 million in the third quarter of 2006 was
$9.3 million or 4.7% higher than the Segment Operating Profit for
the third quarter of 2005 of $198.3 million. -- Glass shipments
increased by 1% overall in the third quarter of 2006 vs. the third
quarter of 2005. Shipments increased in all regions except Europe
where the elimination of selected lower margin products impacted
volume. -- Increased selling prices, procurement savings, higher
unit shipments, and cost savings from European capacity
rationalization partially offset the impact of input cost
inflation. The principal factors contributing to the $9.3 million
increase in Operating Profit were as follows: $ Millions - Price
and product sales mix $ 67.9 - Productivity, production volume and
cost savings 16.2 - Cost savings from European capacity
rationalization 13.1 - Unit sales volume increase 5.5 - Raw
materials and other inflation (42.6) - Energy cost inflation (42.1)
- European integration operating expenses ( 8.2) - Pension expense
( 6.6) - All other - net 6.1 -------- $ 9.3 ======== Plastics
Packaging Segment - Inflation in raw materials and other
manufacturing costs and an unfavorable product sales mix were only
partially offset by improved productivity and cost savings efforts,
resulting in a modest decline in results compared to prior year.
Segment Operating Profit for the third quarter of 2006 was $30.7
million, compared with $33.1 million in the third quarter of 2005,
a decrease of $2.4 million. -- Increased shipments of closures to
certain end use markets were offset by lower unit shipments of
healthcare bottles and vials. Customer consolidation and the
expiration of certain contract manufacturing agreements with the
purchaser of the former blow molded plastics business accounted for
most of the reduction. -- In addition, a less favorable product
sales mix and input cost inflation were partially offset by price
increases, improved production efficiencies and other cost
reduction initiatives. The principal factors contributing to the
$2.4 million decrease in Operating Profit were as follows: $
Millions - Productivity, production volume and cost savings $ 5.2 -
Raw material and other inflation (5.1) - Price and product sales
mix (1.0) - Pension expense (1.0) - Unit sales volume (0.5) -
Energy cost inflation (0.2) - All other - net .2 ------ $ (2.4)
====== Capital Spending Capital spending for the third quarter of
2006 totaled $75.9 million, compared with $111.1 million for the
year ago quarter. The lower capital spending was principally due to
the completion of the new glass container manufacturing facility in
Windsor, Colo., in the fourth quarter of 2005. Interest Expense
Interest expense in the third quarter of 2006 was $122.2 million
compared with $113.3 million in the third quarter of 2005. As
previously reported, interest expense in the third quarter includes
$7.3 million for call premiums and the write-off of unamortized
finance fees related to the July 2006 repurchase of approximately
$150 million of the outstanding 2009, 8.875% senior secured notes.
Effective Tax Rate Excluding the items presented in Note (1), the
Company's effective tax rate in the third quarter of 2006 was
45.5%, compared with 32.1% for the third quarter of 2005. The
Company expects its full year 2006 effective tax rate, exclusive of
separately taxed items, to be between 40% and 41%. The 2006
effective tax rate is higher principally because the Company is no
longer recording tax benefits on its losses in the United States.
Cash tax payments for the third quarter of 2006 amounted to $27.0
million compared with $26.5 million for the third quarter of 2005.
The Company expects to pay cash taxes between $125 million and $135
million for the full year 2006. Asbestos Asbestos-related cash
payments to resolve cases and claims in the ordinary course were
$46.9 million during the third quarter of 2006 compared with $48.9
million for the third quarter of 2005. In addition, the Company
used a portion of previously collected insurance proceeds to reduce
the deferred amount payable on prior settlements by $4.0 million
during the quarter. The deferred amount payable was approximately
$84 million at September 30, 2006, compared with approximately $91
million at December 31, 2005. New filings during the quarter were
approximately 18% higher than the filings during the third quarter
of 2005. While new filings for the third quarter of 2006 are up
from the prior year quarter, filings for the nine months ended
September 2006 are down 30% from the same period in 2005. In
addition, new filings for the nine months ended September 2005 were
35% lower than filings for the comparable period in 2004. As of
September 30, 2006, the number of pending asbestos-related lawsuits
and claims was approximately 24,000 compared with approximately
32,000 at December 31, 2005. The Company believes that a
significant number of the currently pending cases have exposure
dates after the Company's 1958 exit from the business, for which
the Company takes the position that it has no liability or are
subject to dismissal because they were filed in improper forums.
The Company anticipates that cash flows from operations and other
sources will be sufficient to meet its asbestos-related obligations
on a short-term and long-term basis. Nine-Month Results For the
first nine months of 2006, the Company reported earnings from
continuing operations of $75.3 million or $0.38 per share (diluted)
compared with $260.3 million, or $1.60 per share (diluted) for the
first nine months of 2005. Earnings from continuing operations,
excluding the items listed in Note (1), were $126.6 million or
$0.71 per share for the first nine months of 2006, compared with
$218.8 million or $1.34 per share for the comparable 2005 period.
Results for the first nine months of 2005 also included several
non- operating items presented in Note (2) below. Exclusive of
these items, the Company earned $1.27 per share in the nine months
of 2005. Outlook "Despite our dissatisfaction with the pace of the
transformation, we remain confident in our strategies and
priorities as we enter the fourth quarter and look ahead to 2007.
We are committed to combat inflation with price and to walk away
from unprofitable business. Our recent organizational change will
leverage the capabilities of the global glass business to enhance
results and our speed of execution," said McCracken. Note (1) Three
months ended September 30, 2006 2005 Earnings from continuing
operations $ 0.02 $ 0.34 Items that management considers not
representative of ongoing operations, consistent with Segment
Operating Profit: 1. Loss from mark to market effect of natural gas
hedge contracts (A) 0.01 0.03 2. Write-off of finance fees and note
repurchasing premiums 0.05 3. Reversal of a tax accrual for
previous divestiture (0.03) 4. Charge for Godfrey plant closure
0.18 ----- ----- Earnings from continuing operations before items
that management considers not representative of ongoing operations
$ 0.26 $ 0.34 ===== ===== Nine months ended September 30, 2006 2005
Earnings from continuing operations $ 0.38 $ 1.60 Items that
management considers not representative of ongoing operations,
consistent with Segment Operating Profit: 1. Gain on sale of
Corsico, Italy, glass plant (0.18) 2. Loss(gain)from mark to market
effect of natural gas hedge contracts (A) 0.04 (0.05) 3. Write-off
of finance fees and note repurchasing premiums 0.11 4. Reversal of
a tax accrual for a a previous divestiture (0.03) 5. Charge for
Godfrey plant closure 0.18 ------ ------ Earnings from continuing
operations before items that management considers not
representative of ongoing operations $ 0.71 $ 1.34 ====== ======
(A) Prior to April 1, 2005, mark-to-market adjustments for changes
in the unrealized value of natural gas hedge contracts were
reported in results of operations. Beginning April 1, 2005,
additional changes in the unrealized value of these contracts are
being reported as changes in the Other Comprehensive Income
component of share owners' equity through the application of
special hedge accounting. The cumulative mark-to-market gain on the
contracts that existed at April 1, 2005, will continue to impact
reported energy costs until the last of those contracts expire in
the fourth quarter of 2006. Both the non-cash gains reported prior
to April 1, 2005, and the offsetting non-cash charges reported
after that date are excluded from Segment Operating Profit. The
remaining non-cash charges in the fourth quarter of 2006 will be
$2.0 million. Note (2) Nine Month 2005 Results - In addition to the
items presented in Note (1), the nine month 2005 results included
first quarter favorable adjustments of $0.04 per share from a
reduction of the Company's accruals for self-insured risks and
$0.03 per share from a reduction of the tax provision primarily to
recognize changes in deferred taxes at several international
subsidiaries, both recognized in the first quarter of 2005.
Exclusive of these items, the Company earned $1.27 per share in the
first nine months of 2005. Forward Looking Statements This earnings
release contains "forward-looking" statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A
of the Securities Act of 1933. Forward-looking statements reflect
the Company's current expectations and projections about future
events at the time, and thus involve uncertainty and risk. It is
possible the Company's future financial performance may differ from
expectations due to a variety of factors including, but not limited
to the following: (1) foreign currency fluctuations relative to the
U.S. dollar, (2) changes in capital availability or cost, including
interest rate fluctuations, (3) the general political, economic and
competitive conditions in markets and countries where the Company
has operations, including disruptions in the supply chain,
competitive pricing pressures, inflation or deflation, and changes
in tax rates and laws, (4) consumer preferences for alternative
forms of packaging, (5) fluctuations in raw material and labor
costs, (6) availability of raw materials, (7) costs and
availability of energy, (8) transportation costs, (9) consolidation
among competitors and customers, (10) the ability of the Company to
integrate operations of acquired businesses and achieve expected
synergies, (11) unanticipated expenditures with respect to
environmental, safety and health laws, (12) the performance by
customers of their obligations under purchase agreements, and (13)
the timing and occurrence of events which are beyond the control of
the Company, including events related to asbestos-related claims.
It is not possible to foresee or identify all such factors. Any
forward- looking statements in this news release are based on
certain assumptions and analyses made by the Company in light of
its experience and perception of historical trends, current
conditions, expected future developments, and other factors it
believes are appropriate in the circumstances. Forward-looking
statements are not a guarantee of future performance and actual
results or developments may differ materially from expectations.
While the Company continually reviews trends and uncertainties
affecting the Company's results of operations and financial
condition, the Company does not assume any obligation to supplement
any particular forward-looking statements contained in this news
release. Company Profile Millions of times a day, O-I glass
containers, healthcare packaging and specialty closure systems
deliver many of the world's best-known consumer products to people
all around the world. With leading positions in Europe, North
America, Asia Pacific and Latin America, O-I provides
consumer-preferred products that enable superior taste, purity,
visual appeal and value benefits for our customers' products.
Established in 1903, the Company employs approximately 28,200
people and has 100 manufacturing facilities in 23 countries. In
2005, annual revenues were $7.2 billion. For more information,
visit http://www.o-i.com/. Conference Call As announced previously,
a conference call to discuss the Company's latest results will be
held Thursday, October 26, 2006, at 8:30 a.m., Eastern Time. A live
webcast and a replay of the conference call will be available on
the Internet at the O-I Web site (http://www.o-i.com/). The
conference call also may be accessed by dialing +1-888-733-1701
(U.S. and Canada) or 706-634-4943 (International) by 8:20 a.m.
(Eastern Time) on October 26. Ask for the O-I conference call. A
replay of the call will be available from approximately 11:30 a.m.
(Eastern Time) on October 26 through 11:59 p.m. on November 3. In
addition to the O-I Web site, the replay also may be accessed by
dialing 800- 642-1687 (U.S. and Canada) or 706-645-9291
(International). The conference ID number to access the replay is
7670789. Additional information Certain additional information
regarding third quarter sales, Segment Operating Profit and EPS
comparisons to prior year is available at the O-I web site,
http://www.o-i.com/, in the Investor Relations section under
"Annual Reports and Presentations." OWENS-ILLINOIS, INC. Condensed
Consolidated Results of Operations (Dollars in millions, except per
share amounts) Three months ended Nine months ended September 30,
September 30, 2006 2005 2006 2005 Revenues: Net sales $1,911.7
$1,807.5 $5,545.5 $5,323.5 Royalties and net technical assistance
4.4 4.5 12.2 12.8 Equity earnings 7.5 6.6 21.2 17.9 Interest 4.6
5.2 14.4 12.9 Other (a) 5.0 1.7 18.6 39.6 1,933.2 1,825.5 5,611.9
5,406.7 Costs and expenses: Manufacturing, shipping, and delivery
(b) 1,555.2 1,473.5 4,525.8 4,236.9 Research and development 7.3
6.6 21.8 19.0 Engineering 11.5 9.2 29.5 28.9 Selling and
administrative 137.2 122.0 401.1 358.2 Interest (c) (d) 122.2 113.3
372.0 348.4 Other (e) 32.1 12.0 47.6 25.4 1,865.5 1,736.6 5,397.8
5,016.8 Earnings from continuing operations before items below 67.7
88.9 214.1 389.9 Provision for income taxes (f) 46.4 22.7 106.9
104.6 Minority share owners' interests in earnings of subsidiaries
12.9 9.6 31.9 25.0 Earnings from continuing operations 8.4 56.6
75.3 260.3 Net earnings of discontinued operations (g) 63.0 63.0
Net earnings $8.4 $119.6 $75.3 $323.3 Earnings from continuing
operations $8.4 $56.6 $75.3 $260.3 Less convertible preferred stock
dividends (5.4) (5.4) (16.1) (16.1) Available to common share
owners $3.0 $51.2 $59.2 $244.2 Basic earnings per share of common
stock: Earnings from continuing operations $0.02 $0.34 $0.39 $1.62
Net earnings of discontinued operations 0.41 0.41 Net earnings
$0.02 $0.75 $0.39 $2.03 Weighted average shares outstanding (000s)
152,150 151,280 151,937 150,727 Diluted earnings per share of
common stock: Earnings from continuing operations $0.02 $0.34 $0.38
$1.60 Net earnings of discontinued operations 0.41 0.41 Net
earnings $0.02 $0.75 $0.38 $2.01 Diluted average shares (000s)
153,876 153,357 153,960 152,979 (a)Amount for the nine months ended
September 30, 2005 includes a first quarter gain of $28.1 million
(pretax and after tax) from the sale of the Company's glass
container facility in Corsico, Italy. The effect of this adjustment
is an increase in earnings per share of $0.18. The first quarter
sale of the Company's glass container facility in Castellar, Spain
did not result in a gain; the carrying value allocated to that
facility, as part of the BSN acquisition, was adjusted to equal the
sales proceeds. (b)Amount for the three months ended September 30,
2006 includes a loss of $1.6 million ($1.6 million after tax) from
the mark to market effect of natural gas hedge contracts. The
aftertax effect of this loss is a decrease in earnings per share of
$0.01. Amount for the three months ended September 30, 2005
includes a loss of $8.2 million ($4.9 million after tax) from the
mark to market effect of natural gas hedge contracts. The aftertax
effect of this loss is a decrease in earnings per share of $0.03.
Amount for the nine months ended September 30, 2006 includes a loss
of $6.7 million ($6.5 million after tax) from the mark to market
effect of natural gas hedge contracts. The aftertax effect of this
loss is a decrease in earnings per share of $0.04. Amount for the
nine months ended September 30, 2005 includes a gain of $13.2
million ($8.1 million after tax) from the mark to market effect of
natural gas hedge contracts. The aftertax effect of this gain is an
increase in earnings per share of $0.05. (c)Amount for the three
months ended September 30, 2006 includes a charge of $7.3 million
($7.3 million after tax) for note repurchase premiums and the
write-off of finance fees related to debt that was repaid prior to
its maturity. The aftertax effect of this charge is a decrease in
earnings per share of $0.05. (d)Amount for the nine months ended
September 30, 2006 includes charges of $17.5 million ($17.1 million
after tax) for note repurchase premiums and the write-off of
finance fees related to debt that was repaid prior to its maturity.
The aftertax effect of these charges is a reduction in earnings per
share of $0.11. (e)Amount for the three and nine months ended
September 30, 2006 includes a charge of $29.7 million ($27.7
million after tax) for the closing of the Godfrey, Illinois machine
parts manufacturing operation. The aftertax effect of this charge
is a reduction in earnings per share of $0.18. (f)Amount for three
and nine months ended September 30, 2005 includes a third quarter
benefit of $5.3 million from the reversal of an accrual for
potential tax liabilities related to a previous divestiture. The
accrual is no longer required based on the Company's reassessment
of the potential liabilities. The effect of this benefit is an
increase in earnings per share of $0.03. (g)Amount for the three
and nine months ended September 30, 2005 consists of a third
quarter benefit principally from the reversal of an accrual for
potential tax liabilities related to a previous divestiture. The
accrual is no longer required based on the Company's reassessment
of the potential liabilities. OWENS-ILLINOIS, INC. Condensed
Consolidated Cash Flows (Dollars in millions) Three months ended
Nine months ended September 30, September 30, 2006 2005 2006 2005
Cash flows from operating activities: Net earnings $8.4 $119.6
$75.3 $323.3 Net earnings of discontinued operations (63.0) (63.0)
Non-cash charges (credits): Depreciation 118.2 118.6 352.6 359.5
Amortization of intangibles and other deferred items 6.5 6.8 20.6
19.9 Amortization of finance fees 2.7 3.8 10.5 12.2 Gain on sale of
certain real property (28.1) Restructuring costs and writeoff of
certain assets 29.7 29.7 Mark to market effect of natural gas hedge
contracts 1.6 8.2 6.7 (13.2) Other (12.5) 2.3 5.7 (10.3) Change in
non-current operating assets (17.5) 9.5 (29.4) 1.8 Asbestos-related
payments (46.9) (48.9) (127.6) (135.2) Change in non-current
liabilities (9.2) (21.7) (50.9) (64.7) Change in components of
working capital (a) 56.6 166.7 (378.6) (152.1) Cash provided by
(utilized in) operating activities 137.6 301.9 (85.4) 250.1 Cash
flows from investing activities: Additions to property, plant, and
equipment (75.9) (111.1) (200.2) (296.6) Collections on receivables
arising from consolidation of receivables securitization program
(a) 127.3 Net cash proceeds related to divestitures and asset sales
6.8 9.3 14.4 159.7 Cash utilized in investing activities (69.1)
(101.8) (58.5) (136.9) Cash flows from financing activities:
Additions to long-term debt 265.3 69.0 1,181.5 510.6 Repayments of
long-term debt (290.6) (242.8) (1,073.4) (646.5) Increase
(decrease) in short-term loans (50.2) 19.4 52.9 43.5 Net receipts
(payments) for debt- related hedging activity 7.3 (30.0) (4.3)
(100.0) Payment of finance fees (0.2) (12.3) (1.0) Convertible
preferred stock dividends (5.4) (5.4) (16.1) (16.1) Issuance of
common stock and other 0.7 (1.4) 4.7 20.3 Cash provided by
(utilized in) financing activities (72.9) (191.4) 133.0 (189.2)
Effect of exchange rate fluctuations on cash 2.0 1.5 6.6 (11.6)
Increase (decrease) in cash (2.4) 10.2 (4.3) (87.6) Cash at
beginning of period 244.7 180.1 246.6 277.9 Cash at end of period
$242.3 $190.3 $242.3 $190.3 (a)During the fourth quarter of 2005,
the Company expanded the capacity of its European accounts
receivable securitization program. The terms of this expansion
resulted in changing from off-balance sheet to on-balance sheet
accounting for the program by consolidating both the trade accounts
receivable in the program and the secured indebtedness of the same
amount. In the Company's Form 10-Q for the quarters ended March 31
and June 30, 2006, cash received from customers in payment of the
accounts receivable that were in the program at the date of its
consolidation were included in determining the changes in
components of consolidated working capital. However, to more
clearly reflect the change from off-balance sheet accounting to
on-balance sheet accounting, the Company reclassified the cash
flows from these receivables from operating activities to investing
activities. OWENS-ILLINOIS, INC. Condensed Consolidated Balance
Sheets (Dollars in millions) Sept. 30, Dec. 31, Sept. 30, 2006 2005
2005 Assets Current assets: Cash, including time deposits $242.3
$246.6 $190.3 Short-term investments, at cost which approximates
market 82.6 51.9 31.7 Receivables, less allowances for losses and
discounts 1,247.3 1,006.2 993.0 Inventories 1,009.1 940.4 1,020.6
Prepaid expenses 45.9 37.2 121.7 Total current assets 2,627.2
2,282.3 2,357.3 Investments and other assets: Equity investments
103.3 114.9 109.7 Repair parts inventories 166.1 170.3 171.7
Prepaid pension 994.2 988.1 981.9 Deposits, receivables, and other
assets 437.2 444.5 586.4 Goodwill 2,439.3 2,369.2 2,897.1 Total
other assets 4,140.1 4,087.0 4,746.8 Property, plant, and
equipment, at cost 6,358.0 6,146.0 6,163.9 Less accumulated
depreciation 3,253.7 2,993.5 2,971.2 Net property, plant, and
equipment 3,104.3 3,152.5 3,192.7 Total assets $9,871.6 $9,521.8
$10,296.8 Liabilities and Share Owners' Equity Current liabilities:
Short-term loans and long-term debt due within one year $612.6
$278.3 $74.2 Current portion of asbestos- related liabilities 149.0
158.0 158.0 Accounts payable 882.5 843.0 781.0 Other accrued
liabilities 633.2 542.6 602.1 Total current liabilities 2,277.3
1,821.9 1,615.3 Long-term debt 4,908.9 5,018.7 5,127.7 Deferred
taxes 192.3 186.0 196.1 Pension benefits 307.5 311.4 289.3
Nonpension postretirement benefits 282.6 277.1 277.1 Other
liabilities 361.5 429.2 456.0 Asbestos-related liabilities 453.5
572.1 473.0 Minority share owners' interests 196.6 181.5 173.5
Share owners' equity: Convertible preferred stock 452.5 452.5 452.5
Common stock 1.7 1.7 1.6 Capital in excess of par value 2,316.5
2,297.0 2,294.6 Treasury stock, at cost (230.2) (236.0) (237.5)
Retained deficit (1,496.2) (1,555.4) (668.1) Accumulated other
comprehensive loss (152.9) (235.9) (154.3) Total share owners'
equity 891.4 723.9 1,688.8 Total liabilities and share owners'
equity $9,871.6 $9,521.8 $10,296.8 OWENS-ILLINOIS, INC.
Consolidated Supplemental Financial Data (Dollars in millions)
Three months ended Nine months ended Sept. 30, Sept. 30, 2006 2005
2006 2005 Selected Segment Information Net sales: Glass Containers
$1,717.5 $1,604.3 $4,951.0 $4,708.6 Plastics Packaging 194.2 203.2
594.5 614.9 Consolidated net sales $1,911.7 $1,807.5 $5,545.5
$5,323.5 Product Segment Operating Profit (a): Glass Containers (b)
(c) (d) $207.6 $198.3 $594.0 $646.2 Plastics Packaging 30.7 33.1
90.4 97.8 238.3 231.4 684.4 744.0 Eliminations and other retained
items (21.7) (26.2) (76.3) (59.9) Segment Operating Profit 216.6
205.2 608.1 684.1 Sale of the Corsico, Italy glass container
facility 28.1 Charge for closing the Godfrey, Illinois plant (29.7)
(29.7) Mark to market effect of natural gas hedge contracts (1.6)
(8.2) (6.7) 13.2 Consolidated Operating Profit 185.3 197.0 571.7
725.4 Interest income 4.6 5.2 14.4 12.9 Interest expense (122.2)
(113.3) (372.0) (348.4) Provision for income taxes (46.4) (22.7)
(106.9) (104.6) Minority share owners' interests in earnings of
subsidiaries (12.9) (9.6) (31.9) (25.0) Earnings from continuing
operations $8.4 $56.6 $75.3 $260.3 (a)Operating Profit consists of
consolidated earnings from continuing operations before interest
income, interest expense, provision for income taxes and minority
share owners' interests in earnings of subsidiaries. Segment
Operating Profit excludes amounts related to certain items that
management considers not representative of ongoing operations. The
Company presents Operating Profit because management believes that
it provides investors with a measure of operating performance
without regard to level of indebtedness or other related costs of
capital. The most directly comparable GAAP financial measure to
Operating Profit is earnings from continuing operations. The
Company presents Segment Operating Profit because management uses
the measure, in combination with selected cash flow information, to
evaluate performance and to allocate resources. A reconciliation
from Segment Operating Profit to Consolidated Operating Profit to
earnings from continuing operations is included in the tables
above. (b)Excludes a loss of $1.6 million and $6.7 million for the
three months and nine months ended September 30, 2006,
respectively, from the mark to market effect of natural gas hedge
contracts. Excludes a loss of $8.2 million and a gain of $13.2
million for the three months and nine months ended September 30,
2005, respectively, from the mark to market effect of natural gas
hedge contracts. (c)Amount for the three and nine months ended
September 30, 2006 excludes a charge of $29.7 million for the
closing of the Godfrey, Illinois machine parts manufacturing
operation. (d)Amount for the nine months ended September 30, 2005
excludes a gain of $28.1 million from the sale of the Company's
glass container facility in Corsico, Italy.
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO
http://photoarchive.ap.org/ DATASOURCE: Owens-Illinois, Inc.
CONTACT: Kelley Yoder of O-I, +1-567-336-1388 Web site:
http://www.o-i.com/
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