PERRYSBURG, Ohio, April 29 /PRNewswire-FirstCall/ --
Owens-Illinois, Inc. (NYSE:OI) today reported financial results for
the first quarter ending March 31, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO) Quarterly
highlights: -- Reported net earnings of $0.27 per share (diluted)
-- Adjusted net earnings (non-GAAP) of $0.55 per share represent
one of O-I's best first quarter results, second only to record 2008
first quarter adjusted net earnings -- Improved selling prices and
product mix contributed more than six percent to revenue compared
to the prior year, while total net sales declined mainly due to
challenging market conditions -- Improved shipments from trough
levels within the first quarter -- Maintained strong financial
flexibility with $642 million available under the global revolving
credit facility, in addition to cash on hand First quarter net
sales were $1.519 billion in 2009, compared with $1.961 billion in
the prior year. Lower first quarter sales reflect a year-over-year
decline in shipments and the unfavorable impact of foreign currency
translation despite higher average selling prices. Net earnings
from continuing operations in the first quarter of 2009 were $45.1
million, or $0.27 per share (diluted), compared with $174.0
million, or $1.02 per share (diluted), in the first quarter of
2008. Exclusive of the items not representative of ongoing
operations, first quarter 2009 adjusted net earnings were $92.8
million, or $0.55 per share (diluted). These results compare with
adjusted net earnings of $183.7 million, or $1.08 per share
(diluted), in the prior year first quarter. A description of all
items that management considers not representative of ongoing
operations and a reconciliation of the GAAP to non-GAAP earnings
and earnings per share can be found in Note 1 provided below and in
charts on the Company's web site, http://www.o-i.com/. Commenting
on the Company's first quarter performance, O-I Chairman and Chief
Executive Officer Al Stroucken said, "We posted one of our best
first quarters since our IPO in 1991, despite facing a very
challenging glass market. We acted swiftly to balance our
production with sharply lower demand to prevent building excess
inventory and to preserve profit margins over the long term. At the
same time, we successfully raised our average selling prices, which
more than offset inflationary cost increases. We also reduced fixed
costs as part of our strategic footprint alignment initiative."
Operational highlights: Performing well in a challenging market
First quarter segment operating profit was $191.9 million in 2009,
compared with $322.1 million in 2008. Glass container shipments
declined 15 percent on a year-over-year basis in the first quarter.
A significant component of this decline reflected inventory
de-stocking across customer supply chains. To balance production
with lower tonnes shipped, the Company temporarily curtailed
production to prevent building excess inventories. As a result, the
Company incurred approximately $100 million of unabsorbed fixed
costs associated with the curtailments, while inventory levels
declined modestly from the first quarter of 2008. Improved average
selling prices and product mix increased sales by more than six
percent from the prior year, which more than offset cost inflation
of approximately $66 million on a year-over-year basis. Cost
inflation was most notably due to higher raw material prices. The
year-over-year change in foreign currency translation rates reduced
segment operating profit by $29 million in the first quarter of
2009. The Company eliminated approximately $33 million of fixed
costs due to restructuring actions aimed at optimizing its global
footprint by shifting production from higher cost plants to more
efficient facilities. Since the inception of its strategic
footprint alignment initiative in 2007, O-I has shut down a total
of 14 furnaces, including three furnaces in the first quarter of
2009. During the quarter, O-I recorded a restructuring charge of
$50.4 million ($47.7 million after tax) principally for future
additional capacity reductions. Financial highlights: Strong
financial flexibility Total debt declined to $3.326 billion as of
March 31, 2009, from $4.028 billion at March 31, 2008. Debt at the
end of the first quarter of 2009 remained flat with year-end 2008
as seasonally higher working capital drove a use of Free Cash Flow
in the first quarter, which was offset by a favorable $89 million
foreign currency translation. The Company defines Free Cash Flow as
cash provided by operating activities less capital spending.
Capital expenditures in the first quarter were $46.6 million,
consistent with the prior year first quarter. As of March 31, 2009,
in addition to cash on hand, O-I had $642 million available under
its global revolving credit facility, which does not mature until
June 2012. Asbestos-related cash payments during the first quarter
of 2009 were $34.8 million, down from $40.2 million during the
first quarter of 2008. The deferred amount payable for previously
settled claims was approximately $33 million at the end of the
first quarter and comparable to year-end 2008. Approximately 1,000
new lawsuits and claims were filed during the first quarter of
2009, essentially flat with the prior year quarter. However, the
number of pending asbestos-related lawsuits and claims declined
from approximately 11,000 at year-end 2008 to approximately 9,000
as of March 31, 2009. The reduction in pending lawsuits resulted
from the dismissal of federal court non-malignancy cases and the
disposition of inactive state court cases. Business outlook
Commenting on the Company's outlook, Stroucken said, "Challenging
market conditions will likely persist over the next several
quarters, resulting in lower year-over-year demand and continued
temporary production curtailments. However, we expect that
shipments will improve sequentially in the second quarter due to
seasonally stronger demand and as inventory de-stocking pressures
subside. Our strategic footprint alignment initiative and
moderating cost inflation also should benefit future earnings.
Overall, we expect second quarter 2009 adjusted net earnings will
decline on a year-over-year basis, but will improve from first
quarter 2009 results." Note 1: The table below represents items in
the first quarter of 2009 and 2008 that management considers not
representative of ongoing operations. $Millions, except per share
amounts Three months ended March 31 ---------------------------
2009 2008 ---- ---- Earnings EPS Earnings EPS -------- --- --------
--- Earnings from Continuing Operations Attributable to the Company
$45.1 $0.27 $174.0 $1.02 Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit Charges for restructuring and asset impairment
47.7 0.28 9.7 0.06 ---- ---- --- ---- Adjusted Net Earnings $92.8
$0.55 $183.7 $1.08 ===== ===== ====== ===== Company Profile
Millions of times a day, O-I glass containers deliver many of the
world's best-known consumer products to people all around the
world. With the leading position in Europe, North America, Asia
Pacific and South America, O-I manufactures consumer-preferred, 100
percent recyclable glass containers that enable superior taste,
purity, visual appeal and value benefits for our customers'
products. Established in 1903, the Company employs more than 23,000
people with 80 manufacturing facilities in 22 countries. In 2008,
net sales were $7.9 billion. For more information, visit
http://www.o-i.com/. Regulation G The information presented above
regarding earnings from continuing operations exclusive of items
management considers not representative of ongoing operations does
not conform to U.S. generally accepted accounting principles
(GAAP). It should not be construed as an alternative to the
reported results determined in accordance with GAAP. Management has
included this non-GAAP information to assist in understanding the
comparability of results of ongoing operations. Management uses
this non-GAAP information principally for internal reporting,
forecasting, budgeting and calculating bonus payments. Management
believes that the excluded items are not reflective of ongoing
operations, so the non-GAAP presentation allows the board of
directors, management, investors and analysts to better understand
the Company's financial performance in relationship to core
operating results and the business outlook. Forward Looking
Statements This news 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 capital markets, disruptions in the supply chain,
competitive pricing pressures, inflation or deflation, and changes
in the tax rates and laws, (4) consumer preferences for alternative
forms of packaging, (5) fluctuation in raw material and labor
costs, (6) availability of raw materials, (7) costs and
availability of energy, (8) transportation costs, (9) the ability
of the Company to raise selling prices commensurate with energy and
other cost increases, (10) consolidation among competitors and
customers, (11) the ability of the Company to integrate operations
of acquired businesses and achieve expected synergies, (12)
unanticipated expenditures with respect to environmental, safety
and health laws, (13) the performance by customers of their
obligations under purchase agreements, and (14) 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 intend to update any particular
forward-looking statements contained in this news release.
Conference Call Scheduled for April 30, 2009 O-I CEO Al Stroucken
and CFO Ed White will conduct a conference call to discuss the
Company's latest results on Thursday, April 30, 2009, at 8:30 a.m.,
Eastern Time. A live Webcast of the conference call, including
presentation materials, will be available on the O-I Web site,
http://www.o-i.com/, in the Investor Relations section under
"Events and Presentations." The conference call also may be
accessed by dialing 888-733-1701 (U.S. and Canada) or 706-634-4943
(international) by 8:20 a.m., Eastern Time, on April 30. Ask for
the O-I conference call. A replay of the call will be available on
the O-I Web site, http://www.o-i.com/, for 30 days following the
call. OWENS-ILLINOIS, INC. Condensed Consolidated Results of
Operations (a) (Dollars in millions, except per share amounts)
Three months ended March 31, ------------------- 2009 2008 ----
---- Net sales $1,519.0 $1,960.5 Manufacturing, shipping, and
delivery expense (1,222.2) (1,503.7) -------- -------- Gross profit
296.8 456.8 Selling and administrative expense (118.5) (127.8)
Research, development, and engineering expense (13.9) (16.0)
Interest expense (48.1) (64.3) Interest income 8.5 8.7 Equity
earnings 13.6 11.1 Royalties and net technical assistance 2.8 4.8
Other income 1.6 1.8 Other expense (b) (52.8) (20.0) ----- -----
Earnings from continuing operations before income taxes 90.0 255.1
Provision for income taxes (31.2) (64.9) ----- ----- Earnings from
continuing operations 58.8 190.2 Gain on sale of discontinued
operations 4.1 --- --- Net earnings 58.8 194.3 Net earnings
attributable to noncontrolling interests (13.7) (16.2) ----- -----
Net earnings attributable to the Company $45.1 $178.1 ===== ======
Amounts attributable to the Company: Earnings from continuing
operations $45.1 $174.0 Gain on sale of discontinued operations 4.1
----- --- Net earnings $45.1 $178.1 ===== ====== Basic earnings per
share (c): Earnings from continuing operations $0.27 $1.06 Gain on
sale of discontinued operations 0.03 ----- ---- Net earnings $0.27
$1.09 ===== ===== Weighted average shares outstanding (000s)
167,080 156,324 ======= ======= Diluted earnings per share (c):
Earnings from continuing operations $0.27 $1.02 Gain on sale of
discontinued operations 0.02 ----- ---- Net earnings $0.27 $1.04
===== ===== Diluted average shares (000s) (d) 168,469 170,517
======= ======= (a) The Company adopted the provisions of FAS No.
160, "Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51, " on January 1, 2009, which
changed the presentation of noncontrolling interests in
subsidiaries. The presentation provisions of FAS No. 160 were also
required to be retrospectively applied to 2008. (b) Amount for the
three months ended March 31, 2009 includes charges of $50.4 million
($47.7 million after tax) for restructuring and asset impairment.
The effect of these charges is a reduction in earnings per share of
$0.28. Amount for the three months ended March 31, 2008 includes
charges of $12.9 million ($9.7 million after tax and noncontrolling
interests) for restructuring and asset impairment. The effect of
these charges is a reduction in earnings per share of $0.06. (c)
The Company adopted the provisions of FSP No. EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities," on January 1, 2009. FSP
No. EITF 03-6-1 required the Company to allocate earnings to
unvested restricted shares outstanding during the period and was
also required to be retrospectively applied to 2008. Basic earnings
per share for the three months ended March 31, 2009 were reduced by
$0.02 per share. There was no impact on basic earnings per share
for the three months ended March 31, 2009. There was no impact on
diluted earnings per share in either period. (d) The number of
diluted shares for the three months ended March 31, 2008 was
increased by 8,589,000 because the assumed conversion of the
convertible preferred shares is dilutive to the related earnings
per share amount for that period. Accordingly, dividends were not
deducted from earnings in calculating diluted earnings per share
for that period. OWENS-ILLINOIS, INC. Condensed Consolidated
Balance Sheets (Dollars in millions) March 31, Dec. 31, March 31,
2009 2008 2008 ---- ---- ---- Assets Current assets: Cash and cash
equivalents $362.3 $379.5 $483.0 Short-term investments, at cost
which approximates market 15.9 25.0 51.7 Receivables, less
allowances for losses and discounts 945.5 988.8 1,320.6 Inventories
1,044.8 999.5 1,222.4 Prepaid expenses 48.4 51.9 37.1 Total current
assets 2,416.9 2,444.7 3,114.8 Investments and other assets: Equity
investments 105.3 101.7 87.4 Repair parts inventories 134.5 132.5
157.0 Prepaid pension 591.4 Deposits, receivables, and other assets
478.2 444.5 489.4 Goodwill 2,130.3 2,207.5 2,522.2 Total other
assets 2,848.3 2,886.2 3,847.4 Property, plant, and equipment, at
cost 5,711.0 5,983.1 6,707.0 Less accumulated depreciation 3,224.6
3,337.5 3,711.8 ------- ------- ------- Net property, plant, and
equipment 2,486.4 2,645.6 2,995.2 ------- ------- ------- Total
assets $7,751.6 $7,976.5 $9,957.4 ======== ======== ========
Liabilities and Share Owners' Equity Current liabilities:
Short-term loans and long-term debt due within one year $353.6
$393.8 $835.1 Current portion of asbestos-related liabilities 175.0
175.0 210.0 Accounts payable 754.4 838.2 978.5 Other liabilities
554.1 596.3 656.9 Total current liabilities 1,837.1 2,003.3 2,680.5
Long-term debt 2,972.0 2,940.3 3,192.5 Deferred taxes 138.6 77.6
128.8 Pension benefits 703.4 741.8 314.4 Nonpension postretirement
benefits 234.4 239.7 279.6 Other liabilities 324.4 360.1 409.1
Asbestos-related liabilities 285.5 320.3 205.3 Share owners'
equity: The Company's share owners' equity: Common stock 1.8 1.8
1.8 Capital in excess of par value 2,921.8 2,913.3 2,887.7 Treasury
stock, at cost (219.9) (221.5) (224.0) Retained earnings (deficit)
12.7 (32.4) (112.6) Accumulated other comprehensive loss (1,700.4)
(1,620.6) (54.1) -------- -------- ----- Total share owners' equity
of the Company 1,016.0 1,040.6 2,498.8 Noncontrolling interests
240.2 252.8 248.4 ----- ----- ----- Total share owners' equity
1,256.2 1,293.4 2,747.2 Total liabilities and share owners' equity
$7,751.6 $7,976.5 $9,957.4 ======== ======== ========
OWENS-ILLINOIS, INC. Condensed Consolidated Cash Flows (Dollars in
millions) Three months ended March 31, ------------------- 2009
2008 ---- ---- Cash flows from operating activities: Net earnings
$58.8 $194.3 Net earnings attributable to noncontrolling interests
(13.7) (16.2) Gain on sale of discontinued operations (4.1)
Non-cash charges: Depreciation 88.4 113.6 Amortization of
intangibles and other deferred items 4.3 7.6 Amortization of
finance fees 2.4 1.9 Restructuring and asset impairment 50.4 12.9
Other 43.3 19.1 Asbestos-related payments (34.8) (40.2) Cash paid
for restructuring activities (20.2) (4.1) Change in non-current
operating assets (2.4) (0.8) Change in non-current liabilities
(31.3) (18.0) Change in components of working capital (173.7)
(215.1) ------ ------ Cash provided by (utilized in) operating
activities (28.5) 50.9 Cash flows from investing activities:
Additions to property, plant, and equipment (46.6) (45.4) Repayment
from (advance to) equity affiliate 1.6 (15.0) Net cash proceeds
(payments) related to divestitures and asset sales 0.1 (16.6) ---
----- Cash utilized in investing activities (44.9) (77.0) Cash
flows from financing activities: Additions to long-term debt 274.9
309.2 Repayments of long-term debt (183.6) (222.6) Increase
(decrease) in short-term loans (17.6) 82.3 Net (payments) receipts
for hedging activity 4.4 (33.9) Convertible preferred stock
dividends (5.4) Dividends paid to noncontrolling interests (a)
(17.0) (30.2) Issuance of common stock and other 4.0 9.8 --- ---
Cash provided by financing activities 65.1 109.2 Effect of exchange
rate fluctuations on cash (8.9) 12.2 ---- ---- Increase (decrease)
in cash (17.2) 95.3 Cash at beginning of period 379.5 387.7 -----
----- Cash at end of period $362.3 $483.0 ====== ====== (a) The
Company adopted the provisions of FAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51, " on January 1, 2009, which changed the presentation of
noncontrolling interests in subsidiaries. The presentation
provisions of FAS No. 160 were also required to be retrospectively
applied to 2008. OWENS-ILLINOIS, INC. Consolidated Supplemental
Financial Data (Dollars in millions) Three months ended March 31,
---------------- Net sales: 2009 2008 ---- ---- Europe $612.9
$888.9 North America 494.3 530.9 South America 214.0 254.2 Asia
Pacific 182.0 250.0 ----- ----- Reportable segment totals 1,503.2
1,924.0 Other 15.8 36.5 ---- ---- Net sales $1,519.0 $1,960.5
======== ======== Three months ended March 31, ----------------
Segment Operating Profit (a): 2009 2008 ---- ---- Europe $44.2
$147.6 North America 62.7 55.5 South America 60.0 73.6 Asia Pacific
25.0 45.4 ---- ---- Reportable segment totals (b) 191.9 322.1 Items
excluded from Segment Operating Profit: Retained corporate costs
and other (11.9) 1.5 Restructuring and asset impairment (50.4)
(12.9) Interest income 8.5 8.7 Interest expense (48.1) (64.3) -----
----- Earnings from continuing operations before income taxes $90.0
$255.1 ===== ====== The following notes relate to Segment Operating
Profit: (a) Operating Profit consists of consolidated earnings from
continuing operations before interest income, interest expense, and
provision for income taxes. Segment Operating Profit excludes
amounts related to certain items that management considers not
representative of ongoing operations as well as certain retained
corporate costs. The Company presents information on "Operating
Profit" because management believes that it provides investors with
a measure of operating performance separate from the level of
indebtedness or other related costs of capital. The most directly
comparable GAAP financial measure to Operating Profit is net
earnings. The Company presents Segment Operating Profit because
management uses the measure, in combination with gross profit
percentage and selected cash flow information, to evaluate
performance and to allocate resources. A reconciliation from
Segment Operating Profit to earnings from continuing operations
before income taxes is included in the tables above. (b) Segment
Operating Profit for the three months ended March 31, 2009 excludes
charges of $50.4 million for restructuring and asset impairment.
Segment Operating Profit for the three months ended March 31, 2008
excludes charges of $12.9 million for restructuring and asset
impairment.
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO
DATASOURCE: O-I CONTACT: Investor Relations: Sasha Sekpeh,
+1-567-336-2355, Corp. Communications: Stephanie Johnston,
+1-567-336-7199, both of O-I Web Site: http://www.o-i.com/
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