PERRYSBURG, Ohio, July 29 /PRNewswire-FirstCall/ -- Owens-Illinois,
Inc. (NYSE:OI) today reported financial results for the second
quarter ending June 30, 2009. Second quarter highlights: --
Reported net earnings were $0.88 per share (diluted) -- Adjusted
net earnings (non-GAAP) were $0.94 per share, down from record
earnings of $1.35 per share in the prior year, up from $0.55 per
share in first quarter 2009 -- Glass shipments were down 12 percent
year-over-year, reflecting the ongoing global recession, but up 14
percent over first quarter due to seasonal factors and abatement of
inventory de-stocking trends -- Improved price and mix contributed
four percent to revenue, which more than offset moderating cost
inflation -- Temporary production curtailments reduced inventories
by more than six percent from prior year -- Strong financial
flexibility was further improved by the Company's successful $600
million bond offering Second quarter net sales were $1.8 billion in
2009, down from $2.2 billion in the prior year. Improved price and
mix were offset by lower shipments and unfavorable foreign currency
translation effects. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO ) Earnings
from continuing operations in the second quarter of 2009 were
$149.3 million, or $0.88 per share (diluted), compared with $227.5
million, or $1.33 per share (diluted), in the prior year. Exclusive
of the items not representative of ongoing operations, second
quarter 2009 adjusted net earnings were $159.7 million, or $0.94
per share (diluted), down from adjusted net earnings of $231.7
million, or $1.35 per share (diluted), in the prior year second
quarter. However, adjusted net earnings for the second quarter
exceeded first quarter 2009 adjusted earnings of $92.8 million, or
$0.55 per share (diluted). A description of 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 second quarter performance, Chairman and Chief Executive
Officer Al Stroucken said, "As expected, earnings improved from the
first quarter. While the global recession negatively impacted
year-over-year results, seasonally stronger demand and the
abatement of inventory de-stocking trends by our customers boosted
shipments compared to last quarter. In addition, monthly sales
volume comparisons versus the prior year improved throughout the
quarter. As we focus on optimizing free cash flow, we continued to
manage our production to reduce inventories. Improved price and
mix, lower inflation and the benefits from our ongoing strategic
footprint alignment initiative also increased our margins."
Operational highlights: Favorable seasonal and market trends Second
quarter 2009 segment operating profit was $291.9 million, down from
$390.1 million in the prior year, but up $100.0 million over the
first quarter. Glass container shipments in tonnes declined 12
percent year-over-year, reflecting continued challenging market
conditions, while volume in the two largest regions exited the
quarter with a mid-single digit decline. Shipments increased 14
percent on a sequential basis as inventory de-stocking subsided and
sales reflected seasonally stronger demand. Unabsorbed fixed costs,
primarily due to temporary production curtailments, were $95
million higher than the second quarter of last year compared to a
$100 million year-over-year increase in the first quarter. The
Company's proactive asset management efforts reduced inventory, as
measured in tonnes, by more than six percent on a year-over-year
and sequential basis. Improved price and mix of four percent
exceeded cost inflation and the net benefit to operating profit was
$81 million over the prior year, compared to a $55 million
year-over-year improvement to profit in the first quarter. The
company continued to implement its strategic footprint alignment
initiative focused on optimizing global assets. O-I has shifted
production from higher cost plants to more efficient facilities,
shutting a total of 15 furnaces since the program's inception in
2007. This includes one furnace that was closed in the second
quarter. As a result of these efforts, the Company reduced fixed
costs by $38 million in the second quarter and $71 million
year-to-date, compared to the prior year. Two additional plant
closures in Europe were recently announced and should be completed
in the second half of 2009. Financial highlights: Improved
financial flexibility with $600 million bond offering Total debt
was $3.642 billion at June 30, 2009, compared to $3.326 billion at
March 31, 2009. Debt increased primarily due to the net effect of
the Company issuing $600 million of senior notes and using $428
million of proceeds from this transaction to repay other debt. An
unfavorable foreign currency translation of $137 million also
increased debt. Compared to the first quarter, cash and cash
equivalents increased approximately $315 million, principally due
to positive free cash flow of $134 million, along with the
remaining net proceeds from the notes offering. At the end of the
second quarter, O-I had approximately $800 million available under
its global revolving credit facility that does not mature until
June 2012. Commenting on the Company's recent debt refinancing, Ed
White, senior vice president and chief financial officer, said, "We
were very pleased by the market's reception to our attractively
priced bond offering, which provided O-I with additional liquidity.
As a result of this transaction, we extended our debt maturity
schedule by using some of the proceeds to repay a substantial
portion of our bonds maturing in 2010. Furthermore, we repaid all
borrowings under our global revolving credit facility."
Asbestos-related cash payments during the second quarter of 2009
were $49.4 million, down from $63.4 million during the second
quarter of 2008. The deferred amount payable for previously settled
claims was approximately $32.2 million at the end of the second
quarter and comparable to the first quarter 2009 level. New
lawsuits and claims filed during the first half of 2009 were
approximately 30 percent lower than the same period last year. The
number of pending asbestos-related lawsuits and claims was
approximately 7,000 as of June 30, 2009, compared with
approximately 11,000 at year end 2008. Business outlook Commenting
on the Company's outlook for the third quarter 2009, Stroucken
said, "While market conditions have improved considerably in Europe
and North America, we expect the global recession will continue to
impact our business in all regions, especially South America. Third
quarter shipments should be down modestly from the prior year and
comparable with the second quarter. We expect additional benefits
from our ongoing strategic footprint initiative, and improved price
and mix should continue to offset cost inflation. Overall, we are
well positioned to drive improved financial performance and achieve
our strategic priorities as market conditions recover." Note 1: The
table below represents items that management considers not
representative of ongoing operations. $ Millions, except per share
amounts Three months ended June 30 -------------------------- 2009
2008 ---- ---- Earnings EPS Earnings EPS -------- --- -------- ---
Earnings from Continuing Operations Attributable to the Company
$149.3 $0.88 $227.5 $1.33 Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit Charges for restructuring and asset impairment 5.2
0.03 4.2 0.02 Charges for note repurchase premiums and write-off of
finance fees 5.2 0.03 Adjusted Net Earnings $159.7 $0.94 $231.7
$1.35 ====== ===== ====== ===== $ Millions, except per share
amounts Six months ended June 30 ------------------------ 2009 2008
---- ---- Earnings EPS Earnings EPS -------- --- -------- ---
Earnings from Continuing Operations Attributable to the Company
$194.4 $1.15 $401.5 $2.35 Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit Charges for restructuring and asset impairment
52.9 0.31 13.9 0.08 Charges for note repurchase premiums and
write-off of finance fees 5.2 0.03 Adjusted Net Earnings $252.5
$1.49 $415.4 $2.43 ====== ===== ====== ===== 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. The company routinely
posts all important information on its Web site -
http://www.o-i.com/. 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 July 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, July 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 July 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.
Copies of O-I news releases are available on the O-I Web site at
http://www.o-i.com/ or at http://www.prnewswire.com/. The Company's
second quarter 10-Q (and all future 10-Q and 10-K forms) will be
available in XBRL format on our Web site upon filing with the
Securities and Exchange Commission. OWENS-ILLINOIS, INC. Condensed
Consolidated Results of Operations (a) (Dollars in millions, except
per share amounts) Three months ended Six months ended June 30,
June 30, ------------------- ----------------- 2009 2008 2009 2008
---- ---- ---- ---- Net sales $1,807.0 $2,210.6 $3,326.0 $4,171.1
Manufacturing, shipping, and delivery expense (1,399.6) (1,685.4)
(2,621.8) (3,189.1) -------- -------- -------- -------- Gross
profit 407.4 525.2 704.2 982.0 Selling and administrative expense
(122.4) (130.8) (240.9) (258.6) Research, development, and
engineering expense (14.1) (17.9) (28.0) (33.9) Interest expense
(b) (57.9) (69.2) (106.0) (133.5) Interest income 6.5 10.0 15.0
18.7 Equity earnings 14.1 12.7 27.7 23.8 Royalties and net
technical assistance 3.5 5.0 6.3 9.8 Other income 0.9 1.4 2.5 3.2
Other expense (c) (26.0) (15.8) (78.8) (35.8) ----- ----- -----
----- Earnings from continuing operations before income taxes 212.0
320.6 302.0 575.7 Provision for income taxes (49.5) (75.9) (80.7)
(140.8) ----- ----- ----- ------ Earnings from continuing
operations 162.5 244.7 221.3 434.9 Gain on sale of discontinued
operations 3.8 7.9 --- --- Net earnings 162.5 248.5 221.3 442.8 Net
earnings attributable to noncontrolling interests (13.2) (17.2)
(26.9) (33.4) ----- ----- ----- ----- Net earnings attributable to
the Company $149.3 $231.3 $194.4 $409.4 ====== ====== ====== ======
Amounts attributable to the Company: Earnings from continuing
operations $149.3 $227.5 $194.4 $401.5 Gain on sale of discontinued
operations 3.8 7.9 ------ --- ------ --- Net earnings $149.3 $231.3
$194.4 $409.4 ====== ====== ====== ====== Basic earnings per share
(d): Earnings from continuing operations $0.89 $1.37 $1.16 $2.43
Gain on sale of discontinued operations 0.02 0.05 ----- ---- -----
---- Net earnings $0.89 $1.39 $1.16 $2.48 ===== ===== ===== =====
Weighted average shares outstanding (000s) 167,764 165,350 167,424
160,837 ======= ======= ======= ======= Diluted earnings per share
(d): Earnings from continuing operations $0.88 $1.33 $1.15 $2.35
Gain on sale of discontinued operations 0.02 0.05 ----- ---- -----
---- Net earnings $0.88 $1.35 $1.15 $2.40 ===== ===== ===== =====
Diluted average shares (000s) 170,493 170,550 169,481 170,611
======= ======= ======= ======= (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 applied retrospectively to 2008. (b)
Amount for the three and six months ended June 30, 2009, includes
charges of $5.2 million (pretax and 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 reduction in earnings per share of $0.03. (c) Amount for the
three months ended June 30, 2009, includes charges of $5.2 million
(pretax and after tax) for restructuring and asset impairment. The
effect of these charges is a reduction in earnings per share of
$0.03. Amount for the six months ended June 30, 2009, includes
charges of $55.6 million ($52.9 million after tax) for
restructuring and asset impairment. The effect of these charges is
a reduction in earnings per share of $0.31. Amount for the three
months ended June 30, 2008, includes charges of $8.2 million ($4.2
million after tax amount attributable to the Company) for
restructuring and asset impairment. The effect of these charges is
a reduction in earnings per share of $0.02. Amount for the six
months ended June 30, 2008, includes charges of $21.1 million
($13.9 million after tax amount attributable to the Company) for
restructuring and asset impairment. The effect of these charges is
a reduction in earnings per share of $0.08. (d) 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 and six months ended June 30, 2008 were reduced by $0.01 and
$0.03 per share, respectively. There was no impact on basic
earnings per share for the three and six months ended June 30,
2009. There was no impact on diluted earnings per share in any
period presented. OWENS-ILLINOIS, INC. Condensed Consolidated
Balance Sheets (Dollars in millions) June 30, Dec. 31, June 30,
2009 2008 2008 ---- ---- ---- Assets Current assets: Cash and cash
equivalents $677.2 $379.5 $366.0 Short-term investments, at cost
which approximates market 4.8 25.0 23.6 Receivables, less
allowances for losses and discounts 1,126.4 988.8 1,438.4
Inventories 1,039.0 999.5 1,234.7 Prepaid expenses 70.0 51.9 51.8
------- ------- ------- Total current assets 2,917.4 2,444.7
3,114.5 Investments and other assets: Equity investments 115.7
101.7 95.2 Repair parts inventories 139.9 132.5 154.0 Prepaid
pension 614.5 Deposits, receivables, and other assets 498.1 444.5
508.5 Goodwill 2,290.8 2,207.5 2,546.6 ------- ------- -------
Total other assets 3,044.5 2,886.2 3,918.8 Property, plant, and
equipment, at cost 6,206.3 5,983.1 6,811.6 Less accumulated
depreciation 3,554.0 3,337.5 3,807.9 ------- ------- ------- Net
property, plant, and equipment 2,652.3 2,645.6 3,003.7 -------
------- ------- Total assets $8,614.2 $7,976.5 $10,037.0 ========
======== ========= Liabilities and Share Owners' Equity Current
liabilities: Short-term loans and long-term debt due within one
year $357.8 $393.8 $528.6 Current portion of asbestos-related
liabilities 175.0 175.0 210.0 Accounts payable 802.5 838.2 1,002.1
Other liabilities 622.6 596.3 699.6 ------- ------- ------- Total
current liabilities 1,957.9 2,003.3 2,440.3 Long-term debt 3,284.4
2,940.3 3,260.8 Deferred taxes 154.2 77.6 130.7 Pension benefits
712.4 741.8 306.5 Nonpension postretirement benefits 239.0 239.7
279.1 Other liabilities 349.7 360.1 382.0 Asbestos-related
liabilities 236.1 320.3 141.9 Share owners' equity: The Company's
share owners' equity: Common stock 1.8 1.8 1.8 Capital in excess of
par value 2,927.6 2,913.3 2,898.3 Treasury stock, at cost (218.8)
(221.5) (223.5) Retained earnings (deficit) 162.0 (32.4) 118.7
Accumulated other comprehensive income (loss) (1,424.4) (1,620.6)
43.0 ------- ------- ------- Total share owners' equity of the
Company 1,448.2 1,040.6 2,838.3 Noncontrolling interests 232.3
252.8 257.4 ------- ------- ------- Total share owners' equity
1,680.5 1,293.4 3,095.7 Total liabilities and share owners' equity
$8,614.2 $7,976.5 $10,037.0 ======== ======== =========
OWENS-ILLINOIS, INC. Condensed Consolidated Cash Flows (Dollars in
millions) Three months Six months ended ended June 30, June 30,
------------ ---------- 2009 2008 2009 2008 ---- ---- ---- ----
Cash flows from operating activities: Net earnings $162.5 $248.5
$221.3 $442.8 Net earnings attributable to noncontrolling interests
(13.2) (17.2) (26.9) (33.4) Gain on sale of discontinued operations
(3.8) (7.9) Non-cash charges: Depreciation 93.8 115.6 182.2 229.2
Amortization of intangibles and other deferred items 5.0 6.7 9.3
14.3 Amortization of finance fees 1.6 2.1 4.0 4.0 Restructuring and
asset impairment 5.2 8.2 55.6 21.1 Other 24.3 33.0 67.6 52.1
Asbestos-related payments (49.4) (63.4) (84.2) (103.6) Cash paid
for restructuring activities (13.0) (12.5) (33.2) (16.6) Change in
non-current operating assets 13.5 3.0 11.1 2.2 Change in
non-current liabilities (36.4) (38.9) (67.7) (56.9) Change in
components of working capital 17.8 (60.0) (155.9) (275.1) ----
----- ------ ------ Cash provided by operating activities 211.7
221.3 183.2 272.2 Cash flows from investing activities: Additions
to property, plant, and equipment (77.5) (83.6) (124.1) (129.0)
Repayment from (advance to) equity affiliate 1.7 1.6 (13.3) Net
cash proceeds (payments) related to divestitures and asset sales
4.1 4.2 (16.6) --- ----- --- ----- Cash utilized in investing
activities (73.4) (81.9) (118.3) (158.9) Cash flows from financing
activities: Additions to long-term debt 795.5 327.6 1,070.4 636.8
Repayments of long-term debt (562.2) (531.8) (745.8) (754.4)
Increase (decrease) in short-term loans (47.9) (39.1) (65.5) 43.2
Net (payments) receipts for hedging activity 24.7 (12.9) 29.1
(46.8) Payment of finance fees (11.8) (11.8) Convertible preferred
stock dividends (5.4) Dividends paid to noncontrolling interests
(a) (38.4) (11.4) (55.4) (41.6) Issuance of common stock and other
0.3 4.1 4.3 13.9 --- --- --- ---- Cash provided by (utilized in)
financing activities 160.2 (263.5) 225.3 (154.3) Effect of exchange
rate fluctuations on cash 16.4 7.1 7.5 19.3 ---- --- --- ----
Increase (decrease) in cash 314.9 (117.0) 297.7 (21.7) Cash at
beginning of period 362.3 483.0 379.5 387.7 ----- ----- ----- -----
Cash at end of period $677.2 $366.0 $677.2 $366.0 ====== ======
====== ====== (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 applied retrospectively to 2008. OWENS-ILLINOIS,
INC. Consolidated Supplemental Financial Data (Dollars in millions)
Three months Six months ended ended June 30, June 30,
--------------- ---------------- Net sales: 2009 2008 2009 2008
---- ---- ---- ---- Europe $793.9 $1,045.7 $1,406.8 $1,934.6 North
America 560.5 606.3 1,054.7 1,137.2 South America 249.9 294.1 463.9
548.3 Asia Pacific 192.7 242.3 374.8 492.3 ----- ----- ----- -----
Reportable segment totals 1,797.0 2,188.4 3,300.2 4,112.4 Other
10.0 22.2 25.8 58.7 ---- ---- ---- ---- Net sales $1,807.0 $2,210.6
$3,326.0 $4,171.1 ======== ======== ======== ======== Three months
Six months ended ended June 30, June 30, ---------------
---------------- Segment Operating Profit (a): 2009 2008 2009 2008
---- ---- ---- ---- Europe $120.4 $195.8 $164.6 $343.4 North
America 103.1 68.1 165.8 123.5 South America 57.0 85.5 117.0 159.1
Asia Pacific 11.4 40.7 36.4 86.2 ---- ---- ---- ---- Reportable
segment totals (b) 291.9 390.1 483.8 712.2 Items excluded from
Segment Operating Profit: Retained corporate costs and other (23.3)
(2.1) (35.2) (0.6) Restructuring and asset impairment (5.2) (8.2)
(55.6) (21.1) Interest income 6.5 10.0 15.0 18.7 Interest expense
(57.9) (69.2) (106.0) (133.5) ----- ----- ------ ------ Earnings
from continuing operations before income taxes $212.0 $320.6 $302.0
$575.7 ====== ====== ====== ====== 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 June
30, 2009, excludes charges of $5.2 million for restructuring and
asset impairment. Segment Operating Profit for the six months ended
June 30, 2009, excludes charges of $55.6 million for restructuring
and asset impairment. Segment Operating Profit for the three months
ended June 30, 2008, excludes charges of $8.2 million for
restructuring and asset impairment. Segment Operating Profit for
the six months ended June 30, 2008, excludes charges of $21.1
million for restructuring and asset impairment.
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGODATASOURCE:
Owens-Illinois, Inc. CONTACT: Sasha Sekpeh, Investor Relations,
+1-567-336-2355; Lauren Dubilzig, Corp. Communications,
+1-567-336-1312, both of O-I Web Site: http://www.o-i.com/
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