PERRYSBURG, Ohio, April 28 /PRNewswire-FirstCall/ --
Owens-Illinois, Inc. (NYSE: OI)
today reported financial results for the first quarter ended
March 31, 2010.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO
)
First-quarter highlights:
- Earnings: Reported net earnings were
$0.50 per share (diluted) in the
first quarter of 2010, up from $0.27
per share in the prior year. Adjusted net earnings (non-GAAP) also
were $0.50 per share, compared with
$0.55 per share in the first quarter
of 2009.
- Sales: Net sales increased more than 4
percent, primarily due to favorable currency translation.
- Price: Improved price and product mix
increased sales 1 percent on a year-over-year basis.
- Volume: Total shipments were consistent
with prior year as volumes improved in all regions but North America.
- Costs: Input costs were flat. Savings from
O-I's strategic footprint initiative offset higher unabsorbed
fixed costs from temporary production curtailments, which helped
reduce inventories by 19 percent from first quarter 2009. As
expected, non-operating costs, including corporate costs and
interest expense, increased from the prior year.
- Capital allocation: O-I acquired a controlling
interest in a one-plant operation in Argentina and repurchased 4.3 million
shares of Company stock.
First-quarter net sales were $1.6
billion in 2010, up from $1.5
billion in the prior year primarily due to favorable foreign
currency translation effects. Improved price and product mix was
more than offset by an unfavorable change in regional sales
mix.
Net earnings attributable to the Company in the first quarter of
2010 were $85.3 million, or
$0.50 per share (diluted), up from
$45.1 million, or $0.27 per share (diluted), in the prior year. As
there were no items management considers not representative of
ongoing operations in the first quarter of 2010, adjusted net
earnings also were $85.3 million, or
$0.50 per share (diluted). These
results compared with first quarter 2009 adjusted net 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 the charts
provided on the Company's Web site,
www.o-i.com/investorrelations.
Commenting on the Company's first-quarter performance, Chairman
and Chief Executive Officer Al
Stroucken said, "The first quarter marked a turn in our
business, ending nine consecutive quarters of unfavorable volume
trends since the beginning of the global recession. We performed
well in the quarter by raising our selling prices and improving the
cost profile of our operations as shipments remained in line with
the prior year. Consistent with our growth strategy, we acquired
Cristalerias Rosario to enter the fast growing and profitable
Argentinean market, which should further enhance our successful
South American operations."
Operational highlights: Operational improvements were offset
by higher non-operating costs
O-I reported first-quarter 2010 segment operating profit of
$198 million, up from $192 million in the prior year. Operating profit
benefited from a 1 percent increase in sales due to improved price
and product mix. Shipments were up mid-single digits in all
regions, except in North America
where reduced demand in the beer segment impacted volumes.
Consequently, global glass container shipments, in tonnes, were
consistent with prior year levels. While input costs were
essentially flat with first quarter 2009, production costs were
$27 million higher primarily due to
additional temporary production curtailments as the Company reduced
inventory, in tonnes, by 19 percent. Segment operating profits also
reflected the translation of O-I's Venezuelan operating results at
the parallel exchange rate, which reduced operating profits by
approximately $25 million and net
earnings by $0.09 per share. This
impact on net earnings included a $0.03 per share charge to re-measure net monetary
assets in Venezuela and resulted
from the devaluation of the parallel exchange rate during the first
quarter.
Since the 2007 introduction of the Company's strategic footprint
alignment initiative to improve global asset utilization, O-I has
permanently closed 22 furnaces, including one in North America during the first quarter. As a
result, the Company reduced fixed costs by $28 million in the first quarter of 2010 compared
to the prior year first quarter. Large-scale restructuring due to
the Company's current footprint initiative will be finished by
mid-2010, when the previously announced realignment activities in
North America are completed.
As expected, the Company incurred higher corporate costs and
interest expense, which more than offset improved year-over-year
segment operating profit.
Financial highlights: Financial flexibility enabled
acquisition and share repurchase
O-I reported total debt of $3.47
billion and cash of $521
million at March 31, 2010. Net
debt was $2.95 billion, up
$149 million from year-end 2009.
During the quarter, net debt increased as O-I repurchased 4.3
million shares of stock for $144
million and paid $26 million
toward a controlling interest in a glass company in Argentina. Furthermore, favorable foreign
currency translation of $82 million
offset a $72 million use of free cash
flow. As of March 31, 2010, O-I had
$766 million available under its
global revolving credit facility that does not mature until
June 2012.
Asbestos-related cash payments during the first quarter of 2010
were $34 million, down slightly from
$35 million during the first quarter
of 2009. The deferred amount payable for previously settled claims
was $31 million at the end of the
first quarter, down from $36 million
at year-end 2009. New lawsuits and claims filed during the first
three months of 2010 were approximately 40 percent lower than the
same period last year. The number of pending asbestos-related
lawsuits and claims was approximately 7,000 as of March 31, 2010, comparable with the level at year
end 2009.
Business outlook
Commenting on the Company's outlook for the second quarter of
2010, Stroucken said, "Higher overall prices, compared to the prior
year, are expected to offset modest cost inflation mostly due to
Venezuela. We anticipate improved
shipments over last year, primarily driven by the faster-growing
emerging markets and easier year-over-year volume comparisons.
Costs associated with temporary production curtailments should be
consistent with the prior year as market conditions improve, and we
complete our current North American restructuring program. Higher
corporate costs, interest expense and unfavorable Venezuelan
currency translation will continue, while earnings will further
benefit from our strategic footprint initiative. Overall, we are
positioned to deliver profitable growth as markets continue to
recover, and we execute on our long-term strategic plan."
Note 1:
The table below describes the items that management considers
not representative of ongoing operations.
|
|
$ Millions, except per-share
amounts
|
Three months ended
March 31
|
|
|
2010
|
2009
|
|
Earnings
|
EPS
|
Earnings
|
EPS
|
|
Net Earnings Attributable to the
Company
|
$85.3
|
$0.50
|
$45.1
|
$0.27
|
|
Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit
|
|
|
|
|
|
Charges for restructuring and asset
impairment
|
-
|
-
|
47.7
|
0.28
|
|
Adjusted Net Earnings
|
$85.3
|
$0.50
|
$92.8
|
$0.55
|
|
|
|
|
|
|
|
|
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
Latin 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 22,000 people with 78 plants in 22 countries. In 2009,
net sales were $7.1 billion. For more
information, visit www.o-i.com/investorrelations.
Regulation G
The information presented above regarding adjusted net earnings
relates to net earnings attributable to the Company exclusive of
items management considers not representative of ongoing operations
and 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. Further, the
information presented above regarding free cash flow does not
conform to GAAP. Management defines free cash flow as cash provided
by operating activities less capital spending (both as determined
in accordance with GAAP) and has included this non-GAAP information
to assist in understanding the comparability of cash flows.
Management uses this non-GAAP information principally for internal
reporting, forecasting and budgeting.
Management believes that 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 – www.o-i.com/investorrelations.
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 assume any obligation to update or
supplement any particular forward-looking statements contained in
this news release.
Conference Call Scheduled for April
29, 2010
O-I CEO Al Stroucken and CFO
Ed White will conduct a conference
call to discuss the Company's latest results on Thursday, April 29, 2010, 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 at www.o-i.com/investorrelations.
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 29. Ask for the
O-I conference call. A replay of the call will be available on the
O-I Web site, www.o-i.com/investorrelations, for one year following
the call.
O-I's second-quarter 2010 earnings conference call is currently
scheduled for Thursday, July 29,
2010, at 8:30 a.m., Eastern
Time.
OWENS-ILLINOIS,
INC.
|
|
Condensed
Consolidated Results of Operations
|
|
(Dollars in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
March
31,
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
1,582.5
|
|
$
1,519.0
|
|
Manufacturing, shipping, and delivery
expense
|
|
(1,271.7)
|
|
(1,222.2)
|
|
|
|
|
|
|
|
|
Gross profit
|
|
310.8
|
|
296.8
|
|
|
|
|
|
|
|
|
Selling and administrative
expense
|
|
(121.0)
|
|
(118.5)
|
|
Research, development, and engineering
expense
|
|
(13.9)
|
|
(13.9)
|
|
Interest expense
|
|
(55.6)
|
|
(48.1)
|
|
Interest income
|
|
4.4
|
|
8.5
|
|
Equity earnings
|
|
12.5
|
|
13.6
|
|
Royalties and net technical
assistance
|
|
3.8
|
|
2.8
|
|
Other income
|
|
1.1
|
|
1.6
|
|
Other expense (a)
|
|
(13.5)
|
|
(52.8)
|
|
|
|
|
|
|
|
|
Earnings before income
taxes
|
|
128.6
|
|
90.0
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
(34.2)
|
|
(31.2)
|
|
|
|
|
|
|
|
|
Net earnings
|
|
94.4
|
|
58.8
|
|
|
|
|
|
|
|
|
Net earnings attributable to
noncontrolling interests
|
|
(9.1)
|
|
(13.7)
|
|
|
|
|
|
|
|
|
Net earnings attributable to the
Company
|
|
$
85.3
|
|
$
45.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per
share
|
|
$
0.51
|
|
$
0.27
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
(000s)
|
|
167,381
|
|
167,080
|
|
|
|
|
|
|
|
|
Diluted net earnings per
share
|
|
$
0.50
|
|
$
0.27
|
|
|
|
|
|
|
|
|
Diluted average shares (000s)
|
|
170,671
|
|
168,469
|
|
|
|
|
|
|
|
|
(a)
|
Amount for the three months ended March 31, 2009
includes charges of $50.4 million ($47.7 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 $0.28.
|
|
|
|
|
|
|
|
OWENS-ILLINOIS,
INC.
|
|
Condensed
Consolidated Balance Sheets
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
Dec.
31,
|
|
March
31,
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
521.4
|
|
$
811.7
|
|
$
362.3
|
|
Short-term investments, at cost
which
|
|
|
|
|
|
|
|
approximates
market
|
|
0.6
|
|
0.9
|
|
15.9
|
|
Receivables, less allowances
for
|
|
|
|
|
|
|
|
losses and
discounts
|
|
1,048.0
|
|
1,004.2
|
|
945.5
|
|
Inventories
|
|
902.1
|
|
900.3
|
|
1,044.8
|
|
Prepaid expenses
|
|
64.6
|
|
79.6
|
|
48.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
2,536.7
|
|
2,796.7
|
|
2,416.9
|
|
|
|
|
|
|
|
|
|
|
Investments and other
assets:
|
|
|
|
|
|
|
|
Equity investments
|
|
116.3
|
|
114.3
|
|
105.3
|
|
Repair parts
inventories
|
|
131.5
|
|
125.1
|
|
134.5
|
|
Prepaid pension
|
|
41.6
|
|
46.3
|
|
|
|
Deposits, receivables, and
other assets
|
|
502.4
|
|
521.7
|
|
478.2
|
|
Goodwill
|
|
2,346.7
|
|
2,381.0
|
|
2,130.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other assets
|
|
3,138.5
|
|
3,188.4
|
|
2,848.3
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, at
cost
|
|
6,510.2
|
|
6,618.9
|
|
5,711.0
|
|
Less accumulated
depreciation
|
|
3,813.7
|
|
3,876.6
|
|
3,224.6
|
|
|
|
|
|
|
|
|
|
|
Net property, plant, and
equipment
|
|
2,696.5
|
|
2,742.3
|
|
2,486.4
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
8,371.7
|
|
$
8,727.4
|
|
$
7,751.6
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Share Owners'
Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Short-term loans and long-term
debt
|
|
|
|
|
|
|
|
due within one
year
|
|
$
283.1
|
|
$
352.0
|
|
$
353.6
|
|
Current portion of
asbestos-related
|
|
|
|
|
|
|
|
liabilities
|
|
175.0
|
|
175.0
|
|
175.0
|
|
Accounts payable
|
|
825.6
|
|
863.2
|
|
754.4
|
|
Other liabilities
|
|
614.9
|
|
644.1
|
|
554.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
1,898.6
|
|
2,034.3
|
|
1,837.1
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
3,184.9
|
|
3,257.5
|
|
2,972.0
|
|
Deferred taxes
|
|
175.1
|
|
186.3
|
|
138.6
|
|
Pension benefits
|
|
553.0
|
|
577.6
|
|
703.4
|
|
Nonpension postretirement
benefits
|
|
268.4
|
|
266.7
|
|
234.4
|
|
Other liabilities
|
|
328.9
|
|
358.5
|
|
324.4
|
|
Asbestos-related
liabilities
|
|
276.2
|
|
310.1
|
|
285.5
|
|
Share owners' equity:
|
|
|
|
|
|
|
|
The Company's share owners'
equity:
|
|
|
|
|
|
|
|
Common stock
|
|
1.8
|
|
1.8
|
|
1.8
|
|
Capital in excess of par
value
|
|
2,948.9
|
|
2,941.9
|
|
2,921.8
|
|
Treasury stock, at
cost
|
|
(360.4)
|
|
(217.1)
|
|
(219.9)
|
|
Retained
earnings
|
|
214.7
|
|
129.4
|
|
12.7
|
|
Accumulated other
comprehensive (loss)
|
|
(1,328.0)
|
|
(1,317.8)
|
|
(1,700.4)
|
|
|
|
|
|
|
|
|
|
|
Total
share owners' equity of the Company
|
|
1,477.0
|
|
1,538.2
|
|
1,016.0
|
|
Noncontrolling
interests
|
|
209.6
|
|
198.2
|
|
240.2
|
|
Total share
owners' equity
|
|
1,686.6
|
|
1,736.4
|
|
1,256.2
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and share owners'
equity
|
|
$
8,371.7
|
|
$
8,727.4
|
|
$
7,751.6
|
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS,
INC.
|
|
Condensed
Consolidated Cash Flows
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2010
|
|
2009
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
Net earnings
|
|
$
94.4
|
|
$
58.8
|
|
Net earnings attributable to
noncontrolling interests
|
|
(9.1)
|
|
(13.7)
|
|
Non-cash charges:
|
|
|
|
|
|
Depreciation
|
|
90.0
|
|
88.4
|
|
Amortization of
intangibles and
|
|
|
|
|
|
other deferred items
|
|
6.2
|
|
4.3
|
|
Amortization of
finance fees and debt discount
|
|
2.9
|
|
2.4
|
|
Restructuring and
asset impairment
|
|
|
|
50.4
|
|
Other
|
|
57.7
|
|
43.3
|
|
Asbestos-related
payments
|
|
(34.0)
|
|
(34.8)
|
|
Cash paid for restructuring
activities
|
|
(18.9)
|
|
(20.2)
|
|
Change in non-current operating
assets
|
|
(11.8)
|
|
(2.4)
|
|
Change in non-current
liabilities
|
|
(13.1)
|
|
(31.3)
|
|
Change in components of working
capital
|
|
(139.8)
|
|
(173.7)
|
|
|
|
|
|
|
|
|
Cash provided by
(utilized in) operating activities
|
|
24.5
|
|
(28.5)
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
Additions to property, plant,
and equipment
|
|
(96.8)
|
|
(46.6)
|
|
Acquisitions, net of cash
acquired
|
|
(25.8)
|
|
|
|
Repayment from (advance to)
equity affiliate
|
|
|
|
1.6
|
|
Change in short-term
investments
|
|
0.3
|
|
|
|
Net cash proceeds related to
|
|
|
|
|
|
divestitures and asset
sales
|
|
0.2
|
|
0.1
|
|
Cash utilized in
investing activities
|
|
(122.1)
|
|
(44.9)
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
Additions to long-term
debt
|
|
|
|
274.9
|
|
Repayments of long-term
debt
|
|
(4.2)
|
|
(183.6)
|
|
Decrease in short-term
loans
|
|
(49.3)
|
|
(17.6)
|
|
Net receipts for hedging
activity
|
|
12.0
|
|
4.4
|
|
Dividends paid to
noncontrolling interests
|
|
(5.8)
|
|
(17.0)
|
|
Treasury shares
purchased
|
|
(144.2)
|
|
|
|
Issuance of common stock and
other
|
|
2.2
|
|
4.0
|
|
Cash provided by
(utilized in) financing activities
|
|
(189.3)
|
|
65.1
|
|
Effect of exchange rate fluctuations
on cash
|
|
(3.4)
|
|
(8.9)
|
|
Decrease in cash
|
|
(290.3)
|
|
(17.2)
|
|
Cash at beginning of period
|
|
811.7
|
|
379.5
|
|
Cash at end of period
|
|
$
521.4
|
|
$
362.3
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS,
INC.
|
|
Consolidated Supplemental
Financial Data
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Three months
ended
March
31,
|
|
|
|
|
|
|
|
Net sales:
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Europe
|
$
668.1
|
|
$
612.9
|
|
North America
|
443.7
|
|
494.3
|
|
South America
|
210.9
|
|
214.0
|
|
Asia Pacific
|
250.5
|
|
182.0
|
|
|
|
|
|
|
|
Reportable segment totals
|
1,573.2
|
|
1,503.2
|
|
|
|
|
|
|
|
Other
|
9.3
|
|
15.8
|
|
|
|
|
|
|
|
Net sales
|
$
1,582.5
|
|
$
1,519.0
|
|
|
|
|
|
|
|
|
|
Three months
ended
March
31,
|
|
|
|
|
|
|
|
Segment Operating Profit
(a):
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Europe
|
$
56.4
|
|
$
44.2
|
|
North America
|
63.3
|
|
62.7
|
|
South America
|
41.7
|
|
60.0
|
|
Asia Pacific
|
36.8
|
|
25.0
|
|
|
|
|
|
|
|
Reportable segment totals
(b)
|
198.2
|
|
191.9
|
|
|
|
|
|
|
|
Items excluded from Segment Operating
Profit:
|
|
|
|
|
Retained corporate costs and
other
|
(18.4)
|
|
(11.9)
|
|
Restructuring and asset
impairment
|
|
|
(50.4)
|
|
|
|
|
|
|
|
Interest income
|
4.4
|
|
8.5
|
|
Interest expense
|
(55.6)
|
|
(48.1)
|
|
Earnings before income
taxes
|
$
128.6
|
|
$
90.0
|
|
|
|
|
|
|
The following notes relate to Segment Operating
Profit:
(a) Operating Profit
consists of consolidated earnings 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 net
sales and selected cash flow information, to evaluate performance
and to allocate resources.
A reconciliation from Segment
Operating Profit to earnings 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.
|
|
|
|
|
|
|
SOURCE Owens-Illinois, Inc.