PERRYSBURG, Ohio, April 27, 2011 /PRNewswire/ -- Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the first quarter ending March 31, 2011.
(Logo:
http://photos.prnewswire.com/prnh/20050412/CLTU028LOGO)
First Quarter Highlights
- Earnings: O-I reported first quarter 2011 earnings from
continuing operations attributable to the Company of $0.44 per share (diluted), compared to
$0.48 per share (diluted) in the
prior year. Adjusted net earnings (non-GAAP) were $0.47 per share, compared to $0.48 per share in the first quarter of 2010.
Flooding in Australia negatively
impacted first quarter 2011 earnings by $0.04 per share.
- Sales and Volume: Net revenue increased from the prior
year as recent acquisitions and improving market conditions drove a
7 percent increase in tonnes shipped. Volumes improved across all
regions.
- Operating Performance: Higher shipment and production
levels increased segment operating profit to $199 million in the first quarter of 2011,
compared to $193 million in the prior
year, despite additional costs including elevated cost
inflation.
First-quarter net sales were $1.719
billion in 2011, up from $1.546
billion in the prior year quarter primarily due to higher
sales volume and favorable foreign currency translation effects.
Net earnings from continuing operations attributable to the
Company in the first quarter of 2011 were $73 million, or $0.44 per share (diluted), compared with net
earnings from continuing operations in the prior year of
$82 million, or $0.48 per share (diluted). Exclusive of the items
not representative of ongoing operations listed in Note 1,
first-quarter 2011 adjusted net earnings were $79 million, or $0.47 per share (diluted), compared with adjusted
net earnings in the prior year first quarter of $82 million, or $0.48 per share (diluted).
Commenting on the Company's first quarter, Chairman and Chief
Executive Officer Al Stroucken said,
"Our shipments were up from prior year levels across all regions
and end-use categories. Higher volumes reflected last year's
acquisitions in South America and
China as well as improving
economic conditions. Stronger volumes boosted our production levels
and capacity utilization rates. However, the benefit of greater
shipments was offset by higher costs including elevated cost
inflation and interest expense on additional borrowings to fund
recent and future acquisitions. We are also investing in our sales
and marketing capabilities to drive future profitable growth."
Operational Highlights
O-I reported first-quarter 2011 segment operating profit of
$199 million, up from $193 million in 2010. While the combined effect
of price and product mix was essentially flat with the prior year,
global shipments (in tonnes) increased 7 percent. Acquisitions
completed in 2010 represented more than 5 percent of this volume
growth. The remaining increase was due to organic growth. First
quarter earnings benefited $52
million primarily due to improved capacity utilization and
footprint realignment efforts conducted in the prior year. However,
O-I incurred $49 million of cost
inflation driven by higher raw material and energy prices and
$9 million of costs related to
flooding in Australia.
Additionally, operating expense increased $12 million from the prior year to support sales
and marketing initiatives and the initial deployment of an SAP
information system in North
America.
Net interest expense increased $21
million from the prior year as a result of additional
borrowings to fund acquisitions.
Financial Highlights
The Company reported total debt of $4.363
billion and cash of $430
million at March 31, 2011. Net
debt was $3.933 billion, an increase
of $295 million from year-end 2010.
The increase in net debt was primarily due to a $158 million use of free cash flow to support
seasonally higher working capital levels as well as $110 million of foreign currency translation.
Available liquidity on March 31,
2011, was $728 million under
the Company's global revolving credit facility.
Asbestos-related cash payments during the first quarter of 2011
were $33 million, compared to
$34 million in the first quarter of
2010. New lawsuits and claims filed during the first three months
of 2011 were consistent with the same period last year. The number
of pending asbestos-related lawsuits and claims approximated 5,900
as of March 31, 2011, flat with
year-end 2010 levels.
Business Outlook
Commenting on the Company's outlook for the second quarter,
Stroucken said, "We expect higher shipment and production levels
compared to the prior year due to our recent acquisitions and
improving demand for glass packaging. While we anticipate elevated
cost inflation given high energy prices in Europe, an improving demand profile should
create a more receptive environment to pass along additional costs
over the course of 2011. We also expect our investments in
marketing and innovation to benefit future earnings. Overall, free
cash flow should improve to approximately $300 million in 2011."
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
|
|
|
|
2011
|
|
2010
|
|
|
Earnings
|
EPS
|
|
Earnings
|
EPS
|
|
Earnings from Continuing
Operations Attributable to the Company
|
|
$73
|
$0.44
|
|
$82
|
$0.48
|
|
Items that management considers
not representative of ongoing operations consistent with Segment
Operating Profit
|
|
|
|
|
|
|
|
Charges for
restructuring
|
|
6
|
0.03
|
|
|
|
|
Adjusted Net
Earnings
|
|
$79
|
$0.47
|
|
$82
|
$0.48
|
|
|
|
|
|
|
|
|
|
|
Company Profile
Owens-Illinois, Inc. (NYSE: OI)
is the world's largest glass container manufacturer and preferred
partner for many of the world's leading food and beverage brands.
With revenues of $6.6 billion in
2010, the Company is headquartered in Perrysburg, Ohio, USA, and employs more than
24,000 people at 80 plants in 21 countries. O-I delivers safe,
effective and sustainable glass packaging solutions to a growing
global marketplace. For more information, visit www.o-i.com.
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 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. The words "believe," "expect," "anticipate,"
"will," "could," "would," "should," "may," "plan," "estimate,"
"intend," "predict," "potential," "continue," and the negatives of
these words and other similar expressions generally identify
forward looking statements. 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
uncertainties related to the expropriation of the Company's
operations in Venezuela,
disruptions in capital markets, 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, including natural gas prices, (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 acquire businesses and expand plants,
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, (14) the
Company's ability to further develop its sales, marketing and
product development capabilities, and (15) the timing and
occurrence of events which are beyond the control of the Company,
including any expropriation of the Company's operations, floods and
other natural disasters, and events related to asbestos-related
claims. It is not possible to foresee or identify all such factors.
Any forward looking statements in this document 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
28, 2011
O-I CEO Al Stroucken and CFO
Ed White will conduct a conference
call to discuss the Company's latest results on Thursday, April 28, 2011, 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, www.o-i.com/investorrelations, in
the Presentations & Webcast section.
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 28. 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 90 days following
the call.
Copies of O-I news releases are available on the O-I Web site at
www.o-i.com or at www.prnewswire.com.
O-I's second-quarter 2011 earnings conference call is currently
scheduled for Thursday, July 28,
2011, 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,
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
1,719
|
|
$
1,546
|
|
Manufacturing, shipping, and
delivery expense
|
|
(1,386)
|
|
(1,247)
|
|
|
|
|
|
|
|
|
Gross profit
|
|
333
|
|
299
|
|
|
|
|
|
|
|
|
Selling and administrative
expense
|
|
(142)
|
|
(120)
|
|
Research, development, and
engineering expense
|
|
(16)
|
|
(14)
|
|
Interest expense
|
|
(76)
|
|
(56)
|
|
Interest income
|
|
3
|
|
4
|
|
Equity earnings
|
|
14
|
|
13
|
|
Royalties and net technical
assistance
|
|
5
|
|
4
|
|
Other income
|
|
2
|
|
1
|
|
Other expense (a)
|
|
(18)
|
|
(8)
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations before income taxes
|
|
105
|
|
123
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
(28)
|
|
(32)
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations
|
|
77
|
|
91
|
|
|
|
|
|
|
|
|
Earnings (loss) from
discontinued operations
|
|
(1)
|
|
3
|
|
|
|
|
|
|
|
|
Net earnings
|
|
76
|
|
94
|
|
|
|
|
|
|
|
|
Net earnings attributable to
noncontrolling interests
|
|
(4)
|
|
(9)
|
|
|
|
|
|
|
|
|
Net earnings attributable to the
Company
|
|
$
72
|
|
$
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to the
Company:
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$
73
|
|
$
82
|
|
Earnings (loss) from
discontinued operations
|
|
(1)
|
|
3
|
|
Net earnings
|
|
$
72
|
|
$
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share:
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$
0.44
|
|
$
0.49
|
|
Earnings from
discontinued operations
|
|
|
|
0.02
|
|
Net earnings
|
|
$
0.44
|
|
$
0.51
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (000s)
|
|
163,355
|
|
167,381
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$
0.44
|
|
$
0.48
|
|
Earnings from
discontinued operations
|
|
|
|
0.02
|
|
Net earnings
|
|
$
0.44
|
|
$
0.50
|
|
|
|
|
|
|
|
|
Diluted average shares (000s)
|
|
166,114
|
|
170,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amount for the three months
ended March 31, 2011, includes a charges of $8 million ($6 million
after tax amount attributable to the Company) for restructuring.
The effect of this charge is a reduction in earnings per
share of $0.03.
|
|
|
|
OWENS-ILLINOIS, INC.
|
|
Condensed
Consolidated Balance Sheets
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar.
31,
|
|
Dec.
31,
|
|
Mar.
31,
|
|
|
|
|
2011
|
|
2010
|
|
2010
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
430
|
|
$
640
|
|
$
496
|
|
Short-term investments,
at cost which
|
|
|
|
|
|
|
|
approximates market
|
|
|
|
|
|
1
|
|
Receivables, less
allowances for
|
|
|
|
|
|
|
|
losses and
discounts
|
|
1,223
|
|
1,075
|
|
1,029
|
|
Inventories
|
|
1,054
|
|
946
|
|
888
|
|
Prepaid
expenses
|
|
78
|
|
77
|
|
63
|
|
Assets of discontinued
operations
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
2,785
|
|
2,738
|
|
2,537
|
|
|
|
|
|
|
|
|
|
|
Investments and other
assets:
|
|
|
|
|
|
|
|
Equity
investments
|
|
301
|
|
299
|
|
116
|
|
Repair parts
inventories
|
|
154
|
|
147
|
|
128
|
|
Prepaid
pension
|
|
59
|
|
54
|
|
42
|
|
Deposits, receivables,
and other assets
|
|
634
|
|
588
|
|
502
|
|
Goodwill
|
|
2,900
|
|
2,821
|
|
2,347
|
|
Assets of discontinued
operations
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
4,048
|
|
3,909
|
|
3,169
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment,
at cost
|
|
7,213
|
|
7,016
|
|
6,445
|
|
Less accumulated
depreciation
|
|
4,070
|
|
3,909
|
|
3,779
|
|
|
|
|
|
|
|
|
|
|
Net property, plant, and
equipment
|
|
3,143
|
|
3,107
|
|
2,666
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
9,976
|
|
$
9,754
|
|
$
8,372
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Share Owners'
Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Short-term loans and
long-term debt
|
|
|
|
|
|
|
|
due within
one year
|
|
$
372
|
|
$
354
|
|
$
281
|
|
Current portion of
asbestos-related
|
|
|
|
|
|
|
|
liabilities
|
|
170
|
|
170
|
|
175
|
|
Accounts
payable
|
|
889
|
|
878
|
|
810
|
|
Other
liabilities
|
|
646
|
|
677
|
|
615
|
|
Liabilities of
discontinued operations
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
2,077
|
|
2,079
|
|
1,899
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
3,991
|
|
3,924
|
|
3,185
|
|
Deferred taxes
|
|
215
|
|
203
|
|
175
|
|
Pension benefits
|
|
576
|
|
576
|
|
553
|
|
Nonpension postretirement
benefits
|
|
260
|
|
259
|
|
268
|
|
Other liabilities
|
|
403
|
|
381
|
|
318
|
|
Asbestos-related
liabilities
|
|
273
|
|
306
|
|
276
|
|
Liabilities of discontinued
operations
|
|
|
|
|
|
11
|
|
Share owners' equity:
|
|
|
|
|
|
|
|
The Company's share
owners' equity:
|
|
|
|
|
|
|
|
Common
stock
|
|
2
|
|
2
|
|
2
|
|
Capital in excess
of par value
|
|
3,041
|
|
3,040
|
|
2,949
|
|
Treasury stock, at
cost
|
|
(411)
|
|
(412)
|
|
(360)
|
|
Retained
earnings
|
|
154
|
|
82
|
|
214
|
|
Accumulated other
comprehensive loss
|
|
(806)
|
|
(897)
|
|
(1,328)
|
|
|
|
|
|
|
|
|
|
|
Total share owners' equity of the Company
|
|
1,980
|
|
1,815
|
|
1,477
|
|
Noncontrolling
interests
|
|
201
|
|
211
|
|
210
|
|
|
|
|
|
|
|
|
|
|
Total
share owners' equity
|
|
2,181
|
|
2,026
|
|
1,687
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and share
owners' equity
|
|
$
9,976
|
|
$
9,754
|
|
$
8,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS, INC.
|
|
Condensed
Consolidated Cash Flows
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
March 31,
|
|
|
|
|
2011
|
|
2010
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
Net earnings
|
|
$
76
|
|
$
94
|
|
(Earnings) loss
from discontinued operations
|
|
1
|
|
(3)
|
|
Non-cash
charges:
|
|
|
|
|
|
Depreciation
|
|
101
|
|
89
|
|
Amortization
of intangibles and
|
|
|
|
|
|
other deferred items
|
|
5
|
|
6
|
|
Amortization
of finance fees and debt discount
|
|
8
|
|
3
|
|
Restructuring
|
|
8
|
|
|
|
Other
|
|
34
|
|
48
|
|
Asbestos-related
payments
|
|
(33)
|
|
(34)
|
|
Cash paid for
restructuring activities
|
|
(4)
|
|
(19)
|
|
Change in non-current
operating assets
|
|
(25)
|
|
(11)
|
|
Change in non-current
liabilities
|
|
(17)
|
|
(13)
|
|
Change in components of
working capital
|
|
(239)
|
|
(144)
|
|
Cash
provided by (utilized in) continuing operating
activities
|
|
(85)
|
|
16
|
|
Cash
provided by discontinued operating activities
|
|
|
|
8
|
|
Total cash
provided by (utilized in) operating activities
|
|
(85)
|
|
24
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
Additions to property,
plant, and equipment
|
|
(73)
|
|
(96)
|
|
Acquisitions, net of cash
acquired
|
|
6
|
|
(26)
|
|
Cash
utilized in investing activities
|
|
(67)
|
|
(122)
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
Additions to long-term
debt
|
|
5
|
|
|
|
Repayments of long-term
debt
|
|
(10)
|
|
(4)
|
|
Decrease in short-term
loans
|
|
(32)
|
|
(50)
|
|
Net receipts (payments)
for hedging activity
|
|
(12)
|
|
12
|
|
Dividends paid to
noncontrolling interests
|
|
(18)
|
|
(5)
|
|
Treasury shares
purchased
|
|
|
|
(144)
|
|
Issuance of common stock
and other
|
|
2
|
|
1
|
|
Cash
utilized in financing activities
|
|
(65)
|
|
(190)
|
|
Effect of exchange rate
fluctuations on cash
|
|
7
|
|
(3)
|
|
Decrease in cash
|
|
(210)
|
|
(291)
|
|
Cash at beginning of
period
|
|
640
|
|
812
|
|
Cash at end of period
|
|
430
|
|
521
|
|
Cash - discontinued
operations
|
|
|
|
25
|
|
Cash - continuing
operations
|
|
$
430
|
|
$
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS, INC.
|
|
Consolidated
Supplemental Financial Data
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
March 31,
|
|
Net sales:
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
Europe
|
|
$
698
|
|
$
668
|
|
North America
|
|
463
|
|
444
|
|
South America
|
|
269
|
|
175
|
|
Asia Pacific
|
|
262
|
|
250
|
|
|
|
|
|
|
|
|
Reportable segment
totals
|
|
1,692
|
|
1,537
|
|
|
|
|
|
|
|
|
Other
|
|
27
|
|
9
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
1,719
|
|
$
1,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Profit
(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
$
71
|
|
$
56
|
|
North America
|
|
59
|
|
63
|
|
South America
|
|
45
|
|
37
|
|
Asia Pacific
|
|
24
|
|
37
|
|
|
|
|
|
|
|
|
Reportable segment
totals
|
|
199
|
|
193
|
|
|
|
|
|
|
|
|
Items excluded from Segment
Operating Profit:
|
|
|
|
|
|
Retained corporate costs
and other
|
|
(13)
|
|
(18)
|
|
Restructuring
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
3
|
|
4
|
|
Interest expense
|
|
(76)
|
|
(56)
|
|
Earnings from continuing
operations before income taxes
|
|
$
105
|
|
$
123
|
|
|
|
|
|
|
|
|
|
The following notes relate to
Segment Operating Profit:
|
|
(a)
|
Segment Operating Profit
consists of consolidated earnings before interest income, interest
expense, and provision for income taxes and 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 Segment 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
Segment Operating Profit is earnings before income taxes. 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 from continuing operations before
income taxes is included in the tables above.
|
|
|
|
SOURCE Owens-Illinois, Inc.