Sales and earnings continue to grow PERRYSBURG, Ohio, April 30
/PRNewswire-FirstCall/ -- Owens-Illinois, Inc. (NYSE:OI) today
reported financial results for the first quarter ending March 31,
2008. First Quarter Net Sales from Continuing Operations Increase
16% The Company reported net sales of $1.961 billion for the first
quarter of 2008, compared with $1.684 billion a year ago, an
increase of $277 million. Favorable currency translation
contributed $187 million while improved price and product sales mix
added $119 million to the quarterly sales increase. These two
factors more than outweighed the $49 million decrease from fewer
tons sold. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO ) On July
31, 2007 the Company sold its Plastics Packaging business. In
accordance with generally accepted accounting principles, prior
year amounts related to that business have been reclassified and
reported as discontinued operations. First Quarter Earnings from
Continuing Operations Triples The Company's earnings from
continuing operations in the first quarter of 2008 increased to
$174.0 million, compared with $55.3 million a year ago. Earnings
for the quarter included an after tax charge of $9.7 million for
restructuring that management considers not representative of
ongoing operations. A description of this item is shown below in
Note 1. Exclusive of the restructuring charge, 2008 first quarter
earnings were $183.7 million, compared with $55.3 million in the
same quarter last year. The increase in earnings was driven
primarily by an improvement in price and product sales mix. This
improvement was partially offset by higher manufacturing input
costs for energy and raw materials, higher costs related to
transportation, and reduced sales volume. Lower net interest
expense and a lower worldwide effective tax rate also contributed
to the earnings improvement. First Quarter EPS from Continuing
Operations more than Triples The Company earned $1.02 per share
(diluted) from continuing operations in the first quarter of 2008,
compared to $0.31 per share for the first quarter of 2007.
Exclusive of the restructuring charge (see Note 1), earnings per
share increased to $1.08 (diluted) in the first quarter of 2008
from $0.31 (diluted) in the same quarter last year. A description
of the item 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 the tables accompanying this
release and in charts on the Company's Web site
(http://www.o-i.com/ ). "As expected, our performance in the first
quarter continued to build on the solid foundation we've
established over the past year," said Al Stroucken, Chairman and
Chief Executive Officer. "Our results reflect a more robust process
for capturing manufacturing efficiencies, operating improvements
and a more disciplined strategy that favors price over volume. We
continue on our mission to build a stronger, leaner and more
flexible business, positioned for further growth." First Quarter
Free Cash Flow Improves by $48 Million The Company generated cash
of $20.7 million from continuing operating activities in the first
quarter of 2008. This compares with a cash use of $40.2 million in
the same quarter of 2007. Free Cash Flow (defined as cash provided
by continuing operating activities less capital spending for
continuing operations) was a use of $24.7 million in the first
quarter of 2008, compared with a use of $72.8 million in the first
quarter of 2007, an improvement of $48.1 million. The reduction in
cash usage resulted primarily from improved earnings, partially
offset by a larger seasonal increase in working capital and
moderately higher capital spending compared with the prior year
quarter. At current exchange rates, management expects that the
Company will generate approximately $500 million Free Cash Flow in
2008. During the first quarter of 2008, working capital was a
$216.8 million use of cash, compared with a use of $172.5 million
during the same period in 2007. The Company reported $45.4 million
in capital expenditures for continuing operations in the first
quarter of 2008, an increase of $12.8 million compared with the
same quarter last year. For the full year, the Company expects
maintenance and restructuring capital expenditures for the current
manufacturing footprint to be in the range of 80% to 85% of
expected depreciation and amortization expense for the year. Total
Debt Balance of $4.0 Billion As of March 31, 2008, the Company's
total debt balance was $4.028 billion, compared with $5.654 billion
as of March 31, 2007 and $3.714 billion as of December 31, 2007.
The $314 million increase in debt during the first quarter of 2008
includes approximately $144 million for the effects of foreign
currency translation and fair value adjustments of interest rate
swaps. At the end of the first quarter of 2008, the Company had
more than $725 million of available capacity under its secured
revolving credit facility. Effective Tax Rate Decreases The
Company's reported tax rate for the first quarter of 2008 was 25.4%
as compared with 36.6% in the prior year quarter. The reduction is
principally due to: (1) a change in mix of earnings to
jurisdictions where the Company is subject to lower effective
rates, and (2) the effect of higher earnings and lower interest
expense in the U.S., where the Company has recognized a valuation
allowance on net deferred tax assets. Based on the current earnings
mix projection for 2008, the Company expects that the full-year
effective tax rate will be slightly below the 24.4% effective tax
rate for 2007. Asbestos-Related Payments Down Slightly
Asbestos-related cash payments during the first quarter of 2008
were $40.2 million, down slightly from $41.0 million during the
first quarter of 2007. The deferred amount payable for previously
settled claims was down 6% from year end 2007 to a balance of $31.6
million at the end of the first quarter. New claims filed during
the first quarter of 2008 were approximately 32% lower than the
prior year quarter. The number of pending asbestos-related lawsuits
and claims was approximately 14,000 as of March 31, 2008, unchanged
from December 31, 2007. Outlook for 2008 "With rising energy and
other input costs, the balance of 2008 will be a challenge," said
Stroucken. "But I remain confident in the capabilities and
dedication of O-I employees to ensure that the strategies we've put
into place will deliver solid results. Going forward, we will
continue to identify opportunities to expand our footprint in
attractive geographies and to work with our customers to develop
innovative glass packaging that will help distinguish their brands
in the marketplace." Note 1: The table below represents items in
the first quarter of 2008 and 2007 that management considers not
representative of ongoing operations. $ Millions, except per share
amounts Three months ended March 31, 2008 2007 Earnings EPS
Earnings EPS Earnings from continuing operations $174.0 $1.02 $55.3
$0.31 Items that management considers not representative of ongoing
operations consistent with Segment Operating Profit Charges for
restructuring and asset impairment 9.7 0.06 Earnings from
continuing operations exclusive of above items $183.7 $1.08 $55.3
$0.31 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. 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 24,000 people with 83 manufacturing
facilities in 22 countries. In 2007, net sales were $7.6 billion.
For more information, visit 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 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,
without the loss of customers or sales volume, (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 May 1st O-I CEO Al Stroucken and CFO
Ed White will conduct a conference call to discuss the Company's
latest results on Thursday, May 1, 2008, at 8:30 a.m., Eastern
Time. A live Webcast of the conference call will be available on
the O-I Web site (http://www.o-i.com/ ). 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 May 1st.
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. Additional Information Additional information
regarding first quarter sales, Segment Operating Profit and EPS
comparisons to prior year is available on the O-I Web site,
http://www.o-i.com/ , in the Investor Relations section under
"Annual Reports and Presentations." OWENS-ILLINOIS, INC. Condensed
Consolidated Results of Operations (a) (Dollars in millions, except
per share amounts) Three months ended March 31, 2008 2007 Net sales
$1,960.5 $1,684.0 Manufacturing, shipping, and delivery (1,503.7)
(1,356.2) Gross profit 456.8 327.8 Selling and administrative
expense (127.8) (127.2) Research, development, and engineering
expense (16.0) (14.7) Interest expense (64.3) (81.0) Interest
income 8.7 3.4 Equity earnings 11.1 5.1 Royalties and net technical
assistance 4.8 4.9 Other income 1.8 3.6 Other expense (b) (20.0)
(16.5) Earnings from continuing operations before items below 255.1
105.4 Provision for income taxes (64.9) (38.6) Minority share
owners' interests in earnings of subsidiaries (16.2) (11.5)
Earnings from continuing operations 174.0 55.3 Net loss of
discontinued operations (2.1) Gain on sale of discontinued
operations 4.1 Net earnings $178.1 $53.2 Less convertible preferred
stock dividends (5.4) (5.4) Available to common share owners $172.7
$47.8 Basic net earnings per share of common stock: Earnings from
continuing operations $1.08 $0.32 Net loss of discontinued
operations (0.01) Gain on sale of discontinued operations 0.03 Net
earnings $1.11 $0.31 Weighted average shares outstanding (000s)
156,324 152,936 Diluted net earnings per share of common stock:
Earnings from continuing operations $1.02 $0.31 Net loss of
discontinued operations (0.01) Gain on sale of discontinued
operations 0.02 Net earnings $1.04 $0.30 Diluted average shares
(000s) (c) 170,517 156,993 (a) Amounts related to the Company's
plastics packaging business have been reclassified to discontinued
operations following the June 11, 2007 announcement of an agreement
to sell the business. The sale was completed on July 31, 2007. (b)
Amount for the three months ended March 31, 2008 includes charges
of $12.9 million ($9.7 million after tax) for restructuring and
asset impairment. The effect of these charges is a reduction in
earnings per share of $0.06. (c) 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 the
period. Accordingly, dividends were not deducted from earnings in
calculating diluted earnings per share for the period.
OWENS-ILLINOIS, INC. Condensed Consolidated Balance Sheets (Dollars
in millions) March 31, Dec. 31, March 31, 2008 2007 2007 Assets
Current assets: Cash, including time deposits $483.0 $387.7 $293.7
Short-term investments, at cost which approximates market 51.7 59.8
49.8 Receivables, less allowances for losses and discounts 1,320.6
1,185.6 1,130.9 Inventories 1,222.4 1,020.8 1,072.5 Prepaid
expenses 37.1 40.7 34.7 Assets of discontinued operations 122.7
Total current assets 3,114.8 2,694.6 2,704.3 Investments and other
assets: Equity investments 87.4 81.0 92.5 Repair parts inventories
157.0 155.8 145.1 Prepaid pension 591.4 566.4 505.9 Deposits,
receivables, and other assets 489.4 448.7 459.3 Goodwill 2,522.2
2,428.1 2,276.0 Assets of discontinued operations 582.2 Total other
assets 3,847.4 3,680.0 4,061.0 Property, plant, and equipment, at
cost 6,707.0 6,423.1 5,881.4 Less accumulated depreciation 3,711.8
3,473.1 3,047.3 Net property, plant, and equipment 2,995.2 2,950.0
2,834.1 Total assets $9,957.4 $9,324.6 $9,599.4 Liabilities and
Share Owners' Equity Current liabilities: Short-term loans and
long-term debt due within one year $835.1 $700.9 $550.4 Current
portion of asbestos- related liabilities 210.0 210.0 149.0 Accounts
payable 978.5 957.5 842.9 Other liabilities 656.9 661.1 549.7
Liabilities of discontinued operations 75.0 Total current
liabilities 2,680.5 2,529.5 2,167.0 Liabilities of discontinued
operations 8.2 Long-term debt 3,192.5 3,013.5 5,103.4 Deferred
taxes 128.8 109.4 122.8 Pension benefits 314.4 313.7 340.4
Nonpension postretirement benefits 279.6 287.0 289.9 Other
liabilities 409.1 386.9 370.8 Asbestos-related liabilities 205.3
245.5 497.7 Minority share owners' interests 248.4 251.7 209.8
Share owners' equity: Convertible preferred stock (a) 452.5 452.5
Common stock 1.8 1.7 1.7 Capital in excess of par value 2,887.7
2,420.0 2,340.1 Treasury stock, at cost (224.0) (224.6) (226.9)
Retained deficit (112.6) (285.3) (1,556.6) Accumulated other
comprehensive loss (54.1) (176.9) (521.4) Total share owners'
equity 2,498.8 2,187.4 489.4 Total liabilities and share owners'
equity $9,957.4 $9,324.6 $9,599.4 (a) On February 29, 2008, the
Company announced that all outstanding shares of convertible
preferred stock would be redeemed on March 31, 2008, if not
converted by holders prior to that date. All conversions and
redemptions were completed by March 31 through the issuance of
8,584,479 shares of common stock. OWENS-ILLINOIS, INC. Condensed
Consolidated Cash Flows (Dollars in millions) Three months ended
March 31, 2008 2007 Cash flows from operating activities: Net
earnings $178.1 $53.2 Net loss of discontinued operations - 2.1
Gain on sale of discontinued operations (4.1) Non-cash charges:
Depreciation 113.6 100.1 Amortization of intangibles and other
deferred items 7.6 5.4 Amortization of finance fees 1.9 1.9
Restructuring and asset impairment 12.9 Other (11.1) 24.2
Asbestos-related payments (40.2) (41.0) Change in non-current
operating assets (0.8) 9.2 Change in non-current liabilities (20.4)
(22.8) Change in components of working capital (216.8) (172.5) Cash
provided by (utilized in) continuing operating activities 20.7
(40.2) Cash utilized in discontinued operating activities (3.9)
Cash flows from investing activities: Additions to property, plant,
and equipment - continuing (45.4) (32.6) Additions to property,
plant, and equipment - discontinued (8.8) Acquisitions, net of cash
acquired (6.3) Advance to equity affiliate (15.0) Net cash proceeds
(payments) related to divestitures and asset sales (16.6) 1.6 Cash
utilized in investing activities (77.0) (46.1) Cash flows from
financing activities: Additions to long-term debt 309.2 401.7
Repayments of long-term debt (222.6) (63.3) Increase (decrease) in
short-term loans 82.3 (174.2) Net payments for hedging activity
(33.9) (1.6) Payment of finance fees (6.3) Convertible preferred
stock dividends (5.4) (5.4) Issuance of common stock and other 9.8
6.3 Cash provided by financing activities 139.4 157.2 Effect of
exchange rate fluctuations on cash 12.2 4.0 Increase in cash 95.3
71.0 Cash at beginning of period 387.7 222.7 Cash at end of period
$483.0 $293.7 OWENS-ILLINOIS, INC. Consolidated Supplemental
Financial Data (Dollars in millions) Selected Segment Information
(a) Three Months Ended March 31, Segment Operating Net Sales Profit
(b) 2008 2007 2008 2007 Europe $888.9 $728.4 $147.6 $74.8 North
America 530.9 523.4 55.5 62.5 South America 254.2 203.2 73.6 48.0
Asia Pacific 250.0 212.5 45.4 24.7 Reportable segment totals
1,924.0 1,667.5 322.1 210.0 Retained corporate costs and other (c)
36.5 16.5 1.5 (27.0) Consolidated totals (d) $1,960.5 $1,684.0
323.6 183.0 Restructuring and asset impairment (12.9) Interest
income 8.7 3.4 Interest expense (64.3) (81.0) Provision for income
taxes (64.9) (38.6) Minority share owners' interests in earnings of
subsidiaries (16.2) (11.5) Earnings from continuing operations
$174.0 $55.3 The following notes relate to Segment Operating
Profit: (a) Amounts related to the Company's plastics packaging
business have been reclassified to discontinued operations
following the June 11, 2007 announcement of an agreement to sell
the business. The sale was completed on July 31, 2007. (b)
Operating Profit consists of consolidated earnings from continuing
operations before interest income, interest expense, provision for
income taxes and minority share owners' interests in earnings of
subsidiaries. Segment Operating Profit excludes amounts related to
certain items that management considers not representative of
ongoing operations. The Company presents 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 Consolidated Operating Profit to net
earnings is included in the tables above. (c) Beginning in 2008,
the Company revised its method of allocating corporate expenses.
The Company decreased slightly the percentage allocation based on
sales and significantly expanded the number of functions included
in the allocation based on cost of services. It is not practicable
to quantify the net effect of these changes on periods prior to
2008. However, the effect for the first quarter of 2008 was to
reduce the amount of retained corporate costs by approximately $8
million. (d) Segment Operating Profit for the three months ended
March 31, 2008 excludes charges of $12.9 million ($9.7 million
after tax) for restructuring and asset impairment.
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO
http://photoarchive.ap.org/ DATASOURCE: Owens-Illinois, Inc.
CONTACT: Investor Relations, Sasha Sekpeh, +1-567-336-2355; or
Corp. Communications, Lauren Dubilzig, +1-567-336-1312, both of
Owens-Illinois, Inc. Web site: http://www.o-i.com/
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