PERRYSBURG, Ohio, Oct. 28 /PRNewswire-FirstCall/ -- Owens-Illinois,
Inc. (NYSE:OI), today reported financial results for the third
quarter ended September 30, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO)
Third-quarter highlights: -- Reported net earnings were $0.74 per
share (diluted) -- Adjusted net earnings (non-GAAP) were $0.95 per
share, the first year-over-year improvement in quarterly earnings
since the recession began to impact O-I's business in third quarter
2008 -- O-I's global glass shipments were down 7 percent, but down
5 percent excluding South America where volumes continued to lag
the other regions primarily due to the impact of the refillable
bottle market -- Benefits from the strategic footprint initiative,
productivity programs and cost deflation more than offset
unabsorbed fixed costs from continued temporary production
curtailments to reduce inventories -- Generated strong free cash
flow to fund ongoing investment in organic growth initiatives
Third-quarter net sales were $1.9 billion in 2009, down from $2.0
billion in the prior year. Improved price and mix were more than
offset by lower shipments and unfavorable foreign currency
translation effects. Earnings from continuing operations in the
third quarter of 2009 were $126.7 million, or $0.74 per share
(diluted), compared with $78.6 million, or $0.46 per share
(diluted), in the prior year. Exclusive of the items not
representative of ongoing operations, third-quarter 2009 adjusted
net earnings were $162.7 million, or $0.95 per share (diluted), up
from adjusted net earnings of $153.7 million, or $0.90 per share
(diluted), in the prior year third quarter. 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 third-quarter performance, Chairman and Chief Executive
Officer Al Stroucken said, "I am pleased with our third-quarter
results amid challenging economic conditions, underscoring our
ability to adapt to a rapidly changing marketplace. We posted
improved year-over-year earnings for the first time since the
recession began to impact our business in the third quarter of last
year. Furthermore, we generated significant free cash flow, which
improved our already strong financial position. Glass shipments in
most regions were down modestly from the prior year and now more
closely reflect consumer consumption patterns." Operational
highlights: Performing well in a challenging market O-I reported
third-quarter 2009 segment operating profit of $316.6 million, up
from $287.6 million in the prior year and $291.9 million in the
second quarter. Glass container shipments, in tonnes, declined 7
percent from third quarter 2008. Excluding South America, shipments
were down 5 percent. Lower volumes in that region largely reflect
the temporary trend of extending the useful life of refillable
bottles, which happens in times of economic contraction. However,
shipment trends in South America improved during the quarter. Total
Company shipments were essentially flat on a sequential basis, as
gradually improving market demand offset the typical seasonal
shipment decline between the second and third quarters. Unabsorbed
fixed costs, primarily due to temporary production curtailments,
were $61 million higher than the third quarter of last year. The
Company's proactive asset management efforts reduced inventory at
the end of the third quarter, as measured in tonnes, by more than 9
percent on a year-over-year basis. Net sales benefited by more than
4 percent from the prior year due to improved price and mix. Higher
operating profits reflected this price improvement, reduced
warehouse, delivery and production costs, and net deflation driven
by lower energy costs. The Company continued to implement its
strategic footprint alignment initiative, focused on optimizing
global assets. O-I has permanently ceased production or closed a
total of 18 furnaces since the program's inception in 2007,
including three furnaces during the third quarter. As a result of
these efforts, the Company reduced fixed costs by $34 million in
the third quarter and $104 million year-to-date, compared to the
prior year periods. Further, O-I is extending the strategic
footprint initiative to its South American region to serve
customers in a more cost-effective manner. During the third
quarter, O-I recorded a restructuring charge of $57.5 million
($36.0 million after tax amount attributable to O-I), principally
for these actions in South America. Financial highlights:
Significant free cash flow generation supports strong financial
position Total debt was $3.722 billion at September 30, 2009, up
slightly from debt of $3.642 billion at June 30, 2009, primarily
due to foreign currency translation. The Company generated $326.6
million of free cash flow during the third quarter. As a result,
cash and cash equivalents increased $339.9 million during the
quarter. Foreign currency exchange losses, related to the transfer
of cash to avoid increased exposure to the Venezuelan bolivar,
reduced O-I's net earnings by $10 million. In addition to
substantial cash-on-hand at the end of the third quarter, O-I had
approximately $760 million available under its global revolving
credit facility, which does not mature until June 2012.
Asbestos-related cash payments during the third quarter of 2009
were $38.2 million, up slightly from $36.7 million during the third
quarter of 2008. The deferred amount payable for previously settled
claims was approximately $33.2 million at the end of the third
quarter, up slightly from the second quarter. New lawsuits and
claims filed during the first nine months of 2009 were
approximately 23 percent lower than the same period last year. The
number of pending asbestos-related lawsuits and claims was
approximately 7,000 as of September 30, 2009, compared with
approximately 11,000 at year end 2008. Business outlook Commenting
on the Company's outlook for the fourth quarter 2009, Stroucken
said, "Typical seasonal volume trends and temporary production
curtailments to reduce inventories will likely lead to lower
earnings compared with the third quarter. Although we expect
modestly lower shipments, our segment operating profit should
exceed the prior year fourth quarter. However, on a year-over-year
basis, net earnings will be negatively impacted by several
non-operating items, such as higher corporate costs, taxes and net
interest expense. Overall, we remain well-positioned for growth and
expect our profitability to increase 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 September 30
------------------------------- 2009 2008 ---- ---- Earnings EPS
Earnings EPS -------- --- -------- --- Earnings Attributable to the
Company $126.7 $0.74 $78.6 $0.46 Items that management considers
not representative of ongoing operations consistent with Segment
Operating Profit Charges for restructuring and asset impairment
36.0 0.21 79.7 0.47 Net benefit related to tax legislation and
restructuring in Europe (4.6) (0.03) Adjusted Net Earnings $162.7
$0.95 $153.7 $0.90 ====== ===== ====== ===== $Millions, except
per-share amounts Nine months ended September 30
------------------------------ 2009 2008 ---- ---- Earnings EPS
Earnings EPS -------- --- -------- --- Earnings from Continuing
Operations Attributable to the Company $321.1 $1.89 $480.1 $2.81
Items that management considers not representative of ongoing
operations consistent with Segment Operating Profit Charges for
restructuring and asset impairment 88.9 0.52 93.6 0.56 Charges for
note repurchase premiums and write-off of finance fees 5.2 0.03 Net
benefit related to tax legislation and restructuring in Europe
(4.6) (0.03) Adjusted Net Earnings $415.2 $2.44 $569.1 $3.34 ======
===== ====== ===== 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 79 manufacturing
facilities in 21 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 October 29, 2009 O-I CEO Al Stroucken
and CFO Ed White will conduct a conference call to discuss the
Company's latest results on Thursday, October 29, 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 October 29. 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 90 days following the
call. O-I's fourth-quarter earnings conference call is currently
scheduled for Thursday, January 28, 2010, at 8:30 a.m., Eastern
Time. OWENS-ILLINOIS, INC. Condensed Consolidated Results of
Operations (a) (Dollars in millions, except per share amounts)
Three months ended Nine months ended September 30, September 30,
------------------- ------------------ 2009 2008 2009 2008 ----
---- ---- ---- Net sales $1,874.6 $2,008.6 $5,200.6 $6,179.7
Manufacturing, shipping, and delivery expense (1,425.9) (1,601.3)
(4,047.7) (4,790.4) -------- -------- -------- -------- Gross
profit 448.7 407.3 1,152.9 1,389.3 Selling and administrative
expense (128.2) (120.8) (369.1) (379.4) Research, development, and
engineering expense (14.3) (17.1) (42.3) (51.0) Interest expense
(b) (58.6) (66.3) (164.6) (199.8) Interest income 6.1 10.4 21.1
29.1 Equity earnings 11.9 12.9 39.6 36.7 Royalties and net
technical assistance 3.4 5.0 9.7 14.8 Other income 2.4 1.9 4.9 5.1
Other expense (c) (78.6) (94.5) (157.4) (130.3) ----- ----- ------
------ Earnings from continuing operations before income taxes
192.8 138.8 494.8 714.5 Provision for income taxes (d) (63.8)
(42.2) (144.5) (183.0) ----- ----- ------ ------ Earnings from
continuing operations 129.0 96.6 350.3 531.5 Gain on sale of
discontinued operations 7.9 ---- ----- ----- ----- Net earnings
129.0 96.6 350.3 539.4 Net earnings attributable to noncontrolling
interests (2.3) (18.0) (29.2) (51.4) ---- ----- ----- ----- Net
earnings attributable to the Company $126.7 $78.6 $321.1 $488.0
====== ===== ====== ====== Amounts attributable to the Company:
Earnings from continuing operations $126.7 $78.6 $321.1 $480.1 Gain
on sale of discontinued operations - 7.9 ------ ----- ------ ---
Net earnings $126.7 $78.6 $321.1 $488.0 ====== ===== ====== ======
Basic earnings per share(e): Earnings from continuing operations
$0.75 $0.47 $1.91 $2.89 Gain on sale of discontinued operations
0.05 ----- ----- ----- ---- Net earnings $0.75 $0.47 $1.91 $2.94
===== ===== ===== ===== Weighted average shares outstanding (000s)
167,877 165,462 167,577 162,390 ======= ======= ======= =======
Diluted earnings per share(e): Earnings from continuing operations
$0.74 $0.46 $1.89 $2.81 Gain on sale of discontinued operations
0.05 ----- ----- ----- ---- Net earnings $0.74 $0.46 $1.89 $2.86
===== ===== ===== ===== Diluted average shares (000s) 171,543
170,058 170,160 170,483 ======= ======= ======= ======= (a) The
Company adopted the provisions of a new accounting standard on
January 1, 2009, which changed the presentation of noncontrolling
interests in subsidiaries. The presentation requirements of the new
standard were also required to be applied retrospectively to 2008.
(b) Amount for the nine months ended September 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 September 30, 2009, includes charges of $57.5
million ($36.0 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 $0.21. Amount
for the nine months ended September 30, 2009, includes charges of
$113.1 million ($88.9 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 $0.52. Amount
for the three months ended September 30, 2008 includes charges of
$90.6 million ($79.7 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 $0.47. Amount
for the nine months ended September 30, 2008 includes charges of
$111.7 million ($93.6 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 $0.56. (d)
Amounts for the three and nine months ended September 30, 2008
include a net benefit of $6.2 million ($4.6 million after tax
amount attributable to the Company) related to tax legislation and
restructuring in Europe. The effect of this benefit is an increase
in earnings per share of $0.03. (e) The Company adopted the
provisions of a new accounting standard on January 1, 2009, which
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
nine months ended September 30, 2008 were reduced by $0.03 per
share. There was no impact on basic earnings per share for the
three and nine months ended September 30, 2009 or the three months
ended September 30, 2008. There was no impact on diluted earnings
per share in any period presented. OWENS-ILLINOIS, INC. Condensed
Consolidated Balance Sheets (Dollars in millions) Sept. 30, Dec.
31, Sept. 30, 2009 2008 2008 ---- ---- ---- Assets Current assets:
Cash and cash equivalents $1,017.1 $379.5 $410.5 Short-term
investments, at cost which approximates market 0.9 25.0 34.0
Receivables, less allowances for losses and discounts 1,146.6 988.8
1,194.1 Inventories 1,035.4 999.5 1,141.2 Prepaid expenses 45.5
51.9 57.3 Total current assets 3,245.5 2,444.7 2,837.1 Investments
and other assets: Equity investments 124.0 101.7 94.5 Repair parts
inventories 144.2 132.5 136.3 Prepaid pension 624.9 Deposits,
receivables, and other assets 513.9 444.5 462.4 Goodwill 2,382.3
2,207.5 2,333.3 Total other assets 3,164.4 2,886.2 3,651.4
Property, plant, and equipment, at cost 6,559.2 5,983.1 6,345.9
Less accumulated depreciation 3,849.3 3,337.5 3,597.0 -------
------- ------- Net property, plant, and equipment 2,709.9 2,645.6
2,748.9 ------- ------- ------- Total assets $9,119.8 $7,976.5
$9,237.4 ======== ======== ======== Liabilities and Share Owners'
Equity Current liabilities: Short-term loans and long-term debt due
within one year $377.6 $393.8 $496.4 Current portion of
asbestos-related liabilities 175.0 175.0 210.0 Accounts payable
816.1 838.2 901.5 Other liabilities 730.8 596.3 773.3 Total current
liabilities 2,099.5 2,003.3 2,381.2 Long-term debt 3,343.9 2,940.3
2,961.1 Deferred taxes 160.1 77.6 72.1 Pension benefits 706.9 741.8
273.1 Nonpension postretirement benefits 242.5 239.7 273.5 Other
liabilities 368.9 360.1 361.4 Asbestos-related liabilities 197.9
320.3 105.2 Share owners' equity: The Company's share owners'
equity: Common stock 1.8 1.8 1.8 Capital in excess of par value
2,935.2 2,913.3 2,905.0 Treasury stock, at cost (218.0) (221.5)
(222.8) Retained earnings (deficit) 288.7 (32.4) 197.3 Accumulated
other comprehensive income (loss) (1,250.5) (1,620.6) (320.6)
-------- -------- ------ Total share owners' equity of the Company
1,757.2 1,040.6 2,560.7 Noncontrolling interests 242.9 252.8 249.1
----- ----- ----- Total share owners' equity 2,000.1 1,293.4
2,809.8 Total liabilities and share owners' equity $9,119.8
$7,976.5 $9,237.4 ======== ======== ======== OWENS-ILLINOIS, INC.
Condensed Consolidated Cash Flows (Dollars in millions) Three
months ended Nine months ended September 30, September 30,
------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ----
Cash flows from operating activities: Net earnings $129.0 $96.6
$350.3 $539.4 Net earnings attributable to noncontrolling interests
(2.3) (18.0) (29.2) (51.4) Gain on sale of discontinued operations
- (7.9) Non-cash charges: Depreciation 92.1 110.1 274.3 339.3
Amortization of intangibles and other deferred items 8.7 7.2 18.0
21.5 Amortization of finance fees and debt discount 3.3 2.0 7.3 6.0
Restructuring and asset impairment 57.5 90.6 113.1 111.7 Other 28.4
12.0 96.0 64.1 Asbestos-related payments (38.2) (36.7) (122.4)
(140.3) Cash paid for restructuring activities (9.5) (11.4) (42.7)
(28.0) Change in non-current operating assets 2.0 2.3 13.1 4.5
Change in non-current liabilities (29.1) (16.9) (96.8) (73.8)
Change in components of working capital 154.3 70.9 (1.6) (204.2)
----- ---- ---- ------ Cash provided by operating activities 396.2
308.7 579.4 580.9 Cash flows from investing activities: Additions
to property, plant, and equipment (69.6) (109.5) (193.7) (238.5)
Repayment from (advance to) equity affiliate 5.2 1.6 (8.1)
Acquisitions, net of cash acquired (5.4) (5.4) Net cash proceeds
(payments) related to divestitures and asset sales 0.2 0.6 4.4
(16.0) --- --- --- ----- Cash utilized in investing activities
(74.8) (103.7) (193.1) (262.6) Cash flows from financing
activities: Additions to long-term debt 2.2 1,072.6 636.8
Repayments of long-term debt (4.2) (152.0) (750.0) (906.4) Increase
(decrease) in short-term loans 10.4 22.8 (55.1) 66.0 Net (payments)
receipts for hedging activity (11.2) (0.3) 17.9 (47.1) Payment of
finance fees (2.1) (13.9) Convertible preferred stock dividends
(5.4) Dividends paid to noncontrolling interests (a) (2.9) (4.5)
(58.3) (46.1) Issuance of common stock and other 1.8 0.6 6.1 14.5
--- --- --- ---- Cash provided by (utilized in) financing
activities (6.0) (133.4) 219.3 (287.7) Effect of exchange rate
fluctuations on cash 24.5 (27.1) 32.0 (7.8) ---- ----- ---- ----
Increase (decrease) in cash 339.9 44.5 637.6 22.8 Cash at beginning
of period 677.2 366.0 379.5 387.7 ----- ----- ----- ----- Cash at
end of period $1,017.1 $410.5 $1,017.1 $410.5 ======== ======
======== ====== (a) The Company adopted the provisions of a new
accounting standard on January 1, 2009, which changed the
presentation of noncontrolling interests in subsidiaries. The
presentation requirements of the new standard were also required to
be applied retrospectively to 2008. OWENS-ILLINOIS, INC.
Consolidated Supplemental Financial Data (Dollars in millions)
Three months ended Nine months ended September 30, September 30,
---------------- ---------------- Net sales: 2009 2008 2009 2008
---- ---- ---- ---- Europe $785.9 $869.7 $2,192.7 $2,804.3 North
America 538.5 580.6 1,593.2 1,717.8 South America 290.5 299.1 754.4
847.4 Asia Pacific 252.1 248.7 626.9 741.0 ----- ----- ----- -----
Reportable segment totals 1,867.0 1,998.1 5,167.2 6,110.5 Other 7.6
10.5 33.4 69.2 --- ---- ---- ---- Net sales $1,874.6 $2,008.6
$5,200.6 $6,179.7 ======== ======== ======== ======== Three months
ended Nine months ended September 30, September 30,
---------------- ----------------- Segment Operating Profit (a):
2009 2008 2009 2008 ---- ---- ---- ---- Europe $128.4 $114.8 $293.0
$458.2 North America 82.9 41.7 248.7 165.2 South America 63.6 92.4
180.6 251.5 Asia Pacific 41.7 38.7 78.1 124.9 ---- ---- ---- -----
Reportable segment totals (b) 316.6 287.6 800.4 999.8 Items
excluded from Segment Operating Profit: Retained corporate costs
and other (13.8) (2.3) (49.0) (2.9) Restructuring and asset
impairment (57.5) (90.6) (113.1) (111.7) Interest income 6.1 10.4
21.1 29.1 Interest expense (58.6) (66.3) (164.6) (199.8) -----
----- ------ ------ Earnings from continuing operations before
income taxes $192.8 $138.8 $494.8 $714.5 ====== ====== ======
====== 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 September 30, 2009, excludes charges of $57.5 million
for restructuring and asset impairment. Segment Operating Profit
for the nine months ended September 30, 2009, excludes charges of
$113.1 million for restructuring and asset impairment. Segment
Operating Profit for the three months ended September 30, 2008,
excludes charges of $90.6 million for restructuring and asset
impairment. Segment Operating Profit for the nine months ended
September 30, 2008, excludes charges of $111.7 million for
restructuring and asset impairment.
http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGODATASOURCE:
Owens-Illinois, Inc. CONTACT: O-I, Sasha Sekpeh, +1-567-336-2355 -
Investor Relations; O-I, Stephanie Johnston, +1-567-336-7199 -
Corporate Communications Web Site: http://www.o-i.com/
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