PERRYSBURG, Ohio, July 27, 2011 /PRNewswire/ -- Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the second quarter ending June 30, 2011.
(Logo: http://photos.prnewswire.com/prnh/20050412/CLTU028LOGO
)
Summary
- Earnings: O-I reported second quarter 2011 earnings from
continuing operations attributable to the Company of $0.42 per share (diluted), compared to
$0.79 per share (diluted) in the
prior year. Adjusted net earnings (non-GAAP) were $0.59 per share, compared to $0.84 per share in the second quarter of 2010,
and were in line with O-I's updated business outlook provided on
June 15, 2011.
- Sales and Volume: Net revenue increased from the prior
year as recent acquisitions and improving market conditions drove a
more than 6 percent increase in tonnes shipped. Volumes improved
across all key end-use categories. Sales also benefited from
favorable foreign currency translation.
- Operating Performance: Second quarter segment operating
profit was $225 million, compared to
$271 million in the prior year. The
benefit of higher sales and shipment levels was more than offset by
significant cost inflation and higher manufacturing costs, notably
production and supply chain issues in North America. Furthermore, challenging market
conditions in Australia and
New Zealand required lower
production levels. Remediation efforts are underway to address the
challenges in both regions.
- Free Cash Flow: O-I generated $97
million of free cash flow in the second quarter of 2011. O-I
is adjusting down its previous 2011 free cash flow target of
$300 million given potential
restructuring costs in Australia,
the need to rebuild inventory levels in North America to avoid future supply chain
issues, and capital investments to expand capacity in South America. O-I now expects full year 2011
free cash flow of between $200 and $250
million.
- Business Outlook: O-I expects third quarter 2011
adjusted earnings per share will improve from second quarter
results, but will likely lag prior year third quarter adjusted
earnings.
Second quarter net sales were $1.959
billion in 2011, up from $1.670
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 second quarter of 2011 were $71 million, or $0.42 per share (diluted), compared with net
earnings from continuing operations in the prior year of
$132 million, or $0.79 per share (diluted). Exclusive of the items
not representative of ongoing operations listed in Note 1, second
quarter 2011 adjusted net earnings were $98
million, or $0.59 per share
(diluted), compared with adjusted net earnings in the prior year
second quarter of $140 million, or
$0.84 per share (diluted).
Commenting on the Company's second quarter, Chairman and Chief
Executive Officer Al Stroucken said,
"Despite higher sales across all end-use categories, our operating
performance this quarter was clearly unacceptable. During the past
three years, we have realigned our manufacturing footprint to
improve production efficiency, and we have realized significant
fixed cost savings as a result of these actions. However, we didn't
achieve our typical high standards for manufacturing excellence in
North America during the second
quarter. In addition, we faced challenging market demand in
Australia and New Zealand, which contributed to lower
production levels in Asia Pacific.
We are responding with urgency and taking the necessary actions to
address these issues, meet customer needs and maximize O-I's
long-term earnings power."
Operational Highlights
O-I reported second quarter 2011 segment operating profit of
$225 million, down from $271 million in 2010. Significantly higher
manufacturing expense more than offset the benefit from higher
shipment levels and favorable foreign currency translation. The
year-over-year change in segment operating profit is summarized as
follows:
|
|
|
Segment
Operating Profit
|
|
|
|
($millions)
|
|
|
|
|
|
|
Second Quarter
2010
|
$271
|
|
|
|
|
|
|
Currency
translation
|
13
|
|
|
Sales volume
|
26
|
|
|
Price and product
mix
|
(3)
|
|
|
Manufacturing and delivery
costs
|
(78)
|
*see Note A below
|
|
Operating expenses and
other
|
(4)
|
|
|
Net Change
|
(46)
|
|
|
|
|
|
|
Second Quarter
2011
|
$225
|
|
|
|
|
|
|
*Note A
|
|
|
|
Cost inflation
|
($60)
|
|
|
North American production
issues
|
(26)
|
|
|
Australia/New Zealand lower
production
|
(10)
|
|
|
North American footprint
benefits
|
10
|
|
|
Other benefits
|
8
|
|
|
|
($78)
|
|
|
|
|
|
|
|
Segment operating profit benefited $13
million from favorable foreign currency translation. Higher
sales volume increased operating profit by $26 million, despite a $7
million impact from lower shipments in Australia and New
Zealand. Global shipments (in tonnes) improved more than 6
percent from the prior year. Acquisitions completed in 2010
represented 5 percent of this volume growth and reflect new and
expanding relationships with customers in emerging markets. The
remaining increase was due to organic growth as favorable demand in
Europe and South America more than offset lower volume in
Australia and New Zealand. Future capacity expansion will be
required in South America to
support robust organic growth.
While average selling prices improved slightly from the prior
year, this benefit was more than offset by a change in product mix.
The net effect of price and product mix negatively impacted
operating profit by $3 million.
Manufacturing costs increased $78
million from the prior year, driven mostly by $60 million of additional cost inflation. While
earnings benefited $10 million from
footprint restructuring conducted in North America during the prior year,
production and supply chain issues in the region resulted in
$26 million of unanticipated
manufacturing and delivery costs. Weaker sales volumes in
Australia and New Zealand required lower production levels,
which impacted O-I's Asia Pacific
region segment profits by $10
million.
Higher Future Selling Prices to Help Offset Current Cost
Inflation Pressures
O-I has incurred significant cost inflation in 2011 related to
higher raw material, labor and energy prices. Up to
$180 million of higher costs were
anticipated heading into the current year. But, as previously
communicated, the rapid rise in European energy prices this year
has added between $20 and $40 million
of additional cost pressure. As a result, O-I's full year cost
inflation estimate remains between $200 and
$220 million.
The Company has initiated an energy surcharge in Europe to help offset the impact of higher
energy prices in that region. Surcharge negotiations are
essentially complete and O-I anticipates $15
to $20 million of benefit in the second half of 2011. The
Company expects to pass along the remaining impact of 2011 global
cost inflation through higher selling prices in 2012.
Actions to Rectify North American Production and Supply Chain
Issues
Significant manufacturing and supply chain issues in
North America led to higher than
expected manufacturing costs. O-I entered the seasonally strong
second quarter with overall tight inventory levels in the region,
and production issues during the quarter led to inventory shortages
at certain locations. Consequently, out-of-pattern production was
required to meet customer expectations resulting in production
inefficiencies, higher freight costs and product loss during the
second quarter. The Company has taken the following actions to
resolve these issues:
- O-I has successfully restarted two previously idled furnaces,
providing approximately 5 percent of additional production
capacity. O-I is also leveraging its global footprint to shift
inventory from other regions to support North America. Furthermore, O-I's North
American plants will run at high operating rates through the end of
2011. These actions will increase inventory levels, reduce
out-of-pattern production and help meet customer demand.
- The Company is conducting thorough manufacturing audits of all
its North American plants to identify and remediate any other
potential production risks. O-I has also delayed its SAP
implementation to avoid further near-term disruption to operations.
- O-I is enhancing its integrated production planning and
forecasting capabilities in collaboration with its customers to
improve the accuracy of supply chain requirements. This effort will
be supported by a global change in the Company's regional
organization structure to improve communication across all
functions affected by the production cycle. This new structure will
provide better visibility and management of all costs associated
with the manufacture and sale of glass containers.
Restructuring to Address Australia and New Zealand Market
Challenges
In the second quarter of 2011, O-I faced increasingly difficult
market conditions in Australia and
New Zealand. The Australian dollar
has continued to appreciate, reaching record levels against the
U.S. dollar in the second quarter, which negatively impacted wine
exports from that country. Beer consumption in Australia and New
Zealand was also down as high interest and savings rates led
to lower consumer disposable income. While O-I anticipated lower
wine and beer bottle shipments, demand trends for these end uses
deteriorated further during the course of the quarter leading to a
nearly 20 percent decline in O-I's shipments in these countries. In
response to the worsening conditions, regional management reduced
production to balance supply with lower demand, which resulted in
unabsorbed manufacturing costs that were not anticipated entering
the second quarter. In addition to continued temporary production
curtailments, O-I is taking the following steps to improve long
term profitability in Australia:
- Steve Bramlage has been named
the new president of O-I's Asia
Pacific region.
- O-I is implementing a comprehensive restructuring plan in
Australia to increase system
flexibility and align its footprint to meet changing long term
demand requirements. As a first step, the Company closed one
machine line in Australia and a
$4 million severance expense
($3 million after tax) was included
as a Note 1 charge. To accommodate seasonal demand patterns, O-I
will implement additional steps of its restructuring plan over the
next several quarters. Initial estimates indicate the plan may
result in up to $50 million of
additional capital expenditures and severance costs. Cash costs may
total up to $25 million in 2011. More
refined estimates will be available by the end of the third quarter
2011.
Financial Highlights
The Company reported total debt of $4.340
billion and cash of $260
million at June 30, 2011. Net
debt was $4.080 billion, an increase
of $147 million from first quarter
2011. The increase in net debt primarily reflected $153 million of cash used for acquisitions,
including the buyout of the minority partner interest in O-I's
southern Brazil operation;
$52 million related to refinancing
activities and dividends paid to noncontrolling interests; and
$39 million of foreign currency
translation. These additions to net debt were partially offset by
$97 million of free cash flow.
Available liquidity as of June 30,
2011, was $631 million under
the Company's global revolving credit facility.
In May, the Company announced a new $2
billion bank credit agreement. The new agreement, which
matures in May 2016, is comprised of
$1.1 billion in term loans and a
$900 million revolving credit
facility. Proceeds from borrowings under the new credit agreement
were used to repay and terminate the previous credit agreement
scheduled to mature in June 2012.
With the term loan proceeds, as well as cash on hand, O-I also
redeemed more than $700 million of
higher cost 6.75 percent senior notes scheduled to mature in 2014.
O-I expensed $24 million after tax
for note repurchase premiums and the write-off of finance fees
related to the repaid debt, both of which were reported as a Note 1
charge.
Net interest expense increased $16
million (excluding the Note 1 charge related to the repaid
debt) from the prior year as a result of additional borrowings last
year used to fund acquisitions. Corporate retained expense
increased $1 million from the prior
year, reflecting the net effect of $11
million of higher marketing and pension expenses and a
$10 million reduction of long and
short term management incentive compensation expense.
Asbestos-related cash payments during the second quarter of 2011
were $35 million, compared to
$43 million in the second quarter of
2010. New lawsuits and claims filed during the first six months of
2011 were approximately 7 percent lower than the same period last
year. The number of pending asbestos-related lawsuits and claims
was approximately 5,700 as of June 30,
2011, down from approximately 5,900 at the end of 2010.
Business Outlook
Commenting on the Company's outlook, Stroucken said, "We remain
committed to our key strategic priorities of operational
excellence, strategic and profitable growth, marketing glass, and
innovation and technology. While all of these strategies are
essential to our future success, we are refocusing our attention on
operational excellence for the immediate future in light of recent
challenges. We fully expect the actions we are taking in
North America and Asia Pacific will strengthen our operating
performance in those markets. As we focus on our core operations,
we anticipate little additional acquisition activity during the
second half of 2011."
Stroucken continued, "Looking to the third quarter of 2011,
earnings should benefit from higher shipment levels. Likewise,
manufacturing costs are expected to improve over the course of the
quarter as we address the challenges in North America and Asia Pacific. We expect third quarter 2011
adjusted earnings per share will improve from second quarter
results, but earnings will likely lag prior year third quarter
adjusted earnings as we focus on fully restoring operating
performance levels. We are adjusting our previous 2011 free cash
flow target of $300 million given
potential restructuring costs in Australia, the need to rebuild inventory
levels in North America to avoid
future supply chain issues, and capital investments to expand
capacity in South America. We now
expect full year 2011 free cash flow of between $200 and $250 million."
Note 1:
The table below describes the items that management considers
not representative of ongoing operations.
|
|
|
|
$ Millions, except per-share
amounts
|
|
Three months
ended June 30
|
|
|
|
2011
|
|
2010
|
|
|
|
Earnings
|
EPS
|
|
Earnings
|
EPS
|
|
Earnings from Continuing
Operations Attributable to the Company
|
|
$71
|
$0.42
|
|
$132
|
$0.79
|
|
Items that management considers
not representative of ongoing operations consistent with Segment
Operating Profit
|
|
|
|
|
|
|
|
Charges for note repurchase
premiums and write-off of finance fees
Charges for restructuring and
asset impairment
|
|
24
3
|
0.15
0.02
|
|
8
|
0.05
|
|
Adjusted Net
Earnings
|
|
$98
|
$0.59
|
|
$140
|
$0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ Millions, except per-share
amounts
|
|
Six months
ended June 30
|
|
|
|
2011
|
|
2010
|
|
|
|
Earnings
|
EPS
|
|
Earnings
|
EPS
|
|
Earnings from Continuing
Operations Attributable to the Company
|
|
$144
|
$0.86
|
|
$214
|
$1.27
|
|
Items that management considers
not representative of ongoing operations consistent with Segment
Operating Profit
|
|
|
|
|
|
|
|
Charges for note repurchase
premiums and write-off of finance fees
Charges for restructuring and
asset impairment
|
|
24
8
|
0.15
0.05
|
|
8
|
0.05
|
|
Adjusted Net
Earnings
|
|
$176
|
$1.06
|
|
$222
|
$1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
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 81 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 economic conditions in Australia and New
Zealand, 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, (15) the
Company's ability to resolve its production and supply chain issues
in North America, (16) the
Company's success in implementing necessary restructuring plans,
and (17) 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 July 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, July 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 July 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.
O-I's third-quarter 2011 earnings conference call is currently
scheduled for Thursday, October 27,
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
June 30,
|
|
Six months
ended
June 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 1,959
|
|
$ 1,670
|
|
$ 3,678
|
|
$ 3,216
|
|
Manufacturing, shipping, and
delivery expense
|
|
(1,604)
|
|
(1,287)
|
|
(2,990)
|
|
(2,534)
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
355
|
|
383
|
|
688
|
|
682
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative
expense
|
|
(146)
|
|
(123)
|
|
(288)
|
|
(243)
|
|
Research, development, and
engineering expense
|
|
(18)
|
|
(15)
|
|
(34)
|
|
(29)
|
|
Interest expense (a)
|
|
(100)
|
|
(60)
|
|
(176)
|
|
(116)
|
|
Interest income
|
|
3
|
|
4
|
|
6
|
|
8
|
|
Equity earnings
|
|
19
|
|
13
|
|
33
|
|
26
|
|
Royalties and net technical
assistance
|
|
3
|
|
4
|
|
8
|
|
8
|
|
Other income
|
|
2
|
|
2
|
|
4
|
|
3
|
|
Other expense (b)
|
|
(8)
|
|
(14)
|
|
(26)
|
|
(22)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations before income taxes
|
|
110
|
|
194
|
|
215
|
|
317
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
(32)
|
|
(51)
|
|
(60)
|
|
(83)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations
|
|
78
|
|
143
|
|
155
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from discontinued
operations
|
|
2
|
|
12
|
|
1
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
80
|
|
155
|
|
156
|
|
249
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to
noncontrolling interests
|
|
(7)
|
|
(14)
|
|
(11)
|
|
(23)
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to the
Company
|
|
$
73
|
|
$
141
|
|
$
145
|
|
$
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to the
Company:
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$
71
|
|
$
132
|
|
$
144
|
|
$
214
|
|
Earnings from
discontinued operations
|
|
2
|
|
9
|
|
1
|
|
12
|
|
Net earnings
|
|
$
73
|
|
$
141
|
|
$
145
|
|
$
226
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to
noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$
7
|
|
$
11
|
|
$
11
|
|
$
20
|
|
Earnings from
discontinued operations
|
|
|
|
3
|
|
|
|
3
|
|
Net earnings
|
|
$
7
|
|
$
14
|
|
$
11
|
|
$
23
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share:
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$ 0.43
|
|
$ 0.80
|
|
$ 0.87
|
|
$ 1.29
|
|
Earnings from
discontinued operations
|
|
0.01
|
|
0.06
|
|
0.01
|
|
0.07
|
|
Net earnings
|
|
$ 0.44
|
|
$ 0.86
|
|
$ 0.88
|
|
$ 1.36
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (000s)
|
|
163,633
|
|
163,501
|
|
163,494
|
|
165,431
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations
|
|
$ 0.42
|
|
$ 0.79
|
|
$ 0.86
|
|
$ 1.27
|
|
Earnings from
discontinued operations
|
|
0.01
|
|
0.06
|
|
0.01
|
|
0.07
|
|
Net earnings
|
|
$ 0.43
|
|
$ 0.85
|
|
$ 0.87
|
|
$ 1.34
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average shares (000s)
|
|
166,271
|
|
166,459
|
|
166,193
|
|
168,555
|
|
|
|
|
|
|
|
|
|
|
|
(a) Amount for the three
and six months ended June 30, 2011 includes charges of $25 million
($24 million 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 $0.15.
|
|
|
|
(b) Amount for the three
months ended June 30, 2011, includes charges of $4 million ($3
million after tax amount attributable to the Company) for
restructuring. The effect of this charge is a reduction in
earnings per share of $0.02.
|
|
|
|
Amount for the six months
ended June 30, 2011, includes charges of $12 million ($8 million
after tax amount attributable to the Company) for restructuring.
The effect of this charge is a reduction in earnings per
share of $0.05.
|
|
|
|
Amount for the three and
six months ended June 30, 2010 includes charges of $8 million (pre
tax and 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 $0.05.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS, INC.
|
|
Condensed
Consolidated Balance Sheets
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
Dec.
31,
|
|
June
30,
|
|
|
|
2011
|
|
2010
|
|
2010
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 260
|
|
$ 640
|
|
$ 648
|
|
Short-term investments,
at cost which
|
|
|
|
|
|
|
|
approximates market
|
|
|
|
|
|
1
|
|
Receivables, less
allowances for
|
|
|
|
|
|
|
|
losses and
discounts
|
|
1,322
|
|
1,075
|
|
1,076
|
|
Inventories
|
|
1,065
|
|
946
|
|
856
|
|
Prepaid
expenses
|
|
104
|
|
77
|
|
69
|
|
Assets of discontinued
operations
|
|
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
2,751
|
|
2,738
|
|
2,728
|
|
|
|
|
|
|
|
|
|
Investments and other
assets:
|
|
|
|
|
|
|
|
Equity
investments
|
|
330
|
|
299
|
|
106
|
|
Repair parts
inventories
|
|
156
|
|
147
|
|
133
|
|
Prepaid
pension
|
|
63
|
|
54
|
|
41
|
|
Deposits, receivables,
and other assets
|
|
711
|
|
588
|
|
494
|
|
Goodwill
|
|
2,957
|
|
2,821
|
|
2,222
|
|
Assets of discontinued
operations
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
4,217
|
|
3,909
|
|
3,032
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment,
at cost
|
|
7,416
|
|
7,016
|
|
6,231
|
|
Less accumulated
depreciation
|
|
4,240
|
|
3,909
|
|
3,633
|
|
|
|
|
|
|
|
|
|
Net property, plant, and
equipment
|
|
3,176
|
|
3,107
|
|
2,598
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$10,144
|
|
$ 9,754
|
|
$ 8,358
|
|
|
|
|
|
|
|
|
|
Liabilities and Share Owners'
Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Short-term loans and
long-term debt
|
|
|
|
|
|
|
|
due within
one year
|
|
$ 371
|
|
$ 354
|
|
$ 272
|
|
Current portion of
asbestos-related
|
|
|
|
|
|
|
|
liabilities
|
|
170
|
|
170
|
|
175
|
|
Accounts
payable
|
|
985
|
|
878
|
|
791
|
|
Other
liabilities
|
|
666
|
|
677
|
|
656
|
|
Liabilities of
discontinued operations
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
2,192
|
|
2,079
|
|
1,919
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
3,969
|
|
3,924
|
|
3,228
|
|
Deferred taxes
|
|
234
|
|
203
|
|
160
|
|
Pension benefits
|
|
564
|
|
576
|
|
534
|
|
Nonpension postretirement
benefits
|
|
259
|
|
259
|
|
264
|
|
Other liabilities
|
|
398
|
|
381
|
|
262
|
|
Asbestos-related
liabilities
|
|
238
|
|
306
|
|
233
|
|
Liabilities of discontinued
operations
|
|
|
|
|
|
15
|
|
Share owners' equity:
|
|
|
|
|
|
|
|
The Company's share
owners' equity:
|
|
|
|
|
|
|
|
Common
stock
|
|
2
|
|
2
|
|
2
|
|
Capital in excess
of par value
|
|
2,986
|
|
3,040
|
|
3,047
|
|
Treasury stock, at
cost
|
|
(410)
|
|
(412)
|
|
(414)
|
|
Retained
earnings
|
|
227
|
|
82
|
|
355
|
|
Accumulated other
comprehensive loss
|
|
(672)
|
|
(897)
|
|
(1,452)
|
|
|
|
|
|
|
|
|
|
Total share owners' equity of the Company
|
|
2,133
|
|
1,815
|
|
1,538
|
|
Noncontrolling
interests
|
|
157
|
|
211
|
|
205
|
|
|
|
|
|
|
|
|
|
Total
share owners' equity
|
|
2,290
|
|
2,026
|
|
1,743
|
|
|
|
|
|
|
|
|
|
Total liabilities and share
owners' equity
|
|
$10,144
|
|
$ 9,754
|
|
$ 8,358
|
|
|
|
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS, INC.
|
|
Condensed
Consolidated Cash Flows
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$ 80
|
|
$155
|
|
$ 156
|
|
$249
|
|
Earnings from
discontinued operations
|
|
(2)
|
|
(12)
|
|
(1)
|
|
(15)
|
|
Non-cash
charges:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
107
|
|
86
|
|
208
|
|
175
|
|
Amortization
of intangibles and
|
|
|
|
|
|
|
|
|
|
other deferred items
|
|
4
|
|
7
|
|
9
|
|
13
|
|
Amortization
of finance fees and debt discount
|
|
8
|
|
6
|
|
16
|
|
9
|
|
Restructuring
|
|
4
|
|
8
|
|
12
|
|
8
|
|
Other
|
|
27
|
|
33
|
|
61
|
|
81
|
|
Asbestos-related
payments
|
|
(35)
|
|
(43)
|
|
(68)
|
|
(77)
|
|
Cash paid for
restructuring activities
|
|
(9)
|
|
(12)
|
|
(13)
|
|
(31)
|
|
Change in non-current
operating assets
|
|
(17)
|
|
(14)
|
|
(42)
|
|
(25)
|
|
Change in non-current
liabilities
|
|
(20)
|
|
(17)
|
|
(37)
|
|
(30)
|
|
Change in components of
working capital
|
|
30
|
|
(64)
|
|
(209)
|
|
(208)
|
|
Cash
provided by continuing operating activities
|
|
177
|
|
133
|
|
92
|
|
149
|
|
Cash
provided by discontinued operating activities
|
|
2
|
|
17
|
|
2
|
|
25
|
|
Total cash
provided by operating activities
|
|
179
|
|
150
|
|
94
|
|
174
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant, and equipment - continuing
|
|
(80)
|
|
(139)
|
|
(153)
|
|
(235)
|
|
Additions to property,
plant, and equipment - discontinued
|
|
|
|
(1)
|
|
|
|
(1)
|
|
Acquisitions, net of cash
acquired
|
|
(153)
|
|
-
|
|
(147)
|
|
(26)
|
|
Cash
utilized in investing activities
|
|
(233)
|
|
(140)
|
|
(300)
|
|
(262)
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
Additions to long-term
debt
|
|
1,446
|
|
690
|
|
1,451
|
|
690
|
|
Repayments of long-term
debt
|
|
(1,634)
|
|
(486)
|
|
(1,644)
|
|
(490)
|
|
Increase (decrease) in
short-term loans - continuing
|
|
93
|
|
43
|
|
61
|
|
(7)
|
|
Decrease in short-term
loans - discontinued
|
|
|
|
(1)
|
|
|
|
(1)
|
|
Net receipts (payments)
for hedging activity
|
|
3
|
|
10
|
|
(9)
|
|
22
|
|
Payment of finance
fees
|
|
(18)
|
|
(18)
|
|
(18)
|
|
(18)
|
|
Dividends paid to
noncontrolling interests
|
|
(13)
|
|
(17)
|
|
(31)
|
|
(22)
|
|
Treasury shares
purchased
|
|
|
|
(55)
|
|
|
|
(199)
|
|
Issuance of common stock
and other
|
|
-
|
|
2
|
|
2
|
|
3
|
|
Cash
provided by (utilized in) financing activities
|
|
(123)
|
|
168
|
|
(188)
|
|
(22)
|
|
Effect of exchange rate
fluctuations on cash
|
|
7
|
|
(17)
|
|
14
|
|
(20)
|
|
Increase (decrease) in
cash
|
|
(170)
|
|
161
|
|
(380)
|
|
(130)
|
|
Cash at beginning of
period
|
|
430
|
|
521
|
|
640
|
|
812
|
|
Cash at end of period
|
|
260
|
|
682
|
|
260
|
|
682
|
|
Cash - discontinued
operations
|
|
|
|
34
|
|
|
|
34
|
|
Cash - continuing
operations
|
|
$ 260
|
|
$648
|
|
$ 260
|
|
$648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OWENS-ILLINOIS, INC.
|
|
Consolidated
Supplemental Financial Data
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
$ 887
|
|
$ 716
|
|
$ 1,585
|
|
$ 1,384
|
|
North America
|
|
506
|
|
516
|
|
969
|
|
960
|
|
South America
|
|
302
|
|
207
|
|
571
|
|
382
|
|
Asia Pacific
|
|
246
|
|
223
|
|
508
|
|
473
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment
totals
|
|
1,941
|
|
1,662
|
|
3,633
|
|
3,199
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
18
|
|
8
|
|
45
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 1,959
|
|
$ 1,670
|
|
$ 3,678
|
|
$ 3,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Profit
(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
$ 107
|
|
$ 104
|
|
$ 178
|
|
$ 160
|
|
North America
|
|
56
|
|
87
|
|
115
|
|
150
|
|
South America
|
|
53
|
|
49
|
|
98
|
|
86
|
|
Asia Pacific
|
|
9
|
|
31
|
|
33
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment
totals
|
|
225
|
|
271
|
|
424
|
|
464
|
|
|
|
|
|
|
|
|
|
|
|
Items excluded from Segment
Operating Profit:
|
|
|
|
|
|
|
|
|
|
Retained corporate costs
and other
|
|
(14)
|
|
(13)
|
|
(27)
|
|
(31)
|
|
Restructuring
|
|
(4)
|
|
(8)
|
|
(12)
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
3
|
|
4
|
|
6
|
|
8
|
|
Interest expense
|
|
(100)
|
|
(60)
|
|
(176)
|
|
(116)
|
|
Earnings from continuing
operations before income taxes
|
|
$ 110
|
|
$ 194
|
|
$ 215
|
|
$ 317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.