EXHIBIT 99 BALL CORPORATION PRESS RELEASE DATED APRIL 27, 2006
Published on April 27, 2006
Exhibit
99
 |
|
News
Release
|
|
For
Immediate Release
|
http://www.ball.com
|
||
|
Investor
Contact:
|
Ann
T. Scott
|
303-460-3537,
ascott@ball.com
|
|
|
Media
Contact:
|
Scott
McCarty
|
303-460-2103,
smccarty@ball.com
|
|
Ball
Corporation Reports First Quarter Earnings
BROOMFIELD,
Colo., April 27, 2006 - Ball Corporation [NYSE:BLL] today reported first
quarter
2006 earnings of $44.6 million, or 43 cents per diluted share, on sales of
$1.37
billion, compared to $58.6 million, or 51 cents per diluted share, on sales
of
$1.32 billion in the first quarter of 2005.
First
quarter results a year ago reflected unusually strong sales and operating
earnings for metal food cans in advance of announced price increases brought
about by the rising cost of steel used to manufacture the cans. This situation
did not repeat itself in the first quarter of 2006 and overall results returned
to more normal levels, such as the first quarter of 2004 when earnings were
$46.8 million, or 41 cents per diluted share, on sales of $1.23 billion.
The
first
quarter of 2006 included less than one week’s results at the end of March from
the aerosol and specialty can business acquired from the owners of U.S. Can
Corp. and the plastic bottle business acquired from Alcan. Also included
in the
2006 first quarter results is a business consolidation charge equal to one
cent
per diluted share to shut down a metal food can manufacturing line in
Canada.
R.
David
Hoover, chairman, president and chief executive officer, said some factors
affecting 2006 results versus 2005 were anticipated and others were
not.
“Earnings
per diluted share were adversely affected by four cents for foreign exchange,
three cents of which pertained to prior years,” Hoover said. “As was
anticipated, the abnormal first quarter we had in 2005 in what is now our
metal
food and household products packaging, Americas, segment, did not repeat
in
2006. Further, we expect results for the rest of the year from our legacy
metal
food container business to be better than 2005 due to a more normal seasonal
sales pattern.
“We
were
pleased to get our two acquisitions completed as early as we did, and we
expect
them to be accretive to full year 2006 results,” Hoover said. “The integration
process is underway and, as we anticipated, both of the acquired companies
appear to be good fits with Ball, both operationally and
culturally.”
-
more
-
Ball
Corporation
10
Longs
Peak Drive ·
P.O. Box
5000 ·
Broomfield, CO 80021
Ball
Corp. - 2
Metal
Beverage Packaging, Americas
Earnings
in the company’s metal beverage packaging, Americas, segment were $54.5 million
on sales of $592.4 million, compared to $61.8 million on sales of $544.1
million
in the first quarter of 2005.
Costs
for
fuel, utilities, coatings and other direct materials used in the manufacture
of
beverage cans were approximately $10 million higher in the first quarter
of 2006
than they were in the first quarter of 2005.
Progress
continued on a multi-year project to significantly upgrade and streamline
the
company’s manufacture of beverage can ends. Also, the conversion of a
manufacturing line in the company’s Monticello, Ind., plant from the production
of standard 12-ounce cans to the production of specialty size cans was completed
in the quarter.
“Despite
the somewhat slow start to the year for metal beverage packaging, Americas,
we
expect to earn more in this segment in 2006 than we did in 2005 as our capital
projects take hold and we fully realize the benefits of volumes rebounding
to
pre-2005 levels,” Hoover said.
Metal
Beverage Packaging, Europe/Asia
Earnings
in the metal beverage packaging, Europe/Asia, segment were $28.6 million
on
sales of $300.9 million, compared to $30.3 million on sales of $298 million
in
the first quarter of 2005. A weakened euro against the dollar contributed
to
2006 segment earnings being below 2005.
At
the
end of the quarter the company experienced a fire in its manufacturing plant
in
Hassloch, Germany. While the fire damage and business interruption losses
largely are covered by insurance, the loss of production, which will continue
for an as yet undetermined period, will exacerbate an already tight beverage
can
supply picture in Europe. The company has taken several steps and is examining
numerous options to meet demand and to recover from the disruption caused
by the
fire.
“The
effects of the fire will dampen our results from Europe for the remainder
of the
year,” Hoover said. “Also, despite our China volumes being strong in the
quarter, margins have decreased due to a combination of rapid cost increases
and
slower than expected price increases to the trade. As a result, on a full-year
basis we expect a significant reduction in earnings from China in 2006 but
with
a recovery in 2007.”
Metal
Food & Household Products Packaging, Americas
Earnings
in the metal food and household products packaging, Americas, segment were
$1.8
million ($3.9 million before business consolidation activity) on sales of
$189.3
million, compared to $13 million on sales of $184.2 million a year ago. Included
in the segment results are the sales and earnings from the U.S. Can Corp.
assets
acquired on March 27.
-
more
-
Ball
Corporation
10
Longs
Peak Drive ·
P.O. Box
5000 ·
Broomfield, CO 80021
Ball
Corp. - 3
The
company recorded a $2.1 million charge ($1.4 million after-tax) in the quarter
to permanently idle a metal food can production line in its Whitby, Ontario,
manufacturing plant. Metal beverage cans will continue to be produced in
Whitby.
Further capacity rationalizations in the segment are anticipated as the
integration of the former U.S. Can business proceeds.
Plastic
Packaging, Americas
Earnings
in the plastic packaging, Americas, segment were $1.8 million on sales of
$122.4
million, compared to $3.5 million on sales of $115.8 million in the first
quarter of 2005. Included in the results are sales and earnings from the
Alcan
Plastic Bottle assets acquired on March 28.
During
the quarter the company continued the installation and reconfiguration of
manufacturing capacity at a number of locations. The projects will increase
capacity to meet increased demand and should improve productivity.
Energy
and other costs in the segment were approximately $1.5 million higher in
the
first quarter of 2006 compared to the first quarter of 2005. Also, the timing
of
movements in resin prices resulted in a $1 million negative effect on earnings
in the quarter as compared to the first quarter of 2005.
Aerospace
and Technologies
Earnings
in the aerospace and technologies segment were $9.5 million on sales of $159.9
million, compared to $8.9 million on sales of $182 million a year ago. The
2005
first quarter segment earnings included a $3.8 million write-down of an equity
investment.
Work
was
completed during the quarter on some aerospace and technologies projects
while
government funding for some other projects has been delayed until later periods,
creating a gap in sales and earnings in the segment. Capital spending plans
have
been adjusted downward accordingly, and actions to right-size the workforce
are
underway.
“We
expect the slowdown in the timing for award and funding of certain contracts
to
cause a significant reduction in our aerospace and technologies segment results
in 2006,” Hoover said. “However, we still fully expect to win our share of
contracts when they are awarded. The slippage into later periods should result
in positives in 2007 and beyond as important projects for science and national
defense are advanced and fully funded. We believe our track record over the
50
years we have been in the aerospace business positions us to benefit in the
future from numerous new contracts when they are awarded.”
-
more
-
Ball
Corporation
10
Longs
Peak Drive ·
P.O. Box
5000 ·
Broomfield, CO 80021
Ball
Corp. - 4
Outlook
Raymond
J. Seabrook, executive vice president and chief financial officer, said lower
interest expense, a lower effective tax rate and fewer shares outstanding
contributed favorably to Ball’s first quarter results.
“The
actions taken in recent years to shape our financing structure and reduce
our
share count are bearing returns,” Seabrook said. “At the same time we are
investing in our best performing businesses in order to continue to earn
in
excess of our cost of capital and deliver the kind of performance our investors
expect from Ball.”
Commenting
on the first quarter and full-year 2006, Hoover said, “We had a very busy first
quarter, completing two acquisitions, finishing some capital projects and
continuing to make progress on others and adjusting to changing funding
schedules of the government. Results, while below last year, were in line
with
our expectations.
“Even
though we anticipate further challenges during 2006, including lower results
than last year from our aerospace and technologies segment and in China,
we
expect overall results to be better than in 2005,” Hoover said.
Ball
Corporation is a supplier of high-quality metal and plastic packaging products
and owns Ball Aerospace & Technologies Corp. Ball reported 2005 sales of
$5.8 billion and employs 15,600 people.
Conference
Call Details
Ball
Corporation [NYSE: BLL] will hold its quarterly conference call on the company's
first quarter results and performance today at 9 a.m. Mountain Time (11 a.m.
Eastern).
The
North
American toll-free number for the call is 1-800-741-7590.
International
callers should dial +1-212-676-4915.
For
those unable to listen to the live call, a taped rebroadcast will be available
until 11 a.m. Mountain Time on May 4, 2006. To access the rebroadcast, dial
800-633-8284
(domestic
callers) or +
1-402-977-9140
(international callers) and enter 21287926 as
the
reservation number.
Please
use the following URL for a Web cast of the live call and for the
replay:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115234&eventID=1262129
A
written
transcript of the call will be posted within 48 hours of the call’s conclusion
to Ball’s Web site at www.ball.com in the investor relations section under
“presentations.”
-
more
-
Ball
Corporation
10
Longs
Peak Drive ·
P.O. Box
5000 ·
Broomfield, CO 80021
Ball
Corp. - 5
Forward-Looking
Statements
This
news
release contains “forward-looking” statements concerning future events and
financial performance. Words such as “expects,” “anticipates,” “estimates” and
similar expressions are intended to identify forward-looking statements.
Such
statements are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed or implied. The company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Key risks and uncertainties are summarized in filings with the Securities
and
Exchange Commission, including in Exhibit 99.2 in our Form 10-K. These filings
are available at our Web site and at www.sec.gov. Factors that might affect
our
packaging segments include fluctuation in consumer and customer demand and
preferences; availability and cost of raw materials, including recent
significant increases in resin, steel, aluminum and energy costs, and the
ability to pass such increases on to customers; competitive packaging
availability, pricing and substitution; changes in climate and weather; fruit,
vegetable and fishing yields; industry productive capacity and competitive
activity; failure to achieve anticipated productivity improvements or production
cost reductions, including those associated with our beverage can end project;
the German mandatory deposit or other restrictive packaging laws; changes
in
major customer or supplier contracts or loss of a major customer or supplier;
changes in foreign exchange rates, tax rates and activities of foreign
subsidiaries; and the effect of LIFO accounting. Factors that might affect
our
aerospace segment include: funding, authorization, availability and returns
of
government contracts; and delays, extensions and technical uncertainties
affecting segment contracts. Factors that might affect the company as a whole
include those listed plus: acquisitions, joint ventures or divestitures;
integration of recently acquired businesses; regulatory action or laws including
tax, environmental and workplace safety; governmental investigations;
technological developments and innovations; goodwill impairment; antitrust,
patent and other litigation; strikes; labor cost changes; rates of return
projected and earned on assets of the company’s defined benefit retirement
plans; changes to the company’s pension plans; reduced cash flow; interest rates
affecting our debt; and changes to unaudited results due to statutory audits
or
other effects.
15/06 #
#
#
Ball
Corporation
10
Longs
Peak Drive ·
P.O. Box
5000 ·
Broomfield, CO 80021
|
Condensed
Financials (1st
quarter 2006)
|
|||||||
|
Unaudited
Statements of Consolidated Earnings
|
|||||||
|
Three
months ended
|
|||||||
|
($
in millions, except per share amounts)
|
April
2, 2006
|
April
3, 2005
|
|||||
|
Net
sales (Note
1)
|
$
|
1,364.9
|
$
|
1,324.1
|
|||
|
Costs
and expenses
|
|||||||
|
Cost
of sales (excluding depreciation and amortization)
|
1,156.0
|
1,096.8
|
|||||
|
Business
consolidation costs (Note 4)
|
2.1
|
-
|
|||||
|
Depreciation
and amortization
|
54.6
|
53.4
|
|||||
|
Selling,
general and administrative
|
70.6
|
63.0
|
|||||
|
1,283.3
|
1,213.2
|
||||||
|
Earnings
before interest and taxes (Note
1)
|
81.6
|
110.9
|
|||||
|
Interest
expense
|
(23.3
|
)
|
(25.8
|
)
|
|||
|
Tax
provision
|
(16.7
|
)
|
(29.8
|
)
|
|||
|
Minority
Interests
|
(0.2
|
)
|
(0.2
|
)
|
|||
|
Equity
in results of affiliates
|
3.2
|
3.5
|
|||||
|
Net
earnings
|
$
|
44.6
|
$
|
58.6
|
|||
|
Earnings
per share:
|
|||||||
|
Basic
|
$
|
0.43
|
$
|
0.52
|
|||
|
Diluted
|
$
|
0.43
|
$
|
0.51
|
|||
|
Weighted
average shares outstanding (000s):
|
|||||||
|
Basic
|
103,245
|
111,628
|
|||||
|
Diluted
|
105,053
|
114,036
|
|||||
|
Condensed
Financials (1st
quarter 2006)
|
||||||||||
|
Unaudited
Statements of Consolidated Cash Flows
|
||||||||||
|
Three
months ended
|
||||||||||
|
($
in millions)
|
April
2, 2006
|
April
3, 2005
|
||||||||
|
Cash
Flows From Operating Activities:
|
||||||||||
|
Net
earnings
|
$
|
44.6
|
$
|
58.6
|
||||||
|
Depreciation
and amortization
|
54.6
|
53.4
|
||||||||
|
Prepaid
common stock repurchase
|
-
|
(108.5
|
)
|
|||||||
|
Other
changes in working capital
|
(253.2
|
)
|
(148.6
|
)
|
||||||
|
Other
|
(17.8
|
)
|
(15.9
|
)
|
||||||
|
(171.8
|
)
|
(161.0
|
)
|
|||||||
|
Cash
Flows From Investing Activities:
|
||||||||||
|
Additions
to property, plant and equipment
|
(64.4
|
)
|
(80.6
|
)
|
||||||
|
Business
acquisitions (Note 2)
|
(767.9
|
)
|
-
|
|||||||
|
Other
|
1.5
|
(7.9
|
)
|
|||||||
|
(830.8
|
)
|
(88.5
|
)
|
|||||||
|
Cash
Flows From Financing Activities:
|
||||||||||
|
Net
change in borrowings (Note 3)
|
1,029.6
|
142.3
|
||||||||
|
Dividends
|
(10.2
|
)
|
(11.1
|
)
|
||||||
|
Issuance
(purchase) of common stock, net
|
(26.8
|
)
|
8.7
|
|||||||
|
Debt
issuance costs
|
(7.4
|
)
|
-
|
|||||||
|
Other
|
3.0
|
-
|
||||||||
|
988.2
|
139.9
|
|||||||||
|
Effect
of exchange rate
changes on cash
|
0.3
|
(2.3
|
)
|
|||||||
|
Decrease
in cash and cash equivalents
|
(14.1
|
)
|
(111.9
|
)
|
||||||
|
Cash
and cash equivalents-beginning of period
|
61.0
|
198.7
|
||||||||
|
Cash
and cash equivalents-end of period
|
$
|
46.9
|
$
|
86.8
|
||||||
|
Condensed
Financials (1st
quarter 2006)
|
|||||||
|
Unaudited
Consolidated Balance Sheets
|
|||||||
|
($
in millions)
|
April
2, 2006
|
April
3, 2005
|
|||||
|
Assets
|
|||||||
|
Current
assets
|
|||||||
|
Cash
and cash equivalents
|
$
|
46.9
|
$
|
86.8
|
|||
|
Receivables,
net
|
586.5
|
441.0
|
|||||
|
Inventories,
net
|
861.0
|
714.5
|
|||||
|
Prepaid
common stock repurchase
|
-
|
108.5
|
|||||
|
Deferred
taxes, prepaid and other current assets
|
103.5
|
85.1
|
|||||
|
Total
current assets
|
1,597.9
|
1,435.9
|
|||||
|
Property,
plant and equipment, net
|
1,821.1
|
1,534.8
|
|||||
|
Goodwill
|
1,738.4
|
1,361.8
|
|||||
|
Other
assets
|
417.2
|
285.8
|
|||||
|
Total
assets
|
$
|
5,574.6
|
$
|
4,618.3
|
|||
|
Liabilities
and Shareholders’ Equity
|
|||||||
|
Current
liabilities
|
|||||||
|
Short-term
debt and current portion of long-term debt
|
$
|
119.0
|
$
|
145.0
|
|||
|
Payables
and accrued liabilities
|
1,064.8
|
874.3
|
|||||
|
Total
current liabilities
|
1,183.8
|
1,019.3
|
|||||
|
Long-term
debt (Note 3)
|
2,533.7
|
1,631.0
|
|||||
|
Other
liabilities and minority interests
|
965.6
|
847.2
|
|||||
|
Shareholders’
equity
|
891.5
|
1,120.8
|
|||||
|
Total
liabilities and shareholders’ equity
|
$
|
5,574.6
|
$
|
4,618.3
|
|||
|
Notes
to Condensed Financials (1st
quarter 2006)
|
|||||||
|
($
in millions)
|
Three
months ended
|
||||||
|
1. Business
Segment Information
|
April
2, 2006
|
April
3, 2005
|
|||||
|
Sales-
|
|||||||
|
Metal
beverage packaging, Americas
|
$
|
592.4
|
$
|
544.1
|
|||
|
Metal
food & household products packaging, Americas (Note 2)
|
189.3
|
184.2
|
|||||
|
Plastic
packaging, Americas (Note 2)
|
122.4
|
115.8
|
|||||
|
Metal
beverage packaging, Europe/Asia
|
300.9
|
298.0
|
|||||
|
Aerospace
and technologies
|
159.9
|
182.0
|
|||||
|
Consolidated
net sales
|
1,364.9
|
1,324.1
|
|||||
|
Earnings
before interest and taxes-
|
|||||||
|
Metal
beverage packaging, Americas
|
$
|
54.5
|
$
|
61.8
|
|||
|
Metal
food & household products packaging, Americas (Note 2 and
4)
|
1.8
|
13.0
|
|||||
|
Plastic
packaging, Americas (Note 2)
|
1.8
|
3.5
|
|||||
|
Metal
beverage packaging, Europe/Asia
|
28.6
|
30.3
|
|||||
|
Aerospace
and technologies
|
9.5
|
8.9
|
|||||
|
Segment
earnings before interest and taxes
|
96.2
|
117.5
|
|||||
|
Undistributed
corporate costs
|
(14.6
|
)
|
(6.6
|
)
|
|||
|
Earnings
before interest and taxes
|
$
|
81.6
|
$
|
110.9
|
|||
|
2. Acquisitions
|
|||||||
On
March
27, 2006, Ball Corporation acquired all the issued and outstanding shares
of
U.S. Can Corporation for an initial consideration of 758,961 Ball common
shares, together with the repayment of $587 million of existing U.S. Can
debt, including $26 million of bond redemption premiums and fees. The
initial consideration is subject to final closing adjustments that should
be
determined in the second quarter. The acquisition has been accounted for
as a
purchase, and accordingly, its results have been included in our consolidated
financial statements in the metal food and household products packaging,
Americas, segment from March 27, 2006.
The
acquired operations manufacture and sell aerosol cans, paint cans, plastic
containers and custom and specialty containers in 10 plants in the U.S. and
are the largest producer of aerosol cans in North America. In addition,
the
company manufactures and sells aerosol cans in 2 plants in Argentina. The
acquired operations employ 2,300 people and have annual sales of
approximately $600 million.
On
March 28, 2006, Ball Corporation acquired certain North American plastic
container net assets from Alcan Packaging for a total cash consideration
of
$180 million, subject to a working capital adjustment. Ball acquired
plastic container manufacturing plants in Batavia, Illinois; Bellevue,
Ohio; and
Brampton, Ontario; as well as certain equipment and other assets at an
Alcan
research facility in Neenah, Wisconsin, and at a plant in Newark, California.
The acquisition has been accounted for as a purchase, and accordingly,
its
results have been included in our consolidated financial statements in
the
plastic packaging, Americas, segment from March 28, 2006.
Notes
to Condensed Financials (1st
quarter 2006)
|
2. Acquisitions
(continued)
|
The
acquired business primarily manufactures and sells barrier polypropylene
plastic
bottles used in food packaging and to a lesser extent manufactures and
sells
barrier PET plastic bottles used for beverages and foods. The acquired
operations employ 470 people and have annual sales of approximately
$150 million.
|
3. Debt
|
On
March 27, 2006, Ball Corporation expanded its senior secured credit
facilities with the addition of a new U.S. $500 million Term Loan D
facility due in installments through October 2011. Also on March 27, 2006,
Ball issued, at a price of 99.799%, $450 million of new 6.625% Senior Notes
(effective yield to maturity of 6.65 percent) due in March 2018. The proceeds
from these financings were used to refinance existing U.S. Can debt with
Ball
Corporation debt at lower interest rates, acquire certain North American
plastic
container net assets from Alcan Packaging and reduce seasonal working capital
debt (see note 2).
|
4. Business
Consolidation Costs
|
In
the
first quarter of 2006, Ball recorded a $2.1 million charge
($1.4 million after tax) in the metal food and household products
packaging, Americas, segment to shut down a food can line in the Whitby,
Ontario, plant. The charge was comprised of employee termination costs
and
impairment of plant equipment and related spares and tooling, including
cost of
removal of the equipment. A summary of the effects of the above transaction
on
after-tax earnings follows:
|
Three
months ended
|
|||||||
|
($
in millions, except per share amounts)
|
April
2, 2006
|
April
3, 2005
|
|||||
|
Net
earnings as reported
|
$
|
44.6
|
$
|
58.6
|
|||
|
Business
consolidation costs, net of tax
|
1.4
|
-
|
|||||
|
Net
earnings before business consolidation costs
|
46.0
|
$
|
58.6
|
||||
|
Per
diluted share before business consolidation costs
|
$
|
0.44
|
$
|
0.51
|
|||