PRESS RELEASE DOCUMENT
Published on July 24, 2008
Exhibit
99.1
 |
|
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 Announces Second Quarter Results
BROOMFIELD,
Colo., July 24, 2008—Ball Corporation [NYSE:BLL] today announced second
quarter earnings of $100 million, or $1.02 per diluted share, on sales
of $2.08 billion, compared to $105.9 million, or $1.03 per
diluted share, on sales of $2.03 billion in the second quarter of 2007.
For the
first six months of 2008, Ball’s earnings were $183.8 million, or
$1.87 per diluted share, on sales of $3.82 billion. First half 2007
results were earnings of $187.1 million, or $1.81 per diluted share,
on sales of $3.73 billion.
The
second quarter and first six months of 2008 included an $8.1 million
after-tax charge, or approximately 8 cents per diluted share, for various
business consolidation and
other activities initiated in the quarter. The results for the first half
of 2008 also included an after-tax gain of $4.4 million, or approximately
4 cents per diluted share, on the sale in the first quarter of a small
aerospace business in Australia.
“We are
pleased that comparable
earnings for both the second quarter and the first half increased over record
results during the same period a year ago,” said R. David Hoover, chairman,
president and chief executive officer.
“Our operations are
performing well in a difficult economic environment,” said John A. Hayes,
executive vice president and chief operating officer. “Our food and household
products packaging and aerospace and technologies segments led the
company’s improved performance and demand continues to increase for beverage
cans in Europe, China and Brazil. We are focused on margin management, reducing
costs and balancing supply with demand in all of our packaging segments. The
aerospace and technologies segment had a record second quarter in terms of
earnings. Though pleased with this segment’s first half performance, we remain
focused on building its backlog.”
- more
- -
Ball
Corporation
10 Longs
Peak Drive · P.O. Box
5000 · Broomfield, CO
80021
Ball
Corporation – 2
Metal
Beverage Packaging, Americas and Asia
Earnings
for the quarter in the metal beverage packaging, Americas and Asia, segment were
$74 million on sales of $833.9 million. In 2007, second quarter
earnings in the segment were $89.1 million on sales of $871.2 million.
For the first six months, earnings in 2008 were $148 million on sales of
$1.54 billion, compared to $191 million on sales of $1.57 billion
in the first half of 2007.
The
second quarter and first half of 2008 included a charge of $10.6 million to
close a metal beverage container manufacturing plant in Kent, Wash. Also in the
second quarter, a decision to continue to operate existing end-making equipment
and not install a new end-module that would have been part of a multi-year
project resulted in a gain of $7.2 million for the recovery of costs
previously provided for closure obligations.
Improved
operating performance in the quarter partially offset the effects of softer
North American volumes and the absence in 2008 of the North American inventory
gain realized in the second quarter of 2007. Sales volumes in China increased
around
20 percent.
Metal
Beverage Packaging, Europe
Second
quarter earnings in the metal beverage packaging, Europe, segment were
$77.2 million on sales of $571 million, compared to $86.1 million
on sales of $484.8 million a year ago. For the first six months, earnings
were $125.2 million on sales of $976.6 million, compared to
$122.9 million on sales of $805.5 million in the first half of
2007.
Volumes
in the metal beverage packaging, Europe, segment were up approximately
7 percent over 2007 levels for the quarter despite cool, wet weather in
much of eastern and central Europe and transportation and customer strikes in
France and Spain. The strength of the euro contributed to higher European
beverage can earnings in the quarter and helped offset the absence of
$17 million of business interruption insurance proceeds in 2007 stemming
from a 2006 fire at a German plant.
Metal
Food & Household Products Packaging, Americas
The metal
food and household products packaging, Americas, segment second quarter results
were earnings of $14.3 million on sales of $283.2 million, compared to
$11.1 million on sales of $284 million in 2007. For the first half of
2008, segment earnings were $29.1 million on sales of $547 million,
compared to $10.9 million on sales of $562.8 million in the first six
months of 2007.
The metal
food and household products packaging segment’s improved performance was driven
by increases in pricing, a better product mix and cost reduction activities. The
previously announced closing of plants in California and Georgia is on
schedule.
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- -
Ball
Corporation
10 Longs
Peak Drive · P.O. Box
5000 · Broomfield, CO
80021
Ball
Corporation – 3
Plastic
Packaging, Americas
Earnings
in the plastic packaging, Americas, segment for the second quarter of 2008 were
$1.4 million on sales of $201 million, compared to $7.1 million
on sales of $198.7 million in 2007. For the first half of 2008, earnings
were $6.2 million on sales of $389.9 million, compared to
$9.4 million on sales of $385.3 million in the first six months of
2007.
The
second quarter and first half of 2008 included a charge of $4.3 million for
the closure of the Brampton, Ontario, plant. Those operations will be
consolidated into the company’s other plastic packaging manufacturing facilities
in North America. Additional plant closure costs of approximately
$2 million are expected to be incurred in the second half of the year. The
closure is expected to result in annual, fixed-cost savings of approximately
$4 million beginning in 2009.
Aerospace
& Technologies
Earnings
in the aerospace and technologies segment were $22.7 million on sales of
$191.2 million during the second quarter of 2008, compared to
$15.6 million on sales of $194.1 million in the same period a year
ago. For the first half of 2008, segment earnings were $44.7 million on
sales of $369.2 million, compared to $35.2 million on sales of
$400.4 million in the first six months of 2007. The first half of 2008
included a pretax gain of $7.1 million on the sale in the first quarter of
the segment’s aerospace engineering services business in Australia.
Improved
program execution and contract mix, lower unrecoverable costs and higher profit
accruals on certain fixed price contracts as they near completion contributed to
the higher earnings.
Outlook
“The
company’s comparable
performance during the first six months of 2008 improved upon a record
first half performance in 2007,” Hoover said. “We continue to expect cash flow
for the year to be in the range of $300 million, including capital spending
of around $330 million. Even with the tough economic conditions our
businesses have experienced to date, our goal for the second half of 2008 is to
exceed last year’s solid second half performance.”
Ball
Corporation is a supplier of high-quality metal and plastic packaging for
beverage, food and household products customers, and of aerospace and other
technologies and services, primarily for the U.S. government. Ball Corporation
and its subsidiaries employ more than 15,500 people worldwide and reported 2007
sales of approximately $7.4 billion.
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- -
Ball
Corporation
10 Longs
Peak Drive · P.O. Box
5000 · Broomfield, CO
80021
Ball
Corporation – 4
Conference Call
Details
Ball
Corporation will hold its regular quarterly conference call on the company’s
results and performance today at 9 a.m. Mountain Time (11 a.m.
Eastern). The North American toll-free number for the call is 800-734-8583.
International callers should dial 212-231-2900. Please use the following URL for
a Web cast of the live call: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115234&eventID=1882825
For those
unable to listen to the live call, a taped replay will be available about an
hour after the live call’s conclusion until 1 p.m. Eastern Time on
July 31, 2008. To access the replay, call 800-633-8284 (North American
callers) or 402-977-9140 (international callers) and use reservation number
21386780.
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
investors section under “presentations.”
Forward-Looking
Statements
This
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 Exhibit 99.2 in our Form 10-K, which
are available at our Web site and at www.sec.gov. Factors
that might affect our packaging segments include fluctuation in product 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; crop
yields; competitive activity; failure to achieve anticipated productivity
improvements or production cost reductions, including our beverage can end
project; mandatory deposit or other restrictive packaging laws; changes in major
customer or supplier contracts or loss of a major customer or supplier; and
changes in foreign exchange rates, tax rates and activities of foreign
subsidiaries. Factors that might affect our aerospace segment include: funding,
authorization, availability and returns of government and commercial contracts;
and delays, extensions and technical uncertainties affecting segment contracts.
Factors that might affect the company as a whole include those listed plus:
accounting changes; changes in senior management; the current global credit
squeeze; successful or unsuccessful acquisitions, joint
ventures or divestitures; integration of recently acquired businesses;
regulatory action or laws including tax, environmental, health and workplace
safety, including in respect of chemicals or substances used in raw materials or
in the manufacturing process; 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; pension changes;
reduced cash flow; interest rates affecting our debt; and changes to unaudited
results due to statutory audits or other effects.
# #
#
Ball
Corporation
10 Longs
Peak Drive · P.O. Box
5000 · Broomfield, CO
80021
|
Condensed
Financials (June
2008)
|
||||||||||||||||
|
Unaudited
Statements of Consolidated Earnings
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Three
months ended
|
Six
months ended
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June
29,
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July
1,
|
June
29,
|
July
1,
|
|||||||||||||
|
($
in millions, except per share amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Net sales
(Note 1)
|
$ | 2,080.3 | $ | 2,032.8 | $ | 3,820.5 | $ | 3,727.0 | ||||||||
|
Costs and expenses
|
||||||||||||||||
|
Cost of sales (excluding
depreciation and amortization)
|
1,738.5 | 1,682.6 | 3,176.2 | 3,076.9 | ||||||||||||
|
Depreciation and
amortization
|
76.2 | 69.9 | 150.8 | 134.9 | ||||||||||||
|
Business consolidation costs
and other (Note 2)
|
11.5 | - | 11.5 | - | ||||||||||||
|
Gain on sale of subsidiary
(Note 2)
|
- | - | (7.1 | ) | - | |||||||||||
|
Selling, general and
administrative
|
78.5 | 87.3 | 160.1 | 169.5 | ||||||||||||
| 1,904.7 | 1,839.8 | 3,491.5 | 3,381.3 | |||||||||||||
|
Earnings before interest and
taxes (Note 1)
|
175.6 | 193.0 | 329.0 | 345.7 | ||||||||||||
|
Interest
expense
|
(34.7 | ) | (38.1 | ) | (70.9 | ) | (76.0 | ) | ||||||||
|
Tax
provision
|
(45.4 | ) | (52.3 | ) | (82.6 | ) | (89.0 | ) | ||||||||
|
Minority
interests
|
(0.1 | ) | (0.1 | ) | (0.2 | ) | (0.2 | ) | ||||||||
|
Equity
in results of affiliates
|
4.6 | 3.4 | 8.5 | 6.6 | ||||||||||||
|
Net
earnings
|
$ | 100.0 | $ | 105.9 | $ | 183.8 | $ | 187.1 | ||||||||
|
Earnings per share
(Note 2):
|
||||||||||||||||
|
Basic
|
$ | 1.03 | $ | 1.04 | $ | 1.89 | $ | 1.84 | ||||||||
|
Diluted
|
$ | 1.02 | $ | 1.03 | $ | 1.87 | $ | 1.81 | ||||||||
|
Weighted
average shares outstanding (000s):
|
||||||||||||||||
|
Basic
|
96,911 | 101,542 | 97,055 | 101,826 | ||||||||||||
|
Diluted
|
98,459 | 103,165 | 98,465 | 103,374 | ||||||||||||
|
Condensed
Financials (June
2008)
|
||||||||||||||||
|
Unaudited
Statements of Consolidated Cash Flows
|
||||||||||||||||
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
|
June
29,
|
July
1,
|
June
29,
|
July
1,
|
|||||||||||||
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($
in millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Cash
Flows From Operating Activities:
|
||||||||||||||||
|
Net earnings
|
$ | 100.0 | $ | 105.9 | $ | 183.8 | $ | 187.1 | ||||||||
|
Depreciation and
amortization
|
76.2 | 69.9 | 150.8 | 134.9 | ||||||||||||
|
Business consolidation costs
and other (Note 2)
|
11.5 | - | 11.5 | - | ||||||||||||
|
Gain on sale of subsidiary
(Note 2)
|
- | - | (7.1 | ) | - | |||||||||||
|
Income taxes
|
(1.1 | ) | 33.6 | 6.3 | 57.4 | |||||||||||
|
Pension funding and expense,
net
|
(3.8 | ) | (6.4 | ) | 0.7 | (2.4 | ) | |||||||||
|
Legal
settlement
|
- | - | (70.3 | ) | - | |||||||||||
|
Other changes in working
capital
|
(54.8 | ) | 137.7 | (366.3 | ) | (148.2 | ) | |||||||||
|
Other
|
17.0 | 18.1 | 21.0 | 22.3 | ||||||||||||
| 145.0 | 358.8 | (69.6 | ) | 251.1 | ||||||||||||
|
Cash
Flows From Investing Activities:
|
||||||||||||||||
|
Additions to property, plant
and equipment
|
(86.0 | ) | (78.2 | ) | (160.5 | ) | (166.3 | ) | ||||||||
|
Proceeds from sale of
subsidiary
|
- | - | 8.7 | - | ||||||||||||
|
Property insurance
proceeds
|
- | - | - | 48.6 | ||||||||||||
|
Other
|
(7.9 | ) | (1.7 | ) | (10.2 | ) | 0.7 | |||||||||
| (93.9 | ) | (79.9 | ) | (162.0 | ) | (117.0 | ) | |||||||||
|
Cash
Flows From Financing Activities:
|
||||||||||||||||
|
Net change in
borrowings
|
(16.8 | ) | (224.8 | ) | 335.3 | (85.6 | ) | |||||||||
|
Dividends
|
(9.4 | ) | (10.2 | ) | (19.0 | ) | (20.4 | ) | ||||||||
|
Purchases of common stock,
net
|
(56.1 | ) | (7.8 | ) | (181.2 | ) | (95.3 | ) | ||||||||
|
Other
|
2.0 | 3.7 | 2.4 | 6.7 | ||||||||||||
| (80.3 | ) | (239.1 | ) | 137.5 | (194.6 | ) | ||||||||||
|
Effect
of exchange rate changes on cash
|
2.7 | 0.9 | 5.9 | 0.9 | ||||||||||||
|
Change
in cash
|
(26.5 | ) | 40.7 | (88.2 | ) | (59.6 | ) | |||||||||
|
Cash–beginning
of period
|
89.9 | 51.2 | 151.6 | 151.5 | ||||||||||||
|
Cash–end
of period
|
$ | 63.4 | $ | 91.9 | $ | 63.4 | $ | 91.9 | ||||||||
|
Condensed
Financials (June
2008)
|
||||||||
|
Unaudited
Consolidated Balance Sheets
|
||||||||
|
June
29,
|
July
1,
|
|||||||
|
($
in millions)
|
2008
|
2007
|
||||||
|
Assets
|
||||||||
|
Current
assets
|
||||||||
|
Cash and cash
equivalents
|
$ | 63.4 | $ | 91.9 | ||||
|
Receivables,
net
|
839.0 | 772.4 | ||||||
|
Inventories,
net
|
1,092.8 | 898.8 | ||||||
|
Deferred taxes and other
current assets
|
170.2 | 93.4 | ||||||
|
Total current
assets
|
2,165.4 | 1,856.5 | ||||||
|
Property,
plant and equipment, net
|
2,016.0 | 1,913.8 | ||||||
|
Goodwill
|
1,951.6 | 1,783.8 | ||||||
|
Other
assets
|
447.6 | 371.0 | ||||||
|
Total assets
|
$ | 6,580.6 | $ | 5,925.1 | ||||
|
Liabilities
and Shareholders’ Equity
|
||||||||
|
Current
liabilities
|
||||||||
|
Short-term debt and current
portion of long-term debt
|
$ | 327.1 | $ | 162.1 | ||||
|
Payables and accrued
liabilities
|
1,261.4 | 1,173.4 | ||||||
|
Total current
liabilities
|
1,588.5 | 1,335.5 | ||||||
|
Long-term
debt
|
2,415.3 | 2,233.0 | ||||||
|
Other
liabilities and minority interests
|
1,053.6 | 1,011.0 | ||||||
|
Shareholders’
equity
|
1,523.2 | 1,345.6 | ||||||
|
Total liabilities and
shareholders’ equity
|
$ | 6,580.6 | $ | 5,925.1 | ||||
|
Notes
to Condensed Financials (June
2008)
|
||||||||||||||||
|
1.
Business Segment Information
Due
to first quarter 2008 management reporting changes, Ball’s China
operations are included in the metal beverage packaging, Americas and
Asia, segment. The results for the 2007 periods have been
retrospectively adjusted to conform to the current year
presentation.
|
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|
Three
months ended
|
Six
months ended
|
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|
June
29,
|
July
1,
|
June
29,
|
July
1,
|
|||||||||||||
|
($
in millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Sales–
|
||||||||||||||||
|
Metal beverage packaging,
Americas & Asia
|
$ | 833.9 | $ | 871.2 | $ | 1,537.8 | $ | 1,573.0 | ||||||||
|
Metal beverage packaging,
Europe
|
571.0 | 484.8 | 976.6 | 805.5 | ||||||||||||
|
Metal food & household
packaging, Americas
|
283.2 | 284.0 | 547.0 | 562.8 | ||||||||||||
|
Plastic packaging,
Americas
|
201.0 | 198.7 | 389.9 | 385.3 | ||||||||||||
|
Aerospace &
technologies
|
191.2 | 194.1 | 369.2 | 400.4 | ||||||||||||
|
Consolidated net
sales
|
$ | 2,080.3 | $ | 2,032.8 | $ | 3,820.5 | $ | 3,727.0 | ||||||||
|
Earnings
before interest and taxes–
|
||||||||||||||||
|
Metal beverage packaging,
Americas & Asia
|
$ | 77.4 | $ | 89.1 | $ | 151.4 | $ | 191.0 | ||||||||
|
Business consolidation costs
and other (Note 2)
|
(3.4 | ) | - | (3.4 | ) | - | ||||||||||
|
Total
metal beverage packaging, Americas & Asia
|
74.0 | 89.1 | 148.0 | 191.0 | ||||||||||||
|
Metal
beverage packaging, Europe
|
77.2 | 86.1 | 125.2 | 122.9 | ||||||||||||
|
Metal food & household
packaging, Americas
|
14.3 | 11.1 | 29.1 | 10.9 | ||||||||||||
|
Plastic packaging,
Americas
|
5.7 | 7.1 | 10.5 | 9.4 | ||||||||||||
|
Business consolidation costs
and other (Note 2)
|
(4.3 | ) | - | (4.3 | ) | - | ||||||||||
|
Total plastic packaging,
Americas
|
1.4 | 7.1 | 6.2 | 9.4 | ||||||||||||
|
Aerospace &
technologies
|
22.7 | 15.6 | 37.6 | 35.2 | ||||||||||||
|
Gain on sale of subsidiary
(Note 2)
|
- | - | 7.1 | - | ||||||||||||
|
Total aerospace &
technologies
|
22.7 | 15.6 | 44.7 | 35.2 | ||||||||||||
|
Segment earnings before
interest and taxes
|
189.6 | 209.0 | 353.2 | 369.4 | ||||||||||||
|
Undistributed corporate
costs
|
(10.2 | ) | (16.0 | ) | (20.4 | ) | (23.7 | ) | ||||||||
|
Business consolidation costs
and other (Note 2)
|
(3.8 | ) | - | (3.8 | ) | - | ||||||||||
|
Total undistributed corporate
costs
|
(14.0 | ) | (16.0 | ) | (24.2 | ) | (23.7 | ) | ||||||||
|
Earnings before interest and
taxes
|
$ | 175.6 | $ | 193.0 | $ | 329.0 | $ | 345.7 | ||||||||
|
Notes
to Condensed Financials (June
2008)
|
|
2.
|
Significant
Operating and Nonoperating Items
|
Business
Consolidation and Other Activities
In April
2008 the company announced the closure of a U.S. metal beverage packaging plant
in Kent, Wash., and recorded a pretax charge of $10.6 million
($6.4 million after tax). The plant operates two, 12-ounce
aluminum beverage can manufacturing lines that will be redeployed to generate
higher returns elsewhere in Ball’s worldwide beverage can
system. Also in the second quarter, earnings of $7.2 million
($4.4 million after tax) were recorded to reflect a decision to finalize
the North American beverage can end modernization program resulting in the
recovery of costs previously expensed in a prior business consolidation charge
that will no longer be incurred.
In June
2008 the company announced the closure of a plastic packaging manufacturing
plant in Brampton, Ontario, which employs approximately
90 people. The closed operations will be consolidated into the
company’s other plastic packaging manufacturing facilities in North America and
will result in a charge of approximately $6 million, of which
$4.3 million ($3.8 million after tax) was recorded in the second
quarter, with the remaining closure costs to be recorded in the second half of
2008 as they are incurred.
A pretax
charge of $3.8 million ($2.3 million after tax), related to previously
closed and sold facilities, was also recorded in the second
quarter.
Sale
of Subsidiary
On
February 15, 2008, Ball Aerospace & Technologies Corp. (BATC) completed
the sale of its shares in Ball Solutions Group Pty Ltd (BSG) to QinetiQ Pty Ltd
of approximately $10.5 million. BSG was previously a wholly
owned Australian subsidiary of BATC that provided services to the Australian
department of defense and related government agencies. After an
adjustment for working capital items, the sale resulted in a pretax gain of
$7.1 million ($4.4 million after tax).
A
summary of the effects of the above transactions on after-tax earnings
follows:
|
Three
months ended
|
Six
months ended
|
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|
June
29,
|
July
1,
|
June
29,
|
July
1,
|
|||||||||||||
|
($
in millions, except per share amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Net
earnings as reported
|
$ | 100.0 | $ | 105.9 | $ | 183.8 | $ | 187.1 | ||||||||
|
Business
consolidation costs and other, net of tax
|
8.1 | – | 8.1 | – | ||||||||||||
|
Gain
on sale of subsidiary, net of tax
|
– | – | (4.4 | ) | – | |||||||||||
|
Net earnings before above
transactions
|
$ | 108.1 | $ | 105.9 | $ | 187.5 | $ | 187.1 | ||||||||
|
Per diluted share before above
transactions
|
$ | 1.10 | $ | 1.03 | $ | 1.90 | $ | 1.81 | ||||||||
Ball’s
management segregates the above items to evaluate the performance of the
company’s operations. The information is presented on a non-U.S. GAAP basis and
should be considered in connection with the unaudited statements of consolidated
earnings. Non-U.S. GAAP measures should not be considered in
isolation.