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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 20, 2004
OWENS-ILLINOIS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-9576 22-2781933
- ---------------------------- ------------ -------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
One SeaGate
Toledo, Ohio 43666
(Address of Principal Executive Offices)
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(419) 247-5000
(Registrant's telephone number, including area code)
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 20, 2004, Owens-Illinois, Inc. issued a press release
setting forth its results of operations for the quarter ended June
30, 2004. A copy of Owens-Illinois, Inc.'s press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 20, 2004 OWENS-ILLINOIS, INC.
(registrant)
By: /s/ Matthew G. Longthorne
-------------------------
Name: Matthew G. Longthorne
Its: Controller
Exhibit Index
Exhibit 99.1 Press Release dated July 20, 2004 of Owens-Illinois, Inc.
Exhibit 99.1
Owens-Illinois Reports Second Quarter Results
TOLEDO, Ohio, July 20 /PRNewswire-FirstCall/ -- Owens-Illinois, Inc.,
(NYSE: OI) today reported second quarter 2004 net earnings of $82.0 million,
or $0.52 per share (diluted), compared with net earnings for the second
quarter of 2003 of $17.0 million, or $0.08 per share (diluted). Results for
the second quarter of 2003 included additional interest charges of
$16.8 million ($10.7 million after tax), or $0.07 per share, for early
retirement of debt, principally note repurchase premiums, and a loss of
$37.4 million (pretax and after tax), or $0.25, per share from the sale of
long-term notes receivable.
Exclusive of these items, earnings in the second quarter of 2003 were
$65.1 million, or $0.40 per share. Results for the second quarter of 2004
included a gain on the sale of certain real property of $20.6 million
($14.5 million after tax), or $0.10 per share, and a $14.5 million charge
($9.1 million after tax), or $0.06 per share, related to the settlement of
certain intellectual property litigation. Exclusive of these items, earnings
in the second quarter of 2004 were $76.6 million or $0.48 per share.
Principally, as a result of improved operations coupled with improved
working capital management, recent divestitures and lower capital
expenditures, at June 30, 2004, the Company has reduced its debt and increased
its cash balance by approximately $480 million (excluding the additional
$1.360 billion of debt and $87 million of cash related to the acquisition of
BSN Glasspack, S.A. on June 21, 2004) compared with June 30, 2003, balances.
"I am gratified by our progress in the second quarter. The businesses are
demonstrating good balance in EBIT and cash flow. Our liquidity initiatives
are clearly working as we reduce our working capital and capital expenditures.
We have a clear focus on free cash, while we maintain an emphasis on
fundamental earnings growth," said Steve McCracken, Owens-Illinois Chairman
and Chief Executive Officer.
"The BSN integration process is fully engaged with goals and processes set
to achieve synergies and to improve the base European businesses. In
addition, we are approaching a significant milestone in our liquidity and
corporate transformation plans as we near an agreement for the sale of our
blow-molded plastic container business."
Business Review
Summary
Second quarter 2004 net sales were $1.716 billion compared with second
quarter 2003 net sales of $1.580 billion. The recently-acquired BSN
businesses contributed $51 million of net sales for the ten-day period ended
June 30, 2004. Segment EBIT for the second quarter of 2004 was
$229.9 million, compared with $219.0 million for the second quarter of 2003.
The principal factors contributing to the increased 2004 Segment EBIT were an
increase in worldwide glass and plastics unit shipments, improved glass
pricing, a more favorable product sales mix, improved manufacturing
efficiencies, and favorable currency translation. The recently-acquired BSN
businesses contributed $0.4 million of EBIT for the ten-day period ended
June 30, which included a reduction in gross profit of $4.6 million related to
the step-up of BSN finished goods inventory as required by SFAS No. 141. The
reconciliation of Segment EBIT to net earnings is presented in note (a) of the
attached table entitled Consolidated Supplemental Financial Data.
Glass Containers Segment
The Glass Containers segment reported second quarter 2004 net sales of
$1,220 million compared with second quarter 2003 net sales of $1,075 million,
an increase of 13.5%. Segment EBIT for the second quarter of 2004 was
$188.8 million, an increase of $5.0 million, or 2.7%, over the second quarter
of 2003. These improved Segment EBIT results were driven by increased
selling prices, a more favorable product sales mix, improved production
efficiencies, and favorable currency translation. Partially offsetting these
positive factors were lower production levels resulting from increased furnace
repair activity this year and inventory control consistent with the Company's
working capital goals, a $6.0 million reduction in pension income, and a
$5.7 million write-down of obsolete and slow-moving machine repair parts in
connection with the Company's working capital review.
Within the segment, European glass container operations reported improved
sales and EBIT of approximately 31% and 25%, respectively, for the second
quarter of 2004 compared with the second quarter of 2003. These improved
results were largely due to higher unit shipments, improved manufacturing
efficiency, and favorable currency translation rates. Partially offsetting
these positive factors were modestly higher energy costs and a less favorable
product sales mix.
On June 21, 2004, the Company completed the acquisition of BSN Glasspack,
S.A., the second largest glass container manufacturer in Europe. The
Company's second quarter 2004 results include ten days of net sales and EBIT
contributions of approximately $51 million and $0.4 million, respectively,
from this newly-acquired business. The $0.4 million EBIT contribution
includes a reduction in gross profit of $4.6 million related to the step-up of
BSN finished goods inventory as required by SFAS No. 141. The Company expects
that the balance of this step-up of BSN finished goods inventory will be
recorded as increased cost of sales during the third and fourth quarters of
2004, which will reduce gross profit by an estimated additional $26 million.
North American glass container operations reported increased sales of
approximately 2%, however, EBIT declined by approximately 15%. The higher
sales resulted from increased selling prices and a more favorable product
sales mix as unit shipments declined by about 3%. The decrease in unit
shipments was more than accounted for by the previously disclosed loss of a
beverage container customer. However, shipments of beer containers in the
quarter increased by approximately 4% from the second quarter of 2003. The
EBIT decline was principally due to lower production levels resulting from
increased furnace repair activity this year and inventory control consistent
with the Company's working capital goals, higher repair and maintenance costs,
higher natural gas costs, increased freight expense reflecting higher fuel
costs, and a $4.5 million reduction in pension income. Partially offsetting
these EBIT declines were higher selling prices and a more favorable product
sales mix.
Asia Pacific glass container operations reported increased sales and EBIT
of approximately 19% and 5%, respectively, for the second quarter of 2004
compared with the second quarter of 2003. The positive impacts of higher unit
shipments, improved manufacturing efficiencies, and favorable currency
translation rates were partially offset by higher warehousing costs and lower
equity earnings.
In the South American glass operations, second quarter 2004 sales and EBIT
increased by approximately 11% and 20%, respectively, compared with the second
quarter of 2003. These improved results were largely due to higher production
and shipment activity, increased selling prices, and improved manufacturing
efficiencies.
Plastics Packaging Segment
For the second quarter of 2004, the Plastics Packaging segment reported
net sales of $496.6 million compared with net sales of $505.0 million for the
second quarter of 2003. Despite higher unit shipments in 2004, the lower net
sales reflected modestly lower selling prices in several of the segment's
product lines, a less favorable product sales mix and the absence of sales
($14.3 million) from certain closures assets that were divested in the fourth
quarter of 2003. Segment EBIT for the second quarter of 2004 was
$59.0 million compared with $54.2 million for the second quarter of 2003. The
principal factors contributing to the Segment EBIT increase were higher
production and shipment activity, in addition to improved manufacturing
efficiencies largely due to the absence of start-up costs related to the
deployment of new production machinery and new product launches during 2003.
On June 18, 2004, a subsidiary of the Company, ACI Packaging, sold a
substantial part of its plastics packaging business in Australia and New
Zealand to Visy Industrial Plastics, a wholly-owned subsidiary of Visy
Industrial Packaging. The Company received cash proceeds from this
transaction of approximately US$50 million, which approximated the remaining
book value.
Interest Expense
Interest expense in the second quarter of 2004 of $116.2 million compares
with interest expense in the second quarter of 2003, excluding charges of
$16.8 million for early debt retirement, of $121.6 million. The lower
interest expense in 2004 was principally due to the savings from the December
2003 repricing of the Senior Secured Credit Agreement and approximately
$6.7 million in interest savings as a result of the Company's fixed-to-
floating interest rate swap program on a portion of its fixed-rate debt.
As previously disclosed, the Company expects interest expense to increase
by approximately $94 million on an annual basis resulting from the acquisition
of BSN. The incremental interest expense included in the Company's second
quarter results related to BSN for the ten day period ended June 30, 2004, was
approximately $2.8 million.
Consolidated debt at the end of the second quarter of 2004 was $6.702
billion compared with $5.426 billion at year-end 2003, an increase of $1.276
billion. The acquisition of BSN increased debt by
$1.360 billion.
Capital Spending
Capital spending for the second quarter of 2004 totaled $101.4 million,
compared with $101.3 million for the second quarter of 2003. Second quarter
2004 capital spending was impacted by greater furnace rebuild activity in
North American glass container compared with the second quarter of 2003, and
expenditures for the new glass container plant in Windsor, Colorado. For the
six months ended June 2004, capital spending of $183.9 million compares with
$220.7 million for the six months ended June 2003. Reduction of base capital
spending through enhanced capital efficiency was identified as one of the
Company's key liquidity improvement initiatives in 2003 and will remain so
going forward.
Six-Month Results
For the first six months of 2004, the Company reported net earnings of
$131.0 million, or $0.81 per share (diluted), compared with net earnings of
$51.4 million, or $0.28 per share for the first six months of 2003. Results
for the first half of 2003 included additional interest charges of
$16.8 million ($10.7 million after tax), or $0.07 per share, for early
retirement of debt, principally note repurchase premiums, and a loss of
$37.4 million (pretax and after tax), or $0.25 per share, from the sale of
long-term notes receivable. Exclusive of these items, earnings in the first
half of 2003 were $99.5 million, or $0.60 per share. Results for the first
half of 2004 included a gain on the sale of certain real property of
$20.6 million ($14.5 million after tax), or $0.10 per share, and a
$14.5 million charge ($9.1 million after tax), or $0.06 per share related to
the settlement of certain intellectual property litigation. Exclusive of
these items, earnings in the second half of 2004 were $125.6 million or $0.77
per share.
Effective Tax Rate
The Company's effective tax rate for the six months ended June 2004 was
28.9% compared with 29.0% for the full year 2003 (excluding separately taxed
items in both periods.)
Asbestos
Asbestos-related cash payments in the second quarter of 2004 were
$45.5 million, compared with $44.8 million for the second quarter of 2003.
For the six months ended June 2004, asbestos-related payments of $95.9 million
compare with $99.9 million for the six months ended June 2003. New claim
filings in the second quarter of 2004 continued their downward trend. For the
six month period ended June 2004, new filings have declined approximately 55%
from the six month period ending June 2003. As of June 30, 2004, the number of
asbestos-related lawsuits and claims pending against the Company was
approximately 32,000, up from approximately 29,000 pending claims at
December 31, 2003, due to a lower rate of claim disposition than in the
comparable earlier period. Additionally, the Company believes that a
significant number of those pending cases have exposure dates after the
Company's 1958 exit from the business for which the Company takes the position
that it has no liability or are subject to dismissal because they were filed
in improper forums. The Company anticipates that cash flows from operations
and other sources will be sufficient to meet its asbestos-related obligation
on a short-term and long-term basis. The Company expects to conduct its
annual comprehensive review of its asbestos-related liabilities and costs in
connection with finalizing and reporting its results for the full year.
Restructuring of Blow-Molded Plastic Container Business
As previously announced, the Company has undertaken a restructuring of its
blow-molded plastic container business. Pursuant to that restructuring, the
Company has determined that it will continue to operate its blow-molded
plastic container business serving health care customers and combine that
business with its Closure and Prescription Products businesses. The Company
will pursue a divestiture of the balance of its blow-molded plastic container
business and will use the proceeds to reduce indebtedness. The Company
believes that a transaction affecting such a divestiture may be announced
shortly. As required by SFAS No. 144, the Company presently expects that,
beginning with the third quarter of 2004, the blow-molded plastic container
business will be presented as a discontinued operation. Results of operations
for prior periods related to the blow-molded plastic container business will
also be reclassified to discontinued operations.
Benefit Plan Changes
As previously disclosed, the Company has underway various operating
expense reduction initiatives and programs including review of certain benefit
plans which, based on industry studies, are above competitive levels. One
such plan relates to coverage of prescription drugs for Medicare-eligible
retirees.
Historically, prescription drugs have not been covered by Medicare.
Beginning in 2006, however, a new Medicare Part D benefit will provide
prescription drug coverage for every Medicare-eligible person at an estimated
annual premium cost of $420. In response to this important Medicare change,
the Company will eliminate coverage for prescription drugs as of January 1,
2006 for all Medicare-eligible salaried retirees. The Company presently
intends to maintain after January 1, 2006 other portions of its medical
program for Medicare-eligible salaried retirees. The Company also intends, on
a discretionary basis, to pay Medicare-eligible plan participants $420
annually to offset a portion of their costs for the new Medicare Part D
benefits. Lastly, the Company intends to closely monitor the implementation
of Medicare Part D and look for other ways to help its salaried retirees
transition to this new program.
Among other benefit programs that are above competitive levels is the
Company's salaried retirement plan for active employees. The Company has
various studies underway regarding possible modifications of this benefit
program, and expects to complete its review of this issue in the next few
months. Any modification of this plan will have no effect on benefits
currently payable to retirees or on accrued benefits of active employees.
The Company estimates that the annual expense reduction from both of these
cost reduction initiatives will be approximately $20 million commencing in
2005.
Outlook
As previously disclosed, the Company expects interest expense to increase
by approximately $94 million on an annual basis resulting from the acquisition
of BSN, or approximately $23.5 million per quarter.
As required by SFAS No. 141, the Company stepped-up the value of the BSN
acquired finished goods inventory. For the ten-day period ending June 30,
2004, such step-up reduced gross profit by $4.6 million in the second quarter
of 2004. The Company expects that the balance of this step-up of BSN finished
goods inventory will be recorded as increased cost of sales during the third
and fourth quarters of 2004 which will reduce gross profit by an estimated
additional $26 million.
While the Company has approximately 75% of its 2004 North American natural
gas usage hedged, the continued increase in the cost of natural gas will
impact the remaining 25% that is not hedged. Currently the Company estimates
that at the current price of natural gas, its North American glass container
operations will incur approximately $5 million in additional energy costs
during the six-month period ended December 31, 2004, compared with the
comparable 2003 six-month period.
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) the Company's ability to
complete planned divestitures on the terms and conditions and within the time
frames currently anticipated, (2) foreign currency fluctuations relative to
the U.S. dollar, (3) changes in capital availability or cost, including
interest rate fluctuations, (4) the general political, economic and
competitive conditions in markets and countries where the Company has
operations, including disruptions in the supply chain, competitive pricing
pressures, inflation or deflation, and changes in tax rates and laws,
(5) consumer preferences for alternative forms of packaging, (6) fluctuations
in raw material and labor costs, (7) availability of raw materials, (8) costs
and availability of energy, (9) transportation costs, (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.
Company Profile
Owens-Illinois is the largest manufacturer of glass containers in the
world, with leading positions in Europe, North America, Asia Pacific and South
America. O-I is also a leading manufacturer of health care packaging including
prescription containers and medical devices, and closures including tamper-
evident caps and dispensing systems. O-I has plastics operations in the U.S.,
Mexico, Puerto Rico, Brazil, Hungary and Singapore. The Company reported 2003
net sales of $6.0 billion.
Conference Call
As announced previously, a conference call to discuss the Company's latest
results will be held Wednesday, July 21, 2004, at 8:30 a.m., Eastern Time. A
live webcast and a replay of the conference call will be available on the
Internet at the Owens-Illinois web site (http://www.o-i.com). The conference
call also may be accessed by dialing 888-733-1701 (U.S. and Canada) or
706-634-4943 (International) by 8:20 a.m. (Eastern Time) on July 21. Ask for
the Owens-Illinois conference call. A replay of the call will be available
from approximately 11:30 a.m. (Eastern Time) on July 21 through Friday,
July 30. In addition to the Owens-Illinois web site, the replay also may be
accessed by dialing 800-642-1687 (U.S. and Canada) or 706-645-9291
(International). The conference ID number to access the replay is 5293579.
Additional information
Certain additional information regarding second quarter sales, EBIT and
EPS comparisons to prior year is available at the Owens-Illinois web
site, http://www.o-i.com, in the Investor Relations section under "Annual
Reports and Presentations."
Copies of Owens-Illinois news releases are available at the Owens-Illinois
web site at http://www.o-i.com; or at http://www.prnewswire.com.
OWENS-ILLINOIS, INC.
Condensed Consolidated Results of Operations
(Dollars in millions, except per share amounts)
Three months ended June 30,
---------------------------
2004 2003
--------- ---------
Revenues:
Net sales $1,716.3 $1,579.6
Royalties and net technical
assistance 8.1 5.8
Equity earnings 9.1 7.8
Interest 3.6 6.3
Other (a) 24.9 4.6
--------- ---------
1,762.0 1,604.1
Costs and expenses:
Manufacturing, shipping, and
delivery 1,393.9 1,270.7
Research and development 11.7 12.4
Engineering 8.6 7.6
Selling and administrative 86.3 82.2
Interest (b) 116.2 138.4
Other (c) 21.9 43.3
--------- ---------
1,638.6 1,554.6
--------- ---------
Earnings before items below 123.4 49.5
Provision for income taxes 33.8 26.7
Minority share owners' interests
in earnings of subsidiaries 7.6 5.8
--------- ---------
Net earnings $82.0 $17.0
========= =========
Net earnings $82.0 $17.0
Less convertible preferred
stock dividends (5.4) (5.4)
--------- ---------
Available to common share owners $76.6 $11.6
========= =========
Basic earnings per share
of common stock:
Net earnings $0.52 $0.08
========= =========
Weighted average shares
outstanding (000s) 147,582 146,891
========= =========
Diluted earnings per share
of common stock:
Net earnings $0.52 $0.08
========= =========
Diluted average shares (000s) 149,245 147,526
========= =========
(a) Amount for 2004 includes a gain of $20.6 million ($14.5 million after
tax) for the sale of certain real property. The aftertax effect of
this gain is an increase in earnings per share of $0.10.
(b) Amount for 2003 includes a charge of $13.2 million ($8.2 million
after tax) for note repurchase premiums and a charge of $3.6 million
($2.5 million after tax) for the write-off of finance fees related to
debt that was repaid prior to its maturity. The aftertax effect of
these charges is a reduction in earnings per share of $0.07.
(c) Amount for 2004 includes a charge of $14.5 million ($9.1 million
after tax) for certain intellectual property litigation. The
aftertax effect of this charge is a reduction in earnings per share
of $0.06.
Amount for 2003 includes a charge of $37.4 million ($37.4 million
after tax) from the loss on the sale of long-term notes receivable.
The aftertax effect of this charge is a reduction in earnings per
share of $0.25.
OWENS-ILLINOIS, INC.
Condensed Consolidated Results of Operations
(Dollars in millions, except per share amounts)
Six months ended June 30,
---------------------------
2004 2003
--------- ---------
Revenues:
Net sales $3,261.7 $2,966.0
Royalties and net technical
assistance 15.8 12.5
Equity earnings 14.7 13.6
Interest 6.9 14.1
Other (a) 30.1 9.8
--------- ---------
3,329.2 3,016.0
Costs and expenses:
Manufacturing, shipping, and
delivery 2,654.0 2,410.8
Research and development 22.0 22.3
Engineering 18.0 17.8
Selling and administrative 176.8 165.8
Interest (b) 230.6 249.4
Other (c) 26.1 45.9
--------- ---------
3,127.5 2,912.0
--------- ---------
Earnings before items below 201.7 104.0
Provision for income taxes 57.2 43.9
Minority share owners' interests
in earnings of subsidiaries 13.5 8.7
--------- ---------
Net earnings $131.0 $51.4
========= =========
Net earnings $131.0 $51.4
Less convertible preferred
stock dividends (10.7) (10.7)
--------- ---------
Available to common share owners $120.3 $40.7
========= =========
Basic earnings per share
of common stock:
Net earnings $0.82 $0.28
========= =========
Weighted average shares
outstanding (000s) 147,312 146,872
========= =========
Diluted earnings per share
of common stock:
Net earnings $0.81 $0.28
========= =========
Diluted average shares (000s) 148,682 147,522
========= =========
(a) Amount for 2004 includes a gain of $20.6 million ($14.5 million after
tax) for the sale of certain real property. The aftertax effect of
this gain is an increase in earnings per share of $0.10.
(b) Amount for 2003 includes a charge of $13.2 million ($8.2 million
after tax) for note repurchase premiums and a charge of $3.6 million
($2.5 million after tax) for the write-off of finance fees related to
debt that was repaid prior to its maturity. The aftertax effect of
these charges is a reduction in earnings per share of $0.07.
(c) Amount for 2004 includes a charge of $14.5 million ($9.1 million
after tax) for certain intellectual property litigation. The
aftertax effect of this charge is a reduction in earnings per share
of $0.06.
Amount for 2003 includes a charge of $37.4 million ($37.4 million
after tax) from the loss on the sale of long-term notes receivable.
The aftertax effect of this charge is a reduction in earnings per
share of $0.25.
OWENS-ILLINOIS, INC.
Consolidated Supplemental Financial Data
(Dollars in millions)
Three months ended June 30,
---------------------------
2004 2003
--------- ---------
Selected Segment Information
----------------------------
Net sales:
Glass Containers $1,219.7 $1,074.6
Plastics Packaging 496.6 505.0
--------- ---------
Segment and consolidated net sales $1,716.3 $1,579.6
========= =========
Product Segment EBIT (a):
Glass Containers (b) $188.8 $183.8
Plastics Packaging (c) 59.0 54.2
--------- ---------
Product Segment EBIT 247.8 238.0
Eliminations and other
retained items (17.9) (19.0)
--------- ---------
Segment EBIT $229.9 $219.0
========= =========
Selected Cash Flow Information
------------------------------
Depreciation $117.0 $117.3
========= =========
Amortization of intangibles
and other deferred items $7.8 $5.9
========= =========
Additions to property, plant, and
equipment $101.4 $101.3
========= =========
Asbestos-related payments $45.5 $44.8
========= =========
Asbestos-related insurance proceeds $- $0.1
========= =========
OWENS-ILLINOIS, INC.
Consolidated Supplemental Financial Data
(Dollars in millions)
Six months ended June 30,
---------------------------
2004 2003
--------- ---------
Selected Segment Information
----------------------------
Net sales:
Glass Containers $2,282.1 $2,005.2
Plastics Packaging 979.6 960.8
--------- ---------
Segment and consolidated net sales $3,261.7 $2,966.0
========= =========
Product Segment EBIT (a):
Glass Containers (b) $354.0 $310.2
Plastics Packaging (c) 114.9 105.3
--------- ---------
Product Segment EBIT 468.9 415.5
Eliminations and other
retained items (49.6) (38.8)
--------- ---------
Segment EBIT $419.3 $376.7
========= =========
Selected Cash Flow Information
------------------------------
Depreciation $240.3 $231.5
========= =========
Amortization of intangibles
and other deferred items $15.9 $14.5
========= =========
Additions to property, plant, and
equipment $183.9 $220.7
========= =========
Asbestos-related payments $95.9 $99.9
========= =========
Asbestos-related insurance proceeds $0.4 $4.8
========= =========
Selected Balance Sheet Information
----------------------------------
June 30, June 30,
2004 2003
--------- ---------
Total debt $6,702.3 $5,757.4
========= =========
Share owners' equity $1,038.2 $1,882.2
========= =========
Cash $301.8 $150.2
========= =========
Short term investments $22.9 $24.8
========= =========
(a) EBIT consists of consolidated earnings before interest income,
interest expense, provision for income taxes and minority share
owners' interests in earnings of subsidiaries. Segment EBIT excludes
amounts related to certain items that management considers not
representative of ongoing operations.
The Company presents EBIT because its management believes that it
provides investors with a measure of operating performance without
regard to level of indebtedness or other related costs of capital.
The most directly comparable GAAP financial measure to EBIT is net
earnings. The Company presents segment EBIT because management uses
the measure, in large part, to evaluate the Company's performance and
to allocate resources.
A reconciliation of net earnings to consolidated and Segment EBIT is
as follows (dollars in millions):
Three months ended June 30,
---------------------------
2004 2003
--------- ---------
Net earnings $82.0 $17.0
Minority share owner's interests
in earnings of subsidiaries 7.6 5.8
Provision for income taxes 33.8 26.7
Interest expense 116.2 138.4
Interest income (3.6) (6.3)
--------- ---------
Consolidated EBIT 236.0 181.6
Gain on the sale of certain
real property (20.6)
Charge for certain intellectual
property litigation 14.5
Loss on the sale of notes receivable 37.4
--------- ---------
Segment EBIT $229.9 $219.0
========= =========
Six months ended June 30,
---------------------------
2004 2003
--------- ---------
Net earnings $131.0 $51.4
Minority share owner's interests
in earnings of subsidiaries 13.5 8.7
Provision for income taxes 57.2 43.9
Interest expense 230.6 249.4
Interest income (6.9) (14.1)
--------- ---------
Consolidated EBIT 425.4 339.3
Gain on the sale of certain
real property (20.6)
Charge for certain intellectual
property litigation 14.5
Loss on the sale of notes receivable 37.4
--------- ---------
Segment EBIT $419.3 $376.7
========= =========
(b) Amount for 2004 excludes a gain of $20.6 million for the sale of
certain real property.
Amount for 2003 excludes a charge of $37.4 million related to the
loss on the sale of long-term notes receivable.
(c) Amount for 2004 excludes a charge of $14.5 million for certain
intellectual property litigation.
SOURCE Owens-Illinois, Inc.
-0- 07/20/2004
/CONTACT: Sara Theis of Owens-Illinois, Inc., +1-419-247-1297/
/Web site: http://www.o-i.com /
(OI)
CO: Owens-Illinois, Inc.
ST: Ohio
IN: FOD HOU
SU: ERN ERP CCA MAV