UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
January 26, 2011
Date of Report (Date of earliest event reported)
OWENS-ILLINOIS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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1-9576 |
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22-2781933 |
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(State or other jurisdiction of incorporation or organization) |
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(Commission |
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(I.R.S. Employer Identification Number) |
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One Michael Owens Way |
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Perrysburg, Ohio |
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43551-2999 |
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(Address of principal executive offices) |
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(Zip Code) |
(567) 336-5000
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. |
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RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On January 26, 2011, Owens-Illinois, Inc. issued a press release announcing its results of operations for the quarter and year ended December 31, 2010. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Additional financial information, posted to the Company’s web site, is attached hereto as Exhibit 99.2.
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ITEM 9.01. |
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FINANCIAL STATEMENTS AND EXHIBITS. |
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(d) |
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Exhibits. |
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Exhibit |
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No. |
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Description |
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99.1 |
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Press Release dated January 26, 2011, announcing results of operations for the quarter and year ended December 31, 2010 |
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99.2 |
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Additional financial information — quarter and year ended December 31, 2010 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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OWENS-ILLINOIS, INC. | |
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Date: January 26, 2011 |
By: |
/s/ Edward C. White |
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Name: |
Edward C. White |
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Title: |
Senior Vice President and Chief Financial Officer |
EXHIBIT INDEX
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Exhibit |
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No. |
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Description |
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99.1 |
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Press Release dated January 26, 2011, announcing results of operations for the quarter and year ended December 31, 2010 |
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99.2 |
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Additional financial information — quarter and year ended December 31, 2010 |
Exhibit 99.1
FOR IMMEDIATE RELEASE
O-I REPORTS FULL YEAR AND FOURTH QUARTER 2010 RESULTS
Expansion in emerging markets positions O-I well for future profitable growth
2011 free cash flow expected to approximate $300 million
PERRYSBURG, Ohio (January 26, 2011) — Owens-Illinois, Inc. (NYSE: OI) today reported financial results for the full year and fourth quarter ending December 31, 2010.
Highlights:
Full Year 2010: O-I reported full-year 2010 earnings from continuing operations attributable to the Company of $1.55 per share (diluted), compared to $0.65 per share (diluted) in 2009. Adjusted net earnings (non-GAAP) were $2.60 per share, compared to $2.61 per share in 2009.
· Segment Operating Profit: Strong organic growth in South America, acquisitions in emerging markets and improved manufacturing productivity on a global basis drove a $73 million increase in segment operating profit compared to 2009. Non-operating costs increased, including higher pension and net interest expense.
· Acquisitions Drive Future Profitable Growth: O-I added 10 plants in rapidly growing emerging markets through acquisitions and joint ventures. The Company also built three new furnaces to support future growth.
Fourth Quarter 2010: O-I reported a fourth-quarter 2010 loss from continuing operations attributable to the Company of $0.51 per share, compared to a $1.01 per share loss in the prior year. These results include a non-cash charge for the annual adjustment of the Company’s asbestos-related liability. Adjusted net earnings (non-GAAP) were $0.45 per share, compared to $0.43 per share in the fourth quarter of 2009.
· Improved Operating Performance: Higher capacity utilization drove a $47 million improvement in segment operating profit from the prior year fourth quarter. Price and shipment levels were both flat with the prior year. Higher segment results were partially offset by additional pension and net interest expense.
· Strategic Events: O-I purchased three plants in China and began production at a new furnace in New Zealand during the fourth quarter. Due to the expropriation of the assets of its Venezuelan operations, the Company has reflected this business as discontinued operations.
Full Year 2010:
Full-year 2010 net sales from continuing operations were $6.63 billion, compared to $6.65 billion in 2009.
Earnings from continuing operations attributable to the Company for full year 2010 were $258 million, or $1.55 per share (diluted), compared to $110 million, or $0.65 per share (diluted), in the prior year. Exclusive of the items listed in Note 1, full-year 2010 adjusted net earnings were $434 million, or $2.60 per share (diluted) compared with $444 million, or $2.61 per share (diluted) in 2009. A description of items that management considers not representative of ongoing operations and a reconciliation of the GAAP to non-GAAP earnings and earnings per share can be found in Note 1 provided below and in charts on the Company’s Web site, www.o-i.com/investorrelations.
Segment operating profit in 2010 was $964 million, compared to $891 million in 2009, and included a $16 million benefit from favorable currency translation. Price and product mix were consistent with the prior year, while total shipments, in tonnes, declined 1 percent. Excluding the net effect of additional volume from acquisitions and volume loss tied to contract renegotiations effective in 2010, shipments were up approximately 2 percent from 2009, which is more reflective of underlying consumer trends. Manufacturing and delivery costs declined $38 million from 2009, mostly due to benefits from the
Company’s strategic footprint alignment initiative and despite modest cost inflation. Non-operational costs increased from the prior year, primarily the result of additional year-over-year pension and net interest expense. Higher net interest expense reflected additional debt issued to fund various acquisitions during 2010, which are expected to be accretive to earnings in 2011.
Commenting on full-year 2010 results, Chairman and Chief Executive Officer Al Stroucken said, “Our improved segment operating profit over 2009 reflected excellent profitable growth in South America and the success of our strategic footprint alignment efforts. During 2010, we acquired 10 new plants across South America and Asia Pacific, including a joint venture in Southeast Asia. We also added three new furnaces, one each in Argentina, Peru and New Zealand. Collectively, these investments expand our access to new markets and customers, and they position us well for future growth.”
Fourth Quarter 2010:
Fourth-quarter net sales from continuing operations were $1.73 billion in 2010, flat with the prior year.
The loss from continuing operations attributable to the Company in the fourth quarter of 2010 was $83 million, or $0.51 per share, compared with a loss from continuing operations, in the prior year, of $169 million, or $1.01 per share. Exclusive of the items not representative of ongoing operations listed in Note 1, fourth-quarter 2010 adjusted net earnings were $76 million, or $0.45 per share (diluted), compared to adjusted net earnings in the prior year fourth quarter of $74 million, or $0.43 per share (diluted).
O-I reported fourth-quarter 2010 segment operating profit of $221 million, up from $174 million in the prior year. Price and product mix, as well as total shipment levels, in tonnes, were flat with the fourth quarter of 2009. Manufacturing and delivery costs decreased by $35 million from the prior year, primarily due to higher operating rates. Non-operational costs increased from fourth quarter 2009.
Consistent with the Company’s strategic growth initiative to expand in rapidly growing emerging markets, O-I acquired three plants in China during the fourth quarter, including two near Beijing and one near Guangzhou. The Company also began production at its new furnace in New Zealand.
Financial Highlights:
The Company reported total debt of $4.278 billion and cash of $640 million at December 31, 2010. As a result, net debt was $3.638 billion, an increase of $785 million from year-end 2009. The increase in net debt primarily reflected the funding of several acquisitions in 2010 and approximately $200 million paid to repurchase six million shares of O-I stock. These factors were partially offset by $88 million of foreign currency translation and $100 million of free cash flow from continuing operations. In the fourth quarter of 2010, the Company repaid approximately $70 million of debt due in 2011. Available liquidity on December 31, 2010, was $732 million under the Company’s global revolving credit facility.
O-I has deemed the disposal of its expropriated Venezuelan operations as complete effective December 31, 2010. As a result, the Venezuelan business has been reflected in the Company’s financial statements as discontinued operations, and the Company has taken a one-time charge of approximately $329 million to write-off the Venezuelan net assets and the related cumulative Venezuelan currency translation adjustments recorded in prior years. The Company continues to negotiate with the Venezuelan government with respect to certain aspects of the expropriation, including compensation.
Asbestos-related cash payments during the full year and fourth quarter of 2010 were $179 million and $65 million, respectively. These payments compare with $190 million and $68 million for the same periods last year. New lawsuits and claims filed during full year 2010 were approximately 45 percent lower than in 2009. The number of pending asbestos-related lawsuits and claims approximated 5,900 as of December 31, 2010, compared with approximately 6,900 at year end 2009.
The Company conducted its annual comprehensive review of asbestos-related liabilities in the fourth quarter. As a result of that review, O-I recorded a non-cash charge of $170 million (before and after tax amount) compared to the 2009 charge of $180 million (before and after tax amount). The accrued balance for future asbestos-related costs as of December 31, 2010, was $476 million.
Business Outlook:
Commenting on the Company’s outlook for full year 2011, Stroucken said, “We expect improved financial performance and free cash flow generation in 2011. Shipments should increase due to organic growth and benefits from recent acquisitions. To support future profitable growth, we will invest in our sales, marketing and innovation capabilities. Also, higher selling prices will partially offset additional cost inflation. As capital investments and restructuring payments will decline significantly from 2010 levels, we expect free cash flow will approximate $300 million in 2011.”
Note 1:
The table below describes the items that management considers not representative of ongoing operations.
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Three months ended December 31 |
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2010 |
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2009 |
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$ Millions, except per-share amounts |
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Earnings |
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EPS |
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Earnings |
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EPS |
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Loss from Continuing Operations Attributable to the Company |
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$ |
(83 |
) |
$ |
(0.51 |
) |
$ |
(169 |
) |
$ |
(1.01 |
) |
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Items that management considers not representative of ongoing operations consistent with Segment Operating Profit |
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Charge for asbestos-related costs |
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170 |
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1.02 |
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180 |
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1.06 |
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Acquisition-related fair value inventory adjustments and restructuring, transaction and financing costs |
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18 |
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0.11 |
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Charges for restructuring and asset impairment |
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3 |
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0.02 |
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94 |
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0.55 |
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Net benefit related to changes in deferred tax valuation allowance |
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(24 |
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(0.15 |
) |
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Charges for currency remeasurement |
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17 |
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0.10 |
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Non-cash tax benefit transferred from other comprehensive income (equity) |
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(8 |
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(0.05 |
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(48 |
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(0.28 |
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Dilutive effect of options and other |
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0.01 |
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0.01 |
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Adjusted Net Earnings |
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$ |
76 |
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$ |
0.45 |
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$ |
74 |
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$ |
0.43 |
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Twelve months ended December 31 |
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2010 |
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2009 |
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$ Millions, except per-share amounts |
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Earnings |
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EPS |
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Earnings |
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EPS |
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Earnings from Continuing Operations Attributable to the Company |
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$ |
258 |
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$ |
1.55 |
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$ |
110 |
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$ |
0.65 |
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Items that management considers not representative of ongoing operations consistent with Segment Operating Profit |
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Charge for asbestos-related costs |
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170 |
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1.02 |
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180 |
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1.06 |
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Acquisition-related fair value inventory adjustments and restructuring, transaction and financing costs |
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27 |
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0.16 |
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Charges for restructuring and asset impairment |
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11 |
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0.07 |
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180 |
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1.05 |
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Net benefit related to changes in deferred tax valuation allowance |
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(24 |
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(0.15 |
) |
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Charges for currency remeasurement |
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17 |
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0.10 |
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Charges for note repurchase premiums and write-off of finance fees |
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5 |
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0.03 |
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Non-cash tax benefit transferred from other comprehensive income (equity) |
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(8 |
) |
(0.05 |
) |
(48 |
) |
(0.28 |
) | ||||
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Adjusted Net Earnings |
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$ |
434 |
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$ |
2.60 |
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$ |
444 |
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$ |
2.61 |
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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 as sist 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. 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 the expropriation of the Company’s operations in Venezuela, disruptions in capital markets, disruption s in the supply chain, competitive pricing pressures, inflation or deflation, and changes in the tax rates and laws, (4) consumer preferences for alternative forms of packaging, (5) fluctuation in raw material and labor costs, (6) availability of raw materials, (7) costs and availability of energy, (8) transportation costs, (9) the ability of the Company to raise selling prices commensurate with energy and other cost increases, (10) consolidation among competitors and customers, (11) the ability of the Company to 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, and (15) the timing and occurrence of events which are beyond the control of the Compa ny, including any expropriation of the Company’s operations and 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 assume any obligation to update or supplement any particular forward-looking statements contained in this news release.
Conference Call Scheduled for January 27, 2011
O-I CEO Al Stroucken and CFO Ed White will conduct a conference call to discuss the Company’s latest results on Thursday, January 27, 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 January 27. 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.
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Contacts: |
O-I, Sasha Sekpeh, 567-336-2355 – Investor Relations |
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O-I, Stephanie Johnston, 567-336-7199 – Corporate Communications |
Copies of O-I news releases are available on the O-I Web site at www.o-i.com or at www.prnewswire.com.
O-I’s first-quarter 2011 earnings conference call is currently scheduled for Thursday, April 28, 2011, at 8:30 a.m., Eastern Time.
# # #
OWENS-ILLINOIS, INC.
Condensed Consolidated Results of Operations (a)
(Dollars in millions, except per share amounts)
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Three months ended |
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Year ended |
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2010 |
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2009 |
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2010 |
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2009 |
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Net sales |
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$ |
1,728 |
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$ |
1,745 |
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$ |
6,633 |
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$ |
6,652 |
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Manufacturing, shipping, and delivery expense (b) |
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(1,420 |
) |
(1,453 |
) |
(5,283 |
) |
(5,317 |
) | ||||
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Gross profit |
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308 |
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292 |
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1,350 |
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1,335 |
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Selling and administrative expense |
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(125 |
) |
(134 |
) |
(492 |
) |
(493 |
) | ||||
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Research, development, and engineering expense |
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(19 |
) |
(16 |
) |
(62 |
) |
(58 |
) | ||||
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Interest expense (c) |
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(72 |
) |
(57 |
) |
(249 |
) |
(222 |
) | ||||
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Interest income |
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3 |
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5 |
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13 |
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18 |
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Equity earnings |
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13 |
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13 |
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59 |
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53 |
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Royalties and net technical assistance |
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4 |
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3 |
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16 |
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13 |
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Other income |
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6 |
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6 |
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16 |
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11 |
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Other expense (d) |
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(199 |
) |
(306 |
) |
(227 |
) |
(442 |
) | ||||
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Earnings (loss) from continuing operations before income taxes |
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(81 |
) |
(194 |
) |
424 |
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215 |
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Provision for income taxes (e) |
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7 |
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32 |
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(129 |
) |
(83 |
) | ||||
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Earnings (loss) from continuing operations |
|
(74 |
) |
(162 |
) |
295 |
|
132 |
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Earnings from discontinued operations |
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10 |
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31 |
|
66 |
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|
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Loss on disposal of discontinued operations |
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(331 |
) |
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(331 |
) |
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| ||||
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|
|
|
|
|
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|
|
|
| ||||
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Net earnings (loss) |
|
(405 |
) |
(152 |
) |
(5 |
) |
198 |
| ||||
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|
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|
|
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Net earnings attributable to noncontrolling interests |
|
(7 |
) |
(7 |
) |
(42 |
) |
(36 |
) | ||||
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Net earnings (loss) attributable to the Company |
|
$ |
(412 |
) |
$ |
(159 |
) |
$ |
(47 |
) |
$ |
162 |
|
|
|
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Amounts attributable to the Company: |
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|
|
|
|
|
|
|
| ||||
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Earnings (loss) from continuing operations |
|
$ |
(83 |
) |
$ |
(169 |
) |
$ |
258 |
|
$ |
110 |
|
|
Earnings from discontinued operations |
|
|
|
10 |
|
24 |
|
52 |
| ||||
|
Loss on disposal of discontinued operations |
|
(329 |
) |
|
|
(329 |
) |
|
| ||||
|
Net earnings (loss) |
|
$ |
(412 |
) |
$ |
(159 |
) |
$ |
(47 |
) |
$ |
162 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
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Basic earnings per share (f): |
|
|
|
|
|
|
|
|
| ||||
|
Earnings (loss) from continuing operations |
|
$ |
(0.51 |
) |
$ |
(1.01 |
) |
$ |
1.57 |
|
$ |
0.65 |
|
|
Earnings from discontinued operations |
|
|
|
0.06 |
|
0.14 |
|
0.31 |
| ||||
|
Loss on disposal of discontinued operations |
|
(2.01 |
) |
|
|
(2.00 |
) |
|
| ||||
|
Net earnings (loss) |
|
$ |
(2.52 |
) |
$ |
(0.95 |
) |
$ |
(0.29 |
) |
$ |
0.96 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average shares outstanding (000s) |
|
163,181 |
|
168,016 |
|
164,271 |
|
167,687 |
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|
|
|
|
|
|
|
|
|
| ||||
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Diluted earnings per share (f): |
|
|
|
|
|
|
|
|
| ||||
|
Earnings (loss) from continuing operations |
|
$ |
(0.51 |
) |
$ |
(1.01 |
) |
$ |
1.55 |
|
$ |
0.65 |
|
|
Earnings from discontinued operations |
|
|
|
0.06 |
|
0.14 |
|
0.30 |
| ||||
|
Loss on disposal of discontinued operations |
|
(2.01 |
) |
|
|
(1.97 |
) |
|
| ||||
|
Net earnings (loss) |
|
$ |
(2.52 |
) |
$ |
(0.95 |
) |
$ |
(0.28 |
) |
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted average shares (000s) |
|
163,181 |
|
168,016 |
|
167,078 |
|
170,540 |
| ||||
|
(a) |
|
Amounts related to the Company’s Venezuelan operations have been reclassified to discontinued operations for all periods presented. |
|
|
|
|
|
(b) |
|
Amount for the three months ended December 31, 2010, includes charges of $7 million ($4 million after tax amount attributable to the Company) for acquisition-related fair value inventory adjustments. The effect of these charges is a reduction in earnings per share of $0.03. |
|
|
|
|
|
|
|
Amount for the year ended December 31, 2010, includes charges of $12 million ($7 million after tax amount attributable to the Company) for acquisition-related fair value inventory adjustments. The effect of these charges is a reduction in earnings per share of $0.04. |
|
|
|
|
|
(c) |
|
Amount for the year ended December 31, 2009, includes charges of $5 million (pretax and after tax) for note repurchase premiums and the write-off of finance fees related to debt that was repaid prior to its maturity. The aftertax effect of this charge is a reduction in earnings per share of $0.03. |
|
|
|
|
|
(d) |
|
Amount for the three months and year ended December 31, 2010, includes a charge of $170 million (before and after tax) to increase the accrual for estimated future asbestos-related costs. The effect of this charge is a reduction in earnings per share of $1.02. |
|
|
|
|
|
|
|
Amount for the three months ended December 31, 2010, includes charges of $5 million ($3 million after tax amount attributable to the Company) for restructuring and asset impairment. The effect of these charges is a reduction in earnings per share of $0.02. |
|
|
|
|
|
|
|
Amount for the year ended December 31, 2010, includes charges of $13 million ($11 million after tax amount attributable to the Company) for restructuring and asset impairment. The effect of these charges is a reduction in earnings per share of $0.07. |
|
|
|
|
|
|
|
Amount for the three months ended December 31, 2010, includes charges of $14 million (before and after tax amount attributable to the Company) for acquisition-related restructuring, transaction and financing costs. The effect of these charges is a reduction in earnings per share of $0.08. |
|
|
|
|
|
|
|
Amount for the year ended December 31, 2010, includes charges of $20 million (before and after tax amount attributable to the Company) for acquisition-related restructuring, transaction and financing costs. The effect of these charges is a reduction in earnings per share of $0.12. |
|
|
|
|
|
|
|
Amount for the three months and year ended December 31, 2009, includes a charge of $180 million (before and after tax) to increase the accrual for estimated future asbestos-related costs. The effect of this charge is a reduction in earnings per share of $1.06. |
|
|
|
|
|
|
|
Amount for the three months ended December 31, 2009, includes charges of $100 million ($94 million after tax amount attributable to the Company) for restructuring and asset impairment. The effect of these charges is a reduction in earnings per share of $0.55. |
|
|
|
|
|
|
|
Amount for the year ended December 31, 2009, includes charges of $207 million ($180 million after tax amount attributable to the Company) for restructuring and asset impairment. The effect of these charges is a reduction in earnings per share of $1.05. |
|
|
|
|
|
|
|
Amount for the three months and year ended December 31, 2009, includes charges of $18 million ($17 million after tax amount attributable to the Company) for the remeasurement of certain bolivar-denominated assets and liabilities held outside of Venezuela. The effect of these charges is a reduction in earnings per share of $0.10. |
|
|
|
|
|
(e) |
|
Amount for the three months and year ended December 31, 2010, includes a net tax benefit of $24 million related to the reversal of deferred tax valuation allowances. The effect of this tax benefit is an increase in earnings per share of $0.15. |
|
|
|
|
|
|
|
Amount for the three months and year ended December 31, 2010, includes a non-cash tax benefit transferred from other comprehensive income (equity) of $8 million. The effect of this tax benefit is an increase in earnings per share of $0.05. |
|
|
|
|
|
|
|
Amount for the three months and year ended December 31, 2009, includes a non-cash tax benefit transferred from other comprehensive income (equity) of $48 million. The effect of this tax benefit is an increase in earnings per share of $0.28. |
|
|
|
|
|
(f) |
|
Diluted earnings per share of common stock are equal to basic earnings per share of common stock for the three months ended December 31, 2010 and 2009 due to the loss from continuing operations recorded in each period. |
OWENS-ILLINOIS, INC.
Condensed Consolidated Balance Sheets
(Dollars in millions)
|
|
|
Dec. 31, |
|
Dec. 31, |
| ||
|
|
|
2010 |
|
2009 |
| ||
|
Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
640 |
|
$ |
755 |
|
|
Short-term investments, at cost which approximates market |
|
|
|
1 |
| ||
|
Receivables, less allowances for losses and discounts |
|
1,075 |
|
983 |
| ||
|
Inventories |
|
946 |
|
889 |
| ||
|
Prepaid expenses |
|
77 |
|
77 |
| ||
|
Assets of discontinued operations |
|
|
|
92 |
| ||
|
|
|
|
|
|
| ||
|
Total current assets |
|
2,738 |
|
2,797 |
| ||
|
|
|
|
|
|
| ||
|
Investments and other assets: |
|
|
|
|
| ||
|
Equity investments |
|
299 |
|
114 |
| ||
|
Repair parts inventories |
|
147 |
|
122 |
| ||
|
Prepaid pension |
|
54 |
|
46 |
| ||
|
Deposits, receivables, and other assets |
|
588 |
|
522 |
| ||
|
Goodwill |
|
2,821 |
|
2,381 |
| ||
|
Assets of discontinued operations |
|
|
|
34 |
| ||
|
|
|
|
|
|
| ||
|
Total other assets |
|
3,909 |
|
3,219 |
| ||
|
|
|
|
|
|
| ||
|
Property, plant, and equipment, at cost |
|
7,016 |
|
6,553 |
| ||
|
Less accumulated depreciation |
|
3,909 |
|
3,842 |
| ||
|
|
|
|
|
|
| ||
|
Net property, plant, and equipment |
|
3,107 |
|
2,711 |
| ||
|
|
|
|
|
|
| ||
|
Total assets |
|
$ |
9,754 |
|
$ |
8,727 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Share Owners’ Equity |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Short-term loans and long-term debt due within one year |
|
$ |
354 |
|
$ |
350 |
|
|
Current portion of asbestos-related liabilities |
|
170 |
|
175 |
| ||
|
Accounts payable |
|
878 |
|
850 |
| ||
|
Other liabilities |
|
677 |
|
647 |
| ||
|
Liabilities of discontinued operations |
|
|
|
12 |
| ||
|
|
|
|
|
|
| ||
|
Total current liabilities |
|
2,079 |
|
2,034 |
| ||
|
|
|
|
|
|
| ||
|
Long-term debt |
|
3,924 |
|
3,258 |
| ||
|
Deferred taxes |
|
203 |
|
186 |
| ||
|
Pension benefits |
|
576 |
|
578 |
| ||
|
Nonpension postretirement benefits |
|
259 |
|
267 |
| ||
|
Other liabilities |
|
381 |
|
343 |
| ||
|
Asbestos-related liabilities |
|
306 |
|
310 |
| ||
|
Liabilities of discontinued operations |
|
|
|
15 |
| ||
|
Share owners’ equity: |
|
|
|
|
| ||
|
The Company’s share owners’ equity: |
|
|
|
|
| ||
|
Common stock |
|
2 |
|
2 |
| ||
|
Capital in excess of par value |
|
3,040 |
|
2,942 |
| ||
|
Treasury stock, at cost |
|
(412 |
) |
(217 |
) | ||
|
Retained earnings |
|
82 |
|
129 |
| ||
|
Accumulated other comprehensive loss |
|
(897 |
) |
(1,318 |
) | ||
|
|
|
|
|
|
| ||
|
Total share owners’ equity of the Company |
|
1,815 |
|
1,538 |
| ||
|
Noncontrolling interests |
|
211 |
|
198 |
| ||
|
|
|
|
|
|
| ||
|
Total share owners’ equity |
|
2,026 |
|
1,736 |
| ||
|
|
|
|
|
|
| ||
|
Total liabilities and share owners’ equity |
|
$ |
9,754 |
|
$ |
8,727 |
|
OWENS-ILLINOIS, INC.
Condensed Consolidated Cash Flows
(Dollars in millions)
|
|
|
Three months ended |
|
Year ended |
| ||||||||
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
| ||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Net earnings (loss) |
|
$ |
(405 |
) |
$ |
(152 |
) |
$ |
(5 |
) |
$ |
198 |
|
|
Earnings from discontinued operations |
|
|
|
(10 |
) |
(31 |
) |
(66 |
) | ||||
|
Loss on disposal of discontinued operations |
|
331 |
|
|
|
331 |
|
|
| ||||
|
Non-cash charges: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation |
|
102 |
|
98 |
|
369 |
|
364 |
| ||||
|
Amortization of intangibles and other deferred items |
|
4 |
|
3 |
|
22 |
|
21 |
| ||||
|
Amortization of finance fees and debt discount |
|
3 |
|
3 |
|
19 |
|
10 |
| ||||
|
Non-cash tax benefit |
|
(8 |
) |
(48 |
) |
(8 |
) |
(48 |
) | ||||
|
Restructuring and asset impairment |
|
5 |
|
100 |
|
13 |
|
207 |
| ||||
|
Charges for acquisition-related fair value inventory adjustments and restructuring and financing costs |
|
21 |
|
|
|
26 |
|
|
| ||||
|
Future asbestos-related costs |
|
170 |
|
180 |
|
170 |
|
180 |
| ||||
|
Other |
|
15 |
|
55 |
|
86 |
|
113 |
| ||||
|
Asbestos-related payments |
|
(65 |
) |
(68 |
) |
(179 |
) |
(190 |
) | ||||
|
Cash paid for restructuring activities |
|
(12 |
) |
(25 |
) |
(61 |
) |
(65 |
) | ||||
|
Change in non-current operating assets |
|
13 |
|
9 |
|
(19 |
) |
28 |
| ||||
|
Change in non-current liabilities |
|
(18 |
) |
(82 |
) |
(62 |
) |
(179 |
) | ||||
|
Change in components of working capital |
|
74 |
|
165 |
|
(71 |
) |
156 |
| ||||
|
Cash provided by continuing operating activities |
|
230 |
|
228 |
|
600 |
|
729 |
| ||||
|
Cash provided by (utilized in) discontinued operating activities |
|
(43 |
) |
(7 |
) |
(8 |
) |
71 |
| ||||
|
Total cash provided by operating activities |
|
187 |
|
221 |
|
592 |
|
800 |
| ||||
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Additions to property, plant, and equipment - continuing |
|
(111 |
) |
(227 |
) |
(500 |
) |
(407 |
) | ||||
|
Additions to property, plant, and equipment - discontinued |
|
|
|
(7 |
) |
(3 |
) |
(21 |
) | ||||
|
Acquisitions, net of cash acquired |
|
(63 |
) |
|
|
(817 |
) |
(5 |
) | ||||
|
Net cash proceeds related to sale of assets and other |
|
5 |
|
9 |
|
6 |
|
15 |
| ||||
|
Cash utilized in investing activities |
|
(169 |
) |
(225 |
) |
(1,314 |
) |
(418 |
) | ||||
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Additions to long-term debt |
|
22 |
|
8 |
|
1,392 |
|
1,080 |
| ||||
|
Repayments of long-term debt |
|
(78 |
) |
(82 |
) |
(573 |
) |
(832 |
) | ||||
|
Decrease in short-term loans - continuing |
|
(11 |
) |
(30 |
) |
(39 |
) |
(85 |
) | ||||
|
Increase (decrease) in short-term loans - discontinued |
|
|
|
6 |
|
(2 |
) |
6 |
| ||||
|
Net receipts (payments) for hedging activity |
|
(13 |
) |
(4 |
) |
21 |
|
14 |
| ||||
|
Payment of finance fees |
|
|
|
|
|
(33 |
) |
(14 |
) | ||||
|
Dividends paid to noncontrolling interests - continuing |
|
(2 |
) |
(4 |
) |
(25 |
) |
(35 |
) | ||||
|
Dividends paid to noncontrolling interests - discontinued |
|
|
|
|
|
|
|
(27 |
) | ||||
|
Treasury shares purchased |
|
|
|
|
|
(199 |
) |
|
| ||||
|
Issuance of common stock and other |
|
1 |
|
1 |
|
5 |
|
7 |
| ||||
|
Cash provided by (utilized in) financing activities |
|
(81 |
) |
(105 |
) |
547 |
|
114 |
| ||||
|
Effect of exchange rate fluctuations on cash |
|
3 |
|
(96 |
) |
3 |
|
(64 |
) | ||||
|
Increase (decrease) in cash |
|
(60 |
) |
(205 |
) |
(172 |
) |
432 |
| ||||
|
Cash at beginning of period |
|
700 |
|
1,017 |
|
812 |
|
380 |
| ||||
|
Cash at end of period |
|
640 |
|
812 |
|
640 |
|
812 |
| ||||
|
Cash - discontinued operations |
|
|
|
57 |
|
|
|
57 |
| ||||
|
Cash - continuing operations |
|
$ |
640 |
|
$ |
755 |
|
$ |
640 |
|
$ |
755 |
|
OWENS-ILLINOIS, INC.
Consolidated Supplemental Financial Data
(Dollars in millions)
|
|
|
Three months ended |
|
Year ended |
| ||||||||
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
| ||||
|
Net sales: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Europe |
|
$ |
660 |
|
$ |
725 |
|
$ |
2,746 |
|
$ |
2,918 |
|
|
North America |
|
436 |
|
481 |
|
1,879 |
|
2,074 |
| ||||
|
South America |
|
350 |
|
228 |
|
975 |
|
689 |
| ||||
|
Asia Pacific |
|
272 |
|
298 |
|
996 |
|
925 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Reportable segment totals |
|
1,718 |
|
1,732 |
|
6,596 |
|
6,606 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Other |
|
10 |
|
13 |
|
37 |
|
46 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net sales |
|
$ |
1,728 |
|
$ |
1,745 |
|
$ |
6,633 |
|
$ |
6,652 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Segment Operating Profit (a): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Europe |
|
$ |
50 |
|
$ |
40 |
|
$ |
324 |
|
$ |
333 |
|
|
North America |
|
53 |
|
33 |
|
275 |
|
282 |
| ||||
|
South America |
|
82 |
|
48 |
|
224 |
|
145 |
| ||||
|
Asia Pacific |
|
36 |
|
53 |
|
141 |
|
131 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Reportable segment totals |
|
221 |
|
174 |
|
964 |
|
891 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Items excluded from Segment Operating Profit: |
|
|
|
|
|
|
|
|
| ||||
|
Retained corporate costs and other |
|
(37 |
) |
(18 |
) |
(89 |
) |
(67 |
) | ||||
|
Restructuring and asset impairment |
|
(5 |
) |
(100 |
) |
(13 |
) |
(207 |
) | ||||
|
Acquisition-related fair value inventory adjustments and restructuring, transaction and financing costs |
|
(21 |
) |
|
|
(32 |
) |
|
| ||||
|
Charge for currency remeasurement |
|
|
|
(18 |
) |
|
|
(18 |
) | ||||
|
Charge for asbestos related costs |
|
(170 |
) |
(180 |
) |
(170 |
) |
(180 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Interest income |
|
3 |
|
5 |
|
13 |
|
18 |
| ||||
|
Interest expense |
|
(72 |
) |
(57 |
) |
(249 |
) |
(222 |
) | ||||
|
Earnings (loss) from continuing operations before income taxes |
|
$ |
(81 |
) |
$ |
(194 |
) |
$ |
424 |
|
$ |
215 |
|
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. |
Exhibit 99.2
|
|
O-I Earnings Presentation Full Year and Fourth Quarter 2010 Owens-Illinois, Inc. |
|
|
Introduction Agenda Business discussion Financial review Business outlook Concluding remarks and Q&A Presenters Regulation G The information included in this presentation regarding adjusted net earnings relates to net earnings attributable to the Company exclusive of items management considers not representative of ongoing operations does not conform to U.S. generally accepted accounting principles (GAAP). It should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the comparability of results of ongoing operations. Management uses this non-GAAP information principally for internal reporting, forecasting, budgeting and calculating bonus payments. Further, the information in this presentation 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. Forward Looking Statements This news release contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Forward-looking statements reflect the Company’s current expectations and projections about future events at the time, and thus involve uncertainty and risk. It is possible the Company’s future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) foreign currency fluctuations relative to the U.S. dollar, (2) changes in capital availability or cost, including interest rate fluctuations, (3) the general political, economic and competitive conditions in markets and countries where the Company has operations, including 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 the tax rates and laws, (4) consumer preferences for alternative forms of packaging, (5) fluctuation in raw material and labor costs, (6) availability of raw materials, (7) costs and availability of energy, (8) transportation costs, (9) the ability of the Company to raise selling prices commensurate with energy and other cost increases, (10) consolidation among competitors and customers, (11) the ability of the Company to 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, and (15) the timing and occurrence of events which are beyond the control of the Company, including any expropriation of the Company’s operations and 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 assume any obligation to update or supplement any particular forward-looking statements contained in this news release. Presentation Note Unless otherwise noted, the information presented in this presentation reflects continuing operations only. Al Stroucken Chairman and CEO Ed White SVP and CFO |
|
|
2010 Results Business Discussion Full Year 2010: Transitioned from margin repair to growth strategy Adjusted EPS was $2.60/sh, $2.61/sh in 2009 Shipments down 1% from 2009 Underlying shipments up ~2% (2) Manufacturing costs down, non-operating costs up Venezuela treated as discontinued operations Acquired 10 plants, built 3 new furnaces Fourth Quarter 2010: Adjusted EPS was $0.45/sh, $0.43/sh in 4Q09 Lower manufacturing costs, higher non-operating costs Shipments flat YoY Purchased 3 plants in China 2011 Business Outlook (YoY basis): Higher shipments and production operating rates Higher selling prices partially offset cost inflation Higher other expense (sales, pension, interest) Free cash flow ~ $300M Adjusted Net Earnings Per Share (1) 1 EPS exclusive of items management considers not representative of ongoing operations. A description of all items that management considers not representative of ongoing operations, including discontinued operations, and a reconciliation of the GAAP to non-GAAP earnings and earnings per share can be found in the appendix to this presentation. 2 Excludes the net effect of additional volume from acquisitions and volume loss tied to contract renegotiations effective in 2010. 0.43 2.61 0.45 2.60 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 4Q09 4Q10 FY09 FY10 |
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Higher Segment Operating Profits Driven by South America Business Discussion ($ Millions) ($ Millions) Full Year Segment Operating Profit Fourth Quarter Segment Operating Profit 11.4% 11.8% 13.6% 14.6% 21.0% 23.0% 14.2% 14.2% 5.5% 7.6% 6.9% 12.2% 21.1% 23.4% 17.8% 13.2% Margin: Total 2010: $964M 14.6% 2009: $891M 13.5% Total 2010: $221M 12.9% 2009: $174M 10.0% 282 131 145 333 324 224 141 275 $0 $100 $200 $300 $400 $500 Europe North America South America Asia Pacific FY09 FY10 33 53 48 40 50 82 36 53 $0 $25 $50 $75 $100 Europe North America South America Asia Pacific 4Q09 4Q10 |
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Investing In Future Profitable Growth Business Discussion Increasing Capacity in Emerging Markets Expanding in Fast Growing Emerging Markets 1 This acquisition is a joint venture. South America China & SE Asia (# Furnaces) 23 9 20 15 0 5 10 15 20 25 30 2007 2010 2007 2010 Additional 2010 Activity Countries Plants Furnaces Acquisitions CIV Brazil 3 5 Malaya Glass China/Vietnam/Malaysia(1) 3 6 Rixin China 2 7 Jiaxin China 1 2 Rosario Argentina 1 1 10 21 Plant Expansions Rosario Argentina - 1 Lima Peru - 1 Auckland New Zealand - 1 - 3 Total Acquisitions/Expansions 10 24 |
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Improved Operational Results Offset by Non-operational Costs Financial Review 1 Reportable segment sales exclude $10 million of revenue, principally for the Company’s global equipment sales business. 2 Contractual cost pass-through provisions also include the transfer of third-party costs, such as shipping, to customers in North America. 3 Includes approximately $58 million of sales and approximately $17 million of segment operating profit from acquisitions. 4 Includes approximately $20 million of cost inflation. 5 Primarily due to the Company’s repurchase of approximately 6 million shares during 1H10. Reportable Segments Adjusted Net Sales (1) Operating Profit Income ($ Millions) ($ Millions) (Non-GAAP EPS) 4Q09 $1,732 $174 $0.43 Price Price and product mix 1 1 - Cost pass-through provision (2) (3) - - Sales volume (3) 17 7 0.03 Manufacturing and delivery (4) - 35 0.16 Operating expenses and other - 4 0.02 Currency translation and re-measurement (29) - - Operational (14) 47 0.21 Retained corporate costs - - (0.09) Net interest expense - - (0.08) Effective tax rate - - (0.04) Share count (5) - - 0.02 Non-Operational - - (0.19) Total reconciling items (14) 47 0.02 4Q10 $1,718 $221 $0.45 |
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Balance Sheet, Cash Flow, and Asbestos Review Financial Review Highlight of Select Balance Sheet and Cash Flow Items (1) ($ Millions) 1 All information presented is from continuing operations only. 2 Total debt less cash divided by bank credit agreement EBITDA. The FY10 and FY09 ratios were calculated excluding the impact of the discontinued Venezuelan operations. Current bank covenants require a maximum ratio of 3.95x. Asbestos New Filings and Pending Cases ($11) $190 $179 ($10) $180 $170 ($4) $65 $61 $93 $407 $500 ($222) $322 $100 ($10) $540 $530 0 5,000 10,000 15,000 20,000 2006 2007 2008 2009 2010 Pending New FY10 FY09 Inc (Decr) Cash $640 $755 ($115) Debt $4,278 $3,608 $670 Net Debt $3,638 $2,853 $785 Net Debt to EBITDA (2) 2.85x 2.45x 0.40x Under-funded Pension Free Cash Flow Capital Expenditures Restructuring Payments Asbestos Non-Cash Asbestos Charge Asbestos Payments |
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2011 Free Cash Flow Approximately $300 Million Business Outlook Favorable / Unfavorable Impact on Earnings Year-over-Year 1Q11 vs 1Q10 FY11 vs FY10 2011 Annual Comments ($ pre-tax) Price/Product Mix Price / Product mix: up to +1% Up across all regions Sales Volume Volume: +5% to 10% Includes organic and acquisition growth Cost Inflation Cost inflation: $150 to $180M Higher soda ash, energy, labor costs Other Mfg and Delivery Costs Improved Operating Leverage Moderate Productivity/Logistic Improvement Footprint Savings: +$30 to $35M Other Costs OpEx / Corp: +$70 to $80M Includes non-cash pension exp: +$20M Net interest expense: +$35M Free Cash Flow Not Provided Free Cash Flow: ~ $300M Capital expenditures: ~ $350M Restructuring payments: ~ $20M Pension contributions: ~$60M Asbestos payments: ~$170M Note: All items are estimates, all estimates are approximates, estimates are subject to change throughout the year. Reported results can be significantly affected by changing foreign currency exchange rates. |
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Concluding Remarks and Q&A 2010 Was a Transition Year for O-I Concluded three year pricing restoration and restructuring program Shifted focus to profitable growth in emerging markets Strategy to Drive Continued Profitable Growth in 2011 Continued acquisitions and plant expansions in attractive emerging markets Further develop our sales and marketing capabilities Drive innovation to create greater value for our customers Continue to drive further operational excellence Expect Improved 2011 Results and Significantly Higher Free Cash Flow |
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Appendix |
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Reconciliation of GAAP to non-GAAP Items (a) – For GAAP purposes in 4Q10 and 4Q09, dilutued earnings per share of common stock were equal to basic earnings per share due to the loss from continuing operations recorded in each period. For adjusted net earnings, diluted and basic average shares differed since those periods reflected adjusted net earnings. Diluted shares outstanding were used to calculate adjusted earnings per share for the three months and full years ending December 31, 2010 and 2009. Three months ended December 31 Twelve months ended December 31 $ Millions, except per-share amts 2010 2009 2010 2009 Earnings EPS Earnings EPS Earnings EPS Earnings EPS Earnings (loss) from continuing ops. attributable to the Company $ (83) $ (0.51) $ (169) $ (1.01) $ 258 $ 1.55 $ 110 $ 0.65 Items that management considers not representative of ongoing operations consistent with Segment Operating Profit • Charge for asbestos-related costs 170 1.02 180 1.06 170 1.02 180 1.06 • Acquisition-related fair value inventory adjustments and restructuring, transaction, and financing costs 18 0.11 27 0.16 • Charges for restructuring and asset impairment 3 0.02 94 0.55 11 0.07 180 1.05 • Net benefit related to changes in deferred tax valuation allowance (24) (0.15) (24) (0.15) • Charges for currency remeasurement 17 0.10 17 0.10 • Non-cash tax benefit transferred from other comprehensive income (equity) (8) (0.05) (48) (0.28) (8) (0.05) (48) (0.28) • Charges for note repurchase premiums and write-off of finance fees 5 0.03 • Dilutive effect of options and other 0.01 0.01 Adjusted net earnings $ 76 $ 0.45 $ 74 $ 0.43 $ 434 $ 2.60 $ 444 $ 2.61 Diluted shares outstanding (millions) (a) 165.8 171.7 167.1 170.5 |
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Full Year 2010 Reconciliations 1 Reportable segment sales exclude $37 million of revenue, principally for the Company’s global equipment sales business. 2 Contractual cost pass-through provisions also include the transfer of third-party costs, such as shipping, to customers in North America. 3 Includes $20 million of cost inflation. 4 Primarily due to the Company’s repurchase of approximately 6 million shares during 1H10. Reportable Segments Adjusted Net Sales (1) Operating Profit Income ($ Millions) ($ Millions) (Non-GAAP EPS) Full Year 2009 $6,606 $891 $2.61 Price Price and product mix 5 5 0.02 Cost pass-through provision (2) (30) - - Sales volume (61) 7 0.03 Manufacturing and delivery (3) - 38 0.16 Operating expenses and other 7 0.04 Currency translation and re-measurement 76 16 0.07 Operational (10) 73 0.32 Net interest expense - - (0.16) Retained corporate costs - - (0.10) Non controlling interests - - (0.04) Effective tax rate - - (0.08) Share count (4) - - 0.05 Non-Operational - - (0.33) Total reconciling items (10) 73 (0.01) Full Year 2010 $6,596 $964 $2.60 |
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Free Cash Flow (1) Free Cash Flow equals cash provided by continuing operating activities less capital spending from continuing operations. $ Millions Three months ended December 31 Twelve months ended December 31 2010 2009 2010 2009 Net earnings (loss) $ (405) $ (152) $ (5) $ 198 Less: Loss (earnings) from disc. operations 331 (10) 300 (66) Earnings (loss) from continuing operations (74) (162) 295 132 Non-cash charges: Depreciation and amortization 109 104 410 395 Asbestos-related costs 170 180 170 180 Restructuring and asset impairment 5 100 13 207 All other non-cash charges 28 7 104 65 Payments and other reconciling items: Asbestos-related payments (65) (68) (179) (190) Restructuring payments (12) (25) (61) (65) Change in components of working capital 74 165 (71) 156 Change in non-current assets and liabilities (5) (73) (81) (151) Cash provided by continuing operating activities 230 228 600 729 Additions to PP&E for continuing operations (111) (227) (500) (407) Free Cash Flow (1) $ 119 $ 1 $ 100 $ 322 |
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Financials for Discontinued Operations Selected Financial Highlights ($ Millions) Adjusted Net Earnings Per Share (a) The Company deemed its Venezuelan subsidiary as a discontinued operations in 4Q10. Therefore, differences between reported results and results from continuing operations exist only through 3Q10. 0.95 0.90 0.45 0.90 0.50 0.49 0.94 0.55 0.89 0.84 0.45 0.83 0.48 0.43 0.84 0.45 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Reported Continuing Ops. FULL YEAR YTD 3Q(a) 2008 2009 2010 Sales Reported $7,885 $7,067 $5,034 Venezuela (345) (415) (129) Continuing $7,540 $6,652 $4,905 EBIT Reported $772 $518 $712 Venezuela (109) (99) (40) Continuing $663 $419 $672 Adjusted Reported $3.80 $2.93 $2.29 EPS Venezuela ($0.45) ($0.32) ($0.14) Continuing $3.35 $2.61 $2.15 Free Reported $395 $372 $13 Cash Venezuela (75) (50) (32) Flow Continuing $320 $322 $ (19) |
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Pro Forma Net Earnings – Venezuela Discontinued Ops Three months ended September 30, 2010 Dollars in millions As Reported Pro Forma Adjustments Pro Forma Adjusted Earnings before income taxes $208 $20 $188 Provision for income taxes (57) (5) (52) Net earnings 151 15 136 Net earnings attributable to noncontrolling interests (12) (3) (9) Net earnings attributable to the Company $139 $12 $127 Three months ended June 30, 2010 Dollars in millions As Reported Pro Forma Adjustments Pro Forma Adjusted Earnings before income taxes $210 $16 $194 Provision for income taxes (55) (3) (51) Net earnings 155 12 143 Net earnings attributable to noncontrolling interests (14) (3) (11) Net earnings attributable to the Company $141 $9 $132 Three months ended March 31, 2010 Dollars in millions As Reported Pro Forma Adjustments Pro Forma Adjusted Earnings before income taxes $129 $5 $123 Provision for income taxes (34) (2) (32) Net earnings 94 3 91 Net earnings attributable to noncontrolling interests (9) 0 (9) Net earnings attributable to the Company $85 $3 $82 |
