PHILADELPHIA, Feb. 1 /PRNewswire-FirstCall/ -- Crown Holdings, Inc.
(NYSE: CCK) today announced its financial results for the fourth
quarter and year ended December 31, 2009. Fourth Quarter and
Full-Year 2009 Highlights -- Fourth quarter reported earnings per
diluted share of $0.50 -- Earnings before certain items of $0.27,
up 23% -- Full year earnings increased 48% to $2.06 per diluted
share -- Earnings before certain items of $2.01, up 15% -- Gross
profit and segment income margins increased 50 basis points over
2008 -- Cash provided by operating activities of $756 million --
Free cash flow of $612 million Fourth Quarter Results Net sales in
the fourth quarter increased to $1,917 million over the $1,877
million in the fourth quarter of 2008, primarily reflecting
favorable foreign currency translation of $116 million which was
largely offset by the pass-through of lower aluminum costs. Fourth
quarter gross profit rose 10.6% to $250 million compared to $226
million in the 2008 fourth quarter. As a percentage of net sales,
gross profit improved to 13.0% in the fourth quarter compared to
12.0% in the same quarter last year. Favorable foreign currency
translation of $25 million and benefits from ongoing cost reduction
and efficiency improvement programs were partially offset by
increased pension expense. Selling and administrative expense in
the fourth quarter was $107 million compared to $87 million in last
year's fourth quarter. The increase primarily reflects stronger
than expected free cash flow (a non-GAAP measure defined by the
Company as net cash provided by operating activities less capital
expenditures) for the Company which resulted in increased incentive
compensation costs and $6 million of foreign currency translation.
Segment income (a non-GAAP measure defined by the Company as gross
profit less selling and administrative expense) was $143 million in
the fourth quarter, compared to $139 million in the 2008 fourth
quarter and reflects savings from cost reductions, increased
operating efficiencies and $19 million in favorable currency
translation which were largely offset by a $34 million increase in
pension expense. Segment income as a percentage of net sales
improved to 7.5% from 7.4% in the 2008 fourth quarter. On a
currency and pension neutral basis, a non-GAAP measure, segment
income grew 13.7% in the fourth quarter of 2009 compared to the
same period last year. Commenting on the results, John W. Conway,
Chairman and Chief Executive Officer, stated, "We are particularly
pleased with the Company's performance given the very challenging
environment around the world. Gross profit and segment income
margins expanded for the quarter and for the year. These
improvements and the very strong free cash flow performance
reflect, among other things, very tight cost controls, the benefits
of restructuring measures taken over the course of the year,
improving manufacturing efficiencies and materials utilization, and
the ongoing growth of our emerging markets businesses relative to
our more mature packaging businesses in North America and Western
Europe." Interest expense in the fourth quarter was $58 million
compared to $70 million in the fourth quarter of 2008. The decrease
reflects the impact of lower average borrowing rates and lower
average debt outstanding partially offset by foreign currency
translation of $2 million. Fourth quarter 2009 net income improved
to $81 million, or $0.50 per diluted share, compared to a net loss
of $14 million, or $0.09 per diluted share in the fourth quarter of
2008. Fourth quarter net income, before certain items, increased
25.7% to $44 million, or $0.27 per diluted share, compared to $35
million, or $0.22 per diluted share in the fourth quarter of 2008.
Net income before certain items and income before certain items per
diluted share are non-GAAP measures. Reconciliations of such
non-GAAP measures to net income and income per diluted share are
provided in the Consolidated Supplemental Data included in this
release. The Company recorded a charge in the fourth quarter of
2009 of $55 million ($36 million, net of tax, or $0.22 per diluted
share) to increase its asbestos litigation reserve. The Company
estimates that its liability for pending and future asbestos claims
will range between $230 million and $268 million. At December 31,
2008, the reported range was $201 million to $239 million. After
the $55 million charge, the Company's recorded liability at
December 31, 2009 was $230 million, compared to $201 million at
December 31, 2008. Asbestos-related payments totaled $26 million in
2009 compared to $25 million in 2008, and the Company expects 2010
payments of approximately $25 million. Cases filed against the
Company declined to 2,300 in 2009 from 3,100 in 2008. The benefit
from income taxes in the fourth quarter of 2009 was $64 million
compared to a benefit of $1 million in the same 2008 period. During
the fourth quarter of 2009, the Company concluded that it is more
likely than not that the majority of its U.S. tax credits will be
realized through future income from operations before their
expiration. Additionally, a fourth quarter 2009 change in German
tax law is expected to allow the Company to utilize tax loss
carryforwards. Accordingly, tax benefits of $73 million, or $0.45
per diluted share, were recorded in the fourth quarter of 2009
($108 million, or $0.67 per diluted share, for the full year of
2009) to reflect the reversal of valuation allowances. The reversal
of valuation allowances has no impact on taxes paid. The 2008 tax
benefit included $5 million ($0.03 per diluted share) related to a
tax credit for a change in UK tax law related to the deductibility
of depreciation on buildings. The Company paid taxes of $73 million
and $84 million in 2009 and 2008, respectively. Full Year Results
For 2009, net sales were $7,938 million, compared to $8,305 million
in 2008. The decrease was primarily due to $407 million in
unfavorable foreign currency translation and the pass-through of
lower aluminum costs which were partially offset by the
pass-through of higher tinplate costs. Approximately 72% of net
sales were generated outside the U.S. in 2009 compared to 74% in
2008. Gross profit for 2009 improved to 15.0% of net sales over the
14.5% of net sales in 2008. For the year, gross profit was $1,193
million, compared to $1,204 million in 2008 and reflects increased
pension expense and $57 million of unfavorable foreign currency
translation which offset savings from cost containment initiatives
and increased operating efficiencies. Selling and administrative
expense for 2009 was $381 million compared to $396 million in 2008.
The decrease primarily reflects $21 million of foreign currency
translation. Segment income in 2009 was $812 million compared to
$808 million in 2008 despite increased pension expense of $117
million and unfavorable foreign currency translation of $36
million. Segment income grew to 10.2% of net sales over the 9.7% in
2008. On a currency and pension neutral basis, segment income grew
19.4% in 2009 above 2008. Interest expense was $247 million in 2009
compared to $302 million in 2008. The decrease reflects the impact
of lower average borrowing rates, lower average debt outstanding
and foreign currency translation of $9 million. Full year 2009 net
income was $334 million, or $2.06 per diluted share, compared to
$226 million, or $1.39 per diluted share in 2008. Net income before
certain items increased 15.2% to $326 million, or $2.01 per diluted
share, in 2009 compared to $283 million, or $1.74 per diluted share
in 2008. Net debt (a non-GAAP measure defined by the Company as
total debt less cash) decreased by $448 million from September 30,
2009, primarily as a result of the reduction in working capital
during the fourth quarter. Net debt at December 31, 2009 was $2,339
million, $402 million lower than the December 31, 2008 level. The
reduction in net debt in 2009 was primarily due to $756 million in
net cash provided by operating activities offset by $180 million
for capital expenditures and $34 million attributable to foreign
currency translation. Debt and cash amounts were: December 31,
September 30, December 31, September 30, 2009 2009 2008 2008 Total
debt $2,798 $3,225 $3,337 $3,533 Cash 459 438 596 332 ------ ------
------ ------ Net debt $2,339 $2,787 $2,741 $3,201 ====== ======
====== ====== Receivables securitization $232 $322 $234 $308 ====
==== ==== ==== Outlook for 2010 Commenting on the outlook for 2010,
Mr. Conway stated, "We expect 2010 to be another solid year of
improving performance for our Company. Demand in our mature
packaging markets of North America and Western Europe is expected
to recover from 2009 levels and operating improvements and cost
reductions are anticipated to continue throughout 2010. We expect
our emerging markets businesses in China, Southeast Asia, Brazil,
Eastern Europe and the Middle East will continue to grow.
Additionally, the numerous capacity expansions we have undertaken
are completed or well underway, and are expected to contribute to
production and sales in 2010. We continue to believe that we are
exceptionally well positioned for profitable growth in 2010 and
beyond." Non-GAAP Measures Segment income, free cash flow and net
debt are not defined terms under U.S. generally accepted accounting
principles (non-GAAP measures). In addition, the information
presented regarding net income before certain items and income
before certain items per diluted share does not conform to GAAP and
includes non-GAAP measures. Non-GAAP measures should not be
considered in isolation or as a substitute for net income, cash
flow or total debt data prepared in accordance with U.S. GAAP and
may not be comparable to calculations of similarly titled measures
by other companies. The Company views segment income and free cash
flow as the principal measures of performance of its operations and
for the allocation of resources. Free cash flow has certain
limitations, however, including that it does not represent the
residual cash flow available for discretionary expenditures since
other non-discretionary expenditures, such as mandatory debt
service requirements, are not deducted from the measure. The amount
of mandatory versus discretionary expenditures can vary
significantly between periods. The Company believes net debt is a
useful measure of the Company's debt levels and that net income
before certain items can be used to evaluate the Company's
operations. Segment income, free cash flow, net debt and net income
before certain items are derived from the Company's Consolidated
Statements of Operations and Cash Flows and Consolidated Balance
Sheets, as applicable, and reconciliations to segment income, free
cash flow, net debt and net income before certain items can be
found within this release. Segment income discussed in this release
is also presented on a "currency and pension neutral" basis, a
non-GAAP financial measure. The Company believes such presentation
facilitates period-to-period comparisons of the Company's operating
performance without taking into account the impact of fluctuations
in foreign currency exchange rates and changes in pension expense.
Currency neutral segment income is calculated by translating
current period segment income in local currency using the prior
period's local currency conversion rate. Pension neutral segment
income is calculated by eliminating the incremental pension expense
incurred in the current period. Conference Call The Company will
hold a conference call tomorrow, February 2, 2010 at 9:00 a.m.
(EST) to discuss this news release and other matters.
Forward-looking and other material information may be discussed on
the conference call. The dial-in numbers for the conference call
are (630) 395-0436 or toll-free (888) 566-5969 and the access
password is "packaging." A live web cast of the call will be made
available to the public on the Internet at the Company's web site,
http://www.crowncork.com/. A replay of the conference call will be
available for a one-week period ending at midnight on February 9.
The telephone numbers for the replay are (402) 220-0340 or toll
free (800) 728-5840 and the access passcode is 9220. Cautionary
Note Regarding Forward-Looking Statements Except for historical
information, all other information in this press release consists
of forward-looking statements. These forward-looking statements
involve a number of risks, uncertainties and other factors,
including whether demand will grow for food and beverage cans in
2010, including in North America and Western Europe as well as in
China, Southeast Asia, Brazil, Eastern Europe and the Middle East,
and whether the Company can successfully implement plans for growth
globally and in its mature and emerging markets; the Company's
ability to realize operating improvements, capacity expansions,
cost reductions and the benefits of its restructuring activities;
the outcome of asbestos-related litigation; and the Company's
ability to utilize tax loss carryforwards and credits, that may
cause actual results to be materially different from those
expressed or implied in the forward-looking statements. Important
factors that could cause the statements made in this press release
or the actual results of operations or financial condition of the
Company to differ are discussed under the caption "Forward-Looking
Statements" in the Company's Form 10-K Annual Report for the year
ended December 31, 2008 and in subsequent filings made prior to or
after the date hereof. The Company does not intend to review or
revise any particular forward-looking statement in light of future
events. About Crown Holdings, Inc. Crown Holdings, Inc., through
its subsidiaries, is a leading supplier of packaging products to
consumer marketing companies around the world. World headquarters
are located in Philadelphia, Pennsylvania. For more information,
contact: Thomas A. Kelly, Senior Vice President - Finance, (215)
698-5341, or Edward Bisno, Bisno Communications, (212) 717-7578.
Unaudited Consolidated Statements of Operations, Balance Sheets,
Statements of Cash Flows, Segment Information and Supplemental Data
follow this page. Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data) Three Months Ended
Twelve Months Ended December 31, December 31, 2009 2008 2009 2008
---- ---- ---- ---- Net sales $1,917 $1,877 $7,938 $8,305 ------
------ ------ ------ Cost of products sold 1,615 1,600 6,551 6,885
Depreciation and amortization 52 51 194 216 --- --- --- --- Gross
profit (1) 250 226 1,193 1,204 Selling and administrative expense
107 87 381 396 Provision for asbestos 55 25 55 25 Provision for
restructuring 1 17 43 21 (Gain)/loss on sales of assets and
provision for asset impairments (4) 6 (6) 6 (Gain)/loss from early
extinguishments of debt (1) 26 2 Interest expense 58 70 247 302
Interest income (2) (3) (6) (11) Translation and foreign exchange
adjustments (5) 15 (6) 21 --- --- --- --- Income before income
taxes and equity earnings 41 9 459 442 (Benefit) from/provision for
income taxes (64) (1) 7 112 Equity earnings/(loss) in affiliates 2
(1) (2) --- --- --- --- Net income 107 9 450 330 Net income
attributable to non-controlling interests (26) (23) (116) (104) ---
--- ---- ---- Net income/(loss) attributable to Crown Holdings $81
($14) $334 $226 === ==== ==== ==== Earnings per share attributable
to Crown Holdings common shareholders: Basic $0.51 ($0.09) $2.10
$1.42 ===== ====== ===== ===== Diluted $0.50 ($0.09) $2.06 $1.39
===== ====== ===== ===== Weighted average common shares
outstanding: Basic 159,920,777 159,527,322 159,139,673 159,589,240
Diluted 162,636,437 162,204,888 161,947,196 162,931,236 Actual
common shares outstanding 161,483,074 159,191,238 161,483,074
159,191,238 (1) A reconciliation from gross profit to segment
income is found on the following page. Consolidated Supplemental
Financial Data (Unaudited) (in millions) Reconciliation from Gross
Profit to Segment Income The Company views segment income, as
defined below, as a principal measure of performance of its
operations and for the allocation of resources. Segment income is
defined by the Company as gross profit less selling and
administrative expense. A reconciliation from gross profit to
segment income for the three and twelve months ended December 31,
2009 and 2008 follows: Three Months Ended Twelve Months Ended
December 31, December 31, 2009 2008 2009 2008 ---- ---- ---- ----
Gross profit $250 $226 $1,193 $1,204 Selling and administrative
expense 107 87 381 396 --- --- --- --- Segment income $143 $139
$812 $808 ==== ==== ==== ==== Segment Information Three Months
Ended Twelve Months Ended December 31, December 31, Net Sales 2009
2008 2009 2008 --------- ---- ---- ---- ---- Americas Beverage $449
$467 $1,819 $1,938 North America Food 246 230 1,006 905 European
Beverage 348 329 1,567 1,607 European Food 466 458 1,968 2,188
European Specialty Packaging 99 88 404 445 --- --- --- --- Total
reportable segments 1,608 1,572 6,764 7,083 Non-reportable segments
309 305 1,174 1,222 --- --- ----- ----- Total net sales $1,917
$1,877 $7,938 $8,305 ====== ====== ====== ====== Segment Income
-------------- Americas Beverage $45 $38 $207 $202 North America
Food 41 23 140 88 European Beverage 30 35 249 242 European Food 43
39 251 231 European Specialty Packaging (1) (2) 18 18 --- --- ---
--- Total reportable segments 158 133 865 781 Non-reportable
segments 46 43 180 170 Corporate and unallocated items (61) (37)
(233) (143) --- --- ---- ---- Total segment income $143 $139 $812
$808 ==== ==== ==== ==== Consolidated Supplemental Data (Unaudited)
(in millions, except per share data) Reconciliation from Net Income
and Income Per Diluted Common Share to Net Income before Certain
Items and Income Per Diluted Common Share before Certain Items The
following table reconciles reported net income and diluted earnings
per share attributable to the Company to net income before certain
items and income per diluted common share before certain items, as
used elsewhere in this release. Three Months Twelve Months Ended
Ended December 31, December 31, 2009 2008 2009 2008 ---- ---- ----
---- Net income/(loss) as reported $81 ($14) $334 $226 Items, net
of tax: Provision for asbestos 36 15 36 15 Provision for
restructuring (1) 1 17 38 19 Provision for asset impairments/ sales
of assets (2) (1) 6 (2) 9 Loss from early extinguishments of debt
(3) 1 24 2 Intercompany debt and balance sheet translation (4) (3)
11 (3) 17 Closure of non-consolidated PET joint venture (5) 2 7
Income taxes (73) (108) ( 5) --- ---- --- Net income before the
above items $44 $35 $326 $283 Income/(loss) per diluted common
share as reported $0.50 ($0.09) $2.06 $1.39 Income per diluted
common share before the above items $0.27 $0.22 $2.01 $1.74
Effective tax rate as reported (156.1%) (11.1%) 1.5% 25.3%
Effective tax rate before the above items 26.4% 16.7% 24.2% 24.6%
Net income before certain items, income per diluted common share
before certain items and the effective tax rate before certain
items are non-GAAP measures and are not meant to be considered in
isolation or as a substitute for net income (loss), income (loss)
per diluted common share and effective tax rates determined in
accordance with U.S. generally accepted accounting principles
("U.S. GAAP"). The Company believes these non-GAAP measures provide
useful information to evaluate the performance of the Company's
ongoing business. (1) In the fourth quarter of 2009, the Company
recorded a restructuring charge of $1 million ($1 million, net of
tax, or $0.01 per diluted share) primarily related to previously
announced actions. For the full year 2009, restructuring charges
totaled $43 million ($38 million, net of tax, or $0.23 per diluted
share). In the fourth quarter of 2008, the Company recorded a
restructuring charge of $17 million ($17 million, net of tax, or
$0.10 per diluted share) and for the full year of 2008 recorded $21
million ($19 million, net of tax, or $0.12 per diluted share) in
restructuring charges. (2) The Company recorded a net gain on asset
sales of $4 million ($1 million, net of tax, or $0.01 per diluted
share) in the fourth quarter of 2009. In the 2008 fourth quarter,
the Company recorded a provision for asset impairments of $6
million ($6 million, net of tax, or $0.04 per diluted share). (3)
During the fourth quarter of 2009, the Company repurchased $300
million of its U.S. Dollar 7.625% Senior Notes due 2013, euro 54
million (approximately $79 million) of its 6.25% Senior Secured
Notes due 2011 and $86 million of its U.S. Dollar 7.5% Senior Notes
due 2096. Net premiums, discounts and the write-off of finance fees
related to the notes which were repaid prior to their maturity
resulted in a net gain from early extinguishments of debt of $1
million (loss of $1 million, net of tax, or $0.01 per diluted
share) in the fourth quarter. For the full year 2009, the Company
recorded a net loss from early extinguishments of debt of $26
million ($24 million, net of tax, or $0.15 per diluted share)
related to net repurchase premiums, discounts and the write-off of
fees to retire debt prior to maturity. After the repurchases noted
above, and as at December 31, 2009, there were outstanding euro 160
million 6.25% Senior Secured Notes due 2011, $200 million 7.625%
Senior Notes due 2013 and $64 million 7.50% Senior Notes due 2096.
(4) During 2009, the Company recorded translation and foreign
exchange gains of $5 million ($3 million, net of tax, or $0.02 per
diluted share) in the fourth quarter and $6 million ($3 million,
net of tax, or $0.02 per diluted share) for the year. During 2008,
the Company recorded foreign exchange losses of $15 million ($11
million, net of tax, or $0.07 per diluted share) in the fourth
quarter and $21 million ($17 million, net of tax, or $0.10 per
diluted share) for the year. These gains and losses arise from the
translation of certain foreign operations where the U.S. dollar is
the functional currency, and from the remeasurement of
foreign-denominated intercompany debt obligations into the local
currencies. (5) During 2009, the Company's non-consolidated PET
plastic bottle joint-venture in Brazil was closed. The Company
recorded a net charge of $2 million ($0.01 per diluted share) in
the fourth quarter and $7 million ($0.04 per diluted share) for the
full year related to the closure which is reflected in equity
earnings. Consolidated Balance Sheets (Condensed & Unaudited)
(in millions) December 31, 2009 2008 ------------ ---- ---- Assets
Current assets Cash and cash equivalents $459 $596 Receivables, net
714 734 Inventories 960 979 Prepaid expenses and other current
assets 109 148 --- --- Total current assets 2,242 2,457 ----- -----
Goodwill 2,050 1,956 Property, plant and equipment, net 1,509 1,473
Other non-current assets 731 888 --- --- Total $6,532 $6,774 ======
====== Liabilities and equity Current liabilities Short-term debt
$30 $59 Current maturities of long-term debt 29 31 Other current
liabilities 1,866 1,982 ----- ----- Total current liabilities 1,925
2,072 ----- ----- Long-term debt, excluding current maturities
2,739 3,247 Other non-current liabilities 1,485 1,419
Non-controlling interests 389 353 Crown Holdings shareholders'
equity (6) (317) --- --- Total equity 383 36 --- --- Total $6,532
$6,774 ====== ====== Consolidated Statements of Cash Flows
(Condensed & Unaudited) (in millions) Twelve months ended
December 31, 2009 2008 ---- ---- Cash flows from operating
activities Net income $450 $330 Depreciation and amortization 194
216 Loss from early extinguishments of debt 26 2 Premiums paid to
retire debt early (36) (2) Pension expense 130 13 Pension
contributions (74) (71) Working capital and other 66 (66) --- ---
Net cash provided by operating activities (A) 756 422 --- --- Cash
flows from investing activities Capital expenditures (180) (174)
Other, net (20) (12) --- --- Net cash used for investing activities
(200) (186) --- --- Cash flows from financing activities Net change
in debt (562) (52) Dividends paid to non-controlling interests (87)
(65) Other, net (52) 40 --- --- Net cash used for financing
activities (701) (77) --- --- Effect of exchange rate changes on
cash and cash equivalents 8 (20) --- --- Net change in cash and
cash equivalents (137) 139 Cash and cash equivalents at January 1
596 457 --- --- Cash and cash equivalents at December 31 $459 $596
==== ==== (A) Free cash flow is defined by the Company as net cash
provided by operating activities less capital expenditures. A
reconciliation from net cash provided by operating activities to
free cash flow for the twelve months ended December 31 follows:
Twelve months ended December 31, 2009 2008 ---- ---- Net cash
provided by operating activities $756 $422 Capital expenditures
(180) (174) Premiums paid to retire debt early 36 2 Free cash flow
$612 $250 ==== ==== DATASOURCE: Crown Holdings, Inc. CONTACT:
Thomas A. Kelly, Senior Vice President - Finance, +1-215-698-5341,
or Edward Bisno, Bisno Communications, +1-212-717-7578 Web Site:
http://www.crowncork.com/
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