Reporting 4Q 2004 financials on 26 January 2005, Owens- Illinois Chairman and Chief Executive Officer Steve McCracken said the results marked “another positive execution milestone for O-I in our turna…
Reporting 4Q 2004 financials on 26 January 2005, Owens- Illinois Chairman and Chief Executive Officer Steve McCracken said the results marked “another positive execution milestone for O-I in our turnaround and transformation agenda”, adding: “Our objective to deliver strong cash flow balanced by earnings growth near-term while investing in our capabilities to deliver earnings and cash growth long-term remains on track as we close 2004 and step forward into 2005.” RECONCILIATION OF 4Q 2003 EARNINGS TO 4Q 2004 Earnings per share from continuing operations (excluding asbestos-related charges and items that Owens-Illinois management considers not representative of ongoing operations) were USD 0.24 per share for the 4Q of 2004 compared with USD 0.11 per share for the 4Q of 2003. Improved pricing and higher unit shipments accounted for an increase of USD 0.15 per share over 4Q 2003. Productivity improvements and higher production volumes represented another USD 0.05 per share increase over the prior year. The impact of BSN operations contributed USD 0.06 per share and currency translation rates accounted for an increase of USD 0.01 per share. Partially offsetting these positive factors were higher energy costs and lower pension income, bringing down earnings per share by USD 0.07 and USD 0.01, respectively. In addition, the restructuring and transition costs in the company“s Plastics Packaging segment accounted for a decrease of USD 0.02 per share, and all other items unfavorably impacted earnings by USD 0.04 per share. GLASS CONTAINERS SEGMENT Segment Operating Profit in the 4Q of 2004 for Glass Containers grew by USD 52.9 million, or 37.3%, from the 4Q 2003. Strength during the quarter was the result of higher unit shipments, improved pricing and operating efficiencies, and the incremental benefit of BSN, partially offset by increasing energy, raw material, and transportation costs, as well as lower pension income. For the 4Q 2004, BSN contributed Operating Profit of USD 27.0 million on sales of USD 352.8 million. Exclusive of BSN, Segment Operating Profit for Glass Containers improved by USD 25.9 million or 18.3% quarter-over-quarter. PLASTICS PACKAGING SEGMENT The Plastic Packaging Segment now consists of health care packaging, including prescription containers and medical devices, and closures, which includes tamper-evident caps and dispensing systems. Segment Operating Profit results for the 4Q of 2004 were USD 19.7 million compared with USD 24.3 million in the 4Q of 2003. CASH FLOWS Higher Segment Operating Profit, working capital reductions, and lower asbestos spending were partially offset by higher cash interest expense and higher capital spending, finance fees and debt repurchase premiums. INTEREST EXPENSE Interest expense for continuing operations in the 4Q of 2004 was USD 150.5 million. Included in this expense was USD 30.8 million for the write- off of unamortized finance fees related to early extinguishment of debt with the proceeds from the blow-molded plastic container divestiture, as well as repurchase premiums related to the November 2004 refinancing of the 9.25% and 10.25% BSN Notes and the 7.15% O-I, Inc. Notes. Exclusive of these unusual items, interest expense in the 4Q of 2004 was USD 119.7 million versus USD 104.9 million in the 4Q of 2003. The interest expense for the 4Q of 2003 represents continuing operations only, as the interest expense and related debt for the divested blow-molded plastic container business has been reclassified to discontinued operations. The higher interest in the 4Q of 2004 includes approximately USD 14.2 million as a result of higher debt primarily related to the BSN acquisition as the debt and interest expense related to the divested blow- molded plastic container business has been reclassified to discontinued operations. In addition, currency translation rates increased US dollar reported interest expense by approximately USD 4.3 million. Partially offsetting this was a USD 3.7 million savings due to lower interest rates resulting from the December 2003 repricing of the Senior Secured Credit Agreement and interest savings resulting from the company“s fixed-to-floating interest rate swap program, completed in the 1Q of 2004, on a portion of its fixed- rate debt. CAPITAL SPENDING Capital spending for continuing operations for the 4Q of 2004 totaled USD 168.2 million, an increase of USD 66.3 million from the year ago quarter. The higher capital spending in the quarter was the result of BSN and the new Windsor, Colorado glass container plant. Combined, these two factors totaled USD 68.2 million, or approximately 40% of the spending in the quarter.