Crown Holdings Reports First Quarter 2005 Results; Segment Income Increases 19% to $111 Million
PHILADELPHIA, April 18, 2005 /PRNewswire-FirstCall via COMTEX/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the first quarter ended March 31, 2005.
Net sales in the first quarter rose to $1,703 million, up 4.9% over the $1,623 million in the first quarter of 2004. The Americas Division's net sales increased 4.5% to $669 million, the European Division's net sales increased 3.3% to $929 million and the Asia Division's net sales increased 25.0% to $105 million.
Gross profit in the first quarter of 2005 increased 11.9% to $207 million over the $185 million in the 2004 first quarter. As a percentage of net sales, gross profit expanded to 12.2% in the first quarter compared to 11.4% in the first quarter last year. The improvement was primarily driven by increased efficiencies and productivity throughout the Company and stronger foreign currencies.
Segment income (defined by the Company as gross profit less selling and administrative expense and provision for restructuring) grew to $111 million in the first quarter, up 19.4% over the $93 million in the 2004 first quarter. Segment income as a percentage of net sales improved to 6.5% from 5.7% in the same period last year. A reconciliation of segment income from gross profit is provided as a note to the attached unaudited Consolidated Statements of Operations.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "We are very pleased with the first quarter results, particularly in light of the substantial increases in raw material prices demanded by our suppliers. Our price initiatives have developed according to plan as these higher costs have been passed through and are expected to be reflected in increased revenues throughout the year. During the seasonally smaller first quarter, sales unit volumes were firm and we continued to improve productivity. As we move forward into 2005, we are well positioned to further leverage our worldwide manufacturing platform and industry leading research and development capability to continue improving margins and reduce debt."
Interest expense in the first quarter was $94 million compared to $90 million in the first quarter of 2004. The increase reflects the impact of higher average interest rates partially offset by lower average debt outstanding.
During the quarter the Company recorded a net charge of $17 million, or $0.10 per diluted share, reflecting a $22 million net loss related to the remeasurement of foreign currency exposures in Europe, partially offset by a $5 million net gain on the sale of assets. In last year's first quarter, the Company reported a net charge of $5 million, or $0.03 per diluted share, reflecting a $3 million net loss for the early extinguishment of debt and a $2 million net loss related to the remeasurement of foreign currency exposures in Europe.
The first quarter net loss narrowed to $10 million, or $0.06 per diluted share, compared to the net loss of $16 million, or $0.10 per diluted share, in the first quarter of 2004.
Debt and cash amounts were:
March 31, December 31, March 31,
2005 2004 2004
Total debt $4,023 $3,872 $4,042
Cash 340 471 243
$3,683 $3,401 $3,799
Receivables securitization $105 $120 $100
Non-GAAP Measures
Segment income and free cash flow are not defined terms under U.S. generally accepted accounting principles (non-GAAP measures). Non-GAAP measures should not be considered in isolation or as a substitute for net income or cash flow data prepared in accordance with 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, for planning and evaluating investment opportunities and of its ability to incur and service debt. Segment income and free cash flow are derived from the Company's income and cash flow statements, respectively, and reconciliations to segment income and free cash flow can be found on the accompanying unaudited Consolidated Statements of Operations and condensed and unaudited Consolidated Statements of Cash Flows.
Conference Call
The Company will hold a conference call tomorrow, April 19, 2005 at 9:30 a.m. (EDT) to discuss this news release. Forward-looking and other material information may be discussed on the conference call. The dial-in numbers for the conference call are (210) 234-0001 or toll-free (888) 820-8951 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 April 26. The telephone numbers for the replay are (203) 369-1374 or toll free (866) 463-2176 and the access passcode is 1483.
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 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 include the Company's ability to increase revenues by passing through costs and to further improve margins and reduce debt. Other important factors are discussed under the caption "Forward-Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2004 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.
Crown Holdings, Inc., through its affiliated companies, is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania.
Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data)
Three Months Ended March 31,
2005 2004
Net sales $1,703 $1,623
Cost of products sold 1,399 1,335
Depreciation and amortization 72 77
Pension expense 25 26
Gross profit (1) 207 185
Selling and administrative expense 96 92
Gain on sale of assets (5)
Loss from early extinguishments of debt 4
Interest expense 94 90
Interest income (2) (2)
Translation and foreign exchange adjustments 30 4
Net loss before income taxes, minority
interests and equity earnings (6) (3)
Provision for income taxes 8
Minority interests and equity earnings (4) (5)
Net loss ($10) ($16)
Loss per average common share:
Basic ($0.06) ($0.10)
Diluted ($0.06) ($0.10)
Weighted average common shares outstanding:
Basic 165,819,217 165,075,996
Diluted 171,863,163 167,193,105
Actual common shares outstanding 166,424,152 165,114,274
Note: Diluted earnings per share for 2005 and 2004 are the same as basic because common shares contingently issuable upon the exercise of stock options were either not material or were anti-dilutive, or the grant prices of the then outstanding options were above the average market price for the related periods.
(1) 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 and provision for
restructuring. A reconciliation from gross profit to segment income
for the three months ended March 31 follows:
2005 2004
Gross profit $207 $185
Selling and administrative expense 96 92
Segment income $111 $93
Consolidated Balance Sheets (Condensed & Unaudited)
(in millions)
March 31, 2005 2004
Assets
Current assets
Cash and cash equivalents $340 $243
Receivables, net 995 919
Inventories 1,059 954
Prepaid expenses and other current assets 89 137
Total current assets 2,483 2,253
Goodwill 2,533 2,450
Property, plant and equipment, net 1,905 2,057
Other non-current assets 1,158 1,127
Total $8,079 $7,887
Liabilities and shareholders' equity
Current liabilities
Short-term debt $112 $76
Current maturities of long-term debt 27 118
Other current liabilities 1,880 1,813
Total current liabilities 2,019 2,007
Long-term debt, excluding current maturities 3,884 3,848
Other non-current liabilities
and minority interests 1,948 1,865
Shareholders' equity 228 167
Total $8,079 $7,887
Consolidated Supplemental Financial Data (Unaudited)
Three Months Ended March 31,
(in millions)
Net Sales 2005 2004
Americas $669 $640
Europe 929 899
Asia-Pacific 105 84
$1,703 $1,623
Segment Income
Americas $42 $27
Europe 80 80
Asia-Pacific 14 12
Corporate (25) (26)
$111 $93
Consolidated Statements of Cash Flows (Condensed & Unaudited)
(in millions)
Three months ended March 31, 2005 2004
Cash flows from operating activities
Net loss ($10) ($16)
Depreciation and amortization 72 77
Other, net (343) (258)
Net cash used for operating activities (A) (281) (197)
Cash flows from investing activities
Capital expenditures (36) (38)
Proceeds from sales of property,
plant and equipment 1
Other, net (5) (10)
Net cash used for investing activities (41) (47)
Cash flows from financing activities
Net change in debt 210 97
Other, net (12) (11)
Net cash provided by financing activities 198 86
Effect of exchange rate changes
on cash and cash equivalents (7)
Net change in cash and cash equivalents (131) (158)
Cash and cash equivalents at January 1 471 401
Cash and cash equivalents at March 31 $340 $243
(A) Free cash flow is defined by the Company as net cash used for
operating activities less capital expenditures. A reconciliation
from net cash used for operating activities to free cash flow for
the three months ended March 31 follows:
Three months ended March 31, 2005 2004
Net cash used for operating activities ($281) ($197)
Capital expenditures (36) (38)
Free cash flow ($317) ($235)
SOURCE Crown Holdings, Inc.
Timothy J. Donahue, Senior Vice President - Finance, Crown Holdings, +1-215-698-5088 or Edward Bisno, Bisno Communications, +1-917-881-5441, for Crown Holdings
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