Crown Cork & Seal Reports First Quarter 2001 Results

PHILADELPHIA, April 18 /PRNewswire/ -- Crown Cork & Seal Company, Inc. (NYSE: CCK; Paris Bourse) today announced its results for the first quarter ended March 31, 2001. On a continuing operations basis and before the cumulative effect of accounting changes, the Company reported a net loss of $0.37 per diluted share compared to net income of $0.17 per diluted share in the same period last year. The first quarter results are $0.03 per diluted share ahead of expectations issued by management on March 12, 2001.

John W. Conway, Chairman, President and CEO, commented, "We continue to experience the challenges of pricing pressure in certain markets. We are, however, pleased with our increased worldwide unit volume shipments and will continue to seek further improvement. This is a continuing demonstration of the Company's commitment to remaining the global leader in consumer packaging. In line with this strategy, the Company commercially introduced several new technologies during the quarter to both the food and beverage industries. We continue to utilize our leading research and development capability to deliver innovative and high quality packaging solutions to our customers."

First quarter net sales were $1,658 million, 2.4% below the prior year period reflecting the continued strength of the U.S. dollar against the euro and Pound Sterling. Excluding the effects of currency translation, net sales increased 1.5% over the prior year period, reflecting an overall increase in worldwide volumes across most product lines. Previously noted competitive price pressures in the Company's North American beverage businesses have resulted in a reduction of gross and operating margins in the quarter. Selling, general and administrative (SG&A) expense at 5.2% to net sales in the quarter was up $1 million over the prior year, but includes $5 million for employee separation costs. Excluding these costs, SG&A declined 4.7% compared to the prior year and was 4.9% to net sales.

As previously announced, the Company successfully completed the refinancing of its $2.5 billion credit facility and raised an additional $400 million term loan. The new money term loan replaces previously existing alternative sources of capital and provides the Company with the financial strength, flexibility and liquidity to support its businesses and, at the same time, execute its strategy of targeted divestitures to further streamline the business. Since the completion of the refinancing, the Company believes that the fundamentals of its business have improved as evidenced, among other things, by the widespread unit volume growth the Company is experiencing in virtually all of its product segments and geographic markets. As a consequence, the Company notes that its forecast for EBITDA of approximately $1 billion continues to be its view for the full year 2001. In addition, the recent actions by the Federal Reserve Bank reducing interest rates will have a beneficial impact upon interest cost compared to previous assumptions the Company had been using.

The following table reconciles earnings per share as reported with earnings per share on a continuing operations basis:

                                                       Three Months Ended
                                                           March 31,

    (Per diluted share)                                2001           2000
    Net (loss) / income as reported                  ($0.37)          $0.17
    Less: Cumulative effect of accounting change       (.03)
                                                       (.40)
    Add: Provision for restructuring and
     employee separation costs                           .03
    Net (loss) / income from continuing
     operations                                      ($0.37)          $0.17

    Review by Division

The Americas Division generated net sales of $843 million in the first quarter, which were $17 million lower than last year's first quarter. Beverage can unit volumes were equal to the prior year as strong demand in Latin America offset softer volumes in the U.S. and Canada during the northern hemisphere's seasonally slower first quarter. Importantly, North American beverage end unit volumes were 2.1% greater than the prior year reflecting the early success of the Company's patented SuperEnd(TM) technology. The Company expects this superior performing end to become the industry standard by the end of 2002. Food can volumes in North America were down 8.7% to the prior year due in large part to seasonal timing and the June 2000 bankruptcy filing by a large food processor.

Strong sales unit volumes were reported across all of the Division's plastics operations. In particular, PET preforms and plastic beverage and specialty closures all reported double-digit volume growth versus the prior year. The Risdon-AMS beauty care packaging business performed well and benefited from volume gains in its fragrance pump and eyecare product lines.

The European Division generated net sales of $741 million in the first quarter, which were $27 million lower than in the prior year period. Excluding currency translation, net sales in the Division were $29 million or 3.8% greater than in the prior year period reflecting increased unit volumes across all major product lines.

Beverage can unit volumes were up 2.5% with strong performances throughout southern Europe. Food can volumes across the Division were up 1.0% over the same quarter last year, with increases experienced in Benelux, Eastern Europe, Germany and the UK. Aerosol can volumes, up 8.1% over the prior year, benefited from improvement throughout all operations. The plastics sector experienced higher sales unit volumes across most product lines, most notably beauty care packaging and beverage and specialty closures.

The Asia-Pacific Division reported sales of $74 million in the first quarter, an increase of $3 million or 4.2% compared to the prior year period. Demand for all products was exceptionally strong throughout the Division with beverage and food cans, plastic closures and PET beverage bottles all reporting double-digit growth over the prior year. Beverage can volume growth was particularly notable in China while Singapore, Thailand and Vietnam also posted respectable gains over the prior year period. While pricing remained extremely competitive, the Division continued to cut costs and improved its net income and business cash flow by 47% and 257%, respectively, compared to the same quarter last year.

Conference Call

The Company will hold a conference call tomorrow, April 19, 2001 at 11:00 am (EDT) to discuss this news release. The dial-in numbers for the conference call are (712) 257-2280 or toll free (800) 779-1598. Please be prepared to state your name, affiliation, and the access password which is "packaging." A replay of the conference call will be available for a one-week period ending at midnight on Thursday, April 26. The telephone numbers for the replay are (402) 220-0329 or toll free (800) 704-0517 and the access code is 0197. A live web cast of the call will be made available to the public on the Internet at the Company's website, www.crowncork.com.

The Company will release its results for the second quarter on July 19 and for the third quarter on October 18.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information, all other information in this press release consists of forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve a number of risks, uncertainties and other factors which may cause the actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the actual results of operations or financial condition of the Company to differ include, without limitation, competitive pressures affecting the Company, its customers and suppliers; the Company's ability to generate significant free cash and maintain appropriate debt levels; the Company's ability to maintain adequate sources of capital and liquidity, including through the consummation of appropriate asset sales; cost reduction efforts and expected savings; the Company's ability to innovate new designs and technologies and the market acceptance of new products; the outcome of asbestos-related litigation (including the level of future claims and the terms of settlements, and the impact of bankruptcy filings by other companies with asbestos-related liabilities, which could increase the Company's asbestos-related costs over time, and the adequacy of reserves established for asbestos-related liabilities) and other litigation and contingencies; changes in the availability and pricing of raw materials and the Company's ability to pass price increases through to its customers; costs and difficulties related to the integration of acquired businesses; the impact of any potential dispositions or other strategic realignments; and changes or differences in U.S. or international economic, monetary or political conditions. In addition, other factors have been discussed under the caption "Forward-Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2000 and in subsequent filings. The Company does not intend to review or revise any particular forward-looking statement in light of future events.

Crown Cork & Seal is the leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania.

                      Consolidated Statements of Income

    (In millions, except for share and per share amounts)

                                                 Three Months Ended March 31,
                                                      2001            2000

    Net sales (A)                                     $1,658         $1,699

    Cost of products sold (A)                          1,395          1,352
    Depreciation                                          94             97
    Amortization                                          30             31
    Selling and administrative
     expense                                              86             85
    Provision for restructuring and
     other charges                                         2
    Interest expense                                     115             92
    Interest income                                       (6)            (4)
    Translation and foreign exchange
     adjustments                                           3
    (Loss) / income before income taxes and
     cumulative effect of accounting change              (61)            46
    (Benefit) / provision from/for income taxes          (11)            19
    Minority interests, net of equity earnings                          (4)
    Net (loss) / income before cumulative effect
     of accounting change                                (50)            23
    Cumulative effect of change in accounting
     principle for derivatives and hedging
     activities, net of tax (B)                            4
    Net (loss) / income                                  (46)            23
    Preferred stock dividends                                             2
    Net (loss) / income available to common
     shareholders                                       ($46)           $21
    Earnings / (loss) per average common share:
      Basic and diluted -- before cumulative
                           effect of accounting
                           change                      ($.40)          $.17
                           after cumulative effect
                           of accounting change        ($.37)          $.17

              Dividends per common share                               $.25
    Weighted average common shares:
      Basic                                      125,624,056    123,870,438
      Diluted                                    125,624,056    128,569,627
    Actual common shares outstanding             125,628,722    128,106,916

(A) In the fourth quarter of 2000, the Company adopted EITF 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10 requires that shipping and handling costs be excluded from revenues. The Company, to comply with this standard, has reclassified from net sales to cost of products sold $59 for the quarter ended March 31, 2000.

(B) On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 138. SFAS No. 133 establishes comprehensive accounting and reporting guidelines for derivative instruments and hedging activities. The Company, to comply with this standard, has recognized an after-tax transition adjustment, that is, a cumulative effect of an accounting change, in the first quarter of 2001.
SOURCE Crown Cork & Seal Company, Inc.
Web site: http: //www.crowncork.com
CONTACT: Timothy J. Donahue, Senior Vice President - Finance of Crown Cork & Seal, 215-698-5088; or Edward Bisno of Edelman Financial, 212-704-8212, for Crown Cork & Seal