Crown Cork & Seal Reports Fourth Quarter and 2000 Results
PHILADELPHIA, Feb. 15 /PRNewswire/ -- Crown Cork & Seal Company, Inc. (NYSE: CCK) (Paris Bourse: CCK) announced today its results for the fourth quarter and year ended December 31, 2000.
Net income available to common shareholders for 2000, before unusual items, was $0.73 per diluted share compared with $2.15 per diluted share, before unusual items, for 1999. Fourth quarter net income, before unusual items, was a net loss of $0.30 per diluted share compared with net income of $0.30 per diluted share, before unusual items, in the same quarter last year.
Net sales of $7.3 billion for 2000 and $1.6 billion in the fourth quarter were 8.9% and 12.1% lower, respectively, compared to prior year same period results. Excluding the effects of currency translation ($409 million), net sales would have declined by only 3.8% in 2000 compared to 1999.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2000, before unusual items, were $1,040 million, down $271 million or 20.7% from 1999 EBITDA, before unusual items, of $1,311. The compression in EBITDA was attributable to lower net selling prices and volumes across many product lines, combined with increasing costs and the continued strength of the U.S. dollar against the Euro. The Company's ongoing cost reduction efforts resulted in lowering selling and administrative costs by 9.8% for the year. However, this only partially offset the pressure on operating margin.
Two factors, outside the already competitive industry conditions, also put pressure on the Company. The tightening bank credit environment coupled with uncertainties related to asbestos litigation resulted in one rating agency downgrading the Company's debt by five levels in four weeks. The result of this action was that the Company lost access to several sources of capital, including the commercial paper market and off-balance sheet receivables securitization programs. The Company is currently working with its bank group to ensure the continuance of adequate sources of capital and liquidity to fund its operating and investment needs and is confident they will remain supportive of the Company's strategy. Year-end net debt was $4,967 million at December 31, 2000 versus $4,837 million at December 31, 1999. Net interest expense for the year 2000 was $31 million higher than 1999 and $7 million or $0.05 per diluted share higher than the Company had previously forecasted.
The effective tax rate for 2000, before unusual items, was 37.2% compared to the 1999 rate of 34.4%. The increased rate primarily reflects that non- deductible goodwill amortization had a greater percentage impact on lower pre- tax income. Minority interests, net of equity earnings, were a charge of $15 million for 2000 versus $23 million for 1999. The reduction in the minority interest charge compared to last year resulted from the Company's purchase of the minority interests in its CarnaudMetalbox Asia Limited subsidiary operations partially offset by strong performances in the Company's beverage can joint-venture in Brazil.
The following table can be used to reconcile earnings per share as
reported with earnings per share on a continuing operations basis.
Three Months Ended Twelve Months Ended December 31, December 31, (Per diluted share) 2000 1999 2000 1999 Net (loss)/income as reported ($1.89) ($ .57) * ($1.40) * $1.36 * Add: Provisions for restructuring/ other charges 1.33 .87 1.77 .78 Bad debt provision .18 .28 Tax adjustment .07 .07 Less: (Gain)/loss on sale of assets, net of other charges .01 .01 .01 Net (loss)/income from continuing operations ($ .30) $ .30 $.73 $2.15 * Diluted E.P.S. is the same as Basic E.P.S. because of the anti-dilutive effect from the conversion of the preference shares and the add-back of preferred dividends. Review by Major Division
The Americas Division generated net sales of $850 million in the fourth quarter and $3,742 million in 2000, representing decreases of 10.1% and 5.6%, respectively. Operating margin, before unusual items, declined to 7.2% for the full year 2000 compared to 9.7% for 1999 reflecting the impact of pricing pressure and lower volumes.
Beverage can volume declined 3% across the Division as strong demand in Canada and Latin America was offset by softer volume in the U.S. beverage can market. North American food can volume declined 8% due primarily to reduced volume requirements from a customer who filed for voluntary Chapter 11 bankruptcy protection. Unit volume demand continued to be strong for aerosol cans, plastic beverage and specialty closures, PET preforms, custom PET containers and across the Company's beauty care packaging product lines.
Net sales in the European Division were $713 million in the fourth quarter and $3,239 million in 2000 versus $837 million and $3,703 million for the respective 1999 periods. Operating margin for the full year 2000 was 10.6% compared to 12.3% for 1999. Unfavorable currency translation accounted for $398 million of the decline in 2000 net sales from 1999, reflecting the continued strength of the U.S. dollar against the Euro. Excluding the impact of currency translation, European Division net sales were down 1.8% from 1999.
Beverage can volume increased 2% in 2000, as demand remained strong throughout the Division. Food can and aerosol can volumes were down 3% and 1%, respectively, as continental European gains were offset by soft demand in the UK. Plastic closure and plastic container volumes enjoyed volume growth of 4% and 2%, respectively, with gains noted throughout many operations.
The Asia-Pacific Division generated net sales and operating income of $308 million and $22 million, respectively in 2000. Operating margin at 7.1% benefited from strong sales unit volumes throughout the Division as both plastic and metal closures recorded double-digit growth over the prior year. Beverage can and plastic bottle shipments were level to prior year as strong performances in Southeast Asia offset market weakness in China. Despite challenging business conditions in the region, the Division generated free cash flow in excess of 12% of net sales.
Additional Charges for Unusual Items
During the fourth quarter, the Company recorded $255 million ($166 million after-tax or $1.32 per diluted share) to provide for an increase in the estimated liability for litigation alleging injury as a result of exposure to asbestos. After this provision, the recorded liability for estimated settlement and defense costs associated with currently pending and future claims to be filed against the Company is $420 million. This amount is based upon an independent statistical and actuarial valuation recently prepared for the Company and the Company's own review and represents the Company's best estimate of probable and estimable liabilities. Cash expenditures in 2000 amounted to $92 million including payments for legal costs, pre-existing settlements and accelerated settlements. The Company anticipates that cash flows from operations will be sufficient to meet asbestos-related obligations.
During the fourth quarter, the Company also recorded $35 million ($23 million after-tax or $0.18 per diluted share) to provide for non- collectable receivables due from a food can customer in bankruptcy and recorded $8 million ($0.07 per diluted share) to write down foreign tax credits not likely to be recovered. The provision for non-collectable receivables totaled $55 million ($36 million after tax or $0.28 per diluted share) for the year 2000 and was included within cost of products sold.
The Company will hold a conference call today, February 15, 2001 at 11:00 am (ET) to discuss this news release. The dial-in numbers for the conference call are (712) 257-3096 or toll free (800) 779-1598 and the access password is "packaging." A replay of the conference call will be available for a one-week period ending at midnight on Thursday, February 22. The telephone numbers for the replay are (402) 998-1207 or toll free (800) 839-5108 and the access code is 2289. 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.
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 current discussions with the Company's bank group; cost reduction efforts and expected savings; 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, 1999 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 follow this page. Consolidated Statements of Income (In millions, except share and per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2000 1999 2000 1999 Net sales $1,636 $1,862 $7,289 $7,998 Cost of products sold 1,432 1,501 5,982 6,326 Depreciation 87 94 375 395 Amortization 30 32 120 127 Selling and administrative expense 74 81 314 348 Provision for restructuring and other charges 256 163 333 156 Loss / (gain) on sale of assets 1 1 (18) Interest expense 102 91 393 367 Interest income (5) (5) (20) (25) Translation and foreign exchange adjustments 4 1 8 13 (Loss)/income before income taxes (345) (96) (217) 309 (Benefit)/provision from/for income taxes (108) (36) (58) 105 Minority interests, net of equity earnings (6) (15) (23) Net (loss)/income (237) (66) (174) 181 Preferred stock dividends 3 2 15 Net (loss)/income available to common shareholders ($237) ($69) ($176) $166 Earnings/(loss) per average common share: Basic ($ 1.89) ($.57) ($1.40) $1.36 Diluted ($ 1.89) ($.57) ($1.40) $1.36 Dividends per common share $.25 $.25 $1.00 $1.00 Weighted average common shares outstanding: Basic 125,620,188 121,701,337 125,685,987 122,176,193 Diluted 125,620,188 129,337,691 126,843,920 129,811,965 Actual common shares outstanding 125,621,648 121,081,153 125,621,648 121,081,153 Actual preferred outstanding 8,325,951 8,325,951 1) In the fourth quarter, 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 $61 for the quarters ended December 31, 2000 and 1999, respectively, and $244 and $266 for the years ended December 31, 2000 and 1999, respectively. 2) The increase in average and actual common shares outstanding reflects the conversion of outstanding preferred stock on February 26, 2000 partially offset by the repurchase of approximately 3.2 million shares of common during 2000.
SOURCE Crown Cork & Seal Company, Inc.
Web site: http: //www.crowncork.com
CONTACT: Timothy J. Donahue, Senior Vice President - Finance, 215-698-5088, or Edward Bisno, Edelman Financial, 212-704-8212, both of Crown Cork & Seal