Crown Holdings Reports First Quarter 2004 Results; Segment Income Increases 35.8%
PHILADELPHIA, April 14 /PRNewswire-FirstCall/ -- Crown Holdings, Inc. (NYSE: CCK), today announced its financial results for the first quarter ended March 31, 2004.
Net sales in the first quarter rose to $1,623 million, up 11.2% over the $1,460 million in the first quarter of 2003. Americas Division net sales increased 5.1% to $640 million and the European Division's net sales increased 17.1% to $899 million.
Gross profit in the first quarter of 2004 increased 23.6% to $183 million over the $148 million in the 2003 first quarter. As a percentage of net sales gross profit expanded to 11.3% in the first quarter compared to 10.1% in the first quarter last year. The improvement was driven by increased operating efficiencies, the positive effects of the Company's ongoing cost containment and restructuring programs in recent years, higher volumes in line with the market, improved pricing in certain product lines and stronger foreign currencies.
Segment income (defined by the Company as gross profit less selling and administrative expense and provision for restructuring) grew to $91 million in the first quarter, up 35.8% over the $67 million in the 2003 first quarter. A reconciliation of segment income from gross profit is provided as a note to the attached unaudited Consolidated Statements of Operations. Segment income as a percentage of net sales improved to 5.6% from the 4.6% in the same period last year. Significant increases in segment income were reported across all divisions as a result of productivity gains, increased volumes and improved pricing in some product lines and currency translation.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "We are very pleased with the improved operating and profit performance of virtually every business in our portfolio. Demand for our proprietary, industry award-winning can shaping and easy open end technologies continues to command our customers' attention. These innovative technologies add value to our customers' offerings by distinguishing their brands and providing consumers with ease of use, convenience and value."
Interest expense in the first quarter was $90 million compared to $79 million in the first quarter of 2003. The increase reflects the impact of higher average interest rates in the 2004 first quarter resulting from the Company's February 2003 refinancing, partially offset by lower average debt outstanding.
Debt and cash amounts were:
March 31, December 31, March 31,
2004 2003 2003
Total debt $4,042 $3,939 $4,494
Cash 243 401 545
$3,799 $3,538 $3,949
Receivables securitization $100 $90 $100
As previously announced, the Company completed concurrent cash tender offers by two of its wholly owned subsidiaries, Crown Cork & Seal Company, Inc. (Crown Cork) and Crown Cork & Seal Finance S.A. (Crown Finance), for certain of their respective outstanding unsecured notes. Crown Cork purchased $21 million of its 8.375% Notes due January 15, 2005 (2005 Notes) at a price of 104.5% of its original principal amount. Crown Finance purchased euro 85 million of its 6.00% Notes due December 6, 2004 (2004 Notes) at a price of 103.0% of its original principal amount. Remaining principal balances outstanding are $40 million of 2005 Notes and euro 22 million of 2004 Notes. The first quarter net loss narrowed to $18 million, or $0.11 per diluted share, compared to the net loss of $34 million, or $0.21 per diluted share, in the first quarter of 2003. The results for the first quarter of 2004 include a $5 million net loss, or $0.03 per diluted share (net loss of $2 million, or $0.01 per diluted share in the first quarter of 2003), 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.
Conference Call
The Company will hold a conference call tomorrow, April 15, 2004 at 11:00 a.m. (EDT) to discuss this news release. The dial-in numbers for the conference call are (712) 257-0027 or toll-free (888) 560-8502 and the access password is "packaging." A replay of the conference call will be available for a one-week period ending at midnight on April 22. The telephone numbers for the replay are (402) 998-0501 or toll-free (888) 277-5139 and the access passcode is 2765. A live web cast of the call will be made available to the public on the Internet at the Company's Web site, 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. 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 are discussed under the caption "Forward-Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2003 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.
Unaudited Consolidated Statements of Operations and Balance Sheets and Segment Information to follow.
Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data)
Three Months Ended March 31,
2004 2003
Net sales $1,623 $1,460
Cost of products sold 1,337 1,211
Depreciation and amortization 77 78
Pension expense 26 23
Gross profit (1) 183 148
Selling and administrative expense 92 81
Loss from early extinguishment of debt 4 11
Interest expense 90 79
Interest income (2) (2)
Translation and foreign exchange adjustments 4 (13)
Net loss before income taxes, minority
interests and equity earnings (5) (8)
Provision for income taxes 8 19
Minority interests and equity earnings (5) (7)
Net loss ($18) ($34)
Loss per average common share:
Basic ($ 0.11) ($ 0.21)
Diluted ($ 0.11) ($ 0.21)
Weighted average common shares outstanding:
Basic 165,075,996 163,843,107
Diluted 167,193,105 164,776,546
Actual common shares outstanding 165,114,274 164,890,237
(1) The Company views segment income, as defined below, as the 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:
2004 2003
Gross profit $183 $148
Selling and administrative expense 92 81
Segment income $91 $67
CONSOLIDATED BALANCE SHEETS (Condensed & Unaudited)
(in millions)
March 31, 2004 2003
Assets
Current assets
Cash and cash equivalents $243 $545
Receivables, net 919 905
Inventories 954 917
Prepaid expenses and other current assets 137 131
Total current assets 2,253 2,498
Goodwill 2,450 2,289
Property, plant and equipment, net 2,057 2,170
Other non-current assets 1,127 1,098
Total $7,887 $8,055
Liabilities and shareholders' equity
Current liabilities
Short-term debt $76 $60
Current maturities of long-term debt 118 334
Other current liabilities 1,813 1,706
Total current liabilities 2,007 2,100
Long-term debt, excluding current
maturities 3,848 4,100
Other non-current liabilities and
minority interests 1,867 1,907
Shareholders' equity/(deficit) 165 (52)
Total $7,887 $8,055
Consolidated Supplemental Financial Data (Unaudited)
Three Months Ended March 31,
(in millions)
Net Sales 2004 2003
Americas $640 $609
Europe 899 768
Asia 84 83
$1,623 $1,460
Segment Income
Americas $25 $18
Europe 80 62
Asia 12 9
Corporate (26) (22)
$91 $67
SOURCE Crown Holdings, Inc.