Crown Holdings Reports Second Quarter 2004 Results; Segment Income Increases 20% to $166 Million
PHILADELPHIA, Jul 14, 2004 /PRNewswire-FirstCall via COMTEX/ -- Crown Holdings, Inc. (NYSE: CCK), today announced its financial results for the second quarter and six months ended June 30, 2004.
Second Quarter Results
Net sales in the second quarter rose to $1,836 million, up 6.4% over the $1,726 million in the second quarter of 2003. Americas Division net sales rose 4.2% in the second quarter of 2004 over the same period in 2003 and European Division net sales increased 7.7% compared to the 2003 second quarter.
Gross profit in the 2004 second quarter grew 16.9% to $256 million over the $219 million in the 2003 second quarter. As a percentage of net sales, gross profit expanded to 13.9% in the second quarter compared to 12.7% in the same quarter last year. The improvements reflect increased operating efficiencies, the ongoing positive effects of the Company's cost containment and restructuring programs in recent years, stronger foreign currencies and firm volumes and pricing.
Segment income (defined by the Company as gross profit less selling and administrative expense and provision for restructuring) was $166 million in the second quarter, up 20.3% over the $138 million in the 2003 second 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 expanded to 9.0% from the 8.0% in the same period last year.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "With the benefit of improved operating performance from our well capitalized and efficient manufacturing infrastructure, we are in excellent position to continue delevering the balance sheet. At the same time, we also expect to continue to benefit from the Company's international diversification with 70% of sales derived from operations outside the United States."
Interest expense in the second quarter was $89 million compared to $101 million in the second quarter of 2003. The decrease reflects the impact of lower average debt outstanding compared to the prior year second quarter.
Net income in the second quarter was $33 million, or $0.20 per diluted share, after a net charge of $0.09 per diluted share for the remeasurement of foreign currency exposures in Europe. In the second quarter of 2003 net income was $50 million, or $0.30 per diluted share which included a net gain of $0.25 per diluted share related to foreign currency exposures in Europe.
Six Month Results
For the first six months of 2004, net sales were $3,459 million, an increase of 8.6% over the $3,186 million in the first six months of 2003. Americas Division net sales grew 4.6% in the first six months of 2004 over the same period in 2003 and European Division net sales were up 11.9% compared to the first half of last year.
Gross profit for the six month period increased to $439 million, or 12.7% of net sales, over the $367 million, or 11.5% of net sales in the first six months of 2003. The improvements reflect increased operating efficiencies, stronger foreign currencies and firm volumes and pricing.
Segment income in the first half of 2004 improved to $257 million, or 7.4% of net sales, compared to the $205 million, or 6.4% of net sales in the first six months of 2003.
For the first six months of 2004, interest expense was $179 million compared to $180 million for the same period last year.
Debt and cash amounts were:
June 30, March 31, December 31, June 30,
2004 2004 2003 2003
Total debt $3,904 $4,042 $3,939 $4,364
Cash 251 243 401 438
$3,653 $3,799 $3,538 $3,926
Receivables
securitization $113 $100 $90 $120
The Company reported net income of $15 million, or $0.09 per diluted share, for the first six months of 2004, after a net charge of $0.10 per diluted share for the remeasurement of foreign currency exposures in Europe. This compares to net income of $16 million, or $0.10 per diluted share, for the first six months of 2003, which included a net gain of $0.32 per diluted share related to foreign currency exposures in Europe.
Conference Call
The Company will hold a conference call tomorrow, July 15, 2004, at 11:00 a.m. (EDT) to discuss this news release. The dial-in numbers for the conference call are (773) 756-4623 or toll-free (888) 459-7564 and the access password is "packaging." A replay of the conference call will be available for a one-week period ending at midnight on July 22. The telephone numbers for the replay are (402) 220-0181 or toll-free (800) 327-0512 and the access passcode is 2893. A live web cast of the call will be made available to the public on the Internet at the Company's Web site.
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 follow this page.
Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Net sales $1,836 $1,726 $3,459 $3,186
Cost of products sold 1,478 1,399 2,815 2,610
Depreciation and
amortization 76 85 153 163
Pension expense 26 23 52 46
Gross profit (1) 256 219 439 367
Selling and administrative
expense 90 81 182 162
Gain on sale of assets (3) (3)
(Gain)/loss from early
extinguishments of debt (2) 4 9
Interest expense 89 101 179 180
Interest income (1) (3) (3) (5)
Translation and foreign
exchange adjustments 23 (56) 27 (69)
Income before income taxes,
minority interests
and equity earnings 55 101 50 93
Provision for income taxes 16 20 24 39
Minority interests and
equity earnings (6) (31) (11) (38)
Net income $33 $50 $15 $16
Income per average common share:
Basic $0.20 $0.30 $0.09 $0.10
Diluted $0.20 $0.30 $0.09 $0.10
Weighted average common shares outstanding:
Basic 165,165,133 164,910,274 165,120,811 164,379,638
Diluted 167,343,493 165,843,258 167,247,804 165,312,801
Actual common
shares
outstanding 165,234,044 164,922,827 165,234,044 164,922,827
(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 and six months ended June 30 follows:
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Gross profit $256 $219 $439 $367
Selling and administrative
expense 90 81 182 162
Segment income $166 $138 $257 $205
CONSOLIDATED BALANCE SHEETS (Condensed & Unaudited)
(in millions)
June 30, 2004 2003
Assets
Current assets
Cash and cash equivalents $251 $438
Receivables, net 1,008 1,023
Inventories 978 975
Prepaid expenses and other current assets 92 94
Total current assets 2,329 2,530
Goodwill 2,430 2,362
Property, plant and equipment, net 1,992 2,176
Other non-current assets 1,117 1,139
Total $7,868 $8,207
Liabilities and shareholders' equity
Current liabilities
Short-term debt $79 $62
Current maturities of long-term debt 116 190
Other current liabilities 1,897 1,820
Total current liabilities 2,092 2,072
Long-term debt, excluding current maturities 3,709 4,112
Other non-current liabilities and minority
interests 1,889 1,967
Shareholders' equity 178 56
Total $7,868 $8,207
Consolidated Supplemental Financial Data (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
(in millions)
Net Sales 2004 2003 2004 2003
Americas $748 $718 $1,388 $1,327
Europe 996 925 1,895 1,693
Asia 92 83 176 166
$1,836 $1,726 $3,459 $3,186
Segment Income
Americas $57 $46 $82 $64
Europe 117 101 197 163
Asia 14 13 26 22
Corporate (22) (22) (48) (44)
$166 $138 $257 $205
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