Exhibit 99
SEALED AIR ACHIEVES 21% GROWTH IN DILUTED EPS
Reports 6% Sales Growth
ELMWOOD PARK, N.J., Wednesday, October 25, 2006 — Sealed Air Corporation (NYSE:SEE) reported diluted earnings per common share of $0.82 for the third quarter of 2006, a 21% increase over prior year diluted earnings per common share of $0.68. Sealed Air’s net sales for the quarter increased 6% to $1.08 billion, compared with $1.02 billion in 2005.
Commenting on the Company’s operating performance, William V. Hickey, President and Chief Executive Officer, stated:
“We are encouraged that our business continues to demonstrate steady improvement in operating performance over the course of this year. Our gross profit margins improved sequentially versus the second quarter of 2006, and versus the third quarter of 2005, despite higher petrochemical-based raw material costs. Our selling price increases, as well as our supply chain and productivity improvement initiatives, contributed to our margin improvement. We utilized our solid cash flow to repurchase $43 million of our common stock during the quarter, bringing our year-to-date common stock repurchases to $50 million.”
Commenting on the Company’s outlook, Mr. Hickey stated:
“We are enthusiastic about the opportunities for continued growth and enhanced profitability in our business. Our improved operating results demonstrate that we are successfully executing the plans that we laid out at the beginning of the year. Going forward, our global manufacturing strategy is focused on aligning our global production capabilities with the long-term opportunities for growth in developing markets around the world. We will continue to increase our productivity by investing in new technologies and delivering best-in-class manufacturing and logistics through our initiatives to optimize our global supply chain. We remain focused on driving profitable growth in our business and developing innovative solutions for our customers.”
Financial Highlights for the Third Quarter
· Net sales increased 6% to $1.08 billion compared with $1.02 billion for the third quarter of 2005. The increase in net sales resulted from a $31 million favorable change in product price/mix combined with $18 million from acquisitions and $13 million from the favorable effect of foreign currency translation. Unit volumes declined by $1 million during the
quarter. Excluding the favorable effect of $13 million in foreign currency translation, net sales would have increased 5%.
· Gross profit increased to $310 million, or 28.6% of net sales, compared with $288 million, or 28.2% of net sales, for the third quarter of 2005. The increase in gross profit as a percentage of net sales was due to the positive impact of selling price increases combined with improved operating efficiencies that helped offset higher petrochemical-based raw material and other energy-related costs.
· Marketing, administrative and development expenses increased to $170 million, or 15.7% of net sales, compared with $156 million, or 15.3% of net sales, for the third quarter of 2005.
· Operating profit increased to $140 million compared with $131 million in the third quarter of 2005. As a percentage of net sales, operating profit was unchanged at 12.9% compared with prior year.
· Interest expense was $36 million compared with $38 million in the third quarter of 2005 reflecting savings from the retirement of the Company’s 5.625% euro notes on July 19, 2006, partially offset by the impact of higher interest rates on the Company’s outstanding interest rate swaps.
· The Company’s effective income tax rate was 30.6% compared with 33.3% in the third quarter of 2005. The decrease is principally attributable to a shift in the mix of foreign earnings and the adjustment of the Company’s estimated 2006 effective tax rate to 31.5%.
Business Segment Review
Food Packaging Segment
The Company’s food packaging segment net sales for the third quarter increased 7% to $678 million compared with $636 million last year. Continued strength in Latin America and the positive impact of acquisitions helped drive sales growth in the quarter. Excluding the $8 million favorable effect of foreign currency translation, segment net sales would have increased 5%. Operating profit for the third quarter was $82 million, or 12.1% of net sales, compared with $78 million, or 12.2% of net sales, in 2005. Operating profit as a percentage of net sales remained essentially flat as improvements in operating efficiencies help mitigate higher raw material and energy-related costs.
Protective Packaging Segment
The Company’s protective packaging segment net sales for the third quarter increased 5% to $404 million compared with $384 million last year. Selling price increases contributed to sales growth in the quarter, but had an adverse impact on unit volume. Excluding the $5 million favorable effect of foreign currency translation, segment net sales would have increased 4%. Operating profit for the third quarter was $58 million, or 14.3% of net sales, compared with $54 million, or 14.1% of net sales, in 2005. The increase in operating profit as a percentage of net sales was due to the selling price increases noted above, which helped offset higher raw material and energy-related costs.
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Financing Update
As previously disclosed, on July 19, 2006, the Company used available cash to retire its 5.625% euro notes due July 2006. The euro notes had a face value of €200 million, equivalent to $252 million on July 19, 2006.
Global Manufacturing Strategy
As previously announced in the Company’s second quarter 2006 earnings release, Sealed Air expected to incur additional expenses of $20 million in the second half of this year related to the implementation of its global manufacturing strategy. The Company incurred $2 million of these expenses during the third quarter and expects to incur an additional $18 million of expenses in the fourth quarter. The actual timing of these additional expenses is subject to change due to a variety of factors that may cause a portion of the charges to occur in future periods.
Earnings Guidance
Sealed Air expects its full year diluted earnings per common share to be in the range of $2.82 to $3.02, which includes restructuring charges of $0.08 per share incurred in the second quarter. Excluding these restructuring charges, the Company reaffirms its previous earnings guidance of $2.90 to $3.10 per share. This guidance assumes that average raw material costs will remain essentially flat through the remainder of the year. The Company’s guidance does not include the additional $18 million in expenses referenced above relating to its global manufacturing strategy, the timing of which is subject to change.
Web Site and Conference Call Information
Mr. Hickey and David H. Kelsey, the Company’s Chief Financial Officer, will conduct an investor conference call today at 11:00 a.m. (ET). The conference call will be webcast live on Sealed Air’s web site at www.sealedair.com in the Investor Information section under the Presentations & Events tab. Listeners should go to the web site prior to the call to register, and to download and install any necessary audio software. Prior to the call, the Company will also post supplemental financial and statistical information on its web site in the Investor Information section under the Reports & Filings tab. A replay of the webcast will also be available on the Company’s web site.
Investors who cannot access the webcast may listen to the live conference call via telephone by dialing (888) 515-2235 (domestic) or (719) 457-2601 (international). Telephonic replay will be available beginning today at 2:00 p.m. (ET) and ending on Wednesday, November 1, 2006 at 12:00 midnight (ET). To listen to the replay, please dial (888) 203-1112 (domestic) or (719) 457-0820 (international) and use the confirmation code 4584349.
Business
Sealed Air is a leading global manufacturer of a wide range of food and protective packaging materials and systems including such widely recognized brands as Bubble Wrap®
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cushioning, Jiffy® protective mailers and Cryovac® food packaging products. For more information about Sealed Air, please visit the Company’s web site at www.sealedair.com.
Non-GAAP Information
The Company’s management from time to time presents information that does not conform to U.S. Generally Accepted Accounting Principles, including diluted earnings per common share excluding the effects of restructuring charges and changes in net sales excluding the effects of foreign currency translation. The Company’s management believes that presenting diluted earnings per common share excluding the effects of restructuring charges reflects the Company’s operating performance on a basis consistent with the Company’s most recent earnings guidance. The Company’s management uses changes in net sales excluding the effects of foreign currency translation to measure the performance of the Company’s operations. Thus, management believes that this information may be useful to investors. Such measures are also among the criteria upon which performance-based compensation may be determined.
Forward-Looking Statements
Some of the statements made by the Company in this press release are forward-looking. These statements include comments as to future events and trends affecting the Company’s business, which are based upon management’s current expectations and are necessarily subject to risks and uncertainties, many of which are outside the control of the Company. Forward-looking statements can be identified by such words as “anticipates,” “estimates,” “expects,” “intends,” “plans,” “will” and similar expressions. The following are important factors that the Company believes could cause actual results to differ materially from those in the Company’s forward-looking statements: changes in raw material and energy costs; the effects of animal and food-related health issues; import/export restrictions; market conditions; the evolution and timing of the Company’s global manufacturing strategy; tax, interest and exchange rates; the success of new products; and legal proceedings. A more extensive list and description of these and other such factors can be found under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” which appear in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission.
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