First Quarter 2008 Highlights
• | Highest 1Q EPS since the 1991 IPO | |
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• | 1Q cash from operating activities positive for 1st time since 1Q 2002 | |
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• | Successful conversion of 9M preferred shares to common shares | |
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• | Credit rating agency upgrades | |
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| • | S&P to BB from BB- |
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| • | Moody’s to Ba3 from B2 |
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• | Announced expansion of Lurin, Peru plant | |
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• | Announced 4th regional engineering center to be located in Peru | |
1
Reconciliation of GAAP to non-GAAP Items
1tst Quarter 2008 and 1st Quarter 2007
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| 1Q 08 |
| 1Q 07 |
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$ Millions, except per share amounts |
| Earnings |
| EPS |
| Earnings |
| EPS |
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Net earnings |
| $ | 178.1 |
| $ | 1.04 |
| $ | 53.2 |
| $ | 0.30 |
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Add loss from discontinued operations |
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| 2.1 |
| 0.01 |
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Less gain on sale of discontinued operations |
| (4.1 | ) | (0.02 | ) |
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Earnings from continuing operations |
| 174.0 |
| 1.02 |
| 55.3 |
| 0.31 |
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Excluding Note 1 item (a): |
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Charge for restructuring and asset impairment |
| 9.7 |
| 0.06 |
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Earnings from continuing operations exclusive of Note 1 items |
| $ | 183.7 |
| $ | 1.08 |
| $ | 55.3 |
| $ | 0.31 |
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Diluted shares outstanding (millions) |
| 170.5 |
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| 157.0 |
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(a) Management considers Note 1 items not representative of ongoing operations
2
EPS Reconciliation
1st Quarter 2007 vs. 1st Quarter 2008
2007 EPS from continuing operations excluding items that management considers not representative of ongoing operations |
| $ | 0.31 |
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Sales volume |
| (0.05 | ) | |
Price and product mix |
| 0.48 |
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Manufacturing and delivery |
| (0.23 | ) | |
Operating expenses |
| 0.00 |
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Currency translation |
| 0.14 |
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Retained corporate costs & other |
| 0.12 |
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Net interest expense |
| 0.09 |
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Minority share owners’ interest |
| (0.03 | ) | |
Effective tax rate |
| 0.19 |
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Share count dilution |
| (0.06 | ) | |
All other |
| 0.12 |
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Total reconciling items |
| 0.77 |
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2008 EPS from continuing operations excluding items that management considers not representative of ongoing operations |
| $ | 1.08 |
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3
Net Sales Reconciliation
$ Millions |
| 1Q 08 |
| 1Q 07 |
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Prior segment sales |
| $ | 1,668 |
| $ | 1,460 |
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Sales volume |
| (49 | ) | 67 |
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Price and product mix |
| 119 |
| 62 |
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Currency translation |
| 187 |
| 79 |
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Total reconciling items |
| 257 |
| 208 |
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Current segment sales |
| 1,925 |
| 1,668 |
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Other sales |
| 36 |
| 16 |
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| $ | 1,961 |
| $ | 1,684 |
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4
Segment Operating Profit Reconciliation
$ Millions |
| 1Q 08 |
| 1Q 07 |
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Prior Segment Operating Profit |
| $ | 210 |
| $ | 164 |
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Sales volume |
| (12 | ) | 20 |
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Price and product mix |
| 119 |
| 62 |
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Manufacturing and delivery |
| (55 | ) | (31 | ) | ||
Operating expenses |
| (0 | ) | (5 | ) | ||
Currency translation |
| 35 |
| 8 |
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All other |
| 25 |
| (8 | ) | ||
Total reconciling items |
| 112 |
| 46 |
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Current Segment Operating Profit |
| 322 |
| 210 |
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Retained corporate costs & other |
| 2 |
| (27 | ) | ||
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| $ | 324 |
| $ | 183 |
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5
Free Cash Flow
$ Millions |
| 1Q 08 |
| 1Q 07 |
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Net earnings |
| $ | 178.1 |
| $ | 53.2 |
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Loss from discontinued operations |
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| 2.1 |
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Gain on sale of discontinued operations |
| (4.1 | ) |
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Earnings from continuing operating activities |
| 174.0 |
| 55.3 |
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Non-cash charges: |
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Depreciation and amortization |
| 123.1 |
| 107.4 |
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Restructuring and asset impairment |
| 12.9 |
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All other non-cash charges |
| (11.1 | ) | 24.2 |
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Asbestos-related payments |
| (40.2 | ) | (41.0 | ) | ||
Change in components of working capital |
| (216.8 | ) | (172.5 | ) | ||
Change in non-current assets and liabilities |
| (21.2 | ) | (13.6 | ) | ||
Cash provided by (utilized in) continuing operating activities |
| 20.7 |
| (40.2 | ) | ||
Additions to property, plant and equipment for continuing operations |
| (45.4 | ) | (32.6 | ) | ||
Free Cash Flow (a) |
| $ | (24.7 | ) | $ | (72.8 | ) |
(a) Management defines Free Cash Flow as cash provided by continuing operating activities less capital spending for continuing operating activities
6
Reportable Segment Results
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| 2008 |
| 2007 (a) |
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$ Millions |
| 1Q |
| 1Q |
| 2Q |
| 3Q |
| 4Q |
| Total |
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Sales |
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Europe |
| $ | 888.9 |
| $ | 728.4 |
| $ | 901.6 |
| $ | 825.2 |
| $ | 843.5 |
| $ | 3,298.7 |
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North America |
| 530.9 |
| 523.4 |
| 613.9 |
| 596.2 |
| 537.8 |
| 2,271.3 |
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South America |
| 254.2 |
| 203.2 |
| 231.1 |
| 253.0 |
| 283.4 |
| 970.7 |
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Asia Pacific |
| 250.0 |
| 212.5 |
| 210.5 |
| 239.4 |
| 271.9 |
| 934.3 |
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Reportable segment totals |
| 1,924.0 |
| 1,667.5 |
| 1,957.1 |
| 1,913.8 |
| 1,936.6 |
| 7,475.0 |
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Other sales |
| 36.5 |
| 16.5 |
| 39.9 |
| 14.6 |
| 20.7 |
| 91.7 |
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Total |
| $ | 1,960.5 |
| $ | 1,684.0 |
| $ | 1,997.0 |
| $ | 1,928.4 |
| $ | 1,957.3 |
| $ | 7,566.7 |
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Segment Operating Profit |
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Europe |
| $ | 147.6 |
| $ | 74.8 |
| $ | 122.5 |
| $ | 106.5 |
| $ | 129.2 |
| $ | 433.0 |
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North America |
| 55.5 |
| 62.5 |
| 85.0 |
| 84.1 |
| 33.5 |
| 265.1 |
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South America |
| 73.6 |
| 48.0 |
| 58.4 |
| 66.1 |
| 82.4 |
| 254.9 |
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Asia Pacific |
| 45.4 |
| 24.7 |
| 32.2 |
| 42.6 |
| 54.5 |
| 154.0 |
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Reportable segment totals |
| 322.1 |
| 210.0 |
| 298.1 |
| 299.3 |
| 299.6 |
| 1,107.0 |
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Retained corporate costs and other |
| 1.5 |
| (27.0 | ) | (14.5 | ) | (21.4 | ) | (15.9 | ) | (78.8 | ) | ||||||
Total |
| $ | 323.6 |
| $ | 183.0 |
| $ | 283.6 |
| $ | 277.9 |
| $ | 283.7 |
| $ | 1,028.2 |
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(a) Amounts by segment from Note 21 to the 2007 financial statements (pgs. 92-93 of Form 10K) are presented in this table on a quarterly basis for historical reference.
7
Two Major Currencies v USD
FX Translation Impact on Segment Profit
compared to prior year
$ Millions |
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2007 |
| 2008 |
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1Q |
| 2Q |
| 3Q |
| 4Q |
| Year |
| 1Q |
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$ | 8.0 |
| $ | 10.9 |
| $ | 8.3 |
| $ | 24.8 |
| $ | 52.0 |
| $ | 35.0 |
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source: O-I Website Earnings Charts - 2007
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