Exhibit 99.1
Pactiv Revises Earnings Outlook Due to
Significantly Higher Raw Material Costs
LAKE FOREST, Ill.--(BUSINESS WIRE)--Sept. 20, 2004--Pactiv
Corporation (NYSE:PTV) today announced that it has revised its full
year 2004 earnings per share outlook excluding restructuring charges
to a range of $1.40 to $1.45 from its previously announced range of
$1.50 to $1.56. The fourth quarter, and to a lesser extent, the third
quarter, will be impacted. The earnings per share range excluding
restructuring charges for the third quarter is anticipated to be $0.38
to $0.40. While demand remains strong across all business segments,
newly announced raw material cost increases are expected to negatively
impact results. The Company reaffirms its outlook for 2004 free cash
flow (cash from operating activities less capital expenditures) of
$230 million to $240 million after spending $36 million on a
previously announced restructuring program.
"Since our last earnings release, resin suppliers have announced
substantial new cost increases. It is difficult to determine how much
of these increases will ultimately be realized, but we believe that in
the current energy and chemical intermediates environment, raw
materials are likely to rise beyond what the market envisioned 45 days
ago," said Richard L. Wambold, chairman and chief executive officer of
Pactiv. "Our businesses remain strong and healthy, with third quarter
sales growth expected to be in a range of 6 percent to 8 percent,
showing strength in all segments."
"Throughout this year we have raised selling prices several times
to offset higher raw material costs, and we have announced additional
pricing actions for implementation over the next few months. We are
confident that these pricing actions and our continued focus on
productivity and cost control will begin to improve margins as resin
costs plateau. Longer term, we expect the top-line growth we are
seeing to be reflected in strong earnings performance," Wambold
concluded.
Other
This press release includes certain non-GAAP financial measures. A
reconciliation of the non-GAAP financial measures to GAAP is shown in
the attached "Regulation G GAAP Reconciliation".
Cautionary Statements
This press release includes certain "forward-looking statements"
such as "revised its full year 2004 outlook...", "earnings per
share...is anticipated to be...", "raw material cost increases are
expected...", "reaffirms its outlook for 2004 free cash flow", "it is
difficult to determine how much of these increases will ultimately be
realized", "believe that ...raw materials are likely to rise beyond
what the market envisioned 45 days ago", "...sales growth expected to
be in a range of 6 percent to 8 percent...", "we are confident that
these pricing actions...will begin to improve margins...", and "...we
expect the top-line growth we are seeing to be reflected in strong
earnings performance". These statements are based on management's
current reasonable and good faith expectations. A variety of factors
may cause actual results to differ materially from these expectations.
More detailed information about these and other factors is contained
in the Company's Annual Report on Form 10-K at page 56 filed with the
Securities and Exchange Commission as revised and updated by Forms
10-Q and 8-K as filed with the Commission.
Pactiv Corporation, a $3.1 billion company, is a leading provider
of advanced packaging solutions for the consumer, foodservice/food
packaging and protective/flexible packaging markets. The specialty
packaging leader currently operates 79 facilities in 14 countries
around the world. For more information about Pactiv, visit the
company's web site at www.pactiv.com.
Pactiv Corporation
Regulation G GAAP Reconciliation
Outlook for 2004
Three months ended Twelve months ended
September 30, 2004 December 31, 2004
--------------------- ---------------------
Diluted earnings per share Low High Low High
estimate estimate estimate estimate
---------- ---------- ---------- ----------
Continuing operations - US
GAAP basis $0.37 $0.39 $1.01 $1.06
Adjustments to exclude
restructuring
and other charges 0.01 0.01 0.39 0.39
---------- ---------- ---------- ----------
Continuing operations
excluding restructuring
and other charges (a) $0.38 $0.40 $1.40 $1.45
========== ========== ========== ==========
Twelve months ended
December 31, 2004
---------------------
Free cash flow (in Low High
millions) estimate estimate
---------- ----------
Cash flow provided by
operating activities - US
GAAP basis $340 $350
Less: capital expenditures (110) (110)
---------- ----------
Free cash flow (b) $230 $240
========== ==========
(a) In accordance with generally accepted accounting principles (US
GAAP), reported net income from continuing operations includes the
after-tax effects of restructuring and other charges. The company's
management believes that by adjusting reported net income from
continuing operations to exclude the effects of these items, the
resulting earnings present an operationally-oriented depiction of the
company's performance. The company's management uses earnings
excluding restructuring and other charges to evaluate operating
performance, to value various business units, and, along with other
factors, in determining management compensation.
(b) Free cash flow is defined as cash flow provided by operating
activities less amounts for capital expenditures. Both of these
amounts have been calculated in accordance with US GAAP. The company's
management believes free cash flow, as defined, provides a useful
measure of the company's liquidity. The company's management uses free
cash flow as a measure of cash available to fund required or early
debt retirement, incremental investing, or financing activities, such
as, but not limited to, acquisitions and share repurchases.
CONTACT: Pactiv Corporation
Investor Relations
Christine Hanneman, 847-482-2429
channeman@pactiv.com
or
Media Relations
Lisa Foss, 847-482-2704
lfoss@pactiv.com