SADDLE BROOK, N.J., Oct. 26, 2000 (PRIMEZONE) -- Sealed Air Corporation (NYSE:SEE) reported today higher net sales and net earnings for the third quarter and first nine months of 2000 compared with the respective 1999 periods.
Basic and diluted earnings per common share for the third quarter increased to $0.57 and $0.46, respectively, compared to basic and diluted earnings per common share of $0.43 for the third quarter of 1999. The conversion of the Company's outstanding preferred stock is not considered in the calculation of diluted earnings per common share because the effect would be anti-dilutive. However, if earnings per common share were calculated as-if the Company's outstanding preferred stock had been converted into common stock, earnings per common share would have amounted to $0.49 for the third quarter compared to $0.47 for the third quarter of 1999. Analysts who regularly follow the Company generally use this as-if-converted calculation as the method of comparison for their published earnings estimates.
Commenting on the Company's performance, William V. Hickey, President and Chief Executive Officer, stated, "During the third quarter, our unit volume continued to grow in the mid-single digits. Our control of operating expenses resulted in a continuing decline in those expenses as a percentage of net sales, and our cash flow margins remained strong. We continued to position the Company for growth with the completion of several small acquisitions, including the $120 million acquisition of Dolphin Packaging plc which will support our case ready packaging business in Europe. We also took advantage of market conditions to repurchase approximately $158 million of the Company's outstanding stock, bringing our total repurchases for the first nine months to approximately $234 million. These repurchases were largely of preferred stock and reduce the Company's future aggregate dividend obligations and the potential dilution in earnings per common share.
The Company's results in the quarter continued to be affected by higher raw material and energy costs and the weakness of certain foreign currencies, particularly the euro, relative to the U.S. dollar. The third quarter results also include the effects of a factory realignment and rationalization in the U.K., the operating results of the newly acquired Dolphin business, and the receipt of a fee from a third party for the assignment of a contract. As a result of increased borrowings incurred to finance a portion of the Company's acquisitions and share repurchases, interest expense increased in the quarter."
Highlights for the Third Quarter of 2000 include:
-- Net sales increased 4% to $746,860,000 from $714,755,000 for the
third quarter of 1999. The increase in net sales was primarily
due to higher unit volume, the added net sales of several acquired
businesses and, to a lesser extent, higher average selling prices
for certain of the Company's products. Excluding the negative
effect of foreign currency translation, net sales would have
increased 8% compared with the third quarter of 1999.
-- Gross profit was $253,434,000 or 33.9% of net sales compared with
$257,204,000 or 36.0% of net sales for the third quarter of 1999.
The decrease in gross profit as a percentage of net sales was due
primarily to higher raw material costs and, to a limited extent,
charges in the U.K. relating to the factory realignment and
rationalization mentioned above and inclusion of the operating
results of the newly acquired Dolphin business.
-- Operating profit declined to $110,206,000 or 14.8% of net sales
from $114,205,000 or 16.0% of net sales for the third quarter of
1999. The decrease in operating profit was due primarily to the
change in gross profit discussed above.
-- Other expense, net, declined compared to the third quarter of
1999. Interest expense increased to $17,082,000 from $14,631,000
for the third quarter of 1999 primarily due to borrowings made in
connection with the acquisitions and stock repurchases mentioned
above. The increased interest expense was more than offset by the
receipt of a $10,000,000 fee from a third party for the assignment
of a contract. The remaining amount in other expense, net,
primarily represents foreign currency exchange losses attributable
to the weakness of foreign currencies, particularly the euro,
relative to the U.S. dollar.
-- Net earnings increased to $54,714,000 from $53,712,000 for the
third quarter of 1999.
-- Net earnings ascribed to common shareholders increased 33% to
$47,637,000 from $35,833,000 for the third quarter of 1999. This
increase was primarily due to gains on the repurchase of preferred
stock below redemption value (the equivalent of an $0.11 gain
included in the basic earnings per common share) and lower
aggregate dividends due to the lower number of preferred shares
outstanding compared to the third quarter of 1999.
-- Assuming conversion of the Company's outstanding preferred stock,
earnings per common share, excluding goodwill amortization, were
$0.61.
-------
Operating Results
-- Net sales for the first nine months of 2000 increased 5% to
$2,194,990,000 from $2,088,813,000 for the 1999 period. This
increase was due primarily to higher unit volume and, to a lesser
extent, the added net sales of several acquired businesses and
higher average selling prices for certain of the Company's
products. Excluding the negative effect of foreign currency
translation, net sales would have increased 8% compared with the
first nine months of 1999.
-- Net sales for the Company's food packaging segment increased 4%
for the third quarter and 3% for the first nine months of 2000
compared with the respective 1999 periods. The increases in both
periods were due primarily to higher unit volume, the added net
sales of Dolphin and other small businesses following their
acquisitions and, to a lesser extent, certain higher average
selling prices. Excluding the negative effect of foreign currency
translation, net sales for this segment would have increased 8%
and 7% for the third quarter and first nine months of 2000
compared with the respective 1999 periods.
-- Net sales for the Company's protective and specialty packaging
segment increased 5% and 8% for the third quarter and first nine
months of 2000 compared with the respective 1999 periods. The
increases in both periods were due primarily to higher unit
volume, the added net sales of several small acquired businesses
and, to a lesser extent, certain higher average selling prices.
Excluding the negative effect of foreign currency translation, net
sales for this segment would have increased 8% and 11% for the
third quarter and first nine months of 2000 compared with the
respective 1999 periods.
-- Gross profit for the first nine months of 2000 increased to
$765,396,000 or 34.9% of net sales from $756,482,000 or 36.2% of
net sales for the first nine months of 1999 due primarily to the
higher level of net sales partially offset by higher raw material
costs.
-- Marketing, administrative and development expenses including
goodwill amortization declined modestly as a percentage of net
sales for the third quarter and first nine months of 2000 compared
with the respective 1999 periods. These expenses declined to
19.2% of net sales for the third quarter and 19.4% of net sales
for the first nine months of 2000 compared with 20.0% and 20.5%
for each of the respective 1999 periods. As in the 1999 periods,
the Company continued to incur information system costs related to
implementation of its enterprise resource planning system.
-- Operating profit for the first nine months of 2000 increased to
$338,493,000 or 15.4% of net sales from $328,318,000 or 15.7% of
net sales for the first nine months of 1999. The decrease as a
percentage of net sales was due primarily to the changes in gross
profit as a percentage of net sales discussed above.
-- Other expense, net, declined for the first nine months of 2000
compared with the 1999 period. This decrease was primarily due to
the receipt of a $10,000,000 fee from a third party for the
assignment of a contract, largely offset by higher interest
expense related to additional borrowings incurred to finance a
portion of the cost of the acquisitions and share repurchases
mentioned above, and to a lesser extent to foreign exchange losses
related to the weakness of foreign currencies, particularly the
euro, relative to the U.S. dollar.
-- The effective tax rate for the third quarter and first nine months
of 2000 was 45.5%. The Company's effective tax rate is higher
than applicable statutory rates primarily due to the non-
deductibility for tax purposes of goodwill amortization. The
Company expects that its effective tax rate will remain higher
than statutory rates for 2000.
-- Net earnings for the first nine months of 2000 increased to
$163,528,000 from $151,518,000 for the first nine months of 1999.
---------
Earnings Outlook
Based upon our expectations of mid- to high-single digit net sales growth, continuing higher raw material and energy costs, the weakness of certain foreign currencies and the early signs of softening economies in certain parts of the world, the Company currently expects earnings per share, assuming conversion of the Company's preferred stock, to grow at least 5% in the fourth quarter of 2000 and at least 15% for the full year 2001 over the respective prior year periods. These expectations do not consider the effect of any future stock repurchases on the Company's outstanding debt or its earnings per share, nor do they consider the effect of any future acquisitions by the Company, and are based on the assumption of stable interest rates.
---------
Business
Sealed Air is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems. To view the Company's latest financial news online via the World Wide Web, visit http://www.cfonews.com/see.1
Certain statements made by the Company in this press release are forward-looking statements. These statements include comments as to the Company's beliefs and expectations as to future events and trends affecting the Company's business. These forward-looking statements are based upon management's current expectations concerning future events and trends and are necessarily subject to uncertainties, many of which are outside the control of the Company. The factors stated under the heading "Forward-Looking Statements" in Management's Discussion and Analysis of Results of Operations and Financial Condition, which appears in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, could cause actual results to differ materially from such statements.
SEALED AIR CORPORATION
Results for the period ended September 30
(Unaudited)
(In thousands of dollars, except share data)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Quarter Ended September 30
--------------------------
% Increase
2000 1999 (Decrease)
---- ---- --------
Net sales by business segment: (1)
Food packaging $ 452,215 $ 434,486 4
Protective and
specialty packaging 294,645 280,269 5
--------- ---------
Total net sales 746,860 714,755 4
Cost of sales 493,426 457,551 8
--------- ---------
Gross profit 253,434 257,204 (1)
Marketing, administrative and
development expenses 129,790 130,721 (1)
Goodwill amortization 13,438 12,278 9
--------- ---------
Operating profit 110,206 114,205 (4)
Other (expense), net (9,813) (13,809) (29)
--------- ---------
Earnings before income taxes 100,393 100,396 0
Income taxes 45,679 46,684 (2)
--------- ---------
Net earnings $ 54,714 $ 53,712 2
========= =========
Net earnings ascribed
to common shareholders $ 47,637 $ 35,833 33
========= =========
Basic earnings
per common share (2) $ 0.57 $ 0.43
========= =========
Diluted earnings
per common share (2) $ 0.46 $ 0.43
========= =========
Weighted average number of common
shares outstanding (000's):
Basic 83,723 83,648
========= =========
Diluted 85,116 83,784
========= =========
Nine Months Ended September 30
------------------------------
% Increase
2000 1999 (Decrease)
---- ---- ---------
Net sales by business segment: (1)
Food packaging $ 1,320,914 $ 1,280,047 3
Protective and
specialty packaging 874,076 808,766 8
----------- -----------
Total net sales 2,194,990 2,088,813 5
Cost of sales 1,429,594 1,332,331 7
----------- -----------
Gross profit 765,396 756,482 1
Marketing, administrative and
development expenses 388,774 391,304 (1)
Goodwill amortization 38,129 36,860 3
----------- -----------
Operating profit 338,493 328,318 3
Other (expense), net (38,441) (44,287) (13)
----------- -----------
Earnings before income taxes 300,052 284,031 6
Income taxes 136,524 132,513 3
----------- -----------
Net earnings $ 163,528 $ 151,518 8
=========== ===========
Net earnings ascribed to
common shareholders $ 125,163 $ 97,889 28
=========== =========
Basic earnings per
common share (2) $ 1.50 $ 1.17
=========== =========
Diluted earnings per
common share (2) $ 1.36 $ 1.17
=========== =========
Weighted average number of
common shares outstanding (000's):
Basic 83,675 83,552
=========== =========
Diluted 86,367 83,688
========== =========
(1) Certain prior period amounts have been reclassified to conform to
the current year's presentation.
(2) See the Supplementary Information included with this release for
the calculation of basic and diluted earnings per common share.
Supplementary Information
SEALED AIR CORPORATION
Results for the period ended September 30
(Unaudited)
(In thousands of dollars, except share data)
CALCULATION OF EARNINGS PER COMMON SHARE
Quarter Ended September 30
--------------------------
2000 1999
----------- ---------
Net earnings $ 54,714 $ 53,712
Add: Excess of redemption value
over repurchase price of
preferred stock 8,914 0
Less: Preferred dividend (15,991) (17,879)
=========== =========
Net earnings ascribed
to common shareholders $ 47,637 $ 35,833
=========== =========
Weighted average number
of common shares
outstanding (000's):
Basic 83,723 83,648
=========== =========
Diluted 85,116 83,784
=========== =========
EPS - Basic (1) $ 0.57 $ 0.43
=========== =========
EPS - Diluted (1) (2) $ 0.46 $ 0.43
=========== =========
EPS - As If Converted (1) (3) $ 0.49 $ 0.47
=========== =========
Nine Months Ended September 30
------------------------------
2000 1999
----------- ---------
Net earnings $ 163,528 $ 151,518
Add: Excess of redemption value
over repurchase price of
preferred stock 11,725 39
Less: Preferred dividend (50,090) (53,668)
=========== =========
Net earnings ascribed
to common shareholders $ 125,163 $ 97,889
=========== =========
Weighted average number
of common shares
outstanding (000's):
Basic 83,675 83,552
=========== =========
Diluted 86,367 83,688
=========== =========
EPS - Basic (1) $ 1.50 $ 1.17
=========== =========
EPS - Diluted (1) (2) $ 1.36 $ 1.17
=========== =========
EPS - As If Converted (1) (3) $ 1.44 $ 1.31
=========== =========
(1) The basic earnings per common share calculation for the quarter
and nine months ended September 30, 2000 includes an $0.11 and
$0.14 per share gain, respectively, attributable to the
repurchase of preferred stock. Such gain is not included in the
calculation of diluted earnings per common share or as if
converted earnings per common share for the quarter and nine
months ended September 30, 2000. The gain attributable to the
repurchase of preferred stock was not significant in the 1999
periods.
(2) For the purpose of calculating diluted earnings per common share,
net earnings ascribed to common shareholders have been adjusted
to exclude the gain attributable to the repurchase of preferred
stock and to add back dividends attributable to such repurchased
preferred stock in each period, and the weighted average common
shares outstanding have been adjusted to assume conversion of the
shares of preferred stock repurchased during each period in
accordance with the Financial Accounting Standards Board's
Emerging Issues Task Force Topic D-53 guidance.
(3) The assumed conversion of the outstanding convertible preferred
stock is not considered in the calculation of diluted earnings
per common share for all periods presented as the effect is
antidilutive (i.e., would increase the diluted earnings per
common share for the quarters ended September 30, 2000 and 1999
to $0.49 and $0.47, respectively, and for the nine months ended
September 30, 2000 and 1999 to $1.44 and $1.31, respectively).
The weighted average number of shares outstanding, assuming
converstion of the outstanding convertible preferred stock, is
112,287,000 and 113,538,000 for the quarter and nine months ended
September 30, 2000, respectively.