SADDLE BROOK, N.J., April 25, 2001 (PRIMEZONE) -- Sealed Air Corporation (NYSE:SEE) reported first quarter operating results today within the range of its recently announced outlook, excluding a provision related to a guarantee of certain debt issued by an unrelated company. The provision, amounting to $7.8 million, was determined necessary following the bankruptcy of that issuer in early April, 2001. Basic and diluted earnings per common share for the first quarter of 2001 were $0.30 and $0.25, respectively.
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 share were calculated as if the Company's outstanding preferred stock had been converted into common stock, earnings per share would have amounted to $0.36 for the first quarter, excluding the provision for the guarantee of debt amounting to $0.04 per share.
Commenting on the Company's operating performance, William V. Hickey, President and Chief Executive Officer, stated, "As we have previously indicated, the disruption of meat supply and reduced beef consumption caused by the outbreak of foot-and-mouth disease and concerns over mad cow disease, principally in Europe, as well as the further softening of economic conditions in many countries, adversely affected our operating results for the quarter. Excluding acquisitions, which added to our net sales in the quarter, our unit volume on a comparable basis was essentially flat despite the factors mentioned above. However, the factors mentioned contributed to lower net earnings and earnings per common share.
"We remain focused on implementing our growth initiatives and controlling our expenses in this difficult business environment, and we have initiated actions to improve the Company's performance. We intend to position the Company to achieve our long-term financial goals in an environment of sustained higher energy costs and slower global economic growth than in previous years. I am confident that we are taking the steps necessary to build on our leadership position and achieve a higher level of performance as external business conditions improve."
Highlights for the First Quarter of 2001 include:
-- Net sales increased 6%, excluding the negative effect of foreign currency translation, compared to the first quarter of 2000, due primarily to the added net sales of several acquired businesses and, to a lesser extent, higher average selling prices for certain of the Company's products. Including the negative effect of foreign currency translation, net sales increased 2% to $758,272,000 compared to $741,464,000 for the first quarter of 2000.
-- Gross profit was $240,245,000 or 31.7% of net sales compared to $257,989,000 or 34.8% of net sales for the first quarter of 2000. These decreases were due primarily to the lower sales of certain food packaging products in Europe, changes in product mix, and continuing higher raw material and other energy related costs compared to the 2000 period.
-- Operating profit was $93,823,000 or 12.4% of net sales compared to $115,921,000 or 15.6% of net sales for the first quarter of 2000. These decreases were due primarily to the lower gross profit discussed above.
-- Net earnings were $34,560,000 compared to $54,983,000 for the first quarter of 2000.
-- Net earnings ascribed to common shareholders were $24,841,000 compared to $40,665,000 for the first quarter of 2000. This decrease was due primarily to lower net earnings partially offset by gains on the repurchase of preferred stock below redemption value and lower aggregate dividends compared to the first quarter of 2000.
-- Assuming conversion of the Company's outstanding preferred stock, earnings per common share, were $0.49 for the first quarter, excluding goodwill amortization and the provision for the debt guarantee.
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Other Operating Results
-- Net sales of the Company's food packaging segment increased 7%, excluding the negative effect of foreign currency translation, compared to the first quarter of 2000, due primarily to the added net sales of several acquired businesses and, to a lesser extent, higher average selling prices for certain of the Company's products. Including the negative effect of foreign currency translation, net sales for this segment increased 3%.
-- Net sales of the Company's protective and specialty packaging segment increased 4%, excluding the negative effect of foreign currency translation, compared to the first quarter of 2000, due primarily to the added net sales of several acquired businesses and, to a lesser extent, higher average selling prices for certain of the Company's products. Including the negative effect of foreign currency translation, net sales for this segment increased 1%.
-- Marketing, administrative, development and goodwill amortization expenses were $146,422,000 compared to $142,068,000 for the first quarter of 2000. These expenses as a percentage of net sales remained relatively flat at 19.3% for the quarter compared to 19.2% for the first quarter of 2000.
-- Other expense, net, which consists primarily of interest expense, increased due primarily to the higher level of debt outstanding compared to the first quarter of 2000 and to a provision amounting to $7,835,000 for the Company's guarantee of certain debt payable by a subsidiary of W. R. Grace & Co., which filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on April 2, 2001. As a result of Grace's filing, and in accordance with appropriate accounting principles, the Company has provided in full for its guarantee of such indebtedness. The Company's guarantee of such debt arose from the 1998 Cryovac transaction.
-- The effective tax rate in the quarter was 45.7%. This effective tax rate is higher than applicable statutory rates due primarily 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 2001.
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Commenting on the Company's outlook, Mr. Hickey stated, "The continuing disruption in meat supply and consumption and the sluggish global economy are likely to adversely affect our results beyond the first quarter. In view of these factors, our results for the remainder of 2001 may not reach our previously stated outlook.
"In response to the current economic environment, the expectation of sustained higher energy costs, and the likelihood that these conditions may last longer than expected, we are developing an action plan to achieve our long-term financial goals. This will include:
-- Strict cost controls over selling, general and administrative
expenses.
-- Reviewing our business processes and organizational structure as
they relate to serving our customers and reaching our sales growth
objective.
-- Identifying performance improvement opportunities.
-- Managing our capital expenditures to an appropriate level for the
current growth of the business.
-- Reducing our trade working capital, principally inventory.
-- Maximizing cash flow.
"All of these steps are expected to enhance the fundamental strengths of Sealed Air. We will build upon our leadership position and emerge from this process an even stronger company with the expectation of meeting or exceeding our financial goals."
Business
Sealed Air is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems including such widely recognized brands as Bubble Wrap(r) air cellular cushioning, Jiffy(r) protective mailers and Cryovac(r) food packaging products. For more information about Sealed Air Corporation, please visit the Company's web site at www.sealedair.com.
Certain statements made by the Company in this press release may be forward-looking statements. 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 "expects," "intends," "plans," "estimates" and similar expressions. Actual results may differ materially from these expectations due to a number of factors, including changes in economic, business and market conditions in the geographic areas in which the Company conducts business, factors affecting customers, the success of new products, raw material costs and legal proceedings. A more extensive list and description of these factors can be found 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 Annual Report on Form 10-K for the year ended December 31, 2000, and in the Company's other publicly available filings with the Securities and Exchange Commission.
SEALED AIR CORPORATION
Results for the quarter ended March 31
(Unaudited)
(In thousands of dollars, except share data)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Quarter Ended March 31
----------------------
% Increase
2001 2000 (Decrease)
---- ----- ----------
Net sales by business
segment: (a)
Food packaging $ 452,812 $ 439,784 3
Protective and
specialty packaging 305,460 301,680 1
--------- ---------
Total net sales 758,272 741,464 2
Cost of sales (a) 518,027 483,475 7
--------- ---------
Gross profit 240,245 257,989 (7)
Marketing, administrative and
development expenses 132,162 129,758 2
Goodwill amortization 14,260 12,310 16
--------- ---------
Operating profit 93,823 115,921 (19)
Other (expense), net (30,177) (15,034) --
--------- ---------
Earnings before income taxes 63,646 100,887 (37)
Income taxes 29,086 45,904 (37)
--------- ---------
Net earnings $ 34,560 $ 54,983 (37)
========= =========
Net earnings ascribed
to common shareholders $ 24,841 $ 40,665 (39)
========= =========
Basic earnings per
common share (b) $ 0.30 $ 0.49
========= =========
Diluted earnings per
common share (b) $ 0.25 $ 0.45
========= =========
Weighted average number
of common shares
outstanding (000s):
Basic 83,649 83,629
========= =========
Diluted 83,732 84,382
========= =========
(a) Prior period net sales and cost of sales have been
reclassified to conform to the current year's presentation
related to the impact of applying Emerging Issues Task Force
Issue No. 00-10, "Accounting for Shipping and Handling Fees and
Costs", which the Company adopted during the fourth quarter of
2000.
(b) 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 quarter ended March 31
(Unaudited)
(In thousands of dollars, except share data)
CALCULATION OF EARNINGS PER COMMON SHARE
Quarter Ended March 31
----------------------
2001 2000
---- ----
Net earnings $ 34,560 $ 54,983
Add: Excess of redemption value
over repurchase price of preferred stock 4,035 2,779
Less: Preferred dividend (13,754) (17,097)
-------- --------
Net earnings ascribed to
common shareholders $ 24,841 $ 40,665
======== ========
Weighted average number of
common shares outstanding (000s):
Basic 83,649 83,629
======== ========
Diluted 83,732 84,382
======== ========
EPS - Basic (a) $ 0.30 $ 0.49
======== ========
EPS - Diluted (a)(b) $ 0.25 $ 0.45
======== ========
EPS - As If Converted (a)(c) $ 0.32 $ 0.48
======== ========
(a) The basic earnings per common share calculations for the
quarters ended March 31, 2001 and 2000 include a $0.05 and $0.03
per share gain, respectively, attributable to the repurchase of
preferred stock. Such gain is not included in the calculations of
diluted earnings per common share or as if converted earnings per
common share for the quarters ended March 31, 2001 and 2000.
(b) 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.
(c) 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 March 31, 2001 and 2000 to
$0.32 and $0.48, respectively). The weighted average number of
common shares outstanding, assuming conversion of the outstanding
convertible preferred stock, is 108,154 and 115,116 for the
quarters ended March 31, 2001 and 2000, respectively.