SADDLE BROOK, N.J., Jan. 25, 2001 (PRIMEZONE) -- Sealed Air Corporation (NYSE:SEE) reported today higher net sales and net earnings for the fourth quarter and full year of 2000 compared with the respective 1999 periods.
Basic earnings per common share for the fourth quarter increased to $0.97 compared to $0.52 for the 1999 quarter. These results include $0.40 and $0.02 per share of gains attributable to the repurchase of preferred stock in the 2000 and 1999 quarters, respectively. Diluted earnings per common share for the fourth quarter increased to $0.56 from $0.50 for the 1999 quarter and exclude the effect of these gains.
Basic earnings per common share for the full year increased to $2.47 compared to $1.69 for 1999. These results include $0.54 and $0.02 per share of gains attributable to the repurchase of preferred stock for 2000 and 1999, respectively. Diluted earnings per common share for the full year increased to $1.93 from $1.68 for 1999 and exclude the effect of these gains.
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 $0.56 for the fourth quarter compared to $0.52 for the 1999 quarter, and earnings per share would have amounted to $2.00 for the full year compared to $1.83 for 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, "We are pleased to report higher net sales, operating profit and net earnings for 2000 and earnings per share in line with the outlook we provided with our third quarter results."
"During 2000, we continued to demonstrate the fundamental strengths of our business. Our net sales increased 9% before the impact of changes in foreign currency exchange rates. Our expenses remained under control and our EBITDA remained strong even as energy and raw material costs rose, foreign currencies weakened, and economies softened, particularly late in the fourth quarter. We continued to position the Company for growth with the completion of several small acquisitions, including the acquisitions of Dolphin Packaging, which will support our case ready business in Europe, and Shanklin Corporation, which will support the growth of our performance shrink film business. We also took advantage of market conditions to repurchase approximately $347 million of the Company's outstanding stock during the year. These repurchases, which were largely of preferred stock, reduce the Company's future aggregate dividend obligations and the potential dilution in earnings per common share."
Reporting Reclassification
In September 2000, the Emerging Issues Task Force ("EITF") issued a consensus opinion, EITF No. 00-10, "Accounting for Shipping and Handling Fees and Costs" which, as required, the Company adopted in the fourth quarter. Among other things, this opinion changes the long-standing, common practice of deducting shipping costs from gross sales in arriving at net sales. Prior to the issuance of this opinion, the Company had followed this previously accepted accounting practice. As a result, shipping costs have been reclassified from the Company's net sales to its cost of sales in both current and previously reported periods, resulting in increases in both net sales and cost of sales.
This reclassification had no effect on the Company's current or previously reported amounts of gross profit, operating profit, net earnings or cash flow. However, because this reclassification had the effect of increasing net sales, both gross profit and operating profit as a percentage of net sales change. As a result of the reclassification, reported gross profit as a percentage of net sales for the fourth quarter of 2000 was 33.9% compared to 35.2% before the reclassification. Gross profit as a percentage of net sales for the full year was 33.7% compared to 35.0% before the reclassification. Reported operating profit as a percentage of net sales for the fourth quarter of 2000 was 16.3% compared to 17.0% before the reclassification. Operating profit as a percentage of net sales for the full year was 15.3% compared to 15.8% before the reclassification. These changes result only from the arithmetic effect of the reclassification and do not reflect any change in the Company's fundamental business model.
For convenience of reference, supplementary information is included as part of this release providing selected historical statement of operating profit information for 1999 and 2000 quarters restated for the reclassification of shipping costs.
Highlights for the Fourth Quarter of 2000
In the discussion below, all periods have been adjusted to give effect to the reclassification of shipping costs discussed above.
-- Net sales increased 3% to $796,154,000 from $776,485,000 for the
fourth quarter of 1999. The increase in net sales was primarily
due to the added net sales of several acquired businesses, higher
unit volume, 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 fourth quarter of 1999.
-- Gross profit was $269,908,000 or 33.9% of net sales compared with
$272,240,000 or 35.1% of net sales for the fourth quarter of 1999.
The decrease in gross profit amount and as a percentage of net
sales was due primarily to higher raw material and energy-related
costs.
-- Operating profit was $129,970,000 or 16.3% of net sales compared
with $123,874,000 or 16.0% of net sales for the fourth quarter of
1999. The increase in operating profit was due primarily to the
increase in net sales and lower operating expenses, including a
credit related to the Company's 1998 restructuring program,
partially offset by higher raw material and energy-related costs.
-- Other expense, net, increased to $16,593,000 compared with
$12,252,000 for the fourth quarter of 1999 primarily due to
increased interest expense related to borrowings made in
connection with acquisitions and stock repurchases during the
year.
-- Net earnings increased to $61,791,000 from $59,943,000 for the
fourth quarter of 1999.
-- Net earnings ascribed to common shareholders increased 86% to
$81,173,000 from $43,718,000 for the fourth quarter of 1999. This
increase was due to the increase in net earnings mentioned above
and, to a greater extent, the net effect of gains on the
repurchase of preferred stock below redemption value and lower
aggregate dividends due to the lower number of preferred shares
outstanding compared to the fourth quarter of 1999.
-- Assuming conversion of the Company's outstanding preferred stock,
earnings per common share, excluding goodwill amortization, were
$0.69.
Operating Results
In the discussion below, all periods have been adjusted to give effect to the reclassification of shipping costs discussed above.
-- Net sales for the full year of 2000 increased 5% to $3,067,714,000
from $2,931,853,000 for the 1999 period. This increase was due
primarily to higher unit volume, 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 9%
compared with the full year of 1999.
-- Net sales for the Company's food packaging segment increased 3%
for both the fourth quarter and full year 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 acquired businesses and certain higher average selling
prices. Excluding the negative effect of foreign currency
translation, net sales for this segment would have increased 9%
and 7% for the fourth quarter and full year of 2000 compared with
the respective 1999 periods.
-- Net sales for the Company's protective and specialty packaging
segment increased 2% and 7% for the fourth quarter and full year
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 certain
higher average selling prices. Excluding the negative effect of
foreign currency translation, net sales for this segment would
have increased 7% and 10% for the fourth quarter and full year of
2000 compared with the respective 1999 periods.
-- Gross profit was $1,035,304,000 or 33.7% of net sales compared
with $1,028,722,000 or 35.1% of net sales for the full year of
1999. The decrease in gross profit as a percentage of net sales
was due primarily to the higher raw material and energy-related
costs.
-- Marketing, administrative and development expenses including
goodwill amortization declined modestly as a percentage of net
sales for the fourth quarter and full year of 2000 compared with
the respective 1999 periods. These expenses declined to 17.7% of
net sales for the fourth quarter and 18.5% of net sales for the
full year of 2000 compared with 19.1% and 19.7% for each of the
respective 1999 periods.
-- Operating profit increased to $468,463,000 or 15.3% of net sales
from $452,192,000 or 15.4% of net sales for the full year of 1999.
The decrease as a percentage of net sales was due primarily to the
changes in costs and expenses discussed above.
-- Other expense, net, decreased modestly for the full year of 2000
compared with the 1999 period. This decrease was primarily due to
the receipt of a $10,000,000 fee in the third quarter of 2000 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 acquisitions and share
repurchases made during the year.
-- The effective tax rate for the fourth quarter and full year 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 2001.
-- Net earnings for the full year of 2000 increased to $225,319,000
from $211,461,000 for the full year of 1999.
Earnings Outlook
Commenting on the Company's outlook, William V. Hickey, President and Chief Executive Officer stated, "We remain confident in our long-term growth outlook in spite of the slower economic conditions at present. The secular trends and fundamentals of our business are in place to support continuing growth in our operating results. We will continue to focus on our growth initiatives, expense control and productivity improvement programs. At the same time, we believe that our business will be affected this year by slowing economic growth, as well as other factors including higher raw material and energy-related costs. As a result, we expect growth in as-if-converted earnings per share during the first half of the year in the low to mid-single digits. Assuming improvement in economic conditions and raw material and energy-related costs later in the year, we should return to double-digit growth during the second half of 2001."
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 September 30, 2000, as well as other factors, could cause actual results to differ materially from such statements.
SEALED AIR CORPORATION
Results for the periods ended December 31
(In thousands of dollars, except share data)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Quarter Ended December 31
-------------------------
% Increase
2000 1999 (Decrease)
---- ---- --------
Net sales by
business segment(a)
Food packaging $ 482,516 $ 469,731 3
Protective and
specialty packaging 313,638 306,754 2
----------- -----------
Total net sales 796,154 776,485 3
Cost of sales(a) 526,246 504,245 4
----------- -----------
Gross profit 269,908 272,240 (1)
Marketing,
administrative and
development expenses 127,538 135,822 (6)
Goodwill amortization 13,647 12,544 9
Restructuring and
other charges, net (1,247) 0
----------- -----------
Operating profit 129,970 123,874 5
Other (expense), net (16,593) (12,252) 35
----------- -----------
Earnings before
income taxes 113,377 111,622 2
Income taxes 51,586 51,679 0
----------- -----------
Net earnings $ 61,791 $ 59,943 3
=========== ===========
Net earnings ascribed
to common shareholders $ 81,173 $ 43,718 86
=========== ===========
Basic earnings per
common share(b) $ 0.97 $ 0.52
=========== ===========
Diluted earnings per
common share(b) $ 0.56 $ 0.50
=========== ===========
Weighted average number
of common shares
outstanding (000s):
Basic 83,663 83,558
=========== ===========
Diluted 85,176 84,020
=========== ===========
Year Ended December 31
----------------------
% Increase
2000 1999 (Decrease)
---- ---- --------
Net sales by
business segment(a)
Food packaging $ 1,837,294 $ 1,781,420 3
Protective and
specialty packaging 1,230,420 1,150,433 7
----------- -----------
Total net sales 3,067,714 2,931,853 5
Cost of sales(a) 2,032,410 1,903,131 7
----------- -----------
Gross profit 1,035,304 1,028,722 1
Marketing,
administrative and
development expenses 516,312 527,126 (2)
Goodwill amortization 51,776 49,404 5
Restructuring and
other charges, net (1,247) 0
----------- -----------
Operating profit 468,463 452,192 4
Other (expense), net (55,034) (56,539) (3)
----------- -----------
Earnings before
income taxes 413,429 395,653 4
Income taxes 188,110 184,192 2
----------- -----------
Net earnings $ 225,319 $ 211,461 7
=========== ===========
Net earnings ascribed
to common shareholders $ 206,336 $ 141,607 46
=========== ===========
Basic earnings per
common share(b) $ 2.47 $ 1.69
=========== ===========
Diluted earnings per
common share(b) $ 1.93 $ 1.68
=========== ===========
Weighted average number
of common shares
outstanding (000s):
Basic 83,672 83,553
=========== ===========
Diluted 87,951 84,128
=========== ===========
(a) Certain prior period amounts have been reclassified to conform to
the current year's presentation.
(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 periods ended December 31
(In thousands of dollars, except share data)
CALCULATION OF EARNINGS PER COMMON SHARE
Quarter Ended December 31
-------------------------
2000 1999
---- ----
Net earnings $ 61,791 $ 59,943
Add: Excess of redemption value
over repurchase price of preferred stock 33,558 1,529
Less: Preferred dividend (14,176) (17,754)
-------- --------
Net earnings ascribed to
common shareholders $ 81,173 $ 43,718
======== ========
Weighted average number of
common shares outstanding (000s):
Basic 83,663 83,558
======== ========
Diluted 85,176 84,020
======== ========
EPS - Basic (a) $ 0.97 $ 0.52
======== ========
EPS - Diluted (a)(b) $ 0.56 $ 0.50
======== ========
EPS - As If Converted (a)(c) $ 0.56 $ 0.52
======== ========
Year Ended December 31
----------------------
2000 1999
---- ----
Net earnings $ 225,319 $ 211,461
Add: Excess of redemption value
over repurchase price of preferred stock 45,283 1,568
Less: Preferred dividend (64,266) (71,422)
--------- ---------
Net earnings ascribed to
common shareholders $ 206,336 $ 141,607
========= =========
Weighted average number of
common shares outstanding (000's):
Basic 83,672 83,553
========= =========
Diluted 87,951 84,128
========= =========
EPS - Basic (a) $ 2.47 $ 1.69
========= =========
EPS - Diluted (a)(b) $ 1.93 $ 1.68
========= =========
EPS - As If Converted (a)(c) $ 2.00 $ 1.83
========= =========
(a) The basic earnings per common share calculation for the quarter
and year ended December 31, 2000 includes a $0.40 and $0.54 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 year ended December 31, 2000.
The gain attributable to the repurchase of preferred stock was
$0.02 for the quarter and year ended December 31, 1999.
(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 EITF
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 December 31, 2000 and 1999 to
$0.56 and $0.52, respectively, and for the year ended December
31, 2000 and 1999 to $2.00 and $1.83, respectively.) The weighted
average number of shares outstanding, assuming conversion of the
outstanding convertible preferred stock, is 109,808,000 and
112,584,000 for the quarter and year ended December 31, 2000,
respectively.
Supplementary Information
SEALED AIR CORPORATION
Quarterly Results for 2000 - as restated for
EITF 00-10 reclassification
(In thousands of dollars)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATING PROFIT
2000 Quarter Ended
------------------
Dec. 31 Sept. 30 June 30 March 31
------- -------- ------- --------
Net sales by
business segment: (a)
Food packaging $482,516 $464,195 $450,799 $439,784
Protective and
specialty packaging 313,638 309,060 306,042 301,680
-------- -------- -------- --------
Total net sales 796,154 773,255 756,841 741,464
Cost of sales (a) 526,246 519,821 502,868 483,475
-------- -------- -------- --------
Gross profit 269,908 253,434 253,973 257,989
Marketing, administrative
and development expenses 127,538 129,790 129,226 129,758
Goodwill amortization 13,647 13,438 12,381 12,310
Restructuring and other
changes, net (1,247) -- -- --
-------- -------- -------- --------
Operating profit $129,970 $110,206 $112,366 $115,921
======== ======== ======== ========
(a) Restated to reflect impact of applying EITF 00-10.
Supplementary Information
SEALED AIR CORPORATION
Quarterly Results for 1999 - as restated
for EITF 00-10 reclassification
(In thousands of dollars)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATING PROFIT
1999 Quarter Ended
------------------
Dec. 31 Sept. 30 June 30 March 31
------- -------- ------- --------
Net sales by
business segment: (a)
Food packaging $469,731 $444,592 $437,117 $429,980
Protective and
specialty packaging 306,754 292,047 281,225 270,407
-------- -------- -------- --------
Total net sales 776,485 736,639 718,342 700,387
Cost of sales (a) 504,245 479,435 464,762 454,689
-------- -------- -------- --------
Gross profit 272,240 257,204 253,580 245,698
Marketing, administrative
and development expenses 135,822 130,721 131,969 128,614
Goodwill amortization 12,544 12,278 12,331 12,251
-------- -------- -------- --------
Operating profit $123,874 $114,205 $109,280 $104,833
======== ======== ======== ========
(a) Restated to reflect impact of applying EITF 00-10.