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Sealed Air: First Quarter Results
April 26, 2000
Contact: Mary A. Coventry
J. Ryan Flanagan
SEALED AIR CORPORATION REPORTS RECORD FIRST QUARTER RESULTS
SADDLE BROOK, N.J., Wednesday, April 26, 2000 - Sealed Air
Corporation (NYSE-SEE) reported today higher basic and diluted earnings per
common share for the first quarter of $0.49 and $0.45, respectively,
compared to basic and diluted earnings per common share of $0.34 for the
first quarter of 1999.
Commenting on the Company's performance, William V. Hickey, President
and Chief Executive Officer, stated, "We are pleased to report record first
quarter net sales, operating profit and net earnings. Our higher operating
results reflect the continued effect of our focus on activities to increase
our net sales, our efforts to reduce our costs and to make operational
improvements, and the effective use of our free cash flow."
Highlights for the First Quarter of 2000 include:
* Net sales increased 6% to $716,588,000 compared with $678,937,000 for
the first quarter of 1999, primarily due to higher unit volume.
Excluding the negative effect of foreign currency translation, net
sales would have increased 9% compared to the first quarter of 1999.
* Gross profit increased to $257,989,000 or 36.0% of net sales from
$245,698,000 or 36.2% of net sales for the first quarter of 1999.
* Operating profit increased to $115,921,000 or 16.2% of net sales from
$104,833,000 or 15.4% for the first quarter of 1999.
* Net earnings increased 18.0% to $54,983,000 from $46,614,000 for the
first quarter of 1999.
* The Company repurchased shares of its common and preferred stock for a
total cost of approximately $72 million during the quarter.
* Earnings per common share, computed as if the Company's outstanding
preferred stock had been converted, were $0.48 for the quarter,
representing a 20% increase over the first quarter of 1999. This per
share figure excludes a $0.03 per share gain on the repurchase of
shares of preferred stock below book value that is included in the
basic earnings per common share set forth above.
* Assuming conversion of the Company's outstanding preferred stock,
earnings per common share, excluding goodwill amortization, were $0.58
for the quarter. This figure also excludes the gain mentioned above.
------
Operating Results
* Net sales of the Company's food packaging segment increased 2%
compared to the first quarter of 1999 due primarily to higher unit
volume. Excluding the negative effect of foreign currency translation,
net sales for this segment would have increased 6%.
* Net sales of the Company's protective and specialty packaging segment
increased 11% compared to the first quarter of 1999 due primarily to
higher unit volume and, to a lesser extent, the added net sales of
several small acquisitions. Excluding the negative effect of foreign
currency translation, net sales for this segment would have increased
14%.
* The increase in gross profit compared to the first quarter of 1999 was
due primarily to the higher level of net sales. Certain higher raw
material costs resulted in the decline in gross profit as a
percentage of net sales compared to the first quarter of 1999.
* Marketing, administrative, development and goodwill amortization
expenses remained relatively flat compared to the first quarter of
1999. Such expenses declined to 19.8% of net sales for the quarter
compared to 20.7% for the first quarter of 1999. As in the first
quarter of 1999, the Company continued to incur information system
costs related to implementation of its enterprise resource planning
system.
* Other expense, net, which consists primarily of interest expense,
decreased primarily due to the lower level of debt outstanding
compared to the first quarter of 1999.
* The effective tax rate in the quarter was 45.5%. This 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.
------
Commenting on the Company's outlook, Mr. Hickey stated, "Based on our
results for the first quarter, we expect 2000 to be another
successful year for Sealed Air."
Business
Sealed Air is engaged primarily in the manufacture and sale of a
complementary line 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.
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 1999 Annual Report to Stockholders and is incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, could cause actual results to differ materially from
such statements.
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
2000 1999 (Decrease)
Net sales by business segment: (1)
Food packaging $ 429,401 $ 419,693 2
Protective and
specialty packaging 287,187 259,244 11
Total net sales 716,588 678,937 6
Cost of sales 458,599 433,239 6
Gross profit 257,989 245,698 5
Marketing, administrative and
development expenses 129,758 128,614 1
Goodwill amortization 12,310 12,251 -
Operating profit 115,921 104,833 11
Other (expense), net (15,034) (16,883) (11)
Earnings before income taxes 100,887 87,950 15
Income taxes 45,904 41,336 11
Net earnings $ 54,983 $ 46,614 18
Basic earnings per
common share (2) $ 0.49 $ 0.34
Diluted earnings per
common share (2) $ 0.45 $ 0.34
Weighted average number of common
shares outstanding (000's)
Basic 83,629 83,364
Diluted 84,382 83,496
(1) The composition of the Company's two reportable segments has changed
slightly, with certain non-food specialty packaging products being
combined with protective packaging products. The 1999 net sales by
business segment have been reclassified to conform with the 2000
segment 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 quarter ended March 31
(Unaudited)
(In thousands of dollars, except share data)
CALCULATION OF EARNINGS PER COMMON SHARE
Quarter Ended March 31
2000 1999
Net earnings $ 54,983 $ 46,614
Add: Excess of book value over
repurchase price of preferred stock 2,779 10
Less: Preferred dividend (17,097) (17,910)
Net earnings ascribed to
common shareholders $ 40,665 $ 28,714
Weighted average common
shares outstanding (000's):
Basic 83,629 83,364
Diluted 84,382 83,496
EPS - Basic (1) $ 0.49 $ 0.34
EPS - Diluted (1) (2) $ 0.45 $ 0.34
EPS - As If Converted (1) (3) $ 0.48 $ 0.40
(1) The basic earnings per common share calculation for the quarter ended
March 31, 2000 includes a $0.03 per share gain 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 ended March 31, 2000. The
gain attributable to the repurchase of preferred stock was not
significant in the 1999 period.
(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 either period presented as the effect is antidilutive (i.e.,
would increase the diluted earnings per common share for the quarters
ended March 31, 2000 and 1999 to $0.48 and $0.40, respectively.)
End.