Sealed Air Reports 7% Sales Increase in Third Quarter 2007.Achieves 4% Volume Growth ELMWOOD PARK Elmwood Park, village (1990 pop. 23,206), Cook co., NE Ill., a suburb of Chicago; inc. 1914. It is chiefly residential. , N.J. -- Sealed Air Sealed Air Corporation(NYSE: SEE) is a company that makes a variety of packaging materials, systems and equipment. Its brands include Bubble Wrap, Cryovac, Instapak, Shanklin and Jiffy Mailer. They have recently moved headquarters to Elmwood Park, New Jersey. Corporation (NYSE NYSE See: New York Stock Exchange :SEE) reported diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per common share of $0.39 for the third quarter of 2007, which includes a charge of $0.01 per common share related to the implementation of the Company's global manufacturing strategy. Excluding this charge, diluted earnings per common share would have been $0.40 per share. This compares with diluted earnings per common share of $0.41 for the third quarter of 2006, after adjusting for the two-for-one stock split effective March 2, 2007. Sealed Air's net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter increased 7% to $1.16 billion, compared with $1.08 billion in 2006. Commenting on the Company's operating performance, William V William V may refer to:
"Our business continued to demonstrate steady progress while navigating (networking, hypertext) navigating - Finding your way around. Often used of the Internet, particularly the World-Wide Web. A browser is a tool for navigating hypertext documents. through more challenging economic conditions in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). . Unit volume growth was 4% for the quarter, which was the result of our geographic and product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. , our continued expansion into emerging markets, and fast growing packaging applications. Our combined strengths enabled us to partially offset regional weaknesses and grow our sales at a higher rate, both year-over-year and sequentially. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , however, was negatively affected by rising input costs and unfavorable price/mix. In addition, our recent sustainable packaging and vacuum insulation insulation (ĭn'səlā`shən, ĭn'sy  –), use of materials or devices to inhibit or prevent the conduction of heat or of electricity. investments were slightly dilutive to
earnings compared with last year. We continue to believe that these
late-stage development investments will make positive contributions in
the future. During the quarter, we also incurred additional expenses
related to new packaging equipment growth programs, which we anticipate
introducing next year. Notwithstanding these additional expenses, we
continued to use available cash for capital expenditures, acquisitions
and the payment of dividends in the quarter."
Commenting on the Company's outlook, Mr. Hickey stated: "Our outlook for the remainder of 2007 continues to be positive, as our organization is positioned to weather the challenges of slowing economic growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. and rising raw material costs. Looking ahead, our strategy for long term growth remains focused on innovation, growth in emerging markets and new applications. We continued to invest in our Medical Applications business by acquiring Alga Plastics and are executing on-plan with the start-up Start-up The earliest stage of a new business venture. of new operations in China, with expanding capacity in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , and by introducing a number of new food packaging systems." Financial Highlights for the Third Quarter * Net sales increased 7% to $1.16 billion compared with $1.08 billion for the third quarter of 2006. The increase in net sales resulted from a $43 million favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect of foreign currency translation, $40 million from unit volume growth, combined with a net unfavorable effect of $1 million from acquisitions and divestitures. Excluding the favorable effect of $43 million in foreign currency translation, net sales would have increased 4%. * Gross profit increased to $320 million, or 27.6% of net sales, compared with $310 million, or 28.6% of net sales, for the third quarter of 2006. The decrease in gross profit as a percentage of net sales was primarily due to the impact of higher petrochemical-based raw material and energy costs and to a lesser extent, additional expenses associated with the implementation of the Company's multi-year global manufacturing strategy and unfavorable price/mix. * Marketing, administrative and development expenses increased to $186 million, or 16.0% of net sales, compared with $170 million, or 15.7% of net sales, for the third quarter of 2006. The increase in these expenses was primarily due to the unfavorable effects of foreign currency translation, spending related to innovation and new product introductions, and spending related to opening a state-of-the-art customer service center in North America. * Operating profit decreased to $134 million, or 11.6% of net sales, compared with $140 million, or 12.9% of net sales, in the third quarter of 2006. Operating profit in the third quarter of 2007 included charges of $3 million related to the implementation of the Company's multi-year global manufacturing strategy and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. related to the consolidation of the Company's customer service activities in North America. * The Company's effective income tax rate was 31.3% for the third quarter of 2007, compared with 30.6% in the third quarter of 2006. The increase in the quarterly income tax rate was primarily due to a larger mix of domestic pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings. The Company's expected full year effective income tax rate is 25.2%. Business Segment Review As previously announced, Sealed Air has expanded and realigned its segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four to reflect the Company's growth strategies both in core markets and in new business opportunities. This new structure reflects the way management now makes operating decisions, allocates resources and manages the growth and profitability of the Company's segments. Food Packaging Segment The new Food Packaging segment focuses on industrial food packaging and is driven by developments in technologies that enable food processors to effectively package and ship fresh and processed meats and cheeses through their supply chain. The Company's Food Packaging segment net sales for the third quarter increased 8% to $466 million compared with $431 million last year. The positive impact of strong unit volume growth in Latin America and North America contributed to sales growth in the quarter. Excluding a $17 million favorable effect of foreign currency translation, segment net sales would have increased 4%. Operating profit for the third quarter was $51 million, or 10.8% of Food Packaging net sales, compared with $56 million, or 13.0% of net sales, in 2006. The decrease in operating profit as a percentage of net sales was primarily due to expenses related to the global manufacturing strategy and higher raw material costs. Food Solutions Segment The new Food Solutions segment targets advancements in food packaging technologies that provide consumers with fresh, consistently prepared, high-quality meals either from food service outlets or from expanding retail cases at grocery stores. The Company's Food Solutions segment net sales for the third quarter increased 11% to $242 million compared with $218 million last year. The positive impact of continued strong unit volume growth in North America, Europe and Latin America, as well as favorable price/mix in North America, contributed to growth in the quarter. Excluding an $11 million favorable effect of foreign currency translation, segment net sales would have increased 6%. Operating profit for the third quarter was $24 million, or 10.1% of net sales, compared with $24 million, or 10.9% of Food Solutions net sales, in 2006. The decrease in operating profit as a percentage of net sales was primarily due to the impact of higher marketing, administrative and development expenses mentioned above and higher raw material costs. Protective Packaging Segment The new Protective Packaging segment includes core protective packaging technologies and solutions aimed at traditional industrial applications while increasing emphasis on consumer-oriented packaging solutions. The Company's Protective Packaging segment net sales for the third quarter increased 1% to $371 million compared with $366 million last year. Excluding an $11 million favorable effect of foreign currency translation and the $5 million revenue impact of the sale of a small product line, segment net sales would have been essentially flat. Operating profit for the third quarter was $52 million, or 14.1% of Protective Packaging net sales, compared with $53 million, or 14.5% of net sales, in 2006. The decrease in operating profit as a percentage of net sales was primarily due to higher marketing, administrative and development expenses mentioned above, unfavorable price/mix and higher raw material costs. Other Category The Other category, introduced in the second quarter, focuses on growth in newer markets. These markets include specialty materials for non-packaging applications, products for value-added medical applications, and products sourced from renewable materials. The Other category net sales for the third quarter increased 23% to $82 million compared with $66 million last year. The positive impact of strong unit volume growth in the Medical Applications business in Asia-Pacific and Europe, as well as the acquisition of Alga Plastics on August 8, 2007, contributed to the growth in the quarter. Operating profit for the third quarter was $7 million, or 8.8% of Other net sales, compared with $7 million, or 10.1% of net sales in 2006. The decrease in operating profit as a percentage of net sales was primarily due to the impact of higher marketing, administrative and development expenses including expenses associated with the Company's majority ownership in Biosphere biosphere, irregularly shaped envelope of the earth's air, water, and land encompassing the heights and depths at which living things exist. The biosphere is a closed and self-regulating system (see ecology), sustained by grand-scale cycles of energy and of Industries LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Global Manufacturing Strategy The Company incurred $3 million in expenses during the third quarter related to the implementation of its multi-year global manufacturing strategy that were primarily recorded as cost of sales. The Company has incurred $9 million through the first nine months of 2007 and expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. approximately $15 million in total expenses related to this strategy in 2007. The actual timing of these additional expenses is subject to change due to a variety of factors that may cause a portion of the charges to occur in future periods. Capital Expenditures Taking into account the implementation of the first phase of the Company's global manufacturing strategy, the Company now expects that total capital expenditures in 2007 will be approximately $200 million, which is at the upper end of its previously announced range of $175 to $200 million. Earnings Guidance Sealed Air expects its full year 2007 diluted earnings per common share to be at the lower end of its previously announced guidance range of $1.88 to $1.98. This guidance includes two previously-disclosed items that were recorded in the first quarter, those being the gain of $0.11 per common share related to the sale of the Company's investment in the PolyMask joint venture and the $0.18 per common share favorable impact from the reversal of tax accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. and related interest. Additionally, the Company expects to incur total charges of $15 million, or approximately $0.06 per common share in 2007, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its global manufacturing strategy, which is included in this guidance. Excluding these items, the Company is now expecting its full year 2007 diluted earnings per common share guidance to be at the lower end of its previously announced range of $1.65 to $1.75, after adjusting for the two-for-one stock split effective March 2, 2007. This guidance also assumes a full year effective tax rate of 25.2%, continued growth in the global economy and a moderate increase in full year average raw material prices compared with 2006. Results for the year could be further impacted if recently announced raw material price increases are realized in the fourth quarter. As it has done historically, the Company is prepared to take pricing actions as appropriate to lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. the impact of any raw material price increases. However, any actions taken by the Company in the fourth quarter would likely not have an impact until 2008. Web Site and Conference Call Information Mr. Hickey and David H. Kelsey, the Company's Chief Financial Officer, will conduct an investor conference call today at 11:00 a.m. (ET). The conference call will be webcast live on Sealed Air's web site at www.sealedair.com in the Investor Information section under the Presentations & Events tab. Listeners should go to the web site prior to the call to register and to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. Prior to the call, the Company will also post supplemental financial and statistical information on its web site in the Investor Information section under the Reports & Filings tab. A replay of the webcast will also be available on the Company's web site. Investors who cannot access the webcast may listen to the live conference call via telephone by dialing (888) 271-8603 (domestic) or (913) 312-6699 (international). Telephonic replay will be available beginning today at 2:00 p.m. (ET) and ending on Sunday Sunday: see Sabbath; week. , October 28, 2007 at 12:00 midnight (ET). To listen to the replay, please dial (888) 203-1112 (domestic) or (719) 457-0820 (international) and use the confirmation code 4014980. Business Sealed Air is a leading global innovator and manufacturer of a wide range of packaging and performance-based materials and equipment systems that serve an array of food, industrial, medical, and consumer applications. Operating in 51 countries, Sealed Air's international reach generated revenue of $4.3 billion in 2006. With widely recognized brands such as Bubble Wrap bubble wrap n. See bubble pack. bubble wrap Noun a type of polythene wrapping containing many small air pockets, used to protect breakable goods [R] cushioning, Jiffy A fraction of time that has numerous interpretations depending on who uses it. It may refer to one computer clock cycle, one nanosecond, one millisecond or one AC power cycle. There may be others. See nanosecond. 1. [R] protective mailers, Instapak[R] foam-in-place systems and Cryovac[R] packaging technology, Sealed Air continues to identify new trends, foster new markets, and deliver innovative solutions to its customers. For more information about Sealed Air, please visit the Company's web site at www.sealedair.com. Non-GAAP Information The Company's management from time to time presents information that does not conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" U.S. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . In this press release, the Company has presented diluted earnings per common share, and the effective income tax rate excluding items that are included in GAAP calculations of such measures. Sealed Air has also presented changes in net sales and segment net sales, excluding the effects of foreign currency translation and the impact of the sale of a small product line. Presenting diluted earnings per common share and the effective income tax rate excluding the items indicated in this press release aids in the comparisons with other periods or prior guidance. Diluted earnings per common share and growth in net sales are among the criteria upon which performance-based compensation may be determined. The Company's management generally uses changes in net sales excluding the effects of foreign currency translation, and in this instance excluding the impact of the sale of the product line, to measure the performance of the Company's operations. Thus, management believes that this information may be useful to investors. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Some of the statements made by the Company in this press release are forward-looking. 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 "anticipates," "estimates," "expects," "intends," "plans," "will" and similar expressions. The following are important factors that the Company believes could cause actual results to differ materially from those in the Company's forward-looking statements: the success of the Company's growth, profitability and global manufacturing strategies; changes in raw material and energy costs; the effects of animal and food-related health issues; market conditions; tax, interest and exchange rates; and legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. . A more extensive list and description of these and other such factors can be found under the headings "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements," which appear in the Company's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. or Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , as filed with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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