O-I Reports First Quarter 2009 Results

PERRYSBURG, Ohio, April 29 /PRNewswire-FirstCall/ -- Owens-Illinois, Inc.
(NYSE: OI) today reported financial results for the first quarter ending March
31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050412/CLTU028LOGO)

Quarterly highlights:

-- Reported net earnings of $0.27 per share (diluted)
-- Adjusted net earnings (non-GAAP) of $0.55 per share represent one of
O-I's best first quarter results, second only to record 2008 first
quarter adjusted net earnings
-- Improved selling prices and product mix contributed more than six
percent to revenue compared to the prior year, while total net sales
declined mainly due to challenging market conditions
-- Improved shipments from trough levels within the first quarter

-- Maintained strong financial flexibility with $642 million available
under the global revolving credit facility, in addition to cash on
hand

First quarter net sales were $1.519 billion in 2009, compared with $1.961
billion in the prior year. Lower first quarter sales reflect a year-over-year
decline in shipments and the unfavorable impact of foreign currency
translation despite higher average selling prices.

Net earnings from continuing operations in the first quarter of 2009 were
$45.1 million, or $0.27 per share (diluted), compared with $174.0 million, or
$1.02 per share (diluted), in the first quarter of 2008. Exclusive of the
items not representative of ongoing operations, first quarter 2009 adjusted
net earnings were $92.8 million, or $0.55 per share (diluted). These results
compare with adjusted net earnings of $183.7 million, or $1.08 per share
(diluted), in the prior year first quarter. A description of all items that
management considers not representative of ongoing operations and a
reconciliation of the GAAP to non-GAAP earnings and earnings per share can be
found in Note 1 provided below and in charts on the Company's web site,
www.o-i.com.

Commenting on the Company's first quarter performance, O-I Chairman and Chief
Executive Officer Al Stroucken said, "We posted one of our best first quarters
since our IPO in 1991, despite facing a very challenging glass market. We
acted swiftly to balance our production with sharply lower demand to prevent
building excess inventory and to preserve profit margins over the long term.
At the same time, we successfully raised our average selling prices, which
more than offset inflationary cost increases. We also reduced fixed costs as
part of our strategic footprint alignment initiative."

Operational highlights: Performing well in a challenging market
First quarter segment operating profit was $191.9 million in 2009, compared
with $322.1 million in 2008. Glass container shipments declined 15 percent on
a year-over-year basis in the first quarter. A significant component of this
decline reflected inventory de-stocking across customer supply chains. To
balance production with lower tonnes shipped, the Company temporarily
curtailed production to prevent building excess inventories. As a result, the
Company incurred approximately $100 million of unabsorbed fixed costs
associated with the curtailments, while inventory levels declined modestly
from the first quarter of 2008. Improved average selling prices and product
mix increased sales by more than six percent from the prior year, which more
than offset cost inflation of approximately $66 million on a year-over-year
basis. Cost inflation was most notably due to higher raw material prices. The
year-over-year change in foreign currency translation rates reduced segment
operating profit by $29 million in the first quarter of 2009.

The Company eliminated approximately $33 million of fixed costs due to
restructuring actions aimed at optimizing its global footprint by shifting
production from higher cost plants to more efficient facilities. Since the
inception of its strategic footprint alignment initiative in 2007, O-I has
shut down a total of 14 furnaces, including three furnaces in the first
quarter of 2009. During the quarter, O-I recorded a restructuring charge of
$50.4 million ($47.7 million after tax) principally for future additional
capacity reductions.

Financial highlights: Strong financial flexibility
Total debt declined to $3.326 billion as of March 31, 2009, from $4.028
billion at March 31, 2008. Debt at the end of the first quarter of 2009
remained flat with year-end 2008 as seasonally higher working capital drove a
use of Free Cash Flow in the first quarter, which was offset by a favorable
$89 million foreign currency translation. The Company defines Free Cash Flow
as cash provided by operating activities less capital spending. Capital
expenditures in the first quarter were $46.6 million, consistent with the
prior year first quarter. As of March 31, 2009, in addition to cash on hand,
O-I had $642 million available under its global revolving credit facility,
which does not mature until June 2012.

Asbestos-related cash payments during the first quarter of 2009 were $34.8
million, down from $40.2 million during the first quarter of 2008. The
deferred amount payable for previously settled claims was approximately $33
million at the end of the first quarter and comparable to year-end 2008.
Approximately 1,000 new lawsuits and claims were filed during the first
quarter of 2009, essentially flat with the prior year quarter. However, the
number of pending asbestos-related lawsuits and claims declined from
approximately 11,000 at year-end 2008 to approximately 9,000 as of March 31,
2009. The reduction in pending lawsuits resulted from the dismissal of
federal court non-malignancy cases and the disposition of inactive state court
cases.

Business outlook
Commenting on the Company's outlook, Stroucken said, "Challenging market
conditions will likely persist over the next several quarters, resulting in
lower year-over-year demand and continued temporary production curtailments.
However, we expect that shipments will improve sequentially in the second
quarter due to seasonally stronger demand and as inventory de-stocking
pressures subside. Our strategic footprint alignment initiative and moderating
cost inflation also should benefit future earnings. Overall, we expect second
quarter 2009 adjusted net earnings will decline on a year-over-year basis, but
will improve from first quarter 2009 results."

Note 1:
The table below represents items in the first quarter of 2009 and 2008 that
management considers not representative of ongoing operations.

$Millions, except per share amounts Three months ended March 31
---------------------------
2009 2008
---- ----
Earnings EPS Earnings EPS
-------- --- -------- ---
Earnings from Continuing
Operations Attributable to
the Company $45.1 $0.27 $174.0 $1.02
Items that management
considers not representative
of ongoing operations
consistent with Segment
Operating Profit
Charges for restructuring and
asset impairment 47.7 0.28 9.7 0.06
---- ---- --- ----
Adjusted Net Earnings $92.8 $0.55 $183.7 $1.08
===== ===== ====== =====

Company Profile
Millions of times a day, O-I glass containers deliver many of the world's
best-known consumer products to people all around the world. With the leading
position in Europe, North America, Asia Pacific and South America, O-I
manufactures consumer-preferred, 100 percent recyclable glass containers that
enable superior taste, purity, visual appeal and value benefits for our
customers' products. Established in 1903, the Company employs more than
23,000 people with 80 manufacturing facilities in 22 countries. In 2008, net
sales were $7.9 billion. For more information, visit www.o-i.com.

Regulation G
The information presented above regarding earnings from continuing operations
exclusive of items management considers not representative of ongoing
operations does not conform to U.S. generally accepted accounting principles
(GAAP). It should not be construed as an alternative to the reported results
determined in accordance with GAAP. Management has included this non-GAAP
information to assist in understanding the comparability of results of ongoing
operations. Management uses this non-GAAP information principally for
internal reporting, forecasting, budgeting and calculating bonus payments.
Management believes that the excluded items are not reflective of ongoing
operations, so the non-GAAP presentation allows the board of directors,
management, investors and analysts to better understand the Company's
financial performance in relationship to core operating results and the
business outlook.

Forward Looking Statements
This news release contains "forward-looking" statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933. Forward-looking statements reflect the Company's
current expectations and projections about future events at the time, and thus
involve uncertainty and risk. It is possible the Company's future financial
performance may differ from expectations due to a variety of factors
including, but not limited to the following: (1) foreign currency
fluctuations relative to the U.S. dollar, (2) changes in capital availability
or cost, including interest rate fluctuations, (3) the general political,
economic and competitive conditions in markets and countries where the Company
has operations, including disruptions in capital markets, disruptions in the
supply chain, competitive pricing pressures, inflation or deflation, and
changes in the tax rates and laws, (4) consumer preferences for alternative
forms of packaging, (5) fluctuation in raw material and labor costs, (6)
availability of raw materials, (7) costs and availability of energy, (8)
transportation costs, (9) the ability of the Company to raise selling prices
commensurate with energy and other cost increases, (10) consolidation among
competitors and customers, (11) the ability of the Company to integrate
operations of acquired businesses and achieve expected synergies, (12)
unanticipated expenditures with respect to environmental, safety and health
laws, (13) the performance by customers of their obligations under purchase
agreements, and (14) the timing and occurrence of events which are beyond the
control of the Company, including events related to asbestos-related claims.
It is not possible to foresee or identify all such factors. Any
forward-looking statements in this news release are based on certain
assumptions and analyses made by the Company in light of its experience and
perception of historical trends, current conditions, expected future
developments, and other factors it believes are appropriate in the
circumstances. Forward-looking statements are not a guarantee of future
performance and actual results or developments may differ materially from
expectations. While the Company continually reviews trends and uncertainties
affecting the Company's results of operations and financial condition, the
Company does not intend to update any particular forward-looking statements
contained in this news release.

Conference Call Scheduled for April 30, 2009
O-I CEO Al Stroucken and CFO Ed White will conduct a conference call to
discuss the Company's latest results on Thursday, April 30, 2009, at 8:30
a.m., Eastern Time. A live Webcast of the conference call, including
presentation materials, will be available on the O-I Web site, www.o-i.com, in
the Investor Relations section under "Events and Presentations."

The conference call also may be accessed by dialing 888-733-1701 (U.S. and
Canada) or 706-634-4943 (international) by 8:20 a.m., Eastern Time, on April
30. Ask for the O-I conference call. A replay of the call will be available
on the O-I Web site, www.o-i.com, for 30 days following the call.

OWENS-ILLINOIS, INC.
Condensed Consolidated Results of Operations (a)
(Dollars in millions, except per share amounts)

Three months ended
March 31,
-------------------
2009 2008
---- ----

Net sales $1,519.0 $1,960.5
Manufacturing, shipping, and
delivery expense (1,222.2) (1,503.7)
-------- --------

Gross profit 296.8 456.8

Selling and administrative expense (118.5) (127.8)
Research, development, and
engineering expense (13.9) (16.0)
Interest expense (48.1) (64.3)
Interest income 8.5 8.7
Equity earnings 13.6 11.1
Royalties and net technical assistance 2.8 4.8
Other income 1.6 1.8
Other expense (b) (52.8) (20.0)
----- -----

Earnings from continuing operations
before income taxes 90.0 255.1

Provision for income taxes (31.2) (64.9)
----- -----

Earnings from continuing operations 58.8 190.2

Gain on sale of discontinued operations 4.1
--- ---

Net earnings 58.8 194.3

Net earnings attributable to
noncontrolling interests (13.7) (16.2)
----- -----

Net earnings attributable to the Company $45.1 $178.1
===== ======

Amounts attributable to the Company:
Earnings from continuing operations $45.1 $174.0
Gain on sale of discontinued operations 4.1
----- ---
Net earnings $45.1 $178.1
===== ======

Basic earnings per share (c):
Earnings from continuing operations $0.27 $1.06
Gain on sale of discontinued operations 0.03
----- ----
Net earnings $0.27 $1.09
===== =====

Weighted average shares outstanding (000s) 167,080 156,324
======= =======

Diluted earnings per share (c):
Earnings from continuing operations $0.27 $1.02
Gain on sale of discontinued operations 0.02
----- ----
Net earnings $0.27 $1.04
===== =====

Diluted average shares (000s) (d) 168,469 170,517
======= =======

(a) The Company adopted the provisions of FAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51, " on January 1, 2009, which changed the presentation of
noncontrolling interests in subsidiaries. The presentation
provisions of FAS No. 160 were also required to be retrospectively
applied to 2008.

(b) Amount for the three months ended March 31, 2009 includes charges
of $50.4 million ($47.7 million after tax) for restructuring and
asset impairment. The effect of these charges is a reduction in
earnings per share of $0.28.

Amount for the three months ended March 31, 2008 includes charges
of $12.9 million ($9.7 million after tax and noncontrolling
interests) for restructuring and asset impairment. The effect of
these charges is a reduction in earnings per share of $0.06.

(c) The Company adopted the provisions of FSP No. EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities," on January 1, 2009.
FSP No. EITF 03-6-1 required the Company to allocate earnings to
unvested restricted shares outstanding during the period and was
also required to be retrospectively applied to 2008. Basic
earnings per share for the three months ended March 31, 2009 were
reduced by $0.02 per share. There was no impact on basic earnings
per share for the three months ended March 31, 2009. There was no
impact on diluted earnings per share in either period.

(d) The number of diluted shares for the three months ended March 31,
2008 was increased by 8,589,000 because the assumed conversion of
the convertible preferred shares is dilutive to the related
earnings per share amount for that period. Accordingly, dividends
were not deducted from earnings in calculating diluted earnings per
share for that period.

OWENS-ILLINOIS, INC.
Condensed Consolidated Balance Sheets
(Dollars in millions)

March 31, Dec. 31, March 31,
2009 2008 2008
---- ---- ----
Assets
Current assets:
Cash and cash equivalents $362.3 $379.5 $483.0
Short-term investments,
at cost which approximates
market 15.9 25.0 51.7
Receivables, less allowances
for losses and
discounts 945.5 988.8 1,320.6
Inventories 1,044.8 999.5 1,222.4
Prepaid expenses 48.4 51.9 37.1

Total current
assets 2,416.9 2,444.7 3,114.8

Investments and other assets:
Equity investments 105.3 101.7 87.4
Repair parts inventories 134.5 132.5 157.0
Prepaid pension 591.4
Deposits, receivables, and
other assets 478.2 444.5 489.4
Goodwill 2,130.3 2,207.5 2,522.2

Total other
assets 2,848.3 2,886.2 3,847.4

Property, plant, and
equipment, at cost 5,711.0 5,983.1 6,707.0
Less accumulated
depreciation 3,224.6 3,337.5 3,711.8
------- ------- -------

Net property, plant,
and equipment 2,486.4 2,645.6 2,995.2
------- ------- -------

Total assets $7,751.6 $7,976.5 $9,957.4
======== ======== ========

Liabilities and Share Owners'
Equity
Current liabilities:
Short-term loans and
long-term debt
due within one
year $353.6 $393.8 $835.1
Current portion of
asbestos-related
liabilities 175.0 175.0 210.0
Accounts payable 754.4 838.2 978.5
Other liabilities 554.1 596.3 656.9

Total current
liabilities 1,837.1 2,003.3 2,680.5

Long-term debt 2,972.0 2,940.3 3,192.5
Deferred taxes 138.6 77.6 128.8
Pension benefits 703.4 741.8 314.4
Nonpension postretirement
benefits 234.4 239.7 279.6
Other liabilities 324.4 360.1 409.1
Asbestos-related
liabilities 285.5 320.3 205.3
Share owners' equity:
The Company's share owners'
equity:
Common stock 1.8 1.8 1.8
Capital in excess of
par value 2,921.8 2,913.3 2,887.7
Treasury stock, at
cost (219.9) (221.5) (224.0)
Retained earnings
(deficit) 12.7 (32.4) (112.6)
Accumulated other
comprehensive
loss (1,700.4) (1,620.6) (54.1)
-------- -------- -----

Total share owners'
equity of the
Company 1,016.0 1,040.6 2,498.8
Noncontrolling interests 240.2 252.8 248.4
----- ----- -----
Total share owners'
equity 1,256.2 1,293.4 2,747.2

Total liabilities
and share owners'
equity $7,751.6 $7,976.5 $9,957.4
======== ======== ========

OWENS-ILLINOIS, INC.
Condensed Consolidated Cash Flows
(Dollars in millions)

Three months ended
March 31,
-------------------
2009 2008
---- ----
Cash flows from operating activities:
Net earnings $58.8 $194.3
Net earnings attributable to
noncontrolling interests (13.7) (16.2)
Gain on sale of discontinued
operations (4.1)
Non-cash charges:
Depreciation 88.4 113.6
Amortization of intangibles and
other deferred items 4.3 7.6
Amortization of finance fees 2.4 1.9
Restructuring and asset impairment 50.4 12.9
Other 43.3 19.1
Asbestos-related payments (34.8) (40.2)
Cash paid for restructuring
activities (20.2) (4.1)
Change in non-current operating
assets (2.4) (0.8)
Change in non-current
liabilities (31.3) (18.0)
Change in components of
working capital (173.7) (215.1)
------ ------

Cash provided by (utilized in)
operating activities (28.5) 50.9
Cash flows from investing activities:
Additions to property, plant, and
equipment (46.6) (45.4)
Repayment from (advance to) equity
affiliate 1.6 (15.0)
Net cash proceeds (payments) related
to divestitures and asset sales 0.1 (16.6)
--- -----
Cash utilized in investing
activities (44.9) (77.0)
Cash flows from financing activities:
Additions to long-term debt 274.9 309.2
Repayments of long-term debt (183.6) (222.6)
Increase (decrease) in short-term
loans (17.6) 82.3
Net (payments) receipts for
hedging activity 4.4 (33.9)
Convertible preferred stock
dividends (5.4)
Dividends paid to noncontrolling
interests (a) (17.0) (30.2)
Issuance of common stock and other 4.0 9.8
--- ---
Cash provided by financing
activities 65.1 109.2
Effect of exchange rate fluctuations
on cash (8.9) 12.2
---- ----
Increase (decrease) in cash (17.2) 95.3
Cash at beginning of period 379.5 387.7
----- -----
Cash at end of period $362.3 $483.0
====== ======

(a) The Company adopted the provisions of FAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51, " on January 1, 2009, which changed the presentation of
noncontrolling interests in subsidiaries. The presentation
provisions of FAS No. 160 were also required to be
retrospectively applied to 2008.

OWENS-ILLINOIS, INC.
Consolidated Supplemental Financial Data
(Dollars in millions)

Three months
ended March 31,
----------------

Net sales: 2009 2008
---- ----

Europe $612.9 $888.9
North America 494.3 530.9
South America 214.0 254.2
Asia Pacific 182.0 250.0
----- -----

Reportable segment totals 1,503.2 1,924.0

Other 15.8 36.5
---- ----

Net sales $1,519.0 $1,960.5
======== ========

Three months
ended March 31,
----------------

Segment Operating Profit (a): 2009 2008
---- ----

Europe $44.2 $147.6
North America 62.7 55.5
South America 60.0 73.6
Asia Pacific 25.0 45.4
---- ----

Reportable segment totals (b) 191.9 322.1

Items excluded from Segment Operating
Profit:
Retained corporate costs and other (11.9) 1.5
Restructuring and asset impairment (50.4) (12.9)

Interest income 8.5 8.7
Interest expense (48.1) (64.3)
----- -----
Earnings from continuing operations
before income taxes $90.0 $255.1
===== ======

The following notes relate to Segment Operating Profit:

(a) Operating Profit consists of consolidated earnings from continuing
operations before interest income, interest expense, and provision
for income taxes. Segment Operating Profit excludes amounts related
to certain items that management considers not representative of
ongoing operations as well as certain retained corporate costs.

The Company presents information on "Operating Profit"
because management believes that it provides investors with a
measure of operating performance separate from the level of
indebtedness or other related costs of capital. The most directly
comparable GAAP financial measure to Operating Profit is net
earnings. The Company presents Segment Operating Profit because
management uses the measure, in combination with gross profit
percentage and selected cash flow information, to evaluate
performance and to allocate resources.

A reconciliation from Segment Operating Profit to earnings from
continuing operations before income taxes is included in the
tables above.

(b) Segment Operating Profit for the three months ended March 31, 2009
excludes charges of $50.4 million for restructuring and asset
impairment.

Segment Operating Profit for the three months ended March 31, 2008
excludes charges of $12.9 million for restructuring and asset
impairment.

SOURCE O-I

Investor Relations: Sasha Sekpeh, +1-567-336-2355, Corp. Communications:
Stephanie Johnston, +1-567-336-7199, both of O-I