Ball Corp. Reports Operating Results (10-Q)
Ball Corp. has a market cap of $4.96 billion; its shares were traded at around $53.82 with a P/E ratio of 13.2 and P/S ratio of 0.7. The dividend yield of Ball Corp. stocks is 0.7%. Ball Corp. had an annual average earning growth of 12.2% over the past 10 years. GuruFocus rated Ball Corp. the business predictability rank of 5-star.BLL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:For the first quarter of 2010, we reported consolidated net earnings attributable to Ball Corporation of $79.3 million, or 84 cents per diluted share, on sales of $1.7 billion, compared to $69.5 million, or 73 cents per diluted share, on sales of $1.6 billion in the first quarter of 2009. In the first quarter of 2010, we recorded a net charge of $1.7 million ($1.1 million after tax) related to previously announced plant closures. In the first quarter of 2009, $5.0 million ($3.1 million after tax) of accelerated depreciation expense was recorded in connection with the closure of a metal beverage can plant in Kansas City, Missouri.
Selling, general and administrative (SG&A) expenses were $84.7 million in the first quarter of 2010 compared to $75.2 million for the same period in 2009. The increase in SG&A expenses was due to unfavorable foreign currency effects of approximately $2 million, higher employee compensation costs of approximately $2 million, favorable mark-to-market adjustments of derivatives of approximately $2 million in the first quarter of 2009 that did not recur in 2010 and other miscellaneous cost increases.
Consolidated interest expense was $33.9 million for the first quarter of 2010 compared to $25.8 million in the same period of 2009. The higher expense in 2010 was primarily due to higher levels of debt, including the issuance of $700 million in senior notes during August 2009.
Cash flows used by operations of $272.0 million in the first three months of 2010 included $250 million related to a change in accounting for our accounts receivable securitization program. At December 31, 2009, the amount of accounts receivable sold under the securitization program was $250 million and, under the previous accounting guidance, this amount was presented in the consolidated balance sheet as a reduction of accounts receivable as a result of the true sale of receivables. However, upon the company s adoption of new prospective accounting guidance effective January 1, 2010, the amount of accounts receivable sold is not reflected as a reduction of accounts receivable on the balance sheet at March 28, 2010, resulting in a $250 million increase in accounts receivable and a corresponding working capital outflow from operating activities in the statement of cash flows. There was $50 million of accounts receivable sold under the securitization program at March 28, 2010, which has been presented as an increase in short-term debt in the balance sheet and in the financing activities section of the statement of cash flows.
Interest-bearing debt at March 28, 2010, increased approximately $597 million to $3.2 billion from $2.6 billion at December 31, 2009. On March 22, 2010, Ball issued $500 million of new 6.75 percent senior notes due in September 2020. On that same date, the company issued a notice of redemption to call $509 million in 6.875 percent senior notes due December 2012 at a redemption price of 101.146 percent of the outstanding principal amount plus accrued interest. The redemption of the bonds occurred on April 21, 2010, and resulted in a charge of $7.8 million ($4.7 million after tax) for the call premium and the write off of unamortized financing costs and unamortized premiums. The charge will be reported in the company s second quarter consolidated financial statements as a component of interest expense.
At March 28, 2010, approximately $600 million was available under the company s committed multi-currency revolving credit facilities, which are available until October 2011. The company also had $309 million of short-term uncommitted credit facilities available at the end of the first quarter, of which $75.4 million was outstanding and due on demand, as well as approximately $172 million of available borrowings under its accounts receivable securitization program.
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