Stock Symbol: TSX - CCL.A and CCL.B
TORONTO, Nov. 2 /CNW/ -
Dear Shareholder:
Please find enclosed the Third Quarter 2006 financial results and related
public disclosures for CCL Industries Inc. This shareholder package provides
detailed information about your Company's business activities and financial
performance.
CCL has experienced major changes in its businesses over its 55 years
since inception and recently, we have focused our business primarily as a
global leader in high quality packaging solutions. With synergistic
international acquisitions and significant investments in new plants and
equipment, we have continued our record of paying consecutive quarterly
dividends without a reduction for over 25 years since becoming a public
company, despite the ups and downs of business cycles in that time. In a world
of continuous change and uncertainty, investors can take comfort from a
consistent flow of dividends from their investments. We believe that a
dependable and growing dividend is an important component of delivering value
to our loyal shareholders.
In that spirit, your Board of Directors is pleased to approve the next
quarterly dividend payable on January 2, 2007. This dividend is supported by
the strong cash flow and earnings growth of your Company and by the relatively
conservative financial leverage of the business. The dividend is $0.11 per
Class B non-voting share and $0.0975 per Class A voting share.
Conference calls with our stakeholders are held following the release of
our quarterly results and when significant events require additional
communication. These calls are made to ensure that all stakeholders are kept
current with our business developments and to support our good corporate
governance practices. Presentation materials used during conference calls and
formal investor meetings are posted on our web site along with audio
recordings of the meetings. Instructions for accessing these services are set
out at the end of this earnings release.
We are pleased to announce the creation of our new and improved website
at www.cclind.com and encourage all shareholders to access it on a regular
basis for the latest CCL and investor news. If you would like to have future
Press Releases e-mailed to you at the time they are issued, please complete
the Information Request Form under the Investor Relations Section on our
website or write to us at CCL to the attention of Christene Duncan.
Yours truly,
Jon K. Grant
Chairman of the Board
Investor Update
---------------
1. Third Quarter 2006 Results and Dividend Release
2. Consolidated Statements of Earnings and Retained Earnings
3. Consolidated Balance Sheets
4. Consolidated Statements of Cash Flows
5. Notes to Consolidated Financial Statements
6. Third Quarter 2006 Management's Discussion and Analysis
7. Press Release - Further Investment in Mexico - August 30, 2006
<<
Results Summary
---------------
For Periods Ended September 30th
-----------------------------------------------------
Three Months Nine Months
-----------------------------------------------------
(in millions of
Cdn dollars,
except per % %
share data) 2006 2005 Change 2006 2005 Change
---- ---- ------ ---- ---- ------
Sales $ 293.5 $ 281.9 4.1 $ 903.3 $ 827.7 9.1
------- ------- ------- -------
------- ------- ------- -------
Unusual items
- net loss (3.7) - (4.3) (15.5)
------- ------- ------- -------
------- ------- ------- -------
Net earnings
from continuing
operations 13.6 15.3 (11.1) 52.3 36.5 43.3
Net earnings
from discontinued
operations,
net of tax - - - 5.3
Gain on sale of
discontinued
operations,
net of tax - - - 107.0
------- ------- ------- -------
Net earnings $ 13.6 $ 15.3 $ 52.3 $ 148.8
------- ------- ------- -------
------- ------- ------- -------
Per Class B
share
Continuing
operations $ 0.43 $ 0.48 (10.4) $ 1.63 $ 1.14 43.0
Discontinued
operations - - - 0.17
Gain on sale
of discontinued
operations - - - 3.31
------- ------- ------- -------
Class B - net
earnings $ 0.43 $ 0.48 $ 1.63 $ 4.62
------- ------- ------- -------
------- ------- ------- -------
Diluted earnings
per Class B $ 0.41 $ 0.46 $ 1.58 $ 4.51
------- ------- ------- -------
------- ------- ------- -------
Unusual items and
tax benefit on
previously
unrecognized
tax losses
included in
continuing
operations -
net loss $ (0.10) $ - $ (0.16) $ (0.35)
------- ------- ------- -------
------- ------- ------- -------
Number of
outstanding
shares (in 000s)
Weighted average
for the
period 32,229 32,200
Actual at
period end 32,594 32,427
>>
Toronto, November 2, 2006 - CCL Industries Inc., a world leader in
specialty packaging and labelling solutions for the consumer products and
healthcare industries, announced today its financial results for the third
quarter ended September 30, 2006 and the declaration of its quarterly
dividend.
Sales for the third quarter of 2006 of $293.5 million were 4% ahead of
the $281.9 million recorded in the third quarter of 2005 for continuing
operations, while sales for the first nine months of 2006 of $903.3 million
were 9% higher than last year's $827.7 million. Financial comparisons to the
prior year's results have continued to be negatively affected by the
significant appreciation of the Canadian dollar relative to the U.S. dollar,
the euro and most other currencies. In addition, business acquisitions and a
disposition have impacted the comparison to prior periods. Sales increased for
the quarter by 9% (18% year-to-date) due to acquisitions and organic growth,
partially offset by a decrease of 5% (9% year-to-date) due to foreign exchange
and the disposition. On a comparative basis with last year's third quarter,
sales increased in the Label and Tube Divisions (excluding foreign exchange
and the disposition) and in ColepCCL. Sales volume for the Container Division
was marginally lower than last year's level.
Net earnings from continuing operations for the third quarter of 2006
were $13.6 million, down by 11% from the $15.3 million recorded in the third
quarter of 2005. Net earnings were impacted by a loss from unusual and
one-time items of $3.7 million before tax ($3.2 million after tax) in the
third quarter of 2006. In the third quarter of 2005, there were no unusual
items. In May 2005, CCL completed the sale of its North American Custom
Manufacturing Division ("Custom") for gross proceeds of $273 million and
recorded this business as a discontinued operation. Historical financial
information on continuing operations has been restated to reflect this change.
Earnings from continuing operations per Class B share were $0.43 in the
third quarter of 2006 compared to $0.48 earned in the same period last year, a
decrease of 10%. Unusual and one-time items in the third quarter of 2006
decreased earnings per Class B share by $0.10. There were no similar items in
the third quarter of 2005. Diluted earnings per Class B share were $0.02 lower
than basic earnings per Class B share in the third quarter of 2006 and 2005.
For the first nine months of 2006, earnings from continuing operations
per Class B share were $1.63 compared to $1.14 in the prior year, a 43%
increase. Unusual and one-time items reduced earnings per Class B share by
$0.16 for the first nine months of 2006 versus a $0.35 reduction in the
comparable period of 2005. Earnings per Class B share from discontinued
operations for the nine months of 2005, including the gain on sale, were
$3.48. Diluted earnings per Class B share were $0.05 lower than basic earnings
for the first nine months of 2006 and were $0.11 lower in the comparable 2005
period.
Donald G. Lang, Vice Chairman and Chief Executive Officer commented, "We
continue to be pleased with the overall performance of our businesses with
earnings from operations producing a new third quarter record. Our earnings
per share from continuing operations, excluding unusual and one-time items,
were 10% higher in the third quarter than last year's comparable period
despite the 9% negative impact of the strong Canadian dollar on these results.
Since May 2005, we have more than replaced the earnings from the disposed
North American Custom Manufacturing business with organic and acquisition
growth in our specialty packaging core despite the significant unfavourable
currency effect."
Mr. Lang added, "The Label Division continues to perform remarkably well
despite softness in our North American personal care markets. Our expansion
into new markets such as Brazil has been strategically sound and is helping to
generate strong financial returns for the business. The Tube Division has also
showed continuous improvement in comparable sales and income as its management
is driving for a leadership position in this business in North America. The
Container Division has been dramatically impacted by aluminum costs that have
doubled since early 2005. Sales of beverage bottles have been very weak as our
customers struggle with the increase in container costs and personal care
aerosols are experiencing some softness with limited new product launches.
With the recent capacity additions to the business, order backlogs have been
reduced and the focus is now on developing new products and customers and
attempting to offset commodity cost increases. The new management team in the
Container Division is in the process of reviewing all operations and will be
finalizing its restructuring plan by year-end to lower costs and be more
responsive to its customers. Our ColepCCL joint venture performed very well in
the third quarter and is expecting firm markets for the balance of the year."
Mr. Lang continued, "With over $100 million of cash on hand and a debt to
capitalization ratio of a modest 35%, we are well positioned to target
medium-sized accretive acquisitions in our focused business sectors. CCL's
book value per share is now up to $18.90, a full 10% higher than a year ago."
Mr. Lang concluded, "Our outlook through 2007 is good as we continue to
build on our strengths. We have seen some spotty signs of softness in certain
markets, but believe that our core businesses are on track to enjoy continued
long-term growth. Based on our strong cash flows and steady financial
position, your Board of Directors has declared a continuation of the quarterly
dividend at its current level after having increased it by 10% earlier this
year. The quarterly dividend is $0.11 on the Class B non-voting shares and
$0.0975 on the Class A voting shares to shareholders of record at the close of
business on December 12, 2006 payable on January 2, 2007. CCL continues its
record of paying quarterly dividends without reduction or omission for over 25
years."
CCL Industries Inc. manufactures pressure-sensitive labels, aluminum
containers and plastic tubes, providing state-of-the-art specialty packaging
solutions to global producers of consumer brands in the home and personal
care, healthcare and specialty food and beverage sectors. With headquarters in
Toronto, Canada, CCL Industries employs approximately 4,600 people and
operates 45 production facilities in North America, Europe, Latin America and
Asia. CCL's joint venture, ColepCCL operates 5 plants in Europe and employs
approximately 1,800 people.
Statements contained in this Press Release, other than statements of
historical facts, are forward-looking statements subject to a number of
uncertainties that could cause actual events or results to differ materially
from some statements made.
<<
Note: CCL will hold a conference call at 10:00 a.m. EST on Friday,
----- November 3, 2006 to discuss these results.
To access this call, please dial Toll-Free North America -
1-800-289-6406 or Domestic and International - 416-641-6715.
Post-View service will be available from Friday, November 3, 2006
at 12:00 p.m. EST until Sunday, December 3, 2006 at 11:59 p.m.
EST.
Dial: Toll-Free North America - 800-558-5253
Domestic and International - 416-626-4100
Access Code: 21305680
For more details on CCL, visit our website - www.cclind.com
Financial Tables follow ...
CCL INDUSTRIES INC.
2006 Third Quarter
Consolidated Statements of Earnings and Retained Earnings
Three months Nine months
Unaudited ended September 30th ended September 30th
-------------------------------------------------------------------------
(in millions of
Cdn dollars,
except per % %
share data) 2006 2005 Change 2006 2005 Change
-------- -------- -------- -------- -------- --------
Sales $ 293.5 $ 281.9 4.1 $ 903.3 $ 827.7 9.1
-----------------------------------------------------
Income before
undernoted items 46.6 43.8 6.4 151.3 130.9 15.6
Depreciation and
amortization 18.1 17.4 54.7 49.1
Interest expense,
net 5.3 4.4 16.2 15.0
-----------------------------------------------------
23.2 22.0 5.5 80.4 66.8 20.4
Unusual items -
net loss (note 5) (3.7) - (4.3) (15.5)
-----------------------------------------------------
Earnings before
income taxes 19.5 22.0 (11.4) 76.1 51.3 48.3
Income taxes 5.9 6.7 23.8 14.8
-----------------------------------------------------
Net earnings from
continuing
operations 13.6 15.3 (11.1) 52.3 36.5 43.3
Net earnings from
discontinued
operations, net
of tax (note 4) - - - 5.3
Gain on sale of
discontinued
operations, net
of tax (note 4) - - - 107.0
-----------------------------------------------------
Net earnings 13.6 15.3 52.3 148.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings,
beginning of
period 445.0 389.1 413.0 272.7
Net earnings 13.6 15.3 52.3 148.8
Repurchase of
shares - - - (10.7)
-----------------------------------------------------
458.6 404.4 465.3 410.8
Less dividends:
Class A shares 0.3 0.2 0.7 0.6
Class B shares 3.3 3.0 9.6 9.0
-----------------------------------------------------
3.6 3.2 10.3 9.6
-----------------------------------------------------
Retained earnings,
end of period $ 455.0 $ 401.2 $ 455.0 $ 401.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
Class B -
Continuing
operations $ 0.43 $ 0.48 (10.4) $ 1.63 $ 1.14 43.0
Discontinued
operations $ - $ - $ - $ 0.17
Gain on sale
of discontinued
operations $ - $ - $ - $ 3.31
-----------------------------------------------------
Class B -
Net earnings $ 0.43 $ 0.48 (10.4) $ 1.63 $ 4.62 (64.7)
Class A $ 0.42 $ 0.47 $ 1.59 $ 4.58
-----------------------------------------------------
Diluted earnings
per share
Class B -
Continuing
operations $ 0.41 $ 0.46 (10.9) $ 1.58 $ 1.11 42.3
Discontinued
operations $ - $ - $ - $ 0.16
Gain on sale
of discontinued
operations $ - $ - $ - $ 3.24
-----------------------------------------------------
Class B -
Net earnings $ 0.41 $ 0.46 (10.9) $ 1.58 $ 4.51 (65.0)
Class A $ 0.40 $ 0.45 $ 1.54 $ 4.47
-------------------------------------------------------------------------
See notes to interim consolidated financial statements.
CCL INDUSTRIES INC.
2006 Third Quarter
Consolidated Balance Sheets
September December September
30th 31st 30th
-------------------------------------------------------------------------
(in millions of Cdn dollars) 2006 2005 2005
------------ ------------ ------------
(Unaudited) (Unaudited)
Assets
Current assets
Cash and cash equivalents $ 102.7 $ 120.2 $ 119.3
Accounts receivable - trade 175.8 162.2 172.3
Other receivables and
prepaid expenses 20.2 20.7 23.1
Inventories 98.2 102.1 100.4
--------------------------------------
396.9 405.2 415.1
Capital assets 562.3 534.7 512.7
Other assets 26.4 29.2 29.8
Intangible assets 39.8 27.9 28.7
Goodwill 388.8 371.9 369.4
-------------------------------------------------------------------------
Total assets $ 1,414.2 $ 1,368.9 $ 1,355.7
-------------------------------------------------------------------------
Liabilities
Current liabilities
Bank advances $ 9.5 $ 8.8 $ 9.8
Accounts payable and
accrued liabilities 219.5 240.3 227.6
Income and other taxes payable 27.1 24.3 27.8
Current portion of
long-term debt 17.0 17.3 158.5
--------------------------------------
273.1 290.7 423.7
Long-term debt 400.2 376.5 244.1
Other long-term items 51.7 51.4 51.6
Future income taxes 80.6 84.5 86.6
-------------------------------------------------------------------------
Total liabilities 805.6 803.1 806.0
-------------------------------------------------------------------------
Shareholders' equity
Share capital (note 2) 190.1 188.7 188.0
Contributed surplus 3.7 2.0 1.5
Retained earnings 455.0 413.0 401.2
Foreign currency translation
adjustment (40.2) (37.9) (41.0)
-------------------------------------------------------------------------
Total shareholders' equity 608.6 565.8 549.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 1,414.2 $ 1,368.9 $ 1,355.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See notes to interim consolidated financial statements.
Certain 2005 figures have been restated for comparative purposes.
CCL INDUSTRIES INC.
2006 Third Quarter
Consolidated Statements of Cash Flows
Three months Nine months
ended ended
Unaudited September 30th September 30th
-------------------------------------------------------------------------
(in millions of Cdn dollars) 2006 2005 2006 2005
-------- -------- -------- --------
Cash provided by (used for)
Operating activities
Net earnings $ 13.6 $ 15.3 $ 52.3 $ 148.8
Earnings from discontinued
operations - - - (5.3)
Gain on sale of discontinued
operations - - - (107.0)
Items not requiring cash:
Depreciation and amortization 18.1 17.4 54.7 49.1
Stock-based compensation 0.6 1.2 1.7 1.3
Future income taxes 0.3 (1.0) 0.6 1.7
Unusual items (note 5) 3.6 - 6.6 15.4
-----------------------------------------------------------------------
36.2 32.9 115.9 104.0
Net change in non-cash working
capital (4.0) (9.7) (34.6) (37.9)
-----------------------------------------------------------------------
Cash provided by continuing
operations 32.2 23.2 81.3 66.1
Cash provided by (used for)
discontinued operations - (0.5) - 3.2
-----------------------------------------------------------------------
Cash provided by operating
activities 32.2 22.7 81.3 69.3
-------------------------------------------------------------------------
Financing activities
Proceeds on issuance of
long-term debt 0.1 5.5 202.4 41.0
Retirement of long-term debt (24.4) (14.0) (170.9) (16.7)
Increase (decrease) in bank advances 5.7 (0.4) 0.5 (26.2)
Issue of shares 0.2 0.3 1.1 3.9
Repurchase of shares - - - (14.1)
Purchase of shares held in trust
(note 2) - (5.5) - (5.5)
Dividends (3.6) (3.2) (10.3) (9.6)
-----------------------------------------------------------------------
Cash provided by (used for)
financing activities (22.0) (17.3) 22.8 (27.2)
-------------------------------------------------------------------------
Investing activities
Additions to capital assets (27.8) (33.2) (95.4) (117.9)
Proceeds on disposal of capital
assets 10.7 0.4 12.2 0.8
Proceeds on business dispositions
(note 4 and 5) - - 24.4 272.8
Business acquisitions (note 3) - (75.3) (62.2) (139.4)
Other (2.5) (2.9) 1.4 (3.0)
-----------------------------------------------------------------------
Cash provided by (used for)
investing activities (19.6) (111.0) (119.6) 13.3
-------------------------------------------------------------------------
Effect of exchange rate changes on cash 0.4 (5.4) (2.0) (7.5)
-------------------------------------------------------------------------
Increase (decrease) in cash (9.0) (111.0) (17.5) 47.9
Cash and cash equivalents at
beginning of period 111.7 230.3 120.2 71.4
-------------------------------------------------------------------------
Cash and cash equivalents at
end of period $ 102.7 $ 119.3 $ 102.7 $ 119.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents are defined as cash and short-term investments.
See notes to interim consolidated financial statements.
CCL INDUSTRIES INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Periods ended September 30, 2006 AND 2005
(Tabular amounts in millions of Cdn dollars except share data)
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The disclosures contained in these unaudited interim consolidated
financial statements do not include all of the requirements of
generally accepted accounting principles for annual financial
statements. The unaudited interim consolidated financial statements
should be read in conjunction with the annual consolidated financial
statements for the year ended December 31, 2005.
Comparative figures have been reclassified where necessary to
correspond with the current period's presentation.
2. SHARE CAPITAL
Issued and outstanding
September 30, December 31, September 30,
2006 2005 2005
------------- ------------- -------------
Issued share capital $ 197.3 $ 196.1 $ 195.4
Less: Executive share
purchase plan loans (1.6) (1.8) (1.8)
Shares held in trust (5.6) (5.6) (5.6)
-----------------------------------------
Total $ 190.1 $ 188.7 $ 188.0
-----------------------------------------
-----------------------------------------
During 2005, the Company granted a stock award of 200,000 Class B
shares of the Company. These shares are restricted in nature; 120,000
shares will vest in 2007 dependent on performance conditions, and
80,000 shares will vest in 2009 dependent on continuing employment.
The Company purchased these 200,000 shares in the open market and has
placed them in trust until they vest. The fair value of this stock
award is being amortized over the vesting period and recognized as
compensation expense.
Actual number of shares:
September 30, December 31, September 30,
2006 2005 2005
------------- ------------- -------------
Class A 2,378,721 2,422,204 2,428,396
Class B 30,215,322 30,088,789 29,998,597
-----------------------------------------
Subtotal 32,594,043 32,510,993 32,426,993
Less: Executive share
purchase plan shares (125,000) (150,000) (150,000)
Shares held in trust (200,000) (200,000) (200,000)
-----------------------------------------
Total 32,269,043 32,160,993 32,076,993
-----------------------------------------
-----------------------------------------
September 30, December 31, September 30,
2006 2005 2005
------------- ------------- -------------
Year-to-date weighted
average number of shares 32,228,668 32,171,433 32,199,702
-----------------------------------------
-----------------------------------------
Year-to-date weighted
average diluted number
of shares 33,254,709 33,010,605 33,032,306
-----------------------------------------
-----------------------------------------
3. ACQUISITIONS
In January 2006, the Company purchased Prodesmaq, based in Vinhedo,
Brazil. Prodesmaq operates two state-of-the-art plants and is
Brazil's largest supplier of pressure-sensitive labels for many
global companies in the home and personal care, healthcare and
premium food and beverage markets. The purchase price was
$62.2 million, net of cash acquired. The Company is reviewing the
valuation of the net assets acquired, therefore certain items
disclosed below may change when the review is completed in the fourth
quarter of 2006.
Details of the transaction are as follows :
Current assets $ 9.8
Current liabilities (2.1)
Non-current assets at assigned values 9.3
Future taxes (4.8)
Intangible assets 14.0
Goodwill 36.0
-----------
Net assets purchased $ 62.2
-----------
-----------
Total consideration:
Cash, less cash acquired of $1.7 million $ 62.2
-----------
-----------
In September 2005, the Company purchased Inprint Systems based in
Ashford, England, for $63.4 million, net of cash acquired. Inprint
Systems, through its plants in the Netherlands, United Kingdom, Italy
and the USA, manufactures specialty label products.
Details of the transaction are as follows :
Current assets $ 10.8
Current liabilities (9.3)
Non-current assets at assigned values 22.9
Long-term liabilities (1.3)
Future taxes (0.9)
Intangibles 1.7
Goodwill 39.5
-----------
Net assets purchased $ 63.4
-----------
-----------
Total consideration:
Cash, less cash acquired of $3.5 million $ 63.4
-----------
-----------
In August 2005, the Company purchased the remaining 49% of its
European joint venture, CCL-Pachem. CCL entered the joint venture
with Pachem AG, based in Austria, in 2003, by purchasing a 51%
interest. CCL-Pachem, through its plants in Austria, France and the
United Kingdom, produces pressure-sensitive, shrink sleeve and in-
mould labels for the global market.The Company paid cash of
$6.3 million, issued 200,000 restricted shares worth $5.0 million and
assumed debt of $12.1 million as consideration. The restricted shares
are price protected and cannot be sold until December 31, 2008.
Details of the transaction are as follows :
Current assets $ 9.2
Current liabilities (11.9)
Non-current assets at assigned values 15.2
Goodwill 11.3
Long-term liabilities (0.4)
-----------
Net assets purchased $ 23.4
-----------
-----------
Total consideration:
Cash $ 6.3
Restricted shares 5.0
Assumed debt 12.1
-----------
$ 23.4
-----------
-----------
In August 2005, the Company purchased the assets of Merroc Ltd. a
privately owned label converter based in Cumbernauld, Scotland.
Details of the transaction are as follows :
Current assets $ 0.2
Non-current assets at assigned values 2.0
-----------
Net assets purchased $ 2.2
-----------
-----------
Total consideration:
Cash $ 2.2
-----------
-----------
In July 2005, the Company purchased the remaining 30% of its U.S.
plastic closure joint venture, CCL Dispensing Systems, LLC for
$3.4 million cash.
Details of the transaction are as follows :
Current assets $ 1.8
Current liabilities (4.3)
Non-current assets at assigned values 3.1
Goodwill 2.8
-----------
Net assets purchased $ 3.4
-----------
-----------
Total consideration:
Cash $ 3.4
-----------
-----------
In January 2005, the Company purchased Steinbeis Packaging based in
Holzkirchen, Germany, for $64.1 million, net of cash acquired. The
purchase price was financed by cash on hand and bridge bank financing
denominated in euros. In addition, the Company completed the purchase
of the Holzkirchen building and land right for $4.0 million euros in
March 2006. Steinbeis Packaging, through its plants in the U.S.,
France, Germany and China, supplies battery labels on a global basis
and provides premium decorative label solutions for the European
consumer products market.
Details of the purchase price allocations, as finalized at
December 31, 2005, are as follows :
Current assets $ 34.9
Current liabilities (39.2)
Non-current assets at assigned values 44.8
Long-term liabilities (7.6)
Future taxes (4.6)
Intangible assets 3.7
Goodwill 32.1
-----------
Net assets purchased $ 64.1
-----------
-----------
Total consideration:
Cash, less cash acquired of $4.8 million $ 64.1
-----------
-----------
4. DISCONTINUED OPERATIONS
In May 2005, the Company sold its North American Custom Manufacturing
Division for $272.8 million in cash to KCP Income Fund, a Toronto
based contract manufacturer of private label household products. The
sale resulted in a gain of $129.8 million ($107.0 million after tax)
for the period ended September 30, 2005. Closing adjustments in
fourth quarter of 2005 resulted in a revised gain of $131.0 million
($108.5 million after tax) for the year ended December 31, 2005. The
disposition is reported as discontinued operations and the results
are as follows:
Nine months ended
September 30th
---------------------------------------------------------------------
2005
----
Sales from discontinued operations $ 246.8
-----------
Income before undernoted items 14.0
Depreciation and amortization 5.1
Interest expense, net 1.0
-----------
Earnings before income taxes 7.9
Income taxes 2.6
-----------
Net earnings from discontinued operations $ 5.3
-----------
-----------
Gain on sale of discontinued operations,
net of tax of $22.8 million $ 107.0
---------------------------------------------------------------------
Interest expense reported above in discontinued operations included
an allocation from the Company's total interest expense based on the
ratio of net assets sold to total net assets. Income tax expense has
been based on the effective income tax rate in the local country.
5. UNUSUAL ITEMS
Three months ended Nine months ended
September 30th September 30th
---------------------------------------------------------------------
Segment 2006 2005 2006 2005
------- ---- ---- ---- ----
Container segment
restructuring Container $ (0.2) $ - $ (2.4) $ -
Gain on net assets
sale of CCL
Dispensing
Systems, LLC Tube - - 1.6 -
Repatriation of
capital Corporate (3.5) - (3.5) -
Impairment of
IntraPac L.P.
investment Corporate - - - (11.7)
Mexico Container
business
restructuring and
asset write-down Container - - - (3.8)
---------------------------------------
Loss $ (3.7) $ - $ (4.3) $ (15.5)
---------------------------------------
---------------------------------------
Tax recovery
(expense) -
unusual items $ 0.1 $ - $ (2.3) $ 0.1
---------------------------------------------------------------------
In 2006, the Company commenced a senior management restructuring of
the Container segment and recorded a provision related mostly to
severances totalling $2.4 million ($1.6 million after tax). Further
costs will be incurred in fourth quarter of 2006 as the Company
completes its evaluation.
In February 2006, the Company sold its CCL Dispensing Systems, LLC
net assets for $24.4 million cash and realized a gain of $1.6 million
(loss of $1.5 million after tax).
In July 2006, the Company repatriated capital from a foreign
subsidiary, which resulted in a net foreign exchange loss of
$3.5 million. Gains and losses arise from the difference between the
exchange rate in effect on the date the capital was returned to
Canada compared to the historical rate in effect when the capital was
invested. These gains or losses on foreign exchange do not give rise
to any tax effect.
In June 2005, the Company provided for an impairment of its equity
investment in IntraPac L.P. in the amount of $11.7 million
($11.6 million after tax).
In June 2005, the Company completed an evaluation of its plastic
packaging business within the Container Division in Mexico and
recorded a provision for impairment of related capital assets and
inventory write-downs that amounted to $3.8 million, with no tax
benefit.
6. EMPLOYEE FUTURE BENEFITS
The expense for the defined benefit plans in the third quarter is nil
(2005 - $0.3 million) and year-to-date $0.9 million (2005 -
$1.2 million). In addition, the gain on disposal of discontinued
operations in 2005 included $1.3 million of settlement losses.
7. SEGMENTED INFORMATION
Industry segments
In 2006, the Company has separated the Container segment into
Container and Tube, to more closely represent the current management
structure and provide more relevant information to the Company's
stakeholders. The new Container segment manufactures aluminum aerosol
containers, while the Tube segment manufactures plastic tubes.
Three months ended September 30th
---------------------------------------------------------------------
Sales Operating income
---------------------------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Label $ 188.1 $ 169.2 $ 21.7 $ 19.1
Container 41.5 45.4 1.9 5.4
Tube 17.0 20.8 1.4 1.5
ColepCCL 46.9 46.5 5.0 3.6
---------------------------------------
Total operations $ 293.5 $ 281.9 30.0 29.6
-------------------
Corporate expense (1.5) (3.2)
-------------------
28.5 26.4
Interest expense, net 5.3 4.4
-------------------
23.2 22.0
Unusual items - net loss (3.7) -
-------------------
Earnings before income taxes 19.5 22.0
Income taxes 5.9 6.7
-------------------
Net earnings from continuing operations 13.6 15.3
Net earnings from discontinued
operations, net of tax - -
Gain on sale of discontinued operations,
net of tax - -
-------------------
Net earnings $ 13.6 $ 15.3
---------------------------------------------------------------------
Three months ended September 30th
---------------------------------------------------------------------
Sales Operating income
---------------------------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Label $ 584.7 $ 493.7 $ 74.1 $ 57.5
Container 134.2 126.3 13.8 16.7
Tube 53.8 62.0 3.9 3.5
ColepCCL 130.6 145.7 13.0 13.1
---------------------------------------
Total operations $ 903.3 $ 827.7 104.8 90.8
-------------------
Corporate expense (8.2) (9.0)
-------------------
96.6 81.8
Interest expense, net 16.2 15.0
-------------------
80.4 66.8
Unusual items - net loss (4.3) (15.5)
-------------------
Earnings before income taxes 76.1 51.3
Income taxes 23.8 14.8
-------------------
Net earnings from continuing operations 52.3 36.5
Net earnings from discontinued
operations, net of tax - 5.3
Gain on sale of discontinued operations,
net of tax - 107.0
-------------------
Net earnings $ 52.3 $ 148.8
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Identifiable Assets Goodwill
--------------------- -----------
September December September December
30th 31st 30th 31st
---- ---- ---- ----
2006 2005 2006 2005
---- ---- ---- ----
Label $ 852.9 $ 756.2 $ 305.2 $ 276.7
Container 182.0 177.0 12.8 12.7
Tube 89.8 118.2 28.7 40.4
ColepCCL 157.8 163.3 42.1 42.1
Discontinued operations - - - -
Corporate 131.7 154.2 - -
---------------------------------------
Total $1,414.2 $1,368.9 $ 388.8 $ 371.9
---------------------------------------------------------------------
---------------------------------------------------------------------
Depreciation & Capital
Amortization Expenditures
-------------- --------------
Nine months ended Nine months ended
September 30th September 30th
------------------ ------------------
2006 2005 2006 2005
---- ---- ---- ----
Continuing operations
-------------------
Label $ 35.7 $ 29.1 $ 69.3 $ 74.8
Container 7.9 6.9 17.4 26.5
Tube 5.4 6.8 5.5 7.9
ColepCCL 5.3 5.8 2.8 4.1
Discontinued operations - - - 4.5
Corporate 0.4 0.5 0.4 0.1
---------------------------------------
Total $ 54.7 $ 49.1 $ 95.4 $ 117.9
---------------------------------------------------------------------
>>
8. SUBSEQUENT EVENT
In October 2006, the Company announced it had agreed to sell its
Houten, Netherlands label business for $3.5 million in cash. The sale
will be completed in the fourth quarter of this year and a small gain
on sale is expected.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Three and Nine Months Ended September 30, 2006 and 2005
This document has been prepared for the purpose of providing Management's
Discussion and Analysis (MD&A) of the financial condition and results of
operations for the third quarters ended September 30, 2006 and 2005 and an
update to the 2005 Annual MD&A document. The information in this interim MD&A
is current to November 2, 2006 and should be read in conjunction with the
Company's September 30, 2006 unaudited third quarter financial statements
released on November 2, 2006 and the 2005 Annual MD&A document, which forms
part of the CCL Industries Inc. 2005 Annual Report, dated February 16, 2006.
The financial statements have been prepared in accordance with Canadian
generally accepted accounting principles and in accordance with the
requirements of section 1751 of the CICA Handbook. Unless otherwise noted,
both these financial statements and this interim MD&A are expressed in
Canadian dollars as the reporting currency. The measurement currencies of
CCL's operations are primarily the Canadian dollar, the U.S. dollar, the euro,
the Danish krone, the U.K. pound sterling, the Mexican peso, the Thailand
baht, the Chinese renminbi, the Brazilian real and the Polish zloty. CCL's
Audit Committee and its Board of Directors have reviewed this interim MD&A to
ensure consistency with the current approved strategy and actual results of
the Company.
Management's Discussion and Analysis contains forward-looking statements,
including statements concerning possible or assumed future results of
operations of the Company. Forward-looking statements typically are preceded
by, followed by or include the words "believes", "expects", "anticipates",
"estimates", "intends", "plans" or similar expressions. Forward-looking
statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions, including, but not limited to: the impact of
competition; consumer confidence and spending preferences; general economic
and geopolitical conditions; currency exchange rates; and CCL's ability to
attract and retain qualified employees and, as such, the Company's results
could differ materially from those anticipated in these forward-looking
statements.
Overview of Business Conditions
-------------------------------
The global markets in which CCL's customers operate have been diverse
through the third quarter of 2006 with certain markets continuing to show good
growth while others are showing signs of softening conditions. In the U.S.,
overall manufacturing output fell in the third quarter, down 0.9% based on
government statistics. Consumer non-durables, the Company's primary category,
recorded reductions in manufacturing output in August and September. Despite
these concerns, CCL has experienced good global growth in most of its product
categories in line with the sales performance of its customers.
The economies in the countries where CCL operates continue to be affected
by volatile energy and commodity costs and the impact of these changing costs
throughout the supply chain. Energy costs have generally declined in the last
quarter but certain commodities, such as aluminum continue to be priced at
near-record levels. The U.S. Federal Reserve has recognized the signs of a
slowdown and has stopped raising short-term interest rates, at least
temporarily. The cumulative effect of higher interest rates has softened
consumer spending and has been a significant factor in the decline in the U.S.
housing market. The European economy has performed reasonably well with
certain governments increasing interest rates to temper growth while the
emerging market economies in Eastern Europe, Asia and Latin America continue
to expand at a very good pace.
Most of CCL's global customers are enjoying higher sales volumes than
last year, reflecting world economic growth. The exception is the U.S. markets
that have lately been affected by reduced consumer spending. CCL experienced
slower order intake for its U.S. personal care business late in the second
quarter after a very strong first quarter. Although orders picked up through
the summer months, volume has been spotty in this category. As a result, CCL
had reasonable growth in most product lines and regions in the third quarter
with the exception of its personal care business in the U.S., which was flat.
In general, new orders to date in the fourth quarter continue to show modest
strength with continuing softness in the personal care category.
The impact of generally higher material prices on our customers' products
continues to be challenging. All CCL business units are direct or indirect
users of hydrocarbon-based commodities and energy. The costs of many raw
materials used to manufacture CCL's products have been volatile and most are
at substantially higher price levels than a year ago. Management has generally
been able to control these costs and maintain profit margins with a
combination of procurement leverage and price increases to customers. However,
in certain businesses such as the Container Division, the size and the
volatility of increased input costs combined with market softness have put a
squeeze on profit margins. Managing these higher costs and the timing and size
of negotiated customer selling price increases in response will continue to be
a major challenge into 2007.
The long-term strengthening trend of the Canadian dollar continues to
have a negative effect on CCL and its reported financial results. Compared to
the third quarter of 2005, the U.S. dollar has depreciated on average by 7%
(8% year-to-date) relative to the Canadian dollar, while the euro has also
depreciated by 3% (9% year-to-date). In the last few months, the Canadian
dollar has shown some softness in line with the U.S. slowdown and it is
expected that fourth quarter results will be less affected comparatively than
prior quarters.
The Label Division continues to enjoy generally good sales growth as our
global customers have expanded their product lines and the business is
realizing the synergies of our international network in the marketplace
including our recent Brazilian acquisition. In the U.S. personal care
business, new orders have been firm with the exception of slower order
patterns that continued into the fourth quarter. The significant additional
new manufacturing capacity installed in the Container Division has had the
expected effect of reducing customer order backlogs and improving service
levels. However, there has been reduced order intake primarily in beverage and
only modest improvement in personal care for aerosol containers as higher
aluminum costs have had an impact on customers' marketing plans. The Tube
Division continues to experience a steady turnaround in sales with good market
share growth due to improved service and quality despite softer personal care
markets. ColepCCL, CCL's 40% owned joint venture, had higher sales levels
overall than last year for the quarter in local currency, but this was
partially offset by unfavourable currency translation. The increase in third
quarter sales in local terms was an improvement from a softer second quarter.
Further details on divisional sales can be found later in this report.
Discontinued Operations
-----------------------
On May 17, 2005, CCL completed the sale of the North American Custom
Manufacturing business ("Custom") for $273 million in cash, resulting in an
after-tax gain of $108.5 million after final adjustments in December 2005. CCL
recorded this divestiture as a discontinued operation and, consequently, the
sales and income contribution from Custom in 2005 has been excluded from
continuing operations.
Review of Consolidated Continuing Operations
--------------------------------------------
Sales for the third quarter of 2006 of $293.5 million were 4% ahead of
the $281.9 million recorded in the third quarter of 2005 for continuing
operations, while sales for the first nine months of 2006 of $903.3 million
were 9% higher than last year's $827.7 million. Financial comparisons to the
prior year's results have continued to be negatively affected by the
significant appreciation of the Canadian dollar relative to the U.S. dollar,
the euro, and most other currencies. In addition, business acquisitions and a
disposition (as described below) have impacted the comparison to prior
periods. Sales increased for the quarter by 9% (18% year-to-date) due to
acquisitions and organic growth, partially offset by a decrease of 5% (9%
year-to-date) due to foreign exchange and the disposition. On a comparative
basis with last year's third quarter, sales increased in the Label and Tube
Divisions (excluding the disposition) and ColepCCL. Sales volumes for the
Container Division were marginally lower than the prior year's level. The
following six acquisitions and one divestiture affected financial comparisons
in the first three quarters of 2006 versus 2005:
<<
- In January 2005, the Label Division acquired Steinbeis Packaging,
based in Holzkirchen, Germany for $64 million.
- In July 2005, the Tube Division acquired the remaining 30% of CCL
Dispensing Systems that it did not already own for $3 million.
- In August 2005, the Label Division acquired the remaining 49% of the
CCL-Pachem European joint venture for $23 million including debt
assumed and, in addition, purchased the assets of Merroc Ltd., a
label converter located in Cumbernauld, Scotland for $2 million.
- In September 2005, the Label Division acquired the business of
Inprint Systems headquartered in Ashford, England for $63 million.
- In January 2006, the Label Division acquired the label converting
assets of Prodesmaq and its subsidiaries in Vinhedo, Brazil for
$62 million.
- In February 2006, the Company divested the assets of its CCL
Dispensing business in Libertyville, IL for $24 million.
>>
Net earnings from continuing operations for the third quarter of 2006
were $13.6 million, down by 11% from the $15.3 million recorded in the third
quarter of 2005. Net earnings were impacted by a net loss from unusual and
one- time items of $3.7 million before tax ($3.2 million after tax) in the
third quarter of 2006. Details of these items follow later in this report.
There were no unusual items in the third quarter of 2005. Operating income
from continuing operations improved by 1% from last year's third quarter due
to stronger performances in the Label Division and in ColepCCL, partially
offset by substantially lower income from the Container Division in part due
to the negative effect of the stronger Canadian dollar.
Net interest expense from continuing operations was $5.3 million in the
third quarter, up from $4.4 million in last year's corresponding quarter due
primarily to higher net debt levels associated with the above-noted
acquisitions and higher floating interest rates. Since the sale of Custom in
mid-May of last year, all interest expense and the interest income received on
the cash from the sale of Custom are included in continuing operations.
Corporate expenses for the quarter were $1.7 million lower than last year due
to lower pension expense and executive incentive compensation. The overall
effective income tax rate for continuing operations was 27% for the quarter,
excluding the tax on unusual and one-time items, versus 31% in the third
quarter of 2005. The tax rate was lower in 2006 due to a favourable mix of
taxable income earned in jurisdictions with relatively lower tax rates versus
jurisdictions with relatively higher tax rates.
For the first nine months of 2006, net earnings from continuing
operations were $52.3 million, up 43% from $36.5 million in the comparable
2005 period. Net earnings for the nine months of 2006 were affected by a loss
from unusual and one-time items of $4.3 million ($5.2 million after tax).
Unusual and one-time items decreased earnings in the first nine months of 2005
by $15.5 million ($11.1 million after tax). Net earnings from discontinued
operations, including the gain on the sale of Custom for the first nine months
of 2005 were $112.3 million.
Earnings from continuing operations per Class B share were $0.43 in the
third quarter of 2006 compared to the $0.48 earned in the same period last
year, a decrease of 10%. Unusual and one-time items in the third quarter of
2006 decreased earnings per Class B share by $0.10. There were no unusual and
one-time items in the third quarter of 2005. For comparative purposes, if
unusual and one-time items were excluded, net earnings from continuing
operations increased by 10% in the third quarter 2006 versus 2005. The impact
of the unusual and one-time items on a per share basis is measured by dividing
the after-tax income of these items by the average number of shares
outstanding in the relevant period. Management will continue to disclose the
impact of significant unusual and one-time items on its results because the
timing and extent of such items do not reflect or relate to the Company's
ongoing operating performance. Management evaluates the operating income of
its divisions before the effect of unusual items as it provides a meaningful
basis to evaluate historical and future financial performance. Diluted
earnings per Class B share were $0.02 lower than basic earnings per Class B
share in the third quarter of 2006 and 2005.
For the first nine months of 2006, earnings from continuing operations
per Class B share were $1.63 compared to $1.14 in the year earlier period, a
43% increase. Unusual and one-time items reduced earnings per Class B share by
$0.16 for the first nine months of 2006 versus a $0.35 reduction in the prior
year period. For comparative purposes, if the unusual and one-time items were
excluded, net earnings from continuing operations per Class B share increased
by 20% in the first nine months of 2006 versus 2005. Diluted earnings per
Class B share from continuing operations were $0.05 lower than basic earnings
for the first nine months of 2006 and $0.03 lower in the comparable 2005
period.
There were four unusual and one-time items in the first nine months of
2006 for a total net loss of $4.3 million ($5.2 million after tax) and a total
net loss of $3.7 million ($3.2 million after tax) in the third quarter, as
follows:
<<
- Repatriation of Capital - During the third quarter, the Company
repatriated capital from a foreign subsidiary related to the
disposition of Custom in 2005. There was a foreign exchange loss on
this repatriation of $3.5 million with no tax benefit.
- Container Division Restructuring - During the latter part of the first
quarter of 2006, the Company reorganized the management of the
Container Division and incurred severance and other related costs on
this restructuring. The new management continues to review all aspects
of the business in light of existing market conditions and anticipates
that further restructuring costs will be incurred in the remainder of
2006. This unusual expense was $0.2 million ($0.1 million after tax)
for the current quarter and $2.4 million ($1.6 million after tax) on a
year-to-date basis.
- Sale of CCL Dispensing - CCL acquired 70% of CCL Dispensing in 2001
and acquired the remaining 30% in 2005. This business was part of the
Tube Division. Its net assets were sold in February 2006 for a pre-tax
profit of $11.9 million, excluding $10.2 million of the segment's
goodwill, which was allocated to this disposition, resulting in a pre-
tax profit of $1.7 million. Tax of $3.1 million was incurred on the
sale, resulting in an after-tax loss of $1.4 million. In the second
quarter of 2006, a closing adjustment reduced the gain by
$0.1 million, increasing the after-tax loss year-to-date
to $1.5 million.
- Unusual Tax Recovery - In March, with the repayment of the US$120
million senior unsecured notes, certain foreign exchange gains were
realized for tax purposes only. In September, with the repayment of
US$9.4 million on senior unsecured notes, further foreign exchange
gains were realized. Tax payments are not required due to the ability
of the Company to utilize previously unrecognized capital losses
generated from a 2002 unusual item write-down. The utilization of
these capital losses gave rise to a reduction in tax expense of
$0.4 million in the third quarter and $1.4 million year-to-date.
In summary, the unusual and one-time items in the third quarter of 2006
were as follows:
Tax Recovery After Tax
Gain (Loss) (Expense) Gain (Loss)
----------- ------------ ----------
Repatriation of Capital $(3.5) $ - $(3.5)
Container Division Restructuring (0.2) 0.1 (0.1)
One-time Tax Recovery - - 0.4
----------- ------------ ----------
$(3.7) $0.5 $(3.2)
----------- ------------ ----------
----------- ------------ ----------
For the first nine months of 2006, the unusual and one-time items were:
Tax Recovery After Tax
Gain (Loss) (Expense) Gain (Loss)
----------- ------------ ----------
Repatriation of Capital $(3.5) $ - $(3.5)
Container Division Restructuring (2.4) 0.8 (1.6)
Sale of CCL Dispensing 1.6 (3.1) (1.5)
One-time Tax Recovery - - 1.4
----------- ------------ ----------
$(4.3) $(0.9) $(5.2)
----------- ------------ ----------
----------- ------------ ----------
>>
The earnings impact of these unusual and one-time items was a loss of
$0.10 per Class B share for the third quarter of 2006 and $0.16 year-to-date.
The following table is presented to provide context to the change in the
Company's business as a result of the sale of Custom. CCL's strategy has been
to replace the income previously generated by Custom. The progress of the
replacement of the Custom income is of primary importance to our shareholders
and the financial community. This progress is measured based on earnings per
Class B share from the following table. The gain from the sale of the Custom
business in 2005 is excluded for this purpose. If the net negative impact of
unusual and one-time items were excluded from these results, there is major
improvement over the prior year's earnings performance on a year-to-date
basis.
<<
(in Canadian dollars)
---------------------
3rd Quarters Year-to-date
--------------------------------
Earnings per Class B share 2006 2005 2006 2005
-------------------------- ------ ------ ------ ------
From continuing operations $ 0.43 $ 0.48 $1.63 $ 1.14
From discontinued operations - - - $ 0.17
Net loss from unusual items and
one-time tax benefit included in
continuing operations(x) $ 0.10 - $0.16 $ 0.35
(x) A non-GAAP measure referred to earlier, under Review of
Consolidated Continuing Operations.
>>
The sale of Custom required a restatement of results including allocating
certain costs between continuing and discontinued operations. Interest expense
was allocated based on the ratio of the net assets employed in the business
(not the proceeds from the sale) to the total net assets of CCL. The income
tax expense was based on Custom operating as an independent business in Canada
and the United States and incurring income tax at the appropriate federal,
provincial and state tax rates.
The following is selected financial information for the 11 most recently
completed quarters.
<<
(in millions of Canadian dollars, except per share amounts)
-----------------------------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total
------- ------- ------- ------- -------
Sales-continuing operations
2006 $313.2 $296.6 $293.5 $903.3
2005 265.7 280.1 281.9 $282.4 1,110.1
2004 240.7 232.0 220.0 221.2 913.9
Net earnings-continuing operations
2006 21.1 17.6 13.6 52.3
2005 16.1 5.1 15.3 13.5 50.0
2004 11.5 9.1 13.6 9.8 44.0
Net earnings
2006 21.1 17.6 13.6 52.3
2005 19.7 113.8 15.3 15.0 163.8
2004 14.8 11.9 18.6 13.9 59.2
Net earnings per Class B share
From continuing operations
Basic
2006 0.66 0.54 0.43 1.63
2005 0.50 0.16 0.48 0.43 1.57
2004 0.36 0.28 0.42 0.30 1.36
Diluted
2006 0.64 0.53 0.41 1.58
2005 0.49 0.16 0.46 0.41 1.52
2004 0.35 0.27 0.42 0.30 1.34
Net earnings per Class B share
Basic
2006 0.66 0.54 0.43 1.63
2005 0.61 3.53 0.48 0.48 5.10
2004 0.46 0.37 0.58 0.43 1.84
Diluted
2006 0.64 0.53 0.41 1.58
2005 0.60 3.45 0.46 0.46 4.97
2004 0.45 0.36 0.57 0.43 1.81
Unusual items and tax benefit,
including one-time gain per
Class B share, net gain (loss)
2006 (0.03) (0.03) (0.10) (0.16)
2005 - 2.96 - (0.02) 2.94
2004 - - 0.13 (0.07) 0.06
>>
The financial performance of the business has generally improved on an
annual and quarter by quarter basis over the last three years as can be seen
from the above table. The seasonality of the business has evolved over the
last few years such that the first quarter generates the highest sales and net
earnings from continuing operations with the other quarters generally
generating relatively lower sales and earnings. This seasonality is not
totally visible in net earnings as the impact of unusual items in the quarters
has caused net earnings to fluctuate significantly during this timeframe. The
second quarter of 2005 had exceptional net earnings due to the gain on the
sale of Custom.
As approximately 10% of CCL's sales are generated from Canadian
manufacturing locations, the 90% of sales from international operations are
recorded in foreign currencies and then translated into Canadian dollars for
reporting purposes. The U.S. dollar is the functional currency for about 40%
of the Company's total sales and it depreciated 7% on average compared to the
Canadian dollar in the third quarter 2006 versus last year's third quarter. In
addition, European currencies are now the measurement currencies for over 40%
of CCL's sales and the primary European currency, the euro, has also weakened
by 3% compared to the Canadian dollar versus the prior year's quarter. All
other countries, including Brazil, Mexico and CCL's Asian operations account
for approximately 10% of total sales. Changes in foreign exchange rates have
reduced earnings per share due to currency translation by $0.02 in the third
quarter compared to 2005, and $0.13 on a year-to-date basis.
Additionally, CCL has a hedging program to lock in a portion of its
expected U.S. dollar revenues earned in Canada by the Container Division.
These hedging transactions were at an average rate of $1.23 (US$6.8 million
sold forward) for the third quarter of 2005 and were $1.24 (US$3.0 million
sold forward) for the third quarter of 2006. The Container Division also
collected an additional US$8.1 million in the quarter at this year's quarterly
average rate; 7% below the prior year's rate. The change in the exchange rates
on U.S. currency transactions reduced comparative income for continuing
operations by $0.7 million in the third quarter of 2006 ($1.8 million year-to-
date) and reduced comparative earnings per share by $0.03 for the quarter
($0.06 year-to-date). In the third quarter, the Company sold forward 20.8
million Brazilian reais for delivery in 2007. As at September 30, 2006,
outstanding foreign exchange contracts for 2006 and 2007 had a fair value of
nil.
Net interest expense for continuing operations was $5.3 million for the
third quarter of 2006 and $4.4 million in last year's third quarter. Higher
net debt levels due primarily to acquisitions in the last year and higher
floating interest rates were responsible for the increase. The Company's
borrowings are primarily denominated in U.S. dollars and in the form of
private placements from U.S. institutional investors with a portion swapped
into euros. Net interest expense is net of interest earned on both short-term
investments and interest rate swaps.
Interest Rate Swap Agreements ("IRSA") have had the effect of converting
U.S. dollar fixed rate debt into U.S. dollar floating rate debt. Cross
Currency Interest Rate Swap Agreements ("CCIRSA") have had the effect of
converting U.S. dollar fixed rate debt into euro floating rate debt. There
were no changes to these hedging instruments in the third quarter of 2006.
The unrealized loss on all of the above agreements as at September 30,
2006 amounted to $9.5 million. The effect of the IRSAs and CCIRSAs has been to
reduce interest expense by $0.2 million in the third quarter of 2006 ($1.0
million year-to-date) compared to a reduction of $1.0 million in the third
quarter of 2005 ($2.8 million year-to-date). Interest coverage (defined as
operating income before unusual items and net interest expense divided by net
interest expense calculated on a 12-month rolling basis) improved to 5.7 times
in 2006 compared to 5.6 times in 2005 as at September 30th.
The Company's financial position has a sound foundation. As at September
30, 2006, cash and cash equivalents amounted to $103 million compared to $119
million at September 30, 2005. Net debt was $324 million at September 30,
2006, $31 million higher than the net debt of $293 million at the end of
September 2005. The increase in net debt is primarily due to the previously
noted acquisitions and capital spending, partially offset by operating cash
inflows. Capital spending in the third quarter of $27.8 million compared to
$33.2 million last year. The major capital expenditures in the third quarter
were for further payments on production lines for the Container Division, many
new presses and new plants in Memphis, TN and Robbinsville, NJ for the Label
Division and new printing equipment for the Tube Division. This level of
capital spending was higher than the $18.1 million of depreciation and
amortization in the third quarter of 2006 due to the Company's many growth
opportunities.
In the third quarter of 2006, the Company generated $10.7 million of
proceeds on the disposal of capital assets primarily from the sale of
ColepCCL's Madrid land and building. Non-cash working capital increased
modestly by $4.0 million in the third quarter of 2006 after the typical
seasonal build-up in the strong first quarter following the slow holiday
period. The increase in non-cash working capital in the third quarter of 2005
was $9.7 million. On a year-to-date basis, non-cash working capital grew by
$34.6 million in 2006 versus $37.9 million in 2005.
During the third quarters of 2006 and 2005, the Company generated cash
from all operations of $32.2 million and $22.7 million, respectively. The
increase in cash flow is primarily due to higher net earnings before unusual
items, the additional deferral of income taxes of $1.3 million, and the $5.7
million reduction in cash expended on working capital in 2006 compared to
2005.
Net debt to total capitalization, defined as net debt divided by net debt
plus shareholders' equity, at September 30, 2006 was 35%, the same level as at
the end of September 2005 and 33% at the end of December 2005 primarily due to
acquisitions and capital spending. Book value per share, defined as
shareholders' equity divided by total period end shares, was $18.90 at the end
of the third quarter of 2006, 10% above the $17.18 recorded a year ago. The
increase is primarily the result of earnings retained in the Company.
Discussion of Divisional Business Segments
------------------------------------------
Label Division
--------------
Sales for the Label Division were $188.1 million for the third quarter,
up 11% from $169.2 million in the same quarter last year. For the nine months
to date, sales were $584.7 million, up 18% from the $493.7 million in the
comparable prior year period. The sales increase in the third quarter was
primarily a result of acquisitions and modest organic growth partially offset
by negative foreign exchange of 4%.
Sales growth in the third quarter was predominantly due to the Inprint,
Pachem and Prodesmaq acquisitions, but the base business also generally saw a
modest continuation of the positive trends experienced since late in 2004.
North American personal care orders showed some softness in third quarter and
were slightly lower than last year for the quarter. Customers have reduced the
level of new product introductions in recent months. Sales of specialty
products were very strong and well ahead of last year's third quarter with
good growth in agricultural chemical labels and promotional labels. The North
American healthcare business continued to show strong sales growth,
particularly in the insert market, as the business has continued to make
steady progress with customers in the pharmaceutical industry.
In Europe, sales in local currency were modestly higher excluding the
impact of acquisitions. The summer season in Europe is somewhat more difficult
to analyze due to the extended vacations in many countries. There were
continued improvements in the food and beverage business compared to last year
while healthcare sales were flat and personal care sales were down marginally.
Battery sales showed modest growth. The Merroc and Inprint acquisitions, along
with the increased ownership of Pachem, have significantly improved CCL's
European position in all categories.
Sales for the quarter in 2006 for Asia, in local currency, were
substantially ahead of last year with further growth expected as CCL expands
its customer base. The new plant in Guangzhou, China made its first commercial
sales in the second quarter and started to ramp up production in the third
quarter. The plant in Hefei, China focused primarily on battery and beverage
labels, continues to progress. The Prodesmaq acquisition in Brazil once again
enjoyed a very strong sales and income performance as it serves CCL's global
customers in the South American market. The label business continues to take
advantage of its international presence dealing with large global customers.
There are many new opportunities for growth in the developing world, and from
new product introductions and applications in each label business category.
Operating income for the third quarter of 2006 was $21.7 million, up 14%
from the $19.1 million in the third quarter of 2005 despite the continuing
negative effect of currency translation. Drivers of this improvement were the
performance of all the acquisitions and growth in specific product categories
in each region. Key increases in operating income, excluding acquisitions,
versus last year, were earned in the healthcare and specialty businesses in
North America, food and beverage in Europe and in the Latin American and Asian
operations. Included in the results were costs associated with moving the
Robbinsville, NJ facility and start-up losses in Poland and China for a total
of approximately $1 million. Year-to-date, operating income was $74.1 million
versus $57.5 million last year, up 29%. Operating income as a percentage of
sales at 11.5% in the third quarter met our internal targets and was above the
11.3% return generated in last year's third quarter.
On January 11, 2006, the Label Division acquired the label converting
assets of Prodesmaq and its subsidiaries for approximately $62 million in cash
on a debt-free basis. Prodesmaq is Brazil's largest supplier of pressure-
sensitive labels in the home and personal care, healthcare and premium food
and beverage categories. In 2005, Prodesmaq had sales of $37 million and
operated with exceptional profit margins.
CCL acquired Inprint Systems on September 13, 2005 for $63 million in
cash. Inprint, based in Ashford, England, primarily produces specialty
healthcare labels and rounds out CCL's European presence in this business with
plants in England, the Netherlands, Italy and the United States. At the
beginning of August 2005, the Label Division acquired the remaining 49% of the
Austrian-based CCL-Pachem joint venture for $23 million, paid in a combination
of cash, 200,000 CCL Class B shares and debt assumed. At the same time, CCL
also acquired the assets of Merroc Ltd. located in Cumbernauld, Scotland for
$2 million in cash. Merroc provides leading European paint manufacturers with
pressure-sensitive colour chip labels.
Incremental sales and operating income in the third quarter of 2006 for
the above-noted acquisitions were $21.1 million and $4.7 million,
respectively.
Sales backlogs for the label business are generally low due to short
customer lead times, but indications are that customers' orders continue to be
firm through the fourth quarter of 2006 with the exception of the U.S.
personal care business where there is reduced potential for improvement. There
is seasonality in the overall label business with the first quarter generally
stronger than the other three quarters. This seasonality is a result of many
factors including summer vacations particularly in Europe, strong agchem label
production before the spring planting season, and the increased battery label
production in the late summer and fall for the Holiday season. Certain
locations are also particularly impacted by lengthy plant shutdowns during
summer vacations and in the last half of December.
The Label Division invested $21.0 million in capital in the third quarter
of 2006 compared to $16.8 million in the same period last year. The capital
was spent throughout the Division to maintain and expand its manufacturing
base by adding presses in strategic locations, plant construction for the
relocated Robbinsville, NJ operation, and payments on new plants to be
constructed outside of Memphis, TN and in Mexico. The Division expects to
continue to spend capital to increase its capabilities, expand geographically,
and replace or upgrade existing plants and equipment to improve efficiencies
over the next few years. Depreciation and amortization for the Label Division
were $11.8 million for the third quarter of 2006 and $10.6 million in the
comparable 2005 period.
On October 16, 2006, CCL Label sold its Houten, the Netherlands business
to the local management for cash consideration of approximately $3.5 million.
The business was generally focused on local customers outside of the Company's
target markets in personal care, healthcare, battery, food and beverage
serving global customers. Income contribution from this business was not
material and the disposition will have no material effect on CCL's future
consolidated results. There will be a small gain recorded on the sale in the
fourth quarter of 2006. CCL maintains an active involvement in the Dutch
market through its remaining operation in Oss, the Netherlands.
Container Division
------------------
Sales in the third quarter were $41.5 million, down 9% from $45.4 million
last year and for the first nine months of 2006 sales were $134.2 million, up
6% from the $126.3 million last year. Sales decreased for the third quarter
due to lower volumes offset in part by price increases. The impact of foreign
currency translation decreased comparative sales by 4%.
The Container Division continued to experience a significant reduction in
demand for beverage containers in the third quarter and only modest sales
gains in aerosols, largely driven by price increases. The business has been
dramatically affected by the huge increase in aluminum costs and the resultant
impact that higher container costs have on marketers' plans for their
products. Price increases have been implemented but overall have not offset
the higher product costs. The impact of added internal capacity and the
substantially lower demand has resulted in the Division continuing to reduce
its order backlogs and improving customer service.
Operating income for the Container Division before unusual items for the
third quarter of 2006 was $1.9 million, down 65% from $5.4 million in the
third quarter of 2005 due to lower volume and margins, unfavourable foreign
exchange, and higher aluminum costs despite higher selling prices. For the
first nine months of 2006, operating income was $13.8 million versus $16.7
million last year, down 17%. Return on sales for the third quarter of 2006 was
4.6% compared to 11.9% in last year's third quarter.
The plant in Penetanguishene, ON sells almost all of its production to
the United States market in U.S. dollars. As previously discussed, the
business hedges part of these sales in Canadian dollars by way of forward
contracts. The change in the exchange rates on U.S. currency transactions
reduced comparative income for the Container Division by $0.7 million in the
third quarter of 2006 and $1.8 million year-to-date.
During the first quarter, the Container Division commenced reorganization
of its operations by bringing in a new management team to improve operational
effectiveness and to be more responsive to its customers. In light of the
lower profitability of the business in the third quarter, this restructuring
will include a complete review of all operations and assets with a goal of
improving financial returns and cash flow. It is expected that the
restructuring review will be completed during the balance of 2006. During the
third quarter, the restructuring cost was $0.2 million ($0.1 million after
tax) consisting primarily of severance expenses. These costs are recorded as
an unusual item.
The Container Division invested $4.3 million in capital in the third
quarter of 2006 compared to $11.6 million in the same quarter last year, to
maintain and expand its manufacturing base and reduce its production costs.
The most significant capital expenditures in the third quarter were the new
production lines in Hermitage, PA. Depreciation and amortization for the third
quarters of 2006 and 2005 were $2.7 million and $2.4 million, respectively.
The Division has successfully installed six new aluminum container lines in
the last three years and has a seventh new line for installation and start-up
in 2007.
The Container Division continues to hedge some of its anticipated future
aluminum purchases through futures contracts. The fair value of these futures
at September 30, 2006 was a positive $6.0 million. The cost of aluminum has
continued to stay at substantially higher levels than a year ago. The Division
will continue to be challenged to recover these cost increases by increasing
its selling prices since certain customer contracts are at fixed prices and
the level of hedged aluminum purchases have not been completely matched with
customer contracts.
Tube Division
-------------
Sales in the third quarter for the Tube Division were $17.0 million, down
18% from $20.8 million last year. Sales decreased for the quarter by 25% due
to foreign currency translation and the divestiture of CCL Dispensing Systems.
However, excluding the foregoing, the Division enjoyed an increase in tube
sales due to strong organic growth, and improved mix to more highly decorated
tubes. If the effect of the currency translation and the divestiture were
excluded, sales were up by 7% in the third quarter. The demand for plastic
tubes showed good improvement in the quarter and new orders appear to be
generally firm. Sales in the first nine months of 2006 were $53.8 million,
down 13% from the $62.0 million recorded in 2005 due to currency translation
and the divestiture. Excluding the effect of currency and the divestiture,
year-to-date sales were up by 16%. The Division is developing many new
customers and products in the high-end market for highly decorated complex
tubes.
In early February 2006, the Company divested the assets of its CCL
Dispensing business in Libertyville, IL for $24 million in cash. This business
was deemed to be non-core as it was a small player in the global closures
market. Operating income contribution from this business in 2005 was
approximately $1 million. The gain on the sale of this business reported in
first quarter 2006 was $1.7 million (but a $1.3 million loss after tax) after
allocating $10.2 million of goodwill from the Tube Division. The goodwill
allocated to this divestiture originated primarily from the plastic tube
acquisition in 1997.
Operating income for the Tube Division for the third quarter of 2006 was
$1.4 million, down 7% from $1.5 million in the third quarter of 2005. Income
performance in the tube business was up year over year despite unfavourable
currency and the $0.3 million negative impact of the disposed closure
business. Year-to-date operating income was $3.9 million, up 11% from the
$3.5 million recorded in the same period last year. Excluding the impact of
currency and the divestiture, operating income has improved significantly by
63% year-to-date. The return on sales of 8.2% in the third quarter compared to
a 7.2% return in the prior year's third quarter.
The Tube Division invested $1.5 million in capital in the third quarter
of 2006 compared to $3.1 million in the same quarter last year, to maintain
and expand its manufacturing base and reduce its production costs.
Depreciation and amortization for the third quarters of 2006 and 2005 were
$1.8 million and $2.6 million, respectively.
ColepCCL Joint Venture
----------------------
The ColepCCL joint venture was created in mid-July 2004. For the third
quarter of 2006, CCL's 40% proportionate share of the joint venture's sales
was $46.9 million. This sales level was 1% higher than the comparative sales
last year of $46.5 million despite the 3% effect of unfavourable currency
translation for the comparable quarter. In local currency, sales were up
compared to the same quarter a year ago due to increases in the metal
packaging segment partially offset by reductions in the contract manufacturing
business. For the first nine months of 2006, sales were $130.6 million, down
10% from last year's $145.7 million. It is anticipated that sales will improve
over the balance of the year.
Operating income in the third quarter of 2006 for ColepCCL was $5.0
million, indicating a return on sales of 10.7%, and in the third quarter of
2005, operating income was $3.6 million, with a return on sales of 7.7%. For
the first nine months of 2006, operating income of $13.0 million was 1% below
the $13.1 million recorded in the comparable 2005 period. Operating income was
well above last year's level for the quarter despite currency translation, due
to higher volume, improved product mix, and the reduced cost impact of the
plant shutdown in Madrid, Spain in June 2005. The land and building in Madrid
have been sold and ColepCCL received proceeds from the sale totalling
approximately $22 million in July 2006. CCL's share of the proceeds was
approximately $9 million.
Liquidity and Capital Structure
-------------------------------
The Company's debt structure is primarily comprised of three private debt
placements completed in 1997, 1998 and 2006 totalling US$336.2 million (Cdn$
375.8 million) at September 30, 2006. The Company's current overall average
interest rate is 5.8% after factoring in the related Interest Rate and Cross
Currency Swap Agreements.
The most recent private placement for a total of US$170 million closed on
March 7, 2006 followed by the repayment of US$120 million on 10-year notes
that matured on March 15, 2006. The balance of the borrowed funds was to be
used for general corporate purposes and for funding future growth
opportunities. The new series of notes has two tranches: US$60 million for
five years at 5.29% and US$110 million for 10 years at 5.57%. The Company
effectively converted the five-year notes into a five-year fixed rate euro
debt by entering into two independent CCIRSAs with a financial institution.
The intent of this transaction was to more effectively hedge CCL's assets and
cash flows in Europe. This transaction reduced the effective rate on the five-
year notes to 3.82%.
The summary of net debt is as follows:
<<
September 30, December 31, September 30,
$ Millions 2006 2005 2005
---------- ------------- ------------ -------------
Total debt $426.7 $402.6 $412.4
Cash on hand 102.7 120.2 119.3
----- ----- -----
Net debt $324.0 $282.4 $293.1
------ ------ ------
------ ------ ------
>>
Net debt has increased by $41.6 million from 2005 year-end, primarily due
to the Prodesmaq acquisition, the seasonal working capital build-up and the
extensive capital expenditure program, offset in part by earnings and the
disposition of the dispensing closure business. Compared to a year ago, the
increase in net debt of $30.9 million is due primarily to the Prodesmaq
acquisition.
Working capital grew in its typical seasonal fashion in the first nine
months by $34.6 million compared to $37.9 million last year.
For the third quarter, capital spending of $27.8 million was lower than
the $33.2 million spent in the third quarter of 2005. However, capital
spending exceeded this quarter's depreciation and amortization of $18.1
million. This major capital expenditure program was to provide for increased
capacity and geographic reach, to implement cost reduction programs and to
maintain the existing business and asset base. Over the last four years, there
has been a major recapitalization of the business including new plants and
infrastructure. It is expected that capital spending over the next two years
will be somewhat lower than the $156 million spent in 2005. As previously
discussed, the Company recorded $10.7 million of proceeds on the disposition
of capital assets in the quarter; primarily the sale of ColepCCL's land and
building in Madrid, Spain.
Dividends declared in the third quarter of 2006 were $3.6 million
compared to the $3.2 million in the third quarter of 2005 due to the 10%
increase in the dividend rate effective June 2006. The total number of shares
outstanding as at September 30, 2006 was 32.6 million compared to 32.4 million
a year ago due to the exercise of stock options. The Company has historically
paid out dividends at a rate of 20-25% of normalized earnings. Since the
Company's cash flow and financial position is strong, the Board of Directors
approved a continuation of the quarterly dividend at $0.0975 per Class A share
and $0.11 per Class B share to shareholders of record as of December 12, 2006
and payable on January 2, 2007.
The Company has no material "off-balance sheet" financing obligations
except for typical long-term operating lease agreements and has not
experienced any material change in its contractual obligations and
contingencies since year-end 2005. The nature of these commitments and
contingencies is described in note 14 of the December 31, 2005 Annual
Consolidated Financial Statements. The Company does not have any material
related party transactions. There are no defined benefit plans funded with CCL
stock.
Risks and Strategies
--------------------
The 2005 Management's Discussion and Analysis in the Annual Report
detailed the risks to the Company's business and the strategies that were
planned for 2006 and beyond. There have been no material changes to those
risks and strategies. CCL is now more exposed to the inherent risks associated
with running a more internationally diverse specialty packaging business. The
Company now has more dependence on the European, Latin American and Asian
economies and their currencies. These non-Canadian risks were described in the
2005 Management's Discussion and Analysis.
Outlook
-------
The Company continues to be focused on the growth prospects of its
specialty packaging business and the prudent management and reinvestment of
the cash generated from the disposition of Custom with a view to the continued
improvement in shareholder value. CCL will continue to integrate and
reorganize the large number of recent acquisitions it has made to improve
profitability and simplify administration. The Company is investigating mid-
sized potential acquisition candidates that meet its criteria of core products
and customers, and the expectation of earnings accretion in the first year of
ownership.
The organic growth in sales and income experienced in 2005 and so far in
2006 are anticipated to continue and the Company is expecting to generate
additional returns from its recent capital investments and acquisitions.
However, as indicated earlier, there are concerns about the slowing of the
U.S. economy and the apparent softness in consumer spending and its potential
impact on personal care customers in the U.S. There continues to be a focus on
managing the balance between cost increases due to the significant inflation
and volatility of energy, aluminum and oil-based resins in our raw materials
and the Company's ability to recover those cost increases through higher
selling prices to its customers or the mitigation of these cost increases in
the procurement supply chain. Higher aluminum costs combined with reduced
volumes and competitive markets in the Container business are issues that are
being assessed by the new management of the business and will result in
further restructuring costs in the fourth quarter.
The seasonality of the business continues to evolve, particularly in the
Label Division, with the first quarter being generally the strongest. The
strength of the Canadian dollar relative to the currencies of CCL's foreign
operations continues to negatively impact earnings compared to 2005
performance levels and is anticipated to continue but with less effect going
forward due to the strong euro. In addition, recent weakness in the Canadian
dollar could further reduce the future impact of currency translation.
News Release
Stock Symbol: TSX - CCL.A and CCL.B
CCL Industries Plans to Invest C$45 million to Support Growth of its
Mexican Operations
Toronto, August 30, 2006 - CCL Industries, a world leader in specialty
packaging and labelling solutions for the consumer products and healthcare
industries, confirmed today its intention to invest C$45 million over the next
two years in its Label, Container and Plastic Tube operations in Mexico.
CCL Label Mexico will move to a new state-of-the-art, 140,000 square foot
facility in Mexico City. This will include a C$10 million investment in new
label converting and pre-press technologies. The new facility will also
include high-speed tube extrusion lines with labelling and screen printing
decorating capability, allowing the Company to produce high-end plastic tubes
in the same building as its personal care label operation. Investment plans
also include new leading edge offset and rotogravure printing presses to
service the personal care and fast growing beverage label business. The new
label and tube facility will be fully operational by the spring of 2007.
The plans also include building a greenfield aluminum aerosol and bottle
producing plant including new high-speed equipment for both the personal care
and beverage markets. The new plant will be approximately 100,000 square feet
and located in the Guanajuato region, north of Mexico City, in order to be
close to significant customers and easy access to the U.S. market. The new
plant is targeted to come on line in early 2008.
Commenting on the investments, Donald G. Lang, Vice Chairman and Chief
Executive Officer of CCL Industries said, "We see Latin America as an
increasingly important geographic growth region for our customers in the
consumer products business, with Mexico also playing an important role as a
manufacturing centre for products intended for the U.S. market. These
investments, which will be funded from cash on hand, coupled with our January
2006 acquisition of Prodesmaq in Brazil, will position CCL to become a leading
player in the label and specialty container business in the region."
Geoffrey T. Martin, President and Chief Operating Officer of CCL
Industries added, "We have been very pleased with the significant growth in
sales and profitability from our Mexican business units over the last three
years and are highly confident that our management team under the leadership
of Ben Lilienthal, Vice President and Managing Director, CCL Mexico will
execute these plans and create plants that are best in class on a global
basis."
CCL Industries manufactures pressure-sensitive labels, aluminum
containers and plastic tubes, providing state-of-the-art specialty packaging
solutions to global producers of consumer brands in the home and personal
care, healthcare and specialty food and beverage sectors. With headquarters in
Toronto, Canada, CCL Industries employs approximately 4,600 people and
operates 46 production facilities in North America, Europe, Latin America and
Asia. CCL's joint venture, ColepCCL operates five plants in Europe and employs
approximately 1,800 people.
Statements contained in this Press Release, other than statements of
historical facts, are forward-looking statements subject to a number of
uncertainties that could cause actual events or results to differ
materially from some statements made.
For more information, contact: Steve Lancaster, Executive Vice President
and Chief Financial Officer, (416) 756-8517
For more details on CCL, visit our web site - www.cclind.com
