Owens-Illinois reduces debt by $380 million in 2008, focuses on organic growth in 2009

By Jennifer Lanning Drey

Portland, Ore., Jan. 29 - Owens-Illinois, Inc. reduced debt by $380 million during 2008, reflecting net debt repayments of $229 million and the effect of the strengthening U.S. dollar, Owens-Illinois' chief financial officer, Edward C. White, said Thursday during the company's fourth-quarter earnings call.

Owens-Illinois ended 2008 with total debt of $3.334 billion, compared to $3.714 billion at year-end 2007.

"O-I is entering 2009 with a strong balance sheet, good liquidity and no near-term debt maturities. We have created this position through significant de-leveraging over the past two years," White said.

At Dec. 31, Owens-Illinois had $768 million of available capacity under its revolving credit facility.

Free cash flow was $49.6 million in the fourth quarter, compared with $26.8 million during the same period in 2007.

Organic growth in '09

In 2009, Owens-Illinois' primary use of cash will be spending on organic growth, White said.

"We continue to believe whether viewed over the long- or short-term, organic growth within our footprint offers the highest value-creation opportunity to O-I and its stakeholders," he said.

Plans for 2009 include a $40 million investment in expanding the company's plant in New Zealand and $200 million for the continued restructuring and modernization of its global footprint.

The company expects capital expenditures will increase by about $120 million in 2009 as it continues to pursue organic growth and streamlining strategies.

"While we intend to aggressively pursue the modernization of our footprint, we are highly cognizant of the environment and conditions around us, and we will not put our financial flexibility at risk," White noted.

Recognizing the uncertainty in the current markets, White also said Owens-Illinois has no near-term plans to repurchase shares or implement a dividend.

Owens-Illinois posted net sales of $1.705 billion for the fourth quarter, a $252 million decline from $1.957 billion in the fourth quarter of 2007.

Owens-Illinois is a Perrysburg, Ohio-based manufacturer of recyclable glass containers.

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