Sealed Air Reports Fourth Quarter and Full Year 2009 Results

$0.37 Earnings per Share or $0.40 Adjusted Earnings per Share for Fourth Quarter

$1.35 Earnings per Share or $1.44 Adjusted Earnings per Share for Full Year

Fourth Quarter and Full Year 2009 Highlights

• 6% sequential sales growth in the quarter, including 2% due to foreign exchange
• “BRIC” sales increased 18% in the quarter, including 6% due to foreign exchange
• Marketing, administrative and development expenses as percent of net sales higher in the quarter due to incentive compensation expense
• Full year gross margin increased 320 basis points to 28.7%
• Full year operating margin increased 340 basis points to 11.6%
• Full year record free cash flow of $500 million

ELMWOOD PARK, N.J., Jan 25, 2010 (BUSINESS WIRE) -- For full year 2009, Sealed Air Corporation (NYSE:SEE) reported diluted earnings per common share (EPS) of $1.35, compared with $0.99 in 2008. Adjusted EPS was $1.44, compared with $1.40 in 2008. (See attached supplements for non-GAAP reconciliations and information.) Sales declined 12% to $4.24 billion primarily reflecting 8% lower volumes and 5% unfavorable foreign exchange.

Fourth quarter 2009 EPS was $0.37, compared with $0.26 in 2008. Adjusted EPS was $0.40, compared with $0.39 in 2008. Sales declined 2% to $1.15 billion reflecting a 4% decrease in volumes and a 2% decrease in price/mix, partially offset by 4% favorable foreign exchange. Volumes were primarily impacted by reduced equipment sales in Food Packaging, while lower prices on select products, primarily in Protective Packaging, impacted price/mix. Sequential sales increased 6%, including 2% of foreign exchange.

Commenting on our operating performance, William V. Hickey, President and Chief Executive Officer, stated:

"Looking back at 2009, we are encouraged with the sequential improvement in sales even though our end markets have yet to break into positive year-over-year growth rates. Lower input costs combined with aggressive cost savings programs and price/mix management yielded strong margin growth. We maintained a balanced approach during the year by continuing to invest in innovation, launching over 25 new, distinct solutions, adding new customers, and returning cash to shareholders through $76 million of dividend payments. We did this while generating record free cash flow of $500 million, which positions us extremely well to meet near term obligations and focus on growth. We want to particularly recognize and thank Sealed Air employees around the world for their hard work and sacrifice to rise to the challenges of the difficult economic environment in 2009."

Full year gross margin increased 320 basis points (bps) to 28.7%. Operating margin increased 340 bps to 11.6%. Excluding $17 million in charges related to GMS and our cost reduction programs, the 2009 operating margin was 12.0%. This compares with 10.1% in 2008, which excludes $93 million of comparable charges. These 2009 margin increases reflect an estimated $200 million reduction in resin costs and approximately $80 million in benefits from GMS and cost reduction programs.

Fourth quarter gross margin increased 280 bps to 29.1%. Operating margin increased 100 bps to 10.8%. Excluding $9 million in charges related to GMS and our cost reduction programs, the 2009 operating margin was 11.6%. This compares with 11.7% in 2008, which excludes $23 million of comparable charges. These 2009 margin results reflect an estimated $20 million reduction in resin costs and approximately $10 million in benefits from GMS and cost reduction programs.

Operating profit was impacted by higher marketing, administrative and development expenses. Provisions for total company incentive compensation expenses increased $30 million in the quarter and $60 million for full year 2009 as compared to 2008. This incentive compensation includes annual cash incentives, annual profit sharing, and long-term, share-based awards. Of the 2009 amounts, $15 million in the quarter and $24 million in the year were for non-cash, long-term, share-based compensation vesting in 2011 and 2012 that recognizes the achievement of performance results that are aligned with strategic goals. The $15 million in the fourth quarter reflects full year results that exceeded 2009 performance goals.

Fourth Quarter Segment Review

The following net sales discussions exclude the impact of currency translation, which we refer to on a "constant dollar basis." The attached financial statements present results in accordance with U.S. GAAP and the "Components of Change in Net Sales" section provides further details on the impact of currency translation.

In the following segment discussions, the 2009 fourth quarter operating profit includes the impact of the higher incentive compensation expenses that were discussed above, which are allocated to the segments for reporting purposes.

Food Packaging Segment

Sales decreased 4% on a constant dollar basis, principally reflecting 3% lower volumes related primarily to equipment sales in Europe. Sequential sales increased 9%, including 3% of foreign exchange. This increase reflects seasonality in the holiday period and increased demand for our products.

Operating profit was flat at $67 million while the operating margin was 13.3% compared with 13.4% in 2008.

Food Solutions Segment

Sales decreased 6% on a constant dollar basis, reflecting 5% lower volumes and 1% lower price/mix. Volumes in North America were primarily impacted by lower sales in the food service sector. Sequential sales increased 3%, which was largely attributable to foreign exchange.

Operating profit was $19 million with an operating margin of 8.2%. This compares with $28 million, or 11.7% in 2008.

Protective Packaging Segment

Sales decreased 7% on a constant dollar basis, reflecting 4% lower price/mix and 3% lower volumes. Volumes were negatively impacted by the economic conditions in North America and Europe. The lower price/mix is a result of lower prices on select products. Sequential sales increased 6%, including 2% of foreign exchange. This increase reflects a modest seasonal up tick due to the holiday shopping season.

Operating profit was $42 million with an operating margin of 12.9%. This compares with $39 million, or 11.5% in 2008.

Other Category

Sales decreased 13% on a constant dollar basis, primarily reflecting 6% lower price/mix and 5% lower volume. The decline in price/mix primarily reflects the mix of customized packaging solutions in our medical applications business. Volumes were negatively impacted in our specialty materials business due to economic conditions in North America and Europe. Sequential sales increased 1%, which was largely attributable to foreign exchange.

Operating profit was $1 million with an operating margin of 1.7%. This compares with $2 million, or 1.8% in 2008.

Global Manufacturing Strategy (GMS)

We recognized a charge of $8 million in the fourth quarter, of which $5 million is a restructuring charge related to ceasing certain operations at one of our German locations. We anticipate an additional $4 million of associated costs through mid-2010 to complete the project, marking the completion of projects related to GMS.

Financing Transactions

In November, we entered into a 150 million euro senior unsecured revolving credit facility due July 2012 (U.S. dollar equivalent at December 31, 2009 of $214 million). Shortly thereafter, we canceled our ANZ facility valued at Australian dollar 170 million (U.S. dollar equivalent at November 30, 2009 of $156 million).

Goodwill Analysis

We are currently completing our annual goodwill impairment analysis in accordance with accounting standards. This analysis is used to determine whether there might be a non-cash impairment of goodwill for the quarter and year endedDecember 31, 2009. An update on this analysis will be discussed in our upcoming Form 10-K.

2010 Outlook and Earnings Guidance

Commenting on our outlook, Mr. Hickey stated:

"As we celebrate Sealed Air's 50^th anniversary, we are transitioning into 2010 with good momentum. After a significant commitment in recent years to reduce our cost structure and align our business for growth in developing regions, we believe we are well positioned to capture the opportunities that lie ahead. We are focusing on new products and technology platforms and are pursuing new opportunities in new market applications. While many of our end markets continue to show some weakness today, we are anticipating a modest recovery and an average constant dollar sales growth of 4-6% in 2010. We expect this growth to be led by a double-digit percent sales increase in our extensive developing region footprint."

Presently, we are assuming a mid-single digit percent increase in resin prices largely driven by North American commodity-class resins. We will be closely monitoring any resin cost changes and will prudently manage those situations as they arise. For foreign currency translation, we have assumed the U.S. dollar averages $1.43 per euro in 2010. In addition, we are targeting operating expenses to be at 16-17% of net sales. We are assuming a full year effective tax rate of 27.0% and capital expenditures are estimated to be $80 to $100 million. We are estimating depreciation and amortization to be $155 million and are assuming approximately $40 million for non-cash, long-term, share-based compensation. Free cash flow is expected to exceed $300 million for the full year 2010.

As a result, we anticipate full year 2010 EPS to be in the range of $1.48 to $1.68, or $1.50 to $1.70 on an adjusted basis, excluding a $0.02 charge related to the remaining portion of GMS. The pace of volume recovery and price/mix are the determining factors in the range. This guidance assumes an incremental $10 million of benefits from our GMS program in 2010, bringing the full annual estimated benefit run rate to $55 million. Our guidance does not factor in the payment of the W. R. Grace settlement as the exact timing of the settlement is unknown. Our guidance also excludes any foreign exchange losses that may be recognized in 2010 related to the recent currency devaluation in Venezuela.

Business

For fifty years, Sealed Air has been a leading global innovator and manufacturer of a wide range of packaging and performance-based materials and equipment systems that now serve an array of food, industrial, medical, and consumer applications. Operating in 52 countries, Sealed Air's international reach generated revenue of $4.2 billion in 2009. With widely recognized brands such as Bubble Wrap^(R) brand cushioning, Jiffy^(R) protective mailers, Instapak^(R) foam-in-place systems and Cryovac^(R) packaging technology, Sealed Air continues to identify new trends, foster new markets, and deliver innovative solutions to its customers. For more information about Sealed Air, please visit the Company's web site at www.sealedair.com.

Non-U.S. GAAP Information

In this press release, we have included several non-GAAP financial measures, including adjusted EPS, adjusted 2010 EPS guidance, free cash flow, operating margin excluding charges, and a number of items where we say "excluding foreign exchange." We present results and guidance, adjusted to eliminate the effects of specified items that would otherwise be included under U.S. GAAP, to aid in comparisons with other periods or prior guidance. We may use EPS and growth in net sales to determine performance-based compensation. Our management uses financial measures, excluding the effects of currency translation, in evaluating operating performance. Thus, management believes that this information may be useful to investors. For important information on our use of non-GAAP financial measures, see the attached supplementary information entitled "Reconciliation of Diluted Net Earnings per Common Share," "Free Cash Flow," "Reconciliation of Net Earnings Available to Common Stockholders to EBIT, EBITDA and Adjusted EBITDA" and "Components of Change in Net Sales."

Forward-Looking Statements

Sealed Air has provided certain forward-looking statements in this press release such as those in the Outlook section above. Forward-looking statements can be identified by such words as "anticipates," "expects," "will" and similar expressions. A variety of factors may cause actual results to differ materially from these expectations, including: economic conditions affecting packaging utilization; changes in raw material costs; currency translation and devaluation effects; non-cash impairment of goodwill, and legal proceedings. For more extensive information, see "Risk Factors" and "Cautionary Notice Regarding Forward-Looking Statements," which appear in our most recent Annual Report on Form 10-K as revised and updated by our Forms 10-Q and 8-K, as filed with the SEC.