OTHER OPERATING (INCOME) EXPENSE, NET
For the second quarter of 2012, other operating income and expense included $4.4 million of fiscal incentive income, compared to $5.4 million for the second quarter of 2011. Fiscal incentives are associated with net sales and manufacturing activities in certain South American operations and are included in flexible packaging segment operating profit.
CAPITAL STRUCTURE AND CASH FLOW
Net debt (defined as total debt less cash) to adjusted EBITDA (defined as, for the last twelve month period, adjusted operating income plus depreciation and amortization) was 2.3 times at June 30, 2012. Cash provided by operating activities for the second quarter of 2012 was $94.5 million after the payment of $23.5 million of pension contributions. These contributions maintain the current funded status of the U.S. pension plans above 90 percent. Management intends to direct future excess cash flow toward debt reduction during 2012 in order to reduce the ratio of net debt to adjusted EBITDA toward a target of approximately 2.0 times.2012 EARNINGS OUTLOOK Commenting on the outlook for the rest of the year, Theisen said, “We have lowered our expectation for sales volumes for the remainder of the year and adjusted guidance to reflect both lower volumes and weaker foreign currency exchange rates. We are executing our facility consolidation program to effectively deliver measurable savings in 2013 and meet our objectives for performance improvement. Our 2012 capital expenditure plan supports our key high barrier product growth initiatives in China, Brazil, and North America, but we have reduced our expected investments in other areas in light of current volume trends.” Management expects adjusted diluted earnings per share for the third quarter of 2012 to be in the range of $0.51 to $0.57. Management expects adjusted diluted earnings per share for the full year 2012 to be in the range of $2.00 to $2.10 per share. Capital expenditures are expected to be approximately $150 million for the full year 2012, a reduction from management’s previous guidance of $175 million.