ALPHARETTA, Ga., May 11 /CNW/ -- Neenah Paper (NYSE: NP)
reported today first quarter 2005 net income of $2.7 million, or $0.18 per
diluted common share. Results included $0.19 per share for restructuring and
asset impairment charges related to the previously announced closure of the
Terrace Bay No. 1 pulp mill. Net income in the first quarter of 2004, during
which operations were part of Kimberly-Clark, was $15.1 million or $1.03 per
diluted common share and did not include interest expense or other changes
resulting from being a stand-alone company.
FIRST QUARTER RESULTS
Consolidated net sales for the first quarter of 2005 were $196.6 million
versus $198.4 million in the first quarter of 2004. Sales in each of the paper
businesses grew as a result of higher volumes and prices, and in total
increased 4 percent. Pulp sales declined 4 percent as lower volumes and
increased discounts offset higher market prices. Operating income was $8.9
million, including $4.3 million of pre-tax charges associated with the
shutdown of the Terrace Bay No. 1 pulp mill. Operating income in the first
quarter of 2005 also was impacted by a stronger Canadian dollar, which
increased costs by approximately $8 million. Results for the first quarter of
2005 included corporate expenses of $6.7 million for administrative costs
incurred as a result of being a stand-alone company and for payments to
Kimberly-Clark as part of a transition services agreement for 2005. Operating
income in the first quarter of 2004 was $24.3 million.
Fine Paper net sales for the first quarter of 2005 grew 3 percent versus
prior year with volumes up 8 percent. Volumes were boosted by additional sales
of paper used for corporate annual reports. Operating income for fine paper in
the first quarter of 2005 was $17.0 million, compared with $18.2 million in
the first quarter of 2004. In 2005, operating income was impacted by increased
costs for fiber and allocated corporate expenses.
In the Technical Paper segment, net sales for the first quarter of 2005
versus the first quarter 2004 were up 5 percent on 4 percent volume growth.
Sales increased from higher prices and an improved product mix as well as
double-digit volume growth in overseas markets. Operating income for Technical
Paper during the first quarter was $4.7 million, compared with $7.1 million in
the same period of 2004. Oil-based latex costs were approximately $1 million
higher in 2005 compared to the prior year and the segment also incurred
increases for fiber and allocated corporate expenses.
Net sales of pulp in the first quarter of 2005 declined 4 percent compared
to the first quarter of 2004. While production levels were consistent in both
periods, sales volumes decreased 7 percent as inventories were increased
during the first quarter of 2005 to comply with contractually required safety
stock levels. Average market prices compared with the prior year quarter
increased approximately 7-10 percent, although this was offset by higher
discounts on sales to Kimberly-Clark. The pulp segment had a first quarter
2005 operating loss of $11.1 million, including the aforementioned impacts of
a stronger Canadian dollar and the Terrace Bay No. 1 mill charge. Higher costs
for raw materials, energy and allocated corporate expenses were partly offset
by lower depreciation and other manufacturing cost reductions. In the first
quarter of 2004, the pulp segment generated a loss of $1.0 million.
Commenting on results, Sean Erwin, Chairman and Chief Executive Officer
said, "We are seeing results from our initiatives and are pleased with the
continued top-line growth in both of our paper businesses. While increased
prices for raw materials and energy and a much stronger Canadian dollar
present more challenging conditions than in past years, our teams are
responding and were able to deliver over $4 million of cost savings in the
first quarter. In addition, we are following through on our plans to address
Terrace Bay's long-term competitiveness and closed the smaller No. 1 mill on
May 1. Our pulp and woodlands operations continue to represent a primary focus
area and we are pursuing actions and strategic alternatives to improve the
structure of these operations and provide increased value to our
shareholders."
AMENDED 10-K FILING
As a result of the quarterly review during 2005, it was determined that
the opening balance for net deferred income tax assets recorded as part of the
spin-off transaction on November 30, 2004 was overstated by $20.9 million.
Consequently, the amounts of deferred tax assets and additional paid-in
capital on the consolidated balance sheet and statement of stockholders'
equity as of and for the year ended December 31, 2004 will be restated. The
misstatement had no impact on previously reported 2004 net income or losses
and cash flow amounts. An amended Form 10-K will be filed with the Securities
and Exchange Commission to reflect this change.
CONFERENCE CALL
Neenah Paper's conference call to discuss first quarter earnings and other
matters of interest to investors and analysts will be held at 11 a.m. (EDT) on
May 12. The call will be simultaneously broadcast over the World Wide Web and
stockholders and others are invited to listen to the live broadcast by
following the instructions set out in the Investors section of the company's
Web site ( www.neenah.com ). A replay of the call will be available at the
same site through June 10.
About Neenah Paper, Inc.
Neenah Paper manufactures and distributes a wide range of premium and
specialty paper grades, with well-known brands such as CLASSIC(R),
ENVIRONMENT(R), KIMDURA(R) and MUNISING LP(R). The company also produces and
sells bleached pulp, primarily for use in the manufacture of tissue and
writing papers. Neenah Paper is based in Alpharetta, Georgia, and has
manufacturing operations in Wisconsin, Michigan and in the Canadian provinces
of Ontario and Nova Scotia. Additional information about Neenah Paper can be
found at the company's web site at www.neenah.com .
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking"
statements as defined in Section 27A of the Securities Act of 1933 (the
"Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the
"Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"), or in releases made by the Securities and Exchange Commission, all
as may be amended from time to time. Statements contained in this press
release that are not historical facts may be forward-looking statements within
the meaning of the PSLRA. Any such forward-looking statements reflect our
beliefs and assumptions and are based on information currently available to us
and are subject to risks and uncertainties that could cause actual results to
differ materially, including but not limited to, changes in U.S./Canadian
dollar currency exchange rates, changes in pulp prices, the cost or
availability of raw materials, unanticipated expenditures related to the cost
of compliance with environmental and other governmental regulations and the
ability of the company to realize anticipated cost savings. Forward-looking
statements are only predictions and involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information, future
events or otherwise. These cautionary statements are being made pursuant to
the Securities Act, the Exchange Act and the PSLRA with the intention of
obtaining the benefits of the "safe harbor" provisions of such laws. Neenah
Paper, Inc. cautions investors that any forward-looking statements we make are
not guarantees or indicative of future performance.
NEENAH PAPER, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
For the Three Months ended March 31,
2005 2004
Net Sales $196.6 $198.4
Cost of products sold 171.3 165.3
Gross Profit 25.3 33.1
Selling, general and
administrative expenses 12.7 9.1
Restructuring costs and asset
impairment loss(1) 4.3 -
Other income - net (0.6) (0.3)
Operating Income 8.9 24.3
Interest expense 4.7 -
Income Before Income Taxes 4.2 24.3
Provision for income taxes 1.5 9.2
Net Income $2.7 $15.1
Earnings Per Common Share:
Basic $0.18 $1.03
Diluted $0.18 $1.03
Weighted Average Common
Shares Outstanding (000s)
Basic 14,738 14,738
Diluted 14,793 14,738
Notes:
1 - For the three months ended March 31, 2005, Restructuring costs and
asset impairment loss represent costs associated with the closure of
the No. 1 Mill at Terrace Bay.
NEENAH PAPER, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In millions)
For the Three Months ended March 31,
Business Segment Data 2005 2004
Net Sales:
Fine Paper $57.9 $56.1
Technical Paper 35.9 34.1
Pulp 109.2 114.0
Intersegment Sales (6.4) (5.8)
Combined Total $196.6 $198.4
Operating Income (Loss):
Fine Paper $17.0 $18.2
Technical Paper 4.7 7.1
Pulp (11.1) (1.0)
Unallocated corporate (1.7) -
Combined Total $8.9 $24.3
Balance Sheet Data March 31, 2005 December 31, 2004
Cash and Cash Equivalents $24.4 $19.1
Working Capital(1),(4) 124.6 116.4
Total Debt 230.0 225.0
Stockholders' Equity(4) 197.8 197.1
Total Assets(4) 577.1 565.7
For the Three Months ended March 31,
Cash Flow Data 2005 2004
Cash Provided By Operating Activities $8.3 $12.7
Depreciation and amortization(2) 7.0 10.3
Capital expenditures 6.6 1.7
Pension contributions(3) 4.2 4.2
Notes:
1 - Working capital consists of all current assets and current
liabilities.
2 - Results for 2005 include approximately $0.5 million for amortization
of bond issuance costs.
3 - Amounts of cash contributed to pension trusts.
4 - Amounts for December 31, 2004 have been restated from the amounts
previously reported.
to reflect an adjustment for a restatement of deferred tax assets and
additional paid-in capital.
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