For Immediate Release Contact: Helen Marsteller
717-845-1098
Glatfelter Earns $682 thousand, or $.02 per share, from Continuing
Operations in Second Quarter 2003
YORK, PA, JULY 23, 2003: Glatfelter (NYSE: GLT) today reported earnings from
continuing operations for the second quarter of 2003 of $682 thousand or $0.02
per fully diluted share, compared to $7.6 million and $0.17, respectively, for
the comparable quarter in 2002. The decline in earnings was primarily due to
lower non-cash pension income, lower sales volumes and higher costs of products
sold. In addition, during the second quarter of 2003, Glatfelter recognized a
loss from discontinued operations of $413 thousand, after tax, primarily related
to the write-down of a non-strategic subsidiary in France. Including the loss
from discontinued operations, net income for the second quarter of 2003 was $269
thousand, or $0.01 per diluted share.
"Our second quarter operating results reflect a very difficult global economic
climate," said George H. Glatfelter II, Chairman and Chief Executive Officer.
"Although our highly specialized Long Fiber & Overlay and Engineered Products
business units continued to perform relatively well, our Printing & Converting
business unit faced significant challenges during the quarter. Demand for this
business unit's products was soft and pricing pressures remained. In addition,
there is an increasing willingness by some customers to experiment with
lower-cost, lower-quality alternatives, particularly in the book publishing
market. We expect the remainder of the year to be a challenge for our Printing &
Converting business unit."
"Our management team remains committed to maximizing product profitability,
reducing costs, and improving the Company's earnings and cash flow," Mr.
Glatfelter added. "In this challenging environment we are clearly focused on
maintaining our financial discipline. In this regard, management is considering
all appropriate actions necessary to further strengthen the Company's financial
position, including re-evaluating its dividend policy."
Net sales totaled $129.6 million for the second quarter of 2003 compared to
$136.7 million for the year-earlier quarter, a decrease of $7.1 million, or
5.2%. The decline was primarily attributable to weaker demand together with
price competition in the Printing & Converting business unit. The Company's
Engineered Products business unit experienced solid sales growth in the
quarter-to-quarter comparison. The Long-Fiber & Overlay business unit also
experienced a quarter-to-quarter increase in net sales; however, this increase
was primarily due to the impact of a weaker U.S. dollar on translated results of
international operations.
GLATFELTER EARNS $682 THOUSAND, OR $.02 PER SHARE, FROM CONTINUING OPERATIONS IN
SECOND QUARTER 2003
Gross profit for the second quarter of 2003 totaled $18.3 million compared to
$28.8 million in the comparable quarter of 2002. The decrease in gross profit
reflects the impact of higher pulp, wastepaper, and energy prices and lower
non-cash pension income, which was partially offset by the favorable effect of a
weaker U.S. dollar. Gross profit includes net non-cash pension income resulting
from the overfunded status of the Company's defined benefit pension plans.
Non-cash pension income reduced costs of products sold by $3.6 million in the
second quarter of 2003 and by $6.9 million in the second quarter of 2002.
During the second quarters of 2003 and 2002, the Company completed its annually
scheduled maintenance shutdown of its Spring Grove, PA mill. In addition, due to
soft demand, the Company took market-related downtime at the Spring Grove,
Neenah, WI and Gernsbach, Germany mills. Further, in the second quarter of 2003
the Company commenced the scheduled shutdown and rebuild of a long-fiber &
overlay paper machine in Gernsbach. Shutdowns result in reduced production
leading to unfavorable manufacturing variances that negatively affect costs of
products sold.
Selling, general and administrative ("SG&A") expenses in the second quarter of
2003 totaled $14.7 million compared with $14.3 million in the year-earlier
quarter. The increase was primarily due to the unfavorable effect of a weaker
U.S. dollar on translated results of international operations and a reduced
amount of non-cash pension income. Net non-cash pension income reduced reported
SG&A expenses $0.5 million in the second quarter of 2003 and $1.4 million in the
second quarter of 2002.
For the first six months of 2003, earnings from continuing operations totaled
$27.4 million or $0.63 per fully diluted share, compared to $18.7 million and
$0.43, respectively, for the comparable period in 2002. The results for the
first six months benefited from an after-tax gain of $20.0 million, or $0.46 per
share, on the sale of timberlands during the first quarter of 2003. Net sales
totaled $271.9 million for the six months ended June 30, 2003, compared to
$268.0 million for the year-earlier period, an increase of $3.9 million. Gross
profit for first half of 2003 totaled $48.6 million compared to $63.2 million in
the comparable period of 2002 and SG&A expenses totaled $29.8 million compared
with $28.6 million.
Headquartered in York, Pennsylvania, Glatfelter is a global manufacturer of
specialty papers and engineered products. U.S. operations include facilities in
Spring Grove, PA and Neenah, WI. International operations include facilities in
Germany, France and the Philippines. Glatfelter's common stock is traded on the
New York Stock Exchange under the ticker symbol GLT.
- more -
Any statements set forth in this press release with regard to the Company's
expectations as to industry conditions, demand for or pricing of its products,
its profit improvements and cost reductions, its projected financial results or
cash flow, and other aspects of its business may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company makes such statements based on assumptions that it
believes to be reasonable, there can be no assurance that actual results will
not differ materially from the Company's expectations. Factors that could cause
or contribute to actual results differing materially from such forward-looking
statements are discussed in the Company's Securities and Exchange Commission
filings.
As previously announced, Glatfelter will hold a conference call today at 12:00
PM EST to discuss its second quarter results. The conference call may be
accessed via the Company's web site at http://www.glatfelter.com or by calling
1-973-935-8506 at 11:55 a.m. eastern time on July 23, 2003. A taped replay of
the conference call will be available within two hours of the conclusion of the
call from Wednesday, July 23, until Friday, August 1, 2003. The number to call
for the taped replay is 1-877-519-4471 and the conference PIN is 4047427.
GLATFELTER
YORK, PENNSYLVANIA
SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
In thousands, except per share data 2003 2002 2003 2002
- ----------------------------------------------------------- --------- --------- --------- ---------
Net sales $ 129,620 $ 136,693 $ 271,906 $ 267,981
Energy sales - net 2,775 2,533 5,052 4,699
--------- --------- --------- ---------
Total revenues 132,395 139,226 276,958 272,680
Cost of products sold 114,126 110,430 228,382 209,529
--------- --------- --------- ---------
Gross profit 18,269 28,796 48,576 63,151
Operating expenses
Selling, general and administrative expenses 14,737 14,273 29,771 28,627
Loss (gain) on sale of plant, equipment and timberlands, net (854) (476) (31,401) (1,044)
--------- --------- --------- ---------
Total operating expenses 13,883 13,797 (1,630) 27,583
--------- --------- --------- ---------
Operating income 4,386 14,999 50,206 35,568
Other nonoperating income (expense)
Interest expense on debt (3,655) (3,954) (7,054) (7,688)
Interest income on investments and other - net 500 820 687 1,062
Other - net (153) (25) (1,043) (3)
--------- --------- --------- ---------
Total other income (expense) (3,308) (3,159) (7,410) (6,629)
--------- --------- --------- ---------
Income from continuing operations before income taxes 1,078 11,840 42,796 28,939
Income tax provision 396 4,262 15,425 10,240
--------- --------- --------- ---------
Income from continuing operations 682 7,578 27,371 18,699
Discontinued operations
Income (loss) from discontinued operations (648) (3) (513) 1
Income tax benefits 235 1 188 --
--------- --------- --------- ---------
Loss from discontinued operations (413) (2) (325) 1
--------- --------- --------- ---------
Net income $ 269 $ 7,576 $ 27,046 $ 18,700
========= ========= ========= =========
EARNINGS PER SHARE
Basic and diluted
Earnings from continuing operations $ 0.02 $ 0.17 $ 0.63 $ 0.43
Loss from discontinued operations (0.01) (0.01) --
--------- --------- --------- ---------
Net income $ 0.01 $ 0.17 $ 0.62 $ 0.43
========= ========= ========= =========
Weighted average shares outstanding
Basic 43,717 43,406 43,699 43,180
Diluted 43,749 44,049 43,729 43,794
--------- --------- --------- ---------
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