For Immediate Release Contact: Helen Marsteller
717-845-1098
Glatfelter Reports Third Quarter 2003 Results
YORK, PA, OCTOBER 22, 2003: Glatfelter (NYSE: GLT) today reported a net loss
for the third quarter of 2003 of $6.7 million, or $0.15 per diluted share. The
2003 third quarter operating results include pre-tax charges totaling $16.3
million, consisting of $2.1 million for the previously announced restructuring
of the Company's Neenah, WI facility, an $11.5 million reserve for costs
expected to be incurred related to its former Ecusta Division and $2.7 million
of asset writedowns at the Spring Grove, PA and Gernsbach, Germany facilities.
On an after-tax basis, the charges totaled $10.3 million, or $0.23 per diluted
share. For the 2002 third quarter, the Company earned $13.3 million, or $0.30
per diluted share, including an after-tax gain of $2.3 million, or $0.05 per
share, related to a settlement with the prior owner of the Company's Schoeller
& Hoesch Division. Excluding all of the charges discussed above, adjusted
earnings in the third quarter of 2003 were $3.7 million, or $0.08 per diluted
share, compared to adjusted earnings of $11.0 million, or $0.25 per diluted
share in the year-earlier quarter. On this basis, the decline in operating
results in the quarter - to-quarter comparison was primarily due to lower
non-cash pension income, lower sales volumes and higher costs of products sold.
"The third quarter results are affected by a number of significant actions
taken to reallocate resources and eliminate unprofitable assets," said George
H. Glatfelter II, Chairman and Chief Executive Officer. "In addition, the
results reflect charges for potential financial exposure emanating from our
former Ecusta Division. Although the need for this reserve is disappointing, I
believe the clarity provided by the recent Ecusta related developments coupled
with our successful negotiation of a significant portion of the Fox River
matter, is important to our shareholders and allows us to focus our energy on
executing our core business strategy."
"Consistent with earlier quarters this year, our highly specialized Long-Fiber &
Overlay and Engineered Products business units continued to perform relatively
well. We are particularly pleased with the progress demonstrated this quarter by
each of these business units," Mr. Glatfelter added. "Although our Printing &
Converting business unit continues to face a very challenging environment, we
believe the actions we announced in September demonstrate our commitment to
reposition the Company to focus on profitable growth opportunities. We remain
committed to maintaining our strong balance sheet and maximizing the value of
our assets as evidenced by the revised common stock dividend and the recently
announced $17 million land sale in Delaware."
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GLATFELTER REPORTS THIRD QUARTER 2003 RESULTS
In September 2003, the Company announced the strategic decision to reallocate
resources and permanently shut down certain equipment and processes at the
Neenah, WI facility. These initiatives, which are to be completed by the end of
2003, are designed to improve profitability and enhance operating and financial
flexibility and will result in the elimination of approximately 200 jobs. The
results of operations in the third quarter of 2003 include related pre-tax
charges of $2.1 million, of which $1.5 million are reflected in the
consolidated income statement as components of cost of products sold and $0.6
million are reflected as "Restructuring charges." Management continues to
expect additional charges in the fourth quarter of 2003.
The Company recorded a $11.5 million pre-tax charge during the third
quarter of 2003 relating to its former Ecusta Division, which was sold in 2001.
Under the Ecusta Division acquisition agreement, the Company is indemnified for
certain liabilities that have been assumed by the buyers. The Company paid the
portion of these liabilities that became due and has sought reimbursement from
the buyers. Management believes it is prudent to establish a reserve for the
recorded amounts. The third quarter 2003 charge includes $5.5 million to fully
reserve such receivables and an additional $6.0 million related to contingent
environmental liabilities.
"We are extremely disappointed that the buyers of Ecusta have not yet honored
their obligations under the acquisition agreement," added Mr. Glatfelter. "We
believe we have strong legal position in this matter and we intend to
vigorously pursue collection through all appropriate avenues."
Net sales totaled $131.9 million for the third quarter of 2003 compared to
$135.1 million for the year-earlier quarter, a decrease of $3.2 million, or
2.4%. The decline was primarily attributable to weaker demand and pricing
pressure in the Printing & Converting business unit and to lower tobacco
paper sales related to the Company's previously stated intention to eliminate
tobacco paper products. These factors more than offset the favorable effect of a
weaker U.S. dollar on translated results of international operations. The
Company's Engineered Products and Long-Fiber & Overlay business units
experienced solid sales growth in the quarter-to-quarter comparison.
For the three months ended September 30, 2003 and 2002, costs of products sold
totaled $114.6 million and $104.3 million, respectively. As discussed above, the
2003 third quarter costs of products sold includes a $1.5 million pre-tax charge
related to strategic actions announced in September 2003, specifically for
accelerated depreciation and an adjustment to net realizable value of spare
parts and supplies inventory related to equipment to be abandoned. Excluding
this charge, costs of products sold increased $8.8 million in the comparison
primarily due to lower non-cash pension income; the impact of higher pulp,
wastepaper, and energy prices; the writedown to estimated net realizable value
of certain excess inventory; and the unfavorable effect of a weaker U.S. dollar.
Net non-cash pension income reduced costs of products sold in the third quarter
of 2003 and 2002 by $3.4 million and $6.6 million, respectively, resulting from
the overfunded status of the Company's defined benefit pension plans. Gross
profit for the third quarter of 2003 totaled $20.0 million compared to $33.6
million in the comparable quarter of 2002.
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GLATFELTER REPORTS THIRD QUARTER 2003 RESULTS
Selling, general and administrative ("SG&A") expenses in the third quarter of
2003 totaled $14.5 million compared with $13.4 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 third quarter of 2003 and $1.3 million in the
third quarter of 2002.
For the first nine months of 2003, earnings totaled $20.4 million or $0.46 per
diluted share, compared to $32.0 million or $0.73 per diluted share,
respectively, for the comparable period in 2002. The results for the first nine
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
$403.8 million for the nine months ended September 30, 2003, compared to $403.1
million for the year-earlier period. Gross profit for first nine months of 2003
totaled $68.5 million compared to $96.7 million in the comparable period of 2002
and SG&A expenses totaled $44.3 million compared with $42.1 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.
Caution Concerning Forward-Looking Statements
This document includes certain "forward-looking statements" within the meaning
of the United States Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and are subject to
uncertainty and changes in circumstances. 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. Actual results may differ materially from these expectations due
to changes in, among others, industry conditions, demand for or pricing of its
products, circumstances surrounding the Neenah facility and former Ecusta
Division, global political, economic, business, competitive, market and
regulatory factors. More information about those factors is contained in
Glatfelter's filings with the U.S. Securities and Exchange Commission. This
presentation includes certain non-GAAP financial measures as defined under SEC
rules. As required by SEC rules, we have provided a reconciliation of those
measures to the most directly comparable GAAP measures, which is available
herein.
As previously announced, Glatfelter will hold a conference call today at 1:00 PM
Eastern to discuss its second quarter results. Interested parties may
participate by calling 1-973-935-8506 at 12:55 PM. A taped replay of the
conference call will be available within two hours of the conclusion of the call
from October 22, 2003 until October 31, 2003. The number to call for the taped
replay is 1-877-519-4471 and the conference PIN is 4233668. The conference call
may also be accessed via the Company's web site at http://www.glatfelter.com.
GLATFELTER
YORK, PENNSYLVANIA
SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
In thousands, except per share data 2003 2002 2003 2002
- ---------------------------------------------------------- --------- --------- --------- ---------
Net sales $ 131,904 $ 135,105 $ 403,810 $ 403,086
Energy sales - net 2,615 2,735 7,667 7,434
--------- --------- --------- ---------
Total revenues 134,519 137,840 411,477 410,520
Cost of products sold 114,562 104,281 342,944 313,810
--------- --------- --------- ---------
Gross profit 19,957 33,559 68,533 96,710
Operating expenses
Selling, general and administrative expenses 14,525 13,445 44,296 42,072
Restructuring charges 602 -- 602 --
Unusual item 11,501 (3,508) 11,501 (3,508)
Losses (gains) on disposition of plant, equipment and
timberlands, net 257 (931) (31,144) (1,975)
--------- --------- --------- ---------
Total operating expenses 26,885 9,006 25,255 36,589
--------- --------- --------- ---------
Operating income (loss) (6,928) 24,553 43,278 60,121
Other nonoperating income (expense)
Interest expense on debt (3,674) (3,542) (10,728) (11,230)
Interest income on investments and other - net 564 156 1,251 1,218
Other - net (196) 41 (1,239) 38
--------- --------- --------- ---------
Total other income (expense) (3,306) (3,345) (10,716) (9,974)
--------- --------- --------- ---------
Income (loss) from continuing operations before income
taxes (10,234) 21,208 32,562 50,147
Income tax provision (benefit) (3,569) 7,859 11,856 18,099
--------- --------- --------- ---------
Income (loss) from continuing operations (6,665) 13,349 20,706 32,048
Discontinued operations
Income (loss) from discontinued operations -- (58) (513) (57)
Income tax benefit -- (20) (188) (20)
--------- --------- --------- ---------
Loss from discontinued operations -- (38) (325) (37)
--------- --------- --------- ---------
Net income (loss) $ (6,665) $ 13,311 $ 20,381 $ 32,011
BASIC AND DILUTED EARNINGS PER SHARE
Income (loss) from continuing operations $ (0.15) $ 0.30 $ 0.47 $ 0.73
Loss from discontinued operations -- -- (0.01) --
Net income $ (0.15) $ 0.30 $ 0.46 $ 0.73
========= ========= ========= =========
Weighted average shares outstanding
Basic 43,751 43,588 43,717 43,318
Diluted 43,751 43,865 43,745 43,797
--------- --------- --------- ---------
This press release of results of operations for the three months ended September
30, 2003 includes a discussion of earnings before the effect of certain charges.
Management believes that such adjusted earnings are useful to investors as it
identifies the impact on reported results of unusual or nonrecurring charges
that are specifically identified with strategic initiatives or other unique
facts and circumstances. In addition, adjusted earnings represent one
measurement used by management and by the Company's Board of Directors to
measure operating performance.
Three Months ended September 30
2003 2002
In thousands, except per share data INCOME EPS Income EPS
- ----------------------------------- ------ --- ------ ---
Income (loss) from continuing operations $(6,665) $(0.15) $ 13,349 $0.30
Restructuring related charges 1,324 0.03 -- --
Ecusta related reserves 7,315 0.16 -- --
Asset writedowns 1,691 0.04 -- --
Escrow settlement -- -- (2,315) (0.05)
------- ------ -------- -----
Adjusted income $ 3,665 $0.08 $ 11,034 $0.25
======= ===== ======== =====
Nine Months ended September 30
2003 2002
In thousands, except per share data INCOME EPS Income EPS
- ----------------------------------- ------ --- ------ ---
Income (loss) from continuing operations $ 20,706 $0.47 $ 32,048 $0.73
Gain on sale of timberlands (19,965) (0.46) -- --
Loss on sale of certain paper making equipment 654 0.02 -- --
Restructuring related charges 1,324 0.03 -- --
Ecusta related reserves 7,315 0.17 -- --
Asset writedowns 1,691 0.04 -- --
Escrow settlement -- -- (2,315) (0.05)
-------- ----- -------- -----
Adjusted income $ 11,724 $0.27 $ 29,733 $0.68
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