EXHIBIT 99.1
For Immediate Release Contact: Helen Marsteller
717-845-1098
GLATFELTER REPORTS FULL YEAR AND FOURTH QUARTER 2003 RESULTS
YORK, PA, FEBRUARY 6, 2004:
FULL YEAR RESULTS
Glatfelter (NYSE: GLT) today reported full year 2003 income from continuing
operations of $13.0 million, or $0.30 per diluted share, compared to $37.6
million, or $0.86 per diluted share, in 2002. The 2003 results include an
after-tax gain of $20.0 million from the sale of timberlands and after-tax
charges of $18.0 million related to the Neenah restructuring initiative, a
reserve related to its former Ecusta Division and asset writedowns at the Spring
Grove, PA and Gernsbach, Germany facilities. The 2002 results include an
after-tax gain of $2.3 million from the settlement of an escrow agreement and
after-tax charges of $4.2 million related to a workforce reduction and
environmental matters.
Excluding these items for each year, adjusted earnings for 2003 were $11.0
million, or $0.25 per diluted share compared to adjusted earnings of $39.5
million or $0.90 per diluted share in 2002. The decline in earnings was
primarily due to lower sales volumes and selling prices in the Company's
Printing & Converting Papers business unit and higher costs of products sold,
primarily due to lower non-cash pension income, higher raw material prices and
increased market related downtime. The weaker U.S. dollar had an estimated
favorable impact on net income of approximately $4.2 million in 2003.
2003 SUMMARY
- Experienced difficult market conditions in its Printing & Converting
Papers business unit, resulting in a decline in revenue of $35
million, or 12.3%.
- Increased unit volumes in Engineered Products by 8.8% and in Long
Fiber & Overlay Papers by 8.5%.
- Achieved 47% of total sales from new products introduced in the last
five years.
- Restructured the Neenah operations to reduce costs and improve
flexibility.
- Completed a $30 million investment in a new, state-of-the-art,
inclined wire papermaking machine in Gernsbach, Germany to support
growth initiatives in Long-Fiber & Overlay Papers.
- Strengthened the Company's financial position by completing a $37
million sale of timberlands and revising our dividend policy.
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Glatfelter Reports Full Year and Fourth Quarter 2003 Results
FOURTH QUARTER RESULTS
For the fourth quarter of 2003, the Company reported a loss of $7.7 million, or
$0.18 per diluted share. These results include pre-tax charges of $11.4 million
for the previously announced restructuring of its Neenah, WI facility and $0.7
million for the write-off of a papermaking machine at the Company's Spring
Grove, PA facility. On an after-tax basis, these charges totaled $7.7 million,
or $0.18 per diluted share. For the 2002 fourth quarter, the Company earned $5.6
million, or $0.13 per diluted share, including charges of $4.2 million,
after-tax, related to the 2002 workforce reduction and for certain environmental
matters.
Excluding the items discussed above, adjusted earnings for the fourth quarter of
2003 were break even, compared to adjusted earnings of $9.8 million, or $0.22
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 sales volumes and selling prices in the Printing & Converting Papers
business unit and higher costs of products sold, primarily due to lower non-cash
pension income and higher raw material prices. In addition, lower volumes and
increased market-related downtime had an unfavorable effect on our production
costs in North America. The weaker U.S. dollar had an estimated favorable impact
on net income of approximately $1.3 million in the fourth quarter of 2003.
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 are designed to improve profitability,
enhance operating flexibility and will result in the elimination of
approximately 200 jobs. The results of operations in the fourth quarter of 2003
include related pre-tax charges of $11.4 million, of which $5.0 million is
reflected in the consolidated income statement as components of cost of products
sold and $6.4 million is reflected as "Restructuring charges." Additional
charges related to the Neenah restructuring may be recorded in 2004, depending
on the resolution of certain contractual matters.
Net sales totaled $131.8 million for the fourth quarter of 2003 compared to
$139.6 million for the year-earlier quarter, a decrease of $7.8 million, or
5.6%. The decline was primarily attributable to weaker demand and pricing
pressure in the Printing & Converting Papers business unit. Increased unit
volumes of approximately 20% in the Engineered Products business unit and the
favorable effect of a weaker U.S. dollar on translated results of international
operations partially offset Printing & Converting's adverse results.
For the three months ended December 31, 2003 and 2002, costs of products sold
totaled $120.7 million and $110.1 million, respectively. As discussed above, the
2003 fourth quarter costs of products sold includes a $5.0 million pre-tax
charge for accelerated depreciation on equipment abandoned during the Neenah
restructuring and $0.7 million to write-off of a Spring Grove papermaking
machine. Excluding these charges, costs of products sold increased $4.9 million
in the comparison, notwithstanding lower sales volumes, primarily due to the
unfavorable effect of a weaker U.S. dollar; lower non-cash pension income;
higher raw material prices; increased market related downtime; and an increase
in reserves for workers' compensation claims. Net non-cash pension income
reduced costs of products sold in the fourth quarter of 2003 and 2002 by $3.7
million and $6.8 million, respectively, resulting from the overfunded status of
the Company's defined benefit pension plans. Gross profit for the fourth quarter
of 2003 totaled $11.0 million compared to $29.6 million in the comparable
quarter of 2002.
Selling, general and administrative ("SG&A") expenses in the fourth quarter of
2003 totaled $14.9 million compared with $11.6 million in the year-earlier
quarter. The increase was primarily due to higher depreciation, the unfavorable
effect of a weaker U.S. dollar on translated results of international
operations, and lower non-cash pension income. Net non-cash pension income
reduced reported SG&A expenses by $0.6 million in the fourth quarter of 2003 and
by $1.0 million in the fourth quarter of 2002.
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Glatfelter Reports Fourth Quarter and Full Year 2003 Results
Restructuring charges recorded in the fourth quarter of 2003 totaled $6.4
million (excluding amounts included in costs of products sold as noted above)
and primarily consisted of severance and benefit continuation costs and pension
and other post-retirement benefit curtailment costs related to the Neenah
restructuring. In the fourth quarter of 2002, the Company recorded a $4.2
million charge related to a workforce reduction initiative.
"Our operating results for the fourth quarter of 2003 reflect the imbalance
between the supply and demand in our industry, particularly in the Printing &
Converting Papers business unit," said George H. Glatfelter II, Chairman and
Chief Executive Officer. "This unit, which represented approximately 46% of our
revenue, has been challenged by significantly lower demand and adverse pricing
pressures." Mr. Glatfelter added, "We are clearly not satisfied with our
financial results and we are committed to make the additional changes necessary
to significantly improve our business. These changes include:
- Improving our product and service offerings to better align with the
changing needs of our customers.
- Aggressively reducing costs of our production facilities and supply
chain.
- Aligning our Engineered Products and Printing & Converting Papers
business units under common leadership to drive North American
operating efficiencies.
- Executing the growth strategy of our Long-Fiber & Overlay Papers
business unit effectively.
- Reducing 2004 capital expenditures to approximately half of
depreciation expense.
We expect to generate significant cost reductions and profit improvements from
these efforts, which will be quantified and communicated by the end of the first
quarter of 2004."
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.
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Glatfelter Reports Fourth Quarter and Full Year 2003 Results
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, execution of our growth strategies and cost reduction initiatives,
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 11:00
Eastern to discuss its fourth quarter and full year results. Interested persons
who wish to hear the conference call webcast live should go to the web site a
sufficient amount of time before the starting time to register and download and
install any necessary audio software.
You may also participate by calling (973) 935-8506 today at 10:55 a.m. EST. A
taped replay of the conference call will be available within two hours of the
conclusion of the call until February 13, 2004. The number to call for the taped
replay is (877) 519-4471 and the conference PIN is 4410973. The replay of the
conference call also will be available on our website for at least one month
following the call.
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GLATFELTER
YORK, PENNSYLVANIA
SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
In thousands, except per share data 2003 2002 2003 2002
---------- ---------- ---------- ----------
Net sales $ 129,383 $ 137,261 $ 533,193 $ 540,347
Energy sales - net 2,373 2,380 10,040 9,814
---------- ---------- ---------- ----------
Total revenues 131,756 139,641 543,233 550,161
Cost of products sold 120,743 110,070 463,687 423,880
---------- ---------- ---------- ----------
Gross profit 11,013 29,571 79,546 126,281
Operating expenses
Selling, general and administrative expenses 14,850 11,627 59,146 53,699
Restructuring charges 6,381 4,249 6,983 4,249
Unusual items -- 1,500 11,501 (2,008)
Losses (gains) on disposition of plant, equipment and
timberlands, net (1,190) 671 (32,334) (1,304)
---------- ---------- ---------- ----------
Total operating expenses 20,041 18,047 45,296 54,636
---------- ---------- ---------- ----------
Operating income (loss) (9,028) 11,524 34,250 71,645
Other nonoperating income (expense)
Interest expense on debt (3,541) (3,873) (14,269) (15,103)
Interest income on investments and other - net 569 353 1,820 1,571
Other - net (146) 978 (1,385) 1,016
---------- ---------- ---------- ----------
Total other income (expense) (3,118) (2,542) (13,834) (12,516)
---------- ---------- ---------- ----------
Income (loss) from continuing operations before income
taxes (12,146) 8,982 20,416 59,129
Income tax provision (benefit) (4,426) 3,393 7,430 21,492
---------- ---------- ---------- ----------
Income (loss) from continuing operations $ (7,720) $ 5,589 $ 12,986 $ 37,637
Discontinued operations
Income (loss) from discontinued operations -- (7) (513) (64)
Income tax benefit -- (2) (188) (22)
---------- ---------- ---------- ----------
Loss from discontinued operations -- (5) (325) (42)
---------- ---------- ---------- ----------
Net income (loss) $ (7,720) $ 5,584 $ 12,661 $ 37,595
========== ========== ========== ==========
EARNINGS (LOSS) PER SHARE
BASIC
Income (loss) from continuing operations $ (0.18) $ 0.13 $ 0.30 $ 0.87
Net loss from discontinued operations -- -- (0.01) --
---------- ---------- ---------- ----------
Net income (loss) $ (0.18) $ 0.13 $ 0.29 $ 0.87
========== ========== ========== ==========
DILUTED
Income from continuing operations $ (0.18) $ 0.13 $ 0.30 $ 0.86
Net loss from discontinued operations -- -- (0.01) --
---------- ---------- ---------- ----------
Net income (loss) $ (0.18) $ 0.13 $ 0.29 $ 0.86
========== ========== ========== ==========
This press release of results of operations 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 DECEMBER 31
2003 2002
----------------- ----------------
In thousands, except per share data INCOME EPS INCOME EPS
----------------------------------- ------ --- ------ ---
Income (loss) from continuing operations $ (7,720) $ (0.18) $ 5,589 $ 0.13
Restructuring related charges 7,258 0.17 2,719 0.06
Asset writedowns 433 0.01 -- --
Unusual items -- -- 1,500 0.03
-------- -------- -------- --------
Adjusted income (loss) $ (29) $ 0.00 $ 9,808 $ 0.22
======== ======== ======== ========
YEAR ENDED DECEMBER 31
2003 2002
----------------- ----------------
In thousands, except per share data INCOME EPS INCOME EPS
----------------------------------- ------ --- ------ ---
Income (loss) from continuing operations $ 12,986 $ 0.30 $ 37,637 $ 0.86
Gain on sale of timberlands (19,965) (0.46) -- --
Restructuring related charges 8,582 0.20 2,719 0.06
Ecusta related reserves 7,315 0.17 1,500 0.03
Asset writedowns 2,124 0.05 -- --
Escrow settlement -- -- (2,315) (0.05)
-------- -------- -------- --------
Adjusted income $ 11,042 $ 0.25 $ 39,541 $ 0.90
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The sum of individual per share amounts set forth above may not agree to
adjusted income per share due to rounding.