.
.
.
Glatfelter First Quarter 2004 Results page 1
EXHIBIT 99.1
(LOGO)
For Immediate Release CONTACTS:
Investors: Media:
John C. van Roden William T. Yanavitch
(717) 225-2790 (717) 225-2760
GLATFELTER REPORTS FIRST QUARTER 2004 RESULTS
YORK, PA, APRIL 22, 2004: Glatfelter (NYSE: GLT) today reported first quarter
2004 income from continuing operations, after tax, of $36.3 million, or $0.83
per diluted share, compared to $26.7 million, or $0.61 per diluted share, in the
same quarter of 2003. The results for the first quarter of 2004 include
after-tax gains totaling $34.8 million from the sales of timberlands and the
corporate aircraft, and insurance recoveries associated with environmental
costs. The 2003 first quarter results include a $19.3 million after-tax gain
from the sale of timberlands, net of the write-off of certain papermaking
equipment.
Excluding these items from each quarters' results, adjusted net earnings in the
first quarter 2004 (which is reconciled to income from continuing operations on
page 6) were $1.5 million, or $0.03 per diluted share compared to $7.4 million,
or $0.17 per diluted share in the comparable quarter of 2003. On this basis, the
decline was primarily due to lower selling prices in the Company's Printing &
Converting Papers business unit and, to a lesser extent, in the Engineered
Products and Long Fiber & Overlay Papers business units.
2004 FIRST QUARTER SUMMARY
- Increased unit volumes in Engineered Products by 15% and in
Long Fiber & Overlay Papers by 7% when compared with the same
quarter a year ago.
- Achieved 55% of total sales from products introduced in the
last five years.
- Completed $30.3 million in sales of timberlands and
successfully negotiated $25.2 million in insurance recoveries
related to an environmental liability matter.
- Reduced long-term debt outstanding by approximately $36
million since the end of 2003.
- Continued focus on implementing the Long Fiber & Overlay
growth strategy.
- Developed the North American Restructuring Program designed to
improve financial performance.
"During the first quarter, our industry continued to feel the effects of the
challenges that we experienced last year. Our operating results compared with
the same time a year ago reflect the pricing decline that occurred throughout
2003, primarily in our Printing & Converting Papers business unit," said George
H. Glatfelter II, Chairman and Chief Executive Officer. "However, our 2004 first
quarter results improved from the fourth quarter of 2003. We believe that the
economic environment for the business has recently stabilized, order backlogs in
our core Printing & Converting Papers business have substantially improved when
compared with the fourth quarter of 2003, and we expect pricing improvements in
this unit during the second and third quarters. In addition, targeted markets of
our Engineered Products and Long Fiber & Overlay Papers continued to generate
attractive growth in net tons shipped."
-more-
Glatfelter First Quarter 2004 Results page 2
Net sales totaled $132.1 million for the first quarter of 2004 compared to
$142.3 million for the year-earlier quarter, a decrease of $10.2 million, or
7.2%. The decline was primarily attributable to lower volume due to certain
equipment shutdowns at the Company's Neenah, WI facility during the fourth
quarter of 2003, and price declines in the Printing & Converting Papers business
unit and, to a lesser extent, Engineered Products and Long Fiber & Overlay
Papers. The impact of these factors was partially offset by a 15% and 7% unit
volume increase in Engineered Products and Long Fiber & Overlay Papers,
respectively, and the favorable effect of a weaker U.S. dollar on translated
results of international operations. However, the weaker U.S. dollar relative to
the Euro adversely affected the price competiveness of Long Fiber & Overlay
Papers' products.
For the three months ended March 31, 2004 and 2003, costs of products sold
totaled $114.0 million and $114.3 million, respectively. A reduction in costs of
products sold due to lower sales volumes was substantially offset by the
unfavorable effect of the weaker U.S. dollar. Gross profit for the first quarter
of 2004 totaled $20.5 million compared to $30.3 million in the comparable
quarter of 2003.
The following table summarizes the effect from foreign currency translation on
2004 first quarter reported results compared to the same quarter of 2003:
Three Months
Ended March 31,
In millions 2004
----------- --------------
Favorable
(unfavorable)
Net sales $6.1
Costs of products sold (4.7)
SG&A expenses (0.6)
Income taxes and other (0.1)
--------------
Net income $0.7
--------------
The above table only presents the financial reporting impact of foreign currency
translations. It does not present the impact of certain competitive advantages
or disadvantages of operating or competing in a global, multi-currency
environment.
During the 2004 first quarter the Company completed sales of 2,340 acres of
timberland and the sale of its corporate aircraft for aggregate cash proceeds of
$33.1 million. Pre-tax gains from such asset sales included in the first quarter
of 2004 results totaled $32.4 million. In the first quarter of 2003,
approximately 25,000 acres were sold at a pre-tax gain of $31.2 million.
The Company reached successful resolution of certain claims under insurance
policies related to the Fox River environmental matter. Insurance recoveries
included in the 2004 first quarter's results of operations totaled $25.2
million. The recoveries have been fully received in cash.
-more-
Glatfelter First Quarter 2004 Results page 3
North American Restructuring Program
The North American Restructuring Program, which will begin to be implemented
during the second quarter of 2004, is the Company's initiative designed to
improve financial performance by focusing on:
- Improving product and service offerings in Printing &
Converting Paper's book publishing markets.
- Growing revenue from uncoated specialty papers.
- Targeting a Spring Grove, PA workforce reduction of
approximately 20%.
- Reducing our costs to produce by implementing improved and
expanded supply-chain management strategies and redesigning
end-to-end planning and scheduling processes.
- Reducing SG&A (selling, general and administrative) expenses
"The financial performance of our business is unacceptable and the market
dynamics in our industry demand that we change the way we do things. Although
recent changes in our business environment are certainly a positive development,
they do not mitigate the fundamental challenges that confront our industry,"
said Mr. Glatfelter. "The North American Restructuring Program is a
comprehensive series of actions that are designed to significantly reduce our
cost structure and fundamentally improve the way we go to market. The financial
benefits from these efforts will begin to phase-in during the latter part of
2004, and are expected to approximate $15 million to $20 million annually,
beginning in 2006."
The implementation of the North American Restructuring Program is expected to
result in certain one-time charges during the second or third quarters of 2004.
The extent and timing of such charges will be determined as the program is
implemented.
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 and a sales office in China. 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, successful execution of the North American Restructuring Program,
growth strategies and cost reduction initiatives, circumstances surrounding the
Neenah facility and former Ecusta Division, and global political, economic,
business, competitive, market, tax legislation and other 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.
-more-
Glatfelter First Quarter 2004 Results page 4
As previously announced, the Company will hold a conference call today at 11:00
am EST to discuss its first quarter results. Interested persons who wish to hear
the conference call webcast live should go to the Company's Investor Relations
web page at www.glatfelter.com/e/invesstock.asp and allow a sufficient amount of
time before the start of the conference to register and download any necessary
audio software.
You may also participate by calling (973) 582-2706 today at 10:55 am EST. A
taped replay of the conference call will be available within two hours of the
conclusion of the call until April 29, 2004. The number to call for the taped
replay is (973) 341-3080 and the conference PIN is 4668264. The replay of the
conference call also will be available on our website for at least one month
following the call.
-more-
Glatfelter First Quarter 2004 Results page 5
Glatfelter
York, Pennsylvania
SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION
THREE MONTHS
ENDED MARCH 31
2004 2003
--------- ---------
Net sales $ 132,077 $ 142,286
Energy sales - net 2,414 2,277
--------- ---------
Total revenues 134,491 144,563
Cost of products sold 113,992 114,256
--------- ---------
Gross profit 20,499 30,307
Selling, general and administrative expenses 14,822 15,034
Gains on disposition of plant, equipment and timberlands,
net (33,038) (30,547)
Gains from insurance recoveries (25,200) --
--------- ---------
Operating income 63,915 45,820
Nonoperating income (expense)
Interest expense (3,415) (3,399)
Interest income 443 187
Other - net 213 (890)
--------- ---------
Total other income (expense) (2,759) (4,102)
--------- ---------
Income from continuing operations before income taxes 61,156 41,718
Income tax provision 24,897 15,029
--------- ---------
Income from continuing operations 36,259 26,689
Discontinued operations
Income from discontinued operations -- 135
Income tax provision -- 47
--------- ---------
Income from discontinued operations -- 88
--------- ---------
Net income $ 36,259 $ 26,777
========= =========
EARNINGS PER SHARE
BASIC
Income from continuing operations $ 0.83 $ 0.61
-- --
--------- ---------
Net income $ 0.83 $ 0.61
========= =========
DILUTED
Income from continuing operations $ 0.83 $ 0.61
-- --
--------- ---------
Net income $ 0.83 $ 0.61
========= =========
Glatfelter First Quarter 2004 Results page 6
This press release of results of operations includes a discussion of earnings
before the effect of certain items. Management believes that such adjusted
earnings are useful to investors as it identifies the impact on reported results
of unusual or nonrecurring items 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 MARCH 31
2004 2003
-------------------- --------------------
In thousands, except per share data INCOME EPS Income EPS
- ------------------------------------ -------- ----- -------- -----
Income from continuing operations $ 36,259 $0.83 $ 26,689 $0.61
Timberland sales (18,016) (0.41) (19,965) (0.46)
Insurance recoveries (15,221) (0.35) -- --
Corporate aircraft sale (1,543) (0.04) -- --
Write-off of certain papermaking equipment -- -- 654 0.02
-------- ----- -------- -----
Adjusted net earnings $ 1,479 $0.03 $ 7,378 $0.17
======== ===== ======== =====
# # #