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 SECOND QUARTER 2004 RESULTS
YORK, PA, JULY 22, 2004: Glatfelter (NYSE: GLT) today reported a loss from
continuing operations of $1.6 million, or $0.04 per diluted share, for the
second quarter of 2004 compared to income of $682 thousand, or $0.02 per diluted
share, in the same quarter of 2003. The decline in earnings 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.
"During the second quarter, our Engineered Products and Long Fiber & Overlay
Papers business units continued to produce attractive volume growth," said
George H. Glatfelter II, Chairman and Chief Executive Officer. "In addition,
continuing a trend that began in the first quarter of 2004, pricing and demand
in our Printing & Converting Papers business unit strengthened throughout the
quarter, reversing the declining conditions experienced throughout 2003.
Although these conditions are encouraging, we continue to be committed to
executing our strategies to reposition our product portfolio by focusing our
resources on those markets with more attractive growth characteristics while
aggressively reducing our cost structure."
Net sales totaled $129.0 million for the second quarter of 2004 compared to
$129.6 million for the year-earlier quarter. Unit volumes sold in the Company's
Engineered Products and Long Fiber & Overlay Papers business units increased
8.6% and 17%, respectively, in the quarter-to-quarter comparison. Lower selling
prices and a 10% decline in unit volumes in the Printing & Converting Papers
business unit more than offset the growth in Engineered Products' and Long
Fiber & Overlay Papers' results. The decline in Printing & Converting Papers'
revenue resulted from the fourth quarter of 2003 shutdown of a papermaking
machine at the Company's Neenah, WI facility, and the unfavorable effects on net
sales from declining prices experienced throughout 2003. Pricing for Printing &
Converting Papers' products improved in the second quarter of 2004 and prices
for certain of the unit's product offerings are expected to increase further
during the third quarter of this year. The favorable effect of a weaker U.S.
dollar on translated results of international operations increased reported net
sales by approximately $2.4 million. However, the weaker U.S. dollar relative to
the Euro adversely affected the price competitiveness of Long Fiber & Overlay
Papers' products.
For the three months ended June 30, 2004 and 2003, costs of products sold
totaled $115.9 million and $114.1 million, respectively. The $1.8 million
increase was primarily due to production inefficiencies associated with
implementation issues related to the fourth quarter 2003 restructuring of the
Company's Neenah, WI facility, product mix changes and the unfavorable effect of
foreign currency translation adjustments. During the second quarters of 2004 and
2003, the Company completed its annually scheduled maintenance shutdown of its
Spring Grove, PA facility. These shutdowns result in increased maintenance
spending and reduced production leading to unfavorable manufacturing variances
that negatively affect costs of products sold. Gross profit for the second
quarter of 2004 totaled $16.0 million compared to $18.6 million in the
comparable quarter of 2003. The Spring Grove maintenance shutdown had an
estimated impact on gross profit of approximately $5.5 million in the second
quarter of 2004 and $6.1 million in the comparable quarter a year ago.
Selling, general and administrative ("SG&A") expenses in the second quarter of
2004 totaled $15.7 million compared with $14.7 million in the year-earlier
quarter. The $1.0 million increase was
primarily due to higher legal fees related to $25.5 million of insurance
recoveries received in 2004, and to costs associated with implementing the North
American Restructuring Program.
Restructuring charges in the second quarter of 2004 totaled $867 thousand for
severance and related benefits associated with the elimination of salaried
positions in connection with the North American Restructuring Program and for
increases to the 2003 Neenah restructuring accrual.
For the first six months of 2004, earnings from continuing operations totaled
$34.6 million or $0.79 per diluted share, compared to $27.4 million and $0.63
per share, respectively, for the comparable period in 2003. The results for the
first six months of 2004 benefited from after-tax gains totaling $35.0 million,
or $0.80 per share, from the sales of timberlands and the corporate aircraft and
from insurance recoveries. The results for the first six months of 2003
included an after-tax gain of $20.0 million, or $0.46 per share, on the sale of
timberlands. Net sales totaled $261.1 million for the six months
ended June 30, 2004, compared to $271.9 million for the year-earlier period.
Gross profit for first half of 2004 totaled $36.5 million compared to $48.6
million in the comparable period of 2003 and SG&A expenses totaled $30.5 million
compared with $29.8 million.
North American Restructuring Program
The North American Restructuring Program, which was initiated in the second
quarter of 2004, is designed to improve operating results by enhancing product
and service offerings in Printing & Converting Papers' book publishing markets,
reducing our workforce at our Spring Grove facility by approximately 20%, and
implementing improved supply chain management processes. 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.
During the second quarter of 2004, the Company eliminated certain positions not
represented by labor unions. Further, the Company negotiated a new labor
agreement that enables it to achieve targeted workforce reduction levels at our
Spring Grove, PA facility. The union membership at this location ratified the
agreement on July 20, 2004. Based on this contract, the Company expects to
record, in the third quarter of 2004, a restructuring charge of between
approximately $9 million to $20 million, primarily for pension and other
retirement benefits and severance costs.
"Ratification of this agreement is a key component of our North American
Restructuring Program. We worked very closely with our labor representatives at
the Spring Grove facility and are pleased we were able to reach an appropriate
and acceptable agreement for all parties involved. We look forward to continuing
our strong and progressive relationship with our unionized employees and their
representatives as we strengthen and reposition our Company," stated Mr.
Glatfelter. "In addition, we are making significant progress implementing other
initiatives of the North American Restructuring Program including the
introduction of Performance Plus, our redesigned product portfolio and service
program designed specifically for the book publishing industry. We are also
implementing new sourcing strategies that we believe will allow us to more
effectively manage our cost structure and improve working capital."
In September 2003, the Company announced a restructuring program designed to
generate annual pre-tax financial benefits at our Neenah facility of $8 million
to $11 million. As of June 30, 2004, the Company had largely completed the
planned restructuring of the Neenah facility that included the shutdown of the
recycled pulp mill and one paper machine and a 50% workforce reduction at the
facility. However, as a result of this facility's higher purchased fiber and
energy costs, and transition-related operating inefficiencies, the Company now
expects that the actions taken at Neenah will not lead to a realization of the
financial benefits originally expected to be achieved in 2004. The Company
continues to expect that the benefits of the Neenah restructuring will be more
fully reflected in the operating results of the facility as transition related
issues are resolved and when fiber and energy costs return to more normalized
levels.
Mr. Glatfelter added, "Despite the challenges presented by the significant
changes being made to our business, we are encouraged by a number of positive
developments during the quarter. The overall strengthening of both demand and
pricing are indications of improving conditions within our industry. In
addition, we are successfully implementing many of the initiatives of our North
American Restructuring Program which are designed to strengthen the financial
performance of our business."
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 these factors is contained in Glatfelter's filings with
the U.S. Securities and Exchange Commission.
As previously announced, the Company will hold a conference call today at 11:00
AM EST to discuss its second 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 at 10:55 AM (EDT) on July 22,
2004. A taped replay of the conference call will be available within two hours
of the conclusion of the call and until July 29, 2004. To access the taped
replay, call (973) 341-3080 and enter conference PIN 4969423. The replay of the
conference call also will be available on our website for at least one month
following the call.
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
In thousands, except per share data 2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales $129,029 $129,620 $261,106 $271,906
Energy sales - net 2,894 2,775 5,308 5,052
-------- -------- -------- --------
Total revenues 131,923 132,395 266,414 276,958
Costs of products sold 115,881 114,126 229,873 228,382
-------- -------- -------- --------
Gross profit 16,042 18,629 36,541 48,576
Selling, general and administrative expenses 15,691 14,737 30,513 29,771
Restructuring charges 867 - 867 -
Gains on dispositions of plant, equipment and timberlands,
net (392) (854) (33,430) (31,401)
Gains from insurance recoveries (300) - (25,500) -
-------- -------- -------- --------
Operating income 176 4,386 64,091 50,206
Nonoperating income (expense)
Interest expense (3,280) (3,655) (6,695) (7,054)
Interest income 453 500 896 687
Other - net (271) (153) (58) (1,043)
-------- -------- -------- --------
Total other income (expense) (3,098) (3,308) (5,857) (7,410)
-------- -------- -------- --------
Income (loss) from continuing operations before income taxes (2,922) 1,078 58,234 42,796
Income tax provision (benefit) (1,293) 396 23,604 15,425
-------- -------- -------- --------
Income (loss) from continuing operations (1,629) 682 34,630 27,371
Discontinued operations
Income (loss) from discontinued operations - (648) - (513)
Income tax benefits - 235 - 188
-------- -------- -------- --------
Income (loss) from discontinued operations - (413) - (325)
-------- -------- -------- --------
Net income (loss) $(1,629) $269 $34,630 $27,046
======== ======== ======== ========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations $(0.04) $0.02 $0.79 $0.63
- (0.01) - (0.01)
-------- -------- -------- --------
Net income (loss) $(0.04) $0.01 $0.79 $0.62
======== ======== ======== ========
-more-
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30
In thousands 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOW DATA
Cash provided (used) by continuing operations
Operating activities $16,832 $31,953
Investing activities 22,987 (44,468)
Financing activities (43,968) 6,639
Depreciation, depletion and amortization 26,380 25,153
Capital expenditures 11,121 45,548
BALANCE SHEET DATA (END OF PERIOD)
Cash and cash equivalents $11,096 $27,423
Total assets 1,024,283 1,023,069
Total debt 216,823 247,255
Shareholders' equity 396,139 388,236
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