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BADGER PAPER
For Immediate Release
Contacts: Badger Paper:
William H. Peters, CFO
715-582-5203
Badger Reports Second Quarter 2004 Loss
Peshtigo, WI - July 30, 2004 - Badger Paper Mills, Inc. (Nasdaq SmallCap: BPMI)
Badger Paper Mills, Inc., one of the nation's leaders in the manufacture of
flexible packaging and specialty papers, reported a loss of $1,668,000 during
the second quarter of 2004 compared to a loss of $557,000 for the same period
last year. After two quarters, Badger has incurred a loss of $3,544,000 compared
to a loss of $1,578,000 for the same period in 2003.
"The Company continues to see increasing costs. The costs for pulp and other raw
materials increased during the second quarter of 2004 and natural gas prices are
at historically high levels." reported Ronald Swanson, Badger's President and
Chief Executive Officer. "Late in the second quarter the Company successfully
completed a 20% reduction in labor force at its Peshtigo manufacturing
operations. Work force redesign implementation resulted in higher training costs
in the second quarter of 2004," stated Swanson.
"While market conditions have improved, the Company was not able to raise prices
during the second quarter of 2004. Higher costs along with no improvement in
pricing resulted in the loss for the quarter. In spite of these higher costs, we
continue to focus on what we need to do to be profitable in the future by
reducing operating costs, improving efficiencies, optimizing product mix and
introducing new products. The financial impact of our workforce redesign efforts
are expected to take place in the third quarter of 2004. Badger has also
announced a price increase effective for shipments in July for all of its paper
products." Swanson said.
Net sales for the second quarter of 2004 increased to $19,118,000 compared to
$18,636,000 for the second quarter of 2003. After two quarters of 2004, net
sales were $36,496,000 compared to $38,305,000 for the same period of 2003.
Badger Paper Mills, Inc.
Page 2
Forward-Looking Statements
This release may contain one or more "forward-looking statements" that may state
the Company's or management's intentions, hopes, beliefs, expectations or
predictions for the future. In this release, statements containing words such as
"expect," "anticipate," "believe," "estimate," "goal," "objective" or similar
words are intended to identify forward-looking statements. In making such
forward-looking statements, the Company undertakes no obligation to publicly
update or revise any such statements.
Forward-looking statements of the Company are based on information available to
the Company as of the date of such statements and reflect the Company's
expectations as of such date, but are subject to risks and uncertainties that
may cause actual results to differ materially from those projected, expressed or
implied by such forward-looking statements. In addition to specific factors,
which may be described in connection with any of the Company's forward-looking
statements, factors that could cause actual results to differ materially
include:
- Increased competition from domestic or foreign paper producers, or
providers of alternatives to the Company's products, including
increases in competitive production capacity and/or weakness in
demand for paper products
- Changes in the price of pulp, the Company's main raw material.
The Company purchases all of its pulp on the open market and price
changes for pulp have a significant impact on the Company's costs
- Interruptions in the supply of, or increases and/or changes in the
price of energy (principally electricity and natural gas) that
the Company needs in its manufacturing operations
- Changes in demand for the Company's products due to overall
economic activity affecting the rate of consumption of the
Company's paper products, growth rates of the end markets for the
Company's products, technological or consumer preference changes
and acceptance of the Company's products by the markets it serves
Further information about risks and uncertainties discussed above as well as
additional material risks related to the Company's business can be found in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003 and
other filings the Company has made from time to time with the Securities and
Exchange Commission.
Financial Tables Follow
Badger Paper Mills, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in Thousands except For Three Months Ended For Six Months Ended
Per share Data) June 30 June 30
----------------------------------- ---------------------------------
2004 2003 2004 2003
Net Sales $19,118 $18,636 $36,496 $38,305
Cost of Sales 19,380 17,993 36,021 37,656
----------------------------------- ---------------------------------
Gross Profit (262) 643 475 649
Selling and Administrative 1,246 1,380 2,439 2,841
Expenses
Restructuring Cost 0 0 1,303 0
----------------------------------- ---------------------------------
Operating Loss (1,508) (737) (3,267) (2,192)
Interest Expense (166) (112) (289) (209)
Interest Income 1 1 2 3
Other Income 5 4 10 7
----------------------------------- ---------------------------------
Loss Before Income Taxes (1,668) (844) (3,544) (2,391)
Income Tax Benefit 0 (287) 0 (813)
----------------------------------- ---------------------------------
Net Loss ($1,668) ($557) ($3,544) ($1,578)
=================================== =================================
Net Loss Per Share - Basic ($0.82) ($0.27) ($1.74) ($0.78)
Average Shares Outstanding -
Basic 2,039,588 2,032,165 2,039,558 2,032,909
Net Loss Per Share - Diluted ($0.82) ($0.27) ($1.74) ($0.78)
Average Shares Outstanding -
Diluted 2,032,165 2,032,165 2,039,588 2,032,909