Exhibit 99.2
Media contact:
Gordon R. Manuel
864-282-9448
Analyst Contact:
William G. Harvey
864-282-9413
FOR IMMEDIATE RELEASE
TUESDAY OCTOBER 23, 2001
BOWATER ANNOUNCES FINANCIAL RESULTS
FOR THE THIRD QUARTER OF 2001 AND $230 MILLION TIMBERLAND SALE
GREENVILLE, SC - Bowater Incorporated (NYSE: BOW) today released its financial
results for the third quarter of 2001. These financial results reflect the
acquisition of Alliance Forest Products Inc. on September 24, 2001. Bowater
reported a net loss for the third quarter of $1.8 million, or $.04 per diluted
share, on sales of $558.8 million. These results compare with net income of
$50.0 million, or $.96 per diluted share, on sales of $671.8 million in the
third quarter of 2000. Included in the 2001 net income is a $2.7 million, or
$.05 per diluted share, gain related to asset sales, and a $9.5 million, or $.18
per diluted share, gain resulting from foreign currency changes. Before these
two items, the net loss was $.27 per diluted share.
Net income for the first nine months of 2001 was $54.5 million, or
$1.05 per diluted share, on sales of $1.7 billion. This compares with net income
of $100.9 million, or $1.90 per diluted share, on sales of $1.8 billion for the
first nine months of 2000.
In the third quarter, Bowater curtailed newsprint production by
approximately 120,000 metric tons. Market pulp production was curtailed by
approximately 35,000 metric tons. In anticipation of continued weakness in
demand, Bowater plans to take approximately 120,000 metric tons of newsprint and
approximately 25,000 metric tons of market pulp downtime in the fourth quarter.
Arnold M. Nemirow, Chairman and Chief Executive Officer said, "In the face of a
very difficult economic environment, we will continue to cut costs aggressively,
reduce capital spending where appropriate, manage production to match our
orderbook and deliver the synergies of the Alliance acquisition."
(more)
Bowater has decided to close permanently a 90,000 metric ton per year,
high cost newsprint machine at the recently acquired Coosa Pines, Alabama mill
by January 31, 2002. In connection with the closure of this machine and other
equipment at the mill, the company will eliminate approximately 300 jobs, or
about 30% of the workforce. On October 21, Bowater temporarily curtailed
production on all three newsprint machines at the mill. This curtailment of
approximately 18,000 metric tons of production is part of the estimated 120,000
metric tons of newsprint downtime to be taken by Bowater in the fourth quarter.
The Company also announced today that it has signed agreements to sell
about 264,000 acres of non-strategic fee owned and leased timberlands in the
Southeast for approximately $230 million, or $870 per acre, consisting of cash
and notes. The sales consist of two separate transactions, one to clients and
investors of Wachovia Timberland Investment Management for 147,000 acres, and
the other to investors of Hancock Timber Resource Group for 117,000 acres.
Completion of the sales is subject to normal conditions including the
availability of financing. The sales are expected to close in the fourth quarter
of 2001.
Bowater will hold a management conference call to discuss these
financial results at 10:00 AM EDT, October 23, 2001. The conference call number
is 800-450-0819 or 612-332-0342 (international). The call will also be broadcast
via the Internet. Interested parties may connect to the Bowater web site at
www.bowater.com, then follow the on-screen instructions for access to the call.
A replay of the call will be available from 1:30 PM EDT on Tuesday, October 23,
through Tuesday, October 30, on the web site or by dialing 800-475-6701 or
320-365-3844 (international) and using the access code 604736.
Bowater Incorporated, headquartered in Greenville, SC, is a global
leader in newsprint. In addition, the company makes coated and uncoated
groundwood papers, bleached kraft pulp and lumber products. The company has 12
pulp and paper mills in the United States, Canada and South Korea and 13 North
American sawmills that produce softwood and hardwood lumber. Bowater also
operates a facility that converts a groundwood base sheet to coated products.
After the sale of the Southeast timberlands this quarter, Bowater's operations
will be supported by approximately 1.5 million acres of timberlands owned or
leased in the United States and Canada and 32 million acres of timber cutting
rights in Canada. Bowater is one of the world's largest consumers of recycled
newspapers and magazines. Bowater common stock is listed on the New York Stock
Exchange, U.S. regional exchanges and the London Stock Exchange. A special class
of stock exchangeable into Bowater common stock is listed on the Toronto Stock
Exchange (TSE: BWX).
All amounts are in US dollars.
(more)
Statements in this news release that are not reported financial results
or other historical information are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. They include,
for example, statements about our business outlook assessment of market
conditions, strategies, future plans, future sales, prices for our major
products, inventory levels, capital spending and tax rates. These
forward-looking statements are not guarantees of future performance. They are
based on management's expectations that involve a number of business risks and
uncertainties, any of which could cause actual results to differ materially from
those expressed in or implied by the forward-looking statements. The risks and
uncertainties relating to the forward-looking statements in this news release
include those described under the caption "Cautionary Statement Regarding
Forward-Looking Information" in Bowater's annual report on Form 10-K for the
year ended December 31, 2000, and from time to time, in Bowater's other filings
with the Securities and Exchange Commission.
# # #
BOWATER INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in millions except per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Sales $558.8 $671.8 $1,748.9 $1,842.4
Cost of sales, excluding depreciation, amortization and
cost of timber harvested 393.9 402.3 1,155.1 1,150.5
Depreciation, amortization and cost of timber harvested 77.0 74.7 228.6 217.0
Distribution costs 38.9 43.8 120.1 127.2
Selling and administrative expense 31.1 32.5 77.1 86.8
Net gain on sale of assets (2) 4.3 0.1 83.5 3.4
--- --- ---- ---
Operating income 22.2 118.6 251.5 264.3
Other expense (income):
Interest income (1.0) (4.0) (7.6) (11.7)
Interest expense, net of capitalized interest 33.7 36.1 102.7 98.8
Foreign exchange (gain) loss (9.2) 2.2 (2.6) 7.5
Other, net (2.4) 0.1 (3.1) 0.6
---- --- ---- ---
21.1 34.4 89.4 95.2
---- ---- ---- ----
Income before income taxes and minority interests 1.1 84.2 162.1 169.1
Provision for income tax expense (1.2) 31.8 69.2 65.9
Minority interests in the net income of subsidiaries (2) 4.1 2.4 38.4 2.3
--- --- ---- ---
Net income (loss) $ (1.8) $ 50.0 $ 54.5 $ 100.9
====== ====== ======== ========
Basic earnings (loss) per common share: (3) (0.04) 0.97 1.05 1.92
===== ==== ==== ====
Average common shares outstanding (3) 52.0 51.6 51.7 52.6
==== ==== ==== ====
Diluted earnings (loss) per common share: (3) (0.04) 0.96 1.05 1.90
===== ==== ==== ====
Average common and common
equivalent shares outstanding (3) 52.0 52.1 52.1 53.1
==== ==== ==== ====
BOWATER INCORPORATED AND SUBSIDIARIES
(Unaudited, in millions of US dollars)
Consolidated Balance Sheet September 30, December 31,
2001 2000
---- ----
Current assets:
Cash and cash equivalents $ 15.8 $ 20.0
Marketable securities 0.4 0.4
Accounts receivable, net 464.1 380.8
Inventories 252.0 161.9
Other current assets 41.1 52.5
---- ----
Total current assets 773.4 615.6
----- -----
Timber and timberlands 261.1 265.2
Fixed assets, net 3,819.2 2,981.1
Notes receivable (2) - 146.0
Goodwill 848.9 866.8
Other assets 152.8 129.4
----- -----
$5,855.4 $5,004.1
======== ========
Current liabilities:
Current installments of long-term debt $ 128.1 $ 141.4
Short-term bank debt 1,009.5 485.0
Accounts payable and accrued liabilities 417.7 314.7
Income taxes payable 4.3 -
Dividends payable 10.1 10.3
---- ----
Total current liabilities 1,569.7 951.4
------- -----
Long-term debt, net of current installments 1,232.3 1,304.7
Other long-term liabilities 332.2 319.2
Deferred income taxes 593.5 508.1
Minority interests in subsidiaries (2) 86.7 123.6
Commitments and contingencies - -
Shareholders' equity 2,041.0 1,797.1
------- -------
$5,855.4 $5,004.1
======== ========
BOWATER INCORPORATED AND SUBSIDIARIES
(Unaudited, in millions of US dollars)
Nine Months Ended
-----------------
Consolidated Cash Flow September 30, September 30,
2001 2000
---- ----
Cash flows from (used for) operating activities $ 231.5 $ 273.5
------- -------
Cash flows from (used for) investing activities:
Business acquisitions & related expenditures (1) (251.0) (379.6)
Cash invested in fixed assets, timber and timberlands (173.0) (164.5)
Purchase of assets previously leased - (24.2)
Disposition of fixed assets, timber and timberlands - 5.9
Proceeds from sale of note receivable 122.6 -
Cash paid on maturity of economic hedging contracts - (20.2)
Cash from maturity of marketable securities, net - 1.7
--- ---
(301.4) (580.9)
------ ------
Cash flows from (used for) financing activities:
Cash dividends, including minority interests (2) (104.2) (38.0)
Purchase of common stock - (103.7)
Financing activities, net 169.0 443.1
Stock options exercised 0.9 2.4
Other - 0.7
--- ---
65.7 304.5
---- -----
Net decrease in cash and cash equivalents $ (4.2) $ (2.9)
====== ======
BOWATER INCORPORATED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(1) On September 24, 2001, Bowater completed its acquisition of Alliance
Forest Products Inc. (Alliance), a Canadian pulp and paper company.
Bowater acquired all of the outstanding stock of Alliance for C$13.00 in
cash plus .166 shares of Bowater Common Stock or Exchangeable Shares for
each Alliance common share. Bowater shares were valued at $46.65 per
share of Bowater Common Stock or Exchangeable Shares which represents a
six-day average, three trading days prior to March 31, 2001 (the date of
the definitive agreement), and three trading days after. The purchase
price for accounting purposes totaled approximately $499.0 million, which
excludes acquired debt. A breakdown of the $499.0 million is as follows:
(in millions)
Cash $251.0
Issuance of 5,035,863 Bowater shares and
exchangeable shares 235.0
Estimated transaction costs 13.0
-----
Total purchase price for accounting purposes,
excluding acquired debt $499.0
======
We accounted for this transaction in accordance with Statement of
Financial Accounting Standards No. 141, "Business Combinations."
Accordingly, the assets and liabilities of the acquired business are
included in the Consolidated Balance Sheet at September 30, 2001. In
addition, the operating results of Alliance for the period September 24,
2001, to September 30, 2001 are included in the Consolidated Statement of
Operations for the period ended September 30, 2001.
(2) In the third quarter of 2001, Bowater recognized a pre-tax gain on the
sale of assets of $4.3 million, or $0.05 per diluted share. In the second
quarter of 2001, Bowater recognized a net pre-tax gain on the sale of
assets of $85.0 million. This gain is primarily the result of the sale of
a note receivable and recognition of deferred income (previously in Other
Long-term Liabilities) related to a 1999 sale of timberlands. The pre-tax
gain was $84.5 million ($19.2 million after tax and minority interest). A
portion of the proceeds was dividended to the minority shareholder ($60.1
million). In April 2001, Bowater reached a final settlement in connection
with a 1999 asset sale. Bowater recognized a $5.8 million pre-tax charge
($3.6 million after tax), or $0.07 per diluted share, in the first
quarter of 2001.
(3) For the calculation of basic and diluted earnings per share for the three
and nine months ended September 30, 2001 and 2000, no adjustments to net
income are necessary. The effect of dilutive securities is not included
in the computation for the three months ended September 30, 2001 to
prevent antidilution.
A schedule of historical financial and operating statistics is available upon
request and on Bowater's web site (www.bowater.com).