Attached files
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| 8-K - APPVION, INC. | v175947_8k.htm |
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Appleton
Reports Fourth Quarter and Full Year 2009
Results
|
|
|
Improved
earnings, improved cash flow and lower debt strengthen the Company’s
outlook
|
Fourth
quarter
2009
|
·
|
Net
sales of $213.8 million were $11 million lower than Q4
2008
|
| · |
Average
weekly sales for Q4 2009 improved 2.5% compared to Q4 2008 (which had 14
weeks)
|
| · |
Gross
profit margin of 18.3% up 2.1%
|
| · |
Selling,
general & administrative expenses down 22.3%
|
| · |
Net
cash generated from operations of $17.1 million up $10.3
million
|
|
·
|
Sale
of C&H Packaging Company
completed
|
Full-year
2009
|
·
|
Net
sales of $862.1 million down 10.9%
|
|
·
|
Net
income of $25.1 million up $122.5 million compared to
2008
|
|
·
|
Selling,
general & administrative expenses down
17.7%
|
|
·
|
Net
cash from operations of $61.2 million, an increase of $59.5
million
|
|
·
|
Debt
reduced $93 million from its 2009 peak and debt maturities
extended
|
(Appleton,
Wis., March 1, 2010) Appleton’s 2009 net sales of $862.1 million declined 10.9
percent compared to 2008 net sales of $967.2 million. Appleton’s 2009 net income
of $25.1 million increased $122.5 million over the $97.4 million net loss in
2008.
The 2009
results include $17.7 million of alternative fuel tax credits recorded as a
reduction to cost of sales, $42.6 million of net debt extinguishment income and
a goodwill impairment charge of $6.3 million within the performance packaging
business.
The 2008
net loss includes a $47.1 million loss from the discontinued operations of
Appleton’s former subsidiary, BemroseBooth, prior to its sale in August 2008.
The net loss also includes impairment charges of $39.6 million within the
performance packaging business and $2.6 million of restructuring charges in
continuing operations.
Focused execution drove improved
results
“Our
performance in 2009 reflects the early and decisive actions we took to address
challenging and volatile market conditions. We cut spending and reduced
inventories which helped us improve cash flow and reduce debt by more than $93
million,” said Mark Richards, Appleton’s chairman, president and chief executive
officer.
“I am
proud of the determination and discipline our employees showed in serving our
customers, achieving strong results, and positioning us to win in the future,”
Richards said. “We base that optimism on the talents of our people and the
capabilities of operations. We are especially pleased with the operation of the
new coater that supports our growing thermal paper business.” He added that the
Company also gained greater flexibility to operate by revamping its capital
structure and extending debt maturities. “We will remain intensely
focused on the fundamentals of our business and serving the needs of our
customers,” Richards stated.
|
Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
2
|
March
1, 2010
Fourth
Quarter and Full Year Business Unit Results (dollars in thousands):
|
Net
Sales for the
|
Operating
Income (Loss) for the
|
|||||||||||||||
|
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||
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January
2, 2010
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January
3, 2009
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January
2, 2010
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January
3, 2009
|
|||||||||||||
|
Technical
Papers
|
$ | 188,524 | $ | 196,440 | $ | 3,739 | $ | (6,728 | ) | |||||||
|
Performance
Packaging
|
25,308 | 28,329 | (4,060 | ) | (22,356 | ) | ||||||||||
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Other
(Unallocated)
|
-- | -- | (1,308 | ) | (3,446 | ) | ||||||||||
| $ | 213,832 | $ | 224,769 | $ | (1,629 | ) | $ | (32,530 | ) | |||||||
|
Net
Sales for the
|
Operating
Income (Loss) for the
|
|||||||||||||||
|
Year
Ended
|
Year
Ended
|
|||||||||||||||
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January
2, 2010
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January
3, 2009
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January
2, 2010
|
January
3, 2009
|
|||||||||||||
|
Technical
Papers
|
$ | 762,355 | $ | 854,915 | $ | 45,638 | $ | 22,369 | ||||||||
|
Performance
Packaging
|
99,785 | 112,254 | (1,965 | ) | (34,292 | ) | ||||||||||
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Other
(Unallocated)
|
-- | -- | (11,698 | ) | (13,193 | ) | ||||||||||
| $ | 862,140 | $ | 967,169 | $ | 31,975 | $ | $(25,116 | ) | ||||||||
Technical
Papers
Technical
Papers fourth quarter 2009 net sales of $188.5 million were 4.0 percent lower
than fourth quarter 2008 net sales of $196.4 million. Fourth quarter 2008 had
one extra week. Average weekly net sales in 2009 were 3.4 percent higher
compared to 2008.
Coated
solutions average weekly net sales decreased 6.1 percent compared to fourth
quarter 2008, primarily due to lower shipment volumes and reduced prices.
Average weekly net sales of thermal papers increased 18.6 percent compared to
the prior year quarter due to a year-on-year increase in shipment volumes, while
average weekly net sales of security papers increased 16.1 percent compared to
fourth quarter 2008.
Technical
Papers fourth quarter 2009 operating income of $3.7 million increased $10.5
million over fourth quarter 2008 due to reduced manufacturing spending (+$14.5
million), favorable selling, general and administrative spending (+$8.1
million), deflation of raw material and utility costs (+$6.0 million), the
alternative fuels tax credit (+$4.7 million) and lower distribution costs (+$1.3
million) which were partially offset by unfavorable pricing and product mix
(-$23.0 million) and lower shipment volumes (-$1.1 million).
Technical
Papers net sales for 2009 were $762.4 million, 10.8 percent lower than 2008 net
sales of $854.9 million. Total year 2009 shipment volumes were 8.8 percent lower
than the same period of 2008 with 2009 international volumes 13.0 percent lower
than last year.
Coated
solutions 2009 net sales decreased $96.4 million, or 17.8 percent, compared to
2008 due to volume shortfalls in all market channels and unfavorable pricing,
product mix and market channel mix.
|
Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
3
|
March
1, 2010
Net sales
of thermal papers increased $0.9 million, or 0.3 percent, compared to 2008.
Despite a year-on-year increase in shipment volumes of 7.6 percent, aggressive
price competition negatively impacted sales revenues. Net sales of security
papers increased $2.9 million, or 8.6 percent, compared to 2008, due to higher
shipment volumes.
Technical
Papers operating income for 2009 increased $23.3 million, or over 100 percent,
to $45.6 million due to deflation of raw material and utility costs (+$27.0
million), the alternative fuels tax credit (+$17.7 million), favorable selling,
general and administrative spending (+$16.9 million), reduced manufacturing
spending (+$11.3 million), lower distribution costs (+$8.9 million) and reduced
start-up costs of the thermal coater at the West Carrollton, Ohio paper mill
(+$5.4 million) which were partially offset by unfavorable price and
mix (-$42.7 million), lower shipment volumes (-$12.2 million) and mill
curtailments to match customer demand (-$9.0 million).
Performance
Packaging
Performance
Packaging fourth quarter 2009 net sales of $25.3 million were 10.6 percent lower
than fourth quarter 2008 net sales of $28.3 million. Net sales for 2009 were
$99.8 million, which was 11.1 percent lower than net sales of $112.3 million for
the full year 2008. The decrease in revenue was due to weaker demand and lower
selling prices to the customer in response to lower resin prices.
Fourth
quarter 2009 operating loss of $4.1 million was an improvement of $18.3 million
over fourth quarter 2008. An operating loss of $2.0 million was recorded for the
full year 2009 compared to an operating loss of $34.3 million for the prior
year. Fourth quarter and full year 2009 operating results include a $6.3 million
goodwill impairment charge, while 2008 operating results included total goodwill
impairment charges of $39.6, of which, $21.9 million was recorded in the fourth
quarter.
Sale
of C&H Packaging Completed
During
second quarter 2009, Appleton committed to a formal plan to sell C&H
Packaging Company, Inc. (“C&H”). C&H, located in Merrill, Wis., was
acquired in 2003 and prints and converts flexible plastic packaging materials
for companies in the food processing, household and industrial products
industries. The assets and liabilities of C&H were reclassified to be
reported as held for sale for the year ended January 3, 2009. On
December 18, 2009, Appleton completed the sale of C&H to The Interflex
Group, Inc. receiving $16.9 million of cash and a receivable for $0.2 million. A
gain of $0.8 million was recorded as a result of this sale. Prior to the sale,
C&H was included within the performance packaging business
segment.
|
|
Other
(Unallocated)
|
Other
(unallocated) includes revenues and costs associated with new business
development activities and unallocated corporate expenses. Fourth quarter 2009
other (unallocated) operating loss decreased by $2.1 million, compared to fourth
quarter 2008. Full year 2009 other (unallocated) operating loss decreased $1.5
million, compared to 2008.
|
Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
4
|
March
1, 2010
Balance
Sheet
On
February 8, 2010, Appleton completed a voluntary refinancing of its debt to
extend debt maturities, increase liquidity, eliminate certain financial
covenants and increase financial flexibility. The refinancing included the sale
of $305.0 million of 10.5% senior secured notes due June 2015 and a new
five-year, asset-backed $100 million revolving credit facility. Proceeds from
the sale of the senior secured notes, less expenses and discounts, were $292.2
million. A majority of the proceeds from this refinancing transaction were
used to repay, and thus eliminate, the senior secured credit facilities which
included senior secured variable rate notes payable of $211.2 million, plus
interest, and the revolving credit facility of $97.1 million, plus interest.
Remaining proceeds were used to pay related fees and expenses of the
transaction.
In
September 2009, the Company completed a voluntary debt-for-debt exchange
transaction. This transaction exchanged $92.0 million of Appleton’s 8.125%
senior notes payable due June 2011 and $110.3 million of 9.75% senior
subordinated notes payable due June 2014 for $158.2 million of newly issued
11.25% second lien notes payable due December 2015. In addition, $3.6 million of
additional 11.25% notes were issued as in-kind consent fees to the note holders
agreeing to the exchange. The transaction resulted in a debt reduction of $44.1
million as well as extended maturities for a majority of the notes
payable.
During
2009, Appleton generated cash from operations of $61.2 million which is an
increase of $59.4 million over 2008. Working capital reductions contributed
$15.8 million to this year’s cash from operations. During 2009, Appleton
contributed $10 million to its pension fund. Appleton used $7.7
million for investing activities in 2009, which included $24.6 million invested
on capital projects and $16.9 million in proceeds received from the sale of
C&H. This compares to the $100.4 million used in 2008 which included $84.3
million invested in the expansion project at the West Carrollton, Ohio
facility. Finally, Appleton used $47.8 million for financing
activities in 2009, which was mainly the result of debt reduction and
redemptions of PDC common stock, compared to $57.6 million provided in 2008,
largely the result of increased debt.
|
|
Outlook
|
Richards
said the Company expects to see continued market volatility and an uneven
economic recovery. However, the Company is optimistic about 2010 due
to projected growth in sales of its thermal paper products made possible through
the capabilities of the Company’s new coater. Also, the Company’s recent
introduction of a reformulated carbonless sheet product that is guaranteed to
run on all forms of printing equipment has received strong market
response. Richards said he also expects to see continued improvement
in sales of the Company’s products to international markets. Appleton’s
Encapsys®
business, which leverages its extensive experience and success with
microencapsulation technology, is expected to continue its rapid
growth.
“The past
fifteen months have tested us and made our company more nimble, flexible and
durable,” stated Richards. He said the Company is well prepared to compete and
to extend its market positions in its core businesses despite the uncertainties
of an economic recovery. “Building on what we accomplished in 2009, we have a
plan to continue business improvement in 2010 and beyond,” said
Richards.
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Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
5
|
March
1, 2010
Earnings
release conference call
Appleton
will host a conference call to discuss its fourth quarter and 2009 results on
Tuesday, March 2, 2010, at 11:30 a.m. ET. The call will be broadcast through its
Web site, www.appletonideas.com/investors.
A replay will be available through March 31.
About
Appleton
Appleton
creates product solutions through its development and use of coating
formulations, coating applications and encapsulation technology. The Company
produces carbonless, thermal, security and performance packaging products.
Appleton, headquartered in Appleton, Wisconsin, has manufacturing operations in
Wisconsin, Ohio, Pennsylvania, and
Massachusetts, employs approximately 2,100 people and is 100 percent
employee-owned. For more information, visit www.appletonideas.com.
Media
Contact: Bill Van Den
Brandt
Manager,
Corporate Communications
920-991-8613
bvandenbrandt@appletonideas.com
Notice
regarding forward-looking statements
This news
release contains forward-looking statements. The words “will,” “may,” “should,”
“believes,” “anticipates,” “intends,” “estimates,” “expects,” “projects,”
“plans,” “seek” or similar expressions are intended to identify forward-looking
statements. All statements in this news release, other than statements of
historical fact, including statements which address Appleton’s strategy, future
operations, future financial position, estimated revenues, projected costs,
prospects, plans and objectives of management and events or developments that
Appleton expects or anticipates will occur, are forward-looking statements. All
forward-looking statements speak only as of the date on which they are made.
They rely on a number of assumptions concerning future events and are subject to
a number of risks and uncertainties, many of which are outside the Company’s
control that could cause actual results to differ materially from such
statements. These risks and uncertainties include, but are not limited to, the
factors listed under “Item 1A - Risk Factors” in the Annual Report on Form 10-K
for the year ended January 2, 2010. Many of these factors are beyond Appleton’s
ability to control or predict. Given these uncertainties, you should not place
undue reliance on the forward-looking statements. Appleton disclaims any
obligation to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
|
Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
6
|
March
1, 2010
Table 1
Appleton
Papers Inc.
Consolidated
Statements of Operations
(dollars
in thousands)
|
For
the Three
Months
Ended
|
For
the Three
Months
Ended
|
|||||||
|
January
2, 2010
|
January
3, 2009
|
|||||||
|
Net
sales
|
$ | 213,832 | $ | 224,769 | ||||
|
Cost
of sales
|
174,679 | 188,418 | ||||||
|
Gross
profit
|
39,153 | 36,351 | ||||||
|
Selling,
general and administrative expenses
|
34,441 | 44,342 | ||||||
|
Goodwill
impairment
|
6,341 | 21,961 | ||||||
|
Restructuring
costs
|
-- | 2,578 | ||||||
|
Operating
loss
|
(1,629 | ) | (32,530 | ) | ||||
|
Other
expense (income)
|
||||||||
|
Interest
expense
|
13,082 | 22,233 | ||||||
|
Debt
extinguishment expense loss (income), net
|
144 | (11,598 | ) | |||||
|
Interest
income
|
(355 | ) | (706 | ) | ||||
|
Foreign
exchange loss
|
47 | 2,523 | ||||||
|
Other
loss
|
-- | 1,538 | ||||||
|
Loss
before income taxes
|
(14,547 | ) | (46,520 | ) | ||||
|
Provision
(benefit) for income taxes
|
171 | (445 | ) | |||||
|
Net
loss
|
$ | (14,718 | ) | $ | (46,075 | ) | ||
|
Other
Financial Data:
|
||||||||
|
Depreciation
and amortization of intangible assets including impairment
|
$ | 21,938 | $ | 37,034 | ||||
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Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
7
|
March
1, 2010
Table
2
Appleton
Papers Inc.
Consolidated
Statements of Operations
(dollars
in thousands)
|
For
the
|
For
the
|
|||||||
|
Year
Ended
|
Year
Ended
|
|||||||
|
January
2, 2010
|
January
3, 2009
|
|||||||
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Net
sales
|
$ | 862,140 | $ | 967,169 | ||||
|
Cost
of sales
|
684,261 | 780,440 | ||||||
|
Gross
profit
|
177,879 | 186,729 | ||||||
|
Selling,
general and administrative expenses
|
139,563 | 169,622 | ||||||
|
Goodwill
impairment
|
6,341 | 39,645 | ||||||
|
Restructuring
costs
|
-- | 2,578 | ||||||
|
Operating
income (loss)
|
31,975 | (25,116 | ) | |||||
|
Other
expense (income)
|
||||||||
|
Interest
expense
|
51,291 | 54,267 | ||||||
|
Debt
extinguishment income, net
|
(42,602 | ) | (11,598 | ) | ||||
|
Interest
income
|
(402 | ) | (1,071 | ) | ||||
|
Litigation
settlement, net
|
-- | (22,274 | ) | |||||
|
Foreign
exchange (gain) loss
|
(958 | ) | 4,523 | |||||
|
Other
(income) loss
|
(820 | ) | 1,538 | |||||
|
Income
(loss) from continuing operations before income taxes
|
25,466 | (50,501 | ) | |||||
|
Provision
(benefit) for income taxes
|
334 | (268 | ) | |||||
|
Income
(loss) from continuing operations
|
25,132 | (50,233 | ) | |||||
|
Discontinued
operations
|
||||||||
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Loss
from discontinued operations, net of income taxes
|
-- | (47,149 | ) | |||||
|
Net
income (loss)
|
$ | 25,132 | $ | (97,382 | ) | |||
|
Other
Financial Data:
|
||||||||
|
Depreciation
and amortization of intangible assets including impairment within
continuing operations
|
$ | 68,375 | $ | 99,041 | ||||
|
Appleton
Reports Fourth Quarter and Full Year 2009 Results
|
page
8
|
March
1, 2010
Table 3
|
Appleton
Papers Inc.
|
||||||||
|
Consolidated
Balance Sheets
|
||||||||
|
(dollars
in thousands)
|
||||||||
|
January
2, 2010
|
January
3, 2009
|
|||||||
|
Cash
and cash equivalents
|
$
|
9,963 |
$
|
4,180 | ||||
|
Accounts
receivable
|
90,584 | 88,218 | ||||||
|
Inventories
|
120,942 | 124,856 | ||||||
|
Other
current assets
|
55,759 | 45,920 | ||||||
|
Assets
held for sale
|
-- | 9,327 | ||||||
|
Total
current assets
|
277,248 | 272,501 | ||||||
|
Property,
plant and equipment, net
|
405,598 | 439,301 | ||||||
|
Other
long-term assets
|
115,134 | 208,864 | ||||||
|
Assets
held for sale
|
-- | 9,255 | ||||||
|
Total
assets
|
$
|
797,980 |
$
|
929,921 | ||||
|
Accounts
payable
|
$
|
60,020 |
$
|
61,093 | ||||
|
Other
current liabilities
|
103,426 | 92,585 | ||||||
|
Liabilities
held for sale
|
-- | 2,085 | ||||||
|
Total
current liabilities
|
163,446 | 155,763 | ||||||
|
Long-term
debt
|
544,113 | 598,598 | ||||||
|
Other
long-term liabilities
|
189,815 | 282,505 | ||||||
|
Total
equity
|
(99,394 | ) | (106,945 | ) | ||||
|
Total
liabilities & equity
|
$
|
797,980 |
$
|
929,921 | ||||