161 Wellington Road

P.O. Box 498

Brattleboro, Vermont 05302

(802) 257-0365

 

 

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On May 17, 2004, FiberMark announced its first-quarter 2004 results. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

  

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.  

 

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FOR IMMEDIATE RELEASE		Contact:	Janice C. Warren
			Director of Investor Relations and Corporate Communications
			802 257 5981

 

 

BRATTLEBORO, VERMONT, May 17, 2004—FiberMark, Inc., (OTCBB: FMKIQ) today reported a net loss of $16.9 million, or $2.38 per share, for the first quarter ended March 31, 2004, compared with a net loss of $5.4 million, or $.76 per share, for the same 2003 quarter. First-quarter results included $12.0 million, or $1.70 per share, in restructuring expenses, of which $2.0 million were cash expenditures, related to the company’s voluntary chapter 11 filing on March 30, 2004.

Net sales in the first quarter of 2004 were $112.4 million compared with $105.3 million for the same quarter in 2003, an increase of $7.1 million or 6.7%. Sales from German operations in the first quarter of 2004 were $55.6 million compared with $48.3 million in the prior-year quarter, an increase of $7.3 million or 15.1%. Excluding the translation effects of a stronger euro, which accounted for $8.1 million in sales for the first quarter compared with the prior-year quarter, sales from German operations declined by $0.8 million or 1.7%. First-quarter 2004 sales from North American operations were in line with the prior-year quarter at $56.9 million.

As of March 31, 2004, FiberMark’s cash position was $14.0 million worldwide, and revolving credit borrowings totaled $24.0 million. The $85 million revolving credit facility with GE Commercial Finance established in 2003 was replaced on April 1, 2004, with a $30 million debtor-in-possession (DIP) facility covering the FiberMark North American entities that filed for chapter 11 protection, plus a revised facility based on the earnings of our German operations. These two facilities have borrowing bases that are substantially similar to the former credit facility. The DIP facility was approved by the Bankruptcy Court on April 27, 2004, and is available as needed during the chapter 11 process to help finance North American operations. The German facility had $24.0 million of outstanding borrowings at March 31, 2004. FiberMark’s pro-forma unused borrowing capacity as of the end of the first quarter was $27.8 million.

 

“First-quarter 2004 sales improved overall versus the first-quarter of 2003 largely due to foreign exchange translation gains,” said Alex Kwader, chairman and chief executive officer. “On a euro basis, German operations sales were slightly below the strong 2003 quarter, but delivered gains in automotive filter media and nonwoven wallcovering base. Sales in North America were essentially unchanged, stemming five-years of top-line declines for North American operations, excluding acquisitions. While a significant portion of the sales decline was related to business divestitures, we are hopeful that the improving first- quarter revenues reflect economic strengthening, improving markets for our customers, market development projects and the bottoming of sales losses in North America. Within North American operations, only our technical specialties business experienced modest declines.

“A weaker product mix and pricing pressure in selected markets also hurt earnings, accounting for approximately $3.5 million of the earnings decline. Higher energy, and to a lesser degree, higher pulp costs negatively impacted results by approximately $0.4 million compared with the prior-year quarter,” Kwader said. “Pulp pricing is likely to have a greater negative effect going forward, as we realize the full effect of significant escalations in pulp pricing. On the positive side, lower product trial costs and lower fixed overhead, net of initial inefficiencies in transferring production, totaled $3.1 million. These gains are an important continuation of operational improvements.”

Commenting on cost savings initiatives first discussed last August, Kwader said that FiberMark realized $4.0 million in cost savings in 2003. In 2004 the company expects incremental savings of $10 million, as it realizes full-year benefits from its 2003 initiatives. The company also expects further savings of $1–2 million from cost-saving steps to be taken this year. Kwader expects these initiatives to generate aggregate savings of $15–16 million on an annualized basis by mid-year 2004. The company continues to pursue cost reduction opportunities across all of its operations.

In the first quarter of 2004, earnings before interest, taxes, depreciation, amortization and restructuring (EBITDAR), excluding 2004 restructuring charges related to the company’s March 30, 2004, chapter 11 filing, improved to $13.4 million compared with $12.2 million in the prior-year quarter, largely reflecting fixed cost reductions, operational productivity improvements and foreign exchange benefits. FiberMark believes that non-GAAP financial information assists investors and others by providing financial information in a format that presents comparable financial trends of ongoing business activities.

FiberMark, headquartered in Brattleboro, Vt., is a leading producer of specialty fiber-based materials meeting industrial and consumer needs worldwide, operating 11 facilities in the eastern United States and Europe. Products include filter media for transportation and vacuum cleaner bags; base materials for specialty tapes, electrical and graphic arts applications; wallpaper, building materials and sandpaper; and cover/decorative materials for office and school supplies, publishing, printing and premium packaging.

This press release contains forward-looking statements. Actual results may differ depending on the economy and other risk factors discussed in the company's Forms 10K as filed with the SEC on March 30, 2004, which is accessible on the company's Web site: www.fibermark.com.

 

(tables follow)

 

FIBERMARK, INC.
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2004 and 2003
(In thousands, except per share amounts)
Unaudited
			2004			2003
Net sales		$	112,428		$	105,270
Cost of sales			90,212			84,536
Gross profit			22,216			20,734
Selling, general and administrative expenses			12,088			12,238
Income from operations			10,128			8,496
Foreign exchange transaction loss			745			533
Other (income) expense, net			736			(43	)
Interest expense, net (excluding post-petition contractual interest of $92 in 2004)			8,948			8,699
Reorganization expense			11,985			-
Loss before income taxes			(12,286	)		(693	)
Income tax expense			4,564			4,710
Net loss		$	(16,850	)	$	(5,403	)
Basic loss per share		$	(2.38	)	$	(0.76	)
Diluted loss per share		$	(2.38	)	$	(0.76	)
Weighted average basic shares outstanding			7,066			7,066
Weighted average diluted shares outstanding			7,066			7,066

 

 

 

FIBERMARK, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
Unaudited
			March 31,			December 31,
ASSETS			2004			2003
Current assets:
Cash		$	14,025		$	6,111
Accounts receivable, net of allowances			61,784			53,752
Inventories			66,129			63,443
Prepaid expenses			2,443			1,671
Total current assets			144,381			124,977
Property, plant and equipment, net			243,617			248,194
Goodwill			8,440			8,602
Other intangible assets, net			3,630			12,745
Other long-term assets			1,548			1,601
Other pension assets			3,457			3,588
Total assets		$	405,073		$	399,707
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Revolving credit line		$	23,966		$	5,906
Current portion of long-term debt			-			3,955
Accounts payable			18,823			23,168
Accrued liabilities			16,708			22,013
Accrued income taxes payable			5,833			9,930
Deferred income taxes			639			656
Total current liabilities not subject to compromise			65,969			65,628
Long-term liabilities:
Long-term debt			-			338,749
Deferred income taxes			15,134			15,528
Other long-term liabilities			44,654			48,654
Total long-term liabilities not subject to compromise			59,788			402,931
Liabilities subject to compromise			367,521			-
Total liabilities			493,278			468,559
Stockholders' deficit
Preferred stock, par value $.001 per share;
2,000,000 shares authorized, and none issued			-			-
Series A Junior participatory preferred stock, par value $.001;
7,066 shares authorized, and none issued			-			-
Common stock, par value $.001 per share; 20,000,000 shares authorized
7,070,026 and 7,066,226 shares issued and outstanding in 2004 and 2003			7			7
Additional paid-in capital			65,496			65,496
Accumulated deficit			(165,961	)		(149,111	)
Accumulated other comprehensive income			12,288			14,791
Less treasury stock, 3,800 shares at cost in 2004 and 2003			(35	)		(35	)
Total stockholders' deficit			(88,205	)		(68,852	)
Total liabilities and stockholders' deficit		$	405,073		$	399,707

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FIBERMARK, INC.

 

Supplemental Financial Information

Reconciliation of Net Loss to EBITDAR

 

			Three Months Ended March 31,						Variance
			2004			2003			$			%
Net Loss			(16,850	)		(5,403	)		(11,447	)		-212	%
Adjustments to reconcile to EBITDAR
Income taxes			4,564			4,710			(146	)
Net interest			8,948			8,699			249
Chapter 11 reorganization expense			11,985			-			11,985
Depreciation and amortization			4,706			4,193			513
			30,203			17,602			12,601
EBITDAR			13,353			12,199			1,154			9	%
EBITDAR defined as earnings before interest, taxes, depreciation, amortization and reorganization expenses