AT Plastics Announces 2002 Fourth Quarter And Year-End Results.

Business Editors

BRAMPTON, Ontario--(BUSINESS WIRE)--March 11, 2003

Enhanced Product Mix, Reduced Costs, Improved Productivity Generates

17.4% Increase in EBITDA from Ongoing Businesses

AT Plastics (TSX: ATP) today announced its results for the three months and year ended December 31, 2002.

Highlights:

-- Enhanced sales mix, reduced costs, improved productivity generates 17.4% increase in EBITDA from ongoing businesses

-- Target Account Program produced 13.5% increase in sales volumes of higher-margin specialty polymers

-- Record sales volumes of films products increases share of target markets

-- Solid improvement in fourth quarter sales and operating profit despite extremely challenging market conditions

-- Subsequent to year-end, financial covenants with lenders were re-sized to provide increased flexibility in light of current industry conditions

While consolidated sales volumes rose by 3.6% in the fourth quarter compared to last year, consolidated sales revenues increased 5.8% to $59.3 million from $56.0 million last year, due primarily to increased sales of higher-priced higher-margin specialty polymer products. For the year ended December 31, 2002, consolidated sales volumes increased 3.8% compared to last year. However, average revenue per pound for the year declined compared to the prior year due to lower overall market prices and competitive pressures arising from ongoing economic and geopolitical uncertainty, resulting in consolidated sales of $245.4 million compared to $245.6 million last year.

Over the past two years, the Company has implemented a Target Account Program at its Specialty Polymers Business, supported by its strong technical and manufacturing capabilities, aimed at leveraging its strong customer relationships to build sales volumes of its higher-priced and higher-margin specialty products. For the year ended December 31, 2002, sales volumes of these products rose 13.5% as volumes increased with current customers and new customers were acquired. The increases in volumes of specialty products also displaced volumes of lower-margin commodity products, resulting in improved operating performance in the period.

"Despite very challenging and volatile industry conditions in 2002, we were pleased to have seen solid improvements in our operating and financial performance during the year," commented Gary Connaughty, President and CEO. "We were also pleased to have generated a year-over-year improvement in the fourth quarter even though market conditions deteriorated further during the period. Most importantly, our focus on enhancing our mix of products sold, reducing costs and improving production efficiencies generated increased profitability compared with last year."

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), and not including the impact of foreign exchange, special charges or discontinued operations, were $8.2 million in the fourth quarter compared to $7.5 million in the same period last year. EBITDA in the fourth quarter of last year included the contribution of approximately $354,000 from a product line that was sold in the period. Excluding this contribution, EBITDA from ongoing businesses increased 14.1% in the quarter compared to last year. For the year ended December 31, 2002, EBITDA, not including the impact of foreign exchange, special charges or discontinued operations, rose to $35.1 million from $31.1 million in the prior year. Included in last year's results was a contribution of approximately $1.2 million from the product lines sold in the fourth quarter of 2001. Excluding this contribution, EBITDA from ongoing businesses rose 17.4% in 2002 compared to 2001. The improved EBITDA in the quarter and year is primarily due to the Company's ongoing initiatives to increase sales of its higher-margin specialty products, reduce costs and enhance production efficiencies. These improvements were somewhat offset by lower overall market prices experienced in the current year resulting from ongoing economic and geopolitical uncertainty.

During the quarter, the Company recorded a net Foreign Exchange (FX) gain of $556,000 resulting from a required change in accounting for gains or losses on long-term debt denominated in foreign currencies. On a restated basis, the FX gain would have been $1.4 million in the fourth quarter of 2001. For the year ended December 31, 2002 the Company incurred a FX gain of $1.0 million compared to a comparable $618,000 FX loss for the same period in the prior year. The Company had approximately $76.3 million of long-term US debt as at December 31, 2002.

The Company incurred a net loss in the fourth quarter of $2.3 million or $0.05 per common share compared to a restated net loss of $11.8 million or $0.24 per common share last year. Included in last year's net loss was a special charge, before tax, of $6.4 million and a net loss from discontinued operations of $2.1 million. Not including the impact of foreign exchange, special charges and discontinued operations in both periods, the loss for the fourth quarter of 2002 was $2.9 million or $0.06 per share compared to a loss of $6.8 million or $0.14 per share last year.

For the year ended December 31, 2002, the Company generated a net loss of $12.4 million or $0.25 per common share compared to a restated net loss of $28.7 million or $0.73 per common share in 2001. The 2002 loss includes a special charge, before tax, of $10.1 million incurred in the first quarter relating to a refinancing completed in 2001, and a gain on foreign exchange of $1.0 million. The results for 2001 included a special charge of $16.3 million, a foreign exchange loss of $618,000, and a loss from discontinued operations of $3.3 million. Not including the impact of foreign exchange, special charges and discontinued operations in both periods, the loss for the year ended December 31, 2002 was $6.8 million or $0.14 per share compared to a loss of $14.1 million or $0.36 per share last year.

Subsequent to the year-end, the Company entered into amendment agreements with its lenders to re-size financial covenants in light of current industry conditions. In connection with these amendments, the Company has agreed to an increase in interest on its senior term facility of one percentage point and to pay certain lenders aggregate amendment fees of $2.7 million, of which $1.5 million is payable immediately and $1.2 million in the form of pay-in-kind notes on the senior term facility. This increase in interest can be reduced or extinguished if the Company meets certain financial targets. Approximately $2.0 million of the amendment fees in respect of the senior term facility will be extinguished in the event the Company is able to raise a minimum of $5.0 million in subordinated debt or equity prior to December 31, 2003. The Company is currently in discussions with a potential source for such additional capital, however, there is no assurance that a transaction will be concluded.

"We are pleased to have demonstrated continuing improvements in our operating performance in 2002 despite the current challenging industry cycle, a validation that our strategy to focus on building sales of our higher-margin specialty polymer and films products is working, " Mr. Connaughty continued. "Looking ahead, we are confident that the leverage created by an industry up-cycle, combined with our expanded capacity, numerous productivity improvements and cost efficiency initiatives, will generate enhanced value for our shareholders."

Specialty Polymers Business

Excluding sales of the product line sold in the fourth quarter of 2001, volumes increased 3.8% during the fourth quarter compared to last year, generating a 7.1% increase in sales revenues to $52.1 million from $48.7 million last year, primarily due to a 19.5% increase in sales of higher-margin specialty products compared to last year. EBITDA for the polymers business rose 59.2% to $9.1 million in the fourth quarter from $5.7 million last year, the result of the improved product mix, lower costs and enhanced productivity.

Sales volumes of specialty polymers increased 4.4% for the year ended December 31, 2002 while sales revenues rose 0.8%. Sales volumes of the division's higher-margin specialty products rose 13.5% for the year due to the Company's successful focus on its Target Account Program. EBITDA for the year ended December 31, 2002 increased by 24.8% to $36.6 million from $29.3 million last year due primarily to the improved product mix, reduced costs and enhanced production efficiencies. The Specialty Polymers business represented approximately 82% of consolidated sales in the year.

Films Business

For the three months ended December 31, 2002, volumes increased 39.3% compared to last year's fourth quarter generating a 30.1% increase in sales to $8.7 million compared to $6.7 million last year. Sales of the Company's films products are highly seasonal, with the second and third quarters being the strongest periods. However, due primarily to lower selling prices resulting from competitive pressures and reduced capacity utilization resulting from the seasonal impact, the films business generated a small loss of $13,000 compared to EBITDA of $342,000 in the fourth quarter of last year.

For the year ended December 31, 2002, the Films Business generated the highest sales volumes in its history, resulting in a 5.0% increase in sales to $44.0 million compared to $41.9 million last year. However, despite this increase in the share of its target markets, EBITDA for the films business declined to $2.2 million from $2.5 million last year due to lower overall market prices arising from generally weak market demand and increased competitive pressures.

Financial Highlights

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                                     Three Months               Year
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Period Ended December 31,
 (in $,000 except per share
 amounts)                          2002      2001      2002     2001
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Sales                            59,255    55,991   245,380  245,578
Earnings before Interest,
 Taxes, Depreciation,
Amortization, Foreign Exchange
 & Special Charges                8,191     7,535    35,060   31,090
Foreign Exchange (Gain) Loss      (556)   (1,366)   (1,049)      618
Special Charges                       -     6,437    10,123   16,291
Net Income (Loss) from
 Continuing Operations          (2,302)   (9,657)  (12,425) (25,378)
Net Income (Loss) from
 Discontinued Operations              -   (2,095)         -  (3,346)
Net Earnings (Loss)             (2,302)  (11,752)  (12,425) (28,724)
Earnings (Loss) per Share       ($0.05)   ($0.24)   ($0.25)  ($0.73)

Supplemental Information:
Net Income (Loss) before
 Foreign Exchange, Special
Charges and Discontinued
 Operations                     (2,858)   (6,807)   (6,843) (14,089)
Net Income per Share before
 Foreign Exchange, Special
Charges and Discontinued
 Operations                     ($0.06)   ($0.14)   ($0.14)  ($0.36)
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AT Plastics will host a conference call with a live audio webcast on Wednesday, March 12, 2003 at 10:00 a.m. ET for investors and analysts. To access the simultaneous webcast, please visit AT Plastics website at www.atplastics.com, or CNW's website at www.newswire.ca/webcast/ for directions. Participants will require RealPlayer (tm) and Acrobat Reader, which can be downloaded prior to accessing the call. Please note that the webcast allows participants to listen only.

Forward-Looking Statements 

All statements in this quarterly report that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the Private Securities Litigation Reform Act of 1995. Forward-looking statements regarding future events or future financial performance represent AT Plastics' expectations, plans, intentions, and beliefs and are subject to risks, uncertainties and other factors of which many are beyond the control of the Company. These factors include but are not restricted to raw material costs, competitive pricing, currency fluctuations, and economic cycles affecting demand and prices, and other risks identified in Management's Discussion and Analysis in AT Plastics' annual report. AT Plastics disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

AT Plastics Inc. develops and manufactures specialty plastic resins and film products for a number of niche markets in North America and around the world. Through unique process engineering, AT Plastics has developed proprietary and patented processes designed to meet evolving customer requirements for high quality, specialized products and services. Operating from a modern, state-of-the-art engineering and manufacturing facility in Edmonton Alberta, the Company produces specialty plastic resins and compounds for applications such as thermal laminating, hot-melt adhesives, automotive products, packaging and medical and pharmaceutical applications, and film products for agricultural and horticultural markets. AT Plastics' common shares are listed on the Toronto Stock Exchange under the symbol ATP. For more information, please visit our website at www.atplastics.com.