Bowater Announces First Quarter 2007 Financial Results.GREENVILLE, S.C. -- Bowater Incorporated (NYSE NYSE See: New York Stock Exchange : BOW) today reported a net loss for the first quarter of 2007 of $35.4 million, or $0.62 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on sales of $771.6 million. These results compare with a net loss of $18.8 million, or $0.33 per diluted share, on sales of $893.2 million for the first quarter of 2006. "The continued decline in newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been consumption and seasonally slow coated paper Coated paper is paper which has been coated by an inorganic compound to impart certain qualities to the paper, including weight and surface gloss, smoothness or ink absorbency. Kaolinite is the compound most often used for coating papers used in commercial printing. demand, along with weak lumber lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to markets, led to price declines during the quarter," said David J David J. Haskins (b. April 24, 1957, in Northampton, England) is a British alternative rock musician. He was the bassist for the seminal gothic rock band Bauhaus. Life and work . Paterson, Chairman, President and Chief Executive Officer. "We also experienced considerable cost pressures as a result of the rapid increase in the cost of recycled fiber and the impact of production curtailments. We have seen some improvement in the second quarter with better demand for several of our paper grades and softening in the cost of recycled fiber." First quarter 2007 special items, net of tax, consisted of the following items: a $35.9 million gain related to asset sales, a $12.3 million charge related to tax adjustments, a $3.4 million loss relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc foreign currency changes, and a $7.0 million charge for severance and merger-related costs. Excluding these special items, the net loss for the quarter would have been $48.6 million, or $0.85 per diluted share, compared with first quarter 2006 net loss before special items of $19.1 million, or $0.33 per diluted share. A reconciliation of these items is contained in note 5 to this release. During the first quarter, given weak demand for paper grades partially due to seasonal reasons, the company curtailed significant newsprint and specialty paper production. The manufacturing cost impact of these curtailments for the quarter is approximately $15 million and reduced production overall by approximately 68,000 metric tons. "The deterioration in domestic newsprint demand underscores the strategic rationale for our proposed merger with Abitibi-Consolidated, which is to significantly improve efficiencies by reducing costs and increasing productivity," continued Paterson. "I am pleased with the progress we have made thus far and look forward to closing this transaction in the third quarter." SEGMENT DETAIL Newsprint For the first quarter, newsprint had an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $4.1 million, a decrease of $15.4 million from the fourth quarter. The company's average transaction price decreased $22 per metric ton, compared to the fourth quarter. Average operating costs operating costs npl → gastos mpl operacionales increased by $8 per metric ton primarily due to lower production volumes and higher recycled fiber costs. The lower production volumes were largely driven by the curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. of approximately 63,000 metric tons of newsprint, including 10,000 tons as a result of a major machine rebuild at one of the company's sites. Total newsprint shipments were 9% lower in the first quarter of 2007 compared to the fourth quarter of 2006 and 18% lower than the previous year. Newsprint inventories increased, primarily as a result of strong export sales, which now represent over 35% of total shipments. Coated Papers Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the quarter were $8.6 million, a decrease of $7.2 million from the fourth quarter. The company's average transaction price for coated papers decreased $35 per short ton in the quarter compared to the fourth quarter of 2006. Average operating costs continued to improve, declining $3 per short ton from the fourth quarter. Coated paper inventories increased in the quarter as a result of seasonally weak demand. Specialty Papers For the first quarter, specialty papers had an operating loss of $8.7 million. The company's average transaction price decreased $21 per short ton during the quarter, while average operating costs improved by $24 per short ton mainly due to higher production volumes and greater efficiencies. During the quarter, the company continued to shift machine capacity from newsprint to specialty papers. Compared to the fourth quarter of 2006, production of specialties increased 12%. Bowater is also announcing today that paper machine no. 4 at its Thunder Bay Thunder Bay, city (1991 pop. 113,946), SW Ont., Canada, on Thunder Bay inlet of Lake Superior. The city was created in 1970 by the amalgamation of the twin cities of Fort William and Port Arthur and two adjoining townships. , Ontario facility will resume operation during May 2007. The company believes that this facility, with its quality assets and multiple fiber furnishes, combined with a dramatically improved cost structure, is well positioned to produce lightweight specialty grades. Market Pulp Compared to the fourth quarter of 2006, operating earnings for market pulp decreased slightly to $18.7 million in the first quarter. The average market pulp transaction price for the company increased $14 per metric ton. Average operating costs increased $9 per metric ton compared to the fourth quarter, as a result of an annual kraft mill outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. at one of the company's sites. Shipments also declined as a result of the outage. The company has informed its North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. customers of a $20 per metric ton price increase in softwood softwood Timber obtained from coniferous trees (mainly of the pine and fir families). With the exception of bald cypress, tamarack, and larch, softwood trees are evergreens. and a $30 per metric ton fluff pulp price increase effective April 1, 2007. Lumber For the first quarter, lumber had an operating loss of $13.6 million. The average lumber transaction price for the company decreased $7 per thousand board feet. The company also experienced a lumber inventory charge of approximately $4 million due to lower prices. Earnings Conference Call Bowater management will hold a conference call to discuss these financial results today at 10:00 a.m. Eastern time, April 26, 2007. The conference call number is 866-269-9608 or 612-332-0342 (international). A webcast of the call will be available on Bowater's website at www.bowater.com. Interested parties may follow the on-screen on·screen or on-screen adj. & adv. 1. As shown on a movie, television, or display screen. 2. Within public view; in public. instructions for access to the webcast and related information. A replay of the call will be available after 1:30 p.m. Eastern time today on the company's website and through Thursday, May 3, by dialing 800-475-6701 or 320-365-3844 (international) and using the access code 870020. About Bowater Bowater Incorporated, headquartered in Greenville, SC, is a leading producer of coated and specialty papers and newsprint. In addition, the company sells bleached market pulp and lumber products. Bowater employs approximately 7,000 people and has 12 pulp and paper mills in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada and South Korea. In North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , it also operates a converting facility and owns 10 sawmills. Bowater's operations are supported by approximately 763,000 acres of timberlands owned or leased in the United States and Canada and 28 million acres of timber cutting rights in Canada. Bowater operates six recycling plants and is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : BWX). To learn more, visit www.bowater.com. All amounts are in U.S. dollars. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. They include, for example, statements about our business outlook, assessment of market conditions, strategies (including anticipated execution of our export strategy and our debt and cost reduction strategies and opportunities related thereto), the sale of timberlands, and the continuation of operational improvements generally. In addition, statements relating to our planned combination with Abitibi-Consolidated are forward-looking, such as statements about the strategic rationale for the merger, future financial and operating results, plans, objectives, expectations and intentions of the combined company, the markets for the combined company's products, the future development of the combined company's business, the ability of the parties to secure necessary regulatory and shareholder approvals for the combination, the contingencies and uncertainties to which Abitibi and Bowater may be subject, statements regarding the combined company's ability to: generate efficiencies and improve its financial profile; achieve significant synergies, in particular an estimated $250 million of synergies within two years; become more competitive; improve product quality and breadth; develop new products and better serve its customers; as well as other statements that are not historical fact. Forward-looking statements may be identified by the use of forward-looking terminology such as the words "expects", "projects", "intends", "believes", "anticipates", and other terms with similar meaning indicating possible future events or actions or potential impact on the business or shareholders of Bowater. 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, which could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, negative industry conditions and further growth in alternative media, actions of competitors, Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents exchange rates, the actual realization of debt and cost reduction strategies, the demand for higher margin coated and uncoated mechanical paper, the continued strength in the market for timberlands, and the costs of raw materials such as energy, chemicals and fiber. In addition, with respect to forward-looking statements relating to the proposed combination with Abitibi-Consolidated, the following factors, among others could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain required governmental or third party approvals of the combination on the proposed terms and schedule and without material concessions; the failure of Abitibi or Bowater shareholders to approve the combination; the exercise by a material percentage of Abitibi shareholders of their dissent rights; the risk that the businesses will not be integrated successfully or that the anticipated improved financial performance, product quality and, product development will not be achieved; the risk that other combinations within the industry or other factors may limit our ability to improve our competitive position; the risk that the cost savings and other expected synergies from the transaction may not be fully realized or may take longer to realize than expected; and disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers. Additional factors listed from time to time in Bowater's Securities and Exchange Commission filings, including those described in the company's report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2006 under the caption "Cautionary Statement Regarding Forward-Looking Information and Use of Third Party Data." Bowater disclaims any obligation to update these forward-looking statements. Any information about industry or general economic conditions contained in this press release is derived from third party sources that the company believes are widely accepted and accurate; however, the company has not independently verified this information and cannot assure its accuracy. Additional Information and Where to Find It In connection with the proposed combination of Abitibi-Consolidated and Bowater Incorporated, AbitibiBowater Inc. (the proposed new parent corporation) has filed with the SEC a registration statement on Form S-4, which includes a preliminary proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. of Bowater, a preliminary prospectus Preliminary Prospectus A first draft registration statement filed by a firm prior to proceeding with an initial public offering of securities. The document, filed with the Securities & Exchange Commission, is intended to provide pertinent information to prospective shareholders of AbitibiBowater and a preliminary management information circular Information Circular A document sent to shareholders outlining important matters to be discussed at the annual shareholders' meeting. Notes: Sent along with a proxy, the information circular may cover matters such as the election of the Board of Directors, possible of Abitibi. Shareholders are urged to read the preliminary joint proxy statement/prospectus/management information circular regarding the proposed transaction and the definitive proxy statement/prospectus/management information circular when it becomes available, because it contains or will contain important information. Shareholders will be able to obtain a free copy of the definitive joint proxy statement/prospectus/management information circular, as well as other filings containing information about Abitibi and Bowater, without charge, at the SEC's internet site (http://www.sec.gov). Copies of the definitive joint proxy statement/prospectus/management information circular and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus/management information circular can also be obtained, without charge, by directing a request to Abitibi, 1155 Metcalfe Street, Suite 800, Montreal, Quebec Canada H3B 5H2, Attention: Investor Relations Investor relations The process by which the corporation communicates with its investors. (514) 394-2341, or to Bowater, 55 East Camperdown Way, Greenville, South Carolina
Greenville is a mid-sized city located in the upstate of South Carolina. It is the county seat of Greenville CountyGR6 USA 29601, Attention: Investor Relations (864) 271-7733. Participants in the Solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual Abitibi, Bowater and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed combination. Information regarding Abitibi's directors and executive officers is available in the 2006 Annual Report on Form-40F filed with the SEC by Abitibi on March 15, 2007, and the management information circular with respect to Abitibi's 2007 Annual Meeting of Shareholders filed by Abitibi on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review on April 5, 2007. Information regarding Bowater's directors and executive officers is available in the Annual Report on Form 10-K filed with the SEC by Bowater on March 1, 2007 and the Proxy Statement with respect to Bowater's 2006 Annual Meeting of Stockholders filed by Bowater with the SEC on April 12, 2006. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the preliminary proxy statement/prospectus/management information circular and will be contained in other relevant materials to be filed with the SEC. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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