Bowater Announces Fourth Quarter and 2002 Financial Results.Business Editors GREENVILLE Greenville. 1 City (1990 pop. 45,226), seat of Washington co., W Miss., on Lake Ferguson, a deepwater harbor adjoining the Mississippi River; inc. 1886. , S.C.--(BUSINESS WIRE)--Jan. 28, 2003 Bowater Bowater NYSE: BOW is an American pulp and paper company based in Greenville, South Carolina. Bowater has 12 pulp and paper mills in the United States, Canada and South Korea and 13 North American sawmills. It has approximately 10,000 employees. Incorporated (NYSE NYSE See: New York Stock Exchange : BOW) today reported financial results for the fourth quarter and the full year 2002. Bowater reported a net loss of $66.6 million, or $1.17 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 $666.3 million for the fourth quarter of 2002. These results compare with net income of $16.0 million, or $0.28 per diluted share, on sales of $705.4 million in the fourth quarter of 2001. Before special items, the net loss for the fourth quarter of 2002 was $43.7 million, or $0.77 per diluted share, compared with the 2001 fourth quarter net loss before special items of $36.1 million, or $0.63 per diluted share. Fourth quarter 2002 special items, net of tax, consisted of a $3.6 million gain related to asset sales, a severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when charge of $8.1 million, an asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $19.1 million, and a $0.7 million gain resulting from foreign currency changes. Special items, net of tax, in the fourth quarter of 2001 consisted of a $48.2 million gain related to asset sales and a $3.9 million gain resulting from foreign currency changes. In 2002, Bowater had a net loss of $142.4 million, or $2.50 per diluted share. This compares with net income of $70.5 million, or $1.32 per diluted share, in 2001. Bowater's results for 2001 reflect the acquisition of Alliance Forest Products Inc., which closed on September September: see month. 24, 2001. The company adopted Statement of Financial Accounting Standards No. 142, eliminating goodwill amortization, effective January January: see month. 1, 2002.
FINANCIAL HIGHLIGHTS
($ in millions, except per-share amounts)
Three months ended Year ended
December 31, December 31,
2002 2001 2002 2001
------------------- ------------------
Sales $666.3 $705.4 $2,581.1 $2,454.3
Net income (loss) $(66.6) $16.0 $(142.4) $70.5
Earnings (loss) per diluted
share $(1.17) $0.28 $(2.50) $1.32
SPECIAL ITEMS (per diluted share)
Sale of assets (gain) loss $(0.06) $(0.84) $(0.90) $(1.25)
Foreign exchange (gain) loss $(0.01) $(0.07) $(0.03) $(0.19)
Severance Charge $0.14 - $0.14 -
Asset Impairment Charge $0.33 - $0.33 -
Earnings (loss) per share
excluding these items $(0.77) $(0.63) $(2.96) $(0.12)
Goodwill Amortization - $0.11 - $0.45
The company's average 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 price increased by $15 per metric ton in the fourth quarter compared to the third quarter 2002. Bowater's average operating costs operating costs npl → gastos mpl operacionales per metric ton for newsprint decreased by 4% in 2002 compared to 2001. The company curtailed 83,000 metric tons of newsprint production in the fourth quarter, continuing to match production to orders. Total newsprint production curtailments for 2002 were approximately 400,000 metric tons compared to approximately 345,000 metric tons in 2001. Based on improving fundamentals, Bowater 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 $50 per metric ton newsprint price increase effective March 1, 2003. Demand for coated groundwood and specialty grades was strong in the fourth quarter; however, pricing was flat compared to the third quarter of 2002. Bowater's average operating costs per short ton for coated groundwood and specialty grades decreased by 7% in 2002 compared to 2001. The company's average market pulp price decreased by $20 per metric ton in the fourth quarter compared with the third quarter. Bowater's average operating costs per metric ton for market pulp were reduced by 7% in 2002 compared to 2001. Based on improving fundamentals, Bowater announced a $20 per metric ton market pulp price increase 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. and a $40 per metric ton market pulp price increase in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). effective February February: see month. 1, 2003.
Bowater will permanently close a paper machine at its Donnacona, Quebec Donnacona is a town of approximately 6000 inhabitants located about 40 km west of Quebec City in Portneuf MRC, Quebec, Canada. It is mostly known because of its federal prison, located on Route 138. Donnacona is also an excellent place to stop for people travelling on Autoroute 40. mill at the end of April. Specialty grades currently manufactured on this machine will be transferred primarily to the Calhoun, Tennessee Calhoun is a town in McMinn County, Tennessee, United States. The population was 496 at the 2000 census. On December 11, 1990, fog played havoc with the worst accident in Tennessee's history; 99 vehicles crashed on a stretch of fog-prone Interstate 75 and was listed as the mill, thereby eliminating 100,000 metric tons of newsprint capacity as announced last month. The company recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , asset impairment charge of approximately $28.5 million in the fourth quarter of 2002. On January 13, the company permanently eliminated 240,000 metric tons of newsprint capacity at Catawba, South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. by converting a newsprint machine to coated groundwood papers. The conversion will be completed in early March. Bowater reduced its workforce in the fourth quarter of 2002 by 185 employees, representing 23% of its previously announced $75 million 2003 cost reduction target. The planned sale of 240,000 acres of timberland and four non-strategic sawmills is expected to be completed during the first half of 2003. The general decline in the stock market reduced the value of the company's pension plan assets while lower interest rates increased pension liabilities Pension liabilities Future liabilities resulting from pension commitments made by a corporation. Accounting for pension liabilities varies widely by country. . The net result caused pension liabilities to exceed the market value of plan assets. Accounting principles generally accepted 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. require that certain changes in funded status be reflected in shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . Therefore, the company reduced its shareholder equity in the fourth quarter by approximately $100 million. "After a very difficult year, we expect a gradual improvement in our major product lines throughout 2003," said Mr. Arnold M. Nemirow, Chairman, President and Chief Executive Officer. "As pricing improves, our lower operating costs and improved product mix should enable the company to return to profitability and generate positive cash flow during the second half of 2003." Bowater will hold a management conference call to discuss these financial results at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , January 28, 2003. The conference call number is 888-428-4479 or 612-288-0318 (international). The call will also be broadcast via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Interested parties may connect to the Bowater web site at www.bowater.com, then 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 call. A replay of the call will be available from 1:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Tuesday, January 28, through Tuesday, February 4, on the web site or by dialing 800-475-6701 or 320-365-3844 (international) and using the access code 667554. 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 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 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 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 hardwood hardwood: see wood. hardwood Timber obtained from broad-leaved, flower-bearing trees. Hardwood trees are deciduous trees, except in the warmest regions. lumber. Bowater also operates two facilities that convert a groundwood base sheet to coated products. Bowater's operations are 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 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. , the Pacific Exchange and the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. . 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. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :BWX). All amounts are in U.S. dollars. Statements in this news release that are not reported financial results or other historical information are "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. " 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, future plans, future sales, prices for our major products, inventory levels, capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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/A for the year ended December 31, 2001, 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 Twelve Months
Ended Ended
December 31(1) December 31(1)
2002 2001 2002 2001
---- ---- ---- ----
Sales $666.3 $705.4 $2,581.1 $2,454.3
Cost of sales, excluding
depreciation,
amortization
and cost of timber
harvested 525.2 533.3 2,020.7 1,688.4
Depreciation, amortization
and cost of timber
harvested (2) 83.7 92.7 340.5 321.3
Distribution costs 64.2 59.9 232.6 180.0
Selling and administrative
expense 41.0 37.4 140.2 114.5
Impairment of assets (3) 28.5 - 28.5 -
Net gain on sale of assets (4) 5.9 79.8 85.7 163.3
------- ------ ------- -------
Operating income
(loss) (70.4) 61.9 (95.7) 313.4
Other expense (income):
Interest income (1.3) (1.1) (4.5) (8.7)
Interest expense, net
of capitalized
interest 40.2 38.3 163.0 141.0
Foreign exchange loss
(gain) (0.7) (3.3) (6.1) (5.9)
Other, net 0.7 1.0 2.7 (2.1)
------- ------ ------- ------
38.9 34.9 155.1 124.3
------- ------ ------- ------
Income (loss) before
income taxes and minority
interests (109.3) 27.0 (250.8) 189.1
Provision for income tax
expense (benefit) (40.4) 7.8 (100.5) 77.0
Minority interests in the
net income (loss) of
subsidiaries (2.3) 3.2 (7.9) 41.6
------- ------- ------- ------
Net income (loss) $(66.6) $16.0 $(142.4) $70.5
======= ======= ======= ======
Basic earnings (loss) per
common share: (5) $(1.17) $0.28 $(2.50) $1.33
======= ======= ======= ======
Average common shares
outstanding (5) 56.9 56.7 56.9 53.0
======= ======= ======= ======
Diluted earnings (loss)
per common share: (5) $(1.17) $0.28 $(2.50) $1.32
======== ======= ======= ======
Average common and common
equivalent shares
outstanding (5) 56.9 57.0 56.9 53.3
======== ======= ======= ======
BOWATER INCORPORATED AND SUBSIDIARIES
(Unaudited, in millions of US dollars)
Consolidated Balance Sheet December 31, December 31,
2002 2001
----------------------------
Current assets:
Cash and cash equivalents $35.9 $28.3
Accounts receivable, net 330.6 367.0
Inventories 257.2 250.5
Other current assets 64.2 43.8
----------- ---------
Total current assets 687.9 689.6
----------- ---------
Timber and timberlands 195.8 227.7
Fixed assets, net 3,612.9 3,818.4
Goodwill 839.9 843.0
Other assets 128.7 182.3
----------- ---------
$5,465.2 $5,761.0
=========== =========
Current liabilities:
Current installments of
long-term debt $84.3 $73.0
Short-term bank debt 249.0 341.7
Accounts payable and accrued
liabilities 364.0 437.9
Dividends payable 11.2 10.9
----------- ---------
Total current
liabilities 708.5 863.5
----------- ---------
Long-term debt, net of current
installments 2,037.4 1,828.0
Other long-term liabilities 421.8 362.3
Deferred income taxes 469.9 600.0
Minority interests in
subsidiaries 72.1 85.2
Commitments and contingencies - -
Shareholders' equity (6) 1,755.5 2,022.0
----------- ---------
$5,465.2 $5,761.0
=========== =========
Twelve Months Ended
Consolidated Cash Flow Dec. 31,
-------------------------
2002 2001
----------- ---------
Cash flows from (used for)
operating activities $41.2 $372.8
----------- ---------
Cash flows from (used for)
investing activities:
Business acquisitions, net
of cash acquired - (271.6)
Cash invested in fixed
assets, timber and
timberlands (238.7) (246.8)
Disposition of fixed assets,
timber and timberlands 26.5 15.2
Proceeds from monetization
of note receivable (4) 88.1 225.2
Cash invested (maturity) of
marketable securities, net 1.7 (1.7)
----------- ---------
(122.4) (279.7)
----------- ---------
Cash flows from (used for)
financing activities:
Cash dividends, including
minority interests (49.6) (119.0)
Financing activities, net 130.8 31.9
Stock options exercised 7.6 2.2
Other - 0.1
----------- ---------
88.8 (84.8)
----------- ---------
Net increase (decrease) in cash
and cash equivalents $7.6 $8.3
=========== =========
BOWATER INCORPORATED AND SUBSIDIARIES Notes to the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge (1) The Alliance Forest Products Inc. (Alliance) acquisition was completed on September 24, 2001. The results of Alliance's operations have been included in the consolidated financial statements since September 24, 2001. (2) In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," Bowater is no longer amortizing goodwill to earnings. During the three months and twelve months ended December 31, 2001, Bowater recorded goodwill amortization of approximately $6.0 million, or $0.11 per diluted share and $23.9 million, or $0.45 per diluted share, respectively. (3) Bowater recorded a pre-tax, asset impairment charge of approximately $28.5 million in the fourth quarter of 2002. (4) During the first twelve months of 2002, Bowater sold fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → and land resulting in a net pre-tax gain of $85.7 million, or $0.90 per diluted share, after tax and minority interest. In the fourth quarter of 2002, Bowater recognized a net pre-tax gain on the sale of assets of $5.9 million, or $0.06 per diluted share after tax. In January 2002, Bowater completed the sale of approximately 116,000 acres of timberland for aggregate consideration of $104.2 million, comprised of approximately $5.1 million in cash and $99.1 million in a note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. . In March 2002, we monetized the $99.1 million note receivable for net cash proceeds of $88.1 million. These transactions resulted in a pre-tax gain of approximately $70.4 million. During the first twelve months of 2001, Bowater sold fixed assets and land resulting in a net pre-tax gain of $163.3 million, or $1.25 per diluted share, after tax and minority interest. In the fourth quarter of 2001, Bowater recognized a net pre-tax gain on the sale of assets of $79.8 million, or $0.85 per diluted share after tax. In the second quarter of 2001, Bowater monetized the notes receivable in connection with a 1999 land sale for cash proceeds of $122.6 million, and recognized a net pre-tax gain of $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. (5) For the calculation of basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the three months and twelve months ended December 31, 2002 and 2001, no adjustments to net income are necessary. The effect of dilutive securities is not included in the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. for the three months and twelve months ended December 31, 2002 to prevent antidilution. (6) Due to the sharp decline in the value of the equity holdings of our various pension trusts as of September 30, 2002 (our annual measurement date) Bowater recorded a 4th quarter required additional minimum pension liability, which resulted in a charge to equity of approximately $100 million. A schedule of historical financial and operating statistics is available upon request and on Bowater's web site (www.bowater.com). |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion