Net Income of $2.5 Million
Diluted Earnings Per Share of $0.16
ALPHARETTA, Ga., Jan. 31 /PRNewswire-FirstCall/ --
Summary of Results
(Amounts in Millions, Except Per Share Amounts)
2007 2006
Fourth Full Fourth Full
Quarter Year Quarter Year
Net Sales $188.5 $714.8 $166.2 $655.2
Restructuring (Income) Expenses (0.3) 24.0 4.8 21.1
Operating Profit (Loss) 5.8 17.9 (5.1) 5.3
Net Income (Loss) 2.5 3.4 (4.4) (0.8)
Earnings (Loss) Per Share
- Diluted $0.16 $0.22 $(0.28) $(0.05)
Plus: Restructuring Expenses
Per Share - Diluted - 0.98 0.20 0.88
Earnings (Loss) Per Share
Without Restructuring
Expenses - Diluted* $0.16 $1.20 $(0.08) $0.83
Average Shares - Diluted 15.8 15.7 15.4 15.4
* Earnings (Loss) Per Share Without Restructuring Expenses - Diluted is a
non-GAAP financial measure that is calculated by adding the Earnings
(Loss) Per Share reduction caused by Restructuring Expenses to Earnings
(Loss) Per Share - Diluted.
Schweitzer-Mauduit International, Inc. (NYSE: SWM) today reported
fourth quarter 2007 net income of $2.5 million compared with a net loss of
$4.4 million during the fourth quarter of 2006. The diluted earnings per
share were $0.16 compared with a diluted loss per share of $0.28 in the
prior-year quarter. Restructuring expenses decreased earnings per share
during the fourth quarter of 2006 by $0.20. Excluding restructuring
expenses, earnings per share of $0.16 for the fourth quarter of 2007
improved relative to the diluted loss per share of $0.08 for the fourth
quarter of 2006.
Wayne H. Deitrich, Chairman of the Board and Chief Executive Officer,
commented that, "Overall, we are pleased with our financial and operational
performance in 2007 as well as the significant progress made during the
year in reshaping Schweitzer-Mauduit through the restructuring activities
underway and growth realized in reconstituted tobacco products as well as
cigarette paper for lower ignition propensity cigarettes. Despite continued
volatility in our quarterly earnings in 2007, we delivered a 45 percent
increase in earnings per share excluding restructuring expenses and a 38
percent increase in cash provided by operations, which enabled undertaking
significant reinvestment in our business without substantially increasing
debt. Further, on December 21, 2007, Schweitzer-Mauduit entered into an
agreement to purchase the 28 percent of LTR Industries S.A., or LTR, owned
by a subsidiary of Altadis, SA. We are pleased to announce that this
acquisition was completed today. We expect this acquisition to be accretive
to earnings in the range of $0.28 to $0.34 per share, subject in part to
final purchase accounting.
"Schweitzer-Mauduit's results for the fourth quarter of 2007 were
in-line with our expectations for a weaker performance than previous
quarters in 2007 and primarily reflected planned paper machine downtime in
France, the United States and Brazil. Excluding restructuring expenses from
both 2007 and 2006, earnings improved during the fourth quarter compared to
an even weaker prior- year period. This stemmed primarily from increased
demand and higher production capacity utilization for reconstituted tobacco
leaf products. Also, sales volume growth and improved manufacturing costs
were achieved for lower ignition propensity cigarette papers. We continued
to realize significant savings during the fourth quarter from cost
reduction activities across our businesses despite the planned machine
downtime. These improvements were partially offset by the impacts of cost
inflation and a further strengthening of the Brazilian real. We also
improved cash generation, in part from a further decrease in working
capital, during the fourth quarter of 2007."
Restructuring Expenses
Schweitzer-Mauduit initiated restructuring activities during 2006 and
2007 in France and the United States and in 2007 in Brazil. In accordance
with applicable U.S. generally accepted accounting principles,
restructuring expenses associated with these actions were recognized during
the fourth quarters of both 2007 and 2006, resulting in a net credit of
$0.3 million and a charge of $4.8 million, respectively.
In October 2007, Schweitzer-Mauduit announced a three-part
restructuring plan to reduce production capacity for tobacco-related papers
in both France and the United States as well as to reduce employment levels
in Brazil. The three-part plan includes the expected idling of a base
tipping paper machine at Papeteries de Malaucene, or PdMal, in Malaucene,
France by the end of 2008 and the shutdown of our entire operation located
at Lee, Massachusetts beginning in May 2008. The Company plans to transfer
production from PdMal and the Lee Mills to its other facilities, primarily
to Santanesia, Brazil, and discontinue the sale of the majority of
commercial and industrial papers currently produced at the Lee Mills. On
January 17, 2008, agreement was reached with the unions and Work's Council
at the PdMal facility regarding terms of the restructuring plan. The final
negotiated terms, including severance payments, were consistent with the
projections for total restructuring expenses included in the October 1,
2007 announcement of this plan.
Progress continues to be made in implementing Schweitzer-Mauduit's
strategy to become a low cost and the highest quality cigarette and long
fiber paper manufacturer in western Europe. This plan includes capital
investments of $26 million as well as workforce and paper machine
restructuring activities at Papeteries de Mauduit, or PdM, the largest of
the Company's three French paper operations. The PdM restructuring plan
resulted in the shutdown of one cigarette paper machine in 2007 and a
second machine is expected to cease operation upon completion of the
capital investments during the first quarter of 2008.
As a result of these restructuring actions, employment at the affected
locations is expected to decrease by approximately 600 people from 2006
levels. Reductions totaling approximately 380 employees have been achieved
to-date at these locations, with decreases of nearly 240 people occurring
during 2007. The announced restructuring activities are expected to be
completed during 2008.
Schweitzer-Mauduit currently projects pre-tax expenses from 2006
through 2008 for all announced restructuring activities to be in the range
of $51 to $54 million, comprised of $29 to $31 million in severance and
other cash costs and $22 to $23 million in asset impairment charges,
accelerated depreciation and other non-cash costs. Restructuring expenses
of $45.1 million, or approximately 85 percent of the total projected, have
been recognized through 2006 and 2007.
The following table summarizes restructuring expenses recorded during
2007 and 2006.
(Amounts in Millions, Except Per Share Amounts)
2007 2006
Fourth Year-to- Fourth Year-to-
Quarter Date Quarter Date
France $(0.8) $10.4 $4.5 $15.8
United States 0.5 13.2 0.3 5.3
Brazil - 0.4 - -
Total $(0.3) $24.0 $4.8 $21.1
Cash $(1.3) $10.2 $4.1 $15.3
Non-Cash 1.0 13.8 0.7 5.8
Total $(0.3) $24.0 $4.8 $21.1
Restructuring Expenses Per
Share - Diluted $- $0.98 $0.20 $0.88
Fourth Quarter 2007 Results
Consolidated net sales were $188.5 million for the quarter compared
with $166.2 million in the same period a year ago, an increase of 13
percent. The increase in net sales resulted from $10.6 million in favorable
foreign currency exchange rate impacts, $7.5 million in higher average
selling prices, primarily due to an improved mix of products sold, and $4.2
million from increased sales volumes. Currency changes primarily reflected
the impact of a stronger euro, Brazilian real and Philippine peso compared
with the U.S. dollar. The increase in average selling prices reflected an
improved mix of products sold in the United States, related primarily to
increased sales of cigarette paper for lower ignition propensity
cigarettes, and in the French paper businesses.
Sales volumes were essentially unchanged in total for
Schweitzer-Mauduit between the fourth quarters of 2007 and 2006, although
changes within business segments occurred. Sales volumes for the French
segment increased by 8 percent as a result of higher sales of both
reconstituted tobacco leaf products and tobacco-related papers. Sales
volumes in the United States and Brazil decreased by 18 percent and 7
percent, respectively. The U.S. decline reflected reduced sales of
commercial and industrial papers associated with the impending shutdown of
the Lee Mills. Sales volumes in Brazil decreased as a result of lower
commercial and industrial paper sales partially offset by continued growth
in tobacco-related paper sales.
Operating profit was $5.8 million for the quarter compared with an
operating loss of $5.1 million during the fourth quarter of 2006. Excluding
a restructuring credit from the fourth quarter of 2007 and restructuring
expense from the fourth quarter of 2006, operating profit increased $5.8
million for the current-year quarter.
Favorable absorption of mill fixed costs benefited results by $5.3
million as less machine downtime was realized during the fourth quarter of
2007 compared to the prior year when significant downtime occurred across
all units. Mill operations improved, primarily reflecting cost reduction
activities across all business units and benefits of restructuring
activities, despite a difficult operating environment during the fourth
quarter of 2007. Increased average selling prices, resulting primarily from
an improved mix of products sold, improved operating profit by $4.1 million
during the quarter. Higher sales volumes, primarily in the French and U.S.
segments, increased operating profit by $1.5 million.
Inflationary cost increases, primarily related to higher per ton wood
pulp costs, recently increased purchased energy expenses, other purchased
material costs and labor rates, unfavorably impacted operating results by
$5.2 million during the quarter. Changes in per ton wood pulp costs
increased operating expenses by $2.1 million compared with the prior-year
quarter. Increased energy costs impacted operating profit by $1.6 million
primarily due to increased natural gas costs in the United States and
higher electricity costs in France. Other purchased material costs
increased $1.1 million during the quarter while labor rates increased $0.4
million. The weaker U.S. dollar versus the Brazilian real and euro had a
$3.1 million unfavorable impact on the operating results comparison.
Operating profit for the French segment totaled $6.3 million during the
quarter compared with an operating loss of $4.7 million during the fourth
quarter of 2006. Excluding a decrease in French restructuring expenses of
$5.3 million, operating profit increased by $5.7 million from an operating
loss during the fourth quarter of 2006. Favorable fixed cost absorption
from improved reconstituted tobacco leaf and paper machine utilization
increased operating profit by $6.6 million. Though machine downtime was
realized during the fourth quarter of 2007, especially at PdM related to
planned restructuring-related capital investments, downtime was decreased
year-over- year. Higher average selling prices, primarily due to an
improved mix of products sold, increased operating profit by $1.9 million.
Increased sales volumes improved operating profit by $1.0 million. Mill
operations improved, in part reflecting the benefits of restructuring
activities. Inflationary cost increases reduced operating profit by $2.7
million, including higher per ton wood pulp costs, energy rates and other
purchased materials expenses. Unfavorable currency translation effects
negatively impacted the operating profit comparison by $0.8 million due to
a 12 percent strengthening of the euro versus the U.S. dollar during the
quarter.
The U.S. business unit operating profit was $4.4 million for the
quarter compared with an operating profit of $1.9 million during the
prior-year quarter. Excluding a $0.2 million increase in restructuring
expenses, operating profit increased by $2.7 million, primarily the result
of improved mill operations. Changes in the mix of products sold, primarily
due to increased sales of cigarette paper for lower ignition propensity
cigarettes and decreased sales of commercial and industrial papers,
increased U.S. operating profit by $2.0 million. Inflationary cost
increases had an unfavorable impact of $1.8 million during the quarter,
primarily related to increased energy and higher per ton wood pulp costs.
Unfavorable fixed cost absorption from increased paper machine downtime
during the fourth quarter of 2007 compared with the prior-year period
decreased operating profit by $1.3 million. Non-manufacturing expenses
increased $0.5 million primarily due to increased compensation.
The Brazilian business unit realized an operating loss of $2.2 million
during the fourth quarter of 2007 versus an operating loss of $0.5 million
during the prior-year quarter. The stronger Brazilian real versus the U.S.
dollar had an unfavorable impact on the operating results comparison of
$2.3 million. Inflationary cost increases totaled $0.7 million, caused
primarily by increased other material prices and higher per ton wood pulp
costs. Improved mill operations, including cost reduction activities,
despite costs associated with the start-up of the rebuilt base tipping
paper machine, and somewhat higher average selling prices benefited
operating results and partially offset these unfavorable impacts.
Nonmanufacturing expenses increased by $3.0 million, or 20 percent,
during the fourth quarter of 2007 versus the prior-year quarter primarily
due to increased employee compensation expenses. Only minimal incentive
compensation expenses were incurred in 2006 due to lower overall financial
performance whereas 2007 expenses reflect achievement of more normal and
higher incentive opportunities.
An income tax benefit was recognized during the fourth quarters of 2006
and 2007 due to the impact of both restructuring expenses on full-year
taxable earnings as well as Schweitzer-Mauduit's foreign holding company
structure.
Minority interest of $2.0 million increased by $0.9 million due to
improved results at the then 72 percent owned French subsidiary LTR.
The consolidated net income for the fourth quarter of 2007 was $2.5
million compared with a net loss of $4.4 million during the fourth quarter
of 2006. The diluted earnings per share were $0.16 for the fourth quarter
compared with a diluted loss per share of $0.28 for the prior-year quarter.
Diluted earnings per share of $0.16 for the fourth quarter of 2007 compare
to a diluted loss per share of $0.08 for the fourth quarter of 2006
excluding restructuring expenses.
Year-To-Date Results
Net sales were $714.8 million for the full year of 2007, a 9 percent
increase over the 2006 level. Changes in currency exchange rates increased
net sales for the full year of 2007 by $30.6 million primarily due to a
stronger euro, Brazilian real and Philippine peso versus the U.S. dollar.
Higher average selling prices, which improved net sales by $29.7 million
during 2007, primarily reflected an improved sales mix in the United States
and France. Changes in sales volumes decreased net sales by $0.7 million,
primarily due to lower sales volumes in the United States. Total sales
volumes increased approximately one-half percent versus the prior year.
French segment sales volumes increased by 4 percent reflecting increased
reconstituted tobacco leaf product sales of 11 percent partially offset by
lower sales of tobacco-related papers. Brazilian business unit sales
volumes increased 2 percent due to increased tobacco-related papers sales
partially offset by decreased non-tobacco paper sales. U.S. business unit
sales volumes declined by 10 percent due to decreases in both
tobacco-related and commercial and industrial papers sales volumes.
Operating profit for the full year of 2007 totaled $17.9 million, an
increase of $12.6 million from 2006. Excluding an increase in restructuring
expenses of $2.9 million, full-year operating profit increased by $15.5
million, or 59 percent, and totaled $41.9 million for 2007. Increased
average selling prices, primarily due to an improved mix of products sold,
combined with the impact of changes in sales volumes to increase operating
profit by $24.6 million versus 2006. Cost reduction activities in all
business units significantly benefited 2007 results. Increased machine
operating schedules in France partially offset decreased machine schedules
in the United States and caused an overall improved absorption of mill
fixed costs, positively impacting operating profit by $3.4 million during
2007. Inflationary cost increases decreased profitability by $13.0 million
primarily due to higher per metric ton wood pulp expenses, other purchased
material costs and labor rates. For the full year, purchased energy costs
were essentially unchanged versus 2006 levels despite rising markedly
during the fourth quarter. The weaker U.S. dollar, primarily versus the
Brazilian real, had a $5.0 million unfavorable impact on the operating
results comparison. Nonmanufacturing expenses increased by $8.5 million, or
15 percent, for the full year of 2007 compared with 2006 due primarily to
increases in compensation and legal expenses.
A $0.5 million income tax provision was recognized for full-year 2007
compared with a $4.2 million income tax benefit recognized in full-year
2006. Both periods were impacted by tax benefits of substantial
restructuring expenses and our foreign holding company structure.
Minority interest of $8.0 million increased by $3.9 million due to
improved results at LTR.
Net income for 2007 was $3.4 million compared with a net loss of $0.8
million in 2006. Diluted earnings per share were $0.22 for the full-year
2007 compared with a diluted loss per share of $0.05 for the same period in
2006. Excluding restructuring expenses from both periods, diluted earnings
per share for 2007 were $1.20 per share compared with $0.83 per share
during the same period in 2006, an increase of 45 percent.
Cash Flow and Quarterly Dividend
Capital spending was $20.9 million during the fourth quarter of 2007
compared with $4.2 million during the prior-year quarter. Capital spending
for the restructuring-related investments at PdM totaled $10.4 million
during the fourth quarter of 2007 and is expected to total $26 million upon
completion, which will now occur in early 2008. The rebuild of a paper
machine in Brazil was concluded, with spending totaling $5.2 million during
the fourth quarter and $10.2 million for the project in total. Capital
spending for the full year of 2007 totaled $47.7 million, within the
expected range of $45 to $55 million. Capital spending for 2008 is
currently expected to be in the range of $30 to $40 million. Additionally,
spending for capitalized software totaled $2.0 million during the fourth
quarter of 2007, primarily for a project in France, and totaled $8.9
million for the full year, within the expected range of $8 to $10 million.
No pension contributions were made during the fourth quarter of 2007
and $7 million was contributed for the full year. Cash payments of $3.4
million for severance expenses occurred during the fourth quarter of 2007
and totaled $9.5 million for the full year, within the range of $8 to $10
million projected for 2007. Equity investments for Schweitzer-Mauduit's
tobacco- related papers joint venture in China were $2.5 million during the
fourth quarter of 2007 and totaled the expected $12.8 million for the full
year. A final equity injection of $1.9 million was made in January 2008,
bringing the total Schweitzer-Mauduit investment in this joint venture to
$17.6 million.
The full-year cash requirements in 2007 for capital projects, deferred
software development spending, pension contributions, employee severance
payments and joint venture equity payments totaled approximately $86
million, within the expected range of $80 to $90 million. These cash
requirements were funded primarily through internally generated cash flow.
At December 31, 2007, net debt was $96.9 million, an increase of $13.3
million, or 16 percent, compared with year-end 2006, reflecting a $12.9
million increase during the fourth quarter. Funding of the acquisition of
the 28 percent minority shareholder position in LTR Industries S.A. for 35
million euros will cause an approximate $50 million increase in debt during
the first quarter of 2008.
Cash provided by operations totaled $18.8 million for the fourth
quarter of 2007 and $71.4 million for the full year, an increase of 38
percent for the full year. Changes in working capital increased cash
provided by operations by $5.2 million during the fourth quarter of 2007
and $25.4 million for the full year.
Schweitzer-Mauduit is announcing a quarterly common stock dividend of
$0.15 per share. The dividend will be payable on March 17, 2008 to
stockholders of record on February 18, 2008.
Business Comments and Outlook
Mr. Deitrich added, "Overall, we are pleased with our improved
financial performance for the full year of 2007, as demonstrated by a 45
percent increase in earnings per share excluding restructuring expenses,
and we are well positioned to further increase earnings in 2008. Excluding
restructuring expenses, earnings in the fourth quarter of 2007 were, as
expected, below the level of the previous three quarters in 2007 but
substantially improved over the loss realized during the fourth quarter of
2006. This continues our recent trend of improving earnings each quarter
versus the prior-year comparison.
"We are confident that the restructuring activities underway across
Schweitzer-Mauduit will not only improve earnings once fully implemented,
but will also improve the stability of our earnings by decreasing exposure
to the weaker North American and western European markets for
tobacco-related papers. Upon full implementation, the announced
restructuring activities are expected to generate annual pre-tax benefits
of approximately $21 to $23 million, or $0.88 to $0.96 per share. Full
realization of earnings improvement from these actions is not certain and
is dependent upon other factors that impact on our business, including
continuing weakness in cigarette consumption in developed parts of the
world.
"On the cost front, during the fourth quarter we again realized
benefits from cost reduction initiatives undertaken to offset inflation.
However, inflation impacts on operating results worsened noticeably during
the fourth quarter, primarily due to increased purchased energy costs. For
the full year of 2007, inflationary cost increases totaled $13.0 million,
or $0.54 per share. This is approximately 70 percent of the rate realized
in 2006. Due to the sharp rise in inflationary cost increases during the
fourth quarter, the significant full-year benefits of cost reduction
activities did not fully offset other cost increases in 2007.
"The fourth quarter again demonstrated that with the fluctuating
quarterly earnings for Schweitzer-Mauduit during the last two years,
establishing an accurate projection for full-year results is difficult.
This will continue in 2008 given the changes underway in our business.
Full-year 2007 earnings, excluding restructuring expenses, of $1.20 per
share met our most recent guidance to likely exceed the high end of $1.00
to $1.15 per share. We reiterate that diluted earnings per share in 2008,
excluding restructuring expenses, are expected to exceed $1.50 per share.
However, earnings for the first quarter of 2008 will likely be the weakest
of the year due to the planned capital investment-related paper machine
downtime at PdM as well as one-time unfavorable purchase accounting impacts
associated with the announced acquisition of the 28 percent minority
interest in LTR. Growth in earnings in 2008 is expected to come from the
LTR acquisition, increased sales volumes for reconstituted tobacco leaf
products and cigarette paper for lower ignition propensity cigarettes, as
well as from the benefits of the announced restructuring activities. The
challenges to earnings growth in 2008 are expected to include inflationary
cost increases, particularly energy, initial losses associated with the
start-up of our 50 percent tobacco-related papers joint venture in China,
the continued decline in the production of cigarettes and therefore demand
for our products, execution of the broad-based restructuring and other cost
reduction activities underway and the continued weakness of the U.S. dollar
and the resulting impact on earnings for our Brazilian operation."
Conference Call
Schweitzer-Mauduit will hold a conference call to review fourth quarter
2007 results with investors and analysts at 10:30 a.m. eastern time on
Thursday, January 31, 2008. The conference call will be simultaneously
broadcast over the Internet at http://www.schweitzer-mauduit.com. To listen to the
call, please go to the Web site at least 15 minutes prior to the call to
register and to download and install any necessary audio software. For
those unable to listen to the live broadcast, a replay will be available on
the Web site shortly after the call.
About Schweitzer-Mauduit International
Schweitzer-Mauduit International, Inc. is a diversified producer of
premium specialty papers and the world's largest supplier of fine papers to
the tobacco industry. It also manufactures specialty papers for use in
alkaline batteries, vacuum cleaner bags, overlay products, saturating base
papers, and printing and packaging applications. Schweitzer-Mauduit and its
subsidiaries conduct business in over 90 countries and employ 3,500 people
worldwide, with operations in the United States, France, Brazil, the
Philippines, Indonesia and Canada. For further information, please visit
the Company's Web site at http://www.schweitzer-mauduit.com.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and is
subject to the safe harbor created by that Act. Actual results may differ
materially from the results suggested by these statements for a number of
reasons, including the following:
-- We have manufacturing facilities in 6 countries and sell products in
over 90 countries. As a result, we are subject to a variety of import
and export, tax, foreign currency, labor and other regulations within
these countries. Changes in these regulations, or adverse
interpretations or applications, as well as changes in currency
exchange rates, could adversely impact our business in a variety of
ways, including increasing expenses, decreasing sales, limiting our
ability to repatriate funds and generally limiting our ability to
conduct business.
-- Our financial performance is dependent upon the cost of raw materials,
particularly wood pulp, purchased energy, chemicals and labor.
Recently, the total cost of these items has increased significantly,
and competitors' selling prices for certain products and the nature of
our agreements with our customers may make it difficult to pass changes
in these costs on to our customers in a timely and effective manner.
-- Our sales are concentrated to a limited number of customers. In 2007,
41 percent of our sales were to our 2 largest customers. The loss of
one or both such customers, or a significant reduction in one or both
of these customers' purchases, could have a material adverse effect on
our results of operations.
-- Our financial performance is materially impacted by sales of both
reconstituted tobacco products and cigarette paper for lower ignition
propensity cigarettes. A significant change in sales or production
volumes, pricing or manufacturing costs of these products could have a
material impact on future financial results.
-- As a result of current excess capacity in the tobacco-related papers
industry and increased operating costs experienced in recent years,
competitive levels of selling prices for certain of our products are
not sufficient to cover those costs with a margin that we consider
reasonable. Such competitive pressures have resulted in downtime of
certain paper machines and, in some cases, accelerated depreciation or
impairment charges for certain equipment and employee severance
expenses associated with downsizing activities. Management continues
to evaluate how to operate our production facilities more effectively
with reduced production volumes.
-- In recent years, governmental entities around the world, particularly
in the United States and western Europe, have taken or have proposed
actions that may have the effect of reducing consumption of tobacco
products. Reports with respect to the possible harmful physical
effects of cigarette smoking and use of tobacco products have been
publicized for many years and, together with actions to restrict or
prohibit advertising and promotion of cigarettes or other tobacco
products, to limit smoking in public places and to increase taxes on
such products, are intended to discourage the consumption of cigarettes
and other such products. Also in recent years, certain governmental
entities, particularly in North America, have enacted, considered or
proposed actions that would require cigarettes to meet specifications
aimed at reducing their likelihood of igniting fires when the
cigarettes are not actively being smoked. Furthermore, it is not
possible to predict what additional legislation or regulations relating
to tobacco products will be enacted, or to what extent, if any, such
legislation or regulations might affect our business.
For additional factors and further discussion of these factors, please
see our Annual Report on Form 10-K for the year ended December 31, 2006.
Non-GAAP Financial Measures
Certain financial measures and comments contained in this press release
exclude restructuring expenses. Financial measures which exclude this item
have not been determined in accordance with accounting principles generally
accepted in the United States and are therefore "non-GAAP" financial
measures. Reconciliations of these non-GAAP financial measures to the most
closely analogous measure determined in accordance with accounting
principles generally accepted in the United States are included in the
document.
Schweitzer-Mauduit management believes that investors' understanding of
the Company's performance is enhanced by disclosing these non-GAAP
financial measures as a reasonable basis for comparison of the Company's
ongoing results of operations. Many investors are interested in
understanding the performance of our ongoing businesses and comparing our
results from normal operations from one period to the next. By providing
the non-GAAP financial measures, together with the reconciliations and
comments, we believe we are enhancing investors' understanding of our
business results.
Contact: Bill Foust Pete Thompson
770-569-4203 770-569-4277
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31,
(U.S. $ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Unaudited 2007 2006 Change
Net Sales $188.5 $166.2 + 13.4 %
Cost of products sold 165.1 151.6 + 8.9
Gross Profit 23.4 14.6 + 60.3
Selling expense 6.5 6.2 + 4.8
Research expense 2.1 1.9 + 10.5
General expense 9.3 6.8 + 36.8
Total nonmanufacturing expenses 17.9 14.9 + 20.1
Restructuring (income) expense (0.3) 4.8 N.M.
Operating Profit (Loss) 5.8 (5.1) N.M.
Interest expense 1.5 1.2 + 25.0
Other expense, net - 0.2 N.M.
Income (Loss) Before Income Taxes,
Minority Interest and Net Income
from Equity Affiliates 4.3 (6.5) N.M.
Benefit for income taxes - 3.2 N.M.
Minority interest in earnings of
subsidiaries 2.0 1.1 + 81.8
Net income from equity affiliates 0.2 - N.M.
Net Income (Loss) $2.5 $(4.4) N.M. %
Net Income (Loss) Per Share:
Basic $0.16 $(0.28) N.M. %
Diluted $0.16 $(0.28) N.M. %
Dividends Declared Per Share $0.15 $0.15
Average Common Shares Outstanding:
Basic 15,451,900 15,415,400
Diluted, including Common Share
Equivalents 15,796,200 15,415,400
N.M. - Not Meaningful
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FULL YEAR ENDED DECEMBER 31,
(U.S. $ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Unaudited 2007 2006 Change
Net Sales $714.8 $655.2 + 9.1 %
Cost of products sold 606.7 571.1 + 6.2
Gross Profit 108.1 84.1 + 28.5
Selling expense 22.8 22.7 + 0.4
Research expense 8.0 7.3 + 9.6
General expense 35.4 27.7 + 27.8
Total nonmanufacturing expenses 66.2 57.7 + 14.7
Restructuring expense 24.0 21.1 + 13.7
Operating Profit 17.9 5.3 N.M.
Interest expense 5.9 5.5 + 7.3
Other expense, net 0.1 0.5 - 80.0
Income (Loss) Before Income Taxes,
Minority Interest and Net Loss from
Equity Affiliates 11.9 (0.7) N.M.
Provision (benefit) for income taxes 0.5 (4.2) N.M.
Minority interest in earnings of
subsidiaries 8.0 4.1 + 95.1
Net loss from equity affiliates - 0.2 N.M.
Net Income (Loss) $3.4 $(0.8) N.M. %
Net Income (Loss) Per Share:
Basic $0.22 $(0.05) N.M. %
Diluted $0.22 $(0.05) N.M. %
Dividends Declared Per Share $0.60 $0.60
Average Common Shares Outstanding:
Basic 15,529,400 15,393,500
Diluted, including Common Share
Equivalents 15,741,600 15,393,500
N.M. - Not Meaningful
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. $ IN MILLIONS)
December 31, December 31,
Unaudited 2007 2006
(Restated)
ASSETS
Cash and cash equivalents $4.0 $13.7
Accounts receivable 100.6 88.9
Inventories 131.2 119.2
Other current assets 11.4 14.3
Net property, plant and equipment 456.0 416.8
Other noncurrent assets 74.7 44.2
Total Assets $777.9 $697.1
LIABILITIES & STOCKHOLDERS' EQUITY
Current debt $13.6 $17.1
Other current liabilities 201.5 150.9
Long-term debt 87.3 80.2
Pension and other postretirement benefits 46.8 54.2
Deferred income tax liabilities 25.0 29.0
Deferred revenue 18.1 24.1
Other noncurrent liabilities 22.7 23.0
Minority interest 26.0 15.6
Stockholders' equity 336.9 303.0
Total Liabilities and Stockholders'
Equity $777.9 $697.1
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE FULL YEAR ENDED DECEMBER 31,
(U.S. $ IN MILLIONS)
Unaudited 2007 2006
Net income (loss) $3.4 $(0.8)
Depreciation and amortization 39.2 38.2
Restructuring impairment/accelerated
depreciation 13.8 5.2
Amortization of deferred revenue (6.0) (5.9)
Deferred income tax benefit (13.6) (10.6)
Minority interest in earnings of subsidiaries 8.0 4.1
Other items 1.2 1.2
Net changes in operating working capital 25.4 20.4
Cash Provided by Operations 71.4 51.8
Capital spending (47.7) (9.6)
Capitalized software costs (8.9) (3.8)
Equity investment in foreign subsidiaries (12.8) (2.9)
Other investing (3.6) 4.0
Cash Used for Investing (73.0) (12.3)
Cash dividends paid to SWM stockholders (9.4) (9.4)
Cash dividends paid to minority owner - (3.7)
Changes in debt 1.5 (20.7)
Purchases of treasury stock (5.8) -
Other financing 4.8 2.7
Cash Used for Financing (8.9) (31.1)
Effect of Exchange Rate Changes on Cash 0.8 0.2
Increase (Decrease) in Cash and Cash
Equivalents $(9.7) $8.6
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
BUSINESS SEGMENT REPORTING
(U.S. $ IN MILLIONS)
The Company is operated and managed based on the geographical location of
its manufacturing operations: the United States, France and Brazil. For
purposes of the segment disclosure in the following tables, the term
"United States" includes operations in the United States and Canada. The
Canadian operations only produce flax fiber used as a raw material in the
U.S. operations. The term "France" includes operations in France, the
Philippines and Indonesia because the results of the Philippine and
Indonesian operations are not material for segment reporting purposes and
their sales are integrated with sales of the Company's French operations
in southeast Asia. Sales of products between segments are made at market
prices and elimination of these sales are referred to in the following
tables as intersegment sales. Expense amounts not associated with segments
are referred to as unallocated expenses.
Net Sales
For the three months For the twelve months ended
ended December 31, ended December 31,
2007 2006 % Change 2007 2006 % Change
France $119.5 $99.4 + 20.2 % $435.0 $385.0 + 13.0 %
United States 54.4 52.1 + 4.4 226.0 221.8 + 1.9
Brazil 19.3 17.8 + 8.4 73.0 67.3 + 8.5
Subtotal 193.2 169.3 734.0 674.1
Intersegment sales by:
France (0.7) (1.0) (4.2) (9.8)
United States (0.5) (0.4) (2.8) (1.2)
Brazil (3.5) (1.7) (12.2) (7.9)
Consolidated $188.5 $166.2 + 13.4 % $714.8 $655.2 + 9.1 %
Operating Profit (Loss)
For the three months For the twelve months ended
ended December 31, ended December 31,
2007 2006 % Change 2007 2006 % Change
France $6.3 $(4.7) N.M. % $27.1 $8.1 N.M. %
United States 4.4 1.9 N.M. 5.0 5.2 - 3.8
Brazil (2.2) (0.5) N.M. (3.3) (0.7) N.M.
Unallocated expenses (2.7) (1.8) + 50.0 (10.9) (7.3) + 49.3
Consolidated $5.8 $(5.1) N.M. $17.9 $5.3 N.M.
Restructuring Expense
For the three months For the twelve months ended
ended December 31, ended December 31,
2007 2006 % Change 2007 2006 % Change
France $(0.8) $4.5 N.M. % $10.4 $15.8 - 34.2 %
United States 0.5 0.3 + 66.7 13.2 5.3 N.M.
Brazil - - -- 0.4 - N.M.
Consolidated $(0.3) $4.8 N.M. $24.0 $21.1 + 13.7
Operating Profit (Loss) Without Restructuring Expense*
For the three months For the twelve months ended
ended December 31, ended December 31,
2007 2006 % Change 2007 2006 % Change
France $5.5 $(0.2) N.M. % $37.5 $23.9 + 56.9 %
United States 4.9 2.2 N.M. 18.2 10.5 + 73.3
Brazil (2.2) (0.5) N.M. (2.9) (0.7) N.M.
Unallocated expenses (2.7) (1.8) + 50.0 (10.9) (7.3) + 49.3
Consolidated $5.5 $(0.3) N.M.% $41.9 $26.4 + 58.7 %
* Operating Profit (Loss) Without Restructuring Expense is a non-GAAP
financial measure that is calculated by adding Restructuring Expense to
Operating Profit (Loss).
N.M. - Not Meaningful
SOURCE Schweitzer-Mauduit International, Inc.
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Related links:
http://www.schweitzer-mauduit.com
CONTACT:
Bill Foust, +1-770-569-4203, or Pete
Thompson, +1-770-569-4277, both of Schweitzer-Mauduit
International, Inc.
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