Public Affairs Department
Tim Laatsch
Telephone: (715) 422-4023, or
Scott Deitz
Telephone: (715) 422-1521
FOR IMMEDIATE RELEASE July 12, 2000
CONSOLIDATED PAPERS' SECOND QUARTER EARNINGS UP 227% COMPARED WITH THE SAME
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QUARTER IN 1999; RESULTS LIFTED BY RECORD SHIPMENTS AND IMPROVED SELLING PRICES
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WISCONSIN RAPIDS, Wis. - Consolidated Papers, Inc. (NYSE: CDP) today
reported that record total shipments and improved selling prices for its paper
resulted in second quarter 2000 earnings of $32,983,000, or 36 cents per share.
Second quarter earnings were adversely impacted by approximately four cents per
share due primarily to a LIFO provision related to pulp cost increases and
provisions for legal matters. This compares with second quarter 1999 earnings of
$10,080,000, or 12 cents per share, and first quarter 2000 earnings of
$25,271,000, or 28 cents per share.
Gorton M. Evans, president and chief executive officer, and George W.
Mead, chairman of the board, reported that the results mark the fourth
consecutive quarter of earnings improvement and represent the highest quarterly
earnings per share at Consolidated Papers since the first quarter of 1998.
Ongoing earnings improvement, judicious capital spending and prudent
management of working capital has allowed the company to reduce its debt. During
the past 12 months, the company's debt has been reduced by $144 million, or 14%.
The company's debt to capital ratio
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at the end of the second quarter was 36%. This compares to 42% at the end of the
second quarter in 1999.
Consolidated's companywide cost-reduction initiative, which will reduce
business costs by more than $100 million, also added to the quarterly
improvements. Since beginning the program in 1999, the company has reduced its
business costs by more than $60 million. These savings have been achieved
through more efficient use of raw materials, productivity and quality gains, and
a reduction in personnel costs. An additional $40 million in cost reductions are
anticipated to be achieved during the second half of the year through additional
productivity improvements, supply-chain management activities, customer service
initiatives and workforce reductions.
Boosted by stronger demand and improved selling prices for its
printing papers, Consolidated's second quarter 2000 sales totaled $506,868,000,
compared with $435,119,000 in second quarter 1999 and $483,459,000 in the first
quarter of this year. Record shipments for the quarter just ended were 563,088
tons, compared with 504,660 tons during the same period last year and 552,904
tons in the first quarter this year.
Total shipments of coated and supercalendered printing papers for
magazines, brochures, corporate annual reports, advertising inserts and catalogs
were a record, up 13% compared with second quarter 1999 and up 2% compared with
first quarter 2000.
Shipments of heavier-weight groundwood-free coated printing paper were
up 11% compared with the second quarter of 1999 but down 2% compared with the
first quarter of this
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year. Operations that produce groundwood-free coated paper ran at 88% of
available capacity during the quarter, compared with 82% during the second
quarter of 1999 and 93% in the first quarter of 2000.
Shipments of lighter-weight groundwood coated printing paper were up
14% compared with second quarter 1999 and up 2% compared with the first quarter
of this year. The combined operating rate of the mills that produce these
lightweight papers was 98% during the quarter just completed, compared with 84%
during the same quarter in 1999 and 98% during the first quarter of 2000.
The operating rate of the mill that produces supercalendered printing
paper continued to be at 100% of available capacity, as it has been for 13
consecutive quarters. Shipments of supercalendered papers from this mill were up
14% during this year's second quarter compared with the second quarter last year
and up 11% compared with the first quarter of 2000.
Demand for Consolidated's specialty papers used for product packaging,
bar code labels and pressure-sensitive papers continued to strengthen to record
levels. Shipments of these papers were up 22% compared with the second quarter
of 1999 and up 7% compared with first quarter 2000. The operating rate of the
mill that makes these papers also improved, operating at 96% of available
capacity during the second quarter of 2000, compared with 74% during second
quarter 1999 and 85% in the first quarter of this year.
Shipments of paperboard products and recycled fiber were stable during
the period.
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On February 22, 2000, Consolidated Papers announced its agreement to be
acquired by Stora Enso Oyj, Helsinki, Finland. Stora Enso is one of the world's
leading forest industry companies. The transaction has been unanimously approved
by the boards of directors of both companies. The sale is subject to regulatory
approval and the approval of shareholders of both companies. A proxy
statement/prospectus providing detailed information regarding the merger is
expected to be mailed to shareholders later this month.
FORWARD-LOOKING STATEMENTS
Certain statements in this release are forward-looking statements.
Because these forward-looking statements include risks and uncertainties, actual
future results may differ materially. Certain factors that could cause actual
future results to differ are described in the company's Form 10-Q for the
quarter ended March 31, 2000.
COMPANY PROFILE
Consolidated Papers, Inc. is one of North America's largest producers
of coated and supercalendered printing papers for the printing and publishing
industries. In addition, the company is one of the leading producers of
specialty papers and manufactures paperboard and paperboard products.
Consolidated also produces elemental chlorine-free kraft pulp from virgin wood
fiber for its own use and recycled pulp from printed, preconsumer and
postconsumer scrap paper.
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Consolidated employs approximately 6,800 people. The company is
headquartered in Wisconsin Rapids, Wisconsin, and operates manufacturing
facilities in Biron, Kimberly, Niagara, Stevens Point, Whiting and Wisconsin
Rapids, Wisconsin, as well as in Duluth, Minnesota.
Consolidated owns and manages nearly 700,000 acres of forestland in
Wisconsin, Michigan, Minnesota, and Ontario, Canada. The company obtains the
fiber required for its papermaking operations from these renewable forests; from
private, national, state and county forests; and from sawmill byproducts and
recycled scrap paper.
To learn more about Consolidated, visit the company's Web site at
http://www.consolidatedpapers.com.
Tabular summaries follow.
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<TABLE>
CONSOLIDATED BALANCE SHEETS Consolidated Papers, Inc. and Subsidiaries
<CAPTION>
As of
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June 30 June 30 December 31
2000 1999 1999
(Dollars in thousands) (Unaudited) (Unaudited)
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<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 16,596 $ 3,254 $ 6,201
Receivables (net of reserves of $5,847 as of June 30, 2000,
$6,750 as of June 30, 1999, and $6,002 as of December 31, 1999) 164,689 145,751 127,801
Inventories
Finished stock 90,549 83,347 68,972
Unfinished stock 7,495 7,454 8,301
Raw materials and supplies 89,619 98,501 91,348
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Total inventories 187,663 189,302 168,621
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Prepaid expenses 35,120 35,280 32,905
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Total current assets 404,068 373,587 335,528
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Investments and other assets 63,885 60,323 61,879
Restricted cash related to leases 422,124 428,086 443,844
Goodwill 126,033 135,695 130,593
PLANT AND EQUIPMENT
Buildings, machinery and equipment 3,671,032 3,517,787 3,632,547
Less: Accumulated depreciation 1,276,545 1,110,726 1,185,061
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2,394,487 2,407,061 2,447,486
Land and timberlands 42,203 41,321 42,129
Capital additions in process 84,579 135,300 64,714
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Total plant and equipment 2,521,269 2,583,682 2,554,329
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$ 3,537,379 $ 3,581,373 $ 3,526,173
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CURRENT LIABILITIES
Current portion of long-term debt $ 85,000 $ - $ 85,284
Accounts payable 112,921 92,564 103,564
Other 128,964 144,678 122,412
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Total current liabilities 326,885 237,242 311,260
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Long-term debt 764,450 993,000 802,000
Capital lease obligations 442,856 453,714 467,804
Deferred income taxes 414,162 358,821 390,991
Postretirement benefits 173,303 157,272 167,118
Other noncurrent liabilities 31,332 33,857 32,870
SHAREHOLDERS' INVESTMENT
Preferred stock, authorized and unissued 15,000,000 shares - - -
Common stock, shares issued 91,539,166 as of June 30, 2000,
90,988,094 as of June 30, 1999, and 91,140,982 as of
December 31, 1999 91,539 90,988 91,141
Capital in excess of par value 80,769 67,030 71,390
Accumulated other comprehensive income (2,796) (2,797) (2,745)
Treasury stock, at cost, 211,227 shares as of June 30, 2000,
304,025 shares as of June 30, 1999, and 304,025 shares as of
December 31, 1999 (4,739) (7,093) (7,093)
Reinvested earnings 1,219,618 1,199,339 1,201,437
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Total shareholders' investment 1,384,391 1,347,467 1,354,130
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$ 3,537,379 $ 3,581,373 $ 3,526,173
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</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF INCOME Consolidated Papers, Inc. and Subsidiaries
<CAPTION>
Three months ended Six months ended
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June 30 March 31 June 30
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(Dollars in thousands, except per share data - unaudited) 2000 1999 2000 2000 1999
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<S> <C> <C> <C> <C> <C>
Net sales $ 506,868 $ 435,119 $ 483,459 $ 990,327 $ 894,352
Cost of goods sold 411,186 378,780 403,600 814,786 776,836
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Gross profit 95,682 56,339 79,859 175,541 117,516
Selling, general and administrative expenses 27,740 26,487 26,241 53,981 51,642
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Income from operations 67,942 29,852 53,618 121,560 65,874
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Interest expense (20,094) (20,022) (20,501) (40,595) (41,073)
Interest income 6,808 5,423 7,024 13,832 11,468
Miscellaneous, net (586) 1,547 1,287 701 3,815
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Total other income (expense), net (13,872) (13,052) (12,190) (26,062) (25,790)
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Income before provision for income taxes 54,070 16,800 41,428 95,498 40,084
Provision for income taxes 21,087 6,720 16,157 37,244 16,034
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Net income $ 32,983 $ 10,080 $ 25,271 $ 58,254 $ 24,050
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Net income per share - basic $0.36 $0.12 $0.28 $0.64 $0.27
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Net income per share - diluted $0.36 $0.12 $0.28 $0.64 $0.27
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Average number of common shares outstanding 91,240,968 90,648,913 90,909,365 91,075,166 90,536,479
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CONSOLIDATED STATEMENTS OF REINVESTED EARNINGS
Three months ended Six months ended
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June 30 March 31 June 30
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(Dollars in thousands - unaudited) 2000 1999 2000 2000 1999
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<S> <C> <C> <C> <C> <C>
Balance beginning of period $ 1,206,718 $ 1,209,164 $ 1,201,437 $ 1,201,437 $ 1,215,091
Add: Net income 32,983 10,080 25,271 58,254 24,050
Deduct: Cash dividends (20,083) (19,905) (19,990) (40,073) (39,802)
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Balance end of period $ 1,219,618 $ 1,199,339 $ 1,206,718 $ 1,219,618 $ 1,199,339
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SHIPMENTS IN TONS
Three months ended Six months ended
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June 30 March 31 June 30
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2000 1999 2000 2000 1999
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<S> <C> <C> <C> <C> <C>
Printing papers 506,208 448,944 498,170 1,004,378 914,862
Specialty papers 40,830 33,440 38,295 79,125 66,987
Paperboard 792 1,070 758 1,550 2,001
Paperboard products 7,415 7,335 7,066 14,481 14,392
Corrugated products - 5,863 - - 14,955
Recycled pulp 7,843 8,008 8,615 16,458 15,679
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Total 563,088 504,660 552,904 1,115,992 1,028,876
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</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS Consolidated Papers, Inc. and Subsidiaries
<CAPTION>
Six months ended June 30
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(Dollars in thousands - unaudited) 2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 58,254 $ 24,050
Depreciation and depletion 95,346 95,010
Amortization of goodwill and intangibles 4,775 4,731
Debt premium amortization - (992)
Deferred income taxes 23,237 9,248
Earnings of affiliates (1,484) (1,881)
(Increase) decrease in current assets, other than cash and cash equivalents (58,145) 6,395
Increase (decrease) in current liabilities, other than current
portion of long-term debt 15,843 13,272
Increase (decrease) in postretirement benefits 6,185 8,764
Increase (decrease) in other noncurrent liabilities (1,538) 2,441
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Net cash provided by operating activities 142,473 161,038
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (62,286) (93,066)
Proceeds from sale of assets - 25,483
Other (4,016) (1,517)
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Net cash (used in) investing activities (66,302) (69,100)
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CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends (40,073) (39,802)
Repayment of long-term debt (30,000) (20,572)
Net repayments under lines of credit, revolvers and commercial papers (7,834) (40,000)
Common stock issued (net) 12,131 8,460
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Net cash (used in) financing activities (65,776) (91,914)
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Net increase in cash and cash equivalents 10,395 24
Cash and cash equivalents - beginning of period 6,201 3,230
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Cash and cash equivalents - end of period $ 16,596 $ 3,254
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Cash paid during the period for:
Interest $ 38,594 $ 38,566
Income taxes 10,200 3,210
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</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The condensed financial statements included herein have been prepared by
the company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the
notes thereto included in the company's latest Annual Report on Form 10-K.
In the opinion of management, the aforementioned statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary
for a fair presentation of the results for the interim periods. Results
for the six months ended June 30, 2000, are not necessarily indicative of
results that may be expected for the year ending December 31, 2000.
2. On May 28, 1999, the company sold the assets of Castle Rock Container
Company, a division of Consolidated Papers, Inc. and manufacturer of
corrugated products, to St. Laurent Packaging Corp. The sale proceeds
approximated net book value.
3. On February 22, 2000, Consolidated Papers announced its agreement to be
acquired by Stora Enso Oyj, Helsinki, Finland. Stora Enso is one of the
world's leading forest industry companies. The transaction has been
unanimously approved by the boards of directors of both companies. The
completion of the sale, which is subject to regulatory approval and the
approval of shareholders of both companies, is expected to occur in August
or September 2000.
