Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 28, 1998
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Wellman, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-15899 04-1671740
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1040 Broad Street, Shrewsbury, NJ 07702
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(Address of principal executive offices) (Zip Code)
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Item 5. Other Events
The registrant's press release dated October 28, 1998 with respect to
its earnings for the quarter and the nine months ended September 30, 1998,
attached hereto as Exhibit 99, is hereby incorporated by reference.
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
Exhibit No. Description
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99 Press release dated October 28, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WELLMAN, INC.
Date: October 29, 1998 /s/ Mark J. Rosenblum
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Mark J. Rosenblum
Chief Accounting Officer, Vice President
and Controller
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EXHIBIT 99
Contact: Jill Bongiovanni
Investor Relations Manager
(732) 935 - 7319
FOR IMMEDIATE RELEASE
WELLMAN REPORTS 46% INCREASE IN YTD 1998 EPS
DESPITE LOWER 3Q98 EPS AND CONTINUED FIBER WEAKNESS
October 28, 1998, Shrewsbury, NJ - Wellman, Inc. (NYSE: WLM) today reported
financial results for the periods ended September 30, 1998. Quarterly net
earnings (excluding nonrecurring items), which had increased for six quarters
through the second quarter of 1998, declined in the third quarter. The
increases primarily resulted from improved profit margins in the European
operations, lower chemical raw material costs and lower interest expense and
income taxes. However, in the third quarter of 1998, net earnings were
adversely impacted by various factors including lower worldwide fiber and PET
resins margins and volumes.
<TABLE>
<CAPTION>
3Q98 3Q97 YTD Sept. 98 YTD Sept. 97
---- ---- ------------ ------------
($Millions)
<S> <C> <C> <C> <C>
Sales 237.0 264.7 761.4 799.0
Net Earnings 7.7 9.8 34.8 23.8
Net Earnings Per Diluted Share $0.25 $0.31 $1.11 $0.76
</TABLE>
Worldwide fiber profit margins have been declining throughout 1998
primarily due to lower selling prices caused by increased competition with
Asian fiber and textile imports. In addition, increased competition with
domestic producers, resulting from recent expansions in U.S. polyester staple
and POY (partially-oriented yarn) capacity, have contributed to selling price
pressure.
Profitability in the worldwide PET resins business increased
significantly in the first nine months of 1998 compared to the same period in
1997, primarily due to lower chemical raw material costs and strong industry
demand. However, this business began to experience increased competitive
pressure during the third quarter.
Wellman is well positioned to compete in these markets. The Company
continues to benefit from its low-cost position, quality assets and long-term
volume growth. It continues to operate its production facilities and sell
its products at higher utilization rates than most competitors. Selling,
general and administrative expenses declined 7% in the first nine months of
1998 compared to the year-ago nine-month period.
The Company's balance sheet remains strong, with a total debt-to-capital
ratio of 43% at September 30, 1998. Wellman recently received investment-
grade credit ratings from Standard & Poor's and Moody's.
Wellman President and CEO, Thomas M. Duff, noted "The worldwide
polyester fiber market is being severely impacted by the Asian economic
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crisis and the resultant increase in imports of fiber, yarn, fabric and
apparel from that region. Although we expect fiber volumes to remain
relatively stable, ongoing selling price pressure will continue to erode
fiber profit margins in the near term. In addition, the competitive PET
resins environment in the United States and Europe, combined with seasonal
demand slowing, is resulting in pressure on PET resins selling prices.
Additional fiber and PET resins price pressure is expected to result in a
decline in fourth quarter 1998 net earnings compared to the 1998 third
quarter."
Wellman, Inc. manufactures and markets high-quality polyester products,
including Fortrel(R) brand polyester textile fibers, polyester fibers made
from recycled raw materials and PermaClear(R) brand PET (polyethylene
terephthalate) packaging resins. The world's largest PET plastic recycler,
Wellman utilizes a significant amount of recycled raw materials in its
manufacturing operations.
Forward-Looking Statements
- -------------------------------
Statements contained in this report that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company cautions that
a number of important factors could cause actual results to differ materially
from those expressed in any forward-looking statements made by the Company.
Such statements contain a number of risks and uncertainties, certain of which
are set forth in the Company's Securities and Exchange Commission filings.
The Company cannot assure that it will be able to anticipate or respond
timely to changes which could adversely affect its operating results in one
or more fiscal quarters. Results of operations in any past period should not
be considered indicative of results to be expected in future periods.
Fluctuations in operating results may result in fluctuations in the price of
the Company's common stock.
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<TABLE>
Wellman, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
<CAPTION>
Third Quarter Nine Months
ended September 30, ended September 30,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net sales $237.0 $264.7 $761.4 $799.0
Cost of sales 205.2 226.7 644.0 680.6
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Gross profit 31.8 38.0 117.4 118.4
Selling, general &
administrative expenses 17.7 19.0 56.0 60.1
Restructuring charge** --- --- --- 7.5
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Operating income 14.1 19.0 61.4 50.8
Interest expense, net 2.0 3.0 6.6 10.2
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Earnings before income taxes 12.1 16.0 54.8 40.6
Provision for income taxes 4.4 6.2 20.0 16.8
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Net earnings $ 7.7 $ 9.8 $ 34.8 $ 23.8
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Net earnings per common
share - diluted $ 0.25 $ 0.31 $ 1.11 $ 0.76
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Average common shares 31.3 31.5 31.4 31.2
</TABLE>
** Approximately $4.3 million, or $0.14 per share, on an after-tax basis.
Basic EPS are same as diluted EPS for third quarter 1998 and 1997.
Basic EPS for nine-month period 1998 and 1997 are $1.12 and $0.77.
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