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Verso Paper Corp. Reports Fourth Quarter And Year-End 2011 Results

Stocks in this article: VRS

“Market conditions in the fourth quarter were challenged by the seasonal slow-down as well as the tepid economic recovery. However, our sales volumes for the quarter were favorable compared to the fourth quarter of 2010. Our outlook for 2012 continues to see a balance of supply and demand which should support favorable operating rates.”

Verso’s net sales for 2011 increased $117.2 million, or 7.3%, compared to 2010, reflecting a 9.4% increase in the average sales price for all of our products while sales volume decreased 2.0% compared to 2010. Verso’s gross margin was 15.2% in 2011 compared to 12.1% in 2010.

For the year ended December 31, 2011, Verso recorded special items totaling $82.8 million, or $1.57 per diluted share, primarily related to restructuring costs associated with the shutdown of three paper machines, losses related to debt refinancing, goodwill impairment, and the negative impact of de-designating certain hedges. For the year ended December 31, 2010, special items of $4.7 million, or $0.09 per diluted share, were primarily related to new product development. In 2011, Verso reported a net loss of $137.1 million, or $2.61 per diluted share, and operating income of $15.7 million including special items. Verso reported a net loss of $131.1 million, or $2.50 per diluted share, and an operating loss of $3.9 million including special items in 2010.

Excluding special items, net loss was $54.3 million, or adjusted diluted loss per share of $1.02, for the year ended December 31, 2011. Excluding special items, net loss was $126.4 million, or adjusted diluted loss per share of $2.41, for the year ended December 31, 2010.

Summary Results

Results of Operations – Comparison of the Fourth Quarter of 2011 to the Fourth Quarter of 2010

    Three Months Ended
December 31,
(Dollars in thousands)     2011   2010
Net sales $ 450,282   $ 407,684
Costs and expenses:
Cost of products sold - (exclusive of depreciation,
amortization, and depletion) 393,728 337,659
Depreciation, amortization, and depletion 31,113 30,796
Selling, general, and administrative expenses 18,268 21,778
Goodwill impairment 18,695 -
Restructuring and other charges       24,464       -  
Total operating expenses       486,268       390,233  
Operating (loss) income       (35,986 )     17,451  
Interest income (20 ) (26 )
Interest expense 31,807 31,695
Other income, net       (5 )     (346 )
Loss before income taxes (67,768 ) (13,872 )
Income tax benefit       53       145  
Net loss     $ (67,821 )   $ (14,017 )

Net Sales. Net sales for the fourth quarter of 2011 increased 10.4% to $450.3 million from $407.7 million in the fourth quarter of 2010, as sales volume increased 6.2% and the average sales price for all of our products increased 4.0% compared to the fourth quarter of 2010.

Net sales for our coated and supercalendered papers segment increased 10.5% in the fourth quarter of 2011 to $371.9 million from $336.5 million for the same period in 2010, as paper sales volume increased 5.3% and the average paper sales price per ton increased 5.0% compared to the fourth quarter of 2010.

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