For the nine months ended September 30, 2012, including discontinued operations, net of tax, net earnings were $3.1 million, or $0.06 per diluted share, compared to net earnings of $7.0 million, or $0.14 per diluted share, for the same period last year. Net earnings in the current year included earnings from continuing operations before income taxes offset by income tax expense and net earnings from discontinued operations of $4.6 million, or $0.09 per diluted share. Net earnings in the prior year included earnings from continuing operations before income taxes, offset by income tax expense, and a net loss from discontinued operations of $3.0 million, or $0.06 per share.
Henry C. Newell, president and CEO, commenting on the Company’s continued progress against strategic initiatives, said, “Our Tissue expansion is on track as three to four percent case shipment growth continues to drive improving operating margins, now approaching 13 percent. The second half is proving to be a challenge for our Paper segment, as we see slowing demand in industrial and tape markets at a time when we are commercializing new technical capacity at our Brainerd, Minnesota, facility. Despite these pressures, technical volumes are up six percent this year and specifically, tape sector volume is up 14 percent, the result of new customer business and new product introductions.
“The successful exit of our Print franchise has resulted in an exceptionally well positioned balance sheet as we continue to commercialize technical capacity on our Brainerd asset and complete the installation, start-up and commercialization of the new towel and tissue machine at Harrodsburg, Kentucky. We expect to report continued progress over the coming quarters against the long-term growth targets and timelines we’ve outlined this year.”
TISSUE SEGMENTThe Tissue segment’s third-quarter operating profit of $7.5 million included pre-tax expense of $1.9 million related to the expansion activity. This result compared favorably to prior-year operating profit of $7.0 million, including $0.7 million in expansion-related pre-tax expense.PAPER SEGMENTDuring 2012, the Company completed the sale of this segment’s premium Print & Color brands, inventory and select equipment, and ceased papermaking and converting operations at its former primary Print & Color manufacturing site in Brokaw. In the third quarter, we sold the mill site to an unrelated third party. Results of operations related to the former Brokaw manufacturing facility are reported as discontinued operations and for the third quarter and the same period last year included, net-of-tax, a loss of $0.2 million from operations. From continuing operations, the Paper segment reported a third-quarter operating loss of $7.9 million versus an operating profit of $5.9 million for the same period in 2011. The 2012 third-quarter operating loss included pre-tax expense of $7.7 million related to a settlement charge on a certain defined benefit pension plan associated with our former Jay, Maine, facility. The operating results reflect the impact of transitioning capacity to technical grades, including extensive trialing activity at our Brainerd papermaking operations and the pace of working capital liquidation as a result of the premium Print & Color sale and Brokaw closure activity.