In a release issued October 1, the Company set forth full-year guidance for adjusted net earnings from continuing operations of $0.28-$0.30 per diluted share compared to prior-year adjusted net earnings of $0.33 per diluted share.
CONFERENCE CALLWausau Paper’s third-quarter conference call is scheduled for 10:00 a.m. Eastern on Tuesday, October 30, and can be accessed through the Investors section of the Company’s website at www.wausaupaper.com. A replay of the webcast will be available at the same site through November 6.
About Wausau Paper:Wausau Paper produces and markets specialty papers for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products. The Company is headquartered in Mosinee, Wisconsin, and is listed on the NYSE under the symbol WPP. To learn more about Wausau Paper visit: www.wausaupaper.com .
Safe Harbor under the Private Securities Litigation Reform Act of 1995: The matters discussed in this news release concerning the Company’s future performance or anticipated financial results are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements. Among other things, these risks and uncertainties include the strength of the economy and demand for paper products, increases in raw material and energy prices, manufacturing problems at Company facilities, and other risks and assumptions described under “Information Concerning Forward-Looking Statements” in Item 7 and in Item 1A of the Company’s Form 10-K for the year ended December 31, 2011. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
|Interim Report - Quarter Ended September 30, 2012|
|(in thousands, except per share amounts)|
|Condensed Consolidated Statements||Three Months||Nine Months|
|of Operations (unaudited)||Ended September 30,||Ended September 30,|
|Cost of sales||180,706||187,481||557,579||548,073|
|Selling & administrative expenses (Note 3)||30,185||14,697||74,837||50,045|
|Operating (loss) profit||(8,642||)||10,310||(1,113||)||21,937|
|Loss on early extinguishment of debt||-||-||-||(666||)|
|Other expense, net||(7||)||(5||)||(17||)||(15||)|
|Earnings from continuing operations before income taxes||(9,297||)||8,665||(3,518||)||15,799|
|Provision (credit) for income taxes||(4,144||)||3,312||(2,006||)||5,809|
|(Loss) earnings from continuing operations||(5,153||)||5,353||(1,512||)||9,990|
|(Loss) earnings from discontinued operations, net of taxes (Note 2)||(156||)||(172||)||4,646||(2,970||)|
|Net (loss) earnings||$||(5,309||)||$||5,181||$||3,134||$||7,020|
|Net (loss) earnings per share:|
|Net (loss) earnings per share - basic *||$||(0.11||)||$||0.11||$||0.06||$||0.14|
|Net (loss) earnings per share - diluted||$||(0.11||)||$||0.10||$||0.06||$||0.14|
|Weighted average shares outstanding-basic||49,323||49,171||49,309||49,155|
|Weighted average shares outstanding-diluted||49,323||49,425||49,528||49,386|
|* Totals may not foot due to rounding differences.|
|Condensed Consolidated Balance Sheets (Unaudited) (Note 1)||September 30,||December 31,|
|Property, plant, and equipment, net||444,267||369,836|
|Assets of discontinued operations (Note 2)||444||-|
|Liabilities of discontinued operations (Note 2)||1,482||-|
|Total Liabilities and Stockholders' Equity||$||696,429||$||678,830|
|Condensed Consolidated Statements||Nine Months|
|of Cash Flows (Unaudited) (Note 1)||Ended September 30,|
|Cash flows from operating activities:|
|Provision for depreciation, depletion, and amortization||34,455||42,298|
|Gain on sale of business||(12,535||)||-|
|Impairment of long-lived assets||2,075||-|
|Loss on early extinguishment of debt||-||666|
|Other non-cash items||6,433||(1,989||)|
|Changes in operating assets and liabilities:|
|Net cash provided by operating activities||31,344||32,208|
|Cash flows from investing activities:|
|Grants received for capital expenditures||236||610|
|Proceeds from sale of business||20,837||-|
|Proceeds from sale of assets||4,777||1,781|
|Net cash used in investing activities||(84,496||)||(60,680||)|
|Cash flows from financing activities:|
|Net borrowings of commercial paper||6,350||20,535|
|Borrowings under credit agreement||3,000||33,000|
|Payments under credit agreement||(3,000||)||(33,000||)|
|Issuances of notes payable||50,000||50,000|
|Payments under notes payable obligations||-||(35,000||)|
|Payments under industrial development bond agreement||(19,000||)||-|
|Payment of premium on early extinguishment of debt||-||(708||)|
|Net cash provided by financing activities||32,912||30,397|
|Net (decrease) increase in cash & cash equivalents||$||(20,240||)||$||1,925|
Balance sheet amounts at September 30, 2012, are unaudited. The December 31, 2011, amounts are derived from audited financial statements. The assets and liabilities of the discontinued operation were not retroactively reclassified in the balance sheet at December 31, 2011, and as a result, the balances are not comparable between periods. The statements of cash flows for the nine months ended September 30, 2012 and 2011, are unaudited and include discontinued operations in both periods presented.
In December 2011, we announced that our Board of Directors had approved the sale of our premium Print & Color brands, and the closure of our Brokaw, Wisconsin paper mill. The sale of the premium Print & Color brands, select paper inventory, and certain manufacturing equipment to Neenah Paper, Inc. closed on January 31, 2012, generating proceeds of $20.5 million and a pre-tax gain of $12.2 million. We permanently ceased papermaking operations at the mill on February 10, 2012. We have determined that the remaining assets and liabilities of the Brokaw mill, which are included as part of our Paper segment, meet the criteria for discontinued operations presentation as established in Accounting Standards Codification Subtopic 205-20, "Discontinued Operations".
During the third quarter of 2012, we continued to execute restructuring activities related to the closure of the Brokaw mill, and have recognized pre-tax charges of approximately $0.4 million during the three months ended September 30, 2012. Exclusive of the gain recorded for the sale of the Print & Color brands, during the nine months ended September 30, 2012, we have recognized pre-tax charges of approximately $6.7 million. No significant additional pre-tax closure charges are expected to be incurred during the remainder of 2012.
Within the Corporate & Eliminations reporting segment, the second and third quarters of 2012 included pre-tax charges of $2.2 million and $4.4 million, respectively, related to settlement charges associated with various defined benefit pension plans. Also in the third quarter of 2012, the Paper segment incurred pre-tax charges of $7.7 million related to the settlement of a defined benefit pension plan. These settlements are included in selling and administrative expenses in the three and nine months ended September 30, 2012. We previously disclosed in our consolidated financial statements for the year ended December 31, 2011, that we anticipated making contributions of approximately $23 million directly to our defined benefit pension and retirement plans in 2012. As of September 30, 2012, we have made contributions of $23.5 million to our defined benefit pension and retirement plans and now expect to contribute approximately $24.0 million during the full year of 2012.
Interim Segment Information
We have evaluated our disclosures of our business segments in accordance with the Financial Accounting Standards Board Accounting Standards Codification Subtopic 280-10, and as a result we have classified our operations into two principal reportable segments: Tissue and Paper, each providing different products. Separate management of each segment is required because each business unit is subject to different marketing, production, and technology strategies.
The Tissue segment produces a complete line of towel and tissue products that are marketed along with soap and dispensing systems for the "away-from-home" market. Tissue operates a paper mill in Middletown, Ohio and a converting facility in Harrodsburg, Kentucky. The Paper segment produces specialty papers within three core markets - Food, Industrial & Tape, and Coated & Liner. These products are produced at manufacturing facilities located in Brainerd, Minnesota and in Rhinelander and Mosinee, Wisconsin. In 2011 and into 2012, the Paper segment produced fine printing and writing papers at a manufacturing facility in Brokaw, Wisconsin. Papermaking operations at the Brokaw facility permanently ceased on February 10, 2012. We have reported the Brokaw facility as a discontinued operation. See Note 2 for additional information.
Following is net sales, operating profit (loss), and other significant items by segment. The net sales, operating profit (loss), and other significant items exclude discontinued operations in all periods presented.
|(In thousands, except ton data)||Three Months||Nine Months|
|(Unaudited)||Ended September 30,||Ended September 30,|
|Net sales external customers|
|Operating profit (loss)|
|Corporate & Eliminations||(8,264||)||(2,583||)||(21,308||)||(11,391||)|
|Depreciation, depletion, and amortization|
|Corporate & Unallocated||767||639||2,097||1,845|
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