EX-99.1 2 a05-8592_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Polymer Group, Inc.
4055 Faber Place Dr.
Suite 201
N. Charleston, SC  29405
www.polymergroupinc.com
843-329-5151

 

PGI News Release

 

Polymer Group, Inc. Announces First Quarter Results

 

For Immediate Release

 

Tuesday, May 3, 2005

 

[North Charleston, SC] — Polymer Group, Inc. (OTC Bulletin Board: POLGA/POLGB) announced results of operations for the first quarter ended April 2, 2005.

 

Operational highlights included:

 

•                  First quarter sales grew 18.5% to $244.4 million compared to the first quarter of 2004.

 

•                  First quarter gross profit of $43.9 million increased 15.6% over the prior year comparable period of $38.0 million.

 

•                  The company continued its bottom-line profitability improvement with net income for the quarter of $5.2 million compared to a loss of $8.8 million in the first quarter of 2004.

 

Net sales for the first quarter of 2005 were $244.4 million compared to $206.2 million in the first quarter of 2004.  Sales growth was driven by higher volumes in each region of the world in which the company operates and by increased selling prices implemented to partially offset rising raw material costs.

 

Gross profit was $43.9 million for the first quarter, representing a gross profit margin of 18.0% compared to $38.0 million and 18.4%, respectively, for the same period in 2004.  The company continued to improve product mix and manufacturing efficiencies during the quarter. However, the gross margin as a percent of sales decreased slightly, reflecting the negative impacts of raw material cost increases which offset higher selling prices.

 

Operating income for the first quarter of 2005 was $16.4 million compared to $10.8 million for the first quarter of 2004, a 52.9% increase driven primarily by higher volumes and an improved product mix.  Operating income in the first quarter of 2004 included $0.6 million of plant realignment costs.  Additionally, operating income benefited from the company’s ability to continue to control costs as evidenced by selling, general and administrative expenses as a percent of sales decreasing from 12.9% during the first quarter of 2004 to 11.2% for the first quarter of 2005.

 

Net income for the quarter was $5.2 million compared to a loss of $8.8 million during the first quarter of 2004.  Contributing to the increase in bottom-line profitability was a $7.3 million reduction of interest expense as a result of the refinancing of the company’s senior bank debt in April 2004.  After $2.4 million of accrued dividends on the company’s PIK preferred stock, the

 


 

company reported income available to common shareholders for the quarter of $2.8 million compared to the loss of $8.8 million the prior year.

 

Polymer Group’s Chief Executive Officer, James L. Schaeffer, stated, “Our business remained strong during the first quarter of 2005.  We achieved broad-based improvement in each area of our business over the prior year and produced bottom-line profitability through improvements in our product mix and manufacturing efficiencies.  With three large capacity expansion projects underway, we are focused on maintaining a strong foundation for continued growth and improvement.”

 

In light of the company’s strong performance and financial condition, as reflected in the first quarter and prior period results, the company has retained JP Morgan Securities Inc. as its financial advisor to assist the company in evaluating various strategic alternatives in order to maximize shareholder value, which could include, among other things, the sale or recapitalization of the company.  This action is also a result of the company’s desire to provide the existing majority stockholder with liquidity alternatives consistent with the stockholder’s overall fund mandate.  The company expects to complete its review of strategic alternatives in the near future.  However, there can be no assurance that this process will result in any transaction or transactions taking place or being completed.

 

Polymer Group, Inc., one of the world’s leading producers of nonwovens, is a global, technology-driven developer, producer and marketer of engineered materials. With the broadest range of process technologies in the nonwovens industry, PGI is a global supplier to leading consumer and industrial product manufacturers. The company operates 21 manufacturing facilities in 10 countries throughout the world.

 

Safe Harbor Statement

 

Except for historical information contained herein, the matters set forth in this press release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements speak only as of the date of this release.  Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: uncertainty regarding the effect or outcome of the company’s decision to explore strategic alternatives; general economic factors including, but not limited to, changes in interest rates, foreign currency translation rates, consumer confidence, trends in disposable income, changes in consumer demand for goods produced, and cyclical or other downturns; substantial debt levels and potential inability to maintain sufficient liquidity to finance the company’s operations and make necessary capital expenditures; inability to meet existing debt covenants; information and technological advances; changes in environmental laws and regulations; cost and availability of raw materials, labor and natural and other resources and the inability to pass raw material cost increases along to customers; domestic and foreign competition; reliance on major customers and suppliers; and risks related to operations in foreign jurisdictions.  Investors and other readers are directed to consider the risks and uncertainties discussed in documents filed by Polymer Group, Inc. with the Securities and Exchange Commission, including the company’s 2004 Annual Report on Form 10-K.

 

For further information, please contact:

 

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Dennis Norman

Vice President – Strategic Planning & Communication

(843) 329-5151

normand@pginw.com

 

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P O L Y M E R  G R O U P,  I N C.

Consolidated Statements of Operations (Unaudited)

Three Months Ended April 2, 2005,

Three Months Ended April 3, 2004

(In Thousands, Except Per Share Data)

 

 

 

Three Months
Ended
April 2,
2005

 

Three Months
Ended
April 3,
2004

 

 

 

 

 

 

 

Net sales

 

$

244,361

 

$

206,242

 

 

 

 

 

 

 

Cost of goods sold

 

200,444

 

168,266

 

 

 

 

 

 

 

Gross profit

 

43,917

 

37,976

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

27,467

 

26,633

 

 

 

 

 

 

 

Plant realignment costs

 

4

 

584

 

 

 

 

 

 

 

Operating income

 

16,446

 

10,759

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

Interest expense, net

 

7,866

 

15,177

 

Minority interests

 

934

 

482

 

Foreign currency and other

 

(315

)

1,385

 

 

 

8,485

 

17,044

 

 

 

 

 

 

 

Income (loss) before income tax expense

 

7,961

 

(6,285

)

 

 

 

 

 

 

Income tax expense

 

2,795

 

2,485

 

 

 

 

 

 

 

Net income (loss)

 

5,166

 

(8,770

)

 

 

 

 

 

 

Accrued dividends on PIK preferred shares

 

2,358

 

—

 

 

 

 

 

 

 

Income (loss) applicable to common shareholders

 

$

2,808

 

$

(8,770

)

 

 

 

 

 

 

Average common shares outstanding

 

10,418

 

8,787

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

Basic

 

$

0.27

 

$

(1.00

)

 

 

 

 

 

 

Diluted

 

$

0.27

 

$

(1.00

)

 

 

 

 

 

 

Selected Financial Data

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense included in operating income

 

$

13,157

 

$

12,677

 

 

 

 

 

 

 

Amortization of loan acquisition costs

 

$

505

 

$

472

 

 

 

 

 

 

 

Capital expenditures

 

$

10,095

 

$

4,504

 

 

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P O L Y M E R  G R O U P,  I N C.

Condensed Consolidated Balance Sheets

(In Thousands)

 

 

 

April 2,

 

January 1,

 

 

 

2005

 

2005

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

A S S E T S

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

21,618

 

$

41,296

 

Accounts receivable, net

 

132,893

 

112,286

 

Inventories

 

112,466

 

106,349

 

Other

 

40,228

 

37,366

 

Total current assets

 

307,205

 

297,297

 

 

 

 

 

 

 

Property, plant and equipment, net

 

395,858

 

402,603

 

Intangibles and loan acquisition costs, net

 

47,340

 

48,819

 

Other assets

 

6,553

 

4,634

 

Total assets

 

$

756,956

 

$

753,353

 

 

 

 

 

 

 

L I A B I L I T I E S  A N D  S H A R E H O L D E R S’  E Q U I T Y

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

61,683

 

$

63,773

 

Accrued expenses and other

 

45,975

 

35,792

 

Current portion of long-term debt and short term borrowings

 

9,593

 

10,394

 

Total current liabilities

 

117,251

 

109,959

 

 

 

 

 

 

 

Long-term debt

 

402,806

 

403,560

 

Other noncurrent liabilities

 

86,083

 

92,787

 

Total liabilities

 

606,140

 

606,306

 

Minority interests

 

15,557

 

14,912

 

 

 

 

 

 

 

16% Series A convertible pay-in-kind preferred shares

 

60,639

 

58,286

 

 

 

 

 

 

 

Shareholders’ equity

 

74,620

 

73,849

 

Total liabilities and shareholders’ equity

 

$

756,956

 

$

753,353

 

 

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