FiberMark Reports Second Quarter Earnings and Announces Facility Consolidation Plans

Business Wire,  August 1, 2001  

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Business Editors

BRATTLEBORO, Vt.--(BUSINESS WIRE)--Aug. 1, 2001

FiberMark, Inc. (NYSE:FMK) today reported that net earnings per share for the second quarter ended June 30, 2001, were $.05 on net income of $.3 million versus $.55 on net income of $3.8 million for the comparable 2000 quarter. Excluded from second quarter results were non-recurring after-tax charges totaling $8.0 million, or $1.14 per share, related to a planned facility closure. Also excluded was an extraordinary charge of $0.7 million, or $.10 per share, related to early retirement of debt.

The April 18 acquisition of Rexam Decorative Specialties International, Inc. (DSI) boosted net sales 11.7% for the second quarter of 2001 to $102.1 million from $91.4 million for the same period last year. Excluding FiberMark DSI sales of $26.2 million, quarterly sales were off 17%.

Filter media sales during the second quarter were $22.4 million versus $27.0 million in the comparable 2000 quarter, a 17% decline. Technical specialties sales were $21.6 million in the second quarter of 2001 versus $26.5 million for the prior year period, a 19% decline. Sales in durable specialties declined 17.6% to $21.1 million versus $25.6 million in the second quarter of 2000. Sales in office products for the latest quarter were $10.7 million compared with $12.4 million for the same period last year, a 13.7% decline. Sales in decorative specialties were $26.2 million for the second quarter of 2001, reflecting sales between April 18 and June 30, effective with the DSI acquisition.

For the six months ended June 30, 2001, net earnings per share were $.46 on net income of $3.2 million compared with $1.13 per share on net income of $7.9 million for the first half of 2000. Net sales for the first six months of 2001 were $192.4 million compared with $186.5 million, with the increase attributable to the DSI acquisition.

"Sales weakness accelerated during the quarter, mirroring the broad-based economic slowdown worldwide," said Alex Kwader, president and chief executive officer. "Our European sales were not affected until the second quarter and have slowed less visibly. Sales in our German operations are off a much smaller 3%. At FiberMark Lahnstein in particular, certain markets such as flooring and wallcovering materials provided growth, counterbalancing the slightly sluggish European base business.

"Compared with the second quarter in 2000, pulp prices moderated significantly, while energy costs remain at higher overall levels," Kwader said. "Additionally, cost levels were higher due to trial activity related to facility consolidation."

Given the level and nature of current business demands, the company today announced plans to continue to operate its Hughesville, N.J., facility, previously slated for closure. The company also announced plans to cease operations at its Fitchburg, Mass., facility and to relocate its production to its Warren Glen and Hughesville, N.J., mills. The associated write down is $8.0 million on an after-tax basis. This consolidation is expected to increase the company's earnings by $.25-.30 per share on an annual basis, starting in early in 2002.

Forecasting results for the balance of this year will continue to be difficult, given the weakness and uncertainty prevalent in the global economy, Kwader said. In the short term, earnings will be pressured by weak demand, exacerbated by seasonal softness in Europe, high energy costs and accelerated transfer expenses associated with facility consolidation. While the company expects significant cost savings from these consolidations, benefits are not expected to materialize until 2002.

FiberMark, headquartered in Brattleboro, Vt., is a leading producer of specialty fiber-based materials meeting industrial and consumer needs worldwide. Products include filter media for transportation, vacuum bag and fast food applications; base materials for specialty tapes, labels, photographic and graphic arts applications, printed circuit boards, wallpaper, flooring materials and sandpaper and cover/decorative materials for office and school supplies, publishing, printing and premium packaging. The company has 16 facilities in the eastern United States and Europe.

This press release contains forward-looking statements. Actual results may differ depending on the economy and other risk factors discussed in the company's Form 10K filed with the SEC February 24, 2001 and accessible on the company's Web site: www.fibermark.com.