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ALPHARETTA, Ga., July 16, 2001 (press release) -- Schweitzer-Mauduit Intern= ational, Inc. (NYSE: SWM - news) today announced a plan to restructure its = Brazilian operations and exit the printing and writing uncoated papers busi= ness in Brazil in response to current business conditions. A pre-tax charge= of approximately $4.5 to $5.0 million will be taken in the second quarter = of 2001 to implement this restructuring. Excluding this unusual item, the C= ompany anticipates diluted earnings per share for the second quarter of 200= 1 to be in the range of $.52 to $.54 per share. Second quarter diluted earn= ings per share in 2000 were $.41.=20 Brazilian Restructuring=20 Wayne H. Deitrich, Chairman of the Board and Chief Executive Officer, comme= nted that, ``Recent changes in Brazilian business conditions made it necess= ary for Schweitzer-Mauduit to reassess its ability to continue to compete e= ffectively in the printing and writing uncoated papers market. Sales volume= s during the past six months have been unfavorably impacted by a slowdown i= n the Brazilian printing and writing papers market as well as by a decision= by the Company to reduce its sales of certain grades of these papers that = have been negatively impacted by ICMS, a form of value-added business tax. = In addition, the recently enacted electricity rationing program in Brazil h= as necessitated production curtailments in our Brazilian operations. The pr= inting and writing uncoated papers business is our least profitable product= line in Brazil while being our largest electricity user.''=20 The decision to exit the printing and writing uncoated papers business in B= razil will result in a pre-tax charge in the second quarter of 2001 of appr= oximately $4.5 to $5.0 million, or $.20 to $.22 per share, for a non-cash w= rite-off of assets. In addition, a further pre-tax charge of approximately = $0.5 to $0.7 million, or $.02 to $.03 per share, will be taken in the third= quarter, primarily related to employee termination and severance costs. Sc= hweitzer-Mauduit do Brasil's net sales of printing and writing uncoated pap= ers totaled approximately $25 million in 2000. Because of cost reduction st= eps to be implemented as part of the restructuring, exiting the printing an= d writing uncoated papers business is not expected to have a material impac= t on ongoing operating results after the restructuring is fully implemented= , which should occur by year-end 2001.=20 Brazilian Energy Situation=20 In late May, the Brazilian government announced the details of its electric= ity rationing program which has an overall objective of a 20 percent reduct= ion in electricity consumption and mandates a 25 percent reduction in elect= ricity consumption by the paper industry in the most populated and industri= alized regions of Brazil. The reduction is calculated from prior-year avera= ge electricity consumption. The reduction must be measured and achieved for= consecutive thirty-day periods commencing May 31, 2001. Failure to achieve= the mandated reductions would result in higher electricity rates and cuts = in electrical power service. The duration of the government's energy reduct= ion directive is uncertain although it is expected to last at least six mon= ths, through the traditional ``dry period'' in Brazil. The government's for= ced consumption reduction program is in response to unusually low water lev= els in the lakes and reservoirs supplying Brazil's hydroelectric facilities= that provide 90 percent of that country's electricity.=20 In response to the Brazilian government's energy reduction directive, Schwe= itzer-Mauduit do Brasil implemented a four-part electricity reduction progr= am. All nonessential nonmanufacturing uses of electricity are being elimina= ted including cuts in air conditioning, reduced lighting and changes in the= operation of the water and effluent treatment plants. Manufacturing proces= s modifications are being implemented to achieve more energy-efficient usag= e of equipment where product quality will not be compromised. A comprehensi= ve energy conservation training program is being conducted for Brazilian em= ployees and contracted service providers of the Company to increase awarene= ss and solicit ideas for additional electricity reduction. To achieve the 2= 5 percent electrical consumption reduction target, it has also been necessa= ry to implement production curtailments. Machine downtime has been taken to= reduce the production of the Company's least profitable products.=20 Mr. Deitrich added that, ``Schweitzer-Mauduit does not expect the governmen= t's electricity reduction program to significantly affect the demand for or= its ability to produce tobacco-related papers. Likewise, the availability = of the Company's major raw materials such as wood pulp, chemicals and chalk= and the ability to receive raw materials and ship finished product are not= expected to be materially impacted. Exiting the printing and writing uncoa= ted papers business will permit Schweitzer-Mauduit do Brasil to better focu= s on and service its other product lines.''=20 Anticipated Second Quarter Results=20 Excluding the unusual charge associated with restructuring the Brazilian op= erations, the Company anticipates diluted earnings per share for the second= quarter of 2001 to be in the range of $.52 to $.54 per share. Operating pr= ofit improvement is anticipated in both the French and U.S. business units = compared with the prior-year quarter. Results for the quarter are expected = to benefit from increased tobacco-related papers sales volumes, lower wood = pulp costs and improvement in average selling prices. The average per ton l= ist price of northern bleached softwood kraft pulp in the United States was= $570 per metric ton in the second quarter of 2001 compared with $680 per m= etric ton in the second quarter of 2000. These positive factors will be par= tially offset by higher purchased energy costs and expenses related to the = banded cigarette paper project and resultant higher cost of operations at t= he Spotswood, New Jersey mill.=20 Schweitzer-Mauduit will issue its second quarter 2001 earnings press releas= e on Thursday, July 26, 2001. The Company will hold a conference call to re= view second quarter results with investors and analysts at 10:30 a.m. easte= rn time on that day. The conference call will be simultaneously broadcast o= ver the World Wide Web at http://www.schweitzer-mauduit.com . To listen to = the call, please go to the Web site at least fifteen minutes prior to the c= all to register and download and install any necessary audio software. For = those unable to listen to the live broadcast, a replay will be available on= the Web site shortly after the call.=20 Schweitzer-Mauduit International, Inc. is a diversified producer of premium= specialty papers and the world's largest supplier of fine papers to the to= bacco industry. It also manufactures specialty papers for use in alkaline b= atteries, vacuum cleaner bags, overlay products, business forms and printin= g and packaging applications. Schweitzer-Mauduit and its subsidiaries condu= ct business in over 90 countries and employ 3,500 people worldwide, with op= erations in the United States, France, Brazil and Canada. For further infor= mation, please visit the Company's Web site at www.schweitzer-mauduit.com .= =20 Certain comments contained in this news release concerning the business out= look and anticipated financial and operating results of the Company constit= ute ``forward-looking statements,'' generally identified by phrases such as= the Company ``expects'' or ``anticipates'' or words of similar effect, wit= hin the meaning of the Private Securities Litigation Reform Act of 1995 and= are subject to the safe harbor created by that Act. The forward-looking st= atements are based on information currently available to the Company and ar= e based upon management's expectations and beliefs concerning future events= and factors impacting the Company, including energy usage and costs, produ= ction downtime, restructuring costs, per ton wood pulp costs, banded cigare= tte paper implementation costs, local Brazilian business taxes, mill operat= ions, raw materials availability, transportation availability, sales volume= s and average selling prices. There can be no assurances that such factors = or future events will occur as anticipated or that the Company's results wi= ll be as estimated. Many factors outside the control of the Company also co= uld impact the realization of such estimates. Such factors are discussed in= more detail in the Company's latest filings with the Securities and Exchan= ge Commission, including the Company's Annual Report on Form 10-K for the y= ear ended December 31, 2000. Except as required by federal securities law, = the Company undertakes no obligation to publicly update or revise any forwa= rd-looking statements, whether as a result of new information, future event= s, changed circumstances or any other reasons, after the date of this news = release.
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