Cellu Tissue Holdings, Inc. Announces Fourth Quarter and Full Year Fiscal
2010 Results


    


    
</pre>
<p>ALPHARETTA, Ga., <span class="xn-chron">April 28</span> /CNW/ -- Cellu Tissue Holdings, Inc. (NYSE:   CLU), a North American producer of tissue products, today reported net sales of <span class="xn-money">$124.4 million</span> and a net loss of <span class="xn-money">$3.3 million</span>, or a loss of <span class="xn-money">$0.18</span> per diluted share, for the fiscal 2010 fourth quarter ended <span class="xn-chron">February 28, 2010</span>.  The fiscal 2010 fourth quarter results include after-tax, non-recurring expenses arising from the repurchase of debt and accelerated stock-based compensation totaling <span class="xn-money">$3.4 million</span>, or <span class="xn-money">$0.19</span> per diluted share, incurred in connection with completing the Company's initial public offering on <span class="xn-chron">January 27, 2010</span>.  Excluding non-recurring expenses, fiscal 2010 fourth quarter net income was <span class="xn-money">$0.1 million</span>, or <span class="xn-money">$0.01</span> per diluted share.</p>
<p/>
<p>Summarized consolidated fiscal 2010 fourth quarter results compared to fiscal 2009 fourth quarter results are as follows:</p>
<pre>
    

    --  Net sales for the fiscal 2010 fourth quarter were $124.4 million, down
        3.1% compared to $128.4 million in the fiscal 2009 fourth quarter.
    --  Income from operations for the quarters ended February 28, 2010 and
        2009 was $8.5 million in both periods.  The fiscal 2010 fourth quarter
        includes $1.1 million of accelerated stock-based compensation expense
        for certain equity grants whose performance measures were achieved as
a
        result of successfully completing the January 27, 2010 initial public
        offering.
    --  Adjusted EBITDA was $16.8 million in the fiscal 2010 fourth quarter,
up
        slightly compared to $16.7 million in the fiscal 2009 fourth quarter.
    --  Interest expense for the fiscal 2010 fourth quarter was $12.2 million
        compared to $6.8 million in the fourth quarter of fiscal 2009.  The
        fiscal 2010 fourth quarter includes $3.7 million of non-recurring
costs
        as a result of using the net proceeds from the initial public offering
        to repurchase outstanding debt.  The remaining increase is
attributable
        to higher interest rates.
    --  Net loss for the fiscal 2010 fourth quarter was $3.3 million, or a
loss
        of $0.18 per diluted share.  Excluding after-tax non-recurring
expenses
        incurred in connection with completing the Company's initial public
        offering totaling $3.4 million, or $0.19 per diluted share, fiscal
2010
        fourth quarter net income was $0.1 million, or $0.01 per diluted
share,
        compared to net income of $4.0 million, or earnings of $0.23 per
        diluted share for the fiscal 2009 fourth quarter.
    --  During the fourth quarter of fiscal 2010, net proceeds from the
initial
        public offering were used to reduce long-term debt by $26.8 million.

    
</pre>
<p>"We are very pleased with our strong fiscal 2010 fourth quarter results, particularly given the ongoing headwind of escalating pulp prices in the second half of fiscal 2010," said Russell C. Taylor, President and Chief Executive Officer of Cellu Tissue Holdings.  "In addition, our full year fiscal 2010 adjusted EBITDA of <span class="xn-money">$81.3 million</span> exceeds the high end of our previously issued guidance of <span class="xn-money">$75 million to $80 million</span>.  In addition to these excellent financial results, we have invested significant time and capital to meet growing customer demand for our products by adding converting capacity in both our existing facilities and our new <span class="xn-location">Oklahoma City</span> facility, which is scheduled to open in the second half of fiscal 2011."</p>
<pre>
    

    Fiscal 2010 Fourth Quarter Financial and Operating Results
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                      Quarter ended February
                                  28,
                                                           Increase
                           2010               2009        (Decrease)
                      ----               ----                 ----------
    Net sales    $124.4 million     $128.4 million $(4.0) million      (3.1)%
    Gross Profit  $16.3 million      $16.0 million   $0.3 million        2.0%
    Income from
     operations    $8.5 million       $8.5 million              -          -
    Tons sold            79,746             82,077         (2,331)     (2.8)%
    Net selling
     price per
     ton                 $1,533             $1,544           $(11)     (0.7)%


    
</pre>
<p>Net sales for the quarter decreased <span class="xn-money">$4.0 million</span>, or 3.1% year-over-year, and tons sold decreased 2.8% primarily as a result of in-sourcing an additional 3,853 tons of hardrolls for the Company's converting operations, which were purchased on the external hardroll market in the prior year period.  As a result, Cellu Tissue reduced external hardroll shipments by a similar amount and improved the overall sales mix due to higher selling prices for converted tissue products, consistent with the Company's strategy to increase the vertical integration of its acquired operations and to improve quality control and profitability.</p>
<p/>
<p>Net selling price per ton decreased 0.7% primarily due to lower hardroll prices compared to the fourth quarter of 2009, partially offset by the favorable impact of increasing the mix of converted tissue products relative to hardrolls. Prices in the hardroll market increased in the fourth quarter of fiscal 2010 but lagged price increases in the pulp market.</p>
<p/>
<p>Gross profit as a percentage of net sales increased to 13.1% in the fiscal 2010 fourth quarter from 12.5% in the fiscal 2009 fourth quarter.  The improvement was primarily driven by improved sales mix and lower energy costs, partially offset by higher pulp costs.</p>
<p/>
<p>Income from operations for the fiscal 2010 fourth quarter was even with the same period of the prior year at <span class="xn-money">$8.5 million</span>, despite the fact that the fiscal 2010 fourth quarter included <span class="xn-money">$1.1 million</span> of accelerated stock-based compensation expense related to previously issued equity awards that were accelerated in connection with the <span class="xn-chron">January 2010</span> initial public offering.  Excluding the accelerated stock-based compensation, income from operations improved 12.9% from the prior year quarter.</p>
<pre>
    


    Equity Offering and Interest Expense

    
</pre>
<p>During the fourth quarter of fiscal 2010, the Company successfully completed an initial public offering and issued 2,675,000 shares of common stock, which generated net proceeds of <span class="xn-money">$29.0 million</span>.  These net proceeds were used to repay a <span class="xn-money">$6.3 million</span> long-term note payable and to repurchase a portion of Cellu Tissue's 11.5% Senior Secured Notes due in 2014.  In connection with the reduction in the Company's indebtedness, the Company incurred debt extinguishment costs of <span class="xn-money">$3.7 million</span> during the quarter, which were recorded as interest expense.</p>
<pre>
    

    Income Tax Benefit

    
</pre>
<p>Income tax benefit for the fiscal 2010 fourth quarter was <span class="xn-money">$1.1 million</span> compared to income tax benefit of <span class="xn-money">$1.9 million</span> for the fiscal 2009 fourth quarter.  The Company's overall effective tax rate for fiscal 2010 was 67.7%, caused by adjustments relating to increases in the Company's underlying annual effective tax rate and other discrete adjustments related to the calculation of foreign subsidiary deemed dividends and the utilization of alternative minimum tax credits.  Management estimates the overall tax rate for fiscal 2011 will be approximately 36%.</p>
<pre>
    

    Segment Operating Results

    Tissue
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                   Quarter ended February
                               28,
                    -----------------------
                            2010            2009  Increase (Decrease)
                            ----            ----  -------------------
    Net sales      $94.4 million  $100.3 million $(5.9) million     (5.9)%
    Income from
     operations     $8.7 million    $8.7 million              -         -
    Tons sold:
       Converted
        tissue
        products          25,964          26,105           (141)    (0.5)%
       Hardrolls          31,757          35,964         (4,207)   (11.7)%
                          ------          ------         ------
          Total           57,721          62,069         (4,348)    (7.0)%
    Overall net
     selling price
     per ton              $1,635          $1,616            $19       1.2%


    
</pre>
<p>Net sales in Tissue decreased to <span class="xn-money">$94.4 million</span> from <span class="xn-money">$100.3 million</span> in the fiscal 2009 fourth quarter primarily due to in-sourcing an additional 3,853 tons of hardrolls into Cellu Tissue's converting operations.  This planned decrease was partially offset by the Company's <span class="xn-chron">October 2009</span> hardroll price increase and an improved mix with respect to converted tissue products sold. The 1.2% increase in net selling price per ton primarily reflects the continued mix shift to converted tissue products from tissue hardrolls. Income from operations was <span class="xn-money">$8.7 million</span> in both quarters.  Income from operations in the fiscal 2010 fourth quarter reflects mix improvements that were offset by rising pulp prices.  The fiscal 2010 fourth quarter includes incremental stock-based compensation of <span class="xn-money">$0.8 million</span> incurred in connection with the initial public offering.</p>
<pre>
    

    Machine-Glazed Tissue
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                       Quarter ended February
                                   28,
                         -----------------------
                            2010              2009    Increase (Decrease)
                            ----              ----    -------------------
    Net sales      $27.9 million     $26.5 million   $1.4 million         5.2%
    Income from
     operations     $0.3 million      $0.4 million $(0.1) million      (22.0)%
    Tons sold:
       Hardrolls          19,772            17,934          1,838        10.2%
       Converted
        tissue
        products           2,253             2,074            179         8.6%
                           -----             -----            ---
          Total           22,025            20,008          2,017        10.1%
    Overall net
     selling price
     per ton              $1,265            $1,323           $(58)      (4.4)%


    
</pre>
<p>Net sales in Machine-Glazed Tissue increased to <span class="xn-money">$27.9 million</span> from <span class="xn-money">$26.5 million</span> in the fiscal 2009 fourth quarter. Operating income in Machine-Glazed Tissue was <span class="xn-money">$0.3 million</span> in the fiscal 2010 fourth quarter, down slightly compared to <span class="xn-money">$0.4 million</span> in the fiscal 2009 fourth quarter due to incremental stock-based compensation of <span class="xn-money">$0.3 million</span> incurred in connection with the initial public offering.</p>
<pre>
    

    Foam
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                        Quarter ended
                        February 28,
                           -------------
                                                      Increase
                        2010             2009        (Decrease)
                        ----             ----           ----------
    Net sales   $2.2 million     $1.7 million $0.5 million        30.1%
    Income from
     operations $0.7 million     $0.3 million $0.4 million       163.4%


    
</pre>
<p>Net sales in Foam increased to <span class="xn-money">$2.2 million</span> compared to <span class="xn-money">$1.7 million</span> in the prior fiscal year period due to increased sales volumes and an improvement in selling prices.  Income from operations increased to <span class="xn-money">$0.7 million</span> from <span class="xn-money">$0.3 million</span> in the prior fiscal year period due to lower resin prices, which is the primary raw material used to manufacture the Company's foam products.</p>
<pre>
    

    Adjusted EBITDA

    
</pre>
<p>Earnings before interest, taxes, depreciation, amortization and special items (Adjusted EBITDA) for the fourth quarter ended <span class="xn-chron">February 28, 2010</span> totaled <span class="xn-money">$16.8 million</span>, up slightly compared to <span class="xn-money">$16.7 million</span> for the comparable period in the prior fiscal year.</p>
<pre>
    


    Full Year Results

    
</pre>
<p>Fiscal 2010 sales of <span class="xn-money">$511.3 million</span> were down 1.5% from <span class="xn-money">$519.0 million</span> in the prior fiscal year as year-over-year pricing and volume were down <span class="xn-money">$5.1 million</span> and <span class="xn-money">$2.6 million</span>, respectively.  Lower finished product pricing during the middle of the year resulted from declines in pulp price during the first half of the year. During fiscal 2010, the Company in-sourced an additional 12,878 tons of hardrolls for its converting operations, which were previously purchased on the hardroll market, reducing external hardroll shipments by a similar amount.</p>
<p/>
<p>Full year fiscal 2010 operating income was up 73% to <span class="xn-money">$52.2 million</span> compared to <span class="xn-money">$30.2 million</span> in the prior year, reflecting the benefit of improved product mix resulting from increased sales of converted tissue products.  For fiscal 2010, net income was <span class="xn-money">$3.8 million</span>, or <span class="xn-money">$0.21</span> per diluted share, compared with <span class="xn-money">$6.6 million</span> or <span class="xn-money">$0.38</span> per diluted share in fiscal 2009.  The fiscal 2010 results include non-recurring costs of <span class="xn-money">$8.9 million</span>, net of tax, or <span class="xn-money">$0.51</span> per diluted share comprised of the following components:</p>
<pre>
    

    --  Interest costs of $7.7 million, or $4.8 million net of tax, related to
        debt refinancing and debt repurchase costs and the aforementioned
        stock-based compensation charges of $1.1 million that are not tax
        deductible, which together totaled $0.34 per diluted share; and
    --  Unfavorable tax adjustments of $3.0 million due to increasing the
        Company's federal tax rate from 34% to 35% based on projected taxable
        income, and discrete adjustments that primarily arose from changes in
        management estimates relating to the calculation of foreign subsidiary
        deemed dividends and the generation and utilization of alternative
        minimum tax credits, which together totaled $0.17 per diluted share.

    Cash Flow and Debt

    
</pre>
<p>Cellu Tissue continued to generate strong cash flow during the fiscal year ended <span class="xn-chron">February 28, 2010</span>, including <span class="xn-money">$55.2 million</span> of cash flow from operations, up from <span class="xn-money">$24.1 million</span> in the prior year.</p>
<p/>
<p>"We reduced long-term debt by <span class="xn-money">$26.8 million</span> during the fiscal 2010 fourth quarter, using the net proceeds from our initial public offering, while generating <span class="xn-money">$55.2 million</span> in cash from operations during the current year," said <span class="xn-person">David Morris</span>, Chief Financial Officer of Cellu Tissue Holdings.  "Furthermore, our overall liquidity and cash flow outlook remain strong, affording us the flexibility to make strategic investments and meet our operating needs."</p>
<pre>
    


    Fiscal 2011 Outlook

    
</pre>
<p>The Company's key planning and guidance estimates for fiscal 2011 are as follows:</p>
<pre>
    
    --  Average pulp price of $880 per metric ton for northern bleached
        softwood kraft and no retail price increase.
    --  Converting capacity additions are scheduled to come on-line during the
        second half of fiscal 2011.
    --  Tissue and machine-glazed hardroll pricing will lag market pulp price
        by approximately ninety days.
    --  Full year tax rate is estimated to be approximately 36%.
    --  Capital investments are expected to range from $36 million to $40
        million.
    --  Depreciation and intangibles amortization are expected to be
        approximately $31 million.
    --  Interest expense is expected to be approximately $31 million.
    --  EBITDA for fiscal 2011 is expected to be $77 to $85 million.

    
</pre>
<p>Commenting on the outlook, <span class="xn-person">Mr. Taylor</span> said, "We expect our business performance to continue improving as we remain focused on executing our strategy of increasing our tissue business product sales, while also reducing our manufacturing costs across all of our business segments.  However, in the first half of fiscal 2011, finished product prices will lag an escalating pulp market, and our organic converting growth will be limited until our new converting capacity comes on-line in the second half of fiscal 2011.  We will continue to invest in our facilities to offer an expanded line of products, while maintaining our focus on maximizing cash flow and maintaining a strong balance sheet."</p>
<pre>
    

    Notice Relating to the Use of Non-GAAP Measures
    
</pre>
<p>Attached to this press release are tables setting forth the Company's fiscal year-to-date and fourth quarter consolidated statements of operations, financial position and selected consolidated financial data, including information concerning the Company's cash flow position, selected consolidated segment data, reconciliations of consolidated net income to consolidated EBITDA and reconciliations of consolidated EBITDA to consolidated Adjusted EBITDA.</p>
<p/>
<p>EBITDA represents earnings before interest expense, income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to reflect the additions and eliminations described in the table below. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations, as determined by U.S. generally accepted accounting principles, or U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under U.S. GAAP. Some of the limitations are:</p>
<pre>
    

    --  EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or
        future requirements for capital expenditures or contractual
        commitments;
    --  EBITDA and Adjusted EBITDA do not reflect changes in, or cash
        requirements for, our working capital needs;
    --  EBITDA and Adjusted EBITDA do not reflect the significant interest
        expense, or the cash requirements necessary to service interest or
        principal payments, on our debt;
    --  although depreciation and amortization are non-cash charges, the
assets
        being depreciated and amortized will often have to be replaced in the
        future, and EBITDA and Adjusted EBITDA do not reflect any cash
        requirements for such replacements; and
    --  other companies in our industry may calculate EBITDA and Adjusted
        EBITDA differently than we do, limiting their usefulness as
comparative
        measures.

    
</pre>
<p>Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as</p>
<p>measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using</p>
<p>EBITDA and Adjusted EBITDA only supplementally. We further believe that our presentation of these U.S. GAAP and non-GAAP financial measurements provide information that is useful to analysts and investors because they are important indicators of the strength of our operations and the performance of our core business.</p>
<pre>
    

    Management uses EBITDA and Adjusted EBITDA:

    --  as measurements of operating performance because they assist us in
        comparing our operating performance on a consistent basis, as both
        remove the impact of items not directly resulting from our core
        operations;
    --  for planning purposes, including the preparation of our internal
annual
        operating budget;
    --  to allocate resources to enhance the financial performance of our
        business;
    --  to evaluate the performance and effectiveness of our operational
        strategies;
    --  to evaluate our capacity to fund capital expenditures and expand our
        business; and
    --  to calculate incentive compensation for our employees.

    --  In addition, these measurements are used by investors as supplemental
        measures to evaluate the overall operating performance of companies in
        our industry. Management believes that investors' understanding of our
        performance is enhanced by including these non-GAAP financial measures
        as a reasonable basis for comparing our ongoing results of operations.
        Many investors are interested in understanding the performance of our
        business by comparing our results from ongoing operations from one
        period to the next and would ordinarily add back events that are not
        part of normal day-to-day operations of our business. By providing
        these non-GAAP financial measures, together with reconciliations, we
        believe we are enhancing investors' understanding of our business and
        our results of operations, as well as assisting investors in
evaluating
        how well we are executing strategic initiatives.

    
</pre>
<p>Cellu Tissue's management invites you to listen to its conference call on <span class="xn-chron">April 29, 2010</span> at <span class="xn-chron">8:30 a.m. ET</span> regarding fiscal 2010 fourth quarter consolidated financial results.  To participate in the conference call, you may either dial (800) 230-1951 or International (612) 288-0340, or join in listen-only mode to an audio webcast, accessible through the Investor Relations section at <a href="http://www.cellutissue.com">www.cellutissue.com</a>.  A taped replay of the conference call will be available after <span class="xn-chron">11:00 a.m.</span> on <span class="xn-chron">April 29, 2010</span> until <span class="xn-chron">May 13, 2010</span>.  The number to call for the taped replay is (800) 475-6701 or International (320) 365-3844, access code 155042. The taped replay information to access the call will also be available in the Investor Relations section of the Company's website at <a href="http://www.cellutissue.com">www.cellutissue.com</a>.</p>
<pre>
    


    About Cellu Tissue Holdings, Inc.
    
</pre>
<p>Cellu Tissue Holdings, Inc. is a North American producer of tissue products, with a focus on consumer-oriented private label products and a growing presence in the value retail tissue market.</p>
<p/>
<p>For more information, contact Cellu Tissue Holdings, Inc. at <a href="http://www.cellutissue.com">www.cellutissue.com</a>.</p>
<p/>
<p>The statements contained in this release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements included under the heading "Fiscal 2011 Outlook".  Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements included in this document are based upon information available to Cellu Tissue as of the date hereof, and Cellu Tissue assumes no obligation to update any such forward-looking statements. Such statements and any other forward-looking statements are subject to risks, assumptions and uncertainties that may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements, including risks related to energy and fiber costs, the growth of our converted tissue business and synergies relating to the APF Acquisition and any other risks described in our Annual Report on Form 10-K for the fiscal year ended <span class="xn-chron">February 28, 2009</span> and subsequent filings with the SEC.</p>
<pre>
    




    
</pre>
<p> </p>
<p> </p>
<pre>
    
                    CELLU TISSUE HOLDINGS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                     For the three months ended        For the year ended
                     --------------------------        ------------------
                     February 28,  February 28,    February 28,  February 28,
                        2010          2009            2010           2009
                     ------------  ------------    ------------  ------------
    Net sales        $124,408,861  $128,440,409    $511,280,798  $519,022,843
    Cost of goods
     sold             108,077,076   112,424,360     432,220,266   464,118,066
                      -----------   -----------     -----------   -----------
    Gross profit       16,331,785    16,016,049      79,060,532    54,904,777
    
</pre>
<p> </p>
<pre>
    
    Selling, general
     and administrative
     expenses           6,680,675     6,691,271      22,552,055    21,868,989
    Amortization
     expense            1,116,669       811,094       4,332,524     2,872,523
                        ---------       -------       ---------     ---------
    Income from
     operations         8,534,441     8,513,684      52,175,953    30,163,265
    
</pre>
<p> </p>
<pre>
    
    Interest expense,
     net               12,242,830     6,758,314      39,593,747    24,709,461
    Foreign currency
     loss (gain)          171,509     (405,519)       1,282,228     (562,232)
    Other expense
     (income)             449,742        65,680         (8,273)        67,123
                          -------        ------          ------        ------
    Income (loss)
     before income tax
     expense          (4,329,640)     2,095,209      11,308,251     5,948,913
    
</pre>
<p> </p>
<pre>
    
    Income tax expense
     (benefit)        (1,063,911)   (1,880,274)       7,545,630     (611,275)
    Net (loss) 
     Income          $(3,265,729)    $3,975,483      $3,762,621    $6,560,188
                      ===========    ==========      ==========    ==========
    
</pre>
<p> </p>
<pre>
    
    Basic and diluted
     (loss) earnings
     per share            $(0.18)         $0.23           $0.21         $0.38
    Basic shares
     outstanding       18,364,987    17,477,971      17,684,134    17,477,971
    Diluted shares
     outstanding       18,364,987    17,477,971      17,713,863    17,477,971




    
</pre>
<p> </p>
<pre>
    
         CELLU TISSUE HOLDINGS, INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    
</pre>
<p> </p>
<pre>
    
                                           February          February
                                              28,               28,
                                                 2010              2009
                                                 ----              ----
    
</pre>
<p> </p>
<pre>
    
    ASSETS
    Current Assets:
      Cash and cash equivalents            $3,299,033          $361,035
      Receivables, net                     49,659,464        54,065,899
      Inventories                          56,586,982        47,216,049
      Prepaid expenses and other
       current assets                       3,810,934         2,085,774
      Income tax receivable                 2,788,118           174,084
      Deferred income taxes                 1,180,866         3,515,295
                                            ---------         ---------
        Total Current Assets              117,325,397       107,418,136
    
</pre>
<p> </p>
<pre>
    
    Property, Plant and Equipment,
     net                                  307,635,021       301,987,941
    Goodwill                               41,020,138        41,020,138
    Other intangibles                      27,339,953        31,672,477
    Other assets                            9,385,877         1,948,108
                                            ---------         ---------
        Total Assets                     $502,706,386      $484,046,800
                                         ============      ============
    
</pre>
<p> </p>
<pre>
    
    LIABILITIES AND STOCKHOLDERS'
     EQUITY
    Current Liabilities:
      Bank overdrafts                              $-        $3,285,420
      Revolving line of credit              1,000,750        18,530,824
      Accounts payable                     34,275,598        16,726,143
      Accrued expenses                     27,820,255        26,548,639
      Accrued interest                      6,721,143        10,160,124
      Other current liabilities               623,653        17,448,707
      Current portion of long-term
       debt                                   760,000           760,000
                                              -------           -------
        Total Current Liabilities          71,201,399        93,459,857
    
</pre>
<p> </p>
<pre>
    
    Long-term debt, less current
     portion                              242,538,125       242,361,944
    Deferred income taxes                  77,178,393        75,110,277
    Other liabilities                         956,444         5,378,059
    
</pre>
<p> </p>
<pre>
    
    Stockholders' Equity:
    Common stock, $.01 par value,
     23,715,470                               201,452           174,480
     shares authorized, 20,145,176
      shares
     issued and outstanding as of
     February 28, 2010 and common
      stock,
     $.01 par value, 18,245,459 shares
     authorized, 17,447,971 shares
      issued
     and outstanding as of February
      28, 2009
      Capital in excess of par value      103,076,890        70,774,381
      Accumulated earnings                  7,460,692         3,698,071
      Accumulated other
       comprehensive income                    92,991        (6,910,269)
     (loss)                                    ------
        Total Stockholders' Equity        110,832,025        67,736,663
                                          -----------        ----------
        Total Liabilities and
         Stockholders' Equity            $502,706,386      $484,046,800
                                         ============      ============





    
</pre>
<p> </p>
<pre>
    
                    CELLU TISSUE HOLDINGS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                                                        Year Ended
                                             February 28,       February 28,
                                                 2010               2009
                                            -------------      -------------
    
</pre>
<p> </p>
<pre>
    
    Cash flows from operating
     activities
      Net income                               $3,762,621         $6,560,188
      Adjustments to reconcile net income
       to net cash
       provided by operating activities:
        Depreciation                           24,889,714         23,656,245
        Amortization of intangibles             4,332,524          2,872,523
        Deferred financing fees                 2,288,072            306,668
        Long-term debt discount                 4,269,352          1,835,001
        Stock-based compensation                1,928,559            939,530
        Deferred income taxes                   4,403,542         (2,232,976)
        Loss on disposal of fixed asset           812,876                  -
        Loss from natural gas swaps                     -            242,686
      Changes in operating assets and
       liabilities,
       net of effects of acquisitions:
        Receivables                             5,396,260         (3,017,970)
        Inventories                            (8,506,452)        (6,702,780)
        Prepaid expenses, other current
         assets and income tax receivable      (4,277,911)         1,782,185
        Other assets and liabilities              324,635           (123,460)
        Accounts payable, accrued expenses
         and accrued interest                  15,568,373         (2,057,997)
                                                                  ----------
         Total adjustments                     51,429,544         17,499,655
                                               ----------         ----------
           Net cash provided by operating
            activities                         55,192,165         24,059,843
    
</pre>
<p> </p>
<pre>
    
    Cash flows from investing
     activities
        Cash paid for acquisition, net of
         cash acquired                                  -        (64,154,906)
        Capital expenditures                  (26,993,044)       (16,401,848)
                                              -----------        -----------
         Net cash used in investing
          activities                          (26,993,044)       (80,556,754)
    
</pre>
<p> </p>
<pre>
    
    Cash flows from financing
     activities
        Equity investment by shareholders               -         15,001,463
        Cash portion of earnout payment       (18,301,245)        (7,027,346)
        Bank overdrafts                        (3,285,420)         3,285,420
        Borrowings on revolving line of
         credit, net                           36,453,125         85,448,141
        Payments on revolving line of
         credit, net                          (53,983,199)       (76,717,317)
        Payments on long-term debt          (249,831,572)           (760,000)
        Payment of deferred financing fees     (9,739,269)          (885,958)
        Proceeds from initial public
         offering                              28,971,413                  -
        Proceeds from stock options
         exercised                                100,904                  -
        Purchases of employee stock options      (450,988)                 -
        Excess tax benefits from share-
         based compensation arrangements           80,838                  -
        Proceeds from bond offering           245,738,400         36,900,000
                                              -----------         ----------
         Net cash (used in) provided by
          financing activities                (24,247,013)        55,244,403
    
</pre>
<p> </p>
<pre>
    
    Effect of foreign currency                 (1,014,110)           730,155
                                               ----------            -------
    Net increase (decrease) in cash and
     cash equivalents                           2,937,998           (522,353)
    Cash and cash equivalents at
     beginning of period                          361,035            883,388
                                                  -------            -------
    Cash and cash equivalents at end of
     period                                    $3,299,033           $361,035
                                               ==========           ========





    
</pre>
<p> </p>
<pre>
    
                CELLU TISSUE HOLDINGS, INC.
     CONSOLIDATED BUSINESS SEGMENT INFORMATION (Unaudited)
    
</pre>
<p> </p>
<pre>
    
    BUSINESS SEGMENTS
                                 Three Months Ended
                                              February
                             February 28          28
                                     2010           2009
                                     ----           ----
    NET SALES:
      Tissue                  $94,361,010   $100,284,000
      Machine-Glazed Tissue    27,856,738     26,471,954
      Foam                      2,191,113      1,683,551
                                ---------      ---------
      Consolidated           $124,408,861   $128,439,505
                             ============   ============
    
</pre>
<p> </p>
<pre>
    
    INCOME FROM
     OPERATIONS:
      Tissue                   $8,676,856     $8,664,221
      Machine-Glazed Tissue       322,882        413,832
      Foam                        651,371        247,299
                                  -------        -------
      Segment income from
       operations               9,651,109      9,325,352
      Amortization expense     (1,116,668)      (811,094)
      Consolidated             $8,534,441     $8,514,258
                               ==========     ==========
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                     Year Ended
                                              February
                             February 28          28
                                     2010           2009
                                     ----           ----
    NET SALES:
      Tissue                 $394,241,039   $400,640,192
      Machine-Glazed Tissue   109,051,301    114,376,045
      Foam                      7,988,458      4,006,606
                                ---------      ---------
      Consolidated           $511,280,798   $519,022,843
                             ============   ============
    
</pre>
<p> </p>
<pre>
    
    INCOME FROM
     OPERATIONS:
      Tissue                  $49,164,001    $29,423,668
      Machine-Glazed Tissue     4,688,001      3,114,212
      Foam                      2,656,475        497,908
                                ---------        -------
      Segment income from
       operations              56,508,477     33,035,788
      Amortization expense     (4,332,524)    (2,872,523)
      Consolidated            $52,175,953    $30,163,265
                              ===========    ===========





    
</pre>
<p> </p>
<p> </p>
<pre>
    
                 CELLU TISSUE HOLDINGS, INC,
     RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA
                         (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                                    Three Months Ended
                                 February         February
                                    28,              28,
                                       2010             2009
                                       ----             ----
    
</pre>
<p> </p>
<pre>
    
    NET INCOME (LOSS)           $(3,265,729)      $3,975,483
      Add back:
        Depreciation              6,658,252        6,041,593
        Amortization              1,116,669          811,094
        Interest expense, net    12,242,830        6,758,314
        Income tax benefit       (1,063,911)      (1,880,274)
                                 ----------       ----------
    EBITDA                      $15,688,111      $15,706,210
                                ===========      ===========
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                        Year Ended
                                 February         February
                                    28,              28,
                                       2010             2009
                                       ----             ----
    
</pre>
<p> </p>
<pre>
    
    NET INCOME                   $3,762,621       $6,560,188
      Add back:
        Depreciation             24,889,714       23,656,245
        Amortization              4,332,524        2,872,523
        Interest expense, net    39,593,747       24,709,461
        Income tax expense
         (benefit)                7,545,630         (611,275)
    EBITDA                      $80,124,236      $57,187,142
                                ===========      ===========





    
</pre>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
     CELLU TISSUE HOLDINGS, INC.
         RECONCILIATION OF CONSOLIDATED EBITDA TO CONSOLIDATED ADJUSTED
         EBITDA
             (Unaudited)
          ($ in thousands)
    
</pre>
<p> </p>
<pre>
    
                                        Three Months          Three Months
                                           Ended                  Ended
                                       February 28,           February 28,
                                                 2010                   2009
                                                 ----                   ----
    EBITDA (1)                                $15,688                $15,706
    Adjustments:
      Accelerated stock-based
       compensation (2)                         1,107                      -
      Restatement-legal/accounting
       fees (3)                                     -                    750
      APF Transition and Related Costs
       (4):
         Facility consolidation                     -                    282
    ADJUSTED EBITDA                           $16,795                $16,738
                                              =======                =======
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<p>                                               Year ended</p>
<p> </p>
<pre>
    
                                       February 28,           February 28,
                                                 2010                   2009
                                                 ----                   ----
    EBITDA (1)                                $80,124                $57,187
    Adjustments:
      Accelerated stock-based
       compensation (2)                         1,107                      -
      Mississippi sales tax audit (5)               -                    258
      Terminated acquisition costs (6)              -                    140
      Natural Dam Fire (7)                        250                      -
      Insurance claim for wrapper
       damage (8)                                (546)                     -
      APF Transition and Related Costs
       (4):
         Elimination and alignment of
          certain
           overhead functions                       -                    373
         Facility consolidation                   373                    282
    Fair value accounting for
     acquired inventory                             -                    284
      Restatement-legal/accounting
       fees (3)                                     -                    750
    ADJUSTED EBITDA                           $81,308                $59,274
                                              =======                =======
    
</pre>
<p> </p>
<pre>
    
    (1) EBITDA includes stock-based compensation expense related to
    equity awards of $2.1 million, $0.9 million, $1.5 million and $0.2
    million for the fiscal years ended 2010 and 2009 and the three
    months ended February 28, 2010 and 2009, respectively.
    
</pre>
<p> </p>
<pre>
    
    (2) Reflects stock-based compensation expense that was accelerated
    in connection with the initial public offering.
    
</pre>
<p> </p>
<pre>
    
    (3) Legal and accounting fees incurred in connection with the
    restatement of our consolidated financial statements for the fiscal
    year ended February 29, 2008 and for the first and second quarters
    of fiscal year 2009.
    
</pre>
<p> </p>
<pre>
    
    (4) In fiscal year 2009, we acquired APF, which was a significant
    acquisition because of its size and complexity of operations.  In
    connection with the APF acquisition, we determined that several
    initiatives, to be completed over a twelve-month period, would help
    achieve identified synergies.  These initiatives included
    eliminating certain overhead functions and aligning those activities
    with our existing infrastructure as well as consolidating production
    and inventory storage facilities.  Our consolidation of facilities
    included centralizing the acquired APF production facility and two
    APF inventory storage facilities located in Hauppauge, New York into
    one consolidated facility in Long Island, New York and moving
    machinery for a napkin line from our Neenah, Wisconsin location to
    the acquired APF Thomaston, Georgia facility.  In addition, as a
    result of applying purchase accounting to record inventory at fair
    market value, we increased the book value of acquired inventory,
    which we amortized to cost of goods sold as the inventory was sold
    to customers during the second quarter of fiscal year 2009.
    
</pre>
<p> </p>
<pre>
    
    (5) State tax catch-up costs for fiscal year 2009 relate to a
    Mississippi sales and use tax assessment based on an audit of prior
    periods.  The Mississippi taxing authority assessed sales and use
    tax for natural gas consumption purchased in prior periods for which
    our service provider had not charged the appropriate sales and use
    tax amounts.
    
</pre>
<p> </p>
<pre>
    
    (6) Acquisition-related costs incurred in connection with an
    acquisition that did not transpire.
    
</pre>
<p> </p>
<pre>
    
    (7) Insurance deductible costs related to a fire at our Natural Dam
    mill at our Gouverneur, New York facility.
    
</pre>
<p> </p>
<pre>
    
    (8) Reflects insurance proceeds exceeding the book value for damaged
    packaging equipment (damaged-in-transit).







    
</pre>
<p> </p>
<p> </p>
<pre>
    
                             CELLU TISSUE HOLDINGS, INC.
                         EPS RECONCILIATION OF SPECIAL ITEMS
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                           Quarter Ended February        Year Ended February
                                   28, 2010                    28, 2010
                           ----------------------        -------------------
    
</pre>
<p> </p>
<pre>
    
                                                                             
                                          Diluted                   Diluted 
                                          Earnings                  earnings
                                          per share                 per share
                                          ---------                 ---------
    Net (loss) income       $(3,265,729)     (0.18)     $3,762,621      $0.21
      Adjustments for
       special items:
        Related Initial 
         Public Offering
         Events, net of tax:
           Accelerated
            stock-based
            compensation
            expense (1)       1,055,804                  1,055,804 
     2014 Notes repurchase
      premium (2)             1,472,693                  1,472,693
     2014 Notes write-off
      of debt issuance
      costs (2)                 866,534                    866,534
                                -------                    -------
                              3,395,031        0.19      3,395,031       0.20
    
</pre>
<p> </p>
<pre>
    
        Issuance of 2014 Notes
         and retirement of 
         2010 Notes, net Of
         tax (3)                      -           -      2,492,851       0.14
    
</pre>
<p> </p>
<pre>
    
        Tax items (4)                 -           -      3,035,972       0.17
                              ---------        ----      ---------       ----
         Total adjustments    3,395,031        0.19      8,923,853       0.51
                              ---------        ----      ---------       ----
                               $129,302       $0.01    $12,686,474      $0.72
                               ========       =====    ===========      =====
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Diluted shares outstanding
     as of February 28, 2010             18,364,987                17,713,863
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    (1)  Expense recognition of certain stock-based compensation awards
    that were accelerated in connection with the initial public
    offering.
    
</pre>
<p> </p>
<pre>
    
    (2)  Net proceeds from the initial public offering were used to
    repurchase a portion of the 2014 Notes, which resulted in additional
    interest expense.
    
</pre>
<p> </p>
<pre>
    
    (3) During the second quarter of fiscal 2010, the Company refinanced
    its 2010 Notes which resulted in additional interest expense.
    
</pre>
<p> </p>
<pre>
    
    (4) Several adjustments impacted the Company's effective tax rate in
    fiscal 2010, causing the annual effective tax rate to be 66.7%.
    These adjustments primarily arose due to a $1.8 million increase in
    the Company's federal tax rate from 34% to 35% based on projected
    taxable income and the benefit of a change in state tax laws, and
    $1.2 million of discrete tax adjustments that increased tax expense.
    These discrete adjustments primarily arose from changes in
    management estimates relating to the calculation of foreign
    subsidiary deemed dividends and the generation and utilization of
    alternative minimum tax credits.





    

For further information: For further information: Cellu Tissue Holdings, Inc.: +1-678-393-2651, Fax +1-678-393-2657 Web Site: http://www.cellutissue.com

Organization Profile

CELLU TISSUE HOLDINGS, INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890