/R E P E A T/ - SFK Pulp Fund reports results for its third quarter ended September 30, 2007



    
    THIRD QUARTER HIGHLIGHTS
    ------------------------

    - Sales totalled $127.2 million, an increase of $58.4 million when
      compared with the third quarter of 2006. Total sales volume reached
      177,623 tonnes.

    - EBITDA(1) reached $13.2 million, compared to $14.9 million in the
      corresponding period last year.

    - Distributions declared to unitholders totalled $10.9 million ($0.12 per
      unit) in the third quarter. This compares with distributions of
      $3.5 million ($0.055 per unit) declared to unitholders in the
      corresponding quarter of 2006.

    - Monitoring closely the impact of the strength of the Canadian dollar.

    TSX:SFK.UN
    

    LONGUEUIL, QC, Oct. 31 /CNW Telbec/ - For the third quarter ended
September 30, 2007, SFK Pulp recorded sales of $127.2 million. Earnings before
amortization, financial charges and income taxes (EBITDA)(1) stood at
$13.2 million and a net loss of $1.2 million was incurred. This compares with
sales of $68.8 million, EBITDA of $14.9 million and net earnings of
$5.8 million for the same period last year.
    "Our quarterly results clearly demonstrate the volatile nature of our
business environment with the combined impact of the fast strengthening of the
Canadian dollar and changes in pricing and demand for both our products and
raw materials. The Saint-Félicien Mill experienced a very difficult quarter
with the combination of operational difficulties, failure of its main turbo
generator and reduced sales due to temporary downtime taken by some of its
customers. However, despite increased wastepaper pricing, the RBK pulp mills
produced at record levels and were sold out in a positive pricing environment.
This once again confirms the positive impact and the long-term value we should
generate from the acquisition of the RBK pulp mills last year", said André
Bernier, President and Chief Executive Officer of SFK Pulp.

    THIRD QUARTER 2007
    ------------------

    Operating results

    Sales

    Consolidated sales in the third quarter of 2007 reached $127.2 million,
an increase of $58.4 million when compared with sales of $68.8 million in the
third quarter of 2006. This increase is attributable to the Fairmont and
Menominee Mills for $62.4 million, which was partially offset by a decrease in
sales of NBSK pulp of $4.0 million when compared with the corresponding
quarter of 2006.
    The decrease in sales of NBSK is due to a lower sales volume for
$6.9 million, which was partially offset by higher net realized pulp prices
for $2.9 million. The decrease in sales volume resulted mainly from market
related downtime taken by our North American customers. NBSK pulp inventories
at the end of the third quarter were at a normal level.
    Total sales volume reached 177,623 tonnes; RBK pulp accounting for
95,016 tonnes and NBSK pulp for 82,607 tonnes. During the third quarter of
2006, the sales volume totalled 91,813 tonnes (for NBSK pulp only).

    Production and cost of sales

    Production at the mills during the third quarter of 2007 totalled
182,772 tonnes, compared with 94,796 tonnes (for NBSK pulp only) for the third
quarter of 2006. The 94,623 tonnes of RBK pulp produced by the acquired mills
in Fairmont and Menominee accounted for the increase, while the NBSK pulp
production at the Saint-Félicien Mill of 88,149 tonnes was 6,647 tonnes lower
than in the corresponding quarter of 2006. Productivity at the Saint-Félicien
Mill was negatively impacted mainly by the failure of a stator on the main
turbo generator and other minor operating problems.
    Cost of sales for the Saint-Félicien Mill increased by 5.8% to
CAN$604 per tonne in the third quarter of 2007 when compared with the
corresponding period of 2006 (CAN$571). This increase resulted mainly from the
lower mill productivity, higher energy costs (purchase of electric power on
the market and higher fuel costs) and also additional repair material cost
when compared with the third quarter of 2006.
    Cost of sales for the Fairmont and Menominee Mills was CAN$590 per tonne
and totalled CAN$55.6 million for the three-month period ended September 30,
2007.

    EBITDA(1)

    EBITDA for the third quarter of 2007 totalled $13.2 million, a decrease
of $1.8 million when compared with the corresponding period of 2006
($14.9 million). The Fairmont and Menominee Mills accounted for $3.3 million,
while the Saint-Félicien Mill accounted for $9.8 million of the EBITDA.

    Adjusted distributable cash(2)

    During the third quarter of 2007, SFK Pulp generated adjusted
distributable cash of $7.4 million. Including the $23.7 million cash reserve
at the end of the third quarter of 2007, total adjusted distributable cash
available amounted to $20.3 million. Of the adjusted distributable cash
available, SFK Pulp declared distributions of $10.9 million ($0.120 per unit)
and retained $20.3 million as its cash reserve, of which $3.1 million was used
for the Saint-Félicien Mill's semi-annual outage in mid-October 2007 and the
remaining $17.2 million will be used to support our capital investment
strategy, to provide for scheduled amortization payments under the term
facility and to reduce the impact of any negative fluctuations in future cash
flows, the whole in accordance with our distribution policy.

    Distributions to unitholders

    During the quarter ended September 30, 2007, SFK Pulp declared
distributions of $10.9 million ($0.120 per unit), compared to $3.5 million
($0.055) per unit in the corresponding quarter of 2006.

    NINE-MONTH PERIOD 2007
    ----------------------

    Operating results

    Sales

    Consolidated sales for the nine-month period ended September 30, 2007
reached $385.8 million, an increase of $183.9 million when compared with sales
of $201.9 million for the same period in 2006. This increase is attributable
to the Fairmont and Menominee Mills for $189.4 million, which was partially
offset by a decrease in sales of NBSK pulp of $5.5 million. The decrease in
the NBSK sales is due to a lower sales volume for $29.1 million, which was
partially offset by higher net realized pulp prices for $23.6 million.
    Total sales volume reached 524,072 tonnes; RBK pulp accounting for
279,866 tonnes and NBSK pulp for 244,206 tonnes. During the first nine months
of 2006, the sales volume totalled 285,335 tonnes (for NBSK pulp only).

    Production and cost of sales

    Production at the mills during the first nine months of 2007 totalled
545,210 tonnes, compared with 269,336 tonnes (for NBSK pulp only) for the
corresponding period of 2006. The 284,991 tonnes of RBK pulp produced by the
acquired mills in Fairmont and Menominee accounted for the increase, while the
NBSK pulp production at the Saint-Félicien Mill of 260,219 tonnes was
9,117 tonnes lower than in the corresponding period of 2006.
    Cost of sales for the Saint-Félicien Mill increased by 3.0% to
CAN$604 per tonne in the first nine months of 2007 when compared with the
corresponding period of 2006 (CAN$588). This increase resulted mainly from
higher wood fibre and energy costs and the impact of lower mill productivity.
    Cost of sales for the Fairmont and Menominee Mills was CAN$594 per tonne
and totalled CAN$166.2 million for the nine-month period ended September 30,
2007.

    Future income taxes(3)

    On June 12, 2007, the Canadian Parliament substantively enacted
legislation to implement a tax on distributions paid by publicly traded income
trusts in Canada, effective in 2011. As a result of this new legislation,
Canadian GAAP requires that publicly traded income trusts reflect future
income taxes in their financial statements beginning in the second quarter
ended June 30, 2007. Accordingly, SFK Pulp recorded a non-cash future income
tax expense to net income of $0.2 million in the third quarter of 2007 and
$16.5 million for the nine months ended September 2007. With the recording of
this future income tax, SFK Pulp recorded a year to date net loss of
$9.0 million. Future income tax is a non-cash item that has no current impact
on cash from operating activities.

    Adjusted distributable cash(2)

    For the nine-month period ended September 30, 2007, SFK Pulp generated
adjusted distributable cash of $32.2 million. Including the $24.2 million cash
reserve at the end of 2006, total adjusted distributable cash for the period
amounted to $56.4 million. Of the adjusted distributable cash available, SFK
Pulp declared distributions of $36.2 million ($0.400 per unit) and retained
$20.3 million as its cash reserve, of which $3.1 million was used for the
Saint-Félicien Mill's semi-annual outage in mid-October 2007 and $17.2 million
will be used to support our capital investment strategy, to provide for
scheduled amortization payments under the term facility and to reduce the
impact of any negative fluctuations in future cash flows, the whole in
accordance with our distribution policy.

    Distributions to unitholders

    For the nine-month period ended September 30, 2007, SFK Pulp declared
distributions of $36.2 million ($0.400 per unit), compared with $4.1 million
($0.070 per unit) for the nine-month period ended September 30, 2006.

    OUTLOOK
    -------

    "Market conditions for the NBSK and RBK pulp sectors remain strong with
low worldwide pulp inventories and increased export demand. The September NBSK
pulp price increases were fully implemented and several producers recently
announced another price increase for November. As for RBK pulp, the pricing
conditions remain good, supported by strong demand and high prices for all
wastepaper grades.
    The operations at Saint-Félicien were impacted in early October by the
rupture of the pulp pre-retention tube in the bleaching system which required
the extension of the semi-annual shut-down for major maintenance for an
additional week. The repairs and all maintenance jobs planned during the
outage were successfully completed and the mill is now back to normal
production levels, with the exception of the main turbo generator which should
be running again normally in early December. The operations at both Fairmont
and Menominee Mills continue to be excellent with high production levels and
strong demand.
    We also continued during the last quarter to carry out our capital
expenditure strategy for our mills, which should reach its target of
approximately $15.2 million at the end of 2007. The work for the installation
of the new pulp washing system in Saint-Félicien is progressing as scheduled
and the required process tie-ins were completed during our recent semi-annual
outage for major maintenance. The construction work will continue this winter
with the installation of the major components. The commissioning and start-up
of the washing system will begin after our 2008 spring semi-annual outage for
maintenance.
    We are however very concerned by the recent fast increase in value of the
Canadian dollar and we are monitoring the impact of such increase on all
aspects of our operations and on monthly distributions" continued André
Bernier, President and Chief Executive Officer of SFK Pulp.

    ABOUT SFK PULP
    --------------

    SFK Pulp operates, through its subsidiaries, the Saint-Félicien Mill, the
Fairmont Mill and the Menominee Mill (with a total annual production capacity
of 735,000 metric tonnes) and employs approximately 550 people. The
Saint-Félicien Mill (located in Saint-Félicien, Québec, approximately
450 kilometres north of Montréal) has an annual production capacity of
375,000 metric tonnes of NBSK pulp and supplies NBSK pulp to various sectors
of the paper industry in Canada, the United States and in Europe for use in
speciality products. The Fairmont Mill (located in Fairmont, West Virginia)
and the Menominee Mill (located in Menominee, Michigan), with a combined
annual production capacity of 360,000 metric tonnes, both manufacture
air-dried market recycled bleached kraft (RBK) pulp and primarily supply RBK
pulp to manufacturers of uncoated freesheet, commercial and away-from-home
tissue and coated paper in the United States.

    FORWARD-LOOKING STATEMENTS
    --------------------------

    Certain statements made in this press release that are not historical
facts, are "forward-looking statements" which reflect the intentions, plans,
expectations and beliefs of SFK Pulp's management ("Management") regarding SFK
Pulp's future growth, results of operations, performance and business
prospects and opportunities. In certain instances, these statements require
Management to make assumptions and there is significant risk that these
assumptions may not be correct. The words "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "estimate", "expect", and similar
expressions, as they relate to SFK Pulp or Management, are intended to
identify forward-looking statements. Such forward-looking statements reflect
Management's current beliefs and are based on information currently available
to Management. Forward-looking statements involve known and unknown risks,
uncertainties and other factors outside Management's control. A number of
factors could cause actual results of SFK Pulp to differ materially from the
results discussed in the forward-looking statements, including, but not
limited to: risks associated with the lack of accuracy and completeness of
market and industry data, adverse operating conditions, unforeseen capital
expenditures, changes in prices of raw materials and operating costs, changes
in wood fibre and waste paper costs and availability, dependence on
cross-border trade, vulnerability to economic conditions, changes in selling
prices and volume sold, competition, regulatory change, foreign exchange,
interest rates, reliance on key personnel, uninsured and underinsured losses,
the integration of the Fairmont and Menominee Mills, the ability to achieve
revenue synergies resulting from the acquisition of the Fairmont and Menominee
Mills, potential undisclosed liabilities associated with this acquisition,
changes in the business strengths of the Fairmont and Menominee Mills,
restrictions on potential growth, refinancing, credit and collection and other
factors referenced in SFK Pulp's management's discussion and analysis for the
year ended December 31, 2006 and in SFK Pulp's continuous disclosure filings,
which may be found through the Internet on SFK Pulp's website at www.sfk.ca or
on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR)
at www.sedar.com.
    Although the forward-looking statements contained herein are based upon
what Management believes to be reasonable assumptions, Management cannot
assure investors that actual results will be consistent with these
forward-looking statements. These forward-looking statements are made as of
the date of this press release, and, except as required by applicable laws,
Management assumes no obligation to update or revise them to reflect new
events or circumstances. These statements do not reflect the potential impact
of any special items or of any business combination or other transaction that
may be announced or that may occur after the date hereof. Readers are
cautioned not to place undue reliance on these forward-looking statements.

    SFK Pulp will hold a conference call Thursday November 1, 2007 at
2:00 p.m. (Eastern Time), to discuss its results. President and Chief
Executive Officer André Bernier, and Paul Bourque, Chief Financial Officer,
will host the conference call and a question-and-answer session to discuss
earnings. The first 30 minutes will be devoted to questions from investment
professionals while media representatives will be in listening mode only. This
will be followed by a question period for business media. To participate in
the conference call, investment professionals and business media may dial
(514) 861-2255 or 1-866-696-5910, access code 3240111#. Participants not able
to listen to the live call can access a replay of the archived call by calling
(514) 861-2272 or 1-800-408-3053, access code 3240111#. The replay will be
available until December 1, 2007.

    Attached: Summary of Results


    
    SFK Pulp - Financial Highlights - Third quarter ended September 30, 2007
        (in thousands of Canadian dollars except per unit amounts and
                             percentage figures)

    -------------------------------------------------------------------------
                               Three months ended       Nine months ended
                                  September 30            September 30
                                   (unaudited)             (unaudited)
    -------------------------------------------------------------------------
    FINANCIAL RESULTS            2007        2006        2007        2006
    -------------------------------------------------------------------------
                                    $           $           $           $
    -------------------------------------------------------------------------
    Sales                     127,189      68,764     385,789     201,881
    -------------------------------------------------------------------------
    Cost of sales             105,989      52,462     313,582     167,904
    -------------------------------------------------------------------------
    Selling and
     administrative expenses    3,441       1,574      10,802       4,834
    Loss on derivative
     instruments                1,039           -          43           -
    Loss on disposal of
     capital assets               624           -         624           -
    Loss (gain) on foreign
     currency translation       2,933        (211)      8,077         512
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    EBITDA(1)                  13,163      14,939      52,661      28,631
    -------------------------------------------------------------------------
    EBITDA Margin (%)            10.3%       21.7%       13.7%       14.2%
    -------------------------------------------------------------------------
    Amortization                9,726       7,554      29,128      22,368
    -------------------------------------------------------------------------
    Financial charges           4,081       1,526      15,004       4,665
    -------------------------------------------------------------------------
    Provision for income taxes    564          89      17,500 (3)     171
    -------------------------------------------------------------------------
    Net (loss) earnings        (1,208)      5,770      (8,971)(3)   1,427
    -------------------------------------------------------------------------
    Net (loss) earnings per
     unit - basic and diluted   (0.01)       0.09       (0.10)(3)    0.02
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    DISTRIBUTABLE CASH(2)      Three months ended       Nine months ended
                                  September 30            September 30
                                   (unaudited)             (unaudited)
                            -------------------------------------------------
                                 2007        2006        2007        2006
                                        (restated)(4)           (restated)(4)
    -------------------------------------------------------------------------
                                    $           $           $           $
    -------------------------------------------------------------------------
    Cash flows from
     operating activities         794      14,902      30,544      25,794
    -------------------------------------------------------------------------
    Less:
      Capital expenditures -
       cash                     2,958         725       9,400       3,843
    -------------------------------------------------------------------------
    Standardized
     distributable cash        (2,164)     14,177      21,144      21,951
    -------------------------------------------------------------------------
    Adjustments to
     standardized
     distributable cash:
      Changes in non-cash
       working capital items    9,861      (1,334)      9,795      (1,429)
      Capital expenditures
       accruals                  (576)          -       1,551           -
      Amortization of
       deferred financing
       fees                      (185)        (78)       (691)       (195)
      Employee future
       benefits                   479        (153)        413        (382)
    -------------------------------------------------------------------------
    Adjusted distributable
     cash                       7,411      12,612      32,212      19,945

    Distributions declared     10,857       3,259      36,189       4,148
    -------------------------------------------------------------------------
    Distribution equivalent
     accrued on subscription
     receipts                       -         223           -         223
    -------------------------------------------------------------------------
    (Shortfall) excess over
     adjusted distributable
     cash                      (3,442)      9,130      (3,977)     15,574
    -------------------------------------------------------------------------
    Reserve for distributions
     at the beginning of the
     period                    23,702      14,025      24,237       7,581
    -------------------------------------------------------------------------
    Reserve for distributions
     at the end of the period  20,260      23,155      20,260      23,155
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Distributions to               Three months ended September 30
     unitholders                             (unaudited)
    -------------------------------------------------------------------------
    (in thousands of
     Canadian dollars
     except per unit
     amounts)                        2007                    2006
    -------------------------------------------------------------------------
                                Total    Per unit       Total    Per unit
    -------------------------------------------------------------------------
    Total distributions
     declared                 $10,857     $0.1200      $3,259     $0.0550
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Distributions to                Nine months ended September 30
     unitholders                             (unaudited)
    -------------------------------------------------------------------------
    (in thousands of
     Canadian dollars
     except per unit
     amounts)                        2007                    2006
    -------------------------------------------------------------------------
                                Total    Per unit       Total    Per unit
    -------------------------------------------------------------------------
    Total distributions
     declared                 $36,189     $0.4000      $4,148     $0.0700
    -------------------------------------------------------------------------


    (1) Earnings before amortization, financial charges and income taxes
        ("EBITDA") is not a recognized measure under Canadian GAAP and is
        unaudited. Management believes that this measure is useful
        supplemental information as it provides investors with an indication
        of cash available for distribution prior to debt service, capital
        expenditures and income taxes. Investors should be cautioned however
        that this information should not be confused with or used as an
        alternative for net earnings determined in accordance with GAAP as an
        indicator of SFK Pulp's performance or cash flows from operating,
        investing and financing activities as a measure of liquidity and cash
        flows. SFK Pulp's method for calculating this information may differ
        from that used by other issuers and, accordingly, this information
        may not be comparable to measures used by other issuers. EBITDA shown
        herein represents earnings before amortization, financial charges and
        income taxes in the Financial Statements.

    (2) During the third quarter of 2007 and in accordance with the Canadian
        Institute of Chartered Accountants' interpretive release
        "Standardized Distributable Cash in Income Trust and Other flow-
        through Entities" issued in July 2007, SFK Pulp amended the
        distributable cash calculation to conform with this section of the
        new guidance. In summary, standardized distributable cash is defined
        as the periodic cash flows from operating activities as reported in
        the GAAP financial statements, including the effects of changes in
        non cash-working capital items less total capital expenditures (cash)
        as reported in the GAAP financial statements.

        Although SFK Pulp has decided to conform with this new guidance,
        Management nonetheless makes a number of other adjustments to cash
        flows from operations to determine cash available for distributions.
        Accordingly, Management also makes adjustments for changes in non-
        cash working capital items, capital expenditures accruals,
        amortization of deferred financing fees and employee future benefits.
        Standardized distributable cash as adjusted by Management is referred
        to herein as "adjusted distributable cash".

        Adjusted distributable cash is a non-GAAP measure generally used by
        Canadian open-ended trusts as an indicator of the issuer's ability to
        generate cash that could be used for distributions to unitholders and
        it should not be seen as a measure of cash flows or a substitute for
        comparable metrics prepared in accordance with GAAP. SFK Pulp's
        adjusted distributable cash may differ from similar calculations as
        reported by other similar entities and accordingly may not be
        comparable to distributable cash as reported by such entities.
        Management believes that SFK Pulp's adjusted distributable cash
        calculated from cash flows from operations is the most appropriate
        measure to help readers evaluate the ability of SFK Pulp to generate
        cash that could be used for distributions.

    (3) SFK Pulp revised its non-cash provision for future income taxes as of
        and for the three and six-month periods ended June 30, 2007 to
        $16.3 million, an increase of $4.0 million from the amount previously
        recorded. Accordingly, the amount of net loss for the three-month
        period was restated to $18.0 million ($0.20 per unit) from
        $13.9 million ($0.15 per unit) as previously reported and the amount
        of net loss for the six-month period was restated to $7.8 million
        ($0.09 per unit) from $3.7 million ($0.04 per unit) as previously
        reported.

    (4) SFK Pulp retroactively applied the recommendations of the Canadian
        Securities Administrators staff notice 52-306 issued on August 4,
        2006. According to this notice, the Canadian Securities
        Administrators staff is of the view that distributable cash should be
        calculated from cash flows from operating activities as presented in
        the issuer's financial statements rather than from EBITDA. The
        retroactive impact of this change on SFK Pulp's distributable cash
        (standardized and adjusted) and reserve was not material.
    
    %SEDAR: 00018041EF




For further information:

For further information: Investors & Analysts: Paul Bourque, Chief
Financial Officer, (450) 677-7857 ext. 2224; Media & Other: Suzanne Lalande,
Optimum Public Relations, (514) 282-4710

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SFK PULP FUND

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