Bowater 2Q 2007 net loss widened six times to $62.6 million on difficult market conditions

Jul 24, 2007. /Lesprom Network/. Bowater Incorporated reported on July 24, 2007 a net loss for the second quarter of 2007 of $62.6 million, or $1.09 per diluted share, on sales of $798.6 million. These results compare with a net loss of $10.6 million, or $0.18 per diluted share, on sales of $899.4 million for the second quarter of 2006. "During the quarter, we faced difficult market conditions as well as significant cost pressures as a result of the very strong Canadian dollar," said David J. Paterson, chairman, president and chief executive officer. "We mitigated these cost pressures through our focus on operational excellence and I expect these improvements to provide further benefits going forward. I am optimistic that these initiatives, combined with recently announced price increases for many of our products, will improve our financial performance." Second quarter 2007 special items, net of tax, consisted of the following items: a $42.0 million gain related to asset sales, a $17.6 million charge related to tax adjustments, a $16.7 million charge for severance and merger-related costs and a $28.8 million loss relating to foreign currency changes. Excluding these special items, the net loss for the quarter would have been $41.5 million, or $0.72 per diluted share, compared with second quarter 2006 net loss before special items of $17.6 million, or $0.31 per diluted share. A reconciliation of these items is contained in note 5 to this release. "We are making excellent progress on our merger integration plans with Abitibi," continued Mr. Paterson. "I am excited about the new management team we just unveiled and look forward to closing this transaction during the third quarter. I am more confident than ever that this transaction will generate significant value for all of our stakeholders." Bowater Incorporated, headquartered in Greenville, South Carolina, is a leading producer of coated and specialty papers and newsprint. In addition, the company sells bleached market pulp and lumber products. Bowater employs approximately 6 900 people and has 12 pulp and paper mills in the United States, Canada and South Korea. In North America, it also operates a converting facility and owns 10 sawmills. Bowater's operations are supported by approximately 708 000 acres of timberlands owned or leased in the United States and Canada and 28 million acres of timber cutting rights in Canada. Bowater operates six recycling plants and is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange.