Pioneer Announces 2003 Results HOUSTON, March 30
/PRNewswire-FirstCall/ -- Pioneer Companies, Inc. (BULLETIN BOARD:
PONR) today reported that for the year ended December 31, 2003, it
had net income of $18.2 million, or $1.79 per diluted share, on
revenues of $378.7 million, compared to a net loss of $4.8 million,
or $0.48 per share, on revenues of $316.9 million for the year
ended December 31, 2002. Pioneer reported a net loss of $5.2
million, or $0.50 per diluted share, in the fourth quarter of 2003
as compared to a net loss of $11.2 million, or $1.12 per share, in
the comparable quarter in 2002. Revenues for the fourth quarter of
2003 were $93.3 million as compared to $84.3 million for the same
period in 2002. Pioneer realized an average ECU netback of $382 in
2003, compared to $270 in 2002, and revenues also improved as a
result of higher volumes and prices related to sales of bleach in
the western U.S. Pioneer's ECU production was 671,000 tons in 2003,
representing 93% of current production capacity. A $44.2 million
increase in cost of sales - products for 2003 primarily included
increased electricity costs, operating and maintenance costs, costs
of products purchased for resale and other variable production
costs. The fourth quarter increase of $11.7 million as compared to
the year-earlier period resulted from higher costs in the same
categories. Selling, general and administrative expenses in 2003
were largely unchanged from 2002, with increased bad debt expense
of $2.1 million in 2003 offsetting $2.0 million of higher personnel
costs and professional fees in 2002. Fourth quarter selling,
general and administrative expenses were $3.2 million and $6.7
million in 2003 and 2002, respectively. The decrease was primarily
related to lower personnel costs of $2.5 million and lower
professional fees of $0.8 million in 2003. Other significant
charges and credits, not specifically related to plant operating
and maintenance activities and which affect the comparability of
operating income between periods, are as follows (amounts in
millions): Three Months Ended Year Ended December 31, December 31,
2003 2002 2003 2002 Operating income (loss) $ 0.3 $(4.5) $39.8
$12.8 Charges (credits) Cost of sales - products $ --- $ --- $ 9.5
$ --- Cost of sales - derivatives --- (2.2)21.0 (12.9) Change in
fair value of derivatives --- (10.3) (87.3) (23.6) Asset impairment
--- 16.9 40.8 16.9 Restructuring expenses --- --- 4.1 Charges and
credits noted above are detailed as follows: -- In the first
quarter of 2003, cost of sales -- products included an increase of
$9.5 million in Pioneer's reserves for environmental remediation
liabilities, based on a new analysis of environmental concerns at
all of Pioneer's plants. -- In the first quarter of 2003, Pioneer
and the Colorado River Commission settled their dispute over
certain derivative positions relating to the supply of power to
Pioneer's Henderson facility. As a result, the receivable of $21.0
million that Pioneer had recorded for estimated net proceeds from
matured derivatives was reversed, and the net liability of $87.3
million that had been recorded for the net mark-to-market loss on
outstanding derivative positions was also reversed. In the prior
periods, Pioneer recorded $2.2 million and $12.9 million of
benefits in cost of sales related to derivatives positions that had
matured in the three and twelve months ended December 31, 2002,
respectively. Pioneer also recorded $10.3 million and $23.6 million
of benefits related to the change in the fair market value of the
remaining derivatives positions in the three and twelve months
ended December 31, 2002, respectively. -- Due to continued idling
of the Tacoma chlor-alkali facility and uncertainty as to when it
might be restarted, Pioneer recorded an impairment charge of $16.9
million in the fourth quarter of 2002. Pioneer recorded an
impairment charge of $40.8 million in the first quarter of 2003,
since the settlement with the Colorado River Commission resulted in
the use of higher-cost power at the Henderson facility, and
recognition of an impairment of the facility's asset value. --
Restructuring charges in 2002 included $2.9 million of severance
expense, $0.7 million of Tacoma idling costsand $0.5 million of
reorganization-related professional fees. Pioneer reported other
expense of $5.8 million in 2003, consisting of currency exchange
losses. In 2002 there was a currency exchange gain of $0.1 million.
For the three months ended December 31, 2003, other expense
included $1.3 million of currency exchange loss as compared to $0.1
million of currency exchange gain in the comparable period in the
prior year. At December 31, 2003, Pioneer had liquidity of $12.4
million, which included cash of $1.9 million and available
borrowings under Pioneer's revolving credit facility of $10.5
million, net of letters of credit outstanding as of such date.
Michael Y. McGovern, Pioneer's President and Chief Executive
Officer, stated, "In 2003 Pioneer received major benefits from the
settlement of our dispute with CRC and an increase in ECU prices,
which reached a three-year high of $406 in the second quarter.
However, prices have declined since that peak, and for 2004 we do
not currently expect average ECU prices at the 2003 levels, and we
currently anticipate a high level of energy costs during 2004.
Recently we embarked on an important organizational efficiency
project that we believe will produce benefits in other areas of
Pioneer's cost structure in the future and make us more
competitive." Pioneer, based in Houston, manufactures chlorine,
caustic soda, bleach, hydrochloric acid and related products used
in a variety of applications, including water treatment, plastics,
pulp and paper, detergents, agricultural chemicals, pharmaceuticals
and medical disinfectants. The Company owns and operates four
chlor-alkali plants and several downstream manufacturing facilities
in North America. The Company has filed its annual report onForm
10-K for the year ended December 31, 2003, and has posted it to its
Internet web site, so it is readily accessible. Other information
and press releases of Pioneer Companies, Inc. can also be obtained
from its Internet web site at http://www.piona.com/ . Pioneer will
conduct a teleconference on April 1, 2004, at 10:00 a.m. Central
time in order to discuss its 2003 financial results. Individuals
who are interested in listening to the teleconference may call
(800) 732-8491 at that time and request to listen to the Pioneer
earnings teleconference. A replay of the teleconference will be
available from 1:00 p.m. (Central time) on April 1, 2004, until
5:00 p.m. on April 3, 2004, by dialing (800) 633-8284, reservation
#21189980. Certain statements in this news release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act. Forward- looking statements
relate to matters that are not historical facts. Such statements
involve risks and uncertainties, including, but not limited to,
Pioneer's high financial leverage, global political and economic
conditions, the demand and prices for Pioneer's products, Pioneer
and industry production volumes, competitive prices, the cyclical
nature of the markets formany of Pioneer's products and raw
materials, the effect of Pioneer's results of operations on its
debt agreements, and other risks and uncertainties described in
Pioneer's filings with the Securities and Exchange Commission.
Actual outcomes may vary materially from those indicated by the
forward-looking statements. PIONEER COMPANIES, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share data)
Three Months Ended Year Ended December 31, December 31, 2003 2002
2003 2002 Revenues $93,327 $84,288 $378,675 $316,907 Cost of sales
- product (89,090) (77,791) (340,804) (296,622) Cost of sales -
derivatives --- 2,194 (20,999) 12,877 Total cost of sales (89,090)
(75,597) (361,803) (283,745) Gross profit 4,237 8,691 16,872 33,162
Selling, general and administrative expenses (3,164) (6,664)
(23,204) (23,893) Change in fair value of derivatives --- 10,300
87,271 23,566 Asset impairment and other items (786) (16,796)
(41,158) (20,084) Operating income (loss) 287 (4,469) 39,781 12,751
Interest expense, net (4,879) (4,821) (19,064) (18,891) Other
income (expense), net (1,282) 70 (5,816) 602 Income (loss) before
income taxes (5,874) (9,220) 14,901 (5,538) Income tax (expense)
benefit 684 (2,018) 3,286 781 Net income (loss) $(5,190) $(11,238)
$18,187 $(4,757) Income (loss) per share: Basic (0.52) (1.12) 1.82
(0.48) Diluted (0.50) (1.12) 1.79 (0.48) Weighted average number of
shares outstanding: Basic 10,004 10,000 10,002 10,000 Diluted
10,327 10,000 10,169 10,000 PIONEER COMPANIES, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) December 31, December
31, 2003 2002 Assets Current assets, excluding derivative asset
$61,471 $62,862 Current derivative asset --- 17,834 Net property,
plant and equipment 189,534242,269 Other assets 3,931 25,755
Non-current derivative asset --- 41,362 Excess reorganization value
over the fair value of identifiable assets 84,064 84,064 Total
assets $339,000 $474,146 Liabilities and stockholders' equity
Current liabilities, excluding derivative liability $48,881 $59,466
Current derivative liability --- 37,614 Long-term debt, less
current portion 203,803 207,463 Non-current derivative liability
--- 108,852 Other long-term liabilities 67,326 59,499 Total
stockholders' equity 18,990 1,252 Total liabilities and
stockholders' equity $339,000 $474,146 PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended
December 31, 2003 2002 Operating activities: Net income (loss)
$18,187 $(4,757) Adjustments to reconcile net income (loss) to net
cash flows from operating activities: Fresh-start adjustments ---
--- Debt forgiveness income --- --- Depreciation and amortization
21,551 24,926 Provision for (recovery of) loss on accounts
receivable 1,296 (848) Deferred tax benefit (3,142) (781)
Derivatives - cost of sales and change in fair value (66,272)
(36,443) Asset impairment 40,818 16,941 (Gain) loss on disposal of
assets 761 (1,324) Foreign exchange (gain) loss 5,825 (92) Net
effect of changes in operating assets and liabilities (4,763) 2,628
Net cash flows from operating activities 14,261 250 Investing
activities: Capital expenditures (9,998) (10,615) Proceeds from
disposal of assets --- 2,047 Net cash flows from investing
activities (9,998) (8,568) Financing activities:
Debtor-in-possession credit facility, net --- (6,663) Revolving
credit borrowings, net 2,119 14,704 Repayments on long-term debt
(7,494) (1,649) Proceeds from issuance of stock 8 --- Net cash
flows from financing activities (5,367) 6,392 Effect of exchange
rate changes on cash and cash equivalents 261 1,091 Net decrease in
cashand cash equivalents (843) (835) Cash and cash equivalents at
beginning of period 2,789 3,624 Cash and cash equivalents at end of
period $1,946 $2,789 DATASOURCE: Pioneer Companies, Inc.
CONTACT:Gary Pittman of Pioneer Companies, Inc., +1-713-570-3200,
or fax, +1-713-225-6475 Web site: http://www.piona.com/
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