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Appleton Swings to First Quarter Profit

May 11, 2006 (Press Release) - Appleton's net sales for the first quarter ended April 2, 2006 increased 6.3 percent to $268.9 million compared to net sales of $253.0 million for the same quarter of 2005. Four of the Company's five business segments reported an increase in net sales when compared to the first quarter of 2005.

The Company reported net income of $5.6 million for the first quarter of 2006 compared to a net loss of $4.3 million for the same quarter of 2005. The increase in net income was the result of greater net sales, reduced selling, general and administrative expenses, and lower restructuring charges compared to the first quarter of 2005.

Coated Solutions

During first quarter 2006, coated solutions net sales decreased approximately 3 percent compared to the first quarter of 2005. Sales revenue for carbonless products, which accounts for the majority of the Company's coated solutions segment, decreased approximately 2 percent compared to the same quarter in 2005. Carbonless shipment volume decreased approximately 3 percent during the first quarter of 2006 compared to the same quarter for 2005.

Thermal Papers

Thermal net sales increased approximately 23 percent during first quarter 2006 on a 23 percent shipment volume increase compared to first quarter 2005. Increased sales to overseas markets accounted for approximately 40 percent of the volume increase.

Security Papers

Net sales from U.S.-based security products rose 13 percent during first quarter 2006 compared to the same quarter of 2005. Approximately half of the increase was the result of sales to new customers.

Specialized and Secure Print Services

BemroseBooth's net sales for first quarter 2006 increased approximately 9 percent over that of first quarter 2005. The increase in net sales occurred across all manufacturing facilities and within the transactional mailing, security papers, continuous format phone cards and UK government tax stamps product lines.

Performance Packaging

Net sales from Appleton's performance packaging companies grew approximately 25 percent in the first quarter of 2006 as compared to first quarter 2005. The first quarter of 2006 includes 10 additional days of sales from New England Extrusion Inc. (NEX), since NEX was acquired on January 11, 2005. The ongoing benefits of new business secured throughout fiscal 2005, as well as stronger pricing during first quarter 2006 compared to first quarter 2005, accounted for much of the increase.

Balance Sheet

During the three months ended April 2, 2006, Appleton's cash increased by $13.3 million to $31.7 million. During first quarter 2006, Appleton made a $0.6 million mandatory debt payment and an additional $5.6 million excess cash flow payment on the senior credit facility. Also during the quarter, Appleton repaid the entire $2.0 million outstanding on the revolving line of credit.

During the three months ended April 2, 2006, Appleton's current assets, excluding cash, decreased $4.8 million. The majority of this decrease was $3.7 million in accounts receivable. Due to the seasonality of its business, BemroseBooth's accounts receivable decreased by $12.1 million while all other receivables increased by $8.4 million due to increased net sales during first quarter 2006. Appleton's current liabilities decreased $11.4 million. Payments made on the senior credit facility accounted for over half of the decrease. There was also a $2.4 million decrease in the restructuring reserve.

SOURCE: Appleton




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