Excluding the impact of foreign currency changes, sales declined about 9% from the results of last year. Net income for the quarter, before special charges, was $0.02 per diluted share, compared to net income of $0.04 per share recorded in the first quarter of 2000, before restructuring charges. Interest expense for the quarter was lower by $1.2 million, or $0.04 per share, compared to last year. Included in the 2001 results is a special charge of approximately $2.5 million (or $0.09 per share) related to the retirement of the Company’s former President and CEO and the associated transition costs. The 2000 results included a special charge of approximately $0.05 per share related to the Company’s European restructuring efforts.
Cash flow, as measured by EBITDA was $21.0 million, compared to $22.4 million for the same period last year. Total debt at the end of the quarter was $400 million, an improvement of $7 million from the $407 million balance at the beginning of the year.
In the quarter, the Company maintained its overall operating income margin relative to the same period last year, despite a difficult sales environment, as each of its operating groups either maintained or improved its operating income margin except the Films Group.
In the Films Group, sales were down 6%, and its operating income margin declined to 14.8% from the 18.6% margin posted in same quarter last year due to continuing pricing pressures related primarily to softness in the publishing industry and cost increases for raw materials.
Sales in the Office Products Group decreased 20% from last year primarily due to slower sales of visual communication and shredder products. In addition, several other issues, such as an unusually large backlog of orders at year-end 1999, also affected the sales comparison. Despite the sales decline, the Group increased its operating income margin from last year through continuing improvements in its cost of goods sold and supply chain initiatives. Beginning in the second quarter of this year, the Group expects to discontinue sales of certain retail shredder products which contribute a negligible amount of operating profit. These sales amounted to approximately $16 million last year.
In the Document Finishing Group, sales declined 7% due primarily to weakness in its Mexican and Latin America operations, lower sales of stock binders and several unusually large orders last year. The operating income margin for the Group was comparable to last year’s margin.
Results in the Europe Group continued to reflect improved gross margins and lower operating expenses, and the Group achieved a small positive operating income after posting a $0.3 million loss the prior year. After adjusting for currency effects and a discontinued business, sales in Europe increased slightly by approximately 1%.
