VERSO PAPER CORP (VRS, Financial) filed Quarterly Report for the period ended 2010-03-31.
Verso Paper Corp has a market cap of $248.5 million; its shares were traded at around $4.745 with and P/S ratio of 0.2. VRS is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Interest expense. Verso Paper s interest expense for the first quarter of 2010 was $32.3 million compared to $27.1 million for the same period in 2009. Verso Holdings interest expense for the first quarter of 2010 was $31.0 million compared to $24.7 million for the same period in 2009. The increase in interest expense was primarily due to higher interest rates on outstanding debt in the first quarter of 2010, which offset lower long-term indebtedness in the first quarter of 2010 as compared to the first quarter of 2009.
Net cash flows from operating activities. Verso Paper s net cash used in operating activities of $49.1 million in the first quarter of 2010 was primarily attributable to net losses of $53.6 million and to a lesser extent reflected changes in working capital, which included a decline in accrued liabilities resulting from normal fluctuations in accrued interest payable. Net cash used in operating activities of $87.1 million in the first quarter of 2009, primarily resulted from changes in working capital, which included declines in accounts payable and accrued liabilities while inventories and accounts receivable increased. The decline in accounts payable was related to the large amount of market-related machine downtime taken in response to challenging market conditions. The decline in accrued liabilities was due to normal fluctuations in accrued interest payable. The increase in inventory value was primarily due to the normal seasonal build of our wood and finished goods inventories. Additionally, the increase in accounts receivable was primarily due to accruals for alternative fuel mixture tax credits and was offset by the resulting improvement in net income. The tax credit, as it relates to liquid fuels derived from biomass, expired on December 31, 2009. Verso Holdings net cash used in operating activities was $49.1 million for the first quarter of 2010 compared to $86.8 million for the first quarter of 2009. Verso Holdings operating cash flows are the same as those of Verso Paper in all material respects.
Net cash flows from financing activities. Verso Paper s net cash provided by financing activities was $26.5 million for the first quarter of 2010, reflecting $27.4 million in proceeds from the issuance of $25.0 million in senior secured notes including premium and net of underwriting fees and issuance costs. This compares to net cash used in financing activities of $3.6 million in the first quarter of 2009, representing principal payments on long-term debt. Verso Holdings net cash provided by financing activities was $26.5 million for the first quarter of 2010 compared to net cash used in financing activities of $3.8 million for the first quarter of 2009. Verso Holdings financing cash flows are the same as those of Verso Paper in all material respects.
Indebtedness. As of March 31, 2010, Verso Paper s aggregate indebtedness was $1,221.9 million, net of $20.7 million of unamortized discounts. As of March 31, 2010, Verso Holdings aggregate indebtedness was $1,146.6 million, net of $20.7 million of unamortized discounts.
On June 11, 2009, Verso Holdings issued $325.0 million aggregate principal amount of 11.5% senior secured notes due July 1, 2014. These fixed-rate notes pay interest semi-annually. The notes are secured by substantially all of the property and assets of Verso Holdings and each of its direct and indirect subsidiaries. The notes are secured on a ratable and pari passu basis with the revolving credit facility. The net proceeds, after deducting the discount, underwriting fees, and issuance costs, were $288.6 million, which funds were used to repay in full $252.9 million outstanding on Verso Holdings first priority term loan and to temporarily reduce the debt outstanding under the revolving credit facility by $35.0 million. On January 15, 2010, Verso Holdings issued an additional $25.0 million aggregate principal amount of the 11.5% senior secured notes under the same indenture. These notes were treated as a single series with and have the same terms as the notes issued under the indenture in June 2009. The net proceeds including premium, after deducting underwriting fees and offering expenses, were $26.5 million. We intend to use the net proceeds for capital expenditures and other general corporate purposes.
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Verso Paper Corp has a market cap of $248.5 million; its shares were traded at around $4.745 with and P/S ratio of 0.2. VRS is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Cost of sales. Cost of sales, including depreciation, amortization, and depletion, was $368.9 million in the first quarter of 2010 compared to $303.3 million in 2009, primarily reflecting the increase in sales volume. Our gross margin, excluding depreciation, amortization, and depletion, was 7.4% for the first quarter of 2010 compared to 6.3% for the first quarter of 2009. The compression in gross margin for the first quarter of 2009 reflects $31.3 million of unabsorbed costs resulting from almost 140,000 tons of downtime. Our gross margin remained under pressure in 2010 due to continued low sales prices. Depreciation, amortization, and depletion expenses were $32.1 million in the first quarter of 2010 compared to $34.3 million in the first quarter of 2009.Interest expense. Verso Paper s interest expense for the first quarter of 2010 was $32.3 million compared to $27.1 million for the same period in 2009. Verso Holdings interest expense for the first quarter of 2010 was $31.0 million compared to $24.7 million for the same period in 2009. The increase in interest expense was primarily due to higher interest rates on outstanding debt in the first quarter of 2010, which offset lower long-term indebtedness in the first quarter of 2010 as compared to the first quarter of 2009.
Net cash flows from operating activities. Verso Paper s net cash used in operating activities of $49.1 million in the first quarter of 2010 was primarily attributable to net losses of $53.6 million and to a lesser extent reflected changes in working capital, which included a decline in accrued liabilities resulting from normal fluctuations in accrued interest payable. Net cash used in operating activities of $87.1 million in the first quarter of 2009, primarily resulted from changes in working capital, which included declines in accounts payable and accrued liabilities while inventories and accounts receivable increased. The decline in accounts payable was related to the large amount of market-related machine downtime taken in response to challenging market conditions. The decline in accrued liabilities was due to normal fluctuations in accrued interest payable. The increase in inventory value was primarily due to the normal seasonal build of our wood and finished goods inventories. Additionally, the increase in accounts receivable was primarily due to accruals for alternative fuel mixture tax credits and was offset by the resulting improvement in net income. The tax credit, as it relates to liquid fuels derived from biomass, expired on December 31, 2009. Verso Holdings net cash used in operating activities was $49.1 million for the first quarter of 2010 compared to $86.8 million for the first quarter of 2009. Verso Holdings operating cash flows are the same as those of Verso Paper in all material respects.
Net cash flows from financing activities. Verso Paper s net cash provided by financing activities was $26.5 million for the first quarter of 2010, reflecting $27.4 million in proceeds from the issuance of $25.0 million in senior secured notes including premium and net of underwriting fees and issuance costs. This compares to net cash used in financing activities of $3.6 million in the first quarter of 2009, representing principal payments on long-term debt. Verso Holdings net cash provided by financing activities was $26.5 million for the first quarter of 2010 compared to net cash used in financing activities of $3.8 million for the first quarter of 2009. Verso Holdings financing cash flows are the same as those of Verso Paper in all material respects.
Indebtedness. As of March 31, 2010, Verso Paper s aggregate indebtedness was $1,221.9 million, net of $20.7 million of unamortized discounts. As of March 31, 2010, Verso Holdings aggregate indebtedness was $1,146.6 million, net of $20.7 million of unamortized discounts.
On June 11, 2009, Verso Holdings issued $325.0 million aggregate principal amount of 11.5% senior secured notes due July 1, 2014. These fixed-rate notes pay interest semi-annually. The notes are secured by substantially all of the property and assets of Verso Holdings and each of its direct and indirect subsidiaries. The notes are secured on a ratable and pari passu basis with the revolving credit facility. The net proceeds, after deducting the discount, underwriting fees, and issuance costs, were $288.6 million, which funds were used to repay in full $252.9 million outstanding on Verso Holdings first priority term loan and to temporarily reduce the debt outstanding under the revolving credit facility by $35.0 million. On January 15, 2010, Verso Holdings issued an additional $25.0 million aggregate principal amount of the 11.5% senior secured notes under the same indenture. These notes were treated as a single series with and have the same terms as the notes issued under the indenture in June 2009. The net proceeds including premium, after deducting underwriting fees and offering expenses, were $26.5 million. We intend to use the net proceeds for capital expenditures and other general corporate purposes.
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