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PGI Reports Full Year and Fourth Quarter 2012 Results

            PGI Reports Full Year and Fourth Quarter 2012 Results

PR Newswire

CHARLOTTE, N.C., March 28, 2013

CHARLOTTE, N.C., March 28, 2013 /PRNewswire/ -- Polymer Group, Inc. ("PGI" or
the "Company") reported results of operations for the year and fourth quarter
ended December 29, 2012.

As previously announced, Polymer Group, Inc. finalized the merger with an
affiliate of the Blackstone Group, along with co-investors and certain members
of the Company's management (the "Merger"), on January 28, 2011, and became a
privately held company.

In this press release, fiscal 2011 results, which include the January 2 to
January 28, 2011, and January 29 to December 31, 2011, periods, have been
combined. The combined presentation does not comply with United States
generally accepted accounting principles ("GAAP") but is presented because we
believe it provides a meaningful assessment of our financial results, though
the periods are not comparable. Included in the release is a reconciliation
of the GAAP presentation to the combined presentation.

In the second quarter of 2012, we updated our organizational structure to
better reflect how the overall business is managed. As a result, we changed
our reportable segments to reflect the combination of the United States and
Latin America Nonwovens segments into the Americas Nonwovens segment.

Fiscal Year 2012 Highlights:

  oIncreased Volumes Paced by Growth Investments in Americas and Asia

       oTotal sales volumes (as measured in metric tonnes) grew 6.1% compared
         with the prior year, and were up 1.9% excluding volumes from the
         Colombia operations that were disrupted in fiscal year 2011. The
         year-over-year volume growth reflected contributions from new
         capacity in the Americas and Asia segments, combined with improved
         demand in the healthcare markets as well as certain industrial
         markets.
       oUnderlying volume growth was partially offset by reduced selling
         prices from the pass-through of lower raw material costs, unfavorable
         market pricing trends, and unfavorable impact of foreign currency
         translation.

  oProfit Profile Improves on Return to More Normalized Operating Environment
    and Contributions from Cost Savings Initiatives

       oGross profit was 5.8% higher at $197.2 million for fiscal year 2012
         compared with $186.5 million in the prior year, including purchase
         accounting adjustments and the effect of the flood in Colombia.
       oOverall profit was positively impacted higher volumes and cost
         reduction initiatives, which also resulted in lower SG&A costs.
         These benefits were partially offset by certain volume-related
         manufacturing inefficiencies, a volatile raw material environment,
         increased lease expense associated with the new line in Virginia and
         higher depreciation expense.

  oStrong Cash Generation and Disciplined Working Capital Management
    Continues

       oLiquidity remained strong with cash balances of $97.9 million as of
         December 29, 2012.
       oOperating working capital improved year-over-year to 2.6% of net
         sales as of year end compared with 4.6% of net sales as of December
         31, 2011.

PGI's chief executive officer, Veronica (Ronee) M. Hagen, stated, "I am
pleased with our team's response to the impactful challenges we faced in 2012
from industry overcapacity in select markets as well as unfavorable foreign
currency trends. Our business operations are stronger than ever with new
growth investments in the Americas and Asia contributing year-over-year
improvement in differentiated markets, our European operations stabilizing and
continued cost controls and disciplined working capital management yielding
strong cash generations.

"As we look forward to 2013, we expect our focus on economic leadership and
cost optimization to create new opportunities across the globe. Raw material
cost volatility in the first half of the year, along with a competitive
pricing environment, is expected to result in sizable near-term headwinds for
us, but underlying performance should be supported by new growth initiatives
enabled by our new Global Growth & Innovation infrastructure."

FISCAL YEAR 2012 AND FISCAL YEAR 2011 RESULTS (COMBINED)

The positive impact from new investments in Suzhou, China, and Waynesboro,
Virginia, were the largest contributors to net sales for the fiscal year ended
December 29, 2012. Net sales were $1,155.2 million in fiscal 2012 compared
with $1,187.5 million for the year ended December 31, 2011. The
year-over-year decrease was primarily driven by lower net selling prices
resulting from our passing through lower raw material costs in addition to a
negative foreign currency translation impact. The decrease was partially
offset by improved net selling prices in our Oriented Polymers segment as well
as higher volumes in each of our Nonwoven segments, of which $32.1 million was
associated with higher volumes at our Colombia facility compared with the
prior year when the facility was impacted by a flood at the location.
Increased volumes in the Americas segment was driven by wipes and healthcare
products, while incremental growth in Asia was led by healthcare and hygiene
products sold from our new spunmelt line installed in 2011. The stabilization
of underlying demand in our industrial markets, as well as additional volumes
for wipes, benefited our business in Europe.

Gross profit was $197.2 million for the year ended December 29, 2012 compared
with $186.5 million for the year ended December 31, 2011. The year-over-year
increase was primarily driven by the absence of certain purchase accounting
adjustments in fiscal year 2011 associated with the step-up of inventories at
the transaction date, along with increased volume at our Colombia facility
during 2012 after a flood impacted their 2011 operations. The year ended
December 31, 2011 includes $11.8 million of purchase accounting adjustments.
Additionally, raw material costs were lower in fiscal 2012, predominantly
offset by lower selling prices. Gross profit was impacted by higher
manufacturing costs primarily associated with certain volume-related
manufacturing inefficiencies. Other factors included the incremental
depreciation on our new spunmelt lines in the U.S. and China as well as the
incremental lease expense related to the new U.S. line. These amounts were
partially offset by the positive benefits of our plant consolidation activity
in the U.S. As a result, gross profit as a percentage of net sales for the
year ended December 29, 2012 was 17.1% compared with 15.7% in the prior year.

Selling, general and administrative expenses were $140.8 million for the year
ended December 29, 2012 compared with $146.0 million for the year ended
December 31, 2011. The year-over-year decrease was primarily driven by cost
reduction initiatives implemented during the year, which reduced
employee-related expenses. These amounts were partially offset by an increase
in volume-related expenses such as shipping and handling, higher short-term
incentive compensation as well as incremental selling and marketing costs. As
a result, selling, general and administrative expenses as a percentage of net
sales were 12.2% for the year ended December 29, 2012 compared with 12.3% in
the prior year.

The redesigned organizational structure we commenced in 2012 is complete with
the new "Global Growth & Innovation Group" focused on matching resources with
existing growth opportunities as well as identifying and developing new
applications of PGI technologies and capabilities. The new structure is
expected to achieve $10 million to $12 million of annualized savings, a
portion of which will contribute to incremental profit in fiscal year 2013.

Special charges were $19.6 million for the year ended December 29, 2012 and
included $12.4 million related to our internal redesign and restructuring of
global operations initiative, $3.8 million related to our plant realignment
cost initiative in addition to other cost-reduction initiatives. Special
charges were $62.2 million for the year ended December 31, 2011 and included
$46.8 million of merger related expenses, $9.3 million related to goodwill and
asset impairment charges in addition to costs related to the flood at our
Colombia facility.

Operating income for the year ended December 29, 2012 was $37.2 million
compared with a loss of $23.8 million for the year ended December 31, 2011.
The increase in operating income was driven by increased volume, higher net
spreads (the difference between the change in raw material costs and selling
price/mix), the decrease in purchase accounting adjustments and a reduction in
special charges. As a result, the Company reported a net loss attributable to
PGI of $26.0 million for the year ended December 29, 2012 compared with a net
loss attributable to PGI of $94.4 million for the year ended December 31,
2011.

Adjusted EBITDA for fiscal year 2012 was $129.7 million compared with $140.9
million in the prior year, which included proforma add-backs for purchase
accounting adjustments and profit levels in Colombia prior to the flood.
Adjusted EBITDA, a non-GAAP financial measure, is defined and reconciled to
net income below.

FOURTH QUARTER RESULTS

Net sales for the fourth quarter of 2012 were $273.7 million compared with
$291.9 million for the fourth quarter of 2011. The year-over-year decrease
was primarily driven by lower net selling prices, resulting from our passing
through lower raw material costs. Volume increases across each of our
Nonwoven segments were offset by a negative foreign currency translation
impact.

Gross profit was $45.7 million for the fourth quarter of 2012 compared with
$48.1 million for the fourth quarter of 2011. Lower net spread over raw
materials of $2.1 million was driven by a reduction in selling prices which
more than offset lower year-over-year raw material costs during the quarter as
the impact of rising raw material costs during the quarter and the associated
lag to adjust selling prices negatively impacted profitability. In addition,
unfavorable foreign currency translation impacts and the increase in
depreciation associated with the new spunmelt manufacturing lines in the U.S.
and China also contributed to the decrease. However, these amounts were
partially offset by incremental volumes in each of our Nonwoven segments,
primarily in the Americas and Asia segments. As a result, gross profit as a
percentage of net sales for the fourth quarter of 2012 was 16.7% compared with
16.5% in the fourth quarter of 2011.

Selling, general and administrative expenses were $38.4 million for the fourth
quarter of 2012 compared with $36.1 million for the fourth quarter of 2011.
The year-over-year increase was primarily driven by higher short-term
incentive compensation, which included a discretionary decision by the Board
of Directors to pay an increased amount for the fiscal 2012 plan year that
resulted in an incremental $1.9 million of expense in the fourth quarter.
Volume-related expenses such as shipping and handling as well as selling and
marketing costs were also higher year-over-year. These amounts were partially
offset by cost reduction initiatives implemented during the year, which
reduced employee-related expenses.

Special charges were $6.7 million for the fourth quarter of 2012 and included
$3.5 million related to our internal redesign and restructuring of global
operations initiative as well as $2.1 million related to our plant realignment
cost initiative. Special charges were $11.9 million for the fourth quarter of
2011 and included $9.3 million related to goodwill and asset impairment
charges. Other costs included merger related expenses and other cost related
to the flood at our Colombia facility.

As a result of the above, operating income for the fourth quarter of 2012 was
$0.1 million compared with $0.3 million for the fourth quarter of 2011. The
Company reported a net loss attributable to PGI of $15.0 million for the
fourth quarter of 2012 compared with a net loss attributable to PGI of $21.4
million for the fourth quarter of 2011.

FINANCIAL METRICS

Net debt (defined as total debt less cash balances) as of December 29, 2012
was $501.8 million compared with $527.7 million as of December 31, 2011.
Capital expenditures for the full year of 2012 were $51.6 million. Operating
working capital (defined as accounts receivable plus inventories less trade
accounts payable and accrued liabilities) was $29.6 million as of December 29,
2012, or 2.6% net sales, compared with $54.6 million as of December 31, 2011,
or 4.6% of net sales.

NON-GAAP FINANCIAL MEASURES

As more fully described in the company's Annual Report on Form 10-K, the
Merger was accounted for in accordance with GAAP for business combinations and
non-controlling interests. Accordingly, the accounting guidance requires that
the purchase accounting treatment of the Merger be "pushed down" and recorded
on the financial statements of the subsidiary. In addition, the purchase
price was allocated to assets acquired and liabilities assumed based on their
estimated fair market values at the date of acquisition. As a result, periods
prior to the Merger are not comparable to subsequent periods due to the
difference in the basis of presentation of purchase accounting as compared to
historical cost. Although we continue to operate as the same legal entity
subsequent to acquisition, periods prior to January 28, 2011 reflect the
results of the Company prior to the Merger (the "Predecessor") and periods
after January 28, 2011 reflect the results of the Company after the Merger
(the "Successor"). The combined presentation in this press release is a
"non-GAAP financial measure" and does not comply with GAAP, but is presented
because we believe it provides the most meaningful comparison of our results.

Adjusted EBITDA (as defined below) is used in this release as a "non-GAAP
financial measure," which is a measure of the company's financial performance
that is different from measures calculated and presented in accordance with
GAAP within the meaning of applicable Securities and Exchange Commission
rules. A non-GAAP financial measure, such as EBITDA or Adjusted EBITDA,
should not be viewed as an alternative to GAAP measures of performance such as
(1) net income determined in accordance with GAAP or (2) operating cash flows
determined in accordance with GAAP. The calculation of Adjusted EBITDA may
not be comparable to the calculation of similarly titled measures reported by
other companies.

As defined in the company's indenture and credit agreements, Adjusted EBITDA
is generally calculated as net income (loss) before interest expense, income
and franchise taxes and depreciation and amortization, further adjusted to
exclude the effects of currency and certain unusual, non-cash, non-recurring
and other items permitted in calculating covenant compliance under the
indenture governing the Senior Secured Notes and the credit agreement
governing our ABL facility. With certain exceptions, it is also generally
consistent with the metric used by management as a performance measurement for
certain performance-based incentive compensation plans. In addition, the
company considers Adjusted EBITDA an important supplemental measure of its
performance and believes it is frequently used by securities analysts,
investors and other interested parties in the evaluation of companies in its
industry.

Polymer Group, Inc. is a global, technology-driven developer, producer and
marketer of engineered materials, and one of the world's leading producers of
nonwovens. With the broadest range of process technologies in the nonwovens
industry, PGI is a global supplier to leading consumer and industrial product
manufacturers. The company operates 13 manufacturing and converting
facilities in 9 countries throughout the world.

EARNINGS CONFERENCE CALL

PGI will conduct an investor conference call, including presentation slides,
starting at 10:30 a.m. ET on Monday, April 1, 2013. A live webcast of the
conference call and presentation material can be accessed by visiting PGI's
investor relations website at www.polymergroupinc.com. The number to call for
the live interactive teleconference is (866) 578-5771 or (617) 213-8055 and
entering the passcode, 41023018. A replay of the conference call will be
available until April 8, 2013, by dialing (888) 286-8010 or (617) 801-6888 and
entering the passcode, 54287454. Shortly after the conclusion of the
conference call, a webcast replay will be made available at
www.polymergroupinc.com.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in
this press release are forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, that involve certain risks and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. These forward‑looking statements speak only as of
the date of this release. Important factors that could cause actual results
to differ materially from those discussed in such forward‑looking statements
include: general economic factors including, but not limited to, changes in
interest rates, foreign currency translation rates, consumer confidence,
trends in disposable income, changes in consumer demand for goods produced,
and cyclical or other downturns; cost and availability of raw materials, labor
and natural and other resources and the inability to pass raw material cost
increases along to customers; changes to selling prices to customers which are
based, by contract, on an underlying raw material index; substantial debt
levels and potential inability to maintain sufficient liquidity to finance our
operations and make necessary capital expenditures; the ability to meet
existing debt covenants or obtain necessary waivers; achievement of objectives
for strategic acquisitions and dispositions; the ability to achieve successful
or timely start-up of new or modified production lines; reliance on major
customers and suppliers; domestic and foreign competition; information and
technological advances; risks related to operations in foreign jurisdictions;
and changes in environmental laws and regulations, including climate
change-related legislation and regulation. Investors and other readers are
directed to consider the risks and uncertainties discussed in documents filed
by Polymer Group, Inc. with the Securities and Exchange Commission, including
the company's Annual Report on Form 10-K and subsequent Quarterly Reports on
Form 10-Q.



POLYMER GROUP, INC.
Consolidated Statements of Operations
(In Thousands)
Unaudited
                                        Successor
                                        Three Months Ended  Three Months Ended

                                        December 29, 2012   December 31, 2011
Net sales                               $    273,651        $    291,937
Cost of goods sold                      (227,985)           (243,840)
Gross profit                            45,666              48,097
Selling, general and administrative     (38,422)            (36,145)
expenses
Special charges, net                    (6,688)             (11,878)
Other operating, net                    (467)               258
 Operating income (loss)             89                  332
Other income (expense):
Interest expense                        (12,340)            (12,896)
Foreign currency and other, net         (1,039)             (14,387)
Income (loss) before income taxes       (13,290)            (26,951)
Income tax (provision) benefit          (1,743)             4,886
Income (loss) from continuing           (15,033)            (22,065)
operations
Discontinued operations, net of tax     —                   644
Net income (loss)                       (15,033)            (21,421)
 Less: Earnings attributable to      —                   —
noncontrolling interests
Net income (loss) attributable to       $    (15,033)       $    (21,421)
Polymer Group, Inc



POLYMER GROUP, INC.
Consolidated Statements of Operations
(In Thousands)
Unaudited
                    Successor                       Predecessor   Combined
                                    Eleven Months
                                                    One Month     Fiscal Year
                    Fiscal Year     Ended          Ended         Ended
                    Ended December                                December 31,
                    29, 2012        December 31,    January 28,  2011
                                                    2011
                                    2011
Net sales           $  1,155,163    $  1,102,929    $  84,606     $ 1,187,535
Cost of goods sold  (957,917)       (932,523)       (68,531)      (1,001,054)
Gross profit        197,246         170,406         16,075        186,481
Selling, general
and administrative  (140,776)       (134,483)       (11,564)      (146,047)
expenses
Special charges,    (19,592)        (41,345)        (20,824)      (62,169)
net
Other operating,    287             (2,634)         564           (2,070)
net
 Operating       37,165          (8,056)         (15,749)      (23,805)
income (loss)
Other income
(expense):
 Interest        (50,414)        (46,409)        (1,922)       (48,331)
expense
 Foreign
currency and other, (5,134)         (18,636)        (82)          (18,718)
net
Income (loss)       (18,383)        (73,101)        (17,753)      (90,854)
before income taxes
Income tax          (7,655)         3,272           (549)         2,723
(provision) benefit
Income (loss) from
continuing          (26,038)        (69,829)        (18,302)      (88,131)
operations
Discontinued
operations, net of  —               (6,283)         182           (6,101)
tax
Net income (loss)   (26,038)        (76,112)        (18,120)      (94,232)
Less: Earnings
attributable to     —               59              83            142
noncontrolling
interests
Net income (loss)
attributable to     $  (26,038)     $  (76,171)     $  (18,203)   $ (94,374)
Polymer Group, Inc.



POLYMER GROUP, INC.
Condensed Consolidated Balance Sheets
(In Thousands)
Unaudited
                                                    December 29,  December 31,
                                                    2012          2011
ASSETS
Current assets:
Cash and cash equivalents                           $ 97,879      $ 72,742
Accounts receivable, net                            131,569       141,172
Inventories, net                                    94,964        103,911
Other current assets                                37,246        40,448
Total current assets                                361,658       358,273
Property, plant and equipment, net                  479,169       493,352
Goodwill and intangible assets, net                 156,271       164,297
Other noncurrent assets                             24,971        44,656
Total assets                                        $ 1,022,069   $ 1,060,578
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities            $ 196,905     $ 190,516
Current portion of long-term debt and short-term    20,290        12,592
borrowings
Other current liabilities                           4,320         2,714
Total current liabilities                           221,515       205,822
Long-term debt                                      579,399       587,853
Other noncurrent liabilities                        81,953        79,606
Total liabilities                                   882,867       873,281
Total equity                                        139,202       187,297
Total liabilities and equity                        $ 1,022,069   $ 1,060,578



POLYMER GROUP, INC.
Selected Financial Data
(In Thousands)
Unaudited
                Successor                                          Predecessor
                Three       Three        Fiscal Year Eleven        One Month
                Months      Months       Ended       Months        Ended
                Ended       Ended        December    Ended         January 28,
                December    December     29, 2012    December      2011
                29, 2012    31, 2011                 31, 2011
Selected
Financial Data
Depreciation
and             $ 16,631    $ 15,689     $ 64,041    $ 54,760      $  3,472
amortization
Amortization of
loan            609         685          2,665       2,530         51
acquisition
costs
Capital         11,479      14,001       51,625      68,428        8,405
expenditures
U.S.
manufacturing   2,067       2,067        8,269       2,067         —
line operating
lease expense
Non-cash        222         181          842         868           13,591
compensation
Special
charges, net
Restructuring
and plant       $ 6,066     $ 202        $ 17,877    $ 1,515       $  194
realignment
costs
Accelerated
vesting of      —           —            —           —             12,694
share-based
awards
Blackstone
acquisition     —           1,597        452         27,919        6,137
costs
Colombia flood  —           362          57          1,037         1,685
Goodwill        —           7,647        —           7,647         —
impairment
Asset
impairment      —           1,620        —           1,620         —
charges
Other           622         450          1,206       1,607         114
Total           $ 6,688     $ 11,878     $ 19,592    $ 41,345      $  20,824
                Three       Three        Fiscal Year Combined
                Months      Months       Ended       Fiscal Year
Adjusted EBITDA Ended       Ended        December    Ended
                December    December     29, 2012    December
                29, 2012    31, 2011                 31, 2011
The following
table
reconciles
Adjusted EBITDA
from the most
comparable GAAP
measure:
Net income      $ (15,033)  $ (21,421)   $ (26,038)  $ (94,374)
(loss)
Discontinued    —           (645)        —           6,101
operations, net
Net income
attributable to —           —            —           142
noncontrolling
interests
Interest        12,340      12,895       50,414      48,331
expense
Income and      1,875       (4,878)      8,025       (2,278)
franchise tax
Depreciation
and             16,631      15,654       64,041      58,122
amortization
Purchase
accounting      230         1,241        936         15,873
adjustments
Non-cash        221         181          842         1,787
compensation
Special         6,688       11,878       19,592      62,169
charges, net
Foreign
currency and    1,639       14,322       4,982       21,514
other, net
Severance and
relocation      280         419          1,657       2,403
expenses
Unusual or
non-recurring   469         776          880         1,287
charges, net
Business
optimization    137         115          979         523
expenses
Management,
monitoring and  1,111       813          3,361       3,000
advisory fees
Impact of Spain —           —            —           419
lease
Annualized
incremental
contribution    —           2,334        —           15,692
from Cali,
Colombia
spunmelt lines
Public company  —           —            —           183
costs
Adjusted EBITDA $ 26,588    $ 33,684     $ 129,671   $ 140,894



SOURCE Polymer Group, Inc.

Website: http://www.polymergroupinc.com
Contact: Dennis Norman, Chief Financial Officer, +1-704-697-5186,
normand@pginw.com