Saflex Segment Saflex's second quarter 2008 net sales were $220 million, up $31 million or 16% from the same period of 2007.
EBITDA decreased $12 million to $19 million for the second quarter of 2008 compared to the prior year period. EBITDA for this business was adversely affected by a non-cash charge of $24 million associated with the fresh start accounting step-up in basis of inventory. Excluding this charge, Adjusted EBITDA increased by $12 million, or 39% primarily due to stronger revenues and improved manufacturing performance in comparison to the prior year.
CPFilms Segment: CPFilms' second quarter 2008 net sales were $71 million, up $5 million or 8% from the same period in 2007.
EBITDA decreased $4 million to $16 million for the second quarter of 2008, compared to the prior year period. Excluding a $6 million non-cash charge associated with the fresh start accounting step-up in basis of the segment's inventory, EBITDA increased by $2 million, or 10% primarily driven by strong international volume growth.
Technical Specialties Segment: Technical Specialties' net sales for second quarter 2008 of $275 million increased by $118 million compared to 2007. Including Flexsys results for April 2007, pro forma sales improved $68 million or 33% over the prior year.
EBITDA increased $19 million to $39 million during the second quarter 2008 compared to the prior year period. Including Flexsys results for April 2007 on a 100% basis and excluding events affecting comparability, pro forma Adjusted EBITDA increased $23 million, primarily due to stronger revenues and improved product mix versus the prior year.
Events that impacted comparability include a $13 million non-cash charge associated with the fresh start accounting step-up in basis of the segment's inventory and $6 million of costs associated with the expected closure of the Company's Ruabon manufacturing facility in 2008 (as previously announced); and a $2 million charge associated with the step-up in basis of Flexsys' inventory in 2007.
Integrated Nylon Segment: Integrated Nylon net sales for the second quarter 2008 of $518 million increased $29 million or 6% compared to 2007.
Integrated Nylon EBITDA decreased $39 million to a $1 million loss during the second quarter 2008 compared to the prior year period. This segment was also impacted by fresh start accounting related to step-up in inventory basis in the amount of $5 million for 2008 and a $7 million gain from sale of land in Alvin, Texas in the second quarter of 2007. Excluding these unusual items, the $27 million decrease in year-over-year Adjusted EBITDA is primarily attributable to higher raw material and energy costs that were not fully recovered by selling prices.
Unallocated and Other: After taking into consideration unusual charges and gains and decreases in equity earnings as a result of the Flexsys acquisition, corporate and other expenses were down $15 million compared to the second quarter 2007 predominantly due to lower adjustments to the Company's LIFO inventory valuation allowance.
Cash Flow: Cash from operations before reorganization activities for six months ended June 2008 was a usage of $63 million. This included a $204 million increase in inventory and trade accounts receivable, of which approximately 60% is due to escalating raw material and energy costs and the Company's implementation of related price increases. This increase in working capital was partially offset by improved supplier payment terms.
Outlook: The Company is raising its full-year 2008 adjusted EBITDA guidance to a range of $400 million - $425 million from its previous estimate of $375 million - $400 million.