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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 1998
-----------------------------
The Fonda Group, Inc.
Delaware 333-24939 13-3220732
- ----------------------------- --------------------- ---------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
27 Lower Newton Street, St. Albans, Vermont 05478
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (802) 524-5966
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
The following sets forth Fonda's pro forma condensed statements of income
for the fiscal year ended July 27, 1997 and the six and twelve months ended
January 25, 1998 which have been derived from Fonda's historical statements of
income for the fiscal year ended July 27, 1997 and the six and twelve months
ended January 25, 1998, and give effect to (i) the acquisition of the
outstanding capital stock of Heartland Mfg. Corp. as of June 2, 1997 and the
net assets of the former division of Astro Valcour, Inc. from Tenneco Inc. as
of June 10, 1997, (ii) the February 24, 1997 issuance of the 9 1/2% Senior
Subordinated Notes due 2007, (iii) the acquisition of certain net assets of
Leisureway Inc. on January 5, 1998 and (iv) the Natural Dam Mill Disposition,
as if each such transaction had occurred on the first day of Fonda's fiscal
year ended July 27, 1997.
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FONDA UNAUDITED PRO FORMA CONDENSED
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JULY 27, 1997
------------------------------------------------------------------------
NATURAL
FONDA DAM MILL ACQUISITIONS OTHER FONDA
HISTORICAL DISPOSITION (a) HISTORICAL (b) ADJUSTMENTS PRO FORMA
------------ --------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales............................. $252,513 $(19,340) $29,677 $262,850
Cost of goods sold.................... 196,333 (13,114) 21,595 $ 90 (c) 204,904
------------ --------------- -------------- ------------- -----------
Gross profit.......................... 56,180 (6,226) 8,082 (90) 57,946
Selling, general and administrative
expenses............................. 37,168 (2,125) 5,908 (1,561)(d) 39,390
Other income, net..................... (1,608) -- -- (1,608)
------------ --------------- -------------- ------------- -----------
Income from operations............... 20,620 (4,101) 2,174 1,471 20,164
Interest expense, net................. 9,017 -- -- 3,067 (e) 12,084
------------ --------------- -------------- ------------- -----------
Income before taxes and extraordinary
loss................................. 11,603 (4,101) 2,174 (1,596) 8,080
Income taxes (f)...................... 4,872 (1,722) 913 (670) 3,393
------------ --------------- -------------- ------------- -----------
Income before extraordinary loss ..... $ 6,731 $ (2,379) $ 1,261 $ (926) $ 4,687
============ =============== ============== ============= ===========
OTHER FINANCIAL DATA:
EBITDA (g) ........................... $ 23,942 $ 23,962
Cash interest expense (h)............. 8,309 11,520
Capital expenditures ................. 10,363 (8,601) 1,762
Depreciation and amortization (i) .... 4,440 (171) 351 786 5,406
Ratio of EBITDA to cash interest
expense (g)(h) ...................... 2.9x 2.1x
</TABLE>
See Notes to Fonda Unaudited Pro Forma Condensed Statement of Income.
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FONDA UNAUDITED PRO FORMA CONDENSED
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 25, 1998
------------------------------------------------------------------------
NATURAL
FONDA DAM MILL ACQUISITIONS OTHER FONDA
HISTORICAL DISPOSITION (a) HISTORICAL (b) ADJUSTMENTS PRO FORMA
------------ --------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $136,674 $(8,893) $4,292 $132,073
Cost of goods sold ................. 108,077 (7,742) 3,253 35 (c) 103,623
------------ --------------- -------------- ------------- -----------
Gross profit ....................... 28,597 (1,151) 1,039 (35) 28,450
Selling, general and administrative
expenses .......................... 19,814 (610) 930 (130)(d) 20,004
Income from operations ............ 8,783 (541) 109 95 8,446
Interest expense, net .............. 6,003 -- -- 6,003
------------ --------------- -------------- ------------- -----------
Income before taxes and
extraordinary loss ................ 2,780 (541) 109 95 2,443
Income taxes (f) ................... 1,168 (227) 46 40 1,027
------------ --------------- -------------- ------------- -----------
Income before extraordinary loss ... $ 1,612 $ (314) $ 63 $ 55 $ 1,416
============ =============== ============== ============= ===========
OTHER FINANCIAL DATA:
EBITDA (g) ......................... $ 11,670 $ 11,193
Cash interest expense (h)........... 5,924 5,731
Capital expenditures ............... 4,408 (1,692) 2,716
Depreciation and amortization (i) . 2,694 (110) 23 140 2,747
Ratio of EBITDA to cash interest
expense (g)(h)..................... 2.0x 2.0x
</TABLE>
See Notes to Fonda Unaudited Pro Forma Condensed Statement of Income.
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FONDA UNAUDITED PRO FORMA CONDENSED
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JANUARY 25, 1998
------------------------------------------------------------------------
NATURAL
FONDA DAM MILL ACQUISITIONS OTHER FONDA
HISTORICAL DISPOSITION (a) HISTORICAL (b) ADJUSTMENTS PRO FORMA
------------ --------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $264,808 $(19,037) $17,424 $263,195
Cost of goods sold.................. 207,423 (14,357) 13,334 77 (c) 206,477
------------ --------------- -------------- ------------- -----------
Gross profit........................ 57,385 (4,680) 4,090 (77) 56,718
Selling, general and administrative
expenses........................... 37,462 (1,685) 2,923 (22)(d) 38,678
Other income, net................... (1,608) -- -- (1,608)
------------ --------------- -------------- ------------- -----------
Income from operations............. 21,531 (2,995) 1,167 (55) 19,648
Interest expense, net............... 10,480 -- -- 1,582 (e) 12,062
------------ --------------- -------------- ------------- -----------
Income before taxes and
extraordinary loss................. 11,051 (2,995) 1,167 (1,637) 7,586
Income taxes (f).................... 4,640 (1,257) 490 (687) 3,186
------------ --------------- -------------- ------------- -----------
Income before extraordinary loss ... $ 6,411 $ (1,738) $ 677 $ (950) $ 4,400
============ =============== ============== ============= ===========
OTHER FINANCIAL DATA:
EBITDA (g).......................... $ 24,881 $ 23,435
Cash interest expense (h)........... 10,233 11,498
Capital expenditures................ 12,697 (9,159) 3,538
Depreciation and amortization (i) .. 4,275 285 184 651 5,395
Ratio of EBITDA to cash interest
expense (g)(h)..................... 2.4x 2.0x
</TABLE>
See Notes to Fonda Unaudited Pro Forma Condensed Statement of Income.
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NOTES TO FONDA UNAUDITED PRO FORMA
CONDENSED STATEMENTS OF INCOME
(a) Reflects the elimination of the results of operations of the Natural
Dam mill as a result of the Natural Dam Mill Disposition.
(b) The results of operations of each entity acquired in the 1997 Fonda
Acquisitions are included in Fonda's historical results of operations
commencing with such entity's respective acquisition date. The
adjustments reflect (i) the additional results of operations of the
acquired entities as if such acquisitions had occurred at the
beginning of the year ended July 27, 1997 and (ii) the results of
operations of the Leisureway Acquisition as if it had occurred at the
beginning of the year ended July 27, 1997.
(c) Reflects an increase in depreciation expense resulting from the
allocation of the purchase price to the long-term assets acquired
based on fair value and an average life ranging from 8 to 30 years.
(d) Reflects adjustments to general and administrative expenses resulting
from the 1997 Fonda Acquisitions and the Leisureway Acquisition, as
follows:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
JULY 27, 1997 JANUARY 25, 1998 JANUARY 25, 1998
--------------- ---------------- ----------------
<S> <C> <C> <C>
Goodwill amortization over twenty years:
1997 Fonda Acquisitions ...................... $ 440 $ 176
Leisureway Acquisition ....................... 373 $ 155 342
Contractual reduction in officer compensation:
1997 Fonda Acquisitions ...................... (1,439) --
Leisureway Acquisition ....................... (935) (285) (540)
--------------- ---------------- ----------------
$(1,561) $(130) $ (22)
=============== ================ ================
</TABLE>
(e) Reflects (i) the elimination of interest income attributable to cash
used to finance a portion of the 1997 Fonda Acquisitions, (ii)
additional interest expense resulting from the issuance of the Fonda
Notes and borrowings under the Fonda Credit Facility to finance the
1997 Fonda Acquisitions and the Leisureway Acquisition and (iii) the
elimination of interest expense relating to indebtedness that was
repaid with a portion of the proceeds of the Fonda Notes and the
Natural Dam Mill Disposition.
(f) For pro forma purposes, the income tax provision was calculated at 42%
based on enacted statutory rates applied to pro forma pre-tax income
and the provisions of SFAS No. 109.
(g) EBITDA represents income from operations before interest expense,
provision for income taxes, other income and depreciation and
amortization. EBITDA is generally accepted as providing information
regarding a company's ability to service debt. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows
from operations, or other income or cash flow data prepared in
accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.
EBITDA does not reflect the elimination of $2.8 million and $1.4
million of fixed costs in Fiscal 1997 and the twelve months ended
January 25, 1998, respectively, that would not have been incurred had
the Three Rivers and Long Beach facilities been closed at the
beginning of the year ended July 27, 1997.
(h) Cash interest expense consists of interest expense, excluding
amortization of deferred financing costs of $564, $272 and $564 for
Fiscal 1997 and the six and twelve months ended January 25, 1998,
respectively.
(i) Depreciation and amortization excludes amortization of deferred
financing costs, which are included in interest expense.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
March 6, 1998 THE FONDA GROUP, INC.
By: /s/ Hans H. Heinsen
-------------------------
Hans H. Heinsen
Chief Financial Officer/
Principal Accounting Officer
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