<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________.
Commission file number 333-40067
HUNTSMAN PACKAGING CORPORATION
(Exact name of registrant as specified in its charter)
Utah 87-0496065
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Huntsman Way
Salt Lake City, Utah 84108
(801) 532-5200
(Address of principal executive offices and telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. On April 30, 1999, there were
1,000,001 outstanding shares of the registrant's Class A Common Stock, 6,999
outstanding shares of the registrant's Class B Common Stock and 49,511
outstanding shares of the registrant's Class C Common Stock.
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,662 19,217
Receivables, net of allowances of $2,224 and $2,570, respectively 95,382 89,381
Inventories 72,197 65,892
Income taxes receivable 4,529 7,365
Deferred income taxes 3,554 3,605
Prepaid expenses and other 1,935 3,063
------------ ------------
Total current assets 188,259 188,523
PLANT AND EQUIPMENT - Net 301,958 300,334
INTANGIBLE ASSETS - Net 219,176 221,290
OTHER ASSETS 21,302 24,125
------------ ------------
TOTAL ASSETS $ 730,695 $ 734,272
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 34,134 $ 43,186
Accrued liabilities 33,136 33,576
Current portion of long-term debt 12,563 11,406
Due to affiliates 1,397 7,000
------------ ------------
Total current liabilities 81,230 95,168
LONG-TERM DEBT - Net of current portion 518,056 513,530
OTHER LIABILITIES 12,246 11,394
DEFERRED INCOME TAXES 43,608 42,423
------------ ------------
Total liabilities 655,140 662,515
------------ ------------
REDEEMABLE COMMON STOCK - Class C nonvoting, no par value; 60,000 shares
authorized; 49,511 and 11,700 shares outstanding, respectively,
net of related stockholder notes receivable of $2,662 in 1999 2,289 1,170
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock - Class A voting, no par value; 1,200,000 shares authorized;
1,000,001 shares outstanding 63,161 63,161
Common stock - Class B voting, no par value; 10,000 shares authorized;
6,999 shares outstanding 515 515
Retained earnings 16,002 13,731
Stockholder note receivable (434) (434)
Foreign currency translation adjustment (5,978) (6,386)
------------ ------------
Total stockholders' equity 73,266 70,587
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 730,695 $ 734,272
============ ============
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE> 3
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
---------- ----------
<S> <C> <C>
SALES - Net $ 174,443 $ 138,518
COST OF SALES 137,400 117,177
---------- ----------
Gross profit 37,043 21,341
---------- ----------
OPERATING EXPENSES:
Administration and other 11,001 5,745
Sales and marketing 6,186 5,231
Research and development 1,464 970
---------- ----------
Total operating expenses 18,651 11,946
---------- ----------
OPERATING INCOME 18,392 9,395
INTEREST EXPENSE (10,222) (5,674)
OTHER INCOME (EXPENSE) - Net (1,984) 258
---------- ----------
INCOME BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS 6,186 3,979
INCOME TAX PROVISION 3,915 1,868
---------- ----------
INCOME BEFORE
DISCONTINUED OPERATIONS 2,271 2,111
INCOME FROM DISCONTINUED
OPERATIONS (net of income taxes
of $216) 326
---------- ----------
NET INCOME $ 2,271 $ 2,437
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,271 $ 2,437
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,443 4,942
Deferred income taxes 1,236 483
Provision for losses on accounts receivable (346) (258)
Changes in assets and liabilities - net of effects of acquisitions:
Receivables (5,655) 10,907
Inventories (6,305) (1,512)
Prepaid expenses and other 1,128 (226)
Other assets 2,823 (565)
Trade accounts payable (9,052) 6,771
Accrued liabilities (440) 5,348
Due to affiliates (5,603) (5,535)
Income taxes payable/receivable 2,836 (938)
Other liabilities 853 (639)
-------- --------
Net cash provided by (used in) operating activities (7,811) 21,215
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for plant and equipment (8,120) (9,477)
Payments for certain net assets of Ellehammer Industries -- (7,259)
-------- --------
Net cash used in investing activities (8,120) (16,736)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Class C nonvoting common stock 1,119
Principal payments on borrowings (2,313)
Proceeds from issuance of long-term debt 7,996 6,148
-------- --------
Net cash provided by financing activities 6,802 6,148
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 574 251
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (8,555) 10,878
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,217 12,411
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,662 $ 23,289
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest $ 7,487 $ 2,617
======== ========
Income taxes $ (992) $ 385
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE> 5
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements have been
prepared, without audit, in accordance with generally accepted accounting
principles and pursuant to the rules and regulations of the Securities and
Exchange Commission. The information reflects all adjustments that, in the
opinion of management, are necessary for a fair presentation of the
results of operations and financial position of Huntsman Packaging
Corporation and its subsidiaries ("Huntsman Packaging") for the periods
indicated, such adjustments being of a normal recurring nature. Results of
operations for interim periods are not necessarily indicative of results
of operations to be expected for a full fiscal year.
Certain information in footnote disclosures normally included in financial
statements has been condensed or omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. These statements
should be read in conjunction with Huntsman Packaging's Annual Report on
Form 10-K for the year ended December 31, 1998.
2. INVENTORIES
Inventories are valued at the lower of cost (on a first-in, first-out
basis) or market. Inventories on March 31, 1999 and December 31, 1998
consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Finished goods $ 40,924 $ 37,830
Raw materials 25,405 21,318
Work-in-process 5,868 6,744
------------ ------------
Total $ 72,197 $ 65,892
============ ============
</TABLE>
3. ACQUISITIONS
ELLEHAMMER INDUSTRIES LTD. AND ELLEHAMMER PACKAGING INC. - On March 12,
1998, we acquired certain assets and assumed certain liabilities of
Ellehammer Industries Ltd. and Ellehammer Packaging Inc. (collectively,
the "Ellehammer Acquisition") for cash of approximately $7.9 million. The
acquisition was accounted for using the purchase method of accounting.
Accordingly, results of operations are included in the accompanying
consolidated condensed financial statements from the date of acquisition.
We did not record any goodwill in this acquisition.
BLESSINGS CORPORATION - On May 19, 1998, in accordance with an Agreement
and Plan of Merger dated, April 1, 1998, we acquired Blessings Corporation
("Blessings") by merging our wholly-owned subsidiary, VA Acquisition
Corp., with and into Blessings (the "Blessings Acquisition"). Blessings
then became our wholly-owned subsidiary and Blessings changed its name to
Huntsman Edison Films Corporation. The aggregate purchase price for
Blessings was approximately $270 million (including the assumption of
approximately $57 million of Blessings' existing indebtedness). In
connection with the Blessings Acquisition, we incurred transaction costs
of
5
<PAGE> 6
approximately $17 million. The financing for the Blessings Acquisition was
provided under our $510 million Amended and Restated Credit Agreement. The
acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of operations are included in the accompanying
consolidated financial statements from the date of acquisition. We
recorded goodwill and intangible assets of approximately $168.7 million in
this acquisition, which are being amortized on a straight-line basis over
10 to 30 years.
The following pro forma information for the three months ended March 31,
1998 presents our results of operations as if the Blessings Acquisition
had occurred at the beginning of 1998. The results of operations give
effect to certain adjustments, including amortization of intangible
assets, depreciation expense, interest expense on debt borrowings to fund
the acquisition and income taxes. The pro forma results have been prepared
for comparative purposes only and do not purport to be indicative of what
would have occurred had the acquisition been made at the beginning of the
applicable period or of the results which may occur in the future.
Pro forma results of operations (in thousands):
<TABLE>
<S> <C>
Sales - net $183,418
Operating income 14,033
Income before discontinued operations 1,151
</TABLE>
4. RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 establishes accounting and reporting standards requiring that
derivative instruments be recorded on the balance sheet as either an asset
or liability, measured at fair market value, and that changes in a
derivative's fair value be recognized currently in earnings, unless
specific hedge accounting criteria are met. SFAS No. 133 is effective for
fiscal years beginning after June 15, 1999. We expect that the adoption of
this statement will not have a material effect on our consolidated
condensed financial statements.
5. COMPREHENSIVE INCOME
We have adopted SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and displaying comprehensive income
and its components. The following table reports comprehensive income for
the three months ended March 31, 1999 and 1998 (in thousands).
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Net income $ 2,271 $ 2,437
Other comprehensive income (expense):
Foreign currency translation adjustments 408 (506)
--------- ---------
Comprehensive income $ 2,679 $ 1,931
========= =========
</TABLE>
6. OTHER EXPENSE
We hold investments in marketable securities that are designated as
trading securities. For the three months ended March 31, 1999, unrealized
losses of approximately $2.0 million on these investments are included in
other income (expense), net.
6
<PAGE> 7
7. OPERATING SEGMENTS
We have adopted SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information." Operating segments are components of our company
for which separate financial information is available that is evaluated
regularly by our chief operating decision maker in deciding how to
allocate resources and in assessing performance. This information is
reported on the basis that it is used internally for evaluating segment
performance.
We have three reportable operating segments: design products, industrial
films and specialty films. The design products segment produces printed
rollstock, bags and sheets used to package products in the food and other
industries. The industrial films segment produces stretch films, used for
industrial unitizing and containerization, and PVC films, used to wrap
meat, cheese and produce. The specialty films segment produces converter
films that are sold to other flexible packaging manufacturers for
additional fabrication, barrier films that contain and protect food and
other products, and other films used in the personal care, medical,
agriculture and horticulture industries.
Sales and transfers between our segments are eliminated in consolidation.
We evaluate performance of the operating segments based on profit or loss
before income taxes, not including nonrecurring gains or losses. Our
reportable segments are managed separately with separate management teams,
because each segment has differing products, customer requirements,
technology and marketing strategies.
Segment profit or loss and segment assets as of and for the three months
ended March 31, 1999 and 1998 are presented in the following table (in
thousands).
<TABLE>
<CAPTION>
DESIGN INDUSTRIAL SPECIALTY CORPORATE/ TOTAL
PRODUCTS FILMS FILMS OTHER
<S> <C> <C> <C> <C> <C>
1999
Net sales to customers $ 37,934 $33,747 $102,762 $174,443
Intersegment sales 906 307 1,367 $ (2,580)
Total net sales 38,840 34,054 104,129 (2,580) 174,443
Depreciation and
amortization 2,009 1,115 4,574 745 8,443
Interest expense 799 87 3,452 5,884 10,222
Segment profit 2,071 3,969 13,205 (13,059) 6,186
Segment total assets 154,433 84,645 434,344 57,273 730,695
Capital expenditures 2,286 1,717 3,132 985 8,120
1998
Net sales to customers $ 23,045 $39,209 $ 76,264 $138,518
Intersegment sales 237 1,748 173 $ (2,158)
Total net sales 23,282 40,957 76,437 (2,158) 138,518
Depreciation and 531 1,436 1,949 1,026 4,942
amortization
Interest expense 1 67 7 5,599 5,674
Segment profit 2,527 3,311 7,824 (9,683) 3,979
Segment total assets 58,434 81,465 195,238 59,580 394,717
Capital expenditures 2,892 1,205 4,559 821 9,477
</TABLE>
7
<PAGE> 8
A reconciliation of the totals reported for the operating segments to our totals
reported in the consolidated condensed financial statements is as follows (in
thousands):
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
PROFIT OR LOSS
Total profit for reportable segments $ 19,245 $ 13,662
Unallocated amounts:
Corporate expenses (7,175) (4,084)
Interest expense (5,884) (5,599)
------------ ------------
Income before taxes and
discontinued operations $ 6,186 $ 3,979
============ ============
ASSETS
Total assets for reportable segments $ 673,422 $ 335,137
Intangible assets not allocated to segments 17,206 15,338
Net effect of discontinued operations -- 28,640
Other unallocated assets 40,067 44,242
------------ ------------
Total consolidated assets $ 730,695 $ 423,357
============ ============
</TABLE>
8. STOCK SALE AND CANCELLATION OF STOCK OPTIONS
During the first quarter of 1999, we sold 12,188 shares of Class C common
stock to certain officers of Huntsman Packaging for $100 per share, the
estimated fair value of the shares on the date of purchase. In addition,
we redeemed 600 shares of Class C common stock for $100 per share from one
officer.
On February 22, 1999, we entered into Option Cancellation and Restricted
Stock Purchase Agreements with certain officers of Huntsman Packaging
holding options to purchase 26,223 shares of Class C common stock. Under
the agreements, options to purchase an aggregate of 26,223 shares of Class
C common stock were cancelled and 26,223 shares of Class C common stock
were sold to certain option holders for $100 per share, the estimated fair
market value of the shares on the date of purchase. The purchase price for
the shares was paid by delivery of promissory notes to Huntsman Packaging.
The 26,223 shares purchased are subject to repurchase rights of Huntsman
Packaging that will lapse under conditions substantially the same as the
vesting conditions of the options. The repurchase rights for 13,117 shares
lapse on a straight-line basis over a five-year period commencing January
1, 1998. The repurchase rights for the remaining 13,116 shares lapse over
the same five years, subject to achievement of certain Huntsman Packaging
performance criteria, or if the performance criteria are not met, on
December 31, 2007. The shares of Class C common stock are subject to
essentially the same restrictions and put options as the other outstanding
Class C common shares.
Additionally, options to purchase 2,622 shares of Class C common stock
were cancelled during the first quarter of 1999.
8
<PAGE> 9
9. CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
The following condensed consolidating financial statements present, in
separate columns, financial information for (i) Huntsman Packaging (on a
parent only basis), with its investment in its subsidiaries recorded under
the equity method, (ii) guarantor subsidiaries (as specified in the
Indenture, dated September 30, 1997 (the "Indenture") relating to Huntsman
Packaging's $125 million senior subordinated notes (the "Notes")) on a
combined basis, with any investments in non-guarantor subsidiaries
specified in the Indenture recorded under the equity method, (iii) direct
and indirect non-guarantor subsidiaries on a combined basis, (iv) the
eliminations necessary to arrive at the information for Huntsman Packaging
and its subsidiaries on a consolidated basis, and (v) Huntsman Packaging
on a consolidated basis, in each case as of March 31, 1999 and December
31, 1998 and for the three months ended March 31, 1999 and 1998. The Notes
are fully and unconditionally guaranteed on a joint and several basis by
each guarantor subsidiary and each guarantor subsidiary is wholly-owned,
directly or indirectly, by Huntsman Packaging. There are no contractual
restrictions limiting transfers of cash from guarantor and non-guarantor
subsidiaries to Huntsman Packaging. The condensed consolidating financial
statements are presented herein, rather than separate financial statements
for each of the guarantor subsidiaries, because management believes that
separate financial statements relating to the guarantor subsidiaries are
not material to investors.
On January 1, 1999, two of our guarantor subsidiary companies, Huntsman
Deerfield Films Corporation and Huntsman United Films Corporation, were
merged with and into Huntsman Packaging. Accordingly, these former
guarantor subsidiary companies are now included as part of the Huntsman
Packaging Parent Only column for all periods presented.
9
<PAGE> 10
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATING CONDENSED BALANCE SHEET
MARCH 31, 1999 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Huntsman Combined Consolidated
Packaging Combined Non- Huntsman
Corporation Guarantor Guarantor Packaging
Parent Only Subsidiaries Subsidiaries Eliminations Corporation
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,615 $ 94 $ 8,953 $ 10,662
Receivables 61,056 17,040 17,286 95,382
Inventories 57,198 5,905 9,094 72,197
Prepaid expenses and other 1,233 392 310 1,935
Income taxes receivable 3,112 725 692 4,529
Deferred income taxes 4,058 803 (1,307) 3,554
------------ ------------ ------------ ------------
Total current assets 128,272 24,959 35,028 188,259
PLANT AND EQUIPMENT - Net 178,375 71,544 52,039 301,958
INTANGIBLE ASSETS - Net 54,547 145,756 18,873 219,176
INVESTMENT IN SUBSIDIARIES 44,883 $ (44,883)
OTHER ASSETS 16,638 142 4,522 21,302
------------ ------------ ------------ ------------ ------------
TOTAL $ 422,715 $ 242,401 $ 110,462 $ (44,883) $ 730,695
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 21,744 $ 4,916 $ 7,474 $ 34,134
Accrued liabilities 27,725 1,429 3,982 33,136
Current portion of long-term debt 9,750 2,813 12,563
Due to (from) affiliates (32,487) 24,353 9,531 1,397
------------ ------------ ------------ ------------
Total current liabilities 26,732 30,698 23,800 81,230
LONG-TERM DEBT 285,689 187,400 44,967 518,056
OTHER LIABILITIES 7,644 3,170 1,432 12,246
DEFERRED INCOME TAXES 27,095 13,657 2,856 43,608
------------ ------------ ------------ ------------
Total liabilities 347,160 234,925 73,055 655,140
------------ ------------ ------------ ------------
REDEEMABLE COMMON STOCK 2,289 2,289
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 63,676 6,357 29,241 $ (35,598) 63,676
Retained earnings 16,002 1,130 12,659 (13,789) 16,002
Stockholder note receivable (434) (434)
Foreign currency translation adjustment (5,978) (11) (4,493) 4,504 (5,978)
------------ ------------ ------------ ------------ ------------
Total stockholders' equity 73,266 7,476 37,407 (44,883) 73,266
------------ ------------ ------------ ------------ ------------
TOTAL $ 422,715 $ 242,401 $ 110,462 $ (44,883) $ 730,695
============ ============ ============ ============ ============
</TABLE>
10
<PAGE> 11
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATING CONDENSED BALANCE SHEET
DECEMBER 31, 1998 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HUNTSMAN CONSOLIDATED
PACKAGING COMBINED HUNTSMAN
CORPORATION COMBINED NON- PACKAGING
PARENT ONLY GUARANTORS GUARANTORS ELIMINATIONS CORPORATION
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,381 $ 525 $ 11,311 $ 19,217
Receivables 59,667 13,650 16,064 89,381
Inventories 50,243 5,994 9,655 65,892
Prepaid expenses and other 2,090 680 293 3,063
Income taxes receivable 4,230 1,868 1,267 7,365
Deferred income taxes 4,059 803 (1,257) 3,605
------------ ------------ ------------ ------------
Total current assets 127,670 23,520 37,333 188,523
PLANT AND EQUIPMENT - Net 173,850 73,589 52,895 300,334
INTANGIBLE ASSETS - Net 55,142 147,140 19,008 221,290
INVESTMENT IN SUBSIDIARIES 42,959 $ (42,959)
OTHER ASSETS 17,582 143 6,400 24,125
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $ 417,203 $ 244,392 $ 115,636 $ (42,959) $ 734,272
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 26,698 $ 6,760 $ 9,728 $ 43,186
Accrued liabilities 25,064 2,401 6,111 33,576
Current portion of long-term debt 8,875 2,531 11,406
Due to (from) affiliates (21,224) 18,111 10,113 7,000
------------ ------------ ------------ ------------
Total current liabilities 39,413 27,272 28,483 95,168
LONG-TERM DEBT - Net of current portion 273,519 194,200 45,811 513,530
OTHER LIABILITIES 6,740 3,171 1,483 11,394
DEFERRED INCOME TAXES 25,774 13,658 2,991 42,423
------------ ------------ ------------ ------------
Total liabilities 345,446 238,301 78,768 662,515
------------ ------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE COMMON STOCK 1,170 1,170
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 63,676 6,357 29,241 $ (35,598) 63,676
Retained earnings 13,731 (255) 12,641 (12,386) 13,731
Shareholder note receivable (434) (434)
Foreign currency translation adjustment (6,386) (11) (5,014) 5,025 (6,386)
------------ ------------ ------------ ------------ ------------
Total stockholders' equity 70,587 6,091 36,868 (42,959) 70,587
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 417,203 $ 244,392 $ 115,636 $ (42,959) $ 734,272
============ ============ ============ ============ ============
</TABLE>
11
<PAGE> 12
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATING CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Huntsman Combined Consolidated
Packaging Combined Non- Huntsman
Corporation Guarantor Guarantor Packaging
Parent Only Subsidiaries Subsidiaries Eliminations Corporation
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SALES - Net $ 118,722 $ 31,622 $ 26,679 $ (2,580) $ 174,443
COST OF SALES 97,278 22,390 20,312 (2,580) 137,400
------------ ------------ ------------ ------------ ------------
Gross profit 21,444 9,232 6,367 37,043
OPERATING EXPENSES 13,703 2,538 2,410 18,651
------------ ------------ ------------ ------------
OPERATING INCOME 7,741 6,694 3,957 18,392
INTEREST EXPENSE (5,890) (3,445) (887) (10,222)
EQUITY IN EARNINGS OF SUBSIDIARIES 1,403 (1,403)
OTHER EXPENSE - Net (204) (1) (1,779) (1,984)
------------ ------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 3,050 3,248 1,291 (1,403) 6,186
INCOME TAX PROVISION 779 1,863 1,273 3,915
------------ ------------ ------------ ------------ ------------
NET INCOME $ 2,271 $ 1,385 $ 18 $ (1,403) $ 2,271
============ ============ ============ ============ ============
</TABLE>
12
<PAGE> 13
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATING CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Huntsman Combined Consolidated
Packaging Combined Non- Huntsman
Corporation Guarantor Guarantor Packaging
Parent Only Subsidiaries Subsidiaries Eliminations Corporation
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SALES - Net $ 125,750 $ 351 $ 14,601 $ (2,184) $ 138,518
COST OF SALES 106,819 334 12,208 (2,184) 117,177
------------ ------------ ------------ ------------ ------------
Gross profit 18,931 17 2,393 21,341
OPERATING EXPENSES 10,883 37 1,026 11,946
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) 8,048 (20) 1,367 9,395
INTEREST EXPENSE (5,606) (68) (5,674)
EQUITY IN EARNINGS OF SUBSIDIARIES 1,006 (1,006)
OTHER INCOME - Net 47 211 258
------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED
OPERATIONS 3,495 (20) 1,510 (1,006) 3,979
INCOME TAX PROVISION (BENEFIT) 1,058 (8) 818 1,868
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS
2,437 (12) 692 (1,006) 2,111
INCOME FROM DISCONTINUED OPERATIONS (net of income
taxes of $216) 326 326
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 2,437 $ (12) $ 1,018 $ (1,006) $ 2,437
============ ============ ============ ============ ============
</TABLE>
13
<PAGE> 14
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Huntsman Combined Consolidated
Packaging Combined Non- Huntsman
Corporation Guarantor Guarantor Packaging
Parent Only Subsidiaries Subsidiaries Eliminations Corporation
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (13,326) $ 7,205 $ (1,690) $ (7,811)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for plant and equipment (6,603) (836) (681) (8,120)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 1,119 1,119
Net proceeds from issuance (payments) of
long-term debt 13,045 (6,800) (562) 5,683
------------ ------------ ------------ ------------
Net cash provided by (used in) financing
activities 14,164 (6,800) (562) 6,802
------------ ------------ ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS (1) 575 574
------------ ------------ ------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS
(5,766) (431) (2,358) (8,555)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,381 525 11,311 19,217
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,615 $ 94 $ 8,953 $ 10,662
============ ============ ============ ============
</TABLE>
14
<PAGE> 15
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (IN THOUSANDS) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Huntsman Combined Consolidated
Packaging Combined Non- Huntsman
Corporation Guarantor Guarantor Packaging
Parent Only Subsidiaries Subsidiaries Eliminations Corporation
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 19,652 $ (2) $ 1,565 $ 21,215
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for certain net assets of Ellehammer
Industries (7,259) (7,259)
Capital expenditures for plant and equipment (7,994) (1,483) (9,477)
------------ ------------ ------------
Net cash used in investing activities (15,253) (1,483) (16,736)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 6,148 6,148
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS (506) (15) 772 251
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 10,041 (17) 854 10,878
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
1,206 19 11,186 12,411
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 11,247 $ 2 $ 12,040 $ 23,289
============ ============ ============ ============
</TABLE>
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this section is to discuss and analyze our consolidated
financial condition, liquidity and capital resources and results of operations.
This analysis should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in our
Annual Report on Form 10-K for the year ended December 31, 1998 (the "1998
10-K"). This section contains certain forward-looking statements that involve
risks and uncertainties, including statements regarding our plans, objectives,
goals, strategies and financial performance. Our actual results could differ
materially from the results anticipated in these forward-looking statements as a
result of factors set forth under "Cautionary Statement for Forward-Looking
Information" below and elsewhere in this report.
GENERAL
Huntsman Packaging Corporation derives its revenues, earnings and cash
flows from the sale of film and flexible packaging products throughout the
world. Huntsman Packaging manufactures these products at its facilities located
in North America, Europe and Australia. Huntsman Packaging's sales have grown
primarily as a result of strategic acquisitions made over the past several
years, increased levels of production at acquired facilities and the overall
growth in the market for film and flexible packaging products. Our most recent
acquisitions include the 1997 acquisition of Huntsman Polymers Corporation's CT
Film division (the "CT Film Acquisition"), and our 1998 acquisitions of
Ellehammer Industries, Ltd. and Ellehammer Packaging Inc. (collectively, the
"Ellehammer Acquisition") and Blessings Corporation (the "Blessings
Acquisition").
In order to further benefit from these recent acquisitions, we ceased
operations at certain less efficient manufacturing facilities and relocated
equipment to more efficient facilities. In addition, we sold certain assets and
restructured and consolidated our operations and administrative functions. As a
result of these activities, we increased manufacturing efficiencies and product
quality, reduced costs, and increased operating profitability. As described in
the 1998 10-K, we also undertook certain significant divestitures and closures
of manufacturing facilities during 1998.
RESULTS OF OPERATIONS
The following table sets forth net sales and expenses, and such amounts
as a percentage of net sales, for the three months ended March 31, 1999 and 1998
(dollars in millions).
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------------
1999 1998
-------------------------- --------------------------
% of % of
$ Sales $ Sales
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales--net $ 174.4 100.0% $ 138.5 100.0%
Cost of sales 137.4 78.8 117.2 84.6
---------- ---------- ---------- ----------
Gross profit 37.0 21.2 21.3 15.4
Total operating expenses 18.6 10.7 11.9 8.6
---------- ---------- ---------- ----------
Operating income $ 18.4 10.5% $ 9.4 6.8%
========== ========== ========== ==========
</TABLE>
16
<PAGE> 17
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Net Sales
Net sales increased by $35.9 million, or 25.9%, from $138.5 million,
for the first quarter of 1998, to $174.4 million, for the three months ended
March 31, 1999. The increase was primarily due to the Blessings Acquisition in
May 1998. Operations acquired as part of the Blessings Acquisition are included
in our specialty films and design products operating segments. The Blessings
Acquisition accounted for aggregate increased net sales of approximately $43.5
million in 1999. Excluding the sales increases resulting from the Blessings
Acquisition, sales volumes were virtually unchanged in the first quarter of 1999
compared to the same period in 1998. Our average selling prices were
approximately 5.2% lower in the first quarter of 1999 as compared to the first
quarter of 1998, also excluding the effects of the Blessings Acquisition. In the
markets we serve, the average selling price of our products generally increases
or decreases as the price of resins, our primary raw material, increases or
decreases. While the resins market experienced a general price increase in the
first quarter of 1999, the average price of resins in that quarter remained
significantly below the average price of resins during the first quarter of
1998.
Gross Profit
Gross profit increased by $15.7 million, or 73.7%, from $21.3 million,
for the first quarter of 1998, to $37.0 million, for the three months ended
March 31, 1999. The increase was due primarily to increased sales volume
resulting from the Blessings Acquisition in May 1998. In addition, our
industrial and specialty films operating segments have increased their gross
profit through integration and rationalization of acquired and existing
facilities, realization of purchasing and operational synergies associated with
the recent acquisitions, and improved manufacturing performance. These increases
were offset by lower first quarter gross profit in our design products operating
segment, as compared to 1998, excluding the effects of the Blessings
Acquisition.
Total Operating Expenses
Total operating expenses increased by $6.7 million, or 56.3%, from
$11.9 million, for the first quarter of 1998, to $18.6 million, for the three
months ended March 31, 1999. The increase was due primarily to additional
operating expenses resulting from the recent acquisitions.
Operating Income
Operating income increased by $9.0 million, or 95.7%, from $9.4
million, for the first quarter of 1998, to $18.4 million, for the three months
ended March 31, 1999, due to the factors discussed above.
Interest Expense
Interest expense increased by $4.5 million, or 78.9%, from $5.7
million, for the first quarter of 1998, to $10.2 million, for the three months
ended March 31, 1999. The increase was primarily due to additional interest
expense on increased long-term debt incurred in connection with the recent
acquisitions.
Other Income (Expense)
Other income (expense) changed from income of $0.3 million for the
first quarter of 1998 to expense of $2.0 million for the first quarter of 1999,
an increase in expense of $2.2 million. The increase was due to unrealized
losses of $2.0 million on investments in trading securities in the first quarter
of 1999.
17
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
In September 1997, Huntsman Packaging issued $125 million of 9.125%
unsecured senior subordinated notes due October 1, 2007 (the "Notes") and
entered into a $225 million credit facility with The Chase Manhattan Bank
("Chase") and certain financial institutions party thereto (the "Credit
Agreement").
On May 14, 1998, the Credit Agreement was amended and restated as a
$510 million facility (the "Amended Credit Agreement"). The Amended Credit
Agreement provides for the continuation of a previous term loan (the "Original
Term Loan") in the principal amount of $75 million, maturing on September 30,
2005; a Tranche A Term Loan (the "Tranche A Term Loan") in the principal amount
of $140 million, maturing on September 30, 2005; a Tranche B Term Loan (the
"Tranche B Term Loan") in the principal amount of $100 million, maturing on June
30, 2006; and a term loan (the "Mexico Term Loan") to ASPEN Industrial, S.A.,
our wholly-owned Mexican subsidiary, in the principal amount of $45 million,
maturing on September 30, 2005. The Amended Credit Agreement also provides for a
$150 million revolving loan facility (the "Revolver") maturing on September 30,
2004. The Original Term Loan, the Tranche A Term Loan and the Mexico Term Loan
amortize at an increasing rate on a quarterly basis. The Tranche A Term Loan and
the Mexico Term Loan began amortizing on December 31, 1998 and the Original Term
Loan begins amortizing on December 31, 2001. The Tranche B Term Loan amortizes
at the rate of $1 million per year, beginning September 30, 1998, with an
aggregate of $93 million due in the last four quarterly installments. The term
loans described above are required to be prepaid with the proceeds of certain
asset sales, with 50% of the proceeds of the sale of certain Huntsman Packaging
equity securities, and with the proceeds of certain debt offerings.
Loans under the Amended Credit Agreement bear interest, at the election
of the Company, at either (i) zero to 0.75%, depending on certain of our
financial ratios, plus the higher of (a) Chase's prime rate, (b) the federal
funds rate plus 1/2% or (c) Chase's base CD rate plus 1%, or (ii) the London
Interbank Offered Rate plus 1.00% to 2.00%, also depending on certain of our
financial ratios.
Our obligations under the Amended Credit Agreement are guaranteed by
substantially all of our domestic subsidiaries and secured by substantially all
of our domestic assets. The Amended Credit Agreement is also secured by a pledge
of 65% of the capital stock of each of our foreign subsidiaries. See Note 9 to
the Consolidated Condensed Financial Statements included in this report.
Net Cash Used in Operating Activities
Net cash used in operating activities was $7.8 million for the three
months ended March 31, 1999, a decrease of $29.0 million from the same period in
1998. The decrease resulted primarily from first quarter 1999 increases in
inventory and receivables and a decrease in accounts payable.
Net Cash Used in Investing Activities
Net cash used in investing activities was $8.1 million for the three
months ended March 31, 1999, a decrease of $8.6 million from the same period in
1998. Net cash used in investing activities was higher during the first quarter
of 1998 due to the Ellehammer Acquisition ($7.2 million) and higher capital
expenditures in the first quarter of 1998 as compared to the first quarter of
1999. Capital expenditures totaled $8.1 million for the three months ended March
31, 1999 and $9.5 million for the same period in 1998. Capital expenditures
during the first quarter of 1999 were primarily for new printing capacity in our
design products operating segment and normal upgrade and maintenance projects
throughout the Company.
18
<PAGE> 19
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $6.8 million for the
three months ended March 31, 1999, compared to $6.1 million for the same period
in 1998. The 1999 net cash provided by financing activities resulted from
borrowings on our Revolver and was used to fund capital expenditures and
on-going operations.
Liquidity
As of March 31, 1999, we had $107.0 million of working capital and
approximately $105.2 million available under the Revolver, $4.0 million of which
was issued as letters of credit. The debt under our Amended Credit Agreement
bears interest at LIBOR plus 2%, and may adjust downward based upon our leverage
ratio (as defined in the Amended Credit Agreement) to a minimum of LIBOR plus
1%.
As of March 31, 1999, we had $9.0 million in cash and cash equivalents
held by our foreign subsidiaries. The effective tax rate of repatriating this
money and future foreign earnings to the United States varies from approximately
40% to 65% depending on various U.S. and foreign tax factors, including each
foreign subsidiary's country of incorporation. High effective repatriation tax
rates may limit our ability to access cash and cash equivalents generated by our
foreign operations for use in our United States operations, including to pay
principal, premium, if any, and interest on the Notes and the Amended Credit
Agreement. For the three months ended March 31, 1999, our foreign operations
generated net income from continuing operations of $2.0 million.
We expect that cash flows from operating activities and available
borrowings under our credit arrangements will provide sufficient working capital
to operate our business, to make expected capital expenditures and to meet
foreseeable liquidity requirements. If we were to engage in a significant
acquisition transaction, however, it may be necessary for us to restructure our
existing credit arrangements.
YEAR 2000 COMPLIANCE
We have performed an analysis of both our computer systems and our
production and distribution activities and have implemented procedures to
address year 2000 issues. We are currently modifying our computer systems and
application programs for year 2000 compliance, and we anticipate that we will
complete this task by September 1, 1999. As of March 31, 1999, we had spent
approximately $2.9 million on computer systems and application programs upgrades
necessary to become year 2000 compliant. We believe the total cost to complete
the implementation procedures to address year 2000 issues will be less than $5.0
million. In addition to addressing year 2000 issues, these computer systems and
program upgrades will significantly enhance our information systems. We will
fund these upgrades through operating cash flows. Any costs for new systems will
be expensed or capitalized and amortized over the system's useful life, as
appropriate. We have a year 2000 third-party compliance policy in place to
identify and resolve potential third-party year 2000 problems. Although we are
working cooperatively with third parties upon whom we rely for raw materials,
utilities, transportation and other products and services, we cannot give any
assurance that the systems of other parties will be year 2000 compliant on a
timely basis. In the most reasonably likely worst-case scenario involving the
failure of our systems and applications or those operated by others, our
business, financial condition and results of operations would be materially
adversely affected. However, an estimate of the dollar amount of such an adverse
effect cannot be practically determined at this time.
19
<PAGE> 20
CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION
Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Forward-looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
financing needs, plans or intentions relating to acquisitions and other
information that is not historical information. When used in this report, the
words "estimates," "expects," "anticipates," "forecasts," "plans," "intends,"
"believes" and variations of such words or similar expressions are intended to
identify forward-looking statements. We may also make additional forward-looking
statements from time to time. All such subsequent forward-looking statements,
whether written or oral, by or on behalf of Huntsman Packaging, are also
expressly qualified by these cautionary statements.
All forward-looking statements, including without limitation,
management's examination of historical operating trends, are based upon our
current expectations and various assumptions. Our expectations, beliefs and
projections are expressed in good faith and we believe there is a reasonable
basis for them. But, there can be no assurance that management's expectations,
beliefs and projections will result or be achieved. All forward-looking
statements apply only as of the date made. We undertake no obligation to
publicly update or revise forward-looking statements which may be made to
reflect events or circumstances after the date made or to reflect the occurrence
of unanticipated events.
There are a number of risks and uncertainties that could cause our
actual results to differ materially from the forward-looking statements
contained in or contemplated by this report. These risks include, but are not
limited to, Huntsman Packaging's high degree of leverage and its ability to
service indebtedness, restrictions under the Huntsman Packaging's credit
facilities, fluctuations in the price of resins (our primary raw materials) and
the availability of resin supplies, competition, customer relationships, risks
associated with acquisitions and risks associated with international operations.
Each of these risks and certain other uncertainties are discussed in more detail
in the 1998 10-K. There may also be other factors, including those discussed
elsewhere in this report, that may cause our actual results to differ materially
from the forward-looking statements. Any forward-looking statements should be
considered in light of these factors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various interest rate and resins price risks that
arise in the normal course of business. We finance our operations with
borrowings comprised primarily of variable rate indebtedness. Our raw material
costs are comprised primarily of resins. Significant increases in interest rates
or the price of resins could adversely affect our operating margins, results of
operations and ability to service our indebtedness.
We enter into interest rate collar and swap agreements to manage
interest rate market risks and commodity collar agreements to manage resin
market risks. As of March 31, 1999, we had one interest rate collar agreement
and two commodity collar agreements in place. The estimated fair market value of
the interest rate collar was approximately negative $600 and the estimated
aggregate fair market value of the two commodity collars was $200,000. We have
performed a sensitivity analysis assuming a hypothetical 10% adverse movement in
interest rates and commodity prices applied to the agreements described above.
The analysis indicated that such market movements would not have a material
effect on our consolidated financial position, results of operations or cash
flows. Factors that could impact the effectiveness of our hedging programs
include the volatility of interest rates and commodity markets and the
availability of hedging instruments in the future.
20
<PAGE> 21
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report.
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the quarter for which
this report is filed.
21
<PAGE> 22
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 thereunto duly authorized.
HUNTSMAN PACKAGING CORPORATION
/s/ Scott K. Sorensen
---------------------------------------------
SCOTT K. SORENSEN
Executive Vice President and
Chief Financial Officer, Treasurer
(Authorized Signatory and
Principal Financial and Accounting Officer)
Date: May 12, 1999
22
<PAGE> 23
INDEX TO EXHIBITS
Exhibits
27 Financial Data Schedule.
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 10,662
<SECURITIES> 0
<RECEIVABLES> 97,606
<ALLOWANCES> 2,224
<INVENTORY> 72,197
<CURRENT-ASSETS> 188,259
<PP&E> 359,725
<DEPRECIATION> 57,767
<TOTAL-ASSETS> 730,695
<CURRENT-LIABILITIES> 81,230
<BONDS> 125,000
0
0
<COMMON> 63,676
<OTHER-SE> 9,590
<TOTAL-LIABILITY-AND-EQUITY> 730,695
<SALES> 174,443
<TOTAL-REVENUES> 174,443
<CGS> 137,400
<TOTAL-COSTS> 156,051
<OTHER-EXPENSES> 1,984
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,222
<INCOME-PRETAX> 6,186
<INCOME-TAX> 3,915
<INCOME-CONTINUING> 2,271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,271
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
