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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE EXCHANGE ACT OF 1934
Commission file number: 333-42201
BEAR ISLAND PAPER COMPANY, L.L.C.
(Exact name of registrant as specified in its charter)
Virginia 06-0980835
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
10026 Old Ridge Road
Ashland, VA
(Address of Principal Executive Offices)
23005
(Zip Code)
(804) 227-3394
(Registrant's telephone number, including area code)
Former Name, Former Address and Former Fiscal Year, if
Changed Since Last Report: Not Applicable
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 and
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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: Not Applicable.
<PAGE>
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<TABLE>
BEAR ISLAND PAPER COMPANY, L.L.C.
INDEX
<CAPTION>
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Page(s)
Part I. Financial Information
Item 1
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Cash Flows 3
Notes to Condensed Financial Statements 4
Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BEAR ISLAND PAPER COMPANY, L.L.C.
CONDENSED BALANCE SHEETS
<CAPTION>
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June 30, December 31,
ASSETS 1998 1997
---------------- -----------------
(Unaudited)
Current assets:
Cash and short-term investments $ 2,498,087 $ 1,353,049
Accounts receivable 14,381,232 14,133,335
Inventories 12,825,907 14,213,313
Other current assets 234,137 147,911
---------------- -----------------
Total current assets 29,939,363 29,847,608
Property, plant and equipment 198,177,624 195,084,008
Less accumulated depreciation 5,849,415 822,264
---------------- -----------------
Net property, plant and equipment 192,328,209 194,261,744
---------------- -----------------
Deferred financing costs 8,424,153 8,375,199
---------------- -----------------
Total assets $ 230,691,725 $ 232,484,551
================ =================
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Current portion of long-term debt 953,959 880,304
Accounts payable and accrued liabilities 9,193,118 9,446,785
Accrued interest payable 1,350,608 1,344,915
---------------- -----------------
Total current liabilities 11,497,685 11,672,004
Long-term debt 188,950,000 195,555,000
---------------- -----------------
Total liabilities 200,447,685 207,227,004
---------------- -----------------
Member's equity:
Contributed capital 26,916,392 25,469,737
Retained earnings (accumulated deficit) 3,327,648 (212,190)
---------------- -----------------
Total member's equity 30,244,040 25,257,547
---------------- -----------------
Total liabilities and member's equity $ 230,691,725 $ 232,484,551
================ =================
See accompanying notes to the condensed financial statements.
1
<PAGE>
BEAR ISLAND PAPER COMPANY, L.L.C.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Company Predecessor Company Predecessor
--------------- ---------------- ---------------- ----------------
Three months ended June 30, Six months ended June 30,
----------------------------------- -----------------------------------
1998 1997 1998 1997
Net sales $ 31,124,443 $ 28,830,607 $ 61,504,911 $ 55,890,306
Cost of sales 23,271,112 25,727,609 45,946,249 51,201,507
--------------- ---------------- ---------------- ----------------
Gross profit 7,853,331 3,102,998 15,558,662 4,688,799
Selling, general and administrative expenses:
Management fees to Brant-Allen (933,733) (864,918) (1,845,147) (1,676,709)
Other (274,625) (192,303) (550,692) (383,768)
--------------- ---------------- ---------------- ----------------
Income from operations 6,644,973 2,045,777 13,162,823 2,628,322
Other income (deductions):
Interest expense (4,832,860) (1,180,156) (9,714,220) (2,425,156)
Other income (expense) 55,812 142,603 91,235 317,106
--------------- ---------------- ---------------- ----------------
Net income $ 1,867,925 $ 1,008,224 $ 3,539,838 $ 520,272
=============== ================ ================ ================
See accompanying notes to the condensed financial statements.
2
<PAGE>
BEAR ISLAND PAPER COMPANY, L.L.C.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Company Predecessor
---------------- ----------------
Six months ended June 30,
-----------------------------------
1998 1997
Operating activities:
Net income $ 3,539,838 $ 520,272
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and depletion 5,003,754 4,975,917
Amortization of deferred financing
costs 476,316 29,622
Changes in current assets and liabilities:
Accounts receivable (247,897) 355,583
Inventory 1,387,406 1,371,453
Other current assets (86,226) (910,121)
Accounts payable and accrued
liabilities 1,192,988 (3,873,571)
Accrued interest payable 5,693 (64,844)
---------------- ----------------
Cash provided by operating
activities 11,271,872 2,404,311
---------------- ----------------
Investment activities:
Purchases of property, plant and
equipment (3,070,219) (2,436,016)
---------------- ----------------
Net cash used in investing
activities (3,070,219) (2,436,016)
---------------- ----------------
Financing activities:
Proceeds from issuance of long-term
debt 417,861
Principal payments on long-term debt (6,531,345) (5,457,317)
Payment of deferred financing costs (525,270)
Distribution to partners 34,771
---------------- ----------------
Net cash used in financing
activities (7,056,615) (5,004,685)
---------------- ----------------
Net increase (decrease) in cash 1,145,038 (5,036,390)
Cash and short-term investments, beginning
of period 1,353,049 13,625,322
----------------- -----------------
Cash and short-term
investments, end of
period $ 2,498,087 $ 8,588,932
================ ================
Noncash financing activities:
Contributions from Brant-Allen $ 1,446,655
================
See accompanying notes to the condensed financial statements.
</TABLE>
3
<PAGE>
BEAR ISLAND PAPER COMPANY, L.L.C.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of management, the accompanying condensed financial
statements of Bear Island Paper Company, L.L.C. (the "Company") contain all
adjustments necessary to present fairly, in all material respects, the
Company's financial position as of June 30, 1998 and December 31, 1997 and
the Company's condensed results of operations for the three- and six-month
periods ended June 30, 1998 and the condensed results of operations of the
predecessor, Bear Island Paper Company, L.P. (the "Predecessor"), for the
three- and six-month periods ended June 30, 1997 as well as the condensed
cash flows of the Company and Predecessor for the six-month periods ended
June 30, 1998 and 1997, respectively. All adjustments are of a normal and
recurring nature. These condensed financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10K filed on April 30, 1998. The December 31, 1997 balance
sheet data was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting
principles.
The results of operations for the six-month period ended June 30, 1998
should not be regarded as necessarily indicative of the results that may
be expected for the entire year.
2. Effective December 1, 1997, the Company completed the purchase of the 70%
partnership interest (the "Acquisition") in the Predecessor (the Company
and Predecessor are collectively referred to as the "Companies") previously
owned by subsidiaries of Dow Jones & Company, Inc. ("Dow Jones") and The
Washington Post Company (the "Washington Post"). Immediately before the
Acquisition and certain related financings which were used to facilitate
the funding of the Acquisition, the Predecessor was converted into Bear
Island Mergerco, L.L.C. ("Mergerco") and Mergerco was then merged into the
Company with the Company being the surviving entity. The Company is a
wholly owned subsidiary of Brant-Allen Industries, Inc. ("Brant-Allen"), a
Delaware corporation.
The Company accounted for the Acquisition as a purchase. The allocation of
the purchase price resulted in purchase adjustments being applied to assets
and liabilities acquired. In this connection, since Brant-Allen was an
owner of a 30% interest in the Predecessor prior to the Acquisition,
purchase adjustments were applied to adjust 70% of the basis of the assets
and liabilities acquired to fair value. As a result of the Acquisition and
new basis of accounting, the Company's financial statements for the period
subsequent to the Acquisition are not comparable to the Predecessor's
financial statements for the periods prior to the Acquisition.
4
<PAGE>
BEAR ISLAND PAPER COMPANY, L.L.C.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
On January 30, 1998, the Company became subject to the information
requirements of the Securities Exchange Act of 1934, as amended, and
required to file reports and other information with the United States
Securities and Exchange Commission.
During the six months ended June 30, 1998 the board of directors of the
Company's parent, Brant-Allen, contributed the unpaid accrued portion of
the management fee totaling $1,446,655 through June 30, 1998 to the
Company's capital. This portion of the management fee is limited as to
payment in cash by the Company to Brant-Allen under the restrictive
covenants to the $100 million principal amount of 10% Senior Secured Notes
due 2007 (the "Notes"). The contribution of this accrued liability has been
reflected as an addition to contributed capital in the accompanying
condensed balance sheet at June 30, 1998. Brant-Allen's board also agreed
that until further action is taken by the board, future accrued fees (which
are not payable in cash because of the Notes' restrictive covenants) should
be contributed to the Company's capital.
3. No provision for income taxes is required in the financial statements since
each member or partner (prior to the Acquisition) is individually liable
for any income tax that may be payable on its share of the Companies'
taxable income.
4. Finished goods and raw materials inventories are valued at the lower of
cost or market, with cost determined on the first-in, first-out ("FIFO")
basis. Stores inventories are valued at the lower of average cost or
market.
Inventories consisted of:
June 30, December 31,
--------------- ----------------
1998 1997
Raw materials $ 2,575,317 $ 4,085,044
Stores 9,036,867 9,105,893
Finished goods 1,213,723 1,022,376
--------------- ----------------
$ 12,825,907 $@ 14,213,313
=============== ================
<TABLE>
5. Long-term debt consisted of:
<CAPTION>
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June 30, December 31,
---------------- -----------------
1998 1997
Senior Secured Notes $ 100,000,000 $ 100,000,000
Term Loan Facility 69,650,000 70,000,000
Revolving Credit Facility 20,000,000 26,000,000
Long-term purchase obligations 253,959 435,304
---------------- -----------------
189,903,959 196,435,304
Less current portion 953,959 880,304
---------------- -----------------
Total long-term debt $ 188,950,000 $ 195,555,000
================ =================
</TABLE>
5
<PAGE>
BEAR ISLAND PAPER COMPANY, L.L.C.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
6. A component of selling, general and administrative expenses as shown on the
statements of income includes aggregate management fees charged by
Brant-Allen. There are restrictions on payment of the management fee.
The Predecessor was a party to a wood supply contract with Bear Island
Timberlands Company, L.P. ("Timberlands"), an affiliate, whereby
Timberlands had guaranteed to supply all of the Predecessor's log and pulp
chip requirements at prices negotiated annually. Concurrent with the
Acquisition, the Company modified certain terms of the wood supply contract
with Bear Island Timberlands Company L.L.C. ("BITCO"), the successor to
Timberlands and a wholly-owned subsidiary of Brant-Allen. Purchases under
the wood supply contract approximated $405,500 and $3,314,000 for the
three- and six-month periods ended June 30, 1998, and $1,145,500 and
$6,772,000 for the three- and six-month periods ended June 30, 1997,
respectively.
The Predecessor recognized costs of approximately $535,000 and $1,028,000
for recycling procurement fees paid to BITCO during the three- and
six-month periods ended June 30, 1997, respectfully, which are included in
cost of sales in the accompanying condensed financial statements.
The Companies charged BITCO and Timberlands for certain administrative and
other expenses. These charges approximated $185,000 and $385,000 during the
three- and six-month periods ended June 30, 1998 and $345,000 and $718,000
during the three- and six-month periods ended June 30, 1997, respectively.
The Company's receivables and payables and the Companies' sales to partners
and affiliates were as follows:
<TABLE>
<CAPTION>
<S> <C>
June 30, December 31,
---------------- ----------------
1998 1997
Due from Brant-Allen $ 119,031 $ 1,193,315
Due from Dow Jones 2,586,526 1,930,538
Due from BITCO 57,644 42,029
Due to F. F. Soucy, Inc., a wholly owned subsidiary of
Brant-Allen 94,592 109,901
Three Months Ended June 30, Six Months Ended June 30,
----------------------------------
1998 1997 1998 1997
Net sales to Dow Jones $ 7,089,597 $ 6,370,118 $ 13,187,741 $ 12,126,025
Net sales to The Washington Post * 6,459,575 * 13,592,747
</TABLE>
Sales to Dow Jones represented approximately 23% and 22% of total sales
during the three- and six-month periods ended June 30, 1998 and 21% and 22%
during the three- and six-month periods ended June 30, 1997, respectively.
Sales to The Washington Post represented approximately 22% and 24% of total
sales during the three- and six-month periods ended June 30, 1997. The
remaining sales were to other unaffiliated printing and publishing
enterprises located primarily in the eastern United States.
6
<PAGE>
BEAR ISLAND PAPER COMPANY, L.L.C.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
7. The Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
("SFAS No. 131") in June 1997, which became effective for fiscal years
beginning after December 31, 1997. SFAS No. 131 establishes standards for
reporting information about operating segments, including related
disclosures about products and services, geographic areas, and major
customers. Interim reporting disclosures are not required in the first year
of adoption and are therefore not provided. At the time of adoption of SFAS
No. 131, this standard is not expected to have a material impact on the
financial position or results of operations of the Company since the
Company operates as one segment.
Statement of Financial Accounting Standards No. 132 ("SFAS No. 132"),
"Employers' Disclosures about Pensions and Other Postretirement Benefits,"
was issued by the Financial Accounting Standards Board in February 1998,
which is effective for all years beginning after December 31, 1997. This
statement revises employers' disclosures about pension and other
postretirement benefit plans. Implementation of SFAS No. 132 is not
expected to significantly change the Company's current disclosures when
adopted in the fourth quarter of 1998.
Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"),
"Accounting for Derivative Instruments and Hedging Activities," was issued
by the Financial Accounting Standards Board in June 1998, which is
effective for all fiscal quarters of all fiscal years beginning after June
15, 1999. This statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities. At the time of adopton of
SFAS No. 133, this standard is not expected to have a material impact on
the financial position or results of operations of the Company.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors affecting the Company's results of operations and the
Predecessor during the periods included in the accompanying condensed statements
of income and the changes in the Company's financial condition since December
31, 1997.
General
The Company manufactures and is dependent on one product, newsprint,
which is used in general printing and the newspaper publishing industry and for
advertising circulars. Accordingly, demand for newsprint fluctuates with the
economy, newspaper circulation and purchases of advertising lineage which may
significantly impact the Company's selling price of newsprint and, therefore,
its revenues and profitability. In addition, variation in the balance between
supply and demand as a result of global capacity additions have an increasing
impact on both selling prices and inventory levels in the North American
markets. Capacity is typically added in large blocks because of the scale of new
newsprint machines.
As a result, the newsprint market is highly cyclical, depending on
changes in global supply, demand and inventory levels. These factors
significantly impact the Company's sales volume and newsprint prices and,
therefore, the Company's revenues and profitability. Given the commodity nature
of newsprint, the Company, like other suppliers to this market, has little
influence over the timing and extent of price changes. Sales are recognized at
the time of shipment from the Company's mill. However, significant fluctuations
in revenue can and do occur as a result of changes in market conditions.
In December, 1997, the Company purchased the 70% Limited Partnership
interests of the Predecessor owned equally by subsidiaries of The Washington
Post Company, Inc. and Dow Jones & Company, Inc. (the "Acquisition"). Funding
for the Acquisition was provided through the issuance of $100 million principal
amount of 10% Senior Secured Notes due 2007 (the "Notes") and $120 million
principal amount of bank debt (the "Bank Credit Facilities") comprised of a $70
million principal amount Term Loan Facility and a $50 million Revolving Credit
Facility. Following the Acquisition 100% of the Company was owned by Brant-Allen
Industries, Inc. ("Brant-Allen"), the original general partner of the
Predecessor.
During the six months ended June 30, 1998 the board of directors of the
Company's parent, Brant-Allen, contributed the unpaid accrued portion of the
management fee totaling $1,446,655 through June 30, 1998 to the Company's
capital. This portion of the management fee is limited as to payment in cash by
the Company to Brant-Allen under the restrictive covenants to the Notes. The
contribution of this accrued liability has been reflected as an addition to
contributed capital in the accompanying condensed balance sheet at June 30,
1998. Brant-Allen's board also agreed that until further action is taken by the
board, future accrued fees (which are not payable in cash because of the Notes'
restrictive covenants) should be contributed to the Company's capital.
THREE MONTHS ENDED JUNE 30, 1998, COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Net sales increased by $2.3 million, or 8.0%, to $31.1 million in the
second quarter of 1998, from $28.8 million in the second quarter of 1997. This
increase was attributable to an 8.2% increase in the average net selling price
of the Company's products and was offset in part by a 0.2% decrease in sales
volumes to approximately 56,500 tons in the second quarter of 1998 from
approximately 56,600 tons in the second quarter of 1997. The Company's net
selling price for newsprint increased to an average of $551 per ton in the
second quarter of 1998 from an average of $509 per ton in the second quarter of
1997.
Cost of sales decreased by $2.5 million, or 9.6%, to $23.3 million in
the second quarter of 1998 from $25.7 million in the second quarter of 1997.
This decrease was attributable primarily to a 9.4% decrease in unit
manufacturing costs per ton and a 0.2% decrease in sales volumes. The decrease
in unit manufacturing cost per ton was a result of a 48.7% decrease in fiber
costs primarily due to a 33.4% decrease in the cost of wood in the second
quarter of 1998 to reflect cost of wood fiber on a market basis that was used
after consummation of the Acquisition from a non arms length fixed price basis,
including upcharges, that was used prior to the Acquisition. Cost of sales as a
percentage of net sales decreased to 74.8% in the second quarter of 1998, from
89.2% in the second quarter of 1997, due to depressed newsprint selling prices
in the second quarter of 1997 and reduced unit costs of manufacturing as
described above.
8
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Selling, general and administrative expenses increased by $0.2 million,
or 14.3%, to $1.2 million in the second quarter of 1998 from $1.1 million in the
second quarter of 1997. This increase was primarily attributable to an increase
in the management fee paid by the Company to Brant-Allen that resulted from
higher net sales and the additional administrative and regulatory expenses
incurred as a result of the Company's issuance of the Notes.
As a result of the above factors, income from operations increased by
$4.6 million to $6.6 million in the second quarter of 1998 from $2.0 million in
the second quarter of 1997.
Interest expense increased by $3.7 million to $4.8 million in the
second quarter of 1998 from $1.2 million in the second quarter of 1997, due to
the increase in the Company's indebtedness as a result of the Acquisition.
As a result of the above factors, the Company's net income increased by
$0.9 million to $1.9 million in the second quarter of 1998 from $ 1.0 million in
the second quarter of 1997.
SIX MONTHS ENDED JUNE 30, 1998, COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Net sales increased by $5.6 million, or 10.0%, to $61.5 million in the
first six months of 1998, from $55.9 million in the first six months of 1997.
This increase was attributable to an 11.8% increase in the average net selling
price of the Company's products and was offset, in part, by a 1.6% decrease in
sales volumes to approximately 111,100 tons in the first six months of 1998 from
approximately 113,000 tons in the first six months of 1997. The Company's net
selling price for newsprint increased to an average of $580 per ton in the first
six months of 1998 from an average of $523 per ton in the first six months of
1997.
Cost of sales decreased by $5.3 million, or 10.3%, to $45.9 million in
the first six months of 1998 from $51.2 million in the first six months of 1997.
This decrease was attributable primarily to a 8.8% decrease in unit
manufacturing costs per ton and a 1.6% decrease in sales volumes. The decrease
in unit manufacturing cost per ton was a result of a 22.7% decrease in fiber
costs primarily due to a 30.1% decrease in the cost of wood in the first six
months of 1998 to reflect the pricing of wood fiber on a market basis that is
being used after consummation of the Acquisition from a non arms length fixed
price basis including upcharges in the first six months of 1997 that was used
prior to the Acquisition. Cost of sales as a percentage of net sales decreased
to 74.7% in the first six months of 1998, from 91.6% in the first six months of
1997, due to depressed newsprint selling prices in the first six months of 1997
and reduced unit costs of manufacturing in 1998 as described above.
Selling, general and administrative expenses increased by $0.3 million,
or 16.3%, to $2.4 million in the first six months of 1998 from $2.1 million in
the first six months of 1997. This increase was primarily attributable to an
increase in the management fee paid by the Company to Brant-Allen that resulted
from higher net sales and the additional administrative and regulatory expenses
incurred as a result of the Company's issuance of the Notes.
As a result of the above factors, income from operations increased by
$10.5 million to $13.2 million in the first six months of 1998 from $2.6 million
in the first six months of 1997.
Interest expense increased by $7.3 million to $9.7 million in the first
six months of 1998 from $2.4 million in the first six months of 1997, due to the
increase in the Company's indebtedness as a result of the Acquisition.
As a result of the above factors, the Company's net income increased by
$3.0 million to $3.5 million in the first six months of 1998 from $ 0.5 million
in the second quarter of 1997.
9
<PAGE>
Liquidity and Capital Resources
Historically, the Company's principal liquidity requirements have been
for working capital, capital expenditures and debt service. These requirements
have been met through cash flows from operations and/or loans and equity
contributions from either BrantAllen or the Predecessor's former limited
partners, subsidiaries of Dow Jones and The Washington Post. Following the
Acquisition, the Company's principal liquidity requirements are expected to be
principally for working capital, debt service under the Bank Credit Facilities
and the Notes and the funding of capital expenditures.
The Company's cash and short-term investments at June 30, 1998 were
$2.5 million, representing an increase of $1.1 million from $1.4 million at
December 31, 1997. Cash flows from operating activities during the six months
ended June 30, 1998 were used principally to cover capital expenditures of $3.1
million in connection with upgrading and maintaining its manufacturng facility
and to reduce long-term debt by $6.5 million. The Company anticipates that cash
provided from operations in the future, combined with borrowings under the
Revolving Credit Facility will be sufficient to pay its operating expenses,
satisfy debt-service obligations and fund capital expenditures.
Management anticipates that the Company's total capital expenditures
for the balance of 1998 and 1999 will primarily relate to maintenance of its
newsprint facilities and cost reduction projects, allowing the Company to
improve quality and increase capacity, and, therefore, enhance its competitive
position.
At June 30, 1998, the Company had approximately $189.9 million of
indebtedness, consisting of borrowings of $20 million under the Revolving Credit
Facility, $69.6 million under the Term Loan Facility, $100 million under the
Notes and approximately $0.3 million in long-term purchase obligations. In
addition, $25 million was available in unused borrowing capacity under the
Revolving Credit Facility.
Year 2000 Compliance
The Company is in the process of modifying, upgrading or replacing its
computer software applications and systems which the Company expects will
accommodate the "Year 2000" dating changes necessary to permit correct recording
of year dates for 2000 and later years. The Company does not expect that the
cost of its Year 2000 compliance program will be material to its financial
condition or results of operations. The Company believes that it will be able to
achieve compliance by the end of 1999, and does not currently anticipate any
material disruption in its operations as the result of any failure by the
Company to be in compliance. The Company does not currently have any information
concerning the compliance status of its non-affiliated suppliers and customers.
Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," ("SFAS No. 131") in June
1997, which became effective for fiscal years beginning after December 31, 1997.
SFAS No. 131 establishes standards for reporting information about operating
segments, including related disclosures about products and services, geographic
areas, and major customers. Interim reporting disclosures are not required in
the first fiscal year of adoption and are therefore not provided. At the time of
adoption of SFAS No. 131, this standard is not expected to have a material
impact on the financial position or results of operations of the Company since
the Company operates as one segment.
Statement of Financial Accounting Standards No. 132 ("SFAS No. 132"),
"Employers' Disclosures about Pensions and Other Postretirement Benefits," was
issued by the Financial Accounting Standards Board in February 1998, which is
effective for all years beginning after December 31, 1997. This statement
revises employers' disclosures about pension and other postretirement benefit
plans. Implementation of SFAS No. 132 is not expected to significantly change
the Company's current disclosures when adopted in the fourth quarter of 1998.
Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"),
"Accounting for Derivative Instruments and Hedging Activities," was issued by
the Financial Accounting Standards Board in June 1998, which is effective for
all fiscal quarters of all fiscal years beginning after June 15, 1999. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. At the time of adopton of SFAS No. 133,
this standard is not expected to have a material impact on the financial
position or results of operations of the Company.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27, Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
11
<PAGE>
Signatures
Pursant 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, there unto duly authorized.
BEAR ISLAND PAPER COMPANY, L.L.C.
By: /s/ Peter M. Brant
Peter M. Brant
President, Chairman of the Board and
Chief Executive Officer
By: /s/ Edward D. Sherrick
Edward D. Sherrick
Vice President of Finance
(Principal Financial Officer and
Chief Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
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0
0
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</TABLE>
