FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from to .
Commission File: 333-90829
MIDDLE AMERICAN TISSUE INC.
(Exact name of registrant as specified in its charter)
Delaware 52-2181338
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
135 Engineers Road, Hauppauge, New York 11788
(Address of principal executive office) (zip code)
(631) 435-9000
(Registrant's Telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
capital stock as of March 31, 2000: 176 shares of common stock, no par value.
<PAGE>
INDEX
MIDDLE AMERICAN TISSUE INC.
PART I: Financial Information
Item 1. Financial Statements
o Condensed Consolidated Balance Sheets - March 31, 2000 and
September 30, 1999.
o Condensed Consolidated Statements of Operations - Three Months
Ended March 31, 2000 and March 31, 1999.
o Condensed Consolidated Statements of Operations - Six Months
Ended March 31, 2000 and March 31, 1999.
o Condensed Consolidated Statements of Cash Flows - Six Months
Ended March 31, 2000 and March 31, 1999.
o Notes to Condensed Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
PART II: Other Information
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Middle American Tissue Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,133 $ 1,806
Accounts receivable,
Net of allowance for doubtful accounts of $872 and $613,
respectively 58,007 52,555
Inventories 130,127 94,664
Equipment held for sale 749 7,825
Prepaid expenses and other current assets 7,751 3,866
-------- --------
Total Current Assets 197,767 160,716
Property plant & equipment, net 227,210 212,530
Due from related parties 23,288 23,054
Deferred costs, net 10,998 10,408
Other assets 173 155
-------- --------
Total Assets $459,436 $406,863
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Revolving credit facility $ 82,036 $ 50,054
Current portion of long term debt and capital lease obligations 1,387 1,206
Accounts payable and accrued expenses 67,982 63,550
-------- --------
Total Current Liabilities 151,405 114,810
Senior secured discount notes payable 18,818 17,073
Senior secured notes payable 159,824 159,562
Long term debt and capital lease obligations 24,915 22,247
Other long term liabilities 12,023 11,490
Common Stock Warrants 3,781 3,781
Stockholder's equity:
Common stock 1,605 1,605
Additional paid in capital 37,675 37,675
Retained earnings 49,390 38,620
-------- --------
Total Stockholder's Equity 88,670 77,900
-------- --------
Total Liabilities and Stockholder's Equity $459,436 $406,863
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
Middle American Tissue Inc.
Condensed Consolidated Statements of Operations
(In Thousands)
For the Three Months Ended
March 31,
----------------------------
2000 1999
-------- --------
(Unaudited) (Unaudited)
Net Revenues $121,047 $ 60,304
Cost of Sales 97,148 46,305
-------- --------
Gross Profit 23,899 13,999
Selling, General and
Administrative Expenses 12,906 6,996
-------- --------
Operating Profit 10,993 7,003
Interest Expense 8,181 3,732
-------- --------
Net Income $ 2,812 $ 3,271
======== ========
See notes to condensed consolidated financial statements.
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Middle American Tissue Inc.
Condensed Consolidated Statements of Operations
(In Thousands)
For the Six Months Ended
March 31,
---------------------------
2000 1999
-------- --------
(Unaudited) (Unaudited)
Net Revenues $231,362 $120,704
Cost of Sales 178,944 94,657
-------- --------
Gross Profit 52,418 26,047
Selling, General and
Administrative Expenses 25,664 14,644
-------- --------
Operating Profit 26,754 11,403
Interest Expense 15,984 6,981
-------- --------
Net Income $ 10,770 $ 4,422
======== ========
See notes to condensed consolidated financial statements.
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Middle American Tissue Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
March 31,
----------------------
2000 1999
-------- --------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 10,770 $ 4,422
Adjustments:
Depreciation & amortization 12,444 5,838
Bad debt expense 330 300
Forgiveness of Interest -- 640
Changes in operating assets & liabilities:
Increase (decrease) in operating assets & liabilities:
Accounts receivable (5,782) (2,831)
Inventories (35,463) (7,145)
Equipment held for sale 7,076 (2,929)
Prepaid expenses and other current assets (3,885) (349)
Other assets (18) (80)
Accounts payable and accrued expenses 5,155 3,053
-------- --------
Net cash provided by (used in) operating activities: (9,373) 919
-------- --------
Cash Flows From Investing Activities:
Capital expenditures (21,366) (10,992)
-------- --------
Net cash used in investing activities (21,366) (10,992)
-------- --------
Cash Flows From Financing Activities:
Net proceeds under revolving credit facility 31,982 9,590
Proceeds from long term debt and capital lease obligations -- 1,374
Payments of long term debt to capital lease obligations (415) (4,051)
Increase in deferred costs (1,267) (277)
Advances and repayments to affiliates, net (234) 1,253
Net proceeds from financing obligations -- 1,164
-------- --------
Net cash provided by financing activities 30,066 9,053
-------- --------
Net Decrease in Cash and Cash Equivalents (673) (1,020)
Cash and Cash Equivalents, Beginning of Period $ 1,806 $ 1,480
-------- --------
Cash and Cash Equivalents, End of Period $ 1,133 $ 460
======== ========
Interest Paid $ 14,257 $ 6,661
======== ========
Income Taxes Paid $ 13 $ 6
======== ========
Non-cash financing transactions relating to capital leases $ 3,264 $ 4,183
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
MIDDLE AMERICAN TISSUE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
1. BASIS OF PRESENTATION:
The accompanying condensed consolidated financial statements include the
accounts of Middle American Tissue Inc. and its subsidiaries (collectively, the
"Company"). All significant intercompany balances and transactions have been
eliminated in consolidation.
The condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for annual financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results of operations of any interim period are not necessarily
indicative of the results of operations to be expected for the fiscal year.
Reference is made to the consolidated financial statements for the year ended
September 30, 1999, and footnotes thereto, included in the Company's
registration statement on Form S-4 which was declared effective on March 6,
2000.
2. COMPREHENSIVE INCOME:
The Company observes the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which requires
companies to report all changes in equity during a period, except those
resulting from investments by owners and distributions to owners, for the period
in which they are recognized. Comprehensive income is the total of net income
and all other non-owner changes in equity (or other comprehensive income) such
as unrealized gains or losses on securities classified as available for sale,
foreign currency translation adjustments and minimum pension liability
adjustments. Other comprehensive income must be reported on the face of annual
financial statements or in the case of interim reporting, the footnote approach
may be utilized. For the quarters and six months ended March 31, 2000 and 1999,
the Company's operations did not give rise to material items includible in
comprehensive income which were not already included in net income. Accordingly,
the Company's comprehensive income is the same as its net income for all periods
presented.
3. RECENTLY ISSUED ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 is effective
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for all fiscal quarters of fiscal years beginning after June 15, 2000 (as
amended by SFAS No. 137) and will not require retroactive restatement of prior
period financial statements. The Company currently does not use derivative
instruments or engage in hedging activities and, accordingly, does not expect
that this statement will have an impact on its consolidated financial statements
when adopted.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
We are an integrated manufacturer of tissue and uncoated freesheet paper
products, with a comprehensive product line that includes jumbo rolls of tissue
used in the manufacture of finished tissue products, finished tissue products
and uncoated freesheet paper products for printing and publishing applications.
We entered the uncoated freesheet paper business on July 9, 1999, through our
acquisition of our integrated pulp and paper mills located in Berlin and Gorham,
New Hampshire. Our finished tissue products are sold in the commercial, or
away-from-home, and consumer, or at-home, markets. Our jumbo rolls of tissue are
used internally by us for the manufacture of finished tissue products and are
sold to other manufacturers of finished tissue products. Our uncoated freesheet
paper products are sold through merchants and distributors and to end-use
customers. A substantial portion of our net sales is derived from the
manufacture and sale of finished tissue products, jumbo rolls of tissue,
uncoated freesheet paper and virgin pulp. We also generate a small portion of
our net sales from the sale of converting equipment for the manufacture of
finished tissue products.
Results of Operations
The following is a summary of our revenues for each business segment for
the quarters indicated (dollars in millions):
Three Months Ended Six Months Ended
March 31, March 31,
------------------- -------------------
2000 1999 2000 1999
------ ------ ------ ------
Tissue Products $ 65.1 $ 59.1 $123.2 $119.2
Uncoated Freesheet 37.0 0.0* 69.5 0.0*
Woodpulp 16.1 0.0* 31.3 0.0*
Equipment Sales 2.5 0.9 6.9 0.9
Rental Income 0.3 0.3 0.5 0.6
------ ------ ------ ------
Total Revenues $121.0 $ 60.3 $231.4 $120.7
====== ====== ====== ======
*We had no sales of uncoated freesheet or woodpulp for the quarter and six
months ended March 31, 1999, because these products are produced at the
Berlin-Gorham Mills, which we purchased on July 9, 1999.
Three Months Ended March 31, 2000 (the "second quarter of fiscal 2000")
Compared To
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The Three Months Ended March 31, 1999 (the "second quarter of fiscal 1999").
Revenues. Revenues increased approximately $60.7 million, or 100.7%, from
approximately $60.3 million for the second quarter of fiscal 1999 to
approximately $121.0 million for the second quarter of fiscal 2000.
Net sales of tissue products increased approximately $6.0 million, or
10.2%, from approximately $59.1 million for the second quarter of fiscal 1999 to
approximately $65.1 million for the second quarter of fiscal 2000. This increase
was primarily due to increased sales of finished tissue products and higher
average net sales prices per case of sales during the second quarter of fiscal
2000, as compared to the second quarter of fiscal 1999.
Net sales of uncoated freesheet paper products were approximately $37.0
million for the second quarter of fiscal 2000. Net sales of woodpulp were
approximately $16.1 million for the same period. We have no comparable sales
figures for the second quarter of fiscal 1999, as these products are produced by
our subsidiary, Pulp & Paper of America, at the Berlin-Gorham Mills, the assets
of which we acquired on July 9, 1999. However, for comparison purposes only, the
sales of uncoated freesheet and woodpulp for the second quarter of fiscal 1999
for the Berlin-Gorham Mills, as a business unit of Crown Paper Co., were
approximately $31.1 million and approximately $9.6 million, respectively.
Net sales of converting equipment increased approximately $1.6 million, or
177.8% from approximately $0.9 million for the second quarter of fiscal 1999 to
approximately $2.5 million for the second quarter of fiscal 2000.
Gross Profit. Gross profit increased approximately $9.9 million, or 70.7%,
from approximately $14.0 million for the second quarter of fiscal 1999 to
approximately $23.9 million for the second quarter of fiscal 2000. Gross profit,
as a percentage of net sales, decreased from 23.2% for the second quarter of
fiscal 1999 to 19.7% for the second quarter of fiscal 2000. This decrease in
gross profit, as a percentage of net sales, was the result of increased recycled
fiber and energy costs.
Selling, General and Administrative Expenses. A significant portion of our
selling expenses are freight expenses incurred in shipping our products to our
customers. It is our policy to include freight expense in this category as
selling expense. Selling, general and administrative expenses, exclusive of
freight, increased approximately $3.2 million, or 80.0%, from approximately $4.0
million for the second quarter of fiscal 1999 to approximately $7.2 million for
the second quarter of fiscal 2000. Selling, general and administrative expenses,
excluding freight, were 6.6% of net sales for the second quarter of fiscal 1999,
as compared to 5.9% for the second quarter of fiscal 2000. This percentage
decrease was due to net sales increasing at a faster rate than selling, general
and administrative expenses, excluding freight, between the second quarter of
fiscal 1999 and the second quarter of fiscal 2000. Freight expense increased
approximately $2.7 million, or 90.0%, from approximately $3.0 million in the
second quarter of fiscal 1999 to approximately $5.7 million for the second
quarter of fiscal 2000. This increase was a result of our increase in shipments
of finished tissue products, uncoated freesheet and woodpulp during this period.
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Operating Income. Operating income increased approximately $4.0 million, or
57.1%, from approximately $7.0 million for the second quarter of fiscal 1999 to
approximately $11.0 million for the second quarter of fiscal 2000. Operating
income, as a percentage of net sales, was 9.1% for the second quarter of fiscal
2000, as compared to 11.6% for the second quarter of fiscal 1999. This decrease
was due to the reasons stated above.
Interest Expense. Interest expense increased approximately $4.4 million, or
118.9%, from approximately $3.7 million in the second quarter of fiscal 1999 to
approximately $8.1 million for the second quarter of fiscal 2000. This increase
reflects higher debt levels during the second quarter of fiscal 2000, as
compared to the second quarter of fiscal 1999.
EBITDA. EBITDA is defined as operating income plus depreciation and
amortization. EBITDA increased approximately $6.8 million, or 69.4%, from
approximately $9.8 million for the second quarter of fiscal 1999 to
approximately $16.6 million for the second quarter of fiscal 2000. This increase
in EBITDA was due primarily to the realization of synergies resulting from the
integration of the Berlin-Gorham Mills into our company, favorable pricing
conditions in our finished tissue products business and price increases in
uncoated freesheet, woodpulp and jumbo rolls of tissue. Information regarding
EBITDA is presented because management believes that some investors use EBITDA
as one measure of an issuer's ability to service its debt. EBITDA should not be
considered an alternative to, or more meaningful than, operating income, net
income or cash flow as defined by generally accepted accounting principles, or
as an indicator of an issuer's operating performance. In addition, caution
should be used in comparing EBITDA to similarly titled measures of other
companies as the definitions of these measures may vary.
Six Months Ended March 31, 2000 (the "first half of fiscal 2000") Compared
To The Six Months Ended March 31, 1999 (the "first half of fiscal 1999").
Revenues. Revenues increased approximately $110.7 million, or 91.7%, from
approximately $120.7 million for the first half of fiscal 1999 to approximately
$231.4 million for the first half of fiscal 2000.
Net sales of tissue products increased approximately $4.0 million, or 3.4%,
from approximately $119.2 million for the first half of fiscal 1999 to
approximately $123.2 million for the first half of fiscal 2000. This increase
was primarily due to increased sales of finished tissue products and higher
average net sales prices per case of sales and increased sales of jumbo rolls of
tissue during the first half of fiscal 2000, as compared to the first half of
fiscal 1999.
Net sales of uncoated freesheet paper products were approximately $69.5
million for the first half of fiscal 2000. Net sales of woodpulp were
approximately $31.3 million for the same period. We have no comparable sales
figures for the first half of fiscal 1999, as these products are produced by our
subsidiary, Pulp & Paper of America, at the Berlin-Gorham Mills, the assets of
which we acquired on July 9, 1999. However, for comparison purposes only, the
sales of uncoated freesheet and woodpulp for the first half of fiscal 1999 for
the Berlin-Gorham Mills, as a business unit of Crown Paper Co., were
approximately $61.7 million and approximately $22.1 million, respectively.
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Net sales of converting equipment increased approximately $6.0 million, or
667% from approximately $0.9 million for the first half of fiscal 1999 to
approximately $6.9 million for the first half of fiscal 2000.
Gross Profit. Gross profit increased approximately $26.4 million, or
101.5%, from approximately $26.0 million for the first half of fiscal 1999 to
approximately $52.4 million for the first half of fiscal 2000. Gross profit, as
a percentage of net sales, increased from 21.6% for the first half of fiscal
1999 to 22.7% for the first half of fiscal 2000. This increase in gross profit,
as a percentage of net sales, was a result of higher sales levels, the
realization of synergies resulting from the integration of the Berlin-Gorham
Mills into our company, which was partially offset by increased recycled fiber
and energy costs.
Selling, General and Administrative Expenses. A significant portion of our
selling expenses are freight expenses incurred in shipping our products to our
customers. It is our policy to include freight expense in this category as
selling expense. Selling, general and administrative expenses, exclusive of
freight, increased approximately $6.4 million, or 77.1%, from approximately $8.3
million for the first half of fiscal 1999 to approximately $14.7 million for the
first half of fiscal 2000. Selling, general and administrative expenses,
excluding freight, were 6.9% of net sales for the first half of fiscal 1999, as
compared to 6.4% for the first half of fiscal 2000. This percentage decrease was
due to net sales increasing at a faster rate than selling, general and
administrative expenses, excluding freight, between the first half of fiscal
1999 and the first half of fiscal 2000. Freight expense increased approximately
$4.6 million, or 73.0%, from approximately $6.3 million in the first half of
fiscal 1999 to approximately $10.9 million for the first half of fiscal 2000.
This increase was a result of our increase in shipments of finished tissue
products, uncoated freesheet and woodpulp during this period.
Operating Income. Operating income increased approximately $15.4 million,
or 135.1%, from approximately $11.4 million for the first half of fiscal 1999 to
approximately $26.8 million for the first half of fiscal 2000. Operating income,
as a percentage of net sales, was 11.6% for the first half of fiscal 2000, as
compared to 9.4% for the first half of fiscal 1999. This increase was due to the
reasons stated above.
Interest Expense. Interest expense increased approximately $9.0 million, or
128.6%, from approximately $7.0 million in the first half of fiscal 1999 to
approximately $16.0 million for the first half of fiscal 2000. This increase
reflects higher debt levels during the first half of fiscal 2000, as compared to
the first half of fiscal 1999.
EBITDA. EBITDA is defined as operating income plus depreciation and
amortization. EBITDA increased approximately $20.3 million, or 118.0%, from
approximately $17.2 million for the first half of fiscal 1999 to approximately
$37.5 million for the first half of fiscal 2000. This increase in EBITDA was due
primarily to higher sales levels, the realization of synergies resulting from
the integration of the Berlin-Gorham Mills into our company, favorable pricing
conditions in our finished tissue products business and price increases in
uncoated freesheet, woodpulp and jumbo rolls of tissue. Information regarding
EBITDA is presented because
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management believes that some investors use EBITDA as one measure of an issuer's
ability to service its debt. EBITDA should not be considered an alternative to,
or more meaningful than, operating income, net income or cash flow as defined by
generally accepted accounting principles, or as an indicator of an issuer's
operating performance. In addition, caution should be used in comparing EBITDA
to similarly titled measures of other companies as the definitions of these
measures may vary.
Liquidity and Capital Resources
Net cash used in operations in the first half of fiscal 2000 was
approximately $9.4 million, as compared to net cash provided by operations in
the first half of fiscal 1999 of approximately $0.9 million. There was a
substantial increase in net income for the first half of fiscal 2000, as
compared to the first half of fiscal 1999, which was partially offset by
increases in inventories during the first half of fiscal 2000, as compared to
the first half of fiscal 1999, due to the purchase of the Berlin-Gorham Mills
and increases in sales levels during fiscal 2000. Cash used for capital
expenditures in the first half of fiscal 2000 was approximately $21.4 million,
as compared to approximately $11.0 million for the first half of fiscal 1999.
All of the above necessitated borrowings of approximately $32.0 million on the
revolving credit facility in the first half of fiscal 2000.
At March 31, 2000, our total consolidated debt was approximately $287.0
million as compared to $250.1 million at September 30, 1999.
We believe, based on current levels of operations, anticipated internal
growth, price increases, anticipated capital expenditures, and cash flow from
operations, together with other available sources of funds, including the
availability of borrowings under our revolving credit facility, that liquidity
will be adequate for the foreseeable future to make required payments of
interest on indebtedness, to fund anticipated capital expenditures, and for
working capital requirements. The ability to meet debt service obligations and
reduce total debt will be dependent, however, upon our future performance,
which, in turn, will be subject to general economic conditions and to financial,
business and other factors, including factors beyond our control. A portion of
the debt bears interest at floating rates and the current effective interest
rate on this debt is approximately 8.5%. Therefore, our financial condition is,
and will continue to be, affected by changes in prevailing interest rates.
Inflation and Cyclicality
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the
foreseeable future to have, a material impact on our results of operations.
The markets for tissue and uncoated freesheet paper products are
characterized by periods of supply and demand imbalance, with supply being added
in large blocks and demand fluctuating with changes in industry capacity,
economic conditions, including, in the case of our uncoated freesheet paper
products, the overall level of domestic economic activity, and competitive
conditions, including, in the case of our uncoated freesheet paper products,
12
<PAGE>
intensified competition from overseas producers responding to favorable exchange
rate fluctuations and/or unfavorable overseas market conditions. All of such
conditions are beyond our control.
Seasonality
Historically, our net sales have been somewhat stronger during our third
and fourth fiscal quarters, due to increased seasonal usage by consumers in the
at-home business and inventory and usage patterns in the away-from-home finished
tissue products business.
Forward Looking Statements
Except for historical information and discussions contained in this Form
10Q, statements contained in this Form 10-Q may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Any such forward looking statements involve a number of known and
unknown risks, uncertainties and other factors which may cause actual results,
performance or achievements of the Company to differ materially from any future
results, performance or achievements, expressed or implied in such forward
looking statements. The words "believe," "demonstrate," "intend," "expect,"
"estimate," "anticipate," "likely," and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
those forward-looking statements, which speak only as of the date the statement
was made.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, which include changes in U.S.
interest rates and commodity prices. During fiscal year 1999, we restructured
our debt, through a private sale of our senior secured notes, so that it is
predominantly fixed-rate. Our revolving credit facility permits us to elect to
pay interest on borrowings at a spread above the LIBOR rate or at the bank's
prime lending rate. A significant rise in either of these rates could adversely
affect our results of operations, depending upon the level of borrowings under
our revolving credit facility at the time of any rate changes. We do not
currently utilize derivative financial instruments to hedge against changes in
interest rates or commodity prices. Additionally, substantially all of our
transactions are denominated in U.S. dollars.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, we are subject to a number of legal proceedings and
other claims arising in the ordinary course of our business which we do not
believe will have, individually or in the aggregate, a material adverse effect
on our financial condition or results of operations.
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Item 5. OTHER INFORMATION
On April 4, 2000, we completed an exchange offer whereby $35.8 million of
our Series B Senior Secured Notes were exchanged for the same amount of Series A
Senior Secured Notes pursuant to a registration statement that was declared
effective by the Securities and Exchange Commission on March 6, 2000.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 -- Financial Data Schedule
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.
MIDDLE AMERICAN TISSUE INC.
(registrant)
May 9, 2000 By /s/ Edward I. Stein
-------------------
Edward I. Stein
(On behalf of Registrant and as
Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
consolidated financial statements and is qualified in its entirety by
reference to those financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,133
<SECURITIES> 0
<RECEIVABLES> 58,879
<ALLOWANCES> 872
<INVENTORY> 130,127
<CURRENT-ASSETS> 197,767
<PP&E> 277,996
<DEPRECIATION> 50,786
<TOTAL-ASSETS> 459,436
<CURRENT-LIABILITIES> 151,405
<BONDS> 0
0
0
<COMMON> 1,605
<OTHER-SE> 87,065
<TOTAL-LIABILITY-AND-EQUITY> 459,436
<SALES> 231,362
<TOTAL-REVENUES> 231,362
<CGS> 178,944
<TOTAL-COSTS> 178,944
<OTHER-EXPENSES> 25,664
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,984
<INCOME-PRETAX> 10,770
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,770
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,770
<EPS-BASIC> 61,193
<EPS-DILUTED> 61,193
</TABLE>
