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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 1998(October 15,
1998)
AMERICAN PAD & PAPER COMPANY
(Exact name of registrant as specified in its charter)
Commission file number 1-11803
Delaware 04-3164298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 733-6200
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<PAGE>
Item 5. Other Events.
On October 15, 1998, American Pad & Paper Company (the "Company") issued a
press release announcing third quarter 1998 results. The Company reported a net
loss of $13.4 million, or $.48 per share, on net sales of $174.2 million.
Comparable third quarter results in 1997 included net income of $1.0 million, or
$.03 per share, on net sales of $176.5 million. Year-to-date the Company
reported a net loss of $71.4 million, or $2.58 per share, on net sales of $482.5
million. These results include the impact of the current quarter pretax
restructuring charge of $5.7 million, a inventory write-down of $2.9 million,
and a $41.0 million write-down of goodwill in the second quarter. Comparable
year-to-date results in 1997 included net income of $9.6 million, or $.33 per
share, on net sales of $493.5 million. This press release is incorporated herein
as Exhibit 99.015.
On October 16, 1998, American Pad & Paper Company (the "Company") issued a press
release announcing several key management appointments as the Company continues
the process of building a strong management team from both internal and external
sources.
John H. Rodgers has been appointed to the position of Senior Vice President,
General Counsel and Secretary. In his new assignment he will be responsible for
coordinating all of the Company's legal activities.
Mark S. Lipscomb has been appointed to the position of Vice President Corporate
Communications. In this new position he will be responsible for investor
relations, public relations, and employee communications.
Patrick D. "Dan" Lane has joined the Company as its Treasurer.
Robert D. Dunn has been promoted to Vice President, Corporate Development and
Planning. He previously served as Vice President, Human Resources. In his new
role he will coordinate activities associated with American Pad & Paper's
turnaround and develop short and long-term business strategies.
Deborah A. Garrett has been promoted to the position of Vice President,
Human Resources, replacing Mr. Dunn. In her new position, Ms. Garrett will be
responsible for all Human Resources activities of the Corporation.
This press release is incorporated herein as Exhibit 99.016.
Exhibit
99.15 Press release by the Company dated October 15, 1998.
99.16 Press release by the Company dated October 16, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
American Pad & Paper Company
October 30, 1998 /s/ David N. Pilotte
Date David N. Pilotte
Vice President and Corporate Controller
Principal Accounting Officer
<PAGE>
Exhibit 99.015
CONTACT:Mark Lipscomb
Vice President, Corporate Communications
American Pad & Paper Co.
(972) 733-5415
For immediate release
Robert P. Jones/Theresa Schillero
Leslie Feldman/Eileen King - Press
(212) 850-5600
Ken Pieper
(972) 663-9390
Morgen-Walke Associates
American Pad & Paper Reports Third Quarter Results
DALLAS, Texas, October 15 1998, -- American Pad & Paper Company
(NYSE:AGP) (AP&P) today reported financial results for the third quarter and
nine months ended September 30, 1998.
For the third quarter the Company reported a net loss of $13.4 million,
or 48 cents per share, on net sales of $174.2 million. These results include a
previously announced pretax restructuring charge of $5.7 million, and an
inventory write-down of $2.9 million, which together impacted quarterly
performance by 19 cents per share. The Company posted a positive EBITDA
performance of $6.1 million in the quarter, as measured by our bank agreement.
Year to date the Company reported a net loss of $71.4 million, or $2.58
per share, on net sales of $482.5 million. Year to date performance includes the
impact of current quarter charges and a $41.0 million write-down of goodwill
taken in the second quarter.
Comparable third quarter results in 1997 included net income of $1.0
million, or 3 cents per share, on net sales of $176.5 million. For the first
nine months of 1997, net income was $9.6 million, or 33 cents per share, on net
sales of $493.5 million.
The restructuring charge taken this quarter is for part of the
previously announced major rationalization plan of the Company's manufacturing
operations that should be completed in late 1999. This plan is expected to
produce annualized cost savings of approximately $11 million, create a net 18%
savings in space requirements and provide a net 7% reduction in the workforce.
The cost for these restructuring actions is expected to be $11 to $13 million.
During the quarter, the Company also announced it had amended its bank
credit agreement which provides AP&P with access to a $300 million revolving
credit facility that matures in July 2001. At the end of the quarter the Company
had $33.2 million in cash and access to an additional $14.1 million from this
credit facility.
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Exhibit 99.015
Page 2
"Despite the expected loss in the third quarter, I am pleased with the
progress the Company is making," said James W. Swent, III, Chief Executive
Officer of the Company. "Our rationalization plan will help ensure we remain
competitive and meet our financial objectives. Inventory levels continue to
improve, and we expect further reductions in the fourth quarter. Approval of the
amended credit agreement, combined with our cash position provides the financial
flexibility necessary to execute our business plan."
"AP&P is a leader in the markets we serve with strong customer and supplier
relationships," said Mr. Swent. "Our immediate challenges are to rebuild market
share, reduce debt, and return the Company to profitability."
American Pad & Paper Company is a leading manufacturer and marketer of
paper-based office products in North America. The company manufactures and
distributes writing pads, file folders, machine papers, envelopes and other
office products. Name brands include Ampad, Century, Embassy, Gold Fibre,
Huxley, Karolton, Kent, Peel & Seel, SCM, Williamhouse and World Fibre.
This release contains forward-looking statements relating to future
results. Actual results may differ significantly as a result of factors over
which the Company has no control, including the strength of domestic and foreign
economies, slower than anticipated sales growth, price and product competition
and changes in raw material costs. Additional information which could affect the
Company's financial results is included in the Company's prospectus on file with
the Securities and Exchange Commission.
***
(Tables to Follow)
<PAGE>
Exhibit 99.015
AMERICAN PAD & PAPER COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Net sales ................... $ 174,160 $ 176,462 $ 482,479 $ 493,455
Cost of sales ............... 156,462 150,204 441,962 407,282
--------- --------- --------- ---------
Gross profit .............. 17,698 26,258 40,517 86,173
Operating expenses:
Selling and marketing ..... 5,569 5,529 15,762 15,624
General and administrative. 9,608 6,338 24,313 14,716
Restructuring charges ..... 5,741 -- 5,741 --
Loss on sales of
accounts receivable ..... 858 656 2,319 2,049
Amortization of intangible
assets .................. 1,327 1,677 4,522 4,547
Write-down of intangible assets -- -- 41,000 --
Management fees and services . 595 565 1,655 4,276
--------- --------- --------- ---------
Income (loss) from operations (6,000) 11,493 (54,795) 44,961
Other income (expense):
Interest ................. (11,929) (9,848) (33,735) (27,646)
Other income, net ........ 192 84 207 225
--------- --------- --------- ---------
Income (loss) before
income taxes ............. (17,737) 1,729 (88,323) 17,540
Provision for (benefit from)
income taxes.............. (4,343) 778 (16,907) 7,893
--------- --------- --------- ---------
Net income (loss) .......... $ (13,394) $ 951 $ (71,416) $ 9,647
========= ========= ========= =========
Earnings (loss) per
share (Basic) ............. $ (0.48) $ 0.03 $ (2.58) $ 0.33
========= ========= ========= ==========
Earnings per share (Diluted) . -- $ 0.03 -- $ 0.33
========= =========
Weighted average number of
common shares (Basic) .... 27,724 29,389 27,713 29,382
========= ========= ======== =========
Weighted average number of
common shares (Diluted) .. -- 29,389 -- 29,382
========= =========
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Exhibit 99.015
AMERICAN PAD & PAPER COMPANY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except per share amounts)
September 30, December 31,
1998 1997
ASSETS
Current assets:
Cash ............................................... $ 33,228 $ 4,855
Accounts receivable ................................ 49,001 74,203
Inventories ........................................ 129,607 154,359
Refundable income taxes ............................ 751 4,059
Prepaid expenses and other current assets .......... 1,704 1,402
Deferred income taxes .............................. 2,000 11,992
--------- ---------
Total current assets ............................. 216,291 250,870
Property, plant and equipment ........................ 152,181 151,390
Intangible assets .................................... 187,080 233,698
Other ................................................ 2,729 2,443
--------- ---------
Total assets ....................................... $ 558,281 $ 638,401
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current portion of long-term debt .................. $ 1,021 $ 1,538
Accounts payable ................................... 42,674 56,356
Accrued expenses ................................... 53,329 40,157
Restructuring charges .............................. 5,741 --
Income taxes payable ............................... -- --
--------- ---------
Total current liabilities ........................ 102,765 98,051
--------- ---------
Long-term debt ....................................... 412,348 398,577
Deferred income taxes ................................ 12,337 39,477
Other ................................................ 1,568 1,630
--------- ---------
Total liabilities ................................. 529,018 537,735
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, 150 shares authorized,
no shares issued and outstanding, respectively .... -- --
Common stock, voting, $.01 par value, 75,00
shares authorized, 27,724 and 27,436 shares issues
and outstanding, respectively .................... 277 274
Additional pain-in capital ........................... 301,287 301,279
Accumulated deficit .................................. (272,301) (200,887)
--------- ---------
Total stockholders' equity ....................... 29,263 100,666
--------- ---------
Total liabilities and stockholders' equity ....... $ 558,281 $ 638,401
========= =========
Note: On September 30, 1998, American Pad & Paper received a permanent amendment
to its Credit Agreement. As a result AP&P reclassified $272,779 (as presented in
the 10Q filing) from Current portion of long-term debt to Long-term debt.
<PAGE>
Exhibit 99.016
CONTACT:Mark Lipscomb
Vice President, Corporate Communications
American Pad & Paper Co.
(972) 733-5415
for immediate release
Robert P. Jones/Theresa Schillero
Leslie Feldman/Eileen King - Press
(212) 850-5600
Ken Pieper
(972) 663-9390
Morgen-Walke Associates
American Pad & Paper ANNOUNCES Key Management Appointments
DALLAS, Texas, October 16, 1998, -- American Pad & Paper Company
(NYSE:AGP) (AP&P) announced today several key management appointments as the
Company continues the process of building a strong management team from both
internal and external sources.
John H. Rodgers has been appointed to the position of Senior Vice
President, General Counsel and Secretary. In his new assignment he will be
responsible for coordinating all of the Company's legal activities. Before
joining American Pad & Paper, Mr. Rodgers was with The Southland Corporation
where he held several key executive positions including Executive Vice President
and General Counsel over a twenty year career. Prior to joining Southland, he
served in the Judge Advocate General Corps of the United States Army. Mr.
Rodgers received his Bachelor of Arts from Texas A&M University and his Juris
Doctorate from the University of Texas School of Law.
Mark S. Lipscomb has been appointed to the position of Vice President
Corporate Communications. In this new position he will be responsible for
investor relations, public relations and employee communications. Mr. Lipscomb
joins American Pad & Paper after having most recently served as Director of
Investor Relations for STMicroelectronics. Prior to STMicroelectronics, he
served as Investor Relations Director for both Cyrix and Unisys Corporations.
Mr. Lipscomb received his Bachelor of Science degree in Finance from the
University of Texas at Dallas.
Patrick D. "Dan" Lane has joined the Company as its Treasurer. Mr. Lane
joins American Pad & Paper from Computer City, Inc., a subsidiary of the Tandy
Corporation, where he held the position of Treasurer. Prior to this assignment
he held numerous managerial positions with CompuCom Systems and NationsBank. Mr.
Lane is a graduate of the University of North Texas.
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<PAGE>
Exhibit 99.016
Robert D. Dunn has been promoted to Vice President, Corporate
Development and Planning. He previously served as Vice President, Human
Resources. In his new role he will coordinate activities associated with AP&P's
turnaround and develop short and long-term business strategies. Prior to joining
American Pad & Paper in 1996, Mr. Dunn held numerous domestic and international
leadership positions with Office Depot, Mobil Corporation, and as an officer in
the United States Army. Mr. Dunn holds both Bachelor of Science and Masters in
Business Administration degrees.
Deborah A. Garrett has been promoted to the position of Vice President,
Human Resources, replacing Mr. Dunn. In her new position, Ms. Garrett will be
responsible for all Human Resources activities of the Corporation. Ms. Garrett
joined American Pad & Paper in 1997 and most recently served as Division Human
Resources Manager, AMPAD Division. Previously, she held several operational and
human resources management positions with GE Capital. Ms. Garrett holds Bachelor
of Science and Masters in Business Administration degrees.
Commenting on these new appointments within the management team, James
W. Swent, III, Chief Executive Officer of American Pad & Paper, stated, "I am
very pleased at the caliber of employees we are attracting and the internal
management depth the Company possesses. We continue to build a management team
that is a blend of internal and external management expertise. We remain
committed to making this Company a world class organization, and these
appointments demonstrate our progress in that direction." In addition, Mr. Swent
stated, "We continue to have an active executive search underway to fill the key
executive position of president of our AMPAD division."
American Pad & Paper Company is a leading manufacturer and marketer of
paper-based office products in North America. The company manufactures and
distributes writing pads, file folders, machine papers, envelopes and other
office products. Name brands include Ampad, Century, Embassy, Gold Fibre,
Huxley, Karolton, Kent, Peel & Seel, SCM, Williamhouse and World Fibre.
This release contains forward-looking statements relating to future
results. Actual results may differ significantly as a result of factors over
which the Company has no control, including the strength of domestic and foreign
economies, slower than anticipated sales growth, price and product competition
and changes in raw material costs. Additional information which could affect the
Company's financial results is included in the Company's prospectus on file with
the Securities and Exchange Commission.
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