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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): July 26, 1999 (July 19, 1999)
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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Item 5. Other Events.
On July 19, 1999, American Pad & Paper Company (OTCBB:AMPP) (AP&P) reported
financial results for the second quarter ended June 30, 1999.
This press release is incorporated herein as Exhibit 99.030
Exhibit
99.30 Press release by the Company dated July 19, 1999.
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
July 26, 1999 /s/ David N. Pilotte
Date David N. Pilotte
Vice President and Corporate Controller
Principal Accounting Officer
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Exhibit 99.030
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FOR IMMEDIATE RELEASE CONTACT: Mark Lipscomb
(972) 733-5415
AMERICAN PAD & PAPER REPORTS SECOND QUARTER RESULTS
DALLAS, Texas, July 19, 1999, -- American Pad & Paper Company
(OTCBB:AMPP) (AP&P) today announced financial results for the second quarter
ended June 30, 1999. The Company reported a net loss of $14.2 million or 51
cents per share, compared to a net loss of $55.9 million, or $2.02 per share in
the second quarter of 1998. The second quarter 1999 results include previously
announced plant rationalization charges reflected in cost of goods sold totaling
$3.4 million, which negatively impacted quarterly performance by 12 cents per
share. Second quarter 1999 net revenue was $134.1 million, versus net revenue of
$146.7 million in the second quarter of 1998.
For the first six months of 1999 the Company reported a net loss of
$26.9 million, or 97 cents per share, compared to a net loss of $58.0 million,
or $2.09 per share in the first half of 1998. Gross profits for the first six
months of 1999 include the negative impact of plant rationalization charges
totaling $4.7 million, or 17 cents per share. Net revenues for the first six
months of 1999 were $271.7 million, versus net revenue of $308.3 million for the
first half of 1998. Last year's performance was impacted by a $41.0 million
write-down of goodwill taken in the second quarter.
AP&P posted EBITDA performance of $8.4 million in the second quarter of
1999, as measured by the Company's bank agreement. The Company reduced SG&A
expenses in the quarter by $3.3 million from the second quarter of 1998 and $0.5
million sequentially over the first quarter of 1999.
"Revenue performance was somewhat below expectations due to AMPAD
Division volumes being lower than anticipated. This was caused by inventory
reduction initiatives taken at some retail customers very late in the quarter.
Additionally, the Williamhouse Division experienced somewhat softer demand in a
highly competitive pricing environment," said James W. Swent III, Chief
Executive Officer of the Company. "Plant rationalization initiatives, tight
expense controls and the sale of a real estate asset in Chicago helped drive
EBITDA performance above our plan for the quarter."
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"The Company's recovery plan is on track for the first half of 1999
despite a very challenging market environment. Our efforts to reduce costs and
improve margins are taking hold and should drive performance improvements as we
head into the seasonally stronger second half of the year," said Mr. Swent. "The
keys to success in the second half of 1999 will be completing our plant
rationalization plan, increased marketing/sales efforts, new product
introductions and remaining focused on rebuilding our base of business with
existing and new customers."
American Pad & Paper Co., which invented the legal pad in 1888, is a
leading manufacturer and marketer of paper-based office products in North
America. Product offerings include envelopes, writing pads, file folders,
machine papers, greeting cards and other office products. The key operating
divisions of the Company are Williamhouse, AMPAD, and Creative Card. Company
revenues in 1998 were $662 million, additional information is available on the
Company's Website at http://www.americanpad.com.
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, but not limited to the following:
changing economic conditions, 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
filings with the Securities and Exchange Commission.
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(Tables to Follow)
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AMERICAN PAD & PAPER COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six Months ended
June 30, June 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> ..................................... <C> <C> <C> <C>
Net sales ............................... $ 134,051 $ 146,724 $ 271,681 $ 308,319
Cost of sales ........................... 125,475 143,327 250,246 285,500
------------ ------------ ------------ ------------
Gross profit .......................... 8,576 3,397 21,435 22,819
Operating expenses:
Selling and marketing ................. 5,375 5,504 10,255 10,193
General and administrative ............ 6,113 9,273 13,243 14,705
Loss on sales of accounts receivable .. 710 714 1,449 1,461
Amortization of intangible assets ..... 1,286 1,608 2,571 3,195
Write-down of intangible assets ....... -- 41,000 -- 41,000
Management fees and services .......... 375 530 750 1,060
------------ ------------ ------------ ------------
Income (loss) from operations ........... (5,283) (55,232) (6,833) (48,795)
Other income (expense):
Interest .............................. (10,923) (11,063) (21,719) (21,806)
Other income, net ..................... 2,023 (36) 2,329 15
------------ ------------ ------------ ------------
Loss before income taxes ................ (14,183) (66,331) (26,223) (70,586)
Benefit from income taxes ............... -- (10,394) -- (12,564)
------------ ------------ ------------ ------------
Loss before cumulative effect of a change
in accounting principle .............. (14,183) (55,937) (26,223) (58,022)
Cumulative effect of a change in
accounting principle .................. -- -- 726 --
------------ ------------ ------------ ------------
Net loss ................................ $ (14,183) $ (55,937) $ (26,949) $ (58,022)
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Basic loss per share
Loss before cumulative effect of a change
in accounting principle ............... $ (0.51) $ (2.02) $ (0.94) $ (2.09)
Cumulative effect of a change in
accounting principle .................. -- -- (0.03) --
------------ ------------ ------------ ------------
Net loss ................................ $ (0.51) $ (2.02) $ (0.97) $ (2.09)
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Weighted average shares outstanding:
Basic ................................... 27,724 27,724 27,724 27,710
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</TABLE>
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AMERICAN PAD & PAPER COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
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ASSETS
Current assets:
<S> ..................................................... <C> <C>
Cash .................................................. $ 347 $ 1,371
Accounts receivable ................................... 36,757 60,660
Inventories ........................................... 119,670 112,169
Refundable income taxes ............................... 1,700 1,700
Prepaid expenses and other current assets ............. 2,515 1,240
Deferred income taxes ................................. 40 40
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Total current assets ................................ 161,029 177,180
Property and equipment .................................. 150,008 152,198
Intangible assets ....................................... 181,179 185,805
Other ................................................... 2,533 2,654
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Total assets .......................................... $ 494,749 $ 517,837
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ..................... $ 2,592 $ 1,236
Accounts payable ...................................... 40,494 49,598
Accrued expenses ...................................... 45,923 47,078
Restructuring charges ................................. 4,678 5,660
Income taxes payable .................................. 300 300
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Total current liabilities ........................... 93,987 103,872
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Long-term debt .......................................... 388,033 373,675
Deferred income taxes ................................... 16,547 16,972
Other ................................................... 1,101 1,288
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Total liabilities .................................... 499,668 495,807
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Commitments and contingencies
Stockholders' equity:
Preferred stock, 150 shares authorized,
no shares issued and outstanding, respectively ....... -- --
Common stock, voting, $.01 par value, 75,000,000
shares authorized, 27,724,000 and 27,724,000
shares issues and outstanding, respectively ......... 277 277
Additional paid-in capital .............................. 301,287 301,287
Accumulated deficit ..................................... (306,483) (279,534)
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Total stockholders' equity .......................... (4,919) 22,030
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Total liabilities and stockholders' equity .......... $ 494,749 $ 517,837
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</TABLE>