<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: March 31, 1995 Commission File No. 1-9859
Pioneer Companies, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 06-1215192
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
165 Mason Street, Greenwich, CT 06830
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 629-3088
GEV Corporation
(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
Number of Common Shares outstanding at May 8, 1995: 7,769,438 of Class A and
769,354 of Class B, both reflecting the one-for-four reverse stock split
effective April 27, 1995. Exhibit index located at sequential page
no. _______.
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TABLE OF CONTENTS
Part I - Financial Information
Page No.
Item 1 - Consolidated Financial Statements
* Consolidated Balance Sheets - March 31, 1995
(unaudited) and December 31, 1994
* Consolidated Statements of Operations (unaudited) -
Three Months Ended March 31, 1995 and 1994
* Consolidated Statements of Cash Flows (unaudited) -
Three Months Ended March 31, 1995 and 1994
* Notes to Consolidated Financial Statements
(unaudited)
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 6 - Exhibits and Reports on Form 8-K
*Financial Data Schedule
<PAGE>3
PIONEER COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
1995 1994
(unaudited) (1)
___________________________
Assets
Current assets:
Cash and cash equivalents $ 458 $ 880
_______________________
Total current assets 458 880
Property and equipment, net 20 32
Deferred tax asset - -
Deferred acquisition costs 600 -
_______________________
Total assets $ 1,078 $ 912
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable and accrued expenses $ 432 $ 150
_______________________
Total current liabilities 432 150
_______________________
Stockholders' equity:
Preferred stock: $.01 par value,
authorized 10,000,000 shares; none
issued
Common stock: $.01 par value,
Class A authorized 46,000,000 shares,
issued and outstanding 3,792,165 at
March 31, 1995 and 3,768,499 at
December 31, 1994. 38
Class B authorized 4,000,000 shares,
issued and outstanding 769,354,
convertible share-for-share into
Class A shares 8 8
Additional paid-in capital 1,905 1,869
Deficit (1,305) (1,153)
_____________________
646 762
_____________________
Total liabilities and stockholders'
equity $ 1,078 $ 912
======= =======
_____________
(1) The balance sheet at December 31, 1994 has been derived from
the audited financial statements at that date.
See notes to consolidated financial statements.
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PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
___________________
1995 1994
___________________
General and administrative expenses, net $ 152 $ 26
___________________
Net loss $ (152) (26)
======== ========
Loss per share: $ (.03) $ (.01)
======== ========
Average number of shares of
common stock outstanding 4,546 3,623
===== =====
See notes to consolidated financial statements.
<PAGE>5
<TABLE>
<CAPTION>
PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
_______________________
1995 1994
_________________________
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (152) $ (26)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1 1
Increase in operating assets and liabilities:
Accounts payable and accrued expenses 293 (70)
______________________
Net cash provided by (used in) operating activities 142 (95)
_______________________
Cash flows from investing activities:
Deferred acquisition costs (600) -
______________________
Net cash used in investing activities (600) -
______________________
Cash flows from financing activities:
Issuance of Class A Common Stock in accordance 36 24
with Directors Stock Plan
Proceeds from private placement of Class A Stock - 1,103
______________________
Net cash provided by financing activities 36 1,127
______________________
Increase (decrease) in cash and cash equivalents (422) 1,032
Cash and cash equivalents at beginning of period 880 104
______________________
Cash and cash equivalents at end of period $ 458 $1,136
====== ======
</TABLE>
See notes to consolidated financial statements.
<PAGE>6
PIONEER COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(In thousands, except share and per share data)
At the annual shareholders meeting held on March 31, 1995, the change of GEV
Corporation's name to Pioneer Companies, Inc. ("PCI") was approved subject to
consummation of the acquisition described below.
The accompanying unaudited consolidated financial statements at March 31, 1995
and for the three months then ended have been prepared on a going concern
basis and include accounts of PCI and its subsidiaries. The unaudited
financial statements include adjustments of a normal recurring nature which,
in the opinion of management, are necessary for a fair presentation of the
results of operations for the three months ended March 31, 1995 and 1994.
The accompanying unaudited financial statements should be read in conjunction
with the financial statements and notes thereto included in PCI's Annual
Report on Form 10-K for the year ended December 31, 1994.
All share and per share information has been retroactively restated to reflect
the one-for-four reverse stock split of PCI's Class A and Class B Common
Stock, effective April 27, 1995.
Subsequent Event - Pioneer Acquisition
On April 20, 1995, pursuant to a Stock Purchase Agreement, dated as of March
24, 1995 (the "Acquisition Agreement"), by and among PCI, Pioneer Americas
Acquisition Corp., a newly-formed wholly-owned subsidiary of PCI ("New
Pioneer"), and the holders of the outstanding common stock and other common
equity interests (the "Sellers") of Pioneer Americas, Inc. ("Pioneer"), New
Pioneer acquired all of such stock and interests (the "Acquisition") for a
purchase price equal to the sum of approximately (i) $102 million, paid in
cash, (ii) $10 million aggregate principal amount of subordinated promissory
notes of PCI (the "Seller Notes") and (iii) certain amounts payable after the
closing based upon earnings or proceeds attributable to certain of Pioneer's
direct and indirect real estate holdings which are not necessary for Pioneer's
business. In addition, as further consideration for the Acquisition, New
Pioneer paid approximately $45.5 million to retire all outstanding
indebtedness (net of available cash) of Pioneer and $5 million to redeem
Pioneer's outstanding preferred stock.
In connection with the consummation of the Acquisition, (i) New Pioneer issued
and sold $135 million aggregate principal amount of 13 3/8% Senior Notes (the
"Initial Offering" or "Senior Notes"), (ii) PCI issued and sold the Seller
Notes in exchange for certain of the outstanding shares of Pioneer, which PCI
contributed to New Pioneer, (iii) PCI issued and sold to Interlaken Investment
Partners, L.P., a Delaware limited partnership (the "Interlaken Partnership"),
of which an entity controlled by William R. Berkley is the sole general
partner, 2,840,909 shares of Class A Common Stock of PCI for an aggregate
purchase price of $15 million (the "Interlaken Partnership Purchase"), the
proceeds of which were contributed to New Pioneer, (iv) PCI issued and sold to
certain employees and directors of Pioneer (collectively, the "Management
Investors"), 1,136,363 shares of Class A Common Stock of PCI for an aggregate
purchase price of $6 million (the "Management Purchase"), the proceeds of
which were contributed to New Pioneer, and (v) Pioneer and its subsidiaries
entered into a new bank revolving credit facility (the "Bank Credit
Facility"), providing for borrowings of up to $30 million. The net proceeds
of the Initial Offering, the Interlaken Partnership Purchase, the Management
Purchase and a borrowing under the Bank Credit Facility were used to pay the
cash portion of the purchase price of the Acquisition, to retire the
outstanding Pioneer indebtedness, to redeem Pioneer's
<PAGE>7
outstanding preferred stock and to pay certain transaction costs associated
with the Acquisition.
New Pioneer has agreed to file a Registration Statement with the Securities
and Exchange Commission pursuant to which it will propose to offer to exchange
(the "Exchange Offer") up to $135 million aggregate principal amount of 13
3/8% First Mortgage Notes due 2005 (the "Exchange Notes") for up to $135
million aggregate principal amount of its outstanding Senior Notes. New
Pioneer expects to secure the Senior Notes with first mortgage liens on
certain Pioneer manufacturing facilities prior to the effectiveness of such
Registration Statement. If the Registration Statement becomes effective and
New Pioneer proceeds with the Exchange Offer, the terms of the Exchange Notes
and Senior Notes will be substantially identical, except that the Exchange
Notes will be freely transferable subject to certain provisions.
The Acquisition will be accounted for by the purchase method of accounting.
The approximately $113 million of excess of the purchase price over the
estimated fair value of the net assets acquired will be amortized on a
straight line basis over periods of up to 25 years. The purchase price
allocation is based on preliminary estimates of the fair value of the net
assets acquired and liabilities assumed and is subject to adjustment as
additional information becomes available. Such information relates
principally to appraisals of plant, property and equipment, which management
expects to obtain as soon as is practical. Deferred acquisition costs include
costs incurred in connection with the Acquisition.
The following unaudited pro forma summary of operations presents the
consolidated financial results of operations as if the Acquisition, the
Initial Offering, the Interlaken Partnership Purchase, the Management Purchase
and the borrowing under the Bank Credit Facility had occurred at the beginning
of the quarters presented and does not purport to be indicative of either
future results of operations or results that would have occurred had the
Acquisition actually been made as of such dates.
(In thousands except for per share data)
Three Months Ended
March 31
1995 1994
_________________
Revenues $47,842 $34,227
Depreciation and amortization 4,621 4,374
Interest expense, net 4,917 4,917
Earnings (loss) before extraordinary item and
income taxes 6,468 (5,787)
Earnings (loss) before extraordinary item 3,419 (5,787)
Extraordinary item, early extinguishment of debt,
(net of tax benefit of $2,183) 3,275 -
Net income 144 (5,787)
Per Share Data
Average number of common shares outstanding 8,523 7,600
Earnings (loss) before extraordinary item $ 0.40 $ (0.76)
Extraordinary item $ 0.38 $ -
Net income (loss) $ 0.02 $ (0.76)
Pro forma adjustments reflect the inclusion of Pioneer Income Statement
information for the quarters ended March 31, 1994 and 1995 as applicable,
adjusted for: depreciation and amortization on property, plant and equipment
step ups, net costs over assets acquired and financing costs; interest expense
on transaction debt and interest expense on the Seller Notes; adjustment of
the
<PAGE>8
income tax provision; and the elimination of historical interest expense,
amortization of goodwill and organization costs and equity income from certain
real estate investments. The March 31, 1994 pro forma information also
reflects the elimination of SAR's expense and contingent bank fees.
The following summary pro forma consolidated balance sheet as of March 31,
1995 has been prepared as if the Acquisition, the Initial Offering, the
Interlaken Partnership Purchase, the Management Purchase and the borrowing
under the Bank Credit Facility had occurred on that date.
Assets (In thousands)
Current assets $ 47,932
Property, plant and equipment 83,506
Other assets 10,722
Excess of cost over fair market value of net assets acquired 112,663
_________
Total assets $ 254,823
=========
Liabilities and Stockholders' Equity
Current liabilities $ 35,375
Bank credit facility 9,000
Senior notes 135,000
Sellers' notes 10,000
Other long term liabilities 27,356
Stockholders' equity 38,092
_________
Total liabilities and stockholders' equity $ 254,823
=========
The Pro Forma Balance Sheet as of March 31, 1995 has been adjusted for:
adjustment to record inventory and fixed assets in accordance with APB 16;
recording of transaction borrowings and equity investments, excess purchase
price and deferred financing fees; elimination of historical debt, certain
real estate assets, deferred taxes, historical equity, goodwill and certain
other intangibles.
In connection with the Acquisition, PCI issued to the employees of PCI and its
subsidiaries options to acquire approximately 500,000 shares of PCI's Class A
Common Stock at an exercise price of $6.50 per share.
<PAGE>9
ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements and the notes thereto.
This item will discuss and analyze the financial condition and results of
operations of PCI for the three months ended March 31, 1995 and 1994.
Results of Operations
PCI reported a net loss of $152,000, or $.03 per share, in the first quarter
of 1995 as compared to a net loss of $26,000, or $.01 per share, in 1994.
General and administrative expenses were $126,000 higher in 1995 than in 1994
due primarily to the receipt of expense reimbursements from a previously
unconsolidated subsidiary in 1994 and higher transfer agent and legal fees in
1995.
Liquidity and Capital Resources
PCI and its subsidiaries on a consolidated basis (the "Company") is highly
leveraged as a result of indebtedness incurred in connection with the
Acquisition. Concurrent with the Acquisition, the Bank Credit Facility became
available to the Company. The Bank Credit Facility provides the Company with
a $30 million revolving line of credit, subject to borrowing base limitations
that relate to the levels of accounts receivable and inventory. As of March
31, 1995, on a pro forma basis after giving effect to the Acquisition, New
Pioneer had outstanding Senior Indebtedness of approximately $144 million
(including the Senior Notes and $9.0 million of secured indebtedness under the
Bank Credit Facility). As of March 31, 1995, on a pro forma basis, Pioneer
had $2.6 million of letters of credit outstanding and would have had, subject
to certain restrictions (including borrowing base limitations), the ability to
draw up to $18.4 million of additional secured indebtedness under the Bank
Credit Facility through 1998. The Bank Credit Facility is secured by accounts
receivable and inventory, and upon issuance of the Exchange Notes will be
secured on a pari passu basis by liens on certain manufacturing facilities.
The Company believes that cash flow from current levels of operations and, to
a lesser extent, the availability under the Bank Credit Facility, will be
adequate to make the required payments on the indebtedness outstanding upon
consummation of the Acquisition, as well as to fund its foreseeable capital
expenditure and working capital requirements.
PCI's source of funds for payment of principal and interest on the Seller
Notes will be provided by dividends from New Pioneer. New Pioneer is
restricted in paying such dividends to 50% of the cumulative consolidated net
income of New Pioneer for the period subsequent to January 1, 1995, if New
Pioneer meets a consolidated cash flow coverage ratio test of at least 2.75 to
1.0 for the prior four fiscal quarters. Payment of dividends by New Pioneer
to PCI should not affect New Pioneer's liquidity if the tests are met.
<PAGE>10
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 thereunto duly authorized.
PIONEER COMPANIES, INC.
Date: June 29, 1995 By: /s/ George T. Henning, Jr.
Name: George T. Henning, Jr.
Title: Chief Financial Officer and
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet, income statement, cash flow and capital statement of Pioneer
Companies, Inc. and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 458
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 458
<PP&E> 20
<DEPRECIATION> 0
<TOTAL-ASSETS> 1078
<CURRENT-LIABILITIES> 432
<BONDS> 0
<COMMON> 46
0
0
<OTHER-SE> 600
<TOTAL-LIABILITY-AND-EQUITY> 1078
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 152
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (152)
<INCOME-TAX> 0
<INCOME-CONTINUING> (152)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (152)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
