<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 31, 1994
FIBREBOARD CORPORATION
----------------------
(exact name of registrant as specified in charter)
Delaware 0-016951 94-0751580
- - ---------------------------- ------------ ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
2121 North California Blvd., #560, Walnut Creek, CA 94596
----------------------------------------------------------
(Address of principal executive offices)
(510) 274-0700
--------------
(Registrant's telephone number, including area code)
None
---------------------------
(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends the following items
of its Current Report on Form 8-K dated August 31, 1994:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The purchase price paid for Norandex Inc. consisted of $115
million paid in cash at closing plus or minus an adjustment based
upon the change in the financial condition of Norandex from
December 31, 1993 to closing. Fibreboard estimates this
adjustment will increase the purchase price of Norandex by
approximately $5.0 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following financial information is included herewith:
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
<TABLE>
<CAPTION> Page
----
<S> <C>
Financial Statements of Norandex Inc:
Report of Independent Auditors 4
Consolidated Balance Sheets as of December 31, 1993 and 1992 5
Consolidated Statements of Operations and Retained Deficit for
each of the three years in the period ended December 31, 1993 7
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1993 8
Notes to Consolidated Financial Statements 9
Unaudited Consolidated Balance Sheet as of August 31, 1994 16
Unaudited Consolidated Statements of Operations and Retained
Deficit for the eight months ended August 31, 1994 and 1993 18
Unaudited Consolidated Statements of Cash Flows for the eight
months ended August 31, 1994 and 1993 19
Notes to Unaudited Consolidated Financial Statements 20
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Combined Income Statements for the year
ended December 31, 1993 21
Unaudited Pro Forma Combined Income Statements for the nine
months ended September 30, 1994 22
Unaudited Pro Forma Combined Income Statements for the nine
months ended September 30, 1993 23
Notes to Pro Forma Combined Financial Statements 24
</TABLE>
No pro forma combined balance sheet is included herewith as
the Registrant's balance sheet included in its Form 10-Q for the
quarter ended September 30, 1994 reflects the acquisition of
Norandex.
2
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
The following Exhibit is included herewith:
Exhibit 23 Consent of Ernst & Young 26
</TABLE>
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.
FIBREBOARD CORPORATION
----------------------
(Registrant)
Dated: November 14, 1994 By: /s/ Garold E. Swan
---------------------------
Garold E. Swan
Vice President and Controller
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Norandex Inc.
We have audited the accompanying consolidated balance sheets
of Norandex Inc., a wholly owned subsidiary of Noranda
Aluminum, Inc., which is a wholly owned subsidiary of Noranda
Finance Inc., as of December 31, 1993 and 1992, and the
related consolidated statements of operations and retained
deficit, and cash flows for each of the three years in the
period ended December 31, 1993. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
Effective with the close of business on August 31, 1994, the
Common Stock of Norandex Inc. was acquired by an unrelated party.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Norandex Inc. at December 31, 1993 and
1992, and the consolidated results of operations and cash
flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles.
As discussed in Notes 5 and 6 to the financial statements, in
1993 the Company changed its method of accounting for
postretirement benefits and income taxes, respectively.
ERNST & YOUNG LLP
Nashville, Tennessee
September 23, 1994
4
<PAGE>
Norandex Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1993 1992
------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 38 $ 36
Accounts receivable, less allowance for doubtful
accounts of $525,000 in 1993 and $630,000 in 1992 18,319 20,759
Inventories (NOTE 2) 23,915 25,693
Prepaid expenses 724 958
------- -------
Total current assets 42,996 47,446
Property, plant and equipment, at cost:
Land and buildings 12,026 11,628
Machinery and equipment 21,030 37,574
Other 551 631
------- -------
33,607 49,833
Less accumulated depreciation 13,060 17,469
------- -------
20,547 32,364
Goodwill, net of accumulated amortization of
$3,550,000 in 1993 and $3,791,000 in 1992 2,171 4,594
Deferred charges and other assets 225 449
------- -------
Total assets $65,939 $84,853
------- -------
------- -------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
1993 1992
------- ---------
(IN THOUSANDS)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Bank overdrafts $ 1,925 $ 856
Accounts payable 8,220 8,031
Employee compensation and related items 4,474 3,980
Other accrued liabilities 3,071 2,743
Accrued shutdown costs 416 2,407
------- -------
Total current liabilities 18,106 18,017
Deferred liabilities and credits (NOTES 4 AND 5) 7,649 7,060
Advances payable to Parent (NOTE 3) 54,749 84,095
Stockholder's deficit:
Common Stock, $.10 par value; 110,000 shares
authorized, issued and outstanding 11 11
Capital in excess of par value 10,989 10,989
Retained deficit (25,565) (35,319)
------- -------
Total stockholder's deficit (14,565) (24,319)
Commitments and contingencies
------- -------
Total liabilities and stockholder's deficit $65,939 $84,853
------- -------
------- -------
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
Norandex Inc.
Consolidated Statements of Operations and Retained Deficit
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales $192,631 $217,528 $210,500
Costs and expenses:
Cost of sales 135,036 159,053 165,161
Selling, general and administrative 40,842 41,535 35,662
Interest expense, net--Parent (NOTE 3) 4,055 6,333 9,197
Gain on sale of business (3,079) -- --
Shutdown costs -- 3,822 1,500
Other 190 -- (511)
-------- -------- --------
177,044 210,743 211,009
-------- -------- ---------
Income (loss) before income taxes and cumulative
effect of change in accounting principles 15,587 6,785 (509)
Income taxes:
Charge (credit) in lieu of federal
income taxes (NOTE 6) 5,091 2,510 (188)
State and local (NOTE 6) 1,018 -- 18
------- -------- ---------
6,109 2,510 (170)
Income (loss) before cumulative effect
of change in accounting principles 9,478 4,275 (339)
Change in accounting principles:
Postretirement benefits other than 396 -- --
pensions (NOTE 5)
Income taxes (NOTE 6) (1,946) -- --
--------- -------- --------
Net income (loss) 11,028 4,275 (339)
Retained deficit at beginning of year (35,319) (39,594) (39,255)
Dividend to Parent (NOTE 3) (1,274) -- --
-------- -------- ---------
Retained deficit at end of year $(25,565) $(35,319) $(39,594)
-------- -------- ---------
-------- -------- ---------
</TABLE>
SEE ACCOMPANYING NOTES.
7
<PAGE>
Norandex Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1993 1992 1991
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $11,028 $ 4,275 $ (339)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 3,716 5,792 5,859
Shutdown costs -- 3,822 1,500
Gain on sale of business (3,079) -- --
Changes in accounting principle:
Postretirement benefits other than pensions 396 -- --
Income taxes (1,946) -- --
Changes in assets and liabilities,
net of business sold:
Accounts and notes receivable (4,287) 2,139 356
Inventories (3,151) 1,752 7,524
Prepaid expenses (19) (1) 160
Accounts payable and accrued expenses 1,269 (1,103) (14,931)
Deferred charges and other assets -- 3,764 (547)
Deferred liabilities and credits 1,066 (5,863) 4,552
------ ------- -------
Net cash provided by operating activities 4,993 14,577 4,134
INVESTING ACTIVITIES
Capital expenditures (1,955) (3,539) (3,001)
Proceeds from sale of business 25,958 -- --
Net cash provided by (used in) investing
activities 24,003 (3,539) (3,001)
FINANCING ACTIVITIES
Changes in advances payable to Parent (28,789) (11,386) (1,753)
Dividend to Parent (1,274) -- --
Payments of long-term debt -- -- (190)
Changes in bank overdraft 1,069 323 533
------ ------- -------
Net cash used in financing activities (28,994) (11,063) (1,410)
------ ------- -------
Net increase (decrease) in cash 2 (25) (277)
Cash at beginning of year 36 61 338
------ ------- -------
Cash at end of year $ 38 $ 36 $ 61
------- ------- -------
------- ------- -------
</TABLE>
SEE ACCOMPANYING NOTES.
8
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements
December 31, 1993
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND PRINCIPLES OF CONSOLIDATION
Norandex Inc. (the Company) is a wholly owned subsidiary of Noranda Aluminum,
Inc. (the Parent), which is a wholly owned subsidiary of Noranda Finance Inc.
in 1993 and 1992. Through 1991, the Company was a majority-owned subsidiary
of Noranda Aluminum, Inc. and partially owned by the Corporate officers
of Norandex Inc. (see Note 3). The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary, Master Shield,
Inc. (Mastershield) which was sold in February 1993. All significant
intercompany transactions have been eliminated in consolidation.
Earnings per share data has not been provided because Norandex Inc.
is wholly owned by Noranda Finance Inc.
Norandex Inc. is a national manufacturer and distributor of building
materials for residential new construction and remodeling. The Company
manufactures vinyl siding and sells vinyl siding and other purchased
products to the home building industry through its distribution network.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation is computed
principally using the straight-line method over the estimated useful
lives of the assets for financial reporting purposes.
PENSION
Pension cost accruals are funded as required by the Employee Retirement
Income Security Act (ERISA).
GOODWILL
Goodwill represents the excess of cost over the fair value of net assets
acquired and is generally amortized using the straight-line method over
periods ranging from 10 to 15 years. The carrying value of goodwill is
reviewed if the facts and circumstances suggest that it may be impaired.
9
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements (Continued)
2. INVENTORIES
The components of inventory, stated at the lower of cost or market, are:
<TABLE>
<CAPTION>
DECEMBER 31
1993 1992
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Work-in-process and finished goods $22,506 $22,636
Raw materials 1,409 3,057
------- -------
Inventories on the FIFO (first-in, first-out) method $23,915 $25,693
------- -------
------- -------
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
ADVANCES PAYABLE TO PARENT
Advances payable to Parent represents the net amount due to the Parent for
activity between the Company and its Parent. Generally, this balance is
increased by automatic cash transfers from the Parent to reimburse the
Company's bank accounts and certain expenses charged to the Company such as
interest and income taxes. The balance is decreased through daily cash
deposits by the Company to the Parent's bank account. The Company is charged
interest at 1/2% over the prime rate on advances from its Parent. There are
no formal debt instruments representing the advances.
DIVIDEND PAYMENT
In January 1992, the Parent repurchased the Corporate officers' 9.1% share
of the Common Stock and entered into an agreement requiring the payment of
dividends back to the Parent, based on a percentage formula of current
earnings. Dividends are required to be declared and paid in January of
the year subsequent to each year end, beginning December 31, 1992.
10
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements (Continued)
4. PENSION PLANS
The Company participates in a defined benefit plan sponsored by Noranda
Finance Inc. Benefits under the plan are based on years of service and/or
salary levels prior to retirement.
Noranda Finance Inc. charged the Company $495,000, $488,000, and $1,222,000
with respect to its plan in 1993, 1992, and 1991 respectively. In 1993,
the Company recorded a curtailment gain of $477,000 as a result of the sale
of Master Shield and the termination of those employees from the Noranda
Finance Inc. plan. This gain has been included in the gain on sale of this
facility (see Note 9). In 1991, the Company terminated its participation in
a union multiemployer plan for its former window and door manufacturing
hourly workers (see Note 8).
The following assumptions were used in accounting for the defined
benefit plan:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.50% 9.00% 9.25%
Annual compensation increase 5.00 6.00 7.50
Expected long-term rate of return
on plan assets 9.25 9.50 9.25
</TABLE>
The plan's funding policy is for its participating companies to contribute
such amounts as are deemed necessary on an actuarial basis to provide the plan
with assets sufficient to meet the benefits to be paid to the plan
participants. The Company's allocation of the Noranda Finance, Inc. net
accrued pension liability was $4,060,000 and $4,042,000 at December 31,
1993 and 1992, respectively, which is classified in the balance sheet in
deferred liabilities and credits.
The decrease in the discount rate from 9.00% to 7.50% resulted in a significant
increase in the accumulated benefit obligation of the plan. The increase had a
nominal impact on current year pension expense.
5. POSTRETIREMENT BENEFITS
The Company provides life insurance benefits for eligible active and retired
employees. These plans are unfunded, and the Company retains the right to
modify or eliminate these benefits.
11
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements (Continued)
5. POSTRETIREMENT BENEFITS (CONTINUED)
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS 106), for its unfunded life insurance
program. This Statement requires the accrual of the cost of postretirement
benefits during the service lives of the employees. As prior years' cost
were recognized as expense when incurred by the Company, postretirement
benefit cost is not comparable with 1992 and 1991. The accounting change
resulted in a 1993 charge to earnings of $396,000, net of taxes of $266,000.
Components of the 1993 postretirement benefit expense were (in thousands):
<TABLE>
<S> <C>
Service cost of benefits earned $ 36
Interest cost on liability 57
----
Net postretirement benefit cost $ 93
----
----
</TABLE>
The accumulated postretirement benefit obligation (APBO) classified in the
balance sheet in deferred liabilities and credits at December 31, 1993
was (in thousands):
<TABLE>
<S> <C>
Retirees $102
Active participants 560
----
APBO $662
----
----
</TABLE>
The accumulated postretirement benefit obligation was determined using an
8.75% discount rate and an assumed compensation increase of 6%.
6. INCOME TAXES
The Company is a member of the Noranda Finance Inc. consolidated group
for federal income tax purposes. Certain state returns are filed on a unitary
basis together with other members of the consolidated group.
Noranda Finance Inc.'s tax allocation policy requires each member of the
consolidated group to provide federal income tax at the maximum statutory
rate, adjusted for applicable credits, applied to income before income taxes.
The charge (credit) in lieu of federal income tax represents amounts
charged (credited) in accordance with this policy. State and local income
taxes are computed on a separate return basis after consideration of unitary
filings. Income tax benefits or liabilities are reflected in advances payable
to Parent.
12
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements (Continued)
6. INCOME TAXES (CONTINUED)
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, "Accounting for Income Taxes," (SFAS 109). As
permitted under the new rules, prior years' financial statements have not
been restated.
The cumulative effect of adopting SFAS 109 as of January 1, 1993 was to
increase net income by $1,946,000.
The Company's effective tax rate differs from the federal statutory rate
primarily due to amortization of goodwill. Significant temporary differences
include depreciation, inventory capitalization and accrued expenses which
are deductible for tax purposes as economic performance occurs.
At December 31, 1993, the Company had net operating loss carryforwards
for state income tax purposes of approximately $18,590,000.
7. LEASE OBLIGATIONS
The Company operates certain manufacturing and warehouse facilities under
operating leases which expire principally during the next nine years. In most
cases, management expects that in the normal course of business, leases will
be renewed or replaced with other leases.
The following is a schedule of future minimum rental payments required under
operating leases that have initial or remaining noncancelable lease terms
in excess of one year as of December 31, 1993 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
<S> <C>
1994 $ 4,584
1995 4,387
1996 3,318
1997 1,880
1998 1,434
Thereafter 2,437
-------
Total minimum lease payments $18,040
-------
-------
</TABLE>
13
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements (Continued)
7. LEASE OBLIGATIONS (CONTINUED)
The following schedule shows the composition of total rental expense for all
operating leases except those with terms of one month or less that were
not renewed.
<TABLE>
Year ended December 31
1993 1992 1991
-----------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Minimum rentals $ 6,057 $6,410 $6,566
Contingent rentals -- -- 342
Less sublease rentals (247) (185) (316)
------- ------ ------
$ 5,810 $6,225 $6,592
------- ------ ------
------- ------ ------
</TABLE>
Contingent rentals represent transportation equipment operating lease
payments made on the basis of mileage.
8. SHUTDOWN COSTS
In the fourth quarter of 1990, the Company's Board of Directors approved a
plan to shutdown two production facilities that manufactured aluminum
and vinyl windows and doors in favor of purchasing windows and doors from
outside suppliers. This shutdown has been accounted for as a shutdown
of a portion of a line of business. The Company recorded a shutdown charge
of $10,500,000 in 1990 based on estimated shutdown costs, including estimated
operating losses through the date of shutdown.
In 1991, the Company shutdown the two production facilities and recorded
additional shutdown charges totaling $1,500,000 million principally due to
underestimating plant site restoration costs and plant operating losses
prior to the respective dates of shutdown. Also in 1991, the Company sold
fixed assets previously used as production equipment to a building products
manufacturer in exchange for a $1,600,000 note receivable. The Company had
entered into a five-year supply contract with this manufacturer in 1990 in
connection with the Company's plan to shutdown the facilities.
In 1992, the Company recorded additional shutdown charges of approximately
$3,800,000 due to costs not originally contemplated in the original plan
to shutdown the facilities. These costs were principally attributable
to the settlement of litigation brought by the landlord of one of the
shutdown production facilities for failure by the Company to maintain
14
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements (Continued)
8. SHUTDOWN COSTS (CONTINUED)
the leased property and the write-off of the note received in 1991 in exchange
for fixed assets sold by the Company. The write-off of the note receivable
was net of trade accounts payable to this supplier for purchased windows
and doors.
In 1993, the building materials supplier mentioned above and its bank filed
a lawsuit against the Company asserting breach of contract, improper set-offs
and an avoidable preference. The complaint alleged that the Company improperly
terminated its relationships under the terms of the supply agreement.
The Company vigorously defended the asserted claims believing it was fully
justified in terminating its relationship because this vendor had already
breached its underlying agreements. Further, the Company filed counter claims.
On September 23, 1994, the Company agreed to settle the lawsuit with the
supplier of building materials and its bank, discussed above, for a payment
from the Company of $1,400,000. Because the vendor is currently in Chapter 7
proceedings under the Bankruptcy Code, this settlement is contingent upon the
approval of the Bankruptcy Court. This settlement will be charged to
expense in 1994.
9. DISPOSITIONS
In February 1993, the Company recognized a gain of $3,079,000 for the sale
of Master Shield, its vinyl siding operations in Weatherford, Texas.
Total revenue from the disposed entity included in net sales in the
Consolidated Statements of Operations and Retained Deficit for 1993,
1992, and 1991 was $3,513,000, $41,451,000 and $39,406,000, respectively.
10. SALE OF NORANDEX COMMON STOCK
Effective with the close of business on August 31, 1994, the Common Stock of
Norandex Inc. was acquired by Fibreboard Corporation, an unrelated party,
in a $115 million cash transaction. The purchase price is subject to price
adjustments for changes in working capital, pension plan funding and
interest on price adjustments.
15
<PAGE>
Norandex Inc.
Consolidated Balance Sheet
As of August 31, 1994
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
<S> <C>
Assets
Current assets:
Cash $39
Accounts receivable 26,570
Inventories 29,025
Prepaid expenses 651
-------
Total current assets 56,285
Property, plant and equipment
Land and buildings 12,263
Machinery and equipment 21,842
Other 314
-------
34,419
Less accumulated depreciation 14,024
-------
20,395
Goodwill, net of amortization 1,955
Deferred charges and other assets 75
-------
Total assets $78,710
-------
-------
</TABLE>
See accompanying notes.
16
<PAGE>
Norandex Inc.
Consolidated Balance Sheet
As of August 31, 1994
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
<S> <C>
Liabilities and stockholder's equity
Current liabilities:
Bank overdrafts $678
Accounts payable 15,281
Employee compensation and related items 5,791
Other accrued liabilities 3,781
Accrued shutdown costs 1,400
-------
Total current liabilities 26,931
Advances payable to Parent 57,689
Deferred liabilities and credits 7,169
Stockholder's deficit:
Common stock 11
Capital in excess of par value 10,989
Retained deficit (24,079)
-------
Total stockholder's deficit (13,079)
Commitments and contingencies
-------
Total liabilities and stockholder's deficit $78,710
-------
-------
</TABLE>
See accompanying notes.
17
<PAGE>
Norandex Inc.
Consolidated Statements of Operations and Retained Deficit
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED AUGUST 31,
----------------------------
1994 1993
---- ----
<S> <C> <C>
Net sales $143,990 $120,927
Operating costs and expenses:
Cost of sales 100,832 84,703
Selling, general and administrative 31,014 27,002
-------- --------
131,846 111,705
-------- --------
Operating profit 12,144 9,222
Other deductions (income):
Interest expense, net -- Parent 2,971 2,886
Gain on sale of business -- (3,079)
Shutdown costs 1,152 --
Other (300) (234)
------- -------
3,823 (427)
------- -------
Income before income taxes and cumulative
effect of change in accounting principles 8,321 9,649
Income taxes:
Charge in lieu of federal income taxes 1,742 3,139
State and local 876 780
------- --------
2,618 3,919
------- --------
Income before cumulative effect of change
in accounting principles 5,703 5,730
Change in accounting principles:
Postretirement benefits other than pensions -- 396
Income taxes -- (1,946)
------- -------
Net income 5,703 7,280
Retained deficit at beginning of year (25,565) (35,319)
Dividend to Parent (4,217)
-------- -------
Retained deficit at end of year ($24,079) ($28,039)
--------- --------
--------- --------
</TABLE>
See accompanying notes.
18
<PAGE>
Norandex Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED AUGUST 31,
-----------------------------
1994 1993
------------ --------------
<S> <C> <C>
Operating activities:
Net income $ 5,703 $ 7,280
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 2,396 2,683
Gain on sale of business -- (3,079)
Shutdown costs 1,152 --
Changes in noncurrent assets -- --
Changes in noncurrent liabilities (480) 957
Changes in accounting principles:
Postretirement benefits other than
pensions -- 396
Income taxes -- (1,946)
Changes in operating assets and liabilities,
net of business sold:
Accounts and notes receivable (8,251) (7,587)
Inventories (5,125) (4,314)
Prepaid expenses 73 (129)
Accounts payable and accrued expenses 7,943 5,808
-------- --------
Net cash provided by operating activities 3,411 69
Investing activities:
Capital expenditures (1,878) (1,379)
Proceeds from sale of business -- 25,958
-------- --------
Net cash provided (used) by investing activities (1,878) 24,579
Financing activities:
Changes in advances payable to Parent 3,932 (25,004)
Dividend to Parent (4,217) --
Changes in bank overdraft (1,247) 523
--------- --------
Net cash (used) in financing activities (1,532) (24,481)
--------- --------
Net increase in cash 1 167
Cash at beginning of period 38 36
--------- --------
Cash at end of period $ 39 $ 203
--------- --------
--------- --------
</TABLE>
See accompanying notes.
19
<PAGE>
Norandex Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. The summary interim financial statements included herein
have been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to
make the information presented not misleading. It is
suggested that these summary consolidated financial
statements be read in conjunction with the Norandex Inc.
consolidated financial statements and notes thereto included
elsewhere in this report.
The interim period information included herein reflects all
adjustments which are, in the opinion of management,
necessary for a fair statement of the results of the
respective interim periods. Results of operations for
interim periods are not necessarily indicative of results to
be expected for an entire year.
2. On August 31, 1994, all of the Company's outstanding common
stock was purchased by Fibreboard Corporation. No
recognition has been given to that transaction in these
interim financial statements.
20
<PAGE>
FIBREBOARD CORPORATION
Pro Forma Combined Income Statement
Reflecting the Acquisition of Norandex Inc.
Year Ended December 31, 1993
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Fibreboard Norandex Pro forma Adjustment Pro forma
Corporation Inc. Adjustments Key Combined
----------- -------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $265,210 $192,631 -- $457,841
Cost of sales (225,214) (135,036) (1,476) (a) (361,726)
----------- -------- --------- --------
Gross margin 39,996 57,595 (1,476) 96,115
Selling and administrative costs (22,120) (40,842) -- (62,962)
Interest expense, net (3,575) (4,055) (1,158) (b) (8,788)
Interest and other income 5,551 2,889 -- 8,440
----------- -------- --------- --------
Income before income taxes and
cumulative effect of change in
accounting principles 19,852 15,587 (2,634) 32,805
Income taxes (8,139) (6,109) (74) (c) (14,322)
----------- -------- --------- --------
Income before cumulative
effect of change in
accounting principles $11,713 $9,478 ($2,708) $18,483
----------- -------- --------- --------
----------- -------- --------- --------
Earnings per share:
Primary $2.66 $4.20
----- -----
----- -----
Fully diluted $2.62 $4.13
----- -----
----- -----
Common equivalent shares outstanding:
Primary 4,396 4,396
Fully diluted 4,470 4,470
</TABLE>
See accompanying notes.
21
<PAGE>
FIBREBOARD CORPORATION
Pro Forma Combined Income Statement
Reflecting the Acquisition of Norandex Inc.
Nine months ended September 30, 1994
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Fibreboard Norandex Pro forma Adjustment Pro forma
Corporation Inc. Adjustments Key Combined
----------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $226,301 $143,990 -- $370,291
Cost of sales (188,185) (100,832) (1,066) (a) (290,083)
---------- -------- --------- ---------
Gross margin 38,116 43,158 (1,066) 80,208
Selling and administrative costs (19,309) (31,014) -- (50,323)
Interest expense, net (2,678) (2,971) (998) (b) (6,647)
Interest and other income,net 21,957 (852) -- 21,105
---------- -------- --------- ---------
Income before income taxes and
cumulative effect of change in
accounting principles 38,086 8,321 (2,064) 44,343
Income taxes (15,508) (2,618) (407) (c) (18,533)
---------- -------- --------- ---------
Income before cumulative
effect of change in
accounting principles $22,578 $5,703 ($2,471) $25,810
---------- -------- --------- ---------
---------- -------- --------- ---------
Earnings per share:
Primary $5.03 $5.75
----- -----
----- -----
Fully diluted $5.02 $5.74
----- -----
----- -----
Common equivalent shares outstanding:
Primary 4,492 4,492
Fully diluted 4,494 4,494
<FN>
Note: The financial results in the Norandex Inc. column above are for the
eight months ended August 31, 1994. The results of Norandex Inc. for
the month of September 1994 are included in the Fibreboard Corporation
data above.
</TABLE>
See accompanying notes.
22
<PAGE>
FIBREBOARD CORPORATION
Pro Forma Combined Income Statement
Reflecting the Acquisition of Norandex Inc.
Nine months ended September 30, 1993
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Fibreboard Norandex Pro forma Adjustment Pro forma
Corporation Inc. Adjustments Key Combined
----------- -------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $199,051 $140,625 -- $339,676
Cost of sales (165,300) (98,438) (1,084) (a) (264,822)
-------- -------- ------- --------
Gross margin 33,751 42,187 (1,084) 74,854
Selling and administrative costs (16,177) (30,887) -- (47,064)
Interest expense, net (2,495) (3,181) (719) (b) (6,395)
Interest and other income 3,527 3,313 -- 6,840
-------- -------- ------- --------
Income before income taxes and
cumulative effect of change in
accounting principles 18,606 11,432 (1,803) 28,235
Income taxes (7,628) (4,640) 38 (c) (12,230)
-------- -------- ------- --------
Income before cumulative
effect of change in
accounting principles $10,978 $6,792 ($1,765) $16,005
-------- -------- ------- --------
-------- -------- ------- --------
Earnings per share:
Primary $2.48 $3.62
----- -----
----- -----
Fully diluted $2.41 $3.51
----- -----
----- -----
Common equivalent shares outstanding:
Primary 4,420 4,420
Fully diluted 4,556 4,556
</TABLE>
See accompanying notes.
23
<PAGE>
FIBREBOARD CORPORATION
Notes to Pro Forma Combined Financial Statements
Reflecting the Acquisition of Norandex Inc.
(Unaudited)
(In 000's)
1. Principles of Presentation:
On August 31, 1994, Fibreboard Corporation acquired all the outstanding
stock of Norandex Inc., a manufacturer and distributor of residential
exterior building products, for approximately $120,000. The allocation
of the purchase price resulted in goodwill of approximately $63,800 which
will be amortized over 30 years.
The unaudited pro forma combined income statements for the year ended
December 31, 1993 and for the nine months ended September 30, 1994 and
1993 give effect to the transaction as though it had occurred on
January 1, 1993, January 1, 1994 and January 1, 1993, respectively. The
pro forma combined income statements are based on the historical income
statements of Fibreboard Corporation for the year ended December 31,
1993 and for the nine months ended September 30, 1994 and 1993 and the
historical income statements of Norandex Inc. for the year ended
December 31, 1993, the eight months ended August 31, 1994 and the nine
months ended September 30, 1993.
The unaudited pro forma combined financial statements give effect to the
acquisition transaction using the purchase method of accounting and the
adjustments described below.
Because the pro forma statements include only the adjustments described
below, they should not be considered indicative of the results that would
have occurred if the combination had been in effect on the dates indicated
or which may be obtained in the future. No attempt has been made to
quantify in the pro forma statements additional costs which may be incurred
as a result of the combination, even though certain costs are expected
to increase. Furthermore, the pro forma statements include the effects of
gains on asset sales and restructuring costs which occurred during the
periods and may not reoccur.
The pro forma statements should be read in conjunction with the
consolidated financial statements of Fibreboard Corporation and of
Norandex Inc.
24
<PAGE>
FIBREBOARD CORPORATION
Notes to Pro Forma Combined Financial Statements
Reflecting the Acquisition of Norandex Inc.
(Unaudited)
(In 000's)
2. Pro Forma Adjustments:
The following adjustments are incorporated in the pro forma combined
income statements:
<TABLE>
<CAPTION>
Inc/(Dec) Reported Pre-Tax Income
---------------------------------
Year Nine Months Ended
Ended -----------------
12/31/93 9/30/94 9/30/93
-------- ------- -------
<S> <C> <C> <C>
a. Adjust depreciation and amortization to (1,476) (1,066) (1,084)
reflect revised book basis in property, plant and
equipment and to amortize goodwill and other
purchased intangibles
b. Adjust interest expense to reflect debt (1,158) (998) (719)
incurred to fund purchase price at rates
which would have been in effect during the
periods under Fibreboard's credit facility in
place at the date of acquisition
c. Adjust income tax provision to consider (164) (407) 38
items a. and b. above and to reflect the
non-deductible nature of acquired goodwill
</TABLE>
The impact of a 1/8% increase in interest rates would reduce pre-tax income
by $150 per year.
25
<PAGE>
Exhibit 23
Consent of Ernst & Young, Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-60412, No. 33-26450 and No. 33-26449)
of Fibreboard Corporation pertaining to the Restated 1988
Employee Stock Option and Rights Plan and the 1988 Employee Stock
Purchase Plan of Fibreboard Corporation of our report dated
September 23, 1994, with respect to the consolidated financial
statements of Norandex Inc. included in the Current Report (Form
8-K/A Amendment No. 1) of Fibreboard Corporation filed with the
Securities and Exchange Commission on November 14, 1994.
Ernst & Young LLP
Nashville, Tennessee
November 14, 1994
