<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(MARK ONE)
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________________ TO ___________________
COMMISSION FILE NO. 0-016951
FIBREBOARD CORPORATION
(exact name of registrant as specified in charter)
Delaware 94-0751580
(State or other juris- (I.R.S. Employer Iden-
diction of incorporation) tification No.)
2121 North California Blvd., Suite 560, Walnut Creek, CA 94596
(Address of principal executive offices)
(510) 274-0700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address or 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 XXX . No .
As of the close of business on November 10, 1995, the registrant had
outstanding 8,395,688 shares of common stock.
<PAGE>
The registrant hereby undertakes to amend the following portions of its
previously filed Quarterly Report on From 10-Q for the quarter ended
September 30, 1995 in the form attached hereto:
Part I, Item 1 -- Financial Statements
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 15, 1995 By: /s/ Garold E. Swan
-------------------
Garold E. Swan
Vice President and Controller
2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following unaudited financial statements are filed as part of this
report:
Financial Statement Title Page
- -------------------------
Consolidated statements of income for the three and nine
month periods ended September 30, 1995 and 1994 4
Consolidated balance sheets as of September 30, 1995
and December 31, 1994 5
Consolidated statements of cash flows for the nine
months ended September 30, 1995 and 1994 7
Notes to consolidated financial statements 9
On September 25, 1995, Fibreboard sold substantially all of its wood
products related assets. The accompanying financial statements have
been prepared, and prior periods have been restated, to reflect wood
products as a "discontinued operation."
3
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in Thousands Except Per Share)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $102,284 $38,707 $277,640 $92,584
Cost of sales 74,942 28,949 201,104 66,115
-------- ------- -------- -------
Gross margin 27,342 9,758 76,536 26,469
Selling and administrative expenses 19,581 7,396 57,547 15,929
Asbestos-related items -- -- (4,000) --
-------- ------- -------- -------
Operating income 7,761 2,362 22,989 10,540
Interest expense (2,078) (1,145) (6,007) (2,678)
Interest and other income 566 1,307 1,450 3,099
-------- ------- -------- -------
Income from continuing operations
before income taxes 6,249 2,524 18,432 10,961
Income taxes relating to
continuing operations (2,502) (1,106) (7,373) (4,523)
-------- ------- -------- -------
Income from continuing operations 3,747 1,418 11,059 6,438
Discontinued operations:
Income from operations,
net of tax 709 376 3,392 4,919
Gain on surplus asset sales -- 11,221 -- 11,221
Gain on disposal, net of tax 75,897 -- 75,897 --
-------- ------- -------- -------
Net Income $80,353 $13,015 $90,348 $22,578
-------- ------- -------- -------
-------- ------- -------- -------
Earnings per share -- primary(1)
Income from continuing operations $0.42 $0.16 $1.23 $0.71
Discontinued operations:
Income from operations .08 .04 .37 .55
Gain on surplus asset sales -- 1.25 -- 1.25
Gain on disposal 8.44 -- 8.42 --
-------- ------- -------- -------
Net Income per share $8.94 $1.45 $10.02 $2.51
-------- ------- -------- -------
-------- ------- -------- -------
Earnings per share -- fully diluted(1)
Income from continuing operations $0.42 $0.16 $1.22 $0.71
Discontinued operations:
Income from operations .08 .04 .38 .55
Gain on surplus asset sales -- 1.25 -- 1.25
Gain on disposal 8.43 -- 8.40 --
-------- ------- -------- -------
Net Income per share $8.93 $1.45 $10.00 $2.51
-------- ------- -------- -------
-------- ------- -------- -------
Common equivalent shares (thousands)
Primary 8,991 8,984 9,016 8,984
Fully diluted 8,998 8,984 9,036 8,988
</TABLE>
(1) Earnings Per Share and Common Equivalent Shares outstanding have been
restated to reflect a 2-for-1 stock split effective May 19, 1995.
4
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 147,271 $ 8,842
Receivables 46,684 31,213
Current portion of notes receivable 6,188 1,317
Inventories 50,568 40,272
Prepaid expenses 2,430 1,649
Deferred income taxes 10,766 9,270
---------- --------
263,907 92,563
Net assets of discontinued operations -- 109,242
---------- --------
Total current assets 263,907 201,805
Property, plant and equipment, at cost:
Land and improvements 12,725 13,745
Buildings 28,830 28,451
Machinery and equipment 76,046 72,243
Construction in progress 1,791 620
---------- --------
119,392 115,059
Accumulated depreciation (47,039) (40,973)
---------- --------
Net property, plant and equipment 72,353 74,086
Notes receivable 6,489 12,451
Goodwill 67,328 64,623
Other assets 17,460 15,212
---------- --------
Total operating assets 427,537 368,177
Cash restricted for asbestos costs 2,279 1,893
Asbestos costs to be reimbursed 837,598 810,454
---------- --------
Total assets $1,267,414 $1,180,524
---------- --------
---------- --------
</TABLE>
5
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,105 $ 2,045
Accounts payable and accrued liabilities 147,747 53,239
Reserve for asbestos-related costs 2,700 2,700
---------- ----------
Total current liabilities 151,552 57,984
Long-term debt 6,989 101,293
Reserve for asbestos-related costs 9,002 14,584
Other long-term liabilities 21,334 24,109
Deferred income taxes 1,822 19,440
---------- ----------
Total operating liabilities 190,699 217,410
Asbestos claims settlements:
Current -- 6,878
Long-term 822,021 788,487
---------- ----------
Total asbestos claims settlements 822,021 795,365
Long-term debt associated with asbestos 23,378 22,360
---------- ----------
Total liabilities 1,036,098 1,035,135
Commitments & contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 3,000,000
shares authorized; none issued -- --
Common stock, $.01 par value, 15,000,000
shares authorized; 8,570,576 and
4,224,225 shares issued 85 42
Additional paid-in capital 76,917 76,166
Retained earnings 164,100 73,752
Minimum pension liability adjustment (4,571) (4,571)
Treasury stock, at cost, 215,700 shares (5,215) --
---------- ----------
Total stockholders' equity 231,316 145,389
---------- ----------
Total liabilities and stockholders'
equity $1,267,414 $1,180,524
---------- ----------
---------- ----------
</TABLE>
6
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 90,348 $ 22,578
Adjustments to reconcile income to net cash
provided by continuing operating activities:
Income of discontinued operations (79,289) (16,140)
Depreciation and amortization 8,755 4,096
Deferred income taxes (76) 154
Deferred long term benefits 750 (456)
Compensation for stock grants 224 113
Gain on sale of assets (236) (2,080)
Asbestos-related reserve (4,000) --
Change in working capital (8,372) 4,305
--------- -------
Net cash provided by continuing operations 8,104 12,570
Discontinued operations:
Income of discontinued operations 79,289 16,140
Depreciation, amortization and depletion 3,057 3,069
Gain on sale of assets (76,427) (19,190)
Proceeds from asset sales 241,820 24,033
Net asset change 3,442 25,295
--------- -------
Net cash provided by discontinued operations 251,181 49,347
Cash Flows From Investing Activities:
Non-cash net assets of acquired operations (13,896) (120,115)
Proceeds from asset sales -- 1,990
Property, plant and equipment changes (4,248) (4,640)
Reduction in notes receivable 1,232 1,336
Decrease (increase) in other assets (2,396) 284
--------- -------
Net cash used by investing activities (19,308) (121,145)
Cash Flows From Financing Activities:
New borrowings 22,000 93,000
Repayment of debt (117,244) (29,887)
Purchase of treasury stock (5,215) --
Employee stock plan transactions 473 38
--------- -------
Net cash provided (used) by financing activities (99,986) 63,151
Net cash provided by business activities 139,991 3,923
</TABLE>
7
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
----------------------
1995 1994
--------- --------
<S> <C> <C>
Cash Flows From Asbestos Related Activities:
Receipts from insurers $ 4,655 $ 5,360
Structured settlement program activity 35 472
Other asbestos-related cash transactions (5,866) (5,080)
Change in cash restricted for asbestos costs (386) (2,399)
--------- ---------
Net cash used by asbestos-related activities (1,562) (1,647)
--------- ---------
Net increase in cash 138,429 2,276
Cash at beginning of period 8,842 5,322
--------- ---------
Cash at end of period $147,271 $ 7,598
========= =========
Cash Paid During the Period For:
Interest $ 6,143 $ 1,913
Income taxes 5,061 6,054
Non-Cash Items:
Increase in asbestos claims settlements 93,658 123,363
Payments made to asbestos claimants on
Fibreboard's behalf 67,037 224,430
Increase in receivables from sales of
real estate 236 2,949
</TABLE>
8
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts in Thousands)
(Unaudited)
1. The 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 Fibreboard management
believes that the disclosures are adequate to make the information
presented not misleading. These interim financial statements and notes
should be read in conjunction with the financial statements and the notes
thereto included in Fibreboard's 1994 Annual Report and Form 10-K.
Interim financial statements are by necessity somewhat tentative.
Judgments are used to estimate the amounts recorded each quarter for
items that are normally determinable only on an annual basis. For
example, numerous items relating to employee benefits are determined
annually, with hours worked determining pension plan contributions for the
year, eligibility for vacations, etc. Further, all inventory quantities
are verified by physically counting the units on hand at least once a
year. For those inventories not counted at the end of the quarter,
quantities are determined using measured sales and production data for the
period.
The interim period financial information included herein reflects all
adjustments of a normal and recurring nature which are, in the opinion of
Fibreboard management, necessary for a fair presentation 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. Net earnings per common and common equivalent share are calculated using
the weighted average number of common shares outstanding during the period
plus the net additional number of shares which would be issuable upon the
exercise of stock options, assuming Fibreboard used the proceeds received
to purchase additional shares at market value. All per share amounts have
been restated to reflect the impact of a two-for-one common stock split on
May 19, 1995.
3. Inventories are valued at the lower of cost (first in, first out) or
market. Inventory costs include material, labor and operating overhead.
Operating supplies are priced at average cost. Inventories are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
<S> <C> <C>
Finished Goods $42,695 $32,914
Raw Materials 6,844 6,770
Supplies 1,029 588
------------ -----------
Total Inventories $50,568 $40,272
------------ -----------
------------ -----------
</TABLE>
4. Fibreboard's ability to continue to operate in the normal course of
business is dependent upon its ongoing capability to fund asbestos-related
defense and indemnity costs. Prior to 1972, Fibreboard manufactured
insulation products containing asbestos. Fibreboard has since been named
as a defendant in many thousands of personal injury claims for injuries
allegedly caused by asbestos exposure and in asbestos-in-buildings actions
involving many thousands of buildings.
9
<PAGE>
The following tables illustrate asbestos-related personal injury claims
activity for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
New claims received 17,000 1,800
Claims disposed
Settled 10,811 14,631
Dismissed 3,428 946
"Green Card" settlements (1) 60 107
Judgments (2) -- 3
Adjustments (3) -- --
Average settlement amount per claim
settled--(4)
pre-1959 claims $ 10 $ 8
post-1959 claims 8 7
Claims pending at end of period (5) 44,600 43,900
</TABLE>
(1) Under Green Card Settlements, there is no determination of liability
by Fibreboard to a claimant. Instead, Fibreboard waives the statute
of limitations should a claimant develop an asbestos-related
impairment in the future.
(2) Judgments represent defense verdicts in favor of Fibreboard,
plaintiff verdicts where the net amount payable by Fibreboard is
zero after applying prior settlement amounts or plaintiff verdicts
where the judgment has been paid. Additional judgments favoring
plaintiffs have been entered. Fibreboard is appealing these
judgments. The amount of such judgments is included in Fibreboard's
overall liability estimate.
(3) Often, multiple claims are filed for the same injury. It is often
not possible to fully identify duplicate claims until the claims are
prepared for trial. Fibreboard has an ongoing program to identify
duplicate claims and remove them from the claims database, and
anticipates additional future adjustments.
(4) For claims where the initial year of exposure is known.
(5) Of the claims pending at September 30, 1995 27,200 were filed on or
after August 27, 1993, and will be covered by the Global Settlement
if approved.
-------------------
During 1993, Fibreboard entered into a settlement agreement with
Continental Casualty Company (Continental) and Pacific Indemnity Company
(Pacific) (the Insurance Settlement). In addition, Fibreboard,
Continental, Pacific and plaintiffs' representatives entered into a
settlement agreement (the Global Settlement). These agreements are
interrelated. Final court approval of the agreements is required. The
trial court proceeding to determine the reasonableness and fairness of the
settlements has concluded in the United States District Court for the
Eastern District of Texas with the court entering judgments approving both
settlements in July, 1995. Both judgments have been appealed. The fifth
circuit court of appeals has scheduled oral argument of the issues in
December 1995. These appeals will delay final approval of the settlements
until 1996 or later.
If both the Global Settlement and Insurance Settlement are approved,
Fibreboard believes its existing and future personal injury asbestos
liabilities will be resolved through insurance resources and existing
corporate reserves. Fibreboard will contribute $10,000 toward a $1,535,000
settlement trust, which it will obtain from other remaining insurance
sources and existing reserves. The Home Insurance Company paid $9,892 into
an escrow account on behalf of Fibreboard during the first quarter of 1995,
in satisfaction of an earlier settlement agreement. Fibreboard is
obligated to pay $245, which includes interest from the settlement date to
December 31, 1994, into the escrow account if the Global Settlement is
approved. The remainder of the trust will be funded by Continental and
Pacific. The insurers have placed $1,525,000 in an escrow account pending
court approval of the settlements. The balance of the escrow account was
$1,560,633 at December 31, 1994 after payment of interim
10
<PAGE>
expenses associated with the Global Settlement. The trust will be used to
compensate "future" plaintiffs, defined as those plaintiffs who had not
filed a claim against Fibreboard before August 27, 1993. Such future
plaintiffs only source of compensation will be the trust, as an injunction
will be entered prohibiting future claims against Fibreboard or the
insurers.
If the Global Settlement is not approved, but the Insurance Settlement is
approved, the insurers will instead provide Fibreboard with up to
$2,000,000 to resolve pending and future claims and will pay the deferred
payment portion of existing settled claims.
While Fibreboard is optimistic, there is no assurance final court approval
of either the Global Settlement or the Insurance Settlement can be
obtained. If neither the Global Settlement nor the Insurance Settlement is
approved, the parties will be bound by the outcome of the insurance
coverage litigation, unless other settlements are reached.
In the event the settlements discussed above are not approved, Fibreboard
believes it has substantial insurance coverage for asbestos-related defense
and indemnity costs. Fibreboard's disputes with Continental and Pacific
have been the subject of litigation which began in 1979. Trial court
judgments rendered in 1990 give Fibreboard virtually unlimited insurance
coverage for asbestos-related personal injury claims where the initial
exposure to asbestos occurred prior to March 1959. Under the judgments,
these insurers can be required to pay up to $500 for each occurrence
(defined as each individual claim) with no limitation on the aggregate
number of occurrences.
The insurers appealed to the California Court of Appeal. Among other
issues, Continental disputed the definition of an occurrence under its
policy as well as the trigger and scope of coverage as determined by the
trial court, while Pacific argued that its policy contained an aggregate
limit as well as disputing the trigger and scope of coverage issues. In
November 1993, the Court of Appeal issued its ruling on the trigger and
scope of coverage issues, confirming the favorable trial court judgments,
except the court held the period for coverage would begin at the time of
exposure to Fibreboard's asbestos products rather than at the time of
exposure to any company's asbestos product, with the presumption that these
periods are the same. At the request of Fibreboard, Continental and
Pacific, the Court of Appeal withheld its ruling on the remaining issues
while the parties seek approval of the Global and Insurance Settlements.
If the Global and/or Insurance Settlements are ultimately approved,
Fibreboard and its insurers will seek to dismiss the insurance coverage
litigation.
In January 1994 the California Supreme Court granted review of the decision
of the Court of Appeal, but withheld further action until its decision in
another case (MONTROSE CHEMICAL CORP. V. ADMIRAL INS. CO.) then pending
before the Supreme Court was finalized. On July 3, 1995, the Supreme Court
issued a decision in MONTROSE CHEMICAL confirming a trigger of coverage
consistent with the trigger the Court of Appeal applied to the Fibreboard
policies.
By an order of October 19, 1995 the Supreme Court transferred the
Fibreboard case back to the Court of Appeal which, after receiving
supplemental briefs that are to be submitted by November 20, 1995, and
perhaps conducting further argument, will review its decision on trigger
and other issues in light of MONTROSE CHEMICAL and any other considerations
the Court of Appeal deems relevant. After the Court of Appeal reissues a
decision, the parties can again petition for review to the California
Supreme Court.
Fibreboard has entered into an interim agreement with Continental under
which Continental agreed to provide a full defense to Fibreboard on
pre-1959 claims and make certain funds available as needed to pay currently
due Structured Settlement Obligations and other personal injury defense
costs for which Fibreboard does not otherwise have insurance available
during the period pending final approval of the Global and/or Insurance
Settlement, or if neither is approved, through the ultimate conclusion of
the insurance coverage appeal, however long that may take. In exchange for
the benefits provided under this agreement, Fibreboard agreed not to settle
additional pre-1959 personal injury claims without Continental's consent.
If neither the Global Settlement nor the Insurance Settlement are approved
and Fibreboard prevails in the appeal of the insurance coverage litigation,
Continental has agreed to provide Fibreboard with $315,000 to $425,000 to
resolve personal injury claims alleging first exposure to asbestos after
March 1959, less any amounts Fibreboard recovers from the Pacific
settlement described below. Continental would also continue to have
responsibility for all pre-1959 personal injury claims against Fibreboard
up to $500 per claim.
11
<PAGE>
In March 1992, Fibreboard and Pacific entered into a settlement agreement
(the Pacific Agreement). If the Global Settlement or Insurance Settlement
is approved, the Pacific Agreement will be of no effect. If neither of the
settlements is approved, the Pacific Agreement establishes amounts payable
to Fibreboard if the trial court judgments are upheld. Fibreboard received
$10,000 upon signing the agreements and received an additional $10,000
during 1993. In addition, if the judgments are affirmed on appeal,
Fibreboard will receive from $80,000 to $105,000 to be used for claims
costs for which it does not otherwise have insurance.
In the event the trigger and scope of coverage judgments are reversed on
appeal, Pacific will owe Fibreboard nothing and will have a right to
repayment of interim funds previously advanced.
Fibreboard believes amounts available under the settlements discussed above
will be adequate to fund defense and indemnity costs until the insurance
coverage appeal is concluded, whether as a result of the final approval of
the Global and/or Insurance Settlements or the final resolution of the
insurance coverage litigation.
At September 30, 1995, Fibreboard was a defendant in 9
asbestos-in-buildings claims. To date, Fibreboard has successfully
defended these claims or settled the claims for modest amounts compared to
the damages sought. Based on its experience to date, Fibreboard believes
the ultimate resolution of asbestos-in-buildings claims will not have a
material adverse effect on its financial condition.
Fibreboard is also litigating with its insurance carriers and believes the
total limits of insurance policies in effect from 1932 to 1985 which may
provide coverage for asbestos-in-buildings claims aggregate $390,000
(including the settlements discussed below), which is in addition to the
personal injury insurance coverage and does not include additional policies
which contain no aggregate limit. The insurers dispute coverage, although
to date substantially all of Fibreboard's costs of defending
asbestos-in-buildings claims have been paid by its primary carriers.
Fibreboard has reached final settlements with four of its primary insurers
and several of its excess level insurers. The final settlements confirm
more than $295,000 of insurance as needed to defend and dispose of
asbestos-in-buildings claims. Substantially all of the confirmed insurance
remains available.
The asbestos-in-buildings insurance coverage trial has been continued. No
date has been set for the trial to recommence. Fibreboard is continuing
settlement discussions with the remaining insurers. Fibreboard cannot
predict whether such discussions will result in settlements.
At the end of 1991, Fibreboard attempted to quantify its liability for
asbestos-related personal injury claims then pending and anticipated to be
received through the end of the decade. There are many opportunities for
error in such an exercise. Assumptions concerning the number of claims to
be received, the disease mix of pending and future claims and projections
of defense and indemnity costs may or may not prove correct. Fibreboard's
assumptions are based on its historical experience, modified as appropriate
for anticipated demographic changes or changes in the litigation
environment.
Notwithstanding the inherent risk of significant error in such a
calculation, Fibreboard estimated the amount necessary to defend and
dispose of asbestos-related personal injury claims pending at December 31,
1991 and anticipated through the end of the decade plus the costs of
prosecuting its insurance coverage litigation, would aggregate $1,610,000.
Because of the dynamic nature of this litigation, it is more difficult to
estimate how many personal injury claims will be received after 1999 as
well as the costs of defending and disposing of those future claims.
Consequently, Fibreboard's estimated liability contains no amounts for
personal injury claims received after the end of the decade, although it is
likely additional claims will be received thereafter. In addition, the
projected liability does not include any liability for
asbestos-in-buildings claims, if any, as Fibreboard believes that any
liability for such claims is not subject to reasonable estimation.
Fibreboard determined it was probable that it would ultimately receive
insurance proceeds of $1,584,000 for the defense and disposition of the
claims quantified above. Fibreboard's opinion was based on its
understanding of the disputed issues, the financial strength of the
insurers and the opinion of outside legal counsel regarding the outcome of
the litigation. As a
12
<PAGE>
result, Fibreboard recorded a liability, net of anticipated insurance
proceeds, of $26,000 at December 31, 1991, representing its best estimate
of the unreimbursed cost of resolving personal injury claims then pending
and anticipated through the remainder of the decade as well as the costs
of prosecuting the insurance coverage litigation. The balance of the net
liability was $11,702 at September 30, 1995 after a $4,000 adjustment
discussed below.
Fibreboard continues to believe it is probable that it will ultimately
receive insurance proceeds of $1,584,000 for the defense and disposition of
the asbestos-related personal injury claims quantified above. Although
Fibreboard, its insurers and plaintiffs' representatives entered into the
Insurance and Global Settlements discussed above, Fibreboard does not
believe these settlements impact its estimate of liability through the end
of the decade. However, during the second quarter of 1995, Fibreboard
recorded a $4,000 reversal of previously established reserves for
anticipated unreimbursable costs as a result of a reduction in its estimate
of the amounts which will be needed for such purpose in the event neither
the Global nor Insurance Settlements are finally approved. Fibreboard will
continue to reevaluate its estimates and will make adjustments to the
extent dictated by changes in the personal injury litigation.
5. Information about Fibreboard's industry segments is set forth below:
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
1995 1994 1995 1994
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Outside sales
Building products:
Norandex $ 80,910 $ 23,718 $ 197,309 $ 23,718
Industrial insulation products 13,880 12,310 43,954 39,275
-------- -------- --------- --------
Total building products 94,790 36,028 241,263 62,993
Resort operations 7,494 2,679 36,377 29,591
-------- -------- --------- --------
Consolidated $102,284 $ 38,707 $277,640 $ 92,584
-------- -------- --------- --------
-------- -------- --------- --------
Operating profit (loss)
Building products:
Norandex $ 7,681 $ 2,862 $13,286 $ 2,862
Industrial insulation products 1,251 1,577 6,049 5,185
-------- ------- ------- -------
Total building products 8,932 4,439 19,335 8,047
Resort operations 1,928 (780) 9,572 7,147
-------- ------- ------- -------
Total operations 10,860 3,659 28,907 15,194
Unallocated expense (3,099) (1,297) (5,918) (4,654)
Interest expense (2,078) (1,145) (6,007) (2,678)
Interest and other income 566 1,307 1,450 3,099
-------- ------- ------- -------
Income before income taxes $ 6,249 $ 2,524 $18,432 $10,961
-------- ------- ------- -------
-------- ------- ------- -------
</TABLE>
Norandex was purchased August 31, 1994.
6. In May, 1995, Fibreboard acquired eight building products distribution
centers in Texas, Nebraska and Colorado for $13,448. In October, 1995,
Fibreboard acquired six additional distribution centers in Florida,
Alabama and Mississippi for approximately $5,620 and in November, 1995,
acquired eight distribution centers in Arkansas, Alabama and Louisiana for
approximately $3,170.
7. On May 31, 1995, Fibreboard replaced Resort Operation's two revolving
credit facilities and term loan with a $30,000 reducing revolving
facility with interest at LIBOR plus 100 to 125 basis points. Proceeds
may be used for operating purposes and acquisitions. Maximum availability
reduces annually and matures on May 31, 2000. Fibreboard is negotiating
to increase availability under this facility to $40,000. On October 12, 1995,
Fibreboard finalized a five-year, $125,000 revolving facility, with
interest at LIBOR plus 40 to 92.5 basis points, to be used for operating
purposes and acquisitions. The new facility matures on September 20,
2000. Fibreboard is currently negotiating a Canadian credit facility to
support its planned acquisition of a Canadian manufacturer of vinyl siding
products.
13
<PAGE>
8. On September 25, 1995, Fibreboard sold substantially all of its wood
products related assets for $245,000 in cash, subject to a number of
purchase price adjustments estimated to aggregate $5,700 and
recorded a gain of $75,897 net of income taxes. Retained balances
primarily include notes receivable from prior asset sales, a former plant
site and nominal timberlands adjacent to Fibreboard's Northstar Resort
facility. Fibreboard also retained liabilities for workers compensation
claims that arose prior to September 25, and for future environmental
costs related to wood products activities prior to the sale.
9. In October, 1995, Fibreboard acquired the assets of a ski and golf resort
in southern California for approximately $19,700 in cash. Fibreboard is
currently negotiating to acquire a Canadian vinyl siding manufacturer for
$35,000 to $40,000 and expects to close the transaction during the fourth
quarter of 1995.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FIBREBOARD'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31,
1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 147,271
<SECURITIES> 0
<RECEIVABLES> 54,313
<ALLOWANCES> 1,441
<INVENTORY> 50,568
<CURRENT-ASSETS> 263,907
<PP&E> 119,392
<DEPRECIATION> 47,039
<TOTAL-ASSETS> 1,267,414
<CURRENT-LIABILITIES> 151,552
<BONDS> 6,989
<COMMON> 85
0
0
<OTHER-SE> 231,231
<TOTAL-LIABILITY-AND-EQUITY> 1,267,414
<SALES> 277,640
<TOTAL-REVENUES> 277,640
<CGS> 201,104
<TOTAL-COSTS> 201,104
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 536
<INTEREST-EXPENSE> 6,007
<INCOME-PRETAX> 18,432
<INCOME-TAX> 7,373
<INCOME-CONTINUING> 11,059
<DISCONTINUED> 79,289
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,348
<EPS-PRIMARY> 10.02
<EPS-DILUTED> 10.00
</TABLE>
