UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
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Commission File Number: 00-19800
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GIBRALTAR PACKAGING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0496290
(State of incorporation) (I.R.S. Employer
Identification Number)
2000 SUMMIT AVENUE
HASTINGS, NEBRASKA 68901-2148
(Address of principal executive offices) (Zip Code)
(402) 463-1366
(Registrant's telephone number, including area code)
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. |X| Yes |_| No
As of March 31, 2000, there were 5,041,544 shares of the Company's
common stock, par value $0.01 per share, issued and outstanding.
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets 1
As of March 31, 2000 and July 3, 1999
Consolidated Statements of Operations for the 2
Three Months Ended March 31, 2000 and 1999
Nine Months Ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows for the 3
Nine Months Ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial 5
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
</TABLE>
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
March 31, July 3,
2000 1999
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 88 $ 198
Accounts receivable (NET OF ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $185 AND $194, RESPECTIVELY) 7,193 7,287
Inventories 7,071 8,027
Deferred income taxes 972 972
Prepaid and other current assets 450 350
----------- -------
Total current assets 15,774 16,834
PROPERTY, PLANT AND EQUIPMENT - NET 18,474 21,182
EXCESS OF PURCHASE PRICE OVER NET
ASSETS ACQUIRED (NET OF ACCUMULATED
AMORTIZATION OF $1,917 AND $1,794,
RESPECTIVELY) 4,421 4,543
OTHER ASSETS (NET OF ACCUMULATED AMORTIZATION
OF $268 AND $191, RESPECTIVELY) 708 779
------------ --------
TOTAL $ 39,377 $ 43,338
============ ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented $ 899 $ 976
Current portion of long-term debt 2,690 2,891
Accounts payable 6,475 6,502
Accrued expenses 2,761 3,001
Income taxes payable 107 107
------------ --------
Total current liabilities 12,932 13,477
LONG-TERM DEBT - Net of current portion 23,345 27,943
DEFERRED INCOME TAXES 1,382 834
OTHER LONG-TERM LIABILITIES 539 638
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Total liabilities 38,198 42,892
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STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000
shares authorized; none issued - -
Common stock, $.01 par value; 10,000,000
shares authorized; 5,041,544 issued and outstanding 50 50
Additional paid-in capital 28,162 28,162
Accumulated deficit (27,033) (27,766)
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Total stockholders' equity 1,179 446
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TOTAL $ 39,377 $ 43,338
============ ==========
</TABLE>
See notes to unaudited consolidated financial statements.
1
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
NET SALES $ 17,414 $ 19,015 $ 51,665 $ 58,180
COST OF GOODS SOLD 14,058 17,098 41,954 50,084
----------- ---------- ----------- -----------
GROSS PROFIT 3,356 1,917 9,711 8,096
----------- ---------- ----------- -----------
OPERATING EXPENSES:
Selling 744 851 2,229 2,594
General and administrative 1,288 1,344 3,752 4,177
Amortization of excess of purchase price over
net assets acquired 42 103 123 309
Restructuring charges - - - 235
Impairment of long-lived assets - 11,861 - 11,861
----------- ---------- ----------- -----------
Total operating expenses 2,074 14,159 6,104 19,176
----------- ---------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 1,282 (12,242) 3,607 (11,080)
OTHER EXPENSE (INCOME):
Interest expense 749 790 2,329 2,495
Other income - net (12) (4) (26) (11)
----------- ---------- ----------- -----------
Other expense - net 737 786 2,303 2,484
----------- ---------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 545 (13,028) 1,304 (13,564)
INCOME TAX PROVISION (BENEFIT) 235 (394) 571 (516)
----------- ---------- ----------- -----------
NET INCOME (LOSS) $ 310 $ (12,634) $ 733 $ (13,048)
=========== ========== =========== ===========
BASIC AND DILUTED PER COMMON SHARE AMOUNTS:
Net Income (Loss) $0.06 $ (2.51) $ 0.15 $ (2.59)
=========== ========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
(basic and diluted) 5,041,544 5,041,544 5,041,544 5,041,544
=========== ========== =========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
2
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
------------------------------------
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 733 $ (13,048)
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Impairment write-down of long-lived assets - 11,861
Depreciation and amortization 1,823 2,248
Gain on sale of property, plant and equipment (25) (1)
Write-down of long-lived assets - 61
Changes in operating assets and liabilities:
Accounts receivable - net (650) 1,152
Inventories (192) 851
Prepaid expenses and other assets (202) (76)
Accounts payable 554 (2,202)
Income taxes payable 548 (821)
Accrued expenses and other liabilities (594) 63
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Net Cash Flows from Operating Activities 1,995 88
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 31 5
Proceeds from sale of Niemand and GB Labels 2,907 -
Purchases of property, plant and equipment (256) (987)
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Net Cash Flows from Investing Activities 2,682 (982)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under revolving
credit facility (621) 2,448
Net principal repayments of long-term debt (4,140) (31,648)
Proceeds from issuance of long-term debt - 30,830
Refinancing costs - (823)
Net activity under capital leases (26) 55
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Net Cash Flows from Financing Activities (4,787) 862
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NET DECREASE IN CASH (110) (32)
CASH AT BEGINNING OF PERIOD 198 114
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CASH AT END OF PERIOD $ 88 $ 82
============= ===========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A. GENERAL
The accompanying unaudited consolidated financial statements of
Gibraltar Packaging Group, Inc. ("Gibraltar" or the "Company") have
been prepared in accordance with Rule 10-01 of Regulation S-X for
interim financial statements required to be filed with the Securities
and Exchange Commission and do not include all information and
footnotes required by generally accepted accounting principles for
complete financial statements. However, in the opinion of management,
the accompanying unaudited consolidated financial statements contain
all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of the Company as of
March 31, 2000, and the results of its operations and cash flows for
the periods presented herein. Results of operations for the nine months
ended March 31, 2000 are not necessarily indicative of the results to
be expected for the full fiscal year. The financial statements should
be read in conjunction with the audited financial statements for the
year ended July 3, 1999 and the notes thereto contained in the
Company's Annual Report on Form 10-K.
B. INVENTORIES
Inventories consisted of the following (IN THOUSANDS):
<TABLE>
<CAPTION>
March 31, July 3,
2000 1999
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<S> <C> <C>
Finished goods $ 4,946 $ 5,060
Work in process 854 913
Raw materials 780 1,699
Manufacturing supplies 491 355
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$ 7,071 $ 8,027
============= ==============
</TABLE>
C. SALE OF GB LABELS AND NIEMAND
In connection with the Company's strategic plan, the Company sold the
operating assets of two of its subsidiaries, GB Labels, Inc. ("GB
Labels") and Niemand Industries, Inc. ("Niemand"). The sale of the
operating assets of GB Labels was effective August 30, 1999. The
Company recorded a pre-tax non-cash charge of $82,000 in the fourth
quarter of fiscal 1999 to write-down the carrying amount of GB Labels'
fixed assets sold to fair value less cost to sell. No gain or loss was
recorded on the sale in fiscal 2000.
Effective February 1, 2000, the Company completed the sale of the
remaining operating assets of Niemand. As a part of the transaction,
the Company has retained the land and buildings and has leased them to
the new owner. The sale of the container business of Niemand was
finalized in the fourth quarter of fiscal 1999. In the fourth quarter
of fiscal 1998, the Company recorded a pre-tax non-cash charge of $14.1
million to write-down the carrying amount of goodwill and fixed assets
of Niemand to estimated fair value less cost to sell. No material gain
or loss was recorded on either sale.
4
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RECENT EVENTS
In connection with the Company's strategic plan to refocus on its core
capabilities in folding cartons, the Company finalized the sale of the
remaining operating assets of Niemand, effective February 1, 2000, to
TEKPAK, Inc., a company established by Niemand's former president.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared to
Three Months Ended March 31, 1999
In the third quarter of fiscal 2000, the Company had net sales of $17.4
million compared with $19.0 million in the corresponding period of
fiscal 1999, a decrease of $1.6 million or 8.4%. An increase in sales
from retained operations of $1.8 million was offset by a reduction in
sales of $3.4 million following the sale of the operating assets of GB
Labels in August 1999 and Niemand in June 1999 and February 2000.
Cost of goods sold decreased $3.0 million or 17.8% to $14.1 million in
the third quarter of fiscal 2000 compared to $17.1 million in the third
quarter of fiscal 1999. The sale of the operating assets of GB Labels
and Niemand accounted for $2.9 million of the decrease. Expressed as a
percentage of net sales, cost of goods sold decreased in the third
quarter of fiscal 2000 to 80.7% compared to 89.9% in the corresponding
period of fiscal 1999. As a result of the Company's cost control
efforts, cost of goods sold as a percentage of net sales continues to
decline for the folding carton divisions. These included a reduction in
labor costs as productivity improved (as measured by throughput per
employee) and the number of employees was reduced, most notably at
RidgePak Corporation (dba "Flashfold Carton") and Standard Packaging &
Printing Corp. ("Standard Packaging"). Margins at Flashfold Carton were
improved when compared to the prior year as a result of lower
depreciation following the impairment of long-lived assets last fiscal
year, and as a result of inventory valuation adjustments in the third
quarter of fiscal 1999. Improvement in product mix added to the
improved margins at Standard Packaging when compared to the prior year.
These cost reductions were partially offset by certain cost increases:
the folding carton divisions incurred price increases in all grades of
paper board, and Standard Packaging experienced higher overhead costs
due to higher than anticipated claims related to its self-funded
medical plan.
Selling expenses decreased $0.2 million or 12.6% to $0.7 million in the
third quarter of fiscal 2000 from $0.9 million in the corresponding
period of fiscal 1999. Expressed as a percentage of net sales, selling
expenses decreased slightly to 4.3% in the third quarter of fiscal
2000, compared with 4.5% in the corresponding period of fiscal 1999.
Selling expenses decreased primarily as a result of reorganizing the
Company's sales force and internalizing previously out-sourced
functions within its marketing programs. An additional $0.1 million in
reductions came from the sale of the operating assets of GB Labels and
Niemand.
5
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
General and administrative expenses remained relatively constant at
$1.3 million for the third quarters of both fiscal 2000 and fiscal
1999. Expressed as a percentage of net sales, general and
administrative expenses increased slightly to 7.4% in the third quarter
of fiscal 2000, compared with 7.1% in the corresponding period of
fiscal 1999. General and administrative expenses at the folding carton
divisions increased slightly, while the sale of the operating assets of
GB Labels and Niemand resulted in a decrease of $0.2 million.
In connection with the Company's strategic plan, the Company sold the
operating assets of GB Labels, effective August 30, 1999. The Company
recorded a pre-tax non-cash charge of $82,000 in the fourth quarter of
fiscal 1999 to write-down the carrying amount of GB Labels' fixed
assets sold to fair value less cost to sell. No gain or loss was
recorded on the sale in fiscal 2000.
Effective February 1, 2000, the Company completed the sale of the
remaining operating assets of Niemand. The sale of the container
business of Niemand was finalized in the fourth quarter of fiscal 1999.
In the fourth quarter of fiscal 1998, the Company recorded a pre-tax
non-cash charge of $14.1 million to write-down the carrying amount of
goodwill and fixed assets of Niemand to estimated fair value less cost
to sell. No material gain or loss was recorded on either sale.
Interest expense decreased $0.1 million or 5.2% to $0.7 million in the
third quarter of fiscal 2000 from $0.8 million in the corresponding
period of fiscal 1999. This is the result of a blend of $5.4 million in
lower average borrowings coupled with slightly higher average interest
rates of 1.5%.
The income tax provision as a percentage of pre-tax income for the
three months ended March 31, 2000 is 43.1%, which differs from the
statutory rate primarily as a result of non-deductible amortization of
excess of purchase price over net assets acquired. The equivalent tax
rate for the corresponding period in the prior year was an income tax
benefit of 3.0%.
Nine Months Ended March 31, 2000 Compared to
Nine Months Ended March 31, 1999
In the first nine months of fiscal 2000, the Company had net sales of
$51.7 million compared with $58.2 million in the corresponding period
of fiscal 1999, a decrease of $6.5 million or 11.2%. An increase in
sales from retained operations of $0.9 million was offset by a
reduction in sales of $7.4 million following the sale of the operating
assets of GB Labels in August 1999 and Niemand in June 1999 and
February 2000.
6
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
Cost of goods sold decreased $8.1 million or 16.2% to $42.0 million in
the first nine months of fiscal 2000 compared to $50.1 million in the
first nine months of fiscal 1999. The sale of the operating assets of
GB Labels and Niemand accounted for $6.7 million of the decrease.
Expressed as a percentage of net sales, cost of goods sold decreased in
the first nine months of fiscal 2000 to 81.2% compared to 86.1% in the
corresponding period of fiscal 1999. As a result of the Company's cost
control efforts, cost of goods sold as a percentage of net sales
continues to decline for the folding carton divisions. These included a
reduction in labor costs as productivity improved (as measured by
throughput per employee) and the number of employees was reduced, most
notably at Flashfold Carton and Standard Packaging. Standard Packaging
continues to benefit from renegotiated prices with suppliers and the
internalization of the die making and ink mixing processes. Improvement
in product mix in the third quarter of fiscal 2000 also added to the
improved margins at Standard Packaging when compared to the prior year.
Margins at Flashfold Carton were improved when compared to the prior
year as a result of lower depreciation following the impairment of
long-lived assets last fiscal year, and as a result of inventory
valuation adjustments in the third quarter of fiscal 1999. These cost
reductions were partially offset by certain cost increases: the folding
carton divisions incurred price increases in all grades of paperboard,
and Standard Packaging realized higher than anticipated self-funded
medical plan claims and increased repair and maintenance costs as a
result of the overall timing of necessary equipment repairs.
Selling expenses decreased $0.4 million or 14.1% to $2.2 million in the
first nine months of fiscal 2000 from $2.6 million in the corresponding
period of fiscal 1999. Expressed as a percentage of net sales, selling
expenses decreased slightly to 4.3% in the first nine months of fiscal
2000, compared with 4.5% in the corresponding period of fiscal 1999.
Selling expenses decreased primarily as a result of reorganizing the
Company's sales force and internalizing previously out-sourced
functions within its marketing programs. An additional $0.2 million in
reductions came from the sale of the operating assets of GB Labels and
Niemand.
General and administrative expenses decreased $0.4 million or 10.2% to
$3.8 million in the first nine months of fiscal 2000 from $4.2 million
in the corresponding period of fiscal 1999. General and administrative
expenses decreased primarily as a result of the sale of the operating
assets of GB Labels and Niemand. Additional cost savings came from the
relocation of the corporate headquarters in the second quarter of
fiscal 1999, and the continued cost reduction efforts of Flashfold
Carton. These reductions were partially offset by increases in payroll
costs at Great Plains and Standard Packaging. Expressed as a percentage
of net sales, general and administrative expenses increased slightly to
7.3% in the first nine months of fiscal 2000, compared with 7.2% in the
corresponding period of fiscal 1999.
Effective August 30, 1999, as discussed in the three-month analysis,
the Company sold the operating assets of GB Labels.
Effective February 1, 2000, as discussed in the three-month analysis,
the Company sold the remaining operating assets of Niemand.
7
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
Interest expense decreased $0.2 million or 6.7% to $2.3 million in the
first nine months of fiscal 2000 from $2.5 million in the corresponding
period of fiscal 1999. This is the result of a blend of $3.7 million in
lower average borrowings coupled with slightly higher average interest
rates of 0.8%.
The income tax provision as a percentage of pre-tax income for the nine
months ended March 31, 2000 was 43.8%, which differs from the statutory
rate primarily as a result of non-deductible amortization of the excess
of purchase price over net assets acquired. The equivalent tax rate for
the corresponding period in the prior year was an income tax benefit of
3.8%.
FINANCIAL CONDITION
The Company's credit facility with First Source Financial LLP ("First
Source") provides for a five year $25 million term loan and a five year
$15 million working capital revolving line of credit ("Revolver"). As
amended on September 29, 1999, the remaining balance of the term loan
is due in monthly installments of $208,333 through July 2000 and
$229,167 through April 2003, with the balance of $10,043,435 due on
July 31, 2003.
The credit facility is secured by a first priority perfected security
interest in and lien on all assets (real and personal, tangible and
intangible) of the Company excluding its Burlington, North Carolina
property.
The Revolver provides for a revolving line of credit under a borrowing
base commitment subject to certain loan availability requirements. Loan
availability under the Revolver may not exceed the lesser of (1) $15
million or (2) the sum of (a) up to 85% of the Company's eligible
accounts receivable plus (b) up to 60% of the Company's eligible
inventory. At no time may the sum of aggregated loan advances
outstanding under the Revolver plus the aggregated amount of letter of
credit guarantees then extended exceed loan availability.
As of March 31, 2000, all outstanding letters of credit were guaranteed
by First Source. The Company pays a letter of credit fee of 2.75% to
guarantee availability under the Revolver. Outstanding letters of
credit at March 31, 2000 amounted to $222,000 and relate to prior
years' workman's compensation insurance policies.
The First Source credit facility contains certain restrictive covenants
including financial covenants related to net worth, minimum interest
coverage ratio, capital expenditures, debt ratio and fixed charge
coverage. As of March 31, 2000, the Company was in compliance with all
financial covenants.
The Revolver currently bears interest at First Source's prime rate plus
1.25%, while the term loan currently bears interest at First Source's
prime rate plus 1.75%. The Company also pays a commitment fee of 0.5%
on the unused portion of the Revolver. First Source's prime rate was
9.0% at March 31, 2000.
8
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
At March 31, 2000, the Company had working capital of $2.8 million, as
compared to $3.4 million at July 3, 1999. Historically, the Company's
liquidity requirements have been met by a combination of funds provided
by operations and its revolving credit agreements. Funds provided by
operations during the nine months ended March 31, 2000 were $2.0
million compared with $0.1 million in the corresponding period in
fiscal 1999. This increase can primarily be attributed to higher
profitability during the nine months ended March 31, 2000 when compared
to the corresponding period in fiscal 1999. The Company had available
to it unused borrowing capacity of $1.8 million as of March 31, 2000.
During the nine months ended March 31, 2000, capital expenditures
totaled $0.3 million compared with $1.0 million in the corresponding
period in fiscal 1999, and consisted primarily of additions to
machinery and equipment and capital improvements. The Company makes
capital improvements to improve efficiency and product quality and
periodically upgrades its equipment by purchasing or leasing new or
previously used equipment.
The Company's current strategy is to continue to leverage the success
of the Company's Great Plains division to improve the performance of
the Company's other folding carton divisions. The Company has
identified and is pursuing opportunities for profit enhancement at both
Standard Packaging and Flashfold Carton. As part of the strategy of
focusing on folding cartons, the Company has sold the operating assets
of two of its subsidiaries, GB Labels and Niemand. GB Labels was sold
in August 1999, while Niemand was divested in two stages - the
container division in June 1999 and the remainder in February 2000.
Under the current strategy, management believes that future funds
generated by operations and borrowings available under its credit
facility with First Source will be sufficient to meet working capital
and capital expenditure requirements in the near term.
FORWARD-LOOKING STATEMENTS
Statements that are not historical facts, including statements about
the Company's confidence in its prospects and strategies, are
forward-looking statements that involve risks and uncertainties. These
risks and uncertainties include, but are not limited to: (1) the
Company's ability to execute its business plan to leverage the success
of the Company's Great Plains division; (2) market acceptance risks,
including whether or not the Company will be able to successfully gain
market share against competitors, many of which have greater financial
and other resources than the Company, and the continuing trend of
customers to increase their buying power by consolidating the number of
vendors they maintain; (3) manufacturing capacity constraints,
including whether or not as the Company increases its sales it will be
able to successfully integrate its new customers into its existing
manufacturing and distribution system; (4) the introduction of
competing products by other firms; (5) pressure on pricing from
competition or purchasers of the Company's products; (6) whether the
Company will be able to pass on to its customers price increases for
paper and paperboard products; (7) continued stability in other raw
material prices, including oil-based resin and plastic film; (8)
whether or not management will be successful in sufficiently improving
sales and profitability at Flashfold Carton and Standard
9
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
Packaging; (9) the impact of government regulation on the Company's
manufacturing, including whether or not additional capital expenditures
will be needed to comply with applicable environmental laws and
regulations as the Company's production increases; (10) the Company's
ability to continue to comply with the restrictive covenants in its
credit facility or to obtain waivers if it is not in compliance in the
future, and (11) whether Anthem Health Plans will file a counterclaim
against the Company. Investors and potential investors are cautioned
not to place undue reliance on these forward-looking statements, which
reflect the Company's analysis only as of the date of this report. The
Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that
arise after the date of this report. These risks and others that are
detailed in this Form 10-Q and other documents that the Company files
from time to time with the Securities and Exchange Commission,
including its annual report on Form 10-K and any current reports on
Form 8-K and must be considered by any investor or potential investor
in the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk is fluctuation in interest rates. All
of the Company's debt at March 31, 2000 was at variable interest rates.
A hypothetical 10% change in interest rates would have had a $0.2
million impact on interest expense for the nine months ended March 31,
2000.
10
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is a party to certain lawsuits and
administrative proceedings that arise in the conduct of its business.
While the outcome of these lawsuits and proceedings cannot be predicted
with certainty, management believes that, if adversely determined, the
lawsuits and proceedings, either singularly or in the aggregate, would
not have a material adverse effect on the financial condition, results
of operations or net cash flows of the Company.
On April 28, 1999, the Company filed a lawsuit captioned Gibraltar
Packaging Group, Inc. v. Anthem Health Plans, d.b.a. Anthem Blue Cross
and Blue Shield of Connecticut ("Anthem"), Case No. 3:99DV00785, in the
United States District Court for the District of Connecticut. The
Company is seeking damages for Anthem's alleged breach of a contract
for health insurance for employees of the Company. While the Company
initiated this action, it anticipates that Anthem will file a
counterclaim for unpaid premiums. The amount of the anticipated
counterclaim is presently unknown, and there can be no assurances that
the outcome of a potential counterclaim would not have an adverse
impact on the Company. In December 1999, the parties participated in
settlement mediation. It was determined that more information be
gathered through depositions, which are ongoing. We anticipate a second
settlement mediation will be scheduled before the end of the first
quarter of fiscal 2001.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Gibraltar's stockholders in the
quarter ended March 31, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
None
11
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
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.
GIBRALTAR PACKAGING GROUP, INC.
Date: May 15, 2000 By: /s/ John W. Lloyd
------------ ------------------------------------------
John W. Lloyd, Chief Financial Officer
Signing on behalf of the registrant and
as principal financial officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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0
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