<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended JUNE 30, 1999 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 number 0-20231
FIBERMARK, INC.
(Exact name of registrant as specified in its charter)
Delaware 82-0429330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
161 WELLINGTON ROAD
P.O. BOX 498
BRATTLEBORO, VERMONT 05302
(802) 257-0365
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
<TABLE>
<CAPTION>
Class Outstanding
<S> <C>
Common Stock June 30, 1999
$.001 par value 7,715,485
</TABLE>
<PAGE>
FIBERMARK, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Page
----
<S> <C>
ITEM 1. Financial Statements:
Consolidated Statements of Income 3
Three Months and Six Months Ended
June 30, 1999 and 1998
Consolidated Balance Sheets 4
June 30, 1999 and December 31, 1998
Consolidated Statements of Cash Flows 5
Six Months Ended
June 30, 1999 and 1998
Notes To Financial Statements 6-9
ITEM 2. Management's Discussion and Analysis of Financial 10-14
Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II. OTHER INFORMATION
ITEM 5. Other Information 14
ITEM 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
<PAGE>
FIBERMARK, INC.
Consolidated Statements of Income
Three Months and Six Months Ended June 30, 1999 and 1998
(In thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 75,982 $ 78,591 $151,888 $158,542
Cost of sales 60,383 63,824 121,013 128,099
-------- -------- -------- --------
Gross profit 15,599 14,767 30,875 30,443
Selling, general and administrative expenses 5,696 5,665 11,460 11,184
-------- -------- -------- --------
Income from operations 9,903 9,102 19,415 19,259
Other (income) expense, net 80 53 182 115
Interest expense 2,723 2,582 5,229 5,136
-------- -------- -------- --------
Income before income taxes 7,100 6,467 14,004 14,008
Income tax expense 2,890 2,716 5,740 5,906
-------- -------- -------- --------
Net income $ 4,210 $ 3,751 $ 8,264 $ 8,102
======== ======== ======== ========
Basic earnings per share $ 0.54 $ 0.48 $ 1.07 $ 1.05
======== ======== ======== ========
Diluted earnings per share $ 0.53 $ 0.46 $ 1.04 $ 1.00
======== ======== ======== ========
Average Basic Shares Outstanding 7,727 7,751 7,759 7,727
Average Diluted Shares Outstanding 7,925 8,096 7,946 8,100
</TABLE>
(The accompany notes are an integral part of the
consolidated financial statements.)
<PAGE>
FIBERMARK, INC.
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
Unaudited Audited
June 30, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 27,634 $ 33,804
Accounts receivable 38,493 31,518
Inventories 47,876 48,517
Other 869 700
Prepaid expense 307 204
Deferred income taxes 4,477 4,612
--------- ---------
Total current assets 119,656 119,355
Property, plant and equipment, net 126,688 128,375
Goodwill, net 48,008 49,692
Other intangible assets, net 8,027 8,383
Prepaid expense 1,226 1,176
Other long-term assets 1,276 1,433
Other pension assets 2,817 2,817
TOTAL ASSETS $ 307,698 $ 311,231
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion long-term debt $ 3,171 $ 3,598
Accounts payable 14,381 16,484
Accrued liabilities 16,855 15,670
Accrued income taxes payable 2,262 1,440
Accrued pension liabilities 985 1,572
--------- ---------
TOTAL CURRENT LIABILITIES 37,654 38,764
Long term liabilities:
Long term debt, less current portion 129,072 133,583
Deferred gain 8,307 9,166
Deferred income taxes 12,226 12,655
Other long-term liabilities 18,131 19,500
--------- ---------
Total long-term liabilities 167,736 174,904
--------- ---------
Total liabilities 205,390 213,668
Stockholders' Equity
Common stock 8 8
Additional paid-in capital 75,697 76,554
Retained earnings 29,298 21,034
Accumulated other comprehensive income (2,695) (33)
--------- ---------
Total stockholders' equity 102,308 97,563
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 307,698 $ 311,231
========= =========
</TABLE>
(The accompanying notes are an integral paart of the
consolidated financial statements.)
<PAGE>
FIBERMARK, INC.
Consolidated Statements of Cash Flows
(In Thousands)
Unaudited
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income 8,264 8,102
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,317 4,451
Amortization of deferred gain (859) (860)
Changes in operating assets and liabilities:
Accounts receivable (8,469) (3,740)
Inventories (626) 564
Other (193) (716)
Accounts payable (1,433) (8,131)
Accrued pension and other liabilities 762 1,239
Prepaid expense (153)
Other long-term liabilities 120 (2,369)
Accrued income taxes payable 822
------- -------
Net cash provided by (used in) operating activities 2,552 (1,460)
Cash flows used for investing activities:
Additions to property, plant and equipment (6,071) (6,364)
Payments for businesses acquired (net of cash amount) (43,275)
Debt issue costs (514)
Acquisition costs (88)
Deferred charge costs (80) (32)
(Increase) decrease in other intangible assets 29
------- -------
Net cash used in investing activities (6,122) (50,273)
Cash flows from financing activities:
Proceeds from issuance of bank debt 29,552
Proceeds from issuance of Gessner note 4,378
Proceeds from issuance of common stock 2,628
Proceeds from exercise of stock options 156 399
Stock Buyback (1,013)
Increase in revolving credit line 105 --
Payments on revolving credit line (105) --
Borrowing of senior term debt 2,736
Repayment of senior term debt (3,284) --
------- -------
Net cash (used in) provided by financing activities (1,405) 36,957
Effect of exchange rate changes on cash (1,195) 49
Net decrease in cash (6,170) (14,727)
Cash at beginning of period 33,804 37,275
------- -------
Cash at end of period 27,634 22,548
</TABLE>
(The accompanying notes are an integral part of the
consolidated financial statements.)
<PAGE>
FIBERMARK, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION:
The balance sheet as of June 30, 1999 and the statements of income and cash
flows for the periods ended June 30, 1999 and 1998 are unaudited and, in
the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been recorded. Such
adjustments consist only of normal recurring items.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The year-end balance sheet was
derived from audited financial statements, but does not include disclosures
required by generally accepted accounting principles. It is suggested that
these interim financial statements be read in conjunction with the audited
financial statements for the year ended December 31, 1998 included in the
company's Annual Report on Form 10-K.
2. INVENTORIES:
Inventories at June 30, 1999 and December 31, 1998 consisted of the
following (000's):
<TABLE>
<CAPTION>
(Unaudited)
06/30/99 12/31/98
<S> <C> <C>
Raw Material 15,781 16,328
Work in Progress 13,329 11,928
Finished Goods 15,165 16,681
Stores Inventory 1,936 1,671
Operating Supplies 1,665 1,909
TOTAL INVENTORIES 47,876 48,517
</TABLE>
3. NET INCOME PER COMMON SHARE:
The reconciliation of the numerators and denominators of the basic and
diluted income per common share computations for the company's reported net
income is as follows:
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
6/30/99 6/30/98 6/30/99 6/30/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Numerator:
Income available to common shareholders used
in basic and diluted earnings per share ($000) $ 4,210 $ 3,751 $ 8,264 $ 8,102
----------- ----------- ----------- -----------
Denominator:
Denominator for basic earnings per share:
Weighted average shares 7,727,122 7,750,913 7,758,851 7,727,042
Effect of dilutive securities:
Fixed stock options 197,673 345,059 186,735 372,534
----------- ----------- ----------- -----------
Denominator for diluted earnings per share:
Adjusted weighted average shares 7,924,795 8,095,972 7,945,586 8,099,576
Basic earnings per share $ 0.54 $ 0.48 $ 1.07 $ 1.05
Diluted earnings per share $ 0.53 $ 0.46 $ 1.04 $ 1.00
</TABLE>
4. COMPREHENSIVE INCOME:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
6/30/99 6/30/98 6/30/99 6/30/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income $ 4,210 $ 3,751 $ 8,264 $ 8,102
Minimum pension liability adjustment
net of tax benefit 54 0 82 0
Currency translation adjustment (1,059) 329 (2,744) 151
----------- ----------- ----------- -----------
Total comprehensive income $ 3,205 $ 4,080 $ 5,602 $ 8,253
=========== =========== =========== ===========
</TABLE>
<PAGE>
5. Segment Information:
The following table categorizes each market segment into the appropriate
operating segment:
<TABLE>
<CAPTION>
(In Thousands)
Operating Segment
----------------------------------------------------------------
Fibermark Technical
3 months ended June 30, 1999 Gessner and and Office Durable
Net sales Filter Media Products Specialties Other Total
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Market Segment
--------------
Filter Media 23,117 1,459 24,576
Technical Specialties 1,575 14,084 15,659
Durable Specialties 6,248 16,710 22,958
Office Products 12,789 12,789
----------- ----------- ---------- ----------- -----------
Total $ 30,940 $ 28,332 $ 16,710 $ - $ 75,982
=========== =========== ========== =========== ===========
3 months ended June 30, 1998
Net sales
Market Segment
--------------
Filter Media 23,841 1,306 25,147
Technical Specialties 2,444 17,914 20,358
Durable Specialties 5,406 15,325 20,731
Office Products 12,355 12,355
----------- ----------- ---------- ----------- -----------
Total $ 31,691 $ 31,575 $ 15,325 $ - $ 78,591
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands)
Operating Segment
----------------------------------------------------------------
Fibermark Technical
6 months ended June 30, 1999 Gessner and and Office Durable
Net sales Filter Media Products Specialties Other Total
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Market Segment
--------------
Filter Media 48,104 2,643 50,747
Technical Specialties 2,847 29,570 32,417
Durable Specialties 11,963 30,764 42,727
Office Products 25,997 25,997
----------- ----------- ---------- ----------- -----------
Total $ 62,914 $ 58,210 $ 30,764 $ - $ 151,888
=========== =========== ========== =========== ===========
6 months ended June 30, 1998
Net sales
Market Segment
--------------
Filter Media 49,385 2,384 51,769
Technical Specialties 4,203 37,312 41,515
Durable Specialties 10,841 29,024 39,865
Office Products 25,393 25,393
----------- ----------- ---------- ----------- -----------
Total $ 64,429 $ 65,089 $ 29,024 $ - $ 158,542
=========== =========== ========== =========== ===========
</TABLE>
<PAGE>
5. Segment Information (Continued)
The following table details selected financial data by operating segment:
<TABLE>
<CAPTION>
(In Thousands)
Operating Segment
----------------------------------------------------------------
Fibermark Technical
Gessner and and Office Durable
3 months ended June 30, 1999 Filter Media Products Specialties Other Total
- ---------------------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $ 30,940 $ 28,332 $ 16,710 $ 75,982
Intersegment net sales 24 1,084 123 (1,231) -
----------- ----------- ----------- ----------- -----------
Total net sales $ 30,964 $ 29,416 $ 16,833 $ (1,231) $ 75,982
=========== =========== =========== =========== ===========
EBIT $ 4,151 $ 2,940 $ 2,732 $ 9,823
=========== =========== =========== =========== ===========
Depreciation and Amortization $ 667 $ 457 $ 592 $ 1,716
Total Assets $102,602 $ 95,593 $ 59,273 $ 50,230(1) $ 307,698
3 months ended June 30, 1998
- ----------------------------
Net sales $ 31,691 $ 31,575 $ 15,325 $ 78,591
Intersegment net sales 207 103 (310) -
----------- ----------- ----------- ----------- -----------
Total net sales $ 31,691 $ 31,782 $ 15,428 $ (310) $ 78,591
=========== =========== =========== =========== ===========
EBIT $ 3,812 $ 2,698 $ 2,539 $ 9,049
=========== =========== =========== =========== ===========
Depreciation and Amortization $ 624 $ 516 $ 631 $ 1,771
Total Assets $ 96,337 $ 99,344 $ 58,556 $ 44,368(1) $ 298,605
</TABLE>
<TABLE>
<CAPTION>
(In Thousands)
Operating Segment
----------------------------------------------------------------
Fibermark Technical
Gessner and and Office Durable
6 months ended June 30, 1999 Filter Media Products Specialties Other Total
- ---------------------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $ 62,914 $ 58,210 $ 30,764 $ 151,888
Intersegment net sales 24 2,202 123 (2,349) -
----------- ----------- ----------- ----------- -----------
Total net sales $ 62,938 $ 60,412 $ 30,887 $ (2,349) $ 151,888
=========== =========== =========== =========== ===========
EBIT $ 8,969 $ 6,047 $ 4,217 $ 19,233
=========== =========== =========== =========== ===========
Depreciation and Amortization $ 1,352 $ 902 $ 1,210 $ 3,464
Total Assets $102,602 $ 95,593 $ 59,273 $ 50,230(1) $ 307,698
6 months ended June 30, 1998
- ----------------------------
Net sales $ 64,429 $ 65,089 $ 29,024 $ 158,542
Intersegment net sales 325 150 (475) -
----------- ----------- ----------- ----------- -----------
Total net sales $ 64,429 $ 65,414 $ 29,174 $ (475) $ 158,542
=========== =========== =========== =========== ===========
EBIT $ 8,910 $ 5,996 $ 4,238 $ 19,144
=========== =========== =========== =========== ===========
Depreciation and Amortization $ 1,238 $ 1,012 $ 1,222 $ 3,472
Total Assets $ 96,337 $ 99,344 $ 58,556 $ 44,368(1) $ 298,605
</TABLE>
(1) Corporate assets not allocated to operating segments.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1998.
Net sales for the second quarter of 1999 were $76.0 million compared with $78.6
million for the second quarter of 1998, a 3.3% decrease. Sales in the FiberMark
Gessner and filter media operating segment decreased by 2.2% to $31.0 million
compared with $31.7 million in the second quarter of 1998. The technical and
office products operating segment sales decreased by 10.4% to $28.3 million
compared with $31.6 million for the same period in 1998. Sales in the durable
specialties operating segment increased by 9.2% to $16.7 million compared with
$15.3 million for the second quarter of 1998.
Sales in the FiberMark Gessner and filter media segment were down slightly from
the second quarter 1998 due to market softness in filter media in the U.S, and
abrasive materials in Europe, partially offset by higher volume for filter media
and tape base materials in Europe. The decrease in the technical and office
products segment were primarily due to reduced book cover volume after a
customer brought manufacturing in-house, as previously disclosed. The company
also experienced some softness in our abrasive and printing grade product lines,
offset somewhat by incremental business gains in office products. The increase
in durable specialties reflects market strength, a mild resurgence in sales in
the Far East and successful business development efforts in masking tape base.
Gross margin for the quarter was 20.5% compared with 18.8% for last year. This
improvement was achieved in spite of a lower sales volume and a higher level of
production trial expenses related to product transfers. It was fueled primarily
by lower fiber prices, good manufacturing efficiencies and lower fixed costs
related to the closure of our Beaver Falls, NY facility.
General and administrative expenses at $5.7 million for the quarter were
comparable with last year's level of $5.7 million.
Interest expense at $2.7 million for the quarter was comparable with last year's
level of $2.6 million.
The effective income tax rate was 40.7% compared with 42.0% for the second
quarter of 1998.
Net income for the second quarter of this year was $4.2 million, or $.53 per
share, compared with last year's level of $3.8 million, or $.46 per share.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1998.
Net sales for the first six months of 1999 were $151.9 million compared with
$158.5 million for the first six months of 1998, a 4.2% decrease. Sales in the
FiberMark Gessner and filter media operating segment decreased by 2.3% to $62.9
million compared with $64.4 million in the first six months of 1998. The
technical and office products operating segment sales decreased by 10.6% to
$58.2 million compared with $65.1 million for the same period in 1998. Sales in
the durable specialties operating segment increased by 6.2% to $30.8 million
compared with $29.0 million for the first half of 1998.
<PAGE>
Sales in the FiberMark Gessner and filter media segment were down slightly from
the first six months of 1998 due to market softness in filter media in the U.S,
and abrasive materials in Europe, partially offset by higher volume for filter
media and tape base materials in Europe. The decrease in the technical and
office products segment were primarily due to reduced book cover volume after a
customer brought manufacturing in-house, as previously disclosed. The company
also experienced some pockets of softness, particularly in our abrasive and
printing grade product lines, offset somewhat by incremental business gains in
office products. The increase in durable specialties reflects market strength, a
mild resurgence in sales in the Far East and successful business development
efforts in masking tape base.
Gross margin for the first half of 1999 was 20.3% compared with 19.2% for last
year. This improvement was achieved in spite of a lower sales volume and a
higher level of production trial expenses related to product transfers. It was
fueled primarily by lower fiber prices, good manufacturing efficiencies and
lower fixed costs related to the closure of our Beaver Falls, NY facility.
General and administrative expenses at $11.5 million for the first half of 1999
were up slightly from last year's level of $11.2 million.
Interest expense at $5.2 million for the first half of 1999 was comparable with
last year's level of $5.1 million.
The effective income tax rate for the first half of 1999 was 41.0% compared with
42.2% for the first half of 1998.
Net income for the first half of 1999 was $8.3 million, or $1.04 per share,
compared with last year's level of $8.1 million, or $1.00 per share.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, the company had outstanding $100.0 million of senior notes.
The notes have a ten-year term, are non-amortizing and carry a fixed interest
rate of 9.375%. Additionally, the company had available to it a $20.0 million
revolving credit facility as of June 30, 1999. As of such date, no advances were
outstanding under such credit facility. Effective January 1, 1998 the company
acquired Steinbeis Gessner GmbH. A portion of the purchase price was funded
through term loans. As of June 30, 1999, Gessner had a secured term loan of
$26.4 million with Bayerische Bank. The remaining loan balance amortizes over
six years with interest rates ranging from 6.1% to 7.0%. As of this same date,
Gessner had an unsecured term loan of $3.2 million with the previous owner. The
remaining loan balance amortizes over two years and has a fixed interest rate of
5%. As of June 30, 1999, Gessner had a $7.9 million line of credit with
Bayerische Vereinsbank. As of such date no advances were outstanding under the
line of credit. As of June 30, 1999, Gessner also had a capital spending
facility with Bayerische Vereinsbank. Under this facility $2.6 million had been
advanced, with a remaining balance of $5.3 million.
The company's historical requirements for capital have been primarily for
servicing debt, capital expenditures and working capital. For the six months
ended June 30, cash flows from operating activities were $2.6 million in 1999
and ($1.5) million for 1998. During these periods, additions to property, plant
and equipment totaled $6.1 million and $6.4 million in 1998 respectively. The
company believes that cash flow from operations, plus amounts available under
credit facilities will
<PAGE>
be sufficient to fund its capital requirements, debt service and working capital
requirements for the foreseeable future.
On March 31, 1999 the company agreed to repurchase up to 1 million shares of its
common stock, which represented 13% of the shares outstanding at that time.
Stock repurchases may be made periodically in both open market or private
transactions. The extent and timing of these transactions will depend on market
conditions and other corporate considerations. As of June 30, 1999, share
repurchases totaled 85,400. As of June 30, the company had a total of 7,715,485
shares of common stock outstanding.
INFLATION
The company attempts to minimize the effect of inflation on earnings by
controlling operating expenses. During the past several years, the rate of
general inflation has been relatively low and has not had a significant impact
on the company's results of operations. The company purchases raw materials that
are subject to cyclical changes in costs that may not reflect the rate of
general inflation.
SEASONALITY
The company's business is mildly seasonal, with the third quarter of each year
typically having the lowest level of net sales and operating income. This
seasonality is the result of a lower level of purchasing activity in the third
quarter, since many of our U.S. customers shut down their manufacturing
operations during portions of July and many European manufacturers shut down
during portions of August.
NEW ACCOUNTING PRONOUNCEMENT
On April 3, 1998, the AICPA Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities".
This SOP provides guidance on the financial reporting of start-up costs and
organization costs. It requires costs of start-up activities and organization
costs to be expensed as incurred. This SOP is effective for financial statements
for fiscal years beginning after December 15, 1998. The impact on the company
was immaterial.
YEAR 2000
READINESS
The company expects to complete Year 2000 compliance by the end of the third
quarter or early fourth quarter of 1999. The majority of our systems are already
compliant due to implementation of new integrated information systems. In terms
of hardware, management believes the company's inventory of equipment is also
compliant. Internal process systems are largely compliant, and should be fully
compliant by early in the fourth quarter.
The company has communicated with its principal customers and suppliers
regarding Year 2000 compliance. Although we have been given assurances by our
customers and suppliers that they will be compliant, no assurances can be given
that they will be ready, or that the company would not suffer any material
adverse effects to its business, operations or financial condition should they
fail to be compliant.
<PAGE>
COSTS
The costs of achieving Year 2000 compliance are not expected to have a material
impact on the company's business, operations, or financial condition, as system
upgrades were planned for strategic reasons. Anticipated costs are almost
exclusively the cost of installing the company's integrated information systems.
FiberMark Gessner had completed a substantial portion of its system upgrades
prior to the 1998 purchase.
RISKS
The company has assessed the risks of Year 2000 problems, and concluded that in
the unlikely event that a small portion of its software might not be in place by
the year 2000, it would need to rely on manual systems.
The company has contacted both our key suppliers and customers to ascertain
their Year 2000 readiness, and have received assurances that they will be ready.
However, the company cannot control supplier or customer Year 2000 readiness, or
even completely assess the risk the company might face should they fail to be
ready. However, our assessments suggest that in the case of customers, potential
problems might include greater difficulties in managing inventories and
forecasting demand, and in placing or receiving orders that could impact
FiberMark. In the case of suppliers, risks seem to relate more to billing and
ordering rather than more significant items that might impact productivity and
profitability.
CONTINGENCY PLANS
The company is analyzing its contingency planning needs, but at this stage has
chosen not to develop a comprehensive plan, as it is confident that Year 2000
compliance timetables will be met.
FORWARD-LOOKING STATEMENTS
Statements in this report that are not historical are forward-looking statements
subject to risk and uncertainties that could cause actual results to differ
materially. Such risk and uncertainties include fluctuations in economies
worldwide, fluctuations in our customers' demand and inventory levels (including
the loss of certain major customers), the price and availability of raw
materials and of competitive materials, which may preclude passing increases on
or maintaining prices with customers; changes in environmental and other
governmental regulations, changes in terms from lenders, ability to retain key
management and to reach agreement on labor issues, failure to identify or carry
out suitable strategic acquisitions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company believes it has minimal exposure to financial market risks. All debt
is at a fixed rate. Most of the company's sales transactions have been conducted
in the currency where the shipment originated, limiting our exposure to changes
in currency exchange rates. The company does not use derivative financial
instruments.
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
Reports on Form 8-K:
Not applicable.
<PAGE>
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.
FiberMark, Inc.
Date: August 12, 1999
/s/ Bruce Moore
-----------------------------------
Bruce Moore, Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED JUNE 30, 1999
FIBERMARK, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 27,634
<SECURITIES> 0
<RECEIVABLES> 38,493
<ALLOWANCES> 0
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0
0
<COMMON> 8
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</TABLE>
