<PAGE>
NEW DRAFT
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1997
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 1-14084
BIG FLOWER PRESS HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 13-376-8322
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
3 East 54th Street
New York, New York 10022
(212)521-1600
(Address, including zip code, and telephone number, including
area code, of Registrant's Principal Executive Offices)
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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: As of August 8, 1997, there
were 18,481,991 shares of the Registrant's Common Stock, par value $0.01 per
share, outstanding.
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PART I - FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(IN THOUSANDS)
Item 1. Financial Statements
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................... $ 4,698 $ 4,200
Accounts receivable, net..................... 87,609 105,270
Inventories.................................. 36,104 30,126
Prepaid expenses and other assets............ 7,600 5,622
Deferred income taxes........................ 17,219 17,286
---------- ----------
Total current assets..................... 153,230 162,504
Property, plant and equipment, net............. 306,260 296,426
Intangibles and other assets, net.............. 296,741 290,812
---------- ----------
TOTAL ASSETS............................. $ 756,231 $ 749,742
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable............................. $ 105,353 $ 116,513
Compensation and benefits payable............ 35,739 38,087
Other current liabilities.................... 29,881 37,349
Current portion of long-term debt............ 558 1,376
---------- ----------
Total current liabilities................ 171,531 193,325
Long-term debt, net of current portion......... 454,110 430,766
Deferred income taxes.......................... 18,244 13,073
Other long-term liabilities.................... 15,248 16,228
---------- ----------
Total liabilities........................ 659,133 653,392
---------- ----------
Stockholders' equity:
Common stock................................. 185 186
Additional paid-in capital................... 116,362 119,019
Accumulated deficit.......................... (18,399) (21,514)
Other........................................ (1,050) (1,341)
---------- ----------
Total stockholders' equity............... 97,098 96,350
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 756,231 $ 749,742
---------- ----------
---------- ----------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
2
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PART I - FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
JUNE 30, JUNE 30,
1997 1996
------------ --------------
<S> <C> <C>
Net sales.................................... $ 316,838 $ 301,910
Operating expenses:
Costs of production........................ 248,909 247,748
Selling, general and administrative........ 31,952 24,503
Depreciation............................... 11,571 8,983
Amortization of intangibles................ 4,187 4,340
------------ --------------
296,619 285,574
------------ --------------
Operating income............................. 20,219 16,336
------------ --------------
Other expenses (income):
Interest expense........................... 9,794 8,920
Amortization of deferred financing costs... 417 763
Interest income............................ (102) (173)
Other, net................................. 1,726 2,015
------------ --------------
11,835 11,525
------------ --------------
Income before income taxes................... 8,384 4,811
Income tax expense........................... 3,991 2,255
------------ --------------
Income before extraordinary item............. 4,393 2,556
Extraordinary item, net of income tax benefit
of $1.9 million............................ (2,959) --
------------ --------------
Net income................................... $ $1,434 $ 2,556
------------ --------------
------------ --------------
Income per common and common equivalent
share:
Income before extraordinary item........... $ $0.23 $ 0.14
Extraordinary item, net.................... (0.16) --
------------ --------------
Net income................................. $ $0.07 $ 0.14
------------ --------------
------------ --------------
Weighted average shares outstanding.......... 19,337 18,545
------------ --------------
------------ --------------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
3
<PAGE>
PART I - FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
---------------- ----------------
<S> <C> <C>
Net sales................................... $ 614,339 $ 531,038
Operating expenses:
Costs of production....................... 484,154 444,534
Selling, general and administrative....... 63,102 41,777
Depreciation.............................. 23,000 15,036
Amortization of intangibles............... 8,288 8,337
---------------- ----------------
578,544 509,684
---------------- ----------------
Operating income............................ 35,795 21,354
---------------- ----------------
Other expenses (income):
Interest expense.......................... 19,504 16,507
Amortization of deferred financing costs.. 972 1,473
Interest income........................... (222) (369)
Other, net................................ 3,861 7,978
---------------- ----------------
24,115 25,589
---------------- ----------------
Income (loss) before income taxes........... 11,680 (4,235)
Income tax expense (benefit)................ 5,606 (2,368)
---------------- ----------------
Income (loss) before extraordinary item..... 6,074 (1,867)
Extraordinary item, net of income tax
benefits of $1.9 million and $1.3
million, respectively...................... (2,959) (1,892)
---------------- ----------------
Net income (loss)............................ $ 3,115 $ (3,759)
---------------- ----------------
---------------- ----------------
Income (loss) per common and common
equivalent share:
Income (loss) before extraordinary item.... $ 0.31 $ (0.10)
Extraordinary item, net.................... (0.15) (0.11)
---------------- ----------------
Net income (loss).......................... $ 0.16 (0.21)
---------------- ----------------
---------------- ----------------
Weighted average shares outstanding.......... 19,332 18,305
---------------- ----------------
---------------- ----------------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
4
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PART I - FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................................... $ 3,115 $ (3,759)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Provision for doubtful accounts..................... 1,726 30
Deferred income taxes............................... (1,401) (2,576)
Depreciation and amortization....................... 31,288 23,373
Amortization of deferred financing costs............ 972 1,473
Loss on disposition of property,
plant and equipment............................... 517 307
Cost of accounts receivable sales................... 2,923 2,545
Extraordinary item, net............................. 2,959 1,892
Changes in operating assets and liabilities
(excluding effect of acquisitions):
Decrease in accounts receivable..................... 10,316 18,949
Proceeds from sale of accounts receivable........... 91,567
(Increase) decrease in inventories.................. (5,978) 21,981
(Increase) decrease in prepaid expenses and
other current assets.............................. (645) 780
(Increase) decrease in other assets................. (1,282) 3,267
Decrease in accounts payable, compensation and
benefits payable and other liabilities............ (2,416) (46,860)
---------- ------------
Net cash provided by operating activities............. 42,094 112,969
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................. (35,088) (21,534)
Acquisition of businesses, net of cash acquired....... (77,770)
Other investing activities............................ (1,090) 238
---------- ------------
Net cash used in investing activities................. (36,178) (99,066)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for long-term debt........................... (74,596) (115,502)
Proceeds from issuance of long-term debt.............. 250,000 75,000
Net borrowings under credit facilities................ (153,032) 38,624
Decrease in cash overdraft............................ (16,531) (8,409)
Financing costs....................................... (8,703) (1,313)
Other financing activities............................ (2,556) 24
---------- ------------
Net cash used in financing activities................. (5,418) (11,576)
---------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................ 498 2,327
CASH AND CASH EQUIVALENTS, BEGINNING..................... 4,200 9,172
---------- ------------
CASH AND CASH EQUIVALENTS, ENDING........................ $ 4,698 $ 11,499
---------- ------------
---------- ------------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
5
<PAGE>
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Big Flower Press Holdings, Inc. ("Big Flower", and together with its
subsidiaries, the "Company") is a leading advertising and marketing services
company with three principal operating units: Treasure Chest Advertising
Company, Inc. ("TC Advertising"), Webcraft Technologies, Inc. ("Webcraft"),
and Laser Tech Color, Inc. ("Laser Tech"). TC Advertising is a leading
producer of advertising insert programs for retailers and produces TV listing
magazines, Sunday comics, Sunday magazines and special supplements for many
of the most widely circulated U. S. newspapers. Webcraft is a market leader
in producing highly-customized direct mail and specialty advertising products
such as commercial games and fragrance samplers. Laser Tech is a leading
provider of outsourced, digital premedia and content management services to
retailers, advertising agencies, and consumer product companies. The Company
and its subsidiaries operate in the advertising and marketing services
industry. The unaudited interim condensed consolidated financial statements
of the Company have been prepared on the basis of generally accepted
accounting principles and, in the opinion of management, reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of such information for the interim periods presented. The
results of operations and cash flows for the interim periods presented are
not necessarily indicative of results for the full year.
2. ACQUISITIONS
On March 19, 1996, the Company acquired Webcraft for approximately $111.0
million, of which (i) approximately $4.0 million represented a portion of the
proceeds received by Webcraft in connection with the settlement of a certain
patent litigation and (ii) $4.8 million was deposited in escrow to fund any
claims for indemnification of the Company. Assets acquired, excluding
intangible assets, were $198.1 million and liabilities assumed were $156.4
million.
During the fourth quarter of 1996, the Company consummated the acquisition of
all of the outstanding capital stock of PrintCo., Inc. ("PrintCo"), Pacific
Color Connection, Inc. ("Pacific Color"), Designer Color Systems, Ltd.
("Designer Color") and Digital Dimensions, Inc. ("Digital Dimensions"). The
aggregate purchase price of these acquisitions was approximately $46.5
million in cash, a $2 million note and 0.5 million shares of common stock
with an approximate market value of $9 million. Assets acquired, excluding
intangible assets, totaled $67.9 million and liabilities assumed were $41.9
million.
The acquisitions of Webcraft, PrintCo, Pacific Color, Designer Color and
Digital Dimensions have been accounted for as purchases. The cost has been
allocated to the acquired companies' assets and liabilities based on their
relative fair values as of the closing dates of the acquisitions, based on
valuations and other studies. A portion of the excess of the purchase cost
over the
6
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historical book value of the net assets acquired was allocated to specific
identified intangibles and the remainder, representing goodwill, is being
amortized over 40 years.
Subsequent to the acquisition of Webcraft in the first quarter of 1996, the
Company repurchased substantially all of Webcraft's outstanding debt at a
premium which generated an extraordinary loss of $1.9 million, net of income
tax benefit of $1.3 million.
The following supplemental unaudited pro forma information has been prepared
as though the acquisitions of Webcraft, PrintCo, Pacific Color, Designer
Color and Digital Dimensions had occurred at January 1, 1996 (in thousands,
except per share data):
Six Months Ended
June 30,
1996
----------------
Net sales......................................... $651,801
Income before extraordinary item.................. 944
Net loss.......................................... (948)
Net loss per common and common equivalent share... (0.05)
On October 4, 1996, Big Flower consummated the acquisition of Scanforms,
Inc., a Delaware corporation ("Scanforms"), as a result of which Scanforms
became a wholly owned subsidiary of Webcraft. Big Flower issued rights to
receive 1,549,489 full shares of its common stock in exchange for all the
outstanding common stock of Scanforms. The merger of Scanforms was accounted
for as a pooling of interests. Accordingly, the Company's condensed
consolidated financial statements have been restated to include the results
of Scanforms for all periods presented.
3. ACCOUNTS RECEIVABLE
On October 4, 1996 the Company entered into a six-year agreement (the "A/R
Securitization") pursuant to which it may sell fractional undivided
beneficial interests in a designated pool of certain eligible accounts
receivable. The maximum allowable amount of receivables to be sold is $150
million. The amount outstanding at any measurement date varies based upon the
level of eligible receivables. Under the terms of the agreement, the Company
has retained substantially the same risk of credit loss as if the receivables
had not been sold and, accordingly, the full amount of the allowance for
doubtful accounts has been retained. At June 30, 1997 and December 31, 1996 a
$78.4 million and $79.8 million interest, respectively, had been sold under
the A/R Securitization and is reflected as a reduction of accounts receivable
in the accompanying condensed consolidated balance sheets. Fees of this
program vary based on a Eurodollar rate plus an average margin of 3/8% per
annum on the amount of interest sold. These costs, which were approximately
$2.9 million for the six-month period ended June 30, 1997 and $1.4 million
for the three month period ended June 30, 1997, are included in other, net in
the accompanying condensed consolidated statements of operations.
7
<PAGE>
4. INVENTORIES
Inventories as of June 30, 1997 and December 31, 1996 are summarized as
follows (in thousands):
<TABLE>
June 30, December 31,
1997 1996
------------ ------------
(unaudited)
<S> <C> <C>
Paper...................................... $ 29,236 $ 22,315
Ink........................................ 1,168 1,040
Other...................................... 5,700 6,771
------------ ------------
TOTAL...................................... $ 36,104 $ 30,126
------------ ------------
------------ ------------
</TABLE>
5. LONG TERM DEBT
On June 12, 1997, the Company (i) entered into a new credit facility (as
amended to date, the "Credit Facility") with a group of lenders providing up
to $475 million of revolving credit loans and (ii) terminated the previous
credit facility and repaid all of its loans thereunder. At June 30, 1997 the
balance outstanding under the Credit Facility was $74.3 million. The Credit
Facility provides greater borrowing capacity on more favorable terms,
including lower interest rates, and covenant terms which the Company believes
provide greater financial flexibility. The Credit Facility will mature on
June 12, 2002. There is no repayment of principal until maturity. Interest on
revolving loans will be payable at the Company's option (a) at a base rate
plus a margin which ranges from 0.00% to 0.75% or (b) at a Eurodollar-based
rate plus a margin which ranges from 0.50% to 1.75%. The Credit Facility also
contains certain covenant requirements and certain dividend restrictions
which are customary for such financings. In connection with the early
termination of the previous credit facility, approximately $4.9 million of
deferred financing costs were written off which generated an extraordinary
loss of $3.0 million, net of income tax benefit of $1.9 million.
In June 1997, the Company issued $250 million of 8 7/8% senior subordinated
notes due July 1, 2007 (the "8 7/8% Notes"). Interest on the 8 7/8% Notes is
payable semi-annually on January 1st and July 1st. The 8 7/8% Notes are
subject to certain covenants, including restrictions on dividends, which are
customary for such financings. In connection with the issuance of 8 7/8%
Notes, the Company commenced a tender offer and consent solicitation for all
of its outstanding 10 3/4% senior subordinated notes due 2003 (the "10 3/4%
Notes"). The tender offer for the 10 3/4% Notes expired on July 23, 1997. On
July 24, 1997, the Company purchased substantially all the 10 3/4% Notes for
approximately $137 million, which was funded through borrowings under the
Credit Facility. In connection with the redemption of the 10 3/4% Notes, the
Company will record an extraordinary loss of approximately $10.3 million, net
of income tax benefit of $6.8 million, on the early extinguishment of debt in
the third quarter of 1997.
8
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6. EARNINGS PER SHARE
Per share information is computed using the weighted average number of shares
of Common Stock outstanding and dilutive common equivalent shares from stock
options using the treasury stock method.
7. NEW ACCOUNTING PRONOUNCEMENTS
The Company will adopt Statement of Financial Accounting Standard No. 128,
"Earnings Per Share" ("SFAS 128") in the fourth quarter of 1997, as required.
The standard specifies the computation, presentation and disclosure
requirements for earnings per share. Computed under the provisions of SFAS
128, pro forma basic earnings per common share and pro forma diluted earnings
per common share for the quarter ended June 30, 1997, were $0.08 and $0.07,
respectively. The pro forma basic earnings per common share and the pro forma
diluted earnings per common share for the six months ended June 30, 1997,
were $0.17 and $0.16, respectively. Basic and diluted pro forma earnings per
share, as computed under the provisions of SFAS 128, are the same as
previously reported for the quarter and six months ended June 30, 1996.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131 "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for reporting and displaying comprehensive income and its components in a
full set of general-purpose financial statements. SFAS 131 establishes
standards for the way that public companies report information about
operating segments in annual and interim financial reports. Both of these
pronouncements become effective for fiscal years beginning after December 31,
1997. These pronouncements principally affect financial statement format and
disclosure and are not expected to have an impact on the Company's results of
operations or financial position.
9
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BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933. In addition, when used in this report, the
words "believes," "anticipates," "expects" and similar expressions are
intended to identify forward-looking statements. Such statements are subject
to a number of significant risks and uncertainties. Actual results in the
future could differ materially from those described in the forward-looking
statements as a result of many factors outside the control of the Company,
including fluctuations in the cost of paper and other raw materials used by
the Company, changes in the advertising and printing markets, the financial
condition of the Company's customers, and, the general condition of the
United States economy. Consequently, such forward-looking statements should
be regarded solely as the Company's current plans, estimates and beliefs. The
Company does not undertake any obligation to publicly release any revisions
to these forward-looking statements to reflect any future events or
circumstances.
GENERAL
The discussion below compares the consolidated financial condition and
results of operations of Big Flower for the three months ended June 30, 1997
with the three months ended June 30, 1996 and for the six months ended June
30, 1997 with the six months ended June 30, 1996.
Big Flower is a leading advertising and marketing services company with three
principal operating units: TC Advertising, Webcraft, and Laser Tech. TC
Advertising is a leading producer of advertising insert programs for
retailers and produces TV listing magazines, Sunday comics, Sunday magazines
and special supplements for many of the most widely circulated U. S.
newspapers. Webcraft is a market leader in producing highly-customized direct
mail and specialty advertising products such as commercial games and
fragrance samplers. Laser Tech is a leading provider of outsourced, digital
premedia and content management services to retailers, advertising agencies,
and consumer product companies. The Company and its subsidiaries operate in
the advertising and marketing services industry.
The cost of paper is a principal factor in the Company's pricing to certain
customers and consequently the cost of paper significantly affects the
Company's net sales. The Company is generally able to pass increases in the
cost of paper to its customers, while declines in paper costs generally
result in lower prices to customers. Volatility in paper costs results in a
corresponding volatility in the Company's net sales, but generally has not
affected volume or profits to any
10
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significant extent. In late July and early August of 1997 several newsprint
producers, including those used by the Company, announced an increase in the
price of newsprint of between $35 to $40 per metric ton, to take effect in
the fourth quarter of 1997. At this time, the Company does not anticipate
this increase to have a significant impact on its results of operations or
financial position for the remainder of 1997.
Capacity in the paper industry has remained relatively stable in recent
years. Increases or decreases in demand for paper have led to corresponding
pricing changes and, in periods of high demand, to limitations on the
availability of certain grades of paper, including grades utilized by the
Company. The Company believes that its strong relationships with major North
American paper suppliers should enable the Company to satisfy its paper
requirements on competitive terms even in periods of high demand.
RESULTS OF OPERATIONS
The following table presents the major components from the Condensed
Consolidated Statements of Operations as a percent of net sales for the
three-month and six-month periods ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales.................................... 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Costs of production........................ 78.6% 82.1% 78.8% 83.7%
Selling, general and administrative........ 10.1% 8.1% 10.3% 7.9%
Depreciation............................... 3.7% 3.0% 3.7% 2.8%
Amortization of intangibles................ 1.3% 1.4% 1.3% 1.6%
-------- -------- -------- --------
93.7% 94.6% 94.1% 96.0%
-------- -------- -------- --------
Operating income............................. 6.3% 5.4% 5.9% 4.0%
-------- -------- -------- --------
Other expenses (income):
Interest expense........................... 3.1% 3.0% 3.2% 3.1%
Amortization of deferred financing costs... 0.1% 0.3% 0.2% 0.3%
Interest income............................ 0.0% (0.1%) 0.0% (0.1%)
Other, net................................. 0.5% 0.7% 0.6% 1.5%
-------- -------- -------- --------
3.7% 3.9% 4.0% 4.8%
-------- -------- -------- --------
Income (loss) before income taxes............ 2.6% 1.5% 1.9% (0.8%)
Income tax expense (benefit)................. 1.3% 0.7% 0.9% (0.4%)
-------- -------- -------- --------
Income (loss) before extraordinary item...... 1.3% 0.8% 1.0% (0.4%)
Extraordinary item, net...................... (0.9%) (0.5%) (0.3%)
-------- -------- -------- --------
Net income (loss)............................ 0.4% 0.8% 0.5% (0.7%)
-------- -------- -------- --------
-------- -------- -------- --------
EBITDA (in thousands)........................ $ 35,977 $ 29,772 $ 67,083 $ 44,840
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
11
<PAGE>
"EBITDA" represents the sum of operating income, depreciation, amortization
of intangibles and merger costs. EBITDA is presented here to provide
additional information regarding the Company's ability to meet its future
debt service, capital expenditures and working capital requirements. EBITDA
is not a measure of financial performance and should not be considered an
alternative to net income as a measure of operating performance or to cash
flows from operating activities as a measure of liquidity.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1997 WITH THE THREE MONTHS
ENDED JUNE 30, 1996
Net sales increased to $316.8 million for the three months ended June 30,
1997 from $301.9 million for the three months ended June 30, 1996, an
increase of $14.9 million or 4.9%. Approximately $30 million of the increase
resulted from the inclusion of the operations of PrintCo, Pacific Color,
Designer Color and Digital Dimensions for the three months ended June 30,
1997. In addition to the acquisitions, higher volume at TC Advertising, new
customer growth in pre-media services and strong demand for direct mail
products also contributed to the increase in sales. The increase was offset
by the sale of Webcraft Games, Inc. in the fourth quarter of 1996, softness
in catalog and commercial games printing and by a decrease in TC
Advertising's (excluding PrintCo) net sales as a result of lower paper costs
in 1997. Paper costs were 36.2% of the Company's net sales for the three
months ended June 30, 1997 as opposed to 43.6% of net sales for the three
months ended June 30, 1996.
Operating income for the three months ended June 30, 1997 was $20.2 million
compared to $16.3 million for the three months ended June 30, 1996, an
increase of $3.9 million or 23.8%. A net $3.5 million increase resulted from
the inclusion of the operations of the acquisitions made in 1996 offset by
the sale of Webcraft Games, Inc. Demand for the Company's higher margin
products also contributed to the increase in operating income. Costs of
production as a percent of sales decreased to 78.6% for the three months
ended June 30, 1997 from 82.1% for the three months ended June 30, 1996,
principally attributable to the decrease in the cost of paper and the
inclusion of the operations of the 1996 acquisitions where paper is less of a
component of costs. Selling, general and administrative expenses increased to
$32.0 million in the three months ended June 30, 1997 from $24.5 million for
the three months ended June 30, 1996, an increase of $7.5 million or 30.4%
which is principally due to the 1996 acquisitions. Depreciation was $11.6
million for the three months ended June 30, 1997 compared to $9.0 million for
the three months ended June 30, 1996, an increase of $2.6 million or 28.8%.
The increase in depreciation was attributable to the 1996 acquisitions and
increased capital expenditures throughout 1996 and 1997 at TC Advertising.
Net interest expense, including the amortization of deferred financing fees,
for the three months ended June 30, 1997 was $10.2 million compared to $9.7
million for the three months ended June 30, 1996. Interest expense increased
due to higher average debt levels in 1997.
Other, net, was $1.7 million in the three months ended June 30, 1997 compared
to $2.0 million in the comparable period in 1996. For the three months ended
June 30, 1997, other, net includes
12
<PAGE>
charges of $1.4 million related to the A/R Securitization compared to $1.2
million for the three months ended June 30, 1996.
The extraordinary item, net of tax, of $3.0 million in the second quarter of
1997 was due to early extinguishment of debt in connection with the previous
credit facility.
The effective income tax rate for the three months ended June 30, 1997 and
1996 exceeded the federal statutory tax rate due primarily to amortization of
certain goodwill (which is not deductible for income tax purposes) and state
income taxes.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1997 WITH THE SIX MONTHS ENDED
JUNE 30, 1996
Net sales increased to $614.3 million for the six months ended June 30, 1997
from $531.0 million for the six months ended June 30, 1996, an increase of
$83.3 million or 15.7%. The increase resulted from the addition of the
operations of Webcraft , PrintCo, Pacific Color, Designer Color and Digital
Dimensions. In addition to the acquisitions, higher volume at TC Advertising,
new customer growth in pre-media services and strong demand for direct mail
products also contributed to the increase in sales. The increase was offset
by the sale of Webcraft Games, Inc. in the fourth quarter of 1996, softness
in catalog and commercial games printing and by a decrease in TC
Advertising's (excluding PrintCo) net sales as a result of lower paper costs
in 1997. Paper costs were 36.0% of the Company's net sales for the six months
ended June 30, 1997 as opposed to 46.1% of net sales for the six months ended
June 30, 1996.
Operating income for the six months ended June 30, 1997 was $35.8 million
compared to $21.4 million for the six months ended June 30, 1996, an increase
of $14.4 million or 67.6%. A net $12.2 million increase resulted from the
inclusion of the operations of the acquisitions made in 1996 offset, by the
sale of Webcraft Games, Inc. Demand for the Company's higher margin products
also contributed to the increase in operating income. Costs of production as
a percent of sales decreased to 78.8% for the six months ended June 30, 1997
from 83.7% for the six months ended June 30, 1996, principally attributable
to the decrease in the cost of paper and the inclusion of the operations of
the 1996 acquisitions where paper is less of a component of costs. Selling,
general and administrative expenses increased to $63.1 million in the six
months ended June 30, 1997 from $41.8 million for the six months ended June
30, 1996, an increase of $21.3 million or 51.0% which is principally due to
the 1996 acquisitions. Depreciation was $23.0 million for the six months
ended June 30, 1997 compared to $15.0 million for the six months ended June
30, 1996, an increase of $8.0 million or 53.0%. The increase in depreciation
was attributable to the 1996 acquisitions and increased capital expenditures
throughout 1996 and 1997 at TC Advertising.
Net interest expense, including the amortization of deferred financing fees,
for the six months ended June 30, 1997 was $20.5 million compared to $18.0
million for the six months ended June 30, 1996. Interest expense increased
due to higher average debt levels in 1997 as a result of the 1996
acquisitions.
13
<PAGE>
Other, net, was $3.9 million in the six months ended June 30, 1997 compared
to $8.0 million in the comparable period in 1996, which prior period included
$5.0 million in non-recurring financing costs related to the acquisition of
Webcraft. For the six months ended June 30, 1997, other, net includes charges
of $2.9 million related to the A/R Securitization compared to $1.4 million of
recurring costs for the six months ended June 30, 1996.
The extraordinary item, net of tax, of $1.9 million in 1996 was due to early
extinguishment of debt subsequent to the acquisition of Webcraft. The
extraordinary item, net of tax, of $3.0 million in 1997 was due to early
extinguishment of debt in connection with the previous credit facility.
The effective income tax rate for the six months ended June 30, 1997 and 1996
exceeded the federal statutory tax rate due primarily to amortization of
certain goodwill (which is not deductible for income tax purposes) and state
income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The operations of the Company historically have been funded with internally
generated funds, term loans, borrowings under revolving credit facilities and
proceeds from the Company's initial public offering in November 1995.
The Company believes that internally-generated funds from operations, the
Credit Facility and the A/R Securitization will be sufficient to meet its
operating requirements for the near future.
Big Flower's current liabilities exceeded current assets by $18.3 million at
June 30, 1997 compared with $30.8 million at December 31, 1996, an increase
in working capital of $12.5 million. Excluding the effects of the A/R
Securitization, working capital at June 30, 1997 and December 31, 1996 would
have been $60.1 million and $49.0 million, respectively. The ratio of current
assets to current liabilities as of June 30, 1997 was 0.89 to 1 (1.35 to 1
excluding the A/R Securitization), and as of December 31, 1996 was 0.84 to 1
(1.25 to 1 excluding the A/R Securitization).
Net cash provided by operating activities for the six months ended June 30,
1997 was $42.1 million, an increase of $20.7 million from the prior
comparable period in 1996 (excluding the proceeds from the sale of accounts
receivable). Net cash used in investing activities was financed primarily
through borrowings under the Credit Facility and the A/R Securitization.
On June 12, 1997, the Company (i) entered into the Credit Facility with a
group of lenders providing up to $475 million of revolving credit loans and
(ii) terminated the existing credit facility and repaid its loans thereunder.
The Credit Facility provides greater borrowing capacity on more favorable
terms, including lower interest rates, and covenant terms which the Company
believes provide greater financial flexibility and will favorably impact
interest expense in the second half of 1997. The Credit Facility will mature
on June 12, 2002. Interest on revolving loans will be payable at the
Company's option (a) at a base rate plus a margin which ranges from 0.00% to
0.75% or (b) at a Eurodollar-based rate plus a margin which ranges from 0.50%
to
14
<PAGE>
1.75%. The Credit Facility also contains certain covenant requirements and
certain dividend restrictions which are customary for such financings.
In June 1997, the Company issued $250 million of the 8 7/8% Notes. Interest
on the 8 7/8% Notes is payable semi-annually on January 1st and July 1st. In
connection with the issuance of 8 7/8% Notes, the Company commenced a tender
offer and consent solicitation for all of its outstanding 10 3/4% Notes. The
tender offer for the 10 3/4% Notes expired on July 23, 1997. On July 24,
1997, the Company purchased substantially all the 10 3/4% Notes for
approximately $137 million, which was funded through borrowings under the
Credit Facility.
Capital expenditures of $35.1 million and $21.5 million for the six months
ended June 30, 1997 and 1996, respectively, were financed by cash from
operations and borrowings under existing credit facilities.
Big Flower has grown through acquisitions and continues to seek similar or
complementary businesses. Such acquisitions are likely to require the
incurrence and/or assumption of indebtedness and other obligations, the
issuance of equity securities or some combination thereof. In addition, Big
Flower may from time to time determine to sell or otherwise dispose of
certain of its existing businesses. However, Big Flower cannot predict if any
transactions will be consummated, nor the terms or forms of consideration
required in such transactions. Big Flower's recent acquisitions are discussed
in Note 2 to the Condensed Consolidated Financial Statements included herein.
SEASONALITY
The Company's advertising insert business is seasonal in nature, with
activity increasing prior to the following advertising periods: Easter (March
15-April 15); Memorial Day (April 15-May 15); Back to School (July 15-August
15); and Thanksgiving/Christmas (October 1-December 15). Sunday comics,
newspaper TV listing guides, other newspaper products and other publications
are not seasonal in nature. Net sales percentages for the Company by quarter
for the twelve months ended December 31, 1996 were 19%, 25%, 26% and 30% of
total net sales for the quarters ended March 31, June 30, September 30 and
December 31, respectively. Based on its historical experience and projected
operations, the Company expects its operating results to be highest in the
quarter ended December 31 and weakest in the quarter ended March 31.
15
<PAGE>
PART II--OTHER INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS -
No reportable developments occurred with respect to legal proceedings
during the quarter ended June 30, 1997.
ITEM 2. CHANGES IN SECURITIES -
In June 1997, the Company completed a secondary offering where
certain stockholders sold common stock. At the time of the secondary
offering, the Class B common stock held by BT Investment Partners,
Inc. ("BT") was converted to common stock and sold by BT in such
secondary offering. The Company no longer has any Class B common
stock outstanding, and in accordance with the Company's Certificate
of Incorporation, the Company no longer has any Class B common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES -
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS -
On June 24, 1997, the Company held its Annual Meeting of Stockholders
the following proposals were submitted for vote:
Proposal 1--Peter G. Diamandis and Joan D. Manley were elected as
Directors to hold office for three years until their respective
successors are elected and qualified. The following individuals
continue to serve on the Company's Board of Directors: R. Theodore
Ammon, Robert M. Kimmitt, Newton N. Minow and Edward T. Reilly.
Proposal 2--Amendments to the Big Flower Press Holdings, Inc. 1993
Restated Stock Award and Incentive Plan (the "Plan") were approved
which (i) increased the shares reserved for issuance under the Plan to
5,484,114, (ii) permitted non-employee directors to participate in the
Plan and (iii) granted certain additional rights and options to non-
employee directors.
Proposal 3--Deloitte & Touche LLP was elected to continue as the
Company's independent certified public accountants.
<TABLE>
<CAPTION>
VOTES FOR VOTES WITHHELD ABSTENTIONS
------------ -------------- -----------
<S> <C> <C> <C>
Proposal 1............................................................. 15,848,334 166,958
Proposal 2............................................................. 10,362,405 1,609,570 22,946
Proposal 3............................................................. 15,923,334 53,341 38,756
</TABLE>
16
<PAGE>
ITEM 5. OTHER INFORMATION -
In June 1997, the Company completed a secondary offering where certain
stockholders of the Company, including Apollo Big Flower Partners,
L.P. ("Apollo"), sold an aggregate of 5,958,524 shares of
common stock at a price of $21 per share. On July 15, 1997, an
additional 750,000 shares of the Company's common stock were sold
pursuant to the underwriters' over-allotment option granted by Apollo
in connection with such secondary offering. Apollo sold all of its
shares of common stock. On July 17, 1997, Messrs. Black and Yorke,
both of whom are affiliated with Apollo, resigned from the Company's
Board of Directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
4.1 Indenture, dated as of June 20, 1997, between Big Flower
Press Holdings, Inc. and State Street Bank and Trust Company
(as successor in interest to Fleet National Bank), as
Trustee. (1)
4.2 Registration Rights Agreement, dated as of June 20, 1997,
between Big Flower Press Holdings, Inc. and BT Securities
Corporation, Credit Suisse First Boston and Goldman, Sachs &
Co. (1)
10.1 Credit Agreement, dated as of June 12, 1997, between Big
Flower Press Holdings, Inc., the Banks from time to time
party thereto, Bank of America NT & SA and The Industrial
Bank of Japan, Limited as Co Agents, Credit Suisse First
Boston as Documentation Agent and Bankers Trust Company
as Administrative Agent. (2)
10.2 First Amendment to the Credit Facility, dated June 13, 1997,
among Big Flower Press Holdings, Inc., the financial
institutions party to the Credit Facility, Bank of America
NT & SA and The Industrial Bank of Japan, Limited as Co
Agents, Credit Suisse First Boston as Documentation Agent
and Bankers Trust Company as Administrative Agent.
(b) Reports on Form 8-K
Current report on Form 8-K, dated June 13, 1997 concerning the
Registrant's agreement to enter into a Credit Agreement dated
June 12, 1997.
Current report on Form 8-K, dated June 20, 1997 concerning
issuance by the Registrant of 8 7/8% Notes and tender offer
by the Registrant for the 10 3/4% Notes.
- -------------------
(footnotes)
(1) Incorporated by reference to Big Flower Press Holdings, Inc., Form S-4,
filed on July 25, 1997 (File #333-32141).
(2) Incorporated by reference to Big Flower Press Holdings, Inc., Form 8-K,
dated June 13, 1997. (File #1-14084).
17
<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.
BIG FLOWER PRESS HOLDINGS, INC.
/s/Richard L. Ritchie
-----------------------------
Richard L. Ritchie
Executive Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
DATE: August 14, 1997
18
<PAGE>
BIG FLOWER PRESS HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE SIX MONTHS ENDED JUNE 30, 1997
EXHIBIT INDEX
EXHIBIT
NO.
- ---
4.1 Indenture, dated as of June 20, 1997, between Big Flower Press Holdings,
Inc. and State Street Bank and Trust Company (as successor in interest
to Fleet National Bank), as Trustee. (1)
4.2 Registration Rights Agreement, dated as of June 20, 1997, between Big
Flower Press Holdings, Inc. and BT Securities Corporation, Credit Suisse
First Boston and Goldman, Sachs & Co. (1)
10.1 Credit Agreement, dated as of June 12, 1997, between Big Flower Press
Holdings, Inc., the Banks from time to time party thereto, Bank of
America NT & SA and The Industrial Bank of Japan, Limited as Co Agents,
Credit Suisse First Boston as Documentation Agent and Bankers Trust
Company as Administrative Agent. (2)
10.2 First Amendment to the Credit Facility, dated June 13, 1997, among Big
Flower Press Holdings, Inc., the financial institutions party to the
Credit Facility, Bank of America NT & SA and The Industrial Bank of
Japan, Limited as Co Agents, Credit Suisse First Boston as Documentation
Agent and Bankers Trust Company as Administrative Agent.
- -------------------
(footnotes)
(1) Incorporated by reference to Big Flower Press Holdings, Inc., Form S-4,
filed on July 25, 1997 (File #333-32141).
(2) Incorporated by reference to Big Flower Press Holdings, Inc., Form 8-K,
dated June 13, 1997. (File #1-14084).
19
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of June
13, 1997, among BIG FLOWER PRESS HOLDINGS, INC. (the "Borrower"), the
financial institutions party to the Credit Agreement referred to below (the
"Banks"), BANK OF AMERICA NT & SA and THE INDUSTRIAL BANK OF JAPAN, LIMITED,
as Co-Agents (the "Co-Agents"), CREDIT SUISSE FIRST BOSTON, as Documentation
Agent (the "Documentation Agent"), and BANKERS TRUST COMPANY, as
Administrative Agent (the "Administrative Agent") for the Banks. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks, the Co-Agents, the Documentation Agent
and the Administrative Agent are parties to a Credit Agreement, dated as of
June 12, 1997 (as in effect on the date hereof, the "Credit Agreement");
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement as provided herein; and
WHEREAS, the parties hereto wish to amend the Credit Agreement as herein
provided;
NOW, THEREFORE, it is agreed;
I. Amendments to Credit Agreement.
1. Section 9.04(xiv) of the Credit Agreement is hereby amended by
inserting the following text at the end of said Section:
"; provided that the proceeds of any issue of Permitted Subordinated
Indebtedness issued as contemplated by the last sentence of the
definition thereof may, but shall not be required to be, used as
provided in preceding clause (y)(I)".
2. Section 9.10(b) of the Credit Agreement is hereby amended by
inserting the following text at the end of said Section:
"In addition, notwithstanding anything to the contrary contained above in
this Section 9.10, in the event of any issuance of Permitted Subordinated
Indebtedness as
<PAGE>
contemplated by the last sentence of the definition thereof in an
aggregate principal amount in excess of $126,700,000, then so long as no
Default or Event of Default is in existence at the time of the respective
repurchase or redemption or immediately after giving effect thereto, the
Borrower may, on or prior to September 1, 1998, repurchase or redeem the
Existing 10-3/4% Senior Subordinated Notes in whole or in part."
3. The definition of "Permitted Subordinated Indebtedness" appearing in
Section 11.01 of the Credit Agreement is hereby amended by adding the
following sentence at the end of said definition:
"Notwithstanding anything to the contrary contained above in this
definition, if the Borrower issues its unsecured subordinated Indebtedness
for borrowed money in an aggregate principal amount not to exceed
$250,000,000 within 20 days following the Effective Date, such
Indebtedness will constitute Permitted Subordinated Indebtedness, so long
as (i) the per annum interest rate payable in respect of such Subordinated
Indebtedness is not greater than 9-1/4% (subject to increase by not more
than 1/2 of 1% for certain failures to effect, or maintain, registrations
of same with the SEC), (ii) such indebtedness is not guaranteed by any
Person other than the Borrower, (iii) such indebtedness has a final
maturity date not earlier than (and no scheduled repayments of principal
prior to) June 15, 2007, (iv) the documentation with respect to any such
subordinated Indebtedness does not contain (x) any covenants, defaults or
other terms that are less favorable in any material respect from the
perspective of the Banks than those contained in the Existing 10-3/4%
Senior Subordinated Note Indentures or (y) subordination provisions less
favorable from the perspective of the Banks than those contained in the
Existing 10-3/4% Senior Subordinated Note Indentures, it being understood,
however, that the change of control provision contained in the indenture
governing such subordinated Indebtedness may modified from that contained
in the Existing 10-3/4% Senior Subordinated Note Indentures to include a
change of control upon the "beneficial" owernship (as defined under Rule
13d-3 under the Exchange Act) of the Permitted Holders (as defined in the
Existing 10-3/4% Senior Subordinated Note Indentures) of more than 50% of
the combined voting power of the outstanding securities of the Borrower,
(v) the indenture pursuant to which to such subordinated Indebtedness is
issued is furnished to the Agents and the Banks (it being understood,
however, that such documentation shall not be subject to the approval of
the Agents or the Banks) and (vi) the indebtedness covenant contained in
such documentation shall allow up to $475,000,000 (which amount may be
reduced by repayments under this Agreement in satisfaction of the
application of net proceeds requirements of certain asset sales made
after the Effective Date, on substantially the same basis as is currently
provided in the Existing 10-3/4% Senior Subordinated Note Indentures)
aggregate principal amount of Loans to outstanding, which in any event
shall constitute "Senior Debt"
2
<PAGE>
thereunder, without being subject to compliance with an interest coverage or
similar financial test."
II. Miscellaneous Provisions.
1. In order to induce the Banks to enter into the Amendment, the Borrower
hereby represents and warrants that:
(a) no Default or Event of Default exists as of the First Amendment
Effective Date, both before and after giving effect to this Amendment; and
(b) all of the representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects on the First Amendment Effective Date both before and after giving
effect to this Amendment, with the same effect as though such representations
and warranties had been made on and as of the First Amendment Effective Date
(it being understood that any representation or warranty made as of a
specific date shall be true and correct in all material respects as of such
specific date).
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
3. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Administrative
Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.
5. This Amendment shall become effective on the date (the "First
Amendment Effective Date") when each of the Borrower and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Administrative Agent at its Notice Office.
3
<PAGE>
6. Form and after the First Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.
Address:
- -------
3 East 54th Street BIG FLOWER PRESS HOLDINGS, INC.
17th Floor
New York, NY 10022
Tel: (212) 521-1621 By /s/ Irene B. Fisher
Fax: (212) 521-1640 ---------------------------------------
Title: Vice President
Attention: Secretary
One Bankers Trust Plaza BANKERS TRUST COMPANY,
130 Liberty Street Individually and as Administrative Agent
New York, NY 10006
Tel: (212) 250-2500
Fax: (212) 250-7218 By /s/ Timothy Morris
Attention: Timothy Morris --------------------------------------
Title: Vice-President
<PAGE>
11 Madison Avenue CREDIT SUISSE FIRST BOSTON,
New York, NY 10010 Individually
Tel: (212) 325-9157
Fax: (212) 325-8309
Attention: Chris T. Horgan By /s/ Chris T. Horgan
---------------------------------------
Title: Vice President
By /s/ Daniel R. Wenger
---------------------------------------
Title: Associate
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
By /s/ Chris T. Horgan
--------------------------------------
Title: Associate
By /s/ Daniel R. Wenger
--------------------------------------
Title: Associate
<PAGE>
ABN AMRO BANK N.V.,
NEW YORK BRANCH
By /s/ Nancy W. Lanzoni
--------------------------------------
Title: Group Vice President
By /s/ Andrew M. Dry
--------------------------------------
Title: Group Vice President
BANK OF AMERICA, NT & SA
By /s/ Shannon T. Ward
--------------------------------------
Title: Vice President
BANKBOSTON, N.A.
By /s/ Julie V. Jalelian
--------------------------------------
Title: Vice President
BANK OF MONTREAL
By /s/ R.J. McClorey
--------------------------------------
Title: Director
THE BANK OF NEW YORK
By /s/ Ken Sneider
--------------------------------------
Title: Vice President
<PAGE>
BANQUE PARIBAS
By /s/ Mary Finnegan
--------------------------------------
Title: Vice President
CORESTATES BANK, N.A.
By /s/ Melissa G. Landay
--------------------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE
By /s/ J. McCloskey
--------------------------------------
Title: Vice President
CITY NATIONAL BANK
By /s/ George Hayrapetian
--------------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Attila Koc
--------------------------------------
Title: Vice President
<PAGE>
DAI-ICHI KANGYO BANK, LIMITED
By /s/ David J. McCann
--------------------------------------
Title: Account Officer
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By /s/ Peter M. Kay
--------------------------------------
Title: Assistant Vice President
By /s/ Richard W. Conroy
--------------------------------------
Title: Vice President
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By /s/ Teiji Teramoto
--------------------------------------
Title: Vice President & Manager
GIROCREDIT BANK AG DER
SPARKASSEN, GRAND CAYMAN
ISLAND BRANCH
By /s/ John P. Redding
--------------------------------------
Title: Vice President
By /s/ Richard Stone
--------------------------------------
Title: First Vice-President
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By /s/ Takuya Honjo
--------------------------------------
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD. NEW YORK BRANCH
By /s/ Noboru Kubota
--------------------------------------
Title: Deputy General Manager
NATIONSBANK, N.A.
By /s/ Michael R. Heredia
--------------------------------------
Title: Senior Vice President
SUMITOMO BANK OF CALIFORNIA
By /s/ Elizabeth M. Toda
--------------------------------------
Title: Assistant Vice President
THE TOKAI BANK, LIMITED
By /s/ Stuart M. Schulman
--------------------------------------
Title: Deputy General Manager
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By /s/ Ali Pasha Moghaddam
--------------------------------------
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD.,
NY BRANCH
By /s/ Rohn Laudenschlager
--------------------------------------
Title: Senior Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOUND ON PAGES 2 THROUGH 4 OF THE COMPANY'S 10-Q FOR THE YEAR TO
DATE.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,698
<SECURITIES> 0
<RECEIVABLES> 96,882
<ALLOWANCES> 9,273
<INVENTORY> 36,104
<CURRENT-ASSETS> 153,230
<PP&E> 413,818
<DEPRECIATION> 107,558
<TOTAL-ASSETS> 756,231
<CURRENT-LIABILITIES> 171,531
<BONDS> 0
0
0
<COMMON> 185
<OTHER-SE> 96,913
<TOTAL-LIABILITY-AND-EQUITY> 756,231
<SALES> 614,339
<TOTAL-REVENUES> 614,339
<CGS> 484,154
<TOTAL-COSTS> 484,154
<OTHER-EXPENSES> 96,303
<LOSS-PROVISION> 1,726
<INTEREST-EXPENSE> 20,476
<INCOME-PRETAX> 11,680
<INCOME-TAX> 5,606
<INCOME-CONTINUING> 6,074
<DISCONTINUED> 0
<EXTRAORDINARY> 2,959
<CHANGES> 0
<NET-INCOME> 3,115
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
