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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 24, 1999
(February 9, 1999)
AMERICAN PAD & PAPER COMPANY
(Exact name of registrant as specified in its charter)
Commission file number 1-11803
Delaware 04-3164298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 733-6200
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Item 5. Other Events.
On February 9, 1999, American Pad & Paper Company (the "Company")
issued a press release announcing two recent key management appointments.
William J. Mays has joined the Company as Vice President Operations Controller.
In addition, Leon W. Hall has joined the Company as Vice president of Sales for
the AMPAD division. This press release is incorporated herein as Exhibit 99.023.
On February 17, 1999, American Pad & Paper Company (the "Company")
issued a press release announcing financial results for the fourth quarter and
the year ended December 31, 1998. This press release is incorporated herein as
Exhibit 99.024.
Exhibit
99.23 Press release by the Company dated February 9,1999.
99.24 Press release by the Company dated February 17, 1999.
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 hereunto duly authorized.
American Pad & Paper Company
February 24, 1999 /s/ David N. Pilotte
Date David N. Pilotte
Vice President and Corporate Controller
Principal Accounting Officer
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Exhibit 99.023
For Immediate Release CONTACT: Mark Lipscomb
(972) 733-5415
AMERICAN PAD & PAPER ANNOUNCES KEY MANAGEMENT APPOINTMENTS
DALLAS, Texas, February 9, 1999, -- American Pad & Paper Company
(OTCBB:AMPP) (AP&P) announced today two recent key management appointments.
William J. Mays, 51, has joined the Company as Vice President Operations
Controller. Mr. Mays will be responsible for overseeing all financial planning
and control activities of plant operations. Before joining American Pad & Paper,
Mr. Mays was with DSC/Alcatel, where he was Vice President of Finance and
Administration for the United States, Canada, Mexico and Japan operations, a
$3.5 billion business unit. Prior to DSC/Alcatel Mr. Mays was Vice President
Finance with a division of Nortel. Mr. Mays received his A. B. in Mathematics
from Colgate University in New York.
Leon W. Hall, 49, has joined the Company as Vice president of Sales for the
AMPAD division. Mr. Hall will manage the overall sales organization for AMPAD.
Prior to joining American Pad & Paper, Mr. Hall was Southwest Regional Vice
President Sales and Marketing for Millbrook Distributors. Mr. Hall also held the
position of Senior Vice President of Sales with Maybelline U.S.A. and sales
management positions with Gillette. Mr. Hall received his B.S. degree from the
University of Georgia.
Commenting on these new appointments to the management team, James W.
Swent III, Chief Executive Officer of American Pad & Paper, stated, "Mr. Mays
brings to the company a strong, 30 year, background in finance and operations
management and will be instrumental as we execute our previously announced plant
rationalization plans. Mr. Hall is a seasoned and successful sales executive
with 24 years of experience in a wide variety of trade channels who will utilize
his background of managing large sales organizations as we build the AMPAD sales
team."
American Pad & Paper Company is a leading manufacturer and marketer of
paper-based office products in North America. Product offerings include
envelopes, writing pads, file folders, machine papers, greeting cards and other
office products. The key operating divisions of the Company are Williamhouse,
AMPAD, and Creative Card which market principally under the following Brand
Names: AMPAD(R), Century(TM), Embassy(R), Evidence(R), Globe-Weis(R), Gold
Fibre(TM), Huxley(TM), Karolton(R), Kent(R), Peel & Seel(R), SCM(TM),
Williamhouse(TM) and World Fibre(TM). Company revenues in 1997 were $687
million.
This release contains forward-looking statements relating to future
results. Actual results may differ significantly as a result of factors over
which the Company has no control, including, but not limited to the following:
changing economic conditions, slower than anticipated sales growth, price and
product competition and changes in raw material costs. Additional information,
which could affect the Company's financial results, is included in the Company's
filings with the Securities and Exchange Commission.
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Exhibit 99.024
For Immediate Release CONTACT: Mark Lipscomb
(972) 733-5415
American Pad & Paper Reports Fourth Quarter Results
DALLAS, Texas, February 17, 1999, -- American Pad & Paper Company
(OTCBB:AMPP) (AP&P) today reported financial results for the fourth quarter and
the year ended December 31, 1998.
For the fourth quarter the Company reported a net loss of $7.2 million,
or 26 cents per share, on net sales of $179.6 million. These results include
previously announced plant rationalization charges totaling $0.9 million, which
impacted quarterly performance by 2 cents per share. The charges associated with
the ongoing plant rationalization are reflected in cost of goods sold. The
fourth quarter loss also included a $6.3 million non-cash valuation allowance to
the deferred tax asset, which resulted in a net provision for taxes of $5.5
million, or 23 cents per share impact.
For the year ended December 31, 1998, the Company reported a net loss
of $78.6 million, or $2.84 per share, on net sales of $662.0 million. The 1998
net loss includes the impact of a $41.0 million write-down of goodwill taken in
the second quarter, a $2.9 million inventory write-down taken in the third
quarter, plant rationalization charges of $6.6 million in taken in the second
half of the year, and the $6.3 million deferred tax asset valuation allowance.
Collectively these events represent $53.1 million of the net loss, or a $1.92
per share impact to1998 performance.
Comparable fourth quarter results in 1997 included a net loss of $14.1
million, or 52 cents per share, on net sales of $193.9 million. For the year
ended December 31, 1997, the net loss was $4.5 million, or 16 cents per share,
on net sales of $687.3 million.
For the fourth quarter the Company posted EBITDA performance of $14.1
million as measured by the Company's bank agreement. On a cumulative basis, for
the third and fourth quarters of 1998, the Company posted EBITDA performance of
$20.1 million, exceeding the bank agreement requirements by $1.3 million.
- more-
Exhibit 99.024
The Company reported a 13.4% gross profit margin in the fourth quarter
1998, compared to a 1.4% gross margin in the fourth quarter of 1997. This gross
margin performance helped drive a fourth quarter operating profit of $8.3
million versus the $11.3 million operating loss reported in the same period in
1997.
On a sequential basis the Company reduced SG&A expenses by $2.1
million, fourth quarter versus third quarter 1998, as expected. During the
fourth quarter the Company was successful in selling a number of smaller assets
which increased other income by more than $1.0 million.
The Company's previously announced rationalization plan of
manufacturing operations continues on track and should be completed in late
1999. This plan is expected to produce annualized cost savings of approximately
$10 million, reduce space requirements, and provide a net 7% reduction in the
workforce. The cost for these restructuring actions should be $11 to $13
million. The goals of this major plant rationalization are to improve customer
service, become the lowest cost producer in the industry, and increase overall
manufacturing capacity.
" I am pleased overall with the progress the Company made in the fourth
quarter, as we exceeded our financial plan in many key areas," said James W.
Swent, III, Chief Executive Officer of the Company. "Improving gross margins and
a return to an operating profit in the fourth quarter helped drive our EBITDA
performance above $14 million in the quarter. Inventory management was well
ahead of our plan as we exited the year with $112 million in inventory, down $17
million sequentially from the third quarter, and a reduction of over $45 million
from the high point in 1998. Debt levels, net of cash, improved sequentially
from third quarter and were down almost $22 million from year-end 1997."
"Looking forward the goal remains to return to profitability in the second half
of 1999," said Mr. Swent. "1999 remains a transition year as we execute the
plant rationalization plan, work to rebuild our market share, and remain focused
on expanding our business in both new and existing channels."
American Pad & Paper Company is a leading manufacturer and marketer of
paper-based office products in North America. Product offerings include
envelopes, writing pads, file folders, machine papers, greeting cards and other
office products. The key operating divisions of the Company are Williamhouse,
AMPAD, and Creative Card which market principally under the following Brand
Names: AMPAD(R), Century(TM), Embassy(R), Evidence(R), Globe-Weis(R), Gold
Fibre(TM), Huxley(TM), Karolton(R), Kent(R), Peel & Seel(R), SCM(TM),
Williamhouse(TM) and World Fibre(TM). Company revenues in 1998 were $662
million.
This release contains forward-looking statements relating to future
results. Actual results may differ significantly as a result of factors over
which the Company has no control, including, but not limited to the following:
changing economic conditions, slower than anticipated sales growth, price and
product competition and changes in raw material costs. Additional information,
which could affect the Company's financial results, is included in the Company's
filings with the Securities and Exchange Commission.
***
(Tables to Follow)
Exhibit 99.024
AMERICAN PAD & PAPER COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three months ended Year ended
December 31, December 31,
--------------------------- -------------------------
1998 1997 1998 1997
----------- ------------ ---------- ----------
...................................................................................
Net sales $ 179,552 $ 193,880 $ 662,031 $ 687,335
Cost of sales 155,494 191,134 597,456 598,416
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Gross profit 24,058 2,746 64,575 88,919
Operating expenses:
Selling and marketing 5,499 6,622 21,261 22,246
General and administrative 7,527 4,417 31,840 19,133
Restructuring charges -- -- 5,741 --
Loss on sales of accounts receivable 907 904 3,226 2,954
Amortization of intangible assets 1,417 1,564 5,939 6,110
Write-down of intangible assets -- -- 41,000 --
Management fees and services 375 587 2,030 4,871
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Income (loss) from operations 8,333 (11,348) (46,462) 33,605
Other income (expense):
Interest (11,235) (10,197) (44,970) (37,843)
Other income, net 1,204 156 1,411 389
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Income (loss) before income taxes (1,698) (21,389) (90,021) (3,849)
Provision for (benefit from)income taxes 5,533 (7,251) (11,374) 642
----------- ------------ ---------- -----------
Net income (loss) $ (7,231) $ (14,138) $ (78,647) $ (4,491)
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(Loss) per share (Basic) $ (0.26) $ (0.52) $ (2.84) $ (0.16)
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Weighted average number of
common shares (Basic) 27,724 27,436 27,718 27,431
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Certain amounts in the 1997 Consolidated Statement of Operations have been
reclassified to conform to the presentation in the 1998 Consolidated Statement
of Operations.
- more -
Exhibit 99.024
AMERICAN PAD & PAPER COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31, December 31,
1998 1997
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............. ..............
ASSETS
Current assets:
Cash $ 1,371 $ 4,855
Accounts receivable 60,660 74,203
Inventories 112,169 154,359
Refundable income taxes 1,700 4,059
Prepaid expenses and other current assets 1,240 1,402
Deferred income taxes 40 11,992
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Total current assets 177,180 250,870
Property, plant and equipment 152,198 151,390
Intangible assets 185,805 233,698
Other 2,654 2,443
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Total assets $ 517,837 $ 638,401
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LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current portion of long-term debt $ 1,236 $ 1,538
Accounts payable 49,598 56,356
Accrued expenses 47,078 40,157
Restructuring charges 5,660 --
Income taxes payable 300 --
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Total current liabilities 103,872 98,051
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Long-term debt 373,675 398,577
Deferred income taxes 16,972 39,477
Other 1,288 1,630
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Total liabilities 495,807 537,735
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Commitments and contingencies
Stockholders' equity:
Preferred stock, 150 shares authorized,
no shares issued and outstanding, respectively -- --
Common stock, voting, $.01 par value, 75,000,000
shares authorized, 27,724,000 and 27,436,000
shares issues and outstanding, respectively 277 274
Additional pain-in capital 301,287 301,279
Accumulated deficit (279,534) (200,887)
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Total stockholders' equity 22,030 100,666
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Total liabilities and stockholders' equity $ 517,837 $ 638,401
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