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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): August 9, 2001
P. H. GLATFELTER COMPANY
(Exact Name of Registrant as Specified in Charter)
Pennsylvania 1-3560 23-0628360
(State or Other (Commission File (IRS Employer
Jurisdiction of Incorporation) Number) Identification No.)
96 South George Street, Suite 500
York, PA 17401
(Address of Principal (Zip Code)
Executive Offices)
(717) 225-4711
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 9, 2001, the Registrant completed the sale of its Ecusta
Division to privately-held PURICO (IOM) Limited, an Isle of Man company, and
certain of its affiliates.
The transaction involved the sale of the assets of the Registrant's
Ecusta mill, which produces tobacco papers and lightweight printing papers,
together with the stock of its operating subsidiaries in Australia and Canada
and certain of the Registrant's receivables.
The Ecusta Division was sold for a reduced cash price of approximately
$24 million, plus the assumption of certain liabilities related to Ecusta's
business. The cash price is $15 million lower than the amount announced on May
16, 2001 due to changes in certain aspects of Ecusta's business. The cash price
is subject to adjustments for working capital and final settlement of the
closing balance sheet.
The Registrant recognized a charge of $52.5 million ($33.6 million
after tax or $.79 per share) in the second quarter of 2001, primarily related to
the impairment of the Ecusta Division assets. The Registrant believes that the
consummation of the transaction will not have a significant impact on third
quarter 2001 results. During the third quarter, a gain primarily related to the
settlement of pension obligations will be approximately offset by the impact of
the reduction of the cash price. Any post-closing adjustments to the purchase
price required under the acquisition agreement will be recorded by year end. The
transaction will also be modestly dilutive to earnings exclusive of any one-time
net charges.
Related to the transaction, the Registrant's Papierfabrik Schoeller &
Hoesch GmbH & Co. subsidiary in Germany entered into a three-year agreement to
manufacture and supply tobacco papers to PURICO GmbH, also located in Germany.
Schoeller & Hoesch plans to transition its tobacco papers production to other
products over the next three years. Schoeller & Hoesch also produces tea bag and
other long fiber products, as well as overlay papers and metallized papers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information.
The following unaudited pro forma condensed consolidated financial
statements present financial information for the Registrant giving effect to the
sale of the Ecusta Division, which was completed on August 9, 2001. The
transaction involved the sale of the assets of the Registrant's Ecusta mill,
which produces tobacco papers and lightweight printing papers, together with the
stock of its operating subsidiaries in Australia and Canada and certain of the
Registrant's receivables. The unaudited pro forma condensed consolidated
statements of income (loss) for the six months ended June 30, 2001 and for the
year ended December 31, 2000 are presented as if the sale had occurred at the
beginning of the earliest period presented. The unaudited pro forma condensed
consolidated balance sheet as of June 30, 2001 is presented as if the sale had
occurred as of that date.
The pro forma condensed consolidated financial statements should be
read in conjunction with the Registrant's unaudited condensed consolidated
financial statements and notes thereto included in the Registrant's quarterly
report on Form 10-Q for the period ended June 30, 2001 and the audited
consolidated financial statements and notes thereto incorporated by reference in
the Registrant's Annual Report on Form 10-K for the year ended December 31,
2000. The pro forma information may not necessarily be indicative of what the
Registrant's results of operations or financial position would have been had the
transaction been in effect as of and for the periods presented, nor is such
information necessarily indicative of the Registrant's results of operations or
financial position for any future period or date.
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P. H. GLATFELTER COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
(in thousands except per share amounts)
(UNAUDITED)
Six months ended June 30, 2001
-------------------------------------------------------
LESS:
THE DISPOSED
REGISTRANT BUSINESS PRO FORMA
(E) (F) ADJUSTMENTS PRO FORMA
---------- --------- ----------- ---------
Revenues:
Net sales $ 355,933 $ 80,125 $ 275,808
Other income - net:
Energy sales - net 4,714 - 4,714
Interest on investments
and other - net 2,339 45 $ 595 (A) 2,889
Gain (loss) from property
dispositions, etc. - net 1,095 (479) 1,574
--------- --------- --------- ---------
8,148 (434) 595 9,177
Total revenues 364,081 79,691 595 284,985
Costs and expenses:
Cost of products sold 283,981 70,265 (303)(B) 213,413
Selling, general and
administrative expenses 30,582 4,871 25,711
Interest on debt 8,244 - 8,244
Unusual items 52,500 - (50,000)(C) 2,500
--------- --------- --------- ---------
375,307 75,136 (50,303) 249,868
Income (loss) before income taxes (11,226) 4,555 50,898 35,117
Income tax provision (benefit):
Current 673 2,684 9,119 (D) 7,108
Deferred (4,791) (936) 9,204 (D) 5,349
--------- --------- --------- ---------
Total (4,118) 1,748 18,323 12,457
Net income (loss) $ (7,108) $ 2,807 $ 32,575 $ 22,660
========= ========= ========= =========
Earnings (loss) per share:
Basic $ (0.17) $ 0.53
========= =========
Diluted $ (0.17) $ 0.53
========= =========
Shares used in per share calculations:
Basic 42,466 42,466
========= =========
Diluted 42,546 42,800
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P. H. GLATFELTER COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
(in thousands except per share amounts)
(UNAUDITED)
Year ended December 31, 2000
-------------------------------------------------------
LESS:
THE DISPOSED PRO FORMA
REGISTRANT BUSINESS ADJUSTMENTS PRO FORMA
(F)
---------- --------- ----------- ---------
Revenues:
Net sales $ 724,720 $ 165,379 $ 559,341
Other income - net:
Energy sales - net 9,243 - 9,243
Interest on investments
and other - net 3,820 125 $ 1,587 (A) 5,282
Gain from property
dispositions, etc. - net 2,029 (410) 2,439
--------- --------- --------- ---------
15,092 (285) 1,587 16,964
Total revenues 739,812 165,094 1,587 576,305
Costs and expenses:
Cost of products sold 591,201 155,507 (607)(B) 435,087
Selling, general and
administrative expenses 60,267 10,913 49,354
Interest on debt 16,405 - 16,405
Unusual items 3,336 2,497 839
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671,209 168,917 (607) 501,685
Income (loss) before income taxes 68,603 (3,823) 2,194 74,620
Income tax provision (benefit):
Current 11,366 (698) 571 (D) 12,635
Deferred 13,237 (873) 219 (D) 14,329
--------- --------- --------- ---------
Total 24,603 (1,571) 790 26,964
Net income (loss) $ 44,000 $ (2,252) $ 1,404 $ 47,656
========= ========= ========= =========
Earnings per share:
Basic $ 1.04 $ 1.13
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Diluted $ 1.04 $ 1.12
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Shares used in per share calculations:
Basic 42,342 42,342
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Diluted 42,483 42,483
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P. H. GLATFELTER COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(UNAUDITED)
June 30, 2001
-----------------------------------------------------------
LESS:
DISPOSED
THE REGISTRANT BUSINESS PRO FORMA
(E) (E), (M) ADJUSTMENTS PRO FORMA
-------------- --------- ----------- ---------
ASSETS
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Current assets:
Cash and cash equivalents $ 96,933 $ 3,725 $ 22,672 (G) $ 115,880
Accounts receivable - net 75,663 18,496 57,167
Income taxes receivable 7,063 4,758 (H) 11,821
Inventories:
Raw materials 25,266 9,956 15,310
In-process and finished 43,527 14,300 29,227
Supplies 28,865 8,955 19,910
--------- --------- --------- ---------
Total inventories 97,658 33,211 64,447
Prepaid expenses and other current assets 2,700 265 2,435
--------- --------- --------- ---------
Total current assets 280,017 55,697 27,430 251,750
Plant, equipment and timberlands - net 493,612 4,764 488,848
Other assets 185,636 25 16,625 (I) 202,236
--------- --------- --------- ---------
Total assets $ 959,265 $ 60,486 $ 44,055 $ 942,834
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,294 $ - $ 1,294
Short-term debt 2,943 - 2,943
Accounts payable 41,449 5,312 36,137
Dividends payable 7,455 - 7,455
Income taxes payable 1,140 - 1,140
Accrued compensation and other expenses
and deferred income taxes 52,147 12,739 $ 1,000 (J) 40,408
--------- --------- --------- ---------
Total current liabilities 106,428 18,051 1,000 89,377
Long-term debt 284,440 - 284,440
Deferred income taxes 150,507 - 4,032 (H) 154,539
Other long-term liabilities 66,118 4,281 3,400 (K) 65,237
--------- --------- --------- ---------
Total liabilities 607,493 22,332 8,432 593,593
Commitments and contingencies
Shareholders' equity:
Common stock 544 - 544
Capital in excess of par value 41,220 - 41,220
Retained earnings 489,027 38,154 35,623 (L) 486,496
Accumulated other comprehensive loss (4,412) - (4,412)
--------- --------- --------- ---------
Total 526,379 38,154 35,623 523,848
Less cost of common stock in treasury (174,607) - (174,607)
--------- --------- --------- ---------
Total shareholders' equity 351,772 38,154 35,623 349,241
Total liabilities and shareholders' equity $ 959,265 $ 60,486 $ 44,055 $ 942,834
========= ========= ========= =========
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The following unaudited pro forma condensed consolidated financial
statements present financial information for the Registrant giving effect
to the sale of the Ecusta Division, which was completed on August 9, 2001.
The transaction involved the sale of the assets of the Registrant's Ecusta
mill, which produces tobacco papers and lightweight printing papers,
together with the stock of its operating subsidiaries in Australia and
Canada and certain of the Registrant's receivables. The unaudited pro
forma condensed consolidated statements of income (loss) for the six
months ended June 30, 2001 and for the year ended December 31, 2000 are
presented as if the sale had occurred at the beginning of the earliest
period presented. The unaudited pro forma condensed consolidated balance
sheet as of June 30, 2001 is presented as if the sale had occurred as of
that date.
2. Unaudited Pro Forma Consolidated Financial Adjustments
(A) Reflects interest income on net cash proceeds of $22,672,000 using
interest rate assumptions of 5.25% and 7.00% for the six months ended June
30, 2001 and for the year ended December 31, 2000, respectively.
(B) Reflects an estimate of the on-going net impact on pension income and
retiree medical costs due to the settlement of certain pension and
retiree medical benefit obligations for employees transferred in
connection with the sale. This adjustment does not include the impact of
the one-time net gain expected as a result of the curtailment and
settlement of such obligations.
(C) Reflects the elimination of $50,000,000 recorded during the second quarter
of 2001. This amount, which had an after-tax impact of $32,000,000, or
$0.75 per share, relates to an impairment charge associated with the
disposed business.
(D) Reflects the tax effect of the pro forma adjustments described in notes
(A) through (C) using an effective income tax rate of 36.0%.
(E) The unaudited condensed consolidated statement of income (loss) for the
six months ended June 30, 2001 and unaudited condensed consolidated
balance sheet as of June 30, 2001 reflect the impact of the $52,500,000 of
unusual items in the second quarter of 2001. This amount
primarily relates to the $50,000,000 impairment charge associated with the
disposed business discussed in note (C).
(F) Reflects the disposed business' unaudited condensed consolidated
statement of income (loss) for the period presented.
(G) Reflects the sale of the Ecusta Division to PURICO (IOM) Limited, an Isle
of Man company, and certain of its affiliates for total cash proceeds of
$24,000,000, net of an estimated working capital adjustment to the
purchase price of $1,328,000. The actual amount of the working capital
adjustment, if any, is dependent upon the final closing balance sheet.
(H) Reflects the effect on income taxes receivable and deferred income taxes
related to the estimated impact of the transaction on third quarter 2001
earnings. The effect was calculated using an effective income tax rate of
36.0%. The effect on income taxes receivable and deferred income taxes
related to the impairment charge in the second quarter of 2001 is
reflected in the June 30, 2001 unaudited condensed consolidated balance
sheet.
(I) Reflects the impact of an estimated gain in connection with the
curtailment and settlement of certain pension obligations for employees
transferred in connection with the sale.
(J) Reflects the impact of estimated third quarter 2001 costs incurred in
connection with the transaction not reflected in the June 30, 2001
unaudited condensed consolidated balance sheet.
(K) Reflects the net impact of the estimated accrual of certain long-term
liabilities in connection with the transaction, partially offset by an
estimated gain in connection with the settlement of certain retiree
medical benefit obligations for employees transferred in connection with
the sale.
(L) Reflects the net impact of the adjustments described in notes (G) through
(K).
(M) Reflects the disposed business' unaudited condensed consolidated balance
sheet as of June 30, 2001.
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(c) Exhibits.
Number Description of Document
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2 Amended and Restated Acquisition
Agreement, dated as of August 9, 2001
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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.
P. H. GLATFELTER COMPANY
(Registrant)
By: /s/ C. Matthew Smith
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Date: August 24, 2001 Name: C. Matthew Smith
Title: Chief Financial Officer
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INDEX OF EXHIBITS
Number Description of Document
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2 Amended and Restated Acquisition
Agreement, dated as of August 9, 2001
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