Exhibit 99.1
Contact: Kenneth A. Budde
Chief Financial Officer
AKI, Inc.
(423) 624-3301
For Immediate Release
AKI HOLDING CORP. AND ITS WHOLLY OWNED SUBSIDIARY
AKI, INC. NAMES SUCCESSOR TO ROGER BARNETT
TO GUIDE COMPANY INTO NEXT PHASE
WILLIAM J. FOX NAMED CHIEF EXECUTIVE OFFICER
Strong Second Quarter Earnings Announced
NEW YORK, Feb. 2--Roger Barnett, President and CEO of AKI Holding Corp.
and AKI, Inc. ("AKI") the world's leading marketer of cosmetics sampling
products, today announced the appointment of a new CEO under the ownership of
DLJ Merchant Banking Partners, to guide the company in the next phase of its
development. The new CEO, William J. Fox, leaves Revlon, Inc. (NYSE:REV) as
President of Strategic and Corporate Development, Revlon Worldwide. Mr. Fox
joins AKI on Feb. 1, 1999 as Chief Executive Officer. Mr. Barnett will remain a
member of AKI's Board of Directors and a minority shareholder of the Company.
Mr. Fox has significant global experience working with consumer branded
products enhancing strategic prospects as well as implementing operational
efficiencies. Most recently, Mr. Fox served as Senior Executive Vice President
and member of the Board of Directors of Revlon, Inc. and Revlon Consumer
Products Corporation. His various responsibilities at Revlon also included
CEO-Revlon Technologies and, from 1991 through 1997, he was also Revlon's Chief
Financial Officer. In addition, Mr. Fox has been Senior Vice President of
MacAndrews & Forbes Holdings Inc. (the indirect parent of Revlon). Mr. Fox
joined MacAndrews in 1983 after six years at Coopers and Lybrand. He is a
graduate of the Pace University Lubin School and Graduate Business School. Mr.
Fox is also the Vice Chairman of The Board and a Director of the Hain Food Group
Inc.(NASDAQ:HAIN).
As the leader of AKI for the past five years, Mr. Barnett has played an
instrumental role in transforming the company from a domestic marketer of
fragrance samplers into the world's leading marketer of sampling products for
the cosmetics and consumer product industries. Mr. Barnett said, "After selling
AKI and working with the new owners to strongly position the company for the
future, I am now able to pursue other entrepreneurial activities. I am very
proud of the management team at AKI and what we have been able to accomplish
during the past five years. With our successful expansion into cosmetics and
consumer products sampling, the Company has never been stronger."
Thompson Dean, Chairman of AKI and Managing Partner of DLJ Merchant
Banking Partners, the controlling shareholder of AKI, Said, "We have tremendous
confidence in AKI's market position and future prospects. We are delighted that
Bill Fox is joining our team to continue the strong momentum generated by Roger
Barnett."
Mr. Fox Said, "I am excited about this opportunity to lead one of the
most innovative companies in the cosmetics and personal care products industry.
The AKI team has done a tremendous job of building its business into a global
presence and positioning it for further growth and market expansion. I look
forward to developing AKI's proprietary product portfolio by providing
technologically sophisticated marketing solutions designed to fit our customer's
needs. AKI is uniquely positioned to provide strategic assistance to its
customers and to broaden the variety of industries it serves."
DLJ Merchant Banking Partners II, L.P., a $3 billion fund dedicated to
private equity and equity-related investments, seeks significant capital
appreciation through domestic and international investment in common or
preferred stock and debt of other securities in leveraged acquisitions and
corporate joint ventures.
Since its formation in November 1996, DLJ Merchant Banking Partners II,
L.P. has consummated (or contracted to consummate) 26 transactions valued at
approximately $12 billion, the largest of which include Ameriserve, Duane Reade,
Insilco, Thermadyne and Von Hoffman Press.
AKI today also announced second quarter results for the period ended
Dec. 31, 1998.
In June 1998, AKI, Inc. issued $115 million of 10 1/2% Senior Notes due
2008 and AKI Holding Corp. issued $50 million of 13 1/2% Senior Discount
Debentures due 2009. These issues were completed under Rule 144A of the
Securities Act of 1933 and the company has completed an exchange offer for these
securities as prescribed by the terms of the offerings.
Net sales for the 2nd quarter ended December 31, 1998 increased $4.4
million, or 27.5 percent, to $20.4 million compared with $16.0 million in the
1997 period. The net sales increase resulted from increases in the sales of
fragrance sampling products, sales to other categories of the cosmetics industry
and sales to the consumer products market. Increases in domestic fragrance
sampling products resulted primarily from the 3M Acquisition. Earnings before
interest, taxes, depreciation and amortization ("EBITDA") increased $1.5 million
or 50.0 percent to $4.5 million compared with $3.0 million for 1997. The
increase in EBITDA resulted primarily from the gross profit associated with the
increased sales and decreases in raw material costs, partially offset by
increased costs associated with the outsourcing of European production and
increased selling, general and administrative costs reflecting net increases in
executive compensation following the acquisition of the company.
Net sales for the six months ended December 31, 1998 increased $6.5
million, or 17.1 percent, to $44.5 million compared with $38.0 million in the
1997 period. The net sales increase resulted from increases in the sales of
fragrance sampling products sales to other categories of the cosmetics industry.
Increases in domestic fragrance sampling products resulted primarily from the 3M
Acquisition. EBITDA increased $2.0 million or 22.2 percent to $11.0 million
compared with $9.0 million for 1997. The increase in EBITDA resulted primarily
from the gross profit associated with the increased sales and decreases in raw
material costs, partially offset by increased costs associated with the
outsourcing of European production and with the initial production runs of
certain new products, and increased selling, general and administrative costs
reflecting net increases in executive compensation following the acquisition of
the company.
Statements made in this press release that state the company's or
management intentions, beliefs, expectations of predictions for the future are
forward-looking statements. It is important to note that the company's actual
results could differ materially from those projected in such forward-looking
statements. In addition to the factors set forth above, other important factors
that could cause actual results to differ materially include, but are not
limited to general economic and business conditions, industry trends, the loss
of major customers or suppliers, the timing of orders received from customers,
cost and availability of raw materials, changes in business strategy or
development plans, availability and quality of management, and availability,
terms and deployment of capital. Additional information concerning factors that
could cause actual results to differ materially from those in the
forward-looking statements is contained from time to time in the company's SEC
filings. Copies of these filings may be obtained by contacting the company or
SEC. The company disclaims any intention or obligation to update or review any
forward-looking Statements, whether as a result of new information, future
events or otherwise.
AKI, Inc.
December 31, 1998
(In thousands)
Three months Six months
ended December 31, ended December 31,
1997 1998 1997 1998
---- ---- ---- ----
Summary Income
Statement Data:
Net Sales 16,049 20,437 37,977 44,461
Gross Profit 4,884 6,777 13,190 15,380
Selling, general &
administrative expenses 2,871 3,294 6,187 6,409
Income from operations 1,579 2,331 6,259 6,668
Interest expense 1,954 3,244 3,405 6,454
Net Income (loss) (446) (970) 1,350 (697)
Other Data:
Depreciation & amortization 1,404 2,188 2,805 4,374
Capital Expenditures 450 979 898 1,657
EBITDA 2,983 4,519 9,064 11,042
Summary Balance
Sheet Data:
Cash 2,277 7,151
Current Assets 21,043 30,418
Total Assets 201,364 217,646
Current Liabilities 132,997 16,492
Long-term debt, excluding
current portion 1,780 116,702
Total Liabilities 139,193 136,436
Stockholders Equity 62,171 79,040
A full report will be available in the Form 10-Q to be filed with the securities
and Exchange Commission.
AKI Holding Corp.
December 31, 1998
(In thousands)
Three months Six months
ended December 31, ended December 31,
1997 1998 1997 1998
---- ---- ---- ----
Summary Income
Statement Data:
Net Sales 16,049 20,437 37,977 44,461
Gross Profit 4,884 6,777 13,190 15,380
Selling, general &
administrative expenses 2,871 3,294 6,187 6,409
Income from operations 1,579 2,331 6,259 6,668
Interest expense 1,954 4,149 3,405 8,245
Net Income (loss) (446) (1,579) 1,350 (1,903)
Other Data:
Depreciation & amortization 1,404 2,188 2,805 4,374
Capital Expenditures 450 979 898 1,657
EBITDA 2,983 4,519 9,064 11,042
Summary Balance
Sheet Data:
Cash 2,277 7,151
Current Assets 21,043 30,418
Total Assets 201,364 217,646
Current Liabilities 132,997 16,492
Long-term debt, excluding
current portion 1,780 144,478
Total Liabilities 139,193 164,212
Stockholders Equity 62,171 53,434
A full report will be available in the Form 10-Q to be filed with the securities
and Exchange Commission.