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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the Twenty-six Weeks Ended March 25, 2001
[ ] 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 333-24939
THE FONDA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3220732
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2920 North Main Street, Oshkosh, Wisconsin 54901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 920/235-9330
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 [ ]
The number of shares outstanding of the Registrant's common stock
as of April 20, 2001:
Common Stock, $0.01 par value - 100 shares
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE FONDA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
March 25, September 24,
2001 2000
------------- -----------------
Assets
Current assets:
Cash and cash equivalents $ 491 $ 1,413
Receivables, less allowances of $1,831 and $1,459,
respectively 48,475 50,927
Inventories 56,408 63,145
Deferred income taxes 7,644 8,044
Refundable income taxes 298 298
Spare parts 2,565 2,523
Other current assets 6,145 6,328
---------- ----------
Total current assets 122,026 132,678
Property, plant and equipment, net 51,396 49,280
Goodwill, net 21,354 18,373
Due from SF Holdings 18,033 18,441
Other assets 10,014 11,604
---------- ----------
Total assets $ 222,823 $ 230,376
========== ==========
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable $ 9,161 $ 15,679
Accrued payroll and related costs 8,106 10,469
Other current liabilities 18,313 21,203
Current portion of long-term debt 41,611 41,425
---------- ----------
Total current liabilities 77,191 88,776
Deferred income taxes 4,484 5,043
Long-term debt 123,970 120,453
Other liabilities 1,162 1,212
---------- ----------
Total liabilities 206,807 215,484
---------- ----------
Commitments and contingencies (See Notes)
Shareholder's equity:
Common stock - par value $.01 per share; 1,000 shares
authorized; 100 shares issued and outstanding - -
Additional paid-in capital 1,037 1,022
Retained earnings 15,004 13,895
Accumulated other comprehensive loss (25) (25)
---------- ----------
Total shareholder's equity 16,016 14,892
---------- ----------
Total liabilities and shareholder's equity $ 222,823 $ 230,376
========== ==========
See accompanying Notes to Consolidated Financial Statements.
2
THE FONDA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
For the For the For the For the
Thirteen Thirteen Twenty-six Twenty-six
weeks ended weeks ended weeks ended weeks ended
March 25, March 26, March 25, March 26,
2001 2000 2001 2000
--------------- --------------- --------------- ---------------
Net sales $ 79,773 $ 78,063 $ 179,939 $ 175,635
Cost of sales 65,734 64,142 146,882 142,814
---------- ---------- ---------- ----------
Gross profit 14,039 13,921 33,057 32,821
Selling, general and administrative expenses 11,044 11,293 23,453 24,292
Other (income), net (140) (149) (197) (224)
---------- ---------- ---------- ----------
Operating income 3,135 2,777 9,801 8,753
Interest expense, net of interest income of $27,
$136, $39 and $219, respectively 3,824 3,953 7,853 8,153
---------- ---------- ---------- ----------
Income (loss) before income tax expense
(benefit) and extraordinary loss (689) (1,176) 1,948 600
Income tax expense (benefit) (227) (476) 839 234
---------- ---------- ---------- ----------
Income (loss) before extraordinary loss (462) (700) 1,109 366
Extraordinary loss on debt extinguishment (net
of income taxes of $350) - 525 - 525
---------- ---------- ---------- ----------
Net income (loss) $ (462) $ (1,225) $ 1,109 $ (159)
========== ========== ========== ==========
See accompanying Notes to Consolidated Financial Statements.
3
THE FONDA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Twenty-six For the Twenty-six
weeks ended weeks ended
March 25, March 26,
2001 2000
---------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,109 $ (159)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 3,395 3,658
Deferred income tax benefit (159) (131)
Loss on sale of assets 87 12
Changes in operating assets and liabilities (net of business
acquisition:
Receivables 3,401 114
Inventories 8,980 (4,165)
Accounts payable and accrued expenses (14,201) 2,733
Other, net 1,486 1,463
--------- ----------
Net cash provided by operating activities 4,098 3,525
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,540) (782)
Payment for business acquisition (6,654) -
Due to/from SF Holdings 408 (31,692)
Proceeds from sale of property, plant and equipment 63 1,357
--------- ----------
Net cash used in investing activities (8,723) (31,117)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments) borrowings under revolving credit facilities (262) 28,561
Borrowing for business acquisition 5,000 -
Net repayments of other debt (1,035) (261)
--------- ----------
Net cash provided by financing activities 3,703 28,300
--------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (922) 708
CASH AND CASH EQUIVALENTS, beginning of period 1,413 624
--------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 491 $ 1,332
========= ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 7,989 $ 8,104
========= ==========
Income taxes paid (refunded) $ 245 $ (49)
========= ==========
See accompanying Notes to Consolidated Financial Statements.
4
THE FONDA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The information included in the foregoing interim financial statements
of The Fonda Group, Inc. (the "Company") are unaudited but, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments and accruals) which the Company considers necessary for a fair
presentation of the operating results for these periods. Results for the interim
periods are not necessarily indicative of results for the entire year. These
condensed financial statements should be read in conjunction with the Company's
financial statements and notes thereto included in the Company's annual report
on Form 10-K for the fiscal year ended September 24, 2000. Certain prior period
amounts have been reclassified to conform to current period presentation. The
Company is a wholly-owned subsidiary of SF Holdings Group, Inc. ("SF Holdings").
(2) RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and requires that an entity
recognize all derivatives at fair value in the balance sheet. The adoption of
SFAS No. 133 did not have a significant impact on the consolidated financial
statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements. SAB No. 101 establishes accounting and reporting standards for
revenue recognition and requires that an entity not recognize revenue until it
is realized or realizable and earned. The adoption of SAB No.101 did not have an
impact on the consolidated financial statements.
(3) INVENTORIES
The components of inventories are as follows (in thousands):
(Unaudited)
March 25, September 24,
2001 2000
------------- -----------------
Raw materials and supplies $ 15,718 $ 19,723
Finished products 40,319 42,732
Work in progress 371 690
-------- --------
Total inventories $ 56,408 $ 63,145
======== ========
(4) BUSINESS ACQUISITION
On September 25, 2000, pursuant to an asset purchase agreement dated
August 9, 2000 (the "Springprint Agreement"), the Company purchased
substantially all of the property, plant and equipment, intangibles and net
working capital of Springprint Medallion, a division of Marcal Paper Mills, Inc.
("Springprint"). In addition, pursuant to the Springprint Agreement, the Company
has assumed the liabilities and obligations of Springprint arising under
contracts or leases that are either assets purchased by the Company or a part of
the accounts payable. The aggregate purchase price for the assets and working
capital was $6.7 million. The Springprint acquisition has resulted in goodwill
of $3.6
5
million which is being amortized over 20 years. The Springprint acquisition has
been accounted for under the purchase method and the results have been included
in the consolidated statements of operations since the date of acquisition.
(5) RELATED PARTY TRANSACTIONS
All of the below referenced affiliates are under the common control of
the Company's Chief Executive Officer or a director of the Company.
During the twenty-six weeks ending March 25, 2001, the Company sold
$5.0 million of paper plates to Sweetheart Holdings Inc. ("Sweetheart") and $2.8
million of scrap paper to Fibre Marketing, LLC ("Fibre Marketing"). Included in
receivables as of March 25, 2001 are (i) $1.4 million due from Sweetheart, (ii)
$1.1 million due from Fibre Marketing and (iii) $0.2 million due from SF
Holdings. Other sales to affiliates, if any, during the twenty-six weeks ending
March 25, 2001 were not significant.
During the twenty-six weeks ending March 26, 2000, the Company sold
$5.4 million of paper plates and $0.5 million of equipment rental and shared
services to Sweetheart and $3.1 million of scrap paper to Fibre Marketing.
Included in receivables as of March 26, 2000 was (i) $1.2 million due from
Sweetheart, (ii) $1.0 million due from Fibre Marketing and (iii) $0.2 million
due from SF Holdings. Other sales to affiliates, if any, during the twenty-six
weeks ending March 26, 2000 were not significant.
During the twenty-six weeks ending March 25, 2001, the Company
purchased (i) $8.6 million of paper cups from Sweetheart (ii) $0.6 million of
corrugated containers from Box USA Holdings, Inc. ("Box USA") and (iii) $0.4
million of travel services from Emerald Lady, Inc. Included in accounts payable,
as of March 25, 2001, was $1.4 million due to Sweetheart. Other purchases from
affiliates, if any, during the twenty-six weeks ending March 25, 2001 were not
significant.
During the twenty-six weeks ending March 26, 2000, the Company
purchased (i) $6.0 million of paper cups from Sweetheart, (ii) $0.9 million of
corrugated containers from Box USA and (iii) $0.2 million of travel services
from Emerald Lady, Inc. Included in accounts payable, as of March 26, 2000, was
$1.0 million due to Sweetheart. Other purchases from affiliates, if any, during
the twenty-six weeks ending March 26, 2000 were not significant.
In Fiscal 1998, the Company entered into an agreement with SF Holdings
whereby the Company acquired for $7.0 million substantially all of SF Holding's
rights under a Management Services Agreement dated August 31, 1993, as amended,
and pursuant to which the Company has the right, subject to the direction of the
board of directors of Sweetheart, to manage Sweetheart's day-to-day operations.
In consideration of the Company's performance of services, the Company is
entitled to receive management fees of $0.7 million, $0.9 million and $1.1
million in the first, second and third years, respectively, and $1.6 million per
year for the remaining term of the Management Services Agreement. The Company
believes that the terms of such agreement are at least as favorable as those it
could otherwise have obtained from unrelated third parties and were negotiated
on an arm's length basis. The $7.0 million payment is included in other assets
and is being amortized over the term of such agreement. Management fee income,
net of amortization was $0.3 million for the twenty-six weeks ending March 25,
2001 and $0.2 million for the twenty-six weeks ending March 26, 2000.
The Company leases a building in Jacksonville, Florida from Dennis
Mehiel, the Company's Chief Executive Officer, on terms the Company believes are
no less favorable than could be obtained from independent third parties and were
negotiated on an arm's length basis. Annual payments under the lease are $0.2
million plus annual increases based on changes in the Consumer Price Index
("CPI") through December 31, 2014. In addition, Mr. Mehiel can require the
Company to purchase the facility
6
for $1.5 million, subject to a CPI-based escalation, until July 31, 2006. In
Fiscal 1998, the Company terminated its operations at this facility and is
currently subleasing the entire facility to an unrelated third party. Rent
expense, net of sublease income on the portion of the premises subleased, is not
significant.
During the twenty-six weeks ended March 26, 2000, the Company sold
certain paper cup machines to Sweetheart at a fair market value of $1.3 million.
The excess of the proceeds from the sale over the Company's net book value of
such equipment was recorded as a credit to equity of $0.9 million. Independent
appraisals were obtained to determine the fairness of the sale price.
(6) SF HOLDINGS STOCK COMPENSATION PLAN
During the twenty-six weeks ended March 25, 2001, SF Holdings, the
Company's parent, granted options to purchase shares of its common stock to
certain employees of the Company. The options vest over a period of three years.
Certain of the exercise prices of the options were below the fair market value
of SF Holdings common stock at the date of the grant. During the vesting period,
these discounts of $0.1 million are being amortized as compensation expense and
credited to additional paid-in capital by the Company. Amortization expense
relating to SF Holding's stock options was $15 thousand for the twenty-six weeks
ended March 25, 2001.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Forward-looking statements in this filing, including those in the Notes
to Consolidated Financial Statements, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties and actual
results could differ materially. Such risks and uncertainties include, but are
not limited to, general economic and business conditions, competitive market
pricing, increases in raw material costs, energy costs and other manufacturing
costs, fluctuations in demand for the Company's products, potential equipment
malfunctions and pending litigation. For additional information, see the
Company's annual report on Form 10-K for the most recent fiscal year.
General
The Company, a wholly-owned subsidiary of SF Holdings, is a converter
and marketer of disposable paper foodservice products. On December 3, 1999, CEG,
an affiliate of the Company in the disposable party goods products business,
became an 87% owned subsidiary of SF Holdings pursuant to a merger. On December
6, 1999, pursuant to an asset purchase agreement entered into on November 21,
1999, the Company purchased the intangible assets of CEG, including domestic and
foreign trademarks, patents, copyrights, and customer lists for $16 million. In
addition, pursuant to the CEG Asset Purchase Agreement the Company subsequently
purchased certain inventory and acquired other CEG assets for cash and in
exchange for outstanding trade payables owed to the Company by CEG. As a result
of this transaction, the Company markets, manufactures and distributes
disposable party goods products directly to the specialty (party) channel of the
Company's consumer market. The companies are under common control, and
therefore, the transaction has been accounted for in a manner similar to
pooling-of-interests. CEG's net assets and liabilities that were not acquired by
the Company pursuant to the CEG Asset Purchase Agreement were acquired by SF
Holdings and have been classified as "Due to/from SF Holdings".
On September 25, 2000, pursuant to the Springprint Agreement, the
Company purchased substantially all of the property, plant and equipment,
intangibles and net working capital of Springprint
7
Medallion, a division of Marcal Paper Mills, Inc. In addition, pursuant to the
Springprint Agreement, the Company has assumed the liabilities and obligations
of Springprint arising under contracts or leases that are either assets
purchased by the Company or a part of the accounts payable. The aggregate
purchase price for the assets and working capital was $6.7 million.
Thirteen Weeks Ended March 25, 2001 Compared to Thirteen Weeks Ended March 26,
2000 (Unaudited)
Net sales increased $1.7 million, or 2.2%, to $79.8 million for the
thirteen weeks ending March 25, 2001, compared to $78.1 million for the thirteen
weeks ending March 26, 2000, reflecting an 8.4% increase in average realized
sales price partially offset by a 6.2% decrease in sales volume. Net sales to
consumer foodservice customers increased 5.0%, resulting from a 10.6% increase
in average realized sales price, partially offset by a decrease in sales volume
of 5.6%. Net sales to institutional foodservice customers decreased 1.3%,
resulting from a 6.0% increase in average realized sales price, partially offset
by a 7.3% decrease in sales volume. Selling prices to both consumer and
institutional customers were positively affected by increases in raw material
costs that were passed through to customers as well as more competitive market
conditions. These favorable price increases were offset by lower volumes due to
competitive market conditions and the Company's decision to reduce sales to
certain consumer customers experiencing deteriorating credit conditions;
however, these lower volumes were partially offset by additional volume from the
Springprint acquisition.
Gross profit increased $0.1 million, or 0.7%, to $14.0 million for the
thirteen weeks ending March 25, 2001, compared to $13.9 million for the thirteen
weeks ending March 26, 2000. As a percentage of net sales, gross profit
decreased from 17.8% for the thirteen weeks ending March 26, 2000 to 17.5% for
the thirteen weeks ending March 25, 2001. Gross profit for the thirteen weeks
ending March 25, 2001 was positively affected by increased selling prices which
were partially offset by higher raw material and energy costs.
Selling, general and administrative expenses decreased $0.3 million,
or 2.7%, to $11.0 million for the thirteen weeks ending March 25, 2001 compared
to $11.3 million for the thirteen weeks ending March 26, 2000 primarily as a
result of a decrease in the workforce resulting from the CEG consolidation and a
reduction in selling expenses.
Other (income) expense, net was unchanged at income of $0.1 million for
the thirteen weeks ending March 25, 2001 and for the thirteen weeks ending March
26, 2000.
Operating income increased $0.3 million, or 10.7%, to $3.1 million for
the thirteen weeks ending March 25, 2001 compared to $2.8 million for the
thirteen weeks ending March 26, 2000 due to the reasons discussed above.
Interest expense, net of interest income decreased $0.2 million, or
5.0%, to $3.8 million for the thirteen weeks ending March 25, 2001 compared to
$4.0 million for the thirteen weeks ending March 26, 2000. For the thirteen
weeks ending March 25, 2001, the Company realized lower interest expense due
primarily to lower average interest rates.
Income tax expense (benefit) decreased $0.3 million, or 60%, to a
benefit of $0.2 million for the thirteen weeks ending March 25, 2001 compared to
a benefit of $0.5 million for the thirteen weeks ending March 26, 2000. The
effective rate for the thirteen weeks ending March 25, 2001 was 32.9% and for
the thirteen weeks ending March 26, 2000 was 40.0%.
8
Net income (loss) increased $0.7 million, or 58.3%, to a loss of $0.5
million for the thirteen weeks ending March 25, 2001 compared to a loss of $1.2
million for the thirteen weeks ending March 26, 2000, due to the reasons stated
above.
Twenty-six Weeks Ended March 25, 2001 Compared to Twenty-six Weeks Ended March
26, 2000 (Unaudited)
Net sales increased $4.3 million, or 2.4%, to $179.9 million for the
twenty-six weeks ending March 25, 2001, compared to $175.6 million for the
twenty-six weeks ending March 26, 2000, reflecting a 9.6% increase in average
realized sales price partially offset by a 7.2% decrease in sales volume. Net
sales to consumer foodservice customers increased 0.9%, resulting from a 7.2%
increase in average realized sales price, partially offset by a decrease in
sales volume of 6.3%. Net sales to institutional foodservice customers increased
4.6%, resulting from a 13.5% increase in average realized sales price, partially
offset by a 8.9% decrease in sales volume. Selling prices to both consumer and
institutional customers were positively affected by increases in raw material
costs that were passed through to customers as well as more competitive market
conditions. These favorable price increases were offset by lower volumes due to
competitive market conditions and the Company's decision to reduce sales to
certain consumer customers experiencing deteriorating credit conditions;
however, these lower volumes were partially offset by additional volumes from
the Springprint acquisition.
Gross profit increased $0.3 million, or 0.9%, to $33.1 million for the
twenty-six weeks ending March 25, 2001, compared to $32.8 million for the
twenty-six weeks ending March 26, 2000. As a percentage of net sales, gross
profit decreased from 18.7% for the twenty-six weeks ending March 26, 2000 to
18.4% for the twenty-six weeks ending March 25, 2001. Gross profit for the
twenty-six weeks ending March 25, 2001 was positively affected by increased
selling prices which were partially offset by higher raw material and energy
costs.
Selling, general and administrative expenses decreased $0.8 million, or
3.3%, to $23.5 million for the twenty-six weeks ending March 25, 2001 compared
to $24.3 million for the twenty-six weeks ending March 26, 2000 primarily as a
result of a decrease in the workforce resulting from the CEG consolidation and a
reduction in selling expenses.
Other (income) expense, net was unchanged at income of $0.2 million for
the twenty-six weeks ending March 25, 2001 and the twenty-six weeks ending March
26, 2000.
Operating income increased $1.0 million, or 11.4%, to $9.8 million for
the twenty-six weeks ending March 25, 2001 compared to $8.8 million for the
twenty-six weeks ending March 26, 2000 due to the reasons discussed above.
Interest expense, net of interest income decreased $0.3 million, or
3.7%, to $7.9 million for the twenty-six weeks ending March 25, 2001 compared to
$8.2 million for the twenty-six weeks ending March 26, 2000. For the twenty-six
weeks ending March 25, 2001, the Company realized lower interest expense due
primarily to lower average interest rates.
Income tax expense (benefit) increased $0.6 million, or 300%, to an
expense of $0.8 million for the twenty-six weeks ending March 25, 2001 compared
to a expense of $0.2 million for the twenty-six weeks ending March 26, 2000. The
effective rate for the twenty-six weeks ending March 25, 2001 was 43.1% and for
the twenty-six weeks ending March 26, 2000 was 40.0%.
Net income (loss) increased $1.3 million, or 650%, to income of $1.1
million for the twenty-six weeks ending March 25, 2001 compared to a loss of
$0.2 million for the twenty-six weeks ending March 26, 2000, due to the reasons
stated above.
9
Liquidity And Capital Resources
Historically, the Company has relied on cash flow from operations, the
sale of assets and borrowing under its credit facility to finance its working
capital requirements and capital expenditures. The Company expects to continue
this method of funding for its 2001 capital expenditures.
Net cash provided by operating activities increased $0.6 million to
$4.1 million in the twenty-six weeks ending March 25, 2001 compared to $3.5
million in the twenty-six weeks ending March 26, 2000. This increase is
primarily due to a decrease in receivables as a result of better collections and
a decrease in inventory as a result of improved inventory management.
Capital expenditures for the twenty-six weeks ended March 25, 2001 were
$2.5 million compared to $0.8 million for the twenty-six weeks ending March 26,
2000. Capital expenditures in the twenty-six weeks ending March 25, 2001
included $1.7 million for new production equipment and $0.8 million for
renovations and conversions.
The Company has a $55 million revolving credit facility subject to
borrowing base limitations. The credit facility is collateralized by eligible
accounts receivable, inventories, and certain general intangibles. The credit
facility matures on September 30, 2001. Borrowings are available at the bank's
prime rate plus 0.25% or at LIBOR plus 2.25% at the election of the Company. At
March 25, 2001, $40.4 million was outstanding and $14.6 million was the maximum
remaining advance available based upon eligible collateral. Although the Company
intends to refinance this debt, there can be no assurances that the Company will
be able to obtain such refinancing on terms and conditions acceptable to the
Company.
In addition to the revolving credit facility, the Company's credit
facility also includes a term loan of $5 million. This amount is payable in
equal monthly installments through the maturity date of September 30, 2001.
Borrowings under the term loan bear interest, at the Company's election, equal
to the bank's prime rate plus 0.5% or LIBOR plus 2.5%. The proceeds from this
term loan were used to partially finance the purchase of Springprint.
Pursuant to the terms of the instruments governing the indebtedness of
the Company, the Company is subject to certain affirmative and negative
covenants customarily contained in agreements of this type, including, without
limitations covenants that restrict, subject to specified exceptions (i)
mergers, consolidations, asset sales or changes in capital structure, (ii)
creation or acquisition of subsidiaries, (iii) purchase or redemption of capital
stock or declaration or payment of dividends or distributions on such capital
stock, (iv) incurrence of additional indebtedness, (v) investment activities,
(vi) granting or incurrence of liens to secure other indebtedness, (vii)
prepayment or modification of the terms of subordinated indebtedness, and (viii)
engaging in transactions with affiliates. In addition, such debt instruments
restrict the Company's ability to pay dividends or make other distributions to
SF Holdings. The credit facility also requires that certain financial covenants
are satisfied.
Management believes that cash generated by operations, combined with
amounts available under the Company's credit facility, will be sufficient to
meet the Company's working capital and capital expenditure needs in the next
twelve months.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NONE
10
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K:
No reports on Form 8-K were filed during the twenty-six weeks ended
March 25, 2001
11
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, its duly authorized officer and principal financial officer.
THE FONDA GROUP, INC.
(registrant)
Date: April 20, 2001 By: /s/ Hans H. Heinsen
-------------- --------------------
Hans H. Heinsen
Senior Vice President -
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer and Duly
Authorized Officer)
12