Attached files
| file | filename |
|---|---|
| 8-K - 8-K - PAPERWEIGHT DEVELOPMENT CORP | d98057d8k.htm |
| EX-2.1 - EXHIBIT 2.1 - PAPERWEIGHT DEVELOPMENT CORP | d98057dex21.htm |
Exhibit 99.1
PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
April 5, 2015
(dollars in thousands, except share data)
| Historical (1) | Sale of the Encapsys Business (2) |
Pro Forma Adjustments (3) |
Pro Forma | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets |
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| Cash and cash equivalents |
$ | 2,303 | $ | 165,000 | $ | (165,000 | ) | $ | 2,303 | |||||||
| Restricted cash |
— | 35,000 | — | 35,000 | ||||||||||||
| Accounts receivable, net |
54,959 | (1,520 | ) | — | 53,439 | |||||||||||
| Inventories |
92,137 | (1,068 | ) | — | 91,069 | |||||||||||
| Other current assets |
5,031 | (43 | ) | — | 4,988 | |||||||||||
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| Total current assets |
154,430 | 197,369 | (165,000 | ) | 186,799 | |||||||||||
| Property, plant and equipment, net |
231,965 | (12,845 | ) | — | 219,120 | |||||||||||
| Intangible assets, net |
38,697 | — | — | 38,697 | ||||||||||||
| Other assets |
20,455 | (7 | ) | — | 20,448 | |||||||||||
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| Total assets |
$ | 445,547 | $ | 184,517 | $ | (165,000 | ) | $ | 465,064 | |||||||
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| LIABILITIES, REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME |
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| Current liabilities |
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| Current portion of long-term debt |
$ | 12,826 | $ | — | $ | — | $ | 12,826 | ||||||||
| Accounts payable |
69,366 | (1,448 | ) | — | 67,918 | |||||||||||
| Accrued interest |
9,554 | — | — | 9,554 | ||||||||||||
| Other accrued liabilities |
44,431 | (199 | ) | — | 44,232 | |||||||||||
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| Total current liabilities |
136,177 | (1,647 | ) | — | 134,530 | |||||||||||
| Long-term debt |
576,982 | — | (165,000 | ) | 411,982 | |||||||||||
| Postretirement benefits other than pension |
31,715 | — | — | 31,715 | ||||||||||||
| Accrued pension |
93,095 | — | — | 93,095 | ||||||||||||
| Other long-term liabilities |
45,856 | (1,899 | ) | — | 43,957 | |||||||||||
| Commitments and contingencies |
— | — | — | — | ||||||||||||
| Redeemable common stock, $0.01 par value, shares authorized: 30,000,000, shares issued and outstanding: 7,205,699 |
121,017 | — | — | 121,017 | ||||||||||||
| Accumulated deficit |
(584,901 | ) | 188,063 | — | (396,838 | ) | ||||||||||
| Accumulated other comprehensive income |
25,606 | — | — | 25,606 | ||||||||||||
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| Total liabilities, redeemable common stock, accumulated deficit and accumulated other comprehensive income |
$ | 445,547 | $ | 184,517 | $ | (165,000 | ) | $ | 465,064 | |||||||
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See accompanying notes to unaudited condensed pro forma consolidated financial statements.
1
PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended April 5, 2015
(dollars in thousands)
| Historical (1) | Sale of the Encapsys Business (2) |
Pro Forma Adjustments (3) |
Pro Forma | |||||||||||||
| Net sales |
$ | 195,596 | $ | (11,687 | ) | $ | — | $ | 183,909 | |||||||
| Cost of sales |
156,564 | (5,146 | ) | — | 151,418 | |||||||||||
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| Gross profit |
39,032 | (6,541 | ) | — | 32,491 | |||||||||||
| Selling, general and administrative expenses |
30,196 | (2,038 | ) | — | 28,158 | |||||||||||
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| Operating income |
8,836 | (4,503 | ) | — | 4,333 | |||||||||||
| Other expense |
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| Interest expense |
12,822 | — | (2,441 | ) | 10,381 | |||||||||||
| Foreign exchange loss |
1,450 | — | — | 1,450 | ||||||||||||
| Other expense |
255 | — | — | 255 | ||||||||||||
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| (Loss) income before income taxes |
(5,691 | ) | (4,503 | ) | 2,441 | (7,753 | ) | |||||||||
| Provision for income taxes |
74 | — | — | 74 | ||||||||||||
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| Net (loss) income |
$ | (5,765 | ) | $ | (4,503 | ) | $ | 2,441 | $ | (7,827 | ) | |||||
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See accompanying notes to unaudited condensed pro forma consolidated financial statements.
2
PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended January 3, 2015
(dollars in thousands)
| Historical (1) | Sale of the Encapsys Business (2) |
Pro Forma Adjustments (3) |
Pro Forma | |||||||||||||
| Net sales |
$ | 809,816 | $ | (45,118 | ) | $ | — | $ | 764,698 | |||||||
| Cost of sales |
677,383 | (20,070 | ) | — | 657,313 | |||||||||||
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| Gross profit |
132,433 | (25,048 | ) | — | 107,385 | |||||||||||
| Selling, general and administrative expenses |
149,144 | (8,869 | ) | — | 140,275 | |||||||||||
| Fox River Funding Agreement |
23,975 | — | — | 23,975 | ||||||||||||
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| Operating loss |
(40,686 | ) | (16,179 | ) | — | (56,865 | ) | |||||||||
| Other expense (income) |
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| Interest expense |
49,463 | — | (9,856 | ) | 39,607 | |||||||||||
| Interest income |
(376 | ) | — | — | (376 | ) | ||||||||||
| Foreign exchange loss |
2,070 | — | — | 2,070 | ||||||||||||
| Other expense |
660 | — | — | 660 | ||||||||||||
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| (Loss) income before income taxes |
(92,503 | ) | (16,179 | ) | 9,856 | (98,826 | ) | |||||||||
| Provision for income taxes |
269 | — | — | 269 | ||||||||||||
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| Net (loss) income |
$ | (92,772 | ) | $ | (16,179 | ) | $ | 9,856 | $ | (99,095 | ) | |||||
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See accompanying notes to unaudited condensed pro forma consolidated financial statements.
3
PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 28, 2013
(dollars in thousands)
| Historical (1) | Sale of the Encapsys Business (2) |
Pro Forma | ||||||||||
| Net sales |
$ | 807,486 | $ | (34,793 | ) | $ | 772,693 | |||||
| Cost of sales |
567,786 | (15,224 | ) | 552,562 | ||||||||
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| Gross profit |
239,700 | (19,569 | ) | 220,131 | ||||||||
| Selling, general and administrative expenses |
106,928 | (6,040 | ) | 100,888 | ||||||||
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| Operating income |
132,772 | (13,529 | ) | 119,243 | ||||||||
| Other expense (income) |
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| Interest expense |
55,910 | — | 55,910 | |||||||||
| Debt extinguishment expense |
59,681 | — | 59,681 | |||||||||
| Interest income |
(369 | ) | — | (369 | ) | |||||||
| Foreign exchange loss |
82 | — | 82 | |||||||||
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| Income before income taxes |
17,468 | (13,529 | ) | 3,939 | ||||||||
| Provision for income taxes |
193 | — | 193 | |||||||||
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| Net income |
$ | 17,275 | $ | (13,529 | ) | $ | 3,746 | |||||
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See accompanying notes to unaudited condensed pro forma consolidated financial statements.
4
PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 29, 2012
(dollars in thousands)
| Historical (1) | Sale of the Encapsys Business (2) |
Pro Forma | ||||||||||
| Net sales |
$ | 849,756 | $ | (31,212 | ) | $ | 818,544 | |||||
| Cost of sales |
758,875 | (14,533 | ) | 744,342 | ||||||||
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| Gross profit |
90,881 | (16,679 | ) | 74,202 | ||||||||
| Selling, general and administrative expenses |
152,961 | (6,093 | ) | 146,868 | ||||||||
| Restructuring |
28,589 | — | 28,589 | |||||||||
| Environmental expense insurance recovery |
(2,188 | ) | — | (2,188 | ) | |||||||
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| Operating loss |
(88,481 | ) | (10,586 | ) | (99,067 | ) | ||||||
| Other expense (income) |
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| Interest expense |
59,654 | — | 59,654 | |||||||||
| Interest income |
(224 | ) | — | (224 | ) | |||||||
| Foreign exchange gain |
(213 | ) | — | (213 | ) | |||||||
| Other expense |
166 | — | 166 | |||||||||
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| Loss before income taxes |
(147,864 | ) | (10,586 | ) | (158,450 | ) | ||||||
| Provision for income taxes |
587 | — | 587 | |||||||||
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| Net loss |
$ | (148,451 | ) | $ | (10,586 | ) | $ | (159,037 | ) | |||
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See accompanying notes to unaudited condensed pro forma consolidated financial statements.
5
PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Pro Forma Consolidated Financial Information
| (1) | Reflects the unaudited historical condensed consolidated balance sheet and unaudited historical condensed consolidated statement of operations of Paperweight Development Corp. and Subsidiaries (“PDC”) for the first quarter 2015 ended April 5, 2015 and the audited historical consolidated statements of operations for the years ended January 3, 2015, December 28, 2013, and December 29, 2012. |
| (2) | As a result of the sale of the Encapsys Business, the Company received cash gross proceeds of $208 million, less expenses of approximately $8 million. |
| Selling price |
$ | 208.0 | ||
| Transaction expenses |
(8.0 | ) | ||
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| Net proceeds |
200.0 | |||
| Less: Carrying value of net assets sold |
11.9 | |||
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| Net gain on sale of Encapsys Business |
$ | 188.1 | ||
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The pro forma net gain on the sale is based on preliminary estimates and is subject to change. PDC is a subchapter S corporation and therefore no income tax impact is included for this transaction.
Of the $200.0 million of net proceeds, $165 million was used immediately to repay a portion of long-term debt. Remaining proceeds of $35 million are held as restricted cash and will be used within one year of this transaction for the specific purpose of capital investment, including potential acquisitions, and/or further debt reduction.
The results of operations of the Encapsys Business, excluding the impact of corporate selling, general and administrative expenses previously allocated to Encapsys and now included in the continuing operations of PDC, have been removed from the unaudited historical condensed consolidated statement of operations for the first quarter 2015 ended April 5, 2015 and the audited historical consolidated statements of operations for the years ended January 3, 2015, December 28, 2013, and December 29, 2012.
| (3) | Proceeds of $165 million were used to repay a portion of long-term debt. As a result, a reduction in interest expense for the first quarter 2015 ended April 5, 2015 and for fiscal year 2014 ended January 3, 2015 was calculated as if the transaction occurred on the first day of the period presented using historical rates applied to historical principle amounts of long-term debt. |
6