GAYLORD CONTAINER REPORTS LOSS FOR FISCAL 1991
GAYLORD CONTAINER REPORTS LOSS FOR FISCAL 1991 DEERFIELD, Ill., Nov. 11 /PRNewswire/ -- Gaylord Container
Corporation (AMEX: GCR) today reported a net loss of $180.3 million, or $11.68 per share, for fiscal 1991 ended Sept. 30, 1991, compared with a net loss of $23.2 million, or $1.47 per share, for fiscal 1990.
The net loss in fiscal 1991 includes a previously reported $101.2 million ($6.56 per share) after-tax charge for an asset write-down taken in the third fiscal quarter. Net sales for fiscal 1991 totaled $724 million, up from $718 million for the prior fiscal year. The company had an operating loss of $111.5 million in fiscal 1991, compared with operating earnings of $41.4 million in fiscal 1990. Commenting on results for fiscal 1991, Chairman and Chief Executive Officer Marvin A. Pomerantz said, "Despite a 12 percent increase in mill production primarily due to an excellent start-up of a new linerboard machine at our Bogalusa, La., mill, the company's financial results continued to be severely hampered by weak prices for our products, a significant increase in net interest expense and a lower income tax benefit rate. Further, operating earnings were adversely affected by the consolidation of Gaylord Bag Partnership's financial results and financial restructuring expenses recorded in the fourth quarter of fiscal 1991." As previously announced, the company is pursuing a financial restructuring plan designed to reduce total outstanding debt and annual interest payments. The major component of the plan is a proposed exchange offer to holders of the company's approximately $582.8 million principal amount of subordinated debt. The company said its was continuing discussions with an unofficial committee of subordinated bondholders to achieve a mutually acceptable financial restructuring. In the meantime, the company said it has remained current with its trade creditors. "Between cash provided by operations, cash on hand of approximately $39 million and available bank credit of approximately $34 million, the company expects to continue to pay trade creditors and to meet operating expenses in the ordinary course of business," Pomerantz added. Factors Affecting Results for Fiscal 1991 The following are the major factors affecting results for fiscal 1991 vs. fiscal 1990: -- Asset write-down: During the third quarter of fiscal 1991, the company recorded a charge against operating earnings of $125.2 million, which consisted primarily of a write-down of assets at the Antioch, California, East mill. As previously reported, it is unlikely that the company will resume operations at the East mill, which was idled in February 1991. -- Price: Significantly lower primary and converted product prices and changes in product mix had an adverse effect on operating earnings of approximately $53 million. -- Volume: Higher volume had a favorable impact on operating earnings of approximately $48 million. -- Consolidation: Subsequent to fiscal year end, the company completed negotiations to gain voting control of Gaylord Bag Partnership (GBP). Consequently, the company consolidated GBP's financial results for fiscal 1991. Excluding the effect of the consolidation, the company's net sales would have declined approximately 4 percent between fiscal 1990 and fiscal 1991. Previously, the company used the equity method of accounting for its investment in GBP and reported its share of losses as other expense. The company's operating loss in fiscal 1991 includes a loss of approximately $7 million attributable to GBP and a $3 million provision for the write-down of certain intangible and other non-strategic GBP assets. -- Restructuring costs: Operating earnings were adversely affected by approximately $10 million of expenses and professional and other fees related to the company's financial restructuring plan. -- Net interest expense: Pretax earnings were adversely affected by a $34.6 million, or 48 percent, increase in net interest expense primarily due to a $19.5 million reduction in capitalized interest and higher outstanding debt levels. -- Tax rate: The income tax benefit rate for fiscal 1991 was 17.9 percent compared with 39.7 percent for the prior fiscal year. The lower tax benefit rate was due to limitations on the recording of deferred tax benefits resulting from the company's loss from operations and the asset write-down. Operating Results During fiscal 1991, the company produced 1,109,000 tons of containerboard and 225,000 tons of unbleached kraft paper, compared with 935,000 tons of containerboard and 252,000 tons of unbleached kraft paper in fiscal 1990. The increase in containerboard output was primarily due to 285,000 tons of incremental production from the new Bogalusa linerboard machine, partially offset by the effect of the California East mill shutdown which totaled 130,000 tons. The decline in unbleached kraft paper output reflects a shift to containerboard production in response to market conditions. Corrugated container shipments increased to approximately 10.4 billion square feet in fiscal 1991, up from approximately 10.2 billion square feet a year ago. Multiwall bag shipments reached 191 million bags in fiscal 1991, compared with shipments of 179 million bags in fiscal 1990. Fourth Quarter Results The company had a net loss of $32.2 million, or $2.08 per share, for the fourth quarter of fiscal 1991, compared with a net loss of $5.8 million, or 38 cents per share, for the fourth quarter of fiscal 1990. Net sales declined to $189 million in the fiscal 1991 fourth quarter, down from $202 million in the year-ago fourth quarter. The company had an operating loss of $6.3 million in the fiscal 1991 fourth quarter, compared with operating earnings of $13.1 million for the same quarter a year earlier. Results for the fiscal 1991 fourth quarter were adversely affected by many of the same factors that affected results for the year including the expenses and fees related to the financial restructuring, GBP's losses and the write-down of GBP's assets, a lower tax benefit rate, lower product prices and higher net interest expense. The company also noted that the fiscal 1991 fourth quarter was a 13-week period, and the fiscal 1990 fourth quarter was a 14-week period. Gaylord Container Corporation is a major national manufacturer and distributor of corrugated containers, containerboard, unbleached kraft paper, multiwall bags and, through a joint venture, grocery bags and sacks. GAYLORD CONTAINER CORPORATION Selected Financial and Operational Data Periods ended Quarter Percent Year Percent Sept. 30 (A)(B): 1991 1990 increase 1991 1990 increase (decrease) (decrease) Financial Summary: (In millions, except per-share amounts) Net sales $189.2 $201.6 (6.2) $723.8 $718.3 0.8 Operating earnings (loss)(C) (6.3) 13.1 N/M (111.5) 41.4 N/M Interest expense -- net 27.4 22.6 21.2 107.0 72.4 47.8 Loss before taxes (36.4) (9.7) N/M (219.5) (38.5) N/M Income taxes (4.2) (3.9) N/M (39.2) (15.3) N/M Effective tax benefit rate (as a percent) 11.5 40.2 N/M 17.9 39.7 N/M Net loss(C) (32.2) (5.8) N/M (180.3) (23.2) N/M Net loss per share(C) (2.08) (0.38) N/M (11.68) (1.47) N/M Average common and common equivalent shares outstanding 15.5 15.3 1.3 15.4 15.8 (2.5) Operating Summary: Mill production (in thousands of tons) Containerboard 274.7 289.0 (4.9) 1,109.2 935.1 18.6 Unbleached kraft paper 57.0 64.8 (12.0) 225.2 251.8 (10.6) Corrugated shipments (in billions of square feet) 2.8 2.9 (3.4) 10.4 10.2 2.0 Multiwall bag shipments (millions of bags) 48.6 52.2 (6.9) 191.2 179.4 6.6 (A) -- The company operates on a 52/53-week fiscal year. Fiscal 1990 was a 53-week period, and the fourth quarter of fiscal 1990 was a 14-week period. (B) -- In fiscal 1991, the company consolidated the results of Gaylord Bag Partnership (GBP). In fiscal 1990, the company used the equity method of accounting for its investment in GBP. Excluding the effect of the consolidation of GBP, net sales would have declined approximately 4 percent between fiscal 1990 and fiscal 1991. (C) -- The year ended Sept. 30, 1991, includes a charge for an asset write-down ($125.2 million pretax, $101.2 million after tax, $6.56 per share). N/M -- Not meaningful. -0- 11/11/91 /CONTACT: Kathryn J. Chieger of Gaylord Container, 708-405-5645/ (GCR) CO: Gaylord Container Corporation ST: Illinois IN: PAP SU: ERN CK-TS -- NY032 -- 3094 11/11/91 14:23 EST
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|Date:||Nov 11, 1991|
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