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GAYLORD REPORTS SECOND QUARTER LOSS

 GAYLORD REPORTS SECOND QUARTER LOSS
 DEERFIELD, Ill., May 4 /PRNewswire/ -- Gaylord Container Corporation


(AMEX: GCR) reported a net loss of $21.7 million, or $1.39 per share, for the second quarter of fiscal 1992 ended March 31, 1992, compared with a net loss of $12.7 million, or $.81 per share, for the second quarter of fiscal 1991. Net sales declined slightly in the fiscal 1992 second quarter to $177 million from $181 million for the year-ago quarter. Operating earnings rose to $7 million from $5.7 million for the second quarter of fiscal 1991.
 For the six months ended March 31, 1992, the company had a net loss of $45.5 million, or $2.93 per share, compared with a net loss of $22.6 million, or $1.46 per share, for the same period a year ago. Net sales for the first six months of fiscal 1992 totaled $346 million, down from $363 million for the first half of fiscal 1991. Operating earnings declined to $10.8 million from $15.1 million a year earlier.
 Commenting on results for the second quarter of fiscal 1992, Chairman and Chief Executive Officer Marvin A. Pomerantz, said, "The increase in operating earnings was the result of higher containerboard prices and higher containerboard production levels at the Bogalusa, La., and Antioch, Calif., West mills and the benefit derived from idling the uneconomic Antioch, Calif., East mill in February 1991. The company's results, however, continued to be adversely affected by significantly lower prices for unbleached kraft paper and grocery bags and sacks, continuing costs related to the financial restructuring, increased interest expense and the absence of a provision for income tax benefits in the current year."
 As previously announced, the company is implementing a financial restructuring plan designed to reduce its debt and debt service requirements. The company has filed an amended registration statement with the Securities and Exchange Commission which contains a proxy statement-prospectus describing an exchange offer to holders of its subordinated debt and a solicitation of votes on a prepackaged plan of reorganization. The company said it intends to commence the exchange offer/vote solicitation as soon as SEC clearance is obtained.
 Pomerantz noted that since the company began the restructuring process one year ago, it has remained current with its trade creditors. "At present, we have approximately $50 million of cash on hand and approximately $35 million of available bank credit. With these resources, combined with cash flow from operations, the company expects to continue to meet operating expenses and to pay trade creditors in the ordinary course of business." Pomerantz added that Gaylord has a commitment for a $100 million line of credit if it should decide to finalize the restructuring by filing the prepackaged plan.
 Factors Affecting Second Quarter Results
 THe following are the major factors affecting results for the second quarter of fiscal 1992 vs. the second quarter of fiscal 1991:
 -- East Mill Idling: In the second quarter of fiscal 1991, the company took a $5 million charge against operating earnings to cover costs associated with the temporary idling of the California East mill. The absence of a charge in the current quarter, coupled with the favorable impact of idling the East mill, resulted in a positive effect on operating earnings of approximately $11 million.
 -- Volume: Increased production from the Bogalusa and the California West mills had a positive impact on operating earnings. When offset by the adverse effect of lower multiwall bag shipments, the net result was a positive variance in operating earnings of approximately $4 million.
 -- Price: Prices for containerboard and multiwall bags rose quarter-over-quarter; however, this increase was more than offset by a decline in prices for unbleached kraft paper and grocery bags and sacks. The net result was an adverse effect on operating earnings of approximately $4 million.
 -- Water: In the year-ago second quarter, Gaylord recorded a benefit for a refund for excess water costs at its California mill and other miscellaneous one-time gains. The absence of those gains resulted in a negative quarter-over-quarter variance in operating earnings of approximately $3 million.
 -- Sales and Administrative Costs: The $2.5 million increase in SG&A was primarily due to the accrual of costs for employee benefit plans designed to assure the continued services of employees throughout the restructuring process. Payouts under the plan are tied to achieving specified financial results in fiscal 1992 and fiscal 1993.
 -- Restructuring costs: Operating earnings were adversely affected by $3 million of expenses related to the company financial restructuring.
 -- Net interest expense: The $1.3 million increase in net interest expense was primarily due to the accrual of interest on unpaid subordinated debt interest.
 -- Tax rate: The income tax rate for the second quarter of fiscal 1992 was zero. In the year-ago second quarter, the company recorded a tax benefit of approximately $8.0 million which was computed using a 39 percent tax benefit rate. The elimination of tax benefits was due to limitations on the recording of deferred tax benefits.
 Operating Results
 During the second quarter of fiscal 1992, the company produced 276 thousand tons of containerboard, a 5 percent decline from 289 thousand tons a year ago. The company noted that the year-ago quarter includes approximately 37 thousand tons of production from the California East mill which has been idled. Eliminating the East mill production from the year-ago quarter, containerboard production increased 9 percent. Unbleached kraft paper production remained essentially flat at 59 thousand tons for the quarter.
 Corrugated container shipments and grocery bag and sack shipments were also flat in the second quarter of fiscal 1992 compared with the year-ago quarter and totaled approximately 2.5 billion square feet and 34 thousand tons, respectively. Multiwall bag shipments declined to approximately 47 million bags from approximately 53 million bags a year ago.
 Subsequent Event
 Subsequent to the end of the second quarter, the company reached an agreement in principle to acquire the remaining 35 percent interest in its Gaylord Bag Partnership joint venture. THe company said it would record a one-time charge against operating earnings in the third quarter of fiscal 1992, currently estimated to be in the range of $7 million to $10 million to cover the cost of the acquisition and other expenses related to the integration of Gaylord Bag into Gaylord Container. The company noted that, for financial reporting purposes, it is already consolidating Gaylord Bag's financial results; therefore, the acquisition will not result in a restatement of Gaylord Container's financial results.
 Gaylord Container Corporation is a major national manufacturer and distributor of corrugated containers, containerboard, unbleached kraft paper, multiwall bags and grocery bags and sacks.
 GAYLORD CONTAINER CORPORATION
 Selected Financial and Operational Data
 (In millions, except per share amounts)
 Period ended Quarter Six Months
 March 31(A) 1992 1991 Pct. 1992 1991 Pct.
 Incr./(Decr.) (Incr./(Decr.)
 Net Sales $177.0 $180.8 (2.1) $345.9 $363.2 (4.8)
 Debt restructuring
 expenses 3.0 -- N/M 6.0 -- N/M
 Operating earns. 7.0 5.7 22.8 10.8 15.1 (28.5)
 Interest exp.-net 28.3 27.0 4.8 56.1 53.0 5.8
 Loss bef. taxes (21.7) (20.7) N/M (45.5) (37.0) N/M
 Income taxes -- ( 8.0) N/M -- (14.4) N/M
 Net loss (21.7) (12.7) N/M (45.5) (22.6) N/M
 Net loss
 per share (1.39) (0.81) N/M (2.93) (1.46) N/M
 Avg. com. and com.
 equivalent shares
 outstndg. 15.5 15.5 -- 15.5 15.4 0.6
 (A) The quarter and six months ended March 31, 1991, have been restated to reflect the consolidation of Gaylord Bag Partnership's results of operations. The effect of the restatement was to increase net sales by $7.6 million and $17.0 million, respectively, and decrease operating earnings by $1.4 million and $2.4 million, respectively. Net loss was unchanged.
 Operating Summary
 Mill production
 (thousands of tons):
 Containerboard 275.6 288.8 (4.6) 543.2 575.9 (5.7)
 Unbleached kraft
 paper 58.7 58.6 0.2 110.0 109.8 0.2
 Corrugated shipments
 (billions of
 square feet) 2.5 2.5 -- 4.8 5.0 (4.0)
 Multiwall bag shipments
 (millions of
 bags) 47.0 52.9 (11.2) 92.3 94.7 (2.5)
 Grocery bag and sack
 shipments (thousands
 of tons) 34.1 34.3 (0.6) 67.3 61.9 8.7
 N/M - Not meaningful
 -0- 5/4/92
 /CONTACT: Kathryn Chieger of Gaylord Container, 708-405-5645/
 (GCR) CO: Gaylord Container Corporation ST: Illinois IN: TRN SU: ERN


PS-AH -- NY035 -- 6122 05/04/92 14:20 EDT
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Date:May 4, 1992
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