8-K 1 pliant8k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): SEPTEMBER 30, 2004 PLIANT CORPORATION --------------------------------------------------------------- (Exact name of company as specified in its charter) UTAH 333-40067 87-0496065 -------------------- ----------------------- ------------------- (State or other (Commission file number) (IRS Employer jurisdiction of Identification No.) incorporation) 1475 WOODFIELD ROAD, SUITE 700, SCHAUMBURG, ILLINOIS 60173 ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (847) 969-3300 ----------------------------------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE (Former name or former address if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS On September 30, 2004, we completed the sale of substantially all of the assets of our wholly-owned subsidiary, Pliant Solutions Corporation ("Solutions"), to Kittrich Corporation, an unrelated company, pursuant to an Agreement for Purchase and Sale of Assets among Pliant Corporation, Solutions and Kittrich. Solutions was engaged in the business of manufacturing and marketing decorative and surface coverings sold at retail to consumers and will be treated as a discontinued operation, as Solutions was one of our financial reporting segments. The adjusted purchase price for the assets was approximately $10 million, of which approximately $6.5 million was paid in cash at closing and $3.5 million will be paid in equal monthly installments over a 3-year period pursuant to an IP Transition and Consulting Services Agreement entered into in connection with the transaction. The cash paid at closing was used to pay down our revolving line of credit. The cash proceeds from the Solutions sale plus normal cash flow from operations enabled us to pay our credit line down to a zero balance and have a cash surplus of approximately $4 million as of September 30, 2004. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (b) Pro forma financial information On September 30, 2004, we completed the sale of substantially all of the assets of our wholly-owned subsidiary, Pliant Solutions Corporation ("Solutions") for approximately $10 million, of which approximately $6.5 million was paid in cash at closing and $3.5 million will be paid in equal monthly installments over a 3-year period. The following unaudited pro forma information is presented as if the assets of Solutions had been sold as of January 1, 2003. Historical information was derived from our audited condensed consolidated balance sheet as of December 31, 2003,audited condensed consolidated statement of operations for the year ended December 31, 2003 and unaudited condensed consolidated statement of operations for the six months ended June 30, 2004. The unaudited pro forma financial information should be read in connection with the historical financial statements and related notes contained in our annual report on Form 10-K for the year ended December 31, 2003 and quarterly report on Form 10-Q for the period ended June 30, 2004. The unaudited pro forma financial information is illustrative of the effects of the sale of Solutions' assets on our operations and does not necessarily reflect the results of operations that would have been reported had the sale actually occurred on January 1, 2003. In addition, pro forma financial information is not necessarily indicative of our future financial condition or results of operations. PLIANT CORPORATION AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2003 (DOLLARS IN THOUSANDS) (UNAUDITED) Pro Forma Historical Adjustments Pro Forma --------- --------- --------- ASSETS CURRENT ASSETS: Cash and cash equivalents ..........................$ 3,308 $ 6,450 (a) $ 9,758 Receivables, net of allowances ..................... 111,942 (3,207)(b) 108,735 Inventories ........................................ 95,219 (11,094)(b) 84,125 Prepaid expenses and other ......................... 3,809 -- 3,809 Income taxes receivable, net ....................... 1,436 -- 1,436 Deferred income taxes .............................. 9,417 -- 9,417 ------- ---------- -------- Total current assets ........... .............. 225,131 (7,851) 217,280 PLANT AND EQUIPMENT, net ................................ 319,569 (4,149)(c) 315,420 GOODWILL ................................................ 182,162 -- 182,162 INTANGIBLE ASSETS, net .................................. 19,752 (500)(c) 19,252 OTHER ASSETS ............................................ 40,172 1,904 (d) 42,076 --------- --------- --------- TOTAL ASSETS ............................................$ 786,786 $(10,596) $ 776,190 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Trade accounts payable .............................$ 89,800 $ -- $ 89,800 Accrued liabilities: Interest payable ................................ 19,775 -- 19,775 Customer rebates ................................ 7,924 -- 7,924 Other ........................................... 35,947 1,823(e) 37,770 Current portion of long-term debt .................. 1,033 1,033 --------- --------- --------- Total current liabilities ..................... 154,479 1,823 156,302 LONG-TERM DEBT, net of current portion .................. 782,624 782,624 OTHER LIABILITIES ....................................... 27,493 27,493 DEFERRED INCOME TAXES ................................... 27,792 27,792 SHARES SUBJECT TO MANDATORY REDEMPTION .................. -- -- -- --------- --------- --------- Total Liabilities ............................. 992,388 1,823 994,211 --------- --------- --------- MINORITY INTEREST ....................................... 291 -- 291 --------- --------- --------- REDEEMABLE PREFERRED STOCK .............................. 188,223 -- 188,223 --------- --------- --------- REDEEMABLE COMMON STOCK ................................. 13,008 -- 13,008 --------- --------- --------- STOCKHOLDERS' DEFICIT: Common stock 103,376 -- 103,376 Warrants to purchase common stock ................. 39,133 -- 39,133 Accumulated deficit ............................... (537,052) (12,419)(f) (549,471) Stockholders' notes receivable .................... (660) -- (660) Accumulated other comprehensive income (loss) ..... (11,921) -- (11,921) --------- --------- --------- Total stockholders' deficit .................. (407,124) (12,419) (419,543) --------- --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ............ $ 786,786 $ (10,596) $ 776,190 ========= ========= ========= PLIANT CORPORATION AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 (IN THOUSANDS) (UNAUDITED) Historical Pro Forma Pro Forma Adjustments --------- --------- --------- NET SALES ............................................ $ 486,863 $ (14,771)(g) $ 472,092 COST OF SALES ........................................ 414,520 (18,088)(g) 396,432 --------- --------- --------- Gross profit .................................... 72,343 3,317 75,660 OPERATING EXPENSES: Sales, general and administrative ............... 42,615 (2,231)(g) 40,384 Research and development ........................ 3,264 -- 3,264 Restructuring and other costs ................... -- -- -- --------- --------- --------- Total operating expenses ................... 45,879 (2,231) 43,648 --------- --------- --------- OPERATING INCOME ..................................... 26,464 5,548 32,012 INTEREST EXPENSE-Current and long-term debt .......... (59,168) 118 (h) (59,050) INTEREST EXPENSE-Dividends and accretion on redeemable preferred stock ..................... (17,033) -- (17,033) OTHER INCOME(EXPENSE) - Net .......................... (31) (14)(g) (45) --------- --------- --------- INCOME(LOSS) BEFORE INCOME TAXES ......................... (49,768) 5,652 (44,116) INCOME TAX EXPENSE ....................................... 2,360 -- 2,360 --------- --------- --------- NET INCOME(LOSS) ........................................$ (52,128) $ 5,652 $ (46,476) ========= ========= ========= PLIANT CORPORATION AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003 (IN THOUSANDS) (UNAUDITED) Historical Pro Forma Pro Forma Adjustments --------- --------- --------- NET SALES ............................................. $ 929,406 $ (34,927)(i) $ 894,479 COST OF SALES ......................................... 793,509 (39,398)(i) 754,111 --------- --------- --------- Gross profit ..................................... 135,897 4,471 140,368 OPERATING EXPENSES: Sales, general and administrative ................ 88,733 (6,273)(i) 82,010 Research and development ......................... 7,289 -- 7,289 Impairment of goodwill and intangible assets ..... 26,415 (8,160)(i) 18,255 Impairment of fixed assets ....................... 4,844 -- 4,844 Restructuring and other costs .................... 13,801 (2,605)(i) 11,196 Provision for litigation ......................... 7,200 -- 7,200 --------- --------- --------- Total operating expenses .................... 148,282 (17,488) 130,794 --------- --------- --------- OPERATING INCOME ...................................... (12,385) 21,959 9,574 INTEREST (EXPENSE ) ................................... (96,424) 291(h) (96,133) OTHER INCOME(EXPENSE) - Net ........................... (303) 775(i) 472 --------- --------- --------- INCOME(LOSS) BEFORE INCOME TAXES (109,112) 23,025 (86,087) INCOME TAX EXPENSE ..................................... 5,190 -- 5,190 --------- --------- --------- NET INCOME(LOSS) ..................................... $ (114,302) $ (23,025) $ (91,277) ========= ========= =========
Pro Forma Adjustments (a) To reflect cash proceeds received at closing on September 30, 2004. (b) To eliminate Solutions' trade receivables and inventory as of December 31, 2003, net of current receivable associated with IP Transition and Consulting Services Agreement. (c) To eliminate Solutions' net book value of plant, property and equipment and trademarks as of December 31, 2003. (d) To reflect long term portion of IP Transition and Consulting Services Agreement receivable. (e) To accrue severance, lease termination and other closing and exit cost as of September 30,2004, net of Solutions' December 31, 2003 co-op advertising accrual as co-op program assumed by Buyer. (f) To adjust retained deficit for the impact of items (a) through (e) above. (g) To remove the results of operations of the Solutions segment for the six months ended June 30, 2004. (h) To adjust revolving credit facility interest for pro forma pay down of $6.45 million as of January 1, 2003. (i) To remove the results of operations of the Solutions segment for the year ended December 31, 2003. (c) Exhibits EXHIBIT NO. DOCUMENT 10.1 Agreement for Purchase and Sale of Assets Among Pliant Corporation, Pliant Solutions Corporation and Kittrich Corporation 99.1 Press release dated October 5, 2004 SIGNATURE 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 hereunto duly authorized. Pliant Corporation October 5, 2004 By: /s/ James Ide ------------------------------- James Ide Executive Vice President and Chief Financial Officer