-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U/YTjJC3SiBgaUtB6y72Px+jV36zEfmuWA8zSlkhW4c3k1akS82AiUjMZRhRN+1Y Yjyv2mFi9ji/dbC1Nfq5vA== 0000950137-98-001749.txt : 19980430 0000950137-98-001749.hdr.sgml : 19980430 ACCESSION NUMBER: 0000950137-98-001749 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980428 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IVEX PACKAGING CORP /DE/ CENTRAL INDEX KEY: 0000900367 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, FOIL & COATED PAPER BAGS [2673] IRS NUMBER: 760171625 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13968 FILM NUMBER: 98602485 BUSINESS ADDRESS: STREET 1: 100 TRI STATE DR STREET 2: SUITE 200 CITY: LINCOLNSHIRE STATE: IL ZIP: 60069 BUSINESS PHONE: 7089459100 MAIL ADDRESS: STREET 1: 100 TRI STATE DRIVE STREET 2: SUITE 200 CITY: LINCOLNSHIRE STATE: IL ZIP: 60069 FORMER COMPANY: FORMER CONFORMED NAME: IVEX HOLDINGS CORP DATE OF NAME CHANGE: 19940920 10-Q 1 FORM 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------- For the Quarter Ended March 31, 1998 Commission File Number 33-60714 IVEX PACKAGING CORPORATION (Exact name of registrant as specified in its charter) Delaware 76-0171625 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 100 Tri-State Drive Lincolnshire, Illinois 60069 (Address of Principal (Zip Code) Executive Office)
Registrant's Telephone number, including area code: (847) 945-9100 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ At April 28, 1998, there were 20,431,268 shares of common stock, par value $0.01 per share, outstanding. ================================================================================ 2 IVEX PACKAGING CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ ASSETS Current Assets: Cash and cash equivalents................................. $ 6,749 $ 5,989 Accounts receivable trade, net of allowance............... 69,713 64,952 Inventories............................................... 66,306 59,706 Prepaid expenses and other................................ 4,625 5,759 --------- --------- Total current assets............................... 147,393 136,406 --------- --------- Property, Plant and Equipment: Buildings and improvements................................ 57,099 56,336 Machinery and equipment................................... 272,700 272,602 Construction in progress.................................. 13,905 9,225 --------- --------- 343,704 338,163 Less -- Accumulated depreciation.......................... (155,536) (149,207) --------- --------- 188,168 188,956 Land...................................................... 9,188 9,077 --------- --------- Total property, plant and equipment................ 197,356 198,033 --------- --------- Other Assets: Goodwill, net of accumulated amortization................. 34,654 35,278 Deferred income taxes..................................... 34,449 36,647 Management receivable..................................... 14,761 11,135 Miscellaneous............................................. 10,261 10,224 --------- --------- Total other assets................................. 94,125 93,284 --------- --------- Total Assets................................................ $ 438,874 $ 427,723 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Current installments of long-term debt.................... $ 21,561 $ 19,744 Accounts payable.......................................... 38,833 38,675 Accrued salary and wages.................................. 9,105 9,114 Self insurance reserves................................... 6,812 6,799 Accrued rebates and discounts............................. 4,035 4,596 Accrued interest.......................................... 4,261 4,191 Other accrued expenses.................................... 12,229 11,546 --------- --------- Total current liabilities.......................... 96,836 94,665 --------- --------- Long-Term Debt.............................................. 325,201 319,055 --------- --------- Other Long-Term Liabilities................................. 20,895 21,868 --------- --------- Deferred Income Taxes....................................... 4,216 4,304 --------- --------- Commitments................................................. --------- --------- Stockholders' Deficit: Common stock, $.01 par value -- 45,000,000 shares authorized; 20,426,666 shares issued and outstanding at March 31, 1998 and December 31, 1997.................... 204 204 Paid in capital in excess of par value.................... 328,285 328,322 Accumulated deficit....................................... (334,521) (339,836) Accumulated other comprehensive income (loss)............. (2,242) (859) --------- --------- Total stockholders' deficit........................ (8,274) (12,169) --------- --------- Total Liabilities and Stockholders' Deficit................. $ 438,874 $ 427,723 ========= =========
The accompanying notes are an integral part of this statement. 2 3 IVEX PACKAGING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
QUARTER ENDED MARCH 31, ------------------------- 1998 1997 ---- ---- Net sales................................................... $ 136,168 $ 127,864 Cost of goods sold.......................................... 104,671 101,494 ----------- ----------- Gross profit................................................ 31,497 26,370 ----------- ----------- Operating expenses: Selling................................................... 7,286 6,137 Administrative............................................ 8,538 8,282 Amortization of intangibles............................... 316 171 ----------- ----------- Total operating expenses.................................... 16,140 14,590 ----------- ----------- Income from operations...................................... 15,357 11,780 Interest expense............................................ 6,497 11,129 ----------- ----------- Income before income taxes.................................. 8,860 651 Income tax provision........................................ 3,545 327 ----------- ----------- Net income.................................................. $ 5,315 $ 324 =========== =========== Earnings per share: Basic: Net income............................................. $ 0.26 $ 0.03 =========== =========== Weighted average shares outstanding.................... 20,426,666 10,352,533 =========== =========== Diluted: Net income............................................. $ 0.26 $ 0.03 =========== =========== Weighted average shares outstanding.................... 20,651,819 10,352,533 =========== ===========
The accompanying notes are an integral part of this statement. 3 4 IVEX PACKAGING CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
PAID IN ACCUMULATED COMMON STOCK CAPITAL OTHER ------------------- IN EXCESS OF ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE SHARES AMOUNT PAR VALUE DEFICIT INCOME (LOSS) DEFICIT INCOME (LOSS) ------ ------ ------------ ----------- ------------- ------------- ------------- Balance at December 31, 1996... 1,072,246 $ 11 $177,375 $(303,566) $(1,164) $(127,344) Issuance of management shares..................... 218,968 2 33,824 33,826 Common stock split........... 11,175,452 112 (112) Issuance of common stock..... 7,960,000 79 117,235 117,314 Net loss..................... (36,270) (36,270) $(36,270) Other comprehensive income (foreign currency translation adjustment).... 305 305 305 -------- Comprehensive income (loss)..................... $(35,965) ---------- ---- -------- --------- ------- --------- ======== Balance at December 31, 1997... 20,426,666 204 328,322 (339,836) (859) (12,169) Other........................ (37) (37) Net income................... 5,315 5,315 $ 5,315 Other comprehensive income (foreign currency translation adjustment).... (1,383) (1,383) (1,383) -------- Comprehensive income (loss)..................... $ 3,932 ---------- ---- -------- --------- ------- --------- ======== Balance at March 31, 1998...... 20,426,666 $204 $328,285 $(334,521) $(2,242) $ (8,274) ========== ==== ======== ========= ======= =========
The accompanying notes are an integral part of this statement. 4 5 IVEX PACKAGING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ---------------------- 1998 1997 ---- ---- Cash flows from operating activities: Net income................................................ $ 5,315 $ 324 Adjustments to reconcile net income to net cash from operating activities: Depreciation of properties........................... 6,904 6,053 Amortization of intangibles and debt issue costs..... 494 536 Non-cash interest.................................... 3,425 Deferred income taxes................................ 2,198 ------- -------- 14,911 10,338 Change in operating assets and liabilities: Accounts receivable.................................. (5,007) (6,796) Inventories.......................................... (6,798) (2,150) Prepaid expenses and other assets.................... 1,133 1,034 Accounts payable..................................... 330 (6,561) Accrued expenses and other liabilities............... (912) 1,728 ------- -------- Net cash from (used by) operating activities...... 3,657 (2,407) ------- -------- Cash flows from financing activities: Payment of senior credit facility......................... (4,125) (1,250) Proceeds from revolving credit facility................... 12,200 44,900 Management loan........................................... (3,626) Payment of debt issue costs............................... (140) (210) Other, net................................................ (253) (406) ------- -------- Net cash from financing activities................ 4,056 43,034 ------- -------- Cash flows from investing activities: Purchase of property, plant and equipment................. (6,652) (5,479) Acquisitions.............................................. (30,558) Other, net................................................ (301) (104) ------- -------- Net cash used by investing activities............. (6,953) (36,141) ------- -------- Net increase in cash and cash equivalents................... 760 4,486 Cash and cash equivalents at beginning of period............ 5,989 2,822 ------- -------- Cash and cash equivalents at end of period.................. $ 6,749 $ 7,308 ======= ======== Supplemental cash flow disclosures: Cash paid during the period for: Interest............................................... $ 6,474 $ 2,384 Income taxes........................................... 1,875 349
The accompanying notes are an integral part of this statement. 5 6 IVEX PACKAGING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1 -- ACCOUNTING AND REPORTING POLICIES In the opinion of management, the information in the accompanying unaudited consolidated financial statements reflects all adjustments necessary for a fair statement of results for the interim periods. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 1997 (the "Form 10-K") of Ivex Packaging Corporation ("Ivex" or the "Company"). IPC, Inc. ("IPC") is the only direct subsidiary of Ivex and is wholly owned. The Company's accounting and reporting policies are summarized in Note 2 to the consolidated financial statements of the Ivex Form 10-K. Accounts Receivable Accounts receivable at March 31, 1998 and December 31, 1997 consist of the following:
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ Accounts receivable................................... $72,317 $67,496 Less -- Allowance for doubtful accounts............... (2,604) (2,544) ------- ------- $69,713 $64,952 ======= =======
Inventories Inventories at March 31, 1998 and December 31, 1997 consist of the following:
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ Raw materials........................................... $32,192 $32,200 Finished goods.......................................... 34,114 27,506 ------- ------- $66,306 $59,706 ======= =======
NOTE 2 -- LONG-TERM DEBT At March 31, 1998 and December 31, 1997, the long-term debt of the Company was as follows:
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ Senior credit facility.................................. $304,950 $296,875 Industrial revenue bonds................................ 39,720 39,736 Other................................................... 2,092 2,188 -------- -------- Total debt outstanding............................. 346,762 338,799 Less -- Current installments of long-term debt.......... (21,561) (19,744) -------- -------- Long-term debt..................................... $325,201 $319,055 ======== ========
NOTE 3 -- COMPREHENSIVE INCOME During the quarter ended March 31, 1998, the Company adopted SFAS 130, "Reporting Comprehensive Income," which requires the Company to disclose, in financial statement format, all non-owner changes in equity. As of the quarter ended March 31, 1998, all such changes in equity resulted from changes in foreign currency translation adjustments. 6 7 IVEX PACKAGING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED NOTE 4 -- SUBSEQUENT EVENTS On April 23, 1998, Ivex acquired all of the common stock of Ultra Pac, Inc. ("Ultra Pac"), a Rogers, Minnesota based specialty packaging company, for approximately $67,000. Ivex assumed approximately $18,700 of Ultra Pac indebtedness and paid fees associated with the transaction of approximately $2,300. Ultra Pac is a leading North American producer of PET food packaging that designs and manufactures plastic containers and packaging for the food industry, including supermarkets, distributors of food packaging, wholesale bakeries, produce growers, delicatessens, food processors and foodservice companies. Ultra Pac had net sales of approximately $56,700 in its fiscal year ended January 31, 1998. On April 23, 1998, the Company announced that it intends to file a registration statement under the Securities Act of 1933, as amended, to register approximately 500,000 shares of its common stock and approximately 4.5 million shares of common stock owned by certain selling stockholders (the "Offerings"). The net proceeds of the shares to be sold by the Company will be used to repay certain indebtedness. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. References to the Company or Ivex herein reflect the consolidated results of Ivex Packaging Corporation. RESULTS OF OPERATIONS -- FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 Net Sales The Company's net sales increased by 6.5% during the first quarter of 1998 over the Company's net sales during the corresponding period in 1997 primarily as a result of the first quarter 1997 acquisition of M&R Plastics Inc., the third quarter 1997 acquisition of AVPEX International Corporation and the fourth quarter 1997 acquisition of Crystal Thermoplastics, Inc. The following table sets forth information with respect to net sales of the Company's product groups for the periods presented:
THREE MONTHS ENDED MARCH 31, ------------------------------------------- % OF % OF 1998 NET SALES 1997 NET SALES ---- --------- ---- --------- (DOLLARS IN THOUSANDS) Consumer Packaging.................................... $ 81,383 59.8 $ 72,048 56.3 Industrial Packaging.................................. 54,785 40.2 55,816 43.7 -------- ----- -------- ----- Total............................................ $136,168 100.0 $127,864 100.0 ======== ===== ======== =====
Consumer Packaging net sales increased by 13.0% during the first quarter of 1998 from the corresponding period in 1997, primarily from incremental sales associated with the 1997 acquisitions. Additionally, the sales increase is the result of increased unit sales volume of extruded sheet and film, offset by decreased average selling prices in 1998 compared to 1997. Sales of converted plastic and paper products for food applications, excluding the sales relating to the 1997 acquisitions, increased approximately 6.5% during 1998 compared to the prior year. Industrial Packaging net sales decreased by 1.8% during the first quarter of 1998 from the corresponding period in 1997, primarily due to decreased unit volume of the Company's protective packaging products and slightly decreased pricing on the Company's surface protection products (primarily associated with lower raw material costs). The number of tons and average net selling price of recycled and specialty paper during the first quarter of 1998 was consistent with the prior year. Gross Profit The Company's gross profit increased 19.4% during the first quarter of 1998 compared to the corresponding period in the prior year primarily as a result of the increased sales volume, the incremental effects from the 1997 acquisitions and strong cost control across all businesses. Gross profit margin increased to 23.1% during the first quarter of 1998 compared to 20.6% during the first quarter of 1997. The increase in gross profit margin resulted from improved absorption and a favorable product mix associated with the 1997 acquisitions, improved cost control across all businesses and reduced energy costs for the Company's recycled and specialty paper business. The gross profit margin increase was partially offset by the severe weather in Canada during January, downtime on the European extrusion line for a planned upgrade and decreased profitability of the Company's polymerization operations. Operating Expenses Selling and administrative expenses increased 10.6% during the first quarter of 1998 primarily as a result of the 1997 acquisitions. As a percentage of net sales, selling and administrative expenses increased to 11.9% during the first quarter of 1998 compared to 11.4% during the same period in the prior year primarily because of the higher selling and administrative expenses associated with the Company's 1997 acquisitions and reduced sales of the Company's protective packaging products. 8 9 Amortization of intangibles increased 84.8% during the first quarter of 1998 compared to the same period in 1997 as a result of increased goodwill and non-compete agreement amortization associated with the 1997 acquisitions. Income from Operations Income from operations was $15.4 million during the first quarter of 1998 compared to $11.8 million during the first quarter of 1997. The increase in income from operations is primarily a result of the 1997 acquisitions and improved gross profit. Operating margin was 11.3% for the first quarter of 1998 compared to operating margin of 9.2% during the first quarter of 1997. The increase in operating margin is primarily due to the increased gross profit margin partially offset by increased selling and administrative expenses as a percentage of net sales. Interest Expense Interest expense during the first quarter of 1998 was $6.5 million compared to $11.1 million during the same period in 1997. The decrease is the result of lower outstanding aggregate indebtedness and lower interest rates associated with the Company's fourth quarter 1997 initial public offering and debt refinancing. Income Taxes The Company's effective tax rate for the first quarter of 1998 was 40% reflecting an effective federal tax provision of 35% and an effective state tax provision approximating 5%. The Company's income tax provision during the first quarter of 1997 reflects primarily state and foreign tax and federal alternative minimum tax (due to federal net operating loss carryforwards). Net Income Net income increased to $5.3 million during the first quarter of 1998 compared to net income of $0.3 million in the prior year. The increase in net income is the result of the improved income from operations and decreased interest expense. Earnings per share Diluted earnings per share increased to $0.26 during the first quarter of 1998 compared to $0.03 during the first quarter of 1997. The increase is the result of the increased net income partially offset by a greater number of shares outstanding associated with the Company's fourth quarter 1997 initial public offering. Adjusted EBITDA Adjusted EBITDA includes income from operations adjusted to exclude depreciation and amortization expenses, goodwill write-off and special charges. The Company believes that Adjusted EBITDA provides additional information for determining its ability to meet future debt service requirements. However, Adjusted EBITDA is not a defined term under GAAP and is not indicative of operating income or cash flow from operations as determined under GAAP. 9 10 The following table sets forth information with respect to Adjusted EBITDA of the Company's product groups for the periods presented.
THREE MONTHS ENDED MARCH 31, -------------------------------------------- % OF % OF 1998 NET SALES 1997 NET SALES ---- --------- ---- --------- (DOLLARS IN THOUSANDS) Consumer Packaging....................... $15,147 18.6 $11,220 15.6 Industrial Packaging..................... 9,103 16.6 8,327 14.9 Corporate Expense........................ (1,673) -- (1,543) -- ------- ------- Total.................................. $22,577 16.6 $18,004 14.1 ======= =======
The Company's Adjusted EBITDA increased 25.4% from $18.0 million to $22.6 million and Adjusted EBITDA margin increased from 14.1% to 16.6% during the first quarter of 1998 compared to the same period in 1997. The 35.0%, or $3.9 million, increase in Consumer Packaging's Adjusted EBITDA in the current quarter is primarily attributable to the incremental Adjusted EBITDA from the Company's 1997 acquisitions and a favorable mix of extruded sheet and film products. The increase was partially offset by reduced Adjusted EBITDA associated with the severe weather in Canada during January, downtime on the European extrusion line for a planned upgrade and decreased profitability of the Company's polymerization operations. The increase in Industrial Packaging's Adjusted EBITDA of 9.3%, or $776,000, is primarily due to decreased energy costs in the Company's recycled and specialty paper business. LIQUIDITY AND CAPITAL RESOURCES Recent Developments The Company intends to use the proceeds of the Offerings to reduce a portion of the borrowing under the revolving portion of IPC's senior credit facility (the "Credit Facility"), including a portion of the indebtedness which the Company incurred in connection with the acquisition of Ultra Pac, the refinancing of Ultra Pac's indebtedness and related expenses. After giving effect to the completion of the Offerings and the incurrence of indebtedness related to the acquisition of Ultra Pac, at March 31, 1998, the Company would have borrowed approximately $89.6 million under its $175 million revolving Credit Facility and would have had approximately $39.2 million available under the revolving portion of the Credit Facility (taking into account letters of credit under the revolving portion of the Credit Facility). The Company is currently considering a variety of financing alternatives to increase its borrowing capacity, although there can be no assurances that the Company will successfully obtain such additional capacity. Historical Liquidity and Capital Resources At March 31, 1998, the Company had cash and cash equivalents of $6.7 million and $115.6 million was available under the revolving credit portion of the Credit Facility. IPC's working capital at March 31, 1998 was $50.6 million. The primary short-term and long-term operating cash requirements for the Company are for debt service, working capital, acquisitions and capital expenditures. The Company expects to rely on cash generated from operations supplemented by revolving credit facility borrowings under the Credit Facility to fund the Company's principal short-term and long-term cash requirements. The Credit Facility is comprised of a $150.0 million Term A Loan, a $150.0 million Term B Loan and a $175.0 million revolving credit facility (up to $65.0 million of which may be in the form of letters of credit). The Term A Loan is required to be repaid in quarterly payments totaling $3.75 million in 1997, $16.25 million in 1998, $21.25 million in 1999, $25.0 million in 2000, $26.25 million in 2001, $31.25 million in 2002 and $26.25 million in 2003 and the Term B Loan is required to be repaid in quarterly payments totaling $1.5 million per annum through September 30, 2003 and four installments of $35.25 million on December 31, 2003, March 31, 2004, June 30, 2004 and September 30, 2004. The interest rate of the Credit Facility can be, 10 11 at the election of IPC, based upon LIBOR or the Adjusted Base Rate, as defined therein, and is subject to certain performance pricing adjustments. The Term A Loan and loans under the revolving credit facility bear interest at rates up to LIBOR plus 1.625% or the Adjusted Base Rate plus 0.625%. As of March 31, 1998, such rate is LIBOR plus 1.375%. The Term B Loan bears interest at rates up to LIBOR plus 2.00% or the Adjusted Base Rate plus 1.0%. As of March 31, 1998, such rate is LIBOR plus 1.75%. Borrowings are secured by substantially all the assets of the Company and its subsidiaries. The revolving credit facility and Term A Loan will terminate on September 30, 2003 and the Term B Loan will terminate on September 30, 2004. Under the Credit Facility, IPC is required to maintain certain financial ratios and levels of net worth and future indebtedness and dividends are restricted, among other things. The Company believes it is currently in compliance with the terms and conditions of the Credit Facility in all material respects. During 1997, the Company entered into interest rate swap agreements with a group of banks having notional amounts totaling $100.0 million through November 5, 2002. These agreements effectively fix a portion of the Company's LIBOR base rate at 6.12% during this period. Concurrently with the implementation of the swap agreements, the Company also entered into no cost interest rate collar agreements with a group of banks having notional amounts totaling $100.0 million through November 5, 2002. These collar agreements effectively fix the LIBOR base rate at a maximum of 7.00% and allow for the Company to pay the market LIBOR from a floor of 5.55% to the maximum rate. If LIBOR falls below 5.55%, the Company is required to pay the floor rate of 5.55%. During 1996, the Company entered into interest rate swap agreements for the term loans for notional amounts totaling $60.0 million through January 19, 1999. Such agreements effectively fix the Company's LIBOR base rate at 5.33% during this period. Income or expense related to settlements under these agreements are recorded as adjustments to interest expense in the Company's financial statements. IPC's industrial revenue bonds require monthly interest payments and are due in varying amounts and dates through 2009. Certain letters of credit under the Credit Facility provide credit enhancement for IPC's industrial revenue bonds. The Company made capital expenditures of $6.7 million and $5.5 million in the three months ended March 31, 1998 and 1997, respectively. The Company was not committed under any material contractual obligations for capital expenditures as of March 31, 1998. The Company is currently undergoing an enterprise-wide assessment of its Year 2000 expenses. Currently the Company does not anticipate encountering significant problems in adapting its system to the Year 2000 nor are the incremental costs associated with becoming Year 2000 compliant considered to be material, although there can be no assurances that this will be the case. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources" constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the Company's actual performance and highly leveraged financial condition (see "-- Liquidity and Capital Resources" above). 11 12 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. From time to time Ivex and its subsidiaries are involved in various litigation matters arising in the ordinary course of business. Ivex believes that none of the matters in which Ivex or its subsidiaries are currently involved, either individually or in the aggregate, is material to Ivex or IPC. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. None. 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 thereunto duly authorized. IVEX PACKAGING CORPORATION By: /s/ FRANK V. TANNURA ------------------------------------ Frank V. Tannura Vice President and Principal Financial Officer April 28, 1998 (Date) 12 EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT MARCH 31, 1998 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 6,749 0 72,317 2,604 66,306 147,393 352,892 155,536 438,874 96,836 325,201 0 0 204 (8,478) 438,874 136,168 136,168 104,671 104,671 0 0 6,497 8,860 3,545 5,315 0 0 0 5,315 $.26 $.26
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