HOUSTON--Nov. 2, 1995--Drypers Corporation
(Nasdaq:DYPR) today reported net sales of $43.3 million for the
third quarter ended September 30, 1995, compared with $45.7 million
for the same period of 1994. The Company recorded a net loss for
the recent quarter of $2.7 million, or $0.40 per share, compared
with net income of $2.6 million, or $0.37 per share, in the third
quarter of 1994.
The net loss reflected continued pricing pressures due to
competitive conditions in the market for disposable baby diapers and
related products, coupled with higher pulp prices than in the same
period a year-ago. The Company noted, however, that the recent
quarter's results reflected an improvement over the 1995 second
quarter, with net sales rising 14.7% and the net loss declining from
$6.2 million, or $0.95 per share (which included a pretax
restructuring charge of $3.0 million, or approximately $0.35 per
share). This improvement was attributed to gains in market share
and unit volume, as well as achieving planned reductions in
operating costs.
The Company also reported that it is in discussions with major
lending institutions for a $25 million financing facility. The
proposed financing facility would replace Drypers' existing $15.0
million revolving credit facility and $2.0 million term loan.
Subject to receipt of a new credit facility, negotiation of terms
and other approvals, Drypers' two largest equity holders have agreed
to provide additional capital in an aggregate amount of $3.6 million
to improve the Company's cash position. Both the credit facility
and the capital investment, if received, would be subject to
amendment by holders of the Company's 12 1/2% Senior Notes of
certain terms contained in the Indenture governing the Notes. In
the event that the Company is unable to obtain its proposed new
credit and capital financing package, or upon obtaining this
financing package is unable to secure amendments from the
Noteholders, the Company may, as previously stated in a press
release issued by the Company on August 4, 1995, be required to seek
protection under the federal bankruptcy laws.
The Company also stated that pursuant to the 30-day grace period
permitted in the Indenture, it has elected to defer the semi-annual
interest payment due November 1, 1995, on the Notes and intends to
begin discussions with Noteholders.
Walter V. Klemp, Chairman and Co-Chief Executive Officer,
noted, "Despite the loss for the third quarter, our operational turn-
around is progressing as planned and there are several encouraging
developments. Market share has increased to the highest level we
have seen in the past eight months, while promotional expenses have
been lower than expected. It appears pulp price increases have
reached their peak as we are now seeing some price softening from
suppliers. We have completed the shut-down of our Houston diaper
production operations, and our remaining plants are operating more
efficiently with cost savings in excess of our plan. Our Drypers
brand is gaining new support among national mass merchant accounts,
in addition to the improvement in our traditionally strong grocery
store channel."
Mr. Klemp added, "Gross margin improved from 27.7% to 29.6%
between the second and third quarters of 1995, and SG&A expenses
declined from 36.1% of net sales to 30.8% over the same period. The
Company also generated earnings before interest, taxes depreciation
and amortization of approximately $1.4 million in the latest
quarter. Pending receipt of the proposed debt and capital financing
package and certain Indenture amendments from our Senior
Noteholders, management continues to believe that the combination of
this financing package, cost reductions and increased margin from
the continued restoration of previous market share levels should
ultimately allow the Company to regain profitability."
The Company also announced that for the nine months ended
September 30, 1995, net sales were $117.4 million compared with
$127.4 million in the same period of 1994. The net loss was $12.1
million, or $1.84 per share, compared with net income before
extraordinary item of $5.5 million, or $0.91 per share, in the same
nine months of 1994. The net loss for the 1995 period included the
restructuring charge noted above, related to the elimination of
diaper production at Drypers' Houston plant, as well as an unusual
expense of $2.4 million, or approximately $0.27 per share, for
promotional and other expenses related to the repositioning of the
Company's premium brand products. Net income for the first nine
months of 1994 included an unusual expense of $1.1 million, or $0.12
per share, related to one-time legal expenses incurred in connection
with a lawsuit between Drypers and Kimberly-Clark, and an
extraordinary charge of $3.7 million, or $0.61 per share, related to
the redemption of debt.
Drypers Corporation manufactures and markets disposable baby
diapers and related products under the Drypers brand name. The
Company's products are sold through grocery stores and mass
merchants throughout the United States, Latin America and other
international markets. The Company also produces price-value
branded and private label diapers and related products.
DRYPERS CORPORATION (NASDAQ: DYPR)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
NET SALES $ 43,295 $ 45,658 $117,393 $127,384
COST OF GOODS SOLD 30,478 27,892 82,914 76,905
Gross profit 12,817 17,766 34,479 50,479
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 13,334 12,187 39,158 34,659
UNUSUAL EXPENSES -- -- 2,358 1,141
RESTRUCTURING CHARGE -- -- 2,972 --
Operating income (loss) (517) 5,579 (10,009) 14,679
RELATED PARTY INTEREST
EXPENSE 92 94 278 188
OTHER INTEREST EXPENSE, net 1,983 1,596 5,587 5,751
OTHER INCOME -- 352 -- 352
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM (2,592) 4,241 (15,874) 9,092
INCOME TAXES 64 1,675 (3,803) 3,608
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (2,656) 2,566 (12,071) 5,484
EXTRAORDINARY ITEM,
net of taxes -- -- -- (3,688)
NET INCOME (LOSS) $ (2,656) $ 2,566 $(12,071) $ 1,796
COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING 6,600,866 6,984,737 6,574,218 6,009,088
NET INCOME (LOSS) PER
COMMON SHARE:
Before extraordinary
item $ (0.40) $ 0.37 $ (1.84) $ 0.91
Extraordinary item -- -- -- (0.61)
Net income (loss) $ (0.40) $ 0.37 $ (1.84) $ 0.30
DRYPERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
September December
1995 1994
(Unaudited) (Audited)
ASSETS:
CURRENT ASSETS $ 36,728 $ 40,735
PROPERTY AND EQUIPMENT, net of depreciation
and amortization 36,151 34,853
OTHER ASSETS 61,009 56,143
$133,888 $131,731
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES $ 37,971 $ 22,773
LONG-TERM DEBT 46,307 46,632
OTHER LIABILITIES 4,394 5,559
STOCKHOLDERS' EQUITY 45,216 56,767
$133,888 $131,731
CLEARWATER, Fla., Nov. 2, 1995 -- href="chap11.fountain.html">Fountain
Pharmaceuticals, Inc. (OTC Bulletin Board: FPHI) announced today
that the Amended Plan of Re-organization that had been submitted to
the United States Bankruptcy Court was confirmed on November 1,
1995. In accordance with court procedure, unless appealed, the
effective date of the plan is estimated to be on or around December
15, 1995.
Under the Amended Plan, creditors will be paid in full or in
part depending on their treatment pursuant to the terms of the plan.
Existing shareholders will retain their shares of outstanding common
stock, and there will be an issuance of 25 million additional shares
in exchange for a capital contribution to the company of $250,000 by
the company's C.E.O.
The Amended Plan, said the company was confirmed essentially as
originally submitted and was approved overwhelmingly by all classes
of creditors and the stockholders. Further, the company said that
the plan was confirmed over the objection of an individual
stockholder who had challenged certain aspects of the plan. The
company is optimistic that any further legal action which might be
taken by that shareholder would not have merit.
The company said it would now proceed to pursue vigorously the
opportunities for its technology and products as reflected in the
confirmed plan. The company also expressed its appreciation for the
continued support of its creditors, shareholders, customers and
employees.
Fountain Pharmaceuticals, Inc. is a publicly traded company
based in Clearwater, Florida, that specializes in the application of
encapsulated delivery systems for the pharmaceutical and cosmetic
industries. The company's shares are traded in the "OTC Bulletin
Board".
/CONTACT: John C. Walsh, President, Fountain Pharmaceuticals, Inc.,
813-443-3888/
YOUNGSTOWN, Ohio, Nov. 2, 1995 -- href="chap11.pharmor.html">Phar-Mor, Inc. (Nasdaq
Small Cap: PMOR) today announced the results for its first fiscal
quarter, the thirteen weeks ended September 30, 1995. For the 102
deep discount drug stores the Company operates, net income for the
period, on a pro forma basis (giving retroactive effect to fresh
start accounting adjustments, elimination of non- recurring
reorganization costs and adjusting interest expense to give effect
to the new debt of the reorganized Company) was $890,000, or $.07
per share, compared to $807,000, or $.07 per share for the
comparable thirteen weeks ended October 1, 1994.
Comparable store sales were $254.8 million for the period,
compared to $275.7 million for the comparable thirteen week period
of the prior year, a decrease of 7.6%. The sales decrease was
partially the result of transitioning the Company's promotional
campaign during the late summer from an emphasis on grocery items to
emphasizing the broad spectrum of the merchandise offered in its
stores.
The Company, as of November 1, 1995, had $85 million in cash
(net of accrued payments associated with the bankruptcy proceeding)
and approximately $163.3 million in long-term debt and capital lease
obligations. Long-term debt includes the debt assumed on September
29, 1995, when the Company purchased the facility in which its
Youngstown, Ohio headquarters is located. In addition, the Company
has a $100 million revolving credit facility with BankAmerica which
has not been drawn upon.
Phar-Mor Cited for Excellence in Private Label Performance
The Company also announced that it has been chosen as the
winner
of the Private Label Manufacturers Association (PLMA) 1995 "Salute
to Excellence" Award in the Drug Chain category. The PLMA criteria
for selecting Phar-Mor included the Company's marketing and
merchandising policies, its product innovation and its overall
commitment to private label.
"The PLMA award is a tribute to our success in rolling out three
new private label brands over the past several years," said Phar-Mor
President David Schwartz. "All of our brands have been chosen to
meet the demands of today's consumers and are equal to or better
than their national brand counterpart, while offering a better value
and a 100% satisfaction guarantee."
Phar-Mor is a deep discount retail drug store chain with 102
stores in 18 states. The Company's common stock is traded on the
Nasdaq Small Cap Market under the symbol "PMOR." The Company
expects to be listed on the NASDAQ national market following the
completion of the Securities and Exchange Commission's review of its
registration statement on Form 10, which was filed with the S.E.C.
on October 23, 1995.
PHAR-MOR, INC.
UNAUDITED CONSOLIDATED SUMMARY OF SALES AND EARNINGS
(In thousands, except per share amounts)
PROFORMA: (a)
Successor Company
Thirteen Weeks Ended
September 30, 1995 October 1, 1994
Sales $254,845 $275,686
Income before income tax expense 1,484 1,346
Income tax expense 594(b) 539(b)
Net income $890 $807
Earnings per share $0.07 $0.07
AS REPORTED:
Successor Company Predecessor Company
Four Nine Thirteen
Weeks Ended Weeks Ended Weeks Ended
September 30, September 2, October 1,
1995 1995 1994
Sales $72,877(c) $181,968(c) $363,224(c)
Income (Loss) before
reorganization items,
fresh start revaluation,
extraordinary item and
income taxes 146(c) ($1,634)(c) ($3,397)(c)
Reorganization items (16,798)(d) (3,189)(d)
Fresh start revaluation 8,043
Extraordinary item - gain
on debt discharge 775,073
Income (loss) before
income taxes 146 764,684 (6,586)
Income tax expense 58(b) (b) (b)
Net income (loss) $88 $764,684 ($6,586)
Earnings per share $0.01 N/M N/M
The proforma information is for the 102 stores that the
Successor Company was operating when it emerged from bankruptcy on
September 11, 1995. The proforma information includes all
retroactive adjustments for fresh start accounting, elimination of
non-recurring reorganization items and adjusting interest expense to
give effect to the new debt of the reorganized Company.
(b) Due to the losses generated by the Predecessor Company it
was in a net operating loss carryforward position. Further, the
discharge of debt in conjunction with the reorganization did not
generate taxable income. Consequently, no provision for income
taxes was recorded by the Predecessor Company.
The income tax provision for the Successor Company has been
computed at the estimated combined Federal and state tax rate of
approximately 40%.
(c) Includes results for 143 stores for the 13 weeks ended
October 1, 1994 and 102 stores for all other periods presented.
(d) Reorganization items include charges for Chapter 11
professional fees, the Debtor-In-Possession financing facility fees
and costs of downsizing net of credits for interest income,
amortization of prepetition vendor exclusivity income and an
insurance claim recovery.
N/M - not meaningful.
EARNINGS PER SHARE for the Successor Company have been computed
based on 12,156,250 weighted average shares outstanding for each
period. No earnings per share have been presented for the
Predecessor Company because such presentation would not be
meaningful.