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8-K - FORM 8-K - Solo Cup COd8k.htm

Exhibit 99.1

Solo Cup Company and Subsidiaries

Consolidated Statements of Operations

(In millions)

 

     Q4 2009     Q4 2008     YTD
2009
    YTD
2008
 

Net sales

   $ 387.0      $ 404.3      $ 1,502.6      $ 1,847.0   

Cost of goods sold

     336.1        360.8        1,296.2        1,599.2   
                                

Gross profit

     50.9        43.5        206.4        247.8   

Selling, general and administrative expenses

     37.5        29.2        150.1        159.6   

Impairment of goodwill

     —          —          17.2        —     

Loss on asset disposals

     1.5        4.0        9.0        22.6   
                                

Operating income

     11.9        10.3        30.1        65.6   

Interest expense, net

     17.7        15.3        63.1        61.6   

Reclassification of unrealized loss on cash flow hedges to interest expense

     —          —          9.1        —     

Loss on debt extinguishment

     —          —          2.5        —     

Foreign currency exchange (gain) loss, net

     (0.2     10.9        (2.6     14.1   
                                

Loss from continuing operations before income taxes

     (5.6     (15.9     (42.0     (10.1

Income tax (benefit) provision

     (1.1     (2.4     (6.3     2.1   
                                

Loss from continuing operations

     (4.5     (13.5     (35.7     (12.2

Loss from discontinued operations, net of income taxes

     —          (0.1     —          (0.7

Gain on sale of discontinued operations, net of income taxes

     —          0.8        —          0.8   
                                

Net loss

   $ (4.5   $ (12.8   $ (35.7   $ (12.1
                                
Reconciliation of net loss to EBITDA (non-GAAP measure)    Q4 2009     Q4 2008     YTD
2009
    YTD
2008
 

Net loss(1)

   $ (4.5   $ (12.8   $ (35.7   $ (12.1

Interest expense, net (includes reclassification of unrealized loss on cash flow hedges and debt extinguishment)

     17.7        15.3        74.7        61.6   

Income tax (benefit) provision

     (1.1     (2.4     (6.3     2.1   

Depreciation and amortization

     18.1        18.0        70.0        77.7   
                                

EBITDA (non-GAAP measure)

   $ 30.2      $ 18.1      $ 102.7      $ 129.3   
                                

 

(1)

Net loss includes the following items, which are listed here to provide information for purposes of additional analysis.

     Q4 2009     Q4 2008     YTD
2009
    YTD
2008

Plant closure expenses and severance costs

   $     1.8      $     3.7      $      13.3      $      11.1

Closed plant inefficiencies

     —          2.3        1.0        6.5

Impairment of goodwill

     —          —          17.2        —  

Asset impairment

     —          0.6        —          0.6

Loss on asset disposals

     1.5        4.0        9.0        22.6

Foreign currency exchange (gain) loss, net

     (0.2     10.9        (2.6     14.1

Long-term incentive plan

     —          (1.1     0.4        1.2

Contractual resolution charge

     —          —          3.9        —  

STATEMENT REGARDING USE OF NON-GAAP MEASURES

EBITDA, defined as net income (loss) before interest, taxes, depreciation and amortization, is a non-GAAP financial measure, and should not be considered as an alternative to net income (loss) as a measure of financial or operating performance, as an alternative to cash flows provided by operating, investing and financing activities as a measure of liquidity, or as an alternative to any other financial measure calculated in accordance with generally accepted accounting principles. EBITDA is presented to provide additional information regarding the Company’s current financial and operating performance by excluding certain items that may not be indicative of the Company’s core operating results. Management believes that EBITDA provides useful information to the Company and its investors, and is frequently utilized by security analysts, lenders and other interested parties to evaluate companies in our industry. In addition, because the Company has historically provided EBITDA measures to investors and other interested parties as required under certain of our previous financing arrangements, management believes that EBITDA provides consistency in the Company’s financial reporting and is a useful supplemental measure in comparing the Company’s general operating performance from period to period.


Solo Cup Company and Subsidiaries

Consolidated Condensed Balance Sheets

(In millions)

 

     December 27, 2009    December 28, 2008

Assets

     

Cash and cash equivalents

   $ 30.0    $ 57.5

Accounts receivable, net

     124.9      124.0

Inventories

     233.0      283.3

Deferred income taxes

     19.1      21.9

Other current assets

     29.4      38.9
             

Total current assets

     436.4      525.6

Property, plant and equipment, net

     509.0      511.1

Other assets

     42.0      37.1
             

Total assets

   $ 987.4    $ 1,073.8
             

Liabilities and Shareholder’s Equity

     

Accounts payable

   $ 82.0    $ 74.8

Accrued expenses

     29.8      57.5

Current maturities of long-term debt

     0.8      1.4

Other current liabilities

     72.9      45.5
             

Total current liabilities

     185.5      179.2

Long-term debt, net of current maturities

     635.3      716.8

Deferred income taxes

     22.7      30.9

Other liabilities

     125.7      115.6
             

Total liabilities

     969.2      1,042.5
             

Total shareholder’s equity

     18.2      31.3
             

Total liabilities and shareholder’s equity

   $ 987.4    $ 1,073.8
             


Solo Cup Company and Subsidiaries

Consolidated Condensed Statements of Cash Flows

(In millions)

 

     YTD
2009
    YTD
2008
 

Cash flows from operating activities

    

Net loss

   $ (35.7   $ (12.1

Loss from discontinued operations, net of income taxes

     —          0.6   

Gain on sale of discontinued operations, net of income taxes

     —          (0.7
                

Loss from continuing operations

     (35.7     (12.2

Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:

    

Depreciation and amortization

     70.0        77.7   

Deferred financing fee amortization

     6.0        4.5   

Impairment of goodwill

     17.2        —     

Asset impairment

     —          0.6   

Loss on asset disposals

     9.0        22.6   

Loss on debt extinguishment

     2.5        —     

Reclassification of unrealized loss on cash flow hedges

     9.1        —     

Deferred income taxes

     (8.6     (0.8

Foreign currency exchange (gain) loss, net

     (2.6     14.1   

Changes in operating assets and liabilities

     68.7        26.7   

Other, net

     2.3        (0.7
                

Net cash provided by operating activities-continuing operations

     137.9        132.5   

Net cash used in operating activities-discontinued operations

     —          (0.6
                

Net cash provided by operating activities

     137.9        131.9   
                

Cash flows from investing activities

    

Purchase of property, plant and equipment

     (71.8     (79.7

Proceeds from sale of discontinued operations

     —          0.8   

Proceeds from sale of property, plant and equipment

     16.6        10.5   

Increase in restricted cash

     (10.4     —     
                

Net cash used in investing activities

     (65.6     (68.4
                

Cash flows from financing activities

    

Net repayments under revolving credit facilities

     (13.0     (2.1

Borrowings under the 10.5% Senior Secured Notes

     293.8        —     

Repayment of term notes

     (363.2     (38.1

Repayment of other debt

     (0.3     (0.1

Debt issuance costs

     (18.3     —     
                

Net cash used in financing activities

     (101.0     (40.3
                

Effect of exchange rate changes on cash

     1.2        0.7   
                

Net (decrease) increase in cash and cash equivalents

     (27.5     23.9   

Cash and cash equivalents, beginning of period

     57.5        33.6   
                

Cash and cash equivalents, end of period

   $ 30.0      $ 57.5