PAPERWEIGHT DEVELOPMENT CORP.

Transcription

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C 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): November 22, 2017 PAPERWEIGHT DEVELOPMENT CORP. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification Number) 825 East Wisconsin Avenue, P.O. Box 359, Appleton, Wisconsin (Address of principal executive offices) (zip code) (Registrant s telephone number, including area code) 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: Written communications pursuant to Rule 425 under the Securities Act (17 CFR ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ( of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ( b-2 of this chapter). Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

2 Item 7.01 Regulation FD Disclosure. Chapter 11 Filings As previously disclosed, on October 1, 2017, Paperweight Development Corp. (the Company ) and substantially all of its direct and indirect subsidiaries (collectively, the Debtors ) filed voluntary petitions for relief (the Bankruptcy Petitions ) under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court, and the petitions for relief therein, the Chapter 11 Filings ). The Debtors have obtained Bankruptcy Court authorization to jointly administer the Chapter 11 cases (the Chapter 11 Cases ) under the caption In re Appvion, Inc., et al. Case No Updated Financial Projections The Company, in conjunction with its advisors, continues to work with its lender constituencies towards a comprehensive restructuring. As previously disclosed by the Company in its Current Report on Form 8-K dated October 1, 2017 ( Prior 8-K ), prior to the Chapter 11 Filings, the Company entered into confidential discussions with, and provided certain confidential information regarding the Debtors to, certain holders of debt of the Company and its subsidiaries (the Holders ). In connection with those discussions, the Company agreed with the Holders to provide such information publicly and such information was filed as Exhibits to the Prior 8-K. As negotiations with the lender constituencies have continued, the Company has agreed with the Holders to make certain updated financial projections publicly available and is therefore making the disclosures included in this Item 7.01, including Exhibit 99.1 to this report, in accordance with that agreement. The updated financial projections reflect adjustments to the financial projections provided in the Prior 8-K based on the Company s experience and results of operations since the Chapter 11 Filings and revised outlook for fiscal 2017 and fiscal 2018, which supersede and replace the financial projections in the Prior 8-K. Third Quarter Financial Information Additionally, as previously disclosed by the Company in its NT Form 10-Q filed with the SEC on November 15, 2017, due to the demands on the Company s management as a result of the Chapter 11 Cases, the Company is unable to timely file its Form 10-Q for the fiscal quarter ended October 1, However, the Company has agreed with the Holders to make publicly available certain estimated financial information of the Company as set forth on Exhibit 99.2 to this report. This unaudited financial information is preliminary, based upon the Company s estimates and is subject to adjustments. The information in Exhibits 99.1 and 99.2 includes certain unaudited financial data that is preliminary and may change, as well as certain financial projections. While presented with numerical specificity, the financial projections are approximations based upon a variety of estimates and assumptions subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the Company s control. Actual results may vary materially from those presented. The financial information and financial projections have not been audited and are not presented in accordance with GAAP. The Company believes that the financial projections have been prepared on a reasonable basis, reflecting its best estimates and assumptions. However, because this information is highly subjective, it should not be relied on as indicative of future results. As a result of the foregoing considerations and other limitations, including those described below under Forward-Looking Statements, you are cautioned not to place undue reliance on the financial data included in this Item 7.01, including Exhibits 99.1 and The information in this Item 7.01, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed filed for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in filings under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Non-GAAP Information The information in Exhibit 99.1 includes certain financial measures not prepared in accordance with GAAP, including Adjusted EBITDA. The Company is providing Adjusted EBITDA information, which is defined as net income (loss) of the Company determined in accordance with all applicable and effective U.S. GAAP, before interest income or expense, income taxes, depreciation, amortization, certain income and expenses and noncash

3 items for the applicable period, as a complement to GAAP results. Adjusted EBITDA is a measure commonly used by management and investors as a measure of leverage capacity, debt service ability and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing the Company s financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or superior to, such GAAP measures as net income (loss), cash flows provided by or used in operating, investing, or financing activities or other financial statement data presented in the Company s consolidated financial statements as an indicator of financial performance or liquidity. Since Adjusted EBITDA is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. You are encouraged to evaluate each adjustment and to consider whether the adjustment is appropriate. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future, the Company may incur expenses similar to the adjustments included in the presentation of Adjusted EBITDA. The Company believes that the supplemental adjustments applied in calculating Adjusted EBITDA are reasonable and appropriate to provide additional information to investors. The Company also believes that Adjusted EBITDA is a useful measurement tool for assessing its ability to meet its future debt service, capital expenditures, and working capital requirements. Forward-Looking Statements In this report, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of These forward-looking statements often include words such as believe, expect, project, anticipate, intend, plan, estimate, seek, will, may, would, should, could, forecasts or similar expressions. These statements are not guarantees of results, and actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that could cause material impacts on the Company s historical or anticipated financial results. Although the Company believes that in making any such forwardlooking statement its expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the discussion of risk factors under Risk Factors and the discussion under Management s Discussion and Analysis of Financial Condition and Results of Operations in the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by the Company and the following important factors, among others, that could cause actual results to differ materially from those projected in such forward-looking statements: the Debtors ability to obtain the approval of the Bankruptcy Court with respect to motions filed in the Chapter 11 Cases and the outcomes of Bankruptcy Court rulings and the Chapter 11 Cases in general; the effectiveness of the overall restructuring activities pursuant to the Chapter 11 Filings and any additional strategies that the Debtors may employ to address their liquidity and capital resources; the actions and decisions of creditors, regulators and other third parties that have an interest in the Chapter 11 Cases; the actions and decisions of the Company s material vendors, suppliers and customers in response to the Chapter 11 Cases; and restrictions on the Debtors due to the terms of the Debtor s Superpriority Senior Debtor-in-Possession Credit Agreement that the Debtors have entered into in connection with the Chapter 11 Cases and restrictions imposed by the Bankruptcy Court. Many of these factors are beyond the Company s ability to control or predict. Given these uncertainties, you should not place undue reliance on the forward-looking statements. All such statements speak only as of the date made, and the Company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

4 Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit Number / 2018 Forecast Update, dated as of November Description 99.2 Certain Financial Information for the Quarter Ended October 1, 2017

5 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 22, 2017 PAPERWEIGHT DEVELOPMENT CORP. By: /s/ Kevin M. Gilligan Kevin M. Gilligan President and Chief Executive Officer Date: November 22, 2017

6 2017 / 2018 Forecast Update November 2017 Highly Confidential For Professional Eyes Only Exhibit 99.1

7 Forward-Lookin imposed by the Bankruptcy g Statements Court. In this Many presentation, of these factors all statements are beyond th at th are e Company s not purely historical ability to facts co ntrol (includ or predict. ing statements Given these which uncertain address ties, th e Company s yo u should no strategy, t place future undue o reliance perations, future the forward fin ancial -looking position, statements. estimated All revenues, such statements projected speak costs, only prospects, as of the plans date made, and objectives) and th e Company are forward-looking (an d its ad viso statements rs, includ within ing Gug the genheim meaning Secu of Section rities) expressly 27A of the disclaims Securities any Act o bligation of 1933 to and update Section or 21E revise of pub the licly Securities any forward-loo Exchange king Act of statements, These whether forward-looking as a result of statements new information, often include fu ture words events such or oth as erwise. believe, expect, project, anticipate, intend, plan, estimate, seek, will, may, would, should, could, forecasts or similar expression s. These statements are n ot guarantees of results, an d actual results co uld differ materially from th ose ex pressed in the forward-look ing statements due to a variety of important factors, both p ositive and negativ e, that could cause material imp acts on the Compan y s historical or anticip ated financial results. Altho ugh the Company believes that in making an y such forward -lookin g statemen t its expectations are based on reasonable assumptions, any such forward-lo oking statement involves uncertainties and is q ualified in its entirety by reference to th e d iscussion of risk factors under Risk Factors and th e d iscussion under Management s Discussion and Analy sis of Fin an cial Condition and Results of Operations in the Annual Reports on Form 10-K and Qu arterly Reports o n Form 10-Q filed by th e Compan y and the following important factors, among oth ers, that could cause actual results to differ materially from those projected in such forward-looking statements: the Debtors ab ility to obtain the approval of the Bankruptcy Court with respect to motions filed in the Chapter 11 Cases and the outcomes of Bankruptcy Court ru ling s and the Chapter 11 Cases in general; the effectiveness of the ov erall restructu ring activities pu rsuant to

8 2017 / 2018 Forecast Update As part of its normal budgeting process, Appvion, Inc. (the Company ) has updated its 2017 forecast and produced its 2018 annual operating plan, which reflect recent business and market conditions These forecasts take into account: October 2017 year-to-date financial results Near-term impact of the bankruptcy process Revised outlook based on current market conditions Third-quarter 2017 Revenue and EBITDA were lower than anticipated largely due to softness in demand and lower than expected product pricing Revisions to the fourth-quarter 2017 and full year 2018 forecasts reflect higher material costs and lower shipment volumes, in part, as a result of the bankruptcy process and managing inventory levels in light of temporary supply constraints (1) Excludes impact of one-time non-recurring items and restructuring -related expenses (professional fees, etc.). ($ in millions)

9 Exhibit 99.2 Paperweight Development Corp. and Subsidiaries (debtor-in-possession) Q Financial Statements (unaudited) For satisfaction of Section 6.01(b) of the Superpriority Senior Debtor-in-Possession Credit Agreement dated as of October 2, Privileged and Confidential. Prepared at the direction of legal counsel.

10 PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES (debtor-in-possession) CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (dollars in thousands, except share data) October 1, 2017 December 31, 2016 ASSETS Current assets Cash and cash equivalents $ 9,063 $ 6,397 Accounts receivable, less allowance for doubtful accounts of $400 and $323, respectively 55,387 41,297 Inventories 94,159 86,392 Other current assets 6,423 4,478 Total current assets 165, ,564 Property, plant and equipment, net 196, ,413 Intangible assets, net 32,983 34,697 Other assets 8,053 7,495 Total assets $ 402,873 $ 387,169 LIABILITIES, REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME Current liabilities Current portion of long-term debt, net $ 240,185 $ 982 Accounts payable 49,433 Accrued interest 623 3,258 Other accrued liabilities 41,477 44,939 Total current liabilities 282,285 98,612 Long-term debt, net 437,515 Postretirement benefits other than pension 20,842 Accrued pension 111,963 Other long-term liabilities 50 30,536 Liabilities subject to compromise 462,814 Commitments and contingencies (Note 12) Redeemable common stock, $0.01 par value, shares authorized: 30,000,000, shares issued and outstanding: 5,823,112 and 6,260,418 91, ,641 Accumulated deficit (450,573) (431,887) Accumulated other comprehensive income 16,537 18,947 Total liabilities, redeemable common stock, accumulated deficit and accumulated other comprehensive income $ 402,873 $ 387,169 The accompanying notes are an integral part of these condensed consolidated financial statements.

11 PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES (debtor-in-possession) CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (dollars in thousands) For the Three Months Ended October 1, 2017 For the Three Months Ended October 2, 2016 For the Nine Months Ended October 1, 2017 For the Nine Months Ended October 2, 2016 Net sales $ 163,513 $ 169,189 $ 494,183 $ 523,280 Cost of sales 132, , , ,486 Gross profit 30,763 29,337 90,143 95,794 Selling, general and administrative expenses 23,677 25,917 71,362 78,922 Operating income (loss) 7,086 3,420 18,781 16,872 Other expense Interest expense, net 12,356 10,179 36,582 30,550 Debt modification/extinguishment expense 2,365 2,365 Reorganization items, net 3,070 3,070 Foreign exchange (gain) loss (203) 95 (771) (223) Other expense Income (loss) before income taxes (10,853) (7,134) (23,402) (14,257) Provision for income taxes (97) Net income (loss) (10,756) (7,210) (23,445) (14,491) Other comprehensive income (loss): Changes in retiree plans (913) (913) (2,738) (2,743) Unrealized gains (losses) on derivatives (473) Total other comprehensive income (loss) (513) (541) (2,410) (3,216) Comprehensive income (loss) $ (11,269) $ (7,751) $ (25,855) $ (17,707) The accompanying notes are an integral part of these condensed consolidated financial statements.

12 PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES (debtor-in-possession) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED (unaudited) (dollars in thousands) October 1, 2017 October 2, 2016 Cash flows from operating activities: Net income (loss) $ (23,445) $ (14,491) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation 17,128 17,935 Amortization of intangible assets and other 1,989 1,968 Amortization of financing fees 2,816 1,429 Amortization of debt discount Employer 401(k) noncash matching contributions 915 1,245 Foreign exchange (gain) loss (799) (260) Noncash (gain) loss on hedging 166 Loss (gain) on disposals of equipment (Increase)/decrease in assets and increase/(decrease) in liabilities: Accounts receivable (13,760) (5,521) Inventories (7,660) 1,647 Other current assets (1,937) 1,950 Accounts payable and other accrued liabilities 13,825 (7,838) Accrued pension (3,614) 3,463 Other, net (4,929) (3,309) Net cash provided (used) by operating activities (18,468) (1,145) Cash flows from investing activities: Proceeds from sale of equipment 4 46 Additions to property, plant and equipment (6,984) (11,521) Net cash provided (used) by investing activities (6,980) (11,475) Cash flows from financing activities: Debt acquisition costs (800) Proceeds of first lien term loan 20,000 Payments relating to capital lease obligations (190) (208) Proceeds from revolving line of credit 411, ,400 Payments of revolving line of credit (381,300) (258,000) Payments of State of Ohio loans (899) (1,167) Proceeds from issuance of redeemable common stock Payments to redeem common stock (5,490) (6,093) Increase (decrease) in cash overdraft (15,208) 7,669 Net cash provided (used) by financing activities 28,086 14,451 Effect of foreign exchange rate changes on cash and cash equivalents Change in cash and cash equivalents 2,666 1,868 Cash and cash equivalents at beginning of period 6,397 1,817 Cash and cash equivalents at end of period $ 9,063 $ 3,685 The accompanying notes are an integral part of these condensed consolidated financial statements.