-----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, NjQi2WKkhWIM9dwHCCcE5T/HEiToNYH/B8c/nzRBi5VW05BrxLIIN0ueq+Kmnzfk RgKs6irsdbrVdFDW/s7HKA== 0000788983-98-000001.txt : 19980415 0000788983-98-000001.hdr.sgml : 19980415 ACCESSION NUMBER: 0000788983-98-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980414 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PORTOLA PACKAGING INC CENTRAL INDEX KEY: 0000788983 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 941582719 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95318 FILM NUMBER: 98593157 BUSINESS ADDRESS: STREET 1: 890 FAULSTICH CT CITY: SAN JOSE STATE: CA ZIP: 95112 BUSINESS PHONE: 4084538840 MAIL ADDRESS: STREET 1: 890 FAULSTICH COURT CITY: SAN JOSE STATE: CA ZIP: 95112 10-Q 1 FORM 10-Q FOR PERIOD ENDED FEBRUARY 28, 1998 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ______ to ______ COMMISSION FILE NO. 33-95318 PORTOLA PACKAGING, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 94-1582719 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 890 FAULSTICH COURT SAN JOSE, CALIFORNIA 95112 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (408) 453-8840 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 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 (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO. --- --- 11,776,159 shares of Registrant's $.001 par value Common Stock, consisting of 2,134,992 shares of nonvoting Class A Common Stock and 9,641,167 shares in the aggregate of voting Class B Common Stock, Series 1 and 2 combined, were outstanding at March 31, 1998. PORTOLA PACKAGING, INC. AND SUBSIDIARIES INDEX Part I - Financial Information - ------------------------------- Item 1. Financial Statements Consolidated Condensed Balance Sheets as of February 28, 1998 and August 31, 1997 Consolidated Statements of Operations for the Three and Six Months Ended February 28, 1998 and 1997 Consolidated Statements of Cash Flows for the Six Months Ended February 28, 1998 and 1997 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II - Other Information - ---------------------------- Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit Index PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PORTOLA PACKAGING, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
February 28, August 31, 1998 1997 ------------ ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $2,427 $3,242 Investments 1,744 841 Accounts receivable, net 19,172 23,339 Inventories 10,281 9,918 Other current assets 1,547 1,783 Deferred income taxes 671 1,032 ------------ ---------- Total current assets 35,842 40,155 Property, plant and equipment, net 82,513 79,779 Goodwill, net 14,380 15,044 Patents, net 1,919 2,024 Covenants not to compete, net 1,389 2,183 Debt financing costs, net 3,212 3,433 Other assets 4,657 5,439 ------------ ---------- Total assets $143,912 $148,057 ============ ========== LIABILITIES, REDEEMABLE WARRANTS, COMMON STOCK AND OTHER STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Current portion of long-term debt and short-term borrowings $2,515 $6,784 Accounts payable 5,858 9,908 Accrued liabilities 11,134 11,031 Accrued interest 5,063 4,978 ------------ ---------- Total current liabilities 24,570 32,701 Long-term debt, less current portion 120,998 115,159 Other long term obligations 1,126 1,543 Deferred income taxes 4,915 6,028 ------------ ---------- Total liabilities 151,609 155,431 Contingencies (Note 4) Redeemable warrants to purchase Class A Common Stock 6,895 5,675 ------------ ---------- Common stock and other stockholders' deficit: Class A convertible common stock of $.001 par value: Authorized: 5,203 shares; Issued and outstanding 2,135 shares in 1998 and 1997 2 2 Class B, Series 1, common stock of $.001 par value: Authorized: 17,715 shares; Issued and outstanding 8,470 shares in February 1998 and 8,481 shares in August 1997 8 8 Class B, Series 2, common stock of $.001 par value: Authorized: 2,571 shares; Issued and outstanding 1,171 shares in 1998 and 1997 1 1 Additional paid-in capital 8,588 8,661 Notes receivable from stockholders (450) (440) Cumulative foreign currency translation adjustment (210) (173) Unrealized holding losses on marketable securities 450 (92) Accumulated deficit (22,981) (21,016) ------------ ---------- Total common stock and other stockholders' deficit (14,592) (13,049) ------------ ---------- Total liabilities, redeemable warrants, common stock and other stockholders' deficit $143,912 $148,057 ============ ==========
The accompanying notes are an integral part of these consolidated financial statements. PORTOLA PACKAGING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (UNAUDITED)
Three Months Ended Six Months Ended February 28, February 28, --------------------- --------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Sales $39,267 $40,079 $81,243 $79,971 Cost of sales 31,348 32,974 65,147 65,089 ---------- ---------- ---------- ---------- Gross profit 7,919 7,105 16,096 14,882 ---------- ---------- ---------- ---------- Selling, general and administrative 4,658 4,525 9,399 9,579 Research and development 568 573 1,156 1,167 Amortization of intangibles 831 879 1,665 1,634 Write-off of intangibles -- 1,720 -- 1,720 Restructuring costs -- 1,093 -- 1,093 ---------- ---------- ---------- ---------- 6,057 8,790 12,220 15,193 ---------- ---------- ---------- ---------- Income (loss) from operations 1,862 (1,685) 3,876 (311) ---------- ---------- ---------- ---------- Other (income) expense: Interest income (120) (89) (250) (289) Interest expense 3,389 3,373 6,704 6,539 Amortization of debt financing costs 130 115 257 313 Other (income) expense 243 257 (710) 11 ---------- ---------- ---------- ---------- 3,642 3,656 6,001 6,574 ---------- ---------- ---------- ---------- Loss before income taxes (1,780) (5,341) (2,125) (6,885) Benefit from income taxes (1,173) (1,032) (1,380) (1,650) ---------- ---------- ---------- ---------- Net loss ($607) ($4,309) ($745) ($5,235) ========== ========== ========== ========== Basic and diluted net loss per common share ($0.05) ($0.37) ($0.06) ($0.44) ========== ========== ========== ========== Number of shares used in computing per share amount 11,772 11,798 11,777 11,806 ========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. PORTOLA PACKAGING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED
Six Months Ended February 28, --------------------- 1998 1997 ---------- ---------- Cash flows from operating activities: Net loss ($745) ($5,235) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 7,625 7,305 Deferred income taxes (1,319) -- Write-off of intangibles -- 1,720 Loss (gain) on property and equipment dispositions (834) 70 Provision for losses on accounts receivable 162 302 Provision for excess and obsolete inventories 162 519 Provision for restructuring -- 279 Changes in working capital: Accounts receivable 4,006 1,347 Inventories (525) (292) Other current assets 236 (1,173) Accounts payable (4,050) (1,895) Accrued liabilities 309 (50) Accrued interest 86 79 ---------- ---------- Net cash provided by operating activities 5,113 2,976 ---------- ---------- Cash flows used for investing activities: Additions to property and equipment (8,832) (9,284) Proceeds from sale of property, plant and equipment 1,154 261 Payment for Rapid Plast acquisition, net of cash acquired -- (2,134) Decrease in other assets 625 1,873 ---------- ---------- Net cash used in investing activities (7,053) (9,284) ---------- ---------- Cash flows from financing activities: Repayment of long-term debt obligations (1,470) (783) Borrowings under debt arrangements 39 222 Borrowings under revolving line of credit 3,000 2,430 Repayment of notes receivable from shareholder -- 7 Increase in notes receivable from stockholders (10) -- Repurchase of common stock (132) (500) Issuance of common stock 59 -- Payment under covenants (417) (537) ---------- ---------- Net cash from financing activities 1,069 839 ---------- ---------- Effect of exchange rate on cash 56 (2) ---------- ---------- Decrease in cash and cash equivalents (815) (5,471) Cash and cash equivalents at beginning of period 3,242 7,797 ---------- ---------- Cash and cash equivalents at end of period $2,427 $2,326 ========== ========== Supplemental disclosure of non-cash information: Acquisition of property and equipment through long-term capital leases $ -- $1,370 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. Portola Packaging, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except per share data) (Unaudited) 1. BASIS OF PRESENTATION: The consolidated financial statements included herein have been prepared by Portola Packaging, Inc. and its subsidiaries (the "Company") without audit and in the opinion of management include all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. The accompanying financial statements should be read in conjunction with the audited financial statements contained in the Company's Form 10-K previously filed with the Securities and Exchange Commission. Interim results are subject to significant seasonal variations and the results of operations for the three and six months ended February 28, 1998 are not necessarily indicative of the results to be expected for the full year ending August 31, 1998. 2. COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE: Effective for the quarter ended February 28, 1998, the Company adopted Financial Accounting Standards Board No. 128 "Earnings Per Share" (EPS) and accordingly has restated EPS for prior periods from previously reported EPS. Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. Common equivalent shares are excluded from the computation of net loss per share as their effect is antidilutive. The following is a reconciliation of the numerator (net loss) and the denominator (number of shares) used in the basic and diluted EPS calculations: Three Months Ended Six Months Ended February 28, February 28, --------------------- --------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Net loss ($607) ($4,309) ($745) ($5,235) Shares used in per share calculation 11,772 11,798 11,777 11,806 ========== ========== ========== ========== Basic and diluted EPS ($0.05) ($0.37) ($0.06) ($0.44) ========== ========== ========== ========== 3. INVENTORIES: Inventory balances as of February 28, 1998 and August 31, 1997 were as follows: Feb 28, Aug 31, 1998 1997 ---- ---- (unaudited) Raw materials $5,237 $5,251 Work in process 582 442 Finished goods 4,462 4,225 ------- ------- $10,281 $ 9,918 4. CONTINGENCIES: The Company is engaged in patent litigation with various parties who are seeking to have the court declare certain patents owned by the Company invalid. In some of these cases the Company has a claim against it for alleged violations of the antitrust laws. The Company believes its patents are valid, and intends to vigorously contest these actions. However, there can be no assurance that the Company will be successful in its defense of these matters. The Company is also party to a number of other lawsuits and claims arising out of the normal course of business. Although the ultimate outcome of these matters is not presently determinable, management does not believe the final disposition of these matters will have a material adverse effect on the financial position, results of operations or cash flows of the Company. 5. RESTRUCTURING COSTS: The Company took measures to improve productivity and quality in its core business, and in fiscal 1997 implemented a restructuring plan which consolidated its separate Closure, Packaging and Manufacturing divisions. This restructuring plan included a reduction in staff positions and the closure of its Portland, Oregon plant in February 1997 and its Bettendorf, Iowa plant in July 1997. The Portland facility was sold in the first fiscal quarter of 1998 and the Bettendorf plant has been listed for sale. The Company recorded a restructuring charge of approximately $2.4 million primarily for payroll related charges in connection with this restructuring plan in fiscal 1997. 6. WRITE-OFF OF INTANGIBLES: In connection with the Portland, Oregon plant closing discussed above, the Company wrote off $1.7 million of goodwill associated with this plant in fiscal 1997. 7. RECENT ACCOUNTING PRONOUNCEMENTS: In June 1997, the Financial Accounting Standards Board issued SFAS 130, "Reporting Comprehensive Income". SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. It is effective for the Company's fiscal year 1999. In June 1997, the Financial Accounting Standards Board issued SFAS 131, "Disclosure About Segments of an Enterprise and Related Information". SFAS 131 changes current practice under SFAS 14 by establishing a new framework on which to base segment reporting (referred to as the "management" approach) and also requires interim reporting of segment information. It is effective for the Company's fiscal year 1999. The Company is currently studying the implications of these statements and has not yet determined the impact of their adoption. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Disclosures Regarding Forward-Looking Statements This report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this Form 10-Q, including, without limitation, statements contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financing alternatives, financial position, business strategy, plans and objectives of management of the Company for future operations, and industry conditions, are forward-looking statements. Although the Company believes that the expectations reflected in any such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company's business, including but not limited to, competition in its markets, and reliance on key customers, all of which may be beyond the control of the Company. Any one or more of these factors could cause actual results to differ materially from those expressed in any forward-looking statement. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements disclosed in this paragraph and elsewhere in this report. RESULTS OF OPERATIONS Sales decreased $0.8 million, or 2.0%, from $40.1 million for the three months ended February 28, 1997 to $39.3 million for the three months ended February 28, 1998, and increased $1.3 million, or 1.6%, from $80.0 million for the six months ended February 28, 1997 to $81.2 million for the six months ended February 28, 1998. Sales also decreased $2.7 million, or 6.5%, for the second fiscal quarter ended February 28, 1998 compared to sales for the first fiscal quarter ended November 30, 1997. The increase in sales for the six months ended February 28, 1998 was primarily due to increased sales from operations in the United Kingdom and Canada partially offset by decreases in domestic closures and equipment sales. The decreases in sales for the second fiscal quarter ended February 28, 1998 compared to the same quarter of the prior fiscal year and to the first quarter of the current fiscal year, were primarily due to decreases in domestic closures sales. Gross profit increased $0.8 million, or 11.5%, to $7.9 million for the three months ended February 28, 1998, as compared to $7.1 million for the three months ended February 28, 1997, and increased $1.2 million, or 8.2%, to $16.1 million for the six months ended February 28, 1998 from $14.9 million for the same period in fiscal 1997. Gross profit as a percentage of sales increased from 17.7% for the three months ended February 28, 1997 to 20.2% for the three months ended February 28, 1998, and from 18.6% for the six months ended February 28, 1997 to 19.8% for the same period in fiscal 1998. The margin increase was due primarily to improved margins in the equipment division, partially offset by lower margins in the domestic closure business which were down slightly for the three and six month periods ended February 28, 1998 as compared with the same periods of the prior year. Selling, general and administrative expenses increased $133,000, or 2.9%, to $4.7 million for the three months ended February 28, 1998, as compared to $4.5 million for the same period in fiscal 1997, and increased as a percentage of sales from 11.3% for the three months ended February 28, 1997 to 11.9% for the three months ended February 28, 1998. For the six months ended February 28, 1998, selling, general and administrative expenses were $9.4 million, a decrease of $0.2 million, or 1.9%, from expenses of $9.6 million for the same period in fiscal 1997. As a percentage of sales for the six months ended February 28, 1998, selling, general and administrative expenses were 11.6% as compared to 12.0% for the same period in fiscal 1997. The increases for the second fiscal quarter compared to the same period of the prior year were primarily due to increased expenses for bonus accrual partially offset by decreases in personnel costs. The decreases for the six months ended February 28, 1998 compared to the prior year are primarily due to decreases in group insurance and legal fees partially offset by increases in personnel costs. Research and development expense decreased $5,000, or 0.9%, to $568,000 for the three months ended February 28, 1998, as compared to $573,000 for the three months ended February 28, 1997, and remained constant as a percentage of sales at 1.4% in the three months ended February 28, 1998 and 1997. The decrease was primarily due to fewer expenditures for prototype costs offset by increased expenditures for patent consulting in the three months ended February 28, 1998 as compared to the same period of fiscal 1997. For the six months ended February 28, 1998, research and development expense was $1.2 million, a decrease of $11,000, or 0.9%, from $1.2 million for the same period in fiscal 1997. As a percentage of sales, research and development expense was 1.4% for the six months ended February 28, 1998, as compared to 1.5% for the same period in fiscal 1997. The absolute decrease in research and development expense was due primarily to decreased personnel costs. Amortization of intangibles (consisting of amortization of patents, technology, goodwill and covenants not to compete) decreased $48,000, or 5.5 %, to $831,000 for the three months ended February 28, 1998, as compared to $879,000 for the three months ended February 28, 1997, and increased $31,000, or 1.9%, to $1.7 million for the six months ended February 28, 1998 as compared to $1.6 million for the same period in fiscal 1997. The increase was primarily due to an increase in technology amortization due to purchased technology in fiscal 1997. In the second fiscal quarter of 1997 the Company wrote off goodwill of $1.7 million in connection with the closure of its Portland, Oregon plant in February 1997. The Company recorded a restructuring charge of $1.1 million primarily for employee severance payments in connection with the closure of its Portland, Oregon plant in the fiscal quarter ended February 28, 1997 in connection with the restructuring plan implemented by the Company in December 1996. In March 1997, the Company announced further restructuring plans which included the closure of its Bettendorf, Iowa plant in July 1997. Interest income increased $31,000 to $120,000 for the three months ended February 28, 1998 from $89,000 for the same period in fiscal 1997, and decreased $39,000 to $250,000 for the six months ended February 28, 1997 as compared to $289,000 for the same period in fiscal 1997. These increases and decreases are primarily due to fluctuations in the levels of invested cash in fiscal 1998 as compared to fiscal 1997. Interest expense increased $16,000 to $3.4 million for the three months ended February 28, 1998, as compared to $3.4 million for the three months ended February 28, 1997, and increased $165,000 to $6.7 million for the six months ended February 28, 1998 as compared to $6.5 million for the same period in fiscal 1997. These increases were primarily due to a higher level of debt in fiscal 1998 due to borrowings under the Company's line of credit in fiscal 1998. Amortization of debt financing costs increased $15,000 for the three months ended February 28, 1998 to $130,000 from $115,000 for the three months ended February 28, 1997, and decreased $56,000 to $257,000 for the six months ended February 28, 1998 as compared to $313,000 for the same period in fiscal 1997. Debt financing costs are primarily attributable to the $110 million senior notes issued in October 1995 and to a lesser extent, debt financing incurred in Western Canada. Other expense decreased $14,000 to $243,000 for the three months ended February 28, 1998 compared to $257,000 for the same period in fiscal 1997 which was primarily due to a decrease in foreign currency losses on inter-company transactions. Other income increased $721,000 for the six months ended February 28, 1998 to $710,000 compared to other expense of $11,000 for the same period in fiscal 1996. This increase in other income was primarily due to the gain from the sale of the Portland, Oregon facilities. The Company recorded a benefit from income taxes of $1.4 million for the six months ended February 28, 1998 based on its pre-tax loss using an effective tax rate of 65% in anticipation of its expected tax rate for the entire fiscal year. The actual effective tax rate for the entire fiscal year could vary substantially depending on actual results achieved. The Company had an effective tax rate of 11.8% for fiscal 1997. Income tax expense does not bear a normal relationship to income before income taxes primarily due to nondeductible goodwill and other intangibles arising from the Company's acquisitions. LIQUIDITY AND CAPITAL RESOURCES The Company has relied primarily upon cash from operations, borrowings from financial institutions and sales of common stock to finance its operations, repay long-term indebtedness and fund capital expenditures and acquisitions. At February 28, 1998, the Company had cash and cash equivalents of $2.4 million, a decrease of $0.8 million from August 31, 1997. Cash provided by operations totaled $5.1 million for the six months ended February 28, 1998, a $2.1 million increase from the $3.0 million provided by operations for the six months ended February 28, 1997. This increase in cash provided by operating activities is mainly due to the decrease in the net loss from $5.2 million to $0.7 million, the decrease in accounts receivable of $4.0 million compared to $1.3 million decrease in 1997 offset by the decrease in accounts payable of $4.1 million compared to $1.9 million decrease in 1997. Cash used in investing activities was $7.1 million for the six months ended February 28, 1998, as compared to $9.3 million for the six months ended February 28, 1997. This consisted primarily of additions to property and equipment and for fiscal 1997, also included the acquisition of the Company's Eastern Canadian subsidiary (formerly Rapid Plast and now named Portola Packaging Ltd.) in the amount of $2.1 million. Cash provided by investing activities also included $1.2 million in proceeds from the sale of property and equipment, which was primarily gain from the sale of the Portland, Oregon facilities realized in the first fiscal quarter ended November 30, 1997. Cash provided by financing activities was $1.1 million for the first half of fiscal 1998 compared to $0.8 million for the first half of fiscal 1997. As of February 28, 1998, the Company had borrowed $7.4 million under its $35 million revolving line of credit. At February 28, 1998, the Company had $2.4 million in cash and cash equivalents as well as borrowing capacity under the revolving credit line (of which $27.6 million was available for draw as of February 28, 1998). Management believes that these resources, together with anticipated cash flow from operations, will be adequate to fund the Company's operations, debt service requirements and capital expenditures through fiscal 1998. However, there can be no assurance that additional capital beyond the amounts currently forecasted by the Company will not be required or that any such required additional capital will be available on reasonable terms, if at all, at such time or times as required by the Company RECENT ACCOUNTING PRONOUCEMENTS In June 1997, the Financial Accounting Standards Board issued SFAS 130, "Reporting Comprehensive Income". SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. It is effective for the Company's fiscal year 1999. In June 1997, the Financial Accounting Standards Board issued SFAS 131, "Disclosure About Segments of an Enterprise and Related Information". SFAS 131 changes current practice under SFAS 14 by establishing a new framework on which to base segment reporting (referred to as the "management" approach) and also requires interim reporting of segment information. It is effective for the Company's fiscal year 1999. The Company is currently studying the implications of these statements and has not yet determined the impact of their adoption. PART II -- OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Portola Packaging, Inc. is a privately-held company, and currently has no class of voting securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. The Company has two classes of common equity, Class A Common Stock and Class B Common Stock, Series 1 and Series 2. Shares of Class A Common Stock are not entitled to vote. The Company's Class B Common Stock, Series 1 and Class B Common Stock, Series 2 have the same voting rights, each share being entitled to one vote. The annual meeting of the stockholders of the Company was held on January 20, 1998 for the purpose of electing six members of the Board of Directors of the Company and ratifying the selection by the Board of Directors of the Company's independent public accountants for the fiscal year ending August 31, 1998. Proxies representing 6,663,872 shares of the 8,456,534 shares of Class B Common Stock, Series 1 issued and outstanding on the record date, or approximately 79% of the outstanding shares of such Series, were received and entitled to be voted at the annual meeting. Proxies representing 815,715 shares of the 1,171,430 shares of Class B Common Stock, Series 2 issued and outstanding on the record date, or approximately 70% of the outstanding shares of such Series, were received and entitled to be voted at the annual meeting. The holders of Class B Common Stock, Series 1 and Series 2, vote as a single class. Christopher Behrens, Martin R. Imbler, Jeffrey Pfeffer, Timothy Tomlinson, Jack L. Watts and Larry C. Williams each received 7,479,587 votes, representing approximately 78% of the total voting shares outstanding and all shares present and voting at the annual meeting, and each such individual was elected to serve as a Director of the Company until the Company's next annual meeting. The holders of the 7,479,587 shares represented and entitled to vote at the annual meeting, representing all shares present and voting at the meeting, also ratified and approved the selection of Coopers & Lybrand L.L.P. as independent public accountants for the Company for the fiscal year ending August 31, 1998. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed herewith or incorporated by reference herein. EXHIBIT NUMBER EXHIBIT TITLE - ------ ------------- 10.47 Summary Description of Company Bonus Plan and Company Profit Sharing Plan 27.01 Financial Data Schedule (b) No reports on Form 8-K were filed by the Company during the period ended February 28, 1998. SIGNATURES 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. PORTOLA PACKAGING, INC. (Registrant) Date: April 14, 1998 /s/ Joseph T. Mayernick ----------------------------- Joseph T. Mayernick Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT TITLE - ------ ------------- 10.47 Summary Description of Company Bonus Plan and Company Profit Sharing Plan 27.01 Financial Data Schedule EX-10.47 2 BONUS PLAN DESCRIPTION Exhibit 10.47 Summary Description of Company bonus plan and Company profit sharing plan: The Company has adopted a bonus incentive plan effective for fiscal year 1998. Certain management and technical employees are eligible for bonuses under the plan. Bonuses under this plan will be based on two principal factors, namely, the Company's financial performance relative to plan, measured by EBITDA, and the extent to which the Company has reached customer satisfaction goals as measured by a quarterly customer survey. Eligible employees will receive target bonuses to the extent these goals are reached. Such bonuses will increase up to double the originally proposed amount to the extent that financial performance exceeds plan by up to 15% and customer survey results exceed original targets by up to specified amounts. If and to the extent that financial performance falls short of plan or customer satisfaction ratings fail to increases from levels established during the first quarter of 1998, bonuses will be less than originally proposed or will not be awarded. Total funds available for payment under plan will be determined by the Board of Directors at fiscal year end based on the overall financial performance of the Company The Company has also revised its profit sharing plan to provide that eligible employees will receive profit sharing awards of up to five percent of compensation based on the same Company financial performance and customer satisfaction goals outlined above. Such awards will increase up to double the original amount to the extent that financial performance exceeds plan by up to 15% and customer survey results exceed the original targets by up to specified amounts. If and to the extent that financial performance falls short of plan or customer satisfaction ratings fail to increase from levels established during the first quarter of 1998, awards will be less than originally proposed or will be nil. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS AUG-31-1998 SEP-01-1997 FEB-28-1998 2,427 1,744 19,172 0 10,281 35,842 82,513 0 143,912 24,570 0 0 0 11 (14,603) 143,912 81,243 81,243 65,147 65,147 12,220 0 6,704 (2,125) (1,380) (745) 0 0 0 (745) ($0.06) ($0.06) Shown net of allowance Shown net of depreciation
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