10-K405 1 c61158e10-k405.txt ANNUAL REPORT 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 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 INTERNATIONAL 60069 LINCOLNSHIRE, ILLINOIS (Zip Code) (Address of Principal Executive Office) Registrant's Telephone Number, including area code: (847) 945-9100 Securities registered pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH REGISTERED: Common Stock, $0.01 par value New York Stock Exchange Common Stock, $0.01 par value Chicago Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $247 million based upon the closing price of $13.71 on March 14, 2001. At March 14, 2001, 20,947,269 shares of Common Stock, par value of $0.01, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts I, II and III incorporate by reference portions of the Registrant's Annual Report to Security Holders and Proxy Statement for the fiscal year ended December 31, 2000 relating to the Annual Meeting of Stockholders to be held on May 9, 2001. 2 TABLE OF CONTENTS
PAGE PART I Item 1. Business...................................................................................... 3 Item 2. Properties.................................................................................... 9 Item 3. Legal Proceedings............................................................................. 11 Item 4. Submission of Matters to a Vote of Security Holders........................................... 11 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters..................... 13 Item 6. Selected Financial Data....................................................................... 13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 13 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ................................... 14 Item 8. Financial Statements and Supplementary Data................................................... 14 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosures......... 14 PART III Item 10. Directors and Executive Officers of the Registrant............................................ 15 Item 11. Executive Compensation........................................................................ 15 Item 12. Security Ownership of Certain Beneficial Owners and Management................................ 15 Item 13. Certain Relationships and Related Transactions................................................ 15 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............................. 15
2 3 PART I ITEM 1. BUSINESS GENERAL Ivex Packaging Corporation, a Delaware corporation (the "Company" or "Ivex"), is a vertically integrated specialty packaging company that designs and manufactures value-added plastic and paper-based flexible packaging products for the consumer and protective packaging markets. Ivex focuses on niche markets which management believes provide attractive margins and growth and where the Company's integrated manufacturing capabilities can enhance its competitive position. Ivex serves a variety of markets, providing packaging for food, medical devices and electronic goods and protective packaging for industrial products. The Company's principal operating subsidiary is IPC, Inc. ("IPC") and IPC's principal domestic operating subsidiaries are Kama of Illinois Corporation, Plastofilm Industries, Inc., Ultra Pac, Inc. and Ivex Paper Mill Corporation and principal foreign operating subsidiaries are Ivex Corporation, Ivex Holdings, Ltd. and Ivex Plastic Packaging B.V. The following trademarks used herein are owned by the Company or one of its affiliates: Ivex(R), Kama(R), Plastofilm(R), Ultra Pac(R) M&R(TM), Jet-Pak(R), Jet-Lite(R) and Jet-Cor(TM). On October 6, 1997, the Company completed its initial public offering of 9,660,000 shares of its common stock (the "1997 Common Stock Offering") pursuant to which the Company received net proceeds of $117.3 million which it used, together with the proceeds of a $475.0 million amended and restated credit facility, to redeem all of its then outstanding 13 1/4% Senior Discount Debentures and all of IPC's then outstanding 12 1/2% Senior Subordinated Notes. On May 27, 1998, the Company completed a secondary offering of 4,000,000 shares of its common stock pursuant to which the Company sold 500,000 shares of common stock for net proceeds of $10,707,000. The Company used these net proceeds to reduce borrowings under its revolving credit facility. On November 20, 1998, the Company contributed certain paper assets to Packaging Holdings, L.L.C., in return for a non-consolidated 48.2% joint venture interest. On May 26, 2000, the Company sold its Specialty Coating business to Chargeurs, SA ("Chargeurs") of Paris, France for approximately $113.0 million in cash, resulting in a pre-tax gain of $42.2 million. The Specialty Coating business was part of the Company's former Technical Packaging operating segment and included the Newton, Massachusetts, Troy, Ohio and Bellwood, Illinois operations. The Specialty Coating business generated revenues of approximately $90 million in 1999 and $45 million through the date of sale in 2000. The Company's principal executive offices are located at 100 Tri-State International, Suite 200, Lincolnshire, Illinois 60069, and its telephone number is (847) 945-9100. MARKETS Consumer Packaging. The Consumer Packaging product group designs and manufactures plastic and paper-based products for food packaging applications and for applications in the medical and electronics industries. The Company produces a broad array of items, including plastic containers for prepared foods, produce and baked goods; specialty paper products such as fluted baking cups and liners for cookies and other baked goods; microwaveable packaging materials; and packaging for medical devices and electronics products. The Consumer Packaging product group markets its products to a variety of end users, including national wholesale bakeries, supermarket chains, foodservice distributors, fast-food chains, major agricultural growers, medical equipment suppliers and electronics manufacturers. The Company also manufactures a variety of plastic sheet and film products from several different resins for internal use and sales to third party converters. Ivex is the leading producer of oriented polystyrene ("OPS") sheet in North America. The Consumer Packaging product group represented approximately 77% of the Company's net sales and Adjusted EBITDA during the year ended December 31, 2000. The Company's Consumer Packaging product group is hereinafter sometimes referred to as "Consumer Packaging". Protective Packaging. The Protective Packaging product group manufactures paper and film products for protective packaging. The Company also manufactures a variety of recycled kraft paper made from post-consumer and post-industrial fibers. These products are marketed primarily to consumer durable goods manufacturers, other industrial manufacturers and integrated paper producers. The Protective Packaging product group 3 4 represented approximately 23% of the Company's net sales and Adjusted EBITDA during the year ended December 31, 2000. The Company's Protective Packaging product group is hereinafter sometimes referred to as "Protective Packaging". GENERAL DESCRIPTION The following table illustrates the products that Ivex manufactures:
12 MONTHS ENDED DECEMBER 31, 2000 --------------------- NET ADJUSTED PRODUCT GROUP SALES EBITDA PRODUCT CUSTOMERS END PRODUCT USES ------------- -------- -------- ------------------- -------------- ------------------- Consumer Packaging $547,426 $87,193 Plastic containers, Supermarkets, Plastic hinged and corrugated paper foodservice two-piece containers, liners and distributors, trays for deli foods, specialty paper fast food chains, salads, cookies, products, OPS sheet bakery and berries and cakes, and film, HIPS sheet, confectionery film for envelopes PET sheet, PP sheet, companies, and box windows, PVC sheet and HDPE food processors, protective plastic packaging Sheet plastic converters, for medical and electronics envelope, folding applications, paper liners for carton manufacturers, cookies, microwaveable medical device and packaging materials, supply companies and fluted bakery cups and electronics manufacturers specialty paper products Protective Packaging 163,525 25,512 Protective packaging, Consumer durables Cohesive self-sealing including coated manufacturers, other packaging papers, paper, industrial single face corrugated single face manufacturers, paper for packaging, corrugated paper distributors, shippers and mailers, paper, shippers and supply grocery and food bags and mailers, companies and manufactured paper, including kraft papers and specialty recycled papers manufacturers Corporate Expenses (6,944) ----------- -------- Total $ 710,951 $ 105,761 =========== =========
4 5 CONSUMER PACKAGING General. The Consumer Packaging product group is an integrated manufacturer of plastic and paper products for use in a wide array of food applications and medical and electronics packaging applications. The food packaging products are typically used for items sold in supermarkets, wholesale and retail bakeries, fast-food restaurants and institutional foodservice outlets. The Company's medical packaging products typically are used by the major medical supply companies for sterility packaging and its electronics packaging products generally are used as cushioning and packaging materials. Products. Consumer Packaging's products consist primarily of thermoformed plastic containers and converted paper products used in food packaging applications and medical and electronics packaging applications. Thermoformed plastic packaging includes hinged and two-piece containers, trays for delicatessen foods, salads, cookies, cakes and other items, sterility packaging for medical applications and cushioning and packaging products for the electronics industry. Paper products consist of single face corrugated paper liners for cookies and other baked goods, microwaveable materials, fluted cups for baking and other specialty paper products. As part of its integrated operations, Ivex manufactures OPS sheet and also produces OPS film, high impact polystyrene ("HIPS") sheet, polyethylene terephthelate ("PET") sheet, polypropylene ("PP") sheet and high density polyethylene ("HDPE") sheet. OPS sheet is widely used in packaging applications where clarity, rigidity and material yield are significant considerations. HIPS sheet is used in similar applications where clarity is not as important, but where additional stress or crack resistance is required. PET, PP and HDPE sheet are also typically used in applications that require stress or crack resistance. OPS film is a thinner gauge version of OPS sheet with applications primarily in windows for envelopes and folding cartons as well as labels. The Company's OPS sheet and film, HIPS sheet, PET sheet, PP sheet and HDPE sheet are marketed under the Company's Kama(R) brand name. Markets. The principal markets for Ivex's food packaging products include supermarkets, particularly in-store bakery, delicatessen and prepared food sections; national wholesale bakeries; and food service outlets, particularly fast-food restaurants and institutions such as schools, hospitals and corporate cafeterias. The principal markets for the Company's medical and electronics packaging include medical device and supply manufacturers and electronics manufacturers. Ivex employs a national sales force to service each of the specific market segments that it targets. Approximately half of the packaging customers are serviced through distributors, with the balance serviced directly by the Company's national account sales representatives. The Company also markets to end-users served by its distributors, such as small and regional supermarkets and convenience food outlets. Brokers are also used to further penetrate specific geographic markets and access prospective customers. Manufacturing. The Company's plastic packaging products are manufactured internally at the Company's two polystyrene polymerization, nine extrusion and fifteen thermoforming facilities. Polystyrene polymerization is the process of converting liquid styrene monomer into polystyrene through heat and agitation under high pressure. The Company produces high quality polystyrene as measured by the polystyrene's low residual monomer levels. Extrusion is the process of converting plastic resin into plastic sheet and film used in the thermoforming process. The Company is one of only two OPS producers that have polystyrene polymerization manufacturing facilities. Ivex's plastic thermoforming and paper converting operations are principally conducted in sixteen facilities located throughout North America and Europe. PROTECTIVE PACKAGING General. The Protective Packaging product group is an integrated manufacturer and coater of paper and film products for protective packaging and a manufacturer of various grades of specialty papers. Products. Protective packaging products include self-sealing coated packaging papers, films and corrugated paper; heavy-duty mailing envelopes marketed under the brand names Jet-Lite(R), Jet-Cor(TM) and Jet-Pak(R) and corrugated paper. 5 6 The Company's manufactured papers include post-consumer and post-industrial recycled paper products (including lightweight kraft paper for grocery and food bags and heavyweight crepe kraft paper for bag closures). Markets. The Company's protective packaging products are used in a wide variety of commercial and industrial applications. Ivex applies adhesive and cohesive coatings to paper and single face corrugated paper products for high-speed, high-volume, self-sealing packaging applications. A cohesive package is designed to stick to itself and not to the contents. The Company uses proprietary formulations of adhesive and cohesive materials to meet specialized customer requirements. Typical end-users of self-sealing packaging systems are the major U.S. automotive parts manufacturers and book publishers. Approximately 10% of the Company's recycled kraft paper is used internally in the production of single face corrugated paper, cohesive coated paper and mailing envelopes. Principal third-party markets for the Company's manufactured paper products are food packaging, industrial packaging, bag converting and industrial converting, including grocery and food bags; envelopes; and bag closures in pet food, seed, and fertilizer packaging. These markets require high service levels, including fast delivery and the ability to produce a variety of colors, weights and formulations. Customers for the Company's manufactured paper products include large, integrated paper producers as well as packaging companies. Manufacturing. Ivex's paper manufacturing and converting operations are conducted at nine facilities throughout the U.S. and Canada. All of the paper produced at the Company's three paper mills is made entirely from post-consumer and post-industrial fibers, including old corrugated containers ("OCC") and double-lined kraft ("DLK"). COMPETITION The Company operates in markets that are highly competitive and faces substantial competition throughout all of its product lines from numerous national and regional companies. Many of these competitors are considerably larger than the Company and have substantially greater financial and other resources than the Company, while others are significantly smaller with lower fixed costs and greater operating flexibility. In addition to price, competition with respect to many of the Company's products is based on quality, supplier response time, service and timely and complete order fulfillment. The Company's main competitor in the supermarket and foodservice segments is Pactiv Corporation. In the bakery area, the Company competes primarily with Detroit Forming Inc. in plastic products and Georgia Pacific Corporation in paper products. The Company competes with several manufacturers of OPS sheet, including Detroit Forming and Plastic Suppliers, Inc. In the medical and electronics markets, the Company competes with many regional thermoformers, including Prent Corporation and Placon Corp. The Company competes primarily with Dow Chemical Company in the OPS film market. The Company competes primarily with Sealed Air Corporation and AVI Products, Inc. in the mailing envelope market. EMPLOYEES As of December 31, 2000, the Company had 42 employees at its Lincolnshire, Illinois corporate headquarters and had 3,776 employees at plant locations, of which 779 were salaried and 2,997 were hourly. Of the hourly workers, approximately 826 were members of unions. The Company has collective bargaining agreements with various unions in effect with respect to certain hourly employees at the Company's Joliet, Peoria, Chagrin Falls, Avenel, Grove City, Elyria, Newcastle, Wakefield and Laval facilities. There have been no significant interruptions or curtailments of operations due to labor disputes in the last five years, and the Company believes that relations with its employees are good. The collective bargaining agreements at the Company's facilities in Peoria, Grove City, Newcastle and Wakefield will expire in 2001; the collective bargaining agreement at the Company's facilities in Avenel and Chagrin Falls will expire in 2002; the collective bargaining agreement at the Company's facilities in Elyria will expire in 2003; and the collective bargaining agreement at the Company's facilities in Joliet and Laval will expire in 2004. 6 7 RAW MATERIALS Styrene monomer, polystyrene, polyethylene, polypropylene and various paper-based commodities (primarily recycled fiber) constitute the principal raw materials used in the manufacture of the Company's products. Generally, these raw materials are readily available from a wide variety of suppliers. Costs for all of the significant raw materials used by the Company tend to fluctuate with various economic factors which generally affect the Company and its competitors. The availability of raw materials was adequate during 2000 although prices for certain items such as styrene monomer, polystyrene, OCC and DLK have been volatile and may continue to fluctuate, in some instances adversely to the Company. TRADEMARKS, PATENTS AND LICENSES While the Company has registered and unregistered trademarks for many of its product lines, these trademarks, other than the Company's rights to the trademarks "Ivex(R)", "Ultra Pac(R)", "Plastofilm(R)" and "Kama(R)", are not considered material to the conduct of the Company's business. The Company owns or licenses a number of patents but such patents and licenses are not considered material to the conduct of the Company's business and the Company does not believe that any of its businesses are substantially dependent on patent protection. The Company's material proprietary technologies are considered by the Company to be trade secrets and know-how and are not protected by patents or licenses. CUSTOMERS, SALES AND BACKLOG No material portion of the Company's business is dependent upon a single or very few customers, except that the Company's extruded OPS film is sold principally to one customer with which the Company believes that it has a good relationship. No one customer accounted for more than 10% of the Company's aggregate net sales for the fiscal year ended December 31, 2000. In general, the backlog of orders is not significant or material to an understanding of the Company's businesses. ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION The past and present business operations of the Company and the past and present ownership and operations of real property by the Company are subject to extensive and changing federal, state, local and foreign environmental laws and regulations pertaining to the discharge of materials into the environment, the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to the protection of the environment. As is the case with manufacturers in general, if a release of hazardous substances occurs on or from the Company's properties or any associated offsite disposal location, or if contamination from prior activities is discovered at any of the Company's properties, the Company may be held liable. From time to time, the Company is involved in regulatory proceedings and inquiries relating to compliance with environmental laws, permits and other environmental matters. The Company is currently involved with environmental remediation and on-going maintenance at certain of its facilities. The Company believes that the costs of such remediation have been adequately reserved for and that such costs are unlikely to have a material adverse effect on the Company. No assurance can be given, however, that additional environmental issues relating to the presently known remediation matters or identified sites or to other sites or matters will not require additional investigation, assessment or expenditures. The Company has a reserve of approximately $1.3 million as of December 31, 2000 for its known future environmental remediation costs. Because an environmental reserve is not established until a liability is determined to be probable and reasonably estimable, all potential future remedial costs may not be covered by this reserve. The Company has made and will continue to make capital expenditures to maintain compliance with environmental requirements. The Company does not expect its 2000 and 2001 spending on environmental capital projects to be material. From time to time, the Company is involved in cases arising under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"). These cases generally involve sites which allegedly have received wastes from current or former Company locations. During 2000, the Company's subsidiary, Crystal Thermoplastics, Inc., responded to an information request from the United States Protection Agency ("EPA") under CERCLA regarding the J.M. Mills Landfill in Rhode Island. Since filing such response, the Company has not received any further notifications regarding such site. Also, the Company's subsidiary, CFI Industries, Inc., was notified by EPA and the United States Department of Justice that a predecessor- 7 8 company was a potentially-responsible-party under CERCLA, in cooperation with other parties, with respect to the Agriculture Street Landfill in New Orleans, Louisiana by virtue of having allegedly recycled and generated municipal and commercial waste during the time period from approximately 1948 to 1952. The Company believes that it is not reasonably possible that its potential liability, if any, with respect to the known issues at these sites is likely to have a material adverse effect on the Company, however, because liability under CERCLA is joint and several and because the remediation costs at the New Orleans' site are reported to be approximately $30-40 million, there can be no assurance that such liabilities would not have a material adverse effect on the Company. The plastics industry, in general, and the Company also are subject to existing and potential federal, state, local and foreign legislation designed to reduce solid wastes by requiring, among other things, plastics to be degradable in landfills, minimum levels of recycled content, various recycling requirements, disposal fees and limits on the use of plastic products. In addition, various consumer and special interest groups have lobbied from time to time for the implementation of these and other such similar measures. Although the Company believes that the legislation promulgated to date and such initiatives to date have not had a material adverse effect on the Company, there can be no assurance that any such future legislative or regulatory efforts or future initiatives would not have a material adverse effect on the Company. The United States Food and Drug Administration (the "FDA") regulates the content of direct-contact food containers and packages, including containers and packages made from recycled OPS and paper products. The FDA currently limits the amount of recycled materials that can be used in such containers and packages. To comply with these regulations, the Company has instituted various compliance programs. 8 9 FINANCIAL INFORMATION ABOUT SEGMENTS The Company's financial information about industry segments will be set forth in the Company's Annual Report to Stockholders relating to the Annual Meeting of Stockholders to be held on May 9, 2001. FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS The Company's financial information about geographic areas will be set forth in the Company's Annual Report to Stockholders relating to the Annual Meeting of Stockholders to be held on May 9, 2001. ITEM 2. PROPERTIES The Company and its subsidiaries use various owned and leased plants, warehouses and other facilities in their operations. The facilities are considered to be suitable and adequate for the conduct of the businesses involved although the machinery, plant and equipment at such facilities are, from time to time, subject to scheduled and unscheduled maintenance. As of March 1, 2001, the Company had twenty-eight non-warehouse facilities and, except as noted below, all are owned by IPC or a subsidiary of IPC. With certain limited exceptions, all of the owned real estate is subject to mortgages securing IPC's indebtedness under the Company's existing credit facility. LOCATION FUNCTION/SEGMENT SQUARE FOOTAGE -------- ---------------- -------------- Domestic Avenel, NJ(1) Extrusion 55,000 Bellwood, IL(2) Paper Converting 71,000 Bridgeview, IL Paper Converting 115,000 Chagrin Falls, OH Paper Mill 120,000 Cumberland, RI Thermoforming 60,000 Elyria, OH(3) Extrusion 80,000 Grant Park, IL Thermoforming/Engineering 184,000 Grove City, PA(4) Thermoforming 236,000 Hazleton, PA(5) Polymerization/Extrusion 166,000 Joliet, IL Paper Mill/Paper Converting 410,000 Lompoc, CA(6) Thermoforming 93,000 Madison, GA Thermoforming/Paper Converting 141,000 Manteno, IL Extrusion 105,000 Peoria, IL Paper Mill 234,000 Rogers, MN(7) Thermoforming/Extrusion 240,000 Visalia, CA Thermoforming/Paper Converting 144,000 Wakefield, MA Paper Converting 98,000 Wheaton, IL Thermoforming 120,000 International D'Albon, France Thermoforming 17,000 Laval, Quebec Thermoforming/Extrusion/Engineering 60,000 Longueuil, Quebec Thermoforming/Paper Converting 32,000 Monterrey, Mexico(8) Thermoforming 24,000 Newcastle, Ontario Extrusion 45,000 Raamsdonksveer, Netherlands Extrusion 78,000 Sedgefield, England Thermoforming/Extrusion 48,000 Summerstown, Ontario Thermoforming 55,000 Sungai Petani, Malaysia (9) Thermoforming 38,000 Toronto, Ontario Paper Converting 54,000 9 10 (1) Leased facility, with its lease expiring on December 31, 2003, subject to IPC's right to extend the lease for two successive five-year periods upon IPC's written notice to the lessor thereof not more than 12 nor less than 6 months prior to the end of the then current lease term. (2) Leased facility, with its lease expiring on January 8, 2003. (3) Leased facility, with its lease expiring on February 28, 2004, subject to IPC's right to extend the lease for an additional five-year period and, upon specified terms and conditions, to purchase the property. (4) This facility is held subject to an installment sales contract with Grove City Industrial Development Corporation that holds title to the facility. (5) Leased facility, with its lease expiring on October 4, 2003, subject to IPC's right to extend the lease for one successive five-year period upon IPC's written notice to lessor not more than 24 nor less than 6 months prior to the end of the lease term. (6) Leased facility, with its lease expiring on April 30, 2004, subject to the Company's right to extend the lease for three additional five-year periods upon written notice thereof at least 120 days prior to the end of the then existing lease term. (7) A portion of this facility is leased with the three leases expiring on January 1, 2002, February 1, 2010 and February 1, 2010. Each of these three leases contains a three-year extension option and an option, upon specified terms and conditions, to purchase the portion of the facility subject to such lease. (8) Leased facility, with its lease expiring on December 31, 2001. (9) Leased facility, with three leases, one expiring on December 31, 2001 and two expiring on December 31, 2002. 10 11 ITEM 3. LEGAL PROCEEDINGS From time to time the Company and its subsidiaries are involved in various litigation matters arising in the ordinary course of business. The Company believes that none of the matters in which the Company or its subsidiaries are currently involved, either individually or in the aggregate, is material to the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY FOLDERS None. 11 12 EXECUTIVE OFFICERS OF THE COMPANY Set forth below are the name, age, positions and offices held (as of the date hereof) and a brief account of the business experience for each executive officer of the Company. NAME AGE POSITION ---- --- -------- George V. Bayly 58 Director, Chairman of the Board, President and Chief Executive Officer of the Company since January 1991. Frank V. Tannura 44 Director of the Company since August 1995. Executive Vice President and Chief Financial Officer of the Company since February 1999 and Vice President and Chief Financial Officer since October 1989. Gordon B. Bonfield 49 Executive Vice President and Chief Operating Officer of the Company since August 2000. From June 1999 to August 2000, Mr. Bonfield was President of the Consumer Packaging Division. Mr. Bonfield was President and Chief Executive Officer of Multi-Color Corporation from January 1998 to May 1999 and an executive officer of Fort James' Packaging business since 1988. Richard R. Cote 49 Vice President and Treasurer of the Company since August 1994. Mr. Cote was Assistant Vice President and Treasurer of the Company from March 1992 to August 1994. Dennis W. Hadley 46 Vice President of Human Resources of the Company since July 2000. Mr. Hadley was Vice President and General Manager for the Graphic Packaging Corporation (and its predecessor Fort James Packaging business) since 1995. G. Douglas Patterson 43 Vice President and General Counsel of the Company since June 1991. David E. Wartner 34 Vice President and Corporate Controller of the Company since October 1998. From 1994 to 1998, Mr. Wartner was Corporate Controller of the Company. 12 13 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock trades on the New York Stock Exchange and the Chicago Stock Exchange, under the ticker symbol IXX. The high and low sales prices for the common stock by quarter during 2000 and 1999 as reported by the New York Stock Exchange are shown below. PRICES PRICES ------ ------ 2000 1999 QUARTERS QUARTERS ENDED HIGH LOW ENDED HIGH LOW -------- ----- ---- -------- ----- ----- 12/31/00 11.50 8.13 12/31/99 12.88 6.88 9/30/00 11.88 9.25 9/30/99 22.50 9.75 6/30/00 11.13 7.63 6/30/99 22.00 13.75 3/31/00 10.50 5.13 3/31/99 26.13 13.63 The approximate number of shareholders of record of the Company's common stock as of March 14, 2001 was 219 holders. The Company has never paid cash dividends on its common stock. Any payment of cash dividends in the future will be at the discretion of the Company's Board of Directors and will depend upon the financial condition, capital requirements and earnings of the Company as well as other factors that the Company's Board of Directors may deem relevant. In addition, the Company's senior credit facility prohibits the payment of dividends on the Company's common stock. ITEM 6. SELECTED FINANCIAL DATA Information regarding the Company's selected financial data will be set forth in the Company's Annual Report to Stockholders relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information regarding management's discussion and analysis of financial condition and results of operation will be set forth in the Company's Annual Report to Stockholders relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, is incorporated herein by reference. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and are identified by the use of forward looking words and phrases, such as "estimates," "plans," "expects," "to continue," "subject to," "target" and such other similar phrases. These forward looking statements are based on the current expectations of the Company. Because forward looking statements involve risks and uncertainties, the Company's plans, actions and actual results could differ materially. Among the factors that could cause plans, actions and results to differ materially from current expectations are: (i) changes in consumer demand and prices resulting in a negative impact on revenues and margins; (ii) raw material substitutions and increases in the costs of raw materials, utilities, labor and other supplies (see "Business-Raw Materials"); (iii) increased competition in the Company's product lines (see "Business- Competition"); (iv) changes in capital availability or costs; (v) workforce factors such as strikes or labor interruptions; (vi) the ability of the Company and its subsidiaries to develop new products, identify and execute capital programs and efficiently integrate acquired businesses; (vii) the cost of compliance with applicable governmental regulations and changes in such regulations, including environmental regulations (see "Business-Environmental Matters and Government Regulations"); (viii) the general political, economic and competitive conditions in markets and countries where the Company and its subsidiaries operate, including currency fluctuations and other risks associated with operating in foreign countries (see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Quantitative and Qualitative Disclosures about Market Risk"); (ix) the timing and occurrence (or non- occurrence) of transactions and events which may be subject to circumstances beyond the control of the Company and its 13 14 subsidiaries; and (x) the Company's actual performance and highly leveraged financial condition (see Management's Discussion and Analysis of Financial Conditions and Results of Operation-Liquidity and Capital Resources"). ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FOREIGN EXCHANGE. The Company uses primarily foreign exchange forward contracts to hedge its exposure from adverse changes in foreign exchange rates. A 10% unfavorable movement in the foreign exchange rates would not expose the Company to material losses in earnings or cash flows. INTEREST RATES. The Company uses interest rate swaps and collars to modify its exposure to interest rate movements and to reduce borrowing costs. The Company's net exposure to interest rate risk consists of floating rate debt instruments that are benchmarked to LIBOR. During the third quarter of 2000, the Company sold certain interest rate swaps with an aggregate notional amount of $60.0 million. The interest rate swaps were accounted for as hedges and effectively fixed the Company's LIBOR base rate at 5.33% on $60.0 million of indebtedness through January 22, 2002. The sale resulted in a gain of $1.0 million which is being amortized over the instrument period. As of December 31, 2000 the Company had $260 million notional value of interest rate derivatives outstanding (described below). A 10% unfavorable movement in LIBOR rates would not expose the Company to material losses of earnings or cash flows. The Company has entered into interest rate swap agreements with a group of banks having notional amounts totaling $100.0 million and various maturity dates through November 5, 2002. These agreements effectively fix the Company's LIBOR base rate for $100.0 million of the Company's indebtedness at a rate of 6.12% during this period. The Company has 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 for $100.0 million of the Company's indebtedness 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%. The Company has also entered into no cost interest rate collar agreements with a group of banks having notional amounts totaling $60.0 million through November 5, 2001. These collar agreements effectively fix the LIBOR base rate for $60.0 million of the Company's indebtedness at a maximum of 5.31% and allow for the Company to pay the market LIBOR from a floor of 4.47% to the maximum rate. If LIBOR falls below 4.47%, the Company is required to pay the floor rate of 4.47%. Income or expense related to settlements under these agreements is recorded as adjustments to interest expense in the Company's financial statements. The fair market value of the Company's derivative instruments outlined above approximates a loss of $0.6 million as of December 31, 2000 and is based upon the amount at which it could be settled with a third party, although the Company has no current intention to trade any of these instruments and plans to hold them as hedges for the Senior Credit Facility. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's financial statements, supplementary data, financial information about segments and financial information about geographic areas will be set forth in the Company's Annual Report to Stockholders relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None. 14 15 PART III With respect to Items 10 through 13, the Company will file with the Securities and Exchange Commission, within 120 days of the close of its fiscal year, a definitive proxy statement pursuant to Regulation 14-A under the Securities Exchange Act of 1934 (the "Proxy Statement"). ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding directors of the Company will be set forth in the Company's Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, is incorporated herein by reference. Information regarding executive officers of the Company is set forth under the caption "Executive Officers." ITEM 11. EXECUTIVE COMPENSATION Information regarding executive compensation will be set forth in the Company's Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information regarding security ownership of certain beneficial owners and management will be set forth in the Company's Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information regarding certain relationships and related transactions will be set forth in the Company's Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) The following financial statements of the Company will be set forth in the Company's Annual Report to Securityholders relating to the Annual Meeting of Stockholders to be held on May 9, 2001 and, to the extent required, are incorporated herein by reference:
ANNUAL REPORT TO SECURITYHOLDERS Report of Independent Accountants......................................... Page 65 Consolidated Balance Sheets............................................... Page 38 Consolidated Statements of Operations..................................... Page 40 Consolidated Statements of Changes in Stockholders' Equity................ Page 41 Consolidated Statements of Cash Flows..................................... Page 42 Notes to Consolidated Financial Statements................................ Page 44
(a)(2) The following Financial Statement Schedules of the Company are filed as part of this report: Schedule I -- Condensed Financial Information Schedule II -- Valuation and Qualifying Accounts and Reserves 15 16 All other schedules of the Company for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required, are inapplicable or have been disclosed in the notes to the consolidated financial statements and therefore have been omitted. 16 17 (A)(3) EXHIBITS.
INCORPORATED BY REFERENCE TO THE FOLLOWING ------------------------------- EXHIBIT EXHIBIT REGISTRATION NUMBER NUMBER DESCRIPTION OF DOCUMENT NUMBER OR REPORT ------- ----------------------- ------- ------------------- 3.1 Amended and Restated Certificate 3.3 Ivex Amendment No. 8 of Incorporation of Ivex Packaging to Form S-1 (Registration No. Corporation ("Holdings" or "Ivex") 33-95436) 3.2 Amended By-Laws of Ivex 3.4 Ivex Amendment No. 8 to Form S-1 (Registration No. 33-95436) 3.3 Form of Certificate of Elimination of 3.5 Ivex Amendment No. 8 Senior Cumulative Exchangeable to Form S-1 (Registration No. Preferred Stock of Ivex 33-95436) 3.4 Form of Certificate of Designation, 4.1 Ivex 3/3/99 Form 8-K Preferences and Rights of Series A (File No. 33-60714) Junior Participating Preferred Stock 4.1 Amended and Restated Credit Agreement, dated 4.2 Ivex 1997 Form 10-K as of October 2, 1997, by and among IPC, (File No. 33-60714) Ivex, NationsBank, N.A. and Bankers Trust, as agents, and the guarantors and lenders identified on the signature pages thereto 4.2 Amended and Restated Pledge Agreement, 4.3 Ivex 1997 Form 10-K dated as of October 2, 1997, among IPC, (File No. 33-60714) Ivex certain of IPC's subsidiaries and NationsBank, N.A. and Bankers Trust Company, as agents 4.3 Form of Amended and Restated Security 4.4 Ivex 1997 Form 10-K Agreement, dated as of October 2, 1997, (File No. 33-60714) among IPC, Ivex and certain of IPC's domestic subsidiaries and NationsBank, N.A. and Bankers Trust Company, as agents 4.4 Form of Amended and Restated Mortgage and 4.5 Ivex 1997 Form 10-K Security Agreement (File No. 33-60714) 4.5 Form of First Amendment to Amended and 4.6 Ivex 1998 Form 10-K Restated Credit Agreement (File No. 33-60714)
17 18
INCORPORATED BY REFERENCE TO THE FOLLOWING ------------------------------ EXHIBIT EXHIBIT REGISTRATION NUMBER NUMBER DESCRIPTION OF DOCUMENT NUMBER OR REPORT ------- ----------------------- ------- ------------------- 4.6 Form of Second Amendment to Amended and 4.7 Ivex 1998 Form 10-K Restated Credit Agreement (File No. 33-60714) 4.7 Form of Third Amendment to Amended and 4.8 Ivex 1998 Form 10-K Restated Credit Agreement (File No. 33-60714) 4.8 Rights Agreement, dated as of February 10, 4.1 Ivex 3/3/99 Form 8-K 1999, between Ivex and First Chicago (File No. 33-60714) Trust Company of New York 4.9 Form of Fourth Amendment to Amended and 4.10 Ivex 9/30/99 Form 10-Q Restated Credit Agreement (File No. 33-60714) 4.10 Form of Fifth Amendment to Amended and 4.11 Ivex 1999 Form 10-K Restated Credit Agreement (File No. 33-60714) 4.11 1999 Stock Option Plan for Non-Employee Exhibit A Ivex 1999 Proxy Statement Directors (File No. 33-60714) 10.1 Form of Ivex Senior Management 10.1 Ivex Amendment No. 8 to Form S-1 Annual Incentive Plan(1) (Registration No. 33-95436) 10.2 Form of Nonqualified Deferred 10.2 Ivex 1998 Form 10-K Compensation Plan (1) (File No. 33-60714) 10.3 Form of Nonqualified Deferred 10.3 Ivex 1998 Form 10-K Compensation Trust Agreement (1) (File No. 33-60714) 10.4 Form of IPC Stock Purchase and Option 10.2 IPC 1993 Form 10-K Agreement, dated as of January 1, 1993, (Registration No. 33-52150) among IPC, Ivex, Acadia Partners, L.P. and each of certain senior managers of IPC with the Ivex Stock Purchase and Option Agreement attached thereto (1) 10.5 Form of Amended and Restated IPC, Inc. 10.16 Ivex 6/30/96 Form 10-Q Stock Option and Purchase Agreement and (File No. 33-60714) Amended and Restated Ivex Packaging Corporation Stock Option and Purchase Agreement, each dated as of January 1, 1996 (1) 10.6 IPC Retirement Plan and Trust, as 10.3 IPC Form S-1 amended and Restated May 1, 1992 (1) (Registration No. 33-52150)
18 19
INCORPORATED BY REFERENCE TO THE FOLLOWING ---------------------------------- EXHIBIT EXHIBIT REGISTRATION NUMBER NUMBER DESCRIPTION OF DOCUMENT NUMBER OR REPORT ------ ----------------------- ------- ------------------- 10.7 Amended and Restated Employment Agreement, 10.14 Ivex 6/30/96 Form 10-Q dated as of May 30, 1996, between (File No. 33-60714) George V. Bayly and IPC (1) 10.8 Form of Amendment No. 1 to Amended and 10.8 Ivex 1998 Form 10-K Restated Employment Agreement between (File No. 33-60714) George V. Bayly and IPC (1) 10.9 Form of Amended and Restated Employment 10.9 Ivex 1999 Form 10-K Agreement, dated as of October 31, 1999, (File No. 33-60714) between IPC and Frank V. Tannura (1) 10.10 Form of Ivex Packaging Corporation 10.16 Ivex 9/30/99 Form 10-Q Employee Stock Purchase Plan (1) (File No. 33-60714) 10.11 Form of 1999 Long-Term Incentive Plan (1) 10.11 Ivex 1999 Form 10-K (File No. 33-60714) 10.12 Form of Severance and Change of Control 10.12 Ivex 1999 Form 10-K Agreement between the Company and certain (File No. 33-60714) named executive officers (1) 10.13 Form of Ivex Packaging Corporation 1997 10.45 Ivex Amendment No. 8 Long Term Stock Incentive Plan (1) to Form S-1 (Registration No. 33-95436) 10.14 Form of Senior Management's Promissory 10.13 Ivex 1997 Form 10-K Note to IPC (1) (File No. 33-60714) 10.15 Form of Amended and Restated Ivex Packaging Exhibit B Ivex 2000 Proxy Statement Corporation 1997 Long Term Incentive Plan (1) (File No. 33-60714) 10.40 Loan Agreement, dated as of December 1, 1987, between the County of Kankakee, Illinois and Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.41 Loan Agreement, dated as of June 1, 1988, 10.11 IPC Form S-1 between the Development Authority of Morgan (Registration No. 33-52150) County and Ivex of Delaware, Inc. (n/k/a IPC, Inc.) IPC Form S-1 10.13 (Registration No. 33-52150) 10.42 Loan Agreement, dated as of October 1, 1987, 10.15 IPC Form S-1 between the County of Will, Illinois and (Registration No. 33-52150) LPX, Inc (n/k/a IPC, Inc.)
19 20
INCORPORATED BY REFERENCE TO THE FOLLOWING ------------------------------- EXHIBIT EXHIBIT REGISTRATION NUMBER NUMBER DESCRIPTION OF DOCUMENT NUMBER OR REPORT ------- ----------------------- ------- ------------------- 10.43 Loan Agreement, dated as of April 1, 1988, 10.17 IPC Form S-1 between the Illinois Development Finance (Registration No. Authority and Ivex of Delaware, Inc. 33-52150) (n/k/a IPC, Inc.) 10.44 Indenture of Trust, dated as of March 1, 10.19 IPC Form S-1 between Marine Midland Bank, N.A. and Ivex of (Registration No. Delaware, Inc. (n/k/a IPC, Inc.) 33-52150) 10.45 Loan Agreement, dated November 1, 1985, 10.21 IPC Form S-1 between the Village of Bridgeview, Illinois (Registration No. and L&CP Corporation (n/k/a IPC, Inc.) 33-52150) 10.46 Lease Agreement, dated as of December 5, 10.46 Ivex 1996 Form 10-K 1996, between State Street Bank and Trust (File No. 33-60714) Company and IPC 10.47 Lease, dated as of October 4, 1988, between 10.33 IPC Form S-1 Seymour C. Graham and Kama Corporation (Registration No. (n/k/a IPC, Inc.) 33-52150) 10.48 Amendment to Lease, dated as of 10.34 IPC Form S-1 December 20, 1988, between Seymour C. Graham (Registration No. and Kama Corporation (n/k/a IPC, Inc.) 33-52150) 10.49 Lease, dated June 20, 1995, between Howard H. Gelb and Eunice Gelb and Kama Corporation (n/k/a IPC, Inc.) 10.44 Ivex 1995 Form 10-K (File No. 33-60714) 10.50 Industrial Building Lease, dated 10.25 Ivex 1997 Form 10-K January 8, 1998, between Arapahoe Properties, (File No. 33-60714) L.L.C. and Packaging Products, Inc. 10.51 Lease, dated as of September 11, 1996, by 10.54 Ivex 1996 Form 10-K and between Joseph P. Bennett and Trio (File No. 33-60714) Products, Inc
20 21
INCORPORATED BY REFERENCE TO THE FOLLOWING ------------------------- EXHIBIT EXHIBIT REGISTRATION NUMBER NUMBER DESCRIPTION OF DOCUMENT NUMBER OR REPORT ------- ----------------------- ------- ------------------------- 10.52 Installment Sales Agreement, dated as of 10.39 IPC Form S-1 December 12, 1990, between Grove City (Registration No. Industrial Development Corporation and 33-52150) Ivex Converted Products Corporation (n/k/a IPC, Inc.) 10.53 Form of Lease Agreements, dated 10.54 Ivex 1998 Form 10-K May 1, 1993, November 20, 1994 and (File No. 33-60714) November 20, 1994, between Ultra Pac, Inc. and the landlord thereof 10.54 Lease Agreement, dated as of April 16, 10.55 Ivex 3/31/99 Form 10-Q 1999, between Pactuco Acquisition, Inc. (File No. 33-60714) and Gowing Leasing Company 10.70 Tax Sharing Agreement, dated as of 10.40 Ivex Form S-4 December 17, 1992, between Ivex and IPC (Registration No. and certain of IPC's subsidiaries 33-60714) *13 Annual Report to Securityholders for the year ended December 31, 2000. *21.1 Subsidiaries of Ivex *23.1 Consent of PricewaterhouseCoopers LLP
* Filed herewith. (1) Management contact or compensatory plan or arrangement required to be filed as an Exhibit to this Form 10-K pursuant to Item 14(c) of this report. (b) Reports on Form 8-K. None 21 22 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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 ON MARCH 28, 2001. Ivex packaging corporation By: /s/ GEORGE V. BAYLY ----------------------------- Name: George V. Bayly Title: President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to this Report appears below hereby constitutes and appoints G. Douglas Patterson as such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution for such person and in such person's name, place and stead, in any and all capacities, to sign and to file with the Securities and Exchange Commission any and all amendments to this Report, with exhibits thereto and other documents in connection therewith, hereby ratifying and confirming all that said attorney-in-fact and agent, or any substitute therefore, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON MARCH 28, 2001. SIGNATURE TITLE --------- ----- /s/ GEORGE V. BAYLY Director, Chairman of the Board, --------------------------------- President and Chief Executive Officer George V. Bayly (Principal Executive Officer) /s/ FRANK V. TANNURA Director, Executive Vice President and --------------------------------- Chief Financial Officer (Principal Frank V. Tannura Financial Officer) /s/ DAVID E. WARTNER Vice President and Corporate Controller --------------------------------- (Principal Accounting Officer) David E. Wartner /s/ GLENN R. AUGUST Director --------------------------------- Glenn R. August /s/ ANTHONY P. SCOTTO Director --------------------------------- Anthony P. Scotto /s/ WILLIAM J. WHITE Director --------------------------------- William J. White /s/ R. JAMES COMEAUX Director --------------------------------- R. James Comeaux 22 23 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors of Ivex Packaging Corporation Our audits of the consolidated financial statements referred to in our report dated January 29, 2001, appearing on page 65 of the 2000 Annual Report to Stockholders of Ivex Packaging Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 14 (a) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Chicago, Illinois January 29, 2001 23 24 IVEX PACKAGING CORPORATION SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, ---------------------- 2000 1999 --------- --------- ASSETS Current Assets: Cash and cash equivalents ............................................. $ 9 $ 9 --------- --------- Total current assets ............................................... 9 9 Investment in subsidiary ................................................. 73,418 73,418 Due from IPC, Inc. ....................................................... 19,665 23,515 --------- --------- Total assets ....................................................... $ 93,092 $ 96,942 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Stockholders' equity: Common stock, $.01 par value - 45,000,000 shares authorized; 20,947,269 shares issued; and 20,321,994 and 20,793,469 shares outstanding ................................................. $ 209 $ 209 Paid in capital in excess of par value ................................ 339,382 339,354 Treasury stock, at cost - 625,275 and 153,800 shares .................. (5,094) (1,216) Accumulated deficit ................................................... (241,405) (241,405) --------- --------- Total stockholders' equity ......................................... 93,092 96,942 --------- --------- Total liabilities and stockholders' equity ............................... $ 93,092 $ 96,942 ========= =========
See Notes to Consolidated Financial Statements in Item 8. 24 25 IVEX PACKAGING CORPORATION SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------- 2000 1999 1998 ---------- ---------- ---------- Net loss............................... $ $ $ ========== ========== =========
See Notes to Consolidated Financial Statements in Item 8. 25 26 IVEX PACKAGING CORPORATION SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
PAID IN COMMON STOCK CAPITAL IN STOCK- ------------------- EXCESS OF ACCUMULATED TREASURY HOLDERS' SHARES AMOUNT PAR VALUE DEFICIT STOCK EQUITY ---------- ------ ---------- ---------- -------- --------- Balance at December 31, 1997................. 20,426,666 $ 204 $ 328,322 $ (241,405) $ 87,121 Issuance of common stock................... 500,000 5 10,702 10,707 Exercise of common stock options........... 4,602 74 74 ---------- ----- ---------- ---------- --------- -------- Balance at December 31, 1998................. 20,931,268 209 339,098 (241,405) 97,902 Exercise of common stock options........... 16,001 256 256 Purchase of treasury stock................. (153,800) $ (1,216) (1,216) ---------- ----- ---------- ---------- -------- -------- Balance at December 31, 1999................. 20,793,469 209 339,354 (241,405) (1,216) 96,942 Purchase of treasury stock................. (547,800) (4,496) (4,496) Employee stock purchase plan............... 76,325 28 618 646 ---------- ----- ---------- ---------- --------- -------- Balance at December 31, 2000................. 20,321,994 $ 209 $ 339,382 $ (241,405) $ (5,094) $ 93,092 ========== ===== ========== ========== ========= ========
See Notes to Consolidated Financial Statements in Item 8. 26 27 IVEX PACKAGING CORPORATION SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------- 2000 1999 1998 -------- -------- -------- Cash flows used by operating activities: Net loss .......................................... $ -- $ -- $ -- Cash flows from financing activities: Proceeds from issuance of stock ................... 10,707 Transfer from (to) IPC, Inc. ...................... 3,850 960 (10,781) Exercise of common stock options .................. 256 74 -------- -------- -------- Net cash from financing activities ................ 3,850 1,216 -------- -------- -------- Cash flows from investing activities: Purchase of treasury stock ........................ (4,496) (1,216) Employee stock purchase plan ...................... 646 -------- -------- -------- Net cash used by investing activities ............. (3,850) (1,216) -------- -------- -------- Net change in cash and cash equivalents Cash and cash equivalents at beginning of year .... 9 9 9 -------- -------- -------- Cash and cash equivalents at end of year .......... $ 9 $ 9 $ 9 ======== ======== ========
See Notes to Consolidated Financial Statements in Item 8. 27 28 IVEX PACKAGING CORPORATION SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (DOLLARS IN THOUSANDS)
BEGINNING ENDING DESCRIPTION BALANCE ADDITIONS DEDUCTIONS BALANCE ----------- --------- --------- ---------- ------- Accounts receivable -- allowance for doubtful accounts: 1998 $2,544 $1,169 (1) $ (846)(2)(3) $2,867 1999 2,867 2,778 (1) (652)(2) 4,993 2000 4,993 92 (2,601)(2)(4) 2,484 Income Taxes -- valuation allowance: 1998 $2,300 $ 276 $2,576 1999 2,576 1,018 $(1,400) 2,194 2000 2,194 40 2,234
(1) Reflects additions of $328 and $388 associated with acquisitions for the years ended December 31, 1999 and 1998, respectively. (2) Accounts charged off, less recoveries. (3) Includes $261 as a result of the disposition of the Company's Detroit paper mill. (4) Includes $292 as a result of the sale of the Specialty Coating business. 28 29 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION OF DOCUMENT PAGE ------- ----------------------- ------------- 3.1 -- Amended and Restated Certificate of Incorporation of Ivex Packaging Corporation ("Holdings" or "Ivex") 3.2 -- Amended By-Laws of Ivex 3.3 -- Form of Certificate of Elimination of Senior Cumulative Exchangeable Preferred Stock of Ivex 3.4 -- Form of Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock 4.1 -- Amended and Restated Credit Agreement, dated as of October 2, 1997, by and among IPC, Ivex, NationsBank, N.A. and Bankers Trust, as agents, and the guarantees and lenders identified on the signature pages thereto 4.2 -- Form of Amended and Restated Pledge Agreement, dated as of October 2, 1997, among Ivex, IPC, certain of IPC's subsidiaries and NationsBank, N.A., and Bankers Trust Company, as agents 4.3 -- Form of Amended and Restated Security Agreement, dated as of October 2, 1997, among Ivex, IPC, and certain of IPC's subsidiaries and NationsBank, N.A., and Bankers Trust Company, as agents 4.4 -- Form of Amended and Restated Mortgage and Security Agreement 4.5 -- Form of First Amendment to Amended and Restated Credit Agreement 4.6 -- Form of Second Amendment to Amended and Restated Credit Agreement 4.7 -- Form of Third Amendment to Amended and Restated Credit Agreement 4.8 -- Rights Agreement, dated as of February 10, 1999, between Ivex and First Chicago Trust Company of New York 4.9 -- Form of Fourth Amendment to Amended and Restated Credit Agreement 4.10-- Form of Fifth Amendment to Amended and Restated Credit Agreement 4.11-- 1999 Stock Option Plan for Non-Employee Directors 10.1 -- Form of Ivex Senior Management Annual Incentive Plan(1) 10.2 -- Form of Nonqualified Deferred Compensation Plan(1) 10.3 -- Form of Nonqualified Deferred Compensation Trust Agreement(1) 10.4 -- Form of IPC Stock Purchase and Option Agreement, dated as of January 1, 1993, among IPC, Ivex, Acadia Partners, L.P. and each of certain senior managers of IPC with the Ivex Stock Purchase and Option Agreement attached thereto(1)
29 30
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION OF DOCUMENT PAGE ------- ----------------------- ------------ 10.5 -- Form of Amended and Restated IPC Stock Option and Purchase Agreement and Amended and Restated Ivex Stock Option and Purchase Agreement, each dated as of January 1, 1996(1) 10.6 -- IPC Retirement Plan and Trust, as amended and Restated May 1, 1992(1) 10.7 -- Amended and Restated Employment Agreement, dated as of May 30, 1996, between George V. Bayly and IPC(1) 10.8 -- Form of Amendment No. 1 to Amended and Restated Employment Agreement between George V. Bayly and IPC(1) 10.9 -- Form of Amended and Restated Employment Agreement, dated as of October 31, 1999, between IPC and Frank V. Tannura (1) 10.10-- Form of Ivex Packaging Corporation Employee Stock Purchase Plan (1) 10.11-- Form of 1999 Long Term Incentive Plan (1) 10.12-- Form of Severance and Change of Control Agreement between the Company and certain named executive officers (1) 10.13-- Form of Ivex Packaging Corporation 1997 Long Term Stock Incentive Plan(1) 10.14-- Form of Senior Management's Promissory Note to IPC(1) 10.15-- Form of Amended and Restated Ivex Packaging Corporation 1997 Long Term Incentive Plan (1) 10.40-- Loan Agreement, dated as of December 1, 1987, between the County of Kankakee, Illinois and Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.41-- Loan Agreement, dated as of June 1, 1988, between the Development Authority of Morgan County and Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.42-- Loan Agreement, dated as of October 1, 1987, between the County of Will, Illinois and LPX, Inc. (n/k/a IPC, Inc.) 10.43-- Loan Agreement, dated as of April 1, 1988, between the Illinois Development Finance Authority and Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.44-- Indenture of Trust, dated as of March 1, 1989, between Marine Midland Bank, N.A. and Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.45-- Loan Agreement, dated November 1, 1985, between the Village of Bridgeview, Illinois and L&CP Corporation (n/k/a IPC, Inc.) 10.46-- Lease Agreement, dated as of December 5, 1996, between State Street Bank and Trust Company and IPC 10.47-- Lease, dated as of October 4, 1988, between Seymour C. Graham and Kama Corporation (n/k/a IPC, Inc) 10.48-- Amendment to Lease, dated as of December 20, 1988, between Seymour C. Graham and Kama Corporation (n/k/a IPC, Inc.)
30 31
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION OF DOCUMENT PAGE ------- ----------------------- ------------ 10.49-- Lease, dated June 20, 1995, between Howard H. Gelb and Eunice Gelb and Kama Corporation (n/k/a IPC, Inc.) 10.50-- Industrial Building Lease, dated January 8, 1998, between Arapahoe Properties, L.L.C. and Packaging Products, Inc. 10.51-- Lease, dated as of September 11, 1996, by and between Joseph P. Bennett and Trio Products, Inc. 10.52-- Installment Sales Agreement, dated as of December 12, 1990, between Grove City Industrial Development Corporation and Ivex Converted Products Corporation (n/k/a IPC, Inc.) 10.53-- Form of Lease Agreements, dated May 1, 1993, November 20, 1994 and November 20, 1994, between Ultra Pac, Inc. and the landlord thereof 10.54-- Lease Agreement, dated as of April 16, 1999, between Pactuco Acquisition, Inc. and Gowing Leasing Company 10.70-- Tax Sharing Agreement, dated as of December 17, 1992, between Ivex and IPC and certain of IPC's subsidiaries *13 -- Annual Report to Securityholders for the year ended December 31, 2000 *21.1 -- Subsidiaries of Ivex *23.1 -- Consent of PricewaterhouseCoopers LLP
(1) Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Form 10-K pursuant to Item 14(c) of this report. * Filed herewith. 31