-----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, RZbNuWSTGK1ZCpXsXAJ9VtJh8311tivZST4jS+7Et1GqsnMD4wizA9Z58TZykavU LbfJXif0OvcaBvpGHaA5eg== 0000890566-99-001484.txt : 19991117 0000890566-99-001484.hdr.sgml : 19991117 ACCESSION NUMBER: 0000890566-99-001484 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991002 FILED AS OF DATE: 19991116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PLASTICS CORP CENTRAL INDEX KEY: 0000919463 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351813706 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-75706 FILM NUMBER: 99758745 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BPC HOLDING CORP CENTRAL INDEX KEY: 0000919465 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351814673 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-75706-01 FILM NUMBER: 99758746 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY IOWA CORP CENTRAL INDEX KEY: 0000919467 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 421382173 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-75706-02 FILM NUMBER: 99758747 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 BUSINESS PHONE: 8124242904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY TRI PLAS CORP CENTRAL INDEX KEY: 0001011391 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561949250 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-01 FILM NUMBER: 99758748 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST CITY: EVANSVILLE STATE: IN ZIP: 47710 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY STERLING CORP CENTRAL INDEX KEY: 0001075619 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 541749681 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-11 FILM NUMBER: 99758749 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACKERWARE CORP CENTRAL INDEX KEY: 0001075620 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 480759852 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-05 FILM NUMBER: 99758750 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PLASTICS DESIGN CORP CENTRAL INDEX KEY: 0001075621 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 621689708 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-07 FILM NUMBER: 99758751 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENTURE PACKAGING INC CENTRAL INDEX KEY: 0001075622 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 510368479 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-08 FILM NUMBER: 99758752 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENTURE PACKAGING MIDWEST INC CENTRAL INDEX KEY: 0001075623 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-09 FILM NUMBER: 99758753 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENTURE PACKAGING SOUTHEAST INC CENTRAL INDEX KEY: 0001075624 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-03 FILM NUMBER: 99758754 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIM HOLDINGS LTD CENTRAL INDEX KEY: 0001075625 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-04 FILM NUMBER: 99758755 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KNIGHT PLASTICS INC CENTRAL INDEX KEY: 0001075626 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 352056610 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-13 FILM NUMBER: 99758756 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROCON INC /DE/ CENTRAL INDEX KEY: 0001075629 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351948748 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-10 FILM NUMBER: 99758757 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORWICH INJECTION MOULDERS LTD CENTRAL INDEX KEY: 0001075630 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351948748 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-02 FILM NUMBER: 99758758 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARDINAL PACKAGING INC CENTRAL INDEX KEY: 0001093665 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 341396561 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-85739-14 FILM NUMBER: 99758759 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CPI HOLDING CORP CENTRAL INDEX KEY: 0001093666 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 341820303 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-75706-01 FILM NUMBER: 99758760 BUSINESS ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PLASTICS ACQUISITION CORP CENTRAL INDEX KEY: 0001094726 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-17 FILM NUMBER: 99758761 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORWICH ACQUISITION LTD CENTRAL INDEX KEY: 0001094729 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-16 FILM NUMBER: 99758762 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 1999 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 Number 33-75706 BERRY PLASTICS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-1813706 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BPC HOLDING CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-1814673 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY IOWA CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 42-1382173 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY TRI-PLAS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 56-1949250 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY STERLING CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 54-1749681 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) AEROCON, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-1948748 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) PACKERWARE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 48-0759852 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) 1 BERRY PLASTICS DESIGN CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 62-1689708 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) VENTURE PACKAGING, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 51-0368479 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) VENTURE PACKAGING MIDWEST, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 34-1809003 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) VENTURE PACKAGING SOUTHEAST, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 57-1029638 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) NIM HOLDINGS LIMITED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) England and Wales N/A (State or other jurisdiction (IRS employer of incorporation or organization) identification number) NORWICH INJECTION MOULDERS LIMITED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) England and Wales N/A (State or other jurisdiction (IRS employer of incorporation or organization) identification number) KNIGHT PLASTICS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-2056610 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) CPI HOLDING CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 34-1820303 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) CARDINAL PACKAGING, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Ohio 34-1396561 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) NORWICH ACQUISITION LIMITED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) England and Wales N/A (State or other jurisdiction (IRS employer of incorporation or organization) identification number) 2 BERRY PLASTICS ACQUISITION CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware N/A (State or other jurisdiction (IRS employer of incorporation or organization) identification number) 101 Oakley Street Evansville, Indiana 47710 (Address of principal executive offices) (Zip code) Registrants' telephone number, including area code: (812) 424-2904 NONE (Former name, former address and former fiscal year, if changed since last report) 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. [X] Yes [ ] No Indicate the number of shares outstanding of each of issuers' classes of common stock, as of the latest practicable date: As of November 10, 1999, the following shares of common stock of BPC Holding Corporation were outstanding: 91,000 shares of Class A Voting Common Stock; 259,000 shares of Class A Nonvoting Common Stock; 144,546 shares of Class B Voting Common Stock; 57,169 shares of Class B Nonvoting Common Stock; and 16,833 shares of Class C Nonvoting Common Stock. As of November 10, 1999, there were outstanding 100 shares of the Common Stock, $.01 par value, of Berry Plastics Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Iowa Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Tri-Plas Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Sterling Corporation, 100 shares of the Common Stock, $.01 par value, of Aerocon, Inc., 100 shares of the Common Stock, $.01 par value, of PackerWare Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Plastics Design Corporation, 100 shares of the Common Stock, $.01 par value, of Venture Packaging, Inc., 100 shares of the Common Stock, $.01 par value, of Venture Packaging Midwest, Inc., 100 shares of the Common Stock, $.01 par value, of Venture Packaging Southeast, Inc., 4,000,000 Ordinary Shares of (pound)1 par value, of NIM Holdings Limited, 5,850 Ordinary Shares of (pound)1 par value, of Norwich Injection Moulders Limited, 100 shares of the Common Stock, $.01 par value, of Knight Plastics, Inc., 100 shares of the Common Stock, $.01 par value, of CPI Holding Corporation, 100 shares of the Common Stock, $.01 par value, of Cardinal Packaging, Inc., 100 Ordinary Shares of (pound)1 par value, of Norwich Acquistion Limited, and 100 shares of the Common Stock, $.01 par value, of Berry Plastics Acquisition Corporation. 3 BPC HOLDING CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX FOR QUARTERLY PERIOD ENDED OCTOBER 2, 1999 Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets........................... 5 Consolidated Statements of Operations................. 7 Consolidated Statements of Cash Flows................. 8 Notes to Consolidated Financial Statements............ 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 14 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds............. 20 Item 6. Exhibits and Reports on Form 8-K...................... 20 SIGNATURE............................................................. 21 4 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (In Thousands of Dollars)
OCTOBER 2, JANUARY 2, 1999 1999 ------------- -------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents .............................................. $ 2,089 $ 2,318 Accounts receivable (less allowance for doubtful accounts of $1,648 at October 2, 1999 and $1,651 at January 2, 1999) ........ 44,097 29,951 Inventories: Finished goods ..................................................... 27,185 23,146 Raw materials and supplies ......................................... 11,070 8,556 -------- -------- 38,255 31,702 Prepaid expenses and other receivables ................................. 3,087 1,665 Income taxes recoverable ............................................... 45 577 -------- -------- Total current assets ....................................................... 87,573 66,213 Assets held in trust ....................................................... 267 6,679 Property and equipment: Land ................................................................... 8,180 7,769 Buildings and improvements ............................................. 42,941 38,960 Machinery, equipment and tooling ....................................... 162,310 141,054 Automobiles and trucks ................................................. 1,448 1,386 Construction in progress ............................................... 28,979 11,780 -------- -------- 243,858 200,949 Less accumulated depreciation .......................................... 96,357 80,944 -------- -------- 147,501 120,005 Intangible assets: Deferred financing and origination fees, net ........................... 12,192 10,327 Covenants not to compete, net .......................................... 3,446 4,404 Excess of cost over net assets acquired, net ........................... 84,932 44,536 Deferred acquisition costs ............................................. 84 20 -------- -------- 100,654 59,287 Deferred income taxes ...................................................... 2,758 2,758 Other ...................................................................... 1,363 375 -------- -------- Total assets ............................................................... $340,116 $255,317 ======== ========
5 BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (continued) (In Thousands of Dollars)
OCTOBER 2 JANUARY 2, 1999 1999 ------------- -------------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable ...................................................... $ 19,028 $ 18,059 Accrued expenses and other liabilities ................................ 14,391 9,944 Accrued interest ...................................................... 13,238 4,166 Employee compensation and payroll taxes ............................... 15,885 8,953 Income taxes .......................................................... 892 941 Current portion of long-term debt ..................................... 17,546 19,388 --------- --------- Total current liabilities ................................................. 80,980 61,451 Long-term debt, less current portion ...................................... 372,402 303,910 Accrued dividends on preferred stock ...................................... 10,222 7,225 Deferred income taxes ..................................................... 494 497 Other liabilities ......................................................... 1,872 2,591 --------- --------- 465,970 375,674 Stockholders' equity (deficit): Series A Preferred Stock; 800,000 shares authorized; 600,000 shares issued and outstanding (net of discount of $2,551 at October 2, 1999 and $2,770 at January 2, 1999) ............................................... 12,021 11,801 Series B Preferred Stock; 200,000 shares authorized, issued and outstanding ............................................ 5,000 5,000 Class A Common Stock; $.01 par value: Voting; 500,000 shares authorized; 91,000 shares issued and outstanding .......................................... 1 1 Nonvoting; 500,000 shares authorized; 259,000 shares issued and outstanding .......................................... 3 3 Class B Common Stock; $.01 par value: Voting; 500,000 shares authorized; 145,058 shares issued and 144,546 shares outstanding ........................... 1 1 Nonvoting; 500,000 shares authorized; 58,612 shares issued and 57,169 shares outstanding ............................ 1 1 Class C Common Stock; $.01 par value: Nonvoting; 500,000 shares authorized; 17,000 shares issued and 16,833 shares outstanding ............................ -- -- Treasury stock: 512 shares Class B Voting Common Stock; 1,443 shares Class B Nonvoting Common Stock; and 167 shares Class C Nonvoting Common Stock ......................... (296) (280) Additional paid-in capital ............................................ 42,395 45,611 Warrants .............................................................. 3,511 3,511 Retained earnings (deficit) ........................................... (188,339) (185,923) Accumulated other comprehensive loss .................................. (152) (83) --------- --------- Total stockholders' equity (deficit) ...................................... (125,854) (120,357) --------- --------- Total liabilities and stockholders' equity (deficit) ...................... $ 340,116 $ 255,317 ========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 6 BPC Holding Corporation and Subsidiaries Consolidated Statements of Operations (In Thousands of Dollars)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ------------------------------------------------------------------- OCTOBER 2, SEPTEMBER 26, OCTOBER 2, SEPTEMBER 26, 1999 1998 1999 1998 ----------------------------------------------------- ------------- (UNAUDITED) (UNAUDITED) Net sales ........................................ $ 90,105 $ 68,800 $ 249,956 $ 205,116 Cost of goods sold ............................... 68,458 51,066 181,240 151,083 ------------------------------------------------------------------ Gross margin ..................................... 21,647 17,734 68,716 54,033 Operating expenses: Selling .................................... 4,630 3,769 13,183 10,881 General and administrative ................. 5,336 4,502 17,220 13,301 Research and development ................... 537 488 1,712 1,231 Amortization of intangibles ................ 2,432 776 4,981 2,483 Other ...................................... 1,224 877 2,890 3,240 ------------------------------------------------------------------ Operating income ................................. 7,488 7,322 28,730 22,897 Other income and expense: Loss on disposal of property and equipment ............................. 372 62 1,150 492 ------------------------------------------------------------------ Income before interest and income taxes .......... 7,116 7,260 27,580 22,405 Interest: Expense .................................... (11,516) (9,083) (29,539) (26,524) Income ..................................... 41 259 204 833 ------------------------------------------------------------------ Loss before income taxes ......................... (4,359) (1,564) (1,755) (3,286) Income tax expense ............................... 175 306 659 331 ------------------------------------------------------------------ Net loss ......................................... (4,534) (1,870) (2,414) (3,617) Preferred stock dividends ........................ (1,034) (837) (2,996) (2,620) Amortization of preferred stock discount ......... (73) (73) (219) (219) ------------------------------------------------------------------ Net loss attributable to common stockholders ........................ $ (5,641) $ (2,780) $ (5,629) $ (6,456) ==================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 7 BPC Holding Corporation and Subsidiaries Consolidated Statements of Cash Flows (In Thousands of Dollars)
THIRTY-NINE WEEKS ENDED ---------------------------------- OCTOBER 2, SEPTEMBER 26, 1999 1998 -------------- -------------- (UNAUDITED) OPERATING ACTIVITIES Net loss ........................................................ $ (2,414) $ (3,617) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation ............................................ 18,085 15,466 Non-cash interest expense ............................... 1,404 1,335 Amortization ............................................ 4,981 2,483 Interest funded by assets held in trust ................. 6,413 6,617 Loss on sale of property and equipment .................. 1,150 492 Changes in operating assets and liabilities: Accounts receivable, net ............................ (7,079) (3,590) Inventories ......................................... 706 3,492 Prepaid expenses and other receivables .............. (1,391) 316 Other assets ........................................ (4,757) 5,935 Payables and accrued expenses ....................... 15,299 (349) -------- -------- Net cash provided by operating activities ....................... 32,397 28,580 INVESTING ACTIVITIES Additions to property and equipment ............................. (25,580) (13,540) Proceeds from disposal of property and equipment ................ 455 4,452 Acquisitions of businesses ...................................... (71,293) (15,948) -------- -------- Net cash used for investing activities .......................... (96,418) (25,036) FINANCING ACTIVITIES Proceeds from long-term borrowings .............................. 81,333 42,254 Payments on long-term borrowings ................................ (14,520) (40,244) Debt issuance costs ............................................. (3,000) (1,141) Proceeds from issuance of common stock .......................... 56 80 Purchase of stock from management ............................... (16) (59) -------- -------- Net cash provided by (used for) financing activities ............ 63,853 890 -------- -------- Effect of exchange rate changes on cash ......................... (61) -- -------- -------- Net increase (decrease) in cash and cash equivalents ............ (229) 4,434 Cash and cash equivalents at beginning of period ................ 2,318 2,688 -------- -------- Cash and cash equivalents at end of period ...................... $ 2,089 $ 7,122 ======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 8 BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (In thousands of dollars, except as otherwise noted) (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of BPC Holding Corporation and its subsidiaries (collectively, the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying financial statements include the results of BPC Holding Corporation ("Holding") and its wholly-owned subsidiary, Berry Plastics Corporation ("Berry"), and its wholly-owned subsidiaries: Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Venture Packaging Southeast, Inc., NIM Holdings Limited ("NIM Holdings"), Norwich Injection Moulders Limited ("Norwich Moulders"), Knight Plastics, Inc., CPI Holding Corporation, Cardinal Packaging, Inc., Norwich Acquistion Limited, and Berry Plastics Acquisition Corporation. For further information, refer to the consolidated financial statements and footnotes thereto included in Holding's and Berry's Form 10-K's filed with the Securities and Exchange Commission for the year ended January 2, 1999. Certain amounts in the 1998 financial statements have been reclassified to conform with the 1999 presentation. 2. ACQUISITIONS On July 2, 1998, NIM Holdings, a newly-formed, wholly-owned subsidiary of Berry, acquired all of the capital stock of Norwich Moulders of Norwich, England for aggregate consideration of approximately $14.0 million. The purchase was primarily financed through Berry's credit facility. The operations of Norwich Moulders are included in Berry's operations since the acquisition date using the purchase method of accounting. On October 16, 1998, Knight Plastics, Inc. ("Knight"), a newly formed wholly-owned subsidiary of Berry, acquired substantially all of the assets of the Knight Engineering and Plastics Division of Courtaulds Packaging Inc. for aggregate consideration of approximately $18.0 million. The purchase was financed through Berry's revolving line of credit. The operations of Knight are included in Berry's operations since the acquisition date using the purchase method of accounting. 9 On July 6, 1999, Berry acquired all of the outstanding capital stock of CPI Holding Corporation ("Cardinal"), the parent company of Cardinal Packaging, Inc., for aggregate consideration of approximately $72.0 million. This purchase price and allocation of such to the purchased assets and liabilities is preliminary and subject to completion of Cardinal's working capital accounts. The purchase was financed through the issuance by Berry of $75.0 million of 11% Senior Subordinated Notes. The operations of Cardinal are included in Berry's operations since the acquisition date using the purchase method of accounting. The pro forma results listed below are unaudited and reflect purchase accounting adjustments assuming the Norwich Moulders, Knight, and Cardinal acquisitions occurred on December 28, 1997.
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED SEPTEMBER 26, SEPTEMBER 26, OCTOBER 2, 1998 1998 1999 ----------------------------------------------------- Net sales ...................... $ 88,940 $ 270,370 $ 278,422 Loss before income taxes ....... (3,436) (9,878) (5,262) Net loss ....................... (3,742) (10,326) (5,921)
The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisitions been consummated at the above date, nor are they necessarily indicative of future operating results. Further, the information gathered on the acquired companies is based upon unaudited internal financial information and reflects only pro forma adjustments for additional interest expense and amortization of the excess of the cost over the underlying net assets acquired, net of the applicable income tax effects. 3. LONG-TERM DEBT Long-term debt consists of the following: OCTOBER 2, JANUARY 2, 1999 1999 ----------- ------------ Holding 12.50% Senior Secured Notes ........ $105,000 $105,000 Berry 12.25% Senior Subordinated Notes ..... 125,000 125,000 Berry 11% Senior Subordinated Notes ........ 75,000 -- Term loans ................................. 56,819 71,243 Revolving line of credit ................... 22,768 16,162 Nevada Industrial Revenue Bonds ............ 4,000 4,500 Capital leases ............................. 640 561 Debt premium, net .......................... 721 832 -------- -------- 389,948 323,298 Less current portion of long-term debt ..... 17,546 19,388 -------- -------- $372,402 $303,910 ======== ======== The current portion of long-term debt consists of $16.9 million of quarterly installments on the term loans, a $0.5 million repayment of the industrial bonds and the monthly principal payments related to capital lease obligations. 10 On July 6, 1999, Berry completed an offering of $75.0 million aggregate principal amount of 11% Series B Senior Subordinated Notes due 2007 (the "1999 Notes"). The net proceeds to Berry from the sale of the 1999 Notes, after expenses, were $72.0 million. The proceeds from the 1999 Notes were used to finance the Cardinal acquisition. The 1999 Notes mature on July 15, 2007 and interest is payable semi-annually on January 15 and July 15 of each year. Holding and all of Berry's subsidiaries fully, jointly, severally, and unconditionally guarantee on a senior subordinated basis the 1999 Notes. There are no nonguarantor subsidiaries. The debt under Berry's credit facility is guaranteed by BPC Holding and substantially all of its subsidiaries. As of October 2, 1999, the credit facility provided an aggregate commitment of about $134.4 million including (i) $70.0 million revolving line of credit, subject to a borrowing base formula; (ii) (pound)1.5 million revolving line of credit, subject to a borrowing base ("UK Revolver"); (iii) $51.1 million term loan facility; (iv) (pound)3.4 million term loan facility ("UK Term Loan"); and (v) $5.2 million standby letter of credit facility to support Berry and its subsidiaries' obligations under its Nevada Industrial Revenue Bonds. At October 2, 1999, Berry had unused borrowing capacity under the credit facility's revolving line of credit of about $23.9 million. The credit facility matures on January 21, 2002 unless previously terminated by the Company or by the lenders upon an Event of Default as defined in the Security Agreement. The term loan facilities require periodic principal payments, varying in amount through the maturity of the facility. Such periodic payments will aggregate about $19.0 million for fiscal 1999 and about $19.9 million for fiscal 2000. Interest on borrowings under the credit facility is based on either the lender's base rate (which is the higher of the lender's prime rate and the federal funds rate plus 0.50%) plus an applicable margin of 0.50%; or LIBOR (adjusted for reserves) plus an applicable margin of 2.0%, at our option. Following receipt of the quarterly financial statements, the agent under the credit facility has the option to change the applicable interest rate margin on loans (other than under the UK Revolver and UK Term Loan) once per quarter to a specified margin determined by the ratio of funded debt to EBITDA of Berry Plastics and its subsidiaries. Notwithstanding the foregoing, interest on borrowings under the UK Revolver and the UK Term Loan is based on LIBOR (adjusted for reserves) plus 2.50%. The credit facility contains various covenants which include, among other things (i) maintenance of certain financial ratios and compliance with certain financial tests and limitations, (ii) limitations on the issuance of additional debt, and (iii) limitations on capital expenditures. 11 4. BERRY PLASTICS CORPORATION SUMMARY FINANCIAL INFORMATION The following summarizes financial information of Holding's wholly-owned subsidiary, Berry Plastics Corporation, and its subsidiaries. OCTOBER 2, JANUARY 2, 1999 1999 ------------ ------------- CONSOLIDATED BALANCE SHEETS Current assets ........................ $ 87,142 $ 65,590 Property and equipment - net of accumulated depreciation ............ 147,501 120,005 Other noncurrent assets ............... 93,346 58,716 Current liabilities ................... 76,223 60,210 Noncurrent liabilities ................ 269,765 210,093 Equity (deficit) ...................... (17,999) (25,992)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED --------------------------------------------------------------------- OCTOBER 2, SEPTEMBER 26, OCTOBER 2, SEPTEMBER 26, 1999 1998 1999 1998 --------------------------------------------------------------------- CONSOLIDATED STATEMENT OF OPERATIONS Net sales .................................... $ 90,105 $ 68,800 $249,956 $205,116 Cost of goods sold ........................... 68,458 51,066 181,240 151,083 Income (loss) before income taxes ............ (749) 1,652 8,716 6,223 Net income (loss) ............................ (924) 1,346 8,064 5,892
The following summarizes parent company only financial information of Berry: OCTOBER 2, JANUARY 2, 1999 1999 ------------------------------- BALANCE SHEETS Current assets ........................... $ 36,350 $ 28,579 Property and equipment - net of accumulated depreciation ............... 51,458 48,220 Investment in/due from subsidiaries ...... 185,151 120,230 Other noncurrent assets .................. 17,939 15,629 Current liabilities ...................... 46,381 41,325 Noncurrent liabilities ................... 262,516 197,325 Equity (deficit) ......................... (17,999) (25,992)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ---------------------------------------------------------------------- OCTOBER 2, SEPTEMBER 26, OCTOBER 2, SEPTEMBER 26, 1999 1998 1999 1998 ---------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS Net sales .................................. $ 40,415 $ 35,294 $116,623 $107,702 Cost of goods sold ......................... 28,033 23,001 76,675 70,555 Income before income taxes ................. 1,896 3,968 10,406 8,539 Net income ................................. 1,781 3,878 9,987 8,424
12 5. SEGMENT REPORTING The Company has two reportable segments: plastic packaging products and plastic housewares products. The Company's plastic packaging business consists of three primary market groups: aerosol overcaps, containers, and drink cups. The Company's plastic housewares business consists of semi-disposable plastic housewares and plastic lawn and garden products, sold primarily through major national retail marketers and national chain stores. The Company evaluates performance and allocates resources based on operating income before depreciation and amortization of intangibles adjusted to exclude (i) market value adjustment related to stock options, (ii) other non-recurring or "one-time" expenses, (iii) management fees and reimbursed expenses paid to First Atlantic Capital, Ltd. and (iv) certain legal expenses associated with unusual litigation ("Adjusted EBITDA"). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company's reportable segments are business units that offer different products to different markets.
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED -------------------------------------------------------------- OCTOBER 2, SEPTEMBER 26, OCTOBER 2, SEPTEMBER 26, 1999 1998 1999 1998 -------------------------------------------------------------- Net sales: Plastic packaging products ..................................... $ 87,329 $ 65,273 $ 227,771 $ 186,168 Plastic housewares products .................................... 2,776 3,527 22,185 18,948 Adjusted EBITDA: Plastic packaging products ..................................... 17,496 14,611 51,411 41,782 Plastic housewares products .................................... 414 125 4,155 3,020 Reconciliation of Adjusted EBITDA to loss before income taxes: Adjusted EBITDA for reportable segments ....................... $ 17,910 $ 14,736 $ 55,566 $ 44,802 Net interest expense .......................................... (11,475) (8,824) (29,335) (25,691) Depreciation .................................................. (6,525) (5,391) (18,085) (15,466) Amortization .................................................. (2,432) (775) (4,981) (2,483) Loss on disposal of property and equipment ................................................... (372) (62) (1,150) (492) One-time expenses ............................................. (1,224) (877) (2,890) (3,240) Stock option market value adjustment .......................... (23) (152) (225) (62) Management fees ............................................... (218) (219) (655) (654) -------------------------------------------------------------- Loss before income taxes ...................................... $ (4,359) $ (1,564) $ (1,755) $ (3,286)
5. COMPREHENSIVE LOSS Comprehensive loss was $4.6 million and $1.9 million for the thirteen weeks ended October 2, 1999 and September 26, 1998, respectively, and $2.5 million and $3.7 million for the thirty-nine weeks ended October 2, 1999 and September 26, 1998, respectively. 13 Item 2. BPC Holding Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Unless the context discloses otherwise, the "Company" as used in this Management's Discussion and Analysis of Financial Condition and Results of Operations shall include Holding and its subsidiaries on a consolidated basis. The following discussion should be read in conjunction with the consolidated financial statements of Holding and its subsidiaries and the accompanying notes thereto, which information is included elsewhere herein. The following discussion includes certain forward-looking statements. Actual results could differ materially from those reflected by the forward-looking statements in the discussion, and a number of factors could adversely affect future results, liquidity and capital resources. These factors include, among other things, the Company's ability to pass through raw material price increases to its customers, its ability to service debt, the availability of plastic resin, the impact of changing environmental laws and changes in the level of the Company's capital investment. Although management believes it has the business strategy and resources needed for improved operations, future revenue and margin trends cannot be reliably predicted. The Company is highly leveraged. The high degree of leverage could have important consequences, including, but not limited to, the following: (i) a substantial portion of Berry's cash flow from operations must be dedicated to the payment of principal and interest on its indebtedness, thereby reducing the funds available to Berry for other purposes; (ii) Berry's ability to obtain additional debt financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired; (iii) certain of Berry's borrowings will be at variable rates of interest, which will expose Berry to the risk of higher interest rates; (iv) Berry is substantially more leveraged than certain of its competitors, which may place Berry at a competitive disadvantage, particularly in light of its acquisition strategy; and (v) Berry's degree of leverage may hinder its ability to adjust rapidly to changing market conditions and could make it more vulnerable in the event of a downturn in general economic conditions or its business. 14 RESULTS OF OPERATIONS 13 WEEKS ENDED OCTOBER 2, 1999 (THE "QUARTER") COMPARED TO 13 WEEKS ENDED SEPTEMBER 26, 1998 (THE "PRIOR QUARTER") NET SALES. Net sales increased $21.3 million, or 31%, to $90.1 million for the Quarter from $68.8 million for the Prior Quarter with an approximate 4% increase in net selling price due to increased raw material costs. Plastic packaging product net sales increased $22.1 million from the Prior Quarter. Within this segment, the addition of Cardinal and Knight provided Quarter net sales of $14.0 million and $4.1 million, respectively. In addition, custom sales increased $4.3 million from the Prior Quarter with a large promotion in the Quarter. Container sales also increased $0.8 million from the Prior Quarter. Overcap sales, excluding Knight, were relatively flat, increasing $0.2 million. Drink cup sales for the Quarter were $1.0 million off the Prior Quarter. Plastic housewares product sales for the Quarter were down $0.8 million from the Prior Quarter due to timing as sales were stronger in the first quarter of 1999. GROSS MARGIN. Gross margin increased by $3.9 million to $21.6 million (24% of net sales) for the Quarter from $17.7 million (26% of net sales) for the Prior Quarter. This increase of 22% includes the combined impact of the added Cardinal and Knight sales volume, acquisition integration, and productivity improvement initiatives. The decrease of 2% in gross margin percentage can be attributed to the cyclical impact of higher raw material costs compared to the Prior Quarter. A major focus continues to be the consolidation of products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, the Company closed its Anderson, South Carolina facility in the second quarter of 1998, its Arlington Heights, Illinois facility (acquired in the Knight acquisition) in the first quarter of 1999, and its Ontario, California location (acquired in the Cardinal acquisition) in the third quarter of 1999. In addition, the Company announced two facility configuration changes in the third quarter of 1999 with the Minneapolis, Minnesota (acquired in the Cardinal acquisition) and Iowa Falls, Iowa locations closing their molding operations. The business from these locations are distributed throughout several of Berry's facilities. Also, significant productivity improvements have been made, including the addition of state-of-the-art injection molding equipment, molds and printing equipment at several of the Company's facilities. OPERATING EXPENSES. Selling expenses increased by $0.8 million to $4.6 million for the Quarter from $3.8 million for the Prior Quarter principally as a result of expanded sales coverage and increased marketing expenses. General and administrative expenses increased from $4.5 million for the Prior Quarter to $5.3 million for the Quarter. The increase of $0.8 million is primarily attributable to the Cardinal and Knight acquisitions and increased accrued compensation expenses. During the Quarter, one-time transition expenses were $0.8 million related to acquisitions and $0.4 million related to facility reorganizations. In the Prior Quarter, one-time transition expenses related to the shutdown of the Anderson facility were $0.9 million. INTEREST EXPENSE. Interest expense increased $2.4 million to $11.5 million for the Quarter compared to $9.1 million for the Prior Quarter due to the issuance of the 1999 Notes to finance the Cardinal acquisition. 15 INCOME TAX. For the Quarter, the Company recorded income tax expense of $0.2 million. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. NET LOSS. The Company recorded a net loss of $4.5 million for the Quarter compared to a net loss of $1.9 million for the Prior Quarter for the reasons discussed above. 39 WEEKS ENDED OCTOBER 2, 1999 ("YTD") COMPARED TO 39 WEEKS ENDED SEPTEMBER 26, 1998 ("PRIOR YTD") NET SALES. Net sales increased $44.9 million, or 22%, to $250.0 million for the YTD from $205.1 million for the prior YTD with net selling prices relatively flat. Plastic packaging product net sales increased $41.7 million from the prior YTD. Within this segment, the addition of Cardinal, Norwich, and Knight provided net sales for the YTD of $14.0 million, $6.9 million and $13.7 million, respectively. In addition, overcaps sales, excluding Knight, increased $2.3 million. Custom sales increased $7.7 million from the prior YTD with a large promotion in the YTD. Container sales increased $0.9 million from the prior YTD despite the Company's decision to exit certain low margin business. Drink cup sales for the YTD were $4.0 million off the prior YTD due to a $3.5 million promotion in the prior YTD. Plastic housewares product sales for the YTD increased $3.2 million from the prior YTD due to strong internal growth including several new products. GROSS MARGIN. Gross margin increased by $14.7 million to $68.7 million (27% of net sales) for the YTD from $54.0 million (26% of net sales) for the prior YTD. This increase of 27% includes the combined impact of the added Cardinal, Norwich, and Knight sales volume, acquisition integration, and productivity improvement initiatives. A major focus continues to be the consolidation of products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, the Company closed its Anderson, South Carolina facility in the second quarter of 1998, its Arlington Heights, Illinois facility (acquired in the Knight acquisition) in the first quarter of 1999, and its Ontario, California location (acquired in the Cardinal acquisition) in the third quarter of 1999. In addition, the Company announced two facility configuration changes in the third quarter of 1999 with the Minneapolis, Minnesota (acquired in the Cardinal acquisition) and Iowa Falls, Iowa locations closing their molding operations. The business from these locations are distributed throughout Berry's facilities. Also, significant productivity improvements have been made, including the addition of state-of-the-art injection molding equipment, molds and printing equipment at several of the Company's facilities. OPERATING EXPENSES. Selling expenses increased by $2.3 million to $13.2 million for the YTD from $10.9 million for the prior YTD principally as a result of expanded sales coverage and increased marketing expenses. General and administrative expenses increased by $3.9 million to $17.2 million for the YTD from $13.3 million for the prior YTD. The increase is primarily attributable to the Cardinal, Norwich Moulders, and Knight acquisitions and increased accrued compensation expenses. YTD one-time transition expenses include $1.0 million related to facility reorganizations and $1.9 million related to acquisitions. One-time transition expenses for prior YTD were $1.0 million related to acquisitions and $2.2 million related to plant consolidations. 16 INTEREST EXPENSE. Interest expense increased $3.0 million to $29.5 million for the YTD compared to $26.5 million for the prior YTD primarily due to additional borrowings to support the Cardinal, Norwich Moulders and Knight acquisitions. INCOME TAX. The Company's income tax expense was $0.7 million for the YTD. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. NET LOSS. Net loss for the YTD of $2.4 million improved $1.2 million from a net loss of $3.6 million for the prior YTD for the reasons discussed above. LIQUIDITY AND SOURCES OF CAPITAL Net cash provided by operating activities was $32.4 million for the YTD, an increase of $3.8 million from the prior YTD. The increase is primarily the result of improved operating performance with income before depreciation and amortization increasing $6.3 million from the prior YTD. Net working capital changes (defined as accounts receivable, inventories, prepaid expenses, other receivables, accounts payable and accrued expenses) decreased the YTD net cash $3.1 million from the prior YTD due to the Company's growth. YTD capital spending of $25.6 million included $9.1 million for molds, $5.0 million for molding and printing machines, $7.7 million for buildings and systems, and $3.8 million for accessory equipment and systems. The Company anticipates that its cash interest, working capital and capital expenditure requirements for 1999 will be satisfied through a combination of funds generated from operating activities and cash on hand, together with funds available under the Credit Facility. Management bases such belief on historical experience and the substantial funds available under the Credit Facility. However, the Company cannot predict its future results of operations. At October 2, 1999, the Company's cash balance was $2.1 million, and Berry had unused borrowing capacity under the Credit Facility's borrowing base of approximately $23.9 million. The indentures governing the 1994 Notes, the 1998 Notes, and the 1999 Notes restrict, and the Credit Facility prohibits, our ability to pay any dividend or make any distribution of funds to Holding to satisfy interest and other obligations on the 1996 Notes. Based upon historical operating results, we anticipate that we will be unable to generate sufficient net income to permit a dividend to Holding in an amount sufficient to meet Holding's interest payment obligations under the 1996 Notes. Interest on the 1996 Notes is payable semi-annually on June 15 and December 15 of each year. However, from December 15, 1999 until June 15, 2001, Holding may, at its option, pay interest, at an increased rate of 0.75% per annum, in additional 1996 Notes valued at 100% of the principal amount thereof. After June 15, 2001 or in the event that Holding does not pay interest in additional notes, management anticipates that such interest obligations will only be met by refinancing the 1996 Notes or raising capital through equity offerings. There can be no assurance that then-current market conditions would permit Holding to consummate a refinancing or equity offering. In addition, we have now and will continue to have a large amount of debt which may limit the ability of Berry or Holding to consummate a refinancing or equity offering. 17 IMPACT OF YEAR 2000 We have been modifying or replacing portions of our software since 1991 so that our computer systems will function properly with respect to dates in the Year 2000 and thereafter. Because we commenced this process early, the costs incurred to address this issue in any single year have not been significant. Our current business applications are Year 2000 compliant. Acquired businesses are converted to our applications for Year 2000 compliance and consistency in applications and reporting. Except for Cardinal, the most recent acquired business, Knight Plastics, was converted to our applications on March 1, 1999. We plan to convert Cardinal to our applications by December 6, 1999. However, we are currently in the process of replacing our current business software with another Year 2000 compliant package. This replacement is not due to any Year 2000 issues, but is needed to accommodate the changes that we have experienced in our business due to acquisitions in recent years. The anticipated cost of this conversion is about $2.7 million of which $2.5 million has been paid through October 2, 1999. The accounting phase of this conversion was completed for all plants in January 1999. The remaining phases are scheduled to be completed by the end of 1999. We believe that we have an effective program in place to resolve all internal Year 2000 issues. An inventory of computer based systems has been compiled and verified through testing and supplier verification. Due to recent plant acquisitions and ongoing Year 2000 testing we have moved our goal of being Year 2000 compliant to December 17, 1999. Year 2000 testing revealed that the voice mail system in our Lawrence plant is not Year 2000 compliant. This system is to be replaced by November 30, 1999. We purchased three Cardinal packaging plants in July 1999 that are using non-compliant Year 2000 business applications. All of these plants will be converted to our Year 2000 compliant software by December 6, 1999. Our Woodstock plant is scheduled to replace the software on its palletizer by November 30, 1999 to make it Year 2000 ready. The costs of these conversions are estimated to be below $110,000, none of which has been paid through October 2, 1999. The major Year 2000 risk that we face is the Year 2000 readiness of external suppliers of goods and services. We could have material disruption in our ability to produce and deliver product should there be major disruptions in the economy or failure of key suppliers. While it is impossible to account for the effectiveness of every supplier's Year 2000 efforts, the following steps are in the process of being completed: o We are identifying key suppliers, which include suppliers of raw material, banking, transportation, service, and utility providers and surveying these suppliers as to their Year 2000 status; o We are identifying which suppliers are not compliant or at risk; and o We are engaging in risk assessment and contingency planning for these key suppliers. 18 We have identified 304 "key suppliers" that we have surveyed to determine their Year 2000 status. The following is a summary of this survey as of October 22, 1999. NUMBER OF SUPPLIER RESPONSE SUPPLIERS -------------------- ----------- o Fully Year 2000 compliant 203 o Compliant by third quarter 1999 30 o Compliant by fourth quarter 1999 34 o Second request for information 32 o No response 4 o Supplier will not respond 1 We are in the process of following up with all companies that were to be compliant by the third and fourth quarter of 1999 to determine their current status. By the end of November 1999, we will have completed our survey and put into place any contingency plans. The amount of potential liability and lost revenue due to Year 2000 issues cannot be reasonably estimated at this time. We will continue to work throughout the year to minimize any Year 2000 risks. 19 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On July 5, 1999, Holding issued 327 shares of its Class B Non-Voting Common Stock, $.01 par value, to three members of management of Berry at $170.00 per share, for aggregate proceeds of $55,590 (the "Employee Stock"). There was no underwriter for the securities. The securities were privately placed pursuant to the exemption from registration granted under Rule 505 ("Rule 505") of Regulation D promulgated under the Securities Act of 1933, as amended. The offering was made to less than 35 non-accredited investors, the offering was less than $5,000,000, no general solicitation was made and the issuer complied with the provisions of Rule 502 of Regulation D, including the disclosure requirements thereunder. The Employee Stock was issued for cash, and was issued to provide an incentive for management employees. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: A Current Report on Form 8-K, dated July 6, 1998, was filed by Berry on July, 21, 1999. Under Item 2, Acquisition or Disposition of Assets, Berry reported the consummation of the CPI Holding Corporation acquisition. No financial statements were included in the Form 8-K. The Form 8-K was amended by the filing of the Form 8-K/A on September 20, 1999, which includes the financial statements of the business acquired and pro forma financial information. 20 SIGNATURE 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. Berry Plastics Corporation BPC Holding Corporation Berry Iowa Corporation Berry Tri-Plas Corporation Berry Sterling Corporation Aerocon, Inc. Packerware Corporation Berry Plastics Design Corporation Venture Packaging, Inc. Venture Packaging Midwest, Inc. Venture Packaging Southeast, Inc. Knight Plastics, Inc. CPI Holding Corporation Cardinal Packaging, Inc. Berry Plastics Acquisition Corporation November 16, 1999 By: /s/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the entities listed above (Principal Financial and Accounting Officer) NIM Holdings Limited Norwich Injection Moulders Limited Norwich Acquisition Limited By: /s/ JAMES M. KRATOCHVIL James M. Kratochvil Director of the entities listed above (Principal Financial and Accounting Officer) 21 EX-27.1 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 9-MOS JAN-01-2000 OCT-02-1999 2,089 0 45,745 1,648 38,255 87,573 243,858 96,357 340,116 80,980 372,402 0 17,021 6 (142,881) 340,116 249,957 0 181,240 221,226 372 468 11,475 (1,755) 659 (2,414) 0 0 0 (2,414) 0 0
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