-----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, LxFPkIeTaUlkW+wJQtAu5GB2N4za5XtEZAtV62jwz7UyXEZwFnLFoBNWQ6fU/Xcy oUSriZwHo0EEVwFzB5vHPg== 0000919463-96-000007.txt : 19961113 0000919463-96-000007.hdr.sgml : 19961113 ACCESSION NUMBER: 0000919463-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NONE 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: 1934 Act SEC FILE NUMBER: 033-75706 FILM NUMBER: 96659213 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST 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 UNITED STATES 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 September 28, 1996 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, 33-75706-01; 33-75706-02, 33-75706-03 BERRY PLASTICS CORPORATION BPC HOLDING CORPORATION BERRY IOWA CORPORATION BERRY TRI-PLAS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 35-1814673 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 101 OAKLEY STREET, EVANSVILLE, INDIANA 47710 (Address of principal executive offices) (Zip Code) Registrant's 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 the issuer's classes of common stock, as of the latest practicable date: Number of Shares Outstanding COMMON STOCK AS OF SEPTEMBER 28, 1996 Class A - Voting - $.01 Par Value 91,000 Class A - Nonvoting - $.01 Par Value 259,000 Class B - Voting - $.01 Par Value 145,058 Class B - Nonvoting - $.01 Par Value 54,942 Class C - Nonvoting - $.01 Par Value 17,000 BPC HOLDING CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX FOR QUARTERLY PERIOD ENDED SEPTEMBER 28, 1996 PAGE NO. Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Operations 5 Consolidated Statement of Changes in Stockholders' Equity (Deficit) 6 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 16 Signature 17 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (In Thousands of Dollars)
SEPTEMBER 28, DECEMBER 30, 1996 1995 (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 9,324 $ 8,035 Accounts receivable (less allowance for doubtful accounts of $635 and $737) 20,794 15,944 Inventories: Finished goods 9,797 7,743 Raw materials and supplies 4,004 3,897 Custom molds 625 257 14,426 11,897 Prepaid expenses and other receivables 1,159 1,593 Income taxes recoverable 818 411 Total current assets 46,521 37,880 Assets held in trust 36,160 - Property and equipment: Land 4,598 3,882 Buildings and improvements 17,901 15,712 Machinery, equipment and tooling 76,644 68,801 Automobiles and trucks 642 496 Construction in progress 2,711 4,094 102,496 92,985 Less accumulated depreciation 47,696 40,544 54,800 52,441 Intangible assets: Deferred financing and origination fees (net of accumulated amortization of $2,336 and 10,555 5,962 $1,555) Excess of cost over net assets acquired (net of accumulated amortization of $693 and $425) 4,758 4,782 Patents (net of accumulated amortization of $6 and $0) 133 139 Covenants not to compete (net of accumulated amortization of $52 and $27) 48 73 15,494 10,956 Deferred income taxes 2,038 2,056 Other 231 132 Total assets $155,244 $103,465
BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (continued) (In Thousands of Dollars)
SEPTEMBER 28, DECEMBER 30, 1996 1995 (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 13,209 $ 14,073 Accrued expenses and other liabilities 4,585 2,807 Accrued interest 9,462 2,652 Employee compensation and payroll taxes 5,583 4,618 Current portion of long-term debt 732 717 Total current liabilities 33,571 24,867 Long-term debt, less current portion (NOTES 2 AND 3) 215,348 110,959 Deferred compensation - 122 Accrued dividends on preferred stock 593 - Total liabilities 249,512 135,948 Stockholders' equity (deficit) (NOTE 2): Preferred stock; 1,000,000 shares authorized; 600,000 shares issued and outstanding (net of discount of $3,428) 11,144 - Class A Common Stock; $.01 par value: Voting; 500,000 shares authorized; 91,000 shares issued and outstanding 1 - Nonvoting; 500,000 shares authorized; 259,000 shares issued and outstanding 2 - Class B Common Stock; $.01 par value: Voting; 500,000 shares authorized; 145,058 shares issued and outstanding 1 - Nonvoting; 500,000 shares authorized; 54,942 shares issued and outstanding 1 - Class C Common Stock; $.01 par value: Nonvoting; 500,000 shares authorized; 17,000 shares issued and outstanding - - Treasury stock: 0 and 5,212 shares, respectively - (58) Additional paid-in capital 52,204 960 Warrants 3,511 4,034 Retained earnings (deficit) (161,132) (37,419) Total stockholders' equity (deficit) (94,268) (32,483) Total liabilities and stockholders' equity (deficit) $155,244 $103,465
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Consolidated Statements of Operations (In Thousands of Dollars, Except Per Share Data)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30, 1996 1995 1996 1995 (UNAUDITED) (UNAUDITED) Net sales $39,794 $35,932 $113,666 $106,429 Cost of goods sold 29,377 27,269 81,848 77,051 Gross margin 10,417 8,663 31,818 29,378 Operating expenses: Selling 1,775 1,451 5,184 4,210 General and administrative 2,750 2,206 11,915 7,200 Research and development 219 196 612 554 Amortization of intangibles 177 254 382 709 Operating income 5,496 4,556 13,725 16,705 Other (income) expenses: Loss (gain) on disposal of property and equipment - (5) (23) 10 Other 39 181 551 639 Income before interest and income 5,457 4,380 13,197 16,056 taxes Interest: Expense (6,941) (3,561) (14,420) (10,531) Income 561 142 728 508 Income (loss) before income taxes (923) 961 (495) 6,033 Income tax expense (benefit) (167) 148 42 167 Net income (loss) (756) 813 (537) 5,866 Preferred stock dividends (593) - (593) - Net (income) loss attributable to common shareholders $(1,349) $ 813 $ (1,130) $ 5,866 Earnings per share (NOTE 2): PRO FORMA EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Net income (loss) $ (2.23) $ 1.34 $ (1.86) $ 9.68 PRO FORMA EARNINGS PER COMMON SHARE - ASSUMING FULL DILUTION: Net income (loss) $ (2.23) $ 1.34 $ (1.86) $ 9.68
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Consolidated Statement of Changes in Stockholders' Equity (Deficit) (In Thousands of Dollars) (Unaudited)
ADDITIONAL RETAINED COMMON STOCK ISSUED PREFERRED TREASUR PAID-IN EARNINGS CLASS A CLASS B CLASS C STOCK STOCK CAPITAL WARRANTS (DEFICIT) TOTAL Balance at December 31, 1995 $ - $ - $ - $ - $(58) $ 960 $ 4,034 $ (37,419) $(32,483) Net income - - - - - - - (537) (537) Market value adjustment - warrants - - - - - (1,145) 9,399 (8,254) - Exercise of stock options - - - - - 1,130 - - 1,130 Distribution on sale of equity - - - - 58 (1,424) (13,433) (114,922) (129,721) interests Proceeds from newly issued equity 3 2 - 14,572 - 52,797 - - 67,374 Payment of deferred compensation - - - - - 479 - - 479 Issuance of private warrants - - - (3,511) - - 3,511 - - Accrued dividends on preferred - - - - - (593) - - (593) stock Amortization of preferred stock - - - 83 - - - - 83 discount Balance at September 28, 1996 $ 3 $ 2 $ - $11,144 $ - $52,204 $ 3,511 $(161,132) $(94,268)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Consolidated Statements of Cash Flows (In Thousands of Dollars)
THIRTY-NINE WEEKS ENDED SEPTEMBER 28, SEPTEMBER 30, 1996 1995 (UNAUDITED) OPERATING ACTIVITIES Net income $ (537) $5,866 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,223 6,929 Non-cash interest expense 846 718 Write-off of deferred acquisition costs - 390 Non-cash compensation 358 178 Loss (gain) on sale of property and equipment (23) 10 Deferred income taxes 18 (1,463) Changes in operating assets and liabilities: Accounts receivable, net (4,869) (6,489) Inventories (2,529) (1,237) Prepaid expenses and other receivables (64) (976) Accounts payable and accrued expenses 8,644 2,427 Other assets (5) (18) Net cash provided by operating activities 10,062 6,335 INVESTING ACTIVITIES Additions to property and equipment (9,614) (8,185) Proceeds from disposal of property and equipment 43 20 Purchase of assets of Sterling Products, Inc., net of cash acquired - (7,246) Purchase of Alpha and other acquisition costs (790) (395) Net cash used for investing activities (10,361) (15,806) FINANCING ACTIVITIES Payments on long-term borrowings (500) (500) Payments on capital lease (161) (147) Exercise of management stock options 1,130 - Proceeds from senior secured notes 105,000 - Proceeds from issuance of common stock 52,797 - Proceeds from issuance of preferred stock and warrants 14,572 - Rollover investments and share repurchases (125,219) - Assets held in trust (35,600) - Net payments to public warrant holders (4,502) - Debt issuance costs (5,369) (177) Interest income applied to the assets held in trust (560) - Reclassification of cash held for acquisition - 12,000 Net cash provided by financing activities 1,588 11,176 Net increase in cash and cash equivalents 1,289 1,705 Cash and cash equivalents at beginning of period 8,035 9,327 Cash and cash equivalents at end of period $ 9,324 $ 11,032
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of BPC Holding Corporation and its subsidiaries (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 the Company's wholly-owned subsidiary, Berry Plastics Corporation ("Berry"), and its wholly-owned subsidiaries: Berry Iowa Corporation; Berry Tri-Plas Corporation; Berry Sterling Corporation, and AeroCon, Inc. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K filed with the Securities and Exchange Commission for the year ended December 30, 1995 and information included in the Company's Form S-4 filed with the Securities and Exchange Commission on August 28, 1996. 2. COMPANY RECAPITALIZATION On June 18, 1996, BPC Mergerco, Inc. ("Mergerco"), a company organized by Atlantic Equity Partners International II, L.P., Chase Venture Capital Associates, L.P., certain other institutional investors and management, effected the acquisition of a majority of the outstanding capital stock of BPC Holding Corporation ("Holding") by way of merger with Holding, with Holding being the surviving corporation (the "Transaction"). Sources of funds for the new capital structure included the issuance of $55.0 million of common stock, $15.0 million of preferred stock and warrants to purchase common shares of Holding, $105.0 million of 12.5% Senior Secured Notes (the "Notes") described below, and exercise of management stock options of approximately $0.9 million. Approximately $125.2 million of the proceeds were used for rollover investments and purchase of equity interests, and the remaining proceeds were used to make payments of approximately $4.5 million to public warrant holders, to establish an escrow account of $35.6 million to pay the first three years' interest on the Notes, to make deferred payments to certain holders of stock options of approximately $2.5 million, to pay fees and expenses related to the transaction of approximately $8.0 million and $0.1 million was held in cash. In connection with the Transaction, Holding retired its old Class A and Class B common stock and authorized the creation of 500,000 shares each of new Class A voting and non-voting common stock, 500,000 shares each of new Class B voting and non-voting common stock, and 500,000 shares of new Class C non-voting common stock. Pro forma earnings per share information has been presented for all periods as though the capital structure resulting from the recapitalization occurred on January 1, 1995. BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) (Unaudited) 3. ISSUANCE OF SENIOR SECURED NOTES In connection with the Transaction mentioned above, Holding completed a 144A private placement of $105.0 million of Senior Secured Notes due 2006 (the "Old Notes"). On October 9, 1996, Holding consummated an exchange offer whereby the Old Notes were exchanged for 12.5% Series B Senior Secured Notes due 2006 (the "Notes"). The terms of the Notes are identical in all material respects to the Old Notes, except that the Notes have been registered under the Securities Act of 1933, as amended, and therefore do not bear legends restricting their transfer and do not contain certain provisions providing for the payment of liquidated damages to the holders of the Old Notes under certain circumstances relating to the registration of the Old Notes, which provisions terminated upon the consummation of the exchange of the Old Notes for the Notes. The Notes bear interest at 12.5% and mature on June 15, 2006. These Notes are senior secured obligations of Holding and are secured by a first priority pledge of all shares of outstanding capital stock of Berry. Except as provided below, interest on the Notes will be payable in cash semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 1996. Proceeds of the Old Notes (net of fees and expenses of approximately $5.4 million) were used to finance $64.0 million of the purchase of equity interests (see Note 2) and establish an escrow of $35.6 million to pay the first three years' interest on the Notes. In addition, from December 15, 1999 until June 15, 2001, the Company may, at its option, pay interest, at an increased rate of .75% per annum, in the form of additional Notes valued at 100% of the principal amount thereof. 4. ACQUISITIONS On December 21, 1995, the Company acquired substantially all of the assets and assumed certain liabilities of Tri-Plas, Inc. (the "Tri-Plas Acquisition") through its subsidiary Berry Tri-Plas Corporation (formerly Berry-CPI Plastics Corp.) for $6,600,000. The operations of Berry Tri- Plas Corporation are included in the Company's operations since the acquisition date using the purchase method of accounting. BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) (Unaudited) The pro forma results listed below are unaudited and reflect purchase accounting adjustments assuming the Tri-Plas Acquisition occurred on January 1, 1995.
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 (In thousands, except per share data) Net sales $ 40,078 $ 118,866 Income before income taxes 277 3,981 Net income 129 3,814 Pro forma earnings per common share: Primary .21 6.29 Fully diluted .21 6.29
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 acquisition been consummated at the above date, nor are they necessarily indicative of future operating results. Further, the information gathered on the acquired company 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 effect. 5. LONG-TERM DEBT Long-term debt consists of the following:
SEPTEMBER 28, December 30, 1996 1995 (In thousands) 12.50% Senior Secured Notes $105,000 $ - 12.25% Senior Subordinated Notes 100,000 100,000 Nevada Industrial Revenue Bonds 5,500 6,000 Iowa Industrial Revenue Bonds 5,400 5,400 Capital lease obligation 840 1,002 Debt discount (660) (726) 216,080 111,676 Less current portion of long-term debt 732 717 $215,348 $110,959
BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) (Unaudited) The current portion of long-term debt is limited to a $0.5 million repayment of the industrial revenue bonds and the monthly principal payments related to a capital lease obligation. The Company also maintains a $28 million revolving line of credit with Fleet Capital Corporation. As of September 28, 1996, approximately $12 million of this credit line was used to provide a letter of credit for the outstanding industrial revenue bonds. Based on the borrowing formula as of September 28, 1996, the Company had approximately $16 million of additional available credit under the Fleet Capital credit line. 6. PATENT INFRINGEMENT LITIGATION On April 25, 1996, in connection with the patent infringement lawsuit filed by Berry Sterling Corporation against Pescor Plastics, Inc., the United States District Court for the Eastern District of Virginia entered an order that held that Berry Sterling's patent for the design of a drink cup was not valid. The Company is currently appealing this ruling. 7. WINCHESTER PLANT CONSOLIDATION On September 16, 1996 the Company announced the consolidation of its Winchester, Virginia production facility with other Company locations, including Charlotte, North Carolina, Evansville, Indiana and Iowa Falls, Iowa. BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) (Unaudited) 8. BERRY PLASTICS CORPORATION SUMMARY FINANCIAL INFORMATION (IN THOUSANDS) The following summarizes financial information of the Company's wholly- owned subsidiary, Berry Plastics Corporation and subsidiaries:
SEPTEMBER 28, 1996 December 30, 1995 CONSOLIDATED BALANCE SHEETS Current assets $ 45,889 $ 37,880 Property and equipment - net of accumulated depreciation 54,800 52,441 Other noncurrent assets 12,541 13,144 Total assets $113,230 $103,465 Current liabilities $ 31,589 $ 27,672 Noncurrent liabilities 113,152 110,959 Stockholders' equity (deficit) (31,511) (35,166) Total liabilities and stockholders' equity (deficit) $113,230 $103,465
THIRTEEN WEEKS ENDED Thirty-nine Weeks Ended SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30, 1996 1995 1996 1995 STATEMENTS OF OPERATIONS Net sales $39,794 $35,932 $113,666 $106,429 Cost of goods sold 29,377 27,269 81,848 77,051 Operating income 5,576 4,561 16,956 16,883 Income before income taxes 2,102 966 6,067 6,211 Net income 1,240 818 3,656 6,039
Item 2. BPC Holding Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS 13 WEEKS ENDED SEPTEMBER 28, 1996 (THE "QUARTER") COMPARED TO 13 WEEKS ENDED SEPTEMBER 30, 1995 (THE "PRIOR QUARTER") NET SALES. Net sales increased $3.9 million, or 10.9%, to $39.8 million for the Quarter from $35.9 million for the prior Quarter, notwithstanding an approximate 3% decrease in net selling price due mainly to the impact of competitive pricing in the drink cup product line. The increase in net sales was attributed to a combination of higher aerosol overcap sales of $2.5 million and higher container sales of $2.8 million (including the introduction of polypropylene containers from the Tri-Plas Acquisition) offset by a decrease of $1.6 million in drink cup sales. Sales of custom molded products were $0.2 million higher than the prior Quarter. GROSS MARGIN. Gross margin increased by $1.7 million to $10.4 million for the Quarter from $8.7 million for the prior Quarter. This increase of 19.5% was attributed to a combination of the introduction of more efficient tooling for certain of the container and drink cup products, strengthening operating performance at the Company's manufacturing facilities, and stronger sales of higher margin products. OPERATING EXPENSES. Selling expenses increased by $0.3 million to $1.8 million for the Quarter from $1.5 million for the prior Quarter principally as a result of additions to the drink cup sales force and the selling expenses related to the Tri-Plas Acquisition. General and administrative expenses increased by $0.6 million to $2.8 million for the Quarter from $2.2 million for the Prior Quarter, including $0.4 million associated with closing the Winchester, Virginia production facility (SEE NOTE 7). INTEREST EXPENSE. Interest expense increased $3.3 million to $6.9 million for the Quarter compared to $3.6 million for the prior Quarter due to interest associated with the issuance of the Notes (SEE NOTE 3). INCOME TAX. For the Quarter, the Company had a $0.2 million tax benefit which was determined using Federal and state statutory income tax rates. There was also minimal income tax for the prior Quarter due to the availability of loss carryforwards. NET INCOME (LOSS) AND EBITDA. Net loss for the Quarter of $0.8 million increased $1.6 million from net income of $0.8 million for the prior Quarter for the reasons discussed above. EBITDA, defined as income before taxes, interest, depreciation, amortization, loss (gain) on disposal of property and equipment, write-off of deferred acquisition costs, one-time transition expenses related to the Sterling Products Acquisition and the Tri-Plas Acquisition, and expenses related to the Transaction, was $8.8 million for the Quarter compared to $7.0 million for the prior Quarter. RESULTS OF OPERATIONS 39 WEEKS ENDED SEPTEMBER 28, 1996 ("YTD") COMPARED TO 39 WEEKS ENDED SEPTEMBER 30, 1995 ("PRIOR YTD") NET SALES. Net sales increased $7.3 million, or 6.9%, to $113.7 million YTD from $106.4 million for the prior YTD, notwithstanding an approximate 4% decrease in net selling price due to the impact of cyclical adjustments in the price of plastic resin and competitive pricing in the drink cup product line. The increase in net sales was attributed to a combination of higher aerosol overcap sales of $3.8 million, higher drink cup sales of $1.1 million and higher container sales of $5.9 million (including the introduction of polypropylene containers from the Tri-Plas Acquisition). Sales of custom molded products were down $3.1 million mainly due to the loss of a 1995 non- repeating plastic tumbler promotion for Burger King, and sales of custom manufactured tools decreased $0.5 million. GROSS MARGIN. Gross margin increased by $2.4 million to $31.8 million YTD from $29.4 million for the prior YTD. This increase in gross margin was attributed to a combination of the introduction of more efficient tooling for certain of the container and drink cup products, strengthening operating performance at the Company's manufacturing facilities, and stronger sales of higher margin products. Gross margin also reflects the negative $0.8 million impact of a non-repeating favorable resin forward buying program in the first quarter of 1995. OPERATING EXPENSES. Selling expenses increased by $1.0 million to $5.2 million YTD from $4.2 million for the prior YTD principally as a result of the addition of the drink cup business and the Tri-Plas Acquisition. General and administrative expenses increased by $4.7 million to $11.9 million YTD from $7.2 million for the prior YTD. The increase included Transaction expenses of $3.1 million, including $2.5 million of deferred payments to certain holders of stock options (SEE NOTE 2) and a $0.3 million non-cash adjustment to the value of vested incentive stock options. The increase also includes additional expenses from the Tri-Plas Acquisition and the Sterling Products Acquisition of $0.6 million, and patent and other litigation expenses of $0.6 million. INTEREST EXPENSE. Interest expense increased $3.9 million to $14.4 million YTD compared to $10.5 million for the prior YTD due to the issuance of the Notes (SEE NOTE 3). INCOME TAX. YTD, the Company had income tax of $0.1 million which was determined using Federal and state statutory income tax rates. There was minimal income tax in the prior YTD due to the availability of loss carryforwards. NET INCOME AND EBITDA. Net loss YTD of $0.5 million increased $6.4 million from net income of $5.9 million for the prior YTD for the reasons discussed above. EBITDA, defined as income before taxes, interest, depreciation, amortization, loss (gain) on disposal of property and equipment, write-off of deferred acquisition costs, one-time transition expenses related to the Sterling Products Acquisition and the Tri-Plas Acquisition. and expenses related to the Transaction, was $25.5 million YTD compared to $23.8 million for the prior YTD. LIQUIDITY AND SOURCES OF CAPITAL Net cash provided from operating activities was $10.1 million through the thirty-nine week period ended September 28, 1996, an increase of $3.8 million from the $6.3 million for the comparable prior year period. Working capital (defined as accounts receivable, inventories, prepaid expenses, other receivables, accounts payable and accrued expenses) decreased by $1.2 million since 1995 year end due to higher accrued interest, partially offset by a sales driven increase in accounts receivable and an increase to inventory resulting from higher plastic resin prices. Working capital increased $6.3 million for the same period in 1995. Capital spending of $9.6 million YTD included $3.9 million for molds and molding machines, $0.8 for printing-related equipment, and $4.9 million for building and accessory equipment. The Company currently intends to finance capital spending through cash flow from operations, existing cash balances and cash available under the Fleet revolving credit agreement. At September 28, 1996, the Company's cash balance was $9.3 million, and the Company had unused borrowing capacity under the Revolving Credit Facility's borrowing base of approximately $16 million. Capital is considered adequate to meet future obligations. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11.01 Computation of Pro Forma Per Share Earnings (b) Reports on Form 8-K: One report on Form 8-K was filed by the Company on July 3, 1996. Under Item 5, Other Events, the Company reported the consummation of the Transaction and the description of the merger of BPC Mergerco, Inc. and BPC Holding Corporation. No financial statements were included in the filing. 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 November 12, 1996 /S/ JAMES M. KRATOCHVIL James M. Kratochvil Vice President, Chief Financial Officer and Secretary of BPC Holding Corporation and its Subsidiaries (Principal Financial Officer) Exhibit 11.01. COMPUTATION OF PRO FORMA PER SHARE EARNINGS
THIRTEEN THIRTY- WEEKS NINE WEEKS ENDED ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 28, 30, 28, 30, 1996 1995 1996 1995 Net income (loss) $(1,348,628) $ 813,362 $(1,129,692) $5,866,023 PRIMARY EARNINGS PER SHARE: Average number of common shares outstanding 567,000 567,000 567,000 567,000 Net additional common shares in respect to common stock equivalents based on the Modified 39,096 39,096 39,096 39,096 Treasury Stock method Total primary shares and 606,096 606,096 606,096 606,096 equivalents Net income (loss) per primary $ (2.23) $ 1.34 $ (1.86) $ 9.68 share FULLY-DILUTED EARNINGS PER SHARE: Average number of common shares outstanding 567,000 567,000 567,000 567,000 Net additional common shares in respect to common stock equivalents based on the Modified 39,096 39,096 39,096 39,096 Treasury Stock method Total shares and equivalents 606,096 606,096 606,096 606,096 Net income (loss) per fully- $ (2.23) $ 1.34 $ (1.86) $ 9.68 diluted share
SEE NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS. EX-27 2
5 1000 9-MOS DEC-28-1996 SEP-28-1996 9300 0 21429 635 14426 46521 102496 47696 155244 33571 215348 0 11144 5 (105417) 155244 113666 0 81848 99941 528 307500 14420 (495) 42 (537) 0 0 0 (537) (1.86) (1.86)
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