-----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, IE2QnIx4tXfLAyVWIQuQFxsNVl2UrVcQB/zJ+vc2tRD17Yee6xj6ZXXv7Ny9r1DU JlR9OQAZDycUI86MT3W49w== 0000919463-97-000011.txt : 19971114 0000919463-97-000011.hdr.sgml : 19971114 ACCESSION NUMBER: 0000919463-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 033-75706 FILM NUMBER: 97714619 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 27, 1997 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 (IRS employer incorporation or organization) 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 NOVEMBER 1,1997 - ----------------------------------------------------------------------------- Class A - Voting - $.01 Par Value 91,000 Class A - Nonvoting - $.01 Par Value 259,000 Class B - Voting - $.01 Par Value 145,001 Class B - Nonvoting - $.01 Par Value 57,788 Class C - Nonvoting - $.01 Par Value 16,981 1 BPC HOLDING CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX FOR QUARTERLY PERIOD ENDED SEPTEMBER 27, 1997 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 14 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 17 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURE 18 2 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (In Thousands of Dollars)
SEPTEMBER 27, DECEMBER 28, 1997 1996 -------------- -------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 2,442 $ 10,192 Accounts receivable (less allowance for doubtful accounts of $1,193 and $618) 34,770 17,642 Inventories: Finished goods 20,151 9,100 Raw materials and supplies 6,835 3,945 Custom molds 2,355 562 ----------- ----------- 29,341 13,607 Prepaid expenses and other receivables 1,795 957 Income taxes recoverable 36 43 ----------- ----------- Total current assets 68,384 42,834 Assets held in trust 25,136 30,188 Property and equipment: Land 5,776 4,598 Buildings and improvements 32,307 18,290 Machinery, equipment and tooling 124,932 79,043 Automobiles and trucks 1,139 639 Construction in progress 6,679 3,476 ----------- ----------- 170,833 106,046 Less accumulated depreciation 61,413 50,382 ----------- ----------- 109,420 55,664 Intangible assets: Excess of cost over net assets acquired 30,702 4,273 Deferred financing and origination fees 11,209 9,912 Covenants not to compete 2,367 40 Deferred acquisition costs 355 527 ----------- ----------- 44,633 14,752 Deferred income taxes 2,003 2,003 Other 1,332 357 ----------- ----------- Total assets $250,908 $145,798 =========== ===========
3 BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (continued) (In Thousands of Dollars)
SEPTEMBER 27, DECEMBER 28, 1997 1996 -------------- -------------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 18,456 $ 12,877 Accrued expenses and other liabilities 13,325 4,676 Accrued interest 9,732 3,286 Employee compensation and payroll taxes 7,848 5,230 Income taxes 2,141 117 Current portion of long-term debt 5,113 738 ----------- ----------- Total current liabilities 54,615 26,924 Long-term debt, less current portion 294,623 215,308 Accrued dividends on preferred stock 2,873 1,116 Other deferred liabilities 716 - ----------- ----------- Total liabilities 352,827 243,348 Stockholders' equity (deficit): Class A Preferred stock; 800,000 shares authorized; 600,000 shares issued and outstanding (net of discount of $3,137 and $3,355) 11,435 11,216 Class B Preferred stock; 200,000 shares authorized, issued and outstanding 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; 145,001 shares issued and outstanding 1 1 Nonvoting; 500,000 shares authorized; 57,788 shares issued and outstanding 1 1 Class C Common Stock; $.01 par value: Nonvoting; 500,000 shares authorized; 16,981 shares issued and outstanding - - Treasury stock: 239 shares (22) (22) Additional paid-in capital 50,249 51,681 Warrants 3,511 3,511 Retained earnings (deficit) (172,098) (163,942) ----------- ----------- Total stockholders' equity (deficit) (101,919) (97,550) ----------- ----------- Total liabilities and stockholders' equity (deficit) $ 250,908 $ 145,798 =========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 4 BPC Holding Corporation and Subsidiaries Consolidated Statements of Operations (In Thousands of Dollars)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ---------------------------------------------------------------------------- SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28, 1997 1996 1997 1996 ---------------------------------------------------------------------------- (UNAUDITED) (UNAUDITED) Net sales $58,780 $39,794 $164,715 $113,666 Cost of goods sold 46,887 29,377 129,054 81,848 ----------------------------------------------------------------------------- Gross margin 11,893 10,417 35,661 31,818 Operating expenses: Selling 2,955 1,775 8,048 5,184 General and administrative 2,889 2,750 8,613 11,915 Research and development 333 219 935 612 Amortization of intangibles 505 177 1,129 382 Other 1,042 39 2,783 551 ----------------------------------------------------------------------------- Operating income 4,169 5,457 14,153 13,174 Other income and expense: Loss (gain)on disposal of property and equipment (1) - 89 (23) ----------------------------------------------------------------------------- Income before interest and income taxes 4,170 5,457 14,064 13,197 Interest: Expense (8,117) (6,941) (23,667) (14,420) Income 443 561 1,598 728 ----------------------------------------------------------------------------- Loss before income taxes (3,504) (923) (8,005) (495) Income tax expense (benefit) 58 (167) 151 42 ----------------------------------------------------------------------------- Net loss (3,562) (756) (8,156) (537) Preferred stock dividends (710) (593) (1,757) (593) ----------------------------------------------------------------------------- Net loss attributable to common shareholders $ (4,272) $ (1,349) $ (9,913) $ (1,130) =============================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 BPC Holding Corporation and Subsidiaries Consolidated Statement of Changes in Stockholders' Equity (Deficit) (In Thousands of Dollars) (Unaudited)
COMMON STOCK ISSUED PREFERRED STOCK ADDITIONAL RETAINED --------------------------- ----------------- TREASURY PAID-IN EARNINGS CLASS A CLASS B CLASS C CLASS A CLASS B STOCK CAPITAL WARRANTS (DEFICIT) TOTAL ----------------------------------------------------------------------------------------------------- Bal at Dec. 28, 1996 $ 4 $ 2 $ - $11,216 $ - $ (22) $51,681 $ 3,511 $(163,942) $ (97,550) Net loss - - - - - - - - (8,156) (8,156) Accrued dividends on preferred stock - - - - - - (1,757) - - (1,757) Amortization of preferred stock discount - - - 219 - - - - - 219 Common stock issued - - - - - 325 - - 325 Preferred stock issued - - - - 5,000 - - - - 5,000 ------------------------------------------------------------------------------------------------------- Bal at Sept. 27, 1997 $ 4 $ 2 $ - $16,435 $ 5,000 $ (22) $ 50,249 $ 3,511 $(172,098) $(101,919) =======================================================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 6 BPC HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars)
THIRTY-NINE WEEKS ENDED ------------------------------------------------ SEPTEMBER 27, 1997 SEPTEMBER 28, 1996 ------------------------------------------------ (UNAUDITED) OPERATING ACTIVITIES Net loss $ (8,156) $ (537) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 12,622 8,223 Non-cash interest expense 1,139 846 Write off of financing fees 390 - Non-cash compensation - 358 Gain (loss) on sale of property and equipment 89 (23) Deferred income taxes (20) 18 Changes in operating assets and liabilities: Accounts receivable, net (8,724) (4,869) Inventories 2,883 (2,529) Prepaid expenses and other receivables (83) (64) Accounts payable and accrued expenses 1,557 8,644 Other assets 209 (5) ------------ ------------ Net cash provided by operating activities 1,906 10,062 INVESTING ACTIVITIES Additions to property and equipment (8,795) (9,614) Proceeds from disposal of property and equipment 1,092 43 Purchase of PackerWare Corporation (28,190) - Purchase of Container Industries, Inc. (2,879) - Purchase of Virginia Design Packaging Corp. (11,129) - Purchase of Venture Packaging, Inc. (38,675) - Purchase of the Alpha drink cup product line - (790) ------------ ------------ Net cash used for investing activities (88,576) (10,361) FINANCING ACTIVITIES Proceeds from term loan borrowings 60,280 - Proceeds from borrowings on revolving line of credit 19,016 - Payments on long-term borrowings (2,815) (500) Payment of refinancing fees (1,971) - Payment of bond consent fee (790) - Payment on capital lease (176) (161) Exercise of management stock options - 1,130 Proceeds from senior secured notes - 105,000 Proceeds from issuance of common stock 324 52,797 Proceeds from issuance of preferred stock 6,072 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) Interest applied to assets held in trust 5,052 (560) ------------ ------------ Net cash provided by financing activities 78,920 1,588 ------------ ------------ Net increase (decrease) in cash and cash equivalents (7,750) 1,289 Cash and cash equivalents at beginning of period 10,192 8,035 ------------ ------------ Cash and cash equivalents at end of period $ 2,442 $ 9,324 ============ ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 7 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 BPC Holding Corporation ("Holding") and its wholly- owned subsidiary, Berry Plastics Corporation ("Berry"), and its wholly-owned subsidiaries: Venture Packaging, Inc., Venture Packaging Midwest, Inc., Venture Packaging Southeast, Inc., PackerWare Corporation, Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, Berry Plastics Design Corporation, and AeroCon, Inc. 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 December 28, 1996 and information included in Holding'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 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 $7.7 million, and $0.4 million was held in cash. 8 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. 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 is payable in cash semi-annually in arrears on June 15 and December 15 of each year. 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 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 January 17, 1997, Berry acquired substantially all of the assets and assumed certain liabilities of Container Industries, Inc. ("Container Industries") of Pacoima, California for $2.9 million. The purchase was funded out of operating funds. The operations of Container Industries are included in Berry's operations from the acquisition date using the purchase method of accounting. On January 21, 1997, Berry acquired the outstanding common stock of PackerWare Corporation ("PackerWare"), a Kansas corporation, for aggregate consideration of approximately $28.2 million and merged PackerWare with a newly-formed, wholly-owned subsidiary of Berry (with PackerWare being the surviving corporation). The purchase was primarily financed through the New Credit Facility (see Note 5). The operations of PackerWare are included in Berry's operations from the acquisition date using the purchase method of accounting. On May 13, 1997, Berry Plastics Design Corporation, a newly-formed wholly- owned subsidiary of Berry, acquired substantially all of the assets and assumed certain liabilities of Virginia Design Packaging Corp. ("Virginia Design") for approximately $11.1 million. The purchase was financed through the New Credit Facility (see Note 5). The operations of Berry Plastics Design Corporation are included in Berry's operations from the acquisition date using the purchase method of accounting. On August 29, 1997, Berry acquired the outstanding common stock of Venture Packaging, Inc. ("Venture Packaging"), for aggregate consideration of $43.6 million and merged Venture Packaging with a newly formed, wholly-owned subsidiary of Berry (with Venture Packaging being the surviving corporation). The purchase was primarily financed through the New Credit Facility (see Note 5). The operations of Venture Packaging are included in Berry's operations from the acquisition date using the purchase method of accounting. In addition, preferred stock and warrants were issued to certain shareholders of Venture Packaging (see Note 7). The pro forma results listed below are unaudited and reflect purchase accounting adjustments assuming the Container Industries, PackerWare, Virginia Design and Venture Packaging acquisitions occurred on December 31, 1995.
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ---------------------------------------------------------------------------- SEPTEMBER 27, SEPTEMBER 26, SEPTEMBER 27, SEPTEMBER 26, 1997 1996 1997 1996 --------------- ----------------- --------------- --------------- (In thousands) Net sales $ 66,110 $ 66,304 $ 199,294 $ 193,196 Loss before income taxes (4,268) (2,630) (11,431) (5,613) Net loss (4,326) (2,663) (11,582) (5,755)
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 effect. 5. REFINANCING OF REVOLVING CREDIT FACILITY Concurrent with the acquisition of PackerWare (see Note 4), Berry entered into a financing and security agreement with NationsBank, N.A. for a senior secured line of credit in an aggregate principal amount of $60.0 million (the "New Credit Facility"). As a result of the acquisition of assets of Virginia Design and the acquisition of Venture Packaging, the New Credit Facility was amended and increased to $128.2 million. The indebtedness under the New Credit Facility is guaranteed by Holding and Berry's subsidiaries. The New Credit Facility replaced the facility previously provided by Fleet Capital Corporation. The New Credit Facility, including the financing for Virginia Design and Venture Packaging, provides Berry with a $50.0 million revolving line of credit, subject to a borrowing base formula, $58.3 million in term loan facilities and a $18.9 million standby letter of credit to support Berry's and its subsidiaries' obligations under the Nevada and Iowa Industrial Revenue Bonds. Berry borrowed all amounts available under the term loans and the remaining under the revolving line of credit to finance the PackerWare, Virginia Design and Venture Packaging acquisitions. The New Credit Facility matures January 21, 2002 unless previously terminated by Berry or by the lenders upon an Event of Default as defined in the New Credit Facility. Interest on borrowings on the New Credit Facility will be based on the lender's base rate plus 1.0% or LIBOR plus 2.0%, at Berry's option. 6. LONG-TERM DEBT Long-term debt consists of the following:
SEPTEMBER 27, DECEMBER 28, 1997 1996 ------------------------------------ (In thousands) Holding 12.50% Senior Secured Notes $105,000 $105,000 Berry 12.25% Senior Subordinated Notes 100,000 100,000 Term loans 58,300 - Revolving line of credit 19,016 - Nevada Industrial Revenue Bonds 5,000 5,500 Iowa Industrial Revenue Bonds 5,400 5,400 South Carolina Industrial Development Bonds 6,985 - Capital lease obligation 608 785 Debt discount (573) (639) ------------ ----------- 299,736 216,046 Less current portion of long-term debt 5,113 738 ------------ ----------- $294,623 $215,308 ============ ===========
The current portion of long-term debt is limited to $3.7 million of quarterly installments on the term loans, a $1.2 million repayment of the industrial bonds and the monthly principal payments related to a capital lease obligation. Berry also maintains the $50.0 million revolving line of credit with NationsBank, N.A. (see Note 5). Based on the borrowing formula as of September 27, 1997, Berry had approximately $16.7 million of additional available credit (excluding the borrowing capacity available due to Venture Packaging) under the NationsBank, N.A. credit line. 7. CHANGES IN OWNERS EQUITY On August 29, 1997, Holding authorized the creation of 200,000 shares of Series B Cumulative Preferred Stock. In conjunction the Venture Packaging acquisition, these shares were issued to certain selling shareholders of Venture Packaging. The Preferred Stock has a stated value of $25 per share, and dividends accrue at a rate of 14.75% per annum and will accumulate until declared and paid. The Preferred Stock ranks junior to the Series A Preferred Stock and prior to all other capital stock of Holding. In addition, Warrants to purchase 9,924 shares of Class B Non-Voting Common Stock at $108 per share were issued to the same selling shareholders of Venture Packaging. 8. 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. On September 3, 1997, the United States Court of Appeals for the Federal Circuit overturned the lower court's order that the patent was not valid. 9 9. BERRY PLASTICS CORPORATION SUMMARY FINANCIAL INFORMATION The following summarizes financial information of Holding's wholly-owned subsidiary, Berry Plastics Corporation, and its subsidiaries.
SEPTEMBER 27, DECEMBER 28, 1997 1996 ---------------- ---------------- (In thousands) BALANCE SHEETS Current assets $ 67,682 $ 42,445 Property and equipment - net of accumulated depreciation 109,420 55,664 Other noncurrent assets 43,268 12,046 ------------ ------------ Total assets $ 220,370 $ 110,155 ============ ============ Current liabilities $ 58,295 $ 26,220 Noncurrent liabilities 190,340 113,112 Stockholders' equity (deficit) (28,265) (29,177) ------------ ------------ Total liabilities and stockholders' equity (deficit) $ 220,370 $ 110,155 ============ ============
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ---------------------------------- ------------------------------------- SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28, 1997 1996 1997 1996 --------------- -------------- ------------------ -------------- (In thousands) (In thousands) STATEMENTS OF OPERATIONS Net sales $ 58,780 $ 39,794 $ 164,715 $ 113,666 Cost of goods sold 46,887 29,377 129,054 81,848 Operating income 4,242 5,576 14,372 16,956 Income (loss) before income taxes (399) 2,102 1,014 6,067
10 Item 2. BPC Holding Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations 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. RESULTS OF OPERATIONS 13 WEEKS ENDED SEPTEMBER 27, 1997 (THE "QUARTER") COMPARED TO 13 WEEKS ENDED SEPTEMBER 28, 1996 (THE "PRIOR QUARTER") NET SALES. Net sales increased $19.0 million, or 48%, to $58.8 million for the Quarter from $39.8 million for the Prior Quarter. There was no significant change in net selling prices from the Prior Quarter. The increase in net sales was attributed to a combination of the addition of PackerWare, Virginia Design, and Venture Packaging net sales of an aggregate of $11.8 million, lower overcap sales of $1.5 million, higher drink cup sales of $1.7 million (excluding PackerWare) and higher container sales of $5.7 million. Sales of custom products were $1.3 million higher than the Prior Quarter. GROSS MARGIN. Gross margin increased by $1.5 million to $11.9 million for the Quarter from $10.4 million for the Prior Quarter. This increase of 14% included the combined impact of the PackerWare, Virginia Design and Venture Packaging sales volume. Gross margin as a percent of sales decreased to 20.2% of net sales for the Quarter from 26.1% of net sales in the Prior Quarter mainly due to the addition of lower margin business from PackerWare, Virginia Design and Venture Packaging and higher sales of lower margin products compared to sales of similar products in the Prior Quarter. OPERATING EXPENSES. Selling expenses increased by $1.2 million to $3.0 million for the Quarter from $1.8 million for the Prior Quarter principally as a result of the acquisitions of PackerWare, Venture Packaging and Virginia Design and increased product development and marketing expenses. General and administrative expenses of $2.9 million for the Quarter were slightly higher than the $2.8 million for the Prior Quarter. Other operating expenses of $1.0 million include business transition expenses associated with the acquisitions mentioned above. INTEREST EXPENSE. Interest expense increased $1.2 million to $8.1 million for the Quarter compared to $6.9 million for the Prior Quarter due to increased borrowings related to the acquisitions of PackerWare, Venture Packaging and Virginia Design under the New Credit Facility. INCOME TAX. For the Quarter, the Company recorded state income tax expense of $0.1 million compared to an income tax benefit of $0.2 million for the Prior Quarter. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. NET LOSS AND EBITDA. Net loss for the Quarter of $3.6 million increased $2.8 million from net loss 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, write-off of financing fees, one-time transition expenses related to acquisitions by the Company, the shutdown of the Winchester, Virginia facility and expenses related to the Transaction, was $10.0 million for the Quarter compared to $8.8 million for the Prior Quarter. 39 Weeks Ended September 27, 1997 ("YTD") Compared to 39 Weeks Ended September 28, 1996 ("prior YTD") NET SALES. Net sales increased $51.0 million, or 45%, to $164.7 million YTD from $113.7 million for the prior YTD, notwithstanding an approximate 2% increase in net selling price due mainly to the impact of cyclical adjustments in the price of plastic. Other increases in net sales were attributed to a combination of the addition of PackerWare, Virginia Design and Venture Packaging net sales of an aggregate of $36.8 million, higher drink cup sales of $4.5 million (excluding PackerWare drink cup net sales), higher container sales of $8.2 million and higher custom molded products of $1.5 million. GROSS MARGIN. Gross margin increased by $3.9 million to $35.7 million YTD from $31.8 million for the prior YTD. This increase in gross margin included $5.1 million from the PackerWare, Virginia Design and Venture Packaging acquisitions, offset by a decrease of approximately $2.0 million resulting from the cyclical impact of higher raw material costs compared to the prior YTD and suppressed market prices in both the container and drink cup product lines. Gross margin as a percent of sales on sales resulting from the PackerWare, Virginia Design and Venture Packaging acquisitions of 13.9% YTD was substantially lower than gross margin as a percent of sales of 23.9% on non- acquisition related sales. OPERATING EXPENSES. Selling expenses increased by $2.8 million to $8.0 million YTD from $5.2 million for the prior YTD including $2.1 million as a result of the acquisitions of PackerWare, Venture Packaging and Virginia Design and $0.3 million due to increased product development and marketing expenses. General and administrative expenses decreased by $3.3 million to $8.6 million YTD from $11.9 million for the prior YTD. The decrease was primarily due to prior year expenses relating to the Transaction of $3.1 million, including $2.5 million of deferred payments to certain holders of stock options (see Note 2), and a decrease in patent and other litigation expenses of $0.5 million. Other YTD expense of $2.8 million included $0.8 million of costs associated with the shutdown of the Winchester, Virginia and Reno, Nevada facilities, $0.8 million associated with the transition of the PackerWare business, and $1.2 million resulting from the transition of both the Container Industries and Virginia Design acquisitions. Prior YTD other expenses of $0.6 million included transition costs associated with the Tri-Plas and Sterling acquisitions. INTEREST EXPENSE. Interest expense increased $9.3 million to $23.7 million YTD compared to $14.4 million for the prior YTD due to the issuance of the Senior Secured Notes in June 1996 (see Note 3) and borrowings under the New Credit Facility (see Note 5). INCOME TAX. The Company recorded income tax expense of less than $0.2 million YTD. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. NET LOSS AND EBITDA. Net loss YTD of $8.2 million increased $7.7 million from net loss of $0.5 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 acquisitions made by the Company, the shutdown of the Winchester, Virginia facility and expenses related to the Transaction, was $29.5 million YTD compared to $25.5 million for the prior YTD. LIQUIDITY AND SOURCES OF CAPITAL Net cash provided by operating activities was $1.9 million through the thirty- nine week period ended September 27, 1997, a decrease of $8.2 million from the comparable prior year period. This change includes a reduction in accounts payable of approximately $3.5 million resulting from a discounting program with a key supplier and other working capital changes (defined as accounts receivable, inventories, prepaid expenses, other receivables, accounts payable and accrued expenses) of approximately $2.0 million associated with the significant increase in the Company's net sales. Capital spending of $8.8 million included $5.1 million for molds and molding machines, $0.4 million for printing-related equipment, and $3.3 million for building and accessory equipment. Additionally, Berry purchased PackerWare, Venture Packaging, Container Industries and Virginia Design (see Note 4). Berry currently intends to finance capital spending through cash flow from operations, existing cash balances, and cash available under the NationsBank revolving credit agreement. At September 27, 1997, the Company's cash balance was $2.4 million, and Berry had unused borrowing capacity (excluding the borrowing capacity available due to Venture Packaging) under the New Credit Facility's borrowing base of approximately $16.7 million. 12 PART II. OTHER INFORMATION ITEM 2 (C). CHANGES IN SECURITIES AND USE OF PROCEEDS On August 1, 1997 Holding issued 3,009 shares of its Class B Non- Voting Common Stock, $.01 par value, to 19 members of management of Berry at $108.00 per share, for aggregate proceeds of $324,972 (the "Employee Stock"). There was no underwriter for the securities. The securities were privately issued 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. On August 29, 1997, in connection with the acquisition by Berry of Venture Packaging, Inc. and its subsidiaries, Holding issued to certain of the selling shareholders of Venture Packaging as partial consideration for the sale of stock of Venture Packaging an aggregate of (i) 200,000 shares of Series B Cumulative Preferred Stock, $.01 par value, of Holding (the "Preferred Stock"), and (ii) warrants to purchase 9,924 shares of Holding's Class B Non-Voting Common Stock at an exercise price of $108.00 per share (the "Warrants"). The Preferred Stock is not convertible into common stock of Holding, and it has an aggregate liquidation preference of $5,000,000. The Preferred Stock and the Warrants were each privately issued pursuant to the exemption from registration under Rule 505, as there were only two offerees, no general solicitation was made, and the issuer complied with the provisions of Rule 502. The Employee Stock was issued for cash, and the Preferred Stock and Warrants were issued in consideration for the stock of the target company. The Employee Stock was issued to provide an incentive for management employees, and the Preferred Stock and Warrants related to the acquisition of a company. As stated above, the Preferred Stock is not convertible into common stock. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: A report on Form 8-K was filed by Berry on September 15, 1997. Under Item 2 on Form 8-K, Acquisition or Disposition of Assets, Berry reported the consummation of the Venture Packaging acquisition. No financial statements were included in the Form 8-K. 13 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, 1997 /S/ JAMES M. KRATOCHVIL James M. Kratochvil Vice President, Chief Financial Officer, Treasurer and Secretary of Berry Plastics Corporation and its Subsidiaries (Principal Financial and Accounting Officer) EX-27 2
5 1000 9-MOS DEC-27-1997 SEP-27-1997 2442 0 34770 1193 29341 68384 170833 61413 250908 54615 222385 0 16435 6 (118360) 250908 164715 0 129054 150562 0 255 23667 (8005) 151 (8156) 0 0 0 (8156) 0 0
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