-----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, BE8zcz1ccQ4atBjsrSlF1MRio5V0LbqNY30cY9eMw6k5sqrv4QtgPvGEk7NZi6mr mJxVs9f5agMNMvtsdjBWcg== 0000919463-98-000006.txt : 19980812 0000919463-98-000006.hdr.sgml : 19980812 ACCESSION NUMBER: 0000919463-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980627 FILED AS OF DATE: 19980811 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: 98682552 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 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 June 27, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___________________to__________________ Commission File 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) (IRS 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 JUNE 28, 1998 - ----------------------------------------------------------------------------- Class A - Voting - $.01 Par Value 91,000 Class A - Nonvoting - $.01 Par Value 259,000 Class B - Voting - $.01 Par Value 144,936 Class B - Nonvoting - $.01 Par Value 57,387 Class C - Nonvoting - $.01 Par Value 16,960 1 BPC HOLDING CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX FOR QUARTERLY PERIOD ENDED JUNE 27, 1998 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 2 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (In Thousands of Dollars)
JUNE 27, DECEMBER 27, 1998 1997 -------------- -------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 2,680 $ 2,688 Accounts receivable (less allowance for doubtful accounts of $993 at June 27, 1998 and $1,038 at December 27, 1997) 33,951 28,385 Inventories: Finished goods 20,639 22,029 Raw materials and supplies 6,869 7,429 -------------- -------------- 27,508 29,458 Prepaid expenses and other receivables 2,110 1,834 Income taxes recoverable 355 1,167 -------------- -------------- Total current assets 66,604 63,532 Assets held in trust 13,345 19,738 Property and equipment: Land 6,157 5,811 Buildings and improvements 34,449 33,891 Machinery, equipment and tooling 128,912 122,991 Automobiles and trucks 1,272 1,241 Construction in progress 8,545 10,357 -------------- -------------- 179,335 174,291 Less accumulated depreciation 74,075 66,073 -------------- -------------- 105,260 108,218 Intangible assets: Deferred financing and origination fees, net 10,056 10,849 Covenants not to compete, net 3,867 3,940 Excess of cost over net assets acquired, net 29,080 30,303 Deferred acquisition costs 77 13 -------------- -------------- 43,080 45,105 Deferred income taxes 2,049 2,049 Other 833 802 -------------- -------------- Total assets $231,171 $239,444 ============== ==============
3 BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (continued) (In Thousands of Dollars)
JUNE 27, DECEMBER 27, 1998 1997 -------------- -------------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 15,746 $ 16,732 Accrued expenses and other liabilities 7,536 7,162 Accrued interest 3,525 3,612 Employee compensation and payroll taxes 8,569 7,489 Income taxes 152 55 Current portion of long-term debt 12,313 7,619 -------------- -------------- Total current liabilities 47,841 42,669 Long-term debt, less current portion 287,542 298,716 Accrued dividends on preferred stock 5,457 3,674 Other liabilities 2,894 3,360 -------------- -------------- 343,734 348,419 Stockholders' equity (deficit): Class A Preferred Stock; 800,000 shares authorized; 600,000 shares issued and outstanding (net of discount of $2,917 at June 11,655 11,509 27, 1998 and $3,062 at December 27, 1997) Class 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; 144,936 shares issued and outstanding 1 1 Nonvoting; 500,000 shares authorized; 57,387 shares issued and outstanding 1 1 Class C Common Stock; $.01 par value: Nonvoting; 500,000 shares authorized; 16,960 shares issued and outstanding - - Treasury stock: 726 shares (81) (22) Additional paid-in capital 47,445 49,374 Warrants 3,511 3,511 Retained earnings (deficit) (180,099) (178,353) -------------- -------------- Total stockholders' equity (deficit) (112,563) (108,975) -------------- -------------- Total liabilities and stockholders' equity (deficit) $ 231,171 $ 239,444 ============== ==============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 4 BPC Holding Corporation and Subsidiaries Consolidated Statements of Operations (In Thousands of Dollars)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED ---------------------------------------------------------------------------- JUNE 27, JUNE 28, JUNE 27, JUNE 28, 1998 1997 1998 1997 ---------------------------------------------------------------------------- (UNAUDITED) (UNAUDITED) Net sales $69,586 $56,929 $136,317 $105,936 Cost of goods sold 50,768 43,771 100,016 82,167 ---------------------------------------------------------------------------- Gross margin 18,818 13,158 36,301 23,769 Operating expenses: Selling 3,487 2,737 7,112 5,094 General and administrative 4,400 3,120 8,799 5,725 Research and development 347 366 743 602 Amortization of intangibles 828 346 1,708 624 Other 1,230 910 2,363 1,741 ---------------------------------------------------------------------------- Operating income 8,526 5,679 15,576 9,983 Other income and expense: Loss on disposal of property and equipment 297 90 430 90 ---------------------------------------------------------------------------- Income before interest and income 8,229 5,589 15,146 9,893 taxes Interest: Expense (8,776) (7,742) (17,441) (15,550) Income 337 709 575 1,156 ---------------------------------------------------------------------------- Loss before income taxes (210) (1,444) (1,720) (4,501) Income tax expense 13 564 26 92 ---------------------------------------------------------------------------- Net loss (223) (2,008) (1,746) (4,593) Preferred stock dividends (869) (524) (1,783) (1,048) ---------------------------------------------------------------------------- Net loss attributable to common stockholders $ (1,092) $ (2,532) $ (3,529) $ (5,641) ============================================================================
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 PREFERRED STOCK ----------------- -------------- ADDITIONAL RETAINED CLASS CLASS CLASS CLASS CLASS TREASURY PAID-IN EARNINGS A B C A B STOCK CAPITAL WARRANTS (DEFICIT) TOTAL ----- ----- ----- ------- ------ ------- ---------- -------- ---------- ---------- Balance at December 27, 1997 $ 4 $ 2 $ - $11,509 $5,000 $ (22) $ 49,374 $ 3,511 $(178,353) $(108,975) Net loss - - - - - - - - (1,746) (1,746) Accrued dividends on preferred stock - - - - - - (1,783) - - (1,783) Purchase treasury stock from management - - - - - (59) - - - (59) Amortization of preferred stock discount - - - 146 - - (146) - - - Balance at June 27, 1998 $ 4 $ 2 $ - $11,655 $5,000 $ (81) $ 47,445 $ 3,511 $(180,099) $(112,563)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 6 7 BPC Holding Corporation and Subsidiaries Consolidated Statements of Cash Flows (In Thousands of Dollars)
TWENTY-SIX WEEKS ENDED ------------------------------------------------ JUNE 27, JUNE 28, 1998 1997 ------------------------------------------------ (UNAUDITED) OPERATING ACTIVITIES Net loss $ (1,746) $ (4,593) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 10,075 7,249 Non-cash interest expense 884 739 Amortization 1,708 624 Interest applied to assets held in trust 6,393 5,459 Loss on sale of property and equipment 430 90 Deferred income taxes - (20) Changes in operating assets and liabilities: Accounts receivable, net (5,565) (8,833) Inventories 1,950 2,492 Prepaid expenses and other receivables 534 (96) Accounts payable and accrued expenses (114) (1,368) Other assets (169) 554 ------------ ------------ Net cash provided by operating activities 14,380 2,297 INVESTING ACTIVITIES Additions to property and equipment (7,853) (4,801) Proceeds from disposal of property and equipment 95 1,060 Acquisitions of businesses - (44,767) ------------ ------------ Net cash used for investing activities (7,759) (48,508) FINANCING ACTIVITIES Proceeds from borrowings - 40,807 Payments on long-term borrowings (6,397) (1,250) Payments on capital lease (127) (116) Payment of refinancing fees (46) (1,184) Payment of bond consent fee - (737) Purchase of stock from management (59) - ------------ ------------ Net cash provided by (used for) financing activities (6,629) 37,520 ------------ ------------ Net decrease in cash and cash equivalents (8) (8,691) Cash and cash equivalents at beginning of period 2,688 10,192 ------------ ------------ Cash and cash equivalents at end of period $ 2,680 $ 1,501 ============ ============
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"), Venture Packaging Midwest, Inc., Venture Packaging Southeast, Inc., PackerWare Corporation, Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, Berry Plastics Design Corporation ("Berry Design"), 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 27, 1997. Certain amounts on the 1997 financial statements have been reclassified to conform with the 1998 presentation. 2. ACQUISITIONS On January 17, 1997, Berry acquired certain 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 the Berry's operations since the acquisition date using the purchase method of accounting. On January 21, 1997, Berry acquired the outstanding stock of PackerWare Corporation, a Kansas corporation, for aggregate consideration of approximately $28.1 million by way of a merger of PackerWare with a newly- formed, wholly-owned subsidiary of Berry (with PackerWare being the surviving corporation). The purchase was primarily financed through the Credit Facility (see Note 3). The operations of PackerWare are included in Berry's operations since the acquisition date using the purchase method of accounting. On May 13, 1997, Berry Design, 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 Credit Facility (see Note 3). The operations of Berry Design are included in Berry's operations since the acquisition date using the purchase method of accounting. 8 2. ACQUISITIONS (CONTINUED) On August 29, 1997, Berry acquired the outstanding common stock of Venture Packaging for aggregate consideration of $43.7 million by way of a merger of Venture Packaging with a newly formed subsidiary of Berry (with Venture Packaging being the surviving corporation). The purchase was primarily financed through the Credit Facility (see Note 3). Additionally, preferred stock and warrants were issued to certain selling shareholders of Venture Packaging. The operations of Venture Packaging 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 Container Industries, PackerWare, Virginia Design and Venture Packaging acquisitions occurred on December 29, 1996.
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 28, 1997 JUNE 28, 1997 --------------------------------------------------------- (In Thousands) Net sales $ 67,117 $ 133,184 Loss before income taxes (2,797) (7,164) Net loss (3,361) (7,256)
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. 3. LONG-TERM DEBT Long-term debt consists of the following:
JUNE 27, DECEMBER 27, 1998 1997 ---------------------------------------------- (In Thousands) Holding 12.50% Senior Secured Notes $105,000 $105,000 Berry 12.25% Senior Subordinated Notes 100,000 100,000 Term loans 56,206 58,300 Revolving line of credit 22,187 25,654 Nevada Industrial Revenue Bonds 4,500 5,000 Iowa Industrial Revenue Bonds 5,400 5,400 South Carolina Industrial Development Bonds 6,650 6,985 Capital lease obligation 420 547 Debt discount (508) (551) -------------- -------------- 299,855 306,335 Less current portion of long-term debt 12,313 7,619 -------------- -------------- $287,542 $298,716 ============== ==============
The current portion of long-term debt at June 27, 1998 consists of $10.6 million of quarterly installments on the term loans, $1.5 million of repayments on the industrial bonds and the monthly principal payments related to a capital lease obligation. Concurrent with the PackerWare acquisition, Berry entered into a financing and security agreement with NationsBank, N.A. (the "Credit Agreement") for a senior secured line of credit in an aggregate principal amount of $60.0 million (the "Credit Facility"). As a result of the acquisition of assets of Virginia Design and the acquisition of Venture Packaging, the Credit Facility was amended and increased to $127.2 million. The indebtedness under the Credit Facility is guaranteed by Holding and Berry's subsidiaries. The Credit Facility provided the Company with a $50.0 million revolving line of credit, subject to a borrowing base formula, a $58.3 million term loan facility and an $18.9 million standby letter of credit facility to support Berry's and its subsidiaries' obligations under the Nevada and Iowa Industrial Revenue Bonds and the South Carolina Industrial Development Bonds. Berry borrowed all amounts available under the term loan facility to finance the PackerWare, Virginia Design and Venture Packaging acquisitions. Based on the borrowing formula as of June 27, 1998, Berry had approximately $19.4 million of additional available credit under the revolving line of credit. 3. LONG-TERM DEBT (CONTINUED) The Credit Facility matures on January 21, 2002 unless previously terminated by Berry or by the lenders upon an Event of Default as defined in the Credit Agreement. The term loan facility requires periodic quarterly payments, varying in amount, through the maturity of the facility. Interest on borrowings on the Credit Facility will be based on the lender's base rate plus .5% or LIBOR plus 2.0%, at Berry's option. 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 indebtedness, and (iii) limitations on capital expenditures. 4. BERRY PLASTICS CORPORATION SUMMARY FINANCIAL INFORMATION The following summarizes financial information of Holding's wholly-owned subsidiary, Berry Plastics Corporation, and its subsidiaries.
JUNE 27, DECEMBER 27, 1998 1997 -------------- -------------- CONSOLIDATED BALANCE SHEETS Current assets $ 65,930 $ 62,824 Property and equipment - net of accumulated depreciation 105,260 108,218 Other noncurrent assets 42,466 44,480 Current liabilities 47,386 42,158 Noncurrent liabilities 193,528 205,172 Equity (deficit) (27,259) (31,808) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED ------------------------------------------------------------------------ JUNE 27, JUNE 28, JUNE 27, JUNE 28, 1998 1997 1998 1997 STATEMENT OF OPERATIONS Net sales $ 69,586 $ 56,929 $ 136,317 $ 105,936 Cost of goods sold 50,768 43,771 100,016 82,167 Income before income taxes 2,888 1,380 4,571 1,413 Net income 2,875 1,439 4,546 1,316
9 5. RECENT ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board issued Statement No. 131, "Disclosure About Segments of an Enterprise and Related Information" (FAS 131). FAS 131 establishes requirements for reporting information about operating segments in annual and interim reports and is effective for the Company in 1998, but need not be applied to interim financial statements in the initial year of application. FAS 131 may require a change in the Company's financial reporting; however, the extent of the change, if any, has not been determined. 6. SUBSEQUENT TRANSACTION On July 2, 1998, NIM Holdings Limited, a newly formed wholly-owned subsidiary of Berry and a company incorporated in England and Wales ("NIM Holdings"), acquired all of the outstanding capital stock of Norwich Injection Moulders Limited, a company incorporated in England and Wales ("NIM"), for aggregate consideration of approximately $14.0 million. The purchase was financed through an amendment to the Credit Facility to increase the amount of funds available thereunder. 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 JUNE 27, 1998 (THE "QUARTER") COMPARED TO 13 WEEKS ENDED JUNE 28, 1997 (THE "PRIOR QUARTER") NET SALES. Net sales increased $12.7 million, or 22%, to $69.6 million for the Quarter from $56.9 million for the Prior Quarter with net selling prices relatively flat. The increase in net sales was primarily attributed to the addition of Venture Packaging with net sales of $10.5 million and increased non-Venture Packaging container net sales of $2.0 million. GROSS MARGIN. Gross margin increased by $5.6 million to $18.8 million for the Quarter from $13.2 million for the Prior Quarter. This increase of 43% includes the combined impact of added sales volume, productivity improvement initiatives, and the cyclical impact of lower raw material costs compared to the Prior Quarter. OPERATING EXPENSES. Selling expenses increased by $0.8 million to $3.5 million for the Quarter from $2.7 million for the Prior Quarter principally as a result of expanded sales coverage and increased product development and marketing expenses. General and administrative expenses increased from $3.1 million for the Prior Quarter to $4.4 million for the Quarter. The increase of $1.3 million is primarily attributable to increased patent litigation expenses and increased accrued employee profit sharing expense. During the Quarter, one-time transition expenses primarily related to the shutdown of the Anderson facility was $1.2 million. In the Prior Quarter, one-time transition expenses for the PackerWare, Container Industries, and Virginia Design acquisitions were $0.9 million. INTEREST EXPENSE. Interest expense increased $1.0 million to $8.7 million for the Quarter compared to $7.7 million for the Prior Quarter primarily due to additional borrowings under the Credit Facility (see Note 3) to support the 1997 acquisitions (see Note 2). INCOME TAX. For the Quarter, the Company's income tax expense was $0.1 million compared to an income tax expense of $0.6 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 $0.2 million represented a favorable change of $1.8 million from the net loss of $2.0 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, and one-time transition expenses, was $15.7 million for the Quarter compared to $10.7 million for the Prior Quarter. 26 Weeks Ended June 27, 1998 ("YTD") Compared to 26 Weeks Ended June 28, 1997 ("prior YTD") NET SALES. Net sales increased $30.4 million, or 29%, to $136.3 million for the YTD from $105.9 million for the prior YTD with an approximate 1% decrease in net selling prices due mainly to competitive market conditions. The increase in net sales can be primarily attributed to the addition of Venture Packaging with YTD net sales of $21.0 million and higher non-Venture Packaging container sales of $7.5 million. GROSS MARGIN. Gross margin increased by $12.5 million to $36.3 million for the YTD from $23.8 million for the prior YTD. This increase in gross margin can be attributed to the combined impact of sales volume, productivity improvement initiatives, and the cyclical impact of lower raw material costs. OPERATING EXPENSES. Selling expenses increased by $2.0 million to $7.1 million for the YTD from $5.1 million for the prior YTD principally as a result of expanded sales coverage related to the acquisition of Venture Packaging, increased product development and marketing expenses. General and administrative expenses increased by $3.1 million to $8.8 million YTD from $5.7 million for the prior YTD. The increase of $3.1 million is primarily attributable to increased patent litigation expenses and increased accrued employee profit sharing expense. YTD one-time transition expenses include $1.4 million related to the shutdown of the Reno and Anderson facilities and $1.0 million related to the 1997 acquisitions. One-time transition expenses for prior YTD were $1.4 million related to the PackerWare, Container Industries, and Virginia Design acquisitions and $0.3 million related to the Winchester plant consolidation. INTEREST EXPENSE. Interest expense increased $1.8 million to $17.4 million for the YTD compared to $15.6 million for the prior YTD primarily due to additional borrowings under the Credit Facility (see Note 3) to support the 1997 acquisitions (see Note 2). INCOME TAX. The Company's income tax expense was $0.1 million for the YTD compared to an income tax expense of $0.1 million in the prior YTD. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. 11 NET LOSS AND EBITDA. Net loss for the YTD of $1.7 million improved $2.9 million from a net loss of $4.6 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, write-off of financing fees, and one-time transition expenses, was $29.6 million YTD compared to $19.6 million for the prior YTD. LIQUIDITY AND SOURCES OF CAPITAL Net cash provided by operating activities was $14.4 million for the YTD, an increase of $12.1 million from the prior YTD. The increase is primarily the result of improved operating performance with income before depreciation and amortization increasing $6.8 million from prior YTD. Net working capital changes (defined as accounts receivable, inventories, prepaid expenses, other receivables, accounts payable and accrued expenses) also increased YTD cash $4.6 million from the prior YTD. YTD capital spending of $7.9 million included $4.9 million for molds and machines, and $3.0 million for building and accessory equipment. Berry currently intends to finance future capital spending through cash flow from operations, existing cash balances, and cash available under the Credit Facility's revolving line of credit. At June 27, 1998, the Company's cash balance was $2.7 million, and Berry had unused borrowing capacity under the Credit Facility's borrowing base of approximately $19.4 million. 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: None 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 August 11, 1998 /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary of Berry Plastics Corporation and its Subsidiaries (Principal Financial and Accounting Officer) 14 EX-27 2
5 1000 6-MOS JAN-02-1999 JUN-27-1998 2680 0 34944 993 27508 66604 179335 74075 231171 47841 299855 0 16655 6 (129224) 231171 136317 0 100016 120741 0 320 17441 (1720) 26 (1746) 0 0 0 (1746) 0 0
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