-----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, LTYGgSDLy6CWAWqPxHPUjw7ICYLlr4fY09wSMPO0oDGRrvVSvaEXP6YypcF9m+7a ylhg9BOQRMePgqkYK8T8sA== 0000919463-99-000008.txt : 19990810 0000919463-99-000008.hdr.sgml : 19990810 ACCESSION NUMBER: 0000919463-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990809 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: 99681381 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BPC HOLDING CORP CENTRAL INDEX KEY: 0000919465 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351814673 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-75706-01 FILM NUMBER: 99681382 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY IOWA CORP CENTRAL INDEX KEY: 0000919467 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 421382173 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-75706-02 FILM NUMBER: 99681383 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 BUSINESS PHONE: 8124242904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY TRI PLAS CORP CENTRAL INDEX KEY: 0001011391 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561949250 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-01 FILM NUMBER: 99681384 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST CITY: EVANSVILLE STATE: IN ZIP: 47710 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY STERLING CORP CENTRAL INDEX KEY: 0001075619 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 541749681 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-11 FILM NUMBER: 99681385 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACKERWARE CORP CENTRAL INDEX KEY: 0001075620 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 480759852 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-05 FILM NUMBER: 99681386 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PLASTICS DESIGN CORP CENTRAL INDEX KEY: 0001075621 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 621689708 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-07 FILM NUMBER: 99681387 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENTURE PACKAGING INC CENTRAL INDEX KEY: 0001075622 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 510368479 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-08 FILM NUMBER: 99681388 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENTURE PACKAGING MIDWEST INC CENTRAL INDEX KEY: 0001075623 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-09 FILM NUMBER: 99681389 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENTURE PACKAGING SOUTHEAST INC CENTRAL INDEX KEY: 0001075624 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-03 FILM NUMBER: 99681390 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIM HOLDINGS LTD CENTRAL INDEX KEY: 0001075625 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-04 FILM NUMBER: 99681391 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KNIGHT PLASTICS INC CENTRAL INDEX KEY: 0001075626 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 352056610 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-13 FILM NUMBER: 99681392 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROCON INC /DE/ CENTRAL INDEX KEY: 0001075629 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351948748 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-10 FILM NUMBER: 99681393 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORWICH INJECTION MOULDERS LTD CENTRAL INDEX KEY: 0001075630 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351948748 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-64599-02 FILM NUMBER: 99681394 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 1999 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___________________to__________________ Commission File Number 33-75706 BERRY PLASTICS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 35-1813706 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BPC HOLDING CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-1814673 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY IOWA CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 42-1382173 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY TRI-PLAS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 56-1949250 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY STERLING CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 54-1749681 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) AEROCON, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-1948748 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) PACKERWARE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Kansas 48-0759852 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) BERRY PLASTICS DESIGN CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 62-1689708 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) VENTURE PACKAGING, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 51-0368479 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) VENTURE PACKAGING MIDWEST, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Ohio 34-1809003 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) VENTURE PACKAGING SOUTHEAST, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) South Carolina 57-1029638 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) NIM HOLDINGS LIMITED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) England and Wales N/A (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) NORWICH INJECTION MOULDERS LIMITED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) England and Wales N/A (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) KNIGHT PLASTICS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-2056610 (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 101 OAKLEY STREET 47710 EVANSVILLE, INDIANA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE: (812) 424-2904 NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.[X] Yes [ ] No Indicate the number of shares outstanding of each of issuers' classes of common stock, as of the latest practicable date: As of August 2, 1999, the following shares of capital stock of BPC Holding Corporation were outstanding: 91,000 shares of Class A Voting Common Stock; 259,000 shares of Class A Nonvoting Common Stock; 144,546 shares of Class B Voting Common Stock; 57,169 shares of Class B Nonvoting Common Stock; and 16,833 shares of Class C Nonvoting Common Stock. As of August 2, 1999, there were outstanding 100 shares of the Common Stock, $.01 par value, of Berry Plastics Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Iowa Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Tri-Plas Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Sterling Corporation, 100 shares of the Common Stock, $.01 par value, of Aerocon, Inc., 100 shares of the Common Stock, $.01 par value, of PackerWare Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Plastics Design Corporation, 100 shares of the Common Stock, $.01 par value, of Venture Packaging, Inc., 100 shares of the Common Stock, $.01 par value, of Venture Packaging Midwest, Inc., 100 shares of the Common Stock, $.01 par value, of Venture Packaging Southeast, Inc., 4,000,000 Ordinary Shares of 1 par value, of NIM Holdings Limited, 5,850 Ordinary Shares of 1 par value, of Norwich Injection Moulders Limited, and 100 shares of the Common Stock, $.01 par value, of Knight Plastics, Inc. BPC HOLDING CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX FOR QUARTERLY PERIOD ENDED JULY 3, 1999 PAGE NO. Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets 5 Consolidated Statements of Operations 7 Consolidated Statements of Cash Flows 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 20 Item 6. Exhibits and Reports on Form 8-K 20 SIGNATURE 21 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements BPC Holding Corporation and Subsidiaries Consolidated Balance Sheets (In Thousands of Dollars)
JULY 3, JANUARY 2, 1999 1999 (UNAUDITED) Assets Current assets: Cash and cash equivalents $ 2,993 $ 2,318 Accounts receivable (less allowance for doubtful accounts of $1,507 at July 3, 1999 and $1,651 at 40,842 29,951 January 2, 1999) Inventories: Finished goods 23,967 23,146 Raw materials and supplies 8,347 8,556 ------- ------- 32,314 31,702 Prepaid expenses and other receivables 2,575 1,665 Income taxes recoverable 83 577 ------- ------- Total current assets 78,807 66,213 Assets held in trust 252 6,679 Property and equipment: Land 7,762 7,769 Buildings and improvements 39,047 38,960 Machinery, equipment and tooling 140,801 141,054 Automobiles and trucks 1,405 1,386 Construction in progress 21,766 11,780 ------- ------- 210,781 200,949 Less accumulated depreciation 90,510 80,944 ------- ------- 120,271 120,005 Intangible assets: Deferred financing and origination fees, net 9,765 10,327 Covenants not to compete, net 4,068 4,404 Excess of cost over net assets acquired, net 41,971 44,536 Deferred acquisition costs 146 20 ------- ------- 55,950 59,287 Deferred income taxes 2,758 2,758 Other 371 375 ------- ------- Total assets $ 258,409 $ 255,317 ======= =======
Consolidated Balance Sheets (continued) (In Thousands of Dollars)
JULY 3, JANUARY 2, 1999 1999 (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 20,664 $ 18,059 Accrued expenses and other liabilities 8,590 9,944 Accrued interest 3,795 4,166 Employee compensation and payroll taxes 12,156 8,953 Income taxes 1,534 941 Current portion of long-term debt 20,297 19,388 ------- ------- Total current liabilities 67,036 61,451 Long-term debt, less current portion 300,187 303,910 Accrued dividends on preferred stock 9,188 7,225 Deferred income taxes 472 497 Other liabilities 2,193 2,591 ------- ------- 379,076 375,674 Stockholders' equity (deficit): Series A Preferred Stock; 800,000 shares authorized; 600,000 shares issued and outstanding (net of discount of $2,624 at July 3, 1999 and 11,947 11,801 $2,770 at January 2, 1999) Series B Preferred Stock; 200,000 shares authorized, issued and outstanding 5,000 5,000 Class A Common Stock; $.01 par value: Voting; 500,000 shares authorized; 91,000 shares issued and outstanding 1 1 Nonvoting; 500,000 shares authorized; 259,000 shares issued and outstanding 3 3 Class B Common Stock; $.01 par value: Voting; 500,000 shares authorized; 145,058 shares issued and 144,546 shares outstanding 1 1 Nonvoting; 500,000 shares authorized;58,612 shares issued and 56,842 shares outstanding 1 1 Class C Common Stock; $.01 par value: Nonvoting; 500,000 shares authorized;17,000 shares issued and 16,833 shares outstanding - - Treasury stock: 512 shares Class B Voting Common Stock; 1,770 shares Class B Nonvoting Common Stock; and 167 shares Class C Nonvoting Common Stock (296) (280) Additional paid-in capital 43,502 45,611 Warrants 3,511 3,511 Retained earnings (deficit) (183,801) (185,923) Accumulated other comprehensive loss (536) (83) ------- ------- Total stockholders' equity (deficit) (120,667) (120,357) ------- ------- Total liabilities and stockholders'equity (deficit) $ 258,409 $ 255,317 ======= =======
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Consolidated Statements of Operations (In Thousands of Dollars)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JULY 3, JUNE 27, JULY 3, JUNE 27, 1999 1998 1999 1998 (UNAUDITED) (UNAUDITED) Net sales $82,392 $69,586 $159,852 $136,317 Cost of goods sold 58,259 50,768 112,782 100,016 ------- ------- ------- ------- Gross margin 24,133 18,818 47,070 36,301 Operating expenses: Selling 4,323 3,487 8,553 7,112 General and administrative 5,845 4,400 11,883 8,799 Research and development 633 347 1,175 743 Amortization of intangibles 1,275 828 2,550 1,708 Other 711 1,230 1,667 2,363 ------- ------- ------- ------- Operating income 11,346 8,526 21,242 15,576 Other income and expense: Loss on disposal of property and equipment 169 297 778 430 ------- ------- ------- ------- Income before interest and 11,177 8,229 20,464 15,146 income taxes Interest: Expense (8,736) (8,776) (18,022) (17,441) Income 62 337 162 575 ------- ------- ------- ------- Income(loss) before income taxes 2,503 (210) 2,604 (1,720) Income tax expense 289 13 482 26 ------- ------- ------- ------- Net income (loss) 2,214 (223) 2,122 (1,746) Preferred stock dividends (998) (869) (1,962) (1,783) Amortization of preferred stock discount (73) (73) (146) (146) ------- ------- ------- ------- Net income (loss) attributable to Common stockholders $ 1,143 $ (1,165) $ 14 $ (3,675) ======= ======= ======= =======
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Consolidated Statements of Cash Flows (In Thousands of Dollars)
TWENTY-SIX WEEKS ENDED JULY 3, JUNE 27, 1999 1998 (UNAUDITED) OPERATING ACTIVITIES Net income (loss) $ 2,122 $ (1,746) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 11,560 10,075 Non-cash interest expense 872 884 Amortization 2,550 1,708 Interest funded by assets held in trust 6,427 6,393 Loss on sale of property and equipment 778 430 Changes in operating assets and liabilities: Accounts receivable, net (11,058) (5,565) Inventories (636) 1,950 Prepaid expenses and other receivables (910) 534 Other assets (126) (169) Payables and accrued expenses 4,557 (114) ------- ------- Net cash provided by operating activities 16,136 14,380 INVESTING ACTIVITIES Additions to property and equipment (13,461) (7,854) Proceeds from disposal of property and equipment 408 95 ------- ------- Net cash used for investing activities (13,053) (7,759) FINANCING ACTIVITIES Proceeds from long-term borrowings 7,672 - Payments on long-term borrowings (10,058) (6,524) Payment of refinancing fees - (46) Purchase of stock from management (16) (59) ------- ------- Net cash used for financing activities (2,402) (6,629) Effect of exchange rate changes on cash (6) - ------- ------- Net increase in cash and cash equivalents 675 (8) Cash and cash equivalents at beginning of period 2,318 2,688 ------- ------- Cash and cash equivalents at end of period $ 2,993 $ 2,680 ======= =======
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. BPC Holding Corporation and Subsidiaries Notes to Consolidated Financial Statements (In thousands of dollars, except as otherwise noted) (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of BPC Holding Corporation and its subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying financial statements include the results of BPC Holding Corporation ("Holding") and its wholly-owned subsidiary, Berry Plastics Corporation ("Berry"), and its wholly-owned subsidiaries: Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Venture Packaging Southeast, Inc., NIM Holdings Limited ("NIM Holdings"), Norwich Injection Moulders Limited ("Norwich Moulders"), and Knight Plastics, 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 January 2, 1999. Certain amounts on the 1998 financial statements have been reclassified to conform with the 1999 presentation. 2. ACQUISITIONS On July 2, 1998, NIM Holdings, a newly-formed, wholly-owned subsidiary of Berry, acquired all of the capital stock of Norwich Moulders of Norwich, England for aggregate consideration of approximately $14.0 million. The purchase was primarily financed through Berry's credit facility (see Note 3). The operations of Norwich Moulders are included in Berry's operations since the acquisition date using the purchase method of accounting. On October 16, 1998, Knight Plastics, Inc. ("Knight"), a newly formed wholly- owned subsidiary of Berry, acquired substantially all of the assets of the Knight Engineering and Plastics Division of Courtaulds Packaging Inc. for aggregate consideration of approximately $18.0 million. The purchase was financed through Berry's revolving line of credit. 2. ACQUISITIONS (CONTINUED) The pro forma results listed below are unaudited and reflect purchase accounting adjustments assuming the Norwich Moulders and Knight acquisitions occurred on December 28, 1997.
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 27, 1998 JUNE 27, 1998 Net sales $ 78,976 $ 155,012 Loss before income taxes (646) (2,956) Net loss (717) (3,098)
The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisitions been consummated at the above date, nor are they necessarily indicative of future operating results. Further, the information gathered on the acquired companies is based upon unaudited internal financial information and reflects only pro forma adjustments for additional interest expense and amortization of the excess of the cost over the underlying net assets acquired, net of the applicable income tax effects. 3. LONG-TERM DEBT Long-term debt consists of the following:
JULY 3, JANUARY 2, 1999 1999 Holding 12.50% Senior Secured Notes $105,000 $105,000 Berry 12.25% Senior Subordinated Notes 125,000 125,000 Term loans 61,151 71,243 Revolving line of credit 23,835 16,162 Nevada Industrial Revenue Bonds 4,000 4,500 Capital leases 740 561 Debt premium, net 758 832 ------- ------- 320,484 323,298 Less current portion of long-term debt 20,297 19,388 ------- ------- $300,187 $303,910 ======= =======
The current portion of long-term debt consists of $19.6 million of quarterly installments on the term loans, a $0.5 million repayment of the industrial bonds and the monthly principal payments related to capital lease obligations. 3. LONG-TERM DEBT (CONTINUED) THE DEBT UNDER OUR CREDIT FACILITY IS GUARANTEED BY BPC HOLDING AND SUBSTANTIALLY ALL OF OUR SUBSIDIARIES. AS OF JULY 3, 1999, THE CREDIT FACILITY PROVIDED AN AGGREGATE COMMITMENT OF ABOUT $119.7 MILLION INCLUDING (I) $50.0 MILLION REVOLVING LINE OF CREDIT (WHICH WAS INCREASED BY $20.0 MILLION CONCURRENTLY WITH THE CARDINAL ACQUISITION - SEE NOTE 7), SUBJECT TO A BORROWING BASE FORMULA; (II) 1.5 MILLION REVOLVING LINE OF CREDIT, SUBJECT TO A BORROWING BASE ("UK REVOLVER"); (III) $56.0 MILLION TERM LOAN FACILITY; (IV) 3.6 MILLION TERM LOAN FACILITY ("UK TERM LOAN"); AND (V) $5.6 MILLION STANDBY LETTER OF CREDIT FACILITY TO SUPPORT OUR AND OUR SUBSIDIARIES' OBLIGATIONS UNDER OUR NEVADA INDUSTRIAL REVENUE BONDS. AT JULY 3, 1999, WE HAD UNUSED BORROWING CAPACITY UNDER OUR CREDIT FACILITY'S REVOLVING LINE OF CREDIT OF ABOUT $28.9 MILLION. THE CREDIT FACILITY MATURES ON JANUARY 21, 2002 UNLESS PREVIOUSLY TERMINATED BY US OR BY THE LENDERS UPON AN EVENT OF DEFAULT AS DEFINED IN THE SECURITY AGREEMENT. THE TERM LOAN FACILITIES REQUIRE PERIODIC PRINCIPAL PAYMENTS, VARYING IN AMOUNT THROUGH THE MATURITY OF THE FACILITY. SUCH PERIODIC PAYMENTS WILL AGGREGATE ABOUT $19.0 MILLION FOR FISCAL 1999 AND ABOUT $19.9 MILLION FOR FISCAL 2000. INTEREST ON BORROWINGS UNDER THE CREDIT FACILITY IS BASED ON EITHER THE LENDER'S BASE RATE (WHICH IS THE HIGHER OF THE LENDER'S PRIME RATE AND THE FEDERAL FUNDS RATE PLUS 0.50%) PLUS AN APPLICABLE MARGIN OF 0.50%; OR LIBOR (ADJUSTED FOR RESERVES) PLUS AN APPLICABLE MARGIN OF 2.0%, AT OUR OPTION. FOLLOWING RECEIPT OF THE QUARTERLY FINANCIAL STATEMENTS, THE AGENT UNDER OUR CREDIT FACILITY HAS THE OPTION TO CHANGE THE APPLICABLE INTEREST RATE MARGIN ON LOANS (OTHER THAN UNDER THE UK REVOLVER AND UK TERM LOAN) ONCE PER QUARTER TO A SPECIFIED MARGIN DETERMINED BY THE RATIO OF FUNDED DEBT TO EBITDA OF BERRY PLASTICS AND OUR SUBSIDIARIES. NOTWITHSTANDING THE FOREGOING, INTEREST ON BORROWINGS UNDER THE UK REVOLVER AND THE UK TERM LOAN IS BASED ON LIBOR (ADJUSTED FOR RESERVES) PLUS 2.50%. THE CREDIT FACILITY CONTAINS VARIOUS COVENANTS WHICH INCLUDE, AMONG OTHER THINGS (I) MAINTENANCE OF CERTAIN FINANCIAL RATIOS AND COMPLIANCE WITH CERTAIN FINANCIAL TESTS AND LIMITATIONS, (II) LIMITATIONS ON THE ISSUANCE OF ADDITIONAL DEBT, AND (III) LIMITATIONS ON CAPITAL EXPENDITURES. 4. BERRY PLASTICS CORPORATION SUMMARY FINANCIAL INFORMATION The following summarizes financial information of Holding's wholly-owned subsidiary, Berry Plastics Corporation, and its subsidiaries.
JULY 3, JANUARY 2, 1999 1999 CONSOLIDATED BALANCE SHEETS Current assets $ 78,436 $ 65,590 Property and equipment - net of accumulated 120,271 120,005 depreciation Other noncurrent assets 55,624 58,716 Current liabilities 65,839 60,210 Noncurrent liabilities 205,948 210,093 Equity (deficit) (17,456) (25,992)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JULY 3, JUNE 27, JULY 3, JUNE 27, 1999 1998 1999 1998 CONSOLIDATED STATEMENT OF OPERATIONS Net sales $ 82,392 $ 69,586 $ 159,851 $ 136,317 Cost of goods sold 58,259 50,768 112,782 100,016 Income before income taxes 5,946 2,888 9,465 4,571 Net income 5,655 2,875 8,989 4,546
The following summarizes parent company only financial information of Berry:
JULY 3, JANUARY 2, 1999 1999 BALANCE SHEET Current assets $ 40,328 $ 28,579 Property and equipment - net of accumulated 48,937 48,220 depreciation Investment in/due from subsidiaries 122,100 120,230 Other noncurrent assets 14,947 15,629 Current liabilities 44,970 41,325 Noncurrent liabilities 198,798 197,325 Equity (deficit) (17,456) (25,992)
Thirteen Weeks Ended Twenty-six Weeks Ended JULY 3, JUNE 27, JULY 3, JUNE 27, 1999 1998 1999 1998 CONSOLIDATED STATEMENTS OF OPERATIONS Net sales $ 40,675 $ 37,263 $ 76,207 $ 72,408 Cost of goods sold 26,187 24,375 48,642 47,554 Income before income taxes 5,946 2,888 9,465 4,571 Net income 5,655 2,875 8,989 4,546
5. SEGMENT REPORTING The Company has two reportable segments: plastic packaging products and plastic housewares products. The Company's plastic packaging business consists of three primary market groups: aerosol overcaps, containers, and plastic drink cups. The Company's plastic housewares business consists of semi- disposable plastic housewares and plastic lawn and garden products, sold primarily through major national retail marketers and national chain stores. The Company evaluates performance and allocates resources based on operating income before depreciation and amortization of intangibles adjusted to exclude (i) market value adjustment related to stock options, (ii) other non-recurring or "one-time" expenses, (iii) management fees and reimbursed expenses paid to First Atlantic Capital, Ltd. and (iv) certain legal expenses associated with unusual litigation ("Adjusted EBITDA"). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company's reportable segments are business units that offer different products to different markets.
Thirteen Weeks Ended Twenty-six Weeks Ended JULY 3, JUNE 27, JULY 3, JUNE 27, 1999 1998 1999 1998 Net sales: Plastic packaging products $ 75,279 $ 62,259 $ 140,443 $ 120,897 Plastic housewares products 7,113 7,327 19,409 15,420 Adjusted EBITDA: Plastic packaging products 18,349 14,572 33,912 27,172 Plastic housewares products 982 1,317 3,741 2,896 Reconciliation of Adjusted EBITDA to loss before income taxes: Adjusted EBITDA for reportable $ 19,331 $ 15,889 $ 37,653 $ 30,068 segments Net interest expense (8,674) (8,439) (17,860) (16,866) Depreciation (5,687) (5,187) (11,560) (10,075) Amortization (1,275) (828) (2,549) (1,708) Loss on disposal of property and equipment (169) (297) (778) (430) One-time expenses (711) (1,120) (1,667) (2,264) Stock option market value (94) (10) (198) (10) adjustment Management fees (218) (218) (437) (435) ------- ------- ------- ------- Income (loss) before income taxes $ 2,503 $ (210) $ 2,604 $ (1,720)
3. COMPREHENSIVE INCOME Comprehensive income (loss) was $1.7 million and $(0.2) million for the thirteen weeks ended July 3, 1999 and June 27, 1998, respectively, and $1.6 million and $(1.7) million for the twenty-six weeks ended July 3, 1999 and June 27, 1998, respectively. 7. SUBSEQUENT EVENTS On July 6, 1999, Berry acquired all of the outstanding capital stock of CPI Holding Corporation, the parent company of Cardinal Packaging, Inc., for aggregate consideration of approximately $69.5 million. The purchase was financed through the issuance by Berry of $75.0 million of 11% Senior Subordinated Notes. Item 2. BPC HOLDING CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS UNLESS THE CONTEXT DISCLOSES OTHERWISE, THE "COMPANY" AS USED IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHALL INCLUDE HOLDING AND ITS SUBSIDIARIES ON A CONSOLIDATED BASIS. THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF HOLDING AND ITS SUBSIDIARIES AND THE ACCOMPANYING NOTES THERETO, WHICH INFORMATION IS INCLUDED ELSEWHERE HEREIN. THE FOLLOWING DISCUSSION INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE REFLECTED BY THE FORWARD-LOOKING STATEMENTS IN THE DISCUSSION, AND A NUMBER OF FACTORS COULD ADVERSELY AFFECT FUTURE RESULTS, LIQUIDITY AND CAPITAL RESOURCES. THESE FACTORS INCLUDE, AMONG OTHER THINGS, THE COMPANY'S ABILITY TO PASS THROUGH RAW MATERIAL PRICE INCREASES TO ITS CUSTOMERS, ITS ABILITY TO SERVICE DEBT, THE AVAILABILITY OF PLASTIC RESIN, THE IMPACT OF CHANGING ENVIRONMENTAL LAWS AND CHANGES IN THE LEVEL OF THE COMPANY'S CAPITAL INVESTMENT. ALTHOUGH MANAGEMENT BELIEVES IT HAS THE BUSINESS STRATEGY AND RESOURCES NEEDED FOR IMPROVED OPERATIONS, FUTURE REVENUE AND MARGIN TRENDS CANNOT BE RELIABLY PREDICTED. The Company is highly leveraged. The high degree of leverage could have important consequences, including, but not limited to, the following: (i) a substantial portion of Berry's cash flow from operations must be dedicated to the payment of principal and interest on its indebtedness, thereby reducing the funds available to Berry for other purposes; (ii) Berry's ability to obtain additional debt financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired; (iii) certain of Berry's borrowings will be at variable rates of interest, which will expose Berry to the risk of higher interest rates; (iv) the indebtedness outstanding under the Credit Facility is secured by substantially all of the assets of Berry and matures prior to the maturity of the Notes; (v) Berry is substantially more leveraged than certain of its competitors, which may place Berry at a competitive disadvantage, particularly in light of its acquisition strategy; and (vi) Berry's degree of leverage may hinder its ability to adjust rapidly to changing market conditions and could make it more vulnerable in the event of a downturn in general economic conditions or its business. RESULTS OF OPERATIONS 13 WEEKS ENDED JULY 3, 1999 (THE "QUARTER") COMPARED TO 13 WEEKS ENDED JUNE 27, 1998 (THE "PRIOR QUARTER") NET SALES. Net sales increased $12.8 million, or 18%, to $82.4 million for the Quarter from $69.6 million for the Prior Quarter with an approximate 1% decrease in net selling price due primarily to contractual decreases associated with lower raw material costs. Plastic packaging product net sales increased $13.0 million from the Prior Quarter. Within this segment, the addition of Norwich and Knight provided Quarter net sales of $3.6 million and $4.7 million, respectively. In addition, overcaps sales, excluding Knight, increased $1.4 million. Drink cup sales for the Quarter were $1.5 million off the Prior Quarter due to a large promotion in the Prior Quarter. Container sales increased $1.7 million from the Prior Quarter. Custom sales, including tooling, increased $3.2 million from the Prior Quarter with a large promotion in the Quarter. Plastic housewares product sales for the Quarter were down $0.2 million from the Prior Quarter as sales were stronger in the first quarter of 1999. GROSS MARGIN. Gross margin increased by $5.3 million to $24.1 million (30% of net sales) for the Quarter from $18.8 million (27% of net sales) for the Prior Quarter. This increase of 28% includes the combined impact of the added Norwich and Knight sales volume, acquisition integration, productivity improvement initiatives, and the cyclical impact of lower raw material costs compared to the Prior Quarter. A major focus continues to be the consolidation of products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, the Company closed the Anderson, South Carolina facility in 1998 with the majority of the business being transferred to the Charlotte, North Carolina plant. In addition, the Company closed the Arlington Heights, Illinois facility, which was acquired in the Knight acquisition, in 1999 with the majority of the business being transferred to the Woodstock, Illinois plant. Also, significant productivity improvements have been made, including the addition of state-of-the-art injection molding equipment, molds and printing equipment at several of the Company's facilities. OPERATING EXPENSES. Selling expenses increased by $0.8 million to $4.3 million for the Quarter from $3.5 million for the Prior Quarter principally as a result of expanded sales coverage and increased marketing expenses. General and administrative expenses increased from $4.4 million for the Prior Quarter to $5.8 million for the Quarter. The increase of $1.4 million is primarily attributable to the Norwich Moulders and Knight acquisitions and increased accrued bonus expenses. During the Quarter, one-time transition expenses were $0.5 million related to acquisitions and $0.2 million related to the shutdown of the Arlington Heights facility. In the Prior Quarter, one-time transition expenses related to the shutdown of the Anderson facility were $1.2 million. INTEREST EXPENSE. Interest expense decreased $0.1 million to $8.7 million for the Quarter compared to $8.8 million for the Prior Quarter primarily due to term loan principal reductions. INCOME TAX. For the Quarter, the Company recorded income tax expense of $0.3 million. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. NET INCOME (LOSS). The Company recorded net income of $2.2 million for the Quarter compared to a net loss of $0.2 million for the Prior Quarter for the reasons discussed above. 26 WEEKS ENDED JULY 3, 1999 ("YTD") COMPARED TO 26 WEEKS ENDED JUNE 27, 1998 ("PRIOR YTD") NET SALES. Net sales increased $23.6 million, or 17%, to $159.9 million for the YTD from $136.3 million for the prior YTD with an approximate 2% decrease in net selling prices due primarily to contractual decreases associated with lower raw material costs. Plastic packaging product net sales increased $19.6 million from the prior YTD. Within this segment, the addition of Norwich and Knight provided net sales for the YTD of $7.3 million and $9.6 million, respectively. In addition, overcaps sales, excluding Knight, increased $2.1 million. Drink cup sales for the YTD were $3.0 million off the prior YTD due to a $3.5 million promotion in the prior YTD. Container sales increased $0.1 million from the prior YTD despite the Company's decision to exit certain low margin business. Custom sales, including tooling, increased $3.4 million from the prior YTD with a large promotion in the YTD. Plastic housewares product sales for the YTD increased $4.0 million from the prior YTD due to strong internal growth including several new products. GROSS MARGIN. Gross margin increased by $10.8 million to $47.1 million (29% of net sales) for the YTD from $36.3 million (27% of net sales) for the prior YTD. This increase of 30% includes the combined impact of the added Norwich and Knight sales volume, acquisition integration, productivity improvement initiatives, and the cyclical impact of lower raw material costs compared to the Prior Quarter. A major focus continues to be the consolidation of products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, the Company closed the Anderson, South Carolina facility in 1998 with the majority of the business being transferred to the Charlotte, North Carolina plant. In addition, the Company closed the Arlington Heights, Illinois facility, which was acquired in the Knight acquisition, in 1999 with the majority of the business being transferred to the Woodstock, Illinois plant. Also, significant productivity improvements have been made, including the addition of state-of-the-art injection molding equipment, molds and printing equipment at several of the Company's facilities. OPERATING EXPENSES. Selling expenses increased by $1.5 million to $8.6 million for the YTD from $7.1 million for the prior YTD principally as a result of expanded sales coverage and increased marketing expenses. General and administrative expenses increased by $3.1 million to $11.9 million for the YTD from $8.8 million for the prior YTD. The increase is primarily attributable to the Norwich Moulders and Knight acquisitions and increased accrued bonus expenses. YTD one-time transition expenses include $0.6 million related to the shutdown of the Anderson and Arlington Heights facilities and $1.1 million related to acquisitions. One-time transition expenses for prior YTD were $1.1 million related to acquisitions and $1.3 million related to the Anderson plant consolidation. INTEREST EXPENSE. Interest expense increased $0.6 million to $18.0 million for the YTD compared to $17.4 million for the prior YTD primarily due to additional borrowings to support the Norwich Moulders and Knight acquisitions. INCOME TAX. The Company's income tax expense was $0.5 million for the YTD. The Company continues to operate in a net operating loss carryforward position for Federal income tax purposes. NET INCOME (LOSS). Net income for the YTD of $2.1 million improved $3.8 million from a net loss of $1.7 million for the prior YTD for the reasons discussed above. LIQUIDITY AND SOURCES OF CAPITAL Net cash provided by operating activities was $16.1 million for the YTD, an increase of $1.7 million from the prior YTD. The increase is primarily the result of improved operating performance with income before depreciation and amortization increasing $6.1 million from the prior YTD. Net working capital changes (defined as accounts receivable, inventories, prepaid expenses, other receivables, accounts payable and accrued expenses) decreased the YTD net cash $4.8 million from the prior YTD due to the Company's growth. YTD capital spending of $13.5 million included $5.5 million for molds, $0.7 million for molding and printing machines, $4.4 million for buildings and systems, and $2.9 million for accessory equipment and systems. The Company anticipates that its cash interest, working capital and capital expenditure requirements for 1999 will be satisfied through a combination of funds generated from operating activities and cash on hand, together with funds available under the Credit Facility. Management bases such belief on historical experience and the substantial funds available under the Credit Facility. However, the Company cannot predict its future results of operations. At July 3, 1999, the Company's cash balance was $3.0 million, and Berry had unused borrowing capacity under the Credit Facility's borrowing base of approximately $28.9 million. The 1994 Indenture, 1998 Indenture and 1999 Indenture restrict, and the Credit Facility prohibits, Berry's ability to pay any dividend or make any distribution of funds to Holding to satisfy interest and other obligations on the 1996 Notes. Based upon historical operating results, without a substantial increase in the net income of Berry, management anticipates that it will be unable to generate sufficient cash flow to permit a dividend to Holding in an amount sufficient to meet Holding's interest payment obligations under the 1996 Notes which begin after the depletion of the escrow account in June 1999 that was established to pay such interest. However, from December 15, 1999 until June 15, 2001, Holding may, at its option, pay interest, at an increased rate of 0.75% per annum, in additional 1996 Notes valued at 100% of the principal amount thereof. Upon expiration, management anticipates that such obligations will only be met by refinancing the 1996 Notes or raising capital through equity offerings. No assurance can be given that then- current market conditions would permit Holding to consummate a refinancing or equity offering. IMPACT OF YEAR 2000 The Company has been working on modifying or replacing portions of its software since 1991 so that its computer systems will function properly with respect to dates in the Year 2000 and thereafter. Because the Company commenced this process early, the costs incurred to address this issue in any single year have not been significant. The Company's current business applications are Year 2000 compliant. Acquired businesses are converted to the Company's applications for Year 2000 compliance and consistency in applications and reporting. The most recent acquired business (other than the Cardinal Acquisition) was converted to the Company's applications on March 1, 1999. However, the Company is currently in the process of replacing its current business software with a Year 2000 compliant package. This replacement is not due to any Year 2000 issues, but is needed to accommodate the changes the Company has experienced in its business due to acquisitions in recent years. The cost of this conversion is anticipated to be approximately $2.0 million. The accounting phase of this conversion was completed for all plants in January 1999. The remaining phases are scheduled to be completed by the end of 1999. Management of the Company believes it has an effective program in place to resolve all internal Year 2000 issues. An inventory of computer based systems has been compiled and verified through testing and supplier verification. All identified non-compliant equipment and software will be corrected before December 1999. The current estimated cost for this resolution is $110,000. These systems include personal computers, postage machines, plant automation and telephone system components. The major Year 2000 risks that face the Company are external suppliers of goods and services. The Company could incur material disruption in its ability to produce and deliver product should there be major disruptions in the economy or failure of "key suppliers". While it is impossible to account for the effectiveness of every supplier's Year 2000 efforts, the following are the steps that are in the process of being completed: * IDENTIFICATION OF "KEY SUPPLIERS" WHICH INCLUDE RAW MATERIAL, BANKING, TRANSPORTATION, SERVICE, AND UTILITY PROVIDERS. * SURVEY OF THESE SUPPLIERS AS TO THEIR YEAR 2000 STATUS. * IDENTIFICATION OF SUPPLIERS NOT COMPLIANT OR AT RISK. * RISK ASSESSMENT AND CONTINGENCY PLANNING FOR "KEY SUPPLIERS". THESE STEPS WILL NOT BE COMPLETED UNTIL SOME TIME DURING THE THIRD QUARTER OF 1999. THIS IS DUE TO THE FACT THAT SOME OF THE COMPANY'S SUPPLIERS ARE NOT TARGETING YEAR 2000 COMPLIANCE UNTIL THE SUMMER OF 1999. THE AMOUNT OF POTENTIAL LIABILITY AND LOST REVENUE DUE TO YEAR 2000 ISSUES CANNOT BE REASONABLY ESTIMATED AT THIS TIME. THE COMPANY WILL BE CONTINUALLY WORKING THROUGHOUT THE YEAR TO MINIMIZE ANY YEAR 2000 RISKS. PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On July 5, 1999, Holding issued 327 shares of its Class B Non- Voting Common Stock, $.01 par value, to three members of management of Berry at $170.00 per share, for aggregate proceeds of $55,590 (the "Employee Stock"). There was no underwriter for the securities. The securities were privately placed pursuant to the exemption from registration granted under Rule 505 ("Rule 505") of Regulation D promulgated under the Securities Act of 1933, as amended. The offering was made to less than 35 non- accredited investors, the offering was less than $5,000,000, no general solicitation was made and the issuer complied with the provisions of Rule 502 of Regulation D, including the disclosure requirements thereunder. The Employee Stock was issued for cash, and was issued to provide an incentive for management employees. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Berry Plastics Corporation BPC Holding Corporation Berry Iowa Corporation Berry Tri-Plas Corporation Berry Sterling Corporation Aerocon, Inc. Packerware Corporation Berry Plastics Design Corporation Venture Packaging, Inc. Venture Packaging Midwest, Inc. Venture Packaging Southeast, Inc. Knight Plastics, Inc. August 9, 1999 By: _/S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer,Treasurer and Secretary of the entities listed above(Principal Financial and Accounting Officer) NIM Holdings Limited Norwich Injection Moulders Limited By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director of the entities listed above (Principal Financial and Accounting Officer) EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 6-MOS JAN-01-2000 JUL-03-1999 2,993 0 40,842 1,507 32,314 78,807 210,781 90,510 258,409 67,036 300,187 0 16,947 6 (137,620) 258,409 159,852 0 112,782 138,610 778 473 17,860 2,604 482 2,122 0 0 0 2,122 0 0
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