<PAGE>
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 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 0-14450
AEP INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 22-1916107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 PHILLIPS AVENUE
<CAPTION>
SOUTH HACKENSACK, NEW JERSEY 07606
(Address of principal executive offices) (Zip Code)
</TABLE>
(201) 641-6600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
<S> <C>
SHARES
OUTSTANDING AT
CLASS OF COMMON STOCK FEBRUARY 27, 1998
- --------------------------------------------- ---------------------------------------------
$.01 Par Value 7,228,153
</TABLE>
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<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AEP INDUSTRIES INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1998 1997
-------------- --------------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 2,289,000 $ 4,143,000
Accounts receivable, less allowance of $5,253,000 in 1998 and $5,226,000 in
1997 for doubtful accounts................................................... 100,692,000 112,219,000
Inventories, net............................................................... 95,439,000 92,021,000
Net assets of discontinued operations.......................................... 15,000,000 15,000,000
Other current assets........................................................... 14,623,000 12,978,000
-------------- --------------
Total current assets....................................................... 228,043,000 236,361,000
-------------- --------------
PROPERTY, PLANT AND EQUIPMENT, at cost, less
accumulated depreciation and amortization of $92,793,000
in 1998 and $89,498,000 in 1997................................................ 285,237,000 292,743,000
GOODWILL less accumulated amortization of $1,672,000 in 1998 and $1,351,000 in
1997........................................................................... 42,862,000 43,183,000
INVESTMENT IN JOINT VENTURE...................................................... 15,434,000 15,345,000
OTHER ASSETS..................................................................... 34,134,000 25,451,000
-------------- --------------
TOTAL ASSETS............................................................... $ 605,710,000 $ 613,083,000
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings.......................................................... $ 65,760,000 $ 65,484,000
Accounts payable............................................................... 73,452,000 74,720,000
Accrued expenses............................................................... 31,815,000 40,112,000
-------------- --------------
Total current liabilities.................................................. 171,027,000 180,316,000
LONG-TERM DEBT................................................................... 312,912,000 311,522,000
OTHER LONG TERM LIABILITIES...................................................... 5,800,000 6,278,000
DEFERRED INCOME TAXES............................................................ 26,967,000 26,985,000
-------------- --------------
Total liabilities.......................................................... 516,706,000 525,101,000
-------------- --------------
SHAREHOLDERS' EQUITY:
Preferred stock--$1.00 par value, 1,000,000 shares authorized; none
outstanding.................................................................. -- --
Common stock--$.01 par value, 20,000,000 shares authorized; 10,000,540 and
9,988,330 shares, issued in 1998 and 1997, respectively...................... 100,000 100,000
Additional paid-in capital..................................................... 90,061,000 89,974,000
Treasury stock--common stock; at cost, 2,781,543 shares in 1998 and 1997....... (61,783,000) (61,783,000)
Retained earnings.............................................................. 79,933,000 78,679,000
Cumulative translation adjustment.............................................. (19,307,000) (18,988,000)
-------------- --------------
Total shareholders' equity................................................. 89,004,000 87,982,000
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $ 605,710,000 $ 613,083,000
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets
2
<PAGE>
AEP INDUSTRIES INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JANUARY 31,
------------------------------
<S> <C> <C>
1998 1997
-------------- --------------
NET SALES........................................................................ $ 178,292,000 $ 181,686,000
COST OF SALES.................................................................... 138,545,000 142,211,000
-------------- --------------
Gross profit................................................................. 39,747,000 39,475,000
-------------- --------------
OPERATING EXPENSES
Delivery and warehousing....................................................... 11,778,000 10,204,000
Selling........................................................................ 9,829,000 10,547,000
General and administrative..................................................... 7,496,000 7,754,000
-------------- --------------
Total operating expenses..................................................... 29,103,000 28,505,000
-------------- --------------
OTHER INCOME (EXPENSE):
Interest expense............................................................... (8,151,000) (6,578,000)
Other, net..................................................................... 355,000 1,062,000
-------------- --------------
(7,796,000) (5,516,000)
-------------- --------------
Income before provision for income taxes..................................... 2,848,000 5,454,000
PROVISION FOR INCOME TAXES....................................................... 991,000 1,398,000
-------------- --------------
Income from continuing operations............................................ 1,857,000 4,056,000
DISCONTINUED OPERATIONS
(Loss) from operations of discontinued Rigids business (less applicable income
tax benefit of $389,000)..................................................... (603,000) --
-------------- --------------
Net Income................................................................... 1,254,000 4,056,000
Retained earnings, beginning of period........................................... 78,679,000 70,108,000
Retained earnings, end of period................................................. $ 79,933,000 $ 74,164,000
-------------- --------------
-------------- --------------
Earnings Per Share:
Basic income from continuing operations.......................................... $ 0.25 $ 0.57
Basic loss from discontinued operations.......................................... (0.08) --
-------------- --------------
Basic net income................................................................. $ 0.17 $ 0.57
-------------- --------------
-------------- --------------
Diluted income from continuing operations........................................ $ 0.25 $ 0.54
Diluted loss from discontinued operations........................................ (0.08) --
-------------- --------------
Diluted net income............................................................... $ 0.17 $ 0.54
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
AEP INDUSTRIES INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JANUARY 31,
-----------------------------
<S> <C> <C>
1998 1997
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................................... $ 1,254,000 $ 4,056,000
Adjustments to reconcile net income to net cash provided by operating activities
-
Depreciation and amortization.................................................. 8,576,000 9,393,000
Net (gain) loss on sale of equipment........................................... (38,000) (20,000)
Provision for losses on accounts receivable and inventory...................... 391,000 686,000
Minority interest income....................................................... (89,000) (83,000)
Net (gain) loss on sale of securities.......................................... -- (416,000)
Decrease in accounts receivable................................................ 8,870,000 5,583,000
Decrease (Increase) in inventories............................................. (5,158,000) 8,347,000
Decrease (Increase) in other current assets.................................... 2,013,000 3,228,000
Increase in other assets....................................................... (8,683,000) (634,000)
(Decrease) increase in accounts payable........................................ 312,000 (10,307,000)
(Decrease) increase in accrued expenses........................................ (7,538,000) 1,441,000
(Decrease) increase in long term liabilities................................... (127,000) (2,290,000)
-------------- -------------
Net cash (used in) provided by operating activities.......................... (217,000) 18,984,000
-------------- -------------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures............................................................. (4,343,000) (12,690,000)
Sales and retirements of property, plant and equipment, net...................... 27,000 1,233,000
Sale of marketable securities.................................................... -- 2,486,000
Proceeds from sale of subsidiary................................................. 2,284,000 --
-------------- -------------
Net cash used in investing activities........................................ (2,032,000) (8,971,000)
-------------- -------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from issuance of Subordinated Notes..................................... 198,500,000 --
Repayments on Term Loan.......................................................... (196,591,000) (8,000,000)
Net borrowings................................................................... 933,000 4,102,000
Proceeds from issuance of common stock........................................... 87,000 450,000
-------------- -------------
Net cash provided by (used in) financing activities.......................... 2,929,000 (3,448,000)
-------------- -------------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH........................................... (2,534,000) (8,886,000)
-------------- -------------
NET(DECREASE) INCREASE IN CASH:.................................................... (1,854,000) (2,321,000)
CASH AT BEGINNING OF PERIOD:....................................................... 4,143,000 12,067,000
-------------- -------------
CASH AT END OF PERIOD:............................................................. $ 2,289,000 $ 9,746,000
-------------- -------------
-------------- -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for--interest........................................ $ 6,062,000 $ 7,072,000
-------------- -------------
Cash paid during the period for--income taxes.................................... $ 730,000 $ 41,000
-------------- -------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
AEP INDUSTRIES INC.
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial information included herein has been prepared by the Company
without audit, for filing with the Securities and Exchange Commission pursuant
to the rules and regulations of said Commission. The financial information
presented herein, while not necessarily indicative of results to be expected for
the year, reflects all adjustments (which include only normal recurring
adjustments) which in the opinion of the Company are necessary for a fair
presentation of the results for the periods indicated.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report to Shareholders for the fiscal year ended October 31,
1997.
Certain prior period amounts have been reclassified in order to conform with
the current quarter's presentation.
(2) NET INCOME PER SHARE OF COMMON STOCK
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", which establishes new standards for computing and
presenting earnings per share ("EPS"). The new standard requires the
presentation of basic EPS and diluted EPS. Basic EPS is calculated by dividing
income available to common shareholders by the weighted average number of shares
of common stock outstanding during the period. The number of shares used in such
computation for the three months ended January 31, 1998, and 1997 were 7,209,016
and 7,138,771, respectively. Diluted EPS is calculated by dividing income
available to common shareholders by the weighted average number of common shares
outstanding, adjusted to reflect potentially dilutive securities. The number of
shares used in such computation for the three months ended January 31, 1998, and
1997 were 7,380,642 and 7,482,147, respectively. Prior periods have been
restated to reflect such adoption.
(3) INVENTORIES
Inventories, stated at the lower of cost (last-in, first-out (LIFO) method
for domestic operations and first-in, first-out (FIFO) method for foreign
operations and for supplies) or market, include material, labor and
manufacturing overhead costs and are comprised of the following:
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1998 1997
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<S> <C> <C>
Raw Materials.................................................................. $ 24,344,000 $ 22,212,000
Finished Goods................................................................. 68,164,000 67,246,000
Supplies....................................................................... 4,242,000 4,060,000
--------------- ---------------
96,750,000 93,518,000
Less: Inventory Reserve........................................................ (1,311,000) (1,497,000)
--------------- ---------------
Total Inventories, Net......................................................... $ 95,439,000 $ 92,021,000
--------------- ---------------
--------------- ---------------
</TABLE>
The (LIFO) method was used for determining the cost of approximately 59% and
50% of total inventories at January 31, 1998 and October 31, 1997, respectively.
5
<PAGE>
(4) DISCONTINUED OPERATIONS
At the time of the Company's acquisition of Borden Global Packaging (BGP),
management decided not to retain the rigids' businesses of BGP. The rigids'
businesses manufacture, market and distribute wet food containers, dry food
trays and disposable food service products. These businesses are not core and
the Company has offered these businesses for sale. Beginning November 1, 1997,
the Company began recording these businesses as discontinued operations. The
carrying value at January 31, 1998 represents the Company's best estimate as to
the fair market value based on recent market information.
(5) DEBT
On November 19, 1997, the Company completed an offering of $200 million in
aggregate principal amount of 9.875% Senior Subordinated Notes due November 15,
2007 (the "Notes"). The issue price was 99.224% resulting in an effective yield
of 10%. The net proceeds (approximately $198.5 million) from the Notes, of which
$193 million, was used to repay a portion of the indebtedness outstanding under
the Company's outstanding Credit Agreement.
(6) SALE OF SOUTH AFRICA
In January 1998, the Company completed the sale of its operations in South
Africa to local management for $1 million plus the settlement of all
intercompany items. The sale did not result in any gain or loss.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
NET SALES AND GROSS PROFIT
Net sales for the first quarter ended January 31, 1998 decreased by
$3,394,000 or 2% to $178,292,000 from $181,686,000 in the same period in the
prior year. Net sales in North America decreased to $107,865,000 during the
current period from $108,521,000 in the first quarter 1996, or 1%, primarily due
to a 4% decrease in per unit selling prices as a result of lower raw material
costs which were passed though to the customers. This decease in selling prices
was offset by an increase in sales volume of 6% in North America. Net sales in
Europe decreased to $48,174,000 for the first quarter of 1998 from $50,413,000
in fiscal 1997, or 4%, primarily due to a 2% decrease in average selling prices
(local currency) offset by a slight volume increase. Net sales in Asia Pacific
increased to $22,253,000 in the current period from $19,509,000 in the same
period in the prior year, or 14%, primarily due to 66% sales volume increase due
to the Company's acquisition of certain businesses during the prior year offset
by a decease of 2% in average selling prices (local currency). The Company's net
sales for the first quarter 1997 included net sales of $3,243,000 of its South
African Operations which was sold November 1, 1997.
Gross profit for the first quarter of Fiscal 1998 amounted to $39,747,000
compared to $39,475,000 for the first quarter of Fiscal 1997. North America
experienced an increase in gross profit of $3,022,000 or 15% for the period due
to the increased utilization of plant facilities from increased sales volume as
well as reduced raw material costs, however economic pressures in both Europe
and Asia prevented the Company from passing through increased raw material costs
to its customers, which offset the North America results.
OPERATING EXPENSES
Operating expenses for the three months ended January 31, 1998 were
$29,103,000 as compared to $28,505,000 over the same period in the prior fiscal
year. This increase of $598,000 in operating expenses can be attributed to
increased warehousing and delivery costs of $1.5 million which relate to the
Company's increased sales volume for the period as well as costs incurred with
the implementation of new delivery systems. Selling expenses for the period
decreased by $718,000 due to the realignment of the Company's sales force during
the period.
INTEREST EXPENSE
Interest expense for the three months ended January 31, 1998, amounted to
$8,151,000, an increase of $1,573,000 from the same period in the prior year.
This increase in interest expense is due to the Company's issuance of its
$200,000,000 of 9.875% Senior Subordinated Notes in November 1997, which
resulted in higher average interest rates for the period.
OTHER INCOME (EXPENSE)
Other income for the three months ended January 31, 1998, amounted to
$355,000. This amount includes foreign currency exchange gains realized during
the period, gains on sales of machinery and equipment, interest income earned
for the period and income from investment in joint venture.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through cash flow
generated from operations and borrowings by the Company or its subsidiaries
under various credit facilities. The Company's principal uses of cash have been
to fund working capital, including operating expenses, debt service, and capital
expenditures.
The Company's working capital amounted to $57,016,000 at January 31, 1998,
compared to $56,045,000 at October 31, 1997. This increase of $971,000 in
working capital is primarily the result of increases and decreases in components
of the Company's financial position in its normal operating activity.
On October 11, 1996, the Company entered into the Credit Agreement with the
Morgan Guaranty Trust Company, as Agent, and the banks party thereto. The Credit
Agreement provided the Company with two credit facilities, consisting of a term
credit facility in the amount of $350,000,000 and a revolving credit facility
for an amount up to $100,000,000. The proceeds borrowed under the Credit
Agreement were used to pay the $263,000,000 cash portion of the purchase price
for the Borden Acquisition, to repay the $95,400,000 balance under the then
existing term credit and revolving credit obligations and to pay the expenses
and related costs of the Borden Acquisition and the borrowing under the Credit
Agreement. The term loan commitment expired on the date of the closing of the
Credit Agreement and the borrowing of the term loan thereunder. Amounts repaid
or prepaid with respect to the term loan may not be reborrowed
On November 19, 1997, the Company completed an offering of $200,000,000 in
aggregate principal amount of 9.875% Senior Subordinated Notes due November 15,
2007. The issue price was 99.224% resulting in an effective yield of 10%. The
net proceeds from the Notes have been used to repay a portion of the
indebtedness outstanding under the Company's outstanding Credit Agreement.
At January 31, 1998, the Company had $123,250,000 outstanding under the term
credit facility, no outstanding borrowings under its $100,000,000 revolving
credit facility, and $200,000,000 in outstanding Notes due November 2007.
The Company also has a $10,000,000 unsecured revolving credit facility
available for working capital purposes. At January 31, 1998, there was
$5,300,000 outstanding borrowings under this facility.
The Company also maintains various unsecured short-term credit facilities at
its foreign subsidiaries. At January 31, 1998, the aggregate amount outstanding
under such facilities was approximately $45,500,000 and approximately
$25,500,000 was available for borrowing. Borrowings from these facilities are
used to support operations at such subsidiaries and are generally serviced by
cash flow from operations at such subsidiaries. Approximately $42,000,000 of
such indebtedness is guaranteed by the Company.
The Company's cash and cash equivalents decreased by $1,854,000 for the
quarter ended January 31,1998. Net cash used by operating activities during the
period was $217,000 primarily due to net income of $1,254,000, depreciation and
amortization expense of $8,576,000 and collection of accounts receivable of
$8,870,000 offset by increased investment in inventories of $5,158,000 ,in other
assets of $8,683,000 and in other operating assets and liabilities of $5,076,000
Net cash used in investing activities during the Quarter ended January 31,
1998 was $2,032,000, resulting primarily from the net investment in capital
expenditures of $4,343,000 which were partially offset by the proceeds of
$2,284,000 the Company received from its sale of its South Africa subsidiary in
November 1997and the sale of some machinery and equipment.
Net cash provided by financing activities during the quarter ended January
31, 1998 was $2,929,000, reflecting the proceeds from the issuance of the
Company's 9.875% Subordinated Notes of $198,500,000 net borrowings under the
unsecured revolving credit facility of $933,000 and stock issuances of $87,000,
offset by a repayment under the term portion of the Credit Agreement of
$196,591,000.
8
<PAGE>
The remaining increases and decreases in the components of the Company's
financial position reflect normal operating activity.
The Company believes that its cash flow from operations, combined with the
availability of funds under the Credit Agreement and credit lines available to
the Company's foreign subsidiaries for local currency borrowings, will be
sufficient to meet the Company's working capital, capital expenditure and debt
service requirements for the foreseeable future. The Company also expects to
receive cash in the event that its rigids businesses are sold.
EFFECTS OF INFLATION
Inflation is not expected to have significant impact on the Company's
business.
YEAR 2000
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. The Company is currently undertaking a systems readiness review which will
help mitigate the risks associated with the Year 2000 issue. The Company has
purchased certain new operating systems during Fiscal 1997 and as a result,
management believes that the Year 2000 issues will not have a material effect on
its financial position and results of operations.
FORWARD LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and the Results
of Operations contains "Forward Looking Statements" about the Company's
prospects for the future such as its ability to generate sufficient working
capital, its ability to continue to maintain sales and profits and its ability
to generate sufficient funds to meet its cash requirements. Such statements are
subject to certain risks and uncertainties which can cause actual results to
differ materially from those projected, including availability of raw materials,
ability to pass raw material price increases to customers in a timely fashion,
the potential of technological changes which would adversely affect the need for
the Company's products and price fluctuations which could adversely impact the
Company's inventory. Parties are cautioned not to rely on any such forward
looking benefits or judgments in this section and in other parts of this report.
9
<PAGE>
SIGNATURES
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.
<TABLE>
<S> <C> <C>
AEP INDUSTRIES INC.
Date: March 13, 1998 s/a J. Brendan Barba
--------------------------------------
J. Brendan Barba
Chairman of the Board, President
and Chief Executive Officer
Date: March 13, 1998 s/a Paul M. Feeney
--------------------------------------
Paul M. Feeney
Executive Vice President-Finance
Principal Financial and Accounting
Officer
</TABLE>
10
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in routine litigation in the normal course of its
business. The proceedings are not expected to have a material adverse impact on
the Company's results of operations or financial position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11--Computation of weighted average number of shares
outstanding. Page 14
(b) There were no current reports on Form 8-K filed during the quarter ended
January 31, 1998.
11
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- --------------- -------------------------------------------------------------------------------------------------
<C> <S>
3(a) Restated Certificate of Incorporation of the Company as filed April 11, 1997 (incorporated by
reference to Exhibit 3(a) to the Quarterly Report on 10-Q for the quarter ended July 31, 1997)
3(b) Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 4 to
Registrant's report on Form 8-K, dated October 11, 1996)
10(a) 1985 Stock Option Plan of the Company (incorporated by reference to Exhibit 10(mm) to Amendment
No. 2 to Registration Statement on Form S-1 No. 33-2242)
10(b) The Employee Profit Sharing and 401(k) Retirement Plan and Trust as adopted March 3, 1993
(incorporated by reference to Exhibit 10(g) to Registrant's Quarterly Report on Form 10-Q for the
period ended January 31, 1993)
10(c) 1995 Stock Option Plan of the Company (incorporated by reference to Exhibit 4 to the Registration
Statement No. 33-58747 on Form S-8)
10(d) 1995 Employee Stock Purchase Plan of the Company (incorporated by reference to Exhibit 4 to the
Registration Statement No. 33-58743 on Form S-8)
10(e) Lease dated as of March 20, 1990, between the Company and Phillips and Huyler Assoc., L.P.
(incorporated by reference to Exhibit 10(aa) to the Annual Report on Form 10-K for the year ended
October 31, 1990)
10(f)(1) Credit Agreement, dated as of October 11, 1996, among the Company, the Morgan Guaranty Trust
Company, as Agent, and the banks party thereto (incorporated by reference to Exhibit 3 to
Registrant's report on Form 8-K, dated October 11, 1996)
10(f)(2) Amendment No. 1, dated as of October 24, 1997, to the Credit Agreement dated as of October 11,
1996, among the Company, the Morgan Guaranty Trust Company as Agent and the Bank's party thereto
10(g) Tender Offer to Purchase, dated as of August 10, 1995, (incorporated by reference to Exhibit
(a)(1) as filed on August 10, 1995, with Schedule 13E-4)
10(h) Stock Purchase Agreement, dated as of August 2, 1995, between the Company and J. Brendan Barba
(incorporated by reference to Exhibit (c) as filed on August 10, 1995 with Schedule 13E-4)
10(i)(1) Purchase Agreement, dated as of June 20, 1996, without exhibits, between the Company and Borden
Inc. (incorporated by reference to Exhibit C-1 to Registrant's report on Form 8-K, dated June 20,
1996)
10(i)(2) Amendment No. 1, dated as of October 11, 1996, to the Purchase Agreement, dated as of June 20,
1996, between the Company and Borden, Inc. (incorporated by reference to Exhibit 1(b) to
Registrant's report on Form 8-K, dated October 11, 1996)
10(i)(3) Combined Financial Statements of Borden Global Packaging Operations as of December 31, 1995 and
1994 and for each of the three years in the period ended December 31, 1995 (incorporated by
reference to Annex F to Registrant's Proxy Statement, dated September 11, 1996)
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- --------------- -------------------------------------------------------------------------------------------------
<C> <S>
10(j)(1) Governance Agreement, dated as of June 20, 1996, without exhibits, between the Company and
Borden, Inc. (incorporated by reference to Exhibit C-2 to Registrant's report on Form 8-K, dated
June 20, 1996)
10(j)(2) Amendment No. 1, dated as of October 11, 1996, to the Governance Agreement dated as of June 20,
1996, between the Company and Borden, Inc. (incorporated by reference to Exhibit 2(b) to
Registrant's report on Form 8-K, dated October 11, 1996)
10(k) Employment Agreement, dated as of October 11, 1996, between the Company and J. Brendan Barba
10(l) Employment Agreement, dated as of October 11, 1996, between the Company and Paul M. Feeney
10(m) Purchase Agreement, dated November 14, 1997, among Registrant and J.P. Morgan Securities, Inc.,
Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (incorporated by reference to Exhibit
1 to Registrant's report on Form 8-K, dated November 19, 1997)
10(n) Registration Rights Agreement, dated as of November 19, 1997, among Registrant and J.P. Morgan
Securities, Inc., Morgan Stanley & Co. Incorporated and Salomon Brothers, Inc (incorporated by
reference to Exhibit 1 to Registrant's report on Form 8-K, dated November 19, 1997)
10(o) Indenture, dated as of November 19, 1997, between the Registrant and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 1 to Registrant's report on Form 8-K, dated
November 19, 1997)
10(p) Agreement for Sale of Business, dated July 18, 1997, between ICI Australia Limited and ICI
Australia Operations PTY Limited as Seller, and Registrant's subsidiary AEP Industries
(Australia) PTY Limited, as Purchaser (incorporated by reference to Exhibit 10(p) to the Annual
Report on Form 10-K for the year ended October 31, 1997)
</TABLE>
13
<PAGE>
Exhibit 11
AEP INDUSTRIES INC.
COMPUTATION OF THE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
For the Three Months Ended January 31, 1998
<TABLE>
<CAPTION>
Number of Weighted Average
Shares of Days Days in Number of Shares
Common Stock Outstanding Period Outstanding
--------------- ----------- ----------- ------------------
1998
- ---------------------------------
<S> <C> <C> <C> <C>
November 1 - October 31 7,206,787 7,206,787
Shares Issued:
November 18, 1997 60 75 92 49
December 3, 1997 400 60 92 261
December 9, 1997 100 54 92 59
December 15, 1997 200 48 92 104
December 18, 1997 1,900 45 92 929
December 19, 1997 1,000 44 92 478
January 16, 1998 800 16 92 139
January 20, 1998 200 12 92 26
January 27, 1998 600 5 92 33
January 30, 1998 6,950 2 92 151
Total Weighted Average Shares 7,218,997 7,209,016
Total Dilutive Stock options - 171,626
---------------- ---------------
Total Shares 7,218,997 7,380,642
================ ===============
1998
- ---------------------------------
November 1 - October 31 7,130,303 7,130,303
Shares Issued:
November 5, 1996 1,600 88 92 1,530
November 7, 1996 200 86 92 187
November 8, 1996 200 85 92 185
November 11, 1996 500 82 92 446
November 12, 1996 600 81 92 528
November 14, 1996 400 79 92 343
November 18, 1996 400 75 92 326
November 20, 1996 60 73 92 48
November 26, 1996 400 67 92 291
December 9, 1996 460 54 92 270
December 13, 1996 350 50 92 190
December 26, 1996 1,000 37 92 402
December 27, 1996 200 36 92 78
January 1, 1997 4,553 31 92 1,534
January 2, 1997 500 30 92 163
January 3, 1997 600 29 92 189
January 6, 1997 1,600 26 92 452
January 8, 1997 800 24 92 209
January 13, 1997 1,300 19 92 268
January 14, 1997 3,200 18 92 626
January 15, 1997 600 17 92 111
January 20, 1997 200 12 92 26
January 21, 1997 400 11 92 48
January 27, 1997 300 5 92 16
---------------- ---------------
Total Weighted Average Shares 7,150,726 7,138,771
Total Dilutive Stock options - 343,376
---------------- ---------------
Total Shares 7,150,726 7,482,147
================ ===============
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AEP
INDUSTRIES INC. FORM 10-Q FOR THE THREE MONTHS ENDED JAN-31-1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 2,289
<SECURITIES> 0
<RECEIVABLES> 105,945
<ALLOWANCES> 5,253
<INVENTORY> 95,439
<CURRENT-ASSETS> 228,043
<PP&E> 378,030
<DEPRECIATION> 92,793
<TOTAL-ASSETS> 605,710
<CURRENT-LIABILITIES> 171,027
<BONDS> 0
100
0
<COMMON> 0
<OTHER-SE> 88,904
<TOTAL-LIABILITY-AND-EQUITY> 605,710
<SALES> 178,292
<TOTAL-REVENUES> 178,647
<CGS> 138,545
<TOTAL-COSTS> 138,545
<OTHER-EXPENSES> 28,712
<LOSS-PROVISION> 391
<INTEREST-EXPENSE> 8,151
<INCOME-PRETAX> 2,848
<INCOME-TAX> 991
<INCOME-CONTINUING> 1,857
<DISCONTINUED> (603)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,254
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
