<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ______ to ______
COMMISSION FILE NO. 33-95318
PORTOLA PACKAGING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-1582719
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
890 FAULSTICH COURT
SAN JOSE, CALIFORNIA 95112
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(408) 453-8840
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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. YES X NO.
--- ---
11,762,956 shares of Registrant's $.001 par value Common Stock, consisting of
2,134,992 shares of nonvoting Class A Common Stock and 9,627,964 shares in the
aggregate of voting Class B Common Stock, Series 1 and 2 combined, were
outstanding at January 5, 1998.
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
INDEX
Part I - Financial Information Page
- ------------------------------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
November 30, 1997 and August 31, 1997. . . . . . . . . . . 3
Consolidated Statements of Operations for
the Three Months Ended November 30, 1997 and 1996 . . . . . 5
Consolidated Statements of Cash Flows for
the Three Months Ended November 30, 1997 and 1996 . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 9
Part II - Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NOVEMBER 30, AUGUST 31,
1997 1997
---- ----
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,365 $ 3,242
Investments 811 841
Accounts receivable, net 20,926 23,339
Inventories 10,076 9,918
Other current assets 2,170 1,644
Deferred income taxes 1,044 1,032
----- -----
Total current assets 36,392 40,016
Notes receivable from employees 136 139
Property, plant and equipment, net 80,302 79,779
Goodwill, net 14,684 15,044
Patents, net 1,972 2,024
Covenants not to compete,net 1,777 2,183
Debt financing costs, net 3,305 3,433
Other assets 5,136 5,439
----- -----
Total assets $143,704 $148,057
======== =======
Continued
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NOVEMBER 30, AUGUST 31,
1997 1997
---- ----
(UNAUDITED)
LIABILITIES, REDEEMABLE WARRANTS, COMMON
STOCK AND OTHER STOCKHOLDERS' DEFICIT
<S> <C> <C>
CURRENT LIABILITIES:
Checks written in excess of bank balances $1,482 $ -
Current portion of long-term debt and short-term borrowings 2,411 6,784
Accounts payable 6,426 9,908
Accrued liabilities 12,178 11,031
Accrued interest 2,086 4,978
----- -----
Total current liabilities 24,583 32,701
Long-term debt, less current portion 119,440 115,159
Other long term obligations 1,341 1,543
Deferred income taxes 6,026 6,028
----- -----
Total liabilities 151,390 155,431
Commitments and contingencies (Note 4)
Redeemable warrants to purchase Class A Common Stock 6,417 5,675
Common stock and other stockholders' deficit:
Class A convertible common stock of $.001 par value:
Authorized: 5,203 shares; Issued and outstanding
2,135 shares in both periods 2 2
Class B, Series 1, common stock of $.001 par value:
Authorized: 17,715 shares; Issued and outstanding
8,456 shares in November and 8,481 shares in August 1997 8 8
Class B, Series 2, common stock of $.001 par value:
Authorized: 2,571 shares; Issued and outstanding
1,171 shares in both periods 1 1
Additional paid-in capital 8,530 8,661
Notes receivable from stockholders (450) (440)
Cumulative foreign currency translation adjustment (189) (173)
Unrealized holding losses on marketable securities (110) (92)
Accumulated deficit (21,895) (21,016)
------ ------
Total common stock and other stockholders' deficit (14,103) (13,049)
----- -----
Total liabilities, redeemable warrants, common stock and
other stockholders' deficit $143,704 $148,057
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS
ENDED NOVEMBER 30,
------------------
UNAUDITED
1997 1996
---- ----
Sales $41,976 $39,892
Cost of sales 33,799 32,115
------ -----
Gross profit 8,177 7,777
Selling, general and administrative 4,741 5,054
Research and development 588 594
Amortization of intangibles 834 755
--- -----
6,163 6,403
Income from operations 2,014 1,374
Other (income) expense:
Interest income (130) (200)
Interest expense 3,315 3,166
Amortization of debt financing costs 127 198
Other (income) expense (953) (246)
--- --
2,359 2,918
----- -----
Loss before income taxes (345) (1,544)
Benefit from income taxes (207) (618)
---- -----
Net loss ($138) ($926)
==== ====
Loss per common share:
Net loss per common share ($0.07) ($0.10)
Number of shares used in computing per share amount 11,770 11,813
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
NOVEMBER 30,
1997 1996
---- ----
(UNAUDITED)
Cash flows from operating activities:
<S> <C> <C>
Net (loss) $ (138) $ (926)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 3,964 3,723
Provision for excess and obsolete inventory (100) -
Loss(gain) on property, plant and equipment dispositions (985) 13
Provision for losses on doubtful accounts 121 196
Changes in working capital:
Accounts receivable 2,342 2,279
Inventories (68) (822)
Other current assets (568) (768)
Accounts payable (3,560) (3,219)
Accrued liabilities 1,069 (300)
Accrued interest (2,893) (2,931)
------ ------
Net cash used in operating activities (816) (2,755)
Cash flows from investing activities:
Additions to property, plant and equipment (3,758) (6,719)
Proceeds from sale of property, plant and equipment 1,305 259
Payment for Rapid Plast acquisition, net of cash acquired - (2,134)
Decrease in other assets 243 2,278
------ ------
Net cash used in investing activities (2,210) (6,316)
Cash flows from financing activities:
Repurchase of common stock (132) -
Checks written in excess of bank balances 1,482 -
Borrowings under debt arrangements 14 3,881
Increase in notes receivable from stockholders (10) -
Payment under covenants (171) (348)
------ ------
Net cash provided by financing activities 1,183 3,533
------ ------
Effect of exchange rate on cash (34) 25
------ ------
Decrease in cash and cash equivalents (1,877) (5,513)
Cash and cash equivalents at beginning of period 3,242 7,797
------ ------
Cash and cash equivalents at end of period $ 1,365 $ 2,284
===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Portola Packaging, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION:
The consolidated financial statements included herein have been prepared by
Portola Packaging, Inc. and its subsidiaries (the "Company") without audit and
in the opinion of management include all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair presentation. The
accompanying financial statements should be read in conjunction with the audited
financial statements contained in the Company's Form 10-K previously filed with
the Securities and Exchange Commission. The August 31, 1997 condensed balance
sheet data was derived from audited financial statements, but does not include
all disclosures required by generally accepted accounting principles. Interim
results are subject to seasonal variations and the results of operations for the
three months ended November 30, 1997 are not necessarily indicative of the
results to be expected for the full fiscal year ending August 31, 1998.
2. COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE:
Earnings (loss) per common share and common equivalent share is computed
by dividing loss by the weighted average number of shares of common stock and
common stock equivalents outstanding during the period. Except as discussed
below, the number of common shares is increased by the number of shares issuable
on the exercise of options and warrants when the market price of the common
stock exceeds the exercise price of the options and warrants. This increase in
the number of common shares is reduced by the number of common shares which are
assumed to have been purchased with the proceeds from the exercise of the
options or warrants; these purchases are assumed to have been made at the
average price of the common stock during that part of the period when the market
price of the common stock exceeds the exercise price of the options and
warrants.
Since the Company's warrants include a put provision, Emerging Issues Task
Force (EITF) Consensus 88-9 requires computation of earnings (loss) per share
using the lower of the amount computed assuming conversion, as described above,
or the amount computed assuming exercise of the put option feature of the
warrants. Earnings (loss) per share computed using the put option feature is the
more dilutive of the calculations in the quarters ended November 30, 1997 and
1996. The accretion of warrants of $742,000 and $256,000 for the quarters ended
November 30, 1997 and 1996, respectively, is added to the loss for the period to
derive loss per share.
3. INVENTORIES:
Inventory balances as of November 30, 1997 and August 31, 1997 were as
follows:
Nov 30, Aug 31,
1997 1997
---- ----
(unaudited)
Raw materials $5,219 $5,251
Work in process 583 442
Finished goods 4,274 4,225
----- -----
$10,076 $9,918
====== =====
7
<PAGE>
4. CONTINGENCIES:
The Company is engaged in patent litigation with various parties who are
seeking to have the court declare certain patents owned by the Company
invalid. In some of these cases the Company has a claim against it for
alleged violations of the antitrust laws. The Company believes its patents
are valid, and intends to vigorously contest these actions. However, there
can be no assurance that the Company will be successful in its defense of
these matters.
The Company is also party to a number of other lawsuits and claims arising
out of the normal course of business. Although the ultimate outcome of these
matters is not presently determinable, management does not believe the final
disposition of these matters will have a material adverse effect on the
financial position, results of operations or cash flows of the Company.
In March 1997, the Company was advised that the prospectus used by an affiliate
of the Company in connection with secondary market sales of approximately $14
million of the Company's senior notes did not contain current financial
information about the Company. The senior notes sold during this period by the
Company's affiliate may be subject to rescission, which may result in liability
for the Company for any loss incurred in connection with the rescission. No
liability has been accrued in the financial statements as of November 30, 1997
in connection with this matter since the Company has not made a determination
that it is probable that a loss on rescission will be incurred by the Company.
The Company believes that its cash resources, including its borrowings under its
line of credit, are adequate to cover any such loss without materially affecting
the normal conduct of its business.
5. RECENT ACCOUNTING PRONOUCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) 128, "Earnings per Share". SFAS 128 is
effective for quarterly periods ending after December 15, 1997. SFAS 128
requires presentation and calculation of a simplified earnings per share and
that prior periods be restated to conform to that revised presentation and
calculation.
In February 1997, the Financial Accounting Standards Board issued SFAS 129,
"Disclosure of Information about Capital Structure". SFAS 129 requires
disclosure about an entity's capital structure and contains no change in
disclosure requirements for entities that were subject to the previously
existing requirements. SFAS 129 is effective for the Company's fiscal year 1999.
In June 1997, the Financial Accounting Standards Board issued SFAS 130,
"Reporting Comprehensive Income". SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of
general-purpose financial statements. It is effective for the Company's fiscal
year 1999.
In June 1997, the Financial Accounting Standards Board issued SFAS 131,
"Disclosure About Segments of an Enterprise and Related Information". SFAS 131
changes current practice under SFAS 14 by establishing a new framework on which
to base segment reporting (referred to as the "management" approach) and also
requires interim reporting of segment information. It is effective for the
Company's fiscal year 1999.
The Company is currently studying the implications of these statements and has
not yet determined the impact of their adoption.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Disclosures Regarding Forward-Looking Statements
This report on Form 10-Q includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-Q, including, without
limitation, statements contained in this "Management's Discussion and Analysis
of Financial Condition and Results of Operations" regarding the Company's
financing alternatives, financial position, business strategy, plans and
objectives of management of the Company for future operations, and industry
conditions, are forward-looking statements. Although the Company believes that
the expectations reflected in any such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Any forward-looking statements herein are subject to certain risks
and uncertainties in the Company's business, including but not limited to,
competition in its markets, and reliance on key customers, all of which may be
beyond the control of the Company. Any one or more of these factors could cause
actual results to differ materially from those expressed in any forward-looking
statement. All subsequent written and oral forward-looking statements
attributable to the Company or any person acting on its behalf are expressly
qualified in their entirety by the cautionary statements disclosed in this
paragraph and elsewhere in this report.
RESULTS OF OPERATIONS
Sales increased $2.1 million, or 5.2%, to $42.0 million for the three
months ended November 30, 1997 compared to $39.9 million for the three months
ended November 30, 1996. This increase was principally attributable to
increased unit sales in Canada and the United Kingdom, as these newer
subsidiaries increase their operations.
Gross profit increased $0.4 million, or 5.1%, to $8.2 million for the
three months ended November 30, 1997, as compared to $7.8 million for the
three months ended November 30, 1996. Gross profit as a percentage of sales
remained constant at 19.5% for the three months ended November 30, 1997 and
1996. While the consolidated margin was constant, the contribution to
margin in the domestic closure business was up $0.3 million for the quarter
as compared with the same quarter of the prior year. Margins in
international operations declined for the Canadian and UK operations, each of
which has had relatively low margins due to high start up costs.
Selling, general and administrative expense decreased $313,000, or 6.2%, to
$4.7 million for the three months ended November 30, 1997, as compared to $5.1
million for the three months ended November 30, 1996, and decreased as a
percentage of sales from 12.7% for the three months ended November 30, 1996 to
11.3% for the three months ended November 30, 1997. These decreases are
primarily due to decreases in personnel related expenses.
Research and development expense decreased $6,000, or 1.0%, to $588,000
for the three months ended November 30, 1997, as compared to $594,000 for the
9
<PAGE>
three months ended November 30, 1996, and decreased as a percentage of sales
from 1.5% in the three months ended November 30, 1996 to 1.4% in the three
months ended November 30, 1997.
Amortization of intangibles (consisting of amortization of patents,
goodwill and covenants not to compete) increased $79,000, or 10.5%, to
$834,000 for the three months ended November 30, 1997, as compared to
$755,000 for the three months ended November 30, 1996. The increase was
primarily due to an increase in technology amortization due to purchased
technology in fiscal 1997.
Interest income decreased $70,000 to $130,000 for the three months ended
November 30, 1997 from $200,000 for the same period in fiscal 1996. This
decline was primarily due to lower levels of invested cash in fiscal 1998 as
compared to fiscal 1997.
Interest expense increased $149,000 to $3.3 million for the three months
ended November 30, 1997, as compared to $3.2 million for the three months ended
November 30, 1996. This was primarily due to a higher level of borrowing in
fiscal 1998.
Amortization of debt financing costs decreased $71,000 for the three months
ended November 30, 1997 to $127,000 from $198,000 for the three months ended
November 30, 1996. This decrease was primarily attributable to debt financing
activity in Canada.
Other (income) expense increased to a net income of $953,000 for the three
months ended November 30, 1997 from a net income of $246,000 for the three
months ended November 30, 1996. This was primarily due to the gain of
approximately $1.0 million on the sale of the Company's Portland, Oregon
facility.
The Company recorded a benefit from income taxes of $207,000 for the three
months ended November 30, 1997 based on its pre-tax loss using an effective tax
rate of 60% in anticipation of its expected tax rate for the entire fiscal year.
The Company had an effective tax rate of 11.8% for fiscal 1997. Income tax
expense does not bear a normal relationship to income before income taxes
primarily due to nondeductible goodwill and other intangibles arising from the
Company's acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company has relied primarily upon cash from operations, borrowings
from financial institutions and sales of common stock to finance its
operations, repay long-term indebtedness and fund capital expenditures and
acquisitions. At November 30, 1997, the Company had cash and cash
equivalents of $1.4 million, a decrease of $1.9 million from August 31, 1997.
Cash used by operations totaled $0.8 million for the three months ended
November 30, 1997, a $2.0 million decrease from the $2.8 million used by
operations for the three months ended November 30, 1996. Inventories and other
current assets used funds of $0.6 million in the three months ended November 30,
1997, compared to using funds of $1.6 million in the same period of the
prior year. Accrued interest expense used funds of $2.9 million in the first
quarter of fiscal 1998, and used the same amount of funds in the first
quarter of fiscal 1997. Additionally, accounts payable used funds of
$3.6 million in the first quarter of fiscal 1998 as compared to using funds of
$3.2 million in the first quarter of fiscal 1997.
10
<PAGE>
Cash used in investing activities was $2.2 million for the three months
ended November 30, 1997, as compared to $6.3 million for the three months ended
November 30, 1996. This consisted primarily of additions to property and
equipment.
Cash provided by financing activities was $1.2 million for the first
quarter of fiscal 1998 compared to funds provided by financing activities of
$3.5 million for the first quarter of fiscal 1997.
At November 30, 1997, the Company had $1.4 million in cash and cash
equivalents as well as borrowing capacity under the revolving credit line (of
which $30.6 million was available for draw as of November 30, 1997). Management
believes that these resources, together with anticipated cash flow from
operations, will be adequate to fund the Company's operations, debt service
requirements and capital expenditures through fiscal 1998. However, there can
be no assurance that additional capital beyond the amounts currently forecasted
by the Company will not be required or that any such required additional capital
will be available on reasonable terms, if at all, at such time or times as
required by the Company.
RECENT ACCOUNTING PRONOUCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) 128, "Earnings per Share". SFAS 128 is
effective for quarterly periods ending after December 15, 1997. SFAS 128
requires presentation and calculation of a simplified earnings per share and
that prior periods be restated to conform to that revised presentation and
calculation.
In February 1997, the Financial Accounting Standards Board issued SFAS 129,
"Disclosure of Information about Capital Structure". SFAS 129 requires
disclosure about an entity's capital structure and contains no change in
disclosure requirements for entities that were subject to the previously
existing requirements. SFAS 129 is effective for the Company's fiscal year 1999.
In June 1997, the Financial Accounting Standards Board issued SFAS 130,
"Reporting Comprehensive Income". SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of
general-purpose financial statements. It is effective for the Company's fiscal
year 1999.
In June 1997, the Financial Accounting Standards Board issued SFAS 131,
"Disclosure About Segments of an Enterprise and Related Information". SFAS 131
changes current practice under SFAS 14 by establishing a new framework on which
to base segment reporting (referred to as the "management" approach) and also
requires interim reporting of segment information. It is effective for the
Company's fiscal year 1999.
The Company is currently studying the implications of these statements and has
not yet determined the impact of their adoption.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith or incorporated by reference
herein.
Exhibit
Number Exhibit Title
- ------ -------------
10.46 Letter Agreement, dated July 22, 1997, by and between Registrant and
Joe Mayernick, as acknowledged and agreed to on August 15, 1997.
11.01 Computation of Net Loss per share.
27.01 Financial Data Schedule.
(b) The Company did not file any reports on Form 8-K during the three (3) month
period ended November 30, 1997.
12
<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.
PORTOLA PACKAGING, INC.
(Registrant)
Date: January 13, 1998 /s/ Joseph T. Mayernick
-----------------------------
Joseph T. Mayernick
Vice President and
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
13
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Title
- ------- -------------
10.46 Letter Agreement, dated July 22, 1997, by and between Registrant and
Joe Mayernick, as acknowledged and agreed to on August 15, 1997.
11.01 Computation of Net Loss per share.
27.01 Financial Data Schedule.
14
<PAGE>
[Letterhead of Portola Packaging, Inc.]
July 22, 1997
EXHIBIT 10.46
Mr. Joe Mayernick
1499 Monk Road
Gladwyne, Pa 19035
Dear Joe,
It is my pleasure to confirm our offer of employment as the Vice President
Finance and Chief Financial Officer of Portola Packaging, Inc. at our San Jose
facility.
Your annual salary will be $185,000 per year with a bonus potential of 50% for
fiscal year 1998, 50% of that is guaranteed. Subsequent bonuses will be based
on mutually agreed upon company and individual performance measures and will be
consistent with other senior officers. You will receive an auto allowance of
$600 per month and be provided with two gas cards.
In addition, you will receive options for 150,000 shares under the Portola
Packaging Employee Stock Option Plan.
As a full-time employee you will be eligible for benefits such as Medical /
Dental / Vision coverage effective your first day of employment, as well as long
term disability, voluntary life insurance program and vacation. Life insurance
of $300,000 will be supplied by Portola.
You will also be eligible for the Portola Packaging, Inc. Retirement and Savings
Plan. As with all other employees, you will join the plan on the first entry
date following one year of employment. The company maintains a profit-sharing
plan in which annual awards are determined based on overall profitability.
Contributions are made to each employee's retirement account and you will have
the opportunity to contribute additional funds through a 401(k) savings and
retirement plan.
In addition, we would offer a change of control clause that would provide
medical coverage and salary for 24 months or until you find other employment,
whichever comes first.
We all feel very confident that you will be an excellent addition to the
management team and to the company. If these conditions meet your approval,
please sign below. Upon receipt of your agreement, we would include a $50,000
signing bonus. We look forward to welcoming you to Portola Packaging, Inc.
Sincerely,
/s/Jack L. Watts
Jack L. Watts
President and CEO
Signed and Agreed: /s/ Joe Mayernick Date: 8/15/97
---------------------
Joe Mayernick
<PAGE>
EXHIBIT 11.01
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
Computation of Net Loss Per Share (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
NOVEMBER 30,
------------------------
1997 1996
Weighted average common shares
outstanding for the period 11,770 11,813
--------- ---------
Shares used in per share calculation 11,770 11,813
--------- ---------
--------- ---------
Net loss ($138) ($926)
Less the increase in the put value of warrants (742) (256)
--------- ---------
Net loss ($880) ($1,182)
--------- ---------
--------- ---------
Net loss per share ($0.07) ($0.10)
--------- ---------
--------- ---------
(1) There is no difference between primary and fully diluted net loss per share
for all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 1,365
<SECURITIES> 811
<RECEIVABLES> 22,219
<ALLOWANCES> (1,293)
<INVENTORY> 10,076
<CURRENT-ASSETS> 36,392
<PP&E> 128,762
<DEPRECIATION> (48,460)
<TOTAL-ASSETS> 143,704
<CURRENT-LIABILITIES> 24,583
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> (14,114)
<TOTAL-LIABILITY-AND-EQUITY> 143,704
<SALES> 41,976
<TOTAL-REVENUES> 41,976
<CGS> 33,799
<TOTAL-COSTS> 6,163
<OTHER-EXPENSES> (1,083)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,442
<INCOME-PRETAX> (345)
<INCOME-TAX> (207)
<INCOME-CONTINUING> (138)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (138)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
