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 FEBRUARY 28, 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 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.
--- ---
11,776,159 shares of Registrant's $.001 par value Common Stock, consisting of
2,134,992 shares of nonvoting Class A Common Stock and 9,641,167 shares in the
aggregate of voting Class B Common Stock, Series 1 and 2 combined, were
outstanding at March 31, 1998.
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
INDEX
Part I - Financial Information
- -------------------------------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
February 28, 1998 and August 31, 1997
Consolidated Statements of Operations for
the Three and Six Months Ended February 28, 1998 and 1997
Consolidated Statements of Cash Flows for
the Six Months Ended February 28, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II - Other Information
- ----------------------------
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
February 28, August 31,
1998 1997
------------ ----------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,427 $3,242
Investments 1,744 841
Accounts receivable, net 19,172 23,339
Inventories 10,281 9,918
Other current assets 1,547 1,783
Deferred income taxes 671 1,032
------------ ----------
Total current assets 35,842 40,155
Property, plant and equipment, net 82,513 79,779
Goodwill, net 14,380 15,044
Patents, net 1,919 2,024
Covenants not to compete, net 1,389 2,183
Debt financing costs, net 3,212 3,433
Other assets 4,657 5,439
------------ ----------
Total assets $143,912 $148,057
============ ==========
LIABILITIES, REDEEMABLE WARRANTS, COMMON
STOCK AND OTHER STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt and
short-term borrowings $2,515 $6,784
Accounts payable 5,858 9,908
Accrued liabilities 11,134 11,031
Accrued interest 5,063 4,978
------------ ----------
Total current liabilities 24,570 32,701
Long-term debt, less current portion 120,998 115,159
Other long term obligations 1,126 1,543
Deferred income taxes 4,915 6,028
------------ ----------
Total liabilities 151,609 155,431
Contingencies (Note 4)
Redeemable warrants to purchase Class A
Common Stock 6,895 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 1998 and 1997 2 2
Class B, Series 1, common stock of $.001
par value:
Authorized: 17,715 shares; Issued and
outstanding 8,470 shares in February 1998
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 1998 and 1997 1 1
Additional paid-in capital 8,588 8,661
Notes receivable from stockholders (450) (440)
Cumulative foreign currency translation
adjustment (210) (173)
Unrealized holding losses on marketable
securities 450 (92)
Accumulated deficit (22,981) (21,016)
------------ ----------
Total common stock and other
stockholders' deficit (14,592) (13,049)
------------ ----------
Total liabilities, redeemable
warrants, common stock and other
stockholders' deficit $143,912 $148,057
============ ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
--------------------- ---------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $39,267 $40,079 $81,243 $79,971
Cost of sales 31,348 32,974 65,147 65,089
---------- ---------- ---------- ----------
Gross profit 7,919 7,105 16,096 14,882
---------- ---------- ---------- ----------
Selling, general and
administrative 4,658 4,525 9,399 9,579
Research and development 568 573 1,156 1,167
Amortization of intangibles 831 879 1,665 1,634
Write-off of intangibles -- 1,720 -- 1,720
Restructuring costs -- 1,093 -- 1,093
---------- ---------- ---------- ----------
6,057 8,790 12,220 15,193
---------- ---------- ---------- ----------
Income (loss) from operations 1,862 (1,685) 3,876 (311)
---------- ---------- ---------- ----------
Other (income) expense:
Interest income (120) (89) (250) (289)
Interest expense 3,389 3,373 6,704 6,539
Amortization of debt
financing costs 130 115 257 313
Other (income) expense 243 257 (710) 11
---------- ---------- ---------- ----------
3,642 3,656 6,001 6,574
---------- ---------- ---------- ----------
Loss before income taxes (1,780) (5,341) (2,125) (6,885)
Benefit from income taxes (1,173) (1,032) (1,380) (1,650)
---------- ---------- ---------- ----------
Net loss ($607) ($4,309) ($745) ($5,235)
========== ========== ========== ==========
Basic and diluted net loss
per common share ($0.05) ($0.37) ($0.06) ($0.44)
========== ========== ========== ==========
Number of shares used in
computing per share amount 11,772 11,798 11,777 11,806
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
PORTOLA PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
<TABLE>
<CAPTION>
Six Months Ended
February 28,
---------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($745) ($5,235)
Adjustments to reconcile net loss to net cash
from operating activities:
Depreciation and amortization 7,625 7,305
Deferred income taxes (1,319) --
Write-off of intangibles -- 1,720
Loss (gain) on property and equipment dispositions (834) 70
Provision for losses on accounts receivable 162 302
Provision for excess and obsolete inventories 162 519
Provision for restructuring -- 279
Changes in working capital:
Accounts receivable 4,006 1,347
Inventories (525) (292)
Other current assets 236 (1,173)
Accounts payable (4,050) (1,895)
Accrued liabilities 309 (50)
Accrued interest 86 79
---------- ----------
Net cash provided by operating activities 5,113 2,976
---------- ----------
Cash flows used for investing activities:
Additions to property and equipment (8,832) (9,284)
Proceeds from sale of property, plant and equipment 1,154 261
Payment for Rapid Plast acquisition, net of
cash acquired -- (2,134)
Decrease in other assets 625 1,873
---------- ----------
Net cash used in investing activities (7,053) (9,284)
---------- ----------
Cash flows from financing activities:
Repayment of long-term debt obligations (1,470) (783)
Borrowings under debt arrangements 39 222
Borrowings under revolving line of credit 3,000 2,430
Repayment of notes receivable from shareholder -- 7
Increase in notes receivable from stockholders (10) --
Repurchase of common stock (132) (500)
Issuance of common stock 59 --
Payment under covenants (417) (537)
---------- ----------
Net cash from financing activities 1,069 839
---------- ----------
Effect of exchange rate on cash 56 (2)
---------- ----------
Decrease in cash and cash equivalents (815) (5,471)
Cash and cash equivalents at beginning of period 3,242 7,797
---------- ----------
Cash and cash equivalents at end of period $2,427 $2,326
========== ==========
Supplemental disclosure of non-cash information:
Acquisition of property and equipment through
long-term capital leases $ -- $1,370
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
Portola Packaging, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except per share data)
(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. Interim results are subject to
significant seasonal variations and the results of operations for the three and
six months ended February 28, 1998 are not necessarily indicative of the results
to be expected for the full year ending August 31, 1998.
2. COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE:
Effective for the quarter ended February 28, 1998, the Company adopted
Financial Accounting Standards Board No. 128 "Earnings Per Share" (EPS) and
accordingly has restated EPS for prior periods from previously reported EPS.
Basic EPS is computed as net income (loss) divided by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common shares issuable through stock
options, warrants and other convertible securities. Common equivalent shares
are excluded from the computation of net loss per share as their effect is
antidilutive.
The following is a reconciliation of the numerator (net loss) and the
denominator (number of shares) used in the basic and diluted EPS calculations:
Three Months Ended Six Months Ended
February 28, February 28,
--------------------- ---------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
Net loss ($607) ($4,309) ($745) ($5,235)
Shares used in per share
calculation 11,772 11,798 11,777 11,806
========== ========== ========== ==========
Basic and diluted EPS ($0.05) ($0.37) ($0.06) ($0.44)
========== ========== ========== ==========
3. INVENTORIES:
Inventory balances as of February 28, 1998 and August 31, 1997 were as
follows:
Feb 28, Aug 31,
1998 1997
---- ----
(unaudited)
Raw materials $5,237 $5,251
Work in process 582 442
Finished goods 4,462 4,225
------- -------
$10,281 $ 9,918
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.
5. RESTRUCTURING COSTS:
The Company took measures to improve productivity and quality in its core
business, and in fiscal 1997 implemented a restructuring plan which consolidated
its separate Closure, Packaging and Manufacturing divisions. This restructuring
plan included a reduction in staff positions and the closure of its Portland,
Oregon plant in February 1997 and its Bettendorf, Iowa plant in July 1997. The
Portland facility was sold in the first fiscal quarter of 1998 and the
Bettendorf plant has been listed for sale. The Company recorded a
restructuring charge of approximately $2.4 million primarily for payroll
related charges in connection with this restructuring plan in fiscal 1997.
6. WRITE-OFF OF INTANGIBLES:
In connection with the Portland, Oregon plant closing discussed above, the
Company wrote off $1.7 million of goodwill associated with this plant in fiscal
1997.
7. RECENT ACCOUNTING PRONOUNCEMENTS:
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.
<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 Exchange 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 decreased $0.8 million, or 2.0%, from $40.1 million for the three
months ended February 28, 1997 to $39.3 million for the three months ended
February 28, 1998, and increased $1.3 million, or 1.6%, from $80.0 million for
the six months ended February 28, 1997 to $81.2 million for the six months
ended February 28, 1998. Sales also decreased $2.7 million, or 6.5%, for the
second fiscal quarter ended February 28, 1998 compared to sales for the first
fiscal quarter ended November 30, 1997. The increase in sales for the six
months ended February 28, 1998 was primarily due to increased sales from
operations in the United Kingdom and Canada partially offset by decreases in
domestic closures and equipment sales. The decreases in sales for the second
fiscal quarter ended February 28, 1998 compared to the same quarter of the
prior fiscal year and to the first quarter of the current fiscal year, were
primarily due to decreases in domestic closures sales.
Gross profit increased $0.8 million, or 11.5%, to $7.9 million for the
three months ended February 28, 1998, as compared to $7.1 million for the three
months ended February 28, 1997, and increased $1.2 million, or 8.2%, to $16.1
million for the six months ended February 28, 1998 from $14.9 million for the
same period in fiscal 1997. Gross profit as a percentage of sales increased
from 17.7% for the three months ended February 28, 1997 to 20.2% for the three
months ended February 28, 1998, and from 18.6% for the six months ended
February 28, 1997 to 19.8% for the same period in fiscal 1998. The margin
increase was due primarily to improved margins in the equipment division,
partially offset by lower margins in the domestic closure business which were
down slightly for the three and six month periods ended February 28, 1998 as
compared with the same periods of the prior year.
Selling, general and administrative expenses increased $133,000, or 2.9%,
to $4.7 million for the three months ended February 28, 1998, as compared to
$4.5 million for the same period in fiscal 1997, and increased as a percentage
of sales from 11.3% for the three months ended February 28, 1997 to 11.9% for
the three months ended February 28, 1998. For the six months ended February
28, 1998, selling, general and administrative expenses were $9.4 million, a
decrease of $0.2 million, or 1.9%, from expenses of $9.6 million for the same
period in fiscal 1997. As a percentage of sales for the six months ended
February 28, 1998, selling, general and administrative expenses were 11.6% as
compared to 12.0% for the same period in fiscal 1997. The increases for the
second fiscal quarter compared to the same period of the prior year were
primarily due to increased expenses for bonus accrual partially offset by
decreases in personnel costs. The decreases for the six months ended February
28, 1998 compared to the prior year are primarily due to decreases in group
insurance and legal fees partially offset by increases in personnel costs.
Research and development expense decreased $5,000, or 0.9%, to $568,000
for the three months ended February 28, 1998, as compared to $573,000 for the
three months ended February 28, 1997, and remained constant as a percentage of
sales at 1.4% in the three months ended February 28, 1998 and 1997. The
decrease was primarily due to fewer expenditures for prototype costs offset by
increased expenditures for patent consulting in the three months ended February
28, 1998 as compared to the same period of fiscal 1997. For the six months
ended February 28, 1998, research and development expense was $1.2 million, a
decrease of $11,000, or 0.9%, from $1.2 million for the same period in fiscal
1997. As a percentage of sales, research and development expense was 1.4% for
the six months ended February 28, 1998, as compared to 1.5% for the same period
in fiscal 1997. The absolute decrease in research and development expense was
due primarily to decreased personnel costs.
Amortization of intangibles (consisting of amortization of patents,
technology, goodwill and covenants not to compete) decreased $48,000, or 5.5 %,
to $831,000 for the three months ended February 28, 1998, as compared to
$879,000 for the three months ended February 28, 1997, and increased $31,000,
or 1.9%, to $1.7 million for the six months ended February 28, 1998 as compared
to $1.6 million for the same period in fiscal 1997. The increase was primarily
due to an increase in technology amortization due to purchased technology in
fiscal 1997.
In the second fiscal quarter of 1997 the Company wrote off goodwill of
$1.7 million in connection with the closure of its Portland, Oregon plant in
February 1997.
The Company recorded a restructuring charge of $1.1 million primarily for
employee severance payments in connection with the closure of its Portland,
Oregon plant in the fiscal quarter ended February 28, 1997 in connection with
the restructuring plan implemented by the Company in December 1996. In March
1997, the Company announced further restructuring plans which included the
closure of its Bettendorf, Iowa plant in July 1997.
Interest income increased $31,000 to $120,000 for the three months ended
February 28, 1998 from $89,000 for the same period in fiscal 1997, and
decreased $39,000 to $250,000 for the six months ended February 28, 1997 as
compared to $289,000 for the same period in fiscal 1997. These increases and
decreases are primarily due to fluctuations in the levels of invested cash in
fiscal 1998 as compared to fiscal 1997.
Interest expense increased $16,000 to $3.4 million for the three months
ended February 28, 1998, as compared to $3.4 million for the three months ended
February 28, 1997, and increased $165,000 to $6.7 million for the six months
ended February 28, 1998 as compared to $6.5 million for the same period in
fiscal 1997. These increases were primarily due to a higher level of debt in
fiscal 1998 due to borrowings under the Company's line of credit in fiscal
1998.
Amortization of debt financing costs increased $15,000 for the three
months ended February 28, 1998 to $130,000 from $115,000 for the three months
ended February 28, 1997, and decreased $56,000 to $257,000 for the six months
ended February 28, 1998 as compared to $313,000 for the same period in fiscal
1997. Debt financing costs are primarily attributable to the $110 million
senior notes issued in October 1995 and to a lesser extent, debt financing
incurred in Western Canada.
Other expense decreased $14,000 to $243,000 for the three months ended
February 28, 1998 compared to $257,000 for the same period in fiscal 1997 which
was primarily due to a decrease in foreign currency losses on inter-company
transactions. Other income increased $721,000 for the six months ended
February 28, 1998 to $710,000 compared to other expense of $11,000 for the same
period in fiscal 1996. This increase in other income was primarily due to the
gain from the sale of the Portland, Oregon facilities.
The Company recorded a benefit from income taxes of $1.4 million for the
six months ended February 28, 1998 based on its pre-tax loss using an effective
tax rate of 65% in anticipation of its expected tax rate for the entire fiscal
year. The actual effective tax rate for the entire fiscal year could vary
substantially depending on actual results achieved. 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 February 28, 1998, the Company had cash and cash equivalents
of $2.4 million, a decrease of $0.8 million from August 31, 1997.
Cash provided by operations totaled $5.1 million for the six months ended
February 28, 1998, a $2.1 million increase from the $3.0 million provided by
operations for the six months ended February 28, 1997. This increase in cash
provided by operating activities is mainly due to the decrease in the net loss
from $5.2 million to $0.7 million, the decrease in accounts receivable of $4.0
million compared to $1.3 million decrease in 1997 offset by the decrease in
accounts payable of $4.1 million compared to $1.9 million decrease in 1997.
Cash used in investing activities was $7.1 million for the six months
ended February 28, 1998, as compared to $9.3 million for the six months ended
February 28, 1997. This consisted primarily of additions to property and
equipment and for fiscal 1997, also included the acquisition of the Company's
Eastern Canadian subsidiary (formerly Rapid Plast and now named Portola
Packaging Ltd.) in the amount of $2.1 million. Cash provided by investing
activities also included $1.2 million in proceeds from the sale of property and
equipment, which was primarily gain from the sale of the Portland, Oregon
facilities realized in the first fiscal quarter ended November 30, 1997.
Cash provided by financing activities was $1.1 million for the first half
of fiscal 1998 compared to $0.8 million for the first half of fiscal 1997. As
of February 28, 1998, the Company had borrowed $7.4 million under its $35
million revolving line of credit.
At February 28, 1998, the Company had $2.4 million in cash and cash
equivalents as well as borrowing capacity under the revolving credit line (of
which $27.6 million was available for draw as of February 28, 1998). 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 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.
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Portola Packaging, Inc. is a privately-held company, and currently has no class
of voting securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended. The Company has two classes of common
equity, Class A Common Stock and Class B Common Stock, Series 1 and Series 2.
Shares of Class A Common Stock are not entitled to vote. The Company's Class B
Common Stock, Series 1 and Class B Common Stock, Series 2 have the same voting
rights, each share being entitled to one vote.
The annual meeting of the stockholders of the Company was held on January 20,
1998 for the purpose of electing six members of the Board of Directors of the
Company and ratifying the selection by the Board of Directors of the Company's
independent public accountants for the fiscal year ending August 31, 1998.
Proxies representing 6,663,872 shares of the 8,456,534 shares of Class B Common
Stock, Series 1 issued and outstanding on the record date, or approximately 79%
of the outstanding shares of such Series, were received and entitled to be
voted at the annual meeting. Proxies representing 815,715 shares of the
1,171,430 shares of Class B Common Stock, Series 2 issued and outstanding on
the record date, or approximately 70% of the outstanding shares of such Series,
were received and entitled to be voted at the annual meeting. The holders of
Class B Common Stock, Series 1 and Series 2, vote as a single class.
Christopher Behrens, Martin R. Imbler, Jeffrey Pfeffer, Timothy Tomlinson, Jack
L. Watts and Larry C. Williams each received 7,479,587 votes, representing
approximately 78% of the total voting shares outstanding and all shares present
and voting at the annual meeting, and each such individual was elected to serve
as a Director of the Company until the Company's next annual meeting. The
holders of the 7,479,587 shares represented and entitled to vote at the annual
meeting, representing all shares present and voting at the meeting, also
ratified and approved the selection of Coopers & Lybrand L.L.P. as independent
public accountants for the Company for the fiscal year ending August 31, 1998.
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
- ------ -------------
10.47 Summary Description of Company Bonus Plan and Company Profit
Sharing Plan
27.01 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the period ended
February 28, 1998.
<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: April 14, 1998 /s/ Joseph T. Mayernick
-----------------------------
Joseph T. Mayernick
Vice President and
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TITLE
- ------ -------------
10.47 Summary Description of Company Bonus Plan and Company Profit
Sharing Plan
27.01 Financial Data Schedule
<PAGE>
Exhibit 10.47
Summary Description of Company bonus plan and Company profit sharing plan:
The Company has adopted a bonus incentive plan effective for fiscal year
1998. Certain management and technical employees are eligible for bonuses
under the plan. Bonuses under this plan will be based on two principal
factors, namely, the Company's financial performance relative to plan, measured
by EBITDA, and the extent to which the Company has reached customer
satisfaction goals as measured by a quarterly customer survey. Eligible
employees will receive target bonuses to the extent these goals are reached.
Such bonuses will increase up to double the originally proposed amount to the
extent that financial performance exceeds plan by up to 15% and customer survey
results exceed original targets by up to specified amounts. If and to the
extent that financial performance falls short of plan or customer satisfaction
ratings fail to increases from levels established during the first quarter of
1998, bonuses will be less than originally proposed or will not be awarded.
Total funds available for payment under plan will be determined by the Board of
Directors at fiscal year end based on the overall financial performance of the
Company
The Company has also revised its profit sharing plan to provide that
eligible employees will receive profit sharing awards of up to five percent of
compensation based on the same Company financial performance and customer
satisfaction goals outlined above. Such awards will increase up to double the
original amount to the extent that financial performance exceeds plan by up to
15% and customer survey results exceed the original targets by up to specified
amounts. If and to the extent that financial performance falls short of plan
or customer satisfaction ratings fail to increase from levels established
during the first quarter of 1998, awards will be less than originally proposed
or will be nil.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 2,427
<SECURITIES> 1,744
<RECEIVABLES> 19,172 <F1>
<ALLOWANCES> 0
<INVENTORY> 10,281
<CURRENT-ASSETS> 35,842
<PP&E> 82,513 <F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 143,912
<CURRENT-LIABILITIES> 24,570
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> (14,603)
<TOTAL-LIABILITY-AND-EQUITY> 143,912
<SALES> 81,243
<TOTAL-REVENUES> 81,243
<CGS> 65,147
<TOTAL-COSTS> 65,147
<OTHER-EXPENSES> 12,220
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,704
<INCOME-PRETAX> (2,125)
<INCOME-TAX> (1,380)
<INCOME-CONTINUING> (745)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (745)
<EPS-PRIMARY> ($0.06)
<EPS-DILUTED> ($0.06)
<FN>
<F1> Shown net of allowance
<F2> Shown net of depreciation
</FN>
</TABLE>
