<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
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 333-05885
Packaging Resources Incorporated
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3321568
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One Conway Park, 100 Field Drive, Suite 300, Lake Forest, Illinois 60045
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(847)295-6100
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the amount outstanding of each of the issuer's classes of common stock,
as of the latest practicable date.
As of November 30, 1996, the issuer had outstanding 1,000 shares of
Common Stock, $.01 par value per share.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PACKAGING RESOURCES INCORPORATED
STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30 November 30
------------------ -----------------
1996 1995 1996 1995
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Net sales $30,298 $33,073 $91,077 $104,392
Cost of goods sold 25,181 27,462 74,543 86,801
-------- ------- ------- --------
Gross profit 5,117 5,611 16,534 17,591
Selling, general & administrative expenses 1,724 1,498 5,372 5,163
Amortization of intangibles and other assets 173 599 519 1,796
-------- ------- ------- --------
Operating income 3,220 3,514 10,643 10,632
Interest expense 3,398 2,651 9,216 8,148
-------- ------- ------- --------
Income before income taxes and (178) 863 1,427 2,484
extraordinary item
Income tax expense (76) 354 614 1,018
-------- ------- ------- --------
Income (Loss) before extraordinary item (102) 509 813 1,466
Extraordinary item -- write-off of unamortized
deferred financing cost, net of tax 0 0 1,064 0
-------- ------- ------- --------
Net income(loss) ($102) $509 ($251) $1,466
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PACKAGING RESOURCES INCORPORATED
BALANCE SHEETS (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
November 30 February 29,
1996 1996
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $5,064 $398
Account receivable, net 10,475 10,719
Inventories 21,340 21,394
Prepaid expenses 600 690
Deferred income taxes 922 922
---------- ---------
Total current assets 38,401 34,123
Property, plant, and equipment, net 52,286 52,352
Intangibles, net 20,698 20,454
Other assets 5,762 3,754
---------- ---------
$117,147 $110,683
---------- ---------
---------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt $950 $10,350
Accounts payable 7,109 2,615
Accrued expenses 5,239 4,196
---------- ---------
Total current liabilities 13,298 17,161
Long-term debt, excluding current maturities 110,000 67,174
Deferred income taxes 7,595 8,083
---------- ---------
Total liabilities $130,893 $92,418
Stockholder's equity (deficit):
Common stock, $.01 par value. 1,000 shares authorized,
issued, and outstanding - -
Additional paid-in capital (11,483) 20,278
Retained earnings (accumulated deficit) (2,263) (2,013)
---------- ---------
Total stockholder's equity (deficit) ($13,746) $18,265
---------- ---------
$117,147 $110,683
---------- ---------
---------- ---------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PACKAGING RESOURCES INCORPORATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
November 30
---------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($251) $1,466
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,794 8,637
Deferred income taxes (488) 1,922
Change in assets and liabilities:
Change in current assets 469 4,282
Change in current liabilities 5,539 (2,057)
Write-off of unamortized deferred financing costs 1,867 0
- -------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,930 14,250
- -------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant, and equipment 0 105
Capital expenditures (5,515) (1,993)
(Increase) decrease in noncurrent assets (764) (1,536)
- -------------------------------------------------------------------------------------------
Net cash used in investing activities (6,279) (3,424)
- -------------------------------------------------------------------------------------------
Cash flows from financing activities:
Payments under credit agreement (2,250) (4,102)
Payments of promissory notes (850) (1,050)
Repayment of indebtedness under old credit agreement (73,474) 0
Proceeds from senior secured notes, net 105,350 0
Dividends paid (31,761) 0
- -------------------------------------------------------------------------------------------
Net cash used in financing activities (2,985) (5,152)
- -------------------------------------------------------------------------------------------
Net increase in cash 4,666 5,674
Cash at beginning of period 398 232
- -------------------------------------------------------------------------------------------
Cash at end of period $5,064 $5,906
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information - cash paid for:
Interest $7,516 $6,886
Income taxes $342 $65
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PACKAGING RESOURCES INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
1) BASIS OF PRESENTATION
The balance sheet as of November 30, 1996 and the statements of
operations for the three and nine month periods ended November 30, 1996 and
the statement of cash flows for the nine month periods ended November 30,
1996 and 1995 have been prepared by Packaging Resources Incorporated (PRI
or the Company). In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair statement of the
financial statements for the interim periods included herein have been
made. The results of operations for the three and nine month periods ended
November 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
The Company is a wholly owned subsidiary of Packaging Resources Group,
Inc (Group). Group is a wholly owned subsidiary of HPH Industries, Ltd
(HPH).
The primary business of PRI is the manufacture and sale of plastic
packaging for the food, dairy, and pharmaceutical industries and
promotional beverage cups. PRI has manufacturing facilities in Coleman,
Michigan; Fort Worth, Texas; Kansas City, Missouri; Mt. Carmel,
Pennsylvania; and New Vienna, Ohio.
(b) INVENTORIES
Inventories are stated at the lower of first-in, first-out cost or
net realizable value.
(c) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation on
plant and equipment is calculated on the straight-line method over the
following estimated useful lives of the assets:
Furniture and fixtures . . . . . . . . . . . 5 years
Molds . . . . . . . . . . . . . . . . 3-5 years
Machinery and equipment . . . . . . . . . . 13 years
Buildings and improvements . . . . . . . . . 25 years
Land improvements . . . . . . . . . . . . 35 years
Leasehold improvements are amortized ratably over the shorter of
the lease term or estimated useful life of the assets.
(d) INTANGIBLES
Intangibles consists of patent costs and the excess of the cost
over the fair value of net assets purchased. The intangibles are amortized
on a straight-line basis over their useful lives of 14 to 40 years.
Accumulated amortization was $3,865 and $4,384 at February 29, 1996 and
November 30, 1996, respectively.
At each balance sheet date, PRI evaluates the realizable value of
intangibles on the basis of whether the intangibles are fully recoverable
from projected, undiscounted net cash flows. Based on its most recent
analysis, PRI believes no impairment of the carrying values of intangibles
exists.
(e) OTHER ASSETS
The debt issuance costs included in other assets are amortized over
their respective useful lives on the straight-line method.
<PAGE>
(f) RETIREMENT PLANS
PRI has two defined contribution retirement plans covering
substantially all of its employees. PRI's Money Purchase Retirement Plan
is funded entirely by employer contributions based upon a defined
percentage of participating employees compensation. PRI also has a 401(k)
plan where participants elect to have a designated percentage of their
salary withheld and contributed to the plan.
(g) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
3) INVENTORIES
Inventories consist of the following at February 29, 1996 and
November 30, 1996:
February 29, November 30,
1996 1996
---- ----
Finished goods . . . . . . . . . $13,065 $12,376
Raw materials . . . . . . . . . 4,407 5,026
Supplies and mold materials. . . . . 3,922 3,938
------- -------
Total . . . . . . . . . . . . $21,394 $21,340
4) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consist of the following at February
29, 1996 and November 30, 1996:
February 29, November 30,
1996 1996
---- ----
Land . . . . . . . . . . . . $ 309 $ 309
Buildings . . . . . . . . . . 10,156 10,174
Machinery, equipment, and fixtures . . 80,271 82,285
Leasehold improvements . . . . . . 157 1,612
Construction in progress . . . . . 1,562 3,590
------- -------
92,455 97,970
Less allowance for depreciation and
amortization . . . . . . . . . (40,103) (45,684)
-------- -------
Total . . . . . . . . . $52,352 $52,286
Construction in progress includes machinery and equipment which
have not yet been placed in service and molds which are in the process of
being manufactured. Depreciation expense for the three months ending
November 30, 1995 and November 30, 1996 was $1,865 and $1,869 respectively.
5) OTHER ASSETS
Other assets consist of the following at February 29, 1996 and
November 30, 1996:
February 29, November 30,
1996 1996
---- ----
Debt issuance cost, net . . . . $2,213 $4,330
Leased equipment, net . . . . 1,479 1,370
Other . . . . . . . . . . 62 62
------ ------
$3,754 $5,762
The debt issuance costs as of February 29, 1996, were incurred in
connection with the revolving credit loan, the 12.5% senior subordinated
notes issued by Group, and the term loan
<PAGE>
described in note 8. These costs were written-off in May 1996. The debt
issuance costs as of November 30, 1996 were incurred in connection with the
issue of the 11 5/8% Senior Secured Notes due 2003 and are being amortized
over the remaining life of the debt. Amortization of the deferred
financing costs was $415 and $148 for the three months ended November 30,
1995 and November 30, 1996, respectively.
6) LEASES
PRI has several noncancelable operating leases for substantial
portions of the Company's plant and office facilities and machinery and
equipment. Leased plant and office facilities generally contain renewal
options. Rental expense for operating leases for the three months ended
November 30, 1995 and November 30, 1996 aggregated $475 and $428,
respectively.
Additionally, PRI has several facilities which are being subleased.
7) ACCRUED EXPENSES
Accrued expenses consist of the following at February 29, 1996 and
November 30, 1996:
February 29, November 30,
1996 1996
---- ----
Interest . . . . . . . . . . $ 27 $ 983
Vacation . . . . . . . . . . 1,056 1,056
Pension . . . . . . . . . . 985 923
Other . . . . . . . . . . . 2,128 2,277
------ ------
$4,196 $5,239
8) LONG-TERM DEBT
On March 31, 1995, PRI restructured its credit facility and debt
covenants. In conjunction with this restructuring, PRI received a waiver
for noncompliance with certain debt covenants through March 31, 1995.
Thereafter, PRI was in compliance with all restructured debt covenants.
On May 17, 1996, PRI issued $110 million in 11 5/8% Senior Secured
Notes due 2003. The net proceeds from this issuance were used to repay all
outstanding borrowings under the existing senior secured credit facility of
$73.5 million and to fund a dividend to Group of $31.7 million. At this
time the Company also entered into a credit agreement that provides for a
$20.0 million revolving loan facility. Long-term debt consist of the
following at February 29, 1996 and November 30, 1996:
February 29, November 30,
1996 1996
---- ----
Revolving credit loan, interest at Base Rate
during 1995, paid off May 17, 1996 . . . . $15,000 $ 0
Term loan, interest at prime rate plus 1.5%,
payable in quarterly installments, paid off
May 17, 1996 . . . . . . . . . . . 60,724 0
Promissory note, interest at prime plus 0.75%
and effective March 12, 1995, interest at
prime plus 2.0%, payable in installments
semiannually through July, 1997 . . . . . 1,500 950
Promissory note, interest-bearing at prime plus
1.5% beginning January 1995; $800 payable in
April, 1995 and $300 payable in March, 1996 . 300 0
Senior Secured Notes, interest at 11 5/8% paid
semi-annual on May 1 and November 1; notes due
May 1, 2003 . . . . . . . . . . . . 0 110,000
------- --------
77,524 110,950
Less current maturities of long-term debt. . . 10,350 950
------- --------
$67,174 $110,000
<PAGE>
9) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, cash equivalents, receivables, accounts payable and accrued
expenses: The carrying amounts approximate fair value due to the short
maturity of these instruments.
Notes payable: The carrying amounts approximate fair value as the
obligations incur interest at a market rate. In addition, the significant
terms of fixed rate obligations do not differ materially from those
currently available to PRI.
10) RETIREMENT PLAN
PRI has a defined contribution retirement plan covering
substantially all employees and contributions are based upon a defined
percentage of compensation. Provisions for the plan's contributions
amounted to $206 and $196 for the three months ended November 30, 1995
and November 30, 1996, respectively. Provisions of the plan include 20%
vesting per year.
11) RELATED-PARTY TRANSACTIONS
PRI has various transactions with Group and HPH. These
transactions include management fees and reimbursements to HPH of $165 and
$167 for the three months ended November 30, 1995 and November 30, 1996,
respectively.
12) BUSINESS AND CREDIT CONCENTRATIONS
PRI's business is substantially dependent on a limited number of
large customers. In the three months ended November 30, 1995 and November
30, 1996, PRI's ten largest customers accounted for approximately 76% and
81%, respectively, of its nets sales. PRI's largest customers are General
Mills (including Yoplait), Ross Labs, and Dannon, which represented
approximately 25.8%, 20.3%, and 18.2%, respectively, of PRI's net sales for
the three months ended November 30, 1996. No customer other than General
Mills, Dannon, or Ross Labs accounted for more than 5% of PRI's net sales
during the three months ended November 30, 1996. Accounts receivable from
General Mills, Dannon, and Ross Labs totaled $5,976 and $5,843 at February
29, 1996 and November 30, 1996, respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS PERIOD ENDED NOVEMBER 30, 1996 COMPARED TO
THE THREE MONTHS PERIOD ENDED NOVEMBER 30, 1995
NET SALES: Net sales decreased $2.7 million, or 8.2%, from $33.0 million
in the third quarter of fiscal 1996 to $30.3 million in the third quarter of
fiscal 1997. Packaging sales decreased $.6 million, or 2.1%, from $28.5 million
in the third quarter of fiscal 1996 to $27.9 million in the third quarter of
fiscal 1997. Packaging sales were adversely impacted by the Company's loss of
certain lower margin accounts. Promotional sales decreased $2.1 million, or
46.7%, from $4.5 million in the third quarter of fiscal 1996 to $2.4 million in
the third quarter of fiscal 1997. This decrease is primarily due to a lower
level of plastic drink cup promotions by the Company's principal customers
during the third quarter of fiscal 1997 when compared to the third quarter of
fiscal 1996.
GROSS PROFIT: Gross profit decreased $.5 million, from $5.6 million in the
third quarter of fiscal 1996 to $5.1 million in the third quarter of fiscal
1997. Gross margins decreased slightly from 17.0% in the third quarter of
fiscal 1996 to 16.9% in the third quarter of fiscal 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses increased $.2 million from $1.5 million in the third
quarter of fiscal year 1996 to $1.7 million in the third quarter 1997 and
increased as a percentage of net sales from 4.5% to 5.7% due to lower net sales.
AMORTIZATION EXPENSE: Amortization expense decreased $.4 million, from $.6
million in the third quarter of fiscal 1996 to $.2 million in the third quarter
of fiscal 1997. The decrease is primarily attributable to the non-compete
agreement related to the purchase of Miner Container being fully amortized in
fiscal 1996.
OPERATING INCOME: Operating income decreased $.3 million, from $3.5
million, or 10.6% of net sales, in the third quarter of fiscal 1996 to $3.2
million, or 10.6% of net sales, in the third quarter of fiscal 1997.
INTEREST EXPENSE: Interest expense increased $.7 million, from $2.7
million in the third quarter of fiscal 1996 to $3.4 million in the third quarter
of fiscal 1997. The increase is primarily due to the issuance of the Senior
Secured Notes (as defined below).
INCOME TAXES: Income taxes decreased $.48 million, from $.4 million in the
third quarter of fiscal 1996 to a credit of $.08 million in the third quarter of
fiscal 1997, due to lower earnings. The Company's effective state and Federal
tax rate was 41% in the third quarter of fiscal 1996 and 43% in the third
quarter of fiscal 1997.
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM: For the reasons noted above,
income before extraordinary item of $.5 million in the third quarter of fiscal
1996 decreased $.6 million to a loss of $.1 million in the third quarter of
fiscal 1997.
<PAGE>
RESULTS OF OPERATIONS - NINE MONTHS PERIOD ENDED NOVEMBER 30, 1996 COMPARED TO
THE NINE MONTHS PERIOD ENDED NOVEMBER 30, 1995
NET SALES: Net sales decreased $13.3 million, or 12.7%, from $104.4
million in the first nine months of fiscal 1996 to $91.1 million in the first
nine months of fiscal 1997. Packaging sales decreased $2.2 million, or 2.6%,
from $84.2 million in the first nine months of fiscal 1996 to $82.0 million in
the first nine months of fiscal 1997. Packaging sales were adversely impacted
by the Company's loss of certain lower margin accounts. Promotional sales
decreased $11.1 million, or 55.0%, from $20.2 million in the first nine months
of fiscal 1996 to $9.1 million in the first nine months of fiscal 1997. This
decrease is primarily due to a lower level of plastic drink cup promotions by
the Company's principal customers during the first nine months of fiscal 1997
when compared to the first nine months of fiscal 1996.
GROSS PROFIT: Gross profit decreased $1.1 million, from $17.6 million in
the first nine months of fiscal 1996 to $16.5 million in the first nine months
of fiscal 1997. Gross margins improved from 16.9% in the first nine months of
fiscal 1996 to 18.2% in the first nine months of fiscal 1997. This increase in
gross margin reflects a favorable shift in product mix to higher margin
products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses increased from $5.2 million during the first nine months
of fiscal 1996 to $5.4 million the first nine months of fiscal 1997 and
increased as a percentage of net sales from 4.9% to 5.9% due to lower net sales.
AMORTIZATION EXPENSE: Amortization expense decreased $1.3 million, from
$1.8 million in the first nine months of fiscal 1996 to $.5 million in the first
nine months of fiscal 1997. The decrease is primarily attributable to the non-
compete agreement related to the purchase of Miner Container being fully
amortized in fiscal 1996.
OPERATING INCOME: Operating income remained the same at $10.6 million
during the first nine months of fiscal 1996 and the first nine months of fiscal
1997 but increased as a percentage of net sales from 10.2% to 11.7%.
INTEREST EXPENSE: Interest expense increased $1.1 million, from $8.1
million in the first nine months of fiscal 1996 to $9.2 million in the first
nine months of fiscal 1997. The increase is primarily due to the issuance of
the Senior Secured Notes (as defined below).
INCOME TAXES: Income taxes decreased from $1.0 million during the first
nine months of fiscal 1996 to $.6 million during the first nine months of fiscal
1997. The Company's effective state and Federal tax rate was 41% in the first
nine months of fiscal 1996 and 43% in the first nine months of fiscal 1997.
INCOME BEFORE EXTRAORDINARY ITEM: For the reasons noted above, income
before extraordinary item decreased from $1.5 million during the first nine
months of fiscal 1996 to $.8 during the first nine months of fiscal 1997.
EXTRAORDINARY ITEM, NET OF TAX: In the first nine months of fiscal 1997,
the Company recorded an extraordinary write-off net of taxes of $1.1 million for
unamortized deferred financing costs related to bank debt which was repaid in
May 1996.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
PRI issued $110.0 million in Senior Secured Notes due 2003 (the "Senior Secured
Notes") in May 1996. The net proceeds from this issuance were used to repay all
outstanding borrowings of the then existing senior secured credit facility (the
"Old Credit Agreement") of $73.5 million and to fund a dividend of $31.7 million
to the sole stockholder of the Company. In conjunction with this transaction,
the Company also entered into a credit agreement (the "Credit Agreement") that,
subject to certain borrowing conditions and limitation, provides for borrowings
of up to $20.0 million. As of November 30, 1996, there were no outstanding
borrowings under the Credit Agreement.
Cash provided by operating activities decreased to $13.9 million in the first
nine months of fiscal 1997 from $14.3 million in the comparable period of fiscal
1996. The decrease results primarily from a $4.1 million reduction in inventory
in fiscal 1996 which did not occur in fiscal 1997. This was partially offset by
a $5.5 million increase in current liabilities that was primarily due to the
timing of trade payables and the fact that interest on the Senior Secured Notes
is payable semi-annually, whereas the interest under the Old Credit Agreement
was payable monthly. Other assets increased $1.9 million primarily due to the
deferral of $4.1 million of financing costs related to the issuance of the
Senior Secured Notes. This was partially offset by the write-off of $1.9
million of deferred financing cost related to certain bank debt that was paid
off in May, 1996. The deferred financing costs will be amortized over the life
of the notes. The Company had a contingent liability of $.7 million associated
with the purchase of Miner Container. During September, 1996, the payment was
made and was recorded as an increase in the excess of the purchase price over
the fair market value of the net assets acquired. Stockholder's equity
decreased $31.7 million due to the dividend payment to the sole stockholder of
the Company.
Capital expenditures were $2.0 million and $5.5 million for the first nine
months of fiscal 1996 and 1997, respectively. These expenditures, which will
expand production capacity and reduce costs, include (i) the engineering and
manufacture of new production molds, (ii) the installation of automated
packaging and handling systems, and (iii) the expansion of the Company's
warehouse space.
During the last quarter of fiscal 1997, the Company intends to close its Ft.
Worth, Texas plant to reduce manufacturing overhead costs. Customers currently
serviced by the Ft. Worth, Texas plant will be serviced by the Company's Kansas
City, Missouri plant. The cost of the closure, including relocation of
machinery and equipment, is not expected to have a material impact on the
Company's results of operations.
Although there can be no assurances, the Company anticipates that its operating
cash flow along with the borrowings available under the Credit Agreement, will
be sufficient to meet its operating expenses, projected capital expenditures and
debt service requirements as they become due.
Instruments relating to the Company's indebtedness, including the Credit
Agreement and the indenture governing the Senior Secured Notes, contain
financial and other covenants that restrict, among other things, the Company's
ability to incur additional indebtedness, incur liens, pay dividends or make
certain other restricted payments, consummate certain asset sales, enter into
certain transactions with affiliates, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise dispose of substantially
all of the assets of the Company. Such limitations, together with the highly
leveraged nature of the Company, could limit corporate and operating activities,
including the Company's ability to respond to market conditions to provide for
unanticipated capital investments or to take advantage of business
opportunities.
<PAGE>
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
N/A
ITEM 2. CHANGES IN SECURITIES
N/A
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
N/A
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
N/A
ITEM 5. OTHER INFORMATION
N/A
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: The following exhibit is included in this Report on
Form 10-Q:
27.1 Financial Statement Schedule
(b) REPORTS ON FORM 8-K: The Company did not file any reports on
Form 8-K during the three months ended
November 30, 1996.
<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.
PACKAGING RESOURCES INCORPORATED
--------------------------------
Registrant
Date January 13, 1996 /s/ Jerry J. Corirossi
----------------------------- -----------------------
Jerry J. Corirossi
Vice President, Finance and
Administration and Chief Financial
Officer and duly authorized officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> NOV-30-1996
<CASH> 5,064
<SECURITIES> 0
<RECEIVABLES> 10,595
<ALLOWANCES> (120)
<INVENTORY> 21,340
<CURRENT-ASSETS> 38,401
<PP&E> 97,970
<DEPRECIATION> (45,684)
<TOTAL-ASSETS> 117,147
<CURRENT-LIABILITIES> 13,298
<BONDS> 110,000
0
0
<COMMON> 0
<OTHER-SE> (13,746)
<TOTAL-LIABILITY-AND-EQUITY> 117,147
<SALES> 91,077
<TOTAL-REVENUES> 91,077
<CGS> 74,543
<TOTAL-COSTS> 74,543
<OTHER-EXPENSES> 519
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,216
<INCOME-PRETAX> 1,427
<INCOME-TAX> 614
<INCOME-CONTINUING> 813
<DISCONTINUED> 0
<EXTRAORDINARY> 1,064
<CHANGES> 0
<NET-INCOME> (251)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
