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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): APRIL 20, 2000
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PACKAGING RESOURCES INCORPORATED
(Exact name of Registrant as specified in its charter)
DELAWARE 333-05885 36-3321568
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
ONE CONWAY PARK 60045
100 FIELD DRIVE, SUITE 300
LAKE FOREST, ILLINOIS
(Address of principal executive offices) (Zip Code)
(847) 295-6100
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Reference is made to the press release of Packing Resource Incorporated, a
Delaware corporation ("PRI"), dated April 20, 2000 attached hereto as Exhibit
99.1 (the "Press Release") and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits. The following exhibit is filed as a part of this report:
Number Description
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99.1 Press release issued by
PRI April 20, 2000
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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 RESOURCE INCORPORATED,
a Delaware corporation
Date: April 20, 2000 By: /s/ Jerry J. Corirossi
Name: Jerry J. Corirossi
Title: Executive Vice President, Finance and
Administration, Chief Financial Officer
and duly authorized officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
99.1 Press release issued
by PRI April 20, 2000
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EXHIBIT 99.1
PRESS RELEASE
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PACKAGING RESOURCES INCORPORATED ANNOUNCES YEAR-END RESULTS
RETAINS INVESTMENT BANKER TO EXPLORE POTENTIAL SALE OF COMPANY
Chicago, Illinois (April 20, 2000) - Packaging Resources Incorporated
today announced results for its fiscal year ended February 29, 2000. The Company
also announced that it has retained the investment banking firm Deutsche Bank
Securities, Inc. to explore the potential sale of the Company.
Net sales decreased $2.2 million, or 7.0%, from $31.3 million in the
fourth quarter of fiscal 1999 to $29.1 million in the fourth quarter of
fiscal 2000. Packaging sales decreased $5.8 million, or 22.1%, from $26.3
million in the fourth quarter of fiscal 1999 to $20.5 million in the fourth
quarter of fiscal 2000 primarily due to lower sales to Yoplait U.S.A. and The
Dannon Company, Inc. This decrease was partially offset by higher sales of
food storage containers to S.C. Johnson & Son, Inc. Promotional cup sales
increased $3.6 million, or 72.0%, from $5.0 million in the fourth quarter of
fiscal 1999 to $8.6 million in the fourth quarter of fiscal 2000. This
increase reflects higher sales of the Company's 32 ounce polystyrene CRUISER
CUP-Registered Trademark- and sales of the new TWIST N' GO-Registered
Trademark- beverage container to PepsiCo Inc. Gross profit decreased $5.1
million, from $5.4 million in the fourth quarter of fiscal 1999 to $0.3
million in the fourth quarter of fiscal 2000. Gross profit decreased
primarily due to the combination of lower net sales, unfavorable product mix
from lower sales of higher margin Yoplait and Dannon products, inefficiencies
associated with the start-up of certain new products, costs related to the
transfer of production activities from the Company's Kansas City facility to
other plants and additional costs related to equipment leases entered into in
fiscal 2000. A one-time charge of $6.7 million was recorded as other expense
during the fourth quarter of fiscal 2000. This charge represents the
write-down of certain items of equipment that will be disposed of at the
Company's Kansas City facility in connection with the Company's decision to
cease manufacturing activities at that facility. In addition, the Company
identified certain other equipment items that were specifically related to
products produced for a customer whose contract with the Company terminated
and, therefore, were also written down. Operating income, excluding this
one-time charge, decreased $5.3 million, from $3.5 million in the fourth
quarter of fiscal 1999 to an operating loss of $1.8 million in the fourth
quarter of fiscal 2000. Interest expense increased $0.3 million, from $3.7
million in the fourth quarter of fiscal 1999 to $4.0 million in the fourth
quarter of fiscal 2000, primarily due to higher borrowings under the
Company's Senior Credit Facility. Net loss increased $7.3 million, from $0.1
million in the fourth quarter of fiscal 1999 to $7.4 million in the fourth
quarter of fiscal 2000.
Net sales increased $9.7 million, or 7.1%, from $136.6 million in
fiscal 1999 to $146.3 million in fiscal 2000. Packaging sales decreased $4.0
million, or 3.7%, from $106.9 million in fiscal 1999 to $102.9 million in
fiscal 2000 primarily due to lower sales to Yoplait U.S.A. and The Dannon
Company, Inc. This decrease was partially offset by higher sales of food
storage containers to S.C. Johnson & Son, Inc. Promotional cup sales
increased $13.7 million, or 46.1%, from $29.7 million in fiscal 1999 to $43.4
million in fiscal 2000. This increase reflects higher sales of the Company's
32 ounce polystyrene CRUISER CUP-Registered Trademark- and sales of the new
TWIST N' GO-Registered Trademark- beverage container to PepsiCo Inc. Gross
profit decreased $2.2 million, from $25.2 million in fiscal 1999 to $23.0
million in fiscal 2000. Gross profit decreased primarily due to the
combination of unfavorable product mix from lower sales of higher margin
Yoplait and Dannon products, inefficiencies associated with the start-up of
certain new products, costs related to the
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transfer of production activities from the Company's Kansas City facility to
other plants and additional costs related to equipment leases entered into in
fiscal 2000. This decrease was partially offset by higher net sales in fiscal
2000 versus fiscal 1999. Selling, general and administrative expenses increased
$1.8 million, from $6.2 million in fiscal 1999 to $8.0 million in fiscal 2000,
primarily due to higher salary and travel expenses. As discussed above, a
one-time charge of $6.7 million was recorded as other expense during the fourth
quarter of fiscal 2000. Operating income, excluding this one-time charge,
decreased $4.0 million, from $18.3 million in fiscal 1999 to $14.3 million in
fiscal 2000. Interest expense increased $1.8 million, from $13.9 million in
fiscal 1999 to $15.7 million in fiscal 2000, primarily due to higher borrowings
under the Company's Senior Credit Facility. Net income decreased $7.4 million,
from $2.5 million in fiscal 1999 to $4.9 million of net loss in fiscal 2000.
As previously reported, the agreement to supply eight ounce yogurt cups
to Dannon and the agreement to supply six ounce yogurt cups to Yoplait both
expired in December, 1999. Dannon advised the Company that PRI will no longer
serve as a supplier of the Dannon eight ounce cups which accounted for
approximately 9.0% of the Company's net sales during fiscal 2000. Yoplait chose
not to extend or renew its agreement relating to the six ounce cups which
accounted for approximately 13.0% of the Company's net sales during fiscal 2000.
However, the Company continues to serve as the sole supplier of Yoplait's four
ounce cups under a contract that expires in February 2003.
The Company continued to spend heavily in fiscal 2000 to expand its
production capacity for both promotional and packaging products. Capital
expenditures for fiscal 2000 were $30.5 million compared to $32.8 million in
fiscal 1999. Management believes that these expenditures have positioned the
Company to pursue additional business opportunities with new and existing
customers. However, the failure to obtain certain anticipated new business on
a timely basis has restricted its available liquidity. As a result, the
Company does not expect to have sufficient funds to make the interest payment
of $6.4 million due May 1, 2000 on its 11 5/8% Senior Notes due May 1, 2003
or to pay a dividend to its parent, Packaging Resources Group, Inc., in order
to fund the interest payment of $1.8 million due May 31, 2000 on Packaging
Resources Group's 13% Senior Notes due June 30, 2003.
The failure to make the interest payments discussed above will
constitute defaults under both of the Indentures governing such Notes. In
addition, the defaults under the Indentures will trigger certain cross-default
provisions with respect to the Company's Senior Credit Facility. PRI intends to
enter into discussions with the holders of the Notes and the lenders under its
Senior Credit Facility to obtain waivers or amendments, including standstill
agreements that would restrict the holders and the lenders from exercising
remedies for a period of a time; however, there can be no assurance as to
whether and when the Company will obtain any such waiver, amendment or
agreement.
PRI does not intend to update the information contained herein with
respect to PRI's exploration of a potential sale of the Company for any future
developments or circumstances unless and until there is a definitive transaction
agreement entered into between Packaging Resource Group or PRI and any third
party or until its exploration of a potential sale is definitely terminated.
There can be no assurance whatsoever that any transaction with any third party
will
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take place or, even if one does occur, about the nature and extent of any terms
and conditions of any such potential transaction.
PRI is a leading developer, manufacturer and marketer of rigid plastic
food packaging, serving primarily as a supplier of customized containers for
national branded consumer products. The Company is the largest domestic
manufacturer of shelf stable, multi-layer (impermeable to air and moisture)
containers for nutritional supplements, frosting containers and
reusable/disposable food storage containers. The Company also is the largest
domestic designer and manufacturer of promotional beverage cups in the United
States, marketing these products primarily to the fast-food and beverage
industries.
The statements contained herein, which are not historical facts, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. PRI has based these forward-looking statements on
its current expectations and projections about future events. These
forward-looking statements are subject to risks and uncertainties, including,
among other things, : PRI's reliance on key customers and supply agreements,
trends and conditions in the rigid plastic packaging and plastic beverage cup
industries, including fluctuations in resin costs, PRI's substantial debt, PRI's
future capital needs and PRI's ability to compete. PRI undertakes no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks and
uncertainties, actual results may differ materially from those reflected in any
forward-looking statement.
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PACKAGING RESOURCES INCORPORATED
STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS)
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<CAPTION>
Three Months Ended Twelve Months Ended
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02/29/2000 02/28/1999 02/29/2000 02/28/1999
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Net sales $29,114 $31,271 $146,326 $136,558
Cost of goods sold 28,774 25,847 123,285 111,338
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Gross profit 340 5,424 23,041 25,220
Selling, general & administrative expenses 1,940 1,706 8,005 6,244
Amortization of intangibles and other assets 179 178 713 712
Other expense 6,721 0 6,721 0
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Operating income (8,500) 3,540 7,602 18,264
Interest expense 4,019 3,684 15,703 13,891
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Income (loss) before income taxes (12,519) (144) (8,101) 4,373
Income tax expense (benefit) (5,140) (62) (3,240) 1,880
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Net income (loss) ($7,379) ($82) ($4,861) $2,493
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