SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended Commission File Number
May 24, 1996 1-10648
------------ -------
BPI Packaging Technologies, Inc.
--------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 04-2997486
-------- ----------
(State of Other Jurisdiction (I.R.S. Employer
Incorporation of Organization) Identification Number)
455 Somerset Avenue, Dighton, Massachusetts 02764
- ------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(508) 824-8636
--------------------------------------------------
(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
--- ---
As of July 1, 1996, there were issued and outstanding 13,418,359 shares of
Common Stock and 372,146 shares of Series A Preferred Stock.
BPI PACKAGING TECHNOLOGIES, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
- ------------------------------ --------
ITEM 1. Financial Statements (Unaudited)
Balance Sheets - May 24, 1996 and February 23, 1996..............1
Statements of Operations - Three Months Ended
May 24, 1996 and May 26, 1995..................................3
Statements of Cash Flows - Three Months Ended
May 24, 1996 and May 26, 1995..................................4
Notes to Financial Statements - May 24, 1996.....................5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................7
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. Legal Proceedings...............................................12
ITEM 2. Changes in Securities...........................................12
ITEM 3. Default Upon Senior Securities..................................12
ITEM 4. Submission of Matters to a Vote of Security-Holders.............12
ITEM 5. Other Information...............................................12
ITEM 6. Exhibits and Reports on Form 8-K................................13
SIGNATURES....................................................................14
- ----------
-i-
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BPI PACKAGING TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
MAY 24, FEBRUARY 23,
1996 1996
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash $ 1,783,380 $ 109,093
Accounts receivable, net 2,931,481 2,178,132
Inventories 4,314,281 3,927,597
Prepaid expenses and other assets 1,088,655 1,085,258
------------------ -----------------
Total current assets 10,117,797 7,300,080
------------------ -----------------
Property and equipment, net 24,506,626 24,314,649
------------------ -----------------
Patents, net 1,093,488 1,099,553
Deposits - leases and equipment purchases 744,116 802,383
Loans to officers 383,808 468,606
Other assets 1,322,432 1,292,704
------------------ -----------------
3,543,844 3,663,246
------------------ -----------------
$ 38,168,267 $ 35,277,975
================== =================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
1
BPI PACKAGING TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MAY 24, FEBRUARY 23,
1996 1996
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Current liabilities
Note payable - bank $ 3,413,486 $ 3,752,604
Capital lease obligations due within one year 2,012,842 1,832,847
Accounts payable 4,778,046 3,871,699
Other accrued expenses 305,886 427,428
Series C mandatorily redeemable preferred stock,
$.01 par value, at stated value 183,369 183,369
------------------ -----------------
Total current liabilities 10,693,629 10,067,947
------------------ -----------------
Capital lease obligations-long-term portion 5,390,364 5,441,057
Stockholders' Equity
Series B convertible preferred stock, $.01 par value 1,466,954 1,466,954
Series A convertible preferred stock, $.01 par value 1,339,184 1,215,784
Common stock, $.01 par value; shares authorized - 30,000,000; shares issued
and outstanding - 13,386,959 at
May 24, 1996 and 11,800,909 at February 23, 1996 133,870 118,009
Capital in excess of par value 36,764,225 33,615,213
Accumulated deficit (17,619,959) (16,646,989)
------------------ -----------------
22,084,274 19,768,971
------------------ -----------------
Commitments and contingencies
$ 38,168,267 $ 35,277,975
================== =================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
2
BPI PACKAGING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
-------- THREE MONTHS ENDED -------
MAY 24, MAY 26,
1996 1995
------------------ ------------------
(UNAUDITED)
<S> <C> <C>
Net sales $ 6,514,734 $ 6,464,213
Cost of goods sold 5,568,054 4,855,556
------------------ ------------------
Gross profit 946,680 1,608,657
Operating expenses
Selling, general and administrative 1,633,555 1,365,616
------------------ ------------------
1,633,555 1,365,616
------------------ ------------------
(Loss) income from operations (686,875) 243,041
Other income (expense)
Interest expense (288,479) (139,127)
Interest income 2,384 7,815
------------------ ------------------
Net (loss) income $ (972,970) $ 111,729
================== ==================
(Loss) income per share $ (0.08) $ 0.01
Weighted average common shares outstanding 12,192,942 12,216,997
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
3
BPI PACKAGING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
----------- THREE MONTHS ENDED ----------
MAY 24, MAY 26,
1996 1995
------------------- --------------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (972,970) $ 111,729
------------------- --------------------
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 823,380 577,652
Increase in accounts receivable - trade (753,349) (7,044)
Increase in inventories (386,684) (1,376,279)
Increase in prepaid expenses and other current assets (3,397) (135,481)
Increase (decrease) in accounts payable 906,347 (513,563)
Decrease in other accrued expenses (121,543) (74,620)
------------------- --------------------
Total adjustments 464,754 (1,529,335)
------------------- --------------------
Net cash used by operating activities (508,216) (1,417,606)
------------------- --------------------
Cash flows from investing activities:
Additions to property and equipment (374,937) (882,823)
Cost of patents (15,685) (12,439)
Decrease (increase) in deposits, net 58,267 (13,968)
Decrease (increase) in advance to officers 84,798 (117,437)
Decrease in note receivable 0 618,368
(Increase) decrease in other assets, net (53,228) 3,487
------------------- --------------------
Net cash used by investing activities (300,785) (404,812)
------------------- --------------------
Cash flows from financing activities:
Net (payments) borrowings under note payable - bank (339,118) 1,038,249
Principal payments on capital lease obligations (460,767) (276,576)
Proceeds from equipment financings 0 330,808
Net proceeds from sales of stock and exercise of warrants 3,283,173 0
------------------- --------------------
Net cash provided by financing activities 2,483,288 1,092,481
------------------- --------------------
Net increase (decrease) in cash 1,674,287 (729,937)
Cash at beginning of period 109,093 1,350,450
------------------- --------------------
Cash at end of period $ 1,783,380 $ 620,513
=================== ====================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
4
BPI PACKAGING TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
consolidated financial statements.
In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) considered necessary for a fair statement of the
interim financial data have been included. Results from operations for the three
month period ended May 24, 1996 are not necessarily indicative of the results
that may be expected for the fiscal year ending February 28, 1997.
For further information, refer to the consolidated financial statements
and the footnotes included in the annual report on Form 10-K for BPI Packaging
Technologies, Inc. (the "Company") for the year ended February 23, 1996.
NOTE 2: EARNINGS PER SHARE
Earnings per share is calculated based upon the weighted average common
shares outstanding during the period including dilutive employee stock options,
underwriter warrants, Class A and B warrants, using the treasury stock method as
applicable, and Series A and B Preferred Stock. Common stock equivalents are not
reflected in the calculation in periods in which they would have an
anti-dilutive effect.
NOTE 3: ACCOUNTS RECEIVABLES
Accounts receivable, net consists of the following:
<TABLE>
<CAPTION>
MAY 24, FEBRUARY 23,
1996 1996
---------- --------------
<S> <C> <C>
Accounts receivable $3,024,026 $2,273,132
Allowance for doubtful accounts (92,545) (95,000)
---------- --------------
$2,931,481 $2,178,132
========== ==============
</TABLE>
NOTE 4: INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
MAY 24, FEBRUARY 23,
1996 1996
---------- ----------
<S> <C> <C>
Raw materials $1,107,227 $1,480,667
Finished goods 3,207,054 2,446,930
---------- ----------
$4,314,281 $3,927,597
========== ==========
</TABLE>
5
NOTE 5: NOTE PAYABLE-BANK
The Company has a $4,000,000 revolving line of credit from a commercial
bank that is secured by accounts receivable and inventory. Borrowings under the
line of credit are subject to 80% of qualifying accounts receivable and 40% of
qualifying inventories (up to a maximum inventory loan of $2,000,000), less the
aggregate amount utilized under all commercial and standby letters of credit and
bank acceptances. The line of credit bears interest at the bank's prime rate
plus 2.5% (10.75% at May 24, 1996), and provides for a 1/8th of 1% unused line
fee and is subject to renewal annually. At May 24, 1996, availability under the
line of credit was approximately $460,000 and the balance under the line of
credit was $3,413,486.
Under the terms of an amendment dated March 1, 1996, borrowings under
the line of credit secured by qualifying inventories are to be reduced to 35%
and a maximum of $2,000,000 on July 1, 1996, and effective August 1, 1996 and
thereafter to 35% and a maximum of $1,500,000. The amendment includes certain
financial covenants that the Company must maintain, including debt service
coverage, capital base and debt to equity covenants.
NOTE 6: CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE
THREE MONTHS ENDED MAY 24, 1996
SCHEDULE FOLLOWING
NOTE 7: RC AMERICA, INC.
On May 15, 1996, the Company issued 2,550 shares to Ronald Caulfield as
part of the February 26, 1994 agreement providing for the issuance of up to an
additional 100,000 shares of the Company's Common Stock over a five year period
based on RC America, Inc. attaining certain levels of pre-tax earnings. The
Agreement also contains demand and piggy-back registration rights for the
shares.
6
BPI PACKAGING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MAY 24, 1996
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE SERIES B CONVERTIBLE
COMMON STOCK PREFERRED STOCK PREFERRED STOCK CAPITAL IN
-------------------- -------------------- ------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT PAR VALUE DEFICIT TOTAL
---------- --------- --------- ---------- -------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at February 23, 1996 11,800,909 $118,009 303,946 $1,215,784 146,695 $1,466,954 $33,615,213 ($16,646,989) $19,768,971
Sale of common stock pursuant
to Regulation S and
Regulation D private
placement offerings,
net of issuance costs 1,155,500 11,555 2,191,568 2,203,123
Sale of common and preferred
stock pursuant to partial
exercise of underwriter's
warrants from second public
offering, net of issuance
costs 402,600 4,026 100,000 225,000 851,024 1,080,050
Conversion of Series A
convertible preferred stock
to common stock 25,400 254 (25,400) (101,600) 101,346 ---
Issuance of common stock
based on RC America's
FY96 results 2,550 26 5,074 5,100
Net loss for the quarter
ended May 24, 1996 (972,970) (972,970)
---------- --------- --------- ---------- -------- ---------- ----------- ----------- -----------
Balance at May 24, 1996 13,386,959 $133,870 378,546 $1,339,184 146,695 $1,466,954 $36,764,225 ($17,619,959) $22,084,274
========== ========= ========= ========== ======== ========== =========== =========== ===========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS OR INFORMATION
Certain statements contained in this Form 10-Q are not based on
historical facts, but are "foward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, that are based upon a number
of assumptions concerning future conditions that may ultimately prove to be
inaccurate. Actual events and results may materially differ from anticipated
results described in such statements. The Company's ability to achieve the
results anticipated in any forward-looking statements is subject to certain
risks and uncertainties, including, but not limited to, the general economy,
product demand, market acceptance of products, fluctuations in operating
results, competition, continued availability of capital and financing, and other
factors affecting the Company's business beyond the Company's control.
RESULTS OF OPERATIONS
FIRST QUARTER OF FISCAL YEAR 1997 COMPARED TO FIRST QUARTER
OF FISCAL YEAR 1996
For the first quarter of Fiscal 1997, ended May 24,1996, the Company
had sales totaling $6,514,734 as compared to sales of $6,464,213 for the first
quarter of Fiscal 1996, ended May 26, 1995, an increase of 1%.
The Company's core bag and film business (traditional plastic grocery
carryout bags and proprietary plastic carryout bags of "T-shirt sack" design and
plastic film products) had sales of $6,147,026 in the first quarter of Fiscal
1997 compared to $5,528,304 in the first quarter of Fiscal 1996, an increase of
11%. Bags sold increased 22.8% and bag selling prices decreased an average of
14% compared to the previous year.
Sales of the Company's proprietary bag products (FRESH-SAC(R) T-shirt
sack produce bag, HANDI-SACTM and MAXI-SACTM) were $1,457,280 in the first
quarter of Fiscal 1997 compared to sales of $1,552,799 in the first quarter of
Fiscal 1996, a decrease of 6%. Management expects that sales of proprietary bag
products will increase significantly in Fiscal 1997 and that the 6% decrease in
the first quarter does not, in the opinion of management, constitute a trend.
Sales of HANDI-SAC(TM) increased 116% and sales of MAXI-SAC(TM) increased 357%,
while sales of FRESH-SAC(R) decreased 40% compared to the same period last year
primarily because of unit price decreases to reposition this product line, the
loss of accounts through merger and changes in customer distribution channels.
Sales of traditional products were $3,858,557 in the first quarter of Fiscal
1997 compared to sales of $3,477,013 in the first quarter of Fiscal 1996, an
increase of 11% (the number of traditional grocery carryout bags sold increased
39% and the unit sales price decreased 20%). Sales of film products were
$831,189 in the first quarter of Fiscal 1997 compared to sales of $498,492 in
the first quarter of Fiscal 1996, an increase of 67%. Sales from RC America,
Inc. were $367,708 in the first quarter of Fiscal 1997 compared to sales of
$610,769 in the first quarter of Fiscal 1996, a decrease of 40%. RC America's
sales may fluctuate significantly from quarter to quarter due to the nature of
its business and the timing of transactions. BPI Packaging, Inc. did not have
any sales of products purchased from Integrated Bagging Systems Corporation in
the first quarter of Fiscal 1997 compared to sales of $325,140 in the first
quarter of Fiscal 1996 because resources were not allocated to this subsidiary.
7
Cost of goods sold for the first quarter of Fiscal 1997 was $5,568,054
compared to $4,855,556 in the first quarter of Fiscal 1996. Cost of goods sold
as a percentage of sales was 85% for the first quarter of Fiscal 1997, compared
to 75% for the first quarter of Fiscal 1996. The increase in cost of goods sold
as a percentage of sales was due primarily to an increase in material costs
relative to the selling prices of the Company's products. Several factors
contributed to this result: (i) in the third quarter of Fiscal 1996, a
proprietary bag program to which the Company had allocated more than 25% of its
manuafacturing capacity was cancelled by a major retail chain. The cancellation
of this program negatively affected sales, margins, and product mix in the first
quarter of Fiscal 1997. The manufacturing capacity released by the program
cancellation was partially replaced with lower margin traditional grocery
T-shirt sacks which have higher material costs compared to proprietary products
as a percentage of the selling price; and (ii) sales of traditional products
increased by 11% compared to a decrease in sales of proprietary products of 6%
resulting in an unfavorable product mix, which had higher material costs
relative to selling prices. Proprietary products were 22.4% of sales in the
first quarter of Fiscal 1997 compared to 24.0% of sales in the same period last
year. Cost of goods sold as a percentage of sales is expected to decrease when,
as management expects, proprietary bag sales increase as a percentage of sales.
Selling, general and administrative expense for the first quarter of
Fiscal 1997 was $1,633,555 compared to $1,365,616 in the first quarter of Fiscal
1996. The increase is primarily related to sales and marketing activity for
proprietary bag and in-store advertising and promotion products, as well as
start-up costs for Market Media, Inc.
Interest expense for the first quarter of Fiscal 1997 was $288,479
compared to $139,127 for the first quarter of Fiscal 1996. The increase reflects
greater borrowing activity for debt related to equipment acquisitions.
Net loss was $972,970 for the first quarter of Fiscal 1997 compared to
net income of $111,729 for the first quarter of Fiscal 1996. The net loss was
due primarily to increased cost of goods sold and increased selling, general and
administrative expenses. The net loss included a non-cash charge for
depreciation and amortization of $823,380. Approximately 50% of the net loss
occurred in March, and the net losses for April and May were progressively
lower. Sales for June were approximately $3.5 million and preliminary estimates
indicate improved operating results for the month. Management expects that this
fiscal year will be profitable based on anticipated increases in sales of
proprietary bag and in-store advertising and promotion products.
Operating profits (loss) for the various business segments are as
follows:
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996
----------- -----------
<S> <C> <C>
Proprietary, traditional and film products ($166,417) $ 537,486
RC America, Inc. (21,402) 32,432
BPI Packaging, Inc. 0 39,031
Market Media, Inc. (141,742) 0
Unallocated corporate overhead (357,314) (365,908)
----------- -----------
Operating (loss) profit (686,875) 243,041
Interest expense, net (286,095) (131,312)
----------- ---------
Net (loss) income ($972,970) $111,729
=========== =========
</TABLE>
8
LIQUIDITY AND CAPITAL RESOURCES
BANK LOANS
The Company has a $4,000,000 revolving line of credit secured by
accounts receivable and inventory. Borrowings under the line of credit are
subject to 80% of qualifying accounts receivable and 40% of qualifying
inventories up to a maximum inventory loan of $2,000,000, less the aggregate
amount utilized under all commercial and standby letters of credit and bank
acceptances. The line of credit bears interest at the bank's prime rate plus
2.5% (10.75% at May 24, 1996), and provides for a 1/8th of 1% unused line fee
and is subject to renewal annually. At May 24, 1996, availability under the line
of credit was approximately $460,000 and the balance under the line of credit
was $3,413,486.
Under the terms of an amendment dated March 1, 1996, borrowings under
the line of credit secured by qualifying inventories are to be reduced to 35%
and a maximum of $2,000,000 on July 1, 1996, and effective August 1, 1996 and
thereafter to 35% and a maximum of $1,500,000. The amendment includes certain
financial covenants that the Company must maintain, including debt service
coverage, capital base, and debt to equity covenants.
Management believes that its current bank line of credit together with
anticipated cash from operations will be sufficient to fund the Company's
current operations. However, the Company intends to refinance its current bank
lines of credit secured by accounts receivable and inventory and obtain new
secured lines of credit with higher lending limits to support anticipated
growth. No assurance can be given that such refinancing will be successful.
SALES OF SECURITIES
During the first quarter of Fiscal 1997, the Company received
additional equity funding through the sale of Common Stock from a Regulation S
and a Regulation D offering, and the exercise of underwriters warrants. The
Company received net proceeds of $3,283,173 from the sale of an aggregate of
1,558,100 shares of Common Stock and 100,000 shares of Series A Preferred Stock.
The proceeds were used for general corporate purposes and the reduction of bank
debt. The Company may raise additional financing through the sale of equity or
debt securities to pay for all or part of the planned increase in capacity at
the Dighton facility during the next six months as well as to increase general
working capital. The Company has no commitments for such financing, and no
assurance can be given that additional financings will be successfully completed
or that such financing will be available or, if available, will be on terms
favorable to the Company.
EQUIPMENT AND LEASE FINANCING
From March 1994 through May 1996, the Company acquired through purchase
or lease approximately $16 million in additional equipment to increase
manufacturing capacity and efficiency and to expand the Company's product line.
The equipment was financed from the sale of equity securities and from equipment
lease financing and bank loans.
9
The Company currently has outstanding commitments to purchase an
additional $1.8 million in state-of-the-art extrusion and bag making equipment
all of which the Company expects to purchase and install during the fiscal year
ending February 28, 1997. Management intends to finance the purchase of the new
equipment primarily through equipment lease financing. No assurance can be given
that the Company will be able to obtain new equipment financing through banks or
equipment lessors.
CASH FLOW
During the first quarter of Fiscal 1997, the Company generated $823,380
from depreciation and amortization and $906,347 from an increase in accounts
payable. The Company also received net proceeds of $3,283,173 from the sale of
an aggregate of 1,558,100 shares of Common Stock and 100,000 shares of Series A
Preferred Stock. While $374,937 was used to purchase equipment and for plant
improvements, $753,349 and $386,684 were used to finance an increase in accounts
receivable and inventory, respectively. An additional $460,767 was used to make
principal payments on capital lease obligations. At May 24, 1996, stockholders'
equity was $22,084,274, as compared to $24,231,795 at May 26, 1995. The
Company's current ratio decreased from 1.48:1 at May 26, 1995 to 0.94:1 at May
24, 1996. The net book value of property and equipment increased from
$21,170,958 at May 26, 1995 to $24,506,626 at May 24, 1996.
At the end of the first quarter of Fiscal 1997, cash and borrowing
availability under BPI's bank lines of credit totaled $2,243,380. BPI plans to
invest in the new equipment and marketing programs based on its Fiscal 1997
business plan. Management expects that the total of cash and borrowing
availability will increase, even if operations are only at break-even, for
Fiscal 1997.
To date, the Company has generated cash flows from financing
activities, including sales of equity securities and bank lines of credit.
Management believes that fixed asset or lease financing is now available at
competitive rates from institutional lenders and leasing companies to finance a
substantial part of the planned $1.8 million increase in capacity at the Dighton
facility during this fiscal year, and that its current bank line of credit,
together with anticipated cash from operations, will be sufficient to fund the
Company's current operations. The Company may raise additional financing through
the sale of equity or debt to fund all or part of the planned increase in
capacity at the Dighton facility during this fiscal year as well as to increase
general working capital. The Company has no commitments for such financing, and
no assurance can be given that additional financings will be successfully
completed or that such financing will be available or, if available, will be on
terms favorable to the Company.
RC AMERICA, INC.
On May 15, 1996, the Company issued 2,550 shares of Common Stock to
Ronald Caulfield as a part of the February 26, 1994 purchase agreement providing
for the issuance of up to an additional 100,000 shares of the Company's Common
Stock over a five year period based
10
on RC America, Inc. attaining certain levels of pre-tax earnings. The Agreement
also contains demand and piggy-back registration rights for the shares.
IMPACT OF INFLATION
Inflation during the last three fiscal years has not had a significant
effect on the Company's activities.
11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
------------------
On December 4, 1995, Mobil Oil Corporation ("Mobil") filed suit against
the Company in the U.S. District Court for the District of Delaware, Civil
Action No. 95-737. Mobil also named Inteplast Corporation and Integrated Bagging
Systems Corporation ("IBS") as defendants in this matter. Mobil has alleged that
the Company has infringed on Mobil's rights under U.S. Patent No. Re. 34,019,
(the "Patent") regarding the manufacture of plastic carrying bags known as
"T-shirt bags." Mobil is seeking injunctive relief prohibiting the Company from
selling products which allegedly infringe on the Patent, money damages to
compensate Mobil for the Company's alleged infringement, interest, attorney's
fees and costs. The Company intends to vigorously defend this lawsuit. The
Company has been advised by its patent counsel that the Patent applies to the
traditional grocery T-shirt sack and does not apply to the Company's proprietary
HANDI-SAC(TM) and FRESH-SAC(R) bag products.
In May 1994, the Company and IBS filed a patent infringement suit
against Sonoco Products Company and Demoulas Supermarkets, Inc. of Massachusetts
in the United States District Court of Massachusetts. The suit and all
counterclaims were dismissed by mutual agreement of the parties on April 29,
1996.
The Company is involved in several other pending legal proceedings
which the Company does not consider to be material.
ITEM 2. CHANGES IN SECURITIES. None.
----------------------
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
--------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. None.
----------------------------------------------------
ITEM 5. OTHER INFORMATION. None.
------------------
-12-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) Exhibits.
The following exhibits are filed herewith:
Exhibit
Number Title
------ -----
27 Financial Data Schedule.
(b) Reports on Form 8-K. None.
-13-
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.
BPI PACKAGING TECHNOLOGIES, INC.
Date: July 8, 1996 By:/s/ Dennis N. Caulfield
-----------------------
Dennis N. Caulfield, President and
Chief Executive Officer
Date: July 8, 1996 By:/s/ James F. Koehlinger
-----------------------
James F. Koehlinger, Chief
Financial Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> MAY-24-1996
<CASH> 1,783,380
<SECURITIES> 0
<RECEIVABLES> 3,024,026
<ALLOWANCES> (92,545)
<INVENTORY> 4,314,281
<CURRENT-ASSETS> 10,117,797
<PP&E> 31,147,093
<DEPRECIATION> (6,640,467)
<TOTAL-ASSETS> 38,168,267
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0
2,806,138
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</TABLE>
