UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 September 28, 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 33-75706-01; 33-75706-02, 33-75706-03, 33-75706
BPC HOLDING CORPORATION
BERRY IOWA CORPORATION
BERRY TRI-PLAS CORPORATION
BERRY PLASTICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 35-1814673
(State or other jurisdiction of incorporation or organization) (I.R.S.
employer identification no.)
101 OAKLEY STREET, EVANSVILLE, INDIANA 47710
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) 424-2904
NONE
(Former name, former address and former fiscal year, if changed since last
report)
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Number of Shares Outstanding
COMMON STOCK AS OF SEPTEMBER 28, 1996
Class A - Voting - $.01 Par Value 91,000
Class A - Nonvoting - $.01 Par Value 259,000
Class B - Voting - $.01 Par Value 145,058
Class B - Nonvoting - $.01 Par Value 54,942
Class C - Nonvoting - $.01 Par Value 17,000
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
FORM 10-Q INDEX
FOR QUARTERLY PERIOD ENDED SEPTEMBER 28, 1996
PAGE NO.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 5
Consolidated Statement of Changes in Stockholders'
Equity (Deficit) 6
Consolidated Statements of Cash Flows 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
BPC Holding Corporation and Subsidiaries
Consolidated Balance Sheets
(In Thousands of Dollars)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 30,
1996 1995
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,324 $ 8,035
Accounts receivable (less allowance for doubtful
accounts of $635 and $737) 20,794 15,944
Inventories:
Finished goods 9,797 7,743
Raw materials and supplies 4,004 3,897
Custom molds 625 257
14,426 11,897
Prepaid expenses and other receivables 1,159 1,593
Income taxes recoverable 818 411
Total current assets 46,521 37,880
Assets held in trust 36,160 -
Property and equipment:
Land 4,598 3,882
Buildings and improvements 17,901 15,712
Machinery, equipment and tooling 76,644 68,801
Automobiles and trucks 642 496
Construction in progress 2,711 4,094
102,496 92,985
Less accumulated depreciation 47,696 40,544
54,800 52,441
Intangible assets:
Deferred financing and origination fees (net of
accumulated amortization of $2,336 and 10,555 5,962
$1,555)
Excess of cost over net assets acquired (net of
accumulated amortization of $693 and $425) 4,758 4,782
Patents (net of accumulated amortization of $6 and
$0) 133 139
Covenants not to compete (net of accumulated
amortization of $52 and $27) 48 73
15,494 10,956
Deferred income taxes 2,038 2,056
Other 231 132
Total assets $155,244 $103,465
</TABLE>
<PAGE>
BPC Holding Corporation and Subsidiaries
Consolidated Balance Sheets (continued)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 30,
1996 1995
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C> <C>
Current liabilities:
Accounts payable $ 13,209 $ 14,073
Accrued expenses and other liabilities 4,585 2,807
Accrued interest 9,462 2,652
Employee compensation and payroll taxes 5,583 4,618
Current portion of long-term debt 732 717
Total current liabilities 33,571 24,867
Long-term debt, less current portion (NOTES 2 AND 3) 215,348 110,959
Deferred compensation - 122
Accrued dividends on preferred stock 593 -
Total liabilities 249,512 135,948
Stockholders' equity (deficit) (NOTE 2):
Preferred stock; 1,000,000 shares authorized;
600,000 shares issued and outstanding
(net of discount of $3,428) 11,144 -
Class A Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 91,000 shares
issued and outstanding 1 -
Nonvoting; 500,000 shares authorized; 259,000
shares issued and outstanding 2 -
Class B Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 145,058 shares
issued and outstanding 1 -
Nonvoting; 500,000 shares authorized; 54,942
shares issued and outstanding 1 -
Class C Common Stock; $.01 par value:
Nonvoting; 500,000 shares authorized; 17,000
shares issued and outstanding - -
Treasury stock: 0 and 5,212 shares, respectively - (58)
Additional paid-in capital 52,204 960
Warrants 3,511 4,034
Retained earnings (deficit) (161,132) (37,419)
Total stockholders' equity (deficit) (94,268) (32,483)
Total liabilities and stockholders' equity (deficit) $155,244 $103,465
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BPC Holding Corporation and Subsidiaries
Consolidated Statements of Operations
(In Thousands of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30,
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $39,794 $35,932 $113,666 $106,429
Cost of goods sold 29,377 27,269 81,848 77,051
Gross margin 10,417 8,663 31,818 29,378
Operating expenses:
Selling 1,775 1,451 5,184 4,210
General and administrative 2,750 2,206 11,915 7,200
Research and development 219 196 612 554
Amortization of intangibles 177 254 382 709
Operating income 5,496 4,556 13,725 16,705
Other (income) expenses:
Loss (gain) on disposal of
property and equipment - (5) (23) 10
Other 39 181 551 639
Income before interest and income 5,457 4,380 13,197 16,056
taxes
Interest:
Expense (6,941) (3,561) (14,420) (10,531)
Income 561 142 728 508
Income (loss) before income taxes (923) 961 (495) 6,033
Income tax expense (benefit) (167) 148 42 167
Net income (loss) (756) 813 (537) 5,866
Preferred stock dividends (593) - (593) -
Net (income) loss attributable to
common shareholders $(1,349) $ 813 $ (1,130) $ 5,866
Earnings per share (NOTE 2):
PRO FORMA EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Net income (loss) $ (2.23) $ 1.34 $ (1.86) $ 9.68
PRO FORMA EARNINGS PER COMMON
SHARE - ASSUMING FULL DILUTION:
Net income (loss) $ (2.23) $ 1.34 $ (1.86) $ 9.68
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BPC Holding Corporation and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
(In Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON STOCK ISSUED PREFERRED TREASUR PAID-IN EARNINGS
CLASS A CLASS B CLASS C STOCK STOCK CAPITAL WARRANTS (DEFICIT) TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ - $ - $ - $ - $(58) $ 960 $ 4,034 $ (37,419) $(32,483)
Net income - - - - - - - (537) (537)
Market value adjustment - warrants - - - - - (1,145) 9,399 (8,254) -
Exercise of stock options - - - - - 1,130 - - 1,130
Distribution on sale of equity - - - - 58 (1,424) (13,433) (114,922) (129,721)
interests
Proceeds from newly issued equity 3 2 - 14,572 - 52,797 - - 67,374
Payment of deferred compensation - - - - - 479 - - 479
Issuance of private warrants - - - (3,511) - - 3,511 - -
Accrued dividends on preferred - - - - - (593) - - (593)
stock
Amortization of preferred stock - - - 83 - - - - 83
discount
Balance at September 28, 1996 $ 3 $ 2 $ - $11,144 $ - $52,204 $ 3,511 $(161,132) $(94,268)
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
BPC Holding Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands of Dollars)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
SEPTEMBER 28, SEPTEMBER 30,
1996 1995
(UNAUDITED)
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ (537) $5,866
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 8,223 6,929
Non-cash interest expense 846 718
Write-off of deferred acquisition costs - 390
Non-cash compensation 358 178
Loss (gain) on sale of property and equipment (23) 10
Deferred income taxes 18 (1,463)
Changes in operating assets and liabilities:
Accounts receivable, net (4,869) (6,489)
Inventories (2,529) (1,237)
Prepaid expenses and other receivables (64) (976)
Accounts payable and accrued expenses 8,644 2,427
Other assets (5) (18)
Net cash provided by operating activities 10,062 6,335
INVESTING ACTIVITIES
Additions to property and equipment (9,614) (8,185)
Proceeds from disposal of property and equipment 43 20
Purchase of assets of Sterling Products, Inc., net of
cash acquired - (7,246)
Purchase of Alpha and other acquisition costs (790) (395)
Net cash used for investing activities (10,361) (15,806)
FINANCING ACTIVITIES
Payments on long-term borrowings (500) (500)
Payments on capital lease (161) (147)
Exercise of management stock options 1,130 -
Proceeds from senior secured notes 105,000 -
Proceeds from issuance of common stock 52,797 -
Proceeds from issuance of preferred stock and warrants 14,572 -
Rollover investments and share repurchases (125,219) -
Assets held in trust (35,600) -
Net payments to public warrant holders (4,502) -
Debt issuance costs (5,369) (177)
Interest income applied to the assets held in trust (560) -
Reclassification of cash held for acquisition - 12,000
Net cash provided by financing activities 1,588 11,176
Net increase in cash and cash equivalents 1,289 1,705
Cash and cash equivalents at beginning of period 8,035 9,327
Cash and cash equivalents at end of period $ 9,324 $ 11,032
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
BPC Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of BPC
Holding Corporation and its subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the periods presented are not necessarily
indicative of the results that may be expected for the full fiscal year.
The accompanying financial statements include the results of the
Company's wholly-owned subsidiary, Berry Plastics Corporation ("Berry"),
and its wholly-owned subsidiaries: Berry Iowa Corporation; Berry Tri-Plas
Corporation; Berry Sterling Corporation, and AeroCon, Inc. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 30, 1995 and information
included in the Company's Form S-4 filed with the Securities and Exchange
Commission on August 28, 1996.
2. COMPANY RECAPITALIZATION
On June 18, 1996, BPC Mergerco, Inc. ("Mergerco"), a company organized by
Atlantic Equity Partners International II, L.P., Chase Venture Capital
Associates, L.P., certain other institutional investors and management,
effected the acquisition of a majority of the outstanding capital stock
of BPC Holding Corporation ("Holding") by way of merger with Holding,
with Holding being the surviving corporation (the "Transaction").
Sources of funds for the new capital structure included the issuance of
$55.0 million of common stock, $15.0 million of preferred stock and
warrants to purchase common shares of Holding, $105.0 million of 12.5%
Senior Secured Notes (the "Notes") described below, and exercise of
management stock options of approximately $0.9 million. Approximately
$125.2 million of the proceeds were used for rollover investments and
purchase of equity interests, and the remaining proceeds were used to
make payments of approximately $4.5 million to public warrant holders, to
establish an escrow account of $35.6 million to pay the first three
years' interest on the Notes, to make deferred payments to certain
holders of stock options of approximately $2.5 million, to pay fees and
expenses related to the transaction of approximately $8.0 million and
$0.1 million was held in cash.
In connection with the Transaction, Holding retired its old Class A and
Class B common stock and authorized the creation of 500,000 shares each
of new Class A voting and non-voting common stock, 500,000 shares each of
new Class B voting and non-voting common stock, and 500,000 shares of new
Class C non-voting common stock. Pro forma earnings per share
information has been presented for all periods as though the capital
structure resulting from the recapitalization occurred on January 1,
1995.
<PAGE>
BPC Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
3. ISSUANCE OF SENIOR SECURED NOTES
In connection with the Transaction mentioned above, Holding completed a
144A private placement of $105.0 million of Senior Secured Notes due 2006
(the "Old Notes"). On October 9, 1996, Holding consummated an exchange
offer whereby the Old Notes were exchanged for 12.5% Series B Senior
Secured Notes due 2006 (the "Notes"). The terms of the Notes are
identical in all material respects to the Old Notes, except that the
Notes have been registered under the Securities Act of 1933, as amended,
and therefore do not bear legends restricting their transfer and do not
contain certain provisions providing for the payment of liquidated
damages to the holders of the Old Notes under certain circumstances
relating to the registration of the Old Notes, which provisions
terminated upon the consummation of the exchange of the Old Notes for the
Notes. The Notes bear interest at 12.5% and mature on June 15, 2006.
These Notes are senior secured obligations of Holding and are secured by
a first priority pledge of all shares of outstanding capital stock of
Berry. Except as provided below, interest on the Notes will be payable
in cash semi-annually in arrears on June 15 and December 15 of each year,
commencing December 15, 1996.
Proceeds of the Old Notes (net of fees and expenses of approximately $5.4
million) were used to finance $64.0 million of the purchase of equity
interests (see Note 2) and establish an escrow of $35.6 million to pay
the first three years' interest on the Notes.
In addition, from December 15, 1999 until June 15, 2001, the Company may,
at its option, pay interest, at an increased rate of .75% per annum, in
the form of additional Notes valued at 100% of the principal amount
thereof.
4. ACQUISITIONS
On December 21, 1995, the Company acquired substantially all of the
assets and assumed certain liabilities of Tri-Plas, Inc. (the "Tri-Plas
Acquisition") through its subsidiary Berry Tri-Plas Corporation (formerly
Berry-CPI Plastics Corp.) for $6,600,000. The operations of Berry Tri-
Plas Corporation are included in the Company's operations since the
acquisition date using the purchase method of accounting.
<PAGE>
BPC Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
The pro forma results listed below are unaudited and reflect purchase
accounting adjustments assuming the Tri-Plas Acquisition occurred on
January 1, 1995.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
(In thousands, except per share data)
<S> <C> <C>
Net sales $ 40,078 $ 118,866
Income before income taxes 277 3,981
Net income 129 3,814
Pro forma earnings per common share:
Primary .21 6.29
Fully diluted .21 6.29
</TABLE>
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results
that would have occurred had the acquisition been consummated at the
above date, nor are they necessarily indicative of future operating
results. Further, the information gathered on the acquired company is
based upon unaudited internal financial information and reflects only pro
forma adjustments for additional interest expense and amortization of the
excess of the cost over the underlying net assets acquired, net of the
applicable income tax effect.
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 28, December 30,
1996 1995
(In thousands)
<S> <C> <C>
12.50% Senior Secured Notes $105,000 $ -
12.25% Senior Subordinated Notes 100,000 100,000
Nevada Industrial Revenue Bonds 5,500 6,000
Iowa Industrial Revenue Bonds 5,400 5,400
Capital lease obligation 840 1,002
Debt discount (660) (726)
216,080 111,676
Less current portion of long-term debt 732 717
$215,348 $110,959
</TABLE>
BPC Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
The current portion of long-term debt is limited to a $0.5 million
repayment of the industrial revenue bonds and the monthly principal
payments related to a capital lease obligation. The Company also
maintains a $28 million revolving line of credit with Fleet Capital
Corporation. As of September 28, 1996, approximately $12 million of this
credit line was used to provide a letter of credit for the outstanding
industrial revenue bonds. Based on the borrowing formula as of September
28, 1996, the Company had approximately $16 million of additional
available credit under the Fleet Capital credit line.
6. PATENT INFRINGEMENT LITIGATION
On April 25, 1996, in connection with the patent infringement lawsuit
filed by Berry Sterling Corporation against Pescor Plastics, Inc., the
United States District Court for the Eastern District of Virginia entered
an order that held that Berry Sterling's patent for the design of a drink
cup was not valid. The Company is currently appealing this ruling.
7. WINCHESTER PLANT CONSOLIDATION
On September 16, 1996 the Company announced the consolidation of its
Winchester, Virginia production facility with other Company locations,
including Charlotte, North Carolina, Evansville, Indiana and Iowa Falls,
Iowa.
<PAGE>
BPC Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
8. BPC HOLDING CORPORATION SUMMARY FINANCIAL INFORMATION (IN THOUSANDS)
The following summarizes financial information of BPC Holding Corporation
exclusive of the operations of its wholly-owned operating subsidiary,
Berry Plastics Corporation and Subsidiaries.
<TABLE>
<CAPTION>
SEPTEMBER 28, 1996 December 30, 1995
<S> <C> <C>
BALANCE SHEETS
Current assets $ 3,014 $ 2,804
Investment in subsidiary (31,511) (35,166)
Assets held in trust and other
noncurrent assets 44,187 -
Total assets $ 15,690 $ (32,362)
Current liabilities $ 4,365 $ -
Noncurrent liabilities 105,593 121
Stockholders' equity (deficit) (94,268) (32,483)
Total liabilities and
stockholders' equity (deficit) $ 15,690 $ (32,362)
</TABLE>
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED Thirty-nine Weeks Ended
SEPTEMBER 28, SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
Operating expenses $ 80 $ 5 $ 3,231 $ 178
Interest expense, net 2,944 - 3,330 -
Loss before income taxes (3,025) (5) (6,562) (178)
Net loss (1,966) (5) (4,193) (173)
</TABLE>
<PAGE>
Item 2.
BPC Holding Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
13 WEEKS ENDED SEPTEMBER 28, 1996 (THE "QUARTER")
COMPARED TO 13 WEEKS ENDED SEPTEMBER 30, 1995 (THE "PRIOR QUARTER")
NET SALES. Net sales increased $3.9 million, or 10.9%, to $39.8
million for the Quarter from $35.9 million for the prior Quarter,
notwithstanding an approximate 3% decrease in net selling price due
mainly to the impact of competitive pricing in the drink cup product
line. The increase in net sales was attributed to a combination of
higher aerosol overcap sales of $2.5 million and higher container sales
of $2.8 million (including the introduction of polypropylene containers
from the Tri-Plas Acquisition) offset by a decrease of $1.6 million in
drink cup sales. Sales of custom molded products were $0.2 million
higher than the prior Quarter.
GROSS MARGIN. Gross margin increased by $1.7 million to $10.4
million for the Quarter from $8.7 million for the prior Quarter. This
increase of 19.5% was attributed to a combination of the introduction of
more efficient tooling for certain of the container and drink cup
products, strengthening operating performance at the Company's
manufacturing facilities, and stronger sales of higher margin products.
OPERATING EXPENSES. Selling expenses increased by $0.3 million to
$1.8 million for the Quarter from $1.5 million for the prior Quarter
principally as a result of additions to the drink cup sales force and the
selling expenses related to the Tri-Plas Acquisition. General and
administrative expenses increased by $0.6 million to $2.8 million for the
Quarter from $2.2 million for the Prior Quarter, including $0.4 million
associated with closing the Winchester, Virginia production facility (SEE
NOTE 7).
INTEREST EXPENSE. Interest expense increased $3.3 million to $6.9
million for the Quarter compared to $3.6 million for the prior Quarter
due to interest associated with the issuance of the Notes (SEE NOTE 3).
INCOME TAX. For the Quarter, the Company had a $0.2 million tax
benefit which was determined using Federal and state statutory income tax
rates. There was also minimal income tax for the prior Quarter due to
the availability of loss carryforwards.
<PAGE>
NET INCOME (LOSS) AND EBITDA. Net loss for the Quarter of $0.8
million increased $1.6 million from net income of $0.8 million for the
prior Quarter for the reasons discussed above. EBITDA, defined as income
before taxes, interest, depreciation, amortization, loss (gain) on
disposal of property and equipment, write-off of deferred acquisition
costs, one-time transition expenses related to the Sterling Products
Acquisition and the Tri-Plas Acquisition, and expenses related to the
Transaction, was $8.8 million for the Quarter compared to $7.0 million
for the prior Quarter.
RESULTS OF OPERATIONS
39 WEEKS ENDED SEPTEMBER 28, 1996 ("YTD")
COMPARED TO 39 WEEKS ENDED SEPTEMBER 30, 1995 ("PRIOR YTD")
NET SALES. Net sales increased $7.3 million, or 6.9%, to $113.7
million YTD from $106.4 million for the prior YTD, notwithstanding an
approximate 4% decrease in net selling price due to the impact of
cyclical adjustments in the price of plastic resin and competitive
pricing in the drink cup product line. The increase in net sales was
attributed to a combination of higher aerosol overcap sales of $3.8
million, higher drink cup sales of $1.1 million and higher container
sales of $5.9 million (including the introduction of polypropylene
containers from the Tri-Plas Acquisition). Sales of custom molded
products were down $3.1 million mainly due to the loss of a 1995 non-
repeating plastic tumbler promotion for Burger King, and sales of custom
manufactured tools decreased $0.5 million.
GROSS MARGIN. Gross margin increased by $2.4 million to $31.8
million YTD from $29.4 million for the prior YTD. This increase in gross
margin was attributed to a combination of the introduction of more
efficient tooling for certain of the container and drink cup products,
strengthening operating performance at the Company's manufacturing
facilities, and stronger sales of higher margin products. Gross margin
also reflects the negative $0.8 million impact of a non-repeating
favorable resin forward buying program in the first quarter of 1995.
OPERATING EXPENSES. Selling expenses increased by $1.0 million to
$5.2 million YTD from $4.2 million for the prior YTD principally as a
result of the addition of the drink cup business and the Tri-Plas
Acquisition. General and administrative expenses increased by $4.7
million to $11.9 million YTD from $7.2 million for the prior YTD. The
increase included Transaction expenses of $3.1 million, including $2.5
million of deferred payments to certain holders of stock options (SEE
NOTE 2) and a $0.3 million non-cash adjustment to the value of vested
incentive stock options. The increase also includes additional expenses
from the Tri-Plas Acquisition and the Sterling Products Acquisition of
$0.6 million, and patent and other litigation expenses of $0.6 million.
INTEREST EXPENSE. Interest expense increased $3.9 million to $14.4
million YTD compared to $10.5 million for the prior YTD due to the
issuance of the Notes (SEE NOTE 3).
INCOME TAX. YTD, the Company had income tax of $0.1 million which
was determined using Federal and state statutory income tax rates. There
was minimal income tax in the prior YTD due to the availability of loss
carryforwards.
<PAGE>
NET INCOME AND EBITDA. Net loss YTD of $0.5 million increased $6.4
million from net income of $5.9 million for the prior YTD for the reasons
discussed above. EBITDA, defined as income before taxes, interest,
depreciation, amortization, loss (gain) on disposal of property and
equipment, write-off of deferred acquisition costs, one-time transition
expenses related to the Sterling Products Acquisition and the Tri-Plas
Acquisition. and expenses related to the Transaction, was $25.5 million
YTD compared to $23.8 million for the prior YTD.
LIQUIDITY AND SOURCES OF CAPITAL
Net cash provided from operating activities was $10.1 million through the
thirty-nine week period ended September 28, 1996, an increase of $3.8
million from the $6.3 million for the comparable prior year period.
Working capital (defined as accounts receivable, inventories, prepaid
expenses, other receivables, accounts payable and accrued expenses)
decreased by $1.2 million since 1995 year end due to higher accrued
interest, partially offset by a sales driven increase in accounts
receivable and an increase to inventory resulting from higher plastic
resin prices. Working capital increased $6.3 million for the same period
in 1995.
Capital spending of $9.6 million YTD included $3.9 million for molds and
molding machines, $0.8 for printing-related equipment, and $4.9 million
for building and accessory equipment. The Company currently intends to
finance capital spending through cash flow from operations, existing cash
balances and cash available under the Fleet revolving credit agreement.
At September 28, 1996, the Company's cash balance was $9.3 million, and
the Company had unused borrowing capacity under the Revolving Credit
Facility's borrowing base of approximately $16 million. Capital is
considered adequate to meet future obligations.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.01 Computation of Pro Forma Per Share Earnings
(b) Reports on Form 8-K:
One report on Form 8-K was filed by the Company on July
3, 1996. Under Item 5, Other Events, the Company reported
the consummation of the Transaction and the description of
the merger of BPC Mergerco, Inc. and BPC Holding
Corporation. No financial statements were included in the
filing.
<PAGE>
SIGNATURE
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.
BPC Holding Corporation
Berry Iowa Corporation
Berry Tri-Plas Corporation
Berry Plastics Corporation
November 12, 1996
/S/ JAMES M. KRATOCHVIL
James M. Kratochvil
Vice President, Chief Financial Officer
and Secretary of BPC Holding
Corporation and its Subsidiaries
(Principal Financial Officer)
<PAGE>
Exhibit 11.01.
COMPUTATION OF PRO FORMA PER SHARE EARNINGS
<TABLE>
<CAPTION>
THIRTEEN THIRTY-
WEEKS NINE WEEKS
ENDED ENDED
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
28, 30, 28, 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income (loss) $(1,348,628) $ 813,362 $(1,129,692) $5,866,023
PRIMARY EARNINGS PER SHARE:
Average number of common shares
outstanding 567,000 567,000 567,000 567,000
Net additional common shares in
respect to common stock
equivalents based on the Modified 39,096 39,096 39,096 39,096
Treasury Stock method
Total primary shares and 606,096 606,096 606,096 606,096
equivalents
Net income (loss) per primary $ (2.23) $ 1.34 $ (1.86) $ 9.68
share
FULLY-DILUTED EARNINGS PER SHARE:
Average number of common shares
outstanding 567,000 567,000 567,000 567,000
Net additional common shares in
respect to common stock
equivalents based on the Modified 39,096 39,096 39,096 39,096
Treasury Stock method
Total shares and equivalents 606,096 606,096 606,096 606,096
Net income (loss) per fully- $ (2.23) $ 1.34 $ (1.86) $ 9.68
diluted share
</TABLE>
SEE NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 9300
<SECURITIES> 0
<RECEIVABLES> 21429
<ALLOWANCES> 635
<INVENTORY> 14426
<CURRENT-ASSETS> 46521
<PP&E> 102496
<DEPRECIATION> 47696
<TOTAL-ASSETS> 155244
<CURRENT-LIABILITIES> 33571
<BONDS> 215348
0
11144
<COMMON> 5
<OTHER-SE> (105417)
<TOTAL-LIABILITY-AND-EQUITY> 155244
<SALES> 113666
<TOTAL-REVENUES> 0
<CGS> 81848
<TOTAL-COSTS> 99941
<OTHER-EXPENSES> 528
<LOSS-PROVISION> 307500
<INTEREST-EXPENSE> 14420
<INCOME-PRETAX> (495)
<INCOME-TAX> 42
<INCOME-CONTINUING> (537)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (537)
<EPS-PRIMARY> (1.86)
<EPS-DILUTED> (1.86)
</TABLE>
