SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) JANUARY 21, 1997
BPC Holding Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 33-75706-01 35-1814673
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) 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
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K, Date
of Report January 21, 1997, and filed February 4, 1997, as set forth in the
pages attached hereto:
ITEM 7 (A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Audited Financial Statements of PackerWare Corporation for the year ended
October 31, 1996:
Independent Accountants' Report of Baird, Kurtz and Dobson
Balance Sheet
Statement of Income
Statement of changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
Audited Balance Sheet of PackerWare Corporation as of January 21, 1997:
Report of Ernst & Young LLP, Independent Auditors
Balance Sheet
Notes to Balance Sheet
Unaudited Statements of Operations and Cash Flows of PackerWare
Corporation for the period from November 1, 1996 to January 21, 1997:
Statements of Operations
Statement of Cash Flow
Note to Statements of Operation and Cash Flow
ITEM 7 (B) PRO FORMA FINANCIAL INFORMATION
ProForma Unaudited Condensed Financial Statements of BPC Holding
Corporation for the year ended December 28, 1996:
Pro Forma Unaudited Condensed Consolidated Balance Sheet
Notes to Pro Forma Unaudited Condensed Consolidated Balance Sheet
Pro Forma Unaudited Condensed Consolidated Statement of Operations
Notes to Pro Forma Unaudited Condensed Consolidated Statement of
Operations
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
BPC HOLDING CORPORATION
By: /S/ JAMES M. KRATOCHVIL
James M. Kratochvil
Vice President, Chief Financial Officer, Treasurer
and Secretary
Dated: April 7, 1997
<PAGE>
PACKERWARE CORPORATION
Accountants' Report and
Financial Statements
October 31, 1996
<PAGE>
PACKERWARE CORPORATION
OCTOBER 31, 1996
CONTENTS
PAGE
INDEPENDENT ACCOUNTANTS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Income 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
PackerWare Corporation
Lawrence, Kansas
We have audited the accompanying balance sheet of PACKERWARE CORPORATION as
of October 31, 1996, and the related statements of income, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PACKERWARE CORPORATION as
of October 31, 1996, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
As discussed in Note 8, in 1996 the Company changed its method of accounting
for the Employee Stock Ownership Plan by retroactively restating prior years'
financial statements.
By /s/ BAIRD, KURTZ & DOBSON
---------------------------------
BAIRD, KURTZ & DOBSON
Kansas City, Missouri
December 23, 1996, except for Note 12,
as to which the date is January 21, 1997
<PAGE>
BALANCE SHEET
OCTOBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash $ 22,034
Accounts receivable - trade, less allowance for doubtful
accounts of $61,648 4,541,901
Inventories 7,536,702
Deferred income taxes 640,000
Prepaid expenses 146,316
Refundable income taxes
------------
Total Current Assets 12,886,953
------------
RESTRICTED CASH DEPOSITS 13,867
------------
PROPERTY AND EQUIPMENT, At cost
Land 333,979
Buildings and improvements 9,375,285
Equipment 36,919,938
Furniture and fixtures 1,429,661
Automobiles and trucks 114,629
Leasehold improvements 544,989
Molds in process 660,506
------------
49,378,987
Less accumulated depreciation 34,753,686
------------
14,625,301
OTHER ASSETS
Deposits 22,188
Long-term bond origination costs (net of accumulated
amortization of $491,556) 35,277
Receivable - employees 4,701
Cash surrender value of life insurance, net of policy
loans of $14,866 301,202
------------
363,368
------------
$27,889,489
============
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 7,836,935
Checks released in excess of available cash balances 445,947
Accounts payable 3,167,310
Accrued expenses 1,467,317
Accrued vacation 485,800
Income taxes payable 104,000
------------
Total Current Liabilities 13,507,309
------------
DEFERRED INCOME TAXES 604,090
------------
EMPLOYEE STOCK OWNERSHIP PLAN OBLIGATION,
Less current maturities 6,480,000
------------
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share; authorized
2,000,000 shares, issued 911,900 shares 91,190
Additional paid-in capital 5,465,143
------------
Retained earnings 7,238,332
12,794,665
Less:
Treasury stock, at cost, 211,912 shares, (1,696,575)
Unearned ESOP shares (3,800,000)
------------
7,298,090
------------
$27,889,489
============
</TABLE>
<PAGE>
STATEMENT OF INCOME
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
NET SALES $42,818,096
COST OF GOODS SOLD 36,521,062
------------
GROSS PROFIT 6,297,034
------------
OPERATING EXPENSES
Selling 2,456,240
General and administrative 2,316,472
------------
4,772,712
------------
INCOME FROM OPERATIONS 1,524,322
------------
OTHER INCOME (EXPENSE)
Interest income 15,766
Interest expense (908,958)
ESOP interest expense (576,386)
Gain on sale of property and equipment 466,673
Other (40,729)
------------
(1,043,634)
------------
INCOME BEFORE INCOME TAXES 480,688
PROVISION FOR INCOME TAXES 243,000
------------
NET INCOME $ 237,688
============
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
Additional Unearned
Common Paid-in Retained Treasury ESOP
STOCK CAPITAL EARNINGS STOCK SHARES
------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 31, 1995 $9,190 $5,992,143 $ 9,316,644 $(1,576,425) $(7,010,000)
Adjustment applicable to prior
years for adoption of SOP 93-6,
Employers' Accounting for
Employee Stock Ownership Plans (254,000) (2,316,000) - 2,570,000
------- ---------- ------------ ----------- -----------
BALANCE, OCTOBER 31, 1995,
AS RESTATED 9,190 5,738,143 7,000,644 (1,576,425) (4,440,000)
Net income 237,688
Purchase of treasury stock (120,150)
ESOP shares released, net of
taxes (273,000) 640,000
------- ---------- ------------ ----------- -----------
BALANCE, OCTOBER 31, 1996 $9,190 $5,465,143 $ 7,238,332 $(1,696,575) $(3,800,000)
======= ========== ============ =========== ===========
</TABLE>
<PAGE>
STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C>
Net income $ 237,688
Items not requiring (providing) cash:
Depreciation and amortization 3,341,551
Gain on sale of assets (466,673)
Deferred income taxes 169,000
Write-off of investment in affiliate 50,000
ESOP expense 192,000
Changes in:
Accounts receivable 678,559
Inventories (1,977,044)
Income taxes payable 411,898
Prepaid expenses (78,113)
Checks released in excess of available cash balances 11,587
Accounts payable 10,569
Accrued expenses 55,086
------------
Net cash provided by operating activities 2,636,108
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted cash 292,396
Purchases of property and equipment (2,149,171)
Proceeds from sale of property and equipment 589,200
Increase in cash surrender value of officers' life insurance (18,830)
Change in advances to employees 609
Change in escrow deposits 25,532
------------
Net cash used in investing activities (1,260,264)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on line-of-credit agreement 672,195
Proceeds from issuance of long-term debt 1,400,000
Principal payments on long-term debt (2,938,939)
Payments to acquire treasury stock (120,150)
Payment of ESOP debt (530,000)
------------
Net cash used in financing activities (1,516,894)
------------
DECREASE IN CASH (141,050)
CASH, BEGINNING OF YEAR 163,084
------------
CASH, END OF YEAR $ 22,034
</TABLE>
<PAGE>
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The Company earns revenues primarily from manufacturing and selling of
various plastic products, including products for various retail organizations
and certain containers for the food service industry. The Company extends
unsecured credit to its customers in the normal course of business.
INVENTORY PRICING
All inventories are stated at the lower of standard cost, which approximates
cost determined using the FIFO (first-in, first-out) method, or market. The
Company provides an allowance for slow-moving inventory based on its experience
and annual product usage.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated over the estimated useful life of
each asset. Leasehold improvements are depreciated over the shorter of the
lease term or the estimated useful lives of the improvements. Annual
depreciation is computed using straight-line and accelerated methods.
BOND ORIGINATION COSTS
Bond origination costs are being amortized over the life of the underlying
bond issues using a method that approximates the interest method.
WORKERS' COMPENSATION INSURANCE
The Company is partially self-insured with respect to workers' compensation
insurance coverage. Additionally, the Company purchases "excess" insurance for
workers' compensation coverage. Currently under this policy, the Company is
liable for the first $175,000 on individual claims, not to exceed an annual
aggregate amount of $521,200. Also, the "excess" insurance policy has a total
annual aggregate coverage limit of $5,000,000.
INCOME TAXES
Deferred tax liabilities and assets are recognized for the tax effects of
differences between financial statement and tax bases of assets and
liabilities. A valuation allowance is established to reduce deferred tax
assets if it is more likely than not that a deferred tax asset will not be
realized.
<PAGE>
INDUSTRIAL REVENUE BONDS
Industrial revenue bonds, upon which the Company is obligated to pay
principal and interest under lease obligations providing for the transfer of
ownership to the Company upon the satisfaction of the bond obligations, have
been recorded as though the Company were the issuer of the bonds.
CERTAIN SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2: RESTRICTED CASH DEPOSITS
Included in restricted cash are the remaining proceeds from the March 1,
1993, September 1, 1992 and April 15, 1991, Industrial Revenue Bond issues,
which are restricted to future equipment acquisition and funds escrowed toward
principal and interest payments on the bonds. Investment of the underlying
funds is directed by the Company.
NOTE 3: INVENTORIES
Inventories at October 31, 1996 consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Raw materials $ 669,053
Supplies 984,652
Finished goods 6,199,167
-----------
7,852,872
Allowance for slow-moving inventory (316,170)
-----------
$7,536,702
===========
</TABLE>
<PAGE>
NOTE 4: LONG-TERM DEBT
<TABLE>
<CAPTION>
<S> <C>
Industrial Revenue Bonds (A) $1,655,000
Installment notes payable (B) 1,269,304
Notes payable, stockholder (C) 197,359
Revolving credit agreement (D) 4,542,084
Other 173,188
-----------
7,836,935
Less current maturities 1,793,723
-----------
$6,043,212
===========
</TABLE>
(A) Obligations issued by the City of Lawrence, Kansas; maturing
serially through April 2002; the bond series outstanding are:
Series 4/15/91 - 9.75% to 10.10%; 10-year bonds, Series
9/1/92 - 6.5% to 9%; Series A, 3/1/93 - 6.3% to 9%; Series
4/15/91 bonds were refinanced and paid in full through
borrowings described in (D) during 1996. The bonds are
collateralized by buildings and equipment.
(B) Payable to finance company and due 2002; payable in monthly
installments of $29,540, including interest at 9.7%;
collateralized by equipment.
(C) Payable to stockholder and due 1996; payable in variable
monthly installments, including interest at 8%; unsecured;
subordinated to line of credit (F) and ESOP obligation (SEE
NOTE 8). During 1995, the Company purchased 20,000 shares of
outstanding common stock from the stockholder for $300,000 in
exchange for the note payable.
(D) Provides for borrowing up to $4,000,000 and $1,950,000 under
separate line-of-credit agreements pursuant to extension
agreement; due January 31, 1998, plus interest at prime plus
1.5% and 2.5%, respectively, payable monthly; collateralized
by substantially all of the Company's assets; requires
maintenance of Company's primary cash accounts with the bank,
maintenance of minimum level of stockholders' equity,
restricts the purchase and disposition of certain assets or
changes in corporate ownership of the Company, requires
maintenance of minimum debt service coverage and minimum
levels of tangible net worth.
In connection with the change in control (SEE NOTE 12), all of the above
debt was paid in full subsequent to year end and, therefore, is classified as
current in the accompanying balance sheet.
<PAGE>
NOTE 4: LONG-TERM DEBT (CONTINUED)
On October 31, 1994, the Company sold property which represented collateral
on the Series 1993B Revenue Bonds. The net proceeds of $2,077,393 (after
payment of $512,607 in underwriting fees, taxes and other selling costs) were
used to purchase U.S. Government securities. Those securities were deposited
in a trust with an escrow agent to provide for all future debt service payments
on the 1993B Series Bonds. As a result, the 1993B Series Bonds are considered
to be defeased and the liability for those bonds amounting to $1,815,000 at
October 31, 1996 is not shown on the balance sheet.
NOTE 5: OPERATING LEASES
The Company has entered into several noncancellable leases for various
buildings and equipment.
Future minimum lease payments under these leases at October 31, 1996 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 323,310
1998 293,151
1999 279,632
2000 273,888
2001 273,888
Thereafter 727,488
----------
$2,171,357
==========
</TABLE>
Included in future minimum lease payments under noncancellable operating
leases are payments of $68,688 annually to the majority stockholder of the
Company for rental of certain buildings and equipment. The leases expire in
1997 and 2002.
All lease payments are charged to operations as incurred. Total rents
charged to operations under all operating leases were $471,773 for 1996.
NOTE 6: INCOME TAXES
The provision for income taxes includes these components:
<TABLE>
<CAPTION>
<S> <C>
Taxes currently payable $249,000
Deferred income taxes (6,000)
--------
$243,000
========
</TABLE>
<PAGE>
NOTE 6: INCOME TAXES (CONTINUED)
A reconciliation of income tax expense at the statutory rate to income tax
expense at the Company's effective rate is shown below:
<TABLE>
<CAPTION>
<S> <C>
Computed at the statutory rate (34%) $163,500
(Increase) decrease in tax benefit
resulting from:
Change in deferred tax asset valuation allowance 2,000
Nondeductible expenses 2,000
Change in estimate of prior year's tax 67,500
Other 8,000
--------
Actual tax provision (credit) $243,000
========
</TABLE>
The tax effects of temporary differences related to deferred taxes shown on
the balance sheet are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Unearned ESOP shares $ 1,045,000
Alternative minimum tax credits 590,000
Inventory pricing and reserves 313,000
Net operating loss carryforwards 337,000
Accrued compensation 245,000
Workers' compensation reserve 78,000
Allowance for doubtful accounts 23,000
Loss on debt defeasance 1,000
---------
2,632,000
---------
Deferred tax liabilities:
Accumulated depreciation (1,448,000)
Other (44,090)
---------
(1,492,090)
Net deferred tax asset before valuation allowance 1,139,910
Valuation allowance:
Beginning balance (1,102,000)
Increase during the period (2,000)
---------
Ending balance (1,104,000)
Net deferred tax asset $ 35,910
=========
</TABLE>
<PAGE>
NOTE 6: INCOME TAXES (CONTINUED)
The net deferred tax asset is presented on the balance sheet as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax asset - current $ 640,000
Deferred tax liability - long-term (604,090)
---------
Net deferred tax asset $ 35,910
</TABLE>
The Company has available at October 31, 1996, unused operating loss
carryforwards of approximately $590,000 for federal income tax purposes and
$3,600,000 for state income tax purposes which expire in the years 2008 through
2010. The Company also has alternative minimum tax credits of approximately
$590,000 available to offset future federal income taxes. The credits have no
expiration date.
NOTE 7: PROFIT SHARING PLAN
The Company has a profit sharing plan covering substantially all employees.
The Company's contributions to the plan are determined annually by the Board of
Directors. Contributions are limited to the maximum amount allowable as a
deduction under the Internal Revenue Code. The contribution to the plan for
the year ended October 31, 1996 was $78,300.
NOTE 8: EMPLOYEE STOCK OWNERSHIP PLAN AND RESTATEMENT OF
PRIOR YEARS' FINANCIAL STATEMENTS
The Company has an employee stock ownership plan (ESOP) to invest in the
Company's common stock for the benefit of eligible employees. The Company
makes annual contributions to the plan as determined by the Board of Directors,
limited to 25% of eligible employee compensation, plus principal and interest
paid on the related debt. Contributions to the plan were $1,106,386 for the
year ended October 31, 1996, including $448,000 which has been accounted for as
a reduction in additional paid-in capital, and $530,000 in ESOP debt principal
reduction. $640,000 has been accounted for as a reduction in unearned shares
in the stockholders' equity section of the accompanying balance sheet. The
remaining contributions are reported in the accompanying income statement as
compensation expense of $192,000, included as components of operating expenses
and cost of goods sold, as well as interest expense of $576,386.
In prior years, the Company recorded ESOP expense as the amount contributed
to the plan for the year. During 1996, the Company retroactively changed its
method of determining ESOP expense in accordance with Statement of Position
(SOP) 93-6, EMPLOYERS' ACCOUNTING FOR EMPLOYEE STOCK OWNERSHIP PLANS.
Accordingly, the debt of the ESOP is recorded as debt and the shares pledged as
collateral are reported as unearned ESOP shares in the balance sheet. As
shares are released from collateral, the Company reports compensation expense
equal to the current market price of the shares. Adjustments applicable to
1995 and prior, less income tax effects, have been included in restated 1996
beginning additional paid-in capital, retained earnings and unearned ESOP
shares balances. This change had no effect on total beginning stockholders'
equity.
<PAGE>
NOTE 8: EMPLOYEE STOCK OWNERSHIP PLAN AND RESTATEMENT OF
PRIOR YEARS' FINANCIAL STATEMENTS (CONTINUED)
Through an employee stock ownership trust (ESOT), which was established to
fund the ESOP, 250,000 shares of common stock were acquired for $10,000,000
using the proceeds of a special-purpose bank loan to the ESOT. The Company has
guaranteed the repayment of the loan to the ESOT. Under the guarantee
agreement, the Company is obligated to make contributions to the ESOT to enable
it to make similar payments against the bank loan. The loan is payable over
ten years with varying monthly installments of principal plus interest. The
note bears interest at a base rate (8.25% at October 31, 1996). The Company
has pledged substantially all of its assets as collateral for the ESOT loan.
The loan agreement also requires the Company to maintain a minimum level of
stockholders' equity, restricts the purchase and disposition of certain assets
or changes in corporate ownership of the Company, requires maintenance of
minimum debt service coverage and requires minimum levels of tangible net
worth. The Company is in technical noncompliance with certain covenants
contained in the agreement; however, this debt was paid in full subsequent to
year end and replaced with long-term debt in connection with the change in
control (SEE NOTE 12). For financial reporting purposes, the outstanding ESOT
obligation has been reflected as a liability with stockholders' equity reduced
by the unearned ESOP shares.
<TABLE>
<CAPTION>
The principal balance of the ESOT note matures as follows:
<S> <C>
1998 $6,480,000
==========
The ESOP shares at October 31, 1996 are as follows:
Shares released for allocation 109,990
Unreleased shares 94,977
----------
Total ESOP shares 204,967
==========
Estimated fair value of unreleased shares
based on most recent valuation
prepared by John M. Kultgen, April 1,
1996 $1,139,724
==========
</TABLE>
NOTE 9: CONTINGENCIES
There are various legal proceedings involving the Company. Management
considers that the aggregate liabilities, if any, arising from such actions
would not have a material adverse effect on the financial position or
operations of the Company.
<PAGE>
NOTE 10: STOCK OPTION PLAN
During 1995, the Company adopted a stock option plan which permits the
issuance of options to selected employees and independent contractors of the
Company. The plan reserves 50,000 shares of common stock for grant and
provides that the term of each award be determined by the committee of the
Board of Directors (Committee) charged with administering the plan.
Under the terms of the plan, options granted may be either nonqualified or
incentive stock options and the exercise price, determined by the Committee,
may not be less than the fair market value of a share on the date of grant.
Incentive stock options granted to an optionee owning more than 10% of the
voting power of all classes of the Company's stock will not be less than 110%
of the fair market value of such stock. Options granted under the plan are
exercisable in installments determined by the Committee.
At October 31, 1996, the Company had 15,000 options outstanding at an
exercise price of $12; 1,000 options are currently exercisable; and 35,000
options are available for grant.
NOTE 11: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require the disclosure of certain
significant estimates and current vulnerabilities due to certain
concentrations. Those matters include the following:
MAJOR CUSTOMER
Approximately 22% of the Company's total revenue for the year ended October
31, 1996 was from one customer. Additionally, two customers' accounts
receivable balances amounted to approximately 28% of accounts receivable for
the year ended October 31, 1996.
SELF INSURANCE
The Company is partially self-insured with respect to workers' compensation
insurance coverage. The Company accrues the expense of covered claims plus
unasserted claims and unreported incidents occurring during the year based on
estimates of the probable total cost of any related claims. Such estimates are
calculated by the Company's insurance agency and are based on the Company's own
claims experience. Claim payments based on actual 1996 claims ultimately filed
could differ materially from these estimates.
RESERVE FOR SLOW-MOVING INVENTORY
At October 31, 1996, the Company had inventory quantities that exceeded the
Company's current year sales volume for certain products. Management has
reduced the inventory carrying value by recording an allowance of $316,170 and
developed plans to lower inventory levels for such items in the next year. The
amount of ultimate loss could differ materially from management's estimates.
<PAGE>
NOTE 11: SIGNIFICANT ESTIMATES AND CONCENTRATIONS (CONTINUED)
ALLOWANCES FOR DOUBTFUL ACCOUNTS
The Company has recorded an allowance for doubtful accounts related to
accounts receivable of $61,648 at October 31, 1996, which management believes
to be adequate based on information currently available. However, the amount
ultimately collected could differ materially from the carrying amount reflected
in these financial statements.
NOTE 12: CHANGE IN CONTROL
During 1996, the Company's stockholders and its Board of Directors approved
the sale of all of their stock ownership in the Company. The sale closed on
January 21, 1997, and the related debt of the Company was refinanced with long-
term debt. The amounts shown in the accompanying balance sheet do not reflect
any effect of the purchase price allocations which might be made by the buyer.
NOTE 13: ADDITIONAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
ADDITIONAL CASH INFORMATION
<S> <C>
Interest paid $ 851,132
Income taxes paid (refunded) (337,898)
</TABLE>
<PAGE>
Balance Sheet
PackerWare Corporation
AS OF JANUARY 21, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
PackerWare Corporation
Balance Sheet
January 21, 1997
CONTENTS
Report of Independent Auditors...........................1
Audited Balance Sheet
Balance Sheet.............................................2
Notes to Balance Sheet....................................4
<PAGE>
Report of Independent Auditors
The Stockholders
PackerWare Corporation
We have audited the accompanying balance sheet of PackerWare Corporation as of
January 21, 1997. This balance sheet is the responsibility of the Company's
management. Our responsibility is to express an opinion on this balance sheet
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position PackerWare Corporation as of January
21, 1997, in conformity with generally accepted accounting principles.
Ernst & Young, LLP
Indianapolis, Indiana
February 21, 1997
PackerWare Corporation
Balance Sheet
January 21, 1997
<TABLE>
<CAPTION>
ASSETS (NOTE 3)
<S> <C>
Current assets:
Cash and cash equivalents $ 132,799
Accounts receivable, less allowance for doubtful
accounts of $72,088 2,990,363
Inventories:
Finished goods, less allowance for slow moving
items of $917,010 8,147,049
Raw materials and supplies, less allowance for
slow moving items of $182,715 1,631,364
--------------
9,778,413
Prepaid expenses and other receivables 80,711
--------------
Total current assets 12,982,286
Property and equipment (Note 3):
Land 333,980
Buildings and improvements 9,920,275
Machinery, equipment and tooling 37,068,314
Furniture and fixtures 1,441,821
Automobiles and trucks 114,629
Construction in progress 855,762
--------------
49,734,781
Less accumulated depreciation (35,786,026)
--------------
13,948,755
--------------
Cash surrender value of life insurance 313,847
Deferred income taxes 599,687
Other assets 167,624
--------------
Total assets $ 28,012,199
==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities:
Accounts payable $ 5,678,499
Accrued expenses and other liabilities 746,102
Employee compensation and payroll taxes 862,333
Income taxes payable 4,000
Current portion of long-term debt (NOTE 3) 8,158,540
ESOP debt (NOTE 6) 6,435,000
--------------
Total current liabilities 21,884,474
Long-term debt (NOTE 3) 451,496
Stockholders' equity:
Common stock; $.10 par value;
Authorized: 2,000,000 shares
Issued: 911,900 shares 91,190
Additional paid-in capital 5,465,143
Retained earnings 5,574,418
Treasury stock at cost, 211,651 shares (1,699,522)
Unearned ESOP shares (NOTE 6) (3,755,000)
--------------
Total stockholders' equity 5,676,229
Total liabilities and stockholders' equity $ 28,012,199
==============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
PackerWare Corporation
Notes to Balance Sheet
January 21, 1997
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
NATURE OF OPERATIONS
PackerWare Corporation (the "Company") manufactures various injection molded
plastic containers, drink cups, housewares, and lawn and garden products in
manufacturing facilities in Lawrence, Kansas and Reno, Nevada. The Company's
customers are located principally throughout the United States and are
primarily comprised of retail organizations and companies operating in the food
service industry. Amounts due from five customers comprised 36% of the
accounts receivable balance as of January 21, 1997. The Company generally does
not require collateral and reviews accounts periodically for collectibility and
writes off accounts deemed uncollectible.
Various densities of plastic resin represent the most significant portion of
the Company's raw materials. The Company does not anticipate any material
difficulty in obtaining an uninterrupted supply of these resins at competitive
prices in the near future. However, should a significant shortage of the
supply of resin occur, both the price and availability of the principal raw
material used in the manufacture of the Company's products could lead to
financial disruption to the Company.
PREPARATION OF BALANCE SHEET
The balance sheet has been prepared as of January 21, 1997, immediately prior
to the closing of the acquisition of the Company by Berry Plastics Corporation
(see Note 8). Accordingly, the balance sheet reflects the assets, liabilities
and stockholders' equity using the accounting polices of the Company which
follow.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less at the
date of purchase are considered to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost (first in, first out method) or
market.
PackerWare Corporation
Notes to Balance Sheet (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed primarily
by the straight-line method over the estimated useful lives of the assets
ranging from 3 to 35 years.
USE OF ESTIMATES
The preparation of the balance sheet in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the balance sheet and accompanying notes.
Actual amounts could differ from those estimates.
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Lines of credit $ 5,390,667
City of Lawrence, Kansas Industrial Revenue Bonds 1,655,000
Note payable, finance company 1,230,590
Note payable, stockholder 193,742
Note payable, finance company 113,726
Note payable, finance company 26,311
-----------
8,610,036
Less current portion 8,158,540
-----------
$ 451,496
===========
</TABLE>
The lines of credit represent borrowings of $4,000,000 and $1,390,667 under
separate line of credit arrangements with the same bank which permit borrowings
of up to $4,000,000 and $1,950,000, respectively. Both loans mature on January
31, 1997 with interest which accrues at the bank's corporate base rate plus
1.5% (9.75% at January 21, 1997) and 2.5% (10.75% at January 21, 1997) on the
$4,000,000 and $1,950,000 loans, respectively. The loans are collateralized by
security agreements which cover substantially all of the Company's assets.
Amounts may be drawn on the loans subject to a borrowing base described in the
security agreements.
<PAGE>
PackerWare Corporation
Notes to Balance Sheet (continued)
3. LONG-TERM DEBT (CONTINUED)
The amount due under industrial revenue bonds represents $970,000 and $685,000
balances on initial issuances of $4,000,000 and $1,500,000, respectively. The
bonds mature serially through April 2003 with annual payments ranging from
$10,000 to $920,000 at interest rates ranging from 7.5% to 9.0%. The bonds are
collateralized by specified buildings and equipment.
The $1,230,590 note payable is the remaining balance on a $1,400,000 loan
payable to a finance company. The note, which accrues interest at 370 basis
points above the current three month treasury yield (9.7% at January 21, 1997)
is payable in monthly installments of $29,540, including interest, with a final
payment due in March 2001. The note is collateralized by machinery and
equipment specified in a security agreement. In addition, the Company is
required to meet certain financial covenants. As of January 21, 1997, the
Company is in violation of at least one of these covenants. As such, all
amounts payable under this note have been classified as current.
The note payable to stockholder, which was due December 31, 1996, is the
remaining portion of a $264,000 note executed July 1, 1995. The note is
unsecured and is subordinate to the lines of credit and the ESOP obligation
(see Note 6).
The $113,726 note payable to a finance company is the remaining portion due
under a $490,440 note which is collateralized by specified machinery and
equipment. The note, which requires quarterly installments of $24,522
including interest, bears interest at 6.6% and matures in April 1998.
The $26,311 note payable to a finance company is the remaining portion due
under a $190,000 note which is collateralized by a security agreement which
specifies certain machinery and equipment. The note, which requires monthly
payments of $3,861 including interest, bears interest at 8.09% and matures in
August 1998.
<PAGE>
PackerWare Corporation
Notes to Balance Sheet (continued)
3. LONG-TERM DEBT (CONTINUED)
Maturities of long-term debt for each of the following years ending January 21
are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 8,158,540
1999 361,496
2000 20,000
2001 20,000
2002 20,000
Thereafter 30,000
-----------
$ 8,610,036
===========
</TABLE>
4. LEASES
Certain property and equipment are leased under noncancellable operating
leases. Future minimum lease payments under noncancellable operating leases for
each of following years ended January 21 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 484,591
1999 467,658
2000 440,621
2001 342,988
2002 341,988
Thereafter 800,891
-----------
$ 2,878,737
===========
</TABLE>
Included in the future minimum lease payments above are payments under
noncancellable operating leases to the majority stockholder of the Company or
to a company which the majority stockholder of the Company owns an interest in.
Future minimum lease payments under these noncancellables operating leases for
each of the following years ended January 21 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $133,513
1999 127,188
2000 127,188
2001 116,188
2002 115,188
Thereafter 177,191
-----------
$796,456
===========
</TABLE>
PackerWare Corporation
Notes to Balance Sheet (continued)
5. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of deferred tax assets and liabilities at January 21, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Inventory $ 790,086
Compensation and benefit accruals 248,108
Insurance reserves 87,985
Net operating loss carryforwards 720,501
Alternative minimum tax credit carryforwards 599,687
Other 43,687
-----------
2,490,054
Valuation allowance (584,111)
-----------
1,905,943
Deferred tax liabilities:
Tax depreciation in excess of book depreciation 1,306,256
-----------
Net deferred tax asset $ 599,687
===========
</TABLE>
As of January 21, 1997, the Company has unused operating loss carryforwards of
approximately $1,271,000 for federal income tax purposes and $4,611,000 for
state income tax purposes which begin expiring in 2008 and will fully expire in
2112. The Company also has alternative minimum tax credit carryforwards of
approximately $600,000 which have no expiration date.
6. EMPLOYEE STOCK OWNERSHIP PLAN
The Company has an employee stock ownership plan (ESOP) which has invested in
the Company's common stock for the benefit of eligible employees. The Company
makes annual contributions to the plan as determined by the Board of Directors,
limited to 25% of eligible employee compensation, plus principal and interest
paid on the related debt.
<PAGE>
PackerWare Corporation
Notes to Balance Sheet (continued)
6. EMPLOYEE STOCK OWNERSHIP PLAN (CONTINUED)
Through an employee stock ownership trust (ESOT), which was established to fund
the ESOP, 250,000 shares of common stock were acquired for $10,000,000 using
the proceeds of a bank loan the ESOT. The Company has guaranteed the repayment
of the loan to the ESOT. Under this guarantee, the Company is obligated to
make contributions to the ESOT to enable it to make similar payments against
the bank loan. The loan matures on January 31, 1997 and accrues interest at
the bank's base rate (8.25% on January 21, 1997) and is collateralized by a
security agreement which specifies the stock purchased by the ESOP.
The Company accounts for the plan in accordance with Statement of Position
(SOP) 93-6, EMPLOYERS' ACCOUNTING FOR EMPLOYEE STOCK OWNERSHIP PLANS. In
accordance with this statement, unearned shares are recorded as a contra-equity
account and are valued at their original cost. Compensation expense
is charged based on the fair value of shares when they are
released. Any differences between the historical cost and fair value of
released shares is recorded as an increase or decrease to additional paid-in
capital.
The ESOP shares at January 21, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Shares released for allocation $ 115,752
Unreleased shares 94,977
----------
Total ESOP shares $ 210,729
==========
Estimated fair value of unreleased shares based on
most recent valuation, November 18, 1996 $ 988,711
==========
</TABLE>
7. STOCK OPTION PLAN
The Company has a stock option plan which permits the issuance of options to
selected employees and independent contractors of the Company. The maximum
aggregate number of options which may be outstanding at any point in time under
the plan is 50,000.
Under the terms of the plan, options granted may be either nonqualified or
incentive stock options and the exercise price may not be less than the fair
market value of a share of common stock on the date of grant. Options granted
under the plan are exercisable in installments not to exceed ten years from the
date of grant.
PackerWare Corporation
Notes to Balance Sheet (continued)
7. STOCK OPTION PLAN (CONTINUED)
At January 21, 1997, there were 5,000 options outstanding at an exercise price
of $14. 2,000 of these shares are currently exercisable at the discretion of
the option holder.
8. ACQUISITION OF THE COMPANY
On January 21, 1997, the Company and its shareholders executed an Agreement and
Plan of Reorganization (the "Agreement") with Berry Plastics Corporation and
PackerWare Acquisition Corporation (collectively "Berry") whereby Berry
purchased the outstanding common stock of the Company for a purchase price of
approximately $26.5 million.
<PAGE>
PackerWare Corporation
Statement of Operations
(Unaudited)
Period from November 1, 1996 to January 21, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
<S> <C>
Net sales $ 5,215
Cost of goods sold 5,897
Gross margin (deficit) (682)
----------
Operating expenses:
Selling 374
General and administrative 702
----------
Total operating expenses 1,076
----------
Loss from operations (1,758)
Other expense:
Interest, net 409
Other 60
----------
469
----------
Loss before income taxes (2,227)
Income tax benefit 564
----------
Net loss $ (1,663)
==========
</TABLE>
SEE ACCOMPANYING NOTE.
<PAGE>
PackerWare Corporation
Statement of Cash Flows
(Unaudited)
Period from November 1, 1996 to January 21, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (1,663)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation and amortization 1,121
Deferred income taxes (564)
Changes in operating assets and liabilities
Accounts receivable, net 1,552
Inventories, net (2,241)
Cash value of life insurance and other assets (41)
Accounts payable and accrued expenses 1,664
----------
Net cash used for operating activities (172)
INVESTING ACTIVITIES
Additions to property and equipment (445)
----------
Net cash used for investing activities (445)
FINANCING ACTIVITIES
Borrowings on line of credit, net 850
Payments of long-term debt (122)
----------
Net cash provided by financing activities 728
----------
Net increase in cash and cash equivalents 111
Cash and equivalents at beginning of year 22
----------
Cash and equivalents at end of year $ 133
==========
</TABLE>
SEE ACCOMPANYING NOTE.
<PAGE>
PackerWare Corporation
Note to Statements of Operations and Cash Flows
The unaudited statements of operations and cash flows of PackerWare Corporation
for the period from November 1, 1996 to January 21, 1997 have been prepared in
accordance with generally accepted accounting principles for interim financial
information. 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 considered
necessary for a fair presentation have been included. Operating results for
the period presented are not necessarily indicative of the results that may be
expected for the full fiscal year. These statements should be read in
conjunction with the annual financial statements and related note of
PackerWare for the year ended October 31, 1996 included in this Form 8-K/A.
Comparative statements of operations and cash flows for the period from
November 1, 1995 to January 21, 1996 have not been presented as these
statements were not available.
<PAGE>
BPC HOLDING CORPORATION
PRO FORMA UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The following unaudited pro forma condensed consolidated statement of
operations and condensed consolidated balance sheet (collectively, the "Pro
Forma Statements") give effect to the purchase of the outstanding common stock
of PackerWare Corporation ("PackerWare") by Berry Plastics Corporation
("Berry"). Berry is a wholly owned subsidiary of BPC Holding Corporation
("Holding").
The pro forma information is based on the historical consolidated financial
statements of Holding and historical financial statements of PackerWare, giving
effect to the PackerWare acquisition using the purchase method of accounting
and the assumptions and adjustments in the accompanying notes to the pro forma
condensed consolidated financial statements. The pro forma statement of
operations gives effect to the acquisition as if it had occurred on December
31, 1995 and the pro forma condensed balance sheet gives effect to the
acquisition as if it had occurred on December 28, 1996.
The Pro Forma Statements do not purport to represent what Holding's
consolidated financial position or results of operations would actually have
been if such transaction had in fact occurred on such dates or to project
Holding's consolidated financial position or results of operations for any
future date or period. The pro forma adjustments are based upon available
information and upon assumptions that Holding believes to be reasonable. The
Pro Forma Statements and accompanying notes should be read in conjunction with
the historical consolidated financial statements and related notes of Holding
included within its Annual Report on Form 10-K for the year ended December 28,
1996, and with the financial statements and related notes of PackerWare for the
year ended October 31, 1996 and the unaudited financial statements and related
notes of PackerWare for the period from November 1, 1996 to January 21, 1997
included in this Form 8-K/A.
<PAGE>
BPC HOLDING CORPORATION
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 28, 1996
---------------------------------------------------------------------------
HOLDING PACKERWARE PRO FORMA CONSOLIDATED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $10,192 $22 $- $10,214
Accounts receivable 17,642 4,542 - 22,184
Inventories 13,607 7,537 - 21,144
Other current assets 1,393 786 (52) (a) 2,127
------- -------- ------- -------
Total current assets 42,834 12,887 (52) 55,669
Assets held in trust 30,188 - - 30,188
Property and equipment 55,664 14,625 2,625 (b) 72,914
Intangible assets 14,752 - 6,431 (b) 21,183
Other assets 2,360 377 (336) (a) 2,401
------- -------- ------- -------
Total assets $145,798 $27,889 $8,668 $182,355
======= ======== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $12,877 $3,614 $- $16,491
Accrued expenses 10,023 2,022 - 12,045
Accrued interest 3,286 35 (35) (a) 3,286
Current portion of long-term debt 738 7,837 (7,837) (c) 738
------- -------- ------- -------
Total current liabilities 26,924 13,508 (7,872) 32,560
Long-term debt:
Holding 12.50% Senior Secured Notes 105,000 - - 105,000
Berry 12.25% Senior Subordinated Notes 100,000 - - 100,000
Industrial Revenue Bonds 10,400 - - 10,400
Capital lease obligation 547 - - 547
Debt discount (639) - - (639)
PackerWare Employee Stock Ownership Plan
obligation - 6,480 (6,480) (c) -
Berry revolving and senior
credit facilities - - 29,319 (d) 29,319
------- -------- ------- -------
Total long-term debt 215,308 6,480 22,839 244,627
Other liabilities 1,116 604 998 2,718
------- -------- ------- -------
Total liabilities 243,348 20,592 15,965 279,905
Stockholders' equity (deficit):
Common stock and additional paid-in 51,687 5,556 (5,556) (e) 51,687
capital
Preferred stock 11,216 - - 11,216
Treasury stock (22) (1,697) 1,697 (e) (22)
Warrants 3,511 - - 3,511
Retained earnings (deficit) (163,942) 7,238 (7,238) (e) (163,942)
Unearned Employee Stock Ownership shares - (3,800) 3,800 (e) -
------- -------- ------- -------
Total stockholders' equity (deficit) (97,550) 7,297 (7,297) (97,550)
------- -------- ------- -------
Total liabilities and stockholders'
equity (deficit) $145,798 $27,889 $8,668 $182,355
======= ======= ======= =======
</TABLE>
SEE FOOTNOTES ON FOLLOWING PAGE.
<PAGE>
BPC HOLDING CORPORATION
NOTES TO PRO FORMA UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The historical balance sheet presented for Holding is as of December 28, 1996, and the
historical balance sheet presented for PackerWare is as of October 31, 1996.
The following adjustments reflect the acquisition of the common stock of PackerWare, the effect
of the consolidation of PackerWare's Nevada operations, and the repayment of the outstanding
debt of PackerWare on a pro forma basis using proceeds from Berry's revolving credit facility.
The pro forma allocations to the assets acquired and liabilities assumed have been made using
estimates by management and may be adjusted to reflect fair values subsequently established as a
result of appraisals by a qualified appraiser. The amount allocated to cost in excess of assets
acquired may be subsequently adjusted to reflect such appraisals, but any such adjustment is not
expected to be material. The cost in excess of net assets acquired will be amortized by the
straight-line method over a period of 15 years.
<S> <C>
(a) Adjustments for assets of PackerWare not purchased and liabilities not assumed:
Accounts receivable from employees $3
Current portion of bond origination fees 49
------
Total other current assets 52
Cash value of life insurance 301
Long-term portion of bond origination fees 35
------
Total other assets 336
Accrued interest (35)
------
$353
======
(b) Adjustments for assumed fair values of assets and liabilities of PackerWare:
Increase of property and equipment to estimated fair value $2,625
Allocation of excess of purchase price over net assets acquired to intangible assets 6,431
Deferred income taxes on the step-up to estimated fair value of property and equipment (998)
------
$8,058
======
(c) Repayment of PackerWare debt:
Current portion of long-term debt $7,837
Employee Stock Ownership Plan obligation 6,480
------
$14,317
======
(d) Borrowings for payment of purchase price and transaction costs:
Proceeds from Berry revolving and senior credit facilities $29,319
------
(e) Elimination of PackerWare's stockholders' equity:
Common stock and additional paid-in capital $5,556
Treasury stock (1,697)
Retained earnings 7,238
Unearned Employee Stock Ownership shares (3,800)
------
$7,297
======
</TABLE>
<PAGE>
BPC HOLDING CORPORATION
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL 1996
HOLDING PACKERWARE PRO FORMA CONSOLIDATED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Net sales $151,058 $42,818 ($1,007) (a) $192,869
Cost of goods sold 110,110 36,521 (d) (1,564) (a) 144,494
(573) (b)
--------- ------- ------- --------
Gross margin 40,948 6,297 1,130 48,375
Operating expenses 23,679 4,773 (d) (166) (a) 28,482
196 (b)
--------- ------- ------- --------
Income from operations 17,269 1,524 1,100 19,893
Interest expense, net (20,075) (1,469) (866) (b) (22,410)
Other income (expense) (302) 426 - 124
--------- ------- ------- --------
Income before income taxes (3,108) 481 234 (2,393)
Income tax expense 239 243 (243) (c) 239
--------- ------- ------- --------
Net income (loss) (3,347) 238 477 (2,632)
Preferred stock dividends (1,116) - - (1,116)
--------- ------- ------- --------
Net income (loss) attributable
to common shareholders ($4,463) $238 $477 ($3,748)
========= ======= ======= ========
</TABLE>
SEE FOOTNOTES ON FOLLOWING PAGE.
<PAGE>
BPC HOLDING CORPORATION
NOTES TO PRO FORMA UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The historical consolidated statement of operations presented for Holding is for its
fiscal year ended
December 28, 1996 and the historical statement of operations presented for PackerWare
is for its fiscal year ended October 31, 1996.
<S> <C>
(a) Adjustments of net sales, cost of goods sold and operating expenses due to shut down of
PackerWare's Nevada operations:
NET SALES:
Elimination of total net sales of PackerWare's Nevada operations ($4,707)
Addition of net sales retained due to transfer to other PackerWare location or to
existing Holding location 3,700
------
Net reduction in net sales ($1,007)
======
COST OF GOODS SOLD:
Elimination of total cost of goods sold of PackerWare's Nevada operations ($4,672)
Addition of cost of sales related to net sales retained 3,108
------
Net reduction in cost of goods sold ($1,564)
======
OPERATING EXPENSE:
Elimination of expenses incurred by PackerWare related to the sale of the company ($166)
======
(b)Other adjustments to cost of goods sold, operating expenses and interest expense are
comprised of the following:
COST OF GOODS SOLD:
Decrease in resin costs due to volume discounts available to Berry ($1,000)
Net increase in depreciation expense due to a change in the remaining useful lives of
the related assets 427
------
Net reduction in cost of goods sold ($573)
======
OPERATING EXPENSES:
Elimination of former employee salaries ($241)
Increase in amortization of cost in excess of net assets acquired 437
------
Net increase in operating expenses` $196
======
</TABLE>
<PAGE>
BPC HOLDING CORPORATION
NOTES TO PRO FORMA UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
INTEREST EXPENSE:
Elimination of interest expense on debt extinguished ($1,485)
Additional interest incurred on borrowing for the PackerWare acquisition 2,351
------
Net change in interest expense $866
======
(c) Adjustments to income tax expense:
Elimination of PackerWare income tax expenses due to a decrease in Holding's net
operating loss offset by a corresponding decrease in the valuation allowance
on deferred tax assets ($243)
======
(d) Cost of goods sold and operating expenses include a total of $3,342 of depreciation and
amortization expense
</TABLE>
<PAGE>
