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 April 1, 2000
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
BPC HOLDING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
Delaware 35-1814673
<S> <C>
(State or other jurisdiction (IRS employer
of incorporation or organization) identification number)
101 Oakley Street 47710
Evansville, Indiana
<S> <C>
(Address of principal executive offices) (Zip code)
Registrants' telephone number, including area code: (812) 424-2904
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
NONE
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
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
As of April 26, 2000, the following shares of capital stock of BPC Holding
Corporation were outstanding: 91,000 shares of Class A Voting Common Stock;
259,000 shares of Class A Nonvoting Common Stock; 144,546 shares of Class B
Voting Common Stock; 57,169 shares of Class B Nonvoting Common Stock; and
16,833 shares of Class C Nonvoting Common Stock. As of April 26, 2000 there
were outstanding 100 shares of the Common Stock, $.01 par value, of Berry
Plastics Corporation, 100 shares of the Common Stock, $.01 par value, of Berry
Iowa Corporation, 100 shares of the Common Stock, $.01 par value, of Berry
Tri-Plas Corporation, 100 shares of the Common Stock, $.01 par value, of Berry
Sterling Corporation, 100 shares of the Common Stock, $.01 par value, of
Aerocon, Inc., 100 shares of the Common Stock, $.01 par value, of PackerWare
Corporation, 100 shares of the Common Stock, $.01 par value, of Berry Plastics
Design Corporation, 100 shares of the Common Stock, $.01 par value, of Venture
Packaging, Inc., 100 shares of the Common Stock, $.01 par value, of Venture
Packaging Midwest, Inc., 100 shares of the Common Stock, $.01 par value, of
Venture Packaging Southeast, Inc., 4,000,000 Ordinary Shares of
<pound-sterling>1 par value, of NIM Holdings Limited, 5,850 Ordinary Shares of
<pound-sterling>1 par value, of Berry Plastics U.K. Limited, 100 shares of the
Common Stock, $.01 par value, of Knight Plastics, Inc., 100 shares of the
Common Stock, $.01 par value, of CPI Holding Corporation, 100 shares of the
Common Stock, $.01 par value, of Cardinal Packaging, Inc., 2 Ordinary Shares
of <pound-sterling>1 par value, of Norwich Acquisition Limited, and 100 shares
of the Common Stock, $.01 par value, of Berry Acquisition Corporation.
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
FORM 10-Q INDEX
FOR QUARTERLY PERIOD ENDED APRIL 1, 2000
PAGE NO.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 4
Consolidated Statements of Operations 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 4. Submission of Matters to a Vote of
Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURE 18
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
BPC Holding Corporation and Subsidiaries
Consolidated Balance Sheets
(In Thousands of Dollars)
<TABLE>
<CAPTION>
APRIL 1, JANUARY 1,
2000 2000
--------------- --------------
<S> <C>
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents $ 2,707 $ 2,546
Accounts receivable (less allowance for doubtful
accounts of $1,696 at April 1, 2000 and $1,386 at 49,164 37,507
January 1, 2000)
Inventories:
Finished goods 31,909 31,676
Raw materials and supplies 12,605 15,016
--------------- --------------
44,514 46,692
Prepaid expenses and other receivables 5,344 2,082
Income taxes recoverable 45 45
--------------- --------------
Total current assets 101,774 88,872
Property and equipment:
Land 8,445 8,556
Buildings and improvements 47,989 48,080
Machinery, equipment and tooling 167,250 172,082
Construction in progress 25,400 18,170
--------------- --------------
249,084 246,888
Less accumulated depreciation 102,473 100,096
--------------- --------------
146,611 146,792
Intangible assets:
Deferred financing and origination fees, net 10,981 11,571
Covenants not to compete, net 3,142 3,723
Excess of cost over net assets acquired, net 85,869 87,614
--------------- --------------
99,992 102,908
Other 2,339 2,235
--------------- --------------
Total assets $ 350,716 $ 340,807
=============== ===============
</TABLE>
<PAGE>
Consolidated Balance Sheets (continued)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
APRIL 1, JANUARY 1,
2000 2000
--------------- --------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 30,003 $ 25,798
Accrued expenses and other liabilities 10,342 9,590
Accrued interest 13,070 8,108
Employee compensation and payroll taxes 12,179 13,461
Income taxes 386 279
Current portion of long-term debt 21,593 21,109
--------------- --------------
Total current liabilities 87,573 78,345
Long-term debt, less current portion 390,222 382,880
Accrued dividends on preferred stock 12,035 11,001
Deferred income taxes 493 503
Other liabilities 1,315 1,549
--------------- --------------
491,638 474,278
Stockholders' equity (deficit):
Series A Preferred Stock; 800,000 shares
authorized; 600,000 shares issued and outstanding
(net of discount of $2,404 at April 1, 2000 and 12,167 12,093
$2,478 at January 1, 2000)
Series B Preferred Stock; 200,000 shares
authorized, issued and outstanding 5,000 5,000
Class A Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 91,000
shares issued and outstanding 1 1
Nonvoting; 500,000 shares authorized; 259,000
shares issued and outstanding 3 3
Class B Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 145,058
shares issued and 144,546 shares outstanding 1 1
Nonvoting; 500,000 shares authorized; 58,612
shares issued and 57,169 shares outstanding 1 1
Class C Common Stock; $.01 par value:
Nonvoting; 500,000 shares authorized; 17,000
shares issued and 16,833 shares outstanding - -
Treasury stock: 512 shares Class B Voting Common
Stock; 1,443 shares Class B Nonvoting Common Stock;
and 167 shares Class C Nonvoting Common Stock (256) (256)
Additional paid-in capital 40,451 41,559
Warrants 3,511 3,511
Retained earnings (deficit) (201,377) (195,061)
Accumulated other comprehensive loss (432) (323)
--------------- --------------
Total stockholders' equity (deficit) (140,930) (133,471)
--------------- --------------
Total liabilities and stockholders' equity (deficit) $ 350,716 $ 340,807
=============== ===============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BPC Holding Corporation and Subsidiaries
Consolidated Statements of Operations
(In Thousands of Dollars)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------
APRIL 1, APRIL 3,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Net sales $97,184 $77,460
Cost of goods sold 75,189 54,523
------------- ------------
Gross margin 21,995 22,937
Operating expenses:
Selling 5,170 4,230
General and administrative 6,329 6,038
Research and development 726 542
Amortization of intangibles 2,222 1,275
Other expenses 1,781 956
------------- ------------
Operating income 5,767 9,896
Other expenses:
Loss on disposal of property and equipment 528 609
------------- ------------
Income before interest and taxes 5,239 9,287
Interest:
Expense (11,551) (9,286)
Income 12 100
Income (loss) before income taxes (6,300) 101
Income taxes 16 193
------------- ------------
Net loss (6,316) (92)
Preferred stock dividends (1,034) (964)
Amortization of preferred stock discount (73) (73)
------------- ------------
Net loss attributable to common shareholders $ (7,423) $ (1,129)
============= =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BPC Holding Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands of Dollars)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------
APRIL 1, APRIL 3,
2000 1999
------------- ------------
(UNAUDITED)
OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (6,316) $ (92)
Adjustments to reconcile net loss to net cash provided by (used for)
operating activities:
Depreciation 6,806 5,874
Non-cash interest expense 4,008 436
Amortization 2,222 1,275
Interest funded by assets held in trust - (85)
Loss on sale of property and equipment 528 609
Changes in operating assets and liabilities:
Accounts receivable, net (11,729) (12,157)
Inventories 2,193 (842)
Prepaid expenses and other receivables (2,987) 347
Other assets (150) 4
Payables and accrued expenses 4,868 8,713
------------- ------------
Net cash provided by (used for) operating activities (557) 4,082
INVESTING ACTIVITIES
Additions to property and equipment (7,276) (6,639)
Proceeds from disposal of property and equipment 30 90
------------- ------------
Net cash used for investing activities (7,246) (6,549)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 16,290 9,795
Payments on long-term borrowings (8,327) (5,442)
------------- ------------
Net cash provided by financing activities 7,963 4,353
Effect of exchange rate changes on cash 1 (19)
------------- ------------
Net increase in cash and cash equivalents 161 1,867
Cash and cash equivalents at beginning of period 2,546 2,318
------------- ------------
Cash and cash equivalents at end of period $ 2,707 $ 4,185
============= =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BPC Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands of dollars, except as otherwise noted)
(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 BPC
Holding Corporation ("Holding") and its wholly-owned subsidiary, Berry Plastics
Corporation ("Berry"), and its wholly-owned subsidiaries: Berry Iowa
Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon,
Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture
Packaging, Inc., Venture Packaging Midwest, Inc., Venture Packaging Southeast,
Inc., NIM Holdings Limited ("NIM Holdings"), Berry Plastics U.K. Limited
("Berry UK"), Knight Plastics, Inc., CPI Holding Corporation, Cardinal
Packaging, Inc., Norwich Acquisition Limited, and Berry Plastics Acquisition
Corporation. For further information, refer to the consolidated financial
statements and footnotes thereto included in Holding's and Berry's Form 10-K's
filed with the Securities and Exchange Commission for the year ended January 1,
2000.
Certain amounts on the 1999 financial statements have been reclassified to
conform with the 2000 presentation.
2. ACQUISITIONS
On July 6, 1999, Berry acquired all of the outstanding capital stock of CPI
Holding Corporation ("Cardinal"), the parent company of Cardinal Packaging,
Inc. for aggregate consideration of approximately $72.0 million. The purchase
was financed through the issuance by Berry of $75.0 million of 11% Senior
Subordinated Notes. The operations of Cardinal are included in Berry's
operations since the acquisition date using the purchase method of accounting.
<PAGE>
THE PRO FORMA RESULTS LISTED BELOW ARE UNAUDITED AND REFLECT PURCHASE
ACCOUNTING ADJUSTMENTS ASSUMING THE CARDINAL ACQUISITION OCCURRED ON JANUARY 3,
1999.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
APRIL 3, 1999
<S> ----------------------
<C>
Net sales $ 91,693
Loss before income taxes (1,964)
Net loss attributable to common stockholders (2,157)
</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 acquisitions been consummated at the above date, nor are they
necessarily indicative of future operating results. Further, the information
gathered on the acquired companies 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 effects.
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
APRIL 1, JANUARY 1,
2000 2000
---------- ----------
<S> <C> <C>
Holding 12.50% Senior Secured Notes $111,956 $111,956
Berry 12.25% Senior Subordinated Notes 125,000 125,000
Berry 11% Senior Subordinated Notes 75,000 75,000
Term loans 46,871 55,221
Revolving lines of credit 47,917 31,649
Nevada Industrial Revenue Bonds 4,000 4,000
Capital leases 423 479
Debt premium, net 648 684
---------- ----------
411,815 403,989
Less current portion of long-term debt 21,593 21,109
$390,222 $382,880
========== ==========
</TABLE>
The current portion of long-term debt consists of $20.9 million of quarterly
installments on the term loans, and $0.5 million in repayments of the
industrial bonds and the monthly principal payments related to capital lease
obligations.
<PAGE>
Berry has a financing and security agreement with Bank of America for a senior
secured line of credit (the "Credit Facility") for an aggregate principal
amount at April 1, 2000 of approximately $123.5 million consisting of (i) a
$70.0 million revolving line of credit, subject to a borrowing base formula,
(ii) a $2.4 million revolving line of credit in the U.K. ("UK Revolver"),
subject to a borrowing base formula, (iii) a $42.1 million term loan facility,
(iv) a $4.8 million term loan facility in the U.K. ("UK Term Loan") and (v) a
$4.2 million standby letter of credit facility to support the Company's and its
subsidiaries' obligations under the Nevada Bonds. At April 1, 2000, the
Company had unused borrowing capacity under the Credit Facility's revolving
line of credit of approximately $17.8 million. The indebtedness under the
Credit Facility is guaranteed by Holding, Berry, and all of Berry's
subsidiaries. The obligations of the Company and the subsidiaries under the
Credit Facility and the guarantees thereof are secured primarily by all of the
assets of such entities.
4. BPC HOLDING CORPORATION SUMMARY FINANCIAL INFORMATION
The following summarizes parent company only unaudited financial
information of Holding:
<TABLE>
<CAPTION>
APRIL 1, JANUARY 1,
2000 2000
------------ ------------
BALANCE SHEET
Current assets $ 701 $ 703
<S> <C> <C>
Other noncurrent assets (13,024) (10,184)
Current liabilities 4,611 1,033
Noncurrent liabilities 123,992 122,957
Equity (deficit) (140,926) (133,471)
THIRTEEN WEEKS ENDED
-------------------------------
APRIL 1, APRIL 3,
2000 1999
------------- ------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
Net sales $ --- $ -
Cost of goods sold --- -
Loss before income taxes and equity in net income
(loss) of subsidiary (3,752) (3,419)
Net loss (6,316) (92)
Net loss attributable to common shareholders (7,423) (1,129)
</TABLE>
5. SEGMENT REPORTING
The Company has two reportable segments: packaging products and housewares
products. The Company's packaging business consists of three primary market
groups: aerosol overcaps and closures, containers, and drink cups. The
Company's housewares business consists of semi-disposable plastic housewares
and plastic lawn and garden products, sold primarily through major national
retail marketers and national chain stores.
<PAGE>
The Company evaluates performance and allocates resources based on operating
income before depreciation and amortization of intangibles adjusted to exclude
(i) market value adjustment related to stock options, (ii) other non-recurring
or "one-time" expenses and (iii) management fees and reimbursed expenses paid
to First Atlantic ("Adjusted EBITDA"). The accounting policies of the
reportable segments are the same as those described in the summary of
significant accounting policies. The Company's reportable segments are
business units that offer different products to different markets.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------
APRIL 1, APRIL 3,
2000 1999
-------------- --------------
<S> <C> <C>
Net sales:
Packaging products $ 84,686 $ 65,164
Housewares products 12,498 12,296
Adjusted EBITDA:
Packaging products 14,704 15,566
Housewares products 2,251 2,759
Reconciliation of Adjusted EBITDA to income
(loss) before income taxes:
Adjusted EBITDA for reportable segments $ 16,955 $ 18,325
Net interest expense (11,539) (9,186)
Depreciation (6,806) (5,874)
Amortization (2,222) (1,275)
Loss on disposal of property and equipment (528) (609)
One-time expenses (1,838) (980)
Stock option market value adjustment (104) (82)
Management fees (218) (218)
------------- -------------
Income (loss) before income taxes $ (6,300) $ 101
============= =============
</TABLE>
One time-expenses represent non-recurring expenses that relate to recently
acquired businesses, plant consolidations, and litigation associated with a
drink cup patent.
6. COMPREHENSIVE INCOME
Comprehensive losses were $6.4 million and $0.4 million for the thirteen weeks
ended April 1, 2000 and April 3, 1999, respectively.
7. Subsequent Event
On May 9, 2000, Berry acquired all of the outstanding capital stock of Poly-
Seal Corporation for aggregate consideration of approximately $58.0 million.
The purchase was financed through the issuance by Holding of $25.0 million of
14% preferred stock and additional borrowings under the Credit Facility.
<PAGE>
ITEM 2.
BPC HOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
UNLESS THE CONTEXT DISCLOSES OTHERWISE, THE "COMPANY" AS USED IN THIS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHALL INCLUDE HOLDING AND ITS SUBSIDIARIES ON A CONSOLIDATED BASIS.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS OF HOLDING AND ITS SUBSIDIARIES AND THE ACCOMPANYING NOTES
THERETO, WHICH INFORMATION IS INCLUDED ELSEWHERE HEREIN. THE FOLLOWING
DISCUSSION INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE REFLECTED BY THE FORWARD-LOOKING STATEMENTS IN THE
DISCUSSION, AND A NUMBER OF FACTORS COULD ADVERSELY AFFECT FUTURE RESULTS,
LIQUIDITY AND CAPITAL RESOURCES. THESE FACTORS INCLUDE, AMONG OTHER THINGS,
THE COMPANY'S ABILITY TO PASS THROUGH RAW MATERIAL PRICE INCREASES TO ITS
CUSTOMERS, ITS ABILITY TO SERVICE DEBT, THE AVAILABILITY OF PLASTIC RESIN, THE
IMPACT OF CHANGING ENVIRONMENTAL LAWS AND CHANGES IN THE LEVEL OF THE COMPANY'S
CAPITAL INVESTMENT. ALTHOUGH MANAGEMENT BELIEVES IT HAS THE BUSINESS STRATEGY
AND RESOURCES NEEDED FOR IMPROVED OPERATIONS, FUTURE REVENUE AND MARGIN TRENDS
CANNOT BE RELIABLY PREDICTED.
The Company is highly leveraged. The high degree of leverage could have
important consequences, including, but not limited to, the following: (i) a
substantial portion of Berry's cash flow from operations must be dedicated to
the payment of principal and interest on its indebtedness, thereby reducing the
funds available to Berry for other purposes; (ii) Berry's ability to obtain
additional debt financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired; (iii) certain of Berry's borrowings will be at variable rates of
interest, which will expose Berry to the risk of higher interest rates; (iv)
Berry is substantially more leveraged than certain of its competitors, which
may place Berry at a competitive disadvantage, particularly in light of its
acquisition strategy; and (v) Berry's degree of leverage may hinder its ability
to adjust rapidly to changing market conditions and could make it more
vulnerable in the event of a downturn in general economic conditions or its
business.
<PAGE>
RESULTS OF OPERATIONS
13 WEEKS ENDED APRIL 1, 2000 (THE "QUARTER")
COMPARED TO 13 WEEKS ENDED APRIL 3, 1999 (THE "PRIOR QUARTER")
NET SALES. Net sales increased $19.7 million, or 25%, to $97.2 million for the
Quarter from $77.5 million for the Prior Quarter with an approximate 8%
increase in net selling price due to higher raw material costs. Plastic
packaging net sales increased $19.5 million from the Prior Quarter. Within
this segment, aerosol overcaps and closures net sales increased $0.1 million.
Container net sales increased $18.7 million from the Prior Quarter due
primarily to the Cardinal acquisition. Also, drink cup sales for the Quarter
were $1.5 million over the Prior Quarter primarily due to a new product.
Custom net sales were down $0.8 million due to a large promotion in the Prior
Quarter. In addition, housewares sales increased $0.2 million.
GROSS MARGIN. Gross margin decreased by $0.9 million to $22.0 million (23% of
net sales) for the Quarter from $22.9 million (30% of net sales) for the Prior
Quarter. This decrease of 4% includes the combined impact of the cyclical
impact of higher raw material costs compared to the Prior Quarter, the added
Cardinal sales volume, acquisition integration and productivity improvement
initiatives. The cost of the Company's primary raw material, resin, has
increased over 48% from the Prior Quarter. A major focus continues to be
the consolidation of products and business of recent acquisitions to the most
efficient tooling, providing customers with improved products and customer
service. As part of the integration, the Company closed its Arlington
Heights, Illinois facility (acquired in the Knight acquisition) in the
first quarter of 1999 and its Ontario, California facility (acquired in
the Cardinal acquisition) in the third quarter of 1999. In addition, the
Company made two configuration changes that were completed in the fourth
quarter of 1999 with the Minneapolis, Minnesota (acquired in the Cardinal
acquisition) and Iowa Falls, Iowa locations closing their molding
operations. The business from these locations are distributed throughout
Berry's facilities. Also, significant productivity improvements were made
during the year, including the addition of state-of-the-art injection molding
equipment, molds and printing equipment at several of the Company's facilities.
OPERATING EXPENSES. Selling expenses increased by $1.0 million to $5.2 million
for the Quarter from $4.2 million for the Prior Quarter principally as a result
of the Cardinal acquisition and increased commissions with increased selling
prices. General and administrative expenses increased from $6.0 million for
the Prior Quarter to $6.3 million for the Quarter. The increase of $0.3
million is primarily attributable to the Cardinal acquisition. During the
Quarter, one-time transition expenses were $0.3 million related to acquisitions
and $1.5 million related to the shutdown and reorganization of facilities. In
the Prior Quarter, one-time transition expenses related to acquisitions were
$0.5 million and $0.4 million related to the shutdown of the Arlington Heights
facility.
INTEREST EXPENSE. Interest expense increased $2.3 million to $11.6 million for
the Quarter compared to $9.3 million for the Prior Quarter primarily due to the
issuance of $75.0 million of 11% Senior Subordinated Notes to support the
Cardinal acquisition.
INCOME TAX. For the Quarter, the Company recorded income tax expense of $12,000
compared to income tax expense of $0.2 million for the Prior Quarter. The
Company continues to operate in a net operating loss carryforward position for
Federal income tax purposes.
NET LOSS. The Company recorded a net loss of $6.3 million for the Quarter
compared to a net loss of $0.1 million for the Prior Quarter for the reasons
discussed above.
LIQUIDITY AND SOURCES OF CAPITAL
Net cash used by operating activities was $0.6 million for the Quarter compared
to the Prior Quarter in which operating activities provided net cash of $4.1
million. The decrease is primarily the result of higher raw material costs
with net income before depreciation and amortization decreasing $4.3 million
from the Prior Quarter.
Capital spending of $7.3 million for the Quarter represents an increase of $0.7
million from the Prior Quarter. The Quarter's capital spending included $3.8
million for buildings and systems, $1.5 million for molds, $0.7 million for
molding and printing machines, and $1.3 million for accessory equipment and
systems.
Net cash provided by financing activities was $8.0 million for the Quarter
compared to $4.4 million for the Prior Quarter. The increase of $3.6 million
can be attributed to increased borrowings under the Credit Facility's revolving
line of credit to finance the increased capital spending and bond interest
payments related to the Cardinal acquisition.
The Company anticipates that its cash interest, working capital and capital
expenditure requirements for 2000 will be satisfied through a combination of
funds generated from operating activities and cash on hand, together with funds
available under the Credit Facility. Management bases such belief on
historical experience and the substantial funds available under the Credit
Facility. However, the Company cannot predict its future results of
operations. At April 1, 2000, the Company's cash balance was $2.7 million, and
Berry had unused borrowing capacity under the Credit Facility's borrowing base
of approximately $17.8 million.
THE 1994 INDENTURE, 1998 INDENTURE, AND 1999 INDENTURE RESTRICT, AND THE CREDIT
FACILITY PROHIBITS, BERRY'S ABILITY TO PAY ANY DIVIDEND OR MAKE ANY
DISTRIBUTION OF FUNDS TO HOLDING TO SATISFY INTEREST AND OTHER OBLIGATIONS ON
THE 1996 NOTES. BASED UPON HISTORICAL OPERATING RESULTS, WITHOUT A SUBSTANTIAL
INCREASE IN THE OPERATING RESULTS OF BERRY, MANAGEMENT ANTICIPATES THAT IT WILL
BE UNABLE TO GENERATE SUFFICIENT CASH FLOW TO PERMIT A DIVIDEND TO HOLDING IN
AN AMOUNT SUFFICIENT TO MEET HOLDING'S INTEREST PAYMENT OBLIGATIONS UNDER THE
1996 NOTES. INTEREST ON THE 1996 NOTES IS PAYABLE SEMI-ANNUALLY ON JUNE 15 AND
DECEMBER 15 OF EACH YEAR. HOWEVER, FROM DECEMBER 15, 1999 UNTIL JUNE 15, 2001,
HOLDING MAY, AT ITS OPTION, PAY INTEREST, AT AN INCREASED RATE OF 0.75% PER
ANNUM, IN ADDITIONAL 1996 NOTES VALUED AT 100% OF THE PRINCIPAL AMOUNT THEREOF.
ON DECEMBER 15, 1999, HOLDING ISSUED APPROXIMATELY $7.0 MILLION AGGREGATE
PRINCIPAL AMOUNT OF ADDITIONAL 1996 NOTES IN SATISFACTION OF ITS INTEREST
OBLIGATION. AFTER JUNE 15, 2001 OR IN THE EVENT THAT HOLDING DOES NOT PAY
INTEREST IN ADDITIONAL NOTES, MANAGEMENT ANTICIPATES THAT SUCH INTEREST
OBLIGATIONS WILL ONLY BE MET BY REFINANCING THE 1996 NOTES OR RAISING CAPITAL
THROUGH EQUITY OFFERINGS. WE CAN NOT ASSURE YOU THAT THEN-CURRENT MARKET
CONDITIONS WOULD PERMIT HOLDING TO CONSUMMATE A REFINANCING OR EQUITY OFFERING.
<PAGE>
IMPACT OF YEAR 2000
The Company has been modifying or replacing portions of its software since 1991
so that its computer systems will function properly with respect to dates in
the Year 2000 and thereafter. Because this process was commenced early, the
costs incurred to address this issue in any single year have not been
significant. The Company's current business applications are Year 2000
compliant. Acquired businesses are converted to the Company's applications for
Year 2000 compliance and consistency in applications and reporting. The most
recent acquired businesses, Knight and Cardinal, were converted to the
Company's applications by March 1, 1999 and January 10, 2000, respectively.
However, the Company is currently in the process of replacing its current
business software with another Year 2000 compliant package. This replacement
is not due to any Year 2000 issues, but is needed to accommodate the changes
that have been experienced in the business due to acquisitions in recent years.
The anticipated cost of this conversion is about $2.8 million of which $2.6
million has been paid through April 1, 2000. The accounting phase of this
conversion was completed for all plants in January 1999. The remaining phases
are scheduled to be completed by the end of 2000.
The Company believes it has an effective program in place to resolve all
internal Year 2000 issues and that all such issues were adequately resolved
prior to January 1, 2000. An inventory of computer based systems has been
compiled and verified through testing and supplier verification. The Company
replaced the voicemail system in the Lawrence plant for about $80,000. In
addition, the computer on the palletizer in the Woodstock plant has been back-
dated, which has not had any impact on operations. This system is planned to
be upgraded by the end of 2000. The anticipated cost of this upgrade is about
$13,000. No internal Year 2000 problems have been experienced to date by
the Company.
The major Year 2000 risk that the Company faces is the Year 2000 readiness of
external suppliers of goods and services. This could have material disruption
in our ability to produce and deliver product should there be major disruptions
in the economy or failure of key suppliers. While it is impossible to account
for the effectiveness of every supplier's Year 2000 efforts, the following
steps have been completed:
( Identified key suppliers, which include suppliers of raw material,
banking, transportation, service, and utility providers and surveying these
suppliers as to their Year 2000 status;
( Identified which suppliers are not compliant or at risk; and
( Engaged in risk assessment and contingency planning for these key
suppliers.
The Company completed a survey of 304 "key suppliers" to determine their Year
2000 status. The Company did not identify any suppliers who were not Year 2000
compliant or at risk. The Company does not currently have any contingency
plans in place. The Company has not experienced any Year 2000 problems with
any suppliers to date.
Management believes that the Company has effectively resolved any potential
Year 2000 problems, has not experienced any Year 2000 problems to date and does
not currently expect to incur any additional costs for Year 2000 compliance.
However, the Company may not have identified and remedied all Year 2000
problems. If any Year 2000 issues arise, any remediation efforts could involve
significant time and expense and may have a material adverse effect on our
business.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
By Written Consent in Lieu of a Meeting of the Stockholders of BPC
Holding Corporation dated February 29, 2000, the stockholders (i)
re-elected the following members to the Board of Directors: Roberto
Buaron, David M. Clarke, Lawrence G. Graev, Donald J. Hofmann, Jr.,
Martin R. Imbler, Joseph S. Levy and Matthew J. Lori, who comprise
the entire board and were all board members prior to the election,
and (ii) approved the increase in the number of shares available for
issuance under Holding's 1996 Stock Option Plan from 51,620 to 61,620.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
<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
May 15, 2000
By: /S/ JAMES M. KRATOCHVIL
James M. Kratochvil
Executive Vice President, Chief Financial
Officer and Secretary of BPC Holding
Corporation (Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 2,707
<SECURITIES> 0
<RECEIVABLES> 49,164
<ALLOWANCES> 1,696
<INVENTORY> 44,514
<CURRENT-ASSETS> 101,774
<PP&E> 249,084
<DEPRECIATION> 102,473
<TOTAL-ASSETS> 350,716
<CURRENT-LIABILITIES> 87,573
<BONDS> 390,222
0
17,167
<COMMON> 6
<OTHER-SE> (158,103)
<TOTAL-LIABILITY-AND-EQUITY> 350,716
<SALES> 97,184
<TOTAL-REVENUES> 97,196
<CGS> 75,189
<TOTAL-COSTS> 91,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 342
<INTEREST-EXPENSE> 11,551
<INCOME-PRETAX> (6,300)
<INCOME-TAX> 16
<INCOME-CONTINUING> (6,316)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,316)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>