<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26178
BWAY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3624491
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(770) 645-4800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
__________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
There were 9,491,330 shares of Common Stock ($.01 par value) outstanding as of
February 1, 1998.
<PAGE>
BWAY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED
DECEMBER 28, 1997
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at December 28, 1997
and September 28, 1997 (Unaudited) 3
Consolidated Statements of Income for the three month
periods ended December 28, 1997 and
December 29, 1996 (Unaudited) 4
Consolidated Statements of Cash Flows for the three
month periods ended December 28, 1997 and
December 29, 1996 (Unaudited) 5-6
Notes to Consolidated Financial Statements (Unaudited) 7-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DECEMBER 28, SEPTEMBER 28,
ASSETS 1997 1997
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,138 $ 1,374
Accounts receivable, net of allowance of $708 at
December 28, 1997 and $580 at September 28, 1997 39,014 41,806
Inventories 56,016 46,615
Other current assets 3,532 2,150
Deferred tax asset 5,111 5,111
-------- --------
Total Current Assets 104,811 97,056
-------- --------
PROPERTY, PLANT AND EQUIPMENT Net 124,244 123,617
-------- --------
OTHER ASSETS:
Intangible assets, net 86,238 87,232
Deferred financing costs, net 4,770 4,844
Other assets 3,510 3,628
-------- --------
Total Other Assets 94,518 95,704
-------- --------
$323,573 $316,377
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 45,606 $ 57,443
Accrued salaries & wages 6,032 8,949
Accrued income taxes 898 1,338
Other current liabilities 20,670 21,285
Current maturities of long-term debt 1,326 1,151
-------- --------
Total Current Liabilities 74,532 90,166
-------- --------
LONG-TERM DEBT 143,290 114,381
LONG-TERM LIABILITIES:
Deferred income taxes 14,969 14,969
Other long-term liabilities 11,617 11,395
-------- --------
Total Long Term Liabilities 26,586 26,364
-------- --------
COMMITMENTS & CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
authorized 5,000 shares 0 0
Common stock, $.01 par value; authorized
24,000,000 shares, issued 9,851,002
(December 28, 1997 and September 28, 1997) 99 99
Additional paid-in capital 37,564 37,629
Retained earnings 49,708 48,673
-------- --------
87,371 86,401
Less treasury stock, at cost, 365,114 and 51,790
(December 28, 1997 and September 28, 1997) (8,206) (935)
-------- --------
Total Stockholders' Equity 79,165 85,466
-------- --------
$323,573 $316,377
======== ========
</TABLE>
See notes to consolidated financial statements
3
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BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
THREE MONTHS ENDED
--------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
<S> <C> <C>
NET SALES $92,114 $91,166
COSTS, EXPENSES AND OTHER:
Cost of products sold (excluding depreciation and amortization) 76,632 78,105
Depreciation and amortization 3,527 3,452
Selling and administrative expense 4,799 4,957
Interest expense, net 3,496 2,120
Other, net (62) 128
------- -------
Total costs, expenses and other 88,392 88,762
------- -------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING 3,722 2,404
PROVISION FOR INCOME TAXES 1,526 986
------- -------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING 2,196 1,418
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR SYSTEMS DEVELOPMENT
COSTS NET OF RELATED TAX BENEFIT OF $823 (1,161) 0
------- -------
NET INCOME $ 1,035 $ 1,418
======= =======
EARNINGS PER SHARE BEFORE CUMULATIVE ACCOUNTING CHANGE:
- -------------------------------------------------------
Basic Earnings Per Common Share $ 0.23 $ 0.14
======= =======
Weighted Average Basic Common Shares Outstanding 9,755 9,797
======= =======
Diluted Earnings Per Common Share $ 0.22 $ 0.14
======= =======
Weighted Average Diluted Common Shares Outstanding 10,183 9,859
======= =======
EARNINGS PER SHARE AFTER CUMULATIVE ACCOUNTING CHANGE:
- ------------------------------------------------------
Basic Earnings Per Common Share $ 0.11 $ 0.14
======= =======
Weighted Average Basic Common Shares Outstanding 9,755 9,797
======= =======
Diluted Earnings Per Common Share $ 0.10 $ 0.14
======= =======
Weighted Average Diluted Common Shares Outstanding 10,183 9,859
======= =======
</TABLE>
See notes to consolidated financial statements
4
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BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
THREE MONTHS ENDED
----------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $1,035 $1,418
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 2,529 2,620
Amortization 1,175 897
Cumulative effect of change in accounting principle (net) 1,161 0
Provisions for doubtful accounts 128 135
(Gain) / Loss on disposition of property, plant and equipment (77) 5
Changes in assets and liabilities, net of effects of business
acquisitions:
Accounts receivable 2,664 3,882
Inventories (9,401) (2,487)
Other assets (1,271) 931
Accounts payable (4,611) (4,924)
Accrued liabilities (4,066) (1,741)
Income taxes, net 383 927
-------- --------
Net cash provided by (used in) operating activities (10,351) 1,663
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (8,956) (3,590)
Acquisitions, net of cash acquired -- (41,619)
Other 365 --
-------- --------
Net cash used in investing activities (8,591) (45,209)
-------- --------
FINANCING ACTIVITIES:
Net borrowings under bank credit agreement 29,300 40,998
Repayments on long-term debt (216) (81)
Increase (decrease) in unpresented bank drafts (2,942) 1,641
Net purchases of treasury stock (7,336) --
Financing costs incurred (100) --
-------- --------
Net cash provided by financing activities 18,706 42,558
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (236) (988)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,374 1,852
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,138 $ 864
======== ========
(Continued)
</TABLE>
5
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BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
THREE MONTHS ENDED
----------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 5,814 $ 1,595
======== ========
Income taxes $ 1,284 $ 169
======== ========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Amounts owed for capital expenditures $ 612
========
Details of businesses acquired were as follows:
- -----------------------------------------------
Fair value of assets acquired $ 61,259
Liabilities assumed (18,890)
Long-term note issued (750)
--------
Net cash paid for acquisitions $ 41,619
========
</TABLE>
See notes to consolidated financial statements
6
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BWAY CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
________________________________________________________________________________
1. GENERAL
The accompanying consolidated financial statements have been prepared by the
Company without audit. Certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The consolidated financial
statements as of December 28, 1997 and for the three months ended December
28, 1997 and December 29, 1996 include all normal recurring adjustments
necessary for a fair presentation of the financial position and results of
operations for these periods. Operating results for the three months ended
December 28, 1997 are not necessarily indicative of the results that may be
expected for the entire year. It is suggested that these unaudited
consolidated financial statements and the accompanying notes be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K.
The Company operates on a 52/53-week fiscal year ending on the Sunday closest
to September 30 of the applicable year. The first three quarterly fiscal
periods end on the Sunday closest to December 31, March 31 or June 30 of the
applicable quarter.
2. INVENTORIES
Inventories are carried at the lower of cost or market, with cost determined
under the last-in, first-out (LIFO) method of inventory valuation and are
summarized as follows:
DECEMBER 28, SEPTEMBER 28,
1997 1997
Inventories at FIFO Cost:
Raw materials $15,991 $12,661
Work-in-process 27,843 23,603
Finished goods 12,922 11,091
------- -------
$56,756 $47,355
Reduction to LIFO valuation (740) (740)
------- -------
$56,016 $46,615
======= =======
3. EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of common
shares outstanding during each period presented, including vested and
unvested shares issued under the Company's previous Management Stock Purchase
Plan and the dilutive effect of the shares from the 1995 Long-Term Incentive
Plan. Weighted average basic common shares outstanding for the first quarter
of fiscal 1998 and 1997 were 9.8 million. Weighted average diluted common
shares outstanding for the first quarter of fiscal 1998 and 1997 were 10.2
million and 9.9 million, respectively.
4. STOCKHOLDERS' EQUITY
Stock Option Plan
Immediately prior to the Initial Public Offering in June 1995, the Company
adopted the Brockway Standard Holdings Corporation 1995 Long-Term Incentive
Plan and the Formula Plan for Non-Employee Directors (the "Plans") for its
directors, officers, and key employees. On August 20, 1996, the Board of
Directors i) adopted, subject to shareholders approval, the Amended and
Restated 1995 Long-Term Incentive Plan (the "Amended Incentive Plan"), which
Amended Incentive Plan increased the aggregate number of shares of common
stock authorized for issuance under the Amended Incentive Plan from 735,000
to 1,125,000, and ii) froze the Formula Plan with only 45,000 of the
available 150,000 shares of common stock being granted thereunder.
7
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5. ACQUISITIONS
Ball Aerosol
On October 28,1996, a newly created subsidiary of BWAY named Milton Can
Company, Inc. ("MCC"), which was incorporated on October 22, 1996, acquired
the assets of the aerosol can business of Ball Metal Food Container
Corporation ("BMFCC"), a wholly owned and indirect subsidiary of Ball
Corporation in an asset purchase transaction (the "MCC Acquisition"). The
acquired business had revenues of approximately $45 million for the year
ended December 31, 1995 and operates a single manufacturing facility in
Cincinnati, Ohio. MCC produces a wide range of aerosol cans and operates a
materials center providing steel shearing, coating and lithography services
("Materials Center Services"). The Company paid approximately $41.6 million
in cash for the business.
The purchase method of accounting was used to establish and record a new cost
basis for the assets acquired and liabilities assumed for the MCC
acquisition. The operating results for MCC have been included in the
Company's consolidated financial statements since the date of acquisition.
The following pro forma results assume that the acquisition of MCC occurred
at the beginning of the fiscal year ended September 28, 1997 after giving
effect to certain pro forma adjustments, including an adjustment to reflect
the amortization of cost in excess of the net assets acquired, increased
interest expense and the estimated related income tax effects.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 28, 1997 DECEMBER 29, 1996
(In thousands, except per share amounts)
----------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $92,114 $95,492
Net income 1,035 1,516
Earnings per common share:
Net income - Basic $ 0.11 $ 0.15
Net income - Diluted $ 0.10 $ 0.15
----------------------------------------------------------------------------------------------
</TABLE>
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the acquisition been
consummated as of the acquisition date, nor is it necessarily indicative of
future operating results.
6. LONG-TERM DEBT
During the third quarter of fiscal 1996, the Company repaid its existing debt
and established its new five year Credit Agreement, which the Company amended
subsequent to fiscal 1997 year end. The Credit Agreement provides that the
Company and its subsidiaries can borrow up to $100 million, and gives the
Company an option to increase its borrowing limit by an additional $50
million, provided certain conditions are met. The expiration of the Credit
Agreement was extended to June 17, 2002 in the recent amendment. Interest
rates under the Credit Agreement are based on rate margins ("Rate Margin")
for either the prime rate announced by NationsBank, N.A. from time to time or
LIBOR, at the option of the Company. These Rate Margins were lowered in
connection with the recent amendment. The applicable rate margin is
determined on a quarterly basis by a review of the Company's leverage ratio.
Loans under the Credit Agreement are unsecured and can be repaid at the
option of the Company without premium or penalty. The Credit Agreement is
subject to certain restrictive covenants, including covenants which require
the Company to maintain a certain minimum level of net worth and certain
leverage ratios. In addition, the Company is restricted in its ability to pay
dividends and make other restricted payments. The recent amendment to the
Credit Agreement improved certain of these covenants to provide the Company
with greater flexibility with regard to investments in joint ventures and
other subsidiaries. Funds provided under the Credit Agreement were used to
repay the Company's $50 million of 8.35% senior notes due 2001, repay the
Company's existing revolving credit facility, finance acquisitions and meet
operating needs.
During the third quarter of fiscal 1997, the Company issued $100 million of
unsecured senior subordinated notes due April 15, 2007. The notes have an
interest rate of 10 1/4%, payable semi-annually on April 15 and October 15.
Net proceeds of approximately $96 million from the issuance of the notes were
used to reduce borrowings on the Company's Credit Agreement. The Company has
filed a registration statement with the Securities and Exchange Commission
(the "Commission") to register these notes under the Securities Act. Pursuant
to the terms of a registration rights agreement the Company executed in
connection with the offering of the notes, the Company has been paying
additional interest on
8
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the notes since August 9, 1997 because the registration statement has not
been declared effective by the Commission. Such additional interest accrued
at a rate of 0.25% per annum for the 90-day period beginning August 9, 1997
and has continued to, and will continue to, accrue at a rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day period
until the registration statement is declared effective by the Commission,
which the Company expects will occur in the first half of fiscal 1998.
7. CONTINGENCIES
Environmental
The Company is subject to a broad range of federal, state and local
environmental and workplace health and safety requirements, including those
governing discharges to air and water, the handling and disposal of solid and
hazardous wastes, and the remediation of contamination associated with the
releases of hazardous substances. The Company believes that it is in
substantial compliance with all material environmental, health and safety
requirements. In the course of its operations, the Company handles hazardous
substances. As is the case with any industrial operation, if a release of
hazardous substances occurs on or from the Company's facilities or at offsite
waste disposal sites, the Company may be required to remedy such release.
There were no material capital expenditures relating to environmental
compliance in fiscal 1997, and none are expected for fiscal 1998.
Pursuant to the terms of the Company's 1989 acquisition of certain facilities
from Owens-Illinois, its acquisition of facilities from Van Dorn Company
("Van Dorn"), the BSNJ Acquisition, and the MCC Acquisition, the sellers in
each transaction are obligated, subject to certain limitations, to indemnify
the Company for certain environmental matters related to the facilities or
businesses they conveyed. Notwithstanding such indemnifications, the Company
could bear liability in the first instance for indemnified environmental
matters, subject to obtaining reimbursement. There can be no assurance that
the Company will receive reimbursement with respect to the indemnified
environmental matters.
Environmental investigations voluntarily conducted by the Company at its
Homerville, Georgia facility in 1993 and 1994 detected certain conditions of
soil and groundwater contamination, that predated the Company's 1989
acquisition of the facility from Owens-Illinois. Such contamination is
subject to indemnification by Owens-Illinois. The Company and Owens-Illinois
have entered into a supplemental agreement affirming Owens-Illinois's
responsibility for this matter and establishing procedures for Owens-
Illinois' investigation and remediation of the contamination. In 1994, the
Georgia Department of Natural Resources ("DNR") determined that further
investigation must be completed before DNR decides whether corrective action
is needed. Owens-Illinois' investigation of the contamination is continuing.
Management does not believe that the final resolution of this matter will
have a material adverse effect on the results of operations or financial
condition of the Company.
The Cincinnati facility, which was acquired in the MCC Acquisition, is listed
on environmental agency lists as a site that may require investigation for
potential contamination. The listings could result in a requirement for the
Company to investigate and remediate the facility. To date, no agency has
required such action and the cost of any investigation or remediation can not
be reasonably estimated. BMFCC has agreed to indemnify the Company for
liabilities associated with any such required investigation or remediation as
follows: (i) BMFCC will bear the first $0.1 million of such liabilities and
(ii) any liabilities in excess of such amount will be subject to the general
environmental liability indemnification provisions of the agreement with
BMFCC, which provide that BMFCC will bear 100% of the first $0.3 million of
environmental liabilities, 80% of the next $3.0 million of environmental
liabilities, and 65% of all environmental liabilities exceeding $3.3 million.
At the Peabody, Massachusetts facility, which was previously leased by BSNJ,
groundwater remediation is underway. The owner of the facility has agreed to
retain all liability for the remediation. In addition, the former
shareholders of Milton Can, subject to certain limitations, indemnified the
Company for liabilities associated with the contamination. Management
believes that none of these matters will have a material adverse effect on
the results of operations or financial condition of the Company in light of
both the potential indemnification obligations of others to the Company and
the Company's understanding of the underlying potential liability.
The Company (and in some cases, predecessors to the Company) have from time
to time received requests for information or notices of potential
responsibility pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") with respect to certain waste
disposal sites utilized by former or current facilities of the Company or its
various predecessors. To the Company's knowledge, all such matters which have
not been resolved are, subject to certain limitations, indemnified by the
sellers of the relevant Company affiliates, and all such unresolved matters
have been accepted for indemnification by such sellers. Management believes
that none of these matters will have a material adverse effect on the results
of operations or financial condition of the Company. Because liability under
CERCLA is retroactive, it is possible that in the future the Company may
incur liability with respect to other sites.
9
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Sales of aerosol cans currently comprise approximately 12% of the Company's
annual general line sales. Federal and certain state environmental agencies
have issued, and may in the future issue, environmental regulations which
have the effect of requiring reformulation by consumer product manufacturers
(the Company's customers) of aerosol propellants or aerosol-delivered
consumer products to mitigate air quality impacts (principally related to
lower atmosphere ozone formulation). Industry sources believe that aerosol
product manufacturers can successfully achieve any required reformulation.
There can be no assurance, however, that reformulation can be accomplished in
all cases with satisfactory results. Failure by the Company's customers to
successfully achieve such reformulation could affect the viability of aerosol
cans as product delivery containers and thereby have a material adverse
effect on the Company's sales of aerosol cans.
8. ACCOUNTING CHANGE
On November 20, 1997 the FASB's Emerging Issues Task Force (EITF) issued a
consensus ruling which affects the accounting treatment of certain
information systems and process reengineering costs. The Company is involved
in a business information systems and process reengineering project that is
targeted by this pronouncement. Based on the EITF consensus, $2.0 million of
the previously capitalized costs associated with this project was expensed in
the first fiscal quarter of 1998, as a change in accounting method. A one-
time charge of $0.12 per diluted share for the cumulative effect of this new
accounting interpretation for business information systems and process
reengineering activities reduced quarterly net earnings to $1.0 million or
$0.10 per fully diluted share.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales during the first quarter of fiscal 1998 increased 1.0% to $92.1
million compared to $91.2 million in the first quarter of fiscal 1997. On a
proforma basis, giving effect to the October 1997 sales of the Ball Aerosol
business acquired in late October 1996, net sales decreased 3.6% from the $95.5
million in the first quarter of fiscal 1997. The proforma decrease in sales
resulted primarily from typical quarter-to-quarter seasonal shifts and inventory
adjustments by paint customers.
Cost of products sold (excluding depreciation and amortization) decreased 1.9%
in the first quarter of fiscal 1998 to $76.6 million from $78.1 million in the
same period of fiscal 1997. Cost of products sold as a percentage of net sales
decreased from 85.7% in the first quarter of fiscal 1997 to 83.2% in the first
quarter of fiscal 1998. The Company's facilities realized reductions in cost of
products sold as a percent of sales as a result of ongoing initiatives to reduce
cost and increase productivity through rationalization and capital initiatives.
The company continues to experience rationalization costs associated with the
acquisitions made late in fiscal 1996 and in early fiscal 1997.
Depreciation and amortization expense was $0.2 million higher for the first
quarter of fiscal 1998 compared to the first quarter of fiscal 1997, due to the
finalization of the purchase price allocation and resulting increase in
amortization expense on the MCC Acquisition.
Selling and administrative costs for the first quarter of fiscal 1998 decreased
3.2% to $4.8 million from $5.0 million in the first quarter of fiscal 1997.
Selling and administrative cost as a percent of net sales decreased to 5.21%
from 5.44%.
Interest expense increased $1.4 million to $3.5 million in the first quarter of
fiscal 1998 compared to $2.1 million in the same period of fiscal 1997. In
April 1997, the company issued $100 million of unsecured senior subordinated
notes. The proceeds from the issuance were used to pay down the outstanding
balance under the Credit Agreement. The interest rate on the notes is higher
than the rate the Company was paying under the Credit Agreement.
Income before cumulative effect of change in accounting increased $0.8 million
to $2.2 million in the first quarter of fiscal 1998, from $1.4 million in the
first quarter of fiscal 1997. This increase is primarily attributable to the
factors discussed above. In addition, first quarter of fiscal 1998 included one
more month of net income from the MCC Acquisition, which was acquired on October
28, 1996.
Diluted earnings per share, excluding the effect of an accounting change, were
$0.22 per share for the first quarter of fiscal 1998 compared to $0.14 per share
for the same period of 1997. After giving effect to the $0.12 charge related to
the cumulative accounting change, diluted earnings per share were $0.10 for the
first quarter of fiscal 1998. The weighted average diluted shares outstanding
were 10.2 million and 9.9 million for the respective quarters.
On November 20, 1997 the FASB's Emerging Issues Task Force (EITF) issued a
consensus which affects the accounting treatment of certain information systems
and process reengineering costs. The Company is involved in a business
information systems and process reengineering project that is targeted by this
pronouncement. Based on the EITF ruling, a portion of the previously
capitalized costs associated with this project was expensed in the first fiscal
quarter of 1998, as a change in accounting method. A one-time charge of $0.12
per diluted share for the cumulative effect of this new accounting
interpretation for business information systems and process reengineering
activities reduced quarterly net earnings to $1.0 million or $0.10 per fully
diluted share.
On January 21, 1998, MCC and the United Steelworkers of America, AFL-CIO Local
No. 4372 ("USA") representing approximately 30% of the hourly workers at MCC's
Cincinnati, Ohio facility agreed to amend their collective bargaining agreement,
which was scheduled to expire on April 30, 2000. On January 30, 1998, BSNJ and
the International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and
Helpers of America, representing approximately 89% of the hourly workers at
BSNJ's Elizabeth, New Jersey facility, reached agreement on a new three year
labor agreement. The settlement of these labor negotiations will make BSNJ and
MCC more competitive within the industry and provides greater operating
flexibility.
As previously announced in a press release, David P. Hull was hired on September
15, 1997 as President of the Company's Brockway Standard, Inc. subsidiary,
effective October 6, 1997. Mr. Hull replaced John T. Stirrup who remained as
President, Chief Operating Officer and a Director of BWAY Corporation, the
parent corporation of Brockway Standard Inc. Mr. Hull has approximately thirty
years of manufacturing, operational and financial experience. He had most
11
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recently served as Vice President of Operations for Imperial Wallcovering, Inc.
On November 18, 1997, the Company announced the promotion of David P. Hayford to
President of BMAT, Inc., the Company's new strategic business unit responsible
for managing and implementing BWAY's material center strategic growth plans.
Mr. Hayford previously served as Senior Vice President and Chief Financial
Officer of BWAY. He was replaced as Chief Financial Officer by John M. Casey.
Mr. Casey, who was also named an Executive Vice President of the Company, has
twenty-five years of corporate finance experience. He had most recently served
as Executive Vice President and Chief Financial Officer of Birmingham Steel
Corporation.
12
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LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements for operations and capital expenditures during
the quarter ending December 28, 1997 were financed through borrowings under the
Company's Credit Agreement and internally generated cash flows. At December 28,
1997, the Company had availability under the existing Credit Agreement to borrow
an additional $57.2 million, plus an additional $50 million if certain
conditions are met.
The Company's working capital increased $23.4 million to $30.3 million from $6.9
million for the year ending September 28, 1997. The increase is primarily
attributable to an increase in inventories and a decrease in accounts payable.
During the first quarter of fiscal 1998, the Company used $10.4 million of cash
for operating activities. Operating activities for the same period during the
prior year reflected cash provided of $1.7 million. The decrease in funds
provided during the three months ended December 28, 1997 reflect an increase in
inventory.
Capital expenditures of $9.0 million in the first quarter of fiscal 1998
represent an increase of $5.4 million from the first quarter of fiscal 1997.
Although the Company intends to accelerate the rate of spending on its targeted
capital investment program, the increase in the first fiscal quarter of 1998
from the first quarter of fiscal 1997 results primarily from the timing of
expenditures.
Cash provided by financing activities during the quarter ended December 28, 1997
was $18.7 million compared to $42.6 million provided during the comparable
quarter of the prior year. The Company used approximately $41.8 million of cash
to complete the acquisition of the metal aerosol can business from Ball Metal
Food Container Corporation during the first fiscal quarter of 1997. The funds
were provided by borrowings from the Credit Agreement. Cash provided by
financing activities during the first quarter of fiscal 1998 included $29.3
million of borrowings under the Company's Credit Agreement. The Company
repurchased $7.3 million of its common stock during the first quarter of fiscal
1998 under the Company's Common Stock Repurchase Program. Management believes
that cash provided from borrowings available under the Credit Agreement and
operations will provide it with sufficient liquidity to meet its operating needs
and continue the Company's capital expenditure initiatives for the next twelve
months. The Company continues to pursue growth strategies and acquisition
opportunities in the North American container industry and in connection
therewith may incur additional indebtedness.
The Company has historically financed its operations through cash provided by
operations and by borrowings under its credit agreements. BWAY's future
principal uses of cash will be for payment of operating expenses, funding
capital investments, payment for additional acquisitions, repurchase of common
stock, and servicing debt.
NOTE: THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS AS ENCOURAGED BY THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ALL STATEMENTS CONTAINED IN
THIS DOCUMENT, OTHER THAN HISTORICAL INFORMATION, ARE FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS REPRESENT MANAGEMENT'S CURRENT JUDGEMENT ON WHAT
THE FUTURE HOLDS. A VARIETY OF FACTORS COULD CAUSE BUSINESS CONDITIONS AND THE
COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPECTED BY THE COMPANY
OR EXPRESSED IN THE COMPANY'S FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE
WITHOUT LIMITATION, THE COMPANY'S ABILITY TO SUCCESSFULLY INTEGRATE ACQUIRED
BUSINESSES AND IMPLEMENT ITS 3R STRATEGIC INITIATIVES; LABOR UNREST; CHANGES IN
MARKET PRICE OR MARKET DEMAND; CHANGES IN RAW MATERIAL COSTS OR AVAILABILITY;
LOSS OF BUSINESS FROM CUSTOMERS; UNANTICIPATED EXPENSES; CHANGES IN FINANCIAL
MARKETS; POTENTIAL EQUIPMENT MALFUNCTIONS; AND THE OTHER FACTORS DISCUSSED IN
THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
See Index of Exhibits.
14
<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.
BWAY Corporation
(Registrant)
Date: February 7, 1998 By: /s/ John M. Casey
-------------------
John M. Casey
Executive Vice President &
Chief Financial Officer
Form 10-Q: For the quarterly period ending December 28, 1997
15
<PAGE>
INDEX TO EXHIBITS
----------------------------
LOCATION OF DOCUMENT
EXHIBIT IN SEQUENTIAL
NO. DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- ------- -------------------------------------------- --------------------
10.1 Employment Agreement between the Company and
John M. Casey*
___________
* MANAGEMENT CONTRACT OR COMPENSATORY PLAN OR ARRANGEMENT.
16
<PAGE>
Exhibit 4.1
-----------
BWAY CORPORATION
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
Dated as of November 26, 1997
-1-
<PAGE>
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
-----------------------------------
Amendment No. 2, dated as of November 26, 1997 ("Amendment No. 2"), to the
---------------
Rights Agreement, dated as of June 9, 1995, and as amended by Amendment No. 1,
dated as of February 12, 1996 ("Agreement"), between BWAY Corporation, a
---------
Delaware corporation f/k/a Brockway Standard Holdings Corporation (the
"Company"), and Harris Trust and Savings Bank, an Illinois banking corporation
-------
(the "Rights Agent"). Capitalized terms not otherwise defined herein have the
------------
meaning given to such terms in the Agreement.
RECITAL
-------
Pursuant to its authority under Section 26(a) of the Agreement, the Board
of Directors of the Company has authorized and approved an amendment to the
Agreement to decrease the amount of Common Stock GEO Capital Corporation, a
Delaware corporation, may beneficially own without becoming an Acquiring Person
and to increase the ceiling for Current Holders.
AMENDMENT
---------
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1.
A. Exempt Person. Section 1(q) of the Agreement is amended and restated
-------------
as follows:
(q) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
-------------
Company, (iii) any Current Holder, so long as such Current Holder does not
become the Beneficial Owner of 40% or more of the Common Stock then outstanding,
(iv) any Person that acquires Common Stock pursuant to an event described in
clause (ii) of the definition of Exempt Event, (v) any employee benefit plan of
the Company or of any Subsidiary of the Company, or (vi) any Person holding
Common Stock for any such employee benefit plan or for employees of the Company
or of any Subsidiary of the Company pursuant to the terms of any such employee
benefit plan.
B. Purchase Price. Section 1(v) of the Agreement is amended and restated
--------------
as follows:
(v) "Purchase Price" with respect to each Right is, prior to the occurrence
--------------
of a Triggering Event $60, per one one-thousandth of a share of Preferred Stock
and shall, after the occurrence of a Triggering Event, be subject to adjustment
from time to time as provided in Sections 11 and 13, and shall be payable in
lawful money of the United States
-2-
<PAGE>
of America in cash or by certified check or bank draft payable to the order of
the Company.
C. Adjustments to Purchase Price, Number of Shares or Number of Rights.
-------------------------------------------------------------------
Section 11(a)(ii) of the Agreement is amended and restated as follows:
(ii) Upon the first occurrence of a Triggering Event, proper provision
shall be made so that each holder of a Right, except as otherwise provided in
this Agreement, shall thereafter have the right to receive, and the Company
shall issue, upon exercise thereof at a price equal to the then-current Purchase
Price required to be paid in order to exercise a Right in accordance with the
terms of this Agreement, multiplied by the number of one-thousandths of a share
of Preferred Stock or other securities for which a Right was then exercisable
(without giving effect to such Triggering Event), in lieu of the number of one
one-thousandths of a share of Preferred Stock or other securities receivable
upon exercise of a Right prior to the occurrence of the Triggering Event, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then-current Purchase Price by the number of
one-thousandths of a share of Preferred Stock or other securities for which a
Right was then exercisable (without giving effect to such Triggering Event) and
(y) dividing that product by 50% of the Current Market Price per share of Common
Stock on the date of the occurrence of the Triggering Event (such number of
shares being referred to as the "Adjustment Shares"); provided, however, that if
-------- -------
the transaction or event that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 of this Agreement,
then only the provisions of Section 13 of this Agreement shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
D. Section 11(m) shall be amended and restated as follows:
(m) The Company covenants and agrees that from and after the occurrence of
a Triggering Event, it shall not (i) consolidate with, (ii) merge with or into,
or (iii) directly or indirectly sell, lease, or otherwise transfer or dispose of
(in one transaction or series of related transactions) assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer or disposition the stockholders (or equity holders) of the
Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates of Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation, merger,
sale, lease, transfer or disposition unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
-3-
<PAGE>
E. Section 11(o) shall be amended and restated as follows:
(o) Anything in this Agreement to the contrary notwithstanding, if the
Company shall at any time prior to the Distribution Date (i) pay a dividend or
distribution on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then the number of
Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, and the number of one
one-thousandths of a share of Preferred Stock issuable in respect of, the
Rights, shall be proportionately adjusted, so that the following such event one
Right (with the number of one one-thousandths of a share proportionately
adjusted thereunder) shall thereafter be associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date. For example, if the Company effects a two-for-one stock
split at a time when each Right (if it becomes exercisable) would entitle the
holder to purchase one one-thousandth of a share of Preferred Stock for a
Purchase Price of $"Z", then following such stock split each previous Right
would be split into two current Rights and thereafter each current Right, upon
becoming exercisable, would (subject to further adjustment) entitle the holder
to purchase one two-thousandth of a share of Preferred Stock at a Purchase Price
of $"Z".
Section 2. Legend. Effective as of August 19, 1997, the legend to be
------
impressed, printed, or written on, or otherwise affixed to the Common Stock
pursuant to Section 3(b) of the Agreement shall be in substantially in the
following form:
This certificate also evidence and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between BWAY
Corporation and Harris Trust and Savings Bank, as Rights Agent, dated
as of June 9, 1995, as amended February 12, 1996 and November 26, 1997
(the "Rights Agreement"), the terms of which are hereby incorporated
----------------
herein by reference and a copy of which is on file at the principal
executive offices of BWAY Corporation. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. BWAY Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
Rights that were, are or become beneficially owned by Acquiring
Persons or their Associates or Affiliates (as such terms are defined
in the Rights Agreement) may become null and void and the holder of
any of such Rights (including any subsequent holder) shall not have
any right to exercise such Rights.
-4-
<PAGE>
Section 3. Governing Law. This Amendment No. 2, the Agreement and each
-------------
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the internal laws of such state applicable to
contract to be made and performed entirely within such State.
Section 4. Counterparts. This Amendment No. 2 may be executed in
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 5. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Amendment No. 2 are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Amendment No. 2.
* * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
the Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
BWAY CORPORATION
By:
Title:
HARRIS TRUST AND SAVINGS BANK
By:
Title:
-6-
<PAGE>
Exhibit 10.1
------------
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of November 16, 1997, between BWAY
Corporation, a Delaware corporation (the "Company"), and John M. Casey
-------
("Executive"). The Company and Executive are referred to collectively herein as
- -----------
the "Parties" and individually as a "Party".
------- -----
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive
----------
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof (the "Employment
Date") and ending as provided in Section 4 (the "Employment Period").
-----------------
2. Position, Duties and Places of Employment. During the Employment
-----------------------------------------
Period, Executive shall be Chief Financial Officer (effective December 9, 1997)
and an Executive Vice President of the Company and shall render such
administrative and other executive services to the Company and its Subsidiaries
as the Company's board of directors (the "Board") or its Chief Executive Officer
-----
may from time to time direct. Executive shall devote his best efforts and his
full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company and its Subsidiaries. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner. Executive shall report to the Chief
Executive Officer of the Company. For purposes of this Agreement,
"Subsidiaries" shall mean any corporation of which the securities having a
------------
majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
3. Base Salary, Bonus and Benefits.
-------------------------------
(a) During the Employment Period, Executive's base salary shall be
$185,000 per annum or such higher rate as the Board designates from time to time
(the "Base Salary"). The Base Salary shall be payable in regular installments
-----------
in accordance with the Company's general payroll practices. The Board shall
review Executive's performance in March, 1999, and at the end of each eighteen
month period thereafter during the Employment Period. Based on such review, the
Board may, in its sole discretion, increase or decrease the Base Salary (but not
below $185,000). Following the end of each fiscal year during the Employment
Period, the Board may award the Executive a bonus for such year based on
Executive's performance, the amount of which will be determined by the Board in
its sole judgment. Executive's "target" under the Company's Management
Incentive Plan shall be forty percent (40%) of Base Salary with a maximum of
sixty percent (60%) of Base Salary. For fiscal year 1998, Executive shall
receive a bonus equal to sixty percent (60%) of his Base Salary earned in fiscal
year 1998.
-1-
<PAGE>
(b) In addition to the Base Salary and any bonuses payable to
Executive pursuant to Section 4(a), during the Employment Period Executive shall
be entitled to participate in the Company's 1995 Amended and Restated Long-Term
Incentive Plan and all of the Company's other employee benefit programs for
which senior executive employees of the Company are generally eligible, and
Executive shall be entitled to (3) weeks of paid vacation each year.
(c) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
4. Term.
----
(a) Unless renewed by the mutual agreement of the Company and
Executive, the Employment Period shall end on the third anniversary of the
Employment Date; provided that (i) the Employment Period shall terminate prior
to such date upon Executive's resignation, death or permanent disability or
incapacity (as determined by the Board in its good faith judgment) and (ii) the
Employment Period may be terminated by the Company at any time prior to such
date for Cause (as defined below) or without Cause.
(b) If the Employment Period is terminated by the Company without
Cause prior to the third anniversary of the Employment Date, subject to the
limitations set forth below, Executive shall be entitled to receive his Base
Salary and health, disability and life insurance benefits until the later of the
third anniversary of the Employment Date or the first anniversary of the date of
such termination, so long as Executive has not breached in any material respects
the provisions of Sections 5, 6 and 7 hereof. The amounts payable pursuant to
this Section 4(b) shall be reduced by the amount of any compensation Executive
receives with respect to any other employment during the period in which the
Company is making such payments to Executive or, in the event the Employment
Period is terminated as a result of Executive's permanent disability or
incapacity, by the amount Executive receives with respect to any Company
disability policy. Upon request from time to time, Executive shall furnish the
Company with a true and complete certificate specifying any such compensation
due to or received by him. Executive has no obligation to seek employment
during the period that he is receiving compensation pursuant to this Section
4(b).
(c) If the Employment Period is terminated by the Company for Cause or
is terminated pursuant to clause 4 (a) (i) above, Executive shall be entitled to
receive his Base Salary through the date of termination.
(d) All of Executive's rights to fringe benefits and bonuses hereunder
(if any) accruing after the termination of the Employment Period shall cease
upon such termination, except for benefits required by law.
(e) Notwithstanding anything in Section 4(c) to the contrary, the
Company shall be deemed to have terminated the Employment Period without Cause
in the event that (i) Executive resigns as a result of a material breach of this
Agreement by the Company which is not cured by the
-2-
<PAGE>
Company within 30 days after Executive delivers written notice of such breach to
the Chairman of the Board, President and General Counsel or (ii) the Company
terminates the Employment Period as a result of the permanent disability or
incapacity of Executive pursuant to 4(a) (i) above. After a Change in Control,
if the Company terminates the Employment Period for any reason, such termination
shall be deemed to be a termination by the Company without Cause.
(f) "Cause" shall mean (i) a material breach of this Agreement by
-----
Executive, (ii) the conviction of the Executive by a court of competent
jurisdiction of a felony or a crime involving moral turpitude, (iii) conduct
which, if known to the general public, would likely bring the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, (iv) substantial
and repeated failure to perform duties as reasonably directed by the Board or
the Company's Chief Executive Officer or (v) gross negligence or willful
misconduct with respect to the Company or any of its Subsidiaries. "Change in
---------
Control" shall occur upon (x) the acquisition by any person or group of persons
- -------
(within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "Exchange
--------
Act")), other than the Chairman of the Board on the date hereof and his
- ----
affiliates and associates, of more than thirty five percent (35%) of the
Company's Common Stock or (y) the election of a majority of directors to the
Board that were not recommended to the stockholders by the Board.
5. Confidential Information. Executive acknowledges that the
------------------------
information, observations and data obtained by him while employed by the Company
concerning the business or affairs of the Company or any Subsidiary
("Confidential Information") are the property of the Company or such Subsidiary.
- --------------------------
Therefore, Executive agrees that he shall not disclose to any unauthorized
person or use for his own account any Confidential Information without the prior
written consent of the Chairman of the Board, unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of Executive's acts or omissions to act. Nothing
herein shall prevent Executive from making (i) any disclosure that is required
by applicable law or the order of a court of competent jurisdiction, or (ii) any
disclosure, in good faith, to properly fulfill Executive's duties under this
Agreement (including, but not limited to, in connection with treasury and
investor relations functions). Executive shall deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product or the business of the Company or any
Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. Executive agrees that all inventions,
----------------------
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company's
or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by Executive while employed by the Company ("Work Product")
------------
belong to the Company or such Subsidiary. Executive shall promptly disclose
such Work Product to the Chairman of the Board and perform all actions
reasonably requested by the Chairman of the Board (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
-3-
<PAGE>
7. Non-Compete, Non-Solicitation.
-----------------------------
(a) Executive acknowledges that in the course of his employment with
the Company he will become familiar with the Company's and it Subsidiaries'
trade secrets and with other Confidential Information concerning the Company and
the Subsidiaries and that his services will be of special, unique and
extraordinary value to the Company and the Subsidiaries. Therefore, Executive
agrees that, during the Employment Period and during the period that Executive
is receiving compensation pursuant to Section 4(b) (but in no event for a period
of less than twelve months after the termination of the Employment Period) (the
"Noncompete Period"), he shall not directly or indirectly own, manage, control,
-----------------
participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its Subsidiaries as
such businesses exist or are in process on the date of the termination of
Executive's employment, within any geographical area in which the Company or its
Subsidiaries engage or plan to engage in such businesses. Nothing herein shall
prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly (i) induce or attempt to induce any employee of the Company or any
Subsidiary to leave the employ of the Company or such Subsidiary, or in any way
interfere with the relationship between the Company or any Subsidiary and any
employee thereof, (ii) hire any person who was an employee of the Company or any
Subsidiary at any time during the Employment Period, or (iii) induce or attempt
to induce any customer, supplier, licensee or other business relation of the
Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Subsidiary.
8. Enforcement. If, at the time of enforcement of Section 5, 6 or 7,
-----------
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the Parties agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area. Because Executive's services are unique and
because Executive has access to Confidential Information and Work Product, the
Parties agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of a breach or threatened breach of
this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).
9. Executive Representations. Executive hereby represents and
-------------------------
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
-4-
<PAGE>
10. Indemnification of Executive. The Company shall indemnify and
----------------------------
hold harmless Executive from all losses and claims incurred in connection with
any actions taken by Executive in his capacity as an officer of the Company in
accordance with, and to the fullest extent permitted under, Delaware General
Corporation Law as in effect from time to time.
11. General Provisions.
------------------
(a) Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given when delivered
personally to the recipient, telecopied to the intended recipient at the
telecopy number set forth therefor below, or sent to the recipient by reputable
express courier service (charges prepaid) and addressed to the intended
recipient as set forth below:
If to the Company:
- -----------------
BWAY Corporation
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
Telephone: 770/587-0888
Attention: General Counsel
If to Executive:
- ---------------
John M. Casey
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
Telephone: 770/587-0888
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(b) Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
-5-
<PAGE>
(c) Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements or representations by or between
the Parties, written or oral, that may have related in any way to the subject
matter hereof.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
----------------------
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors, heirs, executors,
administrators and assigns; provided that the rights and obligations of
Executive under this Agreement shall not be assignable without the prior written
consent of the Company.
(f) Choice of Law. All questions concerning the construction,
-------------
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Alabama without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Alabama or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Alabama.
(g) Amendment and Waiver. The provisions of this Agreement may be
--------------------
amended and waived only with the prior written consent of the Company and
Executive.
(h) Survival. Sections 5, 6, 7 and 8 shall survive and continue in
--------
full force in accordance with their terms notwithstanding any termination of the
Employment Period.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first written above.
BWAY CORPORATION
By /s/ Warren J. Hayford
-------------------------------------
Its Chairman and Chief Executive Officer
------------------------------------
/s/ John M. Casey
----------------------------------------
John M. Casey
-6-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BWAY
CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1998
<PERIOD-START> SEP-29-1997
<PERIOD-END> DEC-28-1997
<CASH> 1,138
<SECURITIES> 0
<RECEIVABLES> 39,722
<ALLOWANCES> 708
<INVENTORY> 56,016
<CURRENT-ASSETS> 104,811
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0
0
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</TABLE>
