<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 2000
Commission File Number 0-26178
BWAY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3624491
(State of incorporation) (IRS Employer Identification No.)
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350-2230
(Address of principal executive offices)
(770) 645-4800
(Registrant's telephone number)
__________________
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 9,277,818 shares of Common Stock ($.01 par value) outstanding as of
July 24, 2000.
<PAGE>
BWAY CORPORATION
For the quarter ended July 2, 2000
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
INDEX
Page Number
<S> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at July 2, 2000 and October 3,
1999 (Unaudited) 3
Consolidated Statements of Income for the Three Month and
Nine Month Periods Ended July 2, 2000 and July 4, 1999
(Unaudited) 4
Consolidated Statements of Cash Flows for the Nine Month
Periods Ended July 2, 2000 and July 4, 1999 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Qualitative and Quantitative Disclosures About Market Risk 12
PART II--OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
July 2, October 3,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 341 $ 696
Accounts receivable, net of allowance of $572 at
July 2, 2000 and $506 at October 3, 1999 48,268 52,868
Inventories 53,744 49,031
Deferred tax asset 4,075 4,612
Assets held for sale 4,507 4,818
Other current assets 5,772 6,401
---------- ---------
Total Current Assets 116,707 118,426
PROPERTY, PLANT AND EQUIPMENT -- Net 136,738 144,716
OTHER ASSETS:
Intangible assets, net 87,161 90,140
Deferred financing costs, net 3,407 3,727
Other assets 3,632 5,014
---------- ---------
Total Other Assets 94,200 98,881
---------- ---------
$ 347,645 $ 362,023
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 52,117 $ 65,377
Accrued salaries and wages 7,969 9,104
Other current liabilities 17,340 21,046
Accrued rebates 4,255 8,753
---------- ---------
Total Current Liabilities 81,681 104,280
LONG-TERM DEBT 155,500 146,500
LONG-TERM LIABILITIES:
Deferred income taxes 17,130 17,667
Other long-term liabilities 11,841 11,523
----------- ---------
Total Long-Term Liabilities 28,971 29,190
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized 5,000,000 shares,
Common stock, $.01 par value; authorized 24,000,000 shares,
Issued 9,851,002 shares (July 2, 2000 and
October 3, 1999) 99 99
Additional paid-in capital 36,760 37,202
Retained earnings 55,356 55,819
--------- ---------
92,215 93,120
Less treasury stock, at cost, 573,184 and 541,978 shares at
July 2, 2000 and October 3, 1999, respectively (10,722) (11,067)
--------- ---------
Total Stockholders' Equity 81,493 82,053
--------- ---------
$ 347,645 $ 362,023
========= =========
See notes to consolidated financial statements (unaudited).
</TABLE>
3
<PAGE>
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ ------------------
July 2, July 4, July 2, July 4,
2000 1999 2000 1999
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 121,265 $ 123,109 $347,733 $ 349,631
COSTS, EXPENSES AND OTHER:
Cost of products sold (excluding 102,590 106,857 300,353 298,662
depreciation and amortization)
Depreciation and amortization 6,412 4,456 16,731 13,680
Selling and administrative expenses 3,857 5,053 13,371 15,381
Restructuring and impairment charge 5,900
Interest expense, net 4,363 3,549 12,580 10,738
Other, net 30 (69) (185) (251)
---------- ----------- -------- ----------
Total costs, expenses and other 117,252 119,846 348,750 338,210
---------- ----------- -------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 4,013 3,263 (1,017) 11,421
PROVISION (BENEFIT) FOR INCOME TAXES 2,187 1,387 (554) 4,854
---------- ----------- -------- ----------
NET INCOME (LOSS) $ 1,826 $ 1,876 $ (463) $ 6,567
========== =========== ======== ==========
EARNINGS PER SHARE:
------------------
Basic Earnings (Loss) per Common Share $ 0.20 $ 0.20 $ (0.05) $ 0.70
========= =========== ======== ==========
Weighted Average Basic Common Shares Outstanding 9,278 9,325 9,280 9,325
========= =========== ======== ==========
Diluted Earnings (Loss) per Common Share $ 0.20 0.20 $ (0.05) $ 0.69
========= =========== ======== ==========
Weighted Average Diluted Common Shares
0utstanding 9,319 9,476 9,302 9,494
========= =========== ======== ==========
See notes to consolidated financial statements (unaudited).
</TABLE>
4
<PAGE>
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
July 2, July 4,
2000 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (463) $ 6,567
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation 13,752 10,777
Amortization of goodwill and other intangibles 2,979 2,903
Amortization of deferred financing costs 633 558
Provision for doubtful accounts 66 40
Restructuring and impairment charge 5,900
Loss (gain) on disposition of property, plant and equipment 19 (186)
Changes in assets and liabilities, net of effects of business
acquisitions:
Accounts receivable 4,507 (9,493)
Inventories (4,713) (5,524)
Other assets 1,529 3,774
Accounts payable (8,468) 9,377
Accrued liabilities (10,959) (6,273)
Income taxes, net 479 5,293
-------- ----------
Net cash provided by operating activities 5,261 17,813
-------- ----------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (30,187)
Capital expenditures (9,588) (21,744)
Proceeds from disposition of property, plant and equipment 107 4,420
Assets held for sale (4,020)
Other (12)
-------- ----------
Net cash used in investing activities (9,493) (51,531)
-------- ----------
FINANCING ACTIVITIES:
Net borrowings under bank revolving credit agreement 9,000 46,700
Repayments on long-term debt (638)
Decrease in unpresented bank drafts (4,416) (9,574)
Purchases of treasury stock, net (394) (711)
Financing costs incurred (313) (177)
-------- ----------
Net cash provided by financing activities 3,877 35,600
-------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (355) 1,882
CASH AND CASH EQUIVALENTS:
Beginning of period 696 2,303
-------- ----------
End of period $ 341 $ 4,185
======== ==========
</TABLE>
(Continued)
5
<PAGE>
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
July 2, July 4,
2000 1999
---------- ----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
Interest $ 14,689 $ 13,778
============ ============
Income taxes $ (1,034) $ (437)
============ ============
Details of businesses acquired were as follows:
Fair value of assets acquired $ 51,596
Liabilities assumed (21,409)
------------
Net cash paid for acquisitions $ 30,187
============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Amounts owed for capital expenditures $ 467
============
See notes to consolidated financial statements (unaudited).
</TABLE>
6
<PAGE>
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 July 2, 2000 and October 3, 1999 and for the three and
nine month periods ended July 2, 2000 and July 4, 1999 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 nine months ended July 2, 2000 are not necessarily indicative of
the results that may be expected for the entire year. These statements and
the accompanying notes should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended October 3, 1999.
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:
<TABLE>
<CAPTION>
July 2, October 3,
2000 1999
------------ ------------
<S> <C> <C>
Inventories at FIFO Cost:
Raw materials $ 7,734 $ 7,950
Work-in-process 36,809 30,543
Finished goods 9,201 10,538
----------- ---------
53,744 49,031
LIFO reserve 1,544 546
Market reserve (1,544) (546)
----------- ---------
Inventories, net $ 53,744 $ 49,031
=========== =========
</TABLE>
3. STOCKHOLDERS' EQUITY
Earnings per common share are based on the weighted average number of
common shares and common stock equivalents outstanding during each period
presented including vested and unvested shares issued under the Company's
current long-term incentive plan, as amended. Weighted average basic
common shares outstanding were 9.3 million in each of the third fiscal
quarters of 2000 and 1999. Weighted average diluted common shares
outstanding were 9.3 million and 9.5 million in the third fiscal quarters
of 2000 and 1999, respectively.
4. CREDIT AGREEMENT
At July 2, 2000, the Company had a borrowing limit under its Credit
Agreement of $125 million. Due to certain Credit Agreement restrictions,
$79.7 million of the $125 million was available to the Company. The
Company had borrowed $55.5 million of available borrowings at July 2,
2000. The Company's Credit Agreement expires June 2002.
7
<PAGE>
5. RESTRUCTURING AND IMPAIRMENT CHARGE AND PURCHASE ACCOUNTING LIABILITIES
In February 2000, the Company recorded a restructuring and impairment
charge related to the closing of two administrative offices, the
termination of 89 employees and the write-down of equipment held for
disposal. The restructuring and impairment charge totaled $5.9 million and
consisted of the following: $1.1 million related to administrative office
closings, $1.1 million related to severance, $0.7 million related to
contracts and other miscellaneous costs and $3.0 million related to
impairments of equipment held for disposal. Both administrative offices
were closed and all 89 employees were terminated in the second quarter.
In addition to the $5.9 million restructuring and impairment charge in
fiscal 2000, the Company will record $2.5 million in additional
depreciation related to the shortened useful lives of certain computer
systems. Approximately $1.1 million and $1.5 million of additional
depreciation was included in the financial results of the quarter and
nine-months ended July 2, 2000, respectively. The additional depreciation
expense reduced net income per common share by $.05 and $.07 for the
respective quarter and nine-month periods ended July 2, 2000. Additional
depreciation expense of $1.0 million will be recognized in the fourth
quarter of fiscal 2000.
Purchase accounting liabilities relate to the fiscal 1999 U. S. Can
Acquisition. The liabilities relate to the costs associated with vacating
and selling one idled manufacturing facility, satisfying the lease
obligations on another idled manufacturing facility and ceasing the
operations, vacating and selling a third operating manufacturing facility.
The third operating facility is expected to cease production and terminate
the remaining 49 employees in the fourth quarter of fiscal 2000.
The following table sets forth changes in the Company's purchase
accounting and restructuring liabilities from October 3, 1999 to July 2,
2000. Except as noted above for the February 2000 restructuring, the
nature of the liabilities has not changed from those previously reported
on the Company's Annual Report on Form 10-K for the fiscal year ended
October 3, 1999.
<TABLE>
<CAPTION>
(in millions)
Balance
October 3, New July 2,
1999 Charges Expenditures 2000
---------- ------- ------------ --------
<S> <C> <C> <C> <C>
Purchase accounting liabilities:
Equipment demolition costs $ 2.4 $ -- $ -- $ 2.4
Severance costs 1.3 -- (0.5) 0.8
Facility closure costs 2.7 -- (0.9) 1.8
---------- ------ ------------ --------
Total purchase accounting
liabilities 6.4 -- (1.4) 5.0
---------- ------ ------------ --------
Restructuring liabilities:
Severance costs 0.1 1.1 (1.0) 0.2
Facility closure costs 0.4 1.1 (1.0) 0.5
Other -- 0.7 (0.1) 0.6
---------- ------ ------------ --------
Total restructuring liabilities 0.5 2.9 (2.1) 1.3
---------- ------ ------------ --------
Total restructuring and purchase
accounting liabilities included in other
current liabilities $ 6.9 $ 2.9 $ (3.5) $ 6.3
========== ====== ============ ========
</TABLE>
8
<PAGE>
6. CONTINGENCIES
Environmental
The Company continues to monitor and evaluate on an ongoing and regular
basis its compliance with applicable environmental laws and regulations.
Liabilities for non-capital expenditures are recorded when environmental
remediation is probable and the costs can be reasonably estimated. The
Company believes that it is in substantial compliance with all material
federal, state and local environmental requirements.
The Company (and, in some cases, predecessors to the Company) has, 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. Because liability under CERCLA is retroactive, it is possible
that in the future the Company may incur liabilities with respect to other
sites.
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 management believes predated
the Company's 1989 acquisition of the facility from Owens-Illinois. Such
pre-1989 contamination is subject to indemnification by Owens-Illinois.
The Company and Owens-Illinois have entered into supplemental agreements
establishing procedures for 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. On August 25, 1999, DNR
signed a consent order that had been submitted by the Company and Owens-
Illinois. The consent order establishes a schedule for completing such
investigation and remediation by Owens-Illinois. Separately, the Company
entered into a consent order with DNR on July 22, 1999, related to certain
industrial wastewater and cooling water discharges that exceeded allowable
limits. As of July 2, 2000, the project related to the consent order was
substantially complete with expenditures to date of approximately
$200,000. 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.
7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2000, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging Activities, which amends the accounting and reporting standards of
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, for certain derivative instruments and certain hedging
activities. SFAS No. 133 requires an entity to measure all derivatives at
fair value and to recognize them on the balance sheet as an asset or
liability, depending on the entity's rights or obligations under the
applicable derivative contract. The statements are effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. The
Company believes the adoption of the standard will not have a material
effect on its balance sheet. Management is currently assessing the details
of the statements and is preparing an implementation plan.
In March 2000, the FASB issued FASB Interpretation No. 44, Accounting for
Certain Transactions involving Stock Compensation (an interpretation of
the Accounting Principles Board Opinion No. 25) (the "Interpretation").
Among other issues, the Interpretation clarifies (a) the definition of
employee for applying Opinion No. 25, (b) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (c) the accounting
consequences of various modifications to terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. The Interpretation was
effective July 1, 2000, and the Company's financial statements were not
impacted.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales decreased 1.5% in the third quarter of fiscal 2000 to $121.3 million
from $123.1 million in the third quarter of fiscal 1999. Net sales decreased
0.5% for the first nine months of fiscal 2000 to $347.7 million from $349.6
million for the first nine months of fiscal 1999.
Cost of products sold (excluding depreciation and amortization) decreased 4.0%
to $102.6 million in the third quarter of fiscal 2000 from $106.9 million in the
same period of fiscal 1999. Cost of products sold as a percentage of net sales
decreased from 86.8% in the third quarter of fiscal 1999 to 84.6% in the third
quarter of fiscal 2000. Cost of products sold (excluding depreciation and
amortization) for the nine months ended July 2, 2000 increased 0.6% to $300.4
million from $298.7 million for the nine months ended July 4, 1999. Cost of
products sold as a percentage of net sales increased from 85.4% for the nine
month period ended July 4, 1999 to 86.4% for the nine month period ended July 2,
2000. This increase in cost of products sold as a percentage of net sales is
primarily attributable to weak operating performance at certain of the Company's
plants during the first quarter of fiscal 2000. During the third quarter, the
operations continued the improvement that began during the second quarter as the
cost of products sold as a percentage of net sales decreased to 84.6% compared
to 85.5% in the second quarter and 89.4% in the first quarter of fiscal 2000.
Depreciation and amortization expense increased $2.0 million to $6.4 million in
the third quarter of fiscal 2000 from $4.5 million in the third quarter of
fiscal 1999. Depreciation and amortization expense increased $3.1 million to
$16.7 million for the nine months ended July 2, 2000 from $13.7 million for the
nine months ended July 4, 1999. The quarterly and nine-month increases are
primarily due to the Company's capital expenditure program and additional
depreciation related to the shorter useful lives of certain computer equipment.
Approximately $1.1 million and $1.5 million of additional depreciation was
included in the third fiscal quarter and the first nine months of 2000,
respectively.
Selling and administrative expense decreased 23.7% to $3.9 million in the third
quarter of fiscal 2000 from $5.1 million in the third quarter of fiscal 1999.
Selling and administrative expense as a percentage of net sales decreased 0.9%
to 3.2% for the third quarter of fiscal 2000 from 4.1% for the same quarter in
fiscal 1999. Selling and administrative expense decreased 13.1% to $13.4 million
for the nine months ended July 2, 2000 from $15.4 million for the nine months
ended July 4, 1999. Selling and administrative expense as a percentage of net
sales decreased 0.6% to 3.8% for the nine-month period in fiscal 2000 from 4.4%
for the same nine-month period in fiscal 1999. The decrease in selling and
administrative expense for the quarter ended July 2, 2000 was primarily the
result of the elimination of overhead costs due to the Company's restructuring
during the second quarter of fiscal 2000.
Interest expense increased $0.8 million in the third quarter of fiscal 2000 to
$4.4 million from $3.5 million in the third quarter of fiscal 1999. Interest
expense increased $1.8 million for the nine months ended July 2, 2000 to $12.6
million from $10.7 million for the nine months ended July 4, 1999. The increase
in interest expense is primarily attributable to higher LIBOR based interest
rates and higher rate margins under the Company's Credit Agreement.
Income before taxes increased $0.7 million to $4.0 million in the third quarter
of fiscal 2000 from $3.3 million in the third quarter of fiscal 1999. Income
before taxes decreased $12.4 million to a loss of $1.0 million for the nine
months ended July 2, 2000 from income of $11.4 million for the nine months ended
July 4, 1999. The fluctuations are due to the factors discussed above.
Income taxes increased $0.8 million to $2.2 million in the third quarter of
fiscal 2000 from $1.4 million in the third quarter of fiscal 1999. The increase
is due to higher earnings and a higher effective tax rate. The effective tax
rate increased to 54.5% for fiscal 2000 from 42.5% for fiscal 1999 due to non-
deductible items becoming a larger percentage of lower pre-tax income.
Diluted earnings per common share were $0.20 for both the third quarters of
fiscal 2000 and 1999. The weighted average diluted common shares outstanding
were 9.3 million and 9.5 million for the respective quarters. Diluted loss per
common share was $0.05 for the nine months ended July 2, 2000 compared to
diluted earnings per common share of $0.70 for the nine months ended July 4,
1999. The weighted average diluted common shares outstanding were 9.3 million
and 9.5 million for the respective nine-month periods.
10
<PAGE>
Liquidity and Capital Resources
The Company's cash requirements for operations and capital expenditures during
the quarter ended July 2, 2000 were primarily financed through internally
generated cash flows. At July 2, 2000, the Company had a borrowing limit under
its Credit Agreement of $125 million. The Company was in compliance with all
Credit Agreement covenants for the quarter ended July 2, 2000. Interest rates
under the Credit Agreement are either prime (as determined by Bank of America)
plus an applicable rate margin or at LIBOR plus an applicable rate margin, at
the Company's option. Rate margins are reset quarterly based on financial
performance during the preceding four quarters. Based on financial results for
the four quarters ended July 2, 2000, prime rate margin will be .5% in the
fourth quarter, down from 1.5% in the third quarter, and LIBOR rate margin will
be 1.5% in the fourth quarter, down from 2.5% in the third quarter.
As of July 2, 2000, the Company had borrowed $55.5 million of the $125 million
borrowing limit. However, the Credit Agreement covenants limit borrowings to a
maximum leverage ratio based on the Company's earnings before interest, taxes,
depreciation and amortization (EBITDA) and total debt. As of July 2, 2000, this
covenant effectively limited the Company's available borrowings to a total of
$79.7 million, an increase of $13.4 million from the second quarter.
During the first nine months of fiscal 2000, net cash provided by operating
activities was $5.3 million compared to $17.8 million during the first nine
months of fiscal 1999. During the first nine months of fiscal 2000, net cash
was primarily provided by net income before depreciation, amortization and the
restructuring and impairment charge, and reductions of accounts receivable and
other assets. Net cash was primarily used to reduce accounts payable and
accrued liabilities and to increase inventories. The increase in inventories
was partially due to typical seasonal fluctuations.
During the first nine months of fiscal 2000, net cash used in investing
activities was $9.5 million compared to $51.5 million used in the first nine
months of fiscal 1999. The Company used $9.6 million for capital expenditures
in the first nine months of fiscal 2000 compared to $21.7 million in first nine
months of fiscal 1999. The Company expects capital expenditures to be
approximately $13 million in fiscal year 2000. During the first nine months of
fiscal 1999, the Company used $30.2 million for the U. S. Can Acquisition and
received $4.4 million from the sale of its Solon, Ohio plant.
During the first nine months of fiscal 2000, net cash provided by financing
activities was $3.9 million compared to $35.6 million provided during the first
nine months of fiscal 1999. Net cash provided by financing activities included
$9.0 million and $46.7 million of borrowings under the Company's Credit
Agreement for the nine month periods ended July 2, 2000 and July 4, 1999,
respectfully. Net cash provided by financing activities included a use of $4.4
million and $9.6 million related to decreases in unpresented bank drafts for the
respective fiscal 2000 and fiscal 1999 periods.
At July 2, 2000, the Company was restricted in its ability to pay dividends and
make other restricted payments in an amount greater than approximately $7.3
million. The Company's subsidiaries are restricted in their ability to transfer
funds to the Company, except for funds to be used to effect approved
acquisitions, pay dividends in specified amounts, reimburse the Company for
operating and other expenditures made on behalf of the subsidiaries and repay
permitted intercompany indebtedness.
Management believes that cash provided from operations and borrowings available
under the Credit Agreement will provide it with sufficient liquidity to meet its
operating needs.
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, timing and costs of plant start-up and closure; the
Company's ability to successfully integrate acquired businesses; 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.
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's interest rates under its Credit Agreement are variable subject to
market changes and applicable rate margins based on the Company's financial
performance. At July 2, 2000, the Company had borrowings under the Credit
Agreement of $55.5 million that were subject to interest rate risk. Each 1.0%
change in interest rates would impact quarterly pretax earnings by $0.1 million.
12
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
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 to Exhibits. There were no reports filed on Form 8-K during the
quarter ended July 2, 2000.
13
<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: July 31, 2000 By: /s/ Kevin C. Kern
-----------------------------------
Kevin C. Kern
Vice President and
Corporate Controller
(Principal Accounting Officer)
Form 10-Q: For the quarterly period ended July 2, 2000.
14
<PAGE>
INDEX TO EXHIBITS
-------------------------
Exhibit
No. Description of Document
------------- ----------------------------------------------------------------
10.1* Employment agreement between the Company and Paul Mangiafico,
dated as of March 1, 2000
10.2* BWAY Corporation Fourth Amended and Restated 1995 Long-Term
Incentive Plan
10.3 Employment agreement between the Company and Thomas Eagleson,
dated as of July 1, 2000
10.4 Amendment No. 1 dated as of July 1, 2000 to the Employment
agreement between the Company and Paul Mangiafico, dated as of
March 1, 2000
22* Certificate and Report of Inspector of Elections for the Annual
Meeting for the Stockholders of BWAY Corporation dated February
25, 2000.
27 Financial Data Schedule
* Previously filed.
