<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended October 1, 2000
or
[ ] Transition Report pursuant to section 13 or 15 (d) of
The Securities Exchange Act of 1934
for the transition period from __________to _________.
Commission File Number 0-26178
BWAY Corporation
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
36-3624491
(I.R.S. Employer Identification No.)
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
(Address of principal executive offices, including zip code)
770-645-4800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par
value $0.01 per share, registered on the New York Stock Exchange.
Securities registered pursuant to Section 12(g) of the Act: None
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
------------- -------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (x)
As of November 30, 2000, the aggregate market value of the voting stock held by
non-affiliates of BWAY Corporation was approximately $26,972,273.
As of November 30, 2000, there were 9,221,318 shares of BWAY Corporation's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of BWAY Corporation's Proxy Statement to be mailed to
stockholders on or about January 19, 2001 for the Annual Meeting of Stockholders
to be held on February 21, 2001 are incorporated in Part III hereof by
reference.
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BWAY CORPORATION
TABLE OF CONTENTS
<TABLE>
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PART I Page
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Item 1. Business 1
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for the Company's Common Equity and Related Stockholder Matters 7
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 10
Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements With Accountants on Accounting and 14
Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant 14
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and Management 15
Item 13. Certain Relationships and Related Transactions 15
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on 15
Form 8-K
</TABLE>
ii
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BWAY CORPORATION AND SUBSIDIARIES
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED OCTOBER 1, 2000
PART I
Item 1. Business
--------
General
BWAY Corporation and its significant subsidiaries are leading developers,
manufacturers, and marketers of steel containers for the general line category
of the North American container industry. The Company also provides to external
customers related material center services (coating, lithography, and metal
shearing) which exceed internal needs. The references in this report to market
positions or market share are based on information derived from annual reports,
trade publications and management estimates, which the Company believes to be
reliable.
BWAY Corporation ("BWAY") is a holding company whose significant subsidiaries
are BWAY Manufacturing, Inc. ("BWAY Manufacturing") and Milton Can Company, Inc.
("MCC") (collectively the "Company"). Previously, BWAY's significant
subsidiaries also included Brockway Standard, Inc. ("BSI") and BMAT, Inc.
("BMAT"). In the fourth fiscal quarter of 2000, the Company simplified its
legal organizational structure and merged BSI and BMAT into Brockway Standard
(New Jersey), Inc., which was then renamed BWAY Manufacturing, Inc.
In January 1989, the Company was formed to purchase the metal container
business of Owens-Illinois Corporation ("Owens-Illinois"). In June 1995, the
Company completed an initial public offering ("Initial Public Offering") of its
common stock, par value $.01 per share (the "Common Stock").
The Company operates on a 52/53-week fiscal year ending on the Sunday closest
to September 30 of the applicable year. For simplicity of presentation, the
Company has presented year-ends as September 30 and all other periods as the
nearest month end, with the exception of pages F-1 through F-25.
The metal container industry is currently divided into three product
categories: beverage, food and general line. General line includes containers
used for packaging paint and related products, lubricants, cleaners, roof and
driveway sealants, and household and personal care aerosol products. Management
estimates, based on 1999 industry data published by the Can Manufacturers
Institute, that 1999 industry shipments totaled approximately 102 billion units
to the beverage category, 32 billion units to the food category and 4 billion
units to the general line category. Few companies compete in all three product
categories, and most of the companies that produce beverage and food cans do not
compete in the general line product categories.
The Company's principal products include a wide variety of steel cans and
pails used for packaging paint and related products, lubricants, cleaners, roof
and driveway sealants, food (principally coffee and vegetable oil) and household
and personal care aerosol products. The Company also manufactures steel
ammunition boxes and provides material center services. The Company's products
are typically coated on the inside to customer specifications based on intended
use and are either decorated on the outside to customer specifications or sold
undecorated. The Company markets its products primarily in North America. The
Company's sales to customers located outside of the United States were less than
5 percent for both fiscal 1999 and fiscal 2000. Sales are made either by the
Company's direct sales force, third party distributors or sales agents. Sales
growth has been accomplished primarily through acquisitions in the general line
and material center services categories.
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Recent Acquisition
On November 9, 1998, the Company acquired substantially all of the assets and
assumed certain of the liabilities of the United States Can Company's metal
services operations (the "U.S. Can Acquisition"). The purchase price was
approximately $27.7 million in cash after adjustments for working capital. The
acquisition included three operating plants and one non-operating plant. The
acquired facilities operated two different businesses, material center services,
which are part of the Company's core business, and tinplate metal services,
which are not a business of the Company.
The purchase method of accounting was used to establish and record a new cost
basis for the assets acquired and liabilities assumed and an allocation of the
purchase price was finalized during fiscal 2000. Operating results for this
acquisition have been included in the Company's consolidated financial
statements since the date of acquisition.
In November 1998, management committed to a plan to exit certain activities of
the acquired facilities and integrate acquired assets and businesses with other
Company facilities. In connection with the recording of the purchase, the
Company established a reorganization liability of approximately $11 million.
For further information, see the "Acquisitions" note beginning on page F-9 in
the Notes to the Consolidated Financial Statements.
In November 1998, the Company signed a binding letter of intent to sell the
acquired tinplate metal services business. The tinplate metal services business
primarily purchases, processes, and sells nonprime steel to third party
customers. Anticipating the sale of the tinplate metal services business, the
Company closed the Brookfield, Ohio location in March 1999 and closed the
Chicago Metal operations in September 1999. The Company finalized the sale of
the tinplate services business to Arbon Steel and Service Company in the fourth
quarter of fiscal 1999. The Company excluded from results of operations
tinplate metal services business losses of $4.4 million, including interest
expense of $0.7 million, for fiscal 1999.
In the fourth quarter of fiscal 2000, the Company also closed the Chicago,
Illinois material center services operation and transferred the work to other
Company material center services facilities.
Products and Markets
The Company participates in the general line container market and related
material center services business and currently holds leading positions in the
sale of most of its general line products, other than aerosol cans, and holds a
strong position in the sale of coffee and vegetable oil cans. The Company does
not sell beverage containers. The Company also manufactures steel ammunition
boxes. In November 1998, the Company acquired substantially all of the assets
of U.S. Can's metal services operations, making the Company a leading provider
of material center services.
The following table sets forth the Company's percentage of net sales by
product lines for fiscal 2000, 1999, and 1998. The Company's sales distribution
by product line has been affected to some extent by the U.S. Can Acquisition.
Percentage of the Company's Net Sales
-------------------------------------
Year Ended September 30,
----------------------------
Product 2000 1999 1998
------- ---- ---- ----
General Line Containers 73% 70% 80%
Food Cans 8% 11% 13%
Material Center Services 16% 16% 2%
Ammunition Boxes 3% 3% 5%
--- --- ---
Total 100% 100% 100%
General Line Products
The primary uses for the Company's containers are for paint and related
products, lubricants, cleaners, roof and driveway sealants, charcoal lighter
fluid, household and personal care products. Specific products include round
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cans with rings and plugs (typical paint cans), oblong or "F" style cans
(typical paint thinner cans), specialty cans (typical PVC or rubber cement cans,
brake fluid and other automotive after-market products cans and an assortment of
other specialty containers), and pails. The Company produces a full line of
these products to serve the specific requirements of a wide range of customers.
The Company's products are typically coated on the inside to customer
specifications based on intended use, and are either decorated on the outside to
customer specifications or sold undecorated. Most of the Company's products are
manufactured in facilities that are strategically located to allow the Company
to deliver product to customer filling locations for such products within a one
day transit time.
Paint Cans. The Company produces round paint cans in sizes ranging from one-
quarter pint to one gallon, with one-gallon paint cans representing the majority
of all paint can sales.
Oblong or "F" Style Cans. Oblong or "F" style cans are typically used for
packaging paint thinners, lacquer thinners, turpentine, deglossers and similar
paint related products, charcoal lighter fluid, waterproofing products, and
vegetable oil. The Company produces oblong cans in sizes ranging from three
ounces to one imperial gallon.
Specialty Cans. Utility cans include small screw top cans, which typically
have an applicator or brush attached to a screw cap, and are typically used for
PVC pipe cleaner, PVC cement and rubber cement. Cone top cans are typically
used for packaging specialty oils and automotive after-market products,
including brake fluid, gasoline additives and radiator flushes. The Company
also produces various specialty containers.
Aerosol Cans. Aerosol cans are typically used for packaging various household
and industrial products, including paint and related products, personal care
products, lubricants and insecticides. The Company produces a variety of sizes,
which are generally decorated to customer specifications.
Pails. Pails are typically used for packaging paint and related products,
roof and driveway sealants, marine coatings, vegetable oil, and water repellent.
Pails may be either "closed head" for easy pouring products, or "open head"
for more viscous products, with a lid which is crimped on after filling. The
Company manufactures steel pails in sizes ranging from 2.5 to 7 gallons.
Food Products/Coffee Cans
The Company produces cans for coffee and vegetable oil, with coffee accounting
for the majority of sales. The Company produces coffee cans in sizes commonly
referred to as 1 pound, 2 pound and 3 pound, and various smaller specialty
coffee can sizes and shapes. Coffee cans are generally sold to nationally known
coffee processing and marketing companies. The Company does not sell sanitary
food cans in which soups, stews, vegetables, pie fillings and other foods are
actually cooked in the can.
Materials Center Services
The Company provides material center services (coating, lithography, and metal
shearing) for its can assembly facilities and for third party customers.
Ammunition Boxes
The Company manufactures a variety of ammunition boxes. These containers
provide a hermetic seal, are coated with a corrosion-resistant finish and are
used to package small arms ammunitions and other ordnance products. The Company
sells ammunition boxes to the U.S. Department of Defense as well as to major
domestic and foreign producers of ordnance.
Customers
The Company sells its products to a large number of customers in numerous
industry sectors. Sales to the Company's ten largest customers accounted for
approximately 33% of sales in fiscal 2000. During fiscal 2000, sales to any
specific customer did not equal or exceed 10% of sales during the period.
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Raw Materials
The Company's principal raw materials consist of tinplate, blackplate and cold
rolled steel, various coatings, inks and compounds. Steel products represent the
largest component of raw material costs. Essentially all of the Company's
products are manufactured from tinplate steel, except for pails and ammunition
boxes, which are manufactured from blackplate and cold rolled steel.
Various domestic and foreign steel producers supply the Company with tinplate
steel. Procurement from suppliers depends on the suppliers' product offering,
product quality, service and price. Because a significant number of reliable
suppliers produce the steel used in the Company's process, management believes
that it would be able to obtain adequate replacement supplies in the market
should one of the current suppliers discontinue supplying the Company. The
Company increased its purchases of tinplate and cold rolled products from
foreign sources from fiscal 1998 to fiscal 1999 and from fiscal 1999 to fiscal
2000. Tinplate consumers, such as the Company, typically negotiate late in the
calendar year for the next calendar year on terms of volumes and price. Terms
agreed to have historically held through the following year, but there is no
assurance that this practice will remain unchanged in the future.
Steel prices have historically been adjusted annually on January 1. Most
tinplate, blackplate and cold rolled steel producers have announced price
increases effective January 1, 2001. Historically, the Company has generally
been able to recover increased costs of raw materials through price increases
for the Company's products, although there can be no assurances that this
practice will continue.
In addition to steel products, the Company purchases various coatings, inks,
and compounds used in the manufacturing process. Management does not anticipate
any future shortages or supply problems based on historical availability and the
current number of suppliers.
Seasonality
Sales of certain of the Company's products are to some extent seasonal, with
sales levels generally higher in the second half of the Company's fiscal year.
Environmental, Health and Safety Matters
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.
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. In
August 1999, DNR signed a consent order that had been submitted by the Company
and Owens-Illinois. In January 2000, the Company and Owens-Illinois submitted
to DNR a report containing the results of their investigation of the facility.
The Company is awaiting a DNR review of the report.
In addition, at Homerville, the Company entered into a consent order with DNR
in April 1999, related to certain industrial wastewater and cooling water
discharges that exceeded allowable limits. The project related to the consent
order is substantially complete with expenditures to date of approximately $0.2
million.
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
4
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under CERCLA is retroactive, it is possible that in the future the Company may
incur liability with respect to other sites.
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.
Competition
The markets for the Company's products are competitive and the Company faces
competition from a number of sources in most of its product lines. Competition
is based primarily on price, quality, service, and, to a lesser extent, product
innovation. The Company believes that its high quality products, the geographic
location of its facilities, which provide national coverage for most products to
most customers, and its commitment to strong customer relationships enable it to
compete effectively.
Manufacturers of steel containers have historically faced competition from
other materials, primarily plastic, glass, aluminum and composite materials.
Steel containers offer a number of significant advantages over alternative
materials, including fire safety (critical in many products packaged in paint,
oblong and specialty cans), the capacity for vacuum packaging (important to
coffee producers) and ability to contain aggressive products (primarily certain
solvent-based products).
Employees
As of October 1, 2000, the Company employed approximately 1,565 hourly
employees and 389 salaried employees. Of the 1,565 hourly employees, 1,005 are
non-union and the remaining 560 are covered by seven separate collective
bargaining agreements. During fiscal 2000, total Company headcount decreased by
128 hourly and 94 salaried employees. During the second quarter of fiscal 2000,
the Company terminated 89 employees and closed two administrative facilities.
The terminated employees primarily consisted of salaried employees and
terminations were generally completed by April 2000. During the third quarter
of fiscal 2000, the Company ceased operations at the Chicago, Illinois
lithography facility. This closing resulted in the elimination of approximately
69 hourly positions and 17 salaried positions at this facility.
On August 31, 2000, the Company reached an agreement with the International
Union of Electronic, Electrical, Salaried Machine and Furniture Workers Local
729 at its Cincinnati, Ohio facility affecting approximately 140 employees. The
contract is effective September 1, 2000 through August 31, 2003. On October 15,
2000, the Company also reached an agreement with Local 458-3M of the Graphic
Communication Workers International Union at its Franklin Park, Illinois
facility affecting approximately 15 employees. The new contract is effective
October 1, 2000 through October 31, 2003.
The Company has a collective bargaining agreement with Local 14-M of the
Graphic Communication Workers International Union at its Trenton, New Jersey
facility that expires on March 31, 2001. The agreement affects approximately 75
employees.
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Item 2. Properties
----------
The following table sets forth certain information with respect to the
Company's headquarters and significant manufacturing facilities as of November
30, 2000.
<TABLE>
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General Approximate
Location Character Square Footage Type of Interest
-------- ------------------ -------------------------- ----------------
<S> <C> <C> <C>
Atlanta, Georgia (Headquarters) Office 24,000 Leased
Chicago, Illinois (Kilbourn) Manufacturing 141,000 Owned
Chicago, Illinois (Material Center Services) Held For Sale 271,000 Owned
Cincinnati, Ohio Manufacturing 467,000 Leased
Dallas, Texas (Thompson) Held For Sale 110,000 Owned
Dallas, Texas (Southwestern) Manufacturing 88,000 Owned
Elizabeth, New Jersey Manufacturing 211,000 Leased
Elizabeth, New Jersey (Northeast Tinplate) Subleased 42,000 Leased
Fontana, California Manufacturing 72,000 Leased
Franklin Park, Illinois Manufacturing 115,000 Leased
Garland, Texas Manufacturing 108,000 Leased
Homerville, Georgia Manufacturing 395,000 Owned
Memphis, Tennessee Manufacturing 75,000 Leased
Picayune, Mississippi Manufacturing 60,000 Leased
Trenton, New Jersey Manufacturing 105,000 Leased
York, Pennsylvania Manufacturing 97,000 Owned
</TABLE>
A non-operating facility located in Alsip, Illinois, which was acquired from
United States Can Company in fiscal 1999, was sold during the fourth quarter of
fiscal 2000.
The Chicago, Illinois material center services facility and the Dallas, Texas
(Thompson) facility were closed during fiscal 2000. The Company is actively
marketing these facilities for sale.
The Company believes its properties are generally in good condition, well
maintained and suitable for their intended use.
Item 3. Legal Proceedings
-----------------
The Company is involved in certain proceedings relating to environmental
matters as described under Item 1. "Business - Environmental, Health and Safety
Matters."
The Company is also involved in legal proceedings from time to time in the
ordinary course of its business. No such currently pending proceedings are
expected to have a material adverse effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted during the fourth quarter of fiscal 2000 to a vote
of security holders of the Company through the solicitation of proxies or
otherwise.
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PART II
Item 5. Market for the Company's Common Equity and Related Stockholder Matters
----------------------------------------------------------------------
As of December 1, 2000, there were 86 holders of record of the Common Stock.
Because BWAY is a holding company, its ability to pay dividends is substantially
dependent upon the receipt of dividends or other payments from its subsidiaries.
The Company's Credit Agreement dated June 17, 1996, as amended (the "Credit
Agreement"), among BWAY and certain subsidiaries, Deutsche Bank, Bank of
America, N.A. and various other lenders, restricts the ability of BWAY and its
subsidiaries to pay dividends or make other restricted payments in an amount
greater than $3.9 million, and places certain restrictions on the Company with
regard to incurring additional indebtedness, other than certain specified
indebtedness. Additionally, the Company's Indenture dated April 11, 1997 (the
"Indenture") also restricts the ability of BWAY and its subsidiaries to pay
dividends or make other payments, and places certain restrictions on the Company
with regard to incurring additional indebtedness, other than certain specified
indebtedness. Any future determination to pay dividends will be made by the
Board of Directors in light of the Company's earnings, financial position,
capital requirements, credit agreements, indentures, business strategies and
such other factors as the Board of Directors deems relevant at such time. The
Company has not paid any cash distributions or other dividends on the Common
Stock and presently intends to retain its earnings to finance the development of
its business for the foreseeable future.
The Company repurchased $0.5 million of its common stock during fiscal 2000
under the Company's common stock repurchase program.
The Company's common stock is traded on the New York Stock Exchange under the
symbol "BY". The table below sets forth the high and low sales price
information for the Common Stock for each quarter of fiscal 1999 and fiscal
2000.
Fiscal Quarter High Low
-------------- ------ ------
First quarter, 1999 $18.31 $11.50
Second quarter, 1999 $16.00 $10.88
Third quarter, 1999 $15.88 $11.38
Fourth quarter, 1999 $13.69 $ 8.50
First quarter, 2000 $ 9.69 $ 5.50
Second quarter, 2000 $ 8.50 $ 3.81
Third quarter, 2000 $ 8.44 $ 5.94
Fourth quarter, 2000 $ 7.44 $ 4.38
Item 6. Selected Financial Data
-----------------------
The selected historical consolidated financial data as of and for each of the
years in the five years ended September 30, 2000 have been derived from the
audited consolidated financial statements of the Company. The results of
operations include the results of the U.S. Can Acquisition described under
"Business--Recent Acquisition" contained in Item 1 of this report and have been
included in the Company's consolidated financial statements from the date of the
acquisition. The selected consolidated financial data is qualified by, and
should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in Item 7 of this
report and with the Company's consolidated financial statements and the related
notes thereto included in Item 8 of this report.
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<TABLE>
<CAPTION>
Fiscal Year Ended September 30, (1)
-------------------------------------------------------------
2000 1999 (2) 1998 1997 (3) 1996 (4)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales $460,568 $467,099 $401,089 $402,150 $283,105
-------- -------- -------- -------- --------
Costs, expenses and other
Cost of products sold (excluding depreciation and amortization) 403,627 404,492 336,588 341,406 236,741
Depreciation and amortization (5) 22,412 17,246 13,465 13,024 7,425
Selling and administrative expense 17,057 19,678 22,748 19,651 14,589
Restructuring and impairment charge (6) (7) (8) 5,900 - 11,532 - 12,860
Interest expense, net 16,657 14,733 13,021 10,649 4,872
Gain on curtailment of postretirement benefits (9) (1,171) - (1,861) (5,828) -
Other, net (662) 33 127 998 (340)
-------- -------- -------- -------- --------
Total costs, expenses, and other 463,820 456,182 395,620 379,900 276,147
Income (loss) before income taxes, extraordinary item and cumulative
effect of change in accounting (3,252) 10,917 5,469 22,250 6,958
Provision (benefit) for income taxes (334) 5,290 2,789 9,146 3,239
-------- -------- -------- -------- --------
Income (loss) before extraordinary item and cumulative effect of
change in accounting (2,918) 5,627 2,680 13,104 3,719
-------- -------- -------- -------- --------
Extraordinary loss resulting from the extinguishment of debt, net
of tax benefit of $1,683 (10) - - - - (2,535)
Income (loss) before cumulative effect of change in accounting (2,918) 5,627 2,680 13,104 1,184
-------- -------- -------- -------- --------
Cumulative effect of change in accounting for systems development
cost, net of related tax benefit of $823 (11) - - (1,161) - -
-------- -------- -------- -------- --------
Net income (loss) $ (2,918) $ 5,627 $ 1,519 $ 13,104 $ 1,184
======== ======== ======== ======== ========
Basic earnings (loss) per common share data:
Income (loss) before extraordinary item and accounting change $ (0.31) $ 0.60 $ 0.28 $ 1.33 $ 0.40
Extraordinary item (10) - - - - (0.27)
Cumulative effect of change in accounting (11) - - (0.12) -
-------- -------- -------- -------- --------
Net income (loss) $ (0.31) $ 0.60 $ 0.16 $ 1.33 $ 0.13
======== ======== ======== ========= ========
Diluted earnings (loss) per common share data:
Income (loss) before extraordinary item and accounting change $ (0.31) $ 0.60 $ 0.27 $ 1.31 $ 0.40
Extraordinary item (10) - - - - (0.27)
Cumulative effect of change in accounting (11) - - (0.12) - -
-------- -------- -------- -------- --------
Net Income (loss) $ (0.31) $ 0.60 $ 0.15 $ 1.31 $ 0.13
======== ======== ======== ========= ========
Weighted average basic common shares outstanding 9,278 9,323 9,527 9,817 9,373
======== ======== ======== ========= ========
Weighted average diluted common shares outstanding 9,278 9,453 9,959 9,983 9,407
======== ======== ======== ========= ========
</TABLE>
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<TABLE>
<CAPTION>
Fiscal Year Ended September 30, (1)
---------------------------------------------------------
2000 1999 1998 1997 1996
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $ 14,583 $ 14,146 $ 737 $ 6,890 $ 22,280
Property, plant and equipment, net 133,870 144,716 133,960 123,617 94,800
Total assets 332,723 362,023 313,711 316,377 245,133
Long-term debt (including current
maturities) 126,200 146,500 122,272 115,532 95,198
Stockholders' equity 78,961 82,053 77,188 85,466 72,629
</TABLE>
(1) The Company operates on a 52/53-week fiscal year ending on the Sunday
closest to September 30 of the applicable year. For simplicity of
presentation, the Company has presented year-ends as September 30.
(2) The results of operations for the year ending September 30, 1999 include
the results from the November 9, 1998 acquisition of substantially all of
the assets of the material center service business of U.S. Can Company.
(3) The results of operations for the year ending September 30, 1997 include
the results from the October 28, 1996 acquisition of substantially all of
the assets of the aerosol can business of Ball Metal Food Container
Corporation.
(4) The results of operations for the year ending September 30, 1996 include
the results from the following acquisitions: On May 28, 1996, BWAY acquired
all of the stock of Milton Can Company. On June 17, 1996, BSI acquired
substantially all of the assets of the Davies Can Division of the Van Dorn
Company.
(5) Depreciation for fiscal 2000 includes an additional $2.5 million of
depreciation related to shortened useful lives of certain computer systems.
(6) In the second quarter of fiscal 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. See the "Restructuring and Impairment Charge" note in the Notes
to the Consolidated Financial Statements on page F-22 as set forth in Item
8.
(7) During the third quarter of fiscal 1998, the Company recorded a
restructuring and impairment charge related to the closure of three plants,
the elimination of an internal transportation department and the write-off
of equipment at several operating locations which were impaired due
primarily to changes in manufacturing processes. See the "Restructuring and
Impairment Charge" note in the Notes to the Consolidated Financial
Statements on page F-22 as set forth in Item 8.
(8) During the fourth quarter of fiscal 1996, the Company recorded a
restructuring and impairment charge related to the write-off of fixed
assets due to the consolidation of manufacturing processes related to the
fiscal 1996 acquisitions.
(9) The gains on curtailment of postretirement benefits resulted from a
reduction in liability for future medical benefits of certain employees of
the Cincinnati, Ohio facility.
(10) The Company recorded an extraordinary loss related to the prepayment of the
$50 million principal amount of 8.35% Senior Secured Notes during the third
quarter of fiscal 1996.
(11) On November 20, 1997 the FASB's Emerging Issues Task Force (EITF) issued a
consensus on the accounting treatment of certain information systems and
process reengineering costs. The Company was involved in a business
information systems and process reengineering project that was subject to
this pronouncement. Based on the EITF consensus, $2.0 million of the
previously capitalized costs associated with this project were expensed in
the first fiscal quarter of 1998, as a change in accounting. A one-time
charge of $1.2 million after tax or $0.12 per diluted share for the
cumulative effect of this new accounting interpretation for business
information systems and process reengineering activities reduced 1998 year-
to-date net earnings.
9
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes thereto included in Item 8
of this report.
General
Industry
The Company currently derives substantially all of its revenues from the sale
of steel containers manufactured at the Company's plants and from material
center services. The packaging market in which the Company competes is generally
mature. During recent years, the industry has experienced slight volume declines
in certain product categories.
Sales Growth
The Company's net sales have grown from $401.1 million in fiscal 1998 to
$460.6 million in fiscal 2000. Sales growth is primarily due to the U.S. Can
Acquisition. Consistent with the industry, the Company has experienced slight
declines in certain of its product categories.
Raw Materials
Steel is the largest component of cost of sales for the Company's products and
is currently supplied by large domestic and foreign manufacturers. Steel prices
have historically been negotiated annually with changes effective January 1 and
have remained stable for the subsequent year. During fiscal 1999 and fiscal
2000, the Company increased its purchases of tinplate and cold rolled products
from foreign sources.
Gross Profit Margins
Continuous advances in manufacturing productivity and cost reduction are
critical to the industry and the Company's ability to improve gross profit
margins. The Company's objectives are to improve margins through the addition of
new business in the aerosol and general line categories, while improving
operating efficiencies and reducing manufacturing costs. The Company has
historically closed inefficient and redundant facilities and consolidated
business within remaining plants.
Results of Operations
Year ended October 1, 2000 (fiscal 2000) compared to year ended October 3, 1999
(fiscal 1999).
Net Sales. Net sales for fiscal 2000 were $460.6 million, a decrease of $6.5
million or 1.4% from $467.1 million in fiscal 1999. The decrease is primarily
due to the conversion of orders by a large customer from lithographic style cans
to plain style cans, which resulted in a $5.0 million decrease in sales, and to
slight volume declines in certain product categories, primarily in the paint
category.
Cost of Products Sold. Cost of products sold (excluding depreciation and
amortization) in fiscal 2000 was $403.6 million, a decrease of $0.9 million or
0.2% from $404.5 million in fiscal 1999. Cost of products sold as a percent of
sales increased to 87.6% in fiscal 2000 from 86.6% in fiscal 1999. The increase
as a percent of sales is primarily attributable to lower sales and weak
operating performance at certain of the Company's facilities.
Depreciation and Amortization. Depreciation and amortization increased to
$22.4 million in fiscal 2000 from $17.2 million in fiscal 1999. This increase
includes $2.5 million of depreciation related to shortened useful lives of
certain computer systems. The remaining $2.7 million increase in depreciation is
primarily due to capital expenditures.
10
<PAGE>
Selling and Administrative Expense. Selling and administrative expense
decreased to $17.1 million in fiscal 2000 from $19.7 million for fiscal 1999,
primarily due to the elimination of costs from the Company's restructuring
during the second quarter of fiscal 2000, which is described below.
Restructuring and Impairment Charge. During the second quarter of fiscal
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.
Interest Expense, Net. Interest expense, net, increased to $16.7 million in
fiscal 2000 from $14.7 million in fiscal 1999, primarily due to higher LIBOR
based interest rates and higher interest rate margins under the Company's Credit
Agreement. The interest rate margin is determined on a quarterly basis based on
the Company's leverage ratio. The Company paid a higher average margin rate in
fiscal 2000 compared to fiscal 1999 because of the Company's financial
performance.
Gain on Curtailment of Postretirement Benefits. The Company recognized a $1.2
million gain on curtailment of postretirement benefits in fiscal 2000. The gain
resulted from a reduction in liability for future medical benefits of certain
employees of the Company's Cincinnati, Ohio facility.
Income (Loss) Before Income Taxes and Cumulative Effect of Change in
Accounting. Income (loss) before income taxes and cumulative effect of change
in accounting for fiscal 2000 was $(3.3) million, a decrease of $14.2 million
from $10.9 million in fiscal 1999. The change results from the factors
described above.
Provision (Benefit) For Income Taxes. The provision (benefit) for income
taxes decreased to a benefit of $(0.3) million in fiscal 2000 from a provision
of $5.3 million in fiscal 1999. The decrease is due to the decrease in income
(loss) before income taxes and cumulative effect of change in accounting as
described above. For the reconciliation of the income tax rate with the federal
statutory rate, see the "Income Taxes" note in the Notes to the Consolidated
Financial Statements on page F-18 as set forth in Item 8.
Net Income (Loss). Net income (loss) for fiscal 2000 was $(2.9) million, a
decrease of $8.5 million from $5.6 million in fiscal 1999. The change results
from the factors described above.
Year ended October 3, 1999 (fiscal 1999) compared to year ended September 27,
1998 (fiscal 1998).
Net Sales. Net sales for fiscal 1999 were $467.1 million, an increase of
$66.0 million or 16.5% from $401.1 million in fiscal 1998. The increase in net
sales was primarily attributable to the fiscal 1999 U.S. Can Acquisition. The
Company's net sales for fiscal 1999, excluding the effect of the U.S. Can
Acquisition, declined approximately 2.5% from fiscal 1998.
Cost of Products Sold. Cost of products sold (excluding depreciation and
amortization) in fiscal 1999 was $404.5 million, an increase of $67.9 million,
or 20.2%, from $336.6 million in fiscal 1998. The increase is primarily
attributable to increased sales from the U.S. Can Acquisition, start-up costs of
new equipment and plant rationalization costs. Cost of products sold as a
percent of sales increased to 86.6% in fiscal 1999 from 83.9% in fiscal 1998.
The increase is primarily attributable to the incremental sales from the U.S.
Can Acquisition where cost of products sold as a percent of sales has
historically been higher than the Company's existing operations, to start-up
costs for new equipment (particularly within the Company's material center
business) and to costs associated with the Company's rationalization initiatives
at can assembly operations, primarily in the Northeast and Southwest. The
rationalization process for the Company's Northeast and Southwest facilities
progressed at a slower rate than initially planned. Ongoing delays in
construction, equipment relocations and the hiring and training of new employees
contributed to the increase in costs. These additional costs more than offset
realized savings resulting from the Company's purchasing initiatives.
Depreciation and Amortization. Depreciation and amortization increased from
$13.5 million in fiscal 1998 to $17.2 million in fiscal 1999 due the U.S. Can
Acquisition and as a result of capital spending.
11
<PAGE>
Selling and Administrative Expense. Selling and administrative expense of
$19.7 million for fiscal 1999 decreased from $22.7 million in fiscal 1998.
Interest Expense, Net. Interest expense, net, increased to $14.7 million in
fiscal 1999 from $13.0 million in fiscal 1998 primarily due to increased
borrowings under the Company's credit agreement to finance the U.S. Can
Acquisition and fund the Company's capital expenditure program.
Gain on Curtailment of Postretirement Benefits. The Company recognized a $1.9
million gain on curtailment of postretirement benefits in fiscal 1998. The gain
resulted from a reduction in liability for future medical benefits of certain
employees of the Company's Cincinnati, Ohio facility.
Income before Income Taxes and Cumulative Effect of Change in Accounting.
Income before income taxes and cumulative effect of change in accounting for
fiscal 1999 was $10.9 million, an increase of $5.4 million from $5.5 million in
fiscal 1998. In fiscal 1998, the Company recorded a restructuring charge of
$11.5 million (before taxes). Excluding the effect of the fiscal 1998
restructuring charge, fiscal 1999 income before income taxes and cumulative
effect of change in accounting decreased by $6.1 million from fiscal 1998.
This decrease resulted primarily from higher costs of products sold (lower gross
margins) as described above, higher interest expense, and higher depreciation
and amortization, partially offset by lower selling and administrative expenses.
Provision For Income Taxes. The provision for income taxes increased from
$2.8 million in fiscal 1998 to $5.3 million in fiscal 1999. The increase is
due to the increase in income before income taxes and cumulative effect of
change in accounting as described above.
Net Income. Net Income for fiscal 1999 was $5.6 million, an increase of $4.1
million from fiscal 1998. The change results from the factors described above.
Seasonality
Sales of certain of the Company's products are to some extent seasonal, with
sales levels generally higher in the second half of the Company's fiscal year.
Liquidity and Capital Resources
The Company's cash requirements for operations and capital expenditures during
fiscal 2000 and fiscal 1999 were primarily financed through internally generated
cash flows and borrowings under the Company's Credit Agreement. During fiscal
2000, cash and cash equivalents increased $0.3 million and net borrowings under
the Credit Agreement decreased by $20.3 million.
As of October 1, 2000, the Company had borrowed $26.2 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
October 1, 2000, this covenant effectively limited the Company's available
Credit Agreement borrowings to a total of $81.4 million.
The Company was not in compliance with one Credit Agreement covenant (interest
coverage ratio) at fiscal 2000 year-end. Subsequent to fiscal 2000 year-end,
the Company and its lenders executed an amendment to the Credit Agreement that
modified the interest coverage ratio. As part of the Credit Agreement amendment,
the lenders provided the Company with a waiver for the fourth quarter violation.
In consideration for the amendment, the Company paid an amendment fee of
$250,000 and agreed to a 50 basis point increase in interest rate margins.
Credit Agreement interest rates are based on interest rate margins for either
the prime rate (as periodically announced by Bank of America, N.A.) or LIBOR, at
the Company's option. Interest rate margins are reset quarterly based on
financial performance during the preceding four quarters.
During fiscal 2000, net cash provided by operating activities was $25.3
million, which was comprised primarily of net loss ($2.9 million), depreciation
and amortization ($22.4 million), the restructuring and impairment charge ($5.9
million), and reductions of accounts receivable, inventories and other assets
($15.0 million). Net cash was primarily used to reduce accounts payable and
accrued liabilities ($14.9 million).
12
<PAGE>
During fiscal 1999, net cash provided by operating activities was $24.5
million, which was comprised primarily of net income ($5.6 million),
depreciation and amortization ($17.3 million) and deferred income taxes ($7.1
million). Changes in assets and liabilities reduced net cash provided by
operating activities by $6.1 million.
During fiscal 2000, net cash used in investing activities was $8.5 million.
The Company used $10.9 million for capital expenditures in fiscal 2000. The
Company received $2.4 million in proceeds from the disposition of property,
plant and equipment in fiscal 2000, primarily from the sale of the Alsip,
Illinois facility acquired in the U.S. Can Acquisition.
During fiscal 1999, the Company used $46.5 million for investing activities.
The Company used $33.2 million for capital expenditures and $27.9 million for
the U.S. Can Acquisition, offset by $14.6 million provided from the disposition
of property, plant and equipment.
During fiscal 2000, net cash used by financing activities was $16.6 million.
During fiscal 2000, net repayments under the Credit Agreement were $20.3
million. Net cash provided by financing activities related primarily to an
increase in unpresented bank drafts of $4.5 million. The Company also used cash
for the repurchase of its common stock on the open market of approximately $0.5
million in fiscal 2000.
During fiscal 1999, net cash provided by financing activities was $20.4
million. Net borrowings under the Company's Credit Agreement were $24.9
million. Net purchases of treasury stock were $0.8 million. Additionally,
unpresented bank drafts increased $2.9 million.
At October 1, 2000, the Company was restricted in its ability to pay dividends
and make other restricted payments in an amount greater than approximately $3.9
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 and capital expenditure needs in the next 12 months.
Environmental Matters
For information regarding environmental matters, see Item 1. "Business -
Environmental, Health and Safety Matters."
Effect of Inflation
Historically, the Company has generally been able to recover increased costs
of raw materials through price increases for the Company's products, although
there can be no assurances that this practice will continue. Management
currently believes that inflation will not have a material adverse impact on the
Company.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 133, "Accounting for
Derivative Instruments and Hedging Activities", which was amended in June 2000
by SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities." SFAS 133, as amended, requires the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not hedged
must be adjusted to fair value through income. If the derivative is a hedge,
changes in the fair value of the derivative are either offset against changes in
fair value of assets, liabilities or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of the derivative's fair value is immediately
recognized in earnings. The Company adopted SFAS 133, as amended, on October 2,
2000. The adoption of these standards is not expected to have a material impact
on the Company's results of operations, financial position or cash flow.
In 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements." The SAB provides guidance on the
recognition, presentation and disclosure of revenue in the financial statements
filed with the SEC. Although SAB No. 101 does not change any existing standards
on revenue
13
<PAGE>
recognition, it draws upon existing standards and explains how the SEC staff
applies these rules, by analogy, to other transactions that existing rules do
not specifically address. SAB No. 101, as amended by SAB No. 101B, must be
adopted no later than the fourth quarter of our fiscal year 2001. The Company is
in the process of assessing the impact of SAB No. 101 on its financial
statements; however, the adoption of SAB No. 101 is not expected to have a
material impact on the Company's results of operations or financial position.
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 cost 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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
The Company's Credit Agreement permits the Company to borrow up to $150
million provided certain conditions and restrictive financial covenants are met.
Borrowings under the Credit Agreement bear interest at either the prime rate or
the London InterBank Offered Rate ("LIBOR") plus an applicable spread percentage
at the option of the Company. The interest rate spread over LIBOR is determined
each quarter based on the ratio of earnings before interest, taxes, depreciation
and amortization ("EBITDA") to total debt. At October 1, 2000 the applicable
spread was 1.5%, and the Company had borrowings under the Credit Agreement of
$26.2 million that were subject to interest rate risk. Subsequent to year-end,
the Company amended the Credit Agreement as described in "Liquidity and Capital
Resources" in Item 7. Immediately after the amendment to the Credit Agreement
on November 8, 2000, the applicable spread increased to 2.0%. Each 1.0
percentage point increase in interest rates would impact pretax earnings by $0.3
million at the $26.2 million debt level of October 1, 2000.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See the attached Consolidated Financial Statements pages F-1 through F-25.
Item 9. Changes in and Disagreements With Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Inapplicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Incorporated by reference to the Company's Proxy Statement for the 2001 Annual
Meeting of Stockholders to be filed with the Commission.
14
<PAGE>
Item 11. Executive Compensation
----------------------
Incorporated by reference to the Company's Proxy Statement for the 2001 Annual
Meeting of Stockholders to be filed with the Commission.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
Incorporated by reference to the Company's Proxy Statement for the 2001 Annual
Meeting of Stockholders to be filed with the Commission.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Incorporated by reference to the Company's Proxy Statement for the 2001 Annual
Meeting of Stockholders to be filed with the Commission.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) The following documents are filed as a part of this report:
(1) The Consolidated Financial Statements included in Item 8 hereof and set
forth on pages F-1 through F-25.
(2) The Financial Statement Schedules listed in the Index to the Financial
Statement Schedules.
(3) The exhibits listed in the Index to Exhibits.
(b) Reports on Form 8-K.
The Company did not file any Reports on Form 8 - K during the fourth
quarter of fiscal 2000.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
By /s/ Jean-Pierre M. Ergas
------------------------
Jean-Pierre M. Ergas
Chairman of the Board and Chief Executive
Officer
Date December 22, 2000
------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities indicated on December 21, 2000.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ Jean-Pierre M. Ergas Chairman of the Board, Chief Executive Officer and Director
------------------------------------ (Principal Executive Officer)
Jean-Pierre M. Ergas
/s/ Warren J. Hayford Non-Executive Vice Chairman of the Board and Director
------------------------------------
Warren J. Hayford
/s/ Kevin C. Kern Vice President and Corporate Controller
------------------------------------ (Principal Financial and Accounting Officer)
Kevin C. Kern
/s/ James W. Milton Executive Vice President and Director
------------------------------------
James W. Milton
/s/ Thomas A. Donahoe Director
------------------------------------
Thomas A. Donahoe
/s/ Alexander P. Dyer Director
------------------------------------
Alexander P. Dyer
/s/ John E. Jones Director
------------------------------------
John E. Jones
/s/ John W. Puth Director
------------------------------------
John W. Puth
/s/ John T. Stirrup Director
------------------------------------
John T. Stirrup
</TABLE>
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors of BWAY Corporation:
We have audited the accompanying consolidated balance sheets of BWAY Corporation
and subsidiaries (the "Company") as of October 1, 2000 and October 3, 1999 and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended October 1, 2000. Our
audits also included the financial statement schedules listed in the Index to
the financial statements. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of October 1, 2000
and October 3, 1999, and the results of its operations and its cash flows for
each of the three years in the period ended October 1, 2000, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
November 10, 2000
F-1
<PAGE>
BWAY Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
--------------------------------------------------------------------------
October 1 and October 3 2000 1999
-------- --------
Assets
Current assets:
Cash and equivalents $ 961 $ 696
Accounts receivable, net of allowance for
doubtful accounts of $508 and $506 44,083 52,868
Inventories, net 45,522 49,031
Current income taxes receivable 3,048 3,598
Deferred tax asset 8,988 4,612
Assets held for sale 5,284 4,818
Other 1,823 2,803
-------------------------------------------------------------------------
Total current assets 109,709 118,426
Property and equipment, net 133,870 144,716
Other assets:
Goodwill, net of accumulated
amortization of $12,166 and $9,852 73,420 79,366
Intangibles, net 9,216 10,774
Deferred financing fees, net of accumulated
amortization of $2,846 and $1,995 3,189 3,727
Other 3,319 5,014
-------------------------------------------------------------------------
Total other assets 89,144 98,881
-------------------------------------------------------------------------
Total assets $332,723 $362,023
-------------------------------------------------------------------------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 67,155 $ 65,377
Accrued salaries and wages 8,032 9,104
Accrued interest 5,049 5,171
Accrued rebates 5,029 8,753
Other 9,861 15,875
-------------------------------------------------------------------------
Total current liabilities 95,126 104,280
-------------------------------------------------------------------------
Long-term debt 126,200 146,500
Long-term liabilities:
Deferred income taxes 22,044 17,667
Other 10,392 11,523
-------------------------------------------------------------------------
Total other liabilities 32,436 29,190
-------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, shares
authorized 5,000,000 - -
Common stock, $.01 par value, shares
authorized 24,000,000;
shares issued 9,851,002 99 99
Additional paid-in capital 36,760 37,202
Retained earnings 52,901 55,819
-------------------------------------------------------------------------
89,760 93,120
Less: Treasury stock, at cost, shares
held 584,184 and 541,978 (10,799) (11,067)
-------------------------------------------------------------------------
Total stockholders' equity 78,961 82,053
-------------------------------------------------------------------------
Total liabilities and stockholders'
equity $332,723 $362,023
-------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
BWAY Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
-------------------------------------------------------------------------
Year Ended October 1, October 3 and
September 27 2000 1999 1998
-------- -------- --------
Net sales $460,568 $467,099 $401,089
Costs, expenses and other:
Cost of products sold (excluding
depreciation and amortization) 403,627 404,492 336,588
Depreciation and amortization 22,412 17,246 13,465
Selling and administrative expense 17,057 19,678 22,748
Restructuring and impairment charge 5,900 - 11,532
Interest expense, net 16,657 14,733 13,021
Gain on curtailment of postretirement
benefits (1,171) - (1,861)
Other, net (662) 33 127
-------------------------------------------------------------------------
Total costs, expenses and other 463,820 456,182 395,620
-------------------------------------------------------------------------
Income (loss) before income taxes and
cumulative effect of change in accounting (3,252) 10,917 5,469
Provision (benefit) for income taxes (334) 5,290 2,789
-------------------------------------------------------------------------
Income (loss) before cumulative effect
of change in accounting (2,918) 5,627 2,680
Cumulative effect of change in
accounting for systems development
costs, net of related tax benefit of
$823 - - (1,161)
-------------------------------------------------------------------------
Net income (loss) $ (2,918) $ 5,627 $ 1,519
-------------------------------------------------------------------------
Income (loss) per common share
Basic:
Income (loss) before cumulative effect
of change in accounting $ (0.31) $ 0.60 $ 0.28
Cumulative effect of change in
accounting - - (0.12)
-------------------------------------------------------------------------
Net income (loss) $ (0.31) $ 0.60 $ 0.16
-------------------------------------------------------------------------
Diluted:
Income (loss) before cumulative effect
of change in accounting $ (0.31) $ 0.60 $ 0.27
Cumulative effect of change in
accounting - - (0.12)
-------------------------------------------------------------------------
Net income (loss) $ (0.31) $ 0.60 $ 0.15
-------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
BWAY Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
(In thousands)
===============================================================================
<TABLE>
<CAPTION>
Year Ended October 1, October 3 and September 27 2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Common stock and additional paid-in capital
Balance, beginning of year $ 37,301 $ 37,494 $ 37,728
Tax benefit of stock options exercised - - 271
Issuance of treasury stock for stock options exercised - (37) (505)
Purchase of treasury stock, net - (156) -
Issuance of treasury stock for employee profit sharing plan (442) - -
-------------------------------------------------------------------------------------------------------------
Balance, end of year 36,859 37,301 37,494
-------------------------------------------------------------------------------------------------------------
Retained earnings
Balance, beginning of year 55,819 50,192 48,673
Net income (loss) (2,918) 5,627 1,519
-------------------------------------------------------------------------------------------------------------
Balance, end of year 52,901 55,819 50,192
-------------------------------------------------------------------------------------------------------------
Treasury stock, at cost
Balance, beginning of year (11,067) (10,498) (935)
Issuance of treasury stock for stock options exercised - 93 1,554
Purchase of treasury stock, net (471) (662) (11,117)
Issuance of treasury stock for employee profit sharing plan 739 - -
-------------------------------------------------------------------------------------------------------------
Balance, end of year (10,799) (11,067) (10,498)
-------------------------------------------------------------------------------------------------------------
Total stockholders' equity $ 78,961 $ 82,053 $ 77,188
-------------------------------------------------------------------------------------------------------------
Share Data
-------------------------------------------------------------------------------------------------------------
Common stock 9,851 9,851 9,851
-------------------------------------------------------------------------------------------------------------
Treasury stock
Balance, beginning of year (542) (490) (52)
Issuance of treasury stock for stock options exercised - 4 69
Purchase of treasury stock, net (81) (56) (507)
Issuance of treasury stock under employee profit sharing plan 39 - -
-------------------------------------------------------------------------------------------------------------
Balance, end of year (584) (542) (490)
-------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
BWAY Corporation and Subsidiaries
Consolidated Statements of Cash flows
(In thousands)
===============================================================================
<TABLE>
<CAPTION>
Year Ended October 1, October 3 and September 27 2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Operating Activities
Net income (loss) $ (2,918) $ 5,627 $ 1,519
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 18,540 13,355 9,880
Amortization of goodwill and other intangibles 3,872 3,891 3,585
Amortization of deferred financing costs 851 748 706
Gain on curtailment of postretirement benefits (1,171) - (1,861)
Cumulative effect of change in accounting principle, net - - 1,161
Provision for doubtful accounts 2 (27) (47)
Restructuring and impairment charge 5,900 - 11,532
Gain on disposition of property, plant, and equipment (429) (103) (23)
Deferred income taxes 1 7,094 1,009
Changes in assets and liabilities, net of effects
of business acquisitions:
Accounts receivable 8,783 (5,484) 6,279
Inventories 3,509 (5,098) 6,892
Other assets 2,674 (1,553) 2,569
Accounts payable (2,602) 8,041 (9,051)
Accrued liabilities (12,264) (826) (5,958)
Income taxes, net 549 (1,213) (2,631)
-----------------------------------------------------------------------------------------------
Net cash provided by operations 25,297 24,452 25,561
-----------------------------------------------------------------------------------------------
Investing Activities
Acquisitions, net of cash acquired - (27,892) 463
Capital expenditures (10,907) (33,230) (33,826)
Proceeds from disposition of property, plant, and equipment 2,432 14,627 484
-----------------------------------------------------------------------------------------------
Net cash used by investing activities (8,475) (46,495) (32,879)
-----------------------------------------------------------------------------------------------
Financing Activities
Net borrowings (repayments) under bank
revolving credit agreement (20,300) 24,900 8,100
Repayments on long-term debt - (672) (1,181)
Increase (decrease) in unpresented bank drafts 4,527 (2,853) 11,556
Purchase of treasury stock, net (471) (818) (11,117)
Financing costs incurred (313) (177) (160)
Issuance of treasury stock for options exercised - 56 1,049
-----------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (16,557) 20,436 8,247
-----------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 265 (1,607) 929
Cash and equivalents, beginning of year 696 2,303 1,374
-----------------------------------------------------------------------------------------------
Cash and equivalents, end of year $ 961 $ 696 $ 2,303
-----------------------------------------------------------------------------------------------
</TABLE>
Continued...
F-5
<PAGE>
BWAY Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
================================================================================
<TABLE>
<CAPTION>
Year Ended October 1, October 3 and September 27 2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information
Cash paid (refunded) during the period for:
----------------------------------------------------------------------------------------
Interest $ 16,206 $ 14,961 $ 13,981
----------------------------------------------------------------------------------------
Income taxes (885) (591) 4,412
----------------------------------------------------------------------------------------
Details of business acquisitions:
----------------------------------------------------------------------------------------
Fair value of assets acquired - 47,861 -
Liabilities assumed - (19,969) -
Working capital adjustments - - 463
----------------------------------------------------------------------------------------
Net cash paid for acquisitions - 27,892 463
----------------------------------------------------------------------------------------
Noncash Investing and Financing Activities
----------------------------------------------------------------------------------------
Amounts owed for capital expenditures $ 980 $ 929 $ 2,393
----------------------------------------------------------------------------------------
Notes receivable from sale of assets - 2,240 -
----------------------------------------------------------------------------------------
Treasury stock issued for employee savings plan 297 - -
----------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Operations - BWAY Corporation ("BWAY") is a holding company whose
significant subsidiaries, BWAY Manufacturing, Inc. ("BWAY Manufacturing") and
Milton Can Company, Inc. ("MCC") (collectively the "Company") manufacture
and distribute metal containers and provide material center services in the
United States and Canada. Previously, BWAY's significant subsidiaries also
included Brockway Standard, Inc. ("BSI") and BMAT, Inc. ("BMAT"). In the
fourth fiscal quarter of 2000, the Company simplified its legal
organizational structure and merged BSI and BMAT into Brockway Standard (New
Jersey), Inc., which was renamed BWAY Manufacturing, Inc.
Basis of Presentation - The consolidated financial statements of the Company
include the accounts of BWAY and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Fiscal Year - The Company's fiscal year is a 52- or 53- week fiscal period
ending on the Sunday nearest to September 30.
Cash and Cash Equivalents - The Company considers all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents.
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.
Property, Plant, and Equipment - The Company's property, plant, and equipment
is recorded at cost and depreciated over the assets' estimated useful lives
on a straight-line basis. The Company periodically assesses the
appropriateness of the remaining estimated useful lives of property, plant,
and equipment. The Company capitalizes expenditures for major renewals and
replacements and charges against income expenditures for maintenance and
repairs. When the Company retires or otherwise disposes of property, plant,
and equipment, the asset balances are removed from the related asset and
accumulated depreciation accounts and any resulting gain or loss is credited
or charged to income.
Useful lives are as follows:
------------------------------------------------------------------------------
Useful Life
-----------
Buildings and improvements 10-30 years
Machinery and equipment 5-15 years
Furniture and fixtures 5-7 years
Computer systems 1-7 years
------------------------------------------------------------------------------
Interest is capitalized in connection with the installation of major
machinery and equipment acquisitions. The capitalized interest is recorded
as part of the cost of the related asset and is amortized over the asset's
estimated useful life. In fiscal 2000, 1999, and 1998, $0.4 million, $0.6
million, and $1.5 million of interest cost was capitalized, respectively.
Computer Information Systems - Costs directly associated with the initial
purchase, development, and implementation of computer information systems are
capitalized and included in property, plant, and equipment. Such costs are
amortized on a straight-line basis over the expected useful life of the
systems, principally five to seven years. Ongoing maintenance costs of
computer information systems are expensed as incurred.
Intangible Assets - Intangible assets consist of identifiable intangibles
(trademarks, customer lists, and covenants not-to-compete) and goodwill.
Identifiable intangibles are amortized over the term of the agreement (5 to 7
years) or estimated useful life (2 to 17 years). Goodwill is amortized on a
straight-line basis over the estimated useful life (20 to 40 years).
Deferred Financing Costs - Deferred financing costs are being amortized over
the term of the related loan agreement using the straight-line method, which
approximates the effective yield method.
Revenue Recognition - The Company recognizes revenue when product is shipped
to its customers. Provisions for returns and allowances and customer rebates
are provided for in the same period as the related revenues are recorded.
Comprehensive Income - The Company follows the disclosure requirements of
Statement of Financial Accounting Standard ("SFAS") 130, Reporting
Comprehensive Income ("SFAS 130"). SFAS 130 requires the disclosure of total
non-shareholder changes in equity and its components, which would include all
changes in equity during a period except those resulting from investments by
and distributions to shareholders. The only component of other comprehensive
income applicable to the
F-7
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
Company would be translation gains and losses on foreign currency. There were
no material translation gains and losses on foreign currency during the
fiscal years 1998, 1999 and 2000.
Accrued Rebates - The Company enters into contractual agreements with its
customers for rebates on certain products. As sales occur, a provision for
rebates is accrued on the balance sheet and is a charge against net sales.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") 109, Accounting for
Income Taxes ("SFAS 109"). One of the requirements of SFAS 109 is the use of
the liability method of computing deferred income taxes. Under the liability
method, the effect of changes in corporate tax rates on deferred income taxes
is recognized currently as an adjustment to income tax expense. The liability
method also requires that deferred tax assets or liabilities be recorded
based on the difference between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of - The
Company reviews for impairment, on a quarterly basis, long-lived assets and
certain identifiable intangibles whenever events or changes in circumstances
indicate that the carrying amount of any asset may not be reasonable based on
estimates of future undiscounted cash flows. In the event of impairment, the
asset is written down to its fair market value. Impairment of goodwill and
write-down, if any, is measured based on estimates of future undiscounted
cash flows including interest charges. Assets to be disposed of are recorded
at the lower of net book value or fair market value less cost to sell at the
date management commits to a plan of disposal and are classified as assets
held for sale on the consolidated balance sheet.
Disclosures about Fair Value of Financial Instruments - A summary of the fair
value of the Company's financial instruments and the methods and significant
assumptions used to estimate those values is as follows:
Short-Term Financial Instruments - The fair value of short-term financial
instruments, including cash and cash equivalents, trade accounts receivable
and payable, certain accrued liabilities, and current maturities of long-
term debt approximates their carrying amounts in the financial statements
due to the short maturity of such instruments.
Long-Term Debt - The fair value of the variable rate Credit Agreement
borrowings approximates the carrying amount since the currently effective
rates reflect market rates. The fair value of publicly traded fixed rate
subordinated notes payable is based on the quoted market price.
Accounting Change - On November 20, 1997, the Financial Accounting Standards
Board's ("FASB") Emerging Issues Task Force ("EITF") issued a consensus on
the accounting treatment of certain information systems and process
reengineering costs. The Company was involved in a business information
systems and process reengineering project that was subject to this
pronouncement. Based on the EITF consensus, $2.0 million of the previously
capitalized costs associated with this project were expensed in the first
fiscal quarter of 1998 as a change in accounting.
Stock Compensation - The Company accounts for stock-based compensation under
the intrinsic value method prescribed in Accounting Principles Board Opinion
25, Accounting for Stock Issued to Employees. Compensation cost for
employees' and directors' stock options is measured as the excess, if any, of
the quoted market price of the Company's stock at the date of grant over the
exercise price amount an employee or director must pay to acquire the stock.
Earnings Per Common Share - Earnings per common share are based on the
weighted average number of common shares and common stock equivalents
outstanding during each year presented, including vested and unvested shares
issued under the Company's management stock purchase plan. Common stock
equivalents represent the dilutive effect of the assumed exercise of the
outstanding stock options.
Recent Accounting Pronouncements - In June 1998, FASB issued SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, as amended in
June 2000 by SFAS 138, Accounting for Certain Derivative Instruments and
Certain Hedging Activities. SFAS 133, as amended, requires the Company to
recognize all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If the
derivative is a hedge, changes in the fair value of the derivative are either
offset against changes in the fair value of assets, liabilities or firm
commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of
the derivative's fair value is immediately recognized in earnings. The
Company will adopt SFAS 133, as amended, on October 2, 2000. The adoption of
these standards will not have a material impact on the Company's consolidated
results of operation, financial position or cash flow.
F-8
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
In 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101, Revenue
Recognition in Financial Statements. The SAB provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. Although SAB No. 101 does not change any existing
standards on revenue recognition, it draws upon existing standards and
explains how the SEC staff applies these rules, by analogy, to other
transactions that existing rules do not specifically address. SAB No. 101,
as amended by SAB No. 101B, must be adopted no later than the fourth quarter
of our fiscal year 2001. The Company is in the process of assessing the
impact of SAB No. 101 on its financial statements; however, the adoption of
SAB No. 101 is not expected to have a material impact on the results of
operations or financial position.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
ACQUISITIONS
U.S. Can Metal Services Operations - On November 9, 1998, the Company
acquired substantially all of the assets and assumed certain of the
liabilities of the United States Can Company's metal services operations
("U.S. Can Metal Services"). The purchase price was approximately $27.7
million in cash after adjustments for working capital. The acquisition
included three operating plants and one non-operating plant. The acquired
facilities operated two different businesses, coating and lithography which
is part of the Company's core business, and tinplate metal services which is
not a business of the Company. On November 17, 1998, the Company signed a
binding letter of intent to sell the tinplate services business. Anticipating
the sale of the tinplate metal services business, the Company closed the
Brookfield, Ohio location in March 1999 and closed the Chicago Metal location
in September 1999.
The purchase method of accounting was used to establish and record a new cost
basis for the assets acquired and liabilities assumed, and an allocation of
the purchase price was finalized during fiscal 2000. The operating results
for U.S. Can Metal Services have been included in the Company's consolidated
financial statements since the date of acquisition except for the tinplate
services business, which was sold as described below. As of October 1, 2000,
the excess aggregate purchase price over the aggregate fair market value of
net identifiable assets acquired was $8.6 million and is being amortized over
40 years.
The Company completed the sale of the tinplate services business in the
fourth quarter of fiscal 1999. In connection with the sale, the Company
received a note receivable recorded at $2.4 million. No gain was recognized.
The tinplate services business primarily purchased, processed and sold
nonprime steel to third party customers. The Company excluded tinplate metal
services business losses of $4.4 million, including interest expense of $0.7
million, from results of operations for the year ended October 3, 1999.
Management is committed to a plan to exit certain activities of the acquired
facilities and integrate acquired assets and businesses with BWAY facilities.
In connection with the recording of the purchase, the Company established a
reorganization liability of approximately $11.0 million. The reorganization
liability included $1.8 million in severance, $5.5 million in facility
closing costs, and $3.7 million in equipment demolition costs. The
reorganization liability represents the direct incremental costs expected to
be incurred, which have no future economic benefit to the Company.
Details of the U.S. Can Metal Services purchase accounting liability are as
follows:
--------------------------------------------------------------------------------
(In millions)
Equipment
Demolition Facility
Costs Severance Closure Total
----- --------- ------- -----
Balance September 27, 1998 $ -- $ -- $ -- $ --
Liability recorded 3.7 1.8 5.5 11.0
Expenditures (1.4) (0.5) (2.9) (4.8)
-----------------------------------------------------------------------
Balance October 3, 1999 2.3 1.3 2.6 6.2
Expenditures (1.2) (1.1) (1.4) (3.7)
-----------------------------------------------------------------------
Balance October 1, 2000 $ 1.1 $ 0.2 $ 1.2 $ 2.5
-----------------------------------------------------------------------
--------------------------------------------------------------------------------
F-9
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
In connection with the plant closures, the plan called for the termination of
308 employees. The Company terminated 191 employees in fiscal 1999 and the
remaining 117 employees in fiscal 2000. Additionally, the remaining operating
facility was closed in the fourth quarter of fiscal 2000 according to the
reorganization exit plan.
The operating results for the U. S. Can Metal Services acquisition have been
included in the Company's consolidated financial statements since the date of
acquisition.
The following unaudited pro forma results assumes the acquisition of U.S. Can
Metal Services, excluding tinplate services, occurred at the beginning of the
fiscal year ended October 3, 1999, after giving affect to certain pro forma
adjustments. The adjustments were made to reflect the goodwill amortization
cost in excess of the net assets acquired, increased interest expense, and
the estimated related income tax effects.
-----------------------------------------------------------------------------
(In thousands, except per share amounts)
Year Ended October 3 and September 27
1999 1998
---- ----
Net sales $476,149 $401,089
Net income 5,374 1,519
Earnings per
common share:
Basic 0.58 0.16
Diluted 0.57 0.15
--------------------------------------------------------------------------------
The unaudited pro forma financial information is not necessarily indicative
of the operating results that would have occurred had the acquisitions been
consummated as of the beginning of the period presented, nor is it
necessarily indicative of future operating results.
F-10
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
INVENTORIES
Inventories consist of the following:
--------------------------------------------------------------------------------
(In thousands)
October 1 and October 3
2000 1999
---- ----
Inventories at FIFO cost:
Raw materials $ 6,033 $ 7,950
Work-in-progress 30,415 30,543
Finished goods 9,074 10,538
-------- --------
45,522 49,031
LIFO reserve 161 546
Market reserve (161) (546)
-------- --------
Inventories, net $ 45,522 $ 49,031
======== ========
--------------------------------------------------------------------------------
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consist of the following:
--------------------------------------------------------------------------------
(In thousands)
October 1 and October 3
2000 1999
---- ----
Land $ 1,695 $ 1,649
Building and improvements 13,358 12,631
Machinery and equipment 144,183 131,283
Furniture, fixtures and
information technology 27,684 26,114
Construction-in-progress 8,435 17,041
-------- --------
195,355 188,718
Less accumulated depreciation (61,485) (44,002)
-------- --------
Property, plant, and
equipment, net $133,870 $144,716
======== ========
--------------------------------------------------------------------------------
F-11
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
INTANGIBLE ASSETS
Intangible assets consist of the following:
--------------------------------------------------------------------------------
(In thousands)
October 1 and October 3
2000 1999
---- ----
Customer lists $ 7,753 $ 7,753
Tradename 4,704 4,704
Noncompete agreements 4,509 4,509
------- -------
16,966 16,966
Less accumulated amortization (7,750) (6,192)
------- -------
Intangible assets, net $ 9,216 $10,774
======= =======
--------------------------------------------------------------------------------
ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
Included in accounts payable and accrued salaries and wages at October 1,
2000 and October 3, 1999 are bank drafts issued and outstanding for which
no rights of offset exist to cash and cash equivalents, as follows:
--------------------------------------------------------------------------------
(In thousands)
October 1 and October 3
2000 1999
---- ----
Bank drafts issued and
outstanding included in:
Accounts payable $ 24,793 $ 20,464
Accrued salaries and wages 1,334 1,136
-------- --------
Bank drafts $ 26,127 $ 21,600
======== ========
--------------------------------------------------------------------------------
LONG-TERM DEBT
Long-term debt consists of the following:
--------------------------------------------------------------------------------
(In thousands)
October 1 and October 3
2000 1999
---- ----
Senior subordinated notes $100,000 $100,000
Credit agreement 26,200 46,500
-------- --------
Long-term debt $126,200 $146,500
======== ========
--------------------------------------------------------------------------------
F-12
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
Senior Subordinated Notes
The Company has $100 million 10 1/4% Senior Subordinated Notes due 2007 (the
"Notes"). Interest on the Notes is payable semi-annually in arrears on April
15 and October 15 of each year, commencing on October 15, 1997. The Notes
are general unsecured senior subordinated obligations of the Company and are
effectively subordinated to all secured indebtedness, as defined, of the
Company to the extent of the value of the assets securing any such
indebtedness.
The Notes are redeemable, in whole or in part, at the option of the Company,
on or after April 15, 2002 at the prices specified in the Notes (105.125% on
April 15, 2002 declining annually to 100% on April 15, 2005). Upon the
occurrence of a Change in Control, as defined in the Notes, the Company will
be required to make an offer to repurchase the Notes at 101% of the principal
amount plus accrued and unpaid interest to the date of repurchase. The Notes
contain certain restrictive covenants, including limitations on asset sales,
additional indebtedness, and mergers. Under the Notes' covenants, the
Company is restricted in its ability to pay shareholder dividends and other
restricted payments in an amount greater than $3.9 million at October 1,
2000.
BWAY is a holding company with no independent operations, although it incurs
expenses on behalf of its operating subsidiaries. BWAY has no significant
assets other than the common stock of its subsidiaries. The Exchange Notes
are fully and unconditionally guaranteed on a joint and several basis by
certain of the Company's direct and indirect subsidiaries. The subsidiary
guarantors are wholly owned by BWAY and constitute all of the direct and
indirect subsidiaries of BWAY except for one subsidiary that is
inconsequential. Separate financial statements of the subsidiary guarantors
are not presented because management has determined them to be immaterial to
investors.
Credit Agreement
On November 2, 1998, the Company and its lenders amended the Credit Agreement
modifying certain restrictive covenants and providing greater flexibility
with respect to investments in joint ventures. Additionally, the Company
exercised its option to increase the available borrowing limit to $125
million from $100 million. The Credit Agreement currently allows the Company
to borrow up to $125 million or $150 million if certain conditions are met.
The interest rates under the Credit Agreement are based on rate margins for
either prime rate as periodically announced by Bank of America ("Prime") or
LIBOR plus an applicable rate spread, at the option of the Company. The
applicable rate margin is determined on a quarterly basis by a review of the
Company's leverage ratio. The Company's borrowing rate was 8.1% at October 1,
2000 and 7.2% at October 3, 1999. Loans under the Credit Agreement are
unsecured and can be prepaid at the option of the Company without premium or
penalty. The credit agreement expires June 17, 2002.
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 a maximum ratio for leverage indebtedness. On November 8,
2000, the Company and its lenders amended the Credit Agreement modifying
certain restrictive covenants. The amendment provides for the payment of up-
front fees of $250,000 and a 50 basis point increase in the interest rate
margin. As part of the November 8, 2000 amendment, the lenders provided a
waiver to the Company for a covenant violation related to the interest
coverage ratio for the quarter ended October 1, 2000.
BWAY is restricted in its ability to pay shareholder dividends and other
restricted payments in an amount greater than approximately $3.9 million at
October 1, 2000 and to incur additional indebtedness. 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, reimburse the Company for operating and other expenditures made on
behalf of the subsidiaries and repay permitted intercompany indebtedness.
Scheduled maturities of long-term debt as of October 1, 2000 are as follows:
-----------------------------------------------------------------------------
(In thousands)
2002 $ 26,200
Thereafter 100,000
---------
$ 126,200
=========
-----------------------------------------------------------------------------
F-13
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
The fair value of long-term debt at October 1, 2000 and October 3, 1999 was
estimated at $121.4 million and $148.1 million, respectively.
STOCKHOLDERS' EQUITY
Earnings Per Share - The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations for
income before the cumulative effect of change in accounting:
--------------------------------------------------------------------------------
(In thousands, except per share amounts)
Year Ended October 1, October 3 and September 27
2000 1999 1998
---- ---- ----
Calculation of Basic Earnings
(Loss) Per Share:
----------------------------------------------------------------
Net income (loss) before
cumulative effect of change
in accounting $(2,918) $5,627 $2,680
Weighted average number of
common shares outstanding 9,278 9,323 9,527
----------------------------------------------------------------
Basic Earnings (Loss) Per Share $ (0.31) $ 0.60 $ 0.28
----------------------------------------------------------------
Calculation of Diluted Earnings
(Loss) Per Share:
----------------------------------------------------------------
Net income (loss) before
cumulative effect of change
in accounting $(2,918) $5,627 $2,680
Weighted average number of
common shares outstanding 9,278 9,323 9,527
Effect of dilutive stock options -- 130 432
----------------------------------------------------------------
Weighted average number of
common shares outstanding
assuming dilution 9,278 9,453 9,959
----------------------------------------------------------------
Diluted Earnings (Loss) Per Share $ (0.31) $ 0.60 $ 0.27
----------------------------------------------------------------
--------------------------------------------------------------------------------
Approximately 20,000 common stock equivalents are excluded from the fiscal
2000 diluted loss per common share calculation because such are anti-
dilutive.
Stock Option Plans
In February 1998, the Company adopted the Second Amended and Restated 1995
Long-Term Incentive Plan, which increased the aggregate number of shares of
common stock authorized for issuance thereunder from 1,125,000 to 1,425,000.
In February 1999, the Company adopted the Third Amended and Restated 1995
Long-Term Incentive Plan, which increased the aggregate number of shares of
common stock authorized for issuance thereunder from 1,425,000 to 1,825,000.
In February 2000, the Company adopted the Fourth Amendment and Restatement of
the 1995 Long-Term Incentive Plan (the "Current Plan"), which increased the
aggregate number of shares of common stock authorized for issuance thereunder
from 1,825,000 to 2,425,000. The options generally become exercisable in
installments of 33% per year on each of the first through third anniversaries
of the grant. The Current Plan will terminate on May 31, 2005 unless sooner
terminated by the Board. Termination of the Current Plan will not affect
grants made prior to termination. The Current Plan authorizes grants of
stock options to participants from time to time as determined by the Board's
Management Resources, Nominating and Compensation Committee. Options granted
under the Current Plan may be incentive stock options as described in Section
422 of the Internal Revenue Code, non-qualified stock options, or a
combination thereof.
The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions:
F-14
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Year Ended October 1, October 3 and September 27
2000 1999 1998
---- ---- ----
Expected dividends 0.0% 0.0% 0.0%
Expected volatility 51.8% 52.3% 37.7%
Risk-free interest 6.0% 6.6% 6.6%
Expected lives (years) 6.9 6.0 6.0
--------------------------------------------------------------------------------
F-15
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
A summary of the status of the Company's stock option plans as of October 1,
2000 and changes during fiscal 1998, 1999 and 2000 is presented below:
--------------------------------------------------------------------------------
Weighted
Average
Exercise
Fixed Options Shares Price
------------- ------ -----
Outstanding at September 28, 1997 942,300 $11.72
Granted 332,900 20.48
Forfeited (14,800) 19.26
Exercised (69,400) 12.16
--------
Outstanding at September 27, 1998 1,191,000 14.05
Granted 448,274 14.77
Forfeited (36,752) 20.68
Exercised (4,500) 12.67
----------
Outstanding at October 3, 1999 1,598,022 14.07
Granted 334,041 6.16
Forfeited (161,288) 15.86
----------
Outstanding at October 1, 2000 1,770,775 12.42
==========
Exercisable at:
September 27, 1998 592,500 11.37
==========
October 3, 1999 883,155 12.70
==========
October 1, 2000 1,068,490 13.34
==========
Weighted-average grant date fair
value of options granted during
the year ended:
September 27, 1998 $ 13.08
==========
October 3, 1999 $ 8.51
==========
October 1, 2000 $ 4.04
==========
--------------------------------------------------------------------------------
F-16
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
The following table summarizes information about stock options outstanding:
--------------------------------------------------------------------------------
October 1, 2000
Weighted
Average Weighted
Number Remaining Average Number
Range of of Options Contractual Exercise of Options
Exercise Prices Outstanding Life Price Exercisable
--------------- ----------- ---- ----- -----------
$ 5.01 - 6.00 232,273 9.2 $ 5.99 --
6.01 - 7.00 75,000 9.5 6.73 --
9.01 - 10.00 260,011 4.2 9.67 259,567
10.01 - 12.00 74,700 5.2 11.03 52,200
12.01 - 13.00 645,234 6.0 12.59 450,234
13.01 - 15.00 58,588 6.5 14.23 55,516
16.01 - 17.00 196,413 7.7 16.50 71,983
17.01 - 19.00 40,500 6.4 18.17 40,500
19.01 - 20.00 157,947 5.8 19.38 115,016
20.01 - 26.50 30,109 5.0 25.47 23,474
--------- --- ------ ---------
1,770,755 6.5 $12.42 1,068,490
========= === ====== =========
--------------------------------------------------------------------------------
The fair value of options granted during the years ended October 1, 2000,
October 3, 1999, and September 27, 1998, was $1.3 million, $3.8 million, and
$4.4 million, respectively. The Company applies Accounting Principles Board
Opinion 25 and related Interpretations in accounting for its stock option
plans. Accordingly, no compensation cost has been recognized for its fixed
stock option plans. Had compensation cost for the Company's stock option
plans been determined based on the fair value at the grant dates for awards
under those plans consistent with the method of FASB Statement 123, the
Company's net income (loss) and earnings (loss) per share for each of the
three years in the period ended October 1, 2000 would have been reduced
(increased) to the pro forma amounts indicated below:
--------------------------------------------------------------------------------
(In thousands, except per share amounts)
Year Ended October 1, October 3 and September 27
2000 1999 1998
---- ---- ----
Net income (loss):
As reported $(2,918) $5,627 $1,519
Pro forma (5,811) 3,006 (289)
Basic earnings (loss) per share:
As reported $ (0.31) $ 0.60 $ 0.16
Pro forma (0.63) 0.32 (0.03)
Diluted earnings (loss) per share:
As reported $ (0.31) $ 0.60 $ 0.15
Pro forma (0.63) 0.32 (0.03)
--------------------------------------------------------------------------------
Shareholder Rights Plan
The Company has a Shareholder Rights Plan, amended through November 26, 1997
(the "Rights Plan"), under which a preferred share purchase right is
presently attached to and trades with each outstanding share of the Company's
common stock. The rights become exercisable and transferable apart from the
common stock after a person or group other than an Exempt Person (as defined
in the Rights Plan), without the Company's consent, acquires beneficial
ownership of, or the right to obtain beneficial ownership of, 15% or more of
the Company's common stock or ten business days after a person or group
announces or commences a tender offer or exchange offer that could result in
15% ownership. Once exercisable, each right entitles the holder to purchase
one fifteen-hundredth share of Junior Participating Series A Preferred Stock
at an exercise price of $60 per share subject to adjustment to prevent
dilution. The rights have no voting power and no current dilutive effect on
earnings per common share. The rights expire on June 15, 2005 and are
redeemable at the discretion of the Board of Directors at $.01 per share.
F-17
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
------------------------------------------------------------------------------
If a person acquires 15% ownership, except in an offer approved by the
Company under the Rights Plan, then each right not owned by the acquirer or
related parties will entitle its holder to purchase, at the right's exercise
price, additional shares of common stock or common stock equivalents. In
addition, after an acquirer obtains 15% ownership, if the Company is involved
in certain mergers, business combinations, or asset sales, each right not
owned by the acquirer or related persons will entitle its holder to purchase,
at the right's exercise price, additional shares of common stock of the other
party to the transaction.
INCOME TAXES
The Company files a consolidated federal income tax return. Deferred income
taxes are provided to recognize the differences between the carrying amount
of assets and liabilities for financial statement purposes and the amounts
used for income tax purposes.
Components of net deferred tax liability are as follows:
-------------------------------------------------------------------------------
(In thousands)
October 1 and October 3
2000 1999
---- ----
Deferred tax liabilities:
Property, plant, and equipment $25,875 $24,561
Inventory 1,405 1,249
Intangible assets 1,843 1,372
Other 634 626
---------------------------------------------------------------
29,757 27,808
---------------------------------------------------------------
Deferred tax assets:
Restructuring reserves 2,158 4,369
Employee benefits 5,917 6,005
Customer claims/rebates 1,647 1,854
Net operating loss carryforward 5,033 --
Accounts receivable 256 221
Other 1,690 2,304
---------------------------------------------------------------
16,701 14,753
---------------------------------------------------------------
Net deferred tax liability $13,056 $13,055
---------------------------------------------------------------
Net current deferred tax asset $(8,988) $(4,612)
Net noncurrent deferred tax liability 22,044 17,667
---------------------------------------------------------------
$13,056 $13,055
---------------------------------------------------------------
-------------------------------------------------------------------------------
The provision for income taxes is reconciled with the federal statutory rate
as follows:
--------------------------------------------------------------------------------
(In thousands)
October 1, October 3 and September 27
2000 1999 1998
-------------------------------------------------------------------------------
Amount % Amount % Amount %
-------------------------------------------------------------------------------
Income tax at federal
statutory rate $(1,190) (35.0)% $ 3,821 35.0% $ 1,914 35.0%
State income taxes, net of
federal tax benefit (119) ( 3.5)% 382 3.5% 275 5.0%
Nondeductible intangible
amortization 671 19.7% 734 6.7% 600 11.0%
Other 304 6.4% 353 3.2% -- --
-------------------------------------------------------------------------------
$ (334) (12.4)% $ 5,290 48.4% $ 2,789 51.0%
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
F-18
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
The components of the provision for income taxes are as follows:
--------------------------------------------------------------------------------
(In thousands)
October 1, October 3 and September 27
2000 1999 1998
---- ---- ----
Current:
Federal $(303) $(1,640) $1,473
State (32) (164) 307
Deferred 1 7,094 1,009
---------------------------------------
$(334) $ 5,290 $2,789
---------------------------------------
--------------------------------------------------------------------------------
As of October 1, 2000, the Company has recognized deferred tax benefits of
$5.0 million related to net operating loss carryforwards which expire in 2015
and $1.2 million related to alternative minimum tax carryforwards that have
no expiration date.
LEASE COMMITMENTS
The Company leases warehouses, office space, equipment, and vehicles under
operating leases. Rent expense during each of the last three fiscal years
was approximately $6.2 million (2000), $4.5 million (1999), and $3.4 million
(1998).
On August 20, 1999, the Company sold and leased back its Cincinnati
manufacturing facility. The sales price was $10.4 million. After deducting
closing costs of $0.6 million, the Company recorded a deferred gain on the
sale of $2.3 million that is amortized over the life of the lease. The
amortization of the deferred gain recorded in earnings was $0.1 million and
$13 thousand for fiscal 2000 and 1999, respectively. The lease term is 20
years with annual lease payments of approximately $1.1 million. The lease has
two five-year renewal terms that run consecutively after the basic term. The
lease is accounted for as an operating lease for financial reporting
purposes.
At October 1, 2000, future minimum rental payments under non-cancelable
operating leases are as follows:
-----------------------------------------------------------------------------
(In thousands)
Operating
Fiscal Year Lease Payment
----------- -------------
2001 $ 5,995
2002 5,319
2003 4,132
2004 3,720
2005 2,517
Thereafter 18,279
-------
Total minimum lease payments $39,962
=======
-----------------------------------------------------------------------------
PROFIT SHARING AND PENSION PLANS
The Company has qualified profit sharing and savings plans for specified
employees. These plans are defined contribution plans that provide for
employee contributions with a Company matching provision, and for certain
employees a deferred profit sharing component funded by the Company. The
Company's net contributions to the profit sharing and savings plans for each
of the last three fiscal years were approximately $1.5 million (2000), $1.3
million (1999) and $0.9 million (1998).
The Company has a noncontributory defined benefit pension plan covering a
majority of its salaried employees at its Elizabeth, New Jersey facility. The
Company froze this plan effective December 31, 1996. On January 1, 1998, the
Company amended the plan to cover substantially all nonunion employees. The
plan provides for a contribution of 4% of each participant's wages.
Participant account balances earn interest at 6% per annum.
F-19
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
Effective July 31, 1998, the Company amended the plan to terminate the plan
on that date. All participants became fully vested in their accounts on July
31, 1998. On July 29, 1999 the Company received approval to distribute the
assets in the plan to the participants. All plan assets were distributed in
fiscal 2000.
The periodic net expense (income) is comprised of the following:
--------------------------------------------------------------------------------
October 1, October 3 and September 27
2000 1999 1998
---- ---- ----
Service cost--benefits
earned during the period $ -- $ -- $2,294,000
Interest cost on projected
benefit obligation 72,500 307,500 284,100
Actual return on assets (97,800) (158,400) (261,400)
Net amortization and deferral (600) (301,200) (135,000)
---------------------------------------------------------------------
Net pension expense(income) $(25,900) $(152,100) $2,181,700
---------------------------------------------------------------------
--------------------------------------------------------------------------------
The following table shows the plan's funded status and amounts recognized in
the balance:
-----------------------------------------------------------------------------
Year Ended October 3
1999
----
Accumulated benefit obligation $ 3,754,200
------------------------------------------------
Fair value of plan assets $ 4,357,700
Projected benefit obligation (3,754,200)
------------------------------------------------
Funded status 603,500
Unrecognized net gain (470,300)
Unrecognized prior service cost --
------------------------------------------------
Prepaid pension expense $ 133,200
------------------------------------------------
Actuarial assumptions:
------------------------------------------------
Discount rate 7.75%
------------------------------------------------
Rate of increase in compensation levels 0.00%
------------------------------------------------
Expected return on assets 9.00%
------------------------------------------------
--------------------------------------------------------------------------------
Most of the Company's union employees at its Elizabeth, New Jersey facility
are covered under multi-employer defined benefit plans administered by the
union. Total contributions charged to expense for such plans were $0.3
million in fiscal 2000, $0.3 million in fiscal 1999 and $0.4 million in
fiscal 1998.
In fiscal 1998, the Company reached new collective bargaining agreements with
unions representing approximately 34% of the hourly employees at the
Cincinnati, Ohio facility. The provisions of the new agreements
substantially eliminate unvested postretirement medical benefits provided by
the Company resulting in the recording of curtailment gains of approximately
$1.2 million in fiscal 2000 and $1.9 million in fiscal 1998.
As of October 1, 2000, in accordance with the terms of the remaining two
applicable collective bargaining agreements, the Company continues to offer
postretirement medical coverage to certain union employees who retire from
employment with MCC.
F-20
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
The following table reflects the change in benefit obligation and plan assets
and the accrued benefit cost:
--------------------------------------------------------------------------------
Year Ended October 1 and October 3
2000 1999
---- ----
Change in benefit obligation
--------------------------------------------------------------
Benefit obligation at
beginning of year $ 5,165,106 $ 5,899,329
Service cost 8,582 29,319
Interest cost 379,587 392,493
Actuarial gain (29,657) (948,165)
Curtailment gain (1,171,458) --
Benefits paid (255,744) (207,870)
--------------------------------------------------------------
Benefit obligation at
end of year $ 4,096,416 $ 5,165,106
--------------------------------------------------------------
Change in plan assets
--------------------------------------------------------------
Employer contribution 255,744 207,870
Benefits paid (255,744) (207,870)
--------------------------------------------------------------
Fair value of plan assets at
end of year $ -- $ --
--------------------------------------------------------------
Funded status (4,096,416) (5,165,106)
Unrecognized net actuarial gain (873,166) (853,091)
--------------------------------------------------------------
Accrued benefit cost $(4,969,582) $(6,018,197)
--------------------------------------------------------------
Weighted-average assumptions
as of year-end 8.00% 7.50%
--------------------------------------------------------------
--------------------------------------------------------------------------------
For measurement purposes, a 9.5% and 10.0% annual rate of increase in the
post 65 per capita cost of covered health care benefits and a 8.0% and 8.5%
annual rate of increase in the pre 65 per capita cost of covered health care
benefits were assumed for 2000 and 1999, respectively. The rates were
assumed to decrease by 0.5% per year to 4.5% and remain at that level
thereafter.
--------------------------------------------------------------------------------
October 1, October 3 and September 27
2000 1999 1998
----- ---- ----
Components of net periodic
benefit cost:
------------------------------------------------------------------------
Service cost on benefits earned $ 8,582 $ 29,319 $ 29,319
Interest cost on accumulated
postretirement benefit
obligation 379,587 392,493 412,028
Amortization of actuarial gain (9,582) -- --
------------------------------------------------------------------------
Net periodic benefit cost 378,587 421,812 441,347
Curtailment gain (1,171,458) -- (1,860,771)
------------------------------------------------------------------------
Net effect charged to
results from continuing
operations $ (792,871) $421,812 $(1,419,424)
------------------------------------------------------------------------
--------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage point change in assumed
health care cost trends would have the following effects:
F-21
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
==============================================================================
---------------------------------------------------------------------------
Year Ended October 1
2000
----
One-Percentage Point Increase:
------------------------------------------------------------------
Effect on total service and interest cost components $ 38,499
Effect on postretirement benefit obligation 481,232
One-Percentage Point Decrease:
------------------------------------------------------------------
Effect on total service and interest cost components $ (32,285)
Effect on postretirement benefit obligation (403,569)
-----------------------------------------------------------------------------
RELATED PARTY TRANSACTIONS
The Company leases its Elizabeth, New Jersey operating facility and a
warehouse under operating leases from a partnership in which a member of the
Company's management is a partner. The leases run concurrently initially
expiring on September 30, 2004 with an option to extend for a five-year term
to September 30, 2009. The annual lease expense is $0.9 million for the
initial term and $0.9 million adjusted for inflation at October 1, 2004 for
the five-year extended term.
RESTRUCTURING AND IMPAIRMENT CHARGE
Fiscal 2000 Restructuring and Impairment
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 recorded $2.5 million in additional depreciation related to
the shortened useful lives of certain computer systems.
Fiscal 1998 Restructuring
On June 3, 1998, the Board of Directors approved a restructuring plan to
improve operating efficiencies. The plan involves the rationalization of
three existing facilities, the shift of related production to other
facilities, and the elimination of an internal transportation department.
The facilities closed in fiscal 1999 were Solon (Ohio) and Northeast Tin
Plate (New Jersey). The Farmer's Branch (Texas) facility was closed in
fiscal 2000.
The 1998 restructuring and impairment charge totaled $11.5 million and
consisted of the following: $7.8 million related to the closure of the
plants and transportation department and $3.7 million related to other asset
impairments. The $7.8 million related to the plant and transportation
department closure included $2.1 million for severance costs, $2.2 million
for other facility closure costs and $3.5 million for asset impairments
related to the plant shutdowns. All 210 employees under the plan were
terminated in fiscal 1999.
During fiscal 2000, the Company charged $0.1 million in severance and $0.3
million in facility closing costs to the 1998 restructuring liability, which
eliminated the remaining balance in the 1998 restructuring.
F-22
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
Details of the restructuring liabilities included in other current
liabilities are as follows:
--------------------------------------------------------------------------------
(In millions)
Facility
Severance Closure
Costs Costs Other Total
----- ----- ----- -----
Balance September 28, 1997 $ -- $ -- $ -- $ --
New charges 2.1 2.2 3.5 7.8
Expenditures (1.5) (1.0) -- (2.5)
------------------------------------------------------------------
Balance September 27, 1998 0.6 1.2 3.5 5.3
------------------------------------------------------------------
Expenditures (0.5) (0.9) (3.5) (4.9)
------------------------------------------------------------------
Balance October 3, 1999 0.1 0.3 -- 0.4
------------------------------------------------------------------
New charges 1.1 1.1 0.7 2.9
Expenditures (1.1) (1.0) (0.3) (2.4)
------------------------------------------------------------------
Balance October 1, 2000 $ 0.1 $ 0.4 $ 0.4 $ 0.9
------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSETS HELD FOR SALE
In connection with the facility closures in 1998, 1999 and 2000, $5.3
million and $4.8 million of real property was held for sale at October 1,
2000 and October 3, 1999, respectively. This property includes $1.1 million
(2000) and $0.6 million (1999) of land, $3.9 million (2000) and $2.8
million (1999) of buildings, and $0.3 million (2000) and $1.4 million
(1999) in equipment for sale at October 1, 2000 and October 3, 1999.
During fiscal 2000, the Company revised its valuation of the land and
buildings related to the U.S. Can Metal Services acquisition through
finalization of purchase accounting, which resulted in an adjustment to
goodwill. The adjustment increased land held for sale by $1.3 million and
buildings held for sale by $0.3 million.
During the fourth quarter of fiscal 2000, the Company sold the Alsip,
Illinois facility for $2.3 million resulting in a net gain of $0.4 million.
During the second quarter of fiscal 1999, the company sold the Solon, Ohio
facility for $4.5 million resulting in a net gain of $0.2 million.
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.
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. In August 1999, DNR signed a consent
order that had been submitted by the Company and Owens-Illinois. In January
2000, the Company and Owens-Illinois submitted to DNR a report containing
the results of the investigation of the facility. The Company is awaiting a
DNR review of the report.
In addition, at Homerville, the Company entered into a consent order with
DNR in April 1999 related to certain industrial wastewater and cooling
water discharges that exceeded allowable limits. As
F-23
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
--------------------------------------------------------------------------------
of October 1, 2000, the project related to the consent order was
substantially complete with expenditures to date of approximately $200,000.
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.
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.
Letters of Credit
At October 1, 2000, a bank had issued standby letters of credit on behalf
of BWAY in the aggregate amount of $1.2 million in favor of BWAY's workers'
compensation insurer.
CUSTOMERS
The Company sells its metal containers to a large number of customers in
numerous industry sectors. To reduce credit risk, the Company sets credit
limits and performs ongoing credit evaluations. Sales to the Company's ten
largest customers amounted to approximately 33% (2000), 42% (1999), and 36%
(1998) of the Company's sales including sales to its largest customer of
7.4% (2000), 8.5% (1999), and 9.5% (1998).
Although the Company's exposure to credit risk associated with nonpayment
is affected by conditions with the customers' industries, the balances are
substantially current and are within terms and limits established by the
Company.
The Company sells its products and services primarily in North America. In
fiscal 2000, 1999, and 1998, the Company's sales to customers located
outside the United States were less than five percent of total net sales.
The following is a summary of revenue for the Company's products and
services:
--------------------------------------------------------------------------------
(In thousands)
Year Ended October 1, October 3 and September 27
2000 1999 1998
---- ---- ----
General line containers $334,994 $326,970 $320,871
Food cans 38,815 51,380 52,142
Material center services 74,156 74,736 8,022
Ammunition boxes 12,603 14,013 20,054
-----------------------------------------------------------
$460,568 $467,099 $401,089
-----------------------------------------------------------
--------------------------------------------------------------------------------
F-24
<PAGE>
BWAY Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
------------------------------------------------------------------------------
QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Fiscal Year 2000:
============================================================================================================
Net sales $ 106,739 $ 119,729 $ 121,265 $ 112,835
------------------------------------------------------------------------------------------------------------
Gross profit (exclusive of depreciation
and amortization) $ 11,337 $ 17,368 $ 18,675 $ 9,561
------------------------------------------------------------------------------------------------------------
Net income (loss) $ (966) $ (1,323) $ 1,826 $ (2,455)
------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per common share $ (0.10) $ (0.14) $ 0.20 $ (0.26)
------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per common share $ (0.10) $ (0.14) $ 0.20 $ (0.26)
------------------------------------------------------------------------------------------------------------
FISCAL YEAR 1999:
============================================================================================================
Net sales $ 104,986 $ 121,536 $ 123,109 $ 117,468
------------------------------------------------------------------------------------------------------------
Gross profit (exclusive of depreciation
and amortization) $ 15,685 $ 19,032 $ 16,252 $ 11,638
------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,407 $ 3,284 $ 1,876 $ (940)
------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per common share $ 0.15 $ 0.35 $ 0.20 $ (0.10)
------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per common share $ 0.15 $ 0.35 $ 0.20 $ (0.10)
------------------------------------------------------------------------------------------------------------
FISCAL YEAR 1998:
============================================================================================================
Net sales $ 92,114 $ 101,165 $ 107,010 $ 100,800
------------------------------------------------------------------------------------------------------------
Gross profit (exclusive of depreciation
and amortization) $ 15,482 $ 17,346 $ 19,314 $ 12,359
------------------------------------------------------------------------------------------------------------
Net income (loss) before cumulative effect
of change in accounting $ 2,196 $ 3,946 $ (4,026) $ 564
------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,035 $ 3,946 $ (4,026) $ 564
------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per common share before
cumulative effect of change in accounting $ 0.23 $ 0.42 $ (0.42) $ 0.05
------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per common share before
cumulative effect of change in accounting $ 0.22 $ 0.40 $ (0.42) $ 0.05
------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per common share $ 0.11 $ 0.42 $ (0.42) $ 0.05
------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per common share $ 0.10 $ 0.40 $ (0.42) $ 0.05
------------------------------------------------------------------------------------------------------------
</TABLE>
F-25
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule I - Condensed Financial Statements of BWAY Corporation....... S-2
Schedule II - Condensed Valuation and Qualifying Accounts BWAY
Corporation And Subsidiaries......................... S-6
S-1
<PAGE>
SCHEDULE I - CONDENSED FINANCIAL STATEMENTS OF
BWAY CORPORATION
CONDENSED BALANCE SHEETS
(In Thousands)
<TABLE>
October 1, October 3,
2000 1999
----------- ----------
<S> <C> <C>
ASSETS:
Investments in subsidiaries $218,654 $199,813
Property, plant and equipment, net 15,278 20,430
Other assets 16,097 13,239
----------- ----------
$250,029 $233,482
=========== ==========
LIABILITIES:
Intercompany payable $ 12,150 $ 9,517
Other liabilities 58,918 41,912
Long term debt 100,000 100,000
----------- ----------
171,068 151,429
----------- ----------
STOCKHOLDERS' EQUITY:
Common stock 99 99
Additional paid-in capital 36,760 37,202
Retained earnings 52,901 55,819
----------- ----------
89,760 93,120
Less treasury stock at cost (10,799) (11,067)
----------- ----------
Total stockholders' equity 78,961 82,053
----------- ----------
$250,029 $233,482
=========== ==========
</TABLE>
S-2
<PAGE>
SCHEDULE I - CONDENSED FINANCIAL STATEMENTS OF
BWAY CORPORATION
CONDENSED STATEMENTS OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
October 1, October 3, September 27,
2000 1999 1998
---------- ---------- -------------
<S> <C> <C> <C>
Management fees charged to subsidiaries $ 0 $ 0 $ 3,427
Interest expense, net (10,603) (11,160) (10,250)
Other income (expense), net (13,648) (6,890) (17,745)
--------- --------- ---------
Loss before income taxes and equity in
undistributed earnings of subsidiaries (24,251) (18,050) (24,568)
Income tax benefit (2,492) (8,747) (12,530)
--------- --------- ---------
Loss before equity in undistributed earnings
of subsidiaries (21,759) (9,303) (12,038)
Equity in undistributed earnings of subsidiaries 18,841 14,930 14,718
Cumulative effect of change in accounting for
systems development costs, net of related tax
benefit of $823 0 0 (1,161)
--------- --------- ---------
Net income (loss) $ (2,918) $ 5,627 $ 1,519
========= ========= =========
</TABLE>
S-3
<PAGE>
SCHEDULE I - CONDENSED FINANCIAL STATEMENTS OF
BWAY CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended
------------------------------------------
October 1, October 3, September 27,
2000 1999 1998
--------- --------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (2,918) $ 5,627 $ 1,519
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in undistributed earnings of subsidiaries (18,841) (14,930) (14,718)
Changes in assets and liabilities:
Other assets 8,310 (4,542) (1,037)
Other liabilities 12,853 16,095 17,969
Income tax receivable 550 (1,211)
Intercompany payable 2,706 44,816 9,634
--------- --------- ---------
Net cash provided by operating activities 2,660 45,855 13,367
--------- --------- ---------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired 0 (27,746) (3,570)
Capital expenditures (1,752) (16,859)
--------- --------- ---------
Net cash used in investing activities (1,752) (44,605) (3,570)
--------- --------- ---------
FINANCING ACTIVITIES:
Purchase of treasury stock (471) (818) (9,563)
Other 0 56 (234)
--------- --------- ---------
Net cash used in financing activities (471) (762) (9,797)
--------- --------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 437 488 0
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 488 0 0
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 925 $ 488 $ 0
========= ========= =========
</TABLE>
S-4
<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Year Ended
---------------------------------------
October 1, October 3, September 27,
2000 1999 1998
--------- --------- -------------
<S> <C> <C> <C>
Cash paid (received) during the year for:
Income taxes $(3,042) $(9,724) $ 4,765
========= ========= =========
Interest $10,197 $11,033 $10,250
========= ========= =========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Treasury stock issued for employee savings plan $ 297 $ 0 $ 0
========= ========= =========
</TABLE>
S-5
<PAGE>
SCHEDULE II - CONDENSED VALUATION AND QUALIFYING ACCOUNTS
BWAY CORPORATION AND SUBSIDIARIES
(In Thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions of Period
--------------------------------------- -------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts:
Year ended September 27, 1998 $ 580 $ 33 $ 80 (1) $ 533
Year ended October 3, 1999 533 (3) 24 (1) 506
Year ended October 1, 2000 506 539 537 (1) 508
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions of Period
--------------------------------------- -------------- ---------------- --------------- --------------
Restructuring Reserve:
Year ended September 27, 1998 $ 0 $ 7,809 $2,419 $5,390
Year ended October 3, 1999 5,390 0 4,920 470
Year ended October 1, 2000 470 2,900 2,435 935
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions of Period
--------------------------------------- -------------- ---------------- --------------- --------------
Purchase Accounting Liability:
Year ended September 27, 1998 $3,088 $ 0 $1,184 $1,904
Year ended October 3, 1999 1,904 11,037 6,684 6,257
Year ended October 1, 2000 6,257 0 3,756 2,501
____________
(1) Deductions from the allowance for doubtful accounts represent the net write-off of uncollectible accounts
receivable.
</TABLE>
S-6
<PAGE>
INDEX TO EXHIBITS
------------------------------------------------
Exhibit Description of Document
No.
3.1 Amended and Restated Certificate of
Incorporation of the Company. (3)
3.2 Amended and Restated By-laws of the Company (1)
3.3 Rights Agreement dated as of June 9, 1995
between the Company and Harris Trust and
Savings Bank, as Rights Agent (1)
3.4 Amendments to Rights Agreement dated as of
February 12, 1996 between the Company and
Harris Trust and Savings Bank, as Rights Agent (3)
3.5 Amendment No. 2 to Rights Agreement dated as (9)
of August 19, 1997 between the Company and
Harris Trust and Savings Bank, as Rights Agent
3.6 Amendment No. 3 to Rights Agreement, dated as
of November 26, 1997, between the Company and
Harris Trust and Savings Bank. (9)
4.1 Form of certificate representing shares of
Common Stock of the Company (2)
4.2 Credit Agreement dated June 17, 1996 by and
among BWAY Corporation, Brockway Standard,
Inc., Milton Can Company, Inc., the
additional borrowers, BT Alex.Brown
Incorporated (formerly known as Bankers Trust
Company) and NationsBank, N.A. (4)
4.3 Third Amendment To Credit Agreement dated
November 2, 1998 among BWAY Corporation, its
subsidiaries, Bankers Trust Company and
NationsBank, N.A. (14)
4.4 Master Assignment and Consent Agreement and
First Amendment to Credit Agreement dated as
of August 15, 1996, and Second Amendment to
Credit Agreement dated as of October 15, 1997
between BWAY Corporation, Brockway Standard,
Inc., Milton Can Company, Inc., the
additional borrowers, BT Alex.Brown
Incorporated (formerly known as Bankers Trust
Company), and NationsBank, N.A. (11)
4.5 Indenture dated as of April 11, 1997 among
the Company, the subsidiary guarantors named
therein and Harris Savings and Trust Company,
as trustee (6)
4.6 Forms of Series A and Series B 101/4% Senior
Subordinated Notes (contained in Exhibit 4.3
as Exhibit A and B thereto, respectively) (6)
<PAGE>
4.7 Form of Guarantee (contained in Exhibit 4.3
as Exhibit F thereto) (6)
4.8 Fourth Amendment To Credit Agreement dated
December 16, 1999 among BWAY Corporation, its
subsidiaries, BT Alex.Brown Incorporated
(formerly known as Bankers Trust Company) and
Bank of America (formerly known as (14)
NationsBank, N.A.)
4.9 Fifth Amendment To Credit Agreement dated
November 8, 2000 among BWAY Corporation, its
subsidiaries, Bankers Trust Company and Bank
of America N.A. (formerly known as
NationsBank, N.A.)
The Registrant will furnish to the
Commission, upon request, each instrument
defining the rights of holders of long-term
debt of the Registrant and its subsidiaries
where the amount of such debt does not exceed
10 percent of the total assets of the
Registrant and its subsidiaries on a
consolidated basis.
10.1 Asset Purchase Agreement dated December 19,
1988 between BS Holdings Corporation, BW
Plastics, Inc., BW-Morrow Plastics, Inc. and
Owens-Illinois Group, Inc. (1)
10.2 Registration Agreement dated as of January
30, 1989 between BS Holdings Corporation and
certain stockholders (1)
10.3 Acquisition Agreement dated as of March 4,
1993 between Ellisco Inc. and BSI (1)
10.4 Stock Purchase Agreement dated April 27, 1993
among Armstrong Industries, Inc., its
stockholders, Armstrong Containers, Inc. and (1)
BSI
10.5 Asset Purchase Agreement dated May 26, 1993
among DK Containers, Inc., Dennis Dyck,
Robert Vrhel, Mohan Patel and BSI (1)
10.6 Employment Agreement between the Company and
Warren J. Hayford, dated as of June 1, 1995 * (1)
10.7 Employment Agreement between the Company and
John T. Stirrup, dated as of June 1, 1995 * (1)
10.8 Contract and Lease dated September 3, 1968,
between the City of Picayune, Mississippi and
Standard Container Company (1)
10.9 Lease dated February 24, 1995 between Tab
Warehouse Fontana II and BSI (1)
<PAGE>
10.10 Garland, Texas Industrial Net Lease dated
January 14, 1985 between MRM Associates and
Armstrong Containers, Inc. (1)
10.11 Gross Lease Agreement dated August 10, 1990
between Colonel Estates Joint Venture and BSI (1)
10.12 Lease dated February 11, 1991 between Curto
Reynolds Oelerich Inc. and Armstrong
Containers, Inc. (1)
10.13 Lease Agreement dated November 16, 1996
between Shelby Distribution Park and Brockway
Standard, Inc., as amended December 26, 1996. (11)
10.14 Lease dated August 9, 1991 between DK
Containers, Inc. and Smith Barney Birtcher
Institutional Fund-I Limited Partnership and (1)
the First Amendment thereto
10.15 Lease dated September 2, 1994 between
Division Street Partners, L.P. and BSNJ (8)
10.16 Employee Stock Purchase Agreement dated March
4, 1994 among BS Holdings Corporation, Perry
Schwartz, Mid-America Group, Ltd., Warren J.
Hayford and Daniel P. Casey * (1)
10.17 Agreement, dated May 15, 1995, between BSI
and Owens-Illinois, Inc. Pursuant to (S) 9.9
(d) of the December 19, 1988 Stock Purchase (1)
Agreement
10.18 Settlement Agreement, dated June 30, 1997
between BWAY Corporation and Owens-Illinois (11)
Group, Inc.
10.19 Brockway Standard Holdings Corporation
Formula Plan for Non-Employee Directors * (1)
10.20 Cooperation Agreement between Ball
Corporation and BWAY Corporation, dated (3)
January 4, 1996.
10.21 Merger Agreement with Milton Can Company,
Inc., dated March 12, 1996. (3)
10.22 Amendment #1 to the Merger Agreement with
Milton Can Company, Inc., dated April 30, 1996 (3)
10.23 Asset Purchase Agreement dated April 29,
1996, between Brockway Standard, Inc., BWAY
Corporation, Van Dorn Company and Crown Cork
& Seal Company, Inc. (3)
10.24 Employment Agreement between the Company and
James W. Milton, dated as of May 28, 1996 * (4)
10.25 Amended and Restated Registration Rights
Agreement dated as of May 28, 1996, between
BWAY Corporation and certain shareholders. (4)
<PAGE>
10.26 Asset Purchase Agreement dated October 6,
1996, between Brockway Standard (New Jersey),
Inc. (formerly known as Milton Can Company,
Inc.), BWAY Corporation, Ball Metal Food
Container Corp., and Ball Corporation (5)
10.27 Amendment No. 1 to the Asset Purchase
Agreement dated October 28, 1996 between
Milton Can Company, Inc., BWAY Corporation,
Ball Metal Food Container Corp., and Ball (5)
Corporation
10.28 Purchase Agreement dated as of April 8, 1997
among the Company, the subsidiary guarantors
named therein, BT Alex. Brown Incorporated
(formerly known as Bankers Trust Company),
Bear, Stearns & Co. Inc. and NationsBanc (6)
Capital Markets, Inc.
10.29 Brockway Standard (Ohio), Inc. Bargaining
Unit Savings Plan * (7)
10.30 Employment Agreement between the Company and
John T. Stirrup B Amendment No. 1 * (10)
10.31 Asset Purchase Agreement between BMAT, Inc.
and the United States Can Company dated
November 9, 1998. (12)
10.32 Employment Agreement between the Company and
John T. Stirrup - Amendment No. 2* (13)
10.33 Employment Agreement and Options Agreement
between the Company and Warren J. Hayford -
Omnibus Amendment* (14)
10.34 Employment Agreement between the Company and
Jean-Pierre M. Ergas, dated as of January 1, (14)
2000*
10.35 Lease Agreement dated August 20, 1999 between
CRICBW Anderson Trust and Milton Can Company (14)
10.36 Lease Agreement dated September 15, 1999
between Division Street Partners, L.P. and (14)
BSNJ
10.37 Employment agreement between the Company and (15)
Paul Mangiafico, dated as of March 1, 2000
10.38 BWAY Corporation Fourth Amended and Restated (15)
1995 Long-Term Incentive Plan *
10.39 Employment agreement between the Company and (16)
Thomas Eagleson, dated as of July 1, 2000
10.40 Amendment No. 1 dated as of July 1, 2000 to (16)
the Employment agreement between the Company
and Paul Mangiafico, dated as of March 1, 2000
<PAGE>
21.1 Subsidiaries of the Company
23.1 Consents of Experts and Counsel
27.1 Financial Data Schedule
____________________________
* Management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-91114).
(2) Incorporated by reference to the Company's Form 10-K for the fiscal year
ending October 1, 1995 (File No. 0-26178).
(3) Incorporated by reference to the Company's Form 10-Q for the period ending
March 31, 1996 (File No. 0-26178).
(4) Incorporated by reference to the Company's Form 10-Q for the period ending
June 30, 1996 (File No. 0-26178).
(5) Incorporated by reference to the Company's Current Report on Form 8-K filed
on November 12, 1996 (File No. 0-26178).
(6) Incorporated by reference to the Company's Registration Statement on
Form S-4 (File No. 333-26013).
(7) Incorporated by reference to the Company's Registration Statement on
Form S-8 (File No. 333-39225).
(8) Incorporated by reference to the Company's Form 10-K for the fiscal year
ending September 29, 1996 (File No. 0-26178).
(9) Incorporated by reference to the Company's Form 10-Q for the period ending
December 28, 1997 (File No. 0-26178).
(10) Incorporated by reference to the Company's Form 10-Q for the period ending
March 29, 1998 (File No. 0-26178).
(11) Incorporated by reference to the Company's Form 10-K for the fiscal year
ending September 28, 1997 (File No. 0-26178).
(12) Incorporated by reference to the Company's Current Report on Form 8-K filed
on November 9, 1998 (File No. 0-26178).
(13) Incorporated by reference to the Company's Form 10-Q for the period ending
July 4, 1999 (File No. 0-26178).
(14) Incorporated by reference to the Company's Form 10-K for the fiscal year
ending October 3, 1999 (File No. 0-26178).
(15) Incorporated by reference to the Company's Form 10-Q for the period ending
April 2, 2000 (File No. 0-26178).
(16) Incorporated by reference to the Company's Form 10-Q for the period ending
July 2, 2000 (File No. 0-26178).
