UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 2001
Commission File Number 0-26178
BWAY Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 36-3624491
(State of incorporation) (IRS Employer Identification No.)
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350-2230
(Address of principal executive offices)
(770) 645-4800
(Registrant's telephone number)
__________________
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No____
----
There were 8,755,006 shares of Common Stock ($.01 par value) outstanding as of
May 10, 2001.
BWAY CORPORATION
For the quarter ended April 1, 2001
QUARTERLY REPORT ON FORM 10-Q
INDEX
Page
Number
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at April 1, 2001 (Unaudited)
and October 1, 2000 3
Consolidated Statements of Income for the Three Months and
Six Months Ended April 1, 2001 and April 2, 2000
(Unaudited) 4
Consolidated Statements of Cash Flows for the Six Months
Ended April 1, 2001 and April 2, 2000 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II--OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
2
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
----------------------------------------------------------------------------------------------------------
April 1, 2001 October 1,
(Unaudited) 2000
---------------- ---------------
Assets
Cash and equivalents $ 577 $ 961
Accounts receivable, net of allowance for doubtful
accounts of $606 and $508 47,219 44,083
Inventories, net 43,951 45,522
Current income taxes receivable 1,121 3,048
Deferred tax asset 12,739 8,988
Assets held for sale 5,725 5,284
Other 2,496 1,823
--------- ----------
Total current assets 113,828 109,709
Property and equipment, net 128,263 133,870
Other assets:
Intangible assets, net 81,012 82,636
Deferred financing fees, net 3,043 3,189
Other 2,057 3,319
--------- ----------
Total other assets 86,112 89,144
--------- ----------
Total assets $ 328,203 $ 332,723
========= ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 56,347 $ 67,155
Accrued salaries and wages 7,159 8,032
Accrued rebates 4,262 5,029
Other 11,996 14,910
--------- ----------
Total current liabilities 79,764 95,126
Long-term debt 141,100 126,200
Long-term liabilities:
Deferred income taxes 22,044 22,044
Other 10,849 10,392
--------- ----------
Total long-term liabilities 32,893 32,436
--------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, authorized 5,000,000 shares - -
Common stock, $.01 par value; authorized 24,000,000 shares,
issued 9,851,002 shares 99 99
Additional paid-in capital 36,760 36,760
Retained earnings 49,251 52,901
--------- ----------
86,110 89,760
Less treasury stock, at cost, 788,696 and 584,184 shares (11,664) (10,799)
--------- ----------
Total stockholders' equity 74,446 78,961
--------- ----------
Total liabilities and stockholders' equity $ 328,203 $ 332,723
========= ==========
See notes to consolidated financial statements (unaudited).
3
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------- --------------------------
April 1, April 2, April 1, April 2,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net sales $ 110,573 $ 119,729 $ 213,680 $ 226,468
Costs, expenses and other:
Cost of products sold (excluding depreciation and
amortization) 100,094 102,361 194,232 197,763
Depreciation and amortization 5,046 5,275 10,399 10,319
Selling and administrative expenses 4,152 5,157 7,710 9,514
Restructuring and impairment charge 5,900 5,900
Interest expense, net 4,026 4,327 7,957 8,217
Other, net (2) (34) (25) (215)
--------- --------- --------- ---------
Total costs, expenses and other 113,316 122,986 220,273 231,498
--------- --------- --------- ---------
Loss before income taxes (2,743) (3,257) (6,593) (5,030)
Benefit from income taxes (941) (1,934) (2,943) (2,741)
--------- --------- --------- ---------
Net loss $ (1,802) $ (1,323) $ (3,650) $ (2,289)
========= ========= ========= =========
Loss per common share:
---------------------
Basic and diluted loss per common share $ (0.20) $ (0.14) $ (0.40) $ (0.25)
========= ========= ========= =========
Weighted average basic and diluted common shares
outstanding 9,113 9,258 9,115 9,281
========= ========= ========= =========
See notes to consolidated financial statements (unaudited).
4
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
--------------------------------------------------------------------------------------------------------------------------
Six Months Ended
----------------
April 1, April 2,
2001 2000
-------------- --------------
Operating activities:
Net loss $ (3,650) $ (2,289)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 8,774 8,333
Amortization of goodwill and other intangibles 1,625 1,986
Amortization of deferred financing costs 496 414
Provision for doubtful accounts 98 98
Restructuring and impairment charge 5,900
Gain on disposition of property and equipment (40) (8)
Changes in assets and liabilities:
Accounts receivable (3,349) 2,652
Inventories 1,366 (8,496)
Other assets 590 2,192
Accounts payable (877) (8,600)
Accrued liabilities (4,132) (4,782)
Income taxes, net (1,824) (1,428)
----------- ----------
Net cash used in operating activities (923) (4,028)
----------- ----------
Investing activities:
Capital expenditures (3,615) (6,896)
Proceeds from disposition of property and equipment 12
Other 12 (5)
----------- ----------
Net cash used in investing activities (3,591) (6,901)
----------- ----------
Financing activities:
Net borrowings under bank revolving credit agreement 14,900 10,800
(Decrease) increase in unpresented bank drafts (9,555) 240
Purchases of treasury stock, net (865) (295)
Financing costs incurred (350) (313)
----------- ----------
Net cash provided by financing activities 4,130 10,432
----------- ----------
Net decrease in cash and equivalents (384) (497)
Cash and equivalents:
Beginning of period 961 696
----------- ----------
End of period $ 577 $ 199
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the period for:
Interest $ 7,426 $ 7,839
=========== ==========
Income taxes $ (1,119) $ (1,313)
=========== ==========
Noncash investing and financing activities:
Amounts owed for capital expenditures $ 715 $ 292
=========== ==========
See notes to consolidated financial statements (unaudited).
5
BWAY CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. GENERAL
The accompanying consolidated financial statements have been prepared by
the Company without audit. Certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted.
The consolidated financial statements as of April 1, 2001 and October 1,
2000 and for the three and six month periods ended April 1, 2001 and April
2, 2000 include all normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the three and six month periods ended April
1, 2001 are not necessarily indicative of the results that may be expected
for the entire year. These statements and the accompanying notes should be
read in conjunction with the Company's Annual Report on Form 10-K for the
year ended October 1, 2000.
The Company operates on a 52/53 week fiscal year ending on the Sunday
closest to September 30 of the applicable year. The first three quarterly
fiscal periods end on the Sunday closest to December 31, March 31 or June
30 of the applicable quarter.
2. INVENTORIES
Inventories are carried at the lower of cost or market, with cost
determined under the last-in, first-out (LIFO) method of inventory
valuation and are summarized as follows:
April 1, October 1,
2001 2000
----------- -----------
Inventories at FIFO cost:
Raw materials $ 4,575 $ 6,033
Work-in-process 29,766 30,415
Finished goods 9,610 9,074
----------- -----------
43,951 45,522
LIFO reserve 161 161
Market reserve (161) (161)
----------- -----------
Inventories, net $ 43,951 $ 45,522
=========== ===========
3. STOCKHOLDERS' EQUITY
Earnings per common share are based on the weighted average number of
common shares and common stock equivalents outstanding during each period
presented including vested and unvested shares issued under the Company's
current long-term incentive plan, as amended. Weighted average basic and
diluted common shares outstanding were 9.1 million and 9.3 million in the
second fiscal quarters of 2001 and 2000, respectively. For the three and
six-month periods ended April 2, 2000, approximately 22,000 and 15,000
common stock equivalents, respectively, were excluded from the related
diluted loss per common share calculation. For the three and six-month
periods ended April 1, 2001, there were not any common stock equivalents
that would have been anti-dilutive. Common stock equivalents are considered
anti-dilutive when there is a net loss during the period. In November 2000,
the Company's Board of Directors approved a $3 million increase in the
Company's stock repurchase program. During the second quarter of fiscal
2001, the Company purchased 122,612 shares of treasury stock for $491,000.
The Company expects to continue its historical practice of purchasing its
stock for treasury.
6
4. CREDIT AGREEMENT
At April 1, 2001, the Company had a borrowing limit under its Credit
Agreement of $125 million. Due to certain Credit Agreement restrictions,
$48.1 million of the $125 million was available to the Company. The Company
had borrowed $41.1 million of available borrowings at April 1, 2001. At
April 1, 2001, the Company was not in compliance with certain restrictive
covenants (Interest Coverage Ratio) under the Credit Agreement. On April
25, 2001, the Company received from its lenders a temporary waiver valid
through June 15, 2001 for this noncompliance under the credit agreement for
the quarter ended April 1, 2001.
The Company has received an underwriting commitment from Bankers Trust
Company (an affiliate of Deutsche Bank) for a new $90 million secured,
four-year credit agreement. The Company expects to use initial borrowings
under the new Credit Facility to repay all obligations under the existing
Credit Agreement. Associated with the Company's new credit agreement, a
$0.5 million charge to write-off unamortized deferred financing costs under
the Company's existing agreement will be recorded during the third fiscal
quarter ending July 2, 2001. The Company and Bankers Trust Company expect
to close the new agreement during May 2001.
5. RESTRUCTURING AND IMPAIRMENT CHARGE AND PURCHASE ACCOUNTING LIABILITIES
The following table sets forth changes in the Company's purchase accounting
and restructuring liabilities from October 1, 2000 to April 1, 2001. The
nature of the liabilities has not changed from those previously reported in
the Company's Annual Report on Form 10-K for the fiscal year ended October
1, 2000.
-----------------------------------------------------------------------------------------------------------
(In millions)
Balance New Balance
October 1, 2000 Charges Expenditures April 1, 2001
---------------- --------- ------------ -------------
Purchase accounting liabilities:
Equipment demolition costs $ 1.1 $ -- $ (1.1) $ --
Severance costs 0.2 -- (0.2) --
Facility closure costs 1.2 -- (1.1) 0.1
----------------------------------------------------------------------------------------------------------
2.5 -- (2.4) 0.1
----------------------------------------------------------------------------------------------------------
Restructuring liabilities :
Severance costs 0.1 -- (0.1) --
Facility closure costs 0.4 -- (0.2) 0.2
Other 0.4 -- (0.2) 0.2
----------------------------------------------------------------------------------------------------------
0.9 -- (0.5) 0.4
----------------------------------------------------------------------------------------------------------
Total restructuring and
purchase accounting
liabilities included in
other current liabilities $ 3.4 $ -- $ (2.9) $ 0.5
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
In April 2001, the Company announced a restructuring plan to reduce
manufacturing capacity. The plan will result in the recognition of a
restructuring and impairment charge in the third quarter of fiscal 2001.
The plan includes the closing of the Company's Elizabeth, New Jersey
and Garland, Texas manufacturing facilities and the related costs of
equipment impairment, plant exit costs and employee termination costs.
The restructuring plan will be finalized during the third fiscal quarter
of 2001.
6. CONTINGENCIES
Environmental
The Company continues to monitor and evaluate on an ongoing and regular
basis its compliance with applicable environmental laws and regulations.
Liabilities for non-capital expenditures are recorded when environmental
remediation is probable and the costs can be reasonably estimated. The
Company believes that it is in substantial compliance with all material
federal, state and local environmental requirements.
7
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. In December 2000, DNR
asked the Company and Owens-Illinois to modify the investigation report to
address certain issues. Such request may necessitate additional
investigatory work at the site. Owens-Illinois and the Company are currently
discussing the requested modifications with DNR, and Owens-Illinois is
working with the state to devise an acceptable plan for cleaning up the
property.
In April 1999 at the Company's Homerville, Georgia facility, the Company
entered into a consent order with the Georgia Department of Natural
Resources ("DNR") related to certain industrial wastewater and cooling water
discharges that exceeded allowable limits. The project related to the
consent order is complete with expenditures to date of approximately
$200,000. In the first quarter of fiscal 2001, the DNR terminated the
consent order.
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.
7. RECENT ACCOUNTING PRONOUNCEMENTS
As of October 2, 2000, the Company adopted Statement of Financial Accounting
Standards No. 133 ("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 as either assets
or liabilities in the balance sheet and measure such instruments at fair
value. The adoption of these standards has not had a material impact on the
Company's consolidated financial statements.
8. SUBSEQUENT EVENTS
On April 2, 2001, the Company sold the majority of the equipment,
inventories and accounts receivable of its Platemasters facility, which
provided pre-press services both to the Company and outside customers. The
Platemasters assets were sold for $0.5 million, which approximated book
value. In conjunction with the sale, the buyer and the Company executed an
outsourcing agreement whereby the buyer will be the exclusive supplier of
certain pre-press services to the Company for a term of three years.
On April 4, 2001, the Company sold the Chicago, Illinois material center
services property for $5.2 million. A gain of $0.9 million will be
recognized in the third quarter of fiscal 2001.
On May 7, 2001 the Company reached an agreement with Local 14-M of the
Graphic Communication Workers International Union at its Trenton, New Jersey
facility affecting approximately 74 employees. The contract is effective
April 1, 2001 through March 31, 2001
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales decreased 7.6% in the second quarter of fiscal 2001 to $110.6 million
from $119.7 million in the second quarter of fiscal 2000. Year-to-date sales
decreased 5.6% for fiscal 2001 to $213.7 million from $226.5 million for fiscal
2000. The decrease results primarily from a general business slowdown.
Cost of products sold (excluding depreciation and amortization) decreased 2.2%
to $100.1 million in the second quarter of fiscal 2001 from $102.4 million in
the second quarter of fiscal 2000. Cost of products sold as a percentage of net
sales increased to 90.5% in the second quarter of fiscal 2001 from 85.5% in the
second quarter of fiscal 2000. Cost of products sold (excluding depreciation and
amortization) decreased 1.8% to $194.2 million for the first six months of
fiscal 2001 from $197.8 million for the first six months of fiscal 2000. Cost of
products sold as a percentage of net sales increased to 90.9% in the first six
months of fiscal 2001 from 87.3% in the first six months of fiscal 2000. The
increase in cost of products sold as a percentage of net sales was primarily
attributable to lower sales, resulting in unabsorbed overhead, and weak
operating performance at certain of the Company's manufacturing facilities
during the first three and six-month periods of fiscal 2001. Additionally,
shortfalls in sales volumes have made manufacturing improvement initiatives more
difficult and slower to achieve. The Company is developing a plan to reduce
manufacturing and overhead costs company-wide which will properly align the
manufacturing structure and costs. The restructuring plan will consolidate four
smaller plants into two larger plants with economic scale and lower overall
manufacturing cost. The restructuring plan will be finalized and the charge to
earnings will be recorded in the third quarter.
Depreciation and amortization expense decreased $0.2 million to $5.0 million in
the second quarter of fiscal 2001 from $5.3 million in the second quarter of
fiscal 2000. The decrease is primarily related to certain intangibles being
fully amortized in the first quarter of fiscal 2001. Depreciation and
amortization increased $0.1 million to $10.4 million in the first six months of
fiscal 2001 from $10.3 million in the first six months of fiscal 2000. The three
and six month periods ended April 2, 2000 include additional depreciation of
approximately $0.4 million due to the shortened useful lives of certain computer
systems. The additional depreciation related to the Company's capital
expenditure program offset the decrease discussed above.
Selling and administrative expense decreased 19.5% to $4.2 million in the second
quarter of fiscal 2001 from $5.2 million in the second quarter of fiscal 2000.
Selling and administrative expense as a percentage of net sales decreased to
3.8% for the second quarter of fiscal 2001 from 4.3% for the second quarter of
fiscal 2000. Selling and administrative expense decreased 19.0% to $7.7 million
in the first six months of fiscal 2001 from $9.5 million in the first six months
of fiscal 2000. Selling and administrative expense as a percentage of net sales
decreased to 3.6% for the first six months of fiscal 2001 from 4.2% for the
first six months of fiscal 2000. The elimination of overhead costs related to
the Company's fiscal 2000 restructuring was the primary reason for the decrease
in selling and administrative expense.
The Company recorded a restructuring and impairment charge of $5.9 million in
the second quarter of fiscal 2000 related to the simplification of the Company's
structure which facilitated the closing of two administrative offices,
termination of 89 employees and write-down of certain material center equipment
held for disposal.
Interest expense decreased 7.0% to $4.0 million in the second quarter of fiscal
2001 from $4.3 million in the second fiscal quarter of 2000. The Company's
outstanding debt under the Credit Agreement decreased to $41.1 million at April
1, 2001 from $57.3 at April 2, 2000. Interest expense decreased 3.2% to $8.0
million for the first six months of fiscal 2001 from $8.2 million for the first
six months of fiscal 2000. Net interest expense decreased due to a reduction in
average borrowings. The Company's borrowing rate under the Credit Agreement is
impacted by market rates and contractual rate margins.
Loss before taxes decreased 15.8% to $2.7 million in the second quarter of
fiscal 2001 from $3.3 million in the second quarter of fiscal 2000. Loss before
taxes increased $1.6 million to $6.6 million in the first six months of fiscal
2001 from $5.0 million for the first six months of fiscal 2000. The changes in
pretax losses are due to the factors discussed above. The income tax benefit
decreased $1.0 million to $0.9 million in the second quarter of fiscal 2001 from
$1.9 million in the second quarter of fiscal 2000. The decrease is due to a
reduction in the Company's pre-tax loss and the effective tax rate. The income
tax benefit increased 7.4% to $2.9 million in the first six months of fiscal
2001 from $2.7 million in the first six months of fiscal 2000. The increase is
due to an increase in the Company's pre-tax loss offset by a reduced effective
tax rate.
Basic and diluted loss per common share increased $0.06 to $0.20 for the second
quarter of fiscal 2001 from $0.14 for the second quarter of 2000. The
weighted-average diluted common shares outstanding were 9.1 million and 9.3
million for the respective quarters. Basic and diluted loss per common share
increased $0.15 to $0.40 for the first six months of fiscal 2001 from $0.25 for
the first six months of fiscal 2000. The weighted-average diluted common shares
outstanding were 9.1 million and 9.3 million for the respective six-month
periods.
9
Liquidity and Capital Resources
The Company's cash requirements for operations and capital expenditures during
the first six months of fiscal 2001 were primarily financed through internally
generated cash flows and borrowings under the Company's Credit Agreement. At
April 1, 2001, the Company had a borrowing limit under its Credit Agreement of
$125 million. Interest rates under the Credit Agreement are either prime (as
determined by Bank of America) plus an applicable rate margin or at LIBOR plus
an applicable rate margin at the option of the Company. Rate margins are reset
quarterly based on financial performance during the preceding four quarters. At
April 1, 2001, the prime rate margin was 1.000% and the LIBOR rate margin was
2.000%. At April 1, 2001, the Company was not in compliance with certain
restrictive covenants (Interest Coverage Ratio) under the Credit Agreement. The
Company received from its lenders a temporary waiver valid through June 15,
2001, for this noncompliance under the credit agreement for the quarter ended
April 1, 2000.
As of April 1, 2001, the Company had borrowed $41.1 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 April 1, 2001, this
covenant effectively limited the Company's available borrowings to a total of
$48.1 million.
On April 19, 2001, the Company received a commitment from Bankers Trust Company
(an affiliate of Deutsche Bank) to underwrite a new four-year, $90 million
secured credit facility. The Company expects to use initial borrowings under the
new credit facility to repay obligations under the Company's Credit Agreement,
which will be terminated. The Company and Bankers Trust Company expect to close
the new agreement in May 2001. The new agreement would replace the Company's
current $125 million credit agreement which would be classified as a current
liability in June 2001 and expires June 2002. The Company does not expect to
experience any significant change in total financing cost under the new
agreement. Interest rates under the new credit facility are not expected to be
materially different from those under the Credit Agreement.
Net cash used in operating activities during the first six months of fiscal 2001
was $0.9 million compared to $4.0 million used during the first six months of
fiscal 2000. During the first six months of fiscal 2001, cash from operating
activities was primarily provided by net income (loss) before depreciation and
amortization and by reductions in inventories. Cash was primarily used to reduce
accounts payable and accrued liabilities. During the first six months of fiscal
2000, cash from operating activities was primarily provided by net income (loss)
before depreciation, amortization and restructuring and by reductions in
accounts receivable and other assets. Cash was primarily used to increase
inventories and reduce accounts payable and accrued liabilities.
Net cash used in investing activities during the first six months of fiscal 2001
decreased $3.3 million to $3.6 million from $6.9 million for the first six
months of fiscal 2000. Net cash used in investing activities was primarily used
for capital expenditures during the first six months of each fiscal year. Lower
capital expenditures in the first six months of fiscal 2001 are a result of
management's intent to closely control capital expenditures and focus free cash
flow primarily on debt reduction.
Net cash provided by financing activities was $4.1 million during the first six
months of fiscal 2001 compared to $10.4 million during the first six months of
fiscal 2000. Net borrowings under the Company's credit agreement increased $4.1
million to $14.9 million for the first six months of fiscal 2001 compared to
$10.8 million for the first six months of fiscal 2000. Cash used in financing
activities for the first six months of fiscal 2001 was used to decrease
unpresented bank drafts and to purchase treasury stock.
At April 1, 2001, the Company was restricted in its ability to pay dividends and
make other restricted payments in an amount greater than approximately $1.6
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 its credit facility will provide it with sufficient liquidity to meet its
operating and capital expenditure needs in the next 12 months.
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 judgment on what the
future holds. A variety of factors could cause business conditions and the
Company's actual results to differ materially from those expected by the Company
or expressed in the Company's forward-looking statements. These factors include,
without limitation, timing and costs of plant start-up and closure; the
Company's ability to successfully integrate acquired businesses; labor unrest;
changes in market price or market demand; changes in raw material costs or
availability; loss of business from customers; unanticipated expenses; changes
in financial markets; potential equipment malfunctions; and the other factors
discussed in the Company's filings with the Securities and Exchange Commission.
10
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's interest rates under its Credit Agreement are variable subject to
market changes and applicable rate margins based on the Company's financial
performance. At April 1, 2001, the Company had borrowings under the Credit
Agreement of $41.1 million that were subject to interest rate risk. Each 100
basis point increase in interest rates would impact quarterly pretax earnings by
$0.1 million based on the April 1, 2001 debt level.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders (the "Annual Meeting") on
February 21, 2001. The matters considered were as follows:
1. The election of three directors to hold office for a term of three
years; and
2. The ratification of the appointment of Deloitte & Touche LLP as the
Company's independent public accountants for the fiscal year ending
September 30, 2001
Holders of record of the Company's Common Stock at the close of business on
January 5, 2001 were entitled to receive notice of and to vote on all matters
presented at the Annual Meeting and at any adjournments or postponements
thereof.
The duly appointed Inspector of Election, pursuant to Section 231 of the
Delaware General Corporation Law, certified that the following is an accurate
report of the votes of the stockholders of the Company at the Annual Meeting:
1. The number of shares of Common Stock of the Company issued and
outstanding and entitled to vote on matters submitted at the Annual
Meeting to the holders of Common Stock was 9,154,118.
2. There were present at the Annual Meeting, in person or by proxy,
holders of 8,878,268 shares of Common Stock, which is 97% of the total
number of shares of Common Stock outstanding and entitled to vote at
the Annual Meeting and which constituted a quorum for purposes of
voting on each of the matters submitted to the stockholders for their
vote.
3. Tabulated votes with respect to the election of directors were as
follows: Warren J. Hayford received 8,152,332 votes, Alexander P. Dyer
received 8,403,807 votes and Thomas A. Donahoe received 8,403,318
votes.
4. Each of Warren J. Hayford, Alexander P. Dyer and Thomas A. Donahoe
received a plurality of the votes cast by the holders of the Common
Stock and it was certified to the Secretary of the Company that each
of Warren J. Hayford, Alexander P. Dyer and Thomas A. Donahoe was duly
elected as a director of the Company.
5. Tabulated votes with respect to the ratification of the appointment of
Deloitte & Touche LLP as independent public accountants for the fiscal
year ending September 30, 2001 were as follows: For 8,759,999, Against
97,956, Abstain 20,313.
No other business came before the Annual Meeting that required the vote of
shareholders of the Company's common stock.
11
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
See Index to Exhibits. There were no reports filed on Form 8-K during the
quarter ended April 1, 2001.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BWAY Corporation
(Registrant)
Date: May 16, 2001 By: /s/ Kevin C. Kern
-------------------------------------
Kevin C. Kern
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Form 10-Q: For the quarterly period ended April 1, 2001
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INDEX TO EXHIBITS
-------------------------------------------------
Exhibit
No. Description of Document
----------- --------------------------------------------------------
None
14