Portola International

PORTOLA PACKAGING REPORTS SECOND QUARTER RESULTS

SAN JOSE, CA—March 18, 2002 - Portola Packaging, Inc., today reported results for its second quarter of fiscal 2002, ended February 28, 2002. Sales were $48.0 million compared to $51.2 million for the same quarter of the prior year, a decrease of 6.3%. For the first six months of fiscal 2002 sales were $102.2 million compared to $101.9 million for the first six months of fiscal 2001, an increase of 0.3%. Portola had operating income of $2.7 million for the second quarter of fiscal 2002 as compared to operating income of $1.2 million for the second quarter of fiscal 2001. For the first six months of fiscal 2002 the Company had operating income of $5.4 million compared to operating income of $1.1 million for the first six months of fiscal 2001. The Company reported a net loss of $0.5 million for the second quarter of fiscal 2002 compared to net income of $0.2 million for the same period of fiscal 2001, and a net loss of $1.1 million for the first six months of fiscal 2002 compared to a net loss of $1.8 million for the same period in fiscal 2001. During the first six months of fiscal 2001, the Company incurred pretax restructuring charges of $1.9 million and realized a pretax gain of $4.6 million from the sale of real estate located in San Jose, California.

Gross profit increased $1.7 million to $11.6 million for the second quarter of fiscal 2002 as compared to $9.9 million for the same quarter of the prior year. For the first six months of fiscal 2002, gross profit was $24.0 million compared to $20.3 million for the first six months of fiscal 2001. As a percentage of sales, gross profit increased from 19.9% for the first six months of fiscal 2001 to 23.5% for the same period in fiscal 2002.

Adjusted EBITDA excludes the effect of restructuring charges, gains on the sale of real estate, and foreign exchange gains and losses. Adjusted EBITDA increased 17.2% to $7.5 million in the second quarter of fiscal 2002 as compared to $6.4 million in the second quarter of fiscal 2001 and increased 12.0% to $14.9 million for the first six months of fiscal 2002 from $13.3 million for the same period in fiscal 2001. EBITDA, including the effect of the restructuring charge, the gain on the sale of real estate and foreign exchange gains and losses, decreased 21.9% to $7.5 million in the second quarter of fiscal 2002 as compared to $9.6 million in the second quarter of fiscal 2001 and decreased 5.7% to $14.9 million for the first six months of fiscal 2002 from $15.8 million for the same period in fiscal 2001.

Effective September 1, 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 established accounting and reporting standards for acquired goodwill and other intangible assets. The effect of the adoption was to eliminate goodwill amortization expense in the second quarter and first six months of fiscal 2002 of $0.7 million and $1.4 million, respectively. The Company recorded a total of $0.7 million and $1.4 million in goodwill amortization expense in the second quarter and first six months of fiscal 2001, respectively.

Portola Packaging is a leading designer, manufacturer and marketer of tamper evident plastic closures used in dairy, fruit juice, bottled water, sports drinks, institutional food products and other non-carbonated beverage products. The Company also produces a wide variety of plastic bottles for use in the dairy, water and juice industries, including five-gallon polycarbonate water bottles. In addition, the Company designs, manufactures and markets capping equipment for use in high speed bottling, filling and packaging production lines as well as manufactures and markets customized five-gallon water capping and filling systems. The Company is also engaged in the manufacture and sale of tooling and molds used in the blowmolding industry.

PORTOLA PACKAGING, INC
Financial Results
(in millions)

	Q2 02		YTD 02		Q2 01		YTD 01
Sales	$48.0		$102.2		$51.2		$101.9
Cost of sales	36.4		78.2		41.3		81.6
Gross profit	11.6		24.0		9.9		20.3
Gross profit %	24.2%		23.5%		19.3%		19.9%
SG&A, R&D and Amortization	8.9		18.6		8.6		17.3
Restructuring	-		-		0.1		1.9
Operating income	2.7		5.4		1.2		1.1
Gain on sale of real estate	-		-		(3.3)		(4.6)
Other expense, net	3.4		7.1		4.0		7.9
Income (loss) before income taxes	(0.7)		(1.7)		0.5		(2.2)
Income tax expense (benefit)	(0.2)		(0.6)		0.3		(0.4)
Net income (loss)	(0.5)		(1.1)		0.2		(1.8)
EBITDA	7.5		14.9		9.6		15.8
EBITDA %	15.6%		14.6%		18.8%		15.5%
Adjusted EBITDA	7.5		14.9		6.4		13.3
Adjusted EBITDA %	15.6%		14.6%		12.5%		13.1%

	February 28, 2002		August 31, 2001
Current assets	$45.7		$50.9
Property, plant and equipment, net	74.6		78.8
Other assets	18.8		19.9
Total assets	139.1		149.6
Current liabilities	26.3		31.9
Long-term debt	128.5		131.4
Warrants	10.5		10.5
Other liabilities	2.8		3.1
Total liabilities	168.1		176.9
Other equity	5.7		6.3
Accumulated Deficit	(34.7)		(33.6)
Total Equity	(29.0)		(27.3)
Total liabilities and shareholders’    equity (deficit)	139.1		149.6

 

CONTACT: Jack L. Watts, Chairman and Chief Executive Officer, (408) 573-2345, James A. Taylor, President and Chief Operating Officer, (408) 573-2074 or Dennis L. Berg, Vice President and Chief Financial Officer, (408) 573-2039.