BPI Technologies Inc. is getting out of the commodity plastic T-shirt bag business, the company announced recently.
The North Dighton, Mass., firm announced the news with its fourth-quarter results. The company reported a loss of $12.8 million on sales of $30.8 million for the 12 months ended Feb. 28.
``The decision to stop our losses in the commodity plastic T-shirt bag business will enable us to shift our resources to several proprietary markets for both bag and film products,'' Dennis Caulfield, BPI chairman and chief executive officer, said in a news release.
``By eliminating the drag of accelerating losses in commodity plastic T-shirt bags, we forecast that fiscal 1998 sales will be greater than fiscal 1997 and that the company will be profitable.''
The product shift allowed BPI to cut its work force 26 percent, reducing salary, wages, fringe benefit costs and other variable costs by an estimated $6 million annually.
Although the firm is withdrawing from commodity T-shirt bags, BPI will continue to manufacture, sell and market its proprietary front-end grocery T-shirt bags. These include the Handi-Sac brand for convenience stores and Fresh-Sac high-molecular-weight high density polyethylene produce bags.
BPI officials did not return telephone calls.
``We made a necessary decision to end our involvement in a no-win business,'' Caulfield said in a written statement dated June 11. ``Asset write-downs and restructuring costs have reduced working capital to below planned levels and the company is now in the process of negotiating a combination senior long-term debt and equity private placement necessary to improve liquidity and support the fiscal 1998 business plan.''
BPI forecasted that sales of its grocery carry-out bags would decrease 62 percent in 1998 to $6.3 million.
Sales of proprietary bag and thin plastic film products are forecast to increase 167 percent in 1998 to $32.3 million.
BPI's two new thin film products are for encapsulation of fiberglass insulation and to overwrap consumer products.
Sales for 1997 increased 6.8 percent to $30.8 million compared with 1996.
Proprietary bag and film products increased 27.8 percent to $12 million, and made up 39 percent of BPI's sales.
BPI lost $4.51 million, or 38 cents per share, in 1996. The 1997 loss of $12.8 million equalled 97 cents per share. The loss in 1997 includes noncash charges for reserves and write-offs of $7.4 million, the majority of which were for exiting the commodity T-shirt bag business. The net cash loss from continuing operations was $816,000.
``BPI has a net worth of $11.5 million and is increasing its equity base by an additional $5 million in cash through a private placement with our existing shareholders,'' Caulfield said in a letter to BPI's sales and marketing staff. ``Contrary to any negative comments from competitors, BPI is in a very healthy financial and strategic position.''
