UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
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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 1-9487
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ATLANTIS PLASTICS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 06-1088270
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
1870 The Exchange, Suite 200, Atlanta, Georgia 30339
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including Area Code) (800) 497-7659
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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 ____.
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Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Shares Outstanding at October 1, 2001
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A, $.10 par value 4,896,752
B, $.10 par value 2,635,101
ATLANTIS PLASTICS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2001
INDEX
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page
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Consolidated Balance Sheets
as of September 30, 2001 and December 31, 2000.......................... 1
Consolidated Statements of Income
for the three months and nine months ended September 30, 2001 and 2000.. 2
Consolidated Statements of Cash Flows
for the nine months ended September 30, 2001 and 2000................... 3
Notes to Consolidated Financial Statements
for the nine months ended September 30, 2001............................ 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 7
Item 3. Quantitative and Qualitative Disclosure About Market Risk................... 12
Part II. Other Information
Item 1. Legal Proceedings........................................................... 13
Item 6. Exhibits and Reports on Form 8-K............................................ 13
Signatures.............................................................................. 14
Part 1. Financial Information
Item 1. Financial Statements
ATLANTIS PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
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September 30, December 31,
2001 /(1)/ 2000
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ASSETS
Cash and cash equivalents $ 175 $ 2,445
Accounts receivable, less allowance for doubtful accounts
and returned items of $1,499 in 2001 and $1,472 in 2000 32,001 25,227
Inventories 15,623 18,346
Other current assets 6,537 9,099
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Total current assets 54,336 55,117
Property and equipment, net 69,301 71,846
Goodwill, net of accumulated amortization 46,845 48,133
Other assets 109 511
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Total assets $170,591 $175,607
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 19,030 $ 19,329
Current portion of long-term debt 40,996 19,025
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Total current liabilities 60,026 38,354
Long-term debt, less current portion 51,849 79,534
Deferred income taxes 11,507 11,355
Other liabilities 1 51
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Total liabilities 123,383 129,294
Commitments and contingencies - -
Shareholders' equity:
Class A Common Stock, $.10 par value, 20,000,000 shares authorized,
4,896,752 and 4,856,846 shares issued and outstanding in 2001 and 2000 490 486
Class B Common Stock, $.10 par value, 7,000,000 shares authorized,
2,635,101 and 2,676,947 shares issued and outstanding in 2001 and 2000 263 268
Additional paid-in capital 10,677 10,679
Notes receivable from sale of Common Stock (1,569) (1,625)
Retained earnings 37,347 36,505
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Total shareholders' equity 47,208 46,313
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Total liabilities and shareholders' equity $170,591 $175,607
=======================================================================================================================
/(1)/ Unaudited
See accompanying notes.
1
ATLANTIS PLASTICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
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Net sales $ 63,401 $ 63,226 $190,596 $192,951
Cost of sales 53,507 55,288 161,049 164,488
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Gross profit 9,894 7,938 29,547 28,463
Selling, general and administrative expenses 7,139 6,244 20,780 19,031
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Operating income 2,755 1,694 8,767 9,432
Net interest expense (2,331) (2,588) (7,346) (7,640)
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Income (loss) before (provision) benefit for income taxes and
extraordinary item 424 (894) 1,421 1,792
(Provision) benefit for income taxes (307) 213 (981) (1,058)
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Income (loss) before extraordinary item 117 (681) 440 734
Extraordinary (loss) gain on early extinguishment of debt,
net of income taxes (15) - 408 -
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Net income (loss) $ 102 $ (681) $ 848 $ 734
==========================================================================================================================
Earnings per share - Basic
Income (loss) before extraordinary item $ 0.02 $ (0.09) $ 0.06 $ 0.10
Extraordinary (loss) gain on early extinguishment of debt,
net of income taxes (0.01) - 0.05 -
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Net income (loss) $ 0.01 $ (0.09) $ 0.11 $ 0.10
Weighted average number of shares used in
computing basic earnings per share (in thousands) 7,532 7,524 7,532 7,515
Earnings per share - Diluted
Income (loss) before extraordinary item $ 0.02 $ (0.09) $ 0.06 $ 0.10
Extraordinary (loss) gain on early extinguishment of debt,
net of income taxes (0.01) - 0.05 -
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Net income (loss) $ 0.01 $ (0.09) $ 0.11 $ 0.10
Weighted average number of shares used in
computing diluted earnings per share (in thousands) 7,532 7,524 7,536 7,645
See accompanying notes.
2
ATLANTIS PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
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Nine Months Ended
September 30,
2001 2000
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Cash Flows From Operating Activities
Net income $ 848 $ 734
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 7,748 6,883
Loss on disposal of assets 35 32
Gain on early extinguishment of debt (408) -
Amortization of goodwill 1,334 1,187
Loan fee and other amortization 256 360
Interest receivable from shareholder loans (84) (103)
Deferred income taxes (28) 152
Change in operating assets and liabilities (2,002) (2,649)
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Total adjustments 7,031 5,682
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Net cash provided by operating activities 7,879 6,416
Cash Flows From Investing Activities
Capital expenditures (5,241) (11,159)
Purchase of business (46) -
Proceeds from asset dispositions 3 69
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Net cash used in investing activities (5,284) (11,090)
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Cash Flows From Financing Activities
Net borrowings under revolving credit agreements 9,350 5,900
Payments on long-term debt (14,346) (1,943)
Payments on notes receivable from shareholders 140 193
Purchase of common stock (9) (389)
Proceeds from exercise of stock options - 248
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Net cash (used in) provided by financing activities (4,865) 4,009
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Net decrease in cash and cash equivalents (2,270) (665)
Cash and cash equivalents at beginning of period 2,445 2,288
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Cash and cash equivalents at end of period $ 175 $ 1,623
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See accompanying notes.
3
ATLANTIS PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine-month period
ended September 30, 2001 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2001.
The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
The information included in this Form 10-Q should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations and financial statements and footnotes thereto included in the
Atlantis Plastics, Inc. Form 10-K for the year ended December 31, 2000.
Inventories
The components of inventory consist of the following:
September 30 December 31
(in thousands) 2001 2000
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Raw materials $ 8,741 $ 9,102
Work in process 117 107
Finished products 6,765 9,137
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$ 15,623 $ 18,346
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4
Segment Information
The Company has two operating segments: Atlantis Plastic Films and Atlantis
Molded Plastics. Information related to such segments is as follows:
Nine Months Ended September 30, 2001
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Atlantis Atlantis
Plastics Molded
(in thousands) Films Plastics Corporate Consolidated
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Net sales $132,247 $58,349 - $190,596
Operating income 5,547 3,220 - 8,767
Identifiable assets 103,204 62,358 $5,029/(1)/ 170,591
Capital expenditures 2,886 2,001 354 5,241
Depreciation and
amortization 4,004 3,411 1,924 9,339
Nine Months Ended September 30, 2000
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Atlantis Atlantis
Plastics Molded
(in thousands) Films Plastics Corporate Consolidated
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Net sales $134,038 $58,913 - $192,951
Operating income 4,587 4,845 - 9,432
Identifiable assets 108,720 61,116 $2,569/(1)/ 172,405
Capital expenditures 7,838 2,734 587 11,159
Depreciation and
amortization 3,543 2,880 2,007 8,430
/(1)/ Corporate identifiable assets are primarily intercompany balances.
5
Earnings Per Share Data
The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated.
Three Months Nine Months
Ended September 30 Ended September 30
in thousands, except per share data 2001 2000 2001 2000
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Income (loss) before extraordinary item $ 117 $ (681) $ 440 $ 734
Extraordinary (loss) gain on early extinguishment of
debt, net of income taxes (15) - 408 -
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Net income (loss) $ 102 $ (681) $ 848 $ 734
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Earnings per share - basic
Income (loss) before extraordinary item $ 0.02 $(0.09) $ 0.06 $ 0.10
Extraordinary (loss) gain on early extinguishment of
debt, net of income taxes (0.01) - 0.05 -
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Net income (loss) $ 0.01 $(0.09) $ 0.11 $ 0.10
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Weighted average shares outstanding - basic 7,532 7,524 7,532 7,515
Earnings per share - diluted
Income (loss) before extraordinary item $ 0.02 $(0.09) $ 0.06 $ 0.10
Extraordinary (loss) gain on early extinguishment of
debt, net of income taxes (0.01) - 0.05 -
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Net income (loss) $ 0.01 $(0.09) $ 0.11 $ 0.10
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Weighted average shares outstanding 7,532 7,524 7,532 7,515
Net effect of dilutive stock options-based
on treasury stock method - - 4 130
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Weighted average shares outstanding - diluted 7,532 7,524 7,536 7,645
Recently Issued Accounting Standards
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statement. Other intangible assets will continue to be amortized over
their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. During 2002, the
Company will apply the non-amortization provisions and perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets as
of January 1, 2002. The Company has not yet determined what effect, if any, the
Statement will have on the financial statements of the Company.
6
Item 2. Management's Discussion And Analysis of Financial Condition And
Results of Operations
Overview
Atlantis Plastics, Inc. ("Atlantis" or the "Company") is a leading U.S.
plastics manufacturer consisting of two operating segments: (i) Atlantis Plastic
Films, which produces polyethylene stretch and custom films used in a variety of
industrial and consumer applications, and (ii) Atlantis Molded Plastics, which
produces molded plastic products for a variety of applications, including
products and components for the appliance, automotive, building supply, and
recreational vehicle industries.
Atlantis Plastic Films, which accounts for approximately 70% of the
Company's net sales, produces (i) stretch films, which are multilayer plastic
films that are used principally to wrap pallets of materials for shipping or
storage; (ii) custom film products, such as high-grade laminating films,
embossed films, and specialty film products targeted primarily to industrial and
packaging markets; and (iii) institutional products such as aprons, gloves, and
tablecloths that are converted from polyethylene films.
Atlantis Molded Plastics, which accounts for approximately 30% of the
Company's net sales, consists of two principal technologies serving a variety of
specific market segments described as follows: (i) injection molded
thermoplastic parts that are sold primarily to original equipment manufacturers
and used in major household goods and appliances, power tools, agricultural and
automotive products, and (ii) a variety of custom and proprietary extruded
plastic parts for both trim and functional applications (profile extrusion) that
are incorporated into a broad range of consumer and commercial products such as
recreational vehicles, residential windows and doors, office furniture, building
supplies, and retail store fixtures.
Selected income statement data for the quarterly periods ended March 31,
2000 through September 30, 2001 are as follows:
2001 2000
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($ in millions) Q3 Q2 Q1 Q4 Q3 Q2 Q1
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NET SALES
Plastic Films $42.9 $43.0 $46.3 $40.9 $44.5 $45.9 $43.6
Molded Plastics 20.5 19.5 18.4 16.5 18.7 19.3 20.9
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Total $63.4 $62.5 $64.7 $57.4 $63.2 $65.2 $64.5
GROSS PROFIT
Plastic Films 15% 14% 17% 15% 11% 13% 15%
Molded Plastics 17% 17% 15% 15% 16% 18% 21%
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Total 16% 15% 16% 15% 13% 15% 17%
OPERATING INCOME
Plastic Films 3% 3% 6% 4% 1% 4% 5%
Molded Plastics 6% 6% 4% 3% 6% 9% 10%
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Total 4% 4% 5% 3% 3% 5% 7%
NET INTEREST EXPENSE $ 2.3 $2.4 $ 2.6 $ 2.6 $2.6 $2.6 $2.5
7
Results of Operations
Net Sales
The Company's net sales for the quarter and nine months ended September 30,
2001 were $63.4 million and $190.6 million, respectively, compared to $63.2
million and $193.0 million, respectively, for the comparable periods ending
September 30, 2000. Atlantis Plastics Films' volume (measured in pounds) for the
quarter ended September 30, 2001 was 6% above the quarter ended September 30,
2000. Nine months films volume (measured in pounds) for the period ended
September 30, 2001 was 3% higher than the comparable period ended September 30,
2000. Atlantis Plastics Films' sales (measured in dollars) for the quarter and
nine months ended September 30, 2001 decreased 3.6% and 1.3%, respectively, from
the prior year.
The continued economic slowdown and weakness in the automotive, consumer
durables, and home building sectors adversely impacted the molded products
business during the nine month period ended September 30, 2001. Net sales during
such period declined to $58.4 million, compared to $58.9 million for the
comparable nine month period ended September 30, 2000. During the quarter ended
September 30, 2001 net sales in the molded products business increased to $20.5
million from $18.7 million for the quarter ended September 30, 2000.
Gross Profit and Operating Profit
Atlantis' gross margin for both the quarter and nine months ended September
30, 2001 was 16%, compared with 13% and 15%, respectively, for the quarter and
nine month period ended September 30, 2000. Operating margin was 4% and 5%,
respectively, for the quarter and nine month period ended September 30, 2001,
compared to 3% and 5%, respectively, for the comparable period ended September
30, 2000. In the plastic films segment, gross margins and operating margins were
15% and 3%, respectively, for the quarter ended September 30, 2001, compared
with 11% and 1%, respectively, for the quarter ended September 30, 2000. For the
nine month period ended September 30, 2001 gross margins and operating margins
were 15% and 4%, respectively, compared to 13% and 3%, respectively, for the
nine month period ended September 30, 2000.
In Atlantis' Molded Products segment, gross margins and operating margins
were 16% and 6%, respectively, for both quarters ended September 30, 2001
and September 30, 2000. For the nine month period ended September 30, 2001 gross
margins and operating margins declined to 16% and 6%, respectively, compared to
19% and 8%, respectively, for the nine month period ended September 30, 2000.
Selling, General, and Administrative Expense
The Company's selling, general, and administrative ("SG&A") expense
increased to $7.1 million and $20.8 million, respectively, for the quarter and
nine month period ended September 30, 2001 from $6.2 million and $19.0 million
for the quarter and nine month period ended September 30, 2000. The increase is
primarily the result of increased incentives for sales personnel in the plastic
films segment for the volume increase experienced during the first nine months
of 2001.
Net Interest Expense and Income Taxes
Net interest expense for the quarter and nine month period ended September
30, 2001 decreased to $2.3 million and $7.3 million, respectively, compared to
$2.6 million and $7.6 million, respectively, for the comparable period ended
September 30, 2000. Total debt decreased to $92.8 million at September 30, 2001
from $98.6 million at December 31, 2000 and $95.7 million at September 30, 2000.
Interest rate declines in the
8
nine month period ended September 30, 2001 resulted in a lower average interest
rate on the variable portion of debt, primarily the debt associated with the
revolving credit agreement, compared to the average variable interest rate for
the nine month period ended September 30, 2000.
The Company's effective income tax rate in both 2001 and 2000 differed from
the applicable statutory rate primarily due to nondeductible goodwill
amortization and the effect of state income taxes.
Income
As a result of the factors described above, operating income increased to
$2.8 million (4% of net sales) during the quarter ended September 30, 2001,
compared to $1.7 million (3% of net sales) for the quarter ended September 30,
2000. Operating income decreased to $8.8 million (5% of net sales) for the nine
month period ended September 30, 2001, compared to $9.4 million (5% of net
sales) for the nine month period ended September 30, 2000. During the nine
months ended September 30, 2001 the Company benefited from an extraordinary gain
of $408,000, net of income taxes, or $0.05 per diluted share associated with the
buyback of $13.2 million principal amount of the Company's Senior Notes.
Liquidity and Capital Resources
At September 30, 2001, the Company had approximately $92.8 million of
outstanding indebtedness, approximately $0.2 million in cash and cash
equivalents, and an additional $2.8 million unused availability under its
revolving credit facility, net of outstanding letters of credit of approximately
$1.3 million. The current credit agreement was renewed November 12, 2001 and
expires January 31, 2003. As of November 13, 2001 borrowings on this facility
totaled $10 million and unused availability, net of outstanding letters of
credit of approximately $1.3 million and 11% Senior Note sinking fund reserve of
$10.3 million, equaled $8.4 million.
On November 7, 2001, the Company borrowed approximately $15 million from
General Electric Capital Corporation. The proceeds will be used to satisfy the
11% Senior Note sinking fund requirement and repayment of other debt. The
Company's principal needs for liquidity, on both a short and long-term basis,
relate to working capital (principally accounts receivable and inventories),
debt service, and capital expenditures. The Company presently does not have any
material commitments for future capital expenditures
At September 30, 2001 the Company's current portion of long-term debt
increased by $22.0 million to $41.0 million from $19.0 million at December 31,
2000. This increase was primarily the result of the reclassification from long-
term debt to current debt of the $11.6 million remaining sinking fund payment
due February 2002 on its 11% Senior Notes. In the quarter and nine months ended
September 30, 2001, Atlantis repurchased $7.0 and $13.2 million, respectively,
in principal amount, of its 11% Senior Notes, which reduced the February 2002
sinking fund requirement by the same amount. At November 13, 2001 repurchases
totaled $14.5 million. The balance due on the February 2002 sinking fund
requirement is $10.3 million. In addition, Atlantis is exploring alternatives to
refinance its long-term debt, including its 11% Senior Notes due February 2003
The Company's high debt level presents substantial risks and could have
negative consequences. For example, it could (1) require the Company to dedicate
a substantial portion of its cash flow from operations to repayment of debt,
limiting the availability of cash for other purposes; (2) increase the Company's
vulnerability to adverse general economic conditions by making it more difficult
to borrow additional funds to maintain its operations if the Company suffers
shortfalls in net sales; (3) hinder the Company's flexibility in planning for,
or reacting to, changes in its business and industry by preventing the Company
from borrowing money to upgrade
9
its equipment or facilities; and (4) limit or impair the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, or general corporate purposes.
In the event that the Company's cash flow from operations is not sufficient
to fund the Company's expenditures or to service its indebtedness, the Company
would be required to raise additional funds from possible additional borrowings
or through the sale of assets or subsidiaries. There can be no assurance that
any of these sources of funds would be available in amounts sufficient for the
Company to meet its obligations. Moreover, even if the Company were able to meet
its obligations, its highly leveraged capital structure could significantly
limit its ability to finance its expansion program and other capital
expenditures, to compete effectively, or to operate successfully under adverse
economic conditions.
Cash Flows from Operating Activities
For the nine months ended September 30, 2001, net cash provided by
operating activities was approximately $7.9 million, compared to $6.4 million
for the nine months ended September 30, 2000. The difference between the
Company's net income of $848,000 and its $7.9 million operating cash flow for
the nine months ended September 30, 2001 was primarily attributable to
approximately $9.3 million of depreciation and amortization expense, a $1.4
million decrease in other assets resulting primarily from the receipt of resin
rebates and tax refunds, a $2.7 million decrease in inventories, a $594,000
increase in accounts payable and accrued liabilities and a $152,000 increase in
deferred income taxes. These items were partially offset by an approximately
$6.8 million increase in accounts receivable due to increased net sales and a
gain on early extinguishment of debt of $408,000.
Cash Flows from Investing Activities
Net cash used in investing activities decreased to $5.3 million for the
nine months ended September 30, 2001, compared to $11.1 million for the nine
months ended September 30, 2000. This decrease was primarily the result of
reduced capital expenditures (net of dispositions).
Cash Flows from Financing Activities
Net cash used in financing activities for the nine months ended September
30, 2001 was $4.9 million, compared with net cash provided by financing
activities of $4.0 million for the nine months ended September 30, 2000. The
Company's financing cash flow for the nine months ended September 30, 2001
reflects the repurchase of approximately $13.2 million of the Company's 11%
Senior Notes and approximately $1.1 in payments on other long-term debt. This
was partially offset by net borrowings of $9.4 million under the revolving
credit agreements and by the receipt of approximately $140,000 in interest due
from shareholder notes.
10
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statement. Other intangible assets will continue to be amortized over
their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. During 2002, the
Company will apply the non-amortization provisions and perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets as
of January 1, 2002. The Company has not yet determined what effect, if any, the
Statement will have on the financial statements of the Company.
Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of that term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Additional written or oral
forward-looking statements may be made by the Company from time to time, in
press releases, annual or quarterly reports to shareholders, filings with the
Securities Exchange Commission, presentations or otherwise. Statements contained
herein that are not historical facts are forward-looking statements made
pursuant to the safe harbor provisions referenced above.
Forward-looking statements may include, but are not limited to, projections
of net sales, income or losses, or capital expenditures; plans for future
operations; financing needs or plans; compliance with financial covenants in
loan agreements; plans for liquidation or sale of assets or businesses; plans
relating to products or services of the Company; assessments of materiality;
predictions of future events; the ability to obtain additional financing; the
Company's ability to meet obligations as they become due; the impact of pending
and possible litigation; as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties, including, but not limited to,
the impact of leverage, dependence on major customers, fluctuating demand for
the Company's products, risks in product and technology development, fluctuating
resin prices, competition, litigation, labor disputes, capital requirements, and
other risk factors detailed in the Company's Securities and Exchange Commission
filings, some of which cannot be predicted or quantified based on current
expectations.
Consequently, future events and actual results could differ materially from
those set forth in, contemplated by, or underlying the forward-looking
statements. Readers are cautioned not to place undue reliance on any forward-
looking statements contained herein, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
11
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates,
primarily as a result of its floating interest rate debt.
The following table summarizes information on debt instruments. The table
presents expected maturity of debt instruments and projected annual average
interest rates. For variable rate debt instruments, average interest rates are
based on one month London Inter-Bank Offered (LIBOR), prime, and commercial
paper rates as of October 31, 2001. The fair market value of the Senior Notes is
based on quoted market price as of October 31, 2001. The carrying value of the
Company's other long-term debt approximates its fair market value.
Interest Rate Sensitivity
Principal (Notional) Amount by Expected Maturity
Average Interest Rate
($ 000)
Value as of
2001 2002 2003 2004 2005 Thereafter Total September 30, 2001
------------------------------------------------------------------------------------------------------------------------------------
Senior Notes
- Maturity $ - $11,605 $50,000 $ - $ - $ - $ 61,605 $ 61,605
- Average Interest Rate 11% 11% 11%
Other Long-Term Debt -
Fixed Rate
- Maturity $ 43 $ 179 $ 126 $ 124 $ 143 $ 212 $ 827 $ 827
- Average Interest Rate 6.51% 6.53% 6.58% 6.58% 6.58% 6.58%
Other Long-Term Debt -
Variable Rate*
- Maturity $26,438 $ 2,854 $ 336 $ 125 $ 660 $ - $ 30,413 $ 30,413
- Average Interest Rate 6.34% 5.79% 5.54% 5.46% 5.46%
*Based on LIBOR plus spreads of 1.75% to 2.75%, prime plus spreads of 1.0% and
commercial paper plus 2.7% (all rates as of October 31, 2001)
12
Part II. Other Information
Item 1. Legal Proceedings
The Company is not a party to any legal proceeding other than routine litigation
incidental to its business, none of which is material.
Item 6. Exhibits and Reports on Form 8-K
(A) EXHIBITS
10.1 Consent and Twentieth Amendment to Heller Credit Agreement, dated as of
November 12, 2001.
10.2 Promissory Note between Atlantis Plastics Inc. and Atlantis Plastics Films
Inc., as debtor and General Electric Capital Corporation, as secured
party, dated as of November 7, 2001.
10.3 Master Security Agreement between Atlantis Plastics, Inc. and Atlantis
Plastics Films Inc., as debtor and General Electric Capital Corporation,
as secured party, dated as of November 7, 2001.
10.4 Amendment to Master Security Agreement between Atlantis Plastics Inc. and
Atlantis Plastics Films Inc., as debtor and General Electric Capital
Corporation, as secured party, dated as of November 7, 2001.
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter ended September 30,
2001.
Items 2, 3, 4, and 5 are not applicable and have been omitted.
13
SIGNATURES
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.
ATLANTIS PLASTICS, INC.
Date: November 14, 2001 By: /s/ Anthony F. Bova
-------------------
ANTHONY F. BOVA
President and Chief Executive Officer
Date: November 14, 2001 By: /s/ Paul G. Saari
-----------------
PAUL G. SAARI
Senior Vice President, Finance and
Chief Financial Officer
14
Exhibit Index
Exhibit No. Exhibit Description
----------- -------------------
10.1 Consent and Twentieth Amendment to Heller Credit Agreement, dated as of
November 12, 2001.
10.2 Promissory Note between Atlantis Plastics Inc. and Atlantis Plantics Films
Inc., as debtor and General Electric Capital Corporation, as secured
party, dated as of November 7, 2001.
10.3 Master Security Agreement between Atlantis Plastics, Inc. and Atlantis
Plastics Films Inc., as debtor and General Electric Capital Corporation,
as secured party, dated as of November 7, 2001.
10.4 Ammendment to Master Security Agreement between Atlantis Plastics Inc. and
Atlantis Plastics Films Inc., as debtor and General Electric Capital
Corporation, as secured party, dated as of November 7, 2001.