<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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: 333-20095
ATRIUM COMPANIES, INC.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-2642488
--------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1341 W. MOCKINGBIRD LANE, SUITE 1200W, DALLAS, TEXAS 75247, (214) 630-5757
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code and telephone
number, including area code)
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
--- ---
<PAGE> 2
ATRIUM COMPANIES, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997..........................3
Consolidated Statements of Operations for the Quarters Ended March 31, 1998 and 1997............4
Consolidated Statements of Comprehensive Income for the Quarters Ended
March 31, 1998 and 1997.........................................................................5
Consolidated Statement of Stockholders Equity (Deficit) for the Quarter
Ended March 31, 1998............................................................................6
Consolidated Statements of Cash Flows for the Quarters Ended March 31, 1998 and 1997............7
Notes to Consolidated Financial Statements...................................................8-11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................................12-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................................................14
Items 2, 3, 4 and 5 are not applicable
Item 6. Exhibits and Reports on Form 8-K...............................................................14
Signatures..............................................................................................14
Exhibit Index...........................................................................................15
</TABLE>
2
<PAGE> 3
ATRIUM COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
-------------------- --------------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................... $ 1,989 $ 1
Equity securities - available for sale...................... 82 27
Accounts receivable, net.................................... 28,619 24,376
Inventories................................................. 20,806 16,534
Prepaid expenses and other current assets................... 1,477 1,608
Deferred tax asset.......................................... 692 692
------------ -----------
Total current assets..................................... 53,665 43,238
PROPERTY, PLANT, AND EQUIPMENT, net.............................. 18,983 16,388
GOODWILL, net.................................................... 36,131 14,884
DEFERRED FINANCING COSTS, net.................................... 5,310 4,961
OTHER ASSETS..................................................... 4,003 3,904
------------ -----------
Total assets............................................. $ 118,092 $ 83,375
============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of notes payable............................ $ 1,750 $ -
Accounts payable............................................ 15,013 10,007
Accrued liabilities......................................... 9,544 7,102
------------ -----------
Total current liabilities................................ 26,307 17,109
LONG-TERM LIABILITIES:
Notes payable............................................... 125,750 100,000
Deferred tax liability...................................... 1,058 1,058
------------ -----------
Total long-term liabilities........................... 126,808 101,058
------------ -----------
Total liabilities..................................... 153,115 118,167
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY (DEFICIT):
Common stock $.01 par value, 3,000 shares authorized,
100 shares issued and outstanding........................ - -
Paid-in capital............................................. 33,431 32,790
Accumulated deficit......................................... (68,430) (67,503)
Accumulated other comprehensive income...................... (24) (79)
------------ -----------
Total stockholder's deficit........................... (35,023) (34,792)
------------ -----------
Total liabilities and stockholder's deficit..... $ 118,092 $ 83,375
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
NET SALES.............................................. $ 42,669 $ 37,846
COST OF GOODS SOLD..................................... 28,730 24,565
---------- ----------
Gross profit....................................... 13,939 13,281
OPERATING EXPENSES:
Selling, delivery, general and administrative
expenses ........................................ 11,208 10,054
Stock option compensation expense.................. 341 52
---------- ----------
11,549 10,106
---------- ----------
Income from operations........................ 2,390 3,175
INTEREST EXPENSE....................................... 2,862 2,781
OTHER INCOME (EXPENSE), net............................ 56 (55)
---------- ----------
Income (loss) before income taxes............. (416) 339
PROVISION FOR INCOME TAXES............................. (39) 128
---------- ----------
NET INCOME (LOSS)...................................... $ (377) $ 211
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Net income (loss)......................................................... $ (377) $ 211
Other comprehensive income:...............................................
Unrealized gains on securities:.......................................
Unrealized holding gains arising during the period................. 55 29
Less: reclassification adjustment for gains included in net income. - -
-------------- --------------
Comprehensive income.................................................. $ (322) $ 240
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE QUARTER ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER TOTAL
----------------------- PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDER'S
SHARES AMOUNT CAPITAL DEFICIT INCOME DEFICIT
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997............ 100 $ - $ 32,790 $ (67,503) $ (79) $ (34,792)
Contributions from Holding......... - - 300 - - 300
Distributions to Holding........... - - - (550) - (550)
Stock option compensation expense.. - - 341 - - 341
Other comprehensive income......... - - - - 55 55
Net loss........................... - - - (377) - (377)
-------- ------- --------- --------- ----------- -----------
Balance, March 31, 1998............... 100 $ - $ 33,431 $ (68,430) $ (24) $ (35,023)
======== ======= ========= ========= =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE> 7
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ...................................................... $ (377) $ 211
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: ..................................................
Depreciation and amortization........................................ 943 748
Amortization of deferred financing costs............................. 160 155
Stock option compensation expense.................................... 341 52
Gain on retirement of assets......................................... (32) (8)
Changes in assets and liabilities, net of acquisition in 1998: ......
Accounts receivable, net............................................ (1,145) (2,620)
Inventories......................................................... (2,551) (1,392)
Prepaid expenses and other current assets........................... 318 (1,110)
Accounts payable.................................................... 5,425 1,206
Accrued liabilities................................................. 1,510 1,932
------------ ------------
Net cash provided by (used in) operating activities............ 4,592 (826)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.............................. (495) (428)
Proceeds from asset sales............................................... 37 10
Payment for acquisition, net of cash acquired........................... (26,526) -
Increase in other assets................................................ (228) (404)
Purchases of equity securities.......................................... - (458)
------------ ------------
Net cash used in investing activities............................... (27,212) (1,280)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable.................................. 17,500 -
Net borrowings under revolving credit facility.......................... 10,000 622
Checks drawn in excess of bank balances................................. (2,135) 985
Deferred financing costs................................................ (507) (190)
Contributions from Holding.............................................. 300 90
Distributions to Holding................................................ (550) -
------------ ------------
Net cash provided by financing activities........................... 24,608 1,507
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................ 1,988 (599)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................... 1 617
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD..................................... $ 1,989 $ 18
============ ============
SUPPLEMENTAL DISCLOSURE:
Cash paid (received) during the period for:
Interest............................................................ $ 46 $ 11
Income taxes, net of refunds........................................ (199) (48)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE> 8
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION:
The unaudited consolidated financial statements of Atrium Companies, Inc. (the
"Company") for the quarters ended March 31, 1998 and 1997, and as of March 31,
1998 and December 31, 1997 have been prepared in accordance with generally
accepted accounting principles for interim financial reporting, the instructions
to Form 10-Q, and Rule 10-01 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.
These consolidated financial statements and footnotes should be read in
conjunction with the Company's audited financial statements for the fiscal years
ended December 31, 1997, 1996 and 1995 included in the Company's Form 10-K as
filed with the Securities and Exchange Commission on March 30, 1998. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the interim
financial information have been included. The results of operations for any
interim period are not necessarily indicative of the results of operations for a
full year. Certain prior period amounts have been reclassified to conform to the
current period presentation.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS
130). This statement, which the Company is required to adopt in 1998,
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. The new
standard requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. The Company adopted FAS
130 beginning January 1, 1998.
2. EQUITY SECURITIES - AVAILABLE FOR SALE:
Investments in equity securities - available for sale are carried at market
based on quoted market prices, with unrealized gains (losses) recorded as other
comprehensive income in stockholder's equity.
3. INVENTORIES:
Inventories are valued at the lower of cost or market using the last-in,
first-out (LIFO) method of accounting. Work-in-process and finished goods
inventories consist of materials, labor, and manufacturing overhead.
Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Raw materials................................. $ 17,937 $ 13,653
Work-in-process............................... 762 705
Finished goods................................ 3,851 4,056
-------------- --------------
22,550 18,414
LIFO reserve.................................. (1,744) (1,880)
-------------- --------------
$ 20,806 $ 16,534
============== ==============
</TABLE>
8
<PAGE> 9
4. NOTES PAYABLE:
Notes payable consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Senior subordinated notes..................... $ 100,000 $ 100,000
Senior term loan facility..................... 17,500 -
Revolving credit facility..................... 10,000 -
-------------- --------------
127,500 100,000
Current portion of notes payable.............. 1,750 -
-------------- --------------
$ 125,750 $ 100,000
============== ==============
</TABLE>
In connection with the acquisition of Masterview Window Company, L.L.C. (the
"Acquisition"), the Company entered into an amended and restated credit
agreement (the "Credit Agreement") with Bankers Trust Company, dated as of March
27, 1998. The Credit Agreement provided for a $17,500 senior term loan facility
and a $20,000 revolving credit facility (collectively, the "Credit Facility").
Annual unused commitment fees are 0.5% of the unborrowed portion of the $20,000
revolving credit facility. Borrowing rates are based upon the lender's prime
rate plus a margin of 1.25% or a Euro-dollar based rate plus a margin of 2.25%.
The term loan is payable in equal quarterly installments aggregating $1,200 in
1998, $2,200 in 1999, $3,000 in 2000, $3,200 in 2001, $3,400 in 2002, $3,600 in
2003, with the remaining payment of $900 due and payable on March 31, 2004.
The Company is required to make mandatory prepayments of the term loan and,
after repayment in full of the term loan, reductions of the revolving credit
commitments (along with a corresponding repayment of revolving loans in excess
of the reduced commitment), at times and subject to certain exceptions, in
respect of (a) 100% of the net proceeds of issuances of equity and debt, sales
of assets, and condemnations and casualty proceeds, and (b) with respect to the
term loans only, 75% of excess cash flow (subject to reductions to 50% based on
the Company meeting a certain leverage ratio). The Credit Facility terminates on
March 31, 2004.
5. CONTINGENCIES:
The Company is party to various claims, legal actions, and complaints arising in
the ordinary course of business. In the opinion of management, all such matters
are without merit or are of such kind, or involve such amounts, that an
unfavorable disposition would not have a material adverse effect on the
financial position, results of operations or liquidity of the Company.
The Company was named in 1988 as a potentially responsible party ("PRP") in two
superfund sites pursuant to the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended (the Chemical Recycling, Inc.
site in Wylie, Texas, and the Diaz Refinery site in Little Rock, Arkansas). The
Company believes that based on the information currently available, including
the substantial number of other PRP's and relatively small share allocated to it
at such sites, its liability, if any, associated with either of these sites will
not have a material adverse effect on the Company's financial position, results
of operations or liquidity.
6. ACQUISITIONS:
MASTERVIEW ASSET PURCHASE:
On March 27, 1998, through its newly-formed subsidiary, Atrium Door and Window
Company of Arizona ("ADW-Arizona"), the Company acquired substantially all of
the assets of Masterview Window Company, L.L.C. ("Masterview"), a privately held
window and door company located in Phoenix, Arizona, for
9
<PAGE> 10
approximately $26,500 including fees and other transaction expenses. The Company
financed the Acquisition through its Credit Facility, which included a $17,500
senior term loan with the remainder of the purchase price of approximately
$9,000 being drawn from the $20,000 revolving credit facility.
The Acquisition has been accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations." The
aggregate purchase price has been allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of acquisition, with the remainder allocated to goodwill. The purchase price
allocation, preliminary in nature and subject to change, is as follows:
<TABLE>
<S> <C>
Cash and cash equivalents.................................... $ 3
Accounts receivable, net..................................... 3,099
Inventories.................................................. 1,721
Prepaid expenses and other current assets.................... 189
Property, plant and equipment, net........................... 2,738
Other noncurrent assets...................................... 146
Goodwill..................................................... 21,282
Current liabilities.......................................... (2,649)
-------------
Total purchase price................................... $ 26,529
=============
</TABLE>
The Company's Consolidated Statements of Operations for the three months ended
March 31, 1998 and 1997 include the operations of Atrium Door and Window
Company-West Coast ("ADW-West Coast") and ADW-Arizona from the dates of
acquisition, July 1, 1997 and March 27, 1998, respectively. The following table
presents the historical consolidated operating results of the Company for the
three months ended March 31, 1998 and 1997, compared to pro forma operating
results for such periods. The following unaudited pro forma information presents
consolidated operating results as though the acquisitions of ADW-West Coast and
ADW-Arizona had occurred at the beginning of the periods presented:
<TABLE>
<CAPTION>
Quarter Ended March 31, 1998 Quarter Ended March 31, 1997
--------------- -- --------------- -------------- --- ---------------
Actual Pro Forma Actual Pro Forma
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net sales................... $ 42,669 $ 48,888 $ 37,846 $ 46,906
Net income (loss)........... (377) (61) 211 344
</TABLE>
7. SUBSIDIARY GUARANTORS:
In connection with the issuance of the Senior Subordinated Notes (the
"Notes"), the Company's payment obligations under the Notes are fully and
unconditionally guaranteed, jointly and severally on a senior subordinated basis
by its wholly-owned subsidiaries: Atrium Door and Window Company of the
Northeast ("ADW-Northeast"), ADW-West Coast and ADW-Arizona (collectively, the
Subsidiary Guarantors). The Company has no non-guarantor direct or indirect
subsidiaries. The operations related to the assets of ADW-West Coast and
ADW-Arizona are included since July 1, 1997 and March 27, 1998, respectively,
the dates of acquisition. In the opinion of management, separate financial
statements of the respective Subsidiary Guarantors would not provide additional
material information, which would be useful in assessing the financial
composition of the Subsidiary Guarantors. No single Subsidiary Guarantor has any
significant legal restrictions on the ability of investors or creditors to
obtain access to its assets in event of default on the Subsidiary Guarantee
other than its subordination to senior indebtedness.
10
<PAGE> 11
Following is summarized combined financial information pertaining to these
Subsidiary Guarantors:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------------ -------------------
<S> <C> <C>
Current assets............................................. $ 16,824 $ 12,399
Noncurrent assets.......................................... 41,235 17,148
Current liabilities........................................ 4,477 1,906
Noncurrent liabilities..................................... - -
Quarter Ended March 31,
---------------------------------------
1998 1997
------------------- -------------------
Net sales.................................................. $ 4,329 $ 2,769
Gross profit............................................... 1,567 1,109
Net income from continuing operations...................... (38) 44
</TABLE>
The Notes and the Subsidiary Guarantees are subordinated to all existing and
future Senior Indebtedness of the Company. The indenture governing the Notes
contains limitations on the amount of additional indebtedness (including Senior
Indebtedness) which the Company may incur. As of March 31, 1998, the maximum
amount of Senior Indebtedness the Company and its Subsidiary Guarantors
collectively, and in the aggregate, could incur was $45,000.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS AND RISK FACTORS
From time to time, the Company issues statements in public filings (including
this Form 10-Q) or press releases, or officers of the Company make public oral
statements with respect to the Company that may be considered forward looking
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Act of 1934. This Quarterly Report on Form 10-Q contains
certain forward looking statements. Actual results could differ materially from
those projected in the forward-looking statements due to a number of factors,
including but not limited to the demand for new home construction, interest
rates, job formation, migration of the inter/intra-U.S. population, the
competitive environment for the Company's products and services, the timing of
new orders, the degree of market penetration of the Company's new products and
other factors set forth herein or in the Registration Statement and other
documents filed by the Company with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
The operations of the Company are cyclical in nature and generally result in
significant increases during the peak building season which coincides with the
second and third quarters of the year. Accordingly, results of operations for
the quarter ended March 31, 1998 are not necessarily indicative of results
expected for the full year.
NET SALES. Net Sales increased by $4,823 from $37,846 during the first quarter
of 1997 to $42,669 during the first quarter of 1998. The increase was primarily
due to sales from ADW-West Coast, acquired in July of 1997. Additionally, the
Company experienced growth at Atrium Wood, which was awarded a national patio
door sales contract during the second quarter of 1997, at Extruders, due to the
addition of a significant customer, and at Kel-Star Building Products, due to
continued growth since its acquisition in July of 1996.
COST OF SALES. Cost of sales increased from 64.9% of net sales during the first
quarter of 1997 to 67.3% of net sales during the first quarter of 1998. The
increase was due largely to increases in direct labor and raw material costs,
which were partially offset by improvements in material costs at the Atrium Wood
division, due to the product reengineering which occurred during 1997, as well
as the absorption of certain fixed overhead costs over a larger revenue base.
SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, delivery,
general and administrative expenses increased $1,154 from $10,054 (26.6% of net
sales during the first quarter of 1997) to $11,208 (26.3% of net sales during
the first quarter of 1998). The increase was primarily due to the inclusion of
three months of selling, delivery, general and administrative expenses of
ADW-West Coast, acquired in July of 1997, as well as an increase in amortization
expense related to software implementation costs, resulting from additional
amounts capitalized during 1997. Additionally, delivery and selling expenses
increased due to the increase in sales.
STOCK OPTION COMPENSATION EXPENSE. Stock option compensation expense increased
$289 from $52 during the first quarter of 1997 to $341 during the first quarter
of 1998. In addition to normal recurring stock option compensation expense of
$105, the Company recorded a one time charge of $236 associated with certain
variable options.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a $20,000 revolving credit facility with Bankers Trust Company,
which expires March 2004. Borrowings under the revolving credit facility were
$10,000 at March 31, 1998, excluding outstanding letters of credit, totaling
$809. Letters of credit secure workers compensation benefit payments and certain
other obligations. Because of the seasonal nature of the business, the Company's
borrowing requirements are traditionally highest during the second quarter. At
March 31, 1998 the Company had additional borrowing capacity of approximately
$9,191.
12
<PAGE> 13
Cash provided by operations was $4,592 for the quarter ended March 31, 1998 as
compared to cash used in operations of $826 for the same period in 1997. The
increase in cash provided by operations in the 1998 quarter was primarily due to
decreased prepaid expenses related to a property damage loss which occurred
during the first quarter of 1997 and was subsequently reimbursed by the
Company's insurance carrier. Additionally, increased accounts payable
contributed to the increase in cash provided by operations.
Capital expenditures totaled $495 in the quarter ended March 31, 1998, compared
to $428 during the same quarter in 1997. Expenditures in the 1998 period were
primarily used to increase capacity of and further automate the Company's
extrusion and window manufacturing plants, and to further enhance the Company's
management information systems.
YEAR 2000
The Company uses a variety of hardware and software technologies in its
operations. Mainframe computer systems are utilized to operate its accounting
and certain manufacturing systems. The Company has completed its assessment of
the effect of Year 2000 on its management information systems and is currently
Year 2000 compliant with respect to substantially all of its systems. The
Company does not expect any material future expenditures will be required in
order to become fully Year 2000 compliant on all systems.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to various claims, legal actions, and complaints arising in
the ordinary course of business. In the opinion of management, all such matters
are without merit or are of such kind, or involve such amounts, that an
unfavorable disposition would not have a material adverse effect on the
financial position, results of operations or liquidity of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The Exhibits listed on the accompanying Exhibit Index are
filed as part of this report.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATRIUM COMPANIES, INC.
(Registrant)
Date: May 15, 1998 By: /s/ Jeff L. Hull
----------------------- -------------------------------------
Jeff L. Hull
Chief Financial Officer and Secretary
(Principal Financial Officer)
Date: May 15, 1998 By: /s/ Eric W. Long
----------------------- -------------------------------------
Eric W. Long
Corporate Controller
(Principal Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001029336
<NAME> ATRIUM COMPANIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,989
<SECURITIES> 82
<RECEIVABLES> 29,330
<ALLOWANCES> 711
<INVENTORY> 20,806
<CURRENT-ASSETS> 53,665
<PP&E> 28,081
<DEPRECIATION> 9,098
<TOTAL-ASSETS> 118,092
<CURRENT-LIABILITIES> 26,307
<BONDS> 125,750
0
0
<COMMON> 0
<OTHER-SE> (35,023)
<TOTAL-LIABILITY-AND-EQUITY> 118,092
<SALES> 42,669
<TOTAL-REVENUES> 42,669
<CGS> 28,730
<TOTAL-COSTS> 28,730
<OTHER-EXPENSES> (56)
<LOSS-PROVISION> 145
<INTEREST-EXPENSE> 2,862
<INCOME-PRETAX> (416)
<INCOME-TAX> (39)
<INCOME-CONTINUING> (377)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (377)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
