<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended July 3, 1999
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 333-60855
AMM HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-2088661
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Tyson Place, Suite 200
2607 Kingston Pike
Knoxville, TN 37919-4048
(Address of Principal Executive Offices)
(Zip Code)
Registrant's Telephone Number, Including Area Code: (423) 329-5300
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 / /
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Date Class Outstanding Shares
---- ----- ------------------
<S> <C> <C>
August 13, 1999 AMM Holdings, Inc.
Common Stock, $.01 par value 1,000
</TABLE>
<PAGE>
Moll Industries, Inc. is a wholly-owned subsidiary of Anchor Holdings, Inc.
which is a wholly-owned subsidiary of AMM Holdings, Inc.
ii
<PAGE>
AMM HOLDINGS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Introduction......................................................................................................1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.....................................................................................3
Consolidated Balance Sheets at July 3, 1999
and December 31, 1998...................................................................................4
Consolidated Statements of Operations for
the Thirteen Weeks Ended July 3, 1999
and July 4, 1998 and the Twenty-six weeks Ended
July 3, 1999 and July 4, 1998............................................................................5
Consolidated Statements of Comprehensive
Income for the Thirteen Weeks Ended
July 3, 1999 and July 4, 1998 and the Twenty-six
weeks Ended July 3, 1999 and July 4, 1998................................................................6
Consolidated Statements of Cash Flows
for the Thirteen Weeks Ended July 3, 1999
and July 4, 1998 and the Twenty-six weeks Ended
July 3, 1999 and July 4, 1998............................................................................7
Notes to Consolidated Financial Statements............................................................8-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................................................................13
Item 3. Quantitative and Qualitative Disclosures about Market Risks.............................................19
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................................................20
Signatures.......................................................................................................21
</TABLE>
iii
<PAGE>
INTRODUCTION
AMM Holdings ("AMM Holdings", a wholly-owned subsidiary of AMM
Holdings, LLC) is a holding company and does not have any material operations or
assets other than ownership of all the capital stock of Anchor Holdings, Inc.
("Holdings"), which does not have any material operations or assets other than
ownership of all the capital stock of Moll Industries, Inc. (the "Company"), an
operating company.
The Company is a leading full service manufacturer and designer of
custom molded and assembled plastic components for a broad variety of customers
and end markets throughout North America and Europe.
The Company serves over 450 customers, including leading multinational
companies such as Abbott Laboratories, Colgate-Palmolive, Kimberly-Clark,
L'Oreal, Maybelline, Motorola, Procter & Gamble, Renault, Revlon, Siemens,
Whirlpool and Xerox. Products using the Company's plastic components are sold in
a wide range of end markets, including end markets for consumer products,
telecommunications/business equipment, household appliances, automobiles and
medical devices. The Company believes that the diversity of its customers,
markets and geographic regions creates a stable revenue base and reduces the
Company's exposure to particular market or regional economic cycles.
The Company has 30 manufacturing facilities with approximately 700
molding machines throughout North America and Europe, including France, Germany,
the United Kingdom and Portugal. The Company is capable of providing its
customers with integrated design and prototype development, mold design and
manufacturing, advanced plastic injection molding capabilities, and value-added
finishing services, such as hot stamping, pad printing, assembly and complete
product testing, all of which enable it to provide "one-stop" shopping to
customers seeking a wide range of services. The Company's technologically
advanced manufacturing facilities and equipment enable it to provide customized
solutions to highly demanding customer specifications.
The Company was formed through the merger in 1998 (the "Merger") of two
leading plastic injection molders, Moll PlastiCrafters Limited Partnership
("Moll") and Anchor Advanced Products, Inc. ("Anchor"), which were each
controlled by Mr. George Votis. Immediately prior to the Merger, Moll and Anchor
were independently operated entities. Anchor survived the Merger and changed its
name to "Moll Industries, Inc." Mr. Votis acquired Moll's predecessor in 1989
and has since completed seven acquisitions, increasing Moll's revenues from
approximately $8 million in 1989 to approximately $223.5 million in 1998 on a
pro forma basis. Such acquisitions included the acquisition in August 1997 of a
group of companies that had previously been under common ownership ("Hanning")
which supplies injection molded plastic components for use in digital
photocopiers with manufacturing facilities located in the United States, the
United Kingdom and Germany, and the acquisition in January 1998 of Somomeca
Industries S.A.R.L. and its subsidiaries ("Somomeca"), a French injection
molder. In March 1998, Mr. Votis acquired Anchor, which began operations in 1941
as a manufacturer of cosmetic brushes for Maybelline. In June 1998, the Company
acquired Gemini Plastic Services, Inc. ("Gemini"). In addition to the Merger and
the acquisition of Gemini, in June 1998, the Company and AMM Holdings
1
<PAGE>
also consummated offerings (the "Offering") of up to $130,000,000 of its 10
1/2% Senior Subordinated Notes due 2008 (the "Notes") and of up to
$68,000,000 of its 13 1/2% Senior Discount Notes due 2009 (the "Discount
Notes") pursuant to offerings which were exempt from the registration
requirements of the Securities Act of 1933, as amended, and applicable state
securities laws. Holdings is the guarantor of the Company's 11 3/4% Series B
Senior Notes due 2004 (the "Senior Notes") issued by Anchor prior to the
Merger.
The structure of the Company is as indicated in the table below:
---------------------------
AMM Holdings, Inc.
---------------------------
|
|
---------------------------
Anchor Holdings, Inc.
---------------------------
|
|
---------------------------
Moll Industries, Inc.
---------------------------
|
|
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
| | | | | |
<S> <C> <C> <C> <C> <C>
Cepillos De Moll Industries Moll Industries UK, Moll Industries, Moll France SARL Anchor Advanced
Matamoros Paderborn Limited Limited Products Foreign
S.A. de C.V. GmbH & Co. Sales Corporation
</TABLE>
Note: Certain subsidiaries of the Company are held through one or more
intermediate holding companies for certain corporate and tax considerations.
However, such holding companies have not been reflected on this chart.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
3
<PAGE>
AMM HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION, AND UNAUDITED)
<TABLE>
<CAPTION>
JULY 3, DECEMBER 31,
1999 1998
------------ --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................... $ 562 $ 14,396
Short-term investments....................................... -- 3,763
Accounts receivable, net of reserves for doubtful accounts of
$3,168 and $1,214, respectively........................... 81,943 70,872
Inventories, net............................................. 35,493 38,926
Deposits on tooling.......................................... 18,497 11,051
Property, plant and equipment held for sale.................. -- 1,429
Other current assets......................................... 2,805 1,812
------------ --------------
Total current assets................................. 139,300 142,249
------------ --------------
PROPERTY, PLANT AND EQUIPMENT:
Land......................................................... 3,448 3,876
Buildings.................................................... 41,882 39,100
Machinery and equipment...................................... 112,842 114,737
Less: accumulated depreciation............................... (24,987) (26,814)
------------ --------------
Property, plant and equipment, net........................ 133,185 130,899
------------ --------------
GOODWILL, NET.................................................. 42,877 40,874
------------ --------------
INTANGIBLE AND OTHER ASSETS, NET............................... 17,687 18,178
------------ --------------
Total assets......................................... $ 333,049 $ 332,200
------------ --------------
------------ --------------
LIABILITIES AND DEFICIT
CURRENT LIABILITIES:
Current portion of long-term obligations..................... $ 3,435 $ 8,228
Short-term borrowings........................................ 2,181 1,710
Accounts payable............................................. 49,677 37,037
Accrued liabilities.......................................... 24,505 27,270
Deferred income taxes........................................ -- 450
Deferred tooling revenue..................................... 15,125 9,083
------------ --------------
Total current liabilities............................ 94,923 83,778
------------ --------------
LONG-TERM OBLIGATIONS, NET OF CURRENT PORTION.................. 289,863 284,229
------------ --------------
DEFERRED INCOME TAXES.......................................... 5,141 5,295
------------ --------------
OTHER NON-CURRENT LIABILITIES.................................. 7,380 7,898
------------ --------------
COMMITMENTS AND CONTINGENCIES.................................. -- --
------------ --------------
DEFICIT:
Common stock ($.01 par value, 3 shares authorized, 1
shares issued and outstanding)............................ -- --
------------ --------------
Additional paid in capital................................... 387 387
Accumulated deficit.......................................... (61,597) (52,409)
Accumulated other comprehensive income....................... (3,048) 3,022
------------ --------------
Total deficit........................................ (64,258) (49,000)
------------ --------------
Total liabilities and deficit........................ $ 333,049 $ 332,200
------------ --------------
------------ --------------
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
<PAGE>
AMM HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION, AND UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
----------------------- ----------------------
JULY 3, JULY 4, JULY 3, JULY 4,
1999 1998 1999 1998
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES....................................................$ 105,792 $ 61,716 $ 207,341 $ 123,169
COST OF SALES................................................ 90,455 50,398 181,454 102,096
---------- --------- --------- ---------
Gross profit............................................... 15,337 11,318 25,887 21,073
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES................................................ 10,676 4,770 19,373 9,587
MANAGEMENT AND CONSULTING FEE TO
RELATED PARTIES ........................................ 50 428 100 1,198
---------- --------- --------- ---------
Operating income........................................... 4,611 6,120 6,414 10,288
INTEREST EXPENSE, NET........................................ 7,978 2,642 16,171 4,979
OTHER (INCOME) EXPENSE....................................... 321 394 (438) 538
MINORITY INTEREST IN INCOME OF
SUBSIDIARY ............................................. -- 2 -- 239
---------- --------- --------- ---------
INCOME (LOSS) BEFORE TAXES AND .............................. (3,688) 3,082 (9,319) 4,532
EXTRAORDINARY ITEM
PROVISION (BENEFIT) FOR INCOME TAXES ........................ (370) 651 (131) 744
---------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY .......................... (3,318) 2,431 (9,188) 3,788
ITEM
Extraordinary Item - Loss on extinguishment of debt ....... -- 1,235 -- 1,971
---------- --------- --------- ---------
NET INCOME (LOSS)............................................$ (3,318) $ 1,196 $ (9,188) $ 1,817
---------- --------- --------- ---------
---------- --------- --------- ---------
PRO FORMA INFORMATION
Provision (benefit) for income taxes.......................$ (370) $ 740 $ (131) $ 1,300
---------- --------- --------- ---------
---------- --------- --------- ---------
Net income (loss) before extraordinary item................$ (3,318) $ 2,342 $ (9,188) $ 3,232
---------- --------- --------- ---------
---------- --------- --------- ---------
EARNINGS (LOSS) PER SHARE....................................$ (3,318) $ 2,342 $ (9,188) $ 3,232
---------- --------- --------- ---------
---------- --------- --------- ---------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING................ 1 1 1 1
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
AMM HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS AND UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
-------------------- -------------------
JULY 3, JULY 4, JULY 3, JULY 4,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET INCOME (LOSS)..........................................$ (3,318) $ 1,196 $ (9,188) $ 1,817
OTHER COMPREHENSIVE INCOME (LOSS):
Deferred pension cost.................................... -- -- -- --
Foreign currency translation adjustment.................. (2,441) (709) (6,070) (120)
----------- ---------- --------- ---------
COMPREHENSIVE INCOME (LOSS)................................$ (5,759) $ 487 $(15,258) $ 1,697
----------- ---------- --------- ---------
----------- ---------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
AMM HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS AND UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
----------------------- ----------------------
JULY 3, JULY 4, JULY 3, JULY 4,
1999 1998 1999 1998
----------- --------- ------------ ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ (3,318) $ 1,196 $ (9,188) $ 1,817
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Extraordinary loss...................................... -- 1,235 -- 1,971
Depreciation and amortization........................... 6,343 2,947 12,346 5,086
(Gain) loss on disposal of fixed assets................. 93 (139) 106 (134)
Accretion on Senior Discount Notes...................... 1,277 -- 2,553 --
Deferred income taxes................................... (252) 106 (160) 199
Minority interest in subsidiary income (loss)........... -- 2 -- 239
Changes in assets and liabilities, net of assets
purchased and liabilities assumed:
Accounts receivable................................... 3,729 (7,868) (11,104) (4,999)
Inventories........................................... 1,663 941 3,904 (591)
Other current assets.................................. 27 (405) (852) (964)
Deposits on tooling................................... (5,035) 3,693 (7,167) 2,773
Other assets.......................................... (2,045) 352 (1,770) (1,300)
Accounts payable...................................... 2,115 244 13,299 (358)
Accrued liabilities................................... 3,032 4,877 (5,737) 1,842
Deferred tooling revenue.............................. 2,700 (3,536) 5,650 (2,856)
Other liabilities..................................... (980) -- (383) --
------ ------ ------- ------
Total adjustments.................................. 12,667 2,449 10,685 908
------ ------ ------- ------
Net cash provided by operating activities............. 9,349 3,645 1,497 2,725
------ ------ ------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (3,771) (3,779) (10,298) (6,983)
Proceeds on disposal of fixed assets...................... 1,862 137 3,074 553
Short-term investments.................................... -- -- 3,763 --
Purchase of Somomeca, net of cash received................ -- -- -- (11,737)
Purchase of Anchor, net of cash received.................. -- (6,453) -- (6,453)
Purchase of Gemini, net of cash received.................. -- (9,954) -- (9,954)
Purchase of Compression, net of cash received............. (1,236) -- (1,236) --
Purchase of Souplex, net of cash received................. (6,103) -- (6,103) --
------ ------ ------- ------
Net cash used in investing activities................. (9,248) (20,049) (10,800) (34,574)
------ ------ ------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments on) revolving loan
Facilities ............................................. (11,113) (791) (273) (10,594)
Proceeds from issuance of long-term obligations........... 1,041 130,910 1,278 187,218
Principal payments on long-term obligations............... (1,043) (82,420) (5,249) (106,157)
Financing costs........................................... -- (7,517) -- (7,517)
Capital contribution from parent.......................... -- 2,000 -- 2,000
Distributions to partners................................. -- (3,579) -- (5,438)
------- -------- ------- -------
Net cash provided by (used in) financing activities... (11,115) 38,603 (4,244) 59,512
------- -------- ------- -------
</TABLE>
(continued)
<PAGE>
AMM HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS AND UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
-------------------- -------------------
JULY 3, JULY 4, JULY 3, JULY 4,
1999 1998 1999 1998
------- ------- ------- -------
(continued)
<S> <C> <C> <C> <C>
EFFECT OF EXCHANGE RATE CHANGES IN
CASH...................................................... (132) 328 (287) 276
--------- -------- -------- --------
NET CHANGE IN CASH.......................................... (11,146) 22,527 (13,834) 27,939
BALANCE AT BEGINNING OF PERIOD.............................. 11,708 7,141 14,396 1,729
--------- -------- -------- --------
BALANCE AT END OF PERIOD....................................$ 562 $ 29,668 $ 562 $ 29,668
--------- -------- -------- --------
--------- -------- -------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest....................................$ 7,310 $ 3,228 $ 20,324 $ 4,674
--------- -------- -------- --------
--------- -------- -------- --------
Cash paid for income taxes................................$ -- $ 167 $ 210 $ 167
--------- -------- -------- --------
--------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
AMM HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS AND UNAUDITED)
1. ORGANIZATION
AMM Holdings, Inc. ("AMM Holdings", a wholly owned subsidiary of AMM
Holdings, LLC) was formed March 3, 1998 under the laws of the state of Delaware.
AMM Holdings owns Anchor Holdings, Inc. ("Holdings"). Holdings owns all of the
outstanding shares of Moll Industries, Inc. (the "Company", formerly known as
Anchor Advanced Products, Inc.) through which, including the Company's
subsidiaries, it designs and manufactures custom molded products and assembled
plastic components for a broad variety of customers throughout North America and
Europe. Neither AMM Holdings, nor Holdings has any operations or investments
other than their investment in the Company. The Company's products are sold to a
wide range of markets, including consumer products, telecommunications/business
equipment, household appliances, automobile and medical devices. The Company's
manufacturing facilities are located primarily in the United States, France,
Germany, Mexico and the United Kingdom.
2. MERGER WITH MOLL PLASTICRAFTERS LIMITED PARTNERSHIP
Effective June 26, 1998, the owners of Moll PlastiCrafters Limited
Partnership ("Moll") contributed their interest in Moll to AMM Holdings in
exchange for common shares of AMM Holdings. AMM Holdings contributed these
interests in Moll to Holdings and ultimately to Anchor Advanced Products, Inc.
("Anchor"). Moll was merged into Anchor (the "Merger") at which time the name of
Anchor was changed to Moll Industries, Inc. As the owners of Moll owned a
majority of the outstanding shares of AMM Holdings subsequent to the Merger,
Moll is considered the accounting acquiror in the Merger; therefore, the
consolidated financial statements presented for all periods herein are those of
Moll, and exclude those of Anchor prior to June 26, 1998. As a result of the
Merger, Moll's corporate structure was changed from a partnership to a
corporation.
3. BASIS OF PRESENTATION
The historical consolidated financial statements, through the date of the
Merger, include the accounts of Moll, as it is the accounting acquiror in the
Merger discussed in Note 2, and its subsidiaries. All significant results of
operations of companies acquired utilizing the purchase method of accounting
have been included in the consolidated financial statements since the effective
dates of the respective acquisition, (Somomeca Industries, Inc.--January 8,
1998, Anchor--June 26, 1998, Gemini Plastic Services, Inc.--June 26, 1998,
Compression--April 16, 1999 and Souplex, Limited--May 26, 1999). The results of
Reliance Products L.P. have been excluded from these consolidated financial
statements since June 26, 1998 (see Note 5). All significant intercompany
balances have been eliminated in consolidation.
The quarterly financial statements have been prepared, without audit, in
accordance with generally accepted accounting principles, pursuant to the rules
and regulations of the Securities and Exchange Commission. In the opinion of
management, the quarterly consolidated financial statements include all
adjustments necessary for a fair presentation of the financial position and
results of operations for the interim periods presented, such adjustments being
of a normal, recurring nature. Certain information and footnote disclosures have
been condensed or omitted pursuant to such rules and regulations. It is
suggested that these quarterly consolidated financial statements and notes
thereto are read in conjunction with the consolidated financial statements and
notes thereto for the year ended December 31, 1998. Results of operations in the
interim periods are not necessarily indicative of results to be expected for a
full year.
Earnings per share for all periods presented have been computed on a basis
assuming the number of common shares outstanding subsequent to the Merger were
outstanding for all periods presented. There are no potentially dilutive
securities currently outstanding.
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS
During June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires that
derivatives and hedges be valued at their fair value and establishes standards
for the recognition of changes in fair value. SFAS 133 is effective for periods
beginning after June 15, 1999. AMM Holdings is evaluating SFAS No. 133 to
determine the impact, if any, on its reporting and disclosure requirements.
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5 requires
the costs of start-up activities and organization costs, as defined, to be
charged to operations as incurred. Adoption of SOP 98-5 did not have a material
impact on AMM Holdings' results of operations, financial condition or cash
flows.
4. ACQUISITIONS
SOMOMECA
Effective January 8, 1998, Moll acquired the stock of Somomeca Industries,
Inc. ("Somomeca"). Moll paid $13,144 in cash, agreed to pay the sellers $1,488
over two years and assumed its liabilities. Additionally, Moll incurred
approximately $2,321 in expenses to complete the acquisition.
GEMINI
Effective June 26, 1998, the Company acquired the stock of Gemini Plastic
Services, Inc. ("Gemini") for cash of $10,186 and the assumption of its
liabilities.
COMPRESSION
Effective April 16, 1999, the Company acquired three locations of
Compression, Inc. ("Compression") for cash of $1,236.
SOUPLEX
Effective May 26, 1999, the Company acquired the stock of Souplex, Limited
("Souplex") for cash of $6,103 and assumption of its liabilities.
All of the acquisitions have been accounted for using the purchase method.
The results of operations of the acquired companies have been included in the
consolidated financial statements since the effective date of each acquisition.
See Note 8 for unaudited pro forma information.
5. DISPOSITIONS
Effective immediately prior to the Merger discussed in Note 2, Moll
distributed its interest in Reliance Products, L.P. ("Reliance") to its owners.
The total amount of such distribution was $3,135.
Reliance is a limited partnership based in Canada in which Moll had
purchased a 69% limited partnership interest effective December 12, 1996.
Holdings included the operating results of Reliance in its consolidated
financial statements through June 26, 1998. The earnings attributable to the
minority partners are included in the consolidated statements of operations of
Holdings as minority interest in income (loss) of subsidairy.
<PAGE>
6. INCOME TAXES
Effective June 26, 1998, Moll became a taxable entity. Prior to June 26,
1998, Moll was a partnership; accordingly, the earnings of Moll, including the
earnings of foreign subsidiaries attributable to Moll for United States tax
purposes, were included in the tax returns of the partners. Certain of Moll's
foreign subsidiaries have been taxable entities for foreign tax purposes since
their inception.
Included in the accompanying consolidated statements of operations is a
pro forma tax provision that was calculated as if AMM Holdings, including all
of its subsidiaries, was taxable for the entire period presented.
7. SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARIES
All material subsidiaries of the Company, each of which are wholly-owned,
have fully, unconditionally, jointly and severally guaranteed the otherwise
unsecured $100,000 of 11 3/4% Senior Notes due 2004 issued by Anchor and assumed
by the Company in the Merger. The subsidiaries that have not guaranteed the debt
only participate in intercompany transactions with the Company, which are
eliminated in the consolidated financial statements of the Company. The
guarantor subsidiaries are subject to the reporting requirements under Section
13 or 15(d) of the Securities Exchange Act of 1934. Management has determined
that separate financial statements for the guarantor subsidiaries are not
material to holders of the Notes. Combined financial information relating to
these entities since the date of their acquisition is presented herein in
accordance with Staff Accounting Bulletin No. 53 as an addition to the notes of
the consolidated financial statements of the Company.
Condensed consolidating financial information for AMM Holdings for the
quarter ended July 3, 1999 is as follows:
<TABLE>
<CAPTION>
NON-
MOLL GUARANTOR GUARANTOR CONSOLIDATED
INDUSTRIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS BALANCE
---------- ------------ ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash........................... $ 3 $ 550 $ 9 $ -- $ 562
Accounts Receivable............ 45,239 36,689 15 -- 81,943
Inventories.................... 26,236 9,257 -- -- 35,493
Other Current Assets........... 15,331 5,404 567 -- 21,302
--------- --------- ------- -------- --------
Total Current Assets. 86,809 51,900 591 -- 139,300
Fixed Assets................... 85,476 44,764 2,945 -- 133,185
Goodwill....................... 35,490 7,387 -- -- 42,877
Intercompany Receivables....... 55,224 1,163 2,321 (58,708) --
Other Assets................... 13,763 3,924 -- -- 17,687
--------- --------- ------- -------- --------
$ 276,762 $ 109,138 $ 5,857 $(58,708) $333,049
--------- --------- ------- -------- --------
--------- --------- ------- -------- --------
Accounts Payable............... $ 24,239 $ 25,147 $ 291 $ -- $ 49,677
Accrued Liabilities............ 15,855 8,182 468 -- 24,505
Other Current Liabilities...... 14,955 5,786 -- -- 20,741
--------- --------- ------- -------- --------
Total Current
Liabilities........ 55,049 39,115 759 -- 94,923
Long Term Debt................. 277,730 12,133 -- -- 289,863
Other Non-current Liabilities.. 3,407 9,114 -- -- 12,521
Intercompany Payables.......... -- 58,475 -- (58,475) --
--------- --------- ------- -------- --------
Total Liabilities.... 336,186 118,837 759 (58,475) 397,307
Equity......................... (59,424) (9,699) 5,098 (233) (64,258)
--------- --------- ------- -------- --------
$ 276,762 $ 109,138 $ 5,857 $(58,708) $333,049
--------- --------- ------- -------- --------
--------- --------- ------- -------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NON-
MOLL GUARANTOR GUARANTOR CONSOLIDATED
INDUSTRIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS BALANCE
---------- ------------ ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales...................... $ 147,354 $ 59,987 $ 4,884 $ (4,884) $207,341
Cost of Sales.................. 127,462 55,554 3,322 (4,884) 181,454
--------- ------------ ------------ ------------ --------
Gross Profit......... 19,892 4,433 1,562 -- 25,887
Selling, General &
Administrative Expense........ 10,763 7,709 1,001 -- 19,473
--------- ------------ ------------ ------------ --------
Operating Income..... 9,129 (3,276) 561 -- 6,414
Interest Expense, net.......... 13,533 2,638 -- -- 16,171
Other (Income) Expense......... (273) (454) 289 -- (438)
--------- ------------ ------------ ------------ --------
Income Before Taxes and (4,131) (5,460) 272 -- (9,319)
Extraordinary Item.
Income Tax Expense (Benefit)... -- (246) 115 -- (131)
--------- ------------ ------------ ------------ --------
Net Income (Loss).... $ (4,131) $ (5,214) $ 157 $ -- $ (9,188)
--------- ------------ ------------ ------------ --------
--------- ------------ ------------ ------------ --------
STATEMENT OF CASH FLOWS DATA:
Net Income (Loss)................. $ (4,131) $ (5,214) 157 $ -- $ (9,188)
Depreciation and Amortization..... 8,148 4,097 101 -- 12,346
Change in Assets and Liabilities.. (7,386) 3,724 (498) -- (4,160)
Other............................. 2,561 (62) -- -- 2,499
--------- ------------ ------------ ------------ --------
Cash Flows from Operating
Activities............ (808) 2,545 (240) -- 1,497
--------- ------------ ------------ ------------ --------
Capital Expenditures.............. (5,714) (4,584) -- -- (10,298)
Proceeds from Disposal of Fixed
Assets............................ 2,035 1,039 -- -- 3,074
Investments (3,576) -- -- -- (3,576)
--------- ------------ ------------ ------------ --------
Cash Flows from Investing
Activities............ (7,255) (3,545) -- -- (10,800)
--------- ------------ ------------ ------------ --------
Payments on Revolving Loan
Facility........................ 500 (773) -- -- (273)
Proceeds from Issuance of Long-
Term Obligations................ -- 1,278 -- -- 1,278
Principle Payments on Long-Term
Obligations..................... (3,436) (1,813) -- -- (5,249)
Intercompany transfers............ (2,251) 2,059 192 -- --
--------- ------------ ------------ ------------ --------
Cash Flows from Financing
Activities............ (5,187) 751 192 -- (4,244)
--------- ------------ ------------ ------------ --------
Effect of Exchange Rate Changes
in Cash........................... -- (287) -- -- (287)
--------- ------------ ------------ ------------ --------
Net Change in Cash................ (13,250) (536) (48) -- (13,834)
Balance at Beginning of Period.... 13,253 1,086 57 -- 14,396
--------- ------------ ------------ ------------ --------
Balance at End of Period.......... $ 3 $ 550 $ 9 $ -- $ 562
--------- ------------ ------------ ------------ --------
--------- ------------ ------------ ------------ --------
</TABLE>
The financial information of Holdings is identical to that of the Company.
Therefore, summarized financial information of the Company is not required.
8. PRO FORMA INFORMATION
The following statement of income data gives effect to the merger with
Anchor, the acquisitions of Gemini and Souplex and the distribution of Reliance
as if they had occurred at the beginning of the respective periods.
<TABLE>
<CAPTION>
TWENTY SIX WEEKS ENDED
------------------------
JULY 3, JULY 4,
1999 1998
---- ----
<S> <C> <C>
Net sales................................................. $ 217,646 $ 211,505
Operating income.......................................... $ 7,272 $ 13,802
Loss before taxes and extraordinary item.................. $ (8,598) $ (3,647)
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Report may contain certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. All such
statements are based upon a number of assumptions and estimates that are
inherently subject to significant uncertainties and contingencies, many of which
are beyond the control of the Company, and reflect future business decisions
that are subject to change. Some of these assumptions inevitably will not
materialize, and unanticipated events will occur that will affect the Company's
results.
OVERVIEW
AMM Holdings is a holding company and does not have any material operations or
assets other than its ownership of all of the capital stock of Anchor Holdings,
Inc., which does not have any material operations or assets other than the
ownership of all of the capital stock of the Company. Unless otherwise noted,
references herein to the Company also apply to AMM Holdings.
The Company is a leading full service manufacturer and designer of custom molded
and assembled plastic components for a broad variety of customers and end
markets throughout North America and Europe. The Company serves over 450
customers, including leading multi-national companies such as Abbott
Laboratories, Colgate-Palmolive, Kimberly-Clark, L'Oreal, Maybelline, Motorola,
Proctor & Gamble, Renault, Revlon, Whirlpool and Xerox. Products using the
Company's components are sold in a wide range of end-markets, including end
markets for consumer products, telecommunications/business equipment, household
appliances, automobiles and medical devices.
The Company has been formed by a number of acquisitions that have been
integrated through consolidation of manufacturing facilities, logistical
optimization and reduction of overhead. In July 1991, certain entities
controlled by Mr. Votis and his partners were merged to form Moll PlastiCrafters
Limited Partnership ("Moll"). Since 1991, Moll has grown significantly through
several strategic acquisitions in North America and Europe. In December 1992,
Moll acquired Textek Plastics, Inc., based in San Antonio and Round Rock, Texas.
In July 1993, Moll acquired Advanced Custom Molders, based in Georgetown and El
Paso, Texas. In October 1994, Moll acquired Quality Plastics Company, based in
Newberg, Oregon.
In August 1997, Moll acquired the Hanning group of companies, a leading
supplier of injection molded plastic components for use in digital photocopiers,
with manufacturing facilities located in the United States, the United Kingdom
and Germany. In January 1998, Moll acquired Somomeca Industries; a major French
supplier of injection molded plastic components and plastic injection molds. In
March 1998, Mr. Votis acquired Anchor from affiliates of the Thomas H. Lee
Company.
In June 1998, the Company was formed through the merger (the "Merger")
of two leading plastic injection molders, Moll and Anchor Advanced Products,
Inc. ("Anchor"), which were each controlled by Mr. Votis. Prior to the Merger,
Moll and Anchor were independently operated entities. In the Merger, the owners
of Moll contributed their interest in Moll to AMM Holdings in exchange for
common shares of AMM Holdings. AMM Holdings contributed these interests in Moll
to Holdings and ultimately to Anchor. Moll was merged into Anchor at which time
the name of Anchor was changed to Moll Industries, Inc. As the owners of Moll
owned a majority of the outstanding shares of AMM Holdings subsequent to the
Merger, Moll is considered the accounting acquiror in the Merger; therefore, the
consolidated financial statements presented for all periods herein are those of
Moll, and exclude those of Anchor prior to June 26, 1998.
Immediately after the Merger, the Company acquired Gemini Plastic, a
specialty medical and telecommunications product plastic molding company with
one plant in Florida. In April 1999, the Company acquired three locations of
Compression, Inc. ("Compression"), a provider of product design and
<PAGE>
engineering services. In May 1999, the Company acquired Souplex, Limited
("Souplex") a UK based custom injection molder, specializing in the
telecommunications and business equipment industries.
The Company continues to integrate the businesses that were merged.
This includes the pursuit of global opportunities with customers previously
served by each individual company, identification of core competencies the
Company should focus on to meet its strategies, modification of the cost
structure within certain businesses and implementation of an integrated
management information system. This effort has included the sale in March 1999
of its Lakewood and Betta divisions, neither of which were critical to the
Company's long-term success and the June 1999 closure of its Round Rock, TX
facility due to over capacity within the merged company. Further closures or
dispositions could result as the integration continues.
Certain of the AMM Holdings's operating data for the thirteen and
twenty-six weeks ended July 3, 1999 and July 4, 1998 are set forth below as
percentages of net sales.
<TABLE>
<CAPTION>
Thirteen Weeks Ended, Twenty-six Weeks Ended
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Gross profit 14.5% 18.3% 12.5% 17.1%
Selling, general and administrative 10.1% 7.6% 9.3% 7.8%
Management and consulting fee to related parties 0.0% 0.7% 0.0% 1.0%
Operating income 4.4% 10.0% 3.1% 8.3%
Interest expense, net 7.5% 4.3% 7.8% 4.0%
Provision (benefit) for income taxes (0.3)% 1.1% (0.1)% 0.6%
Extraordinary item 0.0% 2.0% 0.0% 1.6%
Net income (loss) (3.1)% 1.9% (4.4)% 1.5%
</TABLE>
THIRTEEN WEEKS ENDED JULY 3, 1999 VERSUS JULY 4, 1998
NET SALES. Net sales increased by $44.1 million, or 71.4%, to $105.8
million for 1999 from $61.7 million for 1998, due to the acquisitions of Anchor,
Gemini and Souplex, offset by the distribution of the Company's limited
partnership interest in Reliance Products. On a pro forma basis, sales increased
$4.1 million, or 3.9%. Sales increased in the Display division by $14.5 million
over 1998 due to the Maybelline Display 99 Wall program. The Wall program was
introduced in the first quarter of 1999; however, demand for the Wall is highest
in the second quarter. This increase was somewhat offset by a $4.8 million
decline in sales in the Germany and UK divisions and $3.1 million decline in
sales in the Cosmetic division due to reduced demand by Xerox and Maybelline,
respectively.
GROSS PROFIT. Gross profit increased by $4.0 million, or 35.5%, to
$15.3 million for 1999 from $11.3 million for 1998, resulting from the inclusion
of results for Anchor and Gemini, offset by the distribution of the Company's
limited partnership interest in Reliance Products. Additionally, certain of the
acquired companies earn lower margins than the Company had historically
realized, thereby, diluting the average margin. On a pro forma basis, gross
profit increased $2.7 million or 19.9%. The increase was the result of the
increased volume in the Display division, increased utilization of the Seagrove
facility due to the closure of the Round Rock facility and a retroactive price
increase in the Brush division that positively impacted gross profit by
approximately $1.0 million.
SELLING, GENERAL AND ADMINISTRATIVE. SG&A expenses increased $5.9
million, or 123.8%, to $10.7 million for 1999 from $4.8 million for 1998 due to
the inclusion of Anchor and Gemini, offset by the distribution of the Company's
limited partnership interest in Reliance Products. On a pro forma basis, SG&A
expenses increased $3.0 million or 36.0% due to a charge of $843 to decrease
employment levels in the Germany division, expenses to implement management
information systems in the French and
<PAGE>
Germany divisions, as well as increased professional services, travel and
computer costs incurred in connection with the integration of the merged
companies.
MANAGEMENT AND CONSULTING FEE TO RELATED PARTIES. Management and
Consulting Fee to Related Parties decreased by $378, or 88.3%, to $50 for 1999
from $428 for 1998, due to restrictions contained in the Notes and Senior Notes.
OPERATING INCOME. Operating income decreased by $1.5 million, or 24.7%,
to $4.6 million for 1999 from $6.1 million for 1998 for the reasons listed
above.
NET INTEREST EXPENSE. Net interest expense increased by $5.3 million,
or 202.0%, to $7.9 million for 1999 from $2.6 million for 1998 due to the
issuance of $130 million Notes and $68 million Discount Notes near the end of
the second quarter of 1998 to finance the acquisition of Gemini and to refinance
existing debt. Additionally, the Company assumed $100 million of debt in the
Merger.
INCOME TAXES. The Company recognized an income tax benefit of $370 for
1999 compared to an expense of $651 for 1998. The benefit was the result of
losses in the French division. Prior to the Merger, the Company's US operations
were organized as a partnership for U.S. tax purposes and, accordingly, did not
reflect income tax expense in its financial statements.
EXTRAORDINARY ITEM. Extraordinary Item of $1.2 million for 1998
represents a loss on early retirement of bank debt due to the write-off of the
remaining deferred debt issue costs.
NET INCOME. Net income decreased $4.5 million, to a $3.3 million loss
for 1999 from $1.2 million income for 1998 as a result of the above factors.
TWENTY-SIX WEEKS ENDED JULY 3, 1999 VERSUS JULY 4, 1998
NET SALES. Net sales increased by $84.2 million, or 68.3%, to $207.3
million for 1999 from $123.2 million for 1998, due to the acquisitions of
Anchor, Gemini and Souplex, offset by the distribution of the Company's limited
partnership interest in Reliance Products. On a pro forma basis, sales increased
$6.1 million, or 2.9%. Sales increased in the Display division by $21.2 million
over 1998 due to the Maybelline Display 99 Wall program. The Wall program was
introduced in the first quarter of 1999. This increase was somewhat offset by a
$6.8 million decline in sales in the Germany and UK divisions and $6.3 million
decline in sales in the Cosmetic division due to reduced demand by Xerox and
Maybelline, respectively.
GROSS PROFIT. Gross profit increased by $4.8 million, or 22.8%, to
$25.9 million for 1999 from $21.1 million for 1998, resulting from the inclusion
of results for Anchor and Gemini, offset by the distribution of the Company's
limited partnership interest in Reliance Products. Additionally, certain of the
acquired companies earn lower margins than the Company had historically
realized, thereby, diluting the average margin. On a pro forma basis, gross
profit decreased $2.6 million or 8.2%. The decrease was the result of operating
inefficiencies encountered in the start-up of the Maybelline Display 99 Wall
project in the first quarter and decreased sales in the Germany, UK and Cosmetic
divisions.
SELLING, GENERAL AND ADMINISTRATIVE. SG&A expenses increased $9.8
million, or 102.1%, to $19.4 million for 1999 from $9.6 million for 1998 due to
the inclusion of Anchor and Gemini, offset by the distribution of the Company's
limited partnership interest in Reliance Products. On a pro forma basis, SG&A
expenses increased $4.0 million or 23.1% due to a charge of $843 to decrease
employment levels in the Germany division, expenses to implement management
information systems in the French and Germany divisions, as well as increased
professional services, travel and computer costs incurred in connection with the
integration of the merged companies.
<PAGE>
MANAGEMENT AND CONSULTING FEE TO RELATED PARTIES. Management and
Consulting Fee to Related Parties decreased by $1.1 million, or 91.7%, to $0.1
for 1999 from $1.2 million for 1998, due to restrictions contained in the Notes
and Senior Notes.
OPERATING INCOME. Operating income decreased by $3.9 million, or 37.7%,
to $6.4 million for 1999 from $10.3 million for 1998 for the reasons listed
above.
NET INTEREST EXPENSE. Net interest expense increased by $11.2 million,
or 224.8%, to $16.2 million for 1999 from $5.0 million for 1998 due to the
issuance of $130 million Notes and $68 million Discount Notes near the end of
the second quarter of 1998 to finance the acquisition of Gemini and to refinance
existing debt. Additionally, the Company assumed $100 million of debt in the
Merger.
INCOME TAXES. The Company recognized an income tax benefit of $131 for
1999 compared to an expense of $744 for 1998. The benefit was the result of
losses incurred in the French division. Prior to the Merger, the Company's US
operations were organized as a partnership for U.S. tax purposes and,
accordingly, did not reflect income tax expense in its financial statements.
EXTRAORDINARY ITEM. Extraordinary Item of $2.0 million for 1998
represents a loss on early retirement of bank debt due to the write-off of the
remaining deferred debt issue costs.
NET INCOME. Net income decreased $11.0 million, to a $9.2 million loss
for 1999 from $1.8 million income for 1998 as a result of the above factors.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements consist primarily of working
capital needs, capital expenditures, required payments of principal and interest
on any borrowings under the Bank of America Credit Facility, required payments
of principal and interest on the European debt, required payments of interest on
the Notes and Senior Notes and principal at maturity.
The Company has no significant principal payments due in 1999 while
interest payments are expected to total approximately $28.0 million.
Additionally, the Company expects capital expenditures to be limited to normal
periodic replacement of equipment (approximately $16 million) with no
significant projects currently planned.
In 1999, the Company's cash provided by operations decreased by $1.2
million to $1.5 million from cash provided by operations of $2.7 million for
1998. The increased cash utilization was primarily the result of the loss for
the year to date, an increase in accounts receivable and interest payments on
both the Notes and Senior Notes. These uses were partially offset by an increase
in accounts payable. The Company has spent $10.3 million during the year to make
purchases of property, plant and equipment. Additionally, the Company has spent
$7.3 during the year in connection with the purchases of Compression and
Souplex. The Company has borrowed $0.5 million under the Credit Facility during
the year.
The Company believes that cash flows from operating activities will be
adequate to meet debt service obligations and working capital needs in 1999. The
Company plans to pursue financing alternatives to supplement cash from operating
activities to fund planned capital expenditures for 1999.
INFLATION AND CHANGING PRICES
The Company's sales and costs are subject to inflation and price
fluctuations. However, because changes in the cost of plastic resins, the
Company's principal raw material, is generally passed through to customers, such
changes historically have not, and in the future are not expected to have, a
material effect on Moll's gross profit.
IMPACT OF NEW ACCOUNTING STANDARDS
<PAGE>
During June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 133, Accounting for Derivative Instruments
and Hedging Activities. The Statement requires that derivatives and hedges be
valued at their fair value and establishes standards for the recognition of
changes in fair value. The Statement is effective for periods beginning after
June 15, 1999. The Company is evaluating SFAS No. 133 to determine the impact,
if any, on its reporting and disclosure requirements.
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5 requires
the costs of start-up activities and organization costs, as defined, to be
charged to operations as incurred. Adoption of this SOP did not have a
significant impact on the Company's financial position or results of operations.
<PAGE>
YEAR 2000
Historically, certain computerized systems have had two digits rather
than four digits to define the applicable year, which could result in
recognizing a date using "00" as the year 1900 rather than the year 2000. This
could result in major failures or miscalculations, and is generally referred to
as the "Year 2000 issue." The Company recognizes that the impact of the Year
2000 issue extends beyond traditional computer hardware and software to
automated plant systems and instrumentation, as well as to third parties. The
Year 2000 issue is being addressed within the Company by its individual business
units, and progress is reported periodically to management.
The Company has committed resources to conduct risk assessments and to
take corrective action, where required, within each of the following areas:
information technology, plan systems and external parties. Information
technology includes telecommunications, as well as traditional computer software
and hardware in the mainframe, midrange and desktop environments. Plant systems
include all automation and embedded chips used in plant operations. External
parties include any third party with which the Company does business.
In the information technology area, inventory and assessment audits
in the mainframe and midrange environments were completed in third quarter
1998 and corrective action was completed in the fourth quarter 1998, except
for business application software which was completed in the second quarter
1999. Inventory and assessment audits for telecommunications were completed
in third quarter 1998 with corrective action completed in the second quarter
1999. Finally, inventory and assessment audits in the desktop environment
were completed in third quarter 1998, with corrective action expected to be
completed by the third quarter 1999. The companies located in Europe began
installing systems in the first quarter 1999 that will be Year 2000 ready.
In the plant systems area, 100% of the Company's North American
business units have completed their inventory and assessment audits.
Inventory and assessment audits are continuing in Europe. The Company is
relying on vendor testing and certification with validation through limited
internal testing and/or industry test results. Testing and corrective action
in the North American business units is complete.
With respect to external parties, the Company's North American
business units have completed their inventory audit of critical external
parties. Risk assessment is complete and monitoring of risk in this area will
continue during 1999, as many external parties will not have completed their
work. The audit of critical European external parties is in process.
The total cost of Year 2000 activities is not expected to be material
to the Company's operations, liquidity or capital resources. Costs are being
managed within each business unit. The total cost for the Company's Year 2000
work is estimated to be $2 million.
17
<PAGE>
Costs exclude expenditures for replacement systems, which were previously
scheduled.
There is still uncertainty around the scope of the Year 2000 issue. At
this time the Company cannot quantify the potential impact of these failures.
There can be no assurance that there will not be a delay in, or increased costs
associated with, the Company's efforts to address the Year 2000 issue, and the
Company's inability to implement the necessary changes could have an adverse
effect on the Company. The Company's Year 2000 program and contingency plans are
being developed to address issues within the Company's control. The program
reduces but may not eliminate the issues of external parties.
18
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
Market risk represents the risk of loss that may impact the
consolidated financial statements of the Company due to adverse changes in
financial market prices and rates. The Company's market risk exposure is
primarily a result of fluctuations in interest rates and foreign exchange rates.
The Company has not entered into derivative-hedging transactions to manage risk
connected with such fluctuations.
The Company derived approximately 30% of its 1999 sales to date from
its operations in Europe. The Company prices its products and incurs
operating expenses in Europe in the currency of the country in which the
product is manufactured and sold and, in the United States, in United States
dollars. To the extent that costs and prices are in the currency of the
country in which the products are manufactured and sold, the costs and prices
of such products in dollars will vary as the value of the dollar fluctuates
against such currencies. There can be no assurance that there will not be
increases in the value of the dollar against such currencies that will reduce
the dollar return to the Company on the sale of its products in such
countries.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K.
None.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 17, 1999 AMM HOLDINGS, INC.
By: /s/ Phyllis C. Best
-------------------------------
Phyllis C. Best
Chief Financial Officer
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001067531
<NAME> AMU HOLDINGS
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUL-03-1999
<EXCHANGE-RATE> 1
<CASH> 562
<SECURITIES> 0
<RECEIVABLES> 85,111
<ALLOWANCES> (3,168)
<INVENTORY> 35,493
<CURRENT-ASSETS> 139,300
<PP&E> 158,172
<DEPRECIATION> (24,987)
<TOTAL-ASSETS> 333,049
<CURRENT-LIABILITIES> 94,923
<BONDS> 270,266
0
0
<COMMON> 0
<OTHER-SE> (64,258)
<TOTAL-LIABILITY-AND-EQUITY> 333,049
<SALES> 207,341
<TOTAL-REVENUES> 207,341
<CGS> 181,454
<TOTAL-COSTS> 19,473
<OTHER-EXPENSES> (438)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,171
<INCOME-PRETAX> (9,319)
<INCOME-TAX> (131)
<INCOME-CONTINUING> (9,188)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,188)
<EPS-BASIC> (9,188)
<EPS-DILUTED> (9,188)
</TABLE>
