<PAGE> 1
- --------------------------------------------------------------------------------
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, 1995
---------------------------------
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
------
ATLANTIS PLASTICS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 06-1088270
- ------------------------------------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2665 South Bayshore Drive, Suite 800, Miami, Florida 33133
-----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including Area Code) (305) 858-2200
--------------
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 issuer's classes of
common stock, as of the latest practicable date.
Class Shares Outstanding at September 30, 1995
------------- ---------------------------------
A, $.10 par value 4,192,823
B, $.10 par value 2,899,977
- -------------------------------------------------------------------------------
<PAGE> 2
ATLANTIS PLASTICS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Income Statements (Unaudited)
for the three and nine months ended September 30, 1995 and 1994 . . . . . 1
Consolidated Balance Sheets (Unaudited)
as of September 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 1995 and 1994 . . . . . . . . . . 3
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . 5
Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
------------------------- ---------------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ---------------------------
1995 1994 1995 1994
------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net sales................................................................ $70,910,707 $69,563,386 $217,112,113 $187,234,112
Cost of sales............................................................ 61,235,840 56,772,631 185,475,600 151,121,825
----------- ----------- ------------ ------------
Gross profit.................................................. 9,674,867 12,790,755 31,636,513 36,112,287
Selling, general and administrative expenses............................. 8,065,557 7,174,498 23,220,006 20,143,278
----------- ----------- ------------ ------------
Operating income.............................................. 1,609,310 5,616,257 8,416,507 15,969,009
Interest expense......................................................... (3,595,323) (3,350,639) (11,095,719) (9,722,639)
Interest income.......................................................... 32,326 33,274 131,189 91,312
----------- ----------- ------------ ------------
Income (loss) from continuing operations before
income taxes................................................. (1,953,687) 2,298,892 (2,548,023) 6,337,682
Income tax (provision) benefit........................................... 676,503 (1,031,530) 487,681 (2,917,431)
----------- ----------- ------------ ------------
Income (loss) from continuing operations...................... (1,277,184) 1,267,362 (2,060,342) 3,420,251
Income (loss) from discontinued operations,
less applicable taxes............................................... 355,872 358,306 (250,970) 479,744
Gain on Sale of Western Pioneer, less applicable taxes .................. 482,375 - 482,375 -
----------- ----------- ------------ ------------
Net income (loss) ........................................... (438,937) 1,625,668 (1,828,937) 3,899,995
Preferred stock dividends................................................ (36,250) (36,250) (108,750) (108,750)
----------- ----------- ------------ ------------
Income (loss) applicable to
common shares and equivalents......................................... $ (475,187) $ 1,589,418 $ (1,937,687) $ 3,791,245
=========== =========== ============ ============
INCOME (LOSS) PER COMMON SHARE:
Continuing operations.................................................. $ (0.17) $ 0.16 $ (0.28) $0.45
Discontinued operations................................................ 0.05 0.05 (0.03) 0.05
Gain on Sale of Western Pioneer ....................................... 0.06 0.00 0.06 0.00
----------- ----------- ------------ ------------
Net income (loss) ............................................ $ (0.06) $ 0.21 $ (0.25) $ 0.50
=========== =========== ============ ============
Weighted average shares outstanding...................................... 7,444,367 7,556,919 7,562,491 7,538,977
=========== =========== ============ ============
DIVIDENDS DECLARED PER COMMON SHARE...................................... $ 0.03 $ 0.03 $ 0.08 $ 0.08
=========== =========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
1
<PAGE> 4
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
------------- ------------
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
Cash and equivalents....................................................................... $ 3,619,621 $ 1,432,567
Accounts receivable, net................................................................... 33,357,721 36,584,996
Inventories................................................................................ 18,520,046 22,854,778
Other current assets....................................................................... 4,704,054 6,353,248
------------ ------------
Current assets......................................................................... 60,201,442 67,225,589
Property and equipment, net................................................................ 64,431,285 61,255,540
Investment in WinsLoew Furniture, Inc. stock............................................... 5,127,781 5,096,722
Net assets of discontinued operations...................................................... 0 9,378,506
Goodwill, net of amortization.............................................................. 61,993,044 63,466,653
Other assets............................................................................... 3,898,462 5,098,953
------------ ------------
$195,652,014 $211,521,963
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses...................................................... $ 25,945,966 $ 32,398,197
Current portion of long-term debt.......................................................... 2,375,957 1,859,821
------------ ------------
Current liabilities.................................................................... 28,321,923 34,258,018
Long-term debt, net of current portion..................................................... 119,602,083 127,374,389
Deferred income taxes...................................................................... 7,596,420 7,841,678
Other liabilities.......................................................................... 1,437,135 1,625,530
------------ ------------
Total liabilities...................................................................... 156,957,561 171,099,615
------------ ------------
Commitments and contingencies
Shareholders' equity:
Series A convertible preferred stock, $1.00 par value, 20,000 shares
authorized, issued and outstanding in 1995 and 1994.................................. 2,000,000 2,000,000
Class A common stock, $.10 par value, 20,000,000 shares authorized,
4,192,823 and 4,082,437 shares issued and outstanding in 1995 and 1994................. 419,282 408,244
Class B common stock, $.10 par value, 7,000,000 shares authorized,
2,899,977 and 3,002,363 shares issued and outstanding in 1995 and 1994................. 289,998 300,236
Additional paid-in capital............................................................... 6,827,531 6,781,206
Unrealized holding gains (losses), net of tax............................................ 410,008 (284,219)
Retained earnings........................................................................ 28,747,634 31,216,881
------------ ------------
Total shareholders' equity............................................................. 38,694,453 40,422,348
------------ ------------
$195,652,014 $211,521,963
============ ============
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
2
<PAGE> 5
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
-------------------------
Nine Months Ended
September 30,
-------------------------
1995 1994
-------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................................................... $(1,828,937) $ 3,899,995
----------- -----------
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation....................................................................... 6,255,816 5,742,184
Amortization of goodwill........................................................... 1,473,609 1,308,698
Loan fee and other amortization.................................................... 390,368 373,371
Gain on sale of Western Pioneer.................................................... (482,375) 0
Gain on sale of Joint Venture...................................................... (36,432) 0
Changes in assets and liabilities, net of acquisition of assets of business in 1994:
Accounts receivable................................................................ 3,227,275 (8,711,090)
Inventories........................................................................ 4,334,732 (3,870,927)
Other current assets............................................................... 1,649,194 (1,664,829)
Accounts payable and accrued expenses.............................................. (6,452,231) 301,112
Deferred income taxes.............................................................. (245,258) 79,216
Other liabilities.................................................................. (188,395) (157,675)
Other, net......................................................................... (367,387) (17,107)
Effects of discontinued operations..................................................... (1,464,356) (374,427)
----------- -----------
Total adjustments.................................................................. 8,094,560 (6,991,474)
----------- -----------
Net cash provided by (used in) operating activities.............................. 6,265,623 (3,091,479)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................................................... (9,099,214) (12,159,301)
Proceeds from sale of Western Pioneer.................................................... 12,000,000 0
Proceeds from sale of Joint Venture...................................................... 870,000 0
Payment for acquisition of assets of business............................................ 0 (12,411,835)
----------- -----------
Net cash provided by (used in) investing activities.............................. 3,770,786 (24,571,136)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreements............................................. 23,497,214 35,519,878
Repayments under revolving credit agreements............................................. (45,161,685) (12,503,837)
Payments on long-term debt............................................................... (1,052,587) (301,684)
Proceeds from issuance of long-term debt................................................. 15,460,888 4,800,000
Dividends on preferred and common stock.................................................. (640,310) (643,764)
Purchases of treasury stock.............................................................. 0 (728,728)
Proceeds from exercise of stock options.................................................. 47,125 192,990
----------- -----------
Net cash (used in) provided by financing activities.............................. (7,849,355) 26,334,855
----------- -----------
Net increase (decrease) in cash and equivalents............................................ 2,187,054 (1,327,760)
Cash and equivalents at beginning of period................................................ 1,432,567 2,170,060
----------- -----------
Cash and equivalents at end of period...................................................... $ 3,619,621 $ 842,300
=========== ===========
</TABLE>
(Continued)
3
<PAGE> 6
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Supplemental disclosures of cash flow information -
continuing operations:
<TABLE>
<CAPTION>
-------------------------
Nine Months Ended
September 30,
-------------------------
1995 1994
-------------------------
<S> <C> <C>
Cash paid during the period for:
Interest............................................................................. $13,133,294 $12,024,536
=========== ===========
Income taxes......................................................................... $ 1,316,048 $ 3,150,269
=========== ===========
</TABLE>
During 1994 the Company purchased certain assets and assumed certain
liabilities of Advanced Plastics, Inc. for $12,411,835. Assets acquired,
liabilities assumed and consideration paid for this acquisition was as follows:
<TABLE>
<S> <C>
Fair value of assets acquired............................................................... $13,095,629
Liabilities assumed......................................................................... (683,794)
-----------
$12,411,835
===========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
<PAGE> 7
ATLANTIS PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited consolidated financial statements of
Atlantis Plastics, Inc. ("Atlantis" or the "Company"), which are for
interim periods, do not include all disclosures provided in the annual
consolidated financial statements. These unaudited consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 as filed with the Securities and Exchange
Commission. The December 31, 1994 balance sheet, included herein, was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Atlantis Plastic Films currently accounts for approximately two-thirds
of the Company's net sales and consists of: (i) stretch films
(multi-layer plastic films that are used principally to stretchwrap
pallets of materials for shipping or storage), and (ii) custom film
products (high-grade laminating films, embossed films and specialty
film products targeted primarily to industrial and agricultural
markets).
Atlantis Molded Plastics currently accounts for approximately
one-third of the Company's net sales and consists of three principal
technologies, serving a wide variety of specific market segments: (i)
injection molded thermoplastic parts that are sold primarily to
original equipment manufacturers and used in major household
appliances, agricultural and automotive products, (ii) a variety of
standard and custom extruded parts (profile extrusion) that are
incorporated into a broad range of consumer and commercial products
including plastic moldings, trims, channels, seals and gaskets that
are used in recreational vehicles, doors, residential windows, office
furniture and retail store fixtures, and (iii) blow molded milk,
juice, water and industrial containers in a variety of shapes and
sizes.
Western Pioneer Insurance Company ("Western Pioneer"), which was sold
on August 31, 1995, has been presented as a discontinued operation in
the accompanying financial statements (see Note 7).
All material intercompany balances and transactions have been
eliminated. Certain amounts included in prior period financial
statements have been reclassified to conform with the current year
presentation.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal
recurring nature) necessary for a fair presentation of the financial
statements. The results of operations for the three and nine months
ended September 30, 1995 are not necessarily indicative of the results
to be expected for the full year.
3. Net income (loss) per common share was computed by dividing net income
(loss), after deducting dividends applicable to preferred stock, by
the weighted average number of shares and share equivalents
outstanding during the period. Fully diluted net income (loss) per
common share is substantially equivalent to primary net income per
common share.
5
<PAGE> 8
4. During May 1994, the Company purchased substantially all of the assets
(excluding cash) and assumed all of the liabilities (excluding
interest bearing indebtedness and amounts due to the seller) of
Advanced Plastics, Inc. ("Advanced"). The acquisition was accounted
for using the purchase method, and accordingly, Advanced's operating
results have been included in the consolidated income statements since
the date of the acquisition. If the acquisition of Advanced had
occurred on January 1, 1994, the Company's pro forma income from
continuing operations for the first nine months of 1994 would have
been $3.6 million, or $0.46 per share.
5. The following table summarizes the cost and approximate fair value of
the Company's WinsLoew stock investment, which is classified as
available-for-sale at September 30, 1995:
<TABLE>
<CAPTION>
Unrealized
-------------------------------
Cost Gains Losses Fair Value
----------- --------- ------ -----------
<S> <C> <C> <C> <C>
WinsLoew Stock . . . . . . . . . . . . . $ 4,506,557 $ 621,224 $ -- $ 5,127,781
</TABLE>
6. During September 1995, the Company sold its 50% interest in the
CKS/Rigal blow molding joint venture to CKS Packaging, Inc., its joint
venture partner, for approximately $870,000 plus the assumption of the
joint venture's indebtedness. The after-tax gain recognized on the
sale was approximately $36,000. The net cash proceeds after expenses
were used to reduce the Company's revolving credit facility.
7. Western Pioneer, the Company's California property-casualty insurance
subsidiary, which has been classified as a discontinued operation in
the accompanying financial statements, was sold to a
Massachusetts-based property and casualty insurance holding company on
August 31, 1995 for $12 million. In connection with the sale, the
Company purchased vacant land from Western Pioneer for approximately
$639,000. The Company intends to dispose of this land. The after-tax
gain recognized on the sale was approximately $482,000. The net cash
proceeds after the land purchase, taxes, expenses and inter-company
amounts were applied to the Company's revolving credit facility.
The following table summarizes Western Pioneer's operating results for
the three and nine month periods ended September 30, 1995 and 1994 (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1995 (a) 1994 1995 (a) 1994
---------- ---- -------- ----
<S> <C> <C> <C> <C>
REVENUES $4,629 $6,152 $17,621 $17,118
EXPENSES 4,273 5,794 17,872 16,638
NET INCOME (LOSS) 356 358 (251) 480
</TABLE>
(a) Represents the two and eight months ended August 31, 1995.
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's continuing operations consist of two major business segments
which produce a wide variety of polyethylene stretch and custom films
("Atlantis Plastic Films") and molded plastic products ("Atlantis Molded
Plastics").
Western Pioneer, the Company's California property-casualty insurance
subsidiary, which was sold on August 31, 1995, has been presented as a
discontinued operation in the accompanying financial statements. See Note 7 for
certain information regarding Western Pioneer.
CONTINUING OPERATIONS
Sales, gross profit and operating income for the third quarter and year-to-date
periods ended September 30, 1995 and 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -------------------------------------
1995 1994 1995 1994
---- ---- ---- ----
% of % of % of % of
SALES: Amount Total Amount Total Amount Total Amount Total
------ ------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlantis Plastic Films $48,265 68% $45,153 65% $149,080 69% $122,954 66%
Atlantis Molded Plastics 22,646 32% 24,410 35% 68,032 31% 64,280 34%
------- --- ------- --- -------- --- -------- ---
TOTAL $70,911 100% $69,563 100% $217,112 100% $187,234 100%
======= === ======= === ======== === ======== ===
<CAPTION>
% of % of % of % of
GROSS PROFIT: Sales Sales Sales Sales
- ------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlantis Plastic Films $ 7,258 15% $ 8,233 18% $ 24,286 16% $ 24,470 20%
Atlantis Molded Plastics 2,417 11% 4,558 19% 7,351 11% 11,642 18%
------- --- ------- --- -------- --- -------- ---
TOTAL $ 9,675 14% $12,791 18% $ 31,637 15% $ 36,112 19%
======= === ======= === ======== === ======== ===
<CAPTION>
OPERATING INCOME:
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlantis Plastic Films $ 1,626 3% $ 2,682 6% $ 7,142 5% $ 8,737 7%
Atlantis Molded Plastics (17) 0% 2,934 12% 1,275 2% 7,232 11%
------- --- ------- --- -------- --- -------- ---
TOTAL $ 1,609 2% $ 5,616 8% $ 8,417 4% $ 15,969 9%
======= === ======= === ======== === ======== ===
</TABLE>
7
<PAGE> 10
SALES
First quarter 1995 Atlantis Plastic Film sales of $55.1 million were 53% above
first quarter 1994 sales, primarily due to higher film selling prices during
1995 resulting from passing through to customers increases in plastic resin
prices (the major raw material component of the Company's products) during
1994 and early 1995, and increased sales volume within the film operating
units. During the second and third quarters of 1995, demand for plastic film
softened, and selling prices of films declined as resins prices fell,
contributing to lower second and third quarter Atlantis Plastic Films sales of
$45.7 million and $48.3 million, respectively, which were ahead of last year's
second and third quarter, but below the first quarter of 1995.
During the last nine months of 1994, plastic resin prices increased by
approximately 75%, causing film product demand to rise beyond normal levels as
customers increased inventories in order to avoid purchases at anticipated
higher selling prices. During the second quarter of 1995, the film market,
anticipating resin price declines, experienced a significant weakening in
demand as customers postponed purchases in order to reduce abnormally high
inventories created during the preceding period and to maximize product
purchases at expected future lower prices. Resin prices started declining in
June 1995, and have fallen approximately 25% (or $0.13 per pound) from early
June through early November, 1995.
Looking ahead, the Company believes the above-described inventory correction
has largely abated, and the film market has returned to its normal growth
pattern. However, it is anticipated that customers will continue to maintain
inventories at minimum levels with the expectation that resin prices will
continue to decline.
The Company is in the process of reconfiguring its stretch film sales
organization, converting from an independent sales representative structure to
a structure comprised of both independent sales representatives and full-time
employees. Sales representatives who will continue to represent the Company in
1996 will do so under a revised commission schedule. The Company expects to
incur approximately $800,000 in one-time expenses during the third and fourth
quarters of 1995 associated with this change, with most of these expenses to be
incurred during the fourth quarter, and expects to realize an annual savings
beginning in 1996 equal to or exceeding this one-time expense.
Third quarter 1995 Atlantis Molded Plastics sales of $22.6 million fell below
last year's $24.4 million for the same period. The Company's injection molding
unit experienced a third quarter decline in sales, due to several factors: (i)
sales of refrigeration-related parts declined compared to last year, (ii) the
effects of a negotiated price reduction with a major customer, and (iii)
changes in product mix.
Total sales for the first nine months of $217.1 million increased by 16% due to
resin price increases described above, and also due to incremental sales volume
resulting from added capacity created by the Company's recent capital expansion
programs, and the contribution from the May 1994 acquisition of Advanced, an
injection molder located in Warren, Ohio (see Note 4).
8
<PAGE> 11
GROSS PROFITS
The decline in film demand during the second and third quarter adversely
impacted 1995 Atlantis Plastic Films gross profits compared to last year, with
third quarter gross profit of $7.3 million (15% of sales), compared to last
year's third quarter gross profit of $8.2 million (18% of sales). First nine
months 1995 gross profits for Atlantis Plastic Films equaled $24.3 million
(16% of sales), compared to $24.5 million (20% of sales) in 1994.
The Atlantis Molded Plastics third quarter and year-to-date 1995 gross profit
percentages of 11% decreased substantially compared to last year's third
quarter gross profit percentage of 19%, and year-to-date 1994 percentage of
18%. The substantial decline in 1995 Atlantis Molded Plastics gross profits
reflects continued poor injection molding profitability resulting from a
variety of factors, including: (i) the decline in sales described above, (ii)
unusually high overtime due to selected high demand for certain parts, and
(iii) manufacturing inefficiencies within certain phases of the production
process.
In order to address the factors described above, the Company has implemented a
number of personnel and process improvement changes, and expects a gradual
improvement in profitability for the injection molding unit as these changes
become fully integrated.
The year-to-date 1995 decline in Atlantis Molded Plastics gross profit
percentages was also caused by lower blow molding profitability due to
continued competitive pricing pressures within the dairy plastic container
markets, partially offset by stronger profitability in the profile extrusion
unit resulting from increased sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
Third quarter 1995 SG&A equaled $8.1 million (11% of sales), compared to last
year's third quarter SG&A of $7.2 million (10% of sales). Year-to-date 1995
SG&A totaled $23.2 million (11% of sales), compared to last year's first nine
months SG&A of $20.1 million (11% of sales).
The dollar increase in SG&A for the 1995 third quarter and year-to-date periods
resulted from higher 1995 sales commission payments within the film unit,
caused by the increase in sales compared to last year, partially offset by
lower incentive compensation accruals and a reduction in salaried headcount. In
addition, third quarter and year-to-date 1995 SG&A expense includes
approximately $600,000 representing the unreserved portion of a potentially
uncollectable account receivable within the injection molding unit. The
year-to-date 1995 dollar increase in SG&A was also attributable to the
inclusion of Advanced since May 1994.
INCOME
As a result of the factors described above, third quarter 1995 operating income
equaled $1.6 million, compared to $5.6 million for the same period last year.
Year-to-date 1995 operating income equaled $8.4 million, compared to $16.0
million in the first nine months of 1994.
The third quarter 1995 loss from continuing operations equaled $1.3 million, or
$0.17 per share, compared to income from continuing operations of $1.3 million,
or $0.16 per share for the third quarter of 1994. The year-to-date 1995 loss
from continuing operations equaled $2.1 million, or $0.28 per share, compared
to first nine months 1994 income from continuing operations of $3.4 million, or
$0.45 per share.
9
<PAGE> 12
INTEREST EXPENSE & TAXES
Third quarter 1995 interest expense of $3.6 million was 7% higher than the
$3.4 million posted for the same period last year. Year-to-date 1995 interest
expense of $11.1 million also increased compared to last year's first nine
months interest expense of $9.7 million. The increases can be attributed to
increased borrowing levels during 1995, primarily during the first half of the
year, in connection with: (i) higher inventory and accounts receivable average
balances during the first half of the fiscal year associated with higher sales
levels compared to the first half of 1994, (ii) the May 1994 acquisition of
Advanced, and (iii) borrowings in connection with equipment financing programs
established during 1994 and 1995.
While third quarter 1995 interest expense was higher than the comparable period
last year, it decreased by approximately $240,000 and $70,000 compared to the
second and first quarter of 1995, respectively. As discussed below in
"Liquidity and Capital Resources", during the second and third quarter of 1995
the Company's management focused on streamlining inventories, improving
collections on accounts receivable and reducing outstanding indebtedness. As a
result, reductions have been achieved in all of these categories from their
respective March 31, 1995 and December 31, 1994 balances.
In addition, as further described in Notes 6 and 7, during August and
September, 1995 the Company sold Western Pioneer, its property-casualty
insurance subsidiary (presented as a discontinued operation), and its 50%
interest in the CKS/Rigal blow molding joint venture, with the net proceeds
from these sales used to reduce outstanding indebtedness. Based upon the
reduction in outstanding indebtedness, assuming market interest rates remain
constant, management anticipates a continued reduction in interest expense
during the remainder of 1995 when compared to the first half of 1995.
The Company's effective tax rates during the third quarter and year-to-date
periods of 1995 and 1994 were affected by nondeductible goodwill amortization,
with the 1995 tax rates also affected by the tax impact of the September 1995
sale of the Company's 50% interest in the CKS/Rigal blow molding joint venture
(see Note 6).
DISCONTINUED OPERATIONS
Western Pioneer was sold to a Massachusetts-based property and casualty
insurance holding company on August 31, 1995 for $12 million. See Note 7 for
additional information regarding this sale.
10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at September 30, 1995 totaled approximately $31.9
million, compared to $33.0 million at December 31, 1994. Cash totaled $3.6
million at September 30, 1995, compared to $1.4 million at December 31, 1994.
The table below presents selected balance sheet and quarterly cash flow data
(in thousands):
<TABLE>
<CAPTION>
SEPT. 30, JUNE 30, MARCH 31, DEC. 31,
1995 1995 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED WORKING CAPITAL/DEBT DATA:
Working Capital $ 31,879 $ 34,442 $ 39,453 $ 32,968
Inventory 18,520 19,879 26,711 22,855
Accounts Receivable 33,358 32,943 37,268 36,585
Total Debt 121,978 135,136 137,118 129,234
Revolving Credit Facility Unused Availability 28,175 15,603 4,934 6,636
<CAPTION>
NINE MONTHS THIRD SECOND FIRST
ENDED QUARTER, QUARTER, QUARTER,
SEPT. 30, 1995 1995 1995
--------- ---- ---- ----
1995
----
<S> <C> <C> <C> <C>
SELECTED CASH FLOW DATA:
Cash Provided by (Used In) Operating Activities $ 6,266 $ 3,593 $ 6,097 $ (3,424)
Cash Provided by (Used in) Investing Activities 3,771 11,160 (3,078) (4,311)
Cash (Used In) Provided by Financing Activities (7,849) (13,369) (2,149) 7,669
</TABLE>
During the second quarter of 1995, as film demand began to soften and resin
price decreases appeared imminent, the Company focused on the reduction of
inventories, accounts receivable and outstanding indebtedness. This resulted
in significant declines in these levels. Outstanding indebtedness was also
reduced by the net proceeds from the August and September, 1995 sales of
Western Pioneer and the Company's 50% interest in the CKS/Rigal blow molding
joint venture, as more fully described in Notes 6 and 7.
Accounts payable and accrued expenses were also reduced by approximately $6.5
million during the first nine months of 1995. Looking ahead, the Company's
management expects that, given the significant working capital reductions
achieved in the second and third quarters of 1995, future working capital
fluctuations will not be as significant and will correspond to the Company's
future sales levels.
During the last half of 1994 and the first nine months of 1995, the Company has
utilized equipment financing programs to finance the majority of its capital
expenditures. Covenants relating to the Company's $100 million Senior Notes
indebtedness restrict the Company from taking certain actions unless specified
interest coverage ratio and other tests are met. The Company's recent decline
in operating profitability has caused it to fall below the interest coverage
ratio requirement for the trailing twelve months ended September 30, 1995, and,
accordingly, the Company's ability to incur new debt or otherwise become
directly or indirectly obligated with respect to any debt is restricted in
certain respects until it is again able to meet the interest coverage ratio
requirement on a trailing twelve month basis.
However, notwithstanding the foregoing restrictions, the Company is fully
permitted to (i) borrow available funds on its credit facility, and to (ii)
incur new debt in connection with the refinancing of existing debt and certain
other types of financings. At September 30, 1995, the Company had
approximately $28.2 million of unrestricted availability on its revolving
credit facility based on eligible collateral.
Management believes that funds generated from operations and funds available
under the revolving credit facility will be sufficient to satisfy the Company's
debt service obligations and working capital requirements.
11
<PAGE> 14
CASH FLOWS FROM OPERATING ACTIVITIES
In the first nine months of 1995, net cash provided by operating activities was
approximately $6.3 million, compared to $3.1 million of net cash used in
operating activities for the same period last year. Accounts receivable and
inventories decreased by $3.2 million and $4.3 million, respectively, during
the first nine months of 1995, due to: (i) the accounts receivable and
inventory reduction programs initiated by the Company during the second
quarter, as described above, and (ii) the downturn in film demand and sales
levels compared to the year-end 1994 period.
Accounts payable and accrued expenses at September 30, 1995 decreased compared
to the 1994 year-end balance due to first quarter 1995 payments of 1994-related
incentive compensation and capital expenditures accrued at year-end 1994, and
due to lower accrued interest on the Company's $100 million Senior Notes
compared to the year-end 1994 accrual (interest paid semi-annually on
February 15 and August 15 of each year).
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by investing activities during the first nine months of 1995
equaled $3.8 million, consisting of the proceeds from the August and September,
1995 sales of Western Pioneer and the Company's 50% interest in the CKS/Rigal
blow molding joint venture (see Notes 6 and 7), offset by capital expenditures
of $9.1 million. Cash used in investing activities for the same period in 1994
equaled $24.6 million, comprised of capital expenditures of $12.2 million and
funds used to acquire the assets of Advanced of $12.4 million (see Note 4 or
information regarding the Company's purchase of Advanced in May 1994).
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities for the first nine months of 1995 was
$7.8 million, compared to cash provided by financing activities of $26.3
million in the first nine months of 1994. Net borrowings on the Company's
revolving credit facility were reduced by approximately $21.7 million during
the first nine months of 1995, along with other principal payments on long-term
debt of approximately $1.1 million during this period. During the first nine
months of 1995, total borrowings equaled $15.5 million, which were primarily
utilized to fund the capital expenditures described above, and to finance
certain equipment acquired during 1994. The Company paid dividends on common
and preferred stock of approximately $640,000.
12
<PAGE> 15
Part II. Other Information
Item 1. Legal Proceedings.
The Company is, from time to time, involved in routine
litigation. Nonesuch routine litigation in which the Company
is presently involved is material to its financial position or
results of operations.
Item 6. Exhibits and Reports on Form 8-K.
(3) EXHIBITS
10.1 Purchase Agreement for the acquisition of the Joint Venture Interest of
Rigal Plastics, Inc. in CKS/Rigal Plastics, by and between CKS
Plastics, Inc., a Florida corporation and the Registrant, dated as of
July 31, 1995.
10.2 Fourth Amendment to Heller Credit Agreement, dated as of September 30,
1995.
10.3 First Amendment to National City Bank, Northeast, Credit Agreement,
dated as of September 30, 1995.
27.1 Financial Data Schedule (for SEC use only)
_______________________________
(b) Reports on Form 8-K:
During the quarter for which this Quarterly Report on Form 10-Q is
filed, the Registrant filed a Current Report on Form 8-K, dated
September 13, 1995.
13
<PAGE> 16
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 13, 1995 /s/ Anthony F. Bova
-------------------
ANTHONY F. BOVA
President and Chief Executive Officer
Date: November 13, 1995 /s/ Paul Rudovsky
------------------------
PAUL RUDOVSKY
Executive Vice President
and Chief Financial Officer
14
<PAGE> 1
EXHIBIT 10.1
PURCHASE AGREEMENT
This Agreement is made and entered into this 1st day of
September, 1995, effective as of July 31, 1995, by and among CKS PACKAGING,
INC., a Georgia corporation (the "PURCHASER"), CKS PLASTICS, INC., a Florida
corporation ("CKS PLASTICS"), RIGAL PLASTICS, INC., a Florida corporation (the
"SELLER"), and ATLANTIS PLASTICS, INC., a Florida corporation ("ATLANTIS").
Preliminary Statements:
A. The Seller is a subsidiary of Atlantis;
B. The Seller is the owner, beneficially and of record,
of a 50% interest in the profits, losses and capital (the "JOINT VENTURE
INTEREST") of CKS/Rigal Plastics (the "JOINT VENTURE"), a joint venture formed
by the Seller and the Purchaser, pursuant to that certain Joint Venture
Agreement, dated January 26, 1990, as amended (the "JOINT VENTURE AGREEMENT").
C. CKS Plastics is an Affiliate of the Purchaser and is
the owner, beneficially and of record, of a 50% interest in the profits, losses
and capital of the Joint Venture.
D. The Seller desires to sell the Joint Venture Interest
to the Purchaser, on the terms and subject to the conditions set forth in this
Agreement.
E. The Purchaser desires to purchase the Joint Venture
Interest, on the terms and subject to the conditions set forth in this
Agreement.
Agreement:
In consideration of the premises and the respective mutual agreements,
covenants, representations and warranties herein contained, the parties hereto
agree as follows:
ARTICLE 1
Definitions
1.1 Defined Terms. In addition to terms defined
elsewhere in this Agreement, the following terms when utilized in this
Agreement, unless the context otherwise requires, shall have the meanings
indicated, which meanings shall be equally applicable to both the singular and
plural forms of such terms:
"ADVERSE CONSEQUENCES" means liabilities, losses, damages or
claims, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" with respect to any Person means any Person (a
"CONTROLLING
<PAGE> 2
PERSON") which, directly or indirectly, through one or more intermediaries,
controls the subject Person or any Person which is controlled by or is under
common control with a Controlling Person. For purposes of this definition,
"CONTROL" (including the correlative terms "CONTROLLING", "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH"), with respect to any Person, means possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"AGREEMENT" means this Purchase Agreement together with all
exhibits and schedules contemplated hereby.
"ASSUMED OBLIGATIONS" is defined in Section 2.2.1 of this
Agreement.
"ATLANTIS" is defined in the preamble of this Agreement.
"AUTHORITY" means any federal, state or local governmental
regulatory agency, commission, bureau or authority.
"CKS PLASTICS" is defined in the preamble of this Agreement.
"CLOSING" is defined in Section 2.4 of this Agreement.
"CLOSING DATE" means the date of this Agreement; provided,
however, that the Closing shall be deemed effective as of July 31, 1995.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"FINANCIAL STATEMENTS" is defined in Section 3.7 of this
Agreement.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"INDEMNIFIED PARTY" is defined in Section 6.2.3 of this
Agreement.
"INDEMNIFYING PARTY" is defined in Section 6.2.3 of this
Agreement.
"JOINT VENTURE" is defined in the Preliminary Statements to
this Agreement.
"JOINT VENTURE AGREEMENT" is defined in the Preliminary
Statements to this Agreement.
"JOINT VENTURE INTEREST" is defined in the Preliminary
Statements to this Agreement.
2
<PAGE> 3
"KNOWLEDGE", (a) when applied to the Seller or Atlantis means
the actual knowledge of the executive officers of Atlantis, and (b) when
applied to the Purchaser or CKS Plastics means the actual knowledge of the
executive officers of the Purchaser.
"LAW" means any law, statute, rule or regulation, and any
judgment or order of any court or Authority.
"LIEN" means any lien, charge, claim, restriction,
encumbrance, security interest or pledge of any kind whatsoever.
"MOST RECENT BALANCE SHEET" is defined in Section 3.7 of this
Agreement.
"PERSON" means any natural person, corporation, limited
liability company, unincorporated organization, partnership, association,
joint-stock company, joint venture, trust or government, or any agency or
political subdivision of any government.
"PURCHASE PRICE" is defined in Section 2.2 of this Agreement.
"PURCHASER" is defined in the preamble of this Agreement.
"REPRESENTATIVE" means, with respect to any Person, such
Person's officers, directors, partners, employees, agents, attorneys,
accountants, lenders or prospective lenders, affiliates and other
representatives.
"RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto.
"SELLER" is defined in the preamble of this Agreement.
"TAXES" means all federal, state, local and foreign taxes
(including, without limitation, income or profits taxes, premium taxes, excise
taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, ad
valorem taxes, severance taxes, capital levy taxes, transfer taxes, employment
and payroll-related taxes, property taxes, business license taxes, occupation
taxes, import duties and other governmental charges and assessments), of any
kind whatsoever, including interest, additions to tax and penalties with
respect thereto.
"THIRD PARTY CLAIM" is defined in Section 6.2.3 of this
Agreement.
1.2 Other Definitional Provisions.
1.2.1 Unless otherwise defined herein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate, report or other document made or delivered pursuant hereto.
3
<PAGE> 4
1.2.2 The words "HEREOF", "HEREIN", "HEREUNDER" and
"HERETO" and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE 2
Sale and Purchase of Joint Venture Interest
2.1 Sale and Purchase of Joint Venture Interest. The
Seller hereby sells, transfers, conveys and delivers to the Purchaser, and the
Purchaser hereby purchases and accepts delivery of the Joint Venture Interest
in exchange for the sum of $870,000 (the "PURCHASE PRICE"), paid this date by
wire transfer of immediately available funds to the Seller in accordance with
the wire transfer instructions set forth on Exhibit A hereto.
2.2 Assumption of Liabilities Under the Joint Venture
Agreement; Mutual Release.
2.2.1 The Purchaser and CKS Plastics, jointly and
severally, hereby assume and agree to satisfy and discharge as they become due
all liabilities, commitments or obligations of the Joint Venture of any nature,
whether absolute, accrued, contingent or otherwise (the "ASSUMED OBLIGATIONS").
The Assumed Obligations include, without limitation, (a) all abilities and
obligations of the Joint Venture in respect of indebtedness for borrowed money
or capitalized lease obligations or any other indebtedness secured by liens on
any of the properties or assets of the Joint Venture, (b) all liabilities and
obligations of the Joint Venture for the processing and delivery to the Joint
Venture's customers of outstanding customer orders as of the Closing Date, (c)
all liabilities and obligations of the Joint Venture under all of the leases of
real or personal property and all other contracts and agreements, written or
oral, (d) all employment and payroll-related obligations of the Joint Venture,
(e) all other current liabilities of the Joint Venture (including trade
accounts payable), (f) all liabilities of the Joint Venture for Taxes, and (g)
all liabilities and obligations of the Joint Venture under environmental health
and safety laws
2.2.2 The parties hereby agree that, except as set
forth in this Agreement, notwithstanding any provision of the Joint Venture
Agreement which may be to the contrary, none of the representations,
warranties, covenants or agreements of the parties contained therein shall
survive the Closing Date and neither the Purchaser, CKS Plastics or their
respective Affiliates, on the one hand, nor the Seller, or its Affiliates, on
the other hand, shall have any further liability or obligation to the other
thereunder or in connection therewith. Atlantis and the Purchaser further agree
that that certain Indemnification Agreement, dated January 31, 1990, between
Atlantis and the Purchaser is hereby terminated as of the Closing Date and that
neither Atlantis nor the Purchaser shall have any further liability or
obligation to the other thereunder or in connection therewith.
2.2.3 The Seller will be apportioned its share of
each item of income, expense, deduction and credit of the Joint Venture for the
taxable period beginning on January
4
<PAGE> 5
1, 1995 and ending on July 31, 1995 based on a closing of the books of the
Joint Venture as of the 11:59 p.m. (Eastern Standard Time) on such date. Such
portion of each item of income, expense, deduction and credit of the Joint
Venture for all taxable periods beginning at or after 12:00 a.m. on August 1,
1995 shall be apportioned to the Purchaser.
2.2.4 Subject to the provisions of Article 6
hereof, The Purchaser and CKS Plastics hereby release the Seller and Atlantis
(and, as applicable, their respective officers, directors, employees, agents,
subsidiaries, and Affiliates) of and from all manner of action, causes of
action, suits, debts, sums of money, covenants, contracts, agreements,
promises, damages, claims and demands whatsoever, in law or in equity, which
any of them ever had or now has or may have in the future for, upon or by
reason of any matter, cause or thing whatsoever arising out of or relating to
the business and operations of the Joint Venture.
2.2.5 Subject to the provisions of Article 6
hereof, The Seller and Atlantis hereby release the Purchaser and CKS Plastics
(and, as applicable, their respective officers, directors, employees, agents,
subsidiaries, and Affiliates) of and from all manner of action, causes of
action, suits, debts, sums of money, covenants, contracts, agreements,
promises, damages, claims and demands whatsoever, in law or in equity, which
any of them ever had or now has or may have in the future for, upon or by
reason of any matter, cause or thing whatsoever arising out of or relating to
the business and operations of the Joint Venture.
2.3 Closing. The closing of the transactions
contemplated by this Agreement (the "CLOSING") is taking place concurrently
with the execution hereof by the parties hereto at the offices of Atlantis in
Atlanta, Georgia on the Closing Date. Except as otherwise provided herein, all
proceedings taken and all documents executed at the Closing shall be deemed to
have been taken, delivered and executed simultaneously, and no proceeding shall
be deemed taken nor documents deemed executed or delivered until all have been
taken, delivered and executed.
2.4 Closing Deliveries.
2.4.1 The Seller has delivered to the Purchaser on
the date hereof, and the Purchaser hereby acknowledges receipt of, the
following:
(a) the resignation of the "Co-Chairman
Venturer Representative" (as such term is defined in the Joint Venture
Agreement) of the Seller;
(b) a certificate issued by the
Secretary of State of the State of Florida as to the good standing of
the Seller in such state;
(c) a certificate issued by the
Secretary of State of the State of Florida as to the good standing of
Atlantis in such state;
(d) a certificate of the Secretary or an
Assistant Secretary of the Seller as to the incumbency and signatures
of the officers of the Seller executing this
5
<PAGE> 6
Agreement; and
(e) a certificate of the Secretary or an
Assistant Secretary of Atlantis as to the incumbency and signatures of
the officers of the Seller executing this Agreement.
2.4.2 The Purchaser has delivered to the Seller on
the date hereof, and the Seller hereby acknowledges receipt of, the following:
(a) the sum of $87,500, by wire transfer
of immediately available funds in accordance with the wire transfer
instructions set forth on Exhibit A hereto, such amount representing
all unpaid compensation due and payable by the Joint Venture to the
Seller, pursuant to Section 7.03 of the Joint Venture Agreement, for
the period commencing January 1, 1995 and ending on July 31, 1995;
(c) a release duly executed by Bank
South, N.A., (i) unconditionally and irrevocably releasing Atlantis
from any and all liabilities and obligations arising under or with
respect to that certain Limited Guaranty Agreement, dated as of
January 19, 1994, executed by Atlantis in favor of Bank South, N.A.,
and (ii) unconditionally and irrevocably releasing the Seller from any
and all liabilities and obligations arising under or with respect to
that certain Loan Agreement, dated as of February 20, 1990, between
the Joint Venture and Bank South, N.A.;
(d) a certificate issued by the
Secretary of State of the State of Georgia as to the good standing of
the Purchaser in such state;
(e) a certificate issued by the
Secretary of State of the State of Florida as to the good standing of
CKS Plastics in such state;
(f) a certificate of the Secretary or an
Assistant Secretary of the Purchaser as to the incumbency and
signatures of the officers of the Purchaser executing this Agreement;
and
(g) a certificate of the Secretary or an
Assistant Secretary of CKS Plastics as to the incumbency and
signatures of the officers of CKS Plastics executing this Agreement.
ARTICLE 3
Representations and Warranties of the Purchaser and CKS Plastics
In order to induce the Seller and Atlantis to enter into this
Agreement and to consummate the transactions contemplated hereby, the Purchaser
and CKS Plastics, jointly and severally, hereby represent and warrant to the
Seller as follows:
6
<PAGE> 7
3.1 Organization and Standing. Each of the Purchaser and
CKS Plastics is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Each of the Purchaser
and CKS Plastics has all requisite corporate right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. Copies of the Articles of Incorporation and bylaws of the Purchaser and
CKS Plastics and all amendments thereto as in effect on the date hereof have
been delivered to the Seller and are complete and correct as of the date
hereof.
3.2 Authorization of Agreement. The execution, delivery
and performance of this Agreement by the Purchaser and CKS Plastics and the
consummation by each of them of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action and this
Agreement constitutes the legal, valid and binding obligations of each of the
Purchaser and CKS Plastics, enforceable against them in accordance with its
terms, except as such enforceability may be limited by bankruptcy, moratorium,
fraudulent conveyance and other similar laws affecting creditors' rights
generally and by general principles of equity.
3.3 No Violation or Conflict. The execution and delivery
of this Agreement by the Purchaser and CKS Plastics and the consummation by
them of the transactions contemplated hereby, and compliance by them with the
provisions hereof, (i) does not and will not violate or conflict with any
provision of Law or any write, order or decree of any court or Authority, or
any term or provision of their respective Articles of Incorporation or bylaws,
and (ii) does not and will not, with or without the passage of time or the
giving of notice or both, result in the breach of, or constitute a default or
require any consent under, or result in the creation of any Lien upon any of
their respective properties or assets pursuant to, any instrument or agreement
to which either of them is a party or by which either of them or their
respective properties may be bound or affected.
3.4 Consent or Approval of Authorities. No consent,
approval or authorization of, or registration, qualification, designation,
declaration or filing with, any Authority is required in connection with the
execution, delivery of performance by the Purchaser or CKS Plastics of this
Agreement or any other agreement, instrument or document contemplated hereby or
thereby or the consummation by the Purchaser or CKS Plastics of the
transactions contemplated hereby or thereby.
3.5 Litigation. There are no actions, suits, claims or
proceedings pending or, to the Knowledge of the Purchaser and CKS Plastics,
threatened against or involving the Purchaser or CKS Plastics or any of their
respective assets or properties, before any court or arbitration tribunal or by
or before any Authority that question the validity of this Agreement or seek to
prohibit, enjoin or otherwise challenge the consummation of the transactions
contemplated hereby. There are no outstanding orders, judgments, injunctions,
stipulations, awards or decrees of any Authority, court or arbitration tribunal
against the Purchaser or CKS Plastics or any of their respective assets or
properties which prohibit or enjoin the consummation of the transactions
contemplated hereby.
7
<PAGE> 8
3.6 Brokers. Neither the Purchaser nor CKS Plastics has
employed any broker or finder and they have not incurred and will not incur any
broker's, finder's or similar fees, commissions or expenses payable by either
of them in connection with the transactions contemplated by this Agreement.
3.7 Financial Statements. The Purchaser and CKS Plastics
have delivered to the Seller copies of the Joint Venture's (a) unaudited
balance sheet (the "MOST RECENT BALANCE SHEET") and the related statements of
income, stockholders' equity and cash flow for the six months ended June 30,
1995, and (b) audited balance sheet and the related statements of income,
venturers' capital and cash flow for the year ended December 31, 1994. The
foregoing financial statements (collectively, the "FINANCIAL STATEMENTS") (i)
are complete and correct in all material respects and have been prepared in
accordance with the books and records of the Joint Venture, (b) present fairly
the financial condition of the Joint Venture and its results of operations as
at and for the respective periods then ended, and (c) have been prepared in
accordance with GAAP; provided, however, that the interim financial statements
are subject to normal year-end adjustments and lack footnotes and other
presentation items.
3.8 Undisclosed Liabilities. The Joint Venture does not have
any liabilities, commitments or obligations of any nature, whether absolute,
accrued, contingent or otherwise, other than (a) those reflected, reserved
against or disclosed in the Financial Statements and not heretofore paid or
discharged, (b) obligations for borrowed money and guarantees of obligations of
third parties not required by GAAP to be reflected, reserved against or
disclosed in the Interim GAAP Financial Statements, all of which are set forth
on Schedule 4.8 hereto, and (c) those incurred in the ordinary course of
business consistent with past practice since the date of the Most Recent
Balance Sheet.
3.9 Permits; Compliance With Law. No notice, citation,
summons or order has been received by the Joint Venture, no complaint has been
filed and served on it, no penalty has been assessed and, to the Knowledge of
the Purchaser and CKS Plastics, no investigation, proceeding or review is
pending or threatened (a) with respect to any alleged violation by the Joint
Venture of any Law or Permit, or (b) with respect to any alleged failure by the
Joint Venture to have any Permit.
3.10 Litigation. There are no actions, suits, claims or
proceedings pending or, to the Knowledge of the Purchaser and CKS Plastics,
threatened against or involving the Joint Venture, or any of its assets or
properties, before any court or arbitration tribunal or by or before any
Authority, or (b) question the validity of this Agreement or seek to prohibit,
enjoin or otherwise challenge the consummation of the transactions contemplated
hereby. There are no outstanding orders, judgments, injunctions, stipulations,
awards or decrees of any Authority, court or arbitration tribunal against the
Joint Venture, or any of its assets or properties which prohibit or enjoin the
consummation of the transactions contemplated hereby.
8
<PAGE> 9
3.11 Tax Matters.
3.11.1 All Tax Returns required to be filed with
respect to the business and assets of the Joint Venture have been duly and
timely (within any applicable extension periods) filed with the appropriate
governmental agencies in all jurisdictions in which such Returns are required
to be filed and all Taxes (including estimated Taxes) shown to be due and
payable on such Returns have been paid.
3.11.2 The unpaid Taxes of the Joint Venture (a) did
not, as of the date of the Most Recent Balance Sheet, exceed the reserve for
Tax liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and tax income) disclosed on the face
of the Most Recent Balance Sheet, and (b) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
the past custom of the Joint Venture.
3.11.3 There is no claim or assessment pending or,
to the Knowledge of the Purchaser and CKS Plastics, threatened against the
Joint Venture for any alleged deficiency in Taxes.
3.11.4 The Joint Venture has not (a) executed a
waiver or consent extending any statute of limitations for the assessment or
collection of any Taxes which remains outstanding, or (c) applied for a ruling
relating to Taxes.
3.11.5 No Tax Return of the Joint Venture has been
audited by any Tax Authority at any time since January 1, 1989.
3.12 No Other Representations or Warranties. Except for
the representations and warranties contained in this Article 3, neither the
Purchaser, CKS Plastics nor any other Person makes any other express or implied
representation or warranty on behalf of the Purchaser or CKS Plastics and the
Purchaser and CKS Plastics hereby disclaim any such representation or warranty,
whether by the Purchaser, CKS Plastics or any of their respective officers,
directors, employees, agents or Representatives or any other Person, with
respect to the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, notwithstanding the delivery or
disclosure to the Seller or Atlantis or any of their respective officers,
directors, employees, agents or Representatives or any other Person of any
documentation or other information by the Purchaser, CKS Plastics or any of
their respective officers, directors, employees, agents or Representatives or
any other Person with respect to any one or more of the foregoing.
ARTICLE 4
Representations and Warranties of the Seller and Atlantis
In order to induce the Purchaser and CKS Plastics to enter
into this Agreement,
9
<PAGE> 10
and to consummate the transactions contemplated hereby, the Seller and
Atlantis, jointly and severally, hereby represent and warrant to the Purchaser
and CKS Plastics as follows:
4.1 Organization and Standing. Each of the Seller and
Atlantis is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida. Each of the Seller and Atlantis has all
requisite corporate right, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. Copies of the Articles of
Incorporation and bylaws of the Seller and Atlantis, respectively, and all
amendments thereto as in effect on the date hereof have been delivered to the
Purchaser and CKS Plastics and are complete and correct as of the date hereof.
4.2 Ownership of Joint Venture Interest. The Seller owns,
beneficially and of record, and has the right to transfer to the Purchaser, the
Joint Venture Interest, free and clear of any Liens. At the Closing, the Seller
will transfer and convey, and the Purchaser will acquire, good, valid and
marketable title to the Joint Venture Interest, free and clear of all Liens.
4.3 Authorization of Agreement. The execution, delivery
and performance by the Seller and Atlantis of this Agreement and the
consummation by the Seller and Atlantis of the transactions contemplated hereby
have been duly and validly authorized by all requisite action and this
Agreement constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by bankruptcy, moratorium, fraudulent conveyance
and other similar laws affecting creditors' rights generally and by general
principles of equity.
4.4 No Violation or Conflict. The execution and delivery
of this Agreement by the Seller and Atlantis and the consummation by them of
the transactions contemplated hereby, and compliance by them with the
provisions hereof, (i) does not and will not violate or conflict with any
provision of Law or any writ, order or decree of any court or Authority, or any
term or provision of their respective Articles of Incorporation or bylaws, and
(ii) does not and will not, with or without the passage of time or the giving
of notice or both, result in the breach of, or constitute a default or require
any consent under, or result in the creation of any Lien upon any of their
respective properties or assets pursuant to, any instrument or agreement to
which either of them is a party or by which either of them or their respective
properties may be bound or affected.
4.5 Consent or Approval of Authorities. No consent,
approval or authorization of, or registration, qualification, designation,
declaration or filing with, any Authority is required in connection with the
execution, delivery of performance by the Seller or Atlantis of this Agreement,
or any other agreement, instrument or document contemplated hereby or the
consummation by the Seller or Atlantis of the transactions contemplated hereby
or thereby.
4.6 Litigation. There are no actions, suits, claims or
proceedings pending or, to the Knowledge of the Seller and Atlantis, threatened
against or involving the Seller or Atlantis or any of their respective assets
or properties, before any court or arbitration tribunal or by or
10
<PAGE> 11
before any Authority that question the validity of this Agreement or seek to
prohibit, enjoin or otherwise challenge the consummation of the transactions
contemplated hereby. There are no outstanding orders, judgments, injunctions,
stipulations, awards or decrees of any Authority, court or arbitration tribunal
against the Seller or Atlantis or any of their respective assets or properties
which prohibit or enjoin the consummation of the transactions contemplated
hereby.
4.7 Brokers. Neither the Seller nor Atlantis has
employed any broker or finder and they have not incurred and will not incur any
broker's, finder's or similar fees, commissions or expenses payable by either
of them in connection with the transactions contemplated by this Agreement.
4.8 Undisclosed Liabilities. Neither the Seller nor
Atlantis has taken any action to cause the Joint Venture to incur any
liabilities, commitments or obligations of any nature, whether absolute,
accrued, contingent or otherwise, other than those reflected, reserved against
or disclosed in the Financial Statements and not heretofore paid or discharged.
4.9 No Other Representations or Warranties. Except for
the representations and warranties contained in this Article 4, neither the
Seller, Atlantis nor any other Person makes any other express or implied
representation or warranty on behalf of the Seller or Atlantis, and the Seller
and Atlantis hereby disclaim any such representation or warranty, whether by
the Seller, Atlantis or any of their respective officers, directors, employees,
agents or Representatives or any other Person, with respect to the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, notwithstanding the delivery or disclosure to the
Purchaser, CKS Plastics or any of their respective officers, directors,
employees, agents or Representatives or any other Person of any documentation
or other information by the Seller, Atlantis or any of their Respective
officers, directors, employees, agents or representatives or any other Person
with respect to any one or more of the foregoing.
ARTICLE 5
Certain Covenants and Agreements
5.1 Further Assurances. The parties hereto shall deliver
any and all other instruments or documents required to be delivered pursuant
to, or necessary or proper in order to give effect to, all of the terms and
provisions of this Agreement including, without limitation, all necessary
instruments of transfer as may be necessary or desirable to transfer ownership
of the Joint Venture Interest.
5.2 Publicity. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby shall be made
without advance approval thereof by the Purchaser and the Seller. The parties
hereto agree to cooperate in issuing any press release or other public
announcement concerning this Agreement or the transactions contemplated hereby.
Whenever practicable, each party shall furnish to the other party drafts of all
such press releases or announcements prior to their release. Nothing contained
herein shall prevent any party from
11
<PAGE> 12
at any time furnishing any information to any Authority or from making any
disclosures required under the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, or under the rules and
regulations of any national securities exchange on which such party's shares of
capital stock are listed.
ARTICLE 6
Survival of Representations, Warranties and Covenants;
Indemnification
6.1 Survival of Representations, Warranties and Covenants.
6.1.1 The representations, warranties, covenants
and agreements of the Seller and Atlantis contained in this Agreement shall
survive the date of this Agreement, the Closing Date and the consummation of
the transactions contemplated by this Agreement until the expiration of the
applicable statutes of limitations.
6.1.2 The representations, warranties, covenants
and agreements of the Purchaser and CKS Plastics contained in this Agreement
shall survive the date of this Agreement, the Closing Date and the consummation
of the transactions contemplated by this Agreement until the expiration of the
applicable statutes of limitations.
6.1.3 To preserve any claim for breach of any such
warranty, representation, covenant or agreement, the party claiming a breach
shall be obligated to notify the party claimed to be in breach in writing of
any such breach, or facts that may give rise to such breach, before termination
of such warranty, representation, covenant or agreement; otherwise, such
party's claim for breach shall be forever barred.
6.2 Indemnification.
6.2.1 The Purchaser and CKS Plastics shall, jointly
and severally, indemnify and hold harmless the Seller, Atlantis and their
respective successors and assigns, from, against and in respect of any Adverse
Consequences they shall suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to or caused by (a)
any breach or violation of any of the representations or warranties of the
Purchaser or CKS Plastics contained in this Agreement, (b) the failure by the
Purchaser or CKS Plastics to comply with any of their respective covenants or
agreements contained in this Agreement, and (c) the Assumed Obligations.
6.2.2 The Seller and Atlantis shall, jointly and
severally, indemnify and hold harmless the Purchaser, CKS Plastics and their
respective successors and assigns from, against and in respect of, any Adverse
Consequences they shall suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to or caused by (a)
any breach or violation of any of the representations or warranties of the
Seller or Atlantis contained
12
<PAGE> 13
in this Agreement, or (b) the failure by the Seller or Atlantis to comply with
any of their respective covenants or agreements contained in this Agreement.
6.2.3 A party seeking indemnification pursuant to
this Section 6.2 (the "INDEMNIFIED PARTY") shall give prompt notice to the
party from whom such indemnification is sought (the "INDEMNIFYING PARTY") in
the event that any person not a party to this Agreement shall make any demand
or claim, or file or threaten to file any lawsuit (a "THIRD PARTY CLAIM"),
which Third Party Claim may cause liability to the Indemnifying Party pursuant
to the indemnification provisions of this Agreement. In any such event, the
Indemnifying Party shall have the right, exercisable by notice to the
Indemnified Party within 10 business days after notice by the Indemnified Party
to the Indemnifying Party of the commencement or assertion of such Third Party
Claim, to retain counsel (which counsel shall be reasonably acceptable to the
Indemnified Party) for the Indemnified Party, at the cost and expense of the
Indemnifying Party, to defend any such Third Party Claim. The Indemnified Party
shall be permitted to participate in the defense of such Third Party Claim at
its own expense. In the event that the Indemnifying Party shall fail to respond
within 30 days after receipt of notice from the Indemnified Party of the
commencement or assertion of any such Third Party Claim, then the Indemnified
Party shall retain counsel and conduct the defense of such Third Party Claim as
it may in its discretion deem proper, at the cost and expense of the
Indemnifying Party.
6.2.4 Unless and until the Indemnifying Party
assumes the defense of a Third Party Claim as provided in Section 6.2.3, the
Indemnified Party may defend against the Third Party Claim in any manner it may
reasonably deem appropriate.
6.2.5 The Indemnifying Party, if it shall have
assumed the defense of any Third Party Claim, shall not have the right to
consent to the entry of judgment with respect to, or otherwise settle such
Third Party Claim without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld), unless the judgment or
proposed settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified Party.
6.2.6 The parties hereto shall cooperate in the
defense of any Third Party Claim and shall furnish such records, information
and testimony, and attend at such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested in connection therewith.
6.2.7 The parties shall make appropriate
adjustments for tax benefits and insurance coverage in determining Adverse
Consequences for purposes of this Section 6.2.
6.2.8 The remedies provided in this Article 6 shall
be exclusive and shall preclude assertion by the Seller, Atlantis, the
Purchaser or CKS Plastics of any other rights or the seeking of any other
remedies against the other.
13
<PAGE> 14
ARTICLE 7
Miscellaneous
7.1 Notices. Any notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and, except as otherwise specified in writing, shall be given by personally
delivery, facsimile transmission, Federal Express (or other similar courier
service) or by registered or certified mail, postage prepaid, return receipt
requested (a) if to the Purchaser or CKS Plastics, to the address for notices
set forth on the signature page hereto (with copies, as applicable, as set
forth on such signature page), and (b) if to the Seller or Atlantis, c/o
Atlantis Plastics, Inc., 2665 South Bayshore Drive, Eighth Floor, Miami,
Florida 33133, telecopier: (305) 858-1629, Attention: General Counsel, or to
such other addresses as any party hereto may from time to time give notice of
(complying as to delivery with the terms of this Section 7.1) to the other.
Notice by registered or certified mail shall be effective three days after
deposit in the United States mail. Notice by any other permitted means will be
effective upon receipt.
7.2 Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto and supersedes all prior agreements,
understandings, negotiations and discussions, both written and oral, among the
parties hereto with respect to the subject matter hereof. This Agreement may
not be modified in any way unless by a written instrument signed by each of the
parties hereto.
7.3 Benefits; Binding Effect; Assignment. This Agreement
shall be for the benefit of and binding upon the parties hereto, their
respective successors and assigns. No party may assign this Agreement or any of
its rights, interests or obligations hereunder without the prior approval of
the other party.
7.4 Waiver. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly so provided.
7.5 No Third Party Beneficiary. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any Person other than the parties hereto and their respective successors
and assigns any rights or remedies under or by reason of this Agreement.
7.6 Expenses. All legal, accounting and other costs and
expenses incurred in connection with this Agreement and any of the transactions
contemplated hereby on behalf of the Purchaser and CKS Plastics shall be borne
and paid by them, and all such costs and expenses incurred on behalf of the
Seller and Atlantis shall be borne and paid by them, and no party shall be
obligated for any cost or expense incurred by any other party unless this
Agreement expressly so provides.
14
<PAGE> 15
7.7 Section Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of any provisions of this Agreement.
7.8 Counterparts. This Agreement may be executed in any
number of counterparts and by the several parties hereto in separate
counterparts, each of which shall be deemed to be one and the same instrument.
7.9 Litigation; Prevailing Party. In the event of any
litigation with regard to this Agreement, the prevailing party shall be
entitled to receive from the non-prevailing party and the non-prevailing party
shall pay all reasonable fees and expenses of counsel for the prevailing party.
7.10 Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Florida.
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
RIGAL PLASTICS, INC.
By: /s/ Anthony F. Bova
-------------------
Anthony F. Bova
President
ATLANTIS PLASTICS, INC.
By: /s/ Anthony F. Bova
-------------------
Anthony F. Bova
President and
Chief Executive Officer
CKS PACKAGING, INC.
By: /s/ Charles K. Sewell
---------------------
Charles K. Sewell
President and
Chief Executive Officer
15
<PAGE> 16
CKS PLASTICS, INC.
By: /s/ Charles K Sewell
--------------------
Charles K. Sewell
President and
Chief Executive Officer
ADDRESS FOR NOTICES FOR PURCHASER AND CKS
PLASTICS:
5515 Tulane Drive, S.W.
P.O. Box 44386
Atlanta, Georgia 30336
COPIES OF NOTICES TO:
Maxwell W. Wells, Jr., Esq.
340 N. Orange Avenue
P.O. Box 3628
Orlando, Florida 32802-3628
Telecopier: (407) 422-8262
16
<PAGE> 17
EXHIBIT A
TO
PURCHASE AGREEMENT
Seller Wire Instructions:
First National Bank of Chicago
Chicago, IL 60670
ABA# 071000013
Cr: Heller Financial, Inc./CFG
Account # 5500540
Client Name: Atlantis Plastics
Client # 4494
Attn: CFG/Portfolio Organization
<PAGE> 18
SCHEDULE 4.8
TO
PURCHASE AGREEMENT
Undisclosed Liabilities
None.
<PAGE> 1
EXHIBIT 10.2
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Fourth Amendment to Credit Agreement, dated as of September 30, 1995
(this "Agreement") is between Atlantis Plastics, Inc., a Florida corporation
("Borrower") and Heller Financial, Inc., a Delaware corporation for itself as
Agent and as Lender ("Heller").
RECITALS
A. Borrower and Heller are parties to that certain Credit Agreement
dated as of February 22, 1993, as amended from time to time, (the "Credit
Agreement"). Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Credit Agreement.
B. The parties hereto wish to amend the Credit Agreement, as provided
herein.
NOW THEREFORE, in consideration of the foregoing, the covenants and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment to the Credit Agreement. The Credit Agreement is hereby
amended as follows:
Section 6.4 of the Credit Agreement is hereby amended to provide that for
the Fiscal Quarter ending September 30, 1995, Indebtedness to EBIDAT shall not
be greater than 5.0 at the end of such Fiscal Quarter, calculated on a trailing
twelve (12) Fiscal Month basis. Thereafter, Indebtedness to EBIDAT, on a
trailing twelve (12) Fiscal Month basis, shall not be greater than 4.75 at the
end of any Fiscal Quarter.
2. Representations and Warranties. To induce Heller to enter into
this Agreement, Borrower represents and warrants to Heller that:
(a) Authority and Binding Effect. The execution, delivery, and
performance by Borrower of this Agreement is within its corporate power, has
been duly authorized by all necessary corporate action (including, without
limitation, shareholder approval), has received all necessary government
approvals (if any shall be required), and does not and will not contravene or
conflict with any provision of law applicable to Borrower, the Certificate of
Incorporation or Bylaws of Borrower, or any order, judgment, or decree of any
court or other agency of government or any agreement, instrument, or document
binding upon Borrower; and the Credit Agreement as heretofore amended and as
amended as of the date hereof is the legal, valid, and binding obligation of
Borrower enforceable against Borrower in accordance with its terms.
<PAGE> 2
(b) No Default. No Default or Event of Default under the Credit
Agreement, as amended hereby, has occurred and is continuing.
(c) Warranties and Representations. The warranties and
representations of Borrower contained in this Agreement, the Credit Agreement,
as amended hereby, and the Financing Agreements, shall be true and correct as
of the date hereof, with the same effect as though made on such date except to
the extent that such representations and warranties expressly relate solely to
an earlier date, in which case such representations or warranties were true and
correct as of such earlier date.
3. Miscellaneous.
(a) Captions. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
(b) Governing Law. This Agreement shall be a contract made under
and governed by the laws of the State of Illinois, without regard to conflict
of laws principles. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid
under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
(c) Counterparts. This Agreement may be executed in counterparts,
each of which counterparts shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same Agreement.
(d) Successors and Assigns. This Agreement shall be binding upon
Borrower and Heller and their respective successors and assigns, and shall
inure to the sole benefit of Borrower and Heller and the successors and assigns
of Borrower and Heller.
(e) References. Any reference to the Credit Agreement or the
Financing Agreements contained in any notice, request, certificate, or other
document executed concurrently with or after the execution and delivery of this
Agreement shall be deemed to include this Agreement unless the context shall
otherwise require.
2
<PAGE> 3
(f) Continued Effectiveness. Notwithstanding anything contained
herein, the terms of this Agreement are not intended to and do not serve to
effect a novation as to the Credit Agreement. The parties hereto expressly do
not intend to extinguish the Credit Agreement. Instead, it is the express
intention of the parties hereto to reaffirm the indebtedness created under the
Credit Agreement which is evidenced by the notes provided for therein and
secured by the Collateral. The Credit Agreement as amended hereby and each of
the Loan Documents remain in full force and effect.
Delivered at Chicago, Illinois, as of the date and year first above
written.
ATLANTIS PLASTICS, INC.
By: /s/ Paul Rudovsky
----------------------------------
Name Printed: Paul Rudovsky
------------------------
Title: EVP & CFO
-------------------------------
HELLER FINANCIAL, INC., for itself
and as Agent for the Lenders
By: /s/ Andrew D. Marek
----------------------------------
Name Printed: Andrew D. Marek
------------------------
Title: Vice President
-------------------------------
3
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO CREDIT AGREEMENT
This Amendment to Credit Agreement, dated as of September 30, 1995 ,
1995 (this "Agreement") is by and between Atlantis Plastics, Inc., a Florida
corporation and Atlantis Plastics Injection Molding, Inc., a Kentucky
corporation (collectively, the "Borrower"), and National City Bank, Northeast
(the "Bank").
RECITALS
A. Borrower and Bank are parties to that certain Credit Agreement dated
as of May 19, 1995 (the "Credit Agreement"). Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
B. The parties hereto wish to amend the Credit Agreement, as provided
herein.
NOW THEREFORE, in consideration of the foregoing, the covenants and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment to the Credit Agreement. The Credit Agreement is hereby
amended as follows:
Section 3B.04 of the Credit Agreement is amended to provide that for the
Fiscal Quarters ending September 30, 1995, and December 31, 1995, Indebtedness
to EBIDAT shall not be greater than 5.0 at the end of such Fiscal Quarters
calculated on a trailing twelve (12) Fiscal Month basis. Thereafter,
Indebtedness to EBIDAT, on a trailing twelve (12) Fiscal Month basis, shall not
be greater than 4.75 at the end of any Fiscal Quarter.
2. Representations and Warranties. To induce Bank to enter into this
Agreement, Borrower represents and warrants to Bank that:
(a) Authority and Binding Effect. The execution, delivery, and
performance by Borrower of this Agreement is within its corporate power, has
been duly authorized by all necessary corporate action (including, without
limitation, shareholder approval), has received all necessary government
approvals (if any shall be required), and does not and will not contravene or
conflict with any provision of law applicable to Borrower, the Certificate of
Incorporation or Bylaws of Borrower, or any order, judgment, or decree of any
court or other agency of government or any agreement, instrument, or document
binding upon Borrower, and the Credit Agreement as heretofore amended as of the
date hereof is the legal, valid, and binding obligation of Borrower enforceable
against Borrower in accordance with its terms.
<PAGE> 2
(b) No Default. No Default or Event of Default under the Credit
Agreement has occurred and is continuing.
(c) Warranties and Representations. The warranties and
representations of Borrower contained in this Agreement, the Credit Agreement,
and the Financing Agreements, shall be true and correct as of the date hereof,
with the same effect as though made on such date except to the extent that such
representations and warranties expressly relate solely to an earlier date, in
which such representations or warranties were true and correct as of such
earlier date.
3. Miscellaneous.
(a) Captions. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
(b) Governing Law. This Agreement shall be a contract made under
and governed by the laws of the State of Ohio, without regard to conflict of
laws principles. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(c) Counterparts. This Agreement may be executed in counterparts,
each of which counterparts shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same Agreement.
(d) Successors and Assigns. This Agreement shall be binding upon
Borrower and Bank and their respective successors and assigns, and shall inure
to the sole benefit of Borrower and Bank and the successors and assigns of
Borrower and Bank.
(e) References. Any reference to the Credit Agreement or the
Financing Agreements contained in any notice, request, certificate, or other
document executed concurrently with or after the execution and delivery of this
Agreement shall be deemed to include this Agreement unless the context shall
otherwise require.
(f) Continued Effectiveness. Notwithstanding anything contained
herein, the terms of this Agreement are not intended to and do not serve to
effect a novation as to the Credit Agreement. The parties hereto expressly do
not intend to extinguish the Credit Agreement. Instead, it is the express
intention of the parties hereto to reaffirm the indebtedness created under the
Credit Agreement which is evidenced by the notes provided for therein and
secured by the Collateral. The Credit Agreement and each of the Loan Documents
remain in full force and effect.
2
<PAGE> 3
Delivered at Atlanta, Georgia, as of the date and year first above written.
ATLANTIS PLASTICS, INC.
(a Florida corporation)
By: /s/ Peter Kacer
----------------------------------
Printed Name: Peter Kacer
------------------------
Title: Vice President & Controller
-------------------------------
ATLANTIS PLASTICS INJECTION
MOLDING, INC.
(a Kentucky corporation)
By: /s/ Peter Kacer
----------------------------------
Printed Name: Peter Kacer
------------------------
Title: Vice President
-------------------------------
NATIONAL CITY BANK, NORTHEAST
By: /s/ Brian V. Kochunas
----------------------------------
Printed Name: BRIAN V. KOCHUNAS
Title: Vice President
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ATLANTIS PLASTICS, INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,619,321
<SECURITIES> 0
<RECEIVABLES> 34,954,750
<ALLOWANCES> 1,597,029
<INVENTORY> 18,520,046
<CURRENT-ASSETS> 60,201,442
<PP&E> 113,982,418
<DEPRECIATION> 49,551,133
<TOTAL-ASSETS> 195,652,014
<CURRENT-LIABILITIES> 28,321,923
<BONDS> 119,602,083
<COMMON> 709,280
0
2,000,000
<OTHER-SE> 35,985,173
<TOTAL-LIABILITY-AND-EQUITY> 195,652,014
<SALES> 217,112,113
<TOTAL-REVENUES> 217,112,113
<CGS> 185,475,600
<TOTAL-COSTS> 184,475,600
<OTHER-EXPENSES> 23,220,006
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,964,530
<INCOME-PRETAX> (2,548,023)
<INCOME-TAX> (487,681)
<INCOME-CONTINUING> (2,060,342)
<DISCONTINUED> 231,401
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,828,937)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
