<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 March 31, 1996
-------------------------
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)
1870 The Exchange, Suite 200, Atlanta, Georgia 30339
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including Area Code) (800) 497-7659
----------------
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.
<TABLE>
<CAPTION>
Class Shares Outstanding at March 31, 1996
----------------- -----------------------------
<S> <C>
A, $.10 par value 4,238,823
B, $.10 par value 2,899,977
</TABLE>
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<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 months ended March 31, 1996 and 1995 .... 1
Consolidated Balance Sheets (Unaudited)
as of March 31, 1996 and December 31, 1995 ............ 2
Consolidated Statements of Cash Flows (Unaudited)
for the three months ended March 31, 1996 and 1995 .... 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 ............................. 12
Item 6 - Exhibits and Reports on Form 8-K .............. 12
SIGNATURES ................................................. 13
</TABLE>
<PAGE> 3
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Unaudited - In thousands, except per share data)
<TABLE>
<CAPTION>
-------------------------------
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1996 1995
-------------------------------
<S> <C> <C>
Net sales............................................................ $64,273 $77,857
Cost of sales........................................................ 52,711 63,687
------------------ -----------
GROSS PROFIT ...................................... 11,562 14,170
Selling, general and administrative expenses......................... 7,502 7,953
Restructuring charges................................................ 0 745
------------------ -----------
OPERATING INCOME .................................. 4,060 5,472
Net interest expense................................................. (3,289) (3,604)
------------------ -----------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES..................................... 771 1,868
Income tax provision................................................. (436) (925)
------------------ -----------
INCOME FROM CONTINUING OPERATIONS.................. 335 943
Income from discontinued operations,
less applicable taxes........................................... 0 8
------------------ -----------
NET INCOME ....................................... 335 951
Preferred stock dividends............................................ (36) (36)
------------------ -----------
Income applicable to
common shares and equivalents..................................... $299 $915
================= ===========
INCOME PER COMMON SHARE:
Continuing operations ............................................. $0.04 $0.12
Discontinued operations............................................ 0.00 0.00
------------------ -----------
NET INCOME ........................................ $0.04 $0.12
================= ===========
Weighted average shares outstanding.................................. 7,425 7,560
================= ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
<PAGE> 4
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands)
<TABLE>
<CAPTION>
------------- --------------
MARCH 31, DECEMBER 31,
1996 1995
------------- --------------
ASSETS
<S> <C> <C>
Cash and equivalents.................................................. $174 $1,255
Accounts receivable, net.............................................. 31,405 28,250
Inventories........................................................... 19,630 18,544
Other current assets.................................................. 6,035 7,044
------------------ ------------
Current assets.................................................... 57,244 55,093
Property and equipment, net........................................... 62,893 64,333
Investment in WinsLoew Furniture, Inc. stock.......................... 4,890 4,798
Goodwill, net of amortization......................................... 52,396 52,680
Other assets.......................................................... 3,149 3,557
------------------ ------------
$180,572 $180,461
================= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses................................. $27,335 $28,725
Current portion of long-term debt..................................... 2,596 3,168
------------------ ------------
Current liabilities............................................... 29,931 31,893
Long-term debt, net of current portion................................ 114,933 113,294
Deferred income taxes................................................. 6,636 6,610
Other liabilities..................................................... 1,304 1,372
------------------ ------------
Total liabilities................................................. 152,804 153,169
------------------ ------------
Commitments and contingencies
Shareholders' equity:
Series A convertible preferred stock, $1.00 par value, 20,000 shares
authorized, issued and outstanding in 1996 and 1995............. 2,000 2,000
Class A common stock, $.10 par value, 20,000,000 shares authorized,
4,238,823 and 4,192,823 shares issued and outstanding in 1996 and 1995 424 419
Class B common stock, $.10 par value, 7,000,000 shares authorized,
2,899,977 shares issued and outstanding in 1996 and 1995.......... 290 290
Additional paid-in capital.......................................... 6,938 6,828
Unrealized holding gains, net of tax................................ 349 287
Retained earnings................................................... 17,767 17,468
------------------ ------------
Total shareholders' equity........................................ 27,768 27,292
------------------ ------------
$180,572 $180,461
================== ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
<PAGE> 5
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In thousands)
<TABLE>
<CAPTION>
------------------------------
THREE MONTHS ENDED
March 31,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $335 $951
Adjustments to reconcile net income to ------------------ ------------
net cash used in operating activities:
Depreciation.................................................... 1,963 2,163
Amortization of goodwill........................................ 404 477
Loan fee and other amortization................................. 132 135
Changes in assets and liabilities:
Increase in accounts receivable............................. (3,155) (683)
Increase in inventories..................................... (1,086) (3,856)
Decrease in other current assets............................ 1,010 1,055
Decrease in accounts payable and accrued expenses........... (1,390) (3,662)
Increase in deferred income taxes........................... 26 22
Decrease in other liabilities............................... (68) (62)
Other, net.................................................. 107 (72)
Effects of discontinued operations.............................. 0 108
------------------ ------------
Total adjustments........................................... (2,057) (4,375)
------------------ ------------
Net cash used in operating activities..................... (1,722) (3,424)
------------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.............................................. (980) (4,311)
Proceeds from sale of building.................................... 475 0
------------------ ------------
Net cash used in investing activities..................... (505) (4,311)
------------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreements...................... 8,541 12,968
Repayments under revolving credit agreements...................... (6,770) (10,766)
Payments on long-term debt........................................ (704) (241)
Proceeds from issuance of long-term debt.......................... 0 5,923
Dividends on preferred and common stock........................... (36) (215)
Proceeds from exercise of stock options........................... 115 0
------------------ ------------
Net cash provided by financing activities................. 1,146 7,669
------------------ ------------
Net decrease in cash and equivalents................................ (1,081) (66)
Cash and equivalents at beginning of period......................... 1,255 1,433
------------------ ------------
Cash and equivalents at end of period............................... $174 $1,367
================= ===========
</TABLE>
(CONTINUED)
<PAGE> 6
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited - In thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -
CONTINUING OPERATIONS:
<TABLE>
<CAPTION>
------------------------------
THREE MONTHS ENDED
March 31,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
CASH PAID (RECEIVED) DURING THE PERIOD FOR:
INTEREST...................................................... $5,886 $6,279
============ ==========
INCOME TAXES.................................................. ($978) $133
============ ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
<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, 1995 as filed with the
Securities and Exchange Commission. The December 31, 1995 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 accounts for approximately two-thirds of
the Company's net sales and produces: (i) stretch films (multi-layer
plastic films that are used principally to wrap pallets of materials for
shipping or storage), (ii) custom film products (high-grade laminating
films, embossed films and specialty film products targeted primarily to
industrial and agricultural markets), and (iii) institutional products such
as aprons, gloves and tablecloths which are converted from polyethylene
films.
Atlantis Molded Plastics 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, described as follows: (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 extruded plastic
trim and channel systems (profile extrusion) that are incorporated into a
broad range of consumer and commercial products such as recreational
vehicles, doors, residential windows and doors, 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
during August 1995, has been presented as a discontinued operation in the
accompanying 1995 financial statements (see Note 6).
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 months ended March 31,
1996 are not necessarily indicative of the results to be expected for the
full year.
3. Net income per common share was computed by dividing net income, 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 per common share is substantially equivalent to primary
net income per common share.
5
<PAGE> 8
4. 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 March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
Unrealized
-------------
Cost Gains Losses Fair Value
------ ----- ------ ----------
<S> <C> <C> <C> <C>
WinsLoew Stock $4,363 $527 $ -- $4,890
</TABLE>
5. 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
applied to the Company's revolving credit facility.
6. Western Pioneer, the Company's California property-casualty insurance
subsidiary which was classified as a discontinued operation in the
accompanying financial statements, was sold to a Massachusetts-based
property and casualty insurance holding company during August 1995 for
$12.0 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 $483,000, including the effects of the land valuation
allowance. The net cash proceeds of approximately $9.3 million 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 months ended March 31, 1995 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, 1995
--------------------
<S> <C>
REVENUES $6,219
EXPENSES 6,211
NET INCOME 8
</TABLE>
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Atlantis is a leading U.S. manufacturer of polyethylene stretch and custom
films used in a variety of industrial and consumer applications and molded
plastic products for the appliance, agricultural, automotive, recreational
vehicle, residential window and door, dairy and industrial container
industries.
Western Pioneer, the Company's California property-casualty insurance
subsidiary which was sold during August 1995 for $12.0 million, was presented
as a discontinued operation in the accompanying 1995 financial statements. See
Note 6 for certain information regarding Western Pioneer.
During 1995 the Company's new senior management group developed and
implemented a strategic operating plan which focuses on achieving a number of
objectives during 1995 and 1996. The primary objectives of the strategic
operating plan are: (i) to reduce the Company's fixed and variable costs, (ii)
to reconfigure its stretch film sales organization, (iii) to exit non-strategic
businesses, and (iv) to better manage its assets and reduce its indebtedness.
The implementation of certain aspects of the strategic operating plan caused
the Company to incur various nonrecurring costs during 1995, which have been
segregated within the "Restructuring charges" category of the accompanying 1995
Income Statement.
Selected income statement data for the quarterly periods ended March 31,
1995 through March 31, 1996 are as follows:
<TABLE>
<CAPTION>
($ IN MILLIONS)
1996 1995
---- --------------------------
Q1 Q4 Q3 Q2 Q1
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
NET SALES:
---------
PLASTIC FILMS $41.7 $43.7 $48.3 $45.7 55.1
MOLDED PLASTICS 22.6 20.3 22.6 22.6 22.8
----- ----- ----- ----- -----
TOTAL $64.3 $64.0 $70.9 $68.3 $77.9
===== ===== ===== ===== =====
GROSS PROFIT: PERCENTAGE OF NET SALES
--------------- ---------------------------------
PLASTIC FILMS 18% 16% 16% 13% 20%
MOLDED PLASTICS 18% 11% 8% 10% 15%
TOTAL 18% 14% 13% 12% 18%
OPERATING INCOME(A):
--------------------
PLASTIC FILMS 6% 4% 4% 2% 9%
MOLDED PLASTICS 8% 1% 0% 1% 6%
TOTAL 6% 3% 3% 2% 8%
NET INTEREST
EXPENSE: $3.3 $3.3 $3.6 $3.8 $3.6
- --------------------
</TABLE>
(A) Amounts exclude the effects of the 1995 impairment of long-lived assets
and restructuring charges, which totalled $12.5 million for the Company.
7
<PAGE> 10
SALES
Net sales in the first quarter of 1996 were $64.3 million, compared to
$77.9 million in the first quarter of 1995, a 17% reduction. The decline in
net sales was due primarily to a significant drop in resin prices (the major
raw material component of the Company's products) during the latter half of
1995, which resulted in lower average selling prices for the Company's
products.
Resin prices started declining in June 1995, and fell approximately 35%
from early June 1995 through March 1996. A price increase of almost 15% was
announced by the Company's plastic resin suppliers during the first quarter of
1996, and is expected to affect the Company's resin purchases starting in the
second quarter of 1996.
First quarter 1996 Atlantis Plastic Films sales of $41.7 million were 24%
below first quarter 1995 sales of $55.1 million, primarily due to the drop in
resin prices noted above. The decline in film sales also resulted from lower
volume in pounds sold within the stretch film unit, compared with the first
quarter of 1995. During the first quarter of 1995, the Company's stretch film
customers were building inventories in reaction to increases in resin prices
during 1994.
The first quarter 1996 decline in stretch film volume compared to the
first quarter of 1995 was partially offset by an increase in volume within the
custom film unit, driven by increased demand for agricultural and carpet
backing film products.
First quarter 1996 Atlantis Molded Plastics sales of $22.6 million
approximated last year's $22.8 million for the same period. However, first
quarter 1996 net sales in this Segment increased 11% compared to the fourth
quarter of 1995, almost entirely due to increased volume at the injection
molded unit. First quarter 1996 sales volume for Atlantis Molded Plastics
represented this segment's highest quarterly sales volume since 1994.
GROSS PROFIT
Gross profit in the first quarter of 1996 was 18% of net sales, or $11.6
million, the highest level since the first quarter of 1995. The strong
improvement was due to improved production efficiency in the Molded Plastics
Segment, along with the positive impact of a number of other initiatives
associated with the Company's strategic operating plan implemented during the
latter half of 1995.
The Atlantis Molded Plastics first quarter 1996 gross profit of 18% of
sales was that Segment's highest quarterly level since 1994. The strong
performance compared to prior quarters (11%, 8%, 10% and 15%, respectively),
was primarily due to lower production and overhead costs within the injection
molding unit achieved through improved scheduling and related reductions in
overtime expense. In addition, blow molding profit margins continued to
improve compared to 1995 levels, and profile extrusion's historically high
gross profit margins were maintained during the first quarter of 1996.
Atlantis Plastic Films first quarter 1996 gross profit (18% of sales)
was at its highest level since the first quarter of 1995 (20% of sales). The
improved profitability as a percentage of sales related to production
efficiencies due to the Company's capital expenditure program, more effective
management of stock keeping units, the consolidation of inefficient
manufacturing facilities, and lower overhead expense. However, film market
conditions remain extremely competitive and continue to exert downward
pressure on variable profit margins compared to the profit margin percentage
levels during late 1994 and early 1995.
8
<PAGE> 11
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
The Company's selling, general and administrative ("SG&A") expense was
reduced from $8.0 million in the first quarter of 1995 to $7.5 million in the
same period of 1996. The decrease in SG&A expense was primarily due to the
various cost reduction programs initiated by the Company during 1995, including
the Company-wide reduction in salaried headcount, the reconfiguration of the
stretch film sales organization, and the restructuring of the Tulsa Custom
Film facility and the injection molding unit.
INCOME
As a result of the factors described above, first quarter 1996 operating
income equaled 6% of net sales, or $4.1 million, the highest level since the
first quarter of 1995. Net income in the 1996 first quarter was $335,000, or
$0.04 per share, compared to net income of $951,000, or $0.12 per share in the
same period of 1995.
INTEREST EXPENSE & TAXES
First quarter 1996 interest expense of $3.3 million was 8% lower than the
$3.6 million posted for the same period last year. The decrease can be
attributed to reduced debt levels during 1996, resulting from lower accounts
receivable and inventory average balances compared to the first quarter of
1995, along with debt paydowns from the proceeds generated by the August and
September 1995 sales of Western Pioneer and the Company's 50% interest in the
CKS/Rigal blow molding joint venture.
The Company's effective tax rates during the first quarter periods of 1995
and 1996 were primarily affected by nondeductible goodwill amortization.
9
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 1996 totaled approximately
$27.3 million, compared to $23.2 million at December 31, 1995. Cash and
equivalents totaled $174,000 at March 31, 1996, compared to $1.3 million at
December 31, 1995. The table below presents selected balance sheet and
quarterly cash flow data (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DEC. 31, MARCH 31,
1996 1995 1995
--------- -------- ---------
<S> <C> <C> <C>
SELECTED WORKING
CAPITAL/DEBT DATA:
Working Capital $27,313 $23,200 $39,453
Accounts Receivable 31,405 28,250 37,268
Inventories 19,630 18,544 26,711
Total Debt 117,529 116,462 137,118
1996 1995
Q1 Q1
SELECTED CASH FLOW DATA: -- --
Cash Used in Operating Activities $(1,722) $(3,424)
Cash Used in Investing Activities (505) (4,311)
Cash Provided by Financing Activities 1,146 7,669
</TABLE>
Effective December 1995, the Company amended its $30.0 million revolving
credit facility and implemented a revolving credit availability formula based
upon the Company's ratio of cash flow to total indebtedness. At March 31,
1996, the gross availability on the revolving credit facility equaled $17.5
million, and the unused availability equaled $14.2 million, net of borrowings
outstanding of approximately $1.8 million and outstanding letters of credit of
approximately $1.5 million.
Covenants relating to the Company's 11% Senior Notes indebtedness restrict
the Company from taking certain actions unless specified interest coverage
ratio and other tests are met. The Company's 1995 decline in operating
profitability caused it to fall below the interest coverage ratio requirement
for the trailing four quarters ended September 30, 1995, December 31, 1995,
and March 31, 1996 and, accordingly, the Company cannot pay dividends and its
ability to incur new debt or take certain other actions is restricted in
certain respects until it is again able to meet the interest coverage ratio
requirement on a trailing four quarters basis.
However, notwithstanding the foregoing restrictions, the Company is fully
permitted to (i) borrow available funds on its revolving credit facility, and
to (ii) incur new debt in connection with the refinancing of existing debt and
certain other types of financings.
The Company's Series A Convertible Preferred Stock ("Preferred Stock")
entitles the holder to an annual cumulative dividend, payable in equal
semiannual installments of $72,500 on April 15 and October 15 of each year. As
discussed above, the Company is prohibited from paying preferred dividends
until it is again able to meet the interest coverage ratio requirement relating
to its 11% Senior Notes on a trailing four quarters basis. In the event that
three or more dividend payments are in arrears on the Preferred Stock, the
holders of the Preferred Stock have the right to elect one director of the
Company. As of May 1996, only one dividend payment is in arrears.
10
<PAGE> 13
The Company's primary needs for liquidity, on both a short- and long-term
basis, relate to working capital (principally accounts receivable and
inventories), debt service and capital expenditures. The Company presently
does not have any material commitments for future capital expenditures, and
expects to meet its short- and long-term liquidity needs with funds generated
from operations along with funds available under its revolving credit facility.
CASH FLOWS FROM OPERATING ACTIVITIES
In the first three months of 1996, net cash used in operating activities
was approximately $1.7 million, compared to $3.4 million for the same period
last year. Accounts receivable and inventories increased by $3.2 million and
$1.1 million, respectively, during the first quarter of 1996, due to higher
sales during the month of March 1996 compared to December 1995, along with
month-end March 1996 inventory purchases by Atlantis Plastic Films in advance
of the previously described price increases announced by the Company's plastic
resin suppliers.
Accounts payable and accrued expenses at March 31, 1996 decreased $1.4
million compared to the 1995 year-end balance primarily due to a decrease in
accrued interest on the Company's 11% Senior Notes resulting from the February
1996 semi-annual interest payment of $5.2 million, partially offset by
increased inventory levels and accruals for incentive compensation.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities during the first quarter of 1996
equaled $505,000, consisting of approximately $1.0 million of capital
expenditures, offset by approximately $500,000 of proceeds from the sale of the
former profile extrusion manufacturing facility. First quarter 1996 capital
expenditures were significantly below last year's first quarter capital
expenditures of $4.3 million.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by financing activities for the first quarter of 1996
was $1.1 million, compared to $7.7 million in the first quarter of 1995. Net
borrowings on the Company's revolving credit facility increased by
approximately $1.8 million during the first quarter of 1996, offset by $704,000
of principal payments on long-term debt during this period.
11
<PAGE> 14
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 Amendment dated April 8, 1996 to Employment Agreement dated February 1,
1995 between Registrant and Anthony F. Bova.
10.2 Amendment dated April 8, 1996 to Employment Agreement dated March 6, 1995
between Registrant and Paul Rudovsky.
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,
no reports on Form 8-K were filed by the Registrant.
12
<PAGE> 15
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: May 14, 1996 /s/ Anthony F. Bova
-------------------------------------
ANTHONY F. BOVA
President and Chief Executive Officer
Date: May 14, 1996 /s/ Paul Rudovsky
-------------------------------------
PAUL RUDOVSKY
Executive Vice President Finance and
Administration
13
<PAGE> 1
EXHIBIT 10.1
[ATLANTIS PLASTICS LETTERHEAD]
April 8, 1996
Mr. Anthony F. Bova
President and Chief Executive Officer
Atlantis Plastics, Inc.
1870 The Exchange Suite 200
Atlanta, Georgia 30339
RE: AMENDMENT TO EMPLOYMENT AGREEMENT
Dear Tony:
Reference is made to the Employment Agreement, dated as of February 1,
1995, between Atlantis Plastics, Inc. (the "Company") and yourself, as amended
(the "Employment Agreement.") Except as set forth herein, capitalized terms
used in this letter agreement have the meanings ascribed to them in the
Employment Agreement.
Because the Company's Adjusted Earnings Per Share for the fiscal year
ended December 31, 1995 was a negative number, you did not earn Incentive
Compensation for that year. The Compensation Committee of the Board of
Directors has approved a modification to the provisions of the Employment
Agreement for the Company's fiscal year ending December 31, 1996 ("FY 96.") The
modification, which is described below, will be applicable only for FY 96. The
provisions of Exhibit A to the Employment Agreement, as in effect prior to the
modification set forth below, will once again be applicable for the Company's
1997, 1998 and 1999 fiscal years.
The modification is as follows:
1. For purposes of the calculations described herein, Adjusted Earnings
Per Share for FY 96 shall not be rounded to the nearest whole cent; rather,
such amount shall be rounded to the nearest tenth of a cent.
2. If the Company's Adjusted Earnings Per Share for FY 96 are $0.25 or
less, you will not be entitled to Incentive Compensation for FY 96.
3. For every tenth (1/10) of a cent by which the Company's Adjusted
Earnings Per Share for FY 96 exceeds $0.25, you will be entitled to Incentive
Compensation for FY 96 in an amount equal to one-third of one percent of your
1996 Base Salary; provided, however, that in no event shall your Incentive
Compensation for FY 96 exceed 200% of your 1996 Base Salary.
EXAMPLE: Assume that the Company's Adjusted
Earnings Per Share for FY 96 are $0.4255. This amount,
rounded to the nearest tenth of cent, is equal to
$0.426, which exceeds $0.25 by $0.176, or 176 tenths
of a cent. 176 times one-third of one percent equals
58-2/3%. Assuming that your 1996
<PAGE> 2
Mr. Anthony F. Bova
April 8, 1996
Page 2
Base Salary is $309,000, you would be entitled to
Incentive Compensation of $181,280 for FY 96.
If the foregoing accurately reflects our agreement with respect to the
foregoing modification to the Employment Agreement, kindly sign the duplicate
copy of this letter agreement enclosed herewith and return it to Peter
Klein.
Sincerely,
/s/ Earl W. Powell
---------------------
Earl W. Powell
Chairman of the Board
ACCEPTED AND AGREED:
/s/ Anthony F. Bova
---------------------
Anthony F. Bova
<PAGE> 1
EXHIBIT 10.2
[ATLANTIS PLANTIS LETTERHEAD]
April 8, 1996
Mr. Paul Rudovsky
Executive Vice President
Atlantis Plastics, Inc.
1870 The Exchange Suite 200
Atlanta, Georgia 30339
RE: AMENDMENT TO EMPLOYMENT AGREEMENT
Dear Paul:
Reference is made to the Employment Agreement, dated as of March 6,
1995, between Atlantis Plastics, Inc. (the "Company") and yourself (the
"Employment Agreement.") Except as set forth herein, capitalized terms used in
this letter agreement have the meanings ascribed to them in the Employment
Agreement.
Because the Company's Adjusted Earnings Per Share for the fiscal year
ended December 31, 1995 was a negative number, you did not earn Incentive
Compensation for that year. The Compensation Committee of the Board of
Directors has approved a modification to the provisions of the Employment
Agreement for the Company's fiscal year ending December 31, 1996 ("FY 96.") The
modification, which is described below, will be applicable only for FY 96. The
provisions of Exhibit A to the Employment Agreement, as in effect prior to the
modification set forth below, will once again be applicable for the Company's
1997, 1998 and 1999 fiscal years.
The modification is as follows:
1. For purposes of the calculations described herein, Adjusted Earnings
Per Share for FY 96 shall not be rounded to the nearest whole cent; rather,
such amount shall be rounded to the nearest tenth of a cent.
2. If the Company's Adjusted Earnings Per Share for FY 96 are $0.25 or
less, you will not be entitled to Incentive Compensation for FY 96.
3. For every tenth (1/10) of a cent by which the Company's Adjusted
Earnings Per Share for FY 96 exceeds $0.25, you will be entitled to Incentive
Compensation for FY 96 in an amount equal to 0.25% of your 1996 Base Salary;
provided, however, that in no event shall your Incentive Compensation for FY 96
exceed 150% of your 1996 Base Salary.
EXAMPLE: Assume that the Company's Adjusted Earnings Per Share
for FY 96 are $0.4255. This amount, rounded to the nearest tenth of
cent, is equal to $0.426, which exceeds $0.25 by $0.176, or 176
tenths of a cent. 176 times .0025 equals 44.0%. Assuming that your
1996 Base Salary is $190,000, you would be entitled to Incentive
Compensation of $83,600 for FY 96.
<PAGE> 2
Mr. Paul Rudovsky
April 8, 1996
Page 2
If the foregoing accurately reflects our agreement with respect to the
foregoing modification to the Employment Agreement, kindly sign the duplicate
copy of this letter agreement enclosed herewith and return it to Peter
Klein.
Sincerely,
/s/ Earl W. Powell
----------------------------
Earl W. Powell
Chairman of the Board
ACCEPTED AND AGREED:
/s/ Paul Rudovsky
----------------------------
Paul Rudovsky
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ATLANTIS PLASTICS FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 173
<SECURITIES> 0
<RECEIVABLES> 32,908
<ALLOWANCES> 1,504
<INVENTORY> 19,630
<CURRENT-ASSETS> 57,243
<PP&E> 119,581
<DEPRECIATION> 56,688
<TOTAL-ASSETS> 180,572
<CURRENT-LIABILITIES> 29,930
<BONDS> 114,933
0
2,000
<COMMON> 714
<OTHER-SE> 25,054
<TOTAL-LIABILITY-AND-EQUITY> 180,572
<SALES> 64,273
<TOTAL-REVENUES> 64,273
<CGS> 52,711
<TOTAL-COSTS> 52,711
<OTHER-EXPENSES> 7,502
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,290
<INCOME-PRETAX> 771
<INCOME-TAX> 436
<INCOME-CONTINUING> 335
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 335
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
