UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 {No Fee Required}
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 {No Fee Required}
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
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
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
CLASS A COMMON STOCK, AMERICAN STOCK EXCHANGE
$.10 PAR VALUE PER SHARE PACIFIC STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (/section/229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [x]
The aggregate market value of shares of Class A Common Stock held by
non-affiliates of the registrant as of January 31, 1998, was approximately
$18,753,393 based on a $5.06 average of the high and low sales prices for the
Class A Common Stock on the American Stock Exchange on such date. For purposes
of this computation, all executive officers, directors, and 5% beneficial owners
of the Common Stock of the registrant have been deemed to be affiliates. Such
determination should not be deemed to be an admission that such directors,
officers or 5% beneficial owners are, in fact, affiliates of the registrant.
The number of shares of Class A Common Stock, $.10 par value, and Class B
Common Stock, $.10 par value, of the registrant outstanding as of January 31,
1998 were 4,428,613 and 2,742,280, respectively.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the following document have been incorporated by reference into the
parts indicated: The registrant's definitive Proxy Statement to be filed with
the Securities and Exchange Commission not later than 120 days after the end of
the fiscal year covered by this report - Part III.
PAGE 1 of 45
Exhibit index located on page 45
<PAGE>
INDEX TO ITEMS
PAGE
PART I
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 8
Item 3. Legal Proceedings........................................... 8
Item 4. Submission of Matters to a Vote of
Security Holders............................................ 8
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters................................. 9
Item 6. Selected Financial Data.....................................10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................................10
Item 8. Financial Statements and Supplementary Data.................16
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure........................................35
PART III
Item 10. Directors and Executive Officers of
the Registrant..............................................35
Item 11. Executive Compensation......................................35
Item 12. Security Ownership of Certain Beneficial
Owners and Management.......................................35
Item 13. Certain Relationships and Related
Transactions................................................35
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K.....................................35
Signatures....................................................................44
-2-
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
Atlantis Plastics, Inc., a Florida corporation ("Atlantis" or the
"Company"), is a leading U.S. plastics manufacturer consisting of two operating
segments: (i) Atlantis Plastic Films, which produces polyethylene stretch and
custom films used in a variety of industrial and consumer applications, and (ii)
Atlantis Molded Plastics, which produces molded plastic products for a variety
of applications, including products and components for the appliance,
automotive, building supply, and recreational vehicle industries.
Atlantis Plastic Films accounts for approximately three-quarters of the
Company's net sales and produces: (i) stretch films (multilayer 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 packaging markets),
and (iii) institutional products such as aprons, gloves, and tablecloths which
are converted from polyethylene films.
Atlantis Molded Plastics accounts for approximately one-quarter of the
Company's net sales and consists of two 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 goods and appliances, power tools, agricultural and
automotive products, and (ii) a variety of custom and proprietary extruded
plastic parts for both trim and functional applications (profile extrusion) that
are incorporated into a broad range of consumer and commercial products such as
recreational vehicles, residential windows and doors, office furniture, building
supplies, and retail store fixtures. Plastic Containers, Inc. ("PCI"), the
Company's manufacturer of blow molded milk, juice, water, and industrial
containers, was sold in November 1996.
The Company was founded in 1984 and grew primarily through acquisitions
in the plastics, insurance, and furniture manufacturing industries. As more
fully described below, in recent years, the Company has concentrated its
resources in certain segments of the plastics industry, and, as part of this
strategic focus, disposed of several non-strategic businesses and assets during
1995 and 1996.
Profiles of the Company's businesses are outlined within the "Market
Capabilities" section below. Descriptions of the Company's facilities are set
forth within Item 2, "Properties". The Company's corporate headquarters office
is located at 1870 The Exchange, Suite 200, Atlanta, Georgia, 30339, and its
telephone number is (800) 497-7659.
This Form 10-K contains certain forward-looking statements which are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from these
statements. These risks include, but are not limited to, raw material costs and
the ability to pass price increases to customers in a timely fashion, industry
overcapacity, product acceptance, technological changes which could alter the
demand for product or adversely impact the competitive cost of production, etc.
All forward-looking statements should be considered in light of these risks and
uncertainties.
During 1995, the Company's new senior management group developed a
strategic operating plan. The principal objectives of the plan, which were
accomplished during 1995 and 1996, were as follows: (1) implementing a cost
reduction plan, including a simplification of the Company's organizational
structure; (2) reconfiguring the stretch film sales organization to more
effectively service its customer base at lower cost; (3) identifying and
disposing of non-strategic businesses and assets; and (4) reducing investment
in working assets, outstanding indebtedness, and interest expense.
For 1997, Atlantis' growth and profit improvement strategies sought to
capitalize on the Company's reputation for product quality and customer service,
its existing manufacturing capabilities, and its reduced fixed and variable cost
structure, to allow it to compete more effectively for new business as a
low-cost provider.
In 1998, the Company's strategies focus on sales and profit growth,
incorporating: (1) improved sales in its stretch film unit by capitalizing on
expanded distribution and improved product line; (2) improved gross margins in
its films businesses as a result of an improved pricing environment; (3)
improved operational and quality controls in its custom film, institutional
products, and injection molding units; (4) expanded sales and improved
throughput in its injection molding unit; and (5) significant sales growth of
high margin proprietary products in its profile extrusion unit. Additionally,
the Company is evaluating its future manufacturing needs in films and profile
extrusion. This evaluation may result in capital expenditures required to fund
these needs or acquisitions where appropriate.
-3-
<PAGE>
STRATEGIC OPERATING PLAN
As outlined in the Company's Form 10-K for the fiscal year ended December
31, 1996, the Company accomplished in 1995 and 1996 all of the principal
objectives outlined in its strategic operating plan. Specifically, during this
two-year period: (1) fixed and variable costs were reduced by over $7 million on
an annualized basis, including a 22% reduction in salaried headcount; (2) the
Company's stretch film sales organization was converted from an independent
sales representative structure to one consisting primarily of direct sales
personnel, thereby improving distribution, customer service, account/pricing
control, market intelligence, and relationships with key customers, while
reducing marketing costs; (3) the Company sold two non-strategic subsidiaries,
its interest in one non-strategic joint venture, its investment in WinsLoew
Furniture, Inc., and closed and sold one plant which had been generating
operating losses for total net cash proceeds of $29 million and after-tax gains
totaling approximately $5.7 million; and (4) as a result of these asset sales
and a focus on reducing inventories and accounts receivable, net debt (total
debt less cash on hand) was reduced from $142.0 million in May, 1995 to $96.8
million as of December 31, 1997.
During 1997, Atlantis' stretch film unit increased its sales (measured in
pounds) by 8% compared to 1996. This growth resulted from improved sales
distribution and excellent market reception for the three uniquely engineered
products introduced in 1996. In May 1997, the Company installed new management
in this unit. Since then, control over pricing has improved, contributing to a
significant increase in gross margins during the last eight months of 1997.
While the stretch film industry in the United States continues to have
production capacity significantly higher than demand, and margins remain below
those experienced prior to Spring, 1995, the unit's lower cost base, increased
volume, and recent margin improvements have improved profits substantially
during the second half of 1997.
Atlantis' custom film and institutional products units improved their
operating profits by 13% in 1997 compared to 1996. The closing of custom's
unprofitable Tulsa plant in 1996 was a major factor in this improvement. During
1997, custom film's production of ultra thin gauge and coextruded products
increased 13% and 25%, respectively, compared to 1996.
The Company's injection molding unit was awarded $6.2 million of new
business by Whirlpool Corporation in 1997. Additionally, the unit's Nashville,
TN plant was closed due, in part, to a shift in Whirlpool and other customer
business away from the Nashville area. The Company transitioned a majority of
its Nashville business to its other injection molding plants during the second
quarter of 1997. During 1997, the injection molding unit incurred a
restructuring charge of $515,000 associated with the closing of the Nashville
plant. In addition, launching the $6.2 million of new Whirlpool business
required substantial one-time expenditures, which reduced the profitability of
this unit in 1997.
Atlantis' profile extrusion unit continued to grow its proprietary
product sales in 1997 to a level 40% higher than 1996 and more than double
1995's sales of these products.
BUSINESS GROWTH AND PROFIT IMPROVEMENT STRATEGIES
The Company's general business strategy emphasizes the following
elements:
STRETCH FILM - IMPROVE SALES THROUGH DISTRIBUTION/IMPROVE GROSS
MARGINS. During 1996, the stretch film unit introduced three uniquely engineered
stretch film products targeting all machine wrap applications and market
segments. These films were designed to offer high performance characteristics,
while utilizing more cost-effective materials and manufacturing processes. In
1997, these products gained wider acceptance in the marketplace and the stretch
film unit broadened its penetration of the U.S. distributor network. In 1998,
the stretch film unit will continue to increase its sales volume to this
network. In addition, this unit will seek to improve gross margins in 1998
compared to 1997 as a result of an improved pricing environment and improved mix
of product sales.
INJECTION MOLDING AND CUSTOM FILM - IMPROVE OPERATIONAL CONTROLS. Since
1995, the Company has concentrated on improving its operating procedures. By the
end of 1996, all three stretch film manufacturing facilities and the profile
extrusion facility had been ISO 9002 certified. The Company's four injection
molding facilities were ISO 9002 certified in early 1998. Efforts have commenced
to qualify the Company's two custom film facilities and its institutional
products facility for ISO 9002 certification. The Company intends to have all of
its eleven manufacturing facilities ISO 9002 certified by mid-1999.
INJECTION MOLDING - SALES AND PRODUCTIVITY GROWTH. As indicated above,
in 1997 Whirlpool Corporation awarded the Company's injection molding unit $6.2
million in new business. Additionally, for reasons stated above, it closed its
Nashville, TN facility and transferred a majority of Nashville's business to its
four other injection molding plants. The costs associated with launching this
$6.2 million in new business were substantially incurred by December 31, 1997,
and the Nashville equipment and business were reallocated to other plants. As a
result, this unit intends to increase both its sales and productivity in 1998.
-4-
<PAGE>
PROFILE EXTRUSION - PROPRIETARY SALES GROWTH. Historically, profile
extrusion has focused almost exclusively on custom designed products. Over the
past three years, this unit has introduced a series of proprietary products. In
1997, these products represented over 8% of the unit's sales. As stated above,
proprietary product sales increased by 40% over 1996 and more than doubled from
1995 to 1997. During 1998, this unit intends to introduce two new proprietary
products for the home building industry. Patent applications are pending on both
products. The Company is very optimistic regarding the prospects for these
products. Historically, proprietary products have generated gross margins well
in excess of the unit's average gross margin (it should be noted that profile
extrusion's gross margins have exceeded gross margins in Atlantis' other
businesses in 1995, 1996, and 1997).
FILMS AND PROFILE EXTRUSION - UPGRADE MANUFACTURING CAPABILITIES.
During 1998, the Company's stretch film and custom film units will be evaluating
potential upgrades to their manufacturing capabilities which will continue to
reduce both fixed and variable manufacturing costs, improve quality, and expand
product offerings. Additionally, subject to market reaction to the new
proprietary products discussed above, the profile extrusion unit may need to
invest in new extrusion capacity. Should the Company decide to proceed with some
or all of these plans, it expects to examine both internal (capital expenditure)
and external (acquisition) avenues to fulfill these needs.
MARKET CAPABILITIES
STRETCH FILMS. Utilizing two plants in Tulsa, OK and one plant in
Nicholasville, KY, Atlantis manufactures multilayer stretch film used
principally to wrap pallets of material for storage or shipping. Stretch film is
made from a combination of polyethylene resins and other materials and is
manufactured using both blown and cast extrusion processes to meet rigid
customer specifications. The resulting product is a very thin film, which
stretches up to 300%, clings to itself, and is puncture resistant.
Atlantis purchases several types of linear low-density resins and other
materials to manufacture its stretch film products. The Company has contracts
with resin manufacturers, which allow it to achieve what it believes to be the
best combination of price, resin availability, and new product development
support. Management believes its relationships with its resin suppliers are very
good.
The Company's stretch film products are sold primarily by direct sales
personnel to industrial packaging distributors and, to a lesser degree, to
end-users. Since a majority of its products is sold to distributors, Atlantis
places particular emphasis on assisting distributors in sales to end-users.
CUSTOM FILMS. Utilizing two plants located in Cartersville, GA and
Mankato, MN, Atlantis manufactures both low density and linear low-density
polyethylene films for a wide variety of packaging applications.
Approximately 20 different types of resin, delivered in pellet form,
and approximately ten types of additives are used in the manufacturing process.
Atlantis has supply contracts that fulfill most of its present requirements and
believes that it has adequate sources available to meet remaining raw material
needs. Relationships with its suppliers are considered very good.
Atlantis has an internal sales staff to market its film products. Most
custom film customers are in industrial markets and consume the film during
their manufacturing and/or delivery processes. Significant growth is planned for
the converter market segment, where film is part of the end use product.
Atlantis also converts film into institutional products such as plastic
gloves, aprons, and tablecloths at a second manufacturing facility located in
Mankato, MN. During the last several years, Atlantis has become one of the
largest producers of polyethylene products for institutional food handling
markets. With vertical integration of film supply and continued capital
investment in automation, the Company believes that this business unit enjoys a
low cost leadership position.
INJECTION MOLDING. Atlantis produces custom thermoplastic parts by
injection molding. These parts are used in large and small appliances
(refrigerators, air conditioners, dehumidifiers, dishwashers, and microwave
ovens), agricultural and automotive products, and hand-held power tools.
Atlantis operates molding presses ranging from 30 to 1,000 tons and
related secondary equipment at four plants located in Henderson, KY; Ft. Smith,
AR; Warren, OH; and Jackson, TN. This wide variety of equipment configurations
and plant locations enable it to fulfill customer requirements, including
multiple components, various press sizes, and secondary operations. As described
above, during September 1997 the Nashville injection molding facility was
closed.
During 1997, approximately 44% of the injection molding unit's sales
(9% of the Company's net sales) were to Whirlpool Corporation ("Whirlpool").
Although the injection molding unit has been a supplier to Whirlpool for over 40
years,
-5-
<PAGE>
there can be no assurance that a significant reduction in Whirlpool's volume, or
the loss of Whirlpool as a customer, would not have a material adverse effect on
the Company's financial condition or results of operations.
The injection molding unit maintains an in-house sales and engineering
staff which assists in the design of products to customer specifications,
designs molds to produce those products, and oversees the construction of
necessary molds. Its "program management" concept promotes early involvement
with customers' engineers to assist with product and tooling design and the
establishment of acceptable quality standards. Its Statistical Process Control
("SPC") systems enable it to meet these established quality standards on a
cost-efficient basis. Management believes that its ability to offer SPC quality
assurance, as well as value-added secondary operations such as hot stamping,
silk screening, and assembly provide a competitive advantage in selling to
national accounts.
Company personnel generate the majority of sales. Independent sales
representatives, calling primarily on industrial customers in the Midwest,
account for the balance.
The Company's injection molding customers generally place orders for
goods based on their production requirements for the following three to four
months, with a non-binding estimate of requirements over six to twelve months.
Management believes that the relatively long production cycles for its customers
make these estimates reliable. See "Backlog".
A wide variety of materials, such as ABS, polystyrene, polyethylene,
polycarbonate, and nylon are used in the manufacturing process. The Company has
multiple sources of supply for these materials.
PROFILE EXTRUSION. At its Elkhart, IN manufacturing facility, Atlantis
produces a variety of extruded plastic parts for both trim and functional
applications that are incorporated into a broad range of consumer and commercial
products. The profile extrusion unit utilizes approximately 2,000 different dies
in fulfilling customer orders, and currently maintains a stock program for
approximately 280 products. As discussed above, in 1997 the unit manufactured
and sold three lines of proprietary products, which accounted for over 8% of the
unit's sales.
This unit's marketing and sales activities are conducted by in-house
sales personnel who oversee a network of independent sales representatives.
These representatives in turn call on a diversified customer base in
approximately 30 states. Atlantis supplies many industries, including
manufacturers of recreational vehicles, residential windows and doors, office
furniture, retail store fixtures, building supplies, and marine products.
The use of only five basic types of compound materials in manufacturing
allows the purchasing of materials in bulk, thereby reducing costs. These
materials are polyvinyl chloride in rigid and flexible forms, polyethylene,
polypropylene, and thermoplastic rubber. Atlantis believes that it has adequate
sources available to meet its raw material needs.
RAW MATERIALS
The primary raw materials used by the Company in the manufacture of its
products are various plastic resins, primarily polyethylene. The Company selects
its suppliers primarily on the basis of quality, price, technical support, and
service. Virtually all of the Company's plastic resin supplies are manufactured
within the United States. Although the plastics industry has from time to time
experienced shortages of plastic resins, the Company has not to date experienced
any such shortages. Management believes that there are adequate sources
available to meet its raw material needs.
The Company uses approximately 300 million pounds of plastic resins
annually. Management believes that the Company's large volume purchases of
plastic resin have generally resulted in lower raw material costs and enabled it
to obtain shipments of raw materials even in periods of short supply.
The primary plastic resins used by the Company are produced from
petrochemical feedstocks mostly derived from natural gas liquids. Based on the
supply and demand cycles in the petrochemical industry, substantial cyclical
price fluctuations can occur. Consequently, plastic resin prices often
fluctuate, and such prices fluctuated significantly during the 1995-1997 period,
as further described in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
While the Company has historically passed through changes in the cost
of its raw materials to its customers, it may not always be able to pass through
its raw material cost increases in the form of price increases, or such pass
throughs may only occur after a time lag. To the extent that increases in the
cost of plastic resin cannot be passed on to its customers, or that the duration
of time lags associated with pass throughs becomes significant, such increases
may have a material detrimental impact on the profitability of the Company.
Furthermore, during periods when resin prices are falling, gross profits may
suffer since the Company is selling product manufactured with resin purchased
one to two months prior at higher prices.
-6-
<PAGE>
COMPETITION
The Company's operating units face intense competition from numerous
competitors, several of which have greater financial resources than Atlantis. In
addition, the markets for certain of the Company's products are characterized by
low cost of entry, or competition based primarily on price.
Atlantis Plastic Films competes with a limited number of producers
capable of national distribution and a greater number of smaller manufacturers
that target specific regional markets and specialty film segments. Competition
is based on quality, price, service (including the manufacturer's ability to
supply customers in a timely manner), and product differentiation. Management
believes the Atlantis Plastic Film units successfully compete on the basis of
their established reputations for service and quality, as well as their
respective positions as efficient, low-cost producers.
Atlantis Molded Plastics competes in a highly fragmented segment of the
plastics industry, with a large number of regional manufacturers competing on
the basis of customer service (including timely delivery and engineering/design
capabilities), quality, product differentiation, and price. Management believes
that the Atlantis Molded Plastics units successfully compete based on their
ability to offer extensive customer service, manufacturing efficiencies, and a
wide variety of products.
BACKLOG
The Company's total backlog at December 31, 1997 was $26.2 million,
compared to $19.1 million at December 31, 1996. Management does not consider any
specific month's backlog to be a significant indicator of sales trends due to
the various factors that influence backlog, such as price changes, which lead to
customer inventory adjustments.
EMPLOYEES
As of December 31, 1997 and 1996, the Company employed approximately
1,350 persons. Atlantis' overall employee relations are considered to be very
good.
PATENTS AND TRADEMARKS
The Company has registered various trademarks with the United States
Patent and Trademark Office and certain overseas trademark regulatory agencies.
The Company also has applications pending for the registration of patents and
other trademarks. Management believes that the Company's trademark position is
adequately protected in all markets in which the Company does business. Atlantis
Plastic Films produces certain stretch film products under non-exclusive
licenses granted by Mobil Oil Corporation, which are coterminous with the
duration of Mobil's underlying patents.
ENVIRONMENTAL REGULATION
Actions by Federal, state, and local governments concerning
environmental matters could result in laws or regulations that could increase
the cost of producing the products manufactured by the Company or otherwise
adversely affect the demand for its products. At present, environmental laws and
regulations do not have a material adverse effect upon the demand for the
Company's products. Certain local governments have adopted ordinances
prohibiting or restricting the use or disposal of certain plastic products that
are among the types produced by the Company. If such prohibitions or
restrictions were widely adopted, it could have a material adverse effect upon
the Company. In addition, a decline in consumer preference for plastic products
due to environmental considerations could have a material adverse effect upon
the Company.
In addition, certain of the Company's operations are subject to
Federal, state, and local environmental laws and regulations that impose
limitations on the discharge of pollutants into the air and water and establish
standards for the treatment, storage, and disposal of solid and hazardous
wastes. Historically, the Company has not had to make significant capital
expenditures for compliance with such laws and regulations.
While the Company cannot predict with any certainty its future capital
expenditure requirements for environmental regulatory compliance because of
continually changing compliance standards and technology, the Company has not
currently identified any of its facilities as requiring major expenditures for
environmental remediation or to achieve compliance with environmental
regulations. Accordingly, the Company has not accrued any amounts relating to
achieving compliance with currently promulgated environmental laws and
regulations. The Company does not currently have any insurance coverage for
environmental liabilities and does not anticipate obtaining such coverage in the
future.
-7-
<PAGE>
ITEM 2. PROPERTIES
During the first quarter of 1995, the Company relocated certain of its
corporate functions from Miami, FL to Atlanta, GA. The Atlanta headquarters
office consists of approximately 9,250 square feet of space, with a present
annual lease expense of approximately $116,000, expiring in May 2002.
Atlantis' Miami offices consist of approximately 13,100 square feet of
space that is shared with several entities controlled by the principal
stockholders of the Company or their affiliates. The present annual lease
expense of $329,000, as well as certain other general and administrative
expenses, is allocated among the Company and these entities. See Part III Item
13. This lease expires in August 2003.
The following table describes the manufacturing facilities owned or
leased by the Company as of December 31, 1997. Substantially all of the owned
facilities are pledged as collateral for debt. Management believes that the
Company's manufacturing facilities are adequate to meet current needs and
increases in sales volume for the foreseeable future.
<TABLE>
COMPANY AND LOCATION OWNED OR BUILDING AREA
- -------------------- LEASED (SQUARE FEET)
------ -------------
ATLANTIS PLASTIC FILMS:
<S> <C> <C>
Stretch Film, Tulsa, Oklahoma (two facilities).......................... Owned 189,300
Stretch Film, Nicholasville, Kentucky................................... Owned 109,500
Custom Film, Mankato, Minnesota......................................... Owned 140,000
Institutional Products, Mankato, Minnesota.............................. Leased 65,000
Custom Film, Cartersville, Georgia...................................... Leased 57,500
ATLANTIS MOLDED PLASTICS:
Injection Molding, Henderson, Kentucky.................................. Owned 118,238
Injection Molding, Jackson, Tennessee................................... Owned 52,835
Injection Molding, Nashville, Tennessee................................. Leased* 68,000
Injection Molding, Ft. Smith, Arkansas.................................. Owned 158,500
Injection Molding, Warren, Ohio......................................... Owned 54,000
Profile Extrusion, Elkhart, Indiana..................................... Owned 87,900
</TABLE>
* Lease expires April 30, 1998 and will not be renewed.
ITEM 3. LEGAL PROCEEDINGS
The Company believes that it is not presently a party to any litigation
the outcome of which would have a material adverse effect on its consolidated
financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the
quarter ended December 31, 1997.
-8-
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Class A Common Stock is traded on the American Stock
Exchange (the "AMEX") and the Pacific Stock Exchange under the symbol "AGH". The
following table sets forth the high and low sales prices for the Class A Common
Stock on the AMEX for each quarter of the years 1996 and 1997:
<TABLE>
HIGH LOW
---- ---
1996
- ----
<S> <C> <C>
First Quarter 5 13/16 4 5/8
Second Quarter 5 7/8 4 7/8
Third Quarter 5 5/8 4 5/8
Fourth Quarter 11 3/8 5 1/2
1997
- ----
First Quarter 10 1/2 8 1/4
Second Quarter 8 7/16 5 3/4
Third Quarter 7 1/8 5
Fourth Quarter 6 11/16 5
</TABLE>
As of January 31, 1998, there were approximately 196 holders of record
of the 4,428,613 outstanding shares of Class A Common Stock. The closing sales
price for the Class A Common Stock on January 31, 1998 was $5.06.
Covenants relating to the Company's 11% Senior Notes restrict the
Company from paying dividends, incurring new debt, or taking certain other
actions unless specified interest coverage ratio and other tests are met. During
1995 and 1997, a decline in operating profitability caused the Company to fall
below the interest coverage ratio requirement for the trailing four quarter
periods ended September 30 and December 31, 1995, March 31 and June 30, 1996,
and June 30 and September 30, 1997. Accordingly, during the quarters following
these dates, the Company could not pay dividends, and its ability to incur new
debt or take certain other actions was restricted. The Company met the interest
coverage ratio requirement for the trailing four quarters ended December 31,
1997, and is therefore currently able to, among other things, pay dividends,
repurchase stock, and incur new debt.
PREFERRED STOCK
In January 1997, the Company issued a mandatory conversion notice to
the holder of the 20,000 outstanding shares of the Company's Series A Preferred
Stock ("Preferred Stock"). The Preferred Stock was convertible into 210,244
shares of Class A Common Stock. After issuing the mandatory conversion notice,
the Company reached an agreement with the Preferred Stock holder to repurchase
all of the common shares resulting from the conversion notice for $2 million
(the original price paid for the Preferred Stock by the holder), and completed
the repurchase in late March, 1997.
Prior to this conversion and repurchase, the Company's Preferred Stock
entitled 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 was prohibited from paying preferred dividends during the
period that it was unable to meet the interest coverage ratio requirement
relating to its 11% Senior Notes on a trailing four quarters basis. Since the
Company met the requirement as of September 30, 1996, during October 1996 the
Company paid the April 15 and October 15, 1996 Preferred Stock dividend
payments.
COMMON STOCK
Prior to 1994, the Company did not pay cash dividends on any class of
its Common Stock. During February 1994, the Company's Board of Directors
approved a 2.5 cents per share quarterly dividend program beginning in April
1994, and consecutive quarterly dividends were paid through October 1995, after
which the dividend program was discontinued.
In November 1996, the Board of Directors authorized the repurchase of
up to 1,000,000 shares of Atlantis Class A Common Stock, or 14% of the 7.1
million Class A and Class B Common Stock then outstanding. Through June 1997,
the
-9-
<PAGE>
Company had repurchased 320,344 shares (including the 210,244 common shares
issued in connection with the conversion of Preferred Stock, as described
above), and options for 55,125 shares, for total consideration of approximately
$3.3 million. As a result of the Company being unable to meet the interest ratio
test referred to above, the stock repurchase program was suspended for the
second half of 1997. As of December 31, 1997, the Company exceeds this interest
ratio test and, accordingly, has the ability to repurchase shares of its Common
Stock under its share repurchase program effective February 11, 1998.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes certain selected consolidated financial
data of the Company for each of the years in the five-year period ended December
31, 1997. The selected consolidated financial data as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997 have
been derived from the Company's financial statements included in Item 8, which
have been audited by Coopers & Lybrand L.L.P., independent accountants for the
Company. The selected consolidated financial data should be read in conjunction
with the Company's Consolidated Financial Statements and the Notes thereto for
the three-year period ended December 31, 1997, included in Item 8, and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
<TABLE>
YEARS ENDED DECEMBER 31, 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
(in millions, except per share data)
INCOME DATA
<S> <C> <C> <C> <C> <C>
Net Sales $256.1 $267.1 $281.1 $260.8 $220.2
Income (Loss) from Continuing Operations 0.3 8.1 (13.6) 5.2 5.2
Net Income (Loss) 0.4 8.1 (13.1) 6.4 3.9
PER SHARE DATA
Income (Loss) from Continuing Operations
Basic Earnings per Common Share $0.04 $1.12 ($1.93) $0.71 $0.69
Diluted Earnings per Common Share $0.04 $1.04 ($1.93) $0.67 $0.65
Net Income (Loss)
Basic Earnings per Common Share $0.06 $1.12 ($1.86) $0.88 $0.51
Diluted Earnings per Common Share $0.05 $1.05 ($1.86) $0.83 $0.48
FINANCIAL DATA
Total Assets* $170.9 $177.9 $180.5 $211.5 $171.0
Total Debt* 105.1 107.9 116.5 129.2 102.4
Cash Dividends Declared per Common Share $ -- $ -- $ 0.08 $ 0.10 $ --
</TABLE>
*as of year end
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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, building supply, and residential window industries.
Discontinued operations relate to Western Pioneer, the Company's
California property-casualty insurance subsidiary that was sold on August 31,
1995 (see Note 16 of Notes to Consolidated Financial Statements).
As more fully described in Item 1. "Business", during 1995 the
Company's new senior management group developed and implemented a strategic
operating plan which focused on achieving a number of objectives during 1995 and
1996. The implementation of certain aspects of the strategic operating plan
caused the Company to incur various nonrecurring costs during 1995.
Additionally, during 1997 the Company incurred $815,000 of nonrecurring pre-tax
costs associated with the closing of its Nashville, TN injection molding
facility and the restructuring of the management of its
-10-
<PAGE>
stretch film unit. These charges have been segregated within the "Impairment of
long-lived assets and restructuring charges" category of the accompanying 1995
and 1997 Income Statements.
Sales, gross profit, and operating income (loss) for the years ended
December 31, 1997, 1996, and 1995, were as follows:
<TABLE>
(in thousands)
YEARS ENDED DECEMBER 31, 1997 1996 1995
------------------------ ------------------------- -----------------------
SALES AMOUNT % TOTAL AMOUNT % TOTAL AMOUNT % TOTAL
- ----- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Atlantis Plastic Films $187,032 73% $177,851 67% $192,806 69%
Atlantis Molded Plastics 69,051 27% 89,268 33% 88,258 31%
-------- -------- -------- --------- -------- --------
Total $256,083 100% $267,119 100% $281,064 100%
======== ======== ======== ========= ======== ========
GROSS PROFIT AMOUNT % SALES AMOUNT % SALES AMOUNT % SALES
- ------------ -------- -------- -------- --------- -------- --------
Atlantis Plastic Films $27,908 15% $29,505 17% $31,491 16%
Atlantis Molded Plastics 11,227 16% 16,226 18% 9,604 11%
-------- -------- -------- --------- -------- --------
Total $39,135 15% $45,731 17% $41,095 15%
======== ======== ======== ========= ======== ========
OPERATING INCOME (LOSS) AMOUNT % SALES AMOUNT % SALES AMOUNT % SALES
- ----------------------- -------- -------- -------- --------- -------- --------
Atlantis Plastic Films $9,636 5% $10,117 6% $1,982 1%
Atlantis Molded Plastics 3,204 5% 8,273 9% (2,697) (3%)
-------- -------- -------- --------- -------- --------
Total $12,840 5% $18,390 7% ($715) (0%)
======== ======== ======== ========= ======== ========
</TABLE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996
SALES
Sales for 1997 equaled $256.1 million, approximately 4% below last
year's sales of $267.1 million. The decline in sales during 1997 compared to the
prior year may be attributed to the sale of the Company's blow molded subsidiary
("PCI") in November 1996. PCI's 1996 sales totaled $11.7 million. The Company's
Films segment experienced an increase in sales volume (measured in pounds) of
4%, compared to 1996, while dollar sales increased by 5%. The decrease in sales
in the Company's Molded segment relates to the above-mentioned sale of PCI and a
decrease in injection molding sales due in part to the above-mentioned closing
of its Nashville facility.
GROSS PROFIT
Gross profit as a percentage of sales for 1997 equaled 15%, a decrease
of two percentage points from 1996. This decline was principally associated with
intense price competition resulting from industry-wide over-capacity affecting
the stretch film unit in the first half of 1997. The Films segment's gross
profit was 17% during the second half of 1997.
The Atlantis Molded Plastics 1997 gross profit percentage equaled 16%,
a decrease of two percentage points from 1996. During 1997, gross margins in the
injection molding unit were negatively impacted by costs associated with
absorbing and launching the $6.2 million of new business awarded by Whirlpool
Corporation, as well as lower utilization rates as this new business was being
absorbed.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
The Company's 1997 selling, general and administrative ("SG&A") expense
was $25.5 million, 7% lower than the $27.3 million in 1996. This decrease in
SG&A expense is due primarily to the sale of PCI and a decrease in incentive
compensation.
IMPAIRMENT OF LONG-LIVED ASSETS AND RESTRUCTURING CHARGES
During 1997, the Company incurred $815,000 of restructuring charges
relating to: (i) the closing of its Nashville, TN injection molding facility,
including approximately $250,000 in non-cash charges for the write-down of fixed
assets and leasehold improvements associated with that facility, and (ii)
restructuring expenses associated with the May 1997 management changes in the
Company's stretch film unit.
-11-
<PAGE>
OTHER INCOME
As more fully described in Note 2 of Notes to the Consolidated
Financial Statements, during the fourth quarter of 1996, the Company disposed of
PCI, the Tulsa custom facility, and the Company's investment in WinsLoew stock.
These transactions generated a total pre-tax gain of $6.7 million, and an after-
tax gain of $5.0 million, or $0.70 per share (basic) and $0.65 per share
(diluted).
NET INTEREST EXPENSE AND INCOME TAXES
Net interest expense during 1997 of $11.4 million was 10% lower than
$12.6 million in 1996. The decrease can be attributed to: (1) cash generated by
the sale of PCI, WinsLoew stock, and the Tulsa custom film plant in late 1996;
and (2) the July 1996 repurchase of $5.7 million of the Company's 11% Senior
Notes.
The Company's 1997 effective tax rate differed from the applicable
statutory rate primarily due to nondeductible goodwill amortization and the
effect of state income taxes. The 1996 effective tax rate differed from the
applicable statutory rate primarily due to nondeductible goodwill amortization
and the impact of the sale of PCI, which generated a gain for book purposes and
a loss for tax purposes (see Note 8 of Notes to Consolidated Financial
Statements).
INCOME FROM DISCONTINUED OPERATIONS
During the fourth quarter of 1997, the Company booked a pre-tax gain of
$192,000, or $126,000 after taxes, associated with the reconciliation of loss
reserves established prior to the 1995 sale of Western Pioneer, a former
subsidiary. During 1996, the Company recorded an after-tax gain of $96,000
relating to the sale of vacant land acquired in connection with the Western
Pioneer sale and to certain tax benefits due to the Company.
EXTRAORDINARY LOSS
During July 1996, the Company repurchased, at a slight discount, $5.7
million of its 11% Senior Notes in the open market, which resulted in an after-
tax extraordinary loss of $73,000, principally related to the write-off of
unamortized loan origination costs.
INCOME (LOSS)
As a result of the factors described above, 1997 operating income
equaled $12.8 million (5% of sales), compared to 1996 operating income of $18.4
million (7% of sales). Income from continuing operations and net income were as
follows:
1997 1996
---- ----
Income from continuing operations $0.3 million $8.1 million
Basic earnings $0.04/share $1.12/share
Diluted earnings $0.04/share $1.04/share
Net income $0.4 million $8.1 million
Basic earnings $0.06/share $1.12/share
Diluted earnings $0.05/share $1.05/share
COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1995
SALES
The Company's 1996 sales of $267.1 million were 5% below 1995 sales of
$281.1 million. The decline in sales during 1996 compared to the prior year
occurred primarily within the Atlantis Plastic Films stretch film unit. The
stretch film unit posted a 7% increase in volume in pounds sold during 1996,
offset by lower average film selling prices resulting from lower average resin
prices during 1996. Within the custom film and institutional product units,
volume in pounds sold increased by 6%. Atlantis Molded Plastics 1996 sales
equaled $89.3 million, slightly ahead of 1995 sales of $88.3 million.
-12-
<PAGE>
GROSS PROFIT
Gross profit as a percentage of sales for 1996 equaled 17%, well ahead
of the 1995 gross profit percentage of 15%. The strong improvement was primarily
due to the positive impact of a number of initiatives associated with the
Company's strategic operating plan implemented during the latter half of 1995
and throughout 1996.
The Atlantis Plastic Films 1996 gross profit percentage equaled 17%,
ahead of 16% in 1995. The improved film profitability as a percentage of sales
resulted from the Company's various cost reduction programs, as described in
Item 1. "Business", Strategic Operating Plan.
While the Atlantis Plastic Films 1996 gross profit percentage improved
compared to the 1995 percentage, the stretch film unit continued to be impacted
by intense price competition resulting primarily from industry-wide
over-capacity. Efforts to improve the future profitability of this unit included
the 1996 introduction of three new machine wrap stretch film products offering
high performance characteristics while utilizing more cost-effective materials
and manufacturing processes, as well as targeted cost reductions in the areas of
production and overhead expense.
The Atlantis Molded Plastics 1996 gross profit percentage equaled 18%,
significantly ahead of the 11% gross profit percentage for 1995. The strong
improvement compared to 1995 was primarily attributable to a significant
decrease in production and overhead costs, together with improvements in
scheduling and related reductions in overtime expense in the injection molding
unit. In addition, the profile extrusion unit continued to maintain its high
gross profit margins, and the blow molding unit posted stronger 1996 profit
margins compared to 1995 levels. The blow molding unit was sold in November 1996
(see Note 2 of Notes to Consolidated Financial Statements).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
The Company's 1996 SG&A expense was $27.3 million, 7% lower than the
$29.4 million in 1995. SG&A expense for 1996 includes incentive compensation
expense related to improved operating results. Excluding these costs, SG&A
expense for 1996 decreased significantly compared to 1995, primarily due to the
previously described cost reduction programs initiated by the Company during
1995 and 1996.
OTHER INCOME
As more fully described in Note 2 of Notes to the Consolidated
Financial Statements, during the fourth quarter of 1996, the Company disposed of
PCI, the Tulsa custom facility, and the Company's investment in WinsLoew stock.
These transactions generated a total pre-tax gain of $6.7 million, and an after-
tax gain of $5.0 million, or $0.70 per share (basic) and $0.65 per share
(diluted).
NET INTEREST EXPENSE AND INCOME TAXES
Net interest expense during 1996 of $12.6 million was 11% lower than
the $14.2 million posted in the prior year. The decrease can be attributed to
reduced debt levels during 1996, resulting from the following factors: (i) lower
average working capital levels during 1996 compared to 1995, (ii) debt paydowns
from the proceeds generated by the 1995 and 1996 sales of non-strategic
businesses and assets, and (iii) lower effective interest rates as a result of
the Company's 1995 refinancing of debt from the revolving credit facility to
equipment financing programs with lower interest rates, and the 1995 and 1996
repurchases of the Company's 11% Senior Notes, discussed below.
The Company's effective tax rate differed from the applicable statutory
rate during 1996 primarily due to nondeductible goodwill amortization and the
impact of the sale of PCI, which generated a gain for book purposes and a loss
for tax purposes. The 1995 effective tax rate differed from the applicable
statutory rate primarily due to nondeductible goodwill amortization and the
goodwill write-off included in the restructuring charges recorded in that year.
EXTRAORDINARY GAIN (LOSS)
During July 1996, the Company repurchased, at a slight discount, $5.7
million of its 11% Senior Notes in the open market, which resulted in an after-
tax extraordinary loss of $73,000, principally related to the write-off of
unamortized loan origination costs. During December 1995, the Company
repurchased, at a discount, $4.8 million of its 11% Senior Notes in the open
market, and recognized an after-tax extraordinary gain of $254,000.
-13-
<PAGE>
INCOME (LOSS)
As a result of the factors described above, 1996 operating income
equaled $18.4 million (7% of sales), compared to an operating loss of $715,000
in 1995. Income from continuing operations and net income were as follows:
1996 1995
---- ----
Income (loss) from continuing operations $8.1 million ($13.6) million
Basic earnings (loss) $1.12/share ($1.93)/share
Diluted earnings (loss) $1.04/share ($1.93)/share
Net income (loss) $8.1 million ($13.1) million
Basic earnings (loss) $1.12/share ($1.86)/share
Diluted earnings (loss) $1.05/share ($1.86)/share
-14-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at December 31, 1997 totaled
approximately $32.4 million (including cash and equivalents of $8.3 million),
compared to $36.4 million (including cash and equivalents of $15.9 million) at
December 31, 1996. The decrease in cash and equivalents at year-end 1997
resulted primarily from 1997 tax obligations of $3.3 million associated with the
fourth quarter 1996 sales of PCI, the Tulsa custom facility, and the Company's
investment in WinsLoew stock, and from stock and option repurchases of $3.0
million.
At December 31, 1997, there were no borrowings on the Company's
revolving credit facility and gross availability equaled $29.5 million. Unused
availability, net of outstanding letters of credit of approximately $1.5
million, equaled $28.0 million. In February 1998, the Company renewed its
revolving credit facility until August 22, 1998 at a principal amount of $15
million. As of mid-March 1998, there were no borrowings on this facility and
unused availability, net of outstanding letters of credit of approximately $1.2
million equaled $13.8 million. Also see Item 5, "Market for the Registrant's
Common Equity and Related Stockholder Matters" for certain information regarding
the Company's compliance with covenants relating to the Company's 11% Senior
Notes, and for information regarding the Company's 1997 mandatory conversion of
Preferred Stock into 210,244 common shares and subsequent repurchase of those
common shares.
The Company's principal needs for liquidity, on both a short- and
long-term basis, relate to working capital (principally accounts receivable and
inventories), debt service, and capital expenditures. The Company presently does
not have any material commitments for future capital expenditures, and expects
to meet its short- and long-term liquidity needs with cash on hand, funds
generated from operations, and funds available under its revolving credit
facility.
CASH FLOWS FROM OPERATING ACTIVITIES
During 1997, net cash provided by operating activities was
approximately $7.8 million, compared to $10.8 million in 1996. Accounts
receivable decreased by $2.9 million, primarily within the injection molding
unit due to the decline in sales mentioned earlier. Inventories increased by
$1.5 million in preparation for higher projected sales early in 1998. The $2.6
million increase in other current assets was due principally to an increase in
deferred and state income tax receivables and in resin rebates (caused by
increased volume and improvements in resin contracts). Accounts payable and
accrued expenses at December 31, 1997, decreased by $2.7 million compared to the
1996 year-end balance primarily due to taxes associated with the sale of
businesses and assets in 1996.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used by investing activities during 1997 equaled $9.9 million,
compared to cash generated by investing activities of $12.6 million during 1996.
During 1996, approximately $18.6 million of proceeds after expenses (but prior
to income taxes) were generated from the dispositions of businesses and assets.
Capital expenditures in 1997 of $9.9 million were above 1996 capital
expenditures of $5.9 million. As part of Atlantis' ongoing capital spending
program, the Company has converted, or is in the process of converting, its
information systems in order to accommodate the year 2000 date change. The
Company expects to complete these changes during the first quarter of 1999.
Capital expenditures and SG&A expenses related solely to the year 2000 date
change are not expected to have a material impact on the Company's business,
operations, or financial condition.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities during 1997 was $5.5 million,
compared to $8.8 million during 1996. During 1997, $3.0 million was used to
repurchase common stock, with the remainder used primarily for principal
payments on long-term debt.
-15-
<PAGE>
ACCOUNTING PRONOUNCEMENTS
In June 1997, Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information" were issued. SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The purpose of
reporting comprehensive income is to present a measure of all changes in equity
that result from recognized transactions and other economic events of the period
other than transactions with owners in their capacity as owners. The FASB
believes that SFAS No. 130 should help investors, creditors, and others in
assessing an enterprise's activities and the timing and magnitude of its future
cash flows. SFAS No. 131 establishes standards for the way that public
businesses report information about operating segments in annual financial
statements, and requires that those enterprises report selected information
about operating segments in interim financial reports issued to shareholders. It
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. The Company has not yet determined the
effect on operating results of implementing SFAS 130; however, the adoption of
this statement is not expected to have a materially adverse effect on
consolidated financial position. The Company has not yet determined the impact
of SFAS 131 on its future disclosures. SFAS 130 and 131 must be implemented for
fiscal years ending after December 15, 1998.
In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits" was issued. SFAS No. 132 requires that
additional information be disclosed regarding changes in the benefit obligation
and fair values of plan assets. The FASB believes that SFAS No. 132 should help
investors, creditors, and others in analyzing the benefit obligation, the fair
value of plan assets, and changes in the obligation and fair value during the
year. It also standardizes the disclosure requirements for pensions and other
postretirement benefits. The Company has not yet determined the impact of SFAS
132 on its future disclosures. SFAS 132 must be implemented for fiscal years
ending after December 15, 1998.
This Form 10-K contains certain forward-looking statements which are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from these
statements. These risks include, but are not limited to, raw material costs and
the ability to pass price increases to customers in a timely fashion, industry
overcapacity, product acceptance, technological changes which could alter the
demand for product or adversely impact the competitive cost of production, etc.
All forward-looking statements should be considered in light of these risks and
uncertainties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
PAGE
<S> <C>
Management's Responsibility for Financial Reporting...............................................................17
Report of Independent Accountants.................................................................................18
Consolidated Income Statements For the Years Ended December 31, 1997, 1996, and 1995..............................19
Consolidated Balance Sheets as of December 31, 1997 and 1996......................................................20
Consolidated Statements of Shareholders' Equity For the Years Ended December 31, 1997, 1996, and 1995.............21
Consolidated Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995.......................22
Notes to Consolidated Financial Statements........................................................................23
</TABLE>
-16-
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The Company's management is responsible for the preparation of the
consolidated financial statements in accordance with generally accepted
accounting principles and for the integrity of all the financial data included
in this Form 10-K. In preparing the consolidated financial statements,
management makes informed judgments and estimates of the expected effects of
events and transactions that are currently being reported.
Management maintains a system of internal accounting controls that is
designed to provide reasonable assurance that assets are safeguarded and that
transactions are executed and recorded in accordance with management's policies
for conducting its business. This system includes policies which require
adherence to ethical business standards and compliance with all laws to which
the Company is subject. The internal control process is continuously monitored
by direct management review.
The Board of Directors, through its Audit Committee, is responsible for
determining that management fulfills its responsibility with respect to the
Company's consolidated financial statements and the system of internal
accounting controls.
The Audit Committee, comprised solely of directors who are not officers
or employees of the Company, meets periodically with representatives of
management and the Company's independent accountants to review and monitor the
financial, accounting, and auditing procedures of the Company in addition to
reviewing the Company's financial reports. The Company's independent accountants
have full and free access to the Audit Committee.
ANTHONY F. BOVA PAUL RUDOVSKY
PRESIDENT AND CHIEF EXECUTIVE VICE PRESIDENT,
EXECUTIVE OFFICER FINANCE AND ADMINISTRATION
-17-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Atlantis Plastics, Inc.:
We have audited the accompanying consolidated balance sheets of Atlantis
Plastics, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Atlantis Plastics,
Inc. and subsidiaries as of December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
February 11, 1998, except for Note 6, as to which
the date is February 20, 1998.
-18-
<PAGE>
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
(dollars in thousands, except per share amounts)
- ---------------------------------------------------------- ----------- ----------- ----------
YEARS ENDED DECEMBER 31, 1997 1996 1995
- ---------------------------------------------------------- ----------- ----------- ----------
<S> <C> <C> <C>
Net sales $256,083 $267,119 $281,064
Cost of sales 216,948 221,388 239,969
----------- ----------- -----------
Gross profit 39,135 45,731 41,095
Selling, general and administrative expenses 25,480 27,341 29,357
Impairment of long-lived assets and restructuring charges 815 - 12,453
----------- ----------- -----------
Operating income (loss) 12,840 18,390 (715)
Net interest expense 11,427 12,638 14,179
Other income (expense) - 6,718 (338)
----------- ----------- -----------
Income (loss) from continuing operations before income taxes 1,413 12,470 (15,232)
Income tax provision (benefit) 1,138 4,396 (1,674)
----------- ----------- -----------
Income (loss) from continuing operations 275 8,074 (13,558)
Income (loss) from discontinued operations, net of income taxes 126 96 (251)
Gain on disposition of discontinued operations, net of income taxes - - 483
----------- ----------- -----------
Income (loss) before extraordinary item 401 8,170 (13,326)
Extraordinary gain (loss) on early extinguishment of debt, net of income taxes - (73) 254
----------- ----------- -----------
Net income (loss) $401 $8,097 ($13,072)
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE
Basic:
Continuing operations $0.04 $1.12 ($1.93)
Net income (loss) $0.06 $1.12 ($1.86)
Diluted:
Continuing operations $0.04 $1.04 ($1.93)
Net income (loss) $0.05 $1.05 ($1.86)
Weighted-average number of shares used in
computing income (loss) per share (in thousands):
Basic 7,106 7,133 7,089
Diluted 7,600 7,742 7,089
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
-19-
<PAGE>
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
(dollars in thousands)
- ---------------------------------------------------------- ----------------- ----------------
AS OF DECEMBER 31, 1997 1996
- ---------------------------------------------------------- ----------------- ----------------
ASSETS
<S> <C> <C>
Cash and equivalents $8,346 $15,905
Accounts receivable, less allowance for doubtful accounts
of $896 in 1997 and $633 in 1996 25,444 28,364
Inventories 18,517 16,984
Other current assets 7,448 4,825
----------------- ----------------
Current assets 59,755 66,078
Property and equipment, net 60,065 58,523
Goodwill, net of accumulated amortization 48,961 50,532
Other assets 2,108 2,768
----------------- ----------------
Total assets $170,889 $177,901
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $24,146 $27,131
Current portion of long-term debt 3,254 2,517
----------------- ----------------
Current liabilities 27,400 29,648
Long-term debt, less current portion 101,862 105,365
Deferred income taxes 8,287 6,886
Other liabilities 791 1,093
----------------- ----------------
Total liabilities 138,340 142,992
----------------- ----------------
Commitments and contingencies (Note 14) - -
Shareholders' equity:
Series A Convertible Preferred Stock; $1.00 par value; 20,000 shares
authorized, issued, and outstanding in 1996 - 2,000
Class A Common Stock; $.10 par value; 20,000,000 shares authorized,
4,358,516 and 4,225,823 shares issued and outstanding in 1997 and 1996 436 423
Class B Common Stock; $.10 par value; 7,000,000 shares authorized,
2,742,280 and 2,899,977 shares issued and outstanding in 1997 and 1996 274 290
Additional paid-in capital 7,117 6,968
Retained earnings 24,722 25,228
----------------- ----------------
Total shareholders' equity 32,549 34,909
----------------- ----------------
$170,889 $177,901
================= ================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
-20-
<PAGE>
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
(dollars in thousands)
- ------------------------------------ ------------ ----------- ------------ ------------ ----------- ------------
SERIES A UNREALIZED
YEARS ENDED CONVERTIBLE CLASS A CLASS B ADDITIONAL HOLDING
DECEMBER 31, 1997, PREFERRED COMMON COMMON PAID-IN GAINS RETAINED
1996, AND 1995 STOCK STOCK STOCK CAPITAL (LOSSES) EARNINGS
- ------------------------------------ ------------ ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1994 $2,000 $408 $300 $6,781 ($284) $31,217
Net loss - - - - - (13,072)
Dividends on Preferred and
Common Stock - - - - - (677)
Conversions of Class B
Common Stock - 10 (10) - - -
Exercise of stock options - 1 - 47 - -
Increase in unrealized gain,
net of tax - - - - 571 -
- ----------------------------------------------------------------------------------------------------------------------
BALANCE,
DECEMBER 31, 1995 2,000 419 290 6,828 287 17,468
Net income - - - - - 8,097
Decrease in unrealized gain,
net of tax - - - - (287) -
Exercise of stock options - 6 - 166 - -
Purchases of Class A Common Stock - - - - - -
Cancellation of Class A Common Stock - (2) - (26) - (228)
Dividends on Preferred Stock - - - - - (109)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE,
DECEMBER 31, 1996 2,000 423 290 6,968 - 25,228
Net income - - - - - 401
Exercise of stock options - 5 - 230 - -
Purchases of Class A Common Stock - - - - - -
Cancellation of Class A Common Stock - (8) - (81) - (638)
Purchases and cancellation
of Class B options - - - - - (269)
Conversion of Class B to Class A
Common Stock - 16 (16) - - -
Conversion, repurchase, and
retirement of Preferred Stock (2,000) - - - - -
- ----------------------------------------------------------------------------------------------------------------------
BALANCE,
DECEMBER 31, 1997 $- $436 $274 $7,117 $- $24,722
============ =========== ============ ============ =========== ============
</TABLE>
<TABLE>
(dollars in thousands)
- ------------------------------------ ----------- ------------
TOTAL
YEARS ENDED SHARE-
DECEMBER 31, 1997, TREASURY HOLDERS'
1996, AND 1995 STOCK EQUITY
- ------------------------------------ ----------- ------------
<S> <C> <C>
BALANCE,
DECEMBER 31, 1994 $- $40,422
Net loss - (13,072)
Dividends on Preferred and
Common Stock - (677)
Conversions of Class B
Common Stock - -
Exercise of stock options - 48
Increase in unrealized gain,
net of tax - 571
- -----------------------------------------------------------------
BALANCE,
DECEMBER 31, 1995 - 27,292
Net income - 8,097
Decrease in unrealized gain,
net of tax - (287)
Exercise of stock options - 172
Purchases of Class A Common Stock (256) (256)
Cancellation of Class A Common Stock 256 -
Dividends on Preferred Stock - (109)
- -----------------------------------------------------------------
BALANCE,
DECEMBER 31, 1996 - 34,909
Net income - 401
Exercise of stock options - 235
Purchases of Class A Common Stock (727) (727)
Cancellation of Class A Common Stock 727 -
Purchases and cancellation -
of Class B options - (269)
Conversion of Class B to Class A
Common Stock - -
Conversion, repurchase and
retirement of Preferred Stock - (2,000)
- -----------------------------------------------------------------
BALANCE,
DECEMBER 31, 1997 $- $32,549
=========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
-21-
<PAGE>
ATLANTIS PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
(dollars in thousands)
- ---------------------------------------------------------- ------------ ----------- -----------
YEARS ENDED DECEMBER 31, 1997 1996 1995
- ---------------------------------------------------------- ------------ ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $401 $8,097 ($13,072)
------------ ----------- -----------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation 7,546 7,810 8,284
Amortization of goodwill 1,571 1,603 1,900
Loan fee and other amortization 574 548 522
Provision for impairment of long-lived assets 250 - 10,551
Loss (gain) on early extinguishment of debt - 112 (392)
Loss (gain) on dispositions of businesses and assets 223 (6,718) (814)
Provision for losses on properties held for sale - - 568
Change in assets and liabilities, net of dispositions
and acquisitions of businesses:
Decrease (increase) in accounts receivable 2,920 (1,766) 8,335
(Increase) decrease in inventories (1,533) 411 4,311
(Increase) decrease in other current assets (2,623) 2,205 (691)
Decrease in accounts payable and accrued expenses (2,679) (1,901) (3,213)
Increase (decrease) in deferred income taxes 1,401 544 (1,232)
Decrease in other liabilities (302) (238) (254)
Other, net 86 106 664
Effects of discontinued operations - - (1,033)
------------ ----------- -----------
Total adjustments 7,434 2,716 27,506
------------ ----------- -----------
Net cash provided by operating activities 7,835 10,813 14,434
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from dispositions of businesses and assets - 18,583 13,014
Capital expenditures (9,867) (5,937) (14,224)
------------ ----------- -----------
Net cash (used in) provided by investing activities (9,867) 12,646 (1,210)
------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under revolving credit agreements - 27,435 27,916
Repayments under revolving credit agreements - (27,435) (49,519)
Payments on long-term debt (2,766) (12,258) (6,808)
Proceeds from issuance of long-term debt - 3,678 15,639
Dividends on Preferred and Common Stock - (145) (677)
Purchases of Common Stock and options (2,996) (256) -
Proceeds from exercise of stock options 235 172 47
------------ ----------- -----------
Net cash used in financing activities (5,527) (8,809) (13,402)
------------ ----------- -----------
Net increase (decrease) in cash and equivalents (7,559) 14,650 (178)
Cash and equivalents at beginning of year 15,905 1,255 1,433
------------ ----------- -----------
Cash and equivalents at end of year $8,346 $15,905 $1,255
============ =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $11,224 $12,241 $14,017
Income taxes $1,889 $1,630 $1,404
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) increase in accrued construction in process ($306) $813 ($460)
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
-22-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, automotive, recreational vehicle, and
building supply industries.
Atlantis Plastic Films manufactures stretch films which are multilayer
plastic films used principally to wrap pallets of materials for shipping or
storage, and custom film products which include high-grade laminating films,
embossed films, and specialty film products targeted primarily to industrial and
packaging markets.
Atlantis Molded Plastics employs two 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; and (ii) a
variety of extruded plastic parts for trim and functional applications (profile
extrusion) that are incorporated into a broad range of consumer and commercial
products such as recreational vehicles, residential doors and windows, office
furniture, building supplies, and retail store fixtures.
Discontinued operations relate to Western Pioneer, which was sold on
August 31, 1995.
The following is a summary of the Company's significant accounting
policies:
BASIS OF PRESENTATION The consolidated financial statements include the accounts
of Atlantis and its subsidiaries, all of which are wholly owned. With regard to
the Company's former 50% interest in the CKS/Rigal joint venture (sold during
September 1995), the Company recorded its proportionate share of the joint
venture's results of operations, during the periods that the Company owned the
investment, using the equity method of accounting. All material intercompany
balances and transactions have been eliminated.
CASH AND EQUIVALENTS The Company classifies as cash and equivalents all highly
liquid investments which present insignificant risk of changes in value and have
maturities at the date of purchase of three months or less. The Company
maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits and in investment accounts with international
investment banking firms. The Company has not experienced any losses in such
accounts.
INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or
market.
PROPERTY AND EQUIPMENT Property and equipment are carried at cost less
accumulated depreciation and amortization. The provisions for depreciation and
amortization have been computed, using both straight-line and accelerated
methods, over the estimated useful lives of the respective assets. Such useful
lives generally fall within the following ranges: buildings and improvements -
15 to 30 years; office furniture and equipment - 5 to 10 years; manufacturing
equipment - 5 to 30 years; and vehicles - 3 to 8 years.
When assets are retired or otherwise disposed of, the costs and
accumulated depreciation are removed from the respective accounts and any
related profit or loss is recognized. Maintenance and repair costs are charged
to expense as incurred. Additions and improvements are capitalized.
GOODWILL Goodwill represents the excess of the purchase price over the fair
value of identifiable assets and liabilities of acquired businesses. Goodwill is
amortized on a straight-line basis over forty years from the date of the
respective acquisitions. Accumulated amortization, excluding the goodwill
write-offs described in Note 15, amounted to approximately $15.9 million and
$14.3 million at December 31, 1997 and 1996, respectively.
LONG-LIVED ASSETS In the fourth quarter of 1995, the Company adopted SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present, and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. The statement also requires
that impairment losses be recorded on long-lived assets to be disposed of when
the carrying value of the asset exceeds the fair value (usually based on
discounted cash flows) less the estimated selling costs. Under this method, the
Company reviews for
-23-
<PAGE>
impairment annually and whenever events or changes in circumstances indicate
that the carrying amount of any of its assets may not be recoverable.
REVENUE RECOGNITION The Company primarily recognizes revenue when goods are
shipped to customers.
AMORTIZATION Loan acquisition costs and related legal fees are amortized over
the respective terms of the related debt utilizing either: (i) the effective
interest method, or (ii) the straight line method when the results do not
materially differ from the effective interest method.
INCOME TAXES The Company and its subsidiaries file consolidated Federal income
tax returns. The Company records income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes", which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
difference between the financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
PER SHARE DATA In the fourth quarter of 1997, the Company adopted SFAS No. 128,
"Earnings per Share". Prior year amounts have been restated in accordance with
this Statement. Basic earnings per share is computed by dividing net earnings
available to common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is computed similarly
but reflects the potential dilution that could occur if options were exercised
or convertible securities were converted into Common Stock.
USE OF ESTIMATES The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect: (i) the reported amounts of assets
and liabilities; (ii) disclosure of contingent assets and liabilities at the
dates of the consolidated financial statements; and (iii) reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
RECLASSIFICATIONS Certain amounts included in prior period financial statements
have been reclassified to conform with the current year presentation.
FINANCIAL INSTRUMENTS SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments", requires the disclosure of the fair value of financial
instruments. The following methods and assumptions were used by the Company to
estimate the fair value of the financial instruments held by the Company: (1)
the fair value of current assets and current liabilities including cash and
equivalents, accounts receivable, and accounts payable approximates carrying
value due to the short maturity of the instruments; and (2) the fair value of
long-term debt (see Note 6) was determined based on quoted market prices for the
Company's 11% Senior Notes and comparison of effective interest rates to current
market rates for loans available to the Company with similar terms and average
maturities for the remainder of the long-term debt.
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of cash and equivalents and accounts
receivable. The Company places its cash and equivalents with high quality
institutions. Concentrations of credit risk with respect to accounts receivable
are limited due to the large number of entities comprising the Company's
customer base and their dispersion across different industries and geographies.
As of December 31, 1997, the Company believes that its credit risk is not
significant.
NOTE 2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES AND ASSETS
DISPOSITIONS
In August 1995, the Company sold Western Pioneer for $12.0 million,
generating a pre-tax gain of $914,000, and an after-tax gain of $483,000. In
1996, the Company recorded an after-tax gain of $96,000 relating to the sale of
vacant land acquired in connection with the Western Pioneer sale and to certain
tax benefits due to the Company. In 1997, the Company recognized a pre-tax gain
of $192,000, and an after-tax gain of $126,000 associated with the
reconciliation of loss reserve accounts in Western Pioneer. In September 1995,
the Company sold its 50% interest in the CKS/Rigal blow molding joint venture
for approximately $870,000, generating a pre-tax loss of $100,000, and an
after-tax gain of $37,000. The net cash proceeds after expenses from these 1995
sales were applied to the Company's revolving credit facility.
-24-
<PAGE>
During the fourth quarter of 1996 the Company completed the following
transactions, generating a total pre-tax gain of $6.7 million: (i) in November,
the Company sold PCI for approximately $8.3 million, generating a pre-tax gain
of approximately $1.4 million, and an after-tax gain of approximately $1.9
million; (ii) in December, the Company sold its Tulsa custom manufacturing
facility for $1.5 million, generating a pre-tax gain of approximately $350,000,
and an after-tax gain of approximately $210,000; and (iii) also during December,
the Company sold its investment in WinsLoew Furniture, Inc. stock to WinsLoew
for approximately $9.3 million, generating a pre-tax gain of approximately $4.9
million, and an after-tax gain of approximately $2.9 million. WinsLoew is
affiliated with Atlantis through its relationship with Trivest, Inc. ("Trivest")
- - see Note 13. A portion of the net cash proceeds after expenses from the PCI
sale was used during the fourth quarter of 1996 to pay off the outstanding
balance on the Company's revolving credit facility.
NOTE 3. INVENTORIES
Inventories at December 31, 1997 and 1996 consisted of the following:
(in thousands)
1997 1996
---- ----
Raw materials $9,738 $9,649
Work in progress 480 204
Finished goods 8,299 7,131
------- -------
TOTAL $18,517 $16,984
======= =======
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 and 1996 consisted of the
following:
(in thousands)
1997 1996
------- -------
Land $2,204 $2,203
Building & improvements 18,303 17,265
Office furniture & equipment 6,269 5,526
Manufacturing equipment 91,634 84,690
Vehicles 471 398
------- -------
TOTAL 118,881 110,082
Accumulated depreciation
and amortization (58,816) (51,559)
-------- --------
NET $60,065 $58,523
======== ========
-25-
<PAGE>
NOTE 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at
December 31, 1997 and 1996:
(in thousands)
1997 1996
---- ----
Accounts payable $6,628 $8,628
Accrued interest 3,814 3,722
Accrued compensation, vacation
& profit sharing 2,539 3,845
Accrued health & safety expense 744 1,310
Customer deposits and
commissions 2,663 1,502
Income taxes payable 1,138 1,967
Accrued construction in progress 1,946 2,252
Other 4,674 3,905
------- -------
TOTAL $24,146 $27,131
======= =======
NOTE 6. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1997 and
1996:
(in thousands)
1997 1996
---- ----
Senior Notes $89,500 $89,500
Revolving credit facility - -
Other indebtedness 15,616 18,382
-------- --------
TOTAL LONG-TERM DEBT 105,116 107,882
Current portion (3,254) (2,517)
--------- --------
LONG-TERM DEBT, NET $101,862 $105,365
========= ========
During early 1993, the Company refinanced substantially all of its
existing indebtedness through a $100 million, 11% Senior Note offering due
February 15, 2003 (the "Notes"), and borrowings under a $30 million revolving
credit facility, which matured on February 22, 1998. Effective as of February
20, 1998, the revolving credit facility was renegotiated at a principal amount
of $15 million. This commitment will expire August 22, 1998.
During July 1996, the Company repurchased, at a slight discount, $5.7
million of its Notes in the open market, which resulted in an after-tax
extraordinary loss of $73,000, principally related to the write-off of
unamortized loan origination costs. During December 1995, the Company
repurchased, at a discount, $4.8 million of its Notes in the open market, and
recognized an extraordinary gain of $254,000, net of tax.
The Notes are senior unsecured obligations of the Company, with all of
the Company's plastics subsidiaries jointly, severally, and unconditionally
guaranteeing the payment of principal and interest. The Notes could not be
redeemed prior to February 15, 1998. On and after that date and until February
15, 2001, the Company may redeem all or any portion of the Notes at redemption
prices ranging from 104.125% to 101.375% of the principal amount. After February
15, 2001, the Company may redeem all or any portion of the Notes at 100% of the
principal amount. The Company must redeem $14.5 million and $25.0 million,
respectively, of the Notes on February 15, 2001 and 2002.
Covenants relating to the Notes restrict the Company from paying
dividends, incurring new debt, or taking certain other actions unless specified
interest coverage ratio and other tests are met. A decline in operating
profitability in 1995 and 1997 caused the Company to fall below the interest
coverage ratio requirement for the trailing four quarter periods ended September
30 and December 31, 1995, March 31 and June 30, 1996, and June 30 and September
30, 1997. Accordingly, in the quarters following those periods, the Company
could not pay dividends or repurchase stock, and its ability to incur new debt
or take
-26-
<PAGE>
certain other actions was restricted. The Company met the interest coverage
ratio requirement for the trailing four quarters ended December 31, 1997, and is
therefore currently able to, among other things, pay dividends, repurchase
stock, and incur new debt.
Under the terms of the revolving credit facility, the Company and its
subsidiaries are required to, among other things, maintain certain financial
ratios and minimum specified levels of net worth, refrain from paying dividends
unless certain requirements are met, refrain from incurring certain additional
indebtedness or guaranteeing the obligations of others, and limit capital
expenditures. At December 31, 1997, the gross availability on the revolving
credit facility equaled $29.5 million. Unused availability, net of outstanding
letters of credit of approximately $1.5 million, equaled $28.0 million.
Borrowings on the revolving credit facility are subject to a borrowing
base formula which is based on eligible collateral (accounts receivable,
inventories, and fixed assets of the subsidiaries). Interest is computed using
either LIBOR or prime-based rates plus a margin. Effective December 31, 1996,
the Company favorably amended the revolving credit facility provisions governing
interest rates and other fees charged by the lender. The LIBOR and prime-based
interest rate margins on the facility are now determined by a formula based upon
the Company's ratio of cash flow to net indebtedness, as defined in the
amendment. At December 31, 1997 and 1996, the LIBOR and prime rate margins were
1.75% and 0%, respectively. The 30-day LIBOR rate and the prime rate were 5.72%
and 8.50%, respectively, at December 31, 1997.
Other indebtedness of approximately $15.6 million consists of equipment
and other collateralized financings entered into during 1994 through 1996, along
with industrial revenue bonds and capitalized lease obligations entered into
prior to 1994. At December 31, 1997 and 1996, the weighted-average interest
rates on these borrowings were 7.87% and 7.97%, respectively, with 84% of the
total at floating interest rates, and the remainder at fixed interest rates as
of December 31, 1997.
Scheduled maturities of indebtedness in each of the next five years are
as follows (in thousands):
YEAR AMOUNT
---- ------
1998 $3,254
1999 2,573
2000 2,893
2001 16,982
2002 27,996
Thereafter 51,418
----------
TOTAL $105,116
========
The fair value of the Company's indebtedness at December 31, 1997 and
1996 was $106.9 million and $111.5 million, respectively.
NOTE 7. CAPITAL STOCK
Generally, the Class A Common Stock has one vote per share and the
Class B Common Stock has ten votes per share. Holders of the Class B Common
Stock are entitled to elect 75% of the Board of Directors; holders of Class A
Common Stock are entitled to elect the remaining 25%. Each share of Class B
Common Stock is convertible, at the option of the holder thereof, into one share
of Class A Common Stock. Class A Common Stock is not convertible into shares of
any other equity security.
During February 1994, the Company's Board of Directors approved a 2.5
cents per share quarterly dividend program beginning in April 1994, and
consecutive quarterly dividends were paid through October 1995, after which the
dividend program was discontinued.
In November 1996, the Board of Directors authorized the repurchase of
up to 1,000,000 shares of Atlantis Class A Common Stock, or 14% of the 7.1
million Class A and Class B Common Stock then outstanding. Through June 1997 the
Company had repurchased 320,344 shares (including 210,244 shares issued in
connection with the conversion of Preferred Stock), and options for 55,125
shares, for total consideration of approximately $3.3 million. The Company was
restricted from repurchases during the last half of 1997 since it fell below the
fixed charge ratio specified in the 11% Senior Note Indenture. As of December
31, 1997, the Company exceeds this fixed charge ratio and, accordingly, has the
ability to repurchase shares of its Common Stock under its share repurchase
program effective February 11, 1998.
-27-
<PAGE>
In January 1997, the Company issued a mandatory conversion notice to
the holder of the 20,000 outstanding shares of the Company's Series A Preferred
Stock ("Preferred Stock"). The Preferred Stock was convertible into 210,244
shares of Class A Common Stock. After issuing the mandatory conversion notice,
the Company reached an agreement with the Preferred Stock holder to repurchase
all of the common shares resulting from the conversion notice for $2 million
(the original price paid for the Preferred Stock by the holder and included in
the $3.3 million consideration cited earlier in this Note), and completed the
repurchase in late March, 1997. Prior to this conversion, each share of
Preferred Stock had a liquidation preference of $100, and the holder of the
Preferred Stock was entitled to an annual cumulative dividend, payable in equal
semiannual installments of $72,500 on April 15 and October 15 of each year.
In the fourth quarter of 1997, the Company adopted SFAS No. 129,
"Disclosure of Information About Capital Structure", which consolidates the
requirements regarding capital structure disclosures. This implementation
required no additional disclosure by the Company.
NOTE 8. INCOME TAXES
The income tax provision (benefit) for the years ended December 31,
1997, 1996, and 1995, consisted of the following:
<TABLE>
(in thousands) 1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Continuing operations $1,138 $4,396 ($1,674)
Discontinued operations 66 51 (445)
Tax effect from sale of Western Pioneer -- -- 432
Extraordinary (loss) gain -- (39) 137
-------- -------- --------
TOTAL $1,204 $4,408 ($1,550)
======== ======== ========
Current Federal income tax expense $646 $2,607 $108
Deferred Federal income tax expense (benefit) 357 1,182 (1,601)
State income tax expense (benefit) 201 619 (57)
------ ------ --------
TOTAL INCOME TAX PROVISION (BENEFIT) $1,204 $4,408 ($1,550)
======= ======= ========
</TABLE>
The following table provides a reconciliation between the Federal
income tax rate and the Company's effective income tax rate for the years ended
December 31, 1997, 1996, and 1995:
1997 1996 1995
---- ---- -----
Federal income tax rate 34% 34% (34%)
Disposition of PCI -- (9) --
Impairment of long-lived assets -- -- 20
State income taxes 13 3 (1)
Amortization of goodwill 28 4 4
Other, net -- 3 (1)
----- ----- -----
Effective tax rate 75% 35% (12%)
===== ===== =====
-28-
<PAGE>
At December 31, 1997 and 1996, deferred tax assets and liabilities
consisted of the following:
(in thousands)
1997 1996
DEFERRED TAX LIABILITIES- ---- ----
Excess of book over tax basis of
property and equipment $8,103 $7,154
Goodwill 527 383
Other, net 168 224
------ ------
TOTAL DEFERRED TAX LIABILITIES $8,798 $7,761
------ ------
DEFERRED TAX ASSETS-
Reserves and accrued expenses not yet
deductible for tax purposes $2,206 $2,301
Capitalized inventory costs 398 34
------ ------
TOTAL DEFERRED TAX ASSETS $2,604 $2,335
------ ------
DEFERRED INCOME TAXES, NET $6,194 $5,426
====== ======
At December 31, 1997 and 1996, classification of net current deferred
tax assets and liabilities and net noncurrent tax assets and liabilities were as
follows:
Deferred income taxes $8,287 $6,886
Less: Other current assets 2,093 1,460
------ ------
$6,194 $5,426
====== ======
NOTE 9. STOCK OPTION PLANS
The Company's Stock Option Plans ("Option Plans") are designed to serve
as an incentive for retaining qualified and competent employees, directors, and
agents. Options may be granted under the Option Plans on such terms and at such
prices as determined by the Compensation Committee of the Board of Directors
(consisting only of outside directors); provided, however, that the exercise
price of options granted under the Option Plans will not be less than 90% of the
market value of the Class A Common Stock on the date of grant. To date, the
exercise price of all options granted under the Option Plans has been equal to
or greater than the fair market value of the Class A Common Stock on the date of
grant. Each option will be exercisable after the period or periods specified in
the option agreement, but no option shall be exercisable after the expiration of
ten years from the date of grant. Options granted vest ratably over a five year
period from the date of grant. Options granted under the Option Plans are not
transferable other than by will or by the laws of descent and distribution. The
Option Plans also authorize the Company to make loans to optionees to exercise
their options.
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issues to Employees", and related interpretations in
accounting for its plans. Accordingly, no compensation expense has been
recognized for its stock-based compensation plans. Had compensation cost for the
Company's stock option plans been determined based upon the fair value at the
grant date for awards under these plans consistent with the methodology
prescribed under SFAS No. 123, "Accounting for Stock Based Compensation", the
Company's 1997 net income and earnings per share (basic) would have been reduced
by approximately $166,000 and $0.02 per share, respectively; the Company's 1996
net income and earnings per share (basic) would have been reduced by $160,000
and $0.02, respectively; and the Company's 1995 net loss and loss per share
(basic) would have been increased by $118,000 and $0.02, respectively. The fair
value of the options was estimated at the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
1997, 1996, and 1995, respectively: dividend yield of 0% for all years;
volatility of 40%, 45%, and 45%; risk-free interest rates of 6.1%, 6.7%, and
7.4%; and an expected life of 6 years for all years.
-29-
<PAGE>
Information with respect to the Option Plans is as follows (in
thousands of shares, except prices per share):
<TABLE>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
OPTIONS OUTSTANDING AT JANUARY 1ST 1,772 1,719 1,459
Granted 96 145 501
Exercised (58) (60) (8)
Canceled (127) (32) (233)
------- ------ -----
OPTIONS OUTSTANDING AT DECEMBER 31ST 1,683 1,772 1,719
======= ====== =====
WEIGHTED-AVERAGE OPTION PRICES PER COMMON SHARE:
OPTIONS OUTSTANDING AT JANUARY 1ST $5.28 $5.12 $4.19
Granted at fair market value $8.68 $6.32 $6.27
Granted at above fair market value N/A N/A $10.38
Exercised $4.09 $2.86 $5.89
Canceled $5.34 $6.02 $5.28
OUTSTANDING AT DECEMBER 31ST $5.51 $5.28 $5.12
Weighted-average fair value of options granted at
fair market value during the year $4.22 $3.36 $3.40
Weighted-average fair value of options granted at
above fair market value during the year N/A N/A $2.25
Options exercisable at December 31st 1,196 1,164 1,207
Options available for grant at December 31st 167 193 257
</TABLE>
The following table summarizes information about stock options
outstanding at December 31, 1997:
<TABLE>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------- --------------------------------
NUMBER WEIGHTED-AVERAGE WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 12/31/97 CONTRACTUAL LIFE EXERCISE PRICE AT 12/31/97 EXERCISE PRICE
--------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1.38 - $2.87 10,000 2.80 $1.38 10,000 $1.38
$2.88 - $4.39 664,309 1.10 $3.48 664,309 $3.48
$4.40 - $6.62 658,176 5.20 $5.42 424,575 $5.25
$6.63 - $9.75 250,500 8.20 $8.71 57,000 $8.74
$9.76 - $11.88 100,000 7.10 $11.88 40,000 $11.88
</TABLE>
NOTE 10. EARNINGS PER SHARE
<TABLE>
(all numbers in thousands except per share amounts) 1997 1996 1995
---- ---- ----
BASIC EARNINGS (LOSS) PER COMMON SHARE:
<S> <C> <C> <C>
Income (loss) from continuing operations $275 $8,074 ($13,558)
Deduct-Series A Convertible Preferred dividends - (109) (145)
------- ------- ----------
Earnings (loss) applicable to common shares $275 $7,965 ($13,703)
Weighted-average common shares outstanding 7,106 7,133 7,089
------- ------- ----------
BASIC EARNINGS (LOSS) PER COMMON SHARE $0.04 $1.12 ($1.93)
======= ======= ==========
</TABLE>
-30-
<PAGE>
<TABLE>
(all numbers in thousands except per share amounts) 1997 1996 1995
---- ---- ----
DILUTED EARNINGS PER COMMON SHARE:
<S> <C> <C> <C>
Earnings (loss) applicable to common shares $275 $7,965 ($13,703)
Add-Series A Convertible Preferred dividends - 109 -
----- ------ --------
Earnings (loss) applicable to common shares plus effects
of assumed conversions $275 $8,074 ($13,703)
Weighted-average common shares outstanding 7,106 7,133 7,089
Add - Options 494 399 -
Add - Conversion of Preferred Stock - 210 -
----- ------ --------
Weighted-average common shares outstanding plus
potential dilutive common shares 7,600 7,742 7,089
----- ------ --------
DILUTED EARNINGS (LOSS) PER COMMON SHARE $0.04 $1.04 ($1.93)
===== ====== ========
AFTER-TAX EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEMS:
DISCONTINUED OPERATIONS:
Basic earnings per common share $0.02 $0.01 ($0.04)
Diluted earnings per common share $0.02 $0.01 ($0.04)
DISPOSITION OF DISCONTINUED OPERATIONS:
Basic earnings per common share $ - $ - $0.07
Diluted earnings per common share $ - $ - $0.07
EXTRAORDINARY ITEMS:
Basic earnings per common share $ - ($0.01) $0.04
Diluted earnings per common share $ - ($0.01) $0.04
</TABLE>
Excluded from the above calculation of diluted EPS are antidilutive
options which could potentially dilute EPS (diluted) in the future. Antidilutive
options for 1997, 1996, and 1995, are: 317,500; 458,100; and 1,719,000 shares,
respectively.
In February 1998, the Company's Board of Directors granted 167,000
options with respect to the Company's Class A Common Stock with an aggregate
option price of $918,500.
During January and February 1998, options to purchase 429,996 shares of
the Company's Common Stock were exercised for an aggregate option price of
$1,567,058, all of which were included in computing diluted earnings per common
share for the year ending December 31, 1997.
NOTE 11. BUSINESS SEGMENTS
The Company considers its continuing operations to comprise two
segments: Atlantis Plastic Films and Atlantis Molded Plastics. During 1997,
1996, and 1995, an Atlantis Molded Plastics customer accounted for approximately
9%, 9%, and 10%, respectively, of the Company's net sales. Summary data for
1997, 1996, and 1995 is as follows (in thousands):
<TABLE>
ATLANTIS ATLANTIS
PLASTIC MOLDED
FILMS PLASTICS CORPORATE CONSOLIDATED
----- -------- --------- ------------
1997
<S> <C> <C> <C> <C>
Net sales $187,032 $69,051 $ -- $256,083
Operating income 9,636 3,204 -- 12,840
Identifiable assets 105,800 52,083 13,006 170,889
Capital expenditures 4,071 5,080 410 9,561
Depreciation & amortization 5,967 2,968 756 9,691
</TABLE>
-31-
<PAGE>
<TABLE>
ATLANTIS ATLANTIS
PLASTIC MOLDED
FILMS PLASTICS CORPORATE CONSOLIDATED
----- -------- --------- ------------
1996
<S> <C> <C> <C> <C>
Net sales $177,851 $89,268 $ -- $267,119
Operating income 10,117 8,273 -- 18,390
Identifiable assets 108,586 53,519 15,796 177,901
Capital expenditures 4,084 2,026 640 6,750
Depreciation & amortization 6,002 3,393 566 9,961
1995
Net sales $192,806 $88,258 $ -- $281,064
Operating income (loss) 1,982 (2,697) -- (715)
Identifiable assets 111,831 56,419 12,211 180,461
Capital expenditures 7,616 5,472 676 13,764
Depreciation & amortization 6,638 3,511 557 10,706
</TABLE>
NOTE 12. PROFIT SHARING AND RETIREMENT PLANS
Atlantis and certain of its subsidiaries have profit sharing and
defined contribution retirement plans. Generally, such plans cover all employees
who have attained the age of 21 and have at least one year of service. The Board
of Directors of each company determines contributions to the plans on an annual
basis. Related expenses applicable to continuing operations were approximately
$936,000, $1.1 million, and $812,000 for the years ended December 31, 1997,
1996, and 1995, respectively.
NOTE 13. RELATED PARTIES
A management agreement exists between the Company and Trivest, an
affiliate of a major shareholder. Trivest and the Company have certain common
officers, directors, and shareholders. Fees charged to expense under this
agreement, including the portion related to discontinued operations, amounted to
$517,400; $497,000; and $478,000 for the years ended December 31, 1997, 1996,
and 1995, respectively. This agreement expired on December 31, 1997. A revised
agreement is presently being negotiated by the Company and Trivest and a
definitive agreement is expected to be signed by March 31, 1998.
Atlantis shares its Miami, FL office space with several related
entities. Rent expense for this office space, as well as certain other
non-direct general and administrative expenses, are allocated among Atlantis and
these entities.
NOTE 14. COMMITMENTS AND CONTINGENCIES
The Company is, from time to time, involved in routine litigation. No
such litigation in which the Company is presently involved is believed to be
material to its financial condition or results of operations.
As part of Atlantis' ongoing capital spending program, the Company has
converted, or is in the process of converting, its information systems in order
to accommodate the year 2000 date change. The Company expects to complete these
changes during the first quarter of 1999. Capital expenditures and SG&A expenses
related solely to the year 2000 date change are not expected to have a material
impact on the Company's business, operations, or financial condition.
Atlantis and its subsidiaries lease various office space, buildings,
transportation, and production equipment with terms in excess of one year. Total
expense under these agreements for the years ended December 31, 1997, 1996, and
1995 was approximately $1.9 million, $1.7 million, and $1.5 million,
respectively.
-32-
<PAGE>
The total minimum rental commitments under long-term, noncancelable
operating leases at December 31, 1997, consisted of the following (in
thousands):
YEAR AMOUNT
---- ------
1998 $1,820
1999 1,086
2000 802
2001 705
2002 609
Thereafter 1,557
---------
TOTAL $6,579
=========
NOTE 15. IMPAIRMENT OF LONG-LIVED ASSETS AND OTHER RESTRUCTURING CHARGES
In accordance with the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
the Company recorded impairment of long-lived assets and other restructuring
charges, as discussed below.
The Company's Tulsa custom film facility which was unprofitable during
1995, had experienced operating losses in prior periods, and was expected to
continue to incur operating losses in the future if the fourth quarter 1995
restructuring of the business was not undertaken. As part of that restructuring,
the Company estimated the facility's future cash flows from its operations and
its eventual disposition, compared those amounts to its carrying value, and
determined that an impairment loss should be recognized. Accordingly, during the
fourth quarter of 1995, goodwill associated with the facility was written off,
and its fixed assets were written down to fair value. This facility was closed
in August 1996, and was subsequently sold in December 1996 (see Note 2).
Also during the fourth quarter of 1995, the Company decided to dispose
of PCI as part of its strategy to focus its resources on the manufacture of film
products and selected molded products. The Company determined that the carrying
value of this operation exceeded its fair value, and determined the amount of
the impairment charge by developing its best estimate of the fair value of the
long-lived assets and comparing it to the carrying value of those long-lived
assets. As a result, the majority of the goodwill associated with this business
was written off during the fourth quarter of 1995. During 1996, PCI's
profitability improved compared to 1995 levels, and in 1996, PCI was sold for
approximately $8.3 million (see Note 2).
The fourth quarter 1995 noncash charges for the impairment of
long-lived assets associated with the Tulsa custom film facility and the
reduction in carrying value of PCI totaled $10.6 million. Of this amount,
goodwill write-offs totaled approximately $8.9 million (with no associated tax
benefit), and fixed asset write-downs totaled approximately $1.7 million
pre-tax, or $1.0 million after-tax.
During 1995, the Company also recorded restructuring charges of
approximately $1.9 million related to: (i) the first quarter 1995 reorganization
of its senior management group (approximately $750,000); (ii) the third and
fourth quarter 1995 reconfiguration of its stretch film sales organization
(approximately $800,000); and (iii) the fourth quarter 1995 headcount reduction
costs associated with the restructuring of the Tulsa custom facility and the
injection molding unit (approximately $350,000). As of December 31, 1996, all
amounts relating to these matters had been paid.
During 1997, the Company recorded impairment of long-lived assets and
other restructuring charges of $815,000, or $505,300 after taxes, related to:
(i) the closing of the Company's Nashville, TN injection molding facility,
including approximately $250,000 in non-cash charges for the write-down of fixed
assets and leasehold improvements associated with that facility; and (ii)
restructuring expenses associated with management changes in the Company's
stretch film unit. As of December 31, 1997, $102,000 of this amount remains to
be paid, and is expected to be paid during 1998.
NOTE 16. DISCONTINUED OPERATIONS
Discontinued operations relate to Western Pioneer. The Western Pioneer
sale contract contained a provision which required that the adequacy of Western
Pioneer's loss reserves as of March 31, 1995 be evaluated during the fourth
quarter of
-33-
<PAGE>
1997. This evaluation was performed and resulted in a pre-tax gain of $192,000,
and an after tax gain of $126,000, which was recognized by the Company in the
fourth quarter of 1997.
During 1996, the Company sold vacant land acquired in connection with
the Western Pioneer sale and recognized a net loss after-tax of approximately
$47,000. In addition, during 1996 the Company recognized additional income on
the sale of Western Pioneer of approximately $143,000, net of tax, related to
certain tax benefits due to the Company.
The following table summarizes Western Pioneer's operating results for
the eight months ended August 31, 1995:
(in thousands)
Revenues $17,621
Expenses 17,872
-------
Net loss $ (251)
=======
NOTE 17. ACCOUNTING PRONOUNCEMENTS
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
were issued. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The purpose of reporting comprehensive income is to
present a measure of all changes in equity that result from recognized
transactions and other economic events of the period other than transactions
with owners in their capacity as owners. The FASB believes that SFAS No. 130
should help investors, creditors, and others in assessing an enterprise's
activities and the timing and magnitude of its future cash flows. SFAS No. 131
establishes standards for the way that public businesses report information
about operating segments in annual financial statements, and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. The Company has not yet determined the effect on operating results of
implementing SFAS 130; however, the adoption of this statement is not expected
to have a materially adverse effect on consolidated financial position. The
Company has not yet determined the impact of SFAS 131 on its future disclosures.
SFAS 130 and 131 must be implemented for fiscal years ending after December 15,
1998.
In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits" was issued. SFAS No. 132 requires that
additional information be disclosed regarding changes in the benefit obligation
and fair values of plan assets. The FASB believes that SFAS No. 132 should help
investors, creditors, and others in analyzing the benefit obligation, the fair
value of plan assets, and changes in the obligation and fair value during the
year. It also standardizes the disclosure requirements for pensions and other
postretirement benefits. The Company has not yet determined the impact of SFAS
132 on its future disclosures. SFAS 132 must be implemented for fiscal years
ending after December 15, 1998.
NOTE 18. QUARTERLY FINANCIAL DATA (UNAUDITED)
Unaudited consolidated quarterly financial data for the years ended
December 31, 1997 and 1996 are as follows:
<TABLE>
(in thousands, except per share data)
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES $64,323 $64,273 $65,530 $70,576 $63,895 $68,211 $62,335 $64,059
GROSS PROFIT 9,187 11,441 9,043 12,831 10,034 11,522 10,871 9,937
INCOME (LOSS) - CONTINUING OPERATIONS (713) 335 (312) 1,344 568 1,322 732 5,073
INCOME (LOSS) - DISCONTINUED OPERATIONS - - - (47) - 143 126 -
EXTRAORDINARY LOSS - - - - - (73) - -
NET INCOME (LOSS) (713) 335 (312) 1,297 568 1,392 858 5,073
INCOME (LOSS) FROM CONTINUING
OPERATIONS PER COMMON SHARE
- BASIC ($0.10) $0.04 ($0.04) $0.18 $0.08 $0.18 $0.10 $0.71
- DILUTED ($0.10) $0.04 ($0.04) $0.17 $0.08 $0.17 $0.10 $0.63
</TABLE>
-34-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has had no changes in or disagreements with its independent
accountants on accounting and financial disclosure.
PART III
ITEMS 10, 11, 12, AND 13.
The information called for by Items 10, 11, 12, and 13 is incorporated
by reference to the registrant's Proxy Statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days after
the end of the fiscal year covered by this report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
(A) DOCUMENTS FILED AS A PART OF THIS REPORT: PAGE
<S> <C>
(1) Financial Statements:
Report of Independent Accountants....................................... 18
Consolidated Income Statements.......................................... 19
Consolidated Balance Sheets............................................. 20
Consolidated Statements of Shareholders' Equity......................... 21
Consolidated Statements of Cash Flows................................... 22
Notes to Consolidated Financial Statements.............................. 23
(2) Financial Statement Schedules:
The following Financial Statement Schedule for the years
ended December 31, 1995, 1996, and 1997 is submitted
herewith:
Report of Independent Accountants on Financial Statement Schedule....... 36
Schedule II - Valuation and Qualifying Accounts......................... 37
</TABLE>
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission have been omitted because the required
information is contained in the financial statements and
notes thereto or because such schedules are not required or
applicable.
-35-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Atlantis Plastics, Inc.:
In connection with our audits of the Consolidated Financial Statements
of Atlantis Plastics, Inc., as of December 31, 1997 and 1996, and for
each of the three years in the period ended December 31, 1997, which
financial statements are included in this Annual Report on Form 10-K,
we have also audited the financial statement schedule listed in Item
14(A) 2 herein.
In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information required to be
included herein.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
February 11, 1998
-36-
<PAGE>
ATLANTIS PLASTICS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31,
($ in thousands)
<TABLE>
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
1997
<S> <C> <C> <C> <C> <C>
Allowances reducing the assets in the balance sheet:
Doubtful accounts receivable $633 $514 $ - $251 $896
Reserve for inventory obsolescence 418 8 - - 426
------ ---- ----- ---- ------
Total $1,051 $522 $ - $251 $1,322
====== ==== ===== ==== ======
1996
Allowances reducing the assets in the balance sheet:
Doubtful accounts receivable $1,530 $143 $ - $1,040 $633
Reserve for inventory obsolescence 342 91 - 15 418
------ ---- ----- ---- ------
Total $1,872 $234 $ - $1,055 $1,051
====== ==== ===== ====== ======
1995
Allowances reducing the assets in the balance sheet:
Doubtful accounts receivable $761 $1,152 $ - $383 $1,530
Reserve for inventory obsolescence 266 140 - 64 342
------ ------- ----- ---- ------
Total $1,027 $1,292 $ - $447 $1,872
======= ======= ======== ===== ======
</TABLE>
-37-
<PAGE>
(3) Exhibits (An asterisk to the right of an exhibit number denotes
a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K.)
3.1 Registrant's Articles of Incorporation (3.1)(1)
3.2 Registrant's Bylaws (February 1988) (3.2)(1)
4.1 Form of Stock Certificate evidencing ownership of Registrant's Class A
Common Stock(10)
4.2 Trust Indenture between Registrant and American Stock Transfer and
Trust Company (4.2)(7)
4.3 Form of Senior Note, dated February 15, 1993 (4.3)(7)
10.1 *Registrant's Amended and Restated Stock Option Plan, dated as of March
16, 1989 (10.1)(4)
10.2 *Registrant's 1987 Disinterested Directors Stock Option Plan (10.2)(2)
10.3 *Registrant's Amended and Restated 1990 Stock Option Plan (10.2)(4)
10.4 *Registrant's 1997 Stock Option Plan(20)
10.5 *Fourth Amended and Restated Management Agreement between Registrant
and Trivest, Inc. (10.5)(6)
10.6 *Second Amended and Restated Employment Agreement, dated January 1,
1990 between Registrant and Earl W. Powell (10.6)(3)
10.7 *First Amendment To Second Amended and Restated Employment Agreement,
dated as of April 1, 1992, between Registrant and Earl W. Powell
(10.7)(7)
10.8 *Employment Agreement, dated January 1, 1990, between Registrant and
Phillip T. George, M.D. (10.7)(3)
10.9 *First Amendment to Employment Agreement, dated as of April 1, 1992,
between the Registrant and Phillip T. George, M.D. (10.9)(7)
10.10 Form of Indemnification Agreement (10.47)(9)
10.11 Office Lease, dated as of December 31, 1993, between Grand Bay Plaza
Joint Venture and the Registrant, and First Addendum thereto.
(10.12)(8)
10.12 Settlement Agreement by and between Mobil Oil Corporation and Linear
Films, Inc. of Civil Action No. 87 civ. 874-B in the Northern District
of Oklahoma, effective as of February 21, 1992 (10.40)(5)
10.13 License Agreement by and between Mobil Oil Corporation and Linear
Films, Inc. for use of U.S. Patent No. 4,518,654, effective as of
February 21, 1992 (10.41)(5)
10.14 Loan Contract, dated October 30, 1987, between State of Minnesota and
National Poly Products, Inc. (10.11)(2)
10.15 Letter of Consent to the Loan Contract between State of Minnesota and
National Poly Products, Inc., dated October 30, 1991 (10.43)(5)
10.16 Letter of Consent to the Loan Contract between State of Minnesota and
National Poly Products, Inc., dated January 13, 1992 (10.44)(5)
-38-
<PAGE>
10.17 Consent and Acknowledgment to the Loan Contract between State of
Minnesota and National Poly Products, Inc., dated February 18, 1993
(10.22)(7)
10.18 Loan Agreement between Arkansas Development Finance Authority and
Atlantis Plastics Injection Molding, Inc. (formerly known as Cyanede
Plastics, Inc.), dated March 18, 1992 (10.69)(6)
10.19 Promissory Note from Atlantis Plastics Injection Molding, Inc.
(formerly known as Cyanede Plastics, Inc.), to the Arkansas Development
Finance Authority, in the amount of $1,600,000, dated June 1, 1992
(10.70)(6)
10.20 Office Lease, dated as of April 1, 1992, between Euram/1870 Exchange
Associates and National Poly Products, Inc. (10.78)(6)
10.21 First Extension of lease agreement between Euram/1870 Exchange
Associates and Atlantis Plastic Films, Inc., dated May 14, 1997.(21)
10.22 Subordination and Attornment Agreement between State Farm Life
Insurance Company and National Poly Products, Inc. dated April 6, 1992
(10.78)(6)
10.23 Intercreditor Agreement between Heller Financial, Inc., Arkansas
Development Finance Authority and Worthen Trust Company, Inc.
(10.40)(7)
10.24 Credit Agreement, dated February 22, 1993, between the Registrant and
Heller Financial, Inc. (the "Heller Credit Agreement") (10.39)(7)
10.25 First Amendment and Waiver, dated March 28, 1994, to Heller Credit
Agreement. (10.29)(10)
10.26 Consent Letter, dated May 23, 1994, to Heller Credit Agreement.
(10.30)(10)
10.27 Second Amendment, dated August 15, 1994, to Heller Credit Agreement.
(10.31)(10)
10.28 Consent Letter, dated September 9, 1994, to Heller Credit Agreement.
(10.32)(10)
10.29 Consent Letter, dated February 13, 1995, to Heller Credit Agreement.
(10.33)(10)
10.30 Consent and Waiver Letter, dated February 24, 1995, to Heller Credit
Agreement. (10.34)(10)
10.31 Third Amendment to Heller Credit Agreement and Consent, dated as of
March 30, 1995. (10.3)(11)
10.32 Fourth Amendment to Heller Credit Agreement, dated as of September 30,
1995. (10.2)(13)
10.33 Fifth Amendment to Heller Credit Agreement, dated as of December 31,
1995. (10.33)(14)
10.34 Sixth Amendment to Heller Credit Agreement, dated as of December 30,
1995. (10.1)(16)
10.35 Seventh Amendment to Heller Credit Agreement, dated as of September 5,
1996. (10.2)(16)
10.36 Eighth Amendment to Heller Credit Agreement, dated as of November 6,
1996. (10.35)(18)
10.37 Ninth Amendment to Heller Credit Agreement, dated as of January 31,
1997. (10.36)(18)
10.38 Tenth Amendment to Heller Credit Agreement, dated as of August 4,
1997.(21)
10.39 Eleventh Amendment to Heller Credit Agreement, dated as of November 3,
1997. (10.7) (19)
10.40 Twelfth Amendment to Heller Credit Agreement, dated as of February 20,
1998.(21)
-39-
<PAGE>
10.41 Amended Revolving Note, dated February 20, 1998, between the Registrant
and Heller Financial, Inc. (21)
10.42 Lease with option to purchase Real Estate between Atlantis Plastic
Films, Inc. and the City of Mankato, Minnesota, dated as of March 2,
1995. (10.35)(10)
10.43 *Employment Agreement, dated February 1, 1995, between the Registrant
and Anthony F. Bova. (10.1)(11)
10.44 *Amendment dated April 8, 1996 to Employment Agreement dated February 1,
1995 between Registrant and Anthony F. Bova. (10.1)(15)
10.45 *Amendment dated February 14, 1997 to Employment Agreement dated
February 1, 1995 between Registrant and Anthony F. Bova. (10.1)(19)
10.46 *Employment Agreement, dated March 6, 1995, between the Registrant and
Paul Rudovsky. (10.2)(11)
10.47 *Amendment dated April 8, 1996 to Employment Agreement dated March 6,
1995 between Registrant and Paul Rudovsky. (10.2)(15)
10.48 *Amendment dated February 14, 1997 to Employment Agreement dated March
6, 1995 between Registrant and Paul Rudovsky. (10.2)(19)
10.49 Master Security Agreement and Promissory Note between Cyanede Plastics,
Inc. and General Electric Capital Corporation ("GECC") in the amount of
$2,673,919, dated as of February 23, 1995. (10.4)(11)
10.50 Corporate Guaranty of the Registrant of the obligations of Cyanede
Plastics, Inc. to GECC, dated as of February 23, 1995. (10.5)(11)
10.51 Master Security Agreement and Promissory Note between Pierce Plastics,
Inc. and GECC in the amount of $221,790, dated as of February 23, 1995.
(10.6)(11)
10.52 Corporate Guaranty of the Registrant of the obligations of Pierce
Plastics, Inc. to GECC, dated as of February 23, 1995. (10.7)(11)
10.53 Master Security Agreement and Promissory Note between Atlantis Plastic
Films, Inc. (as successor by merger to Linear Films, Inc.) and GECC in
the amount of $900,000, dated as of February 23, 1995. (10.10)(11)
10.54 Promissory Note from Atlantis Plastic Films, Inc. to GECC in the amount
of $650,000, dated as of February 23, 1995. (10.11)(11)
10.55 Corporate Guaranty of the Registrant of the obligations of Atlantis
Plastic Films, Inc. to GECC dated as of February 23, 1995. (10.12)(11)
10.56 Loan and Security Agreement by the Among Atlantis Plastic Films, Inc.,
Cyanede Plastics, Inc., Pierce Plastics, Inc., Plastic Containers, Inc.
and The CIT/Equipment Group Financing, Inc. ("CIT"), dated as of
4/13/95. (10.13)(11)
10.57 First Amendment to Loan and Security Agreement by and among Atlantis
Plastic Films, Inc., Atlantis Plastics Injection Molding, Inc.
(formerly known as Cyanede Plastics, Inc.) Pierce Plastics, Inc.,
Plastic Containers, Inc. and CIT dated to be effective as of December
31, 1995. (10.47)(14)
10.58 Second Amendment to Loan and Security Agreement by and among Atlantis
Plastic Films, Inc., Atlantis Plastics Injection Molding, Inc.
(formerly known as Cyanede Plastics, Inc.) Pierce Plastics, Inc. and
CIT dated to be effective as of December 31, 1996. (10.51)(18)
-40-
<PAGE>
10.59 Promissory Note from Atlantis Plastic Films, Inc., Cyanede Plastics,
Inc., Pierce Plastics, Inc., and Plastic Containers, Inc. to CIT in the
amount of $15,000,000, dated as of April 13, 1995. (10.14)(11)
10.60 Guaranty of the Registrant of the obligations of Atlantis Plastic
Films, Inc. to CIT, dated as of April 13, 1995. (10.15)(11)
10.61 Credit Agreement between Atlantis Plastics Injection Molding, Inc. and
the Registrant and National City Bank, Northeast, dated as of May 19,
1995. (10.16)(12)
10.62 First Amendment to National City Bank, Northeast, Credit Agreement,
dated as of September 30, 1995. (10.3)(13)
10.63 Second Amendment to National City Bank, Northeast, Credit Agreement,
dated to be effective as of December 31, 1995. (10.52)(14)
10.64 Amendment and Restatement of Promissory Note by and between Atlantis
Plastics Injection Molding, Inc. and the Registrant and National City
Bank, Northeast, dated as of January 30, 1997. (10.57)( 18)
10.65 Third Amendment to National City Bank, Northeast, Credit Agreement,
dated as of June 30, 1997. (10.7)(19)
10.66 Consolidated Amendment No. 1 to Credit Agreement between Atlantis
Plastics Injection Molding, Inc. and the Registrant and National City
Bank, Northeast, dated as of December 31, 1997. (10.3)(21)
10.67 Stock Purchase Agreement for the acquisition of Western Pioneer
Insurance Company by and between the Commerce Insurance Company, a
Massachusetts Corporation and the Registrant, dated as of May 18, 1995.
(10.17)(12)
10.68 Demand Promissory Note from Atlantis Plastic Films, Inc. to GECC in the
amount of $1,280,579.70, dated as of May 8, 1995. (10.18)(12)
10.69 Stock Purchase Agreement dated as of October 18, 1996 among Reid
Plastics, Inc., Atlantis Molded Plastics, Inc. and Plastic Containers,
Inc. (2.1)(17)
10.70 Sublease dated September 15, 1997 between Registrant and II Eagles
Plastics, Inc. (10.3)(19)
10.71 Agreement dated September 15, 1997 between Registrant and II Eagles
Plastics, Inc. (10.4)(19)
10.72 Equipment lease dated September 15, 1997 between Registrant and II
Eagles Plastics, Inc. (10.5)(19)
21.1 Registrant's Subsidiaries(21)
23.1 Consent of Coopers & Lybrand L.L.P.(21)
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended September 30, 1997 (for SEC use only)
27.3 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended June 30, 1997 (for SEC use only)
27.4 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended March 31, 1997 (for SEC use only)
27.5 Restated Financial Data Schedule for Form 10-K filed for the fiscal
year ended December 31, 1996 (for SEC use only)
-41-
<PAGE>
27.6 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended September 30, 1996 (for SEC use only)
27.7 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended June 30, 1996 (for SEC use only)
27.8 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended March 31, 1996 (for SEC use only)
27.9 Restated Financial Data Schedule for Form 10-K filed for the fiscal
year ended December 31, 1995 (for SEC use only)
- ----------
(1) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Form 8-B filed June 7, 1994.
(2) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1987.
(3) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990.
(4) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's registration statement on Form S-8 (No.
33-41012).
(5) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991.
(6) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's registration statement on Form S-2
(33-53152).
(7) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992.
(8) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.
(9) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Report on Form 8-K filed June 3, 1994.
(10) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994.
(11) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.
(12) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995.
(13) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Quarterly Report on Form 10-Q for the
ended September 30, 1995.
(14) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(15) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
-42-
<PAGE>
(16) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Quarterly Report on Form 10-Q for the
ended September 30, 1996.
(17) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Report on Form 8-K dated November 27,
1996.
(18) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996.
(19) Incorporated by reference to the exhibit shown in parentheses and
filed with the Registrant's Quarterly Report on Form 10-Q for the
ended September 30, 1997.
(20) Incorporated by reference to Exhibit A filed with the Registrant's
Schedule 14A filed on April 29, 1997.
(21) Filed herewith.
(B) REPORTS ON FORM 8-K
During the fourth quarter of 1997, no reports on Form 8-K were filed
by the Registrant.
(C) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
The index to exhibits that are listed in Item 14(a)(3) of this report
and not incorporated by reference follows the "Signatures" section
hereof and is incorporated herein by reference.
(D) FINANCIAL STATEMENT SCHEDULES REQUIRED BY REGULATION S-X
See Item 14 (a) 2.
-43-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 27, 1998 By:/S/ PAUL RUDOVSKY
--------------------------------------
PAUL RUDOVSKY
EXECUTIVE VICE PRESIDENT,
FINANCE AND ADMINISTRATION
(PRINCIPAL FINANCIAL OFFICER)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ EARL W. POWELL Chairman of the Board March 27, 1998
--------------------------------------------
EARL W. POWELL
Director and
/S/ PHILLIP T. GEORGE, M.D. Vice Chairman March 27, 1998
--------------------------------------------
PHILLIP T. GEORGE, M.D.
President and Chief
Executive Officer
/S/ ANTHONY F. BOVA (Principal Executive Officer) March 27, 1998
--------------------------------------------
ANTHONY F. BOVA
Executive Vice President
Finance and Administration
/S/ PAUL RUDOVSKY (Principal Financial Officer) March 27, 1998
--------------------------------------------
PAUL RUDOVSKY
/S/ CHARLES D. MURPHY, III Director March 27, 1998
--------------------------------------------
CHARLES D. MURPHY, III
/S/ CHESTER B. VANATTA Director March 27, 1998
--------------------------------------------
CHESTER B. VANATTA
/S/ LARRY D. HORNER Director March 27, 1998
--------------------------------------------
LARRY D. HORNER
/S/ CESAR ALVAREZ Director March 27, 1998
--------------------------------------------
CESAR ALVAREZ
</TABLE>
-44-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
10.21 First Extension of lease agreement between Euram/1870 Exchange
Associates and Atlantis Plastic Films, Inc., dated May 14, 1997.(21)
10.38 Tenth Amendment to Heller Credit Agreement, dated as of August 4,
1997.(21)
10.40 Twelfth Amendment to Heller Credit Agreement, dated as of February 20,
1998.(21)
10.41 Amended Revolving Note, dated February 20, 1998, between Registrant and
Heller Financial, Inc..(21)
10.66 Consolidated Amendment No. 1 to Credit Agreement between Atlantis
Plastics Injection Molding, Inc. and the Registrant and National City
Bank, Northeast, dated as of December 31, 1997.(21)
21.1 Registrant's Subsidiaries(21)
23.1 Consent of Coopers & Lybrand L.L.P.(21)
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended September 30, 1997 (for SEC use only)
27.3 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended June 30, 1997 (for SEC use only)
27.4 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended March 31, 1997 (for SEC use only)
27.5 Restated Financial Data Schedule for Form 10-K filed for the fiscal
year ended December 31, 1996 (for SEC use only)
27.6 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended September 30, 1996 (for SEC use only)
27.7 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended June 30, 1996 (for SEC use only)
27.8 Restated Financial Data Schedule for Form 10-Q filed for the quarterly
period ended March 31, 1996 (for SEC use only)
27.9 Restated Financial Data Schedule for Form 10-K filed for the fiscal
year ended December 31, 1995 (for SEC use only)
-45-
EXHIBIT 10.21
May 8, 1997
FIRST EXTENSION of Lease agreement dated April 1, 1992 by and between EURAM/1870
EXCHANGE ASSOCIATES (hereinafter called "Lessor") and ATLANTIS PLASTIC FILMS,
INC. (successor by name change to NATIONAL POLY PRODUCTS, INC.), (hereinafter
called "Lessee").
1. Lessor and Lessee agree to a lease extension for a period of 5 years,
commencing on June 1, 1997 and terminating at midnight on May 31, 2002.
2. The monthly rental payment schedule will be as follows:
6/01/97 - 5/31/99 $9,632.29
6/01/99 - 5/31/01 $10,017.58
6/01/01 - 5/31/02 $10,402.88
There will be no CPI or DOE related or other increases added to the
above rental payments.
3. Lessor will make the following improvements to the space at no cost to
Lessee:
Repaint all painted surfaces with washable vinyl paint.
Steam clean carpeting throughout.
Reasonable general clean up and repair.
Replace all damaged and/or stained ceiling tiles, if any.
All of the above mentioned improvements will be finalized no later than June 30,
1997.
Lessor will further make sure that the roof of the building is in good workable
condition.
4. In connection with EDI survey, known to Lessor and Lessee, Lessor will
implement the following 4 items, which will be documented in writing:
- The control system air compressor will be isolated from the return
air stream.
- Rotting wood or organic debris near the Air Handlers and outside air
intakes will be repaired or removed.
- The ceiling supply diffusers in Suite 200 will be cleaned and light
debris removed.
- The interior cleaning procedures will be reviewed and appropriate
dust collection bags will be required in vacuum cleaners.
A fifth item from the survey will be implemented as far as possible
considering the design and capacity of the existing HVAC system in the
building. This item is that Lessor will attempt to verify that outside
airflow to the building when the HVAC system induces minimum quantities
of outside air HVAC system should provide a minimum of 0.14 cfm of
outside air per square foot of usable area to comply with ASHRAE
Standard 62.89 requirements.
The first 4 items to be implemented will be completed no later than
June 1, 1997. If any of these 4 items have not been completed at such
date, Lessee will be entitled to abate rental payments - to be prorated
on a daily basis - until such time as Lessor has implemented these
items fully.
Lessor and Lessee acknowledge and agree that non-compliance with the
fifth item of the EDI survey will not be grounds for rental abatement
by Lessee.
5. Lessor and Lessee both acknowledge and agree that the EDI survey states
that the building generally operates within applicable industry and
regulatory indoor air quality guidelines and that implementing the
above mentioned items should improve indoor air quality.
<PAGE>
6. Lessor acknowledges and agrees that CTR Partners, LLP represents Lessee
in this lease extension transaction.
7. Lessor and Lessee agree that items 1, 2, 5, 7, 8, and 9 of the Special
Stipulations attached to the original Lease agreement will no longer be
valid.
8. Item 6. of the Special Stipulations will be modified as follows:
Lessor's address should read 750 The Healey Building instead of
300 The Healey Building.
Lessee will be Atlantis Plastic Films, Inc. instead of Atlantis Group,
Inc.
Broker will be CTR Partners, LLP
35 Technology Parkway South
Suite 170
Norcross, Georgia 30092
Attn: Rob Coatsworth
9. Except as modified by this extension agreement, the original Lease
agreement with the attached Rules and Regulations and Special
Stipulations will remain in full force and effect.
10. Lessor is responsible for any real estate commissions due CTR Partners,
LLP and/or AFCO Realty in connection with this extension.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease extension on 14
May, 1997.
LESSOR: EURAM/1870 EXCHANGE ASSOCIATES
BY: /S/
----------------------------------------
LESSEE: ATLANTIS PLASTIC FILMS, INC.
BY: /S/
----------------------------------------
EXHIBIT 10.38
TENTH AMENDMENT TO CREDIT AGREEMENT
This Tenth Amendment to Credit Agreement, dated as of August 4, 1997
(this "Agreement"), is between ATLANTIS PLASTICS, INC., a Florida corporation
("Borrower"), and HELLER FINANCIAL, INC., a Delaware corporation in its
individual capacity as a Lender and in its capacity as agent for the Lenders
("Agent").
W I T N E S S E T H:
WHEREAS, Agent, Borrower and Lenders are parties to that certain Credit
Agreement dated as of February 22, 1993 (as heretofore amended, the "Credit
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement.
WHEREAS, the parties wish to amend the Agreement as provided herein.
NOW, THEREFORE, the parties agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT. Effective as of June 30, 1997,
the Credit Agreement is amended as follows:
A. Subsection 6.2 is hereby amended by deleting such
subsection in its entirety and replacing it with the following:
"6.2 FIXED CHARGE COVERAGE. The Fixed Charge Coverage, on a
trailing twelve (12) Fiscal Month basis, shall not be less than (i) .90 for the
Fiscal Quarter ending June 30, 1997 and (ii) 1.0 for the Fiscal Quarters ending
September 30, 1997 and thereafter."
B. Subsection 6.5 is hereby amended by deleting such
subsection in its entirety and replacing it with the following:
"6.5 EBIDAT. EBIDAT, on a trailing twelve (12) Fiscal Month
basis, shall not be less than the following for the respective Fiscal Quarters:
FISCAL QUARTER ENDING
---------------------
ON THE FOLLOWING DATES EBIDAT
---------------------- ------
June 30, 1997 $22,000,000
September 30, 1997 $24,000,000
<PAGE>
December 31, 1997
And thereafter $24,202,000"
2. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter into
this Amendment, 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.
(b) NO DEFAULT. No Default or Event of Default under the
Credit Agreement, as amended hereby, has occurred and is continuing.
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 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 Amendment may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
Agreement.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon Agent, Borrower and Lenders and their respective successors and assigns,
and shall insure to the sole benefit of Agent, Borrower and Lenders and the
successors and assigns of Agent, Borrower and Lenders.
2
<PAGE>
(e) REFERENCES. Any reference to the Credit Agreement
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 and secured by the
Collateral. The Credit Agreement as amended hereby and each of the other Loan
Documents remains in full force and effect.
(g) COST, EXPENSES AND TAXES. Borrower affirms and
acknowledges that subsection 10.1 of the Credit Agreement applies to this
Agreement and the transactions and Agreements and documents contemplated
hereunder.
Delivered at Chicago, Illinois, as of the day and year first above written.
ATLANTIS PLASTICS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
HELLER FINANCIAL, INC.,
Individually and as Agent
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
3
<PAGE>
ACKNOWLEDGMENT
Each of Atlantis Molded Plastics, Inc., Atlantis Plastic Injection
Molding, Inc. (f/k/a Cyanede Plastics, Inc.), Atlantis Plastic Films, Inc. and
Pierce Plastics, Inc. hereby acknowledges and consents to the terms of this
Agreement and hereby affirms, ratifies and confirms all of the terms and
provisions of the such entity's Guaranty in favor of Agent and Lenders.
ATLANTIS MOLDED PLASTICS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
ATLANTIS PLASTIC INJECTION
MOLDING, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
ATLANTIS PLASTIC FILMS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
PIERCE PLASTICS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
4
EXHIBIT 10.40
TWELFTH AMENDMENT TO CREDIT AGREEMENT
This Twelfth Amendment to Credit Agreement ("Amendment") is made and
entered into as of February 20, 1998 by and between ATLANTIS PLASTICS, INC.
("Borrower"), HELLER FINANCIAL, INC., in its capacity as Agent for the Lenders
party to the Credit Agreement described below ("Agent") and the Lenders which
are signatories hereto.
WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit
Agreement dated as of February 22, 1993 and all amendments thereto (as such
agreement has from time to time been amended, supplemented or otherwise
modified, the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in the Agreement and this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Agreement.
2. AMENDMENTS. Subject to the conditions set forth below, the Agreement
is amended as follows:
A. Subsection 2.1(A) is hereby amended by deleting the first
paragraph of subsection 2.1(A) in its entirety and inserting the following in
lieu thereof:
"(A) REVOLVING LOAN. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, each Lender agrees to
lend to Borrower from time to time during the period from the
Closing Date to and excluding the Expiry Date, its Pro Rata
Share of the Revolving Loan. The aggregate amount of all
Revolving Loan Commitments shall be $15,000,000, as reduced
from time to time pursuant to subsection 2.4. Amounts borrowed
under this subsection 2.1(A) may be repaid and reborrowed at
any time prior to the Expiry Date. No Lender shall have any
obligation to make advances under this subsection 2.1(A) to
<PAGE>
the extent any requested advance would cause the principal
balance of the Revolving Loans then outstanding to exceed the
Maximum Revolving Loan Amount; provided that Lenders may, in
their sole discretion, elect from time to time to make Loans
in excess of the Maximum Revolving Loan Amount."
B. Subsection 2.4(D) is hereby amended by deleting subsection
2.4(D) in its entirety and subsection 2.4(E) is hereby designated to be 2.4(D).
C. Subsection 2.5 is hereby amended by deleting the first
sentence in subsection 2.5 in its entirety and inserting the following in lieu
thereof:
"This Agreement shall be effective until August 22, 1998 (the
"Termination Date"), and the Commitments shall terminate on
said date."
D. Subsection 5.1(J) is hereby amended by deleting subsection
5.1(J) in its entirety and inserting the following in lieu thereof:
"(J) PROJECTIONS. As soon as available and in any event no
later than thirty (30) days after the end of each Fiscal Year
of Borrower, Borrower will deliver Projections of Borrower and
the Subsidiary Guarantors for the forthcoming Fiscal Year,
month by month."
E. Subsection 6.1 is hereby amended by deleting the first
sentence in subsection 6.1 in its entirety and inserting the following in lieu
thereof:
"The aggregate amount of all Capital Expenditures of Borrower
and the Subsidiary Guarantors (excluding expenditures funded
by insurance proceeds) will not exceed the sum of $10,000,000
from January 1, 1998 through August 22, 1998."
F. Subsection 6.2 is hereby amended by deleting subsection 6.2
in its entirety and inserting the following in lieu thereof:
"6.2 FIXED CHARGE COVERAGE. The Fixed Charge Coverage, on a
trailing twelve (12) Fiscal Month basis, shall not be less
than 0.90 for the Fiscal Quarter ending March 31, 1998 and
each Fiscal Quarter thereafter."
G. Subsection 6.3 is hereby amended by deleting subsection 6.3
in its entirety and inserting the following in lieu thereof:
2
<PAGE>
"6.3 INTEREST EXPENSE COVERAGE. Interest Expense Coverage, on
a trailing twelve (12) Fiscal Month basis, shall not be less
than 1.80 for the Fiscal Quarter ending March 31, 1998 and
each Fiscal Quarter thereafter."
H. Subsection 6.5 is hereby amended by deleting subsection 6.5
in its entirety and inserting the following in lieu thereof:
"6.5 EBIDAT. EBIDAT, on a trailing twelve (12) Fiscal Month
basis, shall not be less than $22,000,000 for the Fiscal
Quarter ending March 31, 1998 and each Fiscal Quarter
thereafter."
3. COVENANTS. Notwithstanding the limitations of subsection 7.11,
Borrowers may make payments of fees and compensation to Trivest, Inc. and its
officers and subsidiaries, for January 1, 1998 through August 22, 1998, so long
as such payments do not exceed the total amount paid in Fiscal Year 1997.
4. CONDITIONS. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by Agent):
(a) Borrower shall have executed and delivered this Amendment,
and such other documents and instruments as Agent may require shall
have been executed and/or delivered to Agent;
(b) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other
legal matters incident thereto shall be satisfactory to Agent and its
legal counsel;
(c) No Default or Event of Default shall have occurred and be
continuing;
(d) Borrower shall have executed and delivered to Agent a new
Revolving Note indicating the reduced amount of $15,000,000; and
(e) Borrower shall have paid Agent an amendment fee in the
amount of $25,000.
5. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter
into this Amendment, Borrower represents and warrants to Agent and Lenders that
(a) the execution, delivery and performance of this Amendment has been duly
authorized by all requisite corporate action on the part of Borrower and that
this Amendment has been duly executed and delivered by Borrower and (b) each of
the representations and warranties set forth in Section 4 of the Agreement
3
<PAGE>
(other than those which, by their terms, specifically are made as of certain
date prior to the date hereof) are true and correct in all material respects as
of the date hereof.
6. SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
7. REFERENCES. Any reference to the Agreement contained in any
document, instrument or agreement executed in connection with the Agreement
shall be deemed to be a reference to the Agreement as modified by this
Amendment.
8. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.
9. RATIFICATION. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the
Agreement and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Agreement. Except as expressly modified
and superseded by this Amendment, the terms and provisions of the Agreement are
ratified and confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
Delivered at Chicago, Illinois, as of the day and year first above written.
ATLANTIS PLASTICS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
HELLER FINANCIAL, INC.,
Individually and as Agent
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
4
<PAGE>
ACKNOWLEDGMENT
Each of Atlantis Molded Plastics, Inc., Atlantis Plastic Injection
Molding, Inc. (f/k/a Cyanede Plastics, Inc.), Atlantis Plastic Films, Inc. and
Pierce Plastics, Inc. hereby acknowledges and consents to the terms of this
Agreement and hereby affirms, ratifies and confirms all of the terms and
provisions of the such entity's Guaranty in favor of Agent and Lenders.
ATLANTIS MOLDED PLASTICS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
ATLANTIS PLASTIC INJECTION
MOLDING, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
ATLANTIS PLASTIC FILMS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
PIERCE PLASTICS, INC.
By: /S/____________________________________
Name Printed:______________________________
Title:_____________________________________
5
EXHIBIT 10.41
AMENDED REVOLVING NOTE
$15,000,000 Chicago, Illinois
February 20, 1998
FOR VALUE RECEIVED, the undersigned, ATLANTIS PLASTICS, INC., a Florida
corporation ("Borrower"), hereby unconditionally promises to pay to the order of
HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), at the office of
Agent (as defined below) at 500 West Monroe Street, Chicago, Illinois 60661, or
at such other place as the holder of this Amended Revolving Note (the "Revolving
Note") may from time to time designate in writing, in lawful money of the United
States of America and in immediately available funds, the principal sum of
FIFTEEN MILLION DOLLARS ($15,000,000), or, if less, the aggregate unpaid
principal amount of all advances made to Borrower by Lender pursuant to
subsection 2.1(A) of the Credit Agreement described below, at such times as are
specified there.
This revolving Note is one of the Notes referred to in, was executed
and delivered pursuant to, and evidences indebtedness of Borrower incurred
under, that certain Credit Agreement dated as of February 22, 1993 by and among
Borrower, each of the Lenders party thereto from time to time, and Heller
Financial, Inc., in its capacity as Agent for the Lenders (as the same may be
amended, restated, supplemented or otherwise modified and in effect from time to
time, the "Credit Agreement"), to which reference is hereby made for a statement
of the terms and conditions under which the loan evidenced hereby was made and
is to be repaid and for a statement of Agent's and Lender's remedies upon the
occurrence of an Event of Default. Capitalized terms used herein but not
otherwise specifically defined shall have the meanings ascribed to such terms in
the Credit Agreement.
Borrower further promises to pay interest on the outstanding unpaid
principal amount hereof from the date hereof until payment in full at the rate
from time to time applicable to the Revolving Loan as determined in accordance
with the Credit Agreement; PROVIDED, HOWEVER, that upon the occurrence and
during the continuance of an Event of Default, Borrower shall pay interest on
the outstanding principal balance of this Revolving Note at the rate of interest
applicable following the occurrence of an Event of Default as determined in
accordance with the Credit Agreement.
Interest on this Revolving Note shall be payable, at the times and from
the dates specified in the Credit Agreement, on the date of any prepayment
hereof, at maturity, whether due by acceleration or otherwise, and as otherwise
provided in the Credit Agreement. From and after the date when the principal
balance hereof becomes due and payable, whether by acceleration or otherwise,
interest hereon shall be payable on demand. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall,
<PAGE>
in a final determination, deem applicable hereto. In the event that such court
determines that Lender has received interest hereunder in excess of the highest
rate applicable hereto, such excess shall be applied in accordance with the
terms of the Credit Agreement.
The indebtedness evidenced by this Revolving Note is secured pursuant
to the terms of the Loan Documents.
Borrower hereby waives demand, presentment and protest and notice of
demand, presentment, protest and nonpayment.
Borrower further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys' fees and legal
expenses, incurred by Borrower in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
THIS REVOLVING NOTE HAS BEEN DELIVERED AT CHICAGAO, ILLINOIS, AND SHALL
BE GOVERNED BY, AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LASE (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
ILLINOIS. Whenever possible each provision of this Revolving Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Revolving Note shall be prohibited by or invalid
under applicable 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 Revolving Note. Whenever in this Revolving
Note reference is made to Agent, Lender or Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective permitted
successors and assigns and in the case of Lender, any financial institution to
which it has sold or assigned all or any part of its interest in the Revolving
Loan or in its commitment to make the Revolving Loan as permitted by the Credit
Agreement. The provisions of this Revolving Note shall be binding upon and shall
inure to the benefit of such permitted successors and assigns. Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for Borrower.
This Revolving Note is issued in substitution for and replacement of,
but not in payment of, the Revolving Note of Borrower dated February 22, 1993,
payable to the order of Lender in the original principal amount of $30,000,000.
ATLANTIS PLASTICS, INC.,
A Florida corporation
By:_______________________________________
Name Printed:_____________________________
Title:____________________________________
2
EXHIBIT 10.66
CONSOLIDATED AMENDMENT NO. 1
TO
CREDIT AGREEMENT
This Consolidated Amendment No. 1 to Credit Agreement (this
"Amendment"), dated to be effective as of December 31, 1997 is entered into by
and between ATLANTIS PLASTICS INJECTION MOLDING, INC., and ATLANTIS PLASTICS,
INC. (collectively, the "Borrower"), and NATIONAL CITY BANK, successor by merger
to National City Bank, Northeast ("Bank").
WITNESSETH:
WHEREAS, the parties have entered into a Credit Agreement dated May 19,
1995, as amended by a certain Amendment to Credit Agreement dated as of
September 30, 1995 ( the "First Amendment"), a certain Second Amendment to
Credit Agreement dated as of December 31, 1995 (the "Second Amendment") and a
certain Third Amendment to Credit Agreement dated as of June 30, 1997 (the
"Third Amendment") as Amended (the "Credit Agreement"), all terms used in the
Credit Agreement being used herein with the same meaning); and
WHEREAS, the parties desire to further amend certain provisions of the
Credit Agreement to amend certain financial covenants; and
WHEREAS, the parties also wish to evidence the agreement of Borrower to
pay to Bank a $1,000.00 documentation fee in consideration of Bank's preparation
of this Amendment; and
WHEREAS, in light of the fact that certain terms set forth in previous
amendments have been affected by later amendments and/or will be affected by
this Amendment and for ease of reference, the parties also desire to restate and
consolidate in this Amendment all amendments to the Credit Agreement that are
effective on and as of the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
SECTION I - AMENDMENTS TO CREDIT AGREEMENT
A. Section 2A.01 of the Credit Agreement is amended and restated in its entirety
as follows:
2A.01 AMOUNT -- The aggregate amount of the Subject Commitment shall be
determined by the ratio of Indebtedness to EBITDA (which EBITDA is calculated on
a trailing twelve (12) Fiscal Month basis), as determined on the most recent
ended Fiscal Month for which monthly financial statements have been delivered
pursuant to Section 3A.01, in accordance with the following table:
<TABLE>
INDEBTEDNESS TO EBITDA MAXIMUM REVOLVING
LOAN COMMITMENT
<S> <C> <C>
/less than or equal to/ 6.25 and /greater than or equal to/5.75x $758,333.00
/greater than or equal to/5.50x $866,667.00
/greater than or equal to/5.25x $975,000.00
</TABLE>
B. Section 2B.08 is amended and restated in its entirety to read as follows:
<PAGE>
2B.08 BORROWING BASE -- The Borrowing Base at any given time shall be the
aggregate of
(a) an amount equal to eighty-five percent (85%) of the net book value
(after deducting any discount or other incentive for early payment but without
deducting any valuation reserve) of the Eligible Receivables, plus
(b) an amount equal to fifty percent (50%) of the Eligible Inventory,
all as reasonably determined by Bank either on the basis of the then most recent
Borrowing Base Report furnished by Borrower to Bank pursuant to subsection 3A.01
or on the basis of the then most recent field audit (if any) made or other
information received by Bank.
C. Section 3B.02 of the Credit Agreement is amended and restated in its entirety
as follows:
3B.02 FIXED CHARGE COVERAGE -- Fixed Charge Coverage on a trailing twelve (12)
Fiscal Month basis, shall not be less than .90:1.00 as of December 31, 1997.
D. Section 3B.03 of the Credit Agreement is amended and restated in its entirety
to read as follows:
3B.03 INTEREST EXPENSE COVERAGE -- Interest Expense Coverage, on a trailing
twelve (12) Fiscal Month basis, shall not be less than 1.80.
E. Section 3B.04 is amended to provided that on and after the date hereof,
Indebtedness to EBIDAT, on a trailing twelve (12) Fiscal Month basis, shall not
be greater than 6.25 at the end of any Fiscal Quarter.
F. Section 3B.05 of the Credit Agreement is amended and restated in its entirety
as follows:
3B.05 EBIDAT -- EBIDAT on a trailing twelve (12) Fiscal Month basis, shall not
be less than $22,000,000.00 as of December 31, 1997.
G. Section 3D.06 of the Credit Agreement is amended and restated in its entirety
to read as follows:
3D.06 OPERATING INCOME -- Atlantis Plastics Injection Molding, Inc. shall
maintain a minimum controllable operating income of $1,500,000.00 as of December
31, 1997.
SECTION II - CONDITIONS PRECEDENT
It is a condition precedent to the effectiveness of this Amendment
that, prior to or on the date hereof, the following items shall have been
delivered to Bank (in form and substance acceptable to Bank):
(A) a Certificate, dated as of the date hereof, of the secretary of
Borrower certifying (1) that Borrower's Articles of Incorporation have
not been amended since the execution of the Credit Agreement (or
certifying that true, correct and complete copies of any amendments are
attached), (2) that copies of resolutions of the Board of Directors of
Borrower are attached with respect to the approval of this Amendment
and of the matters contemplated hereby and authorizing the execution,
delivery and performance by Borrower of this Amendment and each other
document to be delivered pursuant hereto and (3) as to the incumbency
and signatures of
<PAGE>
the officers of Borrower signing this Amendment and each other document
to be delivered pursuant hereto;
(B) a non-refundable documentation fee in the amount of $1000.00 in
consideration of Bank's preparation of this Amendment and its
agreements herein;
(C) an Acknowledgment of Receipt of a copy of, and Consent and
Agreement to the terms of, this Amendment by Heller Financial, Inc.
with respect to a certain Subordination Agreement executed and
delivered to Bank by such entity and dated May 18, 1995; and
(D) such other documents as Bank may request to implement this
Amendment and the transactions contemplated hereby.
If Bank shall consummate the transaction contemplated hereby prior to the
fulfillment of any of the conditions precedent set forth above, the consummation
of such transaction shall constitute only an extension of time for the
fulfillment of such conditions and not a waiver thereof.
SECTION III REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Bank that:
(A) none of the representations and warranties made in subsections
4B.01 through 4B.10 of the Credit Agreement has ceased to be true and
complete in any material respect as of the date hereof; and
(B) as of the date hereof no "Default Under This Agreement" has
occurred that is continuing.
SECTION IV- ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS
Borrower acknowledges and agrees that, as of the date hereof, all of
Borrower's outstanding loan obligations to Bank are owed without any offset,
defense, claim or counterclaim of any nature whatsoever. Borrower authorizes
Bank to share all credit and financial information relating to Borrower with
Bank's parent company and with any subsidiary or affiliate company of Bank or of
Bank's parent company.
SECTION V - REFERENCES
On and after the effective date of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", or words of
like import referring to the Credit Agreement, and each reference in the Related
Writings to the "Credit Agreement", "thereof", or words of like import referring
to the Credit Agreement shall mean and refer to the Credit Agreement as amended
hereby. The Credit Agreement, as amended by this Amendment, is and shall
continue to be in full force and effect and is hereby ratified and confirmed in
all respects. To the extent any amendment set forth in any previous amendment is
omitted from this Amendment, the same shall be deemed eliminated as between
Borrower and Bank as of the date hereof. The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of Bank under the Credit Agreement or constitute a waiver of any
provision of the Credit Agreement except as specifically set forth herein.
<PAGE>
SECTION VI - GOVERNING LAW
This Amendment, and the respective rights and obligations of the
parties hereto, shall be construed in accordance with and governed by Ohio law.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Amendment to be executed by their authorized officers on March 9, 1998.
NATIONAL CITY BANK ATLANTIS PLASTICS INJECTION
MOLDING, INC.
(a Kentucky corporation)
By: /S/___________________________ By: /S/_______________________________
Printed Name: BRIAN V. KOCHUNAS Printed Name:_________________________
Title: Vice President Title:________________________________
ATLANTIS PLASTICS, INC.
(a Florida corporation)
By: /S/_______________________________
Printed Name:_________________________
Title:________________________________
<PAGE>
SECRETARY'S CERTIFICATE
The undersigned, being the duly elected, qualified and acting Secretary
of ATLANTIS PLASTICS, INC., a Florida corporation ("Borrower"), on this 9th day
of March, 1998, certifies to NATIONAL CITY BANK ("Bank"), as follows:
(1) The Articles of Incorporation of Borrower have not been
amended or modified in any manner since May 31, 1994 and they continue
to remain in full force and effect or, if amended, complete copies of
all amendments are attached hereto.
(2) The following resolutions have been adopted by the Board
of Directors of Borrower authorizing the most recent amendment of that
certain Credit Agreement originally dated as of May 19, 1995 (as
amended, the "Credit Agreement") by and between Borrower and Bank as
well as certain other documents and instruments executed in connection
therewith, and such resolutions are in full force and effect as of the
date hereof without modification:
RESOLVED, that the President or any Vice President of
Borrower be and hereby are authorized to enter into a
Consolidated Amendment No. 1 to Credit Agreement (the
"Amendment"), by and between Borrower and National City Bank
("Bank") containing such provisions and agreements as said
officer may approve.
RESOLVED FURTHER, that the President or any Vice
President of Borrower are hereby authorized to (i) carry out
the terms of the Amendment and in connection therewith to
execute and deliver any instruments and documents contemplated
thereby and (ii) to take such other actions as in any of their
judgment may be necessary or appropriate to consummate the
transactions described in the Amendment, and the acts of said
officers in executing and delivering any documents or
instruments to or for the benefit of Bank or in taking any
such action shall be conclusive evidence of a determination on
their part that the same is necessary or appropriate and of
the approval thereof by this Board.
(3) Set forth below is the true and correct printed name,
title and signature of the duly elected and acting officer(s) of
Borrower who either have executed or are authorized to execute the
Amendment as of the date hereof:
<TABLE>
PRINTED NAME TITLE SIGNATURE
------------ ----- ---------
<S> <C> <C> <C>
_____________________ ________________ /S/___________________
_____________________ ________________ /S/___________________
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
the date set forth above.
/S/______________________,
Secretary of Borrower
EXHIBIT 21.1
REGISTRANT'S SUBSIDIARIES -- ALL 100% OWNED
ATLANTIS PLASTIC FILMS, INC., a Delaware corporation
ATLANTIS MOLDED PLASTICS, INC., a Florida corporation
ATLANTIS PLASTIC INJECTION MOLDING, INC., a Kentucky corporation
PIERCE PLASTICS, INC., a Delaware corporation
RIGAL PLASTICS, INC., a Florida corporation
ATLANTIS PLASTICS FOREIGN SALES INC., a Barbados corporation
LINEAR FILMS, INC., a Canadian corporation
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Atlantis Plastics, Inc. and subsidiaries on Form S-8 (Registration Nos.
33-25983, 33-41012, and 333-34197) of our reports dated February 11, 1998,
except for Note 6, as to which the date is February 20, 1998, on our audits of
the consolidated financial statements of Atlantis Plastics, Inc. and
subsidiaries as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997 which reports are included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND, L.L.P.
Atlanta, Georgia
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 8,346
<SECURITIES> 0
<RECEIVABLES> 26,340
<ALLOWANCES> 896
<INVENTORY> 18,517
<CURRENT-ASSETS> 59,755
<PP&E> 118,881
<DEPRECIATION> 58,816
<TOTAL-ASSETS> 170,889
<CURRENT-LIABILITIES> 27,400
<BONDS> 101,862
0
0
<COMMON> 710
<OTHER-SE> 31,839
<TOTAL-LIABILITY-AND-EQUITY> 170,889
<SALES> 256,083
<TOTAL-REVENUES> 256,083
<CGS> 216,948
<TOTAL-COSTS> 216,948
<OTHER-EXPENSES> 26,295
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,427
<INCOME-PRETAX> 1,413
<INCOME-TAX> 1,138
<INCOME-CONTINUING> 275
<DISCONTINUED> 126
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 401
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 6,804
<SECURITIES> 0
<RECEIVABLES> 29,495
<ALLOWANCES> 790
<INVENTORY> 17,169
<CURRENT-ASSETS> 57,614
<PP&E> 115,518
<DEPRECIATION> 57,085
<TOTAL-ASSETS> 167,666
<CURRENT-LIABILITIES> 24,754
<BONDS> 103,233
0
0
<COMMON> 707
<OTHER-SE> 30,869
<TOTAL-LIABILITY-AND-EQUITY> 167,666
<SALES> 193,748
<TOTAL-REVENUES> 193,748
<CGS> 165,484
<TOTAL-COSTS> 165,484
<OTHER-EXPENSES> 19,673
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,616
<INCOME-PRETAX> (25)
<INCOME-TAX> 432
<INCOME-CONTINUING> (457)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (457)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 5,041
<SECURITIES> 0
<RECEIVABLES> 28,474
<ALLOWANCES> 748
<INVENTORY> 18,934
<CURRENT-ASSETS> 57,526
<PP&E> 113,793
<DEPRECIATION> 55,237
<TOTAL-ASSETS> 168,257
<CURRENT-LIABILITIES> 25,119
<BONDS> 104,041
0
0
<COMMON> 707
<OTHER-SE> 30,284
<TOTAL-LIABILITY-AND-EQUITY> 168,257
<SALES> 129,853
<TOTAL-REVENUES> 129,853
<CGS> 111,564
<TOTAL-COSTS> 111,564
<OTHER-EXPENSES> 13,846
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,716
<INCOME-PRETAX> (1,273)
<INCOME-TAX> (248)
<INCOME-CONTINUING> (1,025)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,025)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 5,762
<SECURITIES> 0
<RECEIVABLES> 30,296
<ALLOWANCES> 692
<INVENTORY> 17,984
<CURRENT-ASSETS> 57,861
<PP&E> 111,239
<DEPRECIATION> 53,355
<TOTAL-ASSETS> 168,482
<CURRENT-LIABILITIES> 24,491
<BONDS> 104,690
0
0
<COMMON> 706
<OTHER-SE> 30,559
<TOTAL-LIABILITY-AND-EQUITY> 168,482
<SALES> 64,323
<TOTAL-REVENUES> 64,323
<CGS> 55,106
<TOTAL-COSTS> 55,106
<OTHER-EXPENSES> 7,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,837
<INCOME-PRETAX> (1,040)
<INCOME-TAX> (327)
<INCOME-CONTINUING> (713)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (713)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 15,905
<SECURITIES> 0
<RECEIVABLES> 28,997
<ALLOWANCES> 633
<INVENTORY> 16,984
<CURRENT-ASSETS> 66,078
<PP&E> 110,082
<DEPRECIATION> 51,559
<TOTAL-ASSETS> 177,901
<CURRENT-LIABILITIES> 29,648
<BONDS> 105,365
0
2,000
<COMMON> 713
<OTHER-SE> 32,196
<TOTAL-LIABILITY-AND-EQUITY> 177,901
<SALES> 267,119
<TOTAL-REVENUES> 267,119
<CGS> 221,388
<TOTAL-COSTS> 221,388
<OTHER-EXPENSES> 20,623
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,638
<INCOME-PRETAX> 12,470
<INCOME-TAX> 4,396
<INCOME-CONTINUING> 8,074
<DISCONTINUED> 96
<EXTRAORDINARY> (73)
<CHANGES> 0
<NET-INCOME> 8,097
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 704
<SECURITIES> 0
<RECEIVABLES> 31,896
<ALLOWANCES> 1,135
<INVENTORY> 21,429
<CURRENT-ASSETS> 59,226
<PP&E> 117,396
<DEPRECIATION> 56,780
<TOTAL-ASSETS> 179,518
<CURRENT-LIABILITIES> 29,956
<BONDS> 109,827
0
2,000
<COMMON> 714
<OTHER-SE> 27,859
<TOTAL-LIABILITY-AND-EQUITY> 179,518
<SALES> 203,060
<TOTAL-REVENUES> 203,060
<CGS> 167,266
<TOTAL-COSTS> 167,266
<OTHER-EXPENSES> 20,483
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,707
<INCOME-PRETAX> 5,604
<INCOME-TAX> 2,603
<INCOME-CONTINUING> 3,001
<DISCONTINUED> 96
<EXTRAORDINARY> (73)
<CHANGES> 0
<NET-INCOME> 3,024
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.39
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,775
<SECURITIES> 0
<RECEIVABLES> 34,957
<ALLOWANCES> 1,472
<INVENTORY> 19,742
<CURRENT-ASSETS> 61,764
<PP&E> 116,305
<DEPRECIATION> 54,797
<TOTAL-ASSETS> 183,211
<CURRENT-LIABILITIES> 33,873
<BONDS> 112,513
0
2,000
<COMMON> 714
<OTHER-SE> 26,228
<TOTAL-LIABILITY-AND-EQUITY> 183,211
<SALES> 134,849
<TOTAL-REVENUES> 134,849
<CGS> 110,456
<TOTAL-COSTS> 110,456
<OTHER-EXPENSES> 14,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,505
<INCOME-PRETAX> 3,194
<INCOME-TAX> 1,515
<INCOME-CONTINUING> 1,679
<DISCONTINUED> (47)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,632
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> 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> 52,772
<TOTAL-COSTS> 52,772
<OTHER-EXPENSES> 7,480
<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> 0.05
<EPS-DILUTED> 0.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,255
<SECURITIES> 0
<RECEIVABLES> 29,780
<ALLOWANCES> 1,530
<INVENTORY> 18,544
<CURRENT-ASSETS> 55,093
<PP&E> 115,605
<DEPRECIATION> 51,272
<TOTAL-ASSETS> 180,461
<CURRENT-LIABILITIES> 31,893
<BONDS> 113,294
0
2,000
<COMMON> 709
<OTHER-SE> 24,583
<TOTAL-LIABILITY-AND-EQUITY> 180,461
<SALES> 281,064
<TOTAL-REVENUES> 281,064
<CGS> 239,969
<TOTAL-COSTS> 239,969
<OTHER-EXPENSES> 42,148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,179
<INCOME-PRETAX> (15,232)
<INCOME-TAX> (1,674)
<INCOME-CONTINUING> (13,558)
<DISCONTINUED> 232
<EXTRAORDINARY> 254
<CHANGES> 0
<NET-INCOME> (13,072)
<EPS-PRIMARY> (1.86)
<EPS-DILUTED> (1.86)
</TABLE>
