UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(ADMENDMENT NO. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________to__________________
Commission File number 1-9487
ATLANTIS PLASTICS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 06-1088270
------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1870 THE EXCHANGE, SUITE 200, ATLANTA, GEORGIA 30339
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including Area Code) (800) 497-7659
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No_____.
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
CLASS SHARES OUTSTANDING AT JUNE 30, 1999
------------- ----------------------------
A, $.10 par value 4,784,078
B, $.10 par value 2,803,444
<PAGE>
ATLANTIS PLASTICS, INC.
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
June 30, 1999 and December 31, 1998.............................1
Condensed Consolidated Statements of Income for the
six months ended June 30, 1999 and 1998.........................2
Consolidated Statements of Cash Flows for the
six months ended June 30, 1999 and 1998.........................3
Notes to Consolidated Financial Statements......................4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations................7
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings................................................12
Item 4 - Submission of Matters to a Vote of Security-Holders..............12
Item 6 - Exhibits and Reports on Form 8-K.................................12
SIGNATURES...................................................................13
<PAGE>
ATLANTIS PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED) (NOTE A)
----------- -----------
ASSETS
<S> <C> <C>
Cash and cash equivalents.......................................... $2,635 $2,879
Accounts receivable, net........................................... 28,239 25,801
Inventories........................................................ 16,393 14,918
Other current assets............................................... 6,830 8,376
----------- -----------
Current assets................................................. 54,097 51,974
Property and equipment, net........................................ 61,280 58,403
Goodwill, net of accumulated amortization.......................... 46,604 47,390
Other assets....................................................... 1,236 1,465
----------- -----------
Total assets................................................... $163,217 $159,232
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses.............................. $23,438 $22,677
Current portion of long-term debt.................................. 2,528 2,538
----------- -----------
Current liabilities............................................ 25,966 25,215
Long-term debt, less current portion............................... 83,372 84,620
Deferred income taxes.............................................. 9,761 10,149
Other liabilities.................................................. 281 544
----------- -----------
Total liabilities.............................................. 119,380 120,528
----------- -----------
Commitments and contingencies - -
Shareholders' equity:
Class A Common Stock, $.10 par value, 20,000,000 shares
authorized, 4,784,078 and 4,538,054 shares issued and outstanding
in 1999 and 1998................................................ 479 454
Class B Common Stock, $.10 par value, 7,000,000 shares
authorized, 2,803,444 and 2,918,043 shares issued and outstanding
in 1999 and 1998................................................ 280 292
Additional paid-in capital....................................... 10,214 9,436
Notes receivable from sale of Common Stock....................... (1,355) (960)
Retained earnings................................................ 34,219 29,482
----------- -----------
Total shareholders' equity..................................... 43,837 38,704
----------- -----------
$163,217 $159,232
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
1
<PAGE>
ATLANTIS PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1999 1998 1999 1998
--------------------- ---------------------
<S> <C> <C> <C> <C>
Net sales........................................................... $65,052 $64,080 $124,025 $128,507
Cost of sales....................................................... 51,830 52,927 98,389 106,065
-------- -------- -------- --------
Gross profit..................................... 13,222 11,153 25,636 22,442
Selling, general and administrative expenses........................ 6,490 6,377 12,990 12,350
-------- -------- -------- --------
Operating income................................. 6,732 4,776 12,646 10,092
Net interest expense................................................ (2,285) (2,696) (4,600) (5,444)
-------- -------- -------- --------
Income before income taxes....................... 4,447 2,080 8,046 4,648
Income tax provision................................................ (1,816) (504) (3,309) (1,385)
-------- -------- -------- --------
Net income....................................... $2,631 $1,576 $4,737 $3,263
======== ======== ======== ========
Net Income per Common Share
Basic $0.35 $0.21 $0.63 $0.44
Diluted $0.33 $0.20 $0.61 $0.42
Weighted-average number of shares used in computing
net income per share (in thousands):
Basic 7,585 7,479 7,538 7,413
Diluted 7,897 7,833 7,821 7,736
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
2
<PAGE>
ATLANTIS PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1999 1998
-------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income ........................................................ $4,737 $3,263
------- --------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation................................................... 4,154 3,963
Loss on disposal of assets.................................... 19 -
Amortization of goodwill....................................... 786 786
Loan fee and other amortization................................ 218 230
Interest receivable from shareholder loans.................... (43) -
Deferred income taxes.......................................... (388) 220
Changes in operating assets and liabilities, net............... (1,662) 2,166
------- --------
Total adjustments.......................................... 3,084 7,365
------- --------
Net cash provided by operating activities................ 7,821 10,628
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................. (7,050) (3,515)
Proceeds from asset dispositions................................. - 118
------- --------
Net cash used in investing activities.................... (7,050) (3,397)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt....................................... (1,258) (1,982)
Payments on notes receivable from shareholders................... 75 -
Purchase of Common Stock and Options............................. - (1,818)
Proceeds from exercise of stock options.......................... 168 1,184
------- --------
Net cash used in financing activities.................... (1,015) (2,616)
------- --------
Net (decrease) increase in cash and cash equivalents............... (244) 4,615
Cash and equivalents at beginning of period........................ 2,879 8,346
------- --------
Cash and equivalents at end of period.............................. $2,635 $12,961
======= ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
3
<PAGE>
ATLANTIS PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Atlantis Plastics, Inc. annual report on Form
10-K for the year ended December 31, 1998.
NOTE B. INVENTORIES
The components of inventory consist of the following:
JUNE 30 DECEMBER 31
1999 1998
--------------------------------
IN THOUSANDS
Raw Materials $ 8,891 $ 7,758
Work in Process 74 95
Finished Products 7,428 7,065
-------- ---------
$ 16,393 $ 14,918
======== =========
4
<PAGE>
NOTE C. SEGMENT INFORMATION
The Company has two operating segments: Atlantis Plastic Films and Atlantis
Molded Plastics. Information related to such segments is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, 1999
---------------------------------------------------------
ATLANTIS ATLANTIS
PLASTICS MOLDED
FILMS PLASTICS CORPORATE CONSOLIDATED
----- -------- --------- ------------
IN THOUSANDS
<S> <C> <C> <C> <C>
Net Sales $ 85,215 $ 38,810 - $124,025
Operating Income 9,570 3,076 - 12,646
Identifiable Assets 111,603 57,124 $ (5,509) 163,218
Capital Expenditures 3,498 2,049 1,493 7,040
Depreciation and
Amortization 2,306 1,785 1,067 5,158
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, 1998
---------------------------------------------------------
ATLANTIS ATLANTIS
PLASTICS MOLDED
FILMS PLASTICS CORPORATE CONSOLIDATED
----- -------- --------- ------------
IN THOUSANDS
<S> <C> <C> <C> <C>
Net Sales $ 89,269 $ 39,238 - $ 128,507
Operating Income 8,481 1,611 - 10,092
Identifiable Assets 107,582 53,552 10,392 171,526
Capital Expenditures 953 1,795 767 3,515
Depreciation and
Amortization 2,333 1,658 988 4,979
</TABLE>
5
<PAGE>
NOTE D. EARNINGS PER SHARE DATA
The following table sets forth the computation of basic and diluted earnings per
share for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
---------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
IN THOUSANDS, EXCEPT PER SHARE DATA
<S> <C> <C> <C> <C>
Basic:
Net income $ 2,631 $ 1,576 $ 4,737 $ 3,263
Weighted average shares outstanding 7,585 7,479 7,536 7,413
------- ------- ------- -------
BASIC EARNINGS PER SHARE $0.35 $ 0.21 $0.63 $ 0.44
======= ======= ======= =======
Diluted:
Net income $ 2,631 $ 1,576 $ 4,737 $ 3,263
Weighted average shares outstanding 7,585 7,479 7,536 7,413
Net effect of dilutive stock options-based on
treasury stock method 312 354 285 323
------ ------- ------ -------
7,897 7,833 7,821 7,736
DILUTED EARNINGS PER SHARE $0.33 $0.20 $0.61 $0.42
====== ======= ====== =======
</TABLE>
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Atlantis is a leading U.S. manufacturer of polyethylene stretch and
custom films used in a variety of industrial and consumer applications and
molded plastic products for the appliance, automotive, building supply, and
recreational vehicle industries.
Atlantis Plastic Films accounts for approximately 70% of the Company's
net sales and produces: (i) stretch films (multilayer plastic films that are
used principally to wrap pallets of materials for shipping or storage), (ii)
custom film products (high-grade laminating films, embossed films, and specialty
film products targeted primarily to industrial and packaging markets), and (iii)
institutional products such as aprons, gloves, and tablecloths which are
converted from polyethylene films.
Atlantis Molded Plastics accounts for approximately 30% of the
Company's net sales and employs two principal technologies, serving a wide
variety of specific market segments, described as follows: (i) injection molded
thermoplastic parts that are sold primarily to original equipment manufacturers
and used in major household goods and appliances, power tools, building
supplies, and agricultural and automotive products, and (ii) a variety of custom
and proprietary extruded plastic parts for both trim and functional applications
(profile extrusion) that are incorporated into a broad range of consumer and
commercial products such as recreational vehicles, residential windows and
doors, office furniture, building supplies, and retail store fixtures.
All material intercompany balances and transactions have been
eliminated. Certain amounts included in prior period financial statements have
been reclassified to conform with the current period presentation.
Selected income statement data for the quarterly periods ended March
31, 1998 through June 30, 1999 are as follows:
<TABLE>
<CAPTION>
($ in millions) 1999 1998
------------------------- -------------------------------------------------------
Q2 Q1 Q4 Q3 Q2 Q1
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET SALES
Plastic Films $44.5 $40.7 $42.7 $44.3 $44.4 $44.9
Molded Plastics 20.5 18.3 16.7 18.7 19.7 19.5
----------- ----------- ----------- ----------- ----------- ----------
TOTAL $65.0 $59.0 $59.4 $63.0 $64.1 $64.4
=========== =========== =========== =========== =========== ==========
<CAPTION>
PERCENTAGE OF NET SALES
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT
Plastic Films 21% 22% 22% 20% 20% 19%
Molded Plastics 19% 18% 17% 11% 12% 15%
----------- ----------- ----------- ----------- ----------- ----------
TOTAL 20% 21% 21% 18% 17% 18%
=========== =========== =========== =========== =========== ==========
OPERATING INCOME
Plastic Films 11% 12% 12% 11% 9% 9%
Molded Plastics 9% 7% 7% 1% 4% 6%
----------- ----------- ----------- ----------- ----------- ----------
TOTAL 10% 10% 10% 8% 8% 8%
=========== =========== =========== =========== =========== ==========
NET INTEREST EXPENSE $2.3 $2.3 $2.4 $2.6 $2.7 $2.7
=========== =========== =========== =========== =========== ==========
</TABLE>
7
<PAGE>
RESULTS OF OPERATIONS
The Company's 1999 second quarter and year-to-date net sales were $65.1
million and $124.0 million compared with $64.1 million and $128.5 million for
the same periods of 1998. Atlantis Plastic Film volume for the second quarter
and first half of 1999 were 2% above 1998 levels. First half net sales for
Atlantis Plastic films were 5% below 1998 due to lower average selling prices
resulting from declines in polyethylene resin prices. Atlantis Molded Products'
net sales for the second quarter and first half of 1999 were $20.5 million and
$38.8 million, compared with $19.7 million and $39.2 million respectively.
Atlantis' second quarter and year-to-date gross margins equaled 20% and
21% respectively compared with 17% for both periods of 1998. Molded plastics
accounted for most of these improvements, with gross margins in the second
quarter and year-to-date periods of 1999 of 19% and 18% respectively, compared
to 12% and 13% for the same periods of 1998. These improvements were attributed
to improved first run yields, faster throughput, and reduced rework/repair.
Additionally, sales volume for the 1999 second quarter at the Warren, OH
injection molding plant increased by 6% over 1998 and 15% over the first quarter
of 1999. Gross margins in Plastic Films also increased over 1998 results,
reporting at 21% and 22% for these two 1999 periods, compared with 20% and 19%
for 1998. Improved resin formulations contributed to these results.
Selling, general, and administrative ("SG&A") expenses for the second
quarter of 1999 were $6.5 million compared with $6.4 million in 1998. For the
first half, SG&A expense was $13.0 million compared to $12.4 million for 1998.
These increases were primarily attributable to increased depreciation associated
with the Company's new distribution, accounting, and resource planning system
installed to date in 8 of 12 locations, and non recurring adjustments which
reduced 1998 SG&A expense, including a 1998 rent adjustment associated with the
1998 restructuring of the Company's agreement with Trivest, Inc.
First quarter and year-to-date net interest expense of $2.3 million and
$4.6 million respectively was about 16% lower than 1998. These decreases were a
result of reduced debt levels in 1999 and the third quarter 1998 repurchase of
$14.7 million of the Company's Senior Notes. Effective income tax rates differed
from applicable statutory rates in both 1999 and 1998, primarily due to
nondeductible goodwill amortization.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1999 totaled $28.1 million
(including cash and cash equivalents of $2.6 million), compared to $26.8 million
(including cash and cash equivalents of $2.9 million) at December 31, 1998. On
June 30, 1999 there were no borrowings on the Company's revolving credit
facility. Unused availability, net of outstanding letters of credit of
approximately $1.3 million, equaled $13.7 million at June 30, 1999. The credit
agreement was renewed in May, 1999 and expires November 22, 1999.
As previously announced, the Company is in the final stages of
selecting an area for a west coast stretch facility. Additionally, in the second
quarter of 1999, it placed an order for a cast extrusion line for delivery to
its stretch film facility in Nicholasville, KY. Present plans call for delivery
late in 1999 with full production commencing in the first quarter of 2000.
The Company's primary needs for liquidity, on both a short- and
long-term basis, relate to working capital (principally accounts receivable and
inventories), debt service, and capital expenditures. The Company presently does
not have any material commitments for future capital expenditures, and expects
to meet its short- and long-
8
<PAGE>
term liquidity needs with cash on hand, funds generated from operations, and
funds available under its revolving credit facility.
CASH FLOWS FROM OPERATING ACTIVITIES
In the first six months of 1999, net cash provided by operating
activities was approximately $7.8 million, compared to $10.6 million for the
same period last year. Accounts receivable increased $2.4 million during the
first half of 1999 due primarily to higher film prices resulting from a $0.13
per pound increase in polyethylene resin prices during this period. Inventory
levels increased $1.5 million in the first half of 1999 due primarily to (1) the
resin price increases cited above, and (2) increased levels of inventory to
protect against resin shortages (sales control programs have been prevalent in
the resin industry since early spring, 1999). During the first half of 1998,
inventories and accounts receivable decreased by $1.9 million and $0.4 million
as resin prices were falling during that period.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities during the first six months of
1999 consisted of capital expenditures totaling $7.0 million, compared to
capital expenditures (net of dispositions) of $3.4 million for the same period
last year.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities for the first six months of 1999
was $1.0 million, compared to $2.6 million during this period last year.
Proceeds from the exercise of stock options equaled $168,000 during the first
six months of 1999, compared to $1.2 million during the same period in 1998.
During the first half of 1998, $1.8 million was used to repurchase the Company's
Common stock compared to none in 1999.
YEAR 2000 ISSUES
As part of the Company's ongoing capital expenditure program, Atlantis
has been in the process of implementing a new distribution, accounting, and
resource planning ("ERP") system ("QAD") which is designed to improve its
operating and financial controls. QAD is Year 2000 ("Y2K") compliant. At the
beginning of July 1999, QAD was successfully installed in the Company's three
stretch film plants. To date, QAD has also been implemented in the Company's two
custom film plants, one institutional products plant, and one profile extrusion
plant, as well as its headquarters in Atlanta. Three of the Company's Molded
plants are operating under an ERP system ("DTR") which was upgraded during the
4th quarter of 1998 to a Y2K compliant version of DTR. Therefore, as of this
date, 11 of the Company's 12 facilities are operating with Y2K compliant ERP
systems.
The major phases associated with installing these systems are: (1)
ASSESSMENT, including defining, scoping the problem and solution; (2) FIXING,
including programming and procedure development; (3) TESTING, including
evaluation of the testing phase; and (4) IMPLEMENTATION, including installation
and "going live".
One other Molded plant (Warren, OH) is operating under two small PC
based systems ("Solomon PC" for general ledger, accounts receivable, and
accounts payable, and "Auditors Advisor" for inventory management and
logistics). Auditors Advisory has been upgraded to a Y2K compliant version. A
Y2K compliant upgrade for Solomon PC is commercially available. Atlantis is
planning to install QAD for
9
<PAGE>
accounting functions in this plant in the 3rd quarter of 1999. Should this last
conversion be delayed, the Company intends to install the Y2K compliant
commercially available upgrade to Solomon PC and subsequently convert this plant
to QAD. The assessment phase for Warren, OH has been completed for installing
QAD as well as an upgrade of the plant's Solomon PC system. The Warren plant
also has a shop floor system that the Company plans to convert to a Y2K
compliant status by October 31, 1999.
Upgrades to the Company's PC's and client servers necessary to make
them Y2K compliant have been completed. Atlantis' e-mail system was changed to a
Y2K compliant system earlier in 1999 and installed with all users except 5
stretch film salespeople. These salespeople will be converted to the new e-mail
system in the next two months. All of the Company's telephone systems are now
Y2K compliant except for two locations. The only remaining phase necessary to
upgrade these two locations is implementation which should be completed by
September 30, 1999.
In the Company's 11 manufacturing facilities and its headquarters in
Atlanta, there are approximately 125 types/models of equipment with programmable
logic chips ("PLC's") which may require adjustment to make them Y2K compliant.
The assessment phase has been completed on all of these devices. The testing,
fixing, and implementation (where necessary) phases have been completed on
approximately 40% of the other devices and are expected to be completed on all
devices by September 30, 1999.
With regard to evaluating the Y2K compliant status of the Company's
significant suppliers and customers, Atlantis presently is in the assessment
phase. Certain major suppliers and customers have been questioned on an informal
basis over the past nine months. All of these informal interviews have indicated
a plan to be Y2K compliant by the end of the third quarter of 1999. All major
customers will be contacted by August 31, 1999 with responses expected back to
Atlantis by September 30, 1999. All major suppliers have been contacted and
responses are expected back to Atlantis by July 31, 1999. By September 30, 1999
the assessment phase should be completed and any necessary contingency plans
developed.
The Company has evaluated worst case scenarios regarding Y2K
compliance. The Company has two critical suppliers of resin to its stretch film
business. The Company has three critical suppliers of resin to its custom film
business. The Company receives most of its plastic resin via railcar. As noted
in the Company's Form 10-K for the year ended December 31, 1998, Whirlpool
Corporation represented approximately 12% of the Company's net sales for 1998.
The Company's two Tulsa, OK stretch film plants account for approximately 25% of
the Company's sales and production while its Nicholasville, KY stretch film
facility accounts for approximately 20% of the Company's sales and production.
In the unlikely event that one of these resin suppliers could not ship resin,
the railroad system used to deliver resin to the Company's facilities fails to
deliver resin, Whirlpool Corporation is not Y2K compliant by January 1, 2000, or
there is a power outage affecting the above mentioned facilities, and this
unlikely event is of longer than a short term duration, the Company could be
affected in a materially adverse manner. Contingency plans for these and other
scenarios are expected to be developed by September 30, 1999.
As most of the upgrades and systems conversions (including QAD)
discussed above would have been implemented without the Y2K compliance issue,
incremental costs associated with Y2K related changes are not expected to exceed
$0.7 million in 1998 and 1999.
10
<PAGE>
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements which are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may include, but are not limited
to, projections of revenues, income or losses, capital expenditures, plans for
future operations, financing needs or plans, compliance with financial covenants
in loan agreements, plans for liquidation or sale of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events, the ability to obtain additional financing, the
Company's ability to meet obligations as they become due, the impact of pending
and possible litigation, as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties, including, but not limited to,
the impact of leverage, dependence on major customers, fluctuating demand for
the Company's products, risks in product and technology development, fluctuating
resin prices, competition, litigation, labor disputes, capital requirements, and
other risk factors detailed in the Company's Securities and Exchange Commission
filings, some of which cannot be predicted or quantified based on current
expectations.
11
<PAGE>
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceeding other than
routine litigation incidental to its business, none of which is
material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Registrant held its Annual Meeting of Shareholders on May 25,
1999.
(b) Not Required
(c) The matter voted on at the Annual Meeting of Shareholders, and the
tabulation of votes on such matter are as follows:
<TABLE>
<CAPTION>
ELECTION OF DIRECTORS
---------------------
NAME FOR WITHHELD
---- --- --------
<S> <C> <C>
CLASS A
Charles D. Murphy, III 4,563,387 1,086
Chester B. Vanatta 4,563,387 1,086
CLASS B
Cesar L. Alvarez 2,689,446 -0-
Anthony F. Bova 2,689,446 -0-
Phillip T. George, M.D. 2,689,446 -0-
Larry D. Horner 2,689,446 -0-
Earl W. Powell 2,689,446 -0-
Paul Rudovsky 2,689,446 -0-
</TABLE>
(d) Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 Sixteenth Amendment to Heller Credit Agreement, dated as of
May 22, 1999
27.1 Financial Data Schedule
____________________
(b) Reports on Form 8-K:
During the quarter for which this Quarterly Report on Form 10-Q is
filed, no reports on Form 8-K were filed by the Registrant.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATLANTIS PLASTICS, INC.
Date: August 2, 1999 /S/ ANTHONY F. BOVA
-------------------
ANTHONY F. BOVA
President and Chief Executive Officer
Date: August 2, 1999 /S/ PAUL RUDOVSKY
-----------------
PAUL RUDOVSKY
Executive Vice President, Finance and
Administration
13
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.1 Sixteenth Amendment to Heller Credit
Agreement, dated as of May 22, 1999
27.1 Financial Data Schedule
EXHIBIT 10.1
SIXTEENTH AMENDMENT TO CREDIT AGREEMENT
This Fifteenth Amendment to Credit Agreement ("Amendment") is made and
entered into as of May ___, 1999 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 1.1 is hereby amended by adding the following
definition to subsection 1.1 in its appropriate place:
"Sixteenth Amendment Effective Date" means May ___, 1999."
(B) Subsection 2.1(A) is amended by deleting the first paragraph of
subsection 2.1(A) in its entirety and inserting the following in lieu thereof:
"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
Fifteenth Amendment Effective 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 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."
(C) Subsection 2.5 is amended by deleting the first sentence of
subsection 2.5 in its entirety and inserting the following in lieu thereof:
"This Agreement shall be effective until November 22, 1999
(the "Termination Date"), and the Commitments shall terminate
on said date."
<PAGE>
(D) 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 1.0 for the Fiscal Quarter ending June 30, 1999 and each
Fiscal Quarter thereafter."
(E) 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 $27,500,000 for the Fiscal
Quarter ending June 30, 1999 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 May 22, 1999 through November 22, 1999, so long
as such payments do not exceed 105% of the total amount paid from May 22, 1999
through November 22, 1999.
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 an
Amended Revolving Note in the amount of $15,000,000; and
(e) Borrower shall have paid Agent a closing fee in the amount
of $18,750.
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
(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.
2
<PAGE>
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.
3
<PAGE>
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.
ATLANTIS PLASTICS, INC.
By:____________________________
Name Printed: Paul Rudovsky
Title:_________________________
HELLER FINANCIAL, INC.,
Individually and as Agent
By:___________________________
Name Printed: Scott E. Gast
Title: Assistant Vice President
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:___________________________
Name Printed: Paul Rudovsky
Title:________________________
ATLANTIS PLASTIC INJECTION
MOLDING, INC.
By:___________________________
Name Printed: Paul Rudovsky
Title:________________________
ATLANTIS PLASTIC FILMS, INC.
By:___________________________
Name Printed: Paul Rudovsky
Title:________________________
PIERCE PLASTICS, INC.
By:___________________________
Name Printed: Paul Rudovsky
Title:________________________
5
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,635
<SECURITIES> 0
<RECEIVABLES> 29,381
<ALLOWANCES> 1,142
<INVENTORY> 16,393
<CURRENT-ASSETS> 54,097
<PP&E> 129,851
<DEPRECIATION> 68,571
<TOTAL-ASSETS> 163,217
<CURRENT-LIABILITIES> 25,966
<BONDS> 83,372
0
0
<COMMON> 759
<OTHER-SE> 43,078
<TOTAL-LIABILITY-AND-EQUITY> 163,217
<SALES> 124,025
<TOTAL-REVENUES> 124,025
<CGS> 98,389
<TOTAL-COSTS> 98,389
<OTHER-EXPENSES> 12,990
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,600
<INCOME-PRETAX> 8,046
<INCOME-TAX> 3,309
<INCOME-CONTINUING> 4,737
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,737
<EPS-BASIC> 0.63
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</TABLE>
