<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended: APRIL 3, 1999
-------------
Commission file number: 0-20328
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AMTROL INC.
(exact name of registrant as specified in its charter)
Rhode Island 05-0246955
- ----------------------- -----------------------
1400 Division Road, West Warwick, RI 02893-1008
-----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (401) 884-6300
--------------
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.
100 shares of Common stock $.01 par value
-----------------------------------------
as of April 3, 1999
<PAGE> 2
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED APRIL 4, 1998
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets -
April 3, 1999 and December 31, 1998 1
Consolidated Statements of Operations -
For the Quarters Ended April 3, 1999
and April 4, 1998 2
Consolidated Statement of Shareholders' Equity -
For the Quarter Ended April 3, 1999 3
Consolidated Statements of Cash Flows -
For the Quarters Ended April 3, 1999
and April 4, 1998 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 14
PART II. OTHER INFORMATION
Signatures 16
<PAGE> 3
AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
APRIL 3, DECEMBER 31,
1999 1998
-------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 204 $ 1,088
Accounts receivable, less allowance for
doubtful accounts 35,848 28,938
Inventories 23,078 24,319
Prepaid income taxes 2,190 2,271
Prepaid expenses and other 3,072 3,241
Assets held for sale 579 572
-------- --------
Total current assets 64,971 60,429
-------- --------
PROPERTY, PLANT AND EQUIPMENT, NET 49,604 51,783
OTHER ASSETS:
Goodwill 169,853 171,166
Deferred financing costs 6,480 6,770
Deferred income taxes 8,208 8,205
Other 2,259 2,314
-------- --------
186,800 188,455
-------- --------
$301,375 $300,667
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 3,738 $ 4,043
Notes payable to banks 8,675 10,660
Accounts payable 22,548 21,193
Accrued expenses 13,744 14,242
Accrued interest 4,046 777
Accrued income taxes 3,263 2,872
-------- --------
Total current liabilities 56,014 53,787
-------- --------
LONG TERM DEBT, LESS CURRENT MATURITIES 174,422 173,023
OTHER NONCURRENT LIABILITIES 7,247 7,909
SHAREHOLDERS' EQUITY
Capital stock $.01 par value - authorized
1,000 shares, 100 shares issued -- --
Additional paid-in capital 89,823 89,823
Retained deficit (25,103) (24,363)
Accumulated other comprehensive (loss) income (1,028) 488
-------- --------
Total shareholders' equity 63,692 65,948
-------- --------
$301,375 $300,667
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(1)
<PAGE> 4
AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
APRIL 3, APRIL 4,
1999 1998
------- -------
<S> <C> <C>
NET SALES $54,409 $48,416
COST OF GOODS SOLD 40,486 36,774
------- -------
GROSS PROFIT 13,923 11,642
OPERATING EXPENSES
Selling, general and administrative 8,209 6,431
Amortization of goodwill 1,116 1,096
------- -------
Income from operations 4,598 4,115
OTHER INCOME (EXPENSE):
Interest expense (5,051) (5,199)
Interest income 24 32
License and distributorship fees 45 30
Other, net 97 201
------- -------
Loss before provision for income taxes (287) (821)
PROVISION FOR INCOME TAXES 453 138
------- -------
NET LOSS $ (740) $ (959)
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(2)
<PAGE> 5
AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED - IN THOUSANDS )
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Deficit Income (Loss)
------ ---------- -------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 -- $89,823 $(24,363) $488
Net Loss -- -- (740) --
Currency Translation Adjustment -- -- -- (1,516)
---- ------- -------- -------
BALANCE, April 3, 1999 -- $89,823 ($25,103) ($1,028)
==== ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(3)
<PAGE> 6
AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------
APRIL 3, APRIL 4,
1999 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (740) $ (959)
Adjustments to reconcile net loss to net cash
provided by operating activities -
Depreciation and amortization 3,627 2,991
Provision for losses on accounts receivable 69 56
Changes in operating assets and liabilities (2,320) 1,968
------- -------
Net cash provided by operating activities 636 4,056
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 106 --
Capital expenditures (1,852) (4,944)
------- -------
Net cash used in investing activities (1,746) (4,944)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (8,105) (3,805)
Issuance of debt 8,383 5,565
------- -------
Net cash provided by financing activities 278 1,760
------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (832) 872
Effect of exchange rate changes on cash and cash equivalents (52) (4)
Cash and Cash Equivalents, beginning of period 1,088 544
------- -------
Cash and Cash Equivalents, end of period $ 204 $ 1,412
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(4)
<PAGE> 7
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly,
in accordance with generally accepted accounting principles, the Company's
financial position, results of operations and cash flows for the interim
periods presented. Such adjustments consisted of only normal recurring
items. The results of operations for the interim periods shown in this
report are not necessarily indicative of results for any future interim
period or for the entire year. These consolidated financial statements do
not include all disclosures associated with annual financial statements and
accordingly should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on
Form 10-K.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. SIGNIFICANT ACCOUNTING POLICIES
GOODWILL
Goodwill represents the excess of purchase price over the fair value of net
assets acquired in connection with the 1996 acquisition of the Company by
affiliates of the Cypress Group L.L.C., the 1997 acquisition of Petroleo
Mecanica ALFA, S.A. ("ALFA") and the 1998 acquisition of NOVA
Wassererwarmer GmbH ("NOVA") and is included in other assets. Goodwill is
being amortized up to 40 years.
DEFERRED FINANCING COSTS
Deferred financing costs are stated at cost as a component of other assets
and are amortized over the life of the related debt using the effective
interest method. Amortization of deferred financing costs is included in
interest expense.
(5)
<PAGE> 8
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D.)
(UNAUDITED)
4. INVENTORIES
Inventories are stated at the lower of cost or market and were as follows
(in thousands):
<TABLE>
<CAPTION>
APRIL 3, DECEMBER 31,
1999 1998
------- -----------
<S> <C> <C>
Raw materials and work in process $12,492 $14,548
Finished goods 10,586 9,771
------- -------
$23,078 $24,319
======= =======
</TABLE>
5. LONG-TERM DEBT AND NOTES PAYABLE TO BANKS
The Bank Credit Agreement (the "Agreement") between the Company and a
syndicate of lenders provides for secured borrowings consisting of (i) a
five and one-half year revolving credit facility providing for up to $30
million in revolving loans, $5.0 million of which may be used for letters
of credit (the "Revolving Credit Facility") and (ii) a term loan facility
consisting of a five and one-half year Tranche A Term Loan and a seven and
one-half year Tranche B Term Loan (collectively, the Term Loans). In
addition, the Company has issued $115.0 million of Senior Subordinated
Notes due in 2006 (the "Notes"). The Notes are unsecured obligations of the
Company. The Notes bear interest at a rate of 10.625% per annum, which is
payable semi-annually on each June 30 and December 31.
Under the terms of the Agreement, AMTROL is required to comply, and is in
compliance, with certain financial covenants and restrictions as of April
3, 1999.
6. PROVISION FOR INCOME TAXES
The effective income tax rates used in the interim financial statements are
estimates of the full year's rates. The difference for 1999 between the
provision computed using the statutory U.S. federal income tax rate and the
provision for income taxes in the accompanying consolidated financial
statements is primarily the result of goodwill amortization.
7. COMPREHENSIVE INCOME
For the quarters ended April 3, 1999 and April 4, 1998, the total
comprehensive loss, which was comprised of the net loss and the foreign
currency translation adjustment, amounted to $2,256 and $1,147,
respectively.
(6)
<PAGE> 9
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D.)
(UNAUDITED)
8. ACQUISITION
On June 9, 1998, the Company acquired NOVA Wassererwarmer GmbH ("NOVA")
located in Donaueschingen, Germany for approximately $6.0 million (United
States Dollars) plus assumed debt of $2.0 million. NOVA manufactures
high-end residential and commercial water heaters which are marketed
primarily in Germany, Switzerland and Austria. This acquisition provides
AMTROL with expanded manufacturing and distribution capabilities in central
Europe, in addition to the opportunity to offer many of AMTROL's
complementary hydronic heating and water systems products in the European
market. AMTROL assumed immediate management control of NOVA and,
accordingly, the operating results and financial position of NOVA are
included in the consolidated results of operations and consolidated balance
sheets of AMTROL from the acquisition date. The following represents
proforma net sales and net income for the quarter ended April 4, 1998 as
though the acquisition of NOVA occurred as of January 1, 1998 (in
thousands): Net sales $51,305, net loss $1,291.
9. BUSINESS SEGMENT INFORMATION
The Company adopted SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information, in 1998. AMTROL's reportable segments
are delineated geographically. The segments are managed separately because
of their different product offerings, markets served, manufacturing
processes and cost structures.
The Company's North American segment operates manufacturing facilities in
Rhode Island, Kentucky, Maryland and Ohio, and operates a distribution
facility in Ontario, Canada. This segment manufactures and markets products
used principally in flow control, storage, heating, and other treatment of
fluids in the water system and HVAC markets. These products are marketed
throughout the world but primarily in North America, Western Europe, Asia
and Mexico.
The Company's European segment includes the Company's facilities in
Guimaraes, Portugal and Donaueschingen, Germany. The Guimaraes facility
manufactures returnable and non-returnable steel gas cylinders for storing
cooking, heating and refrigerant gases which are marketed throughout
Europe, the Middle East and Africa, as well as the Far East. The
Donaueschingen facility, acquired during the second quarter of 1998,
manufactures and distributes residential and commercial water heaters which
are marketed primarily in Switzerland, Austria and Germany.
(7)
<PAGE> 10
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D.)
(UNAUDITED)
The primary criteria by which financial performance is evaluated and resources
are allocated include revenues and operating income. The following is a summary
of key financial data by segment:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
----------------------
APRIL 3, APRIL 4,
1999 1998
------- -------
<S> <C> <C>
Sales to external customers
North America $36,649 $37,167
Europe 17,760 11,249
------- -------
Consolidated $54,409 $48,416
======= =======
INCOME FROM OPERATIONS
North America $ 3,475 $ 2,752
Europe 1,123 1,363
------- -------
Consolidated $ 4,598 $ 4,115
======= =======
</TABLE>
(8)
<PAGE> 11
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The following discussion should be read in conjunction with the consolidated
Financial Statements and Notes thereto appearing elsewhere in this report. This
report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such statements involve risks and uncertainties that could cause actual
results to differ materially from those set forth in such forward-looking
statements. Among other things, expectations for upcoming periods are based on
assumptions which management believes to be reasonable at this time, including
assumptions concerning the volume and product mix of sales. Moreover, there can
be no assurances when initiatives undertaken by the Company to rationalize its
manufacturing operations and improve plant productivity will be successful.
Other significant potential risks and uncertainties include the following: risks
associated with indebtedness; uncertainties of its acquisition strategy,
including the successful integration of the NOVA and ALFA Acquisitions; high
level of competition in the Company's markets; importance and costs of product
innovation; risks associated with international operations; product liability
exposure and the risk of adverse effects of economic and regulatory conditions
on sales; and risks associated with environmental matters.
(9)
<PAGE> 12
AMTROL INC. AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentages of
the Company's net sales represented by certain income and expense items in the
Company's Consolidated Statements of Operations.
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
---------------------
APRIL 3, APRIL 4,
1999 1998
------- -------
<S> <C> <C>
Net Sales 100.0 % 100.0 %
Cost of Goods Sold 74.4 76.0
----- -----
Gross Profit 25.6 24.0
Selling, General and Administrative Expenses 15.1 13.3
Amortization of Goodwill 2.0 2.2
----- -----
Income from Operations 8.5 8.5
Interest Expense (9.3) (10.7)
Interest Income -- 0.1
Other Income, net 0.2 0.4
----- -----
Loss before Provision for Income Taxes (0.6) (1.7)
Provision for Income Taxes 0.8 0.3
----- -----
Net Loss (1.4)% (2.0)%
===== =====
</TABLE>
Results for the quarter were impacted by the acquisition of NOVA Wassererwarmer
GmbH ("NOVA") on June 9, 1998 (see Note 8) as operating results of this
subsidiary are included in the quarter ended April 3, 1999 but are not included
in the comparable period in 1998.
Net sales for the first quarter increased $6.0 million or 12.4% compared to the
same period in 1998. First quarter 1999 sales were the highest in the Company's
history. The quarter-to-quarter comparison was favorably impacted by the
acquisition of NOVA. Excluding NOVA, first quarter 1999 sales would have
increased approximately 6.2%. Sales in North America, adjusted for certain
markets which were transferred to Alfa from North America starting in May 1998,
increased by 6.4% in the 1999 first quarter compared to 1998. European sales,
excluding the impact of NOVA and markets transferred from North America,
increased 5.4% in 1999 compared to 1998. Including NOVA, first quarter 1999
sales in Europe increased 58% compared to 1998.
(10)
<PAGE> 13
AMTROL INC. AND SUBSIDIARIES
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RESULTS OF OPERATIONS (CONT'D.)
The gross profit for the first quarter of 1999 increased $2.3 million or 19.6%
from the first quarter of 1998. The gross margin percentage increased to 25.6%
in 1999 from 24.0% in 1998. Excluding the results of NOVA, the margin percentage
for the first quarter would have been 26.6%. The higher margins in 1999 are due
largely to improvements in productivity at the Company's West Warwick, Rhode
Island manufacturing facility and to favorable product mix.
Selling, General and Administrative expenses for the first quarter of 1999
increased to $8.2 million from $6.4 million in the first quarter of 1998 and, as
a percentage of net sales, increased to 15.1% in 1999 from 13.3% in 1998. The
inclusion of NOVA in 1999 but not 1998 added approximately $0.4 million to first
quarter 1999 expenses. Also, higher operating costs at Alfa, related to
substantially higher revenues, added an additional $0.7 million to first quarter
1999 expenses.
Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
increased 14% to $8.1 million for the first quarter of 1999, from $7.1 million
in the first quarter of 1998. First quarter EBITDA in 1999 was the highest in
the Company's history.
The net loss for the first quarter was $0.7 million, a decrease of approximately
$0.2 million from the first quarter 1998 net loss.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital at April 3, 1999 was $9.0 million and the ratio of current
assets to current liabilities was 1.16 to 1.0. This compares with working
capital of $6.6 million and a current ratio of 1.12 to 1.0 at December 31, 1998.
Since the previous year end, the Company's accounts receivable increased $6.9
million while inventory declined approximately $1.2 million, reflecting seasonal
demand. Accounts payable and accrued expenses combined increased from the
previous year-end by approximately $0.9 million primarily due to the timing of
payments.
The Company's cash balance decreased $0.9 million to $0.2 million as compared to
the end of 1998. The Company invested approximately $1.9 million in plant and
equipment during the first quarter.
The Company is a party to a Bank Credit Facility (the "Facility") which consists
of $54.0 million of senior term loans (the "Term Loans") and a $30.0 million
revolving credit facility (the "Revolving Credit Facility"). A portion ($9.9
million) of the Term Loans (the "Tranche A Term Loans") will mature on May 13,
2002, with quarterly amortization payments during the term of such loans. The
remainder ($44.1 million) of the Term Loans (the "Tranche B Term Loans") will
mature on May 13, 2004, with nominal quarterly amortization prior to the
maturity of the Tranche A Term Loans and with the remaining amounts amortizing
on a quarterly basis thereafter.
(11)
<PAGE> 14
AMTROL INC. AND SUBSIDIARIES
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LIQUIDITY AND CAPITAL RESOURCES (CONT'D)
The Revolving Credit Facility includes a sublimit providing for up to $20.0
million of availability on a revolving credit basis to finance permitted
acquisitions. The commitments under the Revolving Credit Facility and the
acquisition sublimit will each reduce by $5.0 million on November 13, 2000 and
$10.0 million on November 13, 2001. The Revolving Credit Facility will mature on
May 13, 2002. At April 3, 1999, amounts available under the revolver
approximated $24.3 million. The Bank Credit Facility is secured by substantially
all assets of the Company and its domestic subsidiaries.
The Company issued $115.0 million of Senior Subordinated Notes due 2006 (the
"Notes") under an Indenture dated as of November 13, 1996. The Notes are
unsecured obligations of AMTROL. The Notes bear interest at a rate of 10.625%
per annum which is payable semi-annually on each June 30 and December 31
commencing on June 30, 1997. In addition, on or prior to December 31, 1999, the
Company may use the net cash proceeds of one or more public equity offerings to
redeem up to 35% of the aggregate principal amount of the Notes originally
issued at a redemption price of 110.625% of the principal amount thereof plus
accrued interest to the date of redemption. Upon a "Change of Control" (as
defined in the Indenture), each Note holder has the right to require the Company
to repurchase such holder's Notes at a purchase price of 101% of the principal
amount plus accrued interest.
The Bank Credit Facility and the Indenture contain various affirmative and
negative covenants and restrictions. The Company was in compliance with all such
covenants at April 3, 1999.
The Company intends to fund its future working capital expenditures and debt
service requirements through cash flows generated from operations, borrowings
under the revolving credit facility (the "Revolving Credit Facility") provided
under the Bank Credit Agreement and through the use of available cash balances.
Management believes that cash generated from operations, together with
borrowings available under the Revolving Credit Facility, will be sufficient to
meet the Company's working capital and capital expenditure needs in the
foreseeable future. The Company may consider other options available to it in
connection with funding future working capital and capital expenditure needs,
including the issuance of additional debt and equity securities.
INFLATION
The Company believes that inflation does not have a material effect on its
results of operations or financial condition. To insulate against fluctuating
prices, the Company has negotiated annual contracts with suppliers of certain
key raw materials (primarily steel) for a significant percentage of its expected
usage through 1999.
(12)
<PAGE> 15
AMTROL INC. AND SUBSIDIARIES
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YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the Year 1900 rather than the Year 2000. The Company has recently
completed the implementation of a new Enterprise Resource Planning System
("ERP") in its West Warwick, Rhode Island corporate headquarters. The ERP, in
addition to providing the Company with a wide-range of operational and
administrative efficiencies, supports most of the Company's North American
operations and ensures that virtually all of the Company's core business systems
are Year 2000 compliant. All remaining business software programs are expected
to be made Year 2000 compliant by the end of the 1999 third quarter, including
those supplied by vendors, or they will be retired. The cost to remediate
possible exposures resulting from the Year 2000 problem cannot be distinguished
from the overall cost of the ERP which approximated $3.0 million as of the end
of 1998. Costs to remediate Year 2000 exposures other than costs incurred in
connection with the ERP are not material.
The Company communicated with its most significant suppliers to determine the
extent to which the Company's interface systems are vulnerable to those third
parties' failure to remediate their own Year 2000 issues. The Company has also
communicated with its large customers to assess the same issue. While there can
be no guarantee that the systems of other companies on which the Company's
system rely will be timely converted and will not have an adverse effect on the
Company's systems, the Company does not believe that its operations are
materially vulnerable to the failure of any vendor or customer to properly
address the Year 2000 issue. The Company believes it has no exposure to
contingencies related to the Year 2000 issue for the products it has sold.
The Company has also initiated formal communications with the vendors supplying
manufacturing equipment utilizing hardware, software and associated embedded
computer chips. It estimates that this portion of its Year 2000 compliance
program will be completed by the third quarter of 1999.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. The Company believes
that the successful implementation of the ERP supporting the Company's North
American operations in 1998 has substantially mitigated the most pervasive risks
to the Company resulting from Year 2000 related computer failures. Due to the
general uncertainty inherent in the Year 2000 problem, resulting in part from
the uncertainty of the Year 2000 readiness of third-party suppliers and
customers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition. The aforementioned
steps being undertaken by the Company are expected to significantly reduce the
Company's level of uncertainty about the Year 2000 problem and, in particular,
about the Year 2000 compliance and readiness of its material suppliers and
customers.
(13)
<PAGE> 16
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
YEAR 2000 COMPLIANCE (CONT'D)
The Company has developed a contingency plan to address exposures to its
business resulting from possible Year 2000 problems. Because its core systems
have been made Year 2000 compliant already, the Company's contingency plan
primarily addresses identifying alternate sources for key materials and supplies
in the event that the Company's primary vendors are not able to supply the
Company in a timely fashion. For most such materials and supplies, alternate
sources have already been identified. The Company believes that, with the recent
implementation of the ERP and the other steps being taken, the possibility of
significant interruptions of normal operations should be reduced.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Refer to the Company's annual report on Form 10-K for the year ended December
31, 1998 for a complete discussion of the Company's market risk. There have been
no material changes to the market risk information included in the Company's
1998 annual report on Form 10-K.
(14)
<PAGE> 17
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits or reports on Form 8-K were filed during the period covered by this
report.
(15)
<PAGE> 18
AMTROL INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
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.
AMTROL INC.
Date: May 10, 1999 By: /s/ Albert D. Indelicato
------------ -----------------------------
Albert D. Indelicato
President,
Chief Executive Officer and
Director
Date: May 10, 1999 By: /s/ Donald W. Reilly
------------ -----------------------------
Donald W. Reilly,
Vice President,
Chief Financial Officer and
Treasurer
(16)
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-03-1999
<EXCHANGE-RATE> 1
<CASH> 204
<SECURITIES> 0
<RECEIVABLES> 37,217
<ALLOWANCES> (1,369)
<INVENTORY> 23,078
<CURRENT-ASSETS> 64,971
<PP&E> 65,668
<DEPRECIATION> (16,064)
<TOTAL-ASSETS> 301,375
<CURRENT-LIABILITIES> 56,014
<BONDS> 178,160
0
0
<COMMON> 89,823
<OTHER-SE> (26,131)
<TOTAL-LIABILITY-AND-EQUITY> 301,375
<SALES> 0
<TOTAL-REVENUES> 54,409
<CGS> 40,486
<TOTAL-COSTS> 40,486
<OTHER-EXPENSES> 9,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,051
<INCOME-PRETAX> (287)
<INCOME-TAX> 453
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