<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: September 30, 2000
-----------------------------
Commission file number: 0-20328
-------------------
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 September 30, 2000
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AMTROL INC. AND SUBSIDIARIES
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FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000
--------------------------------------------------
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets -
September 30, 2000 and December 31, 1999 2
Consolidated Statements of Operations -
For the Quarter and Nine Months Ended September 30, 2000
and October 2, 1999 3
Consolidated Statements of Shareholders' Equity -
For the Nine Months Ended September 30, 2000 and
October 2, 1999 4
Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 2000 and
October 2, 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
</TABLE>
1
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AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 943 $ 674
Accounts receivable, less allowance for doubtful accounts 30,314 30,340
Inventories 23,421 22,346
Prepaid income taxes 1,476 1,390
Prepaid expenses and other 2,648 1,675
--------- ---------
Total current assets 58,802 56,425
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, NET 43,445 47,100
OTHER ASSETS:
Goodwill 163,027 166,520
Deferred financing costs 4,856 5,704
Deferred income taxes 5,095 5,092
Other 799 904
--------- ---------
173,777 178,220
--------- ---------
$ 276,024 $ 281,745
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 3,662 $ 4,935
Notes payable to banks 7,636 790
Accounts payable 20,583 22,535
Accrued expenses 10,697 15,804
Accrued interest 3,489 789
Accrued income taxes 1,542 2,571
--------- ---------
Total current liabilities 47,609 47,424
--------- ---------
LONG TERM DEBT, LESS CURRENT MATURITIES 163,156 163,385
OTHER NONCURRENT LIABILITIES 4,903 5,633
SHAREHOLDERS' EQUITY
Capital stock $.01 par value - authorized 1,000 shares,
100 shares issued -- --
Additional paid-in capital 89,842 90,156
Retained deficit (24,813) (22,503)
Accumulated other comprehensive loss (4,673) (2,350)
--------- ---------
Total shareholders' equity 60,356 65,303
--------- ---------
$ 276,024 $ 281,745
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
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AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
-------------------------------- --------------------------------
SEPTEMBER 30, OCTOBER 2, SEPTEMBER 30, OCTOBER 2,
2000 1999 2000 1999
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 44,331 $ 53,153 $ 144,605 $ 163,471
COST OF GOODS SOLD 33,585 37,348 108,328 118,498
--------- --------- --------- ---------
GROSS PROFIT 10,746 15,805 36,277 44,973
OPERATING EXPENSES
Selling, general and administrative 6,407 6,858 19,873 22,222
Amortization of goodwill 1,115 1,116 3,348 3,347
--------- --------- --------- ---------
Income from operations 3,224 7,831 13,056 19,404
OTHER INCOME (EXPENSE):
Interest expense (4,867) (4,841) (14,538) (14,763)
Interest income 80 39 161 95
License and distributorship fees 52 60 157 150
Other, net 498 76 732 238
--------- --------- --------- ---------
Income (loss) before provision
for income taxes (1,013) 3,165 (432) 5,124
PROVISION FOR INCOME TAXES 382 1,600 1,878 3,365
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,395) $ 1,565 $ (2,310) $ 1,759
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED - IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
Accumulated Other
Additional Comprehensive Comprehensive
Common Stock Paid-in Capital Retained Deficit Loss Loss
------------ --------------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 $ -- $ 90,156 $(22,503) $ (2,350) $ --
Capital contribution -- 250 -- -- --
Repurchase of common stock -- (564) -- -- --
Net loss -- -- (2,310) -- (2,310)
Currency translation adjustment -- -- -- (2,323) (2,323)
------------ --------------- ---------------- ----------------- -------------
Balance, September 30, 2000 $ -- $ 89,842 $(24,813) $ (4,673) $ (4,633)
============ =============== ================ ================= =============
</TABLE>
NINE MONTHS ENDED OCTOBER 2, 1999:
<TABLE>
<CAPTION>
Accumulated Other
Additional Comprehensive Comprehensive
Common Stock Paid-in Capital Retained Deficit Loss Loss
------------ --------------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $ -- $ 89,823 $(24,363) $ 488 $ --
Capital contribution -- 333 -- -- --
Net income -- -- 1,759 -- 1,759
Currency translation adjustment -- -- -- (1,531) (1,531)
------------ --------------- ---------------- ----------------- -------------
Balance, October 2, 1999 $ -- $ 90,156 $(22,604) $ (1,043) $ 228
============ =============== ================ ================= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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AMTROL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
SEPTEMBER 30, OCTOBER 2,
2000 1999
------------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,310) $ 1,759
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities -
Depreciation and amortization 10,905 10,530
Provision for losses on accounts receivable 13 127
Changes in operating assets and liabilities (9,646) 1,389
-------- --------
Net cash provided by (used in) operating activities (1,038) 13,805
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 31 961
Capital expenditures (4,545) (4,008)
-------- --------
Net cash used in investing activities (4,514) (3,047)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock (564) --
Repayment of debt (29,459) (32,203)
Issuance of debt 35,627 20,685
Capital contribution 250 333
-------- --------
Net cash provided by (used in) financing activities 5,854 (11,185)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 302 (427)
Effect of exchange rate changes on cash and cash equivalents (33) (84)
Cash and Cash Equivalents, beginning of period 674 1,088
-------- --------
Cash and Cash Equivalents, end of period $ 943 $ 577
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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AMTROL INC. AND SUBSIDIARIES
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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 financial
position, results of operations and cash flows of AMTROL Inc. and its
subsidiaries ("the Company") 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, the
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 over periods 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.
6
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AMTROL INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONT.
(UNAUDITED)
3. SIGNIFICANT ACCOUNTING POLICIES-CONT.
RECLASSIFICATIONS
Certain amounts in prior periods have been reclassified to permit
comparison to the current year presentation.
4. INVENTORIES
Inventories are stated at the lower of cost or market and were as follows
(in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
Raw materials and work in process $12,052 $11,689
Finished goods 11,369 10,657
------- -------
$23,421 $22,346
======= =======
</TABLE>
5. LONG-TERM DEBT
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, $2.4 million at September
30, 2000, 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, $5.2 million at September 30, 2000, and a seven
and one-half year Tranche B Term Loan, $43.4 million at September 30, 2000,
(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
September 30, 2000.
7
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AMTROL INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONT.
(UNAUDITED)
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 2000 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. BUSINESS SEGMENT INFORMATION
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, Donaueschingen, Germany and Poznan, Poland. 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 manufactures residential and commercial
water heaters marketed primarily in Switzerland, Austria and Germany. The
Poznan facility refurbishes non-returnable steel gas cylinders.
The primary criteria by which financial performance is evaluated and
resources are allocated include revenues, operating income and EBITDA as
defined below. The following is a summary of key financial data by segment:
8
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AMTROL INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONT.
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, OCTOBER 2, SEPTEMBER 30, OCTOBER 2,
2000 1999 2000 1999
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Sales to external customers
North America $ 31,583 $ 36,665 $ 99,041 $111,758
Europe 12,748 16,488 45,564 51,713
-------- -------- -------- --------
Consolidated $ 44,331 $ 53,153 $144,605 $163,471
======== ======== ======== ========
INCOME FROM OPERATIONS
North America $ 2,865 $ 6,083 $ 10,642 $ 14,614
Europe 359 1,748 2,414 4,790
-------- -------- -------- --------
Consolidated $ 3,224 $ 7,831 $ 13,056 $ 19,404
======== ======== ======== ========
EBITDA
North America $ 5,263 $ 8,225 $ 17,828 $ 21,218
Europe 1,786 2,869 6,271 8,329
-------- -------- -------- --------
Consolidated $ 7,049 $ 11,094 $ 24,099 $ 29,547
======== ======== ======== ========
</TABLE>
"EBITDA" is defined as earnings (net income/loss) before interest, taxes,
depreciation and amortization, which amounts are disclosed in the statement
of operations. Operating income is reduced by goodwill amortization for
each year presented.
9
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AMTROL INC. AND SUBSIDIARIES
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
This Quarterly Report includes "forward-looking statements" within the meaning
of the securities laws. All statements other than statements of historical facts
included in this Quarterly Report regarding the Company's financial position and
strategic plans are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from such expectations include, but are not limited to, the Company's
ability to successfully implement its business strategy, the availability and
cost of raw materials, changes in government regulation or enforcement policies,
particularly those related to refrigerant gases and building and energy
efficiency requirements, development of competing technologies, acceptance of
the Company's existing and planned new products in international markets,
competition in the Company's markets, the rate of growth of developing economies
and demand for the Company's products, the ultimate cost of future warranty
claims, whether the Company succeeds in acquiring new businesses, and general
economic, financial and business conditions, both domestically and
internationally.
10
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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>
QUARTER ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPTEMBER 30, OCTOBER 2, SEPTEMBER 30, OCTOBER 2,
2000 1999 2000 1999
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 75.8 70.3 74.9 72.5
----- ----- ----- -----
Gross Profit 24.2 29.7 25.1 27.5
Selling, General and
Administrative Expenses 14.5 12.9 13.7 13.6
Amortization of Goodwill 2.5 2.1 2.3 2.0
----- ----- ----- -----
Income from Operations 7.2 14.7 9.1 11.9
Interest Expense (11.0) (9.1) (10.1) (9.0)
Interest Income 0.2 0.1 0.1 0.1
Other Income (Expense), net 1.1 0.1 0.5 0.1
----- ----- ----- -----
Income (loss) before Provision
for Income Taxes (2.5) 5.8 (0.4) 3.1
Provision for Income Taxes 0.9 3.0 1.3 2.1
----- ----- ----- -----
Net Income (Loss) (3.4)% 2.8% (1.7)% 1.0%
===== ===== ===== =====
</TABLE>
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AMTROL INC. AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THIRD QUARTER ENDED SEPTEMBER 30, 2000
Net sales for the third quarter decreased $8.8 million or 16.6% compared to the
third quarter of 1999. In North America, net sales in the third quarter declined
13.9% as a result of reduced demand, increased competition and pricing pressures
in the Company's principal North American markets. The weakness of the Euro and
Euro-linked currencies also contributed to a substantial reduction in exports
from North America. In Europe, third quarter sales decreased 22.7%, also due
principally to the weakness of the Euro and Euro-linked currencies.
Approximately 25% of the Company's consolidated net sales are denominated in
Euros or Euro-linked currencies. The average value of the Euro in the third
quarter of 2000 was approximately 14% below its average value in the comparable
period in 1999. Absent this weakening, net sales for the third quarter of 2000
would have been approximately $2.0 million higher than reported.
Gross profit for the third quarter of 2000 decreased $5.1 million compared to
the third quarter of 1999. Gross profit as a percentage of net sales decreased
to 24.2% in 2000 from 29.7% in 1999. The lower percentage is attributable to
lower production volumes and increased material costs, including higher steel
costs in Europe and higher packaging and energy costs in North America in
comparison to 1999. These material cost increases were partially offset by
continuing cost reduction efforts and improvements in labor productivity at all
of the Company's manufacturing locations.
Selling, General and Administrative expenses for the third quarter of 2000
decreased $0.5 million, or 6.6%, to $6.4 million from $6.9 million in the third
quarter of 1999. The decrease in SG&A was largely the result of lower operating
expenses associated with lower sales, as well as continuing cost reduction
efforts. The weaker European currencies in the third quarter of 2000 as compared
to the same period in 1999 also contributed to lower reported operating
expenses.
Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the third quarter of 2000 decreased $4.0 million to $7.1 million from $11.1
in the third quarter of 1999. As a percentage of net sales, EBITDA decreased
from 20.9% in 1999 to 15.9% in 2000.
The net loss for the third quarter of 2000 of $1.4 million compares to net
income in the third quarter 1999 of $1.6 million, an absolute decrease of $3.0
million.
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AMTROL INC. AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NINE MONTHS ENDED SEPTEMBER 30, 2000
Net sales for the first nine months of 2000 decreased $18.9 million or 11.5%
compared to the first nine months of 1999. In North America, net sales declined
approximately 11.4% due to reduced demand, increased competition, and pricing
pressures in the Company's principal North American markets, and a substantial
reduction in exports from North America due in part to the weakening Euro as
discussed above. Net sales in Europe decreased 11.9% compared to the first nine
months of 1999 due principally to the weakening of the Euro as discussed above.
If the value of the Euro had remained at the average level of the first nine
months of 1999, net sales for the first nine months would have been
approximately $6.3 million higher than reported.
Gross profit for the first nine months decreased by $8.7 million compared to the
same period in 1999. Gross profit percentage to net sales decreased to 25.1% in
2000 from 27.5% in 1999. As discussed in the third quarter comparison, the
decreases in gross profit and gross profit percentage of net sales in the first
nine months are attributable to lower production volume and increased material
costs, partially offset by continuing cost reduction efforts and improvements in
labor productivity at all of the Company's manufacturing locations.
Selling, General and Administrative expenses for the first nine months of 2000
decreased approximately $2.3 million or 10.6% from 1999. As discussed in the
third quarter comparison, the decrease in SG&A was largely the result of lower
operating expenses associated with lower sales, continuing cost reduction
efforts, and weak European currencies compared to the first nine months of 1999.
Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the first nine months of 2000 decreased $5.4 million to $24.1 million,
compared to $29.5 million for the first nine months of 1999. As a percentage of
net sales for the first nine months, EBITDA decreased from 18.1% in 1999 to
16.7% in 2000.
Net loss for the first nine months of 2000 was $2.3 million, an absolute
decrease of $4.1 million compared to net income of $1.8 million in the
comparable period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating capital (defined as accounts receivable and inventory,
less accounts payable) increased $3.0 million from $30.1 million at December 31,
1999 to $33.1 million at September 30, 2000. During the same period, the
Company's accounts receivable remained relatively the same and inventory
increased $1.1 million, while its accounts payable decreased $1.9 million,
consistent with seasonal operating levels.
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AMTROL INC. AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Company's cash balance increased $0.3 million to $0.9 million in the first
nine months of 2000. During the first nine months of 2000, the Company invested
approximately $4.5 million in plant and equipment.
The Company's total capital expenditures for 2000 are projected to approximate
$6.0 million. The projection reflects planned capital investments at the
Guimaraes, Portugal and West Warwick, Rhode Island facilities to improve
productivity and additional investments in information systems at certain
Company locations.
The Company is a party to a Bank Credit Facility (the "Facility") which consists
of $48.6 million of senior term loans (the "Term Loans") and a $30.0 million
revolving credit facility (the "Revolving Credit Facility"). A portion ($5.2
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 ($43.4 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.
The Revolving Credit Facility includes a sublimit that provides as much as $20.0
million 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 September 30, 2000, amounts available
under the revolver approximated $26.5 million. The Bank Credit Facility is
secured by substantially all the assets of the Company and its domestic
subsidiaries.
In November 1996 AMTROL issued, under an Indenture, $115.0 million of Senior
Subordinated Notes due 2006 (the "Notes"). The Notes are unsecured obligations
of AMTROL. The Notes bear interest at a rate of 10.625% per annum and are
payable semi-annually on each June 30 and December 31 commencing on June 30,
1997. The Notes are redeemable at the option of AMTROL on or after December 31,
2001. From and after December 31, 2001, the Notes will be subject to redemption
at the option of AMTROL, in whole or in part, at various redemption prices,
declining from 105.313% of the principal amount to par on and after December 31,
2003. 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 September 30, 2000.
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AMTROL INC. AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Company intends to fund its future working capital, capital expenditure and
debt service requirements through cash flow 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. The
Company may consider other options available to it in connection with future
funding requirements, 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. However, there can be no guarantee
that any future significant general economic inflation will not materially
adversely affect the Company's operations or financial condition. To insulate
against fluctuating prices, the Company has negotiated annual contracts with
suppliers of certain key raw materials, principally steel, for a significant
percentage of its expected requirements through 2000.
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AMTROL INC. AND SUBSIDIARIES
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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.
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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: November 14, 2000 By: /s/ Albert D. Indelicato
-------------------------- -------------------------------
Albert D. Indelicato,
Chairman of the Board,
President and
Chief Executive Officer
Date: November 14, 2000 By: /s/ Larry T. Guillemette
-------------------------- -------------------------------
Larry T. Guillemette,
Executive Vice President
and Chief Financial Officer
