<PAGE>
===============================================================================
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 QUARTER ENDED MARCH 31, 2000
--------------------
APPLIED EXTRUSION TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-19188 51-0295865
(State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
</TABLE>
3 CENTENNIAL DRIVE
PEABODY, MASSACHUSETTS 01960
(Address of Principal Executive Offices)
(978) 538-1500
(Registrant's Telephone Number, Including Area Code)
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 / /.
The number of shares of the Registrant's Common Stock, $.01 par value per share,
outstanding as of May 10, 2000 was 11,967,156.
===============================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................... $ 5,374 $ 5,323
Accounts receivable, net of allowance for doubtful accounts of $1,506
at March 31, 2000 and $1,554 at September 30, 1999...................... 45,162 36,857
Inventory................................................................... 48,028 38,611
Prepaid expenses and deferred taxes......................................... 7,048 6,522
-------- --------
Total current assets................................................ 105,612 87,313
Property, plant and equipment, net.............................................. 277,012 278,118
Intangibles and deferred finance charges, net................................... 2,609 3,035
Long-term note receivable and other assets...................................... 6,308 6,584
-------- --------
$ 391,541 $ 375,050
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................ $ 17,140 $ 18,144
Accrued interest............................................................ 9,768 9,113
Accrued expenses and other current liabilities.............................. 22,934 28,311
-------- ---------
Total current liabilities........................................... 49,842 55,568
Long-term debt.................................................................. 201,500 182,500
Deferred taxes and other credits................................................ 35,745 37,941
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized, 1,000 shares, of which 300 are
designated Junior Preferred Stock; no stock outstanding
Common stock, $.01 par value; 30,000 shares authorized; 11,968 and
11,575 shares issued at March 31, 2000 and September 30, 1999,
respectively................................................................ 120 116
Additional paid-in capital...................................................... 100,035 97,701
Retained earnings............................................................... 8,230 5,269
Accumulated other comprehensive loss............................................ (1,375) (1,528)
-------- --------
107,010 101,558
Treasury stock, at cost, and other, 245 and 247 shares at March 31, 2000
and September 30, 1999, respectively........................................ (2,556) (2,517)
-------- --------
Total stockholders' equity ..................................................... 104,454 99,041
-------- --------
$ 391,541 $ 375,050
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
SALES........................................................................... $ 68,745 $ 58,979
Cost of sales................................................................... 51,958 47,327
---------- ---------
GROSS PROFIT.................................................................... 16,787 11,652
OPERATING EXPENSES:
Selling, general and administrative......................................... 6,994 6,383
Research and development.................................................... 1,793 1,839
----------- ----------
Total operating expenses................................................ 8,787 8,222
----------- ----------
OPERATING PROFIT................................................................ 8,000 3,430
NON-OPERATING EXPENSES:
Interest expense, net....................................................... 5,183 4,869
----------- ----------
Total non-operating expenses............................................ 5,183 4,869
----------- ----------
Income (loss) before income taxes............................................... 2,817 (1,439)
Income tax expense (benefit).................................................... 1,014 (576)
----------- ----------
NET INCOME (LOSS)............................................................... $ 1,803 $ (863)
========== ==========
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE.............................. $ .15 $ (0.08)
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic....................................................................... 11,774 11,309
Diluted..................................................................... 12,195 11,309
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
Net income (loss)............................................................... $ 1,803 $ (863)
Exchange rate changes........................................................... 18 456
-------- --------
COMPREHENSIVE INCOME (LOSS)..................................................... $ 1,821 $ (407)
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
SALES........................................................................... $128,896 $114,424
Cost of sales................................................................... 97,233 94,831
---------- ----------
GROSS PROFIT.................................................................... 31,663 19,593
OPERATING EXPENSES:
Selling, general and administrative......................................... 13,463 12,262
Research and development.................................................... 3,394 3,478
---------- ----------
Total operating expenses................................................ 16,857 15,740
---------- ----------
OPERATING PROFIT................................................................ 14,806 3,853
NON-OPERATING EXPENSES:
Interest expense, net....................................................... 10,180 9,721
Acquisition costs........................................................... -- 3,462
---------- ----------
Total non-operating expenses............................................ 10,180 13,183
---------- ----------
Income (loss) before income taxes............................................... 4,626 (9,330)
Income tax expense (benefit).................................................... 1,665 (3,732)
---------- ----------
NET INCOME (LOSS)............................................................... $ 2,961 $ (5,598)
========== ==========
EARNINGS (LOSS) PER COMMON SHARE:
Basic....................................................................... $ .26 $ (0.50)
Diluted..................................................................... .25 (0.50)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic....................................................................... 11,594 11,209
Diluted..................................................................... 11,858 11,209
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE OPERATIONS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
Net income (loss)............................................................... $ 2,961 $ (5,598)
Exchange rate changes........................................................... 153 (52)
----------- ----------
COMPREHENSIVE INCOME (LOSS)..................................................... $ 3,114 $ (5,650)
=========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) .......................................................... $ 2,961 $ (5,598)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Provision for doubtful accounts......................................... 186 180
Depreciation and amortization........................................... 10,609 10,133
Deferred taxes and other credits........................................ (2,214) (6,056)
Changes in assets and liabilities which provided (used) cash:
Prepaid expenses and other current assets........................... (319) (1,775)
Accounts payable and accrued expenses............................... (5,724) 1,388
Accounts receivable and inventory................................... (17,907) (405)
--------- -----------
Net cash used in operating activities........................... (12,408) (2,133)
INVESTING ACTIVITIES:
Additions to property, plant and equipment.................................. (9,031) (8,907)
--------- ----------
Net cash used in investing activities........................... (9,031) (8,907)
FINANCING ACTIVITIES:
Borrowings under line of credit agreement, net.............................. 19,000 13,500
Proceeds from issuance of stock, net........................................ 2,337 1,885
---------- -----------
Net cash provided by financing activities....................... 21,337 15,385
Effect of exchange rate changes on cash..................................... 153 (52)
---------- -----------
Increase in cash and cash equivalents, net.................................. 51 4,293
Cash and cash equivalents, beginning........................................ 5,323 2,279
---------- -----------
Cash and cash equivalents, ending........................................... $ 5,374 $ 6,572
========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, including capitalized interest of $1,190 and $1,371,
respectively......................................................... $ 10,170 $ 10,387
Income taxes............................................................ -- --
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
APPLIED EXTRUSION TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The information set forth in these statements is unaudited and may be subject to
normal year-end adjustments. The information reflects all adjustments that, in
the opinion of management, are necessary to present a fair statement of the
consolidated results of operations of Applied Extrusion Technologies, Inc. and
its consolidated subsidiaries (collectively, the "Company" or "AET") for the
periods indicated. Results of operations for the interim periods ended March 31,
2000 are not necessarily indicative of the results of operations for the full
fiscal year.
Certain information in footnote disclosures normally included in financial
statements has been condensed or omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. These statements should
be read in conjunction with the Company's Annual Report on Form 10-K for the
year ended September 30, 1999, filed with the Securities and Exchange
Commission.
2. INVENTORIES
Inventories are valued at the lower of cost or market, with cost determined
using an average-cost method. Inventories consisted of the following on March
31, 2000 and December 31, 1999:
MARCH SEPTEMBER
2000 1999
---- ----
Raw materials $ 8,467 $ 7,191
Finished goods 39,561 31,420
--------- ----------
Total $ 48,028 $ 38,611
========= ===========
3. EARNINGS PER SHARE
For the three and six months ended March 31, 2000, basic income per share of
$.15 and $.26, respectively, was computed based on the weighted average number
of common shares outstanding during the period. Diluted income per share also
includes the impact of 421,000 and 264,000 potential shares from options for the
three and six months ended March 31, 2000, respectively, computed using the
treasury stock method.
4. COMMITMENTS AND FOREIGN EXCHANGE CONTRACTS
The Company entered into foreign exchange contracts, the last of which expires
in May, 2000, to hedge firm purchase commitments for the purchase of equipment
denominated in German Marks. Gains and losses on the contracts which result from
market risk associated with changes in the market values of the underlying
currencies are deferred and reported as part of the capitalized asset. In
entering into these contracts, the Company has assumed the risk that might arise
from the possible inability of counterparties to meet the terms of their
contracts. The Company does not expect any losses as a result of counterparty
defaults. The Company had outstanding foreign exchange contracts with notional
values of $1,359 and $2,198 at March 31, 2000 and 1999, respectively. These
contracts had no carrying value and net unrealized losses of $833 and $482 as of
March 31, 2000 and 1999, respectively. The Company does not enter into foreign
exchange contracts for trading purposes.
6
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARATIVE RESULTS OF OPERATIONS FOR THE QUARTER AND SIX MONTHS ENDED
MARCH 31, 2000 WITH THE QUARTER AND SIX MONTHS ENDED MARCH 31, 1999
INTRODUCTION
The Company is the largest producer of oriented polypropylene ("OPP") films in
North America. Consumer product companies worldwide use AET's OPP films in
labeling, packaging and overwrap applications that often require special
attributes such as high gloss, vivid graphics, exceptional clarity and barriers
to air, light and moisture to preserve freshness. The Company generally sells
its film products to converters, which are companies specializing in processes
such as laminating multiple films or other materials together and printing text
and graphics to form the final label or packaging material for end-users.
For the purposes of this discussion and analysis, the periods ended March 31,
2000 and 1999 are referred to as the second quarters of 2000 and 1999,
respectively. All dollar amounts are in thousands.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31
------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales..................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales............................. 75.6 80.2 75.4 82.9
Gross profit.............................. 24.4 19.8 24.6 17.1
Selling, general and administrative....... 10.2 10.8 10.4 10.7
Research and development.................. 2.6 3.1 2.6 3.0
Operating profit.......................... 11.6 5.8 11.5 3.4
Interest expense.......................... 7.5 8.3 7.9 8.5
Net income (loss)......................... 2.6 (1.5) 2.3 (4.9)
</TABLE>
The Company reported record second quarter sales of $68,745, an increase of
$9,766 or 16.6 percent over the same quarter in 1999, resulting from both a
double-digit increase in OPP films sales volume and an enhanced product mix as a
result of extensive product development efforts over the past four years. Sales
in the first six months of 2000 increased 12.6 percent to $128,896 compared with
$114,424 in the first six months of fiscal 1999. Annual OPP films industry
demand growth of approximately 6.0 percent continued to absorb excess industry
capacity, and should allow more favorable pricing starting in 2001. Sales and
operating profit derived from sales outside the United States were 19.9 percent
of sales and 7.7 percent of operating profit, respectively, for the three months
ended March 31, 2000, compared with 18.7 percent of sales and 10.1 percent of
operating profit for the three months ended March 31, 1999. For the six months
ended March 31, 2000, sales and operating profit derived from sales outside the
United States were 18.3 percent of sales and 6.9 percent of operating profit,
respectively, compared to 18.6 percent of sales and 7.2 percent of operating
profit for the six months ended March 31, 1999.
Gross profit was $16,787 or 24.4 percent of sales, compared with $11,652 or 19.8
percent of sales in the second quarter of 1999, in spite of industry
overcapacity and substantial increases in resin costs, only a portion of which
have been passed on to our customers. Increased volume, continued improvements
in manufacturing efficiency and high-end differentiated products continued to
drive profitability as second quarter gross profit increased by 44.1 percent
over the second quarter of 1999. Gross profit for the six months ended March 31,
2000 was $31,663, or 40.7 percent higher than gross profit in the same period of
1999. Gross margin for the first six months of 2000 was 24.6 percent of sales,
compared with 19.7 percent in 1999, after adjusting for the cost of a temporary
plant shutdown recorded in the first quarter of 1999.
7
<PAGE>
Total operating expenses of $8,787 for the second quarter of fiscal 2000
represented 12.8 percent of sales versus 13.9 percent in the second quarter of
1999. Sales, marketing and infrastructure expenses increased to support higher
sales and production volume. For the six months ended March 31, 2000 and March
31, 1999, operating expenses were 13.1 and 13.8 percent of sales, respectively,
as sales grew faster than operating expenses, resulting in a 119 percent
increase in operating profit, after adjusting for the cost of a temporary plant
shutdown recorded in the first quarter of 1999.
Net interest expense for the second quarter of 2000 of $5,183 was $314 higher
than interest in the second quarter of 1999 due to a higher average debt balance
and higher interest rates on the Revolving Credit Facility in the second quarter
of 2000.
Income tax as a percent of income before income taxes was 36 percent for the
three and six months ended March 31, 2000 and 40 percent for the three and six
months ended March 31, 1999. The lower percentage reflects the benefit of tax
planning and is expected to remain at this level for at least the next two
years.
LIQUIDITY AND CAPITAL RESOURCES
In April 2000, the Company amended and restated its principal bank lending
agreement to increase the revolving credit facility (the "Revolving Credit
Facility) to $80,000. The Revolving Credit Facility has a final maturity of the
earlier of (i) November 1, 2001, if the AET Senior Notes are not refinanced
prior to such date; or (ii) January 29, 2003. The Revolving Credit Facility is
secured by all the assets of AET. It includes covenants that limit borrowings
based on certain asset levels, require AET to maintain a minimum tangible net
worth and specified interest coverage and leverage ratios, restrict payment of
cash dividends to stockholders and establish maximum capital expenditure levels.
It also contains other covenants customary in transactions of this type. At
March 31, 2000, AET had $45,000 outstanding under its Revolving Credit Facility.
The Company also has $150,000 of Senior Notes outstanding that are due on April
7, 2002 with 11.5 percent interest due semiannually on October 1 and April 1 and
$6,500 of Revenue Bonds outstanding that are due November 4, 2004.
Operating activities used $12,408 of cash for the six months ended March 31,
2000, which was the result of net income of $11,542 before depreciation and
amortization and other non-cash expenditures offset by a seasonal increase in
working capital of $23,950. The net working capital increase was primarily the
result of decreases in accounts payable and accrued expenses of $5,724, and
increases in inventory, accounts receivable, prepaid expenses and other current
assets of $9,417, $8,490 and $319, respectively. Accounts payable and accrued
expenses decreased primarily due to payments for raw materials. In addition,
during the quarter, payments against restructuring reserves reduced such
accounts by $734 to $10,647 at March 31, 2000. The increases in inventory and
receivables since September 30, 1999 are primarily the result of seasonality of
the business.
INFLATION
Management reviews the prices charged for its products on a regular basis. When
market conditions allow, adjustments are made to reflect changes in product
costs due to fluctuations in the cost of materials and labor as well as
inflation. The costs of raw materials make up a significant portion of AET's
costs and have historically fluctuated. There can be no assurance, however, that
future market conditions will support any direct correlation between raw
material cost fluctuations and finished product films pricing.
SEASONAL NATURE OF CERTAIN OPP MARKETS
Certain of the end-use markets for the Company's OPP films are seasonal. For
example, demand in the snack food, soft drink and candy markets is generally
higher in the spring and summer. As a result, sales and net income are generally
higher in those periods.
8
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN EXCHANGE CONTRACTS
See Note 4, "Commitments and Foreign Exchange Contracts" on page 6.
SHORT-TERM AND LONG-TERM DEBT
The Company is exposed to interest rate risk primarily through borrowings under
its Revolving Credit Facility. The Company's policy has been to utilize United
States Dollar denominated borrowings to fund its working capital and investment
needs. Short-term debt, if required, is used to meet working capital
requirements, while long term debt is generally used to finance long term
investments. There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Company's future financing requirements. At March 31, 2000, the Company had no
short-term debt outstanding and had long-term debt outstanding of $201,500, of
which $45,000 was outstanding on its Revolving Credit Facility, which has a
variable interest rate, based on either LIBOR or prime rates. A 10 percent
adverse change in interest rates on the portion of the Company's debt bearing
interest at a variable rate would result in an increase in interest expense of
approximately $387.
The Company does not enter into financial instrument transactions for trading or
other speculative purposes or to manage interest rate exposure. With respect to
the foreign exchange contracts, an adverse change in the underlying exchange
rates would not have a significant effect on the Company's reported results, as
any gain or loss on the contract would be offset by changes in the value of the
firm purchase commitment.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED IN
THIS REPORT ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES
WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE
FORWARD-LOOKING STATEMENTS, INCLUDING THOSE RELATED TO THE TIMELY DEVELOPMENT
AND ACCEPTANCE OF NEW PRODUCTS, FLUCTUATIONS IN RAW MATERIALS AND OTHER
PRODUCTION COSTS, THE LOSS OF ONE OR MORE SIGNIFICANT CUSTOMERS, THE IMPACT OF
COMPETITIVE PRODUCTS AND PRICING, THE TIMELY COMPLETION OF CAPITAL PROJECTS, THE
SUCCESS OF THE COMPANY'S EFFORTS TO EXPAND INTO NEW MARKETS AND OTHER RISKS
DETAILED IN EXHIBIT 99 OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED SEPTEMBER 30, 1999 AND FROM TIME TO TIME IN THE COMPANY'S OTHER REPORTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims that have arisen in the
ordinary course of its business and have not been fully adjudicated. These
actions, when ultimately concluded and determined, will not, in the opinion of
management, have a material adverse effect upon the financial position or
results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on January 26, 2000
(the "Annual Meeting"). Proxies for the Annual Meeting were solicited pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended. A total
of 9,474,602 shares of common stock were represented at the meeting by proxy.
At the Annual Meeting, Messrs. Nader A. Golestaneh and Paul W. Marshall were
elected as Class II Directors of the Company for a term of three years expiring
at the Company's 2003 Annual Meeting. In the case of Mr. Golestaneh, 8,117,275
shares were voted in favor of his election and 1,357,327 votes were withheld;
and in the case of Mr. Marshall, 8,117,275 shares were voted in favor of his
election and 1,357,327 votes were withheld. The following directors' terms
continued after the Annual Meeting: Messrs. Amin J. Khoury, Thomas E. Williams,
Mark M. Harmeling, Richard G. Hamermesh and Joseph J. O'Donnell.
In addition, the number of option shares available for grant under the Company's
1994 Stock Option Plan (the "Option Plan") was increased by 500,000 shares. The
voting for the amendment to the Option Plan was as follows: 5,705,351 in favor;
3,303,191 opposed; 424,456 abstained; and 41,604 did not vote.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
3.1 Amended and Restated Certificate of Incorporation.
3.1.1 Amendment dated February 26, 1992 to Amended and Restated Certificate
of Incorporation.
3.1.2(m) Amendment dated March 21, 1999 to Amended and Restated Certificate of
Incorporation.
3.2(j) Amended and Restated By-Laws.
4.1(d) Indenture dated as of April 7,1994 between the Registrant and United
States Trust Company of New York Trustee.
4.2(d) Form of 11 1/2 percent Senior Note due 2002 (included in Exhibit 4.1).
4.3(a) Specimen Common Stock Certificate.
4.4(l) Rights Agreement dated as of March 2, 1998 between the Company and
BankBoston, N.A., as Rights Agent.
10.1(m) Amended and Restated Credit Agreement dated as of March 15, 1999
between the Registrant and The Chase Manhattan Bank as Administrative
Agent.
10.1.1(m) Amendment No. 1 dated as of April 23, 1999 to the Amended and restated
Credit Agreement dated as of March 15, 1999.
10.1.2* Amended and Restated Credit Agreement dated as of April 12, 2000.
10.2(b) 1986 Stock Option Plan, as amended.
10.3(i) Amendment dated December 7, 1999 to the 1986 Stock Option Plan.
10.4(c) 1991 Stock Option Plan, as amended.
10.5(i) Amendment dated December 7, 1999 to the 1991 Stock Option Plan.
10.6(b) 1991 Stock Option Plan for Directors, as amended.
10.7(i) Amendment dated August 4, 1999 to the 1991 Stock Option Plan for
Directors, as amended.
10.8(d) 1994 Stock Option Plan, as amended.
10.9(i) Amendment dated December 7, 1999 to the 1994 Stock Option Plan.
10.10(e) 1996 Employee Stock Purchase Plan.
10
<PAGE>
10.11(f) Employment Agreement dated as of April 1, 1999 between the Registrant
and Mark S. Abrahams.
10.12(f) Employment Agreement dated as of April 1, 1999 between the Registrant
and David N. Terhune.
10.13(j) Letter Agreement dated May 18, 1998 between the Registrant and
David N. Terhune.
10.14(g) Employment Agreement dated as of August 15, 1998 between the
Registrant and Anthony J. Allott.
10.15(j) Letter Agreement dated May 18, 1998 between the Registrant and
Anthony J. Allott.
10.16(f) Employment Agreement dated as of April 1, 1999 between the Registrant
and Amin J. Khoury.
10.17(j) Letter Agreement dated May 18, 1998 between the Registrant and
Amin J. Khoury.
10.18(f) Employment Agreement dated as of April 1, 1999 between the Registrant
and Thomas E. Williams.
10.19(j) Letter Agreement dated May 18, 1998 between the Registrant and
Thomas E. Williams.
10.20(n) Employment Agreement dated as of April 1, 1999 between the Registrant
and Anthony J. Allott.
10.21(n) Employment Agreement dated as of April 1, 1999 between the Registrant
and Gerald M. Haines II.
10.22(h) Employment Agreement dated as of September 19, 1998 between the
Registrant and Gerald M. Haines II.
10.23(l) Amended and Restated Executive Deferred Compensation Plan dated as of
December 31, 1999.
10.24(j) 1999 Supplemental Executive Retirement Plan dated November 30, 1999.
10.25(l) 1999 Deferred Compensation Trust dated November 30, 1999.
10.26.1(k) Equipment Lease Agreement dated as of December 29, 1997 between
Registrant and LaSalle National Leasing Corporation.
10.26.2(m) Letter Agreement dated April 28,1999, amending Equipment Lease
Agreement dated as of December 29, 1997.
10.27(j) Asset Purchase and Sale Agreement dated as of April 6, 1998 between
the Registrant and ProNet Corporation.
21(d) Subsidiaries of the Registrant.
27* Financial Data Schedule.
99(i) Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995.
- --------------
(a) Contained in Exhibits to Registrant's Registration Statement on Form S-1,
as amended (No. 33-40145), filed with the Commission on April 24, 1991.
(b) Contained in Exhibits to the Registrant's Registration Statement on Form
S-8 (No. 33-44449), filed with the Commission on December 18, 1991.
(c) Contained in Exhibits to the Registrant's Registration Statement on Form
S-8 (No. 33-48841), filed with the Commission on June 25, 1992.
(d) Contained in Exhibits to the Registrant's Registration Statement on Form
S-4 (No. 33-78006), filed with the Commission on April 21, 1994.
(e) Contained in Exhibits to the Registrant's Registration Statement on Form
S-8 (No. 33-31464), filed with the Commission on February 16, 1996.
(f) Contained in Exhibits to the Registrant's Form 10-K for the fiscal year
ended September 30, 1996.
(g) Contained in Exhibits to the Registrant's Form 10-K for the fiscal year
ended September 30, 1997.
(h) Contained in Exhibits to the Registrant's Form 10-K for the fiscal year
ended September 30, 1998.
(i) Contained in Exhibits to the Registrant's Form 10-K for the fiscal year
ended September 30, 1999.
(j) Contained in Exhibits to the Registrant's Form 10-Q for the fiscal quarter
ended December 31, 1997.
(k) Contained in Exhibits to the Registrant's Form 10-Q for the fiscal quarter
ended June 30, 1998.
(l) Contained in Exhibits to the Registrant's Form 10-Q for the fiscal quarter
ended December 31, 1999.
(m) Contained in Exhibits to the Registrant's Form 10-Q for the fiscal quarter
ended March 31, 1999.
(n) Contained in Exhibits to the Registrant's Form 10-Q for the fiscal quarter
ended June 30, 1999.
(o) Contained in Exhibits to the Registrant's Form 8-K dated January 2, 1998.
(p) Contained in Exhibits to the Registrant's Form 8-K dated March 6, 1998.
* Filed herewith
The above referenced exhibits are, as indicated, either filed herewith or have
heretofore been filed with the Commission under the Securities Act and the
Exchange Act and are referred to and incorporated herein by reference to such
filings.
11
<PAGE>
B. REPORTS ON FORM 8-K
None.
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.
APPLIED EXTRUSION TECHNOLOGIES, INC.
(Registrant)
By: /s/ Anthony J. Allott
----------------------------------------
Anthony J. Allott
Vice President, Chief Financial Officer
and Treasurer
May 12, 2000
12
<PAGE>
EXHIBIT 10.1.2
CONFORMED COPY
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 12, 2000,
amending the Credit Agreement dated as of April 7, 1994 and amended and
restated as of January 29, 1998, as amended by Waiver and Amendment No. 1
dated as of December 16, 1998, further amended and restated as of March 15,
1999 and further amended by Amendment No. 1 dated as of April 23, 1999 (the
"CREDIT AGREEMENT") among APPLIED EXTRUSION TECHNOLOGIES, INC. (the
"COMPANY"), the LENDERS party thereto (the "LENDERS") and THE CHASE MANHATTAN
BANK, as Administrative Agent (the "ADMINISTRATIVE AGENT").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreement to
increase the amount of working commitments by $10,000,000, modify the
borrowing base provisions, the leverage ratio covenant and the assignment
provisions and permit the disposition of certain assets, all as more fully
set forth below, and to restate the Credit Agreement in its entirely to read
as set forth in the Credit Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Credit Agreement shall, from and after the
date hereof, refer to the Credit Agreement as amended and restated hereby.
SECTION 2. SECTION 1.01 AND EXHIBIT C. (a) The definitions of "Available
PP&E Amount" and "Borrowing Base" in Section 1.01 of the Credit Agreement,
and Exhibit C to the Credit Agreement, are amended to replace the number
"$35,000,000" with the number "$40,000,000". The definition of "Available
PP&E Amount" is further amended to replace the date "March 15, 1999" with the
date "April 12, 2000".
<PAGE>
(b) Section 1.01 of the Credit Agreement is further amended by adding in
the appropriate alphabetical order the following definition:
"TERRE HAUTE TUBULAR ASSETS" shall mean the four seven foot wide and the
two ten foot wide tubular OPP film lines and associated slitters and winders,
and all polymer handling, reclaim, general services and lab equipment, and
various other pieces of ancillary machinery and equipment used in
conjunction with the foregoing, all currently operated at the plant known as
the Tubular Plant located in Terre Haute, Indiana.
SECTION 3. SECTION 9.11. The chart set forth in Section 9.11 of the
Credit Agreement is amended to replace the line currently reading "October 1,
2000 through March 31, 2001 4:00:1" with the following two lines:
October 1, 2000 through December 31, 2000 4.50:1
January 1, 2001 through March 31, 2001 4.00:1
SECTION 4. SECTION 9.12. Section 9.12 of the Credit Agreement is amended
by amending clause (viii) to add after the words "of the Tenter I Plant
Assets" the following:
, of the Terre Haute Tubular Assets
SECTION 5. SECTION 12.06. Section 12.06 of the Credit Agreement is
amended to insert "(a)" at the beginning thereof and to add the following
paragraph (b) at the end thereof.
(b) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") of such Granting Lender, identified as such in writing from time
to time by the Granting Lender to the Administrative Agent and the Company,
the option to provide to the Company all or any part of any Loan that such
Granting Lender would otherwise be obligated to make to the Company,
PROVIDED that (i) nothing herein shall constitute a commitment to make any
Loan by any SPC and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making
of a Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were made by the Granting
Lender. Each party hereto agrees that no SPC shall be liable for any payment
under this Agreement for which a Lender would otherwise be liable, for as
long as, and to the extent, the related Granting Lender makes such payment.
In furtherance of the foregoing, each party hereto hereby agrees that, prior
to the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of any SPC, it will not institute against, or
join
2
<PAGE>
any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section
12.06 any SPC may (i) with notice to, but without the prior written consent
of, the Company or the Administrative Agent and without paying any processing
fee therefor, assign all or portion of its interests in any Loans to its
Granting Lender or to any financial institutions (if consented to by the
Company and the Administrative Agent) providing liquidity and/or credit
facilities to or for the account of such SPC to fund the Loans made by such
SPC or to support the securities (if any) issued by such SPC to fund such
Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or
provider of a surety, guarantee or credit or liquidity enhancement to such
SPC.
SECTION 6. INCREASED COMMITMENTS. The aggregate amount of the Working
Capital Commitments under this Amended and Restated Agreement is increased on
and as of the Effective Date (as hereinafter defined) by $10,000,000 (the
"INCREASE") to $80,000,000, and each Lender's Working Capital Commitment on
and as of the Effective Date is the amount set forth opposite its name on the
signature pages hereof. Each Lender's participation in any Participation
Letter of Credit outstanding prior to the Effective Date and the related
Letter of Credit Liabilities is automatically adjusted on and as of the
Effective Date to reflect such Lender's new Working Capital Commitment
Percentage. On the Effective Date, the principal amount of each Lender's
outstanding Loans shall be adjusted, and such Lender shall make or receive
payments to or from the other Lenders, and such other adjustments shall be
made, as may be required so that all outstanding Loans shall be held by the
Lenders in proportion to their new Working Capital Commitment Percentages.
SECTION 7. REPRESENTATIONS OF COMPANY. The Company represents and
warrants that after giving effect to the foregoing provisions of this
Amended and Restated Credit Agreement (i) the representations and warranties
of the Company and its Subsidiaries made in each Basic Document shall be true
(or, in the case of Basic Documents which are not Financing Documents, true
in all material respects) on and as of the Effective Date (as hereinafter
defined) to the same extent as they would be required to be under Section
7.01(b) on the occasion of any Loan or issuance of any Letter of Credit and
(ii) no Default will have occurred and be continuing on such date.
SECTION 8. GOVERNING LAW. THIS AMENDED AND RESTATED CREDIT AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
3
<PAGE>
SECTION 9. COUNTERPARTS. This Amended and Restated Credit Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument.
SECTION 10. EFFECTIVENESS. This Amended and Restated Credit Agreement
shall become effective, and the Credit Agreement shall have been restated to
read as set forth in the Credit Agreement with the amendments specified
herein, as of the date hereof on the date (the "EFFECTIVE DATE") when the
Administrative Agent shall have received (i) from the Company for the account
of each Lender, an amendment fee equal to the sum of (x) 0.25% of such
Lenders' Working Capital Commitment as in effect prior to the Increase (as
defined above) and (y) 1.0% of such Lender's pro rata share of the Increase,
(ii) an opinion of Ropes & Gray, counsel for the Company (or such other
counsel for the Company as may be acceptable to the Administrative Agent),
substantially to the effect of Exhibit D to the Credit Agreement with
reference to this Amendment and Restatement and the Credit Agreement as
amended and restated hereby, (iii) from each of the Company and the Lenders
a counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Administrative Agent) that such
party has signed a counterpart hereof, and (iv) such other documents and
instruments as the Administrative Agent may reasonably request in connection
with this Amendment and Restatement and the transactions contemplated hereby.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Credit Agreement to be duly executed as of the date first above
written.
APPLIED EXTRUSION
TECHNOLOGIES, INC.
By: /s/ Anthony J. Allott
---------------------------------
Title: Vice President & Chief
Financial Officer
Working Capital Commitment THE CHASE MANHATTAN BANK
$15,500,000.00
By: /s/ Peter A. Dedousis
---------------------------------
Title: Managing Director
5
<PAGE>
Working Capital Commitment LASALLE BUSINESS CREDIT, INC.
$17,714,285.74
By: /s/ John C. Baier
---------------------------------
Title: Vice President
Working Capital Commitment FLEET NATIONAL BANK
$15,500,000.00
By: /s/ H. Ellery Perkinson
---------------------------------
Title: Vice President
Working Capital Commitment PNC BANK, N.A.
$14,857,142.84
By: /s/ Craig T. Sheetz
---------------------------------
Title: Vice President
Working Capital Commitment FIRST UNION NATIONAL BANK
$16,428,571.42
By: /s/ John T. Trainer
---------------------------------
Title: Vice President
6
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