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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to___________
Commission File number 1-9487
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ATLANTIS PLASTICS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 06-1088270
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1870 The Exchange, Suite 200, Atlanta, Georgia 30339
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including Area Code) (800) 497-7659
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No_____.
---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Shares Outstanding at August 1, 2001
------------ -----------------------------
A, $.10 par value 4,854,906
B, $.10 par value 2,676,947
ATLANTIS PLASTICS, INC.
FORM 10-Q
For the Quarter Ended June 30, 2001
INDEX
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page
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a) Consolidated Balance Sheets
as of June 30, 2001 and December 31, 2000........................... 1
b) Consolidated Statements of Income
for the three months and six months ended June 30, 2001 and 2000.... 2
c) Consolidated Statements of Cash Flows
for the six months ended June 30, 2001 and 2000..................... 3
d) Notes to Consolidated Financial Statements
for the six months ended June 30, 2001............................. 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................... 7
Item 3. Quantitative and Qualitative Disclosure About Market Risk.............. 13
Part II. Other Information
Item 1. Legal Proceedings...................................................... 14
Item 4. Submission of Matters to a Vote of Security-Holders.................... 14
Item 6 Exhibits and Reports on Form 8-K....................................... 14
Signatures...................................................................... 15
Part 1. Financial Information
Item 1. Financial Statements
ATLANTIS PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
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June 30, December 31,
2001/(1)/ 2000
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ASSETS
Cash and cash equivalents $ 373 $ 2,445
Accounts receivable, less allowance for doubtful accounts 30,295 25,227
and returned items of $1,379 in 2001 and $1,472 in 2000
Inventories 17,209 18,346
Other current assets 6,696 9,099
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Total current assets 54,573 55,117
Property and equipment, net 70,399 71,846
Goodwill, net of accumulated amortization 47,288 48,133
Other assets 223 511
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Total assets $172,483 $175,607
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 20,110 $ 19,329
Current portion of long-term debt 41,739 19,025
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Total current liabilities 61,849 38,354
Long-term debt, less current portion 51,887 79,534
Deferred income taxes 11,570 11,355
Other liabilities 45 51
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Total liabilities 125,351 129,294
Commitments and contingencies - -
Shareholders' equity:
Class A Common Stock, $.10 par value, 20,000,000 shares authorized,
4,855,329 and 4,856,846 shares issued and outstanding in 2001 and 2000 485 486
Class B Common Stock, $.10 par value, 7,000,000 shares authorized,
2,676,947 shares issued and outstanding in 2001 and 2000 268 268
Additional paid-in capital 10,677 10,679
Notes receivable from sale of Common Stock (1,543) (1,625)
Retained earnings 37,245 36,505
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Total shareholders' equity 47,132 46,313
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Total liabilities and shareholders' equity $172,483 $175,607
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/(1)/ Unaudited
See accompanying notes.
1
ATLANTIS PLASTICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)
--------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
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Net sales $62,493 $65,251 $127,195 $129,725
Cost of sales 53,240 55,718 107,542 109,200
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Gross profit 9,253 9,533 19,653 20,525
Selling, general and administrative expenses 6,699 6,211 13,641 12,787
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Operating income 2,554 3,322 6,012 7,738
Net interest expense (2,446) (2,546) (5,015) (5,052)
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Income before provision for income taxes 108 776 997 2,686
Provision for income taxes (211) (420) (674) (1,271)
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(Loss) income before extraordinary item (103) 356 323 1,415
Extraordinary gain on early extinguishment of debt,
net of income taxes 423 - 423 -
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Net income $ 320 $ 356 $ 746 $ 1,415
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Earnings per share - Basic
(Loss) income before extraordinary item $ (0.01) $ 0.05 $ 0.04 $ 0.19
Extraordinary gain on early extinguishment of debt,
net of income taxes 0.05 - 0.06 -
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Net income $ 0.04 $ 0.05 $ 0.10 $ 0.19
Weighted average number of shares used in
computing earnings per share (in thousands) 7,532 7,520 7,532 7,511
Earnings per share - Diluted
(Loss) income before extraordinary item $ (0.01) $ 0.05 $ 0.04 $ 0.18
Extraordinary gain on early extinguishment of debt,
net of income taxes 0.05 - 0.06 -
--------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.04 $ 0.05 $ 0.10 $ 0.18
Weighted average number of shares used in
computing earnings per share (in thousands) 7,533 7,621 7,538 7,691
See accompanying notes.
2
ATLANTIS PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
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Six Months Ended
June 30,
2001 2000
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Cash Flows From Operating Activities
Net income $ 746 $ 1,415
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 5,060 4,545
Loss (gain) on disposal of assets 4 (6)
Gain on early extinguishment of debt (138) -
Amortization of goodwill 891 791
Loan fee and other amortization 172 258
Interest receivable from shareholder loans (58) (67)
Deferred income taxes 215 198
Change in operating assets and liabilities (1,217) (3,917)
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Total adjustments 4,929 1,802
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Net cash provided by operating activities 5,675 3,217
Cash Flows From Investing Activities
Capital expenditures (3,619) (8,087)
Purchase of business (46) -
Proceeds from asset dispositions 2 67
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Net cash used in investing activities (3,663) (8,020)
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Cash Flows From Financing Activities
Net borrowings under revolving credit agreements 2,500 4,900
Payments on long-term debt (6,715) (1,311)
Payments on notes receivable from shareholders 140 193
Purchase of common stock (9) (389)
Proceeds from exercise of stock options - 248
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Net cash (used in) provided by financing activities (4,084) 3,641
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Net decrease in cash and cash equivalents (2,072) (1,162)
Cash and cash equivalents at beginning of period 2,445 2,288
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Cash and cash equivalents at end of period $ 373 $ 1,126
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See accompanying notes.
3
ATLANTIS PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 2001
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2001.
The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
The information included in this Form 10-Q should be read in conjunction
with Management's Discussion and Analysis and financial statements and footnotes
thereto included in the Atlantis Plastics, Inc. Form 10-K for the year ended
December 31, 2000.
Inventories
The components of inventory consist of the following:
June 30 December 31
(in thousands) 2001 2000
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Raw materials $ 8,396 $ 9,102
Work in process 95 107
Finished products 8,718 9,137
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$17,209 $18,346
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4
Segment Information
The Company has two operating segments: Atlantis Plastic Films and Atlantis
Molded Plastics. Information related to such segments is as follows:
Six Months Ended June 30, 2001
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Atlantis Atlantis
Plastics Molded
(in thousands) Films Plastics Corporate Consolidated
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Net sales $89,328 $37,867 - $127,195
Operating income 4,112 1,900 - 6,012
Identifiable assets 104,089 62,103 $ 6,291/(1)/ 172,483
Capital expenditures 2,168 1,247 204 3,619
Depreciation and
amortization 2,576 2,253 1,294 6,123
Six Months Ended June 30, 2000
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Atlantis Atlantis
Plastics Molded
(in thousands) Films Plastics Corporate Consolidated
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Net sales $ 89,507 $40,218 - $129,725
Operating income 3,947 3,791 - 7,738
Identifiable assets 109,528 60,108 $3,328/(1)/ 172,964
Capital expenditures 5,967 1,726 394 8,087
Depreciation and
amortization 2,343 1,907 1,344 5,594
/(1)/ Corporate identifiable assets are primarily intercompany balances.
5
Earnings Per Share Data
The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated.
Three Months Six Months
Ended June 30 Ended June 30
dollars in thousands, except per share data 2001 2000 2001 2000
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(Loss) income before extraordinary item $ (103) $ 356 $ 323 $1,415
Extraordinary gain on early extinguishment of debt,
net of income taxes 423 - 423 -
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Net income $ 320 $ 356 $ 746 $1,415
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Earnings per share - basic
(Loss) income before extraordinary item $(0.01) $ 0.05 $ 0.04 $ 0.19
Extraordinary gain on early extinguishment of debt,
net of income taxes 0.05 - 0.06 -
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Net income $ 0.04 $ 0.05 $ 0.10 $ 0.19
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Weighted average shares outstanding - basic 7,532 7,520 7,532 7,511
Earnings per share - diluted
(Loss) income before extraordinary item $(0.01) $ 0.05 $ 0.04 $ 0.18
Extraordinary gain on early extinguishment of debt,
net of income taxes 0.05 - 0.06 -
----------------------------------------------------------------------------------------------------------------------------
Net income $ 0.04 $ 0.05 $ 0.10 $ 0.18
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Weighted average shares outstanding 7,532 7,520 7,532 7,511
Net effect of dilutive stock options-based
on treasury stock method 1 101 6 180
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Weighted average shares outstanding - diluted 7,533 7,621 7,538 7,691
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets, effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual impairment tests
in accordance with the Statement. Other intangible assets will continue to be
amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. During 2002, the
Company will apply the non-amortization provisions and perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets as
of January 1, 2002. The Company has not yet determined what effect, if any, the
Statement will have on the financial statements of the Company.
6
Item 2. Management's Discussion And Analysis of Financial Condition And Results
of Operations
Overview
Atlantis Plastics, Inc. ("Atlantis" or the "Company") is a leading U.S.
plastics manufacturer consisting of two operating segments: (i) Atlantis Plastic
Films, which produces polyethylene stretch and custom films used in a variety of
industrial and consumer applications, and (ii) Atlantis Molded Plastics, which
produces molded plastic products for a variety of applications, including
products and components for the appliance, automotive, building supply, and
recreational vehicle industries.
Atlantis Plastic Films, which accounts for approximately 70% of the
Company's net sales, produces (i) stretch films, which are multilayer plastic
films that are used principally to wrap pallets of materials for shipping or
storage; (ii) custom film products, such as high-grade laminating films,
embossed films, and specialty film products targeted primarily to industrial and
packaging markets; and (iii) institutional products such as aprons, gloves, and
tablecloths that are converted from polyethylene films.
Atlantis Molded Plastics, which accounts for approximately 30% of the
Company's net sales, consists of two principal technologies serving a variety of
specific market segments described as follows: (i) injection molded
thermoplastic parts that are sold primarily to original equipment manufacturers
and used in major household goods and appliances, power tools, agricultural and
automotive products, and (ii) a variety of custom and proprietary extruded
plastic parts for both trim and functional applications (profile extrusion) that
are incorporated into a broad range of consumer and commercial products such as
recreational vehicles, residential windows and doors, office furniture, building
supplies, and retail store fixtures.
Selected income statement data for the quarterly periods ended March 31,
2000 through June 30, 2001 are as follows:
2001 2000
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($ in millions) Q2 Q1 Q4 Q3 Q2 Q1
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NET SALES
Plastic Films $43.0 $46.3 $40.9 $44.5 $45.9 $43.6
Molded Plastics 19.5 18.4 16.5 18.7 19.3 20.9
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Total $62.5 $64.7 $57.4 $63.2 $65.2 $64.5
GROSS PROFIT
Plastic Films 14% 17% 15% 11% 13% 15%
Molded Plastics 17% 15% 15% 16% 18% 21%
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Total 15% 16% 15% 13% 15% 17%
OPERATING INCOME
Plastic Films 3% 6% 4% 1% 4% 5%
Molded Plastics 6% 4% 3% 6% 9% 10%
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Total 4% 5% 3% 3% 5% 7%
NET INTEREST EXPENSE $ 2.4 $ 2.6 $ 2.6 $ 2.6 $ 2.6 $ 2.5
7
Results of Operations
Net Sales
The Company's net sales for the quarter and six months ended June 30, 2001
were $62.5 million and $127.2 million, respectively, compared to $65.3 million
and $129.7 million, respectively, for the comparable periods ending June 30,
2000. Atlantis Plastics Films' volume (measured in pounds) for the quarter
ended June 30, 2001 was 6% below the quarter ended June 30, 2000. Six months
films volume for the period ended June 30, 2001 was 2% higher than the
comparable period ended June 30, 2000.
The continued economic slowdown and weakness in the automotive, consumer
durables, and home building sectors continued to adversely impact the molded
products business during the six month period ended June 30, 2001. Net sales
during such period declined to $37.9 million, compared to $40.2 million for the
comparable six month period ended June 30, 2000. During the quarter ended June
30, 2001 net sales in the molded products business increased to $19.5 million
from $19.3 million for the quarter ended June 30, 2000.
Gross Profit and Operating Profit
Atlantis' gross margin for both the quarter and six months ended June 30,
2001 was 15%, compared with 15% and 16%, respectively, for the quarter and six
month period ended June 30, 2000. Operating margin decreased to 4% and 5%,
respectively, for the quarter and six month period ended June 30, 2001, compared
to 5% and 6%, respectively, for the comparable period ended June 30, 2000. In
the plastic films segment, gross margins and operating margins were 14% and 3%,
respectively, for the quarter ended June 30, 2001, compared with 13% and 4%,
respectively, for the quarter ended June 30, 2000. For the six month period
ended June 30, 2001 gross margins and operating margins were 15% and 5%,
respectively, compared to 14% and 4%, respectively, for the six month period
ended June 30, 2000.
In Atlantis' Molded Products segment, the economic slowdown and resulting
decline in volume caused gross margins and operating margins to decline to 17%
and 6%, respectively, for the quarter ended June 30, 2001, compared to 18% and
9%, respectively, for the quarter ended June 30, 2000. For the six month period
ended June 30, 2001 gross margins and operating margins were 16% and 5%,
respectively, compared to 20% and 9%, respectively, for the six month period
ended June 30, 2000.
Selling, General, and Administrative Expense
The Company's selling, general, and administrative ("SG&A") expense
increased to $6.7 million and $13.6 million, respectively, for the quarter and
six month period ended June 30, 2001 from $6.1 million and $12.8 million for the
quarter and six month period ended June 30, 2000. The increase is primarily the
result of increased incentives for sales personnel in the plastic films segment
for the sales volume increase experienced during the first six months of 2001.
Net Interest Expense and Income Taxes
Net interest expense for the quarter and six month period ended June 30,
2001 decreased to $2.4 million and $5.0 million, respectively, compared to $2.6
million and $5.1 million, respectively, for the comparable period ended June 30,
2000. Total debt decreased to $93.6 million at June 30, 2001 from $98.6 million
at December 31, 2000 and $95.3 million at June 30, 2000. Interest rate declines
in the six month period ended June 30, 2001 resulted in a lower average interest
rate on the variable portion of debt, primarily the debt
8
associated with the revolving credit agreement, compared to the average variable
interest rate for the six month period ended June 30, 2000.
The Company's effective income tax rate in both 2001 and 2000 differed from
the applicable statutory rate primarily due to nondeductible goodwill
amortization and the effect of state income taxes.
Income
As a result of the factors described above, operating income decreased to
$2.6 million (4% of net sales) during the quarter ended June 30, 2001, compared
to $3.3 million (5% of net sales) for the quarter ended June 30, 2000. Operating
income decreased to $6.0 million (5% of net sales) for the six month period
ended June 30, 2001, compared to $7.7 million (6% of net sales) for the six
month period ended June 30, 2000. During the quarter ended June 30, 2001 the
Company benefited from an extraordinary gain of $423,000, net of income taxes,
or $0.05 per diluted share associated with the buyback of $6.1 million of the
Company's Senior Notes.
Net income and basic and diluted earnings per share for the quarter and six
months ended June 30, 2001 and 2000 were as follows:
Three Months Six Months
Ended June 30 Ended June 30
dollars in thousands, except per share data 2001 2000 2001 2000
--------------------------------------------------------------------------------------------------------------------------
(Loss) income before extraordinary item $ (103) $ 356 $ 323 $1,415
Extraordinary gain on early extinguishment of debt,
net of income taxes 423 - 423 -
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Net income $ 320 $ 356 $ 746 $1,415
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Earnings per share - basic
(Loss) income before extraordinary item $(0.01) $0.05 $0.04 $ 0.19
Extraordinary gain on early extinguishment of debt,
net of income taxes 0.05 - 0.06 -
--------------------------------------------------------------------------------------------------------------------------
Net income $ 0.04 $0.05 $0.10 $ 0.19
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Earnings per share - diluted
(Loss) income before extraordinary item $(0.01) $0.05 $0.04 $ 0.18
Extraordinary gain on early extinguishment of debt,
net of income taxes 0.05 - 0.06 -
--------------------------------------------------------------------------------------------------------------------------
Net income $ 0.04 $0.05 $0.10 $ 0.18
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9
Liquidity and Capital Resources
At June 30, 2001, the Company had approximately $93.6 million of
outstanding indebtedness, approximately $0.4 million in cash and cash
equivalents, and an additional $9.7 million unused availability under its
revolving credit facility, net of outstanding letters of credit of approximately
$1.3 million. The revolving credit facility expires November 12, 2001, and there
can be no assurance that the commitment will be renewed or extended, or that
another source of financing will be available to the Company on satisfactory
terms. As of August 8, 2001 borrowings on this facility totaled $17.5 million
and unused availability, net of outstanding letters of credit of approximately
$1.3 million, equaled $11.2 million. The Company's principal needs for
liquidity, on both a short and long-term basis, relate to working capital
(principally accounts receivable and inventories), debt service, and capital
expenditures. The Company presently does not have any material commitments for
future capital expenditures.
At June 30, 2001 the Company's current portion of long-term debt increased
by $22.7 million to $41.7 million from the balance of $19.0 million at December
31, 2000. This increase was primarily the result of the reclassification from
long-term debt to current debt of the $18.6 million remaining sinking fund
payment due February 2002 on its 11% Senior Notes. In the quarter ended June 30,
2001, Atlantis repurchased $6.2 million in principal amount, of its 11% Senior
Notes, which reduced the February 2002 sinking fund requirement by the same
amount. In addition, Atlantis is exploring alternatives to refinance its long-
term debt, including its 11% Senior Notes due February 2003 and the remaining
sinking fund payment of $18.6 million due February 2002.
The Company's high debt level presents substantial risks and could have
negative consequences. For example, it could (1) require the Company to dedicate
a substantial portion of its cash flow from operations to repayment of debt,
limiting the availability of cash for other purposes; (2) increase the Company's
vulnerability to adverse general economic conditions by making it more difficult
to borrow additional funds to maintain its operations if the Company suffers
shortfalls in net sales; (3) hinder the Company's flexibility in planning for,
or reacting to, changes in its business and industry by preventing the Company
from borrowing money to upgrade its equipment or facilities; and (4) limit or
impair the Company's ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions, or general corporate
purposes.
In the event that the Company's cash flow from operations is not sufficient
to fund the Company's expenditures or to service its indebtedness, including the
$18.6 million sinking fund payment, the Company would be required to raise
additional funds from possible additional borrowings or through the sale of
assets or subsidiaries. There can be no assurance that any of these sources of
funds would be available in amounts sufficient for the Company to meet its
obligations. Moreover, even if the Company were able to meet its obligations,
its highly leveraged capital structure could significantly limit its ability to
finance its expansion program and other capital expenditures, to compete
effectively, or to operate successfully under adverse economic conditions.
Cash Flows from Operating Activities
For the six months ended June 30, 2001, net cash provided by operating
activities was approximately $5.7 million, compared to $3.2 million for the six
months ended June 30, 2000. The difference between the Company's net income of
$746,000 and its $5.7 million operating cash flow for the six months ended June
30, 2001 was primarily attributable to approximately $6.0 million of
depreciation and amortization expense, a $2.4 million decrease in other assets
resulting primarily from the receipt of resin rebates and tax refunds, an
approximately $1.1 million decrease in inventories, an approximately $781,000
increase in accounts payable and accrued expenses and an approximately $215,000
increase in deferred income taxes. These items were partially offset by an
approximately $5.1 million increase in accounts receivable due to increased net
sales.
10
Cash Flows from Investing Activities
Net cash used in investing activities decreased to $3.7 million for the six
months ended June 30, 2001, compared to $8.0 million for the six months ended
June 30, 2000. This decrease was primarily the result of reduced capital
expenditures (net of dispositions).
Cash Flows from Financing Activities
Net cash used in financing activities for the six months ended June 30,
2001 was $4.1 million, compared with net cash provided by financing activities
of $3.6 million for the six months ended June 30, 2000. The Company's financing
cash flow for the six months ended June 30, 2001 reflects the repurchase of
approximately $6.2 million of the Company's 11% Senior Notes and approximately
$545,000 in payments on other long-term debt. This was partially offset by net
borrowings of $2.5 million under the revolving credit agreements and by the
receipt of approximately $140,000 in interest due from shareholder notes.
11
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statement. Other intangible assets will continue to be amortized over
their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. During 2002, the
Company will apply the non-amortization provisions and perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets as
of January 1, 2002. The Company has not yet determined what effect, if any, the
Statement will have on the financial statements of the Company.
Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of that term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Additional written or oral
forward-looking statements may be made by the Company from time to time, in
press releases, annual or quarterly reports to shareholders, filings with the
Securities Exchange Commission, presentations or otherwise. Statements contained
herein that are not historical facts are forward-looking statements made
pursuant to the safe harbor provisions referenced above.
Forward-looking statements may include, but are not limited to, projections
of net sales, income or losses, or capital expenditures; plans for future
operations; financing needs or plans; compliance with financial covenants in
loan agreements; plans for liquidation or sale of assets or businesses; plans
relating to products or services of the Company; assessments of materiality;
predictions of future events; the ability to obtain additional financing; the
Company's ability to meet obligations as they become due; the impact of pending
and possible litigation; as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties, including, but not limited to,
the impact of leverage, dependence on major customers, fluctuating demand for
the Company's products, risks in product and technology development, fluctuating
resin prices, competition, litigation, labor disputes, capital requirements, and
other risk factors detailed in the Company's Securities and Exchange Commission
filings, some of which cannot be predicted or quantified based on current
expectations.
Consequently, future events and actual results could differ materially from
those set forth in, contemplated by, or underlying the forward-looking
statements. Readers are cautioned not to place undue reliance on any forward-
looking statements contained herein, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates,
primarily as a result of its floating interest rate debt.
The following table summarizes information on debt instruments. The table
presents expected maturity of debt instruments and projected annual average
interest rates. For variable rate debt instruments, average interest rates are
based on one month London Inter-Bank Offered (LIBOR), prime, and commercial
paper rates as of July 31, 2001. The fair market value of the Senior Notes is
based on quoted market price as of July 31, 2001. The carrying value of the
Company's other long-term debt approximates its fair market value.
Interest Rate Sensitivity
Principal (Notional) Amount by Expected Maturity
Average Interest Rate
($ 000)
Value as of
2001 2002 2003 2004 2005 Thereafter Total June 30, 2001
--------------------------------------------------------------------------------------------------------------------
Senior Notes
- Maturity $ - $18,605 $50,000 $ - $ - $ - $68,605 $68,605
- Average Interest Rate 11% 11% 11%
Other Long-Term Debt - Fixed Rate
- Maturity $ 87 $ 179 $ 126 $ 124 $ 143 $ 212 $ 871 $ 871
- Average Interest Rate 6.51% 6.53% 6.58% 6.58% 6.58% 6.58%
Other Long-Term Debt - Variable Rate*
- Maturity $21,046 $ 2,854 $ 336 $ 125 $ 660 $ - $25,021 $25,021
- Average Interest Rate 6.40% 5.97% 5.59% 5.50% 5.50%
*Based on LIBOR plus spreads of 1.75% to 2.75%, prime plus spreads of 1.0% and
commercial paper plus 2.7% (all rates as of July 31, 2001)
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Part II. Other Information
Item 1. Legal Proceedings
The Company is not a party to any legal proceeding other than routine litigation
incidental to its business, none of which is material.
Item 4. Submission of Matters to a Vote of Security-Holders
(A) The Registrant held its Annual Meeting of Shareholders on May 24, 2001.
(B) Not required
(C) The matter voted on at the Annual Meeting of Shareholders, and the
tabulation of votes on such matter are as follows.
Election of Directors
Name For Withheld
---------------------------------------------------------------------
CLASS A
-------
Charles D. Murphy, III 4,436,180 2,829
Chester B. Vanatta 4,436,180 2,829
CLASS B
-------
Cesar L. Alvarez 1,746,937 -0-
Anthony F. Bova 1,746,937 -0-
Phillip T. George, M.D. 1,746,937 -0-
Larry D, Horner 1,746,937 -0-
Earl W. Powell 1,746,937 -0-
Jay Shuster 1,746,937 -0-
(D) Not applicable
Item 6. Exhibits and Reports on Form 8-K
(A) EXHIBITS
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter ended June 30, 2001.
Items 3 and 5 are not applicable and have been omitted.
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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.
ATLANTIS PLASTICS, INC.
Date: August 14, 2001 By: /s/ Anthony F. Bova
-------------------
ANTHONY F. BOVA
President and Chief Executive Officer
Date: August 14, 2001 By: /s/ Paul G. Saari
-----------------
PAUL G. SAARI
Senior Vice President, Finance and
Chief Financial Officer
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