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, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________to__________________ Commission File number 1-9487 ATLANTIS PLASTICS, INC. (Exact name of registrant as specified in its charter) FLORIDA 06-1088270 ------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1870 THE EXCHANGE, SUITE 200, ATLANTA, GEORGIA 30339 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including Area Code) (800) 497-7659 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X. No_____. Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. CLASS SHARES OUTSTANDING AT JUNE 30, 1999 ------------- ---------------------------- A, $.10 par value 4,784,078 B, $.10 par value 2,803,444 ATLANTIS PLASTICS, INC. TABLE OF CONTENTS PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998.............................1 Condensed Consolidated Statements of Income for the six months ended June 30, 1999 and 1998.........................2 Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998.........................3 Notes to Consolidated Financial Statements......................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................7 PART II. OTHER INFORMATION Item 1 - Legal Proceedings................................................12 Item 4 - Submission of Matters to a Vote of Security-Holders..............12 Item 6 - Exhibits and Reports on Form 8-K.................................12 SIGNATURES...................................................................13 ATLANTIS PLASTICS, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JUNE 30, DECEMBER 31, 1999 1998 (UNAUDITED) (NOTE A) ----------- ----------- ASSETS Cash and cash equivalents.......................................... $2,635 $2,879 Accounts receivable, net........................................... 28,239 25,801 Inventories........................................................ 16,393 14,918 Other current assets............................................... 6,830 8,376 ----------- ----------- Current assets................................................. 54,097 51,974 Property and equipment, net........................................ 61,280 58,403 Goodwill, net of accumulated amortization.......................... 46,604 47,390 Other assets....................................................... 1,237 1,465 ----------- ----------- Total assets................................................... $163,218 $159,232 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses.............................. $23,438 $22,677 Current portion of long-term debt.................................. 2,528 2,538 ----------- ----------- Current liabilities............................................ 25,966 25,215 Long-term debt, less current portion............................... 83,372 84,620 Deferred income taxes.............................................. 9,761 10,149 Other liabilities.................................................. 281 544 ----------- ----------- Total liabilities.............................................. 119,380 120,528 ----------- ----------- Commitments and contingencies - - Shareholders' equity: Class A Common Stock, $.10 par value, 20,000,000 shares authorized, 4,784,078 and 4,538,054 shares issued and outstanding in 1999 and 1998................................................ 479 454 Class B Common Stock, $.10 par value, 7,000,000 shares authorized, 2,803,444 and 2,918,043 shares issued and outstanding in 1999 and 1998................................................ 280 292 Additional paid-in capital....................................... 10,214 9,436 Notes receivable from sale of Common Stock....................... (1,355) (960) Retained earnings................................................ 34,220 29,482 ----------- ----------- Total shareholders' equity..................................... 43,838 38,704 ----------- ----------- $163,218 $159,232 =========== =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). 1 ATLANTIS PLASTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- --------------------- 1999 1998 1999 1998 --------------------- --------------------- Net sales........................................................... $65,052 $64,080 $124,025 $128,507 Cost of sales....................................................... 51,830 52,927 98,389 106,065 -------- -------- -------- -------- Gross profit..................................... 13,222 11,153 25,636 22,442 Selling, general and administrative expenses........................ 6,490 6,377 12,990 12,350 -------- -------- -------- -------- Operating income................................. 6,732 4,776 12,646 10,092 Net interest (expense).............................................. (2,285) (2,696) (4,600) (5,444) -------- -------- -------- -------- Income before income taxes....................... 4,447 2,080 8,046 4,648 Income tax (provision).............................................. (1,816) (504) (3,309) (1,385) -------- -------- -------- -------- Net income....................................... $2,631 $1,576 $4,737 $3,263 ======== ======== ======== ======== Net Income per Common Share Basic $0.35 $0.21 $0.63 $0.44 Diluted $0.33 $0.20 $0.61 $0.42 Weighted-average number of shares used in computing net income per share (in thousands): Basic 7,585 7,479 7,538 7,413 Diluted 7,897 7,833 7,821 7,736 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). 2 ATLANTIS PLASTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - IN THOUSANDS) SIX MONTHS ENDED JUNE 30, ------------------- 1999 1998 ------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ........................................................ $4,737 $3,263 ------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation................................................... 4,154 3,963 Amortization of goodwill....................................... 793 786 Loan fee and other amortization................................ 228 230 Interest receivable from shareholder loans.................... (51) - Deferred income taxes.......................................... (388) 220 Changes in operating assets and liabilities, net............... (1,869) 2,166 ------- -------- Total adjustments.......................................... 2,867 7,365 ------- -------- Net cash provided by operating activities................ 7,604 10,628 ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures............................................. (7,040) (3,515) Proceeds from asset dispositions................................. - 118 ------- -------- Net cash (used in) investing activities.................. (7,040) (3,397) ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt....................................... (1,258) (1,982) Payments on notes receivable from shareholders................... 75 - Purchase of Common Stock and Options............................. - (1,818) Proceeds from exercise of stock options.......................... 375 1,184 ------- -------- Net cash (used in) provided by financing activities..... (808) (2,616) ------- -------- Net increase in cash and cash equivalents.......................... (244) 4,615 Cash and equivalents at beginning of period........................ 2,879 8,346 ------- -------- Cash and equivalents at end of period.............................. $2,635 $12,961 ======= ======== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). 3 ATLANTIS PLASTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1999 NOTE A. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Atlantis Plastics, Inc. annual report on Form 10-K for the year ended December 31, 1998. NOTE B. INVENTORIES The components of inventory consist of the following: JUNE 30 DECEMBER 31 1999 1998 -------------------------------- IN THOUSANDS Raw Materials $ 8,891 $ 7,758 Work in Process 74 95 Finished Products 7,428 7,065 -------- --------- $ 16,393 $ 14,918 ======== ========= 4 NOTE C. SEGMENT INFORMATION The Company has two operating segments: Atlantis Plastic Films and Atlantis Molded Plastics. Information related to such segments is as follows: SIX MONTHS ENDED JUNE 30, 1999 SEGMENT --------------------------------------------------------- ATLANTIS ATLANTIS PLASTICS MOLDED FILMS PLASTICS CORPORATE CONSOLIDATED ----- -------- --------- ------------ IN THOUSANDS Net Sales $ 85,215 $ 38,810 - $124,025 Operating Income 9,570 3,076 - 12,646 Identifiable Assets 111,603 57,124 $ (5,509) 163,218 Capital Expenditures 3,498 2,049 1,493 7,040 Depreciation and Amortization 2,313 1,762 872 4,947 SIX MONTHS ENDED JUNE 30, 1998 SEGMENT --------------------------------------------------------- ATLANTIS ATLANTIS PLASTICS MOLDED FILMS PLASTICS CORPORATE CONSOLIDATED ----- -------- --------- ------------ IN THOUSANDS Net Sales $ 89,269 $ 39,238 - $ 128,507 Operating Income 8,481 1,611 - 10,092 Identifiable Assets 107,582 53,552 10,392 171,526 Capital Expenditures 953 1,795 767 3,515 Depreciation and Amortization 2,333 1,612 804 4,749 5 NOTE D. EARNINGS PER SHARE DATA The following table sets forth the computation of basic and diluted earnings per share for the periods indicated. SIX MONTHS ENDED JUNE 30 ---------------------- 1999 1998 ---- ---- IN THOUSANDS, EXCEPT PER SHARE DATA BASIC: Net income $ 4,737 $ 3,263 Weighted average shares outstanding 7,536 7,413 ------- ------- BASIC EARNINGS PER SHARE $0.63 $ 0.44 ======= ======= DILUTED: Net income $4,737 $ 3,263 Weighted average shares outstanding 7,536 7,413 Net effect of dilutive stock options-based on treasury stock method 285 323 ------ ------- 7,821 7,736 DILUTED EARNINGS PER SHARE $0.61 $0.42 ====== ======= 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Atlantis is a leading U.S. manufacturer of polyethylene stretch and custom films used in a variety of industrial and consumer applications and molded plastic products for the appliance, automotive, building supply, and recreational vehicle industries. Atlantis Plastic Films accounts for approximately 70% of the Company's net sales and produces: (i) stretch films (multilayer plastic films that are used principally to wrap pallets of materials for shipping or storage), (ii) custom film products (high-grade laminating films, embossed films, and specialty film products targeted primarily to industrial and packaging markets), and (iii) institutional products such as aprons, gloves, and tablecloths which are converted from polyethylene films. Atlantis Molded Plastics accounts for approximately 30% of the Company's net sales and employs two principal technologies, serving a wide variety of specific market segments, described as follows: (i) injection molded thermoplastic parts that are sold primarily to original equipment manufacturers and used in major household goods and appliances, power tools, building supplies, and agricultural and automotive products, and (ii) a variety of custom and proprietary extruded plastic parts for both trim and functional applications (profile extrusion) that are incorporated into a broad range of consumer and commercial products such as recreational vehicles, residential windows and doors, office furniture, building supplies, and retail store fixtures. All material intercompany balances and transactions have been eliminated. Certain amounts included in prior period financial statements have been reclassified to conform with the current period presentation. Selected income statement data for the quarterly periods ended March 31, 1998 through June 30, 1999 are as follows: ($ in millions) 1999 1998 ------------------------- ------------------------------------------------------- Q2 Q1 Q4 Q3 Q2 Q1 ----------- ----------- ----------- ----------- ----------- ---------- NET SALES Plastic Films $44.5 $40.7 $42.7 $44.3 $44.4 $44.9 Molded Plastics 20.5 18.3 16.7 18.7 19.7 19.5 ----------- ----------- ----------- ----------- ----------- ---------- TOTAL $65.0 $59.0 $59.4 $63.0 $64.1 $64.4 =========== =========== =========== =========== =========== ========== PERCENTAGE OF NET SALES GROSS PROFIT Plastic Films 21% 22% 22% 20% 20% 19% Molded Plastics 19% 18% 17% 11% 12% 15% ----------- ----------- ----------- ----------- ----------- ---------- TOTAL 20% 21% 21% 18% 17% 18% =========== =========== =========== =========== =========== ========== OPERATING INCOME Plastic Films 11% 12% 12% 11% 9% 9% Molded Plastics 9% 7% 7% 1% 4% 6% ----------- ----------- ----------- ----------- ----------- ---------- TOTAL 10% 10% 10% 8% 8% 8% =========== =========== =========== =========== =========== ========== NET INTEREST EXPENSE $2.3 $2.3 $2.4 $2.6 $2.7 $2.7 =========== =========== =========== =========== =========== ========== 7 RESULTS OF OPERATIONS The Company's 1999 second quarter and year-to-date net sales were $65.1 million and $124.0 million compared with $64.1 million and $128.5 million for the same periods of 1998. Atlantis Plastic Film volume for the second quarter and first half of 1999 were 2% above 1998 levels. First half net sales for Atlantis Plastic films were 5% below 1998 due to lower average selling prices resulting from declines in polyethylene resin prices. Atlantis Molded Products' net sales for the second quarter and first half of 1999 were $20.5 million and $38.8 million, compared with $19.7 million and $39.2 million respectively. Atlantis' second quarter and year-to-date gross margins equaled 20% and 21% respectively compared with 17% for both periods of 1998. Molded plastics accounted for most of these improvements, with gross margins in the second quarter and year-to-date periods of 1999 of 19% and 18% respectively, compared to 12% and 13% for the same periods of 1998. These improvements were attributed to improved first run yields, faster throughput, and reduced rework/repair. Additionally, sales volume for the 1999 second quarter at the Warren, OH injection molding plant increased by 6% over 1998 and 15% over the first quarter of 1999. Gross margins in Plastic Films also increased over 1998 results, reporting at 21% and 22% for these two 1999 periods, compared with 20% and 19% for 1998. Improved resin formulations contributed to these results. Selling, general, and administrative ("SG&A") expenses for the second quarter of 1999 were $6.5 million compared with $6.4 million in 1998. For the first half, SG&A expense was $13.0 million compared to $12.4 million for 1998. These increases were primarily attributable to increased depreciation associated with the Company's new distribution, accounting, and resource planning system installed to date in 8 of 12 locations, and non recurring adjustments which reduced 1998 SG&A expense, including a 1998 rent adjustment associated with the 1998 restructuring of the Company's agreement with Trivest, Inc. First quarter and year-to-date net interest expense of $2.3 million and $4.6 million respectively was about 15% lower than 1998. These decreases were a result of reduced debt levels in 1999 and the third quarter 1998 repurchase of $14.7 million of the Company's Senior Notes. Effective income tax rates differed from applicable statutory rates in both 1999 and 1998, primarily due to nondeductible goodwill amortization. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital at June 30, 1999 totaled $28.1 million (including cash and cash equivalents of $2.6 million), compared to $26.8 million (including cash and cash equivalents of $2.9 million) at December 31, 1998. On June 30, 1999 there were no borrowings on the Company's revolving credit facility. Unused availability, net of outstanding letters of credit of approximately $1.3 million, equaled $13.7 million at June 30, 1999. The credit agreement was renewed in May, 1999 and expires November 22, 1999. As previously announced, the Company is in the final stages of selecting an area for a west coast stretch facility. Additionally, in the second quarter of 1999, it placed an order for a cast extrusion line for delivery to its stretch film facility in Nicholasville, KY. Present plans call for delivery late in 1999 with full production commencing in the first quarter of 2000. The Company's primary needs for liquidity, on both a short- and long-term basis, relate to working capital (principally accounts receivable and inventories), debt service, and capital expenditures. The Company presently does not have any material commitments for future capital expenditures, and expects to meet its short- and long- 8 term liquidity needs with cash on hand, funds generated from operations, and funds available under its revolving credit facility. CASH FLOWS FROM OPERATING ACTIVITIES In the first six months of 1999, net cash provided by operating activities was approximately $7.6 million, compared to $10.6 million for the same period last year. Accounts receivable increased $2.4 million during the first half of 1999 due primarily to higher film prices resulting from a $0.13 per pound increase in polyethylene resin prices during this period. Inventory levels increased $1.5 million in the first half of 1999 due primarily to (1) the resin price increases cited above, and (2) increase levels of inventory to protect against resin shortages (sales control programs have been prevalent in the resin industry since early spring, 1999). During the first half of 1998, inventories and accounts receivable decreased by $1.9 million and $0.4 million as resin prices were falling during that period. CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities during the first six months of 1999 consisted of capital expenditures totaling $7.0 million, compared to capital expenditures (net of dispositions) of $3.4 million for the same period last year. CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities for the first six months of 1999 was $808,000, compared to $2.6 million during this period last year. Proceeds from the exercise of stock options equaled $375,000 during the first six months of 1999, compared to $1.2 million during the same period in 1998. During the first half of 1998, $1.8 million was used to repurchase the Company's Common stock compared to none in 1999. YEAR 2000 ISSUES As part of the Company's ongoing capital expenditure program, Atlantis has been in the process of implementing a new distribution, accounting, and resource planning ("ERP") system ("QAD") which is designed to improve its operating and financial controls. QAD is Year 2000 compliant. At the beginning of July 1999, QAD was successfully installed in the Company's three stretch film plants. To date, QAD has also been implemented in the Company's two custom film plants, one institutional products plant, and one profile extrusion plant, as well as its headquarters in Atlanta. Three of the Company's Molded plants are operating under an ERP system ("DTR") which was upgraded during the 4th quarter of 1998 to a Y2K compliant version of DTR. Therefore, as of this date, 11 of the Company's 12 facilities are operating with Y2K compliant ERP systems. The major phases associated with installing these systems are: (1) ASSESSMENT, including defining, scoping the problem and solution; (2) FIXING, including programming and procedure development; (3) TESTING, including evaluation of the testing phase; and (4) IMPLEMENTATION, including installation and "going live". One other Molded plant (Warren, OH) is operating under two small PC based systems ("Solomon PC" for general ledger, accounts receivable, and accounts payable, and "Auditors Advisor" for inventory management and logistics). Auditors Advisory has been upgraded to a Y2K compliant version. A Y2K compliant upgrade for Solomon PC is commercially available. Atlantis is planning to install QAD for 9 accounting functions in this plant in the 3rd quarter of 1999. Should this last conversion be delayed, the Company intends to install the Y2K compliant commercially available upgrade to Solomon PC and subsequently convert this plant to QAD. The assessment phase for Warren, OH has been completed for installing QAD as well as an upgrade of the plant's Solomon PC system. The Warren plant also has a shop floor system that the Company plans to convert to a Y2K compliant status by October 31, 1999. Upgrades to the Company's PC's and client servers necessary to make them Y2K compliant have been completed. Atlantis' e-mail system was changed to a Y2K compliant system earlier in 1999 and installed with all users except 5 stretch film salespeople. These salespeople will be converted to the new e-mail system in the next two months. All of the Company's telephone systems are now Y2K compliant except for two locations. The only remaining phase necessary to upgrade these two locations is implementation which should be completed by September 30, 1999. In the Company's 11 manufacturing facilities and its headquarters in Atlanta, there are approximately 125 types/models of equipment with programmable logic chips ("PLC's") which may require adjustment to make them Y2K compliant. The assessment phase has been completed on all of these devices. The testing, fixing, and implementation (where necessary) phases have been completed on approximately 40% of the other devices and are expected to be completed on all devices by September 30, 1999. With regard to evaluating the Y2K compliant status of the Company's significant suppliers and customers, Atlantis presently is in the assessment phase. Certain major suppliers and customers have been questioned on an informal basis over the past nine months. All of these informal interviews have indicated a plan to be Y2K compliant by the end of the third quarter of 1999. All major customers will be contacted by August 31, 1999 with responses expected back to Atlantis by September 30, 1999. All major suppliers have been contacted and responses are expected back to Atlantis by July 31, 1999. By September 30,1999 the assessment phase should be completed and any necessary contingency plans developed. The Company has evaluated worst case scenarios regarding Y2K compliance. The Company has two critical suppliers of resin to its stretch film business. The Company has three critical suppliers of resin to its custom film business. The Company receives most of its plastic resin via railcar. As noted in the Company's Form 10-K for the year ended December 31, 1998, Whirlpool Corporation represented approximately 12% of the Company's net sales for 1998. The Company's two Tulsa, OK stretch film plants account for approximately 25% of the Company's sales and production while its Nicholasville, KY stretch film facility accounts for approximately 20% of the Company's sales and production. In the unlikely event that one of these resin suppliers could not ship resin, the railroad system used to deliver resin to the Company's facilities fails to deliver resin, Whirlpool Corporation is not Y2K compliant by January 1, 2000, or there is a power outage affecting the above mentioned facilities, and this unlikely event is of longer than a short term duration, the Company could be affected in a materially adverse manner. Contingency plans for these and other scenarios are expected to be developed by September 30, 1999. As most of the upgrades and systems conversions (including QAD) discussed above would have been implemented without the Y2K compliance issue, incremental costs associated with Y2K related changes are not expected to exceed $0.7 million in 1998 and 1999. 10 FORWARD LOOKING STATEMENTS This Form 10-Q contains certain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, projections of revenues, income or losses, capital expenditures, plans for future operations, financing needs or plans, compliance with financial covenants in loan agreements, plans for liquidation or sale of assets or businesses, plans relating to products or services of the Company, assessments of materiality, predictions of future events, the ability to obtain additional financing, the Company's ability to meet obligations as they become due, the impact of pending and possible litigation, as well as assumptions relating to the foregoing. In addition, when used in this discussion, the words "anticipates," "believes," "estimates," "expects," "intends," "plans" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, including, but not limited to, the impact of leverage, dependence on major customers, fluctuating demand for the Company's products, risks in product and technology development, fluctuating resin prices, competition, litigation, labor disputes, capital requirements, and other risk factors detailed in the Company's Securities and Exchange Commission filings, some of which cannot be predicted or quantified based on current expectations. 11 Part II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is not a party to any legal proceeding other than routine litigation incidental to its business, none of which is material. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS (a) The Registrant held its Annual Meeting of Shareholders on May 25, 1999. (b) Not Required (c) The matter voted on at the Annual Meeting of Shareholders, and the tabulation of votes on such matter are as follows: ELECTION OF DIRECTORS --------------------- NAME FOR WITHHELD ---- --- -------- CLASS A Charles D. Murphy, III 4,563,387 1,086 Chester B. Vanatta 4,563,387 1,086 CLASS B Cesar L. Alvarez 2,689,446 -0- Anthony F. Bova 2,689,446 -0- Phillip T. George, M.D. 2,689,446 -0- Larry D. Horner 2,689,446 -0- Earl W. Powell 2,689,446 -0- Paul Rudovsky 2,689,446 -0- (d) Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 10.1 Sixteenth Amendment to Heller Credit Agreement, dated as of May 22, 1999 27.1 Financial Data Schedule ____________________ (b) Reports on Form 8-K: During the quarter for which this Quarterly Report on Form 10-Q is filed, no reports on Form 8-K were filed by the Registrant. 12 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: July 30, 1999 /S/ ANTHONY F. BOVA ------------------- ANTHONY F. BOVA President and Chief Executive Officer Date: July 30, 1999 /S/ PAUL RUDOVSKY ----------------- PAUL RUDOVSKY Executive Vice President, Finance and Administration 13 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 10.1 Sixteenth Amendment to Heller Credit Agreement, dated as of May 22, 1999 27.1 Financial Data Schedule EXHIBIT 10.1 SIXTEENTH AMENDMENT TO CREDIT AGREEMENT This Fifteenth Amendment to Credit Agreement ("Amendment") is made and entered into as of May ___, 1999 by and between ATLANTIS PLASTICS, INC. ("Borrower"), HELLER FINANCIAL, INC., in its capacity as Agent for the Lenders party to the Credit Agreement described below ("Agent") and the Lenders which are signatories hereto. WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit Agreement dated as of February 22, 1993 and all amendments thereto (as such agreement has from time to time been amended, supplemented or otherwise modified, the "Agreement"); and WHEREAS, the parties desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the Agreement and this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. DEFINITIONS. Capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Agreement. 2. AMENDMENTS. Subject to the conditions set forth below, the Agreement is amended as follows: (A) Subsection 1.1 is hereby amended by adding the following definition to subsection 1.1 in its appropriate place: "Sixteenth Amendment Effective Date" means May ___, 1999." (B) Subsection 2.1(A) is amended by deleting the first paragraph of subsection 2.1(A) in its entirety and inserting the following in lieu thereof: "REVOLVING LOAN. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrower herein set forth, each Lender agrees to lend to Borrower from time to time during the period from the Fifteenth Amendment Effective Date to and excluding the Expiry Date, its Pro Rata Share of the Revolving Loan. The aggregate amount of all Revolving Loan Commitments shall be $15,000,000, as reduced from time to time pursuant to subsection 2.4. Amounts borrowed under this subsection 2.1(A) may be repaid and reborrowed at any time prior to the Expiry Date. No Lender shall have any obligation to make advances under this subsection 2.1(A) to the extent any requested advance would cause the principal balance of the Revolving Loans then outstanding to exceed the Maximum Revolving Loan Amount; provided that Lenders may, in their sole discretion, elect from time to time to make Loans in excess of the Maximum Revolving Loan Amount." (C) Subsection 2.5 is amended by deleting the first sentence of subsection 2.5 in its entirety and inserting the following in lieu thereof: "This Agreement shall be effective until November 22, 1999 (the "Termination Date"), and the Commitments shall terminate on said date." (D) Subsection 6.2 is hereby amended by deleting subsection 6.2 in its entirety and inserting the following in lieu thereof: "6.2 FIXED CHARGE COVERAGE. The Fixed Charge Coverage, on a trailing twelve (12) Fiscal Month basis, shall not be less than 1.0 for the Fiscal Quarter ending June 30, 1999 and each Fiscal Quarter thereafter." (E) Subsection 6.5 is hereby amended by deleting subsection 6.5 in its entirety and inserting the following in lieu thereof: "6.5 EBIDAT. EBIDAT, on a trailing twelve (12) Fiscal Month basis, shall not be less than $27,500,000 for the Fiscal Quarter ending June 30, 1999 and each Fiscal Quarter thereafter." 3. COVENANTS. Notwithstanding the limitations of subsection 7.11, Borrowers may make payments of fees and compensation to Trivest, Inc. and its officers and subsidiaries, for May 22, 1999 through November 22, 1999, so long as such payments do not exceed 105% of the total amount paid from May 22, 1999 through November 22, 1999. 4. CONDITIONS. The effectiveness of this Amendment is subject to the following conditions precedent (unless specifically waived in writing by Agent): (a) Borrower shall have executed and delivered this Amendment, and such other documents and instruments as Agent may require shall have been executed and/or delivered to Agent; (b) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Agent and its legal counsel; (c) No Default or Event of Default shall have occurred and be continuing; (d) Borrower shall have executed and delivered to Agent an Amended Revolving Note in the amount of $15,000,000; and (e) Borrower shall have paid Agent a closing fee in the amount of $18,750. 5. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter into this Amendment, Borrower represents and warrants to Agent and Lenders that (a) the execution, delivery and performance of this Amendment has been duly authorized by all requisite corporate action on the part of Borrower and that this Amendment has been duly executed and delivered by Borrower and (b) each of the representations and warranties set forth in Section 4 of the Agreement (other than those which, by their terms, specifically are made as of certain date prior to the date hereof) are true and correct in all material respects as of the date hereof. 6. SEVERABILITY. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 2 7. REFERENCES. Any reference to the Agreement contained in any document, instrument or agreement executed in connection with the Agreement shall be deemed to be a reference to the Agreement as modified by this Amendment. 8. COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument. 9. RATIFICATION. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions of the Agreement and shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Agreement. Except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement are ratified and confirmed and shall continue in full force and effect. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal and delivered by their respective duly authorized officers on the date first written above. ATLANTIS PLASTICS, INC. By:____________________________ Name Printed: Paul Rudovsky Title:_________________________ HELLER FINANCIAL, INC., Individually and as Agent By:___________________________ Name Printed: Scott E. Gast Title: Assistant Vice President 4 ACKNOWLEDGMENT Each of Atlantis Molded Plastics, Inc., Atlantis Plastic Injection Molding, Inc. (f/k/a Cyanede Plastics, Inc.), Atlantis Plastic Films, Inc. and Pierce Plastics, Inc. hereby acknowledges and consents to the terms of this Agreement and hereby affirms, ratifies and confirms all of the terms and provisions of the such entity's Guaranty in favor of Agent and Lenders. ATLANTIS MOLDED PLASTICS, INC. By:___________________________ Name Printed: Paul Rudovsky Title:________________________ ATLANTIS PLASTIC INJECTION MOLDING, INC. By:___________________________ Name Printed: Paul Rudovsky Title:________________________ ATLANTIS PLASTIC FILMS, INC. By:___________________________ Name Printed: Paul Rudovsky Title:________________________ PIERCE PLASTICS, INC. By:___________________________ Name Printed: Paul Rudovsky Title:________________________ 5 -----END PRIVACY-ENHANCED MES