Atlantis Plastics: 10-Q Filing 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, 1997 ------------- 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 incorporation or organization) (I.R.S. Employer Identification No.) 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, 1997 ------------ ---------------------------- A, $.10 par value 4,205,028 B, $.10 par value 2,861,979 ATLANTIS PLASTICS, INC. TABLE OF CONTENTS PAGE NO. -------- PART I. FINANCIAL INFORMATION Consolidated Income Statements (Unaudited) for the six months ended June 30, 1997 and 1996............... 1 Consolidated Balance Sheets (Unaudited) as of June 30, 1997 and December 31, 1996.................... 2 Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 1997 and 1996............... 3 Notes to Consolidated Financial Statements (Unaudited)........ 4 Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 7 PART II. OTHER INFORMATION Item 1 - Legal Proceedings................................... 11 Item 6 - Exhibits and Reports on Form 8-K.................... 11 SIGNATURES............................................................. 12 ATLANTIS PLASTICS, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (Unaudited - In thousands, except per share data) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------- ---------------------- 1997 1996 1997 1996 ----------------------- ---------------------- Net sales........................................................... $65,530 $70,576 $129,853 $134,849 Cost of sales....................................................... 56,458 57,684 111,564 110,456 ----------- ---------- ---------- ----------- Gross profit..................................... 9,072 12,892 18,289 24,393 Selling, general and administrative expenses........................ 6,426 7,214 12,886 14,694 Impairment of long-lived assets and restructuring charges........... - - 960 - ---------- ---------- ---------- ----------- Operating income ................................. 2,646 5,678 4,443 9,699 Net interest expense................................................ (2,879) (3,255) (5,716) (6,505) ----------- ---------- ---------- ----------- Income (loss) from continuing operations before income taxes..................................... (233) 2,423 (1,273) 3,194 Income tax (provision) benefit...................................... (79) (1,079) 248 (1,515) ---------- ---------- ---------- ----------- Income (loss) from continuing operations ......... (312) 1,344 (1,025) 1,679 Income (loss) from discontinued operations, net of income taxes ... - (47) - (47) ---------- ---------- ---------- ----------- Net income (loss) ................................ (312) 1,297 (1,025) 1,632 Preferred stock dividends........................................... - (37) - (73) ---------- ---------- ---------- ----------- Income (loss) applicable to common shares and equivalents.................................... $ (312) $ 1,260 $ (1,025) $ 1,559 ========== ========== ========== =========== INCOME (LOSS) PER COMMON SHARE: Continuing operations............................................... ($0.04) $0.17 ($0.15) $0.22 Discontinued operations............................................. - - - (0.01) ---------- ---------- ---------- ----------- Net income (loss) ................................ ($0.04) $0.17 ($0.15) $0.21 ========== ========== ========== =========== Weighted average shares outstanding................................. 7,062 7,479 7,068 7,452 ========== ========== ========== =========== See accompanying notes to consolidated financial statements (unaudited). 1 ATLANTIS PLASTICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited - In thousands) JUNE 30, DECEMBER 31, 1997 1996 ASSETS ------------ ------------ Cash and equivalents..................................................... $5,041 $15,905 Accounts receivable, net................................................. 27,726 28,364 Inventories.............................................................. 18,934 16,984 Other current assets..................................................... 5,825 4,825 --------- --------- Current assets....................................................... 57,526 66,078 Property and equipment, net.............................................. 58,556 58,523 Goodwill, net of accumulated amortization................................ 49,746 50,532 Other assets............................................................. 2,429 2,768 --------- --------- $168,257 $177,901 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses.................................... $22,592 $27,131 Current portion of long-term debt........................................ 2,527 2,517 --------- --------- Current liabilities.................................................. 25,119 29,648 Long-term debt, less current portion..................................... 104,041 105,365 Deferred income taxes.................................................... 7,161 6,886 Other liabilities........................................................ 945 1,093 --------- --------- Total liabilities.................................................... 137,266 142,992 --------- --------- Commitments and contingencies Shareholders' equity: Series A convertible preferred stock, $1.00 par value, 20,000 shares authorized, issued and outstanding in 1996 ......................... - 2,000 Class A common stock, $.10 par value, 20,000,000 shares authorized, 4,205,028 and 4,225,823 shares issued and outstanding in 1997 and 1996 421 423 Class B common stock, $.10 par value, 7,000,000 shares authorized, 2,861,979 and 2,899,977 shares issued and outstanding in 1997 and 1996 286 290 Additional paid-in capital.............................................. 6,988 6,968 Retained earnings....................................................... 23,296 25,228 --------- --------- Total shareholders' equity............................................ 30,991 34,909 --------- --------- $168,257 $177,901 ========= ========= See accompanying notes to consolidated financial statements (unaudited). 2 ATLANTIS PLASTICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - In thousands) SIX MONTHS ENDED JUNE 30, ------------------------- 1997 1996 ------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss).................................................. ($1,025) $1,632 Adjustments to reconcile net income (loss) to ----------- ----------- net cash provided by operating activities: Depreciation................................................... 3,669 4,012 Amortization of goodwill....................................... 796 808 Loan fee and other amortization................................ 285 306 Changes in assets and liabilities: Decrease (increase) in accounts receivable................. 638 (5,235) Increase in inventories.................................... (1,950) (1,198) (Increase) decrease in other current assets................ (1,000) 282 (Decrease) increase in accounts payable and accrued expenses (4,539) 2,469 Increase in deferred income taxes......................... 275 37 Decrease in other liabilities.............................. (148) (136) Other, net................................................. 41 (7) ----------- ----------- Total adjustments.......................................... (1,933) 1,338 ----------- ----------- Net cash (used in) provided by operating activities...... (2,958) 2,970 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures............................................. (3,702) (2,022) Proceeds from asset dispositions................................. - 800 ----------- ----------- Net cash used in investing activities.................... (3,702) (1,222) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under revolving credit agreements..................... - 11,982 Repayments under revolving credit agreements..................... - (11,982) Payments on long-term debt....................................... (1,314) (1,343) Purchase of common stock......................................... (2,994) - Proceeds from exercise of stock options.......................... 104 115 ----------- ----------- Net cash used in financing activities.................... (4,204) (1,228) ----------- ----------- Net (decrease) increase in cash and equivalents.................... (10,864) 520 Cash and equivalents at beginning of period........................ 15,905 1,255 ----------- ----------- Cash and equivalents at end of period.............................. $5,041 $1,775 =========== =========== See accompanying notes to consolidated financial statements (unaudited). 3 ATLANTIS PLASTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited consolidated financial statements of Atlantis Plastics, Inc. ("Atlantis" or the "Company"), which are for interim periods, do not include all disclosures provided in the annual consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 as filed with the Securities and Exchange Commission. The December 31, 1996 balance sheet, included herein, was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Atlantis Plastic Films accounts for approximately two-thirds of the Company's net sales and produces stretch films (multilayer plastic films that are used principally to wrap pallets of materials for shipping or storage) and custom film products which include high-grade laminating films, embossed films, and specialty film products targeted primarily to industrial and packaging markets. Atlantis Molded Plastics accounts for approximately one-third of the Company's net sales and employs two principal technologies: (i) injection molded thermoplastic parts that are sold primarily to original equipment manufacturers and used in major household appliances, agricultural, and automotive products, and (ii) a variety of extruded plastic parts for 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, and retail store fixtures. Plastic Containers, Inc. ("PCI"), the Company's manufacturer of blow molded milk, juice, water and industrial containers, was sold in November 1996. See Note 4 of Notes to the Consolidated Financial Statements for information regarding the fourth quarter 1996 disposition of PCI. 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. 2. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the financial statements. The results of operations for the six months ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. 3. Net income (loss) per common share was computed by dividing net income (loss), after deducting dividends applicable to preferred stock for 1996, by the weighted average number of shares and dilutive share equivalents outstanding during the period. Fully diluted net income (loss) per common share is substantially equivalent to primary net income (loss) per common share. 4. As previously disclosed, during the fourth quarter of 1996 the Company completed the following transactions, generating a total pretax gain of $6.7 million: (i) in November, the Company sold PCI for approximately $8.3 million, generating a pretax gain of approximately $1.4 million, and an after tax gain of approximately $1.9 million, (ii) in December, the Company sold its Tulsa custom manufacturing facility 4 for $1.5 million, generating a pretax gain of approximately $350,000, and an after tax gain of approximately $210,000, and (iii) also during December, the Company sold its investment in WinsLoew Furniture, Inc. stock to WinsLoew for approximately $9.3 million, generating a pretax gain of approximately $4.9 million, and an after tax gain of approximately $2.9 million. 5. During the first quarter of 1997, the Company recorded impairment of long-lived assets and other restructuring charges of approximately $1.0 million, or $586,000 after taxes, related to: (i) the closing of the Company's Nashville, Tennessee injection molding facility, including approximately $250,000 in non-cash charges for the write-down of fixed assets and leasehold improvements associated with that facility, and (ii) restructuring expenses associated with recently announced management changes in the Company's stretch film unit. 6. Covenants relating to the Company's 11% Senior Notes indebtedness restrict the Company from taking certain actions unless specified interest coverage ratio and other tests are met. The Company's 1997 decline in operating profitability caused it to fall below the interest coverage ratio requirement for the trailing four quarters ended June 30, 1997. Accordingly, the Company cannot pay dividends or repurchase stock, and its ability to incur new debt or take certain other actions is restricted in certain respects until it is again able to meet the interest coverage ratio requirement on a trailing four quarters basis. Two of the Company's lenders also agreed to amend certain financial covenants in order to maintain compliance as of June 30, 1997. 7. In November 1996, the Board of Directors authorized the repurchase of up to 1,000,000 shares of Atlantis Class A common stock, or 14% of the 7.1 million Class A and Class B common stock then outstanding. In January 1997, the Company issued a mandatory conversion notice to the holder of the 20,000 outstanding shares of the Company's Series A Convertible Preferred Stock ("Preferred Stock"). The Preferred Stock was convertible into 210,244 shares of Class A common stock. After issuing the mandatory conversion notice, the Company reached an agreement with the Preferred Stock holder to repurchase all of the common shares resulting from the conversion notice for $2 million (the original price paid for the Preferred Stock by the holder), and completed the repurchase in late March, 1997. Through March 1997 the Company had repurchased 320,344 shares (including the 210,244 common shares issued in connection with the conversion of Preferred Stock, as described above), and options for 55,125 shares, for total consideration of approximately $3.3 million. The Company has suspended its share buyback program for the reasons discussed above in Note 6. 8. In February 1997, SFAS No. 128, "Earnings Per Share" and SFAS No. 129, "Disclosure of Information About Capital Structure" were issued. SFAS No. 128 specifies the computation, presentation, and disclosure requirements for Earnings Per Share ("EPS"), and is designed to improve the EPS information provided in financial statements by simplifying the existing computational guidelines, revising the disclosure requirements, and increasing the comparability of EPS data on an international basis. The Company has not yet determined the effect on operating results of implementing SFAS 128, however, the adoption of this statement is not expected to have a materially adverse effect on consolidated financial position. SFAS No. 129 consolidates the existing requirements to disclose certain information about an entity's capital structure, and is not expected to change the Company's current capital structure disclosures. SFAS 128 and 129 must be implemented no later than fiscal year 1997. 5 In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" were issued. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The purpose of reporting comprehensive income is to present a measure of all changes in equity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners. The FASB believes that SFAS No. 130 should help investors, creditors, and others in assessing an enterprise's activities and the timing and magnitude of its future cash flows. SFAS No. 131 establishes standards for the way that public businesses report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company has not yet determined the effect on operating results of implementing SFAS 130, however, the adoption of this statement is not expected to have a materially adverse effect on consolidated financial position. The Company has not yet determined the impact of SFAS 131 on its future disclosures. SFAS 130 and 131 must be implemented no later than fiscal year 1998. 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, agricultural, automotive, recreational vehicle, and residential window industries. Selected income statement data for the quarterly periods ended March 31, 1996 through June 30, 1997 are as follows: ($ IN MILLIONS) 1997 1996 ------------ ----------------------------------- NET SALES: Q2 Q1 Q4 Q3 Q2 Q1 - ---------- -- -- -- -- -- -- PLASTIC FILMS $48.2 $45.7 $44.0 $45.3 $46.8 $41.7 MOLDED PLASTICS 17.4 18.6 20.1 22.9 23.8 22.5 ----- ----- ----- ----- ----- ----- TOTAL $65.6 $64.3 $64.1 $68.2 $70.6 $64.2 ===== ===== ===== ===== ===== ===== GROSS PROFIT: PERCENTAGE OF NET SALES - ------------- ----------------------- PLASTIC FILMS 13% 13% 14% 17% 17% 18% MOLDED PLASTICS 17% 18% 18% 17% 20% 18% TOTAL 14% 14% 15% 17% 18% 18% OPERATING INCOME: PLASTIC FILMS 3% 3% (A) 4% 7% 6% 6% MOLDED PLASTICS 6% 8% (A) 7% 10% 12% 8% TOTAL 4% 4% (A) 5% 8% 8% 6% NET INTEREST EXPENSE: $2.9 $2.8 $2.9 $3.2 $3.2 $3.3 - --------------------- (a) Amounts exclude the effects of the first quarter 1997 impairment of long-lived assets and restructuring charges, which totaled approximately $1 million for the Company. Including these charges, the Plastic Films, Molded Plastics, and Total Operating Income percentages for the first quarter of 1997 are 2%, 5%, and 3%, respectively. RESULTS OF OPERATIONS The Company's second quarter and year-to-date 1997 sales of $65.6 million and $129.9 million, respectively, were below last year's sales for the same periods. Excluding sales related to the 1996 disposition of PCI, net sales in the first half of 1997 increased by $1.5 million. PCI contributed second quarter and first half 1996 sales of $3.4 million and $6.5 million, respectively (see Note 4 of Notes to the Consolidated Financial Statements for additional information on the sale of PCI). Excluding these amounts, second quarter and year-to-date 1997 Atlantis Molded Plastics sales of $17.4 million and $36.0 million, respectively, were $3.0 million and $3.8 million below last year's sales for the same periods primarily due to a temporary drop in injection molding sales during the second quarter related to the closing of the Nashville facility (discussed below), combined with lower sales of appliance components. 7 Atlantis Plastic Films' second quarter and year-to-date 1997 net sales totaled $48.2 million and $93.9 million, respectively, increasing 3% and 6%, respectively, compared to last year's sales for the same periods, due to an increase in film volume combined with higher average custom film selling prices. The Company's second quarter and year-to-date 1997 gross profit as a percentage of sales decreased to 14%, compared to 18% for the same periods during 1996, primarily due to continued margin pressures within the stretch film unit resulting from extremely competitive market forces. The Atlantis Plastic Films second quarter and year-to-date 1997 gross profit percentages equaled 13%, compared to last year's percentages of approximately 17%. Stretch film gross profit continued to be adversely impacted by intense price competition resulting primarily from industry wide over capacity. Efforts to improve the future profitability of this unit include the second half 1996 introduction of three new machine wrap stretch films which have been well received in the marketplace, the appointment of a new vice president and general manager in May, 1997 (see Note 5 of Notes to Consolidated Financial Statements), and continued cost reductions in the areas of production and overhead expense. The Atlantis Molded Plastics second quarter and year-to-date 1997 gross profit percentages equaled 17%, compared to 20% and 19%, respectively, for the same periods last year. In the profile extrusion unit for the second quarter and year-to-date periods, gross margins declined slightly compared to the same periods in 1996. Injection molding gross profits decreased in the second quarter of 1997 primarily due to the decline in injection molding sales discussed above. The Company's second quarter and year-to-date 1997 selling, general and administrative ("SG&A") expenses were $6.4 million (10% of sales) and $12.9 million (10% of sales), respectively, compared to 10% of sales and 11% of sales, respectively, for the same periods during 1996. The 1997 SG&A expenses cited above exclude restructuring charges of approximately $1.0 million incurred during the first quarter of 1997, described below. Excluding 1996 SG&A expenses associated with PCI, these amounts represented a savings of $574,000 and $1.3 million, respectively, compared with the SG&A expenses for the second quarter and year-to-date 1996 periods, primarily due to the various cost reduction programs initiated by the Company during 1995 and 1996. First quarter 1997 impairment of long-lived assets and other restructuring charges equaled approximately $1.0 million, or $586,000 after taxes, related to: (i) the closing of the Company's Nashville, Tennessee injection molding facility, including approximately $250,000 in non-cash charges for the write-down of fixed assets and leasehold improvements associated with that facility, and (ii) restructuring expenses associated with recently announced management changes in the Company's stretch film unit. Regarding the closing of the Nashville facility, Atlantis' injection molding unit was recently awarded $6.2 million in new business by Whirlpool Corporation, a major, long-term customer. Partly in connection with this award, Atlantis closed its Nashville injection molding facility due to a shift in Whirlpool and other customer business away from the Nashville area, and due to productivity improvements which have increased manufacturing capacity in the Company's other injection molding facilities. The Company transitioned the majority of its Nashville business to its other injection molding facilities during the second quarter of 1997. Second quarter and year-to-date 1997 net interest expense equaled $2.9 million and $5.7 million, respectively, lower than the $3.2 million and $6.5 million, respectively, in net interest expense for the same periods last year, due to reduced debt levels during the first half of 1997. The Company's effective tax rates differed from the applicable statutory rates during the first half of 1997 and 1996 primarily due to nondeductible goodwill amortization. 8 LIQUIDITY AND CAPITAL RESOURCES The Company's working capital at June 30, 1997 totaled approximately $32.4 million (including cash and equivalents of $5.0 million), compared to $36.4 million (including cash and equivalents of $15.9 million) at December 31, 1996. On June 30, 1997, there were no borrowings on the Company's revolving credit facility. Unused availability, net of outstanding letters of credit of approximately $1.5 million, equaled $28.5 million. Covenants relating to the Company's 11% Senior Notes restrict the Company from taking certain actions unless specified interest coverage ratio and other tests are met. As more fully described in Note 6, the Company did not meet the interest coverage ratio requirement for the trailing four quarters ended June 30, 1997, and two of the Company's lenders agreed to amend certain financial covenants in order to maintain compliance as of June 30, 1997. Also, see Note 7 of the Notes to the Consolidated Financial Statements for information regarding the Company's common stock repurchase program. 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, and expects to meet its short- and long-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 1997, net cash used in operating activities was approximately $3.0 million, compared to cash provided by operations of $3.0 million for the same period last year. Accounts receivable decreased by $638,000 during the first half of 1997 primarily due to a decline in injection molding sales related to the Nashville facility closing and lower second quarter sales of appliance components. Inventories increased by $2.0 million primarily due to lower than normal year-end 1996 film inventories. Accounts payable and accrued expenses at June 30, 1997 decreased by $4.5 million compared to the 1996 year-end balance due to: (i) incentive compensation payments during the first quarter of 1997 related to 1996 operating results, (ii) payable reductions related to the closing of the Nashville facility, and (iii) 1997 tax payments related to 1996 taxable income. CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities during the first six months of 1997, consisting of capital expenditures, equaled $3.7 million compared to capital expenditures of $2.0 million for the same period last year. CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities for the first half of 1997 was $4.2 million, compared to $1.2 million during the first six months of 1996. Cash was used during 1997 to repurchase approximately $3.0 million of common stock (see Note 7 of Notes to the Consolidated Financial Statements), with the balance used for principal payments on long-term debt. 9 FORWARD LOOKING STATEMENTS This Form 10-Q document contains certain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks include, but are not limited to, raw material costs and the ability to pass price increases on to customers in a timely fashion, industry overcapacity, product acceptance, technological changes which could alter the demand for product or adversely impact the competitive cost of production, etc. All forward-looking statements should be considered in light of these risks and uncertainties. ACCOUNTING PRONOUNCEMENTS In February 1997, SFAS No. 128, "Earnings Per Share" and SFAS No. 129, "Disclosure of Information About Capital Structure" were issued. SFAS No. 128 specifies the computation, presentation, and disclosure requirements for Earnings Per Share ("EPS"), and is designed to improve the EPS information provided in financial statements by simplifying the existing computational guidelines, revising the disclosure requirements, and increasing the comparability of EPS data on an international basis. The Company has not yet determined the effect on operating results of implementing SFAS 128, however, the adoption of this statement is not expected to have a materially adverse effect on consolidated financial position. SFAS No. 129 consolidates the existing requirements to disclose certain information about an entity's capital structure and is not expected to change the Company's current capital structure disclosures. SFAS 128 and 129 must be implemented no later than fiscal year 1997. In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" were issued. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The purpose of reporting comprehensive income is to present a measure of all changes in equity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners. The FASB believes that SFAS No. 130 should help investors, creditors, and others in assessing an enterprise's activities and the timing and magnitude of its future cash flows. SFAS No. 131 establishes standards for the way that public businesses report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company has not yet determined the effect on operating results of implementing SFAS 130, however, the adoption of this statement is not expected to have a materially adverse effect on consolidated financial position. The Company has not yet determined the impact of SFAS 131 on its future disclosures. SFAS 130 and 131 must be implemented no later than fiscal year 1998. 10 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 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 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. 11 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 5, 1997 /S/ ANTHONY F. BOVA ------------------- ANTHONY F. BOVA President and Chief Executive Officer Date: August 5, 1997 /S/ PAUL RUDOVSKY ----------------- PAUL RUDOVSKY Executive Vice President, Finance and Administration 12