ATRIUM CORP - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2003

or

o		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: 333-54122

Atrium Corporation

(Exact name of registrant as specified in its charter)


Delaware		75-2814598
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1341 W. Mockingbird Lane, Suite 1200W, Dallas, Texas 75247, (214) 630-5757

(Address of principal executive offices, including zip code and telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No þ

As of August 14, 2003, the registrant had 187,157 shares of Common Stock, par value $.01 per share outstanding.

TABLE OF CONTENTS


ATRIUM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended June 30, 2003 and 2002
ATRIUM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 2003 and 2002
ATRIUM CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND OTHER COMPREHENSIVE LOSS For the Six Months Ended June 30, 2003
ATRIUM CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2003 and 2002
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
ATRIUM CORPORATION EXHIBIT INDEX
EX-10.69 Amended and Restated Indenture
EX-31.1 Certification by CEO - 17 CFR 240.13a-14
EX-31.2 Certification by CEO - 17 CFR 240.13a-14

ATRIUM CORPORATION

FORM 10-Q

QUARTER ENDED JUNE 30, 2003

INDEX


		Page

PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited):
	Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002		2
	Consolidated Statements of Operations for the Three Months Ended June 30, 2003 and 2002		3
	Consolidated Statements of Operations for the Six Months Ended June 30, 2003 and 2002		4
	Consolidated Statement of Stockholders’ Equity and Other Comprehensive Loss for the Six Months Ended June 30, 2003		5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002		6
	Notes to Consolidated Financial Statements		7-15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16-20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		20-21
Item 4.	Controls and Procedures		21
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		22
Items 2, 3, 4 and 5 are not applicable
Item 6.	Exhibits and Reports on Form 8-K		22
Signatures			23

ATRIUM CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share amounts)


				June 30,			December 31,
				2003			2002

				(unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	7,973		$	1,131
	Accounts receivable, net				4,369			1,847
	Retained interest in sold accounts receivable				22,023			25,209
	Inventories				42,381			33,712
	Prepaid expenses and other current assets				5,973			6,109
	Deferred tax asset				1,090			922

		Total current assets			83,809			68,930
PROPERTY, PLANT AND EQUIPMENT, net					59,649			55,322
GOODWILL					349,418			345,239
DEFERRED FINANCING COSTS, net					12,731			14,401
OTHER ASSETS, net					10,226			8,134

		Total assets		$	515,833		$	492,026

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Current portion of notes payable			$	5,285		$	6,524
	Accounts payable				37,494			22,535
	Accrued liabilities				32,773			31,441

		Total current liabilities			75,552			60,500

LONG-TERM LIABILITIES:
	Notes payable				332,714			329,880
	Deferred tax liability				1,090			922
	Other long-term liabilities				2,356			560

		Total long-term liabilities			336,160			331,362

		Total liabilities			411,712			391,862

COMMON STOCK SUBJECT TO MANDATORY REDEMPTION					15,604			15,604

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
	Common stock $.01 par value, 245,000 shares authorized, 170,675 and 170,700 shares issued and outstanding at June 30, 2003 and December 31, 2002, respectively				2			2
	Paid-in capital				179,679			179,704
	Accumulated deficit				(89,266	)		(90,706	)
	Accumulated other comprehensive loss				(1,898	)		(4,440	)

			Total stockholders’ equity		88,517			84,560

			Total liabilities and stockholders’ equity	$	515,833		$	492,026

The accompanying notes are an integral part of the consolidated financial statements.

ATRIUM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30, 2003 and 2002

(dollars in thousands)

(unaudited)


		2003		2002

NET SALES		$	161,810	$	148,181
COST OF GOODS SOLD			109,194		98,938

Gross profit			52,616		49,243

OPERATING EXPENSES:
Selling, delivery, general and administrative expenses (excluding securitization, stock compensation and amortization expense)			32,924		30,959
	Securitization expense		276		298
	Stock compensation expense		352		158
	Amortization expense		1,043		826

SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES			34,595		32,241
Special charge			—		3,948

			34,595		36,189

	Income from operations		18,021		13,054
INTEREST EXPENSE			11,227		11,295
OTHER INCOME (EXPENSE), net			191		181

Income before income taxes			6,985		1,940
PROVISION FOR INCOME TAXES			322		74

NET INCOME		$	6,663	$	1,866

The accompanying notes are an integral part of the consolidated financial statements.

ATRIUM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Six Months Ended June 30, 2003 and 2002

(dollars in thousands)

(unaudited)


		2003		2002

NET SALES		$	275,364	$	261,470
COST OF GOODS SOLD			187,791		177,180

Gross profit			87,573		84,290

OPERATING EXPENSES:
Selling, delivery, general and administrative expenses (excluding securitization, stock compensation and amortization expense)			60,891		57,587
	Securitization expense		512		554
	Stock compensation expense		452		233
	Amortization expense		1,975		1,630

SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES			63,830		60,004
Special charge			—		3,948

			63,830		63,952

	Income from operations		23,743		20,338
INTEREST EXPENSE			22,160		22,419
OTHER INCOME (EXPENSE), net			164		397

Income (loss) before income taxes			1,747		(1,684	)
PROVISION FOR INCOME TAXES			307		230

NET INCOME (LOSS)		$	1,440	$	(1,914	)

The accompanying notes are an integral part of the consolidated financial statements.

ATRIUM CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND

OTHER COMPREHENSIVE LOSS

For the Six Months Ended June 30, 2003

(dollars in thousands, except share amounts)

(unaudited)


													Accumulated
		Common Stock											Other			Total
							Paid-in			Accumulated			Comprehensive			Stockholders’
		Shares			Amount		Capital			Deficit			Loss			Equity

Balance, December 31, 2002			170,700		$	2	$	179,704		$	(90,706	)	$	(4,440	)	$	84,560
Repurchase of class A shares			(25	)		—		(25	)		—			—			(25	)
Comprehensive income (loss):
	Net loss		—			—		—			1,440			—			1,440
	Net fair market value adjustment of derivative instruments, net of tax of $0		—			—		—			—			2,542			2,542

Total comprehensive income (loss)			—			—		—			1,440			2,542			3,982

Balance, June 30, 2003			170,675		$	2	$	179,679		$	(89,266	)	$	(1,898	)	$	88,517

The accompanying notes are an integral part of the consolidated financial statements.

ATRIUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2003 and 2002

(dollars in thousands)

(unaudited)


				2003			2002

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	1,440		$	(1,914	)
	Adjustments to reconcile net loss to net cash flows provided by operating activities:
	Depreciation and amortization				8,189			7,107
	Non-cash stock compensation expense				200			150
	Amortization of deferred financing costs				1,646			1,763
	Write-off of deferred financing costs				29			—
	Accretion of discount on notes payable				111			100
	Accretion of discount on senior payment-in-kind notes				5,203			4,187
	Amortization of gain from sale/leaseback of building				(15	)		(26	)
	Special Charges				—			1,176
	Loss on sale of receivables				335			496
	Gain (loss) on disposals of assets				40			(13	)
	Changes in assets and liabilities, net of acquisitions:
		Accounts receivable			(2,522	)		54
		Retained interest in sold accounts receivable			(15,150	)		(16,684	)
		Sale of accounts receivable			21,700			1,000
		Inventories			(6,892	)		(1,008	)
		Prepaid expenses and other current assets			160			389
		Accounts payable			12,376			12,608
		Accrued liabilities and other long-term liabilities			1,386			(3,377	)

			Net cash provided by operating activities		28,236			6,008

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property, plant and equipment				(7,440	)		(6,505	)
	Proceeds from sales of assets				12			57
	Acquisitions				(9,081	)		—
	Other assets				(2,534	)		(1,600	)

			Net cash used in investing activities		(19,043	)		(8,048	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Payments of capital lease obligations				(16	)		(14	)
	Net borrowings under revolving credit facility				—			4,500
	Deferred financing costs				(7	)		—
	Proceeds from the issuance of common stock				—			1
	Repurchase of stock options and common stock				(25	)		(124	)
	Scheduled principal payments on term loans				(2,733	)		(2,744	)
	Additional principal payments on term loans				(1,058	)		(684	)
	Checks drawn in excess of bank balances				1,488			1,956

			Net cash provided by financing activities		(2,351	)		2,891

NET INCREASE IN CASH AND CASH EQUIVALENTS					6,842			851
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

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