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 September 30, 2002
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 0-20328
AMTROL INC.
| Rhode Island | 05-0246955 | |
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| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
1400 Division Road, West Warwick, RI 02893-1008
Registrant’s telephone number, including area code: (401) 884-6300
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: $.01 Par Value: 100 shares of Common stock as of November 13, 2002.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2002
INDEX
| PAGE | ||||
| PART I | FINANCIAL INFORMATION | |||
| Item 1. | Consolidated Balance Sheets — September 30, 2002 and December 31, 2001 | 3 | ||
| Consolidated Statements of Operations — For the Quarter and Nine Months Ended September 30, 2002 and September 30, 2001 | 4 | |||
| Consolidated Statements of Shareholders’ Equity — For the Nine Months Ended September 30, 2002 and September 30, 2001 | 5 | |||
| Consolidated Statements of Cash Flows — For the Nine Months Ended September 30, 2002 and September 30, 2001 | 6 | |||
| Notes to Consolidated Financial Statements | 7 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 19 | ||
| Item 4. | Controls and Procedures | 19 | ||
| PART II | OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 21 | ||
| Item 2. | Changes in Securities and Use of Proceeds | 21 | ||
| Item 3. | Defaults Upon Senior Securities | 21 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 21 | ||
| Item 5. | Other Information | 21 | ||
| Item 6. | Exhibits and Reports on Form 8-K | 21 | ||
| Signatures | 22 | |||
| Certifications | 23 |
2
AMTROL INC. AND
SUBSIDIARIES
| Unaudited | Audited | |||||||||||
| September 30, 2002 | December 31, 2001 | |||||||||||
ASSETS |
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Current Assets: |
||||||||||||
Cash and cash equivalents |
$ | — | $ | 983 | ||||||||
Accounts receivable, less allowance for doubtful accounts |
30,026 | 28,456 | ||||||||||
Inventories |
23,435 | 19,785 | ||||||||||
Deferred income taxes — short-term |
1,739 | 1,739 | ||||||||||
Tax refund receivable |
1,522 | 1,623 | ||||||||||
Prepaid expenses and other |
556 | 680 | ||||||||||
Total current assets |
57,278 | 53,266 | ||||||||||
Property, Plant and Equipment, Net |
38,340 | 41,192 | ||||||||||
Other Assets: |
||||||||||||
Goodwill |
157,624 | 157,292 | ||||||||||
Deferred financing costs |
4,521 | 4,233 | ||||||||||
Deferred income taxes — long-term |
7,209 | 7,209 | ||||||||||
Other |
1,544 | 1,263 | ||||||||||
Total other assets |
170,898 | 169,997 | ||||||||||
| $ | 266,516 | $ | 264,455 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Current maturities of long-term debt |
$ | 2,957 | $ | 2,218 | ||||||||
Notes payable to banks |
7,320 | 7,930 | ||||||||||
Accounts payable |
22,882 | 20,949 | ||||||||||
Accrued expenses |
11,686 | 10,856 | ||||||||||
Accrued interest |
3,193 | 752 | ||||||||||
Accrued income taxes |
2,083 | 1,959 | ||||||||||
Total current liabilities |
50,121 | 44,664 | ||||||||||
Other Noncurrent Liabilities |
3,831 | 4,061 | ||||||||||
Long Term Debt, Less Current Maturities |
157,252 | 157,511 | ||||||||||
Shareholders’ Equity: |
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Capital stock $.01 par value — authorized 1,000 shares,
100 shares issued |
— | — | ||||||||||
Additional paid-in capital |
99,273 | 99,273 | ||||||||||
Retained deficit |
(40,888 | ) | (36,064 | ) | ||||||||
Accumulated other comprehensive loss |
(3,073 | ) | (4,990 | ) | ||||||||
Total shareholders’ equity |
55,312 | 58,219 | ||||||||||
| $ | 266,516 | $ | 264,455 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
AMTROL INC. AND SUBSIDIARIES
| QUARTER ENDED | NINE MONTHS ENDED | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||
Net sales |
$ | 47,381 | $ | 45,417 | $ | 141,046 | $ | 140,636 | ||||||||
Cost of goods sold |
35,881 | 34,418 | 107,967 | 108,770 | ||||||||||||
Gross profit |
11,500 | 10,999 | 33,079 | 31,866 | ||||||||||||
Operating expenses: |
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Selling, general and administrative |
7,043 | 6,715 | 21,077 | 20,391 | ||||||||||||
Amortization of goodwill |
— | 1,112 | — | 3,338 | ||||||||||||
Income from operations |
4,457 | 3,172 | 12,002 | 8,137 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(4,983 | ) | (4,911 | ) | (14,906 | ) | (14,737 | ) | ||||||||
Interest income |
14 | 22 | 43 | 96 | ||||||||||||
License and distributorship fees |
— | 73 | 40 | 219 | ||||||||||||
Other, net |
8 | (255 | ) | (668 | ) | 352 | ||||||||||
Loss before provision for income taxes |
(504 | ) | (1,899 | ) | (3,489 | ) | (5,933 | ) | ||||||||
Provision (benefit) for income taxes |
526 | (311 | ) | 1,335 | (595 | ) | ||||||||||
Net loss |
$ | (1,030 | ) | $ | (1,588 | ) | $ | (4,824 | ) | $ | (5,338 | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
4
AMTROL INC. AND
SUBSIDIARIES
Nine Months Ended September 30, 2002
| Accumulated Other | |||||||||||||||||||||
| Additional | Retained | Comprehensive | Comprehensive | ||||||||||||||||||
| Common Stock | Paid-in Capital | Deficit | Income (Loss) | Income (Loss) | |||||||||||||||||
Balance, December 31, 2001 |
$ | — | $ | 99,273 | $ | (36,064 | ) | $ | (4,990 | ) | $ | — | |||||||||
Net loss |
— | — | (2,040 | ) | — | (2,040 | ) | ||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | 304 | 304 | ||||||||||||||||
Currency translation adjustment |
— | — | — | (262 | ) | (262 | ) | ||||||||||||||
Balance, March 31, 2002 |
— | 99,273 | (38,104 | ) | (4,948 | ) | (1,998 | ) | |||||||||||||
Net loss |
— | — | (1,754 | ) | — | (1,754 | ) | ||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | 204 | 204 | ||||||||||||||||
Currency translation adjustment |
— | — | — | 2,394 | 2,394 | ||||||||||||||||
Balance, June 30, 2002 |
— | 99,273 | (39,858 | ) | (2,350 | ) | (1,154 | ) | |||||||||||||
Net loss |
— | — | (1,030 | ) | — | (1,030 | ) | ||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | (407 | ) | (407 | ) | ||||||||||||||
Currency translation adjustment |
— | — | — | (316 | ) | (316 | ) | ||||||||||||||
Balance,
September 30, 2002 |
$ | — | $ | 99,273 | $ | (40,888 | ) | $ | (3,073 | ) | $ | (2,907 | ) | ||||||||
Nine Months Ended September 30, 2001
| Accumulated Other | |||||||||||||||||||||
| Additional | Retained | Comprehensive | Comprehensive | ||||||||||||||||||
| Common Stock | Paid-in Capital | Deficit | Income (Loss) | Income (Loss) | |||||||||||||||||
Balance, December 31, 2000 |
$ | — | $ | 89,903 | $ | (26,649 | ) | $ | (3,382 | ) | $ | — | |||||||||
Net loss |
— | — | (2,455 | ) | — | (2,455 | ) | ||||||||||||||
Repurchase of options and common stock |
— | (141 | ) | — | — | — | |||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | (372 | ) | (372 | ) | ||||||||||||||
Currency translation adjustment |
— | — | — | (1,194 | ) | (1,194 | ) | ||||||||||||||
Balance, March 31, 2001 |
— | 89,762 | (29,104 | ) | (4,948 | ) | (4,021 | ) | |||||||||||||
Net loss |
— | — | (1,295 | ) | — | (1,295 | ) | ||||||||||||||
Repurchase of common stock |
— | (100 | ) | — | — | — | |||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | (440 | ) | (440 | ) | ||||||||||||||
Currency translation adjustment |
— | — | — | 31 | 31 | ||||||||||||||||
Balance, June 30, 2001 |
— | 89,662 | (30,399 | ) | (5,357 | ) | (5,725 | ) | |||||||||||||
Net loss |
— | — | (1,588 | ) | — | (1,588 | ) | ||||||||||||||
Repurchase of common stock |
— | (33 | ) | — | — | — | |||||||||||||||
Issuance of common stock |
— | 6,000 | — | — | — | ||||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | (265 | ) | (265 | ) | ||||||||||||||
Currency translation adjustment |
— | — | — | 1,011 | 1,011 | ||||||||||||||||
Balance, September 30, 2001 |
$ | — | $ | 95,629 | $ | (31,987 | ) | $ | (4,611 | ) | $ | (6,567 | ) | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
AMTROL INC. AND SUBSIDIARIES
| NINE MONTHS ENDED | |||||||||||
| September 30, | September 30, | ||||||||||
| 2002 | 2001 | ||||||||||
Cash Flows Provided by (Used in) Operating Activities: |
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