SECURITIES AND EXCHANGE COMMISSION
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, 2003 | ||
| 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 | |
|
|
||
| (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 by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].
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 14, 2003.
AMTROL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2003
INDEX
| PAGE | ||||||
PART I. |
Financial Information | |||||
Item 1. |
Condensed Consolidated Balance Sheets - September 30, 2003 and December 31, 2002 | 3 | ||||
Condensed Consolidated Statements of Operations -
For the Quarter and Nine Months Ended September 30, 2003
and September 30, 2002 |
4 | |||||
Condensed Consolidated Statements of Shareholders’ Equity -
For the Nine Months Ended September 30, 2003 and
September 30, 2002 |
5 | |||||
Condensed Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 2003 and
September 30, 2002 |
6 | |||||
Notes to Condensed Consolidated Financial Statements |
7 | |||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | ||||
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 21 | ||||
Item 4. |
Controls and Procedures | 21 | ||||
PART II. |
Other Information | |||||
Item 1. |
Legal Proceedings | 22 | ||||
Item 2. |
Changes in Securities and Use of Proceeds | 22 | ||||
Item 3. |
Defaults Upon Senior Securities | 22 | ||||
Item 4. |
Submission of Matters to a Vote of Security Holders | 22 | ||||
Item 5. |
Other Information | 22 | ||||
Item 6. |
Exhibits and Reports on Form 8-K | 22 | ||||
Signatures |
23 | |||||
Certification |
24 | |||||
2
AMTROL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
| Unaudited | ||||||||||||
| September 30, 2003 | December 31, 2002 | |||||||||||
ASSETS |
||||||||||||
Current Assets: |
||||||||||||
Cash and cash equivalents |
$ | 1,650 | $ | 1,797 | ||||||||
Accounts receivable, less allowance for doubtful
accounts |
30,740 | 29,765 | ||||||||||
Inventories |
25,632 | 22,445 | ||||||||||
Tax refund receivable |
1,739 | 2,233 | ||||||||||
Deferred income taxes - short-term |
1,681 | 1,681 | ||||||||||
Prepaid expenses and other |
1,661 | 1,357 | ||||||||||
Total current assets |
63,103 | 59,278 | ||||||||||
Property, Plant and
Equipment, Net |
35,262 | 38,501 | ||||||||||
Other Assets: |
||||||||||||
Goodwill |
119,205 | 119,205 | ||||||||||
Deferred financing costs |
3,437 | 4,186 | ||||||||||
Deferred income taxes - long-term |
7,267 | 7,267 | ||||||||||
Other |
1,645 | 1,227 | ||||||||||
Total other assets |
131,554 | 131,885 | ||||||||||
| $ | 229,919 | $ | 229,664 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Current Liabilities: |
||||||||||||
Current maturities of long-term debt |
$ | 2,957 | $ | 2,957 | ||||||||
Notes payable to banks |
9,907 | 6,923 | ||||||||||
Accounts payable |
24,693 | 23,826 | ||||||||||
Accrued expenses |
10,086 | 16,773 | ||||||||||
Accrued interest |
3,100 | 203 | ||||||||||
Accrued income taxes |
1,884 | 719 | ||||||||||
Total current liabilities |
52,627 | 51,401 | ||||||||||
Other Noncurrent Liabilities |
4,355 | 4,023 | ||||||||||
Long Term Debt, Less Current Maturities |
159,021 | 158,391 | ||||||||||
Shareholders’ Equity: |
||||||||||||
Capital stock $.01 par value - authorized 1,000 shares,
100 shares issued |
— | — | ||||||||||
Additional paid-in capital |
99,273 | 99,273 | ||||||||||
Accumulated deficit |
(85,157 | ) | (81,393 | ) | ||||||||
Accumulated other comprehensive loss |
(200 | ) | (2,031 | ) | ||||||||
Total shareholders’ equity |
13,916 | 15,849 | ||||||||||
| $ | 229,919 | $ | 229,664 | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AMTROL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited - in thousands)
| QUARTER ENDED | NINE MONTHS ENDED | |||||||||||||||
| September 30, 2003 | September 30, 2002 | September 30, 2003 | September 30, 2002 | |||||||||||||
Net sales |
$ | 46,370 | $ | 47,381 | $ | 147,647 | $ | 141,046 | ||||||||
Cost of goods sold |
36,236 | 35,881 | 116,039 | 107,967 | ||||||||||||
Gross profit |
10,134 | 11,500 | 31,608 | 33,079 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling, general and administrative |
7,258 | 7,043 | 21,079 | 21,077 | ||||||||||||
Income from operations |
2,876 | 4,457 | 10,529 | 12,002 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(5,012 | ) | (4,983 | ) | (14,698 | ) | (14,906 | ) | ||||||||
Interest income |
6 | 14 | 40 | 43 | ||||||||||||
Other, net |
7 | 8 | 1,449 | (628 | ) | |||||||||||
Loss before provision
for income taxes |
(2,123 | ) | (504 | ) | (2,680 | ) | (3,489 | ) | ||||||||
Provision for income taxes |
144 | 526 | 1,084 | 1,335 | ||||||||||||
Loss before cumulative effect of a
change in accounting principle |
(2,267 | ) | (1,030 | ) | (3,764 | ) | (4,824 | ) | ||||||||
Cumulative effect of a change in
accounting principle |
0 | 0 | 0 | (38,087 | ) | |||||||||||
Net loss |
$ | (2,267 | ) | $ | (1,030 | ) | $ | (3,764 | ) | $ | (42,911 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
AMTROL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited - in thousands)
Nine Months Ended September 30, 2003
| Accumulated Other | |||||||||||||||||||||
| Additional Paid-in | Accumulated | Comprehensive | Comprehensive | ||||||||||||||||||
| Common Stock | Capital | Deficit | Income (Loss) | Income (Loss) | |||||||||||||||||
Balance, December 31, 2002 |
$ | — | $ | 99,273 | $ | (81,393 | ) | $ | (2,031 | ) | $ | — | |||||||||
Net loss |
— | — | (782 | ) | — | (782 | ) | ||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | 73 | 73 | ||||||||||||||||
Currency translation adjustment |
— | — | — | 185 | 185 | ||||||||||||||||
Balance, March 31, 2003 |
— | 99,273 | (82,175 | ) | (1,773 | ) | (524 | ) | |||||||||||||
Net loss |
— | — | (715 | ) | — | (715 | ) | ||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | 78 | 78 | ||||||||||||||||
Currency translation adjustment |
— | — | — | 1,279 | 1,279 | ||||||||||||||||
Balance, June 30, 2003 |
— | 99,273 | (82,890 | ) | (416 | ) | 118 | ||||||||||||||
Net loss |
— | — | (2,267 | ) | — | (2,267 | ) | ||||||||||||||
Derivative instrument valuation adjustment |
— | — | — | 85 | 85 | ||||||||||||||||
Currency translation adjustment |
— | — | — | 131 | 131 | ||||||||||||||||
Balance, September 30, 2003 |
$ | — | $ | 99,273 | $ | (85,157 | ) | $ | (200 | ) | $ | (1,933 | ) | ||||||||
Nine Months Ended September 30, 2002
| Accumulated Other | |||||||||||||||||||||
| Additional Paid-in | Accumulated | Comprehensive | Comprehensive | ||||||||||||||||||
| Common Stock | 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 | ) | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
AMTROL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited - in thousands)
| NINE MONTHS ENDED | ||||||||||||||
| September 30, 2003 | September 30, 2002 | |||||||||||||
Cash Flows Provided by (Used in) Operating Activities: |
||||||||||||||
Net loss |
$ | (3,764 | ) | $ | (42,911 | ) | ||||||||
Cumulative effect of a change in accounting principle |
— | 38,087 | ||||||||||||
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities - |
||||||||||||||
Depreciation and amortization |
6,883 | 6,622 | ||||||||||||
Provision for losses on accounts receivable |
55 | 95 | ||||||||||||
Gain on purchase of senior subordinated notes |
(1,513 | ) | — | |||||||||||
Changes in operating assets and liabilities |
(2,698 | ) | 320 | |||||||||||
Net cash provided by (used in) operating activities |
(1,037 | ) | 2,213 | |||||||||||
Cash Flows Used in Investing Activities: |
||||||||||||||
Capital expenditures |
(1,678 | ) | (1,924 | ) | ||||||||||
Net cash used in investing activities |
(1,678 | ) | (1,924 | ) | ||||||||||
Cash Flows Provided by (Used in) Financing Activities: |
||||||||||||||
Repayment of debt |
(109,234 | ) | (113,505 | ) | ||||||||||
Issuance of debt |
111,605 | 112,193 | ||||||||||||
Net cash provided by (used in) financing activities |
2,371 | (1,312 | ) | |||||||||||
Net Decrease in Cash and Cash Equivalents |
(344 | ) | (1,023 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents |
197 | 40 | ||||||||||||
Cash and Cash Equivalents, beginning of period |
1,797 | 983 | ||||||||||||
Cash and Cash Equivalents, end of period |
$ | 1,650 | $ | — | ||||||||||