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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 2002
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0-19188
(Commission File No.)
APPLIED EXTRUSION TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0295865
(State of Incorporation) (IRS Employer Identification No.)
3 Centennial Drive
Peabody, Massachusetts 01960
(Address of Principal Executive Offices)
(978) 538-1500
(Registrant's 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 [X] NO [ ].
The number of shares of the Registrant's Common Stock, $.01 par value per share,
outstanding as of August 9, 2002 was 12,865,408.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, September 30,
2002 2001
-------- -------------
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 30,220 $ 22,176
Short-term receivable ................................................... -- 23,212
Accounts receivable, net of allowance for doubtful accounts of $1,720
at June 30, 2002 and $1,801 at September 30, 2001, respectively ...... 42,549 41,117
Inventory ............................................................... 35,468 34,889
Prepaid expenses and other assets ....................................... 2,497 1,495
-------- --------
Total current assets .............................................. 110,734 122,889
Property, plant and equipment, net ......................................... 279,121 265,536
Intangibles and deferred finance charges, net .............................. 22,172 23,363
Other assets ............................................................... 15,314 11,550
-------- --------
$427,341 $423,338
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................ $ 9,351 $ 12,860
Accrued expenses and other current liabilities .......................... 22,843 27,552
Accrued interest ........................................................ 15,049 8,585
-------- --------
Total current liabilities ......................................... 47,243 48,997
Long-term debt ............................................................. 277,773 277,462
Long-term liabilities and deferred taxes ................................... 24,931 19,410
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized, 1,000 shares, of which 300
are designated Junior Preferred Stock; no stock outstanding ............. -- --
Common stock, $.01 par value; 30,000 shares authorized; 13,037 and
12,796 shares issued at June 30, 2002 and September 30, 2001,
respectively ............................................................ 130 128
Additional paid-in capital ................................................. 102,943 101,580
Accumulated deficit ........................................................ (20,402) (16,559)
Accumulated other comprehensive loss ....................................... (2,805) (5,103)
-------- --------
79,866 80,046
Treasury stock, at cost, 244 and 250 shares at June 30, 2002
and September 30, 2001, respectively, and other ......................... (2,472) (2,577)
-------- --------
Total stockholders' equity ........................................ 77,394 77,469
-------- --------
$427,341 $423,338
======== ========
See notes to condensed consolidated financial statements.
2
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2002 and 2001
(In thousands, except per share data)
2002 2001
------- -------
Sales .................................................................. $68,282 $72,414
Cost of sales .......................................................... 51,505 55,108
------- -------
Gross profit ........................................................... 16,777 17,306
Operating expenses:
Selling, general and administrative ................................. 7,510 6,925
Research and development ............................................ 1,688 1,497
QPF acquisition costs ............................................... -- 2,548
------- -------
Total operating expenses ......................................... 9,198 10,970
------- -------
Operating profit ....................................................... 7,579 6,336
Non-operating expenses:
Interest expense, net ............................................... 7,028 6,315
------- -------
Income before income taxes ............................................. 551 21
Income tax expense ..................................................... 110 7
------- -------
Income before extraordinary item ....................................... 441 14
------- -------
Extraordinary loss on early extinguishment of debt, net of taxes of
$1,112 .............................................................. -- (1,977)
Net income (loss) ...................................................... $ 441 $(1,963)
======= =======
Basic and diluted earnings per common share before extraordinary item .. $ .03 $ .00
======= =======
Basic and diluted earnings (loss) per common share ..................... $ .03 $ (.16)
======= =======
Weighted average shares outstanding:
Basic ............................................................... 12,806 12,597
Diluted ............................................................. 12,952 12,597
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE OPERATIONS
Three Months Ended June 30, 2002 and 2001
(In thousands)
Net income (loss).......................................... $ 441 $(1,963)
Cumulative translation adjustments......................... 3,383 805
------ -------
Comprehensive income (loss)................................ $3,824 $(1,158)
====== =======
See notes to condensed consolidated financial statements.
3
APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended June 30, 2001 and 2000
(In thousands, except per share data)
2002 2001
-------- --------
Sales ................................................................. $187,322 $208,127
Cost of sales ......................................................... 145,271 164,346
-------- --------
Gross profit .......................................................... 42,051 43,781
Operating expenses:
Selling, general and administrative ................................ 20,990 22,003
Research and development ........................................... 4,854 4,758
QPF acquisition costs .............................................. -- 2,548
-------- --------
Total operating expenses ........................................ 25,844 29,309
Operating profit ...................................................... 16,207 14,472
Non-operating expenses:
Interest expense, net .............................................. 21,010 17,672
-------- --------
Loss before income taxes .............................................. (4,803) (3,200)
Income tax benefit .................................................... (961) (1,152)
-------- --------
Loss before extraordinary item ........................................ (3,842) (2,048)
-------- --------
Extraordinary loss on early extinguishment of debt, net of taxes of
$1,112 ............................................................. -- (1,977)
Net loss .............................................................. $ (3,842) $ (4,025)
======== ========
Basic and diluted loss per common share before extraordinary item ..... $ (.30) $ (.17)
Basic and diluted loss per common share ............................... $ (.30) $ (.33)
Weighted average common shares outstanding:
Basic .............................................................. 12,709 12,360
Diluted ............................................................ 12,709 12,360
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE OPERATIONS
Nine Months Ended June 30, 2001 and 2000
(In thousands)
Net loss ............................................... $(3,842) $(4,025)
Cumulative Translation Adjustments .................... 2,298 (387)
------- -------
Comprehensive loss ..................................... $(1,544) $(4,412)
======= =======
See notes to condensed consolidated financial statements.
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APPLIED EXTRUSION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended June 30, 2002 and 2001
(In thousands, except per share data)
2002 2001
------- ---------
OPERATING ACTIVITIES:
Net loss ........................................................................ $(3,842) $ (4,025)
Adjustments to reconcile net loss to net cash used in operating activities net
of acquisition of QPF:
Provision for doubtful accounts .............................................. 81 273
Depreciation and amortization ................................................ 16,285 17,010
Amortization of sale/leaseback transaction gains ............................. (7,210) (7,140)
Deferred taxes and other credits ............................................. 2,950 1,002
Stock issued for retirement plans ............................................ 425 --
Stock issued for share incentive plan ........................................ -- 861
Write-off of deferred debt issuance costs included in extraordinary loss
on early extinguishment of debt ........................................... -- 1,651
Changes in assets and liabilities which provided (used) cash:
Prepaid expenses and other current assets ................................. (4,018) (6,026)
Accounts payable and accrued expenses ..................................... (1,702) (9,006)
Accounts receivable and inventory ......................................... (2,104) 3,035
------- ---------
Net cash provided by (used in) operating activities .................... 867 (2,365)
INVESTING ACTIVITIES:
Additions to property, plant and equipment ...................................... (35,317) (16,146)
Acquisition of QPF assets ....................................................... -- (15,000)
Collection of short-term receivable ............................................. 23,212 --
Proceeds from sale/leaseback transaction ........................................ 18,225 --
------- ---------
Net cash provided by (used in) investing activities .................... 6,120 (31,146)
FINANCING ACTIVITIES:
Proceeds from issuance of bonds, net of discount ................................ -- 270,859
Redemption of $150,000 senior notes ............................................. -- (150,000)
Repayments under line of credit agreement, net .................................. -- (53,000)
Debt issuance costs ............................................................. -- (9,786)
Proceeds from issuance of stock, net ............................................ 1,045 24
------- ---------
Net cash provided by financing activities .............................. 1,045 58,097
Effect of exchange rate changes on cash ............................................ 13 12
Increase in cash and cash equivalents, net ...................................... 8,044 24,598
Cash and cash equivalents, beginning ............................................ 22,176 3,265
------- ---------
Cash and cash equivalents, ending ............................................... $30,220 $ 27,863
======= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, including capitalized interest of $2,579 and $1,932, respectively .. $16,459 $ 28,883
Income taxes ................................................................. 338 170
See notes to condensed consolidated financial statements.
5
APPLIED EXTRUSION TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended June 30, 2002 and 2001
(In thousands, except share and per share data)
1. Basis of Presentation
The information set forth in these statements is unaudited and may be subject to
normal year-end adjustments. The information reflects all adjustments that, in
the opinion of management, are necessary to present a fair statement of the
results of operations of Applied Extrusion Technologies, Inc. (the "Company" or
"AET") for the periods indicated. Results of operations for the interim period
ended June 30, 2002 are not necessarily indicative of the results of operations
for the full fiscal year.
Certain information in footnote disclosures normally included in financial
statements has been condensed or omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. These statements should
be read in conjunction with the Company's Annual Report on Form 10-K for the
year ended September 30, 2001, filed with the Securities and Exchange
Commission.
2. Inventories
Inventories are valued at the lower of cost or market, with cost determined
using an average-cost method. Inventories consisted of the following on June 30,
2002 and September 30, 2001:
June 2002 September 2001
--------- --------------
Raw materials $ 7,754 $ 6,963
Finished goods 27,714 27,926
------- -------
Total $35,468 $34,889
======= =======
3. Sale-leaseback Transaction
In March 2002, the Company repurchased manufacturing assets for approximately
$17,156 under an existing sale-leaseback agreement and entered into a new lease
for a portion of this equipment. The net impact of these transactions after
expenses was cash neutral. The new sale-leaseback agreement generated a gain of
$8,267, which the Company is required to recognize on a straight-line basis over
the non-cancelable portion of the three-year lease term as a partial offset to
rent expense.
4. Share Incentive Plan
In the first quarter of fiscal 2001, the Company recorded a one-time, non-cash
charge of $861 for shares issued to non-executive employees as part of an
incentive and retention program. Under this program, the Company issued
approximately 600,000 shares of stock to its top 125 non-executive managers in
exchange for 1,200,000 of their vested and unvested stock options. These new
shares vest over two years and were granted in lieu of annual incentive bonuses
for these managers for fiscal 2000 and 2001.
5. New Accounting Pronouncements
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements SFAS 4,
44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS
145 rescinds Statement No. 4, "Reporting Gains and Losses from Extinguishments
of Debt," and an amendment of that Statement, FASB Statement No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." SFAS 145
also rescinds FASB Statement No. 44, "Accounting for Intangible Assets of Motor
Carriers." SFAS 145 amends FASB Statement No. 13, "Accounting for Leases," to
eliminate an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale leaseback transactions. SFAS 145
also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The provision of SFAS 145 related to the rescission of
Statement No. 4 shall be applied in fiscal year beginning after May 15, 2002.
The provisions of SFAS 145 related to Statement No. 13 should be for
transactions occurring after May 15, 2002. Early application of the provisions
of this Statement is encouraged. The Company does not expect the adoption of
SFAS 145 will have a significant impact on its consolidated results of
operations, financial position or cash flows.
On October 1, 2001, the Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill
and Other Intangible Assets." SFAS No. 141 requires that the purchase method be
used for all business combinations initiated after June 30, 2001. SFAS No. 142
changes the accounting for goodwill and intangible assets with indefinite lives
from an amortization method to an impairment approach. Other intangible assets
will continue to be amortized over their estimated useful lives. Amortization of
goodwill, all of which relates to AET's acquisition of certain assets of QPF,
L.L.C. completed on June 30, 2001, ceased on October 1, 2001 (the date of
adoption of SFAS No. 142). The carrying value of goodwill at June 30, 2002 and
October 1, 2001 was $11,344.
Amortizable intangible assets consisting of deferred financing costs, customer
lists and intellectual property were $8,703, $2,300 and $1,611 as of June 30,
2002. Estimated annual amortization of these intangible assets for fiscal years
2002, 2003, 2004, 2005 and 2006 is $1,600, $1,452, $1,438, $1,438 and $1,438,
respectively.
6
The Company has completed its transitional impairment test of goodwill required
by SFAS No. 142 and no impairment was indicated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARATIVE RESULTS OF OPERATIONS FOR THE QUARTER AND NINE MONTHS ENDED JUNE 30,
2002 WITH THE QUARTER AND NINE MONTHS ENDED JUNE 30, 2001
Introduction
The Company is a leading North American developer and manufacturer of highly
specialized oriented polypropylene ("OPP") films used in consumer product
labeling, flexible packaging and overwrap applications. End-users of AET's films
are consumer product companies whose labels and packages require special
attributes such as vivid graphics, exceptional clarity or moisture barriers to
preserve freshness. The Company sells a majority of its film products to
converters, which are companies specializing in processes such as laminating
multiple films or other materials together and printing text and graphics to
form the final label or packaging material for end-users.
For the purposes of this discussion and analysis, the three-month periods ended
June 30, 2002 and 2001 are referred to as the third fiscal quarters of 2002 and
2001, respectively. All dollar amounts, except per share data, are in thousands.
The Company's nets and nonwovens business was sold at the end of fiscal 2001.
This business reported revenue of $5,181, gross profit of $1,394 and operating
profit of $604 in the third fiscal quarter of 2001 and revenue of $15,772, gross
profit of $4,125, and operating profit of $1,425 for the nine months ended June
30, 2001, all of which has been excluded from the financial analysis and
comments included in the following discussion in order to present the results on
a comparable basis.
Results of Operations
Three months Nine months
ended June 30, ended June 30,
------------------- -------------------
2001 2001
2002 As adjusted 2002 As adjusted
----- ----------- ----- -----------
Sales .................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales .......................... 75.4 76.1 77.6 79.0
Gross profit ........................... 24.6 23.9 22.4 21.0
Selling, general and administrative .... 11.0 9.6 11.2 10.2
Research and development ............... 2.5 2.1 2.6 2.3
Operating profit ....................... 11.1 12.3 8.7 8.6
Interest expense, net .................. 10.3 8.7 11.2 8.5
Net income (loss) ...................... 0.6 2.3 (2.1) (0.2)
Sales for the third fiscal quarter of 2002 increased by $1,049 to $68,282
compared with the same quarter of fiscal 2001, due primarily to an 8.3 percent
increase in sales volume partially offset by lower average selling prices. While
sales volume in the third fiscal quarter was lower than the Company's
expectations, volume did increase 7.1 percent over the immediately preceding
quarter, reflecting normal seasonal increases as well as initial signs of a
recovery in demand for OPP films.
Gross profit for the third fiscal quarter of 2002 was $16,777 or 24.6 percent of
sales, compared with $15,912 or 23.7 percent of sales, in the third fiscal
quarter of 2001. The increase in quarter over quarter gross profit was due
primarily to the increase in sales volume discussed above. Total operating
expenses of $9,198 for the third fiscal quarter of 2002 decreased by $982
compared with the third fiscal quarter of 2001, primarily due to the one-time
incurrence of $2,548 of costs related to the acquisition of certain assets of
QPF, L.L.C. in the third fiscal quarter of 2001. Excluding these costs,
operating expenses increased by $1,566 primarily as a result of increases in
research and development and marketing expenses related to the development of a
number of new highly differentiated products. Net income was $441 or $.03 per
share, compared with net loss of $2,349 or $.19 per share, in the third fiscal
quarter of 2001.
As announced in a press release on July 29, 2002, the Company plans to execute
selective shutdowns of its production lines during the fourth quarter to reduce
inventories, which will result in a charge to cost of sales of approximately
$4,000,000.
7
Sales for the first nine months of fiscal 2002 were $187,322 compared with
$192,355 in the same period of the prior year. This decline of $5,033, or 2.6
percent, resulted from lower average selling prices partially offset by a 2.2
percent increase in sales volume. Lower average selling prices reflect depressed
industry-wide capacity utilization levels following post-September 11 inventory
reductions and demand growth below historical levels. Sales outside the United
States were 13.4 percent and 17.7 percent of sales for the nine months ended
June 30, 2002 and 2001, respectively, and generated operating profit, with costs
allocated to foreign sales on an incremental basis, of 13.4 percent and
operating loss of 10.4 percent in those same periods. Operating profit from
sales outside the United States improved substantially over the same period in
2001 due to the effort in 2001 to reduce inventories and maximize cash, which
resulted in an increase in lower-margin sales in 2001. Gross profit was
$42,051or 22.4 percent of sales, in the first nine months of fiscal 2002, versus
$39,656, or 20.6 percent of sales, in the same period of fiscal 2001 due
primarily to an improved mix of products sold.
For the nine months ended June 30, 2002, operating expenses increased $1,783 to
$25,844 compared with $24,061 for the nine months ended June 30, 2001, due
primarily to increases in research and development and marketing expenses
related to the development of a number of new highly differentiated products, as
well as increases in wages and health insurance expenses.
Interest expense for the nine months ended June 30, 2002 increased by $3,338
over the same period of fiscal 2001 due to increased levels of long-term debt
arising from the Company's issuance of Senior Notes in July 2001 (described in
Liquidity and Capital Resources below).
Income tax as a percent of income before income taxes was 20 and 36 percent,
respectively, for the three and nine months ended June 30, 2002 and June 30,
2001. In 2002, the Company is recognizing deferred tax assets utilizing the 20
percent rate. All deferred tax assets established prior to 2002 have a valuation
allowance against them, resulting in a zero balance.
Liquidity and Capital Resources
AET maintains an $80,000 revolving credit agreement with a group of lenders
which has a final maturity of January 29, 2003. The Company intends to refinance
the credit facility prior to its maturity. The bank credit facility is secured
by all of the Company's assets. It includes covenants which limit borrowings
based on certain asset levels, requires a minimum tangible net worth and
specified interest coverage and leverage ratios, restricts payment of cash
dividends to stockholders and establishes maximum capital expenditure levels. It
also contains other covenants customary in transactions of this type. At June
30, 2002, AET had no amounts outstanding on this credit facility aside from
$6,231 in letters of credit. AET also has $6,500 of revenue bonds outstanding
which are due November 4, 2004 and which are partially secured by a letter of
credit issued under the bank credit facility.
On June 19, 2001, the Company issued $275,000 of 10-3/4 percent Senior Notes due
2011 (the "Senior Notes"). The Senior Notes are unsecured senior obligations of
AET. The net proceeds, after deducting fees and expenses, from the sale of the
Senior Notes, were approximately $261,100. Of those proceeds, $155,200 was used
to fund the redemption of and interest on the 11-1/2 percent senior notes due
2002, $9,000 was used to fund the portion of the purchase price of the
acquisition of the assets of QPF, L.L.C., and $74,100 was used to repay
indebtedness and interest due under the revolving credit facility. The remainder
is being held for general corporate purposes.
Operating activities for the nine months ended June 30, 2002 generated $867 of
cash, which was the result of net loss before depreciation and amortization and
other non-cash expenditures of $8,689, offset by an increase in working capital
of $7,824. The net working capital increase was primarily the result of
decreases in accounts payable and accrued expenses of $1,702 and increases in
inventory, prepaid expenses and other current assets, and accounts receivable of
$580, $4,018 and $1,524, respectively. Inventory increased due to the decline in
sales volume caused by weak demand for OPP films as previously mentioned.
Accounts payable and accrued expenses decreased primarily due to the timing of
accounts payable payments. During the quarter, payments against restructuring
reserves reduced such accounts by $225 to a balance of $8,212 at June 30, 2002.
Capital expenditures of $35,317 include $17,156 related to the repurchase of
certain manufacturing assets under a sale-leaseback agreement as described in
Note 3 to the financial statements.
Inflation
Management regularly reviews the prices charged for its products. When market
conditions allow, price adjustments are made to reflect changes in demand or
product costs due to fluctuations in the cost of materials, labor and inflation.
The costs of raw materials make up a significant portion of AET's costs and have
historically fluctuated. In particular, the unrest in the Middle East is causing
the cost of AET's primary raw material, polypropylene resin, to increase. In
response, the Company initiated
8
one price increase effective in May 2002 and a second price increase effective
in August 2002. There can be no assurance, however, that future market
conditions will support any correlation between raw material cost fluctuations
and finished product films pricing. To the extent the Company is unable to pass
raw material cost increases on to its customers through price increases,
operating margins could decrease.
Seasonal Nature of Certain OPP Markets
Certain of the end-use markets for the Company's OPP films are seasonal. For
example, demand in the snack food and soft drink markets is generally higher in
the spring and summer. As a result, sales and net income are generally higher in
those periods, although actual results can be influenced by numerous factors,
such as raw material costs, competitive prices and other matters discussed in
this report
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Short-term and Long-term Debt
AET is exposed to interest rate risk primarily through its borrowing activities.
The Company's policy has been to utilize United States dollar denominated
borrowings to fund working capital and investment needs. Short-term debt, if
required, is used to meet working capital requirements, while long-term debt is
generally used to finance long-term investments. There is inherent rollover risk
for borrowings as they mature and are renewed at current market rates. The
Company maintains a revolving credit facility which bears interest at LIBOR plus
2.75 percent or Prime plus 1.25 percent. The Company intends to refinance this
facility prior to its maturity on January 29, 2003. At June 30, 2002, AET had no
amounts outstanding on this credit facility aside from $6,231 in letters of
credit. At June 30, 2002, the Company had no outstanding short-term debt and
long-term debt outstanding of $277,773, all of which was at a fixed interest
rate.
The Company does not enter into financial instrument transactions for trading or
other speculative purposes or to manage interest rate exposure.
Except for the historical information contained herein, the matters discussed in
this report are forward-looking statements that involve risks and uncertainties
which could cause actual results to differ materially from those in the
forward-looking statements, including those related to the timely development
and acceptance of new products, fluctuations in raw materials and other
production costs, the loss of one or more significant customers, the impact of
competitive products and pricing, the timely completion of capital projects, the
success of the Company's efforts to expand into new markets and other risks
detailed in Exhibit 99 of the Company's Annual Report on Form 10-K for the year
ended September 30, 2001 and from time to time in the Company's other reports
filed with the Securities and Exchange Commission. The Company assumes no
obligation to update any such forward-looking statements to reflect actual
results, changes in assumptions or changes in other factors affecting such
forward-looking statements.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims that have arisen in the
ordinary course of its business and have not been fully adjudicated. These
actions, when ultimately concluded and determined, will not, in the opinion of
management, have a material adverse effect upon the financial position or
results of operations of the Company.
ITEM 2. Not applicable
ITEM 3. Not applicable
ITEM 4. Not applicable
9
ITEM 5. Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
10.1* Amendment No. 5 to the Credit Agreement dated as of June 30, 2002.
10.2* Amended and restated Employment Agreement dated as of August 1, 2002
between the Registrant and Amin J. Khoury.
10.3* Amended and restated Employment Agreement dated as of August 1, 2002
between the Registrant and Thomas E. Williams.
10.4* Amended and restated Employment Agreement dated as of August 1, 2002
between the Registrant and David N. Terhune.
10.5* Amended and restated 1999 Supplemental Executive Retirement Plan dated
March 29, 2002, as amended as of August 1, 2002.
99.1(a) Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995.
99.2* Certification pursuant to Section 1350, Chapter 63 of Title 18, United
States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of Thomas E. Williams, Principal Executive Officer of
Applied Extrusion Technologies, Inc.
99.3* Certification pursuant to Section 1350, Chapter 63 of Title 18, United
States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of David N. Terhune, Chief Operating Officer and Principal
Financial Officer of Applied Extrusion Technologies, Inc.
(a) Contained in Exhibits to the Registrant's Form 10-K for the fiscal year
ended September 30, 2001.
* Filed herewith.
The above referenced exhibits are, as indicated, either filed herewith or have
heretofore been filed with the Commission under the Securities Act and the
Exchange Act and are referred to and incorporated herein by reference to such
filings.
B. Reports on Form 8-K
None.
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.
APPLIED EXTRUSION TECHNOLOGIES, INC.
(Registrant)
By: /s/ Thomas E. Williams
-------------------------------------
Thomas E. Williams
President and Chief Executive Officer
August 14, 2002
10