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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)  

of the Securities Exchange Act of 1934

For the Quarter Ended March 31, 2003

APPLIED EXTRUSION TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

15 Read’s Way

New Castle, DE 19720

(Address of Principal Executive Offices, Including Zip Code)

(302) 326—5500

(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  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES  x    NO  ¨

The number of shares of the Registrant’s Common Stock, $.01 par value per share, outstanding as of April 29, 2003 was 12,833,032.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APPLIED EXTRUSION TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

See notes to condensed consolidated financial statements.

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APPLIED EXTRUSION TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2003 and 2002

(In thousands, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31, 2003 and 2002

(In thousands, except per share data)

See notes to condensed consolidated financial statements.

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APPLIED EXTRUSION TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended March 31, 2003 and 2002

(In thousands, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Six Months Ended March 31, 2003 and 2002

(In thousands, except per share data)

See notes to condensed consolidated financial statements.

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APPLIED EXTRUSION TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31, 2003 and 2002

(In thousands)

See notes to condensed consolidated financial statements.

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APPLIED EXTRUSION TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2003 and 2002

(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 March 31, 2003 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, 2002 filed with the Securities and Exchange Commission.

2. Restatement of Previously Issued Financial Statements

Subsequent to the issuance of its 2001 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for the first three quarters of fiscal 2002, the Company determined that: (1) the gains recognized on the three sale-leaseback transactions it entered into in January 1998, April 1999 and March 2002 should have been recognized over longer periods; and (2) certain leased equipment included in the 1998 restructuring charge related to its Covington, Virginia facility was either subsequently put back in service or was never taken out of service, requiring reversal of a portion of the restructuring charge recorded in 1998. The Company determined that the correction of these errors required it to restate its financial statements for the first, second and third quarters of fiscal year 2002 and fiscal years 1998 through 2001.

In addition, the Company determined that the following items should also be restated on its interim financial statements for the first three quarters of fiscal year 2002: (1) certain costs related to the integration of the acquisition of the QPF, LLC business acquired in June 2001 were recorded as adjustments to a purchase accounting reserve when they should have been recognized as operating expenses; (2) the Company should have recognized depreciation expense and stopped capitalizing interest and other excluded costs on a portion of the OPP film line in the Company’s Varennes, Canada plant beginning in April 2002 when that portion of the line was completed; and (3) due to the uncertainty associated with realizing the future benefit of tax losses, the tax benefit that the Company recorded in fiscal 2002 should only reflect the $2,045 income tax refund received in June 2002, which was due to the change in the tax law regarding carryback of operating losses, and that, aside from this item, the Company’s fiscal 2002 effective tax rate was zero.

Description of Restatement Items

Amortization of Gains on Sale-Leaseback Transactions

The Company entered into sale-leaseback transactions in January 1998, April 1999 and March 2002. The Company had been recognizing each of the gains over the period from the inception of the lease to the date of the early buyout option in the lease. The Company has determined that for each lease the gain should have been amortized over the initial lease term and the lease term subsequent to the early buyout option. The effect of the correction of these errors increased lease expense by $1,000 and $2,000 for the quarter and six months ended March 31, 2002, respectively.

Covington, Virginia Restructuring

A September 1998 restructuring charge included $12,000 for future rental payments on leased assets that were anticipated to be idled. Certain leased equipment, planned to be idled, remained in production, or was initially taken out of service but restarted in November 1999. The portion of the reserve related to the equipment that was never taken out of service should not have been included in the restructuring charge in fiscal year 1998. The portion of the restructuring charge related to the restarted equipment should have been reversed in fiscal year 1999. The correction

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of this error resulted in additional operating lease expense of $70 and $140 for the quarter and six months ended March 31, 2002, respectively.

QPF Acquisition Integration Costs

In fiscal year 2002, certain costs, aggregating $1,100, of integrating the QPF business acquired in June 2001 were charged to a purchase accounting reserve. The Company has determined that these costs should have been expensed as period costs in fiscal year 2002. The correction of this error resulted in additional expense of $112 and $187 for the quarter and six months ended March 31, 2002, respectively.

OPP Film Line

The Company should have expensed certain costs included in the additions to its OPP Film Line in the Company’s Varennes, Canada plant. The correction of these errors resulted in additional cost of sales of $72 and $787 for the quarter and six months ended March 31, 2002, respectively, and additional selling, general and administrative expenses of $25 and $50 for the quarter and six months ended March 31, 2002, respectively.

The correction of the above items resulted in the restatement of certain amounts on the statement of operations for the quarter and six months ended March 31, 2003 as follows:

Statement of Operations

3. 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 March 31, 2003 and September 30, 2002:

In October 2001, the FASB issued SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes FASB Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and also supersedes the accounting and certain reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business. The Company adopted SFAS No. 144 effective October 1, 2002. The adoption of SFAS No. 144 did not have a material impact on its financial position or results of operations.

In June 2002, the FASB issued Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This Statement requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. Under previous guidance, certain exit costs were accrued upon management’s commitment to an exit plan, which is generally before an actual liability has been incurred. Adoption of this Statement is required for exit activities initiated after December 31, 2002.

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5. Restructuring

2002 Restructuring

In September 2002, the Company recorded a $9,002 restructuring charge associated with the Company’s decision to close the Boston-based corporate office, realign the Company’s business units and reorganize key roles and responsibilities. The reorganization eliminated 50 full time positions. The following is a summary of the 2002 restructuring reserve as of March 31, 2003, of which $2,018 is included in accrued expenses and other liabilities and $1,235 is included in long-term liabilities.

1998 Restructuring

The Company announced a major restructuring of its Covington, Virginia manufacturing facility in 1998. The restructuring included the shutdown of certain assets and the elimination of approximately 200 full-time manufacturing and plant administrative positions. The following is a summary of the 1998 restructuring reserve as of March 31, 2003, of which $619 is included in accrued expenses and other liabilities and $2,325 is included in long-term liabilities.

6. Stock Options

The Company maintains common stock option plans for key employees, directors and consultants under which the exercise price is generally not less than the fair value of the shares at the date of grant. The options generally vest at a rate of 25 percent per year. Vested employee options generally expire within three months of employment termination or three years after the death of the employee. Vested director options generally expire within three months of the resignation or within six months of the death of a director. All options expire upon the occurrence of the tenth anniversary of the grant date or upon other termination events specified in the plans.

The Company accounts for stock-based compensation to employees using the intrinsic value method. Accordingly, no compensation cost has been recognized for fixed stock option grants since the options granted to date have exercise prices per share of not less than the fair value of the Company’s common stock at the date of the grant.

If compensation cost for stock option grants and the Company’s Employee Stock Purchase Plan had been determined based on the fair value of the grant for the three and six months ended March 31, 2003 and 2002, the effect on the Company’s net loss and loss per share on a pro forma basis would have been as follows:

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The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing model. The weighted-average grant date fair value of options granted during the three and six months ended March 31, 2003 were $1.04 and $1.80 respectively.

FORWARD-LOOKING STATEMENTS

Certain information contained in this report should be considered “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements represent, among other things, the expectations, beliefs, plans and objectives of management and future financial performance and/or assumptions underlying or judgments concerning matters discussed in this document. The words “believe,” “estimate,” “intend,” “anticipate,” “project,” and “expect” and similar expressions are intended to identify forward-looking statements. All forward-looking statements involve certain risks, estimates, assumptions, and uncertainties with respect to future revenues, cash flows, expenses and the cost of capital, among other things.

You should consider the risks set forth in Item 7 and Exhibit 99.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2002 and elsewhere in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise the forward-looking statements included in this Quarterly Report to reflect any future events or circumstances.

COMPARATIVE RESULTS OF OPERATIONS FOR THE QUARTER AND SIX MONTHS ENDED MARCH 31, 2003 WITH THE QUARTER AND SIX MONTHS ENDED MARCH 31, 2002

Introduction

The Company is a leading North American developer and manufacturer of 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 and or moisture barriers to preserve freshness. The Company generally sells 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 periods ended March 31, 2003 and 2002 are referred to as the second quarters of 2003 and 2002, respectively. All dollar amounts are in thousands.

Results of Operations

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Sales for the second quarter of fiscal 2003 of $62,850 were $713, or 1.1 percent, lower than the comparable quarter in fiscal 2002. A 5.7 percent decline in volume was partially offset by a 4.8 percent increase in average selling price. The higher average selling price was due both to price increases and an improved mix of products sold.

Sales outside the United States were 13.0 percent of sales for the second quarter of fiscal 2003, compared with 11.8 percent for the same period in fiscal 2002, and generated operating profit of $141 and $38 in the second quarter of fiscal 2003 and 2002, respectively.

Gross profit of $12,719 was $771, or 6.5 percent, higher than the same period of last year. Gross margin was 20.2 percent versus 18.8 percent in the same period of last year. Raw material costs for the quarter were approximately $4,700, or 23 percent, higher than the same quarter of last year. Nevertheless, the Company was able to deliver higher gross margin and higher gross profit due to higher selling prices and an improved mix of products sold. Based on Chemical Data, Inc., (CDI)’s projections, the Company expects that the cost of polypropylene resin will continue to increase in the third quarter.

Selling, general and administrative expenses were $6,090, or 9.7 percent, of sales for the second quarter of fiscal 2003 compared with $7,042, or 11.1 percent of sales for the same period in 2002. Selling, general and administrative expenses decreased $952 as a result of $1,372 in cost savings, primarily related to the restructuring announced in September 2002, offset in part by $420 in restructuring transition expenses incurred in the second quarter of fiscal 2003. Transition expenses include duplicative headcount, travel, and relocation expenses specific to the implementation of the restructuring program.

Research and development expense was $2,024, or 3.2 percent, of sales for the second quarter of 2003, compared with $1,667, or 2.6, percent of sales for the same period in fiscal 2002. The $357 increase is due to an increase in spending on more highly differentiated products.

Interest expense of $7,715 was $625 higher than in the second quarter of fiscal 2002. This was primarily due to increased borrowings on our revolving credit facility and less capitalized interest as compared to the same period in the prior year.

The effective income tax rate for the second quarter of fiscal 2003 and the second quarter of fiscal 2002 was zero.

Sales for the first six months of fiscal 2003 of $122,211 were $3,171, or 2.7 percent, higher than the comparable period in fiscal 2002. The 1.3 percent decline in volume was more than offset by a 4.1 percent increase in average selling price. The higher average selling price was due both to price increases and an improved mix of products sold.

Sales outside the United States were 14.2 percent of sales for the first six months of fiscal 2003, compared with 12.0 percent for the same period in fiscal 2002, and generated operating profit of $1,214 and $161 in the first six months of fiscal 2003 and 2002, respectively.

Gross profit of $24,900 was $2,626, or 11.8 percent, higher than the same period of last year. Gross margin was 20.4 percent versus 18.7 percent in the same period of last year. Raw material costs for the first six months were approximately $7,000, or 17 percent, higher than the same period of last year. Nevertheless, the Company was able to deliver higher gross margin and higher gross profit due to lower manufacturing costs, higher selling prices, and an improved mix of products sold.

Selling, general and administrative expenses were $12,310, or 10.1 percent of sales, for the first six months of fiscal 2003 compared with $13,717, or 11.5 percent of sales, for the same period in 2002. Selling, general and administrative expenses decreased $1,407 as a result of $2,291 in cost savings, primarily related to the restructuring announced in September 2002, partially offset by $884 in restructuring transition expenses incurred in the first six

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months of fiscal 2003. Transition expenses include duplicative headcount, travel, and relocation expenses specific to the implementation of the restructuring program.

Research and development expense was $3,965, or 3.2 percent, of sales for first six months of 2003, compared with $3,166, or 2.7 percent, of sales for the same period in fiscal 2002. The $799 increase is due to an increase in spending on more highly differentiated products.

Interest expense of $14,994 was $1,012 higher than in the first six months of fiscal 2002. This was primarily due to increased borrowings on our revolving credit facility and less capitalized interest as compared to the same period in the prior year.

The effective income tax rate for the first six months of fiscal 2003 and the first six months of fiscal 2002 was zero.

Liquidity and Capital Resources

The Company completed the syndication of its amended and restated credit facility (the “Credit Facility”) on March 31, 2003. The Credit Facility, due in March 2006, provides availability up to $50,000, subject to certain restrictions, including the level of the Company’s borrowing base, as defined in the Credit Facility. As of March 31, 2003, borrowings under the Credit Facility were $10,097, in addition to $6,231 of outstanding letters of credit securing $6,500 of outstanding revenue bonds due November 4, 2004. Unused availability under the credit facility was approximately $21,000 at March 31, 2003. The Credit Facility contains covenants that limit capital expenditures, require certain minimum cash flow levels and require certain minimum levels of availability.

AET has $275,000 of 10.75% Senior Notes due 2011 (the “Senior Notes”) outstanding. The Senior Notes are unsecured obligations of AET. The Senior Notes contain customary covenants and related provisions, including a default provision based on the acceleration of debt under other significant debt instruments.

Management believes the cash flows from the Company’s operations in fiscal 2003 and availability under the Credit Facility will be adequate to fund its operations and will provide the Company with the ability to fund its planned and committed capital expenditures and meet its cash flow obligations through at least December, 2004.

Operating Activities

Operating activities for the first six months of fiscal 2003 used $17,210 of cash, which was the result of earnings before depreciation and other non-cash charges of $3,417, and cash used from changes in working capital of $20,627. Inventory at March 31, 2003 increased $15,994 from September 30, 2002. The increase in inventory resulted primarily from lower volume of products sold, versus plan, during the second quarter, the customary build in Company stocks to meet the demands of its seasonally busy third quarter, increased raw material costs, and the restoration of reduced fiscal 2002 year end stocks as a result of the temporary plant shutdowns in the fourth quarter of fiscal 2002. Accounts payable and accrued expenses decreased by $2,483, primarily due to the satisfaction of obligations related to the September, 2002 restructuring.

Investing Activities

In the first six months of fiscal 2003, investing activities used $8,349 of cash for additions to property, plant and equipment.

Financing Activities

In the first six months of fiscal 2003, financing activities generated $9,424 of cash due to $10,097 in borrowings under the revolving credit facility less debt issuance costs of $673.

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 costs of materials and labor and inflation. The costs of raw materials make up a significant portion of the Company’s costs and have historically fluctuated. It cannot be assumed, however, that future market conditions will support any correlation between raw material cost fluctuations and finished product films pricing.

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Seasonal Nature of Some OPP Films Markets

Some of the end-use markets for OPP films are seasonal. For example, demand in the snack food, soft drink and candy markets is generally higher in the spring and summer. As a result, sales and net income are generally higher in the Company’s second and third fiscal quarters and the Company typically builds inventory in its first fiscal quarter to fulfill increased demand in the second and third fiscal quarters, although actual results can be influenced by numerous factors, such as raw material costs, competitive prices and other factors discussed in this report.

New Accounting Pronouncements

A summary of the impact of certain new accounting pronouncements on the Company’s business follows.

In October 2001, the FASB issued SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes FASB Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and also supersedes the accounting and certain reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business. The Company adopted SFAS No. 144 effective October 1, 2002. The adoption of SFAS No. 144 did not have a material impact on its financial position or results of operations.

In June 2002, the FASB issued Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This Statement requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. Under previous guidance, certain exit costs were accrued upon management’s commitment to an exit plan, which is generally before an actual liability has been incurred. Adoption of this Statement is required for exit activities initiated after December 31, 2002.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, bad debts, inventories, and intangible assets. Estimates and judgments are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant estimates and judgments used in preparation of its consolidated financial statements.

Revenue Recognition. Revenue is recognized on product sales at the point in time when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred and there is reasonable assurance of collection of the sales proceeds. The Company generally obtains purchase authorizations from its customers for a specified amount of product at a specified price with delivery terms at the point of shipment. While the Company does provide its customers with a right of return, revenue is not deferred. Rather, a reserve for sales returns is provided in accordance with SFAS No. 48 based on significant historical experience.

Asset Valuation. Asset valuation includes assessing the recorded value of certain assets, including accounts receivable, inventories, property, plant and equipment, goodwill, and intangible assets. Asset valuation is governed by various accounting principles, including SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of” (to be superceded in fiscal year 2003 by SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”), SFAS No. 141, “Business Combinations”, SFAS No. 142 “Goodwill and Other Intangible Assets” and Accounting Research Bulletin No. 43, among others. Management uses a variety of factors to assess valuation depending on the asset. For example, accounts receivable are evaluated based upon an aging schedule. The recoverability of inventories is based primarily upon the age of inventory held and market conditions. Property, plant and equipment, intangible and other assets are evaluated utilizing various factors, including the expected period the asset will be utilized and forecasted cash flows. Changes in judgments on any of these factors could impact the value of the asset.

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Concentrations of Credit Risk. Financial instruments that are exposed to concentrations of credit risk consist primarily of trade receivables. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers. The Company’s allowance for doubtful accounts is calculated based primarily upon historical bad debt experience and current market conditions. Over the past ten years, annual bad debt expense has averaged approximately $690 and ranged from $206 in fiscal 1995 to $1,713 in fiscal 2002. As was the case in fiscal 2002, bankruptcy or other significant financial deterioration of any significant customers could impact their ability to satisfy their receivables with us. While we believe our allowance for bad debts at March 31, 2003 of $1,943 is adequate, an unanticipated increase in customer bankruptcies or other financial difficulties would require the Company to increase its provision for bad debts and ultimately increase its allowance for future bad debts.

Inventories. Inventories, which include material, labor and manufacturing overhead, are stated at the lower of cost or market with cost determined using a weighted average-cost method. The Company determines the market value of its raw ingredients, finished product and packaging inventories based upon references to current market prices for such items as of the end of each reporting period and records a write down of inventory cost to market, when applicable. Polypropylene, the Company’s major raw material, is petroleum based and prices can fluctuate significantly and, as discussed above, increases in raw material prices cannot always be passed on to customers. Additionally, from time to time, the Company has been able to utilize secondary markets to liquidate excess inventories. If raw material prices were to increase and the Company were unable to raise its prices or if the Company’s ability to liquidate excess inventories was significantly diminished, additional inventory reserves may be necessary.

Excess of Cost Over Fair Value of Net Assets Acquired. The excess of cost over fair value of net assets acquired (goodwill) is evaluated annually for impairment in accordance with SFAS 142. We have one reporting unit and estimate fair value based on a variety of market factors, including discounted cash flow analysis, market capitalization, and other market-based data. No impairment of goodwill was recorded during the second quarter of fiscal 2003. Our market capitalization and net assets at March 31, 2003 were $24,639 and $37,444, respectively. However, based on our discounted cash flow projections and other market-related data, the Company believes that at March 31, 2003 the fair value of the Company exceeds its net assets. If the projected cash flows and other projected operating results are not achieved, we would decrease the estimated fair value of our business and a full or partial impairment of our goodwill balance of $9,874 at March 31, 2003 would be necessary.

The Company’s market risks, and the ways it manages them, are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations as of September 30, 2002, included in the Company’s Form 10-K for the fiscal year ended September 30, 2002. There have been no material changes in the first six months of fiscal 2003 to such risks or the Company’s management of such risks.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s principal executive officer and its principal financial officer undertook an evaluation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) within 90 days of the filing date of this report and concluded that the Company’s controls and procedures relating to the processing of routine or systemic transactions were effective and that it had improved its controls and procedures relating to the accounting for its non-routine transactions, such as acquisitions and restructurings of operations, by closer coordination between the Company’s finance, operations and reporting personnel and earlier utilization of the expertise in financial reporting matters of its outside advisors. The Company’s principal executive officer and principal financial officer further concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s disclosure controls and procedures subsequent to the date of their evaluation. The Company is committed to ongoing periodic reviews and enhancements of its controls and their effectiveness and will report to

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the Company’s shareholders on these reviews and enhancements in the Company’s annual and quarterly reports filed under the Exchange Act.

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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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Stockholders of the Company was held on February 25, 2003 (the “Annual Meeting”). Proxies for the Annual Meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. A total of 10,903,720 shares of common stock were represented at the meeting by proxy.

At the Annual Meeting, Mr. Nader A. Golestaneh was elected as Class II Director of the Company for a term of three years expiring at the Company’s 2006 Annual Meeting. Votes were as follows: 10,684,465 shares were voted in favor of his election and 219,255 votes were withheld. The following directors’ terms continued after the Annual Meeting: Messrs. Richard G. Hamermesh, Joseph J. O’Donnell, Amin J. Khoury and Mark M. Harmeling.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A. Exhibits

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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.

Current Report on Form 8-K, filed with the Commission on January 27, 2003 announcing the amended and restated Credit Facility due in March 2006.

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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.

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CERTIFICATIONS

I, Amin J. Khoury, certify that:

Date: May 1, 2003

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I, Brian P. Crescenzo, certify that:

Date: May 1, 2003

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