|UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)
|-----------------------------------------------------------------------------------------------

|[X] |  | QUARTERLY REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ---------------------------------------------------------------------------------------

|For the quarterly
period ended: September 29, 2000


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
0-1298


ADVANCED TECHNICAL
PRODUCTS, INC.(Exact name of Issuer as Specified in Its Charter)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Delaware(State or Other Jurisdiction ofIncorporation or Organization) | 11-1581582(I.R.S. EmployerIdentification No.)
|--------------------------------------------------------------------- | ---------------------------------------------

|200 Mansell Ct. East,
Suite 505, Roswell, Georgia 30076(Address of Principal Executive Offices)


(770) 993-0291(Issuers
Telephone Number, Including Area Code)







(Former Address, if
Changed Since Last Report)



Indicate by check mark whether the
Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act during the past 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 [_]                              
                         NO [X]



The aggregate number of shares of
Common Stock outstanding as of November 10, 2000 was 5,362,541.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ADVANCED TECHNICAL
PRODUCTS, INC.


INDEX
|-----------------------------------------

|PART I.  FINANCIAL INFORMATION                                                                 |  |  | 
|---------------------------------------------------------------------------------------------- |  |  | 
|Item 1.  Financial Statements (unaudited)                                                      |  |  | 
|Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations | 
|Restatement of Previously Reported Financial Statements                                        |  |  | 
|Discontinued Operations                                                                        |  |  | 
|Results of Operations                                                                          |  |  | 
|Financial Condition and Liquidity                                                              |  |  | 
|Year 2000 Issues                                                                               |  |  | 
|Recent Accounting Pronouncements                                                               |  |  | 
|Forward Looking Statements - Cautionary Factors                                                |  |  | 
|Item 3.  Quantitative and Qualitative Disclosures About Market Risk                            |  |  | 
|PART II. OTHER INFORMATION                                                                     | 
|Item 1.  Legal Proceedings                                                                     |  |  | 
|Item 2.  Changes in Securities and Use of Proceeds                                             |  |  | 
|Item 3.  Defaults Upon Senior Securities                                                       |  |  | 
|Item 4.  Submission of Matters to a Vote of Security Holders                                   |  |  | 
|Item 5.  Other Information                                                                     |  |  | 
|Item 6.  Exhibits and Reports on Form 8-K                                                      |  |  | 

---

|ADVANCED TECHNICAL
PRODUCTS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSAS OF SEPTEMBER 29,
2000 AND DECEMBER 31, 1999


(UNAUDITED, IN
THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                         | September 29,2000 | December 31,1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ----------------
|ASSETS                                                                                                                                                                                   |                   |                 
|                                                                                                                                                                                         |                  
|CURRENT ASSETS:                                                                                                                                                                          |                  
|Cash and cash equivalents                                                                                                                                                                |                   | $1,534          
|Accounts receivable (net of allowance for doubtful accounts of $344 and $349 at                                                                                                          |                  
|September 29, 2000 and December 31, 1999, respectively)                                                                                                                                  |                   | 21,840          
|Inventories and costs relating to long-term contracts and programs in                                                                                                                    |                  
|process, net of progress payments                                                                                                                                                        |                   | 42,607          
|Prepaid income taxes                                                                                                                                                                     |                   | 574             
|                                                                                                                                                                                        
|Other prepaid expenses                                                                                                                                                                   |                   | 358             
|Deferred income taxes                                                                                                                                                                    |                   | 3,900           
|                                                                                                                                                                                        
|Total current assets                                                                                                                                                                     |                   | 70,813          
|                                                                                                                                                                                        
|NONCURRENT ASSETS:                                                                                                                                                                       |                  
|Property, plant and equipment                                                                                                                                                            |                   | 19,133          
|Less-accumulated depreciation                                                                                                                                                            |                   | (10,260         
|                                                                                                                                                                                        
|Net property, plant and equipment                                                                                                                                                        |                   | 8,873           
|                                                                                                                                                                                        
|Deferred income taxes                                                                                                                                                                    |                   | 778             
|Other noncurrent assets                                                                                                                                                                  |                   | 2,787           
|Net assets of discontinued operations                                                                                                                                                    |                   | 16,673          
|                                                                                                                                                                                        
|Total assets                                                                                                                                                                             |                   | $99,924         
|                                                                                                                                                                                        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                     |                  
|CURRENT LIABILITIES:                                                                                                                                                                     |                  
|Accounts payable                                                                                                                                                                         |                   | $14,332         
|Accrued expenses                                                                                                                                                                         |                   | 11,379          
|Short-term debt                                                                                                                                                                          |                   | 24,816          
|                                                                                                                                                                                        
|Current portion of capital lease obligations                                                                                                                                             |                   | 67              
|                                                                                                                                                                                        
|Total current liabilities                                                                                                                                                                |                   | 50,594          
|LONG-TERM LIABILITIES:                                                                                                                                                                   |                  
|Long-term debt, net of current portion                                                                                                                                                   |                   | 16,375          
|                                                                                                                                                                                        
|Capital lease obligations, net of current portion                                                                                                                                        |                   | 17              
|Other liabilities                                                                                                                                                                        |                   | 1,693           
|                                                                                                                                                                                        
|Total liabilities                                                                                                                                                                        |                   | 68,679          
|Mandatorily redeemable preferred stock, $1.00 par value, 1,000,000                                                                                                                       |                  
|shares authorized, issued and outstanding; redemption amount of $1.00 per share                                                                                                          |                   | 1,000           
|SHAREHOLDERS EQUITY:                                                                                                                                                                    |                  
|Preferred stock, undesignated, 1,000,000 shares authorized, no shares issued      and outstanding                                                                                        |                   |                
|Common stock, $.01 par value, 30,000,000 shares authorized, 5,347,798 and      5,306,438 shares issued and outstanding as
of September 29, 2000 and      December 31, 1999, respectively |                   | 53              
|Additional paid-in capital                                                                                                                                                               |                   | 16,968          
|Retained earnings                                                                                                                                                                        |                   | 13,464          
|Notes receivable from officers                                                                                                                                                           |                   | (135            
|                                                                                                                                                                                        
|Accumulated other comprehensive income (loss)                                                                                                                                            |                   | (105            
|                                                                                                                                                                                        
|Total shareholders equity                                                                                                                                                               |                   | 30,245          
|                                                                                                                                                                                        
|Total liabilities and
shareholders equity                                                                                                                                               |                   | $99,924         
|                                                                                                                                                                                        

|See accompanying Notes
to Condensed Consolidated Financial Statements.
|----------------------------------------------------------------------

---

|ADVANCED TECHNICAL
PRODUCTS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE
QUARTERS AND NINE MONTHS ENDED SEPTEMBER 29, 2000 AND OCTOBER 1, 1999


(UNAUDITED, IN
THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                         | QuarterEnded | Nine  MonthsEnded
|------------------------------------------------------------------------ | ------------ | -----------------
|
|
|Revenues                                                                 |              | $42,089          
|Cost of revenues                                                         |              | 31,705           
|                                                                        
|Gross profit                                                             |              | 10,384           
|General and administrative expenses                                      |              | 5,988            
|                                                                        
|Operating income                                                         |              | 4,396            
|                                                                        
|Interest expense                                                         |              | 811              
|                                                                        
|Income before income taxes                                               |              | 3,585            
|Income taxes                                                             |              | 1,376            
|                                                                        
|Income from continuing operations                                        |              | 2,209            
|                                                                        
|Discontinued operations:                                                 |             
|Loss from operations of segment to be disposed of                        |              |                 
|Provision for operating losses during the                                |             
|phase-out period                                                         |              |                 
|                                                                        
|Loss from discontinued operations            (net of income tax
benefit) |              |                 
|                                                                        
|Net income (loss)                                                        |              | $2,209           
|                                                                        
|Net income (loss) per share:                                             |             
|Basic:    Income from continuing operations                              |              | $0.41            
|Loss from discontinued operations                                        |              |                 
|                                                                        
|Net income (loss)                                                        |              | $0.41            
|                                                                        
|Diluted: Income from continuing operations                               |              | $0.40            
|Loss from discontinued operations                                        |              |                 
|                                                                        
|Net income (loss)                                                        |              | $0.40            
|                                                                        
|Weighted average number of common and                                    |             
|common equivalent shares outstanding:                                    |             
|Basic                                                                    |              | 5,345            
|                                                                        
|Diluted                                                                  |              | 5,462            
|                                                                        

|See accompanying Notes
to Condensed Consolidated Financial Statements.
|----------------------------------------------------------------------

---

|ADVANCED TECHNICAL
PRODUCTS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE
NINE MONTHS ENDED SEPTEMBER 29, 2000 AND OCTOBER 1, 1999


(UNAUDITED, IN
THOUSANDS)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                   | 2000 | 1999    
|------------------------------------------------------------------ | ---- | --------
|
|CASH FLOWS FROM OPERATING                                          |      |         
|ACTIVITIES:                                                        |     
|Net income (loss)                                                  |      | $2,469  
|Adjustments to reconcile net income (loss) to net cash provided by |     
|operating activities:                                              |     
|Depreciation and amortization                                      |      | 2,219   
|Changes in operating assets and liabilities:                       |     
|Accounts receivable                                                |      | (5,592  
|Inventories                                                        |      | (1,031  
|Other assets                                                       |      | 1,334   
|Accounts payable                                                   |      | 1,254   
|Accrued expenses                                                   |      | 2,653   
|Net assets of discontinued operations                              |      | 1,700   
|                                                                  
|Net cash provided
by operating activities                          |      | 5,006   
|                                                                  
|CASH FLOWS FROM INVESTING ACTIVITIES:                              |     
|Capital expenditures                                               |      | (221    
|Net investing activities of discontinued operations                |      | (222    
|                                                                  
|Net cash used in
investing activities                              |      | (443    
|                                                                  
|CASH FLOWS FROM FINANCING                                          |     
|ACTIVITIES:                                                        |     
|                                                                  
|Proceeds of borrowings                                             |      |        
|Repayments of borrowings                                           |      | (3,158  
|                                                                  
|Proceeds from exercise of stock options and warrants               |      | 5       
|Common stock issued under employee stock purchase plan             |      | 147     
|                                                                  
|Cash dividends paid                                                |      |        
|Payments under capital lease obligations                           |      | (57     
|Net financing activities of discontinued operations                |      | (513    
|                                                                  
|Net cash provided
by (used in) financing activities                |      | (3,576  
|                                                                  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               |      | 987     
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                     |      | 547     
|                                                                  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                           |      | $1,534  
|                                                                  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                  |     
|Cash paid for interest                                             |      | $3,218  
|Cash paid for income taxes                                         |      | $      

|See accompanying Notes
to Condensed Consolidated Financial Statements.
|----------------------------------------------------------------------

---

|ADVANCED TECHNICAL
PRODUCTS, INC.AND SUBSIDIARIES



NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)



1. BASIS OF PRESENTATION


The
accompanying unaudited Condensed Consolidated Financial Statements of Advanced Technical
Products, Inc. and Subsidiaries (the Company or ATP) have been prepared in accordance
with generally accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the quarter and nine months ended
September 29, 2000 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys Form 10-K for the
year ended December 31, 1999.



2. RESTATEMENT OF
PREVIOUSLY REPORTED FINANCIAL STATEMENTS


During
January 2000, the Company learned of possible accounting and financial reporting
irregularities at its subsidiary, Alcore, Inc. (Alcore), when certain financial records
were seized in connection with a search warrant issued by the United States District
Court - District of Maryland as part of a governmental investigation. Additionally, the
Company has been notified of an investigation by the United States Securities and
Exchange Commission regarding these matters.


After
becoming aware of the possible irregularities, the Company engaged special counsel and,
through such counsel, such other advisors as deemed necessary to assist in its
investigation of the possible irregularities. As a result of its investigation, the
Company has restated its consolidated financial statements for each of the first, second,
and third quarters of 1999.


The
effects of the adjustments to the consolidated financial statements for the quarter and
nine months ended October 1, 1999, are as follows (in thousands):
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                | Quarter | Nine Months
|----------------------------------------------- | ------- | -----------
|Reduction in revenues                           |         | $1,718     
|Increase in cost of revenues                    |         | 1,610      
|Increase in general and administrative expenses |         | 908        
|                                               
|Reduction in income before income taxes         |         | 4,236      
|Reduction in income tax expense                 |         | 1,471      
|                                               
|Reduction in net income                         |         | $2,765     
|Reduction in net income per share:              |        
|Basic                                           |         | $0.52      
|                                               
|Diluted                                         |         | $0.51      
|                                               

---

|Substantially
all of the adjustments relate to operations which have been subsequently classified as
discontinued by the Company and are contained in the restated results of discontinued
operations in the accompanying Condensed Consolidated Financial Statements (see Note 3).



3. DISCONTINUED
OPERATIONS


On
June 30, 2000, the Company adopted a formal plan to sell its structural core materials
segment, which consists of the operations of the Alcore, Inc. and Alcore Brigantine S. A.
subsidiaries. The Company anticipates disposal of the segment by the first quarter of
2001. To date, the Company has not entered into any agreement or arrangement with any
third party to purchase the subsidiaries. The assets to be sold consist primarily of
accounts receivable, inventories, property, plant and equipment. Operating results of the
structural core materials segment for the quarter and nine months ended September 29,
2000 are shown separately as a discontinued operation in the accompanying Condensed
Consolidated Financial Statements. In addition, operating results for the quarter and
nine months ended October 1, 1999 have been restated to show results of the structural
core materials segment separately. Net revenues of the structural core materials segment
were approximately $5.8 million and $4.6 million for the quarters ending September 29,
2000 and October 1, 1999, respectively, and $16.9 million and $14.1 million for the nine
months ending September 29, 2000 and October 1, 1999, respectively. These amounts are not
included in revenues in the accompanying Condensed Consolidated Statements of Operations.


Discontinued
operation results, including income tax impact, are summarized as follows (in thousands):
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                          | QuarterEnded | Nine  MonthsEnded
|--------------------------------------------------------- | ------------ | -----------------
|
|
|Loss from operations of segment to be disposed:           |              |                  
|Loss before taxes                                         |              | $               
|Income tax benefit                                        |              |                 
|                                                         
|Net loss after tax                                        |              | $               
|                                                         
|Provision for operating loss during the phase-out period: |             
|Loss before taxes                                         |              | $               
|Income tax benefit                                        |              |                 
|                                                         
|Net loss after tax                                        |              | $               
|                                                         
|Total loss from discontinued operations:                  |             
|Loss before taxes                                         |              | $               
|Income tax benefit                                        |              |                 
|                                                         
|Net loss after tax                                        |              | $               
|                                                         

---

|4. INVENTORIES


Inventories
at September 29, 2000 and December 31, 1999 consisted of the following (in thousands):
|-------------------------------------------------------------------------------------------------------------------

| |  | Sept. 29,2000     | Dec. 31,1999
| |  | ----------------- | ------------
| |  | Finished goods    |             
| |  | Work in process   |             
| |  | Raw materials     |             
| |  | Progress payments |             
|
| |  | Total inventories |             
|

## 5. DEBT

Debt
is summarized as follows (in thousands):

| |  | Sept. 29,2000                          | Dec. 31,1999
| |  | -------------------------------------- | ------------
| |  | Short-term debt:                       |             
| |  | Revolving loans                        |             
| |  | Current portion of long-term debt      |             
|
| |  |                                        |             
|
| |  | Long-term debt:                        |             
| |  | Term loans                             |             
| |  | Equipment loans                        |             
|
| |  | Total long-term debt                   |             
| |  | Less current portion                   |             
|
| |  | Long-term debt, net of current portion |             
|

|At
September 29, 2000 the Company had a $47.0 million credit facility consisting of: (1)
$27.0 million of revolving credit against eligible receivable and inventory balances, (2)
a $17.3 million term loan and (3) a $2.7 million capital expenditure facility. As of
September 29, 2000, the Company had approximately $4.0 million of unused borrowing
availability on this credit facility, net of $1.7 million of reserves against the revolving
loan borrowing base for outstanding stand-by letters of credit commitments and other items.


The
revolving, term and equipment loans are secured by collateral consisting of substantially
all of the Companys assets including inventory, equipment, receivables, general
intangibles, investment property and real property. The interest rates on the loans are
set quarterly based on the Companys performance against debt-to-earnings ratios
specified in the agreement. Interest rates can range from LIBOR (the London Interbank
Offered Rates) plus 2.75% to LIBOR plus 1.0% on the revolving loan and from LIBOR plus
3.25% to LIBOR plus 1.5% on the term and equipment loans. Alternatively, the Company may
elect interest rates based on the lending institutions prime rate with the revolving
loan ranging from prime plus 0.5% to prime plus 0.25% and the term and equipment loans
ranging from prime plus 0.75% to prime plus 0.50%. Interest is paid monthly in arrears on
all loans. The credit facility, as amended in October 2000, extends to October 2003.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|The
following debt balances represent obligations relating to operations of the discontinued
structural core materials segment (see Note 3). The balances are combined along with all
of the assets and liabilities of the segment and reported as net assets of discontinued
operations on the accompanying Condensed Consolidated Balance Sheets.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (in thousands)                        
| |  | --------------------------------------
|
| |  | Bonds payable                         
| |  | Deferred obligation                   
| |  | Other long-term debt                  
|
| |  | Total long-term debt                  
| |  | Less current portion                  
|
| |  | Long-term debt, net of current portion
|

|Bonds
payable result from a financing agreement with the State of Maryland dated May 14, 1997
to provide $2.6 million in 15 year tax-exempt industrial development bonds bearing
interest at a variable rate adjusted weekly to finance the purchase of the Belcamp,
Maryland honeycomb manufacturing facility and an adjacent 3.2 acre parcel of land. The
Company has entered into an interest rate hedge agreement with a financial institution to
fix the interest rate on the tax exempt bonds at 5.07% through the year 2012. The bonds
payable require annual principal payments of $200,000 through 2000, $220,000 for 2001
through 2004 and $140,000 for 2005 through 2012, and are secured by a letter of credit
agreement between the Company and a bank. On May 12, 2000, the letter of credit agreement
was amended for a period extending to May 15, 2001. As a condition of the amended
agreement, ATP delivered collateral to the bank in the form of qualified investment
securities as defined with a value of $100,000 as of the date of execution of the
amendment. Additional collateral of $150,000 increments was delivered on or before each
of July 1, August 1, September 1, and October 1, 2000. The Company is subject to several
financial and nonfinancial covenants under this financing agreement. At September 29,
2000, the Company was in violation of a financial covenant. It is anticipated that the
lender will waive this and future violations, which are expected by the Company during
2000. However, such waivers are not assured.


During
October 2000, the Company entered into an agreement with a lender for a three year,
$7,000,000 loan in the form of a junior secured credit facility. The loan bears interest
payable monthly in arrears at an annual rate of 12.5%, and an additional 2.5% of
payment-in-kind interest that is payable at maturity. The loan principal is payable at
maturity in October 2003. In connection with the loan, ATP also issued warrants giving
the lender the right to purchase 320,000 shares of the Companys common stock at an
exercise price of approximately $4.50 per share. The warrants are exercisable at any time
prior to the fifth anniversary of the credit facility closing. Alternatively, at any time
after 18 months from the closing, but prior to the expiration of the warrants, the lender
may elect to require the Company to repurchase each warrant for an amount equal to 10% of
ATPs EBITDA (earnings before interest, taxes, depreciation and amortization) divided by
320,000 (the Warrant Put). The Warrant Put is subject to a maximum cap of $1,750,000.
In the event of an exercise of a Warrant Put resulting in a repurchase price of
$1,000,000 or greater, the Company has the right to satisfy up to 50% of the obligation
by issuing a promissory note to the lender, with principal payments amortized evenly over
18 months.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|6. EARNINGS PER SHARE


Earnings
per share (EPS) are calculated as follows (in thousands, except per share amounts):
|----------------------------------------------------------------------------------------------------------------------

|                                              | QuarterEnded | Nine  MonthsEnded
|--------------------------------------------- | ------------ | -----------------
|
|
|Income from continuing operations             |              | $ 2,209          
|Less:  preferred stock dividends accrued      |              | (20              
|                                             
|Income from continuing operations available   |             
|for common shares (same for both basic        |             
|and diluted EPS calculation)                  |              | $ 2,189          
|                                             
|Loss from discontinued operations (same for   |             
|both basic and diluted EPS calculation)       |              | $               
|                                             
|Net income (loss)                             |              | $ 2,209          
|Less:  preferred stock dividends accrued      |              | (20              
|                                             
|Net income (loss) available for common shares |             
|(same for both basic and diluted EPS          |             
|calculation)                                  |              | $ 2,189          
|                                             
|Weighted average number of common             |             
|shares outstanding:                           |             
|Basic                                        |              | 5,345            
|Add:  assumed stock conversions, net of       |             
|assumed treasury stock purchases:             |             
|stock options                                |              | 117              
|stock warrants                               |              |                 
|                                             
|Diluted                                      |  
;      | 5,462            
|                                             
|Basic EPS:                                    |             
|Income from continuing operations             |              | $   0.41         
|Loss from discontinued operations             |              |                 
|                                             
|Net income (loss)                             |              | $   0.41         
|                                             
|Diluted EPS:                                  |             
|Income from continuing operations             |              | $   0.40         
|Loss from discontinued operations             |              |                 
|                                             
|Net income (loss)                             |              | $   0.40         
|                                             

---

|7. SEGMENT REPORTING


Segment
financial information is summarized as follows (in thousands):
|---------------------------------------------------------------------------------------------

|                                        | QuarterEnded | Nine  MonthsEnded
|--------------------------------------- | ------------ | -----------------
|
|
|Revenues (all from external customers): |              |                  
|Aerospace and Defense                   |              | $ 35,553         
|Commercial Composites                   |              | 4,377            
|Other operating segments                |              | 2,159            
|                                       
|Total                                   |              | $ 42,089         
|                                       
|Operating income (loss):                |             
|Aerospace and Defense                   |              | $   4,351        
|Commercial Composites                   |              | 1,165            
|Other operating segments                |              | (164             
|Corporate                               |              | (956             
|                                       
|Total                                   |              | $   4,396        
|                                       

|8. COMPREHENSIVE INCOME


Effective
January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income. This statement establishes items that are required to
be recognized under accounting standards as components of comprehensive income. Statement
130 requires, among other things, that an enterprise report a total for comprehensive
income in financial statements of interim periods issued to shareholders. The Companys
other comprehensive loss for the quarter and nine months ended September 29, 2000
consisted of foreign currency translation adjustments totaling $93,000 and $132,000,
respectively. Comprehensive income totaled $2,116,000 and $2,337,000 for the quarter and
nine months ended September 29, 2000, respectively. There was no other comprehensive
income or loss for the quarter and nine months periods ended October 1, 1999.



9. CONTINGENCIES


On
October 7, 1999, the New York Office of the Attorney General, on behalf of the New York
State Department of Environmental Conservation (NYSDEC), sent a letter to the Company,
claiming that Lunn Industries (Lunn) a division of the Company, along with numerous other parties,
is a potentially responsible party (PRP) with respect to contamination at the Babylon Landfill
in Babylon, New York. NYSDEC alleges that Lunn sent waste to the Babylon Landfill and that Lunn is jointly
and severally liable under the Comprehensive Environmental Response, Compensation and Liability Act for NYSDECs
response costs in addition to interest, enforcement and future costs. According to
NYSDEC, there are currently 15 PRPs identified for the Babylon Landfill. Lunn is seeking
access to NYSDECs files to determine the extent of its liability, if any. The Company
has not recorded any liability for the contingency as of September 29, 2000. See Legal
Proceedings (Part II, Item 1 of this report) for additional discussion of this matter.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|The
Company has been notified of an investigation by the United States Securities and
Exchange Commission as a result of possible accounting and financial reporting
irregularities at Alcore. The Company and management are cooperating fully, and because
this investigation and the governmental investigation referred to in Note 2 are in the
early stages, their outcome is uncertain at this time.


The
Company and certain of its Officers and Directors have been named in a number of lawsuits
filed during July, 2000 in the United States District Court for the Northern District of
Georgia. The lawsuits assert securities fraud claims based on, among other things,
alleged misstatements and omissions concerning the Companys 1998 and 1999 financial
results and condition, including various violations of generally accepted accounting
principles. The lawsuits purport to be brought on behalf of a class consisting of all
persons who purchased the Companys Common Stock in the period from April, 1998 through
April, 2000. The Company intends to defend itself vigorously. It is not possible to
predict the impact that these lawsuits may have on the Company, nor is it possible to
predict whether any other suits or claims may arise out of these matters in the future.
However, it is possible that the present or future lawsuits, and any investigations or
proceedings arising out of the same or related facts, depending on their outcome, could
have a material adverse impact on the Companys financial condition or results of
operations in one or more future periods.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations


The
following discussion and analysis should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto included elsewhere herein.



Restatement of
Previously Reported Financial Statements


During
January 2000, the Company learned of possible accounting and financial reporting
irregularities at its subsidiary, Alcore, when certain financial records were seized in
connection with a search warrant issued by the United States District Court - District of
Maryland as part of a governmental investigation.


After
becoming aware of the possible irregularities, the Company engaged special counsel and,
through such counsel, such other advisors as deemed necessary to assist in its
investigation of the possible irregularities. As a result of its investigation, the
Company has restated its 1999 consolidated financial statements for each of the first,
second, and third quarters of 1999. The following discussion of 1999 amounts relates to
the Companys results of operations as restated for the adjustments determined necessary
by the Companys investigation. See Notes 2 and 9 of the Condensed Consolidated Financial
Statements of the Company.



Discontinued Operations


On
June 30, 2000, the Company adopted a formal plan to sell its structural core materials
segment, which consists of the operations of the Alcore, Inc. and Alcore Brigantine S. A.
subsidiaries. Operating results of the structural core materials segment are shown
separately as a discontinued operation in the accompanying Condensed Consolidated
Financial Statements. See Note 3 of the Condensed Consolidated Financial Statements of
the Company.



Results of Operations


Quarter
and Nine Months Ended September 29, 2000 Compared with the Quarter and Nine Months Ended
October 1, 1999


Revenues
for the quarter ended September 29, 2000 increased $2.2 million compared to the quarter
ended October 1, 1999, or 5.5%, from $39.9 million in 1999 to $42.1 million in 2000.
Revenues for the nine months ended September 29, 2000 increased $8.3 million over the
nine months ended October 1, 1999, or 6.9%, from $119.9 million in 1999 to $128.2 million
in 2000. The increase in revenues was primarily attributable to the following factors:
(i) increased deliveries of composite components on several long-term aerospace and
defense programs, including the F-18E/F and C-17 military aircraft and the Airbus A330
and A340 commercial aircraft, (ii) increased revenues on chemical defense contracts,
primarily from the Joint Services Lightweight Standoff Chemical Agent Detector (JSLSCAD)
and the Multi-Purpose Integrated Chemical Agent Detector (MICAD) programs and (iii)
increased shipments of the Companys commercial composites products.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Gross
profit as a percentage of revenues was 24.7% in the third quarter of 2000, compared to
22.4% in the third quarter of 1999. The gross profit percentage for the first nine months
increased from 22.5% in 1999 to 23.6% in 2000. The increase was primarily attributable to
improved profitability of the commercial composites segment resulting from material cost
reductions.


General
and administrative expenses for the third quarter of 2000 totaled $6.0 million,
substantially unchanged from the third quarter of 1999. General and administrative
expenses for the first nine months of 2000 increased $1.1 million, or 6.2%, compared to
1999. The increase is primarily the result of non-recurring charges of $1.3 million
recorded in the second quarter of 2000, including costs incurred in connection with the
termination of a January 2000 merger agreement and severance costs. As a percentage of
revenues, general and administrative expenses decreased from 15.0% in 1999 to 14.2% in
2000 for the quarter, and from 14.9% in 1999 to 14.8% in 2000 for the nine months. The
reduction of general and administrative expenses as a percentage of revenues is primarily
attributable to the increased revenues in 2000.


Operating
income was $4.4 million, or 10.4% of sales, for the third quarter of 2000, compared to
$3.0 million, or 7.4% of sales, for the third quarter of 1999. Operating income was $11.3
million, or 8.8% of sales, for the first nine months of 2000, compared to $9.1 million,
or 7.6% of sales, for the first nine months of 1999. Excluding the non-recurring general
and administrative costs of $1.3 million discussed in the previous paragraph, operating
income was $12.6 million for the first nine months of 2000, an increase of $3.5 million,
or 38.1%, compared to 1999. The increased operating income results primarily from
increased revenues, improved operating results of the commercial composites segment and
increased profits on advanced composite components delivered on the F-18 E/F program.


Interest
expense in 2000 increased $138,000 for the quarter and $443,000 for the nine months,
primarily the result of higher interest rates in effect during 2000 compared to the same
period of 1999.


Income
taxes increased $493,000 for the quarter and $670,000 for the nine months in 2000,
reflecting the relative change in income before taxes. The effective income tax rate for
continuing operations was 38.5% for all periods reported.


Total
loss from discontinued operations decreased $2.3 million for the quarter and $1.6 million
for the first nine months of 2000 compared to 1999. The reduced loss reflects continued
improvement in the operating results of the structural core materials segment resulting
from overhead cost reductions and production process improvements implemented at Alcore
during 2000.



Financial Condition and
Liquidity


Cash
flow provided by operations was $5.0 million for the first nine months of 2000 compared
to $2.4 million for the same period in 1999. Working capital, excluding short-term debt
balances, increased $2.1 million in the first nine months of 2000 to $45.0 million.
Significant changes in working capital during the nine months ended September 29, 2000
included: (i) an increase of $5.6 million in accounts receivable, resulting primarily
from an increase in revenues, (ii) an increase of $4.0 million in accounts payable and
accrued expenses, reflecting accrued expenses incurred during 2000 for non-recurring
general and administrative expenses, increased inventory levels and extended payment
terms negotiated with several major suppliers, (3) an increase of $1.0 million in
inventories, reflecting generally higher business activity levels, (4) a decrease of $1.5
million in prepaid income taxes resulting from the application of prior year prepaid tax
balances to satisfy tax liabilities generated by income earned in 2000 and (5) an
increase of $1.0 million in cash and cash equivalents, primarily the result of collateral
payments made during 2000 in connection with a letter of credit agreement between the
Company and a bank (See Note 5 of the Condensed Consolidated Financial Statements of the
Company). Net cash used in investing activities totaled $0.4 million in the first nine
months of 2000 and resulted exclusively from capital expenditures.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|The
Companys primary loan agreement includes a total credit facility of $47.0 million
consisting of: (i) $17.3 million of revolving credit against eligible receivable and
inventory balances, (ii) a $17.3 million term loan and (iii) a $2.7 million capital
expenditure facility. The term loan is payable quarterly based on a seven-year
amortization period. The equipment loans are payable monthly based on a five-year
amortization period. The interest rates on the loans are set quarterly based on the
Companys performance against debt-to-earnings ratios specified in the agreement.
Interest rates can range from LIBOR (the London Interbank Offered Rates) plus 2.75% to
LIBOR plus 1.0% on the revolving loan and from LIBOR plus 3.25% to LIBOR plus 1.5% on the
term and equipment loans. Alternatively, the Company may elect interest rates based on
the lending institutions prime rate with the revolving loan ranging from prime plus 0.5%
to prime plus 0.25% and the term and equipment loans ranging from prime plus 0.75% to
prime plus 0.50%. Interest is paid monthly in arrears on all loans. The credit facility,
as amended in October 2000, matures in October 2003. As of September 29, 2000, the Company had
approximately $4.0 million of unused borrowing availability on this credit facility, net of $1.7 million
of reserves against the revolving loan borrowing base for outstanding stand-by letters of
credit commitments and other items.


During
October 2000, the Company entered into an agreement with a lender for a three year,
$7,000,000 loan in the form of a junior secured credit facility. The loan bears interest
payable monthly in arrears at an annual rate of 12.5%, and an additional 2.5% of
payment-in-kind interest that is payable at maturity. The loan principal is payable at
maturity in October 2003. In connection with the loan, ATP also issued warrants giving
the lender the right to purchase 320,000 shares of the Companys common stock at an
exercise price of approximately $4.50 per share. The warrants are exercisable at any time
prior to the fifth anniversary of the credit facility closing. Alternatively, at any time
after 18 months from the closing, but prior to the expiration of the warrants, the lender
may elect to require the Company to repurchase each warrant for an amount equal to 10% of
ATPs EBITDA (earnings before interest, taxes, depreciation and amortization) divided by
320,000 (Warrant Put). The Warrant Put is subject to a maximum cap of $1,750,000. In
the event of an exercise of a Warrant Put resulting in a repurchase price of $1,000,000
or greater, the Company has the right to satisfy up to 50% of the obligation by issuing a
promissory note to the lender, with principal payments amortized evenly over 18 months.


At
September 29, 2000, the Companys backlog (continuing operations) of orders and long-term
contracts was approximately $503 million, compared to $549 million at December 31, 1999.
The backlog includes unreleased orders of approximately $385 million and $403 million at
September 29, 2000 and December 31, 1999, respectively.


As
discussed above, the Company has made capital expenditures totaling $0.4 million during
the first quarter of 2000, which have been financed by a combination of cash flows from
operations and increased borrowings under the revolving loan portion of the Companys
credit facility. The Company invested approximately $14.7 million in capital equipment
and facility improvements during the two-year period ending December 31, 1999. These
investments were made primarily in support of several new long-term aerospace and defense
contracts that are now in full production, and facility and equipment upgrades relating
to Natural Gas Vehicle (NGV) production. As a result, management believes that future short-term capital
spending requirements will be limited to a normal sustaining maintenance level plus a
relatively low amount of expenditures that will be cost justified by anticipated
incremental program revenues. However, the Company will consider other future capital
expenditure investments beyond the maintenance level when such investments are deemed to
be strategic or critical to the Companys growth.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|The
Company also anticipates its plan to sell its structural core materials segment will
generate additional future cash proceeds. The Company presently anticipates disposal of
the segment by the first quarter of 2001. To date, the Company has not entered into any
agreement or arrangement with any third party to purchase the segment.




Management
of ATP believes that cash flows from operations, available borrowings under its current
credit facility and the additional subordinated financing obtained during October 2000
are adequate to sustain the Companys current operating level and expected growth for the
next one to three years.


The
preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, income and expenses, and disclosure of contingent assets
and contingent liabilities at the date of the financial statements and during the
reporting period. Actual results could differ materially from those estimates.


The
Company believes that inflation has not had a material effect on the results of its
operations in the periods covered by this report.



Year 2000 Issues


ATP
completed its year 2000 (Y2K) preparation plan which included the following steps:
assessment, modification / implementation and testing. The Company has not experienced
any significant malfunctions or errors in its internal information technology (IT) and
non-IT systems that are critical to its operations since January 1, 2000. A few minor
application problems were identified and resolved early in the year 2000. The Company is
not aware of any significant Y2K issues or problems that may have arisen for its
significant customers and suppliers. Based on currently available information, the
Company is not aware of any significant continued exposure to Y2K systems issues,
although there can be no assurance that the Company will not be adversely affected by Y2K
issues.


ATPs
Y2K costs have not been budgeted and tracked as independent projects, but have been
incurred in conjunction with normal sustaining activities. ATP estimates that such costs,
including the replacement or upgrading of outdated, noncompliant hardware and software
were less than $250,000.



Recent Accounting
Pronouncements


In
September 1999, the Financial Accounting Standards Board issued Emerging Issues Task
Force (EITF) Issue No. 99-5, Accounting for Pre-Production Costs Related to Long-Term
Supply Arrangements. Among other things, EITF Issue No. 99-5 provides additional guidance
on how entities should account for costs incurred to design and develop molds, dies, and
tooling that will be used to produce products that will be sold under long-term supply
arrangements. The Company adopted the provisions of EITF Issue No. 99-5 on January 1,
2000. As a result, there was no material impact on the results of operations for the
quarters and nine months ended September 29, 2000 and October 1, 1999.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|In
December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements, which clarifies certain conditions
to be met in order to recognize revenue. The Company does not anticipate any material
impact on the results of operations as a result of this Staff Accounting Bulletin.



Forward Looking
Statements - Cautionary Factors


This
Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are those that do not state historical fact and are inherently
subject to risk and uncertainties. The forward-looking statements contained herein
include, without limitation, statements about the Companys expectations, beliefs,
intentions, or strategies regarding the future, and are based on current expectations and
information available to the Company. Such forward-looking statements entail various
risks and uncertainties which could cause actual results to differ materially from those
projected in such forward-looking statements. Such risks and uncertainties, which can
cause actual results to differ materially from those described herein, include the risks
and uncertainties associated with the pending governmental investigations and litigation
involving the Company. For additional information identifying such risks and
uncertainties, see the Companys 1999 Annual Report on Form 10-K (Item 7, under the
heading Factors Affecting Future Operating Results).


Item 3. Quantitative and
Qualitative Disclosures About Market Risk


The
Company is exposed to changes in interest rates primarily relating to its $50 million
credit facility. However, the carrying value of borrowings under the credit facility
generally approximate fair value due to the variable rate nature of such borrowings. The
interest rates are set quarterly based on the Companys performance against
debt-to-earnings ratios specified in the agreement. Interest rates can range from LIBOR
plus 2.75% to LIBOR plus 1.0% on the revolving loan and from LIBOR plus 3.25% to LIBOR
plus 1.5% on the term and equipment loans. Alternatively, the Company may elect interest
rates based on the lending institutions prime rate with the revolving loan ranging from
prime plus 0.5% to prime plus 0.25% and the term and equipment loans ranging from prime
plus 0.75% to prime plus 0.50%. At September 29, 2000, the Company had $41.1 million
outstanding under the credit facility at a weighted-average interest rate of 9.71%.


The
Company has not entered into transactions which subject it to material foreign currency
transaction gains and losses.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|PART IIOTHER
INFORMATION


Item 1. Legal Proceedings


As of
December 31, 1999, Lunn Industries, Inc., a division of the Company, in conjunction with
numerous other parties, has been identified as a potentially responsible party (PRP) at
an inactive landfill site in Babylon, New York identified by the New York State
Department of Environmental Conservation for remediation under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). As a PRP, the
Company may be required to pay a portion of the costs of evaluation and cleanup of this
site. Lawsuits and claims involving additional environmental matters may arise from time
to time. The New York Attorney Generals investigation of the inactive CERCLA site in
Babylon, New York is in a very preliminary stage, and as a result, management has based
its assessment of potential liability and remediation costs on currently available facts,
the number of PRPs identified, documentation available, currently anticipated and
reasonably identifiable remediation costs, existing technology, presently enacted laws
and regulations and other factors. While the Company may have rights of contribution or
reimbursement under insurance policies, such issues are not factors in managements
estimation of liability. Based on the foregoing factors, management believes that it is
unlikely that the identified matter at the inactive Babylon, New York site will have a
material adverse affect on the Companys consolidated financial position, results of
operations or cash flows.


During
January 2000, the Company learned of possible accounting and financial reporting
irregularities at its subsidiary, Alcore, when certain financial records were seized in
connection with a search warrant issued by the United States District Court - District of
Maryland as part of a governmental investigation. Additionally, the Company has been
notified of an investigation by the United States Securities and Exchange Commission
regarding these matters. The Company and management are cooperating fully, and because
the investigations are in the early stages, their outcomes are uncertain at this time.


The
Company and certain of its Officers and Directors have been named in a number of lawsuits
filed during July 2000 in the United States District Court for the Northern District of
Georgia. The lawsuits assert securities fraud claims based on, among other things,
alleged misstatements and omissions concerning the Companys 1998 and 1999 financial
results and condition, including various violations of generally accepted accounting
principles. The lawsuits purport to be brought on behalf of a class consisting of all
persons who purchased the Companys Common Stock in the period from April, 1998 through
April, 2000. The Company intends to defend itself vigorously. It is not possible to
predict the impact that these lawsuits may have on the Company, nor is it possible to
predict whether any other suits or claims may arise out of these matters in the future.
However, it is possible that the present or future lawsuits, and any investigations or
proceedings arising out of the same or related facts, depending on their outcome, could
have a material adverse impact on the Companys financial condition or results of
operations in one or more future periods.


ATP is
not a party to any other legal proceedings, other than routine claims and lawsuits
arising in the ordinary course of its business. ATP does not believe that such claims and
lawsuits, individually or in the aggregate, will have a material adverse effect on the
Companys consolidated financial position, results of operations or cash flows.
Compliance with federal, state, local and foreign laws and regulations pertaining to the
discharge of materials into the environment, or otherwise relating to the protection of
the environment, has not had, and is not anticipated to have, a material adverse effect
upon the cash flows, earnings or competitive position of ATP.
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|Item 2. Changes in
Securities and Use of Proceeds


Not
applicable.


Item 3. Defaults Upon
Senior Securities


Not
applicable.


Item 4. Submission of
Matters to a Vote of Security Holders


Not
applicable.


Item 5. Other Information


Not
applicable.


Item 6. Exhibits and
Reports on Form 8-K


(a)
Exhibits
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 27.1
-- Financial Data Schedule (for SEC use only).
| | ---------------------------------------------------

|(b)
Reports on Form 8-K.
|------------------------

| | Not
applicable.
| | ---------------

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|SIGNATURES


In
accordance with the requirements of the Securities Exchange Act of 1934, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | ADVANCED TECHNICAL PRODUCTS, INC.(Registrant)
| |  | ---------------------------------------------

|Dated:  November 13, 2000 |  | By: /s/ James P. Hobt  
James P.  Hobt,  Chief  Financial  and  Accounting  Officer,Treasurer and Secretary
|------------------------- |  | -------------------------------------------------------------------------------------------------------------------------

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|EXHIBIT INDEX
|-------------

| | 27.1      
Financial Data Schedule (for SEC use only).
| | ------------------------------------------------------