|UNITED STATESSECURITIES
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 28, 2001


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 [X] | NO [_]
|------- | ------

|The aggregate number of
shares of Common Stock outstanding as of November 8, 2001 was 5,839,238.
1
|--------------------------------------------------------------------------------------------------

|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                                                          
|        
|         |  | Discontinued Operations                                                
|         |  | Results of Operations                                                  
|         |  | Financial Condition and Liquidity                                      
|         |  | 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                                       

|2
|-

|ADVANCED TECHNICAL
PRODUCTS, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETSAS OF
SEPTEMBER 28, 2001 AND DECEMBER 31, 2000


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

|ASSETS                                                                                             | September 28,2001 | December 31,2000
|-------------------------------------------------------------------------------------------------- | ----------------- | ----------------
|                                                                                                   |                   |                 
|CURRENT ASSETS:                                                                                    |                  
|Cash and cash equivalents                                                                          |                   | $        668    
|Accounts receivable (net of allowance for doubtful accounts of $373 and $455 at                    |                  
|September 28, 2001 and December 31, 2000, respectively)                                            |                   | 24,746          
|Inventories and costs relating to long-term contracts and programs in                              |                  
|process, net of progress payments                                                                  |                   | 50,539          
|Prepaid income taxes                                                                               |                   |                
|Deferred income taxes                                                                              |                   | 3,284           
|Other current assets                                                                               |                   | 1,977           
|                                                                                                   |                   |                 
|Total current assets                                                                               |                   | 81,214          
|                                                                                                   |                   |                 
|NONCURRENT ASSETS:                                                                                 |                  
|Property, plant and equipment                                                                      |                   | 22,142          
|Less-accumulated depreciation                                                                      |                   | (12,857         
|                                                                                                   |                   |                 
|Net property, plant and equipment                                                                  |                   | 9,285           
|                                                                                                   |                   |                 
|Deferred income taxes                                                                              |                   | 2,819           
|Net assets of discontinued operations                                                              |                   | 2,734           
|Other noncurrent assets                                                                            |                   | 4,082           
|                                                                                                   |                   |                 
|Total assets                                                                                       |                   | $ 100,134       
|                                                                                                   |                   |                 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                               |                  
|                                                                                                   |                  
|CURRENT LIABILITIES:                                                                               |                  
|Accounts payable                                                                                   |                   | $   15,858      
|Accrued expenses                                                                                   |                   | 12,007          
|Short-term debt                                                                                    |                   | 24,130          
|Current portion of capital lease obligations                                                       |                   | 37              
|                                                                                                   |                   |                 
|Total current liabilities                                                                          |                   | 52,032          
|                                                                                                   |                  
|LONG-TERM LIABILITIES:                                                                             |                  
|Long-term debt, net of current portion                                                             |                   | 17,217          
|Capital lease obligations, net of current portion                                                  |                   | 3               
|Other liabilities                                                                                  |                   | 4,253           
|                                                                                                   |                   |                 
|Total liabilities                                                                                  |                   | 73,505          
|                                                                                                   |                  
|Mandatorily redeemable preferred stock, $1.00 par value, 1,000,000 shares authorized, no shares    |                  
|issued and outstanding as of September 28, 2001, 1,000,000 shares issued and outstanding           |                   |                
|as of December 31, 2000                                                                            |                  
|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, 5,548,398 shares and 5,375,822         |                  
|shares issued and outstanding as of September 28, 2001 and December 31, 2000,
        respectively |                   | 55              
|Additional paid-in capital                                                                         |                   | 17,902          
|Retained earnings                                                                                  |                   | 9,103           
|Notes receivable from officers                                                                     |                   | (40             
|Accumulated other comprehensive loss                                                               |                   | (391            
|                                                                                                   |                   |                 
|Total shareholders equity                                                                         |                   | 26,629          
|                                                                                                   |                   |                 
|Total liabilities and shareholders equity                                                         |                   | $ 100,134       
|                                                                                                   |                   |                 

|See accompanying Notes
to Condensed Consolidated Financial Statements.
3
|------------------------------------------------------------------------

|ADVANCED
TECHNICAL PRODUCTS, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE
QUARTERS AND NINE MONTHS ENDED SEPTEMBER 28, 2001 AND SEPTEMBER 29, 2000


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

|                                                              | QuarterEnded | NineMonthsEnded
|------------------------------------------------------------- | ------------ | ---------------
|
|Revenues                                                      |              | $43,603        
|                                                              |              |                
|Cost of revenues                                              |              | 32,781         
|                                                              |              |                
|General and administrative expenses                           |              | 6,089          
|                                                              |              |                
|Operating income                                              |              | 4,733          
|                                                              |              |                
|Interest expense                                              |              | 949            
|                                                              |              |                
|Other expense                                                 |              | 614            
|                                                              |              |                
|Income before income tax expense                              |              | 3,170          
|                                                              |              |                
|Income tax expense                                            |              | 1,221          
|                                                              |              |                
|Income from continuing operations                             |              | 1,949          
|                                                              |              |                
|Discontinued operations:                                      |             
|Loss from operations of segment to be disposed of             |              |               
|Provision for loss on disposal of business segment,           |             
|including operating losses during the phase-out period        |              |               
|                                                              |              |                
|Loss from discontinued operations (net of income tax benefit) |              |               
|                                                              |              |                
|Net income                                                    |              | $  1,949       
|                                                              |              |                
|                                                              |              |                
|Net income per share:                                         |             
|Basic:     Income from continuing operations                  |              | $    0.35      
|Loss from discontinued operations                             |              |               
|                                                              |              |                
|Net income                                                    |              | $    0.35      
|                                                              |              |                
|                                                              |              |                
|Diluted: Income from continuing operations                    |              | $    0.32      
|Loss from discontinued operations                             |              |               
|                                                              |              |                
|Net income                                                    |              | $    0.32      
|                                                              |              |                
|                                                              |              |                
|Weighted average number of common and common                  |             
|equivalent shares outstanding:                                |             
|Basic                                                         |              | 5,511          
|                                                              |              |                
|Diluted                                                       |              | 6,079          
|                                                              |              |                

|See accompanying Notes
to Condensed Consolidated Financial Statements.
4
|------------------------------------------------------------------------

|ADVANCED
TECHNICAL PRODUCTS, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE NINE
MONTHS ENDED SEPTEMBER 28, 2001 AND SEPTEMBER 29, 2000


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

|                                                            | 2001 | 2000    
|----------------------------------------------------------- | ---- | --------
|CASH FLOWS FROM OPERATING ACTIVITIES:                       |      |         
|Net income                                                  |      | $ 5,494 
|Adjustments to reconcile net income to net cash provided by |     
|operating activities:                                       |     
|Depreciation and amortization                               |      | 2,102   
|Other non-cash charges                                      |      | 382     
|Changes in operating assets and liabilities:                |     
|Accounts receivable                                         |      | 1,065   
|Inventories                                                 |      | (7,797  
|Accounts payable                                            |      | 2,599   
|Accrued expenses                                            |      | 1,518   
|Net assets of discontinued operations                       |      | (334    
|Other assets and liabilities                                |      | 1,032   
|                                                            |      |         
|Net cash provided by operating activities                   |      | 6,061   
|                                                            |      |         
|CASH FLOWS FROM INVESTING ACTIVITIES:                       |     
|Capital expenditures                                        |      | (2,210  
|Proceeds from disposal of structural core materials segment |      | 3,587   
|Net investing activities of discontinued operations         |      | 31      
|                                                            |      |         
|Net cash provided by (used in) investing activities         |      | 1,408   
|                                                            |      |         
|CASH FLOWS FROM FINANCING ACTIVITIES:                       |     
|Repayments of borrowings                                    |      | (7,902  
|Proceeds from exercise of stock options and warrants        |      | 612     
|Common stock issued under employee stock purchase plan      |      | 140     
|Proceeds from repayment of officer loans                    |      | 95      
|Cash dividends paid                                         |      | (84     
|Payments under capital lease obligations                    |      | (31     
|Redemption of preferred stock                               |      | (1,000  
|Net financing activities of discontinued operations         |      | (297    
|                                                            |      |         
|Net cash used in financing activities                       |      | (8,467  
|                                                            |      |         
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS        |      | (998    
|                                                            |      |         
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD              |      | 1,666   
|                                                            |      |         
|CASH AND CASH EQUIVALENTS, END OF PERIOD                    |      | $    668
|                                                            |      |         
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:           |     
|Cash paid for interest                                      |      | $ 3,076 
|Cash paid for income taxes                                  |      | $    250

|See accompanying Notes
to Condensed Consolidated Financial Statements.
5
|------------------------------------------------------------------------

|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 28, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. 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, 2000.


2.
   DISCONTINUED OPERATIONS


On
June 30, 2000, the Company adopted a formal plan to sell its Structural Core
Materials segment, which consisted of the operations of its Alcore and Alcore
Brigantine S.A. subsidiaries. On June 14, 2001, the Company completed the sale
of certain assets of Alcore and 100% of the stock of the Alcore Brigantine S.A.
subsidiary (the Transaction) to a subsidiary of the M.C. Gill
Corporation. The Alcore assets sold consisted primarily of inventories and
property and equipment. The selling price was approximately $5.0 million in the
form of cash and a promissory note. Excluded from the Transaction were accounts
receivable, the Belcamp, Maryland manufacturing facility and substantially all
the liabilities of Alcore. The Company plans on selling the Belcamp facility
following a transition period after closing the Transaction and relocation by
the buyer of the Alcore operations. During the second quarter of 2001, an after
tax charge of $1.4 million was recorded as a loss from discontinued operations
to reflect the amount by which actual operating losses of Alcore exceeded
previous estimates, and revisions of the final selling price of assets sold and
the estimated proceeds of the retained assets of Alcore that are in the process
of being liquidated.


The
remaining net assets of discontinued operations at September 28, 2001 following
the Transaction consist primarily of the Belcamp manufacturing facility and a
receivable relating to Alcore Brigantine S.A. Net assets to be disposed of have
been separately classified in the accompanying Condensed Consolidated Balance
Sheets.


Operating
results of the Structural Core Materials segment for all periods reported are
shown separately as results from discontinued operations in the accompanying
Condensed Consolidated Financial Statements. Net revenues of the Structural Core
Materials segment were zero and $5.8 million for the quarters ending September
28, 2001 and September 29, 2000, respectively, and $10.7 million and $16.9
million for the nine months ending September 28, 2001 and September 29, 2000,
respectively. These amounts are not included in revenues in the accompanying
Condensed Consolidated Statements of Operations.
6
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.   INVENTORIES


Inventories
at September 28, 2001 and December 31, 2000 consisted of the following (in
thousands):
|---------------------------------------------------------------------------------------------------------------------

| |  | Sept. 28,2001     | Dec. 31,2000
| |  | ----------------- | ------------
| |  | Finished goods    |             
| |  | Work in process   |             
| |  | Raw materials     |             
| |  | Progress payments |             
| |  |                   |             
| |  | Total inventories |             
| |  |                   |             

|4.   DEBT


Debt
is summarized as follows (in thousands):
|---------------------------------------------------------

| |  | Sept. 28,2001                              | Dec. 31,2000
| |  | ------------------------------------------ | ------------
| |  | Short-term debt:                           |             
| |  | Revolving loans                            |             
| |  | Current portion of long-term debt          |             
| |  |                                            |             
| |  |                                            |             
| |  |                                            |             
| |  | Long-term debt:                            |             
| |  | Term loans                                 |             
| |  | Equipment loans                            |             
| |  | Subordinated debt, net of unamortized loan |             
| |  | discount                                   |             
| |  | Bonds payable                              |             
| |  | Other long-term debt                       |             
| |  |                                            |             
| |  | Total long-term debt                       |             
| |  | Less current portion                       |             
| |  |                                            |             
| |  | Long-term debt, net of current portion     |             
| |  |                                            |             

|Revolving,
Term and Equipment Loans


On
October 10, 2000, the Company entered into a new financing agreement with its
primary lender. At September 28, 2001, the Companys credit facility with
this lending institution totaled $42.1 million consisting of: (i) $27.0 million
of revolving credit against eligible receivable and inventory balances, (ii) a
$13.3 million term loan and (iii) a $1.8 million capital equipment loan. As of
September 28, 2001, the Company had approximately $5.6 million of unused
borrowing availability on this credit facility, net of $1.4 million of reserves
against the revolving loan borrowing base for outstanding stand-by letters of
credit commitments ($0.9 million) and other items ($0.5 million).


The
revolving, term and equipment loans are secured by substantially all of the
Companys assets. The interest rates on the loans are set quarterly based
on the Companys performance against debt-to-earnings ratios specified in
the loan 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 rates on the revolving loan ranging from
prime plus 0.5% to prime plus 0.25% and rates on the term and equipment loans
ranging from prime plus 0.75% to prime plus 0.5%.
7
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Interest
is paid monthly in arrears on all loans. The term loan is payable quarterly
based on a seven-year amortization period. The equipment loan is payable monthly
based on a five-year amortization period. In accordance with the financing
agreement, the Company used part of the proceeds received from the sale of
certain assets of its discontinued operations on June 14, 2001 (see Note 2) to
make a one-time principal repayment of $1.3 million on the term loan. The credit
facility matures on October 31, 2003.


Subordinated
Debt


On
October 10, 2000, the Company entered into an agreement with a lender for a
three year, $7.0 million 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 matures on October 31, 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 $4.42 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 Put Option). The Put Option is
subject to a maximum cap of $1.75 million. In the event of an exercise of the
Put Option resulting in a repurchase price of $1.0 million 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. In addition, the Company has a call right in the event that the holders
of the warrants initiate a demand registration or elect to exercise their
piggyback registration rights in accordance with the agreement. The loan is
secured by substantially all of the Companys assets.


The
Company allocated the $7.0 million proceeds from the loan to the subordinated
debt ($5.25 million) and stock warrants ($1.75 million) based on their
respective fair values. The fair value of the stock warrants is reflected as a
debt discount and is being amortized as interest expense over the three year
life of the debt using the interest method. The Company has included the value
assigned to the stock warrants in other long-term liabilities in the
accompanying Condensed Consolidated Balance Sheet at September 28, 2001 and
December 31, 2000.


On
October 31, 2001, the lender exercised all of the 320,000 stock warrants issued
in connection with the loan. In lieu of paying the exercise price to the Company
in cash, the lender elected to convert the warrants on a cashless basis in
accordance with the provisions of the agreement. As a result, the Company issued
266,807 new shares of its common stock to the lender and ATP received no cash
proceeds from the exercise. This transaction will be reflected in the
Companys financial statements during the fourth quarter of 2001.


Bonds Payable


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. On August 1, 2001, the Company fully redeemed
the bonds pursuant to the optional redemption provisions of the financing
agreement.
8
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Other
Long-Term Debt


On
July 7, 1997, in conjunction with the tax-exempt bond financing, the Company
entered into a ten-year $810,000 Maryland Industrial and Commercial
Redevelopment Fund loan agreement with interest set at a fixed rate of 5.1%
annually, plus a five-year $60,000 loan from Harford County, Maryland with
interest set at a fixed rate of 5.5%. The outstanding balances of the loans were
paid off in full on June 15, 2001 using part of the proceeds received from the
sale of certain assets of its discontinued operations on June 14, 2001 (see Note
2).


5.   MANDATORILY
REDEEMABLE PREFERRED STOCK


On
July 20, 2001, all of the Companys 1,000,000 outstanding shares of 8%
cumulative and mandatorily redeemable preferred stock were redeemed for cash
equal to $1.00 per share plus accumulated and unpaid dividends.


6.   EARNINGS
PER SHARE


Earnings
per share are calculated as follows (in thousands):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | QuarterEnded | NineMonthsEnded
|------------------------------------------- | ------------ | ---------------
|
|Income from continuing operations           |              | $ 1,949        
|Less:  preferred stock dividends accrued    |              | (4             
|                                            |              |                
|Income from continuing operations available |             
|for common shares                           |              | $ 1,945        
|                                            |              |                
|                                            |              |                
|Loss from discontinued operations           |              | $             
|                                            |              |                
|                                            |              |                
|Net income                                  |              | $ 1,949        
|Less:  preferred stock dividends accrued    |              | (4             
|                                            |              |                
|Net income available for common shares      |              | $ 1,945        
|                                            |              |                
|                                            |              |                
|Weighted average number of common shares    |             
|outstanding:                                |             
|--Basic                                     |              | 5,511          
|Add: assumed stock conversions, net of      |             
|assumed treasury stock purchases:           |             
|--stock options                             |              | 371            
|--stock warrants                            |              | 197            
|                                            |              |                
|--Diluted                                   |              | 6,079          
|                                            |              |                

|9
|-

|7.   SEGMENT
REPORTING


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

|                                        | QuarterEnded | NineMonthsEnded
|--------------------------------------- | ------------ | ---------------
|
|Revenues (all from external customers): |              |                
|Aerospace and Defense                   |              | $ 37,206       
|Commercial Composites                   |              | 4,517          
|Other operating segments                |              | 1,880          
|                                        |              |                
|Total                                   |              | $ 43,603       
|                                        |              |                
|                                        |              |                
|Operating income (loss):                |             
|Aerospace and Defense                   |              | $   4,570      
|Commercial Composites                   |              | 1,074          
|Other operating segments                |              | (156           
|Corporate                               |              | (755           
|                                        |              |                
|Total                                   |              | $   4,733      
|                                        |              |                

|8.   COMPREHENSIVE INCOME


The Company applies the
provisions of SFAS No. 130, Reporting Comprehensive Income, which
requires the reporting of other comprehensive income in addition to net income
from operations. Comprehensive income is summarized as follows (in thousands):
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        | QuarterEnded | NineMonthsEnded
|--------------------------------------- | ------------ | ---------------
|
|Net income                              |              | $1,949         
|Other comprehensive income (loss):      |             
|Foreign currency translation adjustment |              |               
|                                        |              |                
|Comprehensive income                    |              | $1,949         
|                                        |              |                

|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 the Companys Lunn Industries
division (Lunn) 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
13 PRPs identified for the Babylon Landfill. NYSDEC documents indicate that Lunn
did transmit waste to the Babylon Landfill, although it is currently unclear to
what extent Lunn contributed to contamination of the landfill. Accordingly, the
Company cannot at present determine the extent of its liability, if any. The
Company has not recorded any liability for the contingency as of September 28,
2001.
10
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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, in January 2000, the Company was notified of an investigation by
the United States Securities and Exchange Commission (SEC) regarding
these matters. The Company and management are cooperating fully with these
investigations.


On
July 23, 2001, the United States Attorney for the District of Maryland unsealed
a criminal indictment against Alcores former CEO, alleging that he engaged
in securities fraud and other offenses. A criminal information was also filed by
the United States Attorney against Alcores former chief financial officer,
charging him with conspiracy to make false statements. Simultaneously, the SEC
filed a civil complaint against the two individuals, alleging securities fraud
and other offenses. The employment of these individuals was terminated by the
Company in March 2000. Alcore was sold by the Company in June 2001. The Company
retained Alcores liabilities, including any liabilities associated with
the Governments investigations. Neither the Company nor Alcore was named
as a defendant in the proceedings brought against the two individuals by the
U.S. Attorney and the SEC.


In
June 2001, the Company was notified by the SEC staff that it is evaluating
whether to recommend that the SEC bring an action against the Company and
members of its management for violations of the antifraud and other provisions
of the federal securities laws based on failure to discover the activities at
Alcore referred to above. In July 2001, the Company, James Carter, a former
Chairman and CEO of the Company and a current director of the Company, and
Garrett Dominy, the current CEO and a director of the Company, each made
so-called Wells submissions to the SEC stating why they believe that
they should not be charged with violations of the federal securities laws in
connection with the Alcore investigation. Additional submissions were made in
September and October of 2001. The outcome of the SECs investigation of
the Company is uncertain at this time. Based on information currently available,
however, the Company believes that the SECs investigation will not have a
material adverse impact on its financial position or future results of
operations.


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. During January 2001, the lawsuits were
consolidated and an amended complaint was filed. The lawsuit asserts 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
lawsuit purports 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 any
future lawsuits, and any investigations or proceedings arising out of the same
or related facts, depending on their outcomes, could have a material adverse
impact on the Companys financial condition or results of operations in one
or more future periods. The Company has not recorded any liability for these
lawsuits as of September 28, 2001.
11
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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.



Discontinued
Operations


On
June 30, 2000, the Company adopted a formal plan to sell its Structural Core
Materials segment, which consisted 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 2 of the
Condensed Consolidated Financial Statements of the Company.



Results of
Operations


Quarter and Nine Months Ended
September 28, 2001 Compared with the Quarter and Nine Months Ended September 29, 2000


Revenues
for the quarter ended September 28, 2001 increased $1.5 million compared to the
quarter ended September 29, 2000, or 3.6%, from $42.1 million in 2000 to $43.6
million in 2001. Revenues for the nine months ended September 28, 2001 increased
$9.9 million over the nine months ended September 29, 2000, or 7.7%, from $128.1
million in 2000 to $138.0 million in 2001. The increase in revenues for the
quarter was primarily attributable to increased sales on Aerospace and Defense
programs, including increased deliveries of Lightweight Camouflage Screen
Systems (LCSS), Shelter units and resin transfer molded (RTM) products. The
increase for the nine month period results primarily from increased sales on the
Joint Biological Point Detection System (JBPDS), the LCSS and the Volcano
launcher system programs.


Gross
profit as a percentage of revenues was 24.8% in the third quarter of 2001,
compared to 24.7% in the third quarter of 2000. The gross profit percentage for
the first nine months increased from 23.6% in 2000 to 24.0% in 2001. The
increase was primarily attributable to improved profitability resulting from a
more favorable mix of sales.


General
and administrative expenses increased $0.1 million, or 1.7%, for the quarter and
decreased $1.1 million, or 5.9%, for the first nine months of 2001 compared to
2000. As a percentage of revenues, general and administrative expenses decreased
from 14.2% in 2000 to 14.0% in 2001 for the quarter, and from 14.8% in 2000 to
12.9% in 2001 for the nine months. The decrease for the nine months 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 merger agreement and severance costs. The reduction of general and
administrative expenses as a percentage of revenues is attributable to a
combination of the reduced costs and the increased revenues in 2001 compared to
2000.


Operating
income was $4.7 million, or 10.9% of revenues, for the third quarter of 2001,
compared to $4.4 million, or 10.4% of sales, for the third quarter of 2000.
Operating income was $15.3 million, or 11.1% of revenues, for the first nine
months of 2001, compared to $11.3 million, or 8.8% of revenues, for the first
nine months of 2000. The higher operating income for the first nine months of
2001 compared to 2000 results partially from the non-recurring general and
administrative costs of $1.3 million incurred in 2000 as discussed in the
previous paragraph. Excluding these non-recurring charges, operating income
increased $2.7 million for the nine months of 2001 compared to 2000, primarily
because of the combination of increased revenues and gross profits and
relatively flat general and administrative expenses.
12
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|Interest
expense in 2001 increased $138,000 for the quarter and $378,000 for the nine
months, reflecting the combination of a relatively high effective interest rate
on the portion of ATPs debt relating to the subordinated loan obtained in
the fourth quarter of 2000 and a reduction in the amount of interest expense
allocated to discontinued operations in 2001 compared to 2000 following the
disposal of the Alcore operations in June 2001.


Other
expense consists of certain legal and other costs incurred in connection with
the Companys governmental investigations relating to Alcore and a class
action shareholder lawsuit. Such expenses were initially incurred by the Company
during the fourth quarter of 2000.


Income
taxes decreased $155,000 for the quarter and increased $870,000 for the nine
months in 2001, 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 $1.6 million for the first nine
months of 2001 compared to 2000. There was no loss from discontinued operations
recorded for the third quarter of 2001 and 2000. The second quarter of 2000
included a provision of $0.7 million for estimated future operating losses
during the phase-out period of the Structural Core Materials segment. Operating
losses incurred by the Structural Core Materials segment during 2001 were
charged to the Companys reserve for loss on disposal of segment recorded
as of December 31, 2000. During the second quarter of 2001, an after tax charge
of $1.4 million was recorded as a loss from discontinued operations to reflect
the amount by which actual operating losses of Alcore exceeded previous
estimates, and revisions of the final selling price of assets sold and the
estimated proceeds of the retained assets of Alcore that are in the process of
being liquidated.



Financial
Condition and Liquidity


Cash
flow provided by operations was $6.1 million for the first nine months of 2001
compared to $5.0 million for the same period in 2000. Working capital, excluding
short-term debt balances, increased $1.1 million in the first nine months of
2001 to $53.3 million. Changes in working capital during the nine months ended
September 28, 2001 included: (i) an increase of $7.8 million in inventories,
reflecting generally higher business activity levels, (ii) an increase of $4.1
million in accounts payable and accrued expenses, reflecting an increase in
payments in advance from certain customers on long-term contracts and increased
inventory levels, (iii) a decrease of $1.0 million in cash and cash equivalents,
primarily the result of cash used to redeem the Companys bonds payable on
August 1, 2001, (iv) a decrease of $1.3 million in prepaid income taxes
resulting from the application of prior year prepaid tax balances to satisfy tax
liabilities generated by income earned in 2001 and (v) a decrease of $0.3
million in other working capital components. Net cash provided by investing
activities totaled $1.4 million in the first nine months of 2001, including $3.6
million of cash proceeds from the disposal of certain assets of the
Companys discontinued Structural Core Materials business segment. Other
investing activities consisted of capital expenditures totaling $2.2 million.


The
Companys primary loan agreement includes a total credit facility of $42.1
million consisting of: (i) $27.0 million of revolving credit against eligible
receivable and inventory balances, (ii) a $13.3 million term loan and (iii) a
$1.8 million capital equipment loan. As of September 28, 2001, the Company had
approximately $5.6 million of unused borrowing availability on this credit
facility, net of $1.4 million of reserves against the revolving loan borrowing
base for outstanding stand-by letters of credit commitments ($0.9 million) and
other items ($0.5 million). The revolving, term and equipment loans are secured
by substantially all of the Companys assets. 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 rates on the revolving loan
ranging from prime plus 0.5% to prime plus 0.25% and rates on the term and
equipment loans ranging from prime plus 0.75% to prime plus 0.5%. Interest is
paid monthly in arrears on all loans. The term loan is payable quarterly based
on a seven-year amortization period. The equipment loan is payable monthly based
on a five-year amortization period. In accordance with the financing agreement,
the Company used part of the proceeds received from the sale of certain assets
of its discontinued operations on June 14, 2001 (see Note 2 to the Condensed
Consolidated Financial Statements) to make a one-time principal repayment of
$1.3 million on the term loan. The credit facility matures on October 31, 2003.
13
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--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
October 10, 2000, the Company entered into an agreement with a lender for a
three year, $7.0 million 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 matures on October 31, 2003. The loan is secured by substantially all
of the Companys assets. 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 $4.42 per share. On October
31, 2001, the lender exercised all of the stock warrants issued in connection
with the loan. In lieu of paying the exercise price to the Company in cash, the
lender elected to convert the warrants on a cashless basis in accordance with
the provisions of the agreement. As a result, the Company issued 266,807 new
shares of its common stock to the lender and ATP received no cash proceeds from
the exercise. This transaction will be reflected in the Companys financial
statements during the fourth quarter of 2001.


During
June 2001, the Company initiated action to call its bonds payable resulting from
a financing agreement with the State of Maryland dated May 14, 1997. The bonds
were fully redeemed by cash payment of approximately $1.9 million on August 1,
2001 pursuant to the optional redemption provisions of the financing agreement.


During
June 2001, the Company paid off all of the outstanding balances of its loans
dated July 7, 1997 from the Maryland Industrial and Commercial Redevelopment
Fund and Harford County, Maryland. The payments totaled approximately $0.6
million and were made using part of the proceeds received from the sale of
certain assets of its discontinued operations on June 14, 2001.


During
July 2001, the Company paid $1.0 million to complete the redemption of 1,000,000
shares of 8% mandatorily redeemable preferred stock. Following the redemption,
the Company had no preferred stock outstanding.


At
September 28, 2001, the Companys backlog of orders and long-term contracts
was approximately $735 million, compared to $559 million and $503 million at
December 31, 2000 and September 29, 2000, respectively. The backlog includes
firm released orders of approximately $215 million, $156 million and $118
million at September 28, 2001, December 31, 2000 and September 29, 2000,
respectively. The increase in backlog reflects increased orders received for
biological and chemical detection and protection systems, military shelters and
components on several advanced composites programs.


As
discussed above, the Company has made capital expenditures totaling $2.2 million
during the first nine months of 2001, which have been financed by increased
borrowings under the revolving loan portion of the Companys credit
facility. The Company invested approximately $8.7 million, excluding Alcore, 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 NGV tank production. As a
result, management believes that future short-term capital spending requirements
will be limited to a normal sustaining maintenance level plus 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.
14
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|As
previously discussed, the Company received approximately $3.6 million of cash
proceeds from the disposal of certain assets of the discontinued Structural Core
Materials business segment on June 14, 2001. Among assets that were excluded
from the Transaction was the Companys Belcamp, Maryland manufacturing
facility. The Company plans on selling the Belcamp facility following a
transition period after closing the Transaction and relocation by the buyer of
the Alcore operations. The Company presently anticipates disposal of the
facility during the first half of 2002.


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. However, should
circumstances arise affecting cash flow or requiring capital expenditures beyond
those anticipated by the Company, there can be no assurance that such funds will
be available on commercially reasonable terms, if at all.


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.



Recent
Accounting Pronouncements


In
June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets(SFAS No. 142),which is effective for the Company
beginning January 2002. SFAS No. 142 addresses how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition. SFAS No. 142 also addresses how goodwill and
other intangible assets should be accounted for after they have been initially
recognized in the financial statements. The Company does not anticipate that
there will be a material impact on the results of operations or financial
position upon adoption of this standard.



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 2000 Annual Report on Form 10-K (Item 7, under the heading
Factors Affecting Future Operating Results).



If
there are any subsequent written or oral forward-looking statements made by the Company
or any person acting on its behalf, they are qualified in their entirety by the cautionary
statements and factors contained or referred to in this section. The Company does not
undertake any obligation to release publicly any revisions to any forward-looking
statements to reflect events or circumstances after the date of this document or the date
on which any subsequent forward-looking statement is made or to reflect the occurrence of
unanticipated events.
15
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|Item 3.
  Quantitative and Qualitative Disclosures About Market Risk


The
Company is exposed to changes in interest rates primarily relating to its $42.1
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 0.5%. At September 28, 2001, the Company had
$35.6 million outstanding under the credit facility at a weighted-average
interest rate of 5.2%.


In
addition, the Company fully redeemed $1.89 million of bonds payable on August 1,
2001 for which it had entered an interest rate swap agreement with a financial
institution to fix the interest rate at 5.07% through the year 2012. The
interest rate swap agreement was settled on the date of redemption, including
the elimination of all future obligations of the Company. In January 2001, the
Company adopted SFAS 133, which required the Company to record derivative
financial instruments at fair value. The adoption of SFAS 133 had no material
impact upon adoption or on the results of operations for the quarter and nine
months ended September 28, 2001.


The
Company has not entered into transactions which subject it to material foreign
currency transaction gains and losses.
16
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|PART IIOTHER
INFORMATION



Item 1.  Legal
Proceedings


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 Companys Lunn Industries
division (Lunn) 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 (CERCLA) for NYSDECs response
costs in addition to interest, enforcement and future costs. According to
NYSDEC, there are currently 13 PRPs identified for the Babylon Landfill. NYSDEC
documents indicate that Lunn did transmit waste to the Babylon Landfill,
although it is currently unclear to what extent Lunn contributed to
contamination of the landfill. 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 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. The Company cannot presently determine the extent of its liability,
if any, however, 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 effect on the Companys consolidated financial
position, results of operations or cash flows. The Company has not recorded any
liability for the contingency as of September 28, 2001.


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, in January 2000, the Company was notified of an investigation by
the United States Securities and Exchange Commission (SEC) regarding
these matters. The Company and management are cooperating fully with these
investigations.


On
July 23, 2001, the United States Attorney for the District of Maryland unsealed
a criminal indictment against Alcores former CEO, alleging that he engaged
in securities fraud and other offenses. A criminal information was also filed by
the United States Attorney against Alcores former chief financial officer,
charging him with conspiracy to make false statements. Simultaneously, the SEC
filed a civil complaint against the two individuals, alleging securities fraud
and other offenses. The employment of these individuals was terminated by the
Company in March 2000. Alcore was sold by the Company in June 2001. The Company
retained Alcores liabilities, including any liabilities associated with
the Governments investigations. Neither the Company nor Alcore was named
as a defendant in the proceedings brought against the two individuals by the
U.S. Attorney and the SEC.


In
June 2001, the Company was notified by the SEC staff that it is evaluating
whether to recommend that the SEC bring an action against the Company and
members of its management for violations of the antifraud and other provisions
of the federal securities laws based on failure to discover the activities at
Alcore referred to above. In July 2001, the Company, James Carter, a former
Chairman and CEO of the Company and a current director of the Company, and
Garrett Dominy, the current CEO and a director of the Company, each made
so-called Wells submissions to the SEC stating why they believe that
they should not be charged with violations of the federal securities laws in
connection with the Alcore investigation. Additional submissions were made in
September and October of 2001. The outcome of the SECs investigation of
the Company is uncertain at this time. Based on information currently available,
however, the Company believes that the SECs investigation will not have a
material adverse impact on its financial position or future results of
operations.
17
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|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. During January 2001, the lawsuits were
consolidated and an amended complaint was filed. The lawsuit asserts 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
lawsuit purports 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 any
future lawsuits, and any investigations or proceedings arising out of the same
or related facts, depending on their outcomes, could have a material adverse
impact on the Companys financial condition or results of operations in one
or more future periods. The Company has not recorded any liability for these
lawsuits as of September 28, 2001.


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.



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


Not
applicable.


(b)
Reports on Form 8-K.


Not
applicable.

18
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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 9, 2001 | By: | /S/ James P. Hobt
James P. Hobt, Chief Financial and Accounting Officer,
   Treasurer and Secretary
|------------------------ | --- | -----------------------------------------------------------------------------------------------------------------

|19
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