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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-K þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2004
ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from  to Commission file number 1-9487 ATLANTIS PLASTICS, INC.  Delaware
    
    06-1088270(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)1870 The Exchange, Suite 200, Atlanta, Georgia
    
    30339(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code) (800) 497-7659 Securities registered pursuant to Section 12(b) of the Act: Name of each exchangeTitle of each class
    
    on which registeredClass A Common Stock,
    
    The NASDAQ Stock Market$.10 par value per share
    
    Pacific Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:  None Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2
of the Act. Yes o No þ The aggregate market value of shares of Class A Common Stock held by non-affiliates of the
registrant on June 30, 2004, which was the last business day of the registrants most recently
completed second fiscal quarter, was approximately $53,182,638. For purposes of this computation,
all executive officers, directors, and greater than 5% beneficial owners of the Class A Common
Stock of the registrant have been deemed to be affiliates. Such determination should not be deemed
to be an admission that such directors, officers, or greater than 5% beneficial owners are, in
fact, affiliates of the registrant. The number of shares of Class A Common Stock, $.10 par value, and Class B Common Stock, $.10
par value, of the registrant outstanding as of February 28, 2005 were 5,650,958 and 2,142,665,
respectively. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the following document have been incorporated by reference into the parts
indicated: The registrants Proxy Statement to be filed with the Securities and Exchange Commission
not later than 120 days after the end of the fiscal year covered by this report  Part III (Items
10-14).




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ATLANTIS PLASTICS, INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2004
TABLE OF CONTENTS PagePart IItem 1.
    
    Business
    
    
    3Item 2.
    
    Properties
    
    
    13Item 3.
    
    Legal Proceedings
    
    
    13Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    13Part IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
    
    
    14Item 6.
    
    Selected Financial Data
    
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 8.
    
    Financial Statements and Supplementary Data
    
    
    24Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    44Item 9A.
    
    Controls and Procedures
    
    
    44Item 9B.
    
    Other Information
    
    
    44Part IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    45Item 11.
    
    Executive Compensation
    
    
    45Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    45Item 13.
    
    Certain Relationships and Related Transactions
    
    
    45Item 14.
    
    Principal Accountant Fees and Services
    
    
    45Part IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    45Signatures
Certifications
    
    
    
    
    50
52EX-3.1EX-3.2EX-10.3EX-10.22EX-10.23EX-23.1EX-31.1EX-31.2EX-32
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PART I NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of
that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Additional written or oral forward-looking statements may be made by us from time to
time, in press releases, annual or quarterly reports to shareholders, filings with the Securities
and Exchange Commission, presentations or otherwise. Statements contained herein that are not
historical facts are forward-looking statements made pursuant to the safe harbor provisions
referenced above. Forward-looking statements may include, but are not limited to, projections of net sales,
income or losses, or capital expenditures; plans for future operations; financing needs or plans;
compliance with financial covenants in loan agreements; plans for liquidation or sale of assets or
businesses; plans relating to our products or services; assessments of materiality; predictions of
future events; the ability to obtain additional financing; our ability to meet obligations as they
become due; the impact of pending and possible litigation; as well as assumptions relating to the
foregoing. In addition, when used in this discussion, the words anticipates, believes,
estimates, expects, intends, plans and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are inherently subject to risks and
uncertainties, including, but not limited to, our significant debt, dependence on major customers,
fluctuating demand for our products, risks in product and technology development, fluctuating resin
prices, competition, litigation, labor disputes, capital requirements, and other risk factors
detailed in our filings from time to time with the Securities and Exchange Commission, some of
which cannot be predicted or quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth
in, contemplated by, or underlying the forward-looking statements. Statements in this Annual
Report, including, Item 1, Business-Factors That May Affect Future Results, describe factors,
among others, that could contribute to or cause such differences. Readers are cautioned not to place undue reliance on any forward-looking statements contained
herein, which speak only as of the date hereof. We undertake no obligation to publicly release the
result of any revisions to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events. 
 ITEM 1. BUSINESS Overview Atlantis Plastics, Inc., headquartered in Atlanta, Georgia, is a leading manufacturer of
high quality specialty plastic films and custom molded and extruded plastic products used for
storage and transportation, food service, appliance, automotive, commercial and consumer
applications. We currently operate 16 manufacturing plants located throughout the United States,
and we believe we are a low-cost producer in many of our product lines. We operate through three
operating business segments: Plastic Films, Injection Molding and Profile Extrusion. Plastic Films, which accounted for approximately 64% of our net sales in 2004, is a leading
manufacturer of specialty plastic films. The Plastic Films segment is comprised of three operating
divisions: (1) Stretch Films, (2) Custom Films and (3) Institutional Products. Stretch Films
produces high-quality, multilayer plastic films used to cover, package and protect products for
storage and transportation applications. We believe we are one of the largest producers of stretch
films in the United States. Custom Films produces customized monolayer and multilayer specialty
plastic films used as a substrate in multilayer laminates in foam padding for carpet, automotive
and medical applications, and as industrial and protective packaging. Institutional Products
converts custom films into disposable products such as tablecovers, gloves and aprons, which are
used primarily in institutional foodservice. Injection Molding, which accounted for approximately 29% of our net sales in 2004, is a
leading manufacturer of both custom and proprietary injection molded products. Injection Molding
produces a number of custom injection molded components that are sold primarily to original
equipment manufacturers, or OEMs, in the home appliance, automotive parts, recreational - 3 -




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vehicle and construction industries. Injection Molding also manufactures a line of proprietary
plastic cedar shake siding panels for the home building industry and residential replacement
market under the Cedarwayâ trade name. Profile Extrusion, which accounted for approximately 7% of our net sales in 2004, is a
manufacturer of custom extruded plastic products, primarily for use in consumer and commercial
products, including recreational vehicles, mobile homes, residential doors and windows, office
furniture and appliances. We believe we are one of the leading manufacturers of custom extruded
plastic products for recreational vehicles. Industry Overview Plastic Films.We participate in the flexible plastic films industry, which generated
approximately 13.1 billion pounds in 2003, according to a 2004 industry report from The Freedonia
Group. The flexible plastic films industry is populated by a few large and many smaller firms.
Smaller firms tend to compete in geographic areas to minimize transportation costs and focus on a
few products for specialized or niche markets. Growth in the flexible plastic films industry is
expected to be driven by the increased use of plastic films for packaging applications, primarily
because of its performance and cost advantages over rigid packaging. Within the plastic films
industry, we manufacture linear low-density polyethylene, or LLDPE, stretch films and custom films.
Demand for LLDPE stretch films was approximately 1.1 billion pounds in 2003 according to The
Freedonia Group. Growth in stretch films is driven by a favorable outlook for manufacturing
activity and cost and performance advantages over competing materials. Demand for LLDPE based
custom films was approximately 1.4 billion pounds in 2003, according to the The Freedonia Group.
Growth in custom films is driven by product differentiation and cost advantages over rigid
packaging. Injection Molding.Injection molding is among the most widely utilized industrial plastic
processes, generating market demand of approximately 14.1 billion pounds of resin, or approximately
$8.0 billion in revenue, in 2003 according to The Freedonia Group. The injection molding industry
is highly fragmented with an emphasis on regional markets. Growth in injection molding is expected
to be driven by the increased usage of plastic components for consumer products, appliances,
automobiles, computers, medical devices and other applications. Profile Extrusion.Much like the injection molding industry, the profile extrusion industry
is highly fragmented with an emphasis on regional markets. Growth in the profile extrusion industry
is expected to be driven primarily by the trend toward outsourcing by OEMs. Our Business Strategies Increase Market Penetration.While many of our businesses are leaders in the market
segments they serve, we believe we have substantial opportunities to expand our customer base and
deepen our market penetration. We are focused on increasing sales to new and existing customers by
continuously improving existing products and expanding our product offerings through innovation. We
believe we can increase market penetration and deepen our current customer relationships through
the co-development of low-cost, high quality component parts in our Injection Molding segment. We
continue to increase our penetration of the recreational vehicle and manufactured housing markets
by enhancing our position as a low-cost provider and the introduction of new proprietary products.
We are focused on expanding our customer base in our Plastic Films segment through enhanced
customer service. Expand Product Offerings.We have a history of new product development, and we plan to
continue our successful product development efforts across all of our businesses. In particular, we
will dedicate additional resources to expand our Injection Molding segment, where we believe there
is an excellent opportunity to increase net sales and improve overall margin, and we expect to
introduce new proprietary products in our Profile Extrusion segment, including a line of extruded
siding accessories. Since the introduction of our cedar shake products in 2000, net sales from
building products has grown from $0.7 million in 2000 to $20.8 million for 2004. Maximize Operating Efficiencies.We continually seek to improve our operating efficiencies by
reducing costs, increasing our recovery rates and maintaining operational flexibility. In order to
achieve this goal, we will continue to make prudent investments in our operations and people. For
example, we believe we can continue to achieve cost savings in our Plastic Films segment through
further reduction of materials usage and labor through the use of statistical process - 4 -




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improvement methods in our current manufacturing facilities. Additionally, we look to increase
manufacturing efficiencies and profitability in our Injection Molding segment through the further
use of robotics, streamlining materials flow and by focusing on waste reduction. Pursue Acquisitions at Reasonable Valuations.We have experience in completing acquisitions
and integrating them into our existing businesses as evidenced by our acquisitions of Rio Grande in
October 2002 and LaVanture in November 2004. We believe this expertise will enable us to continue
to identify and pursue attractive opportunities in the future. We will continue to seek acquisition
candidates at reasonable valuations and integrate them into our existing operations. Products Stretch Film. We believe we are one of the largest producers of stretch films in the
United States. We manufacture both monolayer and multilayer stretch films used primarily to wrap
pallets of industrial and commercial goods for shipping or storage. Secondary markets for stretch
film products include the bundling of non-palletized products such as carpet rolls, construction
materials, furniture and paper. Stretch films are typically produced using linear low-density
polyethylene resins and other materials, and are manufactured using both blown and cast extrusion
processes to meet rigid customer specifications. We have over 400 SKUs in the machine wrap and
hand wrap segment. We are one of the two original producers of stretch films and, as a result, our
Linear branded products enjoy considerable brand equity. Our product offerings include our highly
successful Advantage stretch film line, which incorporates three stretch films types, and is
marketed under the Linear brand product family. The principal attributes driving the demand for stretch films are as follows:  
    Load Containment.Stretch film is puncture resistant and can be expanded up to 300% of
its pre-stretch size, creating a rubber band effect that applies force evenly to a load,
helping to prevent palletized products from shifting during the distribution and handling
processes. The consistent load containment minimizes product damage and reduces total
costs relative to other, less reliable packaging alternatives.
    Cost Effectiveness.Stretch film provides superior strength-to-weight ratios, is
cheaper to produce, and results in the creation of less waste than alternative containment
media. Materials such as strapping, banding, corrugated boxes and adhesives continue to be
displaced by stretch films at an increasing rate due to heightened cost and waste
reduction goals. In addition, the average stretch film requirement for pallet wrapping
has decreased from nearly 30 ounces per load to less than 8 ounces per load as a result of
manufacturing and resin technology improvements, which have enabled down-gauging.
    Ease of Use. Stretch film allows for the effective, simple containment of bulk goods
and is less labor and time intensive than alternative containment media. Machine wrap
represents approximately two-thirds of the market for stretch film and continues to grow
in popularity due to advances in automated wrapping machinery. Custom Films. We produce custom low-density and linear low-density polyethylene-based
laminating, embossed and specialty films that serve the furniture, carpeting, textile, lamination,
medical, beauty aids, manufacturing, and food packaging industries. Custom Films utilizes over
1,000 different formulae, resins and color combinations in the manufacturing of monolayer and
multilayer films in a broad range of configurations, sizes and widths. The following are among the
divisions largest volume products:  
    Packaging Converter Films. Converter film is primarily used for flexible packaging,
lamination and surface printing, and can be produced in single wound sheeting, tubing or
bag form. Converter film applications include thin, fractional gauge films used for
packaging applications such as stand-up pouches and sealants used on multilayer structures
to provide oxygen and moisture barriers nearly equivalent to foil or metal containers.
    Masking Films.Masking films are used to protect the surface of materials such as
acrylic sheet, glass and metal during storage and transportation. These films incorporate
a non-abrasive heat-activated adhesive in order to help bind them to the products
surfaces.
    Foam and Nonwoven Lamination Films. These films are engineered to be a carrier web and
integral structural component of carpet pad foam and automotive trim components. In
addition, lamination films are used to adhere to nonwoven substrates for medical product
applications, including dental bibs, surgical draping and other protective medical related products. - 5 -




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
    Carpet, Furniture and Textile Packaging Films.This high-strength packaging films
category includes wide sheeting for wrapping textiles and protective bags for the shipment
and storage of furniture and mattresses. Custom Films also produces film for other market segments, including embossed films used by
producers of personal care and disposable protective wear products, and smooth and embossed release
films used by rubber, prepreg and molding compound manufacturers as a separation medium. Institutional Products.Marketed under the Sta-DriÒ brand name, we produce disposable
consumer and institutional plastic products for the food service, party supply and
school/collegiate markets. These product offerings are available in a variety of styles, colors,
thickness levels and weights. Products produced include tablecovers and skirts, aisle runners,
aprons, bibs, gloves, boots, freezer/storage bags, saddle pack bags, locker wrap and custom imprint
designs. Injection Molding. We produce custom thermoplastic components for small and large appliances,
including refrigerators, air conditioners, dehumidifiers and dishwashers. The division also
manufactures products for the automotive and building products markets. In addition, Injection Molding manufactures a proprietary line of cedar replica building
panels for siding applications in residential and commercial construction markets. The line
includes a cedar shake panel for siding applications sold under the Cedarwayâ brand name
and proprietary half-round accent panels. These products provide a maintenance-free,
cost-effective, easy-to-install, long-lasting alternative to wood, vinyl and aluminum siding
products. Profile Extrusion. We produce and stock over 280 recreational vehicle components, and have
grown our portfolio of building product related offerings to encompass 20 different products. The
following are among the divisions largest volume products:  
    Double-Utility Trim.Double-utility trim is used in the siding industry and is
manufactured under an exclusive licensing agreement.
    PLY-J and Flex-Flash. PLY-J flexible J channel siding trim and Flex-Flash flexible
drip edge flashing products were developed to seal and finish round-top windows. These
products offer built-in mildew, mold and UV inhibitors, are easy to cut and install, and
are manufactured in a variety of colors for convenience. We trademarked the PLY-J name in
1998 and received a patent on the Flex-Flash design in 1999.
    Fluted Outside Corner.The Fluted outside corner is the newest of the extruded building
components and is used primarily in the remodeling segment. This product is manufactured
in a white color and has a highly defined and elegant look. Sales and Marketing Stretch Film. Under the Linear brand name, we sell stretch film nationally to
approximately 400 distributors of industrial packaging and directly to several large end-users.
More than 90% of our stretch film volume is sold to distributors through our direct sales
organization. Custom Films. We market specialty custom films for direct sale to end-users, as well as
through distributors, with a majority of the divisions sales completed on an order-by-order basis.
Our Custom Films sales and marketing personnel work closely with our technical group to develop
specific solutions for a wide range of customer applications. The division is marketing its
expanded coextrusion production capabilities in an effort to further penetrate the markets it
serves. Institutional Products.This division sells primarily through a nation-wide broker network to
numerous customers in the institutional food service, hospital and janitorial supply and party
supply/retail store markets. Sales to both resellers and end-market retailers are completed on an
order-by-order basis. Injection Molding.This division maintains an in-house sales and engineering staff that
assists in the design of products to customer specifications, designs molds to produce those products, and oversees the construction
of necessary molds. Its - 6 -




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program management concept promotes early involvement with customers engineers to assist with product and tooling design and the establishment of acceptable quality
standards. Its Statistical Process Control, or SPC, systems enable it to meet these established
quality standards on a cost-efficient basis. We believe that our ability to offer SPC quality
assurance, as well as value-added secondary operations such as hot stamping, silk screening, and
assembly provide us with a competitive advantage in selling to national accounts. Our personnel
generate the majority of our sales. Independent sales representatives, calling primarily on
industrial customers in the Midwest, account for the balance. Building products sales are conducted
through a nationally recognized distribution and manufacturers representative organization serving
the building construction industry. Profile Extrusion.In-house sales personnel who oversee a network of independent sales
representatives conduct the Profile Extrusion divisions marketing and sales activities. These
representatives call on a diversified customer base in approximately 30 states. We supply many
industries, including manufacturers of appliances, recreational vehicles, residential windows and
doors, office furniture, building supplies and marine products. Manufacturing and Raw Materials Stretch Film. We manufacture our stretch film products utilizing both cast and blown
extrusion technology in three facilities located in Sapulpa, Oklahoma; Nicholasville, Kentucky; and
Fontana, California. We purchase several types of low density and linear low-density resins and
other materials to manufacture our stretch film products. Custom Films. We manufacture our custom film products at two plants located in Cartersville,
Georgia and Mankato, Minnesota. Approximately 20 different types of resin, delivered in pellet
form, and approximately 10 types of additives are used in the manufacturing process. Institutional Products.This division sources film manufactured by Custom Films and converts
the film into disposable poly gloves, bibs, aprons and tablecovers at its manufacturing facility in
Mankato, Minnesota. Institutional Products is an automated converting facility and enjoys a low
cost manufacturing position among North American suppliers with its vertical integration-to-raw
material film supply. Injection Molding. We operate molding presses ranging from 30 to 1,000 tons and related
secondary equipment at seven plants located in Henderson, Kentucky; Ft. Smith, Arkansas; Warren,
Ohio; LaVergne, Tennessee; Jackson, Tennessee; Alamo, Texas; and Elkhart, Indiana. The variety of
equipment configurations and plant locations enables us to fulfill customer requirements, including
multiple components, various press sizes and secondary operations. Our injection molding customers generally place orders for products based on their production
requirements for the following three to four months, with a non-binding estimate of requirements
over six to 12 months. We believe that the relatively long production cycles for our customers make
these estimates reliable. See Item 1, Business  Backlog. A wide variety of materials, such as acrylonitrile butabiene styrene, polystyrene,
polyethylene, polycarbonate and nylon are used in the manufacturing process. Profile Extrusion. We manufacture our extruded plastic parts at our three facilities located
in Elkhart, Indiana. Five basic types of compound materials are used in the manufacturing process.
These materials are polyvinyl chloride in both rigid and flexible forms, polyethylene,
polypropylene and thermoplastic rubber. The raw materials we use in the manufacture of our products are various plastic resins,
primarily polyethylene. We select our suppliers on the basis of quality, price, technical support
and service. We have contracts with resin manufacturers that allow us to achieve what we believe to
be the best combination of price, resin availability and new product development support. We
believe our relationships with our resin suppliers are good. We do not hedge the purchase of our
raw materials. Virtually all of our plastic resin supplies are manufactured within the United
States. Although the plastics industry has from time to time experienced shortages of plastic
resins, to date, we have not experienced any such shortages. We believe that there are adequate
sources available to meet our raw material needs. We use over 300 million pounds of plastic resins annually. We believe that our large volume
purchases of plastic resin have generally resulted in lower net raw material costs and enabled us
to obtain shipments of raw materials even in periods of short supply. - 7 -




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The primary plastic resins we use are produced from petrochemical feedstock mostly derived
from natural gas liquids. Based on the supply and demand cycles in the petrochemical industry,
substantial cyclical price fluctuations can occur. Consequently, plastic resin prices often
fluctuate, and such prices fluctuated significantly during 1999 through 2004. See Item 1, Business
- Factors That May Affect Future Results. Competition Our operating units face intense competition from numerous competitors, several of which
have greater financial resources than we do. In addition, the markets for certain of our products
are characterized by a low cost of entry or competition based primarily on price. Plastic Films competes with a limited number of producers capable of national distribution and
a greater number of smaller manufacturers that target specific regional markets and specialty film
segments. Competition is based on quality, price, service (including the manufacturers ability to
supply customers in a timely manner), and product differentiation. We believe Plastic Films
successfully competes on the basis of its established reputation for service and quality, as well
as its position as an innovative, efficient, low-cost producer. Injection Molding competes in a highly fragmented segment of the plastics industry, with a
large number of regional manufacturers competing on the basis of customer service (including timely
delivery and engineering/design capabilities), quality, and price. We believe that our custom
injection molding business successfully competes based on its ability to offer extensive customer
service, manufacturing efficiencies, and a wide range of production capabilities. Our proprietary
building products business competes with large and well-established suppliers to the industry and
competes on the basis of product differentiation and service. Our cedar replica siding is
recognized as having the most authentic appearance and is offered in the broadest array of colors
in the industry. Profile Extrusion competes regionally with a number of smaller extruders that focus on
specialized niche markets. Competition is driven primarily by cost, quality, and service levels. We
believe that Profile Extrusion successfully competes based on its competitive cost structure, high
service levels, strong production capabilities and efficiencies, and broad geographic reach. Backlog Our total backlog at December 31, 2004 was approximately $29.1 million, compared to
approximately $17.7 million at December 31, 2003. We do not consider any specific months backlog
to be a significant indicator of sales trends due to the various factors that influence backlog,
such as price changes, which lead to customer inventory order adjustments. Information Concerning Atlantis Plastics We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K (and all amendments to these reports), together with all reports filed pursuant to
Section 16 of the Securities Exchange Act of 1934 by our officers, directors, and beneficial owners
of 10% or more of our common stock, available free of charge through the Investors link at our
website, located at www.atlantisplastics.com, as soon as reasonably practicable after they are
filed with or furnished to the SEC. Information included on our website is expressly not
incorporated by reference into this Annual Report on Form 10-K. Additionally, we have adopted a written Code of Ethics that applies to our principal executive
officer and senior financial officers. This Code of Ethics is available free of charge through the
Corporate Governance link on our website. Employees As of December 31, 2004, we employed 1,377 persons, compared with 1,347 persons at
December 31, 2003. None of our employees are covered by collective bargaining agreements, and we
believe that we have good relations with our employees. - 8 -




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Patents and Trademarks We have registered various trademarks with the United States Patent and Trademark Office and
certain overseas trademark regulatory agencies. We also have applications pending for the
registration of patents and other trademarks. We believe that our trademark position is adequately
protected in all markets in which we do business. Plastic Films produces certain stretch film
products under non-exclusive licenses granted by ExxonMobil Corporation, which are coterminous with
the duration of ExxonMobils underlying patents. Environmental Regulation Actions by federal, state and local governments concerning environmental matters could result
in laws or regulations that could increase the cost of producing the products we manufacture or
otherwise adversely affect the demand for our products. At present, environmental laws and
regulations do not have a material adverse effect upon the demand for our products. Certain local
governments have adopted ordinances prohibiting or restricting the use or disposal of certain
plastic products that are among the types we produce. In addition, certain of our operations are subject to federal, state and local environmental
laws and regulations that impose limitations on the discharge of pollutants into the air and water
and establish standards for the treatment, storage and disposal of solid and hazardous wastes.
Historically, we have not had to make significant capital expenditures for compliance with such
laws and regulations. While we cannot predict with any certainty our future capital expenditure requirements for
environmental regulatory compliance because of continually changing compliance standards and
technology, we have not currently identified any of our facilities as requiring major expenditures
for environmental remediation or to achieve compliance with environmental regulations. Accordingly,
we have not accrued any amounts relating to achieving compliance with currently promulgated
environmental laws and regulations. See Item 1, Business  Factors That May Affect Future
Results. Factors That May Affect Future Results An investment in our common stock involves a high degree of risk. You should carefully
consider the factors described below, in addition to those discussed elsewhere in this report, in
analyzing an investment in the common stock. If any of the events described below occurs, our
business, financial condition and results of operations would likely suffer and the trading price
of our common stock could fall. The following factors could cause our actual results to differ materially from those projected
in forward-looking statements, whether made in this 10-K, annual or quarterly reports to
shareholders, future press releases, SEC filings or orally, whether in presentations, responses to
questions or otherwise. See Note Regarding Forward-Looking Statements. Our substantial indebtedness could adversely affect our financial health and prevent us from
fulfilling future obligations. As of March 22, 2005, we had $195 million of outstanding indebtedness, approximately $110
million in cash and cash equivalents and an additional approximate $23.4 million of unused
availability under our new credit facilities, net of outstanding letters of credit of $1.6 million.
Substantially all of the $110 million in cash and cash equivalents will be used to pay a special
dividend of $103.2 million to our stockholders and $4.4 million of option cancellation payments in
April 2005. Our substantial indebtedness could have negative consequences. For example, it could:  
    increase our vulnerability to general adverse economic and industry conditions;
    require us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing the availability of our cash flow to
fund working capital, capital expenditures, product development efforts and other
general corporate purposes; - 9 -




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
    limit our flexibility in planning for, or reacting to, changes in our business and
the industries in which we operate, including our ability to pursue attractive
acquisition opportunities;
    place us at a competitive disadvantage compared to our competitors that have less debt; and
    limit our ability to borrow additional funds. In addition, our credit agreements contain financial and other restrictive covenants that limit our
ability to engage in activities that may be in our long-term best interests. Our failure to comply
with those covenants could result in an event of default which, if not cured or waived, could
result in the acceleration of all of our debts. We face intense competition that could result in our losing or failing to gain market share and
adversely affect our results of operations. We face intense competition from numerous competitors, several of which have greater financial
resources than us. In addition, the markets for certain of our products are characterized by low
cost of entry or competition based primarily on price. This intense competition could result in
pricing pressures, lower sales, reduced margins and lower market share. Plastic Films competes with a limited number of producers capable of national distribution and
a greater number of smaller manufacturers that target specific regional markets and specialty film
segments competing on the basis of quality, price, service (including the manufacturers ability to
supply customers in a timely manner) and product differentiation. Injection Molding competes in a highly fragmented segment of the plastics industry, with a
large number of regional manufacturers competing on the basis of customer service (including timely
delivery and engineering/design capabilities), quality, product differentiation and price. Our
building products business competes with large and well-established suppliers to the industry,
competing on the basis of product differentiation and service. Profile Extrusion competes regionally with a number of smaller extruders that focus on
specialized niche markets, competing on the basis of cost, quality and service levels. There can be no assurance that we will continue to compete successfully in the markets for our
products or that competition in such markets will not intensify. Our financial performance is dependent on raw material prices and our ability to pass on price
increases to customers. The primary raw materials we use in the manufacture of our products are various plastic
resins, primarily polyethylene. Our financial performance therefore is dependent to a substantial
extent on the polyethylene resin market. The capacity, supply and demand for plastic resins and the
petrochemical intermediates from which they are produced are subject to substantial cyclical price
fluctuations and other market disturbances, including supply shortages. Consequently, plastic resin
prices may fluctuate as a result of changes in natural gas and crude oil prices. While we attempt
to pass through changes in the cost of our raw materials to our customers in the form of price
increases, we cannot be assured that we will be able to do so in the future. To the extent that
increases in the cost of plastic resins cannot be passed on to our customers, or the duration of
time lags associated with a pass through becomes significant, such increases may have a material
adverse effect on our profitability. Furthermore, during periods when resin prices are falling,
gross profits may suffer, as we will be selling products manufactured with resin purchased one to
two months prior at higher prices. Sales to one of our customers accounted for 13% of our net sales in 2004, and the loss of sales to
that customer could harm our business, financial condition and results of operations. Sales to Whirlpool Corporation accounted for 13% of our net sales in 2004. A significant
reduction in Whirlpools volume, or the loss of Whirlpool as a customer, could have a material
adverse effect on our business, financial condition and results of operations. Our acquisitions carry risks. Acquisitions and investments, including our recent acquisition of certain assets of LaVanture,
involve numerous risks such as diversion of senior managements attention, unsuccessful integration
of the acquired entitys personnel, operations, - 10 -




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technologies and products, lack of market acceptance of new services and technologies or a
shift in industry dynamics that negatively impacts the forecasted demand for the new products.
Impairment of goodwill and intangible assets may result if these risks materialize. There can be no
assurance that an acquired business, including LaVanture, will perform as expected or generate
significant net sales or profits. In addition, acquisitions may involve the assumption of
obligations or significant one-time write-offs. In order to finance any future acquisitions, we may
need to raise additional funds through public or private financings. Our business may suffer if any of our key senior executives discontinues employment with us or if
we are unable to recruit and retain highly qualified employees. Our future success depends to a large extent on the services of our key managerial employees.
We may not be able to retain our executive officers and key personnel or attract additional
qualified management in the future. Our business also depends on our continuing ability to recruit,
train and retain highly qualified employees. The competition for these employees is intense, and
the loss of these employees could harm our business. Our intellectual property rights may be inadequate to protect our business. We attempt to protect our intellectual property rights through a combination of intellectual
property laws, including patents. Our failure to obtain or maintain adequate protection of our
intellectual property rights for any reason could have a material adverse effect on our business,
results of operations and financial condition. We also rely on unpatented proprietary technology. It is possible that others will
independently develop the same or similar technology or otherwise obtain access to our unpatented
technology. If we are unable to maintain the proprietary nature of our technologies, we could be
materially adversely affected. We rely on our trademarks, trade names and brand names to distinguish our products from the
products of our competitors, and have registered or applied to register many of these trademarks.
We cannot assure you that our trademark applications will be approved. Third parties may also
oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event
that our trademarks are successfully challenged, we could be forced to rebrand our products, which
could result in loss of brand recognition, and could require us to devote resources advertising and
marketing new brands. Further, we cannot be assured that competitors will not infringe our
trademarks, or that we will have adequate resources to enforce our trademarks. If third parties claim that we infringe upon their intellectual property rights, our operating
profits could be adversely affected. We face the risk of claims that we have infringed third parties intellectual property rights.
Any claims of patent or other intellectual property infringement, even those without merit, could:  
    be expensive and time consuming to defend;
    cause us to cease making, licensing or using products that incorporate the challenged intellectual property;
    require us to redesign, reengineer, or rebrand our products, if feasible;
    divert managements attention and resources; or
    require us to enter into royalty or licensing agreements in order to obtain the
right to use a third partys intellectual property. Any royalty or licensing agreements, if required, may not be available to us on acceptable
terms or at all. A successful claim of infringement against us could result in our being required
to pay significant damages, enter into costly license or royalty agreements, or stop the sale of
certain products, any of which could have a negative impact on our operating profits and harm our
future prospects. - 11 -




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If our products infringe on the intellectual property rights of others, we may be required to
indemnify our customers for any damages they suffer. We generally indemnify our customers with respect to infringement by our products of the
proprietary rights of third parties. Third parties may assert infringement claims against our
customers. These claims may require us to initiate or defend protracted and costly litigation on
behalf of our customers, regardless of the merits of these claims. If any of these claims succeed,
we may be forced to pay damages on behalf of our customers or may be required to obtain licenses
for the products they use. If we cannot obtain all necessary licenses on commercially reasonable
terms, our customers may be forced to stop using our products. Environmental, health and safety matters could require material expenditures and changes in our
operations. We are subject to various environmental, health and safety laws and regulations which govern
our operations and which may adversely affect our production costs. Actions by federal, state and
local governments concerning environmental, health and safety matters could result in laws or
regulations that could increase the cost of producing the products we manufacture or otherwise
adversely affect the demand for our products. Certain local governments have adopted ordinances
prohibiting or restricting the use or disposal of certain plastic products that are among the types
we produce. If such prohibitions or restrictions were widely adopted, it could have a material
adverse effect on our business, financial condition and results of operations. In addition, a
decline in consumer preference for plastic products due to environmental considerations could have
a material adverse effect on our business, financial condition and results of operations. In addition, certain of our operations are subject to federal, state and local environmental
laws and regulations that impose limitations on the discharge of pollutants into the air and water
and establish standards for the treatment, storage and disposal of solid and hazardous wastes.
Non-compliance could subject us to material liabilities, such as fines, damages, criminal or civil
sanctions and remediation costs, or result in interruptions in our operations. We believe our
operations are currently in substantial compliance with these laws and regulations. However, we
cannot assure you that we have been or will be at all times in compliance with all of these
requirements and that the resolution of these environmental matters will not have an adverse effect
on our results of operations, financial condition and cash flows in any given period. Under certain environmental laws, liability for the cleanup of contaminated sites can be
imposed retroactively and on a joint and several basis. We could be held responsible for all
cleanup costs at a site, whether currently or formerly owned or operated as well as third party
sites to which we may have sent waste, and regardless of fault or the legality of the original
disposal. While we are not currently aware of contaminated or Superfund sites as to which material
outstanding claims or obligations exist, there may be additional sites or contaminants of which we
are unaware. The discovery of currently unknown contaminants or the imposition of cleanup
obligations could have a material adverse effect on our results of operations or financial
condition. Environmental laws and regulations are complex, and both the laws and regulations and the
interpretation thereof, change frequently and have tended to become more stringent over time.
Future developments could restrict or eliminate the use of, or require us to make modifications to
our products, which could have a material adverse effect on our results of operations, financial
condition and cash flows in any given period. Although we cannot predict with any certainty our
future capital expenditure requirements for environmental regulatory compliance, we have not
currently identified any of our facilities as requiring major expenditures for environmental
remediation or to achieve compliance with environmental regulations. Accordingly, we have not
accrued any amounts relating to such expenditures. We do not currently have any insurance coverage
for environmental liabilities and do not anticipate obtaining such coverage in the future. Our major shareholder has significant influence over our business and could delay, deter or prevent
a change of control or other business combination. As of December 31, 2004, Earl Powell, our Chairman of the Board, holds approximately 46.7% of
our voting power, and is able to exert significant control over our affairs, including the election
of a majority of our board, the appointment of our management, the entering into of mergers, sales
of substantially all of our assets and other extraordinary transactions. His interests could
conflict with those of our other shareholders. - 12 -




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ITEM 2. PROPERTIES Our headquarters consists of approximately 11,400 square feet of office space, with an
annual lease payment of approximately $162,000. The following table describes the manufacturing facilities we own or lease as of December 31,
2004. Substantially all of the owned facilities are pledged as collateral for debt. We believe that
our manufacturing facilities are adequate to meet current needs and increases in sales volume for
the foreseeable future. Owned or
    
    
    Building AreaSegment and Location
    
    Leased
    
    
    (square feet)Plastic Films:Stretch Films, Sapulpa, Oklahoma
    
    Owned
    
    
    126,544Stretch Films, Nicholasville, Kentucky
    
    Owned
    
    
    130,000Stretch Films, Fontana, California
    
    Leased
    
    
    95,080Custom Films, Mankato, Minnesota
    
    Owned
    
    
    140,000Institutional Products, Mankato, Minnesota
    
    Leased
    
    
    65,000Custom Films, Cartersville, Georgia
    
    Leased
    
    
    58,500Injection Molding:Injection Molding, Henderson, Kentucky
    
    Owned
    
    
    133,000Injection Molding, Jackson, Tennessee
    
    Owned
    
    
    50,835Injection Molding, Ft. Smith, Arkansas
    
    Owned
    
    
    135,000Injection Molding, Warren, Ohio
    
    Owned
    
    
    54,131Injection Molding, LaVergne, Tennessee
    
    Leased
    
    
    38,000Injection Molding, Alamo, Texas
    
    Leased
    
    
    98,000Injection Molding, Elkhart, Indiana
    
    Leased
    
    
    22,000Profile Extrusion:Profile Extrusion, Elkhart, Indiana
    
    Owned
    
    
    88,000Profile Extrusion, Elkhart, Indiana
    
    Leased
    
    
    35,200Profile Extrusion, Elkhart, Indiana
    
    Leased
    
    
    63,300
 
 ITEM 3. LEGAL PROCEEDINGS From time to time we may become a party to various legal proceedings arising in the
ordinary course of our business. We are not presently a party to any litigation where the outcome
is expected to have a material adverse effect on our consolidated financial condition or results of
operations. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders, through the solicitation of
proxies or otherwise, during the quarter ended December 31, 2004. - 13 -




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PART II 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES Effective March 9, 2005, our Class A Common Stock is traded on The NASDAQ Stock Market
and the Pacific Stock Exchange under the symbol ATPL. Prior to this date, our Class A Common
Stock was traded on the American Stock Exchange (the AMEX) and the Pacific Stock Exchange under
the symbol AGH. The following table sets forth the high and low sales prices for the Class A
Common Stock on the AMEX for each quarter of the years 2004 and 2003: High
    
    
    Low2004First Quarter
    
    $
    15.50
    
    
    $
    12.00Second Quarter
    
    $
    18.40
    
    
    $
    14.25Third Quarter
    
    $
    19.25
    
    
    $
    11.69Fourth Quarter
    
    $
    17.80
    
    
    $
    13.992003First Quarter
    
    $
    5.25
    
    
    $
    4.65Second Quarter
    
    $
    8.00
    
    
    $
    4.70Third Quarter
    
    $
    7.82
    
    
    $
    6.58Fourth Quarter
    
    $
    13.00
    
    
    $
    7.10
 There is no public market for our Class B Common Stock. Each share of Class B Common Stock is
convertible, at the option of the holder, into one share of Class A Common Stock. As of February 28, 2005, there were 145 holders of record of Class A Common Stock and 15
holders of record of Class B Common Stock. Dividends We did not declare or pay any dividends during the year ended December 31, 2004. On
March 22, 2005, our Board of Directors declared a special, one-time cash dividend of $12.50 per
Common share, payable April 8, 2005, to stockholders of record as of April 1, 2005. The dividend
will aggregate approximately $103.2 million and will be funded by the proceeds from our new
financing agreement entered into on March 22, 2005. - 14 -




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ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with our
Consolidated Financial Statements and the Notes thereto and Managements Discussion and Analysis
of Financial Condition and Results of Operations, which are included elsewhere in this report. Years Ended December 31,
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(in millions, except per share data)Operating DataNet sales
    
    $
    347.8
    
    
    $
    289.1
    
    
    $
    248.6
    
    
    $
    247.8
    
    
    $
    250.3Net income
    
    
    11.5
    
    
    
    8.2
    
    
    
    2.4
    
    
    
    0.7
    
    
    
    0.2Goodwill amortization*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    1.6Per Share DataNet income:Basic earnings per common share
    
    $
    1.49
    
    
    $
    1.08
    
    
    $
    0.31
    
    
    $
    0.10
    
    
    $
    0.03Diluted earnings per common share
    
    $
    1.42
    
    
    $
    1.06
    
    
    $
    0.31
    
    
    $
    0.10
    
    
    $
    0.03Financial DataTotal assets
    
    $
    213.3
    
    
    $
    185.7
    
    
    $
    175.6
    
    
    $
    169.6
    
    
    $
    175.5Total debt
    
    
    87.7
    
    
    
    77.2
    
    
    
    88.9
    
    
    
    88.9
    
    
    
    98.6Cash dividends declared per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   *
    The Company adopted Statement of Financial Accounting Standards No. 142 during 2002, which
requires, among other items, the cessation of recording goodwill amortization. - 15 -




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a leading U.S. manufacturer of high quality specialty plastic films and custom
molded and extruded plastic products used for storage and transportation, food service, appliance,
automotive, commercial and consumer applications. We currently operate 16 manufacturing facilities,
and we believe we are a low-cost producer in many of our product lines. We operate through three
operating business segments: Plastic Films, Injection Molding and Profile Extrusion. Plastic Films, which accounted for approximately 64% of our net sales in 2004, is a leading
manufacturer of specialty plastic films. Plastic Films is comprised of three operating divisions:
Stretch Films, Custom Films and Institutional Products. Stretch Films produces high-quality,
multilayer plastic films that are used to cover, package and protect products for storage and
transportation applications. We believe we are one of the largest producers of stretch films in the
United States. Custom Films produces customized monolayer and multilayer specialty plastic films
used as a substrate in multilayer laminates in foam padding for carpet, automotive and medical
applications, and as industrial and protective packaging. Institutional Products converts custom
films into disposable products such as tablecovers, gloves and aprons, which are used primarily in
institutional food service. Injection Molding, which accounted for approximately 29% of our net sales in 2004, is a
leading manufacturer of both custom and proprietary injection molded products. Injection Molding
produces a number of custom injection molded components that are sold primarily to original
equipment manufacturers in the home appliance, automotive parts, recreational vehicle and
construction industries. Injection Molding also manufactures a line of proprietary plastic cedar
shake siding panels for the home building industry and residential replacement market under the
CedarwayÒ trade name. Profile Extrusion, which accounted for approximately 7% of our net sales in 2004, is a
manufacturer of custom extruded plastic products, primarily for use in consumer and commercial
products, including recreational vehicles, mobile homes, residential doors and windows, office
furniture and appliances. We believe we are one of the leading manufacturers of custom extruded
plastic products for recreational vehicles. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based
upon our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. Note 1 to our consolidated financial statements
describes the significant accounting policies and methods used in the preparation of these
financial statements. The preparation of these financial statements also requires management to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, our
management evaluates these estimates, including those related to revenue recognition, intangible
assets, sales returns and allowances, bad debts and contingencies. We base our estimates on
historical experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may
differ materially from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the more significant judgments
and estimates used in the preparation of our consolidated financial statements. Revenue recognition and accounts receivable:We recognize revenue upon shipment of our products to
customers, giving consideration to product shipping terms. Receivables are currently due from
customers based on negotiated payment terms. The allowance for doubtful accounts is recorded based
on specific review and analysis of customer account balances and historical trends. The allowance
for sales returns is recorded based on managements estimate of product returns, primarily based on
historical trends. We perform ongoing credit assessments of our customers and adjust credit limits
based upon payment history, the customers current credit worthiness and any other relevant
customer specific credit information. While historical credit losses have been within our
expectations and the provisions established, it is possible that future credit losses could be
higher or lower. - 16 -




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##### Table of Contents



Inventories:Inventories are stated at the lower of cost (first-in, first-out) or market. Cost
includes materials, labor and overhead. Market, with respect to all inventories, is replacement
cost or net realizable value. Management periodically reviews inventory to determine the necessity
of reserves for excess, obsolete or unsaleable inventory. These reviews require management to
assess customer and market demand. These estimates may differ from actual results, in which case we
may have overstated or understated the reserve required for excess, obsolete or unsaleable
inventory. Goodwill:We review goodwill and identifiable intangible assets for impairment on an annual basis
or on an interim basis if an event occurs that might reduce the fair value of the goodwill or
identifiable intangible assets below their carrying value. An impairment loss would be recognized
based on the difference between the carrying value of the asset and its estimated fair value, which
would be determined based on either discounted future cash flows or other appropriate valuation
methods. Specifically, we have net goodwill, which represents the purchase price over the fair value of
identifiable assets and liabilities of acquired businesses, of $51.4 million and accumulated
amortization of $22.5 million at December 31, 2004. Net goodwill and accumulated amortization were
$47.2 million and $22.5 million, respectively, at December 31, 2003. Based upon our analysis, we
have determined there has been no impairment of goodwill as of December 31, 2004 in accordance with
SFAS 142. Although we currently believe that the estimates of each reporting units fair value used in
the evaluation of goodwill are reasonable, differences between actual and expected revenue,
operating results, and cash flow could cause these assets to be deemed impaired. If this were to
occur, we would be required to charge to earnings the write-down in value of such assets, which
could have a material adverse effect on our results of operations and financial position. Self Insurance:We are self-insured for the majority of our group health insurance costs, subject
to specific retention levels. The reserve for health insurance claims incurred but not paid is
based on historical claims information. In addition, we are self-insured for the majority of our
workers compensation costs. We establish reserves for workers compensation claims utilizing
insurance industry loss development factors as well as specific estimates of settlement costs for
individual claims. While we believe that our assumptions are appropriate, significant differences
in our actual experience or significant changes in our assumptions may have a material effect on
our group health insurance and workers compensation costs. Net sales, gross profit, and operating income for our business segments for the years ended
December 31, 2004, 2003, and 2002, were as follows (in thousands): Years Ended December 31,
    
    2004
    
    
    2003
    
    
    2002Net Sales
    
    Amount
    
    
    % Net Sales
    
    
    Amount
    
    
    % Net Sales
    
    
    Amount
    
    
    % Net SalesPlastic Films
    
    $
    222,221
    
    
    
    64
    %
    
    $
    186,431
    
    
    
    65
    %
    
    $
    165,013
    
    
    
    66
    %Injection Molding
    
    
    99,899
    
    
    
    29
    %
    
    
    81,345
    
    
    
    28
    %
    
    
    61,807
    
    
    
    25
    %Profile Extrusion
    
    
    25,682
    
    
    
    7
    %
    
    
    21,322
    
    
    
    7
    %
    
    
    21,766
    
    
    
    9
    %Total
    
    $
    347,802
    
    
    
    100
    %
    
    $
    289,098
    
    
    
    100
    %
    
    $
    248,586
    
    
    
    100
    %
 Gross Profit
    
    Amount
    
    
    % Net Sales
    
    
    Amount
    
    
    % Net Sales
    
    
    Amount
    
    
    % Net SalesPlastic Films
    
    $
    34,891
    
    
    
    16
    %
    
    $
    30,021
    
    
    
    16
    %
    
    $
    24,494
    
    
    
    15
    %Injection Molding
    
    
    15,592
    
    
    
    16
    %
    
    
    11,893
    
    
    
    15
    %
    
    
    9,584
    
    
    
    16
    %Profile Extrusion
    
    
    5,985
    
    
    
    23
    %
    
    
    5,026
    
    
    
    24
    %
    
    
    5,819
    
    
    
    27
    %Total
    
    $
    56,468
    
    
    
    16
    %
    
    $
    46,940
    
    
    
    16
    %
    
    $
    39,897
    
    
    
    16
    %
 Operating Income
    
    Amount
    
    
    % Net Sales
    
    
    Amount
    
    
    % Net Sales
    
    
    Amount
    
    
    % Net SalesPlastic Films
    
    $
    12,995
    
    
    
    6
    %
    
    $
    11,092
    
    
    
    6
    %
    
    $
    5,290
    
    
    
    3
    %Injection Molding
    
    
    7,406
    
    
    
    7
    %
    
    
    4,765
    
    
    
    6
    %
    
    
    3,001
    
    
    
    5
    %Profile Extrusion
    
    
    3,358
    
    
    
    13
    %
    
    
    2,688
    
    
    
    13
    %
    
    
    3,150
    
    
    
    14
    %Total
    
    $
    23,759
    
    
    
    7
    %
    
    $
    18,545
    
    
    
    6
    %
    
    $
    11,441
    
    
    
    5
    %
 - 17 -




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Comparison of Years Ended December 31, 2004 and 2003 Net Sales Net sales increased to $347.8 million in 2004, compared with $289.1 million in 2003, a
20% increase. Net sales for our Plastic Films segment increased to $222.2 million in 2004, compared
with $186.4 million in 2003, a 19% increase. This increase was the result of a 10% increase in
sales volume (measured in pounds) as well as increases in average selling prices in 2004. Net sales
for our Injection Molding segment increased to $99.9 million in 2004, compared with $81.3 million
in 2003, a 23% increase. This increase was the result of growth within both the segments building
products business and custom injection molded products business. Net sales for our Profile
Extrusion segment increased to $25.7 million in 2004, compared with $21.3 million in 2003, a 21%
increase. This increase was primarily attributable to increased demand in both the manufactured
housing and office furniture sectors. Gross Profit Gross profit, as a percentage of net sales, remained flat at 16% in 2004, when compared
with 2003. During 2004, our Plastic Films segment experienced volatility in raw material prices
with average raw material prices increasing 13%. Despite the volatility in raw material prices,
our Plastic Films segments gross margin remained steady at 16% in 2004 compared with 2003, due to
our ability to pass through raw material cost increases. In our Injection Molding segment, gross
margin increased to 16% in 2004, compared with 15% in 2003. This increase was primarily due to
growth within the building products and custom molded products businesses. Our Profile Extrusion
segments gross margin decreased to 23% in 2004 from 24% in 2003. This decrease can be attributed
primarily to increases in raw material costs, which were not fully passed through to customers. Selling, General and Administrative Expense Our selling, general and administrative (SG&A) expense increased to $32.7 million in
2004 compared with $28.4 million in 2003. SG&A expenses as a percentage of net sales decreased in
2004 to 9% from 10% in 2003. Net Interest Expense and Income Taxes Interest expense, net of interest income, decreased 3% to $5.6 million in 2004 from $5.8
million in 2003. The decrease was the result of lower average borrowings and lower average interest
rates in 2004. Our effective income tax rate was 37% for both 2004 and 2003. The effective income tax rate
differed from the applicable federal statutory rate due to the effect of state income taxes. Income As a result of the factors described above, operating income increased to $23.8 million,
or 7% of net sales, in 2004, compared with $18.5 million, or 6% of net sales, in 2003. Net income
and earnings per share amounts were as follows: 2004
    
    
    2003Net income
    
    $11.5 million
    
    $8.2 millionBasic earnings per share
    
    $
    1.49
    
    
    $
    1.08Diluted earnings per share
    
    $
    1.42
    
    
    $
    1.06
 - 18 -




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Comparison of Years Ended December 31, 2003 and 2002 Net Sales Net sales increased to $289.1 million in 2003, compared with $248.6 million in 2002, a
16% increase. Net sales for our Plastic Films segment sales increased to $186.4 million in 2003,
compared with $165.0 million in 2002, a 13% increase. This increase was primarily the result of a
17% increase in average selling prices in 2003, which was partially offset by a 3% decline in sales
volume (measured in pounds). Net sales for our Injection Molding segment increased to $81.3 million
in 2003, compared with $61.8 million in 2002, a 32% increase. This increase was primarily the
result of the acquisition of Rio Grande Plastic Products, Inc. in October 2002, which contributed
approximately $9.8 million in net sales during the year, as well as growth within the segments
building products business. Net sales for our Profile Extrusion segment decreased to $21.3 million
in 2003, compared with $21.8 million in 2002, a 2% decrease. This decrease was primarily
attributable to softer demand in the first half of the year in both the manufactured housing and
office furniture sectors. Gross Profit Gross profit, as a percentage of net sales, remained flat at 16% in 2003, when compared
with 2002. During 2003, our Plastic Films segment experienced volatility in raw material prices
with average raw material prices increasing 23%. Despite the volatility in raw material prices,
our Plastic Films segments gross margin increased to 16% in 2003 compared with 15% in 2002, due to
our ability to pass through raw material cost increases. In our Injection Molding segment, gross
margin decreased to 15% in 2003, compared with 16% in 2002. This decrease was primarily due to
start up costs incurred on new business. Our Profile Extrusion segments gross margin decreased to
24% in 2003 from 27% in 2002. This decrease can be attributed primarily to increases in raw
material costs, which were not fully passed through to customers. Selling, General and Administrative Expense Our selling, general and administrative (SG&A) expense decreased slightly to $28.4
million in 2003, compared with $28.5 million in 2002. SG&A expenses as a percentage of net sales
decreased in 2003 to 10% from 11% in 2002. Net Interest Expense and Income Taxes Interest expense, net of interest income, decreased 24% to $5.8 million in 2003 from $7.6
million in 2002. The decrease was the result of lower average interest rates and lower average
borrowings in 2003. Our 2003 and 2002 effective income tax rate was 37% and 38%, respectively. The 2003 and 2002
effective income tax rate differed from the applicable federal statutory rate due to the effect of
state income taxes. Income As a result of the factors described above, operating income increased to $18.5 million,
or 6% of net sales, in 2003, compared with $11.4 million, or 5% of net sales, in 2002. Net income
and earnings per share amounts were as follows: 2003
    
    
    2002Net income
    
    $8.2 million
    
    $2.4 millionBasic earnings per share
    
    $
    1.08
    
    
    $
    0.31Diluted earnings per share
    
    $
    1.06
    
    
    $
    0.31
 - 19 -




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LIQUIDITY AND CAPITAL RESOURCES At December 31, 2004, we had $87.7 million of outstanding indebtedness, $0.1 million in
cash and cash equivalents, and an additional $16.3 million of unused availability under the then
existing credit facility, net of outstanding letters of credit of approximately $1.6 million.
Substantially all of our accounts receivable, inventories and property and equipment were pledged
as collateral under this credit facility. Our principal needs for liquidity, on both a short and
long-term basis, relate to working capital (principally accounts receivable and inventories), debt
service, and capital expenditures. Our working capital, defined as current assets less current
liabilities, at December 31, 2004 totaled $45.0 million (including cash and cash equivalents of
$0.1 million), compared to $25.9 million (including cash and cash equivalents of $3.0 million) at
December 31, 2003. On November 9, 2004, we acquired the business and certain assets and also assumed certain
specific liabilities of LaVanture Plastics Extrusion Technologies, Inc., and Molded Designs
Technology, Inc., (collectively LaVanture). LaVanture manufactures profile extruded and injection
molded plastic products primarily for OEMs in the recreational vehicle industry. The purchase price
of $10 million was funded by borrowings in connection with an amendment to our credit facility. The
amendment, effective November 9, 2004, increased the availability of our credit facility from $110
million to $120 million, and increased the amount drawn by $10 million. The amendment also changed
certain covenants of our credit facility, including the maximum funded debt to EBITDA (earnings
before interest, taxes, depreciation and amortization), capital expenditure limitation, and minimum
EBITDA requirements. We have also recorded a holdback reserve of approximately $500,000, which will
be paid to the former owners of LaVanture upon satisfaction of outstanding previous obligations, or
by June 30, 2005. On March 22, 2005, we completed the syndication of a new $220 million secured financing
provided by a syndicate of banks and financial institutions. The new financing includes a $25
million revolving credit facility maturing March 2011, a $120 million senior secured term loan
facility maturing in September 2011 and a $75 million junior secured term loan facility maturing in
March 2012. Substantially all of our accounts receivable, inventories and property and equipment
are pledged as collateral under this credit facility. The proceeds of the facility were
used to repay our existing senior secured debt of $83.9 million outstanding on March 22, 2005 and
to pay related fees and expenses. The remainder of the proceeds will be used to pay a special
dividend to our shareholders and to provide ongoing working capital. Along with the special
dividend payment, we will pay approximately $4.4 million to holders of outstanding stock options in
exchange for the cancellation of these options on the date the dividend is paid. (See below for
further discussion). In conjunction with the cancellation of our previous credit facility, we will
expense approximately $3.8 million of deferred financing costs associated with the old facility
during the first quarter of fiscal 2005. Additionally, we will expense approximately $500,000 of
non-recurring financing expenses associated with a financing that was not consummated during
January 2005. On March 22, 2005, our Board of Directors declared a special, one-time cash dividend of $12.50
per common share, payable April 8, 2005, to shareholders of record as of April 1, 2005. This
dividend will aggregate approximately $103.2 million and will be funded by the proceeds from our
new financing arrangement. This dividend payment was contingent upon our reincorporation in the
state of Delaware, which was approved by our shareholders and completed on March 15, 2005. On March 15, 2005, our shareholders approved the amendment and restatement of our 2001 Stock
Award Plan. The amended and restated Plan increased the number of shares available for grant from
500,000 to 865,000 and allows us to grant stock based awards other than stock options, such as
stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other
stock related awards and performance awards that may be settled in
cash, stock, or other property. On January 31, 2005, we agreed to cancel certain outstanding stock options of Anthony F. Bova,
President and Chief Executive Officer, which would have otherwise expired on that date. In exchange
for the cancellation of his 350,000 shares, Mr. Bova will receive a cash payment of approximately
$2.4 million on the date of the special dividend payment. The purpose of this option cancellation
agreement is to provide Mr. Bova with a payment similar to the dividend he would otherwise have
received on the shares issuable upon the exercise of the options cancelled. On March 11, 2005, we agreed to cancel the outstanding stock options of certain of our
management, officers and directors (the Participants) for cash payments of approximately $2.0
million in aggregate in anticipation of the one-time dividend payment. The purpose of the option
cancellation arrangements is to provide each Participant with a payment similar to the dividend he
or she would otherwise have received on the shares issuable upon the exercise of the options to be
cancelled. Accordingly, on the date the special dividend is paid to our shareholders, we will
cancel an aggregate of 225,800 outstanding stock options previously granted to the Participants. - 20 -




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##### Table of Contents



As a result of the option cancellations described above, we expect to record related
compensation expense in the amount of $408,000 during fiscal 2005 in accordance with the provisions
of FAS 123R, which we adopted on January 1, 2005. We presently do not have any material commitments for future capital expenditures and expect
to meet our short and long-term liquidity needs with cash on hand, funds generated from operations,
and funds available under our senior credit facility. We believe our cash flows from operations,
available cash and available borrowings under our new credit facility will be adequate to meet our
future liquidity needs for at least the next few years. See Item 1, Business  Factors That May
Affect Future Results. Cash Flows from Operating Activities Net cash provided by operating activities was approximately $7.0 million in 2004,
compared with $21.0 million in 2003. The difference between our net income in 2004 of $11.5 million
and our $7.0 million operating cash flow was primarily attributable to approximately $11.3 million
of depreciation expense and a $4.1 million increase in accounts payable and accrued expenses offset
by a $6.4 million increase in accounts receivable, due to a higher level of sales, and a $13.7
million increase in inventories primarily due to higher resin prices and a larger level of raw
materials inventory. Cash Flows from Investing Activities Net cash used for investing activities in 2004 totaled $22.3 million, compared with $7.0
million in 2003. The cash used for investing activities in 2004 included $9.4 million for the
purchase of LaVanture and $12.9 million of capital expenditures related to capacity expansion
within our building products and custom injection molding businesses. The cash used for investing
activities in 2003 of $7.0 million consisted entirely of capital expenditures. We expect that our capital expenditures will aggregate approximately $15.0 million in fiscal
2005. This amount is comprised of approximately $8.5 million to fund expansion, primarily for our
custom films business and our injection molding business, and $6.5 million for maintenance capital
expenditures. Cash Flows from Financing Activities Net cash provided by financing activities was $12.4 million in 2004, compared with net
cash used for financing activities of $12.2 million in 2003. The cash provided by financing
activities in 2004 reflects net borrowings of $10.5 million under our credit facilities, proceeds
from the exercise of stock options of $1.0 million and repayments on notes receivable from
shareholders of $0.8 million. The cash used for financing activities in 2003 reflects net debt
repayments of $11.7 million and $1.1 million of refinancing costs associated with the senior credit
facility, partially offset by $0.3 million in repayments on notes receivable from shareholders and
$0.3 million of proceeds from the exercise of stock options. The following table summarizes our contractual obligations, including those resulting from the
repayment of our credit facilities existing as of December 31, 2004 with the proceeds of our new
debt facility entered into on March 22, 2005 as well as the repayment obligations under our new
debt facility, and the effect such obligations are expected to have on our liquidity and cash flows
in future periods (in thousands): Maturity
    
    
    Maturity
    
    
    Maturity
    
    
    Maturityless 1 yr
    
    
    1-3 yrs
    
    
    4-5 yrs
    
    
    over 5 yrsDebt principal
    
    $
    88,646
    
    
    $
    2,400
    
    
    $
    2,400
    
    
    $
    189,300Operating leases
    
    
    3,890
    
    
    
    6,380
    
    
    
    3,017
    
    
    
    368Total commitments
    
    $
    92,536
    
    
    $
    8,780
    
    
    $
    5,417
    
    
    $
    189,668
 - 21 -




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Recent Accounting Pronouncements On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 123R, Share-Based Payment (SFAS 123R), which is a
revision of FASB Statement No. 123, Accounting for Stock-Based Compensation and supersedes
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R
requires all share-based payments, including stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure will no longer be an alternative. SFAS
123R permits companies to adopt its requirements using one of two methods: (1) a modified
prospective method in which compensation cost is recognized beginning with the effective date (a)
based on the requirements of SFAS 123R for all share-based payments granted after the effective
date and (b) based on the requirements of SFAS 123R for all awards granted to employees prior to
the effective date of SFAS 123R that remain unvested on the effective date, and (2) a modified
retrospective method which includes the requirements of the modified prospective method, but also
permits entities to restate based on the amounts previously recognized under Statement 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim
periods of the year of adoption. This statement would be effective for public companies (except
small business issuers as defined in SEC Regulation S-B) for interim or annual periods beginning

after June 15, 2005. A calendar-year company therefore would be required to apply SFAS 123R
beginning July 1, 2005 and could choose to apply SFAS 123R retroactively for the January 1, 2005 to
June 30, 2005 year-to-date period in its third quarter 2005 Form 10-Q to account for all
share-based payments under the fair value method from January 1, 2005. Furthermore, companies can
choose to early adopt the proposed Statement at the beginning of its first quarter ended March 31,
2005. We adopted SFAS 123R as of January 1, 2005 using the modified retrospective method. The
adoption resulted in the recognition of deferred compensation cost (a component of equity) of
approximately $461,000 on January 1, 2005. Amortization of such deferred compensation to expense
will be $53,000 for the period prior to the cancellation of all outstanding options as discussed in
Liquidity and Capital Resources. Subsequent to the cancellation of all outstanding options, no
further compensation expense will be recognized related to share based payments until any new share
based payments are made. In December 2003, the Financial Accounting Standards Board issued a revised version of
Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB 51
(FIN 46R). The interpretation was effective for any VIEs created after January 31, 2003 and for
VIEs in which an enterprise obtained an interest after that date. We adopted the provisions of FIN
46R as of March 31, 2004; however, as we did not hold any VIEs at such time, the adoption of this
pronouncement did not have any effect on our consolidated financial statements. - 22 -




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks that may impact our financial condition and financial
results due to changing interest rates and foreign exchange rates. We do not participate in any
significant hedging activities, nor do we currently utilize any significant derivative financial
instruments. The following discussion provides additional information regarding our market risks. Interest Rate Risk: We have entered into variable-rate debt that, at December 31, 2004, had an
outstanding balance of $87.7 million. As of December 31, 2003, we had $77.2 million of outstanding
variable-rate debt. Based on our variable-rate obligations outstanding at December 31, 2004, and
December 31, 2003, each 25 basis point increase or decrease in the level of interest rates would,
respectively, increase or decrease our annual interest expense and related cash payments by
approximately $0.2 million and $0.2 million, respectively. On March 22, 2005, we replaced the
credit facility in place on December 31, 2004 and entered into a new financing agreement resulting
in total outstanding variable rate-debt of $195.0 million. A 25 basis point increase or decrease in
the level of interest rates would, respectively, increase or decrease our annual interest rate on
this amount by approximately $0.5 million. Such potential increases or decreases are based on
certain simplifying assumptions, including a constant level of variable-rate debt for all
maturities and an immediate, across-the-board increase or decrease in the level of interest rates
with no other subsequent changes for the remainder of the period. Pursuant to our new credit
agreements, during the second quarter of 2005, we will enter into, and until maturity will
maintain, interest rate protection for at least $77 million of our outstanding debt. Foreign Exchange Rate Risk: We have a Canadian dollar bank account and therefore are exposed
to foreign exchange currency market risk. We have determined this risk to be immaterial at both
December 31, 2004 and December 31, 2003 based on the balance maintained in that account and the
overall level of our Canadian operations. - 23 -




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageManagements Responsibility for Financial Reporting
    
    
    25Report of Independent Registered Public Accounting Firm
    
    
    26Consolidated Statements of Income for the Years Ended December 31, 2004, 2003, and 2002
    
    
    27Consolidated Balance Sheets as of December 31, 2004 and 2003
    
    
    28Consolidated Statements of Shareholders Equity for the Years Ended December 31, 2004, 2003, and 2002
    
    
    29Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003, and 2002
    
    
    30Notes to Consolidated Financial Statements
    
    
    31
 - 24 -




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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING The Companys management is responsible for the preparation of the accompanying
consolidated financial statements in accordance with accounting principles generally accepted in
the United States and for the integrity of all the financial data included in this Form 10-K. In
preparing the consolidated financial statements, management makes informed judgments and estimates
of the expected effects of events and transactions that are currently being reported. Management maintains a system of internal accounting controls that is designed to provide
reasonable assurance that assets are safeguarded and that transactions are executed and recorded in
accordance with managements policies for conducting its business. This system includes policies
that require adherence to ethical business standards and compliance with all laws to which the
Company is subject. The internal control process is continuously monitored by direct management
review. The Board of Directors, through its Audit Committee, is responsible for determining that
management fulfills its responsibility with respect to the Companys consolidated financial
statements and the system of internal accounting controls. The Audit Committee, comprised solely of directors who (1) all have significant accounting or
financial expertise, and (2) are not officers or employees of the Company, meets periodically with
representatives of management and the Companys independent auditors to review and monitor the
financial, accounting, and auditing procedures of the Company in addition to reviewing the
Companys financial reports. The Companys independent auditors have full and free access to the
Audit Committee. /s/ Anthony F. Bova
    
    /s/ Paul G. SaariPresident and Chief
    
    Senior Vice President of Finance andExecutive Officer
    
    Chief Financial Officer
 - 25 -




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Atlantis Plastics, Inc. We have audited the accompanying consolidated balance sheets of Atlantis Plastics, Inc. as of
December 31, 2004 and 2003, and the related consolidated statements of income, shareholders
equity, and cash flows for each of the three years in the period ended December 31, 2004. Our
audits also included the financial statement schedule listed in the Index at Item 15(a). These
financial statements and schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and schedule based on our
audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Companys internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Atlantis Plastics, Inc. at December 31,
2004 and 2003, and the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 2004, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP
 Atlanta, Georgia
March 25, 2005 - 26 -




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##### Table of Contents



Consolidated Statements of Income Years Ended December 31,(in thousands, except per share amounts)
    
    2004
    
    
    2003
    
    
    2002Net sales
    
    $
    347,802
    
    
    $
    289,098
    
    
    $
    248,586Cost of goods sold
    
    
    291,334
    
    
    
    242,158
    
    
    
    208,689Gross profit
    
    
    56,468
    
    
    
    46,940
    
    
    
    39,897Selling, general and administrative expenses
    
    
    32,709
    
    
    
    28,395
    
    
    
    28,456Operating income
    
    
    23,759
    
    
    
    18,545
    
    
    
    11,441Interest expense, net of interest income of $53 in 2004,
$153 in 2003 and $132 in 2002
    
    
    (5,643
    )
    
    
    (5,790
    )
    
    
    (7,641
    )Other income
    
    
    168
    
    
    
    324
    
    
    
    34Income before provision for income taxes
    
    
    18,284
    
    
    
    13,079
    
    
    
    3,834Provision for income taxes
    
    
    6,769
    
    
    
    4,839
    
    
    
    1,456Net income
    
    $
    11,515
    
    
    $
    8,240
    
    
    $
    2,378Basic earnings per share
    
    $
    1.49
    
    
    $
    1.08
    
    
    $
    0.31Diluted earnings per share
    
    $
    1.42
    
    
    $
    1.06
    
    
    $
    0.31Weighted average number of shares used in
computing earnings per share:Basic
    
    
    7,709
    
    
    
    7,606
    
    
    
    7,569Diluted
    
    
    8,131
    
    
    
    7,750
    
    
    
    7,578
 See accompanying notes. - 27 -




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##### Table of Contents



Consolidated Balance Sheets December 31,(in thousands, except share and per share amounts)
    
    2004
    
    
    2003AssetsCash and cash equivalents
    
    $
    51
    
    
    $
    3,001Accounts receivable (net of allowances of $1,228 and $1,281)
    
    
    45,982
    
    
    
    39,601Inventories
    
    
    38,186
    
    
    
    23,305Other current assets
    
    
    4,760
    
    
    
    3,583Deferred income tax assets
    
    
    3,978
    
    
    
    3,003Total current assets
    
    
    92,957
    
    
    
    72,493Property and equipment, net
    
    
    64,165
    
    
    
    60,347Goodwill, net of accumulated amortization
    
    
    51,413
    
    
    
    47,212Other assets
    
    
    4,759
    
    
    
    5,646Total assets
    
    $
    213,294
    
    
    $
    185,698Liabilities and shareholders equityAccounts payable and accrued expenses
    
    $
    41,048
    
    
    $
    36,149Current maturities of long-term debt
    
    
    6,955
    
    
    
    10,487Total current liabilities
    
    
    48,003
    
    
    
    46,636Long-term debt
    
    
    80,790
    
    
    
    66,713Deferred income tax liabilities
    
    
    11,211
    
    
    
    12,731Other liabilities
    
    
    1,013
    
    
    
    1,213Total liabilities
    
    
    141,017
    
    
    
    127,293Commitments and contingencies
    
    
    
    
    
    
    Shareholders equityClass A Common Stock; $0.10 par value; 20,000,000 shares authorized,
5,556,566 and 5,170,842 shares issued and outstanding in 2004 and 2003
    
    
    556
    
    
    
    517Class B Common Stock; $0.10 par value; 7,000,000 shares authorized,
2,227,057 and 2,456,981 shares issued and outstanding in 2004 and 2003
    
    
    223
    
    
    
    246Additional paid-in capital
    
    
    12,595
    
    
    
    11,119Notes receivable from sale of common stock
    
    
    (452
    )
    
    
    (1,317
    )Retained earnings
    
    
    59,355
    
    
    
    47,840Total shareholders equity
    
    
    72,277
    
    
    
    58,405Total liabilities and shareholders equity
    
    $
    213,294
    
    
    $
    185,698
 See accompanying notes. - 28 -




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##### Table of Contents



Consolidated Statements of Shareholders Equity Notes
    
    
    
    
    
    
    TotalClass A
    
    
    Class B
    
    
    Additional
    
    
    Receivable
    
    
    
    
    
    
    Share-Common
    
    
    Common
    
    
    Paid-In
    
    
    from Sale of
    
    
    Retained
    
    
    holders( in thousands)
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Common Stock
    
    
    Earnings
    
    
    EquityBalance at January 1, 2002
    
    $
    496
    
    
    $
    257
    
    
    $
    10,677
    
    
    $
    (1,589
    )
    
    $
    37,222
    
    
    $
    47,063Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,378
    
    
    
    2,378Exercise of stock options
    
    
    5
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    180Conversion of Class B to Class A
Common Stock
    
    
    11
    
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payments on notes received for sale of
Common Stock , net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    (93
    )Balance at December 31, 2002
    
    
    512
    
    
    
    246
    
    
    
    10,852
    
    
    
    (1,682
    )
    
    
    39,600
    
    
    
    49,528Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,240
    
    
    
    8,240Exercise of stock options
    
    
    5
    
    
    
    
    
    
    
    267
    
    
    
    
    
    
    
    
    
    
    
    272Payments on notes received for sale of
Common Stock , net
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    365
    
    
    
    
    
    
    
    365Balance at December 31, 2003
    
    
    517
    
    
    
    246
    
    
    
    11,119
    
    
    
    (1,317
    )
    
    
    47,840
    
    
    
    58,405Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,515
    
    
    
    11,515Income tax benefit from option
exercises
    
    
    
    
    
    
    
    
    
    
    483
    
    
    
    
    
    
    
    
    
    
    
    483Exercise of stock options
    
    
    16
    
    
    
    
    
    
    
    993
    
    
    
    
    
    
    
    
    
    
    
    1,009Conversion of Class B to Class A
Common Stock
    
    
    23
    
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payments on notes received for sale of
Common Stock , net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    865
    
    
    
    
    
    
    
    865Balance at December 31, 2004
    
    $
    556
    
    
    $
    223
    
    
    $
    12,595
    
    
    $
    (452
    )
    
    $
    59,355
    
    
    $
    72,277
 See accompanying notes. - 29 -




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##### Table of Contents



Consolidated Statements of Cash Flows Years Ended December 31,(in thousands)
    
    2004
    
    
    2003
    
    
    2002Operating Activities:Net income
    
    $
    11,515
    
    
    $
    8,240
    
    
    $
    2,378Adjustments to reconcile net income to cash provided by operating activities:Depreciation and other amortization
    
    
    11,340
    
    
    
    11,760
    
    
    
    11,678Loan fee amortization
    
    
    1,029
    
    
    
    1,012
    
    
    
    220Interest receivable from shareholder loans
    
    
    31
    
    
    
    33
    
    
    
    (75
    )(Gain) loss on disposal of assets
    
    
    (29
    )
    
    
    
    
    
    
    153Income tax benefit from stock option exercises
    
    
    483
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    80
    
    
    
    1,605
    
    
    
    (824
    )Change in operating assets and liabilities, net of acquisitions of businesses:Accounts receivable
    
    
    (6,381
    )
    
    
    (11,035
    )
    
    
    2,853Inventories
    
    
    (13,659
    )
    
    
    (1,347
    )
    
    
    (5,406
    )Other current assets
    
    
    (1,177
    )
    
    
    1,566
    
    
    
    (82
    )Accounts payable and accrued expenses
    
    
    4,093
    
    
    
    8,037
    
    
    
    3,182Other assets and liabilities
    
    
    (297
    )
    
    
    1,159
    
    
    
    251Cash provided by operating activities
    
    
    7,028
    
    
    
    21,030
    
    
    
    14,328Investing Activities:Capital expenditures
    
    
    (12,943
    )
    
    
    (7,033
    )
    
    
    (9,546
    )Purchase of business
    
    
    (9,404
    )
    
    
    
    
    
    
    (1,885
    )Proceeds from asset dispositions
    
    
    4
    
    
    
    
    
    
    
    1,642Cash used for investing activities
    
    
    (22,343
    )
    
    
    (7,033
    )
    
    
    (9,789
    )Financing Activities:Borrowings (repayments) under senior credit facility
    
    
    11,058
    
    
    
    (7,200
    )
    
    
    13,300(Repayments) borrowings under term loans
    
    
    (513
    )
    
    
    (3,900
    )
    
    
    75,000Retirement of Senior Notes
    
    
    
    
    
    
    
    
    
    
    (49,325
    )Repayments under old credit agreement
    
    
    
    
    
    
    
    
    
    
    (21,500
    )Repayments on long-term debt
    
    
    
    
    
    
    (604
    )
    
    
    (17,461
    )Financing costs associated with senior credit facility
    
    
    (23
    )
    
    
    (1,121
    )
    
    
    (4,381
    )Repayments on notes receivable from shareholders
    
    
    834
    
    
    
    332
    
    
    
    96Proceeds from exercise of stock options
    
    
    1,009
    
    
    
    272
    
    
    
    20Cash provided by (used for) financing activities
    
    
    12,365
    
    
    
    (12,221
    )
    
    
    (4,251
    )(Decrease) increase in cash and cash equivalents
    
    
    (2,950
    )
    
    
    1,776
    
    
    
    288Cash and cash equivalents at beginning of year
    
    
    3,001
    
    
    
    1,225
    
    
    
    937Cash and cash equivalents at end of year
    
    $
    51
    
    
    $
    3,001
    
    
    $
    1,225Supplemental disclosure of cash flow information:Cash paid during the year for:Interest
    
    $
    4,689
    
    
    $
    4,003
    
    
    $
    7,364Income taxes, net of refunds
    
    $
    7,854
    
    
    $
    1,119
    
    
    $
    2,107Supplemental schedule of non-cash investing and financing activities:Leases obtained in acquisition
    
    $
    
    
    
    $
    
    
    
    $
    1,978Non-cash reduction of accounts receivable and accounts payable in connection with supplier agreements
    
    $
    851
    
    
    $
    107
    
    
    $
    344
 See accompanying notes. - 30 -




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Business and Summary of Significant Accounting Policies Atlantis Plastics, Inc. (Atlantis or the Company) through its wholly owned
subsidiaries is a leading U.S. manufacturer of polyethylene stretch and custom films used in a
variety of industrial and consumer applications, and molded plastic products for the appliance,
automotive, recreational vehicle and building supply industries. The Companys operations are
reported as three segments: Plastic Films, Injection Molding, and Profile Extrusion. Plastic Films manufactures stretch films, which are monolayer or multilayer plastic films used
principally to wrap pallets of industrial and commercial goods for shipping or storage and custom
film products that include high-grade laminating films, embossed films and specialty films which
serve the furniture, carpeting, textile, lamination, medical, beauty aids, manufacturing, and food
packaging industries. Plastic Films also produces disposable consumer and institutional plastic
products to the food service, party supply, and school and collegiate markets. Injection Molding manufactures a number of custom injection molded thermoplastic components
that are sold primarily to original equipment manufacturers in the home appliance, automotive
parts, recreational vehicle and construction industries. Injection Molding also manufactures a
line of proprietary injection molded siding panels for the home building industry and the
residential replacement market. Profile Extrusion manufactures custom extruded plastic products, primarily for use in consumer
and commercial products including recreational vehicles, mobile homes, residential doors and
windows, office furniture, and appliances. The following is a summary of the Companys significant accounting policies: Basis of presentation:The consolidated financial statements include the accounts of Atlantis, its
subsidiaries and certain assets and liabilities held in a Rabbi Trust related to an employee
supplemental benefit plan. All material intercompany balances and transactions have been
eliminated. Cash and cash equivalents:The Company classifies as cash and cash equivalents all highly liquid
investments that present insignificant risk of changes in value and have maturities at the date of
purchase of three months or less. The Company maintains its cash in bank deposit accounts that, at
times, may exceed federally insured limits. The Company has not experienced any losses in such
accounts. Revenue recognition and accounts receivable:The Company recognizes revenue upon shipment of its
products to customers, giving consideration to product shipping terms. Receivables are currently
due from customers based on negotiated payment terms. The allowance for doubtful accounts is
recorded based on specific review and analysis of customer account balances and historical trends.
The allowance for sales returns is recorded based on managements estimate of product returns,
primarily based on historical trends. The Company performs ongoing credit assessments of its
customers and adjusts credit limits based upon payment history, the customers current credit
worthiness and any other relevant customer specific credit information. Historical credit losses
have been within our expectations and the provisions established. Inventories:Inventories are stated at the lower of cost (first-in, first-out) or market. Cost
includes materials, labor and overhead. Market, with respect to all inventories, is replacement
cost or net realizable value. Management periodically reviews inventory to determine the necessity
of reserves for excess, obsolete or unsaleable inventory. Goodwill:The Company reviews goodwill and identifiable intangible assets for impairment on an
annual basis as of October 1, or on an interim basis if an event occurs that might reduce the fair
value of the goodwill or identifiable intangible assets below their carrying value. An impairment
loss would be recognized based on the difference between the carrying value of the asset and its
estimated fair value, which would be determined based on either discounted future cash flows or
other appropriate valuation methods. Specifically, the Company has goodwill in excess of the purchase price over the fair value of
identifiable assets and liabilities of acquired businesses of $51.4 million and $47.2 million as of
December 31, 2004 and 2003, respectively. These - 31 -




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##### Table of Contents



amounts are net of accumulated amortization of $22.5 million at both December 31, 2004 and 2003.
Based upon its analysis, management has determined there has been no impairment of goodwill as of
December 31, 2004 in accordance with SFAS 142. The changes in the carrying amount of goodwill as recorded at each of the Companys segments
for the years ended December 31, 2004 and 2003 are summarized as follows: Plastic
    
    
    Injection
    
    
    ProfileFilms
    
    
    Molding
    
    
    Extrusion
    
    
    TotalBalance as of December 31, 2003
    
    $
    31.1
    
    
    $
    10.0
    
    
    $
    6.1
    
    
    $
    47.2Goodwill acquired during the year
    
    
    
    
    
    
    
    
    
    
    4.2
    
    
    
    4.2Balance as of December 31, 2004
    
    $
    31.1
    
    
    $
    10.0
    
    
    $
    10.3
    
    
    $
    51.4
 At December 31, 2004 and 2003, the Company had other intangible assets of $0.4 million and
accumulated amortization on these assets of approximately $0.1 million. Self insurance: We are self-insured for the majority of our group health insurance costs, subject
to specific retention levels. The reserve for health insurance claims incurred but not paid is
based on historical claims information. In addition, we are self-insured for the majority of our
workers compensation costs. We establish reserves for workers compensation claims utilizing
insurance industry loss development factors as well as specific estimates of settlement costs for
individual claims. Property and equipment:Property and equipment are carried at cost less accumulated depreciation.
Depreciation has been computed using the straight-line method based on the estimated useful lives
of the respective assets. Such useful lives generally fall within the following ranges: buildings
and improvements  15 to 30 years; office furniture and equipment  5 to 10 years; manufacturing
equipment  5 to 11 years; vehicles  3 to 8 years; and computer hardware and software  3 to 5
years. Property and equipment are evaluated for impairment whenever events or changes in
circumstances indicate that the carrying amounts of such assets may not be recoverable.
Recoverability estimates are based on the projected future cash flows expected to result from the
use of the assets. An impairment loss is measured as the amount by which the carrying amount of the
assets exceeds the fair value. When assets are retired or otherwise disposed of, the costs and accumulated depreciation are
removed from the respective accounts and any related gain or loss is recognized. Maintenance and
repair costs are charged to expense as incurred. Additions and improvements are capitalized when
incurred. Earnings per share:Earnings per share has been computed in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share (SFAS 128), which requires disclosure of basic
and diluted earnings per share. Basic earnings per share excludes any dilutive effects of options,
shares subject to repurchase, warrants, and convertible securities. Diluted earnings per share
includes the impact of potentially dilutive securities. See Note 10  Earnings Per Share. Stock-based compensation: The Company measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations.
Compensation expense is based on the difference, if any, between the fair value of Atlantis common
stock and the exercise price of the option on the measurement date, which is typically the date of
grant. In accordance with Statement of Financial Accounting Standards No. 123 Accounting for
Stock-Based Compensation, (SFAS 123), as amended by Statement of Financial Accounting Standards
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure, (SFAS 148), the
Company has provided the pro forma disclosures of the effect on net income and earnings per share
as if the Company had accounted for its employee stock options granted under the fair value method
of SFAS 123 and had been applied in measuring compensation expense for all periods presented. The fair value of the options granted was estimated at the date of grant using the
Black-Scholes option-pricing model with the following weighted-average assumptions used for 2003
and 2002, respectively: dividend yield of 0% for both years; volatility of 60% and 54%; risk-free
interest rates of 3.53% and 3.34%, and an expected life of six years for all grants. There were no
grants in 2004. - 32 -




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##### Table of Contents



The Black-Scholes option valuation model was developed for use in estimating the fair value of
options that have no vesting restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions, including the expected stock price
volatility. Because the Companys employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, in managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to
expense on a straight-line basis over the options vesting period. The Companys pro forma
information for the years ended December 31, 2004, 2003, and 2002 is as follows (in thousands,
except per share data): (in thousands, except per share data)
    
    2004
    
    
    2003
    
    
    2002Net income:As reported
    
    $
    11,515
    
    
    $
    8,240
    
    
    $
    2,378Add:Stock-based employee compensation
expense included in reported net
income, net of related tax effects
    
    
    
    
    
    
    
    
    
    
    Less:Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects
    
    
    150
    
    
    
    132
    
    
    
    167Pro forma net income
    
    $
    11,365
    
    
    $
    8,108
    
    
    $
    2,211Basic net income per share:As reported
    
    $
    1.49
    
    
    $
    1.08
    
    
    $
    0.31Pro forma
    
    $
    1.47
    
    
    $
    1.07
    
    
    $
    0.29Diluted net income per share:As reported
    
    $
    1.42
    
    
    $
    1.06
    
    
    $
    0.31Pro forma
    
    $
    1.39
    
    
    $
    1.05
    
    
    $
    0.29
 Shipping and handling costs:The Company records costs incurred for shipping and handling in cost
of sales. Amortization:Loan acquisition costs and related legal fees are amortized over the respective terms
of the related debt agreements utilizing either: (i) the effective interest method, or (ii) the
straight-line method when the results do not materially differ from the effective interest method.
The Company currently utilizes the straight-line method for all deferred financing costs. Income taxes:The Company and its subsidiaries file a consolidated federal income tax return. The
Company provides for income taxes in accordance with the liability method, which requires the
recognition of deferred income tax assets and liabilities associated with the expected future tax
consequences of events that have been included in the financial statements. Under this method,
deferred income tax assets and liabilities are determined based on the difference between the
financial statements and tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. Use of estimates:The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires management to make estimates
and assumptions that affect: (i) the reported amounts of assets and liabilities; (ii) disclosure of
contingent assets and liabilities at the dates of the consolidated financial statements; - 33 -




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##### Table of Contents



and (iii) reported amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates. Reclassifications:Certain amounts included in prior period financial statements have been
reclassified to conform with the current year presentation. Financial instruments:The fair value of current assets and current liabilities, including cash and
cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates their
carrying values due to the short maturity of the instruments. The carrying amounts of the Companys
total indebtedness at December 31, 2004 and 2003 approximate their fair values as they bear
interest at variable market rates. The Companys financial instruments that are exposed to concentrations of credit risk consist
primarily of cash and cash equivalents and accounts receivable. The Company places its cash and
cash equivalents with high quality institutions. The Companys three largest trade receivable
balances as of December 31, 2004 represented 33% of the Companys net accounts receivable, compared
with 34% as of December 31, 2003. At December 31, 2004, Whirlpool Corporations accounts receivable
balance was approximately $9.8 million, or 23% of the Companys total net trade accounts receivable
balance. At December 31, 2003, Whirlpool Corporations accounts receivable balance was $8.5
million, or 23% of the Companys total net accounts receivable. Approximately 13%, 14% and 12% of
the Companys net sales in the years ended December 31, 2004, 2003, and 2002, respectively, were to
Whirlpool Corporation. The Company generally does not require collateral from its customers for
trade accounts receivable. Recent Accounting Pronouncements On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 123R, Share-Based Payment (SFAS 123R), which is a
revision of FASB Statement No. 123, Accounting for Stock-Based Compensation and supersedes
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R
requires all share-based payments, including stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure will no longer be an alternative. SFAS
123R permits companies to adopt its requirements using one of two methods: (1) a modified
prospective method in which compensation cost is recognized beginning with the effective date (a)
based on the requirements of SFAS 123R for all share-based payments granted after the effective
date and (b) based on the requirements of SFAS 123R for all awards granted to employees prior to
the effective date of SFAS 123R that remain unvested on the effective date, and (2) a modified
retrospective method which includes the requirements of the modified prospective method, but also
permits entities to restate based on the amounts previously recognized under Statement 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim
periods of the year of adoption. This statement would be effective for public companies (except
small business issuers as defined in SEC Regulation S-B) for interim or annual periods beginning
after June 15, 2005. A calendar-year company therefore would be required to apply SFAS 123R
beginning July 1, 2005 and could choose to apply SFAS 123R retroactively for the January 1, 2005 to
June 30, 2005 year-to-date period in its third quarter 2005 Form 10-Q to account for all
share-based payments under the fair value method from January 1, 2005. Furthermore, companies can
choose to early adopt the proposed Statement at the beginning of its first quarter ended March 31,
2005. The Company adopted SFAS 123R as of January 1, 2005 using the modified retrospective method.
The adoption resulted in the recognition of deferred compensation cost (a component of equity) of
approximately $461,000 on January 1, 2005. Amortization of such deferred compensation to expense
will be $53,000 for the period prior to the cancellation of all outstanding options as discussed in
Note 16  Subsequent Events. Subsequent to the cancellation of all outstanding options, no further
compensation expense will be recognized related to share based payments until any new share based
payments are made. In December 2003, the Financial Accounting Standards Board issued a revised version of
Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB 51
(FIN 46R). The interpretation was effective for any VIEs created after January 31, 2003 and for
VIEs in which an enterprise obtains an interest after that date. The Company adopted the
provisions of FIN 46R as of March 31, 2004; however, as it did not hold any VIEs at such time, the
adoption of this pronouncement did not have any effect on the Companys consolidated financial
statements. - 34 -




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##### Table of Contents



Note 2. Acquisitions of Businesses and Assets On November 9, 2004, Atlantis acquired the business and certain assets and also assumed
certain specific liabilities of LaVanture Plastic Extrusion Technologies, Inc., and Molded Designs
Technology, Inc., (collectively LaVanture). LaVanture manufactures profile extruded and
injection molded plastic products primarily for OEMs in the recreational vehicle industry. The
purchase price of $10 million was funded by borrowings in connection with an amendment to the
Companys senior credit facility. The Company accounted for this acquisition as a purchase
in accordance with the provisions of SFAS 141. The activities of LaVanture are included in the
results of operations of the Companys Injection Molding and Profile Extrusion segments since the
date of acquisition. The allocation of the purchase price resulted in goodwill of approximately
$4.2 million, which represents the excess of the purchase price over the fair value of the net
assets acquired. The Company has recorded a holdback reserve of approximately $500,000, which will
be paid to the former owners of LaVanture upon satisfaction of outstanding previous obligations, or
by June 30, 2005. The
preliminary allocation of the purchase price was as follows (in thousands): Current assets
    
    $
    1,222Long-term assets
    
    
    4,787Goodwill
    
    
    4,201Liabilities
    
    
    (806
    )$
    9,404
 Note 3. Inventories Inventories at December 31, 2004 and 2003 consisted of the following: (in thousands)2004
    
    
    2003Raw materials
    
    $
    24,404
    
    
    $
    12,187Work in
progress
    
    
    430
    
    
    
    246Finished goods
    
    
    13,352
    
    
    
    10,872Total
    
    $
    38,186
    
    
    $
    23,305
 Note 4. Property and Equipment Property and equipment at December 31, 2004 and 2003 consisted of the following: (in thousands)2004
    
    
    2003Land
    
    $
    2,612
    
    
    $
    2,612Building and improvements
    
    
    22,111
    
    
    
    21,863Office furniture and equipment
    
    
    14,376
    
    
    
    12,279Manufacturing equipment
    
    
    134,689
    
    
    
    123,518Vehicles
    
    
    272
    
    
    
    235Total
    
    
    174,060
    
    
    
    160,507Accumulated depreciation
and amortization
    
    
    (109,895
    )
    
    
    (100,160
    )Net
    
    $
    64,165
    
    
    $
    60,347
 Depreciation expense for the years ended December 31, 2004, 2003 and 2002 was approximately
$11.3 million, $11.8 million and $11.7 million, respectively. - 35 -




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##### Table of Contents



Note 5. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following at December 31, 2004 and
2003: (in thousands)2004
    
    
    2003Accounts payable
    
    $
    15,389
    
    
    $
    16,294Accrued interest
    
    
    443
    
    
    
    416Accrued compensation, vacation and profit sharing
    
    
    8,096
    
    
    
    5,555Accrued health and workers compensation insurance
    
    
    1,537
    
    
    
    1,526Customer deposits and commissions
    
    
    5,141
    
    
    
    3,394Income taxes payable
    
    
    2,798
    
    
    
    2,325Other
    
    
    7,644
    
    
    
    6,639Total
    
    $
    41,048
    
    
    $
    36,149
 Note 6. Long-term Debt Long-term debt consisted of the following at December 31, 2004 and 2003: (in thousands)2004
    
    
    2003Senior Credit FacilityTerm Loan A, due December 31, 2007
    
    $
    24,310
    
    
    $
    31,500Term Loan B, due December 31, 2008
    
    
    46,277
    
    
    
    39,600Revolver, due December 31, 2007
    
    
    17,158
    
    
    
    6,100Other indebtedness
    
    
    
    
    
    
    Total debt
    
    
    87,745
    
    
    
    77,200Current portion of long-term debt
    
    
    (6,955
    )
    
    
    (10,487
    )Long-term debt
    
    $
    80,790
    
    
    $
    66,713
 The Company maintains its existing indebtedness through a senior secured credit facility
provided by a syndicate of financial institutions. In conjunction with its LaVanture acquisition in
November 2004, the Company amended its senior credit facility to increase its availability from
$110 million to $120 million. This facility is secured by all of the Companys assets, including
property, inventory and receivables. The components of this facility include two term loans and a
revolving line of credit. Term Loan A and Term Loan B require scheduled quarterly principal
payments through the respective maturity dates. Borrowings under the revolver portion of the
facility are subject to a borrowing base formula based on eligible collateral in the form of
accounts receivable and inventories. Borrowings outstanding under the facility bear interest based
upon LIBOR or prime rate plus an applicable margin. The applicable margin applied to LIBOR and
prime based loans range from 3.25% to 4.75% and 1.75% to 3.25%, respectively, based on the
Companys funded debt to EBITDA (Earnings before interest, taxes, depreciation and amortization)
ratio. Annual fees for the unused portion of this facility are 0.5%. Under the agreements covering
this facility, certain restrictions and covenants exist relating, but not limited to, the
maintenance of financial ratios, dividend payments, asset disposals, acquisitions and capital
expenditures. The Company is currently in compliance with such restrictions and covenants. In
addition, on an annual basis, the Company is required to make mandatory loan pre-payments from
excess cash flow as defined per the credit agreement. Based on calculations as of December 31,
these amounts were zero and $5.3 million for fiscal 2004 and 2003, respectively, payable during the
first quarter of the following fiscal year. As of December 31, 2004, the interest rate on the Term
Loan A, Term Loan B and the Revolver were 5.92%, 6.66% and 6.30%, respectively. The Company has approximately $1.6 million in outstanding letters of credit provided by a
financial institution. - 36 -




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##### Table of Contents



Under the Companys credit facilities as of December 31, 2004, scheduled maturities of
indebtedness in each of the next five years were as follows (in thousands): Year
    
    Amount2005
    
    $
    6,9552006
    
    
    8,5752007
    
    
    27,3542008
    
    
    44,8612009
    
    
    Total
    
    $
    87,745
 On March 22, 2005, the Company completed the syndication of a new $220 million secured
financing which would replace the $120 million facility existing at December 31, 2004. (See Note 16
- Subsequent Events). Note 7. Capital Stock Generally, the Class A Common Stock has one vote per share and the Class B Common Stock
has 10 votes per share. Holders of the Class B Common Stock are entitled to elect 75% of the Board
of Directors; holders of Class A Common Stock are entitled to elect the remaining 25%. Each share
of Class B Common Stock is convertible, at the option of the holder thereof, into one share of
Class A Common Stock. Class A Common Stock is not convertible into shares of any other equity
security. During fiscal 2004, 229,924 shares of Class B Common Stock were converted into Class A
Common Stock. There were no shares converted during 2003. Note 8. Income Taxes The provision for income taxes for the years ended December 31, 2004, 2003 and 2002,
consisted of the following: (in thousands)
    
    2004
    
    
    2003
    
    
    2002Current Federal income tax provision
    
    $
    5,690
    
    
    $
    4,096
    
    
    $
    1,499Current State income tax provision
    
    
    772
    
    
    
    437
    
    
    
    299Deferred Federal and State income tax
provision (benefit)
    
    
    307
    
    
    
    306
    
    
    
    (342
    )Total provision for income taxes
    
    $
    6,769
    
    
    $
    4,839
    
    
    $
    1,456
 The following table provides a reconciliation between the statutory federal income tax rate
and the Companys effective income tax rate for the years ended December 31, 2004, 2003 and 2002: 2004
    
    
    2003
    
    
    2002Statutory federal income tax
rate
    
    
    34
    %
    
    
    34
    %
    
    
    34
    %State income taxes
    
    
    3
    
    
    
    3
    
    
    
    4Effective income tax rate
    
    
    37
    %
    
    
    37
    %
    
    
    38
    %
 - 37 -




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At December 31, 2004 and 2003, deferred income tax assets and liabilities consisted of the
following: (in thousands)
    
    2004
    
    
    2003Long-term deferred income tax liabilities:Excess of book over tax basis of
property and equipment
    
    $
    12,492
    
    
    $
    11,813Goodwill
    
    
    1,831
    
    
    
    1,447Other, net
    
    
    
    
    
    
    79Total deferred income tax liabilities
    
    $
    14,323
    
    
    $
    13,339Long-term deferred income tax assets:Acquired goodwill
    
    
    3,112
    
    
    
    608Total net long-term deferred income tax
liabilities
    
    $
    11,211
    
    
    $
    12,731Current deferred income tax assets:Reserves and accrued expenses not yet
deductible for income tax purposes
    
    $
    3,140
    
    
    $
    2,683Net operating loss carryforwards
    
    
    377
    
    
    
    565Capitalized inventory costs
    
    
    838
    
    
    
    320$
    4,355
    
    
    $
    3,568Valuation allowance
    
    
    (377
    )
    
    
    (565
    )Total current deferred income tax assets
    
    $
    3,978
    
    
    $
    3,003Deferred income taxes, net
    
    $
    7,233
    
    
    $
    9,728
 The Company has evaluated its deferred income tax assets for which a valuation allowance has
not been provided and believes such assets will be realized based upon future projected taxable
income. Note 9. Stock Option Plans The Companys Stock Option Plans (Option Plans) are designed to serve as an incentive
for retaining qualified and competent employees, directors, and agents. Options may be granted
under the Option Plans on such terms and at such prices as determined by the Compensation Committee
of the Board of Directors (consisting only of outside directors); provided, however, that the
exercise price of options granted under the Option Plans will not be less than 90% of the market
value of the Class A Common Stock on the date of grant. To date, the exercise price of all options
granted under the Option Plans has been equal to or greater than the fair market value of the Class
A Common Stock on the date of grant. Each option will be exercisable after the period or periods
specified in the option agreement, but no option shall be exercisable after the expiration of 10
years from the date of grant. Options granted vest ratably over a five-year period from the date of
grant. Options granted under the Option Plans are not transferable other than by will or by the
laws of descent and distribution. The Option Plans also authorize the Company to make loans to
optionees to exercise their options and to fund related tax exposures; however, pursuant to the
regulations of the Sarbanes-Oxley Act of 2002, the Company will no longer authorize any loans to
directors or officers of the Company. - 38 -




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##### Table of Contents



Information with respect to the Option Plans is as follows for the years ended December 31,
(in thousands of shares, except prices per share): 2004
    
    
    2003
    
    
    2002Options outstanding at January 1
    
    
    1,244
    
    
    
    1,250
    
    
    
    1,274Granted
    
    
    
    
    
    
    75
    
    
    
    30Exercised
    
    
    (156
    )
    
    
    (49
    )
    
    
    (47
    )Canceled
    
    
    (37
    )
    
    
    (32
    )
    
    
    (7
    )Options outstanding at December 31
    
    
    1,051
    
    
    
    1,244
    
    
    
    1,250Weighted-average option prices per common share:Options outstanding at January 1
    
    $
    6.45
    
    
    $
    6.23
    
    
    $
    6.14Granted
    
    
    
    
    
    
    9.29
    
    
    
    4.64Exercised
    
    
    6.48
    
    
    
    5.53
    
    
    
    2.88Canceled
    
    
    5.81
    
    
    
    5.63
    
    
    
    4.74Outstanding at December 31
    
    $
    6.47
    
    
    $
    6.45
    
    
    $
    6.23Weighted-average fair value of options
granted during the year
    
    $
    
    
    
    $
    5.34
    
    
    $
    2.50Options exercisable at December 31
    
    
    827
    
    
    
    863
    
    
    
    815Options available for grant at December 31
    
    
    195
    
    
    
    163
    
    
    
    238
 The following table summarizes information about stock options outstanding at December 31,
2004: Options Outstanding
    
    
    
    
    
    
    Options ExercisableNumber
    
    
    
    
    
    
    
    
    
    
    NumberOutstanding
    
    
    Weighted-Average
    
    
    Weighted-
    
    
    Exercisable
    
    
    Weighted-Range
of
    
    At 12/31/04
    
    
    Remaining
    
    
    Average
    
    
    At 12/31/04
    
    
    AverageExercise
Prices
    
    (in 000s)
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    (in 000s)
    
    
    Exercise Price$3.00 -
$  4.50
    
    
    406
    
    
    
    6.6
    
    
    $
    4.28
    
    
    
    258
    
    
    $
    4.24$4.51 -
$  6.80
    
    
    303
    
    
    
    1.6
    
    
    $
    5.63
    
    
    
    288
    
    
    $
    5.64$6.81 -
$  9.75
    
    
    242
    
    
    
    3.5
    
    
    $
    8.96
    
    
    
    181
    
    
    $
    8.86$9.76 - $11.88
    
    
    100
    
    
    
    0.1
    
    
    $
    11.88
    
    
    
    100
    
    
    $
    11.881,051
    
    
    
    3.8
    
    
    $
    6.47
    
    
    
    827
    
    
    $
    6.66
 On March 15, 2005, the shareholders of the Company approved an amended and restated 2001 Stock
Award Plan which increased the number of shares available for grant and allows for the issuance of
stock based awards other than stock options. See Note 16  Subsequent Events. - 39 -




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##### Table of Contents



Note 10. Earnings Per Share The following table calculates basic and diluted earnings per share for the years ended
December 31, 2004, 2003 and 2002: (thousands, except per share amounts)
    
    2004
    
    
    2003
    
    
    2002Basic earnings per common share:Net income
    
    $
    11,515
    
    
    $
    8,240
    
    
    $
    2,378Weighted-average common shares outstanding
    
    
    7,709
    
    
    
    7,606
    
    
    
    7,569Basic earnings per common share
    
    $
    1.49
    
    
    $
    1.08
    
    
    $
    0.31Diluted earnings per common share:Earnings applicable to common shares
    
    $
    11,515
    
    
    $
    8,240
    
    
    $
    2,378Weighted-average common shares outstanding
    
    
    7,709
    
    
    
    7,606
    
    
    
    7,569Add  Dilutive options
    
    
    422
    
    
    
    144
    
    
    
    9Weighted-average common shares outstanding plus
potential dilutive common shares
    
    
    8,131
    
    
    
    7,750
    
    
    
    7,578Diluted earnings per common share
    
    $
    1.42
    
    
    $
    1.06
    
    
    $
    0.31
 Excluded from the above calculation of diluted earnings per share are antidilutive options,
which could potentially dilute earnings per share in the future. Antidilutive options for the years
ended December 31, 2004, 2003 and 2002 are zero, 383,500, and 1,165,454 shares, respectively. - 40 -




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##### Table of Contents



Note 11. Business Segments The Company is comprised of three operating segments: Plastic Films, Injection Molding,
and Profile Extrusion. During the years ended December 31, 2004, 2003 and 2002, a customer accounted for
approximately 13%, 14% and 12%, respectively, of the Companys net sales. Net amounts receivable
from this customer as of December 31, 2004, 2003 and 2002 were 23%, 23% and 22%, respectively, of
the Companys net accounts receivable. Summary data for the years ended December 31, 2004, 2003 and 2002 are as follows (in
thousands): Plastic
    
    
    Injection
    
    
    ProfileFilms
    
    
    Molding
    
    
    Extrusion
    
    
    Corporate
    
    
    Consolidated2004Net sales
    
    $
    222,221
    
    
    $
    99,899
    
    
    $
    25,682
    
    
    $
    
    
    
    $
    347,802Operating income
    
    
    12,995
    
    
    
    7,406
    
    
    
    3,358
    
    
    
    
    
    
    
    23,759Identifiable assets
    
    
    95,923
    
    
    
    57,389
    
    
    
    26,560
    
    
    
    33,422
    
    
    
    213,294Capital expenditures
    
    
    4,601
    
    
    
    4,843
    
    
    
    1,424
    
    
    
    2,075
    
    
    
    12,943Depreciation
    
    
    5,333
    
    
    
    4,091
    
    
    
    1,032
    
    
    
    884
    
    
    
    11,3402003Net sales
    
    $
    186,431
    
    
    $
    81,345
    
    
    $
    21,322
    
    
    $
    
    
    
    $
    289,098Operating income
    
    
    11,092
    
    
    
    4,765
    
    
    
    2,688
    
    
    
    
    
    
    
    18,545Identifiable assets
    
    
    92,089
    
    
    
    53,552
    
    
    
    26,631
    
    
    
    13,426
    
    
    
    185,698Capital expenditures
    
    
    1,653
    
    
    
    4,161
    
    
    
    729
    
    
    
    490
    
    
    
    7,033Depreciation
    
    
    6,022
    
    
    
    3,629
    
    
    
    988
    
    
    
    1,121
    
    
    
    11,7602002Net sales
    
    $
    165,013
    
    
    $
    61,807
    
    
    $
    21,766
    
    
    $
    
    
    
    $
    248,586Operating income
    
    
    5,290
    
    
    
    3,001
    
    
    
    3,150
    
    
    
    
    
    
    
    11,441Identifiable assets
    
    
    101,832
    
    
    
    46,207
    
    
    
    21,932
    
    
    
    5,629
    
    
    
    175,600Capital expenditures
    
    
    2,944
    
    
    
    4,355
    
    
    
    988
    
    
    
    1,259
    
    
    
    9,546Depreciation
    
    
    6,107
    
    
    
    3,372
    
    
    
    939
    
    
    
    1,260
    
    
    
    11,678
 Note 12. Profit Sharing and Retirement Plans Atlantis has a 401(k) defined contribution retirement plan. Generally, such plan covers
all employees who have attained the age of 21 and have at least one year of service. The Company
matches 50% of contributions up to a maximum of 6% of compensation as defined by the plan and as
limited by federal regulations. Related expenses were approximately $477,000, $468,000 and $509,000
for the years ended December 31, 2004, 2003 and 2002, respectively. Effective January 1, 2000, the Company established the Atlantis Plastics, Inc. Deferred
Compensation Plan (the Plan) for certain selected employees. Under the Plan, eligible employees
may elect to make pre-tax contributions to a trust fund up to a maximum of 15% of annual earnings.
The Companys contribution to the Plan is based upon the employees contribution to the Plan but
could not exceed $3,075 per participant for 2004. Normally, the full amount of each participants
interest in the trust fund is paid upon termination of employment; however, the Plan allows
participants to make early withdrawals of contributions, subject to certain restrictions. Company
assets earmarked to pay benefits under the Plan are held by a rabbi trust. Under current accounting
rules, assets of a rabbi trust must be accounted for as if they are assets of the Company;
therefore, all earnings and expenses will be recorded in the Companys financial statements. The
Company may terminate the Plan at any time. Total Company contributions to the Plan were
approximately $51,000, $55,000 and $56,000 for the years ended December 31, 2004, 2003 and 2002,
respectively. - 41 -




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##### Table of Contents



Note 13. Related Parties Trivest Partners, LP and the Company have certain common officers, directors, and
shareholders. Management fees, expense allocations and reimbursements are paid to Trivest Partners,
LP in accordance with the management agreement between the Company and Trivest Partners, LP. During
the years ended December 31, 2004, 2003 and 2002, such payments amounted to approximately $1.5
million, $2.4 million and $2.2 million, respectively, as follows: (in thousands)
    
    2004
    
    
    2003
    
    
    2002Management fees
    
    $
    1,275
    
    
    $
    1,642
    
    
    $
    1,312Expense allocations and
reimbursements
    
    
    193
    
    
    
    767
    
    
    
    845Total fees paid to Trivest
Partners, LP
    
    $
    1,468
    
    
    $
    2,409
    
    
    $
    2,157
 During 2002, certain members of the Companys Board of Directors exercised stock options and
issued notes payable to the Company, secured by the underlying stock, which bear interest at prime
and are due March 16, 2005 and March 18, 2005. Such notes are full recourse in nature. Note 14. Commitments and Contingencies The Company is, from time to time, involved in routine litigation. No such litigation in
which the Company is presently involved is believed to be material to its financial condition or
results of operations. The Company leases various office space, buildings, transportation, and production equipment
with terms in excess of one year. Total rent expense under these agreements for the years ended
December 31, 2004, 2003 and 2002 was approximately $3.6 million, $3.2 million and $1.9 million,
respectively. The total minimum rental commitments under long-term, noncancelable operating leases at
December 31, 2004 consisted of the following (in thousands): Year
    
    Amount2005
    
    $
    3,8902006
    
    
    3,5162007
    
    
    2,8642008
    
    
    1,8732009
    
    
    1,145Thereafter
    
    
    368Total
    
    $
    13,656
 Note 15. Quarterly Financial Data (Unaudited) Unaudited consolidated quarterly financial data for the years ended December 31, 2004 and
2003 are as follows: (in thousands, except per share data)Quarter Ended
    
    
    Quarter Ended
    
    
    Quarter Ended
    
    
    Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Net sales
    
    $
    80,228
    
    
    $
    67,669
    
    
    $
    86,785
    
    
    $
    67,207
    
    
    $
    89,350
    
    
    $
    76,640
    
    
    $
    91,439
    
    
    $
    77,582Gross profit
    
    
    12,911
    
    
    
    10,905
    
    
    
    14,256
    
    
    
    10,096
    
    
    
    14,761
    
    
    
    12,207
    
    
    
    14,540
    
    
    
    13,732Net income
    
    
    2,496
    
    
    
    1,662
    
    
    
    3,129
    
    
    
    955
    
    
    
    3,176
    
    
    
    2,475
    
    
    
    2,714
    
    
    
    3,148Net income per common share:Basic
    
    $
    0.33
    
    
    $
    0.22
    
    
    $
    0.41
    
    
    $
    0.13
    
    
    $
    0.41
    
    
    $
    0.32
    
    
    $
    0.35
    
    
    $
    0.41Diluted
    
    $
    0.31
    
    
    $
    0.22
    
    
    $
    0.38
    
    
    $
    0.12
    
    
    $
    0.39
    
    
    $
    0.32
    
    
    $
    0.33
    
    
    $
    0.40
 - 42 -




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##### Table of Contents



Note 16. Subsequent Events On March 22, 2005, the Company completed the syndication of a new $220 million secured
financing provided by a syndicate of banks and financial institutions. The new financing includes a
$25 million revolving credit facility priced at LIBOR plus 2.75% maturing March 2011, a $120
million senior secured term loan facility priced at LIBOR plus 2.75% maturing September 2011 and a
$75 million junior secured term loan facility priced at LIBOR plus 7.25% maturing in March 2012.
The proceeds of the facility were used to repay the Companys existing senior secured debt of $83.9
million outstanding on March 22, 2005 and to pay related fees and expenses. The remainder of the
proceeds will be used to pay a special dividend to its shareholders and to provide ongoing working
capital. Along with the special dividend payment, the Company will pay approximately $4.4 million
to holders of outstanding stock options in exchange for the cancellation of these options on the
date the dividend is paid. (See below for further discussion). In conjunction with the cancellation
of the Companys previous credit facility, the Company will expense approximately $3.8 million of
deferred financing costs associated with the old facility during the first quarter of fiscal 2005.
Additionally, the Company will expense approximately $500,000 of non-recurring financing expenses
associated with a financing that was not consummated during January 2005. On March 22, 2005, the Companys Board of Directors declared a special, one-time cash dividend
of $12.50 per common share, payable April 8, 2005, to shareholders of record as of April 1, 2005.
This dividend will aggregate approximately $103.2 million and will be funded by the proceeds from
the Companys new financing arrangement. This dividend payment was contingent upon the Companys
reincorporation in the state of Delaware, which was approved by the Companys shareholders and
completed on March 15, 2005. On March 15, 2005, the shareholders of the Company approved the amendment and restatement of
the Companys 2001 Stock Award Plan. The amended and restated Plan increased the number of shares
available for grant from 500,000 to 865,000 and allows the Company to grant stock based awards
other than stock options, such as stock appreciation rights, restricted stock, stock units, bonus
stock, dividend equivalents, other stock related awards and performance awards that may be settled
in cash, stock, or other property. On January 31, 2005, the Company agreed to cancel certain outstanding stock options of Anthony
F. Bova, the Companys President and Chief Executive Officer, which would have otherwise expired on
that date. In exchange for the cancellation of his 350,000 shares, Mr. Bova will receive a cash
payment of approximately $2.4 million on the date of the special dividend payment. The purpose of
this option cancellation agreement is to provide Mr. Bova with a payment similar to the dividend he
would otherwise have received on the shares issuable upon the exercise of the options cancelled. On March 11, 2005, the Company agreed to cancel the outstanding stock options of certain of
its management, officers and directors (the Participants) for cash payments of approximately $2.0
million in aggregate in anticipation of the one-time dividend payment. The purpose of the option
cancellation arrangements is to provide each Participant with a payment similar to the dividend he
or she would otherwise have received on the shares issuable upon the exercise of the options to be
cancelled. Accordingly, on the date the special dividend is paid to its shareholders, the Company
will cancel an aggregate of 225,800 outstanding stock options previously granted to the
Participants. As a result of the option cancellations described above, the Company expects to record related
compensation expense in the amount of $408,000 during fiscal 2005 in accordance with the provisions
of FAS 123R which was adopted on January 1, 2005. - 43 -




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES The Company has had no changes in or disagreements with its independent auditors on
accounting or financial disclosures. 
 ITEM 9A. CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, we have evaluated the effectiveness of the
design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15 as of the end of the period covered by this report. Based upon that evaluation, our
Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and
procedures are effective. There were no changes in our internal control over financial reporting
during the quarter ended December 31, 2004, that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting. Disclosure controls and procedures are designed to ensure that information required to be
disclosed in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include controls and procedures
designed to ensure that information required to be disclosed in our reports filed under the
Exchange Act is accumulated and communicated to management, including the Companys Chief Executive
Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required
disclosure. 
 ITEM 9B. OTHER INFORMATION Not applicable. - 44 -




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##### Table of Contents



PART III 
 ITEMS 10, 11, 12, 13, AND 14 The information required by Items 10, 11, 12, 13, and 14 is incorporated by reference
from the registrants Proxy Statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A no later than 120 days after the end of the fiscal year covered by this
report. 
 PART IV 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  (a)
    Documents filed as a part of this report: Page(1)
    
    Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    26Consolidated Statements of Income
    
    
    27Consolidated Balance Sheets
    
    
    28Consolidated Statements of Shareholders Equity
    
    
    29Consolidated Statements of Cash Flows
    
    
    30Notes to Consolidated Financial Statements
    
    
    31(2)
    
    Financial Statement Schedules:The following Financial Statement Schedule for the years ended December 31, 2004, 2003, and 2002 is submitted herewith:Schedule II  Valuation and Qualifying Accounts
    
    
    49All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
because the required information is contained in the financial statements and
notes thereto or because such schedules are not required or applicable.
 The information called for by Item 15(a) 3. Exhibit Listing, can be obtained free of charge by
any Company Stockholder by writing to Paul G. Saari, Senior Vice President of Finance and Chief
Financial Officer, at the corporate headquarters office. - 45 -




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##### Table of Contents



(b)
    Exhibits (An asterisk to the right of an exhibit number denotes a management contract or
compensatory plan or arrangement required to be filed as an exhibit to thisForm 10-K.) 3.1
    
    
    
    Registrants Certificate of Incorporation3.2
    
    
    
    Registrants Bylaws4.1
    
    
    
    Form of Stock Certificate evidencing ownership of Registrants Class A Common Stock(4)10.1
    
    *
    
    Registrants 1997 Stock Option Plan.(5)10.2
    
    *
    
    Registrants 1998 Stock Option Plan. (7)10.3
    
    *
    
    Registrants 2001 Stock Award Plan, amended and restated as of January 27, 2005.10.4
    
    *
    
    Form of Indemnification Agreement. (3)10.5
    
    *
    
    Management Agreement by and between Atlantis Plastics, Inc. and Trivest Partners,
L.P. dated January 1, 2003. (14)10.6
    
    *
    
    Agreement dated as of January 1, 1998 by and among Registrant, Trivest II, Inc.,
Earl W. Powell and Phillip T. George, M.D. (8)10.7
    
    
    
    Assignment and Assumption of Lease between Registrant and Trivest II, Inc.
(9)10.8
    
    
    
    Settlement Agreement by and between Mobil Oil Corporation and Linear Films, Inc. of
Civil Action No. 87 civ. 874-B in the Northern District of Oklahoma, effective as of
February 21, 1992. (1)10.9
    
    
    
    License Agreement by and between Mobil Oil Corporation and Linear Films, Inc. for use
of U.S. Patent No. 4,518,654, effective as of February 21, 1992. (1)10.10
    
    
    
    Office Lease, dated as of April 1, 1992, between Euram/1870 Exchange Associates and
National Poly Products, Inc. (2)10.11
    
    
    
    First Extension of lease agreement between Euram/1870 Exchange Associates and
Atlantis Plastic Films, Inc., dated May 14, 1997. (6)10.12
    
    
    
    First Amendment of lease agreement between 1870 Exchange Associates and Atlantis
Plastic Films, Inc., dated February 27, 2002. (13)10.13
    
    
    
    Lease with option to purchase Real Estate between Atlantis Plastic Films, Inc. and
the City of Mankato, Minnesota, dated as of March 2, 1995. (4)10.14
    
    *
    
    Registrants Deferred Compensation Plan, incorporated by reference and filed with
the Registrants Form S-8 filed April 5, 2000 (no. 333-34050). (10)10.15
    
    
    
    Lease between Principal Life Insurance Company and Atlantis Plastic Films, Inc.,
dated as of March 8, 2000. (11)10.16
    
    
    
    Guaranty of Lease by Registrant of the obligations of Atlantis Plastic Films, dated
as of March 8, 2000. (11)10.17
    
    
    
    Master Security Agreement between Atlantis Plastics Inc. and Atlantis Plastic Films
Inc., as debtor and General Electric Capital Corporation, as secured party, dated as of
November 7, 2001. (12)
 - 46 -




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##### Table of Contents



10.18
    
    Amendment to Master Security Agreement between Atlantis Plastics Inc. and Atlantis
Plastic Films Inc., as debtor and General Electric Capital Corporation, as secured
party, dated as of November 7, 2001. (12)10.19
    
    Lease Extension between Extrusion Masters, Inc. and E.E.E. Properties, dated as of
October 30, 2001.(13)10.20
    
    Executive Employment Agreement by and between Atlantis Plastics, Inc. and Anthony
F. Bova, dated December 31, 2002. (14)10.21
    
    Change in Control Agreement by and between Atlantis Plastics, Inc. and Anthony F.
Bova, dated December 31, 2002. (14)10.22
    
    Credit Agreement dated as of March 22, 2005 by and among Atlantis Plastic Films,
Inc., Atlantis Molded Plastics, Inc., Atlantis Films, Inc., Rigal Plastics, Inc.,
Atlantis Plastics Injection Molding, Inc., Pierce Plastics, Inc. and Extrusion Masters,
Inc. as Borrowers and the other persons party hereto that are designated as Credit
Parties and Merrill Lynch Capital, a Division of Merrill Lynch Business Financial
Services, Inc. and other financial institutions as a party thereto.10.23
    
    Second Lien Credit Agreement dated as of March 22, 2005 by and among Atlantis
Plastic Films, Inc., Atlantis Molded Plastics, Inc., Atlantis Films, Inc., Rigal
Plastics, Inc., Atlantis Plastics Injection Molding, Inc., Pierce Plastics, Inc. and
Extrusion Masters, Inc. as Borrowers and the other persons party hereto that are
designated as Credit Parties.21.1
    
    Registrants Subsidiaries. (13)23.1
    
    Consent of Independent Registered Public Accounting Firm, relating
to the Companys Registration Statements on Form S-8 (No. 333-85866, No. 333-63855, No.
333-34197, and No. 333-34050)31.1
    
    CEO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    CFO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    CEO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    CFO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 - 47 -




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##### Table of Contents



(1)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1991.(2)
    
    Incorporated by reference to the exhibits filed with the Registrants
registration statement on Form S-2 (33-53152).(3)
    
    Incorporated by reference to the exhibits filed with the Registrants Report
on Form 8-K filed June 3, 1994.(4)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1994.(5)
    
    Incorporated by reference to Exhibit A filed with the Registrants Schedule
14A filed on April 29, 1997.(6)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1997.(7)
    
    Incorporated by reference to Exhibit A filed with the Registrants Schedule
14A filed on April 17, 1998.(8)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.(9)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1998.(10)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.(11)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.(12)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.(13)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 2001.(14)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 2002.
 - 48 -




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##### Table of Contents



(c) Financial Statement Schedules required by Regulation S-X. Atlantis Plastics, Inc.
Schedule II  Valuation and Qualifying Accounts
for the years ended December 31,
(in thousands) Balance at
    
    
    Charged to
    
    
    Charged
    
    
    
    
    
    
    BalanceBeginning
    
    
    Costs and
    
    
    to Other
    
    
    
    
    
    
    at EndClassification
    
    of Year
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions (a)
    
    
    of Year2004Allowances reducing the assets in the balance sheet:Allowance for doubtful accounts
    
    $
    550
    
    
    $
    216
    
    
    $
    
    
    
    $
    227
    
    
    $
    539Reserve for sales allowances
    
    
    731
    
    
    
    173
    
    
    
    
    
    
    
    215
    
    
    
    689Reserve for inventories
    
    
    1,001
    
    
    
    843
    
    
    
    
    
    
    
    435
    
    
    
    1,409Deferred income tax valuation allowance
    
    
    565
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    377Total
    
    $
    2,847
    
    
    $
    1,232
    
    
    $
    
    
    
    $
    1,065
    
    
    $
    3,0142003Allowances reducing the assets in the balance sheet:Allowance for doubtful accounts
    
    $
    499
    
    
    $
    159
    
    
    $
    
    
    
    $
    108
    
    
    $
    550Reserve for sales allowances
    
    
    416
    
    
    
    268
    
    
    
    183
    
    
    
    136
    
    
    
    731Reserve for inventories
    
    
    667
    
    
    
    448
    
    
    
    
    
    
    
    114
    
    
    
    1,001Deferred income tax valuation allowance
    
    
    847
    
    
    
    
    
    
    
    
    
    
    
    282
    
    
    
    565Total
    
    $
    2,429
    
    
    $
    875
    
    
    $
    183
    
    
    $
    640
    
    
    $
    2,8472002Allowances reducing the assets in the balance sheet:Allowance for doubtful accounts
    
    $
    572
    
    
    $
    269
    
    
    $
    16
    
    
    $
    358
    
    
    $
    499Reserve for sales allowances
    
    
    500
    
    
    
    35
    
    
    
    
    
    
    
    119
    
    
    
    416Reserve for inventories
    
    
    676
    
    
    
    166
    
    
    
    
    
    
    
    175
    
    
    
    667Deferred income tax valuation allowance
    
    
    634
    
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    847Total
    
    $
    2,382
    
    
    $
    683
    
    
    $
    16
    
    
    $
    652
    
    
    $
    2,429
   (a) Includes amounts written-off as uncollectible, allowances granted, obsolete inventory, and net
decreases in deferred income tax valuation allowance. - 49 -




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. ATLANTIS PLASTICS, INC.Date: March 30, 2005
    
    By:
    
    /S/
    
    PAUL G. SAARIPaul G. SaariSenior Vice President, Finance andChief Financial Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant in the capacities and on the
dates indicated. Signature
    
    Title
    
    Date/s/
    
    EARL W. POWELL
    
    Chairman of the Board
    
    March 30, 2005Earl W. PowellDirector, Vice Chairman, and/s/
    
    PHILLIP T. GEORGE, M.D.
    
    Chairman of the Executive Committee
    
    March 30, 2005Phillip T. George, M.D.President and Chief/s/
    
    ANTHONY F. BOVA
    
    Executive Officer
    
    March 30, 2005Anthony F. Bova
    
    (Principal Executive Officer)Senior Vice President, Finance and/s/
    
    PAUL G. SAARI
    
    Chief Financial Officer
    
    March 30, 2005Paul G. Saari
    
    (Principal Financial and Accounting Officer)/s/
    
    CHARLES D. MURPHY, III
    
    Director
    
    March 30, 2005Charles D. Murphy, III/s/
    
    CHESTER B. VANATTA
    
    Director
    
    March 30, 2005Chester B. Vanatta/s/
    
    LARRY D. HORNER
    
    Director
    
    March 30, 2005Larry D. Horner/s/
    
    CESAR ALVAREZ
    
    Director
    
    March 30, 2005Cesar Alvarez/s/
    
    JAY SHUSTER
    
    Director
    
    March 30, 2005Jay Shuster/s/
    
    PETER VANDENBERG, JR.
    
    Director
    
    March 30, 2005Peter Vandenberg, Jr.
 - 50 -




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##### Table of Contents



EXHIBIT INDEX 3.1
    
    
    
    Registrants Certificate of Incorporation3.2
    
    
    
    Registrants Bylaws4.1
    
    
    
    Form of Stock Certificate evidencing ownership of Registrants Class A Common Stock(4)10.1
    
    *
    
    Registrants 1997 Stock Option Plan.(5)10.2
    
    *
    
    Registrants 1998 Stock Option Plan. (7)10.3
    
    *
    
    Registrants 2001 Stock Award Plan, amended and restated as of January 27, 2005.10.4
    
    *
    
    Form of Indemnification Agreement. (3)10.5
    
    *
    
    Management Agreement by and between Atlantis Plastics, Inc. and Trivest Partners,
L.P. dated January 1, 2003. (14)10.6
    
    *
    
    Agreement dated as of January 1, 1998 by and among Registrant, Trivest II, Inc.,
Earl W. Powell and Phillip T. George, M.D. (8)10.7
    
    
    
    Assignment and Assumption of Lease between Registrant and Trivest II, Inc.
(9)10.8
    
    
    
    Settlement Agreement by and between Mobil Oil Corporation and Linear Films, Inc. of
Civil Action No. 87 civ. 874-B in the Northern District of Oklahoma, effective as of
February 21, 1992. (1)10.9
    
    
    
    License Agreement by and between Mobil Oil Corporation and Linear Films, Inc. for use
of U.S. Patent No. 4,518,654, effective as of February 21, 1992. (1)10.10
    
    
    
    Office Lease, dated as of April 1, 1992, between Euram/1870 Exchange Associates and
National Poly Products, Inc. (2)10.11
    
    
    
    First Extension of lease agreement between Euram/1870 Exchange Associates and
Atlantis Plastic Films, Inc., dated May 14, 1997. (6)10.12
    
    
    
    First Amendment of lease agreement between 1870 Exchange Associates and Atlantis
Plastic Films, Inc., dated February 27, 2002. (13)10.13
    
    
    
    Lease with option to purchase Real Estate between Atlantis Plastic Films, Inc. and
the City of Mankato, Minnesota, dated as of March 2, 1995. (4)10.14
    
    *
    
    Registrants Deferred Compensation Plan, incorporated by reference and filed with
the Registrants Form S-8 filed April 5, 2000 (no. 333-34050). (10)10.15
    
    
    
    Lease between Principal Life Insurance Company and Atlantis Plastic Films, Inc.,
dated as of March 8, 2000. (11)10.16
    
    
    
    Guaranty of Lease by Registrant of the obligations of Atlantis Plastic Films, dated
as of March 8, 2000. (11)10.17
    
    
    
    Master Security Agreement between Atlantis Plastics Inc. and Atlantis Plastic Films
Inc., as debtor and General Electric Capital Corporation, as secured party, dated as of
November 7, 2001. (12)




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##### Table of Contents



10.18
    
    Amendment to Master Security Agreement between Atlantis Plastics Inc. and Atlantis
Plastic Films Inc., as debtor and General Electric Capital Corporation, as secured
party, dated as of November 7, 2001. (12)10.19
    
    Lease Extension between Extrusion Masters, Inc. and E.E.E. Properties, dated as of
October 30, 2001.(13)10.20
    
    Executive Employment Agreement by and between Atlantis Plastics, Inc. and Anthony
F. Bova, dated December 31, 2002. (14)10.21
    
    Change in Control Agreement by and between Atlantis Plastics, Inc. and Anthony F.
Bova, dated December 31, 2002. (14)10.22
    
    Credit Agreement dated as of March 22, 2005 by and among Atlantis Plastic Films,
Inc., Atlantis Molded Plastics, Inc., Atlantis Films, Inc., Rigal Plastics, Inc.,
Atlantis Plastics Injection Molding, Inc., Pierce Plastics, Inc. and Extrusion Masters,
Inc. as Borrowers and the other persons party hereto that are designated as Credit
Parties and Merrill Lynch Capital, a Division of Merrill Lynch Business Financial
Services, Inc. and other financial institutions as a party thereto.10.23
    
    Second Lien Credit Agreement dated as of March 22, 2005 by and among Atlantis
Plastic Films, Inc., Atlantis Molded Plastics, Inc., Atlantis Films, Inc., Rigal
Plastics, Inc., Atlantis Plastics Injection Molding, Inc., Pierce Plastics, Inc. and
Extrusion Masters, Inc. as Borrowers and the other persons party hereto that are
designated as Credit Parties.21.1
    
    Registrants Subsidiaries. (13)23.1
    
    Consent of Independent Registered Public Accounting Firm, relating
to the Companys Registration Statements on Form S-8 (No. 333-85866, No. 333-63855, No.
333-34197, and No. 333-34050)31.1
    
    CEO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    CFO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    CEO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    CFO Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.




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##### Table of Contents



(1)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1991.(2)
    
    Incorporated by reference to the exhibits filed with the Registrants
registration statement on Form S-2 (33-53152).(3)
    
    Incorporated by reference to the exhibits filed with the Registrants Report
on Form 8-K filed June 3, 1994.(4)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1994.(5)
    
    Incorporated by reference to Exhibit A filed with the Registrants Schedule
14A filed on April 29, 1997.(6)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1997.(7)
    
    Incorporated by reference to Exhibit A filed with the Registrants Schedule
14A filed on April 17, 1998.(8)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.(9)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 1998.(10)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.(11)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.(12)
    
    Incorporated by reference to the exhibits filed with the Registrants
Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.(13)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 2001.(14)
    
    Incorporated by reference to the exhibits filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 2002.