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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, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-9487
 ATLANTIS PLASTICS, INC.
  Delaware
    
    06-1088270(State or other jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)1870 The Exchange, Suite 200, Atlanta, Georgia
    
    30339(Address of principal executive offices)
    
    (Zip Code)
 (800) 497-7659
  Title of each class
    
    Name of each exchange
on which registeredClass A Common Stock,
$.0001 par value per share
    
    The NASDAQ Stock Market
Pacific Stock Exchange
 None
 o þ
 o þ
 þ o
 o
  o o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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ATLANTIS PLASTICS, INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2005
TABLE OF CONTENTS
  
 PagePart IItem 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    10Item 1B. Unresolved Staff Comments
    
    
    13Item 2. Properties
    
    
    14Item 3. Legal Proceedings
    
    
    14Item 4. Submission of Matters to a Vote of Security Holders
    
    
    14Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    15Item 6. Selected Financial Data
    
    
    16Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 8. Financial Statements and Supplementary Data
    
    
    25Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    47Item 9A. Controls and Procedures
    
    
    47Item 9B. Other Information
    
    
    47Part IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    48Item 11. Executive Compensation
    
    
    48Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    48Item 13. Certain Relationships and Related Transactions
    
    
    48Item 14. Principal Accountant Fees and Services
    
    
    48
 -2-




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PagePart IVItem 15. Exhibits and Financial Statement Schedules
    
    
    49Signatures
    
    
    53Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  -3-




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PART I
 NOTE REGARDING FORWARD-LOOKING STATEMENTS
     
 ITEM 1. BUSINESS
 Overview
   â
  -4-




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Industry Overview
 Plastic Films.
  Injection Molding.
 Profile Extrusion.
 Our Business Strategies
 Increase Market Penetration.
 Expand Product Offerings.
 Maximize Operating Efficiencies.
 -5-




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Pursue Acquisitions at Reasonable Valuations.
 Products
 Stretch Film
  
    
    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 their cost and weight reduction
benefits. 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.
 
    
    Flexible Packaging Converter Films.Films engineered for converted flexible packaging
are marketed under the Proflextm brand and used in laminated
applications as sealant layers, barrier layers and/or as a print carrier for graphics in
stand-up pouches and similar value added packaging. Proflextm films
can also be used in an unsupported format, plain or printed, for the manufacture of bags or
wrapping of foods and consumer goods such as bakery or towel and tissue items.
    
    Masking Films.Masking films are used to protect the surface of materials such as
acrylic or polycarbonate sheet, glass and metal during transportation, storage, fabrication
and installation. These films incorporate a scratch, abrasion and gouge resistant layer on
one side and a heat activated adhesive layer on the other, to bind the film to the final
products surface and allow removal to expose a pristine product surface once an item is
finished.
    
    Foam Lamination and Adhesive Films.Foam lamination films are designed to be a carrier
web and become an integral structural component of carpet pad foam and automotive trim
components. Adhesive films act as a heat activated bonding layer between two substrates or
sheets made from diverse materials including applications such as structural panels used in
semi-trailer construction and similar items.
    
    Non-Woven Lamination Films.These films adhere to non-woven substrates and become a
functional part of the finished product. Applications include dental bibs, surgical
drapings, other medical related products and absorbent tray pads used in meat packaging.
 -6-




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
    
    Carpet, Furniture and Textile Packaging Films.This category includes a number of high
strength, wide web films and protective bags used for wrapping textiles and packaging large
format items like mattresses and furniture.
    
    Embossed Films.Embossed films are used in the manufacture of personal care items,
disposable protective clothing and table cloths, and for carrier or release films used in
the production of rubber, composite aerospace materials and molding compounds as a
separation medium.
 Institutional Products. Ò
 Injection Molding â
 Profile Extrusion
 
    
    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 an extruded building component used
primarily in the remodeling industry. This product is manufactured in a white color and
has a highly defined and elegant look.
 Sales and Marketing
 Stretch Films
 Custom Films
 Institutional Products.
 Injection Molding.
 Profile Extrusion.
 -7-




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Manufacturing and Raw Materials
 Stretch Films
 Custom Films
 Institutional Products.
 Injection Molding
   Profile Extrusion
 Raw Materials
   -8-




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Competition
     Backlog
  Information Concerning Atlantis Plastics
   Employees
  Patents and Trademarks
  -9-




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Environmental Regulation
    
 ITEM 1A. RISK FACTORS
 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.
   
    
    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;
    
    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.
  We face intense competition that could result in our losing or failing to gain market share and
adversely affect our results of operations.
 -10-




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Our financial performance is dependent on raw material prices and our ability to pass on price
increases to customers.
  Sales to one of our customers accounted for 12% of our net sales in 2005, and the loss of sales to
that customer could harm our business, financial condition and results of operations.
  Our acquisitions carry risks.
  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 intellectual property rights may be inadequate to protect our business.
  -11-




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If third parties claim that we infringe upon their intellectual property rights, our operating
profits could be adversely affected.
  
    
    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.
  If our products infringe on the intellectual property rights of others, we may be required to
indemnify our customers for any damages they suffer.
  Environmental, health and safety matters could require material expenditures and changes in our
operations.
   -12-




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Our major shareholder has significant influence over our business and could delay, deter or prevent
a change of control or other business combination.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  -13-




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ITEM 2. PROPERTIES
   Owned or
    
    
    Building AreaSegment and Location
    
    Leased
    
    
    (square feet)Plastic Films:Stretch Films, Sapulpa, Oklahoma
    
    Owned
    
    
    126,500Stretch Films, Nicholasville, Kentucky
    
    Owned
    
    
    130,000Stretch Films, Fontana, California
    
    Leased
    
    
    95,100Custom 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
    
    
    50,800Injection Molding, Ft. Smith, Arkansas
    
    Owned
    
    
    135,000Injection Molding, Warren, Ohio
    
    Owned
    
    
    54,100Injection Molding, LaVergne, Tennessee
    
    Leased
    
    
    38,000Injection Molding, Alamo, Texas
    
    Leased
    
    
    98,000Injection Molding, Elkhart, Indiana
    
    Leased
    
    
    43,800Profile Extrusion:Profile Extrusion, Elkhart, Indiana
    
    Owned
    
    
    88,000Profile Extrusion, Elkhart, Indiana
    
    Leased
    
    
    98,500
 
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  -14-




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PART II
 
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  High
    
    
    Low2005First Quarter
    
    $
    26.30
    
    
    $
    16.50Second Quarter
    
    $
    24.20
    
    
    $
    5.36Third Quarter
    
    $
    10.50
    
    
    $
    7.29Fourth Quarter
    
    $
    10.05
    
    
    $
    6.792004First Quarter
    
    $
    15.50
    
    
    $
    12.00Second Quarter
    
    $
    18.40
    
    
    $
    14.25Third Quarter
    
    $
    19.25
    
    
    $
    11.69Fourth Quarter
    
    $
    17.80
    
    
    $
    13.99
   Dividends
  -15-




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ITEM 6. SELECTED FINANCIAL DATA
  Years Ended December 31,
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in millions, except per share data)Operating DataNet sales
    
    $
    424.3
    
    
    $
    347.8
    
    
    $
    289.1
    
    
    $
    248.6
    
    
    $
    247.8Net income
    
    
    6.7
    
    
    
    11.5
    
    
    
    8.2
    
    
    
    2.4
    
    
    
    0.7Goodwill amortization*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8Per Share DataNet income:Basic earnings per common share
    
    $
    0.82
    
    
    $
    1.49
    
    
    $
    1.08
    
    
    $
    0.31
    
    
    $
    0.10Diluted earnings per common share
    
    $
    0.81
    
    
    $
    1.42
    
    
    $
    1.06
    
    
    $
    0.31
    
    
    $
    0.10Cash dividends paid per common share
    
    $
    12.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financial DataTotal assets
    
    $
    238.9
    
    
    $
    213.3
    
    
    $
    185.7
    
    
    $
    175.6
    
    
    $
    169.6Total debt
    
    
    199.2
    
    
    
    87.7
    
    
    
    77.2
    
    
    
    88.9
    
    
    
    88.9
 
 *
    
    The Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets, during 2002, which requires, among other items, the cessation of recording
goodwill amortization. -16-




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   Ò
  Critical Accounting Policies and Estimates
   Revenue recognition and accounts receivable:
 Inventories:
 -17-




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Goodwill:
 Goodwill and Other Intangible
Assets
  Self-Insurance:
  Years Ended December 31,
    
    2005
    
    
    2004
    
    
    2003Plastic Films (pounds)
    
    
    284,019
    
    
    
    
    
    
    
    273,562
    
    
    
    
    
    
    
    247,676
 Net Sales
    
    Amount
    
    
    % Net Sales

    
    Amount
    
    
    % Net Sales

    
    Amount
    
    
    % Net SalesPlastic Films
    
    $
    273,006
    
    
    
    64
    %
    
    $
    222,221
    
    
    
    64
    %
    
    $
    186,431
    
    
    
    65
    %Injection Molding
    
    
    116,050
    
    
    
    28
    %
    
    
    99,899
    
    
    
    29
    %
    
    
    81,345
    
    
    
    28
    %Profile Extrusion
    
    
    35,270
    
    
    
    8
    %
    
    
    25,682
    
    
    
    7
    %
    
    
    21,322
    
    
    
    7
    %Total
    
    $
    424,326
    
    
    
    100
    %
    
    $
    347,802
    
    
    
    100
    %
    
    $
    289,098
    
    
    
    100
    %
 Gross Profit
    
    Amount
    
    
    % Net Sales

    
    Amount
    
    
    % Net Sales

    
    Amount
    
    
    % Net SalesPlastic Films
    
    $
    40,450
    
    
    
    15
    %
    
    $
    34,891
    
    
    
    16
    %
    
    $
    30,021
    
    
    
    16
    %Injection Molding
    
    
    18,117
    
    
    
    16
    %
    
    
    15,592
    
    
    
    16
    %
    
    
    11,893
    
    
    
    15
    %Profile Extrusion
    
    
    6,583
    
    
    
    19
    %
    
    
    5,985
    
    
    
    23
    %
    
    
    5,026
    
    
    
    24
    %Total
    
    $
    65,150
    
    
    
    15
    %
    
    $
    56,468
    
    
    
    16
    %
    
    $
    46,940
    
    
    
    16
    %
 Operating Income
    
    Amount
    
    
    % Net Sales

    
    Amount
    
    
    % Net Sales

    
    Amount
    
    
    % Net SalesPlastic Films
    
    $
    16,562
    
    
    
    6
    %
    
    $
    12,995
    
    
    
    6
    %
    
    $
    11,092
    
    
    
    6
    %Injection Molding
    
    
    9,715
    
    
    
    8
    %
    
    
    7,406
    
    
    
    7
    %
    
    
    4,765
    
    
    
    6
    %Profile Extrusion
    
    
    2,781
    
    
    
    8
    %
    
    
    3,358
    
    
    
    13
    %
    
    
    2,688
    
    
    
    13
    %Total
    
    $
    29,058
    
    
    
    7
    %
    
    $
    23,759
    
    
    
    7
    %
    
    $
    18,545
    
    
    
    6
    %
 -18-




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Comparison of Years Ended December 31, 2005 and 2004
 Net Sales
  Gross Profit
  Selling, General and Administrative Expense
  Net Interest Expense and Income Taxes
   Income
  2005
    
    
    2004Net income
    
    $
    6.7 million
    
    
    $
    11.5 millionBasic earnings per share
    
    $
    0.82
    
    
    $
    1.49Diluted earnings per share
    
    $
    0.81
    
    
    $
    1.42
 -19-




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Comparison of Years Ended December 31, 2004 and 2003
 Net Sales
  Gross Profit
  Selling, General and Administrative Expense
  Net Interest Expense and Income Taxes
   Income
  2004
    
    
    2003Net income
    
    $
    11.5 million
    
    
    $
    8.2 millionBasic earnings per share
    
    $
    1.49
    
    
    $
    1.08Diluted earnings per share
    
    $
    1.42
    
    
    $
    1.06
 -20-




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LIQUIDITY AND CAPITAL RESOURCES
     Share-Based Payment
    Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  -21-




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Cash Flows from Financing Activities
   Maturity less
    
    
    Maturity
    
    
    Maturity
    
    
    Maturity1 yr
    
    
    1-3 yrs
    
    
    4-5 yrs
    
    
    over 5 yrs
    
    
    TotalDebt principal
    
    $
    1,970
    
    
    $
    3,506
    
    
    $
    3,626
    
    
    $
    190,062
    
    
    $
    199,164Estimated
interest payments (1)
    
    
    17,540
    
    
    
    34,773
    
    
    
    34,261
    
    
    
    16,727
    
    
    
    103,301Operating leases
    
    
    3,928
    
    
    
    5,190
    
    
    
    2,125
    
    
    
    1,361
    
    
    
    12,604Total commitments
    
    $
    23,438
    
    
    $
    43,469
    
    
    $
    40,012
    
    
    $
    208,150
    
    
    $
    315,069
 
 (1)
    
    Estimated interest payments were calculated assuming current interest
rates over the minimum maturity periods specified in our debt agreements. Actual interest rates
may differ from those assumed and debt may be repaid sooner or later than such minimum maturity
periods assumed. -22-




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Recent Accounting Pronouncements
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
  Inventory Costs, an Amendment of ARB No. 43, Chapter 4
  -23-




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
 Foreign Exchange Rate Risk
 -24-




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageManagements Responsibility for Financial Reporting
    
    
    26Report of Independent Registered Public Accounting Firm
    
    
    27Consolidated Statements of Income for the Years Ended December 31, 2005, 2004, and 2003
    
    
    28Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    29Consolidated Statements of Shareholders (Deficit) Equity for the Years Ended December 31, 2005, 2004, and 2003
    
    
    30Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004, and 2003
    
    
    31Notes to Consolidated Financial Statements
    
    
    32
 -25-




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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
     /s/ Anthony F. Bova
    
    /s/ Paul G. SaariPresident and Chief
    
    Senior Vice President of Finance andExecutive Officer
    
    Chief Financial Officer
 -26-




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     /s/ Ernst & Young LLP
 
 -27-




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Consolidated Statements of Income
 Years Ended December 31,(in thousands, except per share amounts)
    
    2005
    
    
    2004
    
    
    2003Net sales
    
    $
    424,326
    
    
    $
    347,802
    
    
    $
    289,098Cost of goods sold
    
    
    359,176
    
    
    
    291,334
    
    
    
    242,158Gross profit
    
    
    65,150
    
    
    
    56,468
    
    
    
    46,940Selling, general and administrative expenses
    
    
    35,537
    
    
    
    32,709
    
    
    
    28,395Cost of unconsummated financing
    
    
    555
    
    
    
    
    
    
    
    Operating income
    
    
    29,058
    
    
    
    23,759
    
    
    
    18,545Interest expense, net of interest income of $199 in 2005,
$53 in 2004 and $153 in 2003
    
    
    (15,048
    )
    
    
    (5,643
    )
    
    
    (5,790
    )Unamortized deferred financing cost write-off
    
    
    (3,794
    )
    
    
    
    
    
    
    Other income
    
    
    84
    
    
    
    168
    
    
    
    324Income before provision for income taxes
    
    
    10,300
    
    
    
    18,284
    
    
    
    13,079Provision for income taxes
    
    
    3,629
    
    
    
    6,769
    
    
    
    4,839Net income
    
    $
    6,671
    
    
    $
    11,515
    
    
    $
    8,240Basic earnings per share
    
    $
    0.82
    
    
    $
    1.49
    
    
    $
    1.08Diluted earnings per share
    
    $
    0.81
    
    
    $
    1.42
    
    
    $
    1.06Weighted average number of shares used in
computing earnings per share:Basic
    
    
    8,174
    
    
    
    7,709
    
    
    
    7,606Diluted
    
    
    8,221
    
    
    
    8,131
    
    
    
    7,750Cash dividends paid per common share
    
    $
    12.50
    
    
    
    
    
    
    
    
 See accompanying notes.
 -28-




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Consolidated Balance Sheets
 December 31,(in thousands, except share and per share amounts)
    
    2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    178
    
    
    $
    51Accounts receivable (net of allowances of $1,835 and $1,228)
    
    
    57,075
    
    
    
    45,982Inventories, net
    
    
    41,667
    
    
    
    38,186Other current assets
    
    
    7,513
    
    
    
    4,760Deferred income tax assets
    
    
    3,694
    
    
    
    3,978Total current assets
    
    
    110,127
    
    
    
    92,957Property and equipment, net
    
    
    69,208
    
    
    
    64,165Goodwill, net of accumulated amortization
    
    
    51,351
    
    
    
    51,413Other assets
    
    
    8,226
    
    
    
    4,759Total assets
    
    $
    238,912
    
    
    $
    213,294Liabilities and shareholders (deficit) equityAccounts payable and accrued expenses
    
    $
    48,300
    
    
    $
    41,048Current maturities of long-term debt
    
    
    1,970
    
    
    
    6,955Total current liabilities
    
    
    50,270
    
    
    
    48,003Long-term debt
    
    
    197,195
    
    
    
    80,790Deferred income tax liabilities
    
    
    10,628
    
    
    
    11,211Other liabilities
    
    
    702
    
    
    
    1,013Total liabilities
    
    
    258,795
    
    
    
    141,017Commitments and contingencies
    
    
    
    
    
    
    Shareholders (deficit) equityClass A Common Stock; $0.0001 par value in 2005 and $0.10 par value in
2004; 20,000,000 shares authorized, 6,113,158 and 5,556,566 shares issued
and outstanding in 2005 and 2004, respectively
    
    
    1
    
    
    
    556Class B Common Stock; $0.0001 par value in 2005 and $0.10 par value in
2004; 7,000,000 shares authorized, 2,142,665 and 2,227,057 shares issued
and outstanding in 2005 and 2004, respectively
    
    
    
    
    
    
    223Additional paid-in capital
    
    
    
    
    
    
    12,595Notes receivable from sale of common stock
    
    
    
    
    
    
    (452
    )Accumulated (deficit) earnings
    
    
    (21,536
    )
    
    
    59,355Accumulated other comprehensive income, net of income taxes of $862
    
    
    1,652
    
    
    
    Total shareholders (deficit) equity
    
    
    (19,883
    )
    
    
    72,277Total liabilities and shareholders (deficit) equity
    
    $
    238,912
    
    
    $
    213,294
 See accompanying notes.
 -29-




---



##### Table of Contents



Consolidated Statements of Shareholders (Deficit) Equity
 Notes
    
    
    
    
    
    
    
    
    
    
    TotalReceivable
    
    
    
    
    
    
    Accumulated
    
    
    Share-Class A
    
    
    Class B
    
    
    Additional
    
    
    from Sale of
    
    
    Accumulated
    
    
    Other
    
    
    holdersCommon
    
    
    Common
    
    
    Paid-In
    
    
    Common
    
    
    Earnings
    
    
    Comprehensive
    
    
    (Deficit)( in thousands)
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    (Deficit)
    
    
    Income
    
    
    EquityBalance at January 1, 2003
    
    $
    512
    
    
    $
    246
    
    
    $
    10,852
    
    
    $
    (1,682
    )
    
    $
    39,600
    
    
    $
    
    
    
    $
    49,528Net income and comprehensive 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 and comprehensive 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
    
    
    $
    
    
    
    $
    72,277Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,671
    
    
    
    
    
    
    
    6,671Net unrealized gain on derivatives,
net of income taxes of $862
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,652
    
    
    
    1,652Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,323Cancellation of stock options
    
    
    
    
    
    
    
    
    
    
    (3,977
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,977
    )Exercise of stock options
    
    
    47
    
    
    
    
    
    
    
    2,475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,522Income tax benefit from option exercises/Cancellations
    
    
    
    
    
    
    
    
    
    
    3,718
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,718Conversion of Class B to Class A
Common Stock
    
    
    9
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payments on notes received for sale of
Common Stock, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    452Adjust par value of common stock
    
    
    (611
    )
    
    
    (214
    )
    
    
    825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividend paid
    
    
    
    
    
    
    
    
    
    
    (15,636
    )
    
    
    
    
    
    
    (87,562
    )
    
    
    
    
    
    
    (103,198
    )Balance at December 31, 2005
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (21,536
    )
    
    $
    1,652
    
    
    $
    (19,883
    )
 See accompanying notes.
 -30-




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##### Table of Contents



Consolidated Statements of Cash Flows
 Years Ended December 31,(in thousands)
    
    2005
    
    
    2004
    
    
    2003Operating Activities:Net income
    
    $
    6,671
    
    
    $
    11,515
    
    
    $
    8,240Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortization
    
    
    12,059
    
    
    
    11,340
    
    
    
    11,760Loan fee and other amortization
    
    
    5,677
    
    
    
    1,029
    
    
    
    1,012Interest receivable from shareholder loans
    
    
    (5
    )
    
    
    31
    
    
    
    33Loss (gain) on disposal of assets
    
    
    38
    
    
    
    (29
    )
    
    
    Deferred income taxes
    
    
    (1,199
    )
    
    
    80
    
    
    
    1,605Change in operating assets and liabilities, net of acquisitions of businesses:Accounts receivable, net
    
    
    (11,093
    )
    
    
    (6,381
    )
    
    
    (11,035
    )Inventories, net
    
    
    (3,509
    )
    
    
    (13,659
    )
    
    
    (1,347
    )Other current assets
    
    
    (2,753
    )
    
    
    (1,177
    )
    
    
    1,566Accounts payable, accrued expenses and other current liabilities
    
    
    2,942
    
    
    
    4,093
    
    
    
    8,037Other assets and liabilities
    
    
    20
    
    
    
    (297
    )
    
    
    1,159Cash provided by operating activities
    
    
    8,848
    
    
    
    6,545
    
    
    
    21,030Investing Activities:Capital expenditures
    
    
    (16,917
    )
    
    
    (12,943
    )
    
    
    (7,033
    )Purchase of business
    
    
    
    
    
    
    (9,404
    )
    
    
    Proceeds from asset dispositions
    
    
    38
    
    
    
    4
    
    
    
    Cash used for investing activities
    
    
    (16,879
    )
    
    
    (22,343
    )
    
    
    (7,033
    )Financing Activities:Net
(repayments) borrowings under senior credit facilities
    
    
    (15,860
    )
    
    
    11,058
    
    
    
    (7,200
    )Repayments under old term loans
    
    
    (70,587
    )
    
    
    (513
    )
    
    
    (3,900
    )Proceeds from new credit agreement
    
    
    195,000
    
    
    
    
    
    
    
    Repayments of term loans under new credit agreement
    
    
    (600
    )
    
    
    
    
    
    
    Payment of special dividend
    
    
    (103,198
    )
    
    
    
    
    
    
    Proceeds from issuance of long-term bonds
    
    
    3,503
    
    
    
    
    
    
    
    Payments of long-term bonds
    
    
    (35
    )
    
    
    

    
    
    
    Repayments on long-term debt
    
    
    
    
    
    
    
    
    
    
    (604
    )Financing costs associated with credit agreements and unconsummated financing
    
    
    (6,762
    )
    
    
    (23
    )
    
    
    (1,121
    )Repayments on notes receivable from shareholders
    
    
    457
    
    
    
    834
    
    
    
    332Income tax benefit from stock option exercises/cancellations
    
    
    3,718
    
    
    
    483
    
    
    
    Proceeds from exercise of stock options
    
    
    2,522
    
    
    
    1,009
    
    
    
    272Cash provided by (used for) financing activities
    
    
    8,158
    
    
    
    12,848
    
    
    
    (12,221
    )Increase (decrease) in cash and cash equivalents
    
    
    127
    
    
    
    (2,950
    )
    
    
    1,776Cash and cash equivalents at beginning of year
    
    
    51
    
    
    
    3,001
    
    
    
    1,225Cash and cash equivalents at end of year
    
    $
    178
    
    
    $
    51
    
    
    $
    3,001Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    13,754
    
    
    $
    4,689
    
    
    $
    4,003Cash paid for income taxes, net of refunds
    
    $
    2,969
    
    
    $
    7,854
    
    
    $
    1,119Supplemental schedule of non-cash investing and financing activities:Non-cash reduction of accounts receivable and accounts payable in connection
with supplier agreements
    
    $
    914
    
    
    $
    851
    
    
    $
    107
 See accompanying notes.
 -31-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Summary of Significant Accounting Policies
      Basis of presentation:
 Cash and cash equivalents:
 Revenue recognition and accounts receivable:
 Inventories:
 Goodwill:
 -32-




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##### Table of Contents



Goodwill and Other Intangible Assets
  Plastic
    
    
    Injection
    
    
    ProfileFilms
    
    
    Molding
    
    
    Extrusion
    
    
    TotalGoodwill, net
    
    $
    31.1
    
    
    $
    10.0
    
    
    $
    10.3
    
    
    $
    51.4
 Self-insurance
 Property and equipment:
   Earnings per share:
 Stock-based compensation Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Share-Based Payment
 -33-




---



##### Table of Contents



2004
    
    
    2003Net income:As reported
    
    $
    11,515
    
    
    $
    8,240Add: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
    
    
    
    132Pro forma net income
    
    $
    11,365
    
    
    $
    8,108Basic net income per share:As reported
    
    $
    1.49
    
    
    $
    1.08Pro forma
    
    $
    1.47
    
    
    $
    1.07Diluted net income per share:As reported
    
    $
    1.42
    
    
    $
    1.06Pro forma
    
    $
    1.39
    
    
    $
    1.05
 -34-




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##### Table of Contents



Repair and maintenance expenses:
 Advertising costs:
 Shipping and handling costs:
 Amortization:
 Income taxes:
 Use of estimates:
 Reclassifications:
 Financial instruments:
  Derivative instruments and hedging activities
  -35-




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##### Table of Contents



-36-




---



##### Table of Contents



Recent Accounting Pronouncements
   -37-




---



##### Table of Contents



Note 2. Acquisitions of Businesses and Assets
   Current assets
    
    $
    1,222Long-term assets
    
    
    4,787Goodwill
    
    
    4,201Liabilities
    
    
    (806
    )$
    9,404
 Note 3. Inventories
  2005
    
    
    2004Raw materials
    
    $
    23,747
    
    
    $
    24,404Work in
progress
    
    
    421
    
    
    
    430Finished goods
    
    
    17,499
    
    
    
    13,352Total
    
    $
    41,667
    
    
    $
    38,186
 Note 4. Property and Equipment
  2005
    
    
    2004Land
    
    $
    2,606
    
    
    $
    2,612Building and improvements
    
    
    27,523
    
    
    
    22,111Office furniture and equipment
    
    
    15,231
    
    
    
    14,376Manufacturing equipment
    
    
    144,196
    
    
    
    134,689Vehicles
    
    
    320
    
    
    
    272Total
    
    
    189,876
    
    
    
    174,060Accumulated depreciation
and amortization
    
    
    (120,668
    )
    
    
    (109,895
    )Net
    
    $
    69,208
    
    
    $
    64,165
  -38-




---



##### Table of Contents



Note 5. Accounts Payable and Accrued Expenses
  2005
    
    
    2004Accounts payable
    
    $
    21,455
    
    
    $
    15,389Accrued interest
    
    
    1,005
    
    
    
    443Accrued compensation, vacation and profit sharing
    
    
    8,732
    
    
    
    8,096Accrued health and workers compensation insurance
    
    
    1,177
    
    
    
    1,537Customer deposits and commissions
    
    
    5,187
    
    
    
    5,141Income taxes payable
    
    
    1,017
    
    
    
    2,798Other
    
    
    9,727
    
    
    
    7,644Total
    
    $
    48,300
    
    
    $
    41,048
 Note 6. Long-term Debt
  2005
    
    
    2004Senior secured term loans
    
    $
    119,400
    
    
    $
    70,587Junior secured term loan
    
    
    75,000
    
    
    
    Revolving line of credit
    
    
    1,300
    
    
    
    17,158Bonds
    
    
    3,465
    
    
    
    Total debt
    
    
    199,165
    
    
    
    87,745Current portion of long-term
debt
    
    
    (1,970
    )
    
    
    (6,955
    )Long-term debt
    
    $
    197,195
    
    
    $
    80,790
   -39-




---



##### Table of Contents



Year
    
    Amount2006
    
    $
    1,9702007
    
    
    1,7402008
    
    
    1,7672009
    
    
    1,7972010
    
    
    1,8292011
    
    
    190,062Total
    
    $
    199,165
 Note 7. Capital Stock
  -40-




---



##### Table of Contents



Note 8. Income Taxes
  2005
    
    
    2004
    
    
    2003Current Federal income tax provision
    
    $
    4,223
    
    
    $
    5,690
    
    
    $
    4,096Current State income tax provision
    
    
    742
    
    
    
    772
    
    
    
    437Deferred Federal and State income tax
(benefit) provision
    
    
    (1,336
    )
    
    
    307
    
    
    
    306Total provision for income taxes
    
    $
    3,629
    
    
    $
    6,769
    
    
    $
    4,839
  2005
    
    
    2004
    
    
    2003Statutory federal income tax rate
    
    
    34
    %
    
    
    34
    %
    
    
    34
    %State income taxes
    
    
    3
    
    
    
    3
    
    
    
    3Domestic production deduction and
other
    
    
    (2
    )
    
    
    
    
    
    
    Effective income tax rate
    
    
    35
    %
    
    
    37
    %
    
    
    37
    %
  2005
    
    
    2004Long-term deferred income tax liabilities:Excess of book over tax basis of
property and equipment
    
    $
    10,523
    
    
    $
    12,492Goodwill
    
    
    2,084
    
    
    
    1,831Interest rate swap
    
    
    861
    
    
    
    Other, net
    
    
    56
    
    
    
    Total deferred income tax liabilities
    
    $
    13,524
    
    
    $
    14,323Long-term deferred income tax assets:Acquired goodwill
    
    
    2,896
    
    
    
    3,112Total net long-term deferred income tax
liabilities
    
    $
    10,628
    
    
    $
    11,211Current deferred income tax assets:Reserves and accrued expenses not yet
deductible for income tax purposes
    
    $
    3,038
    
    
    $
    3,140Net operating loss carryforwards
    
    
    
    
    
    
    377Capitalized inventory costs
    
    
    656
    
    
    
    838$
    3,694
    
    
    $
    4,355Valuation allowance
    
    
    
    
    
    
    (377
    )Total current deferred income tax assets
    
    $
    3,694
    
    
    $
    3,978Deferred income taxes, net
    
    $
    6,934
    
    
    $
    7,233
  -41-




---



##### Table of Contents



Note 9. Stock Option Plans
   2005
    
    
    2004
    
    
    2003Options outstanding at January 1
    
    
    1,051
    
    
    
    1,244
    
    
    
    1,250Granted
    
    
    
    
    
    
    
    
    
    
    75Exercised
    
    
    (472
    )
    
    
    (156
    )
    
    
    (49
    )Cancelled
    
    
    (579
    )
    
    
    (37
    )
    
    
    (32
    )Options outstanding at December 31
    
    
    
    
    
    
    1,051
    
    
    
    1,244Weighted-average option prices per common share:Options outstanding at January 1
    
    $
    6.47
    
    
    $
    6.45
    
    
    $
    6.23Granted
    
    
    
    
    
    
    
    
    
    
    9.29Exercised
    
    
    5.34
    
    
    
    6.48
    
    
    
    5.53Cancelled
    
    
    7.40
    
    
    
    5.81
    
    
    
    5.63Outstanding at December 31
    
    $
    
    
    
    $
    6.47
    
    
    $
    6.45Weighted-average fair value of options
granted during the year
    
    $
    
    
    
    $
    
    
    
    $
    5.34Options exercisable at December 31
    
    
    
    
    
    
    827
    
    
    
    863Options available for grant at December 31
    
    
    865
    
    
    
    195
    
    
    
    163
   -42-




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##### Table of Contents



Note 10. Earnings Per Share
  2005
    
    
    2004
    
    
    2003Basic earnings per common share:Net income
    
    $
    6,671
    
    
    $
    11,515
    
    
    $
    8,240Weighted-average common shares outstanding
    
    
    8,174
    
    
    
    7,709
    
    
    
    7,606Basic earnings per common share
    
    $
    0.82
    
    
    $
    1.49
    
    
    $
    1.08Diluted earnings per common share:Earnings applicable to common shares
    
    $
    6,671
    
    
    $
    11,515
    
    
    $
    8,240Weighted-average common shares outstanding
    
    
    8,174
    
    
    
    7,709
    
    
    
    7,606Add  Dilutive options
    
    
    47
    
    
    
    422
    
    
    
    144Weighted-average common shares outstanding plus
potential dilutive common shares
    
    
    8,221
    
    
    
    8,131
    
    
    
    7,750Diluted earnings per common share
    
    $
    0.81
    
    
    $
    1.42
    
    
    $
    1.06
  -43-




---



##### Table of Contents



Note 11. Business Segments
    Plastic
    
    
    Injection
    
    
    ProfileFilms
    
    
    Molding
    
    
    Extrusion
    
    
    Corporate
    
    
    Consolidated2005Net sales
    
    $
    273,006
    
    
    $
    116,050
    
    
    $
    35,270
    
    
    $
    
    
    
    $
    424,326Operating income
    
    
    16,562
    
    
    
    9,715
    
    
    
    2,781
    
    
    
    
    
    
    
    29,058Identifiable assets
    
    
    150,079
    
    
    
    110,287
    
    
    
    49,235
    
    
    
    (70,689
    )
    
    
    238,912Capital expenditures
    
    
    9,678
    
    
    
    4,234
    
    
    
    2,063
    
    
    
    942
    
    
    
    16,917Depreciation
    
    
    4,964
    
    
    
    4,561
    
    
    
    1,258
    
    
    
    1,028
    
    
    
    11,8112004Net 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
    
    
    
    11,760
 Note 12. Profit Sharing and Retirement Plans
   -44-




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##### Table of Contents



Note 13. Related Parties
  2005
    
    
    2004
    
    
    2003Management fees
    
    $
    1,045
    
    
    $
    1,275
    
    
    $
    1,642Expense allocations and
reimbursements
    
    
    371
    
    
    
    193
    
    
    
    767Total fees paid to Trivest
Partners, LP
    
    $
    1,416
    
    
    $
    1,468
    
    
    $
    2,409
  Note 14. Commitments and Contingencies
    Year
    
    Amount2006
    
    $
    3,9282007
    
    
    3,1152008
    
    
    2,0752009
    
    
    1,4622010
    
    
    663Thereafter
    
    
    1,361Total
    
    $
    12,604
 -45-




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##### Table of Contents



Note 15. Quarterly Financial Data (Unaudited)
  Quarter Ended
    
    
    Quarter Ended
    
    
    Quarter Ended
    
    
    Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    Year2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    100,421
    
    
    $
    80,228
    
    
    $
    101,585
    
    
    $
    86,785
    
    
    $
    106,585
    
    
    $
    89,350
    
    
    $
    115,735
    
    
    $
    91,439
    
    
    $
    424,326
    
    
    $
    347,802Gross profit
    
    
    14,308
    
    
    
    12,911
    
    
    
    16,322
    
    
    
    14,256
    
    
    
    16,326
    
    
    
    14,761
    
    
    
    18,194
    
    
    
    14,540
    
    
    
    65,150
    
    
    
    56,468Net income (loss)
    
    
    (332
    )
    
    
    2,496
    
    
    
    2,445
    
    
    
    3,129
    
    
    
    1,946
    
    
    
    3,176
    
    
    
    2,612
    
    
    
    2,714
    
    
    
    6,671
    
    
    
    11,515Net income (loss) per common share:Basic
    
    
    ($0.04
    )
    
    $
    0.33
    
    
    $
    0.30
    
    
    $
    0.41
    
    
    $
    0.24
    
    
    $
    0.41
    
    
    $
    0.32
    
    
    $
    0.35
    
    
    $
    0.82
    
    
    $
    1.49Diluted
    
    
    ($0.04
    )
    
    $
    0.31
    
    
    $
    0.30
    
    
    $
    0.38
    
    
    $
    0.24
    
    
    $
    0.39
    
    
    $
    0.32
    
    
    $
    0.33
    
    
    $
    0.81
    
    
    $
    1.42
 -46-




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
  
 ITEM 9A. CONTROLS AND PROCEDURES
   
 ITEM 9B. OTHER INFORMATION
  -47-




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##### Table of Contents



PART III
 
 
 
 
 
 ITEMS 10, 11, 12, 13, AND 14
  
 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
    
    
    27Consolidated Statements of Income
    
    
    28Consolidated Balance Sheets
    
    
    29Consolidated Statements of Shareholders (Deficit) Equity
    
    
    30Consolidated Statements of Cash Flows
    
    
    31Notes to Consolidated Financial Statements
    
    
    32(2)
 Financial Statement Schedules:The following Financial Statement Schedule for the years
ended December 31, 2005, 2004, and 2003 is submitted herewith:Schedule II  Valuation and Qualifying Accounts
    
    
    52
   -48-




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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
Incorporation(15)3.2
    
    Registrants
Bylaws(15)4.1
    
    Form of Stock Certificate evidencing ownership of Registrants Class A Common Stock(4)10.1*
    
    Registrants 2001 Stock Award
Plan, amended and restated as of January 27,
2005.(15)10.2*
    
    Form of Indemnification Agreement. (3)10.3*
    
    Management Agreement by and between Atlantis Plastics, Inc. and Trivest Partners,
L.P. dated January 1, 2003. (14)10.4*
    
    Agreement dated as of January 1, 1998 by and among Registrant, Trivest II, Inc.,
Earl W. Powell and Phillip T. George, M.D. (8)10.5
    
    Assignment and Assumption of Lease between Registrant and Trivest II, Inc.
(9)10.6
    
    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)10.7
    
    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)10.8
    
    Office Lease, dated as of April 1, 1992, between Euram/1870 Exchange Associates and
National Poly Products, Inc. (2)10.9
    
    First Extension of lease agreement between Euram/1870 Exchange Associates and
Atlantis Plastic Films, Inc., dated May 14, 1997. (6)10.10
    
    First Amendment of lease agreement between 1870 Exchange Associates and Atlantis
Plastic Films, Inc., dated February 27, 2002. (13)10.11
    
    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)10.12*
    
    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)10.13
    
    Lease between Principal Life Insurance Company and Atlantis Plastic Films, Inc.,
dated as of March 8, 2000. (11)10.14
    
    Guaranty of Lease by Registrant of the obligations of Atlantis Plastic Films, dated
as of March 8, 2000. (11)10.15
    
    Lease Extension between Extrusion Masters, Inc. and E.E.E. Properties, dated as of
October 30, 2001.(13)10.16
    
    Executive Employment Agreement by and between Atlantis Plastics, Inc. and Anthony
F. Bova, dated as of December 31, 2005. (14)10.17
    
    Change in Control Agreement by and between Atlantis Plastics, Inc. and Anthony F.
Bova, dated as of December 31, 2005. (14)
 -49-




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##### Table of Contents



10.18
    
    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.(15)10.19
    
    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.(15)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.
 
 -50-




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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 Report
on Form 8-K filed February 27, 2006.(15)
    
    Incorporated by reference to the exhibits filed with the
Registrants Annual Report on Form 10-K for the year ended December 31,
2004. 
 -51-




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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,
 Balance at
    
    
    Charged to
    
    
    Charged
    
    
    
    
    
    
    BalanceBeginning
    
    
    Costs and
    
    
    to Other
    
    
    
    
    
    
    at EndClassification
    
    of Year
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions (a)
    
    
    of Year2005Allowances reducing the assets in the balance sheet:Allowance for doubtful accounts
    
    $
    539
    
    
    $
    255
    
    
    $
    
    
    
    
    ($12
    )
    
    $
    806Reserve for sales allowances
    
    
    689
    
    
    
    340
    
    
    
    
    
    
    
    
    
    
    
    1,029Reserve for inventories
    
    
    1,409
    
    
    
    607
    
    
    
    
    
    
    
    14
    
    
    
    2,002Deferred income tax valuation allowance
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    377
    
    
    
    Total
    
    $
    3,014
    
    
    $
    1,202
    
    
    $
    
    
    
    $
    379
    
    
    $
    3,8372004Allowances 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
    
    
    $
    2,847
 
 (a)
    
    Includes amounts written-off as uncollectible, allowances granted, obsolete inventory, and net
decreases in deferred income tax valuation allowance. -52-




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##### Table of Contents



SIGNATURES
  ATLANTIS PLASTICS, INC.Date: March 30, 2006
    By:

/s/ PAUL G. SAARIPaul G. SaariSenior Vice President, Finance and
Chief Financial Officer  Signature
    
    Title
    
    Date/s/ EARL W. POWELL

Earl W. Powell
    
    Chairman of the Board
    
    March 30, 2006/s/ ANTHONY F. BOVA
    
    President and Chief
Executive Officer
    
    March 30, 2006Anthony F. Bova
    
    (Principal Executive Officer)/s/ PAUL G. SAARI
    
    Senior Vice President, Finance and
Chief Financial Officer
    
    March 30, 2006Paul G. Saari
    
    (Principal Financial and Accounting Officer)/s/ CHARLES D. MURPHY, III
    
    Director
    
    March 30, 2006Charles D. Murphy, III/s/ CHESTER B. VANATTA
    
    Director
    
    March 30, 2006Chester B. Vanatta/s/ LARRY D. HORNER
    
    Director
    
    March 30, 2006Larry D. Horner/s/ CESAR ALVAREZ
    
    Director
    
    March 30, 2006Cesar Alvarez/s/ JAY SHUSTER
    
    Director
    
    March 30, 2006Jay Shuster/s/ PETER VANDENBERG, JR.
    
    Director
    
    March 30, 2006Peter Vandenberg, Jr.
 -53-




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##### Table of Contents



Index
to Exhibit
 3.1
    
    Registrants Certificate of
Incorporation(15)3.2
    
    Registrants
Bylaws(15)4.1
    
    Form of Stock Certificate evidencing ownership of Registrants Class A Common Stock(4)10.1*
    
    Registrants 2001 Stock Award
Plan, amended and restated as of January 27,
2005.(15)10.2*
    
    Form of Indemnification Agreement. (3)10.3*
    
    Management Agreement by and between Atlantis Plastics, Inc. and Trivest Partners,
L.P. dated January 1, 2003. (14)10.4*
    
    Agreement dated as of January 1, 1998 by and among Registrant, Trivest II, Inc.,
Earl W. Powell and Phillip T. George, M.D. (8)10.5
    
    Assignment and Assumption of Lease between Registrant and Trivest II, Inc.
(9)10.6
    
    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)10.7
    
    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)10.8
    
    Office Lease, dated as of April 1, 1992, between Euram/1870 Exchange Associates and
National Poly Products, Inc. (2)10.9
    
    First Extension of lease agreement between Euram/1870 Exchange Associates and
Atlantis Plastic Films, Inc., dated May 14, 1997. (6)10.10
    
    First Amendment of lease agreement between 1870 Exchange Associates and Atlantis
Plastic Films, Inc., dated February 27, 2002. (13)10.11
    
    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)10.12*
    
    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)10.13
    
    Lease between Principal Life Insurance Company and Atlantis Plastic Films, Inc.,
dated as of March 8, 2000. (11)10.14
    
    Guaranty of Lease by Registrant of the obligations of Atlantis Plastic Films, dated
as of March 8, 2000. (11)10.15
    
    Lease Extension between Extrusion Masters, Inc. and E.E.E. Properties, dated as of
October 30, 2001.(13)10.16
    
    Executive Employment Agreement by and between Atlantis Plastics, Inc. and Anthony
F. Bova, dated as of December 31, 2005. (14)10.17
    
    Change in Control Agreement by and between Atlantis Plastics, Inc. and Anthony F.
Bova, dated as of December 31, 2005. (14)




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##### Table of Contents



10.18
    
    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.(15)10.19
    
    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.(15)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 Report
on Form 8-K filed February 27, 2006.(15)
    
    Incorporated by reference to the exhibits filed with the
Registrants Annual Report
on Form 10-K for the year ended December 31, 2005.