UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/x/ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2000
or
/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 333-05978
EURAMAX INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
58-2502320 (I.R.S. Employer Identification No.) |
|
5445 Triangle Parkway, Suite 350, Norcross, Georgia (Address of principal executive offices) |
|
30092 (Zip Code) |
Registrant's telephone number, including area code 770-449-7066
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. /x/ Yes / / No
As of May 11, 2000, Registrant had outstanding 45,567,312 shares of Class A common stock and 4,434,680 shares of Class B common stock.
Page 1 of 23
Exhibit Index located on page 19
Item 1. Financial Statements
EURAMAX INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Thousands of U.S. Dollars)
(Unaudited)
|
Quarter Ended March 31, 2000 |
Quarter Ended March 27, 1999 |
|||||
---|---|---|---|---|---|---|---|
Net sales | $ | 142,273 | $ | 132,387 | |||
Costs and expenses: | |||||||
Cost of goods sold | 116,827 | 107,790 | |||||
Selling and general | 13,779 | 13,172 | |||||
Depreciation and amortization | 3,758 | 3,390 | |||||
Earnings from operations | 7,909 | 8,035 | |||||
Interest expense, net |
|
|
(5,438 |
) |
|
(5,258 |
) |
Other expense, net | (113 | ) | (579 | ) | |||
Earnings before income taxes | 2,358 | 2,198 | |||||
Provision for income taxes | 1,008 | 960 | |||||
Net earnings | 1,350 | 1,238 | |||||
Dividends on redeemable preference shares | | 1,622 | |||||
Net earnings (loss) available for ordinary shareholders | $ | 1,350 | $ | (384 | ) | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
EURAMAX INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of U.S. Dollars)
(Unaudited)
|
March 31, 2000 |
December 31, 1999 |
|||||
---|---|---|---|---|---|---|---|
Assets | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 15,619 | $ | 13,385 | |||
Accounts receivable, net | 93,620 | 80,087 | |||||
Inventories | 85,750 | 82,499 | |||||
Other current assets | 6,087 | 4,271 | |||||
Total current assets | 201,076 | 180,242 | |||||
Property, plant and equipment, net | 118,138 | 120,409 | |||||
Goodwill, net | 80,708 | 82,587 | |||||
Other assets | 17,729 | 16,421 | |||||
$ | 417,651 | $ | 399,659 | ||||
Liabilities and Shareholders' Equity | |||||||
Current liabilities: | |||||||
Cash overdrafts | $ | 614 | $ | 2,009 | |||
Accounts payable | 62,687 | 49,682 | |||||
Accrued expenses and other current liabilities | 22,776 | 31,745 | |||||
Current maturities of long-term debt | 6,142 | 6,236 | |||||
Total current liabilities | 92,219 | 89,672 | |||||
Long-term debt, less current maturities | 231,833 | 215,043 | |||||
Other liabilities | 28,805 | 29,876 | |||||
Total liabilities | 352,857 | 334,591 | |||||
Shareholders' equity: | |||||||
Common stock | 500 | 500 | |||||
Additional paid-in capital | 53,220 | 53,220 | |||||
Retained earnings | 17,875 | 16,525 | |||||
Accumulated other comprehensive loss | (6,801 | ) | (5,177 | ) | |||
Total shareholders' equity | 64,794 | 65,068 | |||||
$ | 417,651 | $ | 399,659 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
EURAMAX INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of U.S. Dollars)
(Unaudited)
|
Quarter Ended March 31, 2000 |
Quarter Ended March 27, 1999 |
|||||
---|---|---|---|---|---|---|---|
Net cash used in operating activities | $ | (13,866 | ) | $ | (719 | ) | |
Cash flows from investing activities: | |||||||
Purchase of business | | (2,769 | ) | ||||
Proceeds from sales of assets | 5 | 558 | |||||
Capital expenditures | (2,695 | ) | (2,419 | ) | |||
Net cash used in investing activities | (2,690 | ) | (4,630 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of debt | (4,004 | ) | (3,727 | ) | |||
Proceeds from debt | 21,695 | 9,000 | |||||
Change in cash overdrafts | (1,395 | ) | 680 | ||||
Net cash provided by financing activities | 16,296 | 5,953 | |||||
Effect of exchange rate changes on cash | 2,494 | 3,684 | |||||
Net increase in cash and equivalents | 2,234 | 4,288 | |||||
Cash and equivalents at beginning of period | 13,385 | 19,044 | |||||
Cash and equivalents at end of period | $ | 15,619 | $ | 23,332 | |||
Non-cash investing and financing activities: | |||||||
Payable for certain non-compete agreements associated with purchase of business | $ | | $ | 500 | |||
Dividends on redeemable preference shares | $ | | $ | 1,622 | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
EURAMAX INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Thousands of U.S. Dollars)
(Unaudited)
1. Basis of Presentation:
For purposes of this report the "Company" refers to Euramax International, Inc. ("Euramax") and Subsidiaries, collectively.
The Condensed Consolidated Financial Statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of the management of the Company, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. All adjustments are of a normal recurring nature unless otherwise disclosed. Management believes that the disclosures made are adequate for a fair presentation of results of operations, financial position and cash flows. These Condensed Consolidated Financial Statements should be read in conjunction with the year-end consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Operating results for the period ended March 31, 2000, are not necessarily indicative of future results that may be expected for the year ending December 29, 2000.
Certain 1999 amounts have been reclassified to conform to current year presentation.
2. Summary of Significant Accounting Policies:
For information regarding significant accounting policies, see Note 2 to the Consolidated Financial Statements of the Company for the year ended December 31, 1999, set forth in the Company's Annual Report on Form 10-K.
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. For fair-value hedge transactions in which the Company is hedging changes in the fair value of an asset, liability, or firm commitment, changes in the fair value of the derivative instrument will generally be offset in the income statement by changes in the hedged item's fair value. For cash-flow hedge transactions, in which the Company is hedging the variability of cash flows related to a variable-rate asset, liability, or a forecasted transaction, changes in the fair value of the derivative instrument will be reported in other comprehensive income. The gains and losses on the derivative instrument that are reported in other comprehensive income will be reclassified as earnings in the periods in which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all hedges will be recognized in current-period earnings. Management is currently reviewing the provisions of SFAS No. 133 and does not believe that the Company's financial statements will be materially impacted by the adoption.
5
3. Inventories:
Inventories were comprised of:
|
MARCH 31, 2000 |
DECEMBER 31, 1999 |
||||
---|---|---|---|---|---|---|
Raw materials | $ | 60,813 | $ | 57,146 | ||
Work in process | 10,933 | 11,708 | ||||
Finished products | 14,004 | 13,645 | ||||
$ | 85,750 | $ | 82,499 | |||
4. Commitments and Contingencies:
Litigation
The Company is subject to legal proceedings and claims that have arisen in the ordinary course of business. Although occasional adverse decisions or settlements may occur, it is the opinion of the Company's management, based upon information available at this time, that the expected outcome of these matters, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company and its subsidiaries taken as a whole.
Environmental Matters
The Company's operations are subject to federal, state, local and European environmental laws and regulations concerning the management of pollution and hazardous substances.
The Company has been named as a defendant in lawsuits or as a potentially responsible party in state and Federal administrative and judicial proceedings seeking contribution for costs associated with the investigation, analysis, correction and remediation of environmental conditions at various hazardous waste disposal sites. The Company continues to monitor these actions and proceedings and to vigorously defend both its own interests as well as the interests of its affiliates. The Company's ultimate liability in connection with present and future environmental claims will depend on many factors, including its volumetric share of the waste at a given site, the remedial action required, the total cost of remediation, and the financial viability and participation of the other entities that also sent waste to the site. Once it becomes probable that the Company will incur costs in connection with remediation of a site and such costs can be reasonably estimated, the Company establishes or adjusts its reserve for its projected share of these costs. Based upon current law and information known to the Company concerning the size of the sites known to it, anticipated costs, their years of operations and the number of other potentially responsible parties, management believes that it has adequate reserves for the Company's potential share of the estimated aggregate liability for the costs of remedial actions and related costs and expenses. In addition, the Company establishes reserves for remedial measures required from time to time at its own facilities. Management believes that the reasonably probable outcomes of these matters will not materially exceed established reserves and will not have a material impact on the future financial position, net earnings or cash flows of the Company. The Company's reserves, expenditures and expenses for all environmental exposures were not significant for any of the dates or periods presented.
In connection with the acquisition of the Company from Alumax Inc. (acquired by Aluminum Company of America in May 1998, and hereafter referred to as "Alumax") on September 25, 1996, the Company was indemnified by Alumax for substantially all of its costs, if any, related to environmental matters for occurrences arising prior to the closing date of the acquisition during the period of time it was
6
owned directly or indirectly by Alumax. Such indemnification includes costs that may ultimately be incurred to contribute to the remediation of certain specified existing National Priorities List ("NPL") sites for which the Company had been named a potentially responsible party under the federal Comprehensive Environmental Response, Compensation, and Liability Information System ("CERCLA") as of the closing date of the acquisition, as well as certain potential costs for sites listed on state hazardous cleanup lists. With respect to all other environmental matters, Alumax's obligations are limited to $125.0 million. However, notwithstanding the indemnity, the Company does not believe that it has any significant probable liability for environmental claims. Further, the Company believes it to be unlikely that the Company would be required to bear environmental costs in excess of its pro rata share of such costs as a potentially responsible party under CERCLA.
5. Comprehensive Income:
For the quarters ended March 31, 2000 and March 27, 1999, comprehensive loss was approximately $(274.0) thousand and $(1.0) million, respectively. Other comprehensive income refers to revenue, expenses, gains and losses that are reflected in stockholders' equity but excluded from net earnings. For the Company, the components of other comprehensive income are principally foreign currency translation adjustments and minimum pension liability adjustments. For the quarters ended March 31, 2000 and March 27, 1999, other comprehensive loss, net of tax, was approximately $(1.6) million and $(2.3) million, respectively.
6. Segment Information:
For detailed information regarding the Company's reportable segments, see Note 13 to the Consolidated Financial Statements of the Company for the year ended December 31, 1999, set forth in the Company's Annual Report on Form 10-K.
The table below presents information about reported segments for the quarters ended March 31, 2000 and March 27, 1999.
|
European Roll Coating |
U.S. Fabrication |
European Fabrication |
Total |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Three months ended March 31, 2000 | ||||||||||||
Sales | $ | 40,094 | $ | 85,061 | $ | 18,056 | $ | 143,211 | ||||
EBITDA | 6,127 | 4,270 | 2,349 | 12,746 | ||||||||
Three months ended March 27, 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
Sales | $ | 36,175 | $ | 81,000 | $ | 16,119 | $ | 133,294 | ||||
EBITDA | 4,893 | 5,515 | 1,759 | 12,167 |
7
A reconciliation of total segment sales to total consolidated sales and of total segment EBITDA to total consolidated earnings before income taxes, for the quarters ended March 31, 2000 and March 27, 1999, is as follows:
|
Quarter Ended March 31, 2000 |
Quarter Ended March 27, 1999 |
|||||
---|---|---|---|---|---|---|---|
Sales | |||||||
Total segment sales | $ | 143,211 | $ | 133,294 | |||
Eliminations | (938 | ) | (907 | ) | |||
Consolidated net sales | $ | 142,273 | $ | 132,387 | |||
EBITDA | |||||||
Total EBITDA for reportable segments | $ | 12,746 | $ | 12,167 | |||
Expenses that are not segment specific | (1,192 | ) | (1,321 | ) | |||
Depreciation and amortization | (3,758 | ) | (3,390 | ) | |||
Interest expense, net | (5,438 | ) | (5,258 | ) | |||
Consolidated earnings before income taxes | $ | 2,358 | $ | 2,198 | |||
8
The following table reflects revenues from external customers by groups of similar products for the quarters ended March 31, 2000 and March 27, 1999:
Customers/Markets |
Primary Products |
Quarter Ended March 31, 2000 |
Quarter Ended March 27, 1999 |
|||||
---|---|---|---|---|---|---|---|---|
Original Equipment Manufacturers ("OEMs") |
|
Painted aluminum sheet and coil; fabricated painted aluminum, laminated and fiberglass panels; RV doors, windows and roofing; and composite building panels |
|
$ |
71,477 |
|
$ |
67,252 |
Rural Contractors |
|
Steel and aluminum roofing and siding |
|
|
22,344 |
|
|
22,771 |
Home Centers |
|
Raincarrying systems, roofing accessories, windows, doors, and shower enclosures |
|
|
17,736 |
|
|
15,754 |
Manufactured Housing |
|
Steel siding and trim components |
|
|
9,658 |
|
|
11,650 |
Distributors |
|
Metal coils, raincarrying systems and roofing accessories |
|
|
7,831 |
|
|
4,898 |
Industrial and Architectural Contractors |
|
Standing seam panels and siding and roofing accessories |
|
|
4,891 |
|
|
4,369 |
Home Improvement Contractors |
|
Vinyl replacement windows; metal roofing and insulated roofing panels; shower, patio and entrance doors; and awnings |
|
|
8,336 |
|
|
5,693 |
|
|
|
|
|
|
|
||
|
|
|
|
$ |
142,273 |
|
$ |
132,387 |
|
|
|
|
|
|
|
9
7. Subsequent Event:
On April 10, 2000, the Company, through its wholly owned subsidiary Amerimax Home Products, Inc., acquired substantially all of the assets and assumed certain liabilities of Gutter World, Inc. and Global Expanded Metals, Inc., companies under common control, ("Gutter World" and "Global", respectively). The purchase price, including approximately $345.0 thousand in acquisition-related fees and expenses, was approximately $45.6 million in cash. Gutter World is a manufacturer of raincarrying accessories, such as gutter guards, water diverters and downspout strainers, as well as door guards. Global manufactures expanded metal products.
In addition, effective April 10, 2000, the Company amended its Credit Agreement to, among other items, permit the acquisition of Gutter World and Global; provide an additional term loan of $40.0 million; and permanently waive the 1999 Excess Cash Flow Provision (as defined in the Credit Agreement).
8. Supplemental Condensed Combined Financial Statements:
On September 25, 1996, Euramax purchased the Company from Alumax. The acquisition was financed, in part, through Senior Subordinated Notes due 2006 (the "Notes"). Euramax International Limited, Euramax European Holdings Limited and Euramax European Holdings B.V. are co-obligors under the Notes (the "Co-Obligors"). Euramax International, Inc. has provided a full and unconditional guarantee of the Notes ("Parent Guarantor"). In addition, Amerimax Holdings, Inc., Amerimax Fabricated Products, Inc., Euramax International Holdings Limited and Euramax Continental Limited, holding company subsidiaries of Euramax, have provided full and unconditional guarantees of the Notes (collectively, the "Guarantor Subsidiaries"). The following supplemental condensed combining financial statements as of March 31, 2000, and December 31, 1999, and for the quarters ended March 31, 2000, and March 27, 1999, reflect the financial position, results of operations, and cash flows of each of the Parent Guarantor, the Co-Obligors, and such combined information of the Guarantor Subsidiaries and the non-guarantor subsidiaries, principally the operating subsidiaries, (collectively, the "Non-Guarantor Subsidiaries"). The Co-Obligors and Guarantors are wholly-owned subsidiaries of Euramax and are each jointly, severally, fully, and unconditionally liable under the Notes. Separate complete financial statements of each Co-Obligor and Guarantor are not presented because management has determined that they are not material to investors.
|
Quarter ended March 31, 2000 |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Euramax International, Inc. (Parent Guarantor) |
Euramax International Limited (Co-obligor) |
Euramax European Holdings Limited (Co-obligor) |
Euramax European Holdings B.V. (Co-obligor) |
Guarantor Subsidiaries |
Non- Guarantor Subsidiaries |
Eliminations |
Consolidated Totals |
|||||||||||||||||
Net sales | $ | | $ | | $ | | $ | | $ | | $ | 142,273 | $ | | $ | 142,273 | |||||||||
Costs and expenses: | |||||||||||||||||||||||||
Cost of goods sold | | | | | | 116,827 | | 116,827 | |||||||||||||||||
Selling and general | 799 | 22 | | | 240 | 12,718 | | 13,779 | |||||||||||||||||
Depreciation and amortization | | | | | 90 | 3,668 | | 3,758 | |||||||||||||||||
Earnings (loss) from operations | (799 | ) | (22 | ) | | | (330 | ) | 9,060 | | 7,909 | ||||||||||||||
Equity in earnings of subsidiaries | 2,067 | 2,688 | 843 | 3,498 | 3,985 | | (13,081 | ) | | ||||||||||||||||
Interest income (expense), net | (376 | ) | (24 | ) | (97 | ) | (35 | ) | 612 | (5,518 | ) | | (5,438 | ) | |||||||||||
Other income (expense), net | | | (433 | ) | (2,048 | ) | 87 | 2,281 | | (113 | ) | ||||||||||||||
Earnings before income taxes | 892 | 2,642 | 313 | 1,415 | 4,354 | 5,823 | (13,081 | ) | 2,358 | ||||||||||||||||
Provision (benefit) for income taxes | (458 | ) | (9 | ) | (152 | ) | (721 | ) | 151 | 2,197 | 1,008 | ||||||||||||||
Net earnings | $ | 1,350 | $ | 2,651 | $ | 465 | $ | 2,136 | $ | 4,203 | $ | 3,626 | $ | (13,081 | ) | $ | 1,350 | ||||||||
10
|
Quarter Ended March 27, 1999 |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Euramax International, Inc. (Parent Guarantor) |
Euramax International Limited (Co-obligor) |
Euramax European Holdings Limited (Co-obligor) |
Euramax European Holdings B.V. (Co-obligor) |
Guarantor Subsidiaries |
Non- Guarantor Subsidiaries |
Eliminations |
Consolidated Totals |
|||||||||||||||||
Net sales | $ | | $ | | $ | | $ | | $ | | $ | 132,387 | $ | | $ | 132,387 | |||||||||
Costs and expenses: | |||||||||||||||||||||||||
Cost of goods sold | | | | | | 107,790 | | 107,790 | |||||||||||||||||
Selling and general | | 739 | | 1 | (62 | ) | 12,494 | | 13,172 | ||||||||||||||||
Depreciation and amortization | | | | | 17 | 3,373 | | 3,390 | |||||||||||||||||
Earnings (loss) from operations | | (739 | ) | | (1 | ) | 45 | 8,730 | | 8,035 | |||||||||||||||
Equity in earnings of subsidiaries | | 1,744 | 702 | 3,024 | 360 | | (5,830 | ) | | ||||||||||||||||
Interest income (expense), net | | | (124 | ) | (15 | ) | 23 | (5,142 | ) | | (5,258 | ) | |||||||||||||
Other income (expense), net | | | (848 | ) | (2,953 | ) | (23 | ) | 3,245 | | (579 | ) | |||||||||||||
Earnings (loss) before income taxes | | 1,005 | (270 | ) | 55 | 405 | 6,833 | (5,830 | ) | 2,198 | |||||||||||||||
Provision (benefit) for income taxes | | (233 | ) | (319 | ) | (1,212 | ) | 18 | 2,706 | | 960 | ||||||||||||||
Net earnings | | 1,238 | 49 | 1,267 | 387 | 4,127 | (5,830 | ) | 1,238 | ||||||||||||||||
Dividends on redeemable preference shares | | 1,622 | | | | | | 1,622 | |||||||||||||||||
Net earnings (loss) available for ordinary shareholders | $ | | $ | (384 | ) | $ | 49 | $ | 1,267 | $ | 387 | $ | 4,127 | $ | (5,830 | ) | $ | (384 | ) | ||||||
11
|
As of March 31, 2000 |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Euramax International, Inc. (Parent Guarantor) |
Euramax International Limited (Co-obligor) |
Euramax European Holdings Limited (Co-obligor) |
Euramax European Holdings B.V. (Co-obligor) |
Guarantor Subsidiaries |
Non- Guarantor Subsidiaries |
Eliminations |
Consolidated Totals |
|||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||
Cash and equivalents | $ | | $ | | $ | | $ | | $ | 4,986 | $ | 10,633 | $ | | $ | 15,619 | |||||||||
Accounts receivable, net | | 173 | | | | 93,447 | | 93,620 | |||||||||||||||||
Inventories | | | | | | 85,750 | | 85,750 | |||||||||||||||||
Other current assets | | | | | 2,534 | 3,553 | | 6,087 | |||||||||||||||||
Total current assets | | 173 | | | 7,520 | 193,383 | | 201,076 | |||||||||||||||||
Property, plant and equipment, net | | | | | 152 | 117,986 | | 118,138 | |||||||||||||||||
Amounts due from parent/affiliates | 79,036 | 75,375 | 46,933 | 44,043 | 336,435 | 120,227 | (702,049 | ) | | ||||||||||||||||
Goodwill, net | | | | | 8,296 | 72,412 | | 80,708 | |||||||||||||||||
Investment in consolidated subsidiaries | 118,481 | 19,531 | (9,828 | ) | 19,872 | 99,990 | | (248,046 | ) | | |||||||||||||||
Other assets | | 2,183 | 602 | 601 | 1,583 | 12,760 | | 17,729 | |||||||||||||||||
$ | 197,517 | $ | 97,262 | $ | 37,707 | $ | 64,516 | $ | 453,976 | $ | 516,768 | $ | (950,095 | ) | $ | 417,651 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||
Cash overdrafts | $ | | $ | | $ | | $ | | $ | 871 | $ | (257 | ) | $ | | $ | 614 | ||||||||
Accounts payable | | | | | 1,382 | 61,305 | | 62,687 | |||||||||||||||||
Accrued expenses and other current liabilities | (626 | ) | (2,353 | ) | (1,608 | ) | 6,399 | (3,530 | ) | 24,494 | | 22,776 | |||||||||||||
Current maturities of long-term debt | | | | | 4,056 | 2,086 | | 6,142 | |||||||||||||||||
Total current liabilities | (626 | ) | (2,353 | ) | (1,608 | ) | 6,399 | 2,779 | 87,628 | | 92,219 | ||||||||||||||
Long-term debt, less current maturities | | 70,605 | 27,179 | 37,216 | 61,485 | 35,348 | | 231,833 | |||||||||||||||||
Amounts due to parent/affiliates | 130,232 | 15,083 | 13,846 | 893 | 251,258 | 290,737 | (702,049 | ) | | ||||||||||||||||
Other liabilities | 2,203 | 421 | | | 651 | 25,530 | | 28,805 | |||||||||||||||||
Total liabilities | 131,809 | 83,756 | 39,417 | 44,508 | 316,173 | 439,243 | (702,049 | ) | 352,857 | ||||||||||||||||
Shareholders' equity: | |||||||||||||||||||||||||
Common stock | 500 | 2 | 78 | 23 | 35,001 | 4,983 | (40,087 | ) | 500 | ||||||||||||||||
Additional paid-in capital | 65,218 | 20,726 | 6,922 | 9,077 | 174,855 | 114,412 | (337,990 | ) | 53,220 | ||||||||||||||||
Retained earnings (deficit) | 1,088 | (1,355 | ) | (8,297 | ) | 15,294 | (69,772 | ) | (36,210 | ) | 117,127 | 17,875 | |||||||||||||
Accumulated other comprehensive loss | (1,098 | ) | (5,867 | ) | (413 | ) | (4,386 | ) | (2,281 | ) | (5,660 | ) | 12,904 | (6,801 | ) | ||||||||||
Total shareholders' equity | 65,708 | 13,506 | (1,710 | ) | 20,008 | 137,803 | 77,525 | (248,046 | ) | 64,794 | |||||||||||||||
$ | 197,517 | $ | 97,262 | $ | 37,707 | $ | 64,516 | $ | 453,976 | $ | 516,768 | $ | (950,095 | ) | $ | 417,651 | |||||||||
12
|
As of December 31, 1999 |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Euramax International, Inc. (Parent Guarantor) |
Euramax International Limited (Co-obligor) |
Euramax European Holdings Limited (Co-obligor) |
Euramax European Holdings B.V. (Co-obligor) |
Non- Guarantor Subsidiaries |
Guarantor Subsidiaries |
Eliminations |
Consolidated Totals |
|||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||
Cash and equivalents | $ | | $ | | $ | | $ | | $ | 1,537 | $ | 11,848 | $ | | $ | 13,385 | |||||||||
Accounts receivable, net | | 103 | | | 1,354 | 78,630 | | 80,087 | |||||||||||||||||
Inventories | | | | | 2,622 | 79,877 | | 82,499 | |||||||||||||||||
Other current assets | | | | | 1,467 | 2,804 | | 4,271 | |||||||||||||||||
Total current assets | | 103 | | | 6,980 | 173,159 | | 180,242 | |||||||||||||||||
Property, plant and equipment, net | | | | | 5,603 | 114,806 | | 120,409 | |||||||||||||||||
Amounts due from parent/affiliates | 76,535 | 81,757 | 46,846 | 49,743 | 345,507 | 141,423 | (741,811 | ) | | ||||||||||||||||
Goodwill, net | | | | | 8,368 | 74,219 | | 82,587 | |||||||||||||||||
Investment in consolidated subsidiaries | 117,490 | 17,918 | (10,829 | ) | 17,360 | 98,088 | | (240,027 | ) | | |||||||||||||||
Other assets | | 2,267 | 635 | 658 | 1,691 | 11,170 | | 16,421 | |||||||||||||||||
$ | 194,025 | $ | 102,045 | $ | 36,652 | $ | 67,761 | $ | 466,237 | $ | 514,777 | $ | (981,838 | ) | $ | 399,659 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||
Cash overdrafts | $ | | $ | | $ | | $ | | $ | (2,030 | ) | $ | 4,039 | $ | | $ | 2,009 | ||||||||
Accounts payable | 2 | | | | 230 | 49,450 | | 49,682 | |||||||||||||||||
Accrued expenses and other current liabilities | (340 | ) | (772 | ) | (595 | ) | 4,095 | 1,316 | 28,041 | | 31,745 | ||||||||||||||
Current maturities of long-term debt | | | | | 5,540 | 696 | | 6,236 | |||||||||||||||||
Total current liabilities | (338 | ) | (772 | ) | (595 | ) | 4,095 | 5,056 | 82,226 | | 89,672 | ||||||||||||||
Long-term debt, less current maturities | | 70,605 | 27,179 | 37,216 | 45,568 | 34,475 | | 215,043 | |||||||||||||||||
Amounts due to parent/affiliates | 126,739 | 19,861 | 12,275 | 7,571 | 279,293 | 296,072 | (741,811 | ) | | ||||||||||||||||
Other liabilities | 2,203 | 421 | | | 647 | 26,605 | | 29,876 | |||||||||||||||||
Total liabilities | 128,604 | 90,115 | 38,859 | 48,882 | 330,564 | 439,378 | (741,811 | ) | 334,591 | ||||||||||||||||
Shareholders' equity: | |||||||||||||||||||||||||
Common stock | 500 | 2 | 78 | 23 | 35,001 | 4,983 | (40,087 | ) | 500 | ||||||||||||||||
Additional paid-in capital | 65,218 | 20,726 | 6,922 | 9,077 | 174,855 | 114,412 | (337,990 | ) | 53,220 | ||||||||||||||||
Retained earnings (deficit) | (262 | ) | 16,787 | 4,170 | 20,049 | (46,325 | ) | (14,760 | ) | 36,866 | 16,525 | ||||||||||||||
Dividends declared | | (20,793 | ) | (12,932 | ) | (6,891 | ) | (27,650 | ) | (25,076 | ) | 93,342 | | ||||||||||||
Accumulated other comprehensive loss | (35 | ) | (4,792 | ) | (445 | ) | (3,379 | ) | (208 | ) | (4,160 | ) | 7,842 | (5,177 | ) | ||||||||||
Total shareholders' equity | 65,421 | 11,930 | (2,207 | ) | 18,879 | 135,673 | 75,399 | (240,027 | ) | 65,068 | |||||||||||||||
$ | 194,025 | $ | 102,045 | $ | 36,652 | $ | 67,761 | $ | 466,237 | $ | 514,777 | $ | (981,838 | ) | $ | 399,659 | |||||||||
13
|
Quarter Ended March 31, 2000 |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Euramax International, Inc. (Parent Guarantor) |
Euramax International Limited (Co-obligor) |
Euramax European Holdings Limited (Co-obligor) |
Euramax European Holdings B.V. (Co-obligor) |
Guarantor Subsidiaries |
Non- Guarantor Subsidiaries |
Consolidated Totals |
|||||||||||||||
Net cash (used in) provided by operating activities | $ | (1,004 | ) | $ | (1,604 | ) | $ | (1,387 | ) | $ | 1,258 | $ | 5,175 | $ | (16,304 | ) | $ | (13,866 | ) | |||
Cash flows from investing activities: | ||||||||||||||||||||||
Proceeds from sales of assets | | | | | | 5 | 5 | |||||||||||||||
Capital expenditures | | | | | (10 | ) | (2,685 | ) | (2,695 | ) | ||||||||||||
Net cash used in investing activities | | | | | (10 | ) | (2,680 | ) | (2,690 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Repayment of debt | | | | | (1,566 | ) | (2,438 | ) | (4,004 | ) | ||||||||||||
Proceeds from debt | | | | | 16,000 | 5,695 | 21,695 | |||||||||||||||
Changes in cash overdrafts | | | | | 2,814 | (4,209 | ) | (1,395 | ) | |||||||||||||
Due to/from parent or affiliate | 1,004 | 1,604 | 1,484 | (977 | ) | (18,964 | ) | 15,849 | | |||||||||||||
Net cash provided by (used in) financing activities | 1,004 | 1,604 | 1,484 | (977 | ) | (1,716 | ) | 14,897 | 16,296 | |||||||||||||
Effect of exchange rate changes on cash | | | (97 | ) | (281 | ) | | 2,872 | 2,494 | |||||||||||||
Net increase (decrease) in cash and equivalents | | | | | 3,449 | (1,215 | ) | 2,234 | ||||||||||||||
Cash and equivalents at beginning of period | | | | | 1,537 | 11,848 | 13,385 | |||||||||||||||
Cash and equivalents at end of period | $ | | $ | | $ | | $ | | $ | 4,986 | $ | 10,633 | $ | 15,619 | ||||||||
|
Quarter Ended March 27, 1999 |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Euramax International, Inc. (Parent Guarantor) |
Euramax International Limited (Co-obligor) |
Euramax European Holdings Limited (Co-obligor) |
Euramax European Holdings B.V. (Co-obligor) |
Guarantor Subsidiaries |
Non- Guarantor Subsidiaries |
Consolidated Totals |
|||||||||||||||
Net cash (used in) provided by operating activities | $ | | $ | (761 | ) | $ | (50 | ) | $ | 3,399 | $ | (317 | ) | $ | (2,990 | ) | $ | (719 | ) | |||
Cash flows from investing activities: | ||||||||||||||||||||||
Purchase of business | | | | | | (2,769 | ) | (2,769 | ) | |||||||||||||
Proceeds from sales of assets | | | | | | 558 | 558 | |||||||||||||||
Capital expenditures | | | | | (30 | ) | (2,389 | ) | (2,419 | ) | ||||||||||||
Net cash used in investing activities | | | | | (30 | ) | (4,600 | ) | (4,630 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Repayment of debt | | | | | (2,916 | ) | (811 | ) | (3,727 | ) | ||||||||||||
Proceeds from debt | | | | | 9,000 | | 9,000 | |||||||||||||||
Changes in cash overdrafts | | | | | 2,356 | (1,676 | ) | 680 | ||||||||||||||
Due to/from parent or affiliate | | 761 | 274 | (3,068 | ) | (8,016 | ) | 10,049 | | |||||||||||||
Net cash provided by (used in) financing activities | | 761 | 274 | (3,068 | ) | 424 | 7,562 | 5,953 | ||||||||||||||
Effect of exchange rate changes on cash | | | (224 | ) | (331 | ) | | 4,239 | 3,684 | |||||||||||||
Net increase in cash and equivalents | | | | | 77 | 4,211 | 4,288 | |||||||||||||||
Cash and equivalents at beginning of period | | | | | 12 | 19,032 | 19,044 | |||||||||||||||
Cash and equivalents at end of period | $ | | $ | | $ | | $ | | $ | 89 | $ | 23,243 | $ | 23,332 | ||||||||
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements included elsewhere in this document, as well as the year-end Consolidated Financial Statements and Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
The Company is an international producer of value-added aluminum, steel, vinyl and fiberglass fabricated products, with facilities strategically located in the United Kingdom ("U.K."), The Netherlands, France, and all major regions of the continental United States ("U.S."). Euramax's core products include specialty coated coils, aluminum recreational vehicle ("RV") sidewalls, RV doors, farm and agricultural panels, roofing accessories, metal and vinyl raincarrying systems, soffit and fascia systems, and vinyl replacement windows. The Company's customers include original equipment manufacturers ("OEMs") such as RV, commercial panel and transportation industry manufacturers; rural contractors; home centers; manufactured housing producers; distributors; industrial and architectural contractors; and home improvement contractors.
Financial results for the quarter ended March 31, 2000, compared to the same period of 1999, reflect continued strength in the Company's RV markets, a sharp increase in demand for painted coil in Europe, and higher aluminum costs. These conditions, together with last year's acquisition of Atlanta Metal Products, Inc., enabled a 7.5% increase in net sales. Higher aluminum costs enabled the Company to increase average selling prices which, in Europe, contributed to a substantial increase in earnings from operations. This improvement was slightly offset by weakening European currencies, relative to the U.S. Dollar. Higher European operating earnings were further offset by lower U.S. operating margins primarily related to the longer time period in which raw material cost increases are passed on in the form of higher selling prices.
Effective April 10, 2000, the Company, through its wholly owned subsidiary Amerimax Home Products, Inc., acquired substantially all of the assets and assumed certain liabilities of Gutter World, Inc. ("Gutter World") and Global Expanded Metals, Inc. ("Global"). Gutter World manufactures a variety of raincarrying accessories, including gutter and door guards, water diverters and downspout strainers. Global manufactures expanded metal products. The Company expects these acquisitions to increase net sales in its U.S. Fabrication segment, particularly those to home centers and distributors. Consistent with the Company's business strategy, management expects to continue identifying and acquiring businesses that will allow it to expand its customer base, geographic coverage and product offerings.
15
Results of Operations
Quarter Ended March 31, 2000 as Compared to Quarter Ended March 27, 1999
The following table sets forth the Company's Statements of Earnings Data expressed as a percentage of net sales:
|
Quarters Ended |
||||
---|---|---|---|---|---|
|
March 31, 2000 |
March 27, 1999 |
|||
Statements of Earnings Data: | |||||
Net sales | 100.0 | % | 100.0 | % | |
Costs and expenses: | |||||
Cost of goods sold | 82.1 | 81.4 | |||
Selling and general | 9.7 | 9.9 | |||
Depreciation and amortization | 2.6 | 2.6 | |||
Earnings from operations | 5.6 | 6.1 | |||
Interest expense, net | (3.8 | ) | (4.0 | ) | |
Other expenses, net | (0.1 | ) | (0.4 | ) | |
Earnings before income taxes | 1.7 | 1.7 | |||
Provision for income taxes | .7 | .7 | |||
Net earnings | 1.0 | % | 1.0 | % | |
|
Net Sales |
Earnings from Operations |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dollars in Thousands |
March 31, 2000 |
March 27, 1999 |
Increase/ (Decrease) |
March 31, 2000 |
March 27, 1999 |
Increase/ (Decrease) |
||||||||||
United States | $ | 85,062 | $ | 81,000 | 5.0% | $ | 1,462 | $ | 3,748 | (61.0)% | ||||||
Europe | 57,211 | 51,387 | 11.3% | 6,447 | 4,287 | 50.4 % | ||||||||||
Totals | $ | 142,273 | $ | 132,387 | 7.5% | $ | 7,909 | $ | 8,035 | (1.6)% | ||||||
Net Sales. Net sales increased 7.5% to $142.3 million for the quarter ended March 31, 2000, from $132.4 million for the quarter ended March 27, 1999. Sales in the U.S. increased primarily from robust first quarter sales to home improvement contractors and distributors and solid increases in sales to the home centers, offset by lower sales to the manufactured housing market. Increases in sales to distributors are primarily the result of the second quarter 1999 acquisition of Atlanta Metal Products, Inc. (see Note 2 to the Consolidated Financial Statements of the Company for the year ended December 31, 1999, set forth in the Company's Annual Report on Form 10-K). In addition, shipments to the RV industry remain strong, consistent with a third consecutive year of growth in this industry. The RV industry expects growth to continue due to favorable demographics and growing popularity of RV travel. However, other factors, including higher fuel costs and higher interest rates, may negatively impact the continued growth of this industry.
Despite a decline in reported net sales of approximately $4.8 million due to the weakening of foreign exchange rates relative to the U.S. Dollar, first quarter net sales in Europe increased by approximately 11% over first quarter 1999 sales. Sales in Europe increased primarily from strong demand for specialty coated coil in continental Europe resulting from economic improvements in Europe that began in the second half of 1999 and have continued into 2000.
Cost of Goods Sold. Cost of goods sold, as a percentage of net sales, increased to 82.1% for the quarter ended March 31, 2000, from 81.4% for the quarter ended March 27, 1999. This increase is primarily attributable to an increase in raw material aluminum prices.
16
Selling and General. Selling and general expenses, as a percentage of net sales, decreased to 9.7% for the quarter ended March 31, 2000, from 9.9% for the quarter ended March 27, 1999. This decrease is primarily attributable to higher net sales and lower levels of spending on information technology.
Depreciation and Amortization. Depreciation and amortization, as a percentage of net sales, was 2.6% for the quarters ended March 31, 2000 and March 27, 1999.
Earnings from Operations. As noted above, earnings from operations in the U.S. decreased to $1.5 million for the quarter ended March 31, 2000, from $3.7 million for the quarter ended March 27, 1999, and earnings from operations in Europe increased to $6.4 million for the quarter ended March 31, 2000, from $4.3 million for the quarter ended March 27, 1999. Earnings from operations in the U.S. were more negatively impacted by the higher raw material costs than were earnings in Europe, as, historically, the U.S. operations are not able to pass along raw material price increases as quickly as the European operations. The ability to pass along price increases at a quicker pace in Europe, together with strong European demand, enabled a sharp increase in earnings from operations in Europe. This increase was achieved despite weakening European currencies, which reduced reported operating earnings by $689.0 thousand compared to the first quarter of 1999.
Interest Expense, Net. Net interest expense, increased to $5.4 million for the quarter ended March 31, 2000, from $5.3 million for the quarter ended March 27, 1999.
Other Expenses, Net. Other expenses were not significant for the quarters ended March 31, 2000 and March 27, 1999.
Provision for income taxes. The income tax provision for the period is based on the effective tax rate expected to be applicable for the full year. The effective rate for the provision for income taxes decreased to 42.7% from 43.7% for the quarters ended March 31, 2000 and March 27, 1999, respectively. The lower rate is primarily due to a decrease in U.S. earnings coupled with an increase in European earnings. U.S. earnings are typically subject to higher tax rates than European earnings, due in part to state income taxes.
Liquidity and Capital Resources
Liquidity. The Company's primary liquidity needs arise from debt service incurred in connection with acquisitions and the funding of capital expenditures. As of March 31, 2000, the Company had outstanding indebtedness of $238.0 million, representing an increase of $16.7 million as compared to December 31, 1999. This increase in debt is related to seasonal borrowing needs of the business and higher aluminum costs. Included in such indebtedness was approximately $103.0 million under the Company's Credit Agreement, consisting of $27.1 million under the Company's Term Loans and $75.9 million under the Company's Revolving Credit Facility. The undrawn amount of the Revolving Credit Facility at March 31, 2000, was approximately $24.1 million, which was available for working capital and general corporate purposes, subject to borrowing base limitations. As of March 31, 2000, this amount was fully available.
The Company's leveraged financial position requires that a substantial portion of the Company's cash flow from operations be used to pay interest on the Notes, principal and interest under the Company's Credit Agreement and other indebtedness. Significant increases in the floating interest rates on the Term Loans and Revolving Credit Facility would result in increased debt service requirements, which may reduce the funds available for capital expenditures and other operational needs. In addition, the Company's leveraged position may impede its ability to obtain financing in the future for working capital, capital expenditures and general corporate purposes. Further, the Company's leveraged position may make it more vulnerable to economic downturns and may limit its ability to withstand competitive pressures.
The Company's primary source of liquidity is funds generated from operations, which are supplemented by borrowings under the Credit Agreement. Net cash used in operating activities for the quarters
17
ended March 31, 2000 and March 27, 1999, were $13.9 million and $719.0 thousand, respectively. The increase in cash used in operating activities is primarily related to an increase in accounts receivable resulting from stronger sales in both the U.S. and Europe for the quarter ended March 31, 2000, as compared to the quarter ended March 27, 1999. Similarly, borrowings under the Credit Agreement increased approximately $12.7 million to fund the increased working capital needs of the business during the first quarter of 2000 as compared to the first quarter of 1999.
The Company believes that cash generated from operations and, subject to borrowing base limitations, borrowings under the Company's Credit Agreement will be adequate to meet its needs for the foreseeable future, although no assurance to that effect can be given.
Capital Expenditures. The Company's capital expenditures were $2.7 million and $2.4 million for the quarters ended March 31, 2000 and March 27, 1999, respectively. Capital expenditures in 2000 include approximately $1.3 million for several projects related to business expansion and cost reduction activities. Capital expenditures in 1999 included approximately $631.1 thousand for improvements to the paintline in Corby, England. The balance of capital expenditures in both periods primarily relate to purchases and upgrades of fabricating equipment, transportation and material moving equipment, and information systems.
The Company has made and will continue to make capital expenditures to comply with Environmental Laws. The Company estimates that its environmental capital expenditures will be approximately $250.0 thousand in 2000.
Working Capital Management. Working capital was $108.9 million as of March 31, 2000, compared to $90.6 million as of December 31, 1999. The increase in working capital is primarily attributable to an increase in accounts receivable due to an increase in sales. The Company continues to aggressively manage working capital levels and believes that current levels of working capital represent a liquid source of funds available for future cash flows.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. For fair-value hedge transactions in which the Company is hedging changes in the fair value of an asset, liability, or firm commitment, changes in the fair value of the derivative instrument will generally be offset in the income statement by changes in the hedged item's fair value. For cash-flow hedge transactions, in which the Company is hedging the variability of cash flows related to a variable-rate asset, liability, or a forecasted transaction, changes in the fair value of the derivative instrument will be reported in other comprehensive income. The gains and losses on the derivative instrument that are reported in other comprehensive income will be reclassified as earnings in the periods in which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all hedges will be recognized in current period earnings. Management is currently reviewing the provisions of SFAS No. 133 and does not believe that the Company's financial statements will be materially impacted by the adoption.
Environmental Matters
The Company's exposure to environmental matters has not changed significantly from the year ended December 31, 1999. For detailed information regarding environmental matters, see "Management's
18
Discussion and AnalysisRisk Management" set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Note Regarding Forward-Looking Statements: The Management's Discussion and Analysis and other sections of this Form 10-Q may contain forward-looking statements that are based on current expectations, estimates and projections about the industries in which the Company operates, and management's beliefs and assumptions. Such forward-looking statements include terminology such as "expects," "anticipates," "intends," "plans," "believes," "estimates," or variations of such words and similar expressions regarding beliefs, plans, expectations or intentions regarding the future. Forward-looking statements in this report include, but are not limited to: (1) statements regarding expected growth in the home center and distributor markets resulting from the acquisition of Gutter World and Global; (2) statements regarding the Company's expectations to continue acquiring businesses that will allow it to expand its customer base, geographic coverage and product offerings; (3) statements regarding industry expectations of continued growth in the U.S. RV industry; and (4) statements regarding the Company's belief that cash from operations and borrowings under the Credit Agreement will be adequate to meet its needs for the foreseeable future. These forward-looking statements are based on a number of assumptions that could ultimately prove inaccurate, and, therefore, there can be no assurance that they will prove to be accurate. All such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Important factors that could cause future financial performance to differ materially and significantly from past results and from those expressed or implied in this document include, without limitation, the risks of acquisition of businesses (including limited knowledge of the businesses acquired and misrepresentations by sellers), changes in business strategy or development plans, the cyclical demand for the Company's products, the supply and/or price of aluminum and other raw materials, currency exchange rate fluctuations, environmental regulations, availability of financing, competition, reliance on key management personnel, ability to manage growth, loss of customers, and a variety of other factors. For further information on these and other risks, see the "Risk Factors" section of Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1999, as well as the Company's other filings with the Securities and Exchange Commission. The Company assumes no obligation to update publicly its forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's exposure to and management of market risk from changes in interest rates, exchange rates and commodity prices have not changed significantly from the year ended December 31, 1999. For further information regarding the Company's risk management, see "Management's Discussion and AnalysisRisk Management" and "Item 7A. Quantitative and Qualitative Disclosures about Market Risk" set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Part IIOther Information
Item 6. Exhibits and Reports on Form 8-K
(a)(1) The following consolidated financial statements of Euramax International, Inc. and its subsidiaries are included in Part I, Item 1.
Condensed Consolidated Statements of Earnings for the quarters ended March 31, 2000 and March 27, 1999
Condensed Consolidated Balance Sheets at March 31, 2000 and December 31, 1999
Condensed Consolidated Statements of Cash Flows for the quarters ended March 31, 2000 and March 27, 1999
Notes to Condensed Consolidated Financial Statements
(b) The Company filed no reports on Form 8-K during the three months ended March 31, 2000.
19
(c) Exhibits:
2.1** | Purchase Agreement dated as of April 28, 1997, among the Company and Genstar Capital Corporation ("GCC"), Ontario Teachers' Pension Plan Board and the Management Stockholders of Gentek Holdings, Inc. ("Holdings") as sellers GCC as sellers' representative; Holdings and Gentek Building Products, Inc. ("GBPI"). (Incorporated by reference to Exhibit 2.1 of the Registrant's Form 8-K filed August 1, 1997). | |
2.2****** |
|
Proposals for the acquisition of the entire issued share capital of Euramax International Limited by Euramax International, Inc. to be effected by means of a Scheme Arrangement under Section 425 of the Companies Act 1985 |
3.1* |
|
Articles of Association of Euramax International plc |
3.2* |
|
Memorandum and Articles of Association of Euramax European Holdings plc |
3.3* |
|
Articles of Association of Euramax International B.V. |
3.4* |
|
Articles of Incorporation of Amerimax Holdings, Inc. |
3.5* |
|
Bylaws of Amerimax Holdings, Inc. |
4.3* |
|
Indenture, dated as of September 25, 1996, by and among Euramax International plc, Euramax European Holdings plc, Euramax European Holdings B.V., Amerimax Holdings, Inc. and the Chase Manhattan Bank, as Trustee. |
4.4* |
|
Deposit Agreement, dated as of September 25, 1996, by and among Euramax International plc, Euramax European Holdings plc, Euramax European Holdings B.V., and The Chase Manhattan Bank, as book-entry depositary |
4.5* |
|
Registration Rights Agreement, dated as of September 25, 1996, by and among Euramax International plc, Euramax European Holdings plc, Euramax European Holdings B.V., Amerimax Holdings, Inc. and J.P. Morgan Securities Inc. and Goldman Sachs & Co. |
4.6* |
|
Purchase Agreement dated as of September 18, 1996, by and among Euramax International Ltd., Euramax European Holdings Ltd., Euramax European Holdings B.V., Amerimax Holdings, Inc. and J.P. Morgan Securities Inc. and Goldman Sachs & Co. |
4.7******* |
|
Supplemental Indenture, dated as of November 18, 1999, among Euramax International Limited, Euramax European Holdings plc, Euramax European Holdings, B.V., as Issuers, Amerimax Holdings, Inc., as Guarantor, and The Chase Manhattan Bank, as Trustee |
4.8******* |
|
Amended and Restated Supplemental Indenture, dated as of December 14, 1999, among Euramax International Limited, Euramax European Holdings plc, Euramax European Holdings, B.V., as Issuers, Amerimax Holdings, Inc., as Guarantor, and The Chase Manhattan Bank, as Trustee |
10.1* |
|
Purchase Agreement, dated as of June 24, 1996, by and between Euramax International Ltd. and Alumax Inc. |
10.2* |
|
Executive Employment Agreement, dated as of September 25, 1996, by and between J. David Smith and Euramax International plc |
10.3* |
|
Executive Employment Agreement, dated as of September 25, 1996, by and between Frank T. Geist and Euramax International plc |
|
|
|
20
10.5* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Amerimax Holdings, Inc. in favor of Banque Paribas, as agent |
10.6* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Amerimax Fabricated Products, Inc. in favor of Banque Paribas, as agent |
10.7* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Amerimax Home Products, Inc. in favor of Banque Paribas, as agent |
10.8* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Amerimax Building Products, Inc. in favor of Banque Paribas, as agent |
10.9* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Amerimax Coated Products, Inc. in favor of Banque Paribas, as agent |
10.10* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Johnson Door Products, Inc. in favor of Banque Paribas, as agent |
10.11* |
|
Domestic Security Agreement, dated as of September 25, 1996, by Amerimax Specialty Products, Inc. in favor of Banque Paribas, as agent |
10.12* |
|
Domestic Subsidiary Guaranty, dated as of September 25, 1996, by each of Amerimax Home Products, Inc., Amerimax Specialty Products, Inc., Amerimax Building Products, Inc., Amerimax Coated Products and Johnson Door Products, Inc. in favor of the Guarantied Parties referred to therein |
10.13* |
|
U.S. Holdings Guaranty, dated as of September 25, 1996, by Amerimax Holdings, Inc. in favor of the Guaranteed Parties referred to therein |
10.14* |
|
U.S. Holdings Pledge Agreement, dated as of September 25, 1996, by Amerimax Holdings, Inc., to Banque Paribas, as Agent |
10.15* |
|
U.S. Operating Co. Guaranty, dated as of September 25, 1996, by Amerimax Fabricated Products, Inc. in favor of the Guarantied Parties referred to therein |
10.16* |
|
U.S. Operating Co. Pledge Agreement dated as of September 25, 1996, by Amerimax Fabricated Products, Inc. to Banque Paribas, as Agent |
10.17* |
|
Euramax Assignment Agreement, dated as of September 25, 1996, by Euramax International plc in favor of Banque Paribas, as Agent |
10.18* |
|
Euramax Pledge Agreement, dated as of September 25, 1996, by Euramax International plc to Banque Paribas, as Agent |
10.19* |
|
Building Products Pledge Agreement, dated as of September 25, 1996, by Amerimax Building Products, Inc. to Banque Paribas, as Agent |
10.20* |
|
Dutch Holdings Guaranty, dated as of September 25, 1996, by Euramax European Holdings B.V. in favor of the Guarantied Parties referred to therein |
10.21* |
|
Dutch Company Guaranty, dated as of September 25, 1996, by Euramax Netherlands B.V., in favor of the Guarantied Parties referred to therein |
10.22* |
|
Dutch Operating Co. Guaranty, dated as of September 25, 1996, by Euramax Europe B.V., in favor of the Guarantied Parties referred to therein |
10.23* |
|
Dutch Subsidiary Guaranty, dated as of September 25, 1996, by Euramax Coated Products B.V., in favor of the Guarantied Parties referred to therein |
|
|
|
21
10.24*** |
|
Amended and Restated Credit Agreement, dated as of July 16, 1997, by and among Amerimax Fabricated Products, Euramax Holdings Limited, Euramax Europe B.V., Euramax Netherlands B.V., as Borrowers; Euramax International plc, Amerimax Holdings, Inc., Euramax European Holdings plc, Euramax European Holdings B.V., Euramax Europe Limited and certain of their operating subsidiaries, as other Loan Parties; Banque Paribas, as Agent, as a Lender and as the Issuer; and the other lenders named therein. (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 10-Q for the quarter ended June 28, 1997.) |
10.25*** |
|
Amendment to Credit Agreement, dated as of December 18, 1997, by and among Amerimax Fabricated Products, Euramax Holdings Limited, Euramax Europe B.V., Euramax Netherlands B.V., as Borrowers; Euramax International plc, Amerimax Holdings, Inc., Euramax European Holdings plc, Euramax European Holdings B.V., Euramax Europe Limited and certain of their operating subsidiaries, as other Loan Parties; Banque Paribas, as Agent, as a Lender and as the Issuer; and the other lenders named therein. (Incorporated by reference to Exhibit 10.25 of the Registrant's Form 10-K for the year ended December 26, 1997.) |
10.26**** |
|
Incentive Compensation Plan effective January 1, 1997, by Euramax International Limited |
10.27**** |
|
Phantom Stock Plan effective January 1, 1999, by Euramax International Limited |
10.28***** |
|
Amendment and Waiver dated as of April 6, 1999, among Euramax International Limited, and its subsidiaries, Paribas (as Agent and Lender), and the Lenders, to the Amended and Restated Credit Agreement dated as of July 16, 1997 |
10.29******* |
|
Amendment, dated as of December 8, 1999, among Euramax International Limited, the other Loan Parties, the Swing Loan Lender and the Issuer and Paribas, as Agent, to (a) the Amended and Restated Credit Agreement, dated as of July 16, 1997 and (b) the other Loan Documents |
10.30******* |
|
Amendment and Consent, dated as of December 9, 1999, among Euramax International Limited, the other Loan Parties, the Swing Loan Lender and the Issuer and Paribas, as Agent, to (a) Amended and Restated Credit Agreement, dated as of July 16, 1997 and (b) the other Loan Documents |
27 |
|
Financial Data Schedule |
* | Incorporated by reference to the Exhibit with the same number in the Registrant's Registration Statement on Form S-4 (333-05978) which became effective on February 7, 1997. | |
** | Incorporated by reference to the Exhibit with the same number in the Registrant's Annual Report on Form 10-K (333-05978) which was filed on March 12, 1998. | |
*** | Incorporated by reference to the Exhibit with the same number in the Registrant's Annual Report on Form 10-K (333-05978) which was filed on March 5, 1999. | |
**** | Incorporated by reference to the Exhibit with the same number in the Quarterly Report on Form 10-Q (333-05978) which was filed on April 26, 1999. | |
***** | Incorporated by reference to the Exhibit with the same number in the Quarterly Report on Form 10-Q (333-05978) which was filed on August 2, 1999. | |
****** | Incorporated by reference to the Exhibit with the same number in the Quarterly Report on Form 10-Q (333-05978) which was filed on November 3, 1999. | |
******* | Incorporated by reference to the Exhibit with the same number in the Registrant's Annual Report on Form 10-K (333-05978) which was filed on March 23, 2000. |
22
Pursuant to the requirements of Section 13 or 15(d) of the securities and exchange act of 1934, Euramax International, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Signature |
Title |
Date |
||
---|---|---|---|---|
/s/ J. DAVID SMITH J. David Smith |
Chief Executive Officer and President | May 11, 2000 | ||
/s/ R. SCOTT VANSANT R. Scott Vansant |
|
Chief Financial Officer and Secretary |
|
May 11, 2000 |
23