-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KKzu8XVAaWgdz3qsj/62Ej1aFLxPACmnFhqHzfLltBCWmngh1EwKRUlLQtSmzwRU cOPEi1+jk7x4sD+fkPe3yg== 0001047469-98-019305.txt : 19980513 0001047469-98-019305.hdr.sgml : 19980513 ACCESSION NUMBER: 0001047469-98-019305 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980328 FILED AS OF DATE: 19980512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EURAMAX INTERNATIONAL PLC CENTRAL INDEX KEY: 0001026743 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 981066997 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-05978 FILM NUMBER: 98616084 BUSINESS ADDRESS: STREET 1: 5335 TRIANGLE PARKWAY STREET 2: SUITE 550 CITY: NORCROSS STATE: GA ZIP: 30092 BUSINESS PHONE: 7704497066 MAIL ADDRESS: STREET 1: 5535 TRIANGLE PKWY CITY: NORCROSS STATE: GA ZIP: 30092 10-Q 1 FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 28, 1998 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 PLC (Exact name of registrant as specified in its charter) ENGLAND AND WALES 98-1066997 (State or other jurisdiction of (I.R.S. Employer Identification No. incorporation or organization) 5335 TRIANGLE PARKWAY, SUITE 550, 30092 NORCROSS, GEORGIA (Zip Code) (Address of principal executive offices)
------------------------ 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 12, 1998, Registrant had outstanding 1,000,000 Ordinary Shares and 34,000,000 Preference Shares. All of these shares were owned by affiliates. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
QUARTER ENDED QUARTER ENDED MARCH 29, MARCH 28, 1997 1998 -------------- -------------- Net sales......................................................................... $ 114,874 $ 143,089 Costs and expenses: Cost of goods sold.............................................................. 92,036 119,417 Selling and general............................................................. 10,639 12,079 Depreciation and amortization................................................... 2,695 3,054 -------------- -------------- 105,370 134,550 -------------- -------------- Earnings from operations...................................................... 9,504 8,539 Interest expense, net............................................................. (5,618) (6,060) Other expense, net................................................................ (40) (41) -------------- -------------- Earnings before income taxes.................................................. 3,846 2,438 Provision for income taxes........................................................ 1,241 1,019 -------------- -------------- Net Earnings...................................................................... 2,605 1,419 Dividends on redeemable preference shares......................................... 1,233 1,413 -------------- -------------- Net earnings available for ordinary shareholders.................................. $ 1,372 $ 6 -------------- -------------- -------------- --------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
DECEMBER 26, MARCH 28, 1997 1998 ------------ ---------- ASSETS Current assets: Cash and cash equivalents............................................................ $ 12,914 $ 13,649 Accounts receivable, net............................................................. 78,085 91,577 Inventories.......................................................................... 87,461 85,977 Other current assets................................................................. 2,314 2,736 ------------ ---------- Total current assets............................................................... 180,774 193,939 Property, plant and equipment, net..................................................... 113,187 113,062 Goodwill, net.......................................................................... 76,910 75,645 Deferred income taxes.................................................................. 11,004 10,966 Other assets........................................................................... 15,875 16,144 ------------ ---------- $ 397,750 $ 409,756 ------------ ---------- ------------ ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdrafts...................................................................... $ 11,470 $ 2,236 Accounts payable..................................................................... 42,575 58,012 Accrued expenses and other current liabilities....................................... 29,792 28,064 Current maturities of long-term debt................................................. 3,924 4,705 ------------ ---------- Total current liabilities.......................................................... 87,761 93,017 Long-term debt, less current maturities................................................ 240,292 245,238 Other liabilities...................................................................... 8,266 8,829 Deferred income taxes.................................................................. 17,555 17,541 ------------ ---------- Total liabilities.................................................................. 353,874 364,625 ------------ ---------- Redeemable preference shares........................................................... 40,382 41,795 ------------ ---------- Ordinary shareholders' equity: Ordinary shares...................................................................... 1,000 1,000 Retained earnings.................................................................... 4,420 4,426 Accumulated other comprehensive income............................................... (1,926) (2,090) ------------ ---------- Total ordinary shareholders' equity................................................ 3,494 3,336 ------------ ---------- $ 397,750 $ 409,756 ------------ ---------- ------------ ----------
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
QUARTER ENDED QUARTER ENDED MARCH 29, MARCH 28, 1997 1998 -------------- -------------- Net cash used in operating activities............................................ $ (3,354) $ (3,490) -------------- ------- Cash flows from investing activities: Capital expenditures........................................................... (867) (2,951) -------------- ------- Net cash used in investing activities........................................ (867) (2,951) -------------- ------- Cash flows from financing activities: Proceeds from long-term debt................................................... 13,116 10,569 Repayment of long-term debt.................................................... (12,409) (4,547) Proceeds from sale of assets................................................... 48 50 -------------- ------- Net cash provided by financing activities.................................... 755 6,072 -------------- ------- Effect of exchange rate changes on cash.......................................... 2,522 1,104 -------------- ------- Net increase (decrease) in cash and equivalents.................................. (944) 735 Cash and equivalents at beginning of period...................................... 12,516 12,914 -------------- ------- Cash and equivalents at end of period............................................ $ 11,572 $ 13,649 -------------- ------- -------------- -------
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 EURAMAX INTERNATIONAL PLC 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 plc 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 26, 1997. Operating results for the period ended March 28, 1998, are not necessarily indicative of future results that may be expected for the year ending December 25, 1998. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: COMPREHENSIVE INCOME Effective December 27, 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, REPORTING COMPREHENSIVE INCOME. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in the financial statements. Prior periods have been reclassified to reflect the adoption of this standard. The adoption of SFAS No. 130 has no material impact on the Company's consolidated results of operations, financial position or cash flows. Comprehensive income equals net income plus other comprehensive income. For the quarters ended March 28, 1998, and March 29, 1997, comprehensive income was approximately $1,255 and $2,895, respectively. Other comprehensive income refers to revenue, expenses, gains and losses which are reflected in stockholders' equity but excluded from net income. For the Company, the components of other comprehensive income are principally foreign currency translation adjustments and minimum pension liability adjustments. Other comprehensive income (loss), net of tax, was approximately ($164) and $290 for the quarters ended March 28, 1998, and March 29, 1997, respectively. The statement requires that total comprehensive income be reported for interim periods but does not require disclosure of the components of other comprehensive income for interim periods. For information regarding other significant accounting policies, see Note 2 to the Consolidated Financial Statements of the Company for the year ended December 26, 1997, set forth in the Company's Annual Report on Form 10-K. 3. INVENTORIES: Inventories were comprised of:
DECEMBER 26, MARCH 28, 1997 1998 ------------ ----------- Raw materials....................................................... $ 63,768 $ 61,814 Work in process..................................................... 12,029 11,233 Finished products................................................... 11,664 12,930 ------------ ----------- $ 87,461 $ 85,977 ------------ ----------- ------------ -----------
5 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (THOUSANDS OF U.S. DOLLARS) (UNAUDITED) (CONTINUED) 4. COMMITMENTS AND CONTINGENCIES: The Company has entered into several non-cancelable long-term contracts for the purchase of aluminum at market values. The aluminum contracts expire at various times through 1999. Contracted amounts of aluminum are less than the Company's anticipated requirements. The Company and its subsidiaries are not currently parties to any pending legal proceedings other than such proceedings as are incidental to its business. Management believes that such proceedings would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the consolidated financial position or results of operations of the Company and its subsidiaries taken as a whole. 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. 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 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 Act ("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. 6 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (THOUSANDS OF U.S. DOLLARS) (UNAUDITED) 5. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS: On September 25, 1996, Euramax purchased the Company from Alumax Inc. The acquisition was financed, in part, through Senior Subordinated Notes due 2006 (the "Notes"). The Notes are primary obligations of Euramax (the "Parent"). The United Kingdom and Netherlands holding company subsidiaries of Euramax are co-obligors under the Notes (the "Co-obligors"). The United States holding company subsidiary of Euramax (the "Guarantor") has provided a full and unconditional guarantee of the Notes. The following supplemental condensed combined financial statements as of March 29, 1997 and March 28, 1998 reflect the financial position, results of operations, and cash flows of each of the Parent, the Co-Obligors and Guarantor entities, and such combined information of the Non-Guarantor Subsidiaries. The Co-obligors and the Guarantor 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 of the Guarantor are not presented because management has determined that they are not material to investors.
QUARTER ENDED MARCH 29, 1997 ------------------------------------------------------------------------------------------------- CO-OBLIGORS AND GUARANTOR SUBSIDIARIES ------------------------------------------- EURAMAX EURAMAX AMERIMAX EURAMAX EUROPEAN INTERNATIONAL HOLDINGS, EUROPEAN HOLDINGS, NON- PLC INC. HOLDINGS PLC B.V. GUARANTOR (PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS ------------- ------------- ------------- ------------- ----------- ------------ ---------- Net Sales................. $ -- $ -- $ -- $ -- $ 114,874 $ -- $ 114,874 Cost and expenses: Cost of goods sold...... -- -- -- -- 92,036 -- 92,036 Selling and general..... -- -- -- -- 10,639 -- 10,639 Depreciation and amortization.......... -- -- -- -- 2,695 -- 2,695 ------ ------------- ------ ------------- ----------- ------------ ---------- Earnings from operations.......... -- -- -- -- 9,504 -- 9,504 Equity in earnings of subsidiaries............ 2,605 1,075 1,377 2,354 -- (7,411) -- Interest expense, net..... -- (3,254) (815) (580) (969) -- (5,618) Other expense, net........ -- -- -- -- (40) -- (40) ------ ------------- ------ ------------- ----------- ------------ ---------- Earnings (loss) before income taxes........ 2,605 (2,179) 562 1,774 8,495 (7,411) 3,846 Provision for income taxes................... -- (1,167) (285) (203) 2,896 -- 1,241 ------ ------------- ------ ------------- ----------- ------------ ---------- Net earnings (loss)....... 2,605 (1,012) 847 1,977 5,599 (7,411) 2,605 Dividends on redeemable preference shares....... 1,233 -- -- -- -- -- 1,233 ------ ------------- ------ ------------- ----------- ------------ ---------- Net earnings (loss) available for ordinary shareholders............ $ 1,372 $ (1,012) $ 847 $ 1,977 $ 5,599 $ (7,411) $ 1,372 ------ ------------- ------ ------------- ----------- ------------ ---------- ------ ------------- ------ ------------- ----------- ------------ ----------
7 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (THOUSANDS OF U.S. DOLLARS) (UNAUDITED) 5. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS: (CONTINUED)
QUARTER ENDED MARCH 28, 1998 ------------------------------------------------------------------------------------------------- CO-OBLIGORS AND GUARANTOR SUBSIDIARIES ------------------------------------------- EURAMAX EURAMAX AMERIMAX EURAMAX EUROPEAN INTERNATIONAL HOLDINGS, EUROPEAN HOLDINGS, NON- PLC INC. HOLDINGS PLC B.V. GUARANTOR (PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS ------------- ------------- ------------- ------------- ----------- ------------ ---------- Net Sales................. $ -- $ -- $ -- $ -- $ 143,089 $ -- $ 143,089 Cost and expenses: Cost of goods sold...... -- -- -- -- 119,417 -- 119,417 Selling and general..... 23 -- -- -- 12,056 -- 12,079 Depreciation and amortization.......... -- -- -- -- 3,054 -- 3,054 ------ ------------- ------ ------------- ----------- ------------ ---------- Earnings (loss) from operations.......... (23) -- -- -- 8,562 -- 8,539 Equity in earnings of subsidiaries............ 1,442 (1,605) 1,133 3,069 -- (4,039) -- Interest expense, net..... -- (583) (177) (6) (5,294) -- (6,060) Other income (expense), net..................... -- -- 74 (1,116) 1,001 -- (41) ------ ------------- ------ ------------- ----------- ------------ ---------- Earnings (loss) before income taxes........ 1,419 (2,188) 1,030 1,947 4,269 (4,039) 2,438 Provision for income taxes................... -- (228) (31) (394) 1,672 -- 1,019 ------ ------------- ------ ------------- ----------- ------------ ---------- Net earnings (loss)....... 1,419 (1,960) 1,061 2,341 2,597 (4,039) 1,419 Dividends on redeemable preference shares....... 1,413 -- -- -- -- -- 1,413 ------ ------------- ------ ------------- ----------- ------------ ---------- Net earnings (loss) available for ordinary shareholders............ $ 6 $ (1,960) $ 1,061 $ 2,341 $ 2,597 $ (4,039) $ 6 ------ ------------- ------ ------------- ----------- ------------ ---------- ------ ------------- ------ ------------- ----------- ------------ ----------
8 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (THOUSANDS OF U.S. DOLLARS) (UNAUDITED) 5. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS: (CONTINUED)
DECEMBER 26, 1997 --------------------------------------------------------------------------------------------------- CO-OBLIGORS AND GUARANTOR SUBSIDIARIES ------------------------------------------- EURAMAX EURAMAX AMERIMAX EURAMAX EUROPEAN INTERNATIONAL HOLDINGS, EUROPEAN HOLDINGS, NON- PLC INC. HOLDINGS PLC B.V. GUARANTOR CONSOLIDATED (PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS ------------- ------------- ------------- ------------- ----------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents......... $ -- $ -- $ -- $ -- $ 12,914 $ -- $ 12,914 Accounts receivable, net................. -- -- -- -- 78,085 -- 78,085 Inventories........... -- -- -- -- 87,461 -- 87,461 Other current assets.............. -- -- -- -- 2,314 -- 2,314 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total current assets............ -- -- -- -- 180,774 -- 180,774 Property, plant and equipment, net........ -- -- -- -- 113,187 113,187 Amounts due from parent / affiliates.......... 70,492 69,139 40,002 42,591 -- (222,224) -- Goodwill, net........... -- -- -- -- 76,910 -- 76,910 Investment in consolidated subsidiaries.......... 43,929 25,857 (213) 13,516 -- (83,089) -- Deferred income tax asset................. -- 448 -- 2,138 8,418 11,004 Other assets............ 2,070 -- 856 934 12,015 -- 15,875 ------------- ------------- ------------- ------------- ----------- ------------ ------------ $ 116,491 $ 95,444 $ 40,645 $ 59,179 $ 391,304 $ (305,313) $ 397,750 ------------- ------------- ------------- ------------- ----------- ------------ ------------ ------------- ------------- ------------- ------------- ----------- ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft........ $ -- $ -- $ -- $ -- $ 11,470 $ -- $ 11,470 Accounts payable...... -- -- -- -- 42,575 -- 42,575 Accrued expenses and other current liabilities......... 2,010 (1,609) 410 8,369 20,612 -- 29,792 Current maturities of long- term debt..... -- -- -- -- 3,924 -- 3,924 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total current liabilities....... 2,010 (1,609) 410 8,369 78,581 -- 87,761 Long-term debt, less current maturities.... 70,605 -- 27,179 37,216 105,292 -- 240,292 Amounts due to parent/ affiliates............ -- 77,779 3,954 -- 140,491 (222,224) -- Other liabilities....... -- -- -- -- 8,266 -- 8,266 Deferred income taxes... -- -- -- -- 17,555 -- 17,555 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total liabilities... 72,615 76,170 31,543 45,585 350,185 (222,224) 353,874 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Redeemable preference shares................ 40,382 -- -- -- -- -- 40,382 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Ordinary shareholders' equity: Ordinary shares....... 1,000 -- 78 23 4,970 (5,071) 1,000 Paid-in capital....... -- 17,000 6,922 9,077 89,458 (122,457) -- Retained earnings (deficit)........... 4,420 2,381 1,779 6,358 18,714 (29,232) 4,420 Dividends declared.... -- -- -- -- (70,600) 70,600 -- Accumulated other comprehensive income.............. (1,926) (107) 323 (1,864) (1,423) 3,071 (1,926) ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total ordinary shareholders' equity............ 3,494 19,274 9,102 13,594 41,119 (83,089) 3,494 ------------- ------------- ------------- ------------- ----------- ------------ ------------ $ 116,491 $ 95,444 $ 40,645 $ 59,179 $ 391,304 $ (305,313) $ 397,750 ------------- ------------- ------------- ------------- ----------- ------------ ------------ ------------- ------------- ------------- ------------- ----------- ------------ ------------
9 EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (THOUSANDS OF U.S. DOLLARS) (UNAUDITED) 5. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS: (CONTINUED)
MARCH 28, 1998 --------------------------------------------------------------------------------------------------- CO-OBLIGORS AND GUARANTOR SUBSIDIARIES ------------------------------------------- EURAMAX EURAMAX AMERIMAX EURAMAX EUROPEAN INTERNATIONAL HOLDINGS, EUROPEAN HOLDINGS, NON- PLC INC. HOLDINGS PLC B.V. GUARANTOR CONSOLIDATED (PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS ------------- ------------- ------------- ------------- ----------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents......... $ -- $ -- $ -- $ -- $ 13,649 $ -- $ 13,649 Accounts receivable, net................. -- -- -- -- 91,577 -- 91,577 Inventories........... -- -- -- -- 85,977 -- 85,977 Other current assets.............. -- -- -- -- 2,736 -- 2,736 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total current assets............ -- -- -- -- 193,939 -- 193,939 Property, plant and equipment, net........ -- -- -- -- 113,062 113,062 Amounts due from parent / affiliates.......... 70,528 73,779 40,102 40,536 -- (224,945) -- Goodwill, net........... -- -- -- -- 75,645 -- 75,645 Investment in consolidated subsidiaries.......... 45,207 24,252 953 16,093 -- (86,505) -- Deferred income tax asset................. -- 448 -- 2,074 8,444 -- 10,966 Other assets............ 2,011 -- 834 880 12,419 -- 16,144 ------------- ------------- ------------- ------------- ----------- ------------ ------------ $ 117,746 $ 98,479 $ 41,889 $ 59,583 $ 403,509 $ (311,450) $ 409,756 ------------- ------------- ------------- ------------- ----------- ------------ ------------ ------------- ------------- ------------- ------------- ----------- ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft........ $ -- $ -- $ -- $ -- $ 2,236 $ -- $ 2,236 Accounts payable...... -- -- -- -- 58,012 -- 58,012 Accrued expenses and other current liabilities......... 2,010 149 1,294 6,922 17,689 -- 28,064 Current maturities of long- term debt..... -- -- -- -- 4,705 -- 4,705 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total current liabilities....... 2,010 149 1,294 6,922 82,642 -- 93,017 Long-term debt, less current maturities.... 70,605 -- 27,179 37,216 110,238 -- 245,238 Amounts due to parent/ affiliates............ -- 81,016 3,202 -- 140,727 (224,945) -- Other liabilities....... -- -- -- -- 8,829 -- 8,829 Deferred income taxes... -- -- -- -- 17,541 -- 17,541 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total liabilities... 72,615 81,165 31,675 44,138 359,977 (224,945) 364,625 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Redeemable preference shares................ 41,795 -- -- -- -- -- 41,795 ------------- ------------- ------------- ------------- ----------- ------------ ------------ Ordinary shareholders' equity: Ordinary shares....... 1,000 -- 78 23 4,970 (5,071) 1,000 Paid-in capital....... -- 17,000 6,922 9,077 89,456 (122,455) -- Retained earnings (deficit)........... 4,426 421 2,840 8,699 (49,289) 37,329 4,426 Accumulated other comprehensive income.............. (2,090) (107) 374 (2,354) (1,605) 3,692 (2,090) ------------- ------------- ------------- ------------- ----------- ------------ ------------ Total ordinary shareholders' equity............ 3,336 17,314 10,214 15,445 43,532 (86,505) 3,336 ------------- ------------- ------------- ------------- ----------- ------------ ------------ $ 117,746 $ 98,479 $ 41,889 $ 59,583 $ 403,509 $ (311,450) $ 409,756 ------------- ------------- ------------- ------------- ----------- ------------ ------------ ------------- ------------- ------------- ------------- ----------- ------------ ------------
10 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth the Company's Statements of Earnings Data expressed as a percentage of net sales:
QUARTER ENDED ------------------------ MARCH 29, MARCH 28, 1997 1998 ----------- ----------- Statement of Earnings Data: Net sales.............................................................. 100.0% 100.0% Costs and expenses: Cost of goods sold................................................... 80.1 83.5 Selling and general.................................................. 9.3 8.4 Depreciation and amortization........................................ 2.3 2.1 ----- ----- Earnings from operations............................................. 8.3 6.0 Interest expense, net.................................................. 4.9 4.3 ----- ----- Earnings before income taxes......................................... 3.4 1.7 Provision for income taxes............................................. 1.1 .7 ----- ----- Net earnings........................................................... 2.3% 1.0% ----- ----- ----- -----
QUARTER ENDED MARCH 28, 1998 AS COMPARED TO QUARTER ENDED MARCH 29, 1997 NET SALES. Net sales increased 24.6% to $143.1 million for the quarter ended March 28, 1998, from $114.9 million for the quarter ended March 29, 1997. Approximately $22.4 million of this increase is attributable to net sales of Fabral, formerly Gentek Building Products, Inc., which was acquired by the Company on July 17, 1997. Excluding Fabral, net sales increased 5.0% or $5.8 million. Increases in shipments, attributable to aluminum product shipments to OEM markets in Europe and metal raincarrying systems shipped to home center customers in North America, combined to increase net sales for the quarter ended March 28, 1998, by approximately $12.2 million as compared to net sales for the quarter ended March 29, 1997. In addition, net sales increased approximately $6.2 million for sales attributable to Amerimax Laminated Products, Inc., formerly JTJ Laminating, Inc., acquired by the Company on March 28, 1997. These increases were partially offset by (i) weakening of the Dutch Guilder and French Franc compared to the U.S. Dollar, which reduced net sales approximately $2.1 million and $691,000, respectively, (ii) a $9.4 million decline in sales attributable to divested subsidiaries in 1997 and (iii) other individually insignificant occurrences. Net sales in the U.S. increased 31.2% to $84.6 million for the quarter ended March 28, 1998, from $64.5 million for the quarter ended March 29, 1997. Net sales in Europe increased 16.0% to $58.5 million for the quarter ended March 28, 1998, from $50.4 million for the quarter ended March 29, 1997. COST OF GOODS SOLD. Cost of goods sold, as a percentage of net sales, increased 3.4% for the three months ended March 28, 1998, from 80.1% in 1997 to 83.5% in 1998. This increase is primarily attributable to sales of a greater percentage of lower margin product (steel) from the Fabral acquisition ($22.4 million), partially offset by (i) sales of a greater percentage of higher margin aluminum products, particularly in Europe, and (ii) an overall improvement in gross margin attributable to higher sales volume. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses, as a percentage of net sales, decreased 0.9% for the quarter ended March 28, 1998, from 9.3% in 1997 to 8.4% in 1998. This decrease is primarily attributable to Fabral, which had lower selling and general expenses, as a percentage of net sales, than the Company prior to the Fabral acquisition. 11 DEPRECIATION AND AMORTIZATION. Depreciation and amortization, as a percentage of net sales, decreased 0.2% for the quarter ended March 28, 1998, from 2.3% in 1997 to 2.1% in 1998. This decrease was primarily attributable to depreciation and amortization arising due to divested subsidiaries, as well as an overall improvement in depreciation expense, as a percentage of sales, as a result of higher sales volume. EARNINGS FROM OPERATIONS. For reasons stated above, earnings from operations in the U.S. decreased to $1.3 million in the first quarter of 1998 from $2.0 million in the first quarter of 1997. Earnings from operations in Europe decreased to $7.2 million for the three months ended March 28, 1998, from $7.5 million for the three months ended March 29, 1997. INTEREST EXPENSE, NET. Net interest expense in the three months ended March 28, 1998, increased 7.9% from $5.6 million for the three months ended March 29, 1997, to $6.1 million for the three months ended March 28, 1998. This increase was due primarily to additional interest as a result of debt incurred for the Fabral acquisition. OTHER EXPENSES, NET. Other expenses were not significant for the quarters ended March 28, 1998 and March 29, 1997. PROVISION FOR INCOME TAXES. The effective rate for the provision for income taxes increased from 32.3% to 41.8% for the three months ended March 29, 1997, and March 28, 1998, respectively. This increase was primarily due to non-deductible goodwill arising from acquisitions made in 1997. LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY. The Company's primary liquidity needs arise from debt service on indebtedness incurred in connection with the Acquisition and the funding of capital expenditures. As of March 28, 1998, the Company had outstanding indebtedness for borrowed money of $249.9 million, $41.8 million of Preference Shares and ordinary shareholders' equity of $3.3 million, representing increases of $5.7 million, $1.4 million and a decrease of $158,000 from December 26, 1997, respectively. Included in such indebtedness was approximately $114.9 million under the Company's credit agreement, consisting of $62.8 million under the Company's term loan and $52.1 million under the Company's revolving credit facility. The undrawn amount of the revolving credit facility at March 28, 1998, was approximately $47.9 million, which was available for working capital and general corporate purposes, subject to borrowing base limitations. As of March 28, 1998, 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. Further, the Company's leveraged position may impede its ability to obtain financing in the future for working capital, capital expenditures and general corporate purposes. In addition, the Company's leveraged position may make it more vulnerable to economic downturns and may limit its ability to withstand competitive pressures. 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. Principal and interest payments under the credit agreement and interest payments on the Notes represent significant liquidity requirements for the Company. With respect to the $62.8 million of term loans, the Company must make scheduled quarterly principal payments totaling $3.1 million over the remainder of 1998, $7.8 million in 1999, $4.7 million in 2000, $7.0 million in 2001, $12.4 million in 2002, $15.9 million in 2003, and $11.9 million in 2004. The term loans and the revolving credit facility bear interest at floating rates. The Company's primary source of liquidity is funds generated from operations, which are supplemented by borrowings under the credit agreement. Operations used cash of $3.5 million in the three months ended March 28, 1998, compared to $3.4 million used in the three months ended March 29, 1997. 12 CAPITAL EXPENDITURES. The Company's capital expenditures were $3.0 million and $867,000 in the three months ended March 28, 1998, and March 29, 1997, respectively. Capital expenditures in 1998 include approximately $700,000 for improvements to paintlines in Helena, Arkansas and 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 $500,000 in 1998. Management continues to evaluate the effect of the Year 2000 issue on the Company. Ongoing assessment continues to support preliminary findings that the total cost of addressing the issue is not expected to have a material effect on the Company's business, financial condition or results of operations. WORKING CAPITAL MANAGEMENT. Working capital was $100.9 million as of March 28, 1998. Excluding Fabral, working capital was $82.6 million as of March 28, 1998, compared to $99.9 million as of March 29, 1997. The Company believes that current levels of working capital represent a liquid source of funds available for future cash flows. The Company believes that reductions in working capital can be achieved upon completion of current information systems projects being undertaken in some of the Company's subsidiaries. The Company believes these systems will offer distinct advantages in monitoring credit, open receivables and inventory levels, while enabling centralized ordering and inventory management. However, there can be no assurance that working capital reductions will be achieved. 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, management's beliefs and assumptions made by management. Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward looking statements. 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 26, 1997, as well as the Company's other filings with the Securities and Exchange Commission. 13 PART II--OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)(1) The following consolidated financial statements of Euramax International plc and its subsidiaries are included in Part I, Item 1. Condensed Consolidated Balance Sheets at December 26, 1997, and March 28, 1998 Condensed Consolidated Statements of Earnings for the quarters ended March 29, 1997, and March 28, 1998 Condensed Consolidated Statements of Cash Flows for the quarters ended March 29, 1997, and March 28, 1998 Notes to condensed consolidated financial statements (b) The Company filed no reports on Form 8-K during the three months ended March 28, 1998. (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). 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. 21.1** Subsidiaries of Euramax International plc 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 Regristrant's Annual Report on Form 10-K (333-05978) which was filed on March 12, 1998. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, Euramax International plc has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EURAMAX INTERNATIONAL PLC
SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- /s/ J. DAVID SMITH - ------------------------------ Chief Executive Officer May 12, 1998 J. David Smith and President V.P. Finance and /s/ R. SCOTT VANSANT Administration and - ------------------------------ Secretary (Principal May 12, 1998 R. Scott Vansant Financial and Accounting Officer) 15 EX-27 2 EXHIBIT 27
5 0001026743 EURAMAX INTERNATIONAL PLC 1,000 3-MOS DEC-25-1998 DEC-27-1997 MAR-28-1998 13,649 0 95,394 3,817 85,977 193,939 130,705 17,643 409,756 93,017 135,000 41,795 0 1,000 2,336 409,756 143,089 143,089 119,417 119,417 14,842 332 6,060 2,438 1,019 1,419 0 0 0 1,419 0 0
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