-----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, Dpf2haKV9Hw/a9CsbCzo+dlkVS9UXswdzS6/edDuWRbrm7nF/69dUwDTC4cjFel0 RD72ZBR/hl0xHnTVwdJioQ== 0000950123-04-002126.txt : 20040220 0000950123-04-002126.hdr.sgml : 20040220 20040220123516 ACCESSION NUMBER: 0000950123-04-002126 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040220 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSOCIATED MATERIALS INC CENTRAL INDEX KEY: 0000802967 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 751872487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24956 FILM NUMBER: 04618478 BUSINESS ADDRESS: STREET 1: 3773 STATE ROAD STREET 2: # CITY: CUYAHOGA FALLS STATE: OH ZIP: 44223 BUSINESS PHONE: 330 929 1811 MAIL ADDRESS: STREET 1: 3773 STATE ROAD STREET 2: # CITY: CUYAHOGA FALLS STATE: OH ZIP: 44223 8-K 1 y94068ce8vk.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934 February 20, 2004 Date of Report (Date of earliest event reported) ASSOCIATED MATERIALS INCORPORATED (Exact Name of Registrant as Specified in Its Charter) 75-1872487 Delaware 0-24956 (IRS Employer (State of Incorporation) (Commission File Number) Identification No.) 3773 State Road Cuyahoga Falls, Ohio 44223 (Address of Principal Executive Office) (800) 257-4335 (Registrant's Telephone Number, Including Area Code) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibit:
Exhibit Number Description - ------ ----------- The following exhibit is not filed but is furnished as described below. 99.1 Pro Forma Consolidated Financial Statements of Associated Materials Incorporated for the year ended January 3, 2004 and the nine months ended September 27, 2003
ITEM 9. REGULATION FD DISCLOSURE Set forth in Exhibit 99.1 attached hereto are results for the year ended January 3, 2004 and for the nine months ended September 27, 2003 on a pro forma basis, which gives effect to the acquisition of Gentek Holdings, Inc. The information furnished in this report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Additionally, the submission of this report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ASSOCIATED MATERIALS INCORPORATED DATE: February 20, 2004 By: /s/ D. Keith LaVanway ------------------------------------ D. Keith LaVanway Vice President-Chief Financial Officer, Treasurer and Secretary -3- EX-99.1 3 y94068cexv99w1.txt PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Exhibit 99.1 Unaudited Pro Forma Condensed Consolidated Statements of Operations Year Ended January 3, 2004 Nine Months Ended September 27, 2003 The unaudited pro forma condensed consolidated statements of operations for the year ended January 3, 2004 and the nine months ended September 27, 2003 are based on the historical financial statements of Associated Materials Incorporated ("Associated Materials" or the "Company") and the historical consolidated financial statements of Gentek Holdings, Inc. ("Gentek Holdings") and on the assumptions and adjustments described in the notes to the unaudited pro forma condensed consolidated financial data. The pro forma adjustments are based upon available information, preliminary estimates and certain assumptions that we believe are reasonable, and are described in the accompanying notes. On August 29, 2003, we acquired all of the issued and outstanding shares of capital stock of Gentek Holdings, the parent company of Gentek Building Products, Inc. and Gentek Building Products Limited, which we collectively refer to as "Gentek". The unaudited pro forma condensed consolidated statement of operations data has been prepared as if the acquisition of Gentek had occurred as of the beginning of 2003. The pro forma statements should not be considered indicative of actual results of operations that would have been achieved had the acquisition of Gentek occurred at the beginning of 2003 and do not purport to indicate results of operations for any future period. -1- Associated Materials Incorporated Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Year Ended January 3, 2004 (in thousands)
Historical -------------------------------------- Year Six Months Two Months Ended Ended Ended Gentek January 3, June 30, August 29, Holdings 2004 2003 2003 Acquisition Associated Gentek Gentek Pro Forma Pro Forma Materials Holdings Holdings Adjustments Combined ---------- ---------- ---------- ----------- --------- Net sales ...................................... $ 779,836 $ 132,911 $ 58,443 $ (1,314)(a) $ 969,876 Cost of sales .................................. 561,525 116,093 48,738 (1,314)(a) 714,545 -- -- -- (10,497)(b) ---------- ---------- ---------- ----------- --------- Gross profit ................................... 218,311 16,818 9,705 10,497 255,331 Selling, general and administrative expense .... 149,571 14,697 4,009 10,164(b) 178,441 ---------- ---------- ---------- ----------- --------- Income from operations ......................... 68,740 2,121 5,696 333 76,890 Interest expense, net .......................... 27,369 936 340 (2,464)(c) 26,181 Foreign currency (gain) ........................ (548) (239) (41) -- (828) Other .......................................... -- 141 -- -- 141 Merger transaction costs ....................... -- 26 3,055 -- 3,081 ---------- ---------- ---------- ----------- --------- Income from operations before income taxes ..... 41,919 1,257 2,342 2,797 48,315 Income taxes ................................... 17,388 1,571 1,268 (176)(d) 20,051 ---------- ---------- ---------- ----------- --------- Net income (loss) .............................. $ 24,531 $ (314) $ 1,074 $ 2,973 $ 28,264 ========== ========== ========== =========== ========= EBITDA (e) ..................................... $ 85,403 $ 4,943 $ 3,598 $ 333 $ 94,277 Adjusted EBITDA (e) ............................ $ 86,805 $ 8,069 $ 6,792 $ -- $ 101,666
-2- Associated Materials Incorporated Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Year Ended January 3, 2004 (Amounts in thousands) (a) Elimination of sales and cost of sales between the Company and Gentek Holdings for the eight months ended August 29, 2003. Neither the Company nor Gentek Holdings had significant quantities of inventory on hand at the end of the period as a result of these transactions. (b) Details of the pro forma adjustments to cost of sales and selling, general and administrative expenses to reflect the following: (i) the reclassification of supply center expenses and certain freight costs from cost of sales to selling, general and administrative expense to conform to the Company's presentation and (ii) elimination of the annual management services fee payable to Gentek Holdings' former parent company. Cost of sales: Reclassification of certain costs ......................... $(10,497) ======== Selling, general and administrative expenses: Reclassification of certain cost of sales expenses ........ $ 10,497 Management services fee ................................... (333) -------- $ 10,164 ========
(c) The pro forma adjustments to interest expense reflect the following: Commitment fee on revolving credit facility ..................... $ 272 Term loan ....................................................... 7,534 Revolving portion of credit facility ............................ 473 9 3/4% senior subordinated notes ................................ 16,088 Existing 9 1/4% senior subordinated notes not tendered .......... 56 Amortization of deferred financing costs ........................ 1,758 -------- Pro forma interest expense ...................................... 26,181 -------- Less: historical interest expense, net: Company ................................................... (27,369) Gentek Holdings - Six Months Ended June 30, 2003 .......... (936) Gentek Holdings - Two Months Ended August 29, 2003 ........ (340) -------- Total adjustment ................................................ $ (2,464) ========
Interest expense was calculated as follows: (i) commitment fee on unused portion of the revolving credit facility of 1/2%; (ii) a rate of 3.97% (average London Interbank Offered Rate ("LIBOR") for the year ended December 31, 2003 of 1.22% + 2.75%) on the term loan portion of the credit facility arranged at the time of the acquisition of Gentek Holdings, (iii) a rate of 4.22% (average LIBOR for the year ended December 31, 2003 of 1.22% + 3.00%) on the revolving loan portion of the credit facility arranged at the time of the acquisition of Gentek Holdings, (iv) an interest rate of 9 3/4% on the senior subordinated notes; (v) an interest rate of 9 1/4% on the 9 1/4% senior subordinated notes not tendered at the time of the merger transaction with an affiliate of -3- Harvest Partners (the April 2002 merger transaction) through the date of redemption; and (vi) one year of amortization of deferred financing costs. The effect of a 1/8% increase or decrease in interest rates would increase or decrease total pro forma interest expense by $0.3 million for the year ended January 3, 2004. (d) This amount represents the necessary adjustment to reflect a pro forma income tax provision of 41.5%. (e) EBITDA is calculated as net income (loss) plus interest, taxes, depreciation and amortization. Adjusted EBITDA excludes certain items and AmerCable's operating results. The Company considers Adjusted EBITDA to be an important indicator of its operational strength and performance of its business. The Company has included Adjusted EBITDA because it is a key financial measure used by management to (i) assess the Company's ability to service its debt and / or incur debt and meet the Company's capital expenditure requirements; (ii) internally measure the Company's operating performance; and (iii) determine the Company's incentive compensation programs. In addition, the Company's credit facility has certain covenants that use ratios utilizing this measure of Adjusted EBITDA. The definition of EBITDA under the Company's credit facility does not exclude the results of AmerCable. The Company has, however, excluded the results of AmerCable when calculating Adjusted EBITDA as AmerCable is not included in the Company's continuing operations. The definition of EBITDA under the indenture governing the 9 3/4% notes due 2012 also excludes certain items. Adjusted EBITDA has not been prepared in accordance with accounting principles generally accepted in the United States. Adjusted EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies. Such supplementary adjustments to EBITDA may not be in accordance with current SEC practices or the rules and regulations adopted by the SEC that apply to registration statements filed under the Securities Act and periodic reports filed under the Securities Exchange Act of 1934. Accordingly, the SEC may require that Adjusted EBITDA be presented differently in filings made with the SEC than as presented in this release, or not be presented at all. Adjusted EBITDA is not a measure determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss) (as determined in accordance with GAAP), as a measure of the Company's operating results or cash flows from operations (as determined in accordance with GAAP) or as a measure of the Company's liquidity. The reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is as follows:
Historical ------------------------------------ Year Six Months Two Months Ended Ended Ended Gentek January 3, June 30, August 29, Holdings 2004 2003 2003 Acquisition Associated Gentek Gentek Pro Forma Pro Forma Materials Holdings Holdings Adjustments Combined ---------- ---------- ---------- ----------- --------- Net income (loss) .................. $ 24,531 $ (314) $ 1,074 $ 2,973 $ 28,264 Interest ........................... 27,369 936 340 (2,464) 26,181 Taxes .............................. 17,388 1,571 1,268 (176) 20,051 Depreciation and amortization ...... 16,115 2,750 916 -- 19,781 ---------- ---------- ---------- ----------- --------- EBITDA ............................. 85,403 4,943 3,598 333 94,277 Merger transaction costs (i) ....... -- 26 3,055 -- 3,081 Cost of sales adjustment (ii) ...... 1,402 -- -- -- 1,402 Certain warranty related costs (iii) -- 2,850 56 -- 2,906 Management fees (iv) ............... -- 250 83 (333) -- ---------- ---------- ---------- ----------- --------- Adjusted EBITDA .................... $ 86,805 $ 8,069 $ 6,792 $ -- $ 101,666 ========== ========== ========== =========== =========
(i) Eliminates merger transaction costs, which includes $3.1 million of investment banking and legal fees incurred by Gentek in conjunction with the Company's acquisition of them. (ii) Eliminates a cost of sales expense relating to an inventory fair value adjustment recorded at the time of the Gentek acquisition totaling $1.4 million. (iii) Eliminates certain warranty costs incurred by Gentek related to defects of specific colors of steel siding manufactured between 1992 and 1995 for which the Company has recorded an actuarially determined reserve as part of our preliminary purchase price allocation representing the fair value of the liability at the date of the acquisition and for which the Company received a reduction in the purchase price. (iv) Eliminates management services fee paid to Gentek's former parent company. -4- Associated Materials Incorporated Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Nine Months Ended September 27, 2003 (in thousands)
Nine Months Six Months Two Months Ended Ended Ended Gentek September 27, June 30, August 29, Holdings 2003 2003 2003 Acquisition Associated Gentek Gentek Pro Forma Pro Forma Materials Holdings Holdings Adjustments Combined ------------- ---------- ---------- ----------- --------- Net sales ................................. $ 515,113 $ 132,911 $ 58,443 $ (1,314)(a) $ 705,153 Cost of sales ............................. 365,926 116,093 48,738 (1,314)(a) 518,946 -- -- -- (10,497)(b) ------------- ---------- ---------- ----------- --------- Gross profit .............................. 149,187 16,818 9,705 10,497 186,207 Selling, general and administrative expense 103,284 14,697 4,009 10,164(b) 132,154 ------------- ---------- ---------- ----------- --------- Income from operations .................... 45,903 2,121 5,696 333 54,053 Interest expense, net ..................... 20,627 936 340 (2,228)(c) 19,675 Foreign currency gain ..................... (199) (239) (41) -- (479) Other ..................................... -- 141 -- -- 141 Merger transaction costs .................. -- 26 3,055 -- 3,081 ------------- ---------- ---------- ----------- --------- Income from operations before income taxes 25,475 1,257 2,342 2,561 31,635 Income taxes .............................. 10,572 1,571 1,268 (282)(d) 13,129 ------------- ---------- ---------- ----------- --------- Net income (loss) ......................... $ 14,903 $ (314) $ 1,074 $ 2,843 $ 18,506 ============= ========== ========== =========== ========= EBITDA (e) ................................ $ 54,976 $ 4,943 $ 3,598 $ 333 $ 63,850 Adjusted EBITDA (e) ....................... $ 56,378 $ 8,069 $ 6,792 $ -- $ 71,239
-5- Associated Materials Incorporated Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Nine Months Ended September 27, 2003 (Amounts in thousands) (a) Elimination of sales and cost of sales between the Company and Gentek Holdings for the eight months ended August 29, 2003. Neither the Company nor Gentek Holdings had significant quantities of inventory on hand at the end of the period as a result of these transactions. (b) Details of the pro forma adjustments to cost of sales and selling, general and administrative expenses to reflect the following: (i) the reclassification of supply center expenses and certain freight costs from cost of sales to selling, general and administrative expense to conform to the Company's presentation and (ii) elimination of the annual management services fee payable to Gentek Holdings' former parent company. Cost of sales: Reclassification of certain costs ......................... $(10,497) ======== Selling, general and administrative expenses: Reclassification of certain cost of sales expenses ........ $ 10,497 Management services fee ................................... (333) -------- $ 10,164
======== (c) The pro forma adjustments to interest expense reflect the following: Commitment fee on revolving credit facility ..................... $ 203 Term loan ....................................................... 5,675 Revolving portion of credit facility ............................ 356 9 3/4% senior subordinated notes ................................ 12,066 Existing 9 1/4% senior subordinated notes not tendered .......... 56 Amortization of deferred financing costs ........................ 1,319 -------- Pro forma interest expense ...................................... 19,675 -------- Less: historical interest expense, net: Company ................................................... (20,627) Gentek Holdings - Six Months Ended June 30, 2003 .......... (936) Gentek Holdings - Two Months Ended August 29, 2003 ........ (340) -------- Total adjustment ................................................ $ (2,228) ========
Interest expense was calculated as follows: (i) commitment fee on unused portion of the revolving credit facility of 1/2%; (ii) a rate of 3.98% (average LIBOR for the nine months ended September 30, 2003 of 1.23% + 2.75%) on the term loan portion of the credit facility arranged at the time of the acquisition of Gentek Holdings, (iii) a rate of 4.23% (average LIBOR for the nine months ended September 30, 2003 of 1.23% + 3.00%) on the revolving loan portion of the credit facility arranged at the time of the acquisition of Gentek Holdings, (iv) an interest rate of 9 3/4% on the senior subordinated notes; (v) an interest rate of 9 1/4% on the 9 1/4% senior subordinated notes not tendered at the time of the April 2002 merger transaction through the date of redemption; and (vi) nine months of amortization of deferred financing costs. -6- The effect of a 1/8% increase or decrease in interest rates would increase or decrease total pro forma interest expense by $0.2 million for the nine months ended September 27, 2003. (d) This amount represents the necessary adjustment to reflect a pro forma income tax provision of 41.5%. (e) EBITDA is calculated as net income (loss) plus interest, taxes, depreciation and amortization. Adjusted EBITDA excludes certain items and AmerCable's operating results. The Company considers Adjusted EBITDA to be an important indicator of its operational strength and performance of its business. The Company has included Adjusted EBITDA because it is a key financial measure used by management to (i) assess the Company's ability to service its debt and / or incur debt and meet the Company's capital expenditure requirements; (ii) internally measure the Company's operating performance; and (iii) determine the Company's incentive compensation programs. In addition, the Company's credit facility has certain covenants that use ratios utilizing this measure of Adjusted EBITDA. The definition of EBITDA under the Company's credit facility does not exclude the results of AmerCable. The Company has, however, excluded the results of AmerCable when calculating Adjusted EBITDA as AmerCable is not included in the Company's continuing operations. The definition of EBITDA under the indenture governing the 9 3/4% notes due 2012 also excludes certain items. Adjusted EBITDA has not been prepared in accordance with accounting principles generally accepted in the United States. Adjusted EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies. Such supplementary adjustments to EBITDA may not be in accordance with current SEC practices or the rules and regulations adopted by the SEC that apply to registration statements filed under the Securities Act and periodic reports filed under the Securities Exchange Act of 1934. Accordingly, the SEC may require that Adjusted EBITDA be presented differently in filings made with the SEC than as presented in this release, or not be presented at all. Adjusted EBITDA is not a measure determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss) (as determined in accordance with GAAP), as a measure of the Company's operating results or cash flows from operations (as determined in accordance with GAAP) or as a measure of the Company's liquidity. The reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is as follows:
Historical --------------------------------------- Nine Months Six Months Two Months Ended Ended Ended Gentek September 27, June 30, August 29, Holdings 2003 2003 2003 Acquisition Associated Gentek Gentek Pro Forma Pro Forma Materials Holdings Holdings Adjustments Combined ------------- ---------- ---------- ----------- --------- Net income (loss).......................... $ 14,903 $ (314) $ 1,074 $ 2,843 $ 18,506 Interest .................................. 20,627 936 340 (2,228) 19,675 Taxes 10,572 1,571 1,268 (282) 13,129 Depreciation and amortization.............. 8,874 2,750 916 -- 12,540 ------------- ---------- ---------- ----------- --------- EBITDA .................................. 54,976 4,943 3,598 333 63,850 Merger transaction costs (i)............... -- 26 3,055 -- 3,081 Cost of sales adjustment (ii).............. 1,402 -- -- -- 1,402 Certain warranty related costs (iii)....... -- 2,850 56 -- 2,906 Management fees (iv)....................... -- 250 83 (333) -- ------------- ---------- ---------- ----------- --------- Adjusted EBITDA............................ $ 56,378 $ 8,069 $ 6,792 $ -- $ 71,239 ============= ========== ========== =========== =========
(i) Eliminates merger transaction costs, which includes $3.1 million of investment banking and legal fees incurred by Gentek in conjunction with the Company's acquisition of them. (ii) Eliminates a cost of sale expense relating to an inventory fair value adjustment recorded at the time of the Gentek acquisition totaling $1.4 million. (iii) Eliminates certain warranty costs incurred by Gentek related to defects of specific colors of steel siding manufactured between 1992 and 1995 for which the Company has recorded an actuarially determined reserve as part of our preliminary purchase price allocation representing the fair value of the liability at the date of the acquisition and for which the Company received a reduction in the purchase price. (iv) Eliminates management services fee paid to Gentek's former parent company. -7- -----END PRIVACY-ENHANCED MESSAGE-----