þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 2, 2011 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 75-1872487 | |
(State or Other Jurisdiction of Incorporation of Organization) | (I.R.S. Employer Identification No.) | |
3773 State Rd. Cuyahoga Falls, Ohio | 44223 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
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EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
Item 1. | Financial Statements |
July 2, | January 1, | |||||||
2011 | 2011 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 6,785 | $ | 13,789 | ||||
Accounts receivable, net of allowance for
doubtful accounts of $9,732 at July 2, 2011
and $9,203 at January 1, 2011 |
158,291 | 118,408 | ||||||
Inventories |
193,429 | 146,215 | ||||||
Income taxes receivable |
| 3,291 | ||||||
Prepaid expenses |
9,058 | 8,995 | ||||||
Total current assets |
367,563 | 290,698 | ||||||
Property,
plant and equipment, net of accumulated depreciation of $17,293 at
July 2, 2011 and $4,943 at January 1, 2011 |
137,460 | 137,862 | ||||||
Goodwill |
573,912 | 566,423 | ||||||
Other intangible assets, net |
725,940 | 731,014 | ||||||
Other assets |
28,326 | 29,907 | ||||||
Total assets |
$ | 1,833,201 | $ | 1,755,904 | ||||
Liabilities and Members Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 138,500 | $ | 90,190 | ||||
Accrued liabilities |
69,937 | 79,319 | ||||||
Deferred income taxes |
16,422 | 19,989 | ||||||
Income taxes payable |
738 | 2,506 | ||||||
Total current liabilities |
225,597 | 192,004 | ||||||
Deferred income taxes |
144,668 | 144,668 | ||||||
Other liabilities |
135,468 | 132,755 | ||||||
Long-term debt |
857,800 | 788,000 | ||||||
Members equity |
469,668 | 498,477 | ||||||
Total liabilities and members equity |
$ | 1,833,201 | $ | 1,755,904 | ||||
1
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Net sales |
$ | 310,459 | $ | 328,322 | $ | 507,195 | $ | 532,559 | ||||||||
Cost of sales |
230,119 | 236,464 | 386,776 | 392,262 | ||||||||||||
Gross profit |
80,340 | 91,858 | 120,419 | 140,297 | ||||||||||||
Selling, general and
administrative expenses |
65,624 | 53,589 | 124,540 | 101,070 | ||||||||||||
Income (loss) from operations |
14,716 | 38,269 | (4,121 | ) | 39,227 | |||||||||||
Interest expense, net |
19,095 | 18,797 | 37,795 | 37,491 | ||||||||||||
Foreign currency loss (gain) |
124 | 70 | 94 | (52 | ) | |||||||||||
(Loss) income before income taxes |
(4,503 | ) | 19,402 | (42,010 | ) | 1,788 | ||||||||||
Income taxes provision (benefit) |
2,690 | (326 | ) | 2,301 | 752 | |||||||||||
Net income (loss) |
$ | (7,193 | ) | $ | 19,728 | $ | (44,311 | ) | $ | 1,036 | ||||||
2
Six Months Ended | ||||||||
July 2, | July 3, | |||||||
2011 | 2010 | |||||||
Successor | Predecessor | |||||||
Operating Activities |
||||||||
Net income (loss) |
$ | (44,311 | ) | $ | 1,036 | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
Depreciation and amortization |
25,457 | 11,266 | ||||||
Deferred income taxes |
1,850 | 261 | ||||||
Provision for losses on accounts receivable |
1,531 | 1,974 | ||||||
Amortization of deferred financing costs |
2,238 | 2,027 | ||||||
Stock compensation |
114 | | ||||||
Amortization of net liabilities recorded in purchase accounting for the fair value of leased facilities and warranty liabilities |
(598 | ) | | |||||
Debt accretion |
| 127 | ||||||
Loss on sale or disposal of assets other than by sale |
173 | 27 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(39,939 | ) | (48,448 | ) | ||||
Inventories |
(45,153 | ) | (43,764 | ) | ||||
Accounts payable and accrued liabilities |
37,512 | 61,014 | ||||||
Income taxes receivable / payable |
(6,142 | ) | (5,725 | ) | ||||
Other |
2,113 | 832 | ||||||
Net cash used in operating activities |
(65,155 | ) | (19,373 | ) | ||||
Investing Activities |
||||||||
Supply center acquisition |
(1,550 | ) | | |||||
Capital expenditures |
(9,941 | ) | (8,263 | ) | ||||
Net cash used in investing activities |
(11,491 | ) | (8,263 | ) | ||||
Financing Activities |
||||||||
Net borrowings under ABL Facilities |
69,800 | | ||||||
Net borrowings under prior ABL Facility |
| 5,000 | ||||||
Financing costs |
(371 | ) | (106 | ) | ||||
Net cash provided by financing activities |
69,429 | 4,894 | ||||||
Effect of exchange rate changes on cash and cash equivalents |
213 | (971 | ) | |||||
Net decrease in cash and cash equivalents |
(7,004 | ) | (23,713 | ) | ||||
Cash and cash equivalents at beginning of period |
13,789 | 55,905 | ||||||
Cash and cash equivalents at end of period |
$ | 6,785 | $ | 32,192 | ||||
Supplemental information: |
||||||||
Cash paid for interest |
$ | 38,365 | $ | 35,837 | ||||
Cash paid for income taxes |
$ | 6,611 | $ | 6,214 | ||||
3
4
Quarter | Six Months | |||||||
Ended | Ended | |||||||
July 3, | July 3, | |||||||
2010 | 2010 | |||||||
Net sales |
$ | 328,322 | $ | 532,559 | ||||
Net income
(loss) |
16,376 | (5,659 | ) |
July 2, | January 1, | |||||||
2011 | 2011 | |||||||
Raw materials |
$ | 49,212 | $ | 39,729 | ||||
Work-in-progress |
12,000 | 10,746 | ||||||
Finished goods and purchased products |
132,217 | 95,740 | ||||||
$ | 193,429 | $ | 146,215 | |||||
5
July 2, 2011 | January 1, 2011 | |||||||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||||||
Amortization | Net | Amortization | Net | |||||||||||||||||||||||||
Period | Accumulated | Carrying | Period | Accumulated | Carrying | |||||||||||||||||||||||
(In Years) | Cost | Amortization | Value | (In Years) | Cost | Amortization | Value | |||||||||||||||||||||
Amortized customer
bases |
13 | $ | 334,141 | $ | 18,711 | $ | 315,430 | 13 | $ | 330,915 | $ | 5,453 | $ | 325,462 | ||||||||||||||
Amortized non-compete
agreements |
3 | 10 | | 10 | | | | |||||||||||||||||||||
Total amortized
intangible assets |
334,151 | 18,711 | 315,440 | 330,915 | 5,453 | 325,462 | ||||||||||||||||||||||
Non-amortized
trade names |
410,500 | | 410,500 | 405,552 | | 405,552 | ||||||||||||||||||||||
Total intangible assets |
$ | 744,651 | $ | 18,711 | $ | 725,940 | $ | 736,467 | $ | 5,453 | $ | 731,014 | ||||||||||||||||
July 2, | January 1, | |||||||
2011 | 2011 | |||||||
9.125% notes |
$ | 730,000 | $ | 730,000 | ||||
Borrowings under the ABL facilities |
127,800 | 58,000 | ||||||
Total long-term debt |
$ | 857,800 | $ | 788,000 | ||||
6
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Net income (loss) |
$ | (7,193 | ) | $ | 19,728 | $ | (44,311 | ) | $ | 1,036 | ||||||
Unrecognized prior service cost and net loss |
| 240 | | 482 | ||||||||||||
Foreign currency translation adjustments |
2,425 | (3,803 | ) | 15,389 | (939 | ) | ||||||||||
Comprehensive income (loss) |
$ | (4,768 | ) | $ | 16,165 | $ | (28,922 | ) | $ | 579 | ||||||
Quarters Ended | ||||||||||||||||
July 2, 2011 | July 3, 2010 | |||||||||||||||
Domestic | Foreign | Domestic | Foreign | |||||||||||||
Plans | Plans | Plans | Plans | |||||||||||||
Successor | Successor | Predecessor | Predecessor | |||||||||||||
Net periodic pension cost |
||||||||||||||||
Service cost |
$ | 186 | $ | 652 | $ | 155 | $ | 593 | ||||||||
Interest cost |
772 | 961 | 778 | 887 | ||||||||||||
Expected return on assets |
(845 | ) | (1,010 | ) | (760 | ) | (852 | ) | ||||||||
Amortization of unrecognized: |
||||||||||||||||
Prior service costs |
| | 7 | 11 | ||||||||||||
Cumulative net loss |
| | 303 | 48 | ||||||||||||
Net periodic pension cost |
$ | 113 | $ | 603 | $ | 483 | $ | 687 | ||||||||
Six Months Ended | ||||||||||||||||
July 2, 2011 | July 3, 2010 | |||||||||||||||
Domestic | Foreign | Domestic | Foreign | |||||||||||||
Plans | Plans | Plans | Plans | |||||||||||||
Successor | Successor | Predecessor | Predecessor | |||||||||||||
Net periodic pension cost |
||||||||||||||||
Service cost |
$ | 372 | $ | 1,300 | $ | 310 | $ | 1,197 | ||||||||
Interest cost |
1,544 | 1,916 | 1,556 | 1,790 | ||||||||||||
Expected return on assets |
(1,690 | ) | (2,014 | ) | (1,520 | ) | (1,719 | ) | ||||||||
Amortization of unrecognized: |
||||||||||||||||
Prior service costs |
| | 14 | 22 | ||||||||||||
Cumulative net loss |
| | 606 | 96 | ||||||||||||
Net periodic pension cost |
$ | 226 | $ | 1,202 | $ | 966 | $ | 1,386 | ||||||||
7
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Vinyl windows |
$ | 97,131 | $ | 115,443 | $ | 168,840 | $ | 191,780 | ||||||||
Vinyl siding products |
62,823 | 68,998 | 99,983 | 108,354 | ||||||||||||
Metal products |
47,101 | 52,086 | 83,470 | 88,461 | ||||||||||||
Third-party manufactured products |
85,651 | 72,329 | 122,771 | 109,892 | ||||||||||||
Other products and services |
17,753 | 19,466 | 32,131 | 34,072 | ||||||||||||
$ | 310,459 | $ | 328,322 | $ | 507,195 | $ | 532,559 | |||||||||
8
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Balance at the beginning of the period |
$ | 95,933 | $ | 33,582 | $ | 94,712 | $ | 33,016 | ||||||||
Provision for warranties issued and
changes in estimates for pre-existing
warranties |
1,653 | 1,780 | 3,025 | 3,320 | ||||||||||||
Claims paid |
(1,213 | ) | (2,039 | ) | (1,841 | ) | (3,276 | ) | ||||||||
Foreign currency translation |
92 | 338 | 569 | 601 | ||||||||||||
Balance at the end of the period |
$ | 96,465 | $ | 33,661 | $ | 96,465 | $ | 33,661 | ||||||||
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Beginning liability |
$ | 4,298 | $ | 4,730 | $ | 4,583 | $ | 5,036 | ||||||||
Additions |
228 | | 228 | | ||||||||||||
Accretion of related lease obligations |
121 | 93 | 259 | 184 | ||||||||||||
Payments |
(299 | ) | (289 | ) | (722 | ) | (686 | ) | ||||||||
Ending liability |
$ | 4,348 | $ | 4,534 | $ | 4,348 | $ | 4,534 | ||||||||
9
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Assets |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ | 6,785 | $ | | $ | | $ | | | $ | 6,785 | |||||||||||||
Accounts receivable, net |
102,716 | | 14,801 | 40,774 | | 158,291 | ||||||||||||||||||
Intercompany receivables |
368,466 | | 6,953 | 2,364 | (377,783 | ) | | |||||||||||||||||
Inventories |
129,534 | | 16,848 | 47,047 | | 193,429 | ||||||||||||||||||
Income taxes receivable |
19,987 | | | | (19,987 | ) | | |||||||||||||||||
Deferred income taxes |
| | 1,634 | | (1,634 | ) | | |||||||||||||||||
Prepaid expenses |
6,278 | | 904 | 1,876 | | 9,058 | ||||||||||||||||||
Total current assets |
633,766 | | 41,140 | 92,061 | (399,404 | ) | 367,563 | |||||||||||||||||
Property, plant and equipment, net |
86,105 | | 3,452 | 47,903 | | 137,460 | ||||||||||||||||||
Goodwill |
353,433 | | 28,978 | 191,501 | | 573,912 | ||||||||||||||||||
Other intangible assets, net |
486,525 | | 50,780 | 188,635 | | 725,940 | ||||||||||||||||||
Investment in subsidiaries |
27,627 | | (20,385 | ) | | (7,242 | ) | | ||||||||||||||||
Intercompany receivable |
| 730,000 | | | (730,000 | ) | | |||||||||||||||||
Other assets |
25,184 | | 11 | 3,131 | | 28,326 | ||||||||||||||||||
Total assets |
$ | 1,612,640 | $ | 730,000 | $ | 103,976 | $ | 523,231 | $ | (1,136,646 | ) | $ | 1,833,201 | |||||||||||
Liabilities and Members Equity |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Accounts payable |
$ | 90,538 | $ | | $ | 13,226 | $ | 34,736 | | $ | 138,500 | |||||||||||||
Intercompany payables |
| | | 377,783 | (377,783 | ) | | |||||||||||||||||
Accrued liabilities |
54,000 | | 5,536 | 10,401 | | 69,937 | ||||||||||||||||||
Deferred income taxes |
11,407 | | | 6,649 | (1,634 | ) | 16,422 | |||||||||||||||||
Income taxes payable |
| | 16,320 | 4,405 | (19,987 | ) | 738 | |||||||||||||||||
Total current liabilities |
155,945 | | 35,082 | 433,974 | (399,404 | ) | 225,597 | |||||||||||||||||
Deferred income taxes |
85,191 | | 14,661 | 44,816 | | 144,668 | ||||||||||||||||||
Other liabilities |
81,036 | | 26,606 | 27,826 | | 135,468 | ||||||||||||||||||
Long-term debt |
820,800 | 730,000 | | 37,000 | (730,000 | ) | 857,800 | |||||||||||||||||
Members equity |
469,668 | | 27,627 | (20,385 | ) | (7,242 | ) | 469,668 | ||||||||||||||||
Total liabilities and members equity |
$ | 1,612,640 | $ | 730,000 | $ | 103,976 | $ | 523,231 | $ | (1,136,646 | ) | $ | 1,833,201 | |||||||||||
10
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Net sales |
$ | 226,284 | $ | | $ | 44,309 | $ | 83,885 | $ | (44,019 | ) | $ | 310,459 | |||||||||||
Cost of sales |
169,717 | | 42,674 | 61,747 | (44,019 | ) | 230,119 | |||||||||||||||||
Gross profit |
56,567 | | 1,635 | 22,138 | | 80,340 | ||||||||||||||||||
Selling, general and
administrative expenses |
53,440 | | 858 | 11,326 | | 65,624 | ||||||||||||||||||
Income from operations |
3,127 | | 777 | 10,812 | | 14,716 | ||||||||||||||||||
Interest expense, net |
18,520 | | | 575 | | 19,095 | ||||||||||||||||||
Foreign currency loss |
| | | 124 | | 124 | ||||||||||||||||||
(Loss) income before income taxes |
(15,393 | ) | | 777 | 10,113 | | (4,503 | ) | ||||||||||||||||
Income taxes provision |
| | | 2,690 | | 2,690 | ||||||||||||||||||
(Loss) income before equity
income from subsidiaries |
(15,393 | ) | | 777 | 7,423 | | (7,193 | ) | ||||||||||||||||
Equity income from subsidiaries |
8,200 | | 7,423 | | (15,623 | ) | | |||||||||||||||||
Net income (loss) |
$ | (7,193 | ) | $ | | $ | 8,200 | $ | 7,423 | $ | (15,623 | ) | $ | (7,193 | ) | |||||||||
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Net sales |
$ | 370,496 | $ | | $ | 78,477 | $ | 134,950 | $ | (76,728 | ) | $ | 507,195 | |||||||||||
Cost of sales |
284,850 | | 76,009 | 102,645 | (76,728 | ) | 386,776 | |||||||||||||||||
Gross profit |
85,646 | | 2,468 | 32,305 | | 120,419 | ||||||||||||||||||
Selling, general and
administrative expenses |
100,081 | | 1,900 | 22,559 | | 124,540 | ||||||||||||||||||
(Loss) income from operations |
(14,435 | ) | | 568 | 9,746 | | (4,121 | ) | ||||||||||||||||
Interest expense, net |
36,859 | | | 936 | | 37,795 | ||||||||||||||||||
Foreign currency loss |
| | | 94 | | 94 | ||||||||||||||||||
(Loss) income before income taxes |
(51,294 | ) | | 568 | 8,716 | | (42,010 | ) | ||||||||||||||||
Income taxes provision |
| | | 2,301 | | 2,301 | ||||||||||||||||||
(Loss) income before equity
income from subsidiaries |
(51,294 | ) | | 568 | 6,415 | | (44,311 | ) | ||||||||||||||||
Equity income from subsidiaries |
6,983 | | 6,415 | | (13,398 | ) | | |||||||||||||||||
Net income (loss) |
$ | (44,311 | ) | $ | | $ | 6,983 | $ | 6,415 | $ | (13,398 | ) | $ | (44,311 | ) | |||||||||
11
Non- | ||||||||||||||||||||
Subsidiary | Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
Net cash used in operating activities |
$ | (59,823 | ) | $ | | $ | (2,188 | ) | $ | (3,144 | ) | $ | (65,155 | ) | ||||||
Investing Activities |
||||||||||||||||||||
Supply center acquisition |
(1,550 | ) | | | | (1,550 | ) | |||||||||||||
Capital expenditures |
(8,029 | ) | | (15 | ) | (1,897 | ) | (9,941 | ) | |||||||||||
Net cash used in investing activities |
(9,579 | ) | | (15 | ) | (1,897 | ) | (11,491 | ) | |||||||||||
Financing Activities |
||||||||||||||||||||
Net borrowings under ABL facilities |
32,800 | | | 37,000 | 69,800 | |||||||||||||||
Intercompany transactions |
37,847 | | 2,203 | (40,050 | ) | | ||||||||||||||
Financing costs |
(371 | ) | | | | (371 | ) | |||||||||||||
Net cash provided by (used in) financing
activities |
70,276 | | 2,203 | (3,050 | ) | 69,429 | ||||||||||||||
Effect of exchange rate changes on cash
and cash equivalents |
| | | 213 | 213 | |||||||||||||||
Net increase (decrease) in cash and cash
equivalents |
874 | | | (7,878 | ) | (7,004 | ) | |||||||||||||
Cash and cash equivalents at beginning of
period |
5,911 | | | 7,878 | 13,789 | |||||||||||||||
Cash and cash equivalents at end of period |
$ | 6,785 | $ | | $ | | $ | | $ | 6,785 | ||||||||||
12
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Assets |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ | 5,911 | $ | | $ | | $ | 7,878 | $ | | $ | 13,789 | ||||||||||||
Accounts receivable, net |
85,496 | | 11,107 | 21,805 | | 118,408 | ||||||||||||||||||
Intercompany receivables |
406,309 | | 9,257 | 2,264 | (417,830 | ) | | |||||||||||||||||
Inventories |
99,228 | | 10,870 | 36,117 | | 146,215 | ||||||||||||||||||
Income taxes receivable |
19,731 | | | | (16,440 | ) | 3,291 | |||||||||||||||||
Deferred income taxes |
| | 1,629 | | (1,629 | ) | | |||||||||||||||||
Prepaid expenses |
6,622 | | 1,174 | 1,199 | | 8,995 | ||||||||||||||||||
Total current assets |
623,297 | | 34,037 | 69,263 | (435,899 | ) | 290,698 | |||||||||||||||||
Property, plant and equipment, net |
86,636 | | 4,014 | 47,212 | | 137,862 | ||||||||||||||||||
Goodwill |
353,434 | | 28,978 | 184,011 | | 566,423 | ||||||||||||||||||
Other intangible assets, net |
495,850 | | 51,006 | 184,158 | | 731,014 | ||||||||||||||||||
Investment in subsidiaries |
5,256 | | (42,289 | ) | | 37,033 | | |||||||||||||||||
Intercompany receivable |
| 788,000 | | | (788,000 | ) | | |||||||||||||||||
Other assets |
26,662 | | (1 | ) | 3,246 | | 29,907 | |||||||||||||||||
Total assets |
$ | 1,591,135 | $ | 788,000 | $ | 75,745 | $ | 487,890 | $ | (1,186,866 | ) | $ | 1,755,904 | |||||||||||
Liabilities and Members Equity |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Accounts payable |
$ | 66,087 | $ | | $ | 5,761 | $ | 18,342 | $ | | $ | 90,190 | ||||||||||||
Intercompany payables |
| | | 417,830 | (417,830 | ) | | |||||||||||||||||
Accrued liabilities |
63,116 | | 7,057 | 9,146 | | 79,319 | ||||||||||||||||||
Deferred income taxes |
11,454 | | | 10,164 | (1,629 | ) | 19,989 | |||||||||||||||||
Income taxes payable |
| | 16,440 | 2,506 | (16,440 | ) | 2,506 | |||||||||||||||||
Total current liabilities |
140,657 | | 29,258 | 457,988 | (435,899 | ) | 192,004 | |||||||||||||||||
Deferred income taxes |
85,191 | | 14,661 | 44,816 | | 144,668 | ||||||||||||||||||
Other liabilities |
78,810 | | 26,570 | 27,375 | | 132,755 | ||||||||||||||||||
Long-term debt |
788,000 | 788,000 | | | (788,000 | ) | 788,000 | |||||||||||||||||
Members equity |
498,477 | | 5,256 | (42,289 | ) | 37,033 | 498,477 | |||||||||||||||||
Total liabilities and members equity |
$ | 1,591,135 | $ | 788,000 | $ | 75,745 | $ | 487,890 | $ | (1,186,866 | ) | $ | 1,755,904 | |||||||||||
13
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Net sales |
$ | 239,861 | $ | | $ | 50,352 | $ | 88,987 | $ | (50,878 | ) | $ | 328,322 | |||||||||||
Cost of sales |
173,694 | | 47,425 | 66,223 | (50,878 | ) | 236,464 | |||||||||||||||||
Gross profit |
66,167 | | 2,927 | 22,764 | | 91,858 | ||||||||||||||||||
Selling, general and
administrative expenses |
43,199 | | 296 | 10,094 | | 53,589 | ||||||||||||||||||
Income from operations |
22,968 | | 2,631 | 12,670 | | 38,269 | ||||||||||||||||||
Interest expense, net |
18,614 | | | 183 | | 18,797 | ||||||||||||||||||
Foreign currency loss |
| | | 70 | | 70 | ||||||||||||||||||
Income before income taxes |
4,354 | | 2,631 | 12,417 | | 19,402 | ||||||||||||||||||
Income taxes (benefit) provision |
(4,904 | ) | | 840 | 3,738 | | (326 | ) | ||||||||||||||||
Income before equity income
from subsidiaries |
9,258 | | 1,791 | 8,679 | | 19,728 | ||||||||||||||||||
Equity income from subsidiaries |
10,470 | | 8,679 | | (19,149 | ) | | |||||||||||||||||
Net income |
$ | 19,728 | $ | | $ | 10,470 | $ | 8,679 | $ | (19,149 | ) | $ | 19,728 | |||||||||||
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Net sales |
$ | 385,752 | $ | | $ | 79,913 | $ | 146,968 | $ | (80,074 | ) | $ | 532,559 | |||||||||||
Cost of sales |
286,170 | | 74,937 | 111,229 | (80,074 | ) | 392,262 | |||||||||||||||||
Gross profit |
99,582 | | 4,976 | 35,739 | | 140,297 | ||||||||||||||||||
Selling, general and
administrative expenses |
80,604 | | 1,104 | 19,362 | | 101,070 | ||||||||||||||||||
Income from operations |
18,978 | | 3,872 | 16,377 | | 39,227 | ||||||||||||||||||
Interest expense, net |
37,059 | | 2 | 430 | | 37,491 | ||||||||||||||||||
Foreign currency (gain) |
| | | (52 | ) | | (52 | ) | ||||||||||||||||
(Loss) income before income taxes |
(18,081 | ) | | 3,870 | 15,999 | | 1,788 | |||||||||||||||||
Income taxes (benefit) provision |
(5,840 | ) | | 1,776 | 4,816 | | 752 | |||||||||||||||||
(Loss) income before equity
income from subsidiaries |
(12,241 | ) | | 2,094 | 11,183 | | 1,036 | |||||||||||||||||
Equity income from subsidiaries |
13,277 | | 11,183 | | (24,460 | ) | | |||||||||||||||||
Net income |
$ | 1,036 | $ | | $ | 13,277 | $ | 11,183 | $ | (24,460 | ) | $ | 1,036 | |||||||||||
14
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
Net cash (used in) provided by operating activities |
$ | (26,372 | ) | $ | | $ | 3,739 | $ | 3,260 | $ | (19,373 | ) | ||||||||
Investing Activities |
||||||||||||||||||||
Capital
expenditures |
(6,286 | ) | | (54 | ) | (1,923 | ) | (8,263 | ) | |||||||||||
Other |
385 | | | (385 | ) | | ||||||||||||||
Net cash used in investing activities |
(5,901 | ) | | (54 | ) | (2,308 | ) | (8,263 | ) | |||||||||||
Financing Activities |
||||||||||||||||||||
Net borrowings under prior ABL Facility |
5,000 | | | | 5,000 | |||||||||||||||
Dividends from non-guarantor subsidiary |
| | 20,000 | (20,000 | ) | | ||||||||||||||
Intercompany transactions |
26,671 | | (23,640 | ) | (3,031 | ) | | |||||||||||||
Financing costs |
(106 | ) | | | | (106 | ) | |||||||||||||
Net cash provided by (used in) financing activities |
31,565 | | (3,640 | ) | (23,031 | ) | 4,894 | |||||||||||||
Effect of exchange rate changes on cash and cash
equivalents |
| | | (971 | ) | (971 | ) | |||||||||||||
Net (decrease) increase in cash and cash equivalents |
(708 | ) | | 45 | (23,050 | ) | (23,713 | ) | ||||||||||||
Cash and cash equivalents at beginning of period |
5,917 | | 82 | 49,906 | 55,905 | |||||||||||||||
Cash and cash equivalents at end of period |
$ | 5,209 | $ | | $ | 127 | $ | 26,856 | $ | 32,192 | ||||||||||
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
15
16
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Net sales |
$ | 310,459 | $ | 328,322 | $ | 507,195 | $ | 532,559 | ||||||||
Cost of sales |
230,119 | 236,464 | 386,776 | 392,262 | ||||||||||||
Gross profit |
80,340 | 91,858 | 120,419 | 140,297 | ||||||||||||
Selling, general and
administrative expenses |
65,624 | 53,589 | 124,540 | 101,070 | ||||||||||||
Income (loss) from operations |
14,716 | 38,269 | (4,121 | ) | 39,227 | |||||||||||
Interest expense, net |
19,095 | 18,797 | 37,795 | 37,491 | ||||||||||||
Foreign currency loss (gain) |
124 | 70 | 94 | (52 | ) | |||||||||||
(Loss) income before income taxes |
(4,503 | ) | 19,402 | (42,010 | ) | 1,788 | ||||||||||
Income taxes provision (benefit) |
2,690 | (326 | ) | 2,301 | 752 | |||||||||||
Net income (loss) |
$ | (7,193 | ) | $ | 19,728 | $ | (44,311 | ) | $ | 1,036 | ||||||
Other Data: |
||||||||||||||||
EBITDA (1) |
$ | 27,392 | $ | 43,832 | $ | 21,242 | $ | 50,545 | ||||||||
Adjusted EBITDA (1) |
34,230 | 46,655 | 30,036 | 55,444 |
(1) | EBITDA is calculated as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to reflect certain adjustments that are used in calculating covenant compliance under our revolving credit agreement and the indenture governing the 9.125% Senior Secured Notes due 2017 (the 9.125% notes). We consider EBITDA and Adjusted EBITDA to be important indicators of our operational strength and performance of our business. We have included Adjusted EBITDA because it is a key financial measure used by our management to (i) assess our ability to service our debt or incur debt and meet our capital expenditure requirements; (ii) internally measure our operating performance; and (iii) determine our incentive compensation programs. In addition, our senior secured asset-based revolving credit facilities (the ABL facilities) and the indenture governing the 9.125% notes have certain covenants that apply ratios utilizing this measure of Adjusted EBITDA. EBITDA and Adjusted EBITDA have not been prepared in accordance with U.S. generally accepted accounting principles (GAAP). Adjusted EBITDA as presented by us may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA are not measures determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results or net cash provided by operating activities (as determined in accordance with GAAP) as a measure of our liquidity. | |
Prior year Adjusted EBITDA amounts are presented to conform to the current years presentation of the computation of Adjusted EBITDA, which is in conformity with the Adjusted EBITDA as defined in our revolving credit agreement and the indenture governing the 9.125% notes. |
17
The reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA is as follows (in thousands): |
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Net income (loss) |
$ | (7,193 | ) | $ | 19,728 | $ | (44,311 | ) | $ | 1,036 | ||||||
Interest expense, net |
19,095 | 18,797 | 37,795 | 37,491 | ||||||||||||
Income taxes provision (benefit) |
2,690 | (326 | ) | 2,301 | 752 | |||||||||||
Depreciation and amortization |
12,800 | 5,633 | 25,457 | 11,266 | ||||||||||||
EBITDA |
27,392 | 43,832 | 21,242 | 50,545 | ||||||||||||
Merger costs (a) |
96 | 1,263 | 585 | 1,263 | ||||||||||||
Purchase accounting related
adjustments (b) |
(878 | ) | | (1,854 | ) | | ||||||||||
Management fees (c) |
| 227 | | 447 | ||||||||||||
Executive officers separation costs (d) |
5,467 | | 5,467 | | ||||||||||||
Restructuring costs (e) |
228 | | 228 | | ||||||||||||
Tax restructuring costs (f) |
| | | 88 | ||||||||||||
Write-offs of assets other than
by sale |
89 | 13 | 173 | 27 | ||||||||||||
Bank audit fees (g) |
| 35 | | 50 | ||||||||||||
Stock compensation expense (h) |
87 | | 114 | | ||||||||||||
Other normalizing and unusual items (i) |
1,625 | 1,215 | 3,987 | 2,473 | ||||||||||||
Foreign currency loss (gain) (j) |
124 | 70 | 94 | (52 | ) | |||||||||||
Pro forma cost savings (k) |
| | | 603 | ||||||||||||
Adjusted EBITDA |
$ | 34,230 | $ | 46,655 | $ | 30,036 | $ | 55,444 | ||||||||
(a) | Represents professional fees incurred in connection with the Merger. | |
(b) | Represents the elimination of the impact of adjustments related to purchase accounting recorded as a result of the Merger, which include the following: $0.7 million of reduced pension expense as a result of purchase accounting adjustments and amortization related to net liabilities recorded in purchase accounting for the fair value of certain of our leased facilities and warranty liabilities of $0.1 million and $0.2 million, respectively, for both the first and second quarters of 2011. These purchase accounting related adjustments related to the Merger are offset by a $0.1 million negative adjustment to inventory that was acquired as part of the supply center acquisition completed during the second quarter of 2011. | |
(c) | Represents annual management fees paid to Harvest Partners, L.P. (one of our sponsors prior to the Merger). | |
(d) | Represents separation costs, including payroll taxes and certain benefits of $5.4 million, and professional fees of $0.1 million, related to the terminations of Mr. Chieffe, our former President and Chief Executive Officer, and Mr. Arthur, our former Senior Vice President of Operations, in June 2011. | |
(e) | During the second quarter of 2011, we recognized a charge of approximately $0.2 million within selling, general and administrative expenses reported in the condensed consolidated statements of operations. The charge was a result of re-measuring the restructuring liability related to the discontinued use of the warehouse facility adjacent to our Ennis manufacturing plant due to changes in the expected timing and amount of cash flows over the remaining lease term. | |
(f) | Represents legal and accounting fees incurred in connection with tax restructuring projects. | |
(g) | Represents bank audit fees incurred under our prior ABL Facility. | |
(h) | Represents stock compensation related to restricted share units issued to certain board members, including the Interim Chief Executive Officer. | |
(i) | Represents the following (in thousands): |
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Professional fees (i) |
$ | 656 | $ | 1,020 | $ | 2,461 | $ | 1,900 | ||||||||
Accretion on lease liability (ii) |
85 | 93 | 223 | 184 | ||||||||||||
Excess severance costs (iii) |
67 | 102 | 265 | 389 | ||||||||||||
Operating lease termination penalty (iv) |
773 | | 773 | | ||||||||||||
Excess legal expense (v) |
44 | | 265 | | ||||||||||||
Total |
$ | 1,625 | $ | 1,215 | $ | 3,987 | $ | 2,473 | ||||||||
(i) | Represents managements estimate of unusual or non-recurring consulting fees primarily associated with cost savings initiatives. | |
(ii) | Represents accretion on the liability recorded at present value for future lease costs in connection with our warehouse facility adjacent to the Ennis manufacturing, which we discontinued using during 2009. |
18
(iii) | Represents managements estimates for excess severance expense primarily due to unusual changes within management. | |
(iv) | Represents the excess of cash paid over the estimated fair values of purchased equipment previously leased. | |
(v) | Represents managements estimate of excess legal expense incurred in connection with the defense of certain warranty related claims. | |
(j) | Represents currency transaction/translation (gains)/losses, including on currency exchange hedging agreements. | |
(k) | For the six months ended July 3, 2010, the amount represents managements estimates of cost savings that could have resulted from producing glass in-house at our Cuyahoga Falls, Ohio window facility had such production started on January 4, 2009 of $0.5 million and cost savings that could have resulted from entering into our leveraged procurement program with an outside consulting firm had such program been entered into on January 4, 2009 of approximately $0.1 million. |
Quarters Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
Vinyl windows |
$ | 97,131 | $ | 115,443 | $ | 168,840 | $ | 191,780 | ||||||||
Vinyl siding products |
62,823 | 68,998 | 99,983 | 108,354 | ||||||||||||
Metal products |
47,101 | 52,086 | 83,470 | 88,461 | ||||||||||||
Third-party manufactured products |
85,651 | 72,329 | 122,771 | 109,892 | ||||||||||||
Other products and services |
17,753 | 19,466 | 32,131 | 34,072 | ||||||||||||
$ | 310,459 | $ | 328,322 | $ | 507,195 | $ | 532,559 | |||||||||
19
20
Six Months Ended | |||||||||
July 2, | July 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Net cash used in operating activities |
$ | (65,155 | ) | $ | (19,373 | ) | |||
Net cash used in investing activities |
(11,491 | ) | (8,263 | ) | |||||
Net cash provided by financing activities |
69,429 | 4,894 |
21
22
23
| our operations and results of operations; |
| declines in remodeling and home building industries, economic conditions and changes in interest rates, foreign currency exchange rates and other conditions; |
| deteriorations in availability of consumer credit, employment trends, levels of consumer confidence and spending and consumer preferences; |
| changes in raw material costs and availability of raw materials and finished goods; |
| the unavailability, reduction or elimination of government and economic home buying and remodeling incentives; |
| our ability to continuously improve organizational productivity and global supply chain efficiency and flexibility; |
| market acceptance of price increases; |
| declines in national and regional trends in home remodeling and new housing starts; |
24
| increases in competition from other manufacturers of vinyl and metal exterior residential building products as well as alternative building products; |
| changes in weather conditions; |
| consolidation of our customers; |
| our ability to attract and retain qualified personnel; |
| our ability to comply with certain financial covenants in the indenture governing the 9.125% notes and our ABL facilities; |
| declines in market demand; |
| our substantial level of indebtedness; |
| increases in our indebtedness; |
| increases in costs of environmental compliance or environmental liabilities; |
| increases in warranty or product liability claims; |
| increases in capital expenditure requirements; and |
| the other factors discussed under Item 1A. Risk Factors as filed in our Annual Report on Form 10-K for the year ended January 1, 2011 and elsewhere in this report. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
25
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | (Removed and Reserved) |
26
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit | ||||
Number | Description | |||
31.1 | Certification of the Principal Executive Officer pursuant to Rule
13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 |
|||
31.2 | Certification of the Principal Financial Officer pursuant to Rule
13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 |
|||
32.1 | Certification of the Principal Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002* |
|||
32.2 | Certification of the Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002* |
* | This document is being furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986. |
27
ASSOCIATED MATERIALS, LLC | ||||||
(Registrant) | ||||||
Date: August 11, 2011
|
By: | /s/ Dana R. Snyder
|
||||
Interim Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: August 11, 2011
|
By: | /s/ Stephen E. Graham
|
||||
Senior Vice President Chief Financial Officer and Secretary | ||||||
(Principal Financial Officer and | ||||||
Principal Accounting Officer) |
28
1. | I have reviewed this quarterly report on Form 10-Q of Associated Materials, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 11, 2011
|
By: | /s/ Dana R. Snyder
|
||||
Interim Chief Executive Officer | ||||||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Associated Materials, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 11, 2011
|
By: | /s/ Stephen E. Graham
|
||||
Senior Vice President Chief Financial Officer and Secretary | ||||||
(Principal Financial Officer and | ||||||
Principal Accounting Officer) |
1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented. |
Date: August 11, 2011
|
By: | /s/ Dana R. Snyder
|
||||
Interim Chief Executive Officer | ||||||
(Principal Executive Officer) |
1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented. |
Date: August 11, 2011
|
By: | /s/ Stephen E. Graham
Senior Vice President Chief Financial Officer and Secretary |
||||
(Principal Financial Officer and | ||||||
Principal Accounting Officer) |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Current assets: | Â | Â |
Accounts receivable, net of allowance for doubtful accounts | $ 9,732 | $ 9,203 |
Property, plant and equipment, net of accumulated depreciation | $ 17,293 | $ 4,943 |
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended |
---|---|---|---|---|
Jul. 02, 2011
Successor
|
Jul. 02, 2011
Successor
|
Jul. 03, 2010
Predecessor
|
Jul. 03, 2010
Predecessor
|
|
Net sales | $ 310,459 | $ 507,195 | $ 328,322 | $ 532,559 |
Cost of sales | 230,119 | 386,776 | 236,464 | 392,262 |
Gross profit | 80,340 | 120,419 | 91,858 | 140,297 |
Selling, general and administrative expenses | 65,624 | 124,540 | 53,589 | 101,070 |
Income (loss) from operations | 14,716 | (4,121) | 38,269 | 39,227 |
Interest expense, net | 19,095 | 37,795 | 18,797 | 37,491 |
Foreign currency loss (gain) | 124 | 94 | 70 | (52) |
(Loss) income before income taxes | (4,503) | (42,010) | 19,402 | 1,788 |
Income taxes provision (benefit) | 2,690 | 2,301 | (326) | 752 |
Net income (loss) | $ (7,193) | $ (44,311) | $ 19,728 | $ 1,036 |
Document and Entity Information (USD $)
In Thousands |
6 Months Ended |
---|---|
Jul. 02, 2011
|
|
Document and Entity Information [Abstract] | Â |
Entity Registrant Name | ASSOCIATED MATERIALS, LLC |
Entity Central Index Key | 0000802967 |
Document Type | 10-Q |
Document Period End Date | Jul. 02, 2011 |
Amendment Flag | false |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Public Float | $ 0 |
Entity Common Stock, Shares Outstanding | 0 |
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Retirement Plans
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Jul. 02, 2011
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Retirement Plans [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans |
Note 7 — Retirement Plans
The Company’s Alside division sponsors a defined benefit pension plan which covers hourly
workers at its plant in West Salem, Ohio and a defined benefit retirement plan covering salaried
employees, which was frozen in 1998 and subsequently replaced with a defined contribution plan. The
Company’s Gentek subsidiary sponsors a defined benefit pension plan for hourly union employees at
its Woodbridge, New Jersey plant (together with the Alside sponsored defined benefit plans, the
“Domestic Plans”) as well as a defined benefit pension plan covering Gentek Canadian salaried
employees and hourly union employees at the Lambeth, Ontario plant, a defined benefit pension plan
for the hourly union employees at its Burlington, Ontario plant and a defined benefit pension plan
for the hourly union employees at its Pointe Claire, Quebec plant (the “Foreign Plans”). Accrued
pension liabilities are included in accrued and other long-term liabilities in the accompanying
balance sheets. The actuarial valuation measurement date for the defined benefit pension plans is
December 31st. Components of defined benefit pension plan costs are as follows (in thousands):
In March 2010, the President signed into law the Patient Protection and Affordable Care Act
(“PPACA”) and the Health Care and Education Reconciliation Act of 2010 (“Reconciliation Act”). The
PPACA and Reconciliation Act include provisions that reduce the tax benefits available to
employers that receive Medicare Part D subsidies. During the first quarter of 2010, the Company
recognized a $0.1 million impact on its deferred tax asset as a result of the reduced deductibility
of the subsidy.
Although changes in market conditions, current pension law and uncertainties regarding
significant assumptions used in the actuarial valuations may have a material impact on future
required contributions to the Company’s pension plans, the Company currently does not expect
funding requirements to have a material adverse impact on current or future liquidity.
The actuarial valuations require significant estimates and assumptions to be made by
management, primarily the funding interest rate, discount rate and expected long-term return on
plan assets. These assumptions are all susceptible to changes in market conditions. The funding
interest rate and discount rate are based on representative bond yield curves maintained and
monitored by independent third parties. In determining the expected long-term rate of return on
plan assets, the Company considers historical market and portfolio rates of return, asset
allocations and expectations of future rates of return.
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Lease Termination Costs
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6 Months Ended |
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Jul. 02, 2011
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Lease Termination Costs [Abstract] | Â |
Lease Termination Costs |
Note 12 — Lease Termination Costs
During the second quarter ended July 2, 2011, the Company purchased previously leased
equipment via a buy-out option and paid the lessor the present value of the remaining lease
payments, the residual value and sales and personal property taxes.
As a result, the Company recorded a charge of approximately $0.8 million within selling,
general and administrative expenses for the quarter and six months ended July 2, 2011. The charge
represents the excess of cash paid over the estimated fair values of the purchased equipment. The
estimated fair values of the purchased equipment have been recorded within the Company’s property,
plant and equipment totals and will be depreciated over their estimated remaining useful lives.
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Inventories
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
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Inventories [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Note 3 — Inventories
Inventories are valued at the lower of cost (first in, first out) or market. Inventories
consist of the following (in thousands):
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Product Warranty Costs and Service Returns
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Jul. 02, 2011
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Product Warranty Costs and Service Returns [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Costs and Service Returns |
Note 9 — Product Warranty Costs and Service Returns
Consistent with industry practice, the Company provides to homeowners limited warranties on
certain products, primarily related to window and siding product categories. Warranties are of
varying lengths of time from the date of purchase up to and including lifetime. Warranties cover
product failures such as stress cracks and seal failures for windows and fading and peeling for
siding products, as well as manufacturing defects. The Company has various options for remedying
product warranty claims including repair, refinishing or replacement and directly incurs the cost
of these remedies. Warranties also become reduced under certain conditions of time and change in
ownership. Certain metal coating suppliers provide warranties on materials sold to the Company that
mitigate the costs incurred by the Company. Reserves for future warranty costs are provided based
on management’s estimates of such future costs using historical trends of claims experience, sales
history of products to which such costs relate, and other factors. An independent actuary assists
the Company in determining reserve amounts related to warranties for product failures.
As a result of the Merger and the application of purchase accounting, the Company adjusted its
warranty reserves to represent an estimate of the fair value of the liability as of the closing
date of the Merger. The estimated fair value of the liability was based on an actuarial calculation
performed by an independent actuary which projected future remedy costs using historical data
trends of claims incurred, claims payments and sales history of products to which such costs
relate. The fair value of the expected future remedy costs related to products sold prior to the
Merger was based on the actuarially determined estimates of expected future remedy costs and other
factors and assumptions the Company believes market participants would use in valuing the warranty
reserves. These other factors and assumptions included inputs for claims administration costs,
confidence adjustments for uncertainty in the estimates of expected future remedy costs and a
discount factor to arrive at the estimated fair value of the liability at the date of the Merger.
The excess of the estimated fair value over the expected future remedy costs, which was included in
the Company’s warranty reserve at the date of the Merger, is being amortized as a reduction of
warranty expense over the expected term such warranty claims will be satisfied. The provision for
warranties is reported within cost of sales in the consolidated statements of operations.
A reconciliation of the warranty reserve activity is as follows (in thousands):
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Manufacturing Restructuring Costs
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Jul. 02, 2011
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Manufacturing Restructuring Costs [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Manufacturing Restructuring Costs |
Note 10 — Manufacturing Restructuring Costs
The following is a reconciliation of the manufacturing restructuring liability of the
warehouse facility adjacent to the Ennis manufacturing plant related to the discontinued use (in
thousands):
During the second quarter of 2011, the Company re-measured its restructuring liability due to
changes in the expected timing and amount of cash flows over the remaining lease term. As a
result, the Company recorded an adjustment to increase the restructuring liability and recognized a
charge of approximately $0.2 million within selling, general and administrative expenses reported
in the condensed consolidated statements of operations for the quarter and six months ended July 2,
2011.
Of the remaining restructuring liability at July 2, 2011, approximately $0.5 million is
expected to be paid during the remainder of 2011. Amounts related to the ongoing facility
obligations will continue to be paid over the lease term, which ends April 2020.
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Business Segments
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Jul. 02, 2011
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Business Segments [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments |
Note 8 — Business Segments
The Company is in the single business of manufacturing and distributing exterior residential
building products. The following table sets forth for the periods presented a summary of net sales
by principal product offering (in thousands):
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Basis of Presentation
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6 Months Ended |
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Jul. 02, 2011
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Basis of Presentation [Abstract] | Â |
Basis of Presentation |
Note 1 — Basis of Presentation
On October 13, 2010, AMH Holdings II, Inc. (“AMH II”), the then indirect parent company of
Associated Materials, LLC, completed its merger (the “Acquisition Merger”) with Carey Acquisition
Corp. (“Merger Sub”), pursuant to the terms of the Agreement and Plan of Merger, dated as of
September 8, 2010 (the “Merger Agreement”), among Carey Investment Holdings Corp. (now known as AMH
Investment Holdings Corp.) (“Parent”), Carey Intermediate Holdings Corp. (now known as AMH
Intermediate Holdings Corp.), a wholly-owned direct subsidiary of Parent (“Holdings”), Merger Sub,
a wholly-owned direct subsidiary of Holdings, and AMH II, with AMH II surviving such merger as a
wholly-owned direct subsidiary of Holdings. After a series of additional mergers (together with the
“Acquisition Merger,” the “Merger”), AMH II merged with and into Associated Materials, LLC, with
Associated Materials, LLC surviving such merger as a wholly-owned direct subsidiary of Holdings. As
a result of the Merger, Associated Materials, LLC (the “Company”) is now an indirect wholly-owned
subsidiary of Parent. Approximately 98% of the capital stock of Parent is owned by investment funds
affiliated with Hellman & Friedman LLC (“H&F”).
The financial statements for the periods ended July 3, 2010 have been presented to reflect the
financial results of the Company and its former direct and indirect parent companies, Associated
Materials Holdings, LLC, AMH and AMH II (together, the “Predecessor”). The financial statements for
the periods ended July 2, 2011 have been presented to reflect the financial results of the Company
subsequent to the Merger (the “Successor”). The Company’s results of operations and cash flows
prior to and including the Merger include the activity and results of its former direct and
indirect parent companies, which principally consisted of borrowings and related interest expense,
and are presented as the results of the Predecessor. The results of operations following the Merger
are presented as the results of the Successor.
The unaudited condensed consolidated financial statements of the Company have been prepared in
accordance with U.S. generally accepted accounting principles for interim financial reporting, the
instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by U.S. generally accepted accounting principles for
complete financial statements. In the opinion of management, these interim condensed consolidated
financial statements contain all of the normal recurring accruals and adjustments considered
necessary for a fair presentation of the unaudited results for the quarter and the six months ended
July 2, 2011 and July 3, 2010. These financial statements should be read in conjunction with the
Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K
for the year ended January 1, 2011. A detailed description of the Company’s significant accounting
policies and management judgments is located in the audited financial statements for the year ended
January 1, 2011, included in the Company’s Form 10-K filed with the Securities and Exchange
Commission.
The Company is a leading, vertically integrated manufacturer and distributor of exterior
residential building products in the United States and Canada. The Company produces a
comprehensive offering of exterior building products, including vinyl windows, vinyl siding,
aluminum trim coil and aluminum and steel siding and accessories, which are produced at the
Company’s 11 manufacturing facilities. The Company also sells complementary products that are
manufactured by third parties, such as roofing materials, insulation, exterior doors, vinyl siding
in a shake and scallop design and installation equipment and tools. Because most of the Company’s
building products are intended for exterior use, the Company’s sales and operating profits tend to
be lower during periods of inclement weather. Therefore, the results of operations for any interim
period are not necessarily indicative of the results of operations for a full year.
Recent Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05
eliminates the option to report other comprehensive income and its components in the statement of
changes in stockholders’ equity and requires an entity to present the total of comprehensive
income, the components of net income and the components of other comprehensive income either in a
single continuous statement or in two separate but consecutive statements. This pronouncement is
effective for fiscal years, and interim periods within those years, beginning after December 15,
2011. The Company believes the adoption of ASU 2011-05 concerns presentation and disclosure only
and will not have an impact on its consolidated financial position, results of operations or cash
flows.
In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU No. 2011-04”), which amends
current guidance to result in common fair value measurement and disclosures between accounting
principles generally accepted in the United States and International Financial Reporting Standards.
The amendments explain how to measure fair value. They do not require additional fair value
measurements and are not intended to establish valuation standards or affect valuation practices
outside of financial reporting. The amendments change the wording used to describe fair value
measurement requirements and disclosures, but often do not result in a change in the application of
current guidance. The amendments in ASU No. 2011-04 are effective for interim and annual periods
beginning after December 15, 2011. The Company does not believe that the adoption of the provisions
of ASU No. 2011-04 will have a material impact on its consolidated financial position, results of
operations or cash flows.
ASU No. 2010-29, Business Combinations (Topic 805)—Disclosure of Supplementary Pro Forma
Information for Business Combinations (“ASU 2010-29”), provides clarification regarding the
acquisition date that should be used for reporting the pro forma financial information disclosures
required by Topic 805 when comparative financial statements are presented. ASU 2010-29 also
requires entities to provide a description of the nature and amount of material, nonrecurring pro
forma adjustments that are directly attributable to the business combination. ASU 2010-29 is
effective for the Company prospectively for business combinations occurring after December 31,
2010.
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Goodwill and Other Intangible Assets
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Jul. 02, 2011
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Goodwill and Other Intangible Assets [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
Note 4 — Goodwill and Other Intangible Assets
The Merger was accounted for using the acquisition method of accounting. The total purchase
price was allocated to the tangible and intangible assets acquired and liabilities assumed based
upon their estimated fair values. The excess of the cost of the Merger over the fair value of the
assets acquired and liabilities assumed resulted in goodwill. Total goodwill was approximately
$573.9 million and $566.4 million as of July 2, 2011 and January 1, 2011, respectively. The Company
did not recognize any impairment losses of its goodwill during any of the periods presented. The
impact of foreign currency translation increased the carrying value of goodwill by $7.5 million for
the six months ended July 2, 2011. None of the Company’s goodwill is deductible for income tax
purposes.
In May 2011, the Company completed its acquisition of a supply center located in Evansville,
Indiana. As a result, the Company recorded an additional customer base intangible asset of
approximately $0.6 million and a non-compete agreement of less than $0.1 million, both of which
will be amortized.
The Company’s other intangible assets consist of the following (in thousands):
The Company’s non-amortized intangible assets consist of the Alside®,
Revere® and Gentek® trade names and are tested for impairment at least
annually at the beginning of the fourth quarter.
Finite-lived intangible assets are amortized on a straight-line basis over their estimated
useful lives. Amortization expense related to intangible assets was approximately $6.6 million and
$0.7 million for the quarters ended July 2, 2011 and July 3, 2010, respectively. Amortization
expense related to intangible assets was approximately $13.2 million and $1.4 million for the six
months ended July 2, 2011 and July 3, 2010, respectively. The foreign currency translation impact
on accumulated amortization of intangibles was less than $0.1 million for the quarter ended July 2,
2011. Amortization expense is expected to be approximately $13.2 million for the remainder of
fiscal 2011. Amortization expense is estimated to be $26.5 million per year for fiscal years 2012,
2013, 2014 and 2015.
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Long-Term Debt
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
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Long-Term Debt [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt |
Note 5 — Long-Term Debt
Long-term debt consists of the following (in thousands):
9.125% Senior Secured Notes due 2017
In October 2010, in connection with the consummation of the Merger, the Company and AMH New
Finance, Inc. (collectively, the “Issuers”) issued and sold $730.0 million of 9.125% Senior Secured
Notes due 2017 (the “9.125% notes”). The notes bear interest at a rate of 9.125% per annum and are
unconditionally guaranteed, jointly and severally, by each of the Issuers’ direct and indirect
domestic subsidiaries that guarantee the Company’s obligations under the senior secured asset-based
revolving credit facilities (the “ABL facilities”). The first semi-annual interest payment was made
on April 29, 2011.
As the Company did not complete its offer to exchange all of its outstanding privately placed
9.125% notes for newly registered 9.125% notes until July 2011, the fair value of the 9.125% notes
at July 2, 2011 and January 1, 2011 was estimated to be $730.0 million based upon the pricing
determined in the private offering of the 9.125% notes at the time of issuance in October 2010.
Subsequent to the completion of the notes exchange, the 9.125% notes have an estimated fair value
of $671.6 million based on quoted market prices as of August 8, 2011.
ABL Facilities
In October 2010, in connection with the consummation of the Merger, the Company entered into
the ABL facilities in the amount of $225.0 million (comprised of a $150.0 million U.S. facility and
a $75.0 million Canadian facility) pursuant to a revolving credit agreement maturing in 2015 (the
“Revolving Credit Agreement”). The revolving credit loans under the Revolving Credit Agreement bear
interest at the rate of (1) the London Interbank Offered Rate (“LIBOR”) (for Eurodollar loans under
the U.S. facility) or Canadian Dealer Offered Rate (“CDOR”) (for loans under the Canadian
facility), plus an applicable margin of 3.00% as of July 2, 2011, (2) the alternate base rate
(which is the highest of a prime rate, the Federal Funds Effective Rate plus 0.50% and a one-month
LIBOR rate plus 1.0% per annum), plus an applicable margin of 2.00% as of July 2, 2011, or (3) the
alternate Canadian base rate (which is the higher of a Canadian prime rate and the 30-day CDOR Rate
plus 1.0%), plus an applicable margin of 2.00% as of July 2, 2011.
As of July 2, 2011, there was $127.8 million drawn under the Company’s ABL facilities and
$52.7 million available for additional borrowings. As of July 2, 2011, the per annum interest rate
applicable to borrowings under the U.S. portion of the ABL facilities was 3.9%. As of July 2,
2011, the per annum interest rate applicable to borrowings under the Canadian portion of the ABL
facilities was 4.4%. The weighted average interest rate for borrowings under the ABL facilities was
4.0% for the quarter ended July 2, 2011. As of July 2, 2011, the Company had letters of credit
outstanding of $7.4 million primarily securing deductibles of various insurance policies.
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Subsidiary Guarantors
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Jul. 02, 2011
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Subsidiary Guarantors [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsidiary Guarantors |
Note 13 — Subsidiary Guarantors
The Company’s payment obligations under its 9.125% notes are fully and unconditionally
guaranteed, jointly and severally, on a senior basis, by its domestic wholly owned subsidiaries,
Gentek Holdings, LLC and Gentek Building Products, Inc. AMH New Finance, Inc. (formerly Carey New
Finance, Inc.) is a co-issuer of the 9.125% notes and is a domestic wholly owned subsidiary of the
Company having no operations, revenues or cash flows for the periods presented.
Associated Materials Canada Limited, Gentek Canada Holdings Limited and Gentek Buildings
Products Limited Partnership are Canadian companies and do not guarantee the Company’s 9.125%
notes. In the opinion of management, separate financial statements of the respective Subsidiary
Guarantors would not provide additional material information that would be useful in assessing the
financial composition of the Subsidiary Guarantors.
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET July 2, 2011 (Successor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For The Quarter Ended July 2, 2011 (Successor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For The Six Months Ended July 2, 2011 (Successor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For The Six Months Ended July 2, 2011 (Successor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET January 1, 2011 (Successor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For The Quarter Ended July 3, 2010 (Predecessor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For The Six Months Ended July 3, 2010 (Predecessor) (In thousands)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For The Six Months Ended July 3, 2010 (Predecessor) (In thousands)
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Comprehensive Income (Loss)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
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Comprehensive Income (Loss) [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) |
Note 6 — Comprehensive Income (Loss)
Comprehensive income (loss) differs from net income (loss) due to the reclassification of
actuarial gains or losses and prior service costs associated with the Company’s pension and other
postretirement plans and foreign currency translation adjustments as follows (in thousands):
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Business Combination
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
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Business Combination [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination |
Note 2 — Business Combination
Unaudited pro forma operating results of the Company giving effect to the Merger on January 3,
2010 is summarized as follows (in thousands):
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Employee Termination Costs
|
6 Months Ended |
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Jul. 02, 2011
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Employee Termination Costs [Abstract] | Â |
Employee Termination Costs |
Note 11 — Employee Termination Costs
On June 2, 2011, Thomas N. Chieffe resigned from his position as President and Chief Executive
Officer and as a director of the Company, and on June 29, 2011, Warren J. Arthur resigned from his
position as Senior Vice President of Operations of the Company. The Company accrued $5.5 million
for separation costs, including payroll taxes, certain benefits and related professional fees,
which has been recorded as a component of selling, general and administrative expenses for the
quarter and six months ended July 2, 2011. Payments for Mr. Chieffe and Mr. Arthur’s separation
costs will be paid in accordance with their respective employment agreements, with approximately
$2.6 million to be paid over the next 12 months and the remainder paid at various dates through
October 2013.
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