-----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, Tyy5GmSLsfwdhS27wCoELCeI5/3hEQLglGXovcan4D3Ria75ligax4NOIuXasqYS ii3u4KU/34HCJTfJ6941SQ== 0000950134-99-007390.txt : 19990816 0000950134-99-007390.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950134-99-007390 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-24956 FILM NUMBER: 99689396 BUSINESS ADDRESS: STREET 1: 2200 ROSS AVE STE 4100 E CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2142204600 MAIL ADDRESS: STREET 1: 2200 ROSS AVENUE STREET 2: SUITE 4100 EAST CITY: DALLAS STATE: TX ZIP: 75201 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1999 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------------- F0RM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 ----------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- ----------------- Commission file number: 0-24956 ASSOCIATED MATERIALS INCORPORATED - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 75-1872487 - -------------------------------------------------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation of Organization) Identification No.) 2200 Ross Avenue, Suite 4100 East, Dallas, Texas 75201 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (214) 220-4600 ----------------------------- Not Applicable - -------------------------------------------------------------------------------- Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report Indicate by check X whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No ----- ----- Shares of Common Stock, $.0025 par value outstanding at August 10, 1999: 6,481,883 --------- Shares of Class B Common Stock, $.0025 par value outstanding at August 10, 1999: 1,550,000 --------- 2 ASSOCIATED MATERIALS INCORPORATED FORM 10-Q FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 1999
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets ........................................................ 1 June 30, 1999 (Unaudited) and December 31, 1998 Statements of Operations (Unaudited) .................................. 2 Quarter and six months ended June 30, 1999 and 1998 Statements of Cash Flows (Unaudited) .................................. 3 Six months ended June 30, 1999 and 1998 Notes to Financial Statements (Unaudited) ............................. 4 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition ..................................... 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk ....... 11 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders .............. 12 Item 6. Exhibits and Reports on Form 8-K ................................. 12 SIGNATURES .................................................................. 13
3 Part I. Financial Information Item 1. Financial Statements ASSOCIATED MATERIALS INCORPORATED BALANCE SHEETS (In Thousands, Except Share Data)
June 30, December 31, 1999 1998 --------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents ................................ $ 1,689 $ 14,964 Accounts receivable, net ................................. 56,260 45,756 Inventories .............................................. 66,127 56,245 Other current assets ..................................... 3,637 3,572 --------- --------- Total current assets ........................................ 127,713 120,537 Property, plant and equipment, net .......................... 70,601 61,130 Investment in Amercord Inc. ................................. 4,416 4,961 Other assets ................................................ 3,015 2,691 --------- --------- Total assets ................................................ $ 205,745 $ 189,319 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ......................................... $ 29,106 $ 11,713 Accrued liabilities ...................................... 19,644 25,417 Income taxes payable ..................................... 4,000 582 Current portion of long-term debt ........................ -- 3,600 --------- --------- Total current liabilities ................................... 52,750 41,312 Deferred income taxes ....................................... 3,540 2,616 Other liabilities ........................................... 5,992 6,013 Long-term debt .............................................. 75,000 75,000 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value: Authorized shares - 100,000 at June 30, 1999 and December 31, 1998 Issued shares - 0 at June 30, 1999 and December 31, 1998 .................................. -- -- Common stock, $.0025 par value: Authorized shares - 15,000,000 Issued shares - 6,987,279 at June 30, 1999 and 6,938,747 at December 31, 1998 .............. 17 17 Common stock, Class B, $.0025 par value: Authorized and issued shares - 1,550,000 at June 30, 1999 and December 31, 1998 ............. 4 4 Less: Treasury stock, at cost - 440,396 shares at June 30, 1999 and 88,396 at December 31, 1998 ...... (4,975) (1,048) Capital in excess of par .............................. 12,734 12,273 Retained earnings ..................................... 60,683 53,132 --------- --------- Total stockholders' equity ............................ 68,463 64,378 --------- --------- Total liabilities and stockholders' equity .................. $ 205,745 $ 189,319 ========= =========
See accompanying notes. -1- 4 ASSOCIATED MATERIALS INCORPORATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, Except Per Share Data)
Quarter Ended Six Months Ended June 30, June 30, ------------------------ ------------------------ 1999 1998 1999 1998 --------- --------- --------- --------- Net sales .......................................... $ 118,908 $ 108,789 $ 203,505 $ 187,439 Cost of sales ...................................... 80,075 74,700 139,517 131,020 --------- --------- --------- --------- 38,833 34,089 63,988 56,419 Selling, general and administrative expense ........ 24,246 22,051 46,141 42,525 --------- --------- --------- --------- Income from operations ............................. 14,587 12,038 17,847 13,894 Interest expense ................................... 1,760 1,897 3,439 4,180 --------- --------- --------- --------- 12,827 10,141 14,408 9,714 Equity in loss of Amercord Inc. .................... (317) (630) (545) (1,194) --------- --------- --------- --------- Income before income taxes and extraordinary item .............................. 12,510 9,511 13,863 8,520 Income tax expense ................................. 4,914 4,126 5,467 3,902 --------- --------- --------- --------- Income before extraordinary item ................... 7,596 5,385 8,396 4,618 Extraordinary loss from retirement of debt, net of income taxes ................................. -- -- -- 4,054 --------- --------- --------- --------- Net income ......................................... $ 7,596 $ 5,385 $ 8,396 $ 564 ========= ========= ========= ========= Earnings Per Common Share - Basic: Income before extraordinary item ................... $ 0.94 $ 0.64 $ 1.02 $ 0.57 Extraordinary loss from retirement of debt ......... -- -- -- (0.50) --------- --------- --------- --------- Net income per common share ........................ $ 0.94 $ 0.64 $ 1.02 $ 0.07 ========= ========= ========= ========= Earnings Per Common Share - Assuming Dilution: Income before extraordinary item ................... $ 0.91 $ 0.63 $ 1.00 $ 0.56 Extraordinary loss from retirement of debt ......... -- -- -- (0.49) --------- --------- --------- --------- Net income per common share ........................ $ 0.91 $ 0.63 $ 1.00 $ 0.07 ========= ========= ========= =========
See accompanying notes. -2- 5 ASSOCIATED MATERIALS INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended June 30, ---------------------- 1999 1998 -------- -------- OPERATING ACTIVITIES Net income .................................................... $ 8,396 $ 564 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ........................... 4,019 3,466 Deferred income taxes ................................... 924 (387) Loss in earnings of Amercord Inc. ....................... 545 1,194 Loss on sale of assets .................................. -- 19 Extraordinary loss on retirement of debt ................ -- 4,054 Changes in operating assets and liabilities: Accounts receivable, net ............................. (10,504) (5,368) Inventories .......................................... (9,882) (6,618) Income taxes receivable/payable ...................... 3,418 5,644 Bank overdrafts ...................................... -- (2,499) Accounts payable and accrued liabilities ............. 11,620 4,578 Other assets and liabilities ......................... (546) (1,294) -------- -------- Net cash provided by operating activities ..................... 7,990 3,353 INVESTING ACTIVITIES Proceeds from sale of assets .................................. 21 45 Additions to property, plant and equipment .................... (13,375) (6,486) -------- -------- Net cash used by investing activities ......................... (13,354) (6,441) ........ FINANCING ACTIVITIES Net proceeds from issuance of long-term debt .................. -- 75,000 Net proceeds from issuance of common stock .................... 431 11,485 Net decrease in revolving line of credit ...................... -- (564) Principal payments of long-term debt .......................... (3,600) (850) Principal payments on 11 1/2% Senior Subordinated Notes ....... -- (72,900) Prepayment premium of early retirement of debt ................ -- (4,809) Debt issuance cost ............................................ -- (2,509) Dividends paid ................................................ (845) (569) Treasury stock acquired ....................................... (3,927) -- Options exercised ............................................. 30 -- -------- -------- Net cash provided by (used by) financing activities ........... (7,911) 4,284 Net increase (decrease) in cash ............................... (13,275) 1,196 Cash at beginning of period ................................... 14,964 1,935 -------- -------- Cash at end of period ......................................... 1,689 $ 3,131 ======== ======== Supplemental information: Cash paid for interest ........................................ $ 3,439 $ 5,176 ======== ======== Net cash paid for income taxes ................................ $ 2,420 $ 1,293 ======== ========
See accompanying notes. -3- 6 ASSOCIATED MATERIALS INCORPORATED NOTES TO FINANCIAL STATEMENTS FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The unaudited financial statements of Associated Materials Incorporated (the "Company") for the quarter and six months ended June 30, 1999 have been prepared in accordance with 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 generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 filed with the Securities and Exchange Commission. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year. NOTE 2 - INVENTORIES Inventories are valued at the lower of cost (first in, first out) or market. Inventories consist of the following (in thousands):
June 30, December 31, 1999 1998 ------- ------- Raw materials ......................... $20,832 $16,422 Work in process ....................... 4,534 4,728 Finished goods and purchased stock .... 40,761 35,095 ------- ------- $66,127 $56,245 ======= =======
NOTE 3 - INVESTMENT IN AMERCORD INC. ("AMERCORD") The Company's investment in Amercord, a 50% owned affiliate, is accounted for using the equity method. Condensed statements of operations for Amercord are presented below (in thousands):
Quarter Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Net sales ...................... $ 13,470 $ 16,280 $ 27,232 $ 32,927 Costs and expenses ............. 14,117 17,915 28,277 36,000 -------- -------- -------- -------- Loss from operations ........... (647) (1,635) (1,045) (3,073) Interest expense ............... 359 366 684 718 Income tax benefit ............. (372) (740) (640) (1,403) -------- -------- -------- -------- Net loss ....................... $ (634) $ (1,261) $ (1,089) $ (2,388) ======== ======== ======== ======== Company's share of net loss .... $ (317) $ (630) $ (545) $ (1,194) ======== ======== ======== ========
Amercord is not in compliance with certain financial covenants under its existing bank credit agreement. Amercord has extended its forbearance agreement with its lender to August 31, 1999 subject to certain conditions. In connection with this forbearance agreement, the Company has guaranteed borrowings of up to $3,000,000 under -4- 7 Amercord's credit agreement. Amercord is currently negotiating a new credit agreement. The Company has announced its intention to sell its 50% interest in Amercord. NOTE 4 - STOCKHOLDERS' EQUITY In October 1998 the Company's Board of Directors approved a stock repurchase program. Under its stock repurchase program, the Company is authorized to purchase up to 800,000 shares of common stock in open market transactions. At June 30, 1999, 399,000 shares have been purchased under the program at a cost of $4,433,000. During the quarter ended June 30, 1999, the Company purchased 117,000 shares of its common stock at a cost of $1,468,000. For the six months ended June 30, 1999, the Company has purchased 352,000 shares of its common stock at a cost of $3,927,000. NOTE 5 - EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per share:
Quarter Ended Six Months Ended June 30, June 30, ----------------- ----------------- 1999 1998 1999 1998 ------ ------ ------ ------ Numerator: Numerator for basic and diluted earnings per common share - earnings before extraordinary item ........................ $7,596 $5,385 $8,396 $4,618 Denominator: Denominator for basic earnings per common - share weighted-average shares ............... 8,097 8,402 8,218 8,117 Effect of dilutive securities: Employee stock options ....................... 211 158 179 158 ------ ------ ------ ------ Denominator for diluted earnings per common share - adjusted weighted-average shares ..... 8,308 8,560 8,397 8,275 Basic earnings per common share before extraordinary item .............................. $ 0.94 $ 0.64 $ 1.02 $ 0.57 ====== ====== ====== ====== Diluted earnings per common share before extraordinary item .............................. $ 0.91 $ 0.63 $ 1.00 $ 0.56 ====== ====== ====== ======
For the quarter and six months ended June 30, 1999, options to purchase 40,000 shares of common stock were excluded from the calculation of weighted average shares outstanding because the average exercise price of these shares was higher than the average market price of the common stock during the period. NOTE 6 - AMENDMENT OF REVOLVING CREDIT AGREEMENT The Company amended its existing $50 million bank credit facility that expired on May 31, 1999 to extend the term of the credit facility through May 2002. The Company's amended bank credit agreement released the lender's security interest in the Company's equipment and improved pricing terms based upon the Company's financial performance. -5- 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Quarter Ended June 30, 1999 Compared to Quarter Ended June 30, 1998 The table below sets forth for the periods indicated certain items of the Company's financial statements by segment:
Quarter Ended June 30, ---------------------------------------------------- 1999 1998 ------------------------ ------------------------- Percentage of Percentage of Amount Total Net Sales Amount Total Net Sales -------- --------------- -------- --------------- Total Company: Net sales - Alside ............... $109,155 91.8% $ 94,961 87.3% Net sales - AmerCable ............ 9,753 8.2 13,828 12.7 -------- -------- -------- -------- Total net sales ............... 118,908 100.0 108,789 100.0 Gross profit ..................... 38,833 32.7 34,089 31.3 Selling, general and administrative expense (1) .... 24,246 20.4 22,051 20.2 -------- -------- -------- -------- Income from operations ........... $ 14,587 12.3% $ 12,038 11.1% ======== ======== ======== ======== Alside: Net sales ........................ $109,155 100.0% $ 94,961 100.0% Gross profit ..................... 37,647 34.5 31,140 32.8 Selling, general and administrative expense ........ 22,306 20.4 20,129 21.2 -------- -------- -------- -------- Income from operations ........... $ 15,341 14.1% $ 11,011 11.6% ======== ======== ======== ======== AmerCable: Net sales ........................ $ 9,753 100.0% $ 13,828 100.0% Gross profit ..................... 1,186 12.2 2,949 21.3 Selling, general and administrative expense ........ 998 10.2 1,325 9.6 -------- -------- -------- -------- Income from operations ........... $ 188 2.0% $ 1,624 11.7% ======== ======== ======== ========
(1) Consolidated selling, general and administrative expenses include corporate expenses of $942,000 and $597,000 for the quarters ended June 30, 1999 and 1998, respectively. Overview The Company's net sales increased to $118.9 million or 9.3% for the second quarter of 1999 as compared to the 1998 period due to higher sales at the Company's Alside division. Income from operations increased 21.2% to $14.6 million for the second quarter of 1999 due to higher profits at its Alside division. The Company's net income was $7.6 million or $0.91 per share for the second quarter of 1999 as compared to $5.4 million or $0.63 per share for the same period in 1998 due to higher income from operations, lower interest expense, smaller losses at the Company's Amercord affiliate and improved tax rates. ALSIDE. Alside's net sales increased 14.9% to $109.2 million for the quarter ended June 30, 1999 as compared to $95.0 million for the same period in 1998 due to higher sales volume across all product lines. Unit sales of vinyl siding increased 17.4% for the second quarter of 1999 as compared to the 1998 period. Unit sales of vinyl windows increased 13.8% for the second quarter of 1999 as compared to 1998 as a result of the ongoing -6- 9 reorganization of its window manufacturing operations. Gross profit as a percentage of sales increased to 34.5% for the 1999 period as compared to 32.8% for the same period in 1998 due to improved production efficiencies and lower raw material costs. Income from operations increased $4.3 million to $15.3 million for the 1999 period due to higher sales volume and lower material costs. Selling, general and administrative expense increased $2.2 million to $22.3 million due to higher personnel costs, principally incentive compensation, but decreased as a percentage of net sales. AMERCABLE. AmerCable's net sales decreased 29.5% to $9.8 million for the second quarter of 1999 as compared with $13.8 million for the same period in 1998 due primarily to lower sales to AmerCable's mining and offshore drilling industry customers due to decreased demand resulting from lower commodity prices. Gross profit as a percentage of sales decreased to 12.2% for the 1999 period as compared to 21.3% for the 1998 period due to lower fixed cost absorption resulting from lower production volumes. Income from operations was $188,000 for the quarter ended June 30, 1999 as compared to $1.6 million for the same period in 1998. Selling, general and administrative expenses decreased to $1.0 million for the second quarter of 1999. AMERCORD. The Company recorded a loss of $317,000 (or $0.04 per share) reflecting its share of the after-tax loss of Amercord for the quarter ended June 30, 1999 as compared with a loss of $630,000 (or $0.07 per share) during the same period in 1998. Amercord's gross profit increased $1.1 million to $105,000 for the quarter ended June 30, 1999 as compared to $(1.0) million for the same period in 1998 due primarily to increased manufacturing efficiencies. Selling, general and administrative expenses increased to $783,000 in the 1999 period from $631,000 for the 1998 period. OTHER. Net interest expense decreased $137,000 or 7.2% for the second quarter of 1999 compared with the same period in 1998 due to a decrease in the Company's average short-term borrowings. The Company recorded interest income of $10,000 for the quarter ended June 30, 1999. The Company's effective tax rate has decreased due to lower state taxes. -7- 10 Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998. The table below sets forth for the periods indicated certain items of the Company's financial statements by segments.
Six Months Ended June 30, ---------------------------------------------------- 1999 1998 ------------------------ ------------------------- Percentage of Percentage of Amount Total Net Sales Amount Total Net Sales -------- --------------- -------- --------------- Total Company: Net sales - Alside ............... $183,264 90.1% $159,354 85.0% Net sales - AmerCable ............ 20,241 9.9 28,085 15.0 -------- -------- -------- -------- Total net sales ............... 203,505 100.0 187,439 100.0 Gross profit ..................... 63,988 31.4 56,419 30.1 Selling, general and administrative expense (1) .... 46,141 22.7 42,525 22.7 -------- -------- -------- -------- Income from operations ........... $ 17,847 8.7% $ 13,894 7.4% ======== ======== ======== ======== Alside: Net sales ........................ $183,264 100.0% $159,354 100.0% Gross profit ..................... 60,802 33.2 50,483 31.6 Selling, general and administrative expense ........ 42,121 23.0 38,771 24.3 -------- -------- -------- -------- Income from operations ........... $ 18,681 10.2% $ 11,712 7.3% ======== ======== ======== ======== AmerCable: Net sales ........................ $ 20,241 100.0% $ 28,085 100.0% Gross profit ..................... 3,186 15.7 5,936 21.1 Selling, general and administrative expense ........ 2,192 10.8 2,550 9.1 -------- -------- -------- -------- Income from operations ........... $ 994 4.9% $ 3,386 12.0% ======== ======== ======== ========
(1) Consolidated selling, general and administrative expenses include corporate expenses of $1,828,000 and $1,204,000 for the six-month periods ended June 30, 1999 and 1998, respectively. Overview The Company's net sales increased to $203.5 million up 8.6% for the six months ended June 30, 1999 as compared to $187.4 million of the same period in 1998 due to strong sales at the Company's Alside division. Income from operations increased by $4.0 million or 28.5% to $17.8 million for the six months ended June 30, 1999 due to increased profitability at the Company's Alside division. The Company's income before extraordinary item increased to $8.4 million ($1.00 per share) for the six months ended June 30, 1999 as compared to $4.6 million ($0.56 per share) for the same period in 1998 due to higher income from operations, lower interest expense and smaller losses from the Company's Amercord affiliate. ALSIDE. Alside's net sales for the six months ended June 30, 1999 increased 15.0% to $183.3 million as compared to $159.4 million for the same period in 1998 due to higher sales volume across all product lines. For the six months ended June 30, 1999, unit sales of vinyl siding and vinyl windows increased 18.5% and 10.6%, respectively as compared to the same period in 1998. Gross profit as a percentage of net sales increased to 33.2% for the six months ended June 30, 1999 as compared to 31.6% for the same period in 1998. Selling, general and administrative expense increased to $42.1 million for the six months ended June 30, 1999 due to higher personnel costs, principally incentive compensation. Income from operations increased 59.5% to $18.7 million for the six months ended June 30, 1999 as compared to $11.7 million for the same period in 1998 due to improved gross profits that were partially offset by increased selling, general and administrative expenses. -8- 11 AMERCABLE. AmerCable's net sales decreased to $20.2 million for the six months ended June 30, 1999 as compared to $28.1 million in the 1998 period due primarily to lower sales to AmerCable's mining and offshore drilling industry customers due to decreased demand resulting from lower commodity prices. Gross profit decreased $2.7 million or 46.3% for the six months ended June 30, 1999 as compared to the 1998 period principally due to unfavorable fixed cost absorption resulting from lower production volume and reduced sales volume. Selling, general and administrative expenses decreased to $2.2 million due primarily to lower personnel costs. Income from operations decreased to $1.0 million for the six months ended 1999 as compared to $3.4 million for the same period in 1998. AMERCORD. The Company recorded a loss of $545,000 for its equity in the after-tax loss of Amercord for the six months ended June 30, 1999 as compared to a loss of $1.2 million during the same period in 1998. Amercord's gross profit increased $2.1 million to $326,000 for the six months ended June 30, 1999 as compared to $(1.8) million for the same period in 1998 due primarily to increased manufacturing efficiencies. Selling, general and administrative expenses increased to $1.4 million in 1999 from $1.2 million in 1998. OTHER. Net interest expense decreased $741,000 or 17.7% for the six months ended June 30, 1999 as compared to the same period in 1998 due to a decrease in the Company's borrowing, the repurchase of $72.9 million of 11 1/2% Notes and the issuance of the 9 1/4% Notes. The Company recorded interest income of $141,000 for the six months ended June 30, 1999. The Company's effective tax rate has decreased due to lower state taxes. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1999 the Company had cash and cash equivalents of $1.7 million and available borrowing capacity of approximately $45.4 million under its existing credit facility. Outstanding letters of credit totaled $4.6 million securing $1.6 million of various insurance letters of credit and $3.0 million securing a letter of credit to guarantee borrowings of up to $3.0 million of Amercord's credit facility. The Company amended its existing $50 million bank credit facility that expired on May 31, 1999 to extend the term of the credit facility through May 2002. The Company's amended agreement released the lender's security interest in the Company's equipment and improved pricing terms based upon the Company's financial performance. Net cash provided by operations was $8.0 million in the six months ended June 30, 1999 compared with $3.4 million in the same period in 1998. The increase in cash provided by operations for the 1999 period was due primarily to an increase in net income in 1999 as compared to 1998. Capital expenditures totaled $13.4 million for the six months ended June 30, 1999, compared with $6.5 million during the same period in 1998. Expenditures in the 1999 period were used primarily in the construction of the Company's new vinyl siding manufacturing plant as well as to increase production flexibility and capacity at AmerCable. Capital expenditures on the new vinyl siding manufacturing plant were $8.2 million in 1999. Operations began at the Company's new vinyl siding facility in July of 1999. During the six months ended June 30, 1999, the Company purchased 352,000 shares of its common stock at a cost of $3,927,000. These purchases were made under its previously announced share repurchase program pursuant to which the Company is authorized to purchase up to a total of 800,000 shares of the common stock from time to time in open market transactions. The Company's ability to repurchase shares of its common stock is subject to the terms of the indenture pursuant to which its 9 1/4% senior subordinated notes were issued. Amercord is not in compliance with certain financial covenants under its existing bank credit agreement. Amercord has extended its forbearance agreement with its lender to August 31, 1999 subject to certain conditions. In connection with this forbearance agreement, the Company has guaranteed borrowings of up to $3.0 million under Amercord's credit agreement. Amercord is currently negotiating a new credit agreement. The Company believes the future cash flows from operations and its borrowing capacity under its existing or new credit agreement will be sufficient to satisfy its obligations to pay principal and interest on its outstanding debt, maintain current operations, provide sufficient capital for presently anticipated capital expenditures and fund its -9- 12 stock repurchase program. However, there can be no assurances that the cash so generated by the Company will be sufficient for these purposes. YEAR 2000 Historically, computer programs have used a two-digit format rather than a four-digit format to refer to the year. After the year 1999, these computer programs will not recognize the year correctly which may cause the computer application to fail or to process data incorrectly. STATE OF READINESS. The Company began its Year 2000 program in 1997 in order to ensure all systems were Year 2000 compliant. The Company's Alside division divided its Year 2000 information technology ("IT") project as follows: mainframe, AS 400 systems, manufacturing systems and PC systems. Alside has reviewed its mainframe and AS 400 systems and believes all date fields have been corrected. All mission critical programs within its mainframe have been tested and are believed to be Year 2000 compliant. The mission critical programs include the general ledger, accounts payable, billing/receivable and payroll. Updates to Alside's manufacturing systems were completed in the first quarter of 1999. Testing of its manufacturing systems was completed in the second quarter of 1999. Alside has established a task force consisting of representatives from Information Services, distribution and each of the manufacturing facilities to review the status of its PC systems. Alside identified the system updates necessary to ensure its PC systems are Year 2000 compliant. These updates are currently being tested by several locations. Alside anticipates completion of its PC systems update by October 1999. The Company's AmerCable division believes its IT systems are Year 2000 compliant. Alside and AmerCable are currently assessing and updating their non-IT systems. The Company has contacted significant suppliers to assess Year 2000 compliance and readiness. The majority of the questionnaires sent to suppliers have been returned. Based upon the responses received, it appears the Company's suppliers are aware of the Year 2000 issue and are taking the necessary steps to ensure Year 2000 compliance. COSTS. To date, the Company's costs to address Year 2000 issues have not been material. The Company's Alside division designs the majority of its application systems in-house. The process of reviewing the in-house systems and converting date sensitive fields was done by Alside's computer programmers as part of routine system maintenance. Alside retained an independent consultant to assist with Year 2000 compliance for its manufacturing systems and created a PC systems task force to identify and address certain hardware and software systems. Alside has spent approximately $250,000 to date and estimates it will spend an additional $100,000 to complete its Year 2000 program. The Company's AmerCable division installed a new information system in 1996 that is Year 2000 compliant. AmerCable's system acquisition was not accelerated due to Year 2000 and is therefore not considered as part of the Year 2000 expenditures. COMPANY RISKS AND CONTINGENCY PLAN. The Company believes that its most significant remaining Year 2000 risk is associated with its suppliers. The Company completed its evaluation of its suppliers and believes its major suppliers are Year 2000 compliant based upon their responses to the Company's Year 2000 questionnaire. Based upon supplier readiness, availability of raw materials from a variety of suppliers and guaranteed delivery contracts with vinyl resin suppliers, the Company does not anticipate any material production delays due to raw material unavailability. The Company believes its customers will not be significantly impacted by the Year 2000 due to the nature of the home improvement business. EFFECTS OF INFLATION The Company believes that the effects of inflation on its operations have not been material during the past two years. Inflation could adversely affect the Company if inflation results in significantly higher interest rates or substantial weakness in economic conditions. Alside's principal raw material, vinyl resin, has been subject to rapid price changes. The average price of vinyl resin in 1999 has been lower than 1998 levels. However, vinyl resin prices have increased in 1999 and are expected to exceed 1998 prices in the third and fourth quarters of 1999. Alside has historically been able to pass on price increases to its customers. No assurances can be given that Alside will be able to pass on any price increases in the future. -10- 13 CERTAIN FORWARD-LOOKING STATEMENTS This report contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the beliefs of, and estimates and assumptions made by and information currently available to, the Company's management. When used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," and similar words, as they relate to the Company or the Company's management, identify forward-looking statements. These statements reflect the current views of the Company's management regarding the operations and results of operations of the Company as well as its customers and suppliers, including as a result of the availability of consumer credit, interest rates, employment trends, changes in levels of consumer confidence, changes in consumer preferences, national and regional trends in new housing starts, raw material costs, pricing pressures, shifts in market demand, Year 2000 issues and general economic conditions. These statements are subject to certain risks and uncertainties. Certain factors that might cause a difference are discussed in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Should one or more of these risks or uncertainties occur, or should management's assumptions or estimates prove incorrect, actual results and events may vary materially from those discussed in the forward-looking statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is subject to commodity price risk, interest rate risk and foreign currency exchange rate risk. The Company has experienced no significant changes in market risk during the quarter or six months ended June 30, 1999. The Company's market risk is described in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. -11- 14 Part II Other Information Item 4. Submission of Matters to a Vote of Security Holders. The 1999 Annual Meeting of Stockholders of the Company was held on May 20, 1999. The following nominees for director were elected to serve as directors until the 2002 Annual Meeting of Stockholders:
For Against --------- ------- James F. Leary 6,424,181 75,523 A. A. Meitz 6,426,491 73,213
The following directors continue in office as directors after the 1999 Annual Meeting for the terms expiring at the annual meeting in the year listed below:
Term Expires ------------ William W. Winspear 2000 Donald L. Kaufman 2000 Alan B. Lerner 2000 Richard I. Galland 2001 John T. Gray 2001
The stockholders also voted upon and approved the adoption of the Associated Materials Employee Stock Purchase Plan.
For Against Abstain --------- ------- ------- 6,376,022 116,250 7,432
The stockholders also voted upon and approved the adoption of the Associated Materials Incorporated Incentive Bonus Plan.
For Against Abstain --------- ------- ------- 6,366,749 125,445 7,510
The stockholders also voted upon and ratified the appointment of Ernst & Young LLP as the independent auditors of the Company for the fiscal year 1999.
For Against Abstain --------- ------- ------- 6,366,749 125,445 7,510
Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10.1 - Third Amendment to Second Amended and Restated Loan and Security Agreement and Waiver, dated as of May 21, 1999 between the Company and KeyBank National Association. 27 - Financial Data Schedule. (b) Reports on Form During the quarter ended June 30, 1999, Associated Materials Incorporated filed no Current Reports on Form 8-K. -12- 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ASSOCIATED MATERIALS INCORPORATED --------------------------------- (Registrant) Date: August 10, 1999 By: \s\ Robert L. Winspear -------------------------------------------- Robert L. Winspear Vice President and Chief Financial Officer Date: August 10, 1999 \s\ Robert L. Winspear -------------------------------------------- Robert L. Winspear Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) -13- 16 INDEX TO EXHIBITS
Exhibit Number Description - ------ ----------- 10.1 Third Amendment to Second Amended and Restated Loan and Security Agreement and Waiver, dated as of May 21, 1999 between the Company and KeyBank National Association. 27 Financial Data Schedule.
EX-10.1 2 3RD AMENDMENT TO 2ND AMENDED & RESTATED LOAN AGMT 1 EXHIBIT 10.1 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND WAIVER THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Amendment") is made as of the 21st day of May, 1999, by and between KEYBANK NATIONAL ASSOCIATION, a national banking association and formerly known as Society National Bank ("Lender"), and ASSOCIATED MATERIALS INCORPORATED, a Delaware corporation ("Borrower"). WITNESSETH THAT: WHEREAS, the Lender and the Borrower entered into a Second Amended and Restated Loan and Security Agreement dated as of April 2, 1996, as amended by the First Amendment to Second Amended and Restated Loan and Security Agreement and Waiver dated as of January 27, 1998, and the Second Amendment to Second Amended and Restated Loan and Security Agreement and Waiver dated as of September 8, 1998 (collectively, the "Loan Agreement"); and WHEREAS, the parties desire to amend the Loan Agreement as set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Effect of Amendment; Definitions. Effective as of the date of this Amendment, the Loan Agreement shall be and hereby is amended as provided in Section 2 hereof. Except as expressly amended in Section 2 hereof, the Loan Agreement shall continue in full force and effect in accordance with its respective provisions on the date hereof. As used in the Loan Agreement, the terms "this Agreement", "herein", "hereinafter", "hereto", "hereof", and words of similar import shall, unless the context otherwise requires, mean the Loan Agreement as amended and modified by this Amendment. Capitalized terms that are not otherwise defined herein have the meanings ascribed to such terms in the Loan Agreement. 2. Amendments. (A) Section 2.2 of the Loan Agreement shall be amended by deleting the first two paragraphs thereof and substituting in lieu thereof the following: "2.2. Interest Rate. Through December 31, 1999, Borrower shall pay to Lender interest on the outstanding principal balance of all Revolving Loans and on the principal amount of all other Liabilities which are outstanding at a rate per annum equal to (i) the Prime Rate or (ii) upon an election by Borrower in accordance with Section 2.11, the LIBOR Rate plus one and one-quarter percent (1-1/4%). On and after January 1, 2000, all Advances outstanding under this Agreement shall bear interest at a rate per annum equal to the Prime Rate in effect from time to time, or upon election by Borrower in accordance with Section 2.11, the LIBOR Rate, in each case plus the Applicable Margin set forth below that corresponds to the Leverage Ratio (as 2 hereinafter defined) as of the last day of the immediately preceding March 31 or September 30. As used herein, "Leverage Ratio" means the Total Funded Debt (as defined in Section 10.15(D) of this Agreement) as of the date of determination divided by the Consolidated EBITDA determined for the four most recently completed fiscal quarters of Borrower preceding the date of determination.
APPLICABLE APPLICABLE APPLICABLE APPLICABLE MARGIN FOR MARGIN FOR UNUSED LETTER OF LEVEL LEVERAGE RATIO PRIME RATE LIBOR RATE FACILITY FEE CREDIT FEE - ----- ------------------- ---------- ---------- ------------ ----------- 1 > 2.75 25% 2.00% .25% 1.50% - ----- ------------------- ---------- ---------- ------------ ----------- 2 > 2.50 and <= 2.75 0% 1.75% .25% 1.50% - ----- ------------------- ---------- ---------- ------------ ----------- 3 > 2.25 and <= 2.50 0% 1.50% .25% 1.50% - ----- ------------------- ---------- ---------- ------------ ----------- 4 > 1.50 and <= 2.25 0% 1.25% .25% 1.25% - ----- ------------------- ---------- ---------- ------------ ----------- 5 <= 1.50 0% 1.00% .20% 1.125% - ----- ------------------- ---------- ---------- ------------ -----------
(B) Section 2.3 of the Loan Agreement shall be amended by deleting the same and substituting in lieu thereof the following: "2.3. Termination. The Revolving Loan Facility, Term Loan Advance Facility and LC Facility and Lender's obligations with respect thereto shall be in effect until May 31, 2002 ("Initial Term"). Upon the effective date of termination of the Revolving Loan Facility and LC Facility, all of the Liabilities shall become immediately due and payable without notice or demand. Upon termination of this Agreement and the Ancillary Agreements, satisfaction of Borrower's obligations hereunder and payment in full of the Liabilities, Lender shall comply with Section 12.17." (C) Section 2.4(A) of the Loan Agreement shall be amended by deleting the same and substituting in lieu thereof the following: "(A) Revolving Loan Facility, Term Loan Advance Facility and LC Facility. Borrower may terminate the Revolving Loan Facility, Term Loan Advance Facility and LC Facility in whole, but not in part (except for partial terminations pursuant to repayment or refinancing in accordance with the proviso to this sentence), at any time prior to the end of the Initial Term by paying to Lender upon such termination the then outstanding principal, accrued interest, other charges, and other Liabilities owing under the terms of this Agreement, including, without limitation, any accrued and unpaid amounts due pursuant to Sections 2.5, 2.6, and 2.8 of this Agreement and in addition to such amounts, as liquidated damages for Lender's loss of the benefit of its bargain, an amount equal to (a) one percent (1.0%) of the Total Credit Facility in effect on the date of termination if such termination occurs on or prior to May 31, 2001, and (b) one-half of one percent (0.5%) of the Total Credit Facility in effect on the date of termination if such termination occurs after May 31, 2001, but on or prior to the expiration of the Initial Term; provided, however, that (i) such liquidated damages shall not be payable if the Page 2 3 Total Credit Facility is repaid or refinanced in whole or in part within sixty (60) days of the receipt of proceeds from an initial public offering of the capital stock (other than preferred stock) of Borrower and (ii) the Total Credit Facility may be partially terminated, but only on a permanent basis, in integral multiples of $1,000,000 to an amount not less that $40,000,000 without the payment of such liquidated damages in connection therewith and only upon thirty (30) days prior written notice to Lender. Such amounts shall also be payable by Borrower upon termination of the Total Credit Facility and a demand for repayment by Lender upon the occurrence of a Default as provided in this Agreement." (D) Section 2.5 of the Loan Agreement shall be amended by deleting the same and substituting in lieu thereof the following: "2.5. Unused Facility Fee. Borrower shall pay to Lender an unused facility fee equal to Applicable Unused Facility Fee (as hereinafter defined) per annum of the amount by which the Total Credit Facility minus the principal amount of the Term Loan Advance exceeds the sum of the average daily outstanding Letter of Credit Reserve and the average daily outstanding principal amount of the Revolving Loans. As used herein, "Applicable Unused Facility Fee" or "unused facility fee" means the Applicable Unused Facility Fee set forth in the table in Section 2.2 of this Agreement that corresponds to the Leverage Ratio as of the last day of the immediately preceding March 31 or September 30; provided, however, through December 31, 1999, the Applicable Unused Facility Fee shall be equal to one-quarter of one percent (1/4%). The Applicable Unused Facility Fee shall accrue daily, beginning on the date of Borrower's execution of this Agreement, shall be calculated on the basis of a three hundred sixty (360) day year for the actual number of days elapsed and shall be payable monthly, in arrears, on the first calendar day of each month following the date hereof and upon the Revolving Loan Termination Date." (E) Section 2.6 of the Loan Agreement shall be amended by deleting the same and substituting in lieu thereof the following: "2.6. LC Fee. For each Letter of Credit, Borrower shall pay to Lender a per annum fee equal to the Applicable Letter of Credit Fee (the "LC Fee") set forth in the table in Section 2.2 of this Agreement that corresponds to the Leverage Ratio as of the last day of the immediately preceding March 31 or September 30 (provided, however, through December 31, 1999, the LC Fee shall be equal to one and one-quarter percent (1-1/4%)) on (i) with respect to Letters of Credit other than the Bond Letter of Credit, the sum, without duplication, of the undrawn face amount of such Letter of Credit and the outstanding amount of any time draft presented to Lender by the beneficiary of such Letter of Credit and (ii) with respect to the Bond Letter of Credit, the principal amount of the Bonds plus interest accrued thereon for 51 days at 16% per annum, plus in either case an amount equal to Lender's customary processing fee charged to applicants of letters of credit of the same type and amount as such Letter of Credit, as is applicable at the time of Borrower's request for such Letter of Credit. The LC Fee for each Letter of Credit shall be payable on the date of issuance and on each yearly anniversary or renewal thereof based upon the Letters of Credit outstanding on each such date. On the date when such Letter of Credit is amended, reissued or renewed, or in any event as soon thereafter as possible, the LC Fee Page 3 4 for each such Letter of Credit shall be calculated by Lender and Borrower shall pay to Lender any shortfall and Lender shall pay to Borrower any overpayment of LC Fees paid by Borrower at such time. The LC Fee shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed." (F) Section 2.8 of the Loan Agreement shall be amended by inserting the following provision at the end of that Section: "On the first day of each calendar quarter commencing on July 1, 1999, Borrower shall pay to Lender an administrative fee of $2,500." (G) Section 7.1 of the Loan Agreement shall be amended by deleting the phrase "(iii) Equipment" therein and substituting in lieu thereof "(iii) intentionally omitted". (H) Section 10.4 of the Loan Agreement shall be amended by deleting the first paragraph thereof and substituting in lieu thereof the following: "Borrower shall not directly or indirectly make, pay, declare or permit any Restricted Junior Payment, except (i) purchases, redemptions, acquisitions, or retirements of capital stock of Borrower from Persons holding five percent (5%) or less of such outstanding capital stock, if at the time of any such purchase, redemption, acquisition, or retirement of capital stock, and after giving effect thereto on a pro forma basis, the conditions in (A), (B), and (C) below are met; and (ii) dividend payments made with respect to Borrower's Capital Stock (as defined in the Indenture) and purchases or redemptions of Subordinated Notes if at the time of any such dividend, purchase, or redemption, and after giving effect thereto on a pro forma basis, the conditions in (A), (B), and (C) below are met:" (I) Section 10.15 of the Loan Agreement shall be amended by deleting the same and substituting in lieu thereof the following: "10.15. Financial Covenants. (A) Maintenance of Cash Inflows to Cash Outflows. Borrower shall not permit its ratio of Cash Inflows to Cash Outflows determined for the preceding twelve (12) month period at the end of each calendar quarter commencing on April 1, 1999, and thereafter to be less than 1.2 to 1.0. (B) Maintenance of Adjusted Consolidated Net Worth. Borrower shall not permit its Adjusted Consolidated Net Worth at any time to be less than $114,343,000 (as of March 31, 1999) plus fifty percent (50%) of all Consolidated Net Income if positive (each such Consolidated Net Income calculated separately for each quarter and determined at the end of each calendar quarter commencing June 30, 1999). (C) Maintenance of Consolidated EBITDA to Interest Expense. Through the twelve (12) month period ending September 30, 1996, Borrower shall not permit its ratio of Consolidated EBITDA to its total consolidated interest expense determined at the end of each calendar quarter for the preceding twelve (12) month period to be less than the ratio of 1.3 to 1.0. Page 4 5 (D) Maintenance of Total Funded Debt to Consolidated EBITDA. Borrower shall not at any time permit the ratio of Total Funded Debt (as hereinafter defined) to Consolidated EBITDA determined for the four most recently completed fiscal quarters of Borrower preceding the date of determination to exceed the ratio of 3.0 to 1.0 (with such calculation reported by Borrower to Lender each calendar quarter following the date hereof). As used herein, "Total Funded Debt" means an amount equal to the Funded Indebtedness of Borrower and its Subsidiaries on a consolidated basis plus the amount of all contingent obligations of Borrower and its Subsidiaries under undrawn Letters of Credit. (E) Maintenance of Consolidated EBIT to Interest Expense. Commencing with the twelve (12) month period ending June 30, 1999, and each calendar quarter thereafter, Borrower shall not permit its ratio of Consolidated EBIT to its total consolidated interest expense determined at the end of each calendar quarter for the preceding twelve (12) month period (the "Interest Coverage Ratio") to be less than the ratio of 2.5 to 1.0." 3. Waiver. The Lender hereby waives the requirements of Sections 8(J) and 10.5 of the Credit Agreement solely as such requirements apply to prohibit the creation by Borrower of AMI Management Company, a Delaware business trust, as a Subsidiary of Borrower or the existence of that Subsidiary, so long as that Subsidiary conducts a financial and strategic management business for Borrower, and so long as Borrower covenants and agrees that it will cause that Subsidiary to execute and deliver to the Lender a Guaranty Agreement, in form and substance satisfactory to the Lender on or before August 15, 1999. 4. Representations and Warranties. The Borrower hereby represents and warrants to the Lender as follows: (A) This Amendment has been executed and delivered by a duly authorized officer of the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity. (B) The execution, delivery and performance by the Borrower of this Amendment and its performance of the Loan Agreement have been authorized by all requisite corporate action and will not (1) violate (a) any order of any court, or any rule, regulation or order of any other agency of government, (b) the articles or certificate of incorporation, the bylaws or any other instrument of corporate governance of the Borrower, or (c) any provision of any indenture, agreement or other instrument to which the Borrower is a party, or by which the Borrower or any of its properties or assets are or may be bound; (2) be in conflict with, result in a breach of or constitute, alone or with due notice or lapse of time or both, a default under any indenture, agreement or other instrument referred to in (1)(c) above; or (3) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever, except pursuant to the terms hereof. 5. Miscellaneous. (A) This Amendment shall be construed in accordance with and governed by the laws of the State of Ohio, without reference to principles of conflict of laws. The Borrower agrees to pay to the Lender at the time this Amendment is executed and delivered by the Lender an amendment fee in an Page 5 6 aggregate amount equal to $62,500, and to pay on demand all costs and expenses of the Lender, including reasonable attorneys' fees and expenses, in connection with the preparation, execution and delivery of this Amendment. (B) The execution, delivery and performance by the Lender of this Amendment shall not constitute, or be deemed to be or construed as, a waiver of any right, power or remedy of the Lender, or a waiver of any provision of the Loan Agreement. (C) This Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument. (D) This Amendment shall become effective as of the date of this Amendment. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the day and year first above written. ASSOCIATED MATERIALS INCORPORATED By: ------------------------------ Its: ------------------------------ KEYBANK NATIONAL ASSOCIATION By: ------------------------------ Title: ------------------------------ "WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE" Page 6 EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1999 JUN-30-1999 1,689 0 61,804 5,544 66,127 127,713 70,601 0 205,745 52,750 75,000 0 0 21 68,442 205,745 203,505 0 139,517 0 46,141 0 3,439 13,863 5,467 0 0 0 0 8,396 1.02 1.00
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