-----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, EUo6LuMxt89rOub0m6VJ7vyYu15m3FG7Sin/QTW+DeyZoJZil5EjtVjcD69JTt/o aILTVzhSQEb/3JOljYnG9w== 0000950152-04-006005.txt : 20040809 0000950152-04-006005.hdr.sgml : 20040809 20040809080421 ACCESSION NUMBER: 0000950152-04-006005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040809 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSOCIATED MATERIALS INC CENTRAL INDEX KEY: 0000802967 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 751872487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24956 FILM NUMBER: 04959457 BUSINESS ADDRESS: STREET 1: 3773 STATE ROAD STREET 2: # CITY: CUYAHOGA FALLS STATE: OH ZIP: 44223 BUSINESS PHONE: 330 929 1811 MAIL ADDRESS: STREET 1: 3773 STATE ROAD STREET 2: # CITY: CUYAHOGA FALLS STATE: OH ZIP: 44223 8-K 1 l09045ae8vk.txt ASSOCIATED MATERIALS INCORPORATED 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 August 9, 2004 Date of Report (Date of earliest event reported) ASSOCIATED MATERIALS INCORPORATED (Exact Name of Registrant as Specified in Its Charter) Delaware 0-24956 75-1872487 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 3773 State Road Cuyahoga Falls, Ohio 44223 (Address of Principal Executive Offices) (800) 257-4335 (Registrant's Telephone Number, Including Area Code) -1- Item 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibit Exhibit Number Description of Document - ------- ----------------------- The following exhibit is not filed but is furnished as described below. 99.1 Press Release, dated August 9, 2004, issued by Associated Materials Incorporated. Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On August 9, 2004, Associated Materials Incorporated issued a press release announcing results for its second quarter ended July 3, 2004. A copy of the press release is attached as Exhibit 99.1 hereto. The information furnished in this report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. -2- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ASSOCIATED MATERIALS INCORPORATED Date: August 9, 2004 By: /s/ D. Keith LaVanway ----------------------------- D. Keith LaVanway Vice President - Chief Financial Officer, Treasurer and Secretary -3- EX-99.1 2 l09045aexv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 NEWS RELEASE ASSOCIATED MATERIALS REPORTS SECOND QUARTER RESULTS CUYAHOGA FALLS, Ohio, August 9 -- ASSOCIATED MATERIALS INCORPORATED ("AMI" OR THE "COMPANY") today announced second quarter 2004 net sales of $301.6 million, a 67.2% increase over $180.4 million for the same period in 2003. For the six months ended July 3, 2004, net sales were $505.9 million or 73.7% higher than $291.3 million for the same period in 2003. The results for 2004 include the operations of the Company's subsidiary, Gentek Holdings, Inc. ("Gentek"). Gentek, which was acquired by AMI on August 29, 2003, contributed $93.8 million and $159.2 million of net sales for the second quarter and six months ended July 3, 2004, respectively. Net income for the second quarter of 2004 was $16.7 million. This compares to net income of $10.3 million for the same period in 2003. For the six months ended July 3, 2004, net income was $7.6 million compared to net income of $5.3 million for the same period in 2003. Gentek contributed $3.9 million and $4.4 million of net income for the second quarter and six months ended July 3, 2004, respectively. EBITDA (as defined below) for the second quarter of 2004 was $39.8 million. This compares to EBITDA of $25.9 million for the same period in 2003. For the six months ended July 3, 2004, EBITDA was $35.4 million compared to EBITDA of $25.5 million for the same period in 2003. Gentek contributed $8.4 million and $11.0 million of EBITDA in the second quarter of 2004 and six months ended July 3, 2004, respectively. Adjusted EBITDA (as defined below) for the six months ended July 3, 2004 was $49.9 million. Adjusted EBITDA for the six months ended July 3, 2004 excludes a bonus paid to certain members of company management totaling approximately $14.5 million related to the completion of the offering of senior discount notes on March 4, 2004 by the Company's indirect parent company, AMH Holdings, Inc. ("AMH"). There were no adjustments to EBITDA for the second quarter of 2004 or for the quarter and six months ended June 28, 2003. A reconciliation of net income to EBITDA and to Adjusted EBITDA is included below. Michael Caporale, President and Chief Executive Officer, commented, "I am very pleased with our second quarter results. We continued to experience strong sales and EBITDA growth." Mr. Caporale continued, "Even with the recently announced federal interest rate increase, we remain optimistic about the underlying fundamentals of our industry. Mortgage rates continue to be at relatively low historical levels, consumer confidence continues to be strong, and consumers continue to invest in their homes." -1- RESULTS OF OPERATIONS Net sales increased 67.2% during the second quarter of 2004 compared to the same period in 2003, driven by increased vinyl window and vinyl siding sales along with net sales from Gentek. Gross profit in the second quarter of 2004 was $83.3 million, or 27.6% of net sales, compared to gross profit of $56.8 million, or 31.5% of net sales, in the second quarter of 2003. The decrease in gross profit margin percentage is primarily due to the impact of the results contributed by Gentek as Gentek's gross margin percentage is typically lower than Alside's as a larger proportion of Gentek's net sales are to independent distributors versus contractors through company-owned distribution centers. Additionally, a portion of Gentek's net sales are from metal products, which typically have a lower margin percentage than vinyl windows and vinyl siding. Selling, general and administrative expense increased to $48.0 million, or 15.9% of net sales, for the second quarter of 2004 versus $33.7 million, or 18.7% of net sales, for the same period in 2003. The increase in selling, general and administrative expense is a result of the impact of the acquisition of Gentek, as well as the result of adding two new Alside supply centers in 2004. Income from operations was $35.3 million in the second quarter of 2004 compared to $23.1 million for the same period in 2003. Net sales increased 73.7% for the six months ended July 3, 2004 compared to the same period in 2003, driven by increased vinyl window and vinyl siding sales along with net sales from Gentek. Gross profit increased to $133.7 million, or 26.4% of net sales, compared to gross profit of $85.0 million, or 29.2% of net sales, for the same period in 2003. The decrease in gross profit margin percentage was a result of the impact of the Gentek acquisition. Selling, general and administrative expense increased to $107.9 million, or 21.3% of net sales, for the six months ended July 3, 2004 versus $65.0 million, or 22.3% of net sales, for the same period in 2003. The increase in selling, general and administrative expense is the result of a management bonus paid in relation to AMH's offering of senior discount notes on March 4, 2004, the impact of the acquisition of Gentek, as well as the result of adding two new Alside supply centers in 2004 along with the three new supply centers added in 2003, which had a full six months of expense in 2004. Income from operations was $25.7 million for the six months ended July 3, 2004 compared to $20.0 million for the same period in 2003. AMH AMH remains in the process of registering notes with the Securities and Exchange Commission, which will be exchanged for its outstanding 11 1/4% senior discount notes on substantially equivalent terms. The attached consolidating financial information for the quarter and six months ended July 3, 2004 includes AMI and AMH, which conducts all of its operating activities through AMI. Including AMH's interest expense, which primarily consists of accretion on AMH's 11 1/4% senior discount notes, AMH's consolidated net income was $11.7 million and $1.0 million for the quarter and six months ended July 3, 2004, respectively. * * * -2- Management will host its second quarter earnings conference call on Monday, August 9th at 11 a.m. Eastern Time. The toll free dial-in number for the call is (877) 363-0523. A replay of the call will be available through August 16, 2004 by dialing (888) 769-9756 and entering the conference call identification number of 9413421. The conference call and replay will also be available via webcast, which along with this news release can be accessed via the Company's web site at http://www.associatedmaterials.com. * * * Associated Materials Incorporated is a leading manufacturer of exterior residential building products, which are distributed through company-owned distribution centers and independent distributors across North America. AMI produces a broad range of vinyl windows, vinyl siding, aluminum trim coil, aluminum and steel siding and accessories, as well as vinyl fencing, decking and railing. AMI is a privately held, wholly-owned subsidiary of Associated Materials Holdings Inc., a wholly-owned subsidiary of AMH Holdings, Inc., which is controlled by affiliates of Harvest Partners, Inc. For more information, please visit the Company's website at http://www.associatedmaterials.com. Founded in 1981, Harvest Partners has approximately $1 billion of invested and committed capital, and is focused on management buyouts and growth financings of profitable, middle-market specialty services, manufacturing and value-added distribution businesses, with a particular emphasis on multinational transactions. Harvest has significant capital available through its managed funds, which include numerous U.S. and European industrial corporations and financial institutions. For more information on Harvest Partners please visit its website at http://www.harvpart.com. This press release contains certain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to AMI that are based on the beliefs of AMI's management. When used in this press release, the words "may," "will," "should," "expect," "intend," "estimate," "anticipate," "believe," "predict," "potential" or "continue" or similar expressions identify forward-looking statements. Such statements reflect the current views of AMI's management with respect to its operations and results of operations regarding the home building industry, economy, interest rates, availability of consumer credit, employment trends, levels of consumer confidence, consumer preferences, raw material costs and availability, national and regional trends in new housing starts, weather conditions, its ability to comply with certain financial covenants in loan documents governing its indebtedness, level of competition within its market, availability of alternative building products, its level of indebtedness, costs of environmental compliance, potential conflict between Alside and Gentek distribution channels, achievement of anticipated synergies and operational efficiencies from the acquisition of Gentek, shifts in market demand, and general economic conditions. These statements are subject to certain risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as expected, intended, estimated, anticipated, believed or predicted. -3- For Further Information At the Company: At Abernathy MacGregor Group Inc.: D. Keith LaVanway Alison Brandt Chief Financial Officer Media (330) 922-2004 (212) 371-5999 -4- ASSOCIATED MATERIALS CONDENSED STATEMENTS OF OPERATIONS (a) (UNAUDITED) QUARTERS ENDED JULY 3, 2004 AND JUNE 28, 2003 (IN THOUSANDS)
AMI AMH ----------------------------- AMH Eliminations Consolidated Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended June 28, July 3, July 3, July 3, July 3, 2003 2004 2004 2004 2004 ------------------------------------------------------------------------- Net sales................................ $ 180,363 $ 301,602 $ - $ - $ 301,602 Gross profit............................. 56,800 83,325 - - 83,325 Selling, general and administrative expense ................................ 33,704 48,040 - - 48,040 --------- --------- ------- ---------- --------- Income from operations................... 23,096 35,285 - - 35,285 Interest expense, net.................... 5,483 6,254 7,516 - 13,770 Foreign currency loss.................... - 609 - - 609 --------- --------- ------- ---------- --------- Income (loss) before income taxes........ 17,613 28,422 (7,516) - 20,906 Income taxes............................. 7,309 11,703 (2,541) - 9,162 --------- --------- ------- ---------- --------- Income (loss) before equity income from subsidiaries.......................... 10,304 16,719 (4,975) - 11,744 Equity income from subsidiaries.......... - - 16,719 (16,719) - --------- --------- ------- ---------- --------- Net income............................... $ 10,304 $ 16,719 $ 11,744 $ (16,719) $ 11,744 ========= ========= ======== ========== ========= Other Data: EBITDA (b)(c)............................ $ 25,891 $ 39,813 Adjusted EBITDA (b)(c)................... 25,891 39,813
-5- ASSOCIATED MATERIALS CONDENSED STATEMENTS OF OPERATIONS (a) (UNAUDITED) SIX MONTHS ENDED JULY 3, 2004 AND JUNE 28, 2003 (IN THOUSANDS)
AMI AMH ----------------------------- AMH Eliminations Consolidated Six Months Six Months Six Months Six Months Six Months Ended Ended Ended Ended Ended June 28, July 3, July 3, July 3, July 3, 2003 2004 2004 2004 2004 -------------------------------------------------------------------------- Net sales................................ $ 291,307 $ 505,923 $ - $ - $ 505,923 Gross profit............................. 84,968 133,680 - - 133,680 Selling, general and administrative expense ................................ 65,014 107,932 - - 107,932 --------- --------- --------- ---------- --------- Income from operations................... 19,954 25,748 - - 25,748 Interest expense, net.................... 10,921 12,266 9,940 - 22,206 Foreign currency loss.................... - 615 - - 615 --------- --------- --------- ---------- --------- Income (loss) before income taxes........ 9,033 12,867 (9,940) - 2,927 Income taxes............................. 3,749 5,247 (3,361) - 1,886 --------- --------- --------- ---------- --------- Income (loss) before equity income from subsidiaries.......................... 5,284 7,620 (6,579) - 1,041 - Equity income from subsidiaries.......... - 7,620 (7,620) - --------- --------- --------- ---------- --------- Net income............................... $ 5,284 $ 7,620 $ 1,041 $ (7,620) $ 1,041 ========= ========= ======== ========== ========= Other Data: EBITDA (b)(c)............................ $ 25,466 $ 35,376 Adjusted EBITDA (b)(c)................... 25,466 49,874
AMI AMH ----------------------------- AMH Consolidated January 3, July 3, July 3, July 3, 2004 2004 2004 2004 ------------ ---------------- --------------- --------------- Selected Balance Sheet Data: - ---------------------------- Cash $ 4,282 $ 2,655 $ 34 $ 2,689 Accounts receivable, net................. 106,975 152,471 - 152,471 Inventory................................ 97,907 122,327 - 122,327 Accounts payable......................... 49,881 81,633 - 81,633 Accrued liabilities...................... 53,234 47,401 144 47,545 Long-term debt........................... 305,000 331,159 267,869 599,028
-6- (a) Operating results for the quarter and six months ended July 3, 2004 include the results of the Company's Gentek Holdings subsidiary, which was acquired on August 29, 2003. (b) EBITDA is calculated as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA excludes certain items. The Company considers Adjusted EBITDA to be an important indicator of its operational strength and performance of its business. The Company has included Adjusted EBITDA because it is a key financial measure used by management to (i) assess the Company's ability to service its debt and / or incur debt and meet the Company's capital expenditure requirements; (ii) internally measure the Company's operating performance; and (iii) determine the Company's incentive compensation programs. In addition, the Company's credit facility has certain covenants that use ratios utilizing this measure of Adjusted EBITDA. The definition of EBITDA under the indenture governing the 9 3/4% notes due 2012 also excludes certain items. Adjusted EBITDA has not been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). Adjusted EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies. Such supplementary adjustments to EBITDA may not be in accordance with current SEC practices or the rules and regulations adopted by the SEC that apply to periodic reports filed under the Securities Exchange Act of 1934. Accordingly, the SEC may require that Adjusted EBITDA be presented differently in filings made with the SEC than as presented in this release, or not be presented at all. Adjusted EBITDA is not a measure determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP), as a measure of the Company's operating results or cash flows from operations (as determined in accordance with GAAP) or as a measure of the Company's liquidity. The reconciliation of the Company's net income to EBITDA and Adjusted EBITDA is as follows (in thousands):
Six Six Quarter Quarter Months Months Ended Ended Ended Ended June 28, July 3, June 28, July 3, 2003 2004 2003 2004 --------- ---------- --------- ---------- Reconciliation of net income to EBITDA and ------------------------------------------ Adjusted EBITDA (c): -------------------- Net income.................................. $ 10,304 $ 16,719 $ 5,284 $ 7,620 Interest.................................... 5,483 6,254 10,921 12,266 Taxes....................................... 7,309 11,703 3,749 5,247 Depreciation and amortization............... 2,795 5,137 5,512 10,243 -------- -------- -------- -------- EBITDA 25,891 39,813 25,466 35,376 Management bonus (d)........................ - - - 14,498 -------- -------- -------- -------- Adjusted EBITDA............................. $ 25,891 $ 39,813 $ 25,466 $ 49,874 ======== ======== ======== ========
(c) The 2004 results of operations include the results of Gentek. A reconciliation of Gentek's net income to EBITDA for the quarter and six months ended July 3, 2004 are as follows (in thousands):
Quarter Six Months Ended Ended July 3, July 3, 2004 2004 -------------------- Reconciliation of Gentek's net income to EBITDA: ------------------------------------------------ Net income..................................... $ 3,900 $ 4,365 Interest....................................... 102 138 Taxes ........................................ 2,609 2,938 Depreciation and amortization.................. 1,739 3,580 ------- -------- Gentek's EBITDA................................ $ 8,350 $ 11,021 ======= ========
(d) Represents a management bonus paid in connection with the completion on March 4, 2004 of AMH's offering of senior discount notes. -7- -----END PRIVACY-ENHANCED MESSAGE-----