-----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, RC9uUsS62aMBhx5wR4p/acBhFeINvMHMII2n1Hm4rZVgV8WXSBjGgs2S9vnRfcSO lWyoFOhEKfjVwWnVmdAIOQ== 0000950152-04-006007.txt : 20040809 0000950152-04-006007.hdr.sgml : 20040809 20040809080721 ACCESSION NUMBER: 0000950152-04-006007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040809 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure 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: 04959460 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 l09046ae8vk.txt ASSOCIATED MATERIALS INCORPORATED UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934 August 9, 2004 Date of Report (Date of earliest event reported) ASSOCIATED MATERIALS INCORPORATED (Exact Name of Registrant as Specified in Its Charter) 75-1872487 Delaware 0-24956 (IRS Employer (State of Incorporation) (Commission File Number) Identification No.) 3773 State Road Cuyahoga Falls, Ohio 44223 (Address of Principal Executive Office) (800) 257-4335 (Registrant's Telephone Number, Including Area Code) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibit: Exhibit Number Description - ------ ----------- The following exhibit is not filed but is furnished as described below. 99.1 Unaudited Pro Forma Condensed Consolidated Statement of Operations of Associated Materials Incorporated for the twelve months ended July 3, 2004 ITEM 9. REGULATION FD DISCLOSURE Set forth in Exhibit 99.1 attached hereto are results for the twelve months ended July 3, 2004 on a pro forma basis, which gives effect to the acquisition of Gentek Holdings, Inc. In accordance with General Instruction B.2 of Form 8-K, the following information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Additionally, the submission of this report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ASSOCIATED MATERIALS INCORPORATED DATE: August 9, 2004 By: /s/ D. Keith LaVanway ------------------------------- D. Keith LaVanway Vice President-Chief Financial Officer, Treasurer and Secretary EX-99.1 2 l09046aexv99w1.txt EX-99.1 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Exhibit 99.1 Unaudited Pro Forma Condensed Consolidated Statement of Operations Twelve Months Ended July 3, 2004 The unaudited pro forma condensed consolidated statement of operations for the twelve months ended July 3, 2004 is based on the historical financial statements of Associated Materials Incorporated ("Associated Materials" or the "Company") and the historical consolidated financial statements of Gentek Holdings, Inc. ("Gentek Holdings") and on the assumptions and adjustments described in the notes to the unaudited pro forma condensed consolidated statement of operations. The pro forma adjustments are based upon available information, preliminary estimates and certain assumptions that we believe are reasonable, and are described in the accompanying notes. On August 29, 2003, we acquired all of the issued and outstanding shares of capital stock of Gentek Holdings, the parent company of Gentek Building Products, Inc. and Gentek Building Products Limited, which we collectively refer to as "Gentek". The unaudited pro forma condensed consolidated statement of operations data has been prepared as if the acquisition of Gentek had occurred as of the beginning of the twelve-month period. The pro forma statement should not be considered indicative of actual results of operations that would have been achieved had the acquisition of Gentek occurred at the beginning of the twelve-month period and does not purport to indicate results of operations for any future period. Associated Materials Incorporated Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Twelve Months Ended July 3, 2004 (in thousands)
Historical ----------------------------- Twelve Months Two Months Ended Ended Gentek July 3, August 29, Holdings 2004 2003 Acquisition Associated Gentek Pro Forma Pro Forma Materials Holdings Adjustments Combined ----------- ----------- ----------- ----------- Net sales .......................... $ 994,452 $ 58,443 $ (337)(a) $ 1,052,558 Cost of sales ...................... 727,429 48,738 (337)(a) 772,983 (2,847)(b) ----------- ----------- ----------- ----------- Gross profit ....................... 267,023 9,705 2,847 279,575 Selling, general and administrative expense ....................... 192,489 4,009 2,975(b) 199,473 ----------- ----------- ----------- ----------- Income from operations ............. 74,534 5,696 (128) 80,102 Interest expense, net .............. 28,714 340 (2,969)(c) 26,085 Foreign currency loss (gain) ....... 67 (41) - 26 Merger transaction costs ........... - 3,055 - 3,055 ----------- ----------- ----------- ----------- Income from operations before income taxes ........................... 45,753 2,342 2,841 50,936 Income taxes ....................... 18,886 1,268 984(d) 21,138 ----------- ----------- ----------- ----------- Net income ......................... $ 26,867 $ 1,074 $ 1,857 $ 29,798 =========== =========== =========== =========== EBITDA (e) ........................ $ 95,313 $ 3,598 $ 83 $ 98,994 Adjusted EBITDA (e) ................ $ 111,213 $ 6,792 $ - $ 118,005
Associated Materials Incorporated Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Twelve Months Ended July 3, 2004 (Amounts in thousands) (a) Elimination of sales and cost of sales between the Company and Gentek Holdings for the two months ended August 29, 2003. Neither the Company nor Gentek Holdings had significant quantities of inventory on hand at the end of the period as a result of these transactions. (b) Details of the pro forma adjustments to cost of sales and selling, general and administrative expense to reflect the following: (i) the reclassification of supply center expenses and certain freight costs from cost of sales to selling, general and administrative expense to conform to the Company's presentation and (ii) elimination of the annual management services fee payable to Gentek Holdings' former parent company; and (iii) incremental depreciation and amortization of tangible and intangible assets recorded in conjunction with the acquisition. Cost of sales: Reclassification of certain costs........................ $ (2,932) Net increase in depreciation and amortization............ 85 ----------- $ (2,847) =========== Selling, general and administrative expenses: Reclassification of certain cost of sales expenses....... $ 2,932 Management services fee.................................. (83) Net increase in depreciation and amortization............ 126 ----------- $ 2,975 ===========
(c) The pro forma adjustments to interest expense reflect the following: Commitment fee on revolving credit facility................... $ 272 Term loan..................................................... 7,499 Revolving portion of credit facility.......................... 468 9 3/4% senior subordinated notes.............................. 16,088 Amortization of deferred financing costs...................... 1,758 --------- Pro forma interest expense.................................... 26,085 --------- Less: historical interest expense, net: Company................................................. (28,714) Gentek Holdings - Two Months Ended August 29, 2003...... (340) ---------- Total adjustment.............................................. $ (2,969) ==========
Interest expense was calculated as follows: (i) commitment fee on unused portion of the revolving credit facility of 1/2%; (ii) a rate of 3.95% (average London Interbank Offered Rate ("LIBOR") for the twelve months ended June 30, 2004 of 1.20% + 2.75%) on the term loan portion of the credit facility arranged at the time of the acquisition of Gentek Holdings, (iii) a rate of 4.20% (average LIBOR for the twelve months ended June 30, 2004 of 1.20% + 3.00%) on the revolving loan portion of the credit facility arranged at the time of the acquisition of Gentek Holdings, (iv) an interest rate of 9 3/4% on the senior subordinated notes; and (v) twelve months of amortization of deferred financing costs. The effect of a 1/8% increase or decrease in interest rates would increase or decrease total pro forma interest expense by $0.3 million for the twelve months ended July 3, 2004. (d) This amount represents the necessary adjustment to reflect a pro forma income tax provision of 41.5%. (e) EBITDA is calculated as net income 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 report, 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 net income to EBITDA and Adjusted EBITDA is as follows:
Historical ------------------------- Twelve Months Two Months Ended Ended Gentek July 3, August 29, Holdings 2004 2003 Acquisition Associated Gentek Pro Forma Pro Forma Materials Holdings Adjustments Combined ---------- ---------- ----------- --------- Net income ......................... $ 26,867 $ 1,074 $ 1,857 $ 29,798 Interest ........................... 28,714 340 (2,969) 26,085 Taxes .............................. 18,886 1,268 984 21,138 Depreciation and amortization ...... 20,846 916 211 21,973 -------- -------- -------- -------- EBITDA ............................. 95,313 3,598 83 98,994 Merger transaction costs (i) ....... - 3,055 - 3,055 Cost of sales adjustment (ii) ...... 1,402 - - 1,402 Certain warranty related costs (iii) - 56 - 56 Management fees (iv) ............... - 83 (83) - Management bonus (v) ............... 14,498 - - 14,498 -------- -------- -------- -------- Adjusted EBITDA .................... $111,213 $ 6,792 $ - $118,005 ======== ======== ======== ========
(i) Eliminates merger transaction costs, which includes $3.1 million of investment banking and legal fees incurred by Gentek Holdings in conjunction with the acquisition by the Company. (ii) Eliminates a cost of sales expense relating to an inventory fair value adjustment recorded at the time of the Gentek Holdings acquisition totaling $1.4 million. (iii) Eliminates certain warranty costs incurred by Gentek Holdings related to defects of specific colors of steel siding manufactured between 1992 and 1995 for which the Company has recorded an actuarially determined reserve representing the fair value of the liability at the date of the acquisition and for which the Company received a reduction in the purchase price. (iv) Eliminates management services fee paid to Gentek Holdings' former parent company. (v) Eliminates the management bonus paid in recognition of management's efforts with respect to the successful acquisition of Gentek Holdings, the Company's performance since the April 2002 merger transaction, as well as the completion of AMH Holdings, Inc.'s (the Company's indirect parent company) offering of senior discount notes. -----END PRIVACY-ENHANCED MESSAGE-----