Note 10 – Subsequent Events

ABL Facility Refinancing

On July 11, 2013, we entered into the New ABL Facility, and at closing, we borrowed $45.3 million under the New ABL Facility and used these borrowings and cash on hand to repay all amounts outstanding under the Prior ABL Facility and to pay related fees and expenses.

The New ABL Facility is a senior secured asset based credit facility in an aggregate principal amount of up to $100.0 million, consisting of a $90.0 million revolving credit facility and a $10.0 million first-in last-out term facility, with the right, subject to certain conditions, to increase the availability under the facility by up to $50.0 million in the aggregate. The New ABL Facility matures on the earlier of (i) May 2018 and (ii) 90 days prior to the maturity date of our 9.5% first priority senior secured notes due August 1, 2018, unless (a) the maturity date of the senior secured notes is extended to a date that is on or after 90 days after the date set forth in the foregoing clause (i), (b) all of the senior secured notes are refinanced or replaced as permitted under the New ABL Facility and the maturity date of all of the indebtedness that refinances or replaces the senior secured notes is on or after 90 days after the date set forth in the foregoing clause (i), or (c) all of the senior secured notes are converted into equity.

The New ABL Facility provides for loans and letters of credit in an amount up to the aggregate availability under the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $20.0 million for letters of credit. Borrowings under the New ABL Facility bear interest through maturity at a variable rate based upon, at our option, either LIBOR or the base rate (which is the greatest of one-half of 1.00% in excess of the federal funds rate, 1.00% in excess of the one-month LIBOR rate and the Agent’s prime rate), plus, in each case, an applicable margin. The applicable margin for loans under the first-in last-out term facility that are (i) LIBOR loans ranges, based on the our average excess availability, from 2.75% to 3.25% per annum and (ii) base rate loans ranges, based on our average excess availability, from 1.00% to 1.50%. The applicable margin for other advances under the New ABL Facility that are (i) LIBOR loans ranges, based on our average excess availability, from 1.75% to 2.25% and (ii) base rate loans ranges, based on our average excess availability, from 0.00% to 0.50%.

We must also pay an unused line fee equal to 0.25% per annum to the lenders under the New ABL Facility if utilization under the facility is greater than or equal to 50.0% of the total available commitments under the facility and a commitment fee equal to 0.375% per annum if utilization under the facility is less than 50.0% of the total available commitments under the facility. Customary letter of credit fees are also payable, as necessary.

The obligations under the New ABL Facility are secured by (i) first-priority liens on substantially all of our accounts receivable and inventories, subject to certain exceptions and permitted liens and (ii) second-priority liens on substantially all of our owned real property and tangible and intangible assets other than the ABL Priority Collateral, including all of the Co-Borrowers’ outstanding capital stock, subject to certain exceptions and permitted liens.

The New ABL Facility contains customary restrictive covenants and also contains a fixed charge coverage ratio covenant which will be applicable if the availability under the New ABL Facility is less than 10.0% of the amount of the New ABL Facility. If applicable, that covenant requires us to maintain a minimum ratio of adjusted EBITDA less capital expenditures made during such period (other than capital expenditures financed with the net cash proceeds of asset sales, recovery events, incurrence of indebtedness and the sale or issuance of equity interests) to fixed charges of 1.00 to 1.00.

Discontinued Operations

On August 1, 2013, the Company announced that it completed the sale of substantially all of the assets of its Imperial Group business to Imperial Group Manufacturing, Inc., a new company formed and capitalized by Wynnchurch Capital for total cash consideration of $30.0 million at closing, plus a contingent earn-out totaling up to $2.25 million. The sale was effective as of 11:59 p.m. on July 31, 2103.

Pursuant to the provisions of the purchase agreement, subject to certain limited exceptions, the purchaser purchased from Imperial all equipment, inventories, accounts receivable, deposits, prepaid expenses, intellectual property, contracts, real property interests, transferable permits and other intangibles related to the Business and Assumed Imperial’s trade and vendor accounts payable and performance obligations under those contracts included in the purchased assets. The real property interests acquired by the purchaser include ownership of three plants located in Decatur, Texas, Dublin, Virginia and Chehalis, Washington and a leasehold interest in a plant located in Denton, Texas. Imperial has retained ownership of a plant property located in Portland, Tennessee but has leased such property to the purchaser under a two-year lease, with the option of the Purchaser to renew the lease for one additional year. Rent under the lease is fixed at $75,000 per year.

We are still analyzing the loss on the transaction including transaction fees. The analysis will be completed in the third quarter.

The values of the sold Imperial assets as of June 30, 2013 were as follows:

(In thousands)

Accounts receivable	$	12,666
Inventories		10,643
Prepaid expenses and other current assets		78
Property, plant, and equipment		26,291
Accounts payable		(11,469	)
Net assets sold	$	38,209

The proforma Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) reclassifying our Imperial business segment as Discontinued Operations for the three and six month periods ended June 30, 2013 and 2012 are below:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands except per share data)	2013			2012			2013			2012

NET SALES	$	179,941		$	229,487		$	342,928		$	458,804
COST OF GOODS SOLD		161,235			204,332			317,944			411,057
GROSS PROFIT		18,706			25,155			24,984			47,747
OPERATING EXPENSES:
Selling, general and administrative		12,747			15,286			23,822			30,148
INCOME FROM OPERATIONS		5,959			9,869			1,162			17,599
OTHER INCOME (EXPENSE):
Interest expense, net		(9,157	)		(8,658	)		(17,851	)		(17,403	)
Other income (loss), net		(441	)		(436	)		(296	)		(279	)
INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS		(3,639	)		775			(16,985	)		(83	)
INCOME TAX PROVISION (BENEFIT)		1,464			1,339			2,873			2,936
INCOME (LOSS) FROM CONTINUING OPERATIONS		(5,103	)		(564	)		(19,858	)		(3,019	)
DISCONTINUED OPERATIONS, NET OF TAX		(259	)		(277	)		(1,451	)		(771	)
NET INCOME (LOSS)	$	(5,362	)	$	(841	)	$	(21,309	)	$	(3,790	)
Weighted average common shares outstanding—basic		47,563			47,376			47,508			47,347
Basic income (loss) per share – continuing operations	$	(0.11	)	$	(0.01	)	$	(0.42	)	$	(0.06	)
Basic income (loss) per share – discontinued operations		(0.00	)		(0.01	)		(0.03	)		(0.02	)
Basic income (loss) per share	$	(0.11	)	$	(0.02	)	$	(0.45	)	$	(0.08	)
Weighted average common shares outstanding—diluted		47,563			47,376			47,508			47,259
Diluted income (loss) per share – continuing operations	$	(0.11	)	$	(0.01	)	$	(0.42	)	$	(0.06	)
Diluted income (loss) per share – discontinued operations		(0.00	)		(0.01	)		(0.03	)		(0.02	)
Diluted income (loss) per share	$	(0.11	)	$	(0.02	)	$	(0.45	)	$	(0.08	)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Defined benefit plans		417			179			748			(39	)
COMPREHENSIVE INCOME (LOSS)	$	(4,945	)	$	(662	)	$	(20,561	)	$	(3,829	)