Attached files

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EX-12.1 - EX-12.1 - Euramax Holdings, Inc.exhibit121ratioofearningst.htm
EX-21.1 - EX-21.1 - Euramax Holdings, Inc.exhibit211listofsubsidiari.htm
EX-14.1 - EX-14.1 - Euramax Holdings, Inc.exhibit141codeofbusinessco.htm
EX-31.1 - EX-31.1 - Euramax Holdings, Inc.exhibit311certificationoft.htm
EX-32.1 - EX-32.1 - Euramax Holdings, Inc.exhibit321certificationoft.htm
EX-31.2 - EX-31.2 - Euramax Holdings, Inc.exhibit312certificationoft.htm
       

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
____________________________________________________________________________
FORM 10-K

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2011
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                    to                                     
Commission File No. 
EURAMAX HOLDINGS, INC.

(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
 
58-2502320
(I.R.S. Employer
Identification Number)
5445 Triangle Parkway, Suite 350, Norcross, GA (Address of principal executive offices)
 
30092 
(Zip Code)
Registrant's telephone number, including area code: (770) 449-7066
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class
N/A
 
Name of each exchange on which registered
N/A
Securities registered pursuant to Section 12(g) of the Act: None
__________________________________________________
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No ý
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer ý
 (Do not check if a smaller reporting company)
 
Smaller reporting company o
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
There is no public market for the Company's common stock. The registrant has 100,549 shares of common stock held by non-affiliates.
There were 185,413 shares of the registrant’s common stock, par value $0.01 per share, issued and outstanding as of March 23, 2012.
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits to the registrant’s registration statement on Form S-4, as amended, are incorporated by reference into Item 15 of this report.




TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 






FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of operating as a public company, our capital programs and environmental expenditures. These statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Item 1A. Risk Factors," that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Such risks and uncertainties include, among other things:

the cyclical nature of the markets we serve;
the general level of economic activity;
the loss or reduction of purchases by key customers;
consolidation of purchasing power among our customers;
the supply and price levels of essential raw materials, particularly aluminum and steel;
risks associated with the manufacturing process due to operating hazards and interruptions, including unscheduled maintenance or downtime;
risks associated with higher energy costs and the risk of disruptions in energy suppliers;
the adequacy of our insurance coverage;
our ability to effectively compete in the markets we serve;
the integrity of our information systems;
seasonal effects on our customers' purchasing activity;
adverse weather conditions;
our ability to adequately protect our intellectual property rights and successfully defend against third-party claims of intellectual property infringement;
the effect of product liability or warranty claims against us;
environmental, health and safety laws and regulations;
our significant indebtedness, and our ability to incur additional debt in the future;
our ability to remain compliant under the agreements governing our indebtedness;
our ability to refinance our indebtedness or generate sufficient cash to service all of out indebtedness;
restrictions under our existing or future debt agreements that limit our operations;
exposure to adjustments in interest rates;
declines in our credit and debt ratings;
instability in the capital and credit markets;
the risks of doing business in foreign countries;
fluctuations in foreign currency exchange rates;
exposure to U.S. and foreign anti-corruption laws and economic sanctions programs;
state, local and non-U.S. taxes and fluctuations in our tax obligations and effective tax rate;
adverse effects of foreign taxation;
adverse changes to accounting rules or regulations;
the success of our acquisitions or divestitures;
our ability to attract and retain qualified management and key personnel;
labor and work stoppages;
the effects of inflation on our business;
the potential for future impairment of our goodwill or other intangible assets; and
global or regional catastrophic events.

You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs, forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent required by law, rule or regulation.


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Part I

Item 1.
BUSINESS

The Company

We are a leading international producer of metal and vinyl products sold to the residential repair and remodel, non-residential construction and recreational vehicle (RV) markets primarily in North America and Europe. We are a leader in several niche product categories, including preformed roof-drainage products sold in the United States, metal roofing and siding for wood frame construction in the United States, and aluminum siding for towable RVs in the United States and Europe. Sales to the building products and RV markets accounted for approximately 72% and 14% of our 2011 net sales, respectively.

Our customers are located predominantly throughout North America and Europe and include distributors, contractors and home improvement retailers, as well as RV, transportation and other original equipment manufacturers ("OEMs"). We have extensive in-house manufacturing and distribution capabilities for our more than 10,000 unique products and operate through a network consisting of 39 facilities, including 32 located in the U.S., one in Canada and six in Europe. We have over 50 years of experience manufacturing building products and RV exterior components, including our time as a division of our former parent, Alumax, a fully integrated aluminum producer acquired by Alcoa Inc. in 1998. We have operated as an independent company since 1996 when our division was acquired in a management-led buyout.

Euramax Holdings, Inc. is a corporation formed under the laws of the state of Delaware. Our headquarters and principal executive offices are located at 5445 Triangle Parkway, Suite 350, Norcross, GA 30092 and our telephone number is 770-449-7066. References in this report to "Euramax Holdings," "the Company," "we," "our" and "us" are to Euramax Holdings and its consolidated subsidiaries, unless the context otherwise requires.

Competitive Strengths

The following competitive strengths have contributed to our success and are critical to maintaining the market positions that we enjoy and achieving our plans for future growth:

Well positioned leader in niche end markets.    We maintain leading market positions in a number of niche markets. These markets include preformed residential gutters sold in the United States, metal roofing and siding for wood frame construction in the Northeast United States, aluminum siding for towable RV exteriors in the United States, aluminum siding and roofing for towable RVs in Europe, steel exterior panels for manufactured housing in the United States and vinyl windows and doors for the UK holiday home and home center markets.

Fabrication capabilities specifically tailored for niche markets.    Our manufacturing capabilities are critical to maintaining our strong position in several niche markets for our products. We are able to procure bare metal and paint it to our customers' specifications. These integrated metal coil coating capabilities provide us with a competitive advantage in the home improvement retail and RV industries as an integrated low-cost supplier of metal products with the ability to meet the demanding delivery requirements of customers in these industries. We manufacture roof drainage components from each of the four most common gutter materials: aluminum, steel, copper and vinyl. In Europe, our 103" wide aluminum coating line in the Netherlands is one of only two such lines in the world that coat metal in excess of 100" wide.

Strong, established customer relationships.    We have maintained long-standing relationships with our major customers across our end markets and, to many, we are a critical supplier. Our top ten accounts include customers from each of our five business segments, have been customers of ours for more than 15 years on average, and include The Home Depot® and Lowe's®, the two largest home improvement retailers in the United States, each of whom have been our customer for over 25 years. The depth and longevity of our customer relationships provide a foundation for recurring revenues and an outlet for the introduction of new products.

More efficient, lower cost business.    In the last few years marked by broad economic decline, we have worked to operate a more efficient, lower cost business. Recent results reflect our ongoing initiatives to centralize certain management controls, rationalize our operating structure and implement best practices to improve our manufacturing culture. Specific initiatives include:

Facility rationalization.  Between January 2008 and December 2011, we closed 31 facilities representing approximately 28.2% of our square footage devoted to manufacturing and distribution. These closures eliminated redundant and less profitable or unprofitable facilities while reducing supervisory and administrative personnel. In

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closing these facilities, we endeavored to and believe we did retain a significant portion of the profitable business previously served by these closed facilities. We believe we have enhanced the overall productivity potential of our facilities and will be able to support the peak volumes that existed prior to these closures.

Centralized lean manufacturing deployment.  Beginning in June 2008, we centralized the implementation and execution of our lean manufacturing initiatives and related integrated sales and operational planning. As a result, we have achieved significant reductions in inventory, improved our efficiency and strengthened customer service at many of our facilities. We expect to continue to benefit from greater efficiencies incrementally as we implement these best practices across our global platform.

Information technology deployment.  We have deployed a market leading enterprise resource planning, or ERP, system in our U.S. Non-Residential Building Products segment, our U.S. Residential Building Products segment and our corporate offices. We expect to deploy this system in our remaining U.S. segment within the next two years. Compared to the legacy systems previously utilized, our new ERP system enables us to better support our manufacturing and selling processes by providing critical information related to product cost, supply chain status and customer profitability.

Improved freight and logistics productivity.  We have undertaken a significant number of initiatives to improve our freight and logistics productivity and reduce our shipping costs, including outsourcing routes, implementing load optimization software, changing our driver compensation structure and adding on-board GPS systems to track productivity and manage mileage-based compensation within our captive shipping fleet.

Significant diversification across products, materials, customers, end markets and geography.    We produce and deliver over 10,000 unique products, utilizing aluminum, steel, copper, vinyl and fiberglass, through a multi-channel distribution network that serves customers across multiple end markets and geographies. Our customer base is highly diverse, with our top ten customers accounting for less than 31% and no single customer accounting for more than 12% of our total 2011 net sales. Further, our top ten customers include customers from each of our five segments. Our sales are also diversified geographically, with 65% of our 2011 net sales originating in the U.S. and Canada and the remainder originating in the UK, the Netherlands and France. This diversity has helped to offset the cyclicality that is experienced in some of the markets we serve, while allowing us to address profitable growth opportunities as they arise in different product lines, end markets and geographies.

Our Business Strategy

Our strategy is to leverage the strengths and experience that have provided us leading market positions to grow our business beyond our current product offerings and the customers and geographic markets we currently serve. In addition, we will endeavor to improve our capabilities and profitability through process improvement initiatives and further cost reductions.

Continue to focus on operational leverage.    We believe that we have created significant operating leverage within our current manufacturing platform. We intend to continue to improve our cost structure through incremental lean manufacturing deployment, improved supply chain management, reduced freight and procurement costs, incremental facility rationalization, and implementation of best practices throughout our organization. We also intend to continue to integrate new information technologies across our business, which we expect will further enhance our management capabilities, improve our data quality and enable further integration of our businesses.

Drive growth through business development initiatives.    We have instituted a series of business development initiatives that we believe will position us to achieve profitable organic growth. As part of our planning process, we task each segment to broaden its geographic presence and product offering. Our efficient and adaptable manufacturing and distribution platform, as well as our existing channel partners and industry relationships, have well positioned us to develop and profitably commercialize new products as well as modify existing products to respond to new and expanding markets. As part of our efforts, we have instituted an incentive compensation structure that specifically rewards business development efforts among key managers.

Expand into new geographic markets.  Our efficient and adaptable manufacturing and distribution platform as well as our established channel partners and industry relationships, have well positioned us to identify and selectively act on growth opportunities in new geographic markets. The versatility of our product line allows us to modify already successful products for use in other geographic areas both in the United States and abroad. For example, we plan to grow our sales of roof drainage products in Canada and our sales to the distributor channels outside the Northeastern United States. Internationally, we have increased our sales representation in emerging markets where our

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manufacturing and distribution expertise can be leveraged profitably.

Increase sales to new customers.  We plan to continue identifying and developing new market opportunities for our products. Opportunities include selling to government entities (including the military) or to government contractors, and increasing penetration of all building materials sales channels with our full product line.

Develop innovative new products.  We plan to continue engaging in research and development of new products and leveraging our existing customer relationships to distribute these products. Examples include our successful introduction of a new solid gutter cover in the United States as well as roll coated aluminum coil offerings with unique graphics capabilities for architectural applications.

Maintain focus on free cash flow generation and deleveraging.    Since 2008, centralization of many procurement functions and implementation of operational planning processes have enhanced our capabilities for managing working capital. Reductions in the number of facilities we operate has further reduced capital spending necessary to maintain equipment and productive capacity while also reducing operating costs. We expect to continue to develop our capabilities for working capital management and to maintain low levels of maintenance capital expenditures. Our focus on these initiatives reflects our intention of generating free cash flow available for debt reduction and deleveraging.

History

Origin as an Independent Company

Prior to 1996, our business was a division of our former parent, Alumax. Our inception as an independent company was the result of a management-led buyout on September 25, 1996, when our former holding company purchased, through its wholly owned subsidiaries, all of the issued and outstanding capital stock of Alumax's subsidiaries which operated a portion of Alumax's fabricated products business. On June 12, 2003, Citigroup Venture Capital Equity Partners, L.P. ("CVCEP") and its affiliates acquired a majority of our common stock with management of CVCEP and directors and management of our company holding the remaining shares.

The Acquisition by the Equity Sponsors

On June 29, 2005, we were acquired by private equity funds affiliated with Goldman, Sachs & Co. and certain members of our senior management (the "Acquisition"). The aggregate purchase price paid for all of our common stock (including shares of common stock issuable upon the exercise of options) in connection with the Acquisition was $1,038.0 million, excluding fees and related expenses, less outstanding debt, net of cash and cash equivalents, and certain transaction expenses. In connection with the Acquisition, the private equity funds made an equity contribution of $311.3 million and management rolled over approximately $20.7 million of equity (which included a rollover of $11.1 million of fully vested and exercisable options). In addition, we incurred $750.0 million of debt to finance the Acquisition.

Restructuring

On June 29, 2009, we, our then-existing equity sponsors, our lenders and management shareholders agreed to a restructuring of indebtedness owed to lenders under our then-existing first and second lien credit agreements and of amounts owed to counterparties to our existing interest rate swaps (the "Restructuring"). Under the terms of the Restructuring, the lenders cancelled 100% of amounts owed under our second lien credit agreement, consisting of principal and accrued interest of $191 million and $12 million, respectively, in exchange for 100% of the issued and outstanding common stock of Euramax Holdings as of the date of the Restructuring. The common stock was issued to lenders in proportion to their holdings of the second lien loans immediately prior to the Restructuring. Our then-existing equity sponsors lost all of their equity investment in us. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources" for additional information regarding the Restructuring.

Our Business Segments

We manage our business and serve our customers through five reportable segments differentiated by market, product type and geography. Our structure and business model trace their roots to our history as a downstream producer of aluminum products and have evolved in response to customer demand for products made from materials other than aluminum and in pursuit of growth opportunities in different end markets and geographies. Today we offer a full complement of products responsive to the demands of the markets we serve and produced from various materials, including aluminum, steel, copper, vinyl and fiberglass.

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Our five reportable business segments are described below:

U.S. Residential Building Products

Our U.S. Residential Building Products segment utilizes aluminum, steel, copper and vinyl to produce residential roof drainage products, including preformed gutters, downspouts, elbows, soffit, drip edge, fascia, flashing, snow guards and related accessories. These products are used primarily for the repair, replacement or enhancement of residential roof drainage systems. We sell these products to home improvement retailers, lumber yards, distributors and contractors from eight manufacturing and distribution facilities located in North America.

U.S. Non-Residential Building Products

Our U.S. Non-Residential Building Products segment utilizes light gauge steel and aluminum coil to produce exterior building components, including roofing and siding panels, ridge caps, flashing, trim, soffit and other accessories. We sell these products to builders, contractors, lumber yards and home improvement retailers from 11 manufacturing and distribution facilities located in the United States. These products are predominantly used in the construction of a wide variety of small scale non-residential, agricultural and industrial building types on either wood or metal frames.

U.S. RV and Specialty Building Products

Our U.S. RV and Specialty Building Products segment utilizes various materials, including aluminum coil, steel coil and fiberglass, to create exterior components for the towable RV, cargo and manufactured housing markets. These products include sidewall components, siding, doors and trim.

We also produce specialty made-to-order vinyl replacement windows and aluminum patio and awning components sold primarily to home improvement contractors in the Western United States. Our vinyl windows and patio and awning products are high-end replacement and remodel products that carry strong brand recognition in the regional markets where they are sold. This segment operates from 13 manufacturing and distribution locations in the United States.

European Roll Coated Aluminum

Our European Roll Coated Aluminum segment uses a roll coating process to apply paint to bare aluminum coil and, to a lesser extent, bare steel coil in order to produce specialty coated coil, which we also process into specialty coated sheets and panels. We sell these products to building panel manufacturers, contractors and UK "holiday home," RV and transportation OEMs throughout Europe and in parts of Asia. Our customers use our specialty coated metal products to manufacture, among other things, RV sidewalls, commercial roofing panels, interior ceiling panels, and liner panels for shipping containers. We produce and distribute these roll coated products from one facility in the Netherlands and one facility in the United Kingdom.

European Engineered Products

Our European Engineered Products segment utilizes aluminum and vinyl extrusions to produce residential windows, doors and shower enclosures. These products are sold to home improvement retailers, distributors and factory-built "holiday home" builders in the United Kingdom. We also produce windows used in the operator compartments of heavy equipment, components sold to suppliers to automotive OEMs in Western Europe and RV doors. We produce and distribute these engineered products from two facilities in France and two facilities in the United Kingdom and have developed extensive in-house manufacturing capabilities, including powder coating, glass cutting, anodizing and glass toughening.

For financial information about our operating segments and geographic areas, refer to Note 16 of Notes to Consolidated Financial Statements set forth in Part II, "Item 8. Financial Statements and Supplementary Data" of this report, incorporated herein by reference. For certain risks attendant to our non-U.S. operations, refer to "Item 1A. Risk Factors" below.

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Our Products

Our products are sold to a diverse group of customers operating in a variety of industries. Our sales and marketing efforts are organized on a decentralized basis to provide services to our broad customer base in multiple geographic areas. The table below lists our key products, primary materials used, customers, primary sales regions, segments and end markets:

Key
Products
 
Primary Materials
Used
 
Customers
 
Primary
Sales
Regions
 
Segments
 
End Markets
Roof Drainage Products (gutters, downspouts and accessories)
 
Aluminum, Steel, Vinyl, Copper
 
Home Improvement Retailers, Lumber Yards, Rural Contractors, Home Improvement Contractors, Distributors, Manufactured Housing Producers
 
U.S.
 
U.S. Residential Building Products and U.S. Non-Residential Building Products
 
Residential Building Products; Non-Residential Building Products
Soffits (roof overhangs), Fascia (trims), Flashing (roofing valley material)
 
Aluminum, Steel, Copper
 
Home Improvement Retailers, Lumber Yards, Rural Contractors, Industrial and Architectural Contractors, Home Improvement Contractors, Manufactured Housing Producers
 
U.S.
 
U.S. Residential Building Products and U.S. Non-Residential Building Products
 
Residential Building Products; Non-Residential Building Products
Roofing & Siding (including RV siding and building panels)
 
Aluminum, Steel, Vinyl, Fiberglass
 
Rural Contractors, Distributors, Lumber Yards, Industrial and Architectural Contractors, Home Improvement Contractors, Manufactured Housing Producers, Home Improvement Retailers, OEMs, RV Manufacturers
 
U.S., Europe
 
U.S. Non-Residential Building Products, U.S. RV and Specialty Building Products, European Roll Coated Aluminum and European Engineered Products
 
Residential Building Products, RV Products, Non-Residential Building Products
Doors
 
Aluminum, Fiberglass
 
Distributors, Home Improvement Retailers, Home Improvement Contractors, RV Manufacturers
 
Europe
 
U.S. Non-Residential Building Products and European Engineered Products
 
RV Products, Residential Building Products
Windows
 
Aluminum, Vinyl
 
Holiday Home Manufacturers, Home Improvement Contractors, Transportation Industry Manufacturers, OEMs, RV Manufacturers
 
U.S., Europe
 
U.S. Non-Residential Building Products, U.S. RV and Specialty Building Products and European Engineered Products
 
RV Products, Residential Building Products, Other Products
Specialty Coated Coils (painted aluminum and steel coils)
 
Aluminum, Steel
 
Various Building Panel Manufacturers, RV Manufacturers, Transportation Industry Manufacturers, OEMs
 
Europe
 
European Roll Coated Aluminum
 
RV Products, Non-Residential Building Products, Other Products


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Our End Markets

Through our five business segments we serve two primary end markets—Building Products and Recreational Vehicle Products. Within the Building Products market, we serve both the Residential and Non-Residential Building Products markets. We believe our geographic network, broad product portfolio and customization capabilities allow us to effectively meet the diverse requirements of our customers within our end markets. The following table illustrates our net sales in 2011 by segment and end market:

 
End Markets Served
 
 
 
 
Segment
Residential
Building
Products
 
Non-Residential
Building
Products
 
Recreational
Vehicle
Products
 
Other
Products
 
Net Sales
 
% of
Net Sales
U.S. Residential Building Products
$
241.8

 
$

 
$

 
$
5.7

 
$
247.5

 
26.5
%
U.S. Non-Residential Building Products

 
211.8

 

 

 
211.8

 
22.7
%
U.S. RV and Specialty Building Products
52.3

 

 
52.8

 
42.3

 
147.4

 
15.8
%
European Roll Coated Aluminum

 
122.5

 
74.7

 
46.3

 
243.5

 
26.1
%
European Engineered Products
38.0

 
3.0

 
6.7

 
35.8

 
83.5

 
8.9
%
Net Sales
$
332.1

 
$
337.3

 
$
134.2

 
$
130.1

 
$
933.7

 
100.0
%
% of Net Sales
35.6
%
 
36.1
%
 
14.4
%
 
13.9
%
 
100.0
%
 
 

Principal Products
Gutters, downspouts, gutter guards, soffits, patio doors, windows
 
Metal roofing, siding panels, drip caps, coated metal coil
 
RV exterior components and doors
 
Coated metal and sheet, cabin frames, sunroofs and windows
 
 

 
 

Customer Type
Home improvement contractors, home improvement retailers, distributors and manufacturing housing producers
 
Rural, industrial and architectural contractors, distributors and builders
 
RV OEMs
 
Transportation and other OEMs
 
 

 
 


Residential Building Products

We are a leading supplier of metal and vinyl gutters and related components to U.S. home improvement retailers. Our other residential building products include patio doors and windows and bath and shower products primarily used in the home improvement market. We continue to grow our sales into the residential building products end market through an emphasis on growing our sales of patio doors, vinyl windows and lattice systems.

Roof Drainage Products

We produce and distribute virtually every component of roof drainage systems and offer a complete product line, including aluminum, steel, copper and vinyl products.

Home Improvement Retailers.    We sell to all major home improvement retailers, which represent the largest customer group for our roof drainage sales. Our success in this market can be attributed to the following factors:

Distribution: We maintain a national manufacturing and distribution network to home improvement retailers in the roof drainage sector. We have a national distribution network which is able to satisfy short lead times (usually two days) mandated by home improvement retailers.
One-stop Shopping: We offer home improvement retailers a full spectrum of roof drainage products and accessories. Further, we offer new and innovative products, including patented products. For example, we introduced the patented Flex-A-Spout which diverts water around trees, shrubs and decks with a corrugated design that easily bends and holds its shape, even when buried.
Cost: Our size and ability to internally paint metal provides a distinct cost advantage compared to most of our competitors. Our purchasing power also affords us a raw materials cost advantage.
Customer Relationships: We have developed long-term relationships with home improvement retailers, having served

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that market for over 30 years.

Distributors.    Roof drainage products sold into the distributor market are generally characterized by heavier gauges and different component parts. Orders from distributors are typically larger in size than those from either the home improvement retailer or contractor market, which allows us to service this market with fewer locations. Products bought by distributors are typically resold to individual contractors.

Other Residential Building Products

We produce and distribute a wide range of other residential building products including awning systems, vinyl windows, aluminum shower enclosures, patio doors and manufactured housing siding. These products are typically sold to holiday home and manufactured housing OEMs, home improvement contractors and distributors.

Replacement Vinyl Windows

We manufacture and sell vinyl windows for the residential replacement markets in the United States and United Kingdom. Vinyl windows require low maintenance and generally are more resistant to temperature than wood and aluminum. In the United States, we sell primarily to the high-end residential contractor market from manufacturing facilities in Sacramento, California and Loveland, Colorado. Over recent years, vinyl window sales have eroded business from wood and aluminum. We also manufacture vinyl windows in the United Kingdom that we sell to the UK holiday home market.

Lattice and Awning System Products

Lattice and awning systems are patio covers and shade structures that enhance outdoor living space. Each component is manufactured from structural aluminum alloys and finished with a high performance coating offered in a variety of colors. This gives the products the appearance of wood with long-term durability. Our lattice and awning systems are sold to contractors and distributors and sales tend to be driven by general remodeling activity. These systems are manufactured in Romoland, California and distributed through two locations in California and Arizona. We believe that the versatility of this product line will provide us a growth opportunity by allowing us to modify these already successful products for use in other geographic locations.

Patio and French Doors

We manufacture and sell vinyl patio and French doors for the UK home center market. By applying our expertise from our U.S. vinyl operation to support our initiative in the United Kingdom, we have grown sales significantly since initiating this program in 2003.

Non-Residential Building Products

We supply metal roofing, siding and accessories for a wide variety of non-residential construction applications, including agricultural, industrial and architectural uses. The core products we sell to this end market include metal roofing and siding, along with numerous accessories such as ridge caps, ridge vents and corners used in non-residential construction. In addition, we manufacture and sell specialty coated aluminum and steel products that are further fabricated by our non-residential customers. We serve a variety of customers through a number of distribution channels including contractors, distributors and lumber yards.

Demand in the agricultural/rural market is driven by non-residential construction trends in rural areas. In addition to increased volumes from overall market growth, we plan to grow our share in regions of North America where we have low penetration. We have not historically had a major presence in the industrial and architectural market, and we believe there is potential for increasing our market share by leveraging our product and manufacturing capabilities and our cost advantage.

Metal Roofing, Siding and Accessories ("MRS")

This end market's core products include fabricated metal roofing and siding panels, along with numerous accessories such as drip caps, ridge vents and corners. These products are used primarily for exterior walls and roofs. We also sell metal roofing panels directly to contractors for use in smaller non-residential construction (e.g., schools and office buildings). In addition, we supply home improvement retailers with standard metal panels which are then sold to customers or contractors in the "Do-It-Yourself", or DIY, market.


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MRS serves a highly fragmented market divided into two distinct market customer groups: the wood frame market and the industrial/architectural market. Both markets are regional and characterized by high shipping costs and short lead times. Sales to the wood frame group are made primarily through builders, distributors and contractors, and are driven by rural construction trends. Sales to the industrial/architectural customer group tend to be more customized with product characteristics often specified by architects.

Demand is largely driven by consumer confidence, interest rates, consumer disposable income, the strength of agricultural markets, consumer access to affordable financing and commercial construction trends. The agricultural market is highly fragmented and we compete against a number of smaller, mostly private companies.

Specialty Coated Metals

We manufacture and sell specialty coated aluminum and steel that is further fabricated by our non-residential customers. We purchase coil from primary metal producers, which is then coated through a roll-coating painting process before being sold for further fabrication by customers. We primarily focus on niche products that have difficult technical and quality requirements such as rolled aluminum unique colors and patterns, advanced finishes and higher-end panels. The market for specialty painted coils is fragmented and diverse with demand driven primarily by non-residential construction trends.

Recreational Vehicle Products

We manufacture and sell components for use in the production of RV exteriors to all major RV OEMs. These products include painted aluminum coils, roll formed aluminum panels, doors and exterior wall panels (typically a fiberglass reinforced panel). Aluminum panels sold to our customers are initially painted at one of our coil coating lines, and are then either delivered directly to customers or further fabricated.

There are two distinct segments in the RV market: products for (i) motorhomes and (ii) towable RVs. Motorhomes are motorized RVs, whereas towable RVs are towed by automobiles and light trucks.

Demand for our RV products is driven by trends in disposable income, interest rates and general economic conditions, as well as demographic trends relating to consumers in the 55 through 74 year old age group, who constitute a significant source of demand for RV products. We primarily supply the lower price point aluminum towable RV market in the United States, which has historically been more stable relative to motorhomes. In Europe, we focus on both towables and motorhomes. Our coating capabilities in the United States and in Europe provide a distinct technological and competitive advantage over other suppliers. These capabilities enable us to paint a stripe or other decorative pattern directly onto the aluminum sheet according to customer specifications.

Aluminum Siding and Roofing

Europe

In Europe, we serve substantially all major RV OEMs with aluminum exteriors. We serve our customers from one location in Corby, United Kingdom, and one location in Roermond, the Netherlands. Overall, the European RV market is more regionally focused than the U.S. market and country preferences have a significant impact on RV purchases. As a result of gasoline prices and aesthetic preferences, fiberglass, which as applied on a recreational vehicle is heavier than aluminum, has not gained significant market share over aluminum in Europe.

United States

We are a national supplier of exterior aluminum siding to the RV industry with multiple locations throughout the United States. We paint our coils internally, providing us with a significant cost advantage.

Over the last 16 years, fiberglass has gained significant share as compared to aluminum in the production of RVs in the U.S. market due to its resistance to denting and scratching. This has occurred even though fiberglass is more costly and has historically required the use of a lauan substrate similar to plywood, which adds significant weight to the vehicle. In recent years, aluminum's share of the towable RV market has stabilized.

We also serve the U.S. RV exterior market, including all major, multi-location North American OEMs. Our three Indiana facilities are strategically located to service the market as a majority of all North American RVs are produced within Indiana. However, we are the only supplier with a network of locations producing aluminum siding outside of Elkhart, providing us

9


with a significant competitive advantage in servicing our customers on a national basis.

Other Products

In addition to serving our three principal end markets, we have taken advantage of available manufacturing capacity and leveraged our expertise to develop and sell new products into other markets. We develop and manufacture various metal-based products, including windows sold to bus manufacturers, specialty coated metals for the appliance and transportation markets, and engineered transportation components sold to transportation suppliers. Our auto component products include seat rails made of extruded aluminum, aluminum extruded frames, and custom made sunroofs. The majority of our Other Products end market sales are in France.

Because of its weight advantages, aluminum is displacing steel in automobile manufacturing. As that trend continues, we expect to capitalize on our aluminum fabrication and extrusion capabilities by increasing sales to Tier I suppliers of aluminum components. We have also emphasized sales of painted aluminum coil into specialty applications. For example, we sell wide painted aluminum into the container market, which improves aesthetics and enables customers to reduce application costs by avoiding seams on their interior panels.

Customer Groups

Within our three principal end markets, we sell our products to a diverse array of customer groups operating in different industries. The following chart illustrates the distribution of actual net sales among different customer groups.

 
Year Ended
 
December 30, 2011
 
December 31, 2010
 
December 25, 2009
OEMs
25.8
%
 
24.8
%
 
21.8
%
Home Improvement Retailers
21.6
%
 
21.8
%
 
23.8
%
Industrial and Architectural Contractors
18.3
%
 
17.9
%
 
18.7
%
Rural Contractors
15.4
%
 
15.1
%
 
17.2
%
Distributors
10.8
%
 
11.6
%
 
10.1
%
Home Improvement Contractors
4.1
%
 
4.7
%
 
4.5
%
Manufactured Housing Producers
4.0
%
 
4.1
%
 
3.9
%
 
100.0
%
 
100.0
%
 
100.0
%

We believe that our focus on customer service and product innovation has helped us to establish and maintain long-standing relationships across various customer groups. Our top ten customers have purchased our products for more than 20 years on average. For example, we have maintained long-standing relationships with the two largest leading home improvement retailers in the United States, having done business with each of them for over 25 years.

We work to foster and build on these relationships by offering our customers a national distribution network with what we believe to be among the best lead times in the industry; developing new products; strengthening the customer/supplier relationship through joint information technology system development and linkage; and building and maintaining personal relationships at multiple levels of our customers' organizations. We believe we have a diverse customer base, and our top ten customers, on a combined basis, represented approximately 30% of our 2011 net sales. In fiscal year 2011, our largest customer, The Home Depot®, accounted for approximately 11% of our net sales.

Original Equipment Manufacturers

We supply OEMs, such as RV, holiday home, manufactured housing and transportation industry manufacturers. Our principal OEM customers are described below:

Recreational Vehicle Manufacturers:    We supply various aluminum products to RV manufacturers in the United States and Europe including aluminum siding, roofing, doors and accessories. In addition, we supply laminated aluminum and fiberglass panels to RV manufacturers.

Commercial Panel Manufacturers:    We sell painted aluminum coil to customers who produce commercial building panels. These panels become part of a total package of commercial building wall panels and facades.

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Transportation Industry Manufacturers:    In addition to supplying RV manufacturers and commercial panel manufacturers, we also supply manufacturers in the transportation industry in Europe with windows, sunroofs, frames and various other components fabricated from aluminum extrusions.

Other Manufacturers:    We also use our decorative and coil coating capabilities for products supplied to producers of transport containers.

Home Improvement Retailers

Our home improvement retail customers supply the well-established DIY market in the United States, Canada and the United Kingdom. In the United States, we sell building and construction products. In the United Kingdom, we sell patio doors, vinyl windows and residential entry doors. Home improvement retailers include small hardware stores, large cooperative buying groups, lumberyards and major home improvement retailers.

Rural Contractors

We supply aluminum and steel roofing and siding products to rural contractors for use in agricultural and rural buildings such as sheds and animal confinement buildings. We sell our products to traditional rural contractors, including building supply dealers, building and agricultural cooperatives, and animal confinement integrators. Building suppliers and agricultural cooperatives typically purchase smaller quantities of product at multiple locations whereas contractors and integrators generally purchase large volumes for delivery to one site.

Home Improvement Contractors

We sell a variety of products to home improvement contractors, the most significant of which are raincarrying systems and vinyl replacement windows. Other products sold to home improvement contractors include awnings, lattice systems, metal roofing, shower doors and patio and entrance doors. In the United States, we offer a full complement of vinyl replacement windows.

Distributors

We sell to distributors who distribute to smaller contractors and act as service centers for the next tier of customers in both the United States and Europe. Residential building products sold through distributors include a wide range of shower enclosures, metal roof flashing materials, painted aluminum trim coil, raincarrying systems, fascia/soffit systems and drip edges.

Industrial and Architectural Contractors

We sell various products to the architectural and industrial contractor markets including standing seam panels, siding, painted coil, soffit and fascia. These products are primarily produced from galvanized steel or aluminum.

Manufactured Home Producers

We sell fabricated steel siding and accessory parts to producers of manufactured housing in the United States. These products are used for exterior walls and roofs. In addition to steel siding, we also fabricate and supply a variety of steel and aluminum accessory components for manufactured home exteriors.

Sales and Marketing

Our products and services are sold primarily by our sales personnel and outside sales representatives located throughout North America, Europe and Asia. We have organized sales teams to focus on specific customers and national accounts to allow us to provide enhanced supply solutions, which improve our ability to increase the number of products that we provide to those customers and accounts.

Seasonality

Our sales volumes have historically been higher in the second and third quarters due to the seasonal demand of the building products markets served. First and fourth quarter sale volumes are generally lower primarily due to reduced repair and

11


remodel activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in our geographic end markets, as well as customer plant shutdowns in the RV and automotive industries during holidays and model changeovers.

Manufacturing Processes

Our manufacturing processes employ a variety of equipment and several types of facilities. We believe that our deployment of equipment enables us to manufacture standard and custom products efficiently and economically. We have the equipment necessary for processing substantially all of our products in-house, which minimizes reliance on third party processors. This provides certain cost benefits while enabling us to add new products on a timely basis. These capabilities provide marketing and pricing advantages, including the ability to better control delivery time and to develop new and customer-specific products in an expeditious manner.

Our manufacturing process generally begins with painting aluminum or steel coil through a process known as roll-coating. Once coated, the aluminum or steel is further fabricated through selected processes which include tension leveling, embossing, slitting, rollforming, brake pressing, notching and bending. These processes complete the appropriate steps to fabricate a finished product. Our coating and fabrication capabilities are described in more detail as follows:

Coating (painting and anodizing).    Roll-coating is the process of applying a variety of liquid coatings (primarily paint) to bare aluminum or steel coil, providing a baked-on finish that is both protective and decorative. We have three coating lines in the United States and four in Europe. Two of the coating lines in the United States are primarily utilized for internal processing, while one coating line in the United States and the four coating lines in Europe, located within two facilities, are utilized to supply roll-coated products to both internal and external customers.

Anodizing is an electrochemical process that alters an aluminum surface through a controlled and accelerated oxidation process, which, if desired, may also color the material. Anodizing provides a high quality architectural finish to aluminum extrusions, which is demanded by certain customers. Anodizing is a key manufacturing process we offer in our Montreuil-Bellay facility included in the European Engineered Products segment, which fabricates automotive parts and extrusions used in the transportation industry.

Fabrication.    After coating, the slit or uncut coil may then undergo a variety of downstream production processes which further fabricate the aluminum and steel sheet to form the desired product. Fabrication equipment includes rollformers, punch and brake presses, embossers and expanding machinery for a variety of applications. Production machinery also includes equipment to bend, notch and cut aluminum and vinyl extrusions required, together with glass, for the assembly of windows and doors.

Raw Materials

Our main raw material purchases consist primarily of aluminum and steel, and, to a lesser extent, paint, glass, copper and vinyl. Aluminum and steel accounted for approximately 77% of our raw material costs for the year ended December 30, 2011. We sold approximately 185 million pounds of aluminum and 209 million pounds of steel during the year ended December 30, 2011. All of our raw materials are sourced from external suppliers who are located primarily in the United States and Europe. As one of the largest aluminum coil purchasers in the building products sector, we have enjoyed significant purchasing power which we believe has historically allowed for favorable pricing terms compared to our smaller competitors.

All of our raw material inputs are sourced from external suppliers. We purchase our steel and aluminum sheet requirements from several foreign and domestic aluminum and steel mills. We believe there is sufficient supply in the market place to competitively source all of our requirements without reliance on any particular supplier. To assure continuity of supply, we may negotiate contracts for minimum annual purchases of aluminum from several suppliers. Commitments for minimum annual purchases are typically at a market price. At December 30, 2011, we did not have any such minimum purchase commitments outstanding. In addition, to ensure a margin on specific customer orders, we may commit to purchase aluminum ingot or coil at a fixed market price for future delivery. At December 30, 2011, such fixed price purchase commitments were approximately $20.7 million.

Approximately 54% and 27% of our net sales in 2011 derived from sales of aluminum and steel products, respectively. Both of these raw materials are subject to a high degree of volatility caused by, among other items, the relationship of world supply to world demand, the relationship of the U.S. dollar to other currencies, and the imposition of import and export tariffs. Historically, prices at which we sell aluminum and steel products tend to fluctuate with corresponding changes in the prices paid to suppliers for these raw materials. Supplier price increases and decreases are typically passed on to customers, but not

12


always, due to competition and the market for alternative products. Accordingly, our net sales and margins attributable to aluminum and steel products may fluctuate, with little or no change in the volume of shipments. See "Item 1A. Risk Factors— Risks Related to Our Business—Our financial performance is affected by the prices of our key raw materials, particularly aluminum and steel. Price fluctuations relating to aluminum and steel could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows and limit our operating flexibility."

Intellectual Property

We rely on a combination of patents, trademarks, trade secrets, other intellectual property rights, and other protective measures to protect our proprietary rights. We do not believe that any individual item of our intellectual property portfolio is material to our current business. We have licensed, and may license in the future, certain intellectual property and technology from third parties. See "Item 1A. Risk Factors—Risks Related to Our Business—We may be unable to protect our intellectual property rights, and we may be subject to intellectual property litigation and infringement claims by third parties."

Competition

We believe the principal competitive factors affecting our business are market diversity, customer diversity, geographic diversity and product and material diversity. We believe that we are well positioned to compete with regard to each of these factors in each of the core markets in which we operate.

We have leading market positions in many of our core product markets. We have historically utilized our strong market positions and operating platforms to grow our business through both organic initiatives and acquisitions, and to improve our profitability. In certain fragmented markets, we are a national supplier to a broad customer base. We have focused on both introducing new products to our existing customer base and selling existing products into new markets and regions.

In the residential end market, which includes roof drainage products, our competitors in all three selling channels (home improvement retailers, distributors and contractors) are fragmented and only have regional distribution capabilities. Selected competitors include Gibraltar Industries, Spectra and Royal-Apex Manufacturing Company, Inc. The U.S. RV OEM end market is a small, concentrated industry with a handful of large-scale competitors including Foremost and Drew Industries. In Europe, the market is similarly concentrated with primary competitors being Hartal and Eltherington Group Ltd., to which we supply certain products. The non-residential end-market includes the agricultural and industrial sectors. The agricultural market is extremely fragmented in the U.S. Our primary competitors are Metal Sales Manufacturing Corp., McElroy, Central States and Union Corrugating. In the architectural market, which is also highly fragmented, CENTRIA Architectural Systems, Metal Sales Manufacturing Corp., NCI and Peterson Aluminum Corporation are our principal competitors. In the industrial market, particularly in Europe, we occasionally compete with vertically integrated aluminum mills such as Novelis Inc., Hydro Aluminum, Alcoa and Hulett.

Environmental, Health and Safety Matters

Our manufacturing operations are subject to a range of federal, state, local and foreign environmental and occupational health and safety laws and regulations, including those relating to air emissions, wastewater discharges, the handling and disposal of solid and hazardous waste and substances, and the remediation of contamination associated with the current and past use of hazardous substances or other regulated materials. We may not be, at all times, in full compliance with all such requirements. Many of our operations require environmental permits and controls pursuant to these laws and regulations to prevent and limit pollution. These permits contain terms and conditions that impose limitations on our manufacturing activities, production levels and associated activities and periodically may be subject to modification, renewal and revocation by issuing authorities. We believe we are in compliance in all material respects with all applicable permit requirements. Historically, the costs of achieving and maintaining compliance with environmental and health and safety requirements have not been material costs. However, the operation of manufacturing plants entails risks in these areas, and a failure by us to comply with applicable environmental, health and safety laws, rules and regulations, including permit requirements, could result in civil or criminal fines, penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup, or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, including the installation of pollution control equipment or remedial actions. While the amount of such liability could be material, we conduct our current operations in a manner intended to reduce the risks of such liability.

Under certain of these laws and regulations, such as the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), known as the Superfund law, and its state law analogs, we may be held liable for releases of hazardous substances on or from our current or former properties or any offsite disposal location to which we may have sent waste. Such liability may include cleanup costs, natural resource damages and associated transaction costs. Liability

13


under these laws can be joint and several, and can be imposed without regard to fault or the lawfulness of the actions that led to the release at the time they occurred.

Pursuant to these laws, we have been named as a potentially responsible party in state and federal administrative and judicial proceedings seeking contribution for costs associated with the investigation, analysis, correction and remediation of environmental conditions at eleven third party hazardous waste disposal sites. Pursuant to the terms of the Alumax acquisition agreement, subject to certain terms and limitations, Alumax (and its successors) has agreed to indemnify us for all of the costs associated with each of these eleven sites as well as for all of the costs associated with nine additional sites to which we may have sent waste for disposal but for which we have not received any notice of potential responsibility. Our ultimate liability will depend on many factors, including our volumetric share of the waste at a given site, the remedial action required, the total cost of remediation, the financial viability and participation of the other entities that also sent waste to the site and Alumax's willingness or ability to honor its indemnification obligations.

We are not currently conducting any investigation or remediation of contamination at facilities we own or operate. Potential liabilities of this kind are not subject to indemnification by Alumax. Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish or adjust our reserve for our projected share of these costs. As of December 30, 2011, we had no reserves recorded for environmental matters, as we believe any potential liability is both remote and not reasonably estimable. However, the estimation of environmental liabilities is subject to uncertainties, including the scope and nature of contamination conditions, the success of remediation technologies being employed, new or changes to environmental laws, regulations or policies, future findings of investigation or remediation actions, alteration to expected remediation plans, or the number, financial condition and cooperation of other potentially responsible parties. In the event that we are responsible for environmental cleanup costs, any actual liabilities that exceed our reserves may have a material and adverse effect on our financial condition and, in particular, our earnings. In addition, we may incur significant liabilities under cleanup laws and regulations in connection with environmental conditions currently unknown to us relating to our existing, prior, or future sites or operations or those of predecessor companies whose liabilities we may have assumed or acquired.

The facility that the Company leases in Ivyland, Pennsylvania has contaminated groundwater as a result of the migration from an adjacent property which was formerly the Naval Air Warfare Center, currently an NPL site under CERCLA. The area designated as an NPL site includes our leased property. The United States Navy is conducting a clean-up of the Naval Air Warfare Center NPL site under the Environmental Protection Agency's supervision. The owner/landlord of the property obtained liability protection under Pennsylvania's Brownfield Law by demonstrating to the Commonwealth of Pennsylvania that the contamination is from an off-site source, and, under Pennsylvania law, such liability protection benefits tenants as well. Moreover, under the Company's lease, the landlord retained any liability for this contamination. Accordingly, although the facility leased by the Company is located on an NPL site, the effects of this contamination would not reasonably be expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Compliance with environmental, and occupational health and safety laws and regulations can be costly, and we have incurred and will continue to incur costs, including capital expenditures, to comply with these requirements. In addition, these laws and regulations and their interpretation or enforcement are constantly evolving and have tended to become more stringent over time, and the impact of these changes on our business, financial condition, results of operations or cash flows are impossible to predict. For example, legislation and regulations limiting emissions of greenhouse gases, including carbon dioxide associated with the burning of fossil fuels, are at various stages of consideration and implementation, and if fully implemented, could significantly increase the price of the raw materials for and energy used to produce our products. If our compliance costs increase and are passed through to our customers, our products may become less competitive than other materials, which could reduce our sales, perhaps materially. Our costs of compliance with current and future environmental requirements could materially and adversely affect our business, financial condition and results of operations, prospects and cash flows.

Employees

As of December 30, 2011 we had approximately 2,084 employees, of which approximately 748 (36%) are employed in Europe and approximately 1,336 (64%) are employed in the United States and Canada. Of these employees, approximately 33% are salaried and 67% are hourly employees.

As of December 30, 2011, approximately 9% of our labor force is represented by collective bargaining agreements and an additional 28% of our labor force is represented by works councils.

We are not a party to any material pending labor proceedings and believe that our relationship with employees is good.

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Available Information

The public may read or copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. This is the Company's first Annual Report on Form 10-K that is required to be filed with the SEC. This annual report on Form 10-K and our future annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to such reports filed with or furnished to the SEC under Section 13(a) or 15(b) of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, will be available free of charge on the SEC's website at www.sec.gov and on our website at www.euramax.com, as soon as reasonably practicable after they are filed with, or furnished to, the SEC. The information on our website is not incorporated into our SEC filings.

Item 1A.
RISK FACTORS

        In addition to the other information set forth in this report, you should carefully consider the following factors, any of which could materially affect our business, financial condition or results of operations in future periods. The risks described below are not the only risks facing our Company. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods. Information contained in this section may be considered "forward-looking statements." See "Cautionary Statement Regarding Forward-Looking Statements" for a discussion of certain qualifications regarding such statements.

Risks Related to Our Business

Demand for our products is cyclical, and reduced demand in our end markets is likely to adversely affect our profitability and cash flow.

Demand for many of our products is cyclical in nature. Because the ultimate end users of our products are most typically individuals electing whether to make discretionary expenditures, our results are affected by various macroeconomic trends which affect consumer confidence and access to financing. Sales of our residential building products for repair, remodel and replacement applications depend upon the availability of home equity and consumer financing, low interest rates, the turnover and aging of housing stock, wear and tear, weather damage and consumer sentiment. Sales of our non-residential building products are affected by consumer confidence, interest rates, consumer disposable income, the strength of agricultural markets, consumer access to affordable financing and commercial construction trends. Demand for our RV products is driven by trends in disposable income, interest rates and general economic conditions, as well as demographic trends relating to consumers in the 55 through 74 year old age group, who constitute a significant source of demand for RV products. Demand for RV products can also be affected by gasoline prices. Adverse trends in these and other cyclical factors are likely to materially reduce demand for and sales of our products. Moreover, simultaneous declines in multiple end markets could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

Our business, financial condition, results of operations, prospects and cash flows have been and in the future may be materially and adversely affected by U.S., European and global general economic conditions.

Many aspects of our business, including demand for our products and the pricing and availability of raw materials, are affected by global general economic conditions and, specifically, economic conditions in the U.S. and Europe. General economic conditions and predictions regarding future economic conditions also affect our business strategies, and a decrease in demand for our products or other adverse effects resulting from an economic downturn affecting our geographic end markets may cause us to fail to achieve our anticipated financial results. General economic factors beyond our control that affect our business and end-markets include interest rates, inflation, deflation, consumer credit availability, consumer debt levels, consumer confidence, employment levels, business confidence levels, housing markets, energy costs, tax rates and policy, unemployment rates, commencement or escalation of war or hostilities, the threat or possibility of war, terrorism or other global or national unrest, political or financial instability, and other matters that influence spending by our customers and in our end markets. Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency or increase in magnitude.

Beginning in the fall of 2008 and continuing through 2009 and into 2011, the global economy entered a financial crisis and severe global recession, which materially and adversely impacted our business and the businesses of our customers. Volatile capital and credit markets, declining business and consumer confidence and increased unemployment precipitated a continuing economic slowdown. The economic slowdown decreased demand for the products offered by our customers, resulting in decreased sales volumes and reduced earnings. The severe downturn affected all of our end markets, ultimately

15


required us to restructure our debt in June 2009 and caused our then-existing equity holders to lose the full value of their investment. Part of our business strategy anticipates recovery in the residential repair and remodel, non-residential construction and RV markets; however, there can be no assurances that a recovery in any of these markets will occur as anticipated. Economic weakness could continue or worsen, as has occurred in the United States and in certain regions of Europe due to concerns over the fiscal and monetary situation in a number of countries. For example, the current U.S. debt ceiling and budget deficit concerns together with signs of deteriorating sovereign debt conditions in Europe have increased the possibility of credit-rating downgrades and economic slowdowns. Although U.S. lawmakers passed legislation to raise the federal debt ceiling, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the United States from "AAA" to "AA+" on August 5, 2011, citing concerns that the legislation may be insufficient to stabilize the U.S. government's medium-term debt dynamics. The impact of this or any further downgrades to the U.S. government's sovereign credit rating, or its perceived creditworthiness, and the impact of the current crisis in Europe with respect to the ability of certain European Union countries to continue to service their sovereign debt obligations is inherently unpredictable and could have a material adverse effect on the U.S. and global financial markets and economic conditions. There can be no assurance that governmental or other measures to aid economic recovery, including economic stimulus legislation, will be effective or that our sales volumes will increase or stabilize in the future. There can also be no assurance that the conditions that affected us beginning in the fall of 2008 and during 2009 will not recur or worsen. Continued adverse economic conditions could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

A decline in our relations with our key customers or the amount of products they purchase from us could materially adversely affect our business, financial position, results of operations, prospects and cash flows.

Our business depends on our ability to maintain positive relations with our key customers. In 2011, our largest customer, The Home Depot®, accounted for approximately 11% of our net sales and our top ten customers combined accounted for approximately 30% of our net sales. Although we have established and maintain significant long-term relationships with our key customers, we cannot assure you that all of these relationships will continue or will not diminish. In addition, we generally do not enter into long-term contracts with our customers and they generally do not have an obligation to purchase products from us. The loss of, or a diminution in, our relationship with any of our largest customers would have a material adverse effect on us. In addition, the loss of any of our largest customers in any of our business segments could have a material adverse effect on the results of operations of that segment.

Our competitors may adopt more aggressive sales policies and devote greater resources to the development, promotion and sale of their products than we do, which could result in a loss of customers. Generally, our customers are price sensitive, which could further lead to the loss of customers if our prices do not remain competitive. The loss of, or a reduction in orders from, any significant customers, losses arising from customer disputes regarding shipments, fees, merchandise condition or related matters, or our inability to collect accounts receivable from any major customer could have a material adverse effect on our business. Customers accounting for a significant amount of our revenues may also become more resistant to price changes as their purchase volumes increase relative to our other customers, limiting our ability to increase prices to these customers and eroding our margins. Also, revenue from customers that have accounted for significant revenue in past periods, individually or as a group, may not continue in future periods or, if continued, may not reach or exceed historical levels in any period.

Further, we have no operational or financial control over our customers and have limited influence over how they conduct their businesses. If any of these customers fail to remain competitive in their respective markets or encounter financial or operational problems, our revenue and profitability may decline. Market conditions could also result in our significant customers experiencing financial difficulties. We are exposed to the credit risk of our customers, and their failure to meet their financial obligations when due because of their bankruptcy, lack of liquidity, operational failure or other reasons could result in decreased sales and earnings for us. The decreased availability of consumer credit resulting from the financial crisis, as well as general unfavorable economic conditions, may cause consumers to further decrease their spending, which would reduce the demand for the products of our customers, which would affect our sales and cash flow.

Certain of our customers have been expanding and may continue to expand through consolidation and internal growth, potentially increasing their buying power, which could materially and adversely affect our business, financial condition, results of operations, prospects and cash flows. Certain of our important customers are large companies with significant buying power. In addition, potential further consolidation among our customers could enhance the ability of these customers to seek more favorable terms, including pricing, for the products that they purchase from us. Accordingly, our ability to maintain or raise prices in the future may be limited, including during periods of raw material and other cost increases. See "—Our financial performance is affected by the prices of our key raw materials, particularly aluminum and steel. Price fluctuations relating to aluminum and steel could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows and limit our operating flexibility." If we are forced to reduce prices or to maintain prices during periods of increased production costs, or if we lose customers because of pricing or other methods of competition, our business, financial

16


condition, results of operations, prospects and cash flows may be materially and adversely affected.

Our financial performance is affected by the prices of our key raw materials, particularly aluminum and steel. Price fluctuations relating to aluminum and steel could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows and limit our operating flexibility.

The manufacture of our products requires substantial amounts of raw materials, which consist principally of aluminum and steel and, to a lesser extent, paint, glass, copper and vinyl. Over 77% of our raw material costs in 2011 consisted of the cost of aluminum and steel. Our manufacturing operations and our financial performance is affected to a substantial extent by the market prices for these raw materials.

Aluminum and steel are cyclical commodities with prices subject to global market forces of supply and demand and other related factors. Such factors include speculative activities by market participants, production capacity, strength or weakness in key end markets such as housing and transportation, political and economic conditions and production costs in major production regions. Prices have been historically volatile. For example, from January 2009 through December 2011 the London Metals Exchange settlement price for spot aluminum ranged from a high of $1.26 per pound in April 2011 to a low of $0.58 per pound in February 2009. Changes in the prices of aluminum and steel could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

We have historically priced our products by reference to raw material costs and generally we seek to pass through raw material price increases to our customers. However, due to the uncertainty of aluminum and steel prices and the time between material purchases and product sales, we cannot assure you that we always will be able to successfully pass through such price increases to our customers or fully offset the effects of high raw materials costs through productivity improvements. For example, if we cannot pass increases in the cost of raw materials to our customers, higher prices could cause our customers to consider competitors' products, some of which may be available at a lower cost. Additionally, where a competitor had previously purchased a large quantity of raw materials into inventory at a lower price, such a competitor could afford to pass on savings from subsequently higher prices to its customers. We also risk purchasing materials for delivery commitments to customers who later file for bankruptcy protection or repudiate or cancel their purchase agreement with us during a falling price environment, causing us to take delivery of raw materials at an above market cost. As a result, to the extent that the time lag associated with a price increase pass through becomes significant, such increases may have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

Where changes in aluminum and steel prices are passed through to our customers, increases or decreases in aluminum and steel prices will cause corresponding increases and decreases in reported net sales, causing fluctuations in reported revenues that are unrelated to our level of business activity. For example, our results during 2011 were significantly affected by rising aluminum and steel prices, which resulted in higher net sales and also higher cost of sales. Accordingly, any change in the price of aluminum and/or steel could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

Our performance is dependent on the continued availability of necessary raw materials, particularly aluminum and steel.

We are dependent on the continued availability of critical raw materials, particularly aluminum and steel. The supply and demand for these critical raw materials are subject to cyclical price fluctuations and other market disturbances, including supply shortages. We purchase a majority of our steel from domestic steel producers, but we have no long-term contracts with any steel suppliers and we generally purchase steel at market prices. In the event of an industry-wide general shortage of raw materials we use, or a shortage or discontinuation of certain types of raw materials, we may not be able to arrange for alternative sources of such raw materials and products. The number of available suppliers has been reduced in recent years due to industry consolidation and bankruptcies affecting steel and metal producers and this trend may continue.

If we are required to utilize alternative suppliers, this could cause delays in the delivery of such raw materials and possible losses in revenue. Also, alternative suppliers may not be available, or may not provide their products and services at similar or favorable prices. Additionally, increased demand from other countries such as China has put upward pressure on the market prices for raw materials. We also purchase raw materials on a regular basis in an effort to maintain our inventory at levels that we believe are sufficient to satisfy the anticipated needs of our customers based upon historic buying practices and market conditions. However, we cannot assure you that there will always be an adequate supply to meet our demand for aluminum and steel, and we are subject to the risk of lost revenue in the event that we cannot obtain quantities of aluminum and steel necessary to meet customer demand. Interruptions in the operations of our suppliers due to labor or production problems, delivery interruptions, fires, floods, explosions, environmental issues, other Acts of God or other events could disrupt the supply of raw materials. Any disruption in the supply of aluminum and/or steel could have a material adverse effect on our

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business, financial condition, results of operations, prospects and cash flows, including temporarily impairing our ability to manufacture our products for our customers or requiring us to pay higher prices in order to obtain aluminum and/or steel from other sources, which could affect our net sales and profitability.

Due to our reliance on unique fabrication techniques for the niche markets we serve, our business is subject to risks associated with manufacturing processes.

We manufacture most of our products at our own production facilities. Any loss of the use of all or a portion of any of our facilities due to accidents, fires, explosions, labor issues, adverse weather conditions, natural disasters such as floods, tornadoes, hurricanes, ice storms and earthquakes, supply interruptions, transportation interruptions, human error, mechanical failure, terrorist acts, power outages, discharges or releases of toxic or hazardous substances or gases, storage tank leaks and other environmental issues, or otherwise, whether short or long-term, could have a material adverse effect on us and our operations. As such events occur, we may experience substantial business losses, production delays, third party lawsuits and significant repair costs, as well as personal injury and/or loss of life, which could materially and adversely affect our business, financial condition, results of operations, prospects and cash flows.

In addition, unexpected failures of our equipment and machinery may result in production delays, revenue loss and significant repair costs, as well as injuries to our employees. Any interruption in production capability may require us to make large capital expenditures to remedy the situation, which could have a negative impact on our profitability and cash flows. A loss or interruption of production at certain of our facilities, such as our manufacturing facilities in the Netherlands, could significantly disrupt our operations and affect a large number of customers, decreasing our revenues. Moreover, there are a limited number of manufacturers that make the machines we use in our business. Because we supply certain of our products to OEMs, a temporary or long-term business disruption could result in a permanent loss of customers, who may be required to seek alternate suppliers. If this were to occur, our future sales levels, and therefore our business, financial condition, results of operations, prospects and cash flows, could be materially and adversely affected.

We are also subject to losses associated with equipment shutdowns, which may be caused by the loss or interruption of electrical power to our facilities due to unusually high demand, blackouts, adverse weather, equipment failure or other catastrophic events. Losses caused by disruptions in the supply of electrical power could materially and adversely affect our business, financial condition, results of operations, prospects and cash flows. See "—Losses caused by disruptions in the supply of power or increases in energy costs would adversely affect our operations."

Our production facilities are located throughout North America and Europe. In the future, we may construct new manufacturing plants or repair or refurbish existing plants. Delays in the construction, repair and refurbishment of a manufacturing plant can occur as a result of events such as insolvency, work stoppages, other labor actions or "force majeure" events experienced by the companies working on the plants that are beyond our control. Any termination or breach of contract following such an event may result in, among other things, the forfeiture of prior deposits or payments made by us, potential claims and impairment of losses. A significant delay in the construction of a new plant or repair of an existing plant could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

Losses caused by disruptions in the supply of power or increases in energy costs would adversely affect our operations.

We use large amounts of electricity, natural gas and other energy sources to operate our manufacturing facilities. Any loss of power which reduces the amperage to our equipment or causes an equipment shutdown would result in a reduction in production volume. Interruptions in the supply of electrical power to our facilities can be caused by a number of circumstances, including unusually high demand, blackouts, equipment or transformer failure, human error, natural disasters or other catastrophic events. If such a condition were to occur, we may lose production for a prolonged period of time and incur significant losses. In addition, the volatility in costs of fuel, principally natural gas, and other utility services, principally electricity, used by our production facilities affect operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control, such as supply and demand for fuel and utility services in both local and regional markets and the potential regulation of greenhouse gases. Future increases in fuel and utility prices may have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

The insurance that we maintain may not fully cover all potential exposures.

We maintain property, casualty and workers' compensation insurance, but such insurance does not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental compliance or remediation. In addition, from time to time, various types of insurance for companies in our

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industries have not been available on commercially acceptable terms or, in some cases, have not been available at all. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.

Consistent with market conditions in the insurance industry, premiums and deductibles for some of our insurance policies have been increasing and may in the future increase substantially. In some instances, some types of insurance may become available only for reduced amounts of coverage, if at all. In addition, there can be no assurance that our insurers would not challenge coverage for certain claims. Moreover, in some instances our insurers may become insolvent and could be unable to pay claims that are made in the future. If we were to incur a significant liability for which we were not fully insured or that our insurers disputed, it could have a material adverse effect on our financial condition. Even with insurance with sufficient coverage, we may still experience a significant interruption to our operations as discussed above. We also cannot assure you that we will maintain or renew our insurance on comparable terms or in sufficient amounts in the future.

We operate in highly competitive markets and our failure to compete effectively may adversely affect our business, financial condition, results of operations, prospects and cash flows.

The markets in which we operate are highly competitive. In the United States, we face competition in each of our business segments from both large and small companies. In Europe, our competitors include a number of integrated companies in the coil coating business. Other smaller companies compete with us in the building and construction, RV and transportation markets in Europe, both on a regional basis and on a pan-European basis. Some of our competitors are larger than us and have significantly greater financial, marketing and technical resources and greater purchasing power than we do. These competitors may be better able to withstand reduced revenues and adverse industry or economic conditions. Further, new competitors could emerge from within North America, Europe or globally. Due to the competitiveness in the various markets in which we operate, we may not be able to increase prices for our products to cover increases in our costs, including increases in raw material costs, or we may face pressure to reduce prices, which could materially and adversely affect our profitability. If we do not compete successfully, our business, financial condition, results of operations, prospects and cash flows could be materially and adversely affected.

Competitive factors in our industry include, without limitation, the importance of customer loyalty, changes in market penetration, increased price competition, the introduction of new products and technology by existing and new competitors, changes in marketing, product diversity, sales and distribution and the ability to supply products to customers in a timely manner. Further, branding is not a significant factor in the sale of many of our products to the end user and the barriers to entry resulting from product branding are therefore lower. In addition, because we do not have long-term contractual arrangements with many of our customers, these competitive factors could cause our customers to cease purchasing our products and shift suppliers.

In addition, our competitors may develop products that are superior to our products or may adapt more quickly to new technologies or evolving customer requirements. Technological advances by our competitors may lead to new material substitutions that are superior to aluminum, steel, copper and vinyl or that may make our products obsolete. New manufacturing techniques developed by competitors may make it more difficult for us to compete. For example, during the 1980s, fiberglass siding was introduced as an alternative to aluminum and took considerable market share in the U.S. RV products end market. Consolidation of our competitors or customers may also adversely affect our businesses. Furthermore, global competition and customer demands for efficiency will continue to make price increases difficult. Because we are largely affected by customer needs and demands, we face uncertainties related to downturns or financial difficulties in our customers' businesses and unanticipated customer production shutdowns or curtailments.

We are increasingly dependent on information technology in our operations. If our computer systems fail or if we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to support all aspects of our geographically diverse business operations. In particular, we depend on our information technology infrastructure for electronic communications among our locations around the world and between our personnel and other customers and suppliers. Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches and natural disasters.

We may experience problems with the operation of our information technology systems that could adversely affect, or even temporarily disrupt, all or a portion of our operations until resolved, affecting our ability to realize projected and expected cost savings and causing significant loss. Damage or interruption to our computer systems may require a significant investment

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to fix or replace them, and we may suffer interruptions in our operations in the interim. A prolonged interruption or failure of any of our systems or their connective networks could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

Additionally, a compromise of our security systems resulting in unauthorized access to certain personal information about our customers or distributors could adversely affect our reputation with our customers, distributors and others, as well as our operations, and could result in litigation against us or the imposition of penalties. Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information. In addition, most states have enacted laws requiring companies to notify individuals and often state authorities of data security breaches involving their personal data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether successful or not, would harm our reputation and brand, and it could cause the loss of customers. A security breach could also require that we expend significant additional resources related to our information security systems.

We also rely heavily on our information technology staff. If we cannot meet our staffing needs in this area, we may not be able to fulfill our technology initiatives while continuing to provide maintenance on existing systems. We rely on certain software vendors to maintain and periodically upgrade many of these systems so that they can continue to support our business. The software programs supporting many of our systems were licensed to us by independent software developers. The inability of these developers or us to continue to maintain and upgrade these information systems and software programs would disrupt or reduce the efficiency of our operations if we were unable to convert to alternate systems in an efficient and timely manner. In addition, costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology, including our ERP system, or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations. Additionally, any systems failures could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations.

Our business is subject to seasonality, with our highest sales volumes historically occurring during our second and third quarters.

Our business is subject to seasonality, with the second and third quarters historically accounting for our highest sales volumes. As a result, quarter-to-quarter comparisons of our sales and operating results should not be relied on as an indication of future performance, and the results of any quarterly period may not be indicative of expected results for a full year. Additionally, this seasonality affects how we manage our cash flows over the course of the year. For example, our working capital needs are typically at their highest during the second and third quarters.

Adverse weather conditions could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

Unusually prolonged periods of cold, rain, blizzards, hurricanes or other severe weather patterns could delay, halt or postpone renovation and construction activity. For example, an unusually severe winter can lead to reduced construction, repairing and remodeling activity and exacerbate the seasonal decline in our sales, cash flows from operations and results of operations during the winter months. If sales were to fall substantially below levels we would normally expect during certain periods, our financial results would be adversely impacted.

We may be unable to protect our intellectual property rights, and we may be subject to intellectual property litigation and infringement claims by third parties.

We rely on a combination of patents, trademarks, trade secrets, proprietary technology and technology advancements to maintain competitiveness in the market and to protect our branded products. We have licensed, and may license in the future, certain intellectual property and technology from third parties. Despite our efforts to protect our proprietary rights, third parties, including our competitors, may copy or otherwise obtain and use our products or technology. It is difficult for us to monitor unauthorized uses of our products or technology and we may not be able to adequately minimize damages to us from these violations. Failures to protect our intellectual property could have a material adverse effect on the competitiveness or profitability of our business. The steps we have taken may not prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. Further, we may not be able to deter current and former employees, contractors and other parties from breaching confidentiality obligations and misappropriating proprietary information. In addition, we cannot guarantee that our applications for registered protection will be accepted by the relevant registries or that courts will find any resulting registrations to be valid. If third parties take actions

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that affect our rights or the value of our intellectual property, similar proprietary rights or reputation, or we are unable to protect our intellectual property from infringement or misappropriation, other companies may be able to use our intellectual property to offer competitive products at lower prices and we may not be able to effectively compete against these companies. In addition, if any third party copies or imitates our products, in a manner that projects a lesser quality or carries a negative connotation, this could have a material adverse effect on our goodwill in the marketplace because it would damage the reputation of our products generally, whether or not it violates our intellectual property rights.

In addition, we face the risk of claims that we are infringing third parties' intellectual property rights. Although we believe that our intellectual property rights are sufficient to allow us to conduct our business without incurring liability to third parties, from time to time we are involved in legal proceedings that arise relating to intellectual property, and we can give no assurance that claims or litigation asserting infringement by us of intellectual property rights will not be initiated in the future seeking damages, payment of royalties or licensing fees, or an injunction against the sale of our products, or that we would prevail in any litigation or be successful in preventing such judgment. Any such claim, even if it is without merit, could be expensive and time-consuming to defend; could cause us to cease making, using or selling certain products that incorporate the disputed intellectual property; could require us to redesign our products, if feasible; and could divert management's time and attention, each of which could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows. In the event a claim of infringement against us is successful, we may be required to pay royalties or license fees to continue to use the applicable technology or other intellectual property rights or may be unable to obtain necessary licenses from third parties at all, or at a reasonable cost or within a reasonable time.

In the future, we may also rely on litigation to enforce our intellectual property rights and contractual rights and, if not successful, we may not be able to protect the value of our intellectual property. Regardless of the outcome, any litigation, whether commenced by us or third parties, could be protracted and costly and could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

We could face potential product liability or warranty claims relating to products we manufacture or distribute, and we may not have sufficient insurance coverage or funds available to cover all potential claims.

We face exposure to product liability claims in the event that the use of our products is alleged to have resulted in injury or other adverse effects. We currently maintain product liability coverage, but we may not be able to continue to maintain such insurance on acceptable terms in the future, if at all, or ensure that any such insurance provides adequate coverage against potential claims. Product liability claims can be expensive to defend and may divert management or other personnel for months or years regardless of the ultimate outcome. An unsuccessful product liability defense could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

We also provide warranties on certain products and are subject to potential warranty claims to the extent that products we manufacture are defective. The warranty periods differ depending on the product, but generally range from one year to limited lifetime warranties. We provide accruals for warranties based on historical experience and expectations of future occurrence. We may experience increased costs of warranty claims if our products are manufactured or designed defectively. Our warranty accruals may be insufficient or we could in the future become subject to a significant and unexpected warranty expense, which could have a material adverse effect on our business, financial condition, results of operations, prospects and cash flows.

We are subject to strict environmental laws and regulations that may lead to significant, unforeseen expenses.

Our manufacturing operations are subject to a range of federal, state, municipal, local, and foreign environmental and occupational health and safety laws and regulations, including those relating to air emissions, wastewater discharges, the handling and disposal of solid and hazardous waste and hazardous substances, and the remediation of contamination associated with the current and past use of hazardous substances or other regulated materials. We may not be, at all times, in compliance with all such requirements. Many of our operations require environmental permits and controls pursuant to these laws and regulations to prevent and limit pollution. These permits contain terms and conditions that impose limitations on our manufacturing activities, production levels and associated activities and periodically may be subject to modification, renewal and revocation by issuing authorities. Historically, the costs of achieving and maintaining compliance with environmental and health and safety requirements have not been material. However, the operation of manufacturing plants entails risks in these areas, and a failure by us to comply with applicable environmental, health and safety laws, rules and regulations, including permit requirements, could result in civil or criminal fines, penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup, or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, including the installation of pollution control equipment or remedial actions.


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Under certain of these laws and regulations, such as the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), known as the Superfund law, and its state law analogs, we may be held liable for releases of hazardous substances on or from our current or former properties or any offsite disposal location to which we may have sent waste. Such liability may include cleanup costs, natural resource damages and associated transaction costs. Liability under these laws can be joint and several, and can be imposed without regard to fault or the lawfulness of the actions that led to the release at the time they occurred.

Pursuant to these laws, we have been named as a potentially responsible party in state and federal administrative and judicial proceedings seeking contribution for costs associated with the investigation, analysis, correction and remediation of environmental conditions at eleven third party hazardous waste disposal sites. Pursuant to the terms of the Alumax acquisition agreement, subject to certain terms and limitations, Alumax (and its successors) has agreed to indemnify us for all of the costs associated with each of these sites as well as for all of the costs associated with nine additional sites to which we may have sent waste for disposal but for which we have not received any notice of potential responsibility. Our ultimate liability in connection with present and future environmental claims will depend on many factors, including our volumetric share of the waste at a given site, the remedial action required, the total cost of remediation, the financial viability and participation of the other entities that also sent waste to the site, and Alumax's willingness or ability to honor its indemnification obligations.

We are not currently conducting any investigation or remediation of contamination at facilities we own or operate. Potential liabilities of this kind are not subject to indemnification by Alumax. Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish or adjust our reserve for our projected share of these costs. As of December 30, 2011, we had no reserves recorded for environmental matters, as we believe any potential liability is both remote and not reasonably estimable. However, the estimation of environmental liabilities is subject to uncertainties, including the scope and nature of contamination conditions, the success of remediation technologies being employed, new or changes to environmental laws, regulations or policies, future findings of investigation or remediation actions, alteration to expected remediation plans, or the number, financial condition and cooperation of other potentially responsible parties. In the event we are responsible for environmental costs, any actual liabilities that exceed our reserves may have a material and adverse effect on our financial condition and, in particular, our earnings. In addition, we may incur significant liabilities in connection with environmental conditions currently unknown to us relating to our existing, prior, or future sites or operations or those of predecessor companies whose liabilities we may have assumed or acquired. See "Item 1. Business—Environmental, Health and Safety Matters."

Compliance with environmental and occupational health and safety laws and regulations can be costly, and we have incurred and will continue to incur costs, including capital expenditures, to comply with these requirements. In addition, these laws and regulations, and their interpretation or enforcement, are constantly evolving and have tended to become more stringent over time. It is impossible to predict accurately the effect that changes in these laws and regulations, or their interpretation or enforcement, may have upon our business, financial condition, results of operations, prospects or cash flows. For example, legislation and regulations limiting emissions of greenhouse gases, including carbon dioxide associated with the burning of fossil fuels, are at various stages of consideration and implementation, and if fully implemented, may significantly increase the price of the raw materials for and energy used to produce our products and negatively impact the financial condition of many of our customers. If our compliance costs increase and are passed through to our customers, our products may become less competitive than other materials, which could reduce our sales, perhaps materially. Our costs of compliance with current and future environmental requirements could materially and adversely affect our business, financial condition, results of operations, prospects and cash flows.

We are subject to the risks of doing business in foreign countries.

We are, and will continue to be, subject to financial, political, economic and business risks in connection with our non-U.S. operations. In 2011, 36% of our net sales were made outside of the United States, and as of December 30, 2011, we operated six manufacturing and distribution facilities in Europe and one in Canada. Doing business in foreign countries entails certain risks, including, but not limited to:

exchange rate fluctuations;
adverse changes in economic conditions in other countries;
political or civil unrest and insurrection and armed hostilities;
government policies against ownership of businesses by non-nationals;
reduced protection of intellectual property rights;
a need to comply with numerous laws and regulations in each jurisdiction in which we operate;
legal systems that may be less developed and less predictable than those in the United States;
shipping delays;

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licensing and other legal requirements;
local tax issues;
longer payment cycles in certain foreign markets;
the difficulties of staffing and managing dispersed international operations;
language and cultural issues in regions of the world outside the United States;
renegotiation or modification of existing agreements or arrangements with governmental authorities;
export and transportation tariffs;
foreign exchange restrictions and trade protection measures;
changes in the value of the U.S. dollar relative to foreign currencies; and
differences in laws governing employee and union relations.

The occurrence of any of these risks could materially disrupt or adversely impact our business.

In addition, because a significant portion of our operations are outside the United States, we are subject to limitations on our ability to repatriate funds to the United States These limitations arise from regulations in certain countries that limit our ability to remove funds from or transfer funds to foreign subsidiaries, as well as from tax liabilities that would be incurred in connection with such transfers. These regulations could significantly limit our liquidity.

In addition, our revenues, expenses, cash flows and results of operations could be affected by actions in foreign countries that more generally affect the global markets, including inflation, fluctuations in currency and interest rates, competitive factors, civil unrest and labor problems. Our operations and the commercial markets for our products could also be materially and adversely affected by acts of war, terrorism or the threat of any of these events as well as government actions such as controls on imports, exports and prices, tariffs, new forms of taxation or changes in fiscal regimes and increased government regulation in countries engaged in the manufacture or consumption of aluminum and steel products. Unexpected or uncontrollable events or circumstances in any of these markets could materially and adversely affect our business, financial condition, results of operations, prospects and cash flows.

Fluctuations in foreign currency exchange rates could negatively affect our financial results.

We earn revenues, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S. dollar. In the year ended December 30, 2011, we used three functional currencies in addition to the U.S. dollar and derived approximately 36% of our net sales from operations outside the United States. Because our consolidated financial statements are presented in U.S. dollars, we must translate net sales, net income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other major currencies will affect our net sales, operating income and the value of balance sheet items, including intercompany assets and obligations. Strengthening of foreign currencies, particularly the euro and British pound, against the U.S. dollar had a significant impact on our cost of goods sold during 2011. Changes in the value of the currencies we use also affect the value and amount of our debt which is recorded on our balance sheet. Because of the geographic diversity of our operations, weaknesses in some currencies might be offset by strengths in others over time. However, we cannot assure you that fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against major currencies, such as the Euro, the Pound Sterling, the Canadian Dollar, or the currencies of large developing countries, would not materially adversely affect our financial results.

Doing business in foreign countries requires us to comply with U.S. and foreign anti-corruption laws and economic sanctions programs.

Our international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act ("FCPA"), and economic sanction programs administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"). As a result of doing business in foreign countries, we are exposed to a heightened risk of violating anti-corruption laws and OFAC regulations.

The FCPA prohibits us from providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. As part of our business, we may deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. In addition, the U.K. Bribery Act 2010, or the Bribery Act, came into force in July 2011. The provisions of the Bribery Act extend beyond bribery of foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitation payments and penalties. Some of the international locations in which we operate lack a developed legal system and have higher than normal levels of corruption. Economic sanctions programs restrict our business dealings with certain sanctioned countries and other sanctioned individuals and entities.

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Violations of anti-corruption laws and sanctions regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment. We have established policies and procedures designed to assist our compliance with applicable U.S. and foreign laws and regulations including the Bribery Act. However, there can be no assurance that our policies and procedures will effectively prevent us from violating these laws and regulations in every transaction in which we may engage, and such a violation could materially and adversely affect our reputation, business, financial condition, results of operations, prospects and cash flows. In addition, various U.S. state and municipal governments, universities and other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned countries.

We are subject to various federal, state, local and non-U.S. tax requirements.

We may be subject to federal, state and local income taxes in the United States and non-U.S. income taxes in numerous other jurisdictions in which we transact business or generate net sales. Increases in income tax rates could reduce our after-tax income from affected jurisdictions. In addition, there have been proposals to reform U.S. tax laws that could significantly impact how U.S. multinational corporations are taxed in the United States on their foreign earnings; because we earn a substantial portion of our income in foreign countries, these proposals could affect our tax rates in a material and adverse manner. Although we cannot predict whether or in what form these proposals will pass, several of the proposals being considered could have a material adverse impact on our tax expense and cash flow, if such proposals are enacted.

Our business operations are subject to numerous duties or taxes that are not based on income, sometimes referred to as "indirect taxes," including import duties, excise taxes, sales or value-added taxes, property taxes and payroll taxes, in many of the jurisdictions in which we operate, including indirect taxes imposed by state and local governments. Increases in or the imposition of new indirect taxes on our business operations or products would increase the cost of products or, to the extent levied directly on consumers, make our products less affordable.

We are subject to taxation in multiple jurisdictions.

We are subject to taxation primarily in the United States, Canada, the United Kingdom, the Netherlands and France. Our effective tax rate and tax liability will be affected by a number of factors, such as the amount of taxable income we generate in particular jurisdictions, the tax rates in those jurisdictions, tax treaties between jurisdictions, the extent to which we transfer funds and repatriate funds from our subsidiaries and future changes in local tax law. Our tax liability will usually be dependent upon our operating results and the manner in which our operations are funded. Generally, the tax liability for each legal entity is determined either on a non-consolidated basis or on a consolidated basis only with other entities incorporated in the same jurisdiction. In either case, our tax liability is determined without regard to the taxable losses of non-consolidated affiliated entities. As a result, we may pay income taxes in one jurisdiction for a particular period even though on an overall basis we incur a net loss for that period.

We may experience fluctuations in our tax obligations and effective tax rate.

We are subject to taxes in the United States and numerous international jurisdictions. We record tax expense based on our estimates of future tax payments, which include reserves for estimates of probable settlements of international and domestic tax audits. At any one time, many tax years are subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. As a result, we expect that throughout the year there could be ongoing variability in our quarterly tax rates as taxable events occur and exposures are re-evaluated. Further, our effective tax rate in a given period may be materially impacted by changes in the mix and level of earnings by taxing jurisdiction or by changes to existing accounting rules or regulations.

Changes to accounting rules or regulations may adversely affect our financial position and results of operations.

Changes to existing accounting rules or regulations may impact our future results of operations and our ability to comply with covenants under our credit agreements or cause the perception that we are more highly leveraged. In addition, new accounting rules or regulations and varying interpretations of existing accounting rules or regulations may be adopted in the future. For instance, accounting regulatory authorities have indicated that they may begin to require lessees to capitalize operating leases in their financial statements in the next few years. If adopted, such a change would require us to record capital lease obligations on our balance sheet and make other changes to our financial statements. This and other future changes to accounting rules or regulations could adversely affect our financial position, results of operations and liquidity.



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Acquisitions or divestitures that we make in the future may be unsuccessful.

Our structure and business model trace their roots to our history as a downstream producer of aluminum products and have evolved in response to customer demand for products made from materials other than aluminum. We have expanded the size, scope and nature of our business partly through the acquisition of other businesses. We may opportunistically consider the acquisition of other companies or product lines of other businesses that either complement or expand our existing business, or we may consider the divestiture of some of our businesses. We may consider and make acquisitions or divestitures both in countries in which we currently operate and elsewhere. We cannot assure you that we will be able to consummate any such acquisitions or divestitures or that any future acquisitions or divestitures will be consummated at acceptable prices and terms. Any future acquisitions or divestitures we pursue may involve a number of special risks, including, but not limited to, some or all of the following:

the diversion of management's attention from our core businesses;
the disruption of our ongoing business;
entry into markets in which we have limited or no experience, including geographies that we have not previously operated in;
the ability to integrate our acquisitions without substantial costs, delays or other problems, which would be complicated by the breadth of our international operations;
inaccurate assessment of undisclosed liabilities;
potential known and unknown liabilities of the acquired businesses and limitations of seller indemnities;
the incorporation of acquired products into our business;
the failure to realize expected synergies and cost savings;
the loss of key employees or customers of the acquired or divested business;
increasing demands on our operational systems;
the integration of information system and internal controls;
possible adverse effects on our reported operating results, particularly during the first several reporting periods after the acquisition is completed; and
the amortization of acquired intangible assets.

Additionally, any acquisitions we may make could result in significant increases in our outstanding indebtedness and debt service requirements. Any acquisition may also cause us to assume liabilities, record goodwill and indefinite-lived intangible assets that will be subject to impairment testing and potential impairment charges, incur significant restructuring charges and increase working capital and capital expenditure requirements, which would reduce our return on invested capital. In addition, the terms of our current indebtedness and any other indebtedness we may incur in the future may limit the acquisitions we may pursue.

Any acquisitions we may seek to consummate will be subject to the negotiation of definitive agreements, satisfactory financing arrangements and applicable governmental approvals and consents, including under applicable antitrust laws, such as the Hart-Scott-Rodino Act. We may not complete any additional acquisitions and any acquired entities or assets may not enhance our results of operations. Even if we are able to integrate future acquired businesses with our operations successfully, we cannot assure you that we will realize all of the cost savings, synergies or revenue enhancements that we anticipate from such integration or that we will realize such benefits within the expected time frame.

If we were to undertake a substantial acquisition, the acquisition would likely need to be financed in part through additional financing from banks, through public offerings or private placements of debt or equity securities or with other arrangements. We cannot assure you that the necessary acquisition financing would be available to us on acceptable terms if and when required, particularly because we are currently highly leveraged, which may make it difficult or impossible for us to secure financing for acquisitions. If we were to undertake an acquisition by issuing equity securities or equity-linked securities, the acquisition may have a dilutive effect on the interests of the holders of our common stock.

Our stockholders agreement includes restrictions on our ability to complete acquisitions and to raise debt or equity financing generally. As a result, any acquisition we seek to make may be subject to stockholder approval, and there can be no assurance we would be able to obtain such approval on a timely basis or at all.

Our business operations depend on attracting and retaining qualified management and personnel.

Our success depends to a significant degree upon the ability, expertise, judgment, discretion, integrity and good faith of our senior management team and our workforce throughout our organization. Thus, our future performance depends on our continued ability to attract and retain experienced and qualified management and personnel. Competition for personnel with

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experience in the materials manufacturing industry, and those qualified to manage a business with significant international operations, is intense, and we may be unable to continue to attract or retain such personnel. Furthermore, as a company with publicly-traded debt securities, our future success will also depend on our ability to hire and retain management with public company experience. The loss of any of our key executive officers or the inability to attract qualified personnel could significantly impede our ability to successfully implement our business strategy, financial plans, marketing and other objectives. We do not currently have any key-person life insurance with respect to any of our executive officers or employees.

A portion of our workforce is unionized and we are subject to the risk of labor disputes and adverse employee relations, which may disrupt our business and increase our costs.

As of December 30, 2011, approximately 9% of our employees were represented by unions, an additional approximately 28% were represented by similar bodies (e.g., works councils) and we were a party to five collective bargaining agreements. While we believe that our relations with our employees are good, our inability to negotiate acceptable contracts with these unions could result in, among other things, strikes, work stoppages, labor disturbances or other slowdowns by the affected workers. If our union-represented employees were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized, or the terms and conditions in our labor agreements were to be renegotiated in an adverse manner, we could experience significant disruption of our operations, which would cause higher ongoing labor costs and impact our ability to satisfy our customers' requirements. Any such cost increases, stoppages or disturbances could materially and adversely affect our business, financial condition, results of operations, prospects and cash flows by limiting plant production, sales volumes and profitability. See "Item 1. Business—Employees."

Inflation may adversely affect our business operations in the future.

We have experienced certain inflationary conditions in our cost base due primarily to changes in foreign currency exchange rates that have reduced the purchasing power of the U.S. dollar and increases in selling, general and administrative expenses. In addition, we are party to certain leases that contain escalator provisions contingent on increases based on changes in the Consumer Price Index. Inflation can harm our margins and profitability if we are unable to increase prices or cut costs enough to offset the effects of inflation in our cost base. If inflation in these or other costs worsens, we cannot assure you that our attempts to offset the effects of inflation and cost increases through control of expenses, passing cost increases on to customers or any other method will be successful. Any future inflation could adversely affect our profitability and our business.

We have recorded material goodwill and other intangible asset impairments in the past and continue to maintain a substantial amount of goodwill and other intangible assets on our balance sheet. The amortization of acquired assets will reduce our future reported earnings, and if our remaining goodwill or other intangible assets become impaired, we may be required to recognize impairment charges that would reduce our net income and could have a material impact on our operating results.

As a result of applying the purchase method of accounting in connection with our acquisition in 2005 and other acquisitions we have made in the past, we have a significant amount of goodwill and other intangible assets on our balance sheet. For the year ended December 26, 2008, as a result of lowered expectations for future cash flows due to the severe economic downturn, we recorded impairment charges totaling $401.4 million, which had a material impact on our historical operating results. As of December 30, 2011 and December 31, 2010, $274.5 million and $296.4 million, respectively, of goodwill and other intangible assets remained recorded on our balance sheet. In accordance with GAAP, we test goodwill for impairment annually on the last day of our fiscal year, or more frequently if events or circumstances indicate the potential for impairment. Such reviews could result in an earnings charge for the impairment of goodwill, and any such charge could be material. Accordingly, our net income could be reduced even though there would be no impact on our underlying cash flow. Furthermore, in accordance with the purchase accounting method, the excess of the cost of purchased assets over the fair value of such assets is assigned to intangible assets and is amortized over a period of time. The amortization expense associated with our intangible assets will have a negative effect on our future reported earnings. Many other companies, including many of our competitors, may not have the significant acquired intangible assets that we have because they have not participated in recent acquisitions and business combination transactions similar to ours. Thus, our reported earnings may be more negatively affected by the amortization of intangible assets than the reported earnings of these companies will be.

Global or regional catastrophic events, natural disasters, severe weather and global political events could impact our operations and financial results.

Because of our global presence and worldwide operations, our business can be affected by large-scale terrorist acts, especially those directed against the United States or other major industrialized countries; the outbreak or escalation of armed hostilities; political instability in oil-producing regions; major natural disasters such as earthquakes, hurricanes, volcano

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eruptions, fires and floods; inclement weather such as frequent or unusually heavy snow, ice or rain storms, or extended periods of unseasonable temperatures; widespread outbreaks of infectious diseases such as H1N1 influenza, avian influenza or severe acute respiratory syndrome (generally known as SARS); disruptive global political events, such as civil unrest in countries in which our suppliers are located; labor strikes or work stoppages; and other such catastrophes and events.

Such events could impair our ability to manage our business around the world, disrupt our supply of raw materials, or result in increases in fuel (or other energy) prices or a fuel shortage or the temporary lack of an adequate work force in a market, and could impact production, transportation and delivery of our products. In addition, such events could cause disruption of regional or global economic activity, which may affect consumers' purchasing power in the affected areas and, therefore, reduce demand for our products. These events also can have indirect consequences such as increases in the costs of insurance if they result in significant loss of property or other insurable damage.

Risks Related to Our Notes

Our substantial indebtedness could adversely affect our financial condition and ability to raise additional capital to fund our operations, prevent us from fulfilling our obligations under our indebtedness, limit our ability to react to changes in the economy or our industry and expose us to interest rate risk to the extent of our variable rate debt.

We have a substantial amount of indebtedness, which requires significant interest and principal payments. As of December 30, 2011, we had total indebtedness of approximately $508.0 million, including $375.0 million of 9.50% Senior Secured Note due 2016, which we refer to as Notes which were issued by Euramax International Inc. and guaranteed by Euramax Holdings, $122.8 million under a senior unsecured loan facility, which we refer to as the Senior Unsecured Loan Facility, and $10.2 million drawn under the Amended and Restated Senior Secured Revolving Credit and Guaranty Agreement which we refer to as the ABL Credit Facility, as well as additional borrowing availability of $46.9 million under the ABL Credit Facility. Subject to the restrictions contained in the indenture governing the Notes, the Senior Unsecured Loan Facility, the ABL Credit Facility and any debt instruments we may enter into in the future, we or our subsidiaries may incur significant additional indebtedness in the future to finance capital expenditures, investments or acquisitions, or for other general corporate purposes.

Our substantial indebtedness could have important negative consequences to you, including:

limiting our ability to obtain financing in the future for working capital, capital expenditures, acquisitions, debt service or other general corporate purposes;
requiring us to use a substantial portion of our available cash flow to service our debt, which will reduce the amount of cash flow available for working capital, capital expenditures, acquisitions and other general corporate purposes;
increasing our vulnerability to general economic downturns and adverse industry conditions;
limiting our flexibility in planning for, or reacting to, changes in our business and in our industry in general;
placing us at a competitive disadvantage compared to our competitors that are not as highly leveraged, as we may be less capable of responding to adverse economic conditions;
restricting the way we conduct our business because of financial and operating covenants in the agreements governing our and our subsidiaries' existing and future indebtedness, including, in the case of certain indebtedness of subsidiaries, particularly foreign subsidiaries which may enter into separate credit facilities, certain covenants that restrict the ability of subsidiaries to pay dividends or make other distributions to us;
increasing the risk of our failing to satisfy our obligations with respect to our debt instruments and/or complying with the financial and operating covenants contained in our or our subsidiaries' debt instruments which, among other things, require us to (in certain circumstances) maintain a specified covenant ratio and limit our ability to incur debt and sell assets, which could result in an event of default under the agreements governing our debt instruments that, if not cured or waived, could have a material adverse effect on our business, financial condition and operating results;
increasing our cost of borrowing; and
preventing us from raising the funds necessary to repurchase outstanding debt upon the occurrence of certain changes of control, which would constitute an event of default under our debt instruments.

In addition, the indenture governing the Notes, the ABL Credit Facility and the Senior Unsecured Loan Facility contain financial and other restrictive covenants that will limit our ability and the ability of our subsidiaries to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default, which, if not cured or waived, could result in the acceleration of all of our debt.

Borrowings under the ABL Credit Facility bear interest at variable rates based on LIBOR or, at our option, a base rate. If market interest rates increase, such variable-rate debt will create higher debt service requirements, which could adversely affect

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our cash flow. Our interest costs are also affected by our credit ratings. If our credit ratings decline in the future, the interest rates we are charged on debt under the ABL Credit Facility could increase incrementally by up to 75 basis points, contingent upon our credit rating.

In addition, changes in our credit ratings may affect the way suppliers view our ability to make payments and may induce them to shorten the payment terms of their invoices. A change in payment terms may have a material adverse effect on the amount of our liabilities and our ability to make payments to our suppliers.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, our lenders' financial stability, which are subject to prevailing global economic and market conditions, and certain financial, business and other factors, many of which are beyond our control. Even if we were able to refinance or obtain additional financing, the costs of new indebtedness could be substantially higher than the costs of our existing indebtedness.

We may not be able to generate sufficient cash to service all of our indebtedness, including the Notes, and may not be able to refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on, among other things:

our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control; and
our future ability to borrow under the ABL Credit Facility, the availability of which depends on, among other things, the size of our borrowing base and our compliance with the covenants in the ABL Credit Facility.

We cannot assure you we will maintain a level of cash flows from operating activities, or that we will be able to draw amounts under the ABL Credit Facility or otherwise, sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness or to otherwise fund our liquidity needs. Furthermore, any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

Our overall debt level and/or market conditions could lead the credit rating agencies to lower our corporate credit ratings. A downgrade in our corporate credit ratings could impact our ability to issue new debt by raising the cost of issuing new debt. As a consequence, we may not be able to issue additional debt in amounts and/or with terms that we consider to be reasonable. In addition, our ability to incur secured indebtedness (which would generally enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on the value of our assets, which depends, in turn, on the strength of our cash flows and results of operations, and on economic and market conditions and other factors. Our ability to refinance our indebtedness is also subject to restrictions contained in our stockholders agreement.

If our cash flows and capital resources are insufficient to fund our debt service obligations or we are unable to refinance our indebtedness, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions, or the proceeds from the dispositions may not be adequate to meet any debt service obligations then due. If we were unable to repay amounts when due, our lenders could proceed against the collateral granted to them to secure that indebtedness.

Borrowings under the ABL Credit Facility bear interest at variable rates and other debt we incur could likewise be variable-rate debt. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. While we may enter into agreements limiting our exposure to higher interest rates, we have no such agreements at this time, and any such agreements may not offer complete protection from this risk.

Our debt agreements contain significant operating and financial restrictions that limit our flexibility in operating our business.

The ABL Credit Facility, the Senior Unsecured Loan Facility and the indenture governing the Notes contain a number of restrictive covenants that impose significant restrictions on us. Compliance with these restrictive covenants limits our flexibility in operating our business and could prevent us from engaging in favorable business activities or financing future operations or

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capital needs. Failure to comply with these covenants could give rise to one or more defaults or events of default under our debt agreements. These covenants restrict, among other things, our ability and the ability of our subsidiaries to:

incur indebtedness;
repurchase or redeem capital stock;
pay certain dividends, make certain distributions, make loans, transfer property or make other restricted payments;
make capital expenditures, acquisitions or investments;
incur liens;
sell assets;
issue or sell capital stock;
enter into transactions with affiliates;
consolidate or merge with other companies or sell all or substantially all of our assets;
engage in certain business activities; and
designate our subsidiaries as unrestricted subsidiaries.

Our fixed charge coverage ratio (as defined in the indenture which governs the Notes) is currently significantly less than 2:1. Accordingly, we are currently unable to incur debt under the ratio test included in the indenture. In addition, our secured debt ratio (as defined in the indenture which governs the Notes) is currently significantly higher than 3.75:1, which significantly limits our ability to incur secured debt. Although the indenture contains other debt and lien baskets, we could be significantly limited in our operations due to the fixed charge coverage ratio and secured debt tests contained in the indenture.

If we default on any of these covenants, our lenders could cause all amounts outstanding under the ABL Credit Facility, the Senior Unsecured Loan Facility or the indenture governing the Notes to be due and payable immediately, and the lenders under the ABL Credit Facility or the indenture governing the Notes could proceed against any collateral securing that indebtedness. Our assets or cash flow may not be sufficient to repay in full the borrowings under our debt agreements, either upon maturity or if accelerated upon an event of default. In addition, any event of default or declaration of acceleration under one debt instrument could also result in a default or an event of default under one or more of our other debt instruments.

Despite our substantial indebtedness, we and our subsidiaries may still be able to incur significantly more debt. This could increase the risks associated with our substantial leverage, including our ability to service our indebtedness.

The ABL Credit Facility, the Senior Unsecured Loan Facility and the indenture governing the Notes contain restrictions on our ability to incur additional indebtedness. However, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Accordingly, we and our subsidiaries could incur significant additional indebtedness in the future, much of which could constitute secured or senior indebtedness.

Our variable-rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

The ABL Credit Facility is subject to variable rates of interest and exposes us to interest rate risk. Our variable rate indebtedness is also subject to minimum rates of interest that limit the potential benefit of any decrease in variable rates. If interest rates exceed the minimum rates payable on our debt, our debt service obligations on the variable rate indebtedness would increase, resulting in a reduction of our net income, even though the amount borrowed remained the same. As of December 30, 2011, we had total indebtedness of approximately $508.0 million. Based on this amount of indebtedness, if interest rates remained at December 30, 2011 levels, our annualized cash interest expense would be approximately $51.2 million (subject to increase in the event interest rates rise). A 1% increase in the interest rate on our indebtedness would increase our annual interest expense to approximately $56.3 million, prior to any consideration of the impact of minimum interest rates on our indebtedness.

Instability and volatility in the capital and credit markets could have a negative impact on our business, financial condition, results of operations and cash flows.

The capital and credit markets have experienced volatility and disruption in 2009, 2010 and 2011. Our business, financial condition, results of operations, prospects and cash flows could be negatively impacted by the difficult conditions and volatility in the capital, credit and commodities markets and in the global economy. Difficult conditions in these markets and the overall economy affect us in a number of ways. For example:

Although we believe we will have sufficient liquidity under our credit facilities to run our business, under extreme

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market conditions there can be no assurance that such funds would be available under the facilities or sufficient to meet our needs, and in such a case, we may not be able to successfully obtain additional financing on favorable terms, or at all.
Market volatility could make it difficult for us to raise additional debt and/or equity capital in the public or private markets if we needed to do so.
Market conditions could cause the counterparties to the derivative financial instruments we use to hedge our exposure to interest rate fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful, and, furthermore, our ability to engage in additional hedging activities may decrease or become even more costly as a result of these conditions.
The ABL Credit Facility and the Senior Unsecured Loan Facility contain various covenants that we must comply with. There can be no assurance that we would be able to successfully amend the ABL Credit Facility and the Senior Unsecured Loan Facility in the future if we were to fail to comply with these covenants. Further, any such amendment could be very expensive and materially impair our cash flow and liquidity.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

Any default under the agreements governing our indebtedness, including a default under the ABL Credit Facility and the Senior Unsecured Loan Facility, that is not waived by the required holders of such indebtedness, could leave us unable to pay principal, premium, if any, or interest on the Notes and could substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, or interest on such indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our existing and future indebtedness, including the ABL Credit Facility and the Senior Unsecured Loan Facility, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with any accrued and unpaid interest, the lenders under the ABL Credit Facility could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against the assets securing such facilities and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to seek waivers from the required lenders under the ABL Credit Facility and the Senior Unsecured Loan Facility to avoid being in default. If we breach our covenants under the ABL Credit Facility or the Senior Unsecured Loan Facility and seek waivers, we may not be able to obtain waivers from the required lenders thereunder. If this occurs, we would be in default under the ABL Credit Facility and the Senior Unsecured Loan Facility, which would, if our obligations under the ABL Credit Facility and the Senior Unsecured Loan Facility are accelerated, cause a default under the indenture governing the Notes. In such case, the lenders under the ABL Credit Facility and the Senior Unsecured Loan Facility could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.

The Notes are effectively subordinated to our and our guarantors' indebtedness under (i) the ABL Credit Facility to the extent of the value of the collateral securing the ABL Credit Facility and (ii) certain permitted additional secured indebtedness, in each case on a basis senior to the Notes.

The Notes and the related guarantees are secured, subject to certain exceptions, by a first priority lien on (i) substantially all of the assets of Euramax International and the guarantors (other than inventory and accounts receivable and related assets, which assets secure the ABL Credit Facility on a first priority basis) and (ii) all of the capital stock of Euramax International and the guarantors and the capital stock of each material domestic restricted subsidiary owned by us or a guarantor and 65% of the voting capital stock and 100% of any non-voting capital stock of foreign restricted subsidiaries directly owned by us or a guarantor (the "Notes Collateral"), and a second priority lien on the inventory and accounts receivable and related assets of Euramax International and the guarantors (which assets secure the ABL Credit Facility on a first priority basis) (the "ABL Collateral"). The Notes are effectively subordinated in right of payment to the ABL Credit Facility to the extent of the value of the ABL Collateral as well as certain permitted additional indebtedness, which can be secured on a senior basis. The effect of this subordination is that upon a default in payment on, or the acceleration of, any indebtedness under the ABL Credit Facility or other indebtedness secured by such assets on a first-priority basis, or in the event of bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding of us or any of the guarantors of the ABL Credit Facility or of such other secured debt, the proceeds from the sale of assets securing the ABL Credit Facility and/or such other indebtedness secured on a first-priority basis will be available to pay obligations on the Notes only after all indebtedness under the ABL Credit Facility and/or such other secured debt has been paid in full. There may be no ABL Collateral remaining after claims of the lenders under the ABL Credit Facility or such other secured debt have been satisfied in full that may be applied to satisfy the claims of holders of the Notes.




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The Notes are structurally subordinated to all indebtedness of those of our existing or future subsidiaries that are not, or do not become, guarantors of the Notes, including all of our foreign subsidiaries.

The Notes are not guaranteed by certain of our current and future subsidiaries, including our non-U.S. subsidiaries. Accordingly, claims of holders of the Notes are structurally subordinated to all indebtedness and the claims of creditors of any non-guarantor subsidiaries, including trade creditors. All indebtedness and obligations of any non-guarantor subsidiaries will have to be satisfied before any of the assets of such subsidiaries would be available for distribution upon liquidation or otherwise, to Euramax International or a guarantor of the Notes. The indenture governing the Notes permits these non-guarantor subsidiaries to incur certain additional debt, including secured debt, and does not limit their ability to incur other liabilities that are not considered indebtedness under the indenture. For the year ended December 30, 2011, our non-guarantor subsidiaries represented approximately 36% of our net sales and 99% of our operating income. In addition, as of December 30, 2011, our non-guarantor subsidiaries held approximately 50% of our consolidated assets and approximately $56.9 million of liabilities (including trade payables), to which the Notes and the guarantees were structurally subordinated.

The rights of holders of the Notes with respect to the ABL Collateral, in which such holders have a junior lien, are substantially limited by the terms of the intercreditor agreement.

The rights of holders of the Notes with respect to the ABL Collateral, which secures the Notes on a second-priority basis, are limited pursuant to the terms of an intercreditor agreement with the lenders under the ABL Credit Facility.

Under the terms of the intercreditor agreement, any actions that may be taken in respect of the ABL Collateral, including the ability to commence enforcement proceedings against the ABL Collateral, control the conduct of such proceedings, and release the ABL Collateral from the lien of the collateral documents, will be at the direction of the lenders under the ABL Credit Facility. Neither the trustee nor the collateral agent, on behalf of the holders of the Notes, will have the ability to control or direct such actions, even if the rights of the holders of the Notes are adversely affected, subject to certain exceptions. Under the terms of the intercreditor agreement, at any time that obligations that have the benefit of the first-priority liens on the ABL Collateral are outstanding, if the holders of such indebtedness release the ABL Collateral, including, without limitation, in connection with any sale of assets, the second-priority security interest in such ABL Collateral securing the Notes will be automatically and simultaneously released without any consent or action by the holders of the Notes, subject to certain exceptions. The ABL Collateral so released will no longer secure our and the guarantors' obligations under the Notes. In addition, because the holders of the indebtedness secured by first-priority liens on the ABL Collateral control the disposition of the ABL Collateral, such holders could decide not to proceed against the ABL Collateral, regardless of whether there is a default under the documents governing such indebtedness or under the indenture governing the Notes. In such event, the only remedy available to the holders of the Notes would be to sue for payment on the Notes and the related guarantees under the indenture and to commence realization on the Notes Collateral. In addition, the intercreditor agreement gives the holders of first-priority liens on the ABL Collateral the right to access and use the collateral that secures the Notes, to allow those holders to protect the ABL Collateral and to process, store and dispose of the ABL Collateral.

Holders of the Notes may not be able to fully realize the value of their liens.

The security interests and liens for the benefit of holders of the Notes may be released without such holders' consent in specified circumstances. In particular, the security documents governing the Notes and the ABL Credit Facility generally provide for an automatic release of all second priority liens for the benefit of the holders of the Notes upon the release of any first priority lien on any asset that secures the ABL Credit Facility on a first-priority basis in accordance with the ABL Credit Facility. As a result, the Notes may not continue to be secured by a substantial portion of our accounts receivable and inventory. In addition, the capital stock and other securities of any current and future subsidiary will be excluded from the collateral to the extent liens thereon would trigger reporting obligations under Rule 3-16 of Regulation S-X, which requires financial statements from any company whose securities are collateral if its book value or market value, whichever is greater, would exceed 20% of the principal amount of the notes secured thereby. As of December 30, 2011, we believe the securities of our Dutch subsidiary holding company would exceed this 20% threshold. Accordingly, a portion of its securities are excluded from the collateral.

In addition, all or a portion of the collateral may be released:

to enable the sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture that governs the Notes or the ABL Credit Facility, including the sale of assets in accordance with the asset sale covenant in the indenture that governs the Notes and the sale of any entity in its entirety that owns or holds such collateral; and
with respect to collateral held by a guarantor, upon the release of such guarantor from its guarantee.

In addition, the guarantee of a guarantor will be released in connection with a sale of such subsidiary guarantor in a

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transaction not prohibited by the indenture.

The indenture also permits us to designate one or more of our restricted subsidiaries that is a guarantor of the Notes as an unrestricted subsidiary. If we designate a guarantor as an unrestricted subsidiary, all of the liens on any collateral owned by such subsidiary or any of its subsidiaries and any guarantees of the Notes by such subsidiary or any of its subsidiaries will be released under the indenture but not under the ABL Credit Facility. Designation of a subsidiary as unrestricted will reduce the aggregate value of the collateral securing the Notes to the extent that liens on the assets of the unrestricted subsidiary and its subsidiaries are released. In addition, the creditors of the unrestricted subsidiary and its subsidiaries will have a senior claim on the assets of such unrestricted subsidiary and its subsidiaries.

A portion of the collateral is subject to exceptions, defects, encumbrances, liens and other imperfections that are accepted by the lenders under the ABL Credit Facility.

The collateral securing the ABL Credit Facility on a first priority basis is also be subject to any and all exceptions, defects, encumbrances, liens and other imperfections as may be accepted by the lenders under the ABL Credit Facility and other creditors that have the benefit of first priority liens on the ABL Collateral from time to time. The collateral also does not include certain "excluded assets," such as assets securing purchase money obligations or capital lease obligations incurred in compliance with the indenture, which obligations would effectively rank senior to the Notes to the extent of the value of such excluded assets. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the collateral securing the Notes as well as the ability of the collateral agent to realize or foreclose on such collateral. The existence of such exceptions, defects, encumbrances, liens and imperfections could adversely affect the value of the collateral securing the Notes as well as the ability of the collateral agent to realize or foreclose on such collateral.

We may not have the ability to raise the funds necessary to finance the change of control offer or the asset sale offer required by the indenture governing the Notes.

Upon the occurrence of a "change of control", as defined in the indenture governing the Notes, Euramax International must offer to buy back the Notes at a price equal to 101% of the principal amount, together with accrued and unpaid interest, if any, to the date of the repurchase. Similarly, Euramax International must offer to buy back the Notes (or repay other indebtedness in certain circumstances) at a price equal to 100% of the principal amount of the Notes (or other debt) purchased, together with accrued and unpaid interest, if any, to the date of repurchase, with the proceeds of certain asset sales (as defined in the indenture). Any failure to purchase, or give notice of purchase of, the Notes would be a default under the indenture governing the Notes, which would also trigger a cross default under the ABL Credit Facility and the Senior Unsecured Loan Facility.

If a change of control or asset sale occurs that would require Euramax International to repurchase the Notes, it is possible that we may not have sufficient assets to make the required repurchase of Notes or to satisfy all obligations under the ABL Credit Facility, the Senior Unsecured Loan Facility and the indenture governing the Notes. The Senior Unsecured Loan Facility requires Euramax International to make an offer to prepay such loans at an offer price of 101% of the principal amount thereof upon the occurrence of a change of control (and in some cases, upon consummation of an asset sale, at an offer price of 100% of the principal amount thereof). In addition, a change of control will also trigger a default under the ABL Credit Facility. Furthermore, the ABL Credit Facility currently prohibits us from repurchasing the Notes if we do not satisfy a fixed charge coverage ratio test or if we do not have certain amounts of excess availability for borrowing, and the indenture currently prohibits us from repaying the debt under our Senior Unsecured Loan Facility (subject to limited exceptions). We would be required to seek a consent from the lenders under the ABL Credit Facility to engage in the repurchase required by the indenture, which could be expensive or impossible to obtain unless we satisfy such fixed charge coverage ratio test or have adequate excess availability. We would also need to obtain a consent from holders of the Notes in order to offer to repay the debt under the Senior Unsecured Loan Facility. In order to satisfy our obligations, we could seek to refinance the indebtedness under the ABL Credit Facility, the Senior Unsecured Loan Facility and the indenture governing the Notes or obtain a waiver from the lenders or the holders of the Notes. We cannot assure you that we would be able to obtain a waiver or refinance our indebtedness on terms acceptable to us, if at all. Any failure to make the required change of control offer or asset sale offer would result in an event of default under the indenture.

Certain restrictive covenants in the indenture governing the Notes will be suspended if such Notes achieve investment grade ratings.

Most of the restrictive covenants in the indenture governing the Notes will not apply for so long as the Notes achieve investment grade ratings from Moody's Investors Service, Inc. and Standard & Poor's Rating Services and no default or event of default has occurred. If these restrictive covenants cease to apply, we may take actions, such as incurring additional debt or

32


making certain dividends or distributions, that would otherwise be prohibited under the indenture. Ratings are given by these rating agencies based upon analyses that include many subjective factors. We cannot assure you that the Notes will achieve investment grade ratings, nor can we assure you that investment grade ratings, if granted, will reflect all of the factors that would be important to holders of the Notes.

State law may limit the ability of the collateral agent, the trustee under the indenture and the holders of the Notes to foreclose on the real property and improvements included in the collateral.

The Notes are secured by, among other things, liens on owned real property and improvements located in the States of Arkansas, California, Indiana and Pennsylvania. The laws of those states may limit the ability of the collateral agent, the trustee under the indenture and the holders of the Notes to foreclose on the improved real property collateral located in those states. Laws of those states govern the perfection, enforceability and foreclosure of mortgage liens against real property interests which secure debt obligations such as the Notes. These laws may impose procedural requirements for foreclosure different from and necessitating a longer time period for completion than the requirements for foreclosure of security interests in personal property. Debtors may have the right to reinstate defaulted debt (even it is has been accelerated) before the foreclosure date by paying the past due amounts and a right of redemption after foreclosure. Governing laws may also impose security first and one form of action rules, which can affect the ability to foreclose or the timing of foreclosure on real and personal property collateral regardless of the location of the collateral and may limit the right to recover a deficiency following a foreclosure.

The holders of the Notes, the trustee and the collateral agent also may be limited in their ability to enforce a breach of the "no liens" covenant. Some decisions of state courts have placed limits on a lender's ability to accelerate debt secured by real property upon breach of covenants prohibiting the creation of certain junior liens. Lenders may need to demonstrate that enforcement is reasonably necessary to protect against impairment of the lender's security or to protect against an increased risk of default. Although the foregoing court decisions may have been preempted, at least in part, by certain federal laws, the scope of such preemption, if any, is uncertain. Accordingly, a court could prevent the trustee and the holders of the Notes from declaring a default and accelerating the Notes by reason of a breach of this covenant, which could have a material adverse effect on the ability of holders of the Notes to enforce the covenant.

We will in most cases have control over the collateral, and the sale of particular assets by us could reduce the pool of assets securing the Notes.

The collateral documents allow us to remain in possession of, retain exclusive control over, freely operate, and collect, invest and dispose of any income from, the collateral securing the Notes, subject to compliance with the covenants contained in the indenture governing the Notes. In addition, we are not required to comply with all or any portion of Section 314(d) of the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act, if we determine, in good faith based on advice of counsel, that under the terms of that Section and/or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including "no action" letters or exemptive orders, all or such portion of Section 314(d) of the Trust Indenture Act is inapplicable to the released collateral. For example, so long as no default or event of default under the indenture would result therefrom and such transaction would not violate the Trust Indenture Act, we may, among other things, without any release or consent by the trustee, conduct ordinary course activities with respect to collateral, such as selling, factoring, abandoning or otherwise disposing of collateral and making ordinary course cash payments (including repayments of indebtedness). With respect to such releases, we must deliver to the collateral agent, from time to time, officers' certificates to the effect that all releases and withdrawals during the preceding six-month period in which no release or consent of the collateral agent was obtained were in the ordinary course of our business and were not prohibited by the indenture.

The rights of holders of Notes to the collateral securing the Notes may be adversely affected by the failure to perfect security interests in the collateral and other issues generally associated with the realization of security interests in collateral.

Applicable law requires that a security interest in certain tangible and intangible assets can only be properly perfected and its priority retained through certain actions undertaken by the secured party. The liens on the collateral securing the Notes may not be perfected with respect to the claims of the Notes if the collateral agent is not able to take the actions necessary to perfect any of these liens. There can be no assurance that the collateral agent will continue to take all actions necessary to retain its priority and perfect these liens in the future. In addition, applicable law requires that certain property and rights acquired after the grant of a general security interest, such as real property, can only be perfected at the time such property and rights are acquired and identified and additional steps to perfect such property and rights are taken. We have limited obligations to perfect the security interest of the holders of the Notes in specified collateral. Although the indenture governing the Notes will contain customary further assurance provisions, there can be no assurance that the collateral agent for the Notes will monitor, or that we will inform such collateral agent of, the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. The collateral agent for the Notes

33


has no obligation to monitor the acquisition of additional property or rights that constitute collateral or the perfection of any security interest. Such failure may result in the loss of the security interest in the collateral or the priority of the security interest in favor of the Notes against third parties.

In addition, the security interest of the collateral agent will be subject to practical challenges generally associated with the realization of security interests in collateral. For example, the collateral agent may need to obtain the consent of third parties and make additional filings. If we are unable to obtain these consents or make these filings, the security interests may be invalid and the holders of the Notes will not be entitled to the collateral or any recovery with respect thereto. We cannot assure you that we or the collateral agent will be able to obtain any such consent. We also cannot assure you that the consents of any third parties will be given when required to facilitate a foreclosure on such assets. Accordingly, the collateral agent may not have the ability to foreclose upon those assets and the value of the collateral may significantly decrease.

Additionally, we are not required under the ABL Credit Facility and the security documents to create or perfect liens in assets where the agent under the ABL Credit Facility and we agree that such creation or perfection would be considered excessive in view of the benefits obtained therefrom by the lenders under the ABL Credit Facility.

The existence or imposition of certain permitted liens could adversely affect the value of the Notes Collateral.

The collateral securing the Notes is subject to liens permitted under the terms of the indenture governing the Notes. The existence of any permitted liens could adversely affect the value of the Notes Collateral as well as the ability of the collateral agent for the Notes to realize or foreclose on such collateral. The Notes Collateral securing the Notes may also secure our and the guarantors' future indebtedness and other obligations to the extent permitted by the indenture governing the Notes and the security documents. Your rights to the Notes Collateral would be diluted by any increase in the indebtedness secured by the Notes Collateral.

In the event of our bankruptcy, the ability of the holders of the Notes to realize upon the collateral will be subject to certain bankruptcy law limitations.

The ability of holders of the Notes to realize upon the collateral will be subject to certain bankruptcy law limitations in the event of our bankruptcy. Under federal bankruptcy law, secured creditors are prohibited from repossessing their security from a debtor in a bankruptcy case, or from disposing of security repossessed from such a debtor, without bankruptcy court approval, which may not be given. Moreover, applicable federal bankruptcy laws generally permit the debtor to continue to use and expend collateral, including cash collateral, and to provide liens senior to the liens of the collateral agent for the Notes to secure indebtedness incurred after the commencement of a bankruptcy case, provided that the secured creditor either consents or is given "adequate protection." "Adequate protection" could include cash payments or the granting of additional security, if and at such times as the presiding court in its discretion determines, for any diminution in the value of the collateral as a result of the stay of repossession or disposition of the collateral during the pendency of the bankruptcy case, the use of collateral (including cash collateral) and the incurrence of such senior indebtedness. In view of the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the collateral agent would repossess or dispose of the collateral, or whether or to what extent holders of the Notes would be compensated for any delay in payment of loss of value of the collateral through the requirements of "adequate protection." Furthermore, in the event the bankruptcy court determines that the value of the collateral is not sufficient to repay all amounts due on any pari passu debt secured by the common collateral, the indebtedness under the Notes would be "undersecured" and the holders of the Notes would have unsecured claims as to the difference. Federal bankruptcy laws do not permit the payment or accrual of interest, costs, and attorneys' fees on undersecured indebtedness during the debtor's bankruptcy case.

The value of the collateral securing the Notes may not be sufficient to secure post-petition interest. Should our obligations under the Notes equal or exceed the fair market value of the collateral securing the Notes, the holders of the Notes may be deemed to have an unsecured claim.

In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving the Company or the guarantors, holders of the Notes will be entitled to post-petition interest under the U.S. Bankruptcy Code only if the value of their security interest in the collateral is greater than their pre-bankruptcy claim. Holders of the Notes may be deemed to have an unsecured claim if our obligation under the Notes equals or exceeds the fair market value of the collateral securing the Notes. Holders of the Notes that have a security interest in the collateral with a value equal to or less than their pre-bankruptcy claim will not be entitled to post-petition interest under the U.S. Bankruptcy Code. Any future bankruptcy trustee, the debtor-in-possession or competing creditors could possibly assert that the fair market value of the collateral with respect to the Notes on the date of the bankruptcy filing was less than the then-current principal amount of the Notes. Upon a finding by a

34


bankruptcy court that the Notes are under- collateralized, the claims in the bankruptcy proceeding with respect to the Notes would be bifurcated between a secured claim and an unsecured claim, and the unsecured claim would not be entitled to the benefits of security in the collateral. Other consequences of a finding of under-collateralization would be, among other things, a lack of entitlement on the part of holders of the Notes to receive post-petition interest and a lack of entitlement on the part of the unsecured portion of the Notes to receive other "adequate protection" under U.S. federal bankruptcy laws. In addition, if any payments of post-petition interest were made at the time of such a finding of under-collateralization, such payments could be re-characterized by the bankruptcy court as a reduction of the principal amount of the secured claim with respect to the Notes. No appraisal of the fair market value of the collateral securing the Notes was prepared in connection with the offering of the Notes and, therefore, the value of the collateral agent's interests in the collateral may not equal or exceed the principal amount of the Notes. We cannot assure you that there will be sufficient collateral to satisfy our and the guarantors' obligations under the Notes.

The waiver in the intercreditor agreement of rights of marshaling may adversely affect the recovery rates of holders of the Notes in a bankruptcy or foreclosure scenario.

The Notes and related guarantees are secured on a junior basis by the ABL Collateral. The intercreditor agreement provides that, at any time that obligations that have the benefit of the first-priority liens on the ABL Collateral are outstanding, the holders of the Notes, the trustee under the indenture governing the Notes and the collateral agent for the Notes may not assert or enforce any right of marshaling accorded to a junior lienholder, as against the holders of such indebtedness secured by first-priority liens on the ABL Collateral. Without this waiver of the right of marshaling, holders of such indebtedness secured by first-priority liens on the ABL Collateral would likely be required to liquidate collateral on which the Notes did not have a lien, if any, prior to liquidating the ABL Collateral, thereby maximizing the proceeds of the ABL Collateral that would be available to repay our obligations under the Notes. As a result of this waiver, the proceeds of sales of the ABL Collateral could be applied to repay any indebtedness secured by first-priority liens on the ABL Collateral before applying proceeds of other collateral securing indebtedness, and the holders of the Notes may recover less than they would have if such proceeds were applied in the order most favorable to the holders of the Notes.

The collateral may not be valuable enough to satisfy all the obligations secured by such collateral and may be diluted under certain circumstances.

The Notes and related guarantees are secured, subject to certain exceptions, by a first priority lien on the Notes Collateral and a second priority lien on the ABL Collateral. Such collateral may be shared with our future creditors. The actual value of the Notes Collateral at any time will depend upon market and other economic conditions. The Notes will also be secured on a second-priority lien basis (subject to certain exceptions) by substantially all of our and the guarantors' accounts receivable and inventory and cash and proceeds and products of the foregoing and certain assets related thereto.

The ABL Credit Facility is secured on a first-priority lien basis by the ABL Collateral and on a junior basis by the Notes Collateral. The ABL Collateral may be shared with out future creditors subject to limitations. Although the holders of obligations secured by first-priority liens on the ABL Collateral and the holders of obligations secured by second-priority liens on the ABL Collateral, including the Notes, will share in the proceeds of certain of the ABL Collateral, the holders of obligations secured by first-priority liens on the ABL Collateral will be entitled to receive proceeds from any realization of the ABL Collateral to repay the obligations held by them in full before the holders of the Notes and the holders of any other obligations secured by second-priority liens on the ABL Collateral receive any such proceeds.

In addition, the asset sale covenant and the definition of asset sale in the indenture governing the Notes have a number of significant exceptions pursuant to which we will be able to sell Notes Collateral without being required to reinvest the proceeds of such sale into assets that will comprise Notes Collateral or to make an offer to the holders of the Notes to repurchase the Notes.

As of December 30, 2011, we had $375.0 million of Notes outstanding, $122.8 million million outstanding under the Senior Unsecured Loan Facility, and $10.2 million of indebtedness outstanding under the ABL Credit Facility, with approximately $46.9 million of additional commitments under the ABL Credit Facility (subject to a borrowing base). All indebtedness under the ABL Credit Facility is secured by first-priority liens on the ABL Collateral. In addition, under the terms of the indenture governing the Notes, we may incur additional indebtedness and grant certain additional liens on any property or asset that constitutes ABL Collateral on a first priority basis. Any grant of additional liens on the ABL Collateral, in which the Notes have a second-priority lien, would further dilute the value of such liens.

The value of the pledged assets in the event of a liquidation will depend upon market and economic conditions, the availability of buyers and similar factors. No independent appraisals of any of the pledged property were prepared by or on

35


behalf of us in connection with the offering of the Notes. If the proceeds of any sale of the pledged assets were not sufficient to repay all amounts due on the Notes, the holders of the Notes (to the extent their notes were not repaid from the proceeds of the sale of the pledged assets) would have only an unsecured claim against our remaining assets. By their nature, some or all of the pledged assets, particularly those assets in which the Notes have a first-priority security interest, may be illiquid and may have no readily ascertainable market value. Likewise, the pledged assets may not be saleable or, if saleable, there may be substantial delays in their liquidation. To the extent that liens, rights and easements granted to third parties encumber assets located on property owned by us or constitute subordinate liens on the pledged assets, those third parties may have or may exercise rights and remedies with respect to the property subject to such encumbrances (including rights to require marshalling of assets) that could adversely affect the value of the pledged assets located at that site and the ability of the collateral agent to realize or foreclose on the pledged assets at that site.

In addition, the indenture governing the Notes permits us to issue additional secured debt, including debt secured prior to or equally and ratably with the same assets pledged for the benefit of the holders of the Notes. This could reduce amounts payable to holders of the Notes from the proceeds of any sale of the collateral.

Subject to the ABL Collateral Agent's rights with respect to ABL Collateral, the right to take actions with respect to the collateral pursuant to the intercreditor agreements, including directing the collateral agent, resides with the authorized representative of the holders of the largest outstanding principal amount of indebtedness secured by a lien on the Note Collateral. If we issue additional debt in the future in a greater principal amount than the Notes, which additional debt is secured on an equal basis with the Notes, then the authorized representative for that debt would be able to exercise rights under the intercreditor agreements, rather than the authorized representative for the Notes.

The collateral securing the Notes is subject to casualty risks.

We intend to maintain insurance or otherwise insure against hazards in a manner appropriate and customary for our business. There are, however, certain losses that may be either uninsurable or not economically insurable, in whole or in part. Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss of any of the collateral, the insurance proceeds may not be sufficient to satisfy payment of the Notes.

Pledges of equity interests in foreign restricted subsidiaries directly owned by us or a guarantor may not constitute collateral for the repayment of the Notes because such pledges are not required to be perfected pursuant to foreign law pledge documents.

Part of the security for the repayment of the Notes consists of a pledge of 65% of the capital stock of foreign restricted subsidiaries directly owned by us or a guarantor. Although such pledges of capital stock are granted under U.S. security documents, it may be necessary or desirable to perfect such pledges under foreign law pledge documents. We are not required to provide such foreign law pledge documents. We cannot assure you that all such pledges will be effected and perfected under applicable foreign laws. Unless and until such pledges of equity interests are properly perfected, they may not constitute collateral for the repayment of the Notes.

Federal and state statutes allow courts, under specific circumstances, to void the Notes, the related guarantees and the security interests, subordinate claims in respect of the Notes, the guarantees and the security interests and/or require holders of the Notes to return payments received.

If we or any guarantor become a debtor in a case under the U.S. Bankruptcy Code or encounter other financial difficulty, under federal or state fraudulent transfer law, a court may void, subordinate or otherwise decline to enforce the Notes, the related guarantees and/or the security interests. A court might do so if it found that when we issued the Notes or the guarantor entered into its guarantee or when we or the guarantor granted a security interest, or in some states when payments became due under the Notes or the guarantees, we or the guarantor received less than reasonably equivalent value or fair consideration and either:

was insolvent or rendered insolvent by reason of such incurrence; or
was left with inadequate capital to conduct its business; or
believed or reasonably should have believed that it would incur debts beyond its ability to pay; or
was a defendant in an action for money damages, or had a judgment for money damages docketed against it, if in either case, after final judgment, the judgment was unsatisfied.

The court might also void an issuance of Notes or a guarantee without regard to the above factors, if the court found that we issued the Notes or the applicable guarantor entered into its guarantee with actual intent to hinder, delay or defraud its

36


creditors.

A court would likely find that we or a guarantor did not receive reasonably equivalent value or fair consideration for the Notes or its guarantee or the security interests, if we or a guarantor did not substantially benefit directly or indirectly from the issuance of the Notes. If a court were to void the issuance of the Notes or guarantees you would no longer have any claim against us or the applicable guarantor or, with respect to the security interests, a claim with respect to the related collateral. Sufficient funds to repay the Notes may not be available from other sources, including the remaining obligors, if any. In addition, the court might direct you to repay any amounts that you already received from us or a guarantor.

In addition, any payment by us pursuant to the Notes made at a time we were found to be insolvent could be voided and required to be returned to us or to a fund for the benefit of our creditors if such payment is made to an insider within a one-year period prior to a bankruptcy filing or within 90 days for any outside party and such payment would give the creditors more than such creditors would have received in a distribution under Title 11 of the United States Code, as amended (the "Bankruptcy Code").

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; or
if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or
it could not pay its debts as they become due.

On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of the Notes, will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

In addition, although each guarantee will contain a provision intended to limit the guarantor's liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, this provision may not be effective to protect those guarantors from being voided under fraudulent transfer laws, or may reduce that guarantor's obligation to an amount that effectively makes its guarantee of limited value or worthless.

Finally, as a court of equity, the bankruptcy court may subordinate the claims in respect of the Notes to the claims of other creditors under the principle of equitable subordination, if the court determines that: (i) the holder of the Notes engaged in some type of inequitable conduct to the detriment of other creditors; (ii) such inequitable conduct resulted in injury to our other creditors or conferred an unjust advantage upon the holder of the Notes; and (iii) equitable subordination is not inconsistent with the provisions of the Bankruptcy Code.

Any future note guarantees or additional liens on collateral could also be avoided by a trustee in bankruptcy.

The indenture governing the Notes provides that certain of our future subsidiaries will guarantee the Notes and secure their note guarantees with liens on their assets. The indenture governing the Notes also requires us and the guarantors to grant liens on certain assets that they acquire after the notes are issued. Any future note guarantee or additional lien in favor of the collateral agent for the benefit of the holders of the notes might be avoidable by the grantor (as debtor-in-possession) or by its trustee in bankruptcy or other third parties if certain events or circumstances exist or occur. For instance, if the entity granting the future note guarantee or additional lien were insolvent at the time of the grant and if such grant was made within 90 days before that entity commenced a bankruptcy proceeding (or one year before commencement of a bankruptcy proceeding if the creditor that benefited from the note guarantee or lien is an "insider" under the Bankruptcy Code), and the granting of the future note guarantee or additional lien enabled the holders of the Notes to receive more than they would if the grantor were liquidated under chapter 7 of the Bankruptcy Code, then such note guarantee or lien could be avoided as a preferential transfer.

If an actual trading market for the Notes is not maintained, the holders of the Notes may not be able to resell their Notes quickly, for the price that they paid or at all.

We cannot assure the holders of the Notes as to the liquidity of any trading market for the Notes or that such a market will be maintained. We have not applied for the Notes to be listed on any securities exchange or arranged for quotation of the Notes

37


on any automated dealer quotation systems. The initial purchasers of the Notes have advised us that they intend to make a market in the Notes, but they are not obligated to do so. Each initial purchaser may discontinue any market making at any time, in its sole discretion.

We also cannot assure the holders of the Notes that they will be able to sell their Notes at a particular time or at all, or that the prices that they receive when they sell them will be favorable. If an active trading market for the Notes is not maintained, the holders of the Notes may not be able to resell their Notes at their fair market value, or at all. The liquidity of, and trading market for, the Notes may also be adversely affected by, among other things:

the number of holders of the Notes;
prevailing interest rates;
our operating performance and financial condition;
the prospects for companies in our industry generally;
the interest of securities dealers in making a market; and
the market for similar securities.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused volatility in prices of securities similar to the Notes. It is possible that the market for the Notes will be subject to disruptions. Any disruptions may have a negative effect on holders, regardless of our prospects and financial performance.

Item 1B.
UNRESOLVED STAFF COMMENTS

Not applicable.

Item 2.
PROPERTIES

Our principal executive office and headquarters is located in Norcross, Georgia, in a leased facility. As of December 30, 2011, we owned or leased 32 facilities in the U.S., one in Canada and six in Europe of which 18 facilities were owned and 22 were leased. We believe that our facilities, taken as a whole, have adequate productive capacity and sufficient manufacturing equipment to conduct business at levels meeting current demand. Our broad U.S. and Western European network is well maintained and our sites are located to optimize customer service, market requirements, distribution capability and freight costs. We continuously review our anticipated requirements for facilities and, on the basis of that review, may from time to time acquire additional facilities and/or dispose of existing facilities.

Item 3.
LEGAL PROCEEDINGS

We are currently party to legal proceedings that have arisen in the ordinary course of business. We believe that the ultimate outcome of these matters would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 4.
MINE SAFETY DISCLOSURES

Not applicable.

Part II

Item 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
There is no established public trading market for the registrant’s common stock. The registrant’s issued and outstanding common stock is held by approximately 90 holders of record.
The registrant has not paid any cash dividends in the past. We anticipate that any earnings will be retained for development of our business and we do not anticipate paying any cash dividends in the foreseeable future. The ABL Credit Facility, the Senior Unsecured Loan Facility and the indenture governing the Notes all contain restrictions on the ability of our subsidiary, Euramax International, Inc. to issue dividends to us and therefore restrict our ability to issue cash dividends. Any future dividends declared would be at the discretion of our board of directors and would depend on our financial condition, results of operations, contractual obligations, the terms of our financing agreements at the time a dividend is considered, and other relevant factors.

38



Item 6.
SELECTED FINANCIAL DATA

The following data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited Consolidated Financial Statements and the notes thereto included under “Item 8. Financial Statements and Supplementary Data.” The statement of operations data for the years ended December 30, 2011, December 31, 2010 and December 25, 2009, and the balance sheet data as of December 30, 2011 and December 31, 2010, are derived from the audited financial statements included elsewhere in this report. The statement of operations data for the years ended December 26, 2008 and December 28, 2007 and the balance sheet data as of December 25, 2009, December 26, 2008 and December 28, 2007 are derived from audited financial statements not included herein. Historical results are not necessarily indicative of results to be expected in the future.
 
As of and for the Year Ended (1)
 
December 30,
2011
 
December 31,
2010

 
December 25,
2009

 
December 26,
2008

 
December 28,
2007

 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Statement of Operations Data:
 
 
 
 
 
 
 
 
 
Net sales
$
933,678

 
$
883,700

 
$
812,055

 
$
1,173,493

 
$
1,245,631

Cost of goods sold (excluding depreciation and amortization)
785,165

 
732,451

 
675,126

 
1,009,392

 
1,052,838

Gross profit
148,513

 
151,249

 
136,929

 
164,101

 
192,793

Selling and general (excluding depreciation and amortization)
91,421

 
90,642

 
83,896

 
108,499

 
95,537

Depreciation and amortization
37,194

 
38,700

 
39,721

 
55,348

 
57,590

Other operating charges
8,404

 
2,939

 
6,707

 
2,109

 
5,652

Multiemployer pension withdrawal expense
1,200

 

 

 

 

Debt restructuring and forbearance expenses

 

 
14,506

 
3,798

 

Goodwill and other impairments

 

 
3,516

 
401,376

 

Income (loss) from operations
10,294

 
18,968

 
(11,417
)
 
(407,029
)
 
34,014

Interest expense
(55,579
)
 
(68,333
)
 
(84,204
)
 
(109,527
)
 
(84,923
)
Gain on extinguishment of debt

 

 
8,723

 

 

Other income (loss), net
(14,117
)
 
(3,484
)
 
1,303

 
(22,716
)
 
5,143

Loss from continuing operations before income taxes
(59,402
)
 
(52,849
)
 
(85,595
)
 
(539,272
)
 
(45,766
)
Provision (benefit) for income taxes
3,315

 
(14,461
)
 
(1,297
)
 
(61,078
)
 
(2,529
)
Loss from continuing operations
(62,717
)
 
(38,388
)
 
(84,298
)
 
(478,194
)
 
(43,237
)
Loss from discontinued operations, net of tax


(152
)

(1,330
)
 
(22,413
)
 
(6,194
)
Net loss
$
(62,717
)
 
$
(38,540
)
 
$
(85,628
)
 
$
(500,607
)
 
$
(49,431
)
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
14,327

 
$
24,902

 
$
69,944

 
$
48,658

 
$
8,272

Working capital
90,365

 
120,476

 
163,393

 
167,849

 
138,828

Total assets
619,246

 
666,890

 
758,626

 
841,966

 
1,423,648

Total debt, including current portion
507,988

 
503,169

 
525,319

 
884,740

 
812,401

Total shareholders' (deficit) equity
(53,293
)
 
9,831

 
47,060

 
(259,282
)
 
273,771

_______________________________________
(1)
Our fiscal year ends on the last Friday in December of each calendar year. Our fiscal year ended December 30, 2011 is based on a 52 week period. Our fiscal year ended December 31, 2010 is based on a 53 week calendar year. Our fiscal years ended December 25, 2009, December 26, 2008 and December 28, 2007 are based on a 52 week period.



39


Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this report. In addition to historical information, this discussion may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, those described in this report under "Item 1A, Risk Factors.” Future results could differ materially from those discussed below. See “Cautionary Statement Regarding Forward-Looking Statements” in Item 1A above. We operate on a 52 or 53 week fiscal year ending on the last Friday in December. Our fiscal years consisted of 52 weeks for the years ended December 30, 2011 and December 25, 2009 and 53 weeks for the year ended December 31, 2010.

Our MD&A includes the following sections:

Overview and Executive Summary provides an overview of our business.
Results of Operations provides an analysis of our financial performance and results of operations for fiscal 2011 compared to fiscal 2010 and fiscal 2010 compared to fiscal 2009.
Liquidity and Capital Resources provides an overview of our financing, capital expenditures, cash flows and contractual obligations.
Critical Accounting Policies provides a discussion of our accounting policies that require critical judgment, assumptions and estimates.
Recently Issued Accounting Standards provides a brief description of significant accounting standards which were issued during the periods presented.

Overview and Executive Summary

We are a leading international producer of metal and vinyl products sold to building products and recreational vehicle (RV) markets primarily in North America and Europe. We are a leader in several niche product categories, including preformed roof-drainage products sold in the U.S., metal roofing and siding for wood frame construction in the U.S., and aluminum siding for towable RVs in the U.S. and Europe. Sales to the building products and RV markets accounted for approximately 72% and 14% of our 2011 net sales, respectively.

Our customers are located predominantly throughout North America and Europe and include distributors, contractors and home improvement retailers, as well as RV, transportation and other original equipment manufacturers, or OEMs. We have extensive in-house manufacturing and distribution capabilities for our more than 10,000 unique products and operate through a network of 39 facilities, consisting of 32 in the U.S., one in Canada and six in Europe. We have over 50 years of experience manufacturing building products and RV exterior components, including our time as a division of our former parent, Alumax Inc., or Alumax, a fully integrated aluminum producer acquired by Alcoa Inc. in 1998. We have operated as an independent company since 1996 when our division was acquired in a management-led buyout.

In 2011, we completed a refinancing of our long-term debt through the issuance of $375 million of 9.50% Senior Secured Notes due 2016 (the "Notes") and entered into a $125 million Senior Unsecured Loan Facility. The proceeds of these financings, together with cash on hand and borrowings under the ABL Credit Facility, were used to repay the then-existing First Lien Credit Facility in full. This refinancing significantly improved our capital structure by relieving the Company of restrictive financial covenants, reducing interest costs, and extending maturities.

Net sales and operating income totaled approximately $933.7 million and $10.3 million respectively, for the year ended December 30, 2011. For the year ended December 31, 2010 net sales and operating income were approximately $883.7 million and $19.0 million, respectively. Our operating performance is primarily affected by the strength of demand for residential and non-residential building materials as well as, to a lesser extent, recreational vehicles in the United States and Western Europe. Demands from the end markets we serve is influenced by macroeconomic trends which affect consumer confidence, access to financing and levels of commercial construction and existing home sales. Our operating results for 2011 reflect a continuation of the lower end market demand environment that emerged following the recession of 2008 and 2009. In response to market challenges we have continued with initiatives to change and improve our business to adapt to the current demand environment. In 2011, we further rationalized our manufacturing and distribution foot print and continued to pursue production efficiency gains and procurement savings. These initiatives, while undertaken in response to continued relative softeness in our demand, are expected to contribute to higher levels of operating performance as markets recover.

Net sales of $933.7 million for the year ended December 30, 2011 increased $50.0 million, or 5.7%, from $883.7 million for the year ended December 31, 2010. This increase is primarily the result of higher selling prices due to escalating aluminum

40


and steel raw material costs and due to strengthening demand from customers in certain European transportation markets. The strengthening of the euro and British pound sterling against the U.S. dollar also contributed to higher sales during the year. These increases were partially offset by a decline in demand for industrial and architectural construction in the U.S. Non-Residential Building Products segment.

Operating income of $10.3 million for the year ended December 30, 2011 declined $8.7 million, or 45.8%, from $19.0 million for the year ended December 31, 2010. Declines in operating income were partially related to declines in sales volumes to distributors in our U.S. Residential Building Products Segment and to customers in our U.S. Non-Residential Building Products Segment and due to higher selling and general administrative costs in our European Engineered Product and European Roll Coated Aluminum segments. Although we were able to effectively manage sales prices to cover increased raw material costs in the majority of our end markets, we were only able to recover a portion of raw material increases in the U.S. RV and Specialty Coated Products market. Our operating results for the year reflect continuing challenges in residential and commercial construction end markets in both the United States and Europe. Our operating income for the year was also negatively impacted by restructuring and refinancing initiatives from which the Company expects to benefit in future periods.

We incurred approximately $4.1 million related to restructuring initiatives including facility closures, relocation, and severance costs intended to reduce overhead and streamline operations. Additionally, we incurred a $1.2 million charge related to an early withdrawal from a multiemployer pension plan benefiting hourly employees. This early withdrawal was the result of consolidation of operations at a facility in Romeoville, IL to an existing facility in Nappanee and was intended to reduce the Company's fixed overhead costs.
Approximately $2.9 million of tax consulting and legal and professional fees were incurred related to our debt refinancing, registration of our Notes with the SEC and other capital market activities. Additionally, tax consulting and legal and professional fees of $1.2 million were incurred for the restructuring and simplification of our legal entity structure in Europe.
Despite the challenges facing our end markets, we believe we are well positioned to benefit from operational efficiencies gained from our restructuring activities, financial flexibility obtained from our debt refinancing, and our commitment to business development activities.

Results of Operations

Our financial performance is affected by, among other factors, underlying trends in the United States and Europe that influence demand for products sold to residential repair and remodeling, non-residential construction and RV markets.

Our building products sold for residential repair and remodeling include roof drainage products, vinyl windows, patios and awnings, and doors. Projects that utilize many of our roof drainage repair and remodeling products are often low cost activities that are necessary to prevent home damage as a result of wear and tear or weather damage. Roof drainage repair projects are often low cost and non-discretionary in nature. Repair and remodeling activity related to products other than roof drainage are typically higher cost and driven by turnover and aging of housing stock, consumer sentiment, availability of home equity and consumer financing and, in the case of our vinyl window products, consumer interest in energy efficiency.

Our building products sold for non-residential construction include, in the United States, light gauge steel and aluminum roofing and siding panels, trim and hardware and, in Europe, the Middle East and Asia, roll coated aluminum coil and sheet. Demand for these products is driven by consumer confidence, interest rates, consumer disposable income, the strength of agricultural markets, consumer access to affordable financing and commercial construction trends.

Our products sold for the RV market include siding, roofing and doors. Demand for these RV products is driven by trends in disposable income, interest rates and general economic conditions, as well as similar demographic trends relating to the increased proportion of the United States and European population in the 55 through 74 year old age group, who serve as an important source of demand for our RV products.

Our sales volumes have historically been higher in the second and third quarters due to the seasonal demand of the building products markets served. Our working capital needs have been at their highest during these periods as well. See "Item 1A. Risk Factors—Risks Related to Our Business—Our business is subject to seasonality, with our highest sales volumes historically occurring during our second and third quarters."


41


The following table sets forth our statements of operations data expressed as a percentage of net sales for the years ended December 30, 2011, December 31, 2010 and December 25, 2009:

 
 
Year Ended December 30, 2011
 
Year Ended December 31, 2010
 
Year Ended December 25, 2009
Statement of Earnings Data:
 
 
 
 
 
 
Net sales
 
100.0
 %
 
100.0
 %
 
100.0
 %
Costs and expenses:
 
 
 
 
 
 
Cost of goods sold (excluding depreciation and amortization)
 
84.1
 %
 
82.9
 %
 
83.1
 %
Selling and general (excluding depreciation and amortization)
 
9.8
 %
 
10.3
 %
 
10.3
 %
Depreciation and amortization
 
4.0
 %
 
4.4
 %
 
4.9
 %
Other operating charges
 
0.9
 %
 
0.3
 %
 
0.9
 %
Multiemployer pension withdrawal expense
 
0.1
 %
 
 %
 
 %
Debt restructuring and forbearance expenses
 
 %
 
 %
 
1.8
 %
Impairments of fixed assets
 
 %
 
 %
 
0.4
 %
Income (loss) from operations
 
1.1
 %
 
2.1
 %
 
(1.4
)%
Interest expense
 
(6.0
)%
 
(7.7
)%
 
(10.4
)%
Gain on extinguishment of debt
 
 %
 
 %
 
1.1
 %
Other income (loss), net
 
(1.5
)%
 
(0.4
)%
 
0.2
 %
Loss from continuing operations before income taxes
 
(6.4
)%
 
(6.0
)%
 
(10.5
)%
Provision (benefit) for income taxes
 
0.4
 %
 
(1.6
)%
 
(0.2
)%
Loss from continuing operations
 
(6.8
)%
 
(4.4
)%
 
(10.3
)%
Loss from discontinued operations, net of tax
 
 %
 
 %
 
(0.2
)%
Net loss
 
(6.8
)%
 
(4.4
)%
 
(10.5
)%


42



Year Ended December 30, 2011 Compared to the Year Ended December 31, 2010.

The year ended December 30, 2011 includes 52 weeks compared to 53 weeks in the year ended December 31, 2010. The following table sets forth net sales and income (loss) from operations data by segment for the years ended December 30, 2011 and December 31, 2010:

 
 
Net Sales
 
Income (Loss) from Operations
 
 
Year Ended December 30, 2011
 
Year Ended December 31, 2010
 
Increase
(Decrease)
 
Year Ended December 30, 2011
 
Year Ended December 31, 2010
 
Increase
(Decrease)
 
 
(dollars in millions)
U.S. Residential Building Products
 
$
247.5

 
$
244.5

 
1.2
%
 
$
17.3

 
$
21.0

 
(17.6
)%
U.S. Non-Residential Building Products
 
211.8

 
203.4

 
4.1
%
 
5.1

 
(3.1
)
 
264.5
 %
U.S. RV and Specialty Building Products
 
147.4

 
146.1

 
0.9
%
 
(8.0
)
 
(0.7
)
 
(1,042.9
)%
European Roll Coated Aluminum
 
243.5

 
210.5

 
15.7
%
 
13.6

 
17.3

 
(21.4
)%
European Engineered Products
 
83.5

 
79.2

 
5.4
%
 
(2.1
)
 
0.3

 
(800.0
)%
Other Non-Allocated
 

 

 
%
 
(15.6
)
 
(15.8
)
 
1.3
 %
Totals
 
$
933.7

 
$
883.7

 
5.7
%
 
$
10.3

 
$
19.0

 
(45.8
)%

Net Sales.    Net sales includes the revenue recognized from the sales of our products less provisions for returns, allowances, rebates and discounts. Our net sales increased $50.0 million, or 5.7%, to $933.7 million in 2011 compared to $883.7 million in 2010. Net sales increased primarily as a result of higher selling prices due to increases in aluminum and steel raw material costs. The strengthening of foreign currencies, primarily the euro and British pound sterling against the U.S. dollar, also resulted in a $15.0 million increase in net sales during 2011. These increases were partially offset by a decline in demand for industrial and architectural construction in the U.S. Non-Residential Building Products segment.

Net sales of our U.S. Residential Building Products segment increased $3.0 million, or 1.2%, to $247.5 million in 2011 from $244.5 million in 2010. This increase in net sales resulted primarily from price increases necessitated by higher aluminum and other raw material costs. Volume declines attributable to lower demand from distributors for our roof drainage, roof edge and related products partially offset higher selling prices. We believe sales to distributors were negatively impacted by economic uncertainty affecting consumer sentiment and demand for higher cost replacement projects. Demand from home improvement retailers was relatively flat reflecting broader trends in residential repair and remodeling activities.

Net sales of our U.S. Non-Residential Building Products segment increased $8.4 million, or 4.1%, to $211.8 million in 2011 from $203.4 million in 2010. Higher relative sales prices as a result of rising steel raw material costs combined with higher demand for our metal roofing and accessories from builders, distributors and contractors in the agricultural woodframe market were offset by declining demand in the industrial and architectural markets.

Net sales of our U.S. RV and Specialty Building Products segment increased $1.3 million, or 0.9%, to $147.4 million in 2011 from $146.1 million in 2010. This increase in net sales resulted primarily from higher demand from manufactured housing producers and for aluminum, steel, fiberglass and laminated products from original equipment manufacturers in the transportation industry. Sales volumes for aluminum coil sold to distributors also increased during the current year. These increases were offset by a decline in sales volumes for RV sidewalls and doors and vinyl windows and patio components sold to contractors compared to 2010.

Total net sales for our U.S. segments increased $12.7 million, or 2.1%, to $606.7 million in 2011 from $594.0 million in 2010. Sales price increases necessitated by higher aluminum and steel raw material costs resulted in net sales increases of approximately $28.0 million. Higher sales prices were partially offset by overall volume declines in certain U.S. Residential Building Products and U.S. Non-Residential Building Products markets of $11.4 million and $4.3 million, respectively.

Net sales of our European Roll Coated Aluminum segment increased $33.0 million, or 15.7%, to $243.5 million in 2011

43


from $210.5 million in 2010. This increase in net sales resulted primarily from higher sales prices, reflecting higher aluminum raw material costs, compared to 2010. Net sales also increased due to higher sales volumes of specialty coated coil and panels sold to OEMs in the transportation industry and to producers of commercial panels used in commercial construction applications including roofing and siding. The increase in sales volumes to commercial panel producers reflects stable market demand and successful business development initiatives directed at increasing our market share of industrial and architectural projects throughout Europe, the Middle East and China. Sales increases were offset by a slight decline in sales of RV sidewalls. Stregthening of the euro and British pound sterling against the U.S. dollar resulted in higher 2011 net sales of $11.0 million compared to 2010.

Net sales of our European Engineered Products segment increased $4.3 million, or 5.4%, to $83.5 million in 2011 from $79.2 million in 2010. Strengthening of the euro and British pound sterling against the U.S. dollar resulted in higher 2011 net sales of $3.6 million compared to 2010. Higher sales volumes of various metal-based products, including windows sold to transportation manufacturers, specialty coated metals for the appliance and transportation markets, and engineered transportation components sold to transportation suppliers, were offset by declines in net sales as a result of lower levels of holiday home production and consumer spending in the UK market. Increases were also partially offset by a reduction in sales volume of vinyl replacement windows to UK home centers.

Total net sales for our European segments increased $37.3 million, or 12.9%, to $327.0 million in 2011 from $289.7 million in 2010. Rising demand in several of our end markets, favorable foreign currency fluctuations, and higher selling prices contributed to the overall net sales increase. Strengthening of the euro and British pound sterling against the U.S. dollar resulted in higher 2011 net sales of approximately $14.6 million compared to 2010. We estimate that higher selling prices resulting from higher aluminum and steel costs increased European net sales by approximately $18.9 million.

Cost of Goods Sold.    Cost of goods sold includes the cost of raw materials, manufacturing labor, packaging, utilities, freight, maintenance and other elements of manufacturing overhead. Cost of goods sold increased $52.7 million, or 7.2%, to $785.2 million in 2011 from $732.5 million in 2010. This increase reflects higher aluminum and steel raw material costs in 2011. Additionally, the strengthening of foreign currencies, primarily the euro and British pound sterling, against the U.S. dollar resulted in higher cost of goods sold of approximately $12.5 million compared to 2010.

Selling and General.    Selling and general expenses include salaries, benefits, incentive compensation, insurance, travel and entertainment and other administrative costs. Selling and general expenses increased $0.8 million, or 0.9%, to $91.4 million in 2011 from $90.6 million in 2010. Strengthening of the euro and British pound sterling against the U.S. dollar resulted in higher 2011 selling and general expenses of approximately $1.3 million compared to 2010.

Other Operating Charges. Other operating charges in 2011 increased $5.5 million to $8.4 million in 2011 from $2.9 million in 2010.
In 2011, other operating charges includes $4.1 million related to restructuring initiatives including facility closures, relocation, and severance costs intended to reduce overhead and streamline operations. Approximately $2.9 million of tax consulting and legal and professional fees were incurred related to our debt refinancing, registration of the Notes with the SEC and other capital market activities. As a result of these initiatives we have removed restrictive financial covenants, significantly reduced interest costs, and provided extended maturity dates. The remaining $1.2 million represents tax consulting and legal and professional fees related to the restructuring and simplification of our legal entity structure in Europe.
In 2010, other operating charges included $1.7 million of legal and professional fees related to capital market activities and $1.2 million of restructuring charges. Restructuring charges related primarily to plant consolidation activities in the RV and Specialty Building Products Segment.
Multiemployer Pension Withdrawal Expense.    In the second quarter of 2011, we recorded a $1.2 million charge in our U.S. Residential Building Products segment for liabilities associated with the early withdrawal from a multiemployer pension plan covering hourly employees in our Romeoville, IL facility. The liability represents the present value of estimated future payments for our proportionate share of unfunded vested benefits under the multiemployer plan. The actual liability will not be known until the plan trustee completes a final assessment of the withdrawal liability. This liability is expected to be settled over a 10 to 20 year period.
Depreciation and Amortization.    Depreciation and amortization declined $1.5 million, or 3.9%, to $37.2 million in 2011 from $38.7 million in 2010. The decline resulted from an increase in the amount of assets that have become fully depreciated.

Income (Loss) From Operations.    As a result of the aforementioned items, our income from operations was $10.3

44


million for 2011, compared to $19.0 million for 2010.

Income from operations of our U.S. Residential Building Products segment declined $3.7 million to $17.3 million for 2011 from $21.0 million for 2010. The decline in income from operations was primarily the result of a $1.2 million charge related to the early withdrawal from a multiemployer pension plan. Higher freight costs of approximately $1.0 million and costs associated with the implementation of our ERP system totaling approximately $0.8 million also contributed to the decline. The remaining decrease is primarily the result of shifts in product mix and the overall decline in demand from distributors.

Income (loss) from operations of our U.S. Non-Residential Building Products segment improved $8.2 million to income of $5.1 million for 2011 from a loss of $(3.1) million in 2010. This improvement was primarily the result of higher selling prices necessitated by rising steel costs and due to lower selling and general costs. These increases were offset by an overall decrease in net sales volumes.

The loss from operations of our U.S. RV and Specialty Building Products segment increased $7.3 million to a loss of $(8.0) million for 2011 from a loss of $(0.7) million for 2010. This increase, despite an overall increase in net sales volume, was primarily related to increases in raw material costs which were only partially offset by selling price increases. Operating results for this segment reflect soft demand for RVs associated with rising gas prices and continuing economic uncertainty among consumers.

Income (loss) from operations of our European Roll Coated Aluminum segment declined $3.7 million to income of $13.6 million for 2011 from income of $17.3 million for 2010. This decline, despite higher sales volumes, was primarily due to rising raw material costs which were only partially offset by selling price increases. Selling and general costs have also increased as a result of anticipated growth and current business development initiatives.

Income (loss) from operations of our European Engineered Products segment declined $2.4 million to a loss of $(2.1) million for 2011 from income of $0.3 million for 2010. The decline, despite overall higher sales volumes, was primarily due to higher labor and overhead costs and higher selling and general costs compared to 2010.

Interest Expense.    Interest expense declined $12.7 million, or 18.6%, to $55.6 million in 2011 from $68.3 million in 2010. The decline in interest expense is primarily due to voluntary prepayments of the Company's then-existing First Lien Credit Facility during the third quarter of 2010, totaling approximately $35.0 million, which reduced the outstanding principal balance. In addition, on March 18, 2011 the Company issued new senior secured notes at an interest rate of 9.5% and senior unsecured notes at an interest rate of 12.25% with the proceeds used to settle outstanding amounts under the Company's then-existing First Lien Credit Facility, which carried a higher rate of interest.

Other Income (Loss), Net.    Other income (loss), net includes translation gains and losses on intercompany obligations, gains and losses on asset disposals, interest income and other income or expense items of a non-operating nature. Other income (loss), net in 2011 of $(14.1) million included translation losses of $(13.0) million on intercompany obligations and $(1.5) million related to the extinguishment of indebtedness under the First Lien Credit Facility primarily related to the write-off of deferred financing fees. These losses were partially offset by a $0.6 million gain recognized on the Company's forward foreign exchange contracts. Other income (loss), net in 2010 of $(3.5) million primarily included a translation loss of $(3.7) million on intercompany obligations partially offset by interest income.

Income Tax Provision (Benefit).   We reported an income tax expense of $3.3 million for 2011, as compared to a benefit of $(14.5) million for 2010. Our effective tax rates were 5.6% for 2011 and (27.4)% for 2010.

Our effective tax rate reflects tax benefits derived from significant operations in the United States, which are generally taxed at rates higher than foreign statutory rates. A change in the mix of pretax income from the various tax jurisdictions can have a significant impact on the Company's periodic effective tax rate.
 
In 2011, our effective tax rate reflected the following:
 
A net charge of approximately $24.7 million related to recognition of valuation allowances against certain deferred tax assets.
A net benefit of approximately $(6.0) million related to earnings taxed at different rates than the U.S. federal statutory rate.
A net charge of approximately $2.9 million related to foreign dividends taxed in the United States at the statutory rate of 35%.

45


 
In 2010, our effective tax rate reflected the following:
 
A net benefit of approximately $(8.5) million related to the implementation of tax planning strategies.
A net benefit of approximately $(2.4) million related to amounts required to be recorded for changes to our uncertain tax positions under Interpretation No. 48, including interest and penalties (see Note 11 of Notes to Consolidated Financial Statements).
A net charge of approximately $8.0 million related to foreign dividends taxed in the United States at the statutory rate of 35%.

Net Loss.    Our net loss was $(62.7) million for 2011, as compared to a net loss of $(38.5) million for 2010.

Year Ended December 31, 2010 Compared to the Year Ended December 25, 2009.

The year ended December 31, 2010 includes 53 weeks compared to 52 weeks in the year ended December 25, 2009. The following table sets forth net sales and income (loss) from operations data by segment for the years ended December 31, 2010 and December 25, 2009:

 
 
Net Sales
 
Income (Loss) from Operations
 
 
Year Ended
December 31,
2010

 
Year Ended
December 25,
2009

 
Increase
(Decrease)
 
Year Ended
December 31,
2010

 
Year Ended
December 25,
2009

 
Increase
(Decrease)
 
 
(dollars in millions)
U.S. Residential Building Products
 
$
244.5

 
$
232.1

 
5.3
 %
 
$
21.0

 
$
29.8

 
(29.5
)%
U.S. Non-Residential Building Products
 
203.4

 
211.9

 
(4.0
)%
 
(3.1
)
 
(0.1
)
 
(3,000.0
)%
U.S. RV and Specialty Building Products
 
146.1

 
119.0

 
22.8
 %
 
(0.7
)
 
(6.5
)
 
89.2
 %
European Roll Coated Aluminum
 
210.5

 
180.3

 
16.7
 %
 
17.3

 
(2.7
)
 
740.7
 %
European Engineered Products
 
79.2

 
68.8

 
15.1
 %
 
0.3

 
(6.1
)
 
104.9
 %
Other Non-Allocated
 

 

 
 %
 
(15.8
)
 
(25.8
)
 
38.8
 %
Totals
 
$
883.7

 
$
812.1

 
8.8
 %
 
$
19.0

 
$
(11.4
)
 
266.7
 %

Net Sales.    Net sales include the revenue recognized from the sales of our products less provisions for returns, allowances, rebates and discounts. Our net sales increased $71.6 million, or 8.8%, to $883.7 million in 2010 compared to $812.1 million in 2009 as global economic concerns diminished and pent up demand for many of our products was released.

Net sales of our U.S. Residential Building Products segment increased $12.4 million, or 5.3%, to $244.5 million in 2010 from $232.1 million in 2009. This increase in net sales resulted primarily from price increases necessitated by an increase in aluminum and other raw material costs. Volume increases for the year were approximately 0.8%. This increase reflects an increase in volume in the first half of 2010 compared to the first half of 2009 of approximately 15.2% primarily attributable to improving core market demand, augmented by severe winter weather in the Northeast U.S. and above average levels of rain in the Southeast U.S. Volume for the second half of 2010 compared to the second half of 2009 declined approximately 10.7% primarily related to the strength of pent up demand that was released by customers in the second half of 2009.

Net sales of our U.S. Non-Residential Building Products segment declined $8.5 million, or 4.0%, to $203.4 million in 2010 from $211.9 million in 2009. This decrease in net sales resulted primarily from sales volume reductions which were partially offset by selling price increases. The decline in sales volume was attributable to a decline in market demand for steel and aluminum roofing and siding sold to distributors, contractors, lumber yards, and builders for both wood framed and non-wood framed construction. The volume decline in this segment was less than half of the decline in commercial construction from 2009 to 2010 as measured by McGraw Hill. We believe this to be attributable to the less cyclical and lower cost nature of wood-framed construction as compared to the broader commercial construction market.

Net sales of our U.S. RV and Specialty Building Products segment increased $27.1 million, or 22.8%, to $146.1 million

46


in 2010 from $119.0 million in 2009. This increase in net sales resulted primarily from sales volume increases. The increase in net sales volume was attributable to stronger demand for RV sidewalls and doors, vinyl windows, patio components and aluminum coil. Demand for RV sidewalls and doors increased as consumer demand for towable RVs increased. Compared to 2009, wholesale shipments of towable RVs in 2010 increased 39%. Despite this significant improvement, RV units produced in 2010 remained more than 35% below the annual average production. Demand for vinyl windows, patio components and aluminum coil increased as a result of broader economic improvement and higher levels of consumer spending on home improvement, repair and remodeling.

Total net sales for our U.S. segments increased $31.0 million, or 5.5%, to $594.0 million in 2010 from $563.0 million in 2009.

Net sales of our European Roll Coated Aluminum segment increased $30.2 million, or 16.7%, to $210.5 million in 2010 from $180.3 million in 2009. This increase in net sales resulted primarily from an increase in sales volume of specialty coated coil and panels sold to European RV OEMs and producers of commercial panels used in commercial construction applications including roofing and siding. These increases reflect stable market demand and successful business development initiatives directed at increasing our market share of industrial and architectural projects throughout Europe, the Middle East and China. Weakening of the Euro and British pound sterling against the U.S. dollar reduced our 2010 net sales $9.0 million compared to 2009.

Net sales of our European Engineered Products segment increased $10.4 million, or 15.1%, to $79.2 million in 2010 from $68.8 million in 2009. This increase in net sales resulted primarily from an increase in sales volume of windows and doors for factory built holiday homes in the United Kingdom and automotive components for European automotive and transportation OEMs. Weakening of the Euro and British pound sterling against the U.S. dollar reduced our 2010 net sales $2.1 million compared to 2009. Increases were also partially offset by a reduction in sales volume of vinyl replacement windows to UK home centers.

Total net sales for our European segments increased $40.6 million, or 16.3%, to $289.7 million in 2010 from $249.1 million in 2009. Weakening of the Euro and British pound sterling against the U.S. dollar decreased our 2010 net sales $11.1 million compared to 2009.

Cost of Goods Sold.    Cost of goods sold includes the cost of raw materials, manufacturing labor, packaging, utilities, freight, maintenance and other elements of manufacturing overhead. Cost of goods sold increased $57.4 million, or 8.5%, to $732.5 million in 2010 from $675.1 million in 2009. This increase reflects higher raw material, labor, packaging, freight and utility costs due to higher sales volume. The percentage increases in these costs were generally less than the 8.8% increase in net sales for the same period, contributing to an increase in gross margin to 17.1% for 2010 from 16.9% for 2009. In addition to volume, cost of goods sold increased due to increases in aluminum, steel and copper raw material costs.

Selling and General.    Selling and general expenses include salaries, benefits, incentive compensation, insurance, travel and entertainment and other administrative costs. Selling and general expenses increased $6.7 million, or 8.0%, to $90.6 million in 2010 from $83.9 million in 2009. This increase is primarily attributable to an increase in selling and administrative costs to support higher sales volumes during 2010, partially offset by lower employee severance costs and bad debt expense.

Debt Restructuring and Forbearance Expenses.    Debt restructuring and forbearance expenses include professional fees for attorneys and other advisors to the Company and its lenders in connection with the restructuring of our debt. Restructuring and forbearance expenses related to the restructuring of our debt were $14.5 million in 2009. No restructuring and forbearance expenses were recorded in 2010.

Depreciation and Amortization.    Depreciation and amortization declined $1.0 million, or 2.5%, to $38.7 million in 2010 from $39.7 million in 2009. The decline resulted from an increase in the amount of assets that have become fully depreciated.

Other Impairments.    In 2009, due to declines in RV demand, we closed our Ft. Wayne, Indiana facility which was devoted to the manufacture of fiberglass products for the RV industry. As a result, we wrote down our investment in this facility by $3.5 million to its expected salvage value. No such impairments were recorded in 2010.

Other Operating Charges. Other operating charges in 2010 declined $3.8 million to $2.9 million in 2011 from $6.7 million in 2009.
In 2010, other operating charges included $1.7 million of legal and professional fees related to capital market activities and $1.2 million of restructuring charges. Restructuring charges primarily include costs related to plant consolidation activities

47


in the RV and Specialty Building Products Segment.
In 2009, other operating charges included $3.4 million of non-recurring legal and professional fees primarily related to the Company's restructuring of indebtedness and $3.3 million of management severance and relocation costs.
Income (Loss) From Operations.    As a result of the aforementioned items, our income from operations was $19.0 million for 2010, as compared to a loss of $(11.4) million for 2009.

Income from operations of our U.S. Residential Building Products segment declined $8.8 million to $21.0 million for 2010 from $29.8 million for 2009. The decline relates primarily to higher raw material, labor, packaging, freight, and utility costs partially offset by an increase in net sales volume and reductions in selling and general expenses.

Income (loss) from operations of our U.S. Non-Residential Building Products segment declined $3.0 million to a loss of $(3.1) million for 2010 from a loss of $(0.1) million in 2009. This is primarily related to a decline in net sales volume, partially offset by an increase in gross margin resulting from increases in selling prices attributable to rising steel costs.

The loss from operations of our U.S. RV and Specialty Building Products segment improved $5.8 million to a loss of $(0.7) million for 2010 from a loss of $(6.5) million for 2009. This improvement is primarily related to higher sales volume and $3.5 million of impairment charges related to the closure of the Ft. Wayne facility during the first half of 2009. These items were partially offset by increases in raw material costs which were only partially offset by selling price increases.

Income (loss) from operations of our European Roll Coated Aluminum segment improved $20.0 million to income of $17.3 million for 2010 from a loss of $(2.7) million for 2009. This improvement was primarily due to higher sales volume and lower raw material costs. Lower raw material costs reflect conditions in 2009 that resulted in many of our specialty coated coil customers delaying or canceling orders for which we had procured bare aluminum supply. We consumed and sold portions of this higher cost metal in the first half of 2009, a time when selling prices were declining. Accordingly, gross margin in the first half of 2009 was below historical levels.

Income (loss) from operations of our European Engineered Products segment improved $6.4 million to income of $0.3 million for 2010 from a loss of $(6.1) million for 2009. The improvement was primarily due to the increase in sales volume and a reduction in costs related to employee severance incurred in 2009.

Interest Expense.    Interest expense declined $15.9 million, or 18.9%, to $68.3 million in 2010 from $84.2 million in 2009. The decline is primarily due to the cancellation of indebtedness in connection with our debt restructuring. This decline was partially offset by an increase in interest rates on the First Lien Credit Facility.

Other Income (Loss), Net.    Other income (loss), net includes translation gains and losses on intercompany obligations, gains and losses on asset disposals, interest income and other income or expense items of a non-operating nature. Other income (loss), net in 2010 of $(3.5) million included a translation loss of $(3.7) million on intercompany obligations partially offset by interest income. Other income (loss), net in 2009 of $1.3 million primarily included a translation gain of $4.5 million on intercompany obligations and interest income of $1.1 million, partially offset by losses on our interest rate swaps.

Income Tax Provision (Benefit).    We reported an income tax benefit of $(14.5) million for 2010, as compared to a benefit of $(1.3) million for 2009. Our effective tax rates were (27.4)% for 2010 and (1.5)% for 2009.

Our effective tax rate reflects tax benefits derived from significant operations in the United States, which are generally taxed at rates higher than the foreign statutory rates. A change in the mix of pretax income from the various tax jurisdictions can have a significant impact on the Company's periodic effective tax rate.

In 2010, our effective tax rate reflected the following:

A net benefit of approximately $(8.5) million related to the implementation of tax planning strategies.
A net benefit of approximately $(2.4) million related to amounts required to be recorded for changes to our uncertain tax positions under Interpretation No. 48, including interest and penalties (see Note 11 of Notes to Consolidated Financial Statements).
A net charge of approximately $8.0 million related to foreign dividends taxed in the United States at the statutory rate of 35%.

In 2009, our effective tax rate reflected the following:

48



The impact of an approximate 25.9% combined effective tax rate on the restructuring activities.
A net benefit of approximately $(9.1) million related to amounts required to be recorded for changes to our uncertain tax positions under Interpretation No. 48, including interest and penalties (see Note 11 of Notes to Consolidated Financial Statements).
A net charge of an approximate $3.8 million related to foreign dividends taxed in the United States at the statutory rate of 35%.

Net Loss.    Our net loss was $(38.5) million for 2010, as compared to a net loss of $(85.6) million for 2009.

Liquidity and Capital Resources

Our principal sources of liquidity are cash and cash equivalents, cash from operations and borrowings under the ABL Credit Facility. As of December 30, 2011, we had cash and cash equivalents of $14.3 million. Net cash provided by operating activities was $18.6 million for the year ended December 30, 2011 compared to net cash provided by operating activities of $4.1 million for the year ended December 31, 2010. As of December 30, 2011, we had $10.2 million outstanding and availability of $46.9 million under the ABL Credit Facility. In February of 2012, the Company's wholly owned subsidiary in the Netherlands, Euramax Coated Products, B.V., entered into a Facility Agreement, which we refer to as the Dutch Revolving Credit Facility. This facility provides revolving credit financing of up to EUR 15 million. Refer to the following section titled Dutch Revolving Credit Factility for further information.

Our ability to make payments on and to refinance our indebtedness, to fund planned capital expenditures and to satisfy our other capital and commercial commitments will depend on our ability to generate cash flow in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We believe our December 30, 2011 cash levels, together with our cash from operations and borrowings under the ABL Credit Facility, will be adequate to fund our cash requirements based on our current level of operations for at least the next twelve months.

Restructuring

On June 29, 2009, we, the holders of substantially all of our then-existing equity securities and management shareholders agreed to a restructuring of indebtedness owed to our then-existing equity sponsors, amounts owed to lenders under the then-existing first and second lien credit agreements and amounts owed to counterparties under the then-existing interest rate swaps (the "Restructuring"). Under the terms of the Restructuring, lenders cancelled 100% of amounts owed under the second lien credit agreement consisting of principal and accrued interest of $191 million and $12 million, respectively, in exchange for 100% of the issued and outstanding common stock of Euramax Holdings, as of the date of the Restructuring. The common stock was issued to lenders in proportion to their holdings of the second lien loans prior to the Restructuring. As a result, we recorded the fair value of equity securities issued (less associated fees) as a credit to paid-in capital and recognized a pretax extinguishment gain of $8.7 million on the exchange. Our then-existing equity sponsors also cancelled all of our then-outstanding payment in kind notes, consisting of $195.4 million of principal and $1.4 million of accrued interest, in connection with the Restructuring.

Also under the terms of the Restructuring, lenders under the First Lien Credit Facility, together with counterparties to our interest rate swaps, amended and restated the then-existing First Lien Credit Facility to, among other items, split the sum of amounts owed under the first lien secured revolving credit facility ($77.5 million), the U.S. dollar term loan facility ($304.8 million), the European term loan facility ($109.3 million) and the interest rate swaps ($18.9 million) into two components consisting of a cash pay portion (the "Cash Pay Loan") and a payment-in-kind portion (the "PIK Loan"). Immediately following the Restructuring, principal balances owed under the Cash Pay Loan and PIK Loan were $261.2 million (including capitalized fees of $1.3 million) and $251.8 million (including accrued interest and capitalized fees of $14.9 million), respectively. On the Restructuring date, debt issuance costs of $2.5 million were capitalized in connection with the amendment and restatement of the First Lien Credit Facility. In connection with the Restructuring, the holders of our then-existing equity securities lost the entire value of their investment.

The Restructuring was preceded by a series of forbearance and limited waiver agreements in place from November 10, 2008 to the Restructuring date. Under the forbearance agreements, lenders under the then-existing first and second lien credit agreements and our then-existing accounts receivable facility agreed to forbear from exercising their rights, including accelerating repayment of the outstanding debt, with respect to named events of default primarily related to financial covenant compliance. The forbearance agreements contained, among other items, a minimum liquidity requirement and restrictions on distributions of cash. During the period of forbearance, we were restricted from borrowing under the then-existing first lien

49


revolving credit facility. In 2008, we recognized interest expense of $21.6 million representing the accelerated amortization of remaining deferred financing fees to coincide with the term of the first forbearance. In 2009, we recognized interest expense of $5.5 million representing fees and expenses relating to obtaining forbearances.

Notes

On March 11, 2011, our subsidiary Euramax International Inc. ("Euramax International") issued $375 million aggregate principal amount of 9.50% Senior Secured Notes due 2016, which we refer to as the Notes. The Notes were issued at par in a private placement exempt from the registration requirements under the Securities Act of 1933, as amended (the "Securities Act"). The Notes were issued pursuant to an indenture, dated March 18, 2011, among Euramax International, Euramax Holdings and certain of our domestic subsidiaries and Wells Fargo Bank, National Association, as trustee, which we refer to as the Trustee. The offering of the Notes closed on March 18, 2011. We used the net proceeds from the Notes, together with cash on hand, the net proceeds from the Senior Unsecured Loan Facility and borrowings under the ABL Credit Facility, to repay the First Lien Credit Facility in full.

The Notes bear interest at 9.50% per year and mature on April 1, 2016, unless earlier redeemed or repurchased by Euramax International. Interest is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2011. The Notes are guaranteed by Euramax Holdings and all of our domestic subsidiaries subject to limited exceptions. The Notes are secured by a first priority security interest in (i) substantially all of the assets of Euramax International and the guarantors(other than inventory and accounts receivable and related assets, which assets secure the ABL Credit Facility on a first priority basis) and (ii) all of Euramax International's capital stock and the capital stock of each material domestic restricted subsidiary owned by Euramax International or a guarantor and 65% of the voting capital stock and 100% of any non-voting capital stock of foreign restricted subsidiaries directly owned by us or a guarantor, and a second priority security interest in our inventory, receivables and related assets.

The Notes may be redeemed at Euramax International's option, in whole or in part, under the conditions specified in the indenture plus accrued and unpaid interest to the redemption date, at the following redemption prices if redeemed during the 12-month period beginning on April 1 of the years indicated:

Year
Percentage
2013
107.125
%
2014
104.750
%
2015 and thereafter
100.000
%

Additionally at any time on or before April 1, 2013, Euramax International may redeem (a) the greater of (i) $37.5 million and (ii) up to 10% of the aggregate principal amount of the Notes at any time and from time to time, but not more than once in any twelve-month period, at a price equal to 103% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption; (b) up to 35% of the aggregate principal amount of the Notes issued with the net proceeds of certain equity offerings at a price equal to 109.50% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption; or (c) on any one or more occasions, all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus an Applicable Premium (as defined in the indenture), and accrued and unpaid interest, if any, to the date of redemption.

The indenture contains restrictive covenants that limit, among other things, the ability of Euramax International and certain of its subsidiaries to incur additional indebtedness, pay dividends and make certain distributions, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and enter into certain transactions with affiliates, in each case, subject to exclusions and other customary covenants. The indenture also contains customary events of default. If we undergo a change of control (as defined in the indenture), Euramax International will be required to make an offer to repurchase the Notes at 101% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption.

ABL Credit Facility

On March 18, 2011, Euramax Holdings, Euramax International, certain of our domestic subsidiaries as borrowers, and certain of our domestic subsidiaries as guarantors, entered into the Amended and Restated Senior Secured Revolving Credit and Guaranty Agreement, which we refer to as the ABL Credit Facility, with various lenders, Regions Bank, as Collateral and Administrative Agent, Wells Fargo Capital Finance, LLC, as Co-Collateral Agent, and Regions Business Capital, as Sole Lead

50


Arranger and Bookrunner. The ABL Credit Facility provides for revolving credit financing of up to $70 million, subject to a borrowing base. The ABL Credit Facility matures on September 18, 2015.

Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to either (a) LIBOR plus an applicable margin or (b) a base rate determined by reference to the highest of (1) the prime commercial lending rate published by Regions Bank as its "prime rate" for commercial loans, (2) the federal funds effective rate plus 0.50% and (3) the one-month LIBOR plus 1.00%, plus an applicable margin. The applicable margin is dependent upon the type of borrowings Euramax International has made under the ABL Credit Facility. At December 30, 2011, the applicable margins were 2.50% and 1.50% for LIBOR and Base Rate borrowings, respectively. The applicable margins are subject to the Company's corporate credit rating as determined from time to time by Standard and Poor's and Moody's Investors Service and range from 2.00% to 2.75% for LIBOR borrowings and 1.00% to 1.75% for Base Rate borrowings. The ABL Credit Facility requires Euramax International to pay a commitment fee ranging from 0.375% to 0.5%, based on the unutilized commitments. Euramax International is also required to pay customary letter of credit fees, including, without limitation, a letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.

All obligations under the ABL Credit Facility are unconditionally guaranteed by Euramax Holdings and substantially all of our existing and future direct and indirect, wholly owned domestic restricted subsidiaries which are not borrowers. All obligations under the ABL Credit Facility and the guarantees of those obligations are secured, subject to certain exceptions, by a first-priority security interest in Euramax International's and the guarantors' inventory and accounts receivable and related assets, which we refer to as the ABL Collateral, and a junior-priority security interest in (i) substantially all of Euramax International's and the guarantors' assets (other than inventory and accounts receivable and related assets, which assets secure the ABL Credit Facility on a first priority basis) and (ii) all of Euramax International's capital stock and the capital stock of each material domestic restricted subsidiary owned by Euramax International or a guarantor and 65% of the voting capital stock and 100% of any non-voting capital stock of foreign restricted subsidiaries directly owned by Euramax International or a guarantor, which we refer to collectively as the Notes Collateral. The security interests are granted in accordance with the Amended and Restated Pledge and Security Agreement dated March 18, 2011, by and among Euramax Holdings, the other grantors party thereto and Regions Bank as Agent.

The ABL Credit Facility contains affirmative and negative covenants customary for this type of financing, including, but not limited to, financial covenants requiring Euramax International to meet a minimum consolidated fixed charge coverage ratio of at least 1.15 to 1.00 when excess availability is less than 15% of the lesser of the aggregate amount of commitments outstanding at such time and the borrowing base. As of December 30, 2011, excess availability exceeded 15% of the borrowing base, and therefore, Euramax International was not required to meet the minimum consolidated fixed charge coverage ratio. Additionally, restrictive covenants limit the ability of Euramax Holdings, Euramax International, and certain of our subsidiaries to incur liens, incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations, consolidate, merge or sell all or substantially all of their assets, pay dividends or make other distributions, make certain loans and investments, amend or otherwise alter the terms of documents related to certain of their indebtedness, enter into transactions with affiliates and prepay certain indebtedness, in each case, subject to exclusions and other customary covenants.

Senior Unsecured Loan Facility

On March 3, 2011, Euramax International, Euramax Holdings and certain of our domestic subsidiaries, as guarantors, entered into a credit and guaranty agreement for a new Senior Unsecured Loan Facility (the "Senior Unsecured Loan Facility") in the aggregate principal amount of $125.0 million with certain lenders under the First Lien Credit Facility, and agreed to exchange a combination of outstanding loans they previously made under the First Lien Credit Facility and cash in the aggregate amount of $122.5 million for $125.0 million aggregate principal amount of indebtedness under the Senior Unsecured Loan Facility. Proceeds from the Senior Unsecured Loan Facility were borrowed on March 18, 2011 and will mature on October 1, 2016. Loans under the Senior Unsecured Loan Facility bear interest at 12.25% per year in the event no election is made to pay interest in kind ("PIK") by increasing the principal amount of the Notes, and 14.25% per year in the event a PIK election is made. Euramax International may make a PIK election for up to six quarters during the term of the Senior Unsecured Loan Facility. The interest rate on outstanding borrowings under the Senior Unsecured Loan Facility at December 30, 2011 was 12.25% as Euramax International has not made a PIK election.

51



The Senior Unsecured Loan Facility may not be voluntarily prepaid before March 18, 2013. Thereafter, Euramax International may prepay outstanding amounts under the Senior Unsecured Loan Facility, in whole or in part, at the prices (expressed as a percentage of the loans) set forth below:

Prepayment Date
Percentage
On or after March 18, 2013 but prior to March 18, 2014
103
%
On or after March 18, 2014 but prior to March 18, 2015
102
%
On or after March 18, 2015
100
%

Additionally, at any time before March 18, 2013, Euramax International may on one or more occasions prepay up to 35% of the aggregate principal amount of the loans outstanding on the closing date at 112.25%, plus accrued and unpaid interest with the net cash proceeds of one or more qualified equity offerings. Upon a change of control, Euramax International may be required to repay all or a portion of the Senior Unsecured Loan Facility at a price equal to 101% of the principal amount plus accrued and unpaid interest. All obligations under the Senior Unsecured Loan Facility are unconditionally guaranteed by Euramax Holdings and substantially all of our existing and future direct and indirect wholly-owned domestic restricted subsidiaries subject to certain exceptions.

The Senior Unsecured Loan Facility contains restrictive covenants that limit, among other things, the ability of Euramax International and certain of our subsidiaries to incur additional indebtedness, pay dividends and make certain distributions, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and enter into certain transactions with affiliates, in each case, subject to exclusions and other customary covenants.

The Senior Unsecured Loan Facility contains certain customary representations and warranties, affirmative covenants and events of default, including among other things, payment defaults, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, material judgments, and failure of any guaranty supporting the Senior Unsecured Loan Facility to be in force and effect in any material respect. If such an event of default occurs, the administrative agent would be entitled to take various actions, including the acceleration of amounts due under the Senior Unsecured Loan Facility and all actions permitted to be taken by an unsecured creditor.

First Lien Credit Facility

Euramax International's amended and restated first lien credit agreement (the "First Lien Credit Facility") consisted of $525.3 million in term loans in the form of the Cash Pay Loan and the PIK Loan. The Cash Pay Loan and PIK Loan each included (i) a U.S. dollar term loan facility (the "U.S. Dollar Term Loan Facility") and (ii) Euro and British pound sterling term loan facilities (together the "European Term Loan Facility"). Euramax International and Euramax International Holdings B.V. were the borrowers (collectively, the "U.S. Borrowers") under the U.S. Dollar Term Loan Facility. Our subsidiaries Euramax Holdings Limited, Euramax Europe B.V. and Euramax Netherlands B.V. were the borrowers (collectively, the "European Borrowers") under the European Term Loan Facility. Outstanding amounts under the First Lien Credit Facility totaling approximately $514.7 million were repaid in the first quarter of 2011 with the proceeds of the Notes and the Senior Unsecured Loan Facility. The First Lien Credit Facility was terminated in March 2011.

Covenant Ratios Contained in the Indenture Governing the Notes, the ABL Credit Facility and the Senior Unsecured Loan Facility.    

The indenture governing the Notes and the Senior Unsecured Loan Facility contain two material covenants which utilize financial ratios. These covenants do not require Euramax International to maintain specified ratio levels at all times or at regular intervals. However, if Euramax International elected to incur additional indebtedness under the ratio test without having availability under other debt baskets, or make restricted payments under the restricted payment covenant without having availability under our restricted payment baskets, non-compliance with these covenants could result in an event of default under the indenture and, under certain circumstances, a requirement to immediately repay all amounts outstanding under the Notes and could trigger a cross-default under our senior secured credit facilities or other indebtedness Euramax International may incur in the future. First, Euramax International is permitted to incur indebtedness under the indenture and the Senior Unsecured Loan Facility if the ratio of Consolidated Cash Flow to Fixed Charges on a pro forma basis (referred to in the indenture and the Senior Unsecured Loan Facility as the "Fixed Charge Coverage Ratio") is greater than 2:1 or, if the ratio is less, only if the indebtedness falls into specified debt baskets, including, for example, a credit agreement debt basket, an

52


existing debt basket, a capital lease and purchase money debt basket, an intercompany debt basket, a permitted guarantee debt basket, a hedging debt basket, a receivables transaction debt basket and a general debt basket. In addition, under the indenture and Senior Unsecured Loan Facility, Euramax International is permitted to incur secured debt only if the ratio of Consolidated Secured Indebtedness to Consolidated Cash Flow on a pro forma basis (referred to in the indenture and the Senior Unsecured Loan Facility as the "Secured Debt Ratio") is equal to or less than 3.75:1.00. Second, the restricted payment covenant provides that Euramax International may declare certain dividends, or repurchase equity securities, in certain circumstances only if the Fixed Charge Coverage Ratio is greater than 2:1. In addition, under the ABL Credit Facility, Euramax International is required to meet a minimum consolidated fixed charge coverage ratio of at least 1.15:1.00 when excess availability is less than 15% of the lesser of the aggregate amount of commitments outstanding at such time and the borrowing base.

As used in the calculation of the Fixed Charge Coverage Ratio and the Secured Debt Ratio under the indenture, Consolidated Cash Flow, commonly referred to as Adjusted EBITDA, is calculated by adding Consolidated Net Income, provision for taxes based on income or profits or capital gains, Fixed Charges, the amount of any minority interest expense, depreciation and amortization and other non-cash expenses or charges, the amount of any integration costs or other business optimization expenses or costs deducted (and not added back) in such period in computing Consolidated Net Income incurred in connection with acquisitions, any extraordinary, non-recurring or unusual gain or loss or expense, together with any related provision for taxes, to the extent deducted in computing such Consolidated Net Income, the amount of cash restructuring charges not to exceed (x) $10.0 million in any twelve month period and (y) $25.0 million in the aggregate (through the maturity of the Notes), to the extent deducted in computing such Consolidated Net Income, and subtracting non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business.

In calculating the ratios, Consolidated Cash Flow is further adjusted on an annual basis by giving pro forma effect to acquisitions, dispositions, refinancings, restructurings and operating changes that occurred in the prior four quarters, including certain cost savings and synergies expected to be obtained in the succeeding twelve months. In addition, the term Net Income is adjusted to exclude any dividends on preferred stock, and the term Consolidated Net Income is adjusted to exclude, among other things, the non-cash impact attributable to the application of the purchase method of accounting in accordance with GAAP and the cumulative effect of a change in accounting principles.

The following table sets forth the Fixed Charge Coverage Ratio, Secured Debt Ratio, Consolidated Cash Flow ("Adjusted EBITDA"), Fixed Charges and Consolidated Secured Indebtedness as of and for the twelve months ended December 30, 2011:

 
 
 
Ratios
(unaudited)
(dollars in millions)
Covenant Measure
 
As of and for the
Twelve Months Ended
December 30, 2011
Fixed Charge Coverage Ratio under the Indenture(1)
Minimum of 2.0x
 
1.02x
Fixed Charge Coverage Ratio under the ABL Credit Facility(2)
Minimum of 1.15x
 
1.02x
Secured Debt Ratio under the Indenture(1)
Maximum of 3.75x
 
6.61x
_______________________________________
(1)
The Fixed Charge Coverage Ratio and the Secured Debt Ratio under the indenture and the Senior Unsecured Loan Facility only limit the ability of Euramax International to incur additional indebtedness. As of December 30, 2011, Euramax International did not meet the Fixed Charge Coverage Ratio and the Secured Debt Ratio under the indenture and the Senior Unsecured Loan Facility. However, since Euramax International has not incurred any additional indebtedness or made any restricted payments pursuant to the provisions in the indenture and the Senior Unsecured Loan Facility that rely on such ratios, there are no events of default or other penalties incurred as a result of not meeting the minimum or exceeding the maximum ratios.
(2)
Under the ABL Credit Facility, Euramax International is only required to meet a minimum consolidated fixed charge coverage ratio when excess availability is less than 15%. As of December 30, 2011, because excess availability under the ABL Credit Facility exceeded 15% of the borrowing base, Euramax International was not required to meet the minimum consolidated fixed charge coverage ratio under the ABL Credit Facility.
Dutch Revolving Credit Facility

In February 2012, our wholly owned subsidiary in the Netherlands, Euramax Coated Products, BV, entered into the Dutch Revolving Credit Facility, with Rabobank Roermond (Rabobank). The Dutch Revolving Credit Facility provides revolving credit financing of up to EUR 15 million and matures on April 1, 2016. Borrowings under the Dutch Revolving Credit Facility bear interest at a rate per annum which is the aggregate of the average one month Euribor rate over a

53


calendar month plus a margin of 2% and requires payment of a Credit Fee of .35% per annum on the nominal amount of the credit facility. All obligations under the Dutch Revolver are secured by a mortgage on the real estate of Euramax Coated Products, BV, a pledge on present and future machinery of Euramax Coated Products, BV, and a pledge on present and future accounts receivable balances of Euramax Coated Products, BV.

Cash Flows
(in thousands)
Year Ended December 30, 2011
 
Year Ended December 31, 2010
 
Year Ended December 25, 2009
Net cash provided by operating activities
$
18,596

 
$
4,133

 
$
59,482

Net cash used in investing activities
(9,717
)
 
(9,482
)
 
(2,026
)
Net cash used in financing activities
(17,634
)
 
(37,046
)
 
(35,929
)
Effect of exchange rate changes on cash
(1,820
)
 
(2,647
)
 
(241
)
Net (decrease) increase in cash and cash equivalents
$
(10,575
)
 
$
(45,042
)
 
$
21,286


Year Ended December 30, 2011 Compared to the Year Ended December 31, 2010 and Year Ended December 25, 2009.

Operating Activities.    Cash provided by operating activities in 2011 was $18.6 million compared to $4.1 million during 2010. This increase in cash flows provided by operating activities was attributable to reductions in working capital changes and in the timing of interest payments compared to the prior year. In 2011, the Company implemented initiatives to reduce inventory levels and other working capital requirements. Additionally, the timing of interest payments on the Company's Senior Secured Credit Facility had a positive impact on operating cash flow when compared to the prior year. Accrued interest of approximately $8.9 million was outstanding as of December 30, 2011. In 2010, interest payments on the then-existing First Lien Credit Facility were made prior to year-end which resulted in a decrease to operating cash flow.

Cash provided by operating activities in 2010 was $4.1 million. The primary use of cash during 2010 was to fund increases in working capital necessary to support net sales growth. We did not experience this working capital increase in 2009 due to lower levels of sales activity resulting from economic difficulties in many of our markets.

Cash provided by operating activities in 2009 was $59.5 million, which included reductions in accounts receivable and inventory of $17.9 million and $45.1 million, respectively. The decline in accounts receivable was primarily related to lower sales volumes in 2009 compared to 2008. The decline in inventory was primarily due to initiatives we have undertaken to reduce our investment in inventory through the integration of sales, inventory and operational planning activities. These initiatives contributed to inventory reductions in both 2009 and 2008 of $45.1 million and $45.0 million, respectively.

Investing Activities.    Cash used in investing activities in 2011 was $9.7 million. Capital expenditures of $10.2 million were offset by asset sales of $0.4 million in 2011.

Cash used in investing activities in 2010 was $9.5 million. Capital expenditures of $12.2 million in 2010 were offset by $2.7 million of proceeds from the sale of assets in 2010.

Cash used in investing activities in 2009 was $2.0 million. Capital expenditures of $4.4 million in 2009 were offset by $2.3 million of proceeds from the sale of assets.

Financing Activities.    Net cash used in financing activities during 2011 was $17.6 million. Net borrowings under the ABL Credit Facility of $10.2 million and borrowings from the issuance of the Notes during 2011 totaling $375.0 million were offset by cash payments of $412.0 million to settle outstanding borrowings under the First Lien Credit Facility of $514.7 million. The remaining $102.7 million in outstanding loans under the First Lien Credit Facility were exchanged by various lenders along with cash of $19.8 million in exchange for $125.0 million aggregate principal amount of indebtedness under the Senior Unsecured Loan Facility. Payments of debt issuance costs totaled $10.6 million.

Cash used in financing activities during 2010 consisted of $37.0 million of net repayments of debt outstanding under the First Lien Credit Facility.

54



Cash used in financing activities during 2009 was $35.9 million. The use of cash in financing activities in 2009 mainly reflects the repayment of our accounts receivable securitization facility and debt issuance costs in connection with the restructuring of the then-existing First Lien Credit Facility and with entering into the then existing revolving credit facility.

Capital Expenditures

Our capital expenditures in 2011, 2010 and 2009 were $10.2 million, $12.2 million and $4.4 million, respectively. Capital expenditures related to the implementation of our ERP system in the United States were $1.5 million, $1.9 million and $0.9 million in 2011, 2010 and 2009, respectively. The balance of capital expenditures in each period relates primarily to purchases and upgrades of coil coating, fabricating, transportation and material moving and handling equipment.

We have made and will continue to make capital expenditures to comply with environmental laws and regulations. Our environmental capital expenditures for the year ending December 30, 2011 were not significant.

Working Capital Management

Working capital decreased $30.1 million, or 25.0%, to $90.4 million as of December 30, 2011 from $120.5 million as of December 31, 2010. The working capital reduction resulted from successful sales, inventory and operational planning initiatives undertaken by the Company. Changes in the timing of interest payments increased cash provided by operating activities in 2011 by $8.1 million compared to 2010.

Inventories of $83.4 million as of December 30, 2011 decreased $6.8 million, or 7.5%, from $90.2 million as of December 31, 2010, primarily as a result of inventory rationalization initiatives aimed at reducing inventory levels and other working capital requirements. As of December 30, 2011, days sales in inventories were 38.7 days, compared to 45.7 days as of December 31, 2010.

Accounts receivable of $83.2 million as of December 30, 2011 decreased $0.5 million, or 0.6%, from $83.7 million as of December 31, 2010. As of December 30, 2011, days sales outstanding in accounts receivable were 32.4 days, compared to 35.1 days as of December 31, 2010.

Accounts payable of $54.3 million as of December 30, 2011 increased $3.9 million, or 7.7%, from $50.4 million as of December 31, 2010. Higher accounts payable balances reflect less restrictive credit terms, which increased trade credit availability, as a result of our debt refinancing during 2011.

Accrued interest payable of $8.9 million as of December 30, 2011 increased $8.1 million from $0.8 million as of December 31, 2010. This increase resulted from the timing of interest payments on the Company's Senior Secured Notes which are not payable until April 1, 2012. In 2010, interest payments related to the First Lien Credit Facility were paid prior to December 31, 2010.

55



Capital and Commercial Commitments

In addition to long-term debt, we are required to make payments relating to various types of obligations. The following table summarizes our minimum payments as of December 30, 2011 relating to long-term debt, operating leases, unconditional purchase obligations and other specified capital and commercial commitments. This table does not include information on our recurring purchases of materials for use in production, as our raw materials purchase contracts do not require fixed or minimum quantities. These tables also exclude payments relating to income tax due to the fact that, at this time, we cannot determine either the timing or the amounts of payments for all periods beyond 2011 for certain of these liabilities. Future events could cause actual payments to differ from these amounts. See "Cautionary Statement Regarding Forward-Looking Statements."

 
Payments Due by Period
 
Total
 
Less than
1 year
 
1-3 years
 
3-5 years
 
More than
5 years
 
(in millions)
Contractual Obligations(1)
 
 
 
 
 
 
 
 
 
Long-term debt(2)
$
510

 
$
10

 
$

 
$
500

 
$

Interest on long-term debt(3)
224

 
51

 
102

 
71

 

Non-cancellable operating leases(4)
20

 
12

 
7

 
1

 

Unconditional purchase obligations
21

 
21

 
 
 

 

Total
$
775

 
$
94

 
$
109

 
$
572

 
$

_______________________________________
(1)
Income tax liabilities, including accrued interest and penalties related to unrecognized tax benefits, totaling $14.2 million, are not included in this table as the settlement period for our income tax liability cannot be determined.
(2)
Long-term debt amortization is based on the contractual terms of our credit facilities and assumes no additional borrowings under the ABL Credit Facility.
(3)
Interest payments are based on interest rates in effect at December 30, 2011.
(4)
We lease various facilities and equipment under non-cancelable operating leases for various periods.

In addition, we sponsor defined benefit pension plans for the benefit of certain of our employees located in the United Kingdom (the "UK Plan") and the United States (the "U.S. Plan"). We curtailed the accrual of participant benefits under the UK Plan effective March 31, 2009. At December 30, 2011 the fair market value of the UK Plan assets was $26.1 million, or $19.6 million less than the projected benefit obligation of the UK Plan. In the first quarter of 2010, we froze future benefit accruals under our U.S. defined benefit pension plan. At December 30, 2011 the fair market value of the U.S. Plan assets was $7.2 million, or $4.6 million less than the projected benefit obligation of the U.S. Plan.

Credit Ratings

Our current credit ratings, which are considered non-investment grade, were as follows:

 
Moody's
 
Standard
and Poor's
Long-term debt
Caa1
 
B-
Outlook
STABLE
 
STABLE

Our current credit ratings, as well as any adverse future actions taken by the rating agencies with respect to our debt ratings, could negatively impact our ability to finance our operations on satisfactory terms and could have the effect of increasing our financing costs. Our debt instruments do not contain provisions requiring acceleration of payment upon a debt rating downgrade. The rating agencies may, in the future, revise the ratings on our outstanding debt.

The above information regarding credit ratings and ratings outlook assigned to our indebtedness by Moody's and Standard & Poor's are opinions of our ability to meet our ongoing obligations. Credit ratings are not recommendations to buy, sell or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency. Each agency's rating should be evaluated independently of any other agency's rating.


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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality; Inflation

Our sales volumes have historically been higher in the second and third quarters due to the seasonal demand of the building products markets served. First and fourth quarter sale volumes are generally lower primarily due to reduced repair and remodel activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in our geographic end markets, as well as customer plant shutdowns in the RV and automotive industries during holidays and model changeovers.

Our cost of goods sold is subject to inflationary pressures and price fluctuations of the raw materials we use, particularly the cost of aluminum and steel. In addition, we are party to certain leases that contain escalator clauses contingent on increases based on changes in the Consumer Price Index. We believe that inflation and/or deflation had a minimal impact on our overall operations during the fiscal years 2011, 2010 and 2009.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. GAAP. In order to apply these principles, management must make judgments, assumptions and estimates based on the best available information at the time. Actual results may differ based on the accuracy of the information utilized and subsequent events. Our accounting policies are described in the notes to our audited financial statements included elsewhere in this report. Our critical accounting policies, which are described below, could materially affect the amounts recorded in our financial statements. Management believes that the following policies are critical because they involve significant judgment, assumptions and estimates.

Allowance for Doubtful Accounts, Inventory Realizability and Obsolescence and Warranty Reserves

We record trade accounts receivable at net realizable value. This value includes an allowance for doubtful accounts based on historical experience, current economic conditions and an evaluation of the relevant customer's credit worthiness. We charge off accounts receivable against the allowance for doubtful accounts when it is probable that the receivable will not be recovered.

Our inventories are stated at the lower of cost or market, with cost determined under the first-in, first-out (FIFO) method. Cost of manufactured inventory includes direct labor and manufacturing overhead. Market with respect to all inventories is replacement cost subject to a floor for an approximate normal profit margin on disposition.

We provide warranties on certain products. The warranty periods differ depending on the product, but generally range from one year to limited lifetime warranties. We provide accruals for warranties based on historical experience and expectations of future occurrences.

We make estimates and assumptions related to establishing reserves and allowances for doubtful accounts, inventory obsolescence and warranty costs. Ranges of estimates are developed based upon historical experience, specifically identified conditions and management expectations for the future occurrence of certain events. In the event that actual results differ from these estimates or we adjust these estimates in future periods, adjustments to the amounts recorded could materially impact our financial position and results of operations. Historically, our experience has not been materially different than our estimates. There have been no significant changes in the assumptions used to develop our estimates in establishing reserves and allowances for doubtful accounts, inventory obsolescence and warranty costs from fiscal year 2009 to fiscal year 2011 and no significant changes are anticipated for fiscal year 2012.

Property, Plant and Equipment

We record property, plant and equipment at cost. Cost of property, plant and equipment acquired in a business combination is recorded at fair value based on the age and current replacement cost for similar assets on the date of the acquisition. We generally expense repair and maintenance costs unless they extend the useful lives of assets. Depreciation of property, plant and equipment is computed principally on the straight-line method over the estimated useful lives of the assets ranging from 3 to 37 years for equipment and from 17 to 25 years for buildings. Gains and losses related to the disposition of property, plant and equipment are charged to other income or expense when incurred. Also, when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, management assesses whether there has been

57


an impairment in the value of the asset by comparing the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition to the carrying amount of the asset. If the expected future cash flows are less than the carrying amount of the asset, an impairment loss is recognized based on the excess of the asset's carrying value over its fair value. Fair value is estimated based on discounted cash flows, independent appraisals or comparable market transactions.

Goodwill and Intangible Assets

Our goodwill represents the excess of the purchase price we pay in a business combination over the fair value of net tangible and identifiable intangible assets acquired. We test our goodwill for impairment annually or more frequently if events or circumstances indicate the potential for impairment. In 2010, we performed our impairment test on the last day of our fiscal year. For fiscal year 2011, we have made an accounting policy election to perform our annual impairment test on the first day of our fourth quarter. We believe this change is preferable as it provides additional time to quantify the fair value of our reporting units and also reduces the likelihood that the annual impairment analysis would not be completed by the filing date of our annual financial statements. This change in accounting policy will not delay, accelerate or avoid an impairment charge and does not result in adjustments to our financial statements when applied retrospectively. For impairment testing purposes, we have identified six reporting units at the operating segment level, primarily based upon the nature of discrete businesses comprising our operations. As of December 30, 2011, goodwill has been allocated to four of the identified reporting units. Two operating segments are below the required quantitative thresholds and have been aggregated into one reporting segment, European Engineered Products.

The impairment test for goodwill is a two step process. If the carrying value of the reporting unit exceeds its fair value, the goodwill is potentially impaired and the implied fair value of goodwill must be determined by estimating the fair value of the reporting units and allocating such value to the tangible and identifiable intangible assets of each reporting unit. If the carrying amount of a reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized equal to the excess of the carrying amount of goodwill over its implied fair value. We determine the fair value of each reporting unit based on an income approach, using a discounted cash flow analysis, and a market valuation approach, using market multiples of publicly traded guideline companies. The discounted cash flow analysis requires various judgmental assumptions about future cash flows, growth rates, and weighted average cost of capital. The assumptions about future cash flows and growth rates are based on an assessment of the business plans of each reporting unit. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units.

No goodwill impairment indicators were identified and no impairment charges were recorded based upon impairment testing performed as of October 1, 2011 or December 31, 2010.

The following table is a summary of the key assumptions and results of our step-one test as of October 1, 2011, comparing the fair value of each reporting unit to the carrying value:

 
Key Assumptions
 
 
 
 
Reporting Units
Discount
Rate
 
Terminal
Growth Rate
 
% Fair Value Exceeds Carrying Value as of
October 1, 2011
 
Goodwill as of
October 1, 2011
 
 
 
 
 
 
 
(in thousands)
U.S. Residential Building Products
11.25
%
 
3.0
%
 
108.2
%
 
$
65,942

U.S. RV and Specialty Building Products
11.25
%
 
3.0
%
 
11.9
%
 
15,112

European Roll Coated Aluminum
11.25
%
 
3.0
%
 
53.9
%
 
103,292

European Engineered Products
 
 
 
 
 

 
 
Ellbee Limited
11.25
%
 
3.0