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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 2014
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to                                     
Commission File No.  333-05978
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)
 
303 Research Drive, Suite 400,
Norcross, GA
(Address of principal executive offices)
 
30092 
(Zip Code)
 

Registrant’s Telephone Number, Including Area Code: (770) 449-7066

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 (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x*
 
* The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports that would have been required during the preceding 12 months, had it been subject to such filing requirements.

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations 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 x No ¨
 
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 x
 (Do not check if a smaller reporting company)
 
 
Smaller reporting company o
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

There were 195,502 shares of the registrant’s common stock, par value $1.00 per share, issued and outstanding as of November 7, 2014, none of which are publicly traded.




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS



 
 
 
 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
Item 1.
Item 1A.
Item 6.












Part I. Financial Information

Item 1. Financial Statements (unaudited)

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
September 26,
2014
 
December 31,
2013
ASSETS
(unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
3,235

 
$
8,977

Accounts receivable, less allowances of $1,541 and $2,235, respectively
111,167

 
73,996

Inventories, net
120,178

 
89,760

Income taxes receivable
542

 
982

Deferred income taxes
575

 
580

Other current assets
8,120

 
7,008

Total current assets
243,817

 
181,303

Property, plant and equipment, net
116,351

 
130,114

Goodwill
195,342

 
204,053

Customer relationships, net
29,942

 
40,631

Other intangible assets, net
6,599

 
7,073

Deferred income taxes
419

 
87

Other assets
6,464

 
8,712

Total assets
$
598,934

 
$
571,973

LIABILITIES AND SHAREHOLDERS’ DEFICIT
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
94,686

 
$
57,262

Accrued expenses and other current liabilities
30,558

 
26,366

Accrued interest payable
21,770

 
9,020

   Current portion of long-term debt
8,253

 

Deferred income taxes
559

 
605

Total current liabilities
155,826

 
93,253

Long-term debt
540,812

 
535,396

Deferred income taxes
18,159

 
18,980

Other liabilities
31,310

 
32,907

Total liabilities
746,107

 
680,536

Shareholders’ deficit:
 
 
 
Common stock
195

 
195

Additional paid-in capital
724,443

 
724,071

Accumulated loss
(882,544
)
 
(843,750
)
Accumulated other comprehensive income
10,733

 
10,921

Total shareholders’ deficit
(147,173
)
 
(108,563
)
Total liabilities and shareholders’ deficit
$
598,934

 
$
571,973

 
See the accompanying notes to these condensed consolidated financial statements.

1



EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)



 
Three months ended
 
Nine months ended
 
September 26,
2014
 
September 27,
2013
 
September 26,
2014
 
September 27,
2013
Net sales
$
239,942

 
$
227,835

 
$
642,836

 
$
630,241

Costs and expenses:
 
 
 
 
 

 
 

Cost of goods sold (excluding depreciation and amortization)
202,160

 
188,792

 
542,208

 
528,423

Selling and general (excluding depreciation and amortization)
17,413

 
20,387

 
55,379

 
59,767

Depreciation and amortization
8,142

 
8,514

 
24,595

 
25,557

Other operating charges
1,051

 
1,455

 
4,357

 
5,355

Income from operations
11,176

 
8,687

 
16,297

 
11,139

Interest expense
(13,895
)
 
(13,805
)
 
(41,574
)
 
(41,257
)
Other (loss) income, net
(14,056
)
 
8,295

 
(14,376
)
 
4,061

(Loss) income before income taxes
(16,775
)
 
3,177

 
(39,653
)
 
(26,057
)
Benefit from income taxes
(369
)
 
(13,082
)
 
(859
)
 
(12,644
)
Net (loss) income
$
(16,406
)
 
$
16,259

 
$
(38,794
)
 
$
(13,413
)
See the accompanying notes to these condensed consolidated financial statements.

2




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(in thousands)
(unaudited)

 
Three months ended
 
Nine months ended
 
September 26,
2014
 
September 27,
2013
 
September 26,
2014
 
September 27,
2013
Net loss
$
(16,406
)
 
$
16,259

 
$
(38,794
)
 
$
(13,413
)
Other comprehensive (loss) income:
 
 
 
 
 
 
 
Foreign currency translation adjustment
204

 
(89
)
 
(250
)
 
(431
)
Defined benefit pension plan adjustments
21

 
81

 
62

 
246

Total comprehensive (loss) income
$
(16,181
)
 
$
16,251

 
$
(38,982
)
 
$
(13,598
)
See the accompanying notes to these condensed consolidated financial statements.



3



EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 
Nine months ended
 
September 26,
2014
 
September 27,
2013
Cash flows from operating activities:
 
 
 
Net loss
$
(38,794
)
 
$
(13,413
)
Reconciliation of net loss to net cash provided by operating activities:

 

Depreciation and amortization
24,595

 
25,557

Amortization of deferred financing fees
1,804

 
1,621

Amortization of debt discount
435

 
336

Share-based compensation
372

 
2,246

Provision for doubtful accounts
85

 
570

Foreign exchange loss (gain)
15,081

 
(4,478
)
(Gain) loss on sale or disposal of assets
(125
)
 
1,531

Deferred income taxes
(800
)
 
336

Changes in operating assets and liabilities, net of acquisitions

 

Accounts receivable
(39,555
)
 
(27,514
)
Inventories
(32,061
)
 
(17,188
)
Other current assets
(1,266
)
 
(1,393
)
Accounts payable and other current liabilities
56,472

 
26,150

Income taxes payable
279

 
(12,984
)
Other noncurrent assets and liabilities
(837
)
 
1,887

Net cash used in operating activities
(14,315
)
 
(16,736
)
Cash flows from investing activities:
 
 
 
Proceeds from sales of assets
777

 
2,288

Capital expenditures
(5,233
)
 
(7,355
)
Net cash used in investing activities
(4,456
)
 
(5,067
)
Cash flows from financing activities:
 
 
 
Net borrowings on ABL Credit Facility
4,981

 
19,514

Net borrowings on Dutch Revolving Credit Facility
8,253

 
1,836

Changes in cash overdrafts
215

 

Debt issuance costs
(88
)
 
(175
)
Net cash provided by financing activities
13,361

 
21,175

Effect of exchange rate changes on cash
(332
)
 
64

Net decrease in cash and cash equivalents
(5,742
)
 
(564
)
Cash and cash equivalents at beginning of period
8,977

 
10,024

Cash and cash equivalents at end of period
$
3,235

 
$
9,460

See the accompanying notes to these condensed consolidated financial statements.
  

4



EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation and Principles of Consolidation
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Euramax Holdings, Inc. and its subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, these statements include all adjustments considered necessary for the fair presentation of all interim periods reported herein. All adjustments are of a normal recurring nature unless otherwise disclosed.
The Company’s sales volumes have historically been higher in the second and third quarters due to the seasonal demand of the building products markets served. Accordingly, results for the three and nine months ended September 26, 2014 are not necessarily indicative of the results that may be expected for the full year. Management believes that the disclosures made are adequate for a fair presentation of the Company’s results of operations, financial position and cash flows. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.
Assets and liabilities of non-U.S. subsidiaries are translated to U.S. Dollars at the rate of exchange in effect on the balance sheet date. Income and expenses are translated to U.S. Dollars at the weighted average rates of exchange prevailing during the period. Foreign currency gains and losses resulting from the remeasurement of inter-company amounts that are not of a long-term investment nature into local currencies and certain indebtedness of foreign subsidiaries denominated in U.S. dollars are included in other (loss) income, net. Other (loss) income, net includes losses of $14.8 million and income of $8.9 million for the three months ended September 26, 2014 and September 27, 2013, respectively. Other (loss) income, net includes losses of $15.1 million and income of $4.1 million for the nine months ended September 26, 2014 and September 27, 2013, respectively. Foreign currency gains and losses resulting from transactions in the ordinary course of business are recorded in selling and general expenses. Foreign currency transaction gains and losses recorded in selling and general expenses were not significant for any period presented.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the Company’s accounts and the accounts of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current period presentation. Each of our interim reporting periods, other than the fourth interim reporting period, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The third quarter of 2014 and 2013 ended on September 26 and September 27, respectively. Our fourth interim reporting period and our fiscal year end on December 31 regardless of the day of the week on which it falls.
Recent Accounting Pronouncements
In May 2014, the FASB issued new revenue recognition guidance, which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is currently assessing the impact of implementing this guidance on the Company's financial position, results of operations, and cash flows.

5



2. Inventories
Inventories were comprised of:
 
September 26,
2014
 
December 31,
2013
 
(in thousands)
Aluminum and steel coil
$
80,783

 
$
58,153

Raw materials
17,782

 
15,291

Work in process
3,283

 
1,936

Finished products
18,330

 
14,380

Total inventories, net
$
120,178

 
$
89,760

The Company has disclosed aluminum and steel coil inventory separately, as it represents inventory that can be classified as raw material, work in process or finished product. Aluminum and steel coil includes both painted and bare coil. Inventories are net of related reserves totaling $3.1 million and $2.4 million as of September 26, 2014 and December 31, 2013, respectively.
3. Indebtedness
Indebtedness consisted of the following:
 
September 26,
2014
 
December 31,
2013
 
(in thousands)
Senior Secured Notes (9.50%)
$
375,000

 
$
375,000

Senior Unsecured Loan Facility (12.25%)
124,075

 
123,640

ABL Credit Facility
41,737

 
36,756

Dutch Revolving Credit Facility
8,253

 

Total debt
549,065

 
535,396

Less: current portion
8,253

 

Total long term debt
$
540,812

 
$
535,396


Senior Secured Notes
The Senior Secured Notes (the "Notes") consist of an aggregate principal amount of $375 million, which were issued pursuant to an indenture (the "Indenture"), dated March 18, 2011, among Euramax International, Inc. ("Euramax International"), Euramax Holdings, Inc. ("Euramax Holdings"), and certain of its domestic subsidiaries as guarantors, and Wells Fargo Bank, National Association, the Trustee. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Euramax Holdings, Euramax International, and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International. 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.
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 nonvoting capital stock of foreign restricted subsidiaries directly owned by the Company or a guarantor, and a second priority security interest in the inventory, receivables and related assets.

6



The Notes may be redeemed at the option of Euramax International, in whole or in part, under the conditions specified in the Indenture, at the following redemption prices plus accrued and unpaid interest to the redemption date if redeemed during the twelve-month period beginning on April 1 of the years indicated:
Year
Percentage
2013
107.125
%
2014
104.750
%
2015 and thereafter
100.000
%
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 its assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants. These limitations also limit Euramax International's ability to transfer cash or assets to Euramax Holdings, whether by dividend, loan or otherwise. The Indenture also contains customary events of default. If Euramax International undergoes 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.
Senior Unsecured Loan Facility
On March 3, 2011, Euramax Holdings, Euramax International, and certain of its domestic subsidiaries entered into a credit and guaranty agreement for a senior unsecured loan facility (the "Senior Unsecured Loan Facility") in the aggregate principal amount of $125 million. The Senior Unsecured Loan Facility was issued at 98% of par on March 18, 2011 and matures on October 1, 2016. The difference between the consideration received and the aggregate face amount ($0.9 million) is being amortized and recorded in interest expense using the effective interest rate method over the term. The Senior Unsecured Loan Facility bears interest at 12.25% per year in the event no election is made to pay interest in kind (PIK), and 14.25% (7.875% cash pay and 6.375% PIK) per annum 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 at September 26, 2014 was 12.25%, as Euramax International has not made a PIK election.
Euramax International may prepay outstanding amounts under the Senior Unsecured Loan Facility, in whole or in part, at the prices (expressed as percentages of the loans) set forth below:
Prepayment Date
Percentage
On or after the second anniversary of the closing but prior to the third anniversary thereof
103
%
On or after the third anniversary of the closing but prior to the fourth anniversary thereof
102
%
On or after the fourth anniversary of the closing
100
%
Upon a change of control, Euramax International may be required to prepay 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, Euramax International, and substantially all of Euramax International's existing and future direct and indirect 100% owned domestic material restricted subsidiaries.
The Senior Unsecured Loan Facility 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 its assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants.

7



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.
ABL Credit Facility
On March 18, 2011, Euramax Holdings, Euramax International, and certain of its domestic subsidiaries, entered into the ABL Credit Facility with Regions Bank, as Collateral and Administrative Agent, Wells Fargo Capital Finance, LLC, as Co-Collateral Agent, and Regions Business Capital, as Sole Lead Arranger and Bookrunner. The ABL Credit Facility provides for revolving credit financing of up to $70 million, subject to borrowing base availability and matures on March 1, 2018. However, if the Agent has not received on or before December 31, 2015, evidence satisfactory to Agent that the scheduled maturity dates of the indebtedness arising under the Indenture and the Senior Unsecured Loan Facility, in each case, have been extended to a date that is 90 or more days following March 1, 2018, then the maturity date for the ABL Credit facility shall be January 1, 2016. In March 2014, Wells Fargo Capital Finance, LLC ceased to be Co-Collateral Agent and a Lender under the ABL Credit Facility. At September 26, 2014, $28.3 million was available to be drawn on the ABL Credit Facility.
On March 21, 2014 and May 8, 2014, the ABL Credit Facility was amended to, among other items, (i) reduce the applicable margin rate for LIBOR borrowings from a range of 2.00% to 2.75% to a range of 1.75% to 2.25% and reduce the applicable margin rate for Base Rate borrowings from a range of 1.00% to 1.75% to a range of 1.00% to 1.25%, in each case, based on average excess availability rather than corporate credit ratings of the Company, (ii) reduce the minimum excess availability threshold to $1.0 million, (iii) reduce the fixed charge coverage ratio from 1.15 to 1.00, (iv) suspend the testing of the fixed charge coverage ratio (A) during fiscal year 2014, unless a Seasonal Overadvance A is then in effect, (B) at all other times including during fiscal year 2014 during the occurrence of a Seasonal Overadvance B or (C) during the occurrence of a Seasonal Overadvance C, (v) suspend the testing of the minimum consolidated EBITDA test except (A) during fiscal year 2014 if a Seasonal Overadvance A is then in effect, (B) at any time during the life of the ABL Credit Facility, during the occurrence of a Seasonal Overadvance B or (C) at any time during the life of the ABL Credit Facility during the occurrence of a Seasonal Overadvance C, and (vi) provide for the three mutually exclusive overadvance facilities as described below.
"Seasonal Overadvance A", in the amount of $15.0 million, is available to the Company from February 1 of each year through May 31 of each such year, subject to the Company demonstrating compliance with the fixed charge coverage ratio of 1.00:1.00, payment of a fee in the amount of 0.20% of the amount of such facility (the "Seasonal Overadvance Fee") and other customary conditions.
"Seasonal Overadvance B", in the amount of $9.0 million, is available to the Company from February 1 of each year through November 30 of each such year, subject to the Company demonstrating compliance with a U.S. fixed charge coverage ratio of 1.00:1.00, payment of the Seasonal Overadvance Fee (except to the extent already paid during such calendar year), maintenance of a U.S. fixed charge coverage ratio of 1.00:1.00 and other customary conditions.
"Seasonal Overadvance C", in the amount of the lesser of (i) $6.0 million and (ii) the sum of (a) 10% of the first component of the borrowing base and (b) 10% of the second component of the borrowing base, is available to the Company from February 1 of each year through August 22 of each such year, subject to the payment of the Seasonal Overadvance Fee (except to the extent already paid during such calendar year), maintenance of a minimum consolidated EBITDA over the trailing twelve months of $52.0 million ($50.0 million for fiscal 2014) and other customary conditions.

8



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 September 26, 2014, the applicable margins are subject to Euramax International’s Average Excess Availability Percentage for the most recently ended fiscal quarter and range from 1.75% to 2.25% for LIBOR borrowings and 1.00% to 1.25% for Base Rate borrowings. The weighted average interest rate at September 26, 2014, including the applicable margin payable on outstanding borrowings under the ABL Credit Facility, was 2.41%. 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, Euramax International, and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International, and any future direct and indirect 100% owned domestic restricted subsidiaries which are not borrowers. All obligations under the ABL Credit Facility 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, referred 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 ABL Credit Facility contains affirmative and negative covenants customary for this type of financing, including, but not limited to certain financial covenants in the event excess availability is less than 12.5% of the lesser of the aggregate amount of commitments outstanding at such time and the borrowing base. As of September 26, 2014, excess availability exceeded 12.5% of the borrowing base; therefore, Euramax International was not required to meet the Minimum Consolidated Adjusted EBITDA or Minimum Consolidated Fixed Charge Coverage Ratio. Additionally, restrictive covenants limit the ability of Euramax International and certain of its 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.
Dutch Revolving Credit Facility
In February 2012, the Company's 100% owned subsidiary Euramax Coated Products, BV entered into a revolving credit facility with Rabobank Roermond (the "Dutch Revolving Credit Facility"). 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 calendar month plus a margin of 2% and requires payment of a commitment fee of 0.35% per annum on the nominal amount of the credit facility. The weighted average interest rate at September 26, 2014, including the margin payable on outstanding borrowings under the Dutch Revolving Credit Facility, was 2.32%. All obligations under the Dutch Revolving Credit Facility are secured by a mortgage on the real estate of Euramax Coated Products, BV and a pledge on present and future machinery and present and future accounts receivable balances of Euramax Coated Products, BV. At September 26, 2014, $10.8 million (EUR 8.5 million) was available to be drawn on the Dutch Revolving Credit Facility.
The Dutch Revolving Credit Facility contains financial and non-financial covenants customary for this type of financing. Financial covenants include, but are not limited to, a minimum annual EBITDA target and a minimum amount of risk-bearing capital for Euramax Coated Products, BV, both measured at the Company's fiscal year-end. The Dutch Revolving Credit Facility also contains a clause limiting further indebtedness. As of September 26, 2014, Euramax Coated Products, BV is in compliance with all covenants.

9



4. Commitments and Contingencies
Raw Material Commitments
The Company’s primary raw materials are aluminum and steel coil. Because changes in aluminum and steel prices are generally passed through to customers, increases or decreases in aluminum and steel prices generally cause corresponding increases and decreases in reported net sales, causing fluctuations in reported revenues that are unrelated to the level of business activity. However, if the Company is unable to pass through aluminum and steel price increases to customers in the future, its business and results of operations could be materially adversely affected. Although the Company believes there is sufficient supply in the marketplace to competitively source all of its aluminum and steel needs without reliance on any particular supplier, any major disruption in the supply and/or price of aluminum and steel could have a material adverse effect on the Company’s business and financial condition.
To ensure a margin on specific customer orders, the Company may commit to purchase aluminum ingot or coil at a fixed market price for future delivery. These contracts are for normal purchases and sales, and therefore, are not required to be accounted for as derivatives.
Litigation
The Company is currently party to legal proceedings that have arisen in the ordinary course of business. The Company has and will continue to vigorously defend itself in these matters. It is the opinion of the Company’s management, based upon information available at this time, that the expected outcome of all matters to which the Company is currently a party would not reasonably be expected to have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
Environmental Matters
The Company’s operations are subject to U.S., Canadian, and European federal, state, and local environmental laws and regulations, including those concerning the management of pollution and hazardous substances.
In connection with the acquisition of the Company from Alumax Inc. (which was acquired by Aluminum Company of America in May 1998, and hereafter referred to as Alumax) on September 25, 1996, the Company was indemnified by Alumax for substantially all of its costs, if any, related to specifically identified environmental matters arising prior to the closing date of the acquisition during the period of time it was owned directly or indirectly by Alumax. Such indemnification includes costs that may ultimately be incurred to contribute to the remediation of eleven specified existing National Priorities List (NPL) sites for which the Company had been named a potentially responsible party under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as of the closing date of the acquisition from Alumax, as well as certain potential costs for nine sites to which the Company may have sent waste for disposal. The Company does not believe that it has any significant probable liability for environmental claims. Further, the Company believes it to be unlikely that the Company would be required to bear environmental costs in excess of its pro rata share of such costs as a potentially responsible party at any site. Any receivable for recoveries under the indemnification would be recorded separately from the corresponding liability when the environmental claim and related recovery is determined to be probable. In addition, the Company establishes reserves for remedial measures required from time to time at its facilities. Management believes that the reasonably probable outcomes of these matters will not be material. The Company’s reserves, expenditures, and expenses for all environmental exposures were not significant as of any of the dates or for any of the periods presented.
Product Warranties
The Company provides warranties on certain products. The warranty periods differ depending on the product, but generally range from one year to limited lifetime warranties. The Company provides for warranties based on historical experience and expectations of future occurrence. Changes in the product warranty accrual are summarized as follows:

10



 
Three months ended
 
Nine months ended
 
September 26,
2014
 
September 27,
2013
 
September 26,
2014

September 27,
2013
 
(in thousands)
Balance, beginning of period
$
4,946

 
$
5,047

 
$
5,326


5,098

Payments made or service provided
(754
)
 
(734
)
 
(2,309
)

(2,565
)
Warranty expense
692

 
997

 
1,867


2,838

Foreign currency translation
(88
)
 
93

 
(88
)

32

Balance, end of period
$
4,796

 
$
5,403

 
$
4,796


$
5,403

5. Income Taxes
The benefit from income taxes for 2014 and 2013 is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country by country basis, adjusted for changes in valuation allowances relating to the Company’s net operating loss and capital loss carryforwards and changes in tax uncertainties. The effective rates for the three month periods ended September 26, 2014 and September 27, 2013 were a benefit of 2.2% and 411.8%, respectively.
The effective rate for the three months ended September 26, 2014 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations compared to the U.S. federal rates, and recognition of valuation allowances related to net losses in the UK and in U.S. federal and state jurisdictions.
The effective rate for the three months ended September 27, 2013 differed from the U.S. statutory rate primarily due to the reversal of an uncertain tax position as a result of the expiration of statute of limitations. During the three months ended September 27, 2013, the statute of limitations expired for an uncertain tax position taken in a prior year. As a result, the Company recognized $9.0 million in previously unrecognized tax benefit and an additional $3.4 million related to the reversal of accrued interest and penalties associated with the position during the quarter. Other factors impacting the effective rate include state income taxes, lower tax rates of our foreign operations as compared to the U.S. federal rates, and recognition of valuation allowances related to current year losses in the UK and in U.S. federal and state jurisdictions.
The effective tax rates for the nine month periods ended September 26, 2014 and September 27, 2013 were a benefit of 2.2% and 48.5%, respectively.
The effective rate for the nine months ended September 26, 2014 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations compared to the U.S. federal rates, and recognition of valuation allowances related to net losses in the UK and in U.S. federal and state jurisdictions.
The effective rate for the nine months ended September 27, 2013 differed from the U.S. statutory rate due to the reversal of various uncertain tax positions, primarily relating to the expiration of certain statutes of limitations. During the nine months months ended September 27, 2013, the statute of limitations expired for an uncertain tax position taken in a prior year. As a result, the Company recognized $9.0 million in previously unrecognized tax benefit and an additional $3.4 million related to the reversal of accrued interest and penalties associated with the position. Other factors impacting the effective rate include state income taxes, lower tax rates of our foreign operations as compared to the U.S. federal rates, and valuation allowances related to current year losses in the UK and in U.S. federal and state jurisdictions.

11



6. Accumulated Other Comprehensive Income
Changes in accumulated other comprehensive income (loss) by component for the nine month period ended September 26, 2014 were as follows:
 
 
Foreign Currency Translation Adjustments
 
Defined Benefit Pension Plan Adjustments
 
Total
 
 
(in thousands)
Balance, beginning of period
 
$
19,281

 
$
(8,360
)
 
$
10,921

Other comprehensive (loss) income before reclassifications
 
(250
)
 

 
(250
)
Amounts reclassified from accumulated other comprehensive income (loss)
 

 
62

 
62

Net other comprehensive (loss) income
 
(250
)
 
62

 
(188
)
Balance, end of period
 
$
19,031

 
$
(8,298
)
 
$
10,733

Amounts reclassified from the defined benefit pension plan adjustments component of accumulated other comprehensive income (loss) were recorded in selling and general expenses within the condensed consolidated statement of operations. There were no net tax effects related to the reclassification as a result of the full valuation allowances in the U.S. and UK in the current year. The accumulated tax effect related to the defined benefit pension plan adjustments component of accumulated other comprehensive income (loss) was a provision of $0.3 million as of September 26, 2014 and December 31, 2013. There are no tax impacts related to the foreign currency translation adjustment component of accumulated other comprehensive income (loss) as the earnings of subsidiaries are considered to be permanently invested.
7. Employee Benefit Plans
Retirement Plans
The Company maintains a non-contributory defined benefit pension plan covering substantially all U.S. hourly employees (the "U.S. Plan"). In addition, the employees at Euramax Coated Products Limited and Ellbee Limited participate in a single employer pension plan (the "UK Plan"). The measurement date for the U.S. and UK plans is the last day of the fiscal year. The Company curtailed the accrual of participant benefits provided under the UK Plan effective March 31, 2009. This curtailment did not affect the timing for the payment of benefits earned under the UK Plan through the curtailment date. In January 2010, the Company's board of directors approved a motion to freeze future benefit accruals under the U.S. Plan. The impact on the Company's projected benefit obligation was not significant. Components of net periodic pension cost for the Company’s defined and multiemployer pension plans were as follows:
 
Three months ended
 
Nine months ended
 
September 26,
2014
 
September 27,
2013
 
September 26,
2014
 
September 27,
2013
 
U.S. Plan
 
UK Plan
 
U.S. Plan
 
UK Plan
 
U.S. Plan
 
UK Plan
 
U.S. Plan
 
UK Plan
 
(in thousands)
Service cost
$
14

 
$

 
$
16

 
$

 
$
42

 
$

 
$
48

 
$

Interest cost
141

 
559

 
130

 
527

 
421

 
1,673

 
390

 
1,582

Expected return on assets
(185
)
 
(472
)
 
(156
)
 
(411
)
 
(557
)
 
(1,412
)
 
(468
)
 
(1,233
)
Recognized actuarial net loss
3

 
18

 
73

 
8

 
7

 
55

 
217

 
29

Total defined benefit net periodic pension cost
(27
)
 
105

 
63

 
124

 
(87
)
 
316

 
187

 
378

Multiemployer benefit expense
324

 

 
313

 

 
893

 

 
860

 

Net periodic pension cost
$
297

 
$
105

 
$
376

 
$
124

 
$
806

 
$
316

 
$
1,047

 
$
378


12



8. Fair Value Measurements
Recurring Fair Value Measurements
In accordance with accounting principles generally accepted in the U.S., certain assets and liabilities are required to be recorded at fair value on a recurring basis. For the Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are derivative financial instruments.
Derivative Financial Instruments
The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risk managed by the Company through the use of derivative instruments is foreign currency exchange rate risk related to intercompany interest payments. The Company does not enter into derivative contracts for trading purposes.
The Company has entered into forward contracts to buy or sell a quantity of a currency at a predetermined future date, and at a predetermined rate or price to mitigate uncertainty and volatility, and to cover underlying exposures to certain payments in currencies other than the functional currency. The Company has not designated these contracts for hedge accounting treatment and, therefore, the gains and losses on these contracts are recorded in other income (loss), net in the condensed consolidated statement of operations. For the three months ended September 26, 2014 and September 27, 2013, the Company recognized gains of $0.7 million and losses of $0.3 million, respectively, related to these forward contracts. For the nine months ended September 26, 2014 and September 27, 2013, the Company recognized gains of $0.7 million and losses of $0.2 million, respectively, related to these forward contracts.
Derivatives are carried at fair value in the condensed consolidated balance sheet in the line item other current assets or accrued liabilities, as applicable. As of September 26, 2014 and December 31, 2013, the fair value of outstanding derivatives totaled assets of $0.5 million and liabilities of $0.2 million, respectively. The fair value of foreign exchange contracts is determined using quoted prices for similar contracts obtained from financial institutions and is classified as a Level 2 measurement in the fair value hierarchy.
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the U.S. Generally, adjustments made to record assets at fair value on a nonrecurring basis are the result of impairment charges.
The Company did not record any impairment charges related to assets measured at fair value on a nonrecurring basis during the three or nine months ended September 26, 2014. During the first quarter of 2013, the Company recorded losses of approximately $1.6 million in other operating charges related to the reclassification of land and buildings to assets held for sale. These losses, incurred as part of the Company's restructuring activities in the European Engineered Products segment, represented the difference between the carrying value prior to the reclassification and the fair value. The fair value was determined based on the selling price less costs incurred to sell and was classified as Level 1 in the fair value hierarchy. The assets were sold during the second quarter of 2013 and no additional losses were recorded from the sale of the assets.
Other Fair Value Disclosures
The carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued expenses, and loans and notes payable approximate their fair values because of the relatively short-term maturities of these instruments.
The fair value of our long-term debt is estimated using Level 2 inputs based on dealer quoted prices for our debt instruments based on recent transactions obtained from various sources. As of September 26, 2014, the carrying amount and fair value of our Senior Secured Notes, were $375.0 million and $363.8 million, respectively. As of December 31, 2013, the carrying amount and fair value of our Senior Secured Notes, were $375.0 million and $375.0 million, respectively.

13



9. Other Operating Charges
Other operating charges incurred by operating segment were as follows:
 
Three months ended
 
Nine months ended
 
September 26,
2014
 
September 27,
2013
 
September 26,
2014
 
September 27,
2013
 
(in thousands)
U.S. Residential Products
$
83

 
$
57

 
$
591

 
$
214

U.S. Commercial Products
177

 
69

 
646

 
364

European Roll Coated Aluminum
26

 
305

 
26

 
495

European Engineered Products
148

 
995

 
1,218

 
4,039

Other non-allocated
617

 
29

 
1,876

 
243

Total other operating charges
$
1,051

 
$
1,455

 
$
4,357

 
$
5,355

Other operating charges are comprised of restructuring initiatives, facility closures, and other operational initiatives. In the second quarter of 2014, after an ongoing review of its North American operations, the Company took steps to rationalize its workforce and to invest in select value-creating officer roles. These actions led to the elimination of certain non-essential salaried positions in the Company's North America business segments and at its Corporate Headquarters in Norcross, GA. The Company believes the elimination of certain non-essential salaried positions in the Company's North American business will result in a more competitive platform that provides both meaningful operational and cost benefits. Total severance and related costs incurred in the nine months ended September 26, 2014 related to the work force rationalization totaled approximately $1.0 million and are recorded within other operating charges in the Company’s condensed consolidated statement of operations. Total severance on a segment basis is disclosed in the following paragraphs.
For the three months ended September 26, 2014, other operating charges of $1.1 million were primarily comprised of severance costs and legal and professional fees. Other non-allocated charges of $0.6 million were primarily related to professional fees for consulting services during the executive transition period. The remaining $0.5 million was related to severance and relocation costs for various organizational initiatives in the U.S. and Europe to reduce operating costs and improve efficiencies.
For the three months ended September 27, 2013, other operating charges of $1.5 million were primarily comprised of ongoing restructuring and relocation initiatives in the European Engineered Products segment including approximately $0.8 million of severance and relocation costs associated with the relocation from multiple plant facilities in the UK into one operating location and $0.2 million of severance costs for various social programs in France. The remaining $0.5 million of other operating costs in the third quarter of 2013 were comprised primarily of severance and relocation costs related to various organizational initiatives in the European Roll Coated Aluminum segment and in the U.S. to reduce operating costs and improve efficiencies.
For the nine months ended September 26, 2014, other operating charges of $4.4 million were primarily comprised of severance costs and legal and professional fees. Other non-allocated charges of $1.9 million were made up of severance and professional fees for consulting services during the executive transition period. Ongoing restructuring initiatives in the European Engineered Products segment totaled $1.3 million, including approximately $0.8 million of severance costs for various social programs in France and $0.5 million of severance in the UK. The remaining other operating charges in the first nine months of 2014 were comprised of $1.2 million in severance and relocation costs in the U.S. primarily related to the workforce rationalization and organizational initiatives to reduce operating costs and improve efficiencies. Total costs related to the workforce rationalization for the nine months ended September 26, 2014 include $0.4 million in the Residential Products segment, $0.4 million in the Commercial Products segment, and $0.2 million in other non-allocated charges for corporate employees.

14



For the nine months ended September 27, 2013, other operating charges of $5.4 million were primarily comprised of restructuring and relocation initiatives in the European Engineered Products segment, including a $1.6 million loss related to the sale of land and buildings, $2.0 million of severance, relocation, and other restructuring charges related to the relocation from multiple plant facilities in the UK into one operating location, and $0.5 million of severance costs for various social programs in France. The remaining other operating charges in the first nine months of 2013 were comprised of $1.3 million in severance and relocation costs in both the U.S. and Europe related to various organizational initiatives to reduce operating costs and improve efficiencies.
10. Segment Information
The Company manages its business and serves its customers through reportable segments differentiated by product type, end market, and geography. The Company's four reportable segments are described below:
U.S. Residential Products—The U.S. Residential 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. The Company sells these products to home improvement retailers, lumber yards, distributors and contractors from manufacturing and distribution facilities throughout North America. The Company also produces specialty made-to-order vinyl replacement windows and aluminum patio and awning components sold primarily to home improvement contractors in the western U.S.
U.S. Commercial Products—The U.S. Commercial Products segment utilizes various materials including steel coil, aluminum coil and fiberglass to create various products with commercial applications, including roofing and siding panels, ridge caps, flashing, trim, soffit and other accessories as well as sidewall components, siding and other exterior components for the towable RV, cargo and manufactured housing markets. The Company sells these products to builders, contractors, lumber yards, home improvement retailers, OEMs, and RV manufacturers from manufacturing and distribution facilities located throughout the U.S. These products are used in the construction of a wide variety of small scale commercial, agricultural and industrial building types on either wood or metal frames, manufactured homes, and towable RVs.
European Roll Coated Aluminum—The 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 the Company also processes into specialty coated sheets and panels. The Company sells these products to building panel manufacturers, contractors and UK “holiday home,” RV and transportation OEMs throughout Europe and in parts of Asia. The Company’s customers use its specialty coated metal products to manufacture, among other things, RV sidewalls, commercial roofing panels, interior ceiling panels, and liner panels for shipping containers. The Company produces and distributes these roll coated products from facilities located in the Netherlands and the UK.
European Engineered Products—The 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 UK. The Company also produces windows used in the operator compartments of heavy equipment, components sold to suppliers of automotive OEMs in Western Europe and RV doors. The Company produces and distributes these engineered products from facilities in France and the UK and has developed extensive in-house manufacturing capabilities, including powder coating, glass cutting, anodizing and glass toughening.
The Company evaluates the performance of its segments and allocates resources to them based primarily on segment income (loss) from operations. Expenses, income and assets that are not segment specific relate to the holding company and business activities conducted for the overall benefit of the Company, and accordingly, are not attributable to the Company’s segments.

15



The following table presents information about reported segments for the three months ended September 26, 2014:
 
U.S.
Residential
Products
 
U.S.
Commercial
Products
 
European
Roll Coated
Aluminum
 
European
Engineered Products
 
Other Non-
Allocated
 
Eliminations
 
Consolidated
Three months ended September 26, 2014
(in thousands)
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party
$
94,126

 
$
85,633

 
$
44,710

 
$
15,473

 
$

 
$

 
$
239,942

Intersegment
218

 
40

 
176

 

 

 
(434
)
 

Total net sales
$
94,344

 
$
85,673

 
$
44,886

 
$
15,473

 
$

 
$
(434
)
 
$
239,942

Income (loss) from operations
$
9,660

 
$
2,213

 
$
1,979

 
$
325

 
$
(3,001
)
 
$

 
$
11,176

Depreciation and amortization
$
2,790

 
$
2,707

 
$
2,299

 
$
398

 
$
(52
)
 
$

 
$
8,142

Capital expenditures
$
301

 
$
641

 
$
415

 
$
248

 
$
667

 
$

 
$
2,272

The following table presents information about reported segments for the three months ended September 27, 2013:
 
U.S.
Residential
Products
 
U.S.
Commercial
Products
 
European
Roll Coated
Aluminum
 
European
Engineered Products
 
Other Non-
Allocated
 
Eliminations
 
Consolidated
Three months ended September 27, 2013
(in thousands)
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party
$
87,518

 
$
80,717

 
$
45,660

 
$
13,940

 
$

 
$

 
$
227,835

Intersegment
188

 
58

 
87

 

 

 
(333
)
 

Total net sales
$
87,706

 
$
80,775

 
$
45,747

 
$
13,940

 
$

 
$
(333
)
 
$
227,835

Income (loss) from operations
$
9,281

 
$
2,251

 
$
1,782

 
$
(1,612
)
 
$
(3,015
)
 
$

 
$
8,687

Depreciation and amortization
$
2,891

 
$
2,628

 
$
2,435

 
$
401

 
$
159

 
$

 
$
8,514

Capital expenditures
$
873

 
$
361

 
$
717

 
$
180

 
$
266

 
$

 
$
2,397

The following table presents information about reported segments for the nine months ended September 26, 2014:
 
U.S.
Residential
Products
 
U.S.
Commercial
Products
 
European
Roll Coated
Aluminum
 
European
Engineered Products
 
Other Non-
Allocated
 
Eliminations
 
Consolidated
Nine months ended September 26, 2014
(in thousands)
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party
$
230,235

 
$
216,699

 
$
146,258

 
$
49,644

 
$

 
$

 
$
642,836

Intersegment
614

 
100

 
472

 

 

 
(1,186
)
 

Total net sales
$
230,849

 
$
216,799

 
$
146,730

 
$
49,644

 
$

 
$
(1,186
)
 
$
642,836

Income (loss) from operations
$
17,938

 
$
(1,003
)
 
$
9,297

 
$
(619
)
 
$
(9,316
)
 
$

 
$
16,297

Depreciation and amortization
$
8,246

 
$
7,564

 
$
7,010

 
$
1,261

 
$
514

 
$

 
$
24,595

Capital expenditures
$
961

 
$
1,344

 
$
1,220

 
$
730

 
$
978

 
$

 
$
5,233

The following table presents information about reported segments for the nine months ended September 27, 2013:

16



 
U.S.
Residential
Products
 
U.S.
Commercial
Products
 
European
Roll Coated
Aluminum
 
European
Engineered Products
 
Other Non-
Allocated
 
Eliminations
 
Consolidated
Nine months ended September 27, 2013
(in thousands)
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party
$
226,203

 
$
209,217

 
$
145,238

 
$
49,583

 
$

 
$

 
$
630,241

Intersegment
522

 
356

 
192

 

 

 
(1,070
)
 

Total net sales
$
226,725

 
$
209,573

 
$
145,430

 
$
49,583

 
$

 
$
(1,070
)
 
$
630,241

Income (loss) from operations
$
18,857

 
$
(1,830
)
 
$
7,422

 
$
(5,144
)
 
$
(8,166
)
 
$

 
$
11,139

Depreciation and amortization
$
8,721

 
$
7,866

 
$
7,149

 
$
1,397

 
$
424

 
$

 
$
25,557

Capital expenditures
$
2,076

 
$
1,367

 
$
2,527

 
$
396

 
$
989

 
$

 
$
7,355

It is impractical for the Company to provide revenues from external customers by groups of similar products. Accordingly, the following table reflects revenues from external customers by markets for the periods indicated:
 
 
Three months ended
 
Nine months ended
Customers/Markets
Primary Products
September 26,
2014
 
September 27,
2013
 
September 26,
2014
 
September 27,
2013
 
 
(in thousands)
Home Improvement Retailers
Rain carrying systems, metal panels, roofing accessories, windows, doors and shower enclosures
$
54,934

 
$
57,449

 
$
135,000

 
$
145,995

Rural Contractors
Steel and aluminum roofing and siding
46,974

 
44,029

 
103,001

 
97,932

Original Equipment Manufacturers (“OEMs”)
Painted aluminum sheet and coil; fabricated painted aluminum, laminated and fiberglass panels; windows and roofing; and composite building panels
46,033

 
45,474

 
158,330

 
149,791

Industrial and Architectural Contractors
Metal panels and siding and roofing accessories
38,168

 
37,926

 
110,410

 
112,721

Distributors
Metal coils, rain carrying systems and roofing accessories
31,043

 
25,096

 
73,296

 
67,121

Home Improvement Contractors
Vinyl replacement windows; metal coils, rain carrying systems; metal roofing and insulated roofing panels; shower, patio and entrance doors; and awnings
13,918

 
11,546

 
37,275

 
31,971

Manufactured Housing
Steel siding and trim components
8,872

 
6,315

 
25,524

 
24,710

 
 
$
239,942

 
$
227,835

 
$
642,836

 
$
630,241



17




11. Supplemental Guarantor Condensed Financial Information
On March 18, 2011, Euramax Holdings (presented as Parent in the following schedules), through its 100% owned subsidiary, Euramax International (presented as Issuer in the following schedules), issued the Notes. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Euramax Holdings, Euramax International, and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International. No other subsidiaries of Euramax International, whether direct or indirect, guarantee the Notes (the "Non-Guarantor Subsidiaries").
Additionally, the Notes are secured on a second priority basis by liens on all of the collateral (subject to certain exceptions) securing the ABL Credit Facility. In the event that secured creditors exercise remedies with respect to Euramax International's pledged assets, the proceeds of the liquidation of those assets will first be applied to repay obligations secured by the first priority liens under the senior secured credit facilities and any other first priority obligations.
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 its assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants. These limitations also limit Euramax International's ability to transfer cash or assets to Euramax Holdings, whether by dividend, loan or otherwise.
The following supplemental condensed consolidating financial statements present the results of operations, comprehensive operations, financial position and cash flows of (1) the Parent, (2) the Issuer, (3) the Non-Guarantor Subsidiaries, and (4) eliminations to arrive at the information for Euramax Holdings on a consolidated basis.


18




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS
SEPTEMBER 26, 2014
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
907

 
$
2,328

 
$

 
$
3,235

Accounts receivable, less allowance for doubtful accounts

 
69,856

 
41,311

 

 
111,167

Inventories, net

 
92,459

 
27,719

 

 
120,178

Income taxes receivable

 
542

 

 

 
542

Deferred income taxes

 
556

 
19

 

 
575

Other current assets

 
5,603

 
2,517

 

 
8,120

Total current assets

 
169,923

 
73,894

 

 
243,817

Property, plant and equipment, net

 
55,054

 
61,297

 

 
116,351

Amounts due from affiliates

 
207,556

 
18,594

 
(226,150
)
 

Goodwill

 
81,359

 
113,983

 

 
195,342

Customer relationships, net

 
18,776

 
11,166

 

 
29,942

Other intangible assets, net

 
6,599

 

 

 
6,599

Investment in consolidated subsidiaries
(141,507
)
 
(2,243
)
 

 
143,750

 

Deferred income taxes

 

 
419

 

 
419

Other assets

 
2,765

 
3,699

 

 
6,464

Total assets
$
(141,507
)
 
$
539,789

 
$
283,052

 
$
(82,400
)
 
$
598,934

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
71,145

 
$
23,541

 
$

 
$
94,686

Accrued expenses and other current liabilities
41

 
19,289

 
11,228

 

 
30,558

Accrued interest payable

 
21,736

 
34

 

 
21,770

Current portion of long-term debt

 

 
8,253

 

 
8,253

Deferred income taxes

 

 
559

 

 
559

Total current liabilities
41

 
112,170

 
43,615

 

 
155,826

Long-term debt

 
540,812

 

 

 
540,812

Amounts due to affiliates
5,625

 
11,403

 
209,122

 
(226,150
)
 

Deferred income taxes

 
10,450

 
7,709

 

 
18,159

Other liabilities

 
6,461

 
24,849

 

 
31,310

Total liabilities
5,666

 
681,296

 
285,295

 
(226,150
)
 
746,107

Shareholders’ (deficit) equity:
 
 
 
 
 
 
 
 
 
Common stock
195

 

 
21

 
(21
)
 
195

Additional paid-in capital
724,443

 
661,550

 
199,452

 
(861,002
)
 
724,443

Accumulated loss
(882,544
)
 
(813,790
)
 
(214,697
)
 
1,028,487

 
(882,544
)
Accumulated other comprehensive income
10,733

 
10,733

 
12,981

 
(23,714
)
 
10,733

Total shareholders’ (deficit) equity
(147,173
)
 
(141,507
)
 
(2,243
)
 
143,750

 
(147,173
)
Total liabilities and shareholders’ (deficit) equity
$
(141,507
)
 
$
539,789

 
$
283,052

 
$
(82,400
)
 
$
598,934


19




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2013
(in thousands)

 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
1,700

 
$
7,277

 
$

 
$
8,977

Accounts receivable, less allowance for doubtful accounts

 
35,012

 
38,984

 

 
73,996

Inventories, net

 
62,270

 
27,490

 

 
89,760

Income taxes receivable

 
341

 
641

 

 
982

Deferred income taxes

 
559

 
21

 

 
580

Other current assets

 
5,462

 
1,546

 

 
7,008

Total current assets

 
105,344

 
75,959

 

 
181,303

Property, plant and equipment, net

 
62,185

 
67,929

 

 
130,114

Amounts due from affiliates

 
229,101

 
18,828

 
(247,929
)
 

Goodwill

 
81,359

 
122,694

 

 
204,053

Customer relationships, net

 
24,626

 
16,005

 

 
40,631

Other intangible assets, net

 
7,073

 

 

 
7,073

Investment in consolidated subsidiaries
(103,217
)
 
2,407

 

 
100,810

 

Deferred income taxes

 

 
87

 

 
87

Other assets

 
4,185

 
4,527

 

 
8,712

Total assets
$
(103,217
)
 
$
516,280

 
$
306,029

 
$
(147,119
)
 
$
571,973

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
30,312

 
$
26,950

 
$

 
$
57,262

Accrued expenses and other current liabilities
14

 
16,133

 
10,219

 

 
26,366

Accrued interest payable

 
8,973

 
47

 

 
9,020

Deferred income taxes

 

 
605

 

 
605

Total current liabilities
14

 
55,418

 
37,821

 

 
93,253

Long-term debt

 
535,396

 

 

 
535,396

Amounts due to affiliates
5,332

 
12,086

 
230,511

 
(247,929
)
 

Deferred income taxes

 
9,561

 
9,419

 

 
18,980

Other liabilities

 
7,036

 
25,871

 

 
32,907

Total liabilities
5,346

 
619,497

 
303,622

 
(247,929
)
 
680,536

Shareholders’ (deficit) equity:
 
 
 
 
 
 
 
 
 
Common stock
195

 

 
21

 
(21
)
 
195

Additional paid-in capital
724,071

 
661,180

 
199,452

 
(860,632
)
 
724,071

Accumulated loss
(843,750
)
 
(775,318
)
 
(210,242
)
 
985,560

 
(843,750
)
Accumulated other comprehensive income
10,921

 
10,921

 
13,176

 
(24,097
)
 
10,921

Total shareholders’ (deficit) equity
(108,563
)
 
(103,217
)
 
2,407

 
100,810

 
(108,563
)
Total liabilities and shareholders’ (deficit) equity
$
(103,217
)
 
$
516,280

 
$
306,029

 
$
(147,119
)
 
$
571,973


20




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 26, 2014
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net sales
$

 
$
177,682

 
$
64,674

 
$
(2,414
)
 
$
239,942

Costs and expenses:
 
 
 
 
 
 
 
 
 
Cost of goods sold (excluding depreciation and amortization)

 
150,361

 
54,213

 
(2,414
)
 
202,160

Selling and general (excluding depreciation and amortization)
102

 
11,722

 
5,589

 

 
17,413

Depreciation and amortization

 
5,406

 
2,736

 

 
8,142

Other operating charges

 
795

 
256

 

 
1,051

Income (loss) from operations
(102
)
 
9,398

 
1,880

 

 
11,176

Equity in earnings (losses) of subsidiaries
(16,304
)
 
(1,471
)
 

 
17,775

 

Interest expense

 
(13,571
)
 
(324
)
 

 
(13,895
)
Intercompany income (loss), net

 
4,486

 
(4,486
)
 

 

Other (loss) income, net

 
(15,023
)
 
967

 

 
(14,056
)
Loss before income taxes
(16,406
)
 
(16,181
)
 
(1,963
)
 
17,775

 
(16,775
)
(Benefit from) provision for income taxes

 
123

 
(492
)
 

 
(369
)
Net loss
$
(16,406
)
 
$
(16,304
)
 
$
(1,471
)
 
$
17,775

 
$
(16,406
)



EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 26, 2014
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net loss
$
(16,406
)
 
$
(16,304
)
 
$
(1,471
)
 
$
17,775

 
$
(16,406
)
Other comprehensive income:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
204

 
204

 
204

 
(408
)
 
204

Defined benefit pension plan adjustments, net of tax
21

 
21

 
18

 
(39
)
 
21

Total comprehensive loss
$
(16,181
)
 
$
(16,079
)
 
$
(1,249
)
 
$
17,328

 
$
(16,181
)






21




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 27, 2013
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net sales
$

 
$
165,866

 
$
64,365

 
$
(2,396
)
 
$
227,835

Costs and expenses: