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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 April 3, 2015
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 195,877 shares of the registrant’s common stock, par value $1.00 per share, issued and outstanding as of May 13, 2015, 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)
 
April 3,
2015
 
December 31,
2014
ASSETS
(unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,868

 
$
2,074

Accounts receivable, less allowances of $1,268 and $1,522, respectively
88,357

 
80,329

Inventories, net
110,648

 
106,385

Income taxes receivable
1,897

 
1,734

Deferred income taxes
424

 
426

Other current assets
7,750

 
7,009

Total current assets
210,944

 
197,957

Property, plant and equipment, net
104,037

 
111,164

Goodwill
180,659

 
190,158

Customer relationships, net
22,754

 
26,315

Other intangible assets, net
6,365

 
6,495

Deferred income taxes
179

 

Other assets
3,924

 
4,687

Total assets
$
528,862

 
$
536,776

LIABILITIES AND SHAREHOLDERS’ DEFICIT
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
83,772

 
$
78,846

Accrued expenses and other current liabilities
25,065

 
25,509

Accrued interest payable
85

 
12,912

   Current portion of long-term debt (Note 2)
450,012

 
4,663

Deferred income taxes
811

 
895

Total current liabilities
559,745

 
122,825

Long-term debt
124,408

 
534,852

Deferred income taxes
14,073

 
15,894

Other liabilities
34,711

 
36,311

Total liabilities
732,937

 
709,882

Shareholders’ deficit:
 
 
 
Common stock
196

 
196

Additional paid-in capital
724,661

 
724,562

Accumulated loss
(934,440
)
 
(903,029
)
Accumulated other comprehensive income
5,508

 
5,165

Total shareholders’ deficit
(204,075
)
 
(173,106
)
Total liabilities and shareholders’ deficit
$
528,862

 
$
536,776

 
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
 
April 3,
2015
 
March 28,
2014
Net sales
$
185,599

 
$
169,904

Costs and expenses:
 

 
 

Cost of goods sold (excluding depreciation and amortization)
160,587

 
146,971

Selling and general (excluding depreciation and amortization)
18,537

 
18,776

Depreciation and amortization
7,499

 
8,202

Other operating charges
2,263

 
965

Loss from operations
(3,287
)
 
(5,010
)
Interest expense
(13,934
)
 
(13,765
)
Other (loss) income, net
(15,465
)
 
196

Loss before income taxes
(32,686
)
 
(18,579
)
(Benefit from) provision for income taxes
(1,275
)
 
693

Net loss
$
(31,411
)
 
$
(19,272
)
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
 
April 3,
2015
 
March 28,
2014
Net loss
$
(31,411
)
 
$
(19,272
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustment
221

 
(389
)
Defined benefit pension plan adjustments
122

 
20

Total comprehensive loss
$
(31,068
)
 
$
(19,641
)
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)

 
Three months ended
 
April 3,
2015
 
March 28,
2014
Cash flows from operating activities:
 
 
 
Net loss
$
(31,411
)
 
$
(19,272
)
Reconciliation of net loss to net cash provided by operating activities:

 

Depreciation and amortization
7,499

 
8,202

Amortization of deferred financing fees
641

 
576

Amortization of debt discount
175

 
129

Share-based compensation
99

 
121

Provision for doubtful accounts
1,318

 
119

Foreign exchange loss (gain)
16,559

 
(212
)
Gain on sale or disposal of assets

 
(6
)
Deferred income taxes
(1,497
)
 
864

Changes in operating assets and liabilities, net of acquisitions

 

Accounts receivable
(12,341
)
 
(18,149
)
Inventories
(6,586
)
 
(14,948
)
Other current assets
(868
)
 
(690
)
Accounts payable and other current liabilities
(5,329
)
 
38,675

Income taxes payable
(390
)
 
501

Other noncurrent assets and liabilities
(339
)
 
204

Net cash used in operating activities
(32,470
)
 
(3,886
)
Cash flows from investing activities:
 
 
 
Proceeds from sales of assets
43

 
43

Capital expenditures
(2,109
)
 
(1,488
)
Net cash used in investing activities
(2,066
)
 
(1,445
)
Cash flows from financing activities:
 
 
 
Net borrowings (repayments) on ABL Credit Facility
24,207

 
(13,756
)
Net borrowings on European Credit Facilities
10,523

 
14,657

Changes in cash overdrafts

 
236

Debt issuance costs

 
(88
)
Net cash provided by financing activities
34,730

 
1,049

Effect of exchange rate changes on cash
(400
)
 
(297
)
Net decrease in cash and cash equivalents
(206
)
 
(4,579
)
Cash and cash equivalents at beginning of period
2,074

 
8,977

Cash and cash equivalents at end of period
$
1,868

 
$
4,398

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 months ended April 3, 2015 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, 2014.
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 $16.2 million and income of $0.2 million for the three months ended April 3, 2015 and March 28, 2014, 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. 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 first quarter of 2015 and 2014 ended on April 3 and March 28, respectively. The first quarter of 2015 contains 6 additional days compared to the first quarter of 2014. 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



In April 2015, the FASB issued new guidance related to the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the guidance is effective for annual and interim periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. The Company is currently assessing the impact of implementing this guidance on the Company's financial position, results of operations, and cash flows.
2. Operations and Significant Accounting Policies
Indebtedness
The $375 million 9.50% Senior Secured Notes (the "Notes") become due on April 1, 2016. In the event the Notes are not refinanced prior to December 31, 2015, the ABL Credit Facility becomes due on January 31, 2016. Generally accepted accounting principles require that long-term debt be classified as a current liability when the maturity date for such debt is within 12 months of a company's reporting period. Accordingly, as of April 3, 2015, the Company is required to classify its outstanding long-term debt under the Notes and the ABL Credit Facility totaling $375 million and $59.8 million, respectively, to current liabilities on its consolidated balance sheet since the Company has not finalized the refinancing of the debt. If the Company were unable to refinance or extend the maturity date of its Notes the Company may not be able to generate sufficient cash to service all of the indebtedness and may not be able to refinance the indebtedness on favorable terms. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond the Company’s control. The Company is actively pursuing several alternatives to address the maturity date of its Notes, including but not limited to engagement of an investment banking firm and legal counsel to facilitate the refinancing process. Based on current market conditions, the Company expects to be able to complete a refinancing of the Notes prior to December 31, 2015, although there can be no assurances of the timing of terms thereof. See Note 4 for further disclosures related to long-term debt.
Accounts Receivable
Accounts receivable are comprised of trade accounts receivable and other receivables. Trade accounts receivable are recorded at net realizable value and totaled $86.8 million and $77.1 million as of April 3, 2015 and December 31, 2014, respectively. This value includes an allowance for estimated uncollectible accounts, returns and allowances, cash discounts and other adjustments. The allowance for doubtful accounts is based on historical experience, the level of past-due accounts based on the contractual terms of the receivables, current economic conditions and an evaluation of the customers' credit worthiness. Accounts receivable are charged against the allowance for doubtful accounts when it is probable that the receivable will not be recovered. During the first quarter of 2015, the Company incurred a loss of $1.2 million in the European Roll Coated Aluminum segment on accounts receivable related to the bankruptcy of a customer in the UK.

3. Inventories
Inventories were comprised of:
 
April 3,
2015
 
December 31,
2014
 
(in thousands)
Aluminum and steel coil
$
71,270

 
$
72,587

Raw materials
19,829

 
16,427

Work in process
2,481

 
2,467

Finished products
17,068

 
14,904

Total inventories, net
$
110,648

 
$
106,385

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 $2.6 million and $2.5 million as of April 3, 2015 and December 31, 2014, respectively.

6



4. Indebtedness
Indebtedness consisted of the following:
 
April 3,
2015
 
December 31,
2014
 
(in thousands)
Senior Secured Notes (9.50%)
$
375,000

 
$
375,000

Senior Unsecured Loan Facility (12.25%)
124,408

 
124,233

ABL Credit Facility
59,826

 
35,619

Dutch Revolving Credit Facility
14,163

 
3,532

French Credit Facility
1,023

 
1,131

Total debt
574,420

 
539,515

Less: current portion
450,012

 
4,663

Total long term debt
$
124,408

 
$
534,852


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 non-voting capital stock of foreign restricted subsidiaries directly owned by Euramax International or a guarantor, and a second priority security interest in the inventory, receivables and related assets.
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 restrictive covenants also prohibit 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. As of April 3, 2015, Euramax International is in compliance with the covenants under the Indenture.

7



As discussed in Note 2, the $375 million outstanding under the Notes has been reclassified from long-term debt to current liabilities as of April 3, 2015.
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 ($0.6 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 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 at April 3, 2015 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.
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. As of April 3, 2015, Euramax International is in compliance with the covenants undet the Credit and Guaranty Agreement governing the Senior Unsecured Loan Facility.
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 Administrative Agent has not received on or before December 31, 2015, evidence satisfactory to such 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 at least 90 days after March 1, 2018, then the maturity date for the ABL Credit Facility will accelerate to January 31, 2016. In March 2014, Wells Fargo Capital Finance, LLC ceased to be Co-Collateral Agent and a Lender under the ABL Credit Facility. As of April 3, 2015, $10.2 million was available to be drawn on the ABL Credit Facility.

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. As of April 3, 2015, 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 April 3, 2015, including the applicable margin payable on outstanding borrowings under the ABL Credit Facility, was 2.25%. 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 (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 April 3, 2015, excess availability exceeded 12.5% of the borrowing base; therefore, Euramax International was not required to meet the 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. As of April 3, 2015, Euramax International is in compliance with the covenants under the credit agreement governing the ABL Credit Facility.
On February 6, 2015 and March 23, 2015, Euramax Holding entered into the Ninth and Tenth Amendments (the “Amendments”), respectively, to the ABL Credit Facility. Borrowings under the revolving credit facility made available pursuant to the ABL Credit Facility are subject to a borrowing base limit and satisfaction of certain conditions. The borrowing base for the existing revolving credit facility includes, subject to notice by the Company and the satisfaction of certain other specified conditions, three mutually exclusive seasonal overadvance amounts, “Seasonal Overadvance (Type A)” in the amount of $15.0 million, “Seasonal Overadvance (Type B)” in the amount of $9.0 million and “Seasonal Overadvance (Type C)” in the amount of $6.0 million. Pursuant to the Amendments, the Company requested the addition of the “Seasonal Overadvance (Type B)” amount to the borrowing base, and the ABL Credit Facility was amended to, among other items, (i) provide for alternate conditions for the “Seasonal Overadvance (Type B)” amount, which will only apply during a specified period in fiscal year 2015, as further described below, (ii) condition availability of the “Seasonal Overadvance (Type A)” amount on the continued satisfaction of the applicable overadvance conditions relating thereto, as further described below, and (iii) amend the financial covenants to, among other things, change certain of the conditions governing when such financial covenants are applicable.
Pursuant to the Amendments, if the “Seasonal Overadvance (Type B)” conditions are not satisfied at any time during the period from January 26, 2015 through May 31, 2015, then the alternate “Seasonal Overadvance (Type B)” conditions shall apply instead during such period. Pursuant to the alternate “Seasonal Overadvance (Type B)” conditions, inclusion of the alternate “Seasonal Overadvance (Type B)” amount in the borrowing base shall be subject to, among other conditions, (i) the Company's demonstrating compliance with (A) a U.S. fixed charge coverage ratio for the most recently ended twelve-month test period of 0.85 to 1.00 and (B) a specified minimum consolidated adjusted EBITDA covenant for the most recently ended twelve-month period of $52.0 million, (ii) payment of a fee equal to 0.2% of the applicable seasonal overadvance amount (the “Seasonal Overadvance Fee) and (iii) other customary conditions.

9



In addition, the Amendments amended the ABL Credit Facility to condition availability of the “Seasonal Overadvance (Type A)” amount in the borrowing base on the continued compliance with the applicable overadvance conditions for such amount. Under the ABL Credit Facility the “Seasonal Overadvance (Type A)” amount is available to the Company from February 1 of each year through June 30 for calendar year 2015 and through May 31 of any other year (each, a “Type A Period”), subject to among other conditions (i) the Company's demonstrating compliance with a fixed charge coverage ratio covenant of 1.00 to 1.00, (ii) payment of the Seasonal Overadvance Fee (except to the extent already paid during such calendar year), (iii) other customary conditions and (iv) pursuant to the Amendments, continued compliance with the foregoing eligibility requirements with respect to any Type A Period, with the “Type A” seasonal overadvance amount being reduced to zero at any time such conditions fail to be satisfied during such Type A Period.
The Amendments also (i) provide for the suspension of the testing of the fixed charge coverage ratio financial covenant in the ABL Credit Facility that is otherwise applicable during certain financial covenant testing periods at any time when the regular “Seasonal Overadvance (Type B)” conditions or the “Seasonal Overadvance (Type C)” conditions are satisfied, and (ii) provides for the suspension of the testing of the minimum consolidated adjusted EBITDA covenant that is otherwise applicable during certain financial covenant testing periods at any time when the regular “Seasonal Overadvance (Type B)” conditions and the “Seasonal Overadvance (Type C)” conditions are not satisfied.
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 April 3, 2015, including the margin payable on outstanding borrowings under the Dutch Revolving Credit Facility, was 2.25%. 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 April 3, 2015, $2.3 million (EUR 2.1 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 April 3, 2015, Euramax Coated Products, BV is in compliance with the covenants under the credit agreement governing the Dutch Credit Facility.

10



5. 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.

11



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:
 
Three months ended
 
April 3,
2015

March 28,
2014
 
(in thousands)
Balance, beginning of period
$
3,970


5,326

Payments made or service provided
(520
)

(621
)
Warranty expense
467


682

Foreign currency translation
(97
)

2

Balance, end of period
$
3,820


$
5,389

6. Income Taxes
The (benefit from) provision for income taxes for 2015 and 2014 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 applied to current year-to-date pre-tax earnings, adjusted for changes in valuation allowances relating to the Company’s realizability of deferred tax assets and changes in tax uncertainties. The Company's interim income tax rate may differ from its estimated annual effective tax rate because accounting standards require the Company to exclude certain entities expected to generate a pretax loss from the overall computation of the estimated annual effective tax rate, as well as items accounted for in the interim period incurred, which may result in a significant variation in the customary relationship between (benefit from) provision for income taxes and pretax accounting income (loss) in interim reporting periods. The effective rates for the three month periods ended April 3, 2015 and March 28, 2014 were a benefit of 3.9% and a provision of 3.7%, respectively.
The effective rate for the three months ended April 3, 2015 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, geographical mix of earnings, changes in estimated uncertain tax positions, and recognition of valuation allowances related to losses in the UK and in U.S. federal and state jurisdictions.
The effective rate for the three months ended March 28, 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, geographical mix of earnings, and recognition of valuation allowances related to losses in the UK and in U.S. federal and state jurisdictions.

12



7. Accumulated Other Comprehensive Income
Changes in accumulated other comprehensive income (loss) by component for the three month period ended April 3, 2015 were as follows:
 
 
Foreign Currency Translation Adjustments
 
Defined Benefit Pension Plan Adjustments
 
Total
 
 
(in thousands)
Balance, beginning of period
 
$
19,557

 
$
(14,392
)
 
$
5,165

Other comprehensive income before reclassifications
 
221

 

 
221

Amounts reclassified from accumulated other comprehensive income
 

 
122

 
122

Net other comprehensive income
 
221

 
122

 
343

Balance, end of period
 
$
19,778

 
$
(14,270
)
 
$
5,508

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 April 3, 2015 and December 31, 2014. 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.
8. 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
 
 
April 3,
2015
 
March 28,
2014
 
 
U.S. Plan
 
UK Plan
 
U.S. Plan
 
UK Plan
 
 
(in thousands)
Service cost
 
$
20

 
$

 
$
14

 
$

Interest cost
 
145

 
440

 
140

 
552

Expected return on assets
 
(189
)
 
(392
)
 
(186
)
 
(466
)
Recognized actuarial net loss
 
78

 
44

 
2

 
18

Total defined benefit net periodic pension cost
 
54

 
92

 
(30
)
 
104

Multiemployer benefit expense
 
272

 

 
258

 

Net periodic pension cost
 
$
326

 
$
92

 
$
228

 
$
104


13



9. 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 (loss) income, net in the condensed consolidated statement of operations. For the three months ended April 3, 2015, the Company recognized gains of $0.8 million. For the three months ended March 28, 2014, the losses related to these forward contracts were not significant.
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 April 3, 2015, the fair value of outstanding derivatives was not significant. For December 31, 2014, the fair value of outstanding derivatives totaled approximately $0.5 million in the line item other current assets. 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. Typically, 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 months ended April 3, 2015 or March 28, 2014.
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 the Notes, included on the consolidated balance sheets in current portion of long-term debt as of April 3, 2015 and long-term debt as of December 31, 2014, is estimated using Level 2 inputs based on dealer quoted prices for the debt instruments based on recent transactions obtained from various sources. As of April 3, 2015, the carrying amount and fair value of the Notes, were $375.0 million and $355.7 million, respectively. As of December 31, 2014, the carrying amount and fair value of the Notes, were $375.0 million and $346.9 million, respectively.

14



10. Other Operating Charges
Other operating charges incurred by operating segment were as follows:
 
Three months ended
 
April 3,
2015
 
March 28,
2014
 
(in thousands)
U.S. Residential Products
$

 
$
108

U.S. Commercial Products

 
30

European Roll Coated Aluminum
268

 

European Engineered Products
242

 
423

Other non-allocated
1,753

 
404

Total other operating charges
$
2,263

 
$
965

For the three months ended April 3, 2015, other operating charges of $2.3 million were primarily comprised of retention costs, severance costs, and legal and professional fees. In the first quarter of 2015, Euramax Holdings instituted a retention compensation program for certain key executives in both North America and Europe to ensure the continuation of operational and strategic initiatives implemented in 2014, which the Company believes have resulted in significant improvements to the Company's operating results, and to secure the management team of the Company to address its pending debt maturities in the first quarter of 2016. Other non-allocated charges of $1.8 million were comprised of retention costs of $0.8 million, professional fees of $0.7 million, and severance costs of $0.3 million. Other operating charges in the European Coated Products segment totaled $0.3 million and were comprised primarily of executive retention costs. The remaining $0.2 million was primarily related to continuing restructuring initiatives in the European Engineered Products segment.
For the three months ended March 28, 2014, other operating charges of $1.0 million were primarily comprised of severance costs and legal and professional fees. Other non-allocated charges of $0.4 million were related to legal and professional fees for consulting services during the executive transition period. Ongoing restructuring initiatives in the European Engineered Products segment totaled $0.4 million, including approximately $0.3 million of severance costs in the UK and $0.1 million of severance costs for various social programs in France. The remaining $0.1 million of other operating costs in the three quarter of 2014 related to various organizational initiatives in the U.S. to reduce operating costs and improve efficiencies.
11. Segment Information
The Company manages its business and serves its customers through reportable segments differentiated by product type, end market, and geography. Beginning in the fourth quarter of 2014, the Company included net sales and the related cost of goods sold for certain commercial panels sold to customers in Residential markets within the U.S. Commercial Products Segment results. Previously, these products were included in the U.S. Residential Products Segment. The Company's results for the three months ended March 28, 2014 have been adjusted to reflect this change in reportable segments.
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.

15



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.
The following table presents information about reported segments for the three months ended April 3, 2015:
 
U.S.
Residential
Products
 
U.S.
Commercial
Products
 
European
Roll Coated
Aluminum
 
European
Engineered Products
 
Other Non-
Allocated
 
Eliminations
 
Consolidated
Three months ended April 3, 2015
(in thousands)
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party
$
56,853

 
$
65,504

 
$
46,939

 
$
16,303

 
$

 
$

 
$
185,599

Intersegment
191

 
41

 
171

 

 

 
(403
)
 

Total net sales
$
57,044

 
$
65,545

 
$
47,110

 
$
16,303

 
$

 
$
(403
)
 
$
185,599

(Loss) income from operations
$
1,725

 
$
(2,793
)
 
$
1,623

 
$
301

 
$
(4,143
)
 
$

 
$
(3,287
)
Depreciation and amortization
$
2,648

 
$
2,456

 
$
1,822

 
$
380

 
$
193

 
$

 
$
7,499

Capital expenditures
$
461

 
$
201

 
$
284

 
$
249

 
$
914

 
$

 
$
2,109


16



The following table presents information about reported segments for the three months ended March 28, 2014:
 
U.S.
Residential
Products
 
U.S.
Commercial
Products
 
European
Roll Coated
Aluminum
 
European
Engineered Products
 
Other Non-
Allocated
 
Eliminations
 
Consolidated
Three months ended March 28, 2014
(in thousands)
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party
$
45,943

 
$
57,456

 
$
49,928

 
$
16,577

 
$

 
$

 
$
169,904

Intersegment
179

 
28

 
209

 

 

 
(416
)
 

Total net sales
$
46,122

 
$
57,484

 
$
50,137

 
$
16,577

 
$

 
$
(416
)
 
$
169,904

(Loss) income from operations
$
(1,634
)
 
$
(4,680
)
 
$
3,929

 
$
(346
)
 
$
(2,279
)
 
$

 
$
(5,010
)
Depreciation and amortization
$
2,733

 
$
2,542

 
$
2,353

 
$
417

 
$
157

 
$

 
$
8,202

Capital expenditures
$
339

 
$
555

 
$
340

 
$
163

 
$
91

 
$

 
$
1,488

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
Customers/Markets
Primary Products
April 3,
2015
 
March 28,
2014
 
 
(in thousands)
Original Equipment Manufacturers (“OEMs”)
Painted aluminum sheet and coil; fabricated painted aluminum, laminated and fiberglass panels; windows and roofing; and composite building panels
$
56,608

 
$
55,735

Home Improvement Retailers
Rain carrying systems, metal panels, roofing accessories, windows, doors and shower enclosures
34,395

 
30,086

Industrial and Architectural Contractors
Metal panels and siding and roofing accessories
33,221

 
33,862

Rural Contractors
Steel and aluminum roofing and siding
21,641

 
18,904

Distributors
Metal coils, rain carrying systems and roofing accessories
19,030

 
14,299

Home Improvement Contractors
Vinyl replacement windows; metal coils, rain carrying systems; metal roofing and insulated roofing panels; shower, patio and entrance doors; and awnings
11,302

 
9,145

Manufactured Housing
Steel siding and trim components
9,402

 
7,873

 
 
$
185,599

 
$
169,904



17




12. 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
APRIL 3, 2015
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
1

 
$
1,867

 
$

 
$
1,868

Accounts receivable, less allowance for doubtful accounts

 
44,951

 
43,406

 

 
88,357

Inventories, net

 
82,166

 
28,482

 

 
110,648

Income taxes receivable

 
538

 
1,359

 

 
1,897

Deferred income taxes

 
382

 
42

 

 
424

Other current assets

 
6,188

 
1,562

 

 
7,750

Total current assets

 
134,226

 
76,718

 

 
210,944

Property, plant and equipment, net

 
51,230

 
52,807

 

 
104,037

Amounts due from affiliates

 
180,183

 
18,275

 
(198,458
)
 

Goodwill

 
81,358

 
99,301

 

 
180,659

Customer relationships, net

 
15,069

 
7,685

 

 
22,754

Other intangible assets, net

 
6,365

 

 

 
6,365

Investment in consolidated subsidiaries
(198,078
)
 
(3,955
)
 

 
202,033

 

Deferred income taxes

 

 
179

 

 
179

Other assets

 
2,477

 
1,447

 

 
3,924

Total assets
$
(198,078
)
 
$
466,953

 
$
256,412

 
$
3,575

 
$
528,862

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

 
$
59,679

 
$
24,093

 
$

 
$
83,772

Accrued expenses and other current liabilities
110

 
14,806

 
10,149

 

 
25,065

Accrued interest payable

 
11

 
74

 

 
85

Current portion of long-term debt

 
434,826

 
15,186

 

 
450,012

Deferred income taxes

 

 
811

 

 
811

Total current liabilities
110

 
509,322

 
50,313

 

 
559,745

Long-term debt

 
124,408

 

 

 
124,408

Amounts due to affiliates
5,887

 
10,811

 
181,760

 
(198,458
)
 

Deferred income taxes

 
11,121

 
2,952

 

 
14,073

Other liabilities

 
9,369

 
25,342

 

 
34,711

Total liabilities
5,997

 
665,031

 
260,367

 
(198,458
)
 
732,937

Shareholders’ (deficit) equity:
 
 
 
 
 
 
 
 
 
Common stock
196

 

 
21

 
(21
)
 
196

Additional paid-in capital
724,661

 
661,769

 
199,452

 
(861,221
)
 
724,661

Accumulated loss
(934,440
)
 
(865,355
)
 
(214,471
)
 
1,079,826

 
(934,440
)
Accumulated other comprehensive income
5,508

 
5,508

 
11,043

 
(16,551
)
 
5,508

Total shareholders’ (deficit) equity
(204,075
)
 
(198,078
)
 
(3,955
)
 
202,033

 
(204,075
)
Total liabilities and shareholders’ (deficit) equity
$
(198,078
)
 
$
466,953

 
$
256,412

 
$
3,575

 
$
528,862


19




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2014
(in thousands)

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

 
$
4

 
$
2,070

 
$

 
$
2,074

Accounts receivable, less allowance for doubtful accounts

 
39,607

 
40,722

 

 
80,329

Inventories, net

 
75,512

 
30,873

 

 
106,385

Income taxes receivable

 
235

 
1,499

 

 
1,734

Deferred income taxes

 
381

 
45

 

 
426

Other current assets

 
5,425

 
1,584

 

 
7,009

Total current assets

 
121,164

 
76,793

 

 
197,957

Property, plant and equipment, net

 
53,042

 
58,122

 

 
111,164

Amounts due from affiliates

 
202,008

 
19,277

 
(221,285
)
 

Goodwill

 
81,359

 
108,799

 

 
190,158

Customer relationships, net

 
16,826

 
9,489

 

 
26,315

Other intangible assets, net

 
6,495

 

 

 
6,495

Investment in consolidated subsidiaries
(167,335
)
 
(5,318
)
 

 
172,653

 

Deferred income taxes

 

 

 

 

Other assets

 
2,883

 
1,804

 

 
4,687

Total assets
$
(167,335
)
 
$
478,459

 
$
274,284

 
$
(48,632
)
 
$
536,776

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

 
$
49,869

 
$
28,977

 
$

 
$
78,846

Accrued expenses and other current liabilities

 
16,284

 
9,225

 

 
25,509

Accrued interest payable

 
12,837

 
75

 

 
12,912

Current portion of long term debt

 

 
4,663

 

 
4,663

Deferred income taxes

 

 
895

 

 
895

Total current liabilities

 
78,990

 
43,835

 

 
122,825

Long-term debt

 
534,852

 

 

 
534,852

Amounts due to affiliates
5,771

 
11,982

 
203,532

 
(221,285
)
 

Deferred income taxes

 
10,468

 
5,426

 

 
15,894

Other liabilities

 
9,502

 
26,809

 

 
36,311

Total liabilities
5,771

 
645,794

 
279,602

 
(221,285
)
 
709,882

Shareholders’ (deficit) equity:
 
 
 
 
 
 
 
 
 
Common stock
196

 

 
21

 
(21
)
 
196

Additional paid-in capital
724,562

 
661,673

 
199,453

 
(861,126
)
 
724,562

Accumulated loss
(903,029
)
 
(834,173
)
 
(215,570
)
 
1,049,743

 
(903,029
)
Accumulated other comprehensive income
5,165

 
5,165

 
10,778

 
(15,943
)
 
5,165

Total shareholders’ (deficit) equity
(173,106
)
 
(167,335
)
 
(5,318
)
 
172,653

 
(173,106
)
Total liabilities and shareholders’ (deficit) equity
$
(167,335
)
 
$
478,459

 
$
274,284

 
$
(48,632
)
 
$
536,776


20





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

FOR THE THREE MONTHS ENDED APRIL 3, 2015
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net sales
$

 
$
121,117

 
$
66,026

 
$
(1,544
)
 
$
185,599

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

 
106,810

 
55,321

 
(1,544
)
 
160,587

Selling and general (excluding depreciation and amortization)
229

 
11,901

 
6,407

 

 
18,537

Depreciation and amortization

 
5,262

 
2,237

 

 
7,499

Other operating charges

 
1,753

 
510

 

 
2,263

(Loss) income from operations
(229
)
 
(4,609
)
 
1,551

 

 
(3,287
)
Equity in earnings (losses) of subsidiaries
(31,182
)
 
1,099

 

 
30,083

 

Interest expense

 
(13,545
)
 
(389
)
 

 
(13,934
)
Intercompany income (loss), net

 
3,780

 
(3,780
)
 

 

Other (loss) income, net

 
(17,479
)
 
2,014

 

 
(15,465
)
Loss before income taxes
(31,411
)
 
(30,754
)
 
(604
)
 
30,083

 
(32,686
)
(Benefit from) provision for income taxes

 
428

 
(1,703
)
 

 
(1,275
)
Net loss
$
(31,411
)
 
$
(31,182
)
 
$
1,099

 
$
30,083

 
$
(31,411
)




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 3, 2015
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net loss
$
(31,411
)
 
$
(31,182
)
 
$
1,099

 
$
30,083

 
$
(31,411
)
Other comprehensive income:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
221

 
221

 
221

 
(442
)
 
221

Defined benefit pension plan adjustments, net of tax
122

 
122

 
44

 
(166
)
 
122

Total comprehensive loss
$
(31,068
)
 
$
(30,839
)
 
$
1,364

 
$
29,475

 
$
(31,068
)






21




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

FOR THE THREE MONTHS ENDED MARCH 28, 2014
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net sales
$

 
$
101,846

 
$
69,582

 
$
(1,524
)
 
$
169,904

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

 
91,773

 
56,722

 
(1,524
)
 
146,971

Selling and general (excluding depreciation and amortization)
118

 
12,411

 
6,247

 

 
18,776

Depreciation and amortization

 
5,389

 
2,813

 

 
8,202

Other operating charges

 
542

 
423

 

 
965

(Loss) income from operations
(118
)
 
(8,269
)
 
3,377

 

 
(5,010
)
Equity in earnings (losses) of subsidiaries
(19,154
)
 
(1,692
)
 

 
20,846

 

Interest expense

 
(13,407
)
 
(358
)
 

 
(13,765
)
Intercompany income (loss), net

 
4,565

 
(4,565
)
 

 

Other income (loss), net

 
317

 
(121
)
 

 
196

Loss before income taxes
(19,272
)
 
(18,486
)
 
(1,667
)
 
20,846

 
(18,579
)
Provision for income taxes

 
668

 
25

 

 
693

Net loss
$
(19,272
)
 
$
(19,154
)
 
$
(1,692
)
 
$
20,846

 
$
(19,272
)




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 28, 2014
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net loss
$
(19,272
)
 
$
(19,154
)
 
$
(1,692
)
 
$
20,846

 
$
(19,272
)
Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
(389
)
 
(389
)
 
(389
)
 
778

 
(389
)
Defined benefit pension plan adjustments, net of tax
20

 
20

 
18

 
(38
)
 
20

Total comprehensive loss
$
(19,641
)
 
$
(19,523
)
 
$
(2,063
)
 
$
21,586

 
$
(19,641
)





22




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

FOR THE THREE MONTHS ENDED APRIL 3, 2015
(in thousands)
(unaudited)

Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net cash used in operating activities
$

 
$
(25,168
)
 
$
(7,302
)
 
$

 
$
(32,470
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 


Proceeds from sale of assets

 
43

 

 

 
43

Capital expenditures

 
(1,563
)
 
(546
)
 

 
(2,109
)
Due (to) from affiliates

 

 
(2,478
)
 
2,478

 

Net cash used in investing activities

 
(1,520
)
 
(3,024
)
 
2,478

 
(2,066
)
Cash flows from financing activities:


 


 


 


 


Net borrowings on ABL Credit Facility

 
24,207

 

 

 
24,207

Net borrowings on European Credit Facilities

 

 
10,523

 

 
10,523

Due from (to) affiliates

 
2,478

 

 
(2,478
)
 

Net cash provided by financing activities

 
26,685

 
10,523

 
(2,478
)
 
34,730

Effect of exchange rate changes on cash

 

 
(400
)
 

 
(400
)
Net decrease in cash and cash equivalents

 
(3
)
 
(203
)
 

 
(206
)
Cash and cash equivalents at beginning of period

 
4

 
2,070

 

 
2,074

Cash and cash equivalents at end of period
$

 
$
1

 
$
1,867

 
$

 
$
1,868




23




EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 28, 2014
(in thousands)
(unaudited)
 
Parent
 
Issuer
 
Non-Guarantor
 
Eliminations
 
Total
Net cash (used in) provided by operating activities
$

 
$
4,233

 
$
(8,119
)
 
$

 
$
(3,886
)
Cash flows from investing activities:


 


 


 


 
 
Proceeds from sale of assets

 
43

 

 

 
43

Capital expenditures

 
(976
)
 
(512
)
 

 
(1,488
)
Due (to) from affiliates

 

 
(8,616
)
 
8,616

 

Net cash used in investing activities

 
(933
)
 
(9,128
)
 
8,616

 
(1,445
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Net borrowings on Dutch Revolving Credit Facility

 

 
14,657

 

 
14,657

Net repayments on ABL Credit Facility

 
(13,756
)
 

 

 
(13,756
)
Changes in cash overdrafts

 
236

 

 

 
236

Debt issuance costs

 
(88
)
 

 

 
(88
)
Due from (to) affiliates

 
8,616

 

 
(8,616
)
 

Net cash provided by (used in) financing activities

 
(4,992
)
 
14,657

 
(8,616
)
 
1,049

Effect of exchange rate changes on cash

 

 
(297
)
 

 
(297
)
Net decrease in cash and cash equivalents

 
(1,692
)
 
(2,887
)