RegistrationNo. 333-173733
• | We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradable. | |
• | You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer. |
• | The exchange offer expires at 5:00 p.m., New York City time, on July 11, 2011, unless extended. We do not currently intend to extend the expiration date. |
• | The exchange notes to be issued in the exchange offer will not be a taxable event for U.S. federal income tax purposes. | |
• | We will not receive any proceeds from the exchange offer. |
• | The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradable, except in the limited circumstances described below. |
• | The exchange notes may be sold in theover-the-counter market, in negotiated transactions or through a combination of such methods. We do not plan to list the notes on a national market. |
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Prospectus Summary | 1 | |||
Risk Factors | 14 | |||
Forward-Looking Statements | 33 | |||
Use of Proceeds | 34 | |||
Capitalization | 35 | |||
Unaudited Pro Forma Condensed Consolidated Financial Data | 36 | |||
Selected Historical Consolidated Financial Data | 41 | |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 43 | |||
Business | 65 | |||
Management | 77 | |||
Executive Compensation | 81 | |||
Security Ownership of Certain Beneficial Owners | 101 | |||
Certain Relationships and Related Party Transactions | 103 | |||
Description of Other Indebtedness | 107 | |||
The Exchange Offer | 111 | |||
Description of Notes | 121 | |||
Material U.S. Federal Income Tax Consequences | 200 | |||
Certain ERISA Considerations | 201 | |||
Plan of Distribution | 203 | |||
Legal Matters | 204 | |||
Experts | 204 | |||
Where You Can Find More Information | 205 | |||
Index to Consolidated Financial Statements | F-1 |
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* | Holdings is a guarantor of our senior secured asset-based revolving credit facilities (the “ABL facilities”). | |
** | Associated Materials, LLC and AMH New Finance, Inc. are co-issuers of the notes. | |
*** | Gentek Holdings, LLC is a guarantor of the notes and our ABL facilities, and Gentek Building Products, Inc. is also a guarantor of the notes and is the borrower under the U.S. portion of our ABL facilities. | |
**** | The non-guarantor subsidiaries are borrowers or guarantors under the Canadian portion of our $225.0 million ABL facilities, which are comprised of a $150.0 million U.S. facility and a $75.0 million Canadian facility. None of these entities are guarantors of the notes or of the $150.0 million U.S. facility. In addition, Associated Materials Finance, Inc. is not a guarantor of the notes or our ABL facilities, as it is an “immaterial subsidiary” under the indenture governing the notes and our ABL facilities. |
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General | In connection with the private placement, we entered into a registration rights agreement with the purchasers in which we agreed, among other things, to deliver this prospectus to you and to obtain the effectiveness of the registration statement on Form S-4 of which this prospectus is a part within 360 days after the date of original issuance of the outstanding notes. You are entitled to exchange in the exchange offer your outstanding notes for exchange notes, which are substantially identical in all material respects to the outstanding notes except: | |
• the exchange notes have been registered under the Securities Act; | ||
• the terms with respect to transfer restrictions no longer apply, provided that the resale conditions described below are satisfied; | ||
• the exchange notes are not entitled to any registration rights that are applicable to the outstanding notes under the registration rights agreement; and | ||
• the provisions of the registration rights agreement that provide for payment of additional amounts upon a registration default are no longer applicable. | ||
The Exchange Offer | We are offering to exchange up to $730,000,000 aggregate principal amount of our 9.125% Senior Secured Notes due 2017 and the related guarantees, which have been registered under the Securities Act, for any and all of our outstanding 9.125% Senior Secured Notes due 2017 and the related guarantees. | |
Outstanding notes may be exchanged only in denominations of $2,000 and in integral multiples of $1,000 in excess thereof. | ||
Subject to the satisfaction or waiver of specified conditions, we will exchange the exchange notes for all outstanding notes that are validly tendered and not validly withdrawn prior to the expiration of the exchange offer. We will cause the exchange to be effected promptly after the expiration of the exchange offer. | ||
Resale | Based on an interpretation by the staff of the Securities and Exchange Commission (the “SEC”) set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration |
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and prospectus delivery provisions of the Securities Act, provided that: | ||
• you are acquiring the exchange notes in the ordinary course of your business; and | ||
• you have not engaged in, do not intend to engage in and have no arrangement or understanding with any person to participate in a distribution of the exchange notes. | ||
If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.” | ||
Any holder of outstanding notes who: | ||
• is our affiliate; | ||
• does not acquire exchange notes in the ordinary course of its business; or | ||
• tenders its outstanding notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes | ||
cannot rely on the position of the staff of the SEC enunciated in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling (available July 2, 1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. |
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on July 11, 2011, unless extended by us. We do not currently intend to extend the expiration of the exchange offer. |
Withdrawal | You may withdraw the tender of your outstanding notes at any time prior to the expiration of the exchange offer. We will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer. | |
Interest on the Exchange Notes and the Outstanding Notes | Each exchange note bears interest at the rate of 9.125% per annum from the original issuance date of the outstanding notes or from the most recent date on which interest has been paid on the notes. The interest on the notes is payable on May 1 and November 1 of each year, commencing May 1, 2011. No interest will be paid on outstanding notes following their acceptance for exchange. | |
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, which we may waive. See “The Exchange Offer — Conditions to the Exchange Offer.” |
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Procedures for Tendering Outstanding Notes | If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of such letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of such letter of transmittal, together with the outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal. | |
If you hold outstanding notes through The Depository Trust Company (“DTC”) and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC by which you will agree to be bound by the letter of transmittal. | ||
By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things: | ||
• you are not our “affiliate” within the meaning of Rule 405 under the Securities Act; | ||
• you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes in violation of the provisions of the Securities Act; | ||
• you are not engaged in, and do not intend to engage in, a distribution of the exchange notes in violation of the provisions of the Securities Act; | ||
• you are acquiring the exchange notes in the ordinary course of your business; and | ||
• if you are a broker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes. | ||
Special Procedures for Beneficial Owners | If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. | |
Guaranteed Delivery Procedures | If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required |
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documents, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests, prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.” | ||
Effect on Holders of Outstanding Notes | As a result of the making of, and upon acceptance for exchange of all validly tendered outstanding notes pursuant to the terms of the exchange offer, we will have fulfilled a covenant under the registration rights agreement. Accordingly, there will be no payments of additional amounts on the outstanding notes under the circumstances described in the registration rights agreement. If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture, except we will not have any further obligation to you to provide for the exchange and registration of the outstanding notes under the registration rights agreement. To the extent that outstanding notes are tendered and accepted in the exchange offer, the trading market for outstanding notes could be adversely affected. | |
Consequences of Failure to Exchange | All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act or except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not intend to register the outstanding notes under the Securities Act, except as otherwise required by the registration rights agreement. | |
United States Federal Income Tax Consequences of the Exchange Offer | The exchange of outstanding notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. See “Material U.S. Federal Income Tax Consequences — Exchange Offer.” | |
Use of Proceeds | We will not receive any cash proceeds from the issuance of exchange notes in the exchange offer. See “Use of Proceeds.” | |
Exchange Agent | Wells Fargo Bank, National Association is the exchange agent for the exchange offer. The addresses and telephone numbers of the exchange agent are set forth in the section captioned “The Exchange Offer — Exchange Agent.” |
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Co-Issuers | Associated Materials, LLC and AMH New Finance, Inc. | |
Securities Offered | $730,000,000 million aggregate principal amount of 9.125% Senior Secured Notes due 2017 and the related guarantees. | |
Maturity Date | November 1, 2017. | |
Interest Rate | 9.125% per annum. | |
Interest Payment Dates | May 1 and November 1 of each year, commencing May 1, 2011. Interest accrues from the original issuance date of the outstanding notes or from the most recent date on which interest has been paid on the notes. |
Guarantees | The exchange notes initially will be guaranteed, jointly and severally, by all of our direct and indirect domestic subsidiaries that guarantee our ABL facilities. See “Description of Notes — Note Guarantees.” | |
Our subsidiaries that do not guarantee the exchange notes represented approximately 22% and 48% of our net sales and operating profit excluding Merger costs, respectively, for the fiscal year ended January 1, 2011 and approximately 21% and 6% of our net sales and operating loss, excluding Merger costs, respectively, for the quarter ended April 2, 2011. In addition, these non-guarantor subsidiaries represented approximately 29% and 11% of our assets and liabilities (including trade payables and excluding intercompany liabilities), respectively, as of April 2, 2011. |
Collateral | The exchange notes and the guarantees will be secured by a first-priority lien on substantially all of our and our guarantors’ present and future assets located in the United States (other than the ABL Collateral (as defined below), in which the notes and the guarantees will have a second-priority lien, and other Excluded Assets (as defined in the Description of Notes)), including equipment, owned real property valued at $5.0 million or more, all present and future shares of capital stock of each of our and each guarantor’s material directly wholly-owned domestic subsidiaries and 65% of the present and future shares of capital stock of each of our and each guarantor’s directly owned foreign restricted subsidiaries (other than Canadian subsidiaries), in each case subject to certain exceptions and customary permitted liens. Such assets are referred to as the “Notes Collateral.” | |
In addition, the exchange notes and the guarantees will be secured by a second-priority lien on substantially all of our and our guarantors’ present and future assets, which assets also secure our |
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obligations under our ABL facilities, including accounts receivable, inventory, related general intangibles, certain other related assets and proceeds thereof. Such assets are referred to as the “ABL Collateral.” We refer to the Notes Collateral and the ABL Collateral together as the “Collateral.” The Bank Lenders (as defined below) will have a first-priority lien securing our ABL facilities and other customary liens subject to an intercreditor agreement relating to the exchange notes, until such ABL facilities and obligations are paid in full. See “Description of Notes — Security for the Notes.” | ||
No appraisal of the value of the Collateral has been made in connection with this exchange offer, and the value of Collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the Collateral. The liens on the Collateral may be released without the consent of the holders of the exchange notes if Collateral is disposed of in a transaction that complies with the indenture governing the notes and related security documents, including in accordance with the provisions of the intercreditor agreement entered into relating to the Collateral securing our ABL facilities on a first-priority basis. In the event of a liquidation of the Collateral, the proceeds may not be sufficient to satisfy the obligations under the exchange notes. | ||
Ranking | The exchange notes and guarantees will constitute senior secured debt of the issuers and the guarantors. They will rank: | |
• equally in right of payment with all of our and the guarantors’ existing and future senior debt, including their obligations under our ABL facilities; | ||
• senior in right of payment to all of our and the guarantors’ existing and future subordinated debt; | ||
• effectively subordinated to all of our and the guarantors’ indebtedness and obligations that are secured by first-priority liens under our ABL facilities to the extent of the value of the ABL Collateral; | ||
• effectively senior to our and the guarantors’ obligations under our ABL facilities, to the extent of the value of the Notes Collateral; | ||
• effectively senior to our and the guarantors’ senior unsecured indebtedness, to the extent of the value of the Collateral (after giving effect to any senior lien on the Collateral); and | ||
• structurally subordinated to all existing and future indebtedness and other liabilities, including preferred stock, of our non-guarantor subsidiaries, including the Canadiansub-facility of our ABL facilities (other than indebtedness and liabilities owed to us or one of our guarantor subsidiaries). | ||
Intercreditor Agreement | The trustee and the collateral agent under the indenture governing the notes and the administrative agent and collateral agent under our ABL facilities have entered into an intercreditor agreement as to the relative priorities of their respective security interests in the Collateral and certain other matters relating to the administration of |
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security interests. See “Description of Notes — Security for the Notes — Intercreditor Agreement.” | ||
Optional Redemption | Except as described below, we cannot redeem the exchange notes before November 1, 2013. Thereafter, we may redeem some or all of the exchange notes at the redemption prices listed under “Description of Notes — Optional Redemption,” plus accrued and unpaid interest to the redemption date. | |
Before November 1, 2013, we may redeem the exchange notes, in whole or in part, at a price equal to 100% of the principal amount thereof plus the make-whole premium described under “Description of Notes — Optional Redemption.” | ||
Additionally, during any12-month period before November 1, 2013, we may redeem up to 10% of the aggregate principal amount of the notes at a redemption price equal to 103.00% of the principal amount thereof plus accrued and unpaid interest, if any. | ||
At any time (which may be more than once) before November 1, 2013, we may redeem up to 35% of the aggregate principal amount of notes issued with the net proceeds that we raise in one or more equity offerings, as long as: | ||
• we pay 109.125% of the face amount of the notes, plus accrued interest to the date of redemption; | ||
• we redeem the notes within 120 days of completing the equity offering; and | ||
• at least 50% of the aggregate principal amount of notes issued remains outstanding afterwards. | ||
Change of Control | If a change of control occurs, we must give holders of the notes the opportunity to sell us their notes at 101% of their face amount, plus accrued and unpaid interest. For more details, you should read “Description of Notes — Repurchase at the Option of Holders — Change of Control.” | |
Asset Sale Proceeds | If we or our subsidiaries engage in asset sales, we generally must either invest the net cash proceeds from such asset sales in our business within a period of time, pre-pay certain secured senior debt or make an offer to purchase a principal amount of the notes equal to the excess net cash proceeds. The purchase price of the notes will be 100% of their principal amount, plus accrued and unpaid interest. See “Description of Notes — Repurchase at the Option of the Holders — Asset Sales.” | |
Covenants | The indenture governing the exchange notes, among other things, limits our ability and the ability of our restricted subsidiaries to: | |
• pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments; | ||
• incur additional debt or issue certain disqualified stock and preferred stock; | ||
• incur liens on assets; |
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• merge or consolidate with another company or sell all or substantially all assets; | ||
• enter into transactions with affiliates; and | ||
• allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments to us. | ||
These covenants are subject to important exceptions and qualifications as described under “Description of Notes — Certain Covenants.” Most of these covenants will cease to apply for so long as the exchange notes have investment grade ratings from both Moody’s Investors Service, Inc. and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. | ||
No Prior Market | The exchange notes are a new issue of securities, and there is currently no established trading market for the exchange notes. We do not intend to apply for a listing of the exchange notes on any securities exchange or an automated dealer quotation system. Accordingly, there can be no assurance as to the development or liquidity of any market for the exchange notes. |
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Pro Forma | Predecessor | Pro Forma | Successor | |||||||||||||||||||||||||||||||||
Predecessor | Combined | Year | Quarter | Quarter | Quarter | |||||||||||||||||||||||||||||||
Years Ended | Year Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||
December 30, | December 29, | January 3, | January 2, | January 1, | January 1, | April 3, | April 3, | April 2, | ||||||||||||||||||||||||||||
2006 | 2007 | 2009 | 2010 | 2011 | 2011 | 2010 | 2010 | 2011 | ||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||
Statements of operations data: | ||||||||||||||||||||||||||||||||||||
Net sales | $ | 1,250,054 | $ | 1,204,056 | $ | 1,133,956 | $ | 1,046,107 | $ | 1,167,187 | $ | 1,167,993 | $ | 204,237 | $ | 204,237 | $ | 196,736 | ||||||||||||||||||
Cost of sales | 947,776 | 899,839 | 859,107 | 765,691 | 881,246 | 858,383 | 155,798 | 155,868 | 156,657 | |||||||||||||||||||||||||||
Gross profit | 302,278 | 304,217 | 274,849 | 280,416 | 285,941 | 309,610 | 48,439 | 48,369 | 40,079 | |||||||||||||||||||||||||||
Selling, general and administrative expenses | 203,844 | 208,001 | 212,025 | 204,610 | 212,991 | 230,565 | 47,481 | 52,985 | 58,916 | |||||||||||||||||||||||||||
Merger costs | — | — | — | — | 110,072 | — | — | — | — | |||||||||||||||||||||||||||
Manufacturing restructuring costs | — | — | 1,783 | 5,255 | — | — | — | — | — | |||||||||||||||||||||||||||
Impairment of long-lived assets | 3,423 | — | — | — | — | �� | — | — | — | |||||||||||||||||||||||||||
Facility closure costs, net | (92 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Income (loss) from operations | 95,103 | 96,216 | 61,041 | 70,551 | (37,122 | ) | 79,045 | 958 | (4,616 | ) | (18,837 | ) | ||||||||||||||||||||||||
Interest expense, net | 80,947 | 81,087 | 82,567 | 77,352 | 74,879 | 74,417 | 18,694 | 18,555 | 18,700 | |||||||||||||||||||||||||||
Net (gain) loss on debt extinguishments | — | — | — | (29,665 | ) | 9,928 | — | — | — | — | ||||||||||||||||||||||||||
Foreign currency (gain) loss | (703 | ) | (227 | ) | 1,809 | (184 | ) | 587 | 587 | (122 | ) | (122 | ) | (30 | ) | |||||||||||||||||||||
Income (loss) before income taxes | 14,859 | 15,356 | (23,335 | ) | 23,048 | (122,516 | ) | 4,041 | (17,614 | ) | (23,049 | ) | (37,507 | ) | ||||||||||||||||||||||
Income taxes | 13,989 | 7,051 | 53,062 | 2,390 | 13,773 | 62,497 | 1,078 | (1,014 | ) | (389 | ) | |||||||||||||||||||||||||
Net income (loss) | $ | 870 | $ | 8,305 | $ | (76,397 | ) | $ | 20,658 | $ | (136,289 | ) | $ | (58,456 | ) | $ | (18,692 | ) | $ | (22,035 | ) | $ | (37,118 | ) | ||||||||||||
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Pro Forma | Predecessor | Pro Forma | Successor | |||||||||||||||||||||||||||||||||
Predecessor | Combined | Year | Quarter | Quarter | Quarter | |||||||||||||||||||||||||||||||
Years Ended | Year Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||
December 30, | December 29, | January 3, | January 2, | January 1, | January 1, | April 3, | April 3, | April 2, | ||||||||||||||||||||||||||||
2006 | 2007 | 2009 | 2010 | 2011 | 2011 | 2010 | 2010 | 2011 | ||||||||||||||||||||||||||||
(In thousands, except for ratios) | ||||||||||||||||||||||||||||||||||||
Other data: | ||||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 14,648 | $ | 12,393 | $ | 11,498 | $ | 8,733 | $ | 15,462 | $ | 5,050 | $ | 2,400 | ||||||||||||||||||||||
Cash dividends | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(1) | 1.16 | x | 1.17 | x | 0.75 | x | 1.26 | x | — | (3) | 1.05 | x | 1.04 | x | 0.79 | x | 0.13 | x | ||||||||||||||||||
Balance sheet data (at end of period): | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 15,015 | $ | 21,603 | $ | 6,709 | $ | 55,905 | $ | 13,789 | $ | 23,682 | $ | 5,682 | ||||||||||||||||||||||
Working capital(2) | 152,752 | 163,444 | 172,857 | 139,334 | 98,694 | 143,191 | 107,944 | |||||||||||||||||||||||||||||
Total assets | 796,198 | 802,461 | 752,466 | 762,129 | 1,755,904 | 765,161 | 1,770,295 | |||||||||||||||||||||||||||||
Total debt | 703,625 | 702,285 | 745,762 | 675,360 | 788,000 | 693,423 | 824,185 | |||||||||||||||||||||||||||||
Stockholders’ (deficit)/member’s equity | (273,156 | ) | (254,477 | ) | (356,866 | ) | (325,205 | ) | 498,477 | (340,792 | ) | 474,350 |
(1) | The ratio of earnings to fixed charges is computed by dividing income (or loss) from continuing operations before income taxes and fixed charges less interest capitalized during such period, net of amortization of previously capitalized interest, and preferred stock dividends or accretion on preferred stock by fixed charges. Fixed charges consist of interest, expensed or capitalized, on borrowings (including or excluding deposits, as applicable) and the portion of rental expense that is representative of interest. | |
(2) | Working capital is defined as current assets minus current liabilities. | |
(3) | For the year ended January 1, 2011, earnings were inadequate to cover fixed charges, and the ratio of earnings to fixed charges therefore has not been presented for that period. The coverage deficiency necessary for the ratio of earnings to fixed charges to equal 1.00x(one-to-one coverage) was $50.5 million for the year ended January 1, 2011. |
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• | We must use a substantial portion of our cash flow from operations to pay interest and principal on our senior secured asset-based revolving credit facilities (the “ABL facilities”) and 9.125% Senior Secured Notes due 2017 (the “notes”) and other indebtedness, which reduces funds available to us for other purposes, such as working capital, capital expenditures, other general corporate purposes and potential acquisitions; | |
• | our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; | |
• | we are exposed to fluctuations in interest rates because the ABL facilities have a variable rate of interest; | |
• | our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; |
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• | we may be more vulnerable to the current economic downturn and adverse developments in our business; and | |
• | we may be unable to comply with financial and other restrictive covenants in the ABL facilities, the notes and other indebtedness, as applicable, some of which requires the obligor to maintain specified financial ratios and limits our ability to incur additional debt and sell assets, which could result in an event of default that, if not cured or waived, would have an adverse effect on our business and prospects and could result in bankruptcy. |
• | pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments; | |
• | incur additional debt or issue certain disqualified stock and preferred stock; | |
• | sell or otherwise dispose of assets, including capital stock of subsidiaries; | |
• | incur liens on assets; | |
• | merge or consolidate with another company or sell all or substantially all assets; |
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• | enter into transactions with affiliates; and | |
• | allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments to us. |
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• | a sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture; | |
• | with respect to collateral held by a guarantor, upon the release of the guarantor from its guarantee; | |
• | to the extent any lease is collateral, upon termination of such lease; | |
• | with respect to collateral that is capital stock, upon the dissolution of the issuer of that capital stock in accordance with the indenture; and | |
• | with respect to any collateral constituting inventory, receivables and other ABL Collateral, in which the notes have a second-priority lien, upon any release by the lenders under the ABL facilities of their first-priority lien in that collateral (subject to the interest of the holders of the notes in the proceeds of that collateral), as described in the preceding risk factor. |
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• | incurred the guarantee of the notes or granted the lien with the intent of hindering, delaying or defrauding current or future creditors; | |
• | received less than reasonably equivalent value or fair consideration for incurring the guarantee of the notes or granting the lien; | |
• | was insolvent or was rendered insolvent; | |
• | was engaged, or about to engage, in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business; or |
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• | intended to incur, or believed that it would incur, debts beyond its ability to pay as such debts matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes); |
• | the sum of its debts (including contingent liabilities) is greater than its assets, at fair valuation; | |
• | the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; or | |
• | it could not pay its debts as they became due. |
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• | our operations and results of operations; | |
• | declines in remodeling and home building industries, economic conditions and changes in interest rates, foreign currency exchange rates and other conditions; | |
• | deteriorations in availability of consumer credit, employment trends, levels of consumer confidence and spending and consumer preferences; | |
• | changes in raw material costs and availability of raw materials and finished goods; | |
• | the unavailability, reduction or elimination of government and economic home buying and remodeling incentives; | |
• | our ability to continuously improve organizational productivity and global supply chain efficiency and flexibility; | |
• | market acceptance of price increases; | |
• | declines in national and regional trends in home remodeling and new housing starts; | |
• | increases in competition from other manufacturers of vinyl and metal exterior residential building products as well as alternative building products; | |
• | changes in weather conditions; | |
• | consolidation of our customers; | |
• | our ability to attract and retain qualified personnel; | |
• | our ability to comply with certain financial covenants in the indenture governing the notes and our ABL facilities; | |
• | declines in market demand; | |
• | our substantial level of indebtedness; | |
• | increases in our indebtedness; | |
• | increases in costs of environmental compliance or environmental liabilities; | |
• | increases in warranty or product liability claims; | |
• | increases in capital expenditure requirements; and | |
• | the other factors discussed under “Risk Factors” and elsewhere in this prospectus. |
33
34
As of April 2, | ||||
2011 | ||||
(In thousands) | ||||
Cash and cash equivalents | $ | 5,682 | ||
Long-term debt: | ||||
Borrowings under ABL facilities(1) | $ | 94,185 | ||
9.125% senior secured notes due 2017 | 730,000 | |||
Total long-term debt | 824,185 | |||
Total member’s equity | 474,350 | |||
Total capitalization | $ | 1,298,535 | ||
(1) | The ABL facilities provide for a five-year asset based revolving credit facility in the amount of $225.0 million, comprised of a $150.0 million U.S. facility and a $75.0 million Canadian facility, in each case subject to borrowing base availability under the applicable facility. As of April 2, 2011, we had unused commitments under the ABL facilities of $130.8 million, of which $36.5 million was available under our borrowing base as of such date, after taking into consideration outstanding and undrawn stand-by letters of credit of $7.3 million primarily securing deductibles of various insurance policies. See “Description of Other Indebtedness.” |
35
36
FOR THE QUARTER ENDED APRIL 3, 2010
Quarter | ||||||||||||
Ended | Adjustments for | |||||||||||
April 3, 2010 | the Merger | Pro Forma | ||||||||||
(In thousands) | ||||||||||||
Net sales | $ | 204,237 | $ | — | $ | 204,237 | ||||||
Cost of sales | 155,798 | 70 | (a) | 155,868 | ||||||||
Gross profit | 48,439 | (70 | ) | 48,369 | ||||||||
Selling, general and administrative expenses | 47,481 | 5,504 | (a) | 52,985 | ||||||||
Income (loss) from operations | 958 | (5,574 | ) | (4,616 | ) | |||||||
Interest expense, net | 18,694 | (139 | )(b) | 18,555 | ||||||||
Foreign currency (gain) | (122 | ) | — | (122 | ) | |||||||
Loss before income taxes | (17,614 | ) | (5,435 | ) | (23,049 | ) | ||||||
Income taxes (benefit) | 1,078 | (2,092 | )(c) | (1,014 | ) | |||||||
Net loss | $ | (18,692 | ) | $ | (3,343 | ) | $ | (22,035 | ) | |||
(a) | Details of the pro forma adjustments to cost of sales and selling, general and administrative expenses reflect the following: (i) incremental depreciation and amortization of tangible and intangible assets and liabilities resulting from fair value adjustments recorded as a result of purchase accounting, (ii) adjustments to pension expense based on recording fair value adjustments for pension liabilities, (iii) amortization of net liabilities related to the fair values recorded for leases and warranties as a result of purchase accounting, and (iv) the elimination of the management fees payable to Harvest Partners. |
Cost of sales: | ||||
Net increase in depreciation and amortization for fair value adjustments to property, plant and equipment | $ | 709 | ||
Net decrease in amortization for fair value adjustments to intangibles | (155 | ) | ||
Decrease in pension expense related to purchase accounting adjustments | (193 | ) | ||
Net decrease in lease expense related to fair value adjustments of leases | (108 | ) | ||
Amortization of warranty liability fair value adjustment | (183 | ) | ||
$ | 70 | |||
Selling, general and administrative expenses: | ||||
Net increase in depreciation and amortization for fair value adjustments to property, plant and equipment | $ | 290 | ||
Net increase in amortization for fair value adjustments to intangibles | 5,913 | |||
Decrease in pension expense related to purchase accounting adjustments | (472 | ) | ||
Net decrease in lease expense related to fair value adjustments of leases | (7 | ) | ||
Elimination of the management fees payable to Harvest Partners | (220 | ) | ||
$ | 5,504 | |||
(b) | Represents the interest expense adjustment related to the incurrence of increased indebtedness and lower average borrowing rates after the retirement of the Predecessor’s indebtedness, such new debt consisting of $730.0 million of the 9.125% notes and $73.0 million of borrowings under our ABL facilities (with no effect given to subsequent borrowings or repayments). The adjustment also includes amortization of debt issuance costs. The annual interest rate for borrowings under our ABL facilities is assumed to be at |
37
LIBOR plus 2.75%. A 0.5% change in interest rates on our ABL facilities would change interest expense by $0.1 million for the quarter ended April 3, 2010. |
Pro forma interest expense | $ | 18,555 | ||
Less: historical interest expense, net | (18,694 | ) | ||
Total adjustment | $ | (139 | ) | |
(c) | Reflects the estimated tax effect using a statutory rate of 38.5% on the pro forma adjustments. |
38
FOR THE FISCAL YEAR ENDED JANUARY 1, 2011
January 3, 2010 | October 13, 2010 | |||||||||||||||
to | to | Adjustments for | ||||||||||||||
October 12, 2010 | January 1, 2011 | the Merger | Pro Forma | |||||||||||||
Predecessor | Successor | |||||||||||||||
(In thousands) | ||||||||||||||||
Net sales | $ | 897,938 | $ | 269,249 | $ | 806 | (a) | $ | 1,167,993 | |||||||
Cost of sales | 658,509 | 222,737 | (22,863 | )(b) | 858,383 | |||||||||||
Gross profit | 239,429 | 46,512 | 23,669 | 309,610 | ||||||||||||
Selling, general and administrative expenses | 159,448 | 53,543 | 17,574 | (b) | 230,565 | |||||||||||
Merger costs | 102,661 | 7,411 | (110,072 | )(c) | — | |||||||||||
Income (loss) from operations | (22,680 | ) | (14,442 | ) | 116,167 | 79,045 | ||||||||||
Interest expense, net | 58,759 | 16,120 | (462 | )(d) | 74,417 | |||||||||||
(Gain) loss on debt extinguishment | (15,201 | ) | 25,129 | (9,928 | )(e) | — | ||||||||||
Foreign currency (gain) loss | (184 | ) | 771 | — | 587 | |||||||||||
Income (loss) before income taxes | (66,054 | ) | (56,462 | ) | 126,557 | 4,041 | ||||||||||
Income taxes | 5,220 | 8,553 | 48,724 | (f) | 62,497 | |||||||||||
Net income (loss) | $ | (71,274 | ) | $ | (65,015 | ) | $ | 77,833 | $ | (58,456 | ) | |||||
(a) | Represents reversal of non-recurring expense for stock warrants, which were redeemed for cash in connection with the Merger. The expense associated with the stock warrants was recorded in the Predecessor’s statement of operations as a reduction in net sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 505-50,Equity-Based Payments to Non-Employees (“ASC 505-50”). |
(b) | Details of the pro forma adjustments to cost of sales and selling, general and administrative expenses reflect the following: (i) reversal of non-recurring amortization of thestep-up in basis of inventory recorded, (ii) incremental depreciation and amortization of tangible and intangible assets and liabilities resulting from fair value adjustments recorded as a result of purchase accounting, (iii) adjustments to pension expense based on recording fair value adjustments for pension liabilities, (iv) amortization of net liabilities related to the fair values recorded for leases and warranties as a result of purchase accounting, and (v) the elimination of the management fees payable to Harvest Partners. |
Cost of sales: | ||||
Reversal of non-recurring amortization ofstep-up in basis of inventory | $ | (23,091 | ) | |
Net increase in depreciation and amortization for fair value adjustments to property, plant and equipment | 2,245 | |||
Net decrease in amortization for fair value adjustments to intangibles | (486 | ) | ||
Decrease in pension expense related to purchase accounting adjustments | (611 | ) | ||
Net decrease in lease expense related to fair value adjustments of leases | (342 | ) | ||
Amortization of warranty liability fair value adjustment | (578 | ) | ||
$ | (22,863 | ) | ||
Selling, general and administrative expenses: | ||||
Net increase in depreciation and amortization for fair value adjustments to property, plant and equipment | $ | 919 | ||
Net increase in amortization for fair value adjustments to intangibles | 18,850 | |||
Decrease in pension expense related to purchase accounting adjustments | (1,493 | ) | ||
Net decrease in lease expense related to fair value adjustments of leases | (21 | ) | ||
Elimination of the management fees payable to Harvest Partners | (681 | ) | ||
$ | 17,574 | |||
39
(c) | Represents the reversal of non-recurring Merger costs, including (i) $38.4 million of expenses including investment banking, legal and other expenses; (ii) $7.4 million of expenses primarily including fees paid on behalf of Merger Sub related to due diligence activities; (iii) $26.2 million of transaction bonuses paid to senior management and certain employees in connection with the Merger; and (iv) $38.0 million of stock option compensation expense recognized as a result of the modification of certain stock option awards in connection with the Merger and the fair value of anin-the-money stock option award granted immediately prior to the Merger. | |
(d) | Represents the interest expense adjustment related to the incurrence of increased indebtedness and lower average borrowing rates after the retirement of the Predecessor’s indebtedness, such new debt consisting of $730.0 million of the notes and $73.0 million of borrowings under our ABL facilities (with no effect given to subsequent borrowings or repayments). The adjustment also includes annual amortization of debt issuance costs. The annual interest rate for borrowings under our ABL facilities is assumed to be at LIBOR plus 2.75%. A 0.5% change in interest rates on our ABL facilities would change interest expense by $0.4 million for the year ended January 1, 2011. |
Pro forma interest expense | $ | 74,417 | ||
Less: historical interest expense, net | (74,879 | ) | ||
Total adjustment | $ | (462 | ) | |
(e) | Reflects the following: (i) a $15.2 million net gain on debt extinguishment recorded by the Predecessor in connection with the Merger, which was related to the write-off of the troubled debt accrued interest associated with the redemption of the previously outstanding 13.625% notes and the write-off of the financing fees related to the prior ABL Facility, and (ii) a $25.1 million loss on debt extinguishment recorded by the Successor, which is comprised of $13.6 million related to the redemption of the previously outstanding 9.875% notes and 11.25% notes and $11.5 million of expense related to an interim financing facility, which was negotiated but ultimately not utilized, related to financing for the Merger. | |
(f) | Reflects the estimated tax effect using a statutory rate of 38.5% on the pro forma adjustments. |
40
Predecessor | Successor | Predecessor | Successor | |||||||||||||||||||||||||||||
Year Ended | January 3, 2010 | October 13, 2010 | Quarter | Quarter | ||||||||||||||||||||||||||||
December 30, | December 29, | January 3, | January 2, | to | to | Ended | Ended | |||||||||||||||||||||||||
2006 | 2007 | 2009 | 2010 | October 12, 2010 | January 1, 2011 | April 3, 2010 | April 2, 2011 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Statements of operations data: | ||||||||||||||||||||||||||||||||
Net sales | $ | 1,250,054 | $ | 1,204,056 | $ | 1,133,956 | $ | 1,046,107 | $ | 897,938 | $ | 269,249 | $ | 204,237 | $ | 196,736 | ||||||||||||||||
Cost of sales | 947,776 | 899,839 | 859,107 | 765,691 | 658,509 | 222,737 | 155,798 | 156,657 | ||||||||||||||||||||||||
Gross profit | 302,278 | 304,217 | 274,849 | 280,416 | 239,429 | 46,512 | 48,439 | 40,079 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 203,844 | 208,001 | 212,025 | 204,610 | 159,448 | 53,543 | 47,481 | 58,916 | ||||||||||||||||||||||||
Merger costs | — | — | — | — | 102,661 | 7,411 | — | — | ||||||||||||||||||||||||
Manufacturing restructuring costs | — | — | 1,783 | 5,255 | — | — | — | — | ||||||||||||||||||||||||
Impairment of long-lived assets | 3,423 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Facility closure costs, net | (92 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||
Income (loss) from operations | 95,103 | 96,216 | 61,041 | 70,551 | (22,680 | ) | (14,442 | ) | 958 | (18,837 | ) | |||||||||||||||||||||
Interest expense, net | 80,947 | 81,087 | 82,567 | 77,352 | 58,759 | 16,120 | 18,694 | 18,700 | ||||||||||||||||||||||||
Net (gain) loss on debt extinguishments | — | — | — | (29,665 | ) | (15,201 | ) | 25,129 | — | — | ||||||||||||||||||||||
Foreign currency (gain) loss | (703 | ) | (227 | ) | 1,809 | (184 | ) | (184 | ) | 771 | (122 | ) | (30 | ) | ||||||||||||||||||
Income (loss) before income taxes | 14,859 | 15,356 | (23,335 | ) | 23,048 | (66,054 | ) | (56,462 | ) | (17,614 | ) | (37,507 | ) | |||||||||||||||||||
Income taxes | 13,989 | 7,051 | 53,062 | 2,390 | 5,220 | 8,553 | 1,078 | (389 | ) | |||||||||||||||||||||||
Net income (loss) | $ | 870 | $ | 8,305 | $ | (76,397 | ) | $ | 20,658 | $ | (71,274 | ) | $ | (65,015 | ) | $ | (18,692 | ) | $ | (37,118 | ) | |||||||||||
Other data: | ||||||||||||||||||||||||||||||||
Capital expenditures | $ | 14,648 | $ | 12,393 | $ | 11,498 | $ | 8,733 | $ | 10,302 | $ | 5,160 | $ | 5,050 | $ | 2,400 | ||||||||||||||||
Cash dividends | — | — | — | — | — | — | — | — |
41
Predecessor | Successor | Predecessor | Successor | |||||||||||||||||||||||||
Year Ended | Quarter | Quarter | ||||||||||||||||||||||||||
December 30, | December 29, | January 3, | January 2, | January 1, | Ended | Ended | ||||||||||||||||||||||
2006 | 2007 | 2009 | 2010 | 2011 | April 3, 2010 | April 2, 2011 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Balance sheet data (at end of period): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 15,015 | $ | 21,603 | $ | 6,709 | $ | 55,905 | $ | 13,789 | $ | 23,682 | $ | 5,682 | ||||||||||||||
Working capital(1) | 152,752 | 163,444 | 172,857 | 139,334 | 98,694 | 143,191 | 107,944 | |||||||||||||||||||||
Total assets | 796,198 | 802,461 | 752,466 | 762,129 | 1,755,904 | 765,161 | 1,770,295 | |||||||||||||||||||||
Total debt | 703,625 | 702,285 | 745,762 | 675,360 | 788,000 | 693,423 | 824,185 | |||||||||||||||||||||
Stockholders’ (deficit) / member’s equity | (273,156 | ) | (254,477 | ) | (356,866 | ) | (325,205 | ) | 498,477 | (340,792 | ) | 474,350 |
(1) | Working capital is defined as current assets minus current liabilities. |
42
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
43
44
45
Years Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
January 1, | January 2, | January 3, | Quarters Ended | |||||||||||||||||||||||||||||||||||||||||||||
January 3, 2010 | October 13, 2010 | 2011 | 2010 | 2009 | April 2, 2011 | April 3, 2010 | ||||||||||||||||||||||||||||||||||||||||||
to | to | Combined | Predecessor | Predecessor | Predecessor | Successor | ||||||||||||||||||||||||||||||||||||||||||
October 12, 2010 | January 1, 2011 | % of | % of | % of | % of | % of | ||||||||||||||||||||||||||||||||||||||||||
Predecessor | Successor | Net | Net | Net | Net | Net | ||||||||||||||||||||||||||||||||||||||||||
Amount | Amount | Amount | Sales | Amount | Sales | Amount | Sales | Amount | Sales | Amount | Sales | |||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net sales(1) | $ | 897,938 | $ | 269,249 | $ | 1,167,187 | 100.0 | % | $ | 1,046,107 | 100.0 | % | $ | 1,133,956 | 100.0 | % | $ | 196,736 | 100.0 | % | $ | 204,237 | 100.0 | % | ||||||||||||||||||||||||
Gross profit | 239,429 | 46,512 | 285,941 | 24.5 | 280,416 | 26.8 | 274,849 | 24.2 | 40,079 | 20.4 | 48,439 | 23.7 | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative expense | 159,448 | 53,543 | 212,991 | 18.3 | 204,610 | 19.6 | 212,025 | 18.7 | 58,916 | 29.9 | 47,481 | 23.2 | ||||||||||||||||||||||||||||||||||||
Merger costs | 102,661 | 7,411 | 110,072 | 9.4 | — | 0.0 | — | 0.0 | — | 0.0 | — | 0.0 | ||||||||||||||||||||||||||||||||||||
Manufacturing restructuring costs | — | — | — | — | 5,255 | 0.5 | 1,783 | 0.2 | — | 0.0 | — | 0.0 | ||||||||||||||||||||||||||||||||||||
(Loss) income from operations | (22,680 | ) | (14,442 | ) | (37,122 | ) | (3.2 | ) | 70,551 | 6.7 | 61,041 | 5.4 | (18,837 | ) | (9.6 | ) | 958 | 0.5 | ||||||||||||||||||||||||||||||
Interest expense, net | 58,759 | 16,120 | 74,879 | 77,352 | 82,567 | 18,700 | 18,694 | |||||||||||||||||||||||||||||||||||||||||
(Gain) loss on debt extinguishment | (15,201 | ) | 25,129 | 9,928 | (29,665 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||
Foreign currency (gain) loss | (184 | ) | 771 | 587 | (184 | ) | 1,809 | (30 | ) | (122 | ) | |||||||||||||||||||||||||||||||||||||
(Loss) income before income taxes | (66,054 | ) | (56,462 | ) | (122,516 | ) | 23,048 | (23,335 | ) | (37,507 | ) | (17,614 | ) | |||||||||||||||||||||||||||||||||||
Income taxes | 5,220 | 8,553 | 13,773 | 2,390 | 53,062 | (389 | ) | 1,078 | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (71,274 | ) | $ | (65,015 | ) | $ | (136,289 | ) | $ | 20,658 | $ | (76,397 | ) | $ | (37,118 | ) | $ | (18,692 | ) | ||||||||||||||||||||||||||||
Other Data: | ||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA(2) | $ | 10,287 | $ | (29,844 | ) | $ | (19,557 | ) | $ | 122,569 | $ | 81,930 | $ | (6,150 | ) | $ | 6,713 | |||||||||||||||||||||||||||||||
Adjusted EBITDA(2) | 103,259 | 30,583 | 133,842 | 116,830 | 89,813 | (4,194 | ) | 8,789 | ||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 17,582 | 10,498 | 28,080 | 22,169 | 22,698 | 12,657 | 5,633 | |||||||||||||||||||||||||||||||||||||||||
Capital expenditures | (10,302 | ) | (5,160 | ) | (15,462 | ) | (8,733 | ) | (11,498 | ) | 2,400 | 5,050 |
(1) | The following table sets forth for the periods presented a summary of net sales by principal product offering: |
January 3, 2010 | October 13, 2010 | Years Ended | Quarters Ended | |||||||||||||||||||||||||
to | to | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
October 12, 2010 | January 1, 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Vinyl windows | $ | 316,102 | $ | 118,778 | $ | 434,880 | $ | 389,293 | $ | 380,260 | $ | 71,709 | $ | 76,337 | ||||||||||||||
Vinyl siding products | 181,904 | 41,504 | 223,408 | 210,212 | 254,563 | 37,160 | 39,356 | |||||||||||||||||||||
Metal products | 147,321 | 35,226 | 182,547 | 167,749 | 213,163 | 36,369 | 36,375 | |||||||||||||||||||||
Third-party manufactured products | 196,587 | 55,511 | 252,098 | 210,806 | 210,633 | 37,120 | 37,563 | |||||||||||||||||||||
Other products and services | 56,024 | 18,230 | 74,254 | 68,047 | 75,337 | 14,378 | 14,606 | |||||||||||||||||||||
$ | 897,938 | $ | 269,249 | $ | 1,167,187 | $ | 1,046,107 | $ | 1,133,956 | $ | 196,736 | $ | 204,237 | |||||||||||||||
(2) | EBITDA is calculated as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to reflect certain adjustments that are used in calculating covenant compliance under our revolving credit agreement (the “Revolving Credit Agreement”) and the indenture governing the notes. We consider EBITDA and Adjusted EBITDA to be important indicators of our operational strength and performance of our business. We have included Adjusted EBITDA because it is a key financial measure used by our management to (i) assess our ability to service our debt or incur debt and meet our capital expenditure requirements; (ii) internally measure our operating performance; and (iii) determine our incentive compensation programs. In addition, our ABL facilities and the indenture governing the notes have certain covenants that apply ratios utilizing this measure of Adjusted EBITDA. EBITDA and Adjusted EBITDA have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA as presented by us may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA are not measures determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating |
46
results or net cash provided by operating activities (as determined in accordance with GAAP) as a measure of our liquidity. |
January 3, 2010 | October 13, 2010 | |||||||||||||||||||||||||||
to | to | Years Ended | Quarters Ended | |||||||||||||||||||||||||
October 12, | January 1, | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
2010 | 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||||||
Successor | ||||||||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Net income (loss) | $ | (71,274 | ) | $ | (65,015 | ) | $ | (136,289 | ) | $ | 20,658 | $ | (76,397 | ) | $ | (37,118 | ) | $ | (18,692 | ) | ||||||||
Interest expense, net | 58,759 | 16,120 | 74,879 | 77,352 | 82,567 | 18,700 | 18,694 | |||||||||||||||||||||
Income taxes | 5,220 | 8,553 | 13,773 | 2,390 | 53,062 | (389 | ) | 1,078 | ||||||||||||||||||||
Depreciation and amortization | 17,582 | 10,498 | 28,080 | 22,169 | 22,698 | 12,657 | 5,633 | |||||||||||||||||||||
EBITDA | 10,287 | (29,844 | ) | (19,557 | ) | 122,569 | 81,930 | (6,150 | ) | 6,713 | ||||||||||||||||||
Merger costs (a) | 103,467 | 7,411 | 110,878 | — | — | 489 | — | |||||||||||||||||||||
Net (gain) loss on debt extinguishments (b) | (15,201 | ) | 25,129 | 9,928 | (29,665 | ) | — | — | — | |||||||||||||||||||
Purchase accounting related adjustments (c) | — | 21,427 | 21,427 | — | — | (976 | ) | — | ||||||||||||||||||||
Management fees (d) | 681 | — | 681 | 1,400 | 1,372 | — | 220 | |||||||||||||||||||||
Restructuring costs (e) | 88 | — | 88 | 5,762 | 2,642 | — | 88 | |||||||||||||||||||||
Impairment and write-offs (f) | 43 | 1,230 | 1,273 | 1,130 | 2,060 | 84 | 14 | |||||||||||||||||||||
Employee termination costs (g) | — | 1,397 | 1,397 | 1,182 | — | — | — | |||||||||||||||||||||
Bank fees (h) | 56 | — | 56 | 142 | — | — | 15 | |||||||||||||||||||||
Stock compensation expense (i) | — | — | — | — | — | 27 | — | |||||||||||||||||||||
Other normalizing and unusual items (j) | 3,419 | 3,062 | 6,481 | 6,505 | — | 2,362 | 1,258 | |||||||||||||||||||||
Foreign currency (gain) loss (k) | (184 | ) | 771 | 587 | (184 | ) | 1,809 | (30 | ) | (122 | ) | |||||||||||||||||
Pro forma cost savings (l) | 603 | — | 603 | 7,989 | — | — | 603 | |||||||||||||||||||||
Adjusted EBITDA | $ | 103,259 | $ | 30,583 | $ | 133,842 | $ | 116,830 | $ | 89,813 | $ | (4,194 | ) | $ | 8,789 | |||||||||||||
(a) | Represents the following: |
January 3, 2010 | October 13, 2010 | |||||||||||||||||||||||||||
to | to | Years Ended | Quarters Ended | |||||||||||||||||||||||||
October 12, | January 1, | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
2010 | 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||||
Successor | ||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Transaction costs (i) | $ | 38,416 | $ | 7,411 | $ | 45,827 | $ | — | $ | — | $ | 489 | $ | — | ||||||||||||||
Transaction bonuses (ii) | 26,231 | — | 26,231 | — | — | — | — | |||||||||||||||||||||
Stock option compensation (iii) | 38,014 | — | 38,014 | — | — | — | — | |||||||||||||||||||||
Stock warrants expense (iv) | 806 | — | 806 | — | — | — | — | |||||||||||||||||||||
Total | $ | 103,467 | $ | 7,411 | $ | 110,878 | $ | — | $ | — | $ | 489 | $ | — | ||||||||||||||
(i) | Predecessor expenses include investment banking, legal and other expenses, including $16.2 million of expense accrued and payable to affiliates of Investcorp and Harvest Partners in connection with the amended and restated management agreement between Harvest Partners and our company. Successor expenses primarily include fees paid on behalf of Merger Sub related to due diligence activities. |
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(ii) | Represents transaction bonuses paid to senior management and certain employees in connection with the Merger. | |
(iii) | Represents stock option compensation expense recognized as a result of the modification of certain stock option awards in connection with the Merger and the fair value of anin-the-money stock option award granted immediately prior to the Merger. | |
(iv) | Represents expense for stock warrants, which were redeemed for cash in connection with the Merger. The expense associated with the stock warrants has been recognized in our statement of operations as a reduction in net sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)505-50,Equity-Based Payments to Non-Employees(“ASC505-50”). |
(b) | Expenses recorded by the Predecessor for the period ended October 12, 2010 include the write-off of deferred financing fees associated with the prior ABL Facility and the write-off of an accrual for all future interest payments on the 20% notes, which was recorded during the year ended January 2, 2010, in accordance with FASBASC 470-60,Troubled Debt Restructurings by Debtors(“ASC470-60”). Expenses recorded by the Successor include the loss on the extinguishment of the 9.875% notes and the 11.25% notes totaling $13.6 million and fees of $11.5 million related to an interim financing facility, which was negotiated, but ultimately not utilized, in conjunction with the financing for the Merger. | |
Net gain on debt extinguishment recognized during the year ended January 2, 2010 represents a $29.6 million gain on troubled debt restructuring of the 13.625% notes and an $8.9 million gain on debt extinguishment in connection with AMH II’s purchase of $15.0 million par value of the 11.25% notes directly from the AMH noteholders with funds loaned from us for approximately $5.9 million, partially offset by debt extinguishment costs of $8.8 million incurred with the redemption of the 9.75% notes and the 15% notes and the issuance of the 9.875% notes. |
(c) | For each of the successor period from October 13, 2010 to January 1, 2011 and the combined year ended January 1, 2011, represents the elimination of the impact of adjustments related to purchase accounting recorded as a result of the Merger, which include the following: $23.1 million of amortization for thestep-up in basis of inventory, partially offset by $0.8 million of other purchase accounting related adjustments to inventory included in cost of sales, $0.6 million of reduced pension expense as a result of purchase accounting adjustments and amortization related to net liabilities recorded in purchase accounting for the fair value of certain of our leased facilities and warranty liabilities of $0.1 million and $0.2 million, respectively. For the quarter ended April 2, 2011, represents the elimination of the impact of adjustments related to purchase accounting recorded as a result of the Merger, which include the following: $0.7 million of reduced pension expense as a result of purchase accounting adjustments and amortization related to net liabilities recorded in purchase accounting for the fair value of certain of our leased facilities and warranty liabilities of $0.1 million and $0.2 million, respectively. |
(d) | Represents (i) amortization of a prepaid management fee paid to Investcorp International Inc. in connection with a December 2004 recapitalization transaction of $0.5 million for each of the fiscal years ended January 2, 2010 and January 3, 2009 and (ii) annual management fees paid to Harvest Partners. | |
(e) | Represents the following (in thousands): |
January 3, 2010 | October 13, 2010 | |||||||||||||||||||||||||||
to | to | Years Ended | Quarters Ended | |||||||||||||||||||||||||
October 12, | January 1, | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
2010 | 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | Predecessor | Successor | ||||||||||||||||||||||
Manufacturing restructuring charges (i) | $ | — | $ | — | $ | — | $ | 5,255 | $ | 2,642 | $ | — | $ | — | ||||||||||||||
Tax restructuring charges (ii) | 88 | — | 88 | 507 | — | — | 88 | |||||||||||||||||||||
Total | $ | 88 | $ | — | $ | 88 | $ | 5,762 | $ | 2,642 | $ | — | $ | 88 | ||||||||||||||
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(i) | During 2008, we relocated a portion of our vinyl siding production from Ennis, Texas to West Salem, Ohio and Burlington, Ontario. In connection with this change, during 2009, we discontinued the use of the warehouse facility adjacent to the Ennis manufacturing plant. Expenses during 2009 represent lease costs associated with our discontinued use of the warehouse facility adjacent to the Ennis manufacturing plant. Expense in 2008 represents asset impairment costs, inventory markdown costs ($0.9 million included in cost of sales) and manufacturing equipment relocation costs totaling $2.6 million in connection with relocating a portion of our vinyl siding production. | |
(ii) | Represents legal and accounting fees in connection with tax restructuring projects. |
(f) | Represents impairments and write-offs of assets other than by sale principally including (i) $1.2 million and $0.6 million incurred during the successor period ended January 1, 2011 and the year ended January 2, 2010, respectively, related to issues with a new product line, and the ultimate discontinuation of the product line by the Successor, (ii) $0.4 million expensed during the year ended January 2, 2010 for software write-offs due to changes in our information technology and business strategies during 2009, and (iii) $2.1 million for the year ended January 3, 2009 principally related to loss upon disposal of assets other than by sale as a result of executing enhanced controls surrounding the physical verification of assets. | |
(g) | Represents separation costs, including payroll taxes and certain benefits, as follows: (i) $1.4 million in the successor period ended January 1, 2011 related to the termination of Mr. Franco, our former President of AMI Distribution, and (ii) $1.2 million for the year ended January 2, 2010 related to a workforce reduction in connection with our overall cost reduction initiatives. | |
(h) | Represents bank audit fees incurred under our prior ABL Facility and new ABL facilities. |
(i) | Represents stock compensation related to restricted share units issued to certain board members. |
(j) | Represents the following: |
January 3, 2010 | October 13, 2010 | |||||||||||||||||||||||||||
to | to | Years Ended | Quarters Ended | |||||||||||||||||||||||||
October 12, | January 1, | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
2010 | 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Professional fees (i) | $ | 2,734 | $ | 2,973 | $ | 5,707 | $ | 1,285 | $ | — | $ | 1,805 | $ | 880 | ||||||||||||||
Accretion on lease liability (ii) | 296 | 89 | 385 | 76 | — | 138 | 91 | |||||||||||||||||||||
Excess severance costs (iii) | 389 | — | 389 | 910 | — | 198 | 287 | |||||||||||||||||||||
Unusual bad debt expense (iv) | — | — | — | 4,234 | — | — | — | |||||||||||||||||||||
Excess legal expense (v) | — | — | — | — | — | 221 | — | |||||||||||||||||||||
Total | $ | 3,419 | $ | 3,062 | $ | 6,481 | $ | 6,505 | $ | — | $ | 2,362 | $ | 1,258 | ||||||||||||||
(i) | Represents management’s estimate of unusual or non-recurring consulting fees primarily associated with cost savings initiatives. | |
(ii) | Represents accretion on the liability recorded at present value for future lease costs in connection with our warehouse facility adjacent to the Ennis manufacturing, which we discontinued using during 2009. | |
(iii) | Represents management’s estimates for excess severance expense due primarily to unusual changes within senior management. | |
(iv) | Represents management’s estimate of unusual bad debt expense based on historical averages from 2004 through 2008. |
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(v) | Represents management’s estimate of excess legal expense incurred in connection with the defense of certain warranty related claims. |
(j) | Represents currency transaction/translation (gains)/losses, including on currency exchange hedging agreements. | |
(k) | Represents the following: |
January 3, 2010 | October 13, 2010 | |||||||||||||||||||||||||||
to | to | Years Ended | Quarters Ended | |||||||||||||||||||||||||
October 12, | January 1, | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
2010 | 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | Predecessor | Successor | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Savings from headcount reductions (i) | $ | — | $ | — | $ | — | $ | 2,975 | $ | — | $ | — | $ | — | ||||||||||||||
Insourcing glass production savings (ii) | 462 | — | 462 | 3,735 | — | — | 462 | |||||||||||||||||||||
Procurement savings (iii) | 141 | — | 141 | 1,279 | — | — | 141 | |||||||||||||||||||||
Total | $ | 603 | $ | — | $ | 603 | $ | 7,989 | $ | — | $ | — | $ | 603 | ||||||||||||||
(i) | Represents savings from headcount reductions as a result of general economic conditions. | |
(ii) | Represents management’s estimates of cost savings that could have resulted from producing glass in-house at our Cuyahoga Falls, Ohio window facility had such production started on January 4, 2009. | |
(iii) | Represents management’s estimate of cost savings that could have resulted from entering into our leveraged procurement program with an outside consulting firm had such program been entered into on January 4, 2009. |
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Quarter Ended | ||||
April 2 | ||||
Successor | ||||
(In thousands) | ||||
2011 | ||||
Net sales | $ | 196,736 | ||
Gross profit | 40,079 | |||
Selling, general and administrative expenses | 58,916 | |||
Loss from operations | (18,837 | ) | ||
Net loss | (37,118 | ) |
Periods Ended | |||||||||||||||||||||||||
October 3, 2010 | October 13, 2010 | ||||||||||||||||||||||||
Quarters Ended | to | to | |||||||||||||||||||||||
April 3 | July 3 | October 2 | October 12, 2010 | January 1, 2011 | |||||||||||||||||||||
Predecessor | Predecessor | Predecessor | Predecessor | Successor | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
2010 | |||||||||||||||||||||||||
Net sales | $ | 204,237 | $ | 328,322 | $ | 329,547 | $ | 35,832 | $ | 269,249 | |||||||||||||||
Gross profit(1) | 48,439 | 91,858 | 91,039 | 8,093 | 46,512 | ||||||||||||||||||||
Selling, general and administrative expenses(2) | 47,481 | 53,589 | 51,734 | 6,644 | 53,543 | ||||||||||||||||||||
Income (loss) from operations | 958 | 38,269 | 37,853 | (99,760 | ) | (14,442 | ) | ||||||||||||||||||
Net income (loss) | (18,692 | ) | 19,728 | 10,563 | (82,873 | ) | (65,015 | ) |
Quarters Ended | ||||||||||||||||
April 4 | July 4 | October 3 | January 2 | |||||||||||||
Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||
(In thousands) | ||||||||||||||||
2009 | ||||||||||||||||
Net sales | $ | 172,332 | $ | 274,969 | $ | 324,807 | $ | 273,999 | ||||||||
Gross profit(3) | 30,253 | 77,981 | 97,809 | 74,373 | ||||||||||||
Selling, general and administrative expenses(4) | 48,498 | 51,297 | 53,323 | 51,492 | ||||||||||||
Income (loss) from operations | (18,245 | ) | 21,429 | 44,486 | 22,881 | |||||||||||
Net income (loss) | (38,005 | ) | 25,572 | 20,112 | 12,979 |
(1) | Gross profit for the period October 13, 2010 to January 1, 2011 reflects $23.1 million of amortization of thestep-up in basis of inventory related to purchase accounting, partially offset by $1.2 million of other purchase accounting related adjustments, and $1.2 million for the impairment related to issues with and the ultimate discontinuation of a new product line. | |
(2) | Selling, general and administrative expenses include professional fees associated with cost savings initiatives of $5.7 million, employee termination costs and excess severance of $1.8 million, and management fees expense of $0.7 million. | |
(3) | Gross profit includes $0.6 million of costs related to issues with a new product line. | |
(4) | Selling, general and administrative expenses include excess bad debt expense resulting from the 2009 economic conditions of $4.2 million, employee termination costs and excess severance of $2.1 million, management fees expense of $1.4 million, professional fees associated with cost savings initiatives of $1.3 million, tax restructuring costs of $0.5 million, and software impairment costs of $0.4 million. |
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January 3, 2010 | October 13, 2010 | Years Ended | Quarters Ended | |||||||||||||||||||||||||
to | to | January 1, | January 2, | January 3, | April 2, | April 3, | ||||||||||||||||||||||
October 12, 2010 | January 1, 2011 | 2011 | 2010 | 2009 | 2011 | 2010 | ||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 28,569 | $ | (72,141 | ) | $ | (43,572 | ) | $ | 118,701 | $ | 7,951 | $ | (41,963 | ) | $ | (45,117 | ) | ||||||||||
Net cash used in investing activities | (10,302 | ) | (562,751 | ) | (573,053 | ) | (8,733 | ) | (11,473 | ) | (2,400 | ) | (5,050 | ) | ||||||||||||||
Net cash (used in) provided by financing activities | (8,406 | ) | 582,324 | 573,918 | (62,338 | ) | (10,371 | ) | 36,149 | 18,000 |
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Payments Due by Fiscal Year | ||||||||||||||||||||||||||||
After | ||||||||||||||||||||||||||||
Total | 2011 | 2012 | 2013 | 2014 | 2015 | 2015 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Long-term debt (1) | $ | 788,000 | $ | — | $ | — | $ | — | $ | — | $ | 58,000 | $ | 730,000 | ||||||||||||||
Interest payments on the notes | 469,618 | 69,943 | 66,613 | 66,613 | 66,613 | 66,613 | 133,223 | |||||||||||||||||||||
Operating leases (2) | 132,976 | 33,231 | 27,830 | 23,157 | 17,706 | 10,349 | �� | 20,703 | ||||||||||||||||||||
Expected pension contributions (3) | 49,310 | 10,213 | 10,737 | 10,581 | 9,994 | 7,785 | — | |||||||||||||||||||||
Total | $ | 1,439,904 | $ | 113,387 | $ | 105,180 | $ | 100,351 | $ | 94,313 | $ | 142,747 | $ | 883,926 | ||||||||||||||
(1) | Represents principal amounts, but not interest. Our long-term debt consists of the $58.0 million outstanding balance under the ABL facilities as of January 1, 2011 and $730.0 million aggregate principal amount of 9.125% notes. We are not able to estimate reasonably the cash payments for interest associated with the ABL facilities due to the significant estimation required related to both market rates as well as projected principal payments. The stated maturity date of the notes is November 1, 2017. See Note 8 to the consolidated financial statements for the year ended January 1, 2011 for further details. |
(2) | For additional information on our operating leases, see Note 9 to the consolidated financial statements. | |
(3) | Although subject to change, the amounts set forth in the table above represent the estimated minimum funding requirements under current law. Due to uncertainties regarding significant assumptions involved in estimating future required contributions to our pension plans, including: (i) interest rate levels, (ii) the amount and timing of asset returns, and (iii) what, if any, changes may occur in pension funding legislation, the estimates in the table may differ materially from actual future payments. We cannot reasonably estimate payments beyond 2015. |
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• | Company-Operated Supply Centers. We believe that our U.S. and Canadian supply center network offers a superior distribution channel compared to our competitors who rely principally on local third-party distributors and dealers who carry an assortment of brands and may not focus on any particular brand. We believe that distributing our products through our network of 120 company-operated supply centers enables us to: (1) build direct long-standing customer relationships; (2) maintain control of the customer value proposition (i.e., product availability and quality, “one-stop” shopping, sales support and service) through integrated logistics between our manufacturing and distribution facilities; (3) monitor developments in local customer preferences; (4) bring new products to market quickly, shortening customary product development cycles; and (5) target our marketing efforts. |
• | Direct Sales Channel. We believe that our strength in selling to independent distributors and dealers provides us with exceptional operational flexibility because it allows us to penetrate key markets and expand our geographic reach without deploying the necessary capital to establish a company-operated supply center. This reach also allows us to service larger customers with a broader geographic scope, which we believe results in additional sales. In addition, we utilize our vertical integration in this channel by selling and shipping directly to our contractor customers in many cases, as evidenced by our approximately 1,000 ship-to locations, which we believe enhances our value proposition to both the distributors and dealers as well as the contractor customer. |
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• | Aging of the Housing Stock. The median estimated home age increased from 23 years in 1985 to 35 years in 2009, and more than 62% of the current housing stock was built prior to 1980, according to the American Housing Survey by the U.S. Census and the U.S. Department of Housing and Urban Development. We believe the aging housing stock trend will continue to drive demand for residential repair and remodeling projects. | |
• | Long-Term Demand for New Construction. We believe that household formation is an important driver of both new housing starts and repair and remodel spending. We expect that a combination of population growth and “teardowns” of existing homes will necessitate continued construction of new homes at rates in excess of the low levels we are currently experiencing. On a historical basis, seasonally-adjusted total housing starts have averaged 1.53 million since 1970 according to the U.S. Census Bureau. The foregoing household formation projections suggest that total housing starts will return to levels closer to long-term historical averages than recent levels. | |
• | Energy Efficiency. There is favorable demand for energy efficient building products given measurable payback periods and strong environmentally focused trends. For example, a National Association of |
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Home Builder’s Consumer Preferences Survey found that home buyers were willing to make an average upfront investment of nearly $9,000 to save $1,000 annually in utility costs, which implies a nine-year payback period. We expect that this increased demand for energy efficient — or “green” — building products will benefit companies like ours with products that meet energy efficiency standards. Additionally, many of our window product lines have earned the ENERGY STAR® rating and meet or exceed the requirements for the energy efficiency home improvement tax credit established by the federal government. |
• | Advantages of Vinyl Products. We believe vinyl siding and vinyl windows possess preferred product attributes compared to other types of exterior windows and siding products. Vinyl has greater durability, requires less maintenance, and provides greater energy efficiency than many competing window and siding products. In addition, we believe vinyl products have a material price advantage over other product types. Vinyl has become an increasingly popular material in both the windows and siding markets. Vinyl windows grew from 59% of the total U.S. window market in 2006 to 64% in 2009, and vinyl siding grew from 40% of the total U.S. siding market in 2006 to 42% in 2009, according to Ducker Worldwide. We believe the advantages of vinyl will continue to drive further penetration. |
• | Repair and Remodeling Expenditure. According to Ducker Worldwide, U.S. total improvement expenditures reached lows of $115.8 billion in 2009, but are projected to grow to $151.0 billion in 2013, a 6.9% compound annual growth rate. According to the Joint Center for Housing Studies of Harvard University (“JCHS”), remodeling spending is expected to increase on an annual basis by the end of the year;year-over-year growth in the Leading Indicator of Remodeling Activity (LIRA) is projected to be 9.1% in the first quarter of 2011 and 12.7% in the second quarter of 2011. | |
• | Existing Home Sales. According to the National Association of Realtors, annualized, seasonally-adjusted existing home sales reached lows of 4.9 million in 2010, but are projected to grow to 5.6 million in 2012, a 6% compound annual growth rate. | |
• | Single Family Housing Starts. National Association of Realtors housing start forecasts suggest single-family housing starts will grow from 472,000 in 2010 to 750,000 in 2012, a 26% compound annual growth rate. A JCHS study projects that 11.8 million to 13.8 million households will be formed from 2010 through 2020. |
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Product Line | Window | Vinyl Siding | Steel Siding | Aluminum Siding | ||||
Premium | Preservation Regency Sequoia Select Sheffield Sovereign UltraMaxx Westbridge | Bennington Board and Batten Berkshire Beaded Centennial Beaded CenterLock Charter Oak Cyprus Creek Northern Forest Preservation Prodigy Sequoia Select Sovereign Select Williamsport | Cedarwood Driftwood Gallery Series SuperGuard SteelTek SteelSide Universal | Cedarwood Vin.Al.Wood Deluxe | ||||
Standard | Alpine 80 Series Berkshire Excalibur Fairfield 80 Series Sierra Signature | Advantage III Advantage Plus Amherst Berkshire Classic Concord Coventry Fair Oaks Odyssey Plus Signature Supreme Somerville III | ||||||
Economy | Alpine 70 Series Amherst Blue Print Series Builder Series Centurion Concord Fairfield 70 Series Geneva Performance Series | Aurora Conquest Driftwood | Woodgrain Series |
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Location | Principal Use | Square Feet | ||||
Cuyahoga Falls, Ohio | Corporate Headquarters | 70,000 | ||||
Cuyahoga Falls, Ohio | Vinyl Windows, Vinyl Fencing and Railing | 577,000 | ||||
Bothell, Washington | Vinyl Windows | 159,000 | (1) | |||
Yuma, Arizona | Vinyl Windows | 223,000 | (1)(4) | |||
Cedar Rapids, Iowa | Vinyl Windows | 259,000 | (1) | |||
Kinston, North Carolina | Vinyl Windows | 319,000 | (1) | |||
London, Ontario | Vinyl Windows | 60,000 | ||||
Burlington, Ontario | Vinyl Siding Products | 394,000 | (2) | |||
Ennis, Texas | Vinyl Siding Products | 538,000 | (3) | |||
West Salem, Ohio | Vinyl Window Extrusions, Vinyl Fencing and Railing | 173,000 | ||||
Pointe Claire, Quebec | Metal Products | 289,000 | ||||
Woodbridge, New Jersey | Metal Products | 318,000 | (1) | |||
Ashtabula, Ohio | Distribution Center | 297,000 | (1) |
(1) | Leased facilities. | |
(2) | We lease a portion of our warehouse space in this facility. | |
(3) | Includes a 237,000 square foot warehouse that was built during 2005 and is leased. We own the remainder of the facility. | |
(4) | The land for this facility is owned by us, but we lease the use of the building. |
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Name | Age | Position(s) | ||||
Dana R. Snyder | 64 | Interim Chief Executive Officer and Director | ||||
Stephen E. Graham | 53 | Vice President — Chief Financial Officer and Secretary | ||||
Warren J. Arthur | 44 | Senior Vice President of Operations | ||||
John F. Haumesser | 46 | Vice President of Human Resources | ||||
Erik Ragatz | 38 | Director, Chairman of the Board of Directors and Compensation Committee | ||||
Charles A. Carroll | 61 | Director | ||||
Robert B. Henske | 49 | Director | ||||
Stefan Goetz | 40 | Director | ||||
Adam B. Durrett | 30 | Director, Chairman of the Audit Committee |
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• | Thomas N. Chieffe, President and Chief Executive Officer | |
• | Stephen E. Graham, Vice President-Chief Financial Officer and Secretary | |
• | Warren J. Arthur, Senior Vice President of Operations | |
• | Robert M. Franco, President of AMI Distribution | |
• | John F. Haumesser, Vice President of Human Resources |
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Salary and Bonus as a | ||||
% of Total Compensation | ||||
Thomas N. Chieffe | 8 | % | ||
Stephen E. Graham | 13 | % | ||
Warren J. Arthur | 8 | % | ||
Robert M. Franco | 9 | % | ||
John F. Haumesser | 9 | % |
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2010 Annual Incentive | ||||||||||||
Bonus Payout Percentage | ||||||||||||
Threshold | Target | Maximum | ||||||||||
Thomas N. Chieffe | 20 | % | 100 | % | 150 | % | ||||||
Stephen E. Graham | 20 | % | 60 | % | 100 | % | ||||||
Warren J. Arthur | 20 | % | 60 | % | 100 | % | ||||||
Robert M. Franco | 20 | % | 60 | % | 100 | % | ||||||
John F. Haumesser | 20 | % | 60 | % | 100 | % |
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Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||
Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus(1) | Awards(4) | Compensation(2) | Earnings | Compensation | Total | ||||||||||||||||||||||||
Thomas N. Chieffe, | 2010 | $ | 587,502 | $ | 500,000 | (3) | $ | 14,100,490 | $ | 900,000 | $ | — | $ | 9,570,246 | (5) | $ | 25,658,238 | |||||||||||||||
President and Chief | 2009 | 550,000 | 500,000 | — | 825,000 | — | 13,999 | 1,888,999 | ||||||||||||||||||||||||
Executive Officer | 2008 | 537,507 | 555,000 | — | — | — | 11,594 | 1,104,101 | ||||||||||||||||||||||||
Stephen E. Graham, | 2010 | 304,500 | — | 2,726,365 | 312,000 | — | 1,577,529 | (5) | 4,920,394 | |||||||||||||||||||||||
Vice President — Chief | 2009 | 158,077 | — | — | 300,000 | — | 633 | 458,710 | ||||||||||||||||||||||||
Financial Officer and Secretary | ||||||||||||||||||||||||||||||||
Warren J. Arthur, | 2010 | 253,754 | — | 3,270,016 | 260,000 | — | 3,061,541 | (5) | 6,845,311 | |||||||||||||||||||||||
Senior Vice President of | 2009 | 234,378 | — | — | 250,000 | — | 774 | 485,152 | ||||||||||||||||||||||||
Operations | 2008 | 218,876 | 13,500 | — | — | — | 705 | 233,081 | ||||||||||||||||||||||||
Robert M. Franco, | 2010 | 335,720 | — | 5,450,071 | 343,980 | — | 3,162,985 | (5) | 9,292,756 | |||||||||||||||||||||||
President of | 2009 | 330,000 | — | — | 330,000 | — | 22,977 | 682,977 | ||||||||||||||||||||||||
AMI Distribution | 2008 | 326,817 | 19,845 | — | — | — | 23,948 | 370,610 | ||||||||||||||||||||||||
John F. Haumesser, | 2010 | 255,780 | — | 3,406,294 | 262,080 | — | 1,969,571 | (5) | 5,893,725 | |||||||||||||||||||||||
Vice President of | 2009 | 252,000 | — | — | 252,000 | — | 4,474 | 508,474 | ||||||||||||||||||||||||
Human Resources | 2008 | 249,000 | 15,120 | — | — | — | 10,032 | 274,152 |
(1) | Except as described in footnote (3), amounts characterized as “Bonus” payments were discretionary awards authorized by the Committee. | |
(2) | Amounts included in the column “Non-Equity Incentive Plan Compensation” reflect the annual cash incentive bonus approved by the Committee. | |
(3) | As set forth in his employment agreement, Mr. Chieffe is entitled to a special retention incentive bonus of $2,000,000 payable in four equal annual installments commencing on October 1, 2010. He received the first installment of $500,000 on October 1, 2010. | |
(4) | The dollar amount provided herein reflects the dollar amount recognized for financial statement reporting purposes for the 2010 fiscal year in accordance with FASB Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“ASC 718”), due to the modification of the options referred to in footnote 5 immediately below to eliminate provisions which caused variability in the number of shares underlying the options. For Mr. Chieffe, the dollar amount also includes the amount recognized for financial statement reporting purposes for the 2010 fiscal year in accordance with ASC 718 for the option granted on September 7, 2010 in connection with the Merger. | |
(5) | The dollar amount provided herein includes a cash payment made in lieu of adjusting the number of shares subject to an option granted under the 2004 Plan, which option was subject to adjustment in the event our previous investor, Investcorp, converted its preferred stock of AMH II into common stock as described in more detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Holdings II, Inc. 2004 Stock Option Plan.” The amount of the payment was determined by the product of the number of shares that would have been received had the option been adjusted upwards multiplied by (2) the excess, if any, of $133.95 (the fair market value of the underlying stock at the time of such conversion) over the exercise price per share of the common stock subject to such option. The cash payment amount per executive officer was: Mr. Chieffe — $8,151,031, Mr. Graham — $1,576,011, Mr. Arthur - $1,890,255, Mr. Franco — $3,150,382 and Mr. Haumesser — $1,968,988. Also included in the amounts provided were one-time cash transaction bonus payments made to Mr. Chieffe and Mr. Arthur of $1,416,000 and $1,167,000, respectively, related to the consummation of the Merger. Amounts include imputed income from group term life coverage provided by us in excess of $50,000. The amounts also include the value of customer incentive trips attended by the executive’s spouse, including the related tax liability, for Messrs. Arthur and Franco in the amounts of $3,746 and $9,223, respectively. |
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All Other | ||||||||||||||||||||||||||||||||||||||||||||
Option | Grant | |||||||||||||||||||||||||||||||||||||||||||
Awards: | Exercise | Fair | Date | |||||||||||||||||||||||||||||||||||||||||
Number of | or Base | Market | Fair | |||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under | Estimated Future Payouts Under | Securities | Price of | Value | Value of | |||||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards(1) | Equity Incentive Plan Awards | Underlying | Option | on | Option | |||||||||||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Options | Awards | Grant | Awards | ||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#)(2) | (#) | (#) | ($/Sh) | Date ($) | ($)(3) | |||||||||||||||||||||||||||||||||
Thomas N. Chieffe | 125,000 | 625,000 | 1,875,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
9/7/2010 | 13,824 | (4) | 1.00 | 133.95 | ||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 106,055 | (5) | 14,100,490 | (6) | ||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 576,099 | (7) | 10.00 | — | (10) | |||||||||||||||||||||||||||||||||||||||
10/13/2010 | 480,082 | (7) | 20.00 | (8) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 480,082 | (7) | 30.00 | (9) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 384,066 | 10.00 | — | (10) | ||||||||||||||||||||||||||||||||||||||||
Stephen E. Graham | 99,840 | 187,200 | 449,280 | |||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 20,506 | (5) | 2,726,365 | (6) | ||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 135,553 | (7) | 10.00 | — | (10) | |||||||||||||||||||||||||||||||||||||||
10/13/2010 | 112,961 | (7) | 20.00 | (8) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 112,961 | (7) | 30.00 | (9) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 90,368 | 10.00 | — | (10) | ||||||||||||||||||||||||||||||||||||||||
Warren J. Arthur | 83,200 | 156,000 | 374,400 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
10/13/2010 | 24,595 | (5) | 3,270,016 | (6) | ||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 169,441 | (7) | 10.00 | — | (10) | |||||||||||||||||||||||||||||||||||||||
10/13/2010 | 141,201 | (7) | 20.00 | (8) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 141,201 | (7) | 30.00 | (9) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 112,961 | 10.00 | — | (10) | ||||||||||||||||||||||||||||||||||||||||
Robert M. Franco | 110,074 | 206,388 | 495,331 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
10/13/2010 | 40,992 | (5) | 5,450,071 | (6) | ||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 203,329 | (7) | 10.00 | — | (10) | |||||||||||||||||||||||||||||||||||||||
10/13/2010 | 169,441 | (7) | 20.00 | (8) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 169,441 | (7) | 30.00 | (9) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 135,553 | 10.00 | — | (10) | ||||||||||||||||||||||||||||||||||||||||
John F. Haumesser | 83,866 | 157,248 | 377,395 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
10/13/2010 | 25,620 | (5) | 3,406,294 | (6) | ||||||||||||||||||||||||||||||||||||||||
10/13/2010 | 135,553 | (7) | 10.00 | — | (10) | |||||||||||||||||||||||||||||||||||||||
10/13/2010 | 112,961 | (7) | 20.00 | (8) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 112,961 | (7) | 30.00 | (9) | — | (10) | ||||||||||||||||||||||||||||||||||||||
10/13/2010 | 90,368 | 10.00 | — | (10) |
(1) | Amounts in the table above under “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” reflect the annual cash incentive bonuses payable to each of our named executive officers upon the achievement of defined EBITDA performance goals and other operating metrics designed to measure short-term initiatives for 2011 at threshold, target and maximum levels of performance. | |
(2) | As described in detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Investment Holdings Corp. 2010 Stock Incentive Plan,” of the total number of options granted on October 13, 2010, eighty percent are subject to time-based vesting and the remaining twenty percent are subject to performance-based vesting. The performance-based options vest upon the attainment of specified annual EBITDA-based performance targets over a5-year period, subject to the executive’s continued service over such period. If the target for a given year is not achieved, the performance-based option may vest if the applicable EBITDA target is achieved in the next succeeding year. In the event of a change in control, that portion of the performance-based option that was scheduled to vest in the year in which such change in control occurs and the portion that was scheduled to vest in any subsequent years shall become vested immediately prior to such change in control. If a liquidity event occurs (defined as the first to occur of either a change in control of us or an initial public offering of our common stock), any portion of the performance-based option that did not vest in any prior year because |
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the applicable EBITDA target was not met will vest if and only if the H&F Investors receive a three times return on their initial cash investment in Parent. | ||
(3) | The dollar amount provided herein reflects the dollar amount recognized for financial statement reporting purposes for the 2010 fiscal year in accordance ASC 718. | |
(4) | As part of his transaction bonus, Mr. Chieffe was granted an option on September 7, 2010 with an exercise price per share equal to $1.00. The exercise price was lower than the fair market value of our common stock on the date of grant. The option, however, could only be exercised within two and one-half months following the end of the year in which it first became exercisable. | |
(5) | Represents the number of options modified in connection with the Merger to eliminate provisions which caused variability in the number of shares underlying the options described in footnote 6 below. | |
(6) | The dollar amount provided herein reflects the dollar amount recognized for financial statement reporting purposes for the 2010 fiscal year in accordance with ASC 718, due to the modification of the options granted under the 2004 Plan, which option was subject to adjustment in the event our previous investor, Investcorp, converted its preferred stock of AMH II into common stock as described in more detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Holdings II, Inc. 2004 Stock Option Plan” to eliminate provisions which caused variability in the number of shares underlying the options. | |
(7) | As described in detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Investment Holdings Corp. 2010 Stock Incentive Plan,” of the total number of options granted on October 13, 2010, eighty percent are subject to time-based vesting and the remaining twenty percent are subject to performance-based vesting. Thirty percent of the total number of options granted have an exercise price equal to the grant date fair market value of the underlying common stock; twenty-five percent of the total number of options granted have an exercise price equal to two times the grant date fair market value of such stock; and the remaining twenty-five percent of the total number of options granted have an exercise price equal to three times the grant date fair market value of such stock. Each of the time-based options vest solely upon the executive’s continued service over a five year period. The vesting of such time-based options accelerates in full if there is a change in control. | |
(8) | The exercise price equals two times the grant date fair market value of Parent’s common stock. | |
(9) | The exercise price equals three times the grant date fair market value of Parent’s common stock. | |
(10) | The grant date fair value is zero. The stock underlying the options awarded by Parent is governed by the stockholders agreement of Parent. Stock purchased as a result of the exercise of options is subject to a call right by Parent, and as a result, other than in limited circumstances, stock issued upon the exercise of the option may be repurchased at the right of Parent. This repurchase feature results in no compensation expense recognized in connection with options granted by Parent, until such time as the exercise of the options could occur without repurchase of the shares by the Parent, which is only likely to occur upon a liquidity event, change in control or initial public offering. |
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Option Awards | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Incentive | ||||||||||||||||||||
Plan Awards: | ||||||||||||||||||||
Number of | Number of | Number of | ||||||||||||||||||
Securities | Securities | Securities | ||||||||||||||||||
Underlying | Underlying | Underlying | ||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | |||||||||||||||||
Options | Options | Unearned | Exercise | Option | ||||||||||||||||
(#) | (#) | Options | Price | Expiration | ||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | |||||||||||||||
Thomas N. Chieffe | — | 576,099 | (1) | — | (2) | 10.00 | 10/13/2020 | |||||||||||||
— | 480,082 | (1) | — | (2) | 20.00 | 10/13/2020 | ||||||||||||||
— | 480,082 | (1) | — | (2) | 30.00 | 10/13/2020 | ||||||||||||||
— | 384,066 | (2) | 10.00 | 10/13/2020 | ||||||||||||||||
Stephen E. Graham | — | 135,553 | (1) | — | (2) | 10.00 | 10/13/2020 | |||||||||||||
— | 112,961 | (1) | — | (2) | 20.00 | 10/13/2020 | ||||||||||||||
— | 112,961 | (1) | — | (2) | 30.00 | 10/13/2020 | ||||||||||||||
— | 90,368 | (2) | 10.00 | 10/13/2020 | ||||||||||||||||
Warren J. Arthur | — | 169,441 | (1) | — | (2) | 10.00 | 10/13/2020 | |||||||||||||
— | 141,201 | (1) | — | (2) | 20.00 | 10/13/2020 | ||||||||||||||
— | 141,201 | (1) | — | (2) | 30.00 | 10/13/2020 | ||||||||||||||
— | 112,961 | (2) | 10.00 | 10/13/2020 | ||||||||||||||||
Robert M. Franco | — | 203,329 | (1) | — | (2) | 10.00 | 10/13/2020 | |||||||||||||
— | 169,441 | (1) | — | (2) | 20.00 | 10/13/2020 | ||||||||||||||
— | 169,441 | (1) | — | (2) | 30.00 | 10/13/2020 | ||||||||||||||
— | 135,553 | (2) | 10.00 | 10/13/2020 | ||||||||||||||||
John F. Haumesser | — | 135,553 | (1) | — | (2) | 10.00 | 10/13/2020 | |||||||||||||
— | 112,961 | (1) | — | (2) | 20.00 | 10/13/2020 | ||||||||||||||
— | 112,961 | (1) | — | (2) | 30.00 | 10/13/2020 | ||||||||||||||
— | 90,368 | (2) | 10.00 | 10/13/2020 |
(1) | As described in detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Investment Holdings Corp. 2010 Stock Incentive Plan,” of the total number of options granted on October 13, 2010, eighty percent are subject to time-based vesting and 20% are performance-based vesting. Of the total number of options granted, thirty percent have an exercise price equal to the grant date fair market value of the underlying common stock; twenty-five percent of the total number of options granted have an exercise price equal to two times the grant date fair market value of such stock; and the remaining twenty-five percent of the total number of options granted have an exercise price equal to three times the grant date fair market value of such stock. Each of the time-based options vest solely upon the executive’s continued service over a five year period. The vesting accelerates in full if there is a change in control. | |
(2) | As described in detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Investment Holdings Corp. 2010 Stock Incentive Plan,” of the total number of options granted on October 13, 2010, twenty percent are subject to performance-based vesting. The performance-based options were granted with an exercise price equal to the grant date fair market value of the underlying stock and vest upon the attainment of specified annual EBITDA-based performance goals over a five year period, subject to the executive’s continued service over such period. If the goal for a given year is not achieved, the performance-based option may vest if the applicable EBITDA goal is achieved in the next succeeding year. In the event of a change in control, that portion of the performance-based option that was scheduled to vest in the year in which such change in control occurs and the portion that was scheduled to vest in any subsequent years shall become vested immediately prior to such change in control. If a liquidity event occurs (defined as the first to occur of either a change in control of us or an initial public offering of our common stock), any portion of the performance-based option that did not vest in any prior |
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year because the applicable EBITDA target was not met will vest if and only if the H&F Investors receive a three times return on their initial cash investment in Parent. |
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Option Awards | ||||||||
Number of Shares | Value Realized on | |||||||
Acquired on Exercise | Exercise | |||||||
Name | (#)(1) | ($)(2) | ||||||
Thomas N. Chieffe | — | 14,100,490 | ||||||
Stephen E. Graham | — | 2,726,365 | ||||||
Warren J. Arthur | — | 3,270,016 | ||||||
Robert M. Franco | — | 5,450,071 | ||||||
John F. Haumesser | — | 3,406,294 |
(1) | No shares of common stock were acquired upon option exercise. Rather the options were cancelled and cashed out in connection with the Merger and the named executive officer received the applicable value set forth herein. | |
(2) | The dollar amount provided herein reflects the cash payment for cancellation of the option in connection with the Merger, which amount was calculated as the product of (1) the number of shares of common stock subject to the option as of the effective time of the Merger multiplied by (2) the excess, if any, of $133.95 (which was the per share Merger consideration) over the exercise price per share of the common stock subject to such option. |
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Change in Control Severance | ||||||||||||
Severance | ||||||||||||
Name | Payments(1) | Benefits(3) | Total | |||||||||
Thomas N. Chieffe | $ | 4,500,000 | (2) | $ | 43,080 | $ | 4,543,080 | (2) | ||||
Stephen E. Graham | 1,248,000 | 43,080 | 1,291,080 | |||||||||
Warren J. Arthur | 1,040,000 | 43,080 | 1,083,080 | |||||||||
Robert M. Franco | 1,375,920 | 43,080 | 1,419,000 | |||||||||
John F. Haumesser | 1,048,320 | 43,080 | 1,091,400 |
(1) | Based on the terms of the employment agreements for each of our executives other than Mr. Chieffe, such amount is equal to the sum of two times the executive’s current annual base salary and two times the executive’s annual incentive bonus (based on the highest amount of annual incentive bonus earned by the executive in any calendar year during the three calendar years immediately preceding the year in which the Merger occurred). No pro rata bonus would be payable if an executive was terminated on January 1, 2011 because the applicable employment agreement provides that a pro-rata bonus is payable only if such termination occurs on or after June 30th of the same calendar year. | |
(2) | Based on the terms of Mr. Chieffe’s employment agreement, such amount is equal to the sum of two times his current annual base salary of $600,000; two times his annual incentive bonus of $600,000 (based on the highest amount of annual incentive bonus earned by Mr. Chieffe in any calendar year during the three calendar years immediately preceding the year in which the Merger occurred), and the remaining unpaid portion of his special retention incentive bonus in the amount of $1,500,000. No pro rata bonus would be payable if Mr. Chieffe was terminated on January 1, 2011 because his employment agreement provides that a pro-rata bonus is payable only if such termination occurs on or after June 30th of the same calendar year. | |
(3) | Represents an estimate of the medical benefits, based on our current cost per employee, to which the executives would be entitled in the event of a change in control and termination in addition to amounts due for employee outplacement services. |
Change | ||||||||||||||||||||||||||||
in Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Fees | Non-Equity | Nonqualified | ||||||||||||||||||||||||||
Earned | Incentive | Deferred | ||||||||||||||||||||||||||
or Paid | Stock | Option | Plan | Compensation | All Other | |||||||||||||||||||||||
Name | in Cash | Awards | Awards | Compensation | Earnings | Compensation | Total(1) | |||||||||||||||||||||
Erik Ragatz | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Charles A. Carroll | 16,500 | — | — | — | — | — | 16,500 | |||||||||||||||||||||
Dana R. Snyder(2) | 31,000 | — | 817,537 | (3) | — | — | 472,531 | (4) | 1,321,068 | |||||||||||||||||||
Robert B. Henske | — | — | — | — | — | — | — | |||||||||||||||||||||
Stefan Goetz | — | — | — | — | — | — | — | |||||||||||||||||||||
Adam B. Durrett | — | — | — | — | — | — | — | |||||||||||||||||||||
Lars C. Haegg(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Ira D. Kleinman(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Kevin C. Nickelberry(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Dennis W. Vollmershausen(2) | 15,000 | — | — | — | — | — | 15,000 | |||||||||||||||||||||
Christopher D. Whalen(2) | — | — | — | — | — | — | — |
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(1) | Mr. Chieffe, our former Chief Executive Officer, is not included in this table as he was our employee and thus receives no compensation for his services as a director. The compensation received by Mr. Chieffe is shown in the Summary Compensation Table. |
(2) | Messrs. Snyder, Haegg, Kleinman, Nickelberry, Vollmershausen and Whalen were members of the Board of Directors of AMH II prior to the Merger. Mr. Haegg was the Chairman of the Board of Directors of AMH II. | |
(3) | The dollar amount provided herein reflects the dollar amount recognized for financial statement reporting purposes for the 2010 fiscal year in accordance with ASC 718, due to the modification of the options referred to in footnote 4 immediately below to eliminate provisions which caused variability in the number of shares underlying the options. | |
(4) | The dollar amount provided herein includes a cash payment made in lieu of adjusting the number of shares subject to an option granted under the 2004 Plan, which option was subject to adjustment in the event our previous investor, Investcorp, converted its preferred stock of AMH II into common stock as described in more detail below under the caption “Outstanding Equity Awards At Fiscal Year-End — AMH Holdings II, Inc. 2004 Stock Option Plan.” The amount of the payment was determined by the product of the number of shares that would have been received had the option been adjusted upwards multiplied by (2) the excess, if any, of $133.95 (the fair market value of the underlying stock at the time of such conversion) over the exercise price per share of the common stock subject to such option. |
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• | each person known by us to own beneficially 5% or more of the outstanding voting preferred stock or voting common stock of Parent; |
• | the directors and executive officers of Parent and our company; and |
• | all directors and named executive officers of Parent and our company as a group. |
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Common Stock | ||||||||
Number of Shares | % of Class | |||||||
Investment funds affiliated with Hellman & Friedman LLC(1) | 53,995,660 | 97.55 | % | |||||
Executive Officers and Directors | * | |||||||
Dana R. Snyder | 10,000 | * | ||||||
Stephen E. Graham | 61,463 | * | ||||||
Warren J. Arthur | 90,391 | * | ||||||
Robert M. Franco | 122,866 | * | ||||||
John F. Haumesser | 76,791 | * | ||||||
Erik D. Ragatz(1) | — | * | ||||||
Charles A. Carroll | 500,000 | * | ||||||
Thomas N. Chieffe | 338,114 | * | ||||||
Robert B. Henske(1) | — | * | ||||||
Stefan Goetz(1) | — | * | ||||||
Adam B. Durrett(1) | — | * | ||||||
All directors and executive officers as a group | 738,645 | 1.33 | % |
* | Indicates ownership of less than 1% |
(1) | Hellman & Friedman Capital Partners VI, L.P. (“HFCP VI”), Hellman & Friedman Capital Partners VI (Parallel), L.P. (“HFCP VI (Parallel)”), Hellman & Friedman Capital Executives VI, L.P. (“HFCE VI”) and Hellman & Friedman Capital Associates VI, L.P. (“HFCA VI,” and together with HFCP VI, HFCP VI (Parallel) and HFCE VI, the “H&F Entities”) beneficially own 53,995,650 shares of Parent common stock. The address for each of the H&F Entities isc/o Hellman & Friedman LLC, One Maritime Plaza, 12th Floor, San Francisco, CA 94111. Such shares of Parent common stock are owned of record by HFCP VI, which owns 42,584,221 shares, HFCP VI (Parallel), which owns 11,179,259 shares, HFCE VI, which owns 176,025 shares, and HFCA VI, which owns 56,155 shares. Hellman & Friedman Investors VI, L.P. (“H&F Investors VI”) is the general partner of each of the H&F Entities. Hellman & Friedman LLC (“H&F”) is the general partner of H&F Investors VI. As the general partner of H&F Investors VI, H&F may be deemed to have beneficial ownership of the shares over which any of the H&F Entities has voting or dispositive power. An investment committee of H&F has sole voting and dispositive control over such shares of Parent common stock. Messrs. Ragatz, Henske and Goetz serve as Managing Directors of Hellman & Friedman, but none of them serves on the investment committee. Each of the members of the investment committee, as well as Messrs. Ragatz, Henske, Goetz and Durrett, disclaim beneficial ownership of such shares of Parent common stock, except to the extent of their respective pecuniary interest therein. |
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• | our Chief Executive Officer (unless otherwise determined in writing by the H&F Investors); and | |
• | such other directors as shall be designated from time to time by the H&F Investors. |
• | an H&F Investor’s or its affiliates’ ownership of equity interests or other securities of Parent or their control of or ability to influence Parent or any of its subsidiaries; or | |
• | the business, operations, properties, assets or other rights or liabilities of Parent or any of its subsidiaries. |
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• | a rate equal to (i) the London Interbank Offered Rate, or LIBOR, with respect to eurodollar loans under the U.S. facility or (ii) the Canadian Deposit Offered Rate, or CDOR, with respect to loans under the Canadian facility, plus an applicable margin of 2.75%, which margin can vary quarterly in 0.25% increments between three pricing levels, ranging from 2.50% to 3.00%, based on excess availability, which is defined in the Revolving Credit Agreement as (a) the sum of (x) the lesser of (1) the aggregate commitments under theU.S. sub-facility at such time and (2) the then applicable U.S. borrowing base and (y) the lesser of (1) the aggregate commitments under the Canadiansub-facility at such time and (2) the then applicable Canadian borrowing base less (b) the sum of the aggregate principal amount of the revolving credit loans (including swingline loans) and letters of credit outstanding at such time; | |
• | the alternate base rate, which is the highest of (i) the prime commercial lending rate published by The Wall Street Journal as the “prime rate,” (ii) the Federal Funds Effective Rate plus 0.50% and (iii) the one-month Published LIBOR rate plus 1.0% per annum, plus, in each case, an applicable margin of 1.75%, which margin can vary quarterly in 0.25% increments between three pricing levels, ranging from 1.50% to 2.00%, based on excess availability, as set forth in the preceding paragraph; or |
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• | the alternate Canadian base rate, which is the higher of (i) the annual rate from time to time publicly announced by Toronto Dominion Bank (Toronto) as its prime rate in effect for determining interest rates on Canadian Dollar denominated commercial loans in Canada and (ii) the30-day CDOR Rate plus 1.0%, plus, in each case, an applicable margin of 1.75%, which margin can vary quarterly in 0.25% increments between three pricing levels, ranging from 1.50% to 2.00%, based on excess availability, as set forth in the second preceding paragraph. |
108
• | a first-priority perfected security interest in all present and after-acquired inventory and accounts receivable of the U.S. borrowers and the U.S. guarantors and all investment property, general intangibles, books and records, documents and instruments and supporting obligations relating to such inventory, such accounts receivable and such other receivables, and all proceeds of the foregoing, including all deposit accounts, other bank and securities accounts, cash and cash equivalents (other than certain excluded deposit, securities and commodities accounts), investment property and other general intangibles, in each case arising from such inventory, such accounts receivable and such other receivables, subject to certain exceptions to be agreed and a first priority security interest in the capital stock of Associated Materials, LLC (the “U.S. first priority collateral”); and | |
• | a second-priority security interest in the capital stock of each direct, material wholly-owned restricted subsidiary of Associated Materials, LLC and of each guarantor of the notes and substantially all tangible and intangible assets of Associated Materials, LLC and each guarantor of the notes (to the extent not included in the U.S. first priority collateral) and proceeds of the foregoing (together with the U.S. first priority collateral, the “U.S. ABL collateral”). |
• | the U.S. ABL collateral; and | |
• | a first-priority perfected security interest in all of the capital stock of the Canadian borrowers and the capital stock of each direct, material restricted subsidiary of the Canadian borrowers and the Canadian guarantors and substantially all tangible and intangible assets of the Canadian borrowers and Canadian guarantors and proceeds of the foregoing and all present and after-acquired inventory and accounts receivable of the Canadian borrowers and the Canadian guarantors and all investment property, general intangibles, books and records, documents and instruments and supporting obligations relating to such inventory, such accounts receivable and such other receivables, and all proceeds of the foregoing, including all deposit accounts, other bank and securities accounts, cash and cash equivalents (other than certain excluded deposit, securities and commodities accounts), investment property and other general intangibles, in each case arising from such inventory, such accounts receivable and such other receivables, subject to certain exceptions to be agreed. |
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• | you are not our “affiliate” within the meaning of Rule 405 of the Securities Act; | |
• | you have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the exchange notes in violation of the provisions of the Securities Act; |
111
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes in violation of the Securities Act; and | |
• | you are acquiring the exchange notes in the ordinary course of your business. |
• | you are not our “affiliate” within the meaning of Rule 405 under the Securities Act; | |
• | you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes in violation of the provisions of the Securities Act; | |
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes in violation of the provisions of the Securities Act; and | |
• | you are acquiring the exchange notes in the ordinary course of your business. |
• | you cannot rely on the position of the SEC set forth in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, dated July 2, 1993, or similar no-action letters; and | |
• | in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. |
112
• | to delay accepting for exchange any outstanding notes (only in the case that we amend or extend the exchange offer); | |
• | to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “— Conditions to the Exchange Offer” have not been satisfied by giving written notice of such delay, extension or termination to the exchange agent; and | |
• | subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner. In the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the offer period, if necessary, so that at least five business days remain in such offer period following notice of the material change. |
113
• | the exchange offer or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or | |
• | any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer. |
• | the representations described under “— Purpose and Effect of the Exchange Offer,” “— Procedures for Tendering” and “Plan of Distribution;” or | |
• | any other representations as may be reasonably necessary under applicable SEC rules, regulations, or interpretations to make available to us an appropriate form for registration of the exchange notes under the Securities Act. |
• | complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail or |
114
deliver such letter of transmittal or facsimile thereof to the exchange agent at the address set forth below under “— Exchange Agent — Notes” prior to the expiration date; or |
• | comply with DTC’s Automated Tender Offer Program procedures described below. |
• | the exchange agent must receive certificates for outstanding notes along with the letter of transmittal prior to the expiration date; | |
• | the exchange agent must receive a timely confirmation of book-entry transfer of outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message prior to the expiration date; or | |
• | you must comply with the guaranteed delivery procedures described below. |
• | make appropriate arrangements to register ownership of the outstanding notes in your name; or | |
• | obtain a properly completed bond power from the registered holder of outstanding notes. |
• | by a registered holder of the outstanding notes who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal; or | |
• | for the account of an eligible guarantor institution. |
115
• | DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation; | |
• | the participant has received and agrees to be bound by the terms of the letter of transmittal, or in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the notice of guaranteed delivery; and | |
• | we may enforce that agreement against such participant. |
• | outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at the book-entry transfer facility; and | |
• | a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message. |
• | you are not our “affiliate” within the meaning of Rule 405 under the Securities Act; | |
• | you do not have an arrangement or understanding with any person or entity to participate in a distribution of the exchange notes in violation of the provisions of the Securities Act; | |
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes in violation of the provisions of the Securities Act; and | |
• | you are acquiring the exchange notes in the ordinary course of your business. |
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• | the tender is made through an eligible guarantor institution; | |
• | prior to the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail or hand delivery or a properly transmitted agent’s message and notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and | |
• | the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date. |
117
• | the exchange agent must receive a written notice, which may be by facsimile or letter, of withdrawal at its address set forth below under “— Exchange Agent;” or | |
• | you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system. |
• | specify the name of the person who tendered the outstanding notes to be withdrawn; | |
• | identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and | |
• | where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder. |
• | the serial numbers of the particular certificates to be withdrawn; and | |
• | a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible guarantor institution. |
118
By Registered or Certified Mail: | By Regular Mail or Overnight Courier: | By Hand Delivery: | ||
Wells Fargo Bank, N.A. Corporate Trust Operations MAC # N9303-121 P.O. Box 1517 Minneapolis, MN 55480 | Wells Fargo Bank, N.A. Corporate Trust Operations MAC # N9303-121 Sixth Street & Marquette Avenue Minneapolis, MN 55479 | Wells Fargo Bank, N.A. Corporate Trust Services Northstar East Building, 12th Floor 608 Second Avenue South Minneapolis, MN 55402 | ||
By Facsimile Transmission: (eligible institutions only): (612) 667-6282 Telephone Inquiries: (800) 344-5128 |
• | certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered; |
119
• | tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or | |
• | a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer. |
• | as set forth in the legend printed on the outstanding notes as a consequence of the issuance of the outstanding notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and | |
• | as otherwise set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. |
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• | jointly and severally issued by the Issuers; | |
• | general senior obligations of the Issuers; | |
• | pari passuin right of payment with all existing and future Senior Indebtedness (including the Senior Credit Agreement and other Lenders Debt) of the Issuers; | |
• | secured on a first-priority basis by the Notes Collateral owned by the Issuers and on a second-priority basis by the ABL Collateral owned by the Issuers, in each case subject to certain Liens permitted under the Indenture; | |
• | equal in priority as to the Notes Collateral owned by the Issuers with respect to any Obligations under any Other Pari Passu Lien Obligations incurred after the Issue Date; | |
• | senior in right of payment to any future Subordinated Indebtedness of the Issuers; |
121
• | initially guaranteed on a senior basis by each Domestic Subsidiary that is a Wholly Owned Subsidiary (other than Excluded Subsidiaries) that guarantees the Obligations under the Senior Credit Agreement and will also be guaranteed in the future by each Domestic Subsidiary that is a Wholly Owned Subsidiary (other than Excluded Subsidiaries) that guarantees any Indebtedness of an Issuer or any Guarantor, subject to certain exceptions; | |
• | effectively senior to all existing and future unsecured Indebtedness of the Issuers to the extent of the value of the Collateral owned by the Issuers (after giving effect to any senior Lien on such Collateral), and effectively senior to all existing and future Obligations under the Senior Credit Agreement and other Lenders Debt to the extent of the value of the Notes Collateral owned by the Issuers; | |
• | effectively subordinated to (i) the Issuers’ existing and future Obligations under the Senior Credit Agreement and other Lenders Debt to the extent of the value of the ABL Collateral owned by the Issuers and (ii) any existing or future Indebtedness of the Issuers that is secured by Liens on assets that do not constitute a part of the Collateral to the extent of the value of such assets; and | |
• | structurally subordinated to all existing and future Indebtedness and other claims and liabilities, including preferred stock, of Subsidiaries of AMLLC that are not Guarantors. |
• | a general senior obligation of each Guarantor; | |
• | pari passuin right of payment with all existing and future Senior Indebtedness of that Guarantor, including its guarantee of all Obligations under the Senior Credit Agreement and other Lenders Debt; | |
• | secured on a first-priority basis by the Notes Collateral owned by that Guarantor and on a second-priority basis by the ABL Collateral owned by that Guarantor, in each case subject to certain Liens permitted under the Indenture; | |
• | equal in priority as to the Notes Collateral owned by that Guarantor with respect to any Obligations under any Other Pari Passu Lien Obligations incurred after the Issue Date; | |
• | senior in right of payment to all existing and future Subordinated Indebtedness of that Guarantor; | |
• | effectively senior to all existing and future unsecured Indebtedness of that Guarantor, to the extent of the value of the Collateral owned by that Guarantor (after giving effect to any senior lien on such Collateral), and effectively senior to all existing and future guarantees of the Obligations under the Senior Credit Agreement and other Lenders Debt of that Guarantor to the extent of the value of the Notes Collateral owned by that Guarantor; | |
• | effectively subordinated to (i) any existing or future guarantee of that Guarantor of the Obligations under the Senior Credit Agreement and of other Lenders Debt to the extent of the value of the ABL Collateral owned by that Guarantor and (ii) any existing or future Indebtedness of that Guarantor that is secured by Liens on assets that do not constitute a part of the Collateral to the extent of the value of such assets; and |
122
• | structurally subordinated to all existing and future Indebtedness and other claims and liabilities, including preferred stock, of any subsidiaries of that Guarantor that are not Guarantors. |
123
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• | subject to the limitation described below under “— Limitations on Stock Collateral,” all of the Capital Stock owned by an Issuer or any Guarantor other than Excluded Capital Stock; | |
• | any fee owned real property owned by the Issuers and the Guarantors with a fair market value in excess of $5.0 million; | |
• | equipment; | |
• | U.S. patents, U.S. trademarks, U.S. copyrights and other U.S. intellectual property; | |
• | general intangibles, instruments, books and records and supporting obligations related to the foregoing and proceeds of the foregoing (other than accounts that are proceeds of the sale of inventory); | |
• | any promissory note in a principal amount in excess of $5.0 million; and | |
• | substantially all of the other present and future tangible and intangible assets of the Issuers and the Guarantors, |
• | all accounts receivable (except to the extent constituting proceeds of equipment, real property or intellectual property); | |
• | all inventory; | |
• | all instruments, chattel paper and other contracts, in each case, evidencing, or substituted for, any accounts receivable; |
126
• | all guarantees, letters of credit, security and other credit enhancements in each case for the accounts receivable; | |
• | all documents of title for any inventory; | |
• | all commercial tort claims and general intangibles (other than intellectual property) to the extent relating to any of the accounts receivable or inventory; | |
• | all bank accounts or securities accounts into which any proceeds of accounts receivable or inventory are deposited (including all cash and other funds on deposit therein, except to the extent constituting identifiable proceeds of the Notes Collateral) but excluding Excluded Accounts; | |
• | all tax refunds; | |
• | all books and records relating to any of the foregoing; and | |
• | all substitutions, replacements, accessions, products or proceeds (including, without limitation, insurance proceeds) of any of the foregoing. |
127
128
129
• | it will not take or cause to be taken any action the purpose or effect of which is, or could be, to make any Lien that the Holders of the Notes or the holders of any Other Pari Passu Lien Obligations have on the ABL Collateral equal with, or to give the Notes Collateral Agent, the Holders of the Notes or the holders of any Other Pari Passu Lien Obligations any preference or priority relative to, any Lien that the holders of any Lenders Debt secured by any ABL Collateral have with respect to such ABL Collateral; | |
• | it will not challenge or question in any proceeding the validity or enforceability of any first-priority security interest in the ABL Collateral, the validity, attachment, perfection or priority of any lien held by the holders of any Lenders Debt secured by any ABL Collateral or the validity or enforceability of the priorities, rights or duties established by other provisions of the Intercreditor Agreement; |
130
• | it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the ABL Collateral by the Bank Collateral Agent or the holders of any Lenders Debt secured by such ABL Collateral; | |
• | it will have no right to (i) direct the Bank Collateral Agent or any holder of any Lenders Debt secured by any ABL Collateral to exercise any right, remedy or power with respect to such ABL Collateral or (ii) consent to the exercise by the Bank Collateral Agent or any holder of any Lenders Debt secured by the ABL Collateral of any right, remedy or power with respect to such ABL Collateral; | |
• | it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Bank Collateral Agent or any holder of any Lenders Debt secured by any ABL Collateral seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to, and neither the Bank Collateral Agent nor any holders of any Lenders Debt secured by any ABL Collateral will be liable for, any action taken or omitted to be taken by the Bank Collateral Agent or such lenders with respect to such ABL Collateral; | |
• | it will not seek, and will waive any right, to have any ABL Collateral or any part thereof marshaled upon any foreclosure or other disposition of such ABL Collateral; | |
• | it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of the Intercreditor Agreement; and | |
• | it will not object to the forbearance by the Bank Collateral Agent from pursuing any right of enforcement with respect to the ABL Collateral. |
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• | to enable the disposition of such property or assets, including Capital Stock, (other than to an Issuer or a Guarantor) to the extent not prohibited under the Indenture; | |
• | in the case of a Guarantor that is released from its Guarantee, the release of the property and assets of such Guarantor; | |
• | to the extent any lease is Collateral, upon termination of such lease; | |
• | with respect to Collateral that is Capital Stock, upon the dissolution or liquidation of the issuer of that Capital Stock that is not prohibited by the Indenture; or | |
• | as described under “— Amendment, Supplement and Waiver” below. |
136
Year | Percentage | |||
2013 | 106.844 | % | ||
2014 | 104.563 | % | ||
2015 | 102.281 | % | ||
2016 and thereafter | 100.000 | % |
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Page | ||||
Audited Consolidated Financial Statements for the Years Ended January 1, 2011, January 2, 2010 and January 3, 2009 | ||||
Reports of Independent Registered Public Accounting Firms | F-2 | |||
Consolidated Balance Sheets as of January 1, 2011 (Successor) and January 2, 2010 (Predecessor) | F-4 | |||
Consolidated Statements of Operations | F-5 | |||
October 13, 2010 through January 1, 2011 (Successor) | ||||
January 3, 2010 through October 12, 2010 (Predecessor) | ||||
Years Ended January 2, 2010 and January 3, 2009 (Predecessor) | ||||
Consolidated Statements of Member’s Equity / Stockholders’ (Deficit) and Comprehensive Income (Loss) | F-6 | |||
October 13, 2010 through January 1, 2011 (Successor) | ||||
January 3, 2010 through October 12, 2010 (Predecessor) | ||||
Years Ended January 2, 2010 and January 3, 2009 (Predecessor) | ||||
Consolidated Statements of Cash Flows | F-7 | |||
October 13, 2010 through January 1, 2011 (Successor) | ||||
January 3, 2010 through October 12, 2010 (Predecessor) | ||||
Years Ended January 2, 2010 and January 3, 2009 (Predecessor) | ||||
Notes to Consolidated Financial Statements | F-8 | |||
Unaudited Condensed Consolidated Financial Statements | ||||
Condensed Consolidated Balance Sheet as of April 2, 2011 (Successor) and January 1, 2011 (Successor) | F-57 | |||
Condensed Consolidated Statements of Operations | F-58 | |||
Quarter ended April 2, 2011 (Successor) | ||||
Quarter ended April 3, 2010 (Predecessor) | ||||
Condensed Consolidated Statements of Cash Flows | F-59 | |||
Quarter ended April 2, 2011 (Successor) | ||||
Quarter ended April 3, 2010 (Predecessor) | ||||
Notes to Unaudited Condensed Consolidated Financial Statements | F-60 |
F-1
F-2
F-3
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
(In thousands) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 13,789 | $ | 55,905 | |||||
Accounts receivable, net of allowance for doubtful accounts of $9,203 at January 1, 2011 and $8,015 at January 2, 2010 | 118,408 | 114,355 | |||||||
Inventories | 146,215 | 115,394 | |||||||
Income taxes receivable | 3,291 | 3,905 | |||||||
Deferred income taxes | — | 4,921 | |||||||
Prepaid expenses | 8,995 | 8,945 | |||||||
Total current assets | 290,698 | 303,425 | |||||||
Property, plant and equipment, net | 137,862 | 109,037 | |||||||
Goodwill | 566,423 | 231,263 | |||||||
Other intangible assets, net | 731,014 | 96,081 | |||||||
Other assets | 29,907 | 22,323 | |||||||
Total assets | $ | 1,755,904 | $ | 762,129 | |||||
LIABILITIES AND MEMBER’S EQUITY / STOCKHOLDERS’ (DEFICIT) | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 90,190 | $ | 87,580 | |||||
Accrued liabilities | 79,319 | 73,087 | |||||||
Deferred income taxes | 19,989 | 2,312 | |||||||
Income taxes payable | 2,506 | 1,112 | |||||||
Total current liabilities | 192,004 | 164,091 | |||||||
Deferred income taxes | 144,668 | 36,557 | |||||||
Other liabilities | 132,755 | 61,326 | |||||||
Long-term debt | 788,000 | 675,360 | |||||||
Commitments and contingencies | |||||||||
Convertible preferred stock, $.01 par value | — | 150,000 | |||||||
Member’s Equity / Stockholders’ (Deficit) | |||||||||
Member’s equity: | |||||||||
Membership interest | 553,507 | — | |||||||
Accumulated other comprehensive income | 9,985 | — | |||||||
Accumulated deficit | (65,015 | ) | — | ||||||
Total member’s equity | 498,477 | — | |||||||
Stockholders’ deficit: | |||||||||
Class B common stock, $.01 par value: | |||||||||
Series I; Authorized shares — 2,583,801; issued shares — 500,000 | — | 5 | |||||||
Series II; Authorized shares — 2,083,801; issued shares — 1,221,076 | — | 11 | |||||||
Capital in excess of par | — | 15 | |||||||
Accumulated other comprehensive loss | — | (7,810 | ) | ||||||
Accumulated deficit | — | (317,426 | ) | ||||||
Total stockholders’ deficit | — | (325,205 | ) | ||||||
Total liabilities and member’s equity / stockholders’ (deficit) | $ | 1,755,904 | $ | 762,129 | |||||
F-4
October 13, 2010 | January 3, 2010 | ||||||||||||||||
to | to | Years Ended | |||||||||||||||
January 1, 2011 | October 12, 2010 | January 2, 2010 | January 3, 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
(In thousands) | |||||||||||||||||
Net sales | $ | 269,249 | $ | 897,938 | $ | 1,046,107 | $ | 1,133,956 | |||||||||
Cost of sales | 222,737 | 658,509 | 765,691 | 859,107 | |||||||||||||
Gross profit | 46,512 | 239,429 | 280,416 | 274,849 | |||||||||||||
Selling, general and administrative expenses | 53,543 | 159,448 | 204,610 | 212,025 | |||||||||||||
Merger costs: | |||||||||||||||||
Transaction costs | 7,411 | 38,416 | — | — | |||||||||||||
Transaction bonuses | — | 26,231 | — | — | |||||||||||||
Stock option compensation | — | 38,014 | — | — | |||||||||||||
Manufacturing restructuring costs | — | — | 5,255 | 1,783 | |||||||||||||
(Loss) income from operations | (14,442 | ) | (22,680 | ) | 70,551 | 61,041 | |||||||||||
Interest expense, net | 16,120 | 58,759 | 77,352 | 82,567 | |||||||||||||
Loss (gain) on debt extinguishment | 25,129 | (15,201 | ) | (29,665 | ) | — | |||||||||||
Foreign currency loss (gain) | 771 | (184 | ) | (184 | ) | 1,809 | |||||||||||
(Loss) income before income taxes | (56,462 | ) | (66,054 | ) | 23,048 | (23,335 | ) | ||||||||||
Income taxes | 8,553 | 5,220 | 2,390 | 53,062 | |||||||||||||
Net income (loss) | $ | (65,015 | ) | $ | (71,274 | ) | $ | 20,658 | $ | (76,397 | ) | ||||||
F-5
AND COMPREHENSIVE INCOME (LOSS)
Accumulated | Total | |||||||||||||||||||||||||||
Other | Accumulated | Member’s | ||||||||||||||||||||||||||
Capital in | Comprehensive | (Deficit) / | Equity/ | |||||||||||||||||||||||||
Common Stock | Excess | Membership | Income | Retained | Stockholders’ | |||||||||||||||||||||||
Shares | Amount | of Par | Interest | (Loss) | Earnings | (Deficit) | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||||||
Balance at December 29, 2007 | 1,721,076 | $ | 16 | $ | 15 | $ | — | $ | 7,179 | $ | (261,687 | ) | $ | (254,477 | ) | |||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | (76,397 | ) | (76,397 | ) | ||||||||||||||||||||
Unrecognized prior service cost and net loss, net of tax | — | — | — | (9,377 | ) | — | (9,377 | ) | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | (16,615 | ) | — | (16,615 | ) | ||||||||||||||||||||
Total comprehensive loss | (102,389 | ) | ||||||||||||||||||||||||||
Balance at January 3, 2009 | 1,721,076 | 16 | 15 | — | (18,813 | ) | (338,084 | ) | (356,866 | ) | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 20,658 | 20,658 | ||||||||||||||||||||||
Unrecognized prior service cost and net gain, net of tax | — | — | — | 217 | — | 217 | ||||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | 10,786 | — | 10,786 | ||||||||||||||||||||||
Total comprehensive income | 31,661 | |||||||||||||||||||||||||||
Balance at January 2, 2010 | 1,721,076 | 16 | 15 | — | (7,810 | ) | (317,426 | ) | (325,205 | ) | ||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | (71,274 | ) | (71,274 | ) | ||||||||||||||||||||
Unrecognized prior service cost and net loss, net of tax | — | — | — | (12,663 | ) | — | (12,663 | ) | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | 3,023 | — | 3,023 | ||||||||||||||||||||||
Total comprehensive loss | — | — | — | — | (80,914 | ) | ||||||||||||||||||||||
Accrued stock options | — | 38,014 | — | — | — | 38,014 | ||||||||||||||||||||||
Accrued warrants | — | 806 | — | — | — | 806 | ||||||||||||||||||||||
Excess tax benefit on stock options | — | 1,817 | — | — | — | 1,817 | ||||||||||||||||||||||
Balance at October 12, 2010 | 1,721,076 | $ | 16 | $ | 40,652 | $ | — | $ | (17,450 | ) | $ | (388,700 | ) | $ | (365,482 | ) | ||||||||||||
Successor | ||||||||||||||||||||||||||||
Balance at October 13, 2010 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Equity contribution | — | — | 553,507 | — | — | 553,507 | ||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | (65,015 | ) | (65,015 | ) | ||||||||||||||||||||
Unrecognized prior service cost and net gain, net of tax | — | — | — | 4,799 | — | 4,799 | ||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 5,186 | — | 5,186 | ||||||||||||||||||||||
Total comprehensive loss | (55,030 | ) | ||||||||||||||||||||||||||
Balance at January 1, 2011 | — | $ | — | $ | — | $ | 553,507 | $ | 9,985 | $ | (65,015 | ) | $ | 498,477 | ||||||||||||||
F-6
October 13, 2010 | January 3, 2010 | Years Ended | |||||||||||||||
to | to | January 2, | January 3, | ||||||||||||||
January 1, 2011 | October 12, 2010 | 2010 | 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
(In thousands) | |||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||
Net income (loss) | $ | (65,015 | ) | $ | (71,274 | ) | $ | 20,658 | $ | (76,397 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 10,498 | 17,582 | 22,169 | 22,698 | |||||||||||||
Deferred income taxes | 8,267 | 4,278 | 1,444 | 41,905 | |||||||||||||
Impact of inventorystep-up | 23,091 | — | — | — | |||||||||||||
Provision for losses on accounts receivable | 1,343 | 3,292 | 10,363 | 8,000 | |||||||||||||
Loss on sale or disposal of assets other than by sale | — | 43 | 509 | 2,060 | |||||||||||||
Loss (gain) on debt extinguishment | 25,129 | (15,201 | ) | (29,665 | ) | — | |||||||||||
Amortization of deferred financing costs | 914 | 3,203 | 12,843 | 53,182 | |||||||||||||
Compensation expense related to stock options | — | 38,014 | — | — | |||||||||||||
Compensation expense related to warrants | — | 806 | — | — | |||||||||||||
Debt accretion | — | 201 | — | — | |||||||||||||
Non-cash portion of manufacturing restructuring costs | — | — | 5,255 | 1,577 | |||||||||||||
Amortization of management fee | — | — | 500 | 500 | |||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Accounts receivable | 42,933 | (49,940 | ) | (2,909 | ) | 5,679 | |||||||||||
Inventories | 13,128 | (41,998 | ) | 30,392 | (13,532 | ) | |||||||||||
Prepaid expenses | (1,258 | ) | 1,712 | 1,326 | (391 | ) | |||||||||||
Accounts payable | (67,762 | ) | 68,507 | 28,794 | (18,517 | ) | |||||||||||
Accrued liabilities | (63,501 | ) | 69,282 | 16,861 | (8,567 | ) | |||||||||||
Income taxes receivable/payable | (98 | ) | (1,204 | ) | (4,416 | ) | (5,370 | ) | |||||||||
Other assets | (32 | ) | (566 | ) | 2,315 | (1,739 | ) | ||||||||||
Other liabilities | 222 | 1,832 | 2,262 | (3,137 | ) | ||||||||||||
Net cash (used in) provided by operating activities | (72,141 | ) | 28,569 | 118,701 | 7,951 | ||||||||||||
INVESTING ACTIVITIES | |||||||||||||||||
Acquisition, net of assumed debt | (557,591 | ) | — | — | — | ||||||||||||
Capital expenditures | (5,160 | ) | (10,302 | ) | (8,733 | ) | (11,498 | ) | |||||||||
Proceeds from sale of assets | — | — | — | 25 | |||||||||||||
Net cash used in investing activities | (562,751 | ) | (10,302 | ) | (8,733 | ) | (11,473 | ) | |||||||||
FINANCING ACTIVITIES | |||||||||||||||||
Net borrowings under ABL facilities | 58,000 | — | — | — | |||||||||||||
Net (repayments) borrowings under prior ABL Facility | — | (10,000 | ) | (46,000 | ) | 56,000 | |||||||||||
Repayment of Predecessor long-term debt, including redemption premiums and interest | (719,972 | ) | — | — | — | ||||||||||||
Repayment of term loan | — | — | — | (61,000 | ) | ||||||||||||
Excess tax benefit from redemption of options | — | 1,817 | — | — | |||||||||||||
Issuance of senior notes | 730,000 | — | 217,514 | — | |||||||||||||
Equity contribution | 553,507 | — | — | — | |||||||||||||
Financing costs | (39,211 | ) | (223 | ) | (16,802 | ) | (5,371 | ) | |||||||||
Cash paid to redeem senior notes | — | — | (216,013 | ) | — | ||||||||||||
Troubled debt interest payments | — | — | (1,037 | ) | — | ||||||||||||
Net cash provided by (used in) financing activities | 582,324 | (8,406 | ) | (62,338 | ) | (10,371 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 75 | 516 | 1,566 | (1,001 | ) | ||||||||||||
Net (decrease) increase in cash and cash equivalents | (52,493 | ) | 10,377 | 49,196 | (14,894 | ) | |||||||||||
Cash and cash equivalents at beginning of the period | 66,282 | 55,905 | 6,709 | 21,603 | |||||||||||||
Cash and cash equivalents at end of the period | $ | 13,789 | $ | 66,282 | $ | 55,905 | $ | 6,709 | |||||||||
Supplemental Information: | |||||||||||||||||
Cash paid for interest | $ | 8,729 | $ | 60,601 | $ | 49,159 | $ | 29,402 | |||||||||
Cash paid for income taxes | $ | 280 | $ | 292 | $ | 6,064 | $ | 16,860 | |||||||||
F-7
1. | ACCOUNTING POLICIES |
F-8
F-9
October 13, 2010 | January 3, 2010 | Years Ended | |||||||||||||||
to | to | January 2, | January 3, | ||||||||||||||
January 1, 2011 | October 12, 2010 | 2010 | 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Balance at beginning of period | $ | 9,471 | $ | 8,015 | $ | 13,160 | $ | 9,363 | |||||||||
Provision for losses | 1,343 | 3,292 | 10,363 | 8,000 | |||||||||||||
Losses sustained (net of recoveries) | (1,611 | ) | (1,836 | ) | (15,508 | ) | (4,203 | ) | |||||||||
Balance at end of period | $ | 9,203 | $ | 9,471 | $ | 8,015 | $ | 13,160 | |||||||||
Building and improvements | 7 to 40 years | |||
Computer equipment | 3 to 5 years | |||
Machinery and equipment | 3 to 15 years |
F-10
F-11
October 13, 2010 | January 3, 2010 | Years Ended | |||||||||||||||
to | to | January 2, | January 3, | ||||||||||||||
January 1, 2011 | October 12, 2010 | 2010 | 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Balance at beginning of period | $ | 93,387 | $ | 33,016 | $ | 29,425 | $ | 28,684 | |||||||||
Provision for warranties issued and changes in estimates for pre-existing warranties | 2,599 | 7,602 | 9,421 | 8,658 | |||||||||||||
Claims paid | (1,441 | ) | (5,675 | ) | (6,603 | ) | (6,922 | ) | |||||||||
Foreign currency translation | 167 | 210 | 773 | (995 | ) | ||||||||||||
Balance at end of period | $ | 94,712 | $ | 35,153 | $ | 33,016 | $ | 29,425 | |||||||||
F-12
F-13
2. | BUSINESS COMBINATION |
F-14
F-15
Total current assets | $ | 423,548 | ||
Property, plant and equipment | 137,152 | |||
Goodwill | 564,072 | |||
Other intangible assets | 734,100 | |||
Other assets | 3,504 | |||
Total assets acquired | 1,862,376 | |||
Total current liabilities | 310,465 | |||
Deferred income taxes | 147,796 | |||
Other liabilities | 140,239 | |||
Long-term debt | 706,285 | |||
Total liabilities assumed | 1,304,785 | |||
Net assets acquired | $ | 557,591 | ||
Year Ended | ||||||||
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Net sales(1) | $ | 1,167,993 | $ | 1,046,107 | ||||
Net income (loss)(2) | (58,456 | ) | 9,041 |
(1) | Does not include $0.8 million of expense for stock warrants, which were redeemed for cash in connection with the Merger. | |
(2) | Does not include $143.9 million of non-recurring expenses directly related to the Merger as follows: (i) $38.4 million of Predecessor expenses including investment banking, legal and other expenses; (ii) $7.4 million of Successor expenses primarily including fees paid on behalf of Merger Sub related to due diligence activities; (iii) $26.2 million of transaction bonuses paid to senior management and certain employees in connection with the Merger; (iv) $38.0 million of stock option compensation expense |
F-16
recognized as a result of the modification of certain stock option awards in connection with the Merger and the fair value of anin-the-money stock option award granted immediately prior to the Merger; (v) $0.8 million of expense for stock warrants, which were redeemed for cash in connection with the Merger; (vi) $23.1 million for the amortization of thestep-up in basis of inventory related to purchase accounting which is non-recurring; (vii) a $15.2 million net gain on debt extinguishment recorded by the Predecessor in connection with the Merger, which was related to the write-off of the troubled debt accrued interest associated with the redemption of the previously outstanding 13.625% notes and the write-off of the financing fees related to the prior ABL Facility; and (viii) a $25.1 million loss on debt extinguishment recorded by the Successor, which is comprised of $13.6 million related to the redemption of the previously outstanding 9.875% notes and 11.25% notes and $11.5 million of expense related to an interim financing facility, which was negotiated but ultimately not utilized, related to financing for the Merger. |
3. | RELATED PARTIES |
F-17
4. | INVENTORIES |
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Raw materials | $ | 39,729 | $ | 28,693 | |||||
Work-in-progress | 10,746 | 8,552 | |||||||
Finished goods and purchased products | 95,740 | 78,149 | |||||||
$ | 146,215 | $ | 115,394 | ||||||
5. | GOODWILL AND OTHER INTANGIBLE ASSETS |
F-18
January 1, 2011 — Successor | January 2, 2010 — Predecessor | ||||||||||||||||||||||||||||||||
Average | Average | ||||||||||||||||||||||||||||||||
Amortization | Net | Amortization | Net | ||||||||||||||||||||||||||||||
Period | Accumulated | Carrying | Period | Accumulated | Carrying | ||||||||||||||||||||||||||||
(In Years) | Cost | Amortization | Value | (In Years) | Cost | Amortization | Value | ||||||||||||||||||||||||||
Trademarks | $ | — | $ | — | $ | — | 15 | $ | 28,070 | $ | 14,087 | $ | 13,983 | ||||||||||||||||||||
Patents | — | — | — | 10 | 6,230 | 4,781 | 1,449 | ||||||||||||||||||||||||||
Customer bases | 13 | 330,915 | 5,453 | 325,462 | 7 | 5,137 | 4,498 | 639 | |||||||||||||||||||||||||
Total amortized intangible assets | 330,915 | 5,453 | 325,462 | 39,437 | 23,366 | 16,071 | |||||||||||||||||||||||||||
Non-amortized trade names | 405,552 | — | 405,552 | 80,010 | — | 80,010 | |||||||||||||||||||||||||||
Total intangible assets | $ | 736,467 | $ | 5,453 | $ | 731,014 | $ | 119,447 | $ | 23,366 | $ | 96,081 | |||||||||||||||||||||
6. | PROPERTY, PLANT AND EQUIPMENT |
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Land | $ | 15,697 | $ | 5,963 | |||||
Buildings | 38,933 | 59,277 | |||||||
Machinery and equipment | 82,516 | 144,866 | |||||||
Construction in process | 5,660 | 1,099 | |||||||
142,806 | 211,205 | ||||||||
Less accumulated depreciation | 4,944 | 102,168 | |||||||
$ | 137,862 | $ | 109,037 | ||||||
Building and improvements | 1 to 28 years | |||
Computer equipment | 2 to 5 years | |||
Machinery and equipment | 1 to 25 years |
F-19
7. | ACCRUED AND OTHER LIABILITIES |
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Employee compensation | $ | 20,825 | $ | 16,648 | |||||
Sales promotions and incentives | 17,704 | 14,810 | |||||||
Warranty reserves | 7,005 | 6,415 | |||||||
Employee benefits | 5,830 | 5,769 | |||||||
Interest | 14,868 | 19,397 | |||||||
Taxes other than income | 3,949 | 3,107 | |||||||
Other | 9,138 | 6,941 | |||||||
$ | 79,319 | $ | 73,087 | ||||||
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Pensions and other postretirement plans | $ | 36,323 | $ | 30,099 | |||||
Warranty reserves | 87,707 | 26,601 | |||||||
Other | 8,725 | 4,626 | |||||||
$ | 132,755 | $ | 61,326 | ||||||
8. | LONG-TERM DEBT |
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
9.125% notes | $ | 730,000 | $ | — | |||||
9.875% notes | — | 197,552 | |||||||
11.25% notes | — | 431,000 | |||||||
20% notes | — | 36,808 | |||||||
Borrowings under the ABL facilities | 58,000 | — | |||||||
Borrowings under the prior ABL Facility | — | 10,000 | |||||||
Total long-term debt | $ | 788,000 | $ | 675,360 | |||||
F-20
F-21
F-22
Year | Percentage | |||
2013 | 106.844 | % | ||
2014 | 104.563 | % | ||
2015 | 102.281 | % | ||
2016 and thereafter | 100.000 | % |
• | pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments; |
F-23
• | incur additional debt or issue certain disqualified stock and preferred stock; | |
• | incur liens on assets; | |
• | merge or consolidate with another company or sell all or substantially all assets; | |
• | enter into transactions with affiliates; and | |
• | allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments to the Issuers. |
F-24
• | a rate equal to (i) the London Interbank Offered Rate, or LIBOR, with respect to eurodollar loans under the U.S. facility or (ii) the Canadian Deposit Offered Rate, or CDOR, with respect to loans under the Canadian facility, plus an applicable margin of 2.75%, which margin can vary quarterly in 0.25% increments between three pricing levels, ranging from 2.50% to 3.00%, based on excess availability, which is defined in the Revolving Credit Agreement as (a) the sum of (x) the lesser of (1) the aggregate commitments under theU.S. sub-facility at such time and (2) the then applicable U.S. borrowing base and (y) the lesser of (1) the aggregate commitments under the Canadiansub-facility at such time and (2) the then applicable Canadian borrowing base less (b) the sum of the aggregate principal amount of the revolving credit loans (including swingline loans) and letters of credit outstanding at such time; | |
• | the alternate base rate which will be the highest of (i) the prime commercial lending rate published by The Wall Street Journal as the “prime rate,” (ii) the Federal Funds Effective Rate plus 0.50% and (iii) the one-month Published LIBOR rate plus 1.0% per annum, plus, in each case, an applicable margin of 1.75%, which margin can vary quarterly in 0.25% increments between three pricing levels, ranging from 1.50% to 2.00%, based on excess availability, as set forth in the preceding paragraph; or | |
• | the alternate Canadian base rate which will be the higher of (i) the annual rate from time to time publicly announced by Toronto Dominion Bank (Toronto) as its prime rate in effect for determining interest rates on Canadian Dollar denominated commercial loans in Canada and (ii) the30-day CDOR Rate plus 1.0%, plus, in each case, an applicable margin of 1.75%, which margin can vary quarterly in 0.25% increments between three pricing levels, ranging from 1.50% to 2.00%, based on excess availability, as set forth in the second preceding paragraph. |
F-25
F-26
• | a first-priority perfected security interest in all present and after-acquired inventory and accounts receivable of the U.S. borrowers and the U.S. guarantors and all investment property, general intangibles, books and records, documents and instruments and supporting obligations relating to such inventory, such accounts receivable and such other receivables, and all proceeds of the foregoing, including all deposit accounts, other bank and securities accounts, cash and cash equivalents (other than certain excluded deposit, securities and commodities accounts), investment property and other general intangibles, in each case arising from such inventory, such accounts receivable and such other receivables, subject to certain exceptions to be agreed and a first priority security interest in the capital stock of the Company (the “U.S. first priority collateral”); and | |
• | a second-priority security interest in the capital stock of each direct, material wholly-owned restricted subsidiary of the Company and of each guarantor of the notes and substantially all tangible and intangible assets of the Company and each guarantor of the notes (to the extent not included in the U.S. first priority collateral) and proceeds of the foregoing (the “U.S. second priority collateral”, and together with the U.S. first priority collateral, the “U.S. ABL collateral”). |
• | the U.S. ABL collateral; and | |
• | a first-priority perfected security interest in all of the capital stock of the Canadian borrowers and the capital stock of each direct, material restricted subsidiary of the Canadian borrowers and the Canadian guarantors and substantially all tangible and intangible assets of the Canadian borrowers and Canadian guarantors and proceeds of the foregoing and all present and after-acquired inventory and accounts receivable of the Canadian borrowers and the Canadian guarantors and all investment property, general intangibles, books and records, documents and instruments and supporting obligations relating to such inventory, such accounts receivable and such other receivables, and all proceeds of the foregoing, including all deposit accounts, other bank and securities accounts, cash and cash equivalents (other than certain excluded deposit, securities and commodities accounts), investment property and other general intangibles, in each case arising from such inventory, such accounts receivable and such other receivables, subject to certain exceptions to be agreed (the “Canadian ABL collateral”). |
F-27
F-28
F-29
9. | COMMITMENTS AND CONTINGENCIES |
2011 | $ | 33,231 | ||
2012 | 27,830 | |||
2013 | 23,157 | |||
2014 | 17,706 | |||
2015 | 10,349 | |||
Thereafter | 20,703 | |||
Total future minimum lease payments | $ | 132,976 | ||
F-30
10. | INCOME TAXES |
October 13, 2010 | January 3, 2010 | ||||||||||||||||||||||||||||||||
to | to | Years Ended | |||||||||||||||||||||||||||||||
January 1, 2011 | October 12, 2010 | January 2, 2010 | January 3, 2009 | ||||||||||||||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||
Current | Deferred | Current | Deferred | Current | Deferred | Current | Deferred | ||||||||||||||||||||||||||
Federal | $ | — | $ | 10,036 | $ | (3,218 | ) | $ | 452 | $ | (5,401 | ) | $ | (803 | ) | $ | 2,806 | $ | 36,130 | ||||||||||||||
State | 92 | 66 | 477 | (2,060 | ) | 1,680 | (17 | ) | 101 | 5,787 | |||||||||||||||||||||||
Foreign | 194 | (1,835 | ) | 3,683 | 5,886 | 4,667 | 2,264 | 8,250 | (12 | ) | |||||||||||||||||||||||
$ | 286 | $ | 8,267 | $ | 942 | $ | 4,278 | $ | 946 | $ | 1,444 | $ | 11,157 | $ | 41,905 | ||||||||||||||||||
F-31
January 1, | January 2, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Deferred income tax assets: | |||||||||
Medical benefits | $ | 2,091 | $ | 2,152 | |||||
Allowance for doubtful accounts | 4,038 | 3,322 | |||||||
Pension and other postretirement plans | 10,085 | 8,377 | |||||||
Inventory costs | 1,635 | 1,397 | |||||||
Interest | — | 79,286 | |||||||
Warranty costs | 35,355 | 11,712 | |||||||
Net operating loss carryforwards | 119,076 | — | |||||||
Foreign tax credit carryforwards | 8,427 | 8,427 | |||||||
Accrued expenses and other | 14,911 | 5,344 | |||||||
Total deferred income tax assets | 195,618 | 120,017 | |||||||
Valuation allowance | (29,460 | ) | (62,391 | ) | |||||
Net deferred income tax assets | 166,158 | 57,626 | |||||||
Deferred income tax liabilities: | |||||||||
Depreciation | 28,230 | 22,657 | |||||||
Intangible assets | 258,425 | 37,117 | |||||||
Tax liability on unremitted foreign earnings | 4,157 | 7,346 | |||||||
Gain on debt extinguishment | 23,398 | 21,203 | |||||||
Other | 16,605 | 3,251 | |||||||
Total deferred income tax liabilities | 330,815 | 91,574 | |||||||
Net deferred income tax liabilities | $ | (164,657 | ) | $ | (33,948 | ) | |||
F-32
October 13, 2010 | January 3, 2010 | Years Ended | |||||||||||||||
to | to | January 2, | January 3, | ||||||||||||||
January 1, 2011 | October 12, 2010 | 2010 | 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | |||||||||
State income tax, net of federal income tax benefit | 3.3 | 4.4 | 4.1 | (0.1 | ) | ||||||||||||
Tax liability on remitted and unremitted foreign earnings | 4.2 | (36.8 | ) | 6.9 | (10.2 | ) | |||||||||||
Foreign rate differential | (0.6 | ) | 2.3 | (3.4 | ) | 3.3 | |||||||||||
Valuation allowance | (53.2 | ) | (9.0 | ) | (38.8 | ) | (255.2 | ) | |||||||||
Non-deductible merger transaction costs | (3.2 | ) | (3.3 | ) | — | — | |||||||||||
Other | (0.6 | ) | (0.5 | ) | 6.6 | (0.2 | ) | ||||||||||
Effective rate | (15.1 | )% | (7.9 | )% | 10.4 | % | (227.4 | )% | |||||||||
October 13, 2010 | January 3, 2010 | ||||||||||||||||
to | to | January 2, | January 3, | ||||||||||||||
January 1, 2011 | October 12, 2010 | 2010 | 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Unrecognized tax benefits, beginning of year | $ | 2,775 | $ | 964 | $ | 914 | $ | 513 | |||||||||
Gross increases for tax positions of prior years | — | — | 50 | 914 | |||||||||||||
Gross increases for tax positions of the current year | 1,690 | 2,140 | — | — | |||||||||||||
Gross decreases for tax positions of prior years | — | — | — | — | |||||||||||||
Settlements | — | (329 | ) | — | (513 | ) | |||||||||||
Unrecognized tax benefits, end of year | $ | 4,465 | $ | 2,775 | $ | 964 | $ | 914 | |||||||||
F-33
11. | PREFERRED STOCK |
12. | MEMBER’S EQUITY / STOCKHOLDERS’ (DEFICIT) |
F-34
Pension | Foreign Currency | Accumulated | ||||||||||
Liability | Translation | Other | ||||||||||
Adjustments, | Adjustments, | Comprehensive | ||||||||||
Net of Tax | Net of Tax | Income (Loss) | ||||||||||
Predecessor | ||||||||||||
December 29, 2007 | $ | (12,463 | ) | $ | 19,642 | $ | 7,179 | |||||
Net change through January 3, 2009 | (9,377 | ) | (16,615 | ) | (25,992 | ) | ||||||
January 3, 2009 | (21,840 | ) | 3,027 | (18,813 | ) | |||||||
Net change through January 2, 2010 | 217 | 10,786 | 11,003 | |||||||||
January 2, 2010 | (21,623 | ) | 13,813 | (7,810 | ) | |||||||
Net change through October 12, 2010 | (12,663 | ) | 3,023 | (9,640 | ) | |||||||
October 12, 2010 | $ | (34,286 | ) | $ | 16,836 | $ | (17,450 | ) | ||||
Successor | ||||||||||||
October 13, 2010 | $ | — | $ | — | $ | — | ||||||
Net change through January 1, 2011 | 4,799 | 5,186 | 9,985 | |||||||||
January 1, 2011 | $ | 4,799 | $ | 5,186 | $ | 9,985 | ||||||
13. | STOCK PLANS |
F-35
Weighted | Remaining | |||||||||||
Average | Contractual Term | |||||||||||
Shares | Exercise Price | (Years) | ||||||||||
Predecessor | ||||||||||||
Options outstanding January 2, 2010 | 347,671 | $ | 6.58 | |||||||||
Granted under Predecessor equity plans | 20,998 | 1.00 | ||||||||||
Redeemed for cash | (342,451 | ) | 5.87 | |||||||||
Forfeited | (5,324 | ) | 3.63 | |||||||||
Cancelled | (20,894 | ) | 13.33 | |||||||||
Options outstanding October 12, 2010 | — | $ | — | — | ||||||||
Successor | ||||||||||||
Options outstanding October 13, 2010 | — | $ | — | |||||||||
Granted under 2010 Plan | 5,873,948 | 17.50 | ||||||||||
Exercised | — | — | ||||||||||
Options outstanding January 1, 2011 | 5,873,948 | $ | 17.50 | 9.8 | ||||||||
Options exercisable January 1, 2011 | — | $ | — | — | ||||||||
F-36
Weighted | ||||||||
Average | ||||||||
Grant Date Fair | ||||||||
Shares | Value per Share | |||||||
Predecessor | ||||||||
Nonvested at January 2, 2010 | 305,599 | $ | — | |||||
Granted | 20,998 | 87.53 | ||||||
Vesting based on time | (19,406 | ) | — | |||||
Vesting in connection with Merger | (288,512 | ) | 6.37 | |||||
Forfeited | (4,959 | ) | — | |||||
Cancelled | (13,720 | ) | — | |||||
Nonvested at October 12, 2010 | — | $ | — | |||||
Successor | ||||||||
Nonvested at October 13, 2010 | — | $ | — | |||||
Granted | 5,873,948 | 3.88 | ||||||
Vested | — | — | ||||||
Forfeited | — | — | ||||||
Nonvested at January 1, 2011 | 5,873,948 | $ | 3.88 | |||||
October 13, 2010 | Years Ended | ||||||||||||
to | January 2, | January 3, | |||||||||||
January 1, 2011 | 2010 | 2009 | |||||||||||
Successor | Predecessor | Predecessor | |||||||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | |||||||
Annual risk free rate | 2.17 | % | 3.37 | % | 3.46 | % | |||||||
Expected life of options (years) | 8.37 | 6.0 | 6.5 | ||||||||||
Volatility | 52.3 | % | 49.1 | % | 39.0 | % | |||||||
Weighted average fair value of options granted per share | $ | 3.88 | $ | 0.00 | $ | 0.00 |
F-37
14. | MANUFACTURING RESTRUCTURING COSTS |
October 13, 2010 | January 3, 2010 | Year Ended | |||||||||||
to | to | January 2, | |||||||||||
January 1, 2011 | October 12, 2010 | 2010 | |||||||||||
Successor | Predecessor | Predecessor | |||||||||||
Beginning liability | $ | 4,728 | $ | 5,036 | $ | — | |||||||
Additions | — | — | 5,332 | ||||||||||
Reclass of related lease obligations | — | 389 | — | ||||||||||
Accretion of related lease obligations | 89 | 295 | 76 | ||||||||||
Payments | (234 | ) | (992 | ) | (372 | ) | |||||||
Ending liability | $ | 4,583 | $ | 4,728 | $ | 5,036 | |||||||
15. | EMPLOYEE TERMINATION COSTS |
F-38
16. | BUSINESS SEGMENTS |
October 13, 2010 | January 3, 2010 | Years Ended | |||||||||||||||
to | to | January 2, | January 3, | ||||||||||||||
January 1, 2011 | October 12, 2010 | 2010 | 2009 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Vinyl windows | $ | 118,778 | $ | 316,102 | $ | 389,293 | $ | 380,260 | |||||||||
Vinyl siding products | 41,504 | 181,904 | 210,212 | 254,563 | |||||||||||||
Metal products | 35,226 | 147,321 | 167,749 | 213,163 | |||||||||||||
Third-party manufactured products | 55,511 | 196,587 | 210,806 | 210,633 | |||||||||||||
Other products and services | 18,230 | 56,024 | 68,047 | 75,337 | |||||||||||||
$ | 269,249 | $ | 897,938 | $ | 1,046,107 | $ | 1,133,956 | ||||||||||
17. | RETIREMENT PLANS |
F-39
October 13, 2010 | January 3, 2010 | ||||||||||||||||||||||||
to | to | Year Ended | |||||||||||||||||||||||
January 1, 2011 | October 12, 2010 | 2009 | |||||||||||||||||||||||
Successor | Predecessor | Predecessor | |||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | ||||||||||||||||||||
Accumulated Benefit Obligation | $ | 59,435 | $ | 60,465 | $ | 64,061 | $ | 58,148 | $ | 55,107 | $ | 54,978 | |||||||||||||
Change In Projected Benefit Obligation | |||||||||||||||||||||||||
Projected benefit obligation at beginning of period | $ | 64,061 | $ | 66,620 | $ | 55,243 | $ | 54,978 | $ | 51,093 | $ | 39,218 | |||||||||||||
Service cost | 165 | 560 | 567 | 1,568 | 572 | 1,440 | |||||||||||||||||||
Interest cost | 647 | 809 | 2,447 | 2,801 | 3,127 | 3,205 | |||||||||||||||||||
Plan amendments | — | — | — | — | — | 267 | |||||||||||||||||||
Actuarial (gain) loss | (4,685 | ) | (870 | ) | 8,223 | 5,676 | 3,257 | 6,458 | |||||||||||||||||
Employee contributions | — | 101 | — | 317 | — | 360 | |||||||||||||||||||
Benefits paid | (753 | ) | (962 | ) | (2,419 | ) | (1,182 | ) | (2,806 | ) | (2,767 | ) | |||||||||||||
Effect of foreign exchange | — | 861 | — | 2,462 | — | 6,797 | |||||||||||||||||||
Projected benefit obligation at end of period | 59,435 | 67,119 | 64,061 | 66,620 | 55,243 | 54,978 | |||||||||||||||||||
Change In Plan Assets | |||||||||||||||||||||||||
Fair value of assets at beginning of period | $ | 40,383 | $ | 51,892 | $ | 38,440 | $ | 47,475 | $ | 31,946 | $ | 34,768 | |||||||||||||
Actual return on plan assets | 1,934 | 1,473 | 2,988 | 593 | 7,513 | 5,858 | |||||||||||||||||||
Employer contributions | 474 | 803 | 1,374 | 2,707 | 1,787 | 3,318 | |||||||||||||||||||
Employee contributions | — | 101 | — | 317 | — | 360 | |||||||||||||||||||
Benefits paid | (753 | ) | (962 | ) | (2,419 | ) | (1,182 | ) | (2,806 | ) | (2,767 | ) | |||||||||||||
Effect of foreign exchange | — | 676 | — | 1,982 | — | 5,938 | |||||||||||||||||||
Fair value of assets at end of period | 42,038 | 53,983 | 40,383 | 51,892 | 38,440 | 47,475 | |||||||||||||||||||
Funded status | $ | (17,397 | ) | $ | (13,136 | ) | $ | (23,678 | ) | $ | (14,728 | ) | $ | (16,803 | ) | $ | (7,503 | ) | |||||||
Amounts Recognized in Consolidated Balance Sheets | |||||||||||||||||||||||||
Non-current liabilities | $ | (17,397 | ) | $ | (13,136 | ) | $ | (23,678 | ) | $ | (14,728 | ) | $ | (16,803 | ) | $ | (7,503 | ) | |||||||
F-40
October 13, 2010 | January 3, 2010 | ||||||||||||||||||||||||
to | to | Year Ended | |||||||||||||||||||||||
January 1, 2011 | October 12, 2010 | 2009 | |||||||||||||||||||||||
Successor | Predecessor | Predecessor | |||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | ||||||||||||||||||||
Discount rate | 5.31 | % | 5.40 | % | 4.70 | % | 5.30 | % | 5.77 | % | 6.25 | % | |||||||||||||
Salary increases | N/A | 3.50 | % | N/A | 3.50 | % | 3.75 | % | 3.50 | % |
October 13, 2010 | January 3, 2010 | ||||||||||||||||||||||||||||||||
to | to | Years Ended | |||||||||||||||||||||||||||||||
January 1, 2011 | October 12, 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | Plans | Plans | ||||||||||||||||||||||||||
Discount rate | 4.70 | % | 5.30 | % | 5.77 | % | 6.25 | % | 6.28 | % | 7.36 | % | 5.94 | % | 5.50 | % | |||||||||||||||||
Long-term rate of return on assets | 8.00 | % | 7.00 | % | 8.00 | % | 7.00 | % | 8.50 | % | 7.00 | % | 8.50 | % | 7.00 | % | |||||||||||||||||
Salary increases | N/A | 3.50 | % | 3.75 | % | 3.50 | % | 3.75 | % | 3.50 | % | 3.75 | % | 3.50 | % |
F-41
October 13, 2010 | January 3, 2010 | ||||||||||||||||||||||||||||||||
to | to | Years Ended | |||||||||||||||||||||||||||||||
January 1, 2011 | October 12, 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | Plans | Plans | ||||||||||||||||||||||||||
Service cost | $ | 165 | $ | 560 | $ | 567 | $ | 1,568 | $ | 572 | $ | 1,440 | $ | 574 | $ | 2,073 | |||||||||||||||||
Interest cost | 647 | 809 | 2,447 | 2,801 | 3,127 | 3,205 | 2,972 | 3,003 | |||||||||||||||||||||||||
Expected return on assets | (688 | ) | (836 | ) | (2,364 | ) | (2,695 | ) | (2,687 | ) | (2,701 | ) | (3,477 | ) | (3,514 | ) | |||||||||||||||||
Amortization of unrecognized: | |||||||||||||||||||||||||||||||||
Prior service cost | — | — | 23 | 35 | 30 | 40 | 30 | 31 | |||||||||||||||||||||||||
Cumulative net loss | — | — | 1,003 | 151 | 1,512 | 58 | 572 | 96 | |||||||||||||||||||||||||
Net periodic pension cost | $ | 124 | $ | 533 | $ | 1,676 | $ | 1,860 | $ | 2,554 | $ | 2,042 | $ | 671 | $ | 1,689 | |||||||||||||||||
F-42
December 31, 2010 | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets/Liabilities | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Equity Securities | $ | 27,637 | $ | — | $ | — | $ | 27,637 | ||||||||
Mutual Funds | — | 5,166 | — | 5,166 | ||||||||||||
Government Securities | — | 7,972 | — | 7,972 | ||||||||||||
Money Funds | — | 1,230 | — | 1,230 | ||||||||||||
Cash | 33 | — | — | 33 | ||||||||||||
Total | $ | 27,670 | $ | 14,368 | $ | — | $ | 42,038 | ||||||||
December 31, 2009 | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets/Liabilities | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Equity Securities | $ | 25,232 | $ | — | $ | — | $ | 25,232 | ||||||||
Mutual Funds | — | 4,447 | — | 4,447 | ||||||||||||
Government Securities | — | 6,530 | — | 6,530 | ||||||||||||
Money Funds | — | 2,177 | — | 2,177 | ||||||||||||
Cash | 54 | — | — | 54 | ||||||||||||
Total | $ | 25,286 | $ | 13,154 | $ | — | $ | 38,440 | ||||||||
December 31, 2010 | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets/Liabilities | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Pooled Funds | $ | — | $ | 53,717 | $ | — | $ | 53,717 | ||||||||
Cash | 266 | — | — | 266 | ||||||||||||
Total | $ | 266 | $ | 53,717 | $ | — | $ | 53,983 | ||||||||
F-43
December 31, 2009 | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets/Liabilities | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Pooled Funds | $ | — | $ | 47,162 | $ | — | $ | 47,162 | ||||||||
Cash | 313 | — | — | 313 | ||||||||||||
Total | $ | 313 | $ | 47,162 | $ | — | $ | 47,475 | ||||||||
F-44
Domestic | Foreign | |||||||
Plans | Plans | |||||||
2011 | $ | 2,674 | $ | 2,206 | ||||
2012 | 2,901 | 2,162 | ||||||
2013 | 3,071 | 2,804 | ||||||
2014 | 3,230 | 2,757 | ||||||
2015 | 3,409 | 2,785 | ||||||
2016 — 2020 | 19,051 | 17,397 |
Percentage | Effect on Fiscal Year 2011 | |||||
Point | Annual | Cash | ||||
Assumption | Change | Expense | Contributions | |||
Domestic Plans | ||||||
Funding interest rate | +/− 100 basis point | $0 / $0 | $0 / $0 | |||
Discount rate | +/− 100 basis point | 170 /(249) | 0 / 0 | |||
Long-term rate of return on assets | +/− 100 basis point | (424) / 423 | 0 / 0 | |||
Foreign Plans | ||||||
Funding interest rate | +/− 100 basis point | $0 / $0 | $(467) / $610 | |||
Discount rate | +/− 100 basis point | (444) / 526 | 0 / 0 | |||
Long-term rate of return on assets | +/− 100 basis point | (560) / 560 | 0 / 0 |
F-45
18. | SUBSIDIARY GUARANTORS |
F-46
CONDENSED CONSOLIDATING BALANCE SHEET
January 1, 2011 (Successor)
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 5,911 | $ | — | $ | — | $ | 7,878 | $ | — | $ | 13,789 | ||||||||||||
Accounts receivable, net | 85,496 | — | 11,107 | 21,805 | — | 118,408 | ||||||||||||||||||
Intercompany receivables | 406,309 | — | 9,257 | 2,264 | (417,830 | ) | — | |||||||||||||||||
Inventories | 99,228 | — | 10,870 | 36,117 | — | 146,215 | ||||||||||||||||||
Income taxes receivable | 19,731 | — | — | — | (16,440 | ) | 3,291 | |||||||||||||||||
Deferred income taxes | — | — | 1,629 | — | (1,629 | ) | — | |||||||||||||||||
Prepaid expenses | 6,622 | — | 1,174 | 1,199 | — | 8,995 | ||||||||||||||||||
Total current assets | 623,297 | — | 34,037 | 69,263 | (435,899 | ) | 290,698 | |||||||||||||||||
Property, plant and equipment, net | 86,636 | — | 4,014 | 47,212 | — | 137,862 | ||||||||||||||||||
Goodwill | 353,434 | — | 28,978 | 184,011 | — | 566,423 | ||||||||||||||||||
Other intangible assets, net | 495,850 | — | 51,006 | 184,158 | — | 731,014 | ||||||||||||||||||
Investment in subsidiaries | 5,256 | — | (42,289 | ) | — | 37,033 | — | |||||||||||||||||
Intercompany receivable | — | 788,000 | — | — | (788,000 | ) | — | |||||||||||||||||
Other assets | 26,662 | — | (1 | ) | 3,246 | — | 29,907 | |||||||||||||||||
Total assets | $ | 1,591,135 | $ | 788,000 | $ | 75,745 | $ | 487,890 | $ | (1,186,866 | ) | $ | 1,755,904 | |||||||||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | 66,087 | $ | — | $ | 5,761 | $ | 18,342 | $ | — | $ | 90,190 | ||||||||||||
Intercompany payables | — | — | — | 417,830 | (417,830 | ) | — | |||||||||||||||||
Payable to parent | — | — | — | — | — | — | ||||||||||||||||||
Accrued liabilities | 63,116 | — | 7,057 | 9,146 | — | 79,319 | ||||||||||||||||||
Deferred income taxes | 11,454 | — | — | 10,164 | (1,629 | ) | 19,989 | |||||||||||||||||
Income taxes payable | — | — | 16,440 | 2,506 | (16,440 | ) | 2,506 | |||||||||||||||||
Total current liabilities | 140,657 | — | 29,258 | 457,988 | (435,899 | ) | 192,004 | |||||||||||||||||
Deferred income taxes | 85,191 | — | 14,661 | 44,816 | — | 144,668 | ||||||||||||||||||
Other liabilities | 78,810 | — | 26,570 | 27,375 | — | 132,755 | ||||||||||||||||||
Long-term debt | 788,000 | 788,000 | — | — | (788,000 | ) | 788,000 | |||||||||||||||||
Member’s equity | 498,477 | — | 5,256 | (42,289 | ) | 37,033 | 498,477 | |||||||||||||||||
Total liabilities and member’s equity | $ | 1,591,135 | $ | 788,000 | $ | 75,745 | $ | 487,890 | $ | (1,186,866 | ) | $ | 1,755,904 | |||||||||||
F-47
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Period October 13, 2010 to January 1, 2011 (Successor)
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net sales | $ | 210,944 | $ | — | $ | 30,795 | $ | 56,269 | $ | (28,759 | ) | $ | 269,249 | |||||||||||
Cost of sales | 170,252 | — | 30,133 | 51,111 | (28,759 | ) | 222,737 | |||||||||||||||||
Gross profit | 40,692 | — | 662 | 5,158 | — | 46,512 | ||||||||||||||||||
Selling, general and administrative expense | 43,206 | — | 555 | 9,782 | — | 53,543 | ||||||||||||||||||
Transaction costs | 7,411 | — | — | — | — | 7,411 | ||||||||||||||||||
Income from operations | (9,925 | ) | — | 107 | (4,624 | ) | — | (14,442 | ) | |||||||||||||||
Interest expense, net | 15,860 | — | — | 260 | — | 16,120 | ||||||||||||||||||
Loss on debt extinguishment | 25,117 | — | — | 12 | — | 25,129 | ||||||||||||||||||
Foreign currency loss | — | — | — | 771 | — | 771 | ||||||||||||||||||
(Loss) income before income taxes | (50,902 | ) | — | 107 | (5,667 | ) | — | (56,462 | ) | |||||||||||||||
Income taxes (benefit) | 12,477 | — | (2,286 | ) | (1,638 | ) | — | 8,553 | ||||||||||||||||
Income before equity income from subsidiaries | (63,379 | ) | — | 2,393 | (4,029 | ) | — | (65,015 | ) | |||||||||||||||
Equity loss from subsidiaries | (1,636 | ) | — | (4,029 | ) | — | 5,665 | — | ||||||||||||||||
Net income (loss) | $ | (65,015 | ) | $ | — | $ | (1,636 | ) | $ | (4,029 | ) | $ | 5,665 | $ | (65,015 | ) | ||||||||
F-48
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Period October 13, 2010 to January 1, 2011 (Successor)
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by operating activities | $ | (58,847 | ) | $ | — | $ | (12,153 | ) | $ | (1,141 | ) | $ | (72,141 | ) | ||||||
Investing Activities | ||||||||||||||||||||
Acquisition, net of assumed debt | (557,591 | ) | — | — | — | (557,591 | ) | |||||||||||||
Capital expenditures | (3,973 | ) | — | (18 | ) | (1,169 | ) | (5,160 | ) | |||||||||||
Net cash used in investing activities | (561,564 | ) | — | (18 | ) | (1,169 | ) | (562,751 | ) | |||||||||||
Financing Activities | ||||||||||||||||||||
Net borrowings under ABL facilities | 58,000 | — | — | — | 58,000 | |||||||||||||||
Issuance of senior notes | 730,000 | — | — | — | 730,000 | |||||||||||||||
Repayment of Predecessor long-term debt, including redemption premiums and interest | (719,972 | ) | — | — | — | (719,972 | ) | |||||||||||||
Equity contribution | 553,507 | 553,507 | ||||||||||||||||||
Financing costs | (39,211 | ) | — | — | — | (39,211 | ) | |||||||||||||
Dividends paid | — | — | 44,500 | (44,500 | ) | — | ||||||||||||||
Intercompany transactions | (16,774 | ) | — | (32,046 | ) | 48,820 | — | |||||||||||||
Net cash (used in) provided by financing activities | 565,550 | — | 12,454 | 4,320 | 582,324 | |||||||||||||||
�� | ||||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 75 | 75 | |||||||||||||||
Net (decrease) increase in cash and cash equivalents | (54,861 | ) | — | 283 | 2,085 | (52,493 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 60,772 | — | (283 | ) | 5,793 | 66,282 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 5,911 | $ | — | $ | — | $ | 7,878 | $ | 13,789 | ||||||||||
F-49
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Period January 3, 2010 to October 12, 2010 (Predecessor)
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net sales | $ | 648,331 | $ | — | $ | 130,099 | $ | 246,842 | $ | (127,334 | ) | $ | 897,938 | |||||||||||
Cost of sales | 477,674 | — | 124,682 | 183,487 | (127,334 | ) | 658,509 | |||||||||||||||||
Gross profit | 170,657 | — | 5,417 | 63,355 | — | 239,429 | ||||||||||||||||||
Selling, general and administrative expense | 127,453 | — | 2,602 | 29,393 | — | 159,448 | ||||||||||||||||||
Transaction costs | 38,416 | — | — | — | — | 38,416 | ||||||||||||||||||
Transaction bonuses | 26,231 | — | — | — | — | 26,231 | ||||||||||||||||||
Stock comp expense | 38,014 | — | — | — | — | 38,014 | ||||||||||||||||||
(Loss) income from operations | (59,457 | ) | — | 2,815 | 33,962 | — | (22,680 | ) | ||||||||||||||||
Interest expense, net | 58,104 | — | 1 | 654 | — | 58,759 | ||||||||||||||||||
(Gain) loss on debt extinguishment | (16,306 | ) | — | — | 1,105 | — | (15,201 | ) | ||||||||||||||||
Foreign currency (gain) | — | — | — | (184 | ) | — | (184 | ) | ||||||||||||||||
(Loss) income before income taxes | (101,255 | ) | — | 2,814 | 32,387 | — | (66,054 | ) | ||||||||||||||||
Income taxes (benefit) | (30,068 | ) | — | 25,720 | 9,568 | — | 5,220 | |||||||||||||||||
(Loss) income before equity (loss) income from subsidiaries | (71,187 | ) | — | (22,906 | ) | 22,819 | — | (71,274 | ) | |||||||||||||||
Equity (loss) income from subsidiaries | (87 | ) | — | 22,819 | — | (22,732 | ) | — | ||||||||||||||||
Net income (loss) | $ | (71,274 | ) | $ | — | $ | (87 | ) | $ | 22,819 | $ | (22,732 | ) | $ | (71,274 | ) | ||||||||
F-50
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Period January 3, 2010 to October 12, 2010 (Predecessor)
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 1,946 | $ | — | $ | (2,069 | ) | $ | 28,692 | $ | 28,569 | |||||||||
Investing Activities | ||||||||||||||||||||
Capital expenditures | (7,869 | ) | — | (55 | ) | (2,378 | ) | (10,302 | ) | |||||||||||
Other | 385 | — | — | (385 | ) | — | ||||||||||||||
Net cash used in investing activities | (7,484 | ) | — | (55 | ) | (2,763 | ) | (10,302 | ) | |||||||||||
Financing Activities | ||||||||||||||||||||
Net repayments under prior ABL Facility | (10,000 | ) | — | — | — | (10,000 | ) | |||||||||||||
Excess tax benefit from redemption of options | 1,817 | — | — | — | 1,817 | |||||||||||||||
Dividends paid | — | — | 20,000 | (20,000 | ) | — | ||||||||||||||
Financing costs | (223 | ) | — | — | — | (223 | ) | |||||||||||||
Intercompany transactions | 68,799 | — | (18,241 | ) | (50,558 | ) | — | |||||||||||||
Net cash provided by (used in) financing activities | 60,393 | — | 1,759 | (70,558 | ) | (8,406 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 516 | 516 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 54,855 | — | (365 | ) | (44,113 | ) | 10,377 | |||||||||||||
Cash and cash equivalents at beginning of period | 5,917 | — | 82 | 49,906 | 55,905 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 60,772 | $ | — | $ | (283 | ) | $ | 5,793 | $ | 66,282 | |||||||||
F-51
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | �� | |||||||||||||||||||||||
Cash and cash equivalents | $ | 5,917 | $ | — | $ | 82 | $ | 49,906 | $ | — | $ | 55,905 | ||||||||||||
Accounts receivable, net | 81,178 | — | 8,728 | 24,449 | — | 114,355 | ||||||||||||||||||
Intercompany receivables | — | — | 76,138 | 3,045 | (79,183 | ) | — | |||||||||||||||||
Inventories | 80,654 | — | 6,613 | 28,127 | — | 115,394 | ||||||||||||||||||
Income taxes receivable | 3,905 | — | — | — | — | 3,905 | ||||||||||||||||||
Deferred income taxes | 5,109 | — | — | — | (188 | ) | 4,921 | |||||||||||||||||
Prepaid expenses | 6,542 | — | 1,263 | 1,140 | — | 8,945 | ||||||||||||||||||
Total current assets | 183,305 | — | 92,824 | 106,667 | (79,371 | ) | 303,425 | |||||||||||||||||
Property, plant and equipment, net | 73,086 | — | 2,033 | 33,918 | — | 109,037 | ||||||||||||||||||
Goodwill | 194,813 | — | 36,450 | — | — | 231,263 | ||||||||||||||||||
Other intangible assets, net | 86,561 | — | 9,465 | 55 | — | 96,081 | ||||||||||||||||||
Investment in subsidiaries | 197,163 | — | 92,409 | — | (289,572 | ) | — | |||||||||||||||||
Intercompany receivable | — | 197,552 | — | — | (197,552 | ) | — | |||||||||||||||||
Other assets | 20,524 | — | — | 1,799 | — | 22,323 | ||||||||||||||||||
Total assets | $ | 755,452 | $ | 197,552 | $ | 233,181 | $ | 142,439 | $ | (566,495 | ) | $ | 762,129 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | 54,618 | $ | — | $ | 9,111 | $ | 23,851 | $ | — | $ | 87,580 | ||||||||||||
Intercompany payables | 79,183 | — | — | — | (79,183 | ) | — | |||||||||||||||||
Payable to parent | (1,535 | ) | — | 1,535 | — | — | — | |||||||||||||||||
Accrued liabilities | 57,861 | — | 6,118 | 9,108 | — | 73,087 | ||||||||||||||||||
Deferred income taxes | — | — | 188 | 2,312 | (188 | ) | 2,312 | |||||||||||||||||
Income taxes payable | — | — | — | 1,112 | — | 1,112 | ||||||||||||||||||
Total current liabilities | 190,127 | — | 16,952 | 36,383 | (79,371 | ) | 164,091 | |||||||||||||||||
Deferred income taxes | 33,227 | — | 2,314 | 1,016 | — | 36,557 | ||||||||||||||||||
Other liabilities | 31,943 | — | 16,752 | 12,631 | — | 61,326 | ||||||||||||||||||
Long-term debt | 675,360 | 197,552 | — | — | (197,552 | ) | 675,360 | |||||||||||||||||
Convertible preferred stock | 150,000 | — | — | — | — | 150,000 | ||||||||||||||||||
Stockholders’ (deficit) | (325,205 | ) | — | 197,163 | 92,409 | (289,572 | ) | (325,205 | ) | |||||||||||||||
Total liabilities and stockholders’ (deficit) | $ | 755,452 | $ | 197,552 | $ | 233,181 | $ | 142,439 | $ | (566,495 | ) | $ | 762,129 | |||||||||||
F-52
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net sales | $ | 772,653 | $ | — | $ | 144,365 | $ | 270,317 | $ | (141,228 | ) | $ | 1,046,107 | |||||||||||
Cost of sales | 562,715 | — | 137,821 | 206,383 | (141,228 | ) | 765,691 | |||||||||||||||||
Gross profit | 209,938 | — | 6,544 | 63,934 | — | 280,416 | ||||||||||||||||||
Selling, general and administrative expense | 164,202 | — | 2,693 | 37,715 | — | 204,610 | ||||||||||||||||||
Manufacturing restructuring costs | 5,255 | — | — | — | — | 5,255 | ||||||||||||||||||
Income from operations | 40,481 | — | 3,851 | 26,219 | — | 70,551 | ||||||||||||||||||
Interest expense, net | 76,585 | — | — | 767 | — | 77,352 | ||||||||||||||||||
Gain on debt extinguishment | (29,665 | ) | — | — | — | — | (29,665 | ) | ||||||||||||||||
Foreign currency (gain) | — | — | — | (184 | ) | — | (184 | ) | ||||||||||||||||
Income before income taxes | (6,439 | ) | — | 3,851 | 25,636 | — | 23,048 | |||||||||||||||||
Income taxes | (6,504 | ) | — | 1,964 | 6,930 | — | 2,390 | |||||||||||||||||
Income before equity income from subsidiaries | 65 | — | 1,887 | 18,706 | — | 20,658 | ||||||||||||||||||
Equity income from subsidiaries | 20,593 | — | 18,706 | — | (39,299 | ) | — | |||||||||||||||||
Net income | $ | 20,658 | $ | — | $ | 20,593 | $ | 18,706 | $ | (39,299 | ) | $ | 20,658 | |||||||||||
F-53
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by operating activities | $ | 57,211 | $ | — | $ | 18,418 | $ | 43,072 | $ | 118,701 | ||||||||||
Investing Activities | ||||||||||||||||||||
Capital expenditures | (7,643 | ) | — | (32 | ) | (1,058 | ) | (8,733 | ) | |||||||||||
Other | (383 | ) | — | 383 | — | — | ||||||||||||||
Net cash (used in) provided by investing activities | (8,026 | ) | — | 351 | (1,058 | ) | (8,733 | ) | ||||||||||||
Financing Activities | ||||||||||||||||||||
Net repayments under prior ABL Facility | (46,000 | ) | — | — | — | (46,000 | ) | |||||||||||||
Issuance of senior notes | 217,514 | — | — | — | 217,514 | |||||||||||||||
Cash paid to redeem senior notes | (216,013 | ) | — | — | — | (216,013 | ) | |||||||||||||
Financing costs | (16,708 | ) | — | — | (94 | ) | (16,802 | ) | ||||||||||||
Troubled debt interest payments | (1,037 | ) | — | — | — | (1,037 | ) | |||||||||||||
Intercompany transactions | 14,012 | — | (18,784 | ) | 4,772 | — | ||||||||||||||
Net cash (used in) provided by financing activities | (48,232 | ) | — | (18,784 | ) | 4,678 | (62,338 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 1,566 | 1,566 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 953 | — | (15 | ) | 48,258 | 49,196 | ||||||||||||||
Cash and cash equivalents at beginning of year | 4,964 | — | 97 | 1,648 | 6,709 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 5,917 | $ | — | $ | 82 | $ | 49,906 | $ | 55,905 | ||||||||||
F-54
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net sales | $ | 792,190 | $ | — | $ | 217,002 | �� | $ | 315,171 | $ | (190,407 | ) | $ | 1,133,956 | ||||||||||
Cost of sales | 596,894 | — | 208,886 | 243,734 | (190,407 | ) | 859,107 | |||||||||||||||||
Gross profit | 195,296 | — | 8,116 | 71,437 | — | 274,849 | ||||||||||||||||||
Selling, general and administrative expense | 161,443 | — | 10,374 | 40,208 | — | 212,025 | ||||||||||||||||||
Manufacturing restructuring costs | 1,133 | — | — | 650 | — | 1,783 | ||||||||||||||||||
Income (loss) from operations | 32,720 | — | (2,258 | ) | 30,579 | — | 61,041 | |||||||||||||||||
Interest expense (income), net | 82,238 | — | (12 | ) | 341 | — | 82,567 | |||||||||||||||||
Foreign currency loss | — | — | — | 1,809 | — | 1,809 | ||||||||||||||||||
Income (loss) before income taxes | (49,518 | ) | — | (2,246 | ) | 28,429 | — | (23,335 | ) | |||||||||||||||
Income taxes | 42,184 | — | 2,601 | 8,277 | — | 53,062 | ||||||||||||||||||
Income (loss) before equity income from subsidiaries | (91,702 | ) | — | (4,847 | ) | 20,152 | — | (76,397 | ) | |||||||||||||||
Equity income from subsidiaries | 15,305 | — | 20,152 | — | (35,457 | ) | — | |||||||||||||||||
Net income (loss) | $ | (76,397 | ) | $ | — | $ | 15,305 | $ | 20,152 | $ | (35,457 | ) | $ | (76,397 | ) | |||||||||
F-55
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 3,452 | $ | — | $ | (1,539 | ) | $ | 6,038 | $ | 7,951 | |||||||||
Investing Activities | ||||||||||||||||||||
Capital expenditures | (6,773 | ) | — | (217 | ) | (4,508 | ) | (11,498 | ) | |||||||||||
Proceeds from sale of assets | 20 | — | 5 | — | 25 | |||||||||||||||
Net cash used in investing activities | (6,753 | ) | — | (212 | ) | (4,508 | ) | (11,473 | ) | |||||||||||
Financing Activities | ||||||||||||||||||||
Borrowings under prior ABL Facility | 56,000 | — | — | — | 56,000 | |||||||||||||||
Repayments of term loan | (61,000 | ) | — | — | — | (61,000 | ) | |||||||||||||
Dividends | — | — | 8,873 | (8,873 | ) | — | ||||||||||||||
Financing costs | (3,913 | ) | — | — | (1,458 | ) | (5,371 | ) | ||||||||||||
Intercompany transactions | 10,771 | — | (7,396 | ) | (3,375 | ) | — | |||||||||||||
Net cash (used in) provided by financing activities | 1,858 | — | 1,477 | (13,706 | ) | (10,371 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (1,001 | ) | (1,001 | ) | |||||||||||||
Net decrease in cash and cash equivalents | (1,443 | ) | — | (274 | ) | (13,177 | ) | (14,894 | ) | |||||||||||
Cash and cash equivalents at beginning of year | 6,407 | — | 371 | 14,825 | 21,603 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 4,964 | $ | — | $ | 97 | $ | 1,648 | $ | 6,709 | ||||||||||
F-56
April 2, | January 1, | |||||||
2011 | 2011 | |||||||
(In thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,682 | $ | 13,789 | ||||
Accounts receivable, net of allowance for doubtful accounts of $9,863 at April 2, 2011 and $9,203 at January 1, 2011 | 111,745 | 118,408 | ||||||
Inventories | 175,248 | 146,215 | ||||||
Income taxes receivable | — | 3,291 | ||||||
Prepaid expenses | 9,372 | 8,995 | ||||||
Total current assets | 302,047 | 290,698 | ||||||
Property, plant and equipment, net | 135,709 | 137,862 | ||||||
Goodwill | 572,755 | 566,423 | ||||||
Other intangible assets, net | 730,760 | 731,014 | ||||||
Other assets | 29,024 | 29,907 | ||||||
Total assets | $ | 1,770,295 | $ | 1,755,904 | ||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 101,879 | $ | 90,190 | ||||
Accrued liabilities | 76,029 | 79,319 | ||||||
Deferred income taxes | 13,951 | 19,989 | ||||||
Income taxes payable | 2,244 | 2,506 | ||||||
Total current liabilities | 194,103 | 192,004 | ||||||
Deferred income taxes | 144,668 | 144,668 | ||||||
Other liabilities | 132,989 | 132,755 | ||||||
Long-term debt | 824,185 | 788,000 | ||||||
Member’s equity | 474,350 | 498,477 | ||||||
Total liabilities and member’s equity | $ | 1,770,295 | $ | 1,755,904 | ||||
F-57
Quarters Ended | |||||||||
April 2, | April 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
(In thousands) | |||||||||
Net sales | $ | 196,736 | $ | 204,237 | |||||
Cost of sales | 156,657 | 155,798 | |||||||
Gross profit | 40,079 | 48,439 | |||||||
Selling, general and administrative expenses | 58,916 | 47,481 | |||||||
(Loss) income from operations | (18,837 | ) | 958 | ||||||
Interest expense, net | 18,700 | 18,694 | |||||||
Foreign currency (gain) | (30 | ) | (122 | ) | |||||
Loss before income taxes | (37,507 | ) | (17,614 | ) | |||||
Income taxes (benefit) provision | (389 | ) | 1,078 | ||||||
Net loss | $ | (37,118 | ) | $ | (18,692 | ) | |||
F-58
Quarters Ended | |||||||||
April 2, | April 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
(In thousands) | |||||||||
OPERATING ACTIVITIES | |||||||||
Net loss | $ | (37,118 | ) | $ | (18,692 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization | 12,657 | 5,633 | |||||||
Amortization of deferred financing costs | 1,102 | 1,007 | |||||||
Amortization of net liabilities recorded in purchase accounting for the fair value of leased facilities and warranty liabilities | (299 | ) | — | ||||||
Deferred income taxes | (301 | ) | 1,078 | ||||||
Provision for losses on accounts receivable | 872 | 1,000 | |||||||
Debt accretion | — | 63 | |||||||
Loss on sale or disposal of assets other than by sale | 84 | 14 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 6,535 | (9,498 | ) | ||||||
Inventories | (27,730 | ) | (22,176 | ) | |||||
Accounts payable and accrued liabilities | 7,716 | (712 | ) | ||||||
Income taxes receivable/payable | (4,610 | ) | (2,967 | ) | |||||
Other | (871 | ) | 133 | ||||||
Net cash used in operating activities | (41,963 | ) | (45,117 | ) | |||||
INVESTING ACTIVITIES | |||||||||
Capital expenditures | (2,400 | ) | (5,050 | ) | |||||
Net cash used in investing activities | (2,400 | ) | (5,050 | ) | |||||
FINANCING ACTIVITIES | |||||||||
Net borrowings under ABL facilities | 36,185 | — | |||||||
Net borrowings under prior ABL Facility | — | 18,000 | |||||||
Financing costs | (36 | ) | — | ||||||
Net cash provided by financing activities | 36,149 | 18,000 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 107 | (56 | ) | ||||||
Net decrease in cash and cash equivalents | (8,107 | ) | (32,223 | ) | |||||
Cash and cash equivalents at beginning of period | 13,789 | 55,905 | |||||||
Cash and cash equivalents at end of period | $ | 5,682 | $ | 23,682 | |||||
Supplemental information: | |||||||||
Cash paid for interest | $ | 673 | $ | 24,714 | |||||
Cash paid for income taxes | $ | 4,540 | $ | 2,966 | |||||
F-59
NOTE 1 — | BASIS OF PRESENTATION |
F-60
NOTE 2 — | BUSINESS COMBINATION |
Quarter | ||||
Ended | ||||
April 3, | ||||
2010 | ||||
Net sales | $ | 204,237 | ||
Net loss | (22,035 | ) |
NOTE 3 — | INVENTORIES |
April 2, | January 1, | |||||||
2011 | 2011 | |||||||
Raw materials | $ | 39,077 | $ | 39,729 | ||||
Work-in-progress | 12,655 | 10,746 | ||||||
Finished goods and purchased products | 123,516 | 95,740 | ||||||
$ | 175,248 | $ | 146,215 | |||||
NOTE 4 — | GOODWILL AND OTHER INTANGIBLE ASSETS |
April 2, 2011 | January 1, 2011 | ||||||||||||||||||||||||||||||||
Average | Average | ||||||||||||||||||||||||||||||||
Amortization | Net | Amortization | Net | ||||||||||||||||||||||||||||||
Period | Accumulated | Carrying | Period | Accumulated | Carrying | ||||||||||||||||||||||||||||
(In Years) | Cost | Amortization | Value | (In Years) | Cost | Amortization | Value | ||||||||||||||||||||||||||
Amortized customer bases | 13 | $ | 333,111 | $ | 12,087 | $ | 321,024 | 13 | $ | 330,915 | $ | 5,453 | $ | 325,462 | |||||||||||||||||||
Non-amortized trade names | 409,736 | — | 409,736 | 405,552 | — | 405,552 | |||||||||||||||||||||||||||
Total intangible assets | $ | 742,847 | $ | 12,087 | $ | 730,760 | $ | 736,467 | $ | 5,453 | $ | 731,014 | |||||||||||||||||||||
F-61
NOTE 5 — | LONG-TERM DEBT |
April 2, | January 1, | |||||||
2011 | 2011 | |||||||
9.125% notes | $ | 730,000 | $ | 730,000 | ||||
Borrowings under the ABL facilities | 94,185 | 58,000 | ||||||
Total long-term debt | $ | 824,185 | $ | 788,000 | ||||
F-62
NOTE 6 — | COMPREHENSIVE LOSS |
Quarters Ended | |||||||||
April 2, | April 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Net loss | $ | (37,118 | ) | $ | (18,692 | ) | |||
Unrecognized prior service cost and net loss, net of tax | — | 242 | |||||||
Foreign currency translation adjustments | 12,965 | 2,864 | |||||||
Comprehensive loss | $ | (24,153 | ) | $ | (15,586 | ) | |||
NOTE 7 — | RETIREMENT PLANS |
Quarters Ended | |||||||||||||||||
April 2, 2011 | April 3, 2010 | ||||||||||||||||
Domestic | Foreign | Domestic | Foreign | ||||||||||||||
Plans | Plans | Plans | Plans | ||||||||||||||
Successor | Predecessor | ||||||||||||||||
Net periodic pension cost | |||||||||||||||||
Service cost | $ | 186 | $ | 648 | $ | 155 | $ | 604 | |||||||||
Interest cost | 772 | 955 | 778 | 903 | |||||||||||||
Expected return on assets | (845 | ) | (1,004 | ) | (760 | ) | (867 | ) | |||||||||
Amortization of unrecognized: | |||||||||||||||||
Prior service costs | — | — | 7 | 11 | |||||||||||||
Cumulative net loss | — | — | 303 | 48 | |||||||||||||
Net periodic pension cost | $ | 113 | $ | 599 | $ | 483 | $ | 699 | |||||||||
F-63
NOTE 8 — | BUSINESS SEGMENTS |
Quarters Ended | |||||||||
April 2, | April 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Vinyl windows | $ | 71,709 | $ | 76,337 | |||||
Vinyl siding products | 37,160 | 39,356 | |||||||
Metal products | 36,369 | 36,375 | |||||||
Third-party manufactured products | 37,120 | 37,563 | |||||||
Other products and services | 14,378 | 14,606 | |||||||
$ | 196,736 | $ | 204,237 | ||||||
NOTE 9 — | PRODUCT WARRANTY COSTS AND SERVICE RETURNS |
F-64
Quarters Ended | |||||||||
April 2, | April 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Balance at the beginning of the period | $ | 94,712 | $ | 33,016 | |||||
Provision for warranties issued and changes in estimates for pre-existing warranties | 1,372 | 1,540 | |||||||
Claims paid | (628 | ) | (1,237 | ) | |||||
Foreign currency translation | 477 | 263 | |||||||
Balance at the end of the period Ending liability | $ | 95,933 | $ | 33,582 | |||||
NOTE 10 — | MANUFACTURING RESTRUCTURING COSTS |
Quarters Ended | |||||||||
April 2, | April 3, | ||||||||
2011 | 2010 | ||||||||
Successor | Predecessor | ||||||||
Beginning liability | $ | 4,583 | $ | 5,036 | |||||
Accretion of related lease obligations | 138 | 91 | |||||||
Payments | (423 | ) | (397 | ) | |||||
Ending liability | $ | 4,298 | $ | 4,730 | |||||
NOTE 11 — | SUBSIDIARY GUARANTORS |
F-65
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 4,040 | $ | — | $ | — | $ | 1,642 | $ | — | $ | 5,682 | ||||||||||||
Accounts receivable, net | 70,621 | — | 10,624 | 30,500 | — | 111,745 | ||||||||||||||||||
Intercompany receivables | 387,641 | — | 12,094 | 2,265 | (402,000 | ) | — | |||||||||||||||||
Inventories | 121,119 | — | 12,281 | 41,848 | — | 175,248 | ||||||||||||||||||
Income taxes receivable | 19,995 | — | — | — | (19,995 | ) | — | |||||||||||||||||
Deferred income taxes | — | — | 1,634 | — | (1,634 | ) | — | |||||||||||||||||
Prepaid expenses | 6,414 | — | 1,095 | 1,863 | — | 9,372 | ||||||||||||||||||
Total current assets | 609,830 | — | 37,728 | 78,118 | (423,629 | ) | 302,047 | |||||||||||||||||
Property, plant and equipment, net | 83,916 | — | 3,739 | 48,054 | — | 135,709 | ||||||||||||||||||
Goodwill | 353,432 | — | 28,978 | 190,345 | — | 572,755 | ||||||||||||||||||
Other intangible assets, net | 490,870 | — | 50,894 | 188,996 | — | 730,760 | ||||||||||||||||||
Investment in subsidiaries | 17,002 | — | (30,332 | ) | — | 13,330 | — | |||||||||||||||||
Intercompany receivable | — | 730,000 | — | — | (730,000 | ) | — | |||||||||||||||||
Other assets | 25,764 | — | 10 | 3,250 | — | 29,024 | ||||||||||||||||||
Total assets | $ | 1,580,814 | $ | 730,000 | $ | 91,017 | $ | 508,763 | $ | (1,140,299 | ) | $ | 1,770,295 | |||||||||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | 65,509 | $ | — | $ | 11,166 | $ | 25,204 | $ | — | $ | 101,879 | ||||||||||||
Intercompany payables | — | — | — | 402,000 | (402,000 | ) | — | |||||||||||||||||
Accrued liabilities | 63,212 | — | 4,925 | 7,892 | — | 76,029 | ||||||||||||||||||
Deferred taxes | 11,407 | — | — | 4,178 | (1,634 | ) | 13,951 | |||||||||||||||||
Income taxes payable | — | — | 16,438 | 5,801 | (19,995 | ) | 2,244 | |||||||||||||||||
Total current liabilities | 140,128 | — | 32,529 | 445,075 | (423,629 | ) | 194,103 | |||||||||||||||||
Deferred income taxes | 85,191 | — | 14,661 | 44,816 | — | 144,668 | ||||||||||||||||||
Other liabilities | 78,145 | — | 26,825 | 28,019 | — | 132,989 | ||||||||||||||||||
Long-term debt | 803,000 | 730,000 | — | 21,185 | (730,000 | ) | 824,185 | |||||||||||||||||
Member’s equity | 474,350 | — | 17,002 | (30,332 | ) | 13,330 | 474,350 | |||||||||||||||||
Total liabilities and member’s equity | $ | 1,580,814 | $ | 730,000 | $ | 91,017 | $ | 508,763 | $ | (1,140,299 | ) | $ | 1,770,295 | |||||||||||
F-66
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net sales | $ | 144,212 | $ | — | $ | 34,168 | $ | 51,065 | $ | (32,709 | ) | $ | 196,736 | |||||||||||
Cost of sales | 115,133 | — | 33,335 | 40,898 | (32,709 | ) | 156,657 | |||||||||||||||||
Gross profit | 29,079 | — | 833 | 10,167 | — | 40,079 | ||||||||||||||||||
Selling, general and administrative expenses | 46,641 | — | 1,042 | 11,233 | — | 58,916 | ||||||||||||||||||
Loss from operations | (17,562 | ) | — | (209 | ) | (1,066 | ) | — | (18,837 | ) | ||||||||||||||
Interest expense, net | 18,339 | — | — | 361 | — | 18,700 | ||||||||||||||||||
Foreign currency (gain) | — | — | — | (30 | ) | — | (30 | ) | ||||||||||||||||
Loss before income taxes | (35,901 | ) | — | (209 | ) | (1,397 | ) | — | (37,507 | ) | ||||||||||||||
Income taxes (benefit) | — | — | — | (389 | ) | — | (389 | ) | ||||||||||||||||
Loss before equity loss from subsidiaries | (35,901 | ) | — | (209 | ) | (1,008 | ) | — | (37,118 | ) | ||||||||||||||
Equity loss from subsidiaries | (1,217 | ) | — | (1,008 | ) | — | 2,225 | — | ||||||||||||||||
Net loss | $ | (37,118 | ) | $ | — | $ | (1,217 | ) | $ | (1,008 | ) | $ | 2,225 | $ | (37,118 | ) | ||||||||
F-67
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (33,874 | ) | $ | — | $ | 2,851 | $ | (10,940 | ) | $ | (41,963 | ) | |||||||
Investing Activities | ||||||||||||||||||||
Capital expenditures | (1,630 | ) | — | (13 | ) | (757 | ) | (2,400 | ) | |||||||||||
Net cash used in investing activities | (1,630 | ) | — | (13 | ) | (757 | ) | (2,400 | ) | |||||||||||
Financing Activities | ||||||||||||||||||||
Net borrowings under ABL facilities | 15,000 | — | — | 21,185 | 36,185 | |||||||||||||||
Intercompany transactions | 18,669 | — | (2,838 | ) | (15,831 | ) | — | |||||||||||||
Financing costs | (36 | ) | — | — | — | (36 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 33,633 | — | (2,838 | ) | 5,354 | 36,149 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 107 | 107 | |||||||||||||||
Net decrease in cash and cash equivalents | (1,871 | ) | — | — | (6,236 | ) | (8,107 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 5,911 | — | — | 7,878 | 13,789 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 4,040 | $ | — | $ | — | $ | 1,642 | $ | 5,682 | ||||||||||
F-68
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 5,911 | $ | — | $ | — | $ | 7,878 | $ | — | $ | 13,789 | ||||||||||||
Accounts receivable, net | 85,496 | — | 11,107 | 21,805 | — | 118,408 | ||||||||||||||||||
Intercompany receivables | 406,309 | — | 9,257 | 2,264 | (417,830 | ) | — | |||||||||||||||||
Inventories | 99,228 | — | 10,870 | 36,117 | — | 146,215 | ||||||||||||||||||
Income taxes receivable | 19,731 | — | — | — | (16,440 | ) | 3,291 | |||||||||||||||||
Deferred income taxes | — | — | 1,629 | — | (1,629 | ) | — | |||||||||||||||||
Prepaid expenses | 6,622 | — | 1,174 | 1,199 | — | 8,995 | ||||||||||||||||||
Total current assets | 623,297 | — | 34,037 | 69,263 | (435,899 | ) | 290,698 | |||||||||||||||||
Property, plant and equipment, net | 86,636 | — | 4,014 | 47,212 | — | 137,862 | ||||||||||||||||||
Goodwill | 353,434 | — | 28,978 | 184,011 | — | 566,423 | ||||||||||||||||||
Other intangible assets, net | 495,850 | — | 51,006 | 184,158 | — | 731,014 | ||||||||||||||||||
Investment in subsidiaries | 5,256 | — | (42,289 | ) | — | 37,033 | — | |||||||||||||||||
Intercompany receivable | — | 788,000 | — | — | (788,000 | ) | — | |||||||||||||||||
Other assets | 26,662 | — | (1 | ) | 3,246 | — | 29,907 | |||||||||||||||||
Total assets | $ | 1,591,135 | $ | 788,000 | $ | 75,745 | $ | 487,890 | $ | (1,186,866 | ) | $ | 1,755,904 | |||||||||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | 66,087 | $ | — | $ | 5,761 | $ | 18,342 | $ | — | $ | 90,190 | ||||||||||||
Intercompany payables | — | — | — | 417,830 | (417,830 | ) | — | |||||||||||||||||
Accrued liabilities | 63,116 | — | 7,057 | 9,146 | — | 79,319 | ||||||||||||||||||
Deferred income taxes | 11,454 | — | — | 10,164 | (1,629 | ) | 19,989 | |||||||||||||||||
Income taxes payable | — | — | 16,440 | 2,506 | (16,440 | ) | 2,506 | |||||||||||||||||
Total current liabilities | 140,657 | — | 29,258 | 457,988 | (435,899 | ) | 192,004 | |||||||||||||||||
Deferred income taxes | 85,191 | — | 14,661 | 44,816 | — | 144,668 | ||||||||||||||||||
Other liabilities | 78,810 | — | 26,570 | 27,375 | — | 132,755 | ||||||||||||||||||
Long-term debt | 788,000 | 788,000 | — | — | (788,000 | ) | 788,000 | |||||||||||||||||
Member’s equity | 498,477 | — | 5,256 | (42,289 | ) | 37,033 | 498,477 | |||||||||||||||||
Total liabilities and member’s equity | $ | 1,591,135 | $ | 788,000 | $ | 75,745 | $ | 487,890 | $ | (1,186,866 | ) | $ | 1,755,904 | |||||||||||
F-69
Subsidiary | Non-Guarantor | Reclassification/ | ||||||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net sales | $ | 145,891 | $ | — | $ | 29,561 | $ | 57,981 | $ | (29,196 | ) | $ | 204,237 | |||||||||||
Cost of sales | 112,476 | — | 27,512 | 45,006 | (29,196 | ) | 155,798 | |||||||||||||||||
Gross profit | 33,415 | — | 2,049 | 12,975 | — | 48,439 | ||||||||||||||||||
Selling, general and administrative expenses | 37,405 | — | 808 | 9,268 | — | 47,481 | ||||||||||||||||||
(Loss) income from operations | (3,990 | ) | — | 1,241 | 3,707 | — | 958 | |||||||||||||||||
Interest expense, net | 18,445 | — | 2 | 247 | — | 18,694 | ||||||||||||||||||
Foreign currency (gain) | — | — | — | (122 | ) | — | (122 | ) | ||||||||||||||||
(Loss) income before income taxes | (22,435 | ) | — | 1,239 | 3,582 | — | (17,614 | ) | ||||||||||||||||
Income taxes (benefit) | (936 | ) | — | 936 | 1,078 | — | 1,078 | |||||||||||||||||
(Loss) income before equity income from subsidiaries | (21,499 | ) | — | 303 | 2,504 | — | (18,692 | ) | ||||||||||||||||
Equity income from subsidiaries | 2,807 | — | 2,504 | — | (5,311 | ) | — | |||||||||||||||||
Net income (loss) | $ | (18,692 | ) | $ | — | $ | 2,807 | $ | 2,504 | $ | (5,311 | ) | $ | (18,692 | ) | |||||||||
F-70
Subsidiary | Non-Guarantor | |||||||||||||||||||
Company | Co-Issuer | Guarantors | Subsidiaries | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash used in operating activities | $ | (36,727 | ) | $ | — | $ | (2,000 | ) | $ | (6,390 | ) | $ | (45,117 | ) | ||||||
Investing Activities | ||||||||||||||||||||
Capital expenditures | (4,133 | ) | — | (10 | ) | (907 | ) | (5,050 | ) | |||||||||||
Net cash used in investing activities | (4,133 | ) | — | (10 | ) | (907 | ) | (5,050 | ) | |||||||||||
Financing Activities | ||||||||||||||||||||
Net borrowings under prior ABL Facility | 18,000 | — | — | — | 18,000 | |||||||||||||||
Dividends from non-guarantor subsidiary | — | — | 20,000 | (20,000 | ) | — | ||||||||||||||
Intercompany transactions | 20,612 | — | (17,996 | ) | (2,616 | ) | — | |||||||||||||
Net cash provided by (used in) financing activities | 38,612 | — | 2,004 | (22,616 | ) | 18,000 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (56 | ) | (56 | ) | |||||||||||||
Net decrease in cash and cash equivalents | (2,248 | ) | — | (6 | ) | (29,969 | ) | (32,223 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 5,917 | — | 82 | 49,906 | 55,905 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 3,669 | $ | — | $ | 76 | $ | 19,937 | $ | 23,682 | ||||||||||
F-71
which have been registered under the Securities Act of 1933, for any and all of its
outstanding 9.125% Senior Secured Notes due 2017.