**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q/A**

**(Amendment No. 1)**

 
| **ý** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                          |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                                                  |   |
|       | **For the quarterly period ended ****June 27,  2003**                                                                                                                                                                                                                                                                                                                            |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |   |
| **OR**     |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |   |
| **o**      | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                         |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |   |
|       | **For the transition period  from                            to                            ** |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |   |
|       | **Commission file number 333-05978**                                                                                                                                                                                                                                                                                                                                             |

 

**EURAMAX INTERNATIONAL, INC.**

(Exact name of registrant as specified in itscharter)

 

| **Delaware**                                                              |   | **58-2502320**                       |
|---------------------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization)           |   | (I.R.S. Employer Identification No.) |
|                                                                      |   |                                 |
| **5445 Triangle Parkway, Suite 350,  Norcross, Georgia**                  |   | **30092**                            |
| (Address of principal executive offices)                                  |   | (Zip Code)                           |
|                                                                      |   |                                 |
| Registrant’s telephone number, including  area code **770-449-7066** |

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

ý Yes  o No

 

Indicate bycheck mark whether the registrant is an accelerated filer (as defined inExchange Rule 12b-2).

 

o Yes  ý No

 

As of August 11, 2003, Registrant had outstanding 492,495.79 shares ofClass A common stock and no shares of Class B common stock.

 

**EXPLANATORY NOTE**

 

This quarterlyreport on Form 10-Q/A amends the Registrant’s quarterly report on Form 10-Q forthe period ended June 27, 2003, which was originally filed on August 11, 2003.This amendment reflects comments to our original report on Form 10-Q receivedfrom the Staff of the Securities and Exchange Commission in connection withtheir review of our registration statement on Form S-4, which was filed onNovember 4, 2003.  Specifically, we areamending the following items:

 

•                  Part I –Financial Information, Item 1. Financial Statements, Footnote 3. Summary ofSignificant Account Policies, “Goodwill”

•                  Part I –Financial Information, Item 1. Financial Statements, Footnote 9. SegmentInformation

•                  Part I –Financial Information, Item 1. Financial Statements, Footnote 13. SupplementalCondensed Combined Financial Statements

•                  Part I –Financial Information, Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

 

Except asexpressly noted above or as otherwise expressly noted herein, the informationin this quarterly report is current only as of June 27, 2003, and we have notattempted to update any such information based on events subsequent to thatdate.

 

 

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**PartI - Financial Information**

 

**Item 1.  Financial Statements**

 

**Euramax International, Inc. and Subsidiaries**

**Condensed Consolidated Statements of Earnings**

**(Thousands of U.S. Dollars)**

**(Unaudited)**

 
|                          |   | **Predecessor**                         |    | **Successor**                        |   | **Predecessor**                      |   | **Successor**                         |   |
|-------------------------------|--------|-----------------------------------------|---------|--------------------------------------|--------|--------------------------------------|--------|---------------------------------------|--------|
|                          |   | **Three months  ended  June 28,  2002** |    | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   | **Six months  ended  June 28,  2002** |   | **Five months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   |
|                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Net sales                     |   | $                                       | 171,668 |                                 | $      | 114,457                              |   | $                                     | 77,194 |   | $ | 304,628 |   | $ | 260,615 |   | $ | 77,194 |   |
|                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Costs and expenses:           |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Cost of goods sold            |   | 132,859                                 |    | 90,854                               |   | 63,904                               |   | 239,117                               |   | 208,420 |   | 63,904 |   |
| Selling and general           |   | 16,400                                  |    | 10,563                               |   | 8,159                                |   | 30,949                                |   | 26,153 |   | 8,159 |   |
| Depreciation and amortization |   | 3,025                                   |    | 2,531                                |   | 1,571                                |   | 6,449                                 |   | 6,276 |   | 1,571 |   |
| Earnings from operations      |   | 19,384                                  |    | 10,509                               |   | 3,560                                |   | 28,113                                |   | 19,766 |   | 3,560 |   |
|                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Interest expense, net         |   | (5,872                                  | )       | (3,678                               | )      | (1,843                               | )      | (11,233                               | )      | (9,126 | ) | (1,843 | ) |
| Other income (expense), net   |   | 624                                     |    | 292                                  |   | (26                                  | )      | 542                                   |   | 506 |   | (26 | ) |
| Earnings before income taxes  |   | 14,136                                  |    | 7,123                                |   | 1,691                                |   | 17,422                                |   | 11,146 |   | 1,691 |   |
| Provision for income taxes    |   | 5,576                                   |    | 2,673                                |   | 562                                  |   | 6,782                                 |   | 4,254 |   | 562 |   |
| Net earnings                  |   | $                                       | 8,560   |                                 | $      | 4,450                                |   | $                                     | 1,129  |   | $ | 10,640 |   | $ | 6,892 |   | $ | 1,129 |   |

 

The accompanying notes are an integral part of these condensedconsolidated financial statements.

 

2

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**Euramax International, Inc. and Subsidiaries**

**Condensed Consolidated Balance Sheets**

**(Thousands of U.S. Dollars)**

**(Unaudited)**

 
|                                           |   | **Predecessor  December 27,  2002** |    | **Successor  June 27,  2003** |   |
|------------------------------------------------|--------|-------------------------------------|---------|-------------------------------|--------|
| **ASSETS**                                     |   |                                |    |                          |   |
| Current assets:                                |   |                                |    |                          |   |
| Cash and equivalents                           |   | $                                   | 11,646  |                          | $      | 10,918 |   |
| Accounts receivable, net                       |   | 88,508                              |    | 120,325                       |   |
| Inventories                                    |   | 78,480                              |    | 90,374                        |   |
| Other current assets                           |   | 5,081                               |    | 8,438                         |   |
| Total current assets                           |   | 183,715                             |    | 230,055                       |   |
| Property, plant and equipment, net             |   | 112,037                             |    | 129,582                       |   |
| Goodwill, net                                  |   | 110,799                             |    | 160,406                       |   |
| Deferred income taxes                          |   | 4,975                               |    | 4,831                         |   |
| Other assets                                   |   | 4,914                               |    | 5,740                         |   |
|                                           |   | $                                   | 416,440 |                          | $      | 530,614 |   |
|                                           |   |                                |    |                          |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**  |   |                                |    |                          |   |
| Current liabilities:                           |   |                                |    |                          |   |
| Cash overdrafts                                |   | $                                   | 1,880   |                          | $      | 1,487 |   |
| Accounts payable                               |   | 57,104                              |    | 74,111                        |   |
| Accrued expenses and other current liabilities |   | 34,251                              |    | 47,039                        |   |
| Total current liabilities                      |   | 93,235                              |    | 122,637                       |   |
| Long-term debt, less current maturities        |   | 196,972                             |    | 208,020                       |   |
| Deferred income taxes                          |   | 19,421                              |    | 23,560                        |   |
| Other liabilities                              |   | 20,593                              |    | 27,731                        |   |
| Total liabilities                              |   | 330,221                             |    | 381,948                       |   |
| Shareholders’equity:                      |   |                                |    |                          |   |
| Common stock                                   |   | 500                                 |    | 500                           |   |
| Additional paid-in capital                     |   | 53,220                              |    | 155,495                       |   |
| Treasury stock                                 |   | (2,056                              | )       | (1,964                        | )      |
| Restricted stock                               |   | —                              |    | (3,764                        | )      |
| Retained earnings                              |   | 44,439                              |    | 1,129                         |   |
| Accumulated other comprehensive loss           |   | (9,884                              | )       | (2,730                        | )      |
| Total shareholders’ equity                |   | 86,219                              |    | 148,666                       |   |
|                                           |   | $                                   | 416,440 |                          | $      | 530,614 |   |

 

The accompanying notes are an integral part of these condensedconsolidated financial statements.

 

3

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**Euramax International, Inc. and Subsidiaries**

**Condensed Consolidated Statements of Cash Flows**

**(Thousands of U.S. Dollars)**

**(Unaudited)**

 
|                                                      |   | **Predecessor**                       |   | **Successor**                         |   |
|-----------------------------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|
|                                                      |   | **Six months  ended  June 28,  2002** |   | **Five months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   |
|                                                      |   |                                  |   |                                  |   |   |   |
| Net cash provided by (used in) operating  activities      |   | $                                     | 549    |                                  | $      | (12,045 | ) | $ | 11,924 |   |
|                                                      |   |                                  |   |                                  |   |   |   |
| Cash flows from investing activities:                     |   |                                  |   |                                  |   |   |   |
| Proceeds from sales of assets                             |   | 24                                    |   | 35                                    |   | 44 |   |
| Capital expenditures                                      |   | (2,566                                | )      | (4,944                                | )      | (789 | ) |
| Net cash used in investing activities                     |   | (2,542                                | )      | (4,909                                | )      | (745 | ) |
|                                                      |   |                                  |   |                                  |   |   |   |
| Cash flows from financing activities:                     |   |                                  |   |                                  |   |   |   |
| Net borrowings (repayments) on revolving credit  facility |   | 40,004                                |   | 18,264                                |   | (11,153 | ) |
| Repayment of long-term debt                               |   | (38,951                               | )      | —                                |   | — |   |
| Changes in cash overdrafts                                |   | 1,229                                 |   | 2,603                                 |   | (2,995 | ) |
| Proceeds from settlement of currency swap                 |   | 2,790                                 |   | —                                |   | — |   |
| Issuance of common stock from shares held in  treasury    |   | —                                |   | —                                |   | 353 |   |
| Purchase of treasury stock                                |   | —                                |   | (2,556                                | )      | (80 | ) |
| Deferred financing fees                                   |   | (1,495                                | )      | (116                                  | )      | (242 | ) |
| Net cash provided by (used in) financing  activities      |   | 3,577                                 |   | 18,195                                |   | (14,117 | ) |
|                                                      |   |                                  |   |                                  |   |   |   |
| Effect of exchange rate changes on cash                   |   | 1,881                                 |   | 778                                   |   | 191 |   |
|                                                      |   |                                  |   |                                  |   |   |   |
| Net increase (decrease) in cash and equivalents           |   | 3,465                                 |   | 2,019                                 |   | (2,747 | ) |
| Cash and equivalents at beginning of period               |   | 5,897                                 |   | 11,646                                |   | 13,665 |   |
| Cash and equivalents at end of period                     |   | $                                     | 9,362  |                                  | $      | 13,665 |   | $ | 10,918 |   |

 

4

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**Euramax International, Inc. and Subsidiaries**

**Notes to Condensed Consolidated FinancialStatements**

**(Thousands of U.S. Dollars)**

**(Unaudited)**

 

**1.  Basis of Presentation:**

 

For purposes of this report the “Company” refers to EuramaxInternational, Inc. (“Euramax”) and Subsidiaries, collectively.

 

The Condensed Consolidated Financial Statements of the Company havebeen prepared in accordance with accounting principles generally accepted inthe United States for interim financial information and with the rules andregulations of the Securities and Exchange Commission (the “SEC”). Accordingly,they do not include all of the information and footnotes required by accountingprinciples generally accepted in the United States for complete financialstatements. In the opinion of the management of the Company, these statementsinclude all adjustments necessary for a fair presentation of the results of allinterim periods reported herein. All adjustments are of a normal recurringnature, except for the 2003 Shareholder Transaction described in Note 2, unlessotherwise disclosed. Management believes that the disclosures made are adequatefor a fair presentation of results of operations, financial position and cashflows. These Condensed Consolidated Financial Statements should be read inconjunction with the year-end Consolidated Financial Statements andaccompanying notes included in the Company’s Annual Report on Form 10-K for theyear ended December 27, 2002. The Company's sales are somewhat seasonal, withthe second and third quarters typically accounting for the highest salesvolumes. Operating results for the period ended June 27, 2003, are notnecessarily indicative of future results that may be expected for the yearending December 26, 2003.

 

Per share data has not been presented since such data provides nouseful information, as the shares of the Company are closely held. 

 

Certain 2002 amounts have been reclassified to conform to current yearpresentation.

 

**2.  2003 Shareholder Transaction**

 

On April 15, 2003, CitigroupVenture Capital Equity Partners, L.P. (“CVCEP”) and Citicorp Venture CapitalLtd. (“CVC”), entered into a definitive purchase agreement with CVC EuropeanEquity Partners, L.P. and CVC European Equity Partners (Jersey), L.P.(collectively “CVC Europe”), BNP Paribas, independent directors and certainmembers of management to purchase, for approximately $106.0 million, all of theshares of the Company held by CVC Europe and BNP Paribas, and a portion of theshares held by independent directors and management (“2003 ShareholderTransaction”). The 2003 Shareholder Transaction was completed on June 12, 2003,with CVCEP purchasing 265,762.48 shares of the Company's Class A Common Stock. Afterthe completion of this transaction CVCEP and CVC collectively ownedapproximately 88.5% of the issued and outstanding shares of the Company, withmanagement of CVCEP and directors and management of the Company holding theremaining shares. Prior to the 2003 Shareholder Transaction, CVC ownedapproximately 34.5% of the issued and outstanding shares of the Company. Thissubstantial change in ownership arising from CVCEP's acquisition of theCompany's stock, together with the Company's subsequent issuance of seniorsubordinated notes (see Note 12), required that the purchase price paid inexcess of the book value of the Company's equity acquired be allocated underthe purchase method of accounting to the assets and liabilities of the Companybased upon a percentage of their fair values proportional to the percentage ofthe ownership change. The allocation was based upon preliminary estimates bymanagement of the fair market values of identifiable assets and liabilities,with the remainder allocated to goodwill. The liabilities assumed includedapproximately $3.4 million of fees related to the transaction, which were paidby the Company on behalf of its shareholders. The Company is currentlycompleting valuations of its assets. The final allocation of the purchaseprice, which is subject to revision when valuations are completed, maymaterially differ from the preliminary estimates. The goodwill generated fromthis transaction is not deductible for income tax purposes. The purchase pricehas been allocated as follows:

 

5

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| Purchase price                                                         |   | $      | 105,981 |   |
|------------------------------------------------------------------------|--------|--------|---------|--------|
| Less: Company equity acquired                                          |   | 53,628 |    |
| Increase in basis                                                      |   | $      | 52,353  |   |
|                                                                   |   |   |    |
| Allocation of increase in basis                                        |   |   |    |
| Record fair value of inventories                                       |   | $      | 4,000   |   |
| Record fair value of property, plant and equipment                     |   | 16,000 |    |
| Record fair value of senior subordinated notes                         |   | (2,040 | )       |
| Record fair value of pension liability                                 |   | (6,987 | )       |
| Record fair value of deferred financing fees                           |   | (1,000 | )       |
| Record fair value of patent (15 year life)                             |   | 2,500  |    |
| Transaction fees                                                       |   | (3,350 | )       |
| Record deferred income taxes for effect of step-up  in basis of assets |   | (4,864 | )       |
| Increase to goodwill, net                                              |   | 48,094 |    |
|                                                                   |   | $      | 52,353  |   |

 

The following unaudited pro-forma information presents the results ofoperations of the Company as if the 2003 Shareholder Transaction had occurredas of the beginning of the period presented. The pro-forma information is notnecessarily indicative of what would have occurred had the acquisitions beenmade as of such period, nor is it indicative of future results of operations.The pro-forma amounts give effect to appropriate adjustments for the fair valueof the assets acquired, liabilities assumed, amortization of property, plantand equipment, intangibles and restricted stock, incurrence of the advisoryfees owed to CVC Management and income taxes.

 
|                   |   | **Three  months ended** |    | **Two months  ended** |   | **One month  ended** |   | **Six months  ended** |   | **Five  months ended** |   | **One month  ended** |   |
|------------------------|--------|-------------------------|---------|-----------------------|--------|----------------------|--------|-----------------------|--------|------------------------|--------|----------------------|--------|
|                   |   | **June 28,  2002**      |    | **May 23,  2003**     |   | **June 27,  2003**   |   | **June 28,  2002**    |   | **May 23,  2003**      |   | **June 27,  2003**   |   |
|                   |   |                    |    |                  |   |                 |   |                  |   |                   |   |                 |   |
| Pro-forma net sales    |   | $                       | 171,668 |                  | $      | 114,457              |   | $                     | 77,194 |                   | $      | 304,628              |   | $ | 260,615 |   | $ | 77,194 |   |
|                   |   |                    |    |                  |   |                 |   |                  |   |                   |   |                 |   |
| Pro-forma net earnings |   | 8,101                   |    | 4,157                 |   | 990                  |   | 9,785                 |   | 6,197                  |   | 990                  |   |
|                        |        |                         |         |                       |        |                      |        |                       |        |                        |        |                      |        |  |  |  |  |  |  |

 

**3.  Summary of Significant Accounting Policies:**

 

For information regarding significant accounting policies, see Note 2to the Consolidated Financial Statements of the Company for the year endedDecember 27, 2002, set forth in the Company’s Annual Report on Form 10-K.

 

*Goodwill*

Goodwill increased $48.1 million from December 27, 2002 to June 27,2003 as a result of applying the purchase method of accounting to the 2003Shareholder Transaction, as described in Note 2. The remaining change ingoodwill is a result of the change in foreign exchange rates used in convertingthe local currency goodwill balance into U.S. Dollars. The Company reviews thecarrying value of its goodwill for impairment annually, on the first day of theCompany’s fiscal fourth quarter.

 

*Stock BasedCompensation*

As permitted by SFAS No. 123, “Accounting for Stock-BasedCompensation”, the Company has elected to apply APB No. 25, “Accounting forStock Issued to Employees” and related interpretations in accounting for stockoptions issued under its equity compensation plan (see Note 10). Hadcompensation expense related to these stock options been determined based uponthe fair value method under SFAS No. 123, net income would have been impactedas follows:

 

6

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|                                                                                                                                  |   | **Predecessor**                         |   | **Successor**                        |   | **Predecessor**                      |   | **Successor**                         |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                                  |   | **Three months  ended  June 28,  2002** |   | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   | **Six months  ended  June 28,  2002** |   | **Five months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   |
|                                                                                                                                  |   |                                    |   |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Net  income, as reported                                                                                                              |   | $                                       | 8,560  |                                 | $      | 4,450                                |   | $                                     | 1,129  |   | $ | 10,640 |   | $ | 6,892 |   | $ | 1,129 |   |
| Add:  Stock-based employee compensation cost included in reported net income, net  of related tax effects                             |   | —                                  |   | —                               |   | 143                                  |   | —                                |   | — |   | 143 |   |
| Less:  Total stock-based employee compensation expense determined under fair value  method for all awards, not of related tax effects |   | —                                  |   | —                               |   | (1,071                               | )      | —                                |   | — |   | (1,071 | ) |
| Pro  forma net income                                                                                                                 |   | $                                       | 8,560  |                                 | $      | 4,450                                |   | $                                     | 201    |   | $ | 10,640 |   | $ | 6,892 |   | $ | 201 |   |

 

The fair value of each option is estimated using the Black-Scholesoption-pricing model using a risk free interest rate of 3.20%, an expectedoption life of 5 years, no volatility and no dividends.

 

*Recent AccountingPronouncements*

In April 2002, the FASB issued Statement No. 145, “Rescission of FASBStatements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and TechnicalCorrections” (“SFAS No. 145”). Among other items, SFAS No. 145 updates andclarifies existing accounting pronouncements related to reporting gains andlosses from the extinguishment of debt and certain lease modifications thathave economic effects similar to sale-leaseback transactions. SFAS No. 145became effective for the Company on the first day of fiscal year 2003. TheCompany expects to record other expense, net of tax, of approximately $1.5million representing unamortized deferred financing fees and the amount paid inexcess of the carrying value of the retired debt, related to the seniorsubordinated notes purchased or redeemed as described in Note 12. Prior to theadoption of SFAS No. 145 the Company would have recognized this amount as anextraordinary loss, net of tax.

 

In December 2002, the FASB issued Statement No. 148, “Accounting forStock-Based Compensation, Transition and Disclosure” (“SFAS No. 148”). SFAS No.148 provides alternative methods of transition for a voluntary

 

7

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change to the fair value based method of accounting for stock-basedemployee compensation. SFAS No. 148 also amends the disclosure requirements ofSFAS No. 123 to require prominent disclosure in both annual and interimfinancial statements about the method of accounting for stock-basedcompensation and the pro forma effect on net income had the fair value of theoptions been expensed. The disclosure requirements of SFAS No. 148 becameeffective at its issuance. The adoption of SFAS No. 148 is not expected to havea material impact on the Company’s financial position or results of operationsin fiscal year 2003.

 

InJanuary 2003, the FASB issued Interpretation No. 46, “Consolidation of VariableInterest Entities” (“FIN 46”), which addresses consolidation of variableinterest entities.  FIN 46 requires avariable interest entity to be consolidated by a parent company if that companyis subject to a majority of the risk of loss from the variable interestentity’s activities or entitled to receive a majority of the entity’s residualreturns or both.  A variable interestentity is a corporation, partnership, trust or any other legal structure usedfor business purposes that either does not have equity investors with votingrights or has equity investors that do not provide sufficient financialresources for the entity to support its activities. The consolidationrequirements of FIN 46 apply immediately to variable interest entities createdafter January 31, 2003.  For olderentities, these requirements will begin to apply in the first fiscal year orinterim period beginning after June 15, 2003. The Company is currently evaluating FIN 46, but the adoption of FIN 46is not expected to have a material impact on the Company’s financial positionor results of operations in fiscal year 2003.

 

InApril 2003, the FASB issued Statement No. 149, “Amendment of Statement 133 onDerivative Instruments and Hedging Activities” (“SFAS No. 149”). SFAS No. 149clarifies under what circumstances a contract with an initial net investmentmeets the characteristics of a derivative, amends the definition of anunderlying contract and clarifies when a derivative contains a financingcomponent in order to increase the comparability of accounting practices underSFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”.SFAS No. 149 is effective for contracts entered into or modified after June 30,2003, and for hedging relationships designated after June 30, 2003. Theadoption of SFAS No. 149 is not expected to have a material impact on theCompany’s financial position or results of operations in fiscal year 2003.

 

**4.  Inventories:**

 

Inventories were comprised of:

 

8

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|              |   | **Predecessor  December 27,  2002** |   | **Successor  June 27,  2003** |   |
|-------------------|--------|-------------------------------------|--------|-------------------------------|--------|
|              |   |                                |   |                          |   |
| Raw materials     |   | $                                   | 60,281 |                          | $      | 65,002 |   |
| Work in process   |   | 2,587                               |   | 5,884                         |   |
| Finished products |   | 15,612                              |   | 19,488                        |   |
|              |   | $                                   | 78,480 |                          | $      | 90,374 |   |

 

Inventories are net of related reserves totaling $3,827 at December 27,2002 and $3,629 at June 27, 2003.

** **

**5.  Long-Term Obligations:**

 

Long-term obligations consisted of the following:

 
|                                      |   | **Predecessor  December 27,  2002** |    | **Successor  June 27,  2003** |   |
|-------------------------------------------|--------|-------------------------------------|---------|-------------------------------|--------|
| Credit Agreement:                         |   |                                |    |                          |   |
| Revolving Credit Facility                 |   | $                                   | 61,972  |                          | $      | 70,980 |   |
| 11.25% Senior Subordinated Notes due 2006 |   | 135,000                             |    | 137,040                       |   |
|                                      |   | $                                   | 196,972 |                          | $      | 208,020 |   |

 

As of June 27, 2003, $39.0 million was available under the RevolvingCredit Facility.

 

**6.  Commitments and Contingencies:**

 

**Litigation**

 

The Company is subject to legal proceedings and claims that have arisenin the ordinary course of business. Although occasional adverse decisions or settlements may occur, it isthe opinion of the Company’s management, based upon information available atthis time, that the expected outcome of these matters, individually or in theaggregate, would not reasonably be expected to have a material adverse effecton the consolidated financial position, results of operations or cash flows ofthe Company and its subsidiaries taken as a whole.

 

**Environmental Matters**

 

The Company’s operations are subject to federal, state, local andEuropean environmental laws and regulations concerning the management ofpollution and hazardous substances.

 

The Company has been named as a potentially responsible party in stateand Federal administrative and judicial proceedings seeking contribution forcosts associated with the investigation, analysis, correction and remediationof environmental conditions at various hazardous waste disposal sites. TheCompany continues to monitor these actions and proceedings and to vigorouslydefend both its own interests as well as the interests of its affiliates. TheCompany’s ultimate liability in connection with present and futureenvironmental claims will depend on many

 

9

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factors, including its volumetric share of the waste at a given site,the remedial action required, the total cost of remediation, and the financialviability and participation of the other entities that also sent waste to thesite. Once it becomes probable that the Company will incur costs in connectionwith remediation of a site and such costs can be reasonably estimated, theCompany establishes or adjusts its reserve for its projected share of thesecosts. Based upon current law and information known to the Company concerningthe size of the sites known to it, anticipated costs, their years of operationsand the number of other potentially responsible parties, management believes thatthe Company’s potential share of the estimated aggregate liability for thecosts of remedial actions and related costs and expenses are not material. Inaddition, the Company establishes reserves for remedial measures required fromtime to time at its own facilities.** **Managementbelieves that the reasonably probable outcomes of these matters will notmaterially exceed established reserves and will not have a material impact onthe future financial position, net earnings or cash flows of the Company. TheCompany’s reserves, expenditures and expenses for all environmental exposureswere not significant for any of the dates or periods presented.

 

In connection with the acquisition of the Company from Alumax Inc.(which has since been acquired by Aluminum Company of America in May 1998, andhereafter referred to as “Alumax”) on September 25, 1996, the Company wasindemnified by Alumax for substantially all of its costs, if any, related tospecifically identified environmental matters arising prior to the closing dateof the acquisition during the period of time it was owned directly orindirectly by Alumax. Such indemnification includes costs that may ultimatelybe incurred to contribute to the remediation of certain specified existingNational Priorities List (“NPL”) sites for which the Company had been named apotentially responsible party under the federal Comprehensive EnvironmentalResponse, Compensation, and Liability Information System (“CERCLA”) as of theclosing date of the acquisition, as well as certain potential costs for siteslisted on state hazardous cleanup lists. The Company does not believe that ithas any significant probable liability for environmental claims. Further, theCompany believes it to be unlikely that the Company would be required to bearenvironmental costs in excess of its pro rata share of such costs as apotentially responsible party at any site.

 

**Product Warranties**

 

The Company provides warranties on certain products. The warrantyperiods differ depending on the product, but generally range from one year tolimited lifetime warranties. The Company provides accruals for warranties basedon historical experience and expectations of future occurrence. A summary ofthe changes in the product warranty accrual follows:

 

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|                                                          |   | **Predecessor**                      |   | **Successor**                        |   |
|---------------------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
|                                                          |   | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   |
|                                                          |   |                                 |   |                                 |   |
| Beginning balance                                             |   | $                                    | 3,045  |                                 | $      | 3,394 |   |
| Payments made or service provided                             |   | (257                                 | )      | (240                                 | )      |
| Warranties issued                                             |   | 447                                  |   | 429                                  |   |
| Change related to changes in foreign currency  exchange rates |   | 159                                  |   | (47                                  | )      |
|                                                          |   |                                 |   |                                 |   |
| Ending balance                                                |   | $                                    | 3,394  |                                 | $      | 3,536 |   |

 

**7.  Comprehensive Income:**

 
|                                          |   | **Predecessor**                         |   | **Successor**                        |   | **Predecessor**                      |   | **Successor**                         |   |
|-----------------------------------------------|--------|-----------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|---------------------------------------|--------|
|                                          |   | **Three months  ended  June 28,  2002** |   | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   | **Six months  ended  June 28,  2002** |   | **Five months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   |
|                                          |   |                                    |   |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Net earnings                                  |   | $                                       | 8,560  |                                 | $      | 4,450                                |   | $                                     | 1,129  |   | $ | 10,640 |   | $ | 6,892 |   | $ | 1,129 |   |
| Other comprehensive earnings (loss):          |   |                                    |   |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Foreign currency translation adjustment       |   | 4,930                                   |   | 5,000                                |   | (2,638                               | )      | 4,504                                 |   | 6,922 |   | (2,638 | ) |
| Gain (loss) on derivative instruments, net:   |   |                                    |   |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Net changes in fair value of derivatives      |   | (1,629                                  | )      | (627                                 | )      | (228                                 | )      | (1,353                                | )      | (324 | ) | (228 | ) |
| Net gains reclassified from OCI into earnings |   | 1,431                                   |   | 759                                  |   | 136                                  |   | 1,254                                 |   | 423 |   | 136 |   |
|                                          |   |                                    |   |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Comprehensive income (loss)                   |   | $                                       | 13,292 |                                 | $      | 9,582                                |   | $                                     | (1,601 | ) | $ | 15,045 |   | $ | 13,913 |   | $ | (1,601 | ) |

 

**8.  Income Taxes:**

 

The income tax provision for the one month ended June 27, 2003, fivemonths ended May 23, 2003 and the six months ended June 28, 2002 is computed atthe effective rate expected to be applicable in each respective full year usingthe statutory rates on a country by country basis.

 

11

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**9.  Segment Information:**

 

For detailed information regarding theCompany’s reportable segments, see Note 14 to the Consolidated FinancialStatements of the Company for the year ended December 27, 2002, set forth inthe Company’s Annual Report on Form 10-K.

 

The table below presents information aboutreported segments and a reconciliation of total segment sales to totalconsolidated sales, total segment EBITDA to total consolidated earnings beforeincome taxes and total segment assets to total assets for the periodsindicated.  Expenses and assets that arenot segment specific relate to holding company and business developmentactivities conducted for the overall benefit of the Company and, accordingly,are not attributable to the Company’s segments.

 
|                                          |   | **Predecessor**                         |    | **Successor**                        |   | **Predecessor**                      |   | **Successor**                         |   |
|-----------------------------------------------|--------|-----------------------------------------|---------|--------------------------------------|--------|--------------------------------------|--------|---------------------------------------|--------|
|                                          |   | **Three months  ended  June 28,  2002** |    | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003** |   | **Six months  ended  June 28,  2002** |   | **Five months  ended  May 23,  2002** |   | **One month  ended  June 27,  2003** |   |
|                                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| **Sales**                                     |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| European Roll Coating                         |   | $                                       | 33,533  |                                 | $      | 24,056                               |   | $                                     | 15,660 |   | $ | 65,563 |   | $ | 60,719 |   | $ | 15,660 |   |
| U.S. Fabrication                              |   | 121,578                                 |    | 75,107                               |   | 52,238                               |   | 206,893                               |   | 161,065 |   | 52,238 |   |
| European Fabrication                          |   | 17,280                                  |    | 15,797                               |   | 9,723                                |   | 33,503                                |   | 39,913 |   | 9,723 |   |
| Total segment sales                           |   | 172,391                                 |    | 114,960                              |   | 77,621                               |   | 305,959                               |   | 261,697 |   | 77,621 |   |
|                                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Eliminations                                  |   | (723                                    | )       | (503                                 | )      | (427                                 | )      | (1,331                                | )      | (1,082 | ) | (427 | ) |
| Consolidated net sales                        |   | $                                       | 171,668 |                                 | $      | 114,457                              |   | $                                     | 77,194 |   | $ | 304,628 |   | $ | 260,615 |   | $ | 77,194 |   |
|                                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| **EBITDA**                                    |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| European Roll Coating                         |   | $                                       | 4,480   |                                 | $      | 3,389                                |   | $                                     | 1,487  |   | $ | 8,999 |   | $ | 9,508 |   | $ | 1,487 |   |
| U.S. Fabrication                              |   | 17,012                                  |    | 7,783                                |   | 4,398                                |   | 23,137                                |   | 11,761 |   | 4,398 |   |
| European Fabrication                          |   | 2,107                                   |    | 1,643                                |   | 1,140                                |   | 4,045                                 |   | 4,489 |   | 1,140 |   |
| Total EBITDA for reportable segments          |   | 23,599                                  |    | 12,815                               |   | 7,025                                |   | 36,181                                |   | 25,758 |   | 7,025 |   |
|                                          |   |                                    |    |                                 |   |                                 |   |                                  |   |   |   |   |   |
| Expenses that are not segment specific        |   | (566                                    | )       | 517                                  |   | (1,920                               | )      | (1,077                                | )      | 790 |   | (1,920 | ) |
| Depreciation and amortization                 |   | (3,025                                  | )       | (2,531                               | )      | (1,571                               | )      | (6,449                                | )      | (6,276 | ) | (1,571 | ) |
| Interest expense, net                         |   | (5,872                                  | )       | (3,678                               | )      | (1,843                               | )      | (11,233                               | )      | (9,126 | ) | (1,843 | ) |
| Consolidated net earnings before income taxes |   | $                                       | 14,136  |                                 | $      | 7,123                                |   | $                                     | 1,691  |   | $ | 17,422 |   | $ | 11,146 |   | $ | 1,691 |   |

 
|                                 |   | **Predecessor**         |       | **Successor**      |       |
|--------------------------------------|--------|-------------------------|------------|--------------------|------------|
|                                 |   | **December  27,  2002** |       | **June 27,  2003** |       |
| **Assets**                           |   |                    | ** ** |               | ** ** |
| European Roll Coating                |   | $                       | 111,985    |               | $          | 142,304 |   |
| U.S. Fabrication                     |   | 234,968                 |       | 299,078            |       |
| European Fabrication                 |   | 59,458                  |       | 78,901             |       |
| Assets that are not segment specific |   | 10,029                  |       | 10,331             |       |
| Total assets                         |   | $                       | 416,440    |               | $          | 530,614 |   |

 

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The following table reflects revenues fromexternal customers by groups of similar products for the periods indicated:

 
|                                                |   |                                                                                                                                                          |   | **Predecessor**                           |    | **Successor**                          |   | **Predecessor**                        |   | **Successor**                           |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|----------------------------------------|--------|----------------------------------------|--------|-----------------------------------------|--------|
| **Customers/Markets**                               |   | **Primary Products**                                                                                                                                          |   | **Three months****ended  June 28,  2002** |    | **Two months****ended  May 23,  2003** |   | **One month****ended  June 27,  2003** |   | **Six months****ended  June 28,  2002** |   | **Five months****ended  May 23,  2003** |   | **One month****ended  June 27,  2003** |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Original Equipment Manufacturers (“OEMs”) |   | Painted aluminum sheet and coil; fabricated painted  aluminum, laminated and fiberglass panels; RV doors, windows and roofing; and  composite building panels |   | $                                         | 70,707  |                                   | $      | 47,552                                 |   | $                                       | 29,649 |   | $ | 135,108 |   | $ | 120,289 |   | $ | 29,649 |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Rural Contractors                                   |   | Steel and aluminum roofing and siding                                                                                                                         |   | 33,088                                    |    | 18,892                                 |   | 12,796                                 |   | 56,663                                  |   | 38,980 |   | 12,796 |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Home Centers                                        |   | Raincarrying systems, roofing accessories, windows,  doors and shower enclosures                                                                              |   | 36,456                                    |    | 25,663                                 |   | 18,941                                 |   | 58,131                                  |   | 51,129 |   | 18,941 |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Manufactured Housing                                |   | Steel siding and trim components                                                                                                                              |   | 6,668                                     |    | 3,526                                  |   | 3,076                                  |   | 11,344                                  |   | 8,031 |   | 3,076 |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Distributors                                        |   | Metal coils, raincarrying systems and roofing  accessories                                                                                                    |   | 5,712                                     |    | 5,832                                  |   | 3,747                                  |   | 10,252                                  |   | 12,084 |   | 3,747 |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Industrial and Architectural Contractors            |   | Standing seam panels and siding and roofing  accessories                                                                                                      |   | 4,381                                     |    | 3,886                                  |   | 2,822                                  |   | 8,488                                   |   | 9,183 |   | 2,822 |   |
|                                                |   |                                                                                                                                                          |   |                                      |    |                                   |   |                                   |   |                                    |   |   |   |   |   |
| Home Improvement Contractors                        |   | Vinyl replacement windows; metal coils,  raincarrying systems; metal roofing  and insulated roofing panels; shower, patio and entrance doors; and awnings     |   | 14,656                                    |    | 9,106                                  |   | 6,163                                  |   | 24,642                                  |   | 20,919 |   | 6,163 |   |
|                                                |   |                                                                                                                                                          |   | $                                         | 171,668 |                                   | $      | 114,457                                |   | $                                       | 77,194 |   | $ | 304,628 |   | $ | 260,615 |   | $ | 77,194 |   |

 

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**10. Shareholders’Equity**

 

*Common Stock*

In connection with the 2003 ShareholderTransaction, the Company converted 44,346.8 shares of Class B Common Stock intoClass A Common Stock.  Additionally, theCompany issued 883.75 shares of Class A Common Stock to CVCEP from shares heldin treasury as described in Note 11 and issued 9,569.6 shares of restrictedClass A Common Stock.

 

*Stock Plans*

On June 12, 2003, the Company established an equity compensationprogram, the Euramax International, Inc. 2003 Equity Compensation Plan (“2003Equity Plan”), for the purpose of attracting and retaining valued employees.Under the 2003 Equity Plan, the Company has granted restricted shares of ClassA Common Stock and granted options to purchase shares of Euramax InternationalClass A Common Stock to selected officers and other key employees. The Companyhas reserved 35,719.6 shares of Class A Common Stock for issuance under the2003 Equity Plan.

 

The 2003 Equity Plan is to be administered by a committee designated bythe board of directors. The committee will have full authority to act inselecting the eligible employees to whom awards of options or restricted stockmay be granted. The committee will determine the times at which such awards ofrestricted stock or options may be granted, the terms and conditions of awardsthat may be granted under the 2003 Equity Plan and the terms of agreementswhich will be entered into with employees designated to participate in the 2003Equity Plan. However, in no event may the exercise price of any non-qualifiedoptions granted under the 2003 Equity Plan be less than the fair market valueof the underlying shares on the date of grant.

 

The 2003 Equity Plan permits the committee to grant both incentivestock options and non-qualified stock options, with all 25,750 options grantedin connection with the 2003 Shareholder Transaction being non-qualified stockoptions. The committee may determine the number of options granted to eachparticipant, the exercise price of each option, the duration of options (not toexceed 10 years), vesting provisions and all other terms and conditions of suchoptions in individual option agreements. The non-qualified stock option grantagreements in effect on the date hereof provide that each participant will vestin 20% of the shares subject to the option grant on each anniversary of thedate of grant, until becoming 100% vested after 5 years. Non-qualified stockoption grant agreements under the 2003 Equity Plan provide that upontermination of employment with the Company, the exercise period for vestedoptions will generally be limited, except that vested options will be canceledimmediately upon a termination for cause. The non-qualified stock option grantagreements provide for the cancellation of all unvested options upontermination of employment with the Company. Under the 2003 Equity Plan, if anyoption shares subject to an outstanding option grant are forfeited or if theoption grant otherwise terminates without exercise, any of these forfeited orterminated option grant shares may be reissued at the discretion of thecommittee. In connection with the 2003 Shareholder Transaction the Companyissued 25,750 options to purchase shares of Class A Common Stock with anexercise price of $400 per share.

 

Information with respect to option activity under the 2003 Equity Planis set forth below:

 
|                           |   | **Options  Outstanding** |   | **Weighted  Average  Exercise  Price** |   |
|--------------------------------|--------|--------------------------|--------|----------------------------------------|--------|
|                           |   |                     |   |                                   |   |
| **Balance, December 27, 2002** |   | —                   |   | $                                      | — |   |
| Options granted                |   | 25,750                   |   | 400                                    |   |
| Options exercised              |   | —                   |   | —                                 |   |
| Options forfeited              |   | —                   |   | —                                 |   |
| Options expired                |   | —                   |   | —                                 |   |
| **Balance, June 27, 2003**     |   | 25,750                   |   | $                                      | 400    |   |

 

The 2003 Equity Plan also permits the Company to grant participantsrestricted shares of Class A Common Stock. The committee will determine thenumber of shares of restricted stock granted to each participant, the periodthe restricted stock is unvested and subject to forfeiture and all other termsand conditions applicable to such restricted stock in individual restrictedstock agreements. The restricted stock agreements in effect on the date hereofprovide that the participant will vest in 100% of the restricted shares fiveyears from the date of grant. If an employee voluntarily terminates his or heremployment, the employee will forfeit any unvested shares of restricted stock.If employment is terminated for any reason other than voluntary termination,all unvested shares of the restricted stock shall be accelerated as of the dateof non-voluntary termination. All shares of restricted stock granted, and all

 

14

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shares acquired upon exercise of options granted, under the 2003 EquityPlan will be subject to the stockholders agreement described in Note 11:Related Party Transactions—Stockholders Agreement. In connection with the 2003Shareholder Transaction, the Company granted 9,569.6 shares of restricted ClassA Common Stock with a fair value of $400 per share.

 

The 2003 Equity Plan provides that upon a change in control of theCompany, all restricted stock awards shall become fully vested, and each unexercisedand outstanding option shall become immediately and fully vested andexercisable. All restricted stock awards shall also become fully vested in theevent of an initial public offering of the Company’s common stock. Each optionthat is exercisable immediately prior to the change in control may be canceledin exchange for a payment in cash of an amount equal to the excess of the fairmarket value of the common stock underlying the option as of the date of thechange in control over the exercise price. The committee may also decide thatsuch options be terminated immediately prior to the change in control, providedthat the participant fails to exercise the option within a specified period (ofat least seven days) following receipt of written notice of the change incontrol and of the Company’s intention to terminate the option prior to suchchange in control. Alternatively, the committee may determine that in the eventof a change in control, such options shall be assumed by the successorcorporation, and shall be substituted with options involving the common stockof the successor corporation with equivalent value and with the terms andconditions of the substituted options being no less favorable that the optionsgranted by the Company.

 

**11.  Related Party Transactions:**

 

*2003 ShareholderTransaction (see Note 2)*

In connection with the 2003 Shareholder Transaction, the Company sold883.75 shares of its common stock directly to CVCEP for $353,500. The Companyalso agreed to pay the out-of-pocket fees and expenses of CVCEP and CVC Europe,which in the aggregate were approximately $3.4 million, and gave certaincustomary indemnities in favor of CVCEP under the stock purchase agreement.CVCEP is an affiliate of CVC, which owned approximately 34.5% of the Company’scommon stock at the time of the 2003 Shareholder Transaction. CVC hadsubsequently transferred its shares to Court Square Capital Limited (“CourtSquare”), which, like CVC, is an indirect wholly-owned subsidiary of CitigroupInc.

 

*StockholdersAgreement*

In connection with the 2003 Shareholder Transaction, the Companyentered into a stockholders agreement with CVCEP and certain of its affiliates,Court Square, and certain other stockholders consisting of members of theCompany’s management and members of CVCEP’s management (“MinorityStockholders”). The stockholders agreement provides that the Company’s ChiefExecutive Officer will be a member of the Company’s board of directors.

 

15

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CVCEP will initially be entitled to designate three additional membersof the Company’s board of directors and Court Square will initially be entitledto designate two additional members of the Company’s board of directors (thesedesignation rights to be adjusted from time to time to reflect certain changesin the common stock ownership of CVCEP and Court Square).

 

Under the stockholders agreement, certain corporate actions require thewritten consent of stockholders holding at least 70% of the Company’soutstanding stock held by all stockholders party to the stockholders agreement.Initially, this will require the written consent of both CVCEP and CourtSquare. These corporate actions include changes to or issuances of theCompany’s equity securities, amendments of organizational documents, payment ofdividends, or certain merger or recapitalization transactions. In addition,each action of the board of directors will require the approval of at least onedirector designated by each of CVCEP and Court Square.

 

The stockholders agreement generally restricts the transfer of sharesof the Company’s common stock. Exceptions to this restriction include transfersto affiliates, transfers to the Company, transfers for estate planning purposesand transfers to family members. In each case, so long as any transferee agreesto be bound by the terms of the stockholders agreement. After an initial publicoffering, additional exceptions to the transfer restrictions will include salespursuant to certain registration rights of the stockholders.

 

*Registration RightsAgreement*

In connection with their entry into the stockholders agreement, CVCEP,Court Square and the Minority Stockholders have entered into an amended andrestated registration rights agreement with the Company. Pursuant to this registrationrights agreement, upon the written request of CVCEP or Court Square, theCompany has agreed (subject to customary exceptions), on up to three occasionsfor CVCEP and up to two occasions for Court Square, to prepare and file aregistration statement with the SEC concerning the distribution of all or partof the shares held by CVCEP or Court Square, as the case may be, and use itsbest efforts to cause the registration statement to become effective. If theCompany is eligible to use a “short form” registration statement on Form S-2,Form S-3 or any similar form, CVCEP and Court Square may each make unlimitedrequests for registration for their shares of the Company’s common stock. If atany time the Company files a registration statement for its common stock (otherthan pursuant to a demand registration by CVCEP or Court Square, a registrationstatement on Form S-8, Form S-4 or any similar form, or in connection withcertain other registrations), it will use its best efforts to allow otherparties to the registration rights agreement to have their shares of theCompany’s common stock (or a portion

 

16

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of their shares under specified circumstances) included in the offeringif the registration form proposed to be used may be used to register theshares. Registration expenses of the selling stockholders (other thanunderwriting fees, brokerage fees and transfer taxes applicable to the sharessold by such stockholders or the fees and expenses of any accountants or otherrepresentatives retained by a selling stockholder) will be paid by the Company.The Company has agreed to indemnify the stockholders against certain customaryliabilities in connection with any registration.

 

*Advisory Agreement*

In connection with the 2003 Shareholder Transaction, the Companyentered into an advisory agreement with CVC Management LLC (“CVC Management”),pursuant to which CVC Management may provide financial, advisory and consultingservices to the Company. In exchange for these services, CVC Management will beentitled to an annual advisory fee. CVC Management’s annual advisory fee willbe the greater of $0.6 million per year or 1% of the Company’s consolidatedEBITDA (as defined in the advisory agreement), plus out-of-pocket expenses.Annual advisory fees in excess of $1.0 million are subject to the consent ofthe Company’s lenders under the credit facility. Pursuant to the advisoryagreement, the Company paid CVC Management a $1.0 million transaction fee inconnection with services provided in connection with the 2003 ShareholderTransaction. The Company has also agreed to pay CVC Management a transactionfee in connection with the consummation of each acquisition, divestiture orfinancing, including any refinancing, by the Company or any of itssubsidiaries, in an amount equal to 1% of the value of the transaction, plusreasonable out-of-pocket expenses. This advisory agreement has an initial termof ten years following the close of the 2003 Shareholder Transaction, subjectto automatic one year extensions thereafter unless terminated by either partyupon written notice 90 days prior to the expiration of the initial term or anyextension thereof. The advisory agreement automatically terminates on a changeof control or an initial public offering of the Company’s common stock. Thereare no minimum levels of service required to be provided pursuant to theadvisory agreement. The advisory agreement includes customary indemnificationprovisions in favor of CVC Management.

 

**12.  Subsequent Event:**

 

On July 10, 2003, the Company commenced an offer to purchase andsolicitation of consents for the outstanding $135.0 million 11.25% seniorsubordinated notes due 2006 (“the Notes”) subject to the receipt of a consentfrom the holders of a majority of the principal amount thereof. On August 6,2003, the Company issued $200.0 million 8.5% senior subordinated notes due 2011(“the New Notes”). Pursuant to the Advisory Agreement discussed in Note 11, CVCManagement will be paid a $2.0 million transaction fee in connection with theissuance of the New Notes. The Company estimates its proceeds from the issuanceof the New Notes, net of debt issuance cost, will be $191.5 million. EuramaxInternational, Inc. and Euramax International Holdings, B.V, a newly formedNetherlands holding company, are each co-obligors on the New Notes. Each ofEuramax International, Inc's U.S. subsidiaries are guarantors of the New Notes.On August 8, 2003, the Company used the proceeds of the New Notes to purchaseapproximately $112.9 million of the Notes that had been validly tendered, forapproximately $120.4 million, including interest. Following the purchase of theNotes accepted in the tender offer, approximately $22.1 million in aggregateprincipal amount of the Notes remained outstanding.  The Company currently intends to call any Notes that remainoutstanding effective on October 1, 2003, at which time the redemption pricewill be 101.875% of principal amount plus accrued interest.

 

17

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**13.  Supplemental Condensed Combined FinancialStatements:**

 

On September 25, 1996, the Notes were issued by EuramaxInternational Limited, Euramax European Holdings Limited and Euramax EuropeanHoldings B.V. as co-obligors (the “Co-Obligors”). Euramax International, Inc.has provided a full and unconditional guarantee of the Notes (“ParentGuarantor”). In addition, Amerimax Holdings, Inc., Amerimax FabricatedProducts, Inc., Euramax International Holdings Limited and Euramax ContinentalLimited, holding company subsidiaries of the Company, have provided full andunconditional guarantees of the Notes (collectively, the “GuarantorSubsidiaries”). The following supplemental condensed combining financialstatements as of June 27, 2003 and December 27, 2002, and for the two monthsand five months ended May 22, 2003, one month ended June 27, 2003 and threemonths and six months ended June 28, 2002, reflect the financial position,results of operations, and cash flows of each of the Parent Guarantor, theCo-Obligors, and such combined information of the Guarantor Subsidiaries andthe non-guarantor subsidiaries, principally the operating subsidiaries,(collectively, the “Non-Guarantor Subsidiaries”). The Co-Obligors andGuarantors are wholly owned subsidiaries of Euramax and are each jointly,severally, fully, and unconditionally liable under the Notes. Separate completefinancial statements of each Co-Obligor and Guarantor are not presented becausemanagement has determined that they are not material to investors.

 

18

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|                                    |   | **Predecessor three months ended June 28, 2002**       |   |
|-----------------------------------------|--------|--------------------------------------------------------|--------|
|                                    |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-  Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                               |   | $                                                      | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 171,668 |   | $ | — |   | $ | 171,668 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                      |   | —                                                 |   | — |   | — |   | — |   | — |   | 132,859 |   | — |   | 132,859 |   |
| Selling and general                     |   | 401                                                    |   | 51 |   | — |   | — |   | 595 |   | 15,353 |   | — |   | 16,400 |   |
| Depreciation and amortization           |   | —                                                 |   | — |   | — |   | — |   | 10 |   | 3,015 |   | — |   | 3,025 |   |
| (Loss) earnings from operations         |   | (401                                                   | )      | (51 | ) | — |   | — |   | (605 | ) | 20,441 |   | — |   | 19,384 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries      |   | 9,914                                                  |   | 2,821 |   | (1,353 | ) | 2,662 |   | 12,021 |   | — |   | (26,065 | ) | — |   |
| Interest expense, net                   |   | (1,047                                                 | )      | (2,070 | )  | (933 | ) | (22 | ) | (1,106 | ) | (694 | ) | — |   | (5,872 | ) |
| Internal interest expense (income), net |   | (608                                                   | )      | 2,070 |   | 719 |   | (29 | ) | (1,432 | ) | (720 | ) | — |   | — |   |
| Other income (expense), net             |   | —                                                 |   | — |   | 2,056 |   | 179 |   | — |   | (1,611 | ) | — |   | 624 |   |
| Earnings before income taxes            |   | 7,858                                                  |   | 2,770 |   | 489 |   | 2,790 |   | 8,878 |   | 17,416 |   | (26,065 | ) | 14,136 |   |
| (Benefit) provision for income taxes    |   | (702                                                   | )      | (16 | ) | 553 |   | 51 |   | (1,036 | ) | 6,726 |   | — |   | 5,576 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                     |   | $                                                      | 8,560  |   | $ | 2,786 |   | $ | (64 | ) | $ | 2,739 |   | $ | 9,914 |   | $ | 10,690 |   | $ | (26,065 | ) | $ | 8,560 |   |

 

19

----

 
|                                    |   | **Predecessor two months ended May 23, 2003**          |   |
|-----------------------------------------|--------|--------------------------------------------------------|--------|
|                                    |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-  Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                               |   | $                                                      | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 114,457 |   | $ | — |   | $ | 114,457 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                      |   | —                                                 |   | — |   | — |   | — |   | — |   | 90,854 |   | — |   | 90,854 |   |
| Selling and general                     |   | 156                                                    |   | 42 |   | — |   | — |   | (506 | ) | 10,871 |   | — |   | 10,563 |   |
| Depreciation and amortization           |   | —                                                 |   | — |   | — |   | — |   | 15 |   | 2,516 |   | — |   | 2,531 |   |
| (Loss) earnings from operations         |   | (156                                                   | )      | (42 | ) | — |   | — |   | 491 |   | 10,216 |   | — |   | 10,509 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries      |   | 5,364                                                  |   | 1,989 |   | (390 | ) | 1,639 |   | 5,931 |   | — |   | (14,533 | ) | — |   |
| Interest expense, net                   |   | (698                                                   | )      | (1,380 | ) | (665 | ) | (18 | ) | (581 | ) | (336 | ) | — |   | (3,678 | ) |
| Internal interest expense (income), net |   | (643                                                   | )      | 1,380 |   | 482 |   | (18 | ) | (720 | ) | (481 | ) | — |   | — |   |
| Other income (expense), net             |   | —                                                 |   | — |   | 1,071 |   | 145 |   | — |   | (924 | ) | — |   | 292 |   |
| Earnings before income taxes            |   | 3,867                                                  |   | 1,947 |   | 498 |   | 1,748 |   | 5,121 |   | 8,475 |   | (14,533 | ) | 7,123 |   |
| (Benefit) provision for income taxes    |   | (583                                                   | )      | (12 | ) | 269 |   | 38 |   | (242 | ) | 3,203 |   | — |   | 2,673 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings                            |   | $                                                      | 4,450  |   | $ | 1,959 |   | $ | 229 |   | $ | 1,710 |   | $ | 5,363 |   | $ | 5,272 |   | $ | (14,533 | ) | $ | 4,450 |   |

 

20

----

 
|                                    |   | **Successor one month ended June 27, 2003**            |   |
|-----------------------------------------|--------|--------------------------------------------------------|--------|
|                                    |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-  Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                               |   | $                                                      | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 77,194 |   | $ | — |   | $ | 77,194 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                      |   | —                                                 |   | — |   | — |   | — |   | — |   | 63,904 |   | — |   | 63,904 |   |
| Selling and general                     |   | 463                                                    |   | 121 |   | — |   | — |   | 1,276 |   | 6,299 |   | — |   | 8,159 |   |
| Depreciation and amortization           |   | —                                                 |   | — |   | — |   | — |   | 7 |   | 1,564 |   | — |   | 1,571 |   |
| (Loss) earnings from operations         |   | (463                                                   | )      | (121 | ) | — |   | — |   | (1,283 | ) | 5,427 |   | — |   | 3,560 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries      |   | 2,190                                                  |   | 763 |   | (194 | ) | 809 |   | 2,941 |   | — |   | (6,509 | ) | — |   |
| Interest expense, net                   |   | (349                                                   | )      | (677 | ) | (337 | ) | (5 | ) | (256 | ) | (219 | ) | — |   | (1,843 | ) |
| Internal interest expense (income), net |   | (463                                                   | )      | 677 |   | 313 |   | (11 | ) | (203 | ) | (313 | ) | — |   | — |   |
| Other income (expense), net             |   | —                                                 |   | — |   | 196 |   | (58 | ) | — |   | (164 | ) | — |   | (26 | ) |
| Earnings (loss) before income taxes     |   | 915                                                    |   | 642 |   | (22 | ) | 735 |   | 1,199 |   | 4,731 |   | (6,509 | ) | 1,691 |   |
| (Benefit) provision for income taxes    |   | (214                                                   | )      | (36 | ) | 48 |   | (25 | ) | (991 | ) | 1,780 |   | — |   | 562 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                     |   | $                                                      | 1,129  |   | $ | 678 |   | $ | (70 | ) | $ | 760 |   | $ | 2,190 |   | $ | 2,951 |   | $ | (6,509 | ) | $ | 1,129 |   |

 

21

----

 
|                                    |   | **Predecessor six months ended June 28, 2002**         |   |
|-----------------------------------------|--------|--------------------------------------------------------|--------|
|                                    |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-  Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                               |   | $                                                      | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 304,628 |   | $ | — |   | $ | 304,628 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                      |   | —                                                 |   | — |   | — |   | — |   | — |   | 239,117 |   | — |   | 239,117 |   |
| Selling and general                     |   | 678                                                    |   | 109 |   | — |   | — |   | 552 |   | 29,610 |   | — |   | 30,949 |   |
| Depreciation and amortization           |   | —                                                 |   | — |   | — |   | — |   | 19 |   | 6,430 |   | — |   | 6,449 |   |
| (Loss) earnings from operations         |   | (678                                                   | )      | (109 | ) | — |   | — |   | (571 | ) | 29,471 |   | — |   | 28,113 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries      |   | 13,035                                                 |   | 5,081 |   | (524 | ) | 4,521 |   | 16,844 |   | — |   | (38,957 | ) | — |   |
| Interest expense, net                   |   | (2,131                                                 | )      | (4,139 | ) | (1,744 | ) | (43 | ) | (1,984 | ) | (1,192 | ) | — |   | (11,233 | ) |
| Internal interest expense (income), net |   | (954                                                   | )      | 4,139 |   | 1,421 |   | (59 | ) | (3,127 | ) | (1,420 | ) | — |   | — |   |
| Other income (expense), net             |   | —                                                 |   | — |   | 1,576 |   | 160 |   | — |   | (1,194 | ) | — |   | 542 |   |
| Earnings before income taxes            |   | 9,272                                                  |   | 4,972 |   | 729 |   | 4,579 |   | 11,162 |   | 25,665 |   | (38,957 | ) | 17,422 |   |
| (Benefit) provision for income taxes    |   | (1,368                                                 | )      | (33 | ) | 376 |   | 33 |   | (1,873 | ) | 9,647 |   | — |   | 6,782 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings                            |   | $                                                      | 10,640 |   | $ | 5,005 |   | $ | 353 |   | $ | 4,546 |   | $ | 13,035 |   | $ | 16,018 |   | $ | (38,957 | ) | $ | 10,640 |   |

 

22

----

 
|                                    |   | **Predecessor five months ended May 23, 2003**         |   |
|-----------------------------------------|--------|--------------------------------------------------------|--------|
|                                    |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-  Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                               |   | $                                                      | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 260,615 |   | $ | — |   | $ | 260,615 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                      |   | —                                                 |   | — |   | — |   | — |   | — |   | 208,420 |   | — |   | 208,420 |   |
| Selling and general                     |   | 393                                                    |   | 105 |   | — |   | — |   | (988 | ) | 26,643 |   | — |   | 26,153 |   |
| Depreciation and amortization           |   | —                                                 |   | — |   | — |   | — |   | 36 |   | 6,240 |   | — |   | 6,276 |   |
| (Loss) earnings from operations         |   | (393                                                   | )      | (105 | ) | — |   | — |   | 952 |   | 19,312 |   | — |   | 19,766 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries      |   | 8,980                                                  |   | 5,810 |   | 925 |   | 4,560 |   | 10,980 |   | — |   | (31,255 | ) | — |   |
| Interest expense, net                   |   | (1,745                                                 | )      | (3,449 | ) | (1,622 | ) | (44 | ) | (1,366 | ) | (900 | ) | — |   | (9,126 | ) |
| Internal interest expense (income), net |   | (1,120                                                 | )      | 3,449 |   | 1,271 |   | (47 | ) | (2,282 | ) | (1,271 | ) | — |   | — |   |
| Other income (expense), net             |   | —                                                 |   | — |   | 529 |   | 192 |   | — |   | (215 | ) | — |   | 506 |   |
| Earnings before income taxes            |   | 5,722                                                  |   | 5,705 |   | 1,103 |   | 4,661 |   | 8,284 |   | 16,926 |   | (31,255 | ) | 11,146 |   |
| (Benefit) provision for income taxes    |   | (1,170                                                 | )      | (31 | ) | 56 |   | 35 |   | (696 | ) | 6,060 |   | — |   | 4,254 |   |
|                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings                            |   | $                                                      | 6,892  |   | $ | 5,736 |   | $ | 1,047 |   | $ | 4,626 |   | $ | 8,980 |   | $ | 10,866 |   | $ | (31,255 | ) | $ | 6,892 |   |

 

23

----

 
|                                           |   | **Predecessor as of December 27, 2002**                |       |
|------------------------------------------------|--------|--------------------------------------------------------|------------|
|                                           |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |       | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
| **ASSETS**                                     |   |                                                   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Current assets:                                |   |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and equivalents                           |   | $                                                      | —     |   | $ | — |   | $ | 1 |   | $ | 1 |   | $ | 181 |   | $ | 11,463 |   | $ | — |   | $ | 11,646 |   |
| Accounts receivable, net                       |   | —                                                 |       | 14 |   | — |   | — |   | 121 |   | 88,373 |   | — |   | 88,508 |   |
| Inventories                                    |   | —                                                 |       | — |   | — |   | — |   | — |   | 78,480 |   | — |   | 78,480 |   |
| Other current assets                           |   | 508                                                    |       | — |   | — |   | — |   | 308 |   | 4,265 |   | — |   | 5,081 |   |
| Total current assets                           |   | 508                                                    |       | 14 |   | 1 |   | 1 |   | 610 |   | 182,581 |   | — |   | 183,715 |   |
| Property, plant and equipment, net             |   | —                                                 |       | — |   | — |   | — |   | 179 |   | 111,858 |   | — |   | 112,037 |   |
| Amounts due from affiliates                    |   | 102,124                                                |       | 77,552 |   | 55,022 |   | — |   | 150,838 |   | 70,425 |   | (455,961 | ) | — |   |
| Goodwill, net                                  |   | —                                                 |       | — |   | — |   | — |   | 7,799 |   | 103,000 |   | — |   | 110,799 |   |
| Investment in consolidated subsidiaries        |   | 153,844                                                |       | 34,800 |   | (20,675 | ) | 41,906 |   | 213,277 |   | — |   | (423,152 | ) | — |   |
| Deferred income taxes                          |   | —                                                 |       | — |   | 1,040 |   | — |   | 60 |   | 3,875 |   | — |   | 4,975 |   |
| Other assets                                   |   | —                                                 |       | 1,260 |   | 350 |   | 379 |   | 1,357 |   | 1,568 |   | — |   | 4,914 |   |
|                                           |   | $                                                      | 256,476    |   | $ | 113,626 |   | $ | 35,738 |   | $ | 42,286 |   | $ | 374,120 |   | $ | 473,307 |   | $ | (879,113 | ) | $ | 416,440 |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**  |   |                                                   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Current liabilities:                           |   |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash overdrafts                                |   | $                                                      | —     |   | $ | — |   | $ | — |   | $ | — |   | $ | (181 | ) | $ | 2,061 |   | $ | — |   | $ | 1,880 |   |
| Accounts payable                               |   | —                                                 |       | — |   | — |   | — |   | 159 |   | 56,945 |   | — |   | 57,104 |   |
| Accrued expenses and other current liabilities |   | (1,222                                                 | )          | 250 |   | (158 | ) | (7,230 | ) | (4,623 | ) | 47,234 |   | — |   | 34,251 |   |
| Total current liabilities                      |   | (1,222                                                 | )          | 250 |   | (158 | ) | (7,230 | ) | (4,645 | ) | 106,240 |   | — |   | 93,235 |   |
| Long-term debt, less current maturities        |   | 37,216                                                 |       | 70,605 |   | 27,179 |   | — |   | 31,700 |   | 30,272 |   | — |   | 196,972 |   |
| Amounts due to affiliates                      |   | 133,239                                                |       | 14,826 |   | 22,117 |   | 3,548 |   | 189,197 |   | 93,034 |   | (455,961 | ) | — |   |
| Deferred income taxes                          |   | 614                                                    |       | — |   | — |   | — |   | 798 |   | 18,009 |   | — |   | 19,421 |   |
| Other liabilities                              |   | —                                                 |       | — |   | — |   | — |   | 3,229 |   | 17,364 |   | — |   | 20,593 |   |
| Total liabilities                              |   | 169,847                                                |       | 85,681 |   | 49,138 |   | (3,682 | ) | 220,279 |   | 264,919 |   | (455,961 | ) | 330,221 |   |
| Shareholders’equity:                      |   |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock                                   |   | 500                                                    |       | 2 |   | 78 |   | 23 |   | 35,001 |   | 6,835 |   | (41,939 | ) | 500 |   |
| Additional paid-in capital                     |   | 65,218                                                 |       | 20,726 |   | 6,922 |   | 9,077 |   | 78,485 |   | 369,643 |   | (496,851 | ) | 53,220 |   |
| Treasury stock                                 |   | (2,056                                                 | )          | — |   | — |   | — |   | — |   | — |   | — |   | (2,056 | ) |
| Retained earnings (deficit)                    |   | 27,652                                                 |       | 15,384 |   | (12,501 | ) | 36,367 |   | 45,225 |   | (149,823 | ) | 82,135 |   | 44,439 |   |
| Dividends declared                             |   | —                                                 |       | — |   | — |   | — |   | — |   | (10,415 | ) | 10,415 |   | — |   |
| Accumulated other comprehensive loss           |   | (4,685                                                 | )          | (8,167 | ) | (7,899 | ) | 501 |   | (4,870 | ) | (7,852 | ) | 23,088 |   | (9,884 | ) |
| Total shareholders’ equity                |   | 86,629                                                 |       | 27,945 |   | (13,400 | ) | 45,968 |   | 153,841 |   | 208,388 |   | (423,152 | ) | 86,219 |   |
|                                           |   | $                                                      | 256,476    |   | $ | 113,626 |   | $ | 35,738 |   | $ | 42,286 |   | $ | 374,120 |   | $ | 473,307 |   | $ | (879,113 | ) | $ | 416,440 |   |

 

24

----

 
|                                           |   | **Successor as of June 27, 2003**                      |       |
|------------------------------------------------|--------|--------------------------------------------------------|------------|
|                                           |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |       | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
| **ASSETS**                                     |   |                                                   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Current assets:                                |   |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and equivalents                           |   | $                                                      | —     |   | $ | — |   | $ | 1 |   | $ | 1 |   | $ | 273 |   | $ | 10,643 |   | $ | — |   | $ | 10,918 |   |
| Accounts receivable, net                       |   | —                                                 |       | 41 |   | — |   | — |   | (1 | ) | 120,285 |   | — |   | 120,325 |   |
| Inventories                                    |   | —                                                 |       | — |   | — |   | — |   | — |   | 90,374 |   | — |   | 90,374 |   |
| Other current assets                           |   | 1,191                                                  |       | — |   | — |   | — |   | 1,225 |   | 6,022 |   | — |   | 8,438 |   |
| Total current assets                           |   | 1,191                                                  |       | 41 |   | 1 |   | 1 |   | 1,497 |   | 227,324 |   | — |   | 230,055 |   |
| Property, plant and equipment, net             |   | —                                                 |       | — |   | — |   | — |   | 205 |   | 129,377 |   | — |   | 129,582 |   |
| Amounts due from affiliates                    |   | 108,691                                                |       | 79,726 |   | 58,781 |   | — |   | 160,985 |   | 67,776 |   | (475,959 | ) | — |   |
| Goodwill, net                                  |   | —                                                 |       | — |   | — |   | — |   | 7,799 |   | 152,607 |   | — |   | 160,406 |   |
| Investment in consolidated subsidiaries        |   | 221,295                                                |       | 68,268 |   | (14,560 | ) | 67,841 |   | 283,255 |   | — |   | (626,099 | ) | — |   |
| Deferred income taxes                          |   | —                                                 |       | — |   | 1,069 |   | — |   | 60 |   | 3,702 |   | — |   | 4,831 |   |
| Other assets                                   |   | —                                                 |       | 489 |   | 141 |   | 162 |   | 1,151 |   | 3,797 |   | — |   | 5,740 |   |
|                                           |   | $                                                      | 331,177    |   | $ | 148,524 |   | $ | 45,432 |   | $ | 68,004 |   | $ | 454,952 |   | $ | 584,583 |   | $ | (1,102,058 | ) | $ | 530,614 |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**  |   |                                                   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Current liabilities:                           |   |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash overdrafts                                |   | $                                                      | —     |   | $ | — |   | $ | — |   | $ | — |   | $ | (891 | ) | $ | 2,378 |   | $ | — |   | $ | 1,487 |   |
| Accounts payable                               |   | —                                                 |       | — |   | — |   | — |   | 319 |   | 73,792 |   | — |   | 74,111 |   |
| Accrued expenses and other current liabilities |   | 1,281                                                  |       | 186 |   | (55 | ) | (7,907 | ) | (1,697 | ) | 55,231 |   | — |   | 47,039 |   |
| Total current liabilities                      |   | 1,281                                                  |       | 186 |   | (55 | ) | (7,907 | ) | (2,269 | ) | 131,401 |   | — |   | 122,637 |   |
| Long-term debt, less current maturities        |   | 37,778                                                 |       | 71,672 |   | 27,589 |   | — |   | 47,000 |   | 23,981 |   | — |   | 208,020 |   |
| Amounts due to affiliates                      |   | 142,692                                                |       | 15,412 |   | 24,717 |   | 3,603 |   | 184,621 |   | 104,914 |   | (475,959 | ) | — |   |
| Deferred income taxes                          |   | 712                                                    |       | — |   | — |   | — |   | 976 |   | 21,872 |   | — |   | 23,560 |   |
| Other liabilities                              |   | —                                                 |       | — |   | 4 |   | — |   | 3,329 |   | 24,398 |   | — |   | 27,731 |   |
| Total liabilities                              |   | 182,463                                                |       | 87,270 |   | 52,255 |   | (4,304 | ) | 233,657 |   | 306,566 |   | (475,959 | ) | 381,948 |   |
| Shareholders’equity:                      |   |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock                                   |   | 500                                                    |       | 2 |   | 78 |   | 23 |   | 35,001 |   | 6,835 |   | (41,939 | ) | 500 |   |
| Additional paid-in capital                     |   | 155,866                                                |       | 57,470 |   | (5,815 | ) | 67,083 |   | 177,181 |   | 265,207 |   | (561,497 | ) | 155,495 |   |
| Treasury stock                                 |   | (1,964                                                 | )          | — |   | — |   | — |   | — |   | — |   | — |   | (1,964 | ) |
| Restricted stock                               |   | (3,764                                                 | )          | — |   | — |   | — |   | — |   | — |   | — |   | (3,764 | ) |
| Retained earnings (deficit)                    |   | 1,129                                                  |       | 678 |   | (70 | ) | 760 |   | 2,190 |   | 2,951 |   | (6,509 | ) | 1,129 |   |
| Accumulated other comprehensive loss           |   | (3,053                                                 | )          | 3,104 |   | (1,016 | ) | 4,442 |   | 6,923 |   | 3,024 |   | (16,154 | ) | (2,730 | ) |
| Total shareholders’ equity                |   | 148,714                                                |       | 61,254 |   | (6,823 | ) | 72,308 |   | 221,295 |   | 278,017 |   | (626,099 | ) | 148,666 |   |
|                                           |   | $                                                      | 331,177    |   | $ | 148,524 |   | $ | 45,432 |   | $ | 68,004 |   | $ | 454,952 |   | $ | 584,583 |   | $ | (1,102,058 | ) | $ | 530,614 |   |

 

25

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|                                                      |   | **Predecessor six months ended June 28, 2002**         |   |
|-----------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                      |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in) provided by operating activities       |   | $                                                      | (3,641 | ) | $ | 15 |   | $ | (221 | ) | $ | (61 | ) | $ | 27,595 |   | $ | 8,289 |   | $ | (31,427 | ) | $ | 549 |   |
|                                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sales of assets                             |   | —                                                 |   | — |   | — |   | — |   | — |   | 24 |   | — |   | 24 |   |
| Capital expenditures                                      |   | —                                                 |   | — |   | — |   | — |   | (96 | ) | (2,470 | ) | — |   | (2,566 | ) |
| Net cash used in investing activities                     |   | —                                                 |   | — |   | — |   | — |   | (96 | ) | (2,446 | ) | — |   | (2,542 | ) |
|                                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                     |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net borrowings (repayments) on revolving credit  facility |   | —                                                 |   | — |   | — |   | — |   | 41,500 |   | (1,496 | ) | — |   | 40,004 |   |
| Repayment of long-term debt                               |   | —                                                 |   | — |   | — |   | — |   | (33,910 | ) | (5,041 | ) | — |   | (38,951 | ) |
| Dividends paid                                            |   | —                                                 |   | — |   | — |   | — |   | — |   | (31,427 | ) | 31,427 |   | — |   |
| Change in cash overdrafts                                 |   | —                                                 |   | — |   | — |   | — |   | (1,169 | ) | 2,398 |   | — |   | 1,229 |   |
| Proceeds from settlement of currency swap                 |   | —                                                 |   | — |   | — |   | — |   | — |   | 2,790 |   | — |   | 2,790 |   |
| Deferred financing fees                                   |   | —                                                 |   | — |   | — |   | — |   | (909 | ) | (586 | ) | — |   | (1,495 | ) |
| Due to/from affiliates                                    |   | 3,641                                                  |   | (15 | ) | 117 |   | (164 | ) | (33,168 | ) | 29,589 |   | — |   | — |   |
| Net cash provided by/(used in) financing activities       |   | 3,641                                                  |   | (15 | ) | 117 |   | (164 | ) | (27,656 | ) | (3,773 | ) | 31,427 |   | 3,577 |   |
|                                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash                   |   | —                                                 |   | — |   | 104 |   | 160 |   | 159 |   | 1,458 |   | — |   | 1,881 |   |
|                                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (decrease) increase in cash and equivalents           |   | —                                                 |   | — |   | — |   | (65 | ) | 2 |   | 3,528 |   | — |   | 3,465 |   |
| Cash and equivalents at beginning of period               |   | —                                                 |   | — |   | — |   | 94 |   | 11 |   | 5,792 |   | — |   | 5,897 |   |
| Cash and equivalents at end of period                     |   | $                                                      | — |   | $ | — |   | $ | — |   | $ | 29 |   | $ | 13 |   | $ | 9,320 |   | $ | — |   | $ | 9,362 |   |

 

26

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|                                                |   | **Predecessor five months ended May 23, 2003**         |   |
|-----------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in)/provided by operating activities |   | $                                                      | (3,596 | ) | $ | (703 | ) | $ | (629 | ) | $ | (49 | ) | $ | 1,783 |   | $ | (8,851 | ) | $ | — |   | $ | (12,045 | ) |
|                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:               |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sales of assets                       |   | —                                                 |   | — |   | — |   | — |   | — |   | 35 |   | — |   | 35 |   |
| Capital expenditures                                |   | —                                                 |   | — |   | — |   | — |   | (47 | ) | (4,897 | ) | — |   | (4,944 | ) |
| Net cash used in investing activities               |   | —                                                 |   | — |   | — |   | — |   | (47 | ) | (4,862 | ) | — |   | (4,909 | ) |
|                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:               |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net borrowings on revolving credit facility         |   | —                                                 |   | — |   | — |   | — |   | 16,800 |   | 1,464 |   | — |   | 18,264 |   |
| Change in cash overdrafts                           |   | —                                                 |   | — |   | — |   | — |   | (215 | ) | 2,818 |   | — |   | 2,603 |   |
| Purchase of treasury stock                          |   | (2,556                                                 | )      | — |   | — |   | — |   | — |   | — |   | — |   | (2,556 | ) |
| Deferred financing fees                             |   | —                                                 |   | — |   | — |   | — |   | (71 | ) | (45 | ) | — |   | (116 | ) |
| Due to/from affiliates                              |   | 6,152                                                  |   | 703 |   | 649 |   | (140 | ) | (18,190 | ) | 10,826 |   | — |   | — |   |
| Net cash provided by/(used in) financing activities |   | 3,596                                                  |   | 703 |   | 649 |   | (140 | ) | (1,676 | ) | 15,063 |   | — |   | 18,195 |   |
|                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash             |   | —                                                 |   | — |   | (20 | ) | 189 |   | — |   | 609 |   | — |   | 778 |   |
|                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase in cash and equivalents                |   | —                                                 |   | — |   | — |   | — |   | 60 |   | 1,959 |   | — |   | 2,019 |   |
| Cash and equivalents at beginning of period         |   | —                                                 |   | — |   | 1 |   | 1 |   | 181 |   | 11,463 |   | — |   | 11,646 |   |
| Cash and equivalents at end of period               |   | $                                                      | — |   | $ | — |   | $ | 1 |   | $ | 1 |   | $ | 241 |   | $ | 13,422 |   | $ | — |   | $ | 13,665 |   |

 

27

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|                                                   |   | **Successor one month ended June 27, 2003**            |   |
|--------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                   |   | **Euramax  International,  Inc.  (Parent  Guarantor)** |   | **Euramax  International  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  Limited  (Co-Obligor)** |   | **Euramax  European  Holdings  B.V.  (Co-Obligor)** |   | **Guarantor  Subsidiaries** |   | **Non-Guarantor  Subsidiaries** |   | **Eliminations** |   | **Consolidated  Totals** |   |
|                                                   |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in)/provided by operating activities    |   | $                                                      | (920   | ) | $ | 609 |   | $ | 311 |   | $ | (11 | ) | $ | (1,265 | ) | $ | 13,200 |   | $ | — |   | $ | 11,924 |   |
|                                                   |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                  |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sales of assets                          |   | —                                                 |   | — |   | — |   | — |   | — |   | 44 |   | — |   | 44 |   |
| Capital expenditures                                   |   | —                                                 |   | — |   | — |   | — |   | (22 | ) | (767 | ) | — |   | (789 | ) |
| Net cash used in investing activities                  |   | —                                                 |   | — |   | — |   | — |   | (22 | ) | (723 | ) | — |   | (745 | ) |
|                                                   |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                  |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net borrowings on revolving credit facility            |   | —                                                 |   | — |   | — |   | — |   | (1,500 | ) | (9,653 | ) | — |   | (11,153 | ) |
| Change in cash overdrafts                              |   | —                                                 |   | — |   | — |   | — |   | (495 | ) | (2,500 | ) | — |   | (2,995 | ) |
| Issuance of common stock from shares held in  treasury |   | 353                                                    |   | — |   | — |   | — |   | — |   | — |   | — |   | 353 |   |
| Purchase of treasury stock                             |   | (80                                                    | )      | — |   | — |   | — |   | — |   | — |   | — |   | (80 | ) |
| Deferred financing fees                                |   | —                                                 |   | — |   | — |   | — |   | (148 | ) | (94 | ) | — |   | (242 | ) |
| Due to/from affiliates                                 |   | 647                                                    |   | (609 | ) | (313 | ) | 69 |   | 3,462 |   | (3,256 | ) | — |   | — |   |
| Net cash provided by/(used in) financing activities    |   | 920                                                    |   | (609 | ) | (313 | ) | 69 |   | 1,319 |   | (15,503 | ) | — |   | (14,117 | ) |
|                                                   |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash                |   | —                                                 |   | — |   | 2 |   | (58 | ) | — |   | 247 |   | — |   | 191 |   |
|                                                   |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and equivalents        |   | —                                                 |   | — |   | — |   | — |   | 32 |   | (2,779 | ) | — |   | (2,747 | ) |
| Cash and equivalents at beginning of period            |   | —                                                 |   | — |   | 1 |   | 1 |   | 241 |   | 13,422 |   | — |   | 13,665 |   |
| Cash and equivalents at end of period                  |   | $                                                      | — |   | $ | — |   | $ | 1 |   | $ | 1 |   | $ | 273 |   | $ | 10,643 |   | $ | — |   | $ | 10,918 |   |

 

28

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**Item 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

 

**BusinessOverview**

 

The following discussion should be read in conjunction with theCondensed Consolidated Financial Statements included elsewhere in thisdocument, as well as the year-end Consolidated Financial Statements andManagement’s Discussion and Analysis included in the Company’s Annual Report onForm 10-K for the year ended December 27, 2002.

 

The Company is an international producer of value-added aluminum, steel,vinyl and fiberglass fabricated products, with facilities located in all majorregions of the United States ("U.S."), as well as in the UnitedKingdom (“U.K.”), The Netherlands and France. The Company's manufacturing anddistribution network consists of 38 strategically located facilities, of which32 are located in the U.S. and 6 are located in Europe. The Company sells itsproducts principally to two markets, the building and construction market andthe transportation market. The Company's core products include specialty coatedcoils, aluminum recreational vehicle (“RV”) sidewalls, RV doors, farm andagricultural panels, metal and vinyl raincarrying systems, soffit and fasciasystems, and vinyl replacement windows. In addition, the Company sells an extensiveline of accessory products, including roofing and siding hardware, trim partsand roof drainage accessories. Gross margins earned on the Company’s accessoryproducts are typically higher than gross margins earned on core product lines.However, net sales trends for core products and accessories to such coreproducts have been very highly correlated within specific markets during thesix months ended June 26, 2003. Accordingly, changes in gross margins duringsuch periods have not been the result of a shift in product sales between coreproducts and accessory products. The Company’s customers include originalequipment manufacturers (“OEMs”) such as RV, commercial panel andtransportation industry manufacturers; rural contractors; home centers; manufacturedhousing producers; distributors; industrial and architectural contractors; andhome improvement contractors.

 

The Company’s results ofoperations for the three and six months ended June 28, 2002, five months endedMay 23, 2003 and one month ended June 27, 2003 have been separated into thepredecessor period and successor period as a result of the application ofpurchase accounting in connection with the 2003 Stock Transaction described inNote 2 to the Condensed Consolidated Financial Statements. The discussion ofthe results of operations below combines the predecessor two months ended May23, 2003 and the successor one month ended June 27, 2003 for comparison to thepredecessor three months ended June 28, 2002, and the predecessor five monthsended May 23, 2003 and the successor one month ended June 27, 2003 forcomparison to the predecessor six months ended June 28, 2002, for purposes ofdiscussing net sales and cost of goods sold. All other items are separated intothe predecessor and successor periods for discussion purposes.

 

The Company achieved record net sales in the three months and sixmonths ended June 27, 2003.  Inconnection with the 2003 Shareholder Transaction (see Note 2 to the CondensedConsolidated Financial Statements) and subsequent issuance of seniorsubordinated notes (see Note 12 to the Condensed Consolidated FinancialStatements), accounting principles generally accepted in the U.S. required thatthe purchase price paid in excess of the book value of the Company's equityacquired be allocated to the assets and liabilities of the Company based uponestimates of their fair values.  Thisapplication of purchase accounting resulted in increasing the value ofinventory at the time of the 2003 Shareholder Transaction by $4.0 million.  This inventory was sold in June 2003 andaccordingly $4.0 million was recorded as cost of goods sold.  This amount does not reflect costs incurredor amounts paid by the Company to prepare inventory for sale and accordinglyhad no affect on the cash flows from operations of the Company.

 

**Results of Operations**

 

**Quarter Ended June27, 2003 as Compared to Quarter Ended June 28, 2002**

 

The following table sets forth the Company’s Statements of EarningsData expressed as a percentage of net sales:

 
|                            |   | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003 (1)** |   | **Three months  ended  June 28,  2002** |   |
|---------------------------------|--------|--------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|--------|
| **Statement of Earnings Date:** |   |                                 |   |                                     |   |                                    |   |
| Net sales                       |   | 100.0                                | %      | 100.0                                    | %      | 100.0                                   | %      |
| Costs and expenses:             |   |                                 |   |                                     |   |                                    |   |
| Cost of goods sold              |   | 79.4                                 |   | 82.8                                     |   | 77.4                                    |   |
| Selling and General             |   | 9.2                                  |   | 10.6                                     |   | 9.6                                     |   |
| Depreciation and amortization   |   | 2.2                                  |   | 2.0                                      |   | 1.8                                     |   |
| Earnings from operations        |   | 9.2                                  |   | 4.6                                      |   | 11.2                                    |   |
| Interest expense, net           |   | (3.2                                 | )      | (2.4                                     | )      | (3.4                                    | )      |
| Other Income, net               |   | 0.2                                  |   | —                                   |   | 0.4                                     |   |
| Earnings before income taxes    |   | 6.2                                  |   | 2.2                                      |   | 8.2                                     |   |
| Provision for income taxes      |   | 2.3                                  |   | 0.7                                      |   | 3.2                                     |   |
| Net earnings                    |   | 3.9                                  | %      | 1.5                                      | %      | 5.0                                     | %      |

 

29

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|                  |   | **Net Sales**                        |       | **Earnings from Operations**         |       |
|-----------------------|--------|--------------------------------------|------------|--------------------------------------|------------|
|                  |   | **Two months  ended  May 23,  2003** |       | **One month  ended  June 27,  2003** |       | **Three months  ended  June 28,  2002** |   | **Two months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003 (1)** |   | **Three months  ended  June 28,  2002** |   |
|                  |   |                                 | ** ** |                                 | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| U.S. Fabrication      |   | $                                    | 75,108     |                                 | $          | 52,237 |   | $ | 121,578 |   | $ | 6,615 |   | $ | 2,414 |   | $ | 14,232 |   |
| European Roll Coating |   | 23,552                               |       | 15,234                               |       | 32,811 |   | 2,637 |   | 645 |   | 3,420 |   |
| European Fabrication  |   | 15,797                               |       | 9,723                                |       | 17,279 |   | 1,257 |   | 501 |   | 1,732 |   |
| Total                 |   | $                                    | 114,457    |                                 | $          | 77,194 |   | $ | 171,668 |   | $ | 10,509 |   | $ | 3,560 |   | $ | 19,384 |   |

 

----

(1) In connection with the 2003 Shareholder Transaction (see Note 2 tothe Condensed Consolidated Financial Statements) and subsequent issuance ofsenior subordinated notes (see Note 12 to the Condensed Consolidated FinancialStatements), accounting principles generally accepted in the U.S. required thatthe purchase price paid in excess of the book value of the Company's equityacquired be allocated to the assets and liabilities of the Company based uponestimates of their fair values.  Thisapplication of purchase accounting resulted in increasing the value ofinventory at the time of the 2003 Shareholder Transaction by $4.0 million.  This inventory was sold in June 2003 andaccordingly $4.0 million was recorded as cost of goods sold.  This amount does not reflect costs incurredor amounts paid by the Company to prepare inventory for sale and accordinglyhad no affect on the cash flows from operations of the Company for the sixmonths ended June 27, 2003.

 

 

*Net Sales.*For the quarter ended June 27, 2003, netsales were $191.7 million compared to $171.7 million for the quarter ended June28, 2002, an increase of $20.0 million or 11.6%. Net sales in the U.S.Fabrication segment increased 4.7% to $127.3 million for the quarter ended June27, 2003, from $121.6 million for the quarter ended June 28, 2002. Thisincrease in net sales in the U.S. Fabrication segment primarily resulted fromhigher sales volumes to home centers, distributors, industrial andarchitectural contractors, rural contractors and home improvement contractors,partially offset by lower sales volumes to RV manufacturers. For the quarterended June 27, 2003, compared to the quarter ended June 28, 2002, sales ofrain-carrying products to home centers, distributors and home improvementcontractors increased $4.5 million; sales of fabricated metal roofing andsiding to industrial and architectural contractors, home centers and ruralcontractors increased $3.1 million; and sales of lattice/awning products tohome improvement contractors increased $0.9 million. Partially offsetting theseincreases was a decrease in sales to RV manufacturers of $2.9 million.

 

Net sales in Europe increased28.4% to $64.3 million for the quarter ended June 27, 2003, from $50.1 millionfor the quarter ended June 28, 2002. This increase in Europe includes anincrease in the European Roll Coating segment of $6.0 million or 18.2% and anincrease in the European Fabrication segment of $8.2 million or 47.7%.Approximately $6.3 million and $3.7 million of the increase in the EuropeanRoll Coating segment and the European Fabrication segment, respectively, weredue to the strengthening of the British Pound and Euro against the U.S. Dollar.The balance of the increase in the European Fabrication segment primarilyresulted from higher sales volumes to the European transportation industry andU.K. home centers. For the quarter ended June 27, 2003, compared to the quarterended June 28, 2002, excluding currency impact, sales from France to theEuropean transportation industry increased $2.6 million; sales of residentialdoors to home centers in the U.K. increased $1.1 million; and sales of bathenclosures and shower doors to customers in the U.K. increased $0.5 million.

 

*Cost of goods sold.*Costof goods sold, as a percentage of net sales, increased to 80.7% for the quarterended June 27, 2003, from 77.4% for the quarter ended June 28, 2002. Thisincrease is primarily attributable to the $4.0 million write-up in inventoriesresulting from the application of the purchase method of accounting associatedwith the 2003 Shareholder Transaction (see Note 2 to the Condensed ConsolidatedFinancial Statements). The $4.0 million write-up was recognized in cost ofgoods sold in June 2003. The remaining increase is largely attributable tohigher aluminum and steel costs, partially offset by higher aluminum sellingprices, in addition to higher labor and utility

 

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costs. Higher labor costs resulted primarily from new product andproduct expansion initiatives undertaken over the past twelve months.

 

*Selling and general.*  Selling and general expenses were $10.6 million, $8.2 million and$16.4 million for the two months ended May 23, 2003, the one month ended June27, 2003 and the three months ended June 28, 2002, respectively.  Selling and general expenses, as apercentage of net sales, were 9.2%, 10.6% and 9.6% for the two months ended May23, 2003, the one month ended June 27, 2003 and the three months ended June 28,2002, respectively.  The higherpercentage of net sales in the one month ended June 27, 2003, compared to thethree months ended June 28, 2002, primarily resulted from $1.4 million incompensation expense resulting from bonus payments associated with the 2003Stock Transaction, together with advisory fees of $0.4 million payable to CVCManagement LLC.  The decrease as apercentage of net sales in the two months ended May 23, 2003, compared to thethree months ended June 28, 2002, is primarily due to lower incentivecompensation expense associated with the Company’s long-term incentive plan,together with higher average daily sales volume in the two months ended May 23,2003.

 

*Depreciation and amortization*.  Depreciation and amortization expense was$2.5 million, $1.6 million and $3.0 million for the two months ended May 23,2003, the one month ended June 27, 2003 and the three months ended June 28,2002, respectively.  Depreciation andamortization expense in the two months ended May 23, 2003, reflect additionalexpense resulting from the strengthening of the Euro and British Pound against theU.S. Dollar, together with additional expense on capital expenditures thatoccurred in the last six months of 2002 and the first five months of 2003.  Depreciation and amortization expense in theone month ended June 27, 2003, reflect additional expense resulting from the2003 Stock Transaction, together with additional expense resulting from thestrengthening of the Euro and British Pound against the U.S. Dollar

 

*Earnings from operations*.  Earnings from operations were $10.5 million,$3.6 million and $19.4 million for the two months ended May 23, 2003, the onemonth ended June 27, 2003 and the three months ended June 28, 2002,respectively.  In the one month endedJune 27, 2003, earnings from operations reflect $4.0 million charged to expenseresulting from the application of the purchase method of accounting associatedwith the 2003 Stock Transaction, $1.4 million in compensation expense resultingfrom bonus payments associated with the 2003 Stock Transaction and advisoryfees of $0.4 million payable to CVC Management LLC.

 

Earnings from operations in theU.S. Fabrication segment include $2.7 million of the $4.0 million increase ininventories charged to expense resulting from the application of the purchasemethod of accounting associated with the 2003 Stock Transaction.  Additionally, the U.S. Fabrication segmentincurred higher aluminum and steel costs, partially offset by higher aluminumselling prices, in 2003.

 

Earnings from operations in theEuropean Roll Coating segment include $0.9 million of the $4.0 million increasein inventories charged to expense resulting from the application of thepurchase method of accounting associated with the 2003 Stock Transaction.  The strengthening of the British Pound andEuro against the U.S. Dollar increased the European Roll Coating segment’searning from operations by $0.5 million and $0.2 million in the two monthsended May 23, 2003 and the one month ended June 27, 2003, respectively,compared to the same periods in 2002.

 

Earnings from operations in theEuropean Fabrication segment include $0.4 million of the $4.0 million increasein inventories charged to expense resulting from the application of thepurchase method of accounting associated with the 2003 Stock Transaction.  The strengthening of the British Pound andEuro against the U.S. Dollar increased the European Fabrication segment’searnings from operations by $0.2 million and $0.1 million in the two monthsended May 23, 2003 and the one month ended June 27, 2003, respectively,compared to the same periods in 2002. Additionally, the European Fabrication segment incurred higher operatingcosts resulting primarily from new product and product expansion initiatives,together with higher depreciation expense, in 2003.

 

*Interest expense, net*.  Net interest expense was $3.7 million, $1.8million and $5.9 million for the two months ended May 23, 2003, the one monthended June 27, 2003 and the three months ended June 28, 2002,respectively.  The average outstandingbalance on the revolving credit facility for the two months ended May 23, 2003,the one month ended June 27, 2003 and the three months ended June 28, 2002 was$85.9 million, $81.5 million and $89.5 million, respectively.  The average rate of interest on ourrevolving credit facility for the two months ended May 23, 2003, the one monthended June 27, 2003 and the three months ended June 28, 2002, was 4.6%, 4.6%and 5.6%, respectively.

 

*Other income (expense), net*.  Other income (expense), net was $0.3million, $0.0 million and $0.6 million for the two months ended May 23, 2003,the one month ended June 27, 2003 and the three months ended June 28, 2002,respectively.  Other income (expense) ineach respective period resulted primarily from foreign exchange gains andlosses on unhedged assets and liabilities remeasured into the local currency.

 

*Provision for income taxes*.  The income tax provision for the period isbased on the effective tax rate expected to be applicable for the fullyear.  The effective tax rate for theprovision for income taxes for the two months ended May 23, 2003, the one monthended June 27, 2003 and the three months ended June 28, 2002 was 37.5%, 33.2%and 39.4%, respectively.  The decreasein the effective tax rate in the two months ended May 23, 2003 and the onemonth ended June 27, 2003, compared to the three months ended June 28, 2002, isprimarily due to a greater proportion of earnings in Europe in 2003, where wehave a lower effective tax rate.

 

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**Five Months Ended May23, 2003 and One Month Ended June 27, 2003 as Compared to Six Months Ended June28, 2002**

 

The following table sets forth the Company’s Statements of EarningsData expressed as a percentage of net sales:

 
|                            |   | **Five  months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003 (1)** |   | **Six months  ended  June 28,  2002** |   |
|---------------------------------|--------|----------------------------------------|--------|------------------------------------------|--------|---------------------------------------|--------|
|                            |   |                                   |   |                                     |   |                                  |   |
| **Statement of Earnings Data:** |   |                                   |   |                                     |   |                                  |   |
| Net sales                       |   | 100.0                                  | %      | 100.0                                    | %      | 100.0                                 | %      |
| Costs and expenses:             |   |                                   |   |                                     |   |                                  |   |
| Cost of goods sold              |   | 80.0                                   |   | 82.8                                     |   | 78.5                                  |   |
| Selling and general             |   | 10.0                                   |   | 10.6                                     |   | 10.2                                  |   |
| Depreciation and amortization   |   | 2.4                                    |   | 2.0                                      |   | 2.1                                   |   |
| Earnings from operations        |   | 7.6                                    |   | 4.6                                      |   | 9.2                                   |   |
| Interest  expense, net          |   | (3.5                                   | )      | (2.4                                     | )      | (3.7                                  | )      |
| Other  (income) expense, net    |   | 0.2                                    |   | —                                   |   | 0.2                                   |   |
| Earnings before income taxes    |   | 4.3                                    |   | 2.2                                      |   | 5.7                                   |   |
| Provision for income taxes      |   | 1.6                                    |   | 0.7                                      |   | 2.2                                   |   |
| Net earnings                    |   | 2.7                                    | %      | 1.5                                      | %      | 3.5                                   | %      |

 

 
|                  |   | **Net Sales**                          |    | **Earnings  from Operations**        |   |
|-----------------------|--------|----------------------------------------|---------|--------------------------------------|--------|
|                  |   | **Five  months  ended  May 23,  2003** |    | **One month  ended  June 27,  2003** |   | **Six months  ended  June 28,  2002** |   | **Five  months  ended  May 23,  2003** |   | **One month  ended  June 27,  2003 (1)** |   | **Six months  ended  June 28,  2002** |   |
|                  |   |                                   |    |                                 |   |   |   |   |   |   |   |   |   |
| U.S. Fabrication      |   | $                                      | 161,050 |                                 | $      | 52,237 |   | $ | 206,893 |   | $ | 8,657 |   | $ | 2,414 |   | $ | 18,159 |   |
| European Roll Coating |   | 59,653                                 |    | 15,234                               |   | 64,232 |   | 7,577 |   | 645 |   | 6,824 |   |
| European Fabrication  |   | 39,912                                 |    | 9,723                                |   | 33,503 |   | 3,532 |   | 501 |   | 3,130 |   |
| Totals                |   | $                                      | 260,615 |                                 | $      | 77,194 |   | $ | 304,628 |   | $ | 19,766 |   | $ | 3,560 |   | $ | 28,113 |   |

 

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(1) In connection with the 2003 Shareholder Transaction (see Note 2 tothe Condensed Consolidated Financial Statements) and subsequent issuance ofsenior subordinated notes (see Note 12 to the Condensed Consolidated FinancialStatements), accounting principles generally accepted in the U.S.  required that the purchase price paid inexcess of the book value of the equity acquired be allocated to the assets andliabilities of the Company based upon their fair values. This application ofpurchase accounting resulted in increasing the value of inventory at the timeof the 2003 Shareholder Transaction by $4.0 million.  This inventory was sold in June 2003 and accordingly $4.0 millionwas recorded as cost of goods sold. This amount does not reflect costs incurred or amounts paid by theCompany to prepare inventory for sale and accordingly had no affect on the cashflows from operations of the Company.

 

 

*Net Sales.*For the six months ended June 27, 2003, netsales were $337.8 million compared to $304.6 million for the six months endedJune 28, 2002, an increase of $33.2 million or 10.9%. Net sales in the U.S.Fabrication segment increased 3.1% to $213.3 million for the six months endedJune 27, 2003, from $206.9 million for the six months ended June 28, 2002. Thisincrease in net sales in the U.S. Fabrication segment primarily resulted fromhigher sales volumes to home centers, distributors, industrial andarchitectural contractors and home improvement contractors, partially offset bylower sales volumes to RV manufacturers and rural contractors. For the sixmonths ended June 27, 2003, compared to the six months ended June 28, 2002,sales of rain-carrying products to home centers, distributors and home improvementcontractors increased $5.5 million; sales of fabricated metal roofing andsiding to industrial and architectural contractors and home centers increased$2.8 million; sales of vinyl windows and lattice/awning products to homeimprovement contractors increased $2.5 million.

 

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Partiallyoffsetting these increases were decreases in sales to RV manufacturers of $3.2million and to rural contractors of $2.1 million.

 

Net sales in Europe increased27.4% to $124.5 million for the six months ended June 27, 2003, from $97.7million for the six months ended June 28, 2002.  This increase in Europe includes an increase in the European RollCoating segment of $10.7 million or 16.6% and an increase in the European Fabricationsegment of $16.1 million or 48.2%. Approximately $12.0 million and $7.3 million of the increase in theEuropean Roll Coating segment and the European Fabrication segment,respectively, were due to the strengthening of the British Pound and Euroagainst the U.S. Dollar.  The decline inthe European Roll Coating segment, excluding currency impact, primarilyresulted from lower sales volumes of painted aluminum and steel coil to OEMs(excluding RV manufacturers), partially offset by higher sales volumes ofpainted aluminum coil to RV manufacturers. For the six months ended June 27, 2003, compared to the six months endedJune 28, 2002, excluding currency impact, sales of painted aluminum and steelcoil to OEMs (excluding RV manufacturers) decreased $2.4 million; and sales ofpainted aluminum coil to European RV manufacturers increased $1.1 million.  The balance of the increase in the EuropeanFabrication segment primarily resulted from higher sales volumes to theEuropean transportation industry, U.K. home centers and European RVmanufacturers.  For the six months endedJune 27, 2003, compared to the six months ended June 28, 2002, excludingcurrency impact, sales from France to the European transportation industryincreased $5.0 million; sales of residential doors to home centers in the U.K.increased $2.3 million; sales of bath enclosures and shower doors to customersin the U.K. increased $1.1 million; and sales of doors and windows to EuropeanRV manufacturers increased $1.1 million.

 

*Cost of goods sold.*Costof goods sold, as a percentage of net sales, increased to 80.6% for the sixmonths ended June 27, 2003, from 78.5% for the six months ended June 28, 2002.This increase is primarily attributable to the $4.0 million write-up ininventories resulting from the application of the purchase method of accountingassociated with the 2003 Shareholder Transaction (see Note 2 to the CondensedConsolidated Financial Statements). The $4.0 million write-up was recognized incost of goods sold in June 2003. The remaining increase is largely attributableto higher steel costs, partially offset by higher steel selling prices, inaddition to higher labor, freight and utility costs. Higher labor costsresulted primarily from new product and product expansion initiativesundertaken over the past twelve months.

 

*Selling and general*.  Selling and general expenses were $26.2million, $8.2 million and $30.9 million for the five months ended May 23, 2003,the one month ended June 27, 2003 and the six months ended June 28, 2002,respectively.  Selling and generalexpenses, as a percentage of net sales, were 10.0%, 10.6% and 10.2% for thefive months ended May 23, 2003, the one month ended June 27, 2003 and the sixmonths ended June 28, 2002, respectively. The higher percentage of net sales in the one month ended June 27, 2003,compared to the six months ended June 28, 2002, primarily resulted from $1.4million in compensation expense resulting from bonus payments associated withthe 2003 Stock Transaction, together with advisory fees of $0.4 million payableto CVC Management LLC.  The decrease asa percentage of net sales in the five months ended May 23, 2003, compared tothe six months ended June 28, 2002, is primarily due to lower incentivecompensation expense associated with the Company’s long-term incentive plan inthe five months ended May 23, 2003.

 

*Depreciation and amortization*.  Depreciation and amortization expense was$6.3 million, $1.6 million and $6.4 million for the five months ended May 23,2003, the one month ended June 27, 2003 and the six months ended June 28, 2002,respectively.  Depreciation andamortization expense in the five months ended May 23, 2003, reflect additionalexpense resulting from the strengthening of the Euro and British Pound againstthe U.S. Dollar, together with additional expense on capital expenditures thatoccurred in the last six months of 2002 and the first five months of 2003.  Depreciation and amortization expense in theone month ended June 27, 2003, reflect additional expense resulting from the2003 Stock Transaction, together with additional expense resulting from thestrengthening of the Euro and British Pound against the U.S. Dollar

 

*Earnings from operations*.  Earnings from operations were $19.8 million,$3.6 million and $28.1 million for the five months ended May 23, 2003, the onemonth ended June 27, 2003 and the six months ended June 28, 2002,respectively.  In the one month endedJune 27, 2003, earnings from operations reflect $4.0 million charged to expenseresulting from the application of the purchase method of accounting associatedwith the 2003 Stock Transaction, $1.4 million in compensation expense resultingfrom bonus payments associated with the 2003 Stock Transaction and advisoryfees of $0.4 million payable to CVC Management LLC.

 

Earnings from operations in the U.S. Fabrication segment include $2.7million of the $4.0 million increase in inventories charged to expenseresulting from the application of the purchase method of accounting associatedwith the 2003 Stock Transaction. Additionally, the U.S. Fabrication segment incurred higher steel costs,partially offset by higher steel selling prices, together with higher freightcosts, in 2003.

 

Earnings from operations in the European Roll Coating segment include$0.9 million of the $4.0 million increase in inventories charged to expenseresulting from the application of the purchase method of accounting associatedwith the 2003 Stock Transaction.  Thestrengthening of the British Pound and Euro against the U.S. Dollar increasedthe European Roll Coating segment’s earning from operations by $1.4 million and$0.2 million in the five months ended May 23, 2003 and the one month ended June27, 2003, respectively, compared to the same periods in 2002.  Additionally, the European Roll Coatingsegment’s 2003 results include a more profitable product mix partially offsetby higher depreciation expense..

 

Earnings from operations in the European Fabrication segment include$0.4 million of the $4.0 million increase in inventories charged to expenseresulting from the application of the purchase method of accounting associatedwith the 2003 Stock Transaction.  Thestrengthening of the British Pound and Euro against the U.S. Dollar increasedthe European Fabrication segment’s earnings from operations by $0.5 million and$0.1 million in the five months ended May 23, 20003 and the one ended June 27,2003, respectively, compared to the same periods in 2002. Additionally, theEuropean Fabrication segment incurred higher operating costs resultingprimarily from new product and product expansion initiatives, together withhigher depreciation expense, in 2003.

 

*Interest expense, net.*  Net interest expense was $9.1 million, $1.8million and $ 11.2 million for the five months ended May 23, 2003, the onemonth ended June 27, 2003 and the six months ended June 28, 2002,respectively.  The average outstandingbalance on our revolving credit facility for the five months ended May 23,2003, the one month ended June 27, 2003 and the six months ended June 28, 2002was $78.2, $81.5 million and $84.8 million, respectively.  The average rate of interest on ourrevolving credit facility for the five months ended May 23, 2003, the one monthended June 27, 2003 and the six months ended June 28, 2002, was 4.7%. 4.6% and5.2%, respectively.

 

*Other income (expense), net. *Other income(expense), net was $0.5 million, $0.0 million and $0.5 million for the fivemonths ended May 23, 2003, the one month ended June 27, 2003 and the six monthsended June 28, 2002, respectively. Other income (expense) in each respective period resulted primarily fromforeign exchange gains and losses on unhedged assets and liabilities remeasuredinto the local currency.

 

*Provision for income taxes*.  The income tax provision for the period isbased on the effective tax rate expected to be applicable for the fullyear.  The effective tax rate for theprovision for income taxes for the five months ended May 23, 2003, the onemonth ended June 27, 2003 and the six months ended June 28, 2002 was 38.2%,33.2% and 38.9%, respectively.  Thedecrease in the effective tax rate in the one month ended June 27, 2003,compared to the five months ended May 23, 2003 and the six months ended June28, 2002, is primarily due to a greater proportion of earnings in Europe in2003, where we have a lower effective tax rate.

 

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**Liquidity and CapitalResources**

 

*Liquidity*.The Company’s primary liquidity needs arise from debt service incurred inconnection with acquisitions and the funding of capital expenditures. TheCompany’s liquidity sources at June 27, 2003 include $10.9 million in cash andcash equivalents and the Company’s revolving credit facility of up to $110.0million, subject to borrowing base limitations. At June 27, 2003, $39.0 millionwas available and undrawn.

 

As discussed in Note 12 to the Condensed Consolidated FinancialStatements, on July 10, 2003, the Company commenced an offer to purchase andsolicitation of consents for the Company’s outstanding $135.0 million 11.25%senior subordinated notes due 2006 (“the Notes”) subject to the receipt of aconsent from the holders of a majority of the principal amount thereof. OnAugust 8, 2003, the Company purchased approximately $112.9 million of the Notesthat had been validly tendered, for

 

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approximately $120.4 million, including interest. Following thepurchase of the Notes accepted in the tender offer, approximately $22.1 millionin aggregate principal amount of the Notes remained outstanding. The Companycurrently intends to call any Notes that remain outstanding effective onOctober 1, 2003, at which time the redemption price will be 101.875% ofprincipal amount plus accrued interest. The Company financed the purchase ofthe Notes through the issuance on August 6, 2003 of $200.0 million 8.5% seniorsubordinated notes due 2011 (the "New Notes"). The remaining proceedsfrom the issuance of the $200.0 million of New Notes was used to cover fees andexpenses from the issuance of the New Notes and to repay a portion of theexisting indebtedness under the revolving credit facility. Immediatelyfollowing the issuance of the New Notes, purchase of the Notes accepted in thetender offer and repayment of a portion of the existing indebtedness under therevolving credit facility, the Company had approximately $103.0 million ofborrowing availability under its revolving credit facility, $22.6 million ofwhich is expected to be used to redeem any Notes that remain outstanding onOctober 1, 2003. The Company may potentially amend its credit agreement toestablish a term loan of up to $45.0 million, a portion of which would be usedto fund a potential acquisition for which the Company has been in discussions,from time to time. The Company can give no assurance that this potentialacquisition or the establishment of a term loan under its credit agreement willoccur. In addition, in the future, the Company may pay a dividend to itsshareholders or repurchase some of its outstanding common stock, subject torestrictions that may be contained in agreements governing its existing orfuture indebtedness. Under the terms of the indenture governing the New Notes,any such dividend or stock repurchase could be up to $70.0 million, subject tocompliance with a cash flow ratio test.

 

The Company’s leveraged financial position requires that a substantialportion of the Company’s cash flow from operations be used to pay interest onthe Notes and the New Notes, principal and interest under the Company’s creditagreement and other indebtedness. Significant increases in the floatinginterest rates on the Company’s revolving credit facility would result inincreased debt service requirements, which may reduce the funds available forcapital expenditures and other operational needs. In addition, the Company’sleveraged position may impede its ability to obtain financing in the future forworking capital, capital expenditures and general corporate purposes. Further,the Company’s leveraged position may make it more vulnerable to economicdownturns, may limit its ability to withstand competitive pressures, and maylimit its ability to comply with restrictive financial covenants required underits credit agreement.

 

The Company’s primary source of liquidity is funds generated fromoperations, which are supplemented by borrowings under the creditagreement.  Net cash (used in) providedby operating activities for the five months ended May 23, 2003, the one monthended June 27, 2003 and the six months ended June 28, 2003 were $(12.0)million, $11.9 million and $0.5 million, respectively.  The five months ended May 23, 2003 include ause of cash resulting from an increase in accounts receivable and inventories of$22.8 million and $13.0 million, respectively. Partially offsetting this use of cash was cash provided by an increasein accounts payable, accrued expenses and other current liabilities of $12.9million.  The one month ended June 27,2003 includes cash provided by an increase in accounts payable, accruedexpenses and other current liabilities of $8.0 million, together with adecrease in inventories of $3.0 million. Partially offsetting these items was ause of cash resulting from an increase in accounts receivable of $6.1 million.  The six months ended June 28, 2002 include ause of cash resulting from an increase in accounts receivable and inventoriesof $25.0 million and $20.6 million, respectively.  Partially offsetting this use of cash was cash provided by anincrease in accounts payable, accrued expenses and other current liabilities of$29.7 million.  The seasonality of ourbusiness results in significant changes in our accounts receivable, inventoriesaccounts payable and accrued expense balances throughout the year, withbalances typically higher at the end of the second and third quarters and lowerat the end of the fourth quarter.

 

Net cash used in investing activities for the five months ended May 23,2003, the one month ended June 27, 2003 and the six months ended June 28, 2002were $4.9 million, $0.7 million and $2.5 million, respectively.  The five months ended May 23, 2003, the onemonth ended June 27, 2003 and the six months ended June 28, 2002 include a useof cash resulting from capital expenditures of $4.9 million, $0.8 million and$2.6 million, respectively.  See afurther discussion of capital expenditures below.

 

Net cash provided by (used in) financing activities for the five monthsended May 23, 2003, the one month ended June 27, 2003 and the six months endedJune 28, 2002 were $18.2 million, $(14.1) million and $3.6 million,respectively.  The five months ended May23, 2003 include borrowings under our revolving credit facility of $18.3million to fund our increase in working capital, together with the purchase oftreasury stock for $2.6 million.  Theone month ended June 27, 2003 includes repayments under our revolving creditfacility of $11.2 million.  The sixmonths ended June 28, 2002 include a repayment of the term loans under thecredit agreement in March 2002 of $39.0 million, borrowings under our revolvingcredit facility of $40.0 million and proceeds of $2.8 million for thesettlement of a currency swap.

 

The above-noted sources are expected to provide the liquidity required,if necessary, to supplement cash from operations, although no assurance to thateffect can be given.

 

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*CapitalExpenditures.* Capital expenditures in 2003 includeapproximately $0.6 million for improvements to the paintlines in Helena,Arkansas; Corby, England; and Roermond, The Netherlands; and approximately $3.4million for several projects related to business expansion. Capitalexpenditures in 2002 included approximately $0.3 million for improvements tothe paintlines in Helena, Arkansas; Corby, England; and Roermond, TheNetherlands; and approximately $0.4 million for several projects related tobusiness expansion. The balance of capital expenditures in both periods relatedto purchases and upgrades of fabricating equipment, transportation and materialmoving equipment, and information systems.

 

The Company has made and will continue to make capital expenditures tocomply with environmental laws. The Company estimates that its environmentalcapital expenditures for 2003 will approximate $900.0 thousand.

 

*Working Capital*.Working capital was $107.4 million as of June 27, 2003, compared to $90.5million as of December 27, 2002. The increase in working capital is largelyattributable to seasonal demands of the business resulting in substantialincreases from year end in trade accounts receivable and inventories, partiallyoffset by an increase in trade accounts payable and accrued expenses.

 

Accounts receivable of $120.3 million as of June 27, 2003, increased$31.8 million, from $88.5 million as of December 27, 2002. The primary reasonfor this increase was a 36.5% increase in net sales in the two months endedJune 27, 2003, compared to the two months ended December 27, 2002. The majorityof outstanding accounts receivable at the end of each period are generated fromnet sales in the preceding two months. Additionally, a stronger British Poundand Euro compared to the U.S. Dollar used in converting the local currencybalance sheet into U.S. Dollars resulted in a $3.4 million increase in accountsreceivable. As of June 27, 2003, days sales outstanding in accounts receivablewas 57.1 days, compared to 50.5 days as of December 27, 2002 and 56.5 days asof June 28, 2002. Seasonal demands of the business typically result in higherdays sales outstanding in accounts receivable at the end of June compared tothe end of December.

 

Inventories of $90.4 million as of June 27, 2003, increased $11.9million, from $78.5 million as of December 27, 2002. A stronger British Poundand Euro compared to the U.S. Dollar used in converting the local currencybalance sheet into U.S. Dollars resulted in $2.0 million of this increase. Asof June 27, 2003, days sales in inventories was 61.2 days, compared to 56.2days as of December 27, 2002 and 65.4 days as of June 28, 2002. Seasonaldemands of the business typically result in higher days sales in inventories atthe end of June compared to the end of December. Lower days sales ininventories as of June 27, 2003, compared to June 28, 2002, resulted frommaintaining a consistent level of inventory despite the increase in net sales.

 

# **Environmental Matters**

 

The Company’s exposure to environmental matters has not changedsignificantly from the year ended December 27, 2002. For detailed informationregarding environmental matters, see “Management’s Discussion and Analysis –Risk Management” set forth in the Company’s Annual Report on Form 10-K for theyear ended December 27, 2002.

 

**Note RegardingForward-Looking Statements:**  The Management’s Discussion and Analysis andother sections of this Form 10-Q may contain forward-looking statements thatare based on current expectations, estimates and projections about theindustries in which the Company operates, and management’s beliefs andassumptions. Such forward-looking statements include terminology such as"may", "will", "should", “expects,”“anticipates,” “intends,” “plans,” “believes,” "contemplates","projects", "predicts", “estimates,” or variations of suchwords and similar expressions regarding beliefs, plans, expectations orintentions regarding the future. Forward-looking statements in this reportinclude, but are not limited to: (1) statements regarding the Company’sexpectation that its sources of liquidity will provide the liquidity required,if necessary, to supplement lower cash flows from operations; (2) statementsregarding management’s expectation that the outcome of legal proceedings andclaims that have arisen in the ordinary course of business would not reasonablybe expected to have a material adverse effect on the consolidated financialposition, results of operations or cash flows of the Company and itssubsidiaries taken as a whole; and (3) statements regarding management’s beliefthat the Company’s potential share of the estimated aggregate liability for thecosts of remedial actions and related costs and expenses at various hazardouswaste disposal sites in which the Company has been named as a defendant inlawsuits or as a potentially responsible party are not material and that thereasonably probable outcome of these matters will not materially exceedestablished reserves and will not have a material impact on the futurefinancial position, net earnings or cash flows of the Company. Theseforward-looking statements are based on a number of assumptions that couldultimately prove inaccurate, and, therefore, there can be no assurance thatthey will prove to be accurate. All such forward-looking

 

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statements are subject to the safe harbor created by the PrivateSecurities Litigation Reform Act of 1995. Important factors that could causefuture financial performance to differ materially and significantly from pastresults and from those expressed or implied in this document include, withoutlimitation, the risks of acquisition of businesses (including limited knowledgeof the businesses acquired and misrepresentations by sellers), changes inbusiness strategy or development plans, the cyclical demand for the Company’sproducts, the supply and/or price of aluminum and other raw materials, currencyexchange rate fluctuations, environmental regulations, availability offinancing, competition, reliance on key management personnel, ability to managegrowth, loss of customers, and a variety of other factors. For furtherinformation on these and other risks, see the “Risk Factors” section of Item 1of the Company’s Annual Report on Form 10-K for the year ended December 27,2002, as well as the Company’s other filings with the Securities and ExchangeCommission. The Company assumes no obligation to update publicly itsforward-looking statements, whether as a result of new information, futureevents or otherwise.

 

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**Part II - Other Information**

** **

**Item6.  Exhibits and Reports on Form 8-K**

 

(a)                                  Exhibits:

 

The exhibits listed in the Exhibit Index immediately preceding theexhibits are filed or incorporated by reference as part of this QuarterlyReport on Form 10-Q.

 

(b)                                 Reportson Form 8-K:

 

On May 12, 2003, the Company filed a report on Form 8-K relating to itsfinancial information for the quarter ended March 28, 2003, as presented in apress release dated May 5, 2003.

 

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**SIGNATURES**

 

**Pursuant to therequirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934,Euramax International, Inc. has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.**

 

**EURAMAX INTERNATIONAL, INC.**

 
| **Signature**    |                 | **Title** |                                  | **Date** |
|------------------|----------------------|-----------|---------------------------------------|----------|
|             |                 |      |                                  |     |   |
|             |                 |      |                                  |     |   |
|             | /s/ J. DAVID SMITH   |      | Chairman, Chief Executive Officer     |     | February 13, 2003 |
| J. David Smith   | and President        |      |                                  |
|             |                 |      |                                  |     |
|             |                 |      |                                  |     |
|             | /s/ R. SCOTT VANSANT |      | Chief Financial Officer and Secretary |     | February 13, 2003 |
| R. Scott Vansant |                 |      |                                  |

 

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**ExhibitIndex**

 
| **Exhibit********Number** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1                      |   | Stock  Purchase Agreement by and among Citigroup Venture Capital Equity Partners,  L.P., CVC Executive Fund LLC, CVC/SSB Employee Fund, L.P., Euramax  International, Inc. and the Stockholders of Euramax International, Inc. noted  therein, dated as of April 15, 2003 (Incorporated by reference to  Euramax International, Inc’s Form 10-Q which was filed on August 11, 2003).                                                                |
| 10.2                      |   | Securities  Holders Agreement by and among Euramax International, Inc., Citigroup Venture  Capital Equity Partners, L.P., CVC Executive Fund LLC, CVC/SSB Employee Fund,  L.P., Citicorp Venture Capital Ltd., The Continuing Investors identified  therein and The Management Investors identified therein dated as of April 15,  2003  (Incorporated by reference to  Euramax International, Inc’s Form 10-Q which was filed on August 11, 2003). |
| 10.3                      |   | Advisory  Agreement dated as of April 15, 2003 by and among Euramax International, Inc.  and CVC Management LLC  (Incorporated  by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                        |
| 10.4                      |   | Amendment  No. 1, dated as of April 15, 2003, to the Executive Employment Agreement,  dated as of October 1, 1999, by and between Euramax International, Inc. and  J. David Smith (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                             |
| 10.5                      |   | Euramax  International, Inc. 2003 Equity Compensation Plan  (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                                                                              |
| 10.6                      |   | Restricted  Stock Agreement dated April 15, 2003 between Euramax International, Inc.  and J. David Smith (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                                 |
| 10.7                      |   | Restricted  Stock Agreement dated April 15, 2003 between Euramax International, Inc.  and Mitchell B. Lewis (Incorporated by reference to Euramax International,  Inc’s Form 10-Q which  was filed on August 11, 2003).                                                                                                                                                                                                                             |
| 10.8                      |   | Restricted  Stock Agreement dated April 15, 2003 between Euramax International, Inc.  and R. Scott Vansant (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                               |
| 10.9                      |   | Form  Restricted Stock Agreement for the Euramax International, Inc. 2003 Equity  Compensation Plan (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                                           |
| 10.10                     |   | Form  Non-Qualified Stock Option Agreement for the for the Euramax International,  Inc. 2003 Equity Compensation Plan (Incorporated by reference to Euramax  International, Inc’s  Form 10-Q which was filed on August 11, 2003).                                                                                                                                                                                                                        |
| 10.11                     |   | Amended  and Restated Registration Rights Agreement dated as of June 12, 2003 by  and among Euramax International, Inc., Citicorp Venture Capital Ltd.,  Citigroup Venture Capital Equity Partners, L.P., CVC Executive Fund LLC and  CVC/SSB Employee Fund, L.P., and other stockholders of Euramax International,  Inc. named therein (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).  |
| 10.12                     |   | Letter  Agreement dated April 15, 2003 between R. Scott Vansant and Euramax  International, Inc. (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                                         |
| 10.13                     |   | Letter  Agreement dated April 15, 2003 between Mitchell B. Lewis and Euramax  International, Inc. (Incorporated by reference to Euramax International, Inc’s Form 10-Q which was filed on August 11,  2003).                                                                                                                                                                                                                                        |
| 10.14                     |   | Euramax  International, Inc.  Supplemental  Executive Retirement Plan dated April 15, 2003 for  J. David Smith (Incorporated by reference to Euramax International,  Inc’s Form 10-Q which  was filed on August 11, 2003).                                                                                                                                                                                                           |
| 10.15                     |   | Euramax  International, Inc.  Supplemental  Executive Retirement Plan dated April 15, 2003 for Mitchell  B. Lewis and R. Scott Vansant (Incorporated by reference to  Euramax International, Inc’s Form 10-Q which was filed on August 11, 2003).                                                                                                                                                                               |
| 10.16                     |   | Amendment  No. 1 dated April 14, 2003 to the Second Amended and Restated Credit  Agreement among Euramax International, Inc and its subsidiaries, BNP Paribas  (as Agent and Lender), and the Lenders named therein (Incorporated by  reference to Euramax International, Inc’s Form 10-Q which was filed on August 11, 2003).                                                                                                                      |
| 10.17                     |   | Amendment  No. 2 and Consent dated May 15, 2003 to the Second Amended and Restated  Credit Agreement among Euramax International, Inc. and its subsidiaries, BNP  Paribas (as Agent and Lender), and the Lenders named therein (Incorporated by  reference to Euramax International, Inc’s Form 10-Q which was filed on August 11, 2003).                                                                                                                |
| 31.1                      |   | Certification  of Chief Executive Office pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002.                                                                                                                                                                                                                                                                                                                                                          |
| 31.2                      |   | Certification  of Chief Financial Office pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002.                                                                                                                                                                                                                                                                                                                                                          |
| 32.1                      |   | Certification  of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                 |
| 32.2                      |   | Certification  of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                 |

 

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