<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 27, 1999
-------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -------
Commission file number 333-05978
EURAMAX INTERNATIONAL PLC
(Exact name of registrant as specified in its charter)
ENGLAND AND WALES 98-1066997
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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 by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
/ X / Yes / / No
As of April 26, 1999, Registrant had outstanding 1,000,000 Ordinary Shares and
34,000,000 Preference Shares.
Page 1 of 22
Exhibit Index located on page 20
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 27, MARCH 28,
1999 1998
------------------- -------------------
<S> <C> <C>
Net sales $ 132,387 $ 143,089
Costs and expenses:
Cost of goods sold 107,790 119,417
Selling and general 13,172 12,079
Depreciation and amortization 3,390 3,054
------------------- -------------------
Earnings from operations 8,035 8,539
Interest expense, net (5,258) (6,060)
Other expenses, net (579) (41)
------------------- -------------------
Earnings before income taxes 2,198 2,438
Provision for income taxes 960 1,019
------------------- -------------------
Net earnings 1,238 1,419
Dividends on redeemable preference shares 1,622 1,413
------------------- -------------------
Net earnings (loss) available for ordinary shareholders $ (384) $ 6
------------------- -------------------
------------------- -------------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 27, DECEMBER 25,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,332 $ 19,044
Accounts receivable, net 82,575 81,845
Inventories 81,129 74,735
Other current assets 4,726 4,585
--------- ---------
Total current assets 191,762 180,209
Property, plant and equipment, net 114,345 117,080
Goodwill, net 74,677 76,047
Deferred income taxes 8,581 8,588
Other assets 7,246 6,725
--------- ---------
$ 396,611 $ 388,649
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdrafts $ 2,192 $ 1,513
Accounts payable 59,845 51,862
Accrued expenses and other current liabilities 30,615 29,094
Current maturities of long-term debt 17,107 9,182
--------- ---------
Total current liabilities 109,759 91,651
Long-term debt, less current maturities 205,286 208,496
Other liabilities 10,558 13,100
Deferred income taxes 16,031 19,398
--------- ---------
Total liabilities 341,634 332,645
--------- ---------
Redeemable preference shares 47,961 46,339
--------- ---------
Ordinary shareholders' equity:
Ordinary shares 1,000 1,000
Retained earnings 10,963 11,347
Accumulated other comprehensive loss (4,947) (2,682)
--------- ---------
Total ordinary shareholders' equity 7,016 9,665
--------- ---------
--------- ---------
$ 396,611 $ 388,649
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 27, MARCH 28,
1999 1998
------------- ------------
<S> <C> <C>
Net cash used in operating activities $ (719) $ (3,490)
-------- --------
Cash flows from investing activities:
Purchase of business (2,769) --
Proceeds from sale of assets 558 50
Capital expenditures (2,419) (2,951)
-------- --------
Net cash used in investing activities (4,630) (2,901)
-------- --------
Cash flows from financing activities:
Repayment of long-term debt (3,727) (4,547)
Proceeds from long-term debt 9,000 10,569
Other 680 --
-------- --------
Net cash provided by financing activities 5,953 6,022
-------- --------
Effect of exchange rate changes on cash 3,684 1,104
-------- --------
Net increase in cash and equivalents 4,288 735
Cash and equivalents at beginning of period 19,044 12,914
-------- --------
-------- --------
Cash and equivalents at end of period $ 23,332 $ 13,649
-------- --------
-------- --------
Non-cash investing and financing activities:
Payable for certain non-compete agreements associated with
purchase of business $ 500 $ --
-------- --------
-------- --------
Dividends on redeemable preference shares $ 1,622 $ 1,413
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
1. BASIS OF PRESENTATION:
For purposes of this report the "Company" refers to Euramax International plc
("Euramax") and Subsidiaries, collectively.
The Condensed Consolidated Financial Statements of the Company have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission (the "SEC"). In the opinion of the management of the
Company, these statements include all adjustments necessary for a fair
presentation of the results of all interim periods reported herein. All
adjustments are of a normal recurring nature unless otherwise disclosed.
Management believes that the disclosures made are adequate for a fair
presentation of results of operations, financial position and cash flows. These
Condensed Consolidated Financial Statements should be read in conjunction with
the year-end consolidated financial statements and accompanying notes included
in the Company's Annual Report on Form 10-K for the year ended December 25,
1998. Operating results for the period ended March 27, 1999, are not necessarily
indicative of future results that may be expected for the year ending December
31, 1999.
On February 5, 1999, the Company's wholly owned subsidiary, Amerimax Home
Products, Inc., purchased certain assets related to the building materials
business of Unimet Manufacturing, Inc. ("Unimet") for approximately $3.3
million, including transaction expenses of approximately $135.0 thousand. As of
March 27, 1999, approximately $2.8 million was paid in cash. The remaining
purchase price of $500.0 thousand, representing consideration for certain
non-compete agreements, will be paid in equal installments over the next five
years. The pro forma operating results of the Company for the quarter ended
March 27, 1999, assuming Unimet was purchased on January 1, 1999, would not have
been materially different from the results presented in these Condensed
Consolidated Financial Statements.
Certain 1998 amounts have been reclassified to conform to current year
presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
For information regarding significant accounting policies, see Note 2 to the
Consolidated Financial Statements of the Company for the year ended December 25,
1998, set forth in the Company's Annual Report on Form 10-K.
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999 (December 31, 2000 for the Company). SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. For fair-value
hedge transactions in which the Company is hedging changes in the fair value of
an asset, liability, or firm commitment, changes in the fair value of the
derivative instrument will generally be offset in the income statement by
changes in the hedged item's fair value. For cash-flow hedge transactions, in
which the Company is hedging the variability of cash flows related to a
variable-rate asset, liability, or a forecasted transaction, changes in the fair
value of the derivative instrument will be reported in other comprehensive
income. The gains and losses on the derivative instrument that are reported in
other comprehensive income will be reclassified as earnings in the periods in
which earnings are impacted by the variability of the cash flows of the hedged
item.
5
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
The ineffective portion of all hedges will be recognized in current-period
earnings. Management is currently reviewing the provisions of SFAS No. 133 and
does not believe that the Company's financial statements will be materially
impacted by the adoption.
3. INVENTORIES:
Inventories were comprised of:
<TABLE>
<CAPTION>
MARCH 27, DECEMBER 25,
1999 1998
--------- ------------
<S> <C> <C>
Raw materials $59,457 $ 53,247
Work in process 9,429 10,172
Finished products 12,243 11,316
--------- ------------
$81,129 $ 74,735
--------- ------------
--------- ------------
</TABLE>
4. LONG-TERM OBLIGATIONS:
In addition to scheduled current maturities of $7.8 million, the Company has
classified $9.3 million as current maturities of long-term debt, because it has
the ability and intent to currently pay its Term Loans under the Dutch Guilder
facility. Effective April 6, 1999, the Company amended its Credit Agreement to,
among other items, allow for the prepayment of the Term Loans under the Dutch
Guilder facility and to permanently waive the 1998 Excess Cash Flow Provision.
For detailed information regarding the Company's long-term obligations, see Note
5 to the Consolidated Financial Statements of the Company for the year ended
December 25, 1998, set forth in the Company's Annual Report on Form 10-K.
5. COMMITMENTS AND CONTINGENCIES:
LITIGATION
The Company is subject to legal proceedings and claims that have arisen in the
ordinary course of business. Although occasional adverse decisions or
settlements may occur, it is the opinion of the Company's management, based upon
information available at this time, that the expected outcome of these matters,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the consolidated financial position, results of
operations or cash flows of the Company and its subsidiaries taken as a whole.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local and European
environmental laws and regulations concerning the management of pollution and
hazardous substances.
The Company has been named as a defendant in lawsuits or as a potentially
responsible party in state and Federal administrative and judicial proceedings
seeking contribution for costs associated with the investigation, analysis,
correction and remediation of environmental conditions at various hazardous
waste disposal sites. The
6
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
5. COMMITMENTS AND CONTINGENCIES (CONTINUED):
Company continues to monitor these actions and proceedings and to vigorously
defend both its own interests as well as the interests of its affiliates. The
Company's ultimate liability in connection with present and future environmental
claims will depend on many factors, including its volumetric share of the waste
at a given site, the remedial action required, the total cost of remediation,
and the financial viability and participation of the other entities that also
sent waste to the site. Once it becomes probable that the Company will incur
costs in connection with remediation of a site and such costs can be reasonably
estimated, the Company establishes or adjusts its reserve for its projected
share of these costs. Based upon current law and information known to the
Company concerning the size of the sites known to it, anticipated costs, their
years of operations and the number of other potentially responsible parties,
management believes that it has adequate reserves for the Company's potential
share of the estimated aggregate liability for the costs of remedial actions and
related costs and expenses. In addition, the Company establishes reserves for
remedial measures required from time to time at its own facilities. Management
believes that the reasonably probable outcomes of these matters will not
materially exceed established reserves and will not have a material impact on
the future financial position, net earnings or cash flows of the Company. The
Company's reserves, expenditures and expenses for all environmental exposures
were not significant for any of the dates or periods presented.
In connection with the acquisition of the Company from Alumax Inc. on September
25, 1996, the Company was indemnified by Alumax for substantially all of its
costs, if any, related to environmental matters for occurrences arising prior to
the closing date of the acquisition during the period of time it was owned
directly or indirectly by Alumax. Such indemnification includes costs that may
ultimately be incurred to contribute to the remediation of certain specified
existing National Priorities List ("NPL") sites for which the Company had been
named a potentially responsible party under the federal Comprehensive
Environmental Response, Compensation, and Liability Information System
("CERCLA") as of the closing date of the acquisition, as well as certain
potential costs for sites listed on state hazardous cleanup lists. With respect
to all other environmental matters, Alumax's obligations are limited to $125.0
million. However, notwithstanding the indemnity, the Company does not believe
that it has any significant probable liability for environmental claims.
Further, the Company believes it to be unlikely that the Company would be
required to bear environmental costs in excess of its pro rata share of such
costs as a potentially responsible party under CERCLA.
6. COMPREHENSIVE INCOME:
For the quarters ended March 27, 1999 and March 28, 1998, comprehensive income
(loss) was approximately $(1.0) million and $1.3 million, respectively. Other
comprehensive income refers to revenue, expenses, gains and losses that are
reflected in stockholders' equity but excluded from net earnings. For the
Company, the components of other comprehensive income are principally foreign
currency translation adjustments and minimum pension liability adjustments.
Other comprehensive income (loss), net of tax, was approximately $(2.3) million
and $(164.0) thousand, respectively.
7
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
SEGMENT INFORMATION:
For detailed information regarding the Company's reportable segments, see Note
13 to the Consolidated Financial Statements of the Company for the year ended
December 25, 1998, set forth in the Company's Annual Report on Form 10-K.
The table below presents information about reported segments for the quarters
ended March 27, 1999 and March 28, 1998.
<TABLE>
<CAPTION>
EUROPEAN U.S. EUROPEAN
ROLL COATING FABRICATION FABRICATION TOTAL
------------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 27, 1999
Sales $ 36,076 $ 95,922 $ 16,119 $148,117
EBITDA 4,893 5,515 1,759 12,167
THREE MONTHS ENDED MARCH 28, 1998
Sales $ 44,353 $ 99,100 $ 17,671 $161,124
EBITDA 6,698 3,852 2,139 12,689
</TABLE>
A reconciliation of total segment sales to total consolidated sales and of total
segment EBITDA to total consolidated earnings before income taxes, for the
quarters ended March 27, 1999 and March 28, 1998, is as follows:
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 27, MARCH 28,
1999 1998
------------ -------------
<S> <C> <C>
SALES
Total segment sales $ 148,117 $ 161,124
Eliminations (15,730) (18,035)
------------ -------------
Consolidated net sales $ 132,387 $ 143,089
------------ -------------
------------ -------------
EBITDA
Total EBITDA for reportable segments $ 12,167 $ 12,689
Expenses that are not segment specific (1,321) (1,137)
Depreciation and amortization (3,390) (3,054)
Interest expense, net (5,258) (6,060)
------------ -------------
Consolidated earnings before income taxes $ 2,198 $ 2,438
------------ -------------
------------ -------------
</TABLE>
8
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
7. SEGMENT INFORMATION (CONTINUED):
The following table reflects revenues from external customers by groups of
similar products for the quarters ended March 27, 1999 and March 28, 1998:
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 27, MARCH 28,
CUSTOMERS/MARKETS PRIMARY PRODUCTS 1999 1998
- --------------------------- ---------------------------------------------------- ----------------- -----------------
<S> <C> <C> <C>
Original Equipment Painted aluminum sheet and coil; fabricated
Manufacturers ("OEMs") painted aluminum, laminated and fiberglass
panels; RV doors, windows and roofing; and
composite building panels $ 67,252 $ 74,550
Rural Contractors Steel and aluminum roofing and siding 22,771 23,467
Home Centers Raincarrying systems, roofing accessories,
windows, doors, and shower enclosures 15,754 17,743
Manufactured Housing Steel siding and trim components 11,650 13,307
Distributors Metal coils, raincarrying systems and roofing
accessories 4,898 5,437
Industrial and Standing seam panels and siding and roofing
Architectural Contractors accessories 4,369 5,008
Home Vinyl replacement windows; metal roofing and
Improvement insulated roofing panels; shower, patio and
Contractors entrance doors; and awnings 5,693 3,577
----------------- -----------------
$ 132,387 $ 143,089
----------------- -----------------
----------------- -----------------
</TABLE>
8. SUBSEQUENT EVENT:
On April 23, 1999, the Company completed an acquisition of all of the
outstanding shares of Color Clad plc, a U.K. corporation. Color Clad is a
producer of aluminum exterior walls and roofs sold primarily to U.K. producers
of recreational vehicles (caravans). The acquisition is expected to augment the
Company's leading position as a supplier of such products in Western Europe. The
purchase price and pro forma effects of the transaction are not material to the
Company's financial position or results of operation.
9
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
9. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS:
On September 25, 1996, Euramax purchased the Company from Alumax Inc. The
acquisition was financed, in part, through Senior Subordinated Notes due 2006
(the "Notes"). The Notes are primary obligations of Euramax (the "Parent"). The
United Kingdom and The Netherlands holding company subsidiaries of Euramax are
co-obligors under the Notes (the "Co-obligors"). The United States holding
company subsidiary of Euramax (the "Guarantor") has provided a full and
unconditional guarantee of the Notes. The following Supplemental Condensed
Combined Financial Statements as of March 27, 1999 and March 28, 1998, reflect
the financial position and results of operations of each of the Parent, the
Co-Obligors and Guarantor entities, and such combined information of the
Non-Guarantor Subsidiaries. The Co-obligors and the Guarantor are wholly-owned
subsidiaries of Euramax and are each jointly, severally, fully, and
unconditionally liable under the Notes. Separate complete financial statements
of each Co-obligor and of the Guarantor are not presented because management has
determined that they are not material to investors.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 27, 1999
----------------------------------------------------------------------------------------------
CO-OBLIGORS AND GUARANTOR SUBSIDIARIES
------------------------------------------------------
EURAMAX AMERIMAX EURAMAX EURAMAX
INTERNATIONAL HOLDINGS, EUROPEAN EUROPEAN NON-
PLC INC. HOLDINGS PLC HOLDINGS B.V. GUARANTOR CONSOLIDATED
(PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ -- $ -- $ -- $ -- $ 132,387 $ -- $ 132,387
Cost and expenses:
Cost of goods sold -- -- -- -- 107,790 -- 107,790
Selling and general 739 -- -- 1 12,432 -- 13,172
Depreciation and amortization -- -- -- -- 3,390 -- 3,390
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) from operations (739) -- -- (1) 8,775 -- 8,035
Equity in earnings of subsidiaries 1,744 666 702 3,024 -- (6,136) --
Interest expense, net -- (457) (124) (15) (4,662) -- (5,258)
Other income (expense), net -- -- (848) (2,953) 3,222 -- (579)
--------- --------- --------- --------- --------- --------- ----------
Earnings (loss) before income taxes 1,005 209 (270) 55 7,335 (6,136) 2,198
Provision (benefit) for income taxes (233) (178) (319) (1,212) 2,902 -- 960
--------- --------- --------- --------- --------- --------- ----------
Net earnings 1,238 387 49 1,267 4,433 (6,136) 1,238
Dividends on redeemable preference
shares 1,622 -- -- -- -- -- 1,622
--------- --------- --------- --------- --------- --------- ----------
Net earnings (loss) available for
ordinary shareholders $ (384) $ 387 $ 49 $ 1,267 $ 4,433 $ (6,136) $ (384)
--------- --------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- --------- ----------
</TABLE>
10
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
9. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED):
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 28, 1998
----------------------------------------------------------------------------------------------
CO-OBLIGORS AND GUARANTOR SUBSIDIARIES
------------------------------------------------------
EURAMAX AMERIMAX EURAMAX EURAMAX
INTERNATIONAL HOLDINGS, EUROPEAN EUROPEAN
PLC INC. HOLDINGS PLC HOLDINGS B.V. NON-GUARANTOR CONSOLIDATED
(PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS
------------- ------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ - $ - $ - $ - $ 143,089 $ - $ 143,089
Cost and expenses:
Cost of goods sold - - - - 119,417 - 119,417
Selling and general 23 - - - 12,056 - 12,079
Depreciation and amortization - - - - 3,054 - 3,054
--------- --------- --------- --------- ----------- ---------- -----------
Earnings (loss) from operations (23) - - - 8,562 - 8,539
Equity in earnings of subsidiaries 1,442 (1,605) 1,133 3,069 - (4,039) -
Interest expense, net - (583) (177) (6) (5,294) - (6,060)
Other income (expense), net - - 74 (1,116) 1,001 - (41)
--------- --------- --------- ---------- ----------- ---------- -----------
Earnings (loss) before income
taxes 1,419 (2,188) 1,030 1,947 4,269 (4,039) 2,438
Provision (benefit) for income
taxes - (228) (31) (394) 1,672 - 1,019
--------- --------- --------- ---------- ----------- ---------- -----------
Net earnings (loss) 1,419 (1,960) 1,061 2,341 2,597 (4,039) 1,419
Dividends on redeemable preference
shares 1,413 - - - - - 1,413
--------- --------- -------- --------- ---------- ---------- -----------
Net earnings (loss) available for
ordinary shareholders $ 6 $ (1,960) $ 1,061 $ 2,341 $ 2,597 $ (4,039) $ 6
</TABLE>
11
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
9. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED):
MARCH 27, 1999
--------------------------------------------------------------------------------------
CO-OBLIGORS AND GUARANTOR SUBSIDIARIES
------------------------------------------------------
EURAMAX AMERIMAX EURAMAX EURAMAX
INTERNATIONAL HOLDINGS, EUROPEAN EUROPEAN NON-
PLC INC. HOLDINGS PLC HOLDINGS B.V. GUARANTOR CONSOLIDATED
(PARENT) (GUARANTOR) (CO-OBLIGOR) (CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ - $ - $ - $ - $ 23,332 $ - $ 23,332
Accounts receivable, net 2 - - - 82,573 - 82,575
Inventories - - - - 81,129 - 81,129
Other current assets - - - - 4,726 - 4,726
------------ ----------- ----------- ------------- ----------- ----------- ------------
Total current assets 2 - - - 191,760 - 191,762
Property, plant and equipment, net - - - - 114,345 - 114,345
Amounts due from parent/affiliates 73,191 76,444 43,324 44,193 - (237,152) -
Goodwill, net - - - - 74,677 - 74,677
Investment in consolidated
subsidiaries 57,428 33,224 1,093 22,236 - (113,981) -
Deferred income taxes - - - - 8,581 - 8,581
Other assets 1,775 - 711 781 3,979 - 7,246
------------ ----------- ----------- ------------- ----------- ----------- ------------
------------ ----------- ----------- ------------- ----------- ----------- ------------
$ 132,396 $ 109,668 $ 45,128 $ 67,210 $ 393,342 $ (351,133) $ 396,611
------------ ----------- ----------- ------------- ----------- ----------- ------------
------------ ----------- ----------- ------------- ----------- ----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdrafts $ - $ - $ - $ - $ 2,192 $ - $ 2,192
Accounts payable - - - - 59,845 - 59,845
Accrued expenses and other
current liabilities (891) 1,705 290 6,801 22,710 - 30,615
Current maturities of long-
term debt - - - - 17,107 - 17,107
------------ ----------- ----------- ------------- ----------- ----------- ------------
Total current liabilities (891) 1,705 290 6,801 101,854 - 109,759
Long-term debt, less current
maturities 70,605 - 27,179 37,216 70,286 - 205,286
Amounts due to parent/affiliates 7,705 82,713 8,764 1,695 136,275 (237,152) -
Other liabilities - - - - 10,558 - 10,558
Deferred income taxes - - - - 16,031 - 16,031
------------ ----------- ----------- ------------- ----------- ----------- ------------
Total liabilities 77,419 84,418 36,233 45,712 335,004 (237,152) 341,634
------------ ----------- ----------- ------------- ----------- ----------- ------------
Redeemable preference shares 47,961 - - - - - 47,961
------------ ----------- ----------- ------------- ----------- ----------- ------------
Ordinary shareholders' equity:
Ordinary shares 1,000 - 78 23 4,970 (5,071) 1,000
Paid-in capital - 17,000 6,922 9,077 89,458 (122,457) -
Retained earnings (deficit) 10,963 8,511 4,068 14,229 (32,042) 5,234 10,963
Accumulated other
comprehensive loss (4,947) (261) (2,173) (1,831) (4,048) 8,313 (4,947)
------------ ----------- ----------- ------------- ----------- ----------- ------------
Total ordinary shareholders'
equity 7,016 25,250 8,895 21,498 58,338 (113,981) 7,016
------------ ----------- ----------- ------------- ----------- ----------- ------------
------------ ----------- ----------- ------------- ----------- ----------- ------------
$ 132,396 $ 109,668 $ 45,128 $ 67,210 $ 393,342 $ (351,133) $ 396,611
------------ ----------- ----------- ------------- ----------- ----------- ------------
------------ ----------- ----------- ------------- ----------- ----------- ------------
</TABLE>
12
<PAGE>
EURAMAX INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
9. SUPPLEMENTAL CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED):
<TABLE>
<CAPTION>
DECEMBER 25, 1999
--------------------------------------------------------------------------------------
CO-OBLIGORS AND GUARANTOR SUBSIDIARIES
----------------------------------------------
EURAMAX EURAMAX
EURAMAX AMERIMAX EUROPEAN EUROPEAN
INTERNATIONAL HOLDINGS, HOLDINGS HOLDINGS NON-
PLC INC. PLC B.V. GUARANTOR CONSOLIDATED
(PARENT) (GUARANTOR)(CO-OBLIGOR)(CO-OBLIGOR) SUBSIDIARIES ELIMINATIONS TOTALS
--------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ -- $ -- $ -- $ -- $ 19,044 $ -- $ 19,044
Accounts receivable, net -- -- -- -- 81,845 -- 81,845
Inventories -- -- -- -- 74,735 -- 74,735
Other current assets -- -- -- -- 4,585 -- 4,585
--------- ---------- ---------- ---------- ----------- ----------- -----------
Total current assets -- -- -- -- 180,209 -- 180,209
Property, plant and equipment, net -- -- -- -- 117,080 117,080
Amounts due from parent/affiliates 73,197 72,188 43,622 46,447 93,168 (328,622) --
Goodwill, net -- -- -- -- 76,047 -- 76,047
Investment in consolidated subsidiaries 57,951 32,559 357 20,846 -- (111,713) --
Deferred income taxes -- -- -- -- 8,588 8,588
Other assets 1,834 -- 756 871 3,264 -- 6,725
--------- ---------- ---------- ---------- ----------- ----------- -----------
$ 132,982 $ 104,747 $ 44,735 $ 68,164 $ 478,356 $ (440,335) $ 388,649
--------- ---------- ---------- ---------- ----------- ----------- -----------
--------- ---------- ---------- ---------- ----------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdrafts $ -- $ -- $ -- $ -- $ 1,513 $ -- $ 1,513
Accounts payable -- -- -- -- 51,862 -- 51,862
Accrued expenses and other current
liabilities (577) (102) (294) 2,062 28,005 -- 29,094
Current maturities of long- term debt -- -- -- -- 9,182 -- 9,182
--------- ---------- ---------- ---------- ----------- ----------- -----------
Total current liabilities (577) (102) (294) 2,062 90,562 -- 91,651
Long-term debt, less current maturities 70,605 -- 27,179 37,216 73,496 -- 208,496
Amounts due to parent/affiliates 6,950 79,987 8,792 7,019 225,874 (328,622) --
Other liabilities -- -- -- -- 13,100 -- 13,100
Deferred income taxes -- -- -- -- 19,398 -- 19,398
--------- ---------- ---------- ---------- ----------- ----------- -----------
Total liabilities 76,978 79,885 35,677 46,297 422,430 (328,622) 332,645
--------- ---------- ---------- ---------- ----------- ----------- -----------
Redeemable preference shares 46,339 -- -- -- -- -- 46,339
--------- ---------- ---------- ---------- ----------- ----------- -----------
Ordinary shareholders' equity:
Ordinary shares 1,000 -- 78 23 4,970 (5,071) 1,000
Paid-in capital -- 17,000 6,922 9,077 89,458 (122,457) --
Retained earnings (deficit) 11,347 8,124 4,019 12,962 (36,475) 11,370 11,347
Accumulated other comprehensive
loss (2,682) (262) (1,961) (195) (2,027) 4,445 (2,682)
--------- ---------- ---------- ---------- ----------- ----------- -----------
Total ordinary shareholders' equity 9,665 24,862 9,058 21,867 55,926 (111,713) 9,665
--------- ---------- ---------- ---------- ----------- ----------- -----------
$ 132,982 $ 104,747 $ 44,735 $ 68,164 $ 478,356 $ (440,335) $ 388,649
--------- ---------- ---------- ---------- ----------- ----------- -----------
--------- ---------- ---------- ---------- ----------- ----------- -----------
</TABLE>
13
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
BUSINESS OVERVIEW
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements included elsewhere in this document, as well
as the year-end consolidated financial statements and management's discussion
and analysis included in the Company's Annual Report on Form 10-K for the year
ended December 25, 1998.
The Company is an international producer of value-added aluminum, steel, vinyl
and fiberglass fabricated products, with facilities strategically located in the
U.K., The Netherlands, France, and all major regions of the continental United
States. Euramax's core products include specialty coated coils, aluminum
recreational vehicle sidewalls, farm and agricultural panels, roofing
accessories, metal and vinyl raincarrying systems, soffit and fascia systems,
recreational vehicle ("RV") doors, and vinyl replacement windows. The Company's
customers include original equipment manufacturers ("OEMs") such as recreational
vehicle and commercial panel manufacturers; rural contractors; home centers;
manufactured housing producers; distributors; industrial and architectural
contractors; and home improvement contractors. Consistent with prior periods, a
significant portion of the Company's sales are generated in niche markets where
the Company enjoys a dominant market share, including aluminum RV sidewalls,
metal raincarrying products and steel siding.
The Company's strategy is to expand its leadership position as a producer of
aluminum and steel products and to further diversify product offerings,
customers and geographic regions in which it operates. Under this strategy,
during the first quarter of 1999, the Company acquired certain assets related to
the building materials business of Unimet Manufacturing, Inc. The acquisition is
expected to expand the Company's customer base for metal raincarrying systems
sold to the home center, buying cooperative and building distributor markets. In
addition, on April 23, 1999, the Company completed an acquisition of all of the
outstanding shares of Color Clad plc, a U.K. corporation. Color Clad is a
producer of aluminum exterior walls and roofs sold primarily to U.K. producers
of recreational vehicles (caravans). The acquisition is expected to augment the
Company's leading position as a supplier of such products in Western Europe. The
Company expects to continue identifying and acquiring businesses and assets as
part of executing its strategy.
RISK MANAGEMENT
The Company's exposure to and management of market risk from changes in interest
rates, exchange rates and commodity prices have not changed significantly from
the year ended December 25, 1998. For further information regarding the
Company's risk management, see "Management's Discussion and Analysis - Risk
Management" and "Item 7A. Quantitative and Qualitative Disclosures about Market
Risk" set forth in the Company's Annual Report on Form 10-K for the year ended
December 25, 1998.
14
<PAGE>
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 27, 1999 AS COMPARED TO QUARTER ENDED MARCH 28, 1998
The following table sets forth the Company's Statements of Earnings Data
expressed as a percentage of net sales:
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------
MARCH 27, MARCH 28,
1999 1998
--------------------------------------------
<S> <C> <C>
STATEMENTS OF EARNINGS DATA:
Net sales 100.0% 100.0%
Costs and expenses:
Cost of goods sold 81.4 83.5
Selling and general 9.9 8.4
Depreciation and amortization 2.6 2.1
--------------------------------------------
Earnings from operations 6.1 6.0
Interest expense, net (4.0) (4.3)
Other expenses, net (0.4) -
--------------------------------------------
Earnings before income taxes 1.7 1.7
Provision for income taxes .7 .7
--------------------------------------------
Net earnings 1.0% 1.0%
--------------------------------------------
--------------------------------------------
</TABLE>
NET SALES. Net sales decreased 7.5% to $132.4 million for the quarter ended
March 27, 1999, from $143.1 million for the quarter ended March 28, 1998. The
decrease is primarily attributable to lower sales in the European market for
painted aluminum and steel coil (primarily industrial sheet sales) due to a
general softening of demand. Net sales also declined due to lower aluminum
selling prices in 1999 associated with the falling world prices for aluminum.
The average price of aluminum on the London Metal Exchange for the quarter ended
March 27, 1999, was approximately 18.3% lower than the average for the quarter
ended March 28, 1998. Sales of aluminum based products were approximately 54.5%
of net sales for the quarter ended March 27, 1999. Net sales in the U.S.
decreased 4.3% to $81.0 million for the quarter ended March 27, 1999, from $84.6
million for the quarter ended March 28, 1998. Net sales in Europe decreased
12.1% to $51.4 million for the quarter ended March 27, 1999, from $58.5 million
for the quarter ended March 28, 1998.
COST OF GOODS SOLD. Cost of goods sold, as a percentage of net sales, decreased
2.1% for the quarter ended March 27, 1999, to 81.4% in 1999 from 83.5% in 1998.
This decrease is primarily attributable to operational improvements realized at
the Helena, Arkansas paintline facility, a decrease in raw material aluminum
prices, and improved margins on sales to home centers and rural contractors in
North America.
SELLING AND GENERAL. Selling and general expenses, as a percentage of net sales,
increased 1.5% for the quarter ended March 27, 1999, to 9.9% in 1999 from 8.4%
in 1998. This increase is primarily attributable to investments in technology
and product development.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization, as a percentage of
net sales, increased 0.5% for the quarter ended March 27, 1999, to 2.6% in 1999
from 2.1% in 1998 due to increased depreciation on 1998 capital expenditures.
EARNINGS FROM OPERATIONS. For reasons stated above, earnings from operations in
the U.S. increased to $3.7 million for the quarter ended March 27, 1999, from
$1.3 million for the quarter ended March 28, 1998.
15
<PAGE>
Earnings from operations in Europe decreased to $4.3 million for the quarter
ended March 27, 1999, from $7.2 million for the quarter ended March 28, 1998.
INTEREST EXPENSE, NET. Net interest expense, as a percentage of net sales,
decreased 0.3% to $5.3 million for the quarter ended March 27, 1999, from $6.1
million for the quarter ended March 28, 1998.
OTHER EXPENSES, NET. Other expenses were not significant for the quarters ended
March 27, 1999 and March 28, 1998.
PROVISION FOR INCOME TAXES. The income tax provision for the period is based on
the effective tax rate expected to be applicable for the full year. The
effective rate for the provision for income taxes increased from 41.8% to 43.7%
for the quarters ended March 28, 1998 and March 27, 1999, respectively. The
higher rate in 1999 is primarily due to an increase in U.S. earnings coupled
with decreased earnings in Europe. U.S. earnings are typically subject to higher
tax rates than European earnings, due in part to state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY. The Company's primary liquidity needs arise from debt service
incurred in connection with acquisitions and the funding of capital
expenditures. As of March 27, 1999, the Company had outstanding indebtedness of
$222.4 million, representing an increase of $4.7 million as compared to December
25, 1998. Included in such indebtedness was approximately $87.4 million under
the Company's Credit Agreement, consisting of $44.2 million under the Company's
Term Loans and $43.2 million under the Company's Revolving Credit Facility. The
undrawn amount of the Revolving Credit Facility at March 27, 1999, was
approximately $56.8 million, which was available for working capital and general
corporate purposes, subject to borrowing base limitations. As of March 27, 1999,
this amount was fully available.
The Company's leveraged financial position requires that a substantial portion
of the Company's cash flow from operations be used to pay interest on the Notes,
principal and interest under the Company's Credit Agreement and other
indebtedness. Significant increases in the floating interest rates on the Term
Loans and Revolving Credit Facility would result in increased debt service
requirements, which may reduce the funds available for capital expenditures and
other operational needs. In addition, the Company's leveraged position may
impede its ability to obtain financing in the future for working capital,
capital expenditures and general corporate purposes. Further, the Company's
leveraged position may make it more vulnerable to economic downturns and may
limit its ability to withstand competitive pressures.
With respect to the Term Loans, in addition to scheduled current maturities of
$7.8 million, the Company has classified $9.3 million as current maturities of
long-term debt, because it has the ability and intent to currently pay its Term
Loans under the Dutch Guilder facility. Effective April 6, 1999, the Company
amended its Credit Agreement to, among other items, allow for the prepayment of
the Term Loans under the Dutch Guilder facility and to permanently waive the
1998 Excess Cash Flow Provision.
The Company's primary source of liquidity is funds generated from operations,
which are supplemented by borrowings under the Credit Agreement. The Company
used $2.8 million less cash for operating activities during the quarter ended
March 27, 1999, compared to the quarter ended March 28, 1998. Increased
operating cash flows in the first quarter of 1999 as compared to the first
quarter of 1998 are primarily due to a significantly smaller increase in
accounts receivable between March 27, 1999 and December 25, 1998 (less than 1%),
as compared to the change between March 28, 1998 and December 26, 1997 (17.3%).
16
<PAGE>
See Note 1 and Note 8 to the Condensed Consolidated Financial Statements for
information regarding acquisitions.
The Company believes that cash generated from operations and, subject to
borrowing base limitations, borrowings under the Company's Credit Agreement will
be adequate to meet its needs for the foreseeable future, although no assurance
to that effect can be given.
CAPITAL EXPENDITURES. The Company's capital expenditures were $2.4 million and
$3.0 million for the quarters ended March 27, 1999 and March 28, 1998,
respectively. Capital expenditures in 1999 include approximately $631.1 thousand
for improvements to the paintline in Corby, England. The balance of capital
expenditures in both periods primarily relate to purchases and upgrades of
fabricating equipment, transportation and material moving equipment, and
information systems.
The Company has made and will continue to make capital expenditures to comply
with Environmental Laws. The Company estimates that its environmental capital
expenditures will be approximately $1.0 million in 1999.
WORKING CAPITAL MANAGEMENT. Working capital was $82.0 million as of March 27,
1999, compared to $88.6 million as of December 25, 1998. The Company continues
to aggressively manage working capital levels and believes that current levels
of working capital represent a liquid source of funds available for future cash
flows.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the application year. Any of the Company's
computers and equipment that have date-sensitive software, including embedded
computer chips, may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure, operating equipment failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
The Company's plan to resolve the Year 2000 issue involves four phases:
assessment, remediation, testing and implementation. To date, management has
fully completed its assessment of the effect of the Year 2000 issue on its
information systems, including the operating systems and equipment used in its
manufacturing operations. Based on assessments conducted in 1997, the Company
determined that it would be required to modify or replace significant portions
of its software at two of its subsidiaries so that its computer systems will
properly utilize dates beyond December 31, 1999. Based upon assessments
conducted in 1998 with regard to operating equipment, the Company determined
that it would not be required to modify or replace any material pieces of
operating equipment in order for the equipment to properly utilize dates beyond
December 31, 1999.
With respect to remediation, two of the Company's subsidiaries are currently
undertaking conversions to fully integrated third-party software packages that
will process the majority of the Company's key transactions. These conversions,
including the testing and implementation of the new systems, are expected to be
fully complete during the second half of 1999. Historical costs incurred through
March 27, 1999, are approximately $2.1 million. The Company estimates the costs
to complete the conversions to be approximately $600.0 thousand, which will be
funded through operating cash flows. The total estimated costs of conversion to
the integrated third party software packages also include the costs of
conversion to the Euro (see "European Currency"). The Company is approximately
60% complete with the remediation phase related to the modification and
replacement of the systems software located at the two subsidiaries. The Company
believes that with the current modifications of existing software, the Year 2000
issue can be mitigated with respect to its significant processes.
17
<PAGE>
Based upon the estimated level of effort necessary to complete the task, the
Company is approximately 80% complete on the testing phase for all other systems
and operating equipment that the Company has assessed as being capable of
properly utilizing dates beyond December 31, 1999. Completion of the testing
phase is expected to occur by mid-1999.
With respect to third parties, the Company has communicated with many of its
major customers and its major vendors and suppliers to determine their state of
readiness with respect to the Year 2000 issue. In addition, the Company
conducted tests with several of its major vendors and suppliers during 1998, and
will continue to conduct such tests during 1999. All costs associated with
supplier and vendor compliance will be borne by the suppliers and vendors. To
date, based upon the information provided by customers and suppliers and the
tests which have been conducted with suppliers, the Company is not aware of any
problems that would materially impact its results of operations, liquidity or
capital resources.
While the Company currently believes that it will be able to modify or replace
its affected systems in time to minimize any detrimental effects on its
operations, failure to do so, or the failure of the Company's major customers
and suppliers to modify or replace their affected systems, could have a material
adverse impact on the Company's results of operations, liquidity or consolidated
financial position in the future. The most reasonably likely worst case scenario
of failure by the Company or its customers and suppliers to resolve the Year
2000 issue in a timely fashion would be a temporary slowdown in operations at
one or more of the Company's facilities and a temporary inability on the part of
the Company to timely process orders and billings.
In the event that modifications and replacements of systems are not completed
timely, the Company's individual subsidiaries have identified and considered
various contingency options, including identification of alternate suppliers and
vendors, and including the processing of significant transactions by other
facilities located within the Company whose systems are capable of properly
utilizing dates beyond December 31, 1999.
EUROPEAN CURRENCY
As provided in the 1992 treaty on European Union, on January 1, 1999, a new
single European currency, the "Euro," became a currency in its own right,
replacing the currencies of the eleven initial members of the European Union
("participating countries"). Fixed conversion rates between the participating
countries' existing currencies ("legacy currencies") and the Euro were
established as of that date. The Euro is available for non-cash transactions.
Between January 1, 1999 and January 1, 2002 (the "transition period"), the
participating countries have the option of accounting for their transactions in
either Euros or their legacy currencies. The legacy currencies are scheduled to
remain legal tender as denominations of the Euro until at least January 1, 2002,
but not later than July 1, 2002. Beginning July 1, 2002, legacy currencies will
cease to exist.
SCHEDULE FOR INTRODUCTION OF THE EURO - Three of the Company's European
subsidiaries are located in participating countries, but have elected the option
of accounting for their transactions in their legacy currencies during at least
the first year of the transition period. However, the Company, including
subsidiaries located in both participating as well as non-participating
countries, was able to transact business in the Euro as of January 1, 1999. This
includes the ability to make and receive payments in the Euro, to invoice in the
Euro, and to provide pricing in the Euro.
ECONOMIC IMPACT ON THE COMPANY - The increased price transparency resulting from
the use of a single currency in the participating countries may affect the
ability of certain companies to price their products
18
<PAGE>
differently in the various European markets. A possible result of this pricing
transparency is price harmonization at lower average prices for products sold in
some markets. However, due to the niche markets in which the Company operates,
the Company does not anticipate that pricing transparency resulting from the use
of a single currency by the participating countries will materially impact its
net sales or earnings from operations.
In addition to the economic impact of pricing transparency, conversion to the
Euro may reduce the Company's exposure to changes in foreign exchange rates due
to the effect of having various assets and liabilities denominated in a single
currency as opposed to various legacy currencies. However, because there will be
less diversity in the Company's exposure to foreign currencies, movements in the
Euro's value in U.S. dollars could have a more pronounced effect, positive or
negative, on the Company's results.
COSTS OF CONVERSION TO THE EURO - The Company's European subsidiaries located in
participating countries have converted or are in the process of converting to
new computer systems to prepare for the Year 2000. These systems will also be
Euro-capable. The conversions are expected to be complete by mid-1999. The
Company estimates that its costs to complete the conversions to the new systems,
which relate to Year 2000 issues, the Euro and operational improvements, will be
approximately $1.0 million in 1999, and will be funded through operating cash
flows. Other costs of conversion to the Euro are not expected to be material.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999 (December 31, 2000
for the Company). SFAS 133 requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. For fair-value hedge
transactions in which the Company is hedging changes in the fair value of an
asset, liability, or firm commitment, changes in the fair value of the
derivative instrument will generally be offset in the income statement by
changes in the hedged item's fair value. For cash-flow hedge transactions, in
which the Company is hedging the variability of cash flows related to a
variable-rate asset, liability, or a forecasted transaction, changes in the fair
value of the derivative instrument will be reported in other comprehensive
income. The gains and losses on the derivative instrument that are reported in
other comprehensive income will be reclassified as earnings in the periods in
which earnings are impacted by the variability of the cash flows of the hedged
item. The ineffective portion of all hedges will be recognized in current period
earnings. Management is currently reviewing the provisions of SFAS No. 133 and
does not believe that the Company's financial statements will be materially
impacted by the adoption.
ENVIRONMENTAL MATTERS
The Company's exposure to environmental matters has not changed significantly
from the year ended December 25, 1998. For detailed information regarding
environmental matters, see "Management's Discussion and Analysis
Risk-Management" set forth in the Company's Annual Report on Form 10-K for
the year ended December 25, 1998.
NOTE REGARDING FORWARD LOOKING STATEMENTS: The Management's Discussion and
Analysis and other sections of this Form 10-Q may contain forward looking
statements that are based on current expectations, estimates and projections
about the industries in which the Company operates, management's beliefs and
assumptions made by management. Words such as "expects," "anticipates,"
"intends," "plans," "believes,"
19
<PAGE>
"estimates," or variations of such words and similar expressions are intended to
identify such forward looking statements. These forward-looking statements are
based on a number of assumptions that could ultimately prove inaccurate, and,
therefore, there can be no assurance that they will prove to be accurate. All
such forward looking statements are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. Important factors that could
cause future financial performance to differ materially and significantly from
past results and from those expressed or implied in this document include,
without limitation, the risks of acquisition of businesses (including limited
knowledge of the businesses acquired and misrepresentations by sellers), changes
in business strategy or development plans, the cyclical demand for the Company's
products, the supply and/or price of aluminum and other raw materials, currency
exchange rate fluctuations, environmental regulations, availability of
financing, competition, reliance on key management personnel, ability to manage
growth, loss of customers, and a variety of other factors. For further
information on these and other risks, see the "Risk Factors" section of Item 1
of the Company's Annual Report on Form 10-K for the year ended December 25,
1998, as well as the Company's other filings with the Securities and Exchange
Commission. The Company assumes no obligation to update publicly its forward
looking statements, whether as a result of new information, future events or
otherwise.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of Euramax
International plc and its subsidiaries are included in Part I, Item 1.
Condensed Consolidated Statements of Earnings for the quarters
ended March 27, 1999 and March 28, 1998
Condensed Consolidated Balance Sheets at March 27, 1999 and
December 25, 1998
Condensed Consolidated Statements of Cash Flows for the quarters
ended March 27, 1999 and March 28, 1998
Notes to Condensed Consolidated Financial Statements
(b) The Company filed no reports on Form 8-K during the three months ended March
27, 1999.
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
(c) Exhibits:
2.1** Purchase Agreement dated as of April 28, 1997, among the
Company and Genstar Capital Corporation ("GCC"), Ontario
Teachers' Pension Plan Board and the Management Stockholders
of Gentek Holdings, Inc. ("Holdings") as sellers GCC as
sellers' representative; Holdings and Gentek Building
Products, Inc. ("GBPI"). (Incorporated by reference to Exhibit
2.1 of the Registrant's Form 8-K filed August 1, 1997).
3.1* Articles of Association of Euramax International plc
3.2* Memorandum and Articles of Association of Euramax European
Holdings plc
3.3* Articles of Association of Euramax International B.V.
3.4* Articles of Incorporation of Amerimax Holdings, Inc.
3.5* Bylaws of Amerimax Holdings, Inc.
4.3* Indenture, dated as of September 25, 1996, by and among
Euramax International plc, Euramax European Holdings plc,
Euramax European Holdings B.V., Amerimax Holdings, Inc. and
the Chase Manhattan Bank, as Trustee.
4.4* Deposit Agreement, dated as of September 25, 1996, by and
among Euramax International plc, Euramax European Holdings
plc, Euramax European Holdings B.V., and The Chase Manhattan
Bank, as book-entry depositary
4.5* Registration Rights Agreement, dated as of September 25, 1996,
by and among Euramax International plc, Euramax European
Holdings plc, Euramax European Holdings B.V., Amerimax
Holdings, Inc. and J.P. Morgan Securities Inc. and Goldman
Sachs & Co.
4.6* Purchase Agreement dated as of September 18, 1996, by and
among Euramax International Ltd., Euramax European Holdings
Ltd., Euramax European Holdings B.V., Amerimax Holdings, Inc.
and J.P. Morgan Securities Inc. and Goldman Sachs & Co.
10.26 Incentive Compensation Plan effective January 1, 1997, by
Euramax International plc
10.27 Phantom Stock Plan effective January 1, 1999, by Euramax
International plc
27 Financial Data Schedule
- --------------------------------------------------------------------------------
* Incorporated by reference to the Exhibit with the same number in the
Registrant's Registration Statement on Form S-4 (333-05978) which
became effective on February 7, 1997.
** Incorporated by reference to the Exhibit with the same number in the
Registrant's Annual Report on Form 10-K (333-05978) which was filed on
March 12, 1998.
21
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934, EURAMAX INTERNATIONAL PLC HAS DULY CAUSED THIS REPORT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
EURAMAX INTERNATIONAL PLC
Signature Title Date
--------- ----- ----
/s/ J. DAVID SMITH Chief Executive Officer and President April 26, 1999
- -------------------------
J. David Smith
/s/ R. SCOTT VANSANT Chief Financial Officer and Secretary April 26, 1999
- -------------------------
R. Scott Vansant
22
<PAGE>
Exhibit 10.26
EURAMAX INTERNATIONAL PLC
EURAMAX INCENTIVE COMPENSATION PLAN
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Purpose.............................................................. 1
2. Definitions.......................................................... 1
3. Administration....................................................... 4
4. Awards............................................................... 4
(a) Performance Objectives, Target Awards and Award Levels........... 4
(b) Determination of Awards.......................................... 5
(c) Payment of Final Awards.......................................... 6
5. General Provisions................................................... 7
(a) Taxes............................................................ 7
(b) Limitations on Rights Conferred under Plan and Beneficiaries..... 8
(c) Unfunded Status of Awards; Creation of Trusts.................... 8
(d) Governing Law; Arbitration....................................... 8
(e) Amendment and Termination of Plan and Awards..................... 9
(f) Effective Date................................................... 9
6. Change in Control.................................................... 9
(a) Payment of Awards................................................ 9
(b) Other Plan Provisions Unaffected................................. 10
</TABLE>
<PAGE>
EURAMAX INTERNATIONAL PLC
EURAMAX INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of this Euramax Incentive Compensation Plan (the "Plan")
is to assist Euramax International plc (the "Company") and its subsidiaries in
motivating high performance employees who occupy key positions and contribute to
the growth and annual profitability of the Company and its subsidiaries through
the award of annual incentives.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be defined
as set forth below:
(a) "Average Net Assets" means, as to the Company, working capital,
excluding cash, plus net fixed assets of the Company and its
subsidiaries on a consolidated basis, or as to the relevant Operating
Unit, working capital, excluding cash, plus net fixed assets of such
Operating Unit, as shown on each of the 13 unaudited monthly balance
sheets of the Company (or of the relevant Operating Unit) prepared in
the ordinary course by the Company for a Performance Year divided by
13.
(b) "Award" means the fixed amount or percentage of Salary payable to a
Participant as determined pursuant to Section 4.
(c) "Award Level" means the percentage of a fixed amount of Salary
payable to a Participant based on the level of Performance Objectives
achievement as determined pursuant to Section 4(a).
(d) "Beneficiary" with respect to Senior Executive Participants means
the person, persons, trust or trusts which have been designated by the
Senior Executive Participant in his or her most recent written
beneficiary designation filed with the Company to receive the benefits
specified under this Plan in the event of the Senior Executive
Participant's death; Beneficiary with respect to all other Participants
shall mean the person, persons, trust or trusts which have been
designated by the Participant in his or her most recent beneficiary
designation to receive the benefits specified under the Company's Group
Life Insurance Plan. In either case, if there is no designated
Beneficiary or surviving designated Beneficiary, then Beneficiary shall
mean the person, persons, trust or trusts entitled by will or the laws
of descent and distribution to receive such benefits.
(e) "Board" means the Company's Board of the Directors.
(f) "Cause" means (i) the willful and continued failure by the
Participant to perform substantially his/her duties with the Company
(other than any such failure resulting from the Participant's
incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to the Participant by the CEO
or the President of the Company which specifically identifies the
manner in which the Participant has not substantially performed his
duties, (ii) the willful engagement by the Participant in conduct which
is not authorized by the Board of Directors of the Company or within
the normal course of the Participant's business decisions and is known
by the Participant to be materially detrimental to the best interests
of the Company or any of its subsidiaries, or (iii) the willful
engagement by the Participant in illegal conduct or any act of serious
dishonesty which adversely affects, or, in the reasonable estimation of
the Board of Directors of the Company, could in the future adversely
affect, the value, reliability or performance of the Participant to the
Company in a material manner. Any act, or failure to act,
<PAGE>
based upon authority given pursuant to a resolution duly adopted by the
Board of Directors of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Participant in good faith and in the best interests
of the Company. Notwithstanding the foregoing, a Participant shall not
be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Participant written notice specifying
the basis of the "Cause". In such event, the Participant will be given
an opportunity, together with his counsel, to be heard before the Board
so that the Board may determine if, the Participant was guilty of the
conduct set forth above in (i), (ii) or (iii) of this subparagraph, in
which event the determination of the Board shall be binding on the
Participant
(g) "CEO" means the Chief Executive Officer of the Company.
(h) "Change in Control" shall occur if and when any person or entity
which is not as of the date hereof a shareholder or affiliate of a
shareholder of the Company (i) becomes a record or beneficial owner,
directly or indirectly, of securities of the Company representing more
than 50% of the combined voting power of the Company's then outstanding
securities (whether by merger, consolidation, recapitalization,
reorganization, purchase of outstanding share capital or otherwise) or
(ii) purchases all or substantially all of the consolidated assets of
the Company, in each case, which purchase has been approved by the
Board and the holders of a majority of the outstanding ordinary shares
of the Company voting together as a single class.
(i) "Committee" means the Board of the Company or such committee as may
be designated by the Board to administer the Plan.
(j) "Company" means Euramax International plc, a company incorporated
in England and Wales or any successor corporation.
(k) "EBITDA" means, as to the Company, the Company's and its
subsidiaries' earnings on a consolidated basis, or as to an Operating
Unit, that Operating Unit's earnings for the Performance Year,
determined based on generally accepted accounting principles,
consistently applied, before deducting interest, taxes, depreciation
and amortization based upon the annual financial statements certified
by the independent certified public accountants regularly employed by
the Company to audit its books and records.
(l) "Eligible Employee" means each officer and other employees of the
Company or its subsidiaries who are deemed to impact the Company's
annual results, as determined by the Committee.
(m) "Executive Participant" means each Participant who has been
designated as such by the CEO with Committee approval and who is not a
Senior Executive Participant.
(n) "Operating Unit" means a subsidiary, business division or operating
unit of the Company, designated as such by the CEO, for which a
Participant works.
(o) "Participant" means Senior Executive Participants, Executive
Participants and all other Eligible Employees designated to participate
in the Plan for a designated Performance Year. Any additions to the
Participant list in effect upon the adoption of this Plan must be
approved by the CEO.
<PAGE>
(p) "Plan" means this Euramax Incentive Compensation Plan.
(q) "Performance Objectives" means the measure of performance specified
by the Committee (or the CEO, if assigned by the Committee) in
accordance with Section 4(a), the achievement of which will trigger the
vesting of Awards.
(r) "Performance Year" means the fiscal year performance during all or
part of which a Participant's entitlement to receive payment of an
Award is based.
(s) "Permanent Disability" means a Participant is unable to perform, by
reason of physical or mental incapacity, his employment duties to the
Company, for a period of one hundred twenty (120) consecutive days or a
total period of two hundred ten (210) days in any three hundred sixty
(360) day period.
(t) "Salary" means a participant's annual base salary rate as in effect
on September 30 of each Performance Year or, in the event of a
Participant's termination during a Performance Year, on the date of
termination.
(u) "Senior Executive Participants" mean the CEO of the Company,
Managing Directors and General Managers of the Company or its
subsidiaries and other key executives of the Company or its
subsidiaries who have been designated as such by the CEO with Committee
approval.
(v) "Target Award" means a fixed amount or specified percentage of a
Participant's Salary payable based upon 100% achievement of Performance
Objectives.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each
case subject to and consistent with the provisions of the Plan, to
select Participants, grant Awards, determine the type, number, and
other terms and conditions of, and all other matters relating to,
Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of
the Plan, construe and interpret the Plan and Award agreements and
correct defects, supply omissions, or reconcile inconsistencies
therein, and to make all other decisions and determinations as the
Committee may deem necessary or advisable for the administration of the
Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee shall
exercise sole and exclusive discretion on any matter relating to a
Participant. Any action of the Committee shall be final, conclusive,
and binding on all persons, including the Company, the Operating Units,
Participants, persons claiming rights from or through a Participant,
and stockholders. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The
Committee may delegate to officers or managers of the Company or any
subsidiary, or committees thereof, the authority, subject to such terms
as the Committee shall determine, to perform administrative functions
and to perform such other functions as the Committee may determine.
(c) LIMITATION OF LIABILITY. The Committee may appoint agents to assist
it in administering the Plan. The Committee and each member thereof
shall be entitled to, in good faith,
<PAGE>
rely or act upon any report or other information furnished to him by
any officer or employee of the Company or a subsidiary, the Company's
independent certified public accountants, or any other agent assisting
in the administration of the Plan. Members of the Committee and any
officer or employee of the Company or a subsidiary acting at the
direction or on behalf of the Committee shall not be personally liable
for any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to any such
action or determination.
4 AWARDS.
(a) PERFORMANCE OBJECTIVES, TARGET AWARDS AND AWARD LEVELS.
(i) Prior to February 15 of each Performance Year (or as promptly as
practicable thereafter), the Committee (or the CEO, if assigned by the
Committee) shall establish Performance Objectives for each Participant
for such Performance Year. The Committee (or the CEO, if assigned by
the Committee) may, from time to time, change the Performance
Objectives to specify different measures of performance of the Company
and its subsidiaries on a consolidated basis, or of each Operating Unit
within the Company, measures of individual performance of the
Participant, or such other objective (and combinations of objectives)
the achievement of which is expected to benefit the Company and its
stockholders. A single Performance Objective may be specified for all
Participants, or separate Performance Objectives may be specified for
different groups of Participants or for individual Participants.
(ii) Prior to February 15 of each Performance Year (or as promptly as
practicable thereafter), the Committee (or the CEO, if assigned by the
Committee) shall establish Target Awards and, if deemed appropriate,
Award Levels. Such Target Awards will specify the Award payable to each
Participant upon 100% achievement of the Performance Objectives
applicable to such Participant. In addition, Award Levels may be
established to determine whether, and the extent to which, a portion of
the Target Award shall be payable to a Participant if the applicable
Performance Objectives are not fully achieved, and whether, and the
extent to which, payments in addition to the Target Award shall be made
if the applicable Performance Objectives are exceeded. The Target
Awards for the 1997 Performance Year and the manner for calculating
Awards is set forth on EXHIBIT A attached hereto, which may from time
to time be amended by the Board.
(iii) The Committee (or the CEO, if assigned by the Committee) is
authorized at any time during or after a Performance Year, in its sole
and absolute discretion, to adjust, modify, or specify new Performance
Objectives, Target Awards, Award Levels and related terms and
conditions, (x) in recognition of unusual or nonrecurring events
affecting the Company or any Operating Unit or the financial statements
of the Company or any Operating Unit, or in response to changes in
applicable laws, regulations or accounting principles, (y) with respect
to any Participant whose position or duties with the Company or any
Operating Unit changes during a Performance Year, or (z) with respect
to any person who first becomes a Participant after the first day of
the Performance Year.
(b) DETERMINATION OF AWARDS.
(i) As promptly as practicable following approval by the Board of the
annual audit of the Company performed by the independent certified
public accountants employed by the
<PAGE>
Company in respect of a Performance Year, the Committee (or the CEO, if
assigned by the Committee) shall determine whether and the extent to
which Performance Objectives applicable to Participants were achieved
and the Awards that correspond to such achievement and/or allocations
as specified under the Award Levels for the Performance Year. All
Awards shall be based on the annual financial statements of the Company
as certified by the independent certified public accountants regularly
employed by the Company to audit its books and records. Actual
performance shall be calculated after accrual for all bonuses and
Awards. Exchange rates as published in the Company's annual budget
shall be used to convert local currencies into U.S. dollars for the
purposes of determining the Company's earnings and Return for bonus
calculations notwithstanding the actual exchange rate as of the date of
calculation. The Committee may, in its sole and absolute discretion, in
view of the Committee's assessment of the business strategy of the
Company and subsidiaries, performance of comparable organizations,
economic and business conditions, and any of the circumstances deemed
relevant, increase or decrease final Award amounts otherwise determined
under the first sentence of this Section 4(b)(i).
(ii) Each Participant shall be entitled to an Award in accordance with
the Target Award and any Award Levels (as adjusted) applicable to him
or her based on the extent to which the Performance Objectives
applicable to him or her have been achieved, PROVIDED, HOWEVER, that
the Committee may determine, in its sole and absolute discretion, that
a Participant shall not receive an Award if the Participant has
received an unsatisfactory personal performance assessment for the
Performance Year (whether or not such personal performance assessment
was a component of the Participant's Performance Objectives for the
Performance Year).
(iii) Unless otherwise determined by the Committee, if a Participant
ceases to be employed by the Company or an Operating Unit prior to the
end of a Performance Year for any reason (including, without
limitation, by reason of the sale of all or substantially all of the
assets of the Participant's Operating Unit or the sale, transfer or
exchange of such Operating Unit's outstanding securities (whether by
merger, consolidation, recapitalization, reorganization, sale of
outstanding share capital or otherwise) to an entity which is neither
another Operating Unit of, nor affiliated with, the Company) other than
death, retirement, disability (as determined by the Committee) or
transfer to an Operating Unit or to another Operating Unit, such
Participant shall not be entitled to receive any portion of his or her
Award for such Performance Year unless otherwise determined by the
Committee (or the CEO if assigned by the Committee) in its sole and
absolute discretion. If such cessation of employment results from such
Participant's death, retirement, disability (as determined by the
Committee) or transfer to an Operating Unit or to another Operating
Unit, the Committee (or the CEO if assigned by the Committee) shall
estimate in its sole and absolute discretion the level of achievement
of Performance Objectives applicable to such Participant during the
period of such Performance Year prior to such cessation, and such
Participant or his or her Beneficiary shall be entitled to receive
payment of the percentage of his or her Target Award or Award Level
amount as determined in accordance with this Section 4(b)(iii) for the
pro rata portion of such Performance Year during which such Participant
was employed by the Company or an Operating Unit, unless payment of a
greater percentage is approved in the sole and absolute discretion of
the Committee.
(c) PAYMENT OF FINAL AWARDS.
(i) Except as otherwise provided in paragraph (ii) and (iii) below,
each Participant shall receive payment, in a cash lump sum, of his or
her final Award as soon as
<PAGE>
practicable following the determination in respect thereof made
pursuant to Section 4(b) (a "Section 4(c)(i) Payment Date").
(ii) In respect only of the Senior Executive Participants, the amount,
if any, by which a final Award exceeds the Target Award for such Senior
Executive Participant (the "Excess Award") shall be paid as follows:
(a) one third of the Excess Award will be paid at the same time the
final Award is paid pursuant to Section 4(c)(i) above, (b) one third of
the Excess Award, plus interest thereon at a rate of 6% per annum from
the Section 4(c)(i) Payment Date until paid, will be paid on December
31 (or within 15 days thereafter) of the first calendar year
immediately following the Performance Year in respect of which such
Award was determined and (c) one third of such Excess Award, plus
interest thereon at a rate of 6% per annum from the Section 4(c)(i)
Payment Date until paid, will be paid on December 31 (or within 15 days
thereafter) of the second calendar year immediately following the
Performance Year in respect of which such Award was determined. Any
unpaid Excess Award, plus interest thereon at a rate of 6% per annum
from the Section 4(c)(i) Payment Date until paid, will be paid within
15 days after death, normal retirement, determination of Permanent
Disability or any termination of employment of a Senior Executive
Participant for any reason other than for Cause. If the Senior
Executive Participant's employment with the Company or any subsidiary
is terminated for Cause or if the Senior Executive Participant
voluntarily resigns prior to the date such Excess Award or portion
thereof otherwise would be payable, any rights to payment of any
portion of such Excess Award shall be forfeited by the Senior Executive
Participant. This Section 4(c)(ii) shall not apply to any Participants
other than Senior Executive Participants. All Participants other than
Senior Executive Participants will receive the entire Excess Award on
the Section 4(c)(i) Payment Date.
(iii) In the event of the death of a Participant, any payments
hereunder due to such Participant shall be paid to his or her
Beneficiary at the time such payment otherwise would have been made. In
the event of the normal retirement or Permanent Disability of a
Participant, any payments hereunder due to such Participant shall be
paid to such Participant at the time such payment otherwise would have
been made.
(iv) In the event of a Change in Control, any payments hereunder due to
such Participant shall be paid in a cash lump sum no later than fifteen
(15) days after a Change in Control.
5. GENERAL PROVISIONS
(a) TAXES. The Company or any subsidiary is authorized to withhold from any
Award granted, any payment relating to an Award under the Plan or any payroll or
other payment to a Participant, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority for the Company to withhold payments in satisfaction of a
Participant's tax obligations.
(b) LIMITATIONS ON RIGHTS CONFERRED UNDER PLAN AND BENEFICIARIES.
(i) Status as a Participant shall not be construed as a commitment that
any Award will become payable under the Plan. Nothing in the Plan shall
be deemed to give any Eligible Employee any right to participate in the
Plan except in accordance herewith.
<PAGE>
(ii) Nothing contained in the Plan or in any documents related to the
Plan or to any Award shall confer upon any Eligible Employee or
Participant any right to continue as an Eligible Employee, Participant
or in the employ of the Company or a subsidiary or constitute any
contract or agreement of employment, or interfere in any way with the
right of the Company or a subsidiary to reduce such person's
compensation, to change the position held by such person or to
terminate the employment of such Eligible Employee or Participant, with
or without cause, but nothing contained in this Plan or any document
related thereto shall affect any other contractual right of any
Eligible Employee or Participant.
(iii) Except as specifically authorized in this Plan, no benefit
payable under, or interest in, this Plan shall be transferable by a
Participant except by will or the laws of descent and distribution or
otherwise be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such
attempted action shall be void and no such benefit or interest shall
be, in any manner, liable for, or subject to, debts, contracts,
liabilities, engagements or torts of any Eligible Employee or
Beneficiary. Any attempt at transfer, assignment or other alienation
prohibited by the preceding sentence shall be disregarded and all
amounts payable hereunder shall be paid only in accordance with the
provisions of the Plan.
(c) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is intended to
constitute an "unfunded" plan for incentive compensation. With respect to any
amounts payable to a Participant pursuant to an Award, nothing contained in the
Plan (or in any documents related thereto), nor the creation or adoption of the
Plan, the grant of any Award, or the taking of any other action taken pursuant
to the provisions of the Plan shall give any such Participant any rights that
are greater than those of a general creditor of the Company; PROVIDED, HOWEVER,
that the Committee may authorize the creation of trusts or make other
arrangements to meet the Company's obligations under the Plan pursuant to any
Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant.
(d) GOVERNING LAW; ARBITRATION. The validity, construction, and effect
of the Plan, any rules and regulations relating to the Plan, and any Award
agreement shall be determined in accordance with the Georgia Business
Corporation Code, to the extent applicable, other laws (including those
governing contracts) of the State of Georgia, without giving effect to
principles of conflicts of laws, and applicable federal law. If any provision
hereof shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions shall continue to be fully effective.
Any dispute or controversy arising under or in connection with this Plan
shall be settled exclusively by arbitration in Atlanta, Georgia by three
arbitrators in accordance with the rules of the American Arbitration
Association in effect at the time of submission to arbitration. Judgment may
be entered on the arbitrators' award in any court having jurisdiction. For
purposes of settling any dispute or controversy arising hereunder or for the
purpose of entering any judgment upon an award rendered by the arbitrators,
the Company and the Participant hereby consent to the jurisdiction of any or
all of the following courts: (i) the United States District Court for the
Northern District of Georgia, (ii) any of the courts of the State of Georgia,
or (iii) any other court having jurisdiction. The Company and the Participant
hereby waive, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to such jurisdiction and any
defense of inconvenient forum. The Company and the Participant hereby agree
that a judgment upon an award rendered by the arbitrators may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided
by law. The costs and expenses of the arbitration,
<PAGE>
including without limitation the legal fees and expenses of both parties, shall
be borne by the party against whom the award is entered as determined by the
arbitrators, in their sole discretion.
(e) AMENDMENT AND TERMINATION OF PLAN AND AWARDS. Notwithstanding anything
herein to the contrary, the Board of Directors may, at any time, terminate or,
from time to time, amend, modify or suspend the Plan and the terms and
provisions of any Awards theretofore awarded to any Participants which have not
been settled by payment. No Award may be granted during any suspension of the
Plan or after its termination.
(f) EFFECTIVE DATE. The Plan shall become effective upon its approval by
the Board. The Plan shall remain in effect until such time as it may be
terminated pursuant to Section 5(e).
6. CHANGE IN CONTROL.
(a) PAYMENT OF AWARDS.
(i) Notwithstanding any provision of this Plan to the contrary, in the
event of a Change in Control, a Participant shall be entitled to
receive any unpaid Excess Award in respect of a prior Performance Year
and an Award for the Performance Year in progress on the date of such
Change in Control, equal to a pro rata portion of his or her full
Target Award for such Performance Year as if 100% of the Performance
Objectives were fully met based on the number of days from the
beginning of the Performance Year to the date of the Change in Control.
(ii) All amounts payable pursuant to this Section 6(a) shall be made in
a cash lump sum to the Participant no later than fifteen (15) days
after the date of a Change in Control. Nothing in the Plan shall
prevent the Committee from continuing Awards, to the extent not paid
under this provision, after a Change in Control.
(b) OTHER PLAN PROVISIONS UNAFFECTED. Nothing in this Section 6 shall
affect the operation of the provisions of this Plan prior to a Change in
Control.
<PAGE>
EXHIBIT A
TARGET AWARDS
For each Performance Year, the Target Awards shall be a percentage of the
Participant's Salary fixed by the Committee (or the CEO, if assigned by the
Committee) ranging in 5% increments. Managing Directors and General Managers who
are designated as Participants shall participate at a Target Award of 30% of
Salary. Each other Participant shall participate at the same Target Award at
which he or she participated in respect of the immediately preceding Performance
Year.
The potential Award that can be achieved by a Participant in respect of each
Target Award level is reflected on a matrix, attached hereto, which provides
percentages of the EBITDA achieved by the Company or the relevant Operating Unit
for the Performance Year on one axis and the percentages of EBITDA divided by
Average Net Assets ("Return") achieved by the Company or the relevant Operating
Unit for a Performance Year on the other axis.
A. AWARDS FOR SENIOR EXECUTIVE PARTICIPANTS WHO ARE NOT MANAGING DIRECTORS OR
GENERAL MANAGERS.
For those Senior Executive Participants who are not Managing Directors or
General Managers, the Performance Objectives shall be based solely on the
results of the Company and its subsidiaries, on a consolidated basis, for the
applicable Performance Year. In order for an Award to be paid to such a Senior
Executive Participant, the Company and its subsidiaries, on a consolidated
basis, must achieve a threshold of 85% of the EBITDA target and 85% of the
Return target for a Performance Year. Such Senior Executive Participant will
receive 100% of the Award at his Award Level if the Company achieves 100% of the
EBITDA target and 100% of the Return target for such Performance Year as
reflected on the matrix attached hereto. Achievement of less or more than 100%
of the Company's EBITDA target and Return target for such Performance Year shall
result in an Award corresponding to the line on each axis reflecting actual
EBITDA and actual Return for such Performance Year. The maximum EBITDA and
Return on which Awards will be calculated is 130% of the EBITDA target and
Return target for such Performance Year.
B. AWARDS FOR ALL OTHER PARTICIPANTS.
(i) For all Senior Executive Participants who are Managing Directors or
General Managers, all Executive Participants and all other Participants
other than those described in A. above, fifty percent (50%) of the
Performance Objectives will be based on the results of the Company and its
subsidiaries, on a consolidated basis, and fifty percent (50%) of the
Performance Objectives will be based on the results of the Operating Unit
for which the Participant works. The Award for such Participant will be
determined by adding the percentages of the actual Return and actual EBITDA
for (a) the Company and (b) for the Participant's relevant Operating Unit
for such Performance Year and dividing that sum by 2.
<PAGE>
(ii) In order for an Award to be paid to such Participant , both (a)
the Company and its subsidiaries, on a consolidated basis, and (b) the
Operating Unit for which the Participant works must achieve a threshold of
85% of the EBITDA target and 85% of the Return target for a Performance
Year; provided, however, that (1) if the Operating Unit for which such
Participant works achieves its EBITDA target and its Return target for a
Performance Year, but the Company and its subsidiaries, on a consolidated
basis, does not achieve its targets for such Performance Year, then the
Committee (or the CEO, if assigned by the Committee) may in its discretion
pay to such Participant that portion of the Award based on the achievement
of the Operating Unit's EBITDA target and Return target for such
Performance Year and (2) if the Operating Unit for which such Participant
works does not achieve its EBITDA target and its Return target for a
Performance Year, regardless of whether the Company and its subsidiaries,
on a consolidated basis, achieves its targets for such Performance Year,
then no Award will be paid to such Participant for such Performance Year.
(iii) Such Participant will receive 100% of the Award at his Award Level
if the Company and the Participant's Operating Unit achieve 100% of the
EBITDA target and 100% of the Return target for such Performance Year as
reflected on the matrix. Except as provided above, achievement of less or
more than 100% of the Company's and the Participant's Operating Unit's
EBITDA target and Return target for such Performance Year shall result in
an Award corresponding to the line on each axis reflecting actual EBITDA
and actual Return for such Performance Year. The maximum EBITDA and Return
on which Awards will be calculated is 130% of the EBITDA target and Return
target for such Performance Year.
C. MATRICES AND EXAMPLES.
The matrices for a sample Performance Year are attached hereto. The following
are examples of the calculation of bonuses for Executive Participants
participating, in example #1, at the 10% Target Bonus Award Level and, in
example #2, at the 30% Target Bonus Award Level.
<PAGE>
EXAMPLE #1
Target Bonus: 10%
<TABLE>
<CAPTION>
BONUS SPLIT
50% - Operating Unit
BUDGET ACTUAL ATTAINMENT PER MATRIX
ATTAINMENT
--------------------- ------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
EBITDA 5 million 4.81 million 96.25%
7.5%
--------------------- ------------------ ------------------ ------------------
EBITDA/AVG. NET
ASSETS 15% 14.43% 96.25%
<CAPTION>
50% - Euramax International plc
BUDGET ACTUAL ATTAINMENT PER MATRIX
ATTAINMENT
--------------------- ------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
EBITDA 35 million 36.3 million 103.75%
11.9%
--------------------- ------------------ ------------------ ------------------
EBITDA/AVG. NET
ASSETS 17% 18.275% 107.5%
TOTAL 19.4%
</TABLE>
% OF TARGET BONUS PAYABLE: 19.4% / 2 = 9.7% VS. 10% TARGET
<PAGE>
EXAMPLE #2
Target Bonus: 30%
<TABLE>
<CAPTION>
BONUS SPLIT
50% - Operating Unit
BUDGET ACTUAL ATTAINMENT PER MATRIX
ATTAINMENT
--------------------- ------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
EBITDA 8 million 8.3 million 103.75%
31.9%
--------------------- ------------------ ------------------ ------------------
EBITDA/AVG. NET
ASSETS 10% 10% 100.00%
<CAPTION>
50% - Euramax International plc
BUDGET ACTUAL ATTAINMENT PER MATRIX
ATTAINMENT
--------------------- ------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
EBITDA 35 million 37.6 million 107.5%
39.4%
--------------------- ------------------ ------------------ ------------------
EBITDA/AVG. NET
ASSETS 17% 18.9% 111.25%
TOTAL 71.3%
</TABLE>
% OF TARGET BONUS PAYABLE: 71.3% / 2 = 35.65% VS. 30% TARGET
<PAGE>
Exhibit 10.27
EURAMAX INTERNATIONAL PLC
1999 PHANTOM STOCK PLAN
<PAGE>
EURAMAX INTERNATIONAL PLC
1999 Phantom Stock Plan
SECTION 1
GENERAL
1.1. PURPOSE. The Euramax International 1999 Phantom Stock Plan (the "Plan") has
been established by Euramax International plc, a United Kingdom Corporation,
(the "Company") to link Participants' interests with those of the Company's
shareholders through compensation that is linked to the equity value of the
Company; and thereby promote the long-term financial interest of the Company and
the Subsidiaries, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
1.2. PARTICIPATION. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Employees, those persons who will be granted one or more Awards under
the Plan, and thereby become "Participants" in the Plan.
1.3. OPERATION, ADMINISTRATION, AND DEFINITIONS. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 3 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 8 of the Plan).
SECTION 2
PHANTOM SHARES
2.1. DEFINITION OF PHANTOM SHARE.
Subject to Section 3.2(d) below, a "Phantom Share" is a unit equal to 4% of the
Equity Value of Euramax International plc divided by 40,000. A Phantom Share
entitles the Participant to receive, in cash or an alternative form of payment
equivalent in value (as determined by the Committee), value equal to (or
otherwise based on) the excess of: (a) the Fair Market Value of a Phantom share
at the time of payout; minus (b) the Beginning Value of a Phantom share.
<PAGE>
2.2. NUMBER AND FORM OF AWARDS. Each Participant will receive only one award
under the Plan, unless the Committee determines, in its sole discretion, that
additional awards should be made to a Participant. Each Award will consist of a
specified number of Phantom Shares.
2.3. BEGINNING VALUE. The "Beginning Value" of each Phantom Share granted under
this Section 2 shall be equal to four (4) percent of the equity value of the
Company on the date the award is granted divided by 40,000. The equity value of
the Company on the date the award is granted shall be determined by multiplying
the Company's annual earnings before interest, taxes, depreciation and
amortization (EBITDA) for the most recent twelve month period by six (6.0) and
reducing that total by the total long-term debt outstanding on the date the
award is granted or by an alternate method established by the Committee and
approved by the Board at the time the Award is granted.
2.4. SETTLEMENT OF AWARDS. The settlement of Phantom Share awards shall be made
in accordance with such terms and conditions and during such periods as may be
established by the Committee. Settlement of Phantom Share awards will be made in
cash, unless an alternative form of payment is determined by the Committee.
SECTION 3
OPERATION AND ADMINISTRATION
3.1. EFFECTIVE DATE. Subject to the approval of the Board of Directors ("Board")
of the Company, the Plan shall be effective as of January 1, 1999 (the
"Effective Date"); provided, however, that to the extent that Awards are granted
under the Plan prior to its approval by the Board, the Awards shall be
contingent on approval of the Plan by the Board. No new awards may be made under
the Plan after the five (5) year anniversary of the Effective Date; however, the
Plan shall remain in effect as long as any Awards under it are outstanding.
3.2. SHARES SUBJECT TO PLAN. The number of Phantom Shares for which Awards may
be granted under the Plan shall be subject to the following:
(a) Subject to the following provisions of this subsection 3.2, the maximum
number of Phantom Shares that may be awarded to Participants and their
beneficiaries under the Plan shall be equal to 40,000 Phantom Shares.
(b) To the extent any Phantom Shares covered by an Award are forfeited, such
Phantom Shares shall not be deemed to have been awarded for purposes of
determining the maximum number of Phantom Shares available for award under the
Plan.
<PAGE>
(c) The maximum number of Phantom Shares that may be covered by Awards granted
to any one individual pursuant to Section 2 shall be 20,000 Phantom Shares.
(d) In the event of a corporate transaction involving the equity of the Company
(including, without limitation, any stock issuance, stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
Committee shall make an appropriate adjustment to the Awards, subject to
approval by the Board. Action by the Committee may include: (i) adjustment of
the number of Phantom Shares which may be delivered under the Plan; (ii)
adjustment of the number of Phantom Shares subject to outstanding Awards; (iii)
adjustment of the calculation of the Beginning Value under Sections 2.1 and
Section 2.3 above; (iv) adjustment of the calculation of the Fair Market Value
under Sections 2.1 and 8(e) herein; and (v) any other adjustments that the
Committee determines to be equitable. Upon approval of the Committee's
adjustments by the Board, the adjustments made by the Committee shall be final
and binding upon the Participants under the Plan and under any outstanding Award
Agreements. The Committee shall give prompt notice to all Participants of any
adjustment pursuant to this Section 3.2(d).
3.3. GENERAL RESTRICTIONS. Notwithstanding any other provision of the Plan, the
Company shall have no liability to make any other distribution of benefits under
the Plan unless such delivery or distribution (i) would comply with all
applicable laws, and the applicable requirements of any securities exchange or
similar entity., and (ii) would not violate any provisions of any material
agreements to which the Company is a party.
3.4. TAX WITHHOLDING. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of benefits under the Plan on satisfaction of the applicable
withholding obligations. The Committee, in its discretion, and subject to such
requirements as the Committee may impose prior to the occurrence of such
withholding, may permit such withholding obligations to be satisfied through
cash payment by the Participant, or through the surrender of amounts to which
the Participant is otherwise entitled under the Plan.
3.5. PAYMENTS. Awards may be settled through cash payments, the delivery of
shares of stock, or combination thereof as the Committee shall determine. Any
Award settlement may be subject to such conditions, restrictions and
contingencies as the Committee shall determine; provided, however, that such
conditions, restrictions and contingencies are set forth in the applicable Award
Agreement to which such conditions, restrictions and contingencies apply.
3.6. TRANSFERABILITY. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
<PAGE>
3.7. AGREEMENT WITH COMPANY. An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee shall, in
its sole discretion, prescribe. The terms and conditions of any Award to any
Participant shall be reflected in such form of written document as is determined
by the Committee. A copy of such document shall be provided to the Participant,
and the Committee may, but need not require that the Participant shall sign a
copy of such document. Such document is referred to in the Plan as an "Award
Agreement" regardless of whether any Participant signature is required.
No Award shall be valid unless evidenced by an Award Agreement.
3.8. ACTION BY COMPANY OR SUBSIDIARY. Any action required or permitted to be
taken by the Company or any Subsidiary shall be by resolution of its Board of
Directors, or by action of one or more members of the Board (including a
committee of the Board) who are duly authorized to act for the Board, or (except
to the extent prohibited by applicable law) by a duly authorized officer of such
company, or by any other persons or persons approved by the Board.
3.9. GENDER AND NUMBER. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.
3.10. LIMITATION OF IMPLIED RIGHTS.
(a) Neither a Participant nor any other person shall, by reason of participation
in the Plan, acquire any right in or title to any assets, funds or property of
the Company or any Subsidiary whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Subsidiary,
in their sole discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the amounts, if any,
payable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.
(b) The Plan does not constitute a contract of employment, and selection as a
Participant will not give any participating employee the right to be retained in
the employ of the Company or any Subsidiary, nor any right or claim to any
benefit under the Plan, unless such right or claim has specifically accrued
under the terms of the Plan and the Award Agreement. Except as otherwise
provided in the Plan, no Award under the Plan shall confer upon the holder
thereof any rights as a shareholder of the Company unless Awards are settled in
shares of Stock, and until the date on which the holder thereof fulfills all
conditions for receipt of such rights.
SECTION 4
CHANGE IN CONTROL OR LISTING
<PAGE>
Subject to the provisions of paragraph 3.2(d) (relating to the adjustment of
shares), and except as otherwise provided in the Plan or the Award Agreement
reflecting the applicable Award, upon the occurrence of a Change in Control or
Listing, all outstanding Phantom Shares shall become fully vested, and the
Participant will receive, in cash or stock (as determined by the Committee and
approved by the Board), value equal to, (or otherwise based on) the excess of:
(a) the Fair Market Value of a share of stock at the time of payout; minus (b)
the Beginning Value of each share; times (c) the Participant's number of Phantom
Shares in the Award.
SECTION 5
COMMITTEE
5.1. ADMINISTRATION. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 5. The Committee shall be selected by the
President. If the Committee does not exist, or for any other reason determined
by the Board, the Board may take any action under the Plan that would otherwise
be the responsibility of the Committee.
5.2. POWERS OF COMMITTEE. The Committee's administration of the Plan shall be
subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the authority
and discretion to select from among the Eligible Employees those persons who
shall receive Awards, to determine the time or times of receipt, to determine
the number of Phantom Shares covered by the Awards, to establish the terms,
conditions, vesting, performance criteria, restrictions, form and timing of
payout, and other provisions of such Awards, and (subject to the restrictions
imposed by Section 6) to terminate the Plan.
(b) To the extent that the Committee determines that the restrictions imposed by
the Plan preclude the achievement of the material purposes of the Awards in
jurisdictions outside the United States, the Committee will have the authority
and discretion to modify those restrictions as the Committee determines to be
necessary or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
(c) The Committee will have the authority and discretion to interpret the Plan,
to establish, amend, and rescind any rules and regulations relating to the Plan,
to determine the terms and provisions of any Award Agreement made pursuant to
the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.
<PAGE>
(d) Any interpretation of the Plan by the Committee and any decision made by it
under the Plan (subject to approval of the Board where required by the Plan) is
final and binding on all persons.
(e) In controlling and managing the operation and administration of the Plan,
the Committee shall take action in a manner that conforms to the articles and
shareholder agreements of the Company, and applicable corporate law.
5.3. DELEGATION BY COMMITTEE. Except to the extent prohibited by applicable law,
the Committee may allocate all or any portion of its responsibilities and powers
to any one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any time.
5.4. INFORMATION TO BE FURNISHED TO COMMITTEE. The Company and Subsidiaries
shall furnish the Committee with such data and information as it determines may
be required for it to discharge its duties. The records of the Company and
Subsidiaries as to an employee's or Participant's employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
SECTION 6
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; provided that adjustments pursuant to subject
to subsection 3.2(d) shall not be subject to the foregoing limitations of this
Section 6.
SECTION 7
GOVERNING LAW
The Plan shall be construed and its provisions enforced and administered in
accordance with the laws of the State of Georgia and the United States of
America.
<PAGE>
SECTION 8
DEFINED TERMS
In addition to the other definitions contained herein, the following definitions
shall apply:
(a) Award. The term "Award" shall mean any award of Phantom Shares granted under
the Plan.
(b) Board. The term "Board" shall mean the Board of Directors of the Company.
(c) Change in Control. Unless deemed to be otherwise by the Board, a "Change in
Control" shall be deemed to have occurred if (i) the Company shall be merged or
consolidated with another corporation and as a result of such merger or
consolidation less than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, other than affiliates (within the meaning of the
Securities Exchange Act of 1934 (the "1934 Act")) of any party to such merger of
consolidation, (ii) the Company shall sell at least 50% of its assets by value
in a single transaction or in a series of transactions to another corporation
which is not a wholly owned subsidiary of the Company, or (iii) a person, within
the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in effect on the date
hereof) of the Securities Exchange Act of 1934, shall acquire 50% or more of the
outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record). For purposes hereof, ownership of voting securities
shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(1)(i) (as in effect on the date hereof) pursuant
to the Securities and Exchange Act of 1934.
(d) Eligible Employee. The term "Eligible Employee" shall mean any key executive
or other management employee of the Company or a Subsidiary. An Award may be
granted to an employee, in connection with hiring, retention or otherwise, prior
to the date the employee first performs services for the Company or the
Subsidiaries, provided that such Awards shall not become vested prior to the
date the employee first performs such services.
(e) Fair Market Value. The "Fair Market Value" of a Phantom Share shall be
determined by the following rules:
(i) In the event of a Change in Control or Listing, the Fair Market
Value shall be four (4) percent of the equity value of the Company
divided by 40,000, where the equity value shall be determined by the
Change in Control or Listing (unless a greater value is determined by
the Committee and approved by the Board).
(ii) If no Change in Control or Listing has occurred, the Fair Market
Value shall be four (4) percent of the equity value of the Company
divided by 40,000, where the equity value shall be determined by
multiplying the Company's year-end earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the most recent twelve
month period by six (6.0) and reducing that total by the total
long-term debt outstanding as of the end of the most recent twelve
month
<PAGE>
period, unless an alternative method is determined in good faith by the
Committee and approved by the Board.
(f) Listing. "Listing" shall mean the listing of all or any part of any class of
the equity stock of the Company on a securities exchange.
(g) Subsidiaries. The term "Subsidiary" means any company during any period in
which it is a "subsidiary corporation" (as that term is defined in the Internal
Revenue Code of 1986, section 424(f), as amended) with respect to the Company.
<PAGE>
BENEFICIARY DESIGNATION FORM
EURAMAX INTERNATIONAL PLC
1999 PHANTOM STOCK PLAN
I wish to designate the following person(s) as my beneficiary(ies) to receive my
Phantom Shares, if any, under the Euramax International plc 1999 Phantom Stock
Plan (the "Plan") in the event of my death. I reserve the right to change this
designation with the understanding that this designation, and any change
thereof, will be effective only upon deliver to Euramax International plc. The
right to settlement of my Phantom Shares under the Plan, if any, will be
transferred to my primary beneficiaries who survive me, and to my secondary
beneficiaries who survive me only if none of my primary beneficiaries survive
me.
1. PRIMARY BENEFICIARY
NAME OF BENEFICIARY PERCENTAGE RELATIONSHIP
- ------------------- ---------- ------------
2. SECONDARY BENEFICIARY
NAME OF BENEFICIARY PERCENTAGE RELATIONSHIP
- ------------------- ---------- ------------
I acknowledge that execution of this form and delivery thereof to Euramax
International plc revokes all prior beneficiary designations I have made with
respect to my outstanding awards under the Plan.
- --------------------------------------------------
(Participant's signature) (Date)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001026743
<NAME> EURAMAX INTERNATIONAL PLC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> DEC-26-1998
<PERIOD-END> MAR-27-1999
<CASH> 23,332
<SECURITIES> 0
<RECEIVABLES> 86,244
<ALLOWANCES> 3,669
<INVENTORY> 81,129
<CURRENT-ASSETS> 191,762
<PP&E> 136,781
<DEPRECIATION> 22,436
<TOTAL-ASSETS> 396,611
<CURRENT-LIABILITIES> 109,759
<BONDS> 135,000
0
47,961
<COMMON> 1,000
<OTHER-SE> 6,016
<TOTAL-LIABILITY-AND-EQUITY> 396,611
<SALES> 132,387
<TOTAL-REVENUES> 132,387
<CGS> 107,790
<TOTAL-COSTS> 107,790
<OTHER-EXPENSES> 16,996
<LOSS-PROVISION> 145
<INTEREST-EXPENSE> 5,258
<INCOME-PRETAX> 2,198
<INCOME-TAX> 960
<INCOME-CONTINUING> 1,238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,238
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
