UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1998
RELIANT BUILDING PRODUCTS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 333-30699 75-1364873
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
3030 LBJ Freeway, Suite 300, Dallas, Texas 75234
(Address of Principal Executive Offices) (Zip Code)
(972) 919-1000
(Registrant's telephone number, including area code
<PAGE>
Reliant Building Products, Inc.
Index to Form 8-K/A
Filed with the Securities and Exchange Commission
April 9, 1998
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Page
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Facing page 1
Item 7. Financial Statements and Exhibits 3
Signatures 4
Exhibit Index 5
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<PAGE>
Item 7. Financial Statements and Exhibits
On February 6, 1998, Reliant Building Products, Inc. (the "Company") filed a
Current Report on Form 8-K with respect to the January 28, 1998 acquisition of
all of the capital stock of CFA Holding Company (the "Acquisition" or "Care
Free" or "CFA"). Such Form 8-K was filed without the financial statements and
pro forma financial information required by rule 3-05 and Article 11 of
Regulation S-X, as it was impractical to do so at that time. This Current
Report on Form 8-K/A provides such required information.
(a) Financial Statements of the Business Acquired
Following, as Exhibit 7(a), are the audited consolidated balance sheets of Care
Free as of December 31, 1997 and 1996 and the related statements of earnings,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997.
(b) Pro Forma Financial Information
Following, as Exhibit 7(b), are an unaudited pro forma consolidated condensed
balance sheet as of December 26, 1997, and unaudited pro forma consolidated
condensed statements of operations for the year ended March 28, 1997 and for the
nine months ended December 26, 1997 and related notes to the unaudited pro forma
consolidated condensed financial statements, giving effect to the Company's
acquisition on January 28, 1998 of all of the common stock of Care Free.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 9, 1998
Reliant Building Products, Inc.
By: /S/ Virgil D. Lowe
---------------------
Virgil D. Lowe
Vice President
<PAGE>
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<CAPTION>
Reliant Building Products, Inc.
Exhibit Index to Form 8-K/A
Exhibit Description
- -------- -------------------------------------------------------------------
<C> <S>
7(a) Audited Consolidated Financial Statements of Care Free
7(b) Unaudited Pro Forma Consolidated Condensed Financial Statements
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
CFA Holding Company and Subsidiaries
Charlotte, Michigan
We have audited the accompanying consolidated balance sheets of CFA Holding
Company and subsidiaries (the "Company") as of December 31, 1997 and 1996, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of Alpine Industries, Inc. ("Alpine"), a wholly owned consolidated
subsidiary of CFA Holding Company, for the year ended December 31, 1995, which
statements reflect total revenues constituting 38% of the related consolidated
total for that year. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts for Alpine for the year ended December 31, 1995, is based solely on the
report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the report of the other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 1997, and 1996 and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Lansing, Michigan
February 27, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Alpine Industries, Inc.
We have audited the statements of earnings, stockholders' equity and cash flows
for the year ended December 31, 1995 of Alpine Industries, Inc. (a wholly-owned
subsidiary of AIBT, Inc., not separately presented herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of Alpine Industries, Inc.'s operations and
its cash flows for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
/S/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Seattle, Washington
January 19, 1996
<PAGE>
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<CAPTION>
CFA HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(IN THOUSANDS)
- ---------------
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 150 $ 692
Accounts receivable, less allowance for doubtful accounts of
$1,576 and $1,121 9,943 10,149
Inventories (Note 4) 8,224 11,699
Prepaid expenses and other 865 871
Deferred taxes on income (Note 7) 755 281
------- -------
Total current assets 19,937 23,692
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 1,026 1,009
Buildings and leasehold improvements 8,125 7,927
Machinery and equipment 16,932 14,116
Transportation equipment 1,577 1,636
Office furniture and equipment 2,116 1,407
Construction in progress 58 741
------- -------
Total 29,834 26,836
Less accumulated depreciation 8,605 6,057
------- -------
Total property, plant and equipment 21,229 20,779
OTHER ASSETS:
Note receivable from officer (Note 5) 215 215
Purchase cost in excess of net assets acquired, net of accumulated
amortization of $2,184 and $1,427 15,685 12,717
Non-compete agreement, net of accumulated amortization of
$2,900 and $2,850 50
Deferred financing costs, net of accumulated amortization of
$1,115 and $845 521 590
------- -------
Total other assets 16,421 13,572
------- -------
TOTAL ASSETS $57,587 $58,043
======= =======
<FN>
See notes to consolidated financial statements. (Continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CFA HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
- ---------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt (Note 6) $ 2,100 $ 600
Accounts payable 6,232 7,905
Accrued expenses 3,003 2,839
Accrued employee compensation and related payroll taxes and
withholdings 3,130 2,849
Contingent payable (Note 3) 767
------- -------
Total current liabilities 15,232 14,193
DEFERRED TAXES ON INCOME (Note 7) 2,273 1,761
LONG-TERM DEBT, LESS CURRENT PORTION (Note 6) 21,194 28,323
CONTINGENT PAYABLE (Note 3) 980
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 2,375 shares authorized;
1,154 shares issued and outstanding (Notes 1 and 9)
Stock warrants (Note 9) 13 13
Paid-in capital 6,283 6,136
Retained earnings 11,612 7,617
------- -------
Total stockholders' equity 17,908 13,766
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $57,587 $58,043
======= =======
<FN>
See notes to consolidated financial statements. (Concluded)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CFA HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
- ---------------
1997 1996 1995
<S> <C> <C> <C>
NET SALES $137,806 $130,569 $115,477
COST OF GOODS SOLD 100,692 96,633 89,076
-------- -------- --------
GROSS PROFIT 37,114 33,936 26,401
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 5, 8, and 11) 27,774 28,024 20,499
-------- -------- --------
INCOME FROM OPERATIONS 9,340 5,912 5,902
INTEREST EXPENSE, NET (Note 5) 3,266 3,319 2,988
OTHER EXPENSES 432 23 119
-------- -------- --------
INCOME BEFORE INCOME TAX 5,642 2,570 2,795
TAXES ON INCOME (Note 7) 1,647 1,112 988
-------- -------- --------
NET EARNINGS $ 3,995 $ 1,458 $ 1,807
======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CFA HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS EXCEPT SHARE DATA)
- ------------------------------------
COMMON STOCK PAID-IN RETAINED STOCKHOLDERS'
SHARES WARRANTS CAPITAL EARNINGS EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1, 1995 1,146 $ 13 $ 6,136 $ 4,352 $ 10,501
Net earnings 1,807 1,807
------ --------- -------- --------- -------------
BALANCE AT
DECEMBER 31, 1995 1,146 13 6,136 6,159 12,308
Net earnings 1,458 1,458
------ --------- -------- --------- -------------
BALANCE AT
DECEMBER 31, 1996 1,146 13 6,136 7,617 13,766
Stock issuance 8 147 147
Net earnings 3,995 3,995
------ --------- -------- --------- -------------
BALANCE AT
DECEMBER 31, 1997 1,154 $ 13 $ 6,283 $ 11,612 $ 17,908
====== ========= ======== ========= =============
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CFA HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
- ---------------
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,995 $ 1,458 $ 1,807
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 3,853 3,499 3,070
Loss on sale of equipment 14 12 154
Deferred taxes on income 180 282 633
Changes in certain assets and liabilities net of effect of
acquisition of assets:
Decrease (increase) in:
Accounts receivable 13 (752) (1)
Inventories 3,669 (1,844) 401
Prepaid expenses and other (198) (283) (556)
Refundable taxes on income 602
Increase (decrease) in:
Accounts payable (2,571) (1,206) (224)
Accrued expenses 567 (51) (610)
-------- --------- --------
Net cash provided by operating activities 9,522 1,115 5,276
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,969) (4,279) (3,145)
Acquisitions (Note 3) (2,006) (6,613)
Proceeds from sale of equipment 39 85 119
Other 15
-------- --------- --------
Net cash used in investing activities (4,936) (4,179) (9,639)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (5,455) (13,633) (2,619)
Proceeds from borrowings 297 15,079 5,271
Stock issuance 30
-------- --------- --------
Net cash (used in) provided by financing activities (5,128) 1,446 2,652
-------- --------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (542) (1,618) (1,711)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF
YEAR 692 2,310 4,021
-------- --------- --------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 150 $ 692 $ 2,310
======== ========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION -
Cash paid during the period for:
Interest $ 3,280 $ 3,658 $ 2,579
Taxes on income 1,340 597 151
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CFA HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
1. CORPORATE STRUCTURE AND GENERAL
CFA Holding Company ("CFA") was incorporated on January 10, 1992. Previously,
CFA had two wholly owned subsidiaries, CFBT, Inc. ("CFBT") and AIBT, Inc.
("AIBT"). CFBT and AIBT were the parent companies of Care Free Aluminum
Products, Inc. ("Care Free") and its wholly owned subsidiary Ultra Building
Systems, Inc. ("Ultra"), and Alpine Industries, Inc. ("Alpine"), respectively,
each of which were wholly owned by their respective parent company. During
1996, CFBT and AIBT, which were nonoperating holding companies, were dissolved
and their assets and liabilities merged into CFA which then became the parent
company to Care Free and Alpine. The consolidated financial statements include
the accounts of CFA and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
CFA manufactures and sells vinyl windows and doors. CFA's customers include
home improvement dealers, lumber yards, distributors, mass merchandisers,
residential contractors, and the manufactured housing industry. Products are
sold to customers located throughout the United States. Credit sales are
typically not collateralized by the customer. Sales to one major customer for
the years ended December 31, 1997, 1996 and 1995 accounted for approximately
18%, 17% and 20%, respectively, of CFA's total sales. Accounts receivable from
this customer were approximately $632, $101 and $361 at December 31, 1997, 1996
and 1995, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS consist of cash and overnight deposits.
INVENTORIES are stated at the lower of cost or market. Care Free determines
cost primarily on a last-in, first-out (LIFO) method, while Alpine and Ultra use
a first-in, first-out (FIFO) method. Approximately 32% and 35% at December 31,
1997 and 1996, respectively, of the consolidated inventory is determined by the
LIFO method.
PROPERTY, PLANT AND EQUIPMENT acquired at the date of the purchases of the CFA
subsidiaries were recorded at their then-estimated fair value. All other
acquisitions of property, plant and equipment are recorded at cost.
Depreciation is computed by the straight-line method based on the estimated
useful lives of the related assets. Leasehold improvements are stated at cost
and amortized over the shorter of their respective lease term or their estimated
useful life. Expenditures for maintenance and repairs are charged to expense as
incurred whereas major additions are capitalized.
TAXES ON INCOME are provided based upon pre-tax income for financial statement
purposes. As required by Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes" (see Note 7), deferred taxes are provided
using the liability method.
CFA and its consolidated subsidiaries file a consolidated federal income tax
return. Federal income tax expense is allocated to each subsidiary as if
separate returns were filed.
PURCHASE COST IN EXCESS OF NET ASSETS ACQUIRED is being amortized on a
straight-line basis primarily over fifteen to twenty-five years.
DEFERRED FINANCING COSTS are being amortized over the terms of the related
financing agreements on a straight-line basis.
THE NON-COMPETE AGREEMENT with one of the previous owners of Care Free was being
amortized over five years. The agreement became fully amortized in 1997.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Management has determined that the
carrying values of cash and cash equivalents, accounts receivable and accounts
payable approximate fair value due to the short-term maturities of these
instruments.
The fair value of notes payable to bank and lines of credit approximate the
carrying amount since these notes bear interest at rates that adjust based upon
market indexes. It is not practicable to estimate the fair value of notes
payable to BT Capital Partners, Inc. and former shareholders due to these notes
being subordinated and unsecured. It is also not practicable to estimate the
fair value of the letters of credit which provide collateral for estimated
insurance claims payable due to the contingent nature of these claims.
LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF - Effective January 1,
1996, CFA adopted Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." This Statement establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and long-lived assets and certain
identifiable intangibles to be disposed of. The initial adoption of this new
accounting standard did not have a material effect on CFA's consolidated
operating results or financial position.
RECLASSIFICATIONS - Certain reclassifications have been made in the 1995 and
1996 financial statements to conform to the classifications used in 1997.
3. ACQUISITIONS
On January 22, 1997, Alpine executed an asset purchase transaction to acquire
California Windows ("California") of Walnut, California for a total purchase
price of $1,132 (exclusive of acquisition costs of approximately $162). The
acquisition has been accounted for as a purchase. Accordingly, the purchase
price was allocated to the assets acquired and the liabilities assumed (accounts
and retention receivables, $443; inventory, $482; property, plant, and
equipment, $180; certain other assets, $112; and trade payables and accrued
expenses of $1,089) based on their respective fair values and the amount paid
in excess of the net assets acquired, totaling $1,166, was recorded as goodwill.
The acquisition was partially financed through the use of Alpine's operating
cash and credit line.
On May 21, 1997, Ultra executed an asset purchase transaction to acquire
Windowman ("Windowman") of Pottsville, Pennsylvania for a total purchase price
of $2,446. The acquisition has been accounted for as a purchase. The
acquisition was partially financed through the use of Ultra's operating cash and
credit line and includes future payments, aggregating up to $1.8 million, based
on sales volumes of Windowman products in each of the three years subsequent to
the acquisition. Such future payments have been included in the purchase price
recorded in the December 31, 1997 financial statements and as a contingent
payable based upon Ultra's assessment of the likelihood of achieving the
requisite sales volume required for such contingent consideration.
The following unaudited pro-forma information sets forth the results of the
Company's operation as though the purchase of California and Windowman had been
made at the beginning of 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues $138,126 $137,893
Net income 4,115 1,773
</TABLE>
On August 1, 1995, Care Free executed a stock purchase transaction to acquire
100% of the outstanding stock of Ultra for a total purchase price of $6,551
(exclusive of acquisition costs of approximately $226). The acquisition has
been accounted for as a purchase. Accordingly, the purchase price has been
allocated to the assets acquired and the liabilities assumed (cash, $164;
accounts and notes receivable, $1,872; inventory, $2,270; property, plant and
equipment, $2,050; deferred tax asset, $306 and certain other assets, $23; trade
payables and accrued expenses of $3,462) based on their respective fair values.
Accordingly, the year end balance sheet of Ultra is included in the consolidated
balance sheet of Care Free at December 31, 1995 and Ultra's operating results
for the period from August 1, 1995 through December 31, 1995 are included in
Care Free's consolidated statement of earnings for the year ended December 31,
1995. The acquisition was partially financed through the use of Care Free's
operating cash and credit lines, the issuance of $1,000 note payable to former
owners of Ultra, and $1,000 of additional bank financing.
4. INVENTORIES
Inventories consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
First-in, first-out (FIFO) basis:
Finished products $1,465 $ 2,656
Raw materials 6,198 8,362
Work in process 364 484
------ -------
8,027 11,502
LIFO reserve 197 197
------ -------
Recorded basis $8,224 $11,699
====== =======
</TABLE>
Earnings before taxes on income under the FIFO method would not have been
different for the year ended December 31, 1997, and would have been $70 higher
and $29 lower for the years ended December 31, 1996 and 1995, respectively.
5. RELATED PARTY TRANSACTIONS
Care Free has a note receivable from an officer which is due in April 1999.
Interest is due at an annual rate of 7-1/2%. The note was paid in full in
January 1998.
CFA also utilizes legal counsel from a law firm in which certain partners are
minority shareholders of CFA through a partnership. Fees paid to this law firm
were $191, $137 and $58 in 1997, 1996 and 1995, respectively.
Additionally, the Company's principal debt financing is provided by BT Capital
Partners, Inc., a shareholder of the Company, and KeyBank, the parent of a
shareholder. Total interest paid to these related parties was $3,232, $3,242,
and $2,937 in 1997, 1996 and 1995, respectively.
6. LONG-TERM DEBT
Long-term debt at December 31 is summarized as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revolving credit advances maturing December 30, 2001 $11,285 $15,943
Note payable, due in quarterly installments of $25 plus interest
at 10% through December 31, 2000 300 400
Note payable due in quarterly installments of $125 plus interest
at 9% commencing October 21, 1996 through August 1, 1998
The note was settled in full in 1997. 871
Subordinated notes payable to BT Capital Partners, Inc., $2,000
due on January 31, 1998 and 1999. Interest payable quarterly
at 14%; unsecured 4,000 4,000
Subordinated notes payable to BT Capital Partners, Inc., $3,855
due on March 16, 1999 and $3,854 due on March 16, 2000.
Interest payable quarterly at 13.5%; unsecured 7,709 7,709
------- -------
Total debt 23,294 28,923
Less current portion 2,100 600
------- -------
Total $21,194 $28,323
======= =======
</TABLE>
On December 19, 1996, CFA executed a revolving credit facility and security
agreement with its primary lender, KeyBank (formerly Society National Bank).
Under the terms of this new agreement, CFA has a revolving credit facility of
$28,000 and a Capital Expenditure ("CapEx") line of credit facility of $6,000.
Borrowings under the revolving credit facility accrue interest at an annual rate
of the LIBOR plus a range of 2.125 to 3.125 basis points or the bank's prime
rate plus a range of 0 to .625 basis points. The current borrowing is at prime
plus .125 basis points. The prime rate was 8.5% and 8.25 % at December 31, 1997
and 1996, respectively. The interest rate method is selected by CFA and is
subject to certain adjustments based on the financial performance of CFA.
Borrowings under the CapEx line of credit accrue interest at the same rates as
the revolving credit facility. There are no amounts outstanding under the CapEx
line of credit facility.
The agreement provides for revolving credit advances equal to 85% of eligible
accounts receivable plus 50% of eligible inventory up to a cap of $6.5 million
and a $13 million reducing term component (reducing by $500 per quarter
commencing April 1, 1997). The agreement matures on December 30, 2001 and
accordingly, all revolving credit advances as of December 31, 1997 and 1996 have
been classified as long term.
In 1996, CFA borrowed a total of $15,943 under the revolving credit facility to
repay the outstanding balance of the previous revolving credit facility, the
capital expenditures line of credit, and all other notes payable to the bank.
CFA must pay .25% annual commitment fee on the unused average daily availability
of the two facilities and a monthly collateral-monitoring fee of $1 per month.
On January 17, 1997, CFA entered into an interest rate swap arrangement with
KeyBank. The swap establishes a fixed rate of 6.32% on the LIBOR rate on the
CFA credit facility. This swap has a notional amount of $10,000 and expires on
January 17, 1999. On January 27, 1998, CFA terminated this swap arrangement for
$101. This amount was accrued at December 31, 1997.
CFA uses settlement accounting such that the effect of the interest rate
differential between the notes payable and the interest rate swaps is recognized
over the life of the agreements as payments are made.
The revolving credit facility and CapEx line of credit facility of CFA with
KeyBank is collateralized by substantially all its assets. The KeyBank
agreements, as well as the BT Capital Partners, Inc. notes payable, contain
certain restrictive covenants which require among other things, that CFA
maintains certain net worth, cash flow, and debt to net worth amounts. CFA is
also restricted as to the payment of dividends and the purchase of property and
equipment. CFA was in compliance with these covenants at December 31, 1997 and
1996.
Maturities on long-term debt are as follows: 1998 - $2,100; 1999 - $7,955; 2000
- - $5,954; 2001 - $8,052.
In conjunction with the acquisition of CFA by Reliant Building Products, Inc. in
January 1998 (see Note 12), all December 31, 1997 outstanding debt was retired.
7. TAXES ON INCOME
The provision for income taxes is comprised of the following as of December 31:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Current $1,467 $ 830 $ 354
Deferred 180 282 634
------ ------ -----
Total $1,647 $1,112 $ 988
====== ====== =====
</TABLE>
The consolidated income tax provision differs from the amount computed on
pretax income using the U.S. statutory income tax rate for the years ended
December 31 for the following reasons:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------- -------------------- ---------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate $ 1,918 34.00 % $ 874 34.00 % $ 950 34.00 %
Increase (decrease) in income taxes
resulting from:
State income taxes 123 2.18 29 1.13 22 0.79
Goodwill amortization 67 1.18 38 1.48 (25) (0.89)
Non-deductible expenses 64 1.13 35 1.36 26 0.93
IRS settlements 100 3.89
Reversal of income tax accruals (250) (4.43)
Acquired tax benefits and
basis differences (252) (4.46)
Other (23) (0.41) 36 1.40 15 0.54
-------- ----------- ------- ----------- -------- -----------
$ 1,647 29.19 % $ 1,112 43.26 % $ 988 35.37 %
======== =========== ======= =========== ======== ===========
</TABLE>
Major components of the CFA's deferred tax assets and liabilities as of
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Current:
Allowance for doubtful accounts $ 536 $ 381
Accrued expenses 536 438
Inventory reserves 73 80
Tax LIFO reserve greater than book LIFO reserve (540) (540)
Warranty reserve 150 34
Other (112)
-------- --------
$ 755 $ 281
======== ========
Noncurrent:
Tax depreciation over book depreciation $(1,964) $(1,763)
Book goodwill amortization over (under) tax amortization (258) 2
Other (51)
-------- --------
$(2,273) $(1,761)
======== ========
</TABLE>
8. DISCRETIONARY PROFIT-SHARING AND 401(K) PLAN
Both Care Free and Alpine have profit sharing and 401(k) plans covering
substantially all employees with more than one year's service at each respective
location. Participants may contribute a portion of their annual salary to the
plan (up to 15% of compensation under the Care Free plan and up to 19% under the
Alpine plan), subject to limitations defined in the respective plan documents as
well as Internal Revenue Service limitations. The Alpine plan also provides a
company matching contribution of the lesser of 25% of the employee's
contribution or 1% of the employee's annual salary, which approximated $47, $45
and $44 during 1997, 1996 and 1995, respectively. In addition, both plans
provide for company profit sharing contributions at the discretion of their
Board of Directors. A provision of $237, $125 and $110 was recorded for the
years ended December 31, 1997, 1996 and 1995, respectively, for Care Free.
9. COMMON STOCK
Common stock authorized, issued and outstanding as of December 31, 1997 and
activity for the year is summarized as follows:
<TABLE>
<CAPTION>
SHARES ISSUED
AND OUTSTANDING
---------------
SHARES BEGINNING STOCK END OF
AUTHORIZED OF YEAR ISSUED YEAR
<S> <C> <C> <C> <C>
Class A 1,000 798 8 806
Class B 500
Class C 250 227 227
Class D 125 121 121
Class E 500
---------- --------- ------ ------
2,375 1,146 8 1,154
========== ========= ====== ======
</TABLE>
There were no changes in the amount of common stock issued and outstanding for
the years ended 1996 and 1995.
The Class A and Class D stockholders are identical as to rights. The Class A
and Class D stockholders have a preference over the Class B, C and E
stockholders upon any distribution by CFA, to the extent that the Class A and
Class D stockholders receive all distributions up to their initial capital
contributions, after which distributions are divided equally among all
stockholders on a per share basis.
CFA issued to the holders of the 14% notes, warrants for the purchase of up to
265 shares of Class B common stock for an aggregate price of $13 (see Note 6).
Warrants may be exercised at a price of $2 per warrant share anytime through
January 31, 2001. In addition, during 1994, CFA issued to the holders of the
13.5% notes, warrants for the purchase of up to 169 shares of Class B common
stock for a nominal price (see Note 6). These warrants may be exercised at a
price of $4 per warrant share anytime through March 16, 2003. Both warrant
issues may be exercised upon the sale of the Company.
CFA has a stockholder's agreement that generally restricts the transfer of
shares and provides for first refusal and co-sale rights, all as specified in
the agreement. The stockholder's agreement also sets forth specific rights of
CFA to repurchase shares of its stock held by certain employees who are also
stockholders of CFA. Repurchase rights and obligations are set forth in the
agreement. The repurchase price is based on a specified formula and is payable
in cash or cash and notes depending upon the circumstances.
The Company has a stock incentive plan whereby key employees of the Company may
receive awards of stock options. A maximum of 81 shares of stock may be issued
under this plan. As allowed by Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (FAS 123), the Company follows
APB Opinion No. 25 and related interpretations in accounting for its plan.
The following table summarizes stock option activity during the years ended
December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE RANGE OF
EXERCISE FAIR EXERCISE
SHARES PRICE VALUE PRICE
<S> <C> <C> <C> <C>
Balance at January 1, 1995 16.00 $ 11.3 $ 11.3
No activity during the period
Balance at December 31, 1995 16.00 11.3 11.3
Options granted 21.53 7.5 $ 2.7
Options exercised (8.15) 7.8
-------
Balance at December 31, 1996 29.38 9.4 6.2 - 11.3
Options granted 16.62 3.3 5.8
Options canceled (5.23) 6.5
-------
Balance at December 31, 1997 40.77 7.3 3.3 - 11.3
</TABLE>
As required by FAS 123, the Company has determined the pro-forma information as
if the Company had accounted for stock options granted since January 1, 1995,
under the fair value method of FAS 123. The Black-Scholes option pricing model
was used with the following weighted average assumptions for 1997 and 1996:
risk free interest rates of 5.5% and 6%, and a weighted average life of 5 years
for all periods presented. The pro-forma effect of these options on net
earnings was to decrease earnings by $14 and $60 in 1997 and 1996, respectively.
Additionally, in 1997 the Company recorded compensation expense of $83 relative
to such options.
10. COMMITMENTS AND CONTINGENCIES
At December 31, 1997, future minimum rental payments under noncancelable
operating leases for certain transportation, manufacturing, and office equipment
are as follows: 1998 - $1,079, 1999 - $890, 2000 - $652, 2001 - $366, 2002 -
$182, Thereafter - $114. Leases for certain transportation equipment require
monthly payments plus additional amounts based on mileage through February 2000.
Contingent rental amounts based on vehicle mileage totaled $53, $84 and $77 for
the years ended December 31, 1997, 1996 and 1995, respectively.
At December 31, 1997, future minimum rental payments under noncancelable
operating leases, which relate to real estate with initial or remaining terms of
more than one year, are as follows: 1998 - $1,270; 1999 - $1,080; 2000 -
$1,083; 2001 - $1,083; 2002 - $1,055; Thereafter - $5,647.
Total rent expense for the years ended December 31, 1997, 1996 and 1995 amounted
to $3,124, $2,142, and $1,247, respectively.
11. MANAGEMENT AND CONSULTING AGREEMENTS
Care Free and Alpine entered into acquisition and management agreements with an
entity controlled by one of CFA's stockholders. During 1996 the Care Free
agreements collectively provided for management fees of $21 per month and an
incentive fee based on operating results, not to exceed $150 annually. The
incentive fee for 1996 and 1995 was $150. In accordance with its agreement
Alpine paid this same entity $300 in 1996 and 1995. In December 1996 one
agreement replaced the previous agreements and provided for management fees of
$700 for 1997. These management fees are paid to the affiliated entity in
return for administrative, strategic planning, recruiting, asset management and
similar other services provided to Care Free, Alpine, and CFA.
12. SUBSEQUENT EVENTS
On December 17, 1997, CFA entered into a stock purchase agreement with Reliant
Building Products, Inc. of Dallas, Texas to sell 100% of the outstanding stock
of CFA for a total purchase price of $120,918. The transaction was consummated
on January 28, 1998. With respect to this transaction, substantially all
outstanding debt and accrued interest as of this date was paid and the
outstanding interest swap agreement terminated. The management and consulting
agreements described in Note 11 were also terminated.
<PAGE>
Exhibit 7(b)
Reliant Building Products, Inc.
Unaudited Pro Forma Consolidated Condensed
Financial Statements
The following unaudited pro forma consolidated condensed balance sheet has been
prepared by taking the December 26, 1997 consolidated balance sheet of Reliant
Building Products, Inc. (the "Company") and the December 31, 1997 consolidated
balance sheet of CFA Holding Company ("Care Free" or "CFA") and giving effect to
the acquisition on January 28, 1998 of all of the common stock of Care Free (the
"Acquisition") by the Company as if it occurred as of December 26, 1997
including the related incurrence of debt and cash contribution from owners of
the Company. The unaudited pro forma consolidated condensed balance sheet has
been prepared for informational purposes only and does not purport to be
indicative of the financial condition that necessarily would have resulted had
the Acquisition taken place at December 26, 1997.
The following unaudited pro forma consolidated condensed statement of operations
for the year ended March 28, 1997 has been prepared by taking the March 28, 1997
consolidated statement of operations of the Company and the December 31, 1996
consolidated statement of operations of Care Free and giving effect to the
Acquisition as if it had occurred as of March 30, 1996. The unaudited pro forma
consolidated condensed statement of operations for the nine months ended
December 26, 1997 has been prepared by taking the December 26, 1997 statement of
operations of the Company (representing Company and Predecessor periods and
excluding an extraordinary loss of $715,000 recognized by the Company in such
period) and the September 30, 1997 statement of operations of Care Free and
giving effect to the Acquisition as if it had occurred as of March 29, 1997.
The revenues and results of operations included in the following unaudited pro
forma condensed statements of operations are not considered necessarily to be
indicative of anticipated results of operations for periods subsequent to the
transaction, nor are they considered necessarily to be indicative of the results
of operations for the periods specified had the transaction actually been
completed at the beginning of each respective period.
These financial statements and accompanying notes should be read in conjunction
with the audited consolidated financial statements of the Company, and related
notes thereto (which are included in the Form S-4 Amendment no. 2 filed on
September 3, 1997, the quarterly report on Form 10-Q for the nine months ended
December 26, 1997, the Company's Current Report on Form 8-K dated February 6,
1998 (all filed with the Securities and Exchange Commission)), and the
consolidated financial statements of Care Free and related notes thereto,
included herewith.
The unaudited pro forma consolidated condensed statements of operations reflect
certain cost savings that management has identified related to elimination of
duplicate costs for corporate and functional facilities as well as contractual
raw material purchase agreements. However, the unaudited pro forma consolidated
condensed statements of operations do not reflect certain additional cost
savings and synergies that management has identified related to plant
productivity and product rationalization.
The adjustments below were prepared based on data currently available and in
some cases are based on estimates or approximations. It is possible that the
actual amounts to be recorded may have an impact on the results of operations
and the balance sheet different from that reflected in the accompanying
unaudited pro forma consolidated condensed financial statements. It is
therefore possible that the entries presented below will not be the amounts
actually recorded at the closing date.
<PAGE>
<TABLE>
<CAPTION>
RELIANT BUILDING PRODUCTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
HISTORICAL PRO FORMA
------------------------ ------------------------------
CFA
RELIANT CFA ADJUSTMENTS COMBINED
------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $ 8,881 $ 150 $ (7,368) (a) $ 1,663
Accounts and notes receivable 18,785 9,943 - 28,728
Inventories 14,672 8,224 (548) (b) 22,348
Deferred tax assets 1,434 755 907 (b) 3,096
Prepaid expenses and other current assets 1,168 865 - 2,033
------------ ---------- ------------- ----------
Total current assets 44,940 19,937 (7,009) 57,868
Property, plant, and equipment, net 28,881 21,229 6,914 (b) 57,024
Intangible assets, net 42,226 15,685 94,436 (b) 136,662
(15,685) (b)
Other assets 3,851 736 2,311 (c) 6,898
------------ ---------- ------------- ----------
Total assets $ 119,898 $ 57,587 $ 80,967 $ 258,452
============ ========== ============= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,002 $ 6,232 $ - $ 13,234
Accrued expenses 8,358 6,133 1,901 (b) 16,392
Current portion of long-term debt and capital lease obligations 2 2,867 (1,233) (b) 2,386
750 (d)
------------ ---------- ------------- ----------
Total current liabilities 15,362 15,232 1,418 32,012
Long-term debt and capital lease obligations - 11,485 (11,285) (b) 111,350
111,150 (d)
Deferred income taxes 5,183 2,273 2,301 (b) 9,757
Other liabilities 1,980 980 - 2,960
Subordinated debt 70,000 9,709 (9,709) (b) 70,000
------------ ---------- ------------- ----------
Total liabilities 92,525 39,679 93,875 226,079
Shareholders' equity:
Common stock 1 13 (13) (e) 1
Additional paid-in-capital 27,392 6,283 (1,283) (e) 32,392
Retained earnings (accumulated deficit) (20) 11,612 (11,612) (e) (20)
Total shareholders' equity 27,373 17,908 (12,908) 32,373
------------ ---------- ------------- ----------
Total liabilities and shareholders' equity $ 119,898 $ 57,587 $ 80,967 $ 258,452
============ ========== ============= ==========
<FN>
See accompanying notes to unaudited pro forma consolidated financial statements.
</TABLE>
<PAGE>
Reliant Building Products, Inc.
Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements
(Dollars in Thousands)
Balance Sheet as of December 26, 1997
(a) Reflects the cash used in connection with the Acquisition:
<TABLE>
<CAPTION>
<S> <C>
Proceeds from new financing $ 111,900
Proceeds from Company shareholders 5,000
Less: purchase price (120,918)
Less: transaction costs (3,350)
----------
Cash used in Acquisition $ (7,368)
==========
</TABLE>
(b) The Acquisition will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations." The
purchase price is being allocated first to tangible and identifiable intangible
assets and liabilities based upon preliminary estimates of their fair market
values, with the remainder allocated to goodwill. The allocation of the
increase in basis is as follows:
<TABLE>
<CAPTION>
<S> <C>
Calculation of excess of cost over book value:
Purchase of CFA $120,918
Acquisition costs 561
---------
Net purchase price 121,479
Less: Net book value of assets acquired (17,908)
Elimination of intangible assets 15,685
Debt not assumed from Acquisition (22,227)
Elimination of other assets 478
---------
$ 97,507
=========
Allocation of excess purchase price:
Property, plant and equipment $ 6,914
Deferred taxes (1,394)
Inventories (548)
Closure of corporate & functional facilities (1,901)
Intangible assets 94,436
---------
$ 97,507
=========
</TABLE>
(c) Reflects adjustment to other assets as follows:
<TABLE>
<CAPTION>
<S> <C>
Debt issuance costs for new credit facility $2,789
Elimination of Care Free debt issuance costs (478)
-------
$2,311
=======
</TABLE>
(d) Reflects borrowings on new credit facility.
(e) Reflects the combination of the following adjustments:
<TABLE>
<CAPTION>
<S> <C>
Elimination of Care Free historical equity $(17,908)
New equity provided by the Company's shareholders 5,000
---------
$(12,908)
=========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RELIANT BUILDING PRODUCTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 28, 1997
(DOLLARS IN THOUSANDS)
PRO FORMA
----------------------------------------
HISTORICAL ADJUSTMENTS
------------------ -----------------------
RELIANT CFA RELIANT CFA COMBINED
-------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $174,401 $130,569 $(13,918) (a) $ - $ 291,052
Cost of products sold 131,474 96,633 (13,086) (a) (1,879) (h) 213,019
(875) (b) 752 (i)
-------- -------- --------- -------- ---------
Gross profit 42,927 33,936 43 1,127 78,033
Selling, general and administrative 32,724 28,024 (2,867) (a) 1,617 (j) 59,220
423 (c) 158 (i)
(859) (k)
-------- -------- --------- -------- ---------
Income from operations 10,203 5,912 2,487 211 18,813
Interest expense, net 5,381 3,319 2,867 (d) 5,791 (l) 17,358
Other expenses 577 23 (350) (e) 23
(227) (f)
-------- -------- --------- -------- ---------
Income (loss) before income taxes 4,245 2,570 197 (5,580) 1,432
Income tax expense (benefit) 1,892 1,112 50 (g) (2,064) (m) 990
-------- -------- --------- -------- ---------
Net income (loss) $ 2,353 $ 1,458 $ 147 $(3,516) $ 442
======== ======== ========= ======== =========
Other Data:
Adjusted EBITDA (n) $ 15,426 $ 10,339 $ 1,847 $ 2,038 $ 29,650
======== ======== ========= ======== =========
<FN>
See accompanying notes to unaudited pro forma consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RELIANT BUILDING PRODUCTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
PRO FORMA
-----------------------------------------
HISTORICAL ADJUSTMENTS
------------------- ------------------------
RELIANT CFA RELIANT CFA COMBINED
--------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $131,973 $100,922 $ (6,899) (a) $ - $ 225,996
Cost of products sold 99,775 76,907 (6,012) (a) (1,409) (h) 169,724
(101) (b) 564 (i)
--------- -------- --------- -------- ----------
Gross profit 32,198 24,015 (786) 845 56,272
Selling, general and administrative 24,921 17,331 (1,177) (a) 1,212 (j) 41,638
(49) (c) 119 (i)
(719) (k)
--------- -------- --------- -------- ----------
Income from operations 7,277 6,684 440 233 14,634
Interest expense, net 5,755 2,445 358 (d) 4,343 (l) 12,901
Other expenses 3,374 335 - - 3,709
--------- -------- --------- -------- ----------
Income (loss) before income taxes (1,852) 3,904 82 (4,110) (1,976)
Income tax expense (benefit) (265) 1,038 31 (g) (1,521) (m) (717)
--------- -------- --------- -------- ----------
Income (loss) before extraordinary items $ (1,587) $ 2,866 $ 51 $(2,589) $ (1,259)
========= ======== ========= ======== ==========
Other Data:
EBITDA (n) $ 12,667 $ 10,880 $ 275 $ 1,603 $ 25,425
========= ======== ========= ======== ==========
<FN>
See accompanying notes to unaudited pro forma consolidated financial statements.
</TABLE>
<PAGE>
Reliant Building Products, Inc.
Notes to Pro Forma Unaudited Condensed Financial Statements
(Dollars in Thousands)
Statement of Operations for Year Ended March 28, 1997 and Nine Months Ended
December 26, 1997
RELIANT PRO FORMA ADJUSTMENTS
Reflects the pro forma adjustments necessary to give effect to the May 9, 1997
Redman Building Products, Inc. (the "Predecessor") common stock purchase by the
current shareholders of the Company (the "Transaction"), the proceeds from the
senior subordinated notes (the "Notes") issued in conjunction therewith, and the
closure of the Company's Houston manufacturing facility. Such pro forma
adjustments reflect the Transaction as if it occurred on March 30, 1996,
including the application of "push-down accounting" as of that date.
(a) Reflects the elimination of the historical results of operations for the
Company's Houston manufacturing facility, closed in connection with the
Transaction. The elimination of the historical cost of products sold includes
$188 historical depreciation expense recorded for the Company's Houston
manufacturing facility for the year ended March 28, 1997.
(b) Reflects decrease in depreciation as a result of extending the remaining
useful lives of certain property, plant and equipment. These remaining useful
lives have been revised due to the fact that such property, plant and equipment
has historically not been subject to technological change and is expected to be
used over such revised remaining useful lives. Management does not expect such
extension to result in a material increase over historical repair and
maintenance expense.
(c) Reflects net increase in amortization resulting from the additional
goodwill created as a result of the Transaction. A life of 40 years has been
assigned to goodwill.
(d) Reflects net increase in interest expense resulting from the Transaction
and financing as follows:
<TABLE>
<CAPTION>
FISCAL NINE MONTHS
YEAR ENDED ENDED
MARCH 28, 1997 DECEMBER 26, 1997
---------------- -------------------
<S> <C> <C>
Elimination of historical interest expense related to debt that
was repaid as a result of the Notes offering $ (5,264) $ (579)
Interest resulting from the issuance of the Notes at 10.875% 7,613 878
Amortization of the $2,600 of debt issuance costs related to
Notes and senior credit facility 393 45
Line of credit fees related to the senior credit facility 125 14
---------------- -------------------
$ 2,867 $ 358
================ ===================
</TABLE>
(e) Represents management fees charged to the Predecessor by the former
owners that will cease with the Transaction.
(f) To reflect elimination of accretion of redeemable common stock warrants
that were redeemed in the Transaction.
(g) Net change in provision for income taxes as a result of notes (a) - (f).
CARE FREE PRO FORMA ADJUSTMENTS
(h) Represent the raw material cost savings from contractual purchase
agreements available to the Company that will be used to supply Care Free
requirements.
(i) Represents increased depreciation from the step-up to fair market value
of property, plant and equipment. Depreciation on property, plant and equipment
has been calculated on a straight line basis over lives ranging from 2 to 20
years.
(j) Reflects the net increase in amortization resulting from the additional
intangible assets (calculated over 40 years) created as a result of the
Acquisition.
(k) Reflects the elimination of duplicate corporate expenses and management
fees charged to Care Free by its former owners that ended with the Acquisition.
(l) Reflects the net increase in interest expense and debt issuance cost
amortization resulting from the new credit facility used to finance the
Acquisition as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MARCH 28, 1997 DECEMBER 26, 1997
---------------- -------------------
<S> <C> <C>
Interest resulting from new financing
at 7.9% - 9.8% $ 8,560 $ 6,420
Elimination of interest expense on debt
Not assumed in the Acquisition (3,234) (2,425)
Amortization of debt issuance costs 465 348
---------------- -------------------
$ 5,791 $ 4,343
================ ===================
</TABLE>
(m) Reflects the pro forma income tax effect of the above adjustments at
37%.
OTHER DATA
(n) The following items were included in the results of operations and have
been eliminated to calculate "Adjusted EBITDA."
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED
MARCH 28,1997
<S> <C>
Interruption of operations at joint venture $ 357
--------------
Total Adjustments (1) $ 357
==============
</TABLE>
1 Represents the incremental costs of purchasing aluminum raw materials from
outside suppliers and the Company's lost earnings recorded under the
equity method of accounting during an interruption in operations due to
a fire at the Company's aluminum joint venture. The Company's aluminum
joint venture has resumed operations at production levels similar to
those prior to the fire.
The Company defines EBITDA as income from operations before depreciation and
amortization. The Company includes information concerning EBITDA because it is
used by certain investors as a measure of the Company's ability to service debt.
EBITDA should not be considered in isolation or as a substitute for net income
or cash flows from operating activities presented in accordance with generally
accepted accounting principles or as a measure of a company's profitability or
liquidity.
