SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------
F0RM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
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: 033-64788
ASSOCIATED MATERIALS INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 75-1872487
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
2200 ROSS AVENUE, SUITE 4100 EAST, DALLAS, TEXAS 75201
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (214) 220-4600
NOT APPLICABLE
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check X whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Shares of Common Stock, $.0025 par value
outstanding at November 12, 1997: 4,934,900
Shares of Class B Common Stock, $.0025 par value
outstanding at November 12, 1997: 2,700,000
<PAGE>
ASSOCIATED MATERIALS INCORPORATED
FORM 10-Q
FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1997
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets................................................. 1
September 30, 1997 (Unaudited) and December 31, 1996
Statements of Operations (Unaudited)........................... 2
Quarter and nine months ended September 30, 1997 and 1996
Statements of Cash Flows (Unaudited)........................... 3
Nine months ended September 30, 1997 and 1996
Notes to Financial Statements (Unaudited)...................... 4
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition................................. 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................ 11
SIGNATURES ......................................................... 12
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
ASSOCIATED MATERIALS INCORPORATED
BALANCE SHEETS
(In Thousands, Except Share Data)
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------- --------
(Unaudited)
ASSETS
Current assets:
Cash ........................................... $ 2,595 $ 2,384
Accounts receivable, net ....................... 54,833 47,208
Inventories .................................... 63,092 58,357
Income taxes receivable ........................ -- 587
Other current assets ........................... 3,129 3,025
--------- --------
Total current assets ............................... 123,649 111,561
Property, plant and equipment, net ................. 53,544 51,649
Investment in Amercord Inc. ........................ 10,694 11,320
Other assets ....................................... 2,554 3,179
--------- --------
Total assets ....................................... $ 190,441 $177,709
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdrafts ................................ $ 5,177 $ 4,853
Accounts payable ............................... 25,451 17,114
Accrued liabilities ............................ 25,662 22,965
Revolving line of credit ....................... 4,969 13,058
Income taxes payable ........................... 1,482 --
Current portion of long-term debt .............. 1,750 1,750
--------- --------
Total current liabilities .......................... 64,491 59,740
Deferred income taxes .............................. 2,946 1,884
Other liabilities .................................. 3,201 3,489
Long-term debt ..................................... 79,050 80,350
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares - 100,000 at
September 30, 1997 and December 31, 1996;
Issued and outstanding shares - 0 at
September 30, 1997 and December 31, 1996 -- --
Common stock, $.0025 par value:
Authorized shares - 15,000,000;
Issued and outstanding shares - 4,934,900
at September 30, 1997 and 4,893,504 at
December 31, 1996 ....................... 12 12
Common stock, Class B, $.0025 par value:
Authorized, issued and outstanding
shares - 2,700,000 at September 30, 1997
and December 31, 1996 ...................... 7 7
Less: Treasury stock, at cost - 41,396
shares at September 30, 1997 and 0 at
December 31, 1996 .......................... (542) --
Capital in excess of par ....................... 505 185
Retained earnings .............................. 40,771 32,042
--------- --------
Total stockholders' equity ..................... 40,753 32,246
--------- --------
Total liabilities and stockholders' equity ......... $ 190,441 $177,709
========= ========
See accompanying notes
-1-
<PAGE>
ASSOCIATED MATERIALS INCORPORATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Net sales ......................... $ 111,127 $103,159 $ 297,919 $264,518
Cost of sales ..................... 78,511 71,196 212,306 189,320
--------- -------- --------- --------
32,616 31,963 85,613 75,198
Selling, general and administrative
expense .......................... 21,517 20,497 61,646 57,944
--------- -------- --------- --------
Income from operations ............ 11,099 11,466 23,967 17,254
Interest expense .................. 2,228 2,739 7,501 8,285
--------- -------- --------- --------
8,871 8,727 16,466 8,969
Equity in earnings (loss) of
Amercord Inc. .................... (731) 404 (624) 1,440
--------- -------- --------- --------
Income before income tax expense .. 8,140 9,131 15,842 10,409
Income tax expense ................ 3,596 3,599 6,735 3,777
--------- -------- --------- --------
Net income ........................ $ 4,544 $ 5,532 $ 9,107 $ 6,632
========= ======== ========= ========
Earnings per common share ......... $ 0.58 $ 0.72 $ 1.17 $ 0.86
========= ======== ========= ========
Weighted average common and common
equivalent shares outstanding ... 7,772 7,716 7,776 7,699
========= ======== ========= ========
</TABLE>
See accompanying notes
-2-
<PAGE>
ASSOCIATED MATERIALS INCORPORATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1997 1996
------- -------
OPERATING ACTIVITIES
<S> <C> <C>
Net income............................................ $ 9,107 $ 6,632
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................... 4,741 4,367
Deferred income taxes............................ 1,062 1,885
Equity in (earnings) loss of Amercord Inc........ 624 (1,440)
Changes in operating assets and liabilities:
Accounts receivable, net...................... (7,625) (4,974)
Inventories................................... (4,735) (4,390)
Income taxes receivable/payable............... 2,228 1,676
Bank overdrafts............................... 324 (510)
Accounts payable and accrued liabilities...... 11,034 7,375
Other assets and liabilities.................. (93) (718)
------- -------
Net cash provided by operating activities............. 16,667 9,903
INVESTING ACTIVITIES
Additions to property, plant and equipment, net....... (6,307) (6,865)
FINANCING ACTIVITIES
Net increase (decrease) in revolving line of credit... (8,089) (1,056)
Principal payments of long-term debt.................. (1,300) (1,300)
Dividends paid........................................ (379) -
Treasury stock acquired............................... (542) -
Options exercised..................................... 161 -
------- -------
Net cash used in financing activities................. (10,149) (2,356)
------- -------
Net increase in cash.................................. 211 682
Cash at beginning of period........................... 2,384 2,279
------- -------
Cash at end of period................................. $ 2,595 $ 2,961
======= =======
Supplemental information:
Cash paid for interest................................ $ 9,940 $10,451
======= =======
Net cash paid for income taxes........................ $ 3,445 $ 247
======= =======
</TABLE>
See accompanying notes
-3-
<PAGE>
ASSOCIATED MATERIALS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited financial statements of Associated Materials Incorporated (the
"Company") for the quarter and nine months ended September 30, 1997 have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting, the instructions to Form 10-Q, and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. These financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 filed with the
Securities and Exchange Commission. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation of the interim financial information have been included.
The results of operations for any interim period are not necessarily indicative
of the results of operations for a full year.
NOTE 2 - INVENTORIES
Inventories are valued at the lower of cost (first in, first out) or market.
Inventories consist of the following (in thousands):
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------- --------
Raw materials................................... $16,780 $14,903
Work in process................................. 5,410 5,276
Finished goods and purchased stock.............. 40,902 38,178
------- -------
$63,092 $58,357
======= =======
NOTE 3 - INVESTMENT IN AMERCORD INC. ("AMERCORD")
The Company's investment in Amercord, a 50% owned affiliate, is accounted for
using the equity method. Condensed statements of operations for Amercord are
presented below (in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ---------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................... $17,377 $21,608 $ 57,559 $ 65,549
Costs and expenses.................. 19,327 19,898 58,376 61,536
------- ------- -------- --------
Income (loss) from operations....... (1,950) 1,710 (817) 4,013
Interest expense.................... 373 432 1,172 1,347
Income tax expense (benefit)........ (860) 471 (740) 985
------- ------- -------- --------
Net income (loss) before cumulative
effect of a change in accounting
principle........................ (1,463) 807 (1,249) 1,681
Cumulative effect of a change in
accounting principle (net of tax) - - - 1,196
------- ------- -------- --------
Net income (loss)................... $(1,463) $ 807 $ (1,249) $ 2,877
======= ======= ======== ========
Company's share of net income (loss) $(731) $404 $(624) $1,440
===== ==== ====== ======
</TABLE>
-4-
<PAGE>
NOTE 4 - EARNINGS PER COMMON SHARE
Earnings per common share computations are determined using the treasury stock
method based on weighted average common and common equivalent shares outstanding
during the periods presented. Fully diluted earnings per common share are not
significantly different than primary earnings per common share.
NOTE 5 - RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform with current
period presentation.
NOTE 6 - ACCOUNTING CHANGES
In February 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") which
specified a new methodology for calculating earnings per share and is effective
for fiscal years ending after December 15, 1997. This statement will have no
effect on the financial position, results of operations or cash flows of the
Company but will require a restatement of prior period earnings per share. The
Company believes that the earnings per share calculated under SFAS 128 will not
be materially different than the current method used.
In addition, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and
Statement of Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information" which are effective for financial
statement periods beginning after December 15, 1997. The Company believes that
these statements will have no effect on the Company's financial position,
results of operations or cash flows.
-5-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1996
The table below sets forth for the periods indicated certain items of the
Company's financial statements by segment:
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
-----------------------------------------------
1997 1996
-------------------- ---------------------
PERCENTAGE OF PERCENTAGE OF
AMOUNT TOTAL NET SALES AMOUNT TOTAL NET SALES
------ --------------- ------ ---------------
Total Company:
<S> <C> <C> <C> <C>
Net sales - Alside ............... $ 98,483 88.6% $ 93,170 90.3%
Net sales - AmerCable ............ 12,644 11.4 9,989 9.7
-------- ------- -------- -------
Total net sales ................. 111,127 100.0 103,159 100.0
Gross profit ..................... 32,616 29.3 31,963 31.0
Selling, general and
administrative expense (1) ...... 21,517 19.4 20,497 19.9
-------- ------- -------- -------
Income from operations ........... $ 11,099 9.9% $ 11,466 11.1%
======== ======= ======== =======
Alside:
Net sales ........................ $ 98,483 100.0% $ 93,170 100.0
Gross profit ..................... 30,203 30.7 30,808 33.1
Selling, general and
administrative expense .......... 19,646 20.0 19,185 20.6
-------- ------- -------- -------
Income from operations ........... $ 10,557 10.7% $ 11,623 12.5%
======== ======= ======== =======
AmerCable:
Net sales ........................ $ 12,644 100.0% $ 9,989 100.0%
Gross profit ..................... 2,413 19.1 1,155 11.5
Selling, general and
administrative expense .......... 1,126 8.9 644 6.4
-------- ------- -------- -------
Income from operations ........... $ 1,287 10.2% $ 511 5.1%
======== ======= ======== =======
</TABLE>
(1) Consolidated selling, general and administrative expenses include corporate
expenses of $745,000 and $668,000 for the quarters ended September 30, 1997
and 1996, respectively.
OVERVIEW
GENERAL. The Company's net sales increased 7.7% to $111.1 million in the
third quarter of 1997 as compared to the 1996 period due to higher sales volume.
Income from operations decreased 3.2% or $367,000 to $11.1 million for the
quarter ended September 30, 1997 as compared to $11.5 million for the 1996
period due primarily to lower operating income experienced at its Alside
division which was only partially offset by increased operating income at its
AmerCable division. Net income decreased 17.9% to $4.5 million for the quarter
ended September 30, 1997 as compared to the 1996 period due to Alside's lower
operating income and a $1.1 million decrease in equity in the earnings of the
Company's affiliate, Amercord.
ALSIDE. Alside's net sales increased $5.3 million or 5.7% to $98.5 million
for the quarter ended September 30, 1997 as compared to the same period in 1996
as unit sales of vinyl siding and vinyl windows increased 6.2% and 11.5%,
respectively. Alside's income from operations was $10.6 million for the quarter
ended September 30, 1997, a decrease of 9.2% from $11.6 million for same period
in 1996 primarily due to higher raw material costs. As a result, gross profit as
a percentage of net sales decreased to 30.7% in the 1997 period from 33.1% in
the 1996 period. Selling, general and administrative expense increased 2.4% to
$19.6 million for the quarter
-6-
<PAGE>
ended September 30, 1997 due to higher advertising expenditures and higher
salaries and wages resulting from additional sales personnel and increased
incentive compensation. Selling, general and administrative expense decreased
slightly as a percentage of net sales.
AMERCABLE. AmerCable's net sales increased $2.7 million or 26.6% for the
quarter ended September 30, 1997 as compared to the same period in 1996 due to
increased sales volume across all major product lines. Gross profit as a
percentage of net sales increased to 19.1% for the quarter ended September 30,
1997 from 11.5% for the same period in 1996 due to increased sales prices,
improved labor productivity and material efficiencies. Income from operations
increased $776,000 to $1.3 million for the quarter ended September 30, 1997 as
compared to $511,000 for the same period in 1996 due primarily to increased
sales volume, sales prices and lower production costs. Selling, general and
administrative expense increased to $1.1 million for the quarter ended September
30, 1997 due primarily to higher incentive compensation.
AMERCORD. The Company recorded a loss of $731,000 reflecting its share of
the after tax loss of Amercord for the quarter ended September 30, 1997 as
compared with income of $404,000 for the same period in 1996. The Company's
share of Amercord's third quarter 1996 after tax income was $284,000 exclusive
of the Company's share of a royalty settlement gain and a writedown of equipment
in accordance with SFAS No. 121. Amercord's net sales decreased 19.6% to $17.4
million in the quarter ended September 30, 1997 as compared to the 1996 period
due to lower sales volume and lower average unit selling prices. Gross profit
decreased from $1.9 million for the quarter ended September 30, 1996 to $(1.4)
million for the same period in 1997 due primarily to lower sales prices and
decreased tire cord manufacturing efficiencies. Selling, general and
administrative expense decreased from $589,000 for the quarter ended September
30, 1996 to $581,000 for the same period in 1997. The Company presently expects
Amercord's average selling prices to remain stable during the remainder of 1997
and further decline during 1998 which may adversely affect Amercord's results of
operations in 1998 and beyond.
OTHER. Net interest expense decreased $511,000 or 18.7% in the quarter
ended September 30, 1997 compared with the same period in 1996 due to lower
borrowing requirements experienced on the Company's line of credit during the
third quarter of 1997 and the recording of $280,000 in interest income relating
to a $1.4 million income tax refund.
-7-
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996.
The table below sets forth for the periods indicated certain items of the
Company's financial statements by segments.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------
1997 1996
------------------------ --------------------------
PERCENTAGE OF PERCENTAGE OF
AMOUNT TOTAL NET SALES AMOUNT TOTAL NET SALES
-------- --------------- --------- ---------------
Total Company:
<S> <C> <C> <C> <C>
Net sales - Alside ................ $257,475 86.4% $ 233,686 88.3%
Net sales - AmerCable ............. 40,444 13.6 30,832 11.7
-------- ----- --------- -----
Total net sales .................. 297,919 100.0 264,518 100.0
Gross profit ...................... 85,613 28.7 75,198 28.4
Selling, general and
administrative expense (1) ....... 61,646 20.7 57,944 21.9
-------- ----- --------- -----
Income from operations ............ $ 23,967 8.0% $ 17,254 6.5%
======== ===== ========= =====
Alside:
Net sales ......................... $257,475 100.0% $ 233,686 100.0%
Gross profit ...................... 78,914 30.6 74,083 31.7
Selling, general and
administrative expense ........... 56,449 21.9 53,654 23.0
-------- ----- --------- -----
Income from operations ............ $ 22,465 8.7% $ 20,429 8.7%
======== ===== ========= =====
AmerCable:
Net sales ......................... $ 40,444 100.0% $ 30,832 100.0%
Gross profit ...................... 6,699 16.6 1,115 3.6
Selling, general and
administrative expense ........... 3,295 8.2 2,502 8.1
-------- ----- --------- -----
Income (loss) from operations ..... $ 3,404 8.4% $ (1,387) (4.5)%
======== ===== ========= =====
</TABLE>
(1) Consolidated selling, general and administrative expenses include corporate
expenses of $1,902,000 and $1,788,000 for the nine month periods ended September
30, 1997 and 1996, respectively.
OVERVIEW
GENERAL. The Company's net sales increased 12.6% to $297.9 million for the
nine-month period ended September 30, 1997 due to net sales increases of 10.2%
and 31.2% for Alside and AmerCable, respectively. The increased operating income
was due to higher sales volume at both Alside and AmerCable as well as
substantial production efficiency gains at AmerCable. The Company's net income
increased 37.3% to $9.1 million for the nine months ended September 30, 1997 as
compared to the 1996 period primarily due to higher operating income at its
Alside and AmerCable divisions.
ALSIDE. Alside's net sales increased $23.8 million or 10.2% for the nine
months ended September 30, 1997 as compared to the same period in 1996 due
primarily to increased unit sales of vinyl siding and vinyl windows of 11.6% and
19.3%, respectively. Gross profit as a percentage of net sales decreased to
30.6% for the nine-month period ended September 30, 1997 as compared to the same
period in 1996 principally due to increased raw material costs, including vinyl
resin. Alside's income from operations increased 10% or $2.0 million to $22.5
million for the nine months ended September 30, 1997 as compared to $20.4
million for the same period in 1996. The increase in income from operations was
due to increased sales volume across the majority of Alside's product lines
which were partially offset by the higher raw material costs which Alside did
not pass through to its customers. Selling, general and administrative expense
increased to $56.4 million for the nine months ended September 30, 1997 from
$53.7 million for the same period in 1996 but decreased as a percentage of net
sales. The increase in selling, general and administrative expense was due
primarily to increased advertising expenditures and employee compensation.
-8-
<PAGE>
AMERCABLE. AmerCable's net sales increased $9.6 million or 31.2% for the
nine months ended September 30, 1997 as compared to the same period in 1996 due
to increased sales volume and prices. Gross profit as a percentage of net sales
increased to 16.6% for the nine months ended September 30, 1997 from 3.6% for
the same period in 1996 due to improved labor productivity and material
efficiencies and higher sales prices. Income from operations was $3.4 million
for the nine months ended September 30, 1997 compared to a loss from operations
of $1.4 million for the same period in 1996 due primarily to increased sales
volume and sales prices, as well as lower production costs. Selling, general and
administrative expense increased to $3.3 million due primarily to higher
incentive compensation.
AMERCORD. The Company recorded a loss of $624,000 reflecting its share of
the after tax losses of Amercord for the nine months ended September 30, 1997 as
compared with income of $1.4 million for the same period in 1996. The Company's
share of after tax income for the nine months ended September 30, 1996 was
$639,000 exclusive of the Company's share of the cumulative change in accounting
principle, a royalty settlement and an equipment writedown. Amercord's net sales
decreased 12.2% to $57.6 million in the nine-month period ended September 30,
1997 as compared to the same period in 1996 due primarily to a decrease in sales
volume and lower average unit selling price of its products. Gross profit
decreased from $5.7 million for the nine months ended September 30, 1996 to $1.4
million for the same period in 1997 due primarily to lower sales prices and
decreased manufacturing efficiencies. Selling, general and administrative
expense increased to $2.2 million for the nine months ended September 30, 1997
from $2.0 million for the same period in 1996. The Company presently expects
Amercord's average selling prices to remain stable during the remainder of 1997
and further decline during 1998 which may adversely affect Amercord's results of
operations in 1998 and beyond.
OTHER. Net interest expense decreased $784,000 or 9.5% in the nine months
ended September 30, 1997 compared with the same period in 1996 due to lower
borrowing requirements experienced on the Company's line of credit during the
1997 period compared to the 1996 period. The Company recorded interest income of
$280,000 related to a $1.4 million income tax refund.
LIQUIDITY AND CAPITAL RESOURCES
Borrowings under the Company's existing credit facility were $4.9 million
at September 30, 1997, excluding outstanding letters of credit totaling $8.5
million securing $5.9 million of taxable notes and certain other obligations. At
September 30, 1997 the Company had an available borrowing capacity of
approximately $36.6 million.
Net cash provided by operations was $16.7 million in the nine months ended
September 30, 1997 compared with $9.9 in the same period in 1996. The increase
in cash provided by operations in the 1997 period was due principally to higher
net income and higher payables for the period ended September 30, 1997 as
compared to the 1996 period.
Capital expenditures totaled $6.3 million for the nine months ended
September 30, 1997, compared with $6.9 million during the same period in 1996.
Expenditures in the 1997 period were primarily used to increase extrusion
capacity for vinyl siding, windows and vinyl fence as well as to increase and
automate window fabrication capacity.
The Company believes the future cash flows from operations and its
borrowing capacity under its existing credit agreement will be sufficient to
satisfy its obligations to pay principal and interest on its outstanding debt,
maintain current operations and provide sufficient capital for presently
anticipated capital expenditures. However, there can be no assurances that the
cash so generated by the Company will be sufficient for such purposes.
The Company currently has $75 million of 11 1/2% senior subordinated notes
outstanding. These notes are callable at the option of the Company beginning in
August 1998 at 104.313% of the outstanding principal amount thereof, decreasing
to 100% of the principal amount in August 2001. The Company may seek to
refinance all or part of the notes in order to obtain more favorable interest
rates. No assurances can be given that the Company will be able to obtain such
financing or the terms on which such financing may be available.
-9-
<PAGE>
EFFECTS OF INFLATION
Inflation could adversely affect the Company if inflation results in
significantly higher interest rates or substantial weakness in economic
conditions. Alside's principal raw material, vinyl resin, has been subject to
rapid price increments. Alside has historically been able to pass on price
increases to its customers. No assurances can be given that Alside will continue
to be able to pass on any price increases.
CERTAIN FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) relating to the
Company that are based on the beliefs of the management. When used in this
report, the words "anticipate," "believe," "estimate," "expect," "intend," and
similar expressions, as they relate to the Company or the Company's management,
identify forward-looking statements. Such statements reflect the current views
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions relating to the operations and results of
operations of the Company as well as its customers and suppliers, including as a
result of the availability of consumer credit, interest rates, employment
trends, changes in levels of consumer confidence, changes in consumer
preferences, national and regional trends in new housing starts, raw material
costs, pricing pressures, shifts in market demand, and general economic
conditions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions or estimates prove incorrect, actual results may
vary materially from those described herein as anticipated, believed, estimated,
expected or intended.
-10-
<PAGE>
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
During the quarter ended September 30, 1997, Associated Materials
Incorporated filed no Current Reports on Form 8-K.
-11-
<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 thereunto duly authorized.
ASSOCIATED MATERIALS INCORPORATED
(Registrant)
Date: November 12, 1997 By: \s\ ROBERT L. WINSPEAR
Robert L. Winspear,
Vice President,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
-12-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
27 Financial Data Schedule
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
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0
0
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</TABLE>
