Euramax Holdings, Inc. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Euramax Holdings, Inc.	Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - Euramax Holdings, Inc.	exhibit312certificationoft.htm
EX-32.1 - EXHIBIT 32.1 - Euramax Holdings, Inc.	exhibit321certofthepeoandc.htm
EX-10.1 - EXHIBIT 10.1 - Euramax Holdings, Inc.	exhibit101tyronejohnsonemp.htm
EX-31.1 - EXHIBIT 31.1 - Euramax Holdings, Inc.	exhibit311certificationoft.htm

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 April 3, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 333-05978

EURAMAX HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware (State or other jurisdiction of incorporation or organization)		58-2502320 (I.R.S. Employer Identification Number)
303 Research Drive, Suite 400, Norcross, GA (Address of principal executive offices)		30092 (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. Yes ¨ No x*

* The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports that would have been required during the preceding 12 months, had it been subject to such filing requirements.

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer o	Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

There were 195,877 shares of the registrant’s common stock, par value $1.00 per share, issued and outstanding as of May 13, 2015, none of which are publicly traded.

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of April 3, 2015 and December 31, 2014	1
	Condensed Consolidated Statements of Operations for the Three Months Ended April 3, 2015 and March 28, 2014	2
	Condensed Consolidated Statements of Comprehensive Operations for the Three Months Ended April 3, 2015 and March 28, 2014	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 3, 2015 and March 28, 2014	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 6.	Exhibits	38

Part I. Financial Information

Item 1. Financial Statements (unaudited)

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



	April 3, 2015			December 31, 2014
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	1,868		$	2,074
Accounts receivable, less allowances of $1,268 and $1,522, respectively	88,357			80,329
Inventories, net	110,648			106,385
Income taxes receivable	1,897			1,734
Deferred income taxes	424			426
Other current assets	7,750			7,009
Total current assets	210,944			197,957
Property, plant and equipment, net	104,037			111,164
Goodwill	180,659			190,158
Customer relationships, net	22,754			26,315
Other intangible assets, net	6,365			6,495
Deferred income taxes	179			—
Other assets	3,924			4,687
Total assets	$	528,862		$	536,776
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	83,772		$	78,846
Accrued expenses and other current liabilities	25,065			25,509
Accrued interest payable	85			12,912
Current portion of long-term debt (Note 2)	450,012			4,663
Deferred income taxes	811			895
Total current liabilities	559,745			122,825
Long-term debt	124,408			534,852
Deferred income taxes	14,073			15,894
Other liabilities	34,711			36,311
Total liabilities	732,937			709,882
Shareholders’ deficit:
Common stock	196			196
Additional paid-in capital	724,661			724,562
Accumulated loss	(934,440		)	(903,029		)
Accumulated other comprehensive income	5,508			5,165
Total shareholders’ deficit	(204,075		)	(173,106		)
Total liabilities and shareholders’ deficit	$	528,862		$	536,776

See the accompanying notes to these condensed consolidated financial statements.

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)



	Three months ended
	April 3, 2015			March 28, 2014
Net sales	$	185,599		$	169,904
Costs and expenses:
Cost of goods sold (excluding depreciation and amortization)	160,587			146,971
Selling and general (excluding depreciation and amortization)	18,537			18,776
Depreciation and amortization	7,499			8,202
Other operating charges	2,263			965
Loss from operations	(3,287		)	(5,010		)
Interest expense	(13,934		)	(13,765		)
Other (loss) income, net	(15,465		)	196
Loss before income taxes	(32,686		)	(18,579		)
(Benefit from) provision for income taxes	(1,275		)	693
Net loss	$	(31,411	)	$	(19,272	)

See the accompanying notes to these condensed consolidated financial statements.

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(in thousands)

(unaudited)



	Three months ended
	April 3, 2015			March 28, 2014
Net loss	$	(31,411	)	$	(19,272	)
Other comprehensive income (loss):
Foreign currency translation adjustment	221			(389		)
Defined benefit pension plan adjustments	122			20
Total comprehensive loss	$	(31,068	)	$	(19,641	)

See the accompanying notes to these condensed consolidated financial statements.

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



	Three months ended
	April 3, 2015			March 28, 2014
Cash flows from operating activities:
Net loss	$	(31,411	)	$	(19,272	)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation and amortization	7,499			8,202
Amortization of deferred financing fees	641			576
Amortization of debt discount	175			129
Share-based compensation	99			121
Provision for doubtful accounts	1,318			119
Foreign exchange loss (gain)	16,559			(212		)
Gain on sale or disposal of assets	—			(6		)
Deferred income taxes	(1,497		)	864
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	(12,341		)	(18,149		)
Inventories	(6,586		)	(14,948		)
Other current assets	(868		)	(690		)
Accounts payable and other current liabilities	(5,329		)	38,675
Income taxes payable	(390		)	501
Other noncurrent assets and liabilities	(339		)	204
Net cash used in operating activities	(32,470		)	(3,886		)
Cash flows from investing activities:
Proceeds from sales of assets	43			43
Capital expenditures	(2,109		)	(1,488		)
Net cash used in investing activities	(2,066		)	(1,445		)
Cash flows from financing activities:
Net borrowings (repayments) on ABL Credit Facility	24,207			(13,756		)
Net borrowings on European Credit Facilities	10,523			14,657
Changes in cash overdrafts	—			236
Debt issuance costs	—			(88		)
Net cash provided by financing activities	34,730			1,049
Effect of exchange rate changes on cash	(400		)	(297		)
Net decrease in cash and cash equivalents	(206		)	(4,579		)
Cash and cash equivalents at beginning of period	2,074			8,977
Cash and cash equivalents at end of period	$	1,868		$	4,398

See the accompanying notes to these condensed consolidated financial statements.

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and Principles of Consolidation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Euramax Holdings, Inc. and its subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, these statements include all adjustments considered necessary for the fair presentation of all interim periods reported herein. All adjustments are of a normal recurring nature unless otherwise disclosed.

The Company’s sales volumes have historically been higher in the second and third quarters due to the seasonal demand of the building products markets served. Accordingly, results for the three months ended April 3, 2015 are not necessarily indicative of the results that may be expected for the full year. Management believes that the disclosures made are adequate for a fair presentation of the Company’s results of operations, financial position and cash flows. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Assets and liabilities of non-U.S. subsidiaries are translated to U.S. Dollars at the rate of exchange in effect on the balance sheet date. Income and expenses are translated to U.S. Dollars at the weighted average rates of exchange prevailing during the period. Foreign currency gains and losses resulting from the remeasurement of inter-company amounts that are not of a long-term investment nature into local currencies and certain indebtedness of foreign subsidiaries denominated in U.S. dollars are included in other (loss) income, net. Other (loss) income, net includes losses of $16.2 million and income of $0.2 million for the three months ended April 3, 2015 and March 28, 2014, respectively. Foreign currency gains and losses resulting from transactions in the ordinary course of business are recorded in selling and general expenses. Foreign currency transaction gains and losses recorded in selling and general expenses were not significant for any period presented.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the Company’s accounts and the accounts of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Each of our interim reporting periods, other than the fourth interim reporting period, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The first quarter of 2015 and 2014 ended on April 3 and March 28, respectively. The first quarter of 2015 contains 6 additional days compared to the first quarter of 2014. Our fourth interim reporting period and our fiscal year end on December 31 regardless of the day of the week on which it falls.

Recent Accounting Pronouncements

In May 2014, the FASB issued new revenue recognition guidance, which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is currently assessing the impact of implementing this guidance on the Company's financial position, results of operations, and cash flows.

In April 2015, the FASB issued new guidance related to the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the guidance is effective for annual and interim periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. The Company is currently assessing the impact of implementing this guidance on the Company's financial position, results of operations, and cash flows.

2. Operations and Significant Accounting Policies

Indebtedness

The $375 million 9.50% Senior Secured Notes (the "Notes") become due on April 1, 2016. In the event the Notes are not refinanced prior to December 31, 2015, the ABL Credit Facility becomes due on January 31, 2016. Generally accepted accounting principles require that long-term debt be classified as a current liability when the maturity date for such debt is within 12 months of a company's reporting period. Accordingly, as of April 3, 2015, the Company is required to classify its outstanding long-term debt under the Notes and the ABL Credit Facility totaling $375 million and $59.8 million, respectively, to current liabilities on its consolidated balance sheet since the Company has not finalized the refinancing of the debt. If the Company were unable to refinance or extend the maturity date of its Notes the Company may not be able to generate sufficient cash to service all of the indebtedness and may not be able to refinance the indebtedness on favorable terms. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond the Company’s control. The Company is actively pursuing several alternatives to address the maturity date of its Notes, including but not limited to engagement of an investment banking firm and legal counsel to facilitate the refinancing process. Based on current market conditions, the Company expects to be able to complete a refinancing of the Notes prior to December 31, 2015, although there can be no assurances of the timing of terms thereof. See Note 4 for further disclosures related to long-term debt.

Accounts Receivable

Accounts receivable are comprised of trade accounts receivable and other receivables. Trade accounts receivable are recorded at net realizable value and totaled $86.8 million and $77.1 million as of April 3, 2015 and December 31, 2014, respectively. This value includes an allowance for estimated uncollectible accounts, returns and allowances, cash discounts and other adjustments. The allowance for doubtful accounts is based on historical experience, the level of past-due accounts based on the contractual terms of the receivables, current economic conditions and an evaluation of the customers' credit worthiness. Accounts receivable are charged against the allowance for doubtful accounts when it is probable that the receivable will not be recovered. During the first quarter of 2015, the Company incurred a loss of $1.2 million in the European Roll Coated Aluminum segment on accounts receivable related to the bankruptcy of a customer in the UK.

3. Inventories

Inventories were comprised of:



	April 3, 2015		December 31, 2014
	(in thousands)
Aluminum and steel coil	$	71,270	$	72,587
Raw materials	19,829		16,427
Work in process	2,481		2,467
Finished products	17,068		14,904
Total inventories, net	$	110,648	$	106,385

The Company has disclosed aluminum and steel coil inventory separately, as it represents inventory that can be classified as raw material, work in process or finished product. Aluminum and steel coil includes both painted and bare coil. Inventories are net of related reserves totaling $2.6 million and $2.5 million as of April 3, 2015 and December 31, 2014, respectively.

4. Indebtedness

Indebtedness consisted of the following:



	April 3, 2015		December 31, 2014
	(in thousands)
Senior Secured Notes (9.50%)	$	375,000	$	375,000
Senior Unsecured Loan Facility (12.25%)	124,408		124,233
ABL Credit Facility	59,826		35,619
Dutch Revolving Credit Facility	14,163		3,532
French Credit Facility	1,023		1,131
Total debt	574,420		539,515
Less: current portion	450,012		4,663
Total long term debt	$	124,408	$	534,852

Senior Secured Notes

The Notes consist of an aggregate principal amount of $375 million, which were issued pursuant to an indenture (the "Indenture"), dated March 18, 2011, among Euramax International, Inc. ("Euramax International"), Euramax Holdings, Inc. ("Euramax Holdings"), and certain of its domestic subsidiaries as guarantors, and Wells Fargo Bank, National Association, the Trustee. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Euramax Holdings, Euramax International, and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International. The Notes bear interest at 9.50% per year and mature on April 1, 2016, unless earlier redeemed or repurchased by Euramax International. Interest is payable semi-annually on April 1 and October 1 of each year.

The Notes are secured by a first priority security interest in (i) substantially all of the assets of Euramax International and the guarantors (other than inventory and accounts receivable and related assets, which assets secure the ABL Credit Facility on a first priority basis) and (ii) all of Euramax International's capital stock and the capital stock of each material domestic restricted subsidiary owned by Euramax International or a guarantor and 65% of the voting capital stock and 100% of any non-voting capital stock of foreign restricted subsidiaries directly owned by Euramax International or a guarantor, and a second priority security interest in the inventory, receivables and related assets.

The Notes may be redeemed at the option of Euramax International, in whole or in part, under the conditions specified in the Indenture, at the following redemption prices plus accrued and unpaid interest to the redemption date if redeemed during the twelve-month period beginning on April 1 of the years indicated:



Year	Percentage
2013	107.125	%
2014	104.750	%
2015 and thereafter	100.000	%

The Indenture contains restrictive covenants that limit, among other things, the ability of Euramax International and certain of its subsidiaries to incur additional indebtedness, pay dividends and make certain distributions, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants. These restrictive covenants also prohibit Euramax International's ability to transfer cash or assets to Euramax Holdings, whether by dividend, loan or otherwise. The Indenture also contains customary events of default. If Euramax International undergoes a change of control (as defined in the Indenture), Euramax International will be required to make an offer to repurchase the Notes at 101% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption. As of April 3, 2015, Euramax International is in compliance with the covenants under the Indenture.

As discussed in Note 2, the $375 million outstanding under the Notes has been reclassified from long-term debt to current liabilities as of April 3, 2015.

Senior Unsecured Loan Facility

On March 3, 2011, Euramax Holdings, Euramax International, and certain of its domestic subsidiaries entered into a credit and guaranty agreement for a senior unsecured loan facility (the "Senior Unsecured Loan Facility") in the aggregate principal amount of $125 million. The Senior Unsecured Loan Facility was issued at 98% of par on March 18, 2011 and matures on October 1, 2016. The difference between the consideration received and the aggregate face amount ($0.6 million) is being amortized and recorded in interest expense using the effective interest rate method over the term. The Senior Unsecured Loan Facility bears interest at 12.25% per year in the event no election is made to pay interest in kind (PIK), and 14.25% (7.875% cash pay and 6.375% PIK) per year in the event a PIK election is made. Euramax International may make a PIK election for up to six quarters during the term of the Senior Unsecured Loan Facility. The interest rate on outstanding borrowings at April 3, 2015 was 12.25% as Euramax International has not made a PIK election.

Euramax International may prepay outstanding amounts under the Senior Unsecured Loan Facility, in whole or in part, at the prices (expressed as percentages of the loans) set forth below:



Prepayment Date	Percentage
On or after the second anniversary of the closing but prior to the third anniversary thereof	103	%
On or after the third anniversary of the closing but prior to the fourth anniversary thereof	102	%
On or after the fourth anniversary of the closing	100	%

Upon a change of control, Euramax International may be required to prepay all or a portion of the Senior Unsecured Loan Facility at a price equal to 101% of the principal amount plus accrued and unpaid interest. All obligations under the Senior Unsecured Loan Facility are unconditionally guaranteed by Euramax Holdings, Euramax International, and substantially all of Euramax International's existing and future direct and indirect 100% owned domestic material restricted subsidiaries.

The Senior Unsecured Loan Facility contains restrictive covenants that limit, among other things, the ability of Euramax International and certain of its subsidiaries to incur additional indebtedness, pay dividends and make certain distributions, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants.

The Senior Unsecured Loan Facility contains certain customary representations and warranties, affirmative covenants and events of default, including among other things, payment defaults, covenant defaults, cross‑defaults to certain indebtedness, certain events of bankruptcy, material judgments, and failure of any guaranty supporting the Senior Unsecured Loan Facility to be in force and effect in any material respect. If such an event of default occurs, the administrative agent would be entitled to take various actions, including the acceleration of amounts due under the Senior Unsecured Loan Facility and all actions permitted to be taken by an unsecured creditor. As of April 3, 2015, Euramax International is in compliance with the covenants undet the Credit and Guaranty Agreement governing the Senior Unsecured Loan Facility.

ABL Credit Facility

On March 18, 2011, Euramax Holdings, Euramax International, and certain of its domestic subsidiaries, entered into the ABL Credit Facility with Regions Bank, as Collateral and Administrative Agent, Wells Fargo Capital Finance, LLC, as Co-Collateral Agent, and Regions Business Capital, as Sole Lead Arranger and Bookrunner. The ABL Credit Facility provides for revolving credit financing of up to $70 million, subject to borrowing base availability and matures on March 1, 2018. However, if the Administrative Agent has not received on or before December 31, 2015, evidence satisfactory to such agent that the scheduled maturity dates of the indebtedness arising under the Indenture and the Senior Unsecured Loan Facility, in each case, have been extended to a date that is at least 90 days after March 1, 2018, then the maturity date for the ABL Credit Facility will accelerate to January 31, 2016. In March 2014, Wells Fargo Capital Finance, LLC ceased to be Co-Collateral Agent and a Lender under the ABL Credit Facility. As of April 3, 2015, $10.2 million was available to be drawn on the ABL Credit Facility.

Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to either (a) LIBOR plus an applicable margin or (b) a Base Rate determined by reference to the highest of (1) the prime commercial lending rate published by Regions Bank as its “prime rate” for commercial loans, (2) the federal funds effective rate plus 0.50% and (3) the one-month LIBOR plus 1.00%, plus an applicable margin. The applicable margin is dependent upon the type of borrowings Euramax International has made under the ABL Credit Facility. As of April 3, 2015, the applicable margins are subject to Euramax International’s Average Excess Availability Percentage for the most recently ended fiscal quarter and range from 1.75% to 2.25% for LIBOR borrowings and 1.00% to 1.25% for Base Rate borrowings. The weighted average interest rate at April 3, 2015, including the applicable margin payable on outstanding borrowings under the ABL Credit Facility, was 2.25%. The ABL Credit Facility requires Euramax International to pay a commitment fee ranging from 0.375% to 0.5%, based on the unutilized commitments. Euramax International is also required to pay customary letter of credit fees, including, without limitation, a letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.

All obligations under the ABL Credit Facility are unconditionally guaranteed by Euramax Holdings, Euramax International, and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International, and any future direct and indirect 100% owned domestic restricted subsidiaries which are not borrowers. All obligations under the ABL Credit Facility are secured, subject to certain exceptions, by a first‑priority security interest in Euramax International’s and the Guarantors’ inventory and accounts receivable and related assets (the "ABL Collateral"), and a junior‑priority security interest in (i) substantially all of Euramax International’s and the Guarantors’ assets (other than inventory and accounts receivable and related assets, which assets secure the ABL Credit Facility on a first priority basis) and (ii) all of Euramax International’s capital stock and the capital stock of each material domestic restricted subsidiary owned by Euramax International or a Guarantor and 65% of the voting capital stock and 100% of any non-voting capital stock of foreign restricted subsidiaries directly owned by Euramax International or a Guarantor, which we refer to collectively as the Notes Collateral.

The ABL Credit Facility contains affirmative and negative covenants customary for this type of financing, including, but not limited to certain financial covenants in the event excess availability is less than 12.5% of the lesser of the aggregate amount of commitments outstanding at such time and the borrowing base. As of April 3, 2015, excess availability exceeded 12.5% of the borrowing base; therefore, Euramax International was not required to meet the minimum consolidated fixed charge coverage ratio. Additionally, restrictive covenants limit the ability of Euramax International and certain of its subsidiaries to incur liens, incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations, consolidate, merge or sell all or substantially all of their assets, pay dividends or make other distributions, make certain loans and investments, amend or otherwise alter the terms of documents related to certain of their indebtedness, enter into transactions with affiliates and prepay certain indebtedness, in each case, subject to exclusions, and other customary covenants. As of April 3, 2015, Euramax International is in compliance with the covenants under the credit agreement governing the ABL Credit Facility.

On February 6, 2015 and March 23, 2015, Euramax Holding entered into the Ninth and Tenth Amendments (the “Amendments”), respectively, to the ABL Credit Facility. Borrowings under the revolving credit facility made available pursuant to the ABL Credit Facility are subject to a borrowing base limit and satisfaction of certain conditions. The borrowing base for the existing revolving credit facility includes, subject to notice by the Company and the satisfaction of certain other specified conditions, three mutually exclusive seasonal overadvance amounts, “Seasonal Overadvance (Type A)” in the amount of $15.0 million, “Seasonal Overadvance (Type B)” in the amount of $9.0 million and “Seasonal Overadvance (Type C)” in the amount of $6.0 million. Pursuant to the Amendments, the Company requested the addition of the “Seasonal Overadvance (Type B)” amount to the borrowing base, and the ABL Credit Facility was amended to, among other items, (i) provide for alternate conditions for the “Seasonal Overadvance (Type B)” amount, which will only apply during a specified period in fiscal year 2015, as further described below, (ii) condition availability of the “Seasonal Overadvance (Type A)” amount on the continued satisfaction of the applicable overadvance conditions relating thereto, as further described below, and (iii) amend the financial covenants to, among other things, change certain of the conditions governing when such financial covenants are applicable.

Pursuant to the Amendments, if the “Seasonal Overadvance (Type B)” conditions are not satisfied at any time during the period from January 26, 2015 through May 31, 2015, then the alternate “Seasonal Overadvance (Type B)” conditions shall apply instead during such period. Pursuant to the alternate “Seasonal Overadvance (Type B)” conditions, inclusion of the alternate “Seasonal Overadvance (Type B)” amount in the borrowing base shall be subject to, among other conditions, (i) the Company's demonstrating compliance with (A) a U.S. fixed charge coverage ratio for the most recently ended twelve-month test period of 0.85 to 1.00 and (B) a specified minimum consolidated adjusted EBITDA covenant for the most recently ended twelve-month period of $52.0 million, (ii) payment of a fee equal to 0.2% of the applicable seasonal overadvance amount (the “Seasonal Overadvance Fee) and (iii) other customary conditions.

In addition, the Amendments amended the ABL Credit Facility to condition availability of the “Seasonal Overadvance (Type A)” amount in the borrowing base on the continued compliance with the applicable overadvance conditions for such amount. Under the ABL Credit Facility the “Seasonal Overadvance (Type A)” amount is available to the Company from February 1 of each year through June 30 for calendar year 2015 and through May 31 of any other year (each, a “Type A Period”), subject to among other conditions (i) the Company's demonstrating compliance with a fixed charge coverage ratio covenant of 1.00 to 1.00, (ii) payment of the Seasonal Overadvance Fee (except to the extent already paid during such calendar year), (iii) other customary conditions and (iv) pursuant to the Amendments, continued compliance with the foregoing eligibility requirements with respect to any Type A Period, with the “Type A” seasonal overadvance amount being reduced to zero at any time such conditions fail to be satisfied during such Type A Period.

The Amendments also (i) provide for the suspension of the testing of the fixed charge coverage ratio financial covenant in the ABL Credit Facility that is otherwise applicable during certain financial covenant testing periods at any time when the regular “Seasonal Overadvance (Type B)” conditions or the “Seasonal Overadvance (Type C)” conditions are satisfied, and (ii) provides for the suspension of the testing of the minimum consolidated adjusted EBITDA covenant that is otherwise applicable during certain financial covenant testing periods at any time when the regular “Seasonal Overadvance (Type B)” conditions and the “Seasonal Overadvance (Type C)” conditions are not satisfied.

Dutch Revolving Credit Facility

In February 2012, the Company's 100% owned subsidiary Euramax Coated Products, BV entered into a revolving credit facility with Rabobank Roermond (the "Dutch Revolving Credit Facility"). The Dutch Revolving Credit Facility provides revolving credit financing of up to EUR 15 million and matures on April 1, 2016. Borrowings under the Dutch Revolving Credit Facility bear interest at a rate per annum which is the aggregate of the average one month Euribor rate over a calendar month plus a margin of 2% and requires payment of a commitment fee of 0.35% per annum on the nominal amount of the credit facility. The weighted average interest rate at April 3, 2015, including the margin payable on outstanding borrowings under the Dutch Revolving Credit Facility, was 2.25%. All obligations under the Dutch Revolving Credit Facility are secured by a mortgage on the real estate of Euramax Coated Products, BV and a pledge on present and future machinery and present and future accounts receivable balances of Euramax Coated Products, BV. At April 3, 2015, $2.3 million (EUR 2.1 million) was available to be drawn on the Dutch Revolving Credit Facility.

The Dutch Revolving Credit Facility contains financial and non-financial covenants customary for this type of financing. Financial covenants include, but are not limited to, a minimum annual EBITDA target and a minimum amount of risk-bearing capital for Euramax Coated Products, BV, both measured at the Company's fiscal year-end. The Dutch Revolving Credit Facility also contains a clause limiting further indebtedness. As of April 3, 2015, Euramax Coated Products, BV is in compliance with the covenants under the credit agreement governing the Dutch Credit Facility.

5. Commitments and Contingencies

Raw Material Commitments

The Company’s primary raw materials are aluminum and steel coil. Because changes in aluminum and steel prices are generally passed through to customers, increases or decreases in aluminum and steel prices generally cause corresponding increases and decreases in reported net sales, causing fluctuations in reported revenues that are unrelated to the level of business activity. However, if the Company is unable to pass through aluminum and steel price increases to customers in the future, its business and results of operations could be materially adversely affected. Although the Company believes there is sufficient supply in the marketplace to competitively source all of its aluminum and steel needs without reliance on any particular supplier, any major disruption in the supply and/or price of aluminum and steel could have a material adverse effect on the Company’s business and financial condition.

To ensure a margin on specific customer orders, the Company may commit to purchase aluminum ingot or coil at a fixed market price for future delivery. These contracts are for normal purchases and sales, and therefore, are not required to be accounted for as derivatives.

Litigation

The Company is currently party to legal proceedings that have arisen in the ordinary course of business. The Company has and will continue to vigorously defend itself in these matters. It is the opinion of the Company’s management, based upon information available at this time, that the expected outcome of all matters to which the Company is currently a party 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.

Environmental Matters

The Company’s operations are subject to U.S., Canadian, and European federal, state, and local environmental laws and regulations, including those concerning the management of pollution and hazardous substances.

In connection with the acquisition of the Company from Alumax Inc. (which was acquired by Aluminum Company of America in May 1998, and hereafter referred to as Alumax) on September 25, 1996, the Company was indemnified by Alumax for substantially all of its costs, if any, related to specifically identified environmental matters 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 eleven 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 Act (CERCLA) as of the closing date of the acquisition from Alumax, as well as certain potential costs for nine sites to which the Company may have sent waste for disposal. 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 at any site. Any receivable for recoveries under the indemnification would be recorded separately from the corresponding liability when the environmental claim and related recovery is determined to be probable. In addition, the Company establishes reserves for remedial measures required from time to time at its facilities. Management believes that the reasonably probable outcomes of these matters will not be material. The Company’s reserves, expenditures, and expenses for all environmental exposures were not significant as of any of the dates or for any of the periods presented.

Product Warranties

The Company provides warranties on certain products. The warranty periods differ depending on the product, but generally range from one year to limited lifetime warranties. The Company provides for warranties based on historical experience and expectations of future occurrence. Changes in the product warranty accrual are summarized as follows:



	Three months ended
	April 3, 2015			March 28, 2014
	(in thousands)
Balance, beginning of period	$	3,970		5,326
Payments made or service provided	(520		)	(621		)
Warranty expense	467			682
Foreign currency translation	(97		)	2
Balance, end of period	$	3,820		$	5,389

6. Income Taxes

The (benefit from) provision for income taxes for 2015 and 2014 is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country by country basis applied to current year-to-date pre-tax earnings, adjusted for changes in valuation allowances relating to the Company’s realizability of deferred tax assets and changes in tax uncertainties. The Company's interim income tax rate may differ from its estimated annual effective tax rate because accounting standards require the Company to exclude certain entities expected to generate a pretax loss from the overall computation of the estimated annual effective tax rate, as well as items accounted for in the interim period incurred, which may result in a significant variation in the customary relationship between (benefit from) provision for income taxes and pretax accounting income (loss) in interim reporting periods. The effective rates for the three month periods ended April 3, 2015 and March 28, 2014 were a benefit of 3.9% and a provision of 3.7%, respectively.

The effective rate for the three months ended April 3, 2015 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations compared to the U.S. federal rates, geographical mix of earnings, changes in estimated uncertain tax positions, and recognition of valuation allowances related to losses in the UK and in U.S. federal and state jurisdictions.

The effective rate for the three months ended March 28, 2014 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations compared to the U.S. federal rates, geographical mix of earnings, and recognition of valuation allowances related to losses in the UK and in U.S. federal and state jurisdictions.

7. Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income (loss) by component for the three month period ended April 3, 2015 were as follows:



	Foreign Currency Translation Adjustments		Defined Benefit Pension Plan Adjustments			Total
	(in thousands)
Balance, beginning of period	$	19,557	$	(14,392	)	$	5,165
Other comprehensive income before reclassifications	221		—			221
Amounts reclassified from accumulated other comprehensive income	—		122			122
Net other comprehensive income	221		122			343
Balance, end of period	$	19,778	$	(14,270	)	$	5,508

Amounts reclassified from the defined benefit pension plan adjustments component of accumulated other comprehensive income (loss) were recorded in selling and general expenses within the condensed consolidated statement of operations. There were no net tax effects related to the reclassification as a result of the full valuation allowances in the U.S. and UK in the current year. The accumulated tax effect related to the defined benefit pension plan adjustments component of accumulated other comprehensive income (loss) was a provision of $0.3 million as of April 3, 2015 and December 31, 2014. There are no tax impacts related to the foreign currency translation adjustment component of accumulated other comprehensive income (loss) as the earnings of subsidiaries are considered to be permanently invested.

8. Employee Benefit Plans

Retirement Plans

The Company maintains a non-contributory defined benefit pension plan covering substantially all U.S. hourly employees (the "U.S. Plan"). In addition, the employees at Euramax Coated Products Limited and Ellbee Limited participate in a single employer pension plan (the "UK Plan"). The measurement date for the U.S. and UK plans is the last day of the fiscal year. The Company curtailed the accrual of participant benefits provided under the UK Plan effective March 31, 2009. This curtailment did not affect the timing for the payment of benefits earned under the UK Plan through the curtailment date. In January 2010, the Company's board of directors approved a motion to freeze future benefit accruals under the U.S. Plan. The impact on the Company's projected benefit obligation was not significant. Components of net periodic pension cost for the Company’s defined and multiemployer pension plans were as follows:



	Three months ended
	April 3, 2015						March 28, 2014
	U.S. Plan			UK Plan			U.S. Plan			UK Plan
	(in thousands)
Service cost	$	20		$	—		$	14		$	—
Interest cost	145			440			140			552
Expected return on assets	(189		)	(392		)	(186		)	(466		)
Recognized actuarial net loss	78			44			2			18
Total defined benefit net periodic pension cost	54			92			(30		)	104
Multiemployer benefit expense	272			—			258			—
Net periodic pension cost	$	326		$	92		$	228		$	104

9. Fair Value Measurements

Recurring Fair Value Measurements

In accordance with accounting principles generally accepted in the U.S., certain assets and liabilities are required to be recorded at fair value on a recurring basis. For the Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are derivative financial instruments.

Derivative Financial Instruments

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risk managed by the Company through the use of derivative instruments is foreign currency exchange rate risk related to intercompany interest payments. The Company does not enter into derivative contracts for trading purposes.

The Company has entered into forward contracts to buy or sell a quantity of a currency at a predetermined future date, and at a predetermined rate or price to mitigate uncertainty and volatility, and to cover underlying exposures to certain payments in currencies other than the functional currency. The Company has not designated these contracts for hedge accounting treatment and, therefore, the gains and losses on these contracts are recorded in other (loss) income, net in the condensed consolidated statement of operations. For the three months ended April 3, 2015, the Company recognized gains of $0.8 million. For the three months ended March 28, 2014, the losses related to these forward contracts were not significant.

Derivatives are carried at fair value in the condensed consolidated balance sheet in the line item other current assets or accrued liabilities, as applicable. As of April 3, 2015, the fair value of outstanding derivatives was not significant. For December 31, 2014, the fair value of outstanding derivatives totaled approximately $0.5 million in the line item other current assets. The fair value of foreign exchange contracts is determined using quoted prices for similar contracts obtained from financial institutions and is classified as a Level 2 measurement in the fair value hierarchy.

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the U.S. Typically, adjustments made to record assets at fair value on a nonrecurring basis are the result of impairment charges.

The Company did not record any impairment charges related to assets measured at fair value on a nonrecurring basis during the three months ended April 3, 2015 or March 28, 2014.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued expenses, and loans and notes payable approximate their fair values because of the relatively short-term maturities of these instruments.

The fair value of the Notes, included on the consolidated balance sheets in current portion of long-term debt as of April 3, 2015 and long-term debt as of December 31, 2014, is estimated using Level 2 inputs based on dealer quoted prices for the debt instruments based on recent transactions obtained from various sources. As of April 3, 2015, the carrying amount and fair value of the Notes, were $375.0 million and $355.7 million, respectively. As of December 31, 2014, the carrying amount and fair value of the Notes, were $375.0 million and $346.9 million, respectively.

10. Other Operating Charges

Other operating charges incurred by operating segment were as follows:



	Three months ended
	April 3, 2015		March 28, 2014
	(in thousands)
U.S. Residential Products	$	—	$	108
U.S. Commercial Products	—		30
European Roll Coated Aluminum	268		—
European Engineered Products	242		423
Other non-allocated	1,753		404
Total other operating charges	$	2,263	$	965

For the three months ended April 3, 2015, other operating charges of $2.3 million were primarily comprised of retention costs, severance costs, and legal and professional fees. In the first quarter of 2015, Euramax Holdings instituted a retention compensation program for certain key executives in both North America and Europe to ensure the continuation of operational and strategic initiatives implemented in 2014, which the Company believes have resulted in significant improvements to the Company's operating results, and to secure the management team of the Company to address its pending debt maturities in the first quarter of 2016. Other non-allocated charges of $1.8 million were comprised of retention costs of $0.8 million, professional fees of $0.7 million, and severance costs of $0.3 million. Other operating charges in the European Coated Products segment totaled $0.3 million and were comprised primarily of executive retention costs. The remaining $0.2 million was primarily related to continuing restructuring initiatives in the European Engineered Products segment.

For the three months ended March 28, 2014, other operating charges of $1.0 million were primarily comprised of severance costs and legal and professional fees. Other non-allocated charges of $0.4 million were related to legal and professional fees for consulting services during the executive transition period. Ongoing restructuring initiatives in the European Engineered Products segment totaled $0.4 million, including approximately $0.3 million of severance costs in the UK and $0.1 million of severance costs for various social programs in France. The remaining $0.1 million of other operating costs in the three quarter of 2014 related to various organizational initiatives in the U.S. to reduce operating costs and improve efficiencies.

11. Segment Information

The Company manages its business and serves its customers through reportable segments differentiated by product type, end market, and geography. Beginning in the fourth quarter of 2014, the Company included net sales and the related cost of goods sold for certain commercial panels sold to customers in Residential markets within the U.S. Commercial Products Segment results. Previously, these products were included in the U.S. Residential Products Segment. The Company's results for the three months ended March 28, 2014 have been adjusted to reflect this change in reportable segments.

The Company's four reportable segments are described below:

U.S. Residential Products—The U.S. Residential Products segment utilizes aluminum, steel, copper and vinyl to produce residential roof drainage products, including preformed gutters, downspouts, elbows, soffit, drip edge, fascia, flashing, snow guards and related accessories. These products are used primarily for the repair, replacement or enhancement of residential roof drainage systems. The Company sells these products to home improvement retailers, lumber yards, distributors and contractors from manufacturing and distribution facilities throughout North America. The Company also produces specialty made-to-order vinyl replacement windows and aluminum patio and awning components sold primarily to home improvement contractors in the western U.S.

U.S. Commercial Products—The U.S. Commercial Products segment utilizes various materials including steel coil, aluminum coil and fiberglass to create various products with commercial applications, including roofing and siding panels, ridge caps, flashing, trim, soffit and other accessories as well as sidewall components, siding and other exterior components for the towable RV, cargo and manufactured housing markets. The Company sells these products to builders, contractors, lumber yards, home improvement retailers, OEMs, and RV manufacturers from manufacturing and distribution facilities located throughout the U.S. These products are used in the construction of a wide variety of small scale commercial, agricultural and industrial building types on either wood or metal frames, manufactured homes, and towable RVs.

European Roll Coated Aluminum—The European Roll Coated Aluminum segment uses a roll coating process to apply paint to bare aluminum coil and, to a lesser extent, bare steel coil in order to produce specialty coated coil, which the Company also processes into specialty coated sheets and panels. The Company sells these products to building panel manufacturers, contractors and UK “holiday home,” RV and transportation OEMs throughout Europe and in parts of Asia. The Company’s customers use its specialty coated metal products to manufacture, among other things, RV sidewalls, commercial roofing panels, interior ceiling panels, and liner panels for shipping containers. The Company produces and distributes these roll coated products from facilities located in the Netherlands and the UK.

European Engineered Products—The European Engineered Products segment utilizes aluminum and vinyl extrusions to produce residential windows, doors and shower enclosures. These products are sold to home improvement retailers, distributors and factory‑built “holiday home” builders in the UK. The Company also produces windows used in the operator compartments of heavy equipment, components sold to suppliers of automotive OEMs in Western Europe and RV doors. The Company produces and distributes these engineered products from facilities in France and the UK and has developed extensive in-house manufacturing capabilities, including powder coating, glass cutting, anodizing and glass toughening.

The Company evaluates the performance of its segments and allocates resources to them based primarily on segment income (loss) from operations. Expenses, income and assets that are not segment specific relate to the holding company and business activities conducted for the overall benefit of the Company, and accordingly, are not attributable to the Company’s segments.

The following table presents information about reported segments for the three months ended April 3, 2015:



	U.S. Residential Products		U.S. Commercial Products			European Roll Coated Aluminum		European Engineered Products		Other Non- Allocated			Eliminations			Consolidated
Three months ended April 3, 2015	(in thousands)
Net sales:
Third party	$	56,853	$	65,504		$	46,939	$	16,303	$	—		$	—		$	185,599
Intersegment	191		41			171		—		—			(403		)	—
Total net sales	$	57,044	$	65,545		$	47,110	$	16,303	$	—		$	(403	)	$	185,599
(Loss) income from operations	$	1,725	$	(2,793	)	$	1,623	$	301	$	(4,143	)	$	—		$	(3,287	)
Depreciation and amortization	$	2,648	$	2,456		$	1,822	$	380	$	193		$	—		$	7,499
Capital expenditures	$	461	$	201		$	284	$	249	$	914		$	—		$	2,109

The following table presents information about reported segments for the three months ended March 28, 2014:



	U.S. Residential Products			U.S. Commercial Products			European Roll Coated Aluminum		European Engineered Products			Other Non- Allocated			Eliminations			Consolidated
Three months ended March 28, 2014	(in thousands)
Net sales:
Third party	$	45,943		$	57,456		$	49,928	$	16,577		$	—		$	—		$	169,904
Intersegment	179			28			209		—			—			(416		)	—
Total net sales	$	46,122		$	57,484		$	50,137	$	16,577		$	—		$	(416	)	$	169,904
(Loss) income from operations	$	(1,634	)	$	(4,680	)	$	3,929	$	(346	)	$	(2,279	)	$	—		$	(5,010	)
Depreciation and amortization	$	2,733		$	2,542		$	2,353	$	417		$	157		$	—		$	8,202
Capital expenditures	$	339		$	555		$	340	$	163		$	91		$	—		$	1,488

It is impractical for the Company to provide revenues from external customers by groups of similar products. Accordingly, the following table reflects revenues from external customers by markets for the periods indicated:



		Three months ended
Customers/Markets	Primary Products	April 3, 2015		March 28, 2014
		(in thousands)
Original Equipment Manufacturers (“OEMs”)	Painted aluminum sheet and coil; fabricated painted aluminum, laminated and fiberglass panels; windows and roofing; and composite building panels	$	56,608	$	55,735
Home Improvement Retailers	Rain carrying systems, metal panels, roofing accessories, windows, doors and shower enclosures	34,395		30,086
Industrial and Architectural Contractors	Metal panels and siding and roofing accessories	33,221		33,862
Rural Contractors	Steel and aluminum roofing and siding	21,641		18,904
Distributors	Metal coils, rain carrying systems and roofing accessories	19,030		14,299
Home Improvement Contractors	Vinyl replacement windows; metal coils, rain carrying systems; metal roofing and insulated roofing panels; shower, patio and entrance doors; and awnings	11,302		9,145
Manufactured Housing	Steel siding and trim components	9,402		7,873
		$	185,599	$	169,904

12. Supplemental Guarantor Condensed Financial Information

On March 18, 2011, Euramax Holdings (presented as Parent in the following schedules), through its 100% owned subsidiary, Euramax International (presented as Issuer in the following schedules), issued the Notes. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Euramax Holdings, Euramax International, and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International. No other subsidiaries of Euramax International, whether direct or indirect, guarantee the Notes (the "Non-Guarantor Subsidiaries").

Additionally, the Notes are secured on a second priority basis by liens on all of the collateral (subject to certain exceptions) securing the ABL Credit Facility. In the event that secured creditors exercise remedies with respect to Euramax International's pledged assets, the proceeds of the liquidation of those assets will first be applied to repay obligations secured by the first priority liens under the senior secured credit facilities and any other first priority obligations.

The following supplemental condensed consolidating financial statements present the results of operations, comprehensive operations, financial position and cash flows of (1) the Parent, (2) the Issuer, (3) the Non-Guarantor Subsidiaries, and (4) eliminations to arrive at the information for Euramax Holdings on a consolidated basis.

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS

APRIL 3, 2015

(in thousands)

(unaudited)



	Parent			Issuer			Non-Guarantor			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	1		$	1,867		$	—		$	1,868
Accounts receivable, less allowance for doubtful accounts	—			44,951			43,406			—			88,357
Inventories, net	—			82,166			28,482			—			110,648
Income taxes receivable	—			538			1,359			—			1,897
Deferred income taxes	—			382			42			—			424
Other current assets	—			6,188			1,562			—			7,750
Total current assets	—			134,226			76,718			—			210,944
Property, plant and equipment, net	—			51,230			52,807			—			104,037
Amounts due from affiliates	—			180,183			18,275			(198,458		)	—
Goodwill	—			81,358			99,301			—			180,659
Customer relationships, net	—			15,069			7,685			—			22,754
Other intangible assets, net	—			6,365			—			—			6,365
Investment in consolidated subsidiaries	(198,078		)	(3,955		)	—			202,033			—
Deferred income taxes	—			—			179			—			179
Other assets	—			2,477			1,447			—			3,924
Total assets	$	(198,078	)	$	466,953		$	256,412		$	3,575		$	528,862
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	—		$	59,679		$	24,093		$	—		$	83,772
Accrued expenses and other current liabilities	110			14,806			10,149			—			25,065
Accrued interest payable	—			11			74			—			85
Current portion of long-term debt	—			434,826			15,186			—			450,012
Deferred income taxes	—			—			811			—			811
Total current liabilities	110			509,322			50,313			—			559,745
Long-term debt	—			124,408			—			—			124,408
Amounts due to affiliates	5,887			10,811			181,760			(198,458		)	—
Deferred income taxes	—			11,121			2,952			—			14,073
Other liabilities	—			9,369			25,342			—			34,711
Total liabilities	5,997			665,031			260,367			(198,458		)	732,937
Shareholders’ (deficit) equity:
Common stock	196			—			21			(21		)	196
Additional paid-in capital	724,661			661,769			199,452			(861,221		)	724,661
Accumulated loss	(934,440		)	(865,355		)	(214,471		)	1,079,826			(934,440		)
Accumulated other comprehensive income	5,508			5,508			11,043			(16,551		)	5,508
Total shareholders’ (deficit) equity	(204,075		)	(198,078		)	(3,955		)	202,033			(204,075		)
Total liabilities and shareholders’ (deficit) equity	$	(198,078	)	$	466,953		$	256,412		$	3,575		$	528,862

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS

DECEMBER 31, 2014
(in thousands)



	Parent			Issuer			Non-Guarantor			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	4		$	2,070		$	—		$	2,074
Accounts receivable, less allowance for doubtful accounts	—			39,607			40,722			—			80,329
Inventories, net	—			75,512			30,873			—			106,385
Income taxes receivable	—			235			1,499			—			1,734
Deferred income taxes	—			381			45			—			426
Other current assets	—			5,425			1,584			—			7,009
Total current assets	—			121,164			76,793			—			197,957
Property, plant and equipment, net	—			53,042			58,122			—			111,164
Amounts due from affiliates	—			202,008			19,277			(221,285		)	—
Goodwill	—			81,359			108,799			—			190,158
Customer relationships, net	—			16,826			9,489			—			26,315
Other intangible assets, net	—			6,495			—			—			6,495
Investment in consolidated subsidiaries	(167,335		)	(5,318		)	—			172,653			—
Deferred income taxes	—			—			—			—			—
Other assets	—			2,883			1,804			—			4,687
Total assets	$	(167,335	)	$	478,459		$	274,284		$	(48,632	)	$	536,776
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	—		$	49,869		$	28,977		$	—		$	78,846
Accrued expenses and other current liabilities	—			16,284			9,225			—			25,509
Accrued interest payable	—			12,837			75			—			12,912
Current portion of long term debt	—			—			4,663			—			4,663
Deferred income taxes	—			—			895			—			895
Total current liabilities	—			78,990			43,835			—			122,825
Long-term debt	—			534,852			—			—			534,852
Amounts due to affiliates	5,771			11,982			203,532			(221,285		)	—
Deferred income taxes	—			10,468			5,426			—			15,894
Other liabilities	—			9,502			26,809			—			36,311
Total liabilities	5,771			645,794			279,602			(221,285		)	709,882
Shareholders’ (deficit) equity:
Common stock	196			—			21			(21		)	196
Additional paid-in capital	724,562			661,673			199,453			(861,126		)	724,562
Accumulated loss	(903,029		)	(834,173		)	(215,570		)	1,049,743			(903,029		)
Accumulated other comprehensive income	5,165			5,165			10,778			(15,943		)	5,165
Total shareholders’ (deficit) equity	(173,106		)	(167,335		)	(5,318		)	172,653			(173,106		)
Total liabilities and shareholders’ (deficit) equity	$	(167,335	)	$	478,459		$	274,284		$	(48,632	)	$	536,776

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 3, 2015
(in thousands)

(unaudited)



	Parent			Issuer			Non-Guarantor			Eliminations			Total
Net sales	$	—		$	121,117		$	66,026		$	(1,544	)	$	185,599
Costs and expenses:
Cost of goods sold (excluding depreciation and amortization)	—			106,810			55,321			(1,544		)	160,587
Selling and general (excluding depreciation and amortization)	229			11,901			6,407			—			18,537
Depreciation and amortization	—			5,262			2,237			—			7,499
Other operating charges	—			1,753			510			—			2,263
(Loss) income from operations	(229		)	(4,609		)	1,551			—			(3,287		)
Equity in earnings (losses) of subsidiaries	(31,182		)	1,099			—			30,083			—
Interest expense	—			(13,545		)	(389		)	—			(13,934		)
Intercompany income (loss), net	—			3,780			(3,780		)	—			—
Other (loss) income, net	—			(17,479		)	2,014			—			(15,465		)
Loss before income taxes	(31,411		)	(30,754		)	(604		)	30,083			(32,686		)
(Benefit from) provision for income taxes	—			428			(1,703		)	—			(1,275		)
Net loss	$	(31,411	)	$	(31,182	)	$	1,099		$	30,083		$	(31,411	)

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE OPERATIONS

FOR THE THREE MONTHS ENDED APRIL 3, 2015

(in thousands)

(unaudited)



	Parent			Issuer			Non-Guarantor		Eliminations			Total
Net loss	$	(31,411	)	$	(31,182	)	$	1,099	$	30,083		$	(31,411	)
Other comprehensive income:
Foreign currency translation adjustment	221			221			221		(442		)	221
Defined benefit pension plan adjustments, net of tax	122			122			44		(166		)	122
Total comprehensive loss	$	(31,068	)	$	(30,839	)	$	1,364	$	29,475		$	(31,068	)

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 28, 2014
(in thousands)

(unaudited)



	Parent			Issuer			Non-Guarantor			Eliminations			Total
Net sales	$	—		$	101,846		$	69,582		$	(1,524	)	$	169,904
Costs and expenses:
Cost of goods sold (excluding depreciation and amortization)	—			91,773			56,722			(1,524		)	146,971
Selling and general (excluding depreciation and amortization)	118			12,411			6,247			—			18,776
Depreciation and amortization	—			5,389			2,813			—			8,202
Other operating charges	—			542			423			—			965
(Loss) income from operations	(118		)	(8,269		)	3,377			—			(5,010		)
Equity in earnings (losses) of subsidiaries	(19,154		)	(1,692		)	—			20,846			—
Interest expense	—			(13,407		)	(358		)	—			(13,765		)
Intercompany income (loss), net	—			4,565			(4,565		)	—			—
Other income (loss), net	—			317			(121		)	—			196
Loss before income taxes	(19,272		)	(18,486		)	(1,667		)	20,846			(18,579		)
Provision for income taxes	—			668			25			—			693
Net loss	$	(19,272	)	$	(19,154	)	$	(1,692	)	$	20,846		$	(19,272	)

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 28, 2014

(in thousands)

(unaudited)



	Parent			Issuer			Non-Guarantor			Eliminations			Total
Net loss	$	(19,272	)	$	(19,154	)	$	(1,692	)	$	20,846		$	(19,272	)
Other comprehensive (loss) income:
Foreign currency translation adjustment	(389		)	(389		)	(389		)	778			(389		)
Defined benefit pension plan adjustments, net of tax	20			20			18			(38		)	20
Total comprehensive loss	$	(19,641	)	$	(19,523	)	$	(2,063	)	$	21,586		$	(19,641	)

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 3, 2015
(in thousands)

(unaudited)



	Parent		Issuer			Non-Guarantor			Eliminations			Total
Net cash used in operating activities	$	—	$	(25,168	)	$	(7,302	)	$	—		$	(32,470	)
Cash flows from investing activities:
Proceeds from sale of assets	—		43			—			—			43
Capital expenditures	—		(1,563		)	(546		)	—			(2,109		)
Due (to) from affiliates	—		—			(2,478		)	2,478			—
Net cash used in investing activities	—		(1,520		)	(3,024		)	2,478			(2,066		)
Cash flows from financing activities:
Net borrowings on ABL Credit Facility	—		24,207			—			—			24,207
Net borrowings on European Credit Facilities	—		—			10,523			—			10,523
Due from (to) affiliates	—		2,478			—			(2,478		)	—
Net cash provided by financing activities	—		26,685			10,523			(2,478		)	34,730
Effect of exchange rate changes on cash	—		—			(400		)	—			(400		)
Net decrease in cash and cash equivalents	—		(3		)	(203		)	—			(206		)
Cash and cash equivalents at beginning of period	—		4			2,070			—			2,074
Cash and cash equivalents at end of period	$	—	$	1		$	1,867		$	—		$	1,868

EURAMAX HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 28, 2014
(in thousands)

(unaudited)



	Parent		Issuer			Non-Guarantor			Eliminations			Total
Net cash (used in) provided by operating activities	$	—	$	4,233		$	(8,119	)	$	—		$	(3,886	)
Cash flows from investing activities:
Proceeds from sale of assets	—		43			—			—			43
Capital expenditures	—		(976		)	(512		)	—			(1,488		)
Due (to) from affiliates	—		—			(8,616		)	8,616			—
Net cash used in investing activities	—		(933		)	(9,128		)	8,616			(1,445		)
Cash flows from financing activities:
Net borrowings on Dutch Revolving Credit Facility	—		—			14,657			—			14,657
Net repayments on ABL Credit Facility	—		(13,756		)	—			—			(13,756		)
Changes in cash overdrafts	—		236			—			—			236
Debt issuance costs	—		(88		)	—			—			(88		)
Due from (to) affiliates	—		8,616			—			(8,616		)	—
Net cash provided by (used in) financing activities	—		(4,992		)	14,657			(8,616		)	1,049
Effect of exchange rate changes on cash	—		—			(297		)	—			(297		)
Net decrease in cash and cash equivalents	—		(1,692		)	(2,887		)	—			(4,579		)
Cash and cash equivalents at beginning of period	—		1,700			7,277			—			8,977
Cash and cash equivalents at end of period	$	—	$	8		$	4,390		$	—		$	4,398

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "could," "may'," "expect," "potential," "future," "continue," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include, among others, statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of operating as a public company, our capital programs and environmental expenditures. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Item 1A. Risk Factors," that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Such risks and uncertainties include, among other things:


•	the cyclical nature of the markets we serve;


•	the general level of economic activity both in North America and international markets;


•	the loss or reduction of purchases by key customers;


•	external factors which impact our key retail customers and reduce purchases of our products;


•	change in strategic direction by our key retail customers;


•	the effect of price competition in key markets and product lines;


•	margin compression associated with higher operating costs which may not be recovered through increased customer pricing;


•	consolidation of purchasing power among our customers;


•	the supply and price levels of essential raw materials, particularly aluminum and steel;


•	risks associated with the manufacturing process due to operating hazards and interruptions, including unscheduled maintenance or downtime;


•	risks associated with revenue concentration at our key home improvement retail customers;


•	risks associated with higher energy costs and the risk of disruptions in energy suppliers;


•	the adequacy of our insurance coverage;


•	our ability to effectively compete in the markets we serve;


•	increased fuel costs which could adversely impact the RV industry;


•	higher interest rates which could adversely impact the RV industry;


•	the integrity of our information systems;


•	seasonal effects on our customers' purchasing activity;


•	adverse weather conditions;


•	disruption in our supply chain or distribution of finished product;


•	our ability to adequately protect our intellectual property rights and successfully defend against third-party claims of intellectual property infringement;


•	higher fuel costs leading to increased transportation and distribution costs;


•	the effect of product liability or warranty claims against us;


•	the proliferation of low-cost competition, particularly in our core North American markets;


•	environmental, health and safety laws and regulations;


•	changes in commercial or residential building codes;


•	our significant indebtedness, and our ability to incur additional debt in the future;


•	our ability to remain compliant under the agreements governing our indebtedness;


•	our ability to refinance our indebtedness, extend the maturity thereof or generate sufficient cash to service all of our indebtedness;


•	restrictions under our existing or future debt agreements that limit our operations;


•	exposure to adjustments in interest rates;


•	declines in our credit and debt ratings;


•	instability in the capital and credit markets;


•	the risks of doing business in foreign countries;


•	fluctuations in foreign currency exchange rates;


•	inability to effectively reinvest in our plants, technology, equipment and new product development due to our indebtedness;


•	exposure to U.S. and foreign anti-corruption laws and economic sanctions programs;


•	state, local and non-U.S. taxes and fluctuations in our tax obligations and effective tax rate;


•	adverse effects of foreign taxation;


•	adverse changes to accounting rules or regulations;


•	the success of our acquisitions or divestitures;


•	our ability to attract and retain qualified management and key personnel, including hourly personnel;


•	labor and work stoppages;


•	the effects of inflation on our business;


•	the effects of government or regulatory activity, compliance with environmental, and occupational health and safety laws and regulations can be costly, and we have incurred and will continue to incur costs, including capital expenditures, to comply with these requirements;


•	the potential for future impairment of our goodwill or other intangible assets; and


•	global or regional catastrophic events.

You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs, forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We caution you that the important factors referenced above may not contain all of the factors that could impair our results or that may be important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent required by law, rule or regulation.

Business Overview

We are a leading producer of metal and vinyl products sold to the residential repair and remodel, commercial construction and recreational vehicle (RV) markets primarily in North America and Europe. We are a leader in several niche product categories, including preformed roof-drainage products sold in the U.S., metal roofing and siding for post frame construction in the U.S., and aluminum siding for towable RVs in the U.S. and Europe.

Our customers are located predominantly throughout North America and Europe and include distributors, contractors and home improvement retailers, as well as RV, transportation and other original equipment manufacturers, or OEMs. We have extensive in-house manufacturing and distribution capabilities for our more than 10,000 unique products and operate through a network consisting of 35 facilities, including 29 located in the United States, one in Canada and 5 located in Europe. We have over 50 years of experience manufacturing building products and RV exterior components, including our time as a division of our former parent, Alumax Inc., or Alumax, a fully integrated aluminum producer acquired by Alcoa Inc. in 1998. We have operated as an independent company since 1996 when our division was acquired in a management-led buyout.

Results of Operations

Our financial performance is affected by, among other factors, underlying trends in the United States and Europe that influence demand for products sold to residential repair and remodeling, commercial construction and RV markets:

•

Our building products sold for residential repair and remodeling activities include roof drainage products, vinyl windows, patios and awnings, and doors. Projects that utilize many of our roof drainage repair and remodeling products are often low cost activities that are necessary to prevent home damage as a result of wear and tear or weather damage. Roof drainage repair projects are often low cost and non‑discretionary in nature. Repair and remodeling activity related to products other than roof drainage are typically higher cost and driven by turnover and aging of housing stock, consumer sentiment, availability of home equity and consumer financing and, in the case of our vinyl window products, consumer interest in energy efficiency.

•

Our building products sold for commercial construction include, in the United States, light gauge steel and aluminum roofing and siding panels, trim and hardware and, in Europe, the Middle East and Asia, roll coated aluminum coil and sheet. Demand for these products is driven by consumer confidence, interest rates, consumer disposable income, the strength of agricultural markets, consumer access to affordable financing and commercial construction trends.

•

Our commercial products sold to the RV market include siding and roofing. Demand for these RV products is driven by trends in disposable income, interest rates and general economic conditions, as well as similar demographic trends relating to the increased proportion of the United States and European population in the 55 through 74 year old age group, who serve as an important source of demand for our RV products.

Our sales volumes have historically been higher in the second and third quarters due to the seasonal demand of the building products markets served. Our working capital needs have been at their highest during these periods as well.

Three months ended April 3, 2015 Compared to the Three months ended March 28, 2014.

The following table sets forth net sales and income (loss) from operations data by segment for the three months ended April 3, 2015 and March 28, 2014:



	Net Sales					Income (Loss) from Operations
	Three months ended					Three months ended
	April 3, 2015		March 28, 2014		Increase (Decrease)	April 3, 2015			March 28, 2014			Increase (Decrease)
	(in millions)
U.S. Residential Products	$	56.9	$	45.9	24.0%	$	1.7		$	(1.6	)	206.3%
U.S. Commercial Products	65.5		57.5		13.9%	(2.8		)	(4.7		)	40.4%
European Roll Coated Aluminum	46.9		49.9		(6.0)%	1.6			3.9			(59.0)%
European Engineered Products	16.3		16.6		(1.8)%	0.3			(0.3		)	200.0%
Other Non-Allocated	—		—		—%	(4.1		)	(2.3		)	(78.3)%
Totals	$	185.6	$	169.9	9.2%	$	(3.3	)	$	(5.0	)	34.0%

Net Sales. Net sales include revenue recognized from the sales of our products less provisions for returns, allowances, rebates and discounts. Our net sales increased $15.7 million, or 9.2%, to $185.6 million in the first quarter of 2015 compared to $169.9 million in the first quarter of 2014. Foreign currency translation resulted in an approximate $11.5 million decrease in net sales during the first quarter of 2015 primarily as a result of the weakening of the euro and British pound sterling against the U.S. dollar compared to the first quarter of 2014. Excluding the impact of foreign exchange, net sales increased $27.2 million, or 16.0%.

Total net sales for our U.S. segments increased $19.0 million, or 18.4%, to $122.4 million in the first quarter of 2015 compared to $103.4 million in the first quarter of 2014.

Net sales of our U.S. Residential Products segment increased $11.0 million, or 24.0%, to $56.9 million in the first quarter of 2015 compared to $45.9 million in the first quarter of 2014. The increase in net sales resulted primarily from greater demand from distributors, home improvement retailers and other retailers for our roof drainage, roof edge and related products during the first quarter of 2015 compared to 2014. Additionally, higher sales in our vinyl window and patio offerings were driven by broader improvements in the residential repair and remodel sector.

Net sales of our U.S. Commercial Products segment increased $8.0 million, or 13.9%, to $65.5 million in the first quarter of 2015 compared to $57.5 million in the first quarter of 2014. Higher net sales resulted from increased demand from OEMs in the RV market and distributors and contractors in the post frame construction market. Net sales increases were partially offset by a decline in demand in the architectural construction market.

Total net sales for our European segments declined $3.3 million, or 5.0%, to $63.2 million in the first quarter of 2015 compared to $66.5 million in the first quarter of 2014. Foreign currency translation resulted in an approximate $11.5 million decrease in net sales during the first quarter of 2015 as a result of the weakening of the euro and British pound sterling against the U.S. dollar. Excluding the impact of foreign exchange, net sales increased $8.2 million, or 12.3%.

Net sales of our European Roll Coated Aluminum segment declined $3.0 million, or 6.0%, to $46.9 million in the first quarter of 2015 compared to $49.9 million in the first quarter of 2014. Foreign currency translation resulted in lower net sales of approximately $9.0 million compared to the prior year period as a result of the weakening of the euro and British pound sterling against the U.S. dollar. Excluding the impact of foreign currency, sales increased $6.0 million, or 12.0%. Net sales improvement, excluding the impact of foreign exchange, resulted primarily from ongoing business development initiatives in emerging markets.

Net sales of our European Engineered Products segment declined $0.3 million, or 1.8% to $16.3 million in the first quarter of 2015 compared to $16.6 million in the first quarter of 2014. Weakening of foreign currencies, primarily the euro and British pound sterling against the U.S. dollar, resulted in lower net sales of approximately $2.5 million compared to the first quarter of 2014. Excluding the impact of foreign currency, net sales increased $2.2 million. This increase in net sales, excluding the impact of foreign exchange, is primarily due to higher demand from OEMs in the holiday home market in the UK for the first quarter of 2015.

Cost of Goods Sold. Cost of goods sold includes the cost of raw materials, manufacturing labor, packaging, utilities, freight, maintenance and other elements of manufacturing overhead. Cost of goods sold increased $13.6 million, or 9.3%, to $160.6 million in the first quarter of 2015 compared to $147.0 million in the first quarter of 2014. Foreign currency translation resulted in lower cost of goods sold of approximately $9.7 million as a result of the weakening of the euro and British pound sterling against the U.S. dollar. Excluding the impact of foreign currency, cost of goods sold increased $23.3 million, or 15.9%. The remaining increase in cost of goods sold is primarily related to higher raw material, labor, packaging and utilities due to higher sales volumes. These increases were partially offset by lower variable labor costs as a result of efficiency improvements and cost reducing initiatives in both North America and Europe.

Selling and General. Selling and general expenses include salaries, benefits, incentive compensation, insurance, travel and entertainment and other administrative costs. Selling and general expenses declined $0.3 million, or 1.6%, to $18.5 million in the first quarter of 2015 compared to $18.8 million in the first quarter of 2014. Foreign currency translation resulted in lower selling and general costs of approximately $1.0 million as a result of the weakening of the euro and British pound sterling against the U.S. dollar. Excluding the impact of foreign exchange, selling and general expenses increased $0.7 million, or 3.7%. Selling and general expense was negatively impacted by a $1.2 million loss recorded during the first quarter of 2015 related to the write off of receivables in our European Roll Coated Aluminum segment due to the bankruptcy of a customer in the UK. Selling and general expense increases related to higher sales volume were generally offset by organizational initiatives to improve efficiency and streamline operations.

Depreciation and Amortization. Depreciation and amortization declined $0.7 million, or 8.5%, to $7.5 million in the first quarter of 2015 compared to $8.2 million in the first quarter of 2014. Foreign currency translation resulted in lower depreciation and amortization expense of $0.4 million. Excluding the impact of foreign exchange, depreciation and amortization declined $0.3 million.

Other Operating Charges. Other operating charges are comprised of restructuring initiatives, facility closures, and other operational initiatives. Other operating charges of $2.3 million in the first quarter of 2015 increased $1.3 million compared to $1.0 million in the first quarter of 2014.

In the first quarter of 2015, other operating charges of $2.3 million were primarily comprised of retention costs, severance, and legal and professional fees. In the first quarter of 2015 Euramax Holdings instituted a retention compensation program for certain key executives in both North America and Europe to ensure the continuation of operational and strategic initiatives implemented in 2014, which the Company believes have resulted in significant improvements to the Company's operating results, and to secure the management team of the Company addresses its pending debt maturities in the first quarter of 2016. Other non-allocated charges of $1.8 million were comprised of retention costs of $0.8 million, professional fees of $0.7 million, and severance of $0.3 million. Other operating charges in the European Coated Products segment totaled $0.3 million and were comprised primarily of executive retention costs. The remaining $0.2 million was primarily related to continuing restructuring initiatives in the European Engineered Products segment.

In the first quarter of 2014, other operating charges of approximately $1.0 million were primarily comprised of severance costs and legal and professional fees. Other non-allocated charges of $0.4 million were primarily related to legal and professional fees for consulting services during the executive transition period. Ongoing restructuring initiatives in the European Engineered Products segment totaled $0.4 million, including approximately $0.3 million of severance in the UK and $0.1 million of severance costs for various social programs in France. The remaining $0.1 million related to various organizational initiatives in the U.S. to reduce operating costs and improve efficiencies.

Income (Loss) from Operations. As a result of the aforementioned items, our loss from operations improved $1.7 million, to a loss of $3.3 million in the first quarter of 2015 compared to a loss of $5.0 million for the first quarter of 2014. Foreign currency translation negatively impacted our loss from operations by $0.4 million. Excluding the impact of foreign exchange, our loss from operations improved $2.1 million, or 42.0% compared to the first quarter of 2014.

Income (loss) from operations of our U.S. Residential Products segment improved $3.3 million to income of $1.7 million in the first quarter of 2015 compared to a loss of $1.6 million in the first quarter of 2014. Excluding the decrease in other operating charges of $0.1 million, income from operations increased $3.2 million. This improvement is primarily related to higher sales volumes compared to the first quarter of 2014 and a reduction in selling and general expenses as a result of operational initiatives to improve efficiency and reduce cost which began in the second half of 2014.

Loss from operations of our U.S. Commercial Products segment improved $1.9 million to a loss of $2.8 million in the first quarter of 2015 compared to a loss of $4.7 million in the first quarter of 2014. This improvement is primarily the result of higher sales volumes compared to the first quarter of 2014 and a reduction in selling and general expenses as a result of operational initiatives to improve efficiency and reduce cost which began in the second half of 2014.

Income from operations of our European Roll Coated Aluminum segment declined $2.3 million to $1.6 million in the first quarter of 2015 compared to $3.9 million in the first quarter of 2014. Excluding the increase in other operating charges of $0.3 million, income from operations declined $2.0 million. Foreign currency translation negatively impacted income from operations by $0.3 million. The decline in operating income was primarily due to the $1.2 million loss on the write off of specific receivables due to the bankruptcy of a customer in the UK during the first quarter of 2015. Higher cost of goods sold related to increased raw material and direct labor costs also contributed to the decline in operating income compared to the first quarter of 2014.

Income (loss) from operations of our European Engineered Products segment improved $0.6 million to income of $0.3 million in the first quarter of 2015 compared to a loss of $0.3 million in the first quarter of 2014. Excluding the decrease in other operating charges of $0.2 million, income from operations improved $0.4 million over the prior year. This improvement in income from operations is driven primarily by increased demand in the UK holiday home market. The impact of organizational initiatives to streamline operations and improve efficiency and a focus on customer and product profitability initiatives have also contributed to the improvement over prior year quarter.

Interest Expense. Interest expense for the first quarter of 2015 and for the first quarter of 2014 totaled approximately $13.9 million and $13.8 million, respectively. Interest expense is primarily comprised of interest on our Notes, Senior Unsecured Loan Facility, ABL Credit Facility, and Dutch Revolving Credit Facility.

Other Income (Loss), Net. Other income (loss), net includes translation gains and losses on intercompany obligations, gains and losses on asset disposals, interest income and other income or expense items of a non-operating nature.

Other loss, net in the first quarter of 2015 of $15.5 million consisted primarily of translation losses on intercompany obligations due to the weakening of the euro compared to the U.S. dollar totaling $16.2 million, which were partially offset by gains on forward foreign currency contracts of $0.8 million.

Other income, net in the first quarter of 2014 of $0.2 million consisted primarily of translation gains on intercompany obligations due to the strengthening of the euro compared to the U.S. dollar totaling $0.2 million.

(Benefit from) Provision for Income Taxes. We reported an income tax benefit of $1.3 million for the first quarter of 2015 compared to a provision of $0.7 million for the first quarter of 2014. Our effective tax rates were a benefit of 3.9% for the three months ended April 3, 2015 and provision of 3.7% for the three months ended March 28, 2014.

The effective rate for the first quarter of 2015 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations compared to the U.S. federal rates, and recognition of valuation allowances related to net losses in the UK and in U.S. federal and state jurisdictions.

The effective rate for the first quarter of 2014 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations compared to the U.S. federal rates, and recognition of valuation allowances related to net losses in the UK and in U.S. federal and state jurisdictions.

Our effective tax rate reflects a full valuation allowance on losses in the U.S. Without a valuation allowance, earnings from the United States are generally taxed at rates higher than the foreign statutory tax rates. The effective tax rate also reflects a full valuation allowance on losses in the UK. A change in the mix of pretax income from the various tax jurisdictions can have a significant impact on our periodic effective tax rate.

Net Loss. Our net loss was $31.4 million for the first quarter of 2015 compared to a net loss of $19.3 million for the first quarter of 2014. The increase in net loss was primarily the result of $16.6 million in unrealized foreign currency translation losses primarily on intercompany obligations in the first quarter of 2015 compared to unrealized gains of $0.2 million in the first quarter of 2014. Excluding these items, net loss declined $4.7 million for the first quarter of 2015 compared to the first quarter of 2014.

Liquidity and Capital Resources

Our principal sources of liquidity are from cash and cash equivalents, cash from operations and borrowings under our ABL Credit Facility and Dutch Revolving Credit Facility. As of April 3, 2015, we had cash and cash equivalents of $1.9 million. Net cash used in operating activities was $32.5 million for the three months ended April 3, 2015 compared to net cash used in operating activities of $3.9 million for the three months ended March 28, 2014. As of April 3, 2015, we had $59.8 million outstanding and availability of $10.2 million under our ABL Credit Facility and $14.2 million outstanding and availability of $2.3 million on our Dutch Revolving Credit Facility.

Our ability to make debt service payments, refinance our indebtedness, maintain capital assets and satisfy our other capital and commercial commitments will depend on our ability to generate cash flow in the future. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors. While these factors are beyond our control, we frequently invest in sources of liquidity with the intent of improving our ability to generate future cash flow. Such investments have, and may in the future, include product development initiatives, restructuring and growth oriented capital expenditures, and business acquisitions. The Notes are due on April 1, 2016, with amounts outstanding as of April 3, 2015, of $375 million. In the event the Notes are not refinanced prior to December 31, 2015, the ABL Credit Facility becomes due on January 31, 2016. As of April 3, 2015, we classified our outstanding long-term debt under the Notes and the ABL Credit Facility totaling $375 million and $59.8 million, respectively, as current liabilities on our consolidated balance sheet since we have not finalized the refinancing of the Notes. We are currently exploring several alternatives to complete the refinancing of the Notes prior to December 31, 2015. We cannot assure that our business will generate sufficient cash flow from operations, that net sales growth and operating improvements will be realized or that future borrowings will be available under the ABL Credit Facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs. In particular, the availability under the ABL Credit Facility is determined based on a borrowing base which can decline due to various factors. We may not be able to generate sufficient cash to service all of the indebtedness, including the Notes, and may not be able to refinance the indebtedness on favorable terms. If we are unable to do so, we may be forced to take other actions to satisfy its obligations under the indebtedness, which may not be successful.

Debt

In the first quarter of 2015, the Company reclassified outstanding borrowings on the Senior Secured Notes (the "Notes") and the ABL Credit Facility totaling $375 million and $59.8 million, respectively, from long term debt to current liabilities on the consolidated balance sheet as the maturity date for these debt facilities are within 12 months of the Company's first quarter interim reporting period. The Senior Secured Notes mature on April 1, 2016 and amounts outstanding on the ABL Credit Facility are due on January 31, 2016 in the event the Notes are not refinanced prior to December 31, 2015.

Notes

Our Notes consist of an aggregate principal amount of $375 million, which were issued pursuant to an indenture (the "Indenture"), dated March 18, 2011, among Euramax Holdings, Inc. ("Euramax Holdings"), Euramax International, Inc. ("Euramax International"), and certain of its domestic subsidiaries as guarantors, and Wells Fargo Bank, National Association, the Trustee. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Euramax Holdings and Amerimax Richmond Company, a 100% owned domestic subsidiary of Euramax International. The Notes bear interest at 9.50% per year and mature on April 1, 2016, unless earlier redeemed or repurchased by Euramax International. Interest is payable semi-annually on April 1 and October 1 of each year.

The Notes are secured by a first priority security interest in (i) substantially all of the assets of Euramax International and the guarantors (other than inventory and accounts receivable and related assets, which assets secure the ABL Credit Facility on a first priority basis) and (ii) all of Euramax International's capital stock and the capital stock of each material domestic restricted subsidiary owned by Euramax International or a guarantor and 65% of the voting capital stock and 100% of any non-voting capital stock of foreign restricted subsidiaries directly owned by us or a guarantor, and a second priority security interest in our inventory, receivables and related assets.

The Notes may be redeemed at Euramax International's option, in whole or in part, under the conditions specified in the Indenture, at the following redemption prices plus accrued and unpaid interest to the redemption date, if redeemed during the twelve month period beginning on April 1 of the years indicated:



Year	Percentage
2013	107.125	%
2014	104.750	%
2015 and thereafter	100.000	%

The Indenture governing the Notes contains restrictive covenants that limit, among other things, the ability of Euramax International and certain of its subsidiaries to incur additional indebtedness, pay dividends and make certain distributions, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants. These limitations also limit Euramax International's ability to transfer cash or assets to Euramax Holdings, whether by dividend, loan, or otherwise. The Indenture also contains customary events of default. If Euramax International undergoes a change of control (as defined in the Indenture), Euramax International will be required to make an offer to repurchase the notes at 101% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption. As of April 3, 2015, Euramax International is in compliance with the covenants under the Indenture.

As of April 3, 2015, the $375 million outstanding under the Notes has been reclassified from long-term debt to current liabilities on the consolidated balance sheet.

Senior Unsecured Loan Facility

In March 2011, Euramax Holdings, Euramax International, and certain of its domestic subsidiaries entered into the Senior Unsecured Loan Facility with investment funds affiliated with Highland Capital Management, L.P. and Levine Leichtman Capital Partners, as lenders in the aggregate principal amount of $125.0 million. The indebtedness incurred under the Senior Unsecured Loan Facility was issued at 98% of par on March 18, 2011 and matures on October 1, 2016. The difference between the consideration received and the aggregate face amount of the Senior Unsecured Loan Facility ($0.6 million) is being amortized and recorded in interest expense using the effective interest rate method over the term. The Senior Unsecured Loan Facility bears interest at 12.25% per year in the event no election is made to pay interest in kind (PIK), and 14.25% (7.875% cash pay and 6.375% PIK) per year in the event a PIK election is made. Euramax International may make a PIK election for up to six quarters during the term of the Senior Unsecured Loan Facility. The interest rate on outstanding borrowings at April 3, 2015 was 12.25% as Euramax International has not made a PIK election. During the second quarter of 2014, Levine Leichtman Capital Partners assigned its holdings in the Senior Unsecured Loan Facility to Credit Suisse Loan Funding LLC.

Euramax International may prepay outstanding amounts under the Senior Unsecured Loan Facility, in whole or in part, at the prices (expressed as a percentage of the loans) set forth below:



Prepayment Date	Percentage
On or after the second anniversary of the closing but prior to the third anniversary thereof	103	%
On or after the third anniversary of the closing but prior to the fourth anniversary thereof	102	%
On or after the fourth anniversary of the closing	100	%

The Senior Unsecured Loan Facility contains restrictive covenants that limit, among other things, the ability of Euramax International and certain of its subsidiaries to incur additional indebtedness, pay dividends and make certain distributions, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants.

The Senior Unsecured Loan Facility contains certain customary representations and warranties, affirmative covenants and events of default, including among other things, payment defaults, covenant defaults, cross‑defaults to certain indebtedness, certain events of bankruptcy, material judgments, and failure of any guaranty supporting the Senior Unsecured Loan Facility to be in force and effect in any material respect. If such an event of default occurs, the administrative agent would be entitled to take various actions, including the acceleration of amounts due under the Senior Unsecured Loan Facility and all actions permitted to be taken by an unsecured creditor. As of April 3, 2015, Euramax International was in compliance with the covenants under the Credit and Guaranty Agreement governing the Senior Unsecured Loan Facility.

ABL Credit Facility

On March 18, 2011, Euramax Holdings, Euramax International, and certain of its domestic subsidiaries entered into the ABL Credit Facility with various lenders, Regions Bank, as Collateral and Administrative Agent, Wells Fargo Capital Finance, LLC, as Co-Collateral Agent, and Regions Business Capital, as Sole Lead Arranger and Bookrunner. The ABL Credit Facility provides for revolving credit financing of up to $70 million, subject to a borrowing base, and matures on March 1, 2018. However, if the Agent has not received on or before December 31, 2015, evidence satisfactory to Agent that the scheduled maturity dates of the indebtedness arising under the Indenture and the Senior Unsecured Loan Facility, in each case, have been extended to a date that is 90 or more days following March 1, 2018, then the maturity date for the ABL Credit facility shall be January 31, 2016. In March 2014, Wells Fargo Capital Finance, LLC ceased to be Co-Collateral Agent and a Lender under the ABL Credit Facility.

Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to either (a) LIBOR plus an applicable margin or (b) a base rate determined by reference to the highest of (1) the prime commercial lending rate published by Regions Bank as its “prime rate” for commercial loans, (2) the federal funds effective rate plus 0.50% and (3) the one-month LIBOR plus 1.00%, plus an applicable margin. The applicable margin is dependent upon the type of borrowings Euramax International has made under the ABL Credit Facility. At April 3, 2015, the applicable margins are subject to Euramax International’s Average Excess Availability Percentage for the most recently ended fiscal quarter and range from 1.75% to 2.25% for LIBOR borrowings and 1.00% to 1.25% for Base Rate borrowings. The weighted average interest rate at April 3, 2015, including the applicable margin payable on outstanding borrowings under the ABL Credit Facility, was 2.25%. The ABL Credit Facility requires Euramax International to pay a commitment fee ranging from 0.375% to 0.5%, based on the unutilized commitments. Euramax International is also required to pay customary letter of credit fees, including, without limitation, a letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.

On February 6, 2015 and March 23, 2015, Euramax Holdings entered into the Ninth and Tenth Amendments (the “Amendments”), respectively, to the ABL Credit Facility. Borrowings under the revolving credit facility made available pursuant to the ABL Credit Facility are subject to a borrowing base limit and satisfaction of certain conditions. The borrowing base for the existing revolving credit facility includes, subject to notice by the Company and the satisfaction of certain other specified conditions, three mutually exclusive seasonal overadvance amounts, “Seasonal Overadvance (Type A)” in the amount of $15.0 million, “Seasonal Overadvance (Type B)” in the amount of $9.0 million and “Seasonal Overadvance (Type C)” in the amount of $6.0 million. Pursuant to the Amendments, the Company requested the addition of the “Seasonal Overadvance (Type B)” amount to the borrowing base, and the ABL Credit Facility was amended to, among other items, (i) provide for alternate conditions for the “Seasonal Overadvance (Type B)” amount, which will only apply during a specified period in fiscal year 2015, as further described below, (ii) condition availability of the “Seasonal Overadvance (Type A)” amount on the continued satisfaction of the applicable overadvance conditions relating thereto, as further described below, and (iii) amend the financial covenants to, among other things, change certain of the conditions governing when such financial covenants are applicable.

In addition, the Amendments amended the ABL Credit Facility to condition availability of the “Seasonal Overadvance (Type A)” amount in the borrowing base on the continued compliance with the applicable overadvance conditions for such amount. Under the ABL Credit Facility the “Seasonal Overadvance (Type A)” amount is available to the Company from February 1 of each year through June 30 for calendar year 2015 and through May 31 of any other year (each, a “Type A Period”), subject to among other conditions (i) the Company's demonstrating compliance with a fixed charge coverage ratio covenant of 1.00 to 1.00, (ii) payment of the Seasonal Overadvance Fee (except to the extent already paid during such calendar year), (iii) other customary conditions and (iv) pursuant to the Amendment, continued compliance with the foregoing eligibility requirements with respect to any Type A Period, with the “Type A” seasonal overadvance amount being reduced to zero at any time such conditions fail to be satisfied during such Type A Period.

As of April 3, 2015, Euramax International is in compliance with the covenants under the credit agreement governing the ABL Credit Facility.

Dutch Revolving Credit Facility

In February 2012, our 100% owned subsidiary in the Netherlands, Euramax Coated Products, BV entered into the Dutch Revolving Credit Facility with Rabobank Roermond (Rabobank). The Dutch Revolving Credit Facility provides revolving credit financing of up to EUR 15 million and matures on April 1, 2016. Borrowings under the Dutch Revolving Credit Facility bear interest at a rate per annum which is the aggregate of the average one month Euribor rate over a calendar month plus a margin of 2% and requires payment of a Credit Fee of 0.35% per annum on the nominal amount of the credit facility. All obligations under the Dutch Revolver are secured by a mortgage on the real estate of Euramax Coated Products, BV, a pledge on present and future machinery and present and future accounts receivable balances of Euramax Coated Products, BV.

The Dutch Revolving Credit Facility contains financial and non-financial covenants customary for this type of financing. Financial covenants include, but are not limited to a minimum annual EBITDA target and a minimum requirement for risk-bearing capital, for Euramax Coated Products, BV, both measured at the Company's fiscal year end. The Dutch Revolving Credit Facility also contains a clause limiting further indebtedness. As of April 3, 2015, Euramax Coated Products, BV is in compliance with the covenants under the credit agreement governing the Dutch Credit Facility.

Covenant Ratios Contained in the Indenture, the ABL Credit Facility and the Senior Unsecured Loan Facility.

The Indenture governing the Notes and the Senior Unsecured Loan Facility contain two material covenants which utilize financial ratios. These covenants do not require Euramax International to maintain specified ratio levels at all times or at regular intervals. However, if Euramax International elected to incur additional indebtedness under the ratio test without having availability under other debt baskets, or make restricted payments under the restricted payment covenant without having availability under our restricted payment baskets, non-compliance with these covenants could result in an event of default under the Indenture and, under certain circumstances, a requirement to immediately repay all amounts outstanding under the Notes and could trigger a cross-default under our credit facilities or other indebtedness Euramax International may incur in the future. Euramax International is permitted to incur indebtedness under the Indenture and the Senior Unsecured Loan Facility if the ratio of Consolidated Cash Flow to Fixed Charges on a pro forma basis (referred to in the Indenture and the Senior Unsecured Loan Facility as the "Fixed Charge Coverage Ratio") is greater than 2:1 or, if the ratio is less, only if the indebtedness falls into specified debt baskets, including, for example, a credit agreement debt basket, an existing debt basket, a capital lease and purchase money debt basket, an intercompany debt basket, a permitted guarantee debt basket, a hedging debt basket, a receivables transaction debt basket and a general debt basket. In addition, under the Indenture and Senior Unsecured Loan Facility, Euramax International is permitted to incur secured debt only if the ratio of Consolidated Secured Indebtedness to Consolidated Cash Flow on a pro forma basis (referred to in the Indenture and the Senior Unsecured Loan Facility as the "Secured Debt Ratio") is equal to or less than 3.75:1.00. Second, the restricted payment covenant provides that Euramax International may declare certain dividends, or repurchase equity securities, in certain circumstances only if the Fixed Charge Coverage Ratio is greater than 2:1. In addition, under the ABL Credit Facility, Euramax International is required to meet either a minimum consolidated Fixed Charge Coverage Ratio or a minimum consolidated EBITDA, in each case under certain circumstances, when excess availability is less than 12.5% of the lesser of the aggregate amount of commitments outstanding at such time and the borrowing base.

The Fixed Charge Coverage Ratio and the Secured Debt Ratio under the Indenture only limit the ability of Euramax International to incur additional indebtedness and the failure of the Company to be within these ratios would not be an event of default under the Indenture or Senior Unsecured Loan Facility. Euramax has not incurred any additional indebtedness or made any restricted payments pursuant to the provisions in the Indenture and the Senior Unsecured Loan Facility that rely on such ratios.

The provisions of the ABL Credit Facility only require Euramax International to meet the Minimum Consolidated Adjusted EBITDA or Minimum Fixed Charge Coverage Ratio under the ABL Credit Facility when excess availability is less than 12.5%. As of April 3, 2015, because excess availability under the ABL Credit Facility exceeded 12.5% of the borrowing base, Euramax International was not required to meet the Minimum Consolidated Adjusted EBITDA or Minimum Consolidated Fixed Charge Coverage Ratio under the ABL Credit Facility. The Company expects that if excess availability falls below 12.5% during the next twelve months, it will meet any minimum consolidated Fixed Charge Coverage Ratio or Minimum Consolidated Adjusted EBITDA thresholds.

Cash Flows

The following table summarizes our cash flows for the three months ended April 3, 2015 and March 28, 2014:



	Three months ended
	April 3, 2015			March 28, 2014
	(in thousands)
Net cash used in operating activities	$	(32,470	)	$	(3,886	)
Net cash used in investing activities	(2,066		)	(1,445		)
Net cash provided by financing activities	34,730			1,049
Effect of exchange rate changes on cash	(400		)	(297		)
Net decrease in cash and cash equivalents	$	(206	)	$	(4,579	)

Three months ended April 3, 2015 Compared to the Three months ended March 28, 2014.

Operating Activities. Cash used in operating activities in the first quarter of 2015 was approximately $32.5 million compared to cash used in operating activities of $3.9 million for the first quarter of 2014, a decrease in cash flow of $29.0 million. The significant increase in cash used in operations is primarily related to the timing of the Company's first quarter 2015 interim reporting period, which ended on April 3, 2015 due to the Company's 4-4-5 reporting calendar. As a result, interest payments on the Company's Notes and Senior Unsecured Loan Facility were made during the Company's first interim reporting period. In the first quarter of 2014, the Company's interim reporting period ended on March 28, 2014 and therefore interest payments were not made until the second interim reporting period in 2014. The timing of the period end dates resulted in interest payments totaling $25.9 million for the three month periods ended April 3, 2015 and $0.3 million for the three month period ended March 28, 2014, a net increase of $25.6 million. The remaining increase in cash used in operations is primarily related to increases in working capital to support higher net sales in 2015.

Investing Activities. Cash used in investing activities in the first quarter of 2015 was $2.1 million and was primarily comprised of capital expenditures.

Cash used in investing activities in the first quarter of 2014 was $1.4 million, which was primarily made up of capital expenditures of $1.5 million in the first quarter of 2014.

Financing Activities. Cash provided by financing activities during the first quarter of 2015 was $34.7 million and consisted of net borrowings on our ABL Credit Facility totaling $24.2 million and net borrowings on our European credit facilities totaling $10.5 million.

Cash provided by financing activities during the first quarter of 2014 was $1.0 million and consisted primarily of net repayments on the ABL Credit Facility of $13.8 million and debt issuance costs related to the amendment of the ABL Credit Facility of $0.1 million offset by net borrowings on our Dutch Revolving Credit Facility totaling $14.7 million.

Capital Expenditures

Our capital expenditures for the first quarter of 2015 and the first quarter of 2014 were $2.1 million and $1.5 million, respectively. Capital expenditures in each period relate primarily to purchases and upgrades of coil coating, fabricating, transportation and material moving and handling equipment.

Seasonality; Inflation

Our sales have historically been seasonal, with the second and third quarters typically accounting for our highest sales volumes. First and fourth quarter sales volumes are generally lower primarily due to reduced repair and remodel activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in our geographic end markets, as well as customer plant shutdowns in the RV and automotive industries during holidays and model changeovers.

Our cost of goods sold is subject to inflationary pressures and price fluctuations of the raw materials we use, particularly the cost of aluminum and steel. In addition, we are party to certain leases that contain escalator clauses contingent on increases based on changes in the Consumer Price Index. We believe that inflation and deflation had a minimal impact on our overall results of operations during the three months ended April 3, 2015 and March 28, 2014.

Working Capital Management

Working capital decreased $423.9 million, or 564.4%, to $(348.8) million as of April 3, 2015 from $75.1 million as of December 31, 2014. The decrease in working capital is primarily attributable to the increase in current portion of long-term debt. The outstanding borrowings on the Notes totaling $375.0 million mature on April 1, 2016. In the event the Notes are not refinanced prior to December 31, 2015, amounts outstanding under the ABL Credit Facility are due January 31, 2016. These debt facilities were classified within current liabilities in the consolidated balance sheet as of April 3, 2015. These reclassifications resulted in a $434.8 million decline in working capital. Further, we historically experience an increase in inventory and accounts receivable during the first half of the year as many customers in our markets increase purchases in the spring and gradually decline throughout the second half of the year.

Accounts receivable of $88.4 million as of April 3, 2015 increased $8.1 million, or 10.1%, from $80.3 million as of December 31, 2014. The primary reason for the increase in accounts receivable was a 17.5% increase in net sales for the month ended April 3, 2015 compared to the month ended December 31, 2014. Typically the majority of outstanding receivables are generated from net sales in the preceding two months. As of April 3, 2015, days sales outstanding in accounts receivable were 44.3 days compared to 36.4 days as of December 31, 2014.

Inventories of $110.6 million as of April 3, 2015 increased $4.2 million, or 3.9%, from $106.4 million as of December 31, 2014, primarily as a result of seasonal increases in demand. As of April 3, 2015, days sales in inventories were 64.0 days compared to 55.7 days as of December 31, 2014.

Accounts payable of $83.8 million as of April 3, 2015 increased $5.0 million, or 6.3%, from $78.8 million as of December 31, 2014. Higher accounts payable balances reflect increasing inventory levels throughout the year to support higher demand in peak seasons.

Current portion of long-term debt increased $445.3 million as of April 3, 2015. The current portion of long-term debt consisted of $375.0 million Notes, $59.8 million outstanding borrowings on the ABL Credit Facility, $14.2 million of outstanding borrowings on the Dutch Revolving Credit Facility and $1.0 million outstandings borrowings on the French Credit Facility as of April 3, 2015 compared to $3.5 million and $1.1 million outstanding borrowings on the Dutch Revolving Credit Facility and the French Credit Facility, respectively, as of December 31, 2014.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles. In order to apply these principles, management must make judgments, assumptions and estimates based on the best available information at the time. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For the three months ended April 3, 2015, there were no significant changes to our critical accounting policies and estimates from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2014.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of April 3, 2015.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in currency exchange rates (primarily the euro and British pound sterling), interest rates and commodity prices (primarily aluminum and steel). The Company has entered into forward contracts to buy or sell a quantity of currency at a predetermined price or quantity to mitigate uncertainty and volatility, and cover underlying exposure to certain payments in currencies other than the functional currency.

Foreign Currency Exchange Risk

Approximately 34.2% of our net sales for the three months ended April 3, 2015 originated in Europe. Although our sales outside the United States are subject to exchange rate fluctuations, we do not use derivatives to manage our foreign currency exchange risks resulting from foreign sales. Changes in foreign exchange rates affect other income recorded in relation to translation gains and losses on intercompany obligations denominated in a foreign currency.

Interest Rate Risk

We manage interest rate risk through the use of fixed rate debt and may in the future utilize interest rate swap contracts. We have fixed rate debt from our Notes and our Senior Unsecured Loan Facility. Our floating rate exposure is related to our ABL and Dutch Revolving Credit Facilities, which are tied to changes in the LIBOR and Euribor rates, respectively.

We had no interest rate swap contracts outstanding during the three months ended April 3, 2015 or March 28, 2014.

Commodity Price Risk

From time to time we enter into contracts for the purchase of aluminum and steel at market values in an attempt to assure a margin on specific customer orders. We may also choose to commit to purchase a specific quantity of aluminum over a specified time period at a fixed price, exposing us to the difference between the fixed price and the market price of aluminum during that time period. We do not use hedges to manage our long-term risks relating to market prices of steel and aluminum raw materials because we are generally able to pass on changes in market prices to customers.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company under the supervision and with the participation of the Company’s management, including the President (its principal executive officer) and the Chief Financial Officer (its principal financial officer), evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d- 15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, our management, including our President and our Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of April 3, 2015.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended April 3, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

From time to time, we are party to various legal proceedings arising in the ordinary course of business. The Company is not currently a party to any legal proceeding the result of which it believes could have a material adverse impact upon its business, financial position or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 5. Other Information

In connection with Tyrone Johnson's appointment as President, North America effective May 23, 2015, Mr. Johnson and the Company entered into an Employment Agreement, dated May 14, 2015 (the “Employment Agreement”). The Employment Agreement provides that Mr. Johnson will be entitled to a base salary of $325,000 and the target for his annual bonus with respect to fiscal year 2015 shall be at least 35% of his base salary. Under the Employment Agreement, Mr. Johnson is also entitled to receive 500 shares of restricted stock in the Company. In the event that Mr. Johnson’s employment is terminated by the Company without cause (as defined in the Employment Agreement), or Mr. Johnson terminates his employment for good reason (as defined in the Employment Agreement), he will be entitled to receive as severance a continuation of his base salary for a period of 12 months following the termination of his employment.

Item 6. Exhibits

EXHIBIT INDEX




Number	Exhibit Title
31.1	Rule 13a-14(a)/15d-14(a) Certification of Euramax Holdings, Inc.'s President.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Euramax Holding's Inc.’s Chief Financial Officer.
32.1	Certification of the PEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.1	Executive Employment Agreement, dated May 14, 2015, by and between Euramax International, Inc. and Tyrone Johnson.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase

SIGNATURE

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.





		EURAMAX HOLDINGS, INC.


Date: May 14, 2015		/s/ Mary S. Cullin
		Mary S. Cullin
		Senior Vice President, Chief Financial Officer & Treasurer

Euramax Holdings, Inc. - FORM 10-Q - May 14, 2015

Attached files

Euramax Holdings, Inc. Reports