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LOGO
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1997 Annual Report
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EASCO, INC.
FINANCIAL HIGHLIGHTS
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YEAR ENDED DECEMBER 31,
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1997 1996 1995
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(Amounts in millions, except per share data and percentages)
OPERATING DATA
Net sales................................................... $334.5 $321.0 $329.4
Operating profit............................................ 19.0 (17.5) 29.3
Adjusted EBITDA(1).......................................... 28.4 19.6 37.5
Income (loss) before income taxes........................... 10.4 (26.5) 20.1
Net income (loss)........................................... 5.4 (22.3) 11.7
Net income (loss) per share--diluted........................ $ 0.51 $(2.17) $ 1.19
BALANCE SHEET DATA
Working capital............................................. $ 41.1 $ 38.9 $ 40.3
Total assets................................................ 236.3 230.5 258.5
Total long-term debt........................................ 85.0 85.0 85.0
Stockholders' equity........................................ 68.5 63.0 85.1
OTHER DATA
Pounds shipped.............................................. 319.7 319.9 303.3
Net debt to total capital(2)................................ 49.8% 48.5% 45.5%
(1) Adjusted EBITDA represents operating profit (loss) plus reorganization
expense and non-cash charges including depreciation, amortization and
impairment charges.
(2) Net debt equals long-term debt (including current maturities) less cash and
equivalents.
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TABLE OF CONTENTS
Financial Highlights........................................ 1
Easco at a Glance........................................... 2
Letter to Stockholders...................................... 3
Selected Financial and Operating Data....................... 6
Unaudited Quarterly Financial Data.......................... 7
Management's Discussion and Analysis........................ 8
Independent Auditor's Report................................ 13
Consolidated Financial Statements........................... 14
Notes to Consolidated Financial Statements.................. 17
Directors and Officers...................................... 24
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EASCO AT A GLANCE
Easco is the largest independent extruder of soft alloy aluminum products
in the United States. Easco's nearly 2,000 employees serve 2,600 customers from
12 facilities in 5 states -- Connecticut, Illinois, Indiana, Ohio and North
Carolina. Easco's products include standard and custom profiles, conduit, and
drawn tubing, which are used in a wide array of applications. Total aluminum
sales by weight in 1997 is shown in the percentages below.
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PRIMARY
MARKET CUSTOMERS PRINCIPAL END PRODUCTS AND APPLICATIONS
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BUILDING & Manufacturers, New and replacement windows and storm doors, wall
CONSTRUCTION assemblers and partitions, structural beams, patio enclosures, bleacher
LOGO contractors seats, road signs, skylights, and curtain wall.
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TRANSPORTATION Original equipment Components used in truck trailers, truck bodies,
LOGO manufacturers recreational vehicles, railcars, step vans, van conversions,
automobiles, emergency vehicles, and livestock trailers.
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DISTRIBUTION Distributors and Building and construction and transportation products, and a
LOGO service centers variety of general industrial applications.
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ELECTRICAL/OTHER Manufacturers, Coaxial cable for telecommunications and cable television
LOGO distributors and applications, electrical conduit, heat sinks, and
contractors connectors.
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CONSUMER DURABLES Manufacturers and Components for boats, sport and exercise equipment, swimming
LOGO assemblers pools, lawn and patio furniture, and health care equipment.
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TO OUR STOCKHOLDERS,
The year proved to be both challenging and rewarding as Easco successfully
returned to profitability. Our EBITDA growth of 45%, to $28.4 million, was
especially gratifying in light of our shipments, which were level from the
previous year. These results reflect significant improvements in many areas of
our business. In fact, our progress can be most accurately described by one
word... "change".
While organizations naturally tend to resist change, I applaud the many
Easco employees who were challenged to do their job in a significantly different
way than they did just one year ago. Embracing the concept of change was a key
to our success this past year, and will be even more important as we look to the
future.
The changes have been pervasive, leaving little of the former Easco
untouched... impacting our organizational structure, manufacturing practices,
compensation system, management style, and, on a broader basis, our basic
business philosophy. For instance, during 1997 we...
CENTRALIZED our raw material and metal management functions to increase
flexibility in production scheduling while enhancing our ability to
effectively manage our single largest cost.
ESTABLISHED corporate management of high dollar expense items including freight,
energy, maintenance, and operating expenses. While realizing some impact of
centralized purchasing in 1997, we believe a large measure of improvement is
yet to come.
ENHANCED our sales and marketing prowess, centralizing certain aspects of sales
management for added pricing and scheduling control. We did not disturb
Easco's excellent regional emphasis on serving and becoming "partners" with
our customers.
ADDED significant engineering and technical skills to manage our technology
enhancement initiatives, improve plant efficiencies and reduce our
manufacturing costs.
STREAMLINED our organizational structure, highlighted by significant
restructurings at Dolton and Kokomo in late 1996, and a further streamlining
of Dolton last Fall. Easco's entire organization, while broader technically
and managerially, is now about 5% smaller than in 1996.
SHARPENED our strategic focus in 1997 with the divestiture of our vinyl
extrusion operations. This allows us to redeploy organizational and
financial resources to enhance our core aluminum business.
EMPOWERED employee groups to form cross-functional process improvement teams on
an ad-hoc basis. Our customer claim resolution team is a prime example of
this activity. By re-designing these processes, the dollar value of pending
customer claims outstanding plummeted by nearly 75% from historical levels.
IMPLEMENTED gain-sharing and other performance-based compensation programs at
many Easco facilities. The intent is to sharpen our focus on performance
measures such as on-time delivery, quality, productivity and safety. These
programs helped Easco to establish new records in 1997 for press
productivity and safety. We believe that sharing the benefit of improved
performance will accelerate continuous improvement in our manufacturing
processes over the long term.
1997 REPORT CARD
These and other changes combined to improve significantly our basic cost
structure, which also bodes well for the future. Last year I discussed with you
our objectives for 1997 and beyond. These goals were:
- SIGNIFICANT OPERATING IMPROVEMENTS
- INCREASED FOCUS ON CUSTOMER SATISFACTION
- BETTER COST CONTROL
- IMPROVED RAW MATERIAL STRATEGY
- OPTIMIZED SALES MIX MANAGEMENT
- ENHANCED INFORMATION SYSTEMS
These objectives are vital to Easco's success and all Easco employees are
accountable for their achievement. Therefore, I would like to share some of the
progress we made in the past year.
SIGNIFICANT OPERATING IMPROVEMENTS
Our overall effort in 1997 was heavily biased toward the "supply side" of
our business. Our greatest concern and, therefore, our greatest opportunity,
involves the inefficiencies in our melting and billet casting processes. High
quality extrusions begin with high quality billet, and improvements were
required on both fronts. We are completing technology upgrades to substantially
all of our furnace and billet casting facilities, with nearly two thirds of our
$10 million capital program initiated in 1997 expended for this purpose.
With both shipments and margins over metal essentially level from 1996, our
improved results reflect better cost control and improved efficiencies at nearly
every plant. The
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most significant improvements occurred at Dolton. Two small tonnage presses were
decommissioned during the year, accompanied by a significant reduction in the
workforce. Today, Dolton's two remaining presses give Easco the capability to
provide the transportation and distribution markets with large diameter shapes
more efficiently than at any time since the plant's acquisition in 1995. As we
began 1997, our Kokomo facility was also restructured to complement Dolton, and
the results have been outstanding, with the facility achieving a 32% increase in
productivity during 1997.
IMPROVED CUSTOMER FOCUS
While we posted improvements in delivery performance and customer returns
during 1997, we still have much work ahead of us. In addition to enhancing our
bookings management systems, we are in the process of developing still other
sales system enhancements designed to increase the ease of doing business with
Easco.
IMPROVED COST CONTROL
On the raw material side, the centralization I previously discussed, coupled
with the installation of a metal blending system to optimize chemistry and
minimize cost, has substantially improved control of this function. Although we
won't be fully utilizing our blending capability until mid 1998, we're off to a
good start. Consumption of prime aluminum as a component of our metal mix,
declined by more than 10% during 1997.
With respect to manufacturing costs, accountabilities have been established
down to the department level at each plant for tighter management and control of
expenses. While we are pleased with the success to date, opportunities for
further improvement remain.
IMPROVED SALES MIX
Our primary objective was to improve the profitability of our existing
business. We accomplished this by holding volume growth to a minimum until our
plants were positioned to profitably accept new business. We are positioning
ourselves to add increments of volume as we move through 1998. However, we
intend to be selective as we balance our desire to utilize capacity with the
need to continue improving the efficiency of our plants. In addition, we moved a
step closer to optimizing our sales mix, a trend we expect to continue as we
realize further improvements in product quality and capability.
ENHANCED SYSTEMS
Our objective was to enhance our information systems to support a lean, yet
comprehensive overall management strategy. While progress has been achieved on
several fronts, much work remains. We expect progress to be steady in this
regard over the next two years. While sales and raw materials management have
required the bulk of our efforts in 1997, initiatives to support a higher level
of process management and increased capacity utilization will be undertaken in
1998.
As part of our focus on information systems, we continued our program to
assure that Easco's computer hardware and software applications are ready for
the year 2000. We expect this program to be completed during 1998 in the normal
course of operations.
LOOKING AHEAD
While we changed significantly in 1997, Easco is still a work in progress.
In 1998, we plan to invest nearly $16 million to complete our billet casting
upgrades and to begin enhancing our extrusion manufacturing capability as well.
As we begin 1998, our key challenges are:
- A rapid, successful startup of our Ahoskie, North Carolina billet casting
expansion. This is critical if we are to maximize the impact of internally
producing our billet requirements. We are planning the start-up of this
facility late in the second quarter.
- Continuation of the positive results we have recently achieved at Dolton.
This facility must demonstrate consistent profitability on its
restructured, smaller scale. While we are very encouraged by the results
thus far, consistency in all aspects of its operations is the key to long
term success.
- Successful broadening of our service center and distribution business.
This effort is being supported by expanding depot stocking programs at
Burlington, North Carolina, adding a northeast depot at Berlin,
Connecticut, and adding product lines to the existing depot at Dolton.
- Successful growth in our value-added fabricated products business,
supported by capital investment at our Winton, North Carolina facility.
As you can see, our agenda remains full of initiatives which offer
additional earnings potential. The change that has been implemented, and the
changes yet to come, will result in a stronger, more focused and more
competitive Easco. Our accomplishments in 1997, and all that we intend
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to achieve as we move forward, reflect our commitment to enhance value for our
customers, our employees and our stockholders. Thank you for your continued
confidence and support as we continue to grow and prosper.... together!
/s/ Xxxxxx X. Xxxxx, Xx.
Xxxxxx X. Xxxxx, Xx.
President and Chief Executive Officer
March 23, 1998
The above statements concerning the Company's plans, opportunities, strategies
and outlook for 1998 and future periods are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially, as described under "Cautionary Statement under the Private
Securities Litigation Reform Act," contained in 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' in this Annual Report
and in the Company's Annual Report on Form 10-K.
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EASCO, INC.
SELECTED FINANCIAL AND OPERATING DATA
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YEAR ENDED DECEMBER 31,
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1997 1996 1995 1994 1993
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(Amounts in millions, except share, and per share data)
OPERATING DATA
Net sales.................................... $ 334.5 $ 321.0 $ 329.4 $ 257.8 $ 202.9
Gross profit................................. 37.3 31.6 45.8 39.2 31.8
Impairment of long-lived assets.............. -- 23.3 -- -- --
Non-recurring charges(1)..................... 0.4 3.5 -- 1.2 0.8
Income (loss) before extraordinary loss(2)... 5.4 (22.3) 11.7 7.9 6.0
Net income (loss)............................ 5.4 (22.3) 11.7 4.9 6.0
Earnings per common share--diluted
Income (loss) before extraordinary loss.... $ 0.51 $ (2.17) $ 1.19 $ .94 $ 0.61
Extraordinary loss......................... -- -- -- 0.36 --
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Net income (loss).......................... $ 0.51 $ (2.17) $ 1.19 $ 0.58 $ 0.61
========== ========= ========= ========= =========
Weighted average number of common shares
outstanding--assuming dilution............... 10,671,246 10,261,774 9,816,127 8,380,405 9,774,108
BALANCE SHEET DATA
Total assets................................. $ 236.3 $ 230.5 $ 258.5 $ 203.2 $ 184.4
Total debt................................... 85.0 85.0 85.0 85.0 57.8
Stockholders' equity......................... 68.5 63.0 85.1 42.3 57.5
Cash dividends per share..................... $ 0.04 $ 0.04 $ 0.02 $ -- $ --
OTHER DATA
Adjusted EBITDA(3)........................... $ 28.4 $ 19.6 $ 37.5 $ 29.8 $ 23.6
Capital expenditures (net)................... $ 9.8 $ 6.5 $ 13.7 $ 10.1 $ 6.4
Depreciation of fixed assets................. $ 7.3 $ 7.6 $ 6.2 $ 4.5 $ 3.9
Pounds shipped............................... 319.7 319.9 303.3 268.1 223.6
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1) Non-recurring items include a plant restructuring, retirement plan
termination and revision of environmental contingency obligation estimates in
1997; an executive reorganization in 1996; a plant closure and disposal of an
extrusion press in 1994 and the resignation and replacement of the Company's
president in 1993.
2) Extraordinary loss on early extinguishment of debt of $3.1 million, net of
federal income tax benefits of $2.0 million in 1994. This loss relates to the
write-off of unamortized debt issuance costs associated with Easco's previous
credit agreement which was paid in full during the first quarter of 1994.
3) Management uses Adjusted EBITDA as an important measure of performance and
ability to service debt. Adjusted EBITDA represents operating profit plus
reorganization expense and non-cash charges including depreciation,
amortization and asset impairment as follows:
YEAR ENDED DECEMBER 31,
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1997 1996 1995 1994 1993
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Operating profit (loss)..... $ 19.0 $(17.5) $29.3 $22.6 $17.4
Depreciation &
amortization............... 9.0 9.7 8.2 6.0 5.4
Impairment of long-lived
assets(a).................. -- 23.9 -- -- --
Non-recurring charges....... 0.4 3.5 -- 1.2 0.8
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Adjusted EBITDA............. $ 28.4 $ 19.6 $37.5 $29.8 $23.6
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Adjusted EBITDA is not intended to represent cash flow from operations as
defined by generally accepted accounting principles and should not be
considered as an alternative to net income as an indicator of operating
performance or to cash flow as a measure of liquidity.
(a) Includes $0.6 million classified as operating expenses.
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EASCO, INC.
UNAUDITED QUARTERLY FINANCIAL DATA
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1997
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FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
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(Amounts in millions, except per share data)
Pounds shipped....................................... 77.7 85.7 84.0 72.3 319.7
Net sales............................................ $77.3 $90.0 $ 89.5 $ 77.7 $ 334.5
Gross profit......................................... 6.8 11.0 10.7 8.8 37.3
Net income (loss).................................... -- 1.5 1.3 2.6 5.4
Earnings (loss) per share-diluted (1)................ $ -- $0.14 $ 0.12 $ 0.24 $ 0.51
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1996
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FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER(2) YEAR
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(Amounts in millions, except per share data)
Pounds shipped....................................... 75.8 86.0 84.0 74.1 319.9
Net sales............................................ $77.1 $86.8 $ 84.4 $ 72.7 $ 321.0
Gross profit......................................... 10.6 11.3 7.2 2.5 31.6
Net income (loss).................................... 2.2 2.5 (0.9) (26.1) (22.3)
Earnings (loss) per share-diluted (1)................ $0.21 $0.24 $(0.09) $(2.53) $ (2.17)
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(1) Quarterly per share data may differ from full year results due to
differences in the weighted number of shares used in the computations.
(2) The following significant pre-tax adjustments were recorded in the fourth
quarter of 1996:
(a) Impairment of property and goodwill related to the Dolton facility: $23.3
million
(b) Termination of a pension plan related to a previously closed facility:
$1.1 million
(c) Reorganization of the executive staff: $3.5 million
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EASCO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Easco, Inc. (the Company) is the largest independent extruder of soft alloy
aluminum products in the United States operating 21 extrusion presses and three
casting facilities in five states. The Company also produced vinyl extrusions in
an operation which it sold in January 1998.
During 1997, the Company focused on a series of initiatives to increase
product quality and reduce unit costs. Of primary concern was the Company's
Dolton, Illinois (Dolton) facility which had experienced a pronounced
deterioration in profitability since its acquisition in 1995. Dolton's billet
casting technology was significantly upgraded during the year and its melting
furnace technology is scheduled for upgrade during the second quarter of 1998.
In August, the Company announced a restructuring of the Dolton extrusion
operations which included the elimination of a second press and a reduced
operating schedule in order to allow the Company to upgrade the remaining
presses. As these upgrades are completed during 1998, the Company currently
plans to return the plant steadily to full operations over the remainder of the
year. As a result of the restructuring, the Company recorded a non-recurring
charge of $1.7 million in the third quarter of 1997.
Also in August, the Company announced a significant expansion of its
Ahoskie, North Carolina casting operations. The $6.5 million project will
effectively double the capacity of the plant to 220 million pounds and reduce
the Company's use of billet purchased from outside sources. The expansion is
intended to give the Company greater control over billet quality and delivery in
addition to reducing unit material costs.
In order to focus on its core business of aluminum extrusions, the Company
also announced in August that it intended to sell its vinyl extrusion operation
in Austintown, Ohio. In December 1997, an agreement was reached for the sale of
the vinyl business. The Company estimates that it will record a pre-tax gain of
approximately $3.0 million from the transaction which closed in January, 1998.
The Company addressed operational inefficiencies at all of its plants during
1997. These efforts focused on areas such as productivity per press hour, scrap
generation and plant safety. Improvements have been realized in most operations.
For example, the lost time accident rate for the Company as a whole decreased
over 27% in 1997. In addition to having a favorable impact on plant costs, this
also reflects the Company's commitment to provide its employees with a safe
working environment. The Company is planning for further improvements and cost
reductions from these efforts during 1998.
The following table sets forth, for the periods shown, certain operating
results which management views as important measures of the Company's
performance.
YEAR DECEMBER 31,
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1997 1996 1995
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(Amounts in millions, except per pound data)
Net sales................... $334.5 $321.0 $329.4
Gross profit................ 37.3 31.6 45.8
Selling and administrative
expenses.................. 15.3 19.3 13.5
Non-recurring and impairment
charges................... 0.4 26.8 --
Operating profit (loss)..... 19.0 (17.5) 29.3
Net income (loss)........... $ 5.4 $(22.3) $ 11.7
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Depreciation and
amortization.......... $ 9.0 $ 9.7 $ 8.2
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Adjusted EBITDA............. $ 28.4 $ 19.6 $ 37.5
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Pounds shipped:
Product sales............. 216.7 202.7 189.9
Toll sales................ 103.0 117.2 113.4
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Total..................... 319.7 319.9 303.3
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Gross profit per pound...... $0.117 $0.099 $0.151
Adjusted EBITDA per pound... $0.089 $0.061 $0.124
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
The statements in the third and fifth paragraphs of this Management's
Discussion and Analysis of Financial Condition concerning anticipated events are
forward looking statements as such term is used under the Private Securities
Litigation Reform Act of 1995. The Company's performance may be affected by many
uncertainties that exist in the Company's operations and business environment
that may cause actual performance to differ materially from performance
suggested by any forward looking statements.
Demand for the Company's products is cyclical in nature and subject to
changes in general market conditions that affect demand. The Company's customers
operate primarily in industries (e.g., building and construction and
transportation) that are affected by changes in economic conditions, which in
turn can affect orders for extrusions. The Company and the extrusion industry
generally operate without significant order backlogs. As a result, economic
slowdowns and recessions could adversely affect the extrusion industry and the
Company. The Company's performance may also be
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affected by other risks and uncertainties that may cause actual performance to
differ materially from any forward-looking statements, including but not limited
to the following: the Company's level of utilization of its extrusion capacity
and the impact of capacity utilization on costs; the Company's ability to
increase its market share, which may be necessary to maximize capacity
utilization, and the costs associated with any such efforts; the highly
competitive nature of the extrusion industry and the relatively greater
capitalization and lower levels of indebtedness of certain competitors,
particularly integrated aluminum producers; developments with respect to
contingencies such as environmental matters and litigation; the impact on
variable costs of changes in labor market conditions and energy and raw
materials costs (primarily aluminum); seasonal variations in the extrusion
business which is generally stronger in the second and third quarters and weaker
in the first and fourth quarters; whether the Company's management team hired in
late 1996 will be able to improve operations and profitability as planned,
particularly at Dolton; whether and to what extent the Company's capital
expenditures can achieve reductions in variable costs; and the Company's ability
to integrate and operate acquired facilities on a profitable basis. For further
information, see section titled "Cautionary Statement" in Part I, Item 1 of the
Company's annual report on Form 10-K.
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
Net sales increased 4.2% to $334.5 million in 1997 from $321.0 million in
1996. The increase was largely due to a change in the mix between product and
toll sales. Product sales, the prices of which include the cost of Company
supplied metal, were 67.8% of shipments in 1997 compared to 63.4% in 1996. Total
shipments of aluminum extrusions were nearly level from 1996 to 1997.
Gross profit increased 18% in 1997 to $37.3 million compared to $31.6
million in 1996. The improvement was primarily due to operating improvements at
Dolton, particularly in the second half of the year. In addition, the spread
between extrusion selling price and the Company's molten metal cost (metal
margin) widened due to the use of a larger percentage of aluminum scrap in the
mix of raw materials. As a result, gross profit per pound increased from $0.099
per pound in 1996 to $0.117 per pound in 1997.
Selling, general and administrative expenses decreased 21% from $19.3
million in 1996 to $15.3 million in 1997. This reduction was a result of
management's focus on reducing administrative expenses, lower bad debt
write-offs and reduced pension expense. On a per pound basis, selling and
administrative expenses decreased to $0.048 in 1997 from $0.06 in 1996.
In August, 1997, the Company announced a series of initiatives which
included a strategic downsizing of Dolton. As a result of this downsizing, the
Company recorded a $1.7 million charge that included, among other items, a
$721,000 write-down of assets to net realizable value and employee severance
costs.
During the fourth quarter of 1997, the Company recognized non-recurring
charges for the cost of terminating a supplemental executive retirement plan and
for the settlement of litigation relating to the pension liability of a bankrupt
member of a multi-employer plan in which the Company participated. The total
charge for these items was $1.0 million. In addition, the Company revised its
estimate of environmental contingencies and reduced its environmental reserve by
$2.3 million upon completing an evaluation of each operating facility and all
other known environmental exposures.
Operating profit increased $36.5 million in 1997 when compared to 1996. The
results for 1996 include a $23.3 million charge for impairment of assets at
Dolton and a $3.5 million reorganization charge relating to the realignment of
the Company's executive management in November, 1996. Excluding these charges,
operating profit would have been $9.3 million in 1996 compared to $19.0 million
in 1997. The increase was primarily due to the lower selling, general and
administrative costs and higher gross profit as discussed above.
Net interest expense was $8.6 million in 1997 compared to $9.0 million in
1996. The reduction was primarily a result of increased interest income from
cash investments.
Tax expense for 1997 was $5.0 million compared to a tax benefit of $4.2
million in 1996. The increase in taxes was a result of the higher pre-tax income
in 1997. The Company's effective tax rate differs from the federal statutory
rate primarily as a result of state and local income taxes and non-deductible
amortization of goodwill.
Net income increased to $5.4 million in 1997 from a net loss of $22.3
million in 1996. A majority of this increase was due to the special charges
incurred in 1996. However, the improvement in operating profits discussed above
was also a contributing factor.
YEARS ENDED DECEMBER 31, 1996 AND 1995
During 1996, pounds shipped increased to 319.9 million from 303.3 million in
1995, an increase of 16.6 million pounds, or 5.5%. This increase in shipments is
due primarily to strong demand during 1996 in the transportation and building
and construction end-use markets served by the Company, offsetting a decline in
the electrical sector. One of the segments of the transportation market that did
not
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EASCO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
experience increased demand was commercial trailer sales which declined and
adversely affected results at Dolton. Net sales decreased 2.6% during 1996
compared to 1995, on higher shipments at lower per pound selling prices. The
lower selling prices compared to the prior period reflects declines in the cost
of aluminum ingot and scrap, the Company's principal raw materials.
Gross profit decreased to $31.6 million in 1996 compared to $45.8 million in
1995, a decrease of $14.2 million or 31%. Despite higher shipment and capacity
utilization levels, gross profit declined in 1996 principally as a result of
higher manufacturing costs, a less favorable sales product mix and more
competitive pricing in the truck trailer segment of the transportation market.
The higher manufacturing costs compared to the prior year resulted primarily
from a continuation of production difficulties, principally at Dolton, and the
write-off of a bankrupt customer's work-in-process inventory. As a result, gross
profit per pound in 1996 decreased to $0.099 compared to $0.151 per pound in
1995.
Selling, general and administrative expenses increased by $5.8 million or
43% to $19.3 million during 1996 compared to 1995. The increase in these
expenses for 1996 is primarily the result of: (i) unusually high bad debt
expense related to a large customer bankruptcy; (ii) increased shipping and
delivery expenses primarily relating to increased volume; (iii) increased
selling expense, including commissions related to increased volume; and (iv)
increased pension expenses, resulting from an obligation incurred in connection
with a plan termination. On a per pound basis, overall selling, general and
administrative expenses increased from $0.045 in 1995 to $0.06 in 1996.
During 1996, a reorganization charge of $3.5 million was incurred primarily
for inducement and separation expenses relating to the turnover of several key
executive personnel. The inducement expenses include stock grants and options as
well as cash bonuses. Because the cash bonuses are forfeitable for a two-year
period in certain circumstances, for each of the years 1997 and 1998, an
additional charge of $1.3 million related to this reorganization may be incurred
as additional inducements become vested.
During the fourth quarter of 1996, a $23.3 million charge was incurred
reflecting the impairment of long-lived assets at Dolton, based on an assessment
of the value of these assets in light of recent and anticipated performance. The
impairment charge reduced property, plant and equipment by $9.7 million and
goodwill by $13.6 million. As a result of these write-offs, annual operating
expenses for 1997 and future periods will be reduced by approximately $1.1
million.
Operating profit (loss) for 1996 decreased by $46.8 million from $29.3
million in 1995 to ($17.5) million in 1996. The lower results for 1996 compared
to 1995 were primarily attributable to the long-lived asset impairment charge,
higher manufacturing costs and reorganization charges and the result of higher
selling, general and administrative expenses, as discussed above.
Interest expense was $9.0 million in 1996 compared to $9.3 million in 1995.
The decrease in interest expense in 1996 is the result of the effect of the
Company's issuance of 2.5 million of shares of common stock in an initial public
offering (the "Offering") during April 1995, which reduced indebtedness by
approximately $31.3 million. The Company's interest expense is determined in
part by the level of its revolving credit borrowings, which were not significant
for any period after the Offering, as cash requirements were met primarily from
operations.
The tax benefit for 1996 was $4.2 million on a pre-tax loss of $26.5 million
or 15.8%, compared to a tax provision of $8.4 million on a pre-tax income of
$20.1 million or 41.8% in 1995. These rates differ from the federal statutory
rate of 35% primarily due to state and local income taxes, non-deductible
amortization of goodwill, and the portion of the impairment of long-lived asset
charge related to goodwill. The differences in the effective tax rates for 1996
compared to 1995, resulted primarily from higher non-deductible amortization and
impairment of goodwill in proportion to pre-tax income or loss.
Due to the decline in operating profit discussed above, including the
special charges for the management reorganization and long-lived asset
impairment, the Company incurred a net loss for the year ended December 31, 1996
of $22.3 million or $2.17 diluted earnings per share, compared to net income of
$11.7 million or $1.19 diluted earnings per share, for the year ended December
31, 1995. Excluding the management reorganization and long-lived asset
impairment charges, net loss would have been $542,000 and net loss per share
would have been $0.05. The per share amounts for 1996 are based on 10,261,774
diluted weighted average shares outstanding while the 1995 per share amounts are
based on 9,816,127 diluted weighted average shares outstanding. The change in
the shares outstanding are due primarily to the Company's initial public
offering in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of working capital are cash flows from
operating activities and borrowings under the Company's revolving line of
credit. Working capital amounted to $41.1 million and $38.9 million at December
31, 1997 and 1996, respectively. The Company's cash needs arise principally from
working capital require-
10
12
ments, interest expense and capital investments. Working capital needs are
generally higher during periods of increasing aluminum prices.
Net capital expenditures for equipment and facility improvements were $9.8
million, $6.5 million and $13.7 million for the years ended December 31, 1997,
1996 and 1995, respectively. The Company used these expenditures to purchase,
modernize or upgrade production equipment and to maintain facilities. In
addition, in January, 1995, the Company acquired all of the stock of Dolton for
$26.4 million including fees and expenses related to the transaction. Capital
expenditures for 1998 are expected to be $16.0 million, including the completion
of the Ahoskie, North Carolina expansion and the continued upgrade of Dolton.
The costs of these capital projects are expected to be funded out of the
Company's operating cash flow, proceeds from the sale of the vinyl extrusion
operation and borrowings, if necessary, under the revolving line of credit.
During 1997, the Company completed a review of its significant computer
hardware and software applications which was intended to identify potential year
2000 issues and develop strategies for their resolution. Based on the results of
the review, management believes a majority of the Company's significant computer
hardware and software applications are year 2000 compliant. The Company plans to
complete modifications of all significant year 2000 issues by September 30,
1998. The estimated cost to update those applications which have potential year
2000 problems is not expected to have a material impact on the Company's
business, operations or financial condition. These costs are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events. However, there can be no guarantee that these estimates will
be achieved and actual results could differ from those plans.
In addition, the Company is communicating with others with whom it does
significant business to determine their year 2000 compliance readiness and the
extent to which the Company is vulnerable to any third party year 2000 issues.
However, there can be no guarantee that the systems of third parties on which
the Company's systems rely will be timely converted or that a failure to
convert, or a conversion that is incompatible with the Company's systems, would
not have an adverse effect on the Company's system.
As of December 31, 1997, the Company's long-term indebtedness was $85.0
million. All of the long-term indebtedness consisted of unsecured Senior Notes
that have no scheduled principal payments until maturity in 2001. The Company
has an Amended Credit Agreement with a syndicate of banks which provides for
borrowings on a revolving credit line of up to $40.0 million dollars, subject to
available collateral (primarily inventory and accounts receivable). Indebtedness
under the agreement is secured by inventory, accounts receivable and related
assets, and the stock of Dolton. The maximum borrowing availability may be
decreased to $30.0 million if certain financial covenants are not met. As of
December 31, 1997, there were no borrowings and $3.4 million of letters of
credit outstanding under the Amended Credit Agreement. Availability under the
Amended Credit Agreement was approximately $36.6 million. The Amended Credit
Agreement terminates on January 31, 2000.
The Company believes that it will generate sufficient cash flow from
operations, as supplemented by its available borrowings under its Amended Credit
Agreement, to meet debt service requirements and to meet its short-term and
long-term working capital and capital expenditure requirements although no
assurance can be given that it will be able to do so or that it will be able to
refinance the Senior Notes or the Amended Credit Agreement at maturity.
FINANCIAL INSTRUMENTS
In the normal course of business, the Company enters into forward sales
contracts with certain customers for the sale of fixed quantities of finished
products. The aluminum cost component of the forward sales contracts is
typically fixed for the duration of the contracts. In order to hedge its
exposure to aluminum price volatility under these forward sales contracts, the
Company may enter into aluminum futures contracts based on the scheduled
deliveries of product.
At December 31, 1997, the Company was a party to aluminum futures contracts
with a nominal value of $2.0 million through recognized brokerage firms. These
aluminum futures contracts cover approximately 2.9 million pounds of aluminum at
prices expected to be settled financially in cash as they reach their respective
settlement dates. As of December 31, 1997, the nominal value of the aluminum
futures contracts approximated market value. No contracts were outstanding as of
December 31, 1996.
ENVIRONMENTAL MATTERS
The Company is subject to a wide variety of environmental laws which
continue to be adopted and amended. While the ultimate extent of the Company's
liability for pending or potential fines, penalties, remedial costs, claims and
litigation relating to environmental laws and health and safety matters and
future capital expenditures that may be associated with environmental laws
cannot be determined at this time, management, with the assistance of outside
environmental consultants, continually assesses the Company's environmental
contingencies. After an extensive review of each operating facility and all
known environmental exposures by management and
11
13
EASCO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
outside environmental consultants during 1997, the Company reduced the recorded
environmental reserve by $2.3 million to reflect the Company's best estimate of
costs of remedial action as well as any related legal and consulting work. As of
December 31, 1997 and 1996, respectively, the Company's environmental reserves
totaled $6.3 million and $9.3 million.
SEASONALITY
The Company does not experience significant seasonality in its business.
However, results of operations are generally lower in the first and fourth
quarters of the year.
12
14
LOGO
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Easco, Inc.
We have audited the accompanying consolidated balance sheets of Easco, Inc.
and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Easco, Inc. and Subsidiaries as
of December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Cleveland, Ohio
February 2, 1998
13
15
EASCO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
--------------------------------------------------------------------------------
1997 1996
-------------------------------------------------------------------------------------
(In thousands, except share and per share data)
ASSETS
Current Assets:
Cash and equivalents.................................... $ 8,470 $ 13,245
Receivables, net........................................ 41,881 40,802
Inventories............................................. 40,059 27,143
Other current assets.................................... 4,061 6,592
-------- --------
Total current assets............................... 94,471 87,782
Property, plant and equipment, net.......................... 81,875 79,661
Goodwill, net............................................... 53,238 54,754
Other assets................................................ 6,680 8,260
-------- --------
Total assets....................................... $236,264 $230,457
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................ $ 29,363 $ 28,629
Accrued insurance obligations........................... 3,290 4,334
Accrued payroll......................................... 5,596 4,528
Other current liabilities............................... 15,087 11,361
-------- --------
Total current liabilities.......................... 53,336 48,852
Long-term debt.............................................. 85,000 85,000
Deferred income taxes....................................... 14,291 13,444
Accrued pension benefits.................................... 1,760 4,331
Accrued postretirement benefits............................. 2,879 2,799
Other noncurrent liabilities................................ 10,479 12,990
-------- --------
Total liabilities.................................. 167,745 167,416
Commitments and contingencies............................... -- --
Stockholders' equity:
Preferred stock, $.01 par value, authorized 1,000,000
shares; none issued and outstanding.................... -- --
Common stock, $.01 par value, authorized 40,000,000
shares; 12,440,276 and 12,414,892 shares issued and
outstanding at December 31, 1997 and 1996,
respectively........................................... 124 124
Paid-in capital......................................... 81,875 81,373
Retained earnings....................................... 6,510 1,534
Less: Treasury stock: 2,005,222 shares.................. (19,990) (19,990)
-------- --------
Total stockholders' equity......................... 68,519 63,041
-------- --------
Total liabilities and stockholders' equity......... $236,264 $230,457
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
14
16
EASCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1997, 1996 and 1995
--------------------------------------------------------------------------------
1997 1996 1995
---------------------------------------------------------------------------------------------------
(In thousands, except share and per share data)
OPERATIONS
Net sales:
Product sales........................................... $ 279,688 $ 258,648 $ 280,941
Tolling fees............................................ 54,827 62,383 48,469
---------- ---------- ---------
334,515 321,031 329,410
Cost of products sold....................................... 297,248 289,463 283,656
---------- ---------- ---------
Gross profit............................................ 37,267 31,568 45,754
Selling, general and administrative......................... 15,342 19,286 13,488
Amortization of goodwill.................................... 1,656 2,028 1,978
Management fee.............................................. 900 900 900
Impairment of long-lived assets............................. -- 23,335 --
Non-recurring charges....................................... 405 3,479 --
---------- ---------- ---------
Operating income (loss)................................. 18,964 (17,460) 29,338
Interest expense............................................ 8,589 9,021 9,337
---------- ---------- ---------
Income (loss) before income taxes....................... 10,375 (26,481) 20,051
Income tax provision (benefit).............................. 4,983 (4,163) 8,400
---------- ---------- ---------
Net income (loss)........................................... $ 5,392 $ (22,318) $ 11,651
========== ========== =========
Net income (loss) per common share.......................... $ .52 $ (2.17) $ 1.22
========== ========== =========
Net income (loss) per common share -- assuming dilution..... $ .51 $ (2.17) $ 1.19
========== ========== =========
Weighted average number of common shares.................... 10,416,293 10,261,774 9,544,514
========== ========== =========
Weighted average number of common shares -- assuming
dilution.................................................. 10,671,246 10,261,774 9,816,127
========== ========== =========
--------------------------------------------------------------------------------
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK OTHER TOTAL
----------------------------------------------------------------------------------------------------------
(In thousands)
Balance, January 1, 1995....................... $ 97 $49,230 $12,813 $(19,589) $(215) $ 42,336
Net income................................... -- -- 11,651 -- -- 11,651
Cash dividends, $0.02 per share.............. -- -- (204) -- -- (204)
Initial public offering...................... 25 31,253 -- -- -- 31,278
Stockholder loan............................. -- -- -- -- 53 53
---- ------- -------- -------- ----- --------
Balance, December 31, 1995..................... 122 80,483 24,260 (19,589) (162) 85,114
Net loss..................................... -- -- (22,318) -- -- (22,318)
Cash dividends, $0.04 per share.............. -- -- (408) -- -- (408)
Stockholder loan............................. -- -- -- -- 162 162
Repurchase of stock.......................... -- -- -- (401) -- (401)
Stock based compensation..................... 2 890 -- -- -- 892
---- ------- -------- -------- ----- --------
Balance, December 31, 1996..................... 124 81,373 1,534 (19,990) -- 63,041
Net income................................... -- -- 5,392 -- -- 5,392
Cash dividends, $0.04 per share.............. -- -- (416) -- -- (416)
Exercise of stock options.................... -- 292 -- -- -- 292
Stock based compensation..................... -- 210 -- -- -- 210
---- ------- -------- -------- ----- --------
Balance, December 31, 1997..................... $124 $81,875 $ 6,510 $(19,990) $ -- $ 68,519
==== ======= ======== ======== ===== ========
The accompanying notes are an integral part of the consolidated financial
statements.
15
17
EASCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
--------------------------------------------------------------------------------
1997 1996 1995
----------------------------------------------------------------------------------------------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 5,392 $(22,318) $ 11,651
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation............................................ 7,331 7,624 6,242
Amortization of goodwill and other...................... 1,656 2,028 1,978
Amortization of deferred debt issue costs............... 572 572 571
(Gain) loss on fixed asset disposals.................... 270 327 --
Impairment of long-lived assets......................... -- 23,335 --
Stock compensation expense.............................. 210 890 --
Increase (decrease) in deferred taxes -- net............ 823 (4,546) 1,571
Changes in operating assets and liabilities:
(Increase) decrease in receivables.................... (1,079) 4,614 1,082
(Increase) decrease in inventories.................... (12,916) 5,716 (12,513)
Decrease (increase) in other current assets........... 2,554 (2,994) 529
Decrease (increase) in other assets................... 868 (202) (58)
Increase (decrease) in accounts payable............... 734 (2,611) 7,511
Increase (decrease) in other current liabilities...... 3,750 3,106 (11,011)
(Decrease) increase in other noncurrent liabilities... (5,002) (2,856) 480
-------- -------- --------
Net cash flows from operating activities........... 5,163 12,685 8,033
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Dolton..................................... -- -- (26,391)
Property additions -- net................................. (9,814) (6,465) (13,713)
-------- -------- --------
Net cash flows used in investing activities........ (9,814) (6,465) (40,104)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid....................................... (416) (408) (204)
Repayment of stockholder loan............................. -- 162 53
Repurchase of stock....................................... -- (401) --
Issuance of common stock.................................. 292 2 31,278
-------- -------- --------
Net cash flows (used) provided in financing
activities....................................... (124) (645) 31,127
(Decrease) increase in cash and equivalents............... (4,775) 5,575 (944)
Cash and equivalents, beginning of year................... 13,245 7,670 8,614
-------- -------- --------
Cash and equivalents, end of year......................... $ 8,470 $ 13,245 $ 7,670
======== ======== ========
SUPPLEMENTAL DISCLOSURES:
Interest paid............................................. $ 8,759 $ 8,752 $ 9,210
Income taxes (refunded) paid.............................. $ (170) $ 4,342 $ 5,600
The accompanying notes are an integral part of the consolidated financial
statements.
16
18
EASCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Easco, Inc. and Subsidiaries (the Company) is the largest independent
extruder of soft alloy aluminum products in the United States. The Company
operates 21 aluminum extrusion presses and three casting facilities in five
states, and its products include standard and custom profiles (shapes of
specific lengths and cross-sectional design), conduit and drawn tubing. The
Company also produces vinyl extrusions. In January, 1998, the Company sold the
vinyl extrusion operations (Note 15).
The Company operates in one business segment and serves approximately 2,600
customers spanning six industry groups (building and construction,
transportation, distribution, consumer durables, coaxial cable and electrical),
and its extrusions are used in a wide variety of products including door and
window frames, truck bodies, truck trailers, recreational vehicles, automobiles,
boats, home appliances, patio enclosures and furniture, office furniture and
equipment, picture frames, sport and exercise equipment, health care equipment,
coaxial cable and electrical conduit. The Company's vinyl extrusions are used
primarily by replacement window manufacturers.
2. SUMMARY OF ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Easco, Inc.
(EI) and its wholly-owned subsidiary, Easco Corporation (Easco) and its
subsidiary (collectively the Company). All significant intercompany accounts
have been eliminated.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized when products are shipped to customers. Included in
net sales are agreed upon tolling fees from casting and extruding
customer-supplied material. Sales returns and allowances and freight to
customers are treated as reductions to sales. Returns and allowances are
provided for based on historical experience and current estimates.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents and trade
accounts receivable. Cash equivalents represent short-term investments readily
convertible into cash or with original maturities of three months or less when
purchased, which approximate fair value. The Company has cash investment
policies that limit the amount of credit exposure to any one financial
institution and require placement of investments in financial institutions
evaluated as highly creditworthy.
Concentration of credit risk with respect to trade accounts receivable is
limited due to the large number of customers comprising the Company's customer
base and their geographical dispersion. The Company does not generally require
collateral for its trade accounts receivable. The allowance for doubtful
accounts of $1.8 million and $2.5 million at December 31, 1997 and 1996 is based
upon the expected collectibility of all trade accounts receivable.
Inventories
Inventories are valued at the lower of cost or market, with cost determined
using the last-in, first-out (LIFO) method.
Financial Instruments
The Company may use futures contracts to reduce the risks associated with
fluctuations in aluminum prices. Gains and losses on aluminum futures contracts
which hedge existing firm commitments are deferred and are recognized in income
as part of the related transaction. At December 31, 1997, the Company was a
party to aluminum futures contracts covering 2.9 million pounds of aluminum with
a nominal value of $2.0 million. The market value of the contracts approximated
cost as of December 31, 1997. No contracts were outstanding as of December 31,
1996.
Income Taxes
The Company accounts for income taxes using the liability method, whereby
deferred income taxes reflect the tax effect of temporary differences between
the carrying amount of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. In valuing deferred tax assets,
the Company uses judgment in determining if it is more likely than not that some
portion or all of a deferred tax asset will not be realized and the amount of
the related valuation allowance.
Long-lived Assets
Property, plant, and equipment is stated at cost. The Company computes
depreciation using the straight-line method for financial reporting purposes
based on useful lives of 5 to 12 years for machinery and equipment and 20 years
for buildings and improvements. Accelerated methods are used for income tax
purposes.
17
19
EASCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Major renewals and betterments are capitalized and ordinary repairs and
maintenance are expensed in the year incurred.
Goodwill, the cost in excess of the fair value of net assets acquired, is
amortized using the straight-line method over a period of 40 years. Accumulated
amortization at December 31, 1997 and 1996 was $8.5 million and $7.0 million,
respectively.
The Company periodically evaluates the carrying value of long-lived assets
to be held and used, including goodwill, when events and circumstances warrant
such a review (Note 4 and 6). The carrying value of a separately identifiable,
long-lived asset is considered impaired when the anticipated undiscounted cash
flow from such asset is less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset. Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved.
Deferred debt issue costs, the amounts incurred in connection with the
issuance of the Senior Notes and the Credit Agreement, are amortized using the
effective interest rate method over the terms of the debt instruments. At
December 31, 1997, such costs were $3.9 million before accumulated amortization
of $2.2 million. Accumulated amortization at December 31, 1996 was $1.6 million.
Environmental Remediation Costs
The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and reasonably estimable. Costs of
future expenditures for environmental remediation obligations are not discounted
to their present value.
Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which
requires companies to present basic earnings per share (EPS) and diluted EPS,
instead of the primary and fully diluted EPS that was previously required. Basic
EPS is computed based upon the weighted-average number of common shares
outstanding for the period. Diluted EPS is computed based upon the weighted
average number of common shares during the period adjusted for the dilutive
effect of common stock options granted. The Company has adopted SFAS No.128 as
of December 31, 1997 and has restated EPS for all prior periods as required by
the Statement.
Self Insurance
The Company is substantially self-insured for losses related to workers'
compensation and health claims. Losses are accrued based upon the Company's
estimates of aggregate liability for claims incurred based on Company experience
and certain actuarial assumptions followed in the insurance industry.
New Accounting Pronouncements
During June, 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 130 requires an
enterprise to classify items of other comprehensive income by their nature in a
financial statement and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial position. SFAS No. 131 requires a
public enterprise to report financial and descriptive information about its
reportable operating segments such as a measure of segment profit or loss,
certain specific revenue and expense items and segment assets. The Company is
required to adopt these statements for the year ending December 31, 1998.
The Company has only one reportable operating segment and had no material
comprehensive income components during 1997, 1996 and 1995. Therefore, adoption
of these statements should not have a material impact on the Company.
Reclassifications
Certain reclassifications have been made to prior year amounts to conform
with the 1997 presentation. The primary change relates to the classification of
freight costs. As a result of reclassifying freight, revenue was reduced $11.9
million, $12.0 million and $10.3 million, respectively, cost of goods sold was
increased $5.8 million, $6.5 million and $5.8 million, respectively and selling,
general and administrative expenses were reduced by $17.7 million, $18.5 million
and $16.1 million, respectively, for the years ended December 31, 1997, 1996 and
1995.
3. ACQUISITION
On January 18, 1995 the Company acquired all of the outstanding stock of
Dolton Aluminum Company, Inc. ("Dolton"), an aluminum extruder, for $26.4
million in cash including fees and expenses related to the transaction (the
"Acquisition"). The Acquisition, financed with cash and borrowings under the
Credit Agreement, was accounted for as a purchase. On the date of acquisition
the estimated fair value of assets acquired, including $14.0 million of
18
20
goodwill, was $42.2 million and liabilities assumed totaled $15.8 million (Note
6).
4. NON-RECURRING CHARGES
In August, 1997, the Company announced a series of initiatives which
included a strategic downsizing of Dolton. As a result of this downsizing, the
Company recorded a $1.7 million charge that included, among other items, a
$721,000 write-down of assets to net realizable value and employee severance
costs.
During the fourth quarter of 1997, the Company recognized non-recurring
charges for the cost of terminating a supplemental executive retirement plan and
for the settlement of litigation relating to the pension liability of a bankrupt
member of a multi-employer plan in which the Company participated. The total
charge for these items was $1.0 million. In addition, the Company revised its
estimate of environmental contingencies and reduced its environmental reserve by
$2.3 million upon completing an extensive evaluation of each operating facility
and all other known environmental exposures.
In November, 1996, the Company's executive staff was reorganized resulting
in the turnover of several key executive personnel. In connection with this
reorganization, a charge to earnings of $3.5 million was recognized related to
separation, executive search, inducement expenses and related legal and
professional fees. The inducement expenses include cash bonuses, stock option
grants and common stock grants that are subject to various vesting provisions
ranging from 2 to 7 years. Further, 150,000 common shares were issued with no
vesting provisions. The fair market value of all common shares granted was $1.3
million. The cash expenditures relating to the reorganization totaled $2.0
million.
5. INVENTORY
Inventories at December 31 are summarized as follows (in thousands):
1997 1996
------- -------
Raw materials........................... $ 2,226 $ 3,090
Work in process......................... 20,028 11,668
Finished goods.......................... 20,308 12,385
------- -------
Total at FIFO cost...................... 42,562 27,143
Less excess of FIFO cost over LIFO
values................................ (2,503) --
------- -------
Total inventories....................... $40,059 $27,143
======= =======
During 1996, inventory quantities were reduced resulting in a partial
liquidation of LIFO inventory layers carried at lower costs than current
replacement costs. The effect of this reduction was to decrease cost of products
sold by $757,000.
The Company has entered into agreements with various customers to sell 21.9
million pounds of finished product at set prices throughout 1998, and has hedged
a portion of these sales commitments through offsetting raw material purchases
at purchase prices set in advance that correspond to the aluminum costs included
in the customer arrangement, and at corresponding delivery dates. The balance
has been hedged through the use of aluminum futures contracts (Note 1) with
settlement dates that correspond to the delivery dates. These commitments are
subject to the Company's determination that the creditworthiness of the
customers participating in these programs is satisfactory.
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31 is summarized as follows (in
thousands):
1997 1996
-------- --------
Land.................................. $ 3,218 $ 3,218
Buildings and improvements............ 28,797 28,458
Machinery and equipment............... 73,807 69,710
Construction in progress.............. 6,319 1,322
-------- --------
112,141 102,708
Less accumulated depreciation......... 30,266 23,047
-------- --------
Total property, plant and equipment... $ 81,875 $ 79,661
======== ========
In 1996, Dolton experienced severe operating difficulties due to changes in
the marketplace, equipment performance, and the related capacity constraints
caused by these conditions. These conditions reduced the estimated future cash
flows of this business. As a result, in the fourth quarter of 1996, the Company
recognized a pre-tax fixed asset and goodwill impairment charge of $23.3
million. The charge reduced property, plant and equipment by $9.7 million and
goodwill by $13.6 million. The property and goodwill were recognized in
conjunction with the 1995 acquisition of Dolton (see Note 3). In determining the
amount of the impairment charge, the Company developed its best estimate of
operating cash flows over the expected holding period. The Company's projections
assume a short term decline in volume followed by minor volume increases. These
projections, after considering significant one-time expenses, include the impact
of cost reduction programs and future estimated capital expenditures as well.
7. LONG-TERM DEBT
Senior Notes
At December 31, 1997 and 1996, long-term debt consisted of $85.0 million of
Senior Notes. The Senior Notes are general unsecured obligations of Easco and
are equal in right of payment with all of Easco's existing and future senior
indebtedness and are senior in right of payment to all of its future
subordinated indebtedness.
19
21
EASCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Senior Notes mature on March 15, 2001 and bear interest at the rate of 10%
per annum, payable semi-annually on March 15 and September 15. The Senior Notes
may be redeemed at the option of Easco, in whole or in part on or after March
15, 1998 at specified redemption prices plus accrued and unpaid interest through
the redemption date. In the event of a change of control of Easco, Easco is
required to make an offer to purchase the Senior Notes at a price equal to 101%
of the aggregate principal amount thereof, plus accrued and unpaid interest, to
the date of purchase.
The Senior Notes Indenture ("the Indenture") contains various covenants
relating to, among others, incurrence of indebtedness, certain restricted
payments in excess of $5.0 million adjusted for equity capital contributions and
50% of net income subsequent to March 18, 1994, asset sales and mergers. At
December 31, 1997 the Company was in compliance with all financial and other
covenants contained in the Indenture.
The fair value of the Senior Notes is estimated to be $88.1 million based on
quoted market prices at December 31, 1997.
Bank Credit Agreement
The Amended Credit Agreement provides available borrowings of up to $40.0
million, including letters of credit, with a maturity date of January 31, 2000.
The maximum amount of available borrowings is decreased to $30.0 million if the
Company does not meet certain financial covenants. Letters of credit totaled
$3.4 million and $4.0 million on December 31, 1997 and 1996, respectively. The
Amended Credit Agreement is secured by substantially all of the Company's
inventory, accounts receivable and related assets. Interest is payable on a
quarterly basis. The rate, as chosen by the Company, is the Agent bank's
reference rate or the rate offered per annum in the interbank eurodollar market
plus a percentage per annum determined by the Company's financial leverage
ratio.
The Company is required to pay a commitment fee between .25% to .50% per
annum of the unused commitment and a letter of credit fee equal to between .875%
and 1.875% per annum. Fees within each of these ranges are determined by the
Company's financial leverage ratio. There were no borrowings under the line of
credit during 1997. At December 31, 1997 unused availability under the agreement
was $36.6 million.
The Amended Credit Agreement contains financial and other covenants
including, among others, restrictions on capital expenditures, indebtedness,
dividends and other restricted payments, and asset sales, as well as provisions
requiring maintenance of a minimum level of net worth and specified fixed
coverage charge and consolidated leverage ratios. At December 31, 1997, the
Company was in compliance with all financial and other covenants contained in
the Amended Credit Agreement.
8. STOCKHOLDERS' EQUITY
On April 12, 1995, the Company issued 2.5 million shares of common stock in
an initial public offering (the "Offering"). Cash proceeds received by the
Company from the Offering, after underwriting discounts and commissions and
other expenses totaling approximately $3.7 million, were $31.3 million. As a
result of the Offering, long-term debt decreased and stockholders equity
increased by approximately $31.3 million. Assuming the Offering occurred as of
January 1, 1995, net income for the year ended December 31, 1995 would have
increased approximately $250,000 resulting from a reduction in interest expense
reflecting the application of net proceeds from the Offering to repay
indebtedness under the Credit Agreement.
At the time of the Offering, all preferred and common stock, share and per
share data were adjusted to reflect: (i) reclassification of all classes of
common stock into one, (ii) the increase in the number of authorized shares of
common stock to 40,000,000 shares, (iii) the 9.6949 for 1 split of the common
stock, (iv) the maintenance of the $.01 par value of the common stock after the
split and (v) the authorization of 1,000,000 shares of preferred stock, all of
which were effective April 11, 1995.
In conjunction with the management reorganization (see Note 4), the Company
granted 150,000 fully vested common shares and 70,000 common shares which vest
over two years, for par value with a weighted average fair value of $5.84 per
share at the grant date.
Stock Options
The Company has a Stock Option Plan (the "Plan") which provides for the
granting of a maximum of 775,592 options to purchase common shares to officers
and key employees of the Company and subsidiaries. All options granted under the
plan vest over three years except for 200,000 options granted to executive
managers in 1996 which vest over three years if certain performance goals are
achieved or seven years irrespective of performance. In addition to grants under
the Plan, the Company entered into Stock Option Agreements with five executive
officers providing for the granting of 225,000 options in 1996 for the purchase
of common shares. These options have exercise prices ranging from $3.00 per
share to $7.25 per share and are exercisable over three years.
20
22
Option activity for the three years ended December 31, 1997 is as follows:
SHARES OPTION PRICE
-------- ------------
Outstanding at January 1, 1995 481,187 $ 5.46
Granted 5,017 9.03
Forfeited (84,346) 9.03
--------
Outstanding at December 31, 1995 401,858 5.46--9.03
Granted 890,852 3.00--7.25
Forfeited (296,083) 5.46--9.03
Redeemed (138,534) 7.50
--------
Outstanding at December 31, 1996 858,093 3.00--9.03
Granted 76,300 7.25--12.00
Forfeited (69,198) 8.25--9.03
Exercised (25,384) 8.25--9.03
--------
Outstanding at December 31, 1997 839,811 3.00--12.00
========
The weighted average grant-date fair value of options granted during 1997,
1996 and 1995 was $8.71, $6.20 and $9.03 per share, respectively. At December
31, 1997, the weighted average exercise price and weighted average remaining
contractual life for all options outstanding were $5.85 per share and 4.72
years, respectively. At December 31, 1997, 1996, and 1995, exercisable options
totaled 237,432, 109,900 and 201,547 respectively.
Options outstanding to and exercisable by a stockholder at December 31,
1997, issued in conjunction with the acquisition of Easco in 1992, totaled
191,154 at an option price of $4.87 per share. These options are not included in
the table above.
The following table summarizes information about stock options outstanding
at December 31, 1997:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------ ----------------------
WEIGHTED WEIGHTED WEIGHTED
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
PRICES GRANTED LIFE PRICE EXERCISABLE PRICE
----------- ------- --------- -------- ----------- --------
$3.00-$5.50 225,000 1.91 $3.00 75,000 $3.00
5.51-8.00 473,500 5.21 6.22 75,000 6.00
8.01-12.00 141,311 7.53 9.10 87,432 8.91
In 1996, the Company adopted Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation". As permitted by SFAS
No. 123, the Company has continued to use the intrinsic value method for
stock-based compensation. If compensation cost had been determined based on the
fair value of the awards at the grant date consistent with the provisions of
SFAS No. 123, there would not have been a material impact on the reported amount
of the Company's net income or loss and net income or loss per share.
9. INCOME TAXES
Components of the provision (benefit) for income taxes are (in thousands):
1997 1996 1995
---- ---- ----
Federal -- current................ $3,466 $ (119) $5,524
Federal -- deferred............... 823 (3,942) 1,301
State and local................... 694 (102) 1,575
------ ------- ------
Total......................... $4,983 $(4,163) $8,400
====== ======= ======
A reconciliation of tax at the statutory federal rate to the tax provision
(benefit) is shown below (in thousands):
1997 1996 1995
---- ---- ----
U.S. federal income tax at 35%.... $3,631 $(9,270) $7,018
Goodwill amortization and
impairment...................... 531 5,427 643
State and local taxes, net of
federal benefit and other....... 821 (320) 739
------ ------- ------
Total......................... $4,983 $(4,163) $8,400
====== ======= ======
The approximate tax effect of each type of temporary difference that gave
rise to the Company's deferred tax assets (liabilities) at December 31 was as
follows (in thousands):
1997 1996
---- ----
Tax LIFO reserve in excess of book
reserve........................... $ (4,366) $ (3,450)
Accrued insurance obligations....... 845 1,734
Accrued vacation pay................ 778 771
Bad debt reserve.................... 764 992
Other............................... 4,309 2,259
-------- --------
Total current deferred tax
asset........................... 2,330 2,306
-------- --------
Accrued environmental liability..... 2,156 3,215
Accrued postretirement benefits..... 1,229 1,252
Book and tax difference in fixed
asset basis....................... (20,968) (19,153)
Other............................... 3,292 1,242
-------- --------
Total noncurrent deferred tax
liability....................... (14,291) (13,444)
-------- --------
Total............................. $(11,961) $(11,138)
======== ========
10. LEASES
The Company has various operating lease commitments through 2004 relating to
warehouse and plant facilities, transportation and other equipment, and office
space. Rental expense for all operating leases was approximately $3.4 million,
$4.0 million and $3.8 million in 1997, 1996 and 1995, respectively.
21
23
EASCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
At December 31, 1997, the Company was obligated to make future minimum lease
payments on noncancellable operating leases as follows (in thousands):
1998.............................................. $2,175
1999.............................................. 1,400
2000.............................................. 489
2001.............................................. 278
2002.............................................. 253
Later years....................................... 216
------
Total minimum payments.......................... $4,811
======
11. PENSION PLANS
The Company has various noncontributory defined benefit pension plans, both
single employer and multiple employer, covering substantially all of its
employees. Plans covering salaried employees provide pension benefits that are
based on the employee's highest compensation during three consecutive years out
of five years prior to retirement. Plans covering hourly employees provide
benefits of stated amounts for each year of service. It is the Company's policy
to make annual contributions required by applicable regulations. Plan assets are
invested principally in listed bonds, equity securities, and temporary cash
investments.
Significant assumptions used in the plans' actuarial valuations were:
1997 1996 1995
---- ---- ----
Discount rate................ 7.25% 7.50% 7.25%
to 7.75%
Long-term rate of investment 8.50% 8.50% 8.50%
return..................... TO 9.50% to 9.50% to 9.50%
Salary increase rate......... 5.00% 5.00% 5.00%
Net periodic pension cost consists of the following (in thousands):
1997 1996 1995
---- ---- ----
Service cost-benefits earned during $ 1,011 $ 1,174 $ 704
the period.......................
Interest cost on projected benefit 3,192 2,977 3,116
obligation.......................
Actual return on plan assets....... (6,356) (4,626) (9,010)
Net amortization and deferral...... 2,846 2,527 6,111
------- ------- -------
Net periodic pension cost.......... $ 693 $ 2,052 $ 921
======= ======= =======
During 1997, the Company terminated a supplemental executive retirement plan
and recognized a pre-tax charge of $667,000 to record the accumulated present
value of benefits to retired executives covered by the plan. In 1996, the
Company terminated a plan related to a previously closed facility and recognized
a pre-tax charge of $1.1 million.
The funded status of such defined benefit pension plans and the amounts
recognized in the consolidated balance sheet at December 31 are as follows (in
thousands):
1997 1996
------------------------- -------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
Projected benefit
obligation......... $(41,631) $(4,985) $(5,726) $(36,468)
Fair value of plan
assets............. 42,621 2,518 9,349 30,597
-------- ------- ------- --------
Plan assets in excess
of (less than)
projected benefit
obligation......... 990 (2,467) 3,623 (5,871)
Unrecognized net
(gain) loss........ (109) 325 (166) 527
Unrecognized prior
service cost....... 513 126 429 33
Minimum liability
adjustments........ -- (419) -- (383)
-------- ------- ------- --------
Accrued pension asset
(liability)........ $ 1,394 $(2,435) $ 3,886 $ (5,694)
======== ======= ======= ========
Vested actuarial
present value of
benefit
obligations........ $(36,681) $(4,723) $(5,271) $(31,742)
======== ======= ======= ========
Accumulated benefit
obligation......... $(38,433) $(4,985) $(5,726) $(32,868)
======== ======= ======= ========
12. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides certain health care and life insurance benefits upon
retirement for substantially all salaried employees through an unfunded defined
benefit plan. The extent of benefits provided is dependent upon the retiree's
years of service, age and retirement date.
Net periodic postretirement benefits cost consists of the following (in
thousands):
1997 1996 1995
---- ---- ----
Service cost-benefits earned during the
period............................... $289 $147 $ 94
Interest cost on projected benefit
obligation........................... 402 242 249
Net amortization and deferral.......... 82 10 (9)
---- ---- ----
Total................................ $773 $399 $334
==== ==== ====
The following table sets forth the plan's accumulated postretirement benefit
obligation at December 31 (in thousands):
1997 1996
---- ----
Fully-eligible active plan participants... $ 425 $1,379
Other active participants................. 2,753 295
Retirees.................................. 2,774 1,734
------ ------
Accumulated postretirement benefit
obligation.............................. 5,952 3,408
Unrecognized net gain or (loss)........... (2,660) (277)
------ ------
Accrued postretirement benefit
liability............................... $3,292 $3,131
====== ======
22
24
Assumptions used in the plan's actuarial valuation were:
1997 1996 1994
---- ---- ----
Discount rate......................... 7.25% 7.75% 7.25%
Medical inflation rate................ 8.00% 9.00% 10.00%
The medical inflation rate is assumed to decrease 1% a year to an ultimate
rate of 5% by the year 2001. If the medical trend assumption was increased by
one percentage point, the liabilities of the plan would increase by $526,000 and
the expense for 1997 would increase by $74,000.
13. CONTINGENCIES
Litigation
Lawsuits and claims are filed from time to time against the Company in the
ordinary course of business. Management of the Company, after reviewing
developments to date with legal counsel, is of the opinion that the outcome of
such matters will not have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
Environmental Remediation
The Company is subject to a wide variety of environmental laws which
continue to be adopted and amended. While the ultimate extent of the Company's
liability for pending or potential fines, penalties, remedial costs, claims and
litigation relating to environmental laws and health and safety matters and
future capital expenditures that may be associated with environmental laws
cannot be determined at this time, management, with the assistance of outside
environmental consultants, continually assesses the Company's environmental
contingencies. After an extensive review of each operating facility and all
known environmental exposures by management and outside environmental
consultants during 1997, the Company reduced the recorded environmental reserve
by $2.3 million to reflect the Company's best estimate of costs of remedial
action as well as any related legal and consulting work. As of December 31, 1997
and 1996, respectively, the Company's environmental reserves totaled $6.3
million and $9.3 million.
14. RELATED PARTY TRANSACTIONS
The Company has entered into a Services Agreement with American Industrial
Partners Management Company, Inc. ("AIPM"), an affiliate of the Company, whereby
AIPM is to provide general management, financial, and other advisory services to
the Company. In return, the Company has paid AIPM $900,000 per year for 1997,
1996 and 1995 and it has agreed to pay $900,000 per year through 2000. This
agreement provides for future reductions in fees to recognize the reduced level
of management services that AIPM would provide if American Industrial Partners
Capital Fund, L.P.'s ownership interest in the Company is reduced significantly.
Fees paid to AIPM in connection with the Dolton Acquisition in 1995 totaled
$490,000.
15. SUBSEQUENT EVENT
In January 1998, the company sold its vinyl extrusion operations for cash
consideration of $13.3 million and assumption of outstanding liabilities. As of
December 31, 1997, the balance sheet includes net assets related to the vinyl
operations of $9.9 million. The net sales of the vinyl operation for the year
ended December 31, 1997 were $15.7 million.
23
25
BOARD OF DIRECTORS
XXXXXX XXXXX*
Chairman of the Board and
Member, Audit Committee
Former Chairman and Chief Executive
Officer, Xxxxxx Industries
XXXXXX X. XXXXX*
Chairman, Compensation Committee
XXXX X. XXXXXX
Chairman, Audit Committee
Senior Vice President-Finance
The Timken Company
XXXXXXXX X. XXXXXX*
Member, Audit Committee
Former Chairman, President and Chief
Executive Officer, NL Industries, Inc.
XXXXXXX X. XXXX
Former President and Chief
Operating Officer, Cincinnati
Milacron, Inc.
XXXXXX X. XXXXX, XX.
Member, Audit Committee
XXXXXXXX X. XXXX, XX.*
Member, Compensation Committee
XXXXXX X. XXXXX, XX.
President and Chief
Executive Officer
*Messrs. Cizik, Klein, Rogers, and Xxxx are general partners, limited partners
or employees of American Industrial Partners Capital Fund, L.P. or an affiliate.
EXECUTIVE
OFFICERS
XXXXXX X. XXXXX, XX.
President and Chief
Executive Officer
XXXXX X. XXXXX
Executive Vice President and
Chief Financial Officer,
Secretary and Treasurer
XXXXXX X. XXXXX
Vice President, Sales
and Marketing
XXXXX X. XXXXXXXXX
Vice President, Operations
XXXXXXXX X. XXX
Vice President, Raw Materials
XXXXXX X. XXXXXX
Vice President, Human Resources
24
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STOCKHOLDER INFORMATION
ANNUAL MEETING
The Annual Meeting of Stockholders of Easco, Inc. will be held at the Hilton
Garden Inn, 000 Xxxxxxxx Xx., Xxxxx Xxxxxxx, XX beginning at 10:00 a.m., local
time, on Friday, May 8, 1998.
STOCK EXCHANGE LISTING
Easco, Inc. common stock is listed on the Nasdaq National Market under the
symbol "ESCO." The common stock commenced trading on April 13, 1995.
The following table sets forth, for the calendar quarters indicated, the
reported high and low closing prices for the Company's common stock:
1997 1996
---------- ----------
HIGH LOW HIGH LOW
---- --- ---- ---
First Quarter........ $ 9 7/8 $6 7/8 $9 3/8 $7 1/4
Second Quarter....... 10 1/8 7 1/4 9 3/8 7 5/8
Third Quarter........ 13 1/2 9 1/2 8 3/8 4 3/4
Fourth Quarter....... 13 5/8 11 5/16 7 3/4 4 1/2
Beginning in the third quarter of 1995, Easco, Inc. has paid regular quarterly
dividends on the common stock of $0.01 per share. As of February 15, 1998 there
were 102 holders of record of the Company's common stock.
TRANSFER AGENT AND REGISTRAR
For inquiries related to share certificates, changes of address or other general
correspondence concerning stockholder accounts, please contact:
ChaseMellon Shareholder Services LLC
Overpeck Centre
00 Xxxxxxxxxx Xx.
Xxxxxxxxxx Xxxx, XX 00000
or you may telephone for assistance:
(000) 000-0000
Website xxx.xxxxxxxxxxx.xxx
INVESTOR RELATIONS
Securities analysts, investors, and others seeking information on the Company
should contact:
Xxxxxx X. Xxxx
Manager, Investor Relations
Easco, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Phone: (000) 000-0000, Ext. 244
Fax: (000) 000-0000
COMPANY WEBSITE
Investor information, press releases, product information and media news items
on the Company can be found on our website at xxx.xxxxxxxxxxxxx.xxx
FORM 10-K
Stockholders may obtain a copy of the annual report on Form 10-K as filed with
the Securities and Exchange Commission (excluding Exhibits) free of charge, upon
written request to the Investor Relations Department at the Headquarters
address.
INDEPENDENT AUDITORS
Deloitte & Touche LLP
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
HEADQUARTERS
Easco, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
ALUMINUM EXTRUSION FACILITIES
Berlin, Connecticut
Burlington, North Carolina
Dolton, Illinois
Elkhart, Indiana
Fostoria, Ohio
Girard, Ohio
Kokomo, Indiana
Niles, Ohio
Xxxxxx, North Carolina
CASTING FACILITIES
Ahoskie, North Carolina
Dolton, Illinois
Niles, Ohio
DEPOTS
Burlington, North Carolina
Dolton, Illinois
Berlin, Connecticut
25
