UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
¨ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2012
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 333-114924
Norcraft Companies, L.P.
(Exact name of registrant as specified in its certificate of limited partnership)
Delaware | 36-4231718 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
3020 Denmark Avenue, Suite 100
Eagan, MN 55121
(Address of Principal Executive Offices)
(800) 297-0661
(Registrants Telephone Number, Including Area Code)
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.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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, accelerated filer, non-accelerated filer or smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ | |||
Non-Accelerated Filer | x | Smaller Reporting Company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x.
Table of Contents
Item 1. |
Consolidated Balance Sheets
(dollar amounts in thousands)
March 31, 2012 (unaudited) |
December 31, 2011 |
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ASSETS |
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Current assets: |
||||||||
Cash and cash equivalents |
$ | 28,730 | $ | 24,185 | ||||
Trade accounts receivable, net |
22,867 | 20,092 | ||||||
Inventories |
19,096 | 17,503 | ||||||
Prepaid and other current assets |
1,567 | 1,835 | ||||||
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|
|
|
|||||
Total current assets |
72,260 | 63,615 | ||||||
Property, plant and equipment, net |
26,885 | 27,434 | ||||||
Other assets: |
||||||||
Goodwill |
88,485 | 88,479 | ||||||
Intangible assets, net |
75,835 | 77,732 | ||||||
Display cabinets, net |
5,959 | 5,842 | ||||||
Other |
490 | 568 | ||||||
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|
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|
|||||
Total other assets |
170,769 | 172,621 | ||||||
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Total assets |
$ | 269,914 | $ | 263,670 | ||||
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LIABILITIES AND MEMBERS EQUITY |
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Current liabilities: |
||||||||
Accounts payable |
$ | 9,357 | $ | 6,566 | ||||
Accrued expenses |
19,495 | 13,775 | ||||||
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|
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Total current liabilities |
28,852 | 20,341 | ||||||
Long-term debt |
240,000 | 240,000 | ||||||
Unamortized premium on bonds payable |
156 | 166 | ||||||
Other liabilities |
108 | 108 | ||||||
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Total liabilities |
269,116 | 260,615 | ||||||
Commitments and contingencies |
| | ||||||
Members equity (deficit) |
(834 | ) | 1,646 | |||||
Accumulated other comprehensive income |
1,632 | 1,409 | ||||||
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Total members equity |
798 | 3,055 | ||||||
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Total liabilities and members equity |
$ | 269,914 | $ | 263,670 | ||||
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See notes to consolidated financial statements.
3
Consolidated Statements of Operations and Comprehensive Loss
(dollar amounts in thousands)
(unaudited)
Three Months
Ended March 31, |
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2012 | 2011 | |||||||
Net sales |
$ | 67,862 | $ | 64,188 | ||||
Cost of sales |
49,942 | 47,585 | ||||||
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Gross profit |
17,920 | 16,603 | ||||||
Selling, general and administrative expenses |
13,179 | 12,360 | ||||||
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Income from operations |
4,741 | 4,243 | ||||||
Other expense: |
||||||||
Interest expense, net |
6,450 | 5,027 | ||||||
Amortization of deferred financing costs |
780 | 370 | ||||||
Other, net |
27 | 24 | ||||||
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Total other expense |
7,257 | 5,421 | ||||||
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Net loss |
(2,516 | ) | (1,178 | ) | ||||
Other comprehensive income: |
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Foreign currency translation adjustment |
223 | 262 | ||||||
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Total other comprehensive income |
223 | 262 | ||||||
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Comprehensive loss |
$ | (2,293 | ) | $ | (916 | ) | ||
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See notes to consolidated financial statements.
4
Consolidated Statement of Changes in Members Equity
(dollar amounts in thousands)
(unaudited)
Members Equity (Deficit) |
Accumulated Other Comprehensive Income |
Total Members Equity |
||||||||||
Members equity at January 1, 2012 |
$ | 1,646 | $ | 1,409 | $ | 3,055 | ||||||
Stock compensation expense |
46 | 46 | ||||||||||
Distributions to member |
(10 | ) | (10 | ) | ||||||||
Foreign currency translation adjustment |
223 | 223 | ||||||||||
Net loss |
(2,516 | ) | (2,516 | ) | ||||||||
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Members equity (deficit) at March 31, 2012 |
$ | (834 | ) | $ | 1,632 | $ | 798 | |||||
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See notes to consolidated financial statements.
5
Consolidated Statement of Cash Flows
(dollar amounts in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2012 | 2011 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (2,516 | ) | $ | (1,178 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization of property and equipment |
1,157 | 1,286 | ||||||
Amortization: |
||||||||
Customer relationships |
1,117 | 1,117 | ||||||
Deferred financing costs |
780 | 370 | ||||||
Display cabinets |
1,019 | 948 | ||||||
Discount amortization/accreted interest |
(10 | ) | 122 | |||||
Provision for uncollectible accounts receivable |
(14 | ) | 11 | |||||
Provision for obsolete and excess inventories |
69 | (96 | ) | |||||
Provision for warranty claims |
757 | 666 | ||||||
Stock compensation expense |
46 | 45 | ||||||
Gain on disposal of assets |
(1 | ) | | |||||
Change in operating assets and liabilities: |
||||||||
Trade accounts receivable |
(2,678 | ) | (3,980 | ) | ||||
Inventories |
(1,625 | ) | (2,073 | ) | ||||
Prepaid expenses |
269 | 57 | ||||||
Other assets |
78 | 77 | ||||||
Accounts payable and accrued expenses |
7,719 | 3,211 | ||||||
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|
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Net cash provided by operating activities |
6,167 | 583 | ||||||
Cash flows from investing activities: |
||||||||
Proceeds from sale of property and equipment |
2 | 4 | ||||||
Purchase of property, plant and equipment |
(484 | ) | (755 | ) | ||||
Additions to display cabinets |
(1,136 | ) | (1,289 | ) | ||||
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Net cash used in investing activities |
(1,618 | ) | (2,040 | ) | ||||
Cash flows from financing activities: |
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Distributions to member |
(10 | ) | (2,618 | ) | ||||
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Net cash used in financing activities |
(10 | ) | (2,618 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
6 | (38 | ) | |||||
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Net increase (decrease) in cash and cash equivalents |
4,545 | (4,113 | ) | |||||
Cash and cash equivalents, beginning of the period |
24,185 | 28,657 | ||||||
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Cash and cash equivalents, end of period |
$ | 28,730 | $ | 24,544 | ||||
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See notes to consolidated financial statements.
6
Notes to Consolidated Financial Statements
(in thousands)
(unaudited)
1. | Basis of Presentation |
The accompanying financial statements are those of Norcraft Companies, L.P. (Norcraft). Norcraft and its subsidiaries are collectively referred to as the Company. Norcraft Holdings, L.P (Holdings) is the parent company of Norcraft.
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the interim consolidated financial statements and accompanying notes included herein should be read in conjunction with the more detailed information contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission. The unaudited interim consolidated financial statements as of March 31, 2012 and 2011 and for the three months ended March 31, 2012 and 2011 include all normal recurring adjustments which management considers necessary for the fair presentation of financial position, results of operations and cash flows for the interim periods.
2. | Trade Accounts Receivable |
Trade accounts receivable consists of the following:
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Trade accounts receivable |
$ | 23,610 | $ | 20,949 | ||||
Less: allowance for uncollectible accounts |
(743 | ) | (857 | ) | ||||
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Trade accounts receivable, net |
$ | 22,867 | $ | 20,092 | ||||
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3. | Inventories |
Inventories consist of the following:
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Raw materials and supplies |
$ | 11,963 | $ | 11,999 | ||||
Work in process |
2,214 | 2,110 | ||||||
Finished goods |
4,919 | 3,394 | ||||||
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$ | 19,096 | $ | 17,503 | |||||
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4. | Intangible Assets |
Intangible assets consist of the following:
March 31, 2012 | ||||||||||||||||
Subject to Amortization | ||||||||||||||||
Not Subject to Amortization |
Gross Carrying Amount |
Accumulated Amortization |
Total | |||||||||||||
Goodwill |
$ | 88,485 | $ | 88,485 | ||||||||||||
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Brand names |
$ | 35,100 | $ | 35,100 | ||||||||||||
Customer relationships |
$ | 67,000 | $ | (37,719 | ) | 29,281 | ||||||||||
Deferred financing costs |
16,120 | (4,666 | ) | 11,454 | ||||||||||||
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$ | 35,100 | $ | 83,120 | $ | (42,385 | ) | $ | 75,835 | ||||||||
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7
December 31, 2011 | ||||||||||||||||
Subject to Amortization | ||||||||||||||||
Not Subject to Amortization |
Gross
Carrying Amount |
Accumulated Amortization |
Total | |||||||||||||
Goodwill |
$ | 88,479 | $ | 88,479 | ||||||||||||
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Brand names |
$ | 35,100 | $ | 35,100 | ||||||||||||
Customer relationships |
$ | 67,000 | $ | (36,602 | ) | 30,398 | ||||||||||
Deferred financing costs |
16,120 | (3,886 | ) | 12,234 | ||||||||||||
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$ | 35,100 | $ | 83,120 | $ | (40,488 | ) | $ | 77,732 | ||||||||
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There were no events or circumstances during the three months ended March 31, 2012 to indicate that the assets not subject to amortization should be evaluated for potential impairment.
5. | Accrued Expenses |
Accrued expenses consist of the following:
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Interest |
$ | 7,476 | $ | 1,179 | ||||
Salaries, wages and employee benefits |
5,032 | 5,750 | ||||||
Commissions, rebates and marketing programs |
2,437 | 2,496 | ||||||
Workers compensation |
1,415 | 1,567 | ||||||
Other, including product warranty accruals |
3,135 | 2,783 | ||||||
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$ | 19,495 | $ | 13,775 | |||||
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Product warranty accrual activity is as follows:
March 31, | March 31, | |||||||
2012 | 2011 | |||||||
Beginning balance December 31 |
$ | 732 | $ | 781 | ||||
Accruals for warranties |
757 | 666 | ||||||
Claims paid |
(734 | ) | (702 | ) | ||||
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Ending balance March 31 |
$ | 755 | $ | 745 | ||||
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6. | Stock-Based Compensation |
The Company has a management incentive plan, (the Plan) which provides for the grants of incentive Class D limited partnership units in Holdings to selected employees of the Company.
Under the terms of the Plan, the Class D units vest with time-based vesting over a three year period. Upon vesting, each Class D unit entitles the unit holder the option to purchase one Class A unit in Holdings. All Class D units are issued with an exercise price equal to the then fair value of Holdings Class A units as determined by the Company.
The fair value of the Class D units granted is based on the Black-Scholes option-pricing model. In accordance with Accounting Standards Codification (ASC) Topic 718, the Company is required to incorporate a volatility factor in the fair value calculation. The volatility factor is developed through the use of a sample of peer group companies consisting of publicly-traded companies that operate in the Companys same industry. The Company did not grant any incentive Class D units during the three months ended March 31, 2012.
Compensation expense related to Class D units was $0.05 million for the three months ended March 31, 2011 and 2012. Because individuals receiving these Class D unit awards are employees of Norcraft, the compensation expense is recorded at the Norcraft level.
8
A summary of Class D Unit activity under the Plan is as follows:
Three Months Ended March 31, 2012 |
||||||||
Units | Weighted- Average Exercise Price |
|||||||
Beginning balance |
6,886,577 | $ | 0.26 | |||||
Granted |
| |||||||
Forfeited/expired |
| |||||||
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Ending balance |
6,886,577 | $ | 0.26 | |||||
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Exercisable balance |
5,533,699 | $ | 0.24 | |||||
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The intrinsic values of the issued Class D units and exercisable Class D units at March 31, 2012 were $1.0 million and $0.9 million, respectively.
The Plan will terminate in December 2015.
7. | Long-term Debt |
Long-term debt consists of the following:
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Senior secured second lien notes payable (due in 2015 with semi-annual interest payments at 10.5%) |
$ | 240,000 | $ | 240,000 | ||||
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Long term debt |
$ | 240,000 | $ | 240,000 | ||||
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ABL Facility
In December 2009, in connection with the issuance of the senior secured second lien notes, Norcraft entered into a senior secured first-lien asset-based revolving credit facility (the ABL Facility) pursuant to a credit agreement dated as of December 9, 2009 (the ABL Credit Agreement) by and among Norcraft, as borrower, Norcraft Intermediate Holdings, L.P. and other guarantors party thereto, as guarantors, the lenders party thereto and UBS Securities LLC, as arranger, bookmanager, documentation agent and syndication agent, and UBS AG, Stamford Branch, as issuing bank, administrative agent and collateral agent and UBS Loan Finance LLC, as swingline lender. The ABL Facility provides for aggregate commitments of up to $25.0 million, including a letter of credit sub-facility and a swingline loan sub-facility, subject to a borrowing base, and has a maturity date of December 9, 2013. As of March 31, 2012, the borrowing base was approximately $19.1 million.
In May 2011, the ABL Credit Agreement was modified and now has a maturity of September 2015.
The ABL Credit Agreement contains negative covenants that restrict or limit the ability of Norcraft Intermediate Holdings, L.P., which is the immediate parent of Norcraft, and its subsidiaries from, among other things, (1) selling assets, (2) altering the business that Norcraft currently conducts, (3) engaging in mergers, acquisitions and other business combinations, (4) declaring dividends or redeeming or repurchasing the Companys equity interests, (5) incurring additional debt or guarantees, (6) making loans and investments, (7) incurring liens, (8) entering into transactions with affiliates, (9) engaging in sale and leaseback transactions and (10) prepaying the senior secured second lien notes, the senior discount notes and any subordinated debt. As of March 31, 2012, the Company was in compliance with these provisions.
9
Indebtedness under the ABL Facility is guaranteed, on a joint and several basis, by Norcraft Intermediate Holdings, L.P.(the immediate parent of Norcraft), Norcraft Finance Corp. (a subsidiary of Norcraft), Norcraft Canada Corporation (a subsidiary of Norcraft) and all of Norcrafts current and future subsidiaries, subject to exceptions for foreign subsidiaries to the extent of adverse tax consequences, and is secured by a first priority security interest in substantially all of Norcrafts and the guarantors existing and future property and assets, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, owned real property, cash and proceeds of the foregoing.
As of March 31, 2012, there were no borrowings outstanding, approximately $4.5 million of a letter of credit outstanding and unused commitments of $14.6 million under the ABL Facility.
The Company has no unused letters of credit.
Senior Secured Second Lien Notes
In December 2009, Norcraft and Norcraft Finance Corp., a 100% owned finance subsidiary of Norcraft, issued, on a joint and several basis, $180.0 million aggregate principal amount of 10 1/2% senior secured second lien notes (the senior secured second lien notes). Interest accrues on the senior secured second lien notes and is payable semiannually on June 15 and December 15 of each year at a rate of 10 1/2% per annum, which commenced on June 15, 2010. Proceeds from the issuance of the senior secured second lien notes were used to redeem the 9% senior subordinated notes due 2011 and to make a distribution to Holdings to allow Holdings to repurchase a portion of its 9 3/4% senior discount notes due 2012.
In May 2011, Norcraft and Norcraft Finance Corp. issued, on a joint and several basis, an additional $60.0 million aggregate principal amount of these senior secured second lien notes at a 1.04 premium, for total gross proceeds of $62.4 million. Proceeds from this issuance of the senior secured second lien notes were used to make a distribution to Holdings to allow Holdings to retire the remainder of its 9 3/4% senior discount notes due 2012 and pay related transaction and financing costs.
At any time before December 15, 2012, Norcraft may redeem up to 35% of the aggregate principal amount of the senior secured second lien notes issued under the indenture with the proceeds of qualified equity offerings at a redemption price equal to 110.5% of the principal amount, plus accrued interest.
Prior to December 15, 2012, Norcraft may redeem the senior secured second lien notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium plus accrued interest.
Norcraft may redeem the senior secured second lien notes, in whole or in part, at any time on or after December 15, 2012, at a redemption price equal to 100% of the principal amount of the senior secured second lien notes plus a premium declining ratably to par plus accrued interest.
If Norcraft experiences a change of control, Norcraft may be required to offer to purchase the senior secured second lien notes at a purchase price equal to 101% of the principal amount, plus accrued interest.
Additionally, the terms of the indenture governing the senior secured second lien notes limit Norcrafts ability to, among other things, incur additional indebtedness, dispose of assets, make acquisitions, make other investments, pay dividends and make various other payments. The terms also include cross-default provisions. As of March 31, 2012, Norcraft was in compliance with these provisions.
10
The following represents certain condensed consolidating financial information as of March 31, 2012 and December 31, 2011 and for the periods ended March 31, 2012 and 2011 for Norcraft as co-issuer and for Norcraft Finance Corp. as co-issuer and Norcraft Canada Corporation, both wholly-owned subsidiaries of Norcraft, which fully and unconditionally guarantees the senior secured second lien notes.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2012 (unaudited)
Norcraft Companies, L.P. (1) |
Norcraft Finance Corp. (1) |
Norcraft Canada |
Eliminations | Consolidated Norcraft Companies, L.P. |
||||||||||||||||
Current assets |
$ | 66,063 | $ | | $ | 6,197 | $ | | $ | 72,260 | ||||||||||
Property, plant & equipment, net |
20,760 | | 6,125 | | 26,885 | |||||||||||||||
Investments in subsidiary |
(991 | ) | | | 991 | | ||||||||||||||
Other assets |
182,202 | | 299 | (11,732 | ) | 170,769 | ||||||||||||||
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|
|||||||||||
Total assets |
$ | 268,034 | $ | | $ | 12,621 | $ | (10,741 | ) | $ | 269,914 | |||||||||
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|
|||||||||||
Current liabilities |
$ | 26,972 | $ | | $ | 1,880 | $ | | $ | 28,852 | ||||||||||
Long-term debt |
240,000 | | 11,732 | (11,732 | ) | 240,000 | ||||||||||||||
Unamortized premium on bonds payable |
156 | | | | 156 | |||||||||||||||
Other liabilities |
108 | | | | 108 | |||||||||||||||
Members equity (deficit) |
798 | | (991 | ) | 991 | 798 | ||||||||||||||
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|
|||||||||||
Total liabilities & members equity (deficit) |
$ | 268,034 | $ | | $ | 12,621 | $ | (10,741 | ) | $ | 269,914 | |||||||||
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As of December 31, 2011
Norcraft Companies, L.P. (1) |
Norcraft Finance Corp. (1) |
Norcraft Canada |
Eliminations | Consolidated Norcraft Companies, L.P. |
||||||||||||||||
Current assets |
$ | 57,816 | $ | | $ | 5,799 | $ | | $ | 63,615 | ||||||||||
Property, plant & equipment, net |
21,312 | | 6,122 | | 27,434 | |||||||||||||||
Investments in subsidiary |
(928 | ) | | | 928 | | ||||||||||||||
Other assets |
183,768 | | 293 | (11,440 | ) | 172,621 | ||||||||||||||
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|
|||||||||||
Total assets |
$ | 261,968 | $ | | $ | 12,214 | $ | (10,512 | ) | $ | 263,670 | |||||||||
|
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|
|
|
|
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|
|||||||||||
Current liabilities |
$ | 18,639 | $ | | $ | 1,702 | $ | | $ | 20,341 | ||||||||||
Long-term debt |
240,000 | | 11,440 | (11,440 | ) | 240,000 | ||||||||||||||
Unamortized premium on bonds payable |
166 | | | | 166 | |||||||||||||||
Other liabilities |
108 | | | | 108 | |||||||||||||||
Members equity (deficit) |
3,055 | | (928 | ) | 928 | 3,055 | ||||||||||||||
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|
|||||||||||
Total liabilities & members equity (deficit) |
$ | 261,968 | $ | | $ | 12,214 | $ | (10,512 | ) | $ | 263,670 | |||||||||
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(1) | Co-issuers |
11
CONDENSED CONSOLIDATED OPERATIONS STATEMENTS
For the Three Months Ended March 31, 2012 (unaudited)
Norcraft Companies, L.P. (1) |
Norcraft Finance Corp. (1) |
Norcraft Canada |
Eliminations | Consolidated Norcraft Companies, L.P. |
||||||||||||||||
Net sales |
$ | 63,030 | $ | | $ | 5,937 | $ | (1,105 | ) | $ | 67,862 | |||||||||
Cost of sales |
45,843 | | 5,204 | (1,105 | ) | 49,942 | ||||||||||||||
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|||||||||||
Gross profit |
17,187 | | 733 | | 17,920 | |||||||||||||||
Equity in earnings (losses) of subsidiary |
(286 | ) | | | 286 | | ||||||||||||||
Selling, general and administrative expenses |
12,183 | | 996 | | 13,179 | |||||||||||||||
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|||||||||||
Income (loss) from operations |
4,718 | | (263 | ) | 286 | 4,741 | ||||||||||||||
Other expense: |
||||||||||||||||||||
Interest expense, net |
6,430 | | 20 | | 6,450 | |||||||||||||||
Amortization of deferred financing costs |
780 | | | | 780 | |||||||||||||||
Other, net |
24 | | 3 | | 27 | |||||||||||||||
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Total other expense |
7,234 | | 23 | | 7,257 | |||||||||||||||
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Net income (loss) |
$ | (2,516 | ) | $ | | $ | (286 | ) | $ | 286 | $ | (2,516 | ) | |||||||
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For the Three Months Ended March 31, 2011 (unaudited)
Norcraft Companies, L.P. (1) |
Norcraft Finance Corp. (1) |
Norcraft Canada |
Eliminations | Consolidated Norcraft Companies, L.P. |
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Net sales |
$ | 60,497 | $ | | $ | 4,449 | $ | (758 | ) | $ | 64,188 | |||||||||
Cost of sales |
44,300 | | 4,043 | (758 | ) | 47,585 | ||||||||||||||
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Gross profit |
16,197 | | 406 | | 16,603 | |||||||||||||||
Equity in earnings (losses) of subsidiary |
(433 | ) | | | 433 | | ||||||||||||||
Selling, general and administrative expenses |
11,530 | | 830 | | 12,360 | |||||||||||||||
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Income (loss) from operations |
4,234 | | (424 | ) | 433 | 4,243 | ||||||||||||||
Other expense: |
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Interest expense, net |
5,018 | | 9 | | 5,027 | |||||||||||||||
Amortization of deferred financing costs |
370 | | | | 370 | |||||||||||||||
Other, net |
24 | | | | 24 | |||||||||||||||
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Total other expense |
5,412 | | 9 | | 5,421 | |||||||||||||||
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|
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Net income (loss) |
$ | (1,178 | ) | $ | | $ | (433 | ) | $ | 433 | $ | (1,178 | ) | |||||||
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(1) | Co-issuers |
12
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2012 (unaudited)
Norcraft Companies, L.P. (1) |
Norcraft Finance Corp. (1) |
Norcraft Canada |
Eliminations | Consolidated Norcraft Companies, L.P. |
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Cash flows provided by (used in) operating activities |
$ | 5,742 | $ | | $ | 425 | $ | | $ | 6,167 | ||||||||||
Cash flows provided by (used in) investing activities |
(1,795 | ) | | (115 | ) | 292 | (1,618 | ) | ||||||||||||
Cash flows provided by (used in) financing activities |
(10 | ) | | 292 | (292 | ) | (10 | ) | ||||||||||||
Effect of exchange rates on cash and cash equivalents |
| | 6 | | 6 | |||||||||||||||
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Net increase (decrease) in cash and cash equivalents |
3,937 | | 608 | | 4,545 | |||||||||||||||
Cash and cash equivalents, beginning of period |
24,305 | | (120 | ) | | 24,185 | ||||||||||||||
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Cash and cash equivalents, end of period |
$ | 28,242 | $ | | $ | 488 | $ | | $ | 28,730 | ||||||||||
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|
|
For the Three Months Ended March 31, 2011 (unaudited)
Norcraft Companies, L.P. (1) |
Norcraft Finance Corp. (1) |
Norcraft Canada |
Eliminations | Consolidated Norcraft Companies, L.P. |
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Cash flows provided by (used in) operating activities |
$ | 585 | $ | | $ | (2 | ) | $ | | $ | 583 | |||||||||
Cash flows provided by (used in) investing activities |
(2,242 | ) | | (158 | ) | 360 | (2,040 | ) | ||||||||||||
Cash flows provided by (used in) financing activities |
(2,618 | ) | | 360 | (360 | ) | (2,618 | ) | ||||||||||||
Effect of exchange rates on cash and cash equivalents |
| | (38 | ) | | (38 | ) | |||||||||||||
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|
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Net increase (decrease) in cash and cash equivalents |
(4,275 | ) | | 162 | | (4,113 | ) | |||||||||||||
Cash and cash equivalents, beginning of period |
28,705 | | (48 | ) | | 28,657 | ||||||||||||||
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Cash and cash equivalents, end of period |
$ | 24,430 | $ | | $ | 114 | $ | | $ | 24,544 | ||||||||||
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(1) | Co-issuers |
We anticipate that the funds generated by operations and current available cash balances will be sufficient to meet working capital requirements, make required member tax distributions and to finance capital expenditures over the next 12 to 18 months. There can be no assurance, however, that our business will generate sufficient cash flow from operations, that anticipated net sales growth and operating improvements will be realized or that future equity or debt financing will be sufficient to enable us to service our indebtedness or to fund our other liquidity needs.
13
8. | Recently Issued Accounting Pronouncements |
In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and International Financial Reporting Standards (IFRS), which amends ASC 820, Fair Value Measurement. This ASU modifies the existing standard to include disclosure of all transfers between Level 1 and Level 2 asset and liability fair value categories. In addition, the ASU provides guidance on measuring the fair value of financial instruments managed within a portfolio and the application of premiums and discounts on fair value measurements. The ASU requires additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. This guidance is effective for interim and annual reporting periods beginning after December 15, 2011, with early adoption prohibited. The Company adopted ASU 2011-04 and it did not have a material impact on the Companys consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. This standard eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Under this new ASU, an entity can elect to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. This guidance is effective for publicly traded companies as of the beginning of a fiscal year that begins after December 15, 2011 and interim and annual periods thereafter. Early adoption is permitted, but full retrospective application is required. The Company adopted ASU 2011-05 and it did not have a material impact on the Companys consolidated financial statements except the addition of the section of Comprehensive Loss to the Statements of Operations.
In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under ASU 2011-08, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU 2011-08 is effective for annual periods beginning after December 15, 2011. The Company adopted ASU 2011-08 and it did not have a material impact on the Companys consolidated financial statements.
In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2011-12 defers changes in Update 2011-05 that relate to the presentation of reclassification adjustments. ASU 2011-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company adopted ASU 2011-12 and it did not have a material impact on the Companys consolidated financial statements.
14
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Uncertainty of Forward Looking Statements and Information
This report contains forward looking statements. All statements other than statements of historical facts included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements. Forward looking statements give our current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of our company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as anticipate, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.
These forward looking statements are based on our expectations and beliefs concerning future events affecting us. They are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe that the expectations reflected in our forward looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.
Because of these factors, we caution that investors should not place undue reliance on any of our forward looking statements. Further, any forward looking statement speaks only as of the date on which it is made and except as required by law we undertake no obligation to update any forward looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
Overview
The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the accompanying notes included elsewhere in this quarterly report. Additionally, the following discussion should be read together with the Selected Financial Data and our consolidated financial statements and the accompanying notes included in our 2011 Annual Report on Form 10-K. All of our operations are conducted through Norcraft Companies, L.P. (Norcraft) and its subsidiaries. Norcraft is an indirect wholly-owned subsidiary of Norcraft Holdings, L.P. (Holdings). The words Company, we, us and our refer to Norcraft and its subsidiaries.
We are a leader in manufacturing, assembling and finishing kitchen and bathroom cabinetry in the U.S. and parts of Canada. We provide our customers with a single source for a broad range of high-quality cabinetry, including stock, semi-custom and custom cabinets manufactured in both framed and frameless, or full access construction. We market our products through six main brands: Mid Continent Cabinetry®, Norcraft Cabinetry®, UltraCraft®, StarMark Cabinetry®, Fieldstone Cabinetry® and Brookwood®. With the exception of Norcraft Cabinetry, each of these brands represents a distinct line of cabinetry and has been in operation for over 25 years, with Mid Continent, our original brand, having been established in 1966. In 2008, our Winnipeg, Canada facility completed the transition to the production of cabinets for sale into the Canadian market under the Norcraft Canada brand. We believe each brand is well recognized and highly respected throughout the industry for its attractive style, flexibility, quality and value.
During the three months ended March 31, 2012, we experienced some growth in sales, but we anticipate the balance of 2012 will be very challenging in the highly competitive cabinet industry where consumers are continuing to be cautious about big-ticket purchases. Margins continue to be impacted by various promotional sales programs intended to generate sales.
15
Results of Operations
The following table outlines for the periods indicated, selected operating data as a percentage of net sales.
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
Net sales |
100.0 | % | 100.0 | % | ||||
Cost of sales |
73.6 | % | 74.1 | % | ||||
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Gross profit |
26.4 | % | 25.9 | % | ||||
Selling, general and administrative expenses |
19.4 | % | 19.3 | % | ||||
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Income from operations |
7.0 | % | 6.6 | % | ||||
Interest expense, net |
9.5 | % | 7.8 | % | ||||
Amortization of deferred financing costs |
1.2 | % | 0.6 | % | ||||
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Net loss |
(3.7 | %) | (1.8 | %) | ||||
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Three Months Ended March 31, 2012 Compared with Three Months Ended March 31, 2011
Net Sales. Net sales increased by $3.7 million, or 5.7%, from $64.2 million for the three months ended March 31, 2011 to $67.9 million for the same period of 2012. Over one-third of the growth was attributable to the Mid Continent division, over one-third to the UltraCraft division and nearly one-third to the Winnipeg, Canada facility while there was a smaller decrease in net sales in the StarMark division. The overall increase in sales was generally driven by an increase in the Companys market share. Net sales to our largest customer were lower during the quarter ended March 31, 2012 as compared to the quarter ended March 31, 2011.
Cost of Sales. Cost of sales increased by $2.4 million, or 5.0%, from $47.6 million for the three months ended March 31, 2011 to $50.0 million for same period of 2012. The increase was primarily attributable to the increased sales volume for the three months ended March 31, 2012. Cost of sales as a percentage of net sales decreased from 74.1% for the three months ended March 31, 2011 to 73.6% for the same period of 2012.
Gross Profit. Gross profit increased by $1.3 million, or 7.9%, from $16.6 million for the three months ended March 31, 2011 to $17.9 million for the same period of 2012. The increase in gross profit was due to the increase in net sales described above. Gross profit as a percentage of net sales increased from 25.9% for the three months ended March 31, 2011 to 26.4% for the same period of 2012.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $0.8 million, or 6.6%, from $12.4 million for the three months ended March 31, 2011 to $13.2 million for the same period of 2012. Selling, general and administrative expenses were greater than the prior-year period because of increased sales and marketing expense to generate new customers, market our new products and support our increased sales volume. Selling, general and administrative expenses as a percentage of net sales increased from 19.3% for the three months ended March 31, 2011 to 19.4% for the same period of 2012.
Income from Operations. Income from operations increased by $0.5 million, or 11.7%, from $4.2 million for the three months ended March 31, 2011 compared to $4.7 million for the same period of 2012. The increase in income from operations was a result of the factors described above. Income from operations as a percentage of net sales increased from 6.6% for the three months ended March 31, 2011 to 7.0% for the same period of 2012.
Interest, Amortization of Deferred Financing Fees and Other Expenses. Interest, amortization of deferred financing fees and other expenses increased by $1.8 million, or 33.9%, from $5.4 million for the three months ended March 31, 2011 to $7.2 million for the same period of 2012. Interest expense increased $1.5 million mainly due to new debt financing. Interest, amortization of deferred financing fees and other expenses as a percentage of net sales increased from 8.4% for the three months ended March 31, 2011 to 10.7% for the same period of 2012.
Net Loss. Net loss increased by $1.3 million from $1.2 million for the three months ended March 31, 2011 compared to $2.5 million for the same period of 2012, for the reasons described above. Net loss as a percentage of net sales decreased from (1.8%) for the three months ended March 31, 2011 to (3.7%) for the same period of 2012.
16
Liquidity and Capital Resources
Cash Flows
Our primary cash needs are working capital, capital expenditures, display cabinets, members tax distributions and debt service. We finance these cash requirements through internally-generated cash flow and, if necessary, funds borrowed under credit facilities.
Cash provided by operating activities was $6.2 million for the three months ended March 31, 2012, compared with $0.6 million for the same period of 2011, an increase in cash provided of $5.6 million. The increase was primarily due to a change in operating liabilities of $4.5 million and a change in operating assets of $2.0 million offset by an increase in net loss of $1.3 million as discussed above.
Cash used in investing activities was $1.6 million for the three months ended March 31, 2012, compared with $2.0 million for the same period of 2011, a decrease in cash used of $0.4 million. Additions to display cabinets were $1.1 million for the three months ended March 31, 2012, compared with $1.3 million for the same period of 2011, a decrease of $0.2 million. Capital expenditures were $0.5 million for the three months ended March 31, 2012, compared with $0.7 million for the same period of 2011, a decrease of $0.2 million.
Cash used in financing activities was minimal for the three months ended March 31, 2012, compared with $2.6 million in the same period of 2011, a decrease in cash used of $2.6 million. This decrease was due to $2.6 million less in distributions to member during the three months ended March 31, 2012 compared to the same period of 2011.
We anticipate that the funds generated by operations and current available cash balances will be sufficient to meet working capital requirements, make required member tax distributions and to finance capital expenditures over the next 12 to 18 months. There can be no assurance, however, that our business will generate sufficient cash flow from operations, that anticipated net sales growth and operating improvements will be realized or that future equity or debt financing will be sufficient to enable us to service our indebtedness or to fund our other liquidity needs.
We and our subsidiaries have from time to time repurchased certain of our debt obligations and may in the future, as part of various financing and investment strategies we may elect to pursue, purchase additional outstanding indebtedness of ours or our subsidiaries, in tender offers, open market purchases, privately negotiated transactions or otherwise. We may also sell certain assets or properties and use the proceeds to reduce our indebtedness or the indebtedness of our subsidiaries. These purchases or sales, if any, could have a material positive or negative impact on our liquidity available to repay outstanding debt obligations or on our consolidated results of operations. These transactions could also require or result in amendments to the agreements governing outstanding debt obligations or changes in our leverage or other financial ratios, which could have a material positive or negative impact on our ability to comply with the covenants contained in our debt agreements. These transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Debt Structure
ABL Facility. In December 2009, in connection with issuance of the senior secured second lien notes, Norcraft entered into a senior secured first-lien asset-based revolving credit facility, or the ABL facility, pursuant to a credit agreement dated as of December 9, 2009, or the ABL credit agreement, by and among Norcraft, as borrower, Norcraft Intermediate Holdings, L.P. and other guarantors party thereto, as guarantors, the lenders party thereto and UBS Securities LLC, as arranger, bookmanager, documentation agent and syndication agent, and UBS AG, Stamford Branch, as issuing bank, administrative agent and collateral agent and UBS Loan Finance LLC, as swingline lender. The ABL facility provides for aggregate commitments of up to $25.0 million, including a letter of credit sub-facility and a swingline loan sub-facility, subject to a borrowing base, and has a maturity date of December 9, 2013. As of March 31, 2012, the borrowing base was approximately $19.1 million.
In May, 2011, the ABL credit agreement was modified and now has a maturity of September 2015.
17
The ABL credit agreement contains negative covenants that restrict or limit the ability of Norcraft Intermediate Holdings, L.P. and its subsidiaries from, among other things, (1) selling assets, (2) altering the business that Norcraft currently conducts, (3) engaging in mergers, acquisitions and other business combinations, (4) declaring dividends or redeeming or repurchasing our equity interests, (5) incurring additional debt or guarantees, (6) making loans and investments, (7) incurring liens, (8) entering into transactions with affiliates, (9) engaging in sale and leaseback transactions and (10) prepaying the senior secured second lien notes, the senior discount notes and any subordinated debt. As of March 31, 2012, the Company was in compliance with these provisions.
Indebtedness under the ABL facility is guaranteed, on a joint and several basis, by Norcraft Intermediate Holdings, L.P., Norcraft Finance Corp., Norcraft Canada Corporation and all of Norcrafts current and future subsidiaries, subject to exceptions for foreign subsidiaries to the extent of adverse tax consequences, and is secured by a first priority security interest in substantially all of Norcrafts and the guarantors existing and future property and assets, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, owned real property, cash and proceeds of the foregoing.
As of March 31, 2012, there were no borrowings outstanding, approximately $4.5 million in a letter of credit outstanding and unused commitments of $14.6 million under the ABL facility.
The Company has no unused letters of credit.
Senior Secured Second Lien Notes. In December 2009, Norcraft and Norcraft Finance Corp., a 100% owned finance subsidiary of Norcraft, issued, on a joint and several basis, $180.0 million aggregate principal amount of 10 1/2% senior secured second lien notes (the senior secured second lien notes). Interest accrues on the senior secured second lien notes and is payable semiannually on June 15 and December 15 of each year at a rate of 10 1/2% per annum, which commenced on June 15, 2010. Proceeds from the issuance of the senior secured second lien notes were used to redeem the 9% senior subordinated notes due 2011 and to make a distribution to Norcraft Holdings, L.P. (Holdings) which allowed Holdings to repurchase a portion of its 9 3/4% senior discount notes due 2012.
In May 2011, Norcraft and Norcraft Finance Corp. issued, on a joint and several basis, an additional $60.0 million aggregate principal amount of these senior secured second lien notes at a 1.04 premium, for total gross proceeds of $62.4 million. Proceeds from this issuance of the senior secured second lien notes were used to make a distribution to Holdings to allow Holdings to retire the remainder of its 9 3/4% senior discount notes due 2012 and pay related transaction and financing costs.
At any time before December 15, 2012, Norcraft may redeem up to 35% of the aggregate principal amount of the senior secured second lien notes issued under the indenture with the proceeds of qualified equity offerings at a redemption price equal to 110.5% of the principal amount, plus accrued interest.
Prior to December 15, 2012, Norcraft may redeem the senior secured second lien notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium plus accrued interest.
Norcraft may redeem the senior secured second lien notes, in whole or in part, at any time on or after December 15, 2012, at a redemption price equal to 100% of the principal amount of the senior secured second lien notes plus a premium declining ratably to par plus accrued interest.
If Norcraft experiences a change of control, Norcraft may be required to offer to purchase the senior secured second lien notes at a purchase price equal to 101% of the principal amount, plus accrued interest.
Additionally, the terms of the indenture governing the senior secured second lien notes limit Norcrafts ability to, among other things, incur additional indebtedness, dispose of assets, make acquisitions, make other investments, pay dividends and make various other payments. The terms also include cross-default provisions. As of March 31, 2012, Norcraft was in compliance with these provisions.
Off balance sheet arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, capital expenditures or capital resources that are material to investors.
18
Taxes; Distributions to our Limited Partners
Norcraft Holdings, L.P (Holdings), our parent company, and Norcraft Companies, L.P. (Norcraft) are limited partnerships. As such, income is allocated to limited partners for inclusion in their respective tax returns. Accordingly, no liability or provision for federal income taxes and deferred income taxes attributable to our operations are included in our financial statements. We are subject to various state and local taxes.
The indenture governing our senior secured second lien notes significantly restricts Norcraft and its subsidiaries from paying dividends and otherwise transferring assets to Holdings. Norcraft expects to make regular distributions to Holdings, subject to certain limitations, to permit Holdings to make further distributions to its equity holders to pay taxes on our net income allocated to them. There was a $10.0 thousand tax distribution during the three months ended March 31, 2012.
Inflation; Seasonality
Our cost of sales is subject to inflationary pressures and price fluctuations of the raw materials we use. We have generally been able over time to recover the effects of inflation and price fluctuations through sales price increases.
Our sales have historically been moderately seasonal and have been strongest in April through October which coincides with construction seasonality.
Critical Accounting Polices
In our Annual Report on Form 10-K for the year ended December 31, 2011, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. The basis for developing the estimates and assumptions within our critical accounting policies is based on historical information and known current trends and factors. The estimates and assumptions are evaluated on an ongoing basis and actual results have been within the Companys expectations. We have not changed these policies from those previously disclosed in our annual report.
Item 3. | Quantitative and Qualitative Disclosures of Market Risk |
We currently do not hedge against interest rate movements or foreign currency fluctuations. The risk inherent in our market-sensitive instruments and positions is the potential loss arising from adverse changes to interest rates as discussed below.
Variable Interest Rates
Our earnings could be affected by changes in interest rates due to the impact those changes would have on interest expense from variable rate debt instruments and on interest income generated from our cash and investment balances. At March 31, 2012, the Company had no borrowings on our variable rate ABL facility; however future earnings could be affected by changes in interest rates.
Foreign Currency
We have minimal exposure to market risk from changes in foreign currency exchange rates and interest rates that could affect our results of operations and financial condition. Our largest exposure comes from the Canadian dollar, where approximately 9% of our sales during the three months ended March 31, 2012 were derived from Norcraft Canada and our revenues from such sales were denominated in Canadian dollars.
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures as of March 31, 2012.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.
19
Based on that evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2012 the Companys disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
20
Item 1. | Legal Proceedings |
During the ordinary course of business, we have become and may in the future become subject to pending and threatened legal actions and proceedings. All of the current legal actions and proceedings that we are a party to are of an ordinary or routine nature incidental to our operations, the resolution of which should not have a material adverse effect on our financial condition, results of operations or cash flows. We are not currently a party to any product liability claims. The majority of the pending legal proceedings involve claims for workers compensation. These claims are generally covered by insurance, but there can be no assurance that our insurance coverage will be adequate to cover any such liability.
Item 1A. | Risk Factors |
There have been no material changes to the risk factors disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2011. The materialization of any risks and uncertainties identified in Part I, Item 2, Uncertainty of Forward Looking Statements and Information contained in this report together with those previously disclosed in the Form 10-K or those that are presently unforeseen could result in material adverse effects on our financial condition, results of operations and cash flows.
Item 6. | Exhibits |
31.1 | Certification by Mark Buller pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification by Leigh Ginter pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification by Mark Buller pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification by Leigh Ginter pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.1 | XBRL Related Documents |
21
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NORCRAFT COMPANIES, L.P. |
(Registrant) |
/s/ Mark Buller |
/s/ Leigh Ginter | |||
Mark Buller | Leigh Ginter | |||
President and Chief Executive Officer | Chief Financial Officer | |||
Date: May 15, 2012 | Date: May 15, 2012 | |||
Signing on behalf of the | Signing on behalf of the | |||
Registrant and as Principal | Registrant and as Principal | |||
Executive Officer | Accounting Officer |
22
Exhibit 31.1
Section 302 Certification
I, Mark Buller, certify that:
1. | I have reviewed this Form 10-Q of Norcraft Companies, L.P. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrants and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 15, 2012 | /s/ Mark Buller | |||||
Mark Buller Chief Executive Officer |
23
Exhibit 31.2
Section 302 Certification
I, Leigh Ginter, certify that:
1. | I have reviewed this Form 10-Q of Norcraft Companies, L.P. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrants and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 15, 2012 | /s/ Leigh Ginter | |||||
Leigh Ginter Chief Financial Officer | ||||||
(Chief Accounting Officer) |
24
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of Norcraft Companies, L.P. (the Company), does hereby certify that to the undersigneds knowledge:
1) the Companys Quarterly Report on Form 10-Q for the period ending March 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) the information contained in the Companys Quarterly Report on Form 10-Q for the period ending March 31, 2012 fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 15, 2012 | /s/ Mark Buller | |||||
Mark Buller Chief Executive Officer |
A signed original of this written statement, required by Section 906, has been provided to Norcraft Companies, L.P. and will be retained by Norcraft Companies, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.
25
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Financial Officer of Norcraft Companies, L.P. (the Company), does hereby certify that to the undersigneds knowledge:
1) the Companys Quarterly Report on Form 10-Q for the period ending March 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) the information contained in the Companys Quarterly Report on Form 10-Q for the period ending March 31, 2012 fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 15, 2011 | /s/ Leigh Ginter | |||||
Leigh Ginter Chief Financial Officer | ||||||
(Chief Accounting Officer) |
A signed original of this written statement, required by Section 906, has been provided to Norcraft Companies, L.P. and will be retained by Norcraft Companies, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.
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Intangible Assets
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Mar. 31, 2012
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Intangible Assets |
Intangible assets consist of the following:
There were no events or circumstances during the three months ended March 31, 2012 to indicate that the assets not subject to amortization should be evaluated for potential impairment. |