Company Quick10K Filing
Jeld-Wen Holding
Price19.16 EPS1
Shares101 P/E20
MCap1,943 P/FCF12
Net Debt1,383 EBIT141
TEV3,326 TEV/EBIT24
TTM 2019-09-28, in MM, except price, ratios
10-Q 2020-03-28 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-02-24
10-Q 2019-09-28 Filed 2019-11-06
10-Q 2019-06-29 Filed 2019-08-07
10-Q 2019-03-30 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-29 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-07
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-06
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-07-01 Filed 2017-08-08
10-Q 2017-04-01 Filed 2017-05-12
10-K 2016-12-31 Filed 2017-03-03
8-K 2020-05-07
8-K 2020-05-05
8-K 2020-05-04
8-K 2020-04-27
8-K 2020-04-27
8-K 2020-03-28
8-K 2020-02-18
8-K 2019-12-31
8-K 2019-11-06
8-K 2019-10-10
8-K 2019-09-20
8-K 2019-08-07
8-K 2019-06-20
8-K 2019-05-09
8-K 2019-05-07
8-K 2019-02-19
8-K 2018-12-27
8-K 2018-11-06
8-K 2018-10-16
8-K 2018-10-09
8-K 2018-08-07
8-K 2018-06-07
8-K 2018-05-08
8-K 2018-04-26
8-K 2018-02-27
8-K 2018-02-21

JELD 10Q Quarterly Report

Part I - Financial Information
Item 1 - Unaudited Financial Statements
Note 1. Description of Company and Summary of Significant Accounting Policies
Note 2. Acquisitions
Note 3. Accounts Receivable
Note 4. Inventories
Note 5. Property and Equipment, Net
Note 6. Goodwill
Note 7. Intangible Assets, Net
Note 8. Other Assets
Note 9. Accrued Expenses and Other Current Liabilities
Note 10. Warranty Liability
Note 11. Long - Term Debt
Note 12. Income Taxes
Note 13. Segment Information
Note 14. Capital Stock
Note 15. Earnings per Share
Note 16. Stock Compensation
Note 17. Impairment and Restructuring Charges
Note 18. Other (Income) Expense
Note 19. Derivative Financial Instruments
Note 20. Fair Value of Financial Instruments
Note 21. Commitments and Contingencies
Note 22. Employee Retirement and Pension Benefits
Note 23. Supplemental Cash Flow Information
Note 24. Related Party Transactions
Note 25. Revision of Prior Period Financial Statements
Note 26. Subsequent Events
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Item 4 - Controls and Procedures
Part II - Other Information
Item 1 - Legal Proceedings
Item 1A - Risk Factors
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 5 - Other Information
Item 6 - Exhibits
EX-31.1 q12020exhibit311.htm
EX-31.2 q12020exhibit312.htm
EX-32.1 q12020exhibit321.htm

Jeld-Wen Holding Earnings 2020-03-28

Balance SheetIncome StatementCash Flow
3.52.82.11.40.70.02017201820192020
Assets, Equity
1.20.90.70.40.2-0.12017201820192020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22017201820192020
Ops, Inv, Fin

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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 28, 2020
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: 001-38000
____________________________
JELD-WEN Holding, Inc.
(Exact name of registrant as specified in its charter)
____________________________
Delaware
 
93-1273278
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
2645 Silver Crescent Drive
Charlotte, North Carolina 28273
(Address of principal executive offices, zip code)
(704) 378-5700
(Registrant’s telephone number, including area code)
____________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock (par value $0.01 per share)
 
JELD
 
New York Stock Exchange

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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
 
 
 
 
Non-accelerated filer
 
o
 
Smaller reporting company
 
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The registrant had 100,474,713 shares of Common Stock, par value $0.01 per share, outstanding as of May 4, 2020.





JELD-WEN HOLDING, Inc.
- Table of Contents –
 
 
Page No.
Part I - Financial Information
 
 
 
 
Item 1.
Unaudited Financial Statements
 
 
Consolidated Statements of Operations
 
Consolidated Statements of Comprehensive Income (Loss)
 
Consolidated Balance Sheets
 
Consolidated Statements of Equity
 
Consolidated Statements of Cash Flows
 
Notes to Unaudited Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
 
 
 
Part II - Other Information
 
 
 
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.
Other Information
Item 6.
Exhibits
 
 
 
 
Signature



2



Glossary of Terms

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
ABL Facility
Our $400 million asset-based loan revolving credit facility, dated as of October 15, 2014 and as amended from time to time, with JWI (as hereinafter defined) and JELD-WEN of Canada, Ltd., as borrowers, the guarantors party thereto, a syndicate of lenders, and Wells Fargo Bank, N.A., as administrative agent
ABS
American Building Supply, Inc.
Adjusted EBITDA
A supplemental non-GAAP financial measure of operating performance not based on any standardized methodology prescribed by GAAP that we define as net income (loss), adjusted for the following items: loss from discontinued operations, net of tax; equity earnings of non-consolidated entities; income tax (benefit) expense; depreciation and amortization; interest expense, net; impairment and restructuring charges; gain on previously held shares of equity investment; (gain) loss on sale of property and equipment; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; other non-cash items; other items; and costs related to debt restructuring and debt refinancing
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
AUD
Australian Dollar
Australia Senior Secured Credit Facility
Our senior secured credit facility, dated as of October 6, 2015 and as amended from time to time, with certain of our Australian subsidiaries, as borrowers, and Australia and New Zealand Banking Group Limited, as lender
BBSY
Bank Bill Swap Bid Rate
Bylaws
Amended and Restated Bylaws of JELD-WEN Holding, Inc.
CAP
Cleanup Action Plan
Charter
Restated Certificate of Incorporation of JELD-WEN Holding, Inc.
Class B-1 Common Stock
Shares of our Class B-1 common stock, par value $0.01 per share, all of which were converted into shares of our Common Stock on February 1, 2017
CMI
CraftMaster Manufacturing, Inc.
COA
Consent Order and Agreement
CODM
Chief Operating Decision Maker
Common Stock
The 900,000,000 shares of common stock, par value $0.01 per share, authorized under our Charter
Corporate Credit Facilities
Collectively, our ABL Facility and our Term Loan Facility
COVID-19
A novel strain of the 2019-nCov coronavirus
Credit Facilities
Collectively, our Corporate Credit Facilities and our Australia Senior Secured Credit Facility as well as other acquired term loans and revolving credit facilities
DKK
Danish Krone
ERP
Enterprise Resource Planning
ESOP
JELD-WEN, Inc. Employee Stock Ownership and Retirement Plan
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
10-K
Annual Report on Form 10-K for the fiscal year ended December 31, 2019
GAAP
Generally Accepted Accounting Principles in the United States
GHGs
Greenhouse Gases
GILTI
Global Intangible Low-Taxed Income
JELD-WEN
JELD-WEN Holding, Inc., together with its consolidated subsidiaries where the context requires
JEM
JELD-WEN Excellence Model
JWH
JELD-WEN Holding, Inc., a Delaware corporation
JWI
JELD-WEN, Inc., a Delaware corporation
LIBOR
London Interbank Offered Rate
MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations

3



Onex
Onex Partners III LP and certain affiliates
PaDEP
Pennsylvania Department of Environmental Protection
Preferred Stock
90,000,000 shares of Preferred Stock, par value $0.01 per share, authorized under our Charter
PSU
Performance stock unit
R&R
Repair and remodel
RSU
Restricted stock unit
SEC
Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
Senior Notes
$800.0 million of unsecured notes issued in December 2017 in a private placement in two tranches: $400.0 million bearing interest at 4.625% and maturing in December 2025 and $400.0 million bearing interest at 4.875% and maturing in December 2027
Series A Convertible Preferred Stock
Our Series A-1 Convertible Preferred Stock, par value $0.01 per share, Series A-2 Convertible Preferred Stock, par value $0.01 per share, Series A-3 Convertible Preferred Stock, par value $0.01 per share, and Series A-4 Convertible Preferred Stock, par value $0.01 per share, all of which were converted into shares of our common stock on February 1, 2017
SG&A
Selling, general, and administrative expenses
Tax Act
Tax Cuts and Jobs Act
Term Loan Facility
Our term loan facility, dated as of October 15, 2014, and as amended from time to time with JWI, as borrower, the guarantors party thereto, a syndicate of lenders, and Bank of America, N.A., as administrative agent
U.S.
United States of America
VPI
VPI Quality Windows, Inc.
WADOE
Washington State Department of Ecology
CERTAIN TRADEMARKS, TRADE NAMES AND SERVICE MARKS
This 10-Q includes trademarks, trade names, and service marks owned by us. Our U.S. window and door trademarks include JELD-WEN®, AuraLast®, MiraTEC®, Extira®, LaCANTINATM, MMI DoorTM, KaronaTM, ImpactGard®, JW®, Aurora®, IWP®, True BLUTM, ABSTM, and VPITM . Our trademarks are either registered or have been used as common law trademarks by us. The trademarks we use outside the U.S. include the Stegbar®, Regency®, William Russell Doors®, Airlite®, Trend®, The Perfect FitTM, Aneeta®, Breezway®, KolderTM , Corinthian® and A&LTM marks in Australia, and Swedoor®, Dooria®, DANA®, MattioviTM, Alupan® and Domoferm® marks in Europe. ENERGY STAR® is a registered trademark of the U.S. Environmental Protection Agency. This 10-Q contains additional trademarks, trade names, and service marks of others, which are, to our knowledge, the property of their respective owners. Solely for convenience, trademarks, trade names, and service marks referred to in this 10-Q appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names, and service marks. We do not intend our use of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

4



PART I - FINANCIAL INFORMATION
Item 1 - Unaudited Financial Statements

JELD-WEN HOLDING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
Three Months Ended
(amounts in thousands, except share and per share data)
March 28, 2020
 
March 30, 2019
Net revenues
$
979,187

 
$
1,010,260

Cost of sales
784,818

 
802,131

Gross margin
194,369

 
208,129

Selling, general and administrative
172,584

 
164,100

Impairment and restructuring charges
6,545

 
3,719

Operating income
15,240

 
40,310

Interest expense, net
16,604

 
17,656

Other income
(2,331
)
 
(3,472
)
Income before taxes
967

 
26,126

Income tax expense
1,197

 
10,349

Net income (loss)
$
(230
)
 
$
15,777

 
 
 
 
Weighted average common shares outstanding:
 
 
 
Basic
100,646,850

 
100,643,509

Diluted
100,646,850

 
101,461,293

Net income (loss) per share
 
 
 
Basic
$

 
$
0.16

Diluted
$

 
$
0.16



























The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

5



JELD-WEN HOLDING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
 
Three Months Ended
(amounts in thousands)
March 28, 2020
 
March 30, 2019
Net income (loss)
$
(230
)
 
$
15,777

Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency translation adjustments, net tax of $0
(53,639
)
 
(12,046
)
Interest rate hedge adjustments, net of tax (benefit) expense of $0 and ($112), respectively

 
550

Defined benefit pension plans, net of tax expense of $1,060 and $771, respectively
2,763

 
1,454

 
(50,876
)
 
(10,042
)
Comprehensive income (loss)
$
(51,106
)
 
$
5,735











































The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

6


JELD-WEN HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(amounts in thousands, except share and per share data)
March 28,
2020
 
December 31,
2019
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
214,297

 
$
225,962

Restricted cash
312

 
3,914

Accounts receivable, net
539,252

 
469,762

Inventories
524,022

 
505,078

Other current assets
59,436

 
38,562

Total current assets
1,337,319

 
1,243,278

Property and equipment, net
829,730

 
864,375

Deferred tax assets
181,642

 
183,837

Goodwill
587,043

 
602,500

Intangible assets, net
237,233

 
250,327

Operating lease assets, net
200,472

 
202,053

Other assets
33,139

 
34,962

Total assets
$
3,406,578

 
$
3,381,332

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable
$
281,863

 
$
294,951

Accrued payroll and benefits
124,600

 
109,386

Accrued expenses and other current liabilities
287,321

 
298,603

Current maturities of long-term debt
64,740

 
65,846

Total current liabilities
758,524

 
768,786

Long-term debt
1,547,115

 
1,451,526

Unfunded pension liability
105,281

 
107,937

Operating lease liability
164,296

 
164,026

Deferred credits and other liabilities
68,731

 
67,682

Deferred tax liabilities
8,863

 
9,288

Total liabilities
2,652,810

 
2,569,245

Commitments and contingencies (Note 21)

 

Shareholders’ equity
 
 
 
Preferred Stock, par value $0.01 per share, 90,000,000 shares authorized; no shares issued and outstanding

 

Common Stock: 900,000,000 shares authorized, par value $0.01 per share, 100,487,485 shares outstanding as of March 28, 2020; 900,000,000 shares authorized, par value $0.01 per share, 100,668,003 shares outstanding as of December 31, 2019
1,005

 
1,007

Additional paid-in capital
675,268

 
671,772

Retained earnings
279,646

 
290,583

Accumulated other comprehensive loss
(202,151
)
 
(151,275
)
Total shareholders’ equity
753,768

 
812,087

Total liabilities and shareholders’ equity
$
3,406,578

 
$
3,381,332





The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

7


JELD-WEN HOLDING, INC.
CONSOLIDATED STATEMENTS OF EQUITY
 
March 28, 2020
 
March 30, 2019
(amounts in thousands, except share and per share amounts)
Shares
 
Amount
 
Shares
 
Amount
Preferred stock, $0.01 par value per share

 
$

 

 
$

Common stock, $0.01 par value per share
 
 
 
 
 
 
 
Balance at beginning of period
100,668,003
 
$
1,007

 
101,310,862
 
$
1,013

Shares issued for exercise/vesting of share-based compensation awards
94,471
 
1

 
303,093
 
3

Shares repurchased
(265,589)
 
(3
)
 
(939,798)
 
(9
)
Shares surrendered for tax obligations for employee share-based transactions
(9,400)
 

 
(9,335)
 

Balance at period end
100,487,485
 
$
1,005

 
100,664,822
 
$
1,007

Additional paid-in capital
 
 
 
 
 
 
 
Balance at beginning of period
 
$
672,445

 
 
 
$
659,241

Shares issued for exercise/vesting of share-based compensation awards
 

 
 
 
1,287

Shares surrendered for tax obligations for employee share-based transactions
 
(237
)
 
 
 
(164
)
Amortization of share-based compensation
 
3,733

 
 
 
2,473

Balance at period end
 
675,941

 
 
 
662,837

Employee stock notes
 
 
 
 
 
 
 
Balance at beginning of period
 
(673
)
 
 
 
(648
)
Net issuances, payments and accrued interest on notes
 

 
 
 
(6
)
Balance at period end
 
(673
)
 
 
 
(654
)
Balance at period end
 
$
675,268

 
 
 
$
662,183

Retained earnings
 
 
 
 
 
 
 
Balance at beginning of period
 
$
290,583

 
 
 
$
246,833

Share repurchased
 
(4,997
)
 
 
 
(14,990
)
Adoption of new accounting standard ASU No. 2016-02
 

 
 
 
761

Adoption of new accounting standard ASU No. 2016-13
 
$
(5,710
)
 
 
 

Net (loss) income
 
(230
)
 
 
 
15,777

Balance at period end
 
$
279,646

 
 
 
$
248,381

Accumulated other comprehensive income (loss)
 
 
 
 
 
 
 
Balance at beginning of period
 
$
(151,275
)
 
 
 
$
(144,805
)
Foreign currency adjustments
 
(53,639
)
 
 
 
(12,046
)
Unrealized gain on interest rate hedges
 

 
 
 
550

Net actuarial pension gain
 
2,763

 
 
 
1,454

Balance at period end
 
$
(202,151
)
 
 
 
$
(154,847
)
 
 
 
 
 
 
 
 
Total shareholders’ equity at period end
 
$
753,768

 
 
 
$
756,724















The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

8


JELD-WEN HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
 
Three Months Ended
(amounts in thousands)
 
March 28,
2020
 
March 30,
2019
OPERATING ACTIVITIES
 
 
 
 
Net income (loss)
 
$
(230
)
 
$
15,777

Adjustments to reconcile net income (loss) to cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
33,446

 
30,898

Deferred income taxes
 
604

 
(2,377
)
(Gain) loss on sale of business units, property and equipment
 
(2,073
)
 
614

Adjustment to carrying value of assets
 
4,254

 
1,634

Amortization of deferred financing costs
 
492

 
490

Stock-based compensation
 
3,733

 
2,596

Contributions to U.S. pension plan
 
(1,619
)
 
(1,375
)
Amortization of U.S. pension expense
 
2,225

 
2,225

Other items, net
 
13,382

 
(8,212
)
Net change in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
Accounts receivable
 
(95,477
)
 
(89,359
)
Inventories
 
(32,686
)
 
(33,745
)
Other assets
 
(17,840
)
 
(7,502
)
Accounts payable and accrued expenses
 
20,389

 
53,537

Change in short term and long-term tax liabilities
 
(5,175
)
 
6,841

Net cash used in operating activities
 
(76,575
)
 
(27,958
)
INVESTING ACTIVITIES
 
 
 
 
Purchases of property and equipment
 
(22,635
)
 
(19,836
)
Proceeds from sale of business units, property and equipment
 
7,775

 
382

Purchase of intangible assets
 
(7,521
)
 
(12,023
)
Purchases of businesses, net of cash acquired
 

 
(57,486
)
Cash received for notes receivable
 
15

 
27

Net cash used in investing activities
 
(22,366
)
 
(88,936
)
FINANCING ACTIVITIES
 
 
 
 
Change in long-term debt
 
94,995

 
107,321

Common stock issued for exercise of options
 
1

 
1,290

Common stock repurchased
 
(5,000
)
 
(14,999
)
Payments to tax authorities for employee share-based compensation
 
(706
)
 
(141
)
Net cash provided by financing activities
 
89,290

 
93,471

Effect of foreign currency exchange rates on cash
 
(5,616
)
 
63

Net decrease in cash and cash equivalents
 
(15,267
)
 
(23,360
)
Cash, cash equivalents and restricted cash, beginning
 
229,876

 
117,623

Cash, cash equivalents and restricted cash, ending
 
$
214,609

 
$
94,263

For further information see Note 23 - Supplemental Cash Flow.
 
 
 
 








The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

9


JELD-WEN HOLDING, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Description of Company and Summary of Significant Accounting Policies
Nature of Business – JELD-WEN Holding, Inc., along with its subsidiaries, is a vertically integrated global manufacturer and distributor of windows and doors that derives substantially all of its revenues from the sale of its door and window products. Unless otherwise specified or the context otherwise requires, all references in these notes to “JELD-WEN,” “we,” “us,” “our,” or the “Company” are to JELD-WEN Holding, Inc. and its subsidiaries.
We have facilities located in the U.S., Canada, Europe, Australia, Asia, Mexico, and South America. Our products are marketed primarily under the JELD-WEN brand name in the U.S. and Canada and under JELD-WEN and a variety of acquired brand names in Europe, Australia, and Asia.
Our revenues are affected by the level of new housing starts and remodeling activity in each of our markets. Our sales typically follow seasonal new construction and repair and remodeling industry patterns. The peak season for home construction and remodeling in many of our markets generally corresponds with the second and third calendar quarters, and therefore, sales volume is typically higher during those quarters. Our first and fourth quarter sales volumes are generally lower due to reduced repair and remodeling activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in certain of our geographic end markets.
Basis of Presentation – The accompanying unaudited consolidated financial statements as of March 28, 2020 and for the three months ended March 28, 2020 and March 30, 2019, respectively, have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the SEC. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company’s financial position for the periods presented. The results for the three months ended March 28, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, or any other period. The accompanying consolidated balance sheet as of December 31, 2019 was derived from audited financial statements included in the Company’s Form 10-K. The accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.
Certain prior year amounts have been reclassified to conform to current year presentation. The consolidated statements of operations and statements of cash flows have been revised to reflect the correction of certain errors and other accumulated misstatements as described in Note 25 - Revision of Prior Period Financial Statements. We do not believe the errors corrected were material to our previously issued financial statements.
All U.S. dollar and other currency amounts, except per share amounts, are presented in thousands unless otherwise noted.
Fiscal Year – We operate on a fiscal calendar year, and each interim quarter is comprised of two 4-week periods and one 5-week period, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on December 31. As a result, our first and fourth quarters may have more or fewer days included than a traditional 91-day fiscal quarter.
Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and related notes. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets including goodwill and other intangible assets, employee benefit obligations, income tax uncertainties, contingent assets and liabilities, provisions for bad debt, inventory, warranty liabilities, legal claims, valuation of derivatives, environmental remediation and claims relating to self-insurance. Actual results could differ due to the uncertainty inherent in the nature of these estimates.
Factoring Arrangements – Our ABS subsidiary, acquired in March 2018, has entered into factoring agreements with a U.S.-based financial institution under which it can elect to sell certain of its accounts receivable under non-recourse agreements. These transactions are treated as a sale and are accounted for as a reduction in accounts receivable because the agreements transfer effective control over and risk of non-collection to the factor. Thus, cash proceeds from these arrangements are reflected as operating activities, including the change of accounts receivable on our statement of cash flows each period. We do not service any factored accounts after the factoring has occurred and do not have any servicing assets or liabilities. We utilize factoring arrangements as part of our financing to manage working capital. The aggregate gross amount factored under these arrangements was $17.9 million and $19.0 million for the three months ended March 28,

10


2020 and March 30, 2019, respectively. The cost of factoring is reflected in the accompanying unaudited consolidated statements of operations as interest expense with other financing costs and was $0.1 million and $0.2 million for the three months ended March 28, 2020 and March 30, 2019, respectively.
Recently Adopted Accounting Standards – In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the measurement of goodwill impairments, this ASU eliminates Step 2 from the goodwill impairment test, which required the calculation of the implied fair value of goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. We adopted this standard in the first quarter of 2020 and the adoption did not have an impact on our unaudited consolidated financial statements as of the date of adoption.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost and adds an impairment model that is based on expected losses rather than incurred losses. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to (Topic 326), Financial Instruments-Credit Losses, (Topic 815), Derivatives and Hedging, and (Topic 825), Financial Instruments, to clarify and address certain items related to the amendments of ASU No. 2016-13. We adopted this standard in the first quarter of 2020 using the modified retrospective approach, which primarily impacted our allowance for doubtful accounts as a result of our analysis of customer historical credit and collections data. Additionally, we recognized a $5.7 million cumulative effect adjustment, net of tax, to retained earnings, which includes a $7.6 million increase to the allowance for doubtful accounts and a $1.9 million net impact to deferred tax assets.
Recent Accounting Standards Not Yet Adopted – In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently assessing the impact of this ASU on our consolidated financial statements and disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles of ASC 740, including, but not limited to, accounting relating to intraperiod tax allocations, deferred tax liabilities related to outside basis differences, and year to date losses in interim periods. This guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently assessing the impact of this ASU on our consolidated financial statements and disclosures.
In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. This guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures.
Note 2. Acquisitions
In March 2019, we acquired VPI Quality Windows, Inc (“VPI”). VPI is a leading manufacturer of vinyl windows, specializing in customized solutions for mid-rise multi-family, industrial, hospitality and commercial projects, primarily in the western U.S. VPI is located in Spokane, Washington and is a part of our North America segment.

11


The fair values of the assets and liabilities acquired of this acquisition are summarized below:
(amounts in thousands)
Preliminary Allocation
 
Measurement Period Adjustment
 
Final Allocation
Fair value of identifiable assets and liabilities:
 
 
 
 
 
Accounts receivable
$
11,417

 
$
(420
)
 
$
10,997

Inventories
2,555

 
(141
)
 
2,414

Other current assets
261

 
40

 
301

Property and equipment
3,166

 
176

 
3,342

Identifiable intangible assets
17,702

 
5,735

 
23,437

Operating lease assets
3,739

 

 
3,739

Goodwill
26,553

 
(3,053
)
 
23,500

Other assets
10

 

 
10

Total assets
$
65,403

 
$
2,337

 
$
67,740

Accounts payable
2,629

 

 
2,629

Other current liabilities
1,875

 
522

 
2,397

Operating lease liability
3,413

 

 
3,413

Other liabilities

 
1,502

 
1,502

Total liabilities
$
7,917

 
$
2,024

 
$
9,941

Purchase price:

 
 
 

Cash consideration, net of cash acquired
$
57,486

 
$
313

 
$
57,799


The final goodwill of $23.5 million, calculated as the excess of the purchase price over the fair value of net assets, represents operational efficiencies and sales synergies, and the full amount is expected to be tax-deductible. The intangible assets include customer relationships and tradenames and will be amortized over an estimated weighted average amortization period of 8 years. Acquisition-related costs are expensed as incurred and are included in selling, general and administrative expense in our accompanying unaudited consolidated statements of operations. We incurred acquisition-related costs of $0.2 million during the three months ended March 30, 2019. The purchase price allocation was considered complete as of March 28, 2020.
We evaluated this acquisition quantitatively and qualitatively and determined it to be insignificant. Therefore, certain pro forma disclosures under ASC 805-10-50 have been omitted.
The results of this acquisition are included in our unaudited consolidated financial statements from the date of acquisition.
Note 3. Accounts Receivable
We sell our manufactured products to a large number of customers, primarily in the residential housing construction and remodel sectors, broadly dispersed across many domestic and foreign geographic regions. We assess the credit risk relating to our accounts receivable based on quantitative and qualitative factors, primarily historical credit collections within each region where we have operations. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not usually require collateral for accounts receivable but will require advance payment, guarantees, a security interest in the products sold to a customer, and/or letters of credit in certain situations. Customer accounts receivable converted to notes receivable are primarily collateralized by inventory or other collateral.
As of January 1, 2020, we adopted ASC 326 - Measurement of Credit Losses on Financial Instruments on a modified retrospective basis, which increased the allowance for doubtful accounts by $7.6 million on the date of adoption.
At March 28, 2020 and December 31, 2019, we had an allowance for doubtful accounts of $13.0 million and $6.0 million, respectively.

12


Note 4. Inventories
Inventories are stated at the lower of cost or net realizable value. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs.
(amounts in thousands)
March 28,
2020
 
December 31,
2019
Raw materials
$
367,321

 
$
372,289

Work in process
37,371

 
38,432

Finished goods
119,330

 
94,357

Total inventories
$
524,022

 
$
505,078


Note 5. Property and Equipment, Net
(amounts in thousands)
March 28,
2020
 
December 31,
2019
Property and equipment
$
1,999,308

 
$
2,052,584

Accumulated depreciation
(1,169,578
)
 
(1,188,209
)
Total property and equipment, net
$
829,730

 
$
864,375


We monitor all property and equipment for any indicators of potential impairment and recorded impairment charges of $0.9 million and $0.9 million during the three months ended March 28, 2020 and March 30, 2019, respectively.
Depreciation expense was recorded as follows:
 
Three Months Ended
(amounts in thousands)
March 28,
2020
 
March 30,
2019
Cost of sales
$
21,741

 
$
20,669

Selling, general and administrative
2,629

 
2,407

Total depreciation expense
$
24,370

 
$
23,076


Note 6. Goodwill
The following table summarizes the changes in goodwill by reportable segment:
(amounts in thousands)
North
America
 
Europe
 
Australasia
 
Total
Reportable
Segments
Balance as of January 1
$
247,502

 
$
273,912

 
$
81,086

 
$
602,500

Currency translation
(448
)
 
(4,552
)
 
(10,457
)
 
(15,457
)
Balance at end of period
$
247,054

 
$
269,360

 
$
70,629

 
$
587,043



13


Note 7. Intangible Assets, Net
The cost and accumulated amortization values of our intangible assets were as follows:
 
March 28, 2020
(amounts in thousands)
Cost
 
Accumulated
Amortization
 
Net
Book Value
Customer relationships and agreements
$
148,025

 
$
(59,049
)
 
$
88,976

Software
94,244

 
(19,645
)
 
74,599

Trademarks and trade names
54,613

 
(7,729
)
 
46,884

Patents, licenses and rights
40,710

 
(13,936
)
 
26,774

Total amortizable intangibles
$
337,592

 
$
(100,359
)
 
$
237,233

 
December 31, 2019
(amounts in thousands)
Cost
 
Accumulated
Amortization
 
Net
Book Value
Customer relationships and agreements
$
151,540

 
$
(57,326
)
 
$
94,214

Software
92,821

 
(18,222
)
 
74,599

Trademarks and trade names
58,088

 
(7,512
)
 
50,576

Patents, licenses and rights
45,392

 
(14,454
)
 
30,938

Total amortizable intangibles
$
347,841

 
$
(97,514
)
 
$
250,327


At March 28, 2020, we have capitalized software costs of $62.3 million related to the application development stage of our global ERP system implementation, including $5.4 million during the three months ended March 28, 2020. As of March 28, 2020, we have placed $52.0 million in service and are amortizing the cost of our global ERP system over its estimated useful life of 15 years. In March 2020, we impaired $3.4 million of capitalized software due to delays in implementation of certain ERP modules and the uncertainty of its future.
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Intangible assets that become fully amortized are removed from the accounts in the period that they become fully amortized. Amortization expense was recorded as follows:
 
Three Months Ended
(amounts in thousands)
March 28, 2020
 
March 30, 2019
Amortization expense
$
6,603

 
$
5,663


Note 8. Other Assets
(amounts in thousands)
March 28, 2020
 
December 31, 2019
Cloud computing arrangements
$
8,688

 
$
6,374

Customer displays
8,526

 
11,213

Deposits
6,270

 
6,440

Long-term notes receivable
4,549

 
4,614

Overfunded pension benefit obligation
1,784

 
2,015

Other prepaid expenses
1,319

 
1,896

Debt issuance costs on unused portion of revolver facility
1,014

 
1,472

Other long-term accounts receivable
634

 
563

Other long-term assets
355

 
375

Total other assets
$
33,139

 
$
34,962



14


Note 9. Accrued Expenses and Other Current Liabilities
(amounts in thousands)
March 28, 2020
 
December 31, 2019
Current portion of legal claims provision
$
83,093

 
$
79,332

Accrued sales and advertising rebates
50,255

 
67,250

Current portion of operating lease liability
42,860

 
45,254

Non-income related taxes
22,523

 
23,178

Accrued expenses
22,470

 
27,993

Current portion of warranty liability (Note 10)
20,397

 
21,054

Accrued interest payable
16,790

 
2,126

Current portion of accrued claim costs relating to self-insurance programs
11,894

 
12,312

Current portion of deferred revenue
8,581

 
7,986

Current portion of restructuring accrual (Note 17)
4,946

 
6,051

Current portion of derivative liability (Note 19)
1,667

 
4,068

Current portion of accrued income taxes payable
1,845

 
1,999

Total accrued expenses and other current liabilities
$
287,321

 
$
298,603


The legal claims provision relates primarily to contingencies associated with the ongoing legal matters disclosed in Note 21 - Commitments and Contingencies.
The accrued sales and advertising rebates, accrued interest payable, and non-income related taxes can fluctuate significantly period-over-period due to timing of payments.
The prior period information has been revised. Please refer to Note 25 - Revision of Prior Period Financial Statements.
Note 10. Warranty Liability
Warranty terms vary from one year to lifetime on certain window and door components. Warranties are normally limited to servicing or replacing defective components for the original customer. Product defects arising within six months of sale are classified as manufacturing defects and are not included in the current period expense below. Some warranties are transferable to subsequent owners and are either limited to 10 years from the date of manufacture or require pro-rata payments from the customer. A provision for estimated warranty costs is recorded at the time of sale based on historical experience and is periodically adjusted to reflect actual experience.
An analysis of our warranty liability is as follows:
(amounts in thousands)
March 28, 2020
 
March 30, 2019
Balance as of January 1
$
49,716

 
$
46,468

Current period expense
4,668

 
4,344

Liabilities assumed due to acquisition

 
79

Experience adjustments
1,902

 
904

Payments
(6,476
)
 
(5,602
)
Currency translation
(756
)
 
106

Balance at period end
49,054

 
46,299

Current portion
(20,397
)
 
(20,272
)
Long-term portion
$
28,657

 
$
26,027


The most significant component of our warranty liability is in the North America segment, which totaled $44.4 million at March 28, 2020, after discounting future estimated cash flows at rates between 0.76% and 4.75%. Without discounting, the liability would have been higher by approximately $3.0 million.

15


Note 11. Long-Term Debt
Our long-term debt, net of original issue discount and unamortized debt issuance costs, consisted of the following:
 
March 28, 2020
 
March 28,
2020
 
December 31,
2019
(amounts in thousands)
Interest Rate
 
 
Senior notes
4.63% - 4.88%
 
$
800,000

 
$
800,000

Term loans
1.30% - 3.94%
 
586,446

 
591,153

Finance leases and other financing arrangements
1.90% - 6.00%
 
108,759

 
108,613

Mortgage notes
1.65%
 
27,361

 
28,175

Revolving credit facilities
2.25% -2.55%
 
100,000

 

Installment notes for stock
%
 

 
205

Unamortized debt issuance costs and original issue discount
 
(10,711
)
 
(10,774
)
 
 
 
1,611,855

 
1,517,372

Current maturities of long-term debt
 
(64,740
)
 
(65,846
)
Long-term debt
 
$
1,547,115

 
$
1,451,526

Summaries of our significant changes to outstanding debt agreements as of March 28, 2020 are as follows:
Senior Notes
In December 2017, we issued $800.0 million of unsecured Senior Notes in two tranches: $400.0 million bearing interest at 4.63% and maturing in December 2025, and $400.0 million bearing interest at 4.88% and maturing in December 2027 in a private placement for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
Term Loans
U.S. Facility - In February 2019, we purchased interest rate caps in order to effectively fix a 3.0% per annum ceiling on the LIBOR component of an aggregate $150 million of our term loans. The caps became effective March 29, 2019 and expire December 31, 2021.
In September 2019, we amended the Term Loan Facility to provide for an incremental aggregate principal amount of $125.0 million and used the proceeds primarily to repay $115.0 million of outstanding borrowings under the ABL Facility. The proceeds were net of the original issue discount of 0.5%, or $0.6 million, as well as $0.6 million in fees and expenses associated with the debt issuance. This amendment requires that approximately $1.4 million of the aggregate principal amount be repaid quarterly until the maturity date. There were no other changes to key terms and the facility maintains its original maturity date in December 2024. At March 28, 2020, the outstanding principal balance, net of original issue discount, was $555.0 million.
Australia Facility - In June 2019, we reallocated AUD 5.0 million from the term loan commitment to the interchangeable commitment of the Australia Senior Secured Credit Facility. The amended AUD 50.0 million floating rate term loan facility bears interest at a base rate of BBSY plus a margin ranging from 1.00% to 1.10%, includes a line fee of 1.25% on the commitment amount, and matures in February 2023. This facility had an outstanding principal balance of $30.3 million as of March 28, 2020.
Revolving Credit Facilities
ABL Facility - In December 2019, we amended our ABL facility to reflect current banking regulatory requirements, which do not have a financial impact. In March 2020, we drew $100.0 million under our ABL Facility as a precautionary measure to ensure funding of our seasonal working capital cash requirements given the recent significant impact on global financial markets and economies as a result of the COVID-19 pandemic. As of March 28, 2020, we had $100.0 million in borrowings, $35.6 million in letters of credit and $