Delaware | 3089 | 20-0645710 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) | ||
5020 Weston Parkway, Suite 400 Cary, North Carolina 27513 |
Three months ended July 2, 2016 and July 4, 2015 | ||
Six months ended July 2, 2016 and July 4, 2015 | ||
July 2, 2016 and December 31, 2015 | ||
Six months ended July 2, 2016 and July 4, 2015 | ||
(Amounts in thousands, except shares and per share data) | For the three months ended | ||||||
July 2, 2016 | July 4, 2015 | ||||||
Net sales | $ | 510,545 | $ | 502,334 | |||
Cost of products sold | 375,256 | 377,591 | |||||
Gross profit | 135,289 | 124,743 | |||||
Operating expenses: | |||||||
Selling, general and administrative expenses | 66,648 | 72,796 | |||||
Amortization of intangible assets | 6,459 | 6,283 | |||||
Total operating expenses | 73,107 | 79,079 | |||||
Operating earnings | 62,182 | 45,664 | |||||
Foreign currency gain (loss) | 255 | (98 | ) | ||||
Interest expense | (18,534 | ) | (18,699 | ) | |||
Interest income | 9 | 17 | |||||
Tax receivable agreement liability adjustment | (241 | ) | 2,006 | ||||
Income before provision (benefit) for income taxes | 43,671 | 28,890 | |||||
Provision (benefit) for income taxes | 2,025 | (1,482 | ) | ||||
Net income | $ | 41,646 | $ | 30,372 | |||
Comprehensive income | $ | 42,802 | $ | 29,517 | |||
Net income attributable to common shareholders per share: | |||||||
Basic | $ | 0.61 | $ | 0.45 | |||
Diluted | $ | 0.61 | $ | 0.45 | |||
Weighted average shares outstanding: | |||||||
Basic | 68,159,907 | 67,946,895 | |||||
Diluted | 68,370,548 | 68,056,591 |
For the six months ended | |||||||
(Amounts in thousands, except shares and per share data) | July 2, 2016 | July 4, 2015 | |||||
Net sales | $ | 919,159 | $ | 878,382 | |||
Cost of products sold | 697,169 | 693,358 | |||||
Gross profit | 221,990 | 185,024 | |||||
Operating expenses: | |||||||
Selling, general and administrative expenses | 137,383 | 140,928 | |||||
Amortization of intangible assets | 12,849 | 12,482 | |||||
Total operating expenses | 150,232 | 153,410 | |||||
Operating earnings | 71,758 | 31,614 | |||||
Foreign currency gain (loss) | 839 | (1,032 | ) | ||||
Interest expense | (37,226 | ) | (37,792 | ) | |||
Interest income | 19 | 26 | |||||
Loss on modification or extinguishment of debt | (2,399 | ) | — | ||||
Tax receivable agreement liability adjustment | (18,391 | ) | (15,179 | ) | |||
Income (loss) before provision (benefit) for income taxes | 14,600 | (22,363 | ) | ||||
Provision (benefit) for income taxes | 531 | (3,876 | ) | ||||
Net income (loss) | $ | 14,069 | $ | (18,487 | ) | ||
Comprehensive income (loss) | $ | 18,277 | $ | (24,686 | ) | ||
Net income (loss) attributable to common shareholders per share | |||||||
Basic | $ | 0.21 | $ | (0.27 | ) | ||
Diluted | $ | 0.21 | $ | (0.27 | ) | ||
Weighted average shares outstanding: | |||||||
Basic | 68,143,523 | 67,935,114 | |||||
Diluted | 68,219,762 | 67,935,114 |
(Amounts in thousands, except share amounts) | July 2, 2016 | December 31, 2015 | ||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 64,451 | $ | 109,425 | ||||
Accounts receivable, less allowances of $3,639 and $3,588, respectively | 261,170 | 195,165 | ||||||
Inventories: | ||||||||
Raw materials | 68,983 | 64,002 | ||||||
Work in process | 25,802 | 25,319 | ||||||
Finished goods | 65,921 | 61,082 | ||||||
Total inventory | 160,706 | 150,403 | ||||||
Prepaid expenses and other current assets | 23,879 | 24,647 | ||||||
Deferred income taxes | 13,705 | 11,261 | ||||||
Total current assets | 523,911 | 490,901 | ||||||
Property and Equipment, at cost: | ||||||||
Land | 8,228 | 8,175 | ||||||
Buildings and improvements | 67,126 | 66,321 | ||||||
Machinery and equipment | 399,517 | 385,750 | ||||||
Total property and equipment | 474,871 | 460,246 | ||||||
Less accumulated depreciation | (311,185 | ) | (299,243 | ) | ||||
Total property and equipment, net | 163,686 | 161,003 | ||||||
Other Assets: | ||||||||
Intangible assets, net | 116,810 | 128,384 | ||||||
Goodwill | 479,778 | 477,739 | ||||||
Other | 8,434 | 8,545 | ||||||
Total other assets | 605,022 | 614,668 | ||||||
$ | 1,292,619 | $ | 1,266,572 | |||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 82,929 | $ | 74,496 | ||||
Accrued expenses | 153,042 | 152,962 | ||||||
Current portion of payable to related parties pursuant to tax receivable agreement | 3,005 | 3,005 | ||||||
Current portion of long-term debt | 4,300 | 4,300 | ||||||
Total current liabilities | 243,276 | 234,763 | ||||||
Deferred income taxes | 23,670 | 21,387 | ||||||
Long-term portion of payable to related parties pursuant to tax receivable agreement | 39,202 | 20,811 | ||||||
Other long-term liabilities | 91,602 | 90,893 | ||||||
Long-term debt, less current portion | 952,439 | 975,531 | ||||||
Commitments and contingencies | ||||||||
Stockholders' Deficit: | ||||||||
Preferred stock $0.01 par, 50,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common stock $0.01 par, 250,000,000 shares authorized, 68,185,776 and 68,127,491 issued and outstanding, respectively | 682 | 681 | ||||||
Additional paid-in-capital | 750,261 | 749,296 | ||||||
Accumulated deficit | (776,155 | ) | (790,224 | ) | ||||
Accumulated other comprehensive loss | (32,358 | ) | (36,566 | ) | ||||
Total stockholders' deficit | (57,570 | ) | (76,813 | ) | ||||
$ | 1,292,619 | $ | 1,266,572 |
(Amounts in thousands) | For the six months ended | |||||||
July 2, 2016 | July 4, 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 14,069 | $ | (18,487 | ) | |||
Adjustments to reconcile net income (loss) to cash | ||||||||
provided by (used in) operating activities: | ||||||||
Depreciation and amortization expense | 28,343 | 29,397 | ||||||
Fair-value premium on purchased inventory | — | 54 | ||||||
Non-cash restructuring costs | 480 | 805 | ||||||
Non-cash interest expense, net | 6,960 | 6,661 | ||||||
(Gain) loss on foreign currency transactions | (839 | ) | 1,032 | |||||
Loss on modification or extinguishment of debt | 2,399 | — | ||||||
Stock based compensation | 596 | 1,145 | ||||||
Deferred income taxes | (391 | ) | (3,256 | ) | ||||
Tax receivable agreement liability adjustment | 18,391 | 15,179 | ||||||
Increase in tax uncertainty, net of valuation allowance | 125 | 147 | ||||||
Other | (5 | ) | (57 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (65,889 | ) | (68,565 | ) | ||||
Inventories | (10,317 | ) | 10,368 | |||||
Prepaid expenses and other assets | (253 | ) | 1,714 | |||||
Accounts payable | 8,366 | 9,142 | ||||||
Accrued expenses | 420 | (2,935 | ) | |||||
Cash payments on restructuring liabilities | (547 | ) | (1,450 | ) | ||||
Other | (478 | ) | (284 | ) | ||||
Net cash provided by (used in) operating activities | 1,430 | (19,390 | ) | |||||
Cash flows from investing activities: | ||||||||
Acquisitions | — | (21,000 | ) | |||||
Capital expenditures | (17,571 | ) | (13,366 | ) | ||||
Proceeds from sale of assets | 147 | 92 | ||||||
Net cash used in investing activities | (17,424 | ) | (34,274 | ) | ||||
Cash flows from financing activities: | ||||||||
Net revolver borrowings | — | 60,000 | ||||||
Payments on long-term debt | (32,150 | ) | (2,150 | ) | ||||
Proceeds from exercises of employee stock options | 369 | 648 | ||||||
Net cash provided by (used in) financing activities | (31,781 | ) | 58,498 | |||||
Impact of exchange rate movements on cash | 2,801 | (2,130 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (44,974 | ) | 2,704 | |||||
Cash and cash equivalents at the beginning of the period | 109,425 | 33,162 | ||||||
Cash and cash equivalents at the end of the period | $ | 64,451 | $ | 35,866 |
Buildings and improvements | 10-37 years |
Machinery and equipment, including leases | 3-15 years |
Leasehold improvements | Term of lease or useful life, whichever is shorter |
(Amounts in thousands) | |||
Accounts receivable | $ | 3,559 | |
Inventories | 712 | ||
Prepaid expenses and other current assets | 41 | ||
Property and equipment | 2,019 | ||
Intangible assets | 9,300 | ||
Goodwill | 7,642 | ||
Accounts payable, accrued expenses and other long-term liabilities | (2,273 | ) | |
$ | 21,000 |
(Amounts in thousands) | July 2, 2016 | December 31, 2015 | |||||
Foreign currency hedge included in other current assets/(liabilities) | $ | (366 | ) | $ | 829 |
• | Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
• | Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
• | Level 3: Inputs that reflect the reporting entity’s own assumptions. |
Quoted Prices in Active Markets | Significant Other | Significant | ||||||||||||||||||
(Amounts in thousands) | Fair | for Identical | Observable | Unobservable | ||||||||||||||||
Carrying | Value | Assets | Inputs | Inputs | ||||||||||||||||
Description | Value | Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Senior Notes-6.50% | $ | 650,000 | $ | 633,750 | $ | 633,750 | $ | — | $ | — | ||||||||||
Term Loan Facility | 390,325 | 386,422 | — | 386,422 | — | |||||||||||||||
As of July 2, 2016: | $ | 1,040,325 | $ | 1,020,172 | $ | 633,750 | $ | 386,422 | $ | — | ||||||||||
Liabilities: | ||||||||||||||||||||
Senior Notes-6.50% | $ | 650,000 | $ | 585,000 | $ | 585,000 | $ | — | $ | — | ||||||||||
Term Loan Facility | 422,475 | 411,913 | — | 411,913 | — | |||||||||||||||
As of December 31, 2015 | $ | 1,072,475 | $ | 996,913 | $ | 585,000 | $ | 411,913 | $ | — |
(Amounts in thousands) | ||||||||
July 2, 2016 | December 31, 2015 | |||||||
Siding, Fencing and Stone | $ | 349,340 | $ | 347,958 | ||||
Windows and Doors | 130,438 | 129,781 | ||||||
$ | 479,778 | $ | 477,739 |
Windows and | Siding, Fencing | |||||||
(Amounts in thousands) | Doors | and Stone | ||||||
Balance as of December 31, 2015 | ||||||||
Goodwill | $ | 457,554 | $ | 470,185 | ||||
Accumulated impairment losses | (327,773 | ) | (122,227 | ) | ||||
$ | 129,781 | $ | 347,958 | |||||
Currency translation adjustments | 657 | 1,382 | ||||||
Balance as of July 2, 2016 | ||||||||
Goodwill | 458,211 | 471,567 | ||||||
Accumulated impairment losses | (327,773 | ) | (122,227 | ) | ||||
$ | 130,438 | $ | 349,340 |
(Amounts in thousands) | Average Amortization Period | Accumulated | Net Carrying | |||||||||||
(in Years) | Cost | Amortization | Value | |||||||||||
As of July 2, 2016: | ||||||||||||||
Patents | 14 | $ | 12,770 | $ | (11,607 | ) | $ | 1,163 | ||||||
Trademarks/Tradenames | 12 | 117,321 | (79,767 | ) | 37,554 | |||||||||
Customer relationships | 13 | 225,133 | (148,741 | ) | 76,392 | |||||||||
Other | 5 | 5,573 | (3,872 | ) | 1,701 | |||||||||
Total intangible assets | 12 | $ | 360,797 | $ | (243,987 | ) | $ | 116,810 | ||||||
As of December 31, 2015: | ||||||||||||||
Patents | 14 | $ | 12,770 | $ | (11,136 | ) | $ | 1,634 | ||||||
Trademarks/Tradenames | 12 | 116,965 | (76,249 | ) | 40,716 | |||||||||
Customer relationships | 13 | 217,709 | (133,532 | ) | 84,177 | |||||||||
Other | 5 | 5,360 | (3,503 | ) | 1,857 | |||||||||
Total intangible assets | 12 | $ | 352,804 | $ | (224,420 | ) | $ | 128,384 |
Amortization | |||
(Amounts in thousands) | expense | ||
2016 (remainder of year) | $ | 12,000 | |
2017 | 20,889 | ||
2018 | 20,049 | ||
2019 | 15,930 | ||
2020 | 11,284 |
(Amounts in thousands) | For the three months ended | For the six months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||
Net income (loss) | $ | 41,646 | $ | 30,372 | $ | 14,069 | $ | (18,487 | ) | |||||||
Foreign currency translation adjustment | 584 | 276 | 5,357 | (7,170 | ) | |||||||||||
Unrealized gain (loss) on derivative instruments | 572 | (1,131 | ) | (1,149 | ) | 971 | ||||||||||
Comprehensive income (loss) | $ | 42,802 | $ | 29,517 | $ | 18,277 | $ | (24,686 | ) |
(Amounts in thousands) | ||||||||
July 2, 2016 | December 31, 2015 | |||||||
Senior secured asset based revolving credit facility | $ | — | $ | — | ||||
Term Loan due 2021, net of unamortized early tender premium, | ||||||||
discount, and debt issuance costs of $29,773 and $35,106, respectively | 360,552 | 387,369 | ||||||
6.50% Senior notes due 2022, net of unamortized early tender premium, | ||||||||
discount, and debt issuance costs of $53,813 and $57,538, respectively | 596,187 | 592,462 | ||||||
$ | 956,739 | $ | 979,831 | |||||
Less current portion of long-term debt | (4,300 | ) | (4,300 | ) | ||||
$ | 952,439 | $ | 975,531 |
(Amounts in thousands) | For the six months ended | |||||||
July 2, 2016 | July 4, 2015 | |||||||
Loss on modification of debt: | ||||||||
Term Loan Facility unamortized discount | $ | 1,915 | $ | — | ||||
Term Loan Facility unamortized debt issuance costs | 484 | — | ||||||
2,399 | — | |||||||
Total loss on modification or extinguishment of debt | $ | 2,399 | $ | — |
(Amounts in thousands) | For the three months ended | For the six months ended | |||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | |||||||||
Interest cost | 486 | 502 | 972 | 1,004 | |||||||||||||
Expected return on plan assets | (545 | ) | (577 | ) | (1,090 | ) | (1,155 | ) | |||||||||
Amortization of loss | 354 | 296 | 708 | 593 | |||||||||||||
Net periodic benefit expense | $ | 295 | $ | 221 | $ | 590 | $ | 442 |
(Amounts in thousands) | July 2, 2016 | December 31, 2015 | ||||||
Product claim liabilities | $ | 138 | $ | 138 | ||||
Multi-employer pension plan withdrawal liability | 809 | 960 | ||||||
Other | 529 | 664 | ||||||
$ | 1,476 | $ | 1,762 |
For the three months ended | For the six months ended | |||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Balance, beginning of period | $ | 77,461 | $ | 84,281 | $ | 76,562 | $ | 84,423 | ||||||||
Acquisition - Canyon | — | 100 | — | 100 | ||||||||||||
Acquisition adjustments - Simonton | — | (8,002 | ) | — | (8,002 | ) | ||||||||||
Warranty expense during period | 6,143 | 6,994 | 10,802 | 10,886 | ||||||||||||
Settlements made during period | (6,191 | ) | (6,396 | ) | (9,951 | ) | (10,430 | ) | ||||||||
Balance, end of period | $ | 77,413 | $ | 76,977 | $ | 77,413 | $ | 76,977 |
(Amounts in thousands) | July 2, 2016 | December 31, 2015 | ||||||
Insurance | $ | 8,621 | $ | 9,347 | ||||
Employee compensation and benefits | 21,325 | 20,381 | ||||||
Sales and marketing | 50,060 | 50,405 | ||||||
Product warranty | 16,128 | 16,619 | ||||||
Accrued freight | 2,060 | 1,445 | ||||||
Accrued interest | 17,687 | 17,808 | ||||||
Accrued environmental liability | 438 | 430 | ||||||
Accrued pension | 647 | 647 | ||||||
Accrued sales returns and discounts | 5,137 | 3,368 | ||||||
Accrued taxes | 6,797 | 5,575 | ||||||
Litigation accrual | 636 | 700 | ||||||
Other | 23,506 | 26,237 | ||||||
$ | 153,042 | $ | 152,962 |
(Amounts in thousands) | July 2, 2016 | December 31, 2015 | ||||||
Insurance | $ | 1,100 | $ | 1,237 | ||||
Pension liabilities | 14,912 | 15,033 | ||||||
Multi-employer pension withdrawal liability | 809 | 960 | ||||||
Product warranty | 61,285 | 59,943 | ||||||
Long-term product claim liability | 138 | 138 | ||||||
Long-term environmental liability | 1,183 | 1,211 | ||||||
Liabilities for tax uncertainties | 2,991 | 2,866 | ||||||
Litigation accrual | 810 | 829 | ||||||
Other | 8,374 | 8,676 | ||||||
$ | 91,602 | $ | 90,893 |
Stock Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | ||||||||
Balance at January 1, 2016 | 2,613,793 | $ | 13.75 | 5.22 | ||||||
Granted | — | — | — | |||||||
Exercised | (58,285 | ) | 6.34 | — | ||||||
Forfeited or expired | — | — | — | |||||||
Balance at July 2, 2016 | 2,555,508 | $ | 13.92 | 4.80 |
For the three months ended | For the six months ended | |||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Net sales | ||||||||||||||||
Siding, Fencing and Stone | $ | 244,411 | $ | 238,573 | $ | 420,787 | $ | 395,015 | ||||||||
Windows and Doors | 266,134 | 263,761 | 498,372 | 483,367 | ||||||||||||
$ | 510,545 | $ | 502,334 | $ | 919,159 | $ | 878,382 | |||||||||
Operating earnings (loss) | ||||||||||||||||
Siding, Fencing and Stone | $ | 51,305 | $ | 44,687 | $ | 71,678 | $ | 55,008 | ||||||||
Windows and Doors | 18,001 | 9,580 | 16,751 | (6,826 | ) | |||||||||||
Unallocated | (7,124 | ) | (8,603 | ) | (16,671 | ) | (16,568 | ) | ||||||||
$ | 62,182 | $ | 45,664 | $ | 71,758 | $ | 31,614 | |||||||||
Total assets as of | ||||||||||||||||
July 2, 2016 | December 31, 2015 | |||||||||||||||
Total assets | ||||||||||||||||
Siding, Fencing and Stone | $ | 709,047 | $ | 664,053 | ||||||||||||
Windows and Doors | 512,928 | 498,994 | ||||||||||||||
Unallocated | 70,644 | 103,525 | ||||||||||||||
$ | 1,292,619 | $ | 1,266,572 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
Three months ended July 2, 2016 | ||||||||||||||||||||||||
Guarantor | Issuer | Non- | ||||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
(Amounts in thousands) | Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 457,654 | $ | 52,891 | $ | — | $ | 510,545 | ||||||||||||
Cost of products sold | — | — | 334,668 | 40,588 | — | 375,256 | ||||||||||||||||||
Gross profit | — | — | 122,986 | 12,303 | — | 135,289 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Selling, general and | ||||||||||||||||||||||||
administrative expenses | — | 7,124 | 48,268 | 11,256 | — | 66,648 | ||||||||||||||||||
Intercompany administrative | ||||||||||||||||||||||||
charges | — | — | 10,736 | 549 | (11,285 | ) | — | |||||||||||||||||
Amortization of intangible assets | — | — | 5,373 | 1,086 | — | 6,459 | ||||||||||||||||||
Total operating expenses | — | 7,124 | 64,377 | 12,891 | (11,285 | ) | 73,107 | |||||||||||||||||
Operating earnings (loss) | — | (7,124 | ) | 58,609 | (588 | ) | 11,285 | 62,182 | ||||||||||||||||
Foreign currency gain | — | — | — | 255 | — | 255 | ||||||||||||||||||
Intercompany interest | — | 15,928 | (15,213 | ) | (715 | ) | — | — | ||||||||||||||||
Interest expense | — | (18,534 | ) | — | — | — | (18,534 | ) | ||||||||||||||||
Interest income | — | 1 | 4 | 4 | — | 9 | ||||||||||||||||||
Tax receivable agreement liability adjustment | — | (241 | ) | — | — | — | (241 | ) | ||||||||||||||||
Intercompany administrative income | — | 11,285 | — | — | (11,285 | ) | — | |||||||||||||||||
Income (loss) before equity in | ||||||||||||||||||||||||
subsidiaries' income (loss) | — | 1,315 | 43,400 | (1,044 | ) | — | 43,671 | |||||||||||||||||
Equity in subsidiaries' income (loss) | 41,646 | 40,331 | — | — | (81,977 | ) | — | |||||||||||||||||
Income (loss) before provision | ||||||||||||||||||||||||
for income taxes | 41,646 | 41,646 | 43,400 | (1,044 | ) | (81,977 | ) | 43,671 | ||||||||||||||||
Provision for income taxes | — | — | 1,161 | 864 | — | 2,025 | ||||||||||||||||||
Net income (loss) | $ | 41,646 | $ | 41,646 | $ | 42,239 | $ | (1,908 | ) | $ | (81,977 | ) | $ | 41,646 | ||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 584 | — | 584 | ||||||||||||||||||
Unrealized gain on derivative instrument | — | — | — | 572 | — | 572 | ||||||||||||||||||
Total comprehensive income (loss) | $ | 41,646 | $ | 41,646 | $ | 42,239 | $ | (752 | ) | $ | (81,977 | ) | $ | 42,802 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
Three months ended July 4, 2015 | ||||||||||||||||||||||||
Guarantor | Issuer | Non- | ||||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
(Amounts in thousands) | Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiary | Adjustments | Consolidated | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 438,259 | $ | 64,075 | $ | — | $ | 502,334 | ||||||||||||
Cost of products sold | — | — | 330,130 | 47,461 | — | 377,591 | ||||||||||||||||||
Gross profit | — | — | 108,129 | 16,614 | — | 124,743 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Selling, general and | ||||||||||||||||||||||||
administrative expenses | — | 8,603 | 48,875 | 15,318 | — | 72,796 | ||||||||||||||||||
Intercompany administrative | ||||||||||||||||||||||||
charges | — | — | 6,172 | 1,572 | (7,744 | ) | — | |||||||||||||||||
Amortization of intangible assets | — | — | 5,134 | 1,149 | — | 6,283 | ||||||||||||||||||
Total operating expenses | — | 8,603 | 60,181 | 18,039 | (7,744 | ) | 79,079 | |||||||||||||||||
Operating earnings (loss) | — | (8,603 | ) | 47,948 | (1,425 | ) | 7,744 | 45,664 | ||||||||||||||||
Foreign currency loss | — | — | — | (98 | ) | — | (98 | ) | ||||||||||||||||
Intercompany interest | — | 15,809 | (14,760 | ) | (1,049 | ) | — | — | ||||||||||||||||
Interest expense | — | (18,699 | ) | — | — | — | (18,699 | ) | ||||||||||||||||
Interest income | — | 1 | 11 | 5 | — | 17 | ||||||||||||||||||
Tax receivable agreement liability adjustment | — | 2,006 | — | — | — | 2,006 | ||||||||||||||||||
Intercompany administrative income | — | 7,744 | — | — | (7,744 | ) | — | |||||||||||||||||
Income (loss) before equity in | ||||||||||||||||||||||||
subsidiaries' income (loss) | — | (1,742 | ) | 33,199 | (2,567 | ) | — | 28,890 | ||||||||||||||||
Equity in subsidiaries' income (loss) | 30,372 | 32,114 | — | — | (62,486 | ) | — | |||||||||||||||||
Income (loss) before provision (benefit) | ||||||||||||||||||||||||
for income taxes | 30,372 | 30,372 | 33,199 | (2,567 | ) | (62,486 | ) | 28,890 | ||||||||||||||||
Provision (benefit) for income taxes | — | — | (1,791 | ) | 309 | — | (1,482 | ) | ||||||||||||||||
Net income (loss) | $ | 30,372 | $ | 30,372 | $ | 34,990 | $ | (2,876 | ) | $ | (62,486 | ) | $ | 30,372 | ||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 276 | — | 276 | ||||||||||||||||||
Unrealized loss on derivative instrument | — | — | — | (1,131 | ) | — | (1,131 | ) | ||||||||||||||||
Total comprehensive income (loss) | $ | 30,372 | $ | 30,372 | $ | 34,990 | $ | (3,731 | ) | $ | (62,486 | ) | $ | 29,517 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
For the six months ended July 2, 2016 | ||||||||||||||||||||||||
Guarantor | Issuer | Non- | ||||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
(Amounts in thousands) | Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 827,168 | $ | 91,991 | $ | — | $ | 919,159 | ||||||||||||
Cost of products sold | — | — | 624,540 | 72,629 | — | 697,169 | ||||||||||||||||||
Gross profit | — | — | 202,628 | 19,362 | — | 221,990 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Selling, general and | ||||||||||||||||||||||||
administrative expenses | — | 16,671 | 97,291 | 23,421 | — | 137,383 | ||||||||||||||||||
Intercompany administrative | ||||||||||||||||||||||||
charges | — | — | 18,539 | 2,222 | (20,761 | ) | — | |||||||||||||||||
Amortization of intangible assets | — | — | 10,667 | 2,182 | — | 12,849 | ||||||||||||||||||
Total operating expenses | — | 16,671 | 126,497 | 27,825 | (20,761 | ) | 150,232 | |||||||||||||||||
Operating earnings (loss) | — | (16,671 | ) | 76,131 | (8,463 | ) | 20,761 | 71,758 | ||||||||||||||||
Foreign currency gain | — | — | — | 839 | — | 839 | ||||||||||||||||||
Intercompany interest | — | 31,861 | (29,924 | ) | (1,937 | ) | — | — | ||||||||||||||||
Interest expense | — | (37,225 | ) | — | (1 | ) | — | (37,226 | ) | |||||||||||||||
Interest income | — | 3 | 6 | 10 | — | 19 | ||||||||||||||||||
Loss on modification or | ||||||||||||||||||||||||
extinguishment of debt | — | (2,399 | ) | — | — | — | (2,399 | ) | ||||||||||||||||
Tax receivable agreement liability adjustment | — | (18,391 | ) | — | — | — | (18,391 | ) | ||||||||||||||||
Intercompany administrative income | — | 20,761 | — | — | (20,761 | ) | — | |||||||||||||||||
Income (loss) before equity in | ||||||||||||||||||||||||
subsidiaries' income (loss) | — | (22,061 | ) | 46,213 | (9,552 | ) | — | 14,600 | ||||||||||||||||
Equity in subsidiaries' income (loss) | 14,069 | 36,130 | — | — | (50,199 | ) | — | |||||||||||||||||
Income (loss) before provision (benefit) | ||||||||||||||||||||||||
for income taxes | 14,069 | 14,069 | 46,213 | (9,552 | ) | (50,199 | ) | 14,600 | ||||||||||||||||
Provision (benefit) for income taxes | — | — | 634 | (103 | ) | — | 531 | |||||||||||||||||
Net income (loss) | $ | 14,069 | $ | 14,069 | $ | 45,579 | $ | (9,449 | ) | $ | (50,199 | ) | $ | 14,069 | ||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 5,357 | — | 5,357 | ||||||||||||||||||
Unrealized gain on derivative instrument | — | — | — | (1,149 | ) | — | (1,149 | ) | ||||||||||||||||
Total comprehensive income (loss) | $ | 14,069 | $ | 14,069 | $ | 45,579 | $ | (5,241 | ) | $ | (50,199 | ) | $ | 18,277 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
For the six months ended July 4, 2015 | ||||||||||||||||||||||||
Guarantor | Issuer | Non- | ||||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
(Amounts in thousands) | Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiary | Adjustments | Consolidated | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 765,650 | $ | 112,732 | $ | — | $ | 878,382 | ||||||||||||
Cost of products sold | — | — | 606,574 | 86,784 | — | 693,358 | ||||||||||||||||||
Gross profit | — | — | 159,076 | 25,948 | — | 185,024 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Selling, general and | ||||||||||||||||||||||||
administrative expenses | — | 16,568 | 94,779 | 29,581 | — | 140,928 | ||||||||||||||||||
Intercompany administrative | ||||||||||||||||||||||||
charges | — | — | 14,946 | 2,722 | (17,668 | ) | — | |||||||||||||||||
Amortization of intangible assets | — | — | 10,118 | 2,364 | — | 12,482 | ||||||||||||||||||
Total operating expenses | — | 16,568 | 119,843 | 34,667 | (17,668 | ) | 153,410 | |||||||||||||||||
Operating earnings (loss) | — | (16,568 | ) | 39,233 | (8,719 | ) | 17,668 | 31,614 | ||||||||||||||||
Foreign currency loss | — | — | — | (1,032 | ) | — | (1,032 | ) | ||||||||||||||||
Intercompany interest | — | 31,592 | (29,721 | ) | (1,871 | ) | — | — | ||||||||||||||||
Interest expense | — | (37,784 | ) | 1 | (9 | ) | — | (37,792 | ) | |||||||||||||||
Interest income | — | 2 | 13 | 11 | — | 26 | ||||||||||||||||||
Tax receivable agreement liability adjustment | — | (15,179 | ) | — | — | — | (15,179 | ) | ||||||||||||||||
Intercompany administrative income | — | 17,668 | — | — | (17,668 | ) | — | |||||||||||||||||
Income (loss) before equity in | ||||||||||||||||||||||||
subsidiaries' income (loss) | — | (20,269 | ) | 9,526 | (11,620 | ) | — | (22,363 | ) | |||||||||||||||
Equity in subsidiaries' income (loss) | (18,487 | ) | 1,782 | — | — | 16,705 | — | |||||||||||||||||
Income (loss) before benefit | ||||||||||||||||||||||||
for income taxes | (18,487 | ) | (18,487 | ) | 9,526 | (11,620 | ) | 16,705 | (22,363 | ) | ||||||||||||||
Benefit for income taxes | — | — | (3,371 | ) | (505 | ) | — | (3,876 | ) | |||||||||||||||
Net income (loss) | $ | (18,487 | ) | $ | (18,487 | ) | $ | 12,897 | $ | (11,115 | ) | $ | 16,705 | $ | (18,487 | ) | ||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | (7,170 | ) | — | (7,170 | ) | ||||||||||||||||
Unrealized gain on derivative instrument | — | — | — | 971 | — | 971 | ||||||||||||||||||
Total comprehensive income (loss) | $ | (18,487 | ) | $ | (18,487 | ) | $ | 12,897 | $ | (17,314 | ) | $ | 16,705 | $ | (24,686 | ) |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEET | ||||||||||||||||||||||||
As of July 2, 2016 | ||||||||||||||||||||||||
(Amounts in thousands) | Guarantor | Issuer | Non- | |||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
ASSETS | Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||
Current Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 63,973 | $ | (8,434 | ) | $ | 8,912 | $ | — | $ | 64,451 | |||||||||||
Accounts receivable, net | — | — | 232,756 | 28,414 | — | 261,170 | ||||||||||||||||||
Inventories: | ||||||||||||||||||||||||
Raw materials | — | — | 63,547 | 5,436 | — | 68,983 | ||||||||||||||||||
Work in process | — | — | 24,131 | 1,671 | — | 25,802 | ||||||||||||||||||
Finished goods | — | — | 51,070 | 14,851 | — | 65,921 | ||||||||||||||||||
Total inventory | — | — | 138,748 | 21,958 | — | 160,706 | ||||||||||||||||||
Prepaid expenses and other | ||||||||||||||||||||||||
current assets | — | 1,346 | 19,820 | 2,713 | — | 23,879 | ||||||||||||||||||
Deferred income taxes | — | — | 13,659 | 46 | — | 13,705 | ||||||||||||||||||
Total current assets | — | 65,319 | 396,549 | 62,043 | — | 523,911 | ||||||||||||||||||
Investments in subsidiaries | (57,570 | ) | (230,693 | ) | — | — | 288,263 | — | ||||||||||||||||
Property and Equipment, at cost: | ||||||||||||||||||||||||
Land | — | — | 7,436 | 792 | — | 8,228 | ||||||||||||||||||
Buildings and improvements | — | — | 62,543 | 4,583 | — | 67,126 | ||||||||||||||||||
Machinery and equipment | — | 1,671 | 378,904 | 18,942 | — | 399,517 | ||||||||||||||||||
— | 1,671 | 448,883 | 24,317 | — | 474,871 | |||||||||||||||||||
Less accumulated depreciation | — | (590 | ) | (300,611 | ) | (9,984 | ) | — | (311,185 | ) | ||||||||||||||
Total property and equipment, net | — | 1,081 | 148,272 | 14,333 | — | 163,686 | ||||||||||||||||||
Other Assets: | ||||||||||||||||||||||||
Intangible assets, net | — | — | 101,687 | 15,123 | — | 116,810 | ||||||||||||||||||
Goodwill | — | — | 449,366 | 30,412 | — | 479,778 | ||||||||||||||||||
Intercompany note receivable | — | 1,135,073 | — | — | (1,135,073 | ) | — | |||||||||||||||||
Other | — | 4,244 | 4,190 | — | — | 8,434 | ||||||||||||||||||
Total other assets | — | 1,139,317 | 555,243 | 45,535 | (1,135,073 | ) | 605,022 | |||||||||||||||||
$ | (57,570 | ) | $ | 975,024 | $ | 1,100,064 | $ | 121,911 | $ | (846,810 | ) | $ | 1,292,619 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | — | $ | 249 | $ | 70,404 | $ | 12,276 | $ | — | $ | 82,929 | ||||||||||||
Accrued expenses | — | 23,134 | 110,871 | 19,037 | — | 153,042 | ||||||||||||||||||
Current portion of payable to related | ||||||||||||||||||||||||
parties pursuant to tax receivable agreement | — | 3,005 | — | — | — | 3,005 | ||||||||||||||||||
Current portion of long-term debt | — | 4,300 | — | — | — | 4,300 | ||||||||||||||||||
Total current liabilities | — | 30,688 | 181,275 | 31,313 | — | 243,276 | ||||||||||||||||||
Deferred income taxes | — | — | 19,635 | 4,035 | — | 23,670 | ||||||||||||||||||
Intercompany note payable | — | — | 1,026,902 | 108,171 | (1,135,073 | ) | — | |||||||||||||||||
Long-term portion of payable to related | ||||||||||||||||||||||||
parties pursuant to tax receivable agreement | — | 39,202 | — | — | — | 39,202 | ||||||||||||||||||
Other long-term liabilities | — | 10,265 | 77,085 | 4,252 | — | 91,602 | ||||||||||||||||||
Long-term debt, less current portion | — | 952,439 | — | — | — | 952,439 | ||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||
Stockholders' Equity (Deficit): | ||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | ||||||||||||||||||
Common stock | 682 | 682 | — | — | (682 | ) | 682 | |||||||||||||||||
Additional paid-in-capital | 750,261 | 750,261 | 350,526 | 25,502 | (1,126,289 | ) | 750,261 | |||||||||||||||||
(Accumulated deficit) retained earnings | (776,155 | ) | (776,155 | ) | (539,385 | ) | (34,995 | ) | 1,350,535 | (776,155 | ) | |||||||||||||
Accumulated other | ||||||||||||||||||||||||
comprehensive loss | (32,358 | ) | (32,358 | ) | (15,974 | ) | (16,367 | ) | 64,699 | (32,358 | ) | |||||||||||||
Total stockholders' (deficit) equity | (57,570 | ) | (57,570 | ) | (204,833 | ) | (25,860 | ) | 288,263 | (57,570 | ) | |||||||||||||
$ | (57,570 | ) | $ | 975,024 | $ | 1,100,064 | $ | 121,911 | $ | (846,810 | ) | $ | 1,292,619 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEET | ||||||||||||||||||||||||
As of December 31, 2015 | ||||||||||||||||||||||||
Guarantor | Issuer | Non- | ||||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
(Amounts in thousands) | Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiary | Adjustments | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 94,692 | $ | (4,944 | ) | $ | 19,677 | $ | — | $ | 109,425 | |||||||||||
Accounts receivable, net | — | — | 172,560 | 22,605 | — | 195,165 | ||||||||||||||||||
Inventories: | ||||||||||||||||||||||||
Raw materials | — | — | 58,400 | 5,602 | — | 64,002 | ||||||||||||||||||
Work in process | — | — | 23,126 | 2,193 | — | 25,319 | ||||||||||||||||||
Finished goods | — | — | 47,946 | 13,136 | — | 61,082 | ||||||||||||||||||
Total inventory | — | — | 129,472 | 20,931 | — | 150,403 | ||||||||||||||||||
Prepaid expenses and other | ||||||||||||||||||||||||
current assets | — | 944 | 20,310 | 3,393 | — | 24,647 | ||||||||||||||||||
Deferred income taxes | — | — | 11,255 | 6 | — | 11,261 | ||||||||||||||||||
Total current assets | — | 95,636 | 328,653 | 66,612 | — | 490,901 | ||||||||||||||||||
Investments in subsidiaries | (76,813 | ) | (245,265 | ) | — | — | 322,078 | — | ||||||||||||||||
Property and Equipment, at cost: | ||||||||||||||||||||||||
Land | — | — | 7,436 | 739 | — | 8,175 | ||||||||||||||||||
Buildings and improvements | — | — | 61,883 | 4,438 | — | 66,321 | ||||||||||||||||||
Machinery and equipment | — | 4,813 | 364,093 | 16,844 | — | 385,750 | ||||||||||||||||||
— | 4,813 | 433,412 | 22,021 | — | 460,246 | |||||||||||||||||||
Less accumulated depreciation | — | (1,755 | ) | (288,542 | ) | (8,946 | ) | — | (299,243 | ) | ||||||||||||||
Total property and equipment, net | — | 3,058 | 144,870 | 13,075 | — | 161,003 | ||||||||||||||||||
Other Assets: | ||||||||||||||||||||||||
Intangible assets, net | — | — | 112,173 | 16,211 | — | 128,384 | ||||||||||||||||||
Goodwill | — | — | 449,366 | 28,373 | — | 477,739 | ||||||||||||||||||
Intercompany note receivable | — | 1,104,510 | — | — | (1,104,510 | ) | — | |||||||||||||||||
Other | — | 4,831 | 3,714 | — | — | 8,545 | ||||||||||||||||||
Total other assets | — | 1,109,341 | 565,253 | 44,584 | (1,104,510 | ) | 614,668 | |||||||||||||||||
$ | (76,813 | ) | $ | 962,770 | $ | 1,038,776 | $ | 124,271 | $ | (782,432 | ) | $ | 1,266,572 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | — | $ | 235 | $ | 60,655 | $ | 13,606 | $ | — | $ | 74,496 | ||||||||||||
Accrued expenses | — | 24,512 | 113,051 | 15,399 | — | 152,962 | ||||||||||||||||||
Current portion of payable to related | ||||||||||||||||||||||||
parties pursuant to tax receivable agreement | — | 3,005 | — | — | — | 3,005 | ||||||||||||||||||
Current portion of long-term debt | — | 4,300 | — | — | — | 4,300 | ||||||||||||||||||
Total current liabilities | — | 32,052 | 173,706 | 29,005 | — | 234,763 | ||||||||||||||||||
Deferred income taxes | — | — | 17,470 | 3,917 | — | 21,387 | ||||||||||||||||||
Intercompany note payable | — | — | 1,002,447 | 102,063 | (1,104,510 | ) | — | |||||||||||||||||
Long-term portion of payable to related | ||||||||||||||||||||||||
parties pursuant to tax receivable agreement | — | 20,811 | — | — | — | 20,811 | ||||||||||||||||||
Other long-term liabilities | — | 11,189 | 75,911 | 3,793 | — | 90,893 | ||||||||||||||||||
Long-term debt | — | 975,531 | — | — | — | 975,531 | ||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||
Stockholders' Equity (Deficit): | ||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | ||||||||||||||||||
Common stock | 681 | 681 | — | — | (681 | ) | 681 | |||||||||||||||||
Additional paid-in-capital | 749,296 | 749,296 | 370,180 | 31,611 | (1,151,087 | ) | 749,296 | |||||||||||||||||
(Accumulated deficit) retained earnings | (790,224 | ) | (790,224 | ) | (584,964 | ) | (25,546 | ) | 1,400,734 | (790,224 | ) | |||||||||||||
Accumulated other | ||||||||||||||||||||||||
comprehensive income (loss) | (36,566 | ) | (36,566 | ) | (15,974 | ) | (20,572 | ) | 73,112 | (36,566 | ) | |||||||||||||
Total stockholders' (deficit) equity | (76,813 | ) | (76,813 | ) | (230,758 | ) | (14,507 | ) | 322,078 | (76,813 | ) | |||||||||||||
$ | (76,813 | ) | $ | 962,770 | $ | 1,038,776 | $ | 124,271 | $ | (782,432 | ) | $ | 1,266,572 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS | ||||||||||||||||||||||||
For the six months ended July 2, 2016 | ||||||||||||||||||||||||
(Amounts in thousands) | Guarantor | Issuer | Non- | |||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net income (loss) | $ | 14,069 | $ | 14,069 | $ | 45,579 | $ | (9,449 | ) | $ | (50,199 | ) | $ | 14,069 | ||||||||||
Adjustments to reconcile net income (loss) | ||||||||||||||||||||||||
to cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 88 | 24,908 | 3,347 | — | 28,343 | ||||||||||||||||||
Non-cash restructuring costs | — | — | — | 480 | — | 480 | ||||||||||||||||||
Non-cash interest expense, net | — | 6,960 | — | — | — | 6,960 | ||||||||||||||||||
Gain on foreign currency transactions | — | — | — | (839 | ) | — | (839 | ) | ||||||||||||||||
Loss on modification or extinguishment of debt | — | 2,399 | — | — | — | 2,399 | ||||||||||||||||||
Stock based compensation | — | 596 | — | — | — | 596 | ||||||||||||||||||
Deferred income taxes | — | — | (240 | ) | (151 | ) | — | (391 | ) | |||||||||||||||
Tax receivable agreement liability adjustment | — | 18,391 | — | — | — | 18,391 | ||||||||||||||||||
Increase in tax uncertainty, | ||||||||||||||||||||||||
net of valuation allowance | — | — | 125 | — | — | 125 | ||||||||||||||||||
Equity in subsidiaries' net income (loss) | (14,069 | ) | (36,130 | ) | — | — | 50,199 | — | ||||||||||||||||
Other | — | — | (5 | ) | — | — | (5 | ) | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable, net | — | — | (61,978 | ) | (3,911 | ) | — | (65,889 | ) | |||||||||||||||
Inventories | — | — | (10,771 | ) | 454 | — | (10,317 | ) | ||||||||||||||||
Prepaid expenses and other assets | — | (117 | ) | (216 | ) | 80 | — | (253 | ) | |||||||||||||||
Accounts payable | — | 14 | 6,115 | 2,237 | — | 8,366 | ||||||||||||||||||
Accrued expenses | — | (2,255 | ) | 4,736 | (2,061 | ) | — | 420 | ||||||||||||||||
Cash payments on restructuring liabilities | — | — | (112 | ) | (435 | ) | — | (547 | ) | |||||||||||||||
Other | — | — | — | (478 | ) | — | (478 | ) | ||||||||||||||||
Net cash provided by (used in) | ||||||||||||||||||||||||
operating activities | — | 4,015 | 8,141 | (10,726 | ) | — | 1,430 | |||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Capital expenditures | — | (1,134 | ) | (14,950 | ) | (1,487 | ) | — | (17,571 | ) | ||||||||||||||
Proceeds from sale of assets | — | — | 57 | 90 | — | 147 | ||||||||||||||||||
Net cash used in | ||||||||||||||||||||||||
investing activities | — | (1,134 | ) | (14,893 | ) | (1,397 | ) | — | (17,424 | ) | ||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Net revolver borrowings | — | — | — | — | — | — | ||||||||||||||||||
Payments on long-term debt | — | (32,150 | ) | — | — | — | (32,150 | ) | ||||||||||||||||
Proceeds from exercises of employee stock options | — | 369 | — | — | — | 369 | ||||||||||||||||||
Proceeds from intercompany | ||||||||||||||||||||||||
investment | — | (1,819 | ) | 3,262 | (1,443 | ) | — | — | ||||||||||||||||
Net cash provided by (used in) | ||||||||||||||||||||||||
financing activities | — | (33,600 | ) | 3,262 | (1,443 | ) | — | (31,781 | ) | |||||||||||||||
Impact of exchange rate movements on cash | — | — | — | 2,801 | — | 2,801 | ||||||||||||||||||
Net decrease in cash | ||||||||||||||||||||||||
and cash equivalents | — | (30,719 | ) | (3,490 | ) | (10,765 | ) | — | (44,974 | ) | ||||||||||||||
Cash and cash equivalents at the | ||||||||||||||||||||||||
beginning of the period | — | 94,692 | (4,944 | ) | 19,677 | — | 109,425 | |||||||||||||||||
Cash and cash equivalents at the end | ||||||||||||||||||||||||
of the period | $ | — | $ | 63,973 | $ | (8,434 | ) | $ | 8,912 | $ | — | $ | 64,451 |
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS | ||||||||||||||||||||||||
For the six months ended July 4, 2015 | ||||||||||||||||||||||||
(Amounts in thousands) | Guarantor | Issuer | Non- | |||||||||||||||||||||
Ply Gem | Ply Gem | Guarantor | Guarantor | Consolidating | ||||||||||||||||||||
Holdings, Inc. | Industries, Inc. | Subsidiaries | Subsidiary | Adjustments | Consolidated | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net income (loss) | $ | (18,487 | ) | $ | (18,487 | ) | $ | 12,897 | $ | (11,115 | ) | $ | 16,705 | $ | (18,487 | ) | ||||||||
Adjustments to reconcile net income (loss) | ||||||||||||||||||||||||
to cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization expense | — | 200 | 25,520 | 3,677 | — | 29,397 | ||||||||||||||||||
Fair-value premium on purchased inventory | — | — | 54 | — | — | 54 | ||||||||||||||||||
Non-cash restructuring expense | — | — | — | 805 | — | 805 | ||||||||||||||||||
Non-cash interest expense, net | — | 6,661 | — | — | — | 6,661 | ||||||||||||||||||
Loss on foreign currency transactions | — | — | — | 1,032 | — | 1,032 | ||||||||||||||||||
Stock based compensation | — | 1,145 | — | — | — | 1,145 | ||||||||||||||||||
Deferred income taxes | — | — | (3,256 | ) | — | — | (3,256 | ) | ||||||||||||||||
Tax receivable agreement liability adjustment | — | 15,179 | — | — | — | 15,179 | ||||||||||||||||||
Increase in tax uncertainty, | ||||||||||||||||||||||||
net of valuation allowance | — | — | 147 | — | — | 147 | ||||||||||||||||||
Equity in subsidiaries' net income (loss) | 18,487 | (1,782 | ) | — | — | (16,705 | ) | — | ||||||||||||||||
Other | — | — | (57 | ) | — | — | (57 | ) | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable, net | — | — | (64,652 | ) | (3,913 | ) | — | (68,565 | ) | |||||||||||||||
Inventories | — | — | 10,777 | (409 | ) | — | 10,368 | |||||||||||||||||
Prepaid expenses and other assets | — | 463 | 2,478 | (1,227 | ) | — | 1,714 | |||||||||||||||||
Accounts payable | — | (116 | ) | 12,975 | (3,717 | ) | — | 9,142 | ||||||||||||||||
Accrued expenses | — | (4,360 | ) | 4,787 | (3,362 | ) | — | (2,935 | ) | |||||||||||||||
Cash payments on restructuring liabilities | — | — | (375 | ) | (1,075 | ) | — | (1,450 | ) | |||||||||||||||
Other | — | (15 | ) | (269 | ) | — | — | (284 | ) | |||||||||||||||
Net cash provided by (used in) | ||||||||||||||||||||||||
operating activities | — | (1,112 | ) | 1,026 | (19,304 | ) | — | (19,390 | ) | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Acquisitions | — | — | (21,000 | ) | — | — | (21,000 | ) | ||||||||||||||||
Capital expenditures | — | (539 | ) | (11,254 | ) | (1,573 | ) | — | (13,366 | ) | ||||||||||||||
Proceeds from sale of assets | — | — | 73 | 19 | — | 92 | ||||||||||||||||||
Net cash used in | ||||||||||||||||||||||||
investing activities | — | (539 | ) | (32,181 | ) | (1,554 | ) | — | (34,274 | ) | ||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Net revolver borrowings | — | 60,000 | — | — | — | 60,000 | ||||||||||||||||||
Payments on long-term debt | — | (2,150 | ) | — | — | — | (2,150 | ) | ||||||||||||||||
Proceeds from exercises of employee stock options | — | 648 | — | — | — | 648 | ||||||||||||||||||
Proceeds from intercompany | ||||||||||||||||||||||||
investment | — | (53,976 | ) | 32,506 | 21,470 | — | — | |||||||||||||||||
Net cash provided by | ||||||||||||||||||||||||
financing activities | — | 4,522 | 32,506 | 21,470 | — | 58,498 | ||||||||||||||||||
Impact of exchange rate movement | ||||||||||||||||||||||||
on cash | — | — | — | (2,130 | ) | — | (2,130 | ) | ||||||||||||||||
Net increase (decrease) in cash | ||||||||||||||||||||||||
and cash equivalents | — | 2,871 | 1,351 | (1,518 | ) | — | 2,704 | |||||||||||||||||
Cash and cash equivalents at the | ||||||||||||||||||||||||
beginning of the period | — | 23,555 | (5,845 | ) | 15,452 | — | 33,162 | |||||||||||||||||
Cash and cash equivalents at the end | ||||||||||||||||||||||||
of the period | $ | — | $ | 26,426 | $ | (4,494 | ) | $ | 13,934 | $ | — | $ | 35,866 |
For the three months ended | For the six months ended | ||||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Net sales | |||||||||||||||||
Siding, Fencing and Stone | $ | 244,411 | $ | 238,573 | $ | 420,787 | $ | 395,015 | |||||||||
Windows and Doors | 266,134 | 263,761 | 498,372 | 483,367 | |||||||||||||
Operating earnings (loss) | |||||||||||||||||
Siding, Fencing and Stone | 51,305 | 44,687 | 71,678 | 55,008 | |||||||||||||
Windows and Doors | 18,001 | 9,580 | 16,751 | (6,826 | ) | ||||||||||||
Unallocated | (7,124 | ) | (8,603 | ) | (16,671 | ) | (16,568 | ) | |||||||||
Foreign currency gain (loss) | |||||||||||||||||
Siding, Fencing and Stone | 129 | (8 | ) | 203 | (261 | ) | |||||||||||
Windows and Doors | 126 | (90 | ) | 636 | (771 | ) | |||||||||||
Interest income (expense), net | |||||||||||||||||
Siding, Fencing and Stone | 6 | 9 | 9 | 3 | |||||||||||||
Windows and Doors | 2 | 7 | 6 | 13 | |||||||||||||
Unallocated | (18,533 | ) | (18,698 | ) | (37,222 | ) | (37,782 | ) | |||||||||
Income tax benefit (provision) | |||||||||||||||||
Unallocated | (2,025 | ) | 1,482 | (531 | ) | 3,876 | |||||||||||
Tax Receivable Agreement liability adjustment | |||||||||||||||||
Unallocated | (241 | ) | 2,006 | (18,391 | ) | (15,179 | ) | ||||||||||
Loss on modification or | |||||||||||||||||
extinguishment of debt | |||||||||||||||||
Unallocated | — | — | (2,399 | ) | — | ||||||||||||
Net income (loss) | $ | 41,646 | $ | 30,372 | $ | 14,069 | $ | (18,487 | ) |
For the three months ended | ||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Statement of operations data: | ||||||||||||||
Net sales | $ | 244,411 | 100.0 | % | $ | 238,573 | 100.0 | % | ||||||
Gross profit | 77,747 | 31.8 | % | 70,700 | 29.6 | % | ||||||||
SG&A expense | 23,067 | 9.4 | % | 22,821 | 9.6 | % | ||||||||
Amortization of intangible assets | 3,375 | 1.4 | % | 3,192 | 1.3 | % | ||||||||
Operating earnings | 51,305 | 21.0 | % | 44,687 | 18.7 | % | ||||||||
Currency transaction gain (loss) | 129 | 0.1 | % | (8 | ) | — | % |
For the six months ended | ||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Statement of operations data: | ||||||||||||||
Net sales | $ | 420,787 | 100.0 | % | $ | 395,015 | 100.0 | % | ||||||
Gross profit | 124,011 | 29.5 | % | 105,471 | 26.7 | % | ||||||||
SG&A expense | 45,657 | 10.9 | % | 44,195 | 11.2 | % | ||||||||
Amortization of intangible assets | 6,676 | 1.6 | % | 6,268 | 1.6 | % | ||||||||
Operating earnings | 71,678 | 17.0 | % | 55,008 | 13.9 | % | ||||||||
Currency transaction gain (loss) | 203 | — | % | (261 | ) | (0.1 | )% |
For the three months ended | ||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Statement of operations data: | ||||||||||||||
Net sales | $ | 266,134 | 100.0 | % | $ | 263,761 | 100.0 | % | ||||||
Gross profit | 57,542 | 21.6 | % | 54,043 | 20.5 | % | ||||||||
SG&A expense | 36,457 | 13.7 | % | 41,372 | 15.7 | % | ||||||||
Amortization of intangible assets | 3,084 | 1.2 | % | 3,091 | 1.2 | % | ||||||||
Operating earnings | 18,011 | 6.8 | % | 9,580 | 3.6 | % | ||||||||
Currency transaction gain (loss) | 126 | — | % | (90 | ) | — | % |
For the six months ended | ||||||||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Statement of operations data: | ||||||||||||||
Net sales | $ | 498,372 | 100.0 | % | $ | 483,367 | 100.0 | % | ||||||
Gross profit | 97,979 | 19.7 | % | 79,553 | 16.5 | % | ||||||||
SG&A expense | 75,055 | 15.1 | % | 80,165 | 16.6 | % | ||||||||
Amortization of intangible assets | 6,173 | 1.2 | % | 6,214 | 1.3 | % | ||||||||
Operating earnings (loss) | 16,751 | 3.4 | % | (6,826 | ) | (1.4 | )% | |||||||
Currency transaction gain (loss) | 636 | 0.1 | % | (771 | ) | (0.2 | )% |
For the three months ended | ||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | ||||||
(unaudited) | (unaudited) | |||||||
Statement of operations data: | ||||||||
SG&A expense | $ | (7,124 | ) | $ | (8,603 | ) | ||
Operating loss | (7,124 | ) | (8,603 | ) | ||||
Interest expense | (18,534 | ) | (18,699 | ) | ||||
Interest income | 1 | 1 | ||||||
Tax receivable agreement liability adjustment | (241 | ) | 2,006 | |||||
Income tax (provision) benefit for income taxes | $ | (2,025 | ) | $ | 1,482 |
For the six months ended | ||||||||
(Amounts in thousands) | July 2, 2016 | July 4, 2015 | ||||||
(unaudited) | (unaudited) | |||||||
Statement of operations data: | ||||||||
SG&A expense | $ | (16,671 | ) | $ | (16,568 | ) | ||
Operating loss | (16,671 | ) | (16,568 | ) | ||||
Interest expense | (37,225 | ) | (37,784 | ) | ||||
Interest income | 3 | 2 | ||||||
Loss on modification or extinguishment of debt | (2,399 | ) | — | |||||
Tax receivable agreement liability adjustment | (18,391 | ) | (15,179 | ) | ||||
Income tax (provision) benefit for income taxes | $ | (531 | ) | $ | 3,876 |
(Amounts in thousands) | For the six months ended | |||||||
July 2, 2016 | July 4, 2015 | |||||||
Loss on modification of debt: | ||||||||
Term Loan Facility unamortized discount | $ | 1,915 | — | |||||
Term Loan Facility unamortized debt issuance costs | 484 | — | ||||||
2,399 | — | |||||||
Total loss on modification or extinguishment of debt | $ | 2,399 | $ | — |
• | our high degree of leverage and significant debt service obligations; |
• | restrictions under the indenture governing the 6.50% Senior Notes and the restrictions under our Term Loan Facility and ABL Facility; |
• | the competitive nature of our industry; |
• | changes in interest rates, and general economic, home repair and remodeling and new home construction market conditions; |
• | changes in the price and availability of raw materials; and |
• | changes in our relationships with our significant customers. |
31.1 * | Certification by President, Chief Executive Officer, and Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 * | Certification by Executive Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 * | Certification by President, Chief Executive Officer, and Chairman pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 * | Certification by Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101* | The following financial statements from Ply Gem Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended July 2, 2016, filed on August 8, 2016, were formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss); (iii) Condensed Consolidated Statements of Cash Flows; (iv) the Notes to Condensed Consolidated Financial Statements. |
By: | /s/ Gary E. Robinette |
Gary E. Robinette | |
President, Chief Executive Officer, and Chairman of the Board |
By: | /s/ Shawn K. Poe |
Shawn K. Poe | |
Executive Vice President, Chief Financial Officer, and Secretary |
/s/ Gary E. Robinette | |
Name: | Gary E. Robinette |
Title: | President, Chief Executive Officer, and Chairman of the Board |
/s/ Shawn K. Poe | |
Name: | Shawn K. Poe |
Title: | Executive Vice President, Chief Financial Officer and Secretary |
Date: | August 8, 2016 | /s/ Gary E. Robinette |
Gary E. Robinette | ||
President, Chief Executive Officer, and Chairman of the Board |
Date: | August 8, 2016 | /s/ Shawn K. Poe |
Shawn K. Poe | ||
Executive Vice President, Chief Financial Officer, and Secretary |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jul. 02, 2016 |
Aug. 08, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PLY GEM HOLDINGS INC | |
Entity Central Index Key | 0001284807 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jul. 02, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | PGEM | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 68,185,776 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Income Statement [Abstract] | ||||
Net sales | $ 510,545 | $ 502,334 | $ 919,159 | $ 878,382 |
Cost of products sold | 375,256 | 377,591 | 697,169 | 693,358 |
Gross profit | 135,289 | 124,743 | 221,990 | 185,024 |
Operating expenses: | ||||
Selling, general and administrative expenses | 66,648 | 72,796 | 137,383 | 140,928 |
Amortization of intangible assets | 6,459 | 6,283 | 12,849 | 12,482 |
Total operating expenses | 73,107 | 79,079 | 150,232 | 153,410 |
Operating earnings | 62,182 | 45,664 | 71,758 | 31,614 |
Foreign currency (loss) gain | 255 | (98) | 839 | (1,032) |
Interest expense | (18,534) | (18,699) | (37,226) | (37,792) |
Interest income | 9 | 17 | 19 | 26 |
Gains (Losses) on Extinguishment of Debt | (2,399) | 0 | ||
Tax receivable agreement liability adjustment | (241) | 2,006 | (18,391) | (15,179) |
Income (Loss) before provision (benefit) for income taxes | 43,671 | 28,890 | 14,600 | (22,363) |
Provision (benefit) for income taxes | 2,025 | (1,482) | 531 | (3,876) |
Net income (loss) | 41,646 | 30,372 | 14,069 | (18,487) |
Comprehensive income (loss) | $ 42,802 | $ 29,517 | $ 18,277 | $ (24,686) |
Earnings Per Share, Basic | $ 0.61 | $ 0.45 | $ 0.21 | $ (0.27) |
Earnings Per Share, Diluted | $ 0.61 | $ 0.45 | $ 0.21 | $ (0.27) |
Weighted Average Number of Shares Outstanding, Basic | 68,159,907 | 67,946,895 | 68,143,523 | 67,935,114 |
Weighted Average Number of Shares Outstanding, Diluted | 68,370,548 | 68,056,591 | 68,219,762 | 67,935,114 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Current Assets: | ||
Allowance for Doubtful Accounts Receivable, Current | $ 3,639 | $ 3,588 |
Stockholders' Deficit: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 68,185,776 | 68,127,491 |
Common stock, shares outstanding (in shares) | 68,185,776 | 68,127,491 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Ply Gem Holdings, Inc. and its subsidiaries (referred to herein as “Ply Gem Holdings”, “Ply Gem”, the “Company”, “we”, “us”, or “our”) have been prepared in accordance with U.S. generally accepted accounting principles as described in the consolidated financial statements and related notes included in our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2016. These statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles and should be read in conjunction with our 2015 Annual Report on Form 10-K. In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation have been included. Operating results for the period from January 1, 2016 through July 2, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The condensed consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements of Ply Gem Holdings at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The Company’s fiscal quarters are based on periods ending on the Saturday of the last week in the quarter. Therefore, the financial results of certain fiscal quarters will not be comparable to the prior and subsequent fiscal quarters. The accompanying financial statements include the Company’s condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended July 2, 2016 and July 4, 2015, the condensed consolidated statements of cash flows for the six months ended July 2, 2016 and July 4, 2015, and the condensed consolidated balance sheets as of July 2, 2016 and December 31, 2015. Ply Gem is a diversified manufacturer of residential and commercial building products, which are sold primarily in the United States and Canada, and include a wide variety of products for the residential and commercial construction, the do-it-yourself and the professional remodeling and renovation markets. The demand for the Company’s products is seasonal, particularly in the Northeast and Midwest regions of the United States and Canada where inclement weather during the winter months usually reduces the level of building and remodeling activity in both the home repair and remodeling and new home construction sectors. The Company’s sales are usually lower during the first and fourth quarters. To a significant extent our performance is dependent upon the levels of home repair and remodeling and new home construction spending, all of which are affected by such factors as interest rates, inflation, consumer confidence, unemployment, and availability of consumer credit. Principles of Consolidation The condensed consolidated financial statements include the accounts of Ply Gem Holdings and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated. Reclassifications Due to the adoption of ASU No. 2015-03, Interest-Imputation of Interest, certain balance sheet amounts in the prior fiscal year have been reclassified to conform to the presentation adopted in the current fiscal year, with no effect on net income (loss), accumulated deficit, or net cash provided by/used in operating, investing, and financing activities. Refer to Note 5, Long-Term Debt, for the presentation impact on net debt. Accounting Policies and Use of Estimates The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles involves estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expense during the reporting periods. Certain of the Company’s accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company periodically evaluates the judgments and estimates used in their critical accounting policies to ensure that such judgments and estimates are reasonable. Such estimates include the allowance for doubtful accounts receivable, rebates, pensions, valuation of inventories, warranty reserves, insurance reserves, legal contingencies, assumptions used in the calculation of income taxes and the tax receivable agreement liability, projected cash flows used in the goodwill and intangible asset impairment tests, and environmental accruals and other contingencies. These judgments are based on the Company’s historical experience, current trends and information available from other sources, and are based on management’s best estimates and judgments. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Volatile equity markets, foreign currency, and litigation risk have combined to increase the uncertainty inherent in such estimates and assumptions. If different conditions result from those assumptions used in the Company’s judgments, actual results could be materially different from the Company’s estimates. Cash and Cash Equivalents Cash equivalents consist of short-term highly liquid investments with original maturities of three months or less and which are readily convertible into cash. Accounts Receivable Accounts receivable-trade are recorded at their net realizable value. The allowance for doubtful accounts was $3.6 million at July 2, 2016 and $3.6 million at December 31, 2015. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company estimates the allowance for doubtful accounts based on a variety of factors including the length of time receivables are past due, the financial health of its customers, unusual macroeconomic conditions and historical experience. If the financial condition of its customers deteriorates or other circumstances occur that result in an impairment of customers’ ability to make payments, the Company records additional allowances as needed. The Company writes off uncollectible trade accounts receivable against the allowance for doubtful accounts when collection efforts have been exhausted and/or any legal action taken by the Company has concluded. Inventories Inventories in the accompanying condensed consolidated balance sheets are valued at the lower of cost or net realizable value and are determined primarily by the first-in, first-out (FIFO) method. The Company records provisions, as appropriate, to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires the Company to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business. Accelerating the disposal process or incorrect estimates of future sales potential may cause actual results to differ from the estimates at the time such inventory is disposed or sold. As of July 2, 2016, the Company had inventory purchase commitments of approximately $24.0 million. Inventory provisions were approximately $9.6 million at July 2, 2016, increasing during the six months ended July 2, 2016 by $1.3 million compared to the December 31, 2015 provision balance of approximately $8.3 million. Property and Equipment Property and equipment are presented at cost. Depreciation of property and equipment are provided on a straight-line basis over estimated useful lives, which are generally as follows:
Expenditures for maintenance and repairs are expensed when incurred. Expenditures for renewals and betterments are capitalized. When assets are sold, or otherwise disposed, the cost and related accumulated depreciation are eliminated and the resulting gain or loss is recognized in operations. Intangible Assets, Goodwill and Other Long-lived Assets Acquisitions On May 29, 2015, Ply Gem completed an acquisition for cash consideration of approximately $21.0 million to acquire substantially all of the assets of Canyon Stone Inc. ("Canyon Stone"), a manufacturer and distributor of stone veneer and accessories in the United States. Canyon Stone has manufacturing facilities in Olathe, Kansas and Youngsville, North Carolina. The purchase agreement also includes contingent consideration in the form of potential earn-out payments of up to $1.0 million based on Canyon Stone's earnings for fiscal years 2015 through 2017. This acquisition expanded the Company's stone veneer manufacturing footprint across the United States as it complements the existing Ply Gem Stone manufacturing facility in Middleburg, Pennsylvania. The Company accounted for the transaction as an acquisition in accordance with the provisions of Accounting Standards Codification 805, Business Combinations, which results in a new valuation for the assets and liabilities of Canyon Stone based upon fair values as of the acquisition date. The Company finalized the acquisition accounting adjustments during the second quarter of 2016. The Company determined the fair value of the tangible and intangible assets and the liabilities acquired, and recorded goodwill based on the excess of fair value of the acquisition consideration over such fair values, as follows:
The $7.6 million of goodwill was allocated to the Siding, Fencing and Stone segment and the goodwill is expected to be deductible for tax purposes. The Company has recognized a liability of approximately $0.8 million as the estimated acquisition date fair value of the earn-out as of July 2, 2016 and December 31, 2015. This amount is included within other long-term liabilities in the condensed consolidated balance sheets. Any change in the fair value of the contingent consideration subsequent to the acquisition date will be recognized in earnings in the period of change. Long-lived assets The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company performs an undiscounted operating cash flow analysis to determine if impairment exists. If an impairment is determined to exist, any related impairment loss is calculated based on the asset’s fair value and the discounted cash flows. The Company tests for long-lived asset impairment at the following asset group levels: (i) the combined U.S. Siding, Fencing and Stone companies in the Siding, Fencing and Stone segment (“Siding”), (ii) the combined U.S. Windows companies in the Windows and Doors segment (“U.S. Windows”), (iii) the combined Simonton windows companies in the Windows and Doors segment, (iv) Gienow Canada Inc. ("Gienow Canada") (a combined Western Canadian company created by the January 2014 amalgamation of the Company's legacy Western Canadian business and the Gienow entity acquired in April 2013) in the Windows and Doors segment, and (v) Mitten in the Siding, Fencing and Stone segment. For purposes of recognition and measurement of an impairment loss, a long-lived asset or asset group should represent the lowest level for which an entity can separately identify cash flows that are largely independent of the cash flows of other assets and liabilities. There were no indicators of impairment during the three and six months ended July 2, 2016. Goodwill and other intangible assets The Company evaluates goodwill for impairment on an annual basis and whenever events or business conditions warrant. All other intangible assets are amortized over their estimated useful lives and are assessed for impairment as necessary. The Company assesses goodwill for impairment at the November month end each year and also at any other date when events or changes in circumstances indicate that the carrying value of these assets may exceed their fair value. To evaluate goodwill for impairment, the Company estimates the fair value of reporting units considering such factors as discounted cash flows and valuation multiples for comparable publicly traded companies. A significant reduction in projected sales and earnings, which would lead to a reduction in future cash flows, could indicate potential impairment. There were no indicators of impairment during the three and six months ended July 2, 2016 that would trigger an interim impairment test. The Company will continue to evaluate goodwill during future periods and future declines in the residential housing and repair and remodeling markets could result in goodwill impairments. Debt Issuance Costs Debt issuance costs, composed of facility, agency, and certain legal fees associated with issuing new debt financing, are amortized over the contractual term of the related agreement using the effective interest method. Net debt issuance costs totaled approximately $20.1 million and $22.2 million as of July 2, 2016 and December 31, 2015, respectively, and have been recorded within long-term debt ($17.5 million at July 2, 2016 and $19.3 million at December 31, 2015) and other non-current assets ($2.6 million at July 2, 2016 and $2.9 million at December 31, 2015) in the accompanying condensed consolidated balance sheets. The debt issuance costs included in other long term assets relate to the Senior Secured Asset Based Revolving Credit Facility due 2020 ("ABL Facility"). Amortization of debt issuance costs for the three months ended July 2, 2016 and July 4, 2015 was approximately $0.9 million and $0.8 million, respectively. Amortization of debt issuance costs for the six months ended July 2, 2016 and July 4, 2015 was approximately $1.7 million and $1.5 million, respectively. Amortization of debt issuance costs is recorded in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). Income Taxes The Company utilizes the asset and liability method of accounting for income taxes which requires that deferred tax assets and liabilities be recorded to reflect the future tax consequences of temporary differences between the book and tax basis of various assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred tax assets and liabilities is recognized as income or expense in the period in which the rate change occurs. A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Estimates are required with respect to, among other things, the appropriate state income tax rates used in the various states that the Company and its subsidiaries are required to file, the potential utilization of operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realized in the future. The Company establishes reserves when, despite our belief that our tax return positions are fully supportable, certain positions could be challenged, and the positions may not be fully sustained. The Company along with its U.S. subsidiaries file a consolidated federal income tax return, separate state income tax returns, combined state returns, and unitary state returns. Gienow Canada and Mitten both file separate Canadian federal income tax returns and separate provincial returns. Tax receivable agreement ("TRA") liability As a result of the Company’s full tax valuation allowance position, the Company’s methodology for calculating the TRA liability considers expectations regarding (i) current year taxable income only (due to the uncertainty of future taxable income associated with the Company’s cumulative loss position) and (ii) future income due to the expected reversals of deferred tax liabilities. During the three and six months ended July 2, 2016, the Company estimated its projected taxable income for the full year ending December 31, 2016. However, the Company’s methodology to estimate the TRA liability excludes forecasts for fiscal years subsequent to 2016 because such future forecasts and projections cannot be relied upon based on the negative evidence from the Company’s three year cumulative loss position. For fiscal year 2016, the Company estimated to be in a taxable income position; however, this taxable income estimate was currently not sufficient to outweigh the negative evidence or alleviate the Company’s three year cumulative loss position. In addition to projecting the Company’s current year taxable income estimate, the Company considered the reversals of deferred tax assets and deferred tax liabilities. Environmental The Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Environmental remediation obligation accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Commitments and Contingencies The Company accrues for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued have been estimated based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and outcomes. Insurance recoveries are recorded as assets when their receipt is deemed probable. Foreign Currency Gienow Canada and Mitten, the Company’s Canadian subsidiaries, utilize the Canadian dollar as their functional currency. For reporting purposes, the Company translates the assets and liabilities of its foreign entities at the exchange rates in effect at period-end. Net sales and expenses are translated using average exchange rates in effect during the period. Gains and losses from foreign currency translation are credited or charged to accumulated other comprehensive income or loss in the accompanying condensed consolidated balance sheets. The Company recorded a gain from foreign currency transactions of approximately $0.3 million for the three months ended July 2, 2016 and a loss of approximately $0.1 million for the three months ended July 4, 2015. The Company recorded a gain from foreign currency transactions of approximately $0.8 million for the six months ended July 2, 2016 and a loss of approximately $1.0 million for the six months ended July 4, 2015. During the six months ended July 2, 2016 accumulated other comprehensive income (loss) included a currency translation gain of approximately $5.4 million and a loss of approximately $7.2 million for the six months ended July 4, 2015. Derivative Financial Instruments As of July 2, 2016, the Company had entered into a foreign currency forward contract agreements to hedge approximately $45.8 million of its 2016 non-functional currency inventory purchases to protect the Company from variability in cash flows attributable to changes in the U.S. dollar relative to the Canadian dollar. The Company has designated these forward contracts as cash flow hedges. As a cash flow hedge, unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. These forward contract agreements are highly correlated to the changes in foreign currency rates to which the Company is exposed. Unrealized gains and losses on these agreements are designated as effective or ineffective. The effective portion of such gains or losses is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion of such gains or losses is recorded as a component of cost of goods sold. Future realized gains and losses in connection with each inventory purchase will be reclassified from accumulated other comprehensive income or loss to cost of goods sold. The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income or loss and are reclassified into cost of goods sold in the same period the hedged item affects earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, fluctuations in the value of the derivative instrument are generally offset by changes in the fair value or cash flows of the underlying exposures being hedged. The changes in the fair value of derivatives that do not qualify as effective are immediately recognized in earnings. The gains and losses on derivative contracts that are reclassified from accumulated other comprehensive income or loss to current period earnings are included in the line item in which the hedged item is recorded in the same period the forecasted transaction affects earnings. As of July 2, 2016, approximately $0.4 million of the deferred net liability on derivative instruments included in accumulated other comprehensive loss is expected to be reclassified to cost of goods sold during the next six months. This expectation is based on the expected timing of the occurrence of the hedged forecasted transactions. During the three and six months ended July 2, 2016, the Company recognized $0.8 million and $0.4 million, respectively, within earnings as an increase to cost of goods sold in the condensed consolidated statement of operations and comprehensive income. During the three and six months ended July 4, 2015, the Company recognized $1.1 million and $2.2 million, respectively, within earnings as a reduction of cost of goods sold in the condensed consolidated statement of operations and comprehensive income. The fair value of the foreign currency forward contract agreements are estimated using industry standard valuation models using market-based observable inputs, including spot rates, forward points, interest rates and volatility inputs (Level 2). A summary of the recorded asset and liability included in the accompanying condensed consolidated balance sheets is as follows:
Fair Value Measurement The accounting standard for fair value discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flows), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
The hierarchy requires the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The fair value of the long-term debt instruments was determined by utilizing available market information. The carrying value of the Company’s other assets and liabilities approximates their fair value. The Company’s population of recurring financial assets and liabilities subject to fair value measurements and the necessary disclosures are as follows:
Earnings (Loss) Per Common Share Basic earnings (loss) per share ("EPS") is computed based upon weighted-average shares outstanding during the period. Dilutive earnings per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period. Ply Gem Holdings uses the treasury stock method to reflect the potential dilutive effect of unvested stock awards and unexercised options. The Company was in a net loss position for the six months ended July 4, 2015 and therefore the impact of stock options and unvested restricted stock were excluded from the computation of diluted earnings (loss) per share for that specific period, as the inclusion of such amounts would be anti-dilutive. The computation of the dilutive effect of other potential common shares included options and unvested restricted stock representing approximately 0.2 million and 0.1 million shares of common stock for the three and six months ended July 2, 2016, respectively. The computation of the dilutive effect of other potential common shares included options and unvested restricted stock representing approximately 0.1 million shares of common stock for the three months ended July 4, 2015 and excluded options and unvested restricted stock representing approximately 0.1 million shares of common stock for the six months ended July 4, 2015. New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this updated guidance include changes to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating the potential impacts of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This update provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer. The amendments in this update affect the guidance in ASU No. 2014-09 and are effective in the same timeframe as ASU No. 2014-09 as discussed below. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core principal of the guidance is that an entity should recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal years. Early adoption is permitted. The guidance is to be applied using a modified retrospective transition method with the option to elect a package of practical expedients. The Company is currently evaluating the impact of the adoption of this accounting standard update on its internal processes, operating results and financial reporting. The impact is currently not known or reasonably estimable. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which completes the joint effort by the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and improve financial reporting by creating common revenue recognition guidance for U.S. generally accepted accounting principles ("GAAP") and International Financial Reporting Standards ("IFRS"). ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using IFRS and GAAP. The core principle of this update is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB finalized a one-year deferral of the effective date of the new revenue recognition standard. The new standard will become effective for Ply Gem beginning with the first quarter of 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The method of adoption has not been determined yet by the Company. The Company is currently reviewing the revised guidance and assessing the potential impact on the consolidated financial statements. |
GOODWILL |
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Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL | The Company records the excess of the fair value of the acquisition consideration over the net tangible and intangible assets of acquired companies as goodwill. The Company performs an annual test for goodwill impairment at the November month end each year and also at any other date when events or changes in circumstances indicate that the carrying value of these assets may exceed their fair value. The Company has defined its reporting units and performs the impairment testing of goodwill at the operating segment level. The Company has two reporting units: (1) Siding, Fencing and Stone and (2) Windows and Doors. Separate valuations are performed for each of these reporting units in order to test for impairment. The Company uses the two-step method to determine goodwill impairment. If the carrying amount of a reporting unit exceeds its fair value (“Step One”), the Company measures the possible goodwill impairment based upon a hypothetical allocation of the fair value estimate of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including previously unrecognized intangible assets (“Step Two”). The excess of the reporting unit’s fair value over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized to the extent that a reporting unit’s recorded goodwill exceeds the implied fair value of goodwill. The Company has elected not to utilize the qualitative Step Zero impairment assessment. There was no goodwill impairment for the year ended December 31, 2015 and no impairment indicators which would trigger an interim impairment test during the three and six months ended July 2, 2016. However, the Company will continue to evaluate goodwill during future periods and future declines in the residential housing and repair and remodeling markets or the Company's market capitalization could result in goodwill impairments. To determine the fair value of its reporting units, the Company equally considers both the income and market valuation methodologies. The income valuation methodology uses the fair value of the cash flows that the reporting unit can be expected to generate in the future. This method requires management to project revenues, operating expenses, working capital investment, capital spending and cash flows for the reporting unit over a multi-year period as well as determine the weighted average cost of capital to be used as the discount rate. The Company also utilizes the market valuation method to estimate the fair value of the reporting units by utilizing comparable public company multiples. These comparable public company multiples are then applied to the reporting unit’s financial performance. The market approach is more volatile as an indicator of fair value as compared to the income approach as internal forecasts and projections have historically been more stable. Since each approach has its merits, the Company equally weights the approaches to balance the internal and external factors affecting the Company’s fair value. The Company’s fair value estimates of its reporting units and goodwill are sensitive to a number of assumptions including discount rates, cash flow projections, operating margins, and comparable market multiples. In order to accurately forecast future cash flows, the Company estimates single family housing starts and the repair and remodeling market's growth rates. However, there is no assurance that: (1) valuation multiples will not decline, (2) discount rates will not increase, or (3) the earnings, book values or projected earnings and cash flows of the Company's reporting units will not decline. The reporting unit goodwill balances were as follows as of July 2, 2016 and December 31, 2015:
The changes in the goodwill balances from December 31, 2015 to July 2, 2016 relate to currency translation. A goodwill rollforward for 2016 is included in the table below:
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INTANGIBLE ASSETS |
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INTANGIBLE ASSETS, NET | The table that follows presents the major components of intangible assets as of July 2, 2016 and December 31, 2015:
Amortization expense for the three months ended July 2, 2016 and July 4, 2015 was $6.5 million and $6.3 million, respectively. Amortization expense for the six months ended July 2, 2016 and July 4, 2015 was $12.8 million and $12.5 million, respectively. Estimated amortization expense for the fiscal years 2016 through 2020 is shown in the following table:
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COMPREHENSIVE INCOME (LOSS) |
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COMPREHENSIVE INCOME (LOSS) | Comprehensive income (loss), net of tax is comprised of the following:
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LONG-TERM DEBT |
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Long-term Debt [Text Block] | LONG-TERM DEBT Long-term debt in the accompanying condensed consolidated balance sheets at July 2, 2016 and December 31, 2015 consists of the following:
2015 Debt Transaction On November 5, 2015, Ply Gem Industries entered into a second amended and restated ABL Facility. Among other things, the second amended and restated ABL Facility: (i) increased the overall facility to $350.0 million, (ii) provided an accordion feature of $50.0 million, and (iii) established the applicable margin for borrowings under the ABL Facility to a range of 1.25% to 2.00% for Eurodollar rate loans, depending on availability. All outstanding loans under the second amended and restated ABL Facility are due and payable in full on November 5, 2020. 6.50% Senior Notes due 2022 On January 30, 2014, Ply Gem Industries issued $500.0 million aggregate principal amount of 6.50% Senior Notes due 2022 (the "6.50% Senior Notes") at par. On September 19, 2014, Ply Gem Industries issued an additional $150.0 million aggregate principal amount of 6.50% Senior Notes at an issue price of 93.25%. Interest accrues at 6.50% per annum and is paid semi-annually on February 1 and August 1 of each year. All issued and outstanding 6.50% Senior Notes are registered under the Securities Act. The 6.50% Senior Notes will mature on February 1, 2022. Prior to February 1, 2017, Ply Gem Industries may redeem up to 40% of aggregate principal amount of the 6.50% Senior Notes with the net cash proceeds from certain equity offerings at a redemption price equal to 106.50% of the aggregate principal amount of the 6.50% Senior Notes to be redeemed, plus accrued and unpaid interest, if any, provided that at least 50% of the aggregate principal amount of the 6.50% Senior Notes remains outstanding after the redemption. Prior to February 1, 2017, Ply Gem Industries may redeem the 6.50% Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a “make-whole” premium plus accrued and unpaid interest, if any. At any time on or after February 1, 2017, Ply Gem Industries may redeem the 6.50% Senior Notes, in whole or in part, at declining redemption prices set forth in the indenture governing the 6.50% Senior Notes plus, in each case, accrued and unpaid interest, if any, to the redemption date. The effective interest rate for the 6.50% Senior Notes is 8.39% after considering each of the different interest expense components of this instrument, including the coupon payment and the deferred debt issuance costs. The 6.50% Senior Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by Ply Gem Holdings and all of the wholly-owned domestic subsidiaries of Ply Gem Industries (the “Guarantors”). The indenture governing the 6.50% Senior Notes contains certain covenants that limit the ability of Ply Gem Industries and its restricted subsidiaries to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem their stock, make loans and investments, sell assets, incur certain liens, enter into agreements restricting their ability to pay dividends, enter into transactions with affiliates, and consolidate, merge or sell assets. In particular, Ply Gem Industries and its restricted subsidiaries may not incur additional debt (other than permitted debt (as defined in the indenture) in limited circumstances) unless, after giving effect to such incurrence, the consolidated interest coverage ratio of Ply Gem Industries would be at least 2.00 to 1.00. In the absence of satisfying the consolidated interest coverage ratio test, Ply Gem Industries and its restricted subsidiaries may only incur additional debt under certain circumstances, including, but not limited to, debt under credit facilities (as defined in the indenture) (x) in an amount not to exceed the greater of (a) $350.0 million and (b) the borrowing base (as defined in the indenture) and (y) in an amount not to exceed the greater of (A) $575.0 million and (B) the aggregate amount of indebtedness (as defined in the indenture) that would cause the consolidated secured debt ratio (as defined in the indenture) to be equal to 4.00 to 1.00; purchase money indebtedness in an aggregate amount not to exceed the greater of (x) $35.0 million and (y) 10% of consolidated net tangible assets (as defined in the indenture) at any one time outstanding; debt of foreign subsidiaries in an aggregate amount not to exceed the greater of (x) $60.0 million and (y) 15% of consolidated net tangible assets (as defined in the indenture) at any one time outstanding; debt pursuant to a general basket in an aggregate amount at any one time outstanding not to exceed the greater of (x) $75.0 million and (y) 20% of consolidated net tangible assets; and the refinancing of debt under certain circumstances. Term Loan Facility due 2021 On January 30, 2014, Ply Gem Industries entered into a credit agreement governing the terms of its $430.0 million Term Loan Facility. Ply Gem Industries originally borrowed $430.0 million under the Term Loan Facility on January 30, 2014, with an original discount of approximately $2.2 million, yielding proceeds of approximately $427.9 million. The Term Loan Facility will mature on January 30, 2021. The Term Loan Facility requires scheduled quarterly payments in an aggregate annual amount equal to 1.00% of the original aggregate principal amount of the Term Loan Facility with the balance due at maturity. Interest on outstanding borrowings under the Term Loan Facility is paid quarterly. Borrowings under the Term Loan Facility bear interest at a rate equal to, at Ply Gem Industries’ option, either (a) a base rate determined by reference to the highest of (i) the prime rate of the administrative agent under the credit agreement, (ii) the federal funds rate plus 0.50% and (iii) the adjusted LIBO rate for a one-month interest period plus 1.00% or (b) a LIBO rate determined by reference to the cost of funds for eurocurrency deposits in dollars for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor, plus, in each case, an applicable margin of 3.00% for any eurocurrency loan and 2.00% for any alternate base rate loan. As of July 2, 2016, the Company's interest rate on the Term Loan Facility was 4.00%. The effective interest rate for the Term Loan is 7.24% after considering each of the different interest expense components of this instrument, including the coupon payment, the deferred debt issuance costs and the original issue discount. The Term Loan Facility allows Ply Gem Industries to request one or more incremental term loan facilities in an aggregate amount not to exceed the greater of (x) $140.0 million and (y) an amount such that Ply Gem Industries’ consolidated senior secured debt ratio (as defined in the credit agreement), on a pro forma basis, does not exceed 3.75 to 1.00, in each case, subject to certain conditions and receipt of commitments by existing or additional financial institutions or institutional lenders. The Term Loan Facility requires Ply Gem Industries to prepay outstanding term loans, subject to certain exceptions, with: (i) 50% (which percentage will be reduced to 25% if our consolidated senior secured debt ratio is equal or less than 2.50 to 1.00 but greater than 2.00 to 1.00 and to 0% if our consolidated senior secured debt ratio is equal to or less than 2.00 to 1.00) of our annual excess cash flow (as defined in the credit agreement), to the extent such excess cash flow exceeds $15.0 million; (ii) 100% of the net cash proceeds of certain non-ordinary course asset sales or certain insurance and condemnation proceeds, in each case subject to certain exceptions and reinvestment rights; and (iii) 100% of the net cash proceeds of certain issuances of debt, other than proceeds from debt permitted under the Term Loan Facility. Ply Gem Industries may voluntarily repay outstanding loans under the Term Loan Facility at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. As of and for the year ended December 31, 2015, the Company's consolidated senior secured debt ratio was 1.97 and as a result no excess cash flow payment under the Term Loan Facility was required. However, the Company elected on March 10, 2016 to voluntarily prepay $30.0 million on the Term Loan Facility to reduce its outstanding indebtedness. The Company also elected on August 4, 2016 to voluntarily prepay an additional $30.0 million on the Term Loan Facility to further reduce its outstanding indebtedness. The Term Loan Facility is secured on a first-priority lien basis by the stock of Ply Gem Industries and by substantially all of the assets (other than the assets securing the obligations under the ABL Facility, which primarily consist of accounts receivable, inventory, cash, deposit accounts, securities accounts, chattel paper, contract rights, instruments, documents related thereto and proceeds of the foregoing) of Ply Gem Industries and the Guarantors that are subsidiaries of Ply Gem Industries and on a second-priority lien basis by the assets that secure the ABL Facility. The Term Loan Facility includes negative covenants, subject to certain exceptions, that are substantially the same as the negative covenants in the 6.50% Senior Notes but does not contain any restrictive financial covenants. The Term Loan Facility also restricts the ability of Ply Gem Industries’ subsidiaries to enter into agreements restricting their ability to grant liens to secure the Term Loan Facility and contains a restriction on changes in fiscal year. Senior Secured Asset Based Revolving Credit Facility due 2020 On November 5, 2015, Ply Gem Holdings, Inc., Ply Gem Industries, Inc., Gienow Canada Inc., and Mitten Inc. (together with Gienow, the “Canadian Borrowers”) entered into a second amended and restated credit agreement governing the ABL Facility. Among other things, the second amendment and restatement of the credit agreement governing the ABL Facility: (i) increased the overall facility to $350.0 million from $300.0 million, (ii) established an accordion feature of $50.0 million, (iii) reduced the applicable margin for borrowings under the ABL Facility to a range from 1.25% to 2.00% for Eurodollar rate loans, depending on availability, and (iv) extended the maturity until November 5, 2020. Under the ABL Facility, $300.0 million is available to Ply Gem Industries and $50.0 million is available to the Canadian Borrowers. The following summary describes the ABL Facility after giving effect to the second amendment and restatement. As a result of the November 2015 ABL Facility amendment in which the loan syndication consisted of previous members who either maintained or increased their position as well as new syndication members, the Company capitalized new debt issuance costs of $1.5 million and will amortize these costs through 2020. Borrowings under the ABL Facility bear interest at a rate per annum equal to, at Ply Gem Industries’ option, either (a) a base rate determined by reference to the higher of (1) the corporate base rate of the administrative agent under the ABL Facility and (2) the federal funds rate plus 0.5% or (b) a Eurodollar rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, in each case plus an applicable margin. The initial applicable margin for borrowings under the ABL Facility was 0.50% for base rate loans and 1.50% for Eurodollar rate loans. The applicable margin for borrowings under the ABL Facility is subject to step ups and step downs based on average excess availability under the ABL Facility. Swingline loans bear interest at a rate per annum equal to the base rate plus the applicable margin. In addition to paying interest on outstanding principal under the ABL Facility, Ply Gem Industries is required to pay a commitment fee in respect of the unutilized commitments thereunder, which fee will be determined based on utilization of the ABL Facility (increasing when utilization is low and decreasing when utilization is high) multiplied by a commitment fee rate determined by reference to average excess availability under the ABL Facility. The commitment fee rate during any fiscal quarter is 0.375% when average excess availability is greater than $100.0 million for the preceding fiscal quarter and 0.25% when average availability is less than or equal to $100.0 million for the preceding fiscal quarter. Ply Gem Industries must also pay customary letter of credit fees equal to the applicable margin on Eurodollar loans and agency fees. As of July 2, 2016, the Company’s interest rate on the ABL Facility was approximately 1.88%. The ABL Facility requires that if (a) excess availability is less than the greater of (x) 10.0% of the lower of the borrowing base and the aggregate commitments and (y) $25.0 million or (b) any event of default has occurred and is continuing, Ply Gem Industries must comply with a minimum fixed charge coverage ratio test of 1.0 to 1.0. If the excess availability under the ABL Facility is less than the greater of (a) 12.5% of the lesser of the borrowing base and the aggregate commitments and (b) $30.0 million ($27.5 million for the months of January, February, March and April) for a period of 5 consecutive days or an event of default has occurred and is continuing, all cash from Ply Gem Industries material deposit accounts (including all concentration accounts) will be swept daily into a collection account controlled by the administrative agent under the ABL Facility and used to repay outstanding loans and cash collateralize letters of credit. All obligations under the ABL Facility are unconditionally guaranteed by Ply Gem Holdings and substantially all of Ply Gem Industries’ existing and future, direct and indirect, wholly owned domestic subsidiaries. All obligations under the ABL Facility, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the assets of Ply Gem Industries and the guarantors, including a first-priority security interest in personal property consisting of accounts receivable, inventory, cash, deposit accounts, and certain related assets and proceeds of the foregoing and a second-priority security interest in, and mortgages on, substantially all of Ply Gem Industries’ and the Guarantors’ material owned real property and equipment and all assets that secure the Term Loan Facility on a first-priority basis. In addition to being secured by the collateral securing the obligations of Ply Gem Industries under the domestic collateral package, the obligations of the Canadian Borrowers, which are borrowers under the Canadian sub-facility under the ABL Facility, are also secured by a first-priority security interest in substantially all of the assets of such Canadian subsidiaries, plus additional mortgages in Canada, and a pledge by Ply Gem Industries of the remaining 35% of the equity interests of the Canadian Borrowers pledged only to secure the Canadian sub-facility. The ABL Facility contains certain covenants that limit Ply Gem Industries’ ability and the ability of Ply Gem Industries’ subsidiaries to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem their stock, make loans and investments, sell assets, incur certain liens, enter into transactions with affiliates, and consolidate, merge or sell assets. As of July 2, 2016, Ply Gem Industries had approximately $339.4 million of contractual availability and approximately $257.9 million of borrowing base availability under the ABL Facility, reflecting $0.0 million of borrowings outstanding and approximately $10.6 million of letters of credit and priority payables reserves. Loss on debt modification or extinguishment During March 2016, the Company made a voluntarily payment of $30.0 million on the Term Loan Facility to reduce its outstanding indebtedness as allowable under the terms of the Term Loan Facility. The Company performed an analysis to determine the proper accounting treatment for this voluntary payment by evaluating the change in cash flows and determined that there were no changes in creditors as a result of the payment. Consequently, the Company recognized a loss on debt modification or extinguishment of approximately $2.4 million for the six months ended July 2, 2016 reflecting the proportionate write-off of the related debt discount and debt issuance costs associated with the $30.0 million payment, as summarized in the table below.
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PENSION PLANS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION PLANS | PENSION PLANS The Company has two pension plans, the Ply Gem Group Pension Plan and the MW Manufacturers, Inc. Retirement Plan. The Company’s net periodic benefit expense for the combined plans for the periods indicated consists of the following components:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Indemnifications In connection with the Ply Gem acquisition, in which Ply Gem Industries was acquired from Nortek, Inc. (“Nortek”) in February 2004, Nortek has agreed to indemnify the Company for certain liabilities as set forth in the stock purchase agreement governing the Ply Gem acquisition. In the event Nortek is unable to satisfy amounts due under these indemnifications, the Company would be liable. The Company believes that Nortek has the financial capacity to honor its indemnification obligations and therefore does not anticipate incurring any losses related to liabilities indemnified by Nortek under the stock purchase agreement. A receivable related to this indemnification has been recorded in other long-term assets of approximately $1.5 million and $1.8 million at July 2, 2016 and December 31, 2015, respectively. As of July 2, 2016 and December 31, 2015, the Company has recorded liabilities related to these indemnifications of approximately $0.5 million and $0.5 million, respectively, in current liabilities and $1.0 million and $1.3 million, respectively, in long-term liabilities, consisting of the following:
Warranty claims The Company sells a number of products and offers a number of warranties. The specific terms and conditions of these warranties vary depending on the product sold. The Company estimates the costs that may be incurred under their warranties and records a liability for such costs at the time of sale. Factors that affect the Company’s warranty liabilities include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company assesses the adequacy of the recorded warranty claims and adjusts the amounts as necessary. As of July 2, 2016 and December 31, 2015, warranty liabilities of approximately $16.1 million and $16.6 million, respectively, have been recorded in current liabilities and approximately $61.3 million and $59.9 million, respectively, have been recorded in long term liabilities in the Company's condensed consolidated balance sheets. Changes in the Company’s short-term and long-term warranty liabilities are as follows:
Environmental The Company is subject to United States and Canadian federal, state, provincial and local laws and regulations relating to pollution and the protection of the environment, including those governing emissions to air, discharges to water, use, storage and transport of hazardous materials, storage, treatment and disposal of waste, remediation of contaminated sites, and protection of worker health and safety. From time to time, the Company's facilities are subject to investigation by governmental regulators. In addition, the Company has been identified as one of many potentially responsible parties for contamination present at certain offsite locations to which it or its predecessors are alleged to have sent hazardous materials for recycling or disposal. The Company may be held liable, or incur fines or penalties, in connection with such requirements or liabilities for, among other things, releases of hazardous substances occurring on or emanating from current or formerly owned or operated properties or any associated offsite disposal location, or for known or newly-discovered contamination at any of the Company's properties from activities conducted by us or previous occupants. The amount of any liability, fine or penalty may be material, and certain environmental laws impose strict, and under certain circumstances joint and several, liability for the cost of addressing releases of hazardous substances upon certain classes of persons, including site owners or operators and persons that disposed or arranged for the disposal of hazardous substances at contaminated sites. MW Manufacturers Inc. (“MW”), a subsidiary of MWM Holding, Inc., entered into an Administrative Order on Consent (the “Consent Order”), effective September 12, 2011, with the United States Environmental Protection Agency (“EPA”), Region III, under Section 3008(h) of the Resource Conservation and Recovery Act ("RCRA"), with respect to its Rocky Mount, Virginia property. During 2011, as part of the Consent Order, MW provided the EPA, among other things, a RCRA Facility Investigation Workplan (the “Workplan”) as well as a preliminary cost estimate of approximately $1.8 million for the predicted assessment, remediation and monitoring activities to be conducted pursuant to the Consent Order over the remediation period, which is currently estimated through 2023. During 2012, the EPA approved the Workplan, and MW is currently implementing the Workplan. The Company has recorded approximately $0.3 million of this environmental liability within current liabilities and approximately $1.2 million within other long-term liabilities in the Company’s condensed consolidated balance sheet at July 2, 2016 and December 31, 2015. The Company will adjust this environmental remediation liability in future periods, if necessary, as further information develops or circumstances change. Certain liabilities with respect to this contamination relate to the previous closure of an underground storage tank and were assumed by U.S. Industries, Inc., pursuant to its indemnity obligation under the stock purchase agreement dated August 11, 1995, whereby U.S. Industries, Inc. sold the stock of MW to FPI Acquisition Corp. (“Fenway Partners”). As the successor-in-interest of Fenway Partners, the Company is similarly indemnified by U.S. Industries, Inc. Notwithstanding this indemnity, however, under applicable Federal and State laws, MW, and the Company as its parent, could be held liable for all or part of the costs associated with the matter under certain circumstances. Moreover, the Company’s ability to seek indemnification from U.S. Industries, Inc. is limited by the terms and limits of the indemnity as well as the strength of U.S. Industries, Inc. is, however, limited by the terms and limits of the indemnity as well as the strength of U.S. Industries, Inc.’s financial condition, which could change in the future. As of July 2, 2016, no recovery has been recognized on the Company’s condensed consolidated balance sheet, but the Company will actively pursue this indemnity in future periods and will recognize future recoveries in the period in which they become probable. The State of Nebraska is investigating certain groundwater contamination in northern York, Nebraska, comprised primarily of volatile organic compounds (VOC) (predominantly trichloroethene (TCE)). In December 2013, the EPA announced its proposal to add this groundwater contamination site to the Superfund National Priorities List (NPL) after it was referred to the EPA by the State of Nebraska. Sampling was conducted at the Kroy Building Products, Inc. (“Kroy”) facility in York, Nebraska during the first quarter of 2010. In February 2015, the EPA sent a request for information pursuant to Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), and Kroy has responded to this request for information. Given the preliminary stage of this matter, the Company has not recorded a liability for this matter in its condensed consolidated balance sheet as of July 2, 2016. Alcan Aluminum Corporation (“Alcan”) has assumed the obligation to indemnify the Company with respect to certain liabilities for environmental contamination of the Kroy facility occurring prior to 1994. Notwithstanding this indemnity, however, under applicable Federal and State laws, Kroy, and Ply Gem as its parent, could be held liable for all or part of the costs associated with the matter under certain circumstances. Moreover, the ability of Kroy and Ply Gem to seek indemnification may be limited by the terms and limits of the indemnity as well as the strength of Alcan’s financial condition, which could change in the future. The Company is currently involved in environmental proceedings involving Gienow Canada Inc. (f/k/a Ply Gem Canada, Inc.) and Alberta Environment (arising from subsurface contamination discovered at our Calgary, Alberta property) for which the Company has a $0.1 million liability included in its condensed consolidated balance sheet, and the Company may in the future be subject to environmental proceedings involving Thermal-Gard, Inc. (arising from groundwater contamination in Punxsutawney, Pennsylvania), Mastic Home Exteriors, Inc. (“MHE”) (relating to a closed landfill site in Sidney, Ohio as well as participating as a potentially responsible party in nine contaminated sites in Indiana, Ohio and South Carolina), and Simonton (relating to closed lagoons and certain contamination in Paris, Illinois as well as certain contamination associated with certain 7-Eleven convenience food stores). Under the stock purchase agreement governing the MHE acquisition, Alcoa Securities Corporation and Alcoa, Inc. are to indemnify the Company for certain environmental liabilities in excess of $2.5 million including liabilities relating to the landfill site in Sidney, Ohio and the nine contaminated sites in Indiana, Ohio and South Carolina. Under the stock purchase agreement governing the Simonton acquisition, Fortune Brands Windows & Doors, Inc., is to indemnify the Company for any environmental claims associated with the 7-Eleven convenience food stores. The Company's ability to seek indemnification or enforce these and other obligations is, however, limited by the strength of the financial condition of the indemnitor or responsible party, which could change in the future, as well as the terms and limits of any such indemnities or obligations. Based on current information, the Company is not aware of any compliance obligations, claims, releases or investigations that will have a material adverse effect on our results of operations, cash flows or financial position except as otherwise disclosed in the Company's condensed consolidated financial statements. However, there can be no guarantee that previously known or newly-discovered matters or any inability to enforce our available indemnification rights against previous owners of the Company, its subsidiaries, or their businesses or properties will not result in material costs or liabilities. While the purchase agreements governing certain of our acquisitions provide that the sellers will indemnify us, subject to certain limitations, for certain environmental liabilities, our ability to seek indemnification from the respective sellers is limited by various factors, including the financial condition of the indemnitor or responsible party as well as by the terms and limits of such indemnities or obligations. As a result, there can be no assurance that we could receive any indemnification from the sellers, and any related environmental liabilities, costs or penalties could have a material adverse effect on our financial condition and results of operations. Self-insured risks The Company maintains a broad range of insurance policies which include general liability insurance coverage and workers compensation. These insurance policies protect the Company against a portion of the risk of loss from claims. However, the Company retains a portion of the overall risk for such claims through its self-insured per occurrence and aggregate retentions, deductibles, and claims in excess of available insurance policy limits. The Company's general liability insurance includes coverage for certain damages arising out of product design and manufacturing defects. The Company's insurance coverage is generally subject to a per occurrence retention. The Company reserves for costs associated with claims, as well as incurred but not reported losses (“IBNR”), based on an outside actuarial analysis of its historical claims. These estimates make up a significant portion of the Company's liability and are subject to a high degree of uncertainty due to a variety of factors, including changes in type of claims, claims reporting and resolution patterns, frequency and timing of claims, third party recoveries, estimates of claim values, claims management expenses (including legal fees and expert fees), insurance industry practices, the regulatory environment, and legal precedent. Adjustments to estimated reserves are recorded in the period in which the change in estimate occurs. Litigation During the past several years, the Company incurred increased litigation expense primarily related to the claims discussed below. The Company believes it has valid defenses to the outstanding claims discussed below and will vigorously defend all such claims; however, litigation is subject to many uncertainties and there cannot be any assurance that the Company will ultimately prevail or, in the event of an unfavorable outcome or settlement of litigation, that the ultimate liability would not be material and would not have a material adverse effect on the business, results of operations, cash flows or financial position of the Company. In John Gulbankian v. MW Manufacturers, Inc. (“Gulbankian”), a purported class action filed in March 2010 in the United States District Court for the District of Massachusetts, plaintiffs, on behalf of themselves and all others similarly situated, alleged damages as a result of the defective design and manufacture of certain MW vinyl clad windows. In Eric Hartshorn and Bethany Perry v. MW Manufacturers, Inc. (“Hartshorn”), a purported class action filed in July 2012 in the District Court, plaintiffs, on behalf of themselves and all others similarly situated, alleged damages as a result of the defective design and manufacture of certain MW vinyl clad windows. On April 22, 2014, plaintiffs in both the Gulbankian and Hartshorn cases filed a Consolidated Amended Class Action Complaint, making similar claims against all MW vinyl clad windows. MW entered into a settlement agreement with plaintiffs as of April 18, 2014 to settle both the Gulbankian and Hartshorn cases on a nationwide basis (the “Vinyl Clad Settlement Agreement”). The Vinyl Clad Settlement Agreement provides that this settlement applies to any and all MW vinyl clad windows manufactured from January 1, 1987 through May 23, 2014, and provides for a cash payment for eligible consumers submitting qualified claims showing, among other requirements, certain damage to their MW vinyl clad windows. The period for submitting qualified claims is the later of: (i) May 28, 2016, or (ii) the last day of the warranty period for the applicable window. On December 29, 2014, the District Court granted final approval of this settlement, as well as MW’s payment of attorneys' fees and costs to plaintiffs' counsel in the amount of $2.5 million, issuing a Final Approval Order, Final Judgment, and Order of Dismissal with Prejudice (the "Final Approval Order"). A notice of appeal of the Final Approval Order (the “Appeal”) was given by certain objectors to the settlement, and on May 6, 2015, MW entered into a settlement agreement with, among others, the objectors to fully and finally resolve their claims, including the dismissal of Karl Memari v. Ply Gem Prime Holdings, Inc. et al., another lawsuit seeking class certification with respect to MW's vinyl clad windows, making the Vinyl Clad Settlement Agreement final and binding on the parties. The Company and MW deny all liability in the settlements and with respect to the facts and claims alleged. The Company, however, is aware of the substantial burden, expense, inconvenience and distraction of continued litigation, and therefore agreed to settle these matters. As a result of the Vinyl Clad Settlement Agreement, the Company recognized a $5.0 million expense during the year ended December 31, 2014 within selling, general, and administrative expenses in the Company’s consolidated statement of operations and comprehensive income (loss) in the Company's Windows and Doors segment. It is possible that the Company may incur costs in excess of the recorded amounts; however, the Company currently expects that the total net cost will not exceed $5.0 million. As of July 2, 2016, approximately $1.4 million of this liability is currently outstanding with $0.6 million as a current liability within accrued expenses and $0.8 million as a noncurrent liability within other long-term liabilities in the Company’s condensed consolidated balance sheet. In Anthony Pagliaroni et al. v. Mastic Home Exteriors, Inc. and Deceuninck North America, LLC, a purported class action filed in January 2012 in the United States District Court for the District of Massachusetts, plaintiffs, on behalf of themselves and all others similarly situated, allege damages as a result of the defective design and manufacture of Oasis composite deck and railing, which was manufactured by Deceuninck North America, LLC (“Deceuninck”) and sold by Mastic Home Exteriors, Inc. (“MHE”). The plaintiffs seek a variety of relief, including (i) economic and compensatory damages, (ii) treble damages, (iii) punitive damages, and (iv) attorneys' fees and costs of litigation. The damages sought in this action have not yet been quantified. The hearing regarding plaintiffs’ motion for class certification was held on March 10, 2015, and the District Court denied plaintiffs’ motion for class certification on September 22, 2015. On October, 6, 2015, plaintiffs filed a petition for interlocutory appeal of the denial of class certification to the U.S. Court of Appeals for the First Circuit, and on April 12, 2016, the Court of Appeals denied this petition for appeal. Deceuninck, as the manufacturer of Oasis deck and railing, has agreed to indemnify MHE for certain liabilities related to this claim pursuant to the sales and distribution agreement, as amended, between Deceuninck and MHE. MHE's ability to seek indemnification from Deceuninck is, however, limited by the terms and limits of the indemnity as well as the strength of Deceuninck's financial condition, which could change in the future. In re Ply Gem Holdings, Inc. Securities Litigation is a purported federal securities class action filed on May 19, 2014 in the United States District Court for the Southern District of New York against Ply Gem Holdings, Inc., several of its directors and officers, and the underwriters associated with the Company’s initial public offering ("IPO"). It is filed on behalf of all persons or entities, other than the defendants, who purchased the common shares of the Company pursuant and/or traceable to the Company’s IPO and seeks remedies under Sections 11 and 15 of the Securities Act of 1933, alleging that the Company’s Form S-1 registration statement was negligently prepared and materially inaccurate, containing untrue statements of material fact and omitting material information which was required to be disclosed. The plaintiffs seek a variety of relief, including (i) damages together with interest thereon and (ii) attorneys’ fees and costs of litigation. On October 14, 2014, Strathclyde Pension Fund was certified as lead plaintiff, and class counsel was appointed. On February 13, 2015, the defendants filed their motion to dismiss the complaint. On September 29, 2015, the District Court granted defendants’ motion to dismiss, but ruled that plaintiff could file an amended complaint. On November 6, 2015, plaintiff filed an amended complaint, and on January 13, 2016, the defendants filed their motion to dismiss this amended complaint. The District Court has not yet ruled on this motion. The damages sought in this action have not yet been quantified. Pursuant to the Underwriting Agreement, dated May 22, 2013, entered into in connection with the IPO, the Company has agreed to reimburse the underwriters for the legal fees and other expenses reasonably incurred by the underwriters’ law firm in its representation of the underwriters in connection with this matter. Pursuant to Indemnification Agreements, dated as of May 22, 2013, between the Company and each of the directors and officers named in this action, the Company has agreed to assume the defense of such directors and officers. We believe the purported federal securities class action is without merit and will vigorously defend the lawsuit. In Raul Carrillo-Hueso and Chec Xiong v. Ply Gem Industries, Inc. and Ply Gem Pacific Windows Corporation, a purported class action filed on November 25, 2015 in the Superior Court of the State of California, County of Alameda, plaintiffs, on behalf of themselves and all others similarly situated, allege damages as a result of, among other things, the defendants’ failure to provide (i) statutorily required meal breaks at the Sacramento, California facility, (ii) accurate wage statements to employees in California, and (iii) all wages due on termination in California. The plaintiffs seek a variety of relief, including (i) economic and compensatory damages, (ii) statutory damages, (iii) penalties, (iv) pre- and post-judgment interest, and (v) attorneys' fees and costs of litigation. The damages sought in this action have not yet been quantified. In Tina Morgan v. Ply Gem Industries, Inc. and Simonton Industries, Inc., a purported class action filed on December 11, 2015 in the Superior Court of the State of California, County of Solano, plaintiff, on behalf of herself and all others similarly situated, alleges damages as a result of, among other things, the defendants’ failure at the Vacaville, California facility to (i) pay overtime wages, (ii) provide statutorily required meal breaks, (iii) provide accurate wage statements, and (iv) pay all wages owed upon termination. The plaintiff seeks a variety of relief, including (i) economic and compensatory damages, (ii) statutory damages, (iii) penalties, (iv) pre- and post-judgment interest, and (v) attorneys' fees and costs of litigation. The damages sought in this action have not yet been quantified. Other contingencies The Company is subject to other contingencies, including legal proceedings and claims arising out of its operations and businesses that cover a wide range of matters, including, among others, environmental, contract, employment, intellectual property, securities, personal injury, property damage, product liability, warranty, and modification, adjustment or replacement of component parts or units sold, which may include product recalls. Product liability, environmental and other legal proceedings also include matters with respect to businesses previously owned. The Company has used various substances in their products and manufacturing operations, which have been or may be deemed to be hazardous or dangerous, and the extent of its potential liability, if any, under environmental, product liability and workers’ compensation statutes, rules, regulations and case law is unclear. Further, due to the lack of adequate information and the potential impact of present regulations and any future regulations, there are certain circumstances in which no range of potential exposure may be reasonably estimated. Also, it is not possible to ascertain the ultimate legal and financial liability with respect to certain contingent liabilities, including lawsuits, and therefore no such estimate has been made as of July 2, 2016. |
ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES | ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES Accrued expenses consist of the following at July 2, 2016 and December 31, 2015:
Other long-term liabilities consist of the following at July 2, 2016 and December 31, 2015:
Long-term incentive plan The Company has a long-term incentive plan (“LTIP”) for certain employees. The long-term incentive plan was implemented to retain and incentivize key employees. During the three months ended July 2, 2016 and July 4, 2015, the Company recognized a LTIP expense of $1.8 million and $0.7 million, respectively, which has been recorded within selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss). During the six months ended July 2, 2016 and July 4, 2015, the Company recognized a LTIP expense of $3.5 million and $1.4 million, respectively, which has been recorded within selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss). The LTIP liability was $6.2 million and $5.9 million as of July 2, 2016 and December 31, 2015, respectively, of which $4.4 million and $3.1 million has been recorded within accrued expenses and $1.8 million and $2.8 million in other long-term liabilities in the condensed consolidated balance sheets as of July 2, 2016 and December 31, 2015, respectively. Other liabilities During the six months ended July 2, 2016 and July 4, 2015, the Company made approximately $0.5 million and $1.5 million, in cash payments on restructuring liabilities, respectively. These payments were for a restructuring and integration program implemented in Western Canada and general back office centralization efforts incurred as well as product simplification costs incurred for the entire Windows and Doors segment. |
INCOME TAXES |
6 Months Ended |
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Jul. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Effective tax rate Under FASB Accounting Standards Codification 740-270, Income Taxes - Interim Reporting, each interim period is considered an integral part of the annual period and tax expense is measured using an estimated annual effective rate. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluation of possible future events and transactions and may be subject to subsequent refinement or revision. The Company calculates its quarterly tax provision consistent with the guidance provided by ASC 740-270, whereby the Company forecasts its estimated annual effective tax rate then applies that rate to its year-to-date pre-tax book income (loss). In addition, we exclude jurisdictions with a projected loss for the year or the year-to-date loss where we cannot recognize a tax benefit from our estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections. In addition to the tax resulting from applying the estimated annual effective tax rate to pre-tax income (loss), the Company includes certain items treated as discrete events to arrive at an estimated effective tax rate. Future changes in the forecasted annual income (loss) projections, tax rate changes, or discrete tax items could result in significant adjustments to quarterly income tax expense (benefit) in future periods in accordance with ASC 740-270. For the six months ended July 2, 2016, the Company's estimated annual effective income tax rate was approximately 2.1%, which varied from the statutory rate primarily due to state income tax expense, valuation allowances, and foreign income taxes. The effective tax rate including discrete items was 3.6%. The tax provision for the three months ended July 2, 2016 was approximately $2.0 million, and the tax benefit for the three months ended July 4, 2015 was approximately $1.5 million. The tax provision for the six months ended July 2, 2016 was approximately $0.5 million, and the tax benefit for the six months ended July 4, 2015 was approximately $3.9 million. Valuation allowance As of July 2, 2016, a full valuation allowance has been provided against certain deferred tax assets as it is currently deemed more likely than not that the benefit of such net tax assets will not be utilized. All of the Company's subsidiaries, excluding Mitten, are in a full valuation allowance position as of July 2, 2016 for federal and provincial income tax purposes as well as for state income tax purposes for certain domestic subsidiaries. Due to recent cumulative losses incurred by the Company, management did not rely upon projections of future taxable income in assessing the recoverability of deferred tax assets. The Company currently has book goodwill of approximately $28.0 million that is not being amortized, which results in a deferred tax liability of approximately $6.9 million at July 2, 2016. The reversal of deferred tax liabilities related to this goodwill is not considered a source of future taxable income in assessing the realization of its deferred tax assets. The Company continues to evaluate its ability to realize the net deferred tax assets and its estimates are subject to change. For the year ending December 31, 2016, the Company may achieve a three-year cumulative income position on a consolidated basis. If the Company achieves this income position during 2016, the Company will evaluate the need for a full, or partial valuation allowance. All of the factors the Company considers in evaluating whether and when to release all or a portion of the deferred tax asset valuation allowance involve significant judgment. We analyze all available positive and negative evidence in determining the continuing need for a valuation allowance. This evaluation considers, among other factors, historical operating results, forecasts of future profitability, and the duration of statutory carryforward periods. One of the primary pieces of negative evidence we consider is the cumulative losses we have incurred in recent years, including being in a three-year cumulative pre-tax loss position at December 31, 2015. Other negative evidence includes a U.S. macroeconomic environment that endured challenges and uncertainties within the cyclical homebuilding industry for new construction and repair and remodeling. However, the amount of negative evidence has lessened in recent periods as positive evidence has developed, including our financial results and the outlook for the new construction and repair and remodeling markets. If current business trends continue, including continued improvements in the new construction and repair and remodeling markets, and we continue to be profitable, we believe that there could be sufficient positive evidence to support reducing a significant portion of the federal valuation allowance and a portion of certain state valuation allowances during the second half of 2016. Tax uncertainties Despite the Company’s belief that its tax return positions are consistent with applicable tax laws, the Company believes that certain positions could be challenged by taxing authorities. The Company’s tax reserves reflect the difference between the tax benefit claimed on tax returns and the amount recognized in the condensed consolidated financial statements. These reserves have been established based on management’s assessment as to potential exposure attributable to permanent differences and interest applicable to both permanent and temporary differences. The tax reserves are reviewed periodically and adjusted in light of changing facts and circumstances, such as progress of tax audits, lapse of applicable statutes of limitations and changes in tax law. Certain income tax returns are currently under examination by various taxing authorities. During the six months ended July 2, 2016, approximately $0.1 million of interest expense was recorded on the remaining uncertain tax positions. The Company made no other adjustments to the tax reserves or penalties during the six months ended July 2, 2016. The liability for unrecognized tax benefits as of July 2, 2016 was approximately $3.0 million and is recorded in other long-term liabilities in the accompanying condensed consolidated balance sheet. The corresponding amount of gross unrecognized tax benefit was approximately $15.9 million. The difference between the total unrecognized tax benefits and the amount of the liability for unrecognized tax benefits represents unrecognized tax benefits that have been netted against deferred tax assets related to net operating losses in accordance with ASC 740 in addition to accrued penalties and interest. Tax Receivable Agreement On May 22, 2013, the Company entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) with PG ITR Holdco, L.P. (the “Tax Receivable Entity”). The Tax Receivable Agreement generally provides for the payment by the Company to the Tax Receivable Entity of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes in periods ending after the IPO as a result of (i) net operating loss ("NOL") carryovers from periods (or portions thereof) ending before January 1, 2013, (ii) deductible expenses attributable to the transactions related to the IPO and (iii) deductions related to imputed interest deemed to be paid by the Company as a result of or attributable to payments under the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such benefits have been utilized or expired. The Company will retain the benefit of the remaining 15% of these tax savings. The Tax Receivable Agreement will obligate the Company to make payments to the Tax Receivable Entity generally equal to 85% of the applicable cash savings that is actually realized as a result of utilizing NOL carryovers once the tax returns are filed for that respective tax year. The Company estimates that the total anticipated amount of future payments under the Tax Receivable Agreement could be up to approximately $100.0 million assuming no material changes in the relevant tax law, that the Company earns sufficient taxable income to utilize the net operating loss carry forwards, and that utilization of such tax attributes is not subject to limitation under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code") as the result of an “ownership change”. It is possible that future transactions or events or changes in estimates could increase or decrease the actual tax benefits realized from these tax attributes and the corresponding Tax Receivable Agreement payments and liability. Future changes in the Company's full valuation allowance position including the reversal of all or a portion of the Company's valuation allowance could accelerate the expense recognition for the Tax Receivable Agreement liability up to the approximate $100.0 million cumulative liability estimate. As of July 2, 2016 and December 31, 2015, the Company had a long-term liability of approximately $39.2 million and $20.8 million, respectively, and a current liability of $3.0 million and $3.0 million, respectively for the amount due pursuant to the Tax Receivable Agreement related to NOL carryovers. The Company recognized a $0.2 million expense and $2.0 million benefit for this liability during the three months ended July 2, 2016 and July 4, 2015, respectively. The Company recognized a $18.4 million and $15.2 million expense for this liability during the six months ended July 2, 2016 and July 4, 2015, respectively. Other As of July 2, 2016, the Company has not established U.S. deferred taxes on unremitted earnings of the Company’s foreign subsidiaries. Notwithstanding the provisions within the American Jobs Creation Act of 2004, the Company continues to consider these amounts to be permanently reinvested. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION A rollforward of stock options outstanding during the six months ended July 2, 2016 is presented below:
As of July 2, 2016, 2,323,022 options were 100% vested. At July 2, 2016, the Company had approximately $1.0 million of total unrecognized compensation expense that will be recognized over a weighted average period of 1.50 years. The Company recorded compensation expense of $0.2 million and $0.5 million for the three months ended July 2, 2016 and July 4, 2015, respectively, and $0.4 million and $1.0 million for the six months ended July 2, 2016 and July 4, 2015, respectively, related to stock option grants. Restricted stock During December 2014, the Company issued an aggregate of 23,944 restricted shares of common stock in an equal number to each of the four independent members of the Board of Directors. These shares vested over the 2015 calendar period and the Company expensed these items as compensation expense, ratably during 2015. During the three and six months ended July 4, 2015, the Company expensed approximately $0.1 million and $0.2 million, respectively, related to these grants in selling, general, and administrative expenses within the condensed consolidated statement of operations and comprehensive income (loss). During December 2015, the Company issued an aggregate of 25,664 restricted shares of common stock in an equal number to each of the four independent members of the Board of Directors. These shares will vest over the 2016 calendar year and the Company will expense these items as compensation expense ratably during 2016. During the three and six months ended July 2, 2016, the Company expensed approximately $0.1 million and $0.2 million, respectively, related to these grants in selling, general, and administrative expenses within the condensed consolidated statement of operations and comprehensive income (loss). |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. The Company has two reportable segments: (1) Siding, Fencing and Stone and (2) Windows and Doors. The income before income taxes of each segment includes the revenue generated on transactions involving products within that segment less identifiable expenses. Unallocated income and expenses include items which are not directly attributed to or allocated to either of the Company’s reporting segments. Such items include interest, legal costs, corporate payroll, and unallocated finance, and accounting expenses. Unallocated corporate assets include cash and certain receivables. Interest expense is presented net of interest income. Following is a summary of the Company’s segment information:
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RELATED PARTY TRANSACTIONS |
6 Months Ended |
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Jul. 02, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS During March 2015, the Company entered into new retention agreements with the Company's Chief Executive Officer and Chief Financial Officer for $3.0 million and $1.3 million, respectively. These retention agreements incentivize these individuals for three years and will require the Company to make cumulative payments of $4.3 million on December 31, 2017, if both individuals remain employed in their current positions on that date. |
GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION |
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Jul. 02, 2016 |
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GUARANTOR / NON GUARANTOR FINANCIAL INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GUARANTOR / NON-GUARANTOR FINANCIAL INFORMATION |
13. GUARANTOR/NON-GUARANTOR The 6.50% Senior Notes were issued by our direct 100% owned subsidiary, Ply Gem Industries, and are fully and unconditionally guaranteed on a joint and several basis by the Company and certain of Ply Gem Industries’ 100% owned subsidiaries. Ply Gem Industries is a 100% owned subsidiary of Ply Gem Holdings. Accordingly, the following guarantor and non-guarantor information is presented as of July 2, 2016 and December 31, 2015, and for the three and six months ended July 2, 2016 and July 4, 2015. The non-guarantor information presented represents our Canadian subsidiaries: Gienow and Mitten.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The Company determined the fair value of the tangible and intangible assets and the liabilities acquired, and recorded goodwill based on the excess of fair value of the acquisition consideration over such fair values, as follows:
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Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Ply Gem Holdings, Inc. and its subsidiaries (referred to herein as “Ply Gem Holdings”, “Ply Gem”, the “Company”, “we”, “us”, or “our”) have been prepared in accordance with U.S. generally accepted accounting principles as described in the consolidated financial statements and related notes included in our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2016. These statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles and should be read in conjunction with our 2015 Annual Report on Form 10-K. In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation have been included. Operating results for the period from January 1, 2016 through July 2, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The condensed consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements of Ply Gem Holdings at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The Company’s fiscal quarters are based on periods ending on the Saturday of the last week in the quarter. Therefore, the financial results of certain fiscal quarters will not be comparable to the prior and subsequent fiscal quarters. The accompanying financial statements include the Company’s condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended July 2, 2016 and July 4, 2015, the condensed consolidated statements of cash flows for the six months ended July 2, 2016 and July 4, 2015, and the condensed consolidated balance sheets as of July 2, 2016 and December 31, 2015. Ply Gem is a diversified manufacturer of residential and commercial building products, which are sold primarily in the United States and Canada, and include a wide variety of products for the residential and commercial construction, the do-it-yourself and the professional remodeling and renovation markets. The demand for the Company’s products is seasonal, particularly in the Northeast and Midwest regions of the United States and Canada where inclement weather during the winter months usually reduces the level of building and remodeling activity in both the home repair and remodeling and new home construction sectors. The Company’s sales are usually lower during the first and fourth quarters. To a significant extent our performance is dependent upon the levels of home repair and remodeling and new home construction spending, all of which are affected by such factors as interest rates, inflation, consumer confidence, unemployment, and availability of consumer credit. |
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Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Ply Gem Holdings and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated. |
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Reclassifications [Text Block] | Reclassifications Due to the adoption of ASU No. 2015-03, Interest-Imputation of Interest, certain balance sheet amounts in the prior fiscal year have been reclassified to conform to the presentation adopted in the current fiscal year, with no effect on net income (loss), accumulated deficit, or net cash provided by/used in operating, investing, and financing activities. |
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Accounting Policies and Use of Estimates | Accounting Policies and Use of Estimates The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles involves estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expense during the reporting periods. Certain of the Company’s accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company periodically evaluates the judgments and estimates used in their critical accounting policies to ensure that such judgments and estimates are reasonable. Such estimates include the allowance for doubtful accounts receivable, rebates, pensions, valuation of inventories, warranty reserves, insurance reserves, legal contingencies, assumptions used in the calculation of income taxes and the tax receivable agreement liability, projected cash flows used in the goodwill and intangible asset impairment tests, and environmental accruals and other contingencies. These judgments are based on the Company’s historical experience, current trends and information available from other sources, and are based on management’s best estimates and judgments. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Volatile equity markets, foreign currency, and litigation risk have combined to increase the uncertainty inherent in such estimates and assumptions. If different conditions result from those assumptions used in the Company’s judgments, actual results could be materially different from the Company’s estimates. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of short-term highly liquid investments with original maturities of three months or less and which are readily convertible into cash. |
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Accounts Receivable | Accounts Receivable Accounts receivable-trade are recorded at their net realizable value. The allowance for doubtful accounts was $3.6 million at July 2, 2016 and $3.6 million at December 31, 2015. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company estimates the allowance for doubtful accounts based on a variety of factors including the length of time receivables are past due, the financial health of its customers, unusual macroeconomic conditions and historical experience. If the financial condition of its customers deteriorates or other circumstances occur that result in an impairment of customers’ ability to make payments, the Company records additional allowances as needed. The Company writes off uncollectible trade accounts receivable against the allowance for doubtful accounts when collection efforts have been exhausted and/or any legal action taken by the Company has concluded. |
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Inventories | Inventories Inventories in the accompanying condensed consolidated balance sheets are valued at the lower of cost or net realizable value and are determined primarily by the first-in, first-out (FIFO) method. The Company records provisions, as appropriate, to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires the Company to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business. Accelerating the disposal process or incorrect estimates of future sales potential may cause actual results to differ from the estimates at the time such inventory is disposed or sold. As of July 2, 2016, the Company had inventory purchase commitments of approximately $24.0 million. Inventory provisions were approximately $9.6 million at July 2, 2016, increasing during the six months ended July 2, 2016 by $1.3 million compared to the December 31, 2015 provision balance of approximately $8.3 million. |
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Property and Equipment | Property and Equipment Property and equipment are presented at cost. Depreciation of property and equipment are provided on a straight-line basis over estimated useful lives, which are generally as follows:
Expenditures for maintenance and repairs are expensed when incurred. Expenditures for renewals and betterments are capitalized. When assets are sold, or otherwise disposed, the cost and related accumulated depreciation are eliminated and the resulting gain or loss is recognized in operations. |
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Long-lived assets | Long-lived assets The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company performs an undiscounted operating cash flow analysis to determine if impairment exists. If an impairment is determined to exist, any related impairment loss is calculated based on the asset’s fair value and the discounted cash flows. The Company tests for long-lived asset impairment at the following asset group levels: (i) the combined U.S. Siding, Fencing and Stone companies in the Siding, Fencing and Stone segment (“Siding”), (ii) the combined U.S. Windows companies in the Windows and Doors segment (“U.S. Windows”), (iii) the combined Simonton windows companies in the Windows and Doors segment, (iv) Gienow Canada Inc. ("Gienow Canada") (a combined Western Canadian company created by the January 2014 amalgamation of the Company's legacy Western Canadian business and the Gienow entity acquired in April 2013) in the Windows and Doors segment, and (v) Mitten in the Siding, Fencing and Stone segment. For purposes of recognition and measurement of an impairment loss, a long-lived asset or asset group should represent the lowest level for which an entity can separately identify cash flows that are largely independent of the cash flows of other assets and liabilities. There were no indicators of impairment during the three and six months ended July 2, 2016. |
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Goodwill and other intangible assets | Goodwill and other intangible assets The Company evaluates goodwill for impairment on an annual basis and whenever events or business conditions warrant. All other intangible assets are amortized over their estimated useful lives and are assessed for impairment as necessary. The Company assesses goodwill for impairment at the November month end each year and also at any other date when events or changes in circumstances indicate that the carrying value of these assets may exceed their fair value. To evaluate goodwill for impairment, the Company estimates the fair value of reporting units considering such factors as discounted cash flows and valuation multiples for comparable publicly traded companies. A significant reduction in projected sales and earnings, which would lead to a reduction in future cash flows, could indicate potential impairment. There were no indicators of impairment during the three and six months ended July 2, 2016 that would trigger an interim impairment test. The Company will continue to evaluate goodwill during future periods and future declines in the residential housing and repair and remodeling markets could result in goodwill impairments. |
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Debt Issuance Costs | Debt Issuance Costs Debt issuance costs, composed of facility, agency, and certain legal fees associated with issuing new debt financing, are amortized over the contractual term of the related agreement using the effective interest method. Net debt issuance costs totaled approximately $20.1 million and $22.2 million as of July 2, 2016 and December 31, 2015, respectively, and have been recorded within long-term debt ($17.5 million at July 2, 2016 and $19.3 million at December 31, 2015) and other non-current assets ($2.6 million at July 2, 2016 and $2.9 million at December 31, 2015) in the accompanying condensed consolidated balance sheets. The debt issuance costs included in other long term assets relate to the Senior Secured Asset Based Revolving Credit Facility due 2020 ("ABL Facility"). Amortization of debt issuance costs for the three months ended July 2, 2016 and July 4, 2015 was approximately $0.9 million and $0.8 million, respectively. Amortization of debt issuance costs for the six months ended July 2, 2016 and July 4, 2015 was approximately $1.7 million and $1.5 million, respectively. Amortization of debt issuance costs is recorded in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). |
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Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes which requires that deferred tax assets and liabilities be recorded to reflect the future tax consequences of temporary differences between the book and tax basis of various assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred tax assets and liabilities is recognized as income or expense in the period in which the rate change occurs. A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Estimates are required with respect to, among other things, the appropriate state income tax rates used in the various states that the Company and its subsidiaries are required to file, the potential utilization of operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realized in the future. The Company establishes reserves when, despite our belief that our tax return positions are fully supportable, certain positions could be challenged, and the positions may not be fully sustained. The Company along with its U.S. subsidiaries file a consolidated federal income tax return, separate state income tax returns, combined state returns, and unitary state returns. Gienow Canada and Mitten both file separate Canadian federal income tax returns and separate provincial returns. Tax receivable agreement ("TRA") liability As a result of the Company’s full tax valuation allowance position, the Company’s methodology for calculating the TRA liability considers expectations regarding (i) current year taxable income only (due to the uncertainty of future taxable income associated with the Company’s cumulative loss position) and (ii) future income due to the expected reversals of deferred tax liabilities. During the three and six months ended July 2, 2016, the Company estimated its projected taxable income for the full year ending December 31, 2016. However, the Company’s methodology to estimate the TRA liability excludes forecasts for fiscal years subsequent to 2016 because such future forecasts and projections cannot be relied upon based on the negative evidence from the Company’s three year cumulative loss position. For fiscal year 2016, the Company estimated to be in a taxable income position; however, this taxable income estimate was currently not sufficient to outweigh the negative evidence or alleviate the Company’s three year cumulative loss position. In addition to projecting the Company’s current year taxable income estimate, the Company considered the reversals of deferred tax assets and deferred tax liabilities. |
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Environmental | Environmental The Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Environmental remediation obligation accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. |
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Commitments and Contingencies, Policy | Commitments and Contingencies The Company accrues for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued have been estimated based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and outcomes. Insurance recoveries are recorded as assets when their receipt is deemed probable. |
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Foreign Currency | Foreign Currency Gienow Canada and Mitten, the Company’s Canadian subsidiaries, utilize the Canadian dollar as their functional currency. For reporting purposes, the Company translates the assets and liabilities of its foreign entities at the exchange rates in effect at period-end. Net sales and expenses are translated using average exchange rates in effect during the period. Gains and losses from foreign currency translation are credited or charged to accumulated other comprehensive income or loss in the accompanying condensed consolidated balance sheets. The Company recorded a gain from foreign currency transactions of approximately $0.3 million for the three months ended July 2, 2016 and a loss of approximately $0.1 million for the three months ended July 4, 2015. The Company recorded a gain from foreign currency transactions of approximately $0.8 million for the six months ended July 2, 2016 and a loss of approximately $1.0 million for the six months ended July 4, 2015. During the six months ended July 2, 2016 accumulated other comprehensive income (loss) included a currency translation gain of approximately $5.4 million and a loss of approximately $7.2 million for the six months ended |
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Derivatives, Policy [Policy Text Block] | Derivative Financial Instruments As of July 2, 2016, the Company had entered into a foreign currency forward contract agreements to hedge approximately $45.8 million of its 2016 non-functional currency inventory purchases to protect the Company from variability in cash flows attributable to changes in the U.S. dollar relative to the Canadian dollar. The Company has designated these forward contracts as cash flow hedges. As a cash flow hedge, unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. These forward contract agreements are highly correlated to the changes in foreign currency rates to which the Company is exposed. Unrealized gains and losses on these agreements are designated as effective or ineffective. The effective portion of such gains or losses is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion of such gains or losses is recorded as a component of cost of goods sold. Future realized gains and losses in connection with each inventory purchase will be reclassified from accumulated other comprehensive income or loss to cost of goods sold. The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income or loss and are reclassified into cost of goods sold in the same period the hedged item affects earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, fluctuations in the value of the derivative instrument are generally offset by changes in the fair value or cash flows of the underlying exposures being hedged. The changes in the fair value of derivatives that do not qualify as effective are immediately recognized in earnings. The gains and losses on derivative contracts that are reclassified from accumulated other comprehensive income or loss to current period earnings are included in the line item in which the hedged item is recorded in the same period the forecasted transaction affects earnings. As of July 2, 2016, approximately $0.4 million of the deferred net liability on derivative instruments included in accumulated other comprehensive loss is expected to be reclassified to cost of goods sold during the next six months. This expectation is based on the expected timing of the occurrence of the hedged forecasted transactions. During the three and six months ended July 2, 2016, the Company recognized $0.8 million and $0.4 million, respectively, within earnings as an increase to cost of goods sold in the condensed consolidated statement of operations and comprehensive income. During the three and six months ended July 4, 2015, the Company recognized $1.1 million and $2.2 million, respectively, within earnings as a reduction of cost of goods sold in the condensed consolidated statement of operations and comprehensive income. The fair value of the foreign currency forward contract agreements are estimated using industry standard valuation models using market-based observable inputs, including spot rates, forward points, interest rates and volatility inputs (Level 2). |
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Fair Value Measurement | Fair Value Measurement The accounting standard for fair value discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flows), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
The hierarchy requires the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The fair value of the long-term debt instruments was determined by utilizing available market information. The carrying value of the Company’s other assets and liabilities approximates their fair value. |
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Earnings (loss) per common share | Earnings (Loss) Per Common Share Basic earnings (loss) per share ("EPS") is computed based upon weighted-average shares outstanding during the period. Dilutive earnings per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period. Ply Gem Holdings uses the treasury stock method to reflect the potential dilutive effect of unvested stock awards and unexercised options. The Company was in a net loss position for the six months ended July 4, 2015 and therefore the impact of stock options and unvested restricted stock were excluded from the computation of diluted earnings (loss) per share for that specific period, as the inclusion of such amounts would be anti-dilutive. The computation of the dilutive effect of other potential common shares included options and unvested restricted stock representing approximately 0.2 million and 0.1 million shares of common stock for the three and six months ended July 2, 2016, respectively. The computation of the dilutive effect of other potential common shares included options and unvested restricted stock representing approximately 0.1 million shares of common stock for the three months ended July 4, 2015 and excluded options and unvested restricted stock representing approximately 0.1 million shares of common stock for the six months ended July 4, 2015. |
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New accounting pronouncements | New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this updated guidance include changes to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating the potential impacts of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This update provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer. The amendments in this update affect the guidance in ASU No. 2014-09 and are effective in the same timeframe as ASU No. 2014-09 as discussed below. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core principal of the guidance is that an entity should recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal years. Early adoption is permitted. The guidance is to be applied using a modified retrospective transition method with the option to elect a package of practical expedients. The Company is currently evaluating the impact of the adoption of this accounting standard update on its internal processes, operating results and financial reporting. The impact is currently not known or reasonably estimable. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which completes the joint effort by the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and improve financial reporting by creating common revenue recognition guidance for U.S. generally accepted accounting principles ("GAAP") and International Financial Reporting Standards ("IFRS"). ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using IFRS and GAAP. The core principle of this update is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB finalized a one-year deferral of the effective date of the new revenue recognition standard. The new standard will become effective for Ply Gem beginning with the first quarter of 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The method of adoption has not been determined yet by the Company. The Company is currently reviewing the revised guidance and assessing the potential impact on the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equpiment | Depreciation of property and equipment are provided on a straight-line basis over estimated useful lives, which are generally as follows:
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | A summary of the recorded asset and liability included in the accompanying condensed consolidated balance sheets is as follows:
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Summary of fair value liabilities | The Company’s population of recurring financial assets and liabilities subject to fair value measurements and the necessary disclosures are as follows:
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GOODWILL (Tables) |
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Jul. 02, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | A goodwill rollforward for 2016 is included in the table below:
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Schedule of reporting unit goodwill balances | The reporting unit goodwill balances were as follows as of July 2, 2016 and December 31, 2015:
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INTANGIBLE ASSETS (Tables) |
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Jul. 02, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of intangible assets | The table that follows presents the major components of intangible assets as of July 2, 2016 and December 31, 2015:
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Schedule of expected amortization expense | Estimated amortization expense for the fiscal years 2016 through 2020 is shown in the following table:
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COMPREHENSIVE INCOME (LOSS) (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of comprehensive income (loss) | Comprehensive income (loss), net of tax is comprised of the following:
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LONG-TERM DEBT (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt in the accompanying condensed consolidated balance sheets at July 2, 2016 and December 31, 2015 consists of the following:
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PENSION PLANS (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net periodic benefit expense | The Company’s net periodic benefit expense for the combined plans for the periods indicated consists of the following components:
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COMMITMENTS AND CONTINGENCIES (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the indemnification | the Company has recorded liabilities related to these indemnifications of approximately $0.5 million and $0.5 million, respectively, in current liabilities and $1.0 million and $1.3 million, respectively, in long-term liabilities, consisting of the following:
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Changes in the Company's warranty liabilities | Changes in the Company’s short-term and long-term warranty liabilities are as follows:
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ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES (Tables) |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses and other long term liabilities | Accrued expenses consist of the following at July 2, 2016 and December 31, 2015:
Other long-term liabilities consist of the following at July 2, 2016 and December 31, 2015:
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STOCK-BASED COMPENSATION (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of stock options outstanding | A rollforward of stock options outstanding during the six months ended July 2, 2016 is presented below:
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Company's segment information | Following is a summary of the Company’s segment information:
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GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Tables) |
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Jul. 02, 2016 |
Jul. 04, 2015 |
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GUARANTOR / NON GUARANTOR FINANCIAL INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS |
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CONDENSED CONSOLIDATING BALANCE SHEET |
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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounting Policies [Abstract] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 3,639 | $ 3,588 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jul. 02, 2016 |
Dec. 31, 2015 |
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Accounting Policies [Abstract] | ||
Purchase Commitment, Remaining Minimum Amount Committed | $ 24.0 | |
Inventory Valuation Reserves | 9.6 | $ 8.3 |
Decrease (increase) in inventory reserve | $ 1.3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) |
6 Months Ended |
---|---|
Jul. 02, 2016 | |
Building and improvements [Member] | Minimum [Member] | |
Property and Equipment [Line Items] | |
Estimated useful life | 10 years |
Building and improvements [Member] | Maximum [Member] | |
Property and Equipment [Line Items] | |
Estimated useful life | 37 years |
Machinery and equipment, including leases [Member] | Minimum [Member] | |
Property and Equipment [Line Items] | |
Estimated useful life | 3 years |
Machinery and equipment, including leases [Member] | Maximum [Member] | |
Property and Equipment [Line Items] | |
Estimated useful life | 15 years |
Leasehold improvements [Member] | |
Property and Equipment [Line Items] | |
Property plant and equipment useful life description | Term of lease or useful life, whichever is shorter |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangibles assets, goodwill and other long-lived assets (Details) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jul. 02, 2016 |
Jul. 02, 2016 |
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Accounting Policies [Abstract] | ||
Impaired Intangible Asset, Facts and Circumstances Leading to Impairment | no indicators | no indicators |
Goodwill, Impaired, Facts and Circumstances Leading to Impairment | no indicators | no indicators |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per share (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
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Accounting Policies [Abstract] | ||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0.2 | 0.1 | 0.1 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
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Derivative [Line Items] | ||||
Foreign Currency Transaction Gain (Loss), Realized | $ 300 | $ (100) | $ 839 | $ (1,032) |
Foreign currency translation adjustment | $ 584 | $ 276 | $ 5,357 | $ (7,170) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivatives (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Dec. 31, 2015 |
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Derivatives, Fair Value [Line Items] | |||
Foreign Currency Cash Flow Hedge Liability at Fair Value | $ (366) | $ 829 | |
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | 800 | $ 1,100 | |
Foreign Exchange Forward [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, Notional Amount | $ 45,800 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-lived assets (Details) |
6 Months Ended |
---|---|
Jul. 02, 2016 | |
Accounting Policies [Abstract] | |
Impaired Long-Lived Assets Held and Used, Facts and Circumstances Leading to Impairment | no |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Debt Issuance Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Dec. 31, 2015 |
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Debt Instrument [Line Items] | |||||
Unamortized Debt Issuance Expense | $ 20.1 | $ 20.1 | $ 22.2 | ||
Amortization of debt issuance costs | 0.9 | $ 0.8 | 1.7 | $ 1.5 | |
Other Noncurrent Assets [Member] | |||||
Debt Instrument [Line Items] | |||||
Unamortized Debt Issuance Expense | 2.6 | 2.6 | 2.9 | ||
Long-term Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Unamortized Debt Issuance Expense | $ 17.5 | $ 17.5 | $ 19.3 |
GOODWILL (Details) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jul. 02, 2016
USD ($)
|
Jul. 02, 2016
USD ($)
reporting_unit
|
Jul. 04, 2015
reporting_unit
|
Dec. 31, 2015
USD ($)
|
May 29, 2015
USD ($)
|
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Goodwill [Line Items] | |||||
Goodwill, Impaired, Facts and Circumstances Leading to Impairment | no indicators | no indicators | |||
Number of reporting units | reporting_unit | 2 | 2 | |||
Goodwill impairment | $ 0 | ||||
Goodwill | $ 479,778,000 | $ 479,778,000 | 477,739,000 | ||
Siding, Fencing and Stone [Member] | |||||
Goodwill [Line Items] | |||||
Goodwill, Gross | 471,567,000 | 471,567,000 | 470,185,000 | ||
Goodwill, Impaired, Accumulated Impairment Loss | (122,227,000) | (122,227,000) | (122,227,000) | ||
Goodwill | 349,340,000 | 349,340,000 | 347,958,000 | ||
Goodwill, Translation Adjustments | 1,382,000 | ||||
Windows and Doors [Member] | |||||
Goodwill [Line Items] | |||||
Goodwill, Gross | 458,211,000 | 458,211,000 | 457,554,000 | ||
Goodwill, Impaired, Accumulated Impairment Loss | (327,773,000) | (327,773,000) | (327,773,000) | ||
Goodwill | $ 130,438,000 | 130,438,000 | $ 129,781,000 | ||
Goodwill, Translation Adjustments | $ 657,000 | ||||
Canyon Stone [Member] | Siding, Fencing and Stone [Member] | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 7,642,000 |
COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net income (loss) | $ 41,646 | $ 30,372 | $ 14,069 | $ (18,487) |
Foreign currency translation adjustment | 584 | 276 | 5,357 | (7,170) |
Unrealized gain (loss) on derivative instruments | 572 | (1,131) | 971 | |
Total comprehensive income (loss) | $ 42,802 | $ 29,517 | $ 18,277 | $ (24,686) |
LONG-TERM DEBT - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 956,739 | $ 979,831 |
Less current portion of long-term debt | 4,300 | 4,300 |
Long-term debt, less current portion | 952,439 | 975,531 |
Senior Secured Asset-Based Revolving Credit Facility due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Line of Credit | 0 | 0 |
Six Point Five Senior Notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 596,187 | 592,462 |
Debt Instrument, Unamortized Discount | 53,813 | 57,538 |
Term Loan Facility due 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 360,552 | 387,369 |
Debt Instrument, Unamortized Discount | $ 29,773 | $ 35,106 |
LONG-TERM DEBT - 2014 Debt Transactions (Details) - USD ($) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jan. 23, 2015 |
Sep. 05, 2014 |
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Debt Instrument [Line Items] | ||||
Repayments of long-term debt | $ 32,150 | $ 2,150 | ||
Six Point Five Senior Notes due 2022 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Face Amount | $ 500,000 | |||
Six Point Five Senior Notes tack on due 2022 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Face Amount | $ 150,000 |
LONG-TERM DEBT - Loss on debt modification or extinguishment (Details) - USD ($) |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Aug. 04, 2016 |
Mar. 10, 2016 |
Dec. 31, 2015 |
Jan. 30, 2014 |
|
Debt Instrument [Line Items] | ||||||
Gains (Losses) on Extinguishment of Debt | $ 2,399,000 | $ 0 | ||||
Unamortized Debt Issuance Expense | 20,100,000 | $ 22,200,000 | ||||
Term Loan Facility due 2021 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Unamortized Discount | 29,773,000 | $ 35,106,000 | ||||
Term Loan Facility due 2021 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Estinguishment of Debt, Unamortized Discount Charged to Expense | 1,915,000 | 0 | ||||
Write off of Deferred Debt Issuance Cost | $ 484,000 | $ 0 | ||||
Term Loan Facility due 2021 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term Debt, Term Loan Voluntary Repayment | $ 30,000,000 | $ 30,000,000.00 | ||||
Debt Instrument, Unamortized Discount | $ 2,200,000 |
PENSION PLANS (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016
USD ($)
pension_plan
|
Jul. 04, 2015
USD ($)
|
Jul. 02, 2016
USD ($)
pension_plan
|
Jul. 04, 2015
USD ($)
|
|
Compensation and Retirement Disclosure [Abstract] | ||||
Number of separate pension plans | pension_plan | 2 | 2 | ||
Net periodic benefit costs | ||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 486 | 502 | 972 | 1,004 |
Expected return on plan assets | (545) | (577) | (1,090) | (1,155) |
Amortization of loss | 354 | 296 | 708 | 593 |
Net periodic benefit expense | $ 295 | $ 221 | $ 590 | $ 442 |
INCOME TAXES tax uncertainties (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Dec. 31, 2015 |
|
Income Tax Contingency [Line Items] | |||||
Current Income Tax Expense (Benefit) | $ 2,000 | $ (1,500) | $ (500) | $ (3,900) | |
Liability for Uncertain Tax Positions, Noncurrent | 2,991 | 2,991 | $ 2,866 | ||
Unrecognized Tax Benefits | $ 15,900 | $ 15,900 |
SEGMENT INFORMATION (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016
USD ($)
|
Jul. 04, 2015
USD ($)
|
Jul. 02, 2016
USD ($)
segment
|
Jul. 04, 2015
USD ($)
segment
|
Dec. 31, 2015
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Reportable segments | segment | 2 | 2 | |||
Net sales | $ 510,545 | $ 502,334 | $ 919,159 | $ 878,382 | |
Operating earnings (loss) | 62,182 | 45,664 | 71,758 | 31,614 | |
Total assets | 1,292,619 | 1,292,619 | $ 1,266,572 | ||
Siding, Fencing and Stone [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 244,411 | 238,573 | 420,787 | 395,015 | |
Operating earnings (loss) | 51,305 | 44,687 | 71,678 | 55,008 | |
Total assets | 709,047 | 709,047 | 664,053 | ||
Windows and Doors [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 266,134 | 263,761 | 498,372 | 483,367 | |
Operating earnings (loss) | 18,001 | 9,580 | 16,751 | (6,826) | |
Total assets | 512,928 | 512,928 | 498,994 | ||
Unallocated [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating earnings (loss) | (7,124) | $ (8,603) | (16,671) | $ (16,568) | |
Total assets | $ 70,644 | $ 70,644 | $ 103,525 |
RELATED PARTY TRANSACTIONS (Details) - 2015 agreement [Member] $ in Millions |
Jul. 02, 2016
USD ($)
|
---|---|
Chief Executive Officer [Member] | |
Related Party Transaction [Line Items] | |
Due to Officers or Stockholders | $ 3.0 |
Chief Financial Officer [Member] | |
Related Party Transaction [Line Items] | |
Due to Officers or Stockholders | 1.3 |
All retention payments [Member] | |
Related Party Transaction [Line Items] | |
Due to Officers or Stockholders | $ 4.3 |
RESTRUCTURING (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Windows and Doors [Member] | Ply Gem Canada [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Payments for Restructuring | $ (0.5) | $ (1.5) |
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