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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: April 4, 2020
 
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to    
 
Commission file number: 1-14315
 
 cnr-20200404_g1.jpg
Cornerstone Building Brands, Inc.
(Exact name of registrant as specified in its charter)

 
Delaware76-0127701
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

5020 Weston ParkwaySuite 400CaryNC27513
(Address of principal executive offices)(Zip Code)
 
(866) 419-0042
(Registrant’s telephone number, including area code)

 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý Yes ¨ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filerAccelerated filerý
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ý No
 
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock $0.01 par value per shareCNRNew York Stock Exchange

APPLICABLE ONLY TO CORPORATE ISSUERS
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Common Stock, $0.01 par value - 126,151,163 shares as of May 5, 2020.





TABLE OF CONTENTS 
  PAGE
  
Item 1.
 
Consolidated Statements of Operations for the Three Months Ended April 4, 2020 and March 30, 2019
 
 
 
 
Item 2.
Item 3.
Item 4.
   
  
Item 1.
Item 1A.
Item 2.
Item 6.
 

i


PART I — FINANCIAL INFORMATION 
Item 1.  Unaudited Consolidated Financial Statements. 
CORNERSTONE BUILDING BRANDS, INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
 April 4,
2020
March 30,
2019
Sales$1,113,811  $1,064,832  
Cost of sales
882,924  878,915  
Gross profit230,887  185,917  
Selling, general and administrative expenses164,954  154,306  
Intangible asset amortization44,861  41,463  
Restructuring and impairment charges, net13,835  3,431  
Strategic development and acquisition related costs4,857  14,082  
Goodwill impairment503,171    
Loss from operations(500,791) (27,365) 
Interest income338  215  
Interest expense(54,835) (58,286) 
Foreign exchange gain (loss)(4,137) 1,177  
Other income (expense), net(662) 345  
Loss before income taxes(560,087) (83,914) 
Benefit for income taxes(18,014) (23,897) 
Net loss(542,073) (60,017) 
Net income allocated to participating securities    
Net loss applicable to common shares$(542,073) $(60,017) 
Loss per common share:  
Basic$(4.30) $(0.48) 
Diluted$(4.30) $(0.48) 
Weighted average number of common shares outstanding:  
Basic126,093  125,503  
Diluted126,093  125,503  
See accompanying notes to consolidated financial statements.
 


1


CORNERSTONE BUILDING BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 Three Months Ended
 April 4,
2020
March 30,
2019
Comprehensive loss:  
Net loss$(542,073) $(60,017) 
Other comprehensive income (loss), net of tax:  
Foreign exchange translation gains (losses)(9,563) 2,472  
Unrealized loss on derivative instruments, net of income tax of $12,032 and $0, respectively
(38,176)   
Other comprehensive income (loss)(47,739) 2,472  
Comprehensive loss$(589,812) $(57,545) 
See accompanying notes to consolidated financial statements.
2


CORNERSTONE BUILDING BRANDS, INC. 
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 April 4,
2020
December 31,
2019
ASSETS  
Current assets:  
Cash and cash equivalents$475,701  $98,386  
Restricted cash7,924  3,921  
Accounts receivable, less allowances of $11,821 and $9,962, respectively
476,779  491,740  
Inventories, net460,405  439,194  
Income taxes receivable35,774  48,466  
Investments in debt and equity securities, at market
2,891  3,776  
Prepaid expenses and other76,098  78,516  
Assets held for sale2,564  1,750  
     Total current assets1,538,136  1,165,749  
Property, plant and equipment, less accumulated depreciation of $580,841 and $556,143, respectively
651,800  652,841  
Lease right-of-use assets301,332  316,155  
Goodwill1,183,432  1,669,594  
Intangible assets, net1,704,371  1,740,700  
Deferred income taxes1,292  7,510  
Other assets, net12,066  11,797  
     Total assets$5,392,429  $5,564,346  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Current portion of long-term debt$25,600  $25,600  
Accounts payable219,300  205,629  
Accrued compensation and benefits62,279  92,130  
Accrued interest34,478  19,070  
Accrued income taxes5,523    
Current portion of lease liabilities69,307  72,428  
Other accrued expenses213,044  233,687  
     Total current liabilities629,531  648,544  
Long-term debt3,612,610  3,156,924  
Deferred income taxes234,112  291,987  
Long-term lease liabilities232,660  243,780  
Other long-term liabilities335,628  287,793  
     Total long-term liabilities4,415,010  3,980,484  
Stockholders’ equity:  
Common stock, $0.01 par value; 200,000,000 authorized; 126,167,645 and 126,142,313 shares issued and outstanding at April 4, 2020, respectively; and 126,110,000 and 126,054,487 shares issued and outstanding at December 31, 2019, respectively
1,262  1,261  
Additional paid-in capital1,251,252  1,248,787  
Accumulated deficit(823,980) (281,229) 
Accumulated other comprehensive loss, net(80,137) (32,398) 
Treasury stock, at cost (25,332 and 55,513 shares at April 4, 2020 and December 31, 2019, respectively)
(509) (1,103) 
     Total stockholders’ equity347,888  935,318  
     Total liabilities and stockholders’ equity$5,392,429  $5,564,346  
See accompanying notes to consolidated financial statements.
3



CORNERSTONE BUILDING BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended
 April 4,
2020
March 30,
2019
Cash flows from operating activities:  
Net loss$(542,073) $(60,017) 
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization69,769  59,947  
Non-cash interest expense2,274  2,672  
Share-based compensation expense3,387  4,005  
Non-cash fair value premium on purchased inventory  16,249  
Goodwill impairment503,171    
Asset impairment3,079    
Provision for doubtful accounts725  (189) 
Deferred income taxes(35,734) (7,434) 
Changes in operating assets and liabilities, net of effect of acquisitions:  
Accounts receivable20,532  (43,635) 
Inventories(20,724) 16,704  
Income taxes18,212  (34,090) 
Prepaid expenses and other1,554  18,524  
Accounts payable12,461  (7,216) 
Accrued expenses(40,662) (12,373) 
Other, net1,805  (1,869) 
Net cash used in operating activities(2,224) (48,722) 
Cash flows from investing activities:  
Acquisitions, net of cash acquired(39,857) (182,418) 
Capital expenditures(27,567) (27,190) 
Net cash used in investing activities(67,424) (209,608) 
Cash flows from financing activities:  
Proceeds from ABL facility345,000  220,000  
Proceeds from cash flow revolver115,000    
Payments on term loan(6,405) (6,405) 
Payments related to tax withholding for share-based compensation(327) (156) 
Net cash provided by financing activities453,268  213,439  
Effect of exchange rate changes on cash and cash equivalents(2,302) 911  
Net increase (decrease) in cash, cash equivalents and restricted cash381,318  (43,980) 
Cash, cash equivalents and restricted cash at beginning of period102,307  147,607  
Cash, cash equivalents and restricted cash at end of period$483,625  $103,627  
 
See accompanying notes to consolidated financial statements.
4



CORNERSTONE BUILDING BRANDS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Common StockAdditional Paid-In CapitalRetained Earnings (Deficit)Accumulated Other Comprehensive Income (Loss)Treasury StockStockholders’ Equity
 SharesAmountSharesAmount
December 31, 2019126,110,000  $1,261  $1,248,787  $(281,229) $(32,398) (55,513) $(1,103) $935,318  
Treasury stock purchases—  —  —  —  —  (37,794) (327) (327) 
Retirement of treasury shares(38,206) (1) (328) —  —  38,206  329    
Issuance of restricted stock95,851  1  (1) —  —  —  —    
Other comprehensive loss—  —  —  —  (47,739) —  —  (47,739) 
Deferred compensation obligation—  1  (593) —  —  29,769  592    
Share-based compensation—  —  3,387  —  —  —  —  3,387  
Cumulative effect of accounting change—  —  —  (678) —  —  —  (678) 
Net loss—  —  —  (542,073) —  —  —  (542,073) 
Balance, April 4, 2020126,167,645  $1,262  $1,251,252  $(823,980) $(80,137) (25,332) $(509) $347,888  
Balance, December 31, 2018125,583,159  $1,256  $1,237,056  $(265,839) $(10,813) (110,899) $(1,678) $959,982  
Treasury stock purchases—  —  —  —  —  (19,713) (156) (156) 
Retirement of treasury shares(57,984) (1) (551) —  —  57,984  552    
Issuance of restricted stock55,834  1  (1) —  —    —    
Other comprehensive income—  —  —  —  2,472  —  —  2,472  
Deferred compensation obligation—  —  (86) —  —  5,712  86    
Share-based compensation—  —  4,005  —  —  —  —  4,005  
Net loss  —  —  —  (60,017) —  —  —  (60,017) 
Balance, March 30, 2019125,581,009  $1,256  $1,240,423  $(325,856) $(8,341) (66,916) $(1,196) $906,286  
See accompanying notes to consolidated financial statements.

5


CORNERSTONE BUILDING BRANDS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 4, 2020
(Unaudited)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements for Cornerstone Building Brands, Inc. (together with its subsidiaries, unless otherwise indicated, the “Company,” “Cornerstone,” “NCI”, “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, the unaudited consolidated financial statements included herein contain all adjustments, which consist of normal recurring adjustments, necessary to fairly present the Company’s financial position, results of operations and cash flows for the periods indicated. Operating results for the period from January 1, 2020 through April 4, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020.
 Certain reclassifications have been made to the prior period segments amounts in the notes to the consolidated financial statements to conform to the current presentation. The net effect of these reclassifications was not material to the consolidated financial statements (See Note 19 — Segment Information).
For additional information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2020.
On July 17, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ply Gem Parent, LLC (“Ply Gem”), and for certain limited purposes as set forth in the Merger Agreement, Clayton, Dubilier & Rice, LLC (“CD&R”), pursuant to which, at the closing of the merger, Ply Gem would be merged with and into NCI, with NCI continuing its existence as a corporation organized under the laws of the State of Delaware (the “Merger”). In connection with the Merger, 58,709,067 shares of NCI common stock were issued to the holders of all of the equity interests in Ply Gem (the “Stock Issuance”), representing approximately 47% of the total number of shares of NCI Common Stock outstanding following the consummation of the Merger on November 16, 2018. There are approximately 57,103 shares of NCI Common Stock of the original 58,709,067 that have not yet been issued pending holder identification and have been accrued as purchase consideration within other current liabilities in the consolidated balance sheet at April 4, 2020.
Reporting Periods
The Company’s current fiscal quarters are based on a four-four-five week calendar with periods ending on the Saturday of the last week in the quarter except that December 31st will always be the year-end date. Therefore, the financial results of certain fiscal quarters may not be comparable to prior fiscal quarters.
Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that total the amounts shown in the consolidated statements of cash flows (in thousands):
 April 4,
2020
December 31,
2019
Cash and cash equivalents$475,701  $98,386  
Restricted cash(1)
7,924  3,921  
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows$483,625  $102,307  
(1)Restricted cash primarily relates to escrow balances held for an outstanding earn-out agreement and working capital and other indemnification agreements.
6


Accounts Receivables and Related Allowance
The Company reports accounts receivable net of the allowance for doubtful accounts. Trade accounts receivable are the result of sales of metal building products, insulated metal panels, metal coating, vinyl siding, metal siding, injection molded products, vinyl windows, aluminum windows, and other products and services to customers throughout the United States and Canada and affiliated territories, including international builders who resell to end users. Sales are primarily denominated in U.S. dollars. Credit sales do not normally require a pledge of collateral; however, various types of liens may be filed to enhance the collection process and we require payment prior to shipment for certain international shipments.
The Company establishes reserves for doubtful accounts on a customer by customer basis when we believe the required payment of specific amounts owed is unlikely to occur. Bad debt provisions are included in selling, general and administrative expenses. In establishing these reserves, the Company considers changes in the financial position of a customer, availability of security, unusual macroeconomic conditions, lien rights and bond rights as well as disputes, if any, with our customers. Our allowance for doubtful accounts reflects reserves for customer receivables to reduce receivables to amounts expected to be collected. We determine past due status as of the contractual payment date. Interest on delinquent accounts receivable is included in the trade accounts receivable balance and recognized as interest income when earned and collectability is reasonably assured. Uncollectible accounts are written off when a settlement is reached for an amount that is less than the outstanding historical balance, all collection efforts have been exhausted and/or any legal action taken by the Company has concluded.
The following table represents the rollforward of the reserve for uncollectible accounts for the period indicated (in thousands):
Three Months Ended
April 4, 2020
Balance, December 31, 2019$9,962  
Cumulative effect of accounting change(1)
678  
Provision for expected credit losses725  
Amounts charged against allowance for credit losses, net of recoveries(354) 
Allowance for credit losses of acquired company at date of acquisition810  
Balance, April 4, 2020$11,821  
(1)Cumulative effect of accounting change reflects the modified retrospective effect of adopting ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (See Note 2 — Accounting Pronouncements).
Net Sales
The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), as of October 29, 2018. 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.
The Company enters into contracts that pertain to products, which are accounted for as separate performance obligations and are typically one year or less in duration. The Company does not exercise significant judgment in determining the timing for the satisfaction of performance obligations or the transaction price. Revenue is measured as the amount of consideration expected to be received in exchange for our products. The Company has elected to apply the practical expedient provided for in ASU No. 2014-09 and has not disclosed information regarding remaining performance obligations that have original expected durations of one year or less. Revenue is generally recognized when the product has shipped from our facility and control has transferred to the customer. For a portion of our business, when we process customer owned material, control is deemed to transfer to the customer as the processing is being completed.
7


Our revenues are adjusted for variable consideration, which includes customer volume rebates and prompt payment discounts. We measure variable consideration by estimating expected outcomes using analysis and inputs based upon anticipated performance, historical data, and current and forecasted information. Customer returns are recorded as a reduction to sales on an actual basis throughout the year and also include an estimate at the end of each reporting period for future customer returns related to sales recorded prior to the end of the period. The Company generally estimates customer returns based upon the time lag that historically occurs between the sale date and the return date while also factoring in any new business conditions that might impact the historical analysis such as new product introduction. Measurement of variable consideration is reviewed by management periodically and revenue is adjusted accordingly. We do not have significant financing components.
Shipping and handling activities performed by us are considered activities to fulfill the sales of our products. Amounts billed for shipping and handling are included in net sales, while costs incurred for shipping and handling are included in cost of sales.
In accordance with certain contractual arrangements, we receive payment from our customers in advance related to performance obligations that are to be satisfied in the future and recognize such payments as deferred revenue, primarily related to the Company's weathertightness warranties (see Note 12 — Warranty).
The following table presents disaggregated revenue disclosure details of net sales by segment (in thousands):
Three Months Ended
April 4,
2020
March 30,
2019
Windows Net Sales Disaggregation:
Vinyl windows$419,022  $393,930  
Aluminum windows19,476  11,708  
Other9,952  15,956  
Total$448,450  $421,594  
Siding Net Sales Disaggregation:
Vinyl siding$109,548  $105,957  
Metal52,666  52,980  
Injection molded13,239  11,838  
Stone18,810  22,314  
Other products & services46,780  25,188  
Total$241,043  $218,277  
Commercial Net Sales Disaggregation:
Metal building products$292,436  $273,425  
Insulated metal panels99,229  106,372  
Metal coil coating32,653  45,164  
Total$424,318  $424,961  
Total Net Sales:$1,113,811  $1,064,832  

8


NOTE 2 — ACCOUNTING PRONOUNCEMENTS
Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an entity to measure all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now incorporate forward-looking information based on expected losses to estimate credit losses. Effective January 1, 2020, the Company adopted this guidance on a modified retrospective basis, pursuant to which it recorded a $0.7 million adjustment to increase the opening balance of accumulated deficit as of January 1, 2020 for the impact of applying the new standard. The adjustment related to recording an incremental credit loss to the accounts receivable allowance for doubtful accounts at the beginning of the first period in which the accounting standard is effective. Additional credit loss disclosures are included in Note 1 — Summary of Significant Accounting Policies.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements for fair value measurements under ASC 820, Fair Value Measurement. Effective January 1, 2020, the Company adopted this guidance. The application of ASU 2018-13 did not have a material effect on consolidated financial statements.
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which removes disclosures no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. Effective January 1, 2020, the Company adopted this guidance. The application of ASU 2018-14 did not have a material effect on consolidated financial statements.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company will be required to adopt this guidance in the annual and interim periods for our fiscal year ending December 31, 2021, with early adoption permitted. The Company is evaluating the impact of adopting this guidance.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. The amendments in this ASU are elective, apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of rate reform, and are effective as of March 12, 2020 through December 31, 2022. The Company is evaluating the impact of electing to apply the amendments in this guidance.
Additionally, there were various other accounting standards and interpretations issued that the Company has not yet been required to adopt, none of which is expected to have a material impact on the Company’s consolidated financial statements going forward.
NOTE 3 — ACQUISITIONS
Kleary Acquisition
On March 2, 2020, the Company acquired 100% of the issued and outstanding shares of the common stock of Kleary Masonry, Inc. ("Kleary") for total consideration of $40.0 million. The transaction was financed with cash on hand and through borrowings under the Company’s asset-based revolving credit facility. Kleary primarily services residential customers with manufactured stone installations and commercial customers with manufactured wall installations in the Sacramento, California area. Kleary's results are reported within the Siding business segment.
The acquisition of Kleary strengthens the Company's position as a market leader in stone veneer. 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 Kleary based upon fair values as of the closing date.
9


The Company determined the fair value of the tangible and intangible assets and the liabilities acquired, and recorded goodwill based on the excess of the fair value of the acquisition consideration over such fair values, as follows (in thousands):
Assets acquired:
Cash$143  
Accounts receivable7,235  
Inventories715  
Prepaid expenses and other current assets330  
Property, plant and equipment1,042  
Lease right of use assets445  
Intangible assets (trade names/customer relationships)22,350  
Goodwill10,615  
Total assets acquired42,875  
Liabilities assumed:
Accounts payable1,126  
Other accrued expenses1,195  
Lease liabilities445  
Other long-term liabilities109  
Total liabilities assumed2,875  
Net assets acquired$40,000  
The $10.6 million of goodwill was allocated to the Siding segment and is expected to be deductible for tax purposes. The goodwill is attributable to the workforce of the acquired business and the synergies expected to be realized.
During the three months ended April 4, 2020, the Company incurred $0.2 million of acquisition-related costs for Kleary, which are recorded in strategic development and acquisition related costs in the Company’s consolidated statements of operations.
The final acquisition accounting allocation for the acquisition of Kleary remains subject to further adjustments. The specific accounts subject to ongoing acquisition accounting adjustments include accounts receivable, inventories, prepaid expenses and other current assets, goodwill, intangibles, accounts payable, accrued expenses, accrued warranties and other liabilities. Therefore, the measurement period remained open as of April 4, 2020, and the preliminary acquisition accounting allocation detailed above is subject to further adjustment. The Company anticipates completing these acquisition accounting adjustments during the first quarter of fiscal 2021.
Unaudited Pro Forma Financial Information
During the three months ended April 4, 2020, Kleary contributed net sales of $3.5 million and net income of $0.7 million which has been included within the Company’s consolidated statement of operations. The following table provides unaudited supplemental pro forma results for Cornerstone, prepared in accordance with ASC 805, for the three months ended April 4, 2020 and March 30, 2019 as if the Kleary and Environmental Stoneworks (defined below) acquisitions had occurred on January 1, 2019 (in thousands except for per share data):
Three Months Ended
April 4,
2020
March 30,
2019
Net sales$1,122,169  $1,088,608  
Net loss applicable to common shares(540,870) (63,003) 
Net loss per common share:
Basic$(4.29) $(0.50) 
Diluted$(4.29) $(0.50) 
10


The unaudited supplemental pro forma financial information was prepared based on the historical information of Cornerstone, Environmental Stoneworks and Kleary. The unaudited supplemental pro forma financial information does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the two acquisitions or any integration costs. Unaudited pro forma balances are not necessarily indicative of operating results had the Environmental Stoneworks and Kleary acquisitions occurred on January 1, 2019 or of future results.
Environmental Stoneworks
On January 12, 2019, the Company entered into a Unit Purchase Agreement (the “Purchase Agreement”) with Environmental Materials, LLC, a Delaware limited liability company (“ESW”), the Members of Environmental Materials, LLC (the “Sellers”) and Charles P. Gallagher and Wayne C. Kocourek, solely in their capacity as the Seller Representative (as defined in the Purchase Agreement), pursuant to which, on February 20, 2019, the Company’s wholly-owned subsidiary, Ply Gem Industries, Inc., purchased from the Sellers 100% of the outstanding limited liability company interests of Environmental Stoneworks (the “Environmental Stoneworks Acquisition”) for total consideration of $182.6 million, subject to certain post-closing adjustments, for ESW. The transaction was financed through borrowings under the Company’s asset-based revolving credit facility.
The Environmental Stoneworks Acquisition, when combined with the Company’s existing stone businesses, positions the Company as a market leader in stone veneer. 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 ESW based upon fair values as of the closing date.
The Company determined the fair value of the tangible and intangible assets and the liabilities acquired, and recorded goodwill based on the excess of the fair value of the acquisition consideration over such fair values, as follows (in thousands):
Assets acquired:
Restricted cash$3,379  
Accounts receivable16,825  
Inventories13,062  
Prepaid expenses and other current assets3,677  
Property, plant and equipment14,295  
Lease right of use assets11,372  
Intangible assets (trade names/customer relationships)91,170  
Goodwill63,543  
Deferred taxes474  
Other assets157  
Total assets acquired217,954  
Liabilities assumed:
Accounts payable5,910  
Other accrued expenses14,666  
Lease liabilities11,365  
Other long-term liabilities3,450  
Total liabilities assumed35,391  
Net assets acquired$182,563  
The $63.5 million of goodwill was allocated to the Siding segment and is expected to be deductible for tax purposes. The goodwill is attributable to the workforce of the acquired business and the synergies expected to be realized.
11


NOTE 4 — RESTRUCTURING
The Company has various initiatives and programs in place within its business units to reduce selling, general, and administrative expenses ("SG&A"), manufacturing costs and to optimize the Company's combined manufacturing footprint. During the three months ended April 4, 2020, the Company incurred restructuring charges of $1.5 million, $1.1 million and $11.7 million in the Windows, Siding and Commercial segments, respectively. Corporate headquarters incurred a restructuring gain of $0.3 million primarily as a result of a reversal of an estimated restructuring accrual. Restructuring charges incurred to date since inception of the current restructuring initiatives began in 2019 is $25.5 million. The following table summarizes our restructuring plan costs and charges related to the restructuring plans for the period indicated, which are recorded in restructuring and impairment charges in the Company’s consolidated statements of operations (in thousands):
 Three Months Ended
 April 4,
2020
Severance$9,542  
Asset impairments3,079  
Other restructuring costs1,371  
Total restructuring costs$13,992  

The restructuring costs are recorded within restructuring and impairment costs for $13.8 million and cost of goods sold for $0.2 million in the Company’s consolidated statement of operations. The asset impairments of $3.1 million are comprised of equipment costs of $1.6 million and right of use asset impairments for $1.5 million related predominantly to the closure of the Company's Ambridge, Pennsylvania Commercial facility.
The following table summarizes our severance liability and cash payments made pursuant to the restructuring plans from inception through April 4, 2020 (in thousands):
 WindowsSidingCommercialCorporateTotal
Balance, December 31, 2018$  $85  $  $2,333  $2,418  
Costs incurred